Psychologists have found that midlife is typically a time when many of us take stock of our values and goals. 

Resort Investments
Predictable Real Estate and Consumer Trends as Generations Change Aging through Life Stages.

Part One in a 4-part Series evaluating real estate and consumer predictions as generations transition throughout successive life stages.

Fifteen years ago in 2002, as Mammoth Lakes realtor Paul Oster reminded us, Harry Dent built several real estate scenarios on shifting demographics called “Age Demographics, Buying Cycles and Real Estate Appreciation”.

And years earlier management guru Peter Drucker wrote about how dismal most predictions turn out, except for one type.

Those based on fundamental demographics.

If I remember correctly he coined the phrase “Demographic Determinism”.

Dent said as a new generation enters the workforce around age 20, we can expect commercial real estate to boom.

20-Somethings in the Labor Force

But, why?

The influx of new workers stimulates demand for office space and manufacturing facilities. 

Since these new workers are also consumers, there is increased demand for new stores and shopping malls.

Of course Amazon, losing money quarter after quarter in 2002, had only just begun to exercise its disruptive influence over traditional retailing.

Why Go to the Mall?

And the older Millennials coming of age in high school may have remembered a time when Amazon didn’t exist, but their younger brothers and sisters act as if they didn’t.

But as a rule of thumb, when it comes to residential housing you can identify five age-specific buying cycles.

Over the life span of a generation, spending on each category accelerates to peak at predictable age intervals.

When an entire generation goes through such predictable property spending patterns, we get a macroeconomic view of the wave-like fluctuations in real estate demand.

As a result, investors can know years and even decades in advance what kinds of properties are going to be hot and when. 

For example, someone who is 52, a “youngish Baby Boomer” or “oldish Gen Xer,” and at the peak of his earnings doesn’t typically rent a one-or two-bedroom apartment for himself—though he might rent one for his 24-year old daughter.

Dream Vacation Home

Instead, he’s thinking about what kind of vacation home he wants or, if he’s already purchased it, how to transition to retirement in 10 years or so.

But, his daughter, just now transitioning from school-to-work, represents the median age for the Millennial generation.

In 2015 we already know her generation ranges in ages from 18 to 35.

They will be segmented into at least six life stage lifestyles.

  • 20-29 Year Old Singles
  • 20-44 Year Old Families
  • 25-54 Year Old Singles and Families
  • 30-44 Year Old Singles and Couples.

What’s their impact on apartments and retail shops?

The demand for rental apartments and retail space including shopping centers, begins to accelerate from 19 and peaks around age 26.

Here’s where the rules of thumb may need to hitch hike down the road for a few years.

Demand for Family Starter Homes

Starter home purchases begins accelerating at around age 26 and reaches a peak around age 33.


Maybe, something else is going on, as we track Millennials through time.

Part Two: Demographic Lifestyles and Buying Power


(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Two Ways to Stay Home

Part Four in a 4-part series weighing the pros and cons of investing in real estate over the course of a life time.

Peace of Mind that Home Equity Affords
Pulling the trigger on any major decision like this one with consequences (intended or unintended) will significantly impact the rest of your life.

Back in February of 2007 I read a FidelityReport published by Fidelity Research Institute that compared unlocking equity for investments to risks and relative returns of stocks, bonds and cash.

NOTE: Don’t take what follows as financial advice. If you haven’t consulted professionals, well, what are you waiting for? Do so at once!

Part One

Part Two

Part Three


Option Four – Stay in your home, invest your equity

Two Tactics.

Reverse Mortgage or

Home Equity Line Of Credit (HELOC)

HELOC scenarios:

HELOC rate is 8.0%; this is based on a loan for 80% of the home’s value and is .25% below prime (Source: Countrywide).

Assume that there is one refinance after 10 years.

HELOC mortgage interest deduction is limited to the interest on the first $100,000 of the loan.

Assumes home is sold off to pay the loan; if another mortgage is taken out, transaction costs could be lower. 


  • Allows both couples to live in their home.

    Enjoying the Fruits of their Labor
  • Works well when the home continues to appreciate in value.
  • The HELOC debt is covered by the increase in value.
  • After paying off the credit line heirs receive substantial legacies

Remember both couples could deduct the mortgage interest by itemizing on Federal taxes attributable to the first $100,000 of the loan.

