Source: MRIS
Thursday, April 10, 2008
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91 comments:
Ah, more evidence for the collapse in Arlington home prices predicted on this board...
or not.
heh...
Right right FD, nothing at all about these numbers to be concerned about.
What is happening to Alexandria? Did "close in" just shrink again?
Back in Jan we were asking ourselves whether the bust had finally reached the inner areas. This is the third straight month that the data suggests that is the case.
Arlington inched up slightly, but the forward looking indicators are now pointing down. Everywhere else is seeing large declines.
Wow, Arlington still holding strong. Somebody foreclose already so I can pay less taxes!
I challenge you to find one post where I said anything about Alexandria City. A number of things, including its middle and high schools, clearly differentiate it from Arlington. And I love how a higher average price and lower days on market relative to last year results in "the forward looking indicators" "now pointing down" for Arlington.
Come on, you are done in by your own rhetoric. This is obviously not an ideal time to sell a home in Arlington--I'm not denying that--and if one was a buyer, there are a number of good options. But there is simply no evidence that Arlington is suffering anything like significant declines in what is now 3 years from the peak and 6 months from grave dislocations in the financing markets.
Unbiased readers, you be the judge...
fd said:
"Come on, you are done in by your own rhetoric. This is obviously not an ideal time to sell a home in Arlington--I'm not denying that--and if one was a buyer, there are a number of good options. But there is simply no evidence that Arlington is suffering anything like significant declines in what is now 3 years from the peak and 6 months from grave dislocations in the financing markets. "
Of course you are right. And so am I when I say how much DC has improved in the last 10 years. But Leroy refuses to acknowledge what we are pointing out because it flies in the face of what he is wishing so hard for ... and will be wishing for for the next ten years while our homes continue to increase yearly in value and, most importantly, we continue to enjoy living in our homes.
The Fairfax County numbers are interesting. The sales vs inventory number is staggering. I predit that after 2008 the median will be down to the 2004 price. In 2009 the median will hit the 2003 pricing. I just hope it stabilizes there.
FD,
If you go to the MRIS website for individual zips you will see that most in Arlington are down YOY for March.
http://www.mris.com/reports/stats/zip_stats.cfm
22207 is the loan exception I see and over 20% of the sales are over 1 million - probably the custom built McMansions. Digging beneath the surface, it appears to me that it's these large custom homes that are skewing the numbers in this zip. Maybe enough to buoy all of Arlington? Overall, in the more average neighborhood homes, there is still downward pressure.
Premium neighborhood Arlington owners probably have more resources to weather the storm of ARM adjustments and IO loans if they have them, but I see no clear evidence that "Arlington is different."
My $0.02.
Lance, to be clear, I do not agree with you completely by any means--there is no doubt that the home market, even in the most prime areas, is significantly weaker then it was in 05, it is just that that weakness has been undergirded by some factors (primarily the strong legal/lobbying/high end gov K market and the extreme reluctance on the part of high earners to have a bad commute) that have supported prices.
"And I love how a higher average price and lower days on market relative to last year results in "the forward looking indicators" "now pointing down" for Arlington."
Well, it has to do with the definition of "forward looking indicator."
Current sales prices are where the market is TODAY, they are not forward looking. The forward looking indicators are predictors of where the market is heading. In this case the most relevant ones are sharply declining sales and building inventory.
Our various real estate pumpers have cooked up a variety of theories over the last couple years to explain away the economic realities of the bubble.
First they claimed that declines were "anecdotal" or limited to isolated foreclosures.
Next they argued that declines were limited to the fringes of the city and that what happened "out there" didn't apply to them.
After that they tried to say that "close in" areas inside the beltway had no need to worry because the rules are just different there.
After that "close in" was defined as Alexandria City and Arlington.
Now we have reached the point where even Alexandria and DC are showing signs that the bubble is bursting there as well.
What else left? Arlington appears to be the last little bit of land still above water but there is a lot of rain in the forecast. I understand that you don't want to see Arlington prices fall but do you honestly think Arlington plays by a different rule book?
So falling prices are evidence of a collapse in Arlington, and rising prices are merely artifacts of a few very expensive homes being sold to wealthy people...ok, I really can't win here.
Well, on a personal level I live in the home my parents bought in the 80s, and will live in this home for probably 20 more years, so it's all academic to me. But I think the combination of incredibly short commute time and great schools give Arlington a combination simply not matched (except by Bethesda) in the D.C. area. But, of course, it is not for everyone as people on this board are constantly repeating. The simple fact is if you follow home sales in North Arlington closely, you KNOW--not think, but KNOW--that homes priced appropriately and with no glaring flaws are selling quickly, in some cases for more than in the 2005 peak. Homes priced inappropriately, or with glaring flaws, are having trouble selling, where in 05 they were not. I hardly think this qualifies me as a raging bull but again there appear to be around 2 people on this board even vaguely familiar with the SFH market in 03, 01 and 07.
"Of course you are right. And so am I when I say how much DC has improved in the last 10 years. But Leroy refuses to acknowledge what we are pointing out because it flies in the face of what he is wishing so hard for ... and will be wishing for for the next ten years while our homes continue to increase yearly in value and, most importantly, we continue to enjoy living in our homes."
Right right lance... if the facts don't suit you go ahead and make something up right? The District is not exactly smelling like a rose at this point. I know that must be hard for you after years of trying to explain away what is happening.
As for "wishing for the next 10 years" ... Where did you get that particular bit of information? Or is that another of your strawmen you seem to fall back on so frequently?
"most importantly, we continue to enjoy living in our homes."
Really?
It seems like you spend more time on the internets on multiple sites obsessing over potential values than you do "enjoying" your home.
FD,
I'm not trying to be a stubborn bear. And I agree that Arlington will hold up much better than surrounding areas.
Where I disagree is that Arlington is somehow immune. Or is already marching back to huge gains.
My $0.02.
$.02, I don't disagree with either of those statements. Have a nice day.
I wouldnt put too much stock in monthly prices as they fluctuate wildly. Maybe a 3-4 month rolling average of median prices would be a better indicator. For example last month Arlington showed an 18% decline in YOY pricing, now it is showing a 3% increase. Thus, one month is not very strong evidence that Alexandria is down OR Arlington is up for that matter.
Inventory is another matter altogether. On this front the numbers are a bit mixed. Historically they are high, but lets remember where we were 2-3 months ago. (Yes I know month to month comparisons suck but bear with me). At that time, Arl & Alex posted double digit inventory just like the outer counties. This was a shocking reversal and the first real evidence they were joining their outer county bretheren in the crapper. They have both knocked those numbers down a good bit, but they are still to high for me to say they are "back".
