Analyst dubbed the ‘Oracle of Wall Street’ warns Gen Z and Millennials are missing out on $21 TRILLION in equity by not

An analyst, who was once dubbed the ‘Oracle of Wall Street’, has warned how not owning homes hurts the ‘avocado toast generation.’

Meredith Whitney, who is known for successfully forecasting the 2008 financial crisis, said that younger Millennials and Gen Z have missed out on $21 trillion in equity which older generations have built in home ownership.

‘We are seeing record low homeownership levels for those under 38,’ she told DailyMail.com. 

‘Homeownership has been a forced savings vehicle in the US, but particularly in the last 12 or 15 years, because interest rates have effectively been at zero. We have seen $21 trillion of equity built up in homes over the last decade, which is obviously an incredible wealth creator.

‘Those who have not participated in that have been those who haven’t owned homes – and that’s disproportionately those under 38,’ she said. 

Meredith Whitney, who was dubbed the ‘Oracle of Wall Street’, has warned how not owning homes hurts the ‘avocado toast generation.’

Whitney noted that there are now also more younger people living at home with their parents than there has been historically – although this trend has decreased somewhat since the Covid-19 pandemic.  

‘What is incredible is that 70 percent of US residential real estate is owned by folks over 50,’ she said. 

Figures from the National Association of Realtors show that the average age of a first-time homebuyer is now at a record-high of 36 years old.

Similarly Census data reveals only 10 percent of homeowners are under the age of 35.

Many commentators have noted that younger generations are more likely to splurge on niceties such as avocado toast brunches rather than save for a home – hence Whitney’s nickname.

The concept is thought to have started from a 2016 opinion piece in The Australian written by demographer Bernard Salt who observed: ‘I have seen young people order smashed avocado with crumbled feta on five-grain toasted bread at $22 a pop and more.’

He added: ‘Twenty-two dollars several times a week could go towards a deposit on a house.’

In the US today young people are facing one of the most volatile property markets in recent memory thanks to soaring mortgage rates. 

Many Americans fixed 30-year deals when rates were between 2 and 3 percent – effectively trapping them in their current home.

In real terms it means somebody who bought a $400,000 in October 2021 – when rates were 3.09 percent – they would pay $1,621 per month on their mortgage. This analysis assumes they paid a 5 percent downpayment.

But at today’s rates the same owner would be forced to pay $2,657 – an increase of more than $1,000 per month.

Despite stalling demand for homes, prices have remained artificially high thanks to limited housing inventory. 

‘Younger people have been priced out of the market,’ Whitney, who is now the CEO of investment research firm Meredith Whitney Advisory Group, said. 

The average rate on a 30-year mortgage dropped this week to 7.50 percent from 7.76 percent last week – the largest amount since last November

But she speculated that a surge in Boomers downsizing may help ease housing shortages eventually. 

‘People who have not sold their house in the past decade will ultimately either need to move or want to reduce their overhead expenses and want a smaller home. That’s typically 51 percent of people over 50, which is roughly 30 million units,’ she said. 

‘Now it doesn’t all happen at once, but it’ll slowly start to change the dynamic. Where we have a demand and supply challenge today where there is more demand and less supply, that will invert to have more supply – and hopefully more demand.’

The key thing that needs to change for younger people to get on the housing market, according to Whitney, is prices.    

‘The issue is how do you break into the housing market for the first time without a big down payment and an ability to serve a mortgage,’ she said.

Whitney previously said how she expects house prices in some states to soon decline for the first time in over a decade.

She predicts Pennsylvania, Connecticut, New Jersey and Illinois are at the biggest risk of falling prices thanks to migration trends. 

However, prices in Texas may not fall, she said, after experiencing a huge influx of California residents who migrated there in search of cheaper living costs. 

She said: ‘This is state-specific. And so I expected this to happen. With 10-years-plus – 12 years – of data, now I can look at it and know that, in fact, it did happen and it is happening.’