Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.

[Anonymous]

One new luxury condo building in Manhattan a few years back did 50 percent 2-3 bedrooms units and 50 percent studio units. With first rights for studios to purchasers or large units.

Thought as nanny would live in unit. Instead they were bought mainly by parents of the purchasers.

One couple said they live down hall their grown kids, baby sit grandkids, use gym, pool, doorman, of building and do thanksgiving and Xmas in building. They are on same floor so even hallway extension of living space as kids can go back and forth on own.

Really is smart

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m dealing with elderly parents and in-laws at the moment. Both are in big homes where they raised their families. One set refuses to leave…ever. They will die in that house. The other couple is preparing to downsize dramatically and relocate. Why? It’s become dangerous to do stairs, maintaining the house and landscaping coupled with the ridiculous taxes (they aren’t in the dc metro area) is actually quite costly.

I bet if we had better housing options for retirees then more people would downsize. Nobody wants to leave their nice neighborhood with good neighbors in highly desirable areas (read: safe, near good amenities, etc.) for a cheaper, less desirable area. Not everybody wants to live in Leisure World.

And now that prices spiked in Florida and/or their politics went bananas, plenty of folks in the dc area are no longer interested in relocating down there.

DH and I will think hard before downsizing, but I would be up for it if we could make the numbers work and land in a desirable area.

Agree with this. My parents sold my childhood home a couple years ago in part because of the stairs issue, also upkeep. They were fortunate in that there are a few over-55 type communities in their area with rental options within their price range. My ILs live in an area that does not have great options for retirees- seems like most stay in their homes until it’s time for assisted living- and their current house is huge. They say they want to downsize, and have had young families offer to buy their current house, but they don’t know where to go.

My parents sold their house and moved into an apartment in DC. It's a nice 2-bedroom in a nice neighborhood, but easily affordable after selling their 4 bedroom house. Elevator, doorman, and they don't have to deal with any maintenance. If the city doesn't feel comfortable to you, there are lots of suburbs around DC with these kind of apartment buildings that are near metro and in safe neighborhoods with good amenities.

Bonus is that living in a place like this ensures you will stay reasonably active -- walk places and be around people. I think often older people get very set in their ways living in residential areas where they drive everywhere and don't really have to make much effort to interact with others. It makes you old faster.

I could not agree more with this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m dealing with elderly parents and in-laws at the moment. Both are in big homes where they raised their families. One set refuses to leave…ever. They will die in that house. The other couple is preparing to downsize dramatically and relocate. Why? It’s become dangerous to do stairs, maintaining the house and landscaping coupled with the ridiculous taxes (they aren’t in the dc metro area) is actually quite costly.

I bet if we had better housing options for retirees then more people would downsize. Nobody wants to leave their nice neighborhood with good neighbors in highly desirable areas (read: safe, near good amenities, etc.) for a cheaper, less desirable area. Not everybody wants to live in Leisure World.

And now that prices spiked in Florida and/or their politics went bananas, plenty of folks in the dc area are no longer interested in relocating down there.

DH and I will think hard before downsizing, but I would be up for it if we could make the numbers work and land in a desirable area.

Agree with this. My parents sold my childhood home a couple years ago in part because of the stairs issue, also upkeep. They were fortunate in that there are a few over-55 type communities in their area with rental options within their price range. My ILs live in an area that does not have great options for retirees- seems like most stay in their homes until it’s time for assisted living- and their current house is huge. They say they want to downsize, and have had young families offer to buy their current house, but they don’t know where to go.

My parents sold their house and moved into an apartment in DC. It's a nice 2-bedroom in a nice neighborhood, but easily affordable after selling their 4 bedroom house. Elevator, doorman, and they don't have to deal with any maintenance. If the city doesn't feel comfortable to you, there are lots of suburbs around DC with these kind of apartment buildings that are near metro and in safe neighborhoods with good amenities.

Bonus is that living in a place like this ensures you will stay reasonably active -- walk places and be around people. I think often older people get very set in their ways living in residential areas where they drive everywhere and don't really have to make much effort to interact with others. It makes you old faster.

I could not agree more with this.

+1, my remaining parent just did this. Selling the house was wonderful and being able to rent in a walkable area locally has been great as well.

[Anonymous]

Anonymous wrote:One new luxury condo building in Manhattan a few years back did 50 percent 2-3 bedrooms units and 50 percent studio units. With first rights for studios to purchasers or large units.

Thought as nanny would live in unit. Instead they were bought mainly by parents of the purchasers.

One couple said they live down hall their grown kids, baby sit grandkids, use gym, pool, doorman, of building and do thanksgiving and Xmas in building. They are on same floor so even hallway extension of living space as kids can go back and forth on own.

Really is smart

A studio though? After the parents probably helped the couple buy the larger unit too!

[Anonymous]

Anonymous wrote:

Anonymous wrote:One new luxury condo building in Manhattan a few years back did 50 percent 2-3 bedrooms units and 50 percent studio units. With first rights for studios to purchasers or large units.

Thought as nanny would live in unit. Instead they were bought mainly by parents of the purchasers.

