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The Preacherman

Are Retirees Causing The Glut Of Houses For Sale?

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We have been viewing houses in Worcestershire over the past month. The properties are what could be described as good family homes, mainly 4 bed detached, in the £200K to £300K bracket.

The majority of vendors are retired or nearing retirement and are seeking to move somewhere smaller. I have only seen 2 sales due to financial difficulties and only one family who were upsizing.

Downsizing - 9 (56%)

Couple getting together - 2 (13%)

Financial Difficulties - 2 (13%)

Upsizing - 1 (6%)

Relocation - 1 (6%)

Death/ Care Home - 1 (6%)

My theory is that concerns about a falling property market, poor investment returns and future government cuts are causing a stampede of motivated retired sellers who believe that this is their best and only opportunity to downsize releasing sufficient capital for them to comfortably live out the rest of their lives.

If this is what is happening it will have the following consequences in the shape of the market.

  1. Family homes become relatively more affordable.
  2. Bungalows become relatively more expensive. (There may be a profitable niche for house builders here.)
  3. The top rungs of the market are hit as no one can afford to upgrade and there is a similar process in this bracket with downsizing retirees.

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Fair and reasoned arguments.

I suppose a couple of things that having a few miles on the clock gives you is the wisdom to know that 1. Crashes have happened before so can happen again 2. Get out before everyone else.

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I would agree with this - we're looking at family homes in Cambridgeshire and the vast majority of the sellers are people who have just retired and are looking to move to a bungalow (health problems)/move closer to children etc.

I don't think any of them are thinking along the lines of "best get out now before our investment plunges in value", they've just reached the next stage in their lives and want to move on.

It can only be a good thing to see family homes finally come on the market, and a bit of competition from lots of other boomers selling up will keep prices in check. Bungalows are going to get even more expensive though!

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I'd make similar observations, but say do be aware of selection bias.

If you sample a variety of people who own homes, they are on average likely to be older, and indeed this applies to those selling too. I think we still have 20 years to go before the boomers are well and truly washed through the system, as its only the 1945 generation that have just hit 65.

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I'm noticing a lot of the cheapest properties in my target areas are retirement properties - limited to buyers over 60 etc.

It makes sense that these are amongst the cheapest on the market, but I haven't seen this phenomenon in a few years of monitoring my areas of interest on Rightmove.

Not quite the same point as the OP is making, but maybe related :)

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If you sample a variety of people who own homes, they are on average likely to be older, and indeed this applies to those selling too. I think we still have 20 years to go before the boomers are well and truly washed through the system, as its only the 1945 generation that have just hit 65.

Plenty of people who were born pre 1945 will be looking to downsize as well so 20 years is a bit pessimistic.

Who is going to buy these houses? Today's crop of 25 - 35 year olds are either in rented or in flats with minimal equity and massive mortgages.

Throw in student debts and other consumer debts, persistently higher taxes and lower spending thanks to Gormless Brown's mismanagement and I fail to see how today's thirtysomethings are going to be able to find £500,000 to buy a moderately large house in the south east (or even £300,000 for warwickshire)

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Plenty of people who were born pre 1945 will be looking to downsize as well so 20 years is a bit pessimistic.

Who is going to buy these houses? Today's crop of 25 - 35 year olds are either in rented or in flats with minimal equity and massive mortgages.

Throw in student debts and other consumer debts, persistently higher taxes and lower spending thanks to Gormless Brown's mismanagement and I fail to see how today's thirtysomethings are going to be able to find £500,000 to buy a moderately large house in the south east (or even £300,000 for warwickshire)

I'm hoping the same, although we got outbid on a property by another FTB (and this was on a family home in the 300-400k range). So although we might be rare, there's a few of us around. Looking for karma after spending years living on a shoestring in a rented shoebox whilst everyone else bought ;)

The only saving grace is that most other people looking at family homes have a smaller place to sell....there's an absolute glut of 3 bed semis where we are at the moment, and those are the ones that aren't shifting. And given the demographics in Cambridge (good professional employment and commutable to London, a 3 bed semi as a first house for a couple around 30 isn't unrealistic.

