A friend who lives in La Costa Valley called, and demanded an answer.

Why is no one moving?

We had discussed previously why the long-time owners in La Costa Valley (built in the late-1990s) aren’t moving.  They are busy raising families and enjoying low property taxes – plus, where else is any better?

But she drove through old La Costa, which was mostly built in the 1970s, and could only find two for-sale signs there.  What gives?

I think there has been a transformation about how we view our housing.

Primarily it’s because we are older, and have experienced the first big real estate depression in American history.

1.  Older

During the Big Boom of 1997-2004, baby boomers were in their 40s and 50s, and in the prime of their lives.  Not only was employment fantastic, but everyone was getting rich on real estate.  The ambitious folks cashed in their gains every two years and moved up, while others were content knowing that their equity build-up would someday be their retirement nest-egg.

But now the baby boomers are much older – in their 50s and 60s.  Employment is uncertain at best, and the kids are leaving or have left.  There isn’t the want or need for a bigger house.

If there was a reason to move, does anyone over age 50 want to take on a new 30-year mortgage?  Not unless it is a fairly small loan, which means either draining the bank account, or leaving town – neither of which is very comfortable for long-timers.

Though it was in our DNA to constantly be moving, we have gotten to the age where it isn’t easy to move, and rarely makes sense.

2.  First Real Estate Depression

Our belief that “real estate always goes up” has been shattered.

People never thought much about prices going down (the early-1990s are forgotten), but now we have been rattled by the reality.  With all of the other uncertainty in the world, we have come to appreciate what we have, and are satisfied that it is enough.

Those who are ‘underwater’ and other debt slaves aren’t beholden to their home – for the last 5+ years they have had a free pass to walk scot-free, and not many have done it (there were 356 short sales last year in NSDCC, or 11% of the total sales).

The same prognosticators who predicted that there would be a tsunami of underwater liquidations now believe there will be a new flood of sales by the same underwater folks once they regain some equity.  No way.

They have endured the toughest financial battle of their lives by waiting it out, and now they are going to bail?  Besides, where are they going to move?

They are staying put, and appreciating what they have even more.

With Prop 13 providing the benefit of passing down the old property-tax basis from parents to kids, the lack of inventory should continue.  Home sellers will be those who NEED to sell, and apparently there aren’t many of those today.

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