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Category Archive: ‘Boomers’

SD Middle-Class Housing Crisis

top

The building industry is selling more new homes, but their focus is on the higher-end markets, and not much is happening for the middle class.

KPBS found a guy to whine about it on camera; but it’s a free market, and rich people are winning. It’s not going to change – what can government do?

Hat tip to daytrip for sending this in!

http://www.kpbs.org/news/2016/aug/08/housing-crisis-squeezes-middle-class/

Homeowners in San Diego County may not feel it, but a housing crisis is underway in the region, and the middle class is especially hard squeezed.

Longtime Escondido resident Guy Chandler faced a situation that may be all too familiar to many San Diego families. He described what happened at a recent San Diego County Board of Supervisors’ meeting.

“Probably the worst day of my life was in June 2015,” Chandler said. “My daughter, Jenelle, 37 years old, came to me and told me, ‘Dad, sit down. There’s something you’re not going to like. We have to move out of San Diego County.’”

Chandler’s daughter told him she was planning to take her family and move to another state because she couldn’t find a house in San Diego where she could afford to raise her kids.

“The next two days a lot of hand-wringing and crying went on,” Chandler said.

He now communicates with his grandchildren on the web via FaceTime.

“What’s my point?” he asked the board. “My point is, droves of young families are leaving the state of California because they can’t afford to live here.”

Posted by on Aug 16, 2016 in Boomers, Builders, Jim's Take on the Market, Market Buzz, The Future | 5 comments

Transferring Tax Basis to Kids

kid

The property-tax basis of your primary residence and other properties can be transferred to your children, or in some cases, your grandchildren:

http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm#1

What are Propositions 58 and 193?

Proposition 58, effective November 6, 1986, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property between parents and children. Proposition 58 is codified by section 63.1 of the Revenue and Taxation Code.

Proposition 193, effective March 27, 1996, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property from grandparents to grandchildren, providing that all the parents of the grandchildren who qualify as children of the grandparents are deceased as of the date of transfer. Proposition 193 is also codified by section 63.1 of the Revenue and Taxation Code.

In the State of California, real property is reassessed at market value if it is sold or transferred and property taxes can sometimes increase dramatically as a result.

However, if the sale or transfer is between parents and their children, or from grandparents to their grandchildren, under limited circumstances, the property will not be reassessed if certain conditions are met and the proper application is timely filed.

These propositions allow the new property owners to avoid property tax increases when acquiring property from their parents or children or from their grandparents. The new owner’s taxes are calculated on the established Proposition 13 factored base year value, instead of the current market value when the property is acquired.

Which transfers of real property are excluded from reassessment by Propositions 58 and 193?

  1. Transfers of primary residences (no value limit).
  2. Transfers of the first $1 million of real property other than the primary residences. The $1 million exclusion applies separately to each eligible transferor.
  3. Transfers may be result of a sale, gift, or inheritance. A transfer via a trust also qualifies for this exclusion. For property tax purposes, we look through the trust to the present beneficial owner. When the present beneficial ownership passes from a parent to a child, this is a change in ownership that is eligible for the parent-child exclusion.

Read More

Posted by on Aug 14, 2016 in Boomers, Jim's Take on the Market, Local Government | 2 comments

More Granny Flats!

ggg

We know there are millions of people thinking about downsizing, due to costs, maintenance, and their health. But the real estate market provides few quality turn-key solutions.  It makes sense to encourage homeowners to add a granny flat!  From the latimes.com:

To help ease California’s housing crisis, Gov. Jerry Brown and state lawmakers are turning to people’s backyards.

Multiple bills with the endorsement of Brown are moving through the Legislature to make it easier for homeowners to build small units on their properties, whether in their garages, as additions to existing homes or as new, freestanding structures.

Los Angeles Mayor Eric Garcetti and other supporters hope the relaxed rules will spur backyard home building to combat a housing shortage that, by one estimate, leaves the state annually more than 100,000 new units behind what’s needed to keep pace with soaring home prices.

“These bills enhance homeowners’ ability to provide needed housing,” Garcetti and Los Angeles City Councilman Gil Cedillo wrote in a letter supporting measures from Assemblyman Richard Bloom (D-Santa Monica) and Sen. Bob Wieckowski (D-Fremont).

Together, the Bloom and Wieckowski bills would force cities to permit the backyard homes — also known as “secondary units” or “granny flats” — eliminate cities’ ability to require additional parking spaces for units near transit, and limit fees charged to connect to local water and sewer systems.

