Originally Posted By bobbelee9 <<<^^^ Did she at least get a gold blazer out of the deal? >>> A few free lunches. But she is learning stuff that maybe helpful when the market changes. Plus a lot of tax deductions.
Originally Posted By fkurucz <<The lack of savings, declining home values, and the surge in Baby Boomers heading into retirement and fixed income living do not bode well for the U.S. economy.>> A lot of those baby boomers will continue to work full time well into their 60's and even their 70's. Many simply have nothing saved and no pensions either. Some were counting on the bubble to fund their retirements, and bought several houses with the intention of flipping them. The lucky and/or smart ones got out of the game early. The other ones became bag holders, owning speculative property that is worth less that what is owed and can't be rented for enough money to cover the monthly nut. Bottom line: they rolled snake eyes.
Originally Posted By Sport Goofy << A lot of those baby boomers will continue to work full time well into their 60's and even their 70's. >> The government hopes this is going to be the case. However, the trend so far is that a majority of Baby Boomers are electing to take their S.S. benefits at age 62 and are retiring as soon as possible. These aren't the well off variety, either. People are tired of working and choosing a much more austere lifestyle on a fixed income instead of remaining in the work force. They are also using financial tricks like more home equity loans and reverse mortgages to try and prop up their fixed incomes. This can't be sustained in the long-term, but that's how it's playing out so far.
Originally Posted By fkurucz <<The current sub-prime/alt-a crisis is different in that the bad loans were made directly to consumers, and were a direct cause of prices getting so out of control (and ironically getting so high that many people needed alt-a loans to qualify).>> The percentage of homes sold in the last 3-4 years using sub-prime and Alt-A loans is staggering. This is not surprising, since the median price in virtually every market was too high for the median household income in just about every market. In the bubbliest markets even a 100K income was too low to qualify for conventional financing. So millions bought houses with toxic loans. It is virtually certain that the majority of these buyers will lose their home once the "teaser" interest rates expire. Millions are and will soon be facing a monthly payment that consumes their entire income. This drama is playing out across the entire socio-economic spectrum. Greeley is the foreclosure capital of Colorado, even though the median price is only 160K. What happened in Greeley? People making $10/hr bought those houses with no doc sub-prime loans.
Originally Posted By fkurucz <<The government hopes this is going to be the case. However, the trend so far is that a majority of Baby Boomers are electing to take their S.S. benefits at age 62 and are retiring as soon as possible. These aren't the well off variety, either. People are tired of working and choosing a much more austere lifestyle on a fixed income instead of remaining in the work force.>> I think that the closer you are to the bottom of the ladder, the easier it will be to pull this off, but the higher up the ladder you go, the lower SS will be as a percentage of pre-retirement income. Also many upscale boomers expect to maintain status quo: nice house, nice car, eating out, trips to WDW, etc. I do agree that some people will be to worn out to continue working, and will try to get by on SS alone. I know that if I start collecting SS at age 62 that all I'll get is about $1200 per month. I suppose that I could get by living in a mobile home in some rural town in flyover country. I know that I couldn't do it here in the Ft. Collins/Loveland area. I think that we will see boomers start collecting SS while working menial jobs, since Corporate America will have nothing to do with them. We know a nice couple in their early 60's. Both were laid off from Corp America long before their pensions were vested (so no pension for them). They have been selling real estate and insurance for the past 10 years. By their own admission they are in trouble when it comes to retiring. They think that they will have enough by the time they are 70, and are hoping and praying that their heath will hold up until then. Here is some food for thought. The average baby boomer 401(k) balance last year was only $39,000, and one in three eligible Baby Boomers weren't participating in their 401(k)s at all.
Originally Posted By fkurucz <<I do agree that some people will be too worn out to continue working, and will try to get by on SS alone.>> And I think that the current obesity epidemic will play a large role in people retiring even though they are broke.
Originally Posted By fkurucz <<This can't be sustained in the long-term, but that's how it's playing out so far.>> Once they are broke and realize they can't get by on SS alone I think that we will see many of these folks re-enter the workforce. Severe austerity can get old after a while. Another thing to keep in mind is that on the leading edge of the boomer generation that many of them still have pensions. My neighbor next door fits that description. While his employer phased out pensions for younger workers he made the grandfather cut and is planning on retiring in about 3 years. He himself admitted that if he had lost the pension that he wouldn't even be thinking about retiring anytime soon.
Originally Posted By fkurucz <<I find it funny that home sale levels in the pre 2001 levels are now considered bad because we have a few years of crazy growth.>> The problem isn't the level of sales, its supply vs. demand. If supply was at pre 2001 levels then there wouldn't be much of a problem. But with supply far exceeding demand (due to sub prime borrowers trying to unload the houses they now know they can't afford) prices are falling in most markets. Since people don't like to catch falling knives demand won't begin rising again until the market bottoms out. Many believe that this won't happen until house prices are at levels where people can actually afford them without resorting to toxic loans (those pesky market fundamentals)
Originally Posted By fkurucz <<That is a contributing factor to the precipitous drop in new car sales this year -- no more home equity lines of credit to finance the new wheels.>> And I expect this situation to be repeated in other markets: fancy TV's, WDW vacations, etc.
Originally Posted By barboy It's funny how nobody ever targets a real and silent culprit to this residential real estate crisis--property taxes. Envision this popular scenario: Jack gets a loan for a residential purchase in 2001 against a $600K house whereby he makes enough to cover his monthly living obligations with little money left over. The county starts to reassess his property and his anual bill rises uniformly with the general real estate values of that area. By 2005 the county now has his house valued at $950K and taxes it accordingly. This new obligation has upset the applecart too many times to count.
Originally Posted By Sport Goofy << It's funny how nobody ever targets a real and silent culprit to this residential real estate crisis--property taxes. >> That can be the case, but I think a number of local governments have acted to ease some of the pain here. When I owned my home in Hampton Roads, VA during the boom, all the local governments rolled back their property tax rates to reflect some concern for affordability. Of course, they'll likely act in reverse now that property values are declining. In some states, like California, property taxes are based upon the purchased price and not reassessed until the property is sold again. So, while there is some impact here, it may not be as pronounced as you suggest.
Originally Posted By MPierce I was in a great mood until I started reading this thread today. I think I'll go hang myself now. See y'all later.
Originally Posted By barboy "California, property taxes are based upon the purchased price and not reassessed until the property is sold again." As to California I believe you have half of it right and the other half wrong. Yes, counties assess property taxes on residential real estate based on the(reasonable) purchase price but counties have steadily issued--especially from 2000 to 2005-- what they call "supplemental" taxes. Those supplementals are uniform increases based on new housing values; One can contest these new assessments but good luck!
Originally Posted By nbodyhome >> You're on a roll fkur--- keep it coming >> You broke his string of posts.
Originally Posted By nbodyhome >> You're on a roll fkur--- keep it coming >> You broke his string of posts.
Originally Posted By fkurucz <<California, property taxes are based upon the purchased price and not reassessed until the property is sold again." As to California I believe you have half of it right and the other half wrong.>> IIRC, prop 13 limits the increases to 2% per year. In Colorado we have TABOR, which limits state and local budgets increases to track inflation and population growth. Taxes therefore are subject to the same limitation. If the state collects too much in taxes they have to refund the excess to taxpayers. This, BTW, hasn't happened since 2000, IIRC. Which says a great deal about how weak Colorado's economy has been this decade.
Originally Posted By fkurucz <<>> You're on a roll fkur--- keep it coming >> You broke his string of posts. >> Now I'm jinxed!
