6 ms·

The problem may be worse than we think. Many Boomers hold a significant portion of their wealth in their homes.This “wealth’ has increased greatly due home asse

The problem may be worse than we think. Many Boomers hold a significant portion of their wealth in their homes.This “wealth’ has increased greatly due home asset price appreciation. To exercise this wealth, they must sell their homes. However, due to the same NIMBY politics Boomers have championed, there are few inexpensive downsizing options, leaving Boomers with little excess cash for the expenses of older age. Boomers have hoisted themselves by their own petard.

GenerocUsername 4y ago
I keep telling my older relatives this: yeah your house is now 800k, but so is the house you want to move to... It doesn't matter when it goes up since you can only ever move laterally or downgrade.
- SkyPuncher 4y ago
  Housing prices only matter if you're significantly changing your situation. Entering, exiting, upsizing, and downsizing. Even then, entering and upsizing is generally a long term play where price differences are distributed.
- Turing_Machine 4y ago
  > I keep telling my older relatives this: yeah your house is now 800k, but so is the house you want to move to... Well, the nice thing about being retired is that you can live anywhere you choose to live, more or less. You don't have to pay $2-3k/month to rent a rathole apartment in Silicon Valley when you're retired. The median house price in San Jose, CA is $1.1 million. The median house price in Gulf Shores, AL (a pretty nice resort area) is only $479k. If you went for a less-resorty area, say Biloxi, MS, you could get by for only $207k. Edit: you could even have a summer place in Maine (median price: $299,000) and a winter place in Biloxi (median price $207k) and still spend less than half what the San Jose house would cost.
  - Kon-Peki 4y ago
    Sure, Gulf Shores is nice and has a huge retirement community, but there is a reason that it has lower house prices and drastically lower property taxes than just a few minutes down the road in Pensacola. There aren't a lot of services. The hospital in Foley isn't super impressive compared to something you'd see in the Bay Area. The local amenities are way more focused on partying and/or kids, too. And finally, of course, is the weather. Winter on that part of the gulf isn't as warm as most people are looking for. You certainly aren't going swimming in the ocean, or even an outdoor pool unless it is heated. You'll have plenty of winter nights at or near freezing.
    - Turing_Machine 4y ago
      > it has lower house prices and drastically lower property taxes than just a few minutes down the road in Pensacola. ? Both Redfin and Zillow peg Pensacola at only around $250-275k, considerably less than Gulf Shores, not more, and only about 1/4 that of San Jose.
      - Kon-Peki 4y ago
        Let’s just say that Pensacola has some areas that you don’t want to live in, if you have the luxury of choice.
  - BenFranklin100 4y ago
    The problem with moving is that one is unlikely to be near relatives — especially adult children with their own children — who can help with needed care at that age. Combine this with the skyrocketing costs of retirement homes in convenient locations, which NIMBYism has also contributed towards, Boomers have few attractive options.
- bluefirebrand 4y ago
  Elderly people should be downgrading into smaller properties that are easier to take care of, closer to amenities, etc. The amount of Elderly people living alone in homes large enough for a family is bananas. And then they have assisted living people come take care of them in their homes because it's too much for them to look after alone, but they refuse to move somewhere smaller. Why?
  - BenFranklin100 4y ago
    In the Northeast, even downsized condos in decent locations are outrageously expensive. Many truly have nowhere to go but hundreds of miles away from family, friends, and the larger community they have lived in for decades.
trgn 4y ago
Yeah. The great wealth transfer, the estate of dying boomers transferring to their grandchildren, is only just starting. It's not going to be a windfall, it's going to completely flood into real estate. It's basically what happened in the more densely populated Western European countries already, a ratchet up. Americans are in for a rude awakening.
- klipklop 4y ago
  Sorta doubt it in already HCOL areas. Many of these grandchildren do not own a home. They will move in. There will be random 'old people' communities in Arizona that will get totally wrecked in value, but the expensive areas will stay expensive. If they sold those homes they would never be able to buy back in. Nobody is going to sell a South Bay area home they inherited from their boomer parents. They will rent it out or move in. A massive windfall for them.
  - trgn 4y ago
    I think we're saying the same thing, I probably misphrased. Grandchildren will use grandparents estate to cling on to homes in hcol. That boomer wealth is just going to stay locked up in real estate. Any sale of meemaws home will fund downpayment for little Sally. That's the ratchet up.
cykros 4y ago
They don't have to sell their homes, instantly anyway. Reverse mortgages absolutely exist. They're not a cure-all, of course, and the high rate environment isn't exactly ideal. But they are an option that gets out of the situation you describe.