In my mind the big winner on the inventory front is...PWC. This is the first time they have beaten YOY sales since (I think) August 2005. Yes, YOY "months of inventory" is still up but it is the smallest increase of any county. Also, for the past 6 consecutive months PWC was being brutalized by 16, 17 & even 18 months of inventory. To go from 16.12 (in Feb) all the way down to 11.61 months of inventory in March is noteworthy. Perhaps they are finally selling all those foreclosures & short sales clogging the pipes?
Clearly, one month does not make a trend, but if PWC, the poster child of fraud, flipping, overbuilding, etc. is halting its seemingly never ending death sprial, that is somehting we should all watch closely.
In Alexandria's case I wasn't basing that on just this month's data.
The last three monthly medians were 415k, 414k, and 405k.
In each case the median was below the median of 2007 and 2006 and in each case sales volume was down significantly from any point in the previous decade.
In each of the three previous months the months of inventory was also significantly higher than at any point in the previous decade.
Obviously more data would always be better but the last three months taken together suggest a new trend is emerging.
I agree that PWC's numbers are very interesting. Sales there actually climbed while every other region in this data showed sharp declines.
Of course PWC also showed huge price declines that have brought it back to more or less 2004 levels...
We need more data, but obviously PWC will bottom out at some point.
crt,
The way I see it, for all counties the listings/sales ratio is still higher than the levels in 1997.
If you look at the pattern of change of this ratio over the years, I would say that any significant upturn in prices is at least 3 years away, probably 5years or more. And so, IMO, these month-to-month changes don't matter.
441 N. Nelson sold for $800,000 on March 31. The house had a contract on it after 1 week. The house was sold for $625,000 in 2003. This house was not renovated.
Good stuff in Ashton Heights is still selling. A house across the street (514 N. Nelson) did not sell, even though it was in good condition, because it had a funny layout and wasn't family friendly.
"the last three months taken together suggest a new trend is emerging."
It is starting to look that way. Prices for the 3 months (combined) are off last year by 8% and 2 years ago by 5%. (recall that for Arl & Alex much of 2007 inventory levels were better than they were in 2006).
I think all areas are going to have to deal with a new reality when it comes to sales - simply put there just wont be as many as before (on a recent or historical basis). The question then is how do sellers respond? How many of them "want" to sell versus "have" to sell and subject themselves to the market? Put another way, do they restrict supply to go along with the lower demand, thereby preventing a big (i.e. outer county) price fall?
Note that for Alexandria, the high water mark for listings is not 2008 but 2006. Arlington is still running more listings than 2006 & 2007 but not nearly at the same clip they were earlier this year (my guess is they fall below 2006 supply in another month or two). Either way the lack of demand months of inventory will be higher than the 4-5-6 months of inventory of the last 2 years. The question then is, is the new reality 7-8 months (modest downward pricing pressure) or 10-12+ months (significant pressure)? This trend can be seen easier on the MLS tracker site. http://www.virginiamls.com/charts/index.htm
By this measure, Fairfax might be in real trouble this year. Supply is up big time over the last 2 years. Loudon? Not nearly as much. PWC is way up too, but look again at the MLS link. Basically, it looks like no one in PWC really left the market last fall, so the run up this spring (Jan to March) has been non existent. In fact according to the MLS link there are LESS houses for sale in PWC today 4/10/08 than were for sale on 1/1/08!
The lack of a spring increase in supply tell me there are very few people on the sidelines trying to wait this out. In PWC, it looks like they have run out of houses to list!
crt said: "The lack of a spring increase in supply tell me there are very few people on the sidelines trying to wait this out. In PWC, it looks like they have run out of houses to list!"
I wonder how many total homes are in PWC??
"I would say that any significant upturn in prices is at least 3 years away, probably 5years or more. And so, IMO, these month-to-month changes don't matter."
No doubt Ted. The upward pricing presure is zero. However the question in my mind re: the downward pressure - is this "it"? Is this the worst the inner areas can expect?
Some here (most notably Neil) believe that ALL inner areas will fall just as much as the outer areas. Many of us who live here see several reasons why the "nice" areas of Loudon or PWC will not hold up nearly as well as the "nice" areas of Arl & Alex. This is why these forward looking indicators (i.e. "Decade of Sales") entry is probably the best entry to answer this question.
for the arlington market: the number of listings is a little bit deceiving, especially for condos. there are several new buildings (phoenix, liberty towers, park at courthouse, hawthorn)that delivered recently with several hundred units to sell and they list only about 15% of their available units on the MLS. there will be several new buildings on the market in the next few months in clarendon/courthouse area, like palatin, vista etc.
also there are quite a few condos in this area which belong to investors who wanted to flip and bought in 2005, even though rents in the area are high given the drop in price and the difference between mortgage and rent there will be some foreclosures there (not because these folks do not have money --- it is just not reasonable to continue paying the mortgage).
people still buy condos here --- but is this pace fast enough for developers to keep the prices at current level --- i doubt it.
i do not have much knowledge of SFH market, so no comments on it.
Regarding PWC-
I think what's happening in PWC has a lot to do with the new home builders really scaling back the rate of construction. On top of that, there has been a significant amount of price decline in the county, both offered by new home builders and existing homes up for sale.
I think prices in PWC will begin to stagnate over the next year, especially in newer neighborhoods that are not experienceing forclosures to the extent that many areas in PWC are. A lot of this, however, will depend on the depth and length of the economic downturn we are going through.
All in all, I think PWC is closer to prices bottoming out than many think because it has almost been forced to do so with the high rate of forclosures in much of the county and high rate of new construction popping up. It remains to be seen, though, how the continued exodus of many illegals and the economy will impact housing.
From the ground in PWC, I can't agree with the MRIS data. Obviously mine is anecdotal and theirs is statistical, but houses just are not selling where I'm watching.
I've watched most of the areas fall 25-40%. Generally it's been about 33% across the board. One house I'm watching closely, because it's in the same neighborhood where I rent was down almost 40%, then other places nearby started the price creep down. One did go under contract, but has been 'under contract' for a little less than they were asking about two months now. I find that suspicious... in response they chopped another 25% off their price.
Bought in 05 for $330K.
Assessed in 07 at $305K.
Listed in 08 at $199K!
Foreclosure nearby goes under contract for $180K (assumed, was most recent asking price).
Price drop to 148K!
And it's sat at that price for a month. 30K or so lower than everything else around it.
And this is not 'gangland'. This is a small quaint subdivision, which appears to be very family-friendly, very close to I-95 for convenience, and nearby Occoquan. Frankly, Woodbridge doesn't get much better than this.
And I haven't even seen people being shown the property.
