Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Some observations.Close in - Prices at the low end are soft. Those are the condo's and THs, places that you wouldn't want to live in. You can find them for under $300K. Below $200K in some places in Arlington and Alexandria. Better places are pricey and scarce. Jobs - This strikes me as a mixed bag. I know "marginal types", no or useless degree, DoD secret clearance, weak skills or work history, who cannot find work. On the other hand, if you have heavy "tickets", a technical degree, and a work history of accomplishment, there's lots of work. The BRAC thing. The jobs are not that far out for those who reverse commute, Arlington or DC to Ft Belvoir is easy. It's outbound. Some of the Arlington jobs are moving to the Arlington-Alexandria border at Mark Center. Retirement - The current wave of government retirees are mostly TSP/stock market immune. They are in CSRS, the old plan which was too good so it was replaced by FERS. You can spot the CSRS types, they're driving the Mercedes or Ferrari to their $1,400K place in McLean, which they paid $250K for, 25 years ago.Personally, I think we've passed the bottom in Alexandria and Arlington. In my area, prices fell about 10% 2006 peak to 2008 trough. I don't know what this year will bring, no one does. I am liquidating a real estate holding but not because of concern for prices or needing the capital. The man managing it died last year. It's not in this area, it's in a high priced part of the country. GLTA
@J@Given that those properties that are currently soft, are what for 10 years people considered to be the gateway into the ownership society of the property ladder, won't the lack of equity there eventually impact the places that you consider worth living in? Agree totally on BRAC. As long as you're going a different direction from everyone else, the commute is no big deal.CSRS, it gets worse, some of them have "retired" are collecting CSRS plus an additional contractor salary to stay and work until they finally decide not to. The contractor salary is commiserate with their experience level. What, me bitter?But I agree with whoever all said this yesterday. The new jobs will primarily be filled with people who are already local. And those who do move here for work are unlikely to have substantial equity relative to DC area prices to bring to any purchase. The DC area is growing. But this has been true for a long time, and is to an extent already baked in.
Calculated Risk explains the dearth of move-up buyers in terms you can understand...And Calculated Risk reports that banks would essentially like to do what many homeowners want, to buy back their current house at a hugely discounted price with debt backed by the Fed. Hopefully, they don't let them do this, anymore than banks let homeowners do this. Cute though huh? What's good for the goose??
Cara,That blurb about a dearth of move-up buyers gives scant argument. The assumptions are picked out of the air. No way, in normal times, 80% of buyers are move up buyers and only 20% are first-time and investors. Notice he gives no reference to that fact. He/she simply made it up. And notice he left out second-home buyers which are substantial in certain time frames.Just because there is some unusual temporary buying with the large numbers of foreclosures doesn't mean that normal conditions won't return.Flimsy argument at best. Of course, if he told the truth he probably wouldn't get many, 'sky is falling' readers like you.
Robert,You can look it up in the census data. It's not 80/20 here. But I also don't know what the current 1st time, investor, and move-across buyer percentages are here either. But, come on, when have you seen any MSM report with real hard data? Occasionally they'll report on a press release of data like Case-Schiller, but generally even if they include numbers there are no citations. Yes, this is a pet peeve of mine, too. But it is unfortunately standard practice.(off to go see if I can get the answer for DC)
Hey Robert, you asked when did people really buy? Here's your answer:interesting tidbits from ACS http://www.census.gov/prod/2009pubs/h170-07-18.pdf ACS housing survey DC metro area 2007? pdf page 41:when did people buy these houses?Year Householder Moved Into UnitOwners:2005-2009: 237.62000-2004: 390.31995-1999: 217.91994-1999: 150.7median: 1999
On page 46:in 2007: owner median income 99krenter median income 46kbut aside from the owners having a huge chunk in the 120k or more bucket, the two distributions peaked at the same bin 60-80kI'm not finding what I was looking for, maybe I'll try again later.
CRT, you downloaded the ACS data right? Can you answer the question of what percentage of purchases are "normally" made by owners versus renters in this area?By year would be even better.
