206-999-1690
larryreichle@remax.net
LOGIN | REGISTER

Larry & Kathy Reichle

Issaquah Real Estate | Call: 206-999-1690

  • Home
  • About
    • About Larry & Kathy Reichle
    • Testimonials
    • Larry and Kathy’s Resume
    • References
  • Home Search
    • Search Options
      • Map Search
      • Advanced Home Search
      • Simple Home Search
      • Search by Address
      • Search by City
    • Search by Communities
      • Bellevue Real Estate
      • Issaquah Real Estate
      • Kirkland Real Estate
      • Maple Valley Real Estate
      • Redmond Real Estate
      • Sammamish Real Estate
  • Buyer
    • Lender
    • Thinking of Buying?
    • Mortgage Calculators
    • My Search Account
  • Seller
    • Thinking of Selling?
    • Our Sold Listings
  • What’s MY Home’s Value
  • Blog
    • Eastside Real Estate Blog
    • Issaquah Community Blog
  • Contact Information

Nearly 1 in 7 homes in Seattle now worth at least $1 million

November 19, 2018 by Kathy Reichle Leave a Comment

This $2,748,000 home has five bedrooms four baths four fireplaces and four garage spaces.  It was originally built in 1938 but has just gone through construction (image: Joshua Lewis)

SEATTLE — A growing number Seattleites can consider themselves as million-dollar homeowners as housing prices continue to climb in the region.

Seattle is now ranks 10th among U.S. metro areas for percentage of homes worth $1 million or more, according to a newly-released study by Trulia. In 2018, 13.3 percent of all homes in the city are worth at least seven figures, up from 11.8 percent last year. The median house price stands at just under $565,000, Trulia says.

We’re still a far cry from the Bay Area though, where 81 percent of homes in San Francisco and 70 percent of homes in San Jose are worth $1 million or more. Oakland checks in third at 30.7 percent, Truila says. Seattle’s 13.3 percent just a little behind Los Angeles at 13.9 percent.

And Seattle’s million dollar homes aren’t just clumped in one or two spots. Trulia found out of the city’s 95 neighborhoods, 10 of them are classified as “million dollar neighborhoods” where more than half the homes are worth $1 million or more.

But Seattle’s not the only city in the region with million dollar homes. Trulia finds that Bellevue has the highest percentage in the region of Million Dollar Neighborhoods. Of the 23 Bellevue neighborhoods identified by Trulia, nine are over the $1 million mark– three more than just two years ago. That’s 39 percent of all the city’s neighborhoods.

Other cities noted with at least one million-dollar neighborhood: Kirkland (5 out of 15), and Shoreline (2 out of 14). San Francisco, as mentioned, is pretty much million dollar city with 87 out of 102 neighborhoods having 50 percent or more million dollar homes.

Nationally, the share of homes worth $1 million or more has doubled since 2012 from 1.5 percent of all homes to 3.6 percent today.

 

Filed Under: Eastside Real Estate Blog, First Time Homeowner, Home Value, Housing Market, Issaquah Real Estate, King County home prices, Seattle, What's Trending Tagged With: Home ownership, Home Trends, Home value boosts, Trending Topics

American Homeownership Increases Again as Housing Market Looks for Balance

November 7, 2018 by Kathy Reichle Leave a Comment

More Americans became homeowners in the summer months, fresh evidence of a housing market that’s finding some stability after several rocky years.

The national homeownership rate was 64.4% in the third quarter, the Census Bureau said Tuesday. That’s a half-percentage point higher than a year ago.

 A look at the rate of homeownership since 2004. Census Bureau/Haver Analytics

 

After touching an all-time high of 69.1% in 2004 as the housing bubble inflated, the homeownership rate bottomed out at 62.9% in 2016 as waves of Americans lost their homes or sold under duress. At the same time, many Americans who would ordinarily become buyers were locked out of the market by stringent lending rules, a lack of affordable inventory and a challenging economic backdrop.

All that has made the post-crisis housing market not just less accessible, but less dynamic. It’s possible the moderation in home prices over the course of 2018, which some analysts believe came from would-be buyers pushing back against hefty price gains, helped many of them finally become owners.

The homeownership rate can be controversial. Some analysts believe that government policies that helped enable ownership more broadly were responsible for the housing crisis, although many others believe there’s blame to go around.

Still, the meager recovery to this point puts the homeownership rate only back to 1995 levels, well before the run-up to the bubble. That suggests it may be possible for many more Americans to become owners, if housing market conditions ease further. The vacancy rate for owners was just 1.5% for the second month in a row, tighter than the 1.6% it averaged throughout 2017.

By Andrea Riquier

Filed Under: Eastside Real Estate Blog, Home Value, Homeownership, Homeownership rate, Housing Market, Issaquah Real Estate, King County home prices, Mortgages, What's Trending Tagged With: Home ownership, Issaquah Real Estate, Trending Topics

Conditions are perfect for the real estate market in Seattle to cool some

October 23, 2018 by Kathy Reichle Leave a Comment

October will be the last month with good inventory — so now’s as good a time as any to buy

Summer is over, but the real estate market is just catching up.

The heyday for the market is typically between May and October, when the sunshine makes for nice pictures and easy open houses. Which means that the final month is here to take advantage of the housing market before the fall drop-off.

“Over the winter, new monthly resale listings will lower by approximately 50 percent compared to summer months,” J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said in the latest Northwest Multiple Listing

Services report, noting that it’s been quite a season for Seattle’s market.

“The housing market close to the job centers has gone from a historic extreme-frenzy market in the spring down a few levels of hotness to a strong level of pending sales activity for new listings.”

Which is true; the Seattle 2018 real estate “season” came in like a lion and seems to be going out like a lamb: Housing inventory continued to improve in September, while the pace of sales has slowed in many counties.

Some balance has been restored to the market — across the NWMLS system, last month ended with 2.56 months of supply of single-family homes and condos. And though that’s not perfect (analysts prefer somewhere between four and six months of supply for a truly balanced market between sellers and buyers) it’s the highest level since February 2015, when brokers reported 3.56 months of inventory.

“This is a more traditional yearly market cycle taking the place of the unusually overheated real estate market of the past several years,” said John Deely, principal managing broker at Coldwell Banker Bain, in the NWMLS report.

