Blame the boomers (again)! This time it's the affordable housing crisis.
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[i][b]Photo above[/b] - "We have met the enemy, and she is mom". Newsweek takes boomers to task for not selling their paid off family homes.[/i]
Every time I open my Yahoo news feed I'm assaulted by economic garbage. Like the link at bottom, from Newsweek. Full disclosure – Newsweek.com has “1MM+ followers” per their masthead, and my column not quite that many. But then again, millions of "followers" went off a cliff in 1929, 1973 (Saudi Oil price hijacking); 2001 (9/11 attacks); and 2007 (junk mortgage bubble). We may be overdue for another lemming run.
I just don't agree with Newsweek that boomers are existential threat to me. Not when there are several war zones that could trigger World War 3. Not when we are being crushed by $34 trillion in government debt - $340,000 for each American family. Not when we have epic levels of drug overdoses. Not when millions of people fleeing despots and cartels are willing to use their life savings to get to America.
But this IS an election year, and the government (both parties, congress as well as the White House) has no plausible bipartisan plan to fix real problems. Let's blame our parents.
According to Newsweek, our moms are evil. Because they refuse to move out of the home she and dad shared for 30 years. All those memories. The trees they planted together. Where the dog is buried in the backyard. Where they raised the 2.5 kids Wait . . .there's a problem. The kids are baaaaaack !! One is living in the basement. Or possibly their original bedroom, if there's more than one fledgling back at the nest. Mom is okay with that. She doesn't want them to end up someplace worse. THAT might be part of the reason why mom doesn't sell the family home, and downsize to an overpriced condo with no garden, and no dogs allowed.
Newsweek complains that half of retirees own their homes free and clear and refuse to sell them. Wait . . . I thought paying off your mortgage was supposed to be a GOOD thing? I read this someplace a while ago. It might have even been in Newsweek. In the pretzel logic of 2024, being mortgage-free is now part of the problem, not a solution. Just sell your home and move, and the housing crisis will vanish?
If you stop and think about this for 2 seconds, it makes no sense. Selling my house and moving someplace else does NOT increase the total supply of housing. It just enriches moving companies and real estate agents. Maybe the National Association of Realtors is advising Newsweek on this boomer attack piece?
It may be tiresome for realists to keep pointing out high interest rates, but that doesn't make it any less true. Only an idiot would trade in their 2.88% mortgage for a 7.X% mortgage, despite what Newsweek says. Only an idiot would sell their detached single family home on a quarter acre, which has had astronomical gains in value - far above inflation – for a landless condo or townhouse. But only an idiot would rely on Newsweek for economic strategy, actually.
For the past several years, America has built HALF AS MANY NEW HOMES as the rate of population increase. THAT's why home prices are going to the moon. New homes aren't being built because of sky high mortgage rates and local governments' stranglehold on zoning and permits. It has nothing to do with your mom and dad. They paid their taxes and paid off their mortgage. Stop the hating.
Don't crises usually involve a 3rd shoe dropping? One beyond zoning permits and mortgage rates? Don't worry . . . the 3rd shoe is on the horizon. Imagine what happens when the stock market actually starts to decline. All those 401Ks accounts people have been counting on. Do you think there's any possible way that giving everyone's 401K a 20% haircut (or worse) will lead to more housing construction and economic prosperity?
I'm just sayin' . . .
~Boomers Are Refusing to Give Up Their Large Homes (msn.com)~
It's literally the worst time in decades to sell a house or build a new one; yet someone is still trying to push the idea into people's heads, it's not just newsweek, there are several "sell your home" ads running on radio stations
as you said, even if they did manage to sell their current paid off/low rate mortgage house for a descent sum; with the current prices of building materials, it would still be no where near enough to build a new comparatively sized home, and they'd be stuck with a fixed rate that's three times the interest of their previous mortgage
aside from being downright idiotic, it seems the housing/financing industry is going down the same path as healthcare; treat the symptoms rather than the cause, put the blame/financial burden on the victim rather the bureaucrats that instigated it.
and with this government insistence on giving unsecured loans to people with no/shitty credit who will inevitably default, all these bank collapses will seem mild to another housing market crash that supersedes it.
@wildbill83 my mom - EVERY week - gets at least one email or snail mail communication from a real estate agent. They're all similar.
"I have done an assessment of your property (without your permission, and without ever actually seeing the inside of it). It's worth X hundreds of thousands of dollars. Let me put it on the market for you. I am a successful professional. You can trust me."
This is some journalist who found a fact and wants to make an allusion without really thinking about the market, interest rates, and cost of living over the past 30 years. Oh, and the people.
Imagine in 1993, a 30 year fixed mortgage wasn't much different than today (7.x%). At 32, your career is going pretty good. You managed to save a down payment, and ready to move out of the "starter home" you bought in 89 with your partner. You've decided that to raise a family, you'll need something a little bigger, maybe outside the city, with a little more land. You find a nice place in a good location in more of a suburban/rural area that has a promising future with other families like you.
