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Category Archive: ‘Boomers’

Update on Boomer Liquidations

Coming to a neighborhood near you….some day!  From cnbc.com:

LINK

Jeff Swaney is worried about selling his 5,600-square-foot home one day.

In his neighborhood south of Atlanta, demand and prices for large ranch houses like his have declined over the last decade, as more young professionals move to smaller abodes in hipper areas. He doesn’t expect that to change anytime soon.

The 51-year-old real estate investor and owner of Swaney Consulting Group has personal reasons to hold on, at least for now. He may eventually move to a condo at the beach, but wants his future grandchildren to enjoy his pool, yard and basement. For these amenities, he spends about $18,000 annually in lawn maintenance, taxes, insurance and utilities alone.

The housing market, on the rebound since the Great Recession, is increasingly being driven by millennials and first-time homebuyers who “are hungry for starter homes and efficient layouts,” said Javier Vivas, manager of economic research for realtor.com.

The trend may leave some older homeowners in a lurch if they want to retire, downsize and cash in their nest egg.

Large single family homes — defined as the largest 25 percent of all listings on realtor.com and about 2,900 square feet to 4,000 square feet — receive 12 percent to 45 percent less views on realtor.com than the typical home in each market.

This year so far, large, single family homes are selling up to 73 percent (or 50 days) slower on average than the typical home in each market.

The often hefty price tags for bigger homes contribute to their lengthier sale times because there is a smaller pool of buyers who can afford them, said Artur Miller, founder and CEO of Miami-based AMLUXE Realty.

Even Swaney, whose 1994 home appraised for $350,000, thinks he may have a tough time selling.

“The McMansions that soon-to-retire people purchased in the 80s and 90s are a very difficult sell right now,” said Melissa Rubenstein, a former real estate attorney who now sells luxury properties with Re/Max HomeTowne Realty in Bergen County, New Jersey. Many are outdated and may not include a first floor bedroom and bath suite for aging in place or in-laws.

Listings of large homes are also up two percent from last year, suggesting owners are dumping them faster, while listings of all homes are down 10 percent from last year, according to the realtor.com data.

“We’re finding these homes are an albatross for clients,” said Michael E. Chadwick, a financial planner and owner of Chadwick Financial Advisors in Unionville, Connecticut.

“We’ve got several right now who have been trying to sell them and move south, and they’ve cut the asking price by over 30 percent each and they’re still not going anywhere fast,” he said.

Read More

Posted by on Oct 14, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Thinking of Selling? | 5 comments

Best Places to Retire

The 2018 rankings of the Best Places to Retire are out!

San Diego is ahead of other more-typical retirement towns like Charlotte, Phoenix, Las Vegas, and Denver, and the only California city in the Top 50.  But there are twenty places ranked above us, so if you’re thinking of leaving us, here’s a guide:

https://realestate.usnews.com/places/rankings/best-places-to-retire

Posted by on Oct 10, 2017 in Boomers, Jim's Take on the Market, Thinking of Selling? | 2 comments

Build More….3x More!

This article adds the numbers.  We need to build at least three times as many homes as we’ve been building to keep up with the growth – and no telling what that would do to prices, if anything:

http://www.cbs8.com/story/36420282/report-changes-needed-to-meet-san-diego-housing-demand

SAN DIEGO (CNS) – As the homeless population grows and rents balloon in San Diego, city officials Thursday announced a series of proposals to help alleviate the housing shortage over the next 10 years.

Numerous changes to city codes and procedures are required to meet the housing demand, according to a report presented to the City Council’s Smart Growth and Land Use Committee.

Some of those changes include rezoning areas around transit hubs to increase density, converting unused industrial zones into residential areas and encouraging smaller unit sizes. Making use of vacant lots and easing some onerous parking requirements are also among the ideas identified in the report.

“This is an exciting step because it gives the city goals for the future, and it gives the city goals to be measured by,” San Diego Housing Commission President Richard Gentry said.

To meet the housing need in San Diego, as many as 220,000 new housing units will need to be built by 2028, the report said. The top annual production rate within the last 5 years has been of 6,400 units. Even with the solutions identified in the report, San Diego would have to bolster its production rate.

“To meet the projected needs for the city for the next 10 years, we will need to produce between 17,000 and 24,000 housing units per year — a dawning task but a worthy goal to be set,” Gentry said.

After the presentation, City Councilwoman Georgette Gomez worried that more units may not necessarily fix the housing crisis facing the region.

“I would love to work with the housing commission to look at the affordability of housing,” Gomez said. “I’m not a firm believer that just creating units is going to get to the actual issues that are in front of us.”

