I continue to hear about the shadow market of foreclosures in the housing market. However, no one discusses the aging population and the housing market. I am.
Let’s face that we all have to die sometime. Yes, I know that most of us will spend some time in a care facility first. Before that we have to live somewhere.
At the end of 2010 the estimate was 40 million on Medicare. Therefore we have approximately 40 million that are now 66 and over since it has been one year. There are approximately 78 million in the Baby Boom. We are the generation born between 1946 and 1963 (some count into 1964 to handle the school year, etc). To government horror we have sent over 3 million onto Medicare this year.
You are asking what this has to do with housing. Stop and think. How many of these over 65 do you know that still live in their homes? How many of these are 1 person is living in that home? What happens when that person finally dies or goes to a nursing home? How many “boomers” have a home and are the sole owner? How many “boomers” are now “empty nesters”? Take a look at your family, neighborhood, friends and colleagues.
My neighborhood is a good study. There are a number of us that are the sole owners of these houses. When I go (I prefer that term or passed on, sort of like “went long, did not come back”), I doubt that my brother and sister will wait for a high price since my home is paid for. Also they are not going to want the hassle of checking on it. It is not worth that.
Some are sole owner and have mortgages or money on Home Equity Loans (HELOCS). Those may just default depending on the estate and where the heirs are located. Realize that heirs may not be able to check on the properties and may have to get out quickly.
Homes are on the market for various reasons. One or two are in foreclosure. The couple in one died and the son is trying to sell it. Another home owner has been injured and needs to move closer to family. Some have had to move for jobs. One is moving to granny’s home and selling this one.
Some start out trying to sale. Then they try to sale or rent. Some just go straight to the rent option.
About 2 years ago, 4 houses had senior couples living in them. Now they have widows.
I know of one home taking care of an illness. There are probably more.
How many of these people own timeshares or vacation homes? What will happen to those?
I do not think that anyone has the statistics on all of this. Most cities and counties get money from property taxes but they do not keep up with the age of the owners or who lives there. This could be scary for future budgets.
I am currently reading the “Black Swan”. Maybe this problem in the housing market is the next one. I think this is the true shadow over the housing market. I do not think that anyone can estimate it. It should be very interesting over the next few years.
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It's interesting that you mention the book "Black Swan." A political commentator mentioned just that book on CBS Sunday Morning, this morning, with regard to how it applies to polotics.
I've been thinking also about how it applies to our projects. Conventional wisdom so seldom works for us. Where experience comes into play isn't in setting up a formula that everyone follows. That only works in the ideal situation. A person's experience is most valuable if they can apply it to the Black Swan situations to keep the project rolling. Thus, "conventional wisdom" and "best practices" only promote another way to be lazy, to not think, to not treat our customers as individuals and to ignore any Black Swam that arises in their projects.
What does this have to do with the housing market, you ask? Well, it's a situation that is currently unusual to our previous housing markets. I doubt that we haven't had this situation before in history, just not in our own lifetimes, possibly.
My point is that the art of viewing a situation and considering its unique factors requires thinking and not merely trying to apply previous situations to it. Thus, back to the point of the Black Swan.
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