Most young Americans are still living in an economy that feels like it is in a recession. Yet there are Millennials that are doing well and are thriving in this economy. How are they escaping mountains of student debt? How are they gaining access to down payments to purchase more expensive homes? The short answer is that they have rich parents. This isn’t some Trumpism. This is merely facts that are coming out of research from the Fed, Census, and Zillow. For the vast majority of young Americans the last decade has been one of low wage labor and a market mired with very expensive colleges. Despite the disappearing middle class many of those Millennials that are thriving are doing so thanks to familial wealth transfers. We tend to romanticize the “self-made” person in the United States but it is increasingly becoming more difficult. More wealth is accumulated in fewer hands and it is staying there.

The Millennials who are thriving

Millennials have taken it on the chin during this recovery. They are saddled in debt and are a large part of the $1.3 trillion in outstanding student loans. Many are finding jobs in the lower paying service sector of our economy even with college degrees. Many are delaying buying homes and in many cases, are stuck living at home with parents even after college.

But a portion of Millennials are doing well:

“(The Atlantic) And then there are those who are doing just great—owning a house, buying a car, and consistently putting money away for retirement. These, however, are not your run-of-the-mill Millennials. Nope. These Millennials have something very special: rich parents. These Millennials have help paying their tuition, meaning they graduate in much better financial shape than their peers who have to self-finance college through a mix of jobs, scholarships, and loans. And then, for the very luckiest, they’ll also get some help with a down payment, making homeownership possible, while it remains mostly unattainable for the vast majority of young adults.”

The two biggest benefits here are paying for college and a down payment for a home. Paying for college allows these Millennials to enter the workforce with a minimal debt load. Add in the down payment for a home and you accelerate the wealth building years for this group immediately. Take for example saving 10 percent for a typical US home down payment:



Source: Trulia

Your typical American household will take 8 years just to save for that down payment. Compare that to getting immediate assistance from your family and you suddenly own a home 8 years quicker. That is a big deal and since most Millennials don’t have this privilege, the home ownership rate has been plummeting in a group that usually leads household formation:

In some parts of the country, going to college may delay your ability to build wealth:

In Las Vegas, households without a college degree can save for a down payment 1.5 years faster than those with a college degree. This isn’t advocating for avoiding college altogether but as Greece is showing us, having way too much debt can be a really bad thing. Education is vital but you have to question the underlying cost of what you are getting. The Millennials that are doing well have access to capital and that is important:

“The study calls this a “funnel of privilege”: Young adults with rich parents soon become rich themselves. “Haves are turning their riches or their wealth into bigger wealth because they are investing in the housing market by simply living in a house,” says Gudell. This advantage is one that these Millennials will carry forward as they earn more than their degree-less peers, and save more than those who were forced to throw away tens of thousands of dollars on rent due to their inability to buy. In the future, they’ll have wealth to pass down to their own kids, continuing the cycle.”

Homeownership is the main path for Americans to build wealth. As the market has been pillaged by big Wall Street investors, the homeownership rate has collapsed all the while prices have gone up. Those building their wealth (those who control stocks and real estate) can then pass that wealth down quickly to their children. In the past, buying a home was a big part for the young emerging middle class. Now, it is becoming more of a privilege to own a home especially in a more expensive metro area. The study merely reveals something we probably already know: more wealth is being filtered into fewer hands.

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