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Saturday, February 14, 2009
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56 comments:
Next week the government will announce an initiative to help stem foreclosures. Home owners in distress will be given the option to get a modified loan with potential government subsidies and there will be no damage done to their credit.
I'm not sure how anyone can consider this fair.
People who made poor choices are rewarded and given government subsidies. While other people who made wise choices receive no rewards and in fact end up paying more taxes.
Of course it isn't fair, it all comes from the misguided idea that the housing correction "caused" this recession.
The bursting of the housing bubble may have been the trigger for the recession, but the recession was coming one way or another, regardless of housing, due to the fundamental imbalances that had developed in the US and world economies.
Going back to the politicians... for some reason many of them seem to have concluded that if they can simply find a way to prop housing prices up at an unsustainable level it will result in a return to economic growth. Nothing could be further from the truth.
New housing construction would generate jobs, but the new home market is so over-built that there is no chance whatsoever of restoring it in the foreseeable future. Propping up the existing home market does nothing to help the economy. It encourages people to continue to overspend on a non-productive asset.
Worst of all, they are funding this bad idea with taxpayer money. They are borrowing money to keep people in homes they can't afford, because they want to keep housing prices at levels people can't afford, and in the end we all get stuck with the bill.
We would all be better off if housing continued its return to historical levels, allowing homebuyers to spend a smaller percentage of their money on housing. The money saved would either be spent elsewhere in the economy, or saved. Both options would have economic benefits. (Provided they are saving the money in a lending institution rather than just burying it in the backyard.)
Besides, even when loans are modified, most quickly go into default again. I suppose a generous enough handout may reverse that trend, but thus far the whole loan modification thing has proven to be a waste of time and effort.
"Redefaults
U.S. bank regulators in December said 55 percent of loans modified during the first quarter of 2008 were 30 or more days delinquent after six months. “Re-default rates increased each month and showed no signs of leveling off after six months,” Comptroller of the Currency John Dugan said in a statement. "
http://tinyurl.com/bqqw85
I do wonder exactly how their formula will work. Is there an upper limit to how much money the government is willing to put into a house?
Knocking $50k off the balance of a $150k loan is one thing... how about $300k off a $900k loan?
Will there be a "means" test? Will high income over-spenders be held to a different standard than low income over-spenders?
Will it be possible to game the system?
What if a spouse quit his/her job lowering the family's income? Could that family have the government pay for part of their house, only to have the spouse return to work a month after the deal is done?
This is going to be a complicated mess.
I read this on a financial message board. Very appropriate for our times:
Thomas Jefferson knew
Jefferson in some cases could be called a prophet.
When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe.
Thomas Jefferson
The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.
Thomas Jefferson
It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.
Thomas Jefferson
I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.
Thomas Jefferson
My reading of history convinces me that most bad government results from too much government.
Thomas Jefferson
No free man shall ever be debarred the use of arms.
Thomas Jefferson
The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government.
Thomas Jefferson
The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants
Thomas Jefferson
To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.
Thomas Jefferson
Very Interesting Quote
In light of the present financial crisis, it's interesting to read what Thomas Jefferson said in 1802:
'I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.
As always, Leroy nailed it right on the head.
It seems that politicians are merely giving the machine a nudge to keep the wheels spinning for a while. Unbeknownst to them, it's really a perpetual motion machine, and like all perpetual motion machines, it's a fraud, and eventually friction will bring it to a grinding halt.
dgg,
That's funny. I started reading through some Thomas Jefferson quotes yesterday after they passed the "stimulus" bill.
I do think this quote is most appropriate today:
I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.
We've clearing failed to prevent the govt from wasting the labors of the people.
They are borrowing money to keep people in homes they can't afford, because they want to keep housing prices at levels people can't afford, and in the end we all get stuck with the bill.
Also, in the end no action the government takes can ultimately prevent prices from falling to their "historical levels." At best their crazy plans will slow the process down, leaving a new class of "victims" (those jumping in too soon), "in need" of a future bailout, in their wake.
Our future generations are sure to appreciate our complete and utter folly when they discover how they became burdened with insurmountable debt a dismal standard of living.
People voting for this theft from our future generations to satisfy their short term desires are just as greedy as any Fannie Mae, Freddie Mac or banking executive.
