June 17, 2007

"The easiest home to sell is the second one" - heading back to 2004 (and lower) prices with the second home glut

Ah, gotta hand it to the boomers. Just like going for seconds and thirds at that $9.99 Las Vegas buffet, they went to the trough these past few years and loaded up on second (and third, and fourth) homes.

Everyone's getting rich! It's a can't-miss! We'll retire on the house!

Oops. Maybe not. Baby Boomer Bailout anyone?

Barron's: Second-Home Housing Glut - Real-Estate Bubble Losing Air

It would seem to have it all: four bedrooms, a guest house, a pool and a rock waterfall. But the vacation home in Naples, Fla., hasn't been drawing much interest from buyers, so the seller recently threw in that most modern of amenities: the $1 million price cut. That's brought the asking price down a full 25%.

"If you want to sell, you've got to go back to '04 prices," says Chip Harris of Coldwell Banker Previews International, which is handling the property.

The market for second homes could use a second wind. After a long string of double-digit annual price increases, a number of second-home meccas across the country are suddenly suffering from plunging sales volume and burgeoning inventories of unsold homes.

Result: Naples-style discounting is starting to spread.

It hit the town of Pocasset, on Massachusetts' Cape Cod, just as retired executive Jack Reen was trying to sell his four-acre, six-bedroom beachfront home. He cut the price several times, for a total of 42% off the listing price, before striking a deal at $3.95 million. Reen takes a philosophical view of the experience, noting that the original price was set at the top of the market. "Calling the tops and bottoms is impossible," he says.

It's all a big change from the seemingly endless rises in prices. For more than a decade, baby boomers have been flocking to the second-homes market and lifting prices, just as they'd earlier lifted the market for primary residences. The market barreled ahead during the past few years, and the demographics -- 75 million boomers -- still bode well for long-term growth. But first, the market has some correcting to tend to.

16 comments:

Anonymous said...

The boomers are screwed

Especially once we cut their social security and medicare too

burn baby burn said...

Boomer worst generation ever!

Kenduffelsniffenspotzen said...

Around here it is Generation X and the Millenials who seem to have gotten suckered into buying. I am sure the Baby Boomers will be happy to work a few years more to help bail those dumb suckers out.

area 51 said...

04' prices?, BULLS**T. Just look at Shiller's graph or plot one yourself. NAR data is widely available.
They gotta go back to 1997 + 10yrs inflation, which = Mid 2002 prices.

Anonymous said...

I still think 42% off the asking price is too expensive.

LMAO

christiangustafson said...

Yes, when the housing bubble intersects the graying of the Boomers, it gets really exciting.

What's the average Boomer liquid savings again? How much in cash, 401K?

Someone should cash in on this next wave of growth with a "Tender Vittles" cookbook.

Anonymous said...

If you think the boomers are going to be the ones that are screwed, put down the crack pipe.

You're going to have a hard time cutting their social security and medicare when they outvote you 2:1.

To paraphrase PJ O'Rourke - "with AARP, we all found a minority group we're going to belong to someday"

Generation X, Y, Z and beyond are gonna be screwed, cuz they're going to foot the bill...

Anonymous said...

$9.99 Las Vegas buffer? HA HA good one KEEFER. $19.99 is about the cheapest buffet in town and that'sa buffet I personally want nothing to do with. Anything decent is $29.99 an up.

Get with the times man, it's 2007 not 1987.

Geezuz you people are so out of touch with reality.

Anonymous said...

6:00pm:

Yep. Old people have 3 things going for them:

1. Sheer numbers.
2. They vote in every election.
3. Have nothing to do all that execpt write/call their Congressman and complain.

All this talk of SS going under is a joke. What will happen is my taxes will triple but Granny and Gramps will get what's theirs.

brokers are morons said...

There's plenty of $9.99 buffets along the Northern Strip and offstrip. The Orleans has a very good buffet for $14.99 just off the Strip. Only a shallow insecure idiot would overpay for housing or a buffet.

Anonymous said...

"Especially once we cut their social security and medicare too "

This is called "blowback" from Gen x/y towards the baby boomers, and it's gonna happen... snicker.

Q: What do you call broke retirees?

Ans: LOYAL democrats, ugh !

Time for the 3rd party called the Constitution Party ! Small govt, no easy handouts, dont work, dont eat policy.

Anonymous said...

"$9.99 Las Vegas buffer? HA HA good one KEEFER. $19.99 is about the cheapest buffet in town and that'sa buffet I personally want nothing to do with. Anything decent is $29.99 an up."

Never been to Vegas, have you?

Anonymous said...

Think about 75 million boomers dumping their McMansions and second homes when they need medical care. Apartment REITs are the way to go. Old people don't want giant houses they have to clean and maintain. They don't want the stairs to climb. They will figure out condos are the biggest scams in real estate. They want small low-cost apartments in senior communities. Others will buy RV's and drive around the country. Some will have no savings and be forced to move to Central America in expat communities.

Anonymous said...

Boomers will be net sellers of RE over the next 25 years. I feel good just sitting in a comfortable chair in a smaller place these days and demographics say I should live another 25 years!!
...who needs the hassle of non-income earning residential houses?

SPECTRE of Deflation said...

The market barreled ahead during the past few years, and the demographics -- 75 million boomers -- still bode well for long-term growth. But first, the market has some correcting to tend to.

75 million debt slaves doesn't sound like a healthy market to me. Why would I buy a second home when I can rent anything I want for pennies on the dollar anywhere in America at a moment's notice?

Anonymous said...

Think about 75 million boomers dumping their McMansions and second homes when they need medical care.
Add to this the blowback when the cheap Mexican labor doing the boomers yardwork and home maintenance is taken away, and these lazy, overweight boomers (who don't like to get their hands dirty) will scream. After all, most of the "professional" boomers look down on the guy who works with his hands. Guess who'e gonna get the last laugh?