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ON THE MONEY: Baby boomers have different desires in housing

WAVE NEWSPAPERS — Unlike just 15 years ago, many baby boomers are discovering that the large, high-end homes with their high-maintenance costs no longer fit their needs as they grow older. And younger people aren’t buying big houses, either.

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By John L. Grace

Unlike just 15 years ago, many baby boomers are discovering that the large, high-end homes with their high-maintenance costs no longer fit their needs as they grow older.

And younger people aren’t buying big houses, either. It wasn’t that long ago when boomer retirees were rushing to buy or build elaborate, five or six-bedroom houses in warm climates, fueled in part by the easy credit of the real estate boom.

Many baby boomers poured millions into these spacious homes, planning to live out their golden years in houses with all the bells and whistles.

“Tastes — and access to credit — have shifted dramatically since the early 2000s. These days, buyers of all ages eschew the large, ornate houses built in those years in favor of smaller, more-modern looking alternatives, and prefer walkable areas to living miles from retail,” according to the Wall Street Journal, March 21.

The Journal opined that the problem is expected to worsen in the 2020s, as more baby boomers across the country advance into their 70s and 80s, the age group where people typically exit homeownership due to poor health or death. Boomers currently own 32 million homes and account for two out of five or 40% of the homeowners in the country.

Buyers have been led down the path of focusing on location, interest rates and inventory. The most important factor to take into consideration, however, is buying behavior based on age.

Thanks to the U.S. Census Bureau and Dent Research we can see that Americans tend to buy their first house at 31, their largest around 41 and sell those same homes at 79.

Born between 1946 and 1964, baby boomers turn anywhere from 55 to 73 this year. From 1980 to 2000 40% of all homes purchased in the U.S. were on lot sizes of a half acre to 10 acres, according to Dent Research. That is a 20-year period, where individual thinking boomers who were doing the same thing at the same time of the age group couldn’t live without their magnificent McMansions.

It stands to reason for this observer that current prices are a direct result of 76 million Americans coming into the equation. It didn’t matter whether the population was legal or illegal, legitimate or illegitimate.

With all of that demand for housing coming out of the woodwork, home prices must go up. On the other side of the equation, it becomes reasonable that when boomers who constitute 24% of the U.S. population go to heaven the supply and demand principles come back into play.

When 130 years of residential real estate remains on this earth after 76 million people go to heaven without those McMansions, you tell me where you think prices are headed.

From 1929-32 New York real estate declined 69%, wrote Zubin Jelveh in The New Republic in September 2009. That’s the same time that the stock market was off 89%, according to Yahoo Finance.

Jelveh went on to say, “A home owner who would have invested in a house on the eve of the Great Depression would not have recovered the full value of their investment until four decades later.”

If you were an adult in the early 1900s the average age of death was mid-50s, according to the U.S. Census Bureau. So you died with great regret long before prices fully recovered.

Neither of those events could ever happen again, right? Investors understand buy low, sell high. The same stock logic applies to all highly appreciated assets.

Savvy investors don’t let emotion dictate their behavior. Or you can be in the middle the pack or at the back of a herd of cows, where the view and the smell never changes.

John L. Grace is president of Investor’s Advantage Corp, a Los Angeles-area financial planning firm that has been helping investors manage wealth and prepare for a more prosperous future since 1979. His On the Money column runs monthly in The Wave.

This article originally appeared in the Wave Newspapers. 

posted by Wave Staff

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Business

OP-ED: Proposition 44 Would Put a Price on Trust

The danger in Proposition 44 is not only its 90 percent figure. It is that the meaning of “qualifying” spending will be worked out later. A clinic preparing a budget today may not know whether a navigator, health educator, transportation program, outreach worker, technology upgrade, or other patient-support service will be counted the way it expects. Yet the financial consequence of getting it wrong could be immediate.

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iStock.

Oakland’s public conversation about health care must begin with a simple truth: a doctor’s appointment is not the same thing as access to care.

For a mother juggling work and child care, access may mean a text-message reminder, a bus pass, an evening appointment, or someone who can explain what Medi-Cal covers. For an older patient managing diabetes, it may mean help scheduling a specialist visit and understanding new medications. For a family that has been dismissed or misunderstood in medical settings, access may begin with meeting a community health worker who knows the neighborhood, speaks their language, and treats their concerns with respect.