According to a staff report, the annual rate of housing construction has been well under half that of population growth over the past decade, creating a warped supply-and-demand situation that has prompted costs to skyrocket. The result is that half of San Diegans can’t find rental units they can afford and 60 percent can’t afford to purchase a home, according to the report.

“What we are doing is driving our kids and grandkids right out of town,” Councilman Scott Sherman said.

The report identified the communities of Skyline-Paradise Hills, Linda Vista, Otay Mesa, Clairemont Mesa and Navajo as the areas with the largest housing growth potential. As many as 74,000 units could be built all together in those five communities.

If all the suggestions in the report are carried out, that 10-year housing goal could be met or exceeded. Then hope later one is to keep that same production rate through 2028 to keep up with the expected population growth.

http://www.cbs8.com/story/36420282/report-changes-needed-to-meet-san-diego-housing-demand

Posted by on Sep 26, 2017 in Boomers, Builders, Jim's Take on the Market, Local Government, Market Conditions, The Future, Thinking of Building? | 1 comment

Surge in 65+ Population

A surge in the 65+ population will probably prolong the market conditions we’ve seen lately – those are the people who got in first, and are probably settled enough that they won’t be moving.

But those who are relying on pensions might get a surprise, and it would take an unusual monetary need like that to cause them to sell their house – or get a reverse mortgage. An interesting note – the number of HUD reverse mortgages funded in the 2017 fiscal year was the lowest since 2005.

Read full article here – thanks JB!

https://www.realestateconsulting.com/correcting-demographic-misperceptions/

Posted by on Sep 20, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market | 1 comment

New Homes for Boomers

What could really boost the market further would be if we had more new or newer single-story homes for sale.  Baby-boomers would be much more likely to ditch the older two-story family estates and glide into a ready-set single story home – if there was just an easy exit.

If you wanted a new house under $500,000, how about Las Vegas? The home above is in Summerlin, and I’ve been there.  It is a great alternative for those who don’t mind the heat!

Or if you insist on San Diego County, but might go to the outskirts?

Here are one-story new-home options for you locally:

Plus, this is the Pardee tract they sold off to Toll:

True, in order to downsize, most sellers need to leave town, but at least there are some new-home options to consider nearby.

The folks at the 55-and-over Auberge near Santaluz just wrapped up sales of their brand-new one-story homes, and it would be a good place to look for resales.  Here is a tour of the Plan 3 model, which one of my buyers purchased:

Save

Posted by on Sep 7, 2017 in Boomers, Bubbleinfo TV, Builders, Jim's Take on the Market, One-Story, The Future | 2 comments

Boomers Causing Gridlock

Hat tip to daytrip for sending this in!

LINK

An excerpt:

People 55 and older own 53 percent of U.S. owner-occupied houses, the biggest share since the government started collecting data in 1900, according to real estate website Trulia. That’s up from 43 percent a decade ago. Those ages 18 to 34 possess just 11 percent. When they were that age, baby boomers had homes at almost twice that level.

Public policy contributes to the generational standoff. Property-tax exemptions for longtime residents keep older Americans from moving. Zoning rules make it harder to build affordable apartments attractive to senior citizens.

“The system is gridlocked,” says Dowell Myers, a professor of urban planning and demography at the University of Southern California. “The seniors aren’t turning over homes as fast as they used to, so there are very few existing homes coming online. To turn it over, they’ll have to have a landing place.”

Read full article here:

https://www.bloomberg.com/news/articles/2017-08-08/baby-boomers-who-won-t-sell-are-dominating-the-housing-market

Posted by on Aug 9, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Listing Agent Practices | 5 comments

The Bubble, Ten Years Later

The real estate market in our neighboring Orange County has performed much like San Diego’s. Here, Jon outlines the 12 differences between the bubble days of 2007, and now:

http://www.ocregister.com/2017/08/06/orange-countys-housing-bubble-10-years-later/

These stats show how the game has changed forever – there is no down side if banks are so reluctant to foreclose:

10. Distressed property: Too much debt and too many layoffs pushed many homeowners to the financial brink. Owners rushed to sell as bankers hit the market with their repossessed properties. In June 2007, 13 percent of homes sales were either short sales — banks agreeing to take less than owed — or sales of foreclosed properties. That distressed share of selling would become roughly half of the market during the next five years. But by June 2017, that share settled back to just 7 percent. Fortunately, it’s only a history lesson today. The supply of foreclosures to buy has shrunk from 463 in late June a decade ago to only 27 as this year’s summer began.

