Housing values may fall as baby boomers die off or sell off, two studies say

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rhornback
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Housing values may fall as baby boomers die off or sell off, two studies say

Post by rhornback » Thu Dec 06, 2018 9:24 am

Here is a snipit

One, from Fannie Mae’s Economic and Strategic Research group, warns that the “beginning of a mass exodus looms on the horizon,” where “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.” The net result: gluts in some local markets with potentially negative impacts.

And the entire article

https://www.washingtonpost.com/realesta ... a60031913c

Where I live (Chicago suburb) the housing market has turned cold. The jobs here have moved into the city which I am seeing as a trend across the United States and the world.

We have lost many important employers: Motorola, GE Medical, Sears, Allstate. These employers supported executive compensation. Also in our area we used to have entrepreneurs. These entrepreneurs are retiring and dying off with none to replace them.

The simple result is housing under 500K is selling but housing over 500K is at best stagnant and more realistic is falling in value. I suspect there is a shadow set of sellers who want to sell but not at the current pricing. Last year my wife told me that maybe when our child goes to college in the city that we could sell our place and rent a condo with them. My reply is that I believe we will lose 100K on our house while spending 3K a month in the city. Because of this it will be cheaper for us to stay where we are.

While I believe the problem in part is that employers have left our area I believe there is also a challenge with millennials wanting or able to buy houses in the suburbs. Many millenials seem to have high college debt, stagnant job opportunities. and do not seem to be in a hurry to form households. It does not seem to help that many live and work in the city where jobs are but where the cost of living can absorb your disposable income.

In the mean time I feel there are many baby boomers who thought their retirement would come from an increase in their housing values. While they have had a run up in values on paper, who knows what their actual sale price would be. And if many want to sell at the same time, this will further depress prices.

I do not think my situation is unique either in the area I live or even the country. I hope that at some point millennials will get married, have a second child, and move out to the suburbs. The City of Chicago has a huge pension liability and taxes keep going up there. I would not invest in real estate in Chicago. Also there is some talk about a commute tax for employees who commute from the city. These factors chase employers away from the City of Chicago. But whether they would relocate from Chicago to the suburbs or just to a different part of the country remains to be seen.

In the interim my wife likes this house and I am raising my family there so it has some practical value. But when I compare the price I paid and what I put into the house compared to home sales prices in our area, I feel a bitter pill is coming.
Last edited by rhornback on Thu Dec 06, 2018 10:45 am, edited 1 time in total.

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Cyclesafe
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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by Cyclesafe » Thu Dec 06, 2018 9:54 am

Same can be said for investments in general. And it's been said for years.

As implied, real estate is local. Here's an extreme of what you are describing...

https://www.cnn.com/2018/12/05/asia/jap ... index.html

Fortnately, we have immigration. And technology might make commuting more palatable.

Valuethinker
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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by Valuethinker » Thu Dec 06, 2018 10:03 am

rhornback wrote:
Thu Dec 06, 2018 9:24 am
Here is a snipit

One, from Fannie Mae’s Economic and Strategic Research group, warns that the “beginning of a mass exodus looms on the horizon,” where “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.” The net result: gluts in some local markets with potentially negative impacts.

And the entire article

https://www.washingtonpost.com/realesta ... a60031913c

Where I live (Chicago suburb) the housing market has turned cold. The jobs here have moved into the city which I am seeing as a trend across the United States and the world.
It's more specific than that. Suburbs in high cost/ high growth cities like SF Bay are doing pretty well I think. Southern California

Sunbelt cities are continuing to grow - DFW, Denver, Atlanta, Sun Corridor (Phoenix-Tucson), even Las Vegas appears to have restarted.
We have lost many important employers: Motorola, GE Medical, Sears, Allstate. These employers supported executive compensation. Also in our area we used to have entrepreneurs. These entrepreneurs are retiring and dying off with none to replace them.
And GE moved its new HQ to downtown Boston (or was, don't know what is happening now).

