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April 6, 2015 at 12:38 PM in reply to: Foreclosure deadbeats are now rewarded with free homes #784491
CA renter
ParticipantIn the past, families were the social safety net. I think we’re going to return to that model in the future. You’re right that we won’t be able to live long lives away from our family members. Parents better start training up their children in the traditional ways. Personally, I think it’s a good thing. Never did like the way Americans treat the elderly.
Multiple generations living together and supporting one another is deflationary, too.
April 5, 2015 at 10:09 PM in reply to: Foreclosure deadbeats are now rewarded with free homes #784476Participant[quote=bearishgurl][quote=The-Shoveler][quote=Hobie]Flyer gets the point for calling the retirement issue here first. 100%agree this will soon trump student loans and dare I say foreign policy issues.
With personal saving at such lows and non-existant pentions for private sector careers I bet we will see a huge increase in (fraudlent)disability claims to support people in retirement with no savings. Sad.[/quote]
This does not sound like “any” of the boomers I know.
Most have several hundred thousand in 401k’s and own their home out right.
But maybe I run with a small crowd.[/quote]Same here, shoveler. I run with the same “crowd” you do but it is not small. Not only do they have 401K assets, but IRA’s, business and real estate income and jumbo CD’s everywhere. This includes the senior citizens I know as well (those currently at least 70 years old).When you bought your personal residence in San Diego (or almost anywhere in SoCal) for $4K to $34K once upon a time, still own it and live in it, worked steadily FT for a minimum of 30 years, earned a pension (and in more than half the cases, your spouse ALSO earned a pension), this is a no-brainer. Even the majority of those who bought their first home in SD County as late as 1986 (for ~$50K to $170K) are doing just fine today.
The problem with at least half of Gen X and all of Gen Y is that their expectations for everything material are much higher than that of the boomers and beyond so they are more of an “instant gratification, throwaway society.” Yes, I will admit my own kid(s) show these traits. Even when making enough to have already saved a downpayment and qualify for a mortgage, they tend to spend their earnings on stuff that depreciates, instead. In addition, less of a percentage of today’s Gen X and Y parents are in the full-time workforce today than when boomer-parents were in their prime working years.
Boomers, for the most part, kept their heads down ALL of their working years, showing up at 6-8 am every morning like clockwork (dressed and groomed), five days per week for decades. I know because I was there every day along with my brethren who arrived at their homes at 5:30 pm situated in the likes of (gasp!), East and SE SD, Lemon Grove and Spring Valley. Some of the “moms” I worked with had up to five minor children still attending (K-12) school or in the FT care of daycare providers and/or relatives. 90% of new moms came back to work FT 6-8 weeks post-partum.
Well people, I’d say 65-75% of these “boomers,” now mostly “retired” are still residing in these same (now long paid-off) homes on two pensions and SS, if eligible (but many have “filed and suspended” their SS benefits, because they “don’t need” the income right now). A sub-portion of these SD County boomers (30%?) also have a military pension for life and Tricare for Life (deeply discounted Medicare Part B/D coverage deducted from their pensions).
I’ve posted before here that I know retired teachers and police officers who still own 4-44 (sometimes in partnership with longtime co-workers and family members) rental SFRs in San Diego County, most of which are completely paid off. (Yes, I meant “garden variety” retired public schoolteachers and law enforcement officers here.) Not to mention the lawyers and judges I know who are longtime owners of multiple SFRs and multifamily units either on or within 2 blocks from the beach (OB/PB). Some have formed REITS to attract more investors and hire professional mgmt for them.
So, please don’t feel sorry for the boomers …. most of us are “golden.” Those of you trying to find a decent home in an established, urban community in SD or an established SD suburban city (or anywhere in coastal CA counties) should feel sorry for yourselves. All of the above are the biggest reasons why there is so little inventory out there to choose from today. And the situation won’t get any better because, uhh, hello? … these boomer-and-beyond owners aren’t going anywhere. They will hold until their deaths and then these properties will be passed onto their heirs at their current, ultra-low assessments. We all have Props 13, 58 and 193 still on CA’s books to thank for this.
In CA, whoever’s family of origin is established the longest and held their RE assets without managing to re-mortgage them wins. It has little to do with an individual’s educational attainment or lifetime earning power. Based upon flyer’s previous posts, he appears to be in this category and as such, is most fortunate.
Just ask one of those low-key longtime slumlords in SF who own a handful of “rent-controlled” buildings how they’re doing, financially. You may find that they are set for life (as will be their children and grandchildren). Some of them undoubtedly never even finished HS, a fact of which is completely irrelevant to their lifetime financial security.[/quote]
For one thing, hundreds of thousands of dollars isn’t going to cut it for most people, especially if Social Security and/or Medicare get cut.