We have truly lost our moral compass as a country.
dgg,
Were those quotes Thomas Jefferson or Ron Paul?
One of my new year's resolutions is to participate and get involved with some type of Libertarian organization.
I just did a quick glance over the massive bill that just passed. One of the first things I saw was 650M for TV set converters.
650Million to help ensure all Americans will have access to American Idol?
http://www.opencongress.org/bill/111-h1/text
"digital-to-analog converter box program
For an amount for ‘Digital-to-Analog Converter Box Program’, $650,000,000, for additional coupons and related activities under the program implemented under section 3005 of the Digital Television Transition and Public Safety Act of 2005, "
Interesting article in the WaPo about the combined costs of housing and transportation, and how they vary from one part of the region to another:
housing and transportation
Tom, you may not have heard but the previous administration failed to fully fund the cost of those coupons so that the conversion could be completed this month. They ran out of money last month. So the current Congress was stuck coming up with the money, just as they have been stuck with far more disastrous problems on so many fronts that now have to be addressed with inadequate resources.
Can we stick to housing issues here? It's fair to say that there is a diversity of political views, and many other places to discuss them on the web.
1 in 9 homes vacant. If we enter a depression, at least we 'should' all have a roof over our head.
http://www.usatoday.com/money/economy/housing/2009-02-12-vacancy12_N.htm
I was surprised that The Washington Post left out one of the biggest counties and second largest job center, Fairfax County, in the area in this story.
Why?
Factoring In The Cost of Getting Home
By Elizabeth Razzi
Special to The Washington Post
Saturday, February 14, 2009; F01
Ever wonder where all your money goes? According to some urban-planning researchers, almost half of it -- 46 percent -- goes to just two things: putting a roof overhead and getting around town. And that's before you even pay income taxes.
Those two money sinks -- home and transportation -- play off each other, according to researchers at the Urban Land Institute, a nonprofit group associated with the development industry. For years, home buyers seeking more home for less money have moved to farther-out suburbs where land is cheaper. But they often don't fully account for higher transportation costs from hours behind the wheel, which will significantly cut into the real estate savings.
Transportation costs begin to exceed the savings from lower housing prices when households move 15 to 17 miles away from job centers, according to a new report, "Beltway Burden: The Combined Cost of Housing and Transportation in the Greater Washington, D.C., Metropolitan Area," produced by the institute's Terwilliger Center for Workforce Housing. The center promotes higher-density development that mixes housing for people with different incomes close to jobs, shopping and public transit.
Across the broad Washington area, stretching from the Blue Ridge to the Chesapeake, residents spend an average of nearly $23,000 each year on housing and $13,000 on transportation, accounting for about 46 percent of the $78,221 median household income, according to the report. Even worse: We waste an average of 60 hours a year stuck in traffic.
The report is linked with a Web-based calculator that allows people to enter their data to figure out the housing/transportation cost trade-offs for different addresses. The tool, available at http://www.uli.org/costcalculator, is tailored to the Washington region.
According to the Urban Land Institute's calculations, Fredericksburg has the region's lowest combined housing/transportation cost at $25,404 per year. That's because many residents are not making the morning migration north to a job in or close to the District.
"Fredericksburg is a compact, walkable community where jobs are plentiful relative to its population size, and residents have access to work, amenities and services locally," the report says. However, Fredericksburg residents also have the lowest median income of the metro area, at $46,007, which means a high proportion of their income, 55 percent, goes to just housing and transportation.
Residents of Loudoun County pay the highest combined price, $46,435 per year, but they also enjoy the highest median income, $101,289, according to the report. So the combined bill is 46 percent of their income.
"The absolute worst offender here is Loudoun County," said Jeffrey Lubell, executive director at the Center for Housing Policy, a nonprofit research organization that helped prepare the report. "Incomes are so high, and residents can afford multiple cars."
Affluent households may be fine bearing those costs. But, Lubell said, households with moderate incomes in such auto-dependent communities can struggle with the combined housing/transportation expense. "These people are very, very vulnerable to fluctuating gas prices," he said, "and over time they're going to be in a bind."
Where can you find more balance between high wages and relatively low combined spending? The report says it's in Arlington, where combined housing/transportation spending hits $33,938 per year, on average, and median income is $87,398. Housing and transportation consume 39 percent of income. It also cites Montgomery County, where costs are $38,478 and median income is $89,628. Housing and transportation account for 43 percent of income.
