Wow I read the whole thing and still get number 2.... Good post... I hope the re-urbanization of America continues... Its done some wonders for some older cities...
My thoughts about retirement change with the years and the economy.
I first thought I would have a defined benift plan and a gold watch.
Then I could build a retirement with a 401K.
I thought I would retire at 65, then they changed it to 67.
At first I thought I would pay off my house and just live in it. Then I could get a reverse mort. then it became an investment item. Then it all went to hell.
Now I have a different plan, but in the 10 to 12 working years I have left (no I do not want to work forever - thank you very much), the only thing I am sure of is that I will have to rethink my plan yet again.
one big factor, impossible to predict, is the cost of housing relative to incomes
,
In states where this is high, such as California, there tend to be more people living in each household.
,
If housing became similarly expensive across the country (could be from anything to reduce disposable income whether it be increased saving or higher taxes, or even changes in mortgage finance)... instead of the 18mn vacant housing units reported by the Census last time I checked, there would be an additional 14mn vacant housing units or 32mn total which is 1 in 4 counted housing units
,
I would only consider cultural effects for the first generation immigrants (such as having 3 generations under one roof), and wouldn't worry about that the way you might when considering birth rates amongst cultural lines
,
I do wonder what role the lack of retirement savings will have in perhaps removing choice of housing for the elderly
Now I have a different plan, but in the 10 to 12 working years I have left (no I do not want to work forever - thank you very much), the only thing I am sure of is that I will have to rethink my plan yet again.
If you have 10-12 years its likely to be rethinking over again and again - this is one fluid environment [fluid as in flood].
nades, I've asked for permission to post the paper (I'd just link to it from my blog). I think it is interesting and significant implications. I do think Nelson is overestimating the shift - but if he is correct, it will be dramatic. And I also think he might be 10 years early.
we will need a new urban core to be able to deliver services to the elderly. As somebody who volunteered for "Meals on Wheels" I know first hand the challenges of delivering meals in a suburban setting. I think what is true for M/W is true for transportation etc as well. Whether people end up renting or buying in the city I don't know but I have to wonder who is going to buy all the MCMansions from the boomers?
Take a big loss on the house or give up on services may be the choice that a lot of people will confront.
Our house was too big for 2 people. But my mom moved back in and
now it's not too big. If she lives as long as 92 like Julia Childs, we will
be fine for 7 more years. I have a feeling one or both of our kids will want
to move back depending on how the economy goes. Nice to have the
flexibility. The hub doesn't plan to retire for 4 more years.
lawyerliz- we may not realize it but perhaps multi- generational living maybe the best thing to come out of this financial mess. It might help remind us all what is important in life and what is not.
Nades, my mom lived in her 4 bedroom 3 bath home until she was 80. I think that is common - I've seen it happen in entire neighborhoods - everyone is pretty old, and there are many single person households (mostly women) all living in large homes. This might be inefficient use of space, but it is what happens.
Nelson is suggesting people will prefer to move to a more urban environment to enjoy the amenities - and I've seen that too. It will be interesting ...
dryfly
I have heard of elderly people pooling their ressources to make their own mini-retirement home (installing a lift, renovating the bath, brining in a nurse once a week) BUT the key thing for them is being physically close to a hospital because of testing and treatment. Being able to get around and socialize without a driver's license is just a bonus along with any community seniors' centre nearby.
Basically saying that elderly people living in a rural area can do it with a developed support network, in an urban area because of amenities, and it seems doubtful for a suitable model to emerge in the suburbs
This might be inefficient use of space, but it is what happens.
CR - My father did the same thing until he died at age 84... but he got a lot of support - from me 25 miles away and from his neighbors. Increasingly tough to rely on.
My mom lived in her small house til she was mugged at 85. Lots of old people
there but new generations moving in. Urban amenities to the extent Baltimore
has them. Trouble is Balto is no Boston. Except the Inner harbor area, which has
been duded up and has lots of mixed use.
Julia & Julie has one other stark message. The urban world of Julia is beautiful.
Of course, she's relatively rich.
The urban world of Julie is physically very ugly on the outside. She & her husband are both
working and should be able to live somewhere slightly less ugly, one would think.
This story relates to my vision of the Post Internet Society which will be marked by increasing cannibalization of resources. We are entering a period of dramatic computer efficiency which will pit man against machine and only the strong will survive and those that will survive will be very aggressive as they take what they can from the weak!
EHP - some towns are actively promoting this. Rochester MN [home of the Mayo Clinic] is one. My little town 45 minutes from Rochester is doing the same thing. It is a good idea and will lower the cost of carrying the old and provides 'business' for people working in those towns - the elders tend to buy less but buy local.
After the kids left and we retired into a house half the size of the Mc Mansion and it is great. Did consider the later years and the flexibility of the place. Hopefully I get to stay here till the end.
I think the incredibly cheap 4+ bedroom, 3 bathroom, 3-car homes in every American suburb will be quite a lure for immigrant families - typically extended families and families with lots of kids. That will extend what is already a very noticeable change in US suburbs.
When i was a kid I never heard any language spoken but English. Today, at Walmart or the local library I can hear several just during a brief visit.
That change will not reverse; it will accelerate.
I think the incredibly cheap 4+ bedroom, 3 bathroom, 3-car homes in every American suburb will be quite a lure for immigrant families - typically extended families and families with lots of kids. That will extend what is already a very noticeable change in US suburbs.
When i was a kid I never heard any language spoken but English. Today, at Walmart or the local library I can hear several just during a brief visit.
That change will not reverse; it will accelerate.
This is quasi-on topic. Last night, I posted about how the demise of Mutual Bank is cutting the yields on the hot-money CDs they created.
At times about three years ago, Corus was paying 3% more on one-year CDs than the national average for that maturity. Mutual Bank was paying about 2% more on three-year CDs than the national average on that maturity.
Now, the FDIC has stepped in apparently put an end to hot-money, Internet-sold CDs. The ceiling permitted on one-year CDs seems to be 2.5% now. There's a trend toward the highest-yield CDs being locally available (to reward loyal customers and walk-ins, not hot-money Internet shoppers). From a regulatory point of view, this was probably necessary to cool off the hot-money CD trade.
But it's having devastating impact on the incomes and standards-of-living of many seniors. For quite a few middle-income and affluent seniors over age 70, FDIC-insured CDs are pretty much "the world of investing." For more than a decade, they were able to rely on competitive CD yields to maintain a good standard of living. Now, with govt price-fixing of CD yields, combined with Bernanke's artificially low rates, many seniors are seeing their incomes cut by 30-40% or more.
It's bad for the economy, and if it continues it may result in some downsizing by seniors, out of single family homes into lower-cost communities and ALFs.
An ALF is not necessarily a step up, even if you need some assistance. For some seniors, ALFs are a dog's life.
dryfly
Have you seen what retirement homes charge? I know of one that's like disneyland for seniors, but it's just wasted money for the most part because it doesn't make them happy. The gimmicks wear off real quick in that environment. In that sense I think it's a great idea to at least bring down profit margins, and it probably has greater social benefits to the seniors who can manage it as well
The kids of the kids will speak a worse and worse version of their native language.
The 3rd and 4th generations won't speak it at all. My granddad spoke german, and yiddish
surrounded us, but all I learned in German was one, 2, 3.
Likewise the strong families of the immigrants tend to break down. It's sad, but there it is.
Urban amenities to the extent Baltimore
has them. Trouble is Balto is no Boston.
This caught my eye in CR's post. Outside of NYC, Boston and San Fran, what amenities do urban areas offer that suburban areas don't? Maybe nightlife, but at retirement age that isn't important. You can always visit museums or other cultural attractions if you want to by car.
We think aging in place is the most desirable choice. There is one ward in DC where there is a community-based organization that will provide services for a modest monthly fee - shopping, driving to appointments, house repairs, clerical etc. Hopefully one of these will be set up in our ward as well. Meanwhile, we can shift for ourselves.
EHP - the minimalist ones are fairly cheap and more than adequate. My father was looking at them in his last years and all they were was an apartment in the downtown of a small city. Everything he needed was within a block walk plus had some features of assisted living but minimal. The cost was something like $800/month for him [full cost because he had significant assets] - those on tighter budgets paid quite a bit less [subsidized but much lower cost than a full blown retirement complex].
There are options available to us if we think hard. But thinking hard is hard so we don't.
crazyv and sdtfs, your last comments in the last thread, on health care. Excellent points. And very important. Please keep contributing here on this issue.
MOYERS: What about the subject you've written so much about - the population explosion? Right now, the population of the globe is over five billion. You've warned us about what will happen if it continues at its two percent growth rate per year.
ASIMOV: Actually, the growth rate is down to one-point-six percent, but with the higher population, it's the same amount in actual numbers: eighty million a year. By the year 2000, it's going to be perhaps six-point-five billion.
MOYERS: That's just twelve years from now. How many people do you think the earth is able to sustain?
ASIMOV: I don't think it's able to sustain the five billion in the long run. Right now most of the world is living under appalling conditions. We can't possibly improve the conditions of everyone. We can't raise the entire world to the average standard of living in the United States because we don't have the resources and the ability to distribute well enough for that. So right now as it is, we have condemned most of the world to a miserable, starvation level of existence. And it will just get worse as the population continues to go up.
If you don't engage the world, and just live passively, you tend to deal poorly with any ailments that come up and die earlier
Agreed. But I don't think that urban living is less passive than suburban though. You can hole up in an inner city apartment as easy as a suburban McMansion.
pavel.chichikov
I just used the term in a general way to describe something that isn't yet known, or perhaps I mean conventional steroids that do reduce healing time which would mean I would have to have some kind of artificial liver and kidney. that's overthinking the original point, which was augmenting my life either from inside my body or outside of it
Time was when most in their late 70s were veggies.
My grandparents checked out in their early 70s.
Gary Moore had a tv show in the 50s called life Begins At 80.
What I recall from this is that the life involved was good enough
because the oldsters could get on the set and didn't drool.
My mom liked the Julia movie. Ate the homemade apple cobbler,
and then some store bought lemon merangue pie. And
now has said that the rising timer for the dough has rung, so
off to see whether it needs more rising or not.
If she gets to the point where she don't know who we are, that's one thing. But she's nowhere near that, and hopefully won't be.
Disempowered Paper Pusher
True, but the converse is not. You most likely will not engage a variety of people as an elderly person in the stereotypical suburb.
Oh yes, this story (Research on Homeownership Rate through 2030) reminds me of one of my pet projects, the global population growth rate versus the growth rate of economic stuff, like housing inventory. The over-population of homes is way ahead of actual human growth, so who will fill the empty homes??
much will depend on the course of oil prices. If we are near peak oil, the urban centers and inner rngusuburbs, with good public transport to the urban centers wll become much more desireable. Increased telecommuting may blunt the trend a little in a high energy price environment. Peak, or effective peak oil, will be the death of exurbia
I don't see elderly engagement as a function of location. It's more to do with what the person wants to do. Some elderly are content with sitting on the couch and watching TV. Others like to socialize, volunteer, etc. As long as they can drive, those who want to do something are fine in the suburbs. If they can't drive and are in the city they need a top notch public transportation, which is rare.
dryfly and others re housing lessons learned, yep me too
as a kid my mom and dad were military and we moved from base to base
(i attended 3 different schools in 4th grade, an indelible effect on my life both good and bad)
then as a traveling salesman and moving up the ranks to VP of a major us petrochemical co we were transferred all over north america and my dad and mom must have bought and sold at least a dozen houses... never fully owning any
he started a company and made a huge pile of money and employed a wholebunch of people,,, which he refused to "let go" until the bitter end as he lost it all when the texas oil patch went bust...all except
his last million
and then my dad got cancer (no health insurance right after his company failed) and they lost everything, absolutely broke
today they live on social security and medicare
the lesson i learned from this was.... i did all the opposite
stayed in one place, built and owned my own house from day one, and saved like a child of the GD
Peak, or effective peak oil, will be the death of exurbia
As we now know it [far flung bedrooms connected to the inner core]... might actually become MORE viable given a few structural changes.
