10 Years Later: The Housing Market Flip

We dug back into the archives on Carolina Plantations back to our eNewsletter dated October 2011. Exactly ten years ago, Doug penned an article “Selling for Less” in The Front Porch Gazette, which was the predecessor to Carolina Dreamin’, our current eNewsletter format.

The county was three years removed from the gut-wrenching financial collapse of our economy. Most homeowners across the country were selling their homes for less than they were valued in 2007 and early 2008.

The article pointed out that if you were selling your home in DC, NJ, PA, or MA, whatever you might be losing up there, you would be gaining down here, as our prices also tumbled. Fast forward ten years, and well, that certainly is not the case as just about every home listed in America sells within 48 hours.

But wait! Isn’t there some kind of irony going on here? We mean, does either market hurt you? Follow this logic for a second. Let’s look at what would have happened if you sold your home in 2011 for $400,000 or $500,000 in 2011.

Value of your Home Sale 2011           $400,000

Current Loan Balance 10/11               $100,000

Equity in your home                           $300,000

Cost of new home in NC                     $350,000

Net Cost of new Home                       $50,000


Value of Your Home in 2021              $500,000

Current Loan Balance 10/21               $50,000

Equity in your Home                           $450,000

Cost of new home in NC                     $450,000

Net Cost of New Home                       $0

We all know that the monthly cost of a $50,000 mortgage is relatively small (about $225 a month), so the irony lies in the fact that your home went up by $100,000. However, so did the cost to build a house down here in North Carolina. The net/net to you in this market is favorable but perhaps not as much as you had imagined due to the costs of building a home rising over the last ten years.

The problem today for many people deals with sitting on the sidelines waiting for lumber and materials prices to come down from their high earlier this summer. The retail costs have adjusted quite a bit; however, those prices adjustments just don’t seem to have made it through the supply chain yet, as many builders Doug has spoken to recently claim prices for almost all building products are still up sharply from the beginning of 2021. Until this occurs, resale homes appear to be the best bet financially, and this is what continues to drive a good portion of our real estate market in our country. If you’re ready to make that move from the Northeast to our beautiful shores of North Carolina, give us a call today. We are prepared to help you make the right decision to retire to Brunswick County.

Retirement Years: The Importance of “Stuff”

So, imagine it is your first full day of retirement in your Dream Home – you know, the one you have been thinking about for years? You and your loved one cook a healthy breakfast of stewed kale and dried prunes (major yuck, by the way) with a touch of nutmeg and a sprig of mint (double yuck) and enjoy reading the local newspaper from front to back, all the while holding hands and saying “I love you” for two hours.

Man & Woman sitting at kitchen table eating breakfast. Says on the picture "A Healthy Retirement Breakfast"

And when you’re finished, the clock on the wall says 7:30 am, and you two lovebirds realize that you need some time apart, as in perhaps 8 – 10 hours??

Since January of 2002, when Doug joined the on-site sales team at Winding River Plantation in Brunswick County, he helped thousands of couples and singles determine if living in Coastal North Carolina met their requirements. Fourteen years ago, Doug opened Carolina Plantations Real Estate in Shallotte with the company’s backbone being out “Martini Theory.” Simply put, incorporating this 3-step philosophy of Area first, followed by Community, and lastly,y the Dream House has been a life-changer for thousands upon thousands of retirees.

When we speak of Area, our fantastic team of Brokers often interject the word “stuff” to describe the goods and services most of us depend on daily, monthly, or weekly. When you leave the breakfast table at 7:30 with or without your loved one, you will be more than likely to seek numerous goods and services outside your community. Yes, what is inside your community essential. However, what lies outside the finely maintained front entrance can often be more critical.

Let’s see if we can break down the technical word “stuff” for a better understanding of your lifestyle when you retire, ok?