Personally I believe that housing prices will adjust to approximately 99 levels-inflation adjusted. A great website for the DC area that shows this is
http://www.recharts.com/AroundDC.htm
Excellent site with just pure data.
PWC I think is closer to the bottom, it might start stagnating and after another 3-5 years hit 200k in 2008 dollars. Arlington would need to hit 300k maybe 350k 2008 dollars. I think prices will go back to 98-99 levels, maybe 2001 levels inflation adjusted not nominal.
So you Arlington pimpers out there . . you don't realize Arlington has taken at least a 4-5% hit already. If it's not increasing at ~4% a year it's not keeping up with inflation.
Inflation, got to love it, the hidden tax.
It seems like you spend more time on the internets on multiple sites obsessing over potential values than you do "enjoying" your home.
ROTFL
for the arlington market: the number of listings is a little bit deceiving, especially for condos. there are several new buildings (phoenix, liberty towers, park at courthouse, hawthorn)that delivered recently with several hundred units to sell and they list only about 15% of their available units on the MLS.
The Post noted there are enough units coming online to meet rental demand for three years!
As to a bottom, foreclosures wil be the price leaders *next* summer. All of the stats show the banks hesitating to disperse their portfolios. Not to mention ,credit is tightening. FHA can make whatever rules they feel like; more and more banks refuse to issue FHA at its most agressive due to the inability to sell bonds.
Got Popcorn?
Neil
crt:
"Some here (most notably Neil) believe that ALL inner areas will fall just as much as the outer areas."
I don't see it that way. Some close-in areas where there is always significant pent-up demand (e.g., NW DC, North Arlington, McLean, Bethesda/Chevy Chase and portions of Alexandria) could probably see comparatively modest nominal declines. But after stagnating over a longer period than in previous normal cycles, the inflation-adjusted drop will be significantly higher than in previous cycles.
There are many unpredictable variables --recession in the short term and potentially high inflation later, defense spending by the new president, changes in the Fed and interest rate policy, possible bubble bursting in China, etc.
But those arguing that there will be only modest declines in such close-in areas should see that the stagnation may last much longer, and in inflation adjusted terms, the fall will still be big enough to show there was a bubble.
I can't speak for anyone but myself obviously, but I think it is pretty obvious the more desirable areas will see smaller declines than the least desirable areas by a wide margin.
One of the more noteworthy aspects of the recent bubble was that during the frenzy anything would sell at ridiculous prices. Tiny poorly constructed houses, run down rowhouses with boarded up neighbors, townhouses at the edge of the city, houses in crime plagued neighborhoods, it didn't matter.... they all commanded high prices.
Now that the bust is moving through the area it is obvious that less desirable properties are getting hit earlier and harder than more desirable properties.
This should be no surprise of course. In a market where there are too few buyers for the number of sellers what do you expect to sell?
I suspect we will see price stabilization around the 2003-2004 level with lower end areas getting hit harder than higher end areas. Once prices stabilize we will see a long period of stagnant prices while inflation will continue to eat away at values.
In the end we will return to fundamentals. The question will be exactly what the fundamentals at that point will be. We have had huge numbers of apartments and condos added to the market on the one hand, while on the other the city continues to grow and the economy here is strong. If there is a serious recession or a large cut in government spending obviously prices will take a greater hit.
As clueless as lance is, he has occasionally been on target in pointing out that neighborhoods that really have changed play by different rules.(Which isn't to say they won't decline in value, they may simply decline less.)
Personally I think a lot of the "gentrification" that took place during the bubble was an illusion. High prices drove desperate buyers to move into neighborhoods they wouldn't previously have considered the same way it drove buyers to buy "million dollar" homes on tiny lots next to major roads. We know these people bought, but is their simple presence "gentrification?" Will they stay? Only time will tell.
I think for the most part the sorts of buyers that were forced to buy in bad neighborhoods were fringe buyers from the start and will probably be less likely to stay in those houses over the long run. The same is true of those who convinced themselves that all bad neighborhoods eventually "gentrify" and bought in hopes of making a profit.
"But those arguing that there will be only modest declines in such close-in areas should see that the stagnation may last much longer, and in inflation adjusted terms, the fall will still be big enough to show there was a bubble."
Not sure I agree here. Take a look at this graphic (about halfway down the page) which I generally find to be a good explanation for how this will play out
http://www.itulip.com/housingpriceregionscascade.htm
In a nutshell, the graphic suggests the decline and stagnation are shortest in the inner areas, and are the first areas to recover when the recovery does start.
If this graphic is correct, the inner areas must experience a very quick and severe downturn to make up for all the lost ground relative to the outer areas.
That aside, your last statement as to whether or not there was a bubble - I dont disagree with you at all. The question for the inner areas is how does the bubble resolve itself? Does the inner area bubble (a) pop like the outer areas has (b) stay inflated (no gain or loss) until they rise with inflation or (c) will a little air seep out slowly until they again rise with inflation?
My answer is (c) which is a very different animal than (a). So far at least this has proven correct.
Leroy - interesting insight on gentrification being illusory - I never thought of it that way before (my assumption being that it was more organic in nature).
I am curious when you speak of "desirable" properies, do you mean simply location or neighborhood appeal? For example Clarendon, and Ashburn are both desirable by curb appeal but not by location. Are you saying that at the end of the day both will fall by the same amount (Clarendon will just take longer), or Ashburn will fall by a greater amount than Clarendon (again at the end of the day).
I've said this before, but PWC is nowhere hear the end of its ordeal. Foreclosure rates are double this year so far what they were last year, and last year PWC led the state with its foreclosure rate. 5.5% of all housing is in some state of foreclosure, according to a study by George Mason University's Center for Regional Analysis.
3,334 foreclosures 2007
282 forclosures 2006
52 foreclosures 2005
If the foreclosure rate stays double this year, that would mean about as many new foreclosures as there are houses available for sale right now, right?
And a lot of the recorded "sales" are actually bank takeovers.
Beyond the numbers, I have been watching Manassas/Bristow closely for more than a year, and there are so many houses that were for sale last spring that are still for sale now...
crt:
"My answer is (c) which is a very different animal than (a). So far at least this has proven correct."
I think under the current conditions most people will agree it is (c).
My point is this-- Between 1990 and 1997, many close-in areas lost about 10--15% nominally. That was a normal cycle. This time, because of the bubble, it may be something like 20--30% nominally over the 2005--2012 period for the same areas.
For the outer areas, it may be anywhere like 40--60% nominally over the same period.
Adjust these figures for inflation and we get an idea of the bubble's impact.
CRT, in what sense is Clarendon not "desirable by location?" It has what is perhaps the best neighborhood in Arlington (Lyon Village) which is filled with high powered lobbyists, law firm partners and congressmen.
Man, some of you people are really clueless.