Chicago appears to have joined the "rust belt" having fought successfully against that for a long time. However Minneapolis-St Paul may be doing relatively well.
The simple result is housing over 500K is selling but housing over 500K is at best stagnant and more realistic is falling in value. I suspect there is a shadow set of sellers who want to sell but not at the current pricing. Last year my wife told me that maybe when our child goes to college in the city that we could sell our place and rent a condo with them. My reply is that I believe we will lose 100K on our house while spending 3K a month in the city. Because of this it will be cheaper for us to stay where we are.

While I believe the problem in part is that employers have left our area I believe there is also a challenge with millennials wanting or able to buy houses in the suburbs. Many millenials seem to have high college debt, stagnant job opportunities. and do not seem to be in a hurry to form households. It does not seem to help that many live and work in the city where jobs are but where the cost of living can absorb your disposable income.

In the mean time I feel there are many baby boomers who thought their retirement would come from an increase in their housing values. While they have had a run up in values on paper, who knows what their actual sale price would be. And if many want to sell at the same time, this will further depress prices.

I do not think my situation is unique either in the area I live or even the country. I hope that at some point millennials will get married, have a second child, and move out to the suburbs. The City of Chicago has a huge pension liability and taxes keep going up there. I would not invest in real estate in Chicago. Also there is some talk about a commute tax for employees who commute from the city. These factors chase employers away from the City of Chicago. But whether they would relocate from Chicago to the suburbs or just to a different part of the country remains to be seen.

In the interim my wife likes this house and I am raising my family there so it has some practical value. But when I compare the price I paid and what I put into the house compared to home sales prices in our area, I feel a bitter pill is coming.
It really depends on your regional trends.

I agree there seems to have been a shift back towards downtown living. Issues like traffic congestion and "buzz" are pushing people back downtown. Big suburban homes seem ill suited to modern lifestyles which are very much around coffee shops and surfing the web.

That said, you read about plenty of booming subdivisions of "McMansions" particularly in the Sun Belt.

The US has relatively good demographics so the demand for housing will continue (albeit at a slower pace due to lower immigration). Each cohort of 20 years is larger than its predecessor (even Gen X post the Boomers, I believe) - not true in other countries.

I agree the Millennials have fundamental career and debt issues arising from when they graduated and the rising real cost of college tuition. Thus, a markedly less preference compared to their parents to move out to the burbs and have families. I think the evidence is that when they do want to have children, they do so move (I am thinking someplace like Salt Lake City where the native birth rate remains high?).

The kinds of suburban homes that were built in North America from the 1960s to the 2000s seem ill suited to smaller families and flexible working lives etc. And they cost a lot to maintain as they age - your maintenance and heating/ cooling costs are quite geared to square footage. Older suburbs will start to have rising property taxes as they acquire the problems of aging infrastructure, care for older people etc. There's real poverty in American suburbs, it seems, which was never envisaged in the 1950s when moving to the suburbs was a way to put all that behind.

Chicago? Chicago and Illinois look like fiscal catastrophes (from 3,500 miles away). I am reminded of New York City in the late 1970s, but without the possibility of a renaissance of Wall Street etc. to transform the picture.

Valuethinker
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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by Valuethinker » Thu Dec 06, 2018 10:14 am

Cyclesafe wrote:
Thu Dec 06, 2018 9:54 am
Same can be said for investments in general. And it's been said for years.

As implied, real estate is local. Here's an extreme of what you are describing...

https://www.cnn.com/2018/12/05/asia/jap ... index.html

Fortnately, we have immigration. And technology might make commuting more palatable.
The data I saw seemed to suggest immigration has dropped *a lot* in the USA since the early 2000s. That's largely a function of diminished economic opportunities - the weaker economy. But also changes in policy.

The period 1970-2000 or so probably saw another one of the great waves of immigration in American history - like the Irish (and German) one in the 1830s/ 40s. Or the Eastern European one up to 1913. The Italians post WW1 (1921 is the year the US imposed immigration quotas for the first time).

