US Homes Listed for Sale due to Old-Age Deaths

[PandaBear]

The other issue is capital gains. Some states have a cap on equity (primary residence) which isn't subjected to capital gains and the older boomers who live in expensive states (ex, California) are finding out that they will have to pay cap gains on some portion of their sale proceeds. The tax acts as a deterrent from selling.

If you have to use this to deter selling, the community is already not worth coming into for the new families. A house is only worth whatever the next guy is willing to pay for it. Whether it is due to aging or cashing out someone new has to be willing to pay for it to worth that much. In the end you need jobs and safety to be worth something.

If everyone wants to buy a Chrysler Sebring and then there is a glut of them when the owners pass away, they are only worth what they would sell for for everyone currently still own them.

If their homes are in the right location and the right quality they would be able to sell them. If they are just "customized" in a wrong place (no job) then it is not worth much.

 

[PandaBear]

In theory, I would agree.

My concern is with the companies that do these. Many want you the access the full amount, on top of the fees they throw on there. Many prey on boomers needing a few bucks, and in the end- it get sold to investors to make a tidy profit. They prey on fear…..

I watched a long time neighbor down my street fall for this, and her kids lost both the money and the house. While there are honest companies for the reason you used above, more are looking to take advantage….

That's no difference from cash out refi.

 

[SC Maintenance]

There is nothing "mortgage" about a reverse mortgage. Its a annuity to purchase.

Banks want to lend money and then get paid back with interest, in installments or all at once - can be structured any way you want. There goal is to get there money back, not the asset your buying. This is true as well for cash out refi's. Thats why most banks don't do reverse mortgages.

A "reverse mortgage" is nothing more than an agreement for the lender to buy your house over time. It like an old k-mart "lay away" where the home owner is k-mart.

Reverse mortgages are generally bad financial products because there not standard. All the costs are much higher - closing costs are higher, interest rates are higher, lots of rules.

From a pure financial standpoint you would be better off to sell, invest the proceeds, and rent somewhere else. Of course the whole point is not having to move.

If you don't care about leaving anything behind, then I suppose who cares. YOLO.

 

[BMWTurboDzl]

If you have to use this to deter selling, the community is already not worth coming into for the new families. A house is only worth whatever the next guy is willing to pay for it. Whether it is due to aging or cashing out someone new has to be willing to pay for it to worth that much. In the end you need jobs and safety to be worth something.

If everyone wants to buy a Chrysler Sebring and then there is a glut of them when the owners pass away, they are only worth what they would sell for for everyone currently still own them.

If their homes are in the right location and the right quality they would be able to sell them. If they are just "customized" in a wrong place (no job) then it is not worth much.

I don't think the purpose is to deter selling but it sure has an impact on supply.

 

[demarpaint]

A house being worth less than what it was-is either a long time ago or in some less than desirable area. Houses less than a million dollars taking a $100,000.00 dive isn't going to happen. I know many are in the twilight zone on here thinking that-but it won't happen.

The area is a still desirable L.I. community 35 minutes from Penn Station on the LIRR. At the present time houses selling there are well over a half million dollars, averaging about $675K, many selling for over a million dollars. My FIL died in 2011. Never say never, real estate prices can and do drop, just like stocks, bonds, T-Bills, and just about everything else. In fact in some areas of the country housing prices are dropping as I type this.