Ask yourself - how easy is it to produce goods for the inner core in the inner core? Ans. - damn hard [logistical nightmare]. Next question - how hard is it to ship them around the world in a peak oil environment? Ans. - damn hard [expensive]. Where is a place with relative space to store & ship & yet some population to produce goods for the inner core? Ans. - exurbia.
I see that as more of a likelihood than abandonment.
We move allot, 4 schools in 2nd grade. Dad retired when I was 11.
Never lived anywhere more than 5 years after dad retired. I love travel, don't care if I have a settled house. My home is where I am.
Plan on travel and having 2 small, cheap places to live when I retire.
You and I sure took away very different things from the same life style.
I will believe in the "new urbanity" when it actually happens. It appears to me there is a lot of wishful thinking in these predictions.
Yep. It also ignores a bunch of realities. People have to be more mobile due to today's labor market, kids have to taken to day care, spouses can commute every day to jobs a hundred miles apart etc.
Health care as stimulation and meaning for our elderly should be considered as a primary cause of the high expenditures for health care after 65.
What's it like to have going to the doctor as the high point of your existence? Health care professionals treat you as a person and listen to your problems. Is it a surprise that in a twisted way our elderly seek validation for being alive by their health problems?
My grandmother is 72 and we talk every Sunday. Discussion of her health, medications and doctor visits are always a significant portion of our conversations. I've offered countless times for her to come live with my family with the hope having an active life will help her health. She always cites her need to be near her doctors as to why she won't move. Warehousing(ignoring) our elderly in assisted living was supposed to benefit their well being and provide better care. The reverse seems to be the case.
dryfly (profile) wrote (in reply to...) on Sun, 8/9/2009 - 11:57 am
Meat before Dawgs.
LOL - I was thinking the same thing.
Nelson is so wrong I am at a loss where to start. It's like someone made a mistake and granted Kunstler tenure someplace. I'll need a few hours to go over what CR has excerpted here and hopefully the full paper will become available for further dissection.
I'd love to get ahold of the evidence for just; "important changes in housing preference. " That's an aspect of American stated and revealed preference that last inflected in 1910. Without seeing the work his pronouncements appear to be the same urban renaissance is just around the corner wishful thinking prourbanists have been pushing since the Johnson Administration.
"pavel.chichikov
I just used the term in a general way to describe something that isn't yet known, or perhaps I mean conventional steroids that do reduce healing time which would mean I would have to have some kind of artificial liver and kidney. that's overthinking the original point, which was augmenting my life either from inside my body or outside of it"
EHP, for some reason what you write makes me feel moved, emotionally, I don't know why. Perhaps I don't want to know, right now.
I wrote a poem today called The Library of Future War. Maybe part of it is that we don't really know what the future will bring.
THE LIBRARY OF FUTURE WAR
The library of future war
Lights inside were deeply dimmed
Within the roundels, at the seats
Youthful men wrote letters home
Quietly the soldiers wrote
Thinking of the coming war
History inside these notes
That must be written now, before
Afterward will be too late
So now when light is deeply dimmed
The pages of each human fate
Continued or perhaps an end
Life that is already shelved
A line of titles spine by spine
One may be a life fulfilled
Or else unfinished, out of mind
A line of titles, war by war
And they have little time to write
It must be written now, before
The servants here put out the lights
Well, I think my next project will be an urban 4-plex with handicapped bathrooms on one floor.
Infill. Rental. Should be able to section 8 it for elderly and get an automatic check every month. Build for durability and just let the dollars roll.
The medical stuff starts having a significant impact past 65. I note George Ure of urbansurvival.com just made it past 60- when the true medical complications ensue, I think he will be back at least part time in an urban environment. My parents experience includes more use of medical facilities (including a knee operation on Monday)- and having ready access to emergency rooms and doctors pretty much ensures an urban environment.
Your survival of a heart attack decreases rapidly with distance from a decent cardiac unit. Your treatment for cancer is more difficult if you have to travel to an urban or suburban center a significant distance three times a week.
Rural medical care is usually less than urban, suburban, and exurban.
With the coming wave of boomer retirement, access to healthcare will be paramount.
There's a real need for "elder architecture" coming up, as well as remodeling. The biggest problems are stairs, hallways, baths, and kitchens. The house doesn't have to be totally ADA, just suitable for wheelchairs, and that implies quite a bit of remodeling work. The bedroom area is always the worst, because you need a 36" door and about 48" hallway-- and most houses don't have that, so you end up stripping out the whole bedroom area.
sorry guys. i love urbanism. i've lived in the middle of major cities for 9 of the last 10 years. now, with children, i've left for the burbs. for cities to rise again in earnest, a couple of things have to happen:
1.) crime has to drop to levels comparable to the burbs
AND
2.) either public schools have to improve to match the quality of those in the burbs or people must be allowed to substitute private school payments for property tax payments (i.e., vouchers)
OR
3.) young people have to stop having kids
jobs will go where the people (who will work) are as transportation costs increase, making commuting less viable, companies will have to relocate... not the people.
RockyR
1 & 2 are met in Vancouver, I think it is that way across the country. Maybe the US is still experiencing fallout from the race riots and white flight of the 60s to an extent? I really don't know. The biggest problem up here is that there are few large cities, mostly in a straight line from west to east near to the border, which limits choice while the housing costs are high
,
Pavel, I don't know what to say which is probably the right thing because you can fill in all the gaps yourself
Dawg, what you are missing is the impact of less resources on the retirement potential of those 74 million boomers.
Smaller and urban is cheaper than larger and suburban.
Your monthly burn rate in a large house is much more than a small house, and with real housing price stagnation built in for the next 25 years, early transition to rental property or smaller houses will be a winning move.
Look at josap's comments about two small places to live when retired- that is a well thought out response to future changes.
scone, hallways are inefficient in any construction under 1200 sq ft.
As for Kunstler, he is unbearably influenced by the decaying Erie canal zone he inhabits.
An area that reached it's zenith before 1900.
RockyR most folks retiring no longer have children to deal with- that is the metric that drives the new urbanism.
The failure was that those moving in the city would be rich, and hip. Instead they will be poor or middle class and need hip replacements. Cities that deal with that demographic and provide separation between the urban poor slums and the new settlements will prosper, and those without insufficient policing will fail. Ironically, these improvements will regenerate tax bases in areas where old folks feel safe.
Hip and young will soon be far outnumbered by the boomer oldsters.
Having to uproot yourself every time you take a new job isn't fun. In America today you're going to change employers far more often than you did 50 years ago. I'd love to try urban living, or at least as close as I can get to it in Arizona. I'm averaging 2 years or so before each job change. I'm certainly not going to move that often.
fwiw the cities in a straight line, with high costs of living is probably true for the entire west coast due to mountains in the east and ocean to the west. As for quality of schools, I don't know the full scope of it but Jim the Realtor started off his last video at a spectacular high school in Carmel Valley. I don't know if you could ever expect that to be the average high school, seems unaffordable and unnecessary to me
transportation costs will push economies towards regional and local commerce
heres a pick which explains rubins reasons for a return to more urbanization
"In his new book, Why Your World Is About to Get a Whole Lot Smaller, Rubin contends that oil, which is currently around $60 a barrel, will quickly top $100 a barrel when the world economy rebounds.
"We're going to see triple-digit oil prices very early in the next recovery," Rubin tells NPR's Steve Inskeep. Furthermore, he says, we should expect oil to stay at those levels because demand will consistently outstrip supply in the coming years.
Rubin argues that high oil prices will have sweeping ramifications and will reverse many of the trends we've seen in recent years in the world economy.
"The model of globalization is not going to be economically viable," Rubin says. "What we're going to find is it's not going to make sense to produce things on the other side of the world, no matter how cheap labor costs are there, when it's so expensive to transport things."
Citizen AllenM (profile) wrote on Sun, 8/9/2009 - 1:26 pm
Dawg, what you are missing is the impact of less resources on the retirement potential of those 74 million boomers.
Smaller and urban is cheaper than larger and suburban.
That's what the urbanists are always claiming. Evidence? Got a dynamic urban area with a lower cost of living to share?
Your monthly burn rate in a large house is much more than a small house, and with real housing price stagnation built in for the next 25 years, early transition to rental property or smaller houses will be a winning move.
Are you sure? I could move to a smaller house on a smaller property and my costs would skyrocket. Instead I've got an exurban California rambling ranch where the largest step is 6 inches to the front door. Nothing else more than a carpet strip. Very low taxes and low energy usage. There's no benefit to downsizing. Certainly I don't see people in their 60s pulling roots, abandoning friends and the familiar for the city experience.
it is amazing how the Clinton retreads, namely Tyson, but inlude Summers And Turbo) along with the keynesian boot lickers do not differentiate between debt driven revenue growth (the impending return of positive GDP growth) and recovery. memo to the white helo crowd: The two are vastly different
dawg,
Look at the entire rustbelt for cheap urban living. Flynt and Detroit homes for tiny dollars.
Look at North Philadelphia- which is resettling compared to when I was there 15 years ago.
Look at the urban part of phoenix- all of those failed condo conversions- Las Vegas, etc.
L.A. and San Francisco, New York, Boston, Inner Loop Chicago- they are getting cheaper- but slowly. But they were urban and hip.
With the huge oversupply of housing, real returns are going to be paltry- but nominal will be pretty good if you bought cheap enough.
R.D. you are too limited by the Boston/LA dichotomy- the rest of America looks much different from those extremes. Oh yeah, New Orleans for the brave at heart.
"There's a real need for "elder architecture" coming up, as well as remodeling. The biggest problems are stairs, hallways, baths, and kitchens. The house doesn't have to be totally ADA, just suitable for wheelchairs..."
Multi-family building codes pretty much require that now. I work as an architect and everything we have built for years (primarily multi-family and mostly affordable housing) is"visitable" and meets what the codes and ANSI now refer to as 'B' level accessibility. That means no-step entries, 2'-10 or wider doors, blocking in the bathroom walls to add future grab bars, required clearances at plumbing fixtures and appliances. Two level townhomes are exempt from those building code requirements, but funding agencies and housing authorities generally require them on anything they build. In this area at least (Minneapolis) agencies and non-profits have really outstripped the big builders in terms of design, build quality, "green" design, energy efficiency, and access. No granite countertops, however, but the money is spent on a better balance of features and quality.
we have massive mismanagement of public resource across the board in the US. you think the feds are bad? take a look at state and local authorities. egad! the big cities are the worst. the idiots seem to rule the roost. the suburban cities are small enough that you can get concentrations of folks with enough sense not to squander their resources and to stay focused on the things the community wants, primarily education.
Why does everyone always assume that shacking up with 3 generations in one household is going to be the one good thing to come out of this? The smug generalization takes my breath away. I see more dysfunction, rudeness and abuse coming from a downsized and forced living arrangement like that, from all generations.
Granted I am an outlier (if I ever do re-marry I want seperate households, side by side townhouses or a duplex being as close as I want to live with anyone) but there are plenty out there that dont mind living in same town or area but will absolutely go ballistic living together.
If it was so great and so wonderful we would have already been doing it. My opinion anyways, mileage may vary blah blah blah
In this area at least (Minneapolis) agencies and non-profits have really outstripped the big builders in terms of design...
I do think of Minnesota as progressive. Oregon (where I live) thinks of itself that way, but it's more honored in the breach. And our codes are county or even town-specific, so requirements are all over the place. There are some 'over 55' cottage developments, but not a lot. Most of the housing is standard issue tract house stuff. The dominant local design house is Mascord, so the overall design quality is not high.
The following is a link to a (ADP sourced) chart that shows service employment, goods-producing employment and manufacturing employment. The latter two have gone from stable to cratering over ten years, but services has yet to crater, but looks very much like it will crater very soon.
I'd read this as a lot of people like CPAs, lawn servicers, small trades are about to get absolutely hammered. I'm guessing that many older people own or run these businesses.
Those thinking of "design" and envisioning huge new developments in urban areas are completely missing the point, which is that the nation has enough housing, already built, to provide most of the supply needed for the next few years. There ain't gonna be enough new development to make a dent in anyone's lifestyle.
We've got the housing we've got, and for the next 10 years or so it's not only all that we'll need, it's all that we'll have.
Design and urban improvement will be done by adapting and retrofitting existing buildings to meet emerging needs.