Such waves come, and then subside. America is changed by these waves - the Irish were reviled, and indeed there was a whole political party formed to oppose their arrival (the fiercely protestant Know Nothings). Yet we all now know the expression "Hail Mary pass". It was not so long ago (1970s) when "Italian" was equated with "Mafia" in American popular culture. Harvard and other Ivy League universities had quotas on the number of Jews they would accept. Etc. etc. But also America stays the same - the kids and grandkids don't remember the languages of the old country, and lose touch with its customs. If you go to the North End in Boston, there outside of Paul Revere's house I recall there is a monument to those who fell in WW2 (and maybe Korea and Vietnam)-- count the Italian-American names-- the original Patriot looks out onto patriots, you might say.

The native Total Fertility Rate remains relatively high for a developed country (over 2.1 replacement level) but dropped quite a bit with the onset of the recession in 2008 - don't know if it has recovered.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by 22twain » Thu Dec 06, 2018 10:27 am

rhornback wrote:
Thu Dec 06, 2018 9:24 am
The simple result is housing over 500K is selling but housing over 500K is at best stagnant and more realistic is falling in value.
I suspect one of those two "overs" should read "under". Is it the first one?
My investing princiPLEs do not include absolutely preserving princiPAL.

rhornback
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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by rhornback » Thu Dec 06, 2018 10:45 am

22twain wrote:
Thu Dec 06, 2018 10:27 am
rhornback wrote:
Thu Dec 06, 2018 9:24 am
The simple result is housing over 500K is selling but housing over 500K is at best stagnant and more realistic is falling in value.
I suspect one of those two "overs" should read "under". Is it the first one?
Yes fixed. Houses under 500K sell. Those over do not. Which is fine if you are super wealthy and it never mattered. But for those who have a big house which they someday expect to sell to finance their retirement, I am not sure that will happen.

At least in Chicago. As said, real estate is local. So maybe in other areas.

jfmiii
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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by jfmiii » Thu Dec 06, 2018 10:45 am

rhornback wrote:
Thu Dec 06, 2018 9:24 am
Here is a snipit

One, from Fannie Mae’s Economic and Strategic Research group, warns that the “beginning of a mass exodus looms on the horizon,” where “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.” The net result: gluts in some local markets with potentially negative impacts.

And the entire article

https://www.washingtonpost.com/realesta ... a60031913c

Where I live (Chicago suburb) the housing market has turned cold. The jobs here have moved into the city which I am seeing as a trend across the United States and the world.

We have lost many important employers: Motorola, GE Medical, Sears, Allstate. These employers supported executive compensation. Also in our area we used to have entrepreneurs. These entrepreneurs are retiring and dying off with none to replace them.

The simple result is housing over 500K is selling but housing over 500K is at best stagnant and more realistic is falling in value. I suspect there is a shadow set of sellers who want to sell but not at the current pricing. Last year my wife told me that maybe when our child goes to college in the city that we could sell our place and rent a condo with them. My reply is that I believe we will lose 100K on our house while spending 3K a month in the city. Because of this it will be cheaper for us to stay where we are.

While I believe the problem in part is that employers have left our area I believe there is also a challenge with millennials wanting or able to buy houses in the suburbs. Many millenials seem to have high college debt, stagnant job opportunities. and do not seem to be in a hurry to form households. It does not seem to help that many live and work in the city where jobs are but where the cost of living can absorb your disposable income.

In the mean time I feel there are many baby boomers who thought their retirement would come from an increase in their housing values. While they have had a run up in values on paper, who knows what their actual sale price would be. And if many want to sell at the same time, this will further depress prices.

I do not think my situation is unique either in the area I live or even the country. I hope that at some point millennials will get married, have a second child, and move out to the suburbs. The City of Chicago has a huge pension liability and taxes keep going up there. I would not invest in real estate in Chicago. Also there is some talk about a commute tax for employees who commute from the city. These factors chase employers away from the City of Chicago. But whether they would relocate from Chicago to the suburbs or just to a different part of the country remains to be seen.

