Comment by mr_tristan | Hacker News Reader

Comment by mr_tristan | Hacker News Reader

I’m thought this article was going to be about McMansions losing value over time, but just seemed like an opinion piece with a couple of anecdotes about elderly people having problems selling very expensive estates.

Here’s an article about McMansion depreciation: https://www.fa-mag.com/news/mcmansions-define-ugly-in-a-new-...

What’s interesting is that the valuations mentioned for McMansions are... like an order of magnitude cheaper then the multimillion dollar estates mentioned in this piece.

So... I looked for the WSJ article this was really a response to: https://www.wsj.com/articles/a-growing-problem-in-real-estat...

What is actually concerning was this statement:

> Boomers currently own 32 million homes and account for two out of five homeowners in the country.

So... given that boomers are less than 10% of the population but are 40% of the homeowners, I suspect there will be a strong downward pressure long term, since, well, all these boomers are probably in their home before “the home”.

Won't most of them just pass their homes to their kids? I am trying to say, that maybe this 40%/10% is normal at any time.

Yeah, I was just going to say -- look at places like Greece. The home ownership rate is about ~75%. It's pretty common for people to own multiple homes, too.

The average Greek person is not wealthy, but the value of these homes is not insignificant either. Mostly, Greek people live like they're poor, even though -- in theory -- their real estate holdings are worth a small fortune.

I met a Greek lady with 4 houses, one of which was on a super desirable island now -- worth well over $2.5M. She can only afford to visit the island once a year for a week, but she refuses to sell the house. Not because she's speculating on the value continuing to increase. Just purely for sentiment.

People are strangely attached to homes. And also (most) people see homes as good investments. Recent history is really working as confirmation biases for that. But long-term, objectively, housing has been an okay investment.

I just can't see all that collapsing because of a little downward pressure. Especially when it DEFINITELY hasn't happened in most aging countries.

One could argue that it has happened in Japan. But Japan's real estate boom in the 90s was truly unbelievable.

So it's really hard to say if house prices have gone down in real terms -- or if they were just so ridiculously insane in the 90s that it had a long-lasting anchor effect on prices ever since.

> But Japan's real estate boom in the 90s was truly unbelievable

You mean the 80s. The 90s saw a real estate price collapse in Japan.

The property taxes must be too low then.

I’m not sure what the nominal tax rates are in Greece, but the level of tax dodging in that country is famously high, I wouldn’t be surprised if effective property taxes are very low.

Michael Lewis in his book Boomerang details this hilariously: The Greeks wanted to turn their country into a pinata stuffed with cash and allow as many citizens as possible to take a whack at it. I believe he said the effective tax rate is under 12%. RE tax he said basically nobody pays.

But then you have a flat in the city, and a big house in the country that at best gets used at the weekends. But then you have upkeep of 2 houses so you're not really that well off, despite having a mansion in the country.

Or the kids realise this, sell the homes, and you still have the downward pressure on prices. (probably more so, as they'll want a quick sale)

In theory yes. My anecdotes are not data, but I am seeing a bit of this now as I am seeing grandparents pass. The common theme is that the houses haven't so much as a coat of paint in 20 years, they are outdated and not in great condition. This is assuming they stayed in the same neighborhoods where the kids were raised. There is a whole other level of undesirability when they bought a condo in Florida (or wherever).

The kids generally have houses, they don't need/want an extra house. Usually there are multiple kids involved, so unless it is distinctly given to one child, it becomes problematic to do anything other than just turn it into a liquid asset and split the proceeds.

This may vary by region, but at least in the Northeast, property taxes are very expensive. Keeping a house around as a spare is just too big of a burden. In the age of AirBnb, there may be some other options.

In all cases I have seen thus far amongst family/friends, the house gets sold.

It's an interesting question, but I'm not sure this is the constant trend.

I just looked up home ownership rates by age group: https://www.census.gov/housing/hvs/data/charts/fig07.pdf

The only group that doesn't seem to have declined in the last 15 years is 65 and over.

This is where I think the large size of the US and the tons of domestic migration won't really make inheriting a home as common as you would find in most of the world.

Anecdotally, I know nobody that I went to high school with that is remotely close to our home town - we all left. This is roughly 50 people, and I'm sure that all of them, like me, would not think twice about selling any property inherited from parents.

But what are the kids going to do with it if they already have some place to live but sell it?

>given that boomers are less than 10% of the population

Citation needed... I think they gotta be more than 20%.

yeah pew research implies boomers are 72m/372m ~20%

https://www.pewresearch.org/fact-tank/2018/03/01/millennials...

Ah, I may have incorrectly stated this - it's 30M or so boomer _homeowners_, which are less than 10% of the current US population.

Still, less than 10% of the US population owns 40% of the homes.

Some number less than 100% of the current US population owns 100% of the homes, though, since tens of millions of people (due primarily to age or resources) do not own real estate. Thus, using a percentage of the total population this way, outside of that context, doesn't really mean much.

That or there will be some very expensive government programs designed to maintain the valuation of the boomer owned homes.

> the WSJ article this was really a response

And the reply on McMansion Hell[0]:

> we did it folks #i didnt mean to crash the boomer economy

[0]: http://mcmansionhell.com/post/183614671911/we-did-it-folks

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