I've been checking in with some of my Southern California clients since I learned one of the latest banks to begin freezing home equity lines of credit, National City, had pulled the plug on homeowners who are seeing declining values in their market areas. Some common threads have been emerging in the conversations I've been having with them. These are nice, chatty conversations, no sense of urgency about the real estate market, although quite a bit of disgust expressed over the negative media barrage they believe has gone on way too long. Interest is being expressed in how long industry professionals anticipate this current market low to hang around, so they can think through their retirement plans, plans that include relocation.
These folks understand that their local real estate markets are in the midst of a long anticipated correction. They have owned their homes for many years, some of them for decades. They may have dipped in to their "home ATM" to invest in their businesses, put their children through college, or to consolidate unanticipated debt, while taking advantage of low interest rates and tax deductions they were eligible for. They didn't abuse their equity, though. They still have a substantial amount of equity in their homes, and some of their homes are owned free and clear of any loans or just about paid off. Why don't we hear more about these statistics in the news? I'd like to hear more about the 40+% of primary home owners or the almost 60% of investment home owners that own their homes outright, right about now wouldn't you?
Their focus is on the future, not how much "money they've lost" in depreciation. These are their family homes, not an investment or speculative venture. Like many Californians making their living in a high-cost area, the equity in their homes represents a big chunk of their retirement savings. They've decided to leave their local California real estate market to the next generation looking to build their careers/ businesses in the World's 3rd largest economy, and are looking to where and when they will go to experience their next stage in life.
They plan to buy their next home outright with the equity they've accumulated in the family home they plan to sell. They are still active, so the area they choose will not only offer overall affordability, it will offer entertainment, fine dining, lifelong learning centers, outdoor activities, the arts , airport access for travel - whatever interests they have. They'll be looking for adequate medical care/ facilities where they go, too.
"So, Karen, how long do you think it will be before our local market turns around?" they are asking me, and "how do you like living in Southern Oregon?" They're planning some long weekends or vacations around areas of interest to further check them out. They've been researching areas they are interested in on the Internet. They've probably found a lot of our Localism.com posts!
What I'm hearing is my fellow Baby Boomers are starting to stir. They are recognizing that there are buying opportunities out there in some local real estate markets that had experienced appreciation that out ran their area median income, areas very popular with the active retirees, like Southern Oregon, Arizona, North Carolina and Florida. They are looking at buying the home they will eventually live in as their primary residence NOW, leaving it as their second home or a rental until they are ready to sell their current residence.
Are we ready for them, fellow industry professionals? Are we posting articles to Localism.com to give them the information they are looking for on areas they are interested in? I know how much my husband and I would have appreciated that resource, some of the high-Quality Localism.com posts, when we were making our plans to relocate to Southern Oregon in 2004. Let's give them what they need!
Karen Cooper, Ashland/Medford Oregon http://localism.com/article/359902/Southern-Oregon-More-Than-a-Vacationer
Mike Jones, Tucson Arizona http://localism.com/article/204264/You-Might-Want-to-Consider-Moving
Ginger Sala, Wilmington North Carolina http://localism.com/article/135151/Historic-Downtown-Wilmington-NC-Things-to
Lisa Hill, Daytona Beach Florida http://localism.com/article/444947/Moving-to-or-already-living-in
See you at the closing table!
Karen Cooper - OR/CA Mortgage Consultant - www.Quality4Loans.com
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