Community health clinics make that kind of care possible. They are part medical provider, part navigator, part educator, and part trusted local institution. Proposition 44 threatens to narrow the definition of what counts as patient care in a way that could undermine the very supports that allow patients to receive it.

The statewide measure would require covered nonprofit community clinics to spend at least 90 percent of their annual revenue on health care or qualifying program services. The ballot measure directs the Attorney General to establish more detailed guidance on what expenses qualify. Clinics that do not meet the threshold could face penalties for the difference. The Legislative Analyst’s Office reports that affected clinics currently spend an average of about 80 percent of revenue on health care services.

A percentage may look like a clean measure of accountability. But health care is not cleanly divided between what happens inside an examination room and everything that enables a patient to enter one.

Consider the work that happens before and after a visit. Clinic staff maintain confidential patient records. They follow up after missed appointments. They keep information systems secure. They recruit and train employees in an expensive and competitive health care labor market. They coordinate referrals, process claims, purchase supplies, maintain buildings, and make certain that patients are not lost somewhere between diagnosis and treatment.

Oakland families should not be asked to accept the fiction that these functions are unrelated to care.

The danger in Proposition 44 is not only its 90 percent figure. It is that the meaning of “qualifying” spending will be worked out later. A clinic preparing a budget today may not know whether a navigator, health educator, transportation program, outreach worker, technology upgrade, or other patient-support service will be counted the way it expects. Yet the financial consequence of getting it wrong could be immediate.

The Legislative Analyst’s Office says clinics falling short of the requirement could be required to pay the shortfall amount to the state and could seek to recover the money only if they show compliance within five years. The same analysis estimates state enforcement costs in the low tens of millions of dollars annually, supported by fees.

That is a troubling arrangement for organizations that are expected to provide care to people with the fewest alternatives.

Oakland has learned that trust is not built through slogans. It is built when a patient is listened to, when a parent can secure an appointment for a child, when a clinic returns a call, and when a person receives help without being shamed for their income, insurance, language, immigration history, or prior experience with the system.

For Black residents in particular, trustworthy care is not an abstract goal. Persistent inequities in health outcomes and patient treatment are real. Community-centered clinics can help bridge the gap with culturally responsive staff, patient navigators, behavioral-health programs, and partnerships that understand the conditions shaping health outside the clinic door.

Proposition 44 could pressure providers to treat those supports as expendable because they do not fit neatly into a state-enforced formula. That would be a mistake.

Accountability is necessary. Clinics that receive public resources should be transparent, well governed, and focused on their mission. But good oversight asks whether patients are being served well, whether money is managed responsibly, and whether communities can obtain needed care. It should not rely on a rigid ratio that may punish clinics for doing the hard work of reaching people who need more than a brief medical encounter.

A broad coalition of providers and community organizations opposes Proposition 44, including the California Primary Care Association, the California Medical Association, the California Hospital Association, Planned Parenthood Affiliates of California, and the California Teachers Association.

Oakland needs health policy that expands the circle of care. Proposition 44 risks drawing that circle smaller.

The Oakland Post editorial board urges a No vote on Proposition 44.

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Business

OP-ED: Proposition 40: It’s Time to Play Chess, Not Checkers

Proposition 40 would impose a one-time 5 percent tax on the wealth of Californians with more than $1 billion in assets. Most of that money would go toward health care, with the remainder supporting food assistance and education-related programs.

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Photo: iStockphoto.

I understand the frustration driving Proposition 40. I share our labor partners’ concerns about protecting health care and essential services at a time when working families are already under enormous pressure.

But labor itself is divided over Proposition 40, and there is good reason to look carefully at what this measure could mean beyond the money it promises to raise.

Proposition 40 would impose a one-time 5 percent tax on the wealth of Californians with more than $1 billion in assets. Most of that money would go toward health care, with the remainder supporting food assistance and education-related programs.

Those are worthy investments. The question is whether this is the right way to pay for them.

California’s independent Legislative Analyst says the measure could raise tens of billions of dollars in the short term. But that same analysis warns that California could eventually lose hundreds of millions of dollars a year in ongoing income-tax revenue if some wealthy taxpayers leave the state or change their financial behavior.

That matters because those dollars help support the General Fund and the broader system of programs and services Californians rely on.

So let’s be clear: This is not about feeling sorry for billionaires. Billionaires will be fine.

