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Category Archive: ‘Boomers’

How Long Have Sellers Owned?

boomer selling

How many of the long-time owners are selling the family homestead, and downsizing now that the kids are gone?

We don’t know for sure who falls into that category – people with older kids could have bought a house 5-8 years ago and already be empty-nesters.  But a growing trend of long-time owners selling could open up some flexibility on price, which could slow down the appreciation trend.

We could also assume that the longer it’s been since the last sale, the more renovating the house could need.  The long-timers should have ample equity, which could enable them to cave on price, rather than remodel just to sell.  Those who went off to the pearly gates are more likely to have their heirs dump on price too.

Our research department checked the last 125 house sales between La Jolla and Carlsbad – the closings dated back to 11/23/15.  These are the number of sales in groups based on when the seller purchased the house:

La Jolla to Carlsbad House Sales – Previous Sale Date

New houses: 3 (2%)

2012-2015: 22 (18%)

2009-2011: 19 (15%)

2004-2008: 29 (23%)

2000-2003: 18 (14%)

0-1999: 34 (27%)

The last two categories combined for 42% of the total sales.  Not only are those houses at least 12 years old (most were much older) and probably need renovating, but in almost all the cases, the equity positions were huge.

If there is some future softening of home values, it will be more likely due to the long-timers being more reasonable on price, rather than the ‘bubble’.

Other facts:

A. The median sales price was $1,080,000

B. The average cost-per-sf was $505/sf.

C. The average market time was 60 days.

D. There were 24% of the total that sold in the first 10 days on market.

E. Eleven sellers sold for less than they paid (9%).

F. In 14 of the sales, the listing agent represented the buyer too (11%).

G. Five were ‘sold before processing’.

The first two categories – homes purchased since 2009 – totaled 33% of the sales.  Those sellers enjoyed a nice windfall of quick appreciation, and may be move-up buyers?

Those who bought in 2004-2008 (23%) were probably glad they waited!

Posted by on Dec 12, 2015 in Boomer Liquidations, Boomers, Downsizing, Jim's Take on the Market, North County Coastal, Sellers Waiting For Comeback | 0 comments

Millennials Top 10

Mtop10

San Diego is the highest-priced in the Top 10 – we want affluent millennials!

From realtor.com:

http://www.realtor.com/news/trends/where-the-millennials-move-to-in-2016/

Is there any part of U.S. life that hasn’t been dramatically altered by the millennial invasion? This vast group of young Americans has already altered general perceptions of job place behavior, pop culture, media consumption, self-entitlement, and acceptable facial hair. But nowhere is its impact greater felt than in the housing market—and that impact is getting bigger all the time. Numbering 43.5 million, the older group of millennials (aged 25 to 34) makes up 13.6% of the U.S. population but fully 30% of the current population of existing-home buyers.

In 2016, millennials have the power to remake the real estate landscape wherever they choose to settle. But where will that be?

You might assume that young people are naturally drawn to the nation’s largest and most renowned metropolises such as New York City and Los Angeles to jump-start their careers and enjoy the full-throttle excitement of big-city life. And you’d be right—at least partly. But here’s the rub: Increasingly, they can’t afford to live in these places. Sure, Brooklyn may be a notorious hipster/millennial mecca, but how many 30-year-olds can afford $1.75 million one-bedroom co-ops? No wonder shrewd young home buyers are increasingly turning to cities that are relatively affordable and have lots of jobs and maybe even a trendy atmosphere all their own.

As part of the realtor.com® 2016 real estate forecast, we’ve pulled out our ironic Magic 8 Ball to prognosticate the top 10 markets likely to see a surge of millennial buyers. Get ready for an incursion of Sriracha, artisanal doughnut shops, and upscale tattoo parlors! And just to be fair, we also spotlight five places that seem to have lost their charm with the young generation and are likely to see the biggest exodus this coming year.

The ranking takes into our proprietary 2016 Sales & Price projections the representation of millennial users among viewers of “for sale” listing pages on realtor.com from July to October, and the share of head of households aged 25 to 34 relative to all heads of households, from 2015 Nielsen Pop-Facts.

