Boomers Mass Exodus

January 04, 2024

WE’RE BACK ❤️

Hey, this is Jeremie, the founder of The Shaker. First off, I wish you a Happy New Year! I had to pause The Shaker for a couple of weeks, but now we're back with your favorite daily residential newsletter. We have some amazing new features coming in the next few weeks, so stay tuned. Also, I'd love to hear your feedback and ideas. Feel free to reach out to me at [email protected]

THE BIG SPLASH

Boomers Mass Exodus

What you can’t miss today

The housing market braces for a shake-up as baby boomers, in a move reminiscent of a mass exodus, are set to unleash a wave of homes for sale, potentially driving down prices.

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  • Meredith Whitney, the oracle of the 2008 housing crash, predicts a surge in home availability as boomers downsize.

  • This phenomenon, dubbed the 'Silver Tsunami', is fueled by 10,000 people turning 65 every day, with the entire boomer generation hitting that mark by 2030.

  • The result? A potential cooling of the overheated housing market, which has seen sky-high prices due to a severe supply shortage.

  • While the trend might vary regionally, the overall expectation is more affordable housing and a reduction in existing home prices.

  • Despite high mortgage rates, there's a trend towards lower rates, possibly making home purchases more feasible.

  • Whitney's two cents: Millennials might want to pause their home-buying plans, while it could be prime time for boomers to sell.

A SCOOP OF MARKET DATA

The number you should know

9.4%

Despite interest rates taking a nosedive, the mortgage market seems to be on a stubborn sabbatical, with demand continuing its dramatic slump.

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  • The Mortgage Bankers Association reported a 9.4% drop in mortgage applications in the final week of 2023, compared to two weeks prior.

  • Even with interest rates cooling off from an October peak, the average rate on the popular 30-year loan ended the year at a still-hefty 6.76%.

  • The housing market, sensitive to interest rate fluctuations, has been in a bit of a chill due to the Federal Reserve's aggressive rate hikes.

  • Home-purchase applications dipped 5% from two weeks earlier, and they're down 12% from the same time last year.

  • Refinancing demand also took a hit, dropping 18% from the previous two weeks, though it's oddly up 15% from last year.

  • The housing market's woes are compounded by a severe shortage of homes for sale, down a staggering 45.1% from pre-pandemic levels.

A SCOOP OF INSIGHTS

Something you’ll learn

In Los Angeles, a 49-unit affordable housing project has become a marathon of bureaucracy, taking a whopping 17 years to build – and it's still not finished.

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  • Los Angeles, notorious for its housing affordability crisis, has been struggling to increase its housing stock.

  • The project, Lorena Plaza, envisioned in 2007, only broke ground last year. Kids born when it was first proposed are now in college!

  • The delay is blamed on a maze of regulations, permits, and approvals needed from various government agencies.

  • This project is a microcosm of L.A.'s broader issue: high land and labor costs push developers towards luxury housing, leaving affordable options in the dust.

  • The city's goal to build 450,000 new housing units by 2029 seems like a pipe dream under current conditions.

  • New Mayor Karen Bass and Governor Gavin Newsom are trying to cut through the red tape, but for many, the wait for affordable housing continues.

A SCOOP OF CONTROVERSY

Everyone will talk about it

The SEC has thrown the book at Miami developer Rishi Kapoor, accusing him of playing fast and loose with millions from investors and skimping on over a million in payroll taxes.

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  • Kapoor, once a rising star in Miami's development scene, is accused of misappropriating at least $6 million, with a chunk of that allegedly lining his own pockets.

  • The SEC's lawsuit led to a freeze on Kapoor's assets, including his bank accounts and properties, to potentially reimburse investors.

  • This financial wizard allegedly paid himself over $1.6 million in 2022 without board approval, while his salary cap was supposed to be $400,000.

  • Kapoor's spending spree included a $5 million yacht, a marina slip, a fancy sports car, and a private chef costing $10,000 a month.

  • Interestingly, the SEC's action doesn't mention Kapoor's $10,000-a-month consultancy deal with Miami Mayor Francis Suarez.

  • Kapoor's company, Location Ventures, faces allegations of selling unregistered securities and misrepresenting investment returns.

  • The SEC also claims Kapoor failed to remit about $1.375 million in federal payroll taxes.

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