The U.S. Economy’s Secret Weapon: Seniors With Money to Spend
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    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,622,098 (+0.71%)       Melbourne $981,832 (-2.09%)       Brisbane $1,013,340 (-4.79%)       Adelaide $896,637 (+0.78%)       Perth $903,142 (+1.62%)       Hobart $735,716 (-0.79%)       Darwin $675,685 (-1.24%)       Canberra $972,155 (+0.42%)       National $1,049,225 (-0.40%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $759,302 (+0.34%)       Melbourne $499,445 (+0.32%)       Brisbane $599,093 (-1.20%)       Adelaide $476,655 (+3.47%)       Perth $470,566 (-0.17%)       Hobart $509,944 (+1.17%)       Darwin $371,905 (-0.35%)       Canberra $475,100 (+0.41%)       National $542,432 (+0.34%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 10,955 (+356)       Melbourne 15,624 (+2,213)       Brisbane 8,222 (+1,548)       Adelaide 2,183 (+305)       Perth 5,974 (+540)       Hobart 1,113 (+77)       Darwin 281 (-8)       Canberra 1,025 (+339)       National 45,377 (+5,370)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 9,327 (+197)       Melbourne 8,761 (+154)       Brisbane 1,718 (-9)       Adelaide 407 (+8)       Perth 1,445 (-1)       Hobart 176 (+1)       Darwin 371 (+3)       Canberra 1,046 (+14)       National 23,251 (+367)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $800 ($0)       Melbourne $610 ($0)       Brisbane $640 ($0)       Adelaide $600 (-$20)       Perth $660 (-$10)       Hobart $550 ($0)       Darwin $725 (+$5)       Canberra $670 (-$5)       National $665 (-$3)                UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $750 ($0)       Melbourne $580 ($0)       Brisbane $620 ($0)       Adelaide $500 ($0)       Perth $620 (+$10)       Hobart $450 (+$10)       Darwin $580 (-$18)       Canberra $550 ($0)       National $593 (-$)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 5,773 (-32)       Melbourne 6,547 (-53)       Brisbane 4,240 (-118)       Adelaide 1,353 (-76)       Perth 2,378 (-31)       Hobart 293 (-33)       Darwin 88 (+2)       Canberra 533 (-18)       National 21,205 (-359)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 10,090 (-221)       Melbourne 6,439 (-13)       Brisbane 2,285 (-27)       Adelaide 374 (-4)       Perth 671 (-47)       Hobart 120 (+1)       Darwin 160 (-3)       Canberra 799 (-17)       National 20,938 (-331)                HOUSE ANNUAL GROSS YIELDS AND TREND         Sydney 2.56% (↓)     Melbourne 3.23% (↑)      Brisbane 3.28% (↑)        Adelaide 3.48% (↓)       Perth 3.80% (↓)     Hobart 3.89% (↑)      Darwin 5.58% (↑)        Canberra 3.58% (↓)       National 3.30% (↓)            UNIT ANNUAL GROSS YIELDS AND TREND         Sydney 5.14% (↓)       Melbourne 6.04% (↓)     Brisbane 5.38% (↑)        Adelaide 5.45% (↓)     Perth 6.85% (↑)      Hobart 4.59% (↑)        Darwin 8.11% (↓)       Canberra 6.02% (↓)       National 5.69% (↓)            HOUSE RENTAL VACANCY RATES AND TREND       Sydney 0.8% (↑)      Melbourne 0.7% (↑)      Brisbane 0.7% (↑)      Adelaide 0.4% (↑)      Perth 0.4% (↑)      Hobart 0.9% (↑)      Darwin 0.8% (↑)      Canberra 1.0% (↑)      National 0.7% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 0.9% (↑)      Melbourne 1.1% (↑)      Brisbane 1.0% (↑)      Adelaide 0.5% (↑)      Perth 0.5% (↑)      Hobart 1.4% (↑)      Darwin 1.7% (↑)      Canberra 1.4% (↑)      National 1.1% (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND       Sydney 31.2 (↑)      Melbourne 33.5 (↑)      Brisbane 32.9 (↑)      Adelaide 25.4 (↑)      Perth 35.6 (↑)      Hobart 37.5 (↑)        Darwin 42.9 (↓)     Canberra 33.5 (↑)      National 34.0 (↑)             AVERAGE DAYS TO SELL UNITS AND TREND       Sydney 32.1 (↑)      Melbourne 34.5 (↑)      Brisbane 30.3 (↑)        Adelaide 25.0 (↓)     Perth 35.5 (↑)      Hobart 33.6 (↑)      Darwin 43.2 (↑)      Canberra 40.8 (↑)      National 34.4 (↑)            
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The U.S. Economy’s Secret Weapon: Seniors With Money to Spend

Americans 65 and older account for record share of spending and are less susceptible to interest rates

By GWYNN GUILFORD
Wed, Oct 11, 2023 8:17amGrey Clock 4 min

Why has consumer spending proven so resilient as the Federal Reserve has raised interest rates? An important and little-appreciated reason: Consumers are getting older.