In the interim my wife likes this house and I am raising my family there so it has some practical value. But when I compare the price I paid and what I put into the house compared to home sales prices in our area, I feel a bitter pill is coming.
Im mid-30s living in Chicago. My wife and I have a 2BR in Lakeview but will need more space in the next year or two. We are torn between the suburbs and the city for our next home. I grew up on the North Shore and my wife likes it up there as well, so that is definitely on the list of possibilities. I have been watching the market up there for a few years via Redfin and it is downright scary. Seems homes sit a long time and what is selling is now selling for at or less than it did 20 YEARS ago. As the New Trier school district suburbs are some of the wealthiest in the nation, the demographic is older and a Baby Boomer exodus has been on my mind vis-a-vis the market up there for a while. I am still of the belief that many of these homeowners will be shocked when they do their tax returns for 2018 and finally realize the impact of the SALT elimination on their taxes. If you're older and paying 20-30k in property taxes that are no longer fully deductible, how long will it be before you pull the trigger on a move to FL? Would love to hear other Chicagoans thoughts.

GAAP
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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by GAAP » Thu Dec 06, 2018 10:51 am

I remember an article from the WSJ, probably 15 or more years ago that pointed out the likely results in the housing market from the aging of the boomers. We've been hearing for decades the mantra to "buy a house young, trade up frequently -- when you retire, you can downsize and fund your retirement". That works much better in the early years of a population boom, not so well on the downside when there are more sellers than buyers.

I've advised people for years not to count on that continued appreciation -- your house is not an investment.
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by jharkin » Thu Dec 06, 2018 10:52 am

Valuethinker wrote:
Thu Dec 06, 2018 10:03 am
I agree the Millennials have fundamental career and debt issues arising from when they graduated and the rising real cost of college tuition. Thus, a markedly less preference compared to their parents to move out to the burbs and have families. I think the evidence is that when they do want to have children, they do so move (I am thinking someplace like Salt Lake City where the native birth rate remains high?).

The kinds of suburban homes that were built in North America from the 1960s to the 2000s seem ill suited to smaller families and flexible working lives etc. And they cost a lot to maintain as they age - your maintenance and heating/ cooling costs are quite geared to square footage. Older suburbs will start to have rising property taxes as they acquire the problems of aging infrastructure, care for older people etc. There's real poverty in American suburbs, it seems, which was never envisaged in the 1950s when moving to the suburbs was a way to put all that behind.
The other thing which I keep reading about is fewer and few millenials and younger generations get drivers licenses. They don't want to own cars or live a car-based lifestyle... SO they are staying in the urban areas where they attended college, living in apartments, using public transit.

When my last employer decided to uproot our headquarters from the surburban beltway to city center the executives cited this as the key reason - needing to locate where all the young talent wants to live. My new employer has made a commitment to stay in the suburbs but I see a stark contrast - pretty nearly every employee over age 35 commutes by car, while a significant portion of those under 30 line up at the bus stop.

I believe that many other corporations are moving into the cities for the same reason.

Makes me think in 20...30... years the USA is going to start to look more and more like Europe and Asia. Overcrowded mega cities with a lot of open space and dying small towns in between. I have mixed feelings on this - I know that we need to move to a post-car future for sustainability reasons, but I don't personally like the crowds, traffic and hectic pace of city life.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by rhornback » Thu Dec 06, 2018 10:54 am

jfmiii wrote:
Thu Dec 06, 2018 10:45 am
rhornback wrote:
Thu Dec 06, 2018 9:24 am
Here is a snipit

One, from Fannie Mae’s Economic and Strategic Research group, warns that the “beginning of a mass exodus looms on the horizon,” where “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.” The net result: gluts in some local markets with potentially negative impacts.

And the entire article

https://www.washingtonpost.com/realesta ... a60031913c

Where I live (Chicago suburb) the housing market has turned cold. The jobs here have moved into the city which I am seeing as a trend across the United States and the world.

We have lost many important employers: Motorola, GE Medical, Sears, Allstate. These employers supported executive compensation. Also in our area we used to have entrepreneurs. These entrepreneurs are retiring and dying off with none to replace them.

The simple result is housing over 500K is selling but housing over 500K is at best stagnant and more realistic is falling in value. I suspect there is a shadow set of sellers who want to sell but not at the current pricing. Last year my wife told me that maybe when our child goes to college in the city that we could sell our place and rent a condo with them. My reply is that I believe we will lose 100K on our house while spending 3K a month in the city. Because of this it will be cheaper for us to stay where we are.

