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Category Archive: ‘Boomers’

Effects of Prop 13 on Selling Your Home

The low-inventory conditions have several contributing factors, one of which is the Prop 13 cap on property taxes.  The long-time owners sure don’t want to pay what would be much-higher taxes if they move up, thus the turnover has slowed considerably:


Moving down, price-wise, to keep your old tax basis isn’t easy either.  Though this graph shows that twice as many people would move if they could take their tax benefits with them, it’s not enough to get older people to sell.  By the time you are 65, the chance of you selling is less than 4%, and that’s with the tax benefits transferring:


Move before you get old!

Here is the big concern – how many younger folks are coming up that are ready, willing, and able to buy your house for what you think it is worth today?

Your house comes with a stifling property-tax bill, and fewer are going for it:


The residual effects of prop 13, combined with the high federal and state income taxes paid on the profit above $500,000 will cause fewer and fewer long-timers to want to sell.  Eventually, it means the inventory will be stocked with estate sales and sellers who NEED to sell.

The full report on Prop 13 is here:


Posted by on Sep 19, 2016 in Boomer Liquidations, Boomers, Inventory, Jim's Take on the Market | 12 comments

Distress by Age


Our local market has been solid as a rock, and we know that banks have quit foreclosing.  Could we ever have another distress sale – a seller who doesn’t hold out for their price, but instead takes less in order to cash-out and go?

Can we predict who might take a quick and easy deal?

90 year-olds and up  – Those who die intestate will have the public administrator sell their house the right way via an open auction with no reserve and a reasonable opening bid.  Many will leave enough meat on the bone for flippers to tack on another 10% to 20%.  Nothing to fear there.  Or their kids will sell for retail or move in.

70-90 years old – They too own their house outright, and hopefully have family assisting them with decisions.  If they had any mortgage balance left, it would be far below the retail value, so these folks are ideal candidates for a reverse mortgage.  Because our tax laws favor selling the home after death, these will have their kids quietly put the house on the market once vacant and take a simple deal that is close to list.

50-70 years old – This is the category at risk, and could be the new ‘distressed’ sale for those who still have a loan.  If you have 10-29 years left on your mortgage, and your health/job/spouse gives out on you, that monthly payment becomes more of a burden.  If nearby home prices have flat-lined or are bouncing around, the allure of cashing out becomes more tempting.  If you had to take 5% to 10% under comps, you’d still be selling for a boatload of money, price-wise, and in 30-45 days be on your way to an easier life.

This could happen to folks who have money. If your health/job/spouse gives out on you, it’s a game-changer, and the discomfort with the debt/payment could cause a rash decision.

30-50 years old – You bought in the last ten years, and are in it for the long haul – and the kids aren’t that old.  Few sellers in this category.

Under-30 – No sellers this young, and anyone under 30 should buy anything they can get their hands on!

It’s unrealistic to expect a massive outbreak of cheap-and-easy sales that would torpedo a whole market.  But it’s possible to see skirmishes in areas where homes were sold 10-20 years ago.  If they refinanced in the last 5-10 years, they still have 20+ years left on that mortgage – and that’s a long time for people who are over 60 years old and uncomfortable being in debt.

Debt is a funny thing.  As people get older, debt gets more uncomfortable, just because of the calendar – they know time is running out.

Think about it.  If you have already considered moving to a less-expensive area, and thought you had $300,000 equity, but then saw two quick-sale comps nearby bring down your equity to $250,000.  Your wife splits or you lose your job and you decide to sell.

But the best you could do was $225,000 equity (minus costs).

Do you sell for the discounted price?

Yes, because the outside factors tend to be more important.


Posted by on Sep 13, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market | 1 comment



The Baby Boomer generation began in 1946, after World War II.  Those born prior to 1946 are now at least 70 years old, and hopefully well off.

I’m not expecting the Matures to have any need for liquidation.  Their houses were paid off long ago, and though their income might be limited, they value their home base and don’t want to leave.  Most have probably been in their home for more than 30 years!


Construction companies that specialize in converting living rooms to master suites should be very popular!  One-story homes are great insurance!

P.S. This is the second week in a row that I used a C.A.R. promotional piece!


Posted by on Sep 12, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, One-Story | 1 comment

Boomer Debt

debt clock

The baby boomers who are comfortably on their way out will ignore my rantings about the potential for boomer liquidation sales.  My concern isn’t because some boomers are over-encumbered, it’s because they are encumbered enough that the debt will force them to make decisions.  I’m talking about older, retired people who still have a small to medium mortgage balance, and are down to their last $500,000 or less.

It is bad enough that the federal government has their own debt – Nick surmises here that the bolstered economy is giving politicians that idea that more debt is available:

What could cause boomers to quietly hit the panic button?