6. San Diego, CA

Median list price: $585,000

Population share of older millennials: 15.5%

A strong economy led by the biotech industry, high-quality universities, year-round mild weather, gorgeous beaches with rich wildlife—do young people need more reasons to move to San Diego? No? OK.

http://www.realtor.com/news/trends/where-the-millennials-move-to-in-2016/

Posted by on Dec 7, 2015 in Boomers, Jim's Take on the Market, Local Flavor, Thinking of Buying?, Thinking of Selling? | 2 comments

Selling to Millennials

mill

http://www.nextavenue.org/how-boomers-can-sell-their-homes-to-millennials/

Generally speaking, boomers who bought homes to start families purchased what their budgets allowed and fixed them up over time. Nothing could be further from the minds of typical Millennial buyers.

For the most part, Millennials are looking for the finished product and will pay for it. They want what they see in magazines — nothing less. They don’t seem to view themselves living in any one place for a very long time, so there’s no time for gradually rolled out home improvements.

The bottom line: To capture the highest selling price, undertake some key home renovations before listing your house for sale.

Read full article here:

http://www.nextavenue.org/how-boomers-can-sell-their-homes-to-millennials/

Posted by on Nov 4, 2015 in Boomers, Jim's Take on the Market, Thinking of Selling? | 0 comments

Millennials’ Housing Worries

Millennials will undoubtedly “drive the growth of aggregate housing demand’.

But at what price?

We’ve already agreed that the majority of baby boomers will be fine, and age in place.  After their demise, the disposition of the house can be debated, but it’s really the same argument.  The heirs who are comfortable will keep the family estate to occupy or rent, and the desperate heirs will sell it.

Apparently there are about as many millennials as boomers – roughly 75 million.

Will there be as many millennials who are ready, willing, and able to pay today’s prices – or most-likely higher prices – to soak up the supply of desperate homes being sold?

Below is the latest chart on how they feel.  About half (56%) are worried about the cost of housing – at least they are paying attention.

What about the rest?

Either the other 44% plan to be rich and don’t worry about the cost of housing (in which case we should be covered)…..or they have already given up hope.

Click on image to enlarge slightly.

Housing

Posted by on Oct 14, 2015 in Boomer Liquidations, Boomers, Jim's Take on the Market | 4 comments

A Million More Should Do It

Some disagree with my idea that, while the majority of baby boomers will be fine, there will be a group that is financially restrained and will need to sell their house.

Richard Green is a USC ivory-tower guy, so he obviously knows his stuff.  He chimed in on twitter, and cited his report that mentioned:

The massive demographic shift will not result in another housing crisis.

This is because the educational and income levels of the current and future seniors are relatively higher than before, leading them to consume more than previous generations. Also, the size of the Millennial generation will drive the growth of aggregate housing demand, although the growth of per household housing demand may be relatively modest.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2614638

He doesn’t just make this stuff up. He also includes formulas to prove his case:

so there

So there you go – nothing to worry about.

A likely scenario is that any future home sellers will get bailed out by the newcomers.  According the SANDAG projections, there will be another million people moving to San Diego County!  Yippee!

2050

http://www.sandag.org/uploads/publicationid/publicationid_1490_11298.pdf

Posted by on Oct 14, 2015 in Boomer Liquidations, Boomers, Jim's Take on the Market, The Future | 9 comments

Boomers Survey

This survey is dated 2014, and they should update it every year – or at least until I’m right about having a boomer liquidation sale coming down the pike!

This survey asks several different questions, but notice how 20% to 30% of the responses seemed to divulge some stress or uncertainty about their future:

boomers1

boomers3

boomers4

Uh-oh.  It looks like this homeownership thing could be a boomer addiction:

boomers5

boomers2

It’s still early in the game for most boomers.

