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Currently the value is going up 10-12%/year, whether that continues or levels off over the next 4-5 years we would be nuts to stay here.
I'm thinking you may have taken your eye off the ball for about a year here. If you researched housing appreciation most recently in 2013, then I'd agree. From the trough seen during the crash (ca. 2010) through 2013, selling prices (NOT wishing prices - selling prices) increased on the coasts by 10-12%/yr. Then they flattened. The inflection point was in July, where month-month and yr-yr, CA selling prices in all but one county have declined. I'm using CA as a "for instance". The rate of decline increases with each month. Census Bureau data, Case-Schiller agrees. The NAR keeps their numbers pimped up, because they use LISTING - a.k.a., WISHING - prices.
In some quite nice areas in Virginia, the difference between listing and selling prices now differs by 20%. The worm has turned. People whose prosperity derives from commissions driven by higher prices are not motivated to seek data that goes contrary to their convictions.
We have read in the papers that wages have declined by 4% nationwide from 2010 to 2013. By no means can buyers with flat or decreasing incomes - even in metro DC - keep up. At some point, it comes down to debt to income ratios. We passed that point when wishing prices began rocketing upwards again in 2010.
In our own best interests, we may want to consider getting nerdy and reading Census Bureau findings. There are some highly regarded, data-driven housing bubble blogs out there as well. Just does not pay to take salesmen's words at face value, IMHO.
Why the heck do you plan on having a mortgage payment in retirement? That sounds silly.
I have read more than a few articles about persons in their 70's losing their houses to foreclosure where the bent of the article is sympathetic with the retiree, but then one has to realize "why in the world does someone over the age of 60 have a mortgage at all?" Assuming one acquires a mortgage at around 30 and remains financially responsible throughout their life then one should have a house paid off around 60.
The Greatest Generation did this and they lived quite well because of their responsibility and thrift. Why is this concept lost on Boomers (who will no doubt legislate their children and grandchildren into bailing out their mistakes and poor financial habits; and congratz by the way for faring better than average, you at least have some equity and I'm assuming have auto and credit card debt at a minimum)?
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This Boomer, for one, has no use for a McMansion at $800K, which seems to be the only move-up possibility from attached housing in Metro DC. That's INSANE. Thankfully, in this area, I can afford not to play. If I offend somebody by not playing, I open my Rolodex (so to speak) and go work for a competitor. I've picked up my marbles and gone home to my rental. I will have a mortgage after I'm 60.
There are therefore all kinds of reasons why one might choose to have a mortgage after 60.
This Boomer, for one, has no use for a McMansion at $800K, which seems to be the only move-up possibility from attached housing in Metro DC. That's INSANE. Thankfully, in this area, I can afford not to play. If I offend somebody by not playing, I open my Rolodex (so to speak) and go work for a competitor. I've picked up my marbles and gone home to my rental. I will have a mortgage after I'm 60.
There are therefore all kinds of reasons why one might choose to have a mortgage after 60.
I agree and here's why I might take on another mortgage.
I am thinking about purchasing a cabin in the mountains north of Atlanta. Fact is I've been toying with the idea for a couple years but still haven't made up my mind.
0 Martins Xing Blue Ridge, GA 30513 2 beds2 baths-- sqft
For Sale $114,900
Zestimate®: $113,677
Est. Mortgage $433/mo
Cabin with end of the road privacy and seasonal views. Open floor plan with soaring ceilings in the great room/dining room combo and wood burning fireplace. 1 bedroom and loft could be 2nd bedroom with 1//2 bath. Hardwood floors throughout the main level. Open kitchen to the great room and dining area. Wrap around deck and porch, great for entertaining and enjoy the best of North Georgia 11/02/14
We rent a place like that and I love it.
If I bought something like this I would put the minimum down required for a mortgage and then stretch that mortgage out for as long as I possibly could, 50 years sounds about right to me, because I wouldn't care if it was ever paid off. 60 years sounds even better.
We vacation up there and it's an absolute piece of heaven. 100 miles north of Atlanta sitting right on the Tennessee Georgia border. Absolutely stunning in the fall when the leaves change colors. I'd love to live there from end of March to about November 1 because yesterday I did hear they got some snow flurries.
