Presumably he's talking to Millennials and other first-time home buyers. For those of us who already own a home, rising prices are a good thing. Or, at least they are if you don't have to turn around and buy another one.
|What we want|
This is all on my mind since we're selling our four-bedroom family home in the suburbs and looking to buy a smaller retirement home, but hopefully one that's a little nicer, someplace where the climate is a little warmer and the cost of living a little lower. This is a process that a lot of retirees go through, and the retirement literature makes it sound so easy. But it is not easy.
I can tell you one thing for sure. We're selling our New York home for a price that's between 5 and 10 percent higher than we could have gotten last year. But we're also selling it for 15 percent less than what we paid for it at the top of the market in 2007.
Don't feel too sorry for us though. Both B and I sold our old homes at the same time, at the inflated 2007 prices. So we came out about even.
Still, it hurts to lose money. And it seems like everyplace else we look has home prices that are higher than we imagined. We've looked around Philadelphia. The prices are just as high as New York. We've looked along the Jersey Shore. The prices are high. We tried Washington, DC. Hah! There's a laugh. Home prices around Washington, DC, are higher than our national debt!
We looked around Charleston, SC, where B's son now lives. The home prices are more reasonable ... if you want to live in some random development off the highway. But if you want to live in historic downtown Charleston, or near the beach -- in other words, a place where you'd really like to live -- then the prices suddenly pop up to astronomical levels again.
Robert Shiller reassures us that while there are anomalies, the long-term trend in home prices will be tepid. Currently there are some cities with slow employment growth where home prices are not going up by much: Boston, New York, Cleveland. And there are a few cities with steep price increases. These are the cities, according to the professor, where job growth has been strong: Denver, Seattle, Portland. But he assures us that prices will level off in these places, as more homes are built to increase supply, and some people are priced out of the market and gravitate to other cities. Then other cities will experience above-normal price increases, for a while anyway, until things average out again.
He's relating home prices to job growth. But what about us retired folks? I've seen several recent articles suggesting that Millennials are finally beginning to move out of center city and are even (horrors!) considering moving to the suburbs. Rents have skyrocketed in the city, and besides, Millennials are now starting to think about having families and so they are looking for more space and better schools and more convenient shopping. This should be good news for baby boomers who want to sell their homes in the suburbs and move to less expensive retirement meccas.
|What we can afford|
I heard one interesting remark last night at a party. I cannot verify if it's true. A friend of mine bought a townhouse near Ft. Myers, FL, about two years ago. He goes down there for three months in the winter. He said it would cost him $9,000 to rent his place for three months. But owning it costs about $8,000, for the entire year. It costs less to own than to rent, even for three months.
I don't know. You tell me. All I know is that I've bought and sold four houses in my lifetime. And every time it seems like the situation is this: When you sell your home, you don't get quite as much as you'd hoped, but the place you want to buy costs more than you can afford.