Coal was cheap and efficient long before oil. Still is the cheapest way to power anything if you can build a big enough plant.
Of course Carbon trading turns that on it's head.
Coal is the great quiet giant along with green things.
Oil and natural gas should not be wasted as we have been doing- petrochemicals are far more valuable than coast to coast semi trucking.
But the only way to make changes is to make stuff more expensive.
The market will respond well to incentives and disincentives.
The dollar is a key component to driving these changes- when oil stays at $100 a barrel plus for the long term, changes will happen.
Nuclear is also amazingly cheap when you reprocess fuel efficiently.
Plants can easily be built to operate for a century or more if you design with replacement of parts in mind and more efficient heat scavenging systems.
re: Homeownership/Renter, Rural/Suburban/Urban
I honestly couldn't make a strong prediction. There are simply too many factors without clear dominance at this point. What will be the prices of energy and housing. How will new mediums of communication cause work to be done and services delivered in practice, not just theory. What will happen in demographics, immigration, global trade...
In most of the world, there have been plenty of economic incentives towards urbanization.
,
So I have to ask, what use is there for a prediction to 2030? If we could limit the question perhaps there would be a more useful answer. Housing is to a significant extent fungible, and I don't care what financial structure is applied to it. Is there a meaningful dividing line between a 99 year lease and ownership
.
,
re: Last night's Housing Investment & the Economy, http://www.hoocoodanode.org/node/7571
Does anyone have more explanatory alternatives to Housing Drives the economy?
Homeownership hung around 64% prior to the late 90's housing push, and I expect it to get back there well before 2020.
FDIC: 2006 Economic Outlook Roundtable: Scenarios for the Next U.S. Recession
Meredith Whitney
Page 10, Chart 43 Sixty-four percent was the traditional homeownership rate as far back as the 1970s to about 1994. This is as far back as the data show, so 64 percent is what we really call the "natural rate of homeownership."
Greenspan said much the same, stating that the additional 5% (when the rate went to 69%) was "at risk".
Similarly, the average household size has bottomed and will now trend upward for the foreseeable future due to household consolidation, etc.
Those two factors alone guarantee housing will have an excess supply for years to come.
Is the economy's stumbling made worse because it no longer pays to work?
Marginal Tax Rate for a young, traditional nuclear family in say CA or NY: 1 worker earning ~$90K/year, 1 spouse, 1 child
25% marginal federal income tax rate
10% marginal state/local income tax rate
15.3% Social Security and Medicare (15.3% for self-employed, which effectively includes the "employer contribution" which, in absence of the tax, would've gone to the worker too)
10% sales tax on marginal purchase (in CA)
Total: 60.3%
Does not include future taxes to pay for ongoing deficit spending.
Those quibbling with the sales tax inclusion might note that savings is also heavily penalized, in its own way, by (a) abusive market arrangements and (b) likely future inflation due to ongoing deficit spending.
No wonder people would rather be wall street speculators or "cash job" workers... Crime pays and work doesn't!
Could be time to move to a lower-tax state... or a lower income way of life...
EHP- true, but it didn't allow massive urbanization beyond the limits of the small mill towns.
Modern Hydro is much cheaper, but in the first world is built out already.
Then you have 3 gorges.
Wow. That will buy the Chinese some breathing room.
Coal and nuclear are going to be filling large gaps.
Solar and wind are still small potatoes.
The more I thought about it, the more I realized Kunstler was right, but just too sudden and too fast.
Change will be gradual. The comments about rebuilding and repurposing existing building stock are apt.
JIUQUAN (Reuters) - China started construction of the country's first 10-gigawa wind power base in Jiuquan of northwest Gansu province on Saturday as Beijing seeks more clean power to fuel its fast economic growth.
China, the world's second-largest energy user, has said it would bring its total wind power capacity to 100 GW by 2020 from the current 12 GW, part of a broad energy target to generate 3 percent of total electricity from non-hydro renewable energy.
To that end, the National Energy Administration (NEA) has planned six 10GW-level wind power bases in areas rich in wind resources such as Inner Mongolia, Gansu, Xinjiang, Hebei and Jiangsu.
Anyone have a tally for how much MBS and agencies the Fed has bought? How near are we to the current $1.25tn limit? At the present rate, how many days until the program runs dry? Agency Mortgage-Backed Securities Purchase Program - Federal Reserve Bank of New York Federal Reserve Bank of New York - Permanent Open Market Operations
,
Anyone who talks about the $787 stimulus instead of the Fed activity completely misses the point. $1.25tn disbursed in months, versus $787bn spent over 6 years, most of which is tax cuts, the remainder is backloaded spending, and the transfer boost has only left a crater now that the smoke has cleared
Visiting my elderly mom upstate. 10 or so years ago my dad had a full bathroom downstairs added to a 4/2 suburban home...including every possible upgrade in heating/insulation, etc. Idea was as elderly folks, they could close off the upstairs, skip the stairs and live comfortably. Their street in an old, well-established suburb is now full of mostly elderly widows, aging in place. And why not?
Schools in this burb are excellent, but they were built for the boomer hordes. Now the class size is 20. There's not a single for sale sign in the neighborhood, and just the occasional family with kids. This place is light-years from Cali...could be a different country.
EvilHenryPaulson (profile) wrote on Sun, 8/9/2009 - 2:28 pm
... versus $787bn spent over 6 years, most of which is tax cuts, the remainder is backloaded spending, and the transfer boost has only left a crater now that the smoke has cleared
But, but. I was sure we were told that tax cuts were a bad thing. I coulda sworn they were so evil that they would be reversed asap.
Regards "users" and "guests". Might I suggest; "mainliners" and "snorters"?
So I have to ask, what use is there for a prediction to 2030? - EHP
Long term infrastructure planning, e.g., roads, bridges, hospitals, schools, etc. In Oregon, it's a legal thing-- our land use laws require long range plans. For example, currently Portland and neighboring Washington County are fighting over who gets more developable land, essentially. The winner becomes the dominant economic power in the region.
Counterpointer
I tried, but I'm not very good at navigating his site. Get too distracted by the atom bomb animations.
,
,
,
So the Fed has been buying & selling the MBS, surely they are losing measurable amounts of money on the spread and fees charged by the 4 anointed managers. Where the heck do they record that on H.41?
With probable future risks to real estate asset pricing, even renting vs 'owning' isn't very different.
Owning is a pretense for most people (once the 'housing always goes up in price' bubble has popped on the surface of your beer), since it is at best a term of art rather than descriptive. It takes a long sequence of mortgage payments to get to 50% equity once we return to CPI-like housing price appreciation.
While this global cartel succeeded in sustaining the illusion of scarcity, by the 1990s it began to put increasing financial strain on the company's finances. Ironically, what sealed the cartel's fate was the Oppenheimer family's effort to tighten its iron grip on De Beers through a leveraged buyout in 2004. Up until then, the Oppenheimers, who only owned about 8 percent of De Beers relied on a maze of interlocking companies to control it. After the buy-out, 40 percent of the company was directly owned by Oppenheimer family's holding company and 45% was owned by the Anglo-American Corporation, in which the Oppemheimers were major share-holders. But to effect the buy-out De Beers had borrowed over $ 4 billion from banks, who imposed covenants that restricted its ability to borrow further to buy diamonds for its stockpile. "Debt drove the deal, as it always does," one shrewd London banker observed. As a result, he added "The new De Beers is not the old De Beers."
Scone, we have a developer locally (wheelchair-bound, by the way) who's built three ADA-compliant complexes -- two apartment houses and one hotel -- and has just now run out of money. He's running the first apartment house himself as a handicapped-friendly residence, but he's selling the second which has been not quite done for the last four months (just got the money to finish the stucco job), and the hotel's for sale, too. We may well see more of it, but now is not the time.
Aging in place seems a good way to go, if you like the place you're in; people I know who've done it, and have the money to do it (ie, finance their old age without selling their houses) seem happy. You may pay $10-20K a year for the services you need done for you -- housekeeping, maintenance, landscaping, laundry -- but that's not such a bad deal for staying independent. I know one couple who's prepping for it by building a granny unit in the back yard; when they get that age, they'll move back there and rent out the front. For now, their college kid lives there.
but the question wasn't where will people live, it was about whether they would own or rent - EHP
The long range plan pretty much determines that, because there are complicated zoning formulas that tend to "herd" the rentals into certain areas. And the amount and type of each zoning sub-type directly effects the rent vs. own equation. Plus a lot of other stuff.
While this global cartel succeeded in sustaining the illusion of scarcity, by the 1990s it began to put increasing financial strain on the company's finances.
The newish manufactured diamonds (of jewelry quality) are so good that only the laser microprint on the stone tells them apart - with a huge, and growing price advantage to the grown stones rather than the mined ones.
Wearing a diamond ring in bad times isn't a very good thing anyway.
Wait, what are the actual numbers of people who move to RENT after 75? In what crazy upside down world does assisted living or nursing homes count as rent? My grandmother held her house in her tight little fist until we carried her out of it kicking and screaming 'cause she was trapped in an Alzheimer's hell in that damn house. But she damn skippy ain't renting at 9k a month for a nursing home -- and that's in cheap living Buffalo NY and it ain't the Ritz of nursing homes either. I seriously doubt 75+ age people are moving into regular renting stock in any large percentage. Hell, until we liquidate the house to offset the nursing home I guess grams is still a "homeowner".
scone
Given that developments are going to slow down for a while, I would say take 5 years and make a new plan then. It's a waste of money to make any serious long term commitments when there is no pressing need. Just let things grow organically for now
That can work fine as long as you have a one-story home and can stay out of a wheelchair. And as long as the wheelchair can fit through the doors. You also need about a 5 foot diameter turn-around in a bathroom. I don't know if you've ever negotiated the trip from a wheelchair to a toilet. I have, and believe me, it takes a lot of space and some strategic grab bars.
One thing people don't seem to take into account is the price of home care. It's not just housekeeping-- at some point you need more assistance, and a lot of people have to sell their home to pay for it. That limits the aging in place scenario, to the first couple of decades after retirement, it seems to me. At some point, you have to generate the money for the last stage of life, which is surprisingly expensive.
I would say take 5 years and make a new plan then.- EHP
Shrug-- that's not the law. Land use laws, especially in Oregon, are tight as a drum and extremely demanding. You can't just make it go away-- it's at the state level. We even have a special state-level court, the Land Use Board of Appeals, to adjudicate issues that rise from the local level. Some of this stuff goes up to the Supremes. That's the way it is.
"At some point, you have to generate the money for the last stage of life, which is surprisingly expensive. "
Which leads me to the statement of, If you have something you will lose it and if you have nothing the government will provide for you.
Those who work hard and smart again lose out to those who piss away their life and get another free ride. After taxes does it really pay to work your way up from the bottom? Don't forget if you have any left then the inheritance tax gets after your dead.
Funny, seeing the hell my grandmother put herself through to stay in her house both my aunt and my mother radically readjusted their ideas of what they wanted their future to look like. Suddenly, being attached to the house stopped being important. Both sold their houses and relocated to be near us so they would have walking distance amenities (this is in Oakland, Ca) and family nearby to rely on when that time came. We're going multigenerational in the next few years, but the buy-a-quadplex way, not the everyone-in-a-SFH way. Never thought in a million years either of them would be willing to move for any reason, but there's a cost to the stay-here-til-I-die mentality.
I think I may have found some of BomberBen's dollars, yo.
Aug. 10 (Bloomberg) -- Turkey’s central bank will adjust its current-account records this week as it struggles to explain the origin of $18 billion in foreign currency inflows that have reduced the need for International Monetary Fund loans.
The inflows since October, which economists say came from companies paying down debts using bank accounts abroad, have helped drive the lira to a nine-month high and trimmed the current account deficit, reducing the need for a new IMF loan.
Aug. 10 (Bloomberg) -- Ben S. Bernanke deserves another term as Federal Reserve Chairman on the basis of his success in battling the financial crisis, said Princeton University Economist Paul Krugman, a winner of the Nobel Prize.