In the District, combined expenses are $27,553, accounting for 49 percent of the $56,823 median income. And in Prince George's County, combined expenses are $32,409, accounting for 48 percent of the $68,124 median income.
District residents are tops for walking, biking and using public transit, according to the report. Only 41 percent drive to work, the lowest proportion in the area.
The biggest fans of the internal combustion engine are in Warren County, Va., where almost 93 percent of residents drive to work.
You can enter your household's information to get a cost comparison that more closely reflects your real budget. Make the model estimate your actual commute by entering home and work addresses. Adjust it for your family size and income, the number of people who hold jobs, the number of vehicles in the driveway, current gas prices and even your car's fuel efficiency.
You can tweak the model to see whether taking public transit would lower your transportation expense or actually add to the cost. And you can easily enter multiple addresses to see how housing and transportation costs break down for different places that you're considering as a new home.
The calculator also shows how your income and expenditures compare with the average for the neighborhood, based on Census data updated in 2006. The Urban Land Institute does not require registration and doesn't hand out your e-mail address.
dc2: There is no need to completely paste in that article. A link would be fine (not to mention that WaPo deserves some of their advertising revenue).
By the way, regarding Razzi's story, the average cost of housing and transportation for zipcode 22207 in Arlington is $52,700. Ths is not mentioned in the story.
I guess if you move to South Arlington you get the benefit of the lower cost. But 22207 is way off the charts regarding cost of housing and transportation.
In contrast other zip codes in Fairfax county have these average costs for housing and transportation:
22312 -- $32,713
22180 -- $39,490
I checked the calculator from the institute who created the report included in the Post story. You can check it for other areas.
Sorry about posting the entire story. You are right.
Check this one out
http://franklymls.com/AR6972351
3115 HAYES ST
ARLINGTON, VA 22202 map
List Price: $228,900 (down 43% from last sold)
Original Price: $238,900
08 Tax A : $324,200
Last sold: $400000 12/21/2005
Two notes: Interesting how it says "corporate-owned" instead of bank-owned.
Also looks to be very very close to the water treatment plant so the smell might be bad.
These numbers are all screwed up.
$13k a year on transportation?
That is insane.
If people choose to buy expensive and/or inefficient vehicles that is their choice, but it isn't tied to their physical location.
This article makes it sound like it is somehow about distance when what it is obviously about is what kind of cars families choose to buy.
If you drive two luxury cars and depreciate most of their value over 5 years... you will have a very high "transportation cost" no matter where you live or how far you drive.
If you drive an inexpensive Honda or Toyota, bought two years old and depreciated over 10 years... you will have a low transportation cost no matter where you live or how far you drive.
This article isn't about a "beltway burden" it is about "some people like to drive expensive cars."
Hi, it's also right on Glebe - terrible location.
Looks as if that Evans Farm house never sold and the owner/investor thinks now would be a good time to list it again:
http://franklymls.com/FX6965360
Taste is an individual thing of course, but IMHO this one needs a stager who has current taste. And it needs a realistic price.
Leroy, true, but offsetting that is that there didn't seem to be any attempt to place a value on the time lost while commuting (unless I missed it) - just an estimate of car operation costs. The lost time value also depends on the person, but it is a significant and very real cost.
"Leroy, true, but offsetting that is that there didn't seem to be any attempt to place a value on the time lost while commuting (unless I missed it) - just an estimate of car operation costs. The lost time value also depends on the person, but it is a significant and very real cost."
Sure it is, and this is far and away the biggest argument for living close to where you work, wherever that is.
The cost of driving a car farther is minimal compared to other factors.
This is a variation of the same discussion we had when gas prices spiked up and people started trying to argue that high gas prices meant people would be willing to spend hundreds of thousands of dollars more on a house to live in close.
The math just doesn't support such a decision.
The same is true of this article. They try to make it sound like distance is what is driving "transportation costs" but that isn't the case at all. The dominant factor, by far, is the type of vehicle families choose to drive and what assumptions you make about its useful life/resale value.
I played with the little calculator they linked to...
Here are three select zip codes according to their calculator.
