Investing

Asia’s family offices used to have a far bigger appetite for risks compared to their global counterparts — but that could be changing, according to a recent survey.
What sets family offices apart from traditional wealth managers is that they solely offer services to an affluent individual or family.
On a global scale, 9% of the world’s family offices are located in Asia, according to KPMG Private Enterprise and family office consultancy Agreus.

Singapore city skyline on September 18, 2016.
Rustam Azmi | Getty Images News | Getty Images

Asia’s family offices used to have a far bigger appetite for risks compared to their global counterparts — but that could be changing, according to a recent survey.
A Citi Private Bank global survey in the third quarter of the year showed there has been a shift out of cash and into risk assets by family offices around the world — but with one notable exception, Asia.

A family office is a private wealth management advisory firm that caters to high net worth individuals. Citi’s survey was conducted on its family office clients, who collectively had a total net worth of $565 billion, and hailed from across the globe — with two-thirds coming from outside North America.
What sets family offices apart from traditional wealth managers is that they solely offer services to an affluent individual or family.

Asian family offices allocated far more funds into risky assets than low-risk assets in the first half of the year, Hannes Hofmann of Citi Private Bank told CNBC’s Squawk Box Asia in late November.
As such, “it’s harder for them to add to risk at this point,” he added.

About 44% of assets held by Asian family offices were private and public equity, compared to 30% to 33% in cash and fixed income, according to Citi’s Hofmann.

That’s a much bigger differential than family offices in the U.S., Europe, or in Latin America.

Hungry for risks

There are several reasons for the comparatively huge risk appetite of Asian family offices, including a historically low interest rate environment and bets on China’s post-Covid recovery, which has since lost ground.
Citi also noted that the potential slowdown in China and disruption of supply chains had a strong impact on the portfolio allocation of Asian family offices.
Another factor is that equity markets in Asia have fallen so far this year, compared with the U.S. or Europe.

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Hong Kong’s Hang Seng index has slumped about 15% year-to-date, while mainland China’s CSI 300 has fallen more than 13% during the same period. Both were the worst performing major Asian stocks gauges so far this year.
On the other hand, Wall Street’s benchmark S&P 500 index has rallied 23% this year, while Europe’s Stoxx 600 has gained more than 12%.

Singapore a bright spot

On a global scale, 9% of the world’s family offices are located in Asia, according to KPMG Private Enterprise and family office consultancy Agreus.
In Asia, Singapore ranks first as a hub for family offices around the world, with about 59% of them based in the city-state so far in 2023, the report showed.
About 14% were based in Hong Kong, 13% in India and the rest were located in Malaysia, Thailand and Pakistan, Agreus said.
Singapore’s proactive regulatory stance and attractive tax rates have made it a top pick among the wealthy. The island nation also acts as a strategic base to access other investment opportunities in Asia in order to diversify investment portfolios.
“I think in Singapore, the MAS as a regulator is very proactive. Which is a great thing,” said Tayyab Mohamed, co-founder of Agreus, referring to the Monetary Authority of Singapore, the country’s central bank and financial regulator.
“So they’ve gone out there and really marketed Singapore and to bring family offices from all over the world to set up there,” he told CNBC. More

Your Money

Among generations, Gen Z is the most confident they’ll be financially prepared for retirement when the time comes, according to the 2023 Planning and Progress Study by Northwestern Mutual. 
Women of this age group especially reflect this outlook: Nearly 6 in 10, or 59%, of Gen Z women believe they will be financially prepared for retirement, the study found. 
“This generation almost has no filter,” said certified financial planner Veronica Fuentes, a managing director at Northwestern Mutual based in Washington, D.C.

Luis Alvarez | Digitalvision | Getty Images

While some recent reports have painted Generation Z as taking a relaxed “soft saving” approach to retirement, new research finds this generation is the most confident they’ll be able to retire. Gen Z women are especially optimistic. 
Almost two-thirds, 65%, of Gen Z respondents are confident they’ll be financially prepared for retirement when the time comes, according to the 2023 Planning and Progress Study by Northwestern Mutual. This is the highest percentage of all the generations, compared with 54% of millennials, 45% of Gen X and 52% of baby boomers. 

