The Kids Aren’t Alright. And They’re Not Buying Your House.
Most allocators are still pricing in a reversion that will never come. This is a working memo for deploying capital in a permanently broken demographic model.
To: Capital allocators with demographic exposure
Subject: Generational participation is not delayed. It’s over.
You’re allocating capital to a demographic that no longer exists in economic terms.
Most models still assume millennials and Gen Z are simply “late”.
Late to buy homes, form families, accumulate wealth.
That they’ll eventually revert to the patterns of prior generations.
That thesis has already failed.
This memo outlines a framework for capital deployment in light of a four-factor structural collapse:
Housing affordability
Fertility
Wage stagnation
Debt burden
These aren’t “macro headwinds”. They’re permanent constraints.
If your portfolio is exposed to sectors priced for a generational comeback, homebuilders, suburban retail, family formation plays, you’re holding mispriced assets.
You're allocating capital to a demographic phantom. Let’s talk about what that means, and how this happened.
Wall Street still models millennials and Gen Z as merely “delayed economic participants”. But the data shows this is structural divergence.
It’s not timing.
Home affordability collapse: In 1980, the U.S. median home price was $64.6k and median household income was $25k. That’s a 2.58x ratio.
In 2023, the median home price was $417.7k while median household income was $74,580. That’s a 5.6x ratio (U.S. Census Bureau, Federal Reserve Economic Data).
Student debt explosion: Average student debt at graduation rose from $17.3k in 2000 to $37.3k in 2023 (Education Data Initiative).
Flat real wages: Real median household income in 2000 was $76.6k in 2023 dollars. In 2023, it was $74.5k. That’s lower than 23 years ago (U.S. Census Bureau).
Delayed or abandoned family formation: The U.S. birth rate fell to 1.62 in 2023, below replacement level. Median age at first marriage rose from 25.5 (men) and 23.3 (women) in 1980 to 30.2 and 28.4 in 2023 (CDC, U.S. Census).
Homebuying delayed or gone: Median first-time homebuyer age rose from 29 in 1981 to 36 in 2023 (National Association of Realtors).
Most allocation models assume these trends revert to historical patterns. The math suggests otherwise.
Three Reasons:
1. The gap is widening, not closing: Home prices are rising faster than wages. Student debt is compounding annually. These aren't temporary dislocations — they're accelerating divergences.
2. Fixed costs consume wealth-building capital: A 27-year-old paying $2,000/month rent and $400/month student loans has no capital left for down payments or investments. This isn't financial illiteracy. It's a mathematical constraint.
3. Time value of money makes delays exponentially costly: Waiting until 36 to buy your first home versus 29 means seven fewer years of equity building and compound appreciation. The "catch up later" thesis ignores exponential math.
Young Americans aren't stupid or entitled. They're responding rationally to economic constraints that didn't exist for previous generations.
What Boomers (1948-1958) THINK Young Americans Believe:
The American Dream is delayed but still achievable
Hard work still leads to homeownership and wealth building
They're just being picky about jobs/housing/relationships [Ages 25-32, born 1992-1999]
They'll eventually "grow up" and follow traditional economic patterns
Their pessimism is temporary/performative
They want the same things Boomers wanted, just later
The Cold Stark Economic Reality:
Homeownership requires 6x the income multiple it did in 1980
College debt has fundamentally altered lifetime wealth trajectories
Real wages have been flat while asset prices exploded
The wealth-building mechanisms Boomers used (pensions, cheap housing, job loyalty) are gone
Healthcare costs alone can bankrupt middle-class families
Climate change threatens long-term asset values
What Young Americans ACTUALLY Know:
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