April 1, 2012

Less False Optimism

Readers suggested a topic on house buying attitudes. “Did the bursting of the housing bubble scare off an entire generation of potential U.S. home owners? So far, I am ’scared off,’ but lower (more affordable) home prices could go far towards alleviating my fears.”

A reply, “I think there are still quite a few who would get back into housing AND stocks if they didn’t appear to be so manipulated.”

One said, “From my own experience house hunting, I definitely think that the market is absolutely owned by the infestor class right now. Where I’m at it’s mostly hot money flowing out of the SF Bay area. I’ve had 3 properties snaked out from under me by cash buyers who appear to be wanting to use them as rentals. If I had to guess right now, I’d say non owner-occupier buyers in my local market would be near 50%. (based on some data I’m seeing at work).”

“The question remains, what happens to rents when the market is absolutely flooded with these properties and job/income numbers are declining or stagnant?”

And another. “Here in Tucson, it seems like it takes about three years for in-VEST-ment properties to run into trouble. By ‘trouble,’ I mean: 1. Rents aren’t covering the mortgage payments, and the appreciation fairy is nowhere to be seen. 2. Tenants are trashing the houses, not paying rent, and causing all sorts of trouble with the neighbors. And said neighbors are finding your contact info in the county assessor database and using it to send you sternly worded letters with attorneys mentioned on the cc: line.”

“3. You finally boot the bad tenants out, and then you’ve got quite the repair job. In the meantime, the house is vacant. A lot of these houses end up back on the resale market. Or the in-VEST-ors just say ‘F— it!’ and let the houses go back to the bank. They remind of the sort who would be dazzled by the guys and gals who present those weekend real estate seminars.”

And finally, “So far it’s working on me and my friends — but ’scare off’ may not be the best description. I’d say ‘price out’ and/or ‘ransom.’ Here’s another: who will give Boomers the health care they think they’ve got coming to them? There are a few other generational whipsaws dancing around the fire.”

The Pittsburg Post Gazette. “Elected officials are adept at kicking cans down the road as far as they can, so why should the people who put them in office be any different?”

“The Employee Benefit Research Institute reports the percentage of workers confident they will have enough money for retirement remains at an all-time low and many of them are too strapped to do anything about it for the time being. Their fallback plan is cramming retirement savings into their final years on the job and working longer than they expected.”

“The Washington, D.C., research group reported last week only 14 percent of the workers it surveyed in January are very confident about having enough money to live comfortably when they retire. That’s about the same percentage as a year ago, but roughly half of the 27 percent who were very confident in 2007.”

“The 27 percent confidence level was recorded before the Great Recession shook workers and retirees out of a confidence — hubris is probably a better word — that did not allow for the market meltdown that ensued. ‘There’s less false optimism in 2011 and 2012 than there had been in past years,’ said Jack VanDerhei, the institute’s research director and co-author of the report.”

“According to the survey, more than 40 percent said job security is the most pressing financial concern facing Americans today. Other concerns include making ends meet, paying down debt, paying their mortgage and having enough money for medical expenses. Those immediate concerns are so overwhelming that more than half of the workers polled haven’t even bothered to try to figure out how much they’ll need to retire comfortably. ‘Many workers have more immediate worries than saving for retirement,’ Mr. VanDerhei said.”

“Mathew Greenwald, president of the Washington, D.C., market research firm, said a quarter of workers reported they had adjusted their expected retirement age in the past year. More than a third now expect to retire after reaching 65 versus only 11 percent in 1991. ‘It’s an acceptance of the cost of not saving enough now,’ he said. ‘Workers are falling further behind, and they know it.’”

“There may be a hitch in the plans of those resigned to working longer and thinking they will get religion about saving for retirement sometime down the road. Almost half of the retirees surveyed said they retired earlier than they expected to for reasons beyond their control, Mr. Greenwald said. Those reasons include losing their job and not being able to find another one, as well as health problems such as disability.”

Bits Bucket for April 1, 2012

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