Monday, August 14, 2006

"Downsize Me!"

From MSN Money:

Homeowners say "Downsize Me!"

Americans are carrying a lot of excess weight and desperately want to slim down. No, not their waistlines -- in the size of their homes.

"Steeply deteriorating." "Hard landing." "Kaput." These are some of the terms used by analysts to describe the slowing of the U.S. housing market. And with the glory days of home-price appreciation now over, some homeowners are declaring, "Downsize Me!"

A huge gap between the supply of homes for sale and demand for housing means prices are leveling off -- and could tumble. David Horwitz and his wife, Diane, are the type of homeowners looking to streamline their expenses and unload their roomy homes for more humbler abodes.
...
Diane Ramirez, president of Halstead Property, has seen downsizing pick up steam in recent months, especially among suburbanites in New York, New Jersey and Connecticut.

"Homeowners are probably sensing now may be the right time to get the best price before the market cools further," Ramirez said. "Some of these homebuyers are empty-nesters now finding their homes are larger than what they need and more than they can handle."

39 Comments:

Anonymous Anonymous said...

Interestingly, you left out the following sentence from the article, which discusses one suburbanite's move from Scarsdale to a 1200 sq foot NYC apartment:

The Horwitzes, who have no mortgage, plan to reside in the apartment for a while, so even if prices fall it is of little significance to them.

Once again, if it's baby boomers' houses that you think will be selling at fire sale prices, think again. No mortgage equals no distress.

We've been around long enough to have seen house prices fall before (early 1980s, early 1990s).

And just what are you all waiting around to do? Why, buy a house, of course! It's not as if homeownership has gone out of style. In fact, by participating in these blogs, it's obvious that it's the thing you want most in your lives.

Long-term renting stinks, just as it always has.

You may have the fortitude to try to wait for the "bottom," but thousands of your compatriots won't.

8/14/2006 06:29:00 AM  
Anonymous Anonymous said...

Boy if this articles comments isn't what I've been thinking. I sold last summer (05) just because I remember the late 80's and wanted less equity to be at risk when I'm so close to retirement our relocation to NC. I did still require a house (couldn't rent)though and only can hope I don't lose Too much more on it's purchase.

8/14/2006 06:45:00 AM  
Blogger grim said...

I only ever include a small portion of any story here on my blog.

The portion included is selected in such a way as to entice readers to click the link and read the full article, then discuss it here.

I will typically try to reproduce approximately 25% of each piece. I do this to ensure that I don't overstep the bounds of "fair use".

You seem to be implying that I purposely "left out" portions of the article as to obscure some important fact or relevant piece of information. However, the source and a link is provided with each piece. You, yourself prove that the majority of readers will go to through the link to read each piece. My out-clicks report is just as long as my inbound reports.

grim

8/14/2006 06:52:00 AM  
Anonymous Anonymous said...

No Kidding! The FOOLS wanted their McMansions about any thought about the carrying cost Now they want out. Careful when you buy to much house. These McMansions will not be wanted in the future.

8/14/2006 07:48:00 AM  
Anonymous Anonymous said...

Grim-

Thank-you for always your fair reporting!! Your determination to show folks the follies of the current market is remarkable. Even tho' I have yet to buy a house as anon 7:29 states, what I took away from this article is this.

As a first time home buyer, a McMansion is definitely alluring..and we have the income to purchase one...what I am seeing from folks like this who are downsizing...it may not be so cheap to keep one of these manses. I mean what is difference between them and me? 25 years and I won't have SS payments or a cozy pension to save me during my retirement. So I just want to say
THANK-you! Whether I buy now or in 2 years, at least I will do it with my head and not just my emotions!!

8/14/2006 08:22:00 AM  
Blogger skep-tic said...

"Once again, if it's baby boomers' houses that you think will be selling at fire sale prices, think again. No mortgage equals no distress."

***another way to look at is that most people who have their homes paid off can afford to sell at far below the peak and still make a lot of money.

"You may have the fortitude to try to wait for the "bottom," but thousands of your compatriots won't."

****their patience is irrelevant if no one will give them a loan

8/14/2006 08:56:00 AM  
Blogger grim said...

Keep one thing in mind..

Res tantum valet quantum vendi potest.

A thing is only worth what someone will pay. Market prices are set by those who sell, not those who don't.

grim

8/14/2006 09:16:00 AM  
Anonymous Anonymous said...

In Anon. 7:29, it is written: "Long-term renting stinks, just as it always has."

I disagree. It is a very viable option, especially in certain urban areas like NY. There are simply other ways to build equity than owning an "asset" that needs thousands of dollars of repairs every year.

A house is not an asset, it is a durable good. It is essentially a car or refrigerator.

By contrast, my stock portfolio never needs a new boiler. And if my apartment building needs one, too bad about the landlord.