"CRT, in what sense is Clarendon not "desirable by location?" It has what is perhaps the best neighborhood in Arlington (Lyon Village) which is filled with high powered lobbyists, law firm partners and congressmen.
Man, some of you people are really clueless."
FD - Perhaps I wasnt clear, but I meant to say that Ashburn is desirable ONLY by curb appeal, however Clarendon is desirable BOTH in curb appeal AND location. Had you read all of my prior posts I think that was pretty evident. This is why I believe "desirable" close in areas will do better than "desirable" outer areas.
You will note that before I resorted to calling Leroy "clueless" I asked him to clarify his remark. Perhaps you should consider doing the same in the future.
Ted K - I see where you were going with that now, and I agree. Areas will suffer differently, but in relation to previous downturns all areas will suffer more than in the past.
TEDK said:
"But those arguing that there will be only modest declines in such close-in areas should see that the stagnation may last much longer, and in inflation adjusted terms, the fall will still be big enough to show there was a bubble."
BHs constantly seem to overlook that inflation is the best friend of mortgage holders. Personally, I hope it soars. I'd love to be in a position where inflation is 10% while my mortgage stays at 5%.
Some here (most notably Neil) believe that ALL inner areas will fall just as much as the outer areas.
No. I do think the outer areas will fall further. Its the assertion that the inner areas haven't fallen that I strongly disagree with.
I understand that ex-urb McMansions will fall the furthest. In particular in areas that have 'gone ghetto.'
My concern is that we'll have economic riots in summer 2008 or 2009... that would do a number on the prices.
"No. I do think the outer areas will fall further. Its the assertion that the inner areas haven't fallen that I strongly disagree with."
Correct me if I am wrong but whenever someone pointed out the modest decline in Arl or Alex you respond that nice areas could fall 40%. I always assumed that meant you believed Arl & Alex could fall 40%.
If so, does that mean that you think nice far out areas like Loudon County are in for a fall noticably larger than 40%???
CRT, fair enough and I apologize.
"I've seen upper middle class areas plunge 40% before. Alexandria is not looking at a 10% drop, but much greater."
Neil this is what you said last month 3/12/08 at 11:28am. This was in response to Doug's suggestion that a 10% drop was Alexandria's fate. I can point to more examples of the 40% mark if you wish - all leading the audience to suggest that the 40% fall is Arlington or Alexandrias fate.
FD - I appreciate the response. Take care.
"I am curious when you speak of "desirable" properies, do you mean simply location or neighborhood appeal? For example Clarendon, and Ashburn are both desirable by curb appeal but not by location."
Desirable isn't easy to define. Even on this one blog we have several different people who will insist that one particular neighborhood is "desirable" while others here aren't even slightly interested in that area.
The people who buy multi-million dollar houses in Mclean didn't do so because they couldn't buy a multi-million dollar townhouse in Georgetown.
I think a fair definition of "attractive" is an area that significant numbers of potential buyers consider their first choice.
It won't always be Clarendon, or Georgetown, or Alexandria, or Mclean... but each of those areas is considered attractive by a large number of people who if they had the means, would choose their favorite area over all others.
Those first choice areas will hold up better than the various second and third choice areas because there really is a sort of pent up demand for them. There are numerous people who would like to live in those areas waiting for their chance to do so. Every dollar those areas drop will bring them into the reach of more people.
In the end, these areas will still fall. Bubble pricing was seen throughout this region and anywhere that saw the 100% run up in prices will ultimately be hit, but the first choice places are going to be hit far slower than the last choice places.
Those last choice places are the areas nobody wanted to be but they took what they could get. Bad locations, bad neighborhoods, bad commutes, whatever it may be. They bought in their "last choice" neighborhood because it was the only choice available.
Nobody is waiting to move into those locations. The only way to sell in a last choice location is to be somebody's last choice... you need to be the cheapest property available of your type.
(Which could be massive new-build house in a terrible location...It won't sell until it is the cheapest massive new build house in the area.)
Nobody is waiting to move into those locations.
And apparently, not too many people are holding off on their move OUT of those locations either--perhaps not so, SO FAR, in the close-in areas.
I've been wondering something that don't know that I've seen discussed in these forums but I wonder whether its a factor in this inner/outer question: I've been wondering about the effect of what I'll call "undifferentiated" inventory.
When you have a variety of different house styles on different lots, some close to the library, some close to the Mall, some close to the park or the school, etc, with different floor plans and features, then in a decent market everybody gets their choice and every home has a market of buyers, perhaps.
But when you get the situation we have in some outer neighborhoods now, plus Miami, Tampa, Pheonix, etc, where you have HUNDREDS of condos, townhouses or SFHs, all practically the same, lined up in rows, one after the other, for as far as the eye can see, then, not only is this less "desirable" (well it certainly would be for ME--I want to be able to find my house by some other means than looking the at the house numbers) but, when the housing market gets less healthy, and 10 units on your street or in your building are on the market that are "just like yours", then what do you have to compete on? What do you have to draw the market to YOUR unit? I'm thinking---ONLY PRICE.
And I'm thinking that at least for a lot of the neighborhoods that I'm familiar with, this undifferentiation is a new thing for this housing cycle, not seen so much in past building booms.
You guys think about this stuff even more than I do--haha
The discussion about the desirable areas vs. the far-flung exurbs continues. There can be no doubt now that the correction is moving in; Fairfax is clearly affected and Alexandria City's months supply is creeping up. In Alexandria, 22314 (Old Town) is surprisingly afflicted while 22301 (Del Ray) and 22302 (Beverly Hills/Jefferson Manor) are faring better. West Alexandria looks as bad as Fairfax, as does South Arlington (22204).
Most likely, the nicer close-in areas will be less impacted, since they posses the highest intrinsic value, but they won't be immune. [Rents are the best indicator of the intrinsic desirability of a neighborhood.] There is a substitution effect in most goods, even non-fungibles such as real estate. There is always a point at which potential buyers in North Arlington will be lured away by cheaper yet comparable homes in Fairfax; this is why corrections tend to "creep in."
Hmm. With regard to Arlington in general and 22207 in particular (full disclosure: my house is in 22207) and the apparent increase in average price, Rich Toscano, who has done an outstanding job of tracking the housing debacle in San Diego for the past five years at piggington.com, has demonstrating pretty conclusively that initial declines are always signaled by declining sales but a rising sales price, as the marginal would-be buyers at the bottom are first to be shut out by tightening credit requirements. So higher end homes being sold to better qualified buyers drive up the average price because lower end homes are less likely to sell. I expect that's why the average price in Arlington appears to be going up; it certainly doesn't mean that's all it's going to do.