This is about protecting the people who will not be fine if we get the policy wrong.

For decades, those of us in Black media have watched public policy debates move from crisis to crisis. We have also watched Black communities deal with the consequences when decisions made in Sacramento or Washington did not fully consider what would happen two, three, or four moves later.

We know what happens when funding disappears. Community organizations struggle. Small businesses lose support. Programs serving young people are squeezed. Schools and local governments are asked to do more with less. The people with the fewest resources are usually the first to feel the consequences.

That history should make us cautious about making major changes to California’s tax system without considering the entire board.

If California believes billionaires should contribute more, then let’s have that conversation. There is nothing unreasonable about asking whether people who have benefited enormously from California’s economy should contribute more to sustaining it.

But we should build tax policy that is thoughtful, sustainable, and difficult to avoid. We should not create a temporary solution that could leave us confronting another revenue problem down the road.

This is also why I respect those in labor who support Proposition 40, even though I have reached a different conclusion. They are responding to very real concerns about health care and the people who depend on it. Those concerns should not be dismissed.

But neither should legitimate questions about Proposition 40.

Too often our politics tells us that if we agree with the goal, we must agree with the proposed solution. That is not how responsible public policy works.

You can believe health care must be protected and still question the mechanism being proposed to protect it.

You can believe billionaires should pay more and still ask whether this particular tax is the smartest way to accomplish that.

And you can stand with working people while insisting that California consider the long-term consequences for all of the public programs working people depend upon.

We need to stop treating complicated economic decisions like a game of checkers, where we look only at the move directly in front of us.

We need to play chess.

Look at the whole board. Think several moves ahead. Understand what happens after the first check is collected and spent.

The question before Californians is not whether billionaires can afford to pay more. They can.

The question is whether Proposition 40 is the right way to do it and whether we are confident enough in the consequences to make this kind of change.

Our communities cannot afford for us to discover the answer too late.

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Economy

Poll: Becerra Widens His Lead Over Hilton; Californians Split on Wealth Tax

A new Public Policy Institute of California poll shows Democrat Xavier Becerra leads Republican Steve Hilton by 22 points in California’s governor’s race, with 60% of likely voters supporting Becerra compared to 38% for Hilton. The September survey also reveals Californians are closely divided on a proposed one-time tax on billionaires, with 52% of likely voters in favor of Proposition 40. Affordability issues are a major factor for voters. Read more to learn about the poll’s additional findings on voter sentiment.

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Democrat Xavier Becerra and Republican Steve Hilton.

Democrat Xavier Becerra holds a 22-point lead over Republican Steve Hilton in California’s governor’s race, while voters remain closely divided over a proposed one-time tax on billionaires, according to a new Public Policy Institute of California poll.

The September PPIC survey found that 60% of likely voters support Becerra, compared with 38% for Hilton. His lead is actually narrower than it was in July, when he led Hilton 61% to 36%.

Becerra leads among independent voters, with 57% supporting him compared with 38% for Hilton. Party loyalty remains strong, with 93% of Democratic likely voters backing Becerra and 92% of Republicans supporting Hilton. 

Hilton leads in the Central Valley, where 52% of likely voters support him compared with 46% for Becerra.

Affordability remains a major factor: 65% of likely voters say candidates’ plans to address cost-of-living issues are “very important” to their vote.

“Affordability continues to be top of mind for Californians when considering their choice for governor,” said Mark Baldassare, PPIC Statewide Survey director and Miller Chair in Public Policy.

The poll also found a narrow split over Proposition 40, a proposed one-time tax of up to 5% on taxpayers with assets exceeding $1 billion. Fifty-two percent of likely voters said they would vote yes, while 46% said they would vote no.

Support for the wealth tax varies sharply by party. Seventy-two percent of Democrats favor Proposition 40, compared with 46% of independents and 21% of Republicans.

Two competing measures also drew majority support. Fifty-one percent back Proposition 41, while 54% support Proposition 42, both of which could affect the wealth-tax proposal.

The findings come as Californians express broader frustration with the state’s political direction. Seventy-one percent of likely voters expect bad economic times in California over the next year.

“Californians are clearly grumpy and aren’t enamored with any particular political party or movement,” Baldassare said.

The survey interviewed 1,745 California adults, including 1,103 likely voters, from Sept. 4-10. The margin of error for likely voters is plus or minus 3.8 percentage points.

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