While I believe the problem in part is that employers have left our area I believe there is also a challenge with millennials wanting or able to buy houses in the suburbs. Many millenials seem to have high college debt, stagnant job opportunities. and do not seem to be in a hurry to form households. It does not seem to help that many live and work in the city where jobs are but where the cost of living can absorb your disposable income.

In the mean time I feel there are many baby boomers who thought their retirement would come from an increase in their housing values. While they have had a run up in values on paper, who knows what their actual sale price would be. And if many want to sell at the same time, this will further depress prices.

I do not think my situation is unique either in the area I live or even the country. I hope that at some point millennials will get married, have a second child, and move out to the suburbs. The City of Chicago has a huge pension liability and taxes keep going up there. I would not invest in real estate in Chicago. Also there is some talk about a commute tax for employees who commute from the city. These factors chase employers away from the City of Chicago. But whether they would relocate from Chicago to the suburbs or just to a different part of the country remains to be seen.

In the interim my wife likes this house and I am raising my family there so it has some practical value. But when I compare the price I paid and what I put into the house compared to home sales prices in our area, I feel a bitter pill is coming.
Im mid-30s living in Chicago. My wife and I have a 2BR in Lakeview but will need more space in the next year or two. We are torn between the suburbs and the city for our next home. I grew up on the North Shore and my wife likes it up there as well, so that is definitely on the list of possibilities. I have been watching the market up there for a few years via Redfin and it is downright scary. Seems homes sit a long time and what is selling is now selling for at or less than it did 20 YEARS ago. As the New Trier school district suburbs are some of the wealthiest in the nation, the demographic is older and a Baby Boomer exodus has been on my mind vis-a-vis the market up there for a while. I am still of the belief that many of these homeowners will be shocked when they do their tax returns for 2018 and finally realize the impact of the SALT elimination on their taxes. If you're older and paying 20-30k in property taxes that are no longer fully deductible, how long will it be before you pull the trigger on a move to FL? Would love to hear other Chicagoans thoughts.
As OP obviously I am from Chicago. Historically quality of schools has kept housing values up. So buying in New Trier would be a definite plus. But I agree I would wait until next year if you could for when the implications for the SALT deduction kick in. Yes I think they will be scary.

The problem IMO as I have indicated earlier, some older baby boomers in Chicago are caught in two extremes: property tax makes their homes un-affordable yet they are expecting a selling price on their home in order to afford their retirement.

Regardless of the space you need I would buy a house under 500K and < 15 K in taxes. That means potentially an older, smaller house. Spend your money fixing up the basement and making it your home. At that price point I feel you have a chance of reselling in the future. I do not see any buyers for the McMansion selling for 1 mil and 30K in taxes.

If there are no homes in that price range that you and your wife find acceptable I would rent. I expect there will be some who will rent with the expectation of an 'appreciation of house price in the future' that will not come. In the mean time, maybe they will rent to you for a more reasonable amount.

jfmiii
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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by jfmiii » Thu Dec 06, 2018 11:14 am

rhornback wrote:
Thu Dec 06, 2018 10:54 am
jfmiii wrote:
Thu Dec 06, 2018 10:45 am
rhornback wrote:
Thu Dec 06, 2018 9:24 am
Here is a snipit

One, from Fannie Mae’s Economic and Strategic Research group, warns that the “beginning of a mass exodus looms on the horizon,” where “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.” The net result: gluts in some local markets with potentially negative impacts.

And the entire article

https://www.washingtonpost.com/realesta ... a60031913c

Where I live (Chicago suburb) the housing market has turned cold. The jobs here have moved into the city which I am seeing as a trend across the United States and the world.

We have lost many important employers: Motorola, GE Medical, Sears, Allstate. These employers supported executive compensation. Also in our area we used to have entrepreneurs. These entrepreneurs are retiring and dying off with none to replace them.