Terminator X said:
" [Rents are the best indicator of the intrinsic desirability of a neighborhood.] There is a substitution effect in most goods, even non-fungibles such as real estate."
"At the north side of the complex are the 135 apartments. About half have been rented so far. Studios start at $1,720, one-bedrooms at $2,500, two-bedrooms at $3,875."
"Ah, city living. It's easy to take for granted -- unless you can remember when a scene like this was but a dream on somebody's drawing board."
"When we opened, the three blocks surrounding us were virtually empty," says Rob Wilder, co-creator in 1993 of the restaurant Jaleo on Seventh Street. On a night walk through the neighborhood, "our banker . . . was literally afraid for his life. Ultimately we got him comfortable with the fact we knew what we were doing."
"We felt like we were on the edge of the Earth," says Miles Groves, president of the Downtown Neighborhood Association, recalling the mid-1990s. There were about 1,500 residents, not enough people to qualify for an advisory neighborhood ommissioner. Now there are more than 5,000 residents, according to the Downtown Business Improvement District."
"Mike Magouirk, an executive with a defense contractor in Connecticut, needed a place in town during a one-year fellowship in Washington. He last lived in Washington in 1980. "There's something to do and people out all the time," he says. "It's certainly not the D.C. I remember."
Downstairs at the Source, executive chef Scott Drewno oversees a classic Puck menu that runs from smoked salmon pizza with dill cream and caviar ($22) to lacquered Chinese duckling with wild huckleberries ($32).
Drewno moved with his wife from Manhattan. He was somewhat dubious he could get by without a car in Washington. But the couple found a two-bedroom condo in the neighborhood and just about everything they need within reach of walking or public transportation. Exception: groceries. Solution: Zipcar."
"Living here, on top of the region's newest museum, in the middle of everything, "it's vibrant, there's a vitality, there's a verve," Striner says. "You feel a part of tomorrow.""
Newseum, a Developing Story
New Growth, More Visitors Expected to Follow in Penn Quarter
By David Montgomery
Washington Post Staff Writer
Friday, April 11, 2008; Page A01
www.washingtonpost.com/wp-dyn/content/article/2008/04/10/AR2008041004254.html?hpid=topnews
*gasp*
A gentrification story in the Washington Post?
Well, that just changes everything.
Speaking of Jaleo/Penn Qtr, I'm renting a two bedroom across the street, for $3650 (just increased from $3550 this past year)
If the the market reverts to the "6% rule" for prices to rents, then my unit would sell for about $730K, which is just about what it sold for when it was built--in 2003 or 2004.
I can only hope!!!
See, I mentioned before that rents are increasing and people claimed it was BS.
I am not sure if you are joking or serious.
3550-> 3650 is 3%, slightly less than inflation.
As rent increases go that is pretty minimal.
No, we weren't too unhappy with the $100 rent increase, not bad. We feel we're paying QUITE enough, wouldn't want to pay much more, but it's a nice place in a very nice location (except on hockey and basketball game nights.)
I was referring to the idea that a year's rent should be 6% of the price of the same housing.
$3650 x 12 / .06 is $730K
When prices stabilize, if we can buy a 1500sqft condo downtown for a 2003 price, it would get me thinking! Of course $400 or $450 a sqft would be even better; when I bought my place in 2002 (sold in 2007) I paid less that $300/sqft--I doubt we can hope for THAT again downtown, even though the case-schiller index graph seems to show that a 30 percent price drop FROM HERE would still leave the index elevated above trend for the DC area.
See, I mentioned before that rents are increasing and people claimed it was BS.
If you are willing to move, and to take a place that is having vacancy trouble, I bet you could play hardball and get a deal on the rent or some incentive that "effectively" lowers your rent.
We were quite particular and found few rentals up to our standards as this one is; and we are pretty sure the landlord wouldn't have trouble finding another tenant for this particular space if we had been willing to move again after only a year.
We weren't really willing to move just for a few percent of money, so, we didn't try to play hardball.
Lance @ 7:37 AM,
You've block quoted something in italics, but you've not stated any premise. What point are you making? Perhaps that rents are high in a luxury building downtown? We all knew that already. Maybe if you posted something about price/rent ratios in that area and made a case that they were sound, we could have a discussion.
It's amusing, really. There's a consumer-led recession upon us and we're in the midst of the worst housing market since the Depression, yet there are actually people on this board who glibly deny that there was a housing bubble. Or perhaps they deny that there was a housing bubble in their particular zip code. Or perhaps they just like to gainsay whatever the "bubbleheads" say since they've put so much emotional energy into a position that they can't get themselves to concede. I can't figure it out.
Terminator-X: "22302 (Beverly Hills/Jefferson Manor) are faring better."
22305 which includes Northridge, Beverly Hills, Hume, and the edge of Del Ray, is doing well.
The places that anyone would want are in short supply and selling well. I've posted links to places that sold quickly.
Places that you might not want (E REED) are falling in price.
At the other end of the price range, the places that few could afford, an example is the $2.2 M spec house on RUSSELL RD, are languishing on the market.
CRT: "all leading the audience to suggest that the 40% fall is Arlington or Alexandrias fate."
Thanks for calling them out on this point.
There's an odd style of discussion from some quarters. The price falls in far-out PWC are supposed to have something to do with prices in close-in.
Similarly, soft prices (bubble deflating) in Alexandria's West End, which, for those who do not know the area, is a long way away from the close-in neighborhoods.
A condo conversion in the West End does not compete with a SFH in Beverly Hills or a TH in Old Town.
Every homeowner realizes that prices rise, go flat for a while, and even fall every decade or two.
Then, there are the comments that a steady price means a loss because of inflation or just wait, the bubble bursting out in PWC is about to work its way in, even though it hasn't happened in 3 years.
It might happen. Then again. It might not.
Saying that Yes-yes, you believe it will happen, does not make it true.
Scott: "Speaking of Jaleo/Penn Qtr, I'm renting a two bedroom across the street, for $3650 (just increased from $3550 this past year)"
Thanks for the hard numbers. I am surprised that rents are so high.
You could pay half that much and spend 3 hours a day driving in from Leesburg.
KH, your posts are getting more and more silly.
Obviously there are still houses selling in 22305, but to characturize it as "doing well" is a real reach.
There were 7 sales there in March, with 80 homes on the market.
You can slice and dice those numbers however you want but it is hard to pretty it up.
Sales volume is down >50% YoY. Sales dollar volume is down >50% YoY. Median price is down 10%.
What about that sounds like "doing well?"
Why not ignore all properties below 450k since you claim it is just the low end that is having problems.
If you do that you end up with... 29 houses on the market with 3 sales.
If you limit yourself to houses $700k and up you end up with 14 houses on the market, with 1 sale.
