Weekend Topic Suggestions!
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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How about a topic on housing and the holiday?
‘Instead of heading to the mountains or the beaches, thousands of Valley residents are cooling their heels near home this weekend. They are joining the “staycation” trend. Rose and Roger Fleenor decided to forgo a trip to their family cabin near Payson. They’re staying three nights at the Clarendon Hotel in Phoenix instead. It’s just five minutes from their house.’
‘At the cabin we probably would have stayed all weekend,” Rose Fleenor says, “but it probably would have been three times as much to go up to the cabin.’
‘Wade Osborne stopped into Head’s Flags in South Tampa on Thursday to replace the faded American flag hanging outside his house in Beach Park. “How’s business?” Osborne asked.’
‘Unfortunately, it’s nothing to celebrate, local flag retailers say. The nation’s blues over high gas prices, job losses and the troubled economy seem to be keeping shoppers away, said Tony Clayton, who operates Head’s Flags with grandfather Floyd Head.’
‘We’re doing OK, but not as good as previous years, that’s for sure,” Clayton told another visitor. “When you’re putting a hundred dollars in your gas tank, it makes people conservative.’
“Rose and Roger Fleenor decided to forgo a trip to their family cabin near Payson.”
And it won’t be long until all these cabins and second homes go on the market, adding to the glut.
It’s going to be a disaster in places like Payson, IMO. No real local economy and a huge price run up. In terms of income to house prices, Flagstaff and Payson may have a larger bubble than coastal California. Of course, it was largely CA infestors that ran it up.
Talking about disaster, last I check General Motors worth $6 billion. I thought it was the worlds biggest company… . On this 4 th of July it is really a disaster. Toyota Co. is worth $147 billion, what happened to this country?
Last week Mr. Paulson went to Russia to ask Putin to invest their money into the U.S., since U.S economy is in a grave condition, to ask Russia for help? Where are we going… ?
My boss has her place for sale in the Poconos. She’s standing firm on her asking price, though. Says, “I don’t need to sell!” We’ll see.
Here in the High Sierra, it’s all about foreigners renting rv’s and not giving a fig about gas prices, as it’s half of what they pay back in the old country.
American tourons are in constant complain mode about gas, in comparison…
I kinda thought the gas complaint was a cover. The real problem being that they’re afraid to put that vacation on the credit card as usual.
(It’s not the $100 gas surcharge but the $2000 vacation they’re rethinking.)
CarrieAnn;
I agree with you.
M
Rose and Roger Fleenor decided to forgo a trip to their family cabin near Payson. They’re staying three nights at the Clarendon Hotel in Phoenix instead. It’s just five minutes from their house.’
I cannot imagine paying to stay at a hotel that close to my house. If I can afford the room, I can afford the gas to go somewhere. We’ve booked our room at Myrtle Beach for the second week in September.
On this July 4 weekend - how do we declare economic independence from the housing and credit mess that some very unpatriotic business and gov’t leaders got us into?
HBB remedies for getting the nation back on its feet.
i would declare Osama has temporally won the war on terror, and the only way to fight back is to remove our troops from baghdad and to place them at the oil fields and protect them at all costs…
Hopefully that will send a message to the oil markets and prices will drop a lot real fast.
Then we need a crash couse in Amercia to not only teach people to read write and speak English, ( eliminate functional illiteracy) but also manditory financial education courses to graduate high school AND college.
If we as Americans knew how to do 8th grade math and use a calculator, there would not have been a housing bubble…IMO
We need public transportation badly in america, we cant even get a new subway done in NYC (what 20 years and counting?)and the lexington ave subway has been at full capacity for years.
We need to time shift workers in America, we have way too many people working at 4pm vs 4 am No tax breaks for business when all their employees work 9-5 M-F, Prime time pricing, this could eliminate lots of trafiic and spread out resources over a 24 hour day….
not many power outages in the middle of the night….right?
And in NYC just try and find 2nd 3rd shift work…i would love to work today, just not in retail
“Then we need a crash couse in Amercia to not only teach people to read write and speak English, ( eliminate functional illiteracy) but also manditory financial education courses to graduate high school AND college.”