The simple result is housing over 500K is selling but housing over 500K is at best stagnant and more realistic is falling in value. I suspect there is a shadow set of sellers who want to sell but not at the current pricing. Last year my wife told me that maybe when our child goes to college in the city that we could sell our place and rent a condo with them. My reply is that I believe we will lose 100K on our house while spending 3K a month in the city. Because of this it will be cheaper for us to stay where we are.

While I believe the problem in part is that employers have left our area I believe there is also a challenge with millennials wanting or able to buy houses in the suburbs. Many millenials seem to have high college debt, stagnant job opportunities. and do not seem to be in a hurry to form households. It does not seem to help that many live and work in the city where jobs are but where the cost of living can absorb your disposable income.

In the mean time I feel there are many baby boomers who thought their retirement would come from an increase in their housing values. While they have had a run up in values on paper, who knows what their actual sale price would be. And if many want to sell at the same time, this will further depress prices.

I do not think my situation is unique either in the area I live or even the country. I hope that at some point millennials will get married, have a second child, and move out to the suburbs. The City of Chicago has a huge pension liability and taxes keep going up there. I would not invest in real estate in Chicago. Also there is some talk about a commute tax for employees who commute from the city. These factors chase employers away from the City of Chicago. But whether they would relocate from Chicago to the suburbs or just to a different part of the country remains to be seen.

In the interim my wife likes this house and I am raising my family there so it has some practical value. But when I compare the price I paid and what I put into the house compared to home sales prices in our area, I feel a bitter pill is coming.
Im mid-30s living in Chicago. My wife and I have a 2BR in Lakeview but will need more space in the next year or two. We are torn between the suburbs and the city for our next home. I grew up on the North Shore and my wife likes it up there as well, so that is definitely on the list of possibilities. I have been watching the market up there for a few years via Redfin and it is downright scary. Seems homes sit a long time and what is selling is now selling for at or less than it did 20 YEARS ago. As the New Trier school district suburbs are some of the wealthiest in the nation, the demographic is older and a Baby Boomer exodus has been on my mind vis-a-vis the market up there for a while. I am still of the belief that many of these homeowners will be shocked when they do their tax returns for 2018 and finally realize the impact of the SALT elimination on their taxes. If you're older and paying 20-30k in property taxes that are no longer fully deductible, how long will it be before you pull the trigger on a move to FL? Would love to hear other Chicagoans thoughts.
As OP obviously I am from Chicago. Historically quality of schools has kept housing values up. So buying in New Trier would be a definite plus. But I agree I would wait until next year if you could for when the implications for the SALT deduction kick in. Yes I think they will be scary.

The problem IMO as I have indicated earlier, some older baby boomers in Chicago are caught in two extremes: property tax makes their homes un-affordable yet they are expecting a selling price on their home in order to afford their retirement.

Regardless of the space you need I would buy a house under 500K and < 15 K in taxes. That means potentially an older, smaller house. Spend your money fixing up the basement and making it your home. At that price point I feel you have a chance of reselling in the future. I do not see any buyers for the McMansion selling for 1 mil and 30K in taxes.

If there are no homes in that price range that you and your wife find acceptable I would rent. I expect there will be some who will rent with the expectation of an 'appreciation of house price in the future' that will not come. In the mean time, maybe they will rent to you for a more reasonable amount.
Yes, renting is something I'm seriously considering. I bought my 2BR condo in 2011, which was pretty much the bottom in RE prices after the GR. I'm up about 50% and the home would be cash flow positive by about $1000/mo if I chose to keep it as a rental. Going to be really interesting to see what happens with Chicago RE over the next 12 months.

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greg24
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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by greg24 » Thu Dec 06, 2018 11:25 am

I think inter-generational differences are almost always overblown. This isn't "boomers vs. millenials".

The biggest problem is buying a really expensive house and expecting to sell it for even more in the future.

Property taxes are a very big concern in the Chicago suburbs.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by Jags4186 » Thu Dec 06, 2018 11:43 am

Real estate is local. If you live where the jobs are housing will be expensive. If you live where there is job exodus, housing will be cheap. The push to live downtown in city centers may work for the young but it doesn’t work for the middle aged with children.