20110(Manassas)
Commute time 27min
Vehicle miles traveled 17,878
Transit cost per month $41
Annual transportation costs:
$14,667
22102(Mclean)
Commute time 25min
Vehicle miles traveled 18,364
Transit cost per month $38
Annual transportation costs:
$15,249
22207(Arlington)
Commute time 15 min
Vehicle miles traveled 14,288
Transit cost per month $6
Annual transportation costs:
$13,592
Using the calculator's default data it basically says that transportation costs are nearly identical in each area.
So what on earth is the article about?
I've always known that N. Arlington commands a huge price premium for location/transportation reasons, but today's WaPo article puts it into hard numbers (though the article didn't quantify time lost in traffic, which is obviously another significant expense). I wasn't surprised Arlington was identified as an optimal location. Location is an important reason why open houses in my 22207 neighborhood have been so jammed in recent weeks.
I've always known that N. Arlington commands a huge price premium for location/transportation reasons, but today's WaPo article puts it into hard numbers (though the article didn't quantify time lost in traffic, which is obviously another significant expense). I wasn't surprised Arlington was identified as an optimal location. Location is an important reason why open houses in my 22207 neighborhood have been so jammed in recent weeks.
My house hunting trip:
I spent Feb 3-10 in the NOVA area looking at areas to live. Of course, we were guided around by our relocation company's agent who was nice but gave the appearance that there was no room for additional drops in prices, generally.
So, we looked at about forty houses over the four days we were with the agent. The agent kept pushing us to choose South Riding, even though it is the furthest from my work (Wash. Navy Yard). Not sure what was up with that. We ended up really liking the Fairfax City/Burke Area and are now thinking about buying in that area.
Springfield was awful, not that we saw all of it, but it was depressing. The agent showed us a few homes there, two were these crazy rebuilds that were interspersed among some very challenged houses. Both had at least three hispanic families with children camping out in each of them. One had three four-poster beds in the master bedroom...We got out of there quickly as we couldn't imagine living there.
She took us to Woodbridge and Dale City, we saw some huge homes with lots of land for good prices. Trouble is I would be on the road for hours a day on I95. We didn't really like the area too much, but it wasn't awful.
Herndon and Reston were OK, but again too far of a commute and the houses we saw were overpriced and not really impressive. We didn't like anything in Chantilly either.
We saw a house in Clifton that we really liked, one in Centerville too. Those were longer commutes but not as bad as some, about 45 minutes leaving early AM, maybe an hour and a bit going home.
We absolutely loved Fairfax City and Burke. Older homes but a nice woodsey feel about the place, and my commute would be about 30 minutes both ways doing the 630 to 3 schedule.
So now we finish packing up and move there at the end of Feb. We will be living in temporary housing at Tyson's Corner for two months. From there we will be able to scout out more areas.
What is the protocol with realtors? Do I have to stick with one or can I just call up some to show me their properties? I called another realtor who said that if I was working with one I should just stick with her until I thought we couldn't work together. It was nice of her to show us around but I really don't think she is looking out for us...
Thoughts?
I call BS on their 'costs'. At the height, when gas was $4 a gallon, it would have costs me $250 a month to drive from my old place in Loudoun to my job at the beltway. That was $3000 a year -- closer to $1500 a year now.
$1500-$3000
Now, I have a German sports sedan. I probably buy a new car every 7 years. So that would be $6000 a year. Most of those years are under warranty, but I'll need new tires plus other miscellaneous maintenance. Let's be pessimistic and say $3000. Spread out over 7 years that's $428 a year. Since we're pessimistic, let's round it up to $500 a year.
$6000
+$500
+$3000
--------
= $9500
?????
Let's assume that the average person in Loudoun works in DC and has to take the Metro. At $12 dollars per day, that's $3,120 a year (+$9500 = 12,620). That still doesn't add up to the $14,841 that web site says. Never mind that the average commute in Loudoun is not to a destination inside the beltway, nor even to an area near the beltway.
In the end, the average transportation costs for someone living in Loudoun, working AT the beltway, and not driving a BMW is going to be closer to $6k a year. Like I said, most drives will be shorter than that.
So why the big discrepancy? Could it be that the numbers come from the Urban Land Institute? " ULI advocates progressive development, covering topics such as sustainability, smart growth, compact development, place making, and workforce housing."
Nope, no bias there.