One couple said they live down hall their grown kids, baby sit grandkids, use gym, pool, doorman, of building and do thanksgiving and Xmas in building. They are on same floor so even hallway extension of living space as kids can go back and forth on own.

Really is smart

A studio though? After the parents probably helped the couple buy the larger unit too!

It is kinda like living with kids but not. Some do one bedrooms.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

I think you are thinking of that window of time where your kids are "adults", but do not yet have any obligations to a spouse, a spouse's family, or any children. This is when they are most likely to visit for holidays or bring friends with them. Now buy yourself a giant beach house, and you may just in fact have visitors quite often!

I wish my in laws had this. Instead, I am stuck visiting your typical TX rambler in sprawling suburbia where 7 of us (3 adults and 4 kids-my BIL lives there with his 2 teen children) share 1 bathroom because the 2nd one is in the master where grandma sleeps, we all have to share rooms, and the bedroom doors have no locks. Oh, and we are stuck there if the 2 people with cars are working and it isn't walking distance to anything. I am forced to do this for a week every year. By the time we've paid for the ridiculously expensive cost of flying 4 of us, we can't really shell out for a week at a hotel or a rental vehicle. I really dislike the holidays for this reason, but I do it so my husband doesn't divorce me.

My parents come to us. It is so much easier that way.

NP. I’m hoping that my kids (teens) don’t move away so we can get together for family dinners with guests driving a short distance back to their own homes. In my opinion our society has gotten too transient, and living near family should be prioritized more.

Living near family is an ideal situation for many, but my husband’s family isn’t leaving TX and my family is on the east coast. There was a period when we were going to move to Austin and my parents and my aunt were going to relocate, too, but I am thankful now that this did NOT happen for a thousand different reasons.

Once people are spread out, it becomes difficult to undo it. But if your husband had stayed in Texas, and you stayed near family on the East coast and married someone from there, life could have been simpler? As parents age, the distance becomes incredibly more challenging and regrettable.

So, wait - you’re suggesting I not fall in love with my husband when he was stationed at Andrews 25 years ago because his family is from TX?

We did talk about these things before committing to each other. He knew he couldn’t stay in the military as I didn’t want to move a family around. He was ok with being on the east coast. Did he get excited when we were talking about moving closer to his family while bringing a little of mine along? Of course. But in the end, he was the one whose job there didn’t work out.

But I can’t go back in time and undo it all just because we can’t get all our family close to us. We visit his once a year and his mom comes here in the summer. We’ve worked it out as best as we can. These were the decisions and compromises we made to be together.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:One new luxury condo building in Manhattan a few years back did 50 percent 2-3 bedrooms units and 50 percent studio units. With first rights for studios to purchasers or large units.

Thought as nanny would live in unit. Instead they were bought mainly by parents of the purchasers.

One couple said they live down hall their grown kids, baby sit grandkids, use gym, pool, doorman, of building and do thanksgiving and Xmas in building. They are on same floor so even hallway extension of living space as kids can go back and forth on own.

Really is smart

A studio though? After the parents probably helped the couple buy the larger unit too!

It is kinda like living with kids but not. Some do one bedrooms.

I can see that. If you are just down the hall from your kids and their family, it's not like you need a ton of room to host. With a 1 bedroom or even a junior 1 bedroom, you could still host your own kids (or the grandkids) for meals and other visits, but it's not like you need an extra bedroom for when people come to stay over. It's basically like an in-law unit, only it's down the hall instead of in the basement. Most IL units are one-bedrooms. I'd rather live in my own apartment down the hall, even if it was only 400-500 sq ft, than in the basement of my kids' house. I'd actually have more privacy, plus nicer living conditions. Especially for a widow or widower, it's a perfectly reasonable amount of space.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yep we are the older people everyone likes to blame at the moment. 3000 sq ft house in a good school district, almost paid off. more house than we need or want and we would love to downsize, but the way prices are, a smaller house would be more than we paid for our original house and with a mortgage would actually cost more than we are paying at the moment. we don't want to stay put, but it doesn't make any sense to move.

The only thing I can think of, what happens to good school districts with old people not budging to downsize down the road? Not enough kids going to those school districts.

I can answer this. I live on the west coast and we have been thinking about leaving our $1.5M house in the city school district to buy into a very good school district in a self-contained smaller city with its own police/schools/utilities/parks. To afford a house there we’ll need to leave our 3% mortgage and pay at least $2.5M.

While doing research, we found a ton of consulting and demographic reports from school board meetings and realized that the very good school district is rapidly shrinking- graduating HS classes are going from 400 this year to a projected 300 when my DD will be in HS. They plan to close at least one elementary soon but need to update several buildings in the meantime. The problem? When they’ll need to put a levy up for vote the majority of voters will be >55 and in 10 years the majority will be >65. The area has strong zoning and discourages condos, apartments and assisted living, so most residents plan to age in place.

I think the schools will bounce back, but high housing costs in our area and younger families locked out of houses in “good” districts mean it will take the older generation dying for a reset. And then schools will be stretched for a while to accommodate the rush of new families- that’s what happened in my childhood suburb.

