Airbnb Collapse & The Lakes Region?

[ishoot308]

Honestly the good news about this situation is things always tend to self correct over time. High interest investors tend to sell off which allows family people to purchase during a better financial climate. Is there turmoil in between, sure, but the opportunities do eventually become available as they have in the past cycle after cycle….

Just my opinion….

Dan

[FlyingScot]

Originally Posted by ishoot308

Honestly the good news about this situation is things always tend to self correct over time. High interest investors tend to sell off which allows family people to purchase during a better financial climate. Is there turmoil in between, sure, but the opportunities do eventually become available as they have in the past cycle after cycle….

Just my opinion….

Dan

I like to think that's true, but if you look at Winni real estate over the long term, it has done extraordinarily well compared to incomes. Which is another way of saying it has gotten tougher for each generation to buy

[John Mercier]

Hard to say...
We have never been beyond the Boomer cycle.

[FlyingScot]

Originally Posted by John Mercier

Hard to say...
We have never been beyond the Boomer cycle.

Yes, a good point. But that may be a decade or two from now. So far, boomers have continued to push up values by continuing to live in large expensive places even after retirement, and then also living longer.

[John Mercier]

The youngest Boomers are 58.
But that would be past the peak births and headed to the lull of the Generation X.

Also, the first line of Boomers reaching pre-retirement had more reasonable valuations to work with... so that was the steepest part of the demand curve.

Covid pulled forward some demand... and with the higher product costs of new construction and renovation... put even more pressure on prices.

Roche does a pretty decent job of comparison to see when we reach peak pricing.https://www.laconiadailysun.com/real...a105bf89e.html

[Biggd]

Boomers get blamed for everything now. It's the American way now, it's always someone else's fault!

[FlyingScot]

Originally Posted by Biggd

Boomers get blamed for everything now. It's the American way now, it's always someone else's fault!

I hope you're kidding. I didn't mean to suggest there was fault involved, and this empty nester has plenty of square footage, so it would be hypocritical of me to point fingers. But it is a pretty basic set of facts that the children of boomers are looking at much tougher economics than we were 30 years ago, and a huge driver of that is the real estate gains that we have made collectively.

The lake economics are a screaming example of that, as John's link points out. I thought my Winni house was a once in a lifetime reward that made no financial sense. Wrong! My splurge would be a huge windfall if I sold. It's as if I've been using it for free.

[WinnisquamZ]

Originally Posted by FlyingScot

I hope you're kidding. I didn't mean to suggest there was fault involved, and this empty nester has plenty of square footage, so it would be hypocritical of me to point fingers. But it is a pretty basic set of facts that the children of boomers are looking at much tougher economics than we were 30 years ago, and a huge driver of that is the real estate gains that we have made collectively.

The lake economics are a screaming example of that, as John's link points out. I thought my Winni house was a once in a lifetime reward that made no financial sense. Wrong! My splurge would be a huge windfall if I sold. It's as if I've been using it for free.

True. But, unless you start borrowing against the gain it’s value is irrelevant. Just number. Enjoy it


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[Biggd]

Originally Posted by FlyingScot

I hope you're kidding. I didn't mean to suggest there was fault involved, and this empty nester has plenty of square footage, so it would be hypocritical of me to point fingers. But it is a pretty basic set of facts that the children of boomers are looking at much tougher economics than we were 30 years ago, and a huge driver of that is the real estate gains that we have made collectively.

The lake economics are a screaming example of that, as John's link points out. I thought my Winni house was a once in a lifetime reward that made no financial sense. Wrong! My splurge would be a huge windfall if I sold. It's as if I've been using it for free.

I don't believe that for one second. When I bought my first house in the 80's interest rates were 18%. I worked 100 hours a week to afford it. Were prices cheaper, of course they were but it was not easier!
I'm sure they will be saying the same thing 40 years from now when the average American home in the US is 3 million or more.

[FlyingScot]

Originally Posted by Biggd

I don't believe that for one second. When I bought my first house in the 80's interest rates were 18%. I worked 100 hours a week to afford it. Were prices cheaper, of course they were but it was not easier!
I'm sure they will be saying the same thing 40 years from now when the average American home in the US is 3 million or more.

I don't mean to diminish your personal experience, there are very few strong enough to work 100 hours/week, and you deserve your reward. And definitely 1985 was one of the very worst times to take out a mortgage

But stepping back from your first house or my second house as one-off examples, you don't need to believe me. There are 100 places you could look for this info. Here's one set of broader data--30 years ago (one generation) the median home price to median income ratio was 4.4, today it is 7.6.
https://www.longtermtrends.net/home-...ehold%20income.