Gen Z women are particularly confident compared with women of other generations. Nearly 6 in 10, or 59%, of women in this age group believe they will be financially prepared for retirement, versus 43% of millennials, 38% of Gen X, and 48% of baby boomers, the study said.
The results are based on 2,740 conducted interviews among U.S. adults between Feb. 17 and March 2, the study said.
Gen Z includes people born in 1997 or later, according to the Pew Research Center.

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Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

A positive attitude toward planning is behind this generation’s retirement confidence.
“This generation almost has no filter,” said certified financial planner Veronica Fuentes, a managing director at Northwestern Mutual based in Washington, D.C.

“They will say anything that is on their minds and they will ask any questions,” Fuentes said. “They’re just open to people guiding them in the right direction and they’re not scared to ask for help.”

Asking questions gives Gen Zers ‘a leg up’

Gen Z investors are open to taking advice from experts and show a willingness to make changes in their financial plan, Fuentes said.
Members of Gen Z are also more apt to vet financial information they see online or on social media, according to both Fuentes and certified financial planner Clifford Cornell.
Social media “gets the gears turning for people because they’re getting exposure to things they otherwise wouldn’t have, and then they’re able to ask the right question,” said Cornell, an associate financial advisor at Bone Fide Wealth in New York.
In the age of information, financial education is more accessible to Gen Zers than prior generations.
“Our ability to use those tools to our advantage … really gives our generation a leg up. Older generations didn’t really have those tools to use to their ability,” said Cornell.

How to ‘mitigate fear’ and stay on track for retirement

This openness may help Gen Z women speak more comfortably about their finances and take the steps to keep them on track to retire comfortably, advisors say.
“The positivity towards planning is really what drives that,” Fuentes said.

Starting to plan for retirement and investing early helps younger investors make strides to avoid a fear many older, less prepared workers have. On average, Americans say there is a 45% chance they outlive their retirement savings, and 33% haven’t taken the steps to address the possibility, Northwestern Mutual found.
“The top thing you could do to mitigate fear is to start as early as possible,” said Fuentes. “Even if you think a $50 savings into your 401(k) every month is small, something is better than nothing.”
Here are two steps to help:

Regularly revisit your retirement savings plan. Ideally, you ought to revisit your plan every year or so. That helps you make sure you’re on track for your targets, especially if you hope to retire early. Doing so will give you the opportunity to pivot if your goals or timelines change.
Boost your retirement contributions. Most advisors recommend setting aside 15% of your annual pay for retirement. That can seem like a tall order, especially for workers starting out their careers. If you can’t hit that target immediately, aim to regularly boost your contributions. “Really challenge yourself to do better every year,” said Fuentes. Set a new savings target every year. Even a small adjustment of 1% annually has an impact. “That compounding over the year over a 10-year, 20-year, 30-year period is going to make a huge difference,” she said.  More

A person walks by a CVS pharmacy store in Manhattan, New York, U.S., November 15, 2021.
Andrew Kelly | Reuters

Several dividend stocks had a rough year due to elevated interest rates. With the Federal Reserve signaling rate cuts in 2024, dividend stocks are expected to regain their shine.
Keeping a long-term investment horizon in mind, here are three attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

