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Category Archive: ‘Boomers’

More Boomers Retiring

It’s inevitable that as more boomers retire, the more we’ll see those lightly-maintained-and-home-depot-upgraded houses hitting the market.

Hattip to daytrip for sending this in:

https://www.bloomberg.com/news/articles/2017-01-06/older-americans-are-retiring-in-droves

An excerpt:

Whether a larger share of senior citizens had previously been incented to remain in their jobs by higher wages or by a need to keep working in order to rebuild their nest eggs after the financial crisis is still an open question. But the recent non-farm payroll reports affirm that the secular trend of rising retirements can only be delayed for so long.

Boomers – would you move if you just had a place to go? Start here:

http://www.bubbleinfo.com/general-information/where-to-move/

Posted by on Jan 7, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market | 4 comments

San Diego County Annual House Sales

For those looking for a more binary view of market conditions (hot/cold, good/bad), let’s compare San Diego County detached-home sales for 2016 to the previous years.

San Diego County Annual Detached-Home Sales

Year
No. of Sales
Median Sales Price
Avg. Days on Market
2012
25,023
$383,000
76
2013
24,910
$455,000
50
2014
22,101
$495,000
47
2015
23,732
$529,000
42
2016
23,802
$560,000
37

The median sales price has gone up 46%, yet the number of sales were only 5% lower in 2016 than in 2012. Last year, sales were higher than the last two years, and the average days on the market are half what they used to be

Those are fantastic market conditions!

Could the momentum keep going? Will it?

There were good reasons that the real estate market has tanked previously. In 1981, mortgage rates hit 18%, when just four years prior they were in the 8s – that is sticker shock! In the early-1990s, we had the Savings & Loan crisis when they gave away all the foreclosed houses. Of course, in 2006-2008 we had the Mozilo Crisis, where exotic mortgages caused a panic.

It would take a catastrophic event to topple our market now. Sales and prices may bounce around, but the baby-boomer wealth distribution program will juice the market for decades. The final gift of boomers will be to make sure their children all have houses, and even Trump won’t screw that up. If anything, the hysteria will cause more boomers to worry about their kids!

Here are the NSDCC annual sales, broken down into North and South:

La Jolla-Del Mar-SB-RSF-Carmel Valley Detached-Home Sales

Year
No. of Sales
Median Sales Price
Avg. Days on Market
2012
1,364
$1,175,000
93
2013
1,462
$1,350,000
61
2014
1,285
$1,445,000
63
2015
1,301
$1,500,000
63
2016
1,369
$1,520,000
58

Carlsbad-Cardiff-Encinitas Annual Detached-Home Sales

Year
No. of Sales
Median Sales Price
Avg. Days on Market
2012
1,790
$684,042
70
2013
1,756
$770,500
41
2014
1,564
$815,000
41
2015
1,723
$870,000
37
2016
1,639
$919,000
34

What could cause the market to tank, besides a catastrophic event? We’d have to run out of buyers. But if there is any place in the good ol’ USA that people will keep coming, it’s San Diego!

Posted by on Jan 4, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Conditions, North County Coastal | 15 comments

Boomers Retiring Abroad

Newly widowed, Kay McCowen quit her job, sold her house, applied for Social Security and retired to Mexico. It was a move she and her husband, Mel, had discussed before he passed away in 2012.

“I wanted to find a place where I could afford to live off my Social Security,” she said. “The weather here is so perfect, and it’s a beautiful place.”

She is among a growing number of Americans who are retiring outside the United States. The number grew 17 percent between 2010 and 2015 and is expected to increase over the next 10 years as more baby boomers retire.

Just under 400,000 American retirees are now living abroad, according to the Social Security Administration. The countries they have chosen most often: Canada, Japan, Mexico, Germany and the United Kingdom.

Retirees most often cite the cost of living as the reason for moving elsewhere said Olivia S. Mitchell, director of the Pension Research Council at the University of Pennsylvania’s Wharton School.

“I think that many people retire when they are in good health and they are interested in stretching their dollars and seeing the world,” Mitchell said.

Read full article here:

http://www.csmonitor.com/USA/Society/2016/1227/Why-are-more-Americans-retiring-abroad

Posted by on Dec 28, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market | 1 comment

How Long Have Sellers Owned 4

Who is selling?

This is the fourth reading – this time I checked the last 112 detached-home sales between La Jolla and Carlsbad.

Here are the categories of when the sellers purchased the home they sold:

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

It has been consistent all year – the majority of sellers are long-time owners, which almost always means buyers are getting a project to some degree.  No matter how much work the sellers have done to their house, buyers can plan on spending plenty to bring it into this era, and modify to their tastes.

Buyers should get comfortable with the idea of remodeling just to expand the inventory.  It is helpful if you or your realtor can properly assess the repair costs before offering, and know that it’s rare to get a dollar-for-dollar discount.

More stats:

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

Today’s stats are fairly similar to the first reading last December, with the exception being the median sales price up 18% – which isn’t the appreciation rate for every house.  It means more of the higher-priced homes are selling.

Posted by on Dec 13, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, North County Coastal | 0 comments

Retire At Sea

cruise

Maybe you don’t have to worry about where to move – just float around!

H/T Daytrip!

Retirement has often been synonymous with quietly living out your golden years in a sunny climate. But for a more adventurous breed of retirees, the end of work life opens a door to a more extreme type of sea change.

The siren’s call of cabin life is beckoning increasing numbers to traverse the globe via the ocean. And, it’s a surprisingly more attractive – and affordable – option than assisted living for some retirees.

The number of people who take cruises is at an all-time high, with 24 million passengers expected to set sail this year worldwide versus 15 million a decade ago, according to the Washington, DC-based Cruise Lines International Association. Half of these cruisers are 50 or older, and, of those, a small number are making the ocean a second home or even their permanent home.

Cruise ships might be an ideal retirement destination, although some things such as healthcare can be tricky. They offer, well, everything. From nightly entertainment to exercise equipment to Internet, most ships are equipped with anything you need to make a place home — including the travel, often a big priority for younger retirees. While no group tracks the number of people choosing this new form of retirement, a handful of cruise lines confirmed that they are seeing more near-year-round cruisers with some frequency.

For some, retirement at sea involves taking over a small stateroom on a standard cruise ship with repeated sailings and itineraries. For others, it means purchasing a “residence” (a high-end apartment at sea) on a luxury ship like The World, which is managed by Florida-based ROW Management Limited, or the yet-to-launch Southern California-based Utopia, both offering exotic destinations and expeditions.

“[These are] people who love to travel, don’t want to be responsible for any type of home maintenance, want to ditch the car, are healthy, and are comfortable living with an ever-changing ‘neighbourhood’,” says Jan Cullinane, Florida-based author of The New Retirement: The Ultimate Guide to the Rest of Your Life.

Read full article here:

http://www.bbc.com/capital/story/20161201-meet-the-people-whove-retired-at-sea

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Posted by on Dec 5, 2016 in Boomers, Interesting Houses, Jim's Take on the Market | 0 comments

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:

fig1

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:

fig2

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:

fig3

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:

http://lao.ca.gov/Publications/Report/3497

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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.

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

Pre-Boomers

matures

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!

90

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!

http://www.car.org/aboutus/onecoolthing/AgingGracefully/

 

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:

http://www.wsj.com/articles/debate-over-u-s-debt-changes-tone-1469385857

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!

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