11: Warning signs: Nothing screams “danger” more than owners skipping house payments. Ponder what lenders were doing in June 2007 vs. this past June. Default notices, a first step in foreclosure: 1,144 then, 310 today. Auction notices, the official threat to sell: 598 then, 213 today. Actual foreclosures: 281 then (and 1,084 in June 2008) vs. 21 today.

For the bubble to ‘pop’, and prices decline, we would need more than a trickle of distressed sellers who need to sell at whatever price the market would bear.  A rash of boomer liquidations might happen, but with reverse mortgages being available, they have other options too.

All ahead full!

Posted by on Aug 6, 2017 in Boomer Liquidations, Boomers, CA Homeowners Bill of Rights, Foreclosure Count, Jim's Take on the Market, No-Foreclosure as Banking Policy | 2 comments

Family Compound

This should happen more often:

HOUSTON (FOX 26) – How often do you see your siblings and your extended family. One Houston man says most relatives don’t spend enough time together so do you know what he did? The story behind this mansion is just about as stunning as the home itself.

“I built this house for not just my immediate family but for my extended family including friends,” Reggie Van Lee said.

Reggie Van Lee was a performer in the Alvin Ailey Dance Company. He recently retired as an Executive Vice President at a Houston consulting firm. He moved out of his home in River Oaks after building this 20,000 square foot estate for himself, his three sisters and their families.

“This kitchen was designed for this house by my wife TJ,” Mark Szafarz said. He’s married to Reggie’s sister. “It’s fun. We each have our own spaces. So we can see each other as often as we want.”

That’s why the 59-year-old says he built this house so their family could make many memories together.

“As much as people say ‘oh that’s so nice of you to do this for your sisters.’ They have no idea the joy I get,” Van Lee said.

http://www.fox10phoenix.com/news/us-world-news/270597993-story

Posted by on Jul 28, 2017 in Boomers, Downsizing, Jim's Take on the Market, The Future | 2 comments

Boomer Parents-to-Children Transfers

Daytrip sent in this article (link below) on baby boomer sales, and how the transfer of homes from parents to children are likely to dampen the supply of homes for sale – and somewhat limit the property-tax receipts:

LATimes.com

But then I went to the actual report for more info and graphs:

http://www.lao.ca.gov/Publications/Report/3693

They do expect more boomer sales – it looks like a growing trend as more boomers get into their mid-70s:

Home Sales Likely to Pick Up as Homeowners Get Older. Although the aging of California’s homeowners has depressed home sales in past years, this pattern is likely to reverse in the future.

As California’s homeowners continue to age—transitioning from the 55 to 75 age group to the over 75 age group—more and more will begin to downsize, move into assisted living or with family, or die. When this occurs, home sales are likely to rise.

Between 2003 and 2013, over two-thirds of homes in California with owners 75 or older were sold to a new owner, compared to less than one-third of homes with owners ages 55 to 75.

Different Rules Apply to Homes Passed From Parents to Children. In general, when a home is transferred to a new owner, its taxable value is reset to its purchase price.

California voters, however, passed Proposition 58 in 1986, which amended the California Constitution to exempt transfers between parents and children (and later grandparents and grandchildren under certain circumstances under Proposition 193 [1996]) from revaluation. This allows a child to inherit their parent’s lower taxable property value.

The report shows the parent-to-child transfers to be around 10% over the total homes sales over the last decade, but it should be going higher, especially in the higher-cost coastal counties!

Parent-to-Child Exclusions Have Had a Notable Impact on Revenues. Over the past decade, around 10 percent of property transfers have taken advantage of the parent-to-child exclusion to prevent an increase in property tax payments. Figure 6 shows how many of these exclusions have been used each year during the past decade.

JtR:

San Diego County is the second most populated county in the state, so no surprise we’re #2 on list at $133,000,000 in estimated reduced taxes.  Those are a substantial number of homes being transferred within the family!

If the average tax savings was $10,000 per house sold, it would mean 13,300 homes transferred from parent to child – and this is from 2014-2015.  We had 35,382 homes sold on the MLS in the same period.  Add the FSBOs and new-home sales and we might have had 40,000 to 45,000 total homes transferred in fiscal 2014-2015.

The parent-to-child transfers could be as many as 25% of the homes moved! (40,000+13,300 = 53,300.  13,300/53,300 = 25%)

Their $133,000,000 estimate could be a tad off, but we probably have 10% to 20% of the potential supply of homes for sale being transferred within the family.  No wonder the public supply is so limited.

It is a trend that probably started to increase in 2013 as prices took off.  Parents realized that with the low tax basis, a child would be better off moving into the family homestead, rather than buying a resale home and paying full boat on the property taxes!

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Posted by on Jul 10, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Prop 13, Property Tax Re-Assessment, The Future | 0 comments