- Nov 19, 2014
- 9,295
- 15,016
@Concrete Helmet you are not wrong in your thought processes, but you have to take into account the human element. I get it with those who sold their POS in the NE for 2M and come here and spend 850K for a 3/2 just because it has a small yard and a pool. They see that as value. But over time as the savings erode, inflation persists and less buyers can even qualify for a mortgage, the human element sets in. Just like other markets, no one panics as things they perceive they own or do own are going up. Totally different when prices going the other way. Down here, most of the deals 500K up are cash, but I have seen listings that barely lasted a day months ago being out there 60+ days now, with price drops. Granted still overpriced and granted it only takes one, but changes like this happen super gradually. And everything you mention has a herd mentality, the herd mentality works the same on the downside, it just takes longer.
As far as the aging demo, your thesis is correct, but I am not sold on how much the inheritance will be. Things cost more now, people living longer etc. As an example here in south Florida there are numerous retirement communities with all the ammenities. You know 600K to 1.5M entrance fee, and then another 7k+ a month in rent, all in. Then the heirs would get 90% of the entrance fee back, the thought being that the heirs would then take that money and reserve their own place in the future. Well that is not happening, so the buy in places are now only returning 80% of the entrance fees, On top of that some of the Buy in places have converted to strictly rentals, no entrance fees Yes, all small signs, but in total they start to paint a slightly different picture for down the road.
As far as the aging demo, your thesis is correct, but I am not sold on how much the inheritance will be. Things cost more now, people living longer etc. As an example here in south Florida there are numerous retirement communities with all the ammenities. You know 600K to 1.5M entrance fee, and then another 7k+ a month in rent, all in. Then the heirs would get 90% of the entrance fee back, the thought being that the heirs would then take that money and reserve their own place in the future. Well that is not happening, so the buy in places are now only returning 80% of the entrance fees, On top of that some of the Buy in places have converted to strictly rentals, no entrance fees Yes, all small signs, but in total they start to paint a slightly different picture for down the road.
I was going to say, "but to service the debt, we can just print more money!"
OK, I'll play, then you are too late to adjust to it, you should have planned/adjusted/paid for things 15 years ago, when it wasn't happening "NOW," it was just starting. Those are called "indicators" and "warning signs." That's when you take action.