“Given there doesn’t appear to be any end in sight related to the region’s job growth, with employees moving here and not enough units being built to accommodate them, we believe this market normalization will continue.”

In a normal market, October marks a steep drop-off in inventory as winter doldrums settle in; at this same time last year, analysts were also wondering if Seattle was going through a cool-down.

Scott’s advice then was about the same as it is now: “October will be the best month for selection and availability until late February.”

Get in while the getting’s good, Seattle buyers.

By Zosha Millman, SeattlePI

Filed Under: A little bit of Trivia, Eastside Real Estate Blog, Fall Changes, Home Value, Homeownership, Hottest housing markets, Housing Market, Investing in Real Estate, Issaquah Lifestyle Blog, Issaquah Real Estate, King County home prices, What's Trending Tagged With: Home ownership, Home Trends, Trending Topics

Slowing real estate might let us catch our breath — or knock the wind out of us

October 18, 2018 by Kathy Reichle Leave a Comment

Last year Seattle ranked first in a widely watched report on markets with an strong outlook for real estate. This year it’s not in the top 10. (Greg Gilbert / The Seattle Times)

An important real estate forecast knocks Seattle out of the top 10 booming markets. We still rank well, but some risks are also gathering.

If you read my colleague Mike Rosenberg, you already know that segments of the Seattle real-estate market are slowing.

We have an apartment glut thanks to heavy investment in multifamily housing coming out of the Great Recession. Sales and inventory numbers for homes in King County are back to 2012 levels. Prices are dropping many places after record leaps in recent years.

Last week came further evidence: For the first time in about a decade, Seattle wasn’t among the top 10 markets for the coming year in the “Emerging Trends in Real Estate” report by the Urban Land Institute and PricewaterhouseCoopers. Last year, we were No. 1.

The report focuses on the Seattle-Bellevue area, setting Tacoma (No. 53) out separately. And it doesn’t directly correlate with livability. Rather, it assesses investment and development trends, and for several years has chronicled the rise of high-quality urban centers.

Many people will see this as all good news, a pause from explosive growth that has also been blamed for lower affordability, rising inequality and social ills. I would add that markets go down as well as up, and every swing creates winners and losers.

Still, while Seattle’s growth isn’t stopping, going from the equivalent of 90 miles per hour to 50 would be felt, and in some unpleasant ways, too.

“Emerging Trends” is the gold standard in real-estate forecasts, based on interviews and surveys of hundreds of leading developers, investors and lenders.  It provides a deep analysis of the outlook for residential, retail, office, hotel and industrial properties, as well as the wider economic environment.

For next year, the top overall markets according to the ULI study are Dallas-Fort Worth, Brooklyn, Raleigh-Durham, Orlando, Nashville, Austin, Boston, Denver, Charlotte and Tampa-St. Petersburg.

At No. 16, Seattle still shows a decent outlook among the 79 markets surveyed. We rank No. 20 in homebuilding prospects. And second, behind Boston, in local market attractiveness for investors. Office demand is expected to continue doing well in the central business district. Being No. 1 isn’t everything. I’d take Seattle over almost any city among the top 10. But Seattle dropping off might mark an inflection point — emphasis on “might.”

The report also offers this caution about Seattle’s drop: “Seattle is still viewed as an attractive place in which to invest, but did media coverage of potential new supply being delivered and increased regulatory discussions sway the opinion of survey respondents?”

(I’d say the news coverage reflected real events and trends.)

Seattle’s population is expected to keep growing, next year at twice the national rate.  Hard as it is to process, Seattle also gets relatively good marks for housing affordability within the context of the Pacific Coast (Tacoma does even better). Demand remains strong for distribution space, too.  The report points to a local economy operating near capacity (e.g. employment) as a constraint on real-estate investment next year.

“This is evidenced by the comments from focus group participants in Seattle and Portland that attracting qualified labor is getting more difficult and could be hurting employment growth,” it reads. The unemployment rate for Seattle-Tacoma-Bellevue was 3.6 percent in August.  Assuming the larger economic climate is stable, we can expect Seattle to go from “hot” to “warm.”  Even so, a pullback in construction would be felt, and not just by speculators.

Being the crane capital of America was part of the enormous construction boom during this expansion. It put hundreds of millions of dollars into the city treasury. This has helped finance low-income housing and social services.

On the other hand, the economy is never static. Risks abound nationally and internationally, from trade battles and asset bubbles to new vulnerability in the banking sector. Geopolitical instability is rising. So are interest rates.

The past week’s wobbly stock market was centered in nervousness about potential inflation — enough at least to cut into profit margins. Popular tech stocks, including Amazon, were among the shares roughed up.  Nobody has repealed the business cycle, so this second-longest expansion in modern American history shouldn’t be taken for granted.  A veteran asset manager quoted in “Emerging Trends” says, “2019 will be a turning-point year.  I think about the capital markets correction that is coming. We have been used to easy money and very low rates for so long. Now is the time to harvest, to hedge, to be cautious.”

Seattle specifically has yet to see how a “separate, equal” HQ2 — yet to be announced — will affect it. Those effects could pinball to small-businesses, city tax revenues, vendors and even charitable giving, as well as hiring at the city’s largest employer.  The metro area would also be hurt by a stock market correction — not only in terms of lost wealth, but potential job cutbacks by companies in response.  But the stomach-knot scenarios might not happen. What we know is that real estate is slowing.  This boom has remade Seattle more dramatically than almost any since the Great Fire. It’s been a lightning rod for criticism, and not just from the social-justice warriors.

Too many classic Seattle three-story brick apartment buildings have been lost, diminishing lower-rent units for renters. Too many useful commercial buildings have been demolished for towers, annihilating affordable retail space and the human-scale delights of the city. Add in straight-up skyscrapers with no setbacks and little distance between them, plus loss of views toward the Space Needle.

I’ve watched these changes over a decade and wondered: Why does this happen in a supposedly progressive city?

Some will pour out corruption conspiracy theories. My guess about what happened is a combination of inattention to protection and design standards; addiction to construction fees; loss of imagination among architects, and political division — all happening as this firehose of demand came at us with great suddenness.  On the other hand, the real-estate boom has been pretty good to Seattle, and not only in terms of tax revenues.

