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Brian
Posts:2628

10/07/2008 10:25 PM	Alert
Baby Boomers have started to retire. I argued before that retiring Boomers will have to slowly liquidate their stocks and bonds for retirement. That, they can do slowly as needed over their remaining lifetimes. Real estate is another matter. A house has to be sold all at once to move to better climates, or closer to children, and relative, or to move to retirement homes. Now that the stock market has killed <a href="http://money.cnn.com/2008/10/07/news/economy/retirement_meltdown.ap/index.htm?postversion=2008100715"> $2 trillion</a> of wealth, more retirees will have to depend on their houses as nest eggs. They will have to downsize and that will put pressure on housing inventory. Boomers are at the end of their most productive years so their houses would tend to be the best they could afford in their lifetimes. This liquidation by Boomers will put pressure on established neighborhoods for years. Time will tell....

Brian
Posts:2628

10/07/2008 10:25 PM	Alert
Now that the stock market has killed $2 trillion of wealth, more retirees will have to depend on their houses as nest eggs. They will have to downsize and that will put pressure on housing inventory.

PolarBearKing
Posts:187

10/07/2008 10:31 PM	Alert
I had predicted 2010. Where's the "bangs head" icon...

HighRiser
Posts:49

10/09/2008 8:07 AM	Alert
Everybody is in trouble. The quicker we understand that the better. There is a wildfire burning in the world banking system and governments are peeing on the problem in the hope of putting it out. Forget standing on the real estate sidelines until you can pick up a bargain, because that depends on you having a job, cash, and maybe any chance of affordable credit when you decide the market has hit bottom. We are currently seeing a vast change occuring in the capitalist paradigm as the government nationalizes more and more of the credit system in the hope of saving it. This could in itself decrease confidence in the system, causing investors to pull out and the slide to continue, requiring yet more government investment. As more banks begin to fail, we could easily see a tipping point where people rush to take out their money from even good banks. Not even a stable bank can survive a run on it's own, because any bank only needs to be 8% liquid. FDIC insurance only works if a tiny proportion of banks fail. What would happen is that the government would freeze all bank accounts, as happened in South America. I'm normally quite a positive person, not a "sky is falling" type. However, although this has all been a problem for a long time it amazes me how quickly things began to collapse once Lehman Bros went down. I have no interest in predicting real estate turnarounds. I am more interested in seeing what state the world economy will be in once this has played out. The ramifications are going to affect the rest of our lives, the lives of our children, and possibly the lives of our children's children.

Brian
Posts:2628

10/09/2008 9:56 AM	Alert
Posted By HighRiser on 10/09/2008 4:06 PM I'm normally quite a positive person, not a "sky is falling" type. However, although this has all been a problem for a long time it amazes me how quickly things began to collapse once Lehman Bros went down. I have no interest in predicting real estate turnarounds. I am more interested in seeing what state the world economy will be in once this has played out. The ramifications are going to affect the rest of our lives, the lives of our children, and possibly the lives of our children's children. I've been called chicken little. But I'm actually positive about the economy. I see this adjustment as a opportunity to get back to things that matter -- real productivity and investments (not speculation). The stock market is not the real economy and the major indexes are just down "a little" from the peak, relatively speaking. The Great Depression is not coming back because we are now a modern society and we'll get through just fine. We, as a society, just have to tighten our belts for a decade and get rid of the debt overhang. I don't believe that our standards of living will decline in any substantial ways that matters. Yeah, families won't be able to afford the kitchen remodel or that new car. But so what? There's no harm in driving a 10 year old car. We just have to get back to basics and not buy so much junk to fill out over-sized houses and bodies. Retirees won't be able to live the good life on the golf course. They may have to move in with children. But what's wrong with that? Like I said before, nominal real estate prices in Japan are still lower than in 1989 (20 years ago). The peak in the Nikkei stock index was nearly 40,000 in 1989. It is now under 10,000. The Japanese still live well and are not starving by any measure. They just aren't taking over the world anymore. What's wrong with real estate prices dropping to the equivalent of 30% of income? That would be a great boon to young new families. I see that as great benefit (a realignment of where we spend out money) not something to be feared As a society, we'll spend less (percent wise) on housing and more on other productive things. That's good. The way to get there is for people who borrowed on overvalued assets to be wiped-out. It's how capitalism works.

tpc
Posts:628

10/09/2008 11:39 AM	Alert
High-great, smart post.

Guppie
Posts:7

10/09/2008 2:27 PM	Alert
[quote]There is a wildfire burning in the world banking system and governments are peeing on the problem in the hope of putting it out. [/quote] Yeah, that's the trickle down part.

Bluforest
Posts:57

10/09/2008 4:44 PM	Alert
My God, what if people go back to buying houses to raise their families in and stay instead of because they think they can use leverage to quadruple their money in a year? That's the only reason all these ugly tract homes got purchased anyway. It's like the slumlord forced to live in his dump, what if people had to stay in the houses they bought?

David_K
Posts:70

10/09/2008 5:43 PM	Alert
The boomers are a joke compared to the "greatest" generation. From Hippies to Yuppies, LSD to Financial Derivatives, all of life for the Boomers seems to have been trying to invent shortcuts to enlightenment and unlimited money. That and arguing about the Vietnam war. I feel worst for the Gen Xers, because they're turning 40ish now, and really have to deal with cleaning up the Boomers mess. Sure the Boomers are losing money, but guess what, they still form the largest voting block, and their interests therefore are going to be very highly represented for at least the next 20 years.