Homeowners such as Rochelle D. Ventura could stand to benefit if the bills pass.  The retiree, who once worked in city government, said she spent around $5,000 several years ago in an attempt to build a secondary unit in her Beverly Grove backyard.

But after the design was submitted to the city, Ventura said she was denied: The driveway that led to the backyard wasn’t wide enough, and a portion of it was covered.

“I couldn’t do it, and that is a shame,” said Ventura, 78. “I have a beautiful granddaughter who was going to live there.”

Read full article here:

http://www.latimes.com/politics/la-fi-small-houses-solution-20160725-snap-story.html

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

We have seen several pre-built alternatives – here is another that sells for around $70,000 plus shipping and installation:

small
http://www.contemporist.com/2016/07/25/this-small-house-is-filled-with-design-ideas-to-maximize-living/

Posted by on Jul 26, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Buzz, The Future | 3 comments

55+ Survey

move

Finally some real evidence on how the Bank of Mom and Dad has been influencing the real estate market – see the bold print:

http://www.freddiemac.com/finance/report/20160608_55ers_significant_impact_housing_market.html

With 55+ homeowners controlling almost two-thirds or $8 trillion of the nation’s home equity*, the housing decisions they make in the coming years will significantly reshape America’s housing market.

The first Freddie Mac 55+ Survey focuses on this 55+ generation of 67 million people because of the impact they are having, and will continue to have, on affordable housing inventories, home prices, and the transition of America’s housing stock from one generation to the next.

The overwhelming message in this first survey is that homeownership works and that 55+ers are confident as they head into retirement or are already there. Some of the key findings include the following.

Baby Boomer Homeowners Expect a Financially Comfortable Retirement

  • Overall, 76 percent of homeowners over the age of 55 are confident they will have a financially comfortable retirement, according to the Freddie Mac 55+ Survey. Majorities in every demographic group surveyed share this confidence to varying degrees: African-Americans (77 percent), Hispanics (64 percent), Asians (80 percent), homeowners who are currently working (74 percent), as well as homeowners earning less than $30,000 (55 percent).
  • The Freddie Mac 55+ Survey also shows consistently strong links between homeownership and a person’s satisfaction with their home, community and financial situation. Specifically, 59 percent of homeowners are “very satisfied” with their communities, 64 percent with their current home, and 54 percent with their quality of life.
  • A majority also believe homeownership makes financial sense for most Americans.  Specifically, 96 percent feel homeownership makes financial sense for people who are either married with children or between 35-49 years of age. Smaller majorities said homeownership makes sense for people over 55 (87 percent), married couples without children (85 percent), single people with children (79 percent), and single people without children (53 percent).
  • In terms of helping others become homeowners, nearly 25 percent of the respondents say they have already helped someone financially with a down payment.

Why Baby Boomers Drive the Housing Market for Millennials

  • The Freddie Mac 55+ Survey also identified a number of other opportunities and challenges for the housing industry that will stem from the decisions Baby Boomers and other older homeowners make over the next few years.
  • For example, 63 percent of the 55+ homeowners surveyed say they prefer to age in place if they had complete control over it. However, nearly 40 percent indicate they would prefer to move at least one more time. This suggests nearly 25 million homeowners over age 55 may move again. When asked when they expect to move next, 13 percent think they will move within four years.
  • Of those homeowners who would consider moving, 12 percent believe their next home will be more expensive than their current one, while 37 percent believe it will be in the same price range, and half believe it will be less expensive. At the same time, 23 percent of homeowners say they would have to make major renovations in order to age in place.
  • 55+ers cite cost and convenience as the top factors influencing whether to move and where to live: affordability of living in a particular community (46%); having the amenities needed to live there for many years after I retire (44%); Less maintenance (41%); proximity to other family members (31%); having a place where I was no longer responsible for caring for the property (e.g. yard work, snow removal) (30%); being in a walkable community (28%); having abundant services for adults my age (25%); access to public transportation (17%); warmer climate (19%); having a place that is smaller than my current home (e.g. downsizing) (19%).

Save

Posted by on Jul 22, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Conditions, One-Story | 1 comment

Multi-Gen Paradise

Lakeside isn’t far – it is centrally-located in San Diego County, and is a straight shot down the 52 and 67 from La Jolla.  It might be a reasonable compromise for those multi-gen buyers who would treasure two houses on a quarter-acre lot with citrus and avocado trees.  This property has been lovingly-maintained and owner-occupied for the last 30 years!

lakeside

Here is a feature-length YouTube video tour:

Pueblo Road satellite photo

Posted by on Jul 17, 2016 in Boomers, Bubbleinfo TV, Jim's Take on the Market, Real Estate Investing, Thinking of Buying? | 0 comments

2016 Renter Survey

rentsurvey

Worried we might run out of buyers? Plenty are waiting in the wings – and working with their parents to achieve!

