From MarketWatch:
Will your house pay for your retirement?
You sell your home at a huge profit, then use the proceeds to upgrade your golden years from comfy to plush. That scenario, which might have seemed realistic when the housing boom was at a full-throated roar, seems a little starry-eyed today with home values still depressed. But according to a survey released this week by Ameriprise Financial, 47% of people aged 50 to 70 “expect to use their home equity to help fund their retirement.” The pollsters say that share appears to have risen significantly since before the recession, even though housing prices declined in the interim.
The findings are particularly interesting because this survey group isn’t exactly crying poor. The average respondent in the survey had $700,000 in investable assets, not including real estate, and 78% had at least $250,000 saved for retirement. (The minimum for participation was $100,000.) In a conversation with Ann Carrns of the New York Times Bucks blog, Ameriprise executive Suzanna de Baca speculates that the rising expectations for home equity might reflect the lingering effects of the stock market crash: “Despite the fact they have reduced home equity, the shortfall between what they’ve saved and what they need is greater.”
Some folks will probably be successful at making their homes work for them, of course—and for boomers who’ve been staying put for quite a while, the prospect is more realistic. Prices nationally are still down about 27% from their 2006 peaks, but those who bought 10 years ago or more are likely to be sitting on some price appreciation. Those homesteaders are also more likely to have built up more equity, which will help them sidestep another obstacle facing many boomers – the fact that more are approaching retirement with mortgage debt. Among families where the head of household was between 55 and 64 years old, 54% had mortgage debt in 2010, up from only 37% in 1989.
Hello, world!
Fabius,
Sure, I’ll give them their inspection money back, right after I revoke the offer, which was their initial and only offer, and right after I change my mind about practically giving them pieces of furniture they were interested in. Fair deal? Right?
Good Morning New Jersey
Fabius,
You want to know what else? My buyers have been looking at other homes for weeks now, with the stipulation that they can void this contract at any time. You know what? They can’t find anything else as nice for the price I gave them. THAT’S why they’re still hanging on. And, guess what? The discussion to refund their inspection money was talked about in this house a long f.ucking time ago.
Maybe Ameriprise Financial needs to survey some blue collar neighborhoods not their own clients who have a million in savings and retirement with a home that’s paid off.
47% of people aged 50 to 70 “expect to use their home equity to help fund their retirement.”
That’s been exactly my point. I’ll go out on a limb and say the percentage is even higher in the nicer BC towns. A lot of these residents come from the field of finance and, believe it or not, have *not* lived beyond their means. They have equity and they have options. My in-laws, in their mid 70’s, are very plugged in with this group and through them I glean a lot of data that doesn’t show up elsewhere. I would say the typical housing MO amongst the baby boom and older demo in BC is this:
1. Retire early, by today’s standards. Age 60 or less.
2. Keep home for about 5-10 more years after that.
3. Downsize.
Also counter trend for this demo, their kids don’t return home. Remember back when we were in HS? Where was the “cool” house, where everyone was hanging out? Answer: the house with no parents home during the day. Between a high stay-at-home Mom population and lot of early retired Dads, these “nice” houses are not “fun” houses for the kids with Mom and Dad home all day. Quite a different environment than a nice house in Clifton where both parents are out the door early to get to their full time gigs and the mid-20’s kids have the run of the house during the day. To the Clifton kid it’s like a great dorm room, a full fridge, and no classes. Who would leave? In the BC train towns an unemployed kid with no college loans doesn’t relax so easy on his bought-and-paid-for $200K Syracuse degree with Mom and Dad home all day. By hook or crook, these kids get out of Dodge and stay out, so those bedrooms are empty and that property tax bill is oft discussed. Perhaps another magnet factor in the parent’s decision to sell is it seems like these kids go one of two ways. First is the NYC rat race where they are helped up the ladder a little bit and buy their own house, maybe even their parent’s house, so there is some local inventory destruction right there. Second, is they seem to scatter far to the wind. They open up a micro-brew restaurant in the Carolinas, head out West, down to Florida etc. None of the kids seem to move just outside the metro-NY area. They either stay, or move far. If they move far and settle those parents also move in that direction.
[6] LOL – My MIL told me over Christmas that the guy who bought their house just retired. I just looked him up. He’s 59 years old and a Wall Street guy. Check. He bought my in-laws house in a private sale in ’92 for a little under $600K when he was 38 years old. He already owned a house in town, which is par for the course. My in-laws were in their late 50’s, had kids in their mid-20’s, both out of the house and had been retired for over 10 years. Check.
My in-laws were empty-nesters who sold their house to get out from under their then $13K tax bill as they didn’t need the train or the schools anymore. Same goes for the 59 year old who just retired. How long do you think he pays his $34K tax bill before he and his wife move?