GenerocUsername 4y ago

I keep telling my older relatives this: yeah your house is now 800k, but so is the house you want to move to... It doesn't matter when it goes up since you can only ever move laterally or downgrade.

SkyPuncher 4y ago
Housing prices only matter if you're significantly changing your situation. Entering, exiting, upsizing, and downsizing. Even then, entering and upsizing is generally a long term play where price differences are distributed.
Turing_Machine 4y ago
> I keep telling my older relatives this: yeah your house is now 800k, but so is the house you want to move to... Well, the nice thing about being retired is that you can live anywhere you choose to live, more or less. You don't have to pay $2-3k/month to rent a rathole apartment in Silicon Valley when you're retired. The median house price in San Jose, CA is $1.1 million. The median house price in Gulf Shores, AL (a pretty nice resort area) is only $479k. If you went for a less-resorty area, say Biloxi, MS, you could get by for only $207k. Edit: you could even have a summer place in Maine (median price: $299,000) and a winter place in Biloxi (median price $207k) and still spend less than half what the San Jose house would cost.
- Kon-Peki 4y ago
  Sure, Gulf Shores is nice and has a huge retirement community, but there is a reason that it has lower house prices and drastically lower property taxes than just a few minutes down the road in Pensacola. There aren't a lot of services. The hospital in Foley isn't super impressive compared to something you'd see in the Bay Area. The local amenities are way more focused on partying and/or kids, too. And finally, of course, is the weather. Winter on that part of the gulf isn't as warm as most people are looking for. You certainly aren't going swimming in the ocean, or even an outdoor pool unless it is heated. You'll have plenty of winter nights at or near freezing.
  - Turing_Machine 4y ago
    > it has lower house prices and drastically lower property taxes than just a few minutes down the road in Pensacola. ? Both Redfin and Zillow peg Pensacola at only around $250-275k, considerably less than Gulf Shores, not more, and only about 1/4 that of San Jose.
    - Kon-Peki 4y ago
      Let’s just say that Pensacola has some areas that you don’t want to live in, if you have the luxury of choice.
- BenFranklin100 4y ago
  The problem with moving is that one is unlikely to be near relatives — especially adult children with their own children — who can help with needed care at that age. Combine this with the skyrocketing costs of retirement homes in convenient locations, which NIMBYism has also contributed towards, Boomers have few attractive options.
bluefirebrand 4y ago
Elderly people should be downgrading into smaller properties that are easier to take care of, closer to amenities, etc. The amount of Elderly people living alone in homes large enough for a family is bananas. And then they have assisted living people come take care of them in their homes because it's too much for them to look after alone, but they refuse to move somewhere smaller. Why?
- BenFranklin100 4y ago
  In the Northeast, even downsized condos in decent locations are outrageously expensive. Many truly have nowhere to go but hundreds of miles away from family, friends, and the larger community they have lived in for decades.

trgn 4y ago

Yeah. The great wealth transfer, the estate of dying boomers transferring to their grandchildren, is only just starting. It's not going to be a windfall, it's going to completely flood into real estate. It's basically what happened in the more densely populated Western European countries already, a ratchet up. Americans are in for a rude awakening.

klipklop 4y ago
Sorta doubt it in already HCOL areas. Many of these grandchildren do not own a home. They will move in. There will be random 'old people' communities in Arizona that will get totally wrecked in value, but the expensive areas will stay expensive. If they sold those homes they would never be able to buy back in. Nobody is going to sell a South Bay area home they inherited from their boomer parents. They will rent it out or move in. A massive windfall for them.
- trgn 4y ago
  I think we're saying the same thing, I probably misphrased. Grandchildren will use grandparents estate to cling on to homes in hcol. That boomer wealth is just going to stay locked up in real estate. Any sale of meemaws home will fund downpayment for little Sally. That's the ratchet up.

cykros 4y ago

They don't have to sell their homes, instantly anyway. Reverse mortgages absolutely exist. They're not a cure-all, of course, and the high rate environment isn't exactly ideal. But they are an option that gets out of the situation you describe.