OneMain Holdings

This week’s first dividend pick is OneMain Holdings (OMF), a financial services company that provides non-prime customers access to credit. Last month, the company paid a quarterly dividend of $1 per share. OMF offers an attractive dividend yield of about 9%.
Following the company’s recent Investor Day, RBC Capital analyst Kenneth Lee reiterated a buy rating on OMF stock with a price target of $50. The analyst stated that following the event, he is more confident about the company’s underwriting and analytics, and has gained additional insights into the benefits of its omnichannel presence.
In particular, OMF’s management indicated that the company’s underwriting models, which leverage machine learning, alternative data, and cash flow data, have two times more predictive power than bureau credit scores. Lee also highlighted that the company’s recent entry into auto financing has significantly expanded its total addressable market to about $1.3 trillion.
The company expects its annual capital generation per share to be about $12.50 in the medium term, with nearly 5% capital generation return on receivables. “Importantly, after factoring in capital retained for organic growth and paying dividends, there could be ~$6/share in excess capital generation annually,” said Lee.
Lee ranks No. 115 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 65% of the time, with each delivering an average return of 14.3%. (See OneMain Financial Statements on TipRanks) 

CVS Health

We move to the retail pharmacy chain CVS Health (CVS), which announced an around 10% hike in its quarterly dividend to 66.5 cents earlier this month. With this hike, the company’s forward dividend yield stands at about 3.5%.
CVS hosted its Investor Day on Dec. 5. Following the event, Mizuho analyst Ann Hynes noted that the company’s long-term adjusted EPS growth floor of over 6% was below her high-single-digit forecast.
That said, Hynes sees the possibility of an upside to the company’s guidance if it gains market share through the execution of its growth strategies and the success of the new pharmacy reimbursement model. The analyst also expects CVS’ focus on health care delivery to boost its growth, as the company continues to enhance its Signify and Oak Street businesses.     
“CVS remains committed to a balanced capital deployment strategy with growing dividend,” added Hynes.
Notably, the company expects to have $40 billion to $50 billion of deployable cash from 2024 to 2026, with an expected annual average free cash flow of $7 billion. It intends to allocate 35% towards capital expenditures and 25% towards dividends, with the remaining 40% available for flexible deployment, including share repurchases.
Overall, Hynes remains bullish on CVS and reaffirmed a buy rating on the stock with a price target of $86. Hynes holds the 489th position among more than 8,600 analysts on TipRanks. Her ratings have been successful 61% of the time, with each delivering a return of 7.2%, on average. (See CVS Insider Trading Activity on TipRanks).

Devon Energy

Last month, oil and gas producer Devon Energy (DVN) declared a fixed plus variable dividend of 77 cents per share, payable on December 29. This dividend payment marked a 57% increase from the second quarter of 2023. Considering total dividends of $2.87 declared over the past 12 months, DVN offers an attractive yield of 6.5%.
Recently, Goldman Sachs analysts, led by Neil Mehta, hosted meetings with Devon’s management. Importantly, management acknowledged that 2023 has been a challenging year for the company with negative revisions to production, partly due to underperformance in the Bakken region and well selection and appraisal activity in the Delaware basin (including weather-related issues) and Eagle Ford.
That said, Mehta highlighted that management sees the opportunity to regain its capital efficiency relative to peers in 2024, by allocating more capital to the Delaware basin than to Bakken.
DVN reiterated plans to allocate 70% of its 2024 free cash flow towards cash returns, with the intention of growing the fixed dividend and deploying excess FCF towards share repurchases and variable dividends. The analyst noted that management plans to prioritize share repurchases over variable dividends, given that DVN stock has underperformed its large-cap peers year-to-date.
Mehta reiterated his rating on Devon stock with a price target of $52, saying, “We are Buy-rated on the shares and see potential for mean reversion with favorable production/cost execution.”
Mehta ranks No. 346 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 61% of the time, with each delivering a return of 10.6%, on average (See Devon Energy Technical Analysis on TipRanks) 

   More

Pennsylvania is the 25th state to pass legislation guaranteeing its high school students will take a semester-long course in personal finance before graduation. 
Now 53% of students will have a mandatory financial education course in high school, according to Next Gen Personal Finance. 
Since 2013, there has been a more than 700% increase in states requiring students to take a personal finance course before graduation, according to John Pelletier, director of the Center for Financial Literacy at Champlain College.