“He’s earned the right to a second term,” Krugman, 56, said yesterday in an interview in Kuala Lumpur. “He turned the Fed into the financial intermediary of last resort. When the banking system failed to deliver capital where it was needed, he put the Fed into the markets.”
broward (homepage, profile) wrote on Sun, 8/9/2009 - 2:56 pm
Very low taxes and low energy usage
Don't worry, Rob, these problems will be fixed shortly.
I know but my meager satisfaction will be in being on the fantail of this Titanic.
We are already seeing some small changes in buying habits with Los Angeles' new mega sales taxes.
Did you know that you cannot drop off the electric grid? You will still get a bill for your "share" of the stranded costs to compensate Edison for the profits they wouldn't have made on the nuclear power plants they never built.
scone,
Take last 20 year plan, resubmit. In the mean time, the shorter term plans will be very responsive to any demand out there
EHP, honey, it's not up to me. The planning process involves hundreds of stakeholders, dozens of meetings, several election cycles, and lots of consultant time and money. It's mandated at the state and local levels, and the process proceeds no matter what is going on in the economy.The process itself is highly codified, and has to be done the way the law says or it gets thrown out in litigation. (There's always litigation anyway, but that's another thing.)
I don't know how they do it in Canada, but that's the way it is here. Maybe you have the "shire" system? If so, go down to the Commissioners planning meetings sometime-- that will give you some idea of how drawn-out and complex the process is.
Blame Greenpeace. I worked with a guy in Idaho, he built a house in Robie Creek and the power company wanted something like $10-15K to run power lines. He told them to screw off and built his own solar & propane-powered 12-volt system for pumping water, etc. Seemed like a lot of work and risk to me.
Yes, that was probably the "die" part of the equation. - broward
Actually, "die" was part of the plan. Step 4, in fact.
1) Refuse to move.
2) Hide all signs of dementia.
3) Die.
4) Be eaten by cat.
5) Be found by mail person or whichever family member got worried first.
She loved that plan. If not for the Alzheimer's, every visit to her would be like the end of a Scooby Doo episode: "And I would've gotten away with it if it hadn't been for you meddling kids!!! Get off my lawn!"
scone,
I'm just saying there isn't much at this point in asking what will be the ownership/rental split in 2030. It's like McDonald's worrying about the McChicken / Big Mac split in 2030. There's no need to prepare far in advance for a shift, and there are much larger questions to be answered first. It's not about what kind of development is done (eg apartments vs SFH), but the financial structure on the asset which itself may or may not produce a noticeable cultural impact (eg Does ownership really make people better citizens? I haven't seen a study to back that up yet)
i blame the federal reserve, and bernanke as a board member at the time for the pre-08 policies which contributed and even aided this financial crisis
having said that, i agree with krugman that absent radical and invasive federal intervention (my words not his) the country now would be in the grips of the worst depression and financial crisis in a century and maybe even in the history of the nation
my problem is that the depression or hyper-inflation may have only been forestalled not averted
i hate that obama and company (geithner summers bernanke) have supported the banksters rather than taking failed institutions into receivership in a resolution trust type national corporation...a bank of the united states kinda deal to get us over the abyss
There's no need to prepare far in advance for a shift, and there are much larger questions to be answered first. - EHP
I understand what you're saying, but that's not the way the process works, and honestly, it can't work like that. This isn't the academic world. If you waited until you knew how things panned out, you would be far too late to do the zoning, planning, roadbuilding, etc. The environmental inpact studies alone can take 10 years. You have no choice but to go ahead making educated guesses about the future. For example, Metro bases some of its planning on population estimates that go to 2050, IIRC. It has to be that way, for a myriad of reasons that would take a long time to explain.
which is nothing but a complete plagiarism of CR's original post without attribution. I hope CR will take prompt and vigorous action against this moron.
I've been searching the web for homes and condos in order to make rough price/cost comparisons to where we live now. "Now" is a 2BR 2BA condo on the tenth floor of a fifty-year-old building on Connecticut Avenue in DC. The real estate tax is about $1,500 annually. The unknown unknown is what the condo fee will morph to over the years, as very expensive heavy maintenance items are planned over the next ten years.
Another unknown is the cost of energy as the Obama Administration's war on energy production kicks into gear. This means food, light and heating costs will soar. So the condo fee and energy-related living expenses can go nowhere but up, I'm afraid. Still, we are not automobile-dependent.
Then there's medical care, as in quality and in access to. Here the condo location shines, because medical care is very accessible via public transport and the Kaiser-Permanente facilities that I use. The quality is at least adequate, sometimes more so. The further one lives from the urban core, the less available are medical facilities. Outside certain cities, staffing of medical centers by GP MDs is going to be increasingly rare, Where there are MDs, they will be overtaxed. Hospitals of all sizes are in precarious financial condition, and they are reducing services and/or closing at an increasing rate. This means one must consider living near a hospital/medical facility that has a future and can attract MDs
Moreover, I am stunned by the property tax estimates on realtor's web sites for many of the thousands of suburban and exurban homes for sale. Clearly, the school districts are attempting to squeeze homeowners to pay for teachers' retirement benefits already committed. This is no bargain for the over-75 crowd.
Finally, there is the issue of street crime. As societal indicators continue to worsen, there is a need for separation of neighborhoods and ample police protection. This has been done in DC with a vengeance. Again, one must look to where protection is available and where it will continue to be funded. This suggests again that an urban location is preferable--like across the street from the entrance to the Denver Country Club, as one member of our family has it.
All indicators to me suggest an urban choice. I see living outside a city as a risky long-term option under most scenarios. Add in urban amenities--museums, concerts, etc., and it gets even better.
While we wait for a link to the paper, here are links to a couple of "very similar" power point presentations, which at least give a flavor of this guy's enthusiasm for his subject:
Rocky R +1,000,000
"1.) crime has to drop to levels comparable to the burbs
AND
2.) either public schools have to improve to match the quality of those in the burbs or people must be allowed to substitute private school payments for property tax payments (i.e., vouchers)"
Neither objective is politically feasible, so the suburbs will grow, nor shrink.
New urbanism is a fantasy.
great and well done i really congratulate to you on this success mate !
The housing bubble and construction for family is not difficult so i think we csholud have to gain more momentum to reach the goal!
Research on the home owner Professor Arthur C. Nelson, Director of the Metropolitan Research Center at the University of Utah, has written some very good points on the Research work for home owners. a dramatic shift in American cities based on changes in housing preferences and Democratic situations. His belief is very good and i want to say that his research made so many changes in my Mind !
so a very good selection and a very nice research work ! Reverse mortgage lenders
We have discussed this in detail in our Housing In Crisis report. (accuriz.com/RealEstate_Reports.aspx) There was a significant oversupply of housing built between 2000 and 2008. which played an important role in the housing bust. Now that we are in the beginning stages of recovery, builders are downsizing and buyers are more frugal. Some of these trends noted in the post make much sense.
The big question is whether the huge numbers of single elderly households will move out of their oversized homes into different housing- and create a market for smaller more urban homes. If not, then I predict the developers will continue to cater to new family households that can't get into existing housing because it is still occupied by seniors. Unless, of course, energy costs go way up.
Nemo?
Wow I read the whole thing and still get number 2.... Good post... I hope the re-urbanization of America continues... Its done some wonders for some older cities...
Meat before Dawgs.
Meat before Dawgs.
LOL - I was thinking the same thing.
My thoughts about retirement change with the years and the economy.
I first thought I would have a defined benift plan and a gold watch.
Then I could build a retirement with a 401K.
I thought I would retire at 65, then they changed it to 67.
At first I thought I would pay off my house and just live in it. Then I could get a reverse mort. then it became an investment item. Then it all went to hell.
Now I have a different plan, but in the 10 to 12 working years I have left (no I do not want to work forever - thank you very much), the only thing I am sure of is that I will have to rethink my plan yet again.
one big factor, impossible to predict, is the cost of housing relative to incomes
,
In states where this is high, such as California, there tend to be more people living in each household.
,
If housing became similarly expensive across the country (could be from anything to reduce disposable income whether it be increased saving or higher taxes, or even changes in mortgage finance)... instead of the 18mn vacant housing units reported by the Census last time I checked, there would be an additional 14mn vacant housing units or 32mn total which is 1 in 4 counted housing units
,
I would only consider cultural effects for the first generation immigrants (such as having 3 generations under one roof), and wouldn't worry about that the way you might when considering birth rates amongst cultural lines
,
I do wonder what role the lack of retirement savings will have in perhaps removing choice of housing for the elderly
The only thing I have really learnes is that I can count on pretty much nothing being what it was ment to be or touted to be or intended to be.
The rules change after I am way into the game.
Now I have a different plan, but in the 10 to 12 working years I have left (no I do not want to work forever - thank you very much), the only thing I am sure of is that I will have to rethink my plan yet again.
If you have 10-12 years its likely to be rethinking over again and again - this is one fluid environment [fluid as in flood].
nades, I've asked for permission to post the paper (I'd just link to it from my blog). I think it is interesting and significant implications. I do think Nelson is overestimating the shift - but if he is correct, it will be dramatic. And I also think he might be 10 years early.
best wishes
The great advantage for the powers that be to have a prolonged housing bubble and much building of not-needed single family homes was pretty simple...
Everything else America used to do well, could be done elsewhere much cheaper, but China couldn't undercut us on the value of land now, could they?
we will need a new urban core to be able to deliver services to the elderly. As somebody who volunteered for "Meals on Wheels" I know first hand the challenges of delivering meals in a suburban setting. I think what is true for M/W is true for transportation etc as well. Whether people end up renting or buying in the city I don't know but I have to wonder who is going to buy all the MCMansions from the boomers?
Take a big loss on the house or give up on services may be the choice that a lot of people will confront.
I hope he agrees. I also agree he is talking dramatic shifts.... fingers crossed
Our house was too big for 2 people. But my mom moved back in and
now it's not too big. If she lives as long as 92 like Julia Childs, we will
be fine for 7 more years. I have a feeling one or both of our kids will want
to move back depending on how the economy goes. Nice to have the
flexibility. The hub doesn't plan to retire for 4 more years.
lawyerliz- we may not realize it but perhaps multi- generational living maybe the best thing to come out of this financial mess. It might help remind us all what is important in life and what is not.
Whether people end up renting or buying in the city I don't know but I have to wonder who is going to buy all the MCMansions from the boomers?
Elder co-ops? Hospices? Maybe go multi-generational. Who knows.
That's what happened thru much of human history.
Nades, my mom lived in her 4 bedroom 3 bath home until she was 80. I think that is common - I've seen it happen in entire neighborhoods - everyone is pretty old, and there are many single person households (mostly women) all living in large homes. This might be inefficient use of space, but it is what happens.
Nelson is suggesting people will prefer to move to a more urban environment to enjoy the amenities - and I've seen that too. It will be interesting ...
best wishes
dryfly
I have heard of elderly people pooling their ressources to make their own mini-retirement home (installing a lift, renovating the bath, brining in a nurse once a week) BUT the key thing for them is being physically close to a hospital because of testing and treatment. Being able to get around and socialize without a driver's license is just a bonus along with any community seniors' centre nearby.
Basically saying that elderly people living in a rural area can do it with a developed support network, in an urban area because of amenities, and it seems doubtful for a suitable model to emerge in the suburbs
This might be inefficient use of space, but it is what happens.
CR - My father did the same thing until he died at age 84... but he got a lot of support - from me 25 miles away and from his neighbors. Increasingly tough to rely on.
My mom lived in her small house til she was mugged at 85. Lots of old people
there but new generations moving in. Urban amenities to the extent Baltimore
has them. Trouble is Balto is no Boston. Except the Inner harbor area, which has
been duded up and has lots of mixed use.
Julia & Julie has one other stark message. The urban world of Julia is beautiful.
Of course, she's relatively rich.
The urban world of Julie is physically very ugly on the outside. She & her husband are both
working and should be able to live somewhere slightly less ugly, one would think.
This story relates to my vision of the Post Internet Society which will be marked by increasing cannibalization of resources. We are entering a period of dramatic computer efficiency which will pit man against machine and only the strong will survive and those that will survive will be very aggressive as they take what they can from the weak!
Read Asimov. Think hard.
