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  • Chris Graham


Updated: Sep 8, 2021

As you may know, I’m a bit of a data junkie and today we're going to talk about one of the main data points that we track and that's demographics. All futurists will tell you that the way they project out is really based on demographics with a population. If the population of a country has a steady pyramid of demographic growth, then that's a country set up and primed for economic success. If it's inverted, it's a disaster waiting to happen. You’ve heard the stories about European countries with inverted demographics where there's not enough population growth to support the older populations. In the U.S., we have an hourglass shape. We have 77 million Baby Boomers today and 4% of them have achieved $3 million of net worth or more, so let's just call that 3.05 million wealthy individuals. The Gen Xers are a 25% smaller population. Out of 62 million Gen Xers, only 2% have achieved $3 million of net worth of more, so that's 1.2 million individuals.

Several years ago, we started thinking there should be some pricing compression that futurists would predict in this shift between these generations. Interestingly, behind the Gen Xers are 88 million Millennials and then the Gen Y behind that is set to be the biggest population in US history.

So, there's major population growth coming down the road, but for Baby Boomers to Gen Xers, there's this gap that should create some pricing pressure as Baby Boomers transition assets to Gen Xers who don't have the ability to buy them. For some reason, this wasn’t really showing up in the markets. Instead, we see all-time high stock markets, commercial real estate at all-time highs, apartment complexes, etc., but in any market where institutions are not participating as a buyer, we see it show up. Take for example high-end residential housing. $3 million and up homes are collapsing in price all around the United States even in retirement areas, like in Florida. As Baby Boomers move into more efficient lifestyles like condos and those kinds of living situations, these high-end homes are collapsing because there's not enough Gen Xers to fill the Gap.

In fact, population of New York is falling and it has been since 2011. People think it's because of the taxes and the weather, but the truth is that it's because of the demographics. In 2011, the oldest of the Baby Boomers turned 66. Think about this: if you didn't have to live in New York to achieve your economic objectives, then you wouldn't live in New York because of the weather and the taxes, so it's both things combined causing this migration South. The beneficiary of that is really Florida. For California, the beneficiaries of this phenomena are typically Texas, Nevada, and Arizona. In California, we started to see it in a graphics decline starting in 2017. The median age of California is 5 years younger than the median age in New York. It's very interesting because you can actually track these Baby Boomer shifts going on right now. This is such a dominant economic force that 82% of US financial assets are actually controlled by Baby Boomers. If you’d like to see any of the resources that we pulled this data from, just email me and I’m happy to send out reference sites.

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