Your Guide to the Best Retirement Communities

ctyankee · Joined: 27 Nov 2006 Posts: 23

I suspect I am not alone in wondering if this is a good time to buy (prices have bottomed) or not (still have a ways to go). So I thought i would share this tidbit and see what anyone else thinks.

RealtyTrac, a foreclosure online site in Irvine, California, reported recently that mortgage foreclosure activity in the last year increased 25 percent. Its Foreclosure Market Report reports nearly 850,000 properties went into one type of foreclosure or another last year - an increase of 25 percent. Florida leads the nation with 14% of the nation's foreclosures. On a positive note, Florida foreclosures are slowing down vs. year ago.

My personal opionion is that as long as foreclosures are high, prices havent bottomed out yet. Reason being that foreclosures put more pressure on sellers who are on the edge to reduce prices and get something. But i would love to hear from someone with a different opinion.

youngatheart · Joined: 13 Nov 2006 Posts: 15

It is interesting what you hear about this. Some people are anxiously awaiting the baby boomer wave to hit the beach of retirement communities and rescue prices. Others blame the baby boomers for ruining prices to begin with, saying those who are in the market are holding on to old prices irrationally.

As for me, I am a believer that baby boomers will rescue this market eventually - together with natural forces that bring about a correction and increased confidence.

boomer1 · Joined: 24 Nov 2006 Posts: 42 Location: Madison CT

I believe that the herd mentality is basically irrational. Two years ago at this time people were absolutely desperate to buy something, anything in a retirement community. Now people are paralyzed to make a move less it turn out to be the wrong one. The market is stalled because of that sentiment, and because sellers are hanging on to the high prices they bragged about at cocktail parties.

Once this market turns it could be a free for all again. I say, if you see something you like and your horizon is long-term, buy now before it gets crazy again. Twisted Evil

boomer1 · Joined: 24 Nov 2006 Posts: 42 Location: Madison CT

The housing market is fascinating for a lot of reasons. But one of my favorites is how much data there is on it.

Here is the gist of 2 stories in the New York Times from today, Jan 26:

- More borrowers with sub-standard credit are defaulting on mortgages (probably not the 2nd home or the retirement community market, but distress sales are never good for the market)
- '06 Sales of existing homes had biggest drop in 17 years
- Sales of existing homes were down almost 15%, and down .8% in December.
- In spite of that slump prices held on pretty well, rising 1.2% for the year (as opposed to 12.5% in 2005)

And here is the biggest, perhaps brightest piece of news in the housing market i've heard in a while - "Economists ..believed that the low point of housing has been reached." In fact, a modest rebound for 2007 is predicted.

That should cheer up everybody with an unsold condominium out there!

bogeyman · Joined: 16 Feb 2007 Posts: 15

Median home prices fell in 73 of the nation's metro areas in the final quarter of 2006 vs the previous year, according to the National Association of Realtors. Prices rose in 71 areas, and the NAR's chief economist predicts that the number of sales and prices will start to rise from here. The Western region had the best performance (+.4%), while the midwest was off 4%.

boomer1 · Joined: 24 Nov 2006 Posts: 42 Location: Madison CT

The news in March about many sub-prime mortgage lenders going bankrupt isnt going to help the much hoped for spring bounce in the real estate market. The crunch means fewer lenders, tougher standards, and fire sales galore on their portfolios. The Treasury Department thinks nothing too bad will happen, but it can't help!

ctyankee · Joined: 27 Nov 2006 Posts: 23

Many thanks to all for your interesting posts. My current question, for which i have no answer, is this. It is clear that the sub-prime mortgage market is in trouble. Presumably most of the people using this type of credit are poorer people; i am not thinking many people buying retirement homes would use it. So if that hypothesis is correct, maybe the sub-prime meltdown won't affect the retirement community market in terms of prices and availabilty.

Or maybe it will. Anyone have a thought on this? Thanks.

ctyankee · Joined: 27 Nov 2006 Posts: 23

Interesting timing. Just after I posted this i came across this interesting podcast from NPR talking about just this very issue.
http://www.npr.org/templates/story/story.php?storyId=9237368

The gist from it and some Wall Street Journal articles is that it is a myth that just the poor used sub-prime mortgages. A lot of speculators used them too.

Also of note: People with very low interest mortgage rates and very high interest mortgages tend to default at much higher rates than those with market interest rates.

boomer1 · Joined: 24 Nov 2006 Posts: 42 Location: Madison CT

It's been a while since this topic was touched on. Unfortunately for sellers (and fortunately for boomer buyers of real estate or retirement communities!) prices are still soft. The Wall Street Journal just had an interesting article called "First-Time Buyers, in No Rush". The gist is that first time buyers are hearing that the market is soft, so they try low-ball bids. Unfortunately they are finding that sellers are not cooperating, so the result is a glut of unsold homes. Many first-time buyers, whose behavior is probably not that different than veteran shoppers, eventually get gun shy about buying at any price, worried that they will pay too high a price and be stuck with a big case of buyer's remorse.

ctyankee · Joined: 27 Nov 2006 Posts: 23

The news has been so bad lately, and the future so uncertain, i am definitely waiting to see what happens. To me it is worth missing the absolute bottom by a little bit vs buying when there is still a long way to go down.

retirementguy · Joined: 24 Nov 2006 Posts: 24

I agree with you about the first part - the news is bad, bad, bad. It is worse in Florida, Nevada, and California. Some places it is just a little bad.

I heard a guy on PBS last night talk about 5%, 10%, or 20% declines in real estate prices. RE: the current experience of declining home prices - this is the first time this has happened since the 1930's. But what he didnt say is real estate prices experienced phenomenal increases from 2002- 2005. There is some room for give back.

That being said - he thought the economy could weather a 5%, maybe even a 10% decrease. But a 20% would send the economy into some very bad territory.

bogeyman · Joined: 16 Feb 2007 Posts: 15

My sense is that the news is really bad and not going to get any better soon. My wife and i are keeping our powder dry, maybe try to buy on the way up.

boomer1 · Joined: 24 Nov 2006 Posts: 42 Location: Madison CT

New Years Day edition of Miami Herald had a screaming headline that echoes all of the comments made here: "Home Sales, prices still in a nose dive." Condominiums in Florida doing worse than homes. November, 2007 sales were off almost 50% from the 2006 figures, home prices down about 4%, while inventories were up from 17% to 34%. Experts are worried things will get worse before they get buyer. But at least one person in the article was buying; a Fed Ex truck driver snapped up a 4 BR home in Pembroke Pines for $327k, the home had been bought a year ago for $385k.
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marty50 · Joined: 13 Dec 2006 Posts: 16

Interesting. This thread started just about a year ago and prices have gotten worse and worse (for sellers) since it started. Here in January 2008 the economic news is much worse, so it is unlikely that it will get better too fast.

I am here in southern Florida and seeing firsthand some of the carnage. The condo market is in shambles - lots and lots of new projects with no units sold at all. Homes on the market at hundreds of thousands of $ less than 2 years ago. Some selling, but nothing at full-price. So much inventory that it will be at least a year catching up. The one good thing for buyers right now - if you buy now you know you are not buying at the top - that was 2 years ago

bogeyman · Joined: 16 Feb 2007 Posts: 15

Have you noticed that some realtors and mortgage brokers are spending a lot on advertising lately? Their pitch is it's a great time to buy, plenty of inventory, low interest rates, lower prices. There is a lot to that, but skeptics say they are just trying to keep their volume up. Time will tell. Meanwhile, prices are up in about as many markets as they are down, according to NAR figures.