What We Saw Was A Bubble
The Missoulian reports from Montana. “Today’s McMansions may become tomorrow’s affordable homes – when multiple generations nestle into different wings. Arthur Nelson, presidential professor and director of the Metropolitan Research Center at the University of Utah, talked about the way households are changing. Baby boomers begin turning 65 in 2011, and they will live longer than their parents lived. The population of people 65 and older will double in the next couple of decades. As the boomers age, they will move. Already, some 20 percent of seniors rent before they move. After they move, 60 percent of seniors rent. Some 24 percent live in an attached home, but after moving, 54 percent of seniors live in an attached home. ‘They will reshape our housing markets in every corner. … It’s going to be what I call the great senior sell-off,’ Nelson said.”
“A different population mix means a different housing market, and Nelson warned against placing too much emphasis on home ownership. ‘I worry that we might have pushed home ownership a bit too much, especially in the early to middle 2000s,’ he said. ‘We’re paying the price now.’”
“No one has done it yet, he said. But multigenerational households have been on the rise, and more people per home will decrease the demand for housing and change it as well. Thus, the new use for the old McMansion. ‘On the main floor, ladies and gentleman, we have the grandmother, grandfather suite,’ Nelson said, taking on the persona of an announcer or real estate agent as he pointed out the home layout.”
“When he had finished going through the 5,000-square-foot home, he had showed people a place for 15 people to live. ‘How many McMansions are there in Missoula County? Couple hundred, probably,’ Nelson said.”
The Billings Gazette in Montana. “An empty nest has prompted the owners of a Billings ‘Extreme Makeover: Home Edition’ home to put their house on the market. The elegant five-bedroom, four-bathroom house just off of U.S. Highway 87 North is on the market for $495,000. Now that all three daughters have grown up and gone off on their own, Julie Carter said the 3,800-square-foot house is too much for two people.”
“‘An empty nest is proving to be as lonely as we expected, and we feel it’s time to move on,’ Carter said in a written message to The Gazette. ‘It’s been a privilege and an honor to live in such an enchanting house.’”
The Jackson Hole News & Guide in Wyoming. “Wells Fargo made the first steps toward taking over a Love Ridge Resort Lodges condominium. The bank submitted the only bid for the unit during a foreclosure auction. According to the sheriff’s office, the owners of the condo owed the bank about $777,484.”
“The condo is the second to revert to a bank so far this month, said Civil Processes Supervisor Cheryl Chidester, who oversees foreclosure auctions for the sheriff’s office. There are 19 Teton County properties slated to go to the auction block this month, although nine already have been canceled, Chidester said. In April, Chidester’s office scheduled auctions for 16 residences, whose owners owed a total of about $5.56 million. Of those, five reverted to banks and 11 were either postponed or canceled.”
The Idaho Mountain Express. “Daryl Fauth, president of Blaine County Title, said the foreclosure pace of 2010 has been one new defaulted home every business day. That’s no different from 2009, which saw 277 defaults, or a little bit more than one default every business day. ‘We’re on pace to beat the number of defaults of last year,’ Fauth said.”
“Real estate agent Debra Hall said that even though homes are selling, new foreclosures prevent prices from recovering. It’s simple. When one home has a foreclosure-sale sign on the lawn, the neighbors’ market values dwindle. ‘We haven’t seen the bottom yet,’ said Hall. Sawtooth Board President Mike Murphy agreed, saying buyers still have all the power. He recently sold a Hulen Meadows home for $595,000. It had been listed for three times that at $1.7 million.”
“‘If the price comes down far enough, there’s a buyer,’ he said. ‘People are looking for a hell of a deal.’”
“Sandra Pastrana owns a home in Hailey’s Woodside area, and is stuck with an ‘underwater mortgage. She doesn’t qualify for a mortgage modification and is therefore relying on a short sale to dig her out. Since putting her house on the market in August, she’s worked through two short sales with Bank of America. She said the first fell through because of the buyer’s bad credit. She said it took five months of working with the bank to get through the short-sale process that first time. ‘It was a really slow process,’ Pastrana said.”
“She said the second time around has been easier, with the process streamlined into a month. But she hasn’t completed the sale yet. Pastrana’s waiting for the bank to say it will forgive her debt. She would be selling the house for about $85,000 less than what she owes.”
The Register Guard in Oregon. “‘There’s no place like home.’ In case you were driving down North Terry Street in west Eugene on Sunday and spotted a woman standing out in front of the Woodland Park Estates in pigtails and ruby red slippers, that’s what her sign was supposed to say. Dorothy (aka Janet Dewey) meant to get the whole phrase on the front of the placard, so she could devote the back of it to the pertinent details: ‘Open House, No. 154.’ Alas, Dorothy ran out of room, so the front of the sign read merely ‘There’s no place like.’”
“Such is the state of real estate in Eugene. Dewey decided to dust off her old Dorothy costume on Sunday and see if her sparkling slippers wouldn’t lure some new potential buyers. No matter how many times Dewey clicked her heels since putting her 1,458-square-foot double-wide on the market in March, she hasn’t magically appeared back on the porch with an offer from a buyer in hand. Not even at $39,700.”
“By the time Dewey retired her wig and blue dress Sunday afternoon, only two people had made it all the way to House No. 154. The wizard apparently decided to stay behind the curtain, at least for now.”
The Mail Tribune in Oregon. “During the three-month period that ended Monday, 503 homes sold, up 19.2 percent over the corresponding period in 2009, when 422 houses changed hands. Federal tax credits for buyers that expired at the end of April played a role in the surge. The median sales price for the period was $162,000, down 14.7 percent from $190,000 during the same period in 2009. May’s median sales price for homes excluding new construction was $157,500, down from $194,500 in 2009.”