Current renters value homeownership and want to buy a home but many are encountering affordability and financial obstacles that prevent them from buying, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2016 Renter Survey.”

Nearly half of renters (48 percent) plan to buy a home in the future, with 10 percent saying that they plan to buy within a year. For those not planning to buy, an improvement in finances, lower housing prices, and saving enough for a downpayment would motivate them to buy now.

Of the 28 percent of renters who don’t plan to buy in the future, 50 percent said they can’t afford to buy, 20 percent will not buy because they prefer to rent, 19 percent said they can’t qualify for a mortgage, and 15 percent lack a downpayment. Job uncertainty (9 percent), economic uncertainty (12 percent), and housing market uncertainty (6 percent) were among other reasons renters cited for not buying a home.

Homeownership remains important to renters, with nearly half (45 percent) rating it 8 or higher in importance on a scale of 1-10, with 10 being extremely important. The average was 6.8. Nearly all renters (95 percent) see advantages to homeownership; freedom to do what you want with your home, building equity, and having permanence and stability were the top benefits mentioned by renters.

One of the surprising findings of this survey is that more than one in four millennial renters said they plan to purchase a home that will accommodate their parents, and about one in five millennials indicated they plan to pool funds with family members to buy a home.

Other key findings from C.A.R.’s “2016 Renter Survey” include:

  • Forty-six percent of renters claimed they currently rent because they can’t afford to buy, and 13 percent said they have poor credit and can’t qualify for a loan. The remaining renters choose to rent because they like the flexibility, freedom and ease of renting, are concerned about the maintenance costs of owning a home, or are not interested or aren’t ready to buy.
  • Nearly four in 10 renters (39 percent) indicated they plan to purchase a home in the same county where they currently reside, and 23 percent plan to buy in the same neighborhood.
  • Fifteen percent of renters plan to buy a home out of their current area, with 7 percent planning to move to another state, 7 percent to another county in California, and 1 percent to another country.
  • Of the renters who are planning to leave the area where they currently reside, 27 percent are moving to find lower housing prices, 24 percent are moving for a better neighborhood, 14 percent want to be closer to family, 9 percent want a shorter commute, and 7 percent are moving for a better school district.
  • Two in three renters have made some kind of preparation to buy a home: 25 percent have searched for homes, 16 percent have searched online for information about the homebuying process, and 12 percent have spoken to a REALTOR®.
  • Thirty-one percent of renters previously owned a primary residence, and 9 percent currently own real estate. Of those who previously owned a home, the reasons for selling included family reasons (37 percent), financial difficulties (28 percent), and work (13 percent).

survey
http://www.car.org/newsstand/newsreleases/2016releases/2016rentersurvey/?view=Standard#

Posted by on Jul 17, 2016 in Boomers, Jim's Take on the Market, Thinking of Buying?, Thinking of Selling? | 0 comments

Baby Boomers vs. Millennials

mil

A good article that examines how baby boomers and millennials are competing for their housing needs – read the last two paragraphs below:

In South Carolina, baby boomers elbowed out entry-level buyers to snap up single-story floor plans at Riverwalk, a bike-friendly, outdoor-oriented community with recreation and office space on the Catawba River in Rock Hill. Builder Evans Coghill had not foreseen that 55-plus buyers would provide such a boost to Riverwalk’s customer base, says chief marketing officer Alan Banks. “We thought it would all be families,” he says, but older buyers flocked to Riverwalk after seeing a newspaper ad for the downstairs-master ranch houses.

As a result, the Charlotte, N.C.–based firm will include more single-story homes and homes with master bedrooms downstairs in the community’s next phase, with subtle yet simple changes that appeal to boomers such as covered outdoor living spaces, walk-in showers, built-in shelving and storage (to hold a lifetime of treasures), and remote-­access security.

A similar scenario occurred at Rancho Mission Viejo, a 23,000-acre community in California that eventually will include 14,000 homes and 17,000 acres of open space. When sales opened for the community’s first phase, developers were surprised to find their target audience (boomers) didn’t flock to its 55-plus communities. Following tradition for multigenerational developments, developers initially included three gated neighborhoods with age-restricted houses and amenities in the project.

But it turns out that the baby boomers and empty-nesters were just as—if not more—interested in the market-rate neighborhoods intended for young families. In Rancho Mission Viejo’s second village, Esencia, the 55-plus housing is integrated into all-ages neighborhoods, and gates are a thing of the past.