Patrick.net is great. Here is the order of headlines for today:-US house prices improve for buyers by record 19.1%-House prices 20% better-House Prices 32% Cheaper Than Peak-Signs Of Even Better Prices Ahead For Housing Buyers-House Prices in 20 US Cities Get More Affordable Than Forecast -House Prices Descend Into The Bargain BasementSee, there's always a silver lining. Prices come crashing down to earth and we once again will live in a society where we don't have to be house poor. Robert, I look forward to buying your house for $300k when the dust settles=)
kevinYeah one of the most fun things about Patrick is the headlines he puts on the articles. (those are NOT what the MSM editors choose).I'm surprised he didn't pick Biggest quarterly YoY decline in house prices on record. (though it's a bit obtuse and doesn't have that ring)
I saw an interview with Whitney Tilson the other day. He seems to have given up on the "Option Arm" implosion he warned about last year (he didnt mention it once). His interview focused on three main points.1. We arent at bottom -- lifting of the foreclosure moratorium will ensure that.2. We (nationally) are in the 7th inning -- another -10% to -15% left to go.3. Buy my new book.
WaPo AP: transactions rise 2.9% in AprilIn more news of what we here at the nova housing bubble fallout blog already knew, because of actually looking at the MRIS numbers, the MSM has now picked up on the fact that spring did indeed occur this year nationwide. (though, unlike here, there were no signs of hope in the pricing data)
tbw,otherwise known as 3.8% per year annualized. (just for those too lazy to whip out the calculator themselves)
Thanks, everyone, for the links, data, and analysis.
tbw, Nah, you've got to be at least GS-10 or 11 before you buy, that's as much as 30-33k. Point still holds however, even if you double it assuming 2 incomes. 60k on a $250k house is pushing it, even after a good downpayment, especially at 1984 interest rates. (this table doesn't include DC's cost of living adjustment, but it probably wasn't that large back then)If two people waited until they were GS-12 they might have been able to swing it though.
Cara- Can't you get to GS 12 fairly quickly. I am pretty sure my mom was a gs-14 when she was 29. She was offered a gs-15 to come back to work after having my brother when she was 30. I know her advancement was very quick, but getting to gs-12 in your upper 20s isn't that hard right? Correct me if I am way off base I am in the private sector and do not know that many non-military public sector workers.
Robert,for the ratio between first-time buyers vs move-up/lateral moves:it is fair to say that average family moves every 5-10 years. Let's say someone buys a first home when they are 30. It means that there'll be about at least 4-5 transactions before retirement (from the lifetime prospective --- starter home/dream home/empty nest home/retirement home + quite often some extra transactions due to relocation to the different area). So for every first-time buyer there are at least 3-4 move-up transactions. So the 20/80 ratio makes sense to me roughly.
housebuyer,If you enter with an advanced degree you start at GS-11 or 12. So, yes. Which is part of why I nitpicked tbw. If that advanced degree only took 4-5 years out of college, then GS-12 before 30 is quite likely. (these days you may need to have had other job experience as well to land that Fed job, or be a contractor for a while, which pushes it a bit later). It's also true that some branches have expedited promotion policies for the first 3 years of work, which allow you to skip levels GS-5 to GS-7 to GS-9 to GS-11 in as little as six months each.
The only thing about government workers is that they have highest possible job security and can buy the moment they can afford without any other considerations like possibility of relocation, etc. Also they have much higher incomes than clerical workers/retail workers in private sector, etc and certainly provide certain boost to the area. At the same time they make less money on average than private sector professionals. And they are in general much more realistic about their future incomes --- they expect steady increases, but nothing extraordinary. So they did not have a tendency to buy too much of real estate --- until the bubble.
CR update: FDIC problem bank list updateThe FDIC released the Q1 Quarterly Banking Profile today. The FDIC listed 305 banks with $220.0 billion in assets as “problem” banks in Q1, up from 252 and $159.4 billion in assets in Q4. Note: Not all problem banks will fail - and not all failures will be from the problem bank list - but this shows the problem is significant and still growing."If north korea isn't scary enough for you, take a good long look at the state of our banking system and the reserve levels of the FDIC. Not that the Fed or Treasury, whichever is appropriate, won't backstop our deposits, but this is pretty serious stuff that the stock market seems to be ignoring in its ongoing spring rally.
anyone have a good method for tracking down the second half of this equation, the price of a home in McLean in 1984? I'm too lazy to search the FFX County tax records for it...This is the problem with using numbers, it leads to too many quibbles. ;)
Best I can do, I who am totally unfamiliar with McClean:a simple house built in 1980:http://franklymls.com/FX69659921920 sq feet03/27/2009 $735,000 11/21/1988 $325,000 09/16/1983 $183,800 So, this home might have been around $200k in 1984. So, this number passes the one-off spot-check.