“Keller Williams Real Estate agent Ron Galbreath said there was a drop-off in early May as agents prepared paperwork to get the deals they made in April closed by June 30 in order to get the tax credits. Galbreath said recent buyers should plan on holding on to their houses until the market begins pushing uphill. ‘We’re telling buyers to hold for three to five years in order to recoup closing costs and actually see good equity,’ Galbreath said. ‘We’re near the bottom and we’ll only know when we come out of it.’”
The Bellingham Herald in Washington. “Whatcom County had an uptick in residential sales last month, but it’s also apparent the post-tax credit hangover has set in. In May local real estate agents sold 229 homes and condominium units, according to the Northwest Multiple Listing Service. That’s up from 203 in April and the highest monthly total since November. However, the number of pending sales - agreed-upon sales that haven’t closed - was at 184 last month, the lowest total since December and way down from April’s total of 372.”
“‘Leading up to its expiration, the tax credit caused a surge of home sales, but a surge can only be sustained for so long,’ said Lennox Scott, CEO of John L. Scott Real Estate, in a press release accompanying the data. ‘What we’re seeing now is a natural adjustment.’”
The Olympian in Washington. “Pending sales in Thurston County fell more than 30 percent in the year-over-year period ending in May. In addition to Thurston County, pending sales fell throughout Western Washington in the year-over-year May period. They were down 22 percent in King County, 32 percent in Snohomish County, 28 percent in Pierce County and nearly 40 percent in Lewis County, the combined data show.”
“South Sound real estate professionals acknowledged that pending sales here were affected by the end of the tax-credit programs; still, some argue that falling prices have had a larger effect on the market than the tax-incentive programs. ‘The bigger driver is affordability,’ said Ken Anderson, broker and owner of Coldwell Banker Evergreen Olympic Realty.”
“Thurston County median prices fell 7.2 percent last month to $229,000 from $247,000 in May 2009. Although prices fell on a year-over-year basis, median prices since January have climbed to $229,000 from $225,000. The median price of a Thurston County home in May 2008 was $264,000, the data show.”
“Anderson said there will be more room for price appreciation once higher-priced homes start selling again. ‘The $300,000-to-$500,000 market is starting to move again, albeit more slowly than we would like to see,’ he said.”
The Herald Net in Washington. “When John Degroot refinanced his Lake Stevens home, it was so he could afford to fix the place up. A few years later, the hardwood floors have been installed. The yard is like a page out of Better Homes and Gardens. And the mortgage payments are unaffordable.”
“A loss of income put the monthly payments out of reach for Degroot, a disabled structural engineer who is not yet old enough to receive full retirement benefits. Now, he’s trying to modify his Bank of America loan, applying for help under the federally-backed Making Home Affordable program. He’s been told he qualifies, but he can’t get answers about when — or if — he’ll see relief. ‘If I qualify for the program, what’s the hang up?’ he said one afternoon last week, shifting through loan documents at his dining room table.”
“He estimates that more than 55 percent of his monthly income goes to paying for his home loan. Even before his income dropped, things were tight. ‘They should never have given me that loan,’ he said.”
“Foreclosures are on the rise in Snohomish County, according to data from the auditor’s office. Before a bank repossesses a property, it must file a notice of trustee sale, acknowledging the property will be foreclosed on in 90 days. About 590 homeowners received notices in May, roughly twice as many as in the same month two years ago. County records show 640 households received the warning notices in April, compared with 450 in January.”
The Whidbey News Times in Washington. “The total assessed value of Island County plummeted by 12.3 percent for the tax year 2011, county Assessor Dave Mattens announced. Mattens said the results showed that the total assessed value fell from $14.6 billion for the 2010 tax year to $12.8 billion for next year. Mattens said he sees the drop in value as a correction after the 35 percent increase from 2006 to 2007.”
“‘What we saw was a bubble,’ he said. ‘When you graph it, it’s amazing the spike that occurred.’”
“He estimates that more than 55 percent of his monthly income goes to paying for his home loan. Even before his income dropped, things were tight. ‘They should never have given me that loan,’ he said.”
Hey John - What type of gun did the mortgage lender use to make you sign those papers? Was it a shotgun? A 9mm? I feel so bad for you because it was clear you were forced against your will to walk into their office and get a HELOC.
Another poor me baby boomer! Boo-frigging-hoo!
Everyone was convinced at the time that money the spent on their home-improvements would pay back at a rate great than 100%. Not HELOC’ing to improve was like leaving free money on the table.
Idiots.
I seem to recall reading, in the pre-bubble years, that remodeling jobs have an ROI of 90% at the very best. Which means that you’re still out 10%.
Sounds like going to the casino would give you the same ROI — and maybe some fun as well.
Home improvements mean nothing to a RE agent. I put a new roof, siding, energy efficient windows and updated all the carpet and bathrooms. Move in condition without needing anything, then I put it on the market. The agent showed me “comps” for the neighborhood, which included houses that were falling apart. When I asked about all the improvements I did she wrote it off: “Well, that doesn’t count”. Nice, so all that work goes for nothing. I can NOT stand it when RE agents bring out “comps”. There is fluxuation in all houses that goes beyond the price/square foot.
And stupid me, I picked up overtime at work and saved for the improvements, skipping the HELOC on my 30 yr fixed mortgage.
I think the return is actually a lot less than 90%. Historically, it has always made more sense to just sell the house than spend a boatload of money making improvements prior to. That said, cheap repairs like a little do-it-yourself painting and landscaping go a LONG way.