Obviously some houses are selling. Some of them are even selling quickly... but if this is doing well what was last year?
"There's an odd style of discussion from some quarters. The price falls in far-out PWC are supposed to have something to do with prices in close-in."
Some of the people here have some knowledge of economics. We have tried in the past to explain to explain to you why things are happening the way they are but it is pretty obvious you would rather not know.
"Similarly, soft prices (bubble deflating) in Alexandria's West End, which, for those who do not know the area, is a long way away from the close-in neighborhoods."
lol, my how "close in" keeps shrinking! Remember when it used to mean "inside the beltway?" Now we are left with the Northern "tip" of Arlington and of course anything within sight of your house. (and your investment houses perhaps? Funny how you pretended for quite a while to be just a homeowner with no interest in prices besides what they do to your taxes...)
"Every homeowner realizes that prices rise, go flat for a while, and even fall every decade or two."
and this afterall is a normal cycle...
"Then, there are the comments that a steady price means a loss because of inflation or just wait, the bubble bursting out in PWC is about to work its way in, even though it hasn't happened in 3 years."
Hasn't happened in 3 years? Did you look at the most recent sales numbers? Or for that matter the sales numbers for the last few months?
It is happening right now. It is going to take well over a year from today to play out but it has already started.
You like to pretend to be some kind of expert, but then you just brush off things like a 40% drop in sales and show yourself for what you are. (Alexandria is now selling at a pace not a little over 1/3rd of its peak)
Terminator,
The point is simply that the increased prices in the District really do reflect a greatly increased intrinsic value ... And while you can argue how far out this increased intrinsic value goes from "the center", I think we can comfortably say that at least those places within the Beltway (and then some) have been similarly affected by have a real international downtown develop. I.e., We have to get past the Bubble Mentality and admit that we've had a veritable increase in value in the metro area and higher prices are simply reflecting that reality.
I just wanted to post this for Lance. :)
March 2008 vs 2007
Average Sold Price:
$535,645
$561,789
-4.65%
Median Sold Price:
$ 399,500
$ 434,500
-8.06%
Total Units Sold:
393
653
-39.82%
Thank you.
Sorry, that was for Washington DC according to MRIS.
That isn't the close in part of DC!
BHs constantly seem to overlook that inflation is the best friend of mortgage holders. Personally, I hope it soars. I'd love to be in a position where inflation is 10% while my mortgage stays at 5%.
Why is no one commenting on this? Yes, a fixed mortgage has an advantage by time because inflation, but to wish for 10% inflation? Do you have a fixed mortgage @ 5% Lance?
Of note, my rent has not moved for over 2 years. Yes, I live in a desirable area.
Just for you Leroy, this is 20001. :)
March 2008 vs 2007
Average Sold Price:
$474,770
$479,439
-0.97%
Median Sold Price:
$399,900
$449,900
-11.11%
Total Units Sold:
25
39
-35.90%
a mere -4.65% is hardly a bursting bubble ... LOL
"a mere -4.65% is hardly a bursting bubble ... LOL"
Do you think this is it?
alexa said "Why is no one commenting on this?"
b/c lance is well . . . (I'm refraining from name calling) . . . he lacks a grasp of economics.
He does not understand that inflation is a non-uniform, stochastic process (I bet he doesn't even know what stochastic means). He believes that an inflation rate of 10% means that EVERYTHING goes up at 10%.
He doesn't understand that to a large extent the massive increase in housing prices was a result of massive monetary/credit inflation. There was any inherent increase in the value of housing, there was a DECREASE in the value of the dollar.
Since 2002 the market was flooded with massive amounts of money in the form of credit, thus spurring the massive bubble in housing. He also believes that the prices (credit inflated) are here to stay. He doesn't understand that any massive expansion of credit must ultimately end up in a massive deflation of credit-Mises had a better quote, but I can't find it.
The only way for prices to stay high is for incomes to massively rise . . . unfortunately in a FIRE economy such as ours incomes are the LAST piece to rise in the inflationary cycle.
So inevitably because of the massive credit expansion made possible by 1% IR, etc. the credit must collapse. Of course now the Fed is on its way to ZIRP to protect those inflationary gains (i.e. solve the problem of inflation with more inflation), which will induce more money/credit into the marketplace. Of course this money will not go into housing, it will go into commodities and bonds.
So on one hand you have massive deflation in credit in the housing/finance sector and massive inflation in new money and in prices in commodities.
So lance believes that with 10% inflation his housing price will rise. He is dead wrong, with 10% inflation his house price/mortgage payments will stay high while food, basics, etc, go higher. An unenviable position, high payments plus high food, gas, etc. Squeezed on both ends.
He also believes the IR on homes are headed higher. While I believe he is ultimately right and before this cycle is over we will see high IR, +10%, it won't happen for a while. Before rates rise that much we have to have a good bout of inflation +8% before the Fed feels forced to raise rates to "kill" inflation. Right now they are too worried about the economy in the dumps to be concerned about inflation.
lance also doesn't seem to understand the massive amounts of inflation already sloshing around in the system as evidenced by a ~40% drop in the value of the dollar since 2001. 40% in 7 years!!!!
I believe that ultimately we will get very close to the same income-mortgage ratios of 2000,2001. That means either prices have to come down a lot more, incomes rise a lot more, or a combo of both. Regardless, I would not want to be in the position of owning a massively depreciating asset, with high inflation (i.e. getting squeezed on both ends). Whether we get to 2001 nominal price is inconsequential, we WILL get there in real terms (i.e price/income).
GTE doesn't seem to understand that I will be happy to see my nominal mortgage payment on my 5% 30 yr fixed rate loan stay the same while everything else (including wages) go up as the value of the dollar falls. He's over-analyzed the situation and greatly under-comprehended the inevitable results ... And btw GTE, it was I who first told you to expect inflation to not hit immediately but once we have stagflation in the system. Again, all we need to do is look back to what occured in the 70s and it becomes obvious what is occuring now and what to expect. Just look back and you'll understand why it was the homeowners with mortgages who had the best of all worlds ... and why sitting around waiting for nominal house prices to fall would have been a bad thing back then ... just like it is now.
"And btw GTE, it was I who first told you to expect inflation to not hit immediately but once we have stagflation in the system."
ROTFLMAO . . . okay yeah sure whatever . . . you talk out of both sides of you mouth too often.
How many books on economics have you read, lance?
"fixed rate loan stay the same while everything else (including wages) go up as the value of the dollar falls." Okay . . . cough, cough bull!@#%.
get it through your thick skull, inflation is NOT UNIFORM!!!
You can have the EFFECTS of inflation (increase in the money supply) in stocks, real estate, commodities.
