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An Insider's Guide to North San Diego County's Coastal Real Estate
Jim Klinge, broker-associate
858-997-3801
klingerealty@gmail.com
Compass
617 Saxony Place, Suite 101
Encinitas, CA 92024
Klinge Realty
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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Jim Klinge
Cell/Text: (858) 997-3801
klingerealty@gmail.com
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Category Archive: ‘Boomer Liquidations’

Millennials in Parents’ Basements

Can we expect young adults to be tomorrow’s home buyers?

A report from the Urban Institute:

The share of young adults ages 25 to 34 living with their parents increased from 11.9 percent in 2000 to 22.0 percent in 2017. This translates to more than 5.6 million additional young adults under their parents’ roofs between the two years. This trend matches the decline in young adults’ marital rate (from 55.3 percent to 40.0 percent) during this period.

Increases in rents and student debt plays an important role in young adults’ decisions to stay with their parents. Metropolitan statistical areas with higher unemployment rates experienced a greater increase in the share of young adults living under their parents’ roofs.

This early life choice could have long-term consequences. Young adults who stayed with their parents between ages 25 and 34 were less likely to form independent households and become homeowners 10 years later than those who made an earlier departure. Even if they did ultimately buy a home, young adults who stayed with their parents longer did not buy more expensive homes or have lower mortgage debts than did young adults who moved out earlier, suggesting that living with parents does not better position young adults for homeownership, a critical source of future wealth, and may have negative long-term consequences for independent household formation.

Link to 39-page report

Posted by on Feb 19, 2019 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Buzz | 4 comments

More on Aging-in-Place

Diana had a piece on seniors aging in place, and put some numbers on it:

  • With more seniors than ever aging in place and choosing not to sell the family home, an estimated 1.6 million fewer properties are now available in a market already experiencing a critical shortage, according to Freddie Mac.
  • That is about the same number of new single-family and multifamily housing units built each year.
  • That stay-put trend is crashing into the rising demand for housing from the huge millennial generation: fewer homes for sale will continue to put upward pressure on already overheated home prices.
  • “There’s a stalemate,” said Jane Fairweather, a longtime real estate agent in Bethesda, Maryland. “We can’t get enough housing for the couples who want to put their kids in good public school systems.”

“We believe the additional demand for homeownership from seniors aging in place will increase the relative price of owning versus renting, making renting more attractive to younger generations,” said Sam Khater, chief economist at Freddie Mac, who estimates that the current market needs about 2.5 million more homes to meet demand.

The reasons more seniors are choosing to stay in the homes where they raised their families are manifold.

“They love their homes, it’s their chief investment, they love their neighborhoods and their communities, and they love the control they get in their own house,” said 64 year-old Louis Tenenbaum, a housing advocate in Kensington, Maryland. “They decide when to get up, when to go to sleep, what to eat, who to have as visitors.”

Tenenbaum is preparing to age in place himself. He is in the midst of building an elevator into his three-level home. He has also widened doorways, made a curbless shower and lowered his kitchen counters, should he ever be in a wheelchair. he notes that 63 percent of the $383 billion spent on remodeling each year is among people over 50 years of age, according to Harvard’s Joint Center for Housing. The trouble is they don’t always add features for aging in place.

“If we can shift the remodeling industry to be doing those types of things when they’re already remodeling, then we really start to change the housing infrastructure and we create this place where people can enjoy living out their years in their home,” Tenenbaum said.

That’s great for homeowners, but not so great for young buyers hoping to move into larger suburban homes.

Bill featured the article on CR, and he had these thoughts:

Even when people move to retirement communities, many will not sell their homes. They will rent them instead – especially in the higher priced areas with significant capital gains – since they have to pay capital gains if they sell (above $250K exclusion for single, $500K for married), but the property steps up in value when they pass away.  So they can leave the property to their kids with no taxes.

This could be fixed with policy changes.  Either eliminate “step up” basis (take away the incentive to hold), or give older homeowners a one time unlimited exclusion (so they can sell while they are alive).

Aging in place is great for the senior, but what frequently happens, is a four bedroom house is occupied by just one person (inefficient).    This is another area where zoning changes could help – let the senior sell her larger family home without tax consequences, and move to a smaller home in the same community (so they can keep their local ties).

Read more at https://www.calculatedriskblog.com/2019/02/as-more-older-americans-age-in-place.html#gxhgrZmQIIkQesgl.99

Wouldn’t it be nice if everyone had a one-time unlimited exclusion from the capital-gains tax!  Would it make you move?  Is it the only thing that’s holding seniors back?  I don’t think so.  The general comfort of staying put has many physical, mental, and emotional benefits to them.  But if the government ever gets realistic about fixing the housing crisis, this would be the place to start.

