We’ve explored a few of the alternative groups of potential sellers, but none are emerging as major contributors. In a ‘normalizing’ market, it means we are back to the Big 3 sources of new listings; Death, Divorce, and Job Transfer.
Carmel Valley doesn’t have much to worry about here – the oldest CV homes were built in the mid-1980s. But in the remaining areas of San Diego’s North County coastal region, where houses go back to the 1940s and 1950s, there are many long-time owners who will stay for the duration.
Back in the old days, it was routine to sell your parents’ home and split the proceeds with the siblings.
But that was when everyone could afford their own house.
Today, one of the siblings might want, or need, to take possession because they can’t afford these prices. As a result, what used to be a steady flow of new listings may not be as fruitful as before.
It will be relative to the quality of the home.
Yesterday I was in Oceanside, where a past client had purchased in the 55+ community of Oceana. I had sold her house about 10 years ago, and she moved there with her husband thinking it would be the final stop. It was for her husband, but now she needs assisted living, so she is exploring those facilities.
Oceana is an average senior community – the homes are 1,000sf to 1,600sf and sell in the $200,000 and $300,000s. Sales are increasing – here are the number of closed sales between Jan 1 and Sept 30:
2010: 57
2011: 57
2012: 50
2013: 69
2014: 66
There are 22 active listings today, which is no shortage of supply is you are thinking of living there, and it is an affordable option.
But in the swankier parts of town, when a homeowner dies, their home is more likely to stay in the family today just because the siblings having such a difficult time buying their own home.
The condition of these homes is usually less than spectacular, and those that do come up for sale will be great flipper food. You’ll see more of them in areas where homes were built in the 1960s and 1970s, because those original owners have had no better place to live for the money!
Jim,
Any insight on continuing communities that are more pricey and have more amenities? We’ve looked at La Costa Glen.
As inflation goes up (eventually) the list of years will start hitting the 1980’s then 1990’s Maybe 2000’s (well those without high MR and HOA’s anyway).
” because those original owners have had no better place to live for the money!”
Give it another 10-15 years.
Any insight on continuing communities that are more pricey and have more amenities? We’ve looked at La Costa Glen.
LC Glen and Carlsbad by the Sea are extremely expensive, and will make you think that assisted suicide might develop into an option in the future!
I’ve had clients move to these retirement homes/assisted living facilities, and they liked them. I’ve been to them too, and they seemed good:
http://www.brookdale.com/communities/emeritus-carlsbad/
https://www.elmcroft.com/community/las-villas-de-carlsbad-california/
http://www.brookdale.com/communities/emeritus-oceanside/
The really interesting part to estate sales is IF they do list, their lack of motivation is exceedingly present.
They have little to no taxes on the property since its been owned for a long time (prop 13) and the place is often paid off. So, they’ll pick a number, sometimes sentimentally increased and just sit. It has different consequences than the owner with a mortgage and $300-$700 in property taxes and it shows.
Cool subject, I think we’ll see a fair share of them but the above reason will limit the discounts given.
Agreed – they’re not going to give them away (even if the folks paid 1/20th the price).
$700.00 in property tax will not get them motivated IMO,
but $8000.00 to $16000.00 most likely will.
Property tax below say $4000.00 can be lived with even on SS.
Reverse Mortgage really is going to change things IMO as well.
You got a little over 50% equity, you can most likely qualify.
I know of a few folks who are paying under 2000 a year in property taxes. If not for prop 13, it would be over $6000. The closer to the beach, the more people you’ll find like that. Places with history like La Jolla may be buttoned up that way, it seems. Many of those properties will only be handed to a broker from the owner’s cold dead hands. Thoughtful inheritors will think long and hard before giving up that kind of spread.
I think reverse mortgages might be attractive to people with no heirs, and the desperate. Otherwise, the rough rule of thumb is:
To ensure pleasant thanksgiving dinners, don’t date your cousin, and don’t file for a reverse mortgage.
Let’s note also that when a child inherits the parents’ house, they also inherit the ultra-low property tax basis also – it doesn’t get stepped up to market value.
RM is only for the desperate IMO.
Else you either don’t desperately need the money or you don’t have a mortgage.
I know someone who hit the reverse-mortgage ATM a couple of times to fund his wife’s bird-watching trips around the world. Finally had to sell and leave town.
With property rates and taxes so low thanks to prop 13 it will be the areas with high hoa and mello roos costs that come onto the market first. People living in that environment will have to find more money every year to cover them while living on a more fixed income.
As I read it for federal tax purposes if you inherit a property, you get a new basis of the value of the property on the date of death. So for federal income tax purposes the basis does step up. Is Ca tax law different? I agree the funny thing about prop 13 is allowing folks who inherit to keep the taxable value is strange. In Tx in comparison you can freeze property taxes when you reach 65 (i.e. the tax is frozen), but when someone inherits the tax steps up. In my case when I inherited my parents house the tax trebled.
Sorry, I added to my previous comment.
Yes, fed and state steps up the basis for INCOME taxes.
Property-tax basis doesn’t change if a child inherits parents house.
That’s how TX makes up for no income tax, works out well if you are a CEO or live in a trailer.
We do it here with bonds and MR on new home owners however as well so maybe it’s not much different LOL.
(ALso high HOA’s sometimes pay for thing property Tax used to)