- Tom BrezsnyA Riddle Wrapped in a Mystery Inside of an Enigma
Picking up the thread from last week… trying to decipher the riddle wrapped in a mystery inside of a market enigma that is our historically low inventory of homes.
The perennial lack of listings we’ve experienced since the market began it’s, ascent out of the doldrums of the Great Recession in 2013, has almost single- handedly reshaped the way real estate works. Nothing else comes close to matching the profound effect dwindling supply has had on all the things we take for granted these days: multiple-offers, overbids, fewer days on market, quicker timelines and consistently rising prices.
The latest theory we’ve been kicking around goes something like this: There are actually lots of people out there, especially increasing numbers of aging baby-boomers, who really do want to sell their homes. They are ready to put them on the market but they just can’t quite figure out how to sell and then buy their replacement homes in ways that make sense to them.
They are feeling stuck for answers. And as long as they are struggling to reframe their real estate / real life choices, they aren’t going to put their homes on the market. And the inventory is probably going to be stuck at the same frustratingly low levels it’s been at – until something bigger decides to shift.
People past the age of 60 represent the largest chunk of homeowners in the Country. The Greatest Generation, Silent Generation and Baby-Boom Generation – all of whom came of age and bought into the American Dream during the longest period of economic expansion (and debt creation) the world has ever known. They currently exercise controlling interest in the supply of homes for sale.
The scale of demographic change associated with our rapidly-aging population is something we’ve never experienced before. In many ways, we’re living in an older, undiscovered country. One that’s trying to come to terms with its own existential angst. And it’s going to require an expanded national conversation to find workable solutions to the challenges of living longer.
So we return to our local couple, Bob and Cathy (names changed to protect the innocent) who have been anointed our local “Poster-Couple” for the huge swathe of baby-boomers out there looking for answers to the challenges of housing and aging.
Bob and Cathy own a 4br, 3.5ba, 3,500 sq ft home on the non-ocean side of Hwy 1. They’d like to sell it and buy a cheaper (much cheaper) single level, 3br, 2ba, 2,000 sq ft home near the beach in an area that’s good for walking. Sound familiar? We’ll start with a few of the easier questions Bob and Cathy are asking:
How does property tax work in California after the age of 55? What are Props 60/90? How do we avoid a huge jump in property tax after retiring?
What about Capital Gains Tax? Is there a one-time exemption? Did it change? $250,000 or $500,000? What happens if we bought our house 30 years ago for $400,000 and the gain is more than $500k? We don’t want to pay any taxes!
How much is our house worth anyway? Zillow says $1,800,000! That could mean huge taxes!! If we wait till we die, can our kids inherit the house without paying any taxes?