EHP - some towns are actively promoting this. Rochester MN [home of the Mayo Clinic] is one. My little town 45 minutes from Rochester is doing the same thing. It is a good idea and will lower the cost of carrying the old and provides 'business' for people working in those towns - the elders tend to buy less but buy local.
After the kids left and we retired into a house half the size of the Mc Mansion and it is great. Did consider the later years and the flexibility of the place. Hopefully I get to stay here till the end.
I think the incredibly cheap 4+ bedroom, 3 bathroom, 3-car homes in every American suburb will be quite a lure for immigrant families - typically extended families and families with lots of kids. That will extend what is already a very noticeable change in US suburbs.
When i was a kid I never heard any language spoken but English. Today, at Walmart or the local library I can hear several just during a brief visit.
That change will not reverse; it will accelerate.
I think the incredibly cheap 4+ bedroom, 3 bathroom, 3-car homes in every American suburb will be quite a lure for immigrant families - typically extended families and families with lots of kids. That will extend what is already a very noticeable change in US suburbs.
When i was a kid I never heard any language spoken but English. Today, at Walmart or the local library I can hear several just during a brief visit.
That change will not reverse; it will accelerate.
This is quasi-on topic. Last night, I posted about how the demise of Mutual Bank is cutting the yields on the hot-money CDs they created.
At times about three years ago, Corus was paying 3% more on one-year CDs than the national average for that maturity. Mutual Bank was paying about 2% more on three-year CDs than the national average on that maturity.
Now, the FDIC has stepped in apparently put an end to hot-money, Internet-sold CDs. The ceiling permitted on one-year CDs seems to be 2.5% now. There's a trend toward the highest-yield CDs being locally available (to reward loyal customers and walk-ins, not hot-money Internet shoppers). From a regulatory point of view, this was probably necessary to cool off the hot-money CD trade.
But it's having devastating impact on the incomes and standards-of-living of many seniors. For quite a few middle-income and affluent seniors over age 70, FDIC-insured CDs are pretty much "the world of investing." For more than a decade, they were able to rely on competitive CD yields to maintain a good standard of living. Now, with govt price-fixing of CD yields, combined with Bernanke's artificially low rates, many seniors are seeing their incomes cut by 30-40% or more.
It's bad for the economy, and if it continues it may result in some downsizing by seniors, out of single family homes into lower-cost communities and ALFs.
An ALF is not necessarily a step up, even if you need some assistance. For some seniors, ALFs are a dog's life.
dryfly
Have you seen what retirement homes charge? I know of one that's like disneyland for seniors, but it's just wasted money for the most part because it doesn't make them happy. The gimmicks wear off real quick in that environment. In that sense I think it's a great idea to at least bring down profit margins, and it probably has greater social benefits to the seniors who can manage it as well
The kids of the kids will speak a worse and worse version of their native language.
The 3rd and 4th generations won't speak it at all. My granddad spoke german, and yiddish
surrounded us, but all I learned in German was one, 2, 3.
Likewise the strong families of the immigrants tend to break down. It's sad, but there it is.
Maybe less money will reverse this.
Urban amenities to the extent Baltimore
has them. Trouble is Balto is no Boston.
This caught my eye in CR's post. Outside of NYC, Boston and San Fran, what amenities do urban areas offer that suburban areas don't? Maybe nightlife, but at retirement age that isn't important. You can always visit museums or other cultural attractions if you want to by car.
You can watch Matlock in the city or the suburbs.
speaking of German, did Werner ever come back to say I was/we were right? Must seem painfully obvious to him now that Germany would feel the downturn
They offer transit. My mom still drives a car tho, and I doubt she would be willing
to get on Balto transit.
We think aging in place is the most desirable choice. There is one ward in DC where there is a community-based organization that will provide services for a modest monthly fee - shopping, driving to appointments, house repairs, clerical etc. Hopefully one of these will be set up in our ward as well. Meanwhile, we can shift for ourselves.
dr munch
If you don't engage the world, and just live passively, you tend to deal poorly with any ailments that come up and die earlier
pavel.chichikov
This is a complete generational split. By the time I am elderly I'll just take steroids or have a set of robots to work for me
EHP - the minimalist ones are fairly cheap and more than adequate. My father was looking at them in his last years and all they were was an apartment in the downtown of a small city. Everything he needed was within a block walk plus had some features of assisted living but minimal. The cost was something like $800/month for him [full cost because he had significant assets] - those on tighter budgets paid quite a bit less [subsidized but much lower cost than a full blown retirement complex].
There are options available to us if we think hard. But thinking hard is hard so we don't.
EHP: Maybe there's an interactive Matlock.
dr munch
scary thought, instead of teenage vegetables we'll have octogenarian vegetables
"pavel.chichikov
This is a complete generational split. By the time I am elderly I'll just take steroids or have a set of robots to work for me"
EHP, I can understand the robots, but what will steroids do for you?
crazyv and sdtfs, your last comments in the last thread, on health care. Excellent points. And very important. Please keep contributing here on this issue.
Isaac Asimov on Bill Moyers World of Ideas pt 2
See and feel:
YouTube - Isaac Asimov on Bill Moyers World of Ideas pt 2
Read and think: Bill Moyers World of Ideas*
Isaac Asimov**
Bill Moyers World of Ideas - Isaac Asimov
MOYERS: What about the subject you've written so much about - the population explosion? Right now, the population of the globe is over five billion. You've warned us about what will happen if it continues at its two percent growth rate per year.
ASIMOV: Actually, the growth rate is down to one-point-six percent, but with the higher population, it's the same amount in actual numbers: eighty million a year. By the year 2000, it's going to be perhaps six-point-five billion.
MOYERS: That's just twelve years from now. How many people do you think the earth is able to sustain?
ASIMOV: I don't think it's able to sustain the five billion in the long run. Right now most of the world is living under appalling conditions. We can't possibly improve the conditions of everyone. We can't raise the entire world to the average standard of living in the United States because we don't have the resources and the ability to distribute well enough for that. So right now as it is, we have condemned most of the world to a miserable, starvation level of existence. And it will just get worse as the population continues to go up.
If you don't engage the world, and just live passively, you tend to deal poorly with any ailments that come up and die earlier
Agreed. But I don't think that urban living is less passive than suburban though. You can hole up in an inner city apartment as easy as a suburban McMansion.
pavel.chichikov
I just used the term in a general way to describe something that isn't yet known, or perhaps I mean conventional steroids that do reduce healing time which would mean I would have to have some kind of artificial liver and kidney. that's overthinking the original point, which was augmenting my life either from inside my body or outside of it
Maybe he means human growth hormone.
Time was when most in their late 70s were veggies.
My grandparents checked out in their early 70s.
Gary Moore had a tv show in the 50s called life Begins At 80.
What I recall from this is that the life involved was good enough
because the oldsters could get on the set and didn't drool.
My mom liked the Julia movie. Ate the homemade apple cobbler,
and then some store bought lemon merangue pie. And
now has said that the rising timer for the dough has rung, so
off to see whether it needs more rising or not.
If she gets to the point where she don't know who we are, that's one thing. But she's nowhere near that, and hopefully won't be.
Disempowered Paper Pusher
True, but the converse is not. You most likely will not engage a variety of people as an elderly person in the stereotypical suburb.
Nobody engages in a stereotypical suburb.
Oh yes, this story (Research on Homeownership Rate through 2030) reminds me of one of my pet projects, the global population growth rate versus the growth rate of economic stuff, like housing inventory. The over-population of homes is way ahead of actual human growth, so who will fill the empty homes??
See: Vandos and Bandos
Calculated Risk: Vandos and Bandos
Bandos - squatters in abandoned homes.
Vandos - vandals that damage abandoned homes.
Later....
I will believe in the "new urbanity" when it actually happens. It appears to me there is a lot of wishful thinking in these predictions.
I agree.
List of countries by life expectancy - Wikipedia, the free encyclopedia
It's amazing, the ability to add billions of person-years just by shifting that little metric.
much will depend on the course of oil prices. If we are near peak oil, the urban centers and inner rngusuburbs, with good public transport to the urban centers wll become much more desireable. Increased telecommuting may blunt the trend a little in a high energy price environment. Peak, or effective peak oil, will be the death of exurbia
I don't see elderly engagement as a function of location. It's more to do with what the person wants to do. Some elderly are content with sitting on the couch and watching TV. Others like to socialize, volunteer, etc. As long as they can drive, those who want to do something are fine in the suburbs. If they can't drive and are in the city they need a top notch public transportation, which is rare.
dryfly and others re housing lessons learned, yep me too
as a kid my mom and dad were military and we moved from base to base
(i attended 3 different schools in 4th grade, an indelible effect on my life both good and bad)
then as a traveling salesman and moving up the ranks to VP of a major us petrochemical co we were transferred all over north america and my dad and mom must have bought and sold at least a dozen houses... never fully owning any
he started a company and made a huge pile of money and employed a wholebunch of people,,, which he refused to "let go" until the bitter end as he lost it all when the texas oil patch went bust...all except
his last million
and then my dad got cancer (no health insurance right after his company failed) and they lost everything, absolutely broke
today they live on social security and medicare
the lesson i learned from this was.... i did all the opposite
stayed in one place, built and owned my own house from day one, and saved like a child of the GD
That's quite a story, Mock.
Peak, or effective peak oil, will be the death of exurbia
As we now know it [far flung bedrooms connected to the inner core]... might actually become MORE viable given a few structural changes.
Ask yourself - how easy is it to produce goods for the inner core in the inner core? Ans. - damn hard [logistical nightmare]. Next question - how hard is it to ship them around the world in a peak oil environment? Ans. - damn hard [expensive]. Where is a place with relative space to store & ship & yet some population to produce goods for the inner core? Ans. - exurbia.
I see that as more of a likelihood than abandonment.
Mock, I'm a millitary kid too.
We move allot, 4 schools in 2nd grade. Dad retired when I was 11.
Never lived anywhere more than 5 years after dad retired. I love travel, don't care if I have a settled house. My home is where I am.
Plan on travel and having 2 small, cheap places to live when I retire.
You and I sure took away very different things from the same life style.
rb
yeah wild ride
my brother (geologist) and father (chem engineer) were oil traders for a time in NYC...
i was the black sheep of the family and declined to join the company
i was never comfortable with their wallstreet friends... so went my own way
I will believe in the "new urbanity" when it actually happens. It appears to me there is a lot of wishful thinking in these predictions.
Yep. It also ignores a bunch of realities. People have to be more mobile due to today's labor market, kids have to taken to day care, spouses can commute every day to jobs a hundred miles apart etc.
"lan on travel and having 2 small, cheap places to live when I retire."
josap: where? (the 2 small places to live)
Health care as stimulation and meaning for our elderly should be considered as a primary cause of the high expenditures for health care after 65.
What's it like to have going to the doctor as the high point of your existence? Health care professionals treat you as a person and listen to your problems. Is it a surprise that in a twisted way our elderly seek validation for being alive by their health problems?
My grandmother is 72 and we talk every Sunday. Discussion of her health, medications and doctor visits are always a significant portion of our conversations. I've offered countless times for her to come live with my family with the hope having an active life will help her health. She always cites her need to be near her doctors as to why she won't move. Warehousing(ignoring) our elderly in assisted living was supposed to benefit their well being and provide better care. The reverse seems to be the case.
josap
i half agree..just like you ,i enjoy travel
but just didnt want to move my home
my wife says i have an insecurity complex
to which i say hey honey make me feel secure!
dryfly (profile) wrote (in reply to...) on Sun, 8/9/2009 - 11:57 am
Meat before Dawgs.
LOL - I was thinking the same thing.
Nelson is so wrong I am at a loss where to start. It's like someone made a mistake and granted Kunstler tenure someplace. I'll need a few hours to go over what CR has excerpted here and hopefully the full paper will become available for further dissection.
I'd love to get ahold of the evidence for just; "important changes in housing preference. " That's an aspect of American stated and revealed preference that last inflected in 1910. Without seeing the work his pronouncements appear to be the same urban renaissance is just around the corner wishful thinking prourbanists have been pushing since the Johnson Administration.
CR,
The table of projections is in 1000's for the first three columns of numbers, correct?
I was raised in the house my mom was born in.