Here's the deal, as long as I am alive we could easily afford it out of the budget but if something happens to me, like it will someday happen to all of us reading this, my wife would struggle so I need to find a way to protect her if I do decide to pursue my fantasy. Maybe a credit life policy IF I could still get one at my age and medical condition? The policy doesn't have to cover the total (at 66 life insurance rates shoot incredibly straight into the sky) my just $30k so she can easily dump the cabin because if I am gone she would not live there.
Interesting study about Baby Boomer plans to transplant or not transplant in retirement and some of the thinking why or why not. Percentages given so obviously there is a mixed bag of feelings.
Some good charts and perhaps a keeper article to refer to in future discussions if you want corroboration of points. One of the thoughts is how realistic are the plans of some of those planning to move? Are they planning to move to capture the equity in their homes etc etc?
many of us boomers had our parents relocate to cheaper areas ,especially florida.
for many of us it meant that except for vacations our parents were pretty much out of not only our daily lives but the lives of their grand kids.
many of us boomers made a promise to ourselves never to move away and do that to our kids unless there was no other way to make ends meet..
many of the parents that moved had no remorse about it as they felt they had to live for themselves but to us kids on the other side of things not having their parents around it was a horrible feeling.
i wouldn't be surprised if a good part of the reason boomers are not leaving is just because they were on the recieving end when their folks left.
many of us boomers had our parents relocate to cheaper areas ,especially florida.
for many of us it meant that except for vacations our parents were pretty much out of not only our daily lives but the lives of their grand kids.
many of us boomers made a promise to ourselves never to move away and do that to our kids unless there was no other way to make ends meet..
many of the parents that moved had no remorse about it as they felt they had to live for themselves but to us kids on the other side of things not having their parents around it was a horrible feeling.
i wouldn't be surprised if a good part of the reason boomers are not leaving is just because they were on the recieving end when their folks left.
Irony strikes when we stay put, and like where we are, but our kids have moved away due to jobs, one to the west coast and the other to the south.
many of us boomers had our parents relocate to cheaper areas ,especially florida.
for many of us it meant that except for vacations our parents were pretty much out of not only our daily lives but the lives of their grand kids.
many of us boomers made a promise to ourselves never to move away and do that to our kids unless there was no other way to make ends meet..
many of the parents that moved had no remorse about it as they felt they had to live for themselves but to us kids on the other side of things not having their parents around it was a horrible feeling.
i wouldn't be surprised if a good part of the reason boomers are not leaving is just because they were on the recieving end when their folks left.
Interesting perspective. I'm glad you got along with and liked your parents so that you missed having them around. Not everyone shares that feeling. In fact, I chose (on purpose) to live 2,000 miles away from my mother. Visits with her were not always pleasant, as she had many mental issues. It was a perfect distance - I visited her every other year in person, normally staying in her spare bedroom for one to two weeks. I used the opportunity to also visit various cousins who lived in or near the same city. My parents had divorced when I was in graduate school and my father married a woman I couldn't stand. So while I actually enjoyed spending time with my father (about 700 miles away), his wife made the visits problematic.
The article was basically statistical data. And the data was basically to do with financial information.
Every story is different and it is impossible from the information in that article to make accurate conclusions as to what the real situations are when people relay they are retiring in place.
One nugget stated that many of the folks "buying up" had limited income and were renters. That one statement is full of variables! Maybe those folks have saved up cash and are hoping to pay cash for a home or condo. Maybe they are renting now because they declared bankruptcy after 2008 or had their home go into foreclosure, so they had no choice but rent . . . but are now in the position to get a mortgage for less than what their rent is costing them monthly. The article doesn't explore these variables.
People do what they can afford to do. That is a fact! But the other part of that equation is . . . folks do what they can afford to do - often with compromises.
Some folks may decide to stay in a high cost of living area b/c their parents and/or their children live nearby. They may have to sacrifice some of the things they want to do (travel, for example) in order to remain in that location. But it is more important to them to be near family.