On the commercial side, it’s been driven by demand from some of the top companies offering some of the best jobs. We’re not cursed by the desert of huge surface parking lots or store fronts emptied out by changing consumer patterns and online competition. Speculation is an element in rising housing prices, but demand was the big driver. Real estate and construction are significant employers.

In the America as it is, rather than what I might wish it to be, this is a gift horse that shouldn’t require obsessing over its dental work.  In the many left-behind localities — places without the bother of an Amazon headquarters — inequality and opportunity are worse than here and future prospects are dim. These include some of the once-greatest American cities.

Seattle has been lucky, and made its luck. Now we’ll see whether what’s happening in real estate is a natural downshifting or something more.

By 

Jon Talton
The Seattle Times

Filed Under: A little bit of Trivia, Eastside Real Estate Blog, Home Value, Homeownership, Housing Market, Issaquah Real Estate, King County home prices, Larry and Kathy Reichle, What's Trending Tagged With: Home ownership, Home Trends, Trending Topics

Four Ways Real Estate Can Boost Retirement Income

October 9, 2018 by Kathy Reichle Leave a Comment

Even if you manage to sock away a fair amount in your 401(k) every year, it’s not unusual to worry that inflation may eat away at the value of your retirement portfolio. To reduce the likelihood of that happening, you can boost retirement income by investing in real estate.You’ll gain the added benefit of increased asset diversity and balance in your portfolio. And depending on which real estate investment option you pick, you could also create a retirement income stream that rises in tandem with inflation.

Let’s look at the pros and cons of common ways to invest in real estate:

1. Purchase shares in private lending pools.

2. Invest directly by purchasing rental property.

3. Buy shares in real estate investment trusts (REITs).

4. Cash out home equity.

1. Investing In Private Mortgage Funds: Pros And Cons

Private mortgage funds lend money to real estate flippers who buy, improve and resell properties. (Full disclosure: I am the CEO of one such lending organization.) Since the pool lends money to hundreds of flippers, risk is diversified across many deals.

As a borrower, you can also avoid risks you’d face if you tried to flip a single property yourself, like buying high and selling low, not knowing enough about renovations to do a good job or taking so long to finish the renovations that holding costs eat your profit.

Private mortgage funds are long-term, fixed-rate investments that aren’t as liquid as stocks and bonds. You typically need to commit to the investment for a set number of years and provide many months’ notice if you want to redeem your investment early. They’re also not traded on an exchange, so it’s important to vet the company offering the investment.

2. Direct Investment In Real Estate: Pros And Cons

Direct investment has many upsides. You can buy with relatively little cash, so it potentially has one of the highest returns on investment (ROI) of the three options. Independent home lenders offer investment property home loans with as little as 15% down, so you could buy a $200,000 property with $30,000 cash down. Let’s say home prices rise 5% next year. Your rental property is now worth $210,000, a 33% gain on your $30,000 investment.

Real estate also tends to move with inflation. As consumer prices rise, so do rents, making direct investment in real estate a solid hedge against inflation. Timing your rental property mortgages to pay off by the time you retire creates an inflation-hedged income stream.

Purchasing rental properties is a long-term investment with much less volatility than stocks. Home values change over years, not hours, like equities. After the real estate crisis, median home sale prices hit a low point of $148,000 in 2012. Six years later in mid-2018, the median home price was $231,000, according to Zillow data.

If you buy with a 15- to 30-year mortgage and don’t sell your rental property, home price changes won’t influence you. But if you do need to sell, it can take months, especially in a down market. And when home prices fall, rents may follow suit. The investment that was paying for itself can suddenly start costing money every month. When rents don’t generate enough income to cover taxes, insurance, repairs and the like, you’ll have to pay for those costs out-of-pocket.

Real estate also carries big transaction fees, like sales commissions and transfer taxes, that make it a costly investment to sell. A 6% sales commission on your $200,000 investment property will run you $12,000, quite a bit more than selling shares in a private loan fund or REIT.

3. Real Estate Investment Trusts (REITs) Pros And Cons

Real estate investment trusts (REITS) take money from shareholders to invest in real estate, such as residential or commercial properties, or mortgage-backed securities.

There are hundreds of REITs to choose from and since many are publicly traded, they’re as easy to buy and sell as stocks. The average return for all REITS since 1972 was about 9.7%, according to data from the National Association of Real Estate Investment Trusts.

Since REITs are fixed-income investments, their value may fall when interest rates rise. A REIT that invests heavily in a single class of real estate — say, strip shopping centers or retail malls — can be hurt when that property type falls out of favor. REITs that invest primarily in mortgage-backed securities can see their prices drop when interest rates rise because they hold securities with interest rates below current rates.

4. Cashing In Home Equity Pros And Cons

Since a whopping 78% of Americans own a home by age 65, according to Census Data, home equity may be one of the most consistent sources of retirement income opportunities. To cash out home equity, you have to either sell a home you’ve built equity in, refinance or take out a reverse mortgage.

Selling and moving to a less-expensive home would allow you to pocket up to $500,000 in profits tax-free (married, filing jointly). However, since millennials are postponing homeownership to a later point in life than prior generations, they may be less likely to own homes free and clear by the time they retire.

To do a cash-out refinance, you generally need to have income from investments or employment to show you can afford monthly payments. Reverse mortgages pay you either monthly or as a lump sum. The lender bases your payment on your current home value. You don’t have to repay a reverse mortgage until you sell your home, move out or pass away.

The fees on reverse mortgages can be significant and those seeking income early in retirement will find they typically don’t receive monthly reverse mortgage payments that are as high as those an older borrower can receive.

WRITTEN BY

Bobby Montagne

 

Filed Under: A little bit of Trivia, Housing Market, Investing, Investing in Real Estate, Issaquah Real Estate, Larry and Kathy Reichle, Retirement Income Tagged With: Home Trends, Real Estate Investment, Trending Topics

How much do you really know about the value of your home?

September 27, 2018 by Kathy Reichle Leave a Comment

If you stalk the real estate listings in your neighborhood and make the open house rounds on the weekends you may feel pretty good about your real estate knowledge. I know I like to play the game of guessing my home’s value every time a house near us sells. But real estate can be a high stakes game, even if it sometimes seems like play money being thrown around on real estate TV shows. A misstep can cost thousands, even tens of thousands of dollars, but how do you even know what you don’t know?

