Jump to content
House Price Crash Forum
PeanutButter

Boomer deaths = millennial joy

Recommended Posts

This is how I managed to buy...

Bank of Dead Mum and Dad (BODMAD)

 

Cheer up, millennials! It will become easier to buy a house

The snag? It’s because your parents are going to die

20190105_BRD001_0.jpg
Jan 5th 2019
 

MANY YOUNG Britons believe that the housing market is stacked against them. And who can blame them? In the past two decades house prices have doubled in real terms, because of both tight planning restrictions, which have limited the supply of homes, and low interest rates, which have stoked demand for them. Theresa May, the prime minister, has described the scarcity of housing as “the biggest domestic policy challenge of our generation”. But the reality is that it challenges some generations more than others. Elderly folk, who bought their houses before the boom, own a huge slice of overall housing wealth relative to their share of the population (see chart). It is a different story for youngsters. A 27-year-old living today is half as likely to be a home-owner as one living 15 years ago.

Yet some economists spy a silver lining for millennials. The thinking goes that, within a decade or two, baby-boomers—the bumper generation born between roughly the early 1940s and early 1960s—will begin to sell up, as they first start to downsize, then move into elderly people’s accommodation and, eventually, to the great old-folks’ home in the sky. As their properties are put on the market, supply will rise, depressing prices and bringing ownership within reach for more people. This is much talked about in America, where a recent article co-authored by an economist at Fannie Mae, a government-backed mortgage provider, pointed to the “coming exodus of older homeowners”.

20190105_BRC781.png

Back-of-the-envelope calculations give an idea of the effect on house prices when boomers begin to sell up. England’s owner-occupier baby-boomers live in houses with an average of three bedrooms. If all of them downsized to homes with two bedrooms, that would free up housing equivalent to around 2.5% of the current stock, reckons Ian Mulheirn of Oxford Economics, a consultancy. Most empirical work shows that a 1% rise in the housing stock leads to a 2% fall in prices and rents, all else being equal. On that basis, a mass-downsizing would imply a cut in prices of about 5%.

Yet so far the British boomers are in no rush to scale down. In contrast to America, Britain does not have much of a downsizing culture. By one calculation just 40% of Britons who owned their homes at age 50 will move house before they die. A paper published in 2011 by James Banks of the Institute for Fiscal Studies, a think-tank, and colleagues, provides convincing evidence that geography and climate play a big role. In America oldsters can move to sunny climes like Florida. Britain is a bit short on such places—Cornwall, lovely as it is, is not known as the “Sunshine County”—so most pensioners don’t bother. An intrepid few retire to the continent. But Brexit is likely to make that harder.

Government policy also discourages downsizing. Stamp duty, a tax on homebuyers, makes moving expensive. As house prices have risen in the past decade, the average amount of stamp duty charged per house-purchase has risen by half in real terms (homebuyers pay around £8,000, or $10,200, in stamp duty). Meanwhile, there is little direct cost associated with remaining in a large empty nest. Council tax, an annual levy on residential property, is based on valuations from 25 years ago and falls relatively lightly on big, pricey houses.

If downsizing is unlikely, boomers may at least sell up when they move into an old people’s home. But here, options for elderly Britons are also limited. Perhaps 3% of British over-65s are in some sort of residential care, compared with more like 5% in America. Lawrence Bowles of Savills, a property firm, points out that Britain is under-supplied with good retirement housing. More than half of the existing stock was built or last refurbished more than 30 years ago. And the design of the social-care system means that most British pensioners do not need to sell their home to pay for their treatment. In their election manifesto last year the Conservatives floated a plan to include more people’s housing wealth in the test of whether they had the means to pay for their own care. After the move was dubbed the “dementia tax” it was hastily scrapped.

All this means that it may be only when baby-boomers start to check out in a more permanent way that lots of houses begin to change hands. The most common year of birth for the baby-boomer generation is 1947. Since their most common lifespan is around 87 years, Peak Death could occur in 2034, when Britain will see around 15% more fatalities than in 2018. It will be very sad. But for house-hunters it will be a help. By that time baby-boomer deaths will be pushing down on house prices by around 0.7% a year.

Yet just as the housing crisis affects different generations unequally, the impact of the great baby-boomer sell-off will have an unequal effect on different groups of youngsters. The boomers will leave record amounts of wealth to their descendants. Data are poor but according to our calculations, roughly £100bn are left behind each year. Over the next 20 years the total value of bequests is expected to more than double, peaking in 2035, according to a paper by Laura Gardiner of the Resolution Foundation, a think-tank. Most of this unearned wealth will not be taxed, on current plans. By 2020 a couple will be able to pass on a house worth £1m tax-free.

