Boomers Aren’t Selling; Marin Is Aging in Place; Why “Sell First, Then Buy” May Be the Wrong Move
There is a housing problem in California that almost nobody talks about enough.
A lot of homeowners simply are not moving.
Not because they love every part of their current house.
Not because they do not want to downsize.
But because the next move can feel financially worse.
AARP reported last week that nearly 1 in 3 baby boomers who own homes say they
may never sell. AARP
In California, the issue is especially visible in places like Marin County, where more than a third of residents are already age 60 or older. Los Angeles Times
That matters for inventory.
It matters for younger buyers.
And it matters for older homeowners sitting in homes that may no longer fit their lives.
I. WHY SO MANY OWNERS ARE STAYING PUT
The obvious reason is the mortgage.
A homeowner with a very low first-mortgage rate may look at today’s financing and say:
“Why would I give this up?”
Fair question.
But that is not the only issue.
Downsizing does not always mean buying something dramatically cheaper.
A smaller home, condo or retirement-friendly property can still be expensive.
HOA dues can be high.
Insurance can be high.
And in some markets, the smaller replacement home may cost nearly as much as the
larger house being sold. HousingWire
That can make “downsizing” feel like paying more to get less.
So people stay.
II. MARIN SHOWS WHAT THIS LOOKS LIKE
The Los Angeles Times recently highlighted Marin County as an extreme example of
California’s aging-in-place trend.
More than one-third of Marin residents are 60 or older, and that share is expected to
keep rising. Los Angeles Times
Many longtime homeowners are still occupying larger single-family homes after
children have moved out.
That is not inherently bad.
People should be able to stay in their homes as long as they want.
But there is a market consequence.
When fewer longtime owners sell, fewer homes come available for younger families
trying to move in.
California already has a supply problem.
Low turnover makes it tighter.
III. CALIFORNIA HOMEOWNERS 55+ HAVE A TOOL
MANY FORGET ABOUT
This is where Proposition 19 matters.
California homeowners who are at least 55 may be able to transfer the taxable value of
their principal residence to a replacement principal residence anywhere in California,
subject to the rules.
The replacement home must generally be purchased or newly constructed within two
years of the sale of the original home.
And qualifying homeowners can use the base-year-value transfer up to three times.
That can matter a lot for someone who has owned a California home for decades and
has a very low property-tax basis.
Without understanding Proposition 19, a homeowner may assume:
“If I move, my property taxes are going to explode.”
Sometimes they will increase.
But the answer can be very different from what the homeowner expects.
This is one of those cases where tax planning should be part of the housing
conversation before the move happens.
IV. THE BIGGER FINANCING QUESTION: DO YOU
REALLY HAVE TO SELL FIRST?
This is where I think a lot of homeowners get boxed in unnecessarily.
They assume the move has to look like this:
Sell the current home.
Move out.
Wait for the sale to close.
Then buy the next home.
That sequence can work.
But it can also create a mess.
Now the homeowner is trying to time two transactions perfectly.
They may need temporary housing.
They may feel pressured to buy the next property quickly.
And they may lose the ability to make a clean offer because their purchase depends on
selling first.
Depending on equity, income and the rest of the financial picture, there may be other
ways to structure the move.
That can include:
A HELOC.
A fixed home-equity loan.
A bridge-style loan.
A buy-before-you-sell strategy.
Or another temporary financing structure designed to access equity before the existing
home is sold.
These are not automatically the right answer.
They can carry higher rates, fees or short-term payment pressure.
But they can solve a very real problem:
How do I buy the next house before I sell this one?
V. SOMETIMES THE BEST “DOWNSIZE” ISN’T A
DOWNSIZE AT ALL
There is another piece of this.
Not every older homeowner needs to move.
For some families, the better solution may be adapting the current property.
That could mean:
Adding an ADU.
Creating a first-floor living space.
Renovating bathrooms.
Removing stairs or accessibility barriers.
Using home equity to age in place more comfortably.
A recent AARP report noted that homeowners age 62 and older hold a record $14.92
trillion in home equity nationally. AARP
That equity can create options.
The right answer might be to move.
The right answer might be to stay.
But either way, the homeowner should understand the choices before assuming they
are trapped.
THE BOTTOM LINE
California’s inventory problem is not just about builders failing to build enough homes.
It is also about turnover.
A lot of longtime homeowners are staying put because moving feels financially
unattractive or logistically difficult.
But some of those homeowners may have more flexibility than they realize.
If you are 55 or older and considering a move, I would look at four things before making
a decision:
Your current mortgage.
Your property-tax basis and potential Proposition 19 eligibility.
Your available home equity.
And whether you truly need to sell before you buy.
Sometimes staying is the best move.
Sometimes downsizing is.
And sometimes the real problem is not the house.
It is the way the move was structured.
About Michael Belfor
Michael Belfor is a Branch Manager and Loan Originator with approximately 24 years of
mortgage experience.
He has been recognized in American Pacific Mortgage’s President’s Club and among the
company’s Top 1% producers since 2017.
Michael works with homebuyers, homeowners, real estate investors and real estate professionals on conventional, jumbo, FHA, VA, down-payment assistance, self-employed and Non-QM financing, DSCR/investment loans, TICs, condos, renovation financing, HELOCs, home-equity loans, bridge financing and other complex mortgage scenarios.
Older California homeowners are staying put, tightening inventory. Learn how Proposition 19, home equity and buy-before-you-sell financing can create more options.
California downsizing, Proposition 19 mortgage, buy before you sell California, Marin County housing, bridge loan California, HELOC for downsize, California home equity
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