Anonymous
Post 09/01/2023 07:59     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
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.


Just rent. I went to a super highly rated HS with very expensive homes but near a cheaper town that was nice except HS sucked. Some family’s rented in HS in my town and then moved back to old home.
Anonymous
Post 09/01/2023 07:56     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
Anonymous wrote:
Anonymous wrote:Downsizing makes very little sense. By the time your last one out of college and you and your wife retired people are between 60-70.

My house for instance is worth 1.7 million with 375k on mortgage.

I plan on retiring at 67. By then mortgage is maybe 250k.

To sell I pay
$85,000 commission
$20-25k prepping house for sale and home inspection things.
$10k closing fees. (Transfer tax, recording fees etc.)
$10k moving fees and misc
$20k closing costs new home
$20k misc repairs upgrades to new house.

I am at $175k to “downsize”

Nearly all of that money I never get back.

Let’s say I down size at 70. Even a 1k a month savings is going to take me 175 months to break even, or 14.5 years.

So old people sit in big homes. Remember the old people have landscapers, handiman and mostly mortgage free.

And with homestead exemptions taxes in the new smaller home could be more



The only way this makes sense is if you are primarily (or exclusively) concerned with net worth in retirement.
I am not.


I am not. But I may just keep my big house and buy a smaller condo in a beach town. Do you really think at age 70 I want to sell a 6,1000 sf house? My neighbor has a 7,000 sf house at 80 and his wife 78. He is in great health but made a whole master squire with bath on main level for him and wife. Upstairs he never goes but the five bedrooms and three baths upstairs are when kids and grand kids visit. The two bedrooms one bath in basement will be if they need live in help. He has 8 bedrooms. But he is a rare 48 years same house in MoCo and qualified for the over 65 and 40 years in same house tax break.

Sounds crazy but he paid $150k in a house worth 1,8 million. If he sold cap gains would be crazy
Anonymous
Post 09/01/2023 04:11     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
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.
Anonymous
Post 08/31/2023 22:32     Subject: Re:Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
Anonymous wrote:
Anonymous wrote:We're in this camp. I feel like we're doing well financially. There's always someone richer, but overall are very fortunate.

We make ~$400K salary w/ upside to ~$600K+ in a good year, have a $1.6mm investment portfolio/$0.4mm home equity, paid for cars, 35 yrs old. We have a small, old ~$1.3mm house and a $4.4K / month payment (for which we paid $1mm and refi'd into <3% rate). If we want something nicer in same hood, let's say a $2.2mm house and took every single dime of accessible investments ($1mm) and every single dime of post transaction cost home equity ($0.4mm) and bought that for $2.2mm house w/ a $1.4mm down payment, then our payment would go from $4.4K PITI to $8.2K PITI. With childcare and our otherwise lavish lifestyle and desire to save $$$, simply would not work, notwithstanding the giant loss in diversification and liquidity and the comfort that comes with having an investment portfolio that pays for the mortgage.

So when I look at these $2mm homes flying off shelves, I can only conclude that people are wealthier than us (which in our little bubble is probably true in select cases) or simply have a higher willingness to concentrate in home equity.

I hear you all playing the world's smallest violin for me, but it is difficult for me to comprehend home pricing with where rates are.


Wow, all those numbers look eerily close that I had to double check my spouse didn’t post this.


I also did a double take, though we are a few years older (late 30s) and our vinyl sided side by side that DCUM would balk at house appears to be worth ~$1.7 and we paid $1.1 for it. We also pay $4,400 a month and have ~$400k HHI. I don’t want to pay a dime more than that at the moment as I enjoy everything about about our lifestyle and neighborhood. Other than my crappy vinyl siding and historic windows I refuse to lay to rehabilitate.
Anonymous
Post 08/31/2023 06:25     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:I'm never moving out of my starter house at a 2.2% mortgage. We just get used to making do with less space.


I feel this way too. I'd LIKE to move, but going from 1500 sq ft to 2000-2500 with a yard would triple my mortgage. I'm more interested in retiring someday.


I’m glad everyone is posting these so people can understand the buffoonery that is the “never pay off your mortgage” argument.

Money is supposed to serve your life; your life is not supposed to be lived in service of money. But for these posters, a 2.5% mortgage is worth living your entire life in a house that you’re not happy with. Makes total sense.

And it gets to the broader point that while paying off your mortgage early will result in a lower retirement account balance at age 65 in nine instances out of 10, it provides so much flexibility and peace of mind that it’s almost unquestionably the right thing to do in most cases. There’s a reason that many, many rich people buy houses in cash.


