Yesterday we wondered if there was a possible threat of a baby-boomer liquidation sale in the coming years, and we had a load of comments – thanks for participating!.
Can we get a feel for what’s happening now? Here’s a check of the 67 NSDCC houses that have sold between $750,000 and $1,000,000 in the last 30 days.
These are the years when the sellers purchased:
| Years Purchased | |
| 1965-1980 | |
| 1981-1990 | |
| 1991-2000 | |
| 2001-2007 | |
| 2008+ |
Only a couple sold for less than the price they paid, and there were 3 short sales too (no REO listings). The newer homes in Carmel Valley bolstered the more-recent stats too.
About 36% of the sellers bought their home prior to 2001, and are probably baby-boomers (or older). Most will at least be empty-nesters by now, and could be candidates for the ‘downsize and travel’ crowd. If their numbers increased, they would most likely be offering older fixers upon which flippers can feast, and eventually be sold to those looking for a substitute for new homes, which are in short supply.
My neighborhood in Carlsbad is a mix of families and retirees.
I find it interesting that the older retirees seem to have no interest in moving, even though their houses are 4 bedroom, 2200 to 2500 square foot homes. They resist the idea of downsizing and – god forbid – relocating to a retirement home. I get the sense that the only way they will leave their house is feet first. My 81 year old next door neighbor said as much.
I wonder is this differs from years past.
The first category seems to be the key category. Those homes were owned between 34 and 50 years. Pegging an average age at purchase between 25 and 30 puts them in the age range of 60 to 80. That’s your Winnebago crowd of retirees. If you figure a few were estate liquidations you are looking at less than 10% of the action coming from that crowd. Why would that percentage increase substantially in the future? It won’t.
The future sellers will come from the same place as today’s seller. The typical churn from comers and goers, divorce, death, job related moves, move ups and move downs. That’s 90% of the market and where the action will always be. Seems pretty straight forward. Thoughts to the contrary?
Agreed, most elderly are very resistant to moving. We should just have a cutoff age – no moving after age 70 unless it’s to assisted living. There is too much junk to sort and finding the right home is grueling.
from my observations in SoCal it was the same for the greatest gen crowd.
If they were not forced, they did not move even though they had 2 story homes with 5 bed rooms in some cases.
(there are always straggler kids and grand kids as well in a lot of cases.
If you have a nice place in SD that doesn’t cost you much, why would you ever want to move?
Jim’s right, the only way people will move is if they have to, but IMHO a lot of those that don’t think they have to now will later.
Since congress just essentially torpedoed the Dodd Frank Act, I think it’s probably fair to assume that there’s not going to be any downturn now that dumb money is back. I don’t think anyone in their right mind would be selling a decent property at a discount, especially within a mile of the coastline, as betting on the irrationality of others has been the easiest bet since the invention of betting.
I’m very curious to see what happens next summer. Barring any unforeseen calamity, I’m guessing it’s not “if” prices go up. It’s how much:
http://www.nytimes.com/2014/10/24/business/banks-again-avoid-having-any-skin-in-the-game.html?_r=0
your somebody if you live within a mile of the coast in CA.
I saw that 50% of americans make less than 28k / year.
Where are these folks suppose to live? Travel trailers and mobiles?
avg joe:
“Where are these folks suppose to live? Travel trailers and mobiles?”
If you’re retiring, and willing to relocate, there’s still some sweet beachfront property deals to be had in El Salvador. Just mind your own business, and you’ll probably be fine.
Daytrip:
Have you ever been there? Where is a good place to go on the ocean worldwide on the cheap but nice?
avgjoe,
There are websites for expats that cover these things. Quite a few places like that in Central & South America.
Avejoe,
I’ve only been to Brazil, not central america. I would probably research an area on the internet, then rent there for a few months to learn what’s what, before seriously considering getting into a property. I guess you can find cheap beachfront property around there, but there are going to be a number of trade-offs. Cheap beach property aside, you can wind up a regular host for exotic skin-burrowing insects, poisonous reptiles, aggressive sharks, and grumpy cartels. There are gated american communities in central america I hear are great, but the price reflects that.
Let your thirst for adventure be your guide, I guess. And who knows? If things go your way, you might wind up being our “Jim the Realtor of Nicaragua.”
Of the 13 homes on my cul-de-sac, five are still owned by original owners from 25 years ago. All are in their late 50’s to mid-60’s, firmly in the baby-boom generation. Three have one story homes. No modifications needed for aging in place. All are planning to stay. The people in the tri-level are having health issues, but are modifying their house for accessibility. The people with the two story added a first floor suite where a succession of parents have lived. They intend to take over that part of the house eventually.
Another two story was purchased about 8 years ago by a couple in their 60’s with grandchildren living around the corner. I expect the kids will be helping them out in a few years. They aren’t moving. A smaller one story was purchased 10 years ago by a couple now around 50 years old. They have expanded the house with additional living space and a large, accessible master bath. Don’t think they are going to move.
The last sale was a short sale several years ago by a couple that spent the equity on treatment programs for a difficult child. A job loss and high mortgage payments forced them out. It was their intention to stay forever.
The subdivision has around 500 homes. Maybe 20 turn over in a busy year. There is never any inventory. There is just too much demand. Original owners bought their houses at prices in the mid $300’s. The houses are now worth $1.3 to $1.5 million. Most of the original owners moved up and rolled over capital gains. The house is a large component of the estate. Prop 13 limits the property tax increases. Why sell? Let the kids inherit with a new basis and dispose of the house.
Why sell? Let the kids inherit with a new basis and dispose of the house.
Great neighborhood! You are in the Bay Area, correct?
You have probably described the majority of our SD North County coastal region too. But there will be a minority who need the money and eventually have to sell, or when the kids inherit, they will need the money and sell. It probably won’t feel like the ‘baby-boomer liquidation sale’ because it will drag out over time, but occasionally there will be a flood (2-5 houses in one neighborhood) that hits the market in a single selling season.
Yep, Silicon Valley.
It’s not a liquidation sale unless a lot of inventory is dumped on the market at once with a short time period to close the sales. The sales you describe will be necessary, but the houses will be listed on the open market like any other house. There will not be enough of them at any point in time to have much effect on values. No bargains to be picked over unless the houses have not been maintained and go to flippers or investors.
We moved to CA (LA area) four years ago from the northeast. Before moving here we used to go to Florida, specially during winters and thought we would retire there later on. Now that we live here, I couldn’t imagine retiring in Florida … once you experience summer without humidity and bugs, there is no going back! We don’t miss the snow either. With the southern CA weather and Prop 13 there is no real reason for someone to move.
I think we should call what’s going on Real Estate right now…
“The Great Wait”
Nobody is being forced to move and nobody is being forced to buy.