CNBC’s senior personal finance correspondent Sharon Epperson speaks with high school students as part of Junior Achievement of Middle Tennessee’s Finance Park financial literacy program.
Sam Wiseman

High schools are increasingly offering real-world financial lessons to students — and soon more than half of U.S. high schoolers will be required to take a personal finance course before graduation.
This week, Pennsylvania became the 25th state to guarantee a personal finance course for high school students. Starting in the fall of 2026,  Pennsylvania schools will provide a mandatory course in personal financial literacy for students in the 9th, 10th, 11th, or 12th grades. On Wednesday, Gov. Josh Shapiro signed into law an omnibus bill that included this provision.

“As a result of this legislation, more than half of high school students in the U.S. — 53% — will have guaranteed access to a standalone personal finance course,” said Yanely Espinal, Director of Educational Outreach at Next Gen Personal Finance, a non-profit financial education advocacy organization. Eight states currently guarantee that students will take a personal finance course and 17 states are implementing these policies.
The momentum for financial education in schools has picked up significant steam this year. Eight states have adopted policies in 2023 guaranteeing students will take a personal finance course before graduation. 
Earlier this month, Wisconsin Gov. Tony Evers signed a bill that requires high school students to take a personal finance literacy course to graduate, starting with the class of 2028. “We have to make sure our kids have the tools and skills to make smart financial and budgeting decisions to prepare for their future, so ensuring our kids have strong financial literacy is essential to setting them up for success as adults,” Evers said in a press release.
The latest “report card” from the Center for Financial Literacy at Champlain College in Burlington, Vermont, shows seven states — Alabama, Iowa, Mississippi, Missouri, Tennessee, Utah, and Virginia — made the top grade. They earned an “A” because, in those states, high school graduates in the class of 2023 were required to have taken a personal finance course before graduation. 
By 2028, when new laws and policy changes are fully implemented, 25 states are projected to earn an “A,” said Pelletier of the Center for Financial Literacy. “Tremendous change is on the horizon. States are rapidly passing laws and changing regulations.” 

High school personal finance courses generally teach students real-world lessons about earning income, spending and savings, credit and credit scores, investing, and managing risk, among other topics. These are financial lessons for life. 

More from Your Money:
Here’s a look at more stories on how to manage, grow, and protect your money for the years ahead.

‘Not a day will go by that you don’t think about money’

“Once you graduate from high school, not a day will go by that you don’t think about money, how to make it, how to spend it, how to save it. You will be thinking about this until the day you die,” Pelletier said. 
Although some schools and school districts have mandated students receive financial education, experts say the recent increase in the number of states that now guarantee high school students will take a financial literacy course before they graduate is partly due to the Covid-19 pandemic, which underscored the financial fragility of many Americans.

“If you leave it up to local control, the districts most likely to unilaterally do this locally, they’re white, and they’re rich. So you would argue the folks that need it the most are the least likely to get it unless the state requires everyone gets it,” Pelletier said. 
Studies show personal finance education can make a significant difference in young adults’ financial behaviors, from improving credit scores and lowering loan delinquency rates to reducing payday lending and helping students make better decisions about college loans.

A few states still have ‘virtually no requirements’

Meanwhile, four states — California, Connecticut, Massachusetts, and South Dakota — and Washington, D.C., got failing grades, receiving “Fs in this report because they have “virtually no requirements” for personal finance education in high school. Still, advocates in these “failing” states are working to change the laws to ensure students are guaranteed financial education. 
“We are currently collecting signatures in support of financial education for all high schoolers,” said California resident Tim Ranzetta, co-founder of Next Gen Personal Finance. “We are far outpacing our estimates, demonstrating what we all inherently know: that personal finance is an impactful and easy-to-implement course with strong demand from both students, parents and the general public.”
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Visoot Uthairam | Moment | Getty Images

Company: Trimble (TRMB)

Trimble is a provider of technology solutions that enables professionals and field mobile workers to improve or transform their work processes. It operates through four segments: Buildings and Infrastructure, Geospatial, Resources and Utilities, and Transportation.
Stock Market Value: $12.88 billion ($51.77 a share)