Your whole post is BS. But very few rich people pay cash for real estate. They just don’t use traditional mortgages.
Anonymous
Post 08/30/2023 19:38     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
Anonymous wrote:
Anonymous wrote:I'm never moving out of my starter house at a 2.2% mortgage. We just get used to making do with less space.


I feel this way too. I'd LIKE to move, but going from 1500 sq ft to 2000-2500 with a yard would triple my mortgage. I'm more interested in retiring someday.


I’m glad everyone is posting these so people can understand the buffoonery that is the “never pay off your mortgage” argument.

Money is supposed to serve your life; your life is not supposed to be lived in service of money. But for these posters, a 2.5% mortgage is worth living your entire life in a house that you’re not happy with. Makes total sense.

And it gets to the broader point that while paying off your mortgage early will result in a lower retirement account balance at age 65 in nine instances out of 10, it provides so much flexibility and peace of mind that it’s almost unquestionably the right thing to do in most cases. There’s a reason that many, many rich people buy houses in cash.
Anonymous
Post 08/30/2023 19:07     Subject: Re:Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
Anonymous wrote:We sold our home and bought this summer despite losing our 3% rate. Life is too short to be stuck in a house that doesn't make sense for our family. We were fortunate to be able put more cash down to offset the higher interest rate but yes it sucks and maybe not the best financial move but in the long run I know we will be happier for it.


Same. We moved late last year to a lower COL area, but with the higher interest rate our payment is about the same. Our prior house no longer worked for us and we never loved the neighborhood, so the higher rate has been worth it.
Anonymous
Post 08/30/2023 17:22     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
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.
Anonymous
Post 08/30/2023 16:42     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
There are two situations for people with low rate mortgages:

A) Happy (enough) in their homes. They have no interest in moving or moving wouldn't give them a positive cost benefit analysis. These people will stay put.

B) Not happy in their homes/location and can afford to move. These people will sell to go live the lives they want and can afford.
Anonymous
Post 08/30/2023 16:25     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
Anonymous wrote:Downsizing makes very little sense. By the time your last one out of college and you and your wife retired people are between 60-70.

My house for instance is worth 1.7 million with 375k on mortgage.

I plan on retiring at 67. By then mortgage is maybe 250k.

To sell I pay
$85,000 commission
$20-25k prepping house for sale and home inspection things.
$10k closing fees. (Transfer tax, recording fees etc.)
$10k moving fees and misc
$20k closing costs new home
$20k misc repairs upgrades to new house.

I am at $175k to “downsize”

Nearly all of that money I never get back.

Let’s say I down size at 70. Even a 1k a month savings is going to take me 175 months to break even, or 14.5 years.

So old people sit in big homes. Remember the old people have landscapers, handiman and mostly mortgage free.

And with homestead exemptions taxes in the new smaller home could be more



The only way this makes sense is if you are primarily (or exclusively) concerned with net worth in retirement.
I am not.
Anonymous
Post 08/30/2023 16:13     Subject: Re:Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
Anonymous wrote:We sold our home and bought this summer despite losing our 3% rate. Life is too short to be stuck in a house that doesn't make sense for our family. We were fortunate to be able put more cash down to offset the higher interest rate but yes it sucks and maybe not the best financial move but in the long run I know we will be happier for it.


I love this!
Anonymous
Post 08/30/2023 16:13     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
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.
Anonymous
Post 08/30/2023 16:00     Subject: Re:Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
We sold our home and bought this summer despite losing our 3% rate. Life is too short to be stuck in a house that doesn't make sense for our family. We were fortunate to be able put more cash down to offset the higher interest rate but yes it sucks and maybe not the best financial move but in the long run I know we will be happier for it.
Anonymous
Post 08/30/2023 15:43     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
Yep we are stuck in our house. The only place we could afford to move is a smaller house, in a worse school district, for a higher PITI.
Anonymous
Post 08/30/2023 15:24     Subject: Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.
Downsizing makes very little sense. By the time your last one out of college and you and your wife retired people are between 60-70.

My house for instance is worth 1.7 million with 375k on mortgage.

I plan on retiring at 67. By then mortgage is maybe 250k.

To sell I pay
$85,000 commission
$20-25k prepping house for sale and home inspection things.
$10k closing fees. (Transfer tax, recording fees etc.)
$10k moving fees and misc
$20k closing costs new home
$20k misc repairs upgrades to new house.

I am at $175k to “downsize”

Nearly all of that money I never get back.

Let’s say I down size at 70. Even a 1k a month savings is going to take me 175 months to break even, or 14.5 years.

So old people sit in big homes. Remember the old people have landscapers, handiman and mostly mortgage free.

And with homestead exemptions taxes in the new smaller home could be more