This weekend after enjoying brunch with some retired friends, I guess you could color me envious not for wanting to fast forward the clock, however for the implied life style many (including me) will never get to see. As afterward since it was a comfortable Sunday afternoon we decided to indulge in another of our popular past times as in a visiting an Open House or two just to see what was on the market for grins and giggles. Though in the end the physical sky remained blue and sunny, the practicalities of an “American Dream” life style in the golden years soon began to cloud over.
As one of the beautiful homes we stopped and looked at was built in the mid-1980’s for the sum of around $450,000 USD yet it was on the market for a mere $290,000 and guess what? Yes, it doesn’t have a prayer of selling at that number as I queried our congenial realtor host about the top sale in the neighborhood and it was only $209,000! As you can see “Houses Aren’t Being Sold”, in fact they are stacking up and becoming liabilities to owners where in the past remodeling and repairs fell to the domain of the buyers who wrapped this cost typically into their mortgage.
So how is this the biggest bust every you’re asking? Think about it this way, that $450,000 USD in today’s money is more a kin to $540,000 dollars, so minus away say the $209,000 dollar highest market price and you have a whopping loss of $331,000 dollars. However divide this out and it comes to a cost of $13,790 per year to live in a 3,000 sq/ft home not bad considering we didn’t factor in “interest” which bumps us up to around $17k per annum.
Ok, I can see by the look on your face your still not fully getting it yet so let’s step back for a second as many people think the automobile made America great and while it aided in building suburban life style allowing us to commute out of our grayish urban trappings. The real story is Real Estate as since the 1950’s its potential equity base grew in accordance of the “power laws” with a long leading tail leading to a steep up turn until the old adage of “what goes up must come down” was invoked to pay the piper.
So it’s here we sit, in an economic limbo as to add insult to economic injury the automobile which sat in the number two spot (only behind real estate) is too taking it on the chin as many (with more following) no longer need to make a daily pilgrimage to that urban place of employment. As with the internet being a super highway with an onramp coming directly into my living room and a little box with the power which use to fill a large air conditioned room sitting on my lap. I can now easily out perform the work product and quality of at least 4 people in 1950 terms. So the question becomes, is where do we go to from here, stay tuned…