In many cases, the failure to downsize is caused by the lack of affordable smaller housing. If a smaller flat is more expensive - if at all available - why should or could they downsize?
this post was submitted on 26 Aug 2024
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Housing Bubble 2: Return of the Ugly
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And with the rate that the market has increased, of course smaller is more expensive than staying for a majority.
OP thinks that it's reasonable to kick retired septuagenarians out of their homes because they have a couple spare rooms they don't use much anymore and force them to deal with the current real estate market
OP said nothing of the sort. What?
The only group we should be blaming is Wall Street predators who have made billions "investing"(1) in private housing, and that group of people is made up of people of all age groups.
Stop falling for the divisionist propaganda these people put design to keep the fighting within the lower class. If you understood just how much of this country a very small group of entities owned, you'd realize that the problem isn't Cathy and William Hareman, both aged 75, who have decided they don't want to navigate the real estate market at this point in their lives. It's Wall Street, always has been, always will be.
- Investment implies risk; there is no risk involved in holding human needs for ransom. A small pool of sociopaths have gamed the system to do something no person with a conscience would consider acceptable to add zeros to a number on a computer screen.
These people aren't completely blameless. Home owners as a class have a vested interest in seeing their property values go up and will take actions to see that happen. This includes not only improvements on the property but also supporting policies to prevent high density affordable housing, school desegregation and public transit. The suburban sprawl and housing shortage were currently suffering through are a direct result of those policies. The real estate wealth of boomers was built off the exclusion of the lower classes and letting them off the hook and just blaming corporations will make us overlook the next generation who inherit these houses and will try to keep the same exclusionary policies.
Just how much of real estate is owned by corporate entities? Looks like they own 3.8% of single family homes, probably a larger percent of apartments but still probably under 10% as most of them are owned by "mom and pop" operations. Thats not enough to cause the housing problems we currently have. We need to recognize housing as an investment causes a perverse incentive to restrict supply in anyone, not just greedy corporations and to lower the cost of housing will require those people using it as an investment to lose money.
Exactly. Relatively wealthy private home owners tend to lean towards maintaining the status quo since it seems to be working in their favor. It's the same as with the discussion about taxing unrealized capital gains above 100 million. People who aren't even close to that number are afraid of this because they fear it'll develop into further legislation and ultimately become a threat to their own wealth. It's not just the 1% but also many of the top 20 or even 30% that feel a strong incentive to keep things from changing. They definitely carry a big part of the responsibility and the largest potential for change with their votes.
Nah, we can blame the Boomers too. Their greed fuels this housing crisis.
Where's the greed in not wanting to deal with a stressful move and stay in the home you've been in for (probably) decades and have either paid off or have a great interest rate on? That's just logic. You'd do the exact same.
The "housing crisis" is fueled entirely Wall Street. Stop blaming single-home owners who have the exact same thing you want too
They own the majority of the homes even though we have 3 generation that are of age that precede them. They voted in policies that subsidized landlords and kept young families renting. Even now they're doing nothing to mitigate this new issue they're causing other than using their tremendous economic power to protect themselves at the expense of everyone else.
I know this is just anecdotal, but I know dozens of my generation that have had to move back in with their parents -- If their parents had downsized, they wouldn't have that opportunity. Stop painting them as evil for wanting to stay in their home. It's misguided at best. Their houses are just as much a security for them, as well as their descendants. That's what "generational wealth" is.
I dont think we can blame boomers for not wanting to move in a terrible market while old as fuck.
I mean, you can blame them for being a part of why the market is so shitty, but that blame doesn’t land evenly or entirely.
Blaming individuals instead of the huge vampire corporations that suck up a significant chunk of housing. Need to change tax laws to make it painful, if not at least financially stupid, to own more than 2-3 properties at most.
And the people that worked in jurisdiction that allowed that in the first place...
You know, boomers.
See, true, but here's the thing. $50 trillion has moved from the bottom 90% to the top 1% over the past few decades. We can bitch about vs , and when it's a very small group of vampires fucking the rest of us. Boomers are around 20% of the population. Blaming boomers in general just doesn't seem honest, as most of them aren't in that 1%. I feel like we should be focusing on the system.
Then again, fucking Boomers worshiped at the senile altar of Reagan, invented Disco, and in general happily sold out their ideals for the '80s. Fuck boomers.
What I really wish we had is better voters. But, as the old saying goes,"Wish in one hand, shit in the other..."