To get some insight into mistakes many of us may be making when it comes to our houses, I talked with Seattle-based real estate expert Aaron Hendon. And did he set me straight.

Here are the six top things we’re getting wrong about real estate.

1. YOU TRUST AN ALGORITHM KNOWS YOUR HOME’S VALUE

The worst thing Hendon sees, he told NBC News BETTER, is homeowners who assume they know something about the value of a house. Maybe they saw something about real estate prices on the news, or talked to their uncle, or saw it on Zillow, he said. The absolute worst, he added, is to think that the Zestimate is the true value of your home.

The “Zestimate” is an estimated value listed on popular real estate site Zillow. And it’s notoriously off, Hendon said. So badly so, in fact, that when Zillow CEO Spencer Rascoff sold his condo, the the Zestimate was 40 percent off.

“The problem is you can’t do it by an algorithm because there are too many variables and they change too rapidly to get a good read,” Hendon explained. “The assumption is there’s a real inherent value to our house but there is not. There’s what a buyer is willing to pay for it on the day they buy it and what the seller is willing to take for it. You’re selling a commodity, one of multiple houses, and you have no idea who’s shopping that particular week. How could you value your house by a computer estimate? At best it’s a guess.”

But “it’s a shiny website and looks like it has authority,” he said. “It’s a real problem that people tend to weight those things heavily.”

There is some value to be found in the Zestimate, however, Hendon said. “Say I want to track my house value over time. I check the Zestimate every six months, and it’s going up. It doesn’t tell me what it’s worth but tells me it’s worth more than it was.”

2. YOU THINK YOUR NEIGHBOR’S HOUSE WILL TELL YOU YOUR HOME’S VALUE

So the house up the street just sold. You quickly do the math and figure out the price per square foot, then apply that to yours: voila, there’s your value.

Not so fast.

“The problem with that logic is you don’t really know the details of the house that sold,” Hendon said, “the particular way it was marketed, maybe the realtor did crappy pictures or maybe the owner took out loan after loan so they’re under water. They don’t know the conditions upon which, or to whom it was sold, or the terms.” It could have sold for cash, the owner could have been leaving the country or going through a divorce, and that’s not even to mention the huge variance possible in the condition of the house.

What’s more, “all square footage is not equal,” he said. If it were, “that would mean 4000 square feet should be worth twice as much as 2000. You need a first thousand to even have a house, the next thousands are options. What are those rooms? Bedrooms are worth way less than bathrooms.” People tend to gloss over a myriad of variables that are hidden, he said.

3. YOU BELIEVE THE APPRAISER SETS THE VALUE

“The tendency is to live like the appraiser is coming up with the true value,” Hendon said. But, he reiterated, “there is no value, it doesn’t exist, it’s worth what someone will pay for it and you’ll accept.”

At the end of the day “it’s a subjective valuation of your property,” he said. The appraiser doesn’t have to agree that you paid the right amount. “Their job in that case is to say to the bank, ‘if this guy defaults you’ll be able to get your money back.’”

While a common worry during homebuying and selling is that the house won’t appraise for the sale price, “rarely does it not come in at value,” he said. “By definition if you’re willing to pay it, it’s worth it. Why would you pay for it if it wasn’t?”

This, at least, is one thing not to worry so much about.

4. YOU THINK RENOVATING BEFORE SELLING WILL BOOST THE VALUE

Tempted to upgrade the kitchen or get new carpet right before you sell? That’s a mistake, Hendon said. “Don’t redo your house right before you sell. I can’t tell you the number of people I have to talk out of remodeling right before sale. I’m a little blunt, I go ‘that’s crazy thinking.’”

He asks sellers to look at the math. “You’re going to spend how much to redo kitchen? Say 15? Do you think we’ll get 20 more? The kitchen will be torn up for six months, that’s got to be worth something, and then we don’t know what the market will be in six months — and everyone may not love your choices.”

When’s the right time to remodel? Five years ago, Hendon said.

“If you did it five years ago and you loved it and used it you don’t care if you get the money back.”

If you’re a professional flipper, go for it, he said. Otherwise, “clean it, get it neutral. You’ll get less, but the net will be the same.” And you save yourself the hassle.

5. YOU UNDERESTIMATE THE ROLE OF THE REALTOR

Homes are the most expensive, most emotionally impactful, rarest sale and purchase in our lives, Hendon said. “What makes me craziest — when people go hire a realtor, they do it with due diligence of where to eat dinner. They hire their friend, they go to Yelp or Zillow and see stars, they use a discount broker or see a guy’s signs all over the neighborhood.”

“None of it has anything to do with performance,” he said. “Sure go try the Chinese restaurant your friend recommends, but using your uncle’s realtor without asking them to show you how much they sell houses for compared to asking price, you’re crazy.”

“No one has ever asked me to see my last 12 months statistics,” he said. “That is crazy to me.

It takes nothing to ask that.” And no realtor should be offended by the question, he said. “You’re going to give someone $8,000 [commission] they should be ready to compete, they should be ready to fight for your business.”

6. YOU CAN SAVE THE SIX PERCENT BY SELLING THE HOUSE YOURSELF

While in a very hot market there could be value in a FSBO, or for sale by owner, the math on this rarely pans out, Hendon said.

First, it’s not six percent, because almost every buyer will have realtor, he said, “so they still have to spend that three percent [for the buyer’s agent].” So you’re down to three percent. Which is still a lot of money.

Is it worth it? “If you don’t have a job [so you have the time], and you’re ok with letting strangers in your house and leaving while they’re there, and doing all the work, and will somehow find a way to price it correctly, and don’t mind the risk involved in the liability of getting it to close, and you who do not negotiate for a living, who do not sell a hundred houses a year are going to trust that the buyer’s agent is somehow not going to screw you over …” Hendon said. We’ll take that as a you do the math.

When my husband and I sold our last house and bought our current one, some of the biggest value to us was our realtor’s role as counselor in guiding us through the process and keeping our best interests first in negotiations with our buyer and seller and their respective agents. It felt like a house of cards most days that would fall apart at any moment, but he made it happen and that was more than worth the commission.

We also listed and sold our house for more than we’d have ever tried ourselves. Hendon wasn’t surprised to hear this.

