Friday, October 20, 2006

Something Happened on the Way to Heaven


One client of Scott Hanson, co-head of Hanson McClain in Sacramento, Calif., had everything mapped out to take full advantage of the booming California real estate market. She would sell her house in the Sacramento area for a bundle, move to a quiet part of Nevada and buy a cheaper house -- and fund her nest egg with the leftover money.

But something happened along the way: The California real estate market began cooling. The client put her house on the market for $725,000 about a year ago, but found no buyers. She finally decided to cut the price. Still no buyers. She cut the price again, and then a third time -- the house is currently listed for $640,000. “It still hasn't sold,” Hanson says. The client is now in a serious bind -- either she'll have to sell the house at a vastly reduced price that will barely buy an adequate home out of state and have nothing left for investing, or she'll have to stay put in the hope that home prices move upward again soon. Either way, she now realizes she has far less money for retirement than she imagined.
Hat tip: The Housing Bubble blog


Anonymous said...

I think she's got more problems than a weak housing market if a shortfall of less than $100K sinks her boat. Why do retirees move away from their lifelong homes anyway? People I know who move out of CA always regret it. There's a reason why it cost more to live here, folks. And once you move out of CA, you don't move back, unless you inherit a million bucks.

My advice: stay in Sac and get a reverse mortgage. You're familiar with your neighbors and your surroundings, there's great medical care, great programs for senior citizens, and great public transportation. If your kids are out of state, let them come to you. Stay out of the casinos and don't buy lottery tickets. (That's better advice than Scott Hanson gave you, and it was free!)

Anonymous said...

This is no different than people who had to go back to work after the stock market went bust sending their retirement savings down the tube.

I'm sure there are stories of those that cashed out and made it big. One of the Fidelity reps in Roseville told me they have tons of accounts with > 500K mainly from folks that had sold expensive houses in the Bay Area and relocated to Sacramento. This is simply the story of someone who arrived at the party a little too late.

Anonymous said...

Let's face it folks Sacramento real estate is just not worth all that much above other states like Nevada. That appears obvious from the story. Sacramento housing market is on track for a 50% decline by 2009. Anybody who buys now would be a fool. Plus the Bee just reported on a surplus of rental homes, probably due to flippers who are now upside down in their mortgage and are hoping to rent until the market get's better. SORRY CHARLIE this is not going to happen. So all first time home buyers should wait and rent until the market corrects downwards for about three years. PLUS ALL FIRST TIME HOMEBUYERS BEFORE YOU BUY PLEASE GO TO THE SACRAMENO POLICE WEBSITE AND USE THEIR SEARCH TOOL FOR CRIMES REPORTED NEAR THE HOUSE YOU ARE LOOKING AT. YOU WILL BE SUPRISED!!!! IT ONLY TAKES A SECOND AND IS VERY INFORMATIVE. IF YOU BUY IN ONE OF THESE CRIME INFESTED AREAS AS MARKET PRICES ARE GOING FURTHER AND FURTHER DOWN, YOU WILL BE STUCK IN A NEIGHBORHOOD THAT IS CRIME INFESTED AND YOU WILL NEVER BE ABLE TO SELL YOUR HOUSE TO GET OUT!!!!!!

tom stone said...

anyone considering a reverse mortgage should take the time to research the alternatives.they are very expensive and have a lot of restrictions.the HECM are relatively straightforward "relatively".however many others are to a GOOD lawyer and loan broker before deciding.many people would be better off doing a cash out refi with a payoption arm than a reverse mortgage,and if THAT doesn't say enough ,you must be deaf.

Anonymous said...

Stupid Greed.

She should just sell now, and lock in the huge profits that someone who has owned their house for many years must surly have. Put the money in a conservative investment plan and RENT while the NV real estate market crashes (2-5years). Buy back in at the bottom. Easy right?

Stupid sellers need to quit crying and fretting over "lost profits" and realize that we are still near the peak of the market, but are rapidly moving away from that peak. Make the price whatever it needs to be to make it sell. You only make money WHEN you SELL the damn thing and every day beyond the peak your value is dropping.

Anonymous said...

Maybe she should stay in her current home with her Prop 13 protected property tax basis, stay close to her friends and family, use her equity if necessary and keep Mr. Hansen's grubby hands off her money for a commission!