For a long time Cambridge agents admitted that FTBs had no hope in Cambridge but that the market was happily ploughing on without them - it looks like the lack of movement in the smaller properties is finally coming into play...Constipated is exactly the word I use for the market at the moment!

Apologies for the anecdotal!

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We have been viewing houses in Worcestershire over the past month. The properties are what could be described as good family homes, mainly 4 bed detached, in the £200K to £300K bracket.

The majority of vendors are retired or nearing retirement and are seeking to move somewhere smaller. I have only seen 2 sales due to financial difficulties and only one family who were upsizing.

Downsizing - 9 (56%)

Couple getting together - 2 (13%)

Financial Difficulties - 2 (13%)

Upsizing - 1 (6%)

Relocation - 1 (6%)

Death/ Care Home - 1 (6%)

My theory is that concerns about a falling property market, poor investment returns and future government cuts are causing a stampede of motivated retired sellers who believe that this is their best and only opportunity to downsize releasing sufficient capital for them to comfortably live out the rest of their lives.

If this is what is happening it will have the following consequences in the shape of the market.

  1. Family homes become relatively more affordable.

  2. Bungalows become relatively more expensive. (There may be a profitable niche for house builders here.)

  3. The top rungs of the market are hit as no one can afford to upgrade and there is a similar process in this bracket with downsizing retirees.

That profile fits with the property currently on the market in my part of town.

I'm not so sure it's about releasing equity, I think it's upgrade/running costs, and a fear of inflation. Looking at the skips and vans that have been littering the area there has been a mad dash to upgrade bathrooms, kitchens and insulation. Most of the property that has been coming on to the market looks very dated/tired, has high council tax, and looks expensive to heat.

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I'd make similar observations, but say do be aware of selection bias.

If you sample a variety of people who own homes, they are on average likely to be older, and indeed this applies to those selling too. I think we still have 20 years to go before the boomers are well and truly washed through the system, as its only the 1945 generation that have just hit 65.

I agree with your comments about selection bias. There is an additional dimension of possible bias in that most of the house we have viewed are 25 years or older. We have rejected large numbers of more recent builds as they offer poor value for money for the space, i.e. they are pokey slaveboxes. However, even with these properties when viewed on rightmove, you can see from the decor that the ones on the market tend to be owned by older people.

However, just as astonishing is how few people are trading up. This does not bode well for the top tiers of the market.

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That profile fits with the property currently on the market in my part of town.

I'm not so sure it's about releasing equity, I think it's upgrade/running costs, and a fear of inflation. Looking at the skips and vans that have been littering the area there has been a mad dash to upgrade bathrooms, kitchens and insulation. Most of the property that has been coming on to the market looks very dated/tired, has high council tax, and looks expensive to heat.

Our property search seems to bear out your comments about how dated and tired a lot of these properties are. Therefore, a motivation may be lack of funds to maintain them.

It is amazing how little money has been spent on these properties to keep them modern. We viewed one property yesterday that didn't have central heating and the owner didn't seem to think it was a problem. In another property the owner was going on about their newfangled combi boiler that didn't need a hot water tank that turned out to be 15 years old. We also had a woman boasting about her Neff oven that looked like it was installed in the 80s.

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I'd make similar observations, but say do be aware of selection bias.

If you sample a variety of people who own homes, they are on average likely to be older, and indeed this applies to those selling too. I think we still have 20 years to go before the boomers are well and truly washed through the system, as its only the 1945 generation that have just hit 65.

+1

I've thought this for some time: we should have an extended period of mild downward pressure on prices and demand as the boomers retire.

The more interesting question is whether those (of all ages, but particularly retiring boomers) with BTL portfolios come under any kind of pressure to cash in their investments. If so it could become a much bigger effect.

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I'm beginning to wonder about the longevity of this glut.

I've had the same Primelocation daily alert running for about a year.