Cara, ask and ye shall receive:One anecdotal case: FX7023482Right now asking about $700k, close to assessment amount. Bought in 1994 for $290k. Bought in 1982 for $100k, though I'm guessing that there were significant updates done on the home during those 12 years. But still, it's unbelievable to imagine a nice SFH in Mclean being bought for that little an amount. If a few more folks here can find other anecdotal examples, I think we'll have a clearer picture.It's becoming obvious to me that these desperate (yet ultimately futile) attempts to prop up housing prices and manipulate the markets are yet another attempt by the boomer generation to steal from the rest of us. The longer houses remain overinflated, the more wealth they are stealing from their children.
Housing Wire, workouts reportinteresting tidbit:"In April, there were 3.85 prime mortgage workouts to every one prime foreclosure — down from 4.28 prime workouts to each prime foreclosure in March — and 4.63 subprime mortgage workouts to every one one subprime foreclosure in April, down from 5.18 subprime workouts to every subprime foreclosure in March."See, homeowners do really want to stay in their homes even if their underwater. Homedebtors are more responsible than the MSM has been giving them credit for. Even if 75% re-default, these numbers still would mean a larger number of homedebtors are willing to keep paying down the note even after experriencing financial hardship than are needing/wanting to walk away from their debt.To me, this verifies my strong belief in the long-slow-flat period to come as each of these owners reaches their own point when they can put their albatross on the market.
Kevin-I agree that there is some bubble in the price which is the boomers stealing from the youth, but most of this is just simple supply and demand. In the early 1980s there was tons of space around here and many lots that had not been developed. Job growth has caused large numbers of people to move here and there is virtually no land that is not being used. So simple supply and demand says if you decrease supply and increase demand and prices will go up.If you use the case shiller index it says prices in the DC area have gone up 158% in 22 years or 4.4% a year. This is almost exactly what incomes have done over this time period. Interest rates have also come down, which means that buying a house now will use a smaller percentage of your income than it would have 20+ years ago.
housebuyer,We won't know the true balance of supply and demand in terms of price until we can look back at the bottom and observe the residual trend when you take out the dominant effects of asset speculation and a credit bubble.But CRT pointed out interesting stuff in terms of number of houses built versus number of new households forming. Other than Arlington, all of NoVa was either mildly or drastically overbuilt during the bubble. There is no lack of supply of which you speak. (This is just my recollection of his numbers, sorry for the lack of specificity). But, I would say that it's pretty clear that McLean is way more desirable now than it was in 1984, and at least some of its gains are due to that.
Can anyone here offer advice as to how one goes about negotiating a mortgage modification with a bank?I have friends coming over for dinner to discuss their attempts to have their loan modified. They think we know a lot about the process, even though I have assured them we don't. I DO know a lot about the market situation of their neighborhood, but that's all. Perhaps someone here can help?This is what I do know: their bank is Indymac. They bought a 4BR/2.5BA/2000sqft SFH in 2004 from the builder (Braemar, in Bristow) for $421K, and refinanced soon after. They used the cash to pay off student loans and a car loan. I think their current balance is something like $500K.All the houses on their street are the same style, with small detached garages and small yards. All sold in the $400Ks in 2004, and in the $500Ks in 2005. 6 of the 18 houses were flipped within a few months of being purchased new from the builder. Two recent foreclosures sold in the upper $200Ks, and their house is currently assessed for $272,500.They were denied a modification last fall because they were not behind on their payments, which are eating up more than half of their monthly income. Their loan reset unexpectedly last winter. They thought it was a 5-year fixed ARM, but after it reset, they realized it was a negative-amortization loan, and once the value of the house dropped past a certain point, the reset happened.They just re-applied for a modification. They have kept current on their payments, but only by burning through all their savings and borrowing from family. They expect to hear an answer within 60 days.What, if anything, motivates a bank to allow a modification? Can they submit a market analysis of their street and neighborhood as evidence that their house will NEVER appreciate anywhere close to their balance? How should they decide whether to keep paying if the modification is denied again? From any angle, is it wise for them to keep paying this hopeless mortgage?Please help. They have four little kids. They are good people--just not savvy. The husband is a little bad with money, and we're hoping to delicately approach that issue, but we want to know what we are talking about to the best of our abilities. Thank you in advance.