The trouble with selling your own home, he said, is “most people make it look like a yard sale. The same sign from Home Depot that says ‘yard sale’ but it says ‘home for sale.’ No one goes to a yard sale and pays full price, it’s a yard sale for God’s sake.”

by Dana McMahan

 

Filed Under: A little bit of Trivia, First Time Homeowner, Getting Ready To Sell, Home Value, Homeownership, Housing Market, Issaquah Real Estate, Larry and Kathy Reichle, Realtors, What's Trending Tagged With: Home ownership, housing prices, Issaquah Real Estate, Pricing your home correctly, Trending Topics

Late Boomers: How Seniors are Affecting the Housing Market

September 17, 2018 by Kathy Reichle Leave a Comment

The baby boomers are entering their golden years and are poised to become the largest generation of retirees in the country’s history. Through their sheer numbers, boomers have impacted the nation’s economic trends. Now, as more of them enter their retirement years, this generation’s housing preferences will help determine the housing options available to younger people entering the market.

Not only are baby boomers the largest generation, but they also have different lifestyle preferences than previous generations. Baby boomers are working longer and delaying the home downsizing many have been expecting. While some observers think baby boomers are contributing to the inventory crunch by staying in place, others believe boomers are holding on to their homes to time the market and that a massive sell-off is on the horizon.

To better understand this demographic group, Trulia took a close look at the housing situation of seniors 65 and over now and a decade ago, as well as how senior households stack up in different metros. Of course, not all boomers are seniors yet—we define baby boomers as individuals born between 1945 and 1964, making them between 54 and 73 this year. However, we focus on changes in senior housing preferences over the last decade to offer insight into how boomers, who are starting to become seniors en masse, differ in their housing choices compared to previous generations.

We found that:

  • Senior households are delaying downsizing. They’re working longer and their kids are living with them more often compared with seniors a decade ago.
  • Senior households with no younger generations living with them—which include empty nesters— on average have two more bedrooms than people in their homes. Households under 65 on average only have one extra bedroom.
  • Places where housing inventory is most needed—the most unaffordable metros in the nation—aren’t the places where seniors are holding onto inventory. Like the rest of the population, seniors rent in these places at much higher rates and also have younger generations living with them more often. Unless they kick out the kids, they won’t be able to downsize.
  • Metros that have the most senior households that could potentially downsize—that is, those households that own their single family home and have no younger generations living with them—are among the most affordable in the nation. That may be evidence that boomers holding onto their homes is not driving up prices.

Delayed Gratification

Aging boomers are staying in place longer. As households move into their retirement years, some of them are downsizing—moving from owning to renting and from single family to multifamily homes. But, on average, boomers are staying in place longer than previous generations. Some observers worry they are taking up valuable home inventory in high-demand markets that would otherwise be snapped up by younger homebuyers. Of senior households, 83.4% live by themselves, with no younger generations. On average, this group has two more bedrooms than people living in the house—perhaps representing empty nesters whose kids have since moved out. That compares with just one extra bedroom for households under 65.

Characteristics of Senior Households
% of Senior Households 2005 2016
In Labor Force 15.9% 19.3%
Living Alone 85.2% 83.4%
Living with Younger Generation(s) 14.4% 16.1%

 

Baby boomers are staying in place longer because the life events that might cause them to downsize are being delayed. Seniors in recent years have adopted significantly different lifestyles than seniors even a decade ago. For one, they’re working longer. The proportion of household heads 65 and over who are still in the labor force rose to 19.3% in 2016 from 15.9% in 2005. What’s more, the kids are moving out later. Senior households living alone represented 83.4% in 2016, ticking down from 85.2% in 2005. In 2016, 16.1% of senior households had younger generations living with them, up from 14.4% in 2005. These factors mean senior households aren’t considering downsized housing options until later in life. In 2005, more senior households were moving into multifamily than single family housing by age 75. In 2016, this inflection point had shifted to age 80.

Senior Living by Metro

The areas where home supply is limited and affordability is low might appreciate an infusion of inventory from downsizing seniors. However, when looking at the nation’s top 100 metros, we don’t see evidence that boomers holding on to inventory is eroding affordability. Like the general population, seniors in expensive and unaffordable metros rent at much higher rates. Unaffordability also translates to higher levels of multigenerational living. The correlation between unaffordability and the percentage of senior households that could potentially downsize—those that live by themselves and own a single family home—is stark. The higher the income required to purchase the median home, the lower the proportion of senior households that could downsize (with a correlation coefficient of -0.73).

The metros with the highest portion of senior households in a position to downsize are in more affordable metros, including Knoxville, Tenn., Colorado Springs, Colo., and Dayton, Ohio. However, even in these metros, inventory has fallen steadily for the past several years. In Knoxville, inventory decreased 12.4% year over year during the second quarter of 2018, rounding out 12 straight quarters of falling inventory. With this prolonged inventory drought across the nation, these metros may very well welcome an increase in boomers listing their homes.

Power in Numbers

Although seniors appear to be delaying downsizing until later in life, as a group, households 65 and over are still downsizing at roughly the same rate as in years past—which is to say not that often. In 2016, 5.5% of households 65 and over moved, pretty evenly split between moves to single family (2.7%) and multifamily (2.4%) homes. In 2005, these percentages were virtually the same, with 5.5% of senior households moving, including 2.5% into single family and 2.5% into multifamily homes.

Still, because the boomer generation is so much larger than previous generations, that 5.5% moving rate translates into very different raw numbers across the years. There were about 7 million more senior households in 2016 than 2005, meaning 386,000 more senior households moved in 2016.

Of course, the ability of senior households to downsize depends on the availability of homes to downsize into. The acute shortage in starter home inventory can make it difficult for retirees to move to smaller homes. Not only are seniors not responsible for making inventory-scarce metros unaffordable, they’re feeling the inventory pinch themselves. Gen X-ers and millennials, especially in expensive coastal metros, are going to need more than downsizing boomers to alleviate the inventory crunch they are facing.

Methodology

We used 2005 and 2016 5-Year American Community Survey data for labor rates, household generation composition, moving rates, unit structure type, number of bedrooms, and tenure. Our analysis only looks at households that are not in “group quarters”, which would include retirement homes and nursing facilities. This means that our downsizing estimates are likely understated. Affordability is based on our inventory metrics from the second quarter of 2018, defined as the share of the median income needed to purchase the median priced home.