You're smart to research this before buying. Is this by any chance CA? CA has different issues with families fleeing due to rising crime and insane progressive politics.

If it is California, it probably has more to do with Prop 13 than families "fleeing" due to rising crime.

DP: I live in CA, of those fleeing I have never heard anyone say "it's because of prop 13" which never comes up in any conversations I've had with those thinking of leaving. It's overwhelmingly because of 1)politics 2)crime 3)cost of living. Obviously I haven't spoken to everyone who is leaving the state, but you saying it's because of Prop 13 is misguided and false.

OK, sure.

[Anonymous]

Prop 13 might be an indirect cause because of the role in housing costs.

[Anonymous]

Anonymous wrote:Yes higher mortgage rates hurt, but not as much as some articles (or posts) would have you believe. You have to do the math for your own situation.

Household A: Locked in 2.5% on a $750K mortgage (monthly pmt $2963). That means interest expenses in the first five year of mortgage are roughly $18K / year. Adding the SALT deduction of $10K, they can deduct $28K come tax time (or just take the equivalent $27.7K standard deduction).

Household B: in current market, gets 7% rate on same $750K mortgage (monthly pmt $4989). That mean deducible yearly interest expense of roughly $51.5K. With SALT, that's $61.5K deductible, an increase of $33.5K in deductible expenses for tax savings of $13.4K (assuming 40% combined fed/state marginal tax rate), or $1117 per month. That reduces the effective after tax monthly payment to $3872 when compared to household A's mortgage. That's equivalent to a 4.66% mortgage rate (after tax).

So, relative to the 2.5% mortgage, still a big jump, but not as big as the hype would have you believe.

Per above poster claiming a $50K raise would be required: to handle that difference, you'd need an extra $3872 - $2963 = $909 per month, or $10908 annual after tax increase in income, which means a gross salary increase of roughly $18K before taxes are taken out (again assuming 40% combined marginal rate). Any price increase component should be ignored: it has presumably also increased the equity in your existing home. For someone making $300K, that's a roughly 6% raise, so it shouldn't be that big of a factor (assuming folks won't go through the trouble of a job change for small raises).

TLDR: do the math for your own situation, it may be a lot milder than the Sturm und Drang online would have you believe.

Thank you for doing the math (really!)

[Anonymous]

Oh...they will sell. Regardless of "muh 2.5%!!!". Here's why.

Texas:



Property taxes went from ~$25K/yr to $120K/yr in less than 6 years. No, the house wasn't rebuilt or anything. The same story is playing out everywhere in the country, some places faster than others, like this one. Then there's home owners insurance in places like CA, CO and FL.

These carrying costs have nothing to do with your "muh 2.5%!". They're being paid with real (not borrowed) dollars today, that could be earning 5% in a savings account. How long do you think folks like these will hang on to these properties, even if they can afford to do so? Not long.

The housing market IS *ucked and will not normalize without pain. A lot of pain.

[Anonymous]

Really sad for young people.

[Anonymous]

bwhahahaha....

[Anonymous]

Anonymous wrote:Yep we are the older people everyone likes to blame at the moment. 3000 sq ft house in a good school district, almost paid off. more house than we need or want and we would love to downsize, but the way prices are, a smaller house would be more than we paid for our original house and with a mortgage would actually cost more than we are paying at the moment. we don't want to stay put, but it doesn't make any sense to move.

+1 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yes higher mortgage rates hurt, but not as much as some articles (or posts) would have you believe. You have to do the math for your own situation.

Household A: Locked in 2.5% on a $750K mortgage (monthly pmt $2963). That means interest expenses in the first five year of mortgage are roughly $18K / year. Adding the SALT deduction of $10K, they can deduct $28K come tax time (or just take the equivalent $27.7K standard deduction).

Household B: in current market, gets 7% rate on same $750K mortgage (monthly pmt $4989). That mean deducible yearly interest expense of roughly $51.5K. With SALT, that's $61.5K deductible, an increase of $33.5K in deductible expenses for tax savings of $13.4K (assuming 40% combined fed/state marginal tax rate), or $1117 per month. That reduces the effective after tax monthly payment to $3872 when compared to household A's mortgage. That's equivalent to a 4.66% mortgage rate (after tax).

So, relative to the 2.5% mortgage, still a big jump, but not as big as the hype would have you believe.

Per above poster claiming a $50K raise would be required: to handle that difference, you'd need an extra $3872 - $2963 = $909 per month, or $10908 annual after tax increase in income, which means a gross salary increase of roughly $18K before taxes are taken out (again assuming 40% combined marginal rate). Any price increase component should be ignored: it has presumably also increased the equity in your existing home. For someone making $300K, that's a roughly 6% raise, so it shouldn't be that big of a factor (assuming folks won't go through the trouble of a job change for small raises).

TLDR: do the math for your own situation, it may be a lot milder than the Sturm und Drang online would have you believe.

Thank you for doing the math (really!)

Except it’s a flawed example.

In example A, PP is assuming the owner can only claim the standard deduction and isn’t adding the interest to other non-SALT deductions.

In example B, PP is assuming the owner isn’t hit by the AMT.