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Category Archive: ‘Boomers’

Baby Boomers Will Rent

senior home

Baby boomers have all the money, and are downsizing everywhere – who are the buyers of the future?  People who inherit or get gifts from baby boomers.

From HW:

http://www.housingwire.com/articles/37391-freddie-mac-what-baby-boomers-want-in-their-next-home

Many Baby Boomers and others who are older than 55 are planning to move into a rental unit in the near future, according to Freddie Mac’s 55+ Survey of housing plans of people born before 1961.

They survey is based on responses from almost 6,000 homeowners and renters born before 1961.

The results show that about 6 million homeowners, as well as the same number of renters, want to move again and rent. About 5 million of those expect to rent by the year 2020.

Of those who expect to rent their next home, about 79% of renters and 83% of homeowners say it will cost the same or less than what they are paying now, according to the survey.

“When a population this large expects to move into less expensive rental housing, we have to expect it will create significant new pressure on both the supply and cost of existing affordable rental housing,” said David Brickman, Freddie Mac Multifamily executive vice president.

In fact, more data is beginning to suggest that mortgages and homeownership may not be the American Dream as Baby Boomers begin moving into the apartments and urban areas.

As Baby Boomers plan to make their next move, these are the 4 things they will be looking closely at:

1. They plan to rent versus buy their next home

Of renters over 55 planing to move again, 71% said they will rent their next home. In fact, 59% say it makes financial sense for people their age to rent.

2. Top attractions include affordability and amenities

The top “very important” factors that influenced their next move included affordability at 60%, amenities needed for retirement at 47%, living in a community where they are no longer responsible for caring for the property at 44% and being in a walkable community at 43%.

3. They don’t want to move far

Of those planning to move again, about 31% of renters over 55 want to move to a different neighborhood in the same city, and 23% want to move to a different property in the same neighborhood. About 18% would like to move to a different city in the same state, and 24% would like to move to a different state.

4. They want family near (or in) their next home

In predicting their retirement situation, about 60% said they would prefer their family to live near or with them. Hispanic single-family renters were the most likely to predict they would move closer to family at 44%. Multifamily Asian-American renters were the most likely to say they will move in with their children at 40%.

As the Baby Boomers plan to move into lower priced markets, apartments and urban areas, they may even begin pushing the Millennial first-time homebuyers out of the market as it becomes more competitive.

Affordability continues to be an issue as 47% of the 55+ renters say they struggle from paycheck to paycheck, 13% sometime even unable to afford basic necessities until the next paycheck, according to the survey.

Save

Posted by on Jun 29, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market | 0 comments

How Long Have Sellers Owned 3

The first posting in this series was on December 12 – let’s check in occasionally to see how long recent sellers owned their home before they sold it.

Here is the third review of the NSDCC detached-home sales – these are sales that have closed so far in June, 2016:

Year Purchased
1st Review (12/12/15)
2nd Review (3/19/16)
3rd Review (6/18/16)
1900-1999
34 (27%)
28 (25%)
31 (22%)
2000 – 2003
18 (14%)
19 (17%)
25 (17%)
2004 – 2008
29 (23%)
33 (29%)
34 (24%)
2009 – 2011
19 (15%)
12 (11%)
19 (13%)
2012 – 2016
22 (18%)
21 (18%)
27 (19%)
New Home
3 (2%)
1 (1%)
8 (5%)

Those long-time owners continue to lead the pack, with 49% of sellers having owned their home more than 12 years before selling it this month.

Buyers should be prepared for fixers, and sellers should do what they can to improve their home to sell because nearly half of the sales probably look dated.

Interesting that those who could make the quickest big profits, those who bought in 2009-2001, were the least likely to sell.

More stats:

Other Categories
1st Review (12/12/15)
2nd Review (3/19/16)
3rd Review (6/18/16)
Number of Sales
125
114
144
Avg. $$/sf
$505/sf
$552/sf
$550/sf
Median SP
$1,080,000
$1,129,000
$1,291,500
Avg DOM
60
38
42
Sold in First 10 Days
24%
32%
35%
Lost $$
11
3
7
0 DOM
5
8
7

Pricing is still strong, and buyers are stepping up!