Oi! Tom spouts off before reading:
Tom: "I've always known that N. Arlington commands a huge price premium for location/transportation reasons, but today's WaPo article puts it into hard numbers...I wasn't surprised Arlington was identified as an optimal location."
Tom (aka Mr. "I can't wait to tell you how much I love North Arlington") must have missed Leroy's post:
Leroy: "Using the calculator's default data it basically says that transportation costs are nearly identical in each area." [Arlington, McLean, Manassas]
Tom C: DO NO MOVE TO SOUTH RIDING. I'm not kidding when I say that it can take you 20-30 minutes to drive down Rt50 to Rt28. The area is nice, but that bottleneck is hellish, and there is no fix in sight.
[Too many Toms lately!]
Tom C., as with every occupation/profession, there are the good and the bad, and it sounds to me as if you got a bad one, with respect to her not listening to you or thinking about how awful the commute would be to your work from some of the places she was showing you.
I am not a Realtor, but as I understand it, it is considered unethical for one Realtor to appear to be soliciting your business if you are already working with another. Technically, if you have not signed a buyer-agent contract, you could work with more than one agent, though they aren't as motivated to work with you if they think you could buy through someone else after they have invested time. So it is probably best for you to make a decision as to whether to dump the present agent (I would, if I were you), then get recommendations and/or interview new agents, letting any new agent know that you are not working with anyone and are trying to find the right agent to work with.
And welcome to NoVA!
Tom C,
I live in West Springfield relatively near the Burke border. My experience with a relocation agency was generally positive, but the housing was outsourced to a real estate firm. When the agents found out I wasn't interested in overpaying they shuffled me around the office until an agent picked up the case. He was very helpful too.
Anyway, don't believe that the prices can't drop. Lots of properties on the market for way too much money, but few are moving. The ones that are moving are priced substantially lower (e.g., around $330k) The new low water mark is $280k for a SFR; most of the asking prices are way higher. However, the buyer of that house paid ~$550; no idea if they're willing to take that haircut or if they expect the bank to. Either way, I'm not biting.
Anyway, the section of 495 crossing the Potomac can get backed up, but (1) I turn the other way on the beltway and only know it from the radio traffic reports and (2) the new bridge may have made it much easier. I can vouch for the West Springfield and Burke areas. The schools are good and if you have kids that's important. The trip down Braddock Rd is usually fine, but the earlier the better. Fairfax city can get very congested. Agree that it's a nice place though.
Have you looked into public transportation to the Navy Yard? VRE trains and/or metro may take longer, but can alleviate stress. Burke has a VRE stop.
I'd stay away from having to use 66 or 95. Both are difficult roads. good luck.
Ralph
Tom C: I don' know what your price range is, but you might want to check out Vienna
tom c--
I think I said this before, but if at all possible, look into the VRE. My husband works at the Navy Yard, and takes the VRE from Manassas, then the Metro from L'Enfant. On the few days that he had to keep odd hours, he drove, and at best, it's an hour, at worst, it can take 3 hours. You will be a much more relaxed person if you can just step on the train, believe me.
You can always ask listing agents to show you their own properties, but from a distance, you will probably want your own agent. Have you considered a discount agent? If you scout out a bunch of places you like and make a trip down here, they will take you to all of them, and help you write/negotiate offers, and then refund you part of their commission.
With the excellent search engines available now, you should be able to take charge of the search and not let a relo agent push you around. Good luck!
novawatcher, I didn't "miss" Leroy's post. If I have to choose between the Post's findings and Leroy's assertions, I'll go with the Post!
I sourced that information clearly enough tom. It is straight from that group's calculator.
If you would like you can punch in your favorite zip code yourself and see what results it produces, but then... I suspect you already have and as usual you have chosen to believe what you want to.
Anyone with thoughts on the West Village at Shirlington? I'm seriously considering buying there (especially now that they have reduced prices to some extent). I would be there for at least 5 years. Any word on the community/area? Any thoughts on how forceful in negotiating on price (buying from developer)?
Thanks!
Leroy,
By now you should know that Tom is a troll who just comes here to annoy. Don't reply directly. Suffice it to say that the immunity argument boils down to a sentimental assertion that a certain neighborhood is protected from the laws of economics and math. But the decade-low sales tells you all you need to know. You'll be right in the end.