In August, 17.7% of the population was 65 or older, according to the Census Bureau, the highest on record going back to 1920 and up sharply from 13% in 2010. The elderly aren’t just more numerous: Their finances are relatively healthy and they have less need to borrow, such as to buy a house, and are less at risk of layoffs than other consumers.

This has made the elderly a spending force to be reckoned with. Americans age 65 and up accounted for 22% of spending last year, the highest share since records began in 1972 and up from 15% in 2010, according to the Labor Department’s survey of consumer expenditures released in September.

“These are the consumers that will matter over the coming year,” said Susan Sterne, chief economist at Economic Analysis Associates.

“Our large share of older consumers provides a consumption base in times like today when job growth slows, interest rates rise and student-debt loan repayments begin again,” she said.

Seniors’ high spending propensities reflect health, wealth and perhaps lingering psychological effects of the pandemic.

“All my life it was, save for this, save for that,” said Maureen Green, 66, of Cape Cod, Mass. “Now there’s money in the bank and I’m spending in ways that bring me closer to friends and family than I did before.”

Green, a real-estate agent with four grown children living across the country, estimated she is spending 25% more and twice as much time traveling now compared with 2019. She recently traveled to Syracuse, N.Y., to catch a photo exhibit with friends, and toured Rhode Island with her son and his girlfriend.

“The one million Americans who didn’t survive Covid—that’s part of it. That taught me not to let time go by because before I know it, that time won’t be there anymore,” she said.

Living better, longer—and larger

“The lifestyle of the senior has changed dramatically—they’re more active than ever,” said Marshal Cohen, chief retail adviser of Circana, a research firm specialising in consumer behavior. That has expanded the menu of recreation on which to spend, he said. “They’re riding e-bikes, they’re hiking, they’re traveling. And they’re doing these things for longer than they’ve ever been done.”

The average household led by someone age 65 and older spent 2.7% more last year than in 2021, adjusted for inflation, according to the Labor Department, compared with 0.7% for under-65 households. Spending by older households is up 34.5% from 1982, compared with 16.5% for younger households.

Comparable data isn’t available for 2023. However, consumers older than 60 reported spending 7.9% more in August than a year earlier, compared with a 5.1% increase among those age 40 to 60 and a 4.6% gain for younger consumers, according to a survey by the New York Fed. The data aren’t adjusted for inflation.

The growing yen to spend by the elderly is amplified by their sheer numbers. The unusually large cohort of baby boomers, the youngest of which are 59, are reaching their retirement years en masse.

American Cruise Lines, which gears its cruises toward older consumers, said it is seeing double-digit sales growth this year, driven largely by boomers. The Guilford, Conn., company this year added three ships to its fleet and expanded its season by a month for some popular routes.

“River cruising has traditionally attracted an older audience, and with more boomers retiring each year, we see both a rapid rate of growth and demand for longer experiences,” said Charles B. Robertson, the company’s president and chief executive.

The economy’s silver bullet

Another factor in the elderly’s favor: relatively strong finances. Americans age 70 and older now hold nearly 26% of household wealth, the highest since records began in 1989, according to the Federal Reserve.

While economists still see a relatively high probability of recession in the coming year, Ed Yardeni, president and chief investment strategist of Yardeni Research, isn’t one of them. An important reason: By the Fed’s reckoning, baby boomers alone have now amassed $77.1 trillion in wealth. “There’s a $77 trillion-wide hole in the theory that consumers’ running out of pandemic savings will sink the economy,” he said.

They have less consumer debt, minimal student debt and are more likely to own their homes outright. Many of those who have mortgages refinanced at the unprecedented low in mortgage rates after the pandemic hit. They are also less likely to need to move due to an expanding family or a new job than Gen Z and Millennials, shielding them from the impact of rising housing costs.

Retirees also received an 8.7% cost-of-living-adjustment bump to Social Security payments in January, the largest single-year increase since 1981, and an automatic adjustment to offset last year’s 9.1% inflation peak.

These factors have cushioned seniors from the twin scourges of inflation and high interest rates. And since most of them are retired, seniors’ spending is less vulnerable to the rise in unemployment that many economists anticipate in coming quarters.