She has lived 4 places in her 85 years, including here.
I've lived 8 places not including college. I'd like to travel,
but the hub doesn't want to set foot on a plane--makes him
very sick.
"pavel.chichikov
I just used the term in a general way to describe something that isn't yet known, or perhaps I mean conventional steroids that do reduce healing time which would mean I would have to have some kind of artificial liver and kidney. that's overthinking the original point, which was augmenting my life either from inside my body or outside of it"
EHP, for some reason what you write makes me feel moved, emotionally, I don't know why. Perhaps I don't want to know, right now.
I wrote a poem today called The Library of Future War. Maybe part of it is that we don't really know what the future will bring.
THE LIBRARY OF FUTURE WAR
The library of future war
Lights inside were deeply dimmed
Within the roundels, at the seats
Youthful men wrote letters home
Quietly the soldiers wrote
Thinking of the coming war
History inside these notes
That must be written now, before
Afterward will be too late
So now when light is deeply dimmed
The pages of each human fate
Continued or perhaps an end
Life that is already shelved
A line of titles spine by spine
One may be a life fulfilled
Or else unfinished, out of mind
A line of titles, war by war
And they have little time to write
It must be written now, before
The servants here put out the lights
Pavel
August 9, 2009
Well, I think my next project will be an urban 4-plex with handicapped bathrooms on one floor.
Infill. Rental. Should be able to section 8 it for elderly and get an automatic check every month. Build for durability and just let the dollars roll.
The medical stuff starts having a significant impact past 65. I note George Ure of urbansurvival.com just made it past 60- when the true medical complications ensue, I think he will be back at least part time in an urban environment. My parents experience includes more use of medical facilities (including a knee operation on Monday)- and having ready access to emergency rooms and doctors pretty much ensures an urban environment.
Your survival of a heart attack decreases rapidly with distance from a decent cardiac unit. Your treatment for cancer is more difficult if you have to travel to an urban or suburban center a significant distance three times a week.
Rural medical care is usually less than urban, suburban, and exurban.
With the coming wave of boomer retirement, access to healthcare will be paramount.
CR- check out TW+A Research - Economic Policy Analysis and Mature Market Research Specialists
Send Gene Warren an email and he will send you a bit of his proprietary research to link to- it is a little more on the mark than what you have.
Someday this war's gonna end...
There's a real need for "elder architecture" coming up, as well as remodeling. The biggest problems are stairs, hallways, baths, and kitchens. The house doesn't have to be totally ADA, just suitable for wheelchairs, and that implies quite a bit of remodeling work. The bedroom area is always the worst, because you need a 36" door and about 48" hallway-- and most houses don't have that, so you end up stripping out the whole bedroom area.
sorry guys. i love urbanism. i've lived in the middle of major cities for 9 of the last 10 years. now, with children, i've left for the burbs. for cities to rise again in earnest, a couple of things have to happen:
1.) crime has to drop to levels comparable to the burbs
AND
2.) either public schools have to improve to match the quality of those in the burbs or people must be allowed to substitute private school payments for property tax payments (i.e., vouchers)
OR
3.) young people have to stop having kids
jobs will go where the people (who will work) are as transportation costs increase, making commuting less viable, companies will have to relocate... not the people.
RockyR
1 & 2 are met in Vancouver, I think it is that way across the country. Maybe the US is still experiencing fallout from the race riots and white flight of the 60s to an extent? I really don't know. The biggest problem up here is that there are few large cities, mostly in a straight line from west to east near to the border, which limits choice while the housing costs are high
,
Pavel, I don't know what to say which is probably the right thing because you can fill in all the gaps yourself
Dawg, what you are missing is the impact of less resources on the retirement potential of those 74 million boomers.
Smaller and urban is cheaper than larger and suburban.
Your monthly burn rate in a large house is much more than a small house, and with real housing price stagnation built in for the next 25 years, early transition to rental property or smaller houses will be a winning move.
Look at josap's comments about two small places to live when retired- that is a well thought out response to future changes.
scone, hallways are inefficient in any construction under 1200 sq ft.
As for Kunstler, he is unbearably influenced by the decaying Erie canal zone he inhabits.
An area that reached it's zenith before 1900.
RockyR most folks retiring no longer have children to deal with- that is the metric that drives the new urbanism.
The failure was that those moving in the city would be rich, and hip. Instead they will be poor or middle class and need hip replacements. Cities that deal with that demographic and provide separation between the urban poor slums and the new settlements will prosper, and those without insufficient policing will fail. Ironically, these improvements will regenerate tax bases in areas where old folks feel safe.
Hip and young will soon be far outnumbered by the boomer oldsters.
Gray Panther revival is next.
Someday this war's gonna end...
RockyR,
I'd add:
4) Job tenure has to increase.
Having to uproot yourself every time you take a new job isn't fun. In America today you're going to change employers far more often than you did 50 years ago. I'd love to try urban living, or at least as close as I can get to it in Arizona. I'm averaging 2 years or so before each job change. I'm certainly not going to move that often.
fwiw the cities in a straight line, with high costs of living is probably true for the entire west coast due to mountains in the east and ocean to the west. As for quality of schools, I don't know the full scope of it but Jim the Realtor started off his last video at a spectacular high school in Carmel Valley. I don't know if you could ever expect that to be the average high school, seems unaffordable and unnecessary to me
Here is a good link:
http://www.twaresearch.com/newsletters/07_09newsletter.pdf
Look at the delay in retirement the stagnating stock market has generated: (Table 1 on the link)
5.5% delayed retirement from 2000 to 2007!!!
That dam will burst and they will go- delay will only result in more hitting the door over the next five years.
Someday this war's gonna end...
Rob Dawg dryfly
nelson may be right but not entirely for all the right reasons
jeff rubin economist gave a persuasive presentation several weeks ago here in seattle
a summary of his ideas can be found here
Economist: Pricier Oil Means Less Globalization : NPR
transportation costs will push economies towards regional and local commerce
heres a pick which explains rubins reasons for a return to more urbanization
"In his new book, Why Your World Is About to Get a Whole Lot Smaller, Rubin contends that oil, which is currently around $60 a barrel, will quickly top $100 a barrel when the world economy rebounds.
"We're going to see triple-digit oil prices very early in the next recovery," Rubin tells NPR's Steve Inskeep. Furthermore, he says, we should expect oil to stay at those levels because demand will consistently outstrip supply in the coming years.
Rubin argues that high oil prices will have sweeping ramifications and will reverse many of the trends we've seen in recent years in the world economy.
"The model of globalization is not going to be economically viable," Rubin says. "What we're going to find is it's not going to make sense to produce things on the other side of the world, no matter how cheap labor costs are there, when it's so expensive to transport things."
Citizen AllenM (profile) wrote on Sun, 8/9/2009 - 1:26 pm
Dawg, what you are missing is the impact of less resources on the retirement potential of those 74 million boomers.
Smaller and urban is cheaper than larger and suburban.
That's what the urbanists are always claiming. Evidence? Got a dynamic urban area with a lower cost of living to share?
Your monthly burn rate in a large house is much more than a small house, and with real housing price stagnation built in for the next 25 years, early transition to rental property or smaller houses will be a winning move.
Are you sure? I could move to a smaller house on a smaller property and my costs would skyrocket. Instead I've got an exurban California rambling ranch where the largest step is 6 inches to the front door. Nothing else more than a carpet strip. Very low taxes and low energy usage. There's no benefit to downsizing. Certainly I don't see people in their 60s pulling roots, abandoning friends and the familiar for the city experience.
On peak oil, am I just wasting my time in pointing out that serious urbanization first occurred with the discovery of cheap oil?
"Pavel, I don't know what to say which is probably the right thing because you can fill in all the gaps yourself"
EHP, it's right to leave certain words unsaid. We hear them in another way.
There's a reason Rubin gave this speech in Seattle. Figure out why and you know what my answer is.
it is amazing how the Clinton retreads, namely Tyson, but inlude Summers And Turbo) along with the keynesian boot lickers do not differentiate between debt driven revenue growth (the impending return of positive GDP growth) and recovery. memo to the white helo crowd: The two are vastly different
dawg,
Look at the entire rustbelt for cheap urban living. Flynt and Detroit homes for tiny dollars.
Look at North Philadelphia- which is resettling compared to when I was there 15 years ago.
Look at the urban part of phoenix- all of those failed condo conversions- Las Vegas, etc.
L.A. and San Francisco, New York, Boston, Inner Loop Chicago- they are getting cheaper- but slowly. But they were urban and hip.
With the huge oversupply of housing, real returns are going to be paltry- but nominal will be pretty good if you bought cheap enough.
R.D. you are too limited by the Boston/LA dichotomy- the rest of America looks much different from those extremes. Oh yeah, New Orleans for the brave at heart.
Someday this war's gonna end...
"There's a real need for "elder architecture" coming up, as well as remodeling. The biggest problems are stairs, hallways, baths, and kitchens. The house doesn't have to be totally ADA, just suitable for wheelchairs..."
Multi-family building codes pretty much require that now. I work as an architect and everything we have built for years (primarily multi-family and mostly affordable housing) is"visitable" and meets what the codes and ANSI now refer to as 'B' level accessibility. That means no-step entries, 2'-10 or wider doors, blocking in the bathroom walls to add future grab bars, required clearances at plumbing fixtures and appliances. Two level townhomes are exempt from those building code requirements, but funding agencies and housing authorities generally require them on anything they build. In this area at least (Minneapolis) agencies and non-profits have really outstripped the big builders in terms of design, build quality, "green" design, energy efficiency, and access. No granite countertops, however, but the money is spent on a better balance of features and quality.
hes been hawking his book in cities around the country
btw i agree with you that a good argument can be made for lower cost living outside of urban areas
but, i think (guess) thats dependent upon the lifestyle of the individual and local resource issues and more
btw are you angry at seattle... i live quite a distance but good city in my book, as cities go
Yancey- wrong.
Serious urbanization came with coal.
Learn your economic history.
Someday this war's gonna end...
EHP,
we have massive mismanagement of public resource across the board in the US. you think the feds are bad? take a look at state and local authorities. egad! the big cities are the worst. the idiots seem to rule the roost. the suburban cities are small enough that you can get concentrations of folks with enough sense not to squander their resources and to stay focused on the things the community wants, primarily education.
that's a good point, paper pusher.
Why does everyone always assume that shacking up with 3 generations in one household is going to be the one good thing to come out of this? The smug generalization takes my breath away. I see more dysfunction, rudeness and abuse coming from a downsized and forced living arrangement like that, from all generations.
Granted I am an outlier (if I ever do re-marry I want seperate households, side by side townhouses or a duplex being as close as I want to live with anyone) but there are plenty out there that dont mind living in same town or area but will absolutely go ballistic living together.
If it was so great and so wonderful we would have already been doing it. My opinion anyways, mileage may vary blah blah blah
EHP - extravagance is just that. i've been in plenty extravagant schools where the fundamentals suck. again, massive mismanagement of resources.
... don't get me started on Texas and high school football.
/putting head back below sand... have work to do (must... prop up... labor... participation....)
In this area at least (Minneapolis) agencies and non-profits have really outstripped the big builders in terms of design...
I do think of Minnesota as progressive. Oregon (where I live) thinks of itself that way, but it's more honored in the breach. And our codes are county or even town-specific, so requirements are all over the place. There are some 'over 55' cottage developments, but not a lot. Most of the housing is standard issue tract house stuff. The dominant local design house is Mascord, so the overall design quality is not high.
Future construction may have less to do with new demand and more to do with replacement of aging housing stock.
Is the time-to-rebuild the same for urban, suburban, rural, exurban?
Are we stuck with tenements forever (now known as "condos" and "apartments")?
How are all these seniors going to earn a living?
The following is a link to a (ADP sourced) chart that shows service employment, goods-producing employment and manufacturing employment. The latter two have gone from stable to cratering over ten years, but services has yet to crater, but looks very much like it will crater very soon.
No Outside Links
I'd read this as a lot of people like CPAs, lawn servicers, small trades are about to get absolutely hammered. I'm guessing that many older people own or run these businesses.
In my small town the single biggest land lord is the combined government housing.