Most of the inheritance bonanza, however, will go to a relative few. Nearly half of non-homeowning millennials have no parental property wealth at all, according to Ms Gardiner’s research. The other half will be able to use their inheritance to gain greater purchase in the housing market, for themselves or their own heirs and heiresses. A class of wealthy oldsters is moving on, only to be replaced by a class of wealthy inheritors. Demography will put downward pressure on house prices. But some people have a lot more to look forward to than others.

Share this post


Link to post
Share on other sites

There's more to it than that. The boomers end of life costs will push up natural interest rates until the pig in the python finally clears, over coming decades.

Edited by Si1

Share this post


Link to post
Share on other sites

I know many people waiting for their parents to die...and the stakes are so high that bitter fighting between struggling siblings over the riches is common.

Death they say is a taboo but there seems to be an even greater taboo in this article about supply and demand...the 'I' word that dare not be spoken. The denial of reason leads to suffering.

Share this post


Link to post
Share on other sites

I don't understand who would voluntarily stay in the South-East hell hole....society is a sick little puppy, most people dont even have basic courtesy skills. 

Will try and make my next foreign transfer stick permanently.......the uprising will spread

Share this post


Link to post
Share on other sites

I’ve given the matter some thought, and this is what I came up with:

A)      I graduated at time when youth unemployment was at 1 million and total unemployment was at 2.56 million. Therefore, having now obtained a job in London my instinct is to cling to it for dear life in a way that someone who entered the jobs market during the noughties probably would not feel.

B)      I live in a commuter down and you subconsciously associate middle-class adulthood with the Reggie Perrin style commute.

C)      I also work in an industry where the largest concentration of jobs is in London and there is always the worry that your job opportunities would be worse up North in the event of a job loss.

D)      Metropolitan snobbery. World class sport, theatre, arts, museums and the like can all be found in London.  Of course the irony is that I would need both the wealth and the spare time of a boomer retiree to fully take advantage of everything.

Share this post


Link to post
Share on other sites
2 hours ago, Maximus Skepticus said:

I don't understand who would voluntarily stay in the South-East hell hole....society is a sick little puppy, most people dont even have basic courtesy skills. 

Will try and make my next foreign transfer stick permanently.......the uprising will spread

+1 Moved out of southeast and feeling alive again in Scotland.

Share this post


Link to post
Share on other sites

All good point but I really don't see

4 hours ago, PeanutButter said:

This is how I managed to buy...

Bank of Dead Mum and Dad (BODMAD)

 

Cheer up, millennials! It will become easier to buy a house

The snag? It’s because your parents are going to die

Good point but what's the point of all that money/house by the time the millenials (and I) are in their 60s?

I suppose such planning could allow to decrease saving towards retirement but there is definitely a generation of grandchildren partially lost because some *****s decided to blow a massive housing bubble.

 

Share this post


Link to post
Share on other sites
30 minutes ago, DonJop12 said:

I’ve given the matter some thought, and this is what I came up with:

 

A)      I graduated at time when youth unemployment was at 1 million and total unemployment was at 2.56 million. Therefore, having now obtained a job in London my instinct is to cling to it for dear life in a way that someone who entered the jobs market during the noughties probably would not feel.

 

B)      I live in a commuter down and you subconsciously associate middle-class adulthood with the Reggie Perrin style commute.

 

C)      I also work in an industry where the largest concentration of jobs is in London and there is always the worry that your job opportunities would be worse up North in the event of a job loss.

 

D)      Metropolitan snobbery. World class sport, theatre, arts, museums and the like can all be found in London.  Of course the irony is that I would need both the wealth and the spare time of a boomer retiree to fully take advantage of everything.

 

B and D are just made up

Share this post


Link to post
Share on other sites
3 hours ago, Maximus Skepticus said:

I don't understand who would voluntarily stay in the South-East hell hole....society is a sick little puppy, most people dont even have basic courtesy skills. 

Will try and make my next foreign transfer stick permanently.......the uprising will spread

Where are you thinking? I’ve lived overseas. Grass is greener etc. Everywhere has problems.

 

Share this post


Link to post
Share on other sites
3 hours ago, Wayward said:

I know many people waiting for their parents to die...and the stakes are so high that bitter fighting between struggling siblings over the riches is common.

Death they say is a taboo but there seems to be an even greater taboo in this article about supply and demand...the 'I' word that dare not be spoken. The denial of reason leads to suffering.