Tabitha, good or bad doesn't matter, they are irresponsible. If I were them I'd take solace with the fact that bubble dollars paid for their student loans and cars. If they foreclose, they'll be making off like bandits. Really hard to feel sorry for them. Now that I got that out of the way... I don't think there is a single successful track for modification. Probably the most helpful consolidated resource is this:http://www.loansafe.org/forum/stop-foreclosure-tell-us-your-story/Warning to everyone: reading those sob stories might cause you to lose all faith in human beings and society. About one in every four stories is someone bitching about being taken advantage of or being victims when clearly they were not. The stories might make you angry, particularly since so many of our tax dollars are going to subsidize the losers that get modifications.
Re: McLean house prices in the early eighties. Don't forget about inflation. That $183k house Cara mentions would be almost $400k today if all else were equal and inflation was the only consideration.A nice inflation calculator here from BLS: http://data.bls.gov/cgi-bin/cpicalc.pl
trickydonut,or you could be a little more generous and use wages, or the GS schedule itself. (still comes up $300k shy of last sale price).The question posed was really, whether GS'ers could have afforded a home in McLean in the 1980s that would now sell for a pretty penny. And I think our two examples show that $250k was actually a bit high, and that quite possibly, especially with two incomes, yes, Feds could have bought in McLean in the 80s.Tabitha,the WaPo has a good resource on sorting out which loan programs you are eligible for. Other than that, they should be calling a government-sponsored loan modification hot-line to get some weight behind their requests. But really? If it was neg-am? There best option is to look for a subsidy to cover moving expenses after a short-sale, and just rent for a while while repairing their financial balance sheet, and wait until the long-slow-flat period to buy a new place. My guess is, the impairment on their credit score won't last more than 3-4 years. Which, while temporarily traumatic, might be character building in the long run, and less likely to lead to divorce than being seriously financially constrained for the next 10 years in an albatross of a house.
Housing wire, repeat-buyers making up a larger percentage of purchasesIn direct refutation of my thesis, the Housing Wire reports that first timers are down to 40% of the market from 53% based on numbers from NAR. Now, they didn't break down exactly how much of that gap is move-up buyers and how much is cash-flow investors, or how many of the move-up buyers will be proceeding with a short-sale on their old house immediately thereafter. But here you go, possible hint of evidence that the move-up market is not dead, and that the savy owners (kinda like Ace) are taking advantage of lower prices in their target home to move up now.What this scrap of evidence means for my thesis going forward is open for debate. I still say these move-up buyers will have less equity and hence provide less price support, and they too may dry up, just like the pent up demand of 1st timers who wanted to enter the market between 2004-now. But we shall see. Certainly a move away from 1st timers should indicate a move towards a more "healthy" market.
TBW-I know that more houses can be made, but on if prices stay "high." People who can afford their two acre lot are not going to sell it so a developer can make a bunch of houses right next to it unless they can make a ton of money off of it. Also I agree that there is land once you get way out, but I was talking about McLean. There is only so much land in desirable locations thus the premium.
tbw,yes, they could not afford a $250k home, but if the homes were more along the lines of $200k, then a 40k GS-12 salary plus another half-income of say 20k, would make such a home possible to buy if you had a good downpayment.I wasn't here in the 80s, my mom was a social worker (not family friendly hours) and then a teacher's assistant (remember those?). The house they bought in 1980 cost 100k, in 1985 moved and had to get a TH (to not have so many repairs as the SFHs available) for about 150k??? So yeah, for my middle class family it would have been a huge stretch to pay near $200k for a home.