By Alexandra Lee

Filed Under: A little bit of Trivia, Baby Boomers, Education, First Time Homeowner, Home Value, Homeownership, Housing Market, Issaquah Lifestyle Blog, Issaquah Real Estate, Larry and Kathy Reichle, Retirement Tagged With: Baby Boomers, Home ownership, Home Trends, Housing Market, Trending Topics

Eastside Real Estate Blog

The Cost Of Purchasing A Home In The U.S. Increased 55% Last Year. But It’s Still A Great Time To Buy A House For These Five Reasons

I’ve always been all-in on homeownership. Yet, for the first time in two decades since the beginning … [Read More...]

New Listings Signal Hope Is On The Horizon For Home Buyers

At the midpoint of April, housing markets are reflecting a changing landscape, according to a new … [Read More...]

Upscale Kitchen Features That Can Boost A Home’s Value

Between preparing to host family and friends for Thanksgiving and making gift lists and checking … [Read More...]

Contact Us

Issaquah real estate

Larry & Kathy Reichle

371 NE Gilman Blvd. #160
Issaquah, WA 98027

Phone: 206-999-1690

Contact Us

Digital Millennium Copyright Act Notice (DMCA)

Real Estate Tools

  • Search AccountCreate your Custom Home Search Account
  • Map ViewSearch For Eastside Real Estate With A Map Style Search
  • Email AlertsSign Up To Get New Listings Delivered To You via Email
  • My Home’s ValueCustom Tool To Get the Accurate Price of your Home

Eastside Real Estate Blog

The Cost Of Purchasing A Home In The U.S. Increased 55% Last Year. But It’s Still A Great Time To Buy A House For These Five Reasons

I’ve always been all-in on homeownership. Yet, for the first time in two decades … Read More

New Listings Signal Hope Is On The Horizon For Home Buyers

At the midpoint of April, housing markets are reflecting a changing landscape, … Read More