If we as Americans knew how to do 8th grade math and use a calculator, there would not have been a housing bubble…IMO
The more educated the populace, the more unhappy that they will be with their inevitable fate. Do you really want a lot of disgruntled Ph.Ds working checkout or cleaning bathrooms? These are the jobs of the future in this country. Awareness will only breed discontent. Education will just exacerbate the bad feelings.
Have a good 4th.
If we as Americans knew how to do 8th grade math and use a calculator, there would not have been a housing bubble…IMO
I’m not so sure. Most people are greedy and lazy.
I’d also suspect that the majority of people who participated in the bubble were frustrated lower-class people who really wanted that Hummer but didn’t want to work for it. No math will convince them that they don’t deserve what they think is the jet-set Hollywood lifestyle…
They knew 8th grade math well enough to calculate all the riches they would sock away after they flipped the McStuccoBox in Queen Creek onto a Greater Fool…
Has anyone else noticed a big change in freeway traffic this year? Though gas costs a fortune, I am guessing my fuel consumption has dropped drastically this year due to lighter traffic on SD freeways. Three years ago, with Realtors and flippers clogging the roads on the way to their next home showing, I could almost never get on the freeway without getting stuck in traffic; now I can predictably make good time. From an economic standpoint, the drop in travel time and fuel burned while sitting in traffic is an offset to the increase in per gallon fuel price.
I am especially interested in knowing whether SF Bay Area traffic has lightened?
ProBear-My wife went from 52 north to Encinitas Blvd on I-5 Tuesday at 5pm and did 65 Mph. Now I realize it’s a holiday week and lots of folks took off but that was almost hard to believe. The fair is still going on too.
PB;
What about folks leaving in country side ot towns where the traffic is not issue.
The traffic in San Diego and Bay area does not represent the whole picture of the nation nor does the fuel consumption/saving.
M
I’ve driven the North 15 to Rancho Bernardo every afternoon for 4 years. Used to get jammed up at Miramar or Mira Mesa twice a week - and around Poway Road the rest of the time. Didn’t matter when in the afternoon I left work (3:30 to 5:30 - same pattern). But, the last two years or so it’s been smooth sailing to at least Carmel Mountain.
This could be due more to the construction, however. But I do notice what you’re talking about in general across San Diego.
SF Bay Area traffic has lightened ??
I spend a lot of time on two feeder expressways to the tech employers in 95051…Traffic flows are down as compared to lets say a year ago…
What I’m noticing during my twice-weekly suicide run on the 405, to and from the San Fernando Valley - is a couple of things:
A) People really are driving more slowly - ambient speed seems to have dropped to just below 60mph, although there’s still the inevitable speed-freak that likes to tailgate at 80mph.
B) A huge increase in the number of scooters and motorbikes, of all persuasions, on the road.
Sadly, the ‘Yukon Dinosaurs’, as I like to call them, have difficulty in seeing them, so will expect to hear about bigger casualty numbers later on.
Will the President follow through on his threat to veto the Congress’s $300 bn housing rescue plan?
Bush says can reach deal with Congress on housing
Tue Jul 1, 2008 10:59pm BST
By Jeremy Pelofsky
NORTH LITTLE ROCK, Arkansas (Reuters) - U.S. President George W. Bush said on Tuesday he believed a deal could be reached with Congress on legislation to help distressed homeowners stay in their houses.
“I think we can get us a bill, but it’s going to require less politics and more focus on keeping our minds on who we need to help — and that’s the homeowner,” Bush said at a roundtable on housing counseling.
Every once in a rare while I think Bush wakes up
I read the current media blitz on the Prez’s newfound willingness to strike a deal as a sign the veto threat was just a bargaining chip, rather than a real eventuality.
I hope someone realizes that Frank-Dodd will cost us Taxpayers BILLIONS. (Ny who will qualify for Frank-Dodd can be considered a Taxpayer; they’re all in the looter class).
If 500,000 houses are crammed-down, I calculate an average of $80,000 in cramdown for each one. (30% of the median house price in 2006).
So that’s $24,000 of income tax each Chris-Dodd lucky-duck won’t have to pay on this $80,000 of income (yes, I know it doesn’t seem like income to them, but it’s income)
$24,000 * 500,000 = $12,000,000,000
and I’ve never seen ANYONE mention this as a cost of Chris-Dodd!
