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Category Archive: ‘Boomers’

Boomer Liquidation Postponed

This guy saw it like I did – that there would be “the great senior sell-off”, but he had more concern that the millennials wouldn’t be there to pick up the pieces. He is back-pedaling now on when it will happen – and I think he is just guessing. It will happen when it happens, and each neighborhood will be affected differently. Hat tip daytrip!

It’s a dilemma that has preoccupied Arthur C. Nelson, a U of A professor who spoke with former CityLab staff writer Emily Badger in 2013 about what he dubbed “the great senior sell-off.” Nelson postulated that Boomers would soon be selling their homes in droves, but would be hard-pressed to find buyers—mainly because Millennials wouldn’t want to buy them.

Nelson pointed to the affordability issue as well as the fact that about a quarter of Millennials prefer urban housing, such as condos or townhouses, over the detached suburban homes that were the Boomers’ preferred habitat. Younger buyers, he said, will also be looking for starter homes—smaller than the big Colonials and split-levels that line America’s cul-de-sacs. “We can predict the next housing crash,” he said at the time. “That’ll be in about 2020.”

Four years later, Nelson tells CityLab that he believes the sell-off will still occur—but later, in the mid- to late 2020s.

This has to do with people deciding to defer selling their homes, hoping to get a better price later than settling for a lower price now. “Home values in much of the country are still less than those before the Great Recession of 2007 to 2009,” he says. Prior to the recession, the typical homeowner would sell a house about every six years. “It was like clockwork,” says Nelson. “This drove a lot of planning and development projections.”

“It’s not that Boomers are going to ‘age in place,’” says Nelson. “They’re going to be stuck in place, and they’re going to make the best of it.” Those who can afford it will remodel.

Though Jennifer Molinsky, a senior research associate at Harvard’s Joint Center for Housing Studies, agrees that exurbs and rural areas will likely be vulnerable to the Boomer/Millennial housing mismatch, she’s not as pessimistic about the sell-off as a whole.“The Baby Boomers are a large generation,” she says. “Nothing they do is going to happen en masse.” She also believes that the Boomers who don’t age in place will demand an increasing array of housing options that will help spread out sales over time, decreasing the likelihood of a sudden glut of housing.

Read full article here:

https://www.citylab.com/housing/2017/04/who-will-buy-baby-boomers-homes/522912/

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Posted by on Apr 16, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Conditions | 1 comment

How Long Have Sellers Owned 5

Who is selling?

Here are stats on the 99 NSDCC houses sold between March 1 and March 15th – these are the years when the sellers purchased the home they sold:

Year Purchased
12/12/15
3/19/16
6/18/16
12/13/16
4/3/17
0 – 2003
41%
42%
39%
57%
48%
2004 – 2008
23%
29%
24%
19%
15%
2009 – 2011
15%
11%
13%
6%
7%
2012 – 2016
18%
18%
19%
13%
25%
New Homes
2%
1%
5%
4%
4%

With roughly half the homes being owned by the sellers for at least 13-14 years, buyers can expect to do some repairs and improvements!  It is interesting to note that 25% of the sellers were recent purchasers too.  Is that a group consisting of divorces and move-up buyers?

More stats:

Other Categories
12/12/15
3/19/16
6/18/16
12/13/16
4/3/17
Number of Sales
125
114
144
112
99
Avg. $$/sf
$505/sf
$552/sf
$550/sf
$529/sf
$481/sf
Median SP
$1,080,000
$1,129,000
$1,291,500
$1,274,500
$1,110,000
Avg DOM
60
38
42
54
43
Sold in 0-10 Days
24%
32%
35%
28%
45%
Lost $$
11
3
7
7
0
DOM = 0
5
8
7
2
4

I don’t get worked up about the pricing stats – every group of houses is different, and the stats are going to bounce around.  Other notable items:

  1. Of the 99 sales, 24% of the buyers paid cash.
  2. The median days-on-market was 13 days.
  3. No sellers sold for less than they paid!

This is probably how the boomer liquidation will occur – one by one.

Posted by on Apr 3, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market | 0 comments

Will The Real Estate Bubble Pop Again?

Our local home prices have risen so quickly that it feels like we’re in ‘bubble’ conditions again – could the bubble burst this time?