Medical

  • First, you might be surprised how many people assume that there are good medical services wherever they search. Man, how wrong can they be? Imagine being a 45-minute to an hour drive from your primary provider, specialists, or hospital?
  • FACT: Yes, we are getting older, and most of us will need to seek more medical care as the year’s stream past us.
  • While many of us have been healthy for our first 60 or so years, we need to “anticipate” the fact that God will deal with us. So locating yourself nearby to medical care is critical.
5 pictures in one picture, first picture of doctor and patient in a office, 2nd picture is family on a vacation, 3rd picture two woman shopping, 4th picture is the blue man group beating on drums with paint, last picture is man golfing

Dining

  • Many retirees will become “foodies” and “wine connoisseurs.”
  • This is hard to do if your round trips to such dining establishments are 90 minutes or more.
  • The further away eclectic dining, fine dining, international dining, and fun dining are away from your home, the less likely you will be to experience what the area has to offer.

Shopping

  • Not that shopping is critical to most retirees, but when your days are full of nothing to do vs. boardroom meetings, business trips, PTA meetings, and Rotary luncheons, you will shop.
  • And we are talking about Costco, grocery stores, Walmart, malls, gift shops, downtowns, and more.
  • Don’t forget that as we age, our eyesight and desire to drive often wains.

Entertainment

  • You are retired, and you will take advantage of them if you live close to lovely venues.
  • We are talking movie theaters, museums, live theater productions, concerts, and more.
  • Do you want to attend these events, have a few pops, and drive 30+ miles home when you’re 70?

Sports & Outdoor Activities

  • You cannot stay home seven days a week and watch Mary Tyler Moore reruns. You need to find outside activities to participate in (outside your community).
  • For example, additional golf courses, walking on the beach, visiting gardens, walking on a Riverwalk, spending time in a park, hiking, walking downtown are just a few to mention.
  • You might also want to join a gym or the YMCA, learn to kayak, fish on the beach, take up tennis. There is so much to do on the coast.

“Stuff” can make or break a happy retirement. Over the years, we have met hundreds of people who honestly made the simple mistake of “assuming” that all they needed was just down the street. But imagine your grocery store of choice is a 90-minute roundtrip drive. What about driving 2 hours roundtrip to get to your doctor’s. Those distances might have been acceptable in our 30s & 40s, but they will not be in our 60s and up.

When you search for a place to retire to, remember that an essential part of the search is “The Area” – and what makes up the area is “Stuff.” It’s also critical to consider that in 10 years, you’ll be in your 70s or 80s, so the distance to “Stuff” can be a game-changer for driving 90 minutes roundtrip to your doctor or favorite grocery store where it may not be an option. We at Carolina Plantations are here to help you find your retirement home here on the North Carolina Coast.

Retirement: Don’t Overdo It

A few weeks ago, Doug did an online search for “top retirement issues.” The results were not surprising and rising to the top of every list was financial issues. In essence, make sure that you have enough to retire on comfortably.

stacks of money all over the picture.

He took away from those articles a plan to expect the unexpected, as many surprises can occur in our 60s and beyond. The following is a quick snapshot of actual numbers for a person retiring.

  • Let’s say that Sally is about to retire and currently earns $100,000 a year
  • Assume Sally does not have any kind of pension
  • The rule of thumb says Sally will need 80% of her pre-retirement income
  • So, how does Sally get to $80,000 a year in retirement income?
  • Let’s assume her Social Security is $3,000 a month or $36,000 a year
  • That leaves a shortfall of $44,000
  • If Sally has $1,000,000 in stocks, she will need a 55% return annually or $50,000
  • This equation stipulates that Sally does not touch the principle
  • This would provide Sally with $86,000 a year

Here are the significant variables that could influence the above scenario:

  • Sally will need to receive a 5% return annually. More is better, however, if the market tanks. Sally will have to dig into her principle probably. That means Sally will have to rebuild that principle soon.
  • Sally’s most significant variable is her health, as her insurance and Medicaid do not cover 100% of her bills. A couple of unexpected hospital or doctor visits can quickly cause Sally to dig into her principle.
  • Children, siblings, parents, and grandchildren can also easily add to Sally’s financial obligations, as family issues can come out of nowhere and cause significant short-term and long-term financial constraints.
  • Managing debt can also be a silent killer for many. Piling up credit card debt, in particular, is more common than most of us think. Plus, the costs associated with purchasing a new home or car can also increase debt dramatically.
  • Gifts. It is pretty standard for grandparents to want to support their children and grandchildren. This could be money for a house down payment, a car, college tuition, and more. Plus, many people like supporting their church, alma mater, civic organization, etc.