It needs to be put in these terms. Maybe if the average Liberal realizes that Congress wants to write 500,000 tax-free $80,000 checks to greedy irresponsible people there would be some outrage. (My liberal brother and parents, when asked about this, say “It’s terrrible! People are losing the homes! We need to do something! It’s so sad”, etc.)
(Ny == (Nobody
Those taxes were never going to be paid anyway. There are not enough IRS agents to followup on 1% of these situations.
I agree the cost is underestimated, but predict Reuven’s $12 bn will also prove an underestimate (not that there is anything wrong with that…).
I bet parties are going to be more fun because nobody is going to bragging about their equity. We will all be talking about gas and food instead.
LOL. The new bragging topic for men will be MPG.
How about some stories where people are doing well with real estate where they showed some commonsense and aren’t drowning in debt? Afterall, when you focus only one side of any situation it becomes easy to believe that everything is bad or everything is good depending on your perspective.
A good portion of the folks who aren’t drowning in debt do not have the perspective that they are doing well.
For instance, my in-laws purchased their suburban Atlanta home 30+ years ago. It’s gone up in value (not much — it’s hasn’t kept pace with inflation) and they only pay small yearly property tax and insurance bills for housing. So, based on my perspective, they’re doing very well.
However, they do not view their fate the same way. They talk about all the value they have lost in their home since 2005 — something they view as real lost money.
They also focus on the appreciation other areas of Atlanta have experienced relative to theirs. Had they purchased the same value home in Midtown Atlanta back in the late 70s, their home would be worth triple what their current home is worth.
Their case is not unique. I hear from many long-time owner with loads of equity about all the money they have “lost” since the crash. It seems to me that they only people who are happy with the crash is people who have been renting since 2005.
Great point. My dad is the same way - huge house, bought cheaply in late 70s, paid off years agot, intends to put on the market this month. He is adamant about not taking less than $400,000 for it. The man could take $300,000 and it’d STILL be an enormous win-win for him, but he can’t see that.
I know a guy at the gym with a long face he is always talking about the $100,000 dollars he has lost on his house just this last year.
Has owned the the house for over 15 yrs!
What an idiot!
We seem to be doing better than the people my husband works with. All of them do a lot of driving since they do onsite technical support. Some days my husband sits at home and does research or studies. Other days he drives 300 or 400 miles. He gets 35 miles per gallon. Most of his coworkers drvie trucks or SUVs. Also we owe very litle on the house, mainly from necessary repairs such as a roof. They are either renting expensive places or bought in the last couple of years.
Low-class people like talking about big sums of money! So while during the peak they’d talk about how they have $500,000 in imagined wealth (and how savvy they are!), during the crash, they’ll talk about how they lost $500,000! Just humor them.
“… they only pay small yearly property tax and yearly insurance bills for housing.”
Your in-laws have it made and don’t know it. I suggest you sit down with them with pencil and paper and show them how much more after-tax money they’d need to bring in to pay the rent if they were renting their house from some else.
Just wondering what’s your best guess as to when our mess called the FED will raise rates?
Inflation beginning to pinch? Consider this! “Inflation in the Ukraine is running at 30% per year. In Latvia, it’s 18%. Egypt is suffering 16% inflation. And, oh yes…there’s Zimbabwe. The average worker’s salary in Zimbabwe is 15 billion Zimbabwe dollars per month. The poor fellows are billionaires, every one of them. But it takes 19 billion Zimbabwe dollars just to buy a pack of 10 cookies - if you find it. A pound of margarine is 25 billion.”
If wages are rising with prices, you have real inflation. If not, you have currency devaluation. Can the Fed let the status quo continue? IMO, if the price of gasoline doesn’t fall, the economy will head into a major tail-spin.
This all gets back to the idea that the Fed has limitless power to preserve house prices. Does anyone think now that they will risk still higher gas prices with further rate cuts? If $4/gallon is hurting, think about 6 or 7.
‘Jose Mauricio Rodriguez Montalvo rents a room from his sister to help her afford her basement flat in Madrid as mortgage costs soar. ‘She’s crying over the Euribor,’ the 12-month money- market rate used to set Spanish mortgages, Montalvo, 28, said in an interview. ‘We’re just praying it won’t keep going up.’