Real Estate in the Pacific Northwest

Real Estate in the Pacific Northwest

  • Aberdeen, WA Real Estate
  • Acme, WA Real Estate
  • Addy, WA Real Estate
  • Adna, WA Real Estate
  • Airway Heights, WA Real Estate
  • Alger, WA Real Estate
  • Algona, WA Real Estate
  • Allyn, WA Real Estate
  • Aloha, WA Real Estate
  • Amanda Park, WA Real Estate
  • Amboy, WA Real Estate
  • Anacortes, WA Real Estate
  • Anderson Island, WA Real Estate
  • Appleton, WA Real Estate
  • Ardenvoir, WA Real Estate
  • Ariel, WA Real Estate
  • Arlington, WA Real Estate
  • Ashford, WA Real Estate
  • Auburn, WA Real Estate
  • Bainbridge Island, WA Real Estate
  • Baring, WA Real Estate
  • Battle Ground, WA Real Estate
  • Bay Center, WA Real Estate
  • Beaux Arts, WA Real Estate
  • Beaver, WA Real Estate
  • Belfair, WA Real Estate
  • Bellevue, WA Real Estate
  • Bellingham, WA Real Estate
  • Benton City, WA Real Estate
  • Beverly, WA Real Estate
  • Bickleton, WA Real Estate
  • Birch Bay, WA Real Estate
  • Black Diamond, WA Real Estate
  • Blaine, WA Real Estate
  • Blakely Island, WA Real Estate
  • Boistfort, WA Real Estate
  • Bonney Lake, WA Real Estate
  • Bothell, WA Real Estate
  • Bow, WA Real Estate
  • Brady, WA Real Estate
  • Bremerton, WA Real Estate
  • Brewster, WA Real Estate
  • Bridgeport, WA Real Estate
  • Brier, WA Real Estate
  • Brinnon, WA Real Estate
  • Brush Prairie, WA Real Estate
  • Buckley, WA Real Estate
  • Bucoda, WA Real Estate
  • Burien, WA Real Estate
  • Burlington, WA Real Estate
  • Camano Island, WA Real Estate
  • Camas, WA Real Estate
  • Carbonado, WA Real Estate
  • Carlsborg, WA Real Estate
  • Carlton, WA Real Estate
  • Carnation, WA Real Estate
  • Carrolls, WA Real Estate
  • Cashmere, WA Real Estate
  • Castle Rock, WA Real Estate
  • Cathlamet, WA Real Estate
  • Center Island, WA Real Estate
  • Centerville, WA Real Estate
  • Centralia, WA Real Estate
  • Chehalis, WA Real Estate
  • Chelan, WA Real Estate
  • Chelan Falls, WA Real Estate
  • Cheney, WA Real Estate
  • Chimacum, WA Real Estate
  • Chinook, WA Real Estate
  • Cinebar, WA Real Estate
  • Clallam Bay, WA Real Estate
  • Cle Elum, WA Real Estate
  • Clearlake, WA Real Estate
  • Clinton, WA Real Estate
  • Clyde Hill, WA Real Estate
  • College Place, WA Real Estate
  • Colville, WA Real Estate
  • Conconully, WA Real Estate
  • Concrete, WA Real Estate
  • Connell, WA Real Estate
  • Conway, WA Real Estate
  • Copalis Beach, WA Real Estate
  • Copalis Crossing, WA Real Estate
  • Cosmopolis, WA Real Estate
  • Cougar, WA Real Estate
  • Coulee City, WA Real Estate
  • Coulee Dam, WA Real Estate
  • Coupeville, WA Real Estate
  • Covington, WA Real Estate
  • Crane Island, WA Real Estate
  • Creston, WA Real Estate
  • Curlew, WA Real Estate
  • Curtis, WA Real Estate
  • Custer, WA Real Estate
  • Cypress Island, WA Real Estate
  • Danville, WA Real Estate
  • Darrington, WA Real Estate
  • Davenport, WA Real Estate
  • Decatur Island, WA Real Estate
  • Deer Meadows, WA Real Estate
  • Deming, WA Real Estate
  • Des Moines, WA Real Estate
  • Doty, WA Real Estate
  • Dryad, WA Real Estate
  • Dupont, WA Real Estate
  • Duvall, WA Real Estate
  • East Olympia, WA Real Estate
  • East Wenatchee, WA Real Estate
  • Easton, WA Real Estate
  • Eatonville, WA Real Estate
  • Edgewood, WA Real Estate
  • Edison, WA Real Estate
  • Edmonds, WA Real Estate
  • Elbe, WA Real Estate
  • Electric City, WA Real Estate
  • Ellensburg, WA Real Estate
  • Elma, WA Real Estate
  • Elmer City, WA Real Estate
  • Entiat, WA Real Estate
  • Enumclaw, WA Real Estate
  • Ephrata, WA Real Estate
  • Ethel, WA Real Estate
  • Everett, WA Real Estate
  • Everson, WA Real Estate
  • Fall City, WA Real Estate
  • Federal Way, WA Real Estate
  • Ferndale, WA Real Estate
  • Fife, WA Real Estate
  • Fircrest, WA Real Estate
  • Ford, WA Real Estate
  • Forks, WA Real Estate
  • Fox Island, WA Real Estate
  • Freeland, WA Real Estate
  • Fruitland, WA Real Estate
  • Gardiner, WA Real Estate
  • George, WA Real Estate
  • Gig Harbor, WA Real Estate
  • Glacier, WA Real Estate
  • Glenoma, WA Real Estate
  • Gold Bar, WA Real Estate
  • Goldendale, WA Real Estate
  • Goose Prairie, WA Real Estate
  • Graham, WA Real Estate
  • Grand Coulee, WA Real Estate
  • Grand Mound, WA Real Estate
  • Grandview, WA Real Estate
  • Granite Falls, WA Real Estate
  • Grapeview, WA Real Estate
  • Grayland, WA Real Estate
  • Grays River, WA Real Estate
  • Greenbank, WA Real Estate
  • Greenwater, WA Real Estate
  • Guemes Island, WA Real Estate
  • Hansville, WA Real Estate
  • Harrah, WA Real Estate
  • Harrington, WA Real Estate
  • Hartline, WA Real Estate
  • Henry Island, WA Real Estate
  • Hobart, WA Real Estate
  • Hoodsport, WA Real Estate
  • Hoquiam, WA Real Estate
  • Humptulips, WA Real Estate
  • Hunters, WA Real Estate
  • Hunts Point, WA Real Estate
  • Ilwaco, WA Real Estate
  • Index, WA Real Estate
  • Indianola, WA Real Estate
  • Ione, WA Real Estate
  • Issaquah, WA Real Estate
  • Juanita, WA Real Estate
  • Kalama, WA Real Estate
  • Kapowsin, WA Real Estate
  • Keller, WA Real Estate
  • Kelso, WA Real Estate
  • Kendall, WA Real Estate
  • Kenmore, WA Real Estate
  • Kent, WA Real Estate
  • Kettle Falls, WA Real Estate
  • Keyport, WA Real Estate
  • Kingston, WA Real Estate
  • Kirkland, WA Real Estate
  • Kittitas, WA Real Estate
  • La Center, WA Real Estate
  • La Conner, WA Real Estate
  • Lacey, WA Real Estate
  • Lake City, WA Real Estate
  • Lake Forest Park, WA Real Estate
  • Lake Stevens, WA Real Estate
  • Lake Tapps, WA Real Estate
  • Lakebay, WA Real Estate
  • Lakewood, WA Real Estate
  • Langley, WA Real Estate
  • Leavenworth, WA Real Estate
  • Lebam, WA Real Estate
  • Lilliwaup, WA Real Estate
  • Lincoln, WA Real Estate
  • Lind, WA Real Estate
  • Long Beach, WA Real Estate
  • Longbranch, WA Real Estate
  • Longview, WA Real Estate
  • Loomis, WA Real Estate
  • Loon Lake, WA Real Estate
  • Lopez Island, WA Real Estate
  • Lummi Island, WA Real Estate
  • Lyle, WA Real Estate
  • Lyman, WA Real Estate
  • Lynden, WA Real Estate
  • Lynnwood, WA Real Estate
  • Machias, WA Real Estate
  • Malaga, WA Real Estate
  • Malo, WA Real Estate
  • Malone, WA Real Estate
  • Malott, WA Real Estate
  • Manchester, WA Real Estate