What I suspect we have seen is that as the average age to have children has risen, there is a bigger gap between moving from the city to the suburb. In the past the 25 year olds got married, got pregnant, and relocated to the suburbs. Today many gainfully employed people put off marriage and children into their mid 30s.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by gasdoc » Thu Dec 06, 2018 12:33 pm

We own a rental in The Villages, Florida. While there has been great growth so far, and they are planning to almost double the present population (currently 130K), what will happen when the retired boomers start to die off?

gasdoc

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by Boglegrappler » Thu Dec 06, 2018 12:53 pm

I think inter-generational differences are almost always overblown. This isn't "boomers vs. millenials".
Its perilous to over generalize, but I do think there is a difference there. I generally think the the description in the original post has a lot of accuracy in it that is applicable to many, many areas in the country.

The boomers came of age at a time when the reality was that if you extended yourself to buy your first or second house, you were rewarded with decent appreciation and were better off because of it. The millennials have seen many people who bought homes as long as 12-15 years ago not able to recoup their original equity, and in many cases, losing all of it.

All of these issues are more pronounced at the upper end of housing prices. I know there are exceptions in many areas of the country, but the observations in the original argument apply to far more than just a small minority of areas.
Last edited by Boglegrappler on Thu Dec 06, 2018 1:27 pm, edited 1 time in total.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by Sandi_k » Thu Dec 06, 2018 12:54 pm

We observed this when we recently visited Palm Springs. All of its emphasis on golf courses and aging Hollywood royalty doesn't seem to be working with the newer generations.

A store owner with whom we chatted said that many of the golf courses are now asking the local neighbors to pay a "green space membership fee" to keep the open space supported, since golf club memberships have plummeted so precipitously. And without that economic support from the local neighbors, the course owners are contemplating selling out to developers who would replace the course with cheaper condos and townhouses.

Things change, for sure.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by Sam1 » Thu Dec 06, 2018 1:09 pm

Jags4186 wrote:
Thu Dec 06, 2018 11:43 am
Real estate is local. If you live where the jobs are housing will be expensive. If you live where there is job exodus, housing will be cheap. The push to live downtown in city centers may work for the young but it doesn’t work for the middle aged with children.

What I suspect we have seen is that as the average age to have children has risen, there is a bigger gap between moving from the city to the suburb. In the past the 25 year olds got married, got pregnant, and relocated to the suburbs. Today many gainfully employed people put off marriage and children into their mid 30s.
It’s not just the marital age or age one has children. It’s the fact that with two parents working, a long commute from the burbs is extremely challenging. In the past, many of the moms in suburbia were SAHMs and only one commute mattered while the SAHM did everything at home.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by bligh » Thu Dec 06, 2018 1:11 pm

greg24 wrote:
Thu Dec 06, 2018 11:25 am
I think inter-generational differences are almost always overblown. This isn't "boomers vs. millenials".
People are still people. However, you have to account for the different socio-economic climate in which these generations exist. When purchase decisions between generations are compared, the claim isn't that those born between 1980 & 2000 (approximate millenial) were somehow wired just a little differently than those who were born between 1945 and 1965 (approximate baby boomer). It is more a claim about the environment differences that have come about.

So much has changed between these two time periods - the kind of jobs, the stability of those jobs, the size of the average household, the cost of transportation, the cost of housing, the tastes in housing, the cost of education, the list goes on and on. People respond to the environment they are in, and you cannot expect their behavior to remain constant even as the challenges they face have changed.

The generational labels are just a shorthand for referring to this changing environment. You can phrase it another way by saying the type and quantity of the housing available today does not meet the type and quantity of the expected housing demand due to all these changes.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by rhornback » Thu Dec 06, 2018 2:26 pm

Jags4186 wrote:
Thu Dec 06, 2018 11:43 am
Real estate is local. If you live where the jobs are housing will be expensive. If you live where there is job exodus, housing will be cheap. The push to live downtown in city centers may work for the young but it doesn’t work for the middle aged with children.