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Trimble, 1-year

Activist: Jana Partners

Percentage Ownership: n/a
Average Cost: n/a
Activist Commentary: Jana is a very experienced activist investor founded in 2001 by Barry Rosenstein. They made their name taking deeply researched activist positions with well-conceived plans for long term value. Rosenstein called his activist strategy “V cubed”. The three “Vs” were” (i) Value: buying at the right price; (ii) Votes: knowing whether you have the votes before commencing a proxy fight; and (iii) Variety of ways to win: having more than one strategy to enhance value and exit an investment. Since 2008, they have gradually shifted that strategy to one which we characterize as the three “Ss” (i) Stock price – buying at the right price; (ii) Strategic activism – sale of company or spinoff of a business; and (iii) Star advisors/nominees – aligning with top industry executives to advise them and take board seats if necessary.

What’s happening:

On December 11, 2023, JANA Partners announced that they have taken a position in Trimble Inc and are calling on the Company to cease M&A activities and instead focus on organic growth in its existing businesses

Behind the scenes:

Trimble started in 1978 as a GPS technology company, primarily for agriculture. In the 2000s it entered the construction industry with its acquisition of Spectra Precision. It continued growing through acquisition and over the past 10 years has spent $5 billion on acquisitions, primarily buying software businesses with the goal of providing an interconnected hardware and software product. In 2012, they acquired the 3D modeling software package SketchUp from Google and continued to expand their Building Information Modeling portfolio with the acquisition of Tekla in 2014. In 2016, Trimble acquired Sefaira, a software for sustainability analysis including energy modeling and daylight visualization. More recently, in 2018, Trimble acquired Viewpoint (a leading provider of construction management software) from Bain Capital for $1.2 billion, and in 2019 launched Trimble MAPS, consolidating several of its previous acquisitions. They now offer hardware and software solutions in under-tech served industries such as construction, transportation, forestry and agriculture.

The company’s multiple software acquisitions have led to their mix changing in a very positive way. In 2011, 16% of their revenue came from software and services that are by their nature recurring and higher multiple revenue. In 2024, it will be more than half. However, while the business mix has transformed for the better, during this time the stock has significantly underperformed – over the past three years, the stock has underperformed the S&P 500 by nearly 50%.
A lot of this underperformance can be tied to their recent history of software M&A activity. They have been buying companies for 30 to 40 times EBITDA and the acquired companies are being valued at Trimble’s EBITDA multiple of 14 times EBITDA inside of Trimble. The market understands this and as a result, has reacted negatively to their acquisitions, as recently evidenced by their April 2023 acquisition of Transporeon (a cloud-based transportation management platform) for 30 times EBITDA. After the deal was announced, the company’s stock dropped 6.5%. Trimble is not getting credit for their new product mix with a re-rating to a higher software multiple. This does not mean 30 to 40 times EBITDA, but industrial technology peers trade in the mid-teens to mid-20s.  If they can get in line with peers, Jana sees a stock upside of over 40%.
The first thing Jana would like the company to do is cease M&A activity and focus on the core business. To do this, the board should tie executive compensation to return on invested capital, instead of the current compensation structure which incentivizes revenue growth targets. Second, Jana sees an opportunity for the company to focus on improving operations and profit margins. Over the past eight years of increasing software product mix the company has expanded its gross margins by approximately 800 basis points, yet they have expanded their EBITDA margins by only 500 basis points (1 basis point equals 0.01%). There is an opportunity to better integrate these acquisitions and improve operating margins. Lastly, this is a complicated business structure that could benefit from a simplification. This past September, Trimble announced that it entered a joint venture with AGCO Corporation (AGCO) (a worldwide manufacturer and distributor of agricultural machinery and Precision Ag technology), whereby AGCO will acquire an 85% interest in Trimble’s portfolio of Ag assets and technologies for $2.0 billion. This got the opposite market reaction than when Trimble acquires companies, sending Trimble’s stock price up 6.5%.
While their primary objective here is to have the company stick to the core business and cease their M&A activity, there is another ironic opportunity here, and that is the M&A opportunity created by the company’s history of value destroying M&A. Trimble could be an attractive acquisition target for a larger industrial company who also wants a product mix with more software but has the discipline not to pay 30 to 40 times EBITDA for software companies. With a greater than 50% software mix and a much lower EBITDA multiple, Trimble would be an attractive asset for many large industrial companies.
Jana often launches activist campaigns with a team of experienced industry executives ready to be board nominees if necessary. While we assume they have connections to such executives, there has been no announcement that they have recruited any, which means to us that it is too early to tell if this will be escalated. However, we will not have to wait that long. The director nomination window opens on February 2, 2024, at which time we will have more clarity on which road this campaign will take.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.  More