I used to love walking through tree-lined suburban streets, admiring the pretty houses. Now I feel like everybody's shoving their, um, asset in my face. I wish no one financial harm, but I don't wish anyone grand success either.

The Baby Boom: the Monster that Ate America.

8/14/2006 09:56:00 AM  
Anonymous Anonymous said...

Here's another current renter's point of view, for Anon 7:29.

We (hubby and I) consider ourselves economical decision-makers..."cheap." Even without the math or calculators, our gut tells us break-even points.

Currently we value MUCH more than any tax break the free time we have together. My husband hasn't mowed a lawn or pounded on a boiler in several years. Instead, we go to the beach and swim and laugh with our little one. Priceless.

And because our rent is [extremely] well below what we could afford, we invest the difference. Who cares what people think? If they don't like my retro kitchen, they don't have to eat my homemade meatballs.

Back to the subject. Value is not always asset-based. Ya' know that "human" factor you've subjectively awarded to home ownership? Lots of us place that value on our time, instead, especially dual-wage, hard working couples. It may be one of the psychological differences between boomers and the younger crowds.

Pat

8/14/2006 10:20:00 AM  
Blogger NJGal said...

"Back to the subject. Value is not always asset-based. Ya' know that "human" factor you've subjectively awarded to home ownership? Lots of us place that value on our time, instead, especially dual-wage, hard working couples. It may be one of the psychological differences between boomers and the younger crowds."

Pat, very well said. This is what my husband and I value the most, and even though we don't have kids, when we do I know I'd rather be with them than stuck with fellow homeowners on line at Home Depot on a Saturday morning. Unfortunately, people choose not to really see what's going on around them or make choices based on what's good for them - herd mentality rules.

8/14/2006 10:34:00 AM  
Anonymous Anonymous said...

Oh, and one more little question I have for anon 7:29:

What in heavens name gave you the following idea, "In fact, by participating in these blogs, it's obvious that it's the thing you want most in your lives."??????

Not me baby. Yeah, if the price value hits below rental costs again, maybe. AND if there's enough savings after that to pay a lawn maintence company, etc. I'll then have to factor a differential for our time and frustration value versus net taxes, etc.

The reason I'm here, from Day 1, is to help shed a little light on the possible BAIL OUT that may be coming down the pike, in hopes of reducing it, so maybe my kid won't have such a financial burden in 20 years.

For every person convinced not to take a risky loan now, it might be an hour of overtime a year my child won't have to work to make more money to fund our stupidity.

Civic duty.

[I am proud to say that this blog has convinced three associates to avoid risky loans, and ANY ATM use on houses.]

Pat

8/14/2006 11:27:00 AM  
Blogger chicagofinance said...

You may have the fortitude to try to wait for the "bottom," but thousands of your compatriots won't.
8/14/2006 07:29:36 AM

I don't think a lot of people are going to have a choice.

8/14/2006 11:35:00 AM  
Anonymous Anonymous said...

What in heavens name gave you the following idea, "In fact, by participating in these blogs, it's obvious that it's the thing you want most in your lives."??????

Gosh, I got that idea because you're all crowing about how great a 30, 40, or 50% decline in house prices will be.

I guess you want that decline just to put the nation's economic house in order...not because you have your eye on some of that real estate for yourselves.

I know that you all just love having to live with your landlord's paint and carpet choices, and the sound of the elephants above you and the cooking smells seeping in from next door. And your children adore taking their bicycles down in the elevator to play in the parking lot.

I repeat: Long-term renting stinks. Always has. Always will.

8/14/2006 11:46:00 AM  
Blogger chicagofinance said...

I guess you want that decline just to put the nation's economic house in order...not because you have your eye on some of that real estate for yourselves.

I know that you all just love having to live with your landlord's paint and carpet choices, and the sound of the elephants above you and the cooking smells seeping in from next door. And your children adore taking their bicycles down in the elevator to play in the parking lot.

I repeat: Long-term renting stinks. Always has. Always will.
Anon


Your comments are an anachronism.

8/14/2006 11:50:00 AM  
Anonymous Anonymous said...

Your comments are an anachronism.

Like me, I guess. Anyone who disagrees here does so at her own peril, I see.

You're all very comfortable here, I guess, agreeing with each other.

All I ask is that you be honest, and admit that you're not hoping for a real estate crash just so that your "kid won't have such a financial burden in 20 years."

That's sanctimonious nonsense.

8/14/2006 11:59:00 AM  
Anonymous Anonymous said...

Anon 7:29, give it up already! (giggling) I rent a home, not some ghetto apt. Where are you getting these ideas?

No elephants. No stairs for the bike. Her bike's in the yard, next to our huge deck. Owner cuts the grass, and would paint whatever color I want.

Wacko.


Pat

8/14/2006 12:01:00 PM  
Anonymous Anonymous said...

wacko

As I said...anyone who disagrees here is attacked. Name-calling is so easy. Does it make you feel better?