HELOC transaction costs are also quite low at about 1% of the loan and the credit line offers flexibility in timing any drawdown.


  • The costs and responsibility of home maintenance.
  • As cost of living expenses increase both couples may be tempted to spend down more than the initial 80% debt value ceiling.
  • Or, as their home value increases they may  continually ramp up their debt.

    Risk of Foreclosure

Of course, they will need to make regular monthly payments on their HELOC or face the risk of foreclosure.

Reverse Mortgage scenarios:

Assumes that proposed legislation is enacted that would change housing limits to a national limit of $417,000.

Limit increases at 4% annually.

Assume current interest rate of 7% – includes the 6.5% interest rate and the .5% insurance premium.

Monthly servicing fee of $30/month is added annually.

This scenario assumes that interest rates stay fairly constant.

Reverse mortgage interest deduction is limited to the interest on the first $100,000 of the loan; accrued interest is deductible by the heirs in the year that it is paid. 

Leaving a Legacy for Heirs

It is assumed that the heirs will be able to deduct the mortgage interest in the year that it is paid, and that the heirs will be able to utilize $100,000 of that interest deduction. 

The utility of the deduction will depend on the individual tax situation of the heirs.

Assume home is sold to pay off loan; if another mortgage is taken out, transaction costs could be different.

Reverse mortgages

Enable these couples to receive regular payments (actually loans) secured against the value of their homes and be assured that they can remain in those homes for life. 


  • Homeowners live in their homes and tap into their substantial amount of equity.
  • Depending on their age.
  • Home value.
  • Prevailing interest rates.
  • As long as they live in their home, life is good.

No payments need to be made on the reverse mortgage (though they must, of course, cover the home’s routine expenses and maintain it). 

Better still, loan payments to the borrower may feel — and function — like ordinary income, but they are not taxable income. 

Under current law, payments received by a reverse mortgage borrower don’t count towards Medicaid resource limits provided they are spent each month and not accumulated. 

Here’s the bonus while you live in your home.

They don’t count toward the income threshold for determining whether regular Social Security payments are subject to federal income tax. 

Social Security Income and Taxes

Also, reverse mortgages do not count toward the $500,000 – $750,000 home equity test for nursing/long-term care assistance under Medicaid. 

Here’s the bonus for your kids.

Heirs to a home carrying reverse mortgage debt do sell, they should be able to deduct the mortgage interest (subject to any applicable limitations).


During 2007 Fidelity cautioned.

  • Because the reverse mortgage market is still emerging, upfront costs are much higher than a HELOC — up to several percent of the loan value. 
  • The product is complex and the amount available for lending is inversely correlated to interest rates — which are difficult to predict and impossible to control.

Are these five options the only scenarios for both couples?

It is possible to combine these strategies in various ways. 

Both couples could choose to combine the first scenario, 

Sell Home and Buy a Less Expensive Home, with either a HELOC or a Reverse Mortgage on the new home. 

Why would this be in their best interests?

They could generate incremental cash flow. 

Heirs would benefit from the new home.

Equity could be extracted for their comfort or future investments

But, here’s the kicker.

  • Time to age 94.

    How Long Before Age 94?
  • One couple’s planning horizon is 32 years while the other is just 19 years.

What’s yours?

You need to take into account the difference in possible home values, cash flows and other variables.

Think of it this way — if these couples chose one of these options in the (year 2016) — the results we project would be realized for the Walkers (by 2035)… the Smiths would not see the results the table suggests until (2048 )— the last year of their 32-year planning horizon. 

Since this age and timeframe difference is so substantial, the only meaningful comparisons to make are among each couple’s own options. 


Remember, don’t rely solely on your home equity as a significant retirement funding source.

  • Recurring cyclical downturns in real estate can inflict severe damage.
  • Investment returns on residential real estate have been lower historically than
    Nest Egg

    on stocks and bonds.

  • If you pour all your funds into your home you’ll have nothing left to invest for higher marginal returns.

Don’t count out the emotional components of owning a home.

