Resale Markets and Cremation Trends

In the city of Oakland, California, you'll find one of America's most scenic cemeteries Pched in the hills, it has unobstructed views of the Golden Gate Bridge and the San Francisco Bay These two hundred and twenty six acres of prime real estate are occupied by the remains of Titans of industry like the founders of Folgers Coffee and Giradeelli chocolate If you want to join them, six feet under It'll cost you dearly You might pay as much as fifty thousand dollars for Premium plot. Jeff Lendeman is the CEO of Mountain View Cemetery. You might not think of cemeteries as having CEO's But there are a three billion dollar industry in the US. There's a lot riding on them, making money because they've made an eternal promise to the people buried there when we sell a their niche. The idea is that put enough money away in the trust fund so that over time care for the cemetery forever When you're selling a finite resource though The word forever can be a bit tricky It's really kind of greedy, you know, from a land use perspective to say person who died is going to occupy this couple square feet of real estate forever, forever, and we're never, ever, ever gonna change it Free Economics Radio Netork. This is the economics of everyday things. I'm Zachary Craken Today, cemeteries For most of human history, we didn't bury our deceased in the ground When our oldest ancestors died They were often left in caves, burned or pushed out to sea The modern practice of burying people in dedicated graveyards began with organized religion. And when the first Europeans settled in America They brought that practice with them For the first couple hundred years of European settlement in America, we really had Church cemeteries and family owned cemeteries, like a little corner of a farm Tanya Marsh Professor of Law at Wake Forest University She holds a bit of a unique distinction As far as I know, I teach the only course in funeral and cemetery law at a U.S. law school Marsh says that America started to rethink its cemetery system during the Industrial Revolution Church graveyards tended to be right in the middle of town As urban populations grew, those burial grounds became overcrowded and unsanitary They were burying people on top of each other for, you know, way more than a hundred years. And it was smelly. And it was not awesome to have in the middle of these downtowns. And so they started to build these so called rural cemeteries outside major metropolitan areas in the United States Today Thousands of these cemeteries dot the American landscappe Some of them look like giant parks, with trees, benches, and winding paths Others look kind of like golf courses, with green lawns and flat headstones. Many of these cemeteries are run by religious organizations, local municipalities or the federal government In those cases, the funds for running them come from the church or from taxpayers But a sizable portion of cemeteries are owned by private companies or nonprofits. And those are a big business cemeteries are just another real estate use, right? So if you're thinking about what's the use for a particular piece of land And how can I make money from it cemeteries might be an option We are there to serve consumers who have a little bit of money and we are there to serve consumers who want something more extravagant Again, that's Jeff Lindman, the CEO of Mountain View Cemetery in Oakland, California The cemetery was built as a nonprofit in the eighteen sixties, and today, two hundred five thousand people and counting are interred there Like most cemeteries, Mountain View has a pretty simple business model It owns piece of land and customers pay to be buried there. But those customers aren't actually buying real estate. Consumers often mistakenly think that when they purchase a grave, they're purchasing the land And they're not. what they're really purchasing is an easement on the land for burial rights In other words, those bodies in the cemetery are renters with a very long term lease Nationwide, the average cost for a traditional cemetery plot is around three thousand six hundred dollars In a small town municipal cemetery, you might be able to find one for as little as a thousand dollars And in a more desirable private cemetery Burial spaces go for many multiples more The Pierce Brothers Westwood Village Memorial Park and Mortuary is filled with celebrities There, a crypt near Marilyn Monroe recently went on the market for two million dollars The plot itself is only one small part of the cost a cemetery charges you for a burial. When the time comes, you will typically incur charges for opening and closing the plot Most cemeteries will require what we call an outer burial container And typically there might be a recording fee In addition, If you want to purchase a headstone, and most people do, there would be a range of prices applicable to that as well If you tally up all the extra costs, A traditional burial at a cemetery can easily exceed twenty thousand dollars What you get in return is a guarantee that your