  1.  Debt Relief – If boomers have to pick up more of the federal tab, or live on reduced Social Security – just the lower monthly income could make them cash out.
  2.  Freedom – A neighbor of mine just sold and moved to La Paz, Mexico. The main reason was to pay off the mortgage, and live debt-free.
  3.  Cost of Health Care – Everything from a serious health event to moving into assisted living could cause boomers to sell their house.
  4.  Help Their Family – Boomers will do anything for their kids or grandkids.
  5.  Home Maintenance – The house is falling apart.  For many, the cost of repairs sound more daunting than moving.
  6.  Flat or Declining Home Prices – When old people are down to their last few bucks, the mental struggle alone causes panic.

If it is just a few folks here and there, the demand for housing in quality locations will be happy to pick up the slack.  Could there be a flood?

This came out last week:

Last month the Federal Reserve spread the word that U.S. household debt hit $12.29 trillion in the second quarter, up $434 billion from a year earlier as auto loans and credit card debt increased. Auto debt was $1.10 trillion, up $97 billion from a year earlier, while the aggregate credit card limit increased for the 14th straight quarter. Mortgage debt was $8.36 trillion, up $246 billion from last year, while student loan debt was $1.26 trillion, up $69 billion. Some 4.8 percent of the outstanding debt was in some stage of delinquency, down from 5.6 percent from a year ago, according to the quarterly household debt and credit report. My statistics teacher would hate this, but, roughly speaking, at 320 million of us in this country, this works out to about $38,400 per man, woman, and child for all debt.

Somebody owes a lot of money, and if it happens to be boomers who panic in unison, some neighborhoods will be in for quite a ride!


Posted by on Sep 7, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market | 1 comment

More Boomer


The author calls for a better look at how baby boomers impact the housing market, which is great.  Talk to realtors who work the street – we are the ones who have the direct one-on-one contact with buyers and sellers.

Excerpted here:

Location, location, location. It’s the long accepted golden rule of real estate. Could it be possible that the golden rule of real estate is being rewritten to focus on the golden years?

The National Association of Realtors does a great job studying real estate trends and providing data that could be powerful to local municipalities if interpreted correctly and applied strategically.

In its 2016 Home Buyers and Sellers Generational Trends report, the data showed that sellers ranging in age from 61 to 90 pick the same top three choices as a reason for selling.  This homeowner demographic chose to sell to move closer to family and friends, downsize, or retire.

That’s not new news. Older homeowners have always sold their homes to move closer to family and friends, downsize, or retire. What’s new is that older homeowners may make up the majority of the homeowners in your town. That could mean an oversupply of inventory, which could mean longer market times or falling prices, even if activity is strong and the number of units sold is up.

As it continues to unfold, some communities will feel the pain of falling prices fueled by oversupply of inventory as seniors need to sell in numbers larger than younger buyers are moving in. Some communities will feel the pain of rising prices fueled by low inventory and increased demand if they are a retirement destination and the beneficiary of relocating seniors. Some communities will boom if buyers both young and old penetrate their market, benefitting from the enormity of both the baby boom and the echo boom.

As a nation, we’re accustomed to the real estate market moving in concert, either up or down, in response to a variety of economic factors. The market has never really had simultaneous hot spots and cold spots with no clear economic indicator, and it is confusing because local age distributions are not currently being factored into the statistics, so demographics are not part of the conversation.

Let’s change that. Here is an all-call for housing analysts to look at the data through a different pair of glasses as the boomers move through their aging years, so the public is more educated on this dynamic. Municipal planners need to analyze their age distribution relative to housing inventory so residents understand a local supply or demand issue.

In addition, builders need to identify markets that are drawing more than their fair share of one or both generations to accurately project demand, which may not be the same communities that needed new construction in the past.



Posted by on Aug 31, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Buzz, Market Conditions, One-Story | 0 comments

More on Boomer Liquidations


The CAR has been publishing goodies for realtors to use on their blogs – you may have seen them?  The part in the red circle is what I’d like to address.

My biggest concern coming down the pike is boomer liquidations.

The above graphic isn’t boomers only, but they sound like people who are at risk of having to sell their house to survive (unless they are all renting?).  For those boomers whose eyesight may be a little fuzzy when looking at the image – I’m one of you!

Here’s what they say above:

  • 67% of women agree they cannot possibly save as much money annually as retirement planning tools say they will need to invest in order to have a comfortable retirement.

  • 25% of women feel financially secure.

  • 36% of men feel financially secure.

Obviously this polling company must have found a bunch of losers to come to these conclusions.  But even if it was half this bad, it could be a problem.

We are currently enjoying a real sweet spot in real estate.  Not enough people want to sell (yet), and the market has been very orderly.

But if people aren’t financially secure, at what point do they sell their house to survive?

Baby boomers are susceptible to losing their health/job/spouse, and all it would take is for a handful of those around you to cash-out and run. Once you have a downward trend in pricing, then the lower-motivated sellers will wait, because they aren’t going to give it away.  Then who is going to sell?

The issue will probably work itself out over the next 10-20 years, and most homeowners probably won’t feel a thing.  But there could be neighborhoods where a quick exit by a handful of sellers could cause some pricing chaos.



Posted by on Aug 31, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market | 5 comments

SD Middle-Class Housing Crisis


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!

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


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

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!


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

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:


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


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