tabitha said: "From any angle, is it wise for them to keep paying this hopeless mortgage?"Ethics maybe? Morals maybe?I think part of the reason people get themselves into financial trouble is because they aren't completely honest with themselves. For example, you said they told you:"They bought a 4BR/2.5BA/2000sqft SFH in 2004 from the builder (Braemar, in Bristow) for $421K, and refinanced soon after. They used the cash to pay off student loans and a car loan."They didn't "pay off" any debt. They simply transferred existing debt from one lender to another. This is a perfect example of people not being honest with themselves. They still owe for the car and the student loans, just for 30 years instead of 5 or 10.The day they start to take full responsibility for their actions and being honest with themselves is the day they'll start on the path to financial recovery. But not a day before.They can default and walk away from their debts, but they will eventually end up right back where they started unless they change.As to your question, it is well within their rights to not pay their obligation, but they need to realize that the damage that will do to their credit is no one's fault but their own. If they want to renegotiate with the bank, they have no option but to stop paying their mortgage for 3 months to force the bank to take them seriously.
housebuyer"only if they can make money"? BS. You're not in control of what someone who buys your house from you wants to do with the land thereafter. If the top bidder chooses to develop it and sell both houses to other parties, there's nothing you can do.And you're missing my point. Which is that the supply already has been created. During the bubble. When everyone thought they could make money doing just that (and some did).
Cara-I agree that there is way to much supply I just didn't think this was true of good properties in good locations. I may be wrong, but was there a lot of overbuilding in McLean, Great Falls, N. Arlington? If there was I apologize. If not the fact that I can get an 8,000 sq. ft. house in Prince William is irrelevant because living that far out if you have a good job in DC or Tysons would be an awful commute.
Cara-I just looked at my original post and I didn't mean they would sell it to someone who wasn't a developer. I was trying to say that they wouldn't sell it at all, unless someone like a developer came along and offered top dollar. This point isn't really important, but I just wanted to clarify my first post.
housebuyer,I don't live in any of those places, so I'm the wrong person to ask. (nor would it be even remotely convenient for me to do so, at some point you have to recognize that all buyers don't have the same commuting needs)I'm trying to find CRT's post with the construction numbers versus number of additional households with more than $200K? income, but I can't find it to give you the construction figures.And this absurdity that no one sells their home unless they get a huge payout has got to die. I'm sorry, the more you talk the more you spout realtor-spread myths. I know, each of them has a grain of truth that helps make them scary, but I think you're taking them too seriously. San Diego housing myth debunkingI know this is San Diego not DC, but it's a decent primer for eradicating 20 years of NAR indoctrination if you haven't read it yet.
NYTimes, promises of free money not a solution for debtsorry, just had to put a Patrick.net style title on that one. It's about student loan debt forgiveness programs facing cutbacks. The usual anecdotal clap-trap for the most part but with some meat on what's happening in certain states (DC are is not mentioned).
Cara: "And this absurdity that no one sells their home unless they get a huge payout has got to die. I'm sorry, the more you talk the more you spout realtor-spread myths. I know, each of them has a grain of truth that helps make them scary, but I think you're taking them too seriously."Amen! For me it goes back to the whining I hear from people who are plenty above water on their houses (say, owe $200k on a house "worth" $500k) that think they deserve or are entitled to peak bubble profit. Oh the misery of having to only profit $300k instead of $600k. Again, this is partly generational wealth thievery. You've owned for 15 years, your loan is party paid off, and your house didn't really appreciate at 10% per year. Somebody recently complained to me that they needed that money because of their retirement plans. Needed? For what, a yacht? A beach house? The $300k should be just fine. These folks can go eff themselves.
Cara-"And this absurdity that no one sells their home unless they get a huge payout has got to die. I'm sorry, the more you talk the more you spout realtor-spread myths. I know, each of them has a grain of truth that helps make them scary, but I think you're taking them too seriously."I am not talking about the average house. I am planning on buying a house and will likely move to a nicer house in 5-10 years. I am not planning on making a lot of money on this transaction. In fact I will likely lose vs. renting(post transaction costs), but I will enjoy owning my own space. I am,however, talking about people who already have their dream house. Why would you ever leave your dream house. Assuming that you don't need to relocate the only other reason is for lots of money. I am not saying these people should expect huge paydays, but rather you should not expect many people in this area to leave. Keeping supply of available houses lower.
housebuyer,PWC to DC would suck but PWC to Tysons is doable. People who live on the I-66 side of PWC (and not I-95 side) can get there in a reasonable amount of time. I do recall the Gainesville area of I-66 used to look like a parking lot at rush hour but I have not seen it since they finished adding lanes around those exits. I imagine it flows a little better now.