Everything does not go up at the same time at the same rate due to inflation! Wages are the LAST TO RISE! You are in a pickle while housing prices FALL, commodities RISE and incomes are STAGNANT.
Sure you've locked in your costs at 5% . . . yipee . . .
. . .ah screw it . . . I'm not wasting my time on you . . . you figure it out.
GTE said:
"Sure you've locked in your costs at 5% . . . yipee . . .
. . .ah screw it . . . I'm not wasting my time on you . . . you figure it out."
Ah ...it sounds like you're finally figuring it out. Yes, I've locked in my largest single cost ... So, if utilities go up, they would have gone up irrespective of whether I bought or waited ... And if wages lag the inflation of commodities, that would have happened irrespective of whether I bought or waited ... But unlike those waiting, I'm at least in a position of having locked in my single largest cost. Are YOU getting it now?
whatever lance . . . I don't feel like arguing with a moron and with someone who's head is stuck up their own rear.
You're right lance, I should have bought in '05 . . . how stupid of me to not lock up my costs.
I mean goodness, if I had bought I would have a house that if I tried to sell, I would take at least a 5-10% hit, and more likely a 15-20% hit as just on probabilities alone not all the population is situated in North Arlington.
I would have more likely than not used an IO 30 year fixed that amortizing in 10 years. So now I have 7 years left until my payments reset and I'm forced to pay off the entire amount in 20 years . . . man that's going to be a big hit when it comes in 7 years. In order to pay for my house I would have to rent out some of my rooms, maybe my basement to someone while at the same time my wife is pregnant with my first child. Man . . . living with someone else besides my wife that I'm not related to that would be AWESOME!!! So in 7 years on a 300k mortgage my payment will jump from ~1600/month to at least 2200/month-if I had a 20% down payment, if I didn't have 20% down it would have been a lot more.
If I had bought, I wouldn't have been able to save at least half of my mortgage payment, I wouldn't have been able to put that money away. I wouldn't have been able to buy as much silver/gold, and I wouldn't be up at least 75% in the past 3 years on it. I wouldn't currently have enough in savings to support my family for 2 years without working, and I wouldn't have enough for a 20% downpayment + closing costs + at least one year of living stashed away.
Gosh . . . you're right lance . . . I should have bought in 2005 b/c housing over the long term goes up and buying in '05 I needed to lock in my costs. I should have bought so that in 7 years when my payment goes up by 50%, inflation is 7% a year my salary increase of 4% a year I'll be better off.
Yeah . . . please lance . . . I need some of the crack you are smoking to take me to happyland . . . and make me believe I should have done that.
No lance you don't get it . . . it's called time value of money.
Lance, spare us your lectures on economics. They aren't funny, and they aren't even close to accurate.
As usual, your understanding is extremely simplistic, putting it nicely.
Inflation does not mean "wages go up."
Inflation means "your currency buys less."
Often, during inflationary periods wages go up, but that is not necessarily the case.
Fear of inflation is no reason to rush out and buy a house, especially in a declining market.
...and yes lance, it is declining.
Interesting article about why one should lock in whatever costs they can prior to inflation really hitting:
For Younger Generations, First Lesson In Inflation
By Kirstin Downey
Washington Post Staff Writer
Sunday, April 13, 2008; Page C01
www.washingtonpost.com/wp-dyn/content/article/2008/04/12/AR2008041201915.html?hpid=topnews
Leroy said:
"Often, during inflationary periods wages go up, but that is not necessarily the case."
Nope, they never go up. People just keep earning the same amount while all their costs go up. There's absolutely no pressure on employers to raise wages in order to retain employees who will otherwise move away to lower cost areas or to other better paying jobs from competitors. No pressure.
KH was on to something when he pointed out that you and other BHs are static thinkers.
But Leroy, thanks for helping me make my point. If even I never get another raise (as unlikely as that is), at least I know that my single largest monthly expense won't be one of the expenses going up.
"Nope, they never go up. People just keep earning the same amount while all their costs go up."
Hey look, a strawman!
I say "not neccessarily the case" but you decide it would be easier to argue with me if I had said "never," so you go ahead and make pretend that is what I said.
Charming!
"There's absolutely no pressure on employers to raise wages in order to retain employees who will otherwise move away to lower cost areas or to other better paying jobs from competitors. No pressure."
There are several flaws here. First, pressure doesn't necessarily equal "ability."
How do you think BMW dealerships are feeling right now? They may be under "pressure" to continue selling the same number of cars, but with the dollar falling and with the economy in general falling... they can't just wave their hands and conjure up sales.
With that said, employers are not always ABLE to raise wages.
This really shouldn't be such a complicated issue for you. Sometimes people just make less. There have been countless examples through history of that exact thing happening.
You are an IT tech right? Surely you know some people that held ridiculously high paying jobs back in the .com bubble but were unable to match their previous wages after the bust. Many will likely NEVER match their previous wages in inflation adjusted dollars. They just plain lost out.
Second, housing prices are currently falling. That isn't "inflation," if anything you could make an argument that the housing market is seeing deflation right now. Massive amounts of money have left the housing market and now prices are falling across the nation.(and to some extent the world)
Really, if you don't understand something you should ask questions instead of just making stuff up.
"KH was on to something when he pointed out that you and other BHs are static thinkers."
Static thinkers? I wish you knew enough to know what a fool you look like. You don't even understand the words you use and yet you insist you MUST be right because...well... the alternative is simply unthinkable.
We get it lance, you think buying real estate is always a good idea.
Top of a bubble? No problem, obviously there can't be a bubble.
In a falling market? No problem, obviously the market isn't really falling, not in places that count, because nice places just don't fall, and if they do... well they obviously weren't that nice!
You are a broken clock lance. You always say the same thing. Buy buy buy... we get it...
"But Leroy, thanks for helping me make my point. If even I never get another raise (as unlikely as that is), at least I know that my single largest monthly expense won't be one of the expenses going up."
You made a point alright... probably not the one you were shooting for though.
Nobody here is arguing that you personally are going to go bankrupt or whatever.
What we are trying to explain to you is that your "it is always a good time and a good price" to buy approach is badly flawed.
You are locked in, but you are locked in at a very high price.
Debt is debt is debt. A huge amount of debt at a low interest rate is still a huge amount of debt.
That is the flaw in too many people's thinking. They think about the payment rather than the price. That is exactly what you are doing every time you start going on and on about your interest only loan at a low interest rate.
Interest rates matter, but so does the principal. When all is said and done you will have to actually pay off what you borrowed. Interest only delays that day, but it doesn't eliminate it.
We aren't in a rush to buy because every day that passes allows us to buy the same thing for less money.
