An analyst once called the “oracle of Wall Street” has warned of how not having a home will negatively impact the “avocado toast generation.”
Meredith Whitney, known for predicting the 2008 financial crisis, said younger millennials and Gen Z are missing out on the $21 trillion in wealth that older generations built through homeownership.
“Home ownership rates for people under 38 are at record lows,” she told DailyMail.com.
“Homeownership has become a forced savings tool in the United States, especially since interest rates have been virtually zero for the past 12 to 15 years. Over the past decade, $21 trillion in wealth has been accumulated in homes. But this obviously creates incredible wealth.
“The people who aren’t participating in this are people who don’t own a home, and a disproportionate number of them are under 38,” she says.
Meredith Whitney, nicknamed the “oracle of Wall Street,” warned of how homelessness would harm the “avocado toast generation.”
Whitney also noted that while more young people are now living at home with their parents than at any other time in history, this trend has decreased slightly since the COVID-19 pandemic.
“What’s incredible is that 70 percent of residential real estate in the United States is owned by people over 50,” she says.
The average age of first-time homebuyers is now at an all-time high of 36, according to statistics from the National Association of Realtors.
Similarly, census data reveals that only 10 percent of homeowners are under 35 years of age.
Many commentators have noted that younger generations are more likely to indulge in luxuries like avocado toast brunch rather than save money for home, which is where Whitney’s nickname comes from.
The concept is thought to have originated with a 2016 opinion piece in The Australian written by demographer Bernard Salt, who said: “Young people are trying to make the most of their time by adding crushed avocado and crumbled feta cheese to five-grain toasted buns.” I’ve seen people ordering it for like $22 a piece.”
He added: “Several times a week, $22 could go toward a down payment on a home.”
In the United States today, young people are facing one of the most volatile real estate markets in recent memory due to soaring mortgage rates.
Many Americans signed 30-year contracts when interest rates were 2 to 3 percent, effectively locking them into their current homes.
Effectively, that means someone who bought $400,000 in October 2021 when the interest rate was 3.09 percent. You will pay $1,621 per month towards your mortgage. This analysis assumes you made a 5% down payment.
But at current rates, that same owner would have to pay $2,657, an increase of more than $1,000 per month.
Despite stagnant demand for housing, limited housing inventory keeps prices artificially high.
“Young people are being excluded from the market,” said Whitney, now CEO of the investment research firm Meredith Whitney Advisory Group.
![The average interest rate on a 30-year mortgage was 7.50% this week, down from 7.76% last week and the highest since last November.](https://i.dailymail.co.uk/1s/2023/11/10/18/77652071-12734863-The_average_rate_on_a_30_year_mortgage_dropped_this_week_to_7_50-a-8_1699641058411.jpg)
![The average interest rate on a 30-year mortgage was 7.50% this week, down from 7.76% last week and the highest since last November.](https://i.dailymail.co.uk/1s/2023/11/10/18/77652071-12734863-The_average_rate_on_a_30_year_mortgage_dropped_this_week_to_7_50-a-8_1699641058411.jpg)
The average interest rate on a 30-year mortgage was 7.50% this week, down from 7.76% last week and the highest since last November.
But she speculated that a surge in downsizing among baby boomers may eventually help ease the housing shortage.
“Those who haven’t sold a home in the past 10 years will eventually need to move or want a smaller home to cut overhead. This is typically the case for people over 50. “That’s 51 per cent of the total, or about 30 million units,” she said.
“It won’t all happen at once, but slowly things will start to change. We have a supply and demand challenge right now, and in a situation where demand is high and supply is low, it will reverse and increase supply and hopefully also demand. It will increase.”
Whitney said the key thing that needs to change for young people to enter the housing market is price.
“The question is how do you get into the housing market for the first time without a large down payment and the ability to pay off a mortgage,” she says.
Whitney previously said he expected home prices in some states to soon fall for the first time in more than a decade.
He predicts that Pennsylvania, Connecticut, New Jersey and Illinois are at the greatest risk of falling prices due to migration trends.
But she said prices in Texas may not come down because of the large influx of Californians who moved to Texas for a lower cost of living.
She said, “This varies from state to state. And I expected this to happen. We have over 10, 12 years of data, so looking at it now, we’re actually seeing that. You can find out what happened and what is still happening.”