The last two times the real estate bubble has popped, it was due to banks having to offload their foreclosed properties for whatever the market will bear.  They flooded the market, and buyers – and prices – backed off.

But that has all changed now.

Look at the new devices being used to avoid a flood of desperate selling:

  1. New accounting rules.
  2. California Homeowners Bill of Rights
  3. Reverse mortgages

The accounting rules were altered so banks could hold their REO properties longer, and the California Homeowners Bill of Rights has, in effect, stopped foreclosing.  Lenders are now required to offer a loan modification to anyone in default, and only if the homeowner can’t or won’t qualify are they at risk of being foreclosed.   With today’s higher rents, there isn’t much relief for those in default to give back their house and go lease one nearby.  Besides, with our higher home values today, they can always sell before getting foreclosed.

Homeowners who need money can get a reverse mortgage too, as long as they haven’t been tapping into their equity already.

We end up with virtually no desperate sellers who need to dump on price.  Someone who wants to cash out quickly can price their home at last year’s comps and look like a deal!

The game is rigged – the Banking Cartel won’t let the bubble pop again!

For the bubble to pop, we would need a dramatic shift in the supply and demand – either a flood of homes hit the market, and/or we run out of buyers.

I thought we’d be seeing more baby boomers unloading their homes due to downsizing or sickness, and while the market consists mainly of those listings, there aren’t enough of them to call it a flood – at least not yet.  Because they are in quality locations, more kids are probably trying to buy out their siblings and take over their parents’ house, rather than sell it.  They could be moving in with the folks too, rather than sending them to assisted living.

Could we run out of buyers? You would think there would be a price point where buyers can’t or won’t go any higher, but there seems to be a steady flow of people with more horsepower.  We saw two weeks ago the prediction that the population of San Diego County is expected to grow by 700,000 people by 2050, which is over 21,000 per year – where are they going to live? Will they be rich? They will need to be!

There hasn’t been enough (has there been any?) sellers so desperate that they had to dump on price – instead, they just keep waiting.  We would need more than a few price-dumpers to start a panic, which could cause the market to flood with supply and burst the bubble.

Some air might escape occasionally, but it is doubtful that a market change could occur without the government finding a way to save the bankers.

People like this guy think the conditions are ripe for a downturn.  But if prices started falling, sellers are more likely to wait, than dump, which would cause our market to stagnate, rather than crash.

Posted by on Mar 27, 2017 in Boomer Liquidations, Boomers, CA Homeowners Bill of Rights, Foreclosures/REOs, Jim's Take on the Market, Loan Mods, Market Conditions, Mortgage News | 3 comments

The Millennials’ Housing Disadvantage

Everything about the real estate market favors those who got in years ago (location, zoning, traffic, property taxes, etc.).  Today’s desperate search for reasonably-priced housing is futile at best, and invites table-tilting by all involved. The rich get richer! Hat tip to Bill W:

LINK

Excerpt:

The problems facing millennials include an economy where job growth has been largely in service and part-time employment, producing lower incomes; the Census bureau estimates they earn, even with a full-time job, $2,000 less in real dollars than the same age group made in 1980. More millennials, notes a recent White House report, face far longer period of unemployment and suffer low rates of labor participation. More than 20 percent of people 18 to 34 live in poverty, up from 14 percent in 1980.

They are also saddled with ever more college debt, with around half of students borrowing for their education during the 2013-14 school year, up from around 30 percent in the mid-1990s.

All this at a time when the returns on education seem to be dropping: A millennial with both a college degree and college debt, according to a recent analysis of Federal Reserve data, earns about the same as a boomer without a degree did at the same age.

Downward mobility, for now at least, is increasingly rife. Stanford economist Raj Chatty finds that someone born in 1940 had a 92 percent chance of earning more than their parents; a boomer born in 1950 had a 79 percent chance of earning more than their parents. Those born in 1980, in contrast, have just a 46 percent chance.

Since 2004, homeownership rates for people under 35 have dropped by 21 percent, easily outpacing the 15 percent fall among those 35 to 44; the boomers’ rate remained largely unchanged.