You are obviously here waging a little mini-crusade to prove to the world how smart you were. It isn't working...
leroy . . . I bet lance believes that inflation is just a "general increase in prices". I can't blame him too much, I mean after 20 years of public indoctrination about what inflation really is and why we have inflation, he can't think for himself.
Inflation is an ABNORMAL state of things, in general the natural state of thing is a gradual decrease in prices . . . it is useless trying to explain things to someone who won't take the time to research for himself how the monetary system works. He'd rather blather on about how he's locked in , versus doing some research and figuring out the economics of our country. Just like the article he posted . . . no one in the article had a clue as to WHY prices are rising, just that they are.
GTE,
you are really off the mark with your last comment. inflation IS normal in our economy ... deflation is abnormal and not wanted. Those who set monetary policy have to overshoot inflation because you need sufficient money out there to absorb increases in production. Deflation chokes off increased GDP and you begin a downward spiral of decreasing production. I suspect even Leroy knows that ...
And no Leroy, I am not an "IT tech" ... just another lie made up by another ill-informed BH.
Leroy said:
"What we are trying to explain to you is that your "it is always a good time and a good price" to buy approach is badly flawed."
Speaking of straw men ... I've NEVER said "it is ALWAYS a good time to buy and a good price". What I've said is that there is never a time when someone cannot buy ... just people who don't know how to buy and are sitting around on their duffs waiting for "good deals" to fall into their laps rather than doing the best they can given their current circumstances. i.e. quitters/losers
"you are really off the mark with your last comment. inflation IS normal in our economy ... deflation is abnormal and not wanted."
Wrong . . . but I'm too tired to waste my time with someone like you.
Read some non-Keynesian econ. books.
Look up Mises, Rothbard, Hayek, shoot even Friedman disagrees with you. Whatever you want to believe lance.
Price deflation happens all the time. . . computers, electronics, etc. And shoot just about anything and everything becomes cheaper in real terms over time. Even cars . . . inflation adjust a car in 1960 to today and you will get a much better vehicle today vs. 1960. In real terms just about everything becomes cheaper because humans find a better, faster, more efficient ways of producing more and more of said item. And finally for over 100+ years the CPI stayed relatively constant at ~50 until 1913. . . since 1913 it's gone up to ~500. What happened in 1913 . . . the Federal Reserve which gave us our inflation.
You have no clue . . .
"to fall into their laps rather than doing the best they can given their current circumstances. i.e. quitters/losers"
how lame . . . yeah I'm a quitter for socking my money away in silver/gold and getting great returns vs. a depreciating asset . . . yeap I'm a quitter.
GTE said:
"Even cars . . . inflation adjust a car in 1960 to today and you will get a much better vehicle today vs. 1960."
Funny how you have to "inflation adjust" to prove to me that deflation is good/normal and inflation is bad/abnormal. And your example goes on to talk about real value and not about inflation. You've just shown the world how confused you are about the concept of inflation. Do you really think anyone is now going to trust you in regards to how bust to buy a home? You don't even understand inflation/monetary issues. You might consider taking an economics course. ECON 101 for starters.
GTE,
LOL. Don't let him get to you. He is the epitome of the old In Living Color play on words, "A mind is a terrible thing to develop - without guidance."
Damon Wayans would sit there stringing a bunch of SAT words together that made no coherent sense.
My $0.02.
mytwocents . . .
lol, yeah I know, I try to refrain . . I'm sure he just laughs and laughs. Kick me for being stupid enough to respond to him please :-).
"What I've said is that there is never a time when
someone cannot buy ... just people who don't know how
to buy and are sitting around on their duffs waiting
for "good deals" to fall into their laps rather than
doing the best they can given their current
circumstances. i.e. quitters/losers"
Ha...
Sure lance, anyone that stops to think instead of just
swallowing a realtor's advice hook line and sinker is a "quitter/loser."
You were lame two years ago with this type of
hard-sell crap but today? Just kind of sad, or
funny...
Houses were/are badly overpriced.
Just because someone COULD find some way to leverage
themself into some kind of home doesn't mean that it
is a smart decision.
"You might consider taking an economics course. ECON 101 for starters."
heh
To hear you of all people giving that advice is pretty amusing.
You do realize that you aren't fooling anyone right?
Lance: "You've just shown the world how confused you are about the concept of inflation. "
There are people who collect cars from the 1960's. Perhaps it's inflation or a "bubble" but prices for units such as SS396 Chevelles and 427 Galaxies are higher today than I would pay.
This reminds me of the SFH in my zipcode that are priced above what I'd pay but are selling well, two sold recently in 5 and 2 weeks. The $2.2 M spec home down the street may be overpriced; time will tell.
Most things are priced above my budget but that does not prove that the item is overpriced.
It may reveal the limitations of my budget or that I don't understand that specific market.
Your friend in California using "statistics" to prove that you are wrong about your zip code reveals his limitations.
Neil said:
"My concern is that we'll have economic riots in summer 2008 or 2009... that would do a number on the prices."
Btw, no one picked up on this outlandish statement. I can't even imagine who Neil would envision as leading these economic riots. BHs? HHs? It's a really outlandish statement which deserves discussion about.
Lance: "Btw, no one picked up on this outlandish statement."
Lance, I have no idea what some of your BH pals are going on and on about.
Generally, I skip over their prose and look for posts from you, Bill (the landlord), Doug, AlexA, Terminator-X, tabitha, CRT, fd, etc who offer facts or points to consider.
Some others do not make any sense, the business about the economic riots is one example.
kh,
Good point about skipping over his comments. On another post today he says something like "I'll bid zero". I guess he thinks he'll get a property for nothing? Next he'll be claiming he's going to get paid to take over title to a house. LOL
lance said
"happy to see my nominal mortgage payment on my 5% 30 yr fixed rate loan stay the same while "
This is actually one of his lies again. He claimed in other threads to have a 30yr fixed at 5%. However, the loan is IO for the first 10 years, so no principal is paid. At the ten year point it converts to a 20 yr fixed at 5% on a loan of something like 850k.
So, why is Lance here. If his house is less then he paid for it when the reset comes, his payment doubles. SO HE IS VERY WORRIED.
He is also praying that his income will rise enough to cover that spike in payment. So, in the end lance speculated like every one else and took a risk. Whether he plans to live in it or not, he still speculated.
Now, he will make some outlandish claim that he can save money now and he can pay the payment in the future. blah blah blah.
Why would anyone in their right mind take an IO loan at age 50 if they weren't speculating/hoping that prices would go much higher in the short term?
Any smart finanicial adviser would tell someone, especially at that age, to lock in their home price at a fixed payment and let your income rise to cover the cost of increasing taxs and commodities.
Lets hear it smart guy. Keep bragging/lieing about how you have a fixed payement.
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