Traditionally, I get 3-8 properties per day listed in the e-mail. About 6 weeks back, it was averaging more like 10-15, but now it seems to have gone back to normal, maybe even a little lower than normal.

Can't help wondering if like a lot of these housing trends, this one had already happened before the mainstream media even noticed it.

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I would agree with this - we're looking at family homes in Cambridgeshire and the vast majority of the sellers are people who have just retired and are looking to move to a bungalow (health problems)/move closer to children etc.

I don't think any of them are thinking along the lines of "best get out now before our investment plunges in value", they've just reached the next stage in their lives and want to move on.

It can only be a good thing to see family homes finally come on the market, and a bit of competition from lots of other boomers selling up will keep prices in check. Bungalows are going to get even more expensive though!

They'd hardly be likely to admit that to a potential purchaser, would they? "We're selling because house prices are about to crash, please buy our house now" :rolleyes:.

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I'm beginning to wonder about the longevity of this glut.

I've had the same Primelocation daily alert running for about a year.

Traditionally, I get 3-8 properties per day listed in the e-mail. About 6 weeks back, it was averaging more like 10-15, but now it seems to have gone back to normal, maybe even a little lower than normal.

Can't help wondering if like a lot of these housing trends, this one had already happened before the mainstream media even noticed it.

We currently in the middle of Summer traditionally a slow patch for the housing market so the fact that houses are still coming on to the market shows there is a momentum. However, as per another thread I don't believe we can truly assess the situation until the end of September, If you start receiving emails then with 10 to 15 properties on it then your local market will be in capitulation mode.

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Fair and reasoned arguments.

I suppose a couple of things that having a few miles on the clock gives you is the wisdom to know that 1. Crashes have happened before so can happen again 2. Get out before everyone else.

I seriously doubt this, many older people have just had longer in front of the idiot box and are even more confused than younger people, and isn`t it psychologically harder to change long held views (houses always go up laugh.gif ) when you are older? If retirees are really cutting the price that might be smart, but the credit is not out there any longer to buy houses,the time to sell was 2007/8 , now you have to be either a keeper or a loser as far as UK property goes IMO.

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We have been viewing houses in Worcestershire over the past month. The properties are what could be described as good family homes, mainly 4 bed detached, in the £200K to £300K bracket.

The majority of vendors are retired or nearing retirement and are seeking to move somewhere smaller. I have only seen 2 sales due to financial difficulties and only one family who were upsizing.

Downsizing - 9 (56%)

Couple getting together - 2 (13%)

Financial Difficulties - 2 (13%)

Upsizing - 1 (6%)

Relocation - 1 (6%)

Death/ Care Home - 1 (6%)

My theory is that concerns about a falling property market, poor investment returns and future government cuts are causing a stampede of motivated retired sellers who believe that this is their best and only opportunity to downsize releasing sufficient capital for them to comfortably live out the rest of their lives.

If this is what is happening it will have the following consequences in the shape of the market.

  1. Family homes become relatively more affordable.

  2. Bungalows become relatively more expensive. (There may be a profitable niche for house builders here.)

  3. The top rungs of the market are hit as no one can afford to upgrade and there is a similar process in this bracket with downsizing retirees.

Im amazed at the hassle people go for to get a bungalow.

Surely after agents fees, stamp duty, moving costs, conveyancing etc it would be cheaper just to get a bloody stairlift?

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I seriously doubt this, many older people have just had longer in front of the idiot box and are even more confused than younger people, and isn`t it psychologically harder to change long held views (houses always go up laugh.gif ) when you are older? .....

With all due respect, that's a somewhat patronising attitude based on outdated stereotypes. Most older people I meet accept that house prices are unsustainably high and are well aware that prices can go down as well as up. Indeed some were burned by the last house price crash in the late 80s/ early 90s. Many would like to see prices dropping if only to allow their own offspring to buy/ upsize their homes.

