For arebelspy and others similarly inclined

[dude]

http://www.bloomberg.com/news/articles/2016-08-04/landlord-nation-boomers-new-retirement-plan-is-millennials-paying-rent

[clarkfan1979]

This was a good read. I love millenials!

[arebelspy]

Good read, thanks for the link!

Yeah, the boomers may be planning to use rentals to partly fund retirement, but there will come a point at which they sell--either to ease the transition into a full retirement in a nursing home, or perhaps it'll be their offspring who inherit it who sell it.

Either way, they may be rentals for the next 15 years or so, but then there will be a glut of them for sale, I'm betting.

[mathjak107]

in a huge  survey here , over 400,000 boomer and millennial's on long island said their plan is to sell their mega buck homes , take their larger social security checks from higher wages and relocate  somewhere cheaper  . 

[dude]

in a huge  survey here , over 400,000 boomer and millennial's on long island said their plan is to sell their mega buck homes , take their larger social security checks from higher wages and relocate  somewhere cheaper  .

Wow, that's a lot of people!  It's definitely something I may consider at some point (my upstairs neighbor has already indicated she'd be interested in buying our condo if we ever sell), but I do rather like our area and our mortgage is dirt cheap thanks to serially refinancing it (to 3.25%). It's a pretty good spot to age in place, but you never know.

[Another Reader]

In my 30 year-old neighborhood in Silly Valley, most of the remaining original owners are in their late 50's to early 70's.  Walking around some mornings, it looks like the gated retirement community a few miles away.  The houses are selling in the 7 figures now, but many of the remaining original owners and others in that age category are planning on aging in place and modifying their houses to do that.   

Some folks own rentals, often the home they moved from when they moved here.  The rents for those properties are $3-4,000, based on the ones of which I am aware.  Two social security checks, the net rental income, and even a moderately sized 401k portfolio is easily going to put these folks into the six figure income bracket.  With paid off houses and low Prop 13 taxes, there is no financial incentive to move.

Everyone, especially real estate agents, talks about the coming baby boomer real estate liquidation sale.  Ain't gonna happen, at least not here.

[dougules]

They didn't really say much on one key thing, construction.  Landlords and interest rates may be driving up housing costs in the short term, but the cost of construction is what sets rents and real estate prices long term.   

[cerat0n1a]

They didn't really say much on one key thing, construction.  Landlords and interest rates may be driving up housing costs in the short term, but the cost of construction is what sets rents and real estate prices long term.

Depends on location, surely? The cost of building a house in terms of construction labour & materials costs is typically well under half of the selling price where I live and so almost irrelevant in terms of rent and house prices. I would imagine it's the same in Silicon Valley/SF, Manhattan etc?

[dougules]

They didn't really say much on one key thing, construction.  Landlords and interest rates may be driving up housing costs in the short term, but the cost of construction is what sets rents and real estate prices long term.

Depends on location, surely? The cost of building a house in terms of construction labour & materials costs is typically well under half of the selling price where I live and so almost irrelevant in terms of rent and house prices. I would imagine it's the same in Silicon Valley/SF, Manhattan etc?

Well, I meant total including land costs and barriers to new construction.  Cost of construction is definitely what's driving prices in New York and the Bay Area.  It's not cheap to build 100 story skyscrapers, and then there are so many people that throw up roadblocks when you try to build infill near them. 

[arebelspy]

In my 30 year-old neighborhood in Silly Valley, most of the remaining original owners are in their late 50's to early 70's.  Walking around some mornings, it looks like the gated retirement community a few miles away.  The houses are selling in the 7 figures now, but many of the remaining original owners and others in that age category are planning on aging in place and modifying their houses to do that.   

Some folks own rentals, often the home they moved from when they moved here.  The rents for those properties are $3-4,000, based on the ones of which I am aware.  Two social security checks, the net rental income, and even a moderately sized 401k portfolio is easily going to put these folks into the six figure income bracket.  With paid off houses and low Prop 13 taxes, there is no financial incentive to move.

Everyone, especially real estate agents, talks about the coming baby boomer real estate liquidation sale.  Ain't gonna happen, at least not here.

But, as always, real estate is local.

There's maybe no reason for someone to move from there, with Prop 13, and good weather.

But someone in the NE, with New England weathers, and no Prop 13?  Florida starts to look pretty good...

I don't think there will be a massive boomer sell-off.. like I said, I think they'll use them to fund their retirement.

But are their kids gonna hold those properties forever as well?  That's the much more likely stage where they get sold, IMO.

[Prairie Stash]

They didn't really say much on one key thing, construction.  Landlords and interest rates may be driving up housing costs in the short term, but the cost of construction is what sets rents and real estate prices long term.

It's wages that set prices, people only buy what they can afford. Even if it's a 7 figure valuation or $10k. That's where high priced land, like the $100k my house is on, comes into play. An hour away 100k buys 80 acres, arguably 80 acres is better than a small lot.

 

Good read, thanks for the link!

Yeah, the boomers may be planning to use rentals to partly fund retirement, but there will come a point at which they sell--either to ease the transition into a full retirement in a nursing home, or perhaps it'll be their offspring who inherit it who sell it.

Either way, they may be rentals for the next 15 years or so, but then there will be a glut of them for sale, I'm betting.

Wouldn't it be balanced by fewer housing starts?

Fascinating article

[dougules]

They didn't really say much on one key thing, construction.  Landlords and interest rates may be driving up housing costs in the short term, but the cost of construction is what sets rents and real estate prices long term.

It's wages that set prices, people only buy what they can afford. Even if it's a 7 figure valuation or $10k. That's where high priced land, like the $100k my house is on, comes into play. An hour away 100k buys 80 acres, arguably 80 acres is better than a small lot.

The old adage still holds true: Location, Location, Location.    The market shows what people really think is better.

[The Happy Philosopher]

"If people felt they could get a reasonable return on money in the traditional way, then these nontraditional ways would have no appeal,"

Award for dumbest statement in the article.