The public builders are taking note of this trend as well. Companies like D.R. Horton and LGI Homes have launched product lines (or, in LGI’s case, entire business models) around building no-frills homes for the first-time buyer. But when these developments open, the builders are finding out that it’s not just millennials who are scooping up the entry-level homes.

“When we launched Express in Florida, 40%, 45% were actually the people buying their last home, not their first home,” said Horton CEO David Auld on the builder’s second quarter 2016 earnings call. “And that’s something we’re taking note of, and making sure that we’re in a position to accommodate those buyers.”

Riverwalk and Rancho Mission Viejo are evidence of a trend that will change the way communities are built and marketed for years, and likely decades, to come. It happened at NorthWest Crossing, a family-friendly traditional neighborhood development in Bend, Ore., where older buyers account for 60% percent of sales, and at Skylar at Playa Vista, contemporary single-story flats designed for young professionals in Los Angeles where more than half the residents in the first phase were 55 and older. Taking note, PulteGroup is building 1,900-square-foot townhouses with flexible three- to five-bedroom floor plans designed to appeal to both millennials and boomers in Minnesota

Boomers have been swiping the best of their kids’ culture in everything from fashion to technology since the millennials began coming of age. The Christian Science Monitor first noted this trend in a 2002 article (“parents and kids today dress alike, listen to the same music, and are good friends,”), and it’s become more intense as millennials have become adults.

For perhaps the first time ever, similarities between a parental generation and the generation it raised far outweigh differences. They mingle at concerts, over craft beers and cocktails, on bike paths and hiking trails. They’re all foodies. A 2015 Eventbrite survey found that boomers and millennials have surprisingly similar spending habits and attend the same live music events, according to an Elite Daily article, “The Fun Is Over: Music Festivals Are Being Invaded By Baby Boomers.” Festival promoters have taken note, and last year Billy Joel played Bonnaroo.

“Boomers are in the process of downsizing and getting rid of junk, and millennials don’t have junk,” he says. “Neither wants a big yard, but they both want a place for a dog.”

Millennials and boomers are more alike than different in everything from technology to ethics, according to a Synchrony Financial report, “Balancing Multi-Generational Retail Strategies.” Millennials are only moderately more likely to own digital devices, according to the report. They’re no more likely than boomers to shop at socially conscious or environmentally friendly retailers (67% of all generations say they would). Both generations are very comfortable with browsing, researching, and shopping online, but they respond differently to marketing messages. The ideal strategy for reaching both, the report states, “is one where the boomer population feels valued and delighted, while the millennial feels excited and interested.”

“Millennials like iPhones, Macs, riding their bikes,” says Manny Gonzalez, principal of KTGY, which designed Skylar at Playa Vista. “I’m 62. We’re finding that people my age like the same sorts of things. We’ve worked with computers, and we’re tech savvy. We may not go to the exact same restaurants as millennials, but we still go to the same downtown area. We still like being part of that whole buzz.”

Home builders have paid more attention to boomers because they’re better off financially, thanks largely to history. Boomers launched during a prosperous time for the middle class and compounded assets, while millennials launched (or didn’t) into the Great Recession with crippling student loan debt. Many boomers are fortunate to have home equity (if they didn’t lose it in the housing crisis), but they’re retiring into murky financial waters. Three-quarters of them plan to fund their retirements solely with Social Security, says John Mulville, vice president of the consulting group for Real Estate Economics. Pension plans are in trouble, and 401(k) retirement accounts are just as vulnerable to market corrections now as they were in 2008. Home equity could become many retirees’ only asset.

Mulville says this has already fueled a boomer migration in Southern California as empty nesters sell the coastal homes they raised kids in for $1 million or more and pick up new, lower-maintenance homes in Riverside or San Bernardino for a couple hundred thousand dollars.

“People haven’t sacked away the balances they need, and they’re being forced to extract the accumulated equity in their homes and put it in the bank for retirement,” he says. “It’s all very new, and it will really intensify in the next few years.”

Read full article here:

http://www.builderonline.com/building/boomers-and-millennials-alike-demand-entry-level-housing_o

Posted by on Jul 14, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, One-Story | 2 comments

One-Story Hope

2016-07-05 12.28.07

It’s not easy to downsize, especially into a decent one-story house – there aren’t enough one-story owners who want to sell!

But there are some good opportunities if you are willing to leave the coast.  Sell your coastal big bombers and go inland just far enough that you can get a one-story for less, and still be close to the grandkids!

Posted by on Jul 5, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, One-Story, Thinking of Buying? | 4 comments

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