Grizzly,
Right, and if the ‘new’ owners want to throw a butt-load of money at a fabulous… kitchen then I guess that’s their business.
One of the things that’s super easy and the guys really appreciate is making the damned garage at least look functional. Since this will be the place he’ll shoulder a lot of the work, make sure there’s plenty of outlets, decent lighting and the doors close firmly and securely.
Just replacing the garage door can improve street ( and practical ) appeal immeasureably. Under a grand and the installer is out in under 4 hours complete w/ opener. A little bench space doesn’t hurt either.
The reason I even mention it is that, every home we ever sold ( the garage was the ‘least’ of the priorities and it -looked- it! ) Of course your boom-time realtwhore was all about the wow factor…
I remember those billboards in Reno:
Harold’s Club has 99.7% winners! or something.
“It’s going to be what I call the great senior sell-off,’ Nelson said.””
And that fact is never discussed.
What we do hear (and it’s flawed logic) is that “boomers are retiring and they’re loaded AND they want to live here.
Time to buy stock in cut-rate nursing homes.
That’s where they’re gonna end up.
I saw something on investing in retirement/nursing homes in Mexico. Warm climate, dollar (peso) goes further and they are treated like kings. They are putting them in the secondary Mexican tourist destinations (Ixtapa, Puerto Vallarta, Loreto). May be something to look into.
Well, I expect a certain type of housing (smaller, close to stores, single level) will do very well as a result of this shift. The fact that many current owners will RENT, as pointed out in the article, is what is glossed over by the boosters.
In the Midwest, at any rate, there are any number of well-maintained, small, handy-to-amenities (healthcare, shopping, car repair, drug stores ), which are in various stages of foreclosure/HUD repos. I have noticed some really nice ones around us in the $ 40’s. Amazing. Either some of these will be going for rentals, or some of the boomers/elderly will be moving into these smaller home layouts. I was surprised at how nice these repos are.
Identical to the dot.com bubble.
Anybody recall how conventional wisdom thought that because people could buy everything from the internet that they would? No one thought to ask people if this is what they wanted to do. Then it was ‘discovered’ that most people actually like going out to the store to purchase certain things.
The same thing happens with the seniors. I have asked several what their plans are, and the response has always been ’staying close to my family’.
The same thing happens with the seniors. I have asked several what their plans are, and the response has always been ’staying close to my family’.
Preach it, SMF!
Last summer, when I was visiting my aunt in Vermont, I spent a day at the State Capitol. My aunt’s a tour guide there.
Aunt Jean was training a new tour guide. While Jean was off leading a tour, the rookie guide and I got to talking. Seems that she had moved back to Vermont from that retirement paradise, Florida.
And why did she want to move back to Vermont, with its cold and endless winters? You guessed it. She wanted to be close to he family.
The best stories are those morons that buy a place in Nicaragua about an hour away from the nearest big city for ‘retirement’ purposes.
Guess what?
When you get sick, you’ll be dead before you get to a doctor.
Y’know, when it comes to doctors, I have a fear and loathing kind of attitude. But, if it comes to the difference between my living and dying, I do like having them around. Even if I don’t like them otherwise.
Slim,
You never said, how’d the date go!? Inquiring bubble bloggers want to know!
Slim,
You never said, how’d the date go!? Inquiring bubble bloggers want to know!
Well, D, since you asked, here’s the tale of the date:
I agreed to meet my college classmate at the weekly Meet Me at Maynards Social Run/Walk around Downtown Tucson. (People, if you’re ever here on a Monday evening, do this event. It’s free. You’ll like it.)
Any-hoo, I was a bundle of nerves on the way down to the train station. (That’s the starting and ending point for Meet Me at Maynards.)
Well, after waiting-waiting-waiting and my wondering if he was going to show up, he did. And I didn’t recognize him. He’d gained about 20-30 pounds since college. And Yours Truly weighs less than back in those days.
We had a nice walk -n- talk around Downtown. The further we got into the M3 course, the more I realized how truly blessed I am.
I mean, this guy’s an engineer, and he’s essentially had to become a job nomad. That’s the story of his career. And, big surprise, he’s on blood pressure medication.
As y’all know, I’m not a job nomad. Nor am I on any sort of medication. On those rare occasions when I cross paths with the medical profession, that previous sentence amazes them. The very idea of my not taking anything!
Now, this was the guy who got me on the bicycle-centric way of life. He was a housemate during my senior year at the University of Michigan, and he was going through school on a shoestring. Word around the house was not to do or say anything that would cost him money, because he just didn’t have it.
To deal with the stresses of school and his meager finances, he’d go out on long bike rides around Ann Arbor. After I got my own bike, I wanted to go with him and ask all sorts of bicycling questions, but He. Wasn’t. Interested.
Matter of fact, when I’d ask bicycling questions at home, he’d be very short tempered with me. That stung me at the time, but it proved to be good training for my long bike trips. Out on the road, I had to figure things out for myself. Ditto for my freelance life. Another place where I’ve really had to develop the self-reliance muscles.
Well, last night, he apologized for being so short with me. And I told him that it was good mental training for what came next in my life. An interesting exchange to say the least.
Unlike a lot of our classmates, who went on to live lives that could best be described as tragic or just all-around unhappy, both of us our content. He’s very proud of getting his Michigan degree, even though he had to go through school on a shoestring. The experience didn’t leave him deep in debt. And he’s enjoying being an engineer-employee while planning his next life-phase as a consultant.
After the walk, we went out to dinner, and afterward, shook hands and went our separate ways.
“There’s no place like…”
You know, I’ve seen some pretty freaky things in Eugene over the years ( nude cyclists etc. ) and my buddy DJ’s the 2-4am death-metal show on college radio, but I can’t saw as I’ve ever seen somone dressed up as Dorothy?
