Nice job, millennials: You just doubled your total net worth since the start of the pandemic, according to a new report. That is, if you own a home.
Millennials’ total net worth has jumped 106% to $9.38 in the first quarter from $4.55 trillion in the first quarter of 2020 — when the COVID-19 outbreak became a global pandemic.
The average net worth of a millennial is now $127,793, as of the first quarter of this year. In 2020, that number was $62,758.
The report, from MagnifyMoney, looked at figures from Distributional Financial Accounts, which is part of the Federal Reserve, and U.S. Census Bureau population data to estimate millennials’ average net worth. The millennial generation is defined as those born between 1981 and 1996.
A pause on student-loan payments and unemployment benefits helped millennials accumulate wealth in the last two years, the report said.
But here is the caveat for those millennials whose net worth had doubled over the last two years: growth in home prices has been the biggest driver in asset accumulation for millennials.
“A pause on student-loan payments and unemployment benefits helped millennials accumulate wealth in the last two years, but growth in home prices has been the biggest driver.”
Real estate formed the bulk of millennials’ net worth, according to MagnifyMoney, with 35.6% of millennials’ assets tied up in homes. That’s the highest among the categories tracked.
If they had taken out a mortgage in the last two years when mortgage rates were at historic lows, buying a home has given them “a significant leg up,” Ismat Mangla, executive director at MagnifyMoney, said.
Borrowing costs are now much higher: The average rate on a 30-year fixed-rate mortgage is now 5.54%, as of July 21, according to Freddie Mac. A year ago, the 30-year was at 2.76%.
Meanwhile, home prices in the 20 biggest cities in the U.S. have jumped 20.5% since last year, according to S&P CoreLogic Case-Shiller.
Bottom line: home-owning millennials have benefitted from high inflation, being able to accumulate wealth quickly as the price of their properties rose.
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