Thursday, February 16, 2006

SIGHT UNSEEN???


I had to re-read this story five times. If anyone had a doubt that we are in a housing bubble, this should push you into the believer camp. Perhaps they should do a follow up and see how these pre-retirees are doing as this story was first published December 18,2005.

Here are some excerpts:

"Should you purchase a retirement home years before you plan to move in Some say the time is now, before prices escalate. Alarmed by the nationwide spike in housing prices, these buyers, known as "pre-retirees," are purchasing homes years before their retirement because they fear they'll be priced out of the market if they wait. They rent the property, leave it vacant or use it as a vacation home in the interim." According to a national survey this year, 27 percent of second-home buyers said they bought the home to use as their primary residence after retirement."

"Does it really make financial sense? Experts disagree, but for Linda Ward-Willis and other pre-retirees, it's a no-brainer." "I see the prices of (homes in 55+ communities) going through the roof," says the real estate agent from Lake Worth. Ward-Willis, 49, intends to buy a home next year to use for her own retirement seven years from now."
Her reasoning is simple: "A place that costs $200,000 today might be worth $400,000 in six years." "

"VALERIE FUCHS and LAWRENCE MORAN:"
"The couple plans to trade up to their dream condo before she retires in 10 years. Their real estate agent, Frank Rao, says 80 percent of his clients who buy something small end up upgrading when they finally retire, using their first purchase as a "stepping stone." After paying $179,000 less than two years ago, similar units are listed in the $290's now, Fuchs says. She'll use the profit from the sale of her one-bedroom condo in 2006 to buy a larger condo. "To hell with stocks," she says. "I'll be waiting a long time for a bank stock to double or triple, you know?""


"LAURETTE HARPER:
"A police detective in Queens, Laurette Harper can't wait to move in to her little slice of paradise — a three-bedroom, two-and-a-half bath townhome in Jupiter, which she purchased last year for $379,900, according to the Palm Beach County Property Appraiser. By the time she closed, Harper says it appraised for $20,000 more. "The one I selected was a three-story (unit)," says Harper. "I loved it! If I could have, I would have bought the whole building." Harper, 49, plans to retire in two years after more than 20 years on the police force. Then, she'll move to the Abacoa townhome full-time. "I love my job, don't get me wrong. But I would love to get down there and relax and have some sunshine on my face," says Harper, who is renting her townhouse to a family for "a pretty fair rental price" while their own house is being built. Harper started looking for a little place to retire to after she heard some of her co-workers had already bought in Florida. She bought her retirement home sight unseen via a colleague's wife, a South Florida real estate agent."


"WILL ENGLUND and KATHY LALLY:
Married for 25 years, journalists Will Englund and Kathy Lally live in a "rambling," historic, six-bedroom home in Baltimore. This year, they bought a two-bedroom, one-bath home in Flamingo Park for $450,000, which they intend to use for their retirement. Lally works for the Washington Post. Englund, 52, works for the Baltimore Sun. After considering the "fragility of America's pension system" and the poor returns on their 401ks, the couple decided real estate was the way to go. Of course, there are ups and downs in the real estate market," says Englund. "But a real house in a real community is always going to be a good investment."Englund and Lally's plan is to keep the Florida home vacant until they retire in about 13 years, and move in full time.""We might want to try to keep both houses and use the one in West Palm Beach all or some of the time ourselves," says Englund. "We might sell the one in West Palm or the one in Baltimore. Or sell both and get someplace nicer elsewhere.""


"LINDA WARD-WILLIS:"
"As a Re-Max Southeast agent, Linda Ward-Willis sees home prices on the rise every day. Right now, she's looking for a home to invest in for retirement. In seven years, Ward-Willis intends to move into the property full-time."I want to buy something . . . before prices just go skyrocketing and I can't afford a retirement," says Ward-Willis, 49." "In two years as a Realtor, Ward-Willis saw property values increase spectacularly." "In some of the retirement communities like Aberdeen (in Boynton Beach), people were paying $10,000 to $15,000 over the asking price just to get in," she says. "And I thought, 'If it's like this now, what's it going to be like when I retire?'"

I want you to read that article again. I couldn't believe it either. They all think that they cannot lose money. Doubling or tripling of money? A stock substitute? Vacant houses for 13 years? Buying a house sight unseen? As I have said repeatedly and will say again, the Dot.com bubble HAS been replaced by the housing bubble.

2 Comments:

At 10:10 PM, Anonymous Anonymous said...

How do you think Scripps will affect the re market in the Abacoa area?

 
At 4:00 AM, Blogger Melody said...

Ouch, this will get sooo ugly :(

 

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