patrick.net

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A “silver tsunami” of baby boomers will start downsizing next year and 2025.

In terms of the housing market, baby boomers pretty much have it made. They own homes worth a whopping $18 trillion combined, compared to just about $5 trillion for millennials as of the first quarter of 2023, according to a Redfin report released in August.

The ‘silver tsunami’ is about to hit the housing market—but millennials and Gen Zers may not come out any better in the wash

https://fortune.com/2023/11/09/housing-market-affordability-silver-tsunami-home-prices-baby-boomers-millennials-gen-z/

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It was behind a veil for me, but I assume the Forbes (owned by CCP) writer assumed that a near doubling of the rates won't substantially impact used house prices.

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In terms of the housing market, baby boomers pretty much have it made. They own homes worth a whopping $18 trillion combined, compared to just about $5 trillion for millennials as of the first quarter of 2023, according to a Redfin report released in August.

Here in California, these old folks have dirt cheap property tax due to Prop 13. They either stay put and die in situ so their kids can inherit tax free or they leave, but rent out their place until death so their kids can inherit tax free. Fortunately, now, the kinds can't get the dirt cheap tax unless they themselves live in the house.

HeadSet says

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Biden is funneling $45 billion from clean energy incentives in the ridiculously named Inflation Reduction Act (IRA) into housing conversions.

Translation - Warehouse accommodations for mass illegals.

You forgot to mention: accommodations that, due to corruption and incompetence, will be 2x more expensive than privately built housing.

You know, housing is just like Bitcoin in a way. Those who already hodl Bitcoin are motivated to pump up its value by that fact alone. Same with housing.

SunnyvaleCA says

Here in California, these old folks have dirt cheap property tax due to Prop 13. They either stay put and die in situ so their kids can inherit tax free or they leave, but rent out their place until death so their kids can inherit tax free. Fortunately, now, the kinds can't get the dirt cheap tax unless they themselves live in the house.

I guess you don't know what a living trust is.

Patrick says

You know, housing is just like Bitcoin in a way. Those who already hodl Bitcoin are motivated to pump up its value by that fact alone. Same with housing.

One difference though - Bitcoin is a speculative device while a house is a place to live. With the house, one is deciding whether rent or buy is the lower cost of obtaining shelter.

PumpingRedheads says

SunnyvaleCA says

Here in California, these old folks have dirt cheap property tax due to Prop 13. They either stay put and die in situ so their kids can inherit tax free or they leave, but rent out their place until death so their kids can inherit tax free. Fortunately, now, the kinds can't get the dirt cheap tax unless they themselves live in the house.

I guess you don't know what a living trust is.

Sunnyvale seems to be right, you may want to check Prop 19.

Prop 19 does make a narrow exception for primary residences transferred only to your child, during your lifetime or after your death—but then your child must themselves live on the property as the owner.

https://www.cunninghamlegal.com/legal-strategy-for-ca-prop-19-trust-transfer/

HeadSet says

Sunnyvale seems to be right, you may want to check Prop 19.

Prop 19 does make a narrow exception for primary residences transferred only to your child, during your lifetime or after your death—but then your child must themselves live on the property as the owner.

If the house is in a living trust.they don't have to live there.

PumpingRedheads says

HeadSet says

Sunnyvale seems to be right, you may want to check Prop 19.

Prop 19 does make a narrow exception for primary residences transferred only to your child, during your lifetime or after your death—but then your child must themselves live on the property as the owner.

If the house is in a living trust.they don't have to live there.

Could you explain this "living trust" idea more completely? Does it let kids sell the house (before parent death) and somehow get the stepped up basis and avoid capital gains? Does it mean, after Prop 19 changes, that they can inherit the house and continue getting the Prop 13 tax assessment without having to live in the house?

SunnyvaleCA says

Does it mean, after Prop 19 changes, that they can inherit the house and continue getting the Prop 13 tax assessment without having to live in the house?

Quite the opposite. Prop 19 removed the former ability of a homeowner to pass Prop 13 tax advantages to the kids via a Living Trust, unless the kid actually lives in that property. You may be interested in this:
https://www.bubbleinfo.com/2020/12/07/prop-19-will-trust-protect-reassessment/

zzyzzx says

Should I rip the bandaid off and sell my condo?

The question about an Oakland Condo should not be a financial question.

