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| Model of Penthouse Condo - courtesy of Internet |
We fear death, but we should also fear life. What if we should live to a hundred or
more? How will we live? How will we support ourselves?
Planning for the future and your retirement is a hapless responsibility. Any assumptions that you might have made in
planning for your future maybe thwarted by the unexpected vulgar painstaking realities
of the day.
This is just to serve as one example to illustrate the
delusional nature of our thinking and how utterly wrong it can turn out to
be. To be sure, this is one example, but
one in particular that may shatter the fabric and foundation of a fundamental tenant
harbored by many; that as an aging senior citizen, many of us will consider
downsizing from an active single family home to the simplified life afforded in
a downtown condominium. Ah, to give up
your car and all of the headaches of driving or at least to rest it to a
minimum, to enjoy the safety and comfort of communal living in a secure and
protected environment, to access shops and movie theatres only a few feet from
your front door, to relieve yourself of the daily burden of worrying about home
improvements and home repairs, walking up a million steps to get to your front
door, and mowing the lawn.
Indeed, condominium living is more than a concept that many people
have embraced, whether as a primary mode of living or in transition to a
simpler life as the wear and tear of decades of upkeep and house maintenance
duties wears thin on the patience and fortitude of the homeowner. And if you live in the suburbs, the constant
pressure to time your commuting departures and returns based on traffic flow
and rush hour times limits the freedom and comfort of those trying to enjoy the
moment, in partial or full retirement.
I recently investigated the possibility of making a
transition from my house in Manoa to a condominium in Ward Village, an emerging
complex of condominiums planned and funded by Howard Hughes Corporation which I
think has swallowed up Victoria Ward Limited in the process of planning this ambitious
60 acre downtown community. Two condo
projects are set for development out of dozens down the road. They include Waiea and Anaha. Astonishingly, only after a few weeks of
condo sales, they have about a half of these outrageously expensive condos
“sold”, or so they say.
Lets work out the math.
This is an approximate and simplified calculation meant to emphasize the
difference in living expenses between single family home living and living in a
Ward Village condominium. It’s made to
be simple and does not reflect my present situation if anyone is wondering.
Again, as a theoretical example, lets say my Manoa house is
valued at 2 million and that I have been able to pay off all loans and
mortgages. Property taxes are 7K based on the 2013 tax rate of 3.50 per
$1,000. My electric bill is $50-100
based on the photovoltaic system I have in place, water is $100/month, cable is
$100/month, and miscellaneous (gas, land line, Netflix account, etc) is
$100/month. Taken together, this is about $1000/month of living expenses. What’s more, I do not expect that these
expenses will change drastically over the next 5-10 years.
Next, I sell my home and buy a Ward Village
Condominium. You might ask what is the
price range. And I would answer that
while you can get one for under a million, most of those in the range just
under a million have already been sold, so we’re talking 1 million and
beyond. More realistically, the 2- 4
million range will get you a two to three bedroom condo with a SF range of 1300
to 2500sf depending upon the building, floor plan and of course price. And the
truth is that this is not unique to Ward Village, try looking at Hokua next
door to Ward Village and you’ll see approximately the same prices. And of course, the higher up the building you
go, the more you pay a premium for being that much closer to heaven and the
picture perfect view of the pacific ocean, and that much further away from the
human anthill scurrying around randomly at ground zero.
Taxes should be the same, but you will have to pay for
electricity sans photovoltaic. A few
hundred, maybe 3 or 400/month, lets say 300/month considering that the entire
complex is air-conditioned and air conditioning doesn’t come cheap. I think water and Internet are included in
the maintenance and lets take that as a given for the sake of argument. But maintenance is running about 1k/month
per million in value which would mean that I would be paying $2,000/month for
maintenance based on a purchase price of 2 million. Taken
together, this would make my monthly expense just under $3000/month…..nearly 3 times
my living expenses in my private family dwelling. What’s more, individual homeowners will have no
knowledge or control over how high the maintenance fees will go, and in some
cases I have observed that they have doubled in the last 5 years. So lets take this number to $3,500/month given the guaranty that
maintenance feels will continue to climb without warning as the cost of doing
business and the machinations of the Howard Hughes corporation chips away at
your retirement reserves in eager pursuit of every drop of cash you have left
to live on……..as it feeds it voracious appetite for power and wealth. And what if I traded up to a condo with a
price tag that required a mortgage. I
could easily be looking at doubling the monthly expense from 5-6 or even $8,000/month!!!!
I’m trading my 4,000 sq home for a 1500 sq condo. I have to sell my Nissan Leaf and replace it
with a gas propelled engine car because there is no way to get my car charged
at the condo (this is an assumption which maybe incorrect). I am replacing the quiet and privacy of
living in a single-family home for the hustle and bustle of living in a busy
downtown community, noise and soot from Ala Moana Boulevard, an increasing slew
of homeless people begging on the streets, and the same overpriced shops manned
by young Facebook obsessed groupies willing to give you a moment of their time
in exchange for an overpriced sale. I am
no longer in the market for any of these shops, cooking at home is preferable
to eating at the same restaurants, overpriced as they are, unhealthy and
unseemly as they seem.
Its funny how all of a sudden I feel blessed to be where I
am, living more frugally in a large charming single family home than an
overpriced slice of air on the 20th floor encased in concrete and
surrounded by veneer and plastic. Go
figure…….I never thought it possible for something so obviously wrong to be
true.
Finally, I asked myself who can afford such an inflated monthly
expense. Not the masses. What income would it take to support such
living expenses? Well there is more to
living than paying the condo association.
Oh, I need some funds for food, for travel, to support my kids at
Punahou, to save up for college, for a rainy day if I get sick, and oh, yea,
and to save up for retirement so I can downsize from this expensive condo to a
single family dwelling……
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