Tag Archives: Home Buying

Energy Prices Drop; Highlands Homeowners Cheer

12-10-gasJust about the last thing Highlands homeowners expect is for the price of something we use every day to drop precipitously. It isn’t just that we’ve grown skeptical about the way official inflation numbers are formulated (although we have). It’s simply that when it can cost more than a dollar for a Coke, we’ve drawn our own conclusions. To quote The Wall Street Journal’s front page last Tuesday, “Basic Costs Squeeze Families.”

So it’s been slightly disorienting to experience what has been happening with energy prices in Highlands. It’s not your imagination—as you drive past the neighborhood gas station, the prices on the sign really have dropped nearly 30¢ a gallon over the past month or so. As December began, prices from coast to coast were at their lowest since December of 2010. And home heating oil prices were following suit, leaving one to wonder if electricity and natural gas couldn’t be far behind.

Highlands homeowners should be among the most pleasantly surprised, for a number of the reasons pointed out last week by Molly Boesel in an Insights blog titled “An Unexpected Windfall.” Ms. Boesel is the Senior Economist at CoreLogic, and like any card-carrying member of the economists’ trade, was able to draw up a number of graphs and charts to bolster her point—which was that lower energy prices might well stimulate housing demand. It’s not just that more money remains in drivers’ and homeowners’ wallets as gasoline and heating/cooling expenses sink. There is another less obvious factor.

That factor is VMT (Vehicle Miles Traveled) per capita, and there seems to be a strong relationship between it and homeownership rates. The logic is that as prices for gasoline and diesel remain low, homebuyers are encouraged to move further and further from urban cores (or wherever their jobs are located)—out to where they can buy bigger and more expensive homes. If that sounds like a bit of a leap, history suggests otherwise. VMT per capita rose steadily alongside the increase in homeownership rates from 1994 to 2004; after which “the trend then reversed from 2005 to 2014, with homeownership rates and VMT per capita falling back to 1994 levels.”

So the possibility exists that if the present energy price levels remain low (more precisely, if future homebuyers believe that’s likely), it could “incent buyers to again” move to larger and more expensive Highlands digs, heedless of how far their personal commute becomes. It increases the number of potential Highlands homebuyers.

If common sense tells us, “wait a minute-what about the effect of the housing bubble burst?” Ms. Boesel has an interesting take. She points to an earlier working paper (2012) by three researchers entitled “How High Gas Prices Triggered the Housing Crisis: Theory and Empirical Evidence.” That title was enough to keep me from actually reading it—I was content to just ponder the idea that it was gas prices—not big-time financial manipulations—that caused all the trouble! Leave it to economists to come up with that one…

At any rate, for Highlands homeowners musing about what they can expect when they put their homes on the market, the possible effects of lower energy prices has to be heartening. Not to mention, another good reason to give me a call to discuss Highlands’s current real estate market!

Buying a Home in Lake Toxaway: Retirement Myths Abound

12-10-retirementThat housing needs change as people get older goes without saying. For Lake Toxaway Baby Boomers, the “getting older” concept has gradually morphed from the distant abstraction it seemed in the 60’s and 70’s to a more immediate concern. And of all the decisions that will have the most impact on those nearing their golden years, buying the right Lake Toxaway home—one that makes the most sense for the future—tops the list.

Boomers have heard and read much advice about buying a home; advice having to do with downsizing, mobility issues and the like. Most of it is cautionary…and not very cheerful. But suddenly weighing into seniors’ “buying a home” deliberations is a contrary point of view: one that many of them have apparently begun to suspect on their own. It’s news that could be of considerable importance, not only for their own age group, but for younger adults as well:

Growing older doesn’t seem to be nearly as dire as everyone has been led to believe.

Last Monday, “Why Everything You Know about Aging is Probably Wrong” led The Wall Street Journal’s special insert on planning and living “in the new retirement.” Its lead article dissected the most common preconceptions Americans have about aging, including the expected declines in mind, body, productivity, and stereotypes of growing loneliness and depression. “Everyone knows that as we age…life becomes less satisfying and enjoyable,” the Journal reported…followed by what a wide range of research shows: “Everyone, it seems, is wrong.”

Among the scientists quoted was the former director of a Baltimore study that has been underway for three decades. Of the widespread notion of the aged as being depressed, cranky, and irritable, etc., he says they constitute no more than 10% of the older population. The remaining 90% are “not like that at all.” Another Stanford study showed that as participants aged, their moods improved!

This may or may not change how we approach buying a home for our latter years, but to the extent that it’s a 180-degree reversal from what most of us have always believed about what to expect next, it should warrant at least a thoughtful examination of how we choose.

  • Common wisdom: Downsizing. Baby boomers who stay in large houses are probably spending more money than necessary; cleaning unused rooms may be too physically taxing, etc.
    Second thought: “Extra” rooms may be needed to accommodate new hobbies, visiting children and grandkids.
  • Common wisdom: Mobility. Must be a single-level home; mobility issues are paramount.
    Second thought: Stairs provide regular mild exercise; greatest threats to physical well-being are inactivity (and over-exercise).
  • Common wisdom: Budgeting. A budget showing exactly how much can be afforded when renting or buying a home is critical. It should include taxes, insurance, maintenance, and other expenses.
    Second thought: No research changes this one: buying a house in retirement should always be based on solid budget realities.

Whether you’re retirement-bound, buying your next Lake Toxaway home sets the table for the coming years in so many ways it’s vital to base your selection on reality rather than myth. Once you’ve set your course, I’m standing by to help find your dream house in all the many ways that I can put at your disposal.