More people today may identify as HENRYs, or “high earners, not rich yet.”
That feeling of being wealthy is increasingly elusive, according to a new Edelman Financial Engines report. 
$1 million used to be the gold standard — now the bar is higher.

These days, fewer people feel financially comfortable, let alone rich.
The average household’s net worth has soared in recent years, rising 37% between 2019 and 2022, according to the survey of consumer finances from the Federal Reserve.

Yet, even as households became wealthier, inflation and instability have left more people in the bucket of so-called HENRYs — short for “high earners, not rich yet.”
Only 14% of Americans would consider themselves wealthy, a recent Edelman Financial Engines report found, and the bar is only getting increasingly out of reach. 
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Despite higher-than-average salaries, those HENRYs have struggled with a higher cost of living and a growing savings shortfall.
A prolonged period of high inflation and instability has chipped away at most consumers’ buying power and confidence. More than half of Americans earning more than $100,000 a year say they live paycheck to paycheck.

“Market volatility over the past two years has taken a financial and emotional toll on individuals and families regardless of wealth,” said Kelly O’Donnell, chief client officer at Edelman Financial Engines.

What would it take to feel rich?

In 2023, 67% of Americans said they would need at least $1 million to feel rich, up from 57% a year earlier, the Edelman Financial Engines report found. Roughly 20% said it would take $5 million or more.
“That million dollars is just not getting you as much,” O’Donnell said.
To bridge the gap, more people rely on credit cards to cover day-to-day expenses. In the past year, credit card debt spiked to an all-time high, while the personal savings rate fell.
When it comes to building wealth, most consumers say high-cost debt is now their biggest obstacle, according to the Edelman Financial Engines report.

However, feeling financially secure is often less about how much money you have and more about the ability to spend less than you make.
In part, the current economic conditions have fostered the feeling of being overextended, said certified financial planner Jason Friday, head of financial planning at Citizens Wealth Management.
“HENRYs are relative. There are a lot of people who live well below their means and people who spend too much,” Friday said.
“Social media is also to blame,” O’Donnell added. “There is a bit of keeping up with the Joneses and the pressure to continue to buy and consume even when people may not have the actual funds to do so.”
Understanding how much to save for retirement or other long-term goals can be key to finding a balance.
“If you are not grounded in long-term goals, short-term budgeting can get away from you,” O’Donnell said. Instead, “set up long-term goals and work backwards.”

The American dream ‘has created a lot of stress’

Historically, feeling wealthy has also had strong ties to homeownership.
In the aftermath of the Covid-19 pandemic, due to skyrocketing housing prices, many Americans became house-rich, at least on paper. When mortgage rates touched historic lows, those homeowners were also able to refinance, reducing the size of their monthly payments and creating more breathing room in their budgets.

Blueflames | Getty Images

However, that opportunity is now largely gone. For those in the market for a home, nearly half, or 45%, of potential buyers feel discouraged by the current high prices and higher mortgage rates, according to Edelman Financial Engines. Even among wealthy respondents, or those between the ages of 45 and 70 with household assets of up to $3 million, 37% said the same.
“That American dream, particularly around homeownership, has created a lot of stress for people,” O’Donnell said.