Posted by on Jun 18, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

One-Story Premiums

2016-04-10 15.23.25

Richard and I were discussing the phenomenon of houses selling for prices that are well-above comps – and how they almost always end up being all-cash sales.

Back in the day, the cash buyers always demanded the best deals – figuring that because they were paying cash, they somehow deserved a better price.  But today, cash buyers are throwing around big money to get what they want.

What do they want?

What do they need?

We know that the one-story homes have always been popular, especially with seniors. Guess who has all the money? Yep – the older set.

But there is more to it. Buyers get pickier as prices go up, and now they want everything.  You can’t blame them – we are at record prices!

My rule-of-thumb has been that one-story houses sell for a 10% premium over two-story houses. But I think the gap is increasing, and for single-level houses that also have the other valued features like 3-car garage, view, and a low-maintenance but attractive yard, there is a combo premium too.

Part of the pricing pressure is due to the inventory differences. Here’s a look at South Carlsbad over the last six months:

Detached-Home Listings in 92009 and 92011

Type
ACT Listings
Avg. LP/sf
SOLDS last 6 mo.
Avg SP/sf
SP:LP
One-Story
26
$425/sf
67
$418/sf
98%
Two-Story
133
$355/sf
301
$337/sf
95%

If you prefer one-story homes, there aren’t many to consider, and the cost-per-sf premium of the solds is 24%!

When analyzing the comps, you can’t compare 1-story and 2-story homes together – they are two separate markets.

Here are two examples of one-story homes listed yesterday:

6678 Cabela, Carlsbad, 92011

6387 Huntington, Carlsbad, 92009

You can buy two-story homes that are 600-800sf larger nearby for the same price – or less.  But because both of these have other premium features (views, lower-maintenance yards, 3-car, and no pools), and the selection of one-story houses is scant, these two stand a good chance of selling promptly!

With 10,000 baby boomers turning 65 years old every day, it’s understandable that one-story homes are fetching a premium, which today appears to be 10% to 20% above two-story homes.

What is the combo premium for the one-story houses with the extras?  It has to be another 10% minimum, and for those that have it all, there is no ceiling.

It means that the method of selling will determine the outcome.

If the seller hires a regular realtor who compares the super-duper one-story to other two-story homes nearby, there will be money left on the table.

This is where the auction format could really pay off. Bidders are uncertain about calculating the value of the extra features, and getting them into a competitive environment will cause them to pay whatever it takes to win.

Get good help – hire a realtor who can evaluate the premiums, and create an auction-like format to ensure top dollar!

Posted by on Jun 11, 2016 in Auctions, Boomers, Jim's Take on the Market, Market Buzz, Market Conditions, One-Story | 1 comment

Retirees and Housing

retirees

From our friends at John Burns Real Estate Consulting:

http://realestateconsulting.com/the-retiree-surge-is-here/

Only 10 years ago, 2.2 million people were turning 65 each year. That number has surged to 3.5 million this year and will grow to 4.2 million in 2025!

Tomorrow’s retirees will completely transform the housing industry. We have done a tremendous amount of research on this group, all of whom were born in the 1950s. We call them the Innovators because they have created so many innovations throughout their lives. They are:

  • Tech savvy, which began with their space race fascination as kids
  • Family-oriented, with almost 50% reporting that they intend to live with their parent or adult child in the near future
  • More affluent than any prior generation of retirees, thanks to:
    • Careers that perfectly coincided with a strong economy
    • A workaholic attitude that led to more double-income households and delayed retirement
    • 80% homeownership, with the majority having no mortgage today
    • 30 years of falling interest rates boosting home values and retirement accounts

All of these factors above will play into the Innovators’ next housing move. They will:

  • Innovate retirement to be more about health, family, experiences, and continuing to work
  • Move several more times, including selling their home and moving into a rental in an urban area that is walkable to entertainment
  • Focus more on living near their kids, with huge rewards to the builders who sell multigenerational-living homes that satisfy Innovators’ needs
  • Continue migrating south, but not just to the traditional retirement areas, as they will want to be near their kids and a job

The chart above comes from our upcoming book The Big Shifts Ahead: Demographic Clarity for Businesses and shows how dramatic the retirement surge has been recently—and will be in the future.