However I do accept what some of the other posters are saying about older peoples' house being generally dated. But I'm not convinced this is predominantly an affordability issue. It's just that they don't all buy into this consumerist and fashionista culture. If something is still functional, "why change it? " is their thinking. I've witnessed this at first hand with my own parents who needed a lot of convincing to upgrade by fitting double glazing or a new kitchen for example.

One thing I have noticed about these houses built in the 50s, 60s and early 70s, is how much larger the plots are. So some real potential to upgrade and extend these houses for those with the vision to see past the tired and dated outward appearance.

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Im hearing from people , people of all ages that they are downsizing due to the running cost's . People are just waking up to the fact how expensive it is to run a home in the u.k. even without a mortgage. When property was booming people do not mind paying £5-6k a year to run the place it they see its value climbing year on year , but when the price is stagnent or dropping and the money coming in is not going up or dropping and the bills keep rising it becomes a different story.

Houses are money pits and people are not prepared or have not got the money any more. I live in a very small 1 bed flat and my council tax with the 25% single person's discount is £800 per year , I know many people in what could be described as average or just above average homes with two people in them paying over £2000 a year in Council Tax . That's £40 per week after tax income , just for the right to stay there before paying any other bill or buying a loaf of bread.

They can not afford it any more.

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Im amazed at the hassle people go for to get a bungalow.

Surely after agents fees, stamp duty, moving costs, conveyancing etc it would be cheaper just to get a bloody stairlift?

It might be if stair lifts weren't sold by DG type sharks who charge three times the real price.

tim

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A lot of retired people lost a lot in shares via pensions, etc, and are now losing via cash.

And those currently retiring have crap annuity rates to add to their woes.

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They'd hardly be likely to admit that to a potential purchaser, would they? "We're selling because house prices are about to crash, please buy our house now" :rolleyes:.

They know deep down that house prices are not going anywhere upwards, downwards is the future trend.....they are selling because they no longer require the space, the cost of upkeep, fuel bills and council tax...they have decreasing disposable income and the savings are dwindling fast.

Less is more and they know it. ;)

Edited by winkie

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We currently in the middle of Summer traditionally a slow patch for the housing market so the fact that houses are still coming on to the market shows there is a momentum. However, as per another thread I don't believe we can truly assess the situation until the end of September, If you start receiving emails then with 10 to 15 properties on it then your local market will be in capitulation mode.

yep - 4th qrt 2010 and onwards should be interesting - not sure about the "capitulation mode" though as IR's are still low but ...............

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With all due respect, that's a somewhat patronising attitude based on outdated stereotypes. Most older people I meet accept that house prices are unsustainably high and are well aware that prices can go down as well as up. Indeed some were burned by the last house price crash in the late 80s/ early 90s. Many would like to see prices dropping if only to allow their own offspring to buy/ upsize their homes.

However I do accept what some of the other posters are saying about older peoples' house being generally dated. But I'm not convinced this is predominantly an affordability issue. It's just that they don't all buy into this consumerist and fashionista culture. If something is still functional, "why change it? " is their thinking. I've witnessed this at first hand with my own parents who needed a lot of convincing to upgrade by fitting double glazing or a new kitchen for example.

One thing I have noticed about these houses built in the 50s, 60s and early 70s, is how much larger the plots are. So some real potential to upgrade and extend these houses for those with the vision to see past the tired and dated outward appearance.

I can see their logic when it comes to ripping out a dated kitchen, it's the failing to update windows, insulation and boilers that gets me. Surely lower energy bills/maintenance costs and safety/security are the driver for some of these jobs.

We bought a tired 70's house. Patched up single glazed softwood windows, with massive openers - secure as a paper bag, and not much point in trying to heat the place. We had a safety check done on the boiler before we exchanged, the F-ing thing was spilling carbon monoxide, and it was only it's location in the house that had stopped it from killing someone!

Getting rid of there atomic orange 70's kitchen tiles, whilst on our wishlist, came long after a great long list of fundamental stuff.

BTW they had a Jag on the drive and liked their holidays :rolleyes:

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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