Kevin-I agree that they are not entitled to have huge profits on their house, but we (renters) are also not entitled to live in a large house in a great location on average salaries. Personally I think the market will likely fall a little more particularly as interest rates go up. But if for one second you think there will come a time when a family of two GS-12 workers will be able to afford to live in McLean again I think you are in for surprise.
BTW,I know 2007 was the peak of the bubble but pages 93,94 show some really relevant numbers (77,78 on the page)median value to income: 4.61st home 495.9knot 1st home 775.5kno answer 58.2kbut downpayment amount would need to be graphed source of downpaymentsavings or cash on hand: 577.2ksale of previous home: 462.2kthe mortgage characteristics follow from their if you're curious.
housebuyersince when does having land attached to it and dream house become one and the same???There are still plenty of 1950s,1960s tear downs on good sized lots that I wouldn't think are anyone's dream house. And who's tearing down these dream houses to put new ones in their place anyway? Not a cost effective strategy.My point is that with no numbers you are defaulting to the NAR position that demand exceeds supply, and that a significant contraction in supply relative to demand has occurred, because they're not making any more land. What I'm saying is that this is a widely held myth that must go under scrutiny if it is to be believed. (but I can't find the numbers gosh darn it)Places do gentrify and move-up the hierarchy. McLean is probably one of those places. But what this really means is that demand shifts elsewhere to the next up and coming place, like it did to Del Ray, like builders are trying very hard to make happen at Huntington (good luck!).
http://www.fairfaxcounty.gov/dpz/tysonscorner/cambridgepresmar07.pdfIf you go to Slide 6 you can see where Tysons Corner workers live (all over the place but concentrated on the I-66 and Rte 7 corridors).
For some reason my links do not always show fully. :( Anyone know how to make sure they are not cut off?http://www.fairfaxcounty.gov/dpz/tysonscorner/cambridgepresmar07.pdf (all one line)btw, McLean has been considered a very nice place for a while. I think if anything got fancier it was Vienna and Oakton (although they too were never shabby).
and the survey says in both 2007 and 1998, the percentage of first time buyers in this area was quite sizable20071st time 495k 38.9% of respondingnot 1st 775k 19981st time 472k 46% of respondingnot 1st 546kboth with near 60k not answering.Okay, so that's two data points, now we need to know the current percentage of 1st timers...
Cara-I agree with your point I guess I was misinterpreting what you were saying. I was just trying to say that prime locations will always command a premium. So at least part of the reason McLean appreciated is that in the 1980's people did not want to pay a premium for this location.
By Floyd Norris of the NYT:Can Home Prices Fall Over an Entire Cycle?Very broad look, but interesting.
paKainteresting, but given that the peak stock market prices (inflation adjusted) were actually just before the dot com bust, I would say we've been in a double troughed recession with a period of hysterical denial in the middle of it all along.But it still is an interesting comparison (even though I'd like to move both the start and end dates).
Cara - I dont have the earlier info you asked for this AM (normal purchases made), but I do have the info on income gains and homes built.Specifically, here is a comparison by area of the number of homes built versus the number of new households in the highest income category available (200K+) from year 2000-2007:ArlingtonHomes + 6970Incomes + 7348Here there is a shortage. There werent enough homes built during this time to meet the demand of 200K income households.AlexandriaHomes + 5683Incomes + 4346Here there is a surplus. Enough homes to satisfy this category, plus some to the 150K income category. Only problem here is that alot of the homes built were undoubedly condos, and many 200K+ households likely would prefer SFH homes over condos. Still, there is no shortage here - prices must come down a bit to meet demand.FaifaxHomes +35,384Incomes +32,745Again, a slight surplus. Also, most of the newly built stuff likely was SFH meaning prices here are softer than they are in Alexandria where all they could really build was condos. Now here comes the real shocker:Loudoun Homes +35,844Incomes + 8,140This is a MASSIVE surplus - a ton of overbuilding, much of which was SFH "McMansions". There is no way around this huge oversupply - prices must come down and come down a ton (to the 150K income level and 100K income level) before a new equilibrium is met.PWCHomes +31,356Incomes + 7,328Just like Loudoun, this is a major problem. Looks like a lot of McMansions were built to meet a demand that simply is not there. The oversupply must go to the 150K households and the 100K households before it is all absorbed - hence prices had to have really come down here to meet a new equilibrium.This isnt a perfect example since some high income households will choose to rent - plus the idea of condos in the close in areas, McMansions in the burbs is a bit of a generalization. Still, you can see why the "they arent making any more land" concept really comes home in the close in areas. After looking at this, its no surprise that Arl & Alex (and parts of Fairfax) prices have generally held, whereas Lou & PWC prices have cratered.
