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Has The Housing Market Been Unkind To Millennials?

Posted by on Friday, August 18th, 2017 at 10:33am.

unkind

COEUR d’ALENE — Chad Mitchell is seeing the problem right up close.

“My parents could sell their house and walk away with something like $100,000,” said Mitchell, an agent with Century 21 Beutler & Associates in Coeur d’Alene. “You know, downsize and have that money to enjoy life.

“The market is going up, so they could get a good price. But what then? They sell, and unless they want to leave town, they’d be walking right back into the same housing market.”

Here is the issue that faces Mitchell’s folks and millions of other house-seekers nationwide: Baby Boomers are not selling homes, for those reasons facing the Mitchells but often because they’re comfortable and just don’t want the hassle. Some are still working, but it’s generally at home and on their own terms.

This famous generation has settled down in cushy recliners, content to let younger people fight things out in business, society and family life.

According to the real estate website Trulia, 53 percent of owner-occupied homes across the country belong to owners 55 and older — the highest percentage in that category since 1900.

Meanwhile, Millennials (ages 18-34) own just 11 percent of U.S. homes.

Even amateur economists understand supply and demand. With such a shortage of homes on the market, prices are going to be high.

Sometimes beyond high.

And that leaves younger families scrambling to find houses that even come close to matching the asking price — especially in a place like Kootenai County, where people are flocking in and hardly anyone chooses to leave.

“You hear conversations about having to start out in Post Falls, because property is so much cheaper,” Mitchell said. “But that’s not quite true, not anymore, and definitely not to the same extent.

“How about an 1,800-square-foot house in Post Falls for $294,000? That’s a house that would barely have cost $200,000 a year and a half ago.”

Millennials have a serious problem.

“The system is gridlocked,” said Dowell Myers, professor of urban planning and demography at the University of Southern California. “The seniors aren’t turning over houses as fast as they used to, so there are very few existing homes coming online.

“To turn it over, they’ll have to have a landing place.”

Mitchell suggests that won’t be anywhere in Kootenai County.

“When older people decide to take the money out of their houses and go,” he said, “they’re usually going to Arizona or Texas — maybe even Reno.

“But the truth is that a lot of people who have all that equity in their homes don’t want to leave the Coeur d’Alene area. They settled here because they love it, and they still do.

“So why sell?”

Indeed.

Local real estate broker Kim Cooper offers another reason why seniors are loathe to leave the homes where they’ve spent most of their adult lives.

“My theory is that during the recession, there was no equity in these homes so a lot of people opted to age in place,” Cooper said. “Maybe they added second kitchens for another generation of the family.

“Well, now they’ve recovered financially, but time has passed and they’re just going to stay.

“So all these homes just aren’t on the market. Sure, eventually people will pass on, but they’re not all going to die at once.

“The homes will be available again at some point, but it’s going to be a while.”

Cooper suggests the twin issues of low supply and high prices are even more obvious in Coeur d’Alene itself.

“To start with, 83814 (ZIP code) is essentially full except for a few hillside lots,” he said. “There just aren’t homes available for any reasonable prices near what I’d call the city’s gathering places — the lake, downtown, McEuen Park and so forth.”

Cooper came close to repeating exactly the difficulty facing Chad Mitchell’s parents.

“If you have a home near, say, Sanders Beach or somewhere nearby,” he said, “where do you go if you sell it? Most people here don’t want to leave, so the market stays tight and prices go up.”

Meanwhile, the region is pushing for new businesses, which would mean additional (and younger) workers.

Where will they live?

“You know the way people talked about Post Falls as a cheaper starting place?” Mitchell said. “Maybe in just a few years we’ll be saying that about Rathdrum.”

Source: http://www.cdapress.com/article/20170817/ARTICLE/170819858

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