Posted by on Feb 11, 2019 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Conditions | 3 comments

Real Estate Cycle

www.sacramentoappraisalblog.com

Ryan posted the history of real estate cycles in Sacramento County, so here are the same years for North San Diego County’s coastal region for comparison.  Human nature tends to flow in the same direction everywhere, and as a result, our history looks a little like his:

Year
Number of Sales
Median Sales Price, Annual
Change
1999
3,236
$475,000
+8%
2000
3,285
$555,000
+17%
2001
2,926
$570,000
+3%
2002
3,717
$630,000
+11%
2003
3,932
$732,500
+16%
2004
3,363
$948,000
+29%
2005
3,014
$1,000,000
+5%
2006
2,626
$985,000
-2%
2007
2,479
$1,000,000
+2%
2008
2,037
$890,000
-11%
2009
2,223
$817,000
-8%
2010
2,461
$830,000
+2%
2011
2,562
$825,000
-1%
2012
3,154
$830,000
+1%
2013
3,218
$952,250
+15%
2014
2,850
$1,025,000
+8%
2015
3,079
$1,090,000
+6%
2016
3,103
$1,160,000
+6%
2017
3,084
$1,225,000
+6%
2018
2,797
$1,325,000
+8%

At the time it seemed like sky was caving in, but looking back we only had two bad years (2008 and 2009) in the last twenty. There was some scuffling around as we found our way in 2006-2007, and 2010-2012, but given that our market had been injected with the most exotic financing ever known to man, and then tanked by foreclosures and short sales, I think we did pretty good to survive it as well as we did.

Now what?

With 90% of the NSDCC active listings priced over $1M, all we need is wealthy people to keep coming here to buy their forever home.  We’re still cheaper than the LA/OC and Bay Area, so we look attractive to downsizers.

Our pricing may bounce around, but without brainless bank clerks dumping properties for any price, who else is going to cause a collapse?  We could run low on the number of buyers – and if we did, all it would do is cause a protracted descent; re: soft landing over years.

Boomer liquidations?

Here’s a conversation I had yesterday with a guy who is 80+ years old and who has lived in his house since the 1960s:

Him: Convince me why I should sell my house.

Me: How are you getting around?

Him: I ride my bike to the store.

Me: Do you need the money?

Him: No.

Me: Have you ever dreamed about buying a house on the lake and fishing the rest of your life?

Him: No.

Me: Are you married?

Him: No.

Me: Did you know that if you did sell, you’d have to pay six-figures in taxes?  How would that make you feel?

Him: What?  I only paid $19,500! I’d never pay that much in taxes!

Me: What happens upon your demise?

Him: My daughter will inherit – she grew up here, and will likely move back in.  But I told her if she doesn’t move in, it’s ok with me to sell it.

Me: Do you have a family trust?

Him: Yes.

Me: Did you know that if she sells the house, she will pay no tax?

Him: You’re kidding? If I sell it, I have to pay the tax man six-figures, but if she sells it, she pays nothing?  Jim, I think we have the answer!

There will be occasional sales where sellers hire bad agents and get taken advantage of, but there won’t be an avalanche of desperate sellers dumping for any price.  It would take a tsunami, earthquake, or terrorist event at the border to cause a drastic shift in housing – which could happen!

Here’s the latest photo of the nuclear waste being stored right on the surf at San Onofre.  All we need is one crack in a storage cask…..

Without a catastrophic event, what’s the worst we can expect?

Maybe 5% drop in pricing in the short-term?

Any more than that, and sellers will just wait it out.

Posted by on Jan 11, 2019 in Boomer Liquidations, Boomers, Jim's Take on the Market, North County Coastal, Sales and Price Check, Slowdown | 6 comments

Instant ADU

If baby boomers have to sell their home because they need the money, this will be a great alternative – and could help to dry up the housing inventory, especially if you can build an ADU for less than $50,000.  Homes with bigger yards would be more valuable too.

Link to Article

Today, Samara is announcing a new initiative called Backyard, “an endeavor to design and prototype new ways of building and sharing homes,” according to a press statement, with the first wave of test units going public in 2019.

It means Airbnb is planning to distribute prototype buildings next year.

The name “Backyard” might imply that Airbnb just wants to build Accessory Dwelling Units (ADUs), those small cottages that sit behind large suburban houses and are often rented on Airbnb. Gebbia clarifies that is not the case. “The project was born in a studio near Airbnb headquarters,” he says in an interview over email. “We always felt as if we were in Airbnb’s backyard–physically and conceptually–and started referring to the project as such.”