It’s funny how so many people are advocating for 401ks and other DC pension plans when it’s been shown that very few people are willing/able to save enough to get through their retirement years…and I’m talking about just basic living expenses, no big vacations or luxuries.
Some people seem to be under the impression that DB pension plans will fail. IMO, the much bigger failure will be evident when the majority of these DC pension retirees hit their latter years. That will be a much bigger problem, and we will still be forced to bail them out (at a much greater expense than if they had maintained DB plans, IMO), but that will be a sudden expense that “nobody saw coming,” making it even worse than the DB pension issue where people have at least been trying to better fund these plans in advance.
And I don’t think that the younger generation has higher expectations for the most part, either. Most young people would be happy to get what the Boomers got 30+ years ago — affordable homes with nice-sized yards in clean, safe neighborhoods. The problem is that fewer and fewer of those homes and neighborhoods exist for a much larger population. It’s gotten to the point that once middle-class homes can now only be afforded by “rich” people, many of whom are able to buy only because of their parents’ financial help.
As for women in the workforce, the percentage of mothers in the workforce increased until it reversed around 2000, at which point many women came to the realization that they were working for a negative income. Even those who were earning something (almost always less than they had expected, after taking into account all of the costs of working, including taxes) found that they weren’t earning enough to warrant leaving their children (six-week-old babies!) with strangers to raise them for the majority of their waking hours. This reversal is a good thing because it removes some of the surplus labor from the labor market, helping to prop up wages and open up positions for those who truly need to be in the workforce (single people/parents, heads of household, etc.). We’d be in even worse shape if the trend of mothers in the workforce had not reversed.
April 5, 2015 at 10:04 PM in reply to: State of the economy and affect on housing in S California #784485Participant[quote=joec]I think using PIIGS is a bad example and a different beast because all those counties don’t control their own currency and have to answer to Germany.
Had to quickly look up as I didn’t care for PIIGS, but (Portugal, Italy, Ireland, Greece and Spain) you can see all those are old EU countries with a ton of problems like massive youth unemployment, no fiscal policy (Greece now), high unemployment, yadda yadda yadda…
I’ve said many times, the fed would raise rates ONLY to get off zero, and even then, they are being so slow about it. The problem with current renters and I can understand their bitterness is that if rates are low for say 20-30 years, you’ve pretty much “used up” 20 or 30 prime years of your life. Japan is still stuck at lower rates (off 0 I think now). For all we know, if rates go up, people who have locked in will just rent places out. With such small inventory, rents will probably go up. Also, they may get more aggressive with longer term loans like 40 years, (100 years in Japan I hear) like what they are doing with car loans so payment may stay the same, but housing prices just don’t move much.
If you enjoy renting, that’s all great and good, if you hate rent increases (why we bought actually) and like a known housing payment on a commodity you MUST have to live in, then buying is such a load off your head.
You can always look for investment properties if you want to after your primary residence, but people should really (much easier for families) just live within their means in terms of a house and don’t see it as an investment. It’s just shelter and after 30 years, maybe it will be cheap shelter at that point. Much harder for the single folks here I think since you can tell from the posts how their mindset is very different from people who worry about a family/pets/etc…
SD Realtor, did you purchase a place yet? I don’t think I’ve seen a note here after following this place for almost 10 years, you’ve mentioned buying yet.
Also, for people renting, be cautious of your own renter bias just assuming things will collapse or go down. Similar to what AN said, a lot of buyers (even poor me) would try to hold on to our homes if we’re already at a much lower rate or our payments are significantly lower than comparable rents.[/quote]
Agree about those countries not controlling their own currencies. Just pointing out that interest rates can go up during deflationary times. Of course, if people start to question the value of our currency, that’s another story… I’ve long said that we should avoid stepping into Japan’s shoes. I certainly don’t want to trade places with them, but fear that we are going there.
The portions of your post that I’ve bolded, above, are spot on. This is largely why we wanted to buy, as well. It’s largely psychological, but when you have a family, stability is #1. It’s not a matter of whether or not a house is a good investment; some of us just want to settle into a home.
Participantsvelte, if you want more info on a more detailed level, feel free to PM me, as we had our system installed last summer. I think our climate is similar, though you probably get a bit more sun than we do.
April 5, 2015 at 11:18 AM in reply to: State of the economy and affect on housing in S California #784475Participant[quote=AN]SD Realtor, I totally agree. Those of us who locked in at this low rate, why sell when rate rise? Especially if rate rise above the current mortgage rate. If anything, I would drag that out as long as possible, since my money would be earning a higher interest rate than the bank is charging me.
If rent and income rises, why would you sell when your monthly cost to rent a similar place would be higher than your mortgage and your take home pay would make servicing that mortgage even easier.
