Love, Money + Real Estate #29
Ft. Myers rebuild. Parents supporting adult children. And our usual roundup of real estate news.
Greetings!
Last week, I was in Ft. Myers. Florida, for business meetings. I took the opportunity to take a drive down Estero Boulevard in Ft. Myers Beach and see the damage caused by Hurricane Ian (2022) and the rebuilding that’s taken place.
First, there are a lot of empty lots. Some have “for sale” signs propped up in the sand. Some have garbage and storm debris piled high.
Some of the rebuilding looks like this. Small houses and landscaping that are still being propped up. Work has begun, but not finished.
But most of the rebuilding looks a little different - and carries a much higher price point. According to Zillow, the value of single-family homes on Estero Boulevard start at around $16 million and go up to nearly $70 million. If you buy a lot for $4.5 million, a builder would expect to sell the new home build on it for at least three to four times that amount, or $13.5 to $18 million. (And with high-end finishes costing as much as $1,000 per square foot, the final price is likely to be far higher.)
What does a brand new $25 million house look like? This photo shows what some of the newly-built/renovated homes look like. (To my eye, some of them look like condo buildings, but I’ve been assured that they are indeed single-family homes.)
It isn’t hard to understand why local residents are seeing the value in selling their (now) vacant lots for $4.5 million and moving. If you didn’t have insurance, or enough insurance, and can’t afford to rebuild and insure your new home, then selling for and amount that is still life-changing and moving some cheaper makes economic sense.
What is interesting is that these high-priced homes have been built as quickly as they have. Florida is way short of builders, carpenters, painters, drywallers, etc. But somehow, money finds a way.
Real Estate (and other) News
Freddie Mac reports interest rates dropped again this week, to around 6.74% for a 30-year fixed rate loan. That’s the rate you’ll get with a top credit score. If your credit score is around 705, the national average, you’ll pay over 7% for the same loan.
How many people are homeless in the United States? It’s a hard number to pinpoint. LendingTree’s latest report says nearly 650,000 people are homeless.
California, New York and Florida have the largest homeless populations. Across the three heavily populated states, more than 315,000 people are homeless — nearly half of the identified homeless population in the U.S.
Wyoming, North Dakota and Mississippi have the smallest homeless populations. At 532, 784 and 982, these are the only three states where the count of people experiencing homelessness is below 1,000.
Redfin says home prices increased in all 50 top metro areas. But the bigger news is that listings increased. “New listings are up 13%, the biggest annual increase in nearly three years, and the total number of homes for sale is up 3%, the biggest increase in nine months.”
The interesting thing about this stat, is that almost all of these sellers will become buyers - and often they’re buyers buying with cash only — no mortgage. That’s stiff competition for buyers who do need a mortgage and have to worry about qualifying.
HUD launched a website to combat source of income discrimination for families using housing vouchers. “The Source of Income Protections website serves as a “one-stop shop” for HUD stakeholders that summarizes existing materials to explain what SOI discrimination looks like, identifies states and local jurisdictions that prohibit it, and provides resources for people who believe they have experienced this form of discrimination,” according to a HUD news release.
It isn’t just those who get housing vouchers who are discriminated against. Those with zero-down VA loans are discriminated against as well. My feeling about who you’re selling to boils down to this: It’s about the green. Doesn’t matter where it comes from but if you can sell to a Veteran, who has served our country, why wouldn’t you?
In more HUD news, Secretary Marcia L. Fudge announced she was stepping down from her post.
According to Clever, a real estate data site, homes have increased 2.5 times the rate of inflation since 2013.
According to the Employee Benefit Research Institute, there are 350 languages spoken in the U.S. English is predominantly spoken to communicate among the 1,500 different races and ethnicities residing in the country. And, it turns out that those who are most financially healthy speak English proficiently.
Hot Reads from ThinkGlink.com and Best Money Moves
Debt: How One Bad Move Can Wreck Your Financial Life
How to Protect Yourself from Real Estate Scams
Estate Planning: Trusts and Transfer on Death (TOD)
Neighbor Problems: Dangerous Conditions
4 Ways to Support Employees Living with Disabilities
Video: Using Technology in Financial Wellness Services
4 Things You’re Missing About Employee Financial Stress
3 Impacts of Employee Student Debt in 2024
Is there a question you’d like me to answer. Send an email to Questions@thinkglink.com.
Are You Still Financially Supporting Your Kids?
Nearly half of parents with a child over 18 provide them with at least some financial support, according to a recent report by Savings.com.
47% of parents with grown children provide them with some form of financial support (not including adult children with disabilities). This is a similar rate to last year’s report.
On average, parents providing financial support give $1,384 to their children monthly, or nearly $17,000 per year. That’s more than twice what the average working parent in our study contributed to their own retirement savings monthly ($609 on average). Non-retired parents still in the workforce contribute even more - an average of $1,476 monthly
61% of adult children living with their parents don’t contribute to any household expenses, including rent.
46% of parents who financially support adult children give them money for vacations and discretionary spending, and 18% help their adult kids pay off credit cards.
58% of parents agree they have sacrificed their own financial security for the sake of their adult children. Last year, only 37% of parents said the same.
Though most parents attach some strings to the help they give their adult kids, 29% of parents do so without any conditions.
What are parents paying for?
And a few other jaw-dropping statistics from this survey:
61% of parents feel financially responsible for their adult children.
58% have sacrificed their own financial security.
56% feel pressured to provide financial support to their adult children even if it stretches their own financial resources beyond comfort.
61% say they’d be willing to live more frugally in order to continue providing financial support.
46% would pull money from savings or retirement accounts
37% say they’ll retire later to keep supporting their adult kids.
29% say they’d take on additional debt.
18% say they’d come out of retirement to help their adult children
What would you do if your adult children needed financial support? And, if you’re already financially supporting your adult children, how much are you giving them?
Is This Why More People Are Pulling Money From 401(k) Accounts?
Fidelity Investments and Vanguard published some data recently that looked at how many people pulled cash from their 401(k) accounts in 2023 compared with other years. According to this chart from the Wall Street Journal, last year 3.6% of 401k participants took an economic hardship withdrawal versus 2.8% the prior year. (There is a paywall on the link, I’m afraid.)
It left me wondering whether more people are facing economic hardship because they’re supporting their adult Gen Z and Millennial children. But, Vanguard’s survey suggests that perhaps there are other reasons:
Nearly 40% of those who took a hardship distribution last year did so to avoid foreclosure, compared with 36% in 2022. In 2023, more than 75% of hardship distributions totaled $5,000 or less, according to Vanguard. (Quote from the Wall Street Journal)
More people are putting more money into their 401(k)s. That’s a good thing. Auto-enrollment means when you join a company, you’re automatically enrolled into their 401k program. Unfortunately, when times get tight, some folks see that pot of cash as a place to turn. Good that you have it. Not so good if you have to use it for anything other than retirement.
That’s it for now. Type to you again, soon.
Ilyce
The Naples / Fort Myers area experienced a massive influx of builders and repair folks from out of state. I stayed in Naples a week after the hurricane and was amazed at the number of construction companies from out of state. In our Airbnb, we saw two months of tourists cancel after the hurricane, and repair crews replaced these reservations in a matter of days. All following the money.....