A better question would be...why are you so touchy if things in rental-land are so wonderful?

8/14/2006 12:10:00 PM  
Anonymous Anonymous said...

Chicagofinance,
What does Anon 12:46 comments have to do with anachronism?
Most of the comments still seem pretty relevant, especially if the RE market improves.

8/14/2006 12:13:00 PM  
Anonymous Anonymous said...

Wacko..giggling. Humor, get it?

You are really touchy.

Pat

8/14/2006 12:19:00 PM  
Anonymous Anonymous said...

Anon 1:10 (Wacko)
Your right and apparently you ran in to one of the people on this site that's one of the biggest offenders of this behavior.

If you don't agree with what many of them say you instantly attacked.

I still think there are many here who are jealous they didn't buy years ago. They now only gloat at the misfortune of those that did and if given the chance again still will not ever buy anything at any price.

8/14/2006 12:22:00 PM  
Anonymous Anonymous said...

Reinvestor, is that you?

I hope so - for a minute there I was wondering if Grim wasn't playing Devil's Advocate.

Hi!

Pat

8/14/2006 12:33:00 PM  
Blogger NJGal said...

I think the real issue, anon, is that you're the one coming off a little crazy and over the top. You make nasty comments and when people have a response, you just get nastier and come back with more nasty comments - no thoughtful comments or well reasoned arguments. There are commenters on here with different viewpoints (reinvestor comes to mind) who are respected because well, they behave like an adult.

8/14/2006 12:33:00 PM  
Blogger skep-tic said...

anachronistic anon,

so what if people want house prices to drop so they can get a good deal?

I'm guessing that you want house prices to stay up so you can make as much money as possible.

Homeownership hasn't gone out of style-- in fact it's at a record high. Which begs the question as to who exactly is going to buy overvalued houses such as yours when and if you decide to sell.

No mortgage does not always equal no distress. People get old. They get sick. Medical care is expensive. Taxes are high.

Come to think of it, the median population of region is getting older and older every year. Does this seem like a positive development for the suburban single family house market?

Wouldn't it be great if all of your baby boomer friends had paid off their mortgages just like you?

Well, most of them haven't. In fact, they're more in debt than ever, and retirement is just around the corner. Do you think these people might be a little distressed? If they aren't now, give them 5 yrs.

8/14/2006 12:41:00 PM  
Anonymous Jay said...

Wacko, thanks for the laugh.

JAY

8/14/2006 12:41:00 PM  
Blogger chicagofinance said...

Anonymous said...
Chicagofinance,
What does Anon 12:46 comments have to do with anachronism?
Most of the comments still seem pretty relevant, especially if the RE market improves.
8/14/2006 01:13:08 PM

Anonymous said...
As I said...anyone who disagrees here is attacked. Name-calling is so easy. Does it make you feel better?
A better question would be...why are you so touchy if things in rental-land are so wonderful?
8/14/2006 01:10:44 PM

anachronism

Function: noun
2 : a person or a thing that is chronologically out of place; especially : one from a former age that is incongruous in the present


Most of these comments are VERY relevent. However, the gross mispricing of real estate in the current market is so dramatic that it overwhelms everyhting else. Your reasoning is out of place and would be relevent in 2002 or 2010.

8/14/2006 12:51:00 PM  
Blogger patient homebuyer said...

since long term renting sucks
i guess i better buy now!

real estate always goes up anyway

let me put all my cash into one of those 3000 sq ft monsters and pay my $1200 electric bill and my $90
a tank fill ups in my luxury hummer

i have to keep up with the jones'

8/14/2006 12:56:00 PM  
Anonymous Anonymous said...

anon 1:22

There are many here who are jealous...

So why are you here? Are you here to tell us that you bought years ago and wagging your tail for us? Congratulations on your purchase...now scram!!

8/14/2006 01:11:00 PM  
Anonymous Anonymous said...

"Once again, if it's baby boomers' houses that you think will be selling at fire sale prices, think again. No mortgage equals no distress."

Yes - and no baby boomer has overconsumed and taken equity out of their homes. Riiiiiiiigggghhttt.

8/14/2006 01:15:00 PM  
Anonymous Anonymous said...

So why are you here? Are you here to tell us that you bought years ago and wagging your tail for us? Congratulations on your purchase...now scram!!

See what I mean?

"Now scram".....how does that statement add to the discussion?

I'm not here to wag my tail. I have kids your age.

I am merely pointing out that you all seem to assume that baby boomers in the NYC area are, overall, deeply in debt. Can you point me to data that shows this?

Don't confuse us 50- and 60-somethings with the folks who buy $300 designer jeans.

But since you think I'm a wacko (I know, you were only joking) and you've told me to scram (in jest, no doubt)....I'll go.