Posted by on May 27, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market | 3 comments

Best Places to Retire

apache

For most baby boomers, it takes leaving town to really make it worth selling.

But where do you go?

If you still want to stay around SoCal, places like Idyllwild, Julian, or Running Springs are all within a half-day drive.  If you don’t mind going further, places like Prescott and Payson, AZ are at a high enough elevation that you get out of the heat.

Or check one of these spots:

http://www3.forbes.com/investing/25-best-places-to-retire-in-2016/

Posted by on May 2, 2016 in Boomers, Jim's Take on the Market | 0 comments

How to Throttle Prices

exp

Millienials – or anyone feeling priced out – really should support permissive housing policy to help keep a throttle on prices.  Here’s evidence showing that faster-growing cities have more-modest price increases, although this chart is older (prices over last 5 years have been straight up). Thanks Ollie!

http://blogs.wsj.com/economics/2016/04/18/why-the-great-divide-is-growing-between-affordable-and-expensive-u-s-cities/

Across the country, a divide is emerging between cities that are growing outward and remaining affordable and ones that are hemmed in by geography and onerous zoning codes and are becoming  more and more expensive.

As a whole, U.S. cities are expanding as rapidly as they have throughout the last half-century. From the 1950s until the 2000s they have added about 10,000 square miles per decade, or an area roughly the size of Massachusetts, according to research by Issi Romem, chief economist at real-estate site BuildZoom, to be released Monday. But beneath the surface a divide is deepening.

On the one side are cities such as San Francisco, Boston, New York and Miami that have slowed their pace of expansion dramatically since the 1970s, in part as they have added layer upon layer of building regulations. On the other side are cities concentrated in the southeast and Texas, which have grown outward and seen much slower price growth.

The developed residential area in Atlanta, for example, grew by 208% from 1980 to 2010 and real home values grew by 14%. In contrast, in the San Francisco-San Jose area, developed residential land grew by just 30%, while homes values grew by 188%.

The developed residential area in Raleigh, N.C., grew by 219% in the same period, while home values grew by 27%. In Seattle, the developed area grew by 69%, while home values grew by 119%.

Mr. Romem draws the distinction succinctly: expansive cities versus expensive cities.

“If you don’t let the city grow, you’re going to get prices going upward…and see the middle class being pushed out,” Mr. Romem said.

Read full article here:

http://blogs.wsj.com/economics/2016/04/18/why-the-great-divide-is-growing-between-affordable-and-expensive-u-s-cities/

Posted by on Apr 18, 2016 in Boomers, Builders, Jim's Take on the Market, The Future | 2 comments

733 Stratford Drive

733-stratford-dr-076

I love my new Encinitas Highlands listing at 733 Stratford Drive, which is at the top of the hill and offers some of the best ocean views in EH!  This is another property that is ideally suited for the multi-generational buyers because there are bedrooms and full baths on the ground floor plus a detached 1br/1ba cottage out back.

This is my first real tour of a house with the new camera (and because I’m trying to move slower and smoother), so this is the extended full version of the whole property:

http://www.zillow.com/homedetails/733-Stratford-Dr-Encinitas-CA-92024/16718577_zpid/

Posted by on Apr 14, 2016 in Boomers, Bubbleinfo TV, Encinitas, Klinge Realty, Listing Agent Practices, Market Buzz, Osmo, Thinking of Buying?, Why You Should List With Jim | 3 comments

Granny Pods

Med

Hat tip to daytrip for sending in this information on granny pods, which are fully-contained housing units you can put in your backyard:

http://www.lifedaily.com/with-a-granny-pod-grandma-can-live-in-your-backyard/

The company’s website has pods as low as $39,625:

http://www.medcottage.com/products.php

These could be a viable solution for those wanting to downsize, but having trouble finding the right home, at the right price.