Lady! Have ’some’ damned dignity! ( What’s up, couldn’t wait for Burning Man to get your freak on? ) Eugene, sheesh.
If the real estate bust lingers, old Dorothy may wake up in Kansas….
LOL! Yeah, the whole thing kind of reminded me of “the naked lady” that wore dental floss and ‘pasties’ and roller bladed around her SoCal subdivision. ( I mean this ‘is’ America, right? )
Actually I like the “Dorothy” lady because at least she’s trying something new, and didn’t appear to be whining. No quote of any whine, anyway. That’s cool.
Except for the ‘There’s no place like.’ signage fail.
’signage fail’
That reminds me of Kingman AZ. There are billboards (!) with crappy hand spray painted letters ‘land for sale’, etc, where the words don’t fit the space, so they crammed it all in a corner.
I saw that in parts of Utah also… What gives, does not take too much effort to make the letter look decent.
My favorite homemade sign was one on the front of an old bait store which a local guy had on a busy street corner for about 40 years ( which he later sold to Rite-Aid for development for about $ 800,000 pre-recession - good for him ) which read:
” BAIT WORMS and then crammed into the corner NIGHTCRALVERS”
I wondered how many Nightcralvers he had in that little store.
That is, he sold the lot , minus the bait shop LOL. I don’t think Rite-aid wanted the bait shop with shack that badly, since it was demolished about a week after the sale made the local newspaper !
It’s like when I was 8, and had a lemonade stand. I started out with really big letters, but quickly ran out of room. The sign ended up reading:
Lemo-
nade
My mom thought it was cute, and saved the sign. But these other signs were presumably made by adults? Is there something about the real estate business that makes people regress to the level of 8 year olds? Same thing with some of the horribly written listings, like you see on IHB.
“regress to the level of 8 year olds?”
We wish. Think more like horny teens that can’t wait to be peeling each other’s clothes off in the backseat. ( In the heat of passion, something always comes up missing? )
During the RE-Orgy, there’s never been any need for SpellChecker.
‘pretty freaky things in Eugene’
OK, I thought the article might be getting at an inside joke. So what’s the story on Eugene?
Think Berkeley and Madison.
Ben I just really really have to post this:
http://www.youtube.com/watch?v=FeZlXJtLhMQ
I like the Duck U stickers.
“A different population mix means a different housing market, and Nelson warned against placing too much emphasis on home ownership. ‘I worry that we might have pushed home ownership a bit too much, especially in the early to middle 2000s,’ he said. ‘We’re paying the price now.’”
Ya think?
But it’s great to see professors picking up on the demographic shift argument for why the U.S. housing market is toast in the wake of the McMansion construction boom.
“It’s going to be what I call the great senior sell-off”
Golly, thanks! Dent tried to warn us of this back in the mid-90’s. I believe ‘his’ term was “Don’t Wanter’s” but whatever.
not only does their housing requirements change but their entire consumption habits drop off a cliff.
one of the reasons neithter party is in a hurry to do anything about illegal immigration IMHO.
michael,
Yes, Dent’s research found that for most Americans the age of 45 is what he called “Peak Consumption”, and ‘what’ percentage of our pop. is now beyond that?
No doubt, Dent got a -lot- of things wrong, bigtime ( DOW 30K!? ) but his observations about pop. and consumption have proven spot on. The whole while the boom was forming ( complete w/ 2nd homes and elective surgery ) I kept wondering ( haven’t these people read the book, it’s the first thing you see when go into Barnes & Noble! )
DinOR: Ah, second homes. Not addressed in that Missoulian article, but it’s a big piece of what’s going to happen when all the boomers are retiring. Are people on fixed incomes going to continue to pay for two homes? Nope, didn’t think so.
Jimmy Jazz,
Let’s see..? We have one child that lives in Denver ( so we’ll need a home ‘there’? ) and another in college in DC so…
Yeah, the entire mindset was just another excuse to speculate, AND ( diversify your ‘holdings’! ) No way that could go wrong huh?
What were they thinking? I guess the only way ‘I’ could have pulled that off is to send the bills from Denver home to DC and my DC home to…
Retirees say that they’ll downsize and live on
less, but they don’t unless forced to. We see
it all the time with people we know. No one
wants to give up all the goodies just because
they have less money coming in.
Rancher,
Coming from one of the very few posters we have that are “on the other side” that carries a lot of weight. Most of us here are still in the workforce so we don’t ‘really’ have a clue as to what ret. looks like?
What troubled me, during the run-up was, it struck me that a good many of these people had every suspicion the path they were on was unsustainable! Totally… unsustainable.
And they didn’t CARE! They were going to have as much fun as they could for as ‘long’ as they could, and if it all blew up in their ( our ) faces.., well then so be it! I’ll become a public liability and live off the generousity of others? I just don’t have any other way to explain their wreckless behavior.
It’s going to be what I call the great senior sell-off,
Funny how that hasn’t been discussed much in regards real estate. But it has been discussed in regards the stock market, where seniors are going to dump stocks for fixed-return investments and thereby put a cap on any bull markets in the near future.
DennisN,
Ah… The Great Disconnect!?
As Exeter notes above, but… bu.. Boomers are ‘loaded’ and they’ll want to own a home in each state between NYC and FL! ( but they’ll be dumping equities in wholesale fashion… in favor of, income? )
Regardless of age, we’re all figuring out that “liquidity matters!” and if you want to call the CIK then fine. In the end, I’m reasonably satisified w/ Dent’s projections. Other than NAR, no one of any stature was calling for a housing boom in the mid-90’s?