Both my in-laws and the current owners could/can well afford to stay there, but if you’re good with money why would you?
gary (4)-
Gluteus types are the ones so busy rigging up the market that people like you and your buyer can’t get anything done.
The funny thing is that all in the name of “fairness” and “level playing ground” and “help for homeowners”, the only people who end up winning are thieving banksters and WS.
Fabius,
It took my buyers a YEAR before they found this house. That was after they saw dozens of f.ucking homes that they no doubt “passed on that went straight away.” I wonder how many words of “advice” they received in their journey?
grim – take 6 out of mod please.
Meat,
Look at the front cover of the Real Estate section in today’s Bergen Record. It talks about the failure of HAMP to aid homeowners. You want to know the reasons? 1) Good faith attempts by the Servicers wasn’t so good after all and 2) It cost money to hire people to do the leg work in the process. Go f.ucking figure! But the attempt was there and that’s all that matters. [sarcasm off]
HAMP? Failure.
HARP – I would say the single most influential, specifically pro-housing, action by the government since the bubble had burst.
If you ranked all of the 137 different bailout attempts since the bubble burst, HARP, specifically 2.0, would rank at the top. If HARP 3.0 legislation passes, it will bypass 2.0 as the most influential.
If you want to compare:
HARP – http://www.fhfa.gov/webfiles/24844/Oct12RefiReport.pdf
HAMP – http://www.fhfa.gov/webfiles/24943/NOV2012FPRfinal.pdf
HARP has current helped 58,067 NJ homeowners refi.
Dedicated to clot:
Our Sports Culture At Work, Play: N.C. State guard Tyler Lewis’ grandmother had died six days earlier, so Thursday, as he shot free throws in the second half with Duke up 18 at home, some students were heard chanting, “How’s your grandma?”
ESPN, among other media, has identified Duke’s “Cameron Crazies” as the best darned fans in college basketball.
Not from the perspective of a first-time homeowner looking to buy. I think renters would like to see much lower prices instead of their tax dollars spent to keep them priced out. I thought pro-housing initiatives are supposed to help those without homes buy, not shield banks from losses and make stupid purchasers feel less stupid.
HARP – I would say the single most influential, specifically pro-housing, action by the government since the bubble had burst.
15 – You don’t need to like it, but you can’t argue that it wasn’t influential. By the end of 2012, HARP will have refinanced more than 2 million homeowners who otherwise wouldn’t have been able to take advantage of low mortgage rates.
From Freddie Mac:
http://rismedia.com/2013-02-07/fourth-quarter-results-84-percent-of-refinancing-homeowners-maintain-or-reduce-mortgage-debt/
For someone with a $200k loan, HARP enabled an annual savings of $3,600, that’s a huge number.
Parlay that to NJ, where the average loan could be closer to $400k for those who purchased at peak, and that might enable a savings of $7,200 a year.
15 – You don’t need to like it, but you can’t argue that it wasn’t influential. By the end of 2012, HARP will have refinanced more than 2 million home
ownersoccupiers who otherwise wouldn’t have been able to take advantage of low mortgage rateshave defaulted causing the banks even greater losses.So, to be honest, it’s a pro-bank initiative. Just like all the others.
And did nothing for the true homeowners.
Grim [12];
HARP (allowing underwater refis) worked because Fannie & Freddie were already on the hook for the underwater notes. So, if the lender allows the submarine homeowner to refi, they are not taking on any additional capital risk; but they are significantly decreasing the likelihood of default. Essentially, they are just bribing the homeowner not to exercise their nuclear option of walk-away default, but point in fact its a fairly shrewd business decision. It also frees up discretionary income to goose the [still] flagging domestic consumer-driven economy.
Not without its problems, however. One of them is that keeping the underwater homedebtors in their houses tightens supply. Another is that it rewards the person who over-extended during bubble by keeping them in a house that they otherwise would have sold/short-sold/defaulted out of. And as much as that sucks for buyers, its still a business decision on the part of the lender. Where I get pissed is that the lender is the government, subsidizing Fannie and Freddie with the extra taxes I paid by being a renter and NOT buying into the bubble.
chi (14)-
Go to hell dook.
Dook = University of New Jersey Cheaters
grim (16)-
That’s 2 mm homedebtors that would’ve eventually been carried away on their shields, absent the program.
I think that’s also enough to completely keep the market from clearing for at least a generation.
It will be the death of the Amerikan Dream (aka owing big loot on a house).
Dang those unintended consequences. Just couldn’t have seen those coming.
My wife made me a Taylor Ham and cheese sandwich for lunch. I’m probably the only one in Boston who can say that today.
grim, influential and wasteful.
Huh? There’s plenty of kosher places up there….
The Original NJ ExPat says:
February 10, 2013 at 5:12 pm
My wife made me a Taylor Ham and cheese sandwich for lunch. I’m probably the only one in Boston who can say that today.
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