Just keep agreeing with each other...that's the true path to enlightenment.

8/14/2006 01:20:00 PM  
Blogger NJGal said...

"I'm not here to wag my tail. I have kids your age."

Well honestly then, why ARE you here? ARe you hoping that we come in, buy the boomer's places, and sell them to your kids for double the price in a few years? Cause if real estate continues, that's what your looking at ....

8/14/2006 01:23:00 PM  
Blogger chicagofinance said...

Just keep agreeing with each other...that's the true path to enlightenment.
8/14/2006 02:20:17 PM

Where else do you find this commentary? Do you e-mail realtors, and post on the NAR website the same comments? Would you say such things to a real estate agent? Have you said as much to a realtor when they quote from their own economists' forecasts?

If so, and you show the perseverance to register your name and maintain posting here, we would strongly welcome the balance to the dialogue here.

Thank you for posting your opinions.

chicago

8/14/2006 01:39:00 PM  
Anonymous Anonymous said...

And I ask you to be honest about why you hope for a real estate crash.

8/14/2006 01:44:00 PM  
Anonymous Anonymous said...

Don't confuse us 50- and 60-somethings with the folks who buy $300 designer jeans.

Those baby boomers are an endangered species in the NYC region. They are being replaced by single trustfunders, emillionairs, wall streeters & lawyers.

Everyone makes in the six figures and can afford $750,000 for a one bedroom co-op or a $900,000 starter home on Long Island

8/14/2006 01:47:00 PM  
Anonymous Anonymous said...

Baby boomers haven't left..At least not all of them.. There are quite a few still out there. But I have to agreee that sometimes on this blog things can come off as an attack. Like e-mail things can come off differently then intended.. But I also don't agree with calling someone stupid or a fool because they bought in the last year.. My family had no choice my mother got ill and we needed a larger home to take our parents in.. So not all of us are stupid.. Do I feel like we made a big mistake .. Not really we aren't looking to sell anytime in the near future and both our jobs have no chance of re-location. So I fell we could have gotten the house for cheaper now but we had time constraints..

8/14/2006 01:55:00 PM  
Blogger NJGal said...

"Not really we aren't looking to sell anytime in the near future and both our jobs have no chance of re-location. "

Yeah, but hasn't everyone on this board always maintained that if you buy something you can afford and plan to be there a while, it's ok? So you wouldn't be included in the criticism.

"And I ask you to be honest about why you hope for a real estate crash."

Contrary to your apparent belief, many of us are not buying because we can't afford to - that's not the case for me, as I can afford it easily.

So, I hope for a real estate crash because the alternatives are worse - I'd prefer price drops now to a major US recession where more than just a few realtors lose their jobs. I'd like to see credit tighter so that people DON'T continue to HELOC their places for cars and vacations and can save money for a rainy day. On that note, I'd like to see a us become less materialistic. I'd like to see fundamentals return so I can justify buying a place and live near MY aging parents without mortgaging myself so much that my spouse and I are miserable and can't afford kids and can have some money in the future to help my parents when they need us, like they did with theirs.

But really, keep believing what you want about those of us who believe real estate is overpriced.

8/14/2006 02:02:00 PM  
Anonymous Anonymous said...

But they didn't choose to go into debt for designer clothes, cell phones, & ipods..

Down payment is expected to come from parents. It is more important to have the right clothes & other 'toys'.

As recently as 15 years ago, you actually saved money and didn't feel this arrogant sense of entitlement to have every thing now as the average 30 year old living in NYC thinks he or she is entitled to.

I am 29 & a native NY'er BTW.

8/14/2006 02:05:00 PM  
Anonymous Anonymous said...

For the record, anon 7:49/12:46, I've been accused of being a liar on here before. Maybe contentment is a rarity, and is therefore difficult to believe, so you assume it is something false? Maybe my writing style contributes. Don't know and it doesn't matter. There is a lot of goofing around on here, for sure.

I am posting on this site for completely the reasons I've stated. No joking.

Money does nothing for a person after a certain point - no extra happiness, no extra love. Same thing with business, same thing with housing.

You call it sanctimonious. Maybe it has something to do with the fact that I rent by choice that makes me sound sanctimonious to you?

What is a person to do when they watch a bunch of bulls running toward a cliff? Stand around and stoke up the fire for a quick barbeque, or at least try to save some who might listen?

Yeah, I do sound sanctimonious. Oh, well.

Pat

8/14/2006 02:27:00 PM  
Anonymous Anonymous said...

Hey Anon2:11
Wag This!

8/14/2006 02:43:00 PM  
Anonymous UnRealtor said...

We don't need to "wait for the bottom," but home prices at less than 10X income would be nice.

People here aren't "anti-house" they're anti-massive debt, and today's inflated prices equal taking on massive debt.

8/14/2006 04:13:00 PM  

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