I wish I had instant recall, cuz I think it was the NYT that put out an article about people owning 5 or 6 houses in their later years. I had a post about it. It was full of quotes from people that would stay in each a week or so, and move on to the next.
Of course the NAR latched onto that idea, I don’t remember the time line, but it was around spring 2005. Houses were a new ‘investment class.’ It was Peter Schiff that opened my eyes about these various rationals that basically justified speculation. It’s easy to connect the dots and figure out that mcmansions were a form of speculation as well. (ie, a bigger house, well, it goes up more!)
And one of my favorite speculation schemes was remodeling, paid for by refinancing, of course. It went like this; ‘if I spend 50k on a new kitchen, my house is instantly worth 80k more!’
As I recall from viewing an episode of one of those “Can I Afford This Remodel” housing shows ( as in, How Much More Can I HELOC My House For ? ), and in it, the couple had massive ambitions for what I thought was already a great-looking bathroom ( the 2nd one for the kiddos), to the tune of somewhere around $ 75,000. Everyone, everyone, needs a soaking tub the size of an Olympic swimming pool, you know. Anyway, their realtor “approved” their remodel, because they still had about $ 150,000 “equity” in their already much-remodelled, overdone home. It was going to push the value of the place up another $100,000 once the remodel job was done on the bathroom. ( This was in CA in 2007 I believe ). I’m sure they’re in foreclosure now.
I grew up in a big house, but I had 6 brothers and sisters. We had 4 bedrooms and 2 bathrooms. The other day I was looking at an REO listing that had 5 bedrooms and 5 baths. My point is, families aren’t typically as large today, but houses are bigger.
It’s not uncommon for a mcmansion in Flagstaff to have 3-7 car garages. I saw one house for sale that had a garage for 10 cars.
Those shows really missed the boat by not getting a “where are they now” clause in each contract so they could go back and luridly display the remodels gone wrong on a new show called “Housing Flops” where people like us can get housing crash pron.
It’s not fair that the only televised housing pron is upside, right?
“I wish I had instant recall”
Ben, given this is year ( what? ) of The Bust ( I wish I could recall ‘anything’? ) Now it’s, give me a week and I’ll get back to you.
Right, moreover not only had homes become an ‘investment class’ unto themselves, but ( and here’s a blast from the past ) NAR coined the term “investor class”!
Anyone remember that one?
“And one of my favorite speculation schemes was remodeling, paid for by refinancing, of course. It went like this; ‘if I spend 50k on a new kitchen, my house is instantly worth 80k more!’”
And you have no idea how alive and well this moronic notion is. I see and hear it all the time. “The house won’t sell so we’re going to upgrade the kitchen”…. I heard it last week.
Here’s a doozy….. Over the weekend my wife was talking with one of her dingbat friends back up in VT. She said “stainless steel appliances increase the value of your house!”……
Speechless I was and I hadn’t heard my wife laugh so loud in weeks.
“Not HELOC’ing to improve was like leaving free money on the table”
Idiots.
( Prime_Is_Contained post above )
2000-2007… maaaaybe I could understand, but last week!? Hell, I wasn’t even -there- and I’m laughing my @$$ off!
Entertainment Purposes Only:
http://www.businessweek.com/magazine/content/04_36/b3898009.mz001.htm
( Investor Class my azz… ) 2004, what do you expect.
Sorry about the link guys, I’ll try back.
But just for the record.., there’s a HELL of a lot of difference between some blue collar guy going to the lunchroom and getting talked into putting $50 a payday of his hard-earned money into his 401k/Ponzi and getting talked into buying WAY too much house and/or multiple houses he clearly can NOT afford!
Trainwreck scenario his $1,200 at the end of the year is down 40% ( or so ) and then he takes another 10% hit for early withdrawal. He still has $600 bucks. Big Difference between that and being $200k underwater on a mort. you’re now behind on?
So much for ‘growing’ the Investor Class.
“I wish I had instant recall, cuz I think it was the NYT that put out an article about people owning 5 or 6 houses in their later years.”
Ben, I remember that article. They had a funny name for this category of buyers, but I can’t remember exactly what they called them. Hyper-nesters? Hyper-homeowners?
Tried locating it with news search but didn’t succeed yet.
Anyone else remember what they call these folks?
Hyper-Spenders? ( Just trying to help? )
“It’s going to be what I call the great senior sell-off”
I believe that the seniors might have some problems deciding where and what they are going to do in the future.
The once carefree, condo living Golden Years lifestyle promise has been badly damaged to the point were it scares many today.
These folks may be older but they are not brain dead.
Like some housing, condo associations have all the appeal of an extended tour of duty in trench warfare on the Western Front.
Expect …desertions.
Shoot - if my health holds out, I plan to work through age 70. Not that I need to, but it’s my way of being social. I am treated with respect by colleagues 28 years younger than me. And I’m sort of hip - can talk about Avatar, talk about the Apps I downloaded to my iPad, the games I have, and so on. Work keeps you young.
I took Dent’s warning seriously.
“‘What we saw was a bubble,’ he said. ‘When you graph it, it’s amazing the spike that occurred.’”
Another sign that person by person, U.S. citizen to U.S. citizen, housing bubble denial is giving way to startled recognition. One look at Robert Shiller’s 100 year home price graph is all it really takes.
Yes, and it should have alarmed the people at the Fed and in DC that this was going on in every nook and cranny of the country.
Why be alarmed when they could use the credit-bubble-turned-crisis to “prove” how necessary their powers are in order to save the world from a global depression??
(A potential depression that they caused, of course, but pay no attention to that fact behind the curtain.)