But a deterioration of the American dream has been decades in the making, according to Mark Hamrick, Bankrate’s senior economic analyst.
“Structural or long-term changes have been injurious to Americans’ ability to manage their personal finances,” he said.
“Where there was a time in the U.S. when a married couple, with children, could get by with a single-wage earner in the house, those days are mostly vestiges of the past,” Hamrick added.
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The Powerball jackpot has grown to an estimated $535 million without a winning ticket on Wednesday.
With the year-end approaching, the winner may wonder whether it’s better to claim their prize in 2023 or 2024.
The next Powerball drawing is on Saturday at 10:59 p.m. ET.

The Powerball jackpot hit $1.2 billion on Oct. 3, 2023, the third-biggest prize in the game’s history.
Scott Olson | Getty

Whether you pick the lump sum or annuity payout, Loyd suggests a “cooling off period” after winning the lottery before making any big financial moves.

If you’re planning to donate money to charity, start a business or make any investments, it will be “really tricky” to line up the right team of experts before year-end. “You probably wouldn’t be getting the ‘A’ team,” Loyd said. “So, I would buy yourself some time.”

Prepare for higher taxes in 2026

The winner will also need to plan for looming tax law changes slated for 2026 when provisions sunset from former President Donald Trump’s signature tax overhaul.
For example, without changes from Congress, the top federal income tax bracket will revert to 39.6% from 37%. “That’s a lot of money,” Loyd said.
The winner will also need to plan for federal estate taxes. While the exemption rises to $13.61 million per individual or $27.22 million for married couples in 2024, those limits will drop by roughly one-half in 2026.
Robert Dietz, national director of tax research at Bernstein Private Wealth Management in Minneapolis, said it’s “the biggest issue” his firm is talking about with high-net-worth clients right now.

Saturday’s Powerball drawing comes roughly two months since a single ticket sold in California won the game’s $1.765 billion jackpot. Meanwhile, the Mega Millions jackpot is back down to $28 million and the odds of winning that prize are roughly 1 in 302 million. More

After a year full of record-high interest rates and home prices, experts say there are signs of improvement for the housing market in 2024.
In December, the average mortgage rates dropped below 7% for the first time since August and after an 8% peak in October, which pushed housing costs to the highest level since 2000.
“The decline poses good news for buyers,” said Jessica Lautz, deputy chief and vice president of research at the National Association of Realtors.

Noel Hendrickson/Getty Images

After a year full of record-high interest rates and home prices, experts say there are signs of improvement for the housing market in 2024.
In December, the average mortgage rates dropped below 7% for the first time since August and after an 8% peak in October, which pushed housing costs to the highest level since 2000.

The average rate on a 30-year fixed rate mortgage dropped to 6.95% from 7.03% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.31%. Meanwhile, the 15-year fixed rate mortgage jumped to 6.38% from 6.29%.
“The decline poses good news for buyers,” said Jessica Lautz, deputy chief and vice president of research at the National Association of Realtors. 

Interest and mortgage rates will slowly decline, giving people a “little bit more room in their budgets” when it comes to mortgage payments, experts say. Additionally, inventory is growing as new listings creep back up, said Nicole Bachaud, a senior economist at housing site Zillow.
Lower interest rates should come as encouraging news for homebuilders.
“It should be easier for builders as rates go down, as they need to borrow to build,” said Lautz. Homebuyers should see a greater supply as more homes will be built, she said.