Terminator-X said:
"Leroy,
By now you should know that Tom is a troll who just comes here to annoy. Don't reply directly. Suffice it to say that the immunity argument boils down to a sentimental assertion that a certain neighborhood is protected from the laws of economics and math. But the decade-low sales tells you all you need to know. You'll be right in the end."
I'm not sure of the definition of a troll, but you're free to believe what you want. I'm as sentimental as the next person, but I'm not aware I've asserted any position based on a claim of "immunity." I simply assess the market in the area I know best (N. Arlington within walking distance of the Orange Line) based on all the information I can get -- both on this blog and elsewhere, not least what I learn from talking to people who either know RE in this area or are looking to buy here.
"By now you should know that Tom is a troll who just comes here to annoy. Don't reply directly. Suffice it to say that the immunity argument boils down to a sentimental assertion that a certain neighborhood is protected from the laws of economics and math. But the decade-low sales tells you all you need to know. You'll be right in the end."
I agree, on both counts.
He loves his neighborhood and simply believes what he wants to believe... and yes, he is clearly trolling much of the time.
Leroy,
See, if Tom offers an anecdotal evidence or some point of view however hypothetical it may be, it's not trolling. Repeating a phrase "... whatever evidence proves that 22207 near metro is stable" is definitely trolling if done on daily basis (even though is true for the moment). People do get repetitive here, can't help, real estate market changes slowly, not enough new data to discuss.
Thanks, Konstantin.
Tabitha,
You're right about the available online information, I used it a lot. I was pretty much at her mercy last week, but it was mostly to familiarize us with areas and types of houses. On our last day, I gave her four houses I researched on ZipRealty, FrMLS, and Redfin. She went along with it but emphasized two of them that were very distressed short sales as "typical" of the deals you find.
Once we get up there, we will do a lot more of our own looking around and analyzing areas before we decide to buy anything. We also will use our resources to come up with a reasonable offer, not accepting the realtor's logic or advice at face value.
Thanks all!
Tom C - I went through South Riding last weekend purely on an exploratory venture, we don't plan on looking that far out. Perhaps this is unethical enough that realtors never do it but I wouldn't be surprised if your reloc realtor had a personal reason for pushing a South Riding property. Meaning that particular planned neighborhood seems to be in such dire straits now that the builders (Toll Brothers) might be sweetening the pot considerably for realtors that can unload those properties. Again I have absolutely no evidence of this but it wouldn't surprise me. It might even be as simple as Toll Brothers throwing more business her way if she can sell a few homes out there.
Sean,
The Shirlington area seems to me to be pretty hit-or-miss. Some neighborhoods seem really nice but one block over it gets worse quick. The area where all the restaurants and the movie theater are is nice and seems to be on the upswing (new condos, new library, a whole new set of shops and restaurants, etc.) but I don't love the immediately surrounding area of neighborhoods.
I'm torn when deciding on areas like Shirlington - in normal times I would consider them to be nice and only getting nicer. Given the current economic and real estate climate though I'm just not sure which places will keep gentrifying over the next 10 or so years.
Sean,
You may want to live up the hill from Shirlington in an area known as Fairlington. It is a large community of red brick garden-style condominiums that include a swimming pool, tennis courts, and community center.
Jeff B has a good point: One thing to keep in mind is how might a neighborhood look in 10 years?
Case in point: a house came on the market a month ago that not only was very nice, but the price wasn't *that* inflated. Sure, it was inflated, but if you put 20% down, I don't think you'd have to worry about having zero equity in the next 5 years. I know that's not the right way to look at things, but that's a different story.
Back on track...
The thing that made us pause was the surrounding streets. All of the houses on this street are quite large and well-maintained (all built decades before the bubble). The houses one street over were also nice, but not as pricey (e.g 4br instead of 5 br homes). The three streets run in parallel. Let's just call this one the right-hand street.
On the other hand, the street on the otherside, the left-hand street, was far more modest. 3br, even 2br, homes. It was a working class street built 20-30 years ago. Nothing inherently wrong with that street at all, unless the wealth disparity would make you feel uncomfortable.
What did bother me was the future potential of that street. Would it continue to be a street of hard-working working-class folk that cared about their properties? Or would it become like some areas of east Vienna, where you have houses with rusting cars in the driveway and houses that visibly not taken-care-of? Could it become a neighborhood of boarding houses?
tom c.