According to the Fed’s view, the financial crisis is an act of God which nobody could have seen coming; though they had no hand in its creation, they are working 24/7 to save the planet from its pernicious effects.
“During the three-month period that ended Monday, 503 homes sold, up 19.2 percent over the corresponding period in 2009, when 422 houses changed hands. Federal tax credits for buyers that expired at the end of April played a role in the surge. The median sales price for the period was $162,000, down 14.7 percent from $190,000 during the same period in 2009. May’s median sales price for homes excluding new construction was $157,500, down from $194,500 in 2009.”
Viewed through the lens of the rear view mirror, will the $8K first-time home buyer tax credit turn out to have been the major catalyst for post-housing bubble price discovery?
He recently sold a Hulen Meadows home for $595,000. It had been listed for three times that at $1.7 million.
Geography reminder. Blaine county is perhaps the Idaho county with the most rich people, including the towns of Sun Valley, Ketchum, Hailey, and Bellvue. Guys like Arnold and John Kerry (who?) own big places in Sun Valley/Ketchum. Hulen Meadows is a well-to-do suburb of Ketchum.
Hailey has the Sun Valley airport and is where people who can’t afford Ketchum live. Bellvue is south of Hailey and is where people who can’t afford Hailey live, although Bruce Willis has quietly been buying up most of Hailey.
Idaho humor….south of Bellvue is “Poverty Flat”, home of the Wood River Gun Club.
Now I’ll probably get a weird email about Bruce Willis someday.
“Now I’ll probably get a weird email about Bruce Willis someday.”
Right after the personal visit from boyz from “Conair” Ben.
Correction: Bruce Willis is buying up much of Bellvue, not Hailey. He often shows up to play jazz at a local nightclub there.
Correction to the correction: it was Hailey after all. I had to Google Willis.
See, you’ve just started a mini-bubble in the wrong place. I’m sure the UHS phones are ringing off the hook in Bellvue right now.
Wasn’t Bellvue the name of an infamous NY mental institution?
From the original post:
The Olympian in Washington. “Pending sales in Thurston County fell more than 30 percent in the year-over-year period ending in May. In addition to Thurston County, pending sales fell throughout Western Washington in the year-over-year May period. They were down 22 percent in King County, 32 percent in Snohomish County, 28 percent in Pierce County and nearly 40 percent in Lewis County, the combined data show.”
To which I say:
Thurston County was Oly’s stomping grounds. How I wish she were around to comment on today’s post.
I thought the same thing AZSlim. I just know she would have something to say.
To your question yesterday SFBAG….
We tow a Jeep Wrangler soft top…
Thanks scdave.
If I get an RV, I would want to tow a small car or off road vehicle behind me. I like to drive some of the back unpaved roads.
I can’t not think of her every time I read the Olympian, or walk around the water there. Still wonder about the circumstances of her passing, though maybe it’s best we don’t know.
Car accident I believe…
However, the local media made no mention of a fatal car accident. Even a city the size of Tucson, fatal car accidents get news coverage.
It wasn’t a car accident. The media made no mention of such. The only release was “an accident near her home”.
I thought somebody posted a link that suggested a vehicle accident on some rural road..??
My money is on bigfoot. I think she blew his cover somehow.
She fell off a ladder while working on her home.
OMG, I did the same thing in April.
Was working with a handywoman, and we were loosing some old fascia board. I was on an aluminum ladder that I’d had for years, and dang if that thing didn’t shift a bit too much when I shifted my weight.
Next thing you know, I’m flat on my back, looking up at the sky. And, hey, nothing’s broken and I can move my arms and legs.
I got up, did a quick check of the old bod and just found a lot of bruises. My right arm was tingling like a phone was ringing inside of it. That was the worst of my physical injuries.
The mental part took a few hours. That aluminum ladder got exiled to the back yard, and the handywoman went out and bought a sturdier fiberglass ladder, for which I gladly reimbursed her.
People, all I can say is, if you’re working on ladders, make sure that they’re sturdy and have solid contact with the ground. No wobbles. Take what did happen to Oly and what almost happened to me as your warning.
“People, all I can say is, if you’re working on ladders, make sure that they’re sturdy and have solid contact with the ground. No wobbles.”
Great point.
A trick I like to use to assure my OWN safety is the following: before ascending on the ladder, stand on the LOWEST rung (right by the ground), grasp the ladder with both hands, and lean back slightly. This has the effect of un-weighting the ladder from the surface it leaning against (Ideally I rock it an inch or so away from that surface), and allowing it to shift to one side or the other to its natural equilibrium point. If it moves too much to one side or another, I try to find better footing for the ladder’s feet.
The benefit is that I don’t ascend a ladder that has a hidden desire to shift to one side or the other while I’m much higher above the ground.
Your mileage may vary. This is not certified safety instruction. I don’t know what I’m talking about. Use this technique at your own risk!
p.s. OMG, that’s so sad that Oly got taken from us by a freakin ladder. I hate ladders forever.
Slim, glad that you came through your encounter relatively intact! I recall when you were talking about your arm hurting, but didn’t realize you had had such a close call. Phew!
Regarding ladders- when working high above the ground against a structure, especially on extension ladders, secure them with a tie down around both legs fastened to the fascia with 16 penny nails on both sides, or run a rope through a window and secure them that way. Ladders are some of the most dangerous tools out there and are responsible for innumerable deaths each year, yet people seem to casually use them as if there is no danger whatsoever.
Seriously?
“Thurston County was Oly’s stomping grounds. How I wish she were around to comment on today’s post”
“Pumpkins for Overlords”
“As the boomers age, they will move.”