  • Mansfield, WA Real Estate
  • Manson, WA Real Estate
  • Maple Falls, WA Real Estate
  • Maple Valley, WA Real Estate
  • Marblemount, WA Real Estate
  • Marlin, WA Real Estate
  • Marysville, WA Real Estate
  • Mattawa, WA Real Estate
  • Mazama, WA Real Estate
  • McCleary, WA Real Estate
  • McKenna, WA Real Estate
  • Medical Lake, WA Real Estate
  • Medina, WA Real Estate
  • Mercer Island, WA Real Estate
  • Metaline Falls, WA Real Estate
  • Methow, WA Real Estate
  • Mill Creek, WA Real Estate
  • Milton, WA Real Estate
  • Mineral, WA Real Estate
  • Moclips, WA Real Estate
  • Monitor, WA Real Estate
  • Monroe, WA Real Estate
  • Montesano, WA Real Estate
  • Morton, WA Real Estate
  • Moses Lake, WA Real Estate
  • Mossyrock, WA Real Estate
  • Mount Vernon, WA Real Estate
  • Mountlake Terrace, WA Real Estate
  • Moxee, WA Real Estate
  • Mukilteo, WA Real Estate
  • Naches, WA Real Estate
  • Nahcotta, WA Real Estate
  • Napavine, WA Real Estate
  • Naselle, WA Real Estate
  • Neilton, WA Real Estate
  • Nespelem, WA Real Estate
  • Newcastle, WA Real Estate
  • Newport, WA Real Estate
  • Nooksack, WA Real Estate
  • Nordland, WA Real Estate
  • Normandy Park, WA Real Estate
  • North Bend, WA Real Estate
  • North Cove, WA Real Estate
  • Northport, WA Real Estate
  • Oak Harbor, WA Real Estate
  • Oakville, WA Real Estate
  • Obstruction Island, WA Real Estate
  • Ocean City, WA Real Estate
  • Ocean Park, WA Real Estate
  • Ocean Shores, WA Real Estate
  • Ocosta, WA Real Estate
  • Odessa, WA Real Estate
  • Okanogan, WA Real Estate
  • Olalla, WA Real Estate
  • Olympia, WA Real Estate
  • Omak, WA Real Estate
  • Onalaska, WA Real Estate
  • Orcas Island, WA Real Estate
  • Orondo, WA Real Estate
  • Oroville, WA Real Estate
  • Orting, WA Real Estate
  • Othello, WA Real Estate
  • Outlook, WA Real Estate
  • Oyhat, WA Real Estate
  • Oysterville, WA Real Estate
  • Pacific, WA Real Estate
  • Pacific Beach, WA Real Estate
  • Packwood, WA Real Estate
  • Parkland, WA Real Estate
  • Pasco, WA Real Estate
  • Pateros, WA Real Estate
  • Pe Ell, WA Real Estate
  • Pearl Island, WA Real Estate
  • Peshastin, WA Real Estate
  • Point Roberts, WA Real Estate
  • Port Angeles, WA Real Estate
  • Port Hadlock, WA Real Estate
  • Port Ludlow, WA Real Estate
  • Port Orchard, WA Real Estate
  • Port Townsend, WA Real Estate
  • Poulsbo, WA Real Estate
  • Preston, WA Real Estate
  • Prosser, WA Real Estate
  • Pullman, WA Real Estate
  • Purdy, WA Real Estate
  • Puyallup, WA Real Estate
  • Quilcene, WA Real Estate
  • Quinault, WA Real Estate
  • Quincy, WA Real Estate
  • Rainier, WA Real Estate
  • Randle, WA Real Estate
  • Ravensdale, WA Real Estate
  • Raymond, WA Real Estate
  • Reardan, WA Real Estate
  • Redmond, WA Real Estate
  • Renton, WA Real Estate
  • Republic, WA Real Estate
  • Rice, WA Real Estate
  • Richland, WA Real Estate
  • Ridgefield, WA Real Estate
  • Ritzville, WA Real Estate
  • Riverside, WA Real Estate
  • Rochester, WA Real Estate
  • Rock Island, WA Real Estate
  • Rockport, WA Real Estate
  • Ronald, WA Real Estate
  • Rosburg, WA Real Estate
  • Roslyn, WA Real Estate
  • Roy, WA Real Estate
  • Royal City, WA Real Estate
  • Ruston, WA Real Estate
  • Ryderwood, WA Real Estate
  • Salkum, WA Real Estate
  • Sammamish, WA Real Estate
  • San Juan Island, WA Real Estate
  • Satsop, WA Real Estate
  • Seabeck, WA Real Estate
  • Seatac, WA Real Estate
  • Seattle, WA Real Estate
  • Seaview, WA Real Estate
  • Sedro Woolley, WA Real Estate
  • Sekiu, WA Real Estate
  • Selah, WA Real Estate
  • Sequim, WA Real Estate
  • Seven Bays, WA Real Estate
  • Shaw Island, WA Real Estate
  • Shelton, WA Real Estate
  • Shoreline, WA Real Estate
  • Silver Creek, WA Real Estate
  • Silverdale, WA Real Estate
  • Silverlake, WA Real Estate
  • Skamokawa, WA Real Estate
  • Skykomish, WA Real Estate
  • Snohomish, WA Real Estate
  • Snoqualmie, WA Real Estate
  • Snoqualmie Pass, WA Real Estate
  • Soap Lake, WA Real Estate
  • South Bend, WA Real Estate
  • South Cle Elum, WA Real Estate
  • South Colby, WA Real Estate
  • South Prairie, WA Real Estate
  • Southworth, WA Real Estate
  • Spanaway, WA Real Estate
  • Spokane, WA Real Estate
  • Spokane Valley, WA Real Estate
  • Springdale, WA Real Estate
  • Stanwood, WA Real Estate
  • Stehekin, WA Real Estate
  • Steilacoom, WA Real Estate
  • Stevenson, WA Real Estate
  • Stuart Island, WA Real Estate
  • Sultan, WA Real Estate
  • Sumas, WA Real Estate
  • Sumner, WA Real Estate
  • Suquamish, WA Real Estate
  • Tacoma, WA Real Estate
  • Taholah, WA Real Estate
  • Tahuya, WA Real Estate
  • Tenino, WA Real Estate
  • Thornton, WA Real Estate
  • Thorp, WA Real Estate
  • Tieton, WA Real Estate
  • Tokeland, WA Real Estate
  • Toledo, WA Real Estate
  • Tonasket, WA Real Estate
  • Toppenish, WA Real Estate
  • Touchet, WA Real Estate
  • Toutle, WA Real Estate
  • Tracyton, WA Real Estate
  • Tukwila, WA Real Estate
  • Tulalip, WA Real Estate
  • Tumtum, WA Real Estate
  • Tumwater, WA Real Estate
  • Twisp, WA Real Estate
  • Union, WA Real Estate
  • University Place, WA Real Estate
  • Usk, WA Real Estate
  • Vader, WA Real Estate
  • Vancouver, WA Real Estate
  • Vantage, WA Real Estate
  • Vashon, WA Real Estate
  • Vaughn, WA Real Estate
  • Waitsburg, WA Real Estate
  • Waldron Island, WA Real Estate
  • Walla Walla, WA Real Estate
  • Wapato, WA Real Estate
  • Warden, WA Real Estate
  • Washougal, WA Real Estate
  • Washtucna, WA Real Estate
  • Waterville, WA Real Estate
  • Wauconda, WA Real Estate
  • Wauna, WA Real Estate
  • Wenatchee, WA Real Estate
  • Westport, WA Real Estate
  • White Pass, WA Real Estate
  • White Salmon, WA Real Estate
  • Wilbur, WA Real Estate
  • Wilkeson, WA Real Estate
  • Wilson Creek, WA Real Estate
  • Winlock, WA Real Estate
  • Winthrop, WA Real Estate
  • Woodinville, WA Real Estate
  • Woodland, WA Real Estate
  • Woodway, WA Real Estate
  • Yacolt, WA Real Estate
  • Yakima, WA Real Estate
  • Yarrow Point, WA Real Estate
  • Yelm, WA Real Estate
  • Zillah, WA Real Estate

CRS logoCRS logoCRS logoCRS logo

Copyright © 2023 | XML Sitemap | Sitemap |Privacy Policy

Designed by Om Spark LLC

Copyright © 2023 · Curb Appeal Evolved on Genesis Framework · WordPress · Log in

 

Loading Comments...