Subscription demand for the Cincinnati Opera’s summer festival this year was surprisingly strong and driven by older patrons, said Todd Bezold, director of marketing.

“Despite the multiyear trend in subscriptions going down, down, down in every art form, we went up this year—by 3%,” he said. That jump in demand came despite a sharp rise in ticket prices to account for several years of inflation. “The vast majority of our subscribers are baby boomers; we know that much.”



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Why Berkshire Hathaway Might Stop Selling Bank of America Stock Once It Reaches This Number

When will Berkshire Hathaway stop selling Bank of America stock?

By ANDREW BARY
Sat, Sep 7, 2024 3 min

Berkshire began liquidating its big stake in the banking company in mid-July—and has already unloaded about 15% of its interest. The selling has been fairly aggressive and has totaled about $6 billion. (Berkshire still holds 883 million shares, an 11.3% interest worth $35 billion based on its most recent filing on Aug. 30.)

The selling has prompted speculation about when CEO Warren Buffett, who oversees Berkshire’s $300 billion equity portfolio, will stop. The sales have depressed Bank of America stock, which has underperformed peers since Berkshire began its sell program. The stock closed down 0.9% Thursday at $40.14.

It’s possible that Berkshire will stop selling when the stake drops to 700 million shares. Taxes and history would be the reasons why.

Berkshire accumulated its Bank of America stake in two stages—and at vastly different prices. Berkshire’s initial stake came in 2017 , when it swapped $5 billion of Bank of America preferred stock for 700 million shares of common stock via warrants it received as part of the original preferred investment in 2011.

Berkshire got a sweet deal in that 2011 transaction. At the time, Bank of America was looking for a Buffett imprimatur—and the bank’s stock price was weak and under $10 a share.

Berkshire paid about $7 a share for that initial stake of 700 million common shares. The rest of the Berkshire stake, more than 300 million shares, was mostly purchased in 2018 at around $30 a share.

With Bank of America stock currently trading around $40, Berkshire faces a high tax burden from selling shares from the original stake of 700 million shares, given the low cost basis, and a much lighter tax hit from unloading the rest. Berkshire is subject to corporate taxes—an estimated 25% including local taxes—on gains on any sales of stock. The tax bite is stark.

Berkshire might own $2 to $3 a share in taxes on sales of high-cost stock and $8 a share on low-cost stock purchased for $7 a share.

New York tax expert Robert Willens says corporations, like individuals, can specify the particular lots when they sell stock with multiple cost levels.

“If stock is held in the custody of a broker, an adequate identification is made if the taxpayer specifies to the broker having custody of the stock the particular stock to be sold and, within a reasonable time thereafter, confirmation of such specification is set forth in a written document from the broker,” Willens told Barron’s in an email.

He assumes that Berkshire will identify the high-cost Bank of America stock for the recent sales to minimize its tax liability.

If sellers don’t specify, they generally are subject to “first in, first out,” or FIFO, accounting, meaning that the stock bought first would be subject to any tax on gains.

Buffett tends to be tax-averse—and that may prompt him to keep the original stake of 700 million shares. He could also mull any loyalty he may feel toward Bank of America CEO Brian Moynihan , whom Buffett has praised in the past.

Another reason for Berkshire to hold Bank of America is that it’s the company’s only big equity holding among traditional banks after selling shares of U.S. Bancorp , Bank of New York Mellon , JPMorgan Chase , and Wells Fargo in recent years.

Buffett, however, often eliminates stock holdings after he begins selling them down, as he did with the other bank stocks. Berkshire does retain a smaller stake of about $3 billion in Citigroup.

There could be a new filing on sales of Bank of America stock by Berkshire on Thursday evening. It has been three business days since the last one.

Berkshire must file within two business days of any sales of Bank of America stock since it owns more than 10%. The conglomerate will need to get its stake under about 777 million shares, about 100 million below the current level, before it can avoid the two-day filing rule.

It should be said that taxes haven’t deterred Buffett from selling over half of Berkshire’s stake in Apple this year—an estimated $85 billion or more of stock. Barron’s has estimated that Berkshire may owe $15 billion on the bulk of the sales that occurred in the second quarter.

Berkshire now holds 400 million shares of Apple and Barron’s has argued that Buffett may be finished reducing the Apple stake at that round number, which is the same number of shares that Berkshire has held in Coca-Cola for more than two decades.

Buffett may like round numbers—and 700 million could be just the right figure for Bank of America.

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This stylish family home combines a classic palette and finishes with a flexible floorplan

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