I think the only way we’ll see lower price is if we have job loss and declining income. I.E. if we see deflation, not inflation. You won’t see rate rising with deflation.[/quote]Depends on why deflation is happening. Look at the PIIGS, for example, or even the U.S. when the financial crisis was coming to a head. Rates went up drastically until the central banks of the world intervened together.
What happens when/if central banks run out of ammunition? We’re already at ZIRP and with each successive QE intervention, the effects become smaller and smaller.
April 4, 2015 at 11:23 PM in reply to: State of the economy and affect on housing in S California #784473ParticipantDefinitely a tough call. No doubt that sellers who bought when prices were lower and then refinanced using these lower rates are in a pretty good place for as long as rents stay high and other investments look overbought.
There are a lot of variables. I just like to point out that looking at the 70s and 80s as indicative of how the housing market should fare if rates rise isn’t necessarily a good idea because there were other factors at play during those years. Of course, there may be entirely different factors in the future that could affect the housing market in a similar way, but we just can’t know until we’re deeper into it.
Participant[quote=SD Squatter]Pretty much all the water used for washing (sinks, showers, washing machine) is perfectly fine for landscaping with no treatment. Right now it’s all mixed up with toilet and down the sever it goes (to the ocean).
Why is the reclaimed water usage for on-property landscaping not mandatory yet? Why are still new houses being build with no mandatory graywater reclamation systems build-in? Why does the government make it so difficult to retro-fit existing on-property sever lines for graywater reclamation? (I tried once, but gave up after seeing all ridiculous regulations and permit hoop jumping required.)
What about rainwater from your roof?
Some questions to ask our local goverment.[/quote]
This has long been one of my pet peeves, too. I do not favor “toilet to tap,” but think that every house built over the past 10-20 years should have been mandated to have a dual plumbing/wastewater system where the grey water is recycled, at least for outdoor/irrigation use. There is no reason for people to have to water with perfectly good, potable water unless they have a fruit/vegetable garden. Even then, filtered grey water (a simple charcoal filter, or something similar) should work for most applications.
ParticipantThank you, flyer. 🙂
Yes, most people we’ve talked to here seem to like it here. That being said, whenever they hear that we are from California, their eyes light up and they always make some comment about how lucky we are because of the weather.
Ideally, if one had plenty of money and flexibility WRT work, a bi-coastal lifestyle would be best. The “rich and famous” set often do just that (as you know). Can’t say I blame them.
Participant[quote=spdrun]FlyerInHi:
1. vegetation on the East Coast grows faster, so is harder to keep trimmed.
2. no HOAs in most cities in NJ in SFR areas. This is a good thing. I’d rather trade a bit more dirt for spontaneity and houses painted pretty non-HOA-approved colors.
3. “riff-raff” makes things interesting. I don’t want to be surrounded by exact clones of myself. Boring.[/quote]Amen to that! 🙂
Participant[quote=bearishgurl]I’m glad you’re enjoying your visit to the east coast, CAR. YES, it IS quite different than the west coast (culture-shock be damned). I’ve made the Baltimore/DC trek a few times in my life but have never actually traveled to NYC/NJ. Someday I will, with a more “knowledgeable” Gen Y kid in tow …[/quote]
Yes, definitely try to make it here with your kid(s) if you can. Everything feels “richer” here…and I’m not just talking about money. Over 800 languages are spoken in New York! Lots of energy and stuff going on. We went to the same church where George Washington used to worship, and it’s still a functioning church and community meeting place. It’s like they want people to use it. In California, it would be all roped off like a museum with small tours going through it at certain hours.
And the architecture!!! No ugly, ticky-tacky stucco boxes like we have in CA (at least, not in the areas we’ve travelled). Reminds me of Europe in many ways. I am in love!
April 1, 2015 at 11:36 PM in reply to: State of the economy and affect on housing in S California #784376Participant[quote=Jazzman][quote=FormerSanDiegan][quote=rockingtime]Since you have lot of money for cash down, I’d say invest in some good relatively safe place to get you 4-5% return.
In couple of years, when and if the interest rates hit high, I am sure the prices would come down
Real estate prices in CA are cyclical in general and if anyone says otherwise, please look at the history.
Of course no one knows the future..[/quote]
If you look at the history of housing prices and interest rates you will note that the periods of interest rates increasing (notably mid 1960s to 1980, for example) coincided with home price increases.