‘For homeowners in Spain and in Ireland, struggling to stay afloat amid the wreckage of a decade-long real-estate boom, those prayers are going unanswered. The European Central Bank yesterday increased its benchmark rate to 4.25 percent to fight inflation, pushing both economies a step closer to recession.’
‘The two countries are particularly vulnerable to higher lending costs because their housing industries account for about 10 percent of their economies, twice the EU average. Montalvo’s family has seen its monthly mortgage payment leap 50 percent to 2,080 euros since the ECB began raising rates in December 2005.’
‘They have been thrown to the wolves,’ said Stuart Thomson, who helps manage $46 billion in bonds in Glasgow, Scotland. ‘It’s much easier to bring inflation lower if you’re willing to have a recession in economies like Spain, Italy and Ireland.’
I’ve raised my hourly rates to my customers and starting next month I’ll be raising my employee’s wages.
I hope I’m not starting something we’ll all regret later.
My guests and I have a front-row seat (with chilled beverages) for the biggest fireworks spectacular in the region. 84 engines, 7 air tankers, 3 medium and 1 heavy chopper, 1200 hunky guys camped out in a meadow. Eighteen miles of this…and all just one ridge over. SMOKIN’!
I’m betting we’re not the only ones celebrating the 4th by watching our properties go up in flames, so to speak.
http://www.kerncountyfire.org/incidents.php?id=124
That looks scary, although the 1200 hunky guys camped out in a meadow sounds nice. Take your camera and some release forms and make a Kern County firefighters 2009 calendar.
At this point in my life I’m more aroused by their bulldozers.
Too funny. Friends here, the couple across the street, are both in their 50s, and in a happy marriage of about 7 years. They met when she represented him in his divorce from the first wife. She is a woman with so much going for her, which he appreciates.
He remembers how impressed he was when he found out that she had a full set of Torq wrenches!
Return to 55mph…. God I hope not, my gas budget is just fine.
http://news.yahoo.com/s/ap/20080703/ap_on_go_co/warner_speed_limit
My sister and her husband are thinking about buying and flipping homes in St. Lucie county Florida. The proceeds of the flips will go toward paying down their homeowner’s equity line used to buy two other homes near the peak of the housing market. Is flipping a good strategy at this time? Should they buy and hold? Or, should they just stay the hell away from housing?
That depends on whether they like losing money…
I explained to her that this is a cyclical market and the time to flip properties is near the peak when prices are increasing rapidly. Moreover, the time to buy and hold is near the bottom of the cycle when prices are low enough to be covered by tenants.
Mrkt:
Your sis is one of the smartest people on the planet, she should be fine with their ideas. Hey why not take money out of you 401K and double up on the profits? I wish i was as lucky as you and had a sis that smart..
mrktmaven:
I’d like to be an investor with her, she sounds VERY astute. In fact, have her send me her SS# and bank info and I’ll deposit money directly into her account. This is such a GREAT idea, I can’t wait to get involved - don’t forget, SS# and bank account #s.
/sarcasm
Good grief! There really is a fool born every minute.
I asked her who she is going to flip or sell the properties to — her target market. She said they intend to sell their flips to first time buyers. I described the major shift we had in the national homeownership rate and how that was caused in large part by first time buyers using subprime loans. How many qualified first time buyers are out there?
If she is literate, and can read and understand english just refer her to the archives of this blog. If she can understand english then simple for her to come to her own conclusions, if not then keep us informed.
My sister is literate. She is determined, however, to invest in the real estate market. I’m not against anyone investing in real estate, stocks, bonds, or commodities. I suspect, however, she is executing the wrong tactics and strategies at differing phases of the real estate cycle.
Vital questions:
What age:
Married:
Kids:
Height and weight:
Can she work nights:
Has she take pole dancing classes:
Does she like to make money in one dollar increments?
“For every thing there is a season …”
A time to build up, a time to break down,
A time to laugh and a time to weep…
A time to get, and a time to lose
A time to keep, and a time to cast away…
Lack of governmental appraisal adjustments to present market conditions for tax purposes.
