Too Big To Sell

-edited

Wealthy baby boomers are trapped in homes that are too big to sell. They want to downsize but can't get what they paid.

This was guaranteed to happen, and did. Baby boomers and retirees built large, elaborate dream homes only to find that few people want to buy them.

Please consider a Growing Problem in Real Estate: Too Many Too Big Houses.

Large, high-end homes across the Sunbelt are sitting on the market, enduring deep price cuts to sell.

That is a far different picture than 15 years ago, when retirees were rushing to build elaborate, five or six-bedroom houses in warm climates, fueled in part by the easy credit of the real estate boom. Many baby boomers poured millions into these spacious homes, planning to live out their golden years in houses with all the bells and whistles.

Now, many boomers are discovering that these large, high-maintenance houses no longer fit their needs as they grow older, but younger people aren’t buying them.

Tastes—and access to credit—have shifted dramatically since the early 2000s. These days, buyers of all ages eschew the large, ornate houses built in those years in favor of smaller, more-modern looking alternatives, and prefer walkable areas to living miles from retail.

The problem is especially acute in areas with large clusters of retirees. In North Carolina’s Buncombe County, which draws retirees with its mild climate and Blue Ridge Mountain scenery, there are 34 homes priced over $2 million on the market, but only 16 sold in that price range in the past year, said Marilyn Wright, an agent at Premier Sotheby’s International Realty in Asheville.

The area around Scottsdale, Ariz., also popular with wealthy retirees, had 349 homes on the market at or above $3 million as of February 1—an all-time high, according to a Walt Danley Realty report. Homes built before 2012 are selling at steep discounts—sometimes almost 50%, and many owners end up selling for less than they paid to build their homes, said Walt Danley’s Dub Dellis.

Kiawah Island, a South Carolina beach community, currently has around 225 houses for sale, which amounts to a three- or four-year supply. Of those, the larger and more expensive homes are the hardest to sell, especially if they haven’t been renovated recently, according to local real-estate agent Pam Harrington.

The problem is expected to worsen in the 2020s, as more baby boomers across the country advance into their 70s and 80s, the age group where people typically exit homeownership due to poor health or death, said Dowell Myers, co-author of a 2018 Fannie Mae report, “The Coming Exodus of Older Homeowners.” Boomers currently own 32 million homes and account for two out of five homeowners in the country.

Not Just the South

It's not just big houses across the Sunbelt. It's big houses everywhere. If anything, I suspect it's worse in the north. There is an exodus of people in high tax states like Illinois who want the hell out.

Already big homes were hard to sell. Now these progressive states are raising taxes.

Triple Whammy

  1. Millennials trapped in debt and cannot afford them
  2. Millennials wouldn't buy them anyway because tastes have changed.
  3. Taxes are driving people away from states like Illinois

Good luck with that.

For the plight of Illinoisans, please consider Illinois' Demographic Collapse: Get Out As Soon As You Can.

Mike "Mish" Shedlock

Comments
No. 1-16
bIlluminati
bIlluminati

Data I see does not seem to agree. Kiawah Island - Median days - down 18% from 206 to 167 - median size from 1500 to 1418 - median per sq. ft. up from 463 to 475 - houses for sale - 67 vs 64 - so there are more smaller houses than a year ago.

Here, the thesis fits: Asheville, Buncombe County, North Carolina - houses for sale 600 vs 494 - median days - 94 vs 42 - and here, not so much - median house size - 1942 vs 2090 - - median per sq ft -225 vs 223 - so it's smaller houses that are piling up again.

Scottsdale, Arizona - for sale - 2833 vs 2782 - median days - 67 vs 82 - median house size - 2872 vs 3088 - median per sq ft - 264 vs 259 - again, smaller houses, but here, selling faster.

DrDog
DrDog

I did a stint as a Realtor back in the 80's. A bit of research showed the price pyramid in most housing markets. The higher end homes WILL ALWAYS sit on the market the longest if at FMV due to the simple fact that the number of buyers at that price level is small compared to the number of median priced home buyers. The other factor is if I have that much money to invest in housing why buy someone else's mistake when I can make my own for the same price? I have lived the rule -- Never own more than a $500k housing unit. (CA excepted, that would be a shack.)

Want a counter argument? McMansions that are properly positioned on some acreage would make a comeback in a economy down environment. Multigenerational homes are making a comeback only its advertised as 'johnny lives in the basement'. The kids can't scrape the money together for a down payment due to student loans. Nor can they start a family for the same reason without proper housing. Those kids that can afford housing are moving to the 'burbs. The Boomers face an assisted living future they can't afford. So the opportunity exits to do a mashup of a modern day Walton's if you have a large enough home, er McMansion. If things got really bad you at least have the space to grow some food.

Ted R
Ted R

All of these posts are informative, accurate, and make sense. Add the Charlotte, N.C. metro market to the list of cities with large, expensive houses that ain't selling right now. Ouch.

Irondoor
Irondoor

We sold a year ago to Californians who were so glad to get the hell out they thanked us for selling to them. We purchased a smaller new home. The buyers haven’t moved in yet and they are facing the cost of new roofs and new decking on a 22 year old home. My wife and I are sitting here discussing this downsizing and know we are very fortunate. We’re now on one level, no snow to plow, no firewood to split and stack, etc. our expenses are down by 50%. We are in good health and I continue to enjoy my work from my home office. Life is good. Regarding younger folks, our kids are doing well and what you would consider successful. Hard-working and conservative. They have no desire for a McMansion. They are interested in “experiences” and I agree with them. Tending to a large home on eight acres with trees, ponds and outbuildings in snow country turned into a pain in the you-know-what for both of us. Twenty years ago it was what we wanted and it was good for that period. We see this problem for many of our friends of our age, several of which have minor to serious health problems and need to sell, but aren’t having any luck even after large price reductions. Everyone is ok financially, but it is a lifestyle burden and we aren’t getting any younger.

Stuki
Stuki

What's sad, is that after a century of debasement theft, which has left America virtually devoid of any competitive industry; people are now so indoctrinated into The Way of the Fed; that they find it somehow surprising that a manufactured good, which has been used and worn down for a decade or more, no longer costs what it did when it was brand new. Talk about layercake of idiocy upon idiocy upon ever more idiocy. It's bloody mind numbing...