remains will be cared for Pbetuity The law promises us forever when we're talking about cemeteries In many states, for profit and nonprofit cemeteries like Mountain View portion of what you pay into something called a perpetual trust or an endowment fund That money is invested And the income is used to keep the cemetery operational for as long as possible. So that money might be used to mow the lawn. For example, if we have a landslide in the cemetery, it would be used to Shore up That landsflide. It would be used, for example to hire an arborist to come out periodically and care for the trees At a cemetery can be expensive At Mountain View, the landscaping and gardening bill is around nine hundred thousand dollars a year Utilities run half a million The pairs are just shy of two hundred seventy five thousand Lindeman says his cemetery has more than a hundred million dollars in its endowment fund to cover these costs long term But not every cemetery is so lucky Unfortunately, There have been instances where Organizations have not put enough money in their trusts and when those organizations close We've all seen the cemeteries that have fallen into disarray There's going to be a lot of cemeteries going out of business in the next twenty years, I think When a cemetery goes bankrupt A few things can happen In many states, the local government is permitted to step in But Marsh says there's not much of an incentive to do so. most municipalities and counties don't want to take on the tax burden. if there's no money in a perpetual care fund. So as a result, we have a fairly significant number of abandoned cemeteries in the United States If a judge approves it The owner of a bankrupt cemetery can sometimes sell its land for development All of the buried bodies have to be exhumed at the expense of the buyer In twenty twelve, the city of Chicago spent seventeen million dollars to relocate fifteen thousand graves so it could build a new runway at O'Hare International Airport And in Northern California, a church had to exhume and relocate dozens of unmarked graves from the eighteen hundreds before selling an adjacent plot of land to a developer I mean, this is one of the funny things about this whole promise of perpetual care Forever means forever until the living decide they want to do something else with that piece of property. When these cemeteries go away, they're often not replaced Because opening a new cemetery is its own unique challenge Cemeteries are generally exempt from paying property taxes And they don't create a lot of jobs So municipalities aren't too keen about using scarce land to house dead people. potential neighbors usually object to Gally People don't want the cemetery in their backyard. They know that they need to have some form of disposition. Someeday but not in their backy More than three million Americans die each year. And for existing cemeteries, Concern is finding enough space to accommodate everyone the land that's easy to develop at the cemetery. is pretty much fully developed This fixed supply has given birth to an unusual resale market for cemetery plots That's coming up If you want to be buried in a cemetery, you have two options You can wait until you die and leave it to your family to figure out or you can buy a plot in advance Let's say you snatch up a burial plot twenty years before your time comes And then you decide that plot isn't where you want to spend eternity What do you do with the plot In a lot of cases, the cemetery won't buy it back You can list it on eBay or Craigslist and try to find someone who's looking for a grave site just like yours betet is to head to a certified cemetery plot broker I Terry Ariano and I am president of Cemetery Property Resales Inc Terry Ariano is kind of like a real estate broker for fininal Resting places She helps people sell plots they've already purchased or buy them at a discounted rate. In return, she charges a flat fee of around a hundred bucks Most of our sellers are actually referred to us by the cemetery and most of our buyers are referred to us by the funeral home or a casewker, a hospice caretaker Over nearly thirty years, Ariano has facilitated the transfer of fifteen thousand burial plots at more than fifty cemeteries all over the San Francisco Bay Area She can get you a space for twenty percent to eighty percent below what the cemetery charges Rather than going straight to the cemetery and buying a space that's eight thousand or ten thousand for a single space, we have those for three thousand four thousand Most commonly, people sell their plots because they've moved away and want to be buried somewhere else. there are other reasons too Oh, this is a good one. The wife purchased two spaces. when her first husband died And so the first husband, he's in one space and the one right next to it is reserved for the wife when her time comes. Well, now she's gotten remarried Wh's calling us? husband number two. He wants to make sure that space is sold because she's not going to go into that space next to husband number one. Marriano says more