But here’s where the game changers start to come out.  Only 58% don’t plan to sell?  Fine, they aren’t going to make the market – it’s the other 42% that will determine our real estate future:

boomers7

Fluff question below – of course we like our home, at least until selling it becomes a better idea:

boomers8

Almost a quarter of boomers know they are already short on income, and will be hitting the housing ATM.  How many others who didn’t expect to use their equity in 2014 will eventually need to cash out for various reasons?

boomers6

Here’s where the real trouble starts below – 46%???

boomers10

boomers11

boomers11

boomers12

The best question towards the end of the survey once respondents have loosened up – and lo and behold, 61% of boomers aren’t sleeping that well.

If it only ends up being 20% to 30% of boomers who make a move, that’s still at least 15 million people in America who will be deciding our market!

The biggest concern?

Elderly folks who haven’t moved in a generation (or two), who know their money is running out and happen to see a couple of lower-priced sales nearby.  In a effort to bank as much equity as possible, they hit the panic button and grab the first realtor they find who then dumps their house for 95% of value.

It’s a downward spiral that could pick up steam quickly.

Posted by on Oct 12, 2015 in Boomer Liquidations, Boomers, Forecasts, Jim's Take on the Market, Thinking of Buying?, Thinking of Selling?, This Is America, Why You Should List With Jim | 19 comments

Boomer Liquidation Sale On Hold

The baby boomer liquidation sale has failed to materialize….so far.  Boomers are holding onto their old homes longer, and living the good life instead:

LINK

Baby boomers are not leaving the homes they own to settle into apartments, as housing economists had predicted.

A new edition of Fannie Mae Housing Insights says that boomers are not responsible for a recent surge in the apartment market. But when they do finally downsize, the very size of the generation will be enough to “move markets.”

Predictions were that boomers, the generation born between 1946 and 1965 (some sources say 1964), would begin downsizing naturally as they became older and more frail. “The research showed that the likelihood of Baby Boomers occupying single-family homes has changed little in recent years, despite the factor that boomers are experiencing major life changes that might be expected to cause a downshift in their housing consumption,” the Fannie Mae article said.

Instead, through 2013, boomers had not significantly reduced the rate at which they live in single-family, detached houses, the agency said. And although the number of rooms in those houses has decreased in recent years, “boomer home size has increased since then, suggesting the boomers are not trading down to smaller single-family homes, either.”

The article added that the “number of boomer apartment dwellers has not budged in recent years, whereas the number of millennials in multifamily rental units has grown by nearly half a million annually.”

That’s a significant finding with big implications for the housing market, because “boomers have an enormous residential footprint.” Some 40 percent of the nation’s homes are occupied by boomers, who have “half of the nation’s housing wealth,” Fannie Mae said.

As baby boomers move into their retirement years, they’re having a major impact in other ways, too.

“After working most of their lives, Baby Boomers want it all in retirement: travel, dining out, owning two cars and multiple homes. And they want to do this off of income generated by their investments,” said a recent article in Wall Street Daily. “Yet you’d be amazed how many people go to see an advisor with far too little in savings or investments to enjoy that sort of retirement. Even those people who have enough assets often have them allocated extremely poorly.”

Some boomers have accumulated no savings for retirement, the article said.

Read full article here:

LINK

Posted by on Aug 31, 2015 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Conditions, Thinking of Buying?, Thinking of Selling? | 11 comments

Baby Boomers Downsizing?

The baby boomer liquidation sale isn’t panning out just yet.  There are boomers buying a bigger homes to house multiple generations, and there are those who want to enitce more visits from the grandkids.  From nbcnews.com:

http://www.nbcnews.com/business/real-estate/recession-dims-americans-fall-out-love-smaller-homes-n313451

Homeowners’ post-recession fling with smaller dwellings has fizzled, and Baby Boomers aren’t downsizing as expected.

Real estate site Trulia found that 43 percent of more than 2,000 online survey respondents want “somewhat” or “much” bigger homes than their current residences. This might be expected among younger adults with growing families — more than 60 percent of respondents under 35 want a bigger home — but even their parents still feel cramped.

Although Boomers are most likely to be satisfied with the size of their current homes, the conventional wisdom that these empty nesters would downsize to smaller homes later in life turned out to not be the case. “It is a bit contrary,” said Trulia housing economist Ralph McLaughlin. “According to our survey, we are finding that almost as many of them want larger homes.”