What I suspect we have seen is that as the average age to have children has risen, there is a bigger gap between moving from the city to the suburb. In the past the 25 year olds got married, got pregnant, and relocated to the suburbs. Today many gainfully employed people put off marriage and children into their mid 30s.
Agree with what you are writing. And frankly it is my hope that as millennial get a little older that they may move to the suburbs and find my property more attractive. My timeline for selling is 2 - 5 years out.

Related I am seeing baby boomers not wanting to retire, or not able to financially. But ultimately they will retire which might create financial opportunities for millennials and make my house more affordable for them.

But the corollary to your statement that the city is not attractive to the middle aged, I wonder if corporations have moved into the cities in part to try to decrease their work force. It seems to me with outsourcing, globalization, and automation that 'big' corporations need smaller staff and that consolidating operations in the city is a way to decrease layers of employees.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by Whakamole » Thu Dec 06, 2018 2:48 pm

rhornback wrote:
Thu Dec 06, 2018 2:26 pm
But the corollary to your statement that the city is not attractive to the middle aged, I wonder if corporations have moved into the cities in part to try to decrease their work force. It seems to me with outsourcing, globalization, and automation that 'big' corporations need smaller staff and that consolidating operations in the city is a way to decrease layers of employees.
The opposite seems to be true from my experience. A lot of younger workers prefer to be in the city, where dense housing makes car ownership unappealing and mass transit feasible, and so they prefer to work where they can catch mass transit or a cheap Uber/Lyft. Companies that want to hire these workers (mainly millennials, but I know older workers who prefer city life) all but have to move to the city.

I know of one company that is moving from the burbs (technically downtown but still not in the "city") to the city proper; those who live in the city are very happy at the move since the commute will be easier, those who live in the suburbs are not happy at all. Their new digs are much bigger than the existing ones.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

Post by cheezit » Thu Dec 06, 2018 2:51 pm

bligh wrote:
Thu Dec 06, 2018 1:11 pm
greg24 wrote:
Thu Dec 06, 2018 11:25 am
I think inter-generational differences are almost always overblown. This isn't "boomers vs. millenials".
People are still people. However, you have to account for the different socio-economic climate in which these generations exist. When purchase decisions between generations are compared, the claim isn't that those born between 1980 & 2000 (approximate millenial) were somehow wired just a little differently than those who were born between 1945 and 1965 (approximate baby boomer). It is more a claim about the environment differences that have come about.

So much has changed between these two time periods - the kind of jobs, the stability of those jobs, the size of the average household, the cost of transportation, the cost of housing, the tastes in housing, the cost of education, the list goes on and on. People respond to the environment they are in, and you cannot expect their behavior to remain constant even as the challenges they face have changed.

The generational labels are just a shorthand for referring to this changing environment. You can phrase it another way by saying the type and quantity of the housing available today does not meet the type and quantity of the expected housing demand due to all these changes.
I agree entirely.

I work full time while my wife stays at home with our kids. We're about 30 and we'd love to own a house. The economic reality means this is probably still four or five years away. As a bachelor I lived in a converted attic so that I could pay down debt and save for our wedding. For the first four years of our marriage we squeezed into a one-bedroom condo to save money so we could pay off about $100k of college debt. Once we ran out of closets to sleep the kids in, we found a 2BR house to rent "cheaply" so we could save up for a down payment (and replace the jalopies built in the last millenium that we had been driving) without borrowing from retirement savings. And this is a family with two thrifty spouses and a breadwinner with an engineering salary in a MCOL area - I have no idea how people at or below the median income are supposed to do it. And good luck if you want to do this while eating out more than zero times per month, or to occasionally go on vacation. I suppose if you ran as DINKs for five or ten years the numbers would look better - maybe that's why the median age to marry and have kids is going up!

With regards to cities, perhaps I am an outlier but IMO people have cause and effect backwards. We're considering moving to a large city not because we actually want to live there, but rather because the salary advantage for people in my field is enormous if you live in NYC or SF compared to basically anywhere else in the world. My wife and I would both rather be in the sticks if we had our druthers.

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Re: Housing values may fall as baby boomers die off or sell off, two studies say

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