SO, higher rates does not necessarily equate to lower prices. In fact, historically it has been the other way around. Higher interest rates generally track over the long run with higher inflation.[/quote]
It may be difficult to show a direct relationship. Some argue rising rates first impact demand, but supply and demand then influences price. A more recent debate focusses on the effect that prolonged periods of monetary easing has on the housing market. These researchers seem to have found a corelation:
An exogenous 100 bps decrease in the short rate results in about a 50 bps decrease in the long rate on impact, and an increase in mortgage loans to GDP of about 0.5 percentage points. Yet the effect of the initial shock keeps building over time, and by year four there is about a 3 percentage point increase in the ratio of mortgage loans to GDP.In light of the response of long-term rates and mortgage lending, one might expect house prices to increase in response to an exogenous decline in interest rates. The bottom-right panel shows that this is indeed the case. A fall of the short rate of 1 percentage point builds up over time and leads to a 4% increase of the house price-to-income ratio after four years. (Or alternatively, an exogenous increase results in a sizeable decline instead.) Various robustness checks and sample splits further strengthen our core result that monetary policy has indeed a powerful influence on households’ willingness to take bets on the house. https://agenda.weforum.org/2015/02/what-history-teaches-us-about-house-prices-and-low-interest-rates/
Interest rates have been declining consistently for many years. In the last 20 years, the 30 year fixed rate mortgage has halved. House prices in San Diego, on the other hand, have increased 180% over the same period. So while price and interest rate indices mat not track each other precisely, there is more than coincidence at play here. And it’s probably not without good reason that imminent central bank tightening has everyone on tenterhooks.[/quote]
During the 70s and 80s, we had the Baby Boomers entering their peak buying years. At the same time, women were entering the workforce en masse, increasing the amount that people were willing to pay for housing (and other purchases). Nixon also took us off the gold standard in the early 70s. All of these things would certainly affect housing prices, and were likely the cause of most of the inflation during that time…and it was that dramatic and rapid rise in inflation that caused the Fed to increase interest rates they way they did in order to cool things off.
Higher interest rates do not cause housing prices to rise. All else being equal, they will cause housing prices to fall commensurately. Most people buy based on the PITI payment; interest rates can affect monthly payments dramatically. Note that when the Fed wanted to slow/stop the decline in housing prices and other assets, they dropped rates to zero. They are, in fact, causing people to pay more for assets than they would pay if interest rates were normalized.
Participant[quote=scaredyclassic][quote=FlyerInHi][quote=livinincali]Philly for me was a visit once kind of place. It was ok it just feels run down in most parts of the city.[/quote]
Don’t knock philly too much. The old city area and Washington square are one of the best stories of urban renewal in the last few decades. You could have bought for next to nothing in the 80s and be rich today. Better than downtown San Diego.[/quote]
oldcity totally hipster cool. Oldest kid willing to live here.
we are staying in a really cool condo near Christmas church. So many bars! Vintage ice cream parlor open till midnight. Fun. But u can’t buy liquor in supermarkets[/quote]
We’re in New Jersey/New York and were tripping out on the alcohol thing, too. Just wanted a bottle of wine, but no. They won’t even sell them after 10:00 p.m. in the liquor stores.
The architecture and history on the east coast is amazing. Something we sorely lack in California. We are loving the public transportation, too. Haven’t touched a car except once to get the big stuff from Target because we’ve scheduled an extended trip and are staying in a condo where we have to bring in all of our own cleaning supplies, toilet paper, etc. (they did leave a “starter kit” for us here)
We will always choose a condo over a hotel. It’s a no-brainer if you’re traveling with a family. It’s insane to pay for 2-3 meals out every day, as you’d have to do in a hotel. That’s a quick and easy way to go broke. And condos are usually roomier (and cheaper!) than what one can find in a hotel.
Funny thing happened to us tonight: Nick Lachey (or someone who looks *exactly* like him and lives in an expensive building) gave us directions around a big construction zone tonight! He had just hopped out of a cab and saw us trying to figure out how to get around the blocked streets and offered to help us out. Very cool.
Lots of nice people here. Even nicer than Californians in some ways. Maybe it’s because people are forced together here, whereas they are able to live very remote, isolated lives on the west coast with all the car driving and more spread-out living arrangements. As a west-coaster, I’d always been a bit biased against east coasters because they’ve always seemed so much harsher than Californians, but we’ve been very pleasantly surprised by how helpful and friendly everyone is out here.
March 22, 2015 at 2:24 AM in reply to: State of the economy and affect on housing in S California #784061ParticipantFWIW, I think Pollard is correct in his thinking. The question, of course, is how long until it washes out? If you’re sitting in a rental for 10 years (or more), would you be okay with that?
March 22, 2015 at 12:50 AM in reply to: State of the economy and affect on housing in S California #784060Participant[quote=wallers]yep. I’m out. 3127 McKinley just listed. check the history. in my opinion wow.[/quote]
Crazy price for a house that size. It’s also a bummer that the most recent owners took out the beautiful trees and painted over the previous colors, which matched better with the house. The house looked so much nicer in the previous listing, especially with the nice trees out front.
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