Retiring at Home

Today I had an appointment with future clients in my longtime "farm" area. Their future plans were in place. They own a second home in a lovely resort community not too far from here, and expect to turn this vacation house into the place where they will spend their retirement years.
But what if you would hate to leave your present home? Are there steps that can be taken to remain there?

Donna Christner-Lile, a Pleasanton, California-based counselor specializing in elder issues, tapped her experiences in caring for her aging mother in writing her book, Aging In Place: Safely Living in Your "Home Sweet Home" Until You're 100 Plus. She addresses practical issues that need to be addressed for people to successfully remain at home as they age. The book includes worksheets to evaluate home safety issues and existing support systems, outlines useful online resources for aging adults, and offers tips on finances and incorporating universal design principles.
For more information and to order the book, visit http://mentorcentral.com/book.htm

Real Estate Fraud

We read these stories in the newspaper all the time, and "tsk. tsk" at how unthinking people are to let themselves be taken in by obvious cons, but yesterday it hit closer to home, and affected me like hearing that someone I know well is gravely ill, rather than reading statistics in the paper about the same illness.
A good friend is in a terrible situation. She and her husband succumbed to real estate fraud of the worst kind, and have lost the money from the sale of her business and the equity in their house...plus their good credit is ruined. The swindler has disappeared, and now they are facing foreclosure on two rental properties that he never made payments on, plus deposits on two houses that never were for sale. The loan company involved has dissolved and the real estate company, closed. They refinanced their own house on his recommendation, and now have an interest only loan for over $700,000 that can't be refinanced. He kept them on the hook for over two years, making occasional payments (probably from money he took from other people). They didn't really catch on until they were refused a loan for a condo their college student daughter was buying, and found out that their impeccable credit was destroyed....way too trusting and gullible, but my heart aches for her. I know what it's like to lose everything you worked for.
They will never see the money again, even if they find this guy.

When Will the Number of Listings "Top Out?"

Our manager announced at yesterday's office meeting that she and her fellow managers have a pool going to see who comes closest to guessing where the inventory will top out this year. She thought it would be fun to do the same thing within the office. If we want to play, we have to submit our guess along with $5 by Sept. 11, which is our next office meeting. The managers’ guesses range between 6500 and 7800.
Although numbers in the higher priced areas in the county are holding steady, Santa Clara County as a whole is moving up to a record not seen since 1999.
For the week of August 24, the total number of listings was 6311, of which 4657 were single family homes. Compare those figures to a year ago when there were a total of 4611, with 3387 of them single family residences.
The '06 date when listings topped out was September 15, when there were 4745 listings, 3449 of them single family.
Even with the tight money in Jumbo loans, the high end still leads the market, with an average of 34 days of unsold inventory in Mountain View, Saratoga and Palo Alto. This compares to 397 days in east south and central San Jose.
I'm still thinking about what the "winning" number will be. In this case, the homeowners could be the losers.

How to Foresee the End of a Bull Market

Every body's nervous around the office, and my friends of retirement age are starting to panic. Are they diversified enough? Can they wait out a bear market if one shows up? Maybe it's time to check their investments to see if their portfolios match their appetite for risk, but is the five-year-old bull close to the end of his road?
Another article in Money Magazine says that there is a pattern that shows up before the end of a bull market.
The first indicator is higher oil prices. We're seeing those, but not nearly as much of a trend as before the bear market of the '90's.
Then there is a "run up" of Treasury yields...none that are significant.
Before a bear market, consumer spending sometimes slows, and this is starting to happen. Corporate earnings growth often slows, but we'll have to wait for the 2007 numbers. However, estimates by market strategists expect only a 7% increase this year, as opposed to more than 17% in the years 2003 to 2006.
Rather than watch the variations of the S&P 500, a better indicator is if the number of rising stocks starts to shrink. Before the crash of 2000, the overall index kept going up, but these were fueled by only a handful of mostly Internet-related companies.

Accidental Landlords

The September issue of Money Magazine features an article called Landlords in Waiting. It describes a situation which is becoming more common throughout the country. Homeowners who are unable to sell their properties in a weakening market are becoming reluctant landlords. The inventory of homes for sale is twice as large as it was three years ago, and this could mean a longer time to sell, and possibly to shoulder two mortgages if they buy their next home first.
With home prices flat...or worse...in many markets, there may not be enough equity to pay closing costs. The rental market is still strong. According to NAR (The National Association of Realtors) rents were up 4.1% in 2006.
The article gives a checklist to estimate whether it makes economic and emotional sense to rent, and also tips on finding a good tenant.
My son and his wife in Kalamazoo, Michigan learned these lessons the hard way. Bridget owns a house with a second unit across the state border in Indiana, which they've found impossible to sell. They've just completed the arduous process of evicting a tenant in the smaller unit for nonpayment of rent, and are hoping that the tenant in the larger house will qualify to buy the property. Meanwhile, the monthly payments are still due.

Active Retirement Areas

Channing, a client/friend of mine is off to Arizona this week to check out a community that has been recommended to her. She is taking an early retirement from HP, and wants to pursue her longtime interest in the arts.
The place is called Academy Village – a unique, active adult community located in the Rincon Valley just east of Tucson. Tucson itself is a cosmopolitan Southwestern city that offers many art and cultural venues and beautiful scenery. It sounds like an ideal setting for an independent, active adult lifestyle.
Unlike some other retirement communities, at Academy Village you own your own home. The choices include a number of town home or single-family models that fit the Tucson lifestyle and complement the magnificent Southwestern desert.
Both Boomers and Seniors expect medical advances will allow them to stay active and vigorous well into their eighties. Such a view debunks traditional notions people have about aging and the perception that people want to squander their days lounging on porch swings as they age. For instance, 77% of 50 to 64 year-olds and 65% of 65 to 74 year-olds want more pleasure out of life.
Activity, fun, and friends are key.
I'll be interested in Channing's comments when I see her again this Sunday.

Do We Live in an Oasis?

When I talk to Realtors from most parts of the country, and even from other sections of California, they tell me that real estate sales and prices are flat or down in dozens of metropolitan areas. But there are micro-markets within them are performing very differently: Prices and sales are up this year over last, and plenty of buyers still want to move in.
Kenneth Harney, a syndicated Real Estate columnist,calls them Real Estate Oases - which he describes as neighborhoods and ZIP codes that defy national and regional downturns, and remain in demand as long as the local economy keeps generating jobs and rising incomes. They don't require residents to make long commutes, sit in traffic for hours or worry about gas prices, like the languishing Central Valley.
Typically these are not entry-level, first-time buyer markets, nor do they have lots of new subdivision construction. Educational levels of residents exceed regional norms, local school systems are highly regarded and crime rates generally are low.
Sound familiar?
In the Washington, D.C., metropolitan area, the ZIP codes 20815 (Bethesda-Chevy Chase, Md.) and 20015 (portions of Northwest D.C.) are avoiding most of the down-market trends in the larger metropolitan area that surrounds them. My son recently priced homes in the Bethesda market, and prices were still strong, although not as wild as the area where he currently lives...Palo Alto.
Other metropolitan areas where similar patterns can be found are Coral Gables in Florida, and San Francisco, where highly regarded in-town neighborhoods such as Pacific Heights and the Marina continue to outperform the metropolitan area and the state as a whole.
So what does this mean to our clients? Value patterns and sales performances are uniquely localized - right down to ZIP codes, neighborhoods and even individual streets. Smart buyers and sellers adjust their strategies on pricing, timing and bargaining with a micro perspective, no matter what the metropolitan headlines may be.