Posted on 08/15/2017 6:42:18 AM PDT by Lorianne
Older Americans own half of the houses in the market. Many are simply refusing to sell and others have adult “kids” moving back in since they can’t afford a place to rent or buy. It is a Catch 22 and many people are looking at countries like Italy where the number of adults that live at home is enormous. Multi-generational families just don’t coincide with the “rugged American” worldview where you go out on your own and you make it with your own two hands. Of course, many house humpers had mom and dad chip in but that doesn’t make for such a sexy story. In the end, however there are many baby boomers that simply are not selling. This is actually an interesting problem that is not going away.
Refusing to sell
Housing used to be a young person’s game. The U.S. housing market and to a large extent, the economy was driven by home buying and big ticket purchases. But that has definitely changed since the housing market imploded with the 2000s. It has also changed in terms of people marrying later, having fewer kids, and basically preferring to live in city centers versus suburbs. In other words, not a big need for McMansions.
The oldies but goodies are now occupying a larger share of housing:
Over half of homeowners in the U.S. are now 55 and older. And this figure is only going to grow over time. In places like California, the Taco Tuesday baby boomers own the housing market. This is just a fact and has kept inventory to a very low level.
But housing has gotten more expensive across all U.S. metro areas so this is a much larger trend. It has absolutely crushed the available inventory out on the market:
SNIP
Phhhhht!
My 99 year old mother(as of today) has been in assisted living for 9 years and the cost is approaching $10,000 a month. I would encourage anyone who can avoid these places to do so. They’re money making machines and from what i can see not worth the expense. The problem is that have you by the throat and they know it.
My 99 year old mother(as of today) has been in assisted living for 9 years and the cost is approaching $10,000 a month. I would encourage anyone who can avoid these places to do so. They’re money making machines and from what i can see not worth the expense. The problem is that have you by the throat and they know it.
I’m looking at a home in Maine today. Good price, lower real estate taxes than where I am in now although I’m concerned that they’ll grow by leaps and bounds in the blue state.
Yes, between 10-12 thousand a month. For it, you get a room, cleanliness and fairly bad food. And my mom was in a good one run by nuns straight out of The Sound of Music. My brother kept saying that for the money, we should have put her in the Ritz Carlton.
And who pays the tax when renting?
We'll use round numbers to make it easy. You do know what round numbers are, don't you?
Okay. Let's start.
Let's say your mortgage is $1,000.
There are 12 months in a year. With me so far?
12 x $1,000 (that little "x" represents "multiplied by" or "times") = $12,000. Write that number down somewhere. We will be coming back to it.
Still following?
Now, let's say the interest on that payment is $500.
Take that and multiply it by 12 and write that number down.
Now, subtract that number from the first number, $12,000.
Which number would your rather have in your bank account?
I must leave for work now, so you have 10 hours to work on this.
I'll be back to grade your answer tonight.
If that were true we would have stayed in Texas!
If you have a lot of money, the best strategy is not to build a McMansion, but instead build a smaller, quality home that is durable, with very low and easier maintenance, high efficiency, very conservative with water and power, and flexible enough for internal and external redesign.
The idea is to create a home that can function with little money for hundreds of years, in a place not prone to future development, relatively safe from natural disasters, and out of sight, out of mind of government.
A few years after turning 70, my trophy wife for more than a half century, and I, decided that we lived in a great neighborhood and liked our neighbors. We lived in a good town and belonged to a good church. We decided a smaller home or a retirement center was not for us.
We decided that, we would be like a couple of our former neighbors and not leave our home, until we were carried out feet first by the coroner’s office.
Our home is basically one level with a few steps to get in from our carport and with only a few steps in a part of our home we only use for guests or dinner parties.
So we had a ramp put in for us and guests to get into our home from the carport. Had a new roof with heavy duty insulation, two ac/heating units, one for the area we don’t use that much and one for our family room, kitchen, and master bedroom. We keep the mostly unused area at 62 degrees. We have a Nest thermostat. where we spend most of our time. I can control the Nest with our android phone here or away.
Inspite of price increases on Gas and Electric, our PG&E bill is less per month than before the retro. The monthly printout shows we are doing better than newer so called highly efficient homes in our area.
We put in a walkin shower with tiled bench if we want to sit down, in the Master BedRoom area.
We had a large on demand natural gas water heater installed. It comes on 15 minutes before we up and stays on until about 9 am. It comes on before dinner time and stays on until about 7pm. Any other time, we can have hot water in less than a minute for shower or whatever. This saves a huge amount water as little is wasted to get hot water, and there is no constant heating to maintain hot water.
Then, we recarpeted our home with the heavy insulated padding to block cold from coming up to the floor. We have hardwood floors in our family room and kitchen, and we had insulation put under those floors for more comfort.
This morning is an example of great comfort. Our inside temp is 68 with no heating and an outside low of 54 and a temp of 58 now, close to 7:30 am. The inside temp will stay in that range without any heating or AC today.
We had the exterior of our home repainted with a 20 year paint.
Our kitchen had been retrofitted with new appliances a few years before. It still looks great and like new inspite of being used everyday we are home.
We have 3 couples and a widow lady on our cul de sac who have done the same as us, and they plan to stay here to their end. Two couples in retirement have moved to our block the past year, and they will stay in their new homes to the end. We are divided into 50% a little past Boomer age and about 50% Boomers with two families with children.
When this happens across the nation, the supply of homes can’t meet the demand. So, the value of our homes increase each year.
Our home is in a trust and should be a nice inheritance for our surviving adult children and grandkids. That will handle a lot more than our home loan and line of credit that paid for all of the above.
They keep trying to put us in progressively smaller boxes. No thanks to that!
More whiny millennials. People live longer healthier and there has been all of a 5% uptick in the share of homes owned by older folks in the last 40 years. Considering it takes young adults a decade longer to approach actual adulthood this is a negligible increase all around.
Someone had written an article about a woman who essentially lives on a cruise boat.
At about $1000 a week it was cheaper than an assisted living home, and someone cooks and cleans up and she travels all over.
BTW, all our children are moved out and on their own. It's nice to come home to a quiet house and have all those extra bedrooms for guests. Having grown children living at home must get old rather quickly.
My Wife and I are 80/82. We sold our big home 4 years ago and downsized to 1900 sqft. Our Mortgage + Taxes + Insurance is $670./month. We don’t have enough Deductions to Itemize so Mortgage Interest has no affect on us Tax wise. This is best for us.
It took us some time but we finally figured out how stupid the whole concept of paying a mortgage to get the tax deduction is.
We did get a mortgage but it was a 15 year one, at absurdly cheap interest rates, and what we needed to do to get our 32 acres and a house in central KY. And it cost less than a quarter what a 3 bedroom rambler in any major metropolitan city’s suburbs would cost.
And the annual property taxes are less than a single month’s car payment on a Toyota.
We will either die there or stay there until we go to assisted living. All the kids and grandkids are staking claims. :)
The only way your logic works is if you live out of your car!
There are financial planners who can make a case not to pay off the mortgage because it is ‘cheap money’;
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