Why wait?

Just book them for a cheap week in The Grand Hotel in Scabby or any another Brittania hotel.

Share this post


Link to post
Share on other sites
1 hour ago, DonJop12 said:

I’ve given the matter some thought, and this is what I came up with:

 

A)      I graduated at time when youth unemployment was at 1 million and total unemployment was at 2.56 million. Therefore, having now obtained a job in London my instinct is to cling to it for dear life in a way that someone who entered the jobs market during the noughties probably would not feel.

 

B)      I live in a commuter down and you subconsciously associate middle-class adulthood with the Reggie Perrin style commute.

 

C)      I also work in an industry where the largest concentration of jobs is in London and there is always the worry that your job opportunities would be worse up North in the event of a job loss.

 

D)      Metropolitan snobbery. World class sport, theatre, arts, museums and the like can all be found in London.  Of course the irony is that I would need both the wealth and the spare time of a boomer retiree to fully take advantage of everything.

 

Your B and C are the resonse i used to hear when i lived in West London m4 corridor.

The reality is most people rarely ventured into London - too tired or could not afford it.

The average SE commute is 30-40 minutes.

Yawk to KX is 90m.

Share this post


Link to post
Share on other sites
4 hours ago, Si1 said:

There's more to it than that. The boomers end of life costs will push up natural interest rates until the pig in the python finally clears, over coming decades.

Indeed.

Dying is just the end of a long expensive process.

I worked these numvers out from the ukstats mortality table -

In 10 years time, 50% of people 65 and above will be dead.

Look at a towns probate rate. Then look at number of sales.

Im seeing traditional moveto older towns in the north die on their a5se as theres no replacement oap. Now they get a small flat where they live, near the kids, then live off peak in spain or portugal for 4 months - gordies free oap money paying for flights over.

Share this post


Link to post
Share on other sites
25 minutes ago, spyguy said:

I worked these numvers out from the ukstats mortality table -

In 10 years time, 50% of people 65 and above will be dead.

That’s not right. Average 65 yo man has 17 years to live. Avg 65 yo woman has 20 years to live.

https://www.ssa.gov/oact/STATS/table4c6.html

A proportion will be dead, yes. But not half. And many will live longer.

Share this post


Link to post
Share on other sites
1 hour ago, neon tetra said:

That’s not right. Average 65 yo man has 17 years to live. Avg 65 yo woman has 20 years to live.

https://www.ssa.gov/oact/STATS/table4c6.html

A proportion will be dead, yes. But not half. And many will live longer.

You not read it correctly - 50% of people 65 and above.

In 2029 todays 65yo will be 75 and about 20% will have died.

Todays 75yo will be 85, and 50% will have died.

Todays 85yo will be 95, 80% dead.

Edited by spyguy

Share this post


Link to post
Share on other sites

Gross miscalculation in article: 

Most of the btl is owned by goldgen .

Gross miscalculation by children: many gold gen will try and ski all the money before they die. 

Cruises to see biggest boom since 1930's? 

Net effect of miscalculation : giving millennial the impression it will be decades before house prices go down ( so they may as well buy house now)

Share this post


Link to post
Share on other sites

Obviously advances in medical treatment for future generations may increase longevity. However, instinct suggests working till 67 in a more demanding workplace (as of now) instead of retiring at 60 or before as many boomers have done will reduce life expectancy. Any statistical evidence to back this up? 

Share this post


Link to post
Share on other sites
14 minutes ago, nothernsoul said:

Obviously advances in medical treatment for future generations may increase longevity. However, instinct suggests working till 67 in a more demanding workplace (as of now) instead of retiring at 60 or before as many boomers have done will reduce life expectancy. Any statistical evidence to back this up? 

I remember looking at spy's (which I thought were wild) mortality claims and some life tables, and the numbers pretty much stacked up.

But on working in old age: I have seen some pretty much opposite views on this. Depends which article you read.

Share this post


Link to post
Share on other sites
33 minutes ago, nothernsoul said:

Obviously advances in medical treatment for future generations may increase longevity. However, instinct suggests working till 67 in a more demanding workplace (as of now) instead of retiring at 60 or before as many boomers have done will reduce life expectancy. Any statistical evidence to back this up? 

There are limited medical advances. Dont believe the BS put about by the 'give more money to nhs' brigade.

You can do fall to counter the effects of aging with medicine. Theres a couple of medical tweaks but they are likely to be cancelled out with medicine for treating  other chronic conditions.