So you spend the next 30 years, by no means living beyond your means, and now at 62 make the final payment. The kids are out, and in a few years you can retire, and enjoy the fruits of your labor. The neighborhood is still good, maybe the house needs a little work, however, you're looking forward to being able to spend more time around the house, and can use that extra money each month doing some home improvements.
I mean, that point in life is truly when you can finally settle in and settle down to enjoy those twilight years in the comfort of familiar surroundings.
@BrewCityBarfly thanks for conceding that the facts in my post are accurate, and nobody thinks 7% mortgages are a good idea. in fact, they suppress housing starts.
If you think it's "naive" to want affordable mortgages, improved zoning regulations, and building enough houses to match population growth, i simply don't know how to respond to that.
@SusanInFlorida My references are to the author/journalist of the Newsweek article, and never stated anything about it being "naive" to want an affordable mortgage. https://www.newsweek.com/boomers-refusing-give-their-large-homes-1893262
I'm sure Newsweek didn't call your mother evil . .
Why is this "economic garbage"? Where the market is behaving inefficiently and there is a mismatch between demand and supply, prices will rise. One reason for this inefficiency is people accumulating and hanging on to assets that they do not require for their own basic housing needs. The same owners of capital are often instrumental in blocking new construction/conversion, which by implication would drive down the value of their investments . .
The depiction of all government as craven and corrupt is convenient, but not convincing in a sphere of economic activity that is largely the preserve of the "free market".
@SunshineGirl I had the good fortune to "do" Dubai about 10 years back and had a tour of a number of inland freeways to nowhere in the desert, just waiting for development funds. But again, there was no real need for the housing or any retail development, because of Dubai has of managing its population. And now some of the artificial reclaimed land built as luxury for foreigners is starting to subside. Its nice to see the Capitalists take one for the team someplace they arent going to get bailed out..😷
several of those desert sheikdoms have already scaled back their imaginary shangri-las after double checking the numbers.
wait til they start to factor in the cost of air conditioning, fresh water, refrigeration of perishables - all essentials if you plan to live forever in the desert.
@SusanInFlorida Urban development is part of the emirates' efforts to diversify their economies away from fossil fuels. Yes, there are many factors to be weighed up in achieving sustainability, but the electricity at least should be cheap and limitless. In Spain, which has the most extensive network of solar generation, the effective cost to consumers is practically zero during summer . . partly thanks to the lack of private sector involvement.
This Problem is replicated in Australia. The only additional factor I can bring in is that the traditional quarter acre suburban block held a three to four bedroom, one bathroom home when my parents bought in 1960. That same block took a three to four bedroom home with two batherooms and a family room when we built in the later seventies and now a smaller block takes a double story McMansion with 4 bedrooms, a study, family/rumpus room and a home thetre with 2 bathrooms and a double garage, Plus the obligatory A/C and dishwasher The consumer wants more. Just like they get with their cars, where a heater was extra..😷
@ineedadrink apartments are high because interest costs are high, and zoning for new apartments is restrictive. people living in posh neighbors - the people city hall listens to - have demand that there be no apartments nearby, which might reduce property values on their own mcmansions
@beckyromero You can avoid a fair amount of capital gains tax on your primary residence, up to a ceiling. Does Canada have no ceiling?
[quote]When does capital gains tax not apply? If you have lived in a home as your primary residence for two out of the five years preceding the home’s sale, the IRS lets you exempt $250,000 in profit, or $500,000 if married and filing jointly, from capital gains taxes. The two years do not necessarily need to be consecutive. If you become disabled, receive a job offer in a new area or are forced to sell your home before you have lived there two years, you may qualify for an exception to the two-out-of-five rule. [/quote] [b]https://www.bankrate.com/real-estate/capital-gains-tax-on-real-estate/#avoiding-during-home-sale[/b]
@beckyromero there are no capital gains as long as you buy a more expensive home. If you buy a less expensive one, you only get a one time, non repeatable exclusion. if you want to sell that LATEST home, the government starts taxing your home sales all over again.
Housing market is the government allowing the banks to sit on foreclosed homes and developments for years until they must be demolished and sold for pennies
@MarineBob you make a good point, actually. and local governments do this too. they both evict owners/tenants, and then the buildings sit idle until they become drug dens or are destroyed by squatters.
i'm in favor of legislation which requires the sale - at auction - of any empty property which -
- is 12 months or more arrears in property tax - and is currently vacant, or occupied by squatters - and/or is part of a bankruptcy or probated estate which began more than 12 months ago.
@BritishFailedAesthetic the reason is that housing construction is half the rate of annual population growth. the reason for THAT is high interest rates and restrictive zoning laws.
@Roundandroundwego i'm not asking uncle sam to house everyone. just stop tinkering with mortgage rates and imposing zoning restrictions which prevent affordable housing construction by the private sector.
@SusanInFlorida course not. This can not be about the imperative to house yourselves. You are war incarnate. Not ready for housing me or mine. Only socialist people ask for housing. You aren't like me at all. You don't even ask that Uncle Sam should house me. Right back at you. I don't ask that you should make it indoors, either. Nothing for you but cuts and removal.