Other people had a lot of equity in their homes before 2008, and their home values are starting to increase again, so they are waiting til they can cash out. If they can make the mortgage payment comfortably using their retirement income, then that is certainly a strategy. I have talked to folks who say they are staying in place until the time comes that they can cash out and if that time never comes, they will just stay where they are, since they like their neighborhoods.
And of course, the age groups being surveyed may have plans that seem reasonable for today, but those plans may change in a few years. So a survey being conducted on this same group of people at a later date may find people have made very different decisions than they planned for in 2014!
The only way to plan for the future is based on what we know to be true in our lives at the moment -- tempered by possibilities that could impact our lifestyles in the future.
Very few decisions in life end up being "forever" unless we die shortly after making those decisions, lol.
We started planning for retirement early - back in our 40's. If anyone had told me back then that I'd work till age 65, I would have said they were nuts. But that's how it worked out.
We both retired in late 2012. We then had a typical upscale 3-bed, 2-bath home in a nice area, and had a small mortgage on it. We have 2 daughters, with families of their own, who lived nearby. Part of our plan was to gift our daughters with their inheritance upon our retirement. We did that by distributing assets that we no longer felt would be needed in retirement. The girls are in their late 30's and why make them wait until we pass on to inherit? They will get more then, but have the bulk already, at an age when they can make better use of it. For us, having liquid cash on hand for any emergencies was much more important than having a lot of "stuff".
We downsized our housing. I bought the land for cash, and cash-flowed the building materials that I and 2 relatives used to build an 1120 sq ft ranch. Staying in good physical shape was part of our retirement plan, and we are both at normal weight and do not take medications. Our new location has taxes of just $700 per year. We heat with wood, and are very pleased to not have to deal with heating oil prices any longer. The point of this, is that successful retirements are often the result of early planning and attention to deatils that are yet to come to fruition, but will.
I agree and here's why I might take on another mortgage.
I am thinking about purchasing a cabin in the mountains north of Atlanta. Fact is I've been toying with the idea for a couple years but still haven't made up my mind.
If I bought something like this I would put the minimum down required for a mortgage and then stretch that mortgage out for as long as I possibly could, 50 years sounds about right to me, because I wouldn't care if it was ever paid off. 60 years sounds even better.
We vacation up there and it's an absolute piece of heaven. 100 miles north of Atlanta sitting right on the Tennessee Georgia border. Absolutely stunning in the fall when the leaves change colors. I'd love to live there from end of March to about November 1 because yesterday I did hear they got some snow flurries.
Here's the deal, as long as I am alive we could easily afford it out of the budget but if something happens to me, like it will someday happen to all of us reading this, my wife would struggle so I need to find a way to protect her if I do decide to pursue my fantasy. Maybe a credit life policy IF I could still get one at my age and medical condition? The policy doesn't have to cover the total (at 66 life insurance rates shoot incredibly straight into the sky) my just $30k so she can easily dump the cabin because if I am gone she would not live there.
Well, if the property is good rental property, then surely your wife could simply hold it and rent it out - as an investment. The insurance would seem to be a good idea (if the premiums are reasonable) but the best strategy may be to invest in property that will bring a return on investment -- should you die and your wife wants to either sell it (and make a nice profit) or rent it out.
With that in mind, I would advise that you carefully consider where you purchase in re: to both re-sale and for potential rental.
That region has always been a good location for folks wanting to escape the Atlanta area. The cabin you shared the photos of is adorable!
My wife and I plan to downsize eventually. We currently have a 1750 sf ranch with easy accessibility, so we can stay here for a while as we age. No mortgage, or debt of any kind, and I just paid a year's property taxes, $1565. We have 93 acres with a barn, shop and wood shed, so it's a little bigger than it sounds. A logging project in 2013 put $47k in our pockets. Pensions and SS add up to over $70k a year. So far we haven't had to touch retirement savings, though we will have to start distributions from the tax sheltered accounts in a couple years.
Eventually we plan to sell out and move into assisted living. Our health will tell us when it is time. Meanwhile, the home is beautiful, the setting is gorgeous and it is well within our budget. We sweated a little to get everything paid off by retirement and build savings, but it was worth it. We plan to stay right here until advancing age makes it impractical.
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