While 21 percent of Baby Boomers want a smaller house, the highest percentage of any age bracket, the number who still want to go bigger is five percentage points higher. Last year, Fannie Mae noted that Boomers displayed no hurry to trade in their houses for retirement condos.

“It is pretty surprising,” McLaughlin said, adding that there are probably multiple explanations for the enduring preference for bigger homes. Retiring Boomers may be moving out of urban areas and into communities where they can get more square footage for their money. They might want larger spaces so their kids and grandkids can come visit without feeling cramped.

Or, they might not want to give up their toys just yet. “It could also be the case that Boomers are also going to stay more active and need space for all the activities they stay engaged in,” McLaughlin said.

Posted by on Mar 10, 2015 in Boomer Liquidations, Boomers | 17 comments

Surge of Boomers Retiring

Did everyone have a nice day off?  Great, let’s get back at it! From John Burns:

http://www.realestateconsulting.com/blog/john-burns/big-idea-2015-rethink-your-business-due-retirement-surge

More people were born in the 1950s (41 million) than in any other decade, and they are dropping out of the workforce in droves. Those born in the 1950s will begin turning 65 in 2015. In fact, in the last 10 years, we have transitioned from roughly 2.5 million US residents per year turning 65 to 3.5 million per year, and that number will trend up to almost 4.5 million by 2025 before it starts trending down again.

boomers graph

This seismic shift will have a huge impact on the economy, as the traditional working age population of 20-64 will transition from growing 1.0 percent per year for decades to growing 0.25 percent per year. 20- to 64-year-olds earn and spend the most, so you can almost guarantee that the economy will grow more slowly than it has in the past.

While the economic growth will  be slower than usual, and the burdens on Social Security will skyrocket, entrepreneurial opportunities will abound to serve an unprecedented surge in retirees who, by the way, also happen to be the most affluent retirees ever.

My big idea for 2015 is to plan for a slower growing pool of workers and to take advantage of the surge in retirees, no matter what your  business.

Here is a nice clip from CNBC discussing the success home builders are having targeting retirees, even in non-traditional retirement markets such as Atlanta:

Posted by on Dec 26, 2014 in Boomers, Market Conditions | 10 comments

Born To Be Wild?

seniors

Doesn’t there have to be a segment of baby boomers who are looking for adventure, and want to head out on the highway?  If so, will the warmer-climate San Diego be a net gainer, or loser?  If there is a senior exodus to free up money and lifestyle, it would make sense that the more-expensive areas like Southern California would see more seniors leaving.

From the nytimes.com:

http://www.nytimes.com/2014/12/20/your-money/selling-the-family-home-is-liberating-for-many-retirees.html

When is a house your safe haven and when is it standing in the way of richer life experiences?  That’s the question more and more retirees are asking these days.

Take Barbara and Mike West and Joseph and Phyllis Applebaum, retirees and longtime Maryland residents.

After years of analyzing their financial situation, the Wests decided to put the mortgage-free suburban house they had owned for 26 years on the market. They wanted to avoid the mid-Atlantic winters and considered moving to Hawaii, where they had lived while Mr. West was in the U.S. Navy.

But they decided it was too remote. They also ruled out San Diego, Savannah, Ga., and Charleston, S.C. Florida, they decided, was a possibility.

They considered renting their Maryland house out for part of the year, yet the idea of storing some of their household goods and someone else sleeping in their bed changed their minds.

Of the decision to sell a mortgage-free home, Barbara West, 63, said it would give them a chance to dream and to explore. Besides, “It’s a lot of money locked up in the house,” said Ms. West, who retired from her job as a lobbyist two years ago. “It’s a nice side benefit. It will free up money. We’ll have more flexibility. We’re kind of looking at it as an adventure.”

Read full article here:

http://www.nytimes.com/2014/12/20/your-money/selling-the-family-home-is-liberating-for-many-retirees.html

Posted by on Dec 19, 2014 in Boomers | 8 comments