In some markets, high rents and weak millennial incomes make it all but impossible to raise a down payment. According to Zillow, for workers between 22 and 34, rent costs now claim upward of 45 percent of income in Los Angeles, San Francisco, New York, and Miami, compared to less than 30 percent of income in metropolitan areas like Dallas-Fort Worth and Houston.

The costs of purchasing a house are even more lopsided: In Los Angeles and the Bay Area, a monthly mortgage takes, on average, close to 40 percent of income, compared to 15 percent nationally.

Home ownership rates in California are among the nation’s lowest, with Los Angeles-Orange having the lowest rate of the nation’s 75 large metropolitan areas. For every two homebuyers who come to the state, five families leave, notes the research firm Core Logic.

Like medieval serfs in pre-industrial Europe, America’s new generation, particularly in its alpha cities, seems increasingly destined to spend their lives paying off their overlords, and having little to show for it.

No wonder that rather than strike out on their own, many millennials are simply failing to launch, with record numbers hunkering down in their parents’ homes. Since 2000, the numbers of people aged 18 to 34 living at home has shot up by over 5 million.

Home ownership rates in California are among the nation’s lowest, with Los Angeles-Orange having the lowest rate of the nation’s 75 large metropolitan areas. For every two homebuyers who come to the state, five families leave, notes the research firm Core Logic.

The irony is that the state’s progressive policies are contributing  to a less mobile society and a potential demographic crisis. For one thing, fewer young people can form families—Los Angeles-Orange had one of the biggest drops in the child population of any of the 53 largest metros from 2010 to 2015.

This also has a racial component, as homeownership rates African American and Latino households—which often lack access to family wealth—have dropped far more precipitously than those of non-Hispanic Whites or Asians. Hispanics, accounting for 42 percent of all California millennials, endure homeownership roughly half that seen in other parts of the country.

This is not the planners’ happy future of density dwelling, transit-riding millennials but a present of overcrowding, the nation’s highest level of poverty and, inevitably, a continued drop in fertility in comparison to less regulated, and less costly, states such as Utah, Texas, and Tennessee that have been among those with the biggest surges in millennial migration.

Once identified with youth, California’s urban areas are now experiencing a significant decline in both their millennial and Xer populations. By the 2030s, large swaths of the state—particularly along the coast—could become geriatric belts, with an affluent older boomer population served by a largely minority servant class. How feudal!

Read full article here:

LINK

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Posted by on Mar 12, 2017 in Boomers, Jim's Take on the Market, Local Government, Market Buzz, Market Conditions, The Future | 3 comments

Boomers Holding On

Are you getting the feeling that our low-inventory conditions are here to stay?

Our local Case-Shiller Index has risen 59% since April, 2009, and fewer people are selling? Instead, they appear to be riding into the sunset.

Consider these boomer stats from wiki:

  • 60% lost value in investments because of the economic crisis
  • 42% are delaying retirement
  • 25% claim they will never retire (currently still working)

For those who moved up a couple of times, their current house is the best they’ve done, and is good enough to last them.  There isn’t a compelling reason for boomers to move if they bought low, and the house is paid off or refinanced into an ultra-low rate.

Baby boomers are currently 53 to 71 years old, which should mean they could move if needed.  They just don’t want to.

If things got tough, it’s more likely they would share with the kids.  Either have a kid move in and help with care-giving, or go live with a child.

My mom is moving in with us this month.

My dad died in 2010, we sold their house, and mom has been on the move ever since. She tried living on her own, but that was boring, and then recently she lived with my little brother, which everyone will tell you is no picnic.  She lasted 14 months with him, which is more than I would have!

But even with a life-changing event, there’s no change to real estate.  Mom’s house was sold long ago, and we don’t need to move to accommodate her.

We’ll all just get along instead!

As baby boomers keep aging, many, if not most, will find a way to make do with what they have, rather than move.  Upon their demise, one of the kids are more likely than ever to inhabit, rather than sell.

The rapid ascent of prices haven’t helped either – it’s probably one of the main reasons don’t want to move.  It’s too expensive, compared to what they have, and they’d rather find a way to stay put.