In essence, most retirees live on a fixed income. There are no more overtime hours to count on, quarterly or annual bonuses, pay raises and promotions, etc. And while inheritances from parents or other relatives can happen, it is wise not to count too much on them for unexpected expenses can severely curtail your possible windfall.

Over the years, Doug has seen some retired people forced to make tough decisions regarding their finances. He guesses that they did not invest enough time and effort into laying out their expected and unexpected costs – aka budget. The results ran the gamut of selling their Dream Home and downsizing, moving back home, and getting back in the job market.

You’ve worked hard for 30-40 years, building up a nest egg so that you can retire comfortably. One last variable that can affect your financial stability is managing your ego.

yellow expensive car on left, white boat on right on the water speeding

Let’s fast forward to your retirement day, and you have $3.5M with a stockbroker, half a million in your savings, and your $475,000 is paid off. You’re rich, rich beyond your wildest dreams, and it’s time to pound your chest a little bit and let the world know so that you can go on a bit of a spending spree. Sure, you may only spend $40,000 (or more) on a new car, boat, jewelry, artwork, or a trip around the world. But for the most part, that was an expense that is either gone or probably severely devalued the minute you laid down your American Express Platinum Card.

We’ve seen professional athletes for decades sign multi-million-dollar contracts only to find out years later that they have nothing left. Be careful not to allow your ego to ruin your retirement because it can and will. Don’t become a statistic of poor judgment.

When we look back at the slide of 2008/2009, many people said that their retirement planning was sound and they were safe from unknown variables. Let those who suffered so mightily be our guiding lights to live a long and prosperous future! If you’re ready to sit down and find your dream retirement home here on the beautiful coast of North Carolina, we’re here for you.

Caution: Closely Monitor Your Real Estate Market

Recently, Doug has read two articles that talk about a potential factor that will more than likely contribute to a slowdown in our national economy – the housing market. Trust us, we are not a naysayer at all, but there is some pretty strong logic to what lies ahead for much of the country.

The “Baby Boomers” are defined as people born between 1946 and 1964. Doug is a Baby Boomer and gust what? He is one of the 74.6 million Baby Boomers born in the post war era. Today, the population of BBs are down approximately 10 million. However, if you take into consideration immigration to the US during those years, we could still be looking at about 75 million Baby Boomers here in the states.

As a group, our wealth is staggering, and our buying power almost immeasurable. We are saving and hard workers, and many have paid off their full-time residences. We invest in the stock market (and other securities) and about 10,000 of us are retiring every day.

Should You Sell Your Home Now?

However, there is a glitch. The generations behind us are not nearly as diligent as we are and the percentage of homeowners are amongst those generations is lower than ours. In essence, there may not be enough of them to purchase all our homes when we put them on the market to retire. This is what economists are concerned about, and if it comes to fruition, will certainly sound the alarms for an economic slowdown here in the states.

The good news is that we should still have another good 3-7 years of Baby Boomers selling their homes for a fair market price and retiring preferable somewhere warmer, and purchasing a less expensive home. Although Doug still likes to quote a client of his from New Jersey who years ago said to his friends, “My wife and I are downsizing to a bigger home!!”

One factor though that could be exacerbating this market trend are the new tax laws up north that are limiting the amount of annual interest from you home mortgage that can be deducted. Due to these new rules and others that are being enacted, home ownership may not be as attractive as in decades past, so the results to home buyers in these states is a coin flip, for now.