Backyard is poised to be much larger than ADUs, in Gebbia’s telling. Yes, small prefabricated dwellings could be in the roadmap, but so are green building materials, standalone houses, and multi-unit complexes. Think of Backyard as both a producer and a marketplace for selling major aspects of the home, in any shape it might come in.

Read More

Posted by on Dec 1, 2018 in ADU, Boomer Liquidations, Boomers, Homeless Cure, Jim's Take on the Market, Modular Homes, Real Estate Investing, Remodel Projects | 1 comment

Estate Sales Online

This idea is ingenious!

Maxsold has a team of staff people in San Diego County to come to your house, photograph all your stuff, and then sell it online for you!

Check out this video:

Get started here:

https://infl.tv/eLwm

Posted by on Oct 26, 2018 in Auctions, Boomer Liquidations, Boomers, Estate Sales, Jim's Take on the Market | 0 comments

Growing Senior Population

In the last post we saw how expensive kids can be, and taking care of the growing number of seniors is another strain on the Bank of Mom and Dad. Thanks daytrip for sending this in from the latimes.com – an excerpt:

“We are exquisitely unprepared for that [oldest] age demographic pushing through,” said Dr. Bruce Chernof, president of the SCAN Foundation, an aging advocacy group.

By many measures, California is not ready to meet the demand for long-term care. Just under 2% of residents are insured for it, according to the state Department of Insurance.

A 2014 poll found that just 3 in 10 Californians over age 40 felt very confident about their ability to pay for future care. And the Employment Development Department projects that the state will need 250,000 more personal care aides by 2026, a growth rate of 40%.

Nancy McPherson, the California state director for AARP, said long-term care is the No. 1 issue for the retiree advocacy group.

“It’s not enough to have service delivery,” McPherson said. “You need to have a coordinated system, and you need to have a means for middle-income Californians to get the support they need.”

Though wealthy Californians can rely on long-term care insurance or ample savings and the poorest can qualify for safety-net programs, the middle class is especially vulnerable when it comes to paying for care.

The out-of-pocket costs can be staggering, and Medicare, the federal healthcare program for seniors, does not cover long-term care. A 2017 survey by Genworth, a long-term insurance company, found the average yearly cost for a home healthcare aide was $57,200. The median cost for a private room in a nursing home was more than $116,000.

“You are depleting generational wealth, ensuring it is not passed down,” said Kristina Bas Hamilton, legislative director of United Domestic Workers, a union of home care providers. “You are essentially demolishing the American dream of the kids doing better than the parents.”

Read full article here:

http://www.latimes.com/projects/la-pol-ca-next-california-demographics/

Posted by on Oct 8, 2018 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Conditions | 0 comments

The Cost of Kids

Factor in the cost of raising children into the future housing demand – how much farther can the Bank of Mom and Dad go?  Hat tip daytrip:

The average cost of raising a child until age 18 today is more than $230,000— but that number only gets higher when children leave the nest. In fact, many parents consider it to be the most expensive stage of parenting, according to Merrill Lynch’s new “The Financial Journey of Modern Parenting: Joy, Complexity, and Sacrifice”report.

The bank surveyed more than 2,500 American parents and found that 79% of parents continue to provide financial support to their adult children — contributing to an estimated $500 billion annually. That’s twice the amount they save for retirement — $250 billion annually — according to the report. There are 173 million parents in the US, according to Merrill Lynch.

“When emotions and money become intertwined, parents risk making financial decisions that can compromise their financial futures,” states the report.

Seventy-two percent of parents revealed they put their children’s interests ahead of their own need to save for retirement. On top of that, 63% of parents reported sacrificing their own financial security for their children’s sake. Specifically, Asian, Latino, and African American parents are more likely to give up financial security for their children, the report found.

So what exactly are parents paying for? The answer is both big and small, with parents covering necessities, like rent or mortgage, as well as luxuries, like vacations.

Of the $500 billion total amount parents are spending on adult children, college education comprises about one-fourth, according to the report; groceries and food cost $54 billion annually and cell phone service costs $18 billion, with many parents covering the full cost, not just handing over a few dollars.

But that total doesn’t count big-ticket items — about 60% of parents help pay for their adult child’s wedding and 25% help pay for their child’s first home.

Link to Full Article

Posted by on Oct 7, 2018 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Conditions | 2 comments

50% of Boomers Plan to Move

Here’s the interesting excerpt from this article – the other alternatives that older adults might consider:

Communities become a source of support and engagement for residents, particularly for older adults, who have an even stronger desire to age in place. The AARP survey finds many adults age 50 and older are willing to consider alternatives such as home sharing (32%), building an accessory dwelling unit (31%) and villages that provide services that enable aging in place (56%).

Link to Article

Posted by on Sep 28, 2018 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Buzz | 0 comments