One reason that the satisfaction rating of "relo realtors" is often poor is due to the compensation "structure" that exists on these "company related referrals". First, the relocation company carves off 35% of the commmission to be earned. Then, companies such as "Large and Famous" further slice the agents normal split until the amount left for the agent MAY be as low as 22-25%. Great agents-even in this "interesting" market, will not, cannot give full service and 20+ years of knowledge for that amount.They will not accept these referrals, in MOST cases. Not your fault-and agents who DO take on those jobs do it willingly and should treat the client no different than if they were earning 100%-but they have neither the skill set nor the attitude to do so.Unfortunately, many buyers get suckered in by the USAA and similar affinity programs, figuring -hey-if its USAA or pentagon Federal-it must be good. Sorry-same agents for the most part.Redfin and Zip-sure they will throw a little cash your way-but again, the neighborhood knowledge in most cases is thin.
As to your present agent-get several new personal referrals from people YOU trust-personally interview the agents-then decide whether to continue with agent A-or not. It is not fair to work with another agent at the same time-decide who you want and the loyalty should go both ways.
Agents cannot be expected to predict the future,but should listen to YOUR concerns and by asking the right questions, allow you to make a great decision. Good luck...
Tom C,
Look into frankly's blog post on short sales. They can be done now, and are indeed the best deals. Any real estate agent who's afraid of them is trying to get you to overpay. (Or isn't very savy about the market)
(and prices do too have plenty of "room" to go down further)
check out the homes near Huntley Meadows park, there are some very pleasant neighborhoods there, as well as down closer to Mount Vernon.
"Anyone with thoughts on the West Village at Shirlington?"
Sean, first of all "West Village at Shirlington" isn't even in Shirlington. It's in a kinda rough area somewhat near Shirlington and the developer is using the nanme Shirlington in a vain attempt to annex their development into Shirlington.
The development itself is a former low income housing project. When they started kicking out the low income tenants to make "luxury condos" a couple of years ago, I drove through there. The unrenovated buildings were in terrible condition. I suppose the fixed up units are nice enough, but it is still bordered by rough developments. Take a look at the crime blotter in the Sun Gazette and you'll see plenty of bad stuff happening down there.
Of course, if the price was right it could be a decent buy. I personally think renovated units there shouldn't cost more than $150k for a one bedroom and $200k for a two bedroom. I'm guessing prices are still much higher than that though.
goldenruler,
Thanks for a great post! It makes far more sense now. I kept hearing about "referrals" but did not think they made such a big impact on the agent. Now that I know I believe I will look for other options.
Cara, I saw a few short sales that were largely horrible to tour. A couple were alright, and one was even nice. I find a lot of settling in some of the houses, where the sheetrock joints are breaking apart at corners and on ceiling joints; this was very common on many of the newer homes. It is possible that the realtor was setting me up to see the worst case shorts to discourage my interest in that type of purchase.
JeffB, I was suspecting of a possible "incentive" that gave my realtor some reason to keep talking up the South Riding development. Your post further convinces me of the validity of my suspicions I had about this. One other thing she kept emphasizing was the number of homes that were disappearing from our tour each day because of new contracts. You would have thought houses were selling like hotcakes!
I hate to be so paranoid about these kind of things, but this move is going to be dicey enough financially without getting taken for a ride by a shrewd realtor.
Using the calculator's default data it basically says that transportation costs are nearly identical in each area.
So what on earth is the article about?
The article is about the fact that "Transportation costs begin to exceed the savings from lower housing prices when households move 15 to 17 miles away from the job centers..." and identifies job centers "...such as the District, the I-270 corridor and Arlington and Fairfax counties." Since neither McLean, Manassas or Arlington are 15-17 miles outside of these job centers, the example doesn't apply to this article. In other words, the article was about something other than what you're talking about.
Jeff B said...
Perhaps this is unethical enough that realtors never do it but I wouldn't be surprised if your reloc realtor had a personal reason for pushing a South Riding property.
Or maybe the homes the realtor showed were in-house listings. Cross check the homes you were shown with FranklyMLS.com. The name of the listing agent/broker is near the bottom.
Tom C said...
I hate to be so paranoid about these kind of things, but this move is going to be dicey enough financially without getting taken for a ride by a shrewd realtor.