Example: Home across from old GF is being foreclosed this month; 90 K mortgage, 63.5K Zillow estimate, 28K sheriff sale appraisal, minimum starting bid, 18.7K
Just how many banks do we estimate will be closed in August (the classic month of banking doom).
Is anybody thinking of buying? In some parts of flyover country, sellers are probably willing to entertain a reasonable lowball.
Yes, I know, we won’t see the first bottom for another couple years*, but if we’re going to have a Great Recession, would it be better to buy now, rather than to wait for a rental to be foreclosed under you? I’m also a mild Peak Oiler, so I like the stability of storage space and land enough to fit more than one shrub.
—-
*I’m calling the true Rock Bottom for 2013 or so, a year after all those prime option-arm HELOC’s on the Credit Suisse graph are due to reset. That’s assuming the world doesn’t end in 2012 like it does on the Inca (Aztec?) calendar.
We were thinking about checking out the prices next spring but this area has only started to feel pressure. Realistically we’ll probably be resigning that rental lease.
“That’s assuming the world doesn’t end in 2012 like it does on the Inca (Aztec?) calendar.”
My friend just returned from touring the Mayan ruins. Tour operators are explaining the end of that calendar predicts a cataclysmic event for that area specifically, such as a great flood, and not the end of the world as a whole. If I was there I would have asked if they felt the calendar was predicting the results of global warming.
Just chatted with a local (SD) appraiser and fellow renter. I asked him when (if) he planned to start looking for a place to buy, and he said 2009 at soonest. Judging from the reset schedule which stretches out past the end of 2009, next year may prove to be too early if one wants to avoid the blade of the falling knife.
Just returned from the local parade. I am in pretty heavy Repub country but wasn’t thinking politics as I sat down to enjoy.
I did notice that no one was clapping as the town’s and area politicians were paraded by. I figured it was just the local reserve. Or perhaps being new to town I didn’t understand some local spat that had the crowd so uninteristed.
Then the Democratic Party leaders came by. That’s when I understood. There was that missing clapping.
Then came the Obama sign w/its crowd. The loudest cheers I heard all morning. This is Repub country. I think, at least in this town, their guy is in trouble.
Got a late call last night from a friend who is a long-time Republican congressman. Wanted to wish me a happy 4th, and wax wistful. He’s been in DC for almost 30 years now and although he’s going through the motions, doesn’t sound optimistic about the upcoming election. Oddly enough, he hasn’t mentioned Barack Obama’s or John McCain’s presidential campaign even once, but he’s been very public and very vocal in his outright condemnation of Our Dear Leader. A far cry from a few years ago.
You’re right, CarrieAnn. A sea change is coming.
(New admin buzzword: “warfighters.” Replaces “robust.”)
At my local parade there was more of a democrat showing than there was republican. However, no one cheered for the Obama banner nor for the State Reps walking the parade (they got in a few handshakes but that was about it).
However, there were a number of WWII vets in the parade (including a nurse and a purple heart recipient) that got standing ovation and applause.
Yup, my hardcore right-wing pollyanna cheerleading BIL shocked me the other day by saying Bush III didn’t have a snowball’s chance in Hell. Hmmm…at the time I thought he might be doing some Rovian jitsu on me, but now, I’m thinking he and his homies are preparing for a rout.
My neighborhood, traditionally largely liberal dem w/ a high voter turnout all round - on the streets that I walk, bike or drive through - has 0 McCain yard signs, a few Obama, about half as many Hillary (still), but by far the largest number of signs are Ron Paul.
Does anyone have suggestions for recent editions to bubble literature? I am currently reading “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism” by Kevin Phillips (highly recommended for anyone who enjoys post-credit-bubble Schadenfreude).
Next on my list after this one is “The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means” by George Soros.
Here are a few more contemporary titles in this genre; any comments on which of these are most worth reading or other titles to add to this list would be appreciated:
“The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash” by Charles R. Morris
“When Markets Collide: Investment Strategies for the Age of Global Economic Change” by Mohamed El-Erian
“Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve” by William Fleckenstein
“The Panic of 1907: Lessons Learned from the Market’s Perfect Storm”
by Robert F. Bruner
“While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis by Roger Lowenstein
“Pension Dumping: The Reasons, the Wreckage, the Stakes for Wall Street” by Fran Hawthorne
“The Black Swan: The Impact of the Highly Improbable” by Nassim Nicholas Taleb
Thanks for the list. I look forward to seeing others’ suggestions. I’m reading Bad Money at the moment now too.