You wanted grandma close by, right?

med1

med2

Posted by on Apr 13, 2016 in Boomer Liquidations, Boomers, Interesting Houses, Jim's Take on the Market | 7 comments

“Aging Tsunami”

bb

The population of aging baby boomers in California will double by 2050.  Downsizing will be a hot topic, and one-story homes will be very popular!  Will we see baby-boomer communes?

From the beach party movies of the 1960s to the hippies of the 1970s and Silicon Valley’s baby billionaires today, California has long projected a youthful ambiance.

That’s about to change in a big way. The aging of California’s huge post-World War II baby-boom generation, combined with plummeting birth and immigration rates, means the Golden State is quickly going gray.

A huge growth in the over-65 population, from about 4.5 million today to more than 11 million by 2050 – nearly a quarter of the state’s residents then – will disrupt labor markets as it imposes major new costs on taxpayers for health care and other services.

It could also alter the state’s politics as the elderly become a decisive voting bloc, not only because of rising numbers but because the propensity to vote increases with age.

First, the numbers.

Roughly 11 percent of the nearly 40 million Californians today are 65-plus. The state Department of Finance estimates that by 2020, the over-65 cohort will rise to 15 percent, then to nearly 20 percent by 2030, when the youngest of the baby boomers will pass 65, and reach 22.3 percent by 2050, double the current proportion.

One state document puts it this way: “California will surpass the national average for age by 2040 even though it is currently the sixth youngest state in the nation with only 11 percent of its population 65 and older.

Read full article here – many interesting conclusions:

http://www.sacbee.com/news/politics-government/politics-columns-blogs/dan-walters/article45009978.html#

Posted by on Apr 1, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, One-Story, The Future | 0 comments

How Long Have Sellers Owned?

boomer selling

How many of the long-time owners are selling the family homestead, and downsizing now that the kids are gone?

We don’t know for sure who falls into that category – people with older kids could have bought a house 5-8 years ago and already be empty-nesters.  But a growing trend of long-time owners selling could open up some flexibility on price, which could slow down the appreciation trend.

We could also assume that the longer it’s been since the last sale, the more renovating the house could need.  The long-timers should have ample equity, which could enable them to cave on price, rather than remodel just to sell.  Those who went off to the pearly gates are more likely to have their heirs dump on price too.

Our research department checked the last 125 house sales between La Jolla and Carlsbad – the closings dated back to 11/23/15.  These are the number of sales in groups based on when the seller purchased the house:

La Jolla to Carlsbad House Sales – Previous Sale Date

New houses: 3 (2%)

2012-2015: 22 (18%)

2009-2011: 19 (15%)

2004-2008: 29 (23%)

2000-2003: 18 (14%)

0-1999: 34 (27%)

The last two categories combined for 42% of the total sales.  Not only are those houses at least 12 years old (most were much older) and probably need renovating, but in almost all the cases, the equity positions were huge.

If there is some future softening of home values, it will be more likely due to the long-timers being more reasonable on price, rather than the ‘bubble’.

Other facts:

A. The median sales price was $1,080,000

B. The average cost-per-sf was $505/sf.

C. The average market time was 60 days.

D. There were 24% of the total that sold in the first 10 days on market.

E. Eleven sellers sold for less than they paid (9%).

F. In 14 of the sales, the listing agent represented the buyer too (11%).

G. Five were ‘sold before processing’.

The first two categories – homes purchased since 2009 – totaled 33% of the sales.  Those sellers enjoyed a nice windfall of quick appreciation, and may be move-up buyers?

Those who bought in 2004-2008 (23%) were probably glad they waited!

Posted by on Dec 12, 2015 in Boomer Liquidations, Boomers, Downsizing, Jim's Take on the Market, North County Coastal, Sellers Waiting For Comeback | 0 comments