[John Mercier]

Originally Posted by FlyingScot

I don't mean to diminish your personal experience, there are very few strong enough to work 100 hours/week, and you deserve your reward. And definitely 1985 was one of the very worst times to take out a mortgage

But stepping back from your first house or my second house as one-off examples, you don't need to believe me. There are 100 places you could look for this info. Here's one set of broader data--30 years ago (one generation) the median home price to median income ratio was 4.4, today it is 7.6.
https://www.longtermtrends.net/home-...ehold%20income.

But your comparing lake homes to homes in general.
It would be relatively hard for me to find an on-water lot to build around Winnipesaukee or the tear-downs that have diminished for the time being.
But I can easily find lots in the lakes region to build on.

Basic materials cost have come way down... so it is a great time to build.
What is in short supply is skilled labor.

But the DIY field is ever expanding.
I think as we build more housing... local prices will either stabilize or maybe even drop. Just like the late 1980's and the 2008 cycle.
Properties that rose the most, will most likely drop the most.

Oddly, our kids don't see ''suffering''.
More of their finances are labor than capital. Labor currently has a pretty strong hand.

Also, high interest rates is a great time to take out a mortgage. A contrarian investor would take the lower cost of the property, pay the higher interest rate, and look forward to a time when they would refinance. Thus ending up with the lower initial cost and the lower interest rate.

[FlyingScot]

Originally Posted by John Mercier

But your comparing lake homes to homes in general.
It would be relatively hard for me to find an on-water lot to build around Winnipesaukee or the tear-downs that have diminished for the time being.
But I can easily find lots in the lakes region to build on.

Basic materials cost have come way down... so it is a great time to build.
What is in short supply is skilled labor.

But the DIY field is ever expanding.
I think as we build more housing... local prices will either stabilize or maybe even drop. Just like the late 1980's and the 2008 cycle.
Properties that rose the most, will most likely drop the most.

Oddly, our kids don't see ''suffering''.
More of their finances are labor than capital. Labor currently has a pretty strong hand.

Also, high interest rates is a great time to take out a mortgage. A contrarian investor would take the lower cost of the property, pay the higher interest rate, and look forward to a time when they would refinance. Thus ending up with the lower initial cost and the lower interest rate.

No--the data I shared are for US averages. They show that it is MUCH tougher to buy a hone today than 30 years ago if your means of paying for the home is your salary (as opposed to your previous home or inheritance, etc)

If you have other data or analyses that disagree, please share. As I wrote before, one person's experience or a drive around the lake doesn't really shed light on whether or not it's tougher in general to buy a house

[John Mercier]

I'm sure the data is correct.
I think it is more the way that each generation places value on things.

Homes over time have gotten bigger... but we don't know if that trend will continue. They may also be willing to put a greater percentage of their income into a home and forego other expenditures.

So will they be willing to part with more to buy the homes around the lake that in general are now larger than the past? What value will they give that? It will take time for the trend line to expose itself.

[Descant]

Originally Posted by John Mercier

I'm sure the data is correct.
I think it is more the way that each generation places value on things.

Homes over time have gotten bigger... but we don't know if that trend will continue. They may also be willing to put a greater percentage of their income into a home and forego other expenditures.

So will they be willing to part with more to buy the homes around the lake that in general are now larger than the past? What value will they give that? It will take time for the trend line to expose itself.

Yes, times change. My father always told me to pay off the mortgage, so that no matter what happened (e.g. Great Depression) I'd always have a roof over my head. A few years ago, the norm was to buy a bigger house every time you got a raise or promotion. Now, people rent or buy a condo instead of a bigger house. Without equity to downsize for retirement, it will be interesting to see how Millennials retire. I priced a local (Nashua) retirement community a few weeks ago--$650K to buy in, and $7500 a month for a couple. I'm not worried. In a few years, my boat slip will be worth that much, and will appreciate faster than inflation.

[tis]

Originally Posted by Descant

Yes, times change. My father always told me to pay off the mortgage, so that no matter what happened (e.g. Great Depression) I'd always have a roof over my head. A few years ago, the norm was to buy a bigger house every time you got a raise or promotion. Now, people rent or buy a condo instead of a bigger house. Without equity to downsize for retirement, it will be interesting to see how Millennials retire. I priced a local (Nashua) retirement community a few weeks ago--$650K to buy in, and $7500 a month for a couple. I'm not worried. In a few years, my boat slip will be worth that much, and will appreciate faster than inflation.

In those days, they didn't know taxes were going to be as much as a house payment.