Those thinking of "design" and envisioning huge new developments in urban areas are completely missing the point, which is that the nation has enough housing, already built, to provide most of the supply needed for the next few years. There ain't gonna be enough new development to make a dent in anyone's lifestyle.
We've got the housing we've got, and for the next 10 years or so it's not only all that we'll need, it's all that we'll have.
Design and urban improvement will be done by adapting and retrofitting existing buildings to meet emerging needs.
Do large American cities give as much as they take anymore, as in days of yore?
Obviously not, as what business are left within the city limits tend to be service oriented, rather than producing anything of substance...
Citizen AllenM (profile) wrote on Sun, 8/9/2009 - 1:48 pm
Yancey- wrong.
Serious urbanization came with coal.
Learn your economic history.
Someday this war's gonna end...
How did they carry those coals from Newcastle?
like donald rumsfeld said
you go to retirement with the housing you've got
(trying to be funny, joking aside you make a good point)
With mighty steam R.D.
Coal was cheap and efficient long before oil. Still is the cheapest way to power anything if you can build a big enough plant.
Of course Carbon trading turns that on it's head.
Coal is the great quiet giant along with green things.
Oil and natural gas should not be wasted as we have been doing- petrochemicals are far more valuable than coast to coast semi trucking.
But the only way to make changes is to make stuff more expensive.
The market will respond well to incentives and disincentives.
The dollar is a key component to driving these changes- when oil stays at $100 a barrel plus for the long term, changes will happen.
Nuclear is also amazingly cheap when you reprocess fuel efficiently.
Plants can easily be built to operate for a century or more if you design with replacement of parts in mind and more efficient heat scavenging systems.
Someday this war's gonna end...
re: Homeownership/Renter, Rural/Suburban/Urban
I honestly couldn't make a strong prediction. There are simply too many factors without clear dominance at this point. What will be the prices of energy and housing. How will new mediums of communication cause work to be done and services delivered in practice, not just theory. What will happen in demographics, immigration, global trade...
In most of the world, there have been plenty of economic incentives towards urbanization.
,
So I have to ask, what use is there for a prediction to 2030? If we could limit the question perhaps there would be a more useful answer. Housing is to a significant extent fungible, and I don't care what financial structure is applied to it. Is there a meaningful dividing line between a 99 year lease and ownership
.
,
re: Last night's Housing Investment & the Economy, http://www.hoocoodanode.org/node/7571
Does anyone have more explanatory alternatives to Housing Drives the economy?
Will single-person households afford a home on a single income?
Homeownership hung around 64% prior to the late 90's housing push, and I expect it to get back there well before 2020.
FDIC: 2006 Economic Outlook Roundtable: Scenarios for the Next U.S. Recession
Meredith Whitney
Page 10, Chart 43
Sixty-four percent was the traditional homeownership rate as far back as the 1970s to about 1994. This is as far back as the data show, so 64 percent is what we really call the "natural rate of homeownership."
Greenspan said much the same, stating that the additional 5% (when the rate went to 69%) was "at risk".
Similarly, the average household size has bottomed and will now trend upward for the foreseeable future due to household consolidation, etc.
Those two factors alone guarantee housing will have an excess supply for years to come.
Citizen Allen M
Not that it is applicable, but strictly speaking Hydropower is cheaper than coal where available
Is the economy's stumbling made worse because it no longer pays to work?
Marginal Tax Rate for a young, traditional nuclear family in say CA or NY: 1 worker earning ~$90K/year, 1 spouse, 1 child
25% marginal federal income tax rate
10% marginal state/local income tax rate
15.3% Social Security and Medicare (15.3% for self-employed, which effectively includes the "employer contribution" which, in absence of the tax, would've gone to the worker too)
10% sales tax on marginal purchase (in CA)
Total: 60.3%
Does not include future taxes to pay for ongoing deficit spending.
Those quibbling with the sales tax inclusion might note that savings is also heavily penalized, in its own way, by (a) abusive market arrangements and (b) likely future inflation due to ongoing deficit spending.
No wonder people would rather be wall street speculators or "cash job" workers... Crime pays and work doesn't!
Could be time to move to a lower-tax state... or a lower income way of life...
Hehe quite the recovery....oh when the rates climb and the Taxes climb, the fun were all going to have.
Buckle up!!
Geithner asks Congress for higher U.S. debt limit
Geithner asks Congress for higher U.S. debt limit
| Reuters
EHP- true, but it didn't allow massive urbanization beyond the limits of the small mill towns.
Modern Hydro is much cheaper, but in the first world is built out already.
Then you have 3 gorges.
Wow. That will buy the Chinese some breathing room.
Coal and nuclear are going to be filling large gaps.
Solar and wind are still small potatoes.
The more I thought about it, the more I realized Kunstler was right, but just too sudden and too fast.
Change will be gradual. The comments about rebuilding and repurposing existing building stock are apt.
Someday this war's gonna end...
"Our houses are such unwieldy property that we are often imprisoned rather than housed by them."
Henry David Thoreau
JIUQUAN (Reuters) - China started construction of the country's first 10-gigawa wind power base in Jiuquan of northwest Gansu province on Saturday as Beijing seeks more clean power to fuel its fast economic growth.
China, the world's second-largest energy user, has said it would bring its total wind power capacity to 100 GW by 2020 from the current 12 GW, part of a broad energy target to generate 3 percent of total electricity from non-hydro renewable energy.
To that end, the National Energy Administration (NEA) has planned six 10GW-level wind power bases in areas rich in wind resources such as Inner Mongolia, Gansu, Xinjiang, Hebei and Jiangsu.
China starts building first 10-GW mega wind farm
| Reuters
Anyone have a tally for how much MBS and agencies the Fed has bought? How near are we to the current $1.25tn limit? At the present rate, how many days until the program runs dry?
Agency Mortgage-Backed Securities Purchase Program - Federal Reserve Bank of New York
Federal Reserve Bank of New York - Permanent Open Market Operations
,
Anyone who talks about the $787 stimulus instead of the Fed activity completely misses the point. $1.25tn disbursed in months, versus $787bn spent over 6 years, most of which is tax cuts, the remainder is backloaded spending, and the transfer boost has only left a crater now that the smoke has cleared
kcoop thanks for what you have done here, we are in your debt
btw
"There are currently 42 users
and 54 guests online."
"user" is such a pedestrian term dont you think
as members of the rentier class such as some of us here might be
might we prefer uh... hmm...
associates or some such term
ah yes
that has a rather rich ring to it dont you think?
and a
please pass the grey poupon
"users" may be appropriate since that has become the term of choice for druggies LOL. gotta get my CR fix!
Visiting my elderly mom upstate. 10 or so years ago my dad had a full bathroom downstairs added to a 4/2 suburban home...including every possible upgrade in heating/insulation, etc. Idea was as elderly folks, they could close off the upstairs, skip the stairs and live comfortably. Their street in an old, well-established suburb is now full of mostly elderly widows, aging in place. And why not?
Schools in this burb are excellent, but they were built for the boomer hordes. Now the class size is 20. There's not a single for sale sign in the neighborhood, and just the occasional family with kids. This place is light-years from Cali...could be a different country.
CR has become one of my several vices.
"Our houses are such unwieldy property that we are often imprisoned rather than housed by them."
Henry David Thoreau
Words that Casey Serin lived by.
JPO yes indeed
To Ken.
Keep up the great work!
EvilHenryPaulson (profile) wrote on Sun, 8/9/2009 - 2:28 pm
... versus $787bn spent over 6 years, most of which is tax cuts, the remainder is backloaded spending, and the transfer boost has only left a crater now that the smoke has cleared
But, but. I was sure we were told that tax cuts were a bad thing. I coulda sworn they were so evil that they would be reversed asap.
Regards "users" and "guests". Might I suggest; "mainliners" and "snorters"?
I know many people who are owned by their home. They can do nothing but make the payments and a stare at the upgrades. I would hate that life.
So I have to ask, what use is there for a prediction to 2030? - EHP
Long term infrastructure planning, e.g., roads, bridges, hospitals, schools, etc. In Oregon, it's a legal thing-- our land use laws require long range plans. For example, currently Portland and neighboring Washington County are fighting over who gets more developable land, essentially. The winner becomes the dominant economic power in the region.
EHP - I think Denninger is keeping score. There's a good tour d'horizon up today.
C
Answering my own Q:
From H.41, past week end
MBS: $542,888mn
Agency: $106,837mn
Total: $647bn / $1.25tn
FRB: H.4.1 Release--Factors Affecting Reserve Balances--December 3, 2009
FAQs: MBS Purchase Program - Federal Reserve Bank of New York
I've read CR's post (and the extract from Nelson) and all I think of is Keynes saying 'in the long run we are all dead'.
Hell, I don't know whether deflation or inflation in 2009/10 is going to prevail. Or stagnation.
"One stagnation, under Dog, with liberty and justice for all".
scone,
but the question wasn't where will people live, it was about whether they would own or rent
Counterpointer
I tried, but I'm not very good at navigating his site. Get too distracted by the atom bomb animations.
,
,
,
So the Fed has been buying & selling the MBS, surely they are losing measurable amounts of money on the spread and fees charged by the 4 anointed managers. Where the heck do they record that on H.41?
With probable future risks to real estate asset pricing, even renting vs 'owning' isn't very different.
Owning is a pretense for most people (once the 'housing always goes up in price' bubble has popped on the surface of your beer), since it is at best a term of art rather than descriptive. It takes a long sequence of mortgage payments to get to 50% equity once we return to CPI-like housing price appreciation.
OT but interesting: LBO loans may finally take down the De Beers cartel. Get ready to sell your diamonds folks.
The New Republic
While this global cartel succeeded in sustaining the illusion of scarcity, by the 1990s it began to put increasing financial strain on the company's finances. Ironically, what sealed the cartel's fate was the Oppenheimer family's effort to tighten its iron grip on De Beers through a leveraged buyout in 2004. Up until then, the Oppenheimers, who only owned about 8 percent of De Beers relied on a maze of interlocking companies to control it. After the buy-out, 40 percent of the company was directly owned by Oppenheimer family's holding company and 45% was owned by the Anglo-American Corporation, in which the Oppemheimers were major share-holders. But to effect the buy-out De Beers had borrowed over $ 4 billion from banks, who imposed covenants that restricted its ability to borrow further to buy diamonds for its stockpile. "Debt drove the deal, as it always does," one shrewd London banker observed. As a result, he added "The new De Beers is not the old De Beers."
Scone, we have a developer locally (wheelchair-bound, by the way) who's built three ADA-compliant complexes -- two apartment houses and one hotel -- and has just now run out of money. He's running the first apartment house himself as a handicapped-friendly residence, but he's selling the second which has been not quite done for the last four months (just got the money to finish the stucco job), and the hotel's for sale, too. We may well see more of it, but now is not the time.
Aging in place seems a good way to go, if you like the place you're in; people I know who've done it, and have the money to do it (ie, finance their old age without selling their houses) seem happy. You may pay $10-20K a year for the services you need done for you -- housekeeping, maintenance, landscaping, laundry -- but that's not such a bad deal for staying independent. I know one couple who's prepping for it by building a granny unit in the back yard; when they get that age, they'll move back there and rent out the front. For now, their college kid lives there.
but the question wasn't where will people live, it was about whether they would own or rent - EHP
The long range plan pretty much determines that, because there are complicated zoning formulas that tend to "herd" the rentals into certain areas. And the amount and type of each zoning sub-type directly effects the rent vs. own equation. Plus a lot of other stuff.
some downsizing by seniors, out of single family homes into lower-cost communities and ALFs
You didn't mention cemeteries & urns.
While this global cartel succeeded in sustaining the illusion of scarcity, by the 1990s it began to put increasing financial strain on the company's finances.
The newish manufactured diamonds (of jewelry quality) are so good that only the laser microprint on the stone tells them apart - with a huge, and growing price advantage to the grown stones rather than the mined ones.
Wearing a diamond ring in bad times isn't a very good thing anyway.
