NEW: my column this week is about the coming vibe shift, from Boomers vs Millennials to huge wealth inequality *between* Millennials. Current discourse centres on how the average Millennial is worse-off than the average Boomer was, but the richest millennials are loaded 💸🚀
That data was for the UK, but it’s a similar story in the US. The gap between the richest and poorest Millennials is far wider than it was for Boomers. More debt at the bottom, and much more wealth at the top. In both countries, inequality is overwhelmingly *within* generations, not between them.
And how have the richest millennials got so rich? Mainly this: enormous wealth transfers from their parents, typically to help with buying their first home. In the UK, among those who get parental help, the top 10% got *£170,000* towards their house (the average Millennial got zero).
And these transfers compound over time. Someone who gets a chunky parental handout towards their house then has a lower LTV mortgage, which means lower interest rates, which means lower monthly payments, which can effectively double the size of the gift.
So you can have two couples with the same incomes, same house, bought for the same price, ostensibly living the same life, except one is paying £2,500 a month and the other £1,500 because of parental help with the deposit, so every month one couple has a spare grand.
A big factor here is unaffordable housing. It now takes *25 years* for the average young couple to save for a deposit in London. Similar in San Francisco & New York. To state the obvious, Millennial homeowners in these cities didn’t save for 25 years, they got parental help.
To be clear: one can hardly blame parents for helping their offspring, or children for accepting assistance. But the growing role of these transfers in determining millennial wealth trajectories (and thus life trajectories) is likely to have major social and political fallout.
@jburnmurdoch Absolutely, the #1 problem is HOUSING SUPPLY and what impacts it: — regulations (green belts, zoning, urban reg limits, construction laws) — lack of social housing invts — market structure for housing development vs speculation incentives (ZIRP..)