It ought to be an existential question.

https://nypost.com/2023/10/28/opinion/oakland-calif-is-falling-apart/

HeadSet says

Quite the opposite. Prop 19 removed the former ability of a homeowner to pass Prop 13 tax advantages to the kids via a Living Trust, unless the kid actually lives in that property. You may be interested in this:

My little street in gentrifying section of formerly ghetto East SJ has 20 single family homes (sh*tboxes) about 50 years old.

One time when I was sitting in an office waiting for an appointment I looked everyone up on Z*llow for the most recent tax assessment and tax bill (2022). All these homes according to the website have market value north of $1 M.

The low assessment was $61,328 with tax bill $2,935. The high was $893,000 with tax bill $13,151.

Average assessment was $295k with average tax bill $5567; median $273k and $5146.

A Tale Of Two Cities.

HeadSet says

ability of a homeowner to pass Prop 13 tax advantages to the kids via a Living Trust, unless the kid actually lives in that property. You may be interested in this:
https://www.bubbleinfo.com/2020/12/07/prop-19-will-trust-protect-reassessment/

When my grandmother died in 2017, her house that was already in a living trust passed to my father and uncle w/o change to property taxes. And they were not living there.

PumpingRedheads says

When my grandmother died in 2017, her house that was already in a living trust passed to my father and uncle w/o change to property taxes. And they were not living there.

Generous local assessor.

PumpingRedheads says

HeadSet says

ability of a homeowner to pass Prop 13 tax advantages to the kids via a Living Trust, unless the kid actually lives in that property. You may be interested in this:
https://www.bubbleinfo.com/2020/12/07/prop-19-will-trust-protect-reassessment/

When my grandmother died in 2017, her house that was already in a living trust passed to my father and uncle w/o change to property taxes. And they were not living there.

Prop 19 passed in 2020.

RWSGFY says

Prop 19 passed in 2020.

So? They were made trustees, not beneficiaries anyway.

PumpingRedheads says

RWSGFY says

Prop 19 passed in 2020.

So? They were made trustees, not beneficiaries anyway.

So your example is irrelevant for post Prop-19 times.

At this point it may be good to review the main purpose of a revocable living trust -- which is to avoid probate. Full stop.

RWSGFY says

So your example is irrelevant for post Prop-19 times.

Did you even read the fucking article?

https://twitter.com/unusual_whales

PumpingRedheads says

yep, also the general rule is for every 1% increase in the 30 year mortgage rate requires a 10% drop in home price to maintain housing affordability

from what I've seen peak prices were set around April 2022 so the locked in 30 year mortgage rate was about 3.75%

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I haven't seen any RE drop 40%-50% yet. In fact, I'm told it's rising in my area still.

PumpingRedheads says

RWSGFY says

So your example is irrelevant for post Prop-19 times.

Did you even read the fucking article?

Yes. I also red the fucking Prop 19. Your trust won't shield you. This is the one and only point I argue. Don't believe me - ask an attorney.

Don't believe me - ask an attorney.

We already did. And in the context of this thread, she basically told us, "Don't listen to fucking morons on PatNet...in fact, TELL them they are fucking morons who need to get help..."

RWSGFY says

Yes. I also red the fucking Prop 19. Your trust won't shield you. This is the one and only point I argue. Don't believe me - ask an attorney.

Yes, we're in agreement here. However, in 3794 above, you seemed to write something that implied differently.

One thing with Prop 19, though, is that kids need to legally take possession quickly in order to get the Prop 13 benefits. I've heard stories of kids slogging through the court system when parents didn't have a will or trust and missing the timing requirements.

With Prop 19, kids officially have to live in the inherited house to get the Prop 13 benefits. I'm just wondering... how many kids actually wind up wanting to live in their parents' ancient house? I mean... parents die at age 80, kids are therefore 50. Kids have been out of the house having their own life for 30 years and they actually want to drop everything move back to their childhood home? Seems to me that you sell the place and enjoy the tax-free inheritance.

SunnyvaleCA says

With Prop 19, kids officially have to live in the inherited house to get the Prop 13 benefits. I'm just wondering... how many kids actually wind up wanting to live in their parents' ancient house? I mean... parents die at age 80, kids are therefore 50. Kids have been out of the house having their own life for 30 years and they actually want to drop everything move back to their childhood home? Seems to me that you sell the place and enjoy the tax-free inheritance.