Wait, what are the actual numbers of people who move to RENT after 75? In what crazy upside down world does assisted living or nursing homes count as rent? My grandmother held her house in her tight little fist until we carried her out of it kicking and screaming 'cause she was trapped in an Alzheimer's hell in that damn house. But she damn skippy ain't renting at 9k a month for a nursing home -- and that's in cheap living Buffalo NY and it ain't the Ritz of nursing homes either. I seriously doubt 75+ age people are moving into regular renting stock in any large percentage. Hell, until we liquidate the house to offset the nursing home I guess grams is still a "homeowner".
scone
Given that developments are going to slow down for a while, I would say take 5 years and make a new plan then. It's a waste of money to make any serious long term commitments when there is no pressing need. Just let things grow organically for now
Aging in place is the way to go-- BD
That can work fine as long as you have a one-story home and can stay out of a wheelchair. And as long as the wheelchair can fit through the doors. You also need about a 5 foot diameter turn-around in a bathroom. I don't know if you've ever negotiated the trip from a wheelchair to a toilet. I have, and believe me, it takes a lot of space and some strategic grab bars.
One thing people don't seem to take into account is the price of home care. It's not just housekeeping-- at some point you need more assistance, and a lot of people have to sell their home to pay for it. That limits the aging in place scenario, to the first couple of decades after retirement, it seems to me. At some point, you have to generate the money for the last stage of life, which is surprisingly expensive.
But, but. I was sure we were told that tax cuts were a bad thing.
When you don't reduce your expenditures, they certainly are a bad thing.
Regards "users" and "guests". Might I suggest; "mainliners" and "snorters"?
Those work quite well. "Addicts" and "recreational users" also gets the point across.
EHP: I agree completely on 'don't decide now'.
I would say take 5 years and make a new plan then.- EHP
Shrug-- that's not the law. Land use laws, especially in Oregon, are tight as a drum and extremely demanding. You can't just make it go away-- it's at the state level. We even have a special state-level court, the Land Use Board of Appeals, to adjudicate issues that rise from the local level. Some of this stuff goes up to the Supremes. That's the way it is.
Very low taxes and low energy usage
Don't worry, Rob, these problems will be fixed shortly.
"At some point, you have to generate the money for the last stage of life, which is surprisingly expensive. "
Which leads me to the statement of, If you have something you will lose it and if you have nothing the government will provide for you.
Those who work hard and smart again lose out to those who piss away their life and get another free ride. After taxes does it really pay to work your way up from the bottom? Don't forget if you have any left then the inheritance tax gets after your dead.
Those who work hard and smart again lose out to those who piss away their life
You've got this mixed up, Ben.
The people. pissing their life away are those working hard and smart.
Maybe hard but hardly smart.
scone,
Take last 20 year plan, resubmit. In the mean time, the shorter term plans will be very responsive to any demand out there
Aging in place is the way to go-- BD
Funny, seeing the hell my grandmother put herself through to stay in her house both my aunt and my mother radically readjusted their ideas of what they wanted their future to look like. Suddenly, being attached to the house stopped being important. Both sold their houses and relocated to be near us so they would have walking distance amenities (this is in Oakland, Ca) and family nearby to rely on when that time came. We're going multigenerational in the next few years, but the buy-a-quadplex way, not the everyone-in-a-SFH way. Never thought in a million years either of them would be willing to move for any reason, but there's a cost to the stay-here-til-I-die mentality.
I think I may have found some of BomberBen's dollars, yo.
Aug. 10 (Bloomberg) -- Turkey’s central bank will adjust its current-account records this week as it struggles to explain the origin of $18 billion in foreign currency inflows that have reduced the need for International Monetary Fund loans.
The inflows since October, which economists say came from companies paying down debts using bank accounts abroad, have helped drive the lira to a nine-month high and trimmed the current account deficit, reducing the need for a new IMF loan.
Mysterious Currency Inflows Aid Turkey’s Central Bank (Update1) - Bloomberg.com
there's a cost to the stay-here-til-I-die mentality.
Yes, that was probably the "die" part of the equation.
Krugman is a moron.
Aug. 10 (Bloomberg) -- Ben S. Bernanke deserves another term as Federal Reserve Chairman on the basis of his success in battling the financial crisis, said Princeton University Economist Paul Krugman, a winner of the Nobel Prize.
“He’s earned the right to a second term,” Krugman, 56, said yesterday in an interview in Kuala Lumpur. “He turned the Fed into the financial intermediary of last resort. When the banking system failed to deliver capital where it was needed, he put the Fed into the markets.”
---on the basis of his success?
HA!
broward (homepage, profile) wrote on Sun, 8/9/2009 - 2:56 pm
Very low taxes and low energy usage
Don't worry, Rob, these problems will be fixed shortly.
I know but my meager satisfaction will be in being on the fantail of this Titanic.
We are already seeing some small changes in buying habits with Los Angeles' new mega sales taxes.
Did you know that you cannot drop off the electric grid? You will still get a bill for your "share" of the stranded costs to compensate Edison for the profits they wouldn't have made on the nuclear power plants they never built.
scone,
Take last 20 year plan, resubmit. In the mean time, the shorter term plans will be very responsive to any demand out there
EHP, honey, it's not up to me. The planning process involves hundreds of stakeholders, dozens of meetings, several election cycles, and lots of consultant time and money. It's mandated at the state and local levels, and the process proceeds no matter what is going on in the economy.The process itself is highly codified, and has to be done the way the law says or it gets thrown out in litigation. (There's always litigation anyway, but that's another thing.)
I don't know how they do it in Canada, but that's the way it is here. Maybe you have the "shire" system? If so, go down to the Commissioners planning meetings sometime-- that will give you some idea of how drawn-out and complex the process is.
--on the basis of his success? - HG
IIRC, Ben used to be Krugman's boss at Princeton.
the nuclear power plants they never built.
Blame Greenpeace. I worked with a guy in Idaho, he built a house in Robie Creek and the power company wanted something like $10-15K to run power lines. He told them to screw off and built his own solar & propane-powered 12-volt system for pumping water, etc. Seemed like a lot of work and risk to me.
Yes, that was probably the "die" part of the equation. - broward
Actually, "die" was part of the plan. Step 4, in fact.
1) Refuse to move.
2) Hide all signs of dementia.
3) Die.
4) Be eaten by cat.
5) Be found by mail person or whichever family member got worried first.
She loved that plan. If not for the Alzheimer's, every visit to her would be like the end of a Scooby Doo episode: "And I would've gotten away with it if it hadn't been for you meddling kids!!! Get off my lawn!"
scone,
I'm just saying there isn't much at this point in asking what will be the ownership/rental split in 2030. It's like McDonald's worrying about the McChicken / Big Mac split in 2030. There's no need to prepare far in advance for a shift, and there are much larger questions to be answered first. It's not about what kind of development is done (eg apartments vs SFH), but the financial structure on the asset which itself may or may not produce a noticeable cultural impact (eg Does ownership really make people better citizens? I haven't seen a study to back that up yet)
HomeGnome
i blame the federal reserve, and bernanke as a board member at the time for the pre-08 policies which contributed and even aided this financial crisis
having said that, i agree with krugman that absent radical and invasive federal intervention (my words not his) the country now would be in the grips of the worst depression and financial crisis in a century and maybe even in the history of the nation
my problem is that the depression or hyper-inflation may have only been forestalled not averted
i hate that obama and company (geithner summers bernanke) have supported the banksters rather than taking failed institutions into receivership in a resolution trust type national corporation...a bank of the united states kinda deal to get us over the abyss
Extend and Pretend, mock.
There's no need to prepare far in advance for a shift, and there are much larger questions to be answered first. - EHP
I understand what you're saying, but that's not the way the process works, and honestly, it can't work like that. This isn't the academic world. If you waited until you knew how things panned out, you would be far too late to do the zoning, planning, roadbuilding, etc. The environmental inpact studies alone can take 10 years. You have no choice but to go ahead making educated guesses about the future. For example, Metro bases some of its planning on population estimates that go to 2050, IIRC. It has to be that way, for a myriad of reasons that would take a long time to explain.
Umm,
Rome was serious urbanization, was it not?
Very insightful, pavel. Thank you.
Meta comment here: while doing some research related to this topic I discovered the following link:
froogalizer.com
which is nothing but a complete plagiarism of CR's original post without attribution. I hope CR will take prompt and vigorous action against this moron.
Probably way too late on this thread, but . . .
I've been searching the web for homes and condos in order to make rough price/cost comparisons to where we live now. "Now" is a 2BR 2BA condo on the tenth floor of a fifty-year-old building on Connecticut Avenue in DC. The real estate tax is about $1,500 annually. The unknown unknown is what the condo fee will morph to over the years, as very expensive heavy maintenance items are planned over the next ten years.
Another unknown is the cost of energy as the Obama Administration's war on energy production kicks into gear. This means food, light and heating costs will soar. So the condo fee and energy-related living expenses can go nowhere but up, I'm afraid. Still, we are not automobile-dependent.
Then there's medical care, as in quality and in access to. Here the condo location shines, because medical care is very accessible via public transport and the Kaiser-Permanente facilities that I use. The quality is at least adequate, sometimes more so. The further one lives from the urban core, the less available are medical facilities. Outside certain cities, staffing of medical centers by GP MDs is going to be increasingly rare, Where there are MDs, they will be overtaxed. Hospitals of all sizes are in precarious financial condition, and they are reducing services and/or closing at an increasing rate. This means one must consider living near a hospital/medical facility that has a future and can attract MDs
Moreover, I am stunned by the property tax estimates on realtor's web sites for many of the thousands of suburban and exurban homes for sale. Clearly, the school districts are attempting to squeeze homeowners to pay for teachers' retirement benefits already committed. This is no bargain for the over-75 crowd.
Finally, there is the issue of street crime. As societal indicators continue to worsen, there is a need for separation of neighborhoods and ample police protection. This has been done in DC with a vengeance. Again, one must look to where protection is available and where it will continue to be funded. This suggests again that an urban location is preferable--like across the street from the entrance to the Denver Country Club, as one member of our family has it.
All indicators to me suggest an urban choice. I see living outside a city as a risky long-term option under most scenarios. Add in urban amenities--museums, concerts, etc., and it gets even better.
While we wait for a link to the paper, here are links to a couple of "very similar" power point presentations, which at least give a flavor of this guy's enthusiasm for his subject:
http://www.oregonmetro.gov/files/planning/nelson.pdf
http://www.smartgrowthonlineaudio.org/np2009/101-b.pdf
Rocky R +1,000,000
"1.) crime has to drop to levels comparable to the burbs
AND
2.) either public schools have to improve to match the quality of those in the burbs or people must be allowed to substitute private school payments for property tax payments (i.e., vouchers)"
Neither objective is politically feasible, so the suburbs will grow, nor shrink.
New urbanism is a fantasy.
AllenM,
"Smaller and urban is cheaper than larger and suburban."
Smaller and suburban is cheaper than smaller and urban.
AllenM: "Flynt and Detroit homes for tiny dollars."
How is crime there?
How are the hospitas there?
How is public transportation there?
You would recommend to your elderly parents ... a home in Detroit?
For posts such as this, hoocoodanode needs karma counters. Too good.
For posts such as this, hoocoodanode needs karma counters. Too good.
great and well done i really congratulate to you on this success mate !
The housing bubble and construction for family is not difficult so i think we csholud have to gain more momentum to reach the goal!
Reverse mortgage calculator
Research on the home owner Professor Arthur C. Nelson, Director of the Metropolitan Research Center at the University of Utah, has written some very good points on the Research work for home owners. a dramatic shift in American cities based on changes in housing preferences and Democratic situations. His belief is very good and i want to say that his research made so many changes in my Mind !
so a very good selection and a very nice research work !
Reverse mortgage lenders
We have discussed this in detail in our Housing In Crisis report. (accuriz.com/RealEstate_Reports.aspx) There was a significant oversupply of housing built between 2000 and 2008. which played an important role in the housing bust. Now that we are in the beginning stages of recovery, builders are downsizing and buyers are more frugal. Some of these trends noted in the post make much sense.
The big question is whether the huge numbers of single elderly households will move out of their oversized homes into different housing- and create a market for smaller more urban homes. If not, then I predict the developers will continue to cater to new family households that can't get into existing housing because it is still occupied by seniors. Unless, of course, energy costs go way up.