Well, you got one right and one wrong for me. I’m an aging boomer, but I don’t plan to move from the house I have lived in for over 25 years. Sorry, Nelson, if I proved your prediction wrong.
My father’s parents owned what would now be called a McMansion. It’s where my father, his brother and sister, and their parents and grandmother lived.
That house proved to be superfluous after my dad and Aunt Jean got married and left home. Uncle Jim never married.
Any-hoo, Grandma and Grandpa sold the McMansion and moved into an apartment with Granny (my dad’s grandmother and my great grandmother) and Uncle Jim.
So, in essence, they continued to be an extended family, but in a smaller living space.
I’m with you. They can bury me here.
I have one more move in me I suspect…Current house is just to big…I won’t leave my area but I would like to build a new home that is energy efficient and accommodative to a older empty nester’s that also had small caretaker quarters..Just thinking ahead of the curve……
Doug,
That’s b/c you lived an otherwise modest lifestyle! Do you have any clue as to how many boomers have not only a camp trailer ( but a motorhome to boot? )
When was the last time you did an improvement to your home that -wasn’t- paid for.., in CASH!? Just yesterday you said the ‘consumer’ doesn’t see him/herself and their actions as being “part of the broader economy”. So in ‘your’ case it’s not safe to assume that just b/c you led what just a few years ago would have been considered a perfectly ‘normal’ ( non-deprived ) lifestyle that the majority of others haven’t been splurging and now can no longer support those choices? Just a thought.
My aging boomer parents still live in their 3000sf house bought in 1980. It’s on a 1.6 acre lakefront lot, and the tax bill is about $25,000. I think they’d be downsizing right now if the housing market were any good. The yard work and the tax bill are starting to be a burden. They don’t owe much on it, but my dad is holding out for a 7 figure sale price. My brother and I don’t mind, since it’s a great place to keep our boats.
“The yard work and the tax bill are starting to be a burden.”
And there it is folks. Either the taxes and maintenance eats you alive or you dump it, move to smaller quarters and die.
The Great Senior Sell-Off
As usual, most only looked at the original mortgage bill, not the hefty maintenance costs that come with size.
The taxes when they bought it back in 1980 were like $4000. And back then, they had me living there to mow the lawn.
We have all gotten a lot of enjoyment out of that house over the decades. They’ve had some awesome parties in that big back yard. On the 4th of July, the city shoots the fireworks off a barge out on the lake, and we have a front row seat on the shore. I keep my little sailboat there on a shore station, and take it out every Sunday when the weather cooperates. I don’t think they regret it at all. But nothing lasts forever. Soon they will want to move on to something cheaper.
Chris M,
Please take it from a parent who’s children’s company means more to them than anything in the world!
( Let them KNOW it’s ‘o.k’ to move on! ) Say-the-words. I know for a fact, if there was just a ‘chance’ my health was going to hold out.., or that there was another grand child on the way.., I would give -anything- for just-one-last-summer by the lake w/ the kids!
No matter ‘what’ it cost me. How big the bill was. Even though I may well have suspected it was losing it’s lustre in the kid’s eyes, hey, “They never mentioned anything to ‘me’?”
Yeah, I sure wouldn’t want them to stay in the house just for my benefit. But I don’t think that’s what’s holding them back right now. It’s the housing market more than anything. If they got the right offer, dad would be on the phone telling me to come and pick up my boat. They are planning to stay in town, so it’s not like they’re leaving. But still, it will be a tearful day when they sell that place.
$25,000! Holy F.N. Shomoly! Last year when my tax increased from $350 to $500, I fired off an angry letter to the editor of the local newsrag. If my tax bill was $25,000, damned if I wouldn’t occupy the county courthouse 24/7!
$25,000 property tax bill. $1,000 per month to rent a two bedroom luxury apartment in N. Scottsdale with resort-like pool. gated, and very new.
Seems they are “throwing their money away” on property taxes.
“They don’t owe much on it, but my dad is holding out for a 7 figure sale price. My brother and I don’t mind, since it’s a great place to keep our boats.”
You guys sound like my brother. Our Mom’s place is like his own private lakeside resort. He’s married with a wife and to kids and he still “lives” there every chance he gets.
He once pushed my little sisters horses out of the horse barn to make room for his family’s surplus snowmobiles, boats and trailers.
Now, she and her husband have a 600 plus acre hobby farm in prime deer hunting country and she really makes him get down and grovel to go hunting over there each year.
“Real estate agent Debra Hall said that even though homes are selling, new foreclosures prevent prices from recovering.
Honey, prices going DOWN is the recovery!
Silly realtor…
I often wondered the logic in retirees moving into starter castles out in the county (Whatcom) where the minimum lot size is five acres. As they get older and realize their health is failing (and public transit is virtually non-existent) and they can no longer drive, they will basically be trapped in their homes. Add to that the Californians that cycle through and move back after three years of drear and rain, and it’s no wonder the large, high-end homes are languishing on the market in Bellingham.
I wonder when we will see the much anticipated RE boom from the Vancouver Olympics that we were promised. Unfortunately, most people drove right through Bellingham, and few stopped (as far as I saw or read about).
Fortunately, the small homes (like mine - 1,000sf and close to town) are still holding their values. I’ve read the homes on posh resorts like Semiahmoo are selling at 30-50% discounts.
And like everywhere, the shadow inventory here is estimated at 50% of the listed properties.
“after three years of drear and rain” LOL!
Yeah, especially after this freakin’ year. Hello? U-Haul?
Has Spring even showed up there yet? We’re still waiting in Salem, OR.
Gotta love the weather. This winter was mild, but there’s a reason this call this month Junuary. But you still get a day (like today) that’s just wonderful - 65* and sunny.