The emotional aspects of homeownership can also present significant barriers to the use of home equity for retirees.

Whatever the financial case, the emotional investment involved can make it hard to sell, rent or float debt on a home after a lifetime of paying off mortgages — even if that strategy makes sense financially.

The comfort of living in a familiar home as one ages or the desire to leave the home’s full value to heirs compound many retirees reluctance to tap their home equity by either sale or leverage.

If you’ve planned well and acquired significant equity when reaching retirement age you’ve got multiple options for mobilizing it.

Decisions on precisely how to tap home equity require careful analysis and he financial and emotional trade-offs change as retirees age.

Non-financial personal preferences may quite reasonably trump sheer financial or cash flow benefits.

Peace of mind, convenience, familiarity are all real, if hard-to-quantify values.

Reverse mortgages do offer many advantages for retirees —

… notably, regular cash flows that do not count as taxable income. 

But this market needs to mature.

High initial costs of reverse mortgages scare off many retirees.

Many fear losing their homes to the lender, even though there is no such risk.

The reverse mortgage market will likely grow substantially once upfront costs drop, securitization takes hold, and customer awareness of potential advantages grows.

With your financial planner double-check all of the

Feel free to use this image, just link to www.SeniorLiving.Org
  • assumptions,
  • scenarios,
  • tradeoffs,
  • pros,
  • cons and
  • your spreadsheet calculations.

If the calculated risks are baked in, then go ahead with your eyes wide open.

Like all carpenters know, measure twice and cut one.

Pulling the trigger on any major decision like this one with consequences (intended or unintended) will significantly impact the rest of your life.

An excerpt from Book Four in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Rocky Mountain State.

Pros and Cons of 3 Options

Part Three in a 4-part series weighing the pros and cons of investing in real estate over the course of a life time.

Home Sale Assumptions
NOTE: – Double and triple check your scenarios with a financial planner whose fiduciary duty is to you!

Option One – Downsize and Buy.

Couples sell their home and purchase a less expensive house.


For both couples, this option

Generates extra income for consumption, provides a legacy for their heirs and allows them to enjoy the comfort and autonomy of home ownership. 

Security to Enjoy Life

It also preserves the option to further tap home equity in the future through various types of loans which will be discussed later.


Don’t forget both couples have to

… maintain and cover the continuing expenses of a home. 

They might also have difficulty finding a less expensive home in the same community — or timing that purchase with the sale of their original home. 

Or, the stress of relocation.

Once they find their new home, they have to incur the emotional and monetary costs associated with moving.

Option Two – Sell and Rent a less expensive residence


Both couples escape the expense and responsibility of maintaining a home.

Enjoy the Amenities

They might also have greater latitude to move to a different location immediately or as their circumstances change.


As renters, both couples lose control over their future housing costs.

They’ll face constraints when they want to personalize their home to suit their specific needs or tastes.

And maybe more significantly.

The Smiths, in their early 60s, could also face high cash outflows in rent for many years — longer than it takes to pay off a 30-year mortgage if they live until their mid-nineties.

Option Three – Become a landlord. And a renter.

A third option available to our couples would be to rent out their existing home and to rent a less expensive home.

If they convert their home to an investment property, this will introduce some changes to their financial situation. 

The income they receive from renting out their home will be treated as taxable income. 

They can now deduct certain home expenses such as insurance and maintenance and are able to take depreciation on the property.


Good news. The original home can be handed down to future generations —

… a potentially substantial benefit.


Cash flow concerns.

Unless the rental unit is significantly less expensive than the original home this choice will produce minimal additional cash flow.

At this stage in life do you really want a part-time job?

Fixing Up After Last Renter

Plus deal with the emotional wrench of maintaining your home for someone else.

Also, remember the following points for the renting out existing home scenario:

Home is depreciated on the 27.5 year straight-line method as required under current tax law. See IRS Publication 257 — Residential Rental Property.

Home maintenance and insurance are deductible as rental expenses.

An excerpt from Book Four in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Rocky Mountain State.



“Buy land, they’re not making it anymore.” — Mark Twain.

Unlocking Equity. From www.SeniorLiving.Org
Figure out if you should unlock that equity for investments.

Or more specifically, how to tap into your source of capital to fund your retirement.

