Wealth TransferWhat Could Happen to Real Estate in the Great Wealth Transfer?

Ralph Byer is a Merrill Lynch financial advisor and Managing Director of the Byer Wealth Management Group in Plantation Florida. In this role, Ralph Byer leverages more than four decades of experience with Merrill Lynch to provide his clients with a wide range of services, including financial planning, wealth transfer, and estate planning.

One of the upcoming major economic shifts in the United States is the great wealth transfer. This refers to a move of $59 trillion through assets and inheritances, as the baby boomer generation reaches retirement ages by 2030. Once this demographic passes the 65-year mark, control of the wealth currently in their possession will shift to their children, drastically changing general spending and investing habits. Researchers project that this shift will impact the real estate market greatly.

According to the Federal Reserve, homeowners born between 1946 and 1964 currently own 44 percent of US homes, and about $6 trillion in real estate. However, they will ultimately pass away or require full-time care. While some people may choose to or be able to receive care at home, many will shift to assisted living communities or nursing homes. Thus, the real estate market will see a rise in demand for senior facilities as well as single-family homes as elders move out.

Heirs, on the other hand, may choose to preserve larger properties or sell them. Options for preservation include living in a house oneself, using it as a secondary or holiday home, or renting out. If they lack a detailed estate management plan, however, they can be subject to large inheritance taxes, which may make selling the real estate a more lucrative and less stressful choice. This may lead to an injection of properties into the market, particularly those in probate, or the legal process of settling an estate after the owner’s death.