Thursday, March 19, 2009

Retirements, interest rates, and home inventory

Companies are doing retirement buy out packages right now. Not great ones... but when you consider the low interest rates, people are able to cash out their pensions for large amounts.

What this is bringing to the table is home inventory. I congradulated a few people retiring this week. Its all the same story:

1. They already have their home in escrow (to sell) in the 'beach cities.' This is *before* commiting to retire.
2. They are retiring to already owned (mortgaged?) property outside of the 'urban zones.' (Either on water or on a mountain with a spectacular view.)
3. Cash out of the pension
4. Large stock market losses (forcing sale of urban 'work area' home)

All wish they could have sold for the $250k more of 2006. But all realize now is the time to move on.

Oh... I know more than a few companies where these workers will be 'unemployed.'

Interesting consequence of low interest rates (home will sell, pension cashes out for more). But what does this do for the company (Due to the pension benefit hit)?

I'd imagine similar effects are going to hold true with government workers. (Sans pension cash out.) Has the government tried to help the retirement scenario in order to make the layoff scenario less scary?

Side note: Multiple of these retirees were considering buying a downsided place (e.g., a condo) in the beach cities of LA to 'keep in touch' with friends. More than one has realized:

1. Large boats are cheap today $30k for the floating condo!
2. Slips are available (rare for LA) and the fees are reasonable.

Got Popcorn?


Rob Dawg said...

Slips are even cheaper and more available and more pleasant IMO just west of LA in Oxnard. THere are even some rumored to be available in Santa Barbara.

You've been around long enough to remember when I posted at HBB and was ridiculed in 2006 for saying if you need to sell in the next 5-6 years sell now. Turns out we were right.

wannabuy said...

THere are even some rumored to be available in Santa Barbara.
That is a scary thought. ;)

I remember your posts on the HBB. I agreed. But man... I didn't realize the magnitude of the whole thing.

Powered boats that would have fetched $120k (used) two years ago are now being offered at $30k... I'm floored. I expected a fall...

Oh, I'm hearing of more high end car owners 'delaying' buying their next toy. These are the type who could afford a $150k+ auto. All of the sudden their focused on keeping their businesses running. Some are looking at 75% drops in revenue turn over. (I really wish I hadn't heard that discussion today... Yea... eavesdropping. This was auto promotion related.)

Got Popcorn?

The Anonymous said...
This comment has been removed by the author.
The Anonymous said...

Well, while you boys are busy patting each other on the back, lets not forget some of the failures of those early days on the HBB.

40% OFF!!! - NO PLACE IS DIFFERENT!!! ITS ALL LIAR LOANS!!! I was assured, and boy I lapped it up like kool aid.

3 years later, Arlington is down 11% from the peak, and thats for the whole county -- garbage and nice areas alike. In my preferred zip prices since 2006 are down - 0.5%

I think we will get some more downward movement in prices. However with an unemployment rate of 3.7% (most of which came not from job loss but population gain), im not expecting much. No chance we get back to the prices I balked at back in 2003 when I first heard about this "bubble" thingy.

I will admit, on a national scale, this has exceeded my expectations. And the stories I hear out of California sound like a scene out of the Mad Max movies. Still, I think back to those early days and wonder, how did those early calls of major price drops in Arlington get it so terribly wrong?

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