It's not the fault of the people aging in place. It's the right financial move for them.
The country has been building wrong for their entire lives. And we're reaping the consequences now.
You hit the nail on the head with building wrong. We both stronger and more flexible building codes to encourage builders to build high quality, efficient housing (efficient for space for those for whom that is a priority and efficient for energy).
Bullshit. VC investment firms and speculative property investments turning single family homes into "portfolios" for rent or AirBnb are the fucking drags on our entire housing market.
Boomers should hold onto their homes till their dying breath and hand the housing over only to living human families if they can manage to.
There is no reason that they should downsize. A paid off house is a security against bad times. Moving; even downsizing -- involves real estate agencies and all of the fees associated with a house changing hands. Additionally, if the chickens come home to roost, who's to say you won't need the space in the future to prevent children (even adult children) from being homeless?
Do you have boomer parents? I do, and they definitely need to downsize because they're getting too old to be able to keep up with the yardwork and other maintenance. An empty-nester couple just doesn't need a 3000+ square foot house. And they know it, too! They want to downsize. The only reason they haven't yet is that they can't decide where to move to.
There is no reason that they should downsize.
I disagree. "Downsizing" is a catchall phrase for a number of different things that are accomplished with getting a smaller living space in advanced age. The most obvious is less house to keep clean, but it also usually means less house to maintain with expensive roof, HVAC, and usually more landscaping responsibilities. For those in retirement it also means you can live in a smaller home which means lower property taxes eating away at the finite retirement savings. Finally, when you get older you usually have different mobility limitations. This can mean houses with 2nd floor bedrooms or basement laundry become not just a hassle for navigating stairs but also possibly sources of sever injury from falling. Smaller homes built with retirees in mind usually have wheelchair wide hallways, wheelchair wide doors, first floor bedroom/laundry, and possibly spaces for walk-in/wheel in tubs and showers.
If we're lucky enough to live long enough to get old, we want to be able to live as best we can and many times that means a smaller and more accommodating house for those aging bodies.
A paid off house is a security against bad times.
If you have a large paid off house, you can usually afford a small paid off house as a replacement...and historically extra money put in the bank. The challenge these days is that lots of retirees don't have a paid off house so they need to stay in their larger one with preferential interest rates.
For those in retirement it also means you can live in a smaller home which means lower property taxes eating away at the finite retirement savings.
I don't know if you know this or not, but there are MASSIVE tax benefits for those who have lived in the same house for 25 years. They get to write off something like 100k of tax burden if they're over 55, along with another 25k in homestead exemption.
Plus, housing taxes are generally limited to a 3% or so increase every year; so many of these older folks would actually be paying MORE taxes, on a smaller property if they were to take your advice.
Many of these people are paying the taxes of the home they bought when it was $100k; but is now worth 1M
I don’t know if you know this or not, but there are MASSIVE tax benefits for those who have lived in the same house for 25 years. They get to write off something like 100k of tax burden if they’re over 55, along with another 25k in homestead exemption.
Plus, housing taxes are generally limited to a 3% or so increase every year; so many of these older folks would actually be paying MORE taxes, on a smaller property if they were to take your advice.
These sound like state, county, or local rules specific to those regions. Are any of these you're mentioning federal that would apply to all in the USA?
There is not such a thing as a federal property tax. But similar rules exist across much of the USA.
A homestead exemption is a legal provision that prevents creditors from being paid off from a debtor's homestead, and also includes a homestead‘s exemption from property taxes and from the death of the homeowner's spouse.
State laws regarding the homestead exemption vary widely. Most states have limits on the amount of exemption a debtor is entitled to, such as $20,000, but a few states have no limits at all, exempting the entire homestead of the homeowner for debt service. Other states have limits that depend on the size and type of property or the age of the property owner.
Additionally, many of these protections (not homestead, but additionals that exist in various states) only kick in once a homeowner has lived in the house for more than [X] number of years.
It would be financial suicide for many older folks to move to a smaller dwelling. You can leverage your home for home equity loans as well, so moving in the current state of the housing market would be downright WILD to think of; you would be purchasing a smaller estate at an inflated price, re-pinning your tax rate to the inflated price you bought it at.
I remember when baby boomers downsizing was a problem because they were taking the starter homes. How the turn tables
I suspect this is true in much of Europe too, although lack a dataset to check it. People underestimate the importance of changing demographics and family structures.