the real estate crash of 2020

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March 12th, 2013 at 8:28:22 AM permalink
reno
Member since: Oct 24, 2012
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This article quotes a University of Utah professor making a bold prediction: in the early 2020s, there will be a substantial real estate sell-off as baby boomers enter their 70s and move into small apartments and nursing homes. In particular, there won't be enough buyers to absorb the glut of big suburban homes.

From the article: "Roughly 7 percent of over-65 households move each year, and as people get older, their likelihood of moving from owning to renting gets higher and higher (it’s about 79 percent for households over 85). By 2020, there were will be around 35 million over-65 households in the U.S. That year, Nelson calculates, seniors who would like to become renters will be trying to sell about 200,000 more owner-occupied homes than there will be new households entering the market to buy them. By 2030, that figure could rise to half a million housing units a year."

Is this prediction realistic? Or total hogwash?
March 12th, 2013 at 9:38:19 AM permalink
AZDuffman
Member since: Oct 24, 2012
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Honestly I really have heard of few seniors who do this. Maybe I just live around reasonable sized housing stock where an apartment is not a major downsize. But this is part of why the powers that be want more immigration. Gen X is not going to be able to replace this group in labor pool size. Need moe people feeding the system.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
March 12th, 2013 at 3:36:59 PM permalink
Fleastiff
Member since: Oct 27, 2012
Threads: 54
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Rich babyboomers will retire to even larger houses or to large apartments in CBDs of smaller cities or simply stay put in their large homes. Why sell? Many over 65 stay working though they don't need the money. Why move? Sure some move, but why is this mass migration being predicted?
March 12th, 2013 at 4:11:24 PM permalink
Ayecarumba
Member since: Oct 24, 2012
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I think more children and their families will move back to their parent's larger digs. Either that, or the homes will be reverse mortgaged when the owners move into board and care facilities. I don't see a major change that market forces won't take care of.
March 12th, 2013 at 4:14:27 PM permalink
Nareed
Member since: Oct 24, 2012
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Quote: reno
Is this prediction realistic? Or total hogwash?



Yes.

Sorry, it's the little Vorlon inside me.... :)

A wise man once said "It is difficutl to make predictions, particularly about the future."
Donald Trump is a fucking liar
March 12th, 2013 at 6:13:15 PM permalink
rxwine
Member since: Oct 24, 2012
Threads: 132
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Quote: reno
Is this prediction realistic? Or total hogwash?


I don't know if the baby boomers will reflect anything different than other generations. The number of men living over 70 is at least a few numbers less than the women. So you have more single seniors. You will hear they don't want to continue the upkeep of larger homes. They often need someone to help them anyway. I believe the drive to keep up with the Jones becomes kind of meaningless in advancing age. Nobody gives a shit what you own, they talk about who they knew died this year. Well, they still gossip about who is doing what to whom.

(I'm going by conversations overheard in my mom and dad in retirement community when I visited.)

So, yeah, I think it's plausible.
Nobody learned anything from the global financial crisis.
March 12th, 2013 at 6:58:32 PM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 851
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Quote: reno
This article quotes a University of Utah professor making a bold prediction: in the early 2020s, there will be a substantial real estate sell-off as baby boomers enter their 70s and move into small apartments and nursing homes. In particular, there won't be enough buyers to absorb the glut of big suburban homes

Is this prediction realistic? Or total hogwash?


I was deeply impressed by an article in the Wall Street Journal after the real estate crash of the 1980's that said that the great house construction boom was over once and for all and was a unique event in history. The relatively combination of affluence and population growth starting in 1946 had ended in the mid 1980's. Now with much lower growth rates and a rapidly aging population housing would be a relatively slow growth market. This article was written circa 1993-1995. The article recommended not trying to trade up houses, but to live in basic homes (or even rent) and invest your money.

Prior to WWII people used to live in very tiny homes, and they had very big families.

I think that one of the big myths of economics is the the "Law of Supply and Demand" is of paramount importance. I think that they should have taught the rule that markets "climb a wall of fear and worry" trumps Supply and Demand.
March 13th, 2013 at 12:45:04 AM permalink
Fleastiff
Member since: Oct 27, 2012
Threads: 54
Posts: 6411
Quote: Pacomartin

I think that one of the big myths of economics is the the "Law of Supply and Demand" is of paramount importance. I think that they should have taught the rule that markets "climb a wall of fear and worry" trumps Supply and Demand.
Or at least that fear and worry and outright ignorance heavily filters the law of supply and demand.

The law posits a Buyer and Seller that are each knowing and each under no particular need to consummate the transaction ... try finding one of those in the marketplace though?

I know someone who sold a home and moved into a condo when she lost her much-trusted handyman, but if someone supplies a trustworthy handyman service will the elderly retain ownership rather than downsizing?

Many people like the ostentation of large properties and see no need to downsize. They don't have bumperstickers about their kid's inheritance... they don't care about it.
December 13th, 2014 at 10:24:02 PM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 851
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There was an article on the most expensive home in each state
North Dakota — $2.849 Million 2043 Rose Creek Blvd S, Fargo, ND
• Size: 7,421 square feet
• Lot: 1.1 acres
• Price per square foot: $384
• Standout feature: indoor pool

South Dakota — $3 Million 34613 299th St, Burke, SD
• Size: 11,000 square feet
• Lot: 780 acres
• Price per square foot: $273
• Standout feature: covered arena


I know there are not a lot of people in the Dakotas, but $2.849 Million is a ranch house in parts of LA.
December 14th, 2014 at 5:41:48 AM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 110
Posts: 8660
Quote: Pacomartin
There was an article on the most expensive home in each state
North Dakota — $2.849 Million 2043 Rose Creek Blvd S, Fargo, ND
• Size: 7,421 square feet
• Lot: 1.1 acres
• Price per square foot: $384
• Standout feature: indoor pool

South Dakota — $3 Million 34613 299th St, Burke, SD
• Size: 11,000 square feet
• Lot: 780 acres
• Price per square foot: $273
• Standout feature: covered arena


I know there are not a lot of people in the Dakotas, but $2.849 Million is a ranch house in parts of LA.


The South Dakota one is not a house, it is a ranch. To be fair only the home and surrounding 5 or so acres should be counted. When I was in mortgages we would not write for more than 10 acres IIRC.

If not for the oil drilling boom the ND property would probably go for $700K.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
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