Unless you’re using a flat fee service, it is in their best interest for you to pay as much as possible for a home.
"The article is about the fact that "Transportation costs begin to exceed the savings from lower housing prices when households move 15 to 17 miles away from the job centers..." and identifies job centers "...such as the District, the I-270 corridor and Arlington and Fairfax counties." Since neither McLean, Manassas or Arlington are 15-17 miles outside of these job centers, the example doesn't apply to this article. In other words, the article was about something other than what you're talking about."
My main point was that they were using some incredibly inflated numbers for transportation costs.
My other point is more or less what you were saying. The way the article reads it sounds like transportation costs are somehow a major factor for those living in other parts of the DC area, but that isn't what their data shows.
Tom C
We are closing on a short sale next week. We had a great experience with our realtor. She put up with us for well over 8 months as we looked. She never complained and did not dissuade us from short-sales or foreclosures --- she only told us you have to be patient with them because the process takes longer. If you want her name to add her to your list to interview - let me know, I'll be glad to email it to you. All the best to you in your move and house search!
Leroy,
I'm not going to question your cost of driving. Obviously, you know more about it than anyone else. But like they say, your results may vary.
The Bureau of Transportation Statistics reports average cost to drive by year (Assuming 15,000 miles):
http://www.bts.gov/publications/national_transportation_statistics/html/table_03_14.html
The latest year is 2007. For 2007, it was $8121. The average yearly maintenance was just under $700 ($.046 x 15,000 = $690). If your warranty covers maintenance, and not just repairs, or if you do the work yourself, it will be less. If you have the dealer do everything, including adding washer fluid, it will be a lot more. This is the average.
The figure includes just over two thirds fixed costs, but these fixed costs include some things like depreciation and insurance that have a variable element. It's these variable cost that gets the long distance drivers. I work with people who commute from Spotsylvania county, or from Maryland into Virginia who put in much more than 15,000 miles per year.
Still, if it's costing these drivers $10,000 a year instead of $8,000, that's still falls short of the numbers in the article. Why the difference? Because the article is looking at cost per household, not per driver or cost per car. Even if one of the drivers in a two driver/two car household is driving fewer miles, you still have to add in the fixed costs, which average $5500 a year nationally, plus some variable cost. While not all households have two cars and two drivers, most of the ones in my neighborhood do. Get out in areas where driving is the only way to get anywhere and I'm sure most households with two adults also have two cars. Around here many households have three or more cars, especially households with driving age kids (throw an 18 year old driver with his own car into the mix and watch your costs take a big jump).
When you take all these items into account, the estimates don't seem too far out of line. If you have one car, minimal maintenance cost and keep your car for longer than the finance period, your household costs may be half what the study shows. But for the average household in this area, I don't think they're unreasonable - especially when you look at all the expensive cars in the area which would drive fixed costs much higher than the national average.
I don't doubt that people spend a lot on transportation.
What I am saying is that this has almost nothing to do with location. It has to do with what people choose to spend on transportation.
I haven't read the report itself, but the Washington Post article about the report linked transportation costs to location, when really it has far more to do with what people choose to spend.
As an analogy...
If I did a survey to determine how much the average household in the DC area spends on food, I would get a number that is accurate in one sense.
The problem would be if I then turned around and tried to say "if you live in Arlington you have to spend more money on food than you do in PWC."
You can eat very inexpensively in either area. If you choose to eat out every night your food costs will be high in either area. If you buy groceries and eat in every night your food costs will be low in either place.
The question isn't one of location driving food costs, it is a question of whether people choose to spend more than they need to on something.
Just because the average resident of an area spends a certain amount of something, whether it is food or transportation, it doesn't mean that they have to.
Tom C-
I just read your post (I only catch up when my little guy naps!)--we are looking in similar areas but aren't planning to buy for at least a year. We are both local so we know pretty much where we like that we can also afford (right now we rent in N Arlington-way out of the 'buy' budget, unfortunately!).
Burke and Fairfax City are also on our short list. There is a neighborhood called "Truro" i n Fairfax that I really like. We also like the Sleepy Hollow and Camelot neighborhoods in Annandale.
S. Riding is nice but no way would I do that commute to Navy Yard--I would ditch that realtor for sure!
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