and more people end up selling their plots for financial reasons. Many times, someone will buy a plot decades in advance without realizing there are additional burial costs down the line So you can imagine Maybe somebody bought a grave forty years ago and they paid two hundred dollars for it. And so they feel like, o, thank goodness, we've got our final resting place. Well, then somebody dies and they go to the cemetery and they go, okay, we're ready And here's some paperwork and all of a sudden they have to pay the cemetery ten thousand dollars In recent decades, some cemetery plots have appreciated in value more than the housing market Spaces priced at three to four thousand dollars thirty years ago are now often going for twenty five thousand dollars The only thing you can always be assort of is that cemetery prices will go up every year regardless of what the market is doing. That's Maureen Walton She's the founder of the online listing service, The Cemetery Exchange It's kind of like Zillow, but for cemetery spaces On the site, you can browse through nearly ten thousand cemetery properties for sale across the country We might have somebody that's selling a single grave space in Indianapolis for, let's say a thousand dollars to a private crypt in Hollywood Forever Cemetery for two hundred fifty thousand Walton says that traditional burial plots are getting a little harder to sell Six out of ten Americans are now opting for cremation Double what the rate was twenty years ago This is partly because it's a much cheaper alternative than a casket burial You could get cremated for under two thousand dollars and walk out with a really nice urn And then you can decide to be on somebody's mantle for eternity or scattered somewhere For the cemeteries themselves, this is actually a welcome trend Because running out of land is a serious concern Once the grave plots are all used up, There's no more revenue Cemeteries have experimented with all kinds of ways to maximize capacity. buried caskets upright rather than horizontally They've used double decker plots to accommodate multiple bodies But Tanya Marsh, the law professor says it's a lot easier to find space for an urn than a casket One of my favorite cemeteries is Greenwood Cemetery in Brooklyn And for the past forty years, they've been saying about every ten years. We've got about ten years left they keep figuring out ways to kind of squeeze in more space. And one way cemeteries in urban areas have figured out to do it is to build spreading gardens for cremated remains You can create a spreading garden and let people spread ashes even in a full cemetery, right Jeff Lindeman says Mountain View Cemetery has gotten a bit more liberal about its cremation policies So Often somebody will purchase a grave for a full casket borial We will allow families to later on add premor remains to that grid. So in a sense It enables us to expand the resource without necessarily having to expand that perimeter borders of the cemetery Mountain View charges around one fif five hundred dollars for each additional earn buried with an existing plot. plus the cost to open and close the ground If you get enough family members on board the view of the Golden Gate Bridge become a bit more feasible So for example, let's say you like that plot with the great view. It's thirty thousand dollars. And you purchase it for a single casket burial. You can also purchase future burial rights for cremations at a much lesser cost. So conceivably You may eventually enter five or six family members in that single grave after the additional cremation burialite cost. Let's say we come to thirty six thousand dollars for that grave Now you've got ost. per individual of six thousand. to thirty thousand for a single person Mountain View has around twenty five million dollars worth of gravespace left Lindeman spends most of his time thinking about how he can stretch that out as long as possible Cemeteries in many other countries Don't share this concern There are countries where permanent burial. is either a luxury or it's simply not allowed. You actually lease a grave. for a couple of decades or more and then you can pay more if you want to extend it But then if there's bones still left, they're going to take them and put them into a communal spot somethingomething like that It's much more efficient use of land Tanya Marsh wouldn't mind seeing this model applied to American soil Because in the end, All we are is dust in the wind Human remains do not last forever. Even if you embalm them and put them in a steel casket inside a concrete vault, they're not going to last forever. You know We are all organic material. Eventually everything is going to go away and turn into something else Economics of everyday thingsings, I'm Zachary Crockett. This episode was produced by me and Sarah Lilly and mixed by Jeremy Johnston We had help from Daniel Morrz Rapson. Have you decided what you're gonna do someday? Oh, honey, I'm going high and dry I want to be in a mausoleum Free economics radio network, the hidden side of everything