“How many millionaires do you know who have become wealthy by investing in savings accounts?” Lenders, and their underwriters, work with income, value, and wealth every day. But check this out reminder that owning property is a great way to build wealth: Baby Boomers are 9x wealthier than Millennials. That is quite a difference. “Wealth is the value of assets owned minus the liabilities (debts) owed. The new U.S. Census Bureau report, and detailed tables on household wealth in 2019, show similarly wide variations across demographic and socioeconomic groups but also detail generational wealth differences for the first time.” Home prices and rental rates are far outpacing income gains, meaning millennials must spend significantly more of their earnings on housing than previous generations. The average millennial spends 47% of their gross monthly income on housing, roughly 1.5x more than the 30% experts recommend for financial health. Millennial debt is a big deal as millennials are feeling the strain of rising housing costs on their finances: almost 1 in 3 (29%) say they can’t afford their mortgage, and 1 in 5 (20%) say they can’t afford their rent. In an emergency, 1 in 4 (25%) doubt they could pay a $500 expense out of pocket. It’s no wonder 41% of millennials feel pessimistic about their finances. (Today’s podcast is available here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services in the mortgage industry and in banking. Today’s includes an interview with Morty’s Rob Heck on current market trends and what to expect in the second half of 2022 for the mortgage industry.)
Source: Mortgage News Daily