Does reading that book make you feel that you are reading a synopsis of the discussion on this blog over the past couple of years? I am not trying to suggest that Phillips scooped the blog; he has been talking and writing books about the subjects we discussed here for twenty years or so. But it is quite interesting to me how many of the discussions we have had here are closely paralleled by the content of his book.
Going back and forth between the Phillips book and this blog is a seamless experience. I read American Theocracy when it came out two years ago, which was 1/3 about US financial crisis (then, pending). I was surprised then that I found the financial part so interesting.
Now, I find reading Bad Money fits quite seamlessly with my HBB reading. I am a far more sophisticated reader than I was of the previous book - thanks to what I have learned from HBB and HBB-ers.
‘Does anyone have suggestions for recent editions to bubble literature? I am currently reading “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism” by Kevin Phillips (highly recommended for anyone who enjoys post-credit-bubble Schadenfreude).’
Just got a copy of Bad Money from the library last week.
Just read a review about a book coming out in August:
The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too, by James Galbraith
Infectious Greed, byJames Partnoy.
Explains the creation of the MBS at Salomon, and the mutant financial engineering it engendered. Very readable.
My two favorite books on the american economy are Crash-Proof and Empire of Debt.
Crash-Proof
This book is an informed and informative warning of a looming period marked by sizeable tax hikes, loss of retirement benefits, double digit inflation, even - as happened recently in Argentina - the possible collapse of the middle class. However, Schiff does have a survival plan that can provide the protection that readers will need in the coming years.
Empire of Debt
In this book, financial writers Bill Bonner and Addison Wiggin provide you with a indepth look at how the American character has shifted to accommodate its new imperial role; how we have abandoned the private virtues of personal liberty, economic freedom, and fiscal restraint; and how the government has gained control of public life and the economy.
Enjoy!
I am wondering what the future of 55+ communities are. Years ago, these were places where retirees (or soon to be retirees) could go to downsize. They were affordable. Nowadays there are so many that are pricey, large homes with vaulted ceilings and gourmet kitchens, etc. I honestly don’t know how there can be so many rich retirees. And you do have to be rich to live in many of them. What is going on? And where is it headed?
future of 55+ communities ??
I made a comment about this a week or two ago in “Weekend Topic”….Its not going to happen for some time but you 70 Mil. babby boomers that populate these communities….As they start to die off and move to more care oriented facilities I got to believe its going to leave a gaping vacuum in these communities….What demographic will be able to fill this gap particularly at these price levels ??
so many rich retirees ??
Depends on how you define “rich”…We could easily make a argument that you could be “rich” in that you can afford to live in these communities with relatively little assests other than Pension….Lots of disposable income out there through Pensions and SS checks…
Yeah, eastcoaster, what about those hordes of 55+ that have to be not only rich, but inclined to waste their money on bogus luxury?
A friend and I went to look at condos in our near-in neighborhood in Austin. (Next week, we’re going to downtown high-rise condo sales places.)
I thought that they were marketing those things to young single trendies willing to indenture their lives in order to waste money on purported luxury - yes, it’s a stacked crapbox with a parking garage underneath, but it has pergo, stainless, granite, and you can walk to nightlife.
But they say that they’re selling to “youthful” empty nesters, or soon to be empty nesters, and retirees or soon to be retirees, wanting to leave the suburbs and their yard, and bring their equity to a condo, where they can be at the park and downtown and the restaurants and clubs without having to use the car.
Now maybe they were targeting us, since we are in that age demographic. (Although we both have always lived in this area, WAY enjoy the yards of our little old houses, and don’t spend money stupidly.)
But who ARE these people that are supposed to buy those $385,000 1 bedroom condos, $650,000, $1 million, $1.5 million condos? Are they all going to come from CA and buy, since TX is so much cheaper than CA?
