When the Children are all grown up…

I was surprised to see that many 20-year old’s are looking for a special kind of property in the North American urban market: One that has a ‘granny flat’ so that they can have their parent or parents move in with them when they no longer need to pay the mortgage on the Family home. This is a wonderful idea when you consider the reasons why this has come about:

Families are having children later in order to enjoy a firmer start to their careers, which means they aren’t ending with their mortgages until their late sixties. This delay in their career line has been passed down to today’s teenagers, who expect a ‘gap year’ when they leave High School! This used to be the preserve of either the rich after a handful of years in Further education, AND getting their degrees, or gangs of perma-drunk females from Australia in VW microbuses – well it was if you were brought up in Europe.

Just like everything else in today’s life, the culture of entitlement we have in the ‘developed world’ now means that everyone must have it, so most kids aren’t even looking at a career until their mid-twenties. Following the ‘gap year’, there’s now the ’sleeping-in-till-noon-while-living-at-home year’.

So we extend our adolescense, and work until our early 70’s, pay the mortgage off, and go get our revenge on our kids by living with them, and blasting Adam Ant on the Stereo to say to the kids: “There! How do you like it?”

While on the same subject, there is a distateful commercial on TV from Exxon, that mentions the rise of the Middle Class in the BRIC countries (Brazil, India, and China), in a very haughty way, mentioning that they need ‘greater access to fuels’, like those same parents, trying to get their 22-year old’s to work.

What we in the Western world, the ‘parents’, have done is raised the expectations of people that have taken two generations to go from the Colonized, through the Poverty struck, too something resembling life as we know it. We have used them as cheap labour, and a home to factories and plants too poisonous for our neighbourhoods for almost half-a-century, and are now blaming them for the mess that they have left, and the strain on the environment.

At some point in their life, every parent realises that their kids have grown up (and gotten their butts out of the TV chair?), and then we expect them to look after us. Isn’t it time that we did this with these developing countries? They are the next generation of this planet’s First World, as we fade into the background.  It’s time to start a dialogue about them looking after us in our dotage.

If they need more R and D assistance, more education, more fuel, more leeway, less Culture of ours being forced on them (Adam Ant, again), and more of us beginning to understand theirs.

We are going to need someone to look after us in the next 20 years – let’s see if we can use our lives as the Granny Flat under their ever expanding house.

What is your house really worth?

What will your house be worth in 15 years?

Many of us are assuming that the equity we have in our homes will be used in part for retirement or upgrading to larger properties. In the current financial climate, it is worth checking exactly how much that actually is.

In August 2007, the ’sub-prime’ mortgage market imploded, leading to almost 10% of all North American residential properties either in foreclosure, or quickly getting there. What in the name of Martha Stewart happened?

It’s an example of how the investment industry has invented new and often inferior ways of selling exactly the same thing – stocks and bonds. Our Boom generation has so much money in invested in  other people’s invisible worth (including debt), that we often make decisions on how to make some money without looking at all of dangers that lurk inside transactions that trade computerized hands globally at the speed of light every minute of every day.

Asset Backed Commercial Paper (ABCP’s) are a symbol of the ever-increasingly complicated Investment industry. These are short-term notes backed by securitized loans (ranging from everyday auto loans to immigrant loans) and many more long term debt, like unleveraged CDO’s, and more letter collections that we haven’t heard of. It results in a ‘layer cake’ of debt, each strata being a different form of debt, that is sliced into manageable packages, and passed onto financial institutions to hold for short amount of time. Like any kind of rental, banks and savings and loans, earn profit on the debt for holding it before passing on their ’slice’ around the tea table to someone else.

Now, what happens when someone receiving a slice of cake says:” These are a little too much for me, I’ll pass.” Too much in this case being too much risk to hold at once. For that split second, some institution (And many think it was Saudi or Chinese in origin), decided that they had enough debt on their plates for that split second, and the entire line stopped. Plates can’t go forward or back, and everyone looks at their debt more closely. Here, they see that there is so much residential mortgage debt attributed to everyday folks, whose only standard for receiving a mortgage was that their heart was beating in their banker’s office at the time.

When the line stops, the debt comes back to it’s originator - large scale investment banks, and we all know what happened to one of these. Bear Stearns has gone, under a mountain of returned debt, and the US government had to step in to sell it at a fire-sale price.

Because house owners do not have a close relationship with the mortgager, they simply walk when they can’t afford to pay a mortgage. House prices plummet (and it has happened in the last year or so) and, as a result – yours is probably worth no more than last year, and possibly less.

In a future post, we can examine what effect this has on towns and cities, so if you have a comment, or more facts, let’s have them and we can include them.

This is not getting any better, it’s getting worse. Some pundits realise that this could be the tipping point that sends North America into a 10 – 15 year recession. That’s the next 15 years before your property is worth what it’s worth now.

So check your property price, and imagine living on that after 15 years of more everyday price rises; or look back to 1993, and see what your house was worth then, and how far would that get you today?

The World is changing, and you need a New Future in order to get over this, and other new realities. Let’s get ready for change.

Look at the date!

The Baby Boom is over! This HUGE demographic is beginning to retire, and this means that your life tommorrow will be diferent than it is today. Are you ready for the New Future?

Perhaps it’s time to go out on your own: Affiliate marketing,or some other business. Not just to earn earn money, in a home-based business, but to find out more of this new wave, SEO-driven, Internet marketing, social marketplace world. Cyberspace has replaced the ‘real’ world in terms of communication and business marketing.