How We Can Help

Our team of 10 Brokers has worked with tens of thousands of clients in our real estate careers. We know that timing a market, whether it be a stock market, housing market, futures market, etc., is nearly impossible to do a lay person. What we have been fortunate to see though over the years are people taking advantage of the old adage of “Selling High and Buying Low.” Imagine after 25 years you finally get around to cleaning up your house and yard to near new condition and whoah Nellie, there’s nobody knocking on your door to see your beautiful home? Said it ain’t so, Joe!!

So, today’s food for thought is passing along to you what some other folks have done:

  • Sell NOW, Rent, then Purchase – Take advantage of a strong market in your community, sell for a good profit, rent something in your area until you can retire. Then you can come south and purchase your Dream Home.
  • Retire Now, Sell Now and Move Now! If your home can bring you a profit that is nearly too good to pass up now, then factor that into your financial retirement plan and you might be telling your co-workers Adios as you take that sack of unmarked $100s from the sale of your home and head to warmer and greener pastures, wherever that might be.

Just don’t be that person who knows the market so well that you are the last in your neighborhood to place that “For Sale” Sign up in the yard. Keep in mind that the choice really is yours and walk away with guaranteed cash vs giving your home away. A little bit of jostling & inconvenience for 6-12 months might have everything to do with your successful retirement. Allow us at Carolina Plantations help you find your dream home here on the North Carolina Coast!

 

Should We Have Zigged When We Zagged?

On any given day in the life of an adult, we make approximately 35,000 decisions. Therefore, in a one-year period, an adult makes nearly 12,775,000 decisions. No wonder why Doug goes to bed so early each night – he just made a whole lot of decisions!

With all these decisions to make, it’s easy for us to look back and say “hey, what would have happened if we zigged instead of zagged?” Or, what if we chose this profession over that profession? Or should Doug have attended Harvard vs. University of Tennessee? (Go Vols) Or how about if he chose this family to grow up with versus that family? (just kidding, we all know that Doug made the right decision in life.)

Should We Have Zigged When We Zagged?

Here’s a good example of a zig-or-zag story:

 Back in the mid-90s when Doug was living north of Boston, he and his neighbor Bill and his buddy Ed from Chicago, took a cruise. One evening about halfway through the 7-day cruise and before dinner, they were walking on the Lido deck in search of a cocktail, and as they approached the pool, there was a bar on the left with people and a bar on the right with people. Doug made the decision to go to the one on the right, where they met two sisters from Boston. Twenty or so years later, Bill is still married to one of those sisters and has 3 daughters. Imagine if they had zigged instead of zagged?

Important Decisions

We all make important decisions in our lives.  Some we choose correctly and others, perhaps not so well. But hey, life is too short to have regrets as the incorrect decisions hopefully pave the way for correct decisions down the line, right?

Today, we are all where we are at because we have made billions of well-guided decisions, so let’s take a step back and congratulate each other because there are a lot of places, we could be that are certainly less desirable! Doug means, our lives might be far from perfect however, on the other hand, Los Angeles currently has 59,000 homeless people – not 59,001, agreed?

Choosing ‘where to retire’ is unequivocally one of the last major decisions adults make, so it is imperative that one studies the effects of zigging or zagging, as the implications on your quality of remaining life lie in the ballast. In fact, we think y’all might be surprised how often we meet people who have zigged when they should have zagged and wound up making an expensive mistake. We all know that moving is one of the world’s worst experience and it’s also very costly too!

Best Team on the Coast

To Doug’s knowledge, there is no real estate company in America that is better educated on the area they serve than the team at Carolina Plantations. However, we know you may be checking out other areas, so be sure to find independent Brokers that can help educate you on the area/s you are looking at. Well informed Zigs or Zags will lead you to a happy retirement and if coastal North Carolina is right for you, Team Carolina Plantations wants to assist you on your first retirement move, not your second or third. We hope that you will be able to find your forever home here on our beautiful coast line!