Posted by on Mar 8, 2017 in About the author, Boomer Liquidations, Boomers, Jim's Take on the Market | 4 comments

McMansion Report

They are re-hashing an old 2016 article here, and I’d like to add:

Homebuyers want quality at a fair price – that’s all.

http://www.businessinsider.com/death-of-suburbia-series-overview-2017-3

An excerpt:

The cheaply constructed mansions of old are plummeting in value as homebuyers are more discerning.

In an article in August 2016, Bloomberg cited data from the real-estate site Trulia that showed that the premiums paid for McMansions have declined significantly in 85 of the country’s 100 biggest cities.

For the study, Trulia defined a McMansion as a home that was built between 2001 and 2007 and that had between 3,000 and 5,000 square feet of space.

In one example, in Fort Lauderdale, Florida, the extra money that buyers were expected to be willing to pay to own a McMansion fell by 84% from 2012 to 2016. In that same city in 2012, a typical McMansion would be valued at $477,000, about 274% more than the area’s other homes. Today, a McMansion would be valued at $611,000, or 190% above the rest of the market.

Experts told Business Insider’s Madeline Stone that the youngest generations of homebuyers tend to value efficiency more than ever before and feel that McMansions are impractical and wasteful.

Posted by on Mar 6, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Buzz | 2 comments

Cleaning Out the Parents’ House

This can be overwhelming, and everyone puts it off as long as possible. Start early, and heave at will – note the last paragraph below.

8 Tips for Home Unfurnishing

What else can you do to avoid finding yourself forlorn in your late parents’ home, broken up about the breakfront that’s going begging? Some suggestions:

1. Start mobilizing while your parents are around. “Every single person, if their parents are still alive, needs to go back and collect the stories of their stuff,” says Kylen. “That will help sell the stuff.” Or it might help you decide to hold onto it. One of Kylen’s clients inherited a set of beautiful gold-trimmed teacups, saucers and plates. Her mother had told her she’d received them as a gift from the DuPonts because she had nursed for the legendary wealthy family. Turns out, the plates were made for the DuPonts. The client decided to keep them due to the fantastic story.

2. Give yourself plenty of time to find takers, if you can. “We tell people: The longer you have to sell something, the more money you’re going to make,” says Fultz. Of course, this could mean cluttering up your basement, attic or living room with tables, lamps and the like until you finally locate interested parties.

3. Do an online search to see whether there’s a market for your parents’ art, furniture, china or crystal. If there is, see if an auction house might be interested in trying to sell things for you on consignment. “It’s a little bit of a wing and a prayer,” says Buysse.

That’s true. But you might get lucky. I did. My sister and I were pleasantly surprised — no, flabbergasted — when the auctioneer we hired sold our parents’ enormous, turn-of-the-20th-century portrait of an unknown woman by an obscure painter to a Florida art dealer for a tidy sum. (We expected to get a dim sum, if anything.) Apparently, the Newcomb-Macklin frame was part of the attraction. Go figure. Our parents’ tabletop marble bust went bust at the auction, however, and now sits in my den, owing to the kindness of my wife.

4. Get the jewelry appraised. It’s possible that a necklace, ring or brooch has value and could be sold.

5. Look for a nearby consignment shop that might take some items. Or, perhaps, a liquidation firm.

6. See if someone locally could use what you inherited. “My dad had some tools that looked interesting. I live in Amish country and a farmer gave me $25 for them,” says Kylen. She also picked out five shelters and gave them a list of all the kitchen items she wound up with. “By the fifth one, everything was gone. That kind of thing makes your heart feel good,” Kylen says.

7. Download the free Rightsizing and Relocation Guide from the National Association of Senior Move Managers. This helpful booklet is on the group’s site.

8. But perhaps the best advice is: Prepare for disappointment. “For the first time in history of the world, two generations are downsizing simultaneously,” says Buysse, talking about the boomers’ parents (sometimes, the final downsizing) and the boomers themselves. “I have a 90-year-old parent who wants to give me stuff or, if she passes away, my siblings and I will have to clean up the house. And my siblings and I are 60 to 70 and we’re downsizing.”

This, it seems, is 21st-century life — and death. “I don’t think there is a future” for the possessions of our parents’ generation, says Eppel. “It’s a different world.”

http://www.nextavenue.org/nobody-wants-parents-stuff/

Posted by on Mar 5, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Tips, Advice & Links | 3 comments