Part One in a 4-part series weighing the pros and cons of investing in real estate over the course of a life time.

Nest Egg

Leaving aside rental and commercial property or other indirect forms of investing in real estate, such as REITs, a more common scenario involves typical homeowners.

Those who bought years ago, paid off their mortgage or will have shortly and despite the negative impact of The Great Recession managed to build a decent amount of equity.

Point one.  

Don’t take what follows as financial advice.

If you haven’t consulted professionals, well, what are you waiting for?

Do so at once!

Back in February of 2007 I read a FidelityReport published by Fidelity Research Institute that compared unlocking equity for investments to risks and relative returns of stocks, bonds and cash.

Point two. 

Fidelity emphasized how much a home, and therefore it’s equity, is subject to market cycles.

History lesson.

Previous generations of Americans treated home equity as an illiquid asset being built up almost invisibly as mortgages were paid down. 

History Lesson

They considered this growing equity either as an “asset of last resort” or as a source of bequests to heirs.

And, of course, back then those homes cost what a luxury car today goes for today.

So, it’s no surprise that future generations are on track to carry much larger mortgages.

And, they will continue to do so into their late middle age and even deep into their retirement years

… perhaps on the assumption that these larger debts will be compensated for by a continued rise in home values.

By 2007, more than 80% of all Americans over age 65 owned homes.

The median price of new homes in the United States has averaged an annual appreciation rate of 5.9% since 1963.

Point three.

Fidelity cautioned, even before the more recent Great Recession

Market Cycles

… historical experience suggests that real estate investments can suffer serious and sometimes prolonged downturns. 

Sometimes it can be across the board.

But, baring a prolonged deflationary slump teetering on an economic depression, it is certainly true for local regions struck by extended economic decline.

Local real estate prices and your return on investment rise and fall with economic factors

… such as interest rates, per capita income, building costs and unemployment rates. 

Shifts in your mortgage loan market can reduce your monthly payments.

Those innovations make housing more accessible.

Like variable rate and interest only loans.

But, they don’t come without their own set of risks.

Beyond the loan market, don’t forget to monitor important variables expanding or constricting the local supply of real estate properties.

  • General availability of land.
  • Land use restrictions.
  • Tough zoning rules.
  • Building regulations.
  • Slow administrative procedures.

And, of course shifts in demographic trends

  • Population growth.
  • Migration patterns.
  • Immigration rates.
  • Average household size.
  • Household formation age (individuals in their thirties).

Fidelity said American real estate values endured three sharp “corrections” during ten-year intervals.

  • From the early 1970’s to the early 1980’s.
  • During the early 1990’s.
  • And, during The Great Recession at the end of the 2000’s to mid 2010’s

With the severity and duration of the downturn that occurred in 2006 still uncertain (published in 2007).

Fidelity tracked investment performance back to before you were born.

How did they say real estate investments held up?

Returns on a dollar invested in residential real estate in 1963 have been only lightly better than returns on low-risk Treasury Bills.

What about compared to stocks, then?

Over this more than forty-year time period, real compound returns to stocks outpaced realty, averaging 5.95% versus returns of just 1.35% to real estate after adjusting for inflation. 

Downturns and Rebounts

So, if you took a dollar and invested it in the 1963 stock market it would have “compounded to $12.36 by 2006.”

But, the same dollar invested in real estate would have grown to just $1.79. 

What about those higher appreciation regions on the coast?

Golden Gate Bridge
On the West Coast. Golden Gate Bridge. Courtesy of

Even the highest appreciating regions of the country, the Northeast and West Coast, only realized real returns of 2.35% and 2.49%, respectfully, and underperformed the returns on bonds at 2.74%.

Don’t they say past performance isn’t a guarantee of future performance?

Still data are data.

Home values have underperformed stocks and bonds in terms of average annual returns over every five- and ten-year period from 1963 to 2005, but have only been slightly above the returns on treasury bills.

Why bother, then?

Part Two: Five Options for Unlocking Equity

An excerpt from Book Four in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Rocky Mountain State.


“Give yourself and your loved ones more choices and options.”

Anticipating What’s to Come

Why anticipation acts like an advanced warning device:  gain more control and thrive.