If Joe Average wants to live to an old age then they need to stay physically and mentally active. Avoiding animal fats and stay under weight (being careful to avoid arthritus) will do much more than any pill.

The easiest way is to do this is to remain in work.

A boomer retiring at 60, to do fall but eat out and go on holiday loses 5-10 years of life expectancy esp healthy life i.e not peeing pants in a home.

The 50% of 65+ dead is a good rough figure. Some socio economic die a lot earlier, some a bit later.

The current 60-75 cohort are probably the unhealthiest ever. This is showing as uk life expectancy is dropping.

Share this post


Link to post
Share on other sites
22 minutes ago, spyguy said:

If Joe Average wants to live to an old age then they need to stay physically and mentally active. Avoiding animal fats and stay under weight (being careful to avoid arthritus) will do much more than any pill. 

Very True. One of the side effects of Statins is arthritic symptoms.

Share this post


Link to post
Share on other sites
1 hour ago, nothernsoul said:

Obviously advances in medical treatment for future generations may increase longevity. However, instinct suggests working till 67 in a more demanding workplace (as of now) instead of retiring at 60 or before as many boomers have done will reduce life expectancy. Any statistical evidence to back this up? 

The only jobs that killed people were hard, physical jobs such as coal mining and labouring, where you had to carry on working no matter how fed your body was.

Despite teachers claims, deaths from stress are very rare. Its more the thinking you are stressed and drinking loads that cause the dame.

You can dig out life stats per job type. The long life expectancy and large deficits for public professions such as teachers, nhs, fireman, point to jobs that are very low stress and theraputic.

Share this post


Link to post
Share on other sites

I highly doubt the death of baby boomers will have much of an impact on reducing house prices to sensible levels.

London house prices are over inflated because you have to be very wealthy to live there, the people who do have many businesses or various income streams.

Birmingham and Manchester are only getting worse, my road in Birmingham went up by 10k for the past three years.

Life expectancy is also likely to increase by the time their deaths come around, the banks may decide to borrow to people for up to 50 years or more, further pushing up prices.

 

Interestingly in Birmingham the bottom rung is going up faster than those above, as millenials compete for their first home.

 

 

Share this post


Link to post
Share on other sites
15 minutes ago, Speed1987 said:

I highly doubt the death of baby boomers will have much of an impact on reducing house prices to sensible levels.

London house prices are over inflated because you have to be very wealthy to live there, the people who do have many businesses or various income streams.

Birmingham and Manchester are only getting worse, my road in Birmingham went up by 10k for the past three years.

Life expectancy is also likely to increase by the time their deaths come around, the banks may decide to borrow to people for up to 50 years or more, further pushing up prices.

 

Interestingly in Birmingham the bottom rung is going up faster than those above, as millenials compete for their first home.

 

 

Youre joking!

Look at the transactions level.

Then look at the extremely skewed ownership.

Most io btl is held by the over 55s.

And they were not shy of io mortgages - hence the RIO product.

 

Share this post


Link to post
Share on other sites
7 hours ago, Maximus Skepticus said:

I don't understand who would voluntarily stay in the South-East hell hole....society is a sick little puppy, most people dont even have basic courtesy skills. 

Will try and make my next foreign transfer stick permanently.......the uprising will spread

Very many now do not have basic courtesy skills, for a start drivers on the roads push in, don't give way, on the pavements pedestrians push others out of the way, don't acknowledge them, walk at them, too busy looking into phone......fewer people seem to form an organised queue when waiting for something..... lack of patience, ignorance, hear less of the please and thank you for anything, grunt, snatch and demand......no longer a polite society, plenty of rudeness out there......;)

Share this post


Link to post
Share on other sites

The odd thing about this article is that I am not convinced boomers are exclusively the parents of Millennials. I am GenX, and my parents are boomers. If boomers went up to 1963, to be the parent of a 27 year old today, they’d have had to have knocked them out in 1992, which would make the youngest boomers about 29 at the time - not hideously late or early, but the oldest boomers would have been 47 at the time which is late for having kids. So I actually expect a decent chunk of Millennials have early GenX parents - in which case they’ll have to wait a while.

Share this post


Link to post
Share on other sites

There not all going to die at the same time, some will make it to 80-90.

Some will have their children living with them or just hand it directly to their kids. There kids may decide to mortgage the property and pay off other siblings.

It's not the case that a flood of houses will hit the market on mass... it will be a slow trickle affect.

I know several boomers selling up their properties right now, to travel the world and down size. 

I don't think it will have the effect of what some may be hoping for.

I honestly believe it will just mean, those who inherit these properties will be even richer.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 293 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.