There is a silent trend unfolding across the United States.  Like most things, it is slowly brewing and will tip over in the next decade or so.  While many baby boomers feel as though they will never need it, millions upon millions will end up in retirement homes.  Retirement homes are not cheap so in many cases people will need to sell their property to unlock that stored up equity.  Zillow ran a report highlighting that 34 percent of homes in the US are owned by people that are 60 or older.  The estimate is that 20 million homes will hit the market starting now up until the mid-2030s.  Combine this unfolding trend with the record number of Millennials living at home and you have a housing market that is struggling to find its footing.  In places like California, the issue of affordable housing is off the charts.  What will housing look like with this tsunami of homes hitting the market?

Millennials are not going to save the housing market.  Home sales volume remains tepid and younger buyers are simply not out in mass buying homes.  The housing market is being driven by Taco Tuesday baby boomers and low sales volume.  We will highlight a few data points that show that Millennials are simply not moving the needle on housing, especially in expensive places like Los Angeles where the majority of households rent.  You have many people living in World War II standard homes in places like Torrance where prices are disconnected from value but people are now convinced that this is standard practice.  It is not.  The market is heavily indebted and Millennials are carrying the brunt of the $1.5 trillion in student debt that is floating in our economy.  This has delayed younger Americans from buying homes. Take a look at these figures.

Los Angeles County is the most populated county in the nation and it is also an area where renter households are the majority.  Contrary to what some will say, this is not how “it has always been” since in the last decade the area has added mostly renting households tipping the figures to the other side.  LA is also the most expensive area to rent in the nation.  Isn’t San Francisco or New York more expensive?  Rents are higher in those areas but so are household incomes.  What you need to look at is the actual income of those living in the area and when we do that, we see why LA is the most expensive market and we will show some data to back up this assertion.  Ultimately many households in LA rent and the amount of money spent on rents is consuming a growing amount of disposable income.  Let us look at some charts.

The trend of having the most populated state in the United States becoming one where the majority of households are renters is on track.  California is morphing into a renter’s paradise.  This reality isn’t a surprise and we have some sizable generational shifts that are occurring.  We have millions of adult Millennials living at home with their parents.  You also have an interesting situation where home prices are high relative to what people can support but sales volume still remains low.  Looking at the California Association of Realtors (CAR) for some data you can find that this is also perplexing the group.  Ultimately you want sales volume to be high to churn those commission checks but that is not occurring.  Builders are building more multi-family unit housing to satisfy the market demands.  Yet in the end, it is clear that most Californian households are unable to afford a home and are opting to rent.