My parents are moving to a retirement community. They are paying ~$300,000 for a 2BR bungalow duplex (which now sell for even more, but my parents have been on the waiting list for about a year or so, so they got it at the then-price). They will also pay ~$900 month for the services listed below:
-Property Taxes
-Use of all Campus Amenities*
-Snow and Trash Removal
-Water/Sewer
-Lawn and Shrubbery Care
-Wellnesss Nurse
-Street Lights
-Emergency Meal Service
-Campus Groundskeeping
-Scheduled Transportation
-Routine Exterior Home Maintenance
-Routine Interior Home Repairs and Maintenance
-Priorty Access to On-Campus Assisted Living and Skilled Nursing
Care (fee for service)
*Amenities:
-Spacious 7,500 Square Foot Clubhouse
-Heated Indoor Pool
-Multi-media Room with Bigscreen entertainment
-Great Room for Private Parties and resident social events
-Country kitchen for catered functions
-Game Room
-Exercise center
-Acres of outdoor space for walking, gardening and bicycling
Here’s the kicker - they won’t actually own the home. They get no deed. The $300,000 is called an “entrance fee” and they (or their estate) will get some percentage of their purchase price back when they move (or die).
Is it just me or does this seem like an expensive way to retire? My dad pulls in a very nice pension (from a career of teaching HS math - seriously, teaching is more lucrative than people say), but it seems to me like it’d make more sense to downsize to a SFH rancher or something and pay someone to do your lawn care, snow shoveling, etc.
I know I won’t be retiring like this. I’m years away, but still. I do know some people facing retirement and they sure can’t afford to live like this. And this isn’t even one of the really expensive options out there.
Actually, that sounds pretty good, assuming that your parents are ready for some place so “sheltered.” They are preparing for the long run, will save their kids some stress, and should be able to live out their lives without the threat of ending up in a nursing home.
“Priorty Access to On-Campus Assisted Living and Skilled Nursing Care (fee for service)” sounds good, especially with long-term care insurance.
My friends who are retired are doing the SFR thing, and those of us not retired are heading that direction, with some thought to have space - office or studio or rental - that could be occupied by a caregiver if necessary. But other options may be down the road, not by choice.
In a recent phone conversation, an old friend told me about where his mother lives in Ohio, a place like what you describe. She’s younger than my mom, and it sounds like she is well set. (She’s a retired social worker, and did her research.) Her kids don’t have to worry. An elderly neighbor from when we were living in an apartment moved into a place like you described, because her daughter insisted.
This friend was very sympathetic with my situation - for the umpteenth time, I was having to cope with the fact that my ancient mother is threatened with having to leave the assisted living facility where she is happy. It is a “no-lift” facility, and doesn’t offer the higher levels of care that “aging-in-place” facilities offer.
My mother is mentally sharp, but physically weak. I was freaked out by the thought of her going into a nursing home. She still owns her home, but the idea of her being there alone and vulnerable to some sort of live-in caregiver or caregiver team is scary. Fortunately there is an “aging-in-place” facility, ready to take her, in my home town, and one within walking distance of my house in Austin, so there are still options. But mom wants to stay where she is…
So your parents’ decision sounds good to me - as it would to my friend with the mother in Ohio and the daughter of my former neighbor.
My mom is doing the same thing in Pasadena. I needed a glass of wine after she told me how mucha month and how much to buy into a home she does not own.
I went to a party at the beach but there was nowhere to park.
I’m beginning to hear noises that when school starts [and home sales season ends for 2008] inventory will come down cause the “wishers” will pull their houses off the market; and those left (those who seriously need to sell) will be forced to lower prices. Ya think?
Not sure where you are, but apparently San Diegans are already “forced” to lower their prices 25 pct or so below the peak bubble year prices if they want to sell their homes.
Yeah- that’s what will happen. We’ll do it after several months of fruitless “walk-throughs” (take it off the market). So will the seller of the house we’re interested in- they will refinance from a 15 year to a 30 year loan so they can stay put in style. We, on the other hand, will begin the neutralizing of our house for the next go-round. We’ll take the beautiful custom wallpaper down and choose a nice shade of taupe for the discriminating buyer. This will make the crown molding “pop” I’m sure. Don’t mind really. Believe that???