There is a type of kids who want to live in their parents' ancient house - the ones who never left it. =))

https://www.investopedia.com/30-year-mortgage-rates-shoot-back-up-returning-to-8-territory-8401542

30-Year Mortgage Rates Shoot Back Up, Returning to 8% Territory

zzyzzx says

https://www.investopedia.com/30-year-mortgage-rates-shoot-back-up-returning-to-8-territory-8401542

30-Year Mortgage Rates Shoot Back Up, Returning to 8% Territory

Nooooooooooo!

zzyzzx says

https://www.investopedia.com/30-year-mortgage-rates-shoot-back-up-returning-to-8-territory-8401542

30-Year Mortgage Rates Shoot Back Up, Returning to 8% Territor

From what I recall, the 30 year mortgage rate usually is about 1.5% higher than the 10 Year Treasury.

And also I recall that most mortgages are paid off on average in 7 years since people will move on average about every 7 years.

The Fed should just let all those mortgage back securities (MBS) to be paid off and just sit back and not buy any new MBS for next 5 years as part of quantitative tightening (QT).

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zzyzzx says

https://www.investopedia.com/30-year-mortgage-rates-shoot-back-up-returning-to-8-territory-8401542

30-Year Mortgage Rates Shoot Back Up, Returning to 8% Territory

Canadian prisoners asking to extend their prison sentences due to housing costs

https://boredbat.com/canadian-prisoners-asking-to-extend-their-prison-sentences-due-to-housing-costs/

Prices WAY up in Rio Vista



The $240/month HOA is just adding insult to injury.

https://www.zerohedge.com/personal-finance/everybodys-panic-mode-rich-la-homeowners-rent-mansions-150000-month-amid-turmoil

Los Angeles Mansion Owners Test $150,000 Rents as Sales Slump

Some owners are seeking to lease luxury properties instead of selling as a new mansion tax and entertainment industry turmoil loom over the market. ...
Ken H. Johnson, associate dean at Florida Atlantic University’s College of Business, suggests a broader market trend. He notes that the cost of buying is currently about 8% higher than renting in the L.A. area, indicating a potential future decline in both rental and sale prices.

"As the owner of short-term rental, I think you’re going to get a supply shock in LA," he said. "A lot of people are cashing out of LA now and moving. You’re probably at a peak price."

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zzyzzx says

https://www.investopedia.com/30-year-mortgage-rates-shoot-back-up-returning-to-8-territory-8401542

30-Year Mortgage Rates Shoot Back Up, Returning to 8% Territor

From what I recall, the 30 year mortgage rate usually is about 1.5% higher than the 10 Year Treasury.

And also I recall that most mortgages are paid off on average in 7 years since people will move on average about every 7 years.

The Fed should just let all those mortgage back securities (MBS) to be paid off and just sit back and not buy any new MBS for next 5 years as part of quantitative tightening (QT).

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That's basically what the Fed is doing. Problem is that people aren't selling and paying off their mortgages at the rate the Fed forecast. That's why they are lagging on the QT wrt MBS. Already the Fed has stopped paying the Treasury interest from its bond holdings because they are paying about the same in interest as they are collecting. If they flat out sold some MBS, it would show up as losses for the Fed, and some knuckleheads would be calling for the Treasury to bail out the Fed.

Onvacation says

Prices WAY up in Rio Vista



The $240/month HOA is just adding insult to injury.

Isn't that cheap by California standards?

zzyzzx says

Isn't that cheap by California standards?

https://www.zillow.com/homedetails/2085-Park-Pl-Rio-Vista-CA-94571/300242938_zpid/
$435,9002 bd 1,255 sqft
2085 Park Pl, Rio Vista, CA 94571
Price/sqft:$347
Lot:5,001 sqft (good size relative to what other builders are offering)
Estimated monthly cost$3,145
I doubt that it is cheap!

Blue says

$3,145

Now it isn't $2,966 anymore.

Blue says

$435,9002 bd 1,255 sqft
2085 Park Pl, Rio Vista, CA 94571
Price/sqft:$347
Lot:5,001 sqft (good size relative to what other builders are offering)
Estimated monthly cost$3,145
I doubt that it is cheap!

Hmmm, that's a small ownership premium compared to renting.

The ownership premiums here in SJ are insane, like 2x or more the cost of renting. With locked-in stratospheric property taxes.