When it comes to suddenly losing your job without any advanced warning your world turns upside down and your confidence sinks like a rock.

You experience a process of loss.

That’s one of two possible responses.

The second is a process of anticipation.

The first drains all of your energy.

The second feels more like an adventure.

The first forces you to take drastic measures just to survive.

If only they gave you enough advanced warning to avoid the trauma.

Keep an Eye on The Future

If you received advanced warnings and acted on the potential threat, you could have activated a plan months before the event and gained more control over your fate.

But, in the real world it’s very rare to get any kind of warning, so you have to anticipate and adapt on your own.

You need to become your own strategic planning department to see the writing on the wall before it is too late.

Why Not Live in Paradise?

Following Mark’s lead, you need to anticipate the threats and opportunities that present themselves before you move to a Caribbean Island.

“It is common knowledge that if you follow your passions in your business or career, success normally hinges on the demand for it in the local community within a reasonable driving radius.” 

If you plan to move for higher quality-of-life reasons to a new neighborhood in a different state, you have to answer a whole host of questions.

Free to Live a Better Life

Can you still earn a living if the local economy doesn’t support your venture?

What if the town’s people reject you as an outsider?

Is there a way you can win them over?

Will you be forced to give up and move back?

Or is it possible to enjoy a new lifestyle and make money while you sleep?

Start with your passions.

From my 2009 chapter, Why Careers are like Real Estate Markets …

“While we may be in for a long downturn beginning in 2010 or 2011, new real estate opportunities will open up for savvy investors on the outskirts of premier resort communities. 

A new phenomenon is emerging thanks to ‘Web 2.0’ technologies. 

You can make money while you sleep by packaging your knowledge and using the Internet to your advantage.”

So my advice?

Assess your personality.

Focus on what you love doing.

But don’t stop there.

Become a strategic career investor.

“Give yourself and your loved ones more choices and options. In the process, avoid a prolonged downturn while prospering with a better quality of life anywhere in the world you want.”


(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Two in “The Knowledge Path Series” dedicated to helping you make more money from a lifestyle businesses you’re truly passionate about.

Grabbing an Option While Falling Through Space

Falling Through Space


From the same chapter, “Why Careers Are like Real Estate Markets”:

“Those of us who have been in transition (between jobs) can tell you that when you are blind-sided it’s not fun.” 

Major disruptions in our lives force us to change our normal habits.

A widespread and prolonged economic disruption across industries dictates …

  • where and how you retire,
  • the value of your house,
  • where you live,
  • your children’s education and
  • career choices,
  • your hobbies,
  • whether your are starting,
  • buying, or
  • selling a business,
  • your estate and
  • tax planning, and
  • even your charitable giving.

We know from change experts that we respond to a job loss in one of two ways.

The first is a version of walking the plank.

We’re pushed off a cliff into the valley of despair — the death-and-dying model — of

  • shock,
  • bargaining,
  • denial,
  • anger,
  • depression, and
  • finally acceptance.

Because we naturally practice selective filtering to focus on business as usual, we miss the clues that suggest just how close we’ve come to the edge of the cliff or plank.

Then we’re falling through space.

The Rules Have Changed.

And, they keep on changing!

A previous version originally appeared in the How We Got Here section of Adapt! How to Survive and Thrive in the Changing World of Work, in 2009, Co-Authored by Steve Howard .

It ‘s no longer enough to simply dream – it’s now more about making the best decisions possible in uncertain, confusing times — whether as individuals, teams or as organizational leaders.

When we come to a crossroads in our lives the path you’ve been on may feel like a dead-end.

But, you have many more options available to you than you initially realize.

You can choose any one of 11 options:

  1. Change positions in same organization;
  2. Change organizations in same field;
  3. Change careers;
  4. Work in the same job while moonlighting;
  5. Start a business from scratch;
  6. Buy a business with its own customers;
  7. Buy a franchise with a proven business model;
  8. Launch a consulting practice;
  9. Turn a hobby or artistic talent into a lifestyle business;
  10. Move to a lower-cost-of-living community and live on your investments and volunteer; or
  11. Retire, yet freelance or consult to supplement your income.