[John Mercier]

Your taxes and insurance will always be less than with the addition of a mortgage.

A younger buyer without inheriting will always pay more than you currently do... and will do so willingly.

Investment in a smaller home allows for higher quality, investment in other assets, and in relation that should bring with it lower taxes and insurance comparatively to the larger homes around it. Also savings in energy costs comparatively. The problem in when the investment in other assets are depreciating assets.

[gillygirl]

Originally Posted by Descant

Yes, times change. My father always told me to pay off the mortgage, so that no matter what happened (e.g. Great Depression) I'd always have a roof over my head. A few years ago, the norm was to buy a bigger house every time you got a raise or promotion. Now, people rent or buy a condo instead of a bigger house. Without equity to downsize for retirement, it will be interesting to see how Millennials retire. I priced a local (Nashua) retirement community a few weeks ago--$650K to buy in, and $7500 a month for a couple. I'm not worried. In a few years, my boat slip will be worth that much, and will appreciate faster than inflation.

Can I ask what’s included for that $7500/month fee?


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[Descant]

Originally Posted by gillygirl

Can I ask what’s included for that $7500/month fee?

All the usual building services, landscaping, shovel, plow, paint, insure, etc. Heat, some places include internet. Some sort of meal program. The big, to me, cost is continuing care--if you run out of money, they won't evict you, if need be, you can progress to assisted living, full nursing care, etc. I don't know current law, but in the not so distant past, companies were limited to the number of full nursing beds they could have. If they were full, you were taken to another facility, hopefully nearby.

[gillygirl]

Originally Posted by Descant

All the usual building services, landscaping, shovel, plow, paint, insure, etc. Heat, some places include internet. Some sort of meal program. The big, to me, cost is continuing care--if you run out of money, they won't evict you, if need be, you can progress to assisted living, full nursing care, etc. I don't know current law, but in the not so distant past, companies were limited to the number of full nursing beds they could have. If they were full, you were taken to another facility, hopefully nearby.

Thanks. Sounds similar to the Taylor Community, which we checked out for our mother. But at 95, she’s still refusing to leave her home.


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[Biggd]

In my area in Mass, I've noticed a lot more single family homes with for rent signs lately. Many people that bought homes before the Covid spike and refinanced to sub 3% mortgages are realizing they can rent their home for more than double their monthly mortgage payment.

[John Mercier]

Originally Posted by Biggd

Boomers get blamed for everything now. It's the American way now, it's always someone else's fault!

No. It is a cycle.

Second homes are most often purchased by near retirees/retirees (55+); that demographic generally has the highest amount of assets due to years of working and building their wealth. They may purchase as a vacation getaway, but also think of that last ''forever home''. Lake houses tend not to be ''starter homes''.

So the latest surge is the cycle of Boomers reaching 55+ and will drop as the number of people in that group drops. GenX tended to be a smaller number of people... so they will not be able to keep up the same demand.

When Millennials reach 55, because of the size of that generation, a new cycle will start another surge.

Their taste in housing is different so a lot of remodeling and building will go on when that happens... we expect that run to begin around 2051.

[Biggd]

Originally Posted by John Mercier

No. It is a cycle.

Second homes are most often purchased by near retirees/retirees (55+); that demographic generally has the highest amount of assets due to years of working and building their wealth. They may purchase as a vacation getaway, but also think of that last ''forever home''. Lake houses tend not to be ''starter homes''.

So the latest surge is the cycle of Boomers reaching 55+ and will drop as the number of people in that group drops. GenX tended to be a smaller number of people... so they will not be able to keep up the same demand.

When Millennials reach 55, because of the size of that generation, a new cycle will start another surge.

Their taste in housing is different so a lot of remodeling and building will go on when that happens... we expect that run to begin around 2051.

I'm not sure why you quoted my post for this? My post was a general statement, not just about real estate. When I was in my 30's and 40's I don't ever remember my generation blaming our parents for our problems.
You can continue with your infomercial without quoting me!

[John Mercier]

Originally Posted by Biggd

I'm not sure why you quoted my post for this? My post was a general statement, not just about real estate. When I was in my 30's and 40's I don't ever remember my generation blaming our parents for our problems.
You can continue with your infomercial without quoting me!

Because I was responding to your post.

[Biggd]

Originally Posted by FlyingScot

I like to think that's true, but if you look at Winni real estate over the long term, it has done extraordinarily well compared to incomes. Which is another way of saying it has gotten tougher for each generation to buy

That's usually the case for off water properties but lakefront doesn't go down much because there's limited supply.