However, consumers may still feel discouraged, added Lautz, as affordability may still be a challenge.
“We’re expecting home price appreciation to stay flat for the next year nationally, so prices aren’t really going to move much from where they’re at now,” Bachaud said.
More from Personal Finance:Gen Z, millennials are ‘house hacking’ to become homeownersHomeowners associations can be a boon, or bust, for buyersHomebuyers must earn over $400,000 to afford a home

High costs kept would-be buyers as renters

Homes were 52% more expensive than rentals this year, the highest gap on record, according to the Zumper Annual Rent Report for 2023.
High costs in the buying market have delayed homeownership for many buyers and kept inflation-strapped consumers in the rental market, some explained.
The national rent price for a one-bedroom apartment is $1,496, down 10% from a year ago. The last time there was a decline was during the pandemic, from July to October 2020, Zumper found.
“Over the course of the last few years, there were actually a lot of buildings in the rental sector, so that may have helped to alleviate rental prices. But they’re still at a high price point,” Lautz said.
Lautz expects more movement in the rental market next year as many young adults look for a place to live.
While most young adults either stayed with parents or paired up with roommates during the pandemic to relieve costs, they might seek independence next year, whether because “a CEO [is] saying you have to come back into the office or they’re ready to move out,” said Lautz.
New York City is seeing a surging demand for rental housing in commutable areas with easy access to downtown and midtown Manhattan in 2024, according to data from StreetEasy, Zillow Group’s New York City real estate marketplace. 
“That’s an indication that people are looking to move back closer to the workplace or closer to more amenities,” Bachaud said. “We’re expecting the rest of the country to follow that trend throughout the next year.”

The American Dream is still owning a home.

Nicole Bachaud
Zillow senior economist

Record-high interest rates deterred more than 69% of renters from buying a home in 2023, a Zumper report found. These high costs are pushing the typical ages of renters and first-time homeowners upward.
To that point, the typical head of household in a rental is 41 years old, up from age 40 in 2019 and age 37 in 2000, according to Zillow economist Bachaud.
“Renters are getting older,” said Bachaud. “As long as affordability remains a big challenge, we will likely see renters getting older.”
Meanwhile, the age of a typical first-time homebuyer is 35 years. In the 1980s, people bought their first homes at the age of 28, Lautz said.
Market conditions and external factors, such as student loan repayments and child care costs, are delaying homebuying activity for many shoppers, Lautz said.
Since many people cannot afford to buy a home, they are likely to consider renting a single-family home instead to achieve a similar experience.

Renting over buying their first home

Prices for single-family rentals are increasing faster than rent prices for multifamily apartment buildings, showing signs of high demand, said Bachaud.
“That has a lot to do with affordability as people are priced out of being able to purchase a home. They’re still looking for that starter home experience,” she said.
As long as people continue to be priced out of the market, would-be homebuyers will remain as renters, and Bachaud expects “to see more of that this year.”
Even though affordability is expected to marginally improve over the next 12 months as rates continue to decline, the market is still far from where it was before the pandemic, she added.
“Affordability is still a big challenge for a lot of households,” she said.

‘The American Dream is still owning a home’

While homeownership is challenging for many would-be buyers, it doesn’t mean people no longer aspire to own a home, said Bachaud.
“The American Dream is still owning a home,” she said. “There’s a lot of pent-up demand for ownership; that isn’t going to go away. It might take longer for people to get and to be able to realize that dream.”
Indeed, “homeownership is the number one way to build wealth in America,” said Lautz.
Lautz explained that when you look at the typical homeowner, they have a net worth of just under $400,000 compared with the typical renter, who has just over $10,000, following the American dream of financial stability.

“Folks will have to look elsewhere if they’re not looking at homeownership to find that,” Lautz added.
Additionally, younger generations are still thinking about saving for down payments and planning for future housing, said Bachaud, meaning the demand for homeownership persists.
She predicts a change in what homeownership will look like in the coming decades: “We’re kind of on that journey now.”
For now, serious first-time homebuyers should consider jumping into the market as soon as February, while the market remains quiet, said Lautz. Lower rates may breed competitive bidding wars among strong buyers, so now may be the time.
The National Association of Realtors forecasts mortgage interest rates will average 6.3% and estimates 0.9% increase for home prices in 2024, added Lautz.
“First-time buyers stand a chance at this time period,” she said. “It’s a trade off: Do they want to run the risk of encountering higher competition when rates are lower or do they want to increase the probability of securing homeownership?”
“Refinancing is always an option,” she said. More