First-base side near Padres dugout
I went to the annual seat shuffle at Petco Park on Tuesday. It’s the event where Padres season-ticket holders can see which seats have become available, and possibly switch to a better location.
It reminded me of our local real estate market:
The best locations are owned by seniors who have had them for a long time, and they’re not giving them up!
There were some decent seats available, but very few of the prime seats up close.
Old-timers discussing their future mirrored what I hear about their real estate too. Some have a specific succession plan where, upon their death, the kids will take over the tickets, but there were others who mentioned that their kids are out-of-town, and have no interest.
Will there be a time when a load of great tickets become available?
Just like we’ve seen in real estate, probably not.
But you don’t need every senior to bail – all you need is one old couple to give up their prime spot!
Visitor’s clubhouse
Here’s a 33-second look at how few of the good seats were available:
For YEARS you have written about the coming boomer liquidation and for years I have been saying you are wrong. There is no better place to move TO and the tax hit to sell for many would be egregious. The $500k exclusion is not sufficient motivation for many people in the more expensive areas of the state
California taxes capital gains at income tax rates and there is that pesky Medicare tax surcharge of 3.8 percent on top of the federal rate over a certain amount. These houses originally sold for the high $200’s in 1988 to around $650k for the premium lots with bigger, more modern houses eight years later. The houses are now worth $1.5 to $2.3 million. This was a “move up” subdivision, and people that could roll the basis from their previous house when it was possible, did so. I certainly did. Do the math.
Why sell when you can wait for the basis to reset and your kids can get the house without paying those taxes? The $500k exclusion isn’t a lot of help when the basis in your house is so low.
Property taxes are also relatively reasonable if you have an old property tax basis under Prop 13. A lot of folks have small balance mortgages and a number have paid off houses. These houses rent for $4,000 to $5,500 a month. Probably more now, as I haven’t looked in a couple of years. A number of them have been converted to rentals as people have moved. It makes financial sense to rent instead of sell if you can afford to do that.
On my cul-de-sac, there are five original owners out of thirteen properties. Several more have been here for twenty years. The original owners are in their early 60’s to early 70’s. Only one or maybe two families with the adults under 50. Nobody is moving. They like most things about the area and they have ties here. These people will go out in an ambulance or a hearse. When they do leave, the kids will get a stepped up basis and the Prop 13 taxes. Why would the kids sell? They will either occupy or rent the house.
Don’t hold your breath waiting for the Boomer liquidation. It’s not going to happen in the nicer areas of California anytime soon.
Oops. A sentence got deleted by accident when editing. The second sentence in the second paragraph is missing. It should read:
“I live in an upper-middle grade subdivision in the southern part of the Bay Area.”
I gave up the fight at least two years ago, at your behest, and my writing here doesn’t insinuate anything about a boomer liquidation in Padres seats or houses.
I’ll always be here for you though!
The last year of my skepticism of a big boomer liquidation event:
Me being doubtful in March of this year:
https://bubbleinfocom.wpenginepowered.com/2019/03/12/boomers-in-charge/
Boomers not selling:
https://bubbleinfocom.wpenginepowered.com/2019/02/11/more-on-aging-in-place/
Trulia study that shows boomers not moving:
https://bubbleinfocom.wpenginepowered.com/2018/09/08/seniors-moving-later/
I state here that I am skeptical (July, 2018):
https://bubbleinfocom.wpenginepowered.com/2018/07/25/boomer-liquidations-2/
Harvard study:
https://bubbleinfocom.wpenginepowered.com/2018/06/22/aging-boomers-fewer-moves/
In addition, adults of all ages are far less likely to move than in years past. While the greatest declines in household mobility have been concentrated among the young, the 65-and-older set has also become increasingly more entrenched in their existing properties.
“Many of the growing number of older households are staying in their homes longer than previous generations at their ages, rather than downsizing or moving to rentals,” the JCHS observed.
Demographic shifts also play a role: Even though the move rate for Americans aged 65 and older dropped by just a percentage point, the sheer volume of aging baby boomers means that change represents “significantly fewer residential moves.”
“There is no doubt that the number of older adults will reach an unprecedented high over the next two decades,” the Harvard team concluded. “With this growth will come different demands, challenges, and stresses on the housing stock.”
Must have been that packet of Kool-Aid I sent you…
I don’t think people of any age move as much as they did 30 or 40 years ago. In the 60’s and 70’s, IBM stood for “I’ve Been Moved.” Corporations don’t do as much of that these days. Too expensive and people are generally considered interchangeable from the corporate perspective. Without job security, who is going to take the risk and spend a lot of money to move on their own?
Thinking back to our parents’ generation, I don’t recall a lot of them moving as they aged out of the workforce, either. A few moved to be near the kids, a few downsized or moved for financial reasons, but most stayed where they were.
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There is some incentive for older people today to relocate from high tax, cold winter locations back east to Florida and similar places. I see a lot of discussion of that on the internet retirement forums. Taxes and weather are a lot more bearable in mostly sunny and mild California. Great climate, Prop 13 protects you from massive property tax increases, and your Social Security is not subject to state income tax – not much incentive for older Californians to pack up and move.
I don’t think people of any age move as much as they did 30 or 40 years ago.
I agree…..and I’m trying to change that! 🙂
Make it cheaper and easier if you want to increase the numbers of movers…
The costs of selling, buying and moving are prohibitive. It takes a lot of time and energy. There isn’t a lot of good inventory to move to. Not sure you can fix those problems.
This was the only one i got wrong 14+ years ago:
https://exurbannation.blogspot.com/2005/12/future-history-2005-2012.html
In that same post I recommended: A share of Berkshire Hathaway ($89,500/share). Now $329,000.
Make it cheaper and easier if you want to increase the numbers of movers…
The costs of selling, buying and moving are prohibitive.
The high costs may be annoying but here’s the test – Would you move today if the cost was reasonable…or free? Probably not, so the costs are annoying not a hurdle.
Your other two reasons are the MAJOR hurdles:
It takes a lot of time and energy. There isn’t a lot of good inventory to move to.
What can I do? This is why I have a job!
The time and energy is spent on getting your chops up, and dealing with the lack of inventory.
Or you can have me help you.
I can’t make it cheaper, but I do make it quite easier!
Dawg from 2005 (killing it!):
The “silent spring” in real estate this March will do much to focus peoples’ attention. That real estate market turmoil will spill over into every market; bonds, stocks, the general economy. Stupid 42″ plasmas aren’t the problem. Even SUV sales are not going to be a big deal. Those are “creative destruction.” The real value of the US economy will be proven to be its self healing and flexibility. To protect the inate value of the US economy or individual assets means correctly pricing risk and carrying costs. A fixed rate mortgage for anyone with a note is a good idea. California’s Prop 13 is a good idea. A share of Berkshire Hathaway ($89,500/share) speaks to the issue of value over price.
This is a time to sit tight. Presumably you didn’t make any stupid choices recently so this should work.