I remember those type of days when I was stationed at Ft. Lewis, WA. Loved sitting on the hood of my 2-1/2 ton truck in the motor pool and looking at Mt. Rainer.
SFBA Gal,
Well, I promise not to tell the 1st Sergeant!
The fact that the 1,000 s/f homes seem to be faring better fits in well w/ my predictions all along. I recall on Patrick.net ( Bay Area Blog ) there was always this consensus “the low-end will get Crushed!” and I never did get it?
So far, the Portland area had already gotten our avg. rainfall for the MONTH just 3 or 4 days into June! It’s all fine and well to say “then you get (a) day like this” but you have to admit, this is a very… shaky start. Hate to say it but it looks like ‘another’ Non-Summer Summer?
A woman in France told me one time “Christmas on the balcony means Bastille Day by the fire.”
So I think too a mild winter means for a cool summer. But at least I can see Mt. Baker today.
“Bastille Day by the fire”
Oh those French are so witty aren’t they? Yeah, after having lived in Portland more or less since the late 70’s, take it from me:
Rain usually just means more f@cking rain!
You know, it wasn’t like this when I first moved here. I’m sure had that been the case I’d have simply moved on? My electric bill btw didn’t tend to indicate a ‘mild’ winter.
( Just crabby )
I like the joke of the woman who recently moved to the PNW. One day while walking through the park she had about as much as she could take of the rain. She came upon a group of kids playing ball and asked the one “when is this rain ever going to end?”
He shrugged and flippantly responded “I’m only eight.”
LOL! You guys are such wussies. It snowed here (almost 4 inches) for the first time in recorded history on May 28th.
When I was a kid living near Yosemite park in the Sierra Nevada foothills in the early 1960s, it snowed one June.
My buddy just moved there from Tennessee. He bought a foreclosure on a hillside with a view of Lake Whatcom. He says most of his neighbors are Canadians’ vacation homes. He paid $330K, and the Zestimate was $410K and climbing. Sounds like it’s still pretty bubbly there. I tried to convince him to rent, but he found this “bargain”. It does sound like it’s beautiful there. I’m hoping to visit next summer.
Yeah, the glut of homes seems to be in the $350-$800,000 range. I cannot tell you the number of construction people that are really hurting up here. But I guess it’s the same anywhere you go.
Lake Whatcom was supposed to put a moratorium on building (which never happened), so there was a rush to permit and start building. And I’ve never lived in a town with such unbridled building on its watershed (ie, Lake Whatcom), but don’t get me started on that.
It’s an odd dichotomy here - wealthy retirees with pensions, social security, IRAs, etc. versus the younger generations that live on a precarious financial footing. I am presently among the latter, but having been both wealthy and poor, I find this minimalist lifestyle to be oddly satisfying.
The average wage is $18/hr in Whatcom County, I’ve read, so the barista serving your coffee could very well have a graduate degree from WWU.
My friend is not retired. He’s 38 and works at Alcoa in Ferndale. He does alright, but I think this house was a bit of a stretch for him. I was kinda surprised at his decision. He’s always been frugal, and this purchase could wipe out years of savings if he has to sell. He also seems to move every 3-5 years, so I don’t know why he didn’t want to rent. But I do hope it works out for him.
The number of Californians moving to WA, buying up small acreage, and building their retirement mansions was astounding. About 5 years ago, I was looking at a beautiful, heavily wooded ten acre parcel in Kitsap County with an abandoned house. It was a tiny turn of the century cottage, and though it was really hammered, I easily envisioned it’s beauty as I restored it to all it’s glory. I had a Realtor friend (very nice woman my mothers age) working to help me locate the owners so I could submit an offer. Turns out some CA folks had beat me to the punch.
I drove by it a few months later, and I was really confused because I thought I had taken a wrong turn. I could not find the place. I backtracked to get my bearings, and as I came back around the bend it hit me- the house was gone, and they had completely logged off the entire parcel. It did not even look like the same piece of land. It was completely barren. Gone were all of the old fir, maple, and cedar trees, wild rhododendrons, salal, ferns, and all other understory growth, and all that was left was stumps. It was the most disgusting thing I’ve ever seen. I drove by one more time about a year later, and there was the most monstrous, garish house sitting there, with a Mercedes Benz with CA plates. I had wanted to turn it into a woodland garden. The devastation to the land brought tears to my eyes.
I agree. I understand that you can do what you choose with the land, but leveling centuries old firs and cedars so you can ‘get more sunlight’ is just ludicrous. So sad.
And what’s worse is the rest of us having to look at the gawdy architecture that replaces the once towering trees.
‘I worry that we might have pushed home ownership a bit too much, especially in the early to middle 2000s,’ he said. ‘We’re paying the price now.’”
No $hit Sherlock! My oldest sister is turning 57 in July. I am 51 and there are two in betweens. None of us own real estate. I think none of us will own real estate.
None of us went nuts in the boomer credit bubble. It was all a false economy. The middle class was in the 1950s and 1960s. I’ve a net worth of seven figures but that is either upper low class or lower middle class in California.
This is the first time I’ve read this blog since the beginning of the crash a few years back. I’m now in Vancouver, BC (Canada) and we’re in crazy bubble territory here. It’s absolutely insane. Yet, most people I talk to think that prices will rise “only a few per cent over the next few years.”
What we’ve experienced here, and are continuing to experience, is truly unrivaled. Even the bubbliest US areas did not get this agonizingly, stupidly, beyond fundamentals. When our bubble finally pops, and I think we’re at an inflection point right now, the crash will be historic.
What are the ratios that you are seeing, in terms of price-to-rent ratios? That’s the best indicator IMHO…