LoonyQT
Posts:931

10/09/2008 6:26 PM	Alert
Love the wildfire/peeing analogy highriser - thanks for the giggle!

artist
Posts:114

10/10/2008 1:54 PM	Alert
HUD has rummored that over 5 Million of their loans are to illegals. A law was passed that forbade them to ask for Social Security info or check employment. how is that for a great law? My grandmother just before the run on the banks during the first Great Depression ( I believe we are at the start of the second Great Depression) took all her money out of the bank and put it under her mattress. I advise you to do the same because all hell is just getting ready to break out. I predict a 5000 stockmarket by Christmas and triple the unemployment by then also. Thank you King George (Bush) The worse president ever and his court of the worse Congress and Senate ever.

Brian
Posts:2628

10/16/2008 8:27 AM	Alert
Washington Post - Market Fears Sun City, Ariz. – When the stock market drops, Barbara Eylands worries. She estimates that as much as 80 percent of her life savings is in the stock market. This is the money that she uses to put food on the table or gas in the car. “I’m just hoping it will go up again and I don’t outlive my money,” Eylands says. With more than 40,000 people, Sun City is the country’s largest retirement community. And the financial downturn is affecting many of these seniors directly. For people like Eylands who are living off the proceeds of an IRA or 401(k) that is invested the stock market, a market crash could be life changing. Eylands says she could always sell her house to raise money, but others aren’t so lucky.

jpinpb
Posts:1689

10/16/2008 8:43 AM	Alert
She could sell her house to raise money??!! Isn't Arizona taking a hit on real estate, too? I'm sure her house is worth less than it was 2 or 3 years ago. But some baby boomers bought way before the boom and probably paid off. Even depreciation from the past few years gives them quite a bit of cash. Proving the mentality of baby boomers will be to sell their house.

Bluforest
Posts:57

10/16/2008 9:48 AM	Alert
If she's retired, what the hell is she doing having 80% of her money in the stock market. She should have 80% of it in secure income producing assets.

Brian
Posts:2628

10/24/2008 8:56 PM	Alert
Middle-class Americans' retirement at risk By John Gallagher, Detroit Free Press October 18, 2008 Through most of his working life, steelworker Ray West looked toward a secure retirement. His company pension would bring in around $30,000 a year, his union contract guaranteed retiree health coverage and he had 401(k) savings of about $50,000. Three years ago, it unraveled. His company filed for bankruptcy. The collapse reduced his expected pension to around $5,000 a year and canceled his retiree health insurance. And, in three years of unemployment since then, West blew through all the money in his 401(k) as he trained for a new career. "I lost my job after 27 years before I got my retirement," said West, 52, of Hazel Park, Mich. "I ain't going to get nothing." Of all the threats to the American middle-class standard of living, from stagnating incomes to piles of consumer debt, perhaps the least understood and among the most serious is the looming crisis in retirement. Several trends, each debilitating alone, are due to converge on the middle class over the next decade or so. http://abcnews.go.com/Business/story?id=6063139&page=1

jakob
Posts:549

10/24/2008 10:18 PM	Alert
Thanks for the link. It's a rough transition if you believed you were going to be taken care of, now to be on your own, investing yourself. Everyone is a freelance now. It's a good thing. The unions with crippling pensions have slowly choked the lives out of their employers. That's why I have no problem with private unions. If they get too demanding they will bring down their employer. With public unions we don't have this restorative force of the market and costs can get out of hand yet we still keep paying. Getting off the topic now, but this is the root of the problem with government providing everything. Costs get out of hand without competition. I think government should be as small as possible with all services farmed out to private entities that compete for the services they provide.

Brian
Posts:2628

10/25/2008 9:14 AM	Alert
Posted By jakob on 10/25/2008 6:17 AM I think government should be as small as possible with all services farmed out to private entities that compete for the services they provide. I generally agree. But, the key is to get healthy competition going and not get bogged down with nepotism and government sponsored monopolies. Cindy McCain's beer distribution business is highly regulated and the government gives her exclusive distribution rights in Arizona. That is not healthy competition.

tpc
Posts:628

10/25/2008 10:24 AM	Alert
[quote]I think government should be as small as possible with all services farmed out to private entities that compete for the services they provide.[/quote] Jakob-farmed out to whom-Hallibutron???????

tpc
Posts:628

10/25/2008 10:31 AM	Alert
[quote]It's a rough transition if you believed you were going to be taken care of, now to be on your own, investing yourself.[/quote] Jakob-obviously you are a youngster. You believe that you are in control of your own fate. That your life will not be controlled by your employer, the economy, the church folks (armaggedon), your health, politics, etc, etc. Must be nice to be an island unto yourself and the master of the universe. You will be right at home in lakeside.

tpc
Posts:628

10/25/2008 10:35 AM	Alert
[quote]The boomers are a joke compared to the "greatest" generation.[/quote] David-and the Gen Xers are a joke compared to the Boomers. The boomers seem to be doing quite well for themselves having lived in single family homes for most of their lives. They have even managed to save a bedroom or two for the ever increasing and growing trend of Gen Xers moving back home with mommy and daddy.

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