Thanks for reposting that CRT.I got the regional 1st timer versus non-first timer myself, but not the current stats on it.As long as current 1st timers aren't above 50% I don't think we have much worry there (some of the added 1st timers will be those who were waiting while priced out in the bubble).McLean is in FFX, so it looks like supply and demand is probably close to a wash there, unless you want to claim it's obviously more like Arlington (I don't think it has anywhere near the density though).
CRT -Thanks for the information. It really does help explain why the outer areas(where there is still cheap land) have been hit much harder than the inner areas(where land is more limited)
housebuyeryeah this was one of CRT's stunning revelations that have happened over the course of time in this blog. It's dramatic isn't it?Supply and demand matters, but it's so much more potent of an argument when you use the actual numbers.Sorry these particular numbers can't answer specific questions on McLean or Great Falls.
Well, I don't buy CRT's thesis. Why should we only look at $200k+ households? Many of the new homes in PWC and Loudoun went for $300-500k. You don't need $200k to buy a $300k home in Haymarket. Part of why PWC and Loudoun went down quicker is because of the high number of foreclosures. And that is concentrated in the low end of the market and people with low incomes.
CRT, do you happen to have those numbers for DC readily available?
Cara-Although they can't specifically answer the question. I think it is probably safe to assume that McLean and Great Falls are more like Arlington than PWC.I find it interesting that Fairfax was actually pretty close to equilibrium. I assume that this means that areas of Fairfax closer to the city (Vienna/Oakton) were probably under built and areas of Fairfax close to (Lorton/Centreville) were overbuilt.
As an aside the Fed is going to need to start buying treasuries quickly if they don't want mortgage rates to shoot up. They made the claim they were going to try and support lower rates and since then the treasury yield has climbed steadily. The last couple of days have been particularly ugly. In the last week it went from 3.2% to 3.7%If mortgage rates go to 6+% that will put cold water on any sort of bottom process that might be starting to form
As for the City of Alexandria, they had a whole new planned area "Cameron Station" (which also included a new elementary school). That community came with brand new SFH (although also TH and condos). So there were new SFHs built in the City of Alexandria for the rich people referenced in CRT's account.
Cara - you deserve as much credit as I do. You found the ACS data - all I did was mine it.TBW - there is nothing to "buy" in what I am saying. It was suggested for a long time that income growth was next to nothing for this area. What this shows is that isnt the case. There has been plenty of income growth - especially in the upper income categories - and this can cause prices to move higher especially in land constrained areas where they cant simply build more SFH to keep up with demand. Anon 412 - the picture in DCDCHomes + 9,020Incomes +12,129Essentially this is a shortage like Arlington, perhaps worse. Its no surprise then that DC prices (which rose more than Arlington in the first place) are doing quite well compared to places like Lou & PWC
What? No one is denying income growth. I'll repost what I put up earlier today.2000 Fairfax median household income: $81,0502007 Fairfax median household income: $105,241That is about a 30% increase. Not enough to justify 100% or more increases in home prices.
CRT - Interesting, thanks. Pricewise DC has even done well compared to Arlington so far, but MOI has been high recently so some declines are probably coming. But in general you could probably make the argument that they actually haven't built enough luxury condos for all of the rich people who want to move to DC.
CRT,You are not accounting for people dying, people moving out of the area, people moving to other jurisdictions within the metro area, etc. Those bring more homes on the market as well.There is no shortage in DC. On the contrary, there are more areas for well-heeled individuals to live than ever. Neighborhoods that in the 1990s you would hesitate to visit are now very fashionable (Logan Circle, Columbia Heights, U Street, Chinatown, Adams Morgan, Mount Pleasant). And Foggy Bottom and Dupont Circle have lower crime rates and fancier units.
http://www.arlingtonva.us/Departments/CPHD/planning/data_maps/pirs/PIR54/CPHDPlanningDataandMapspir54_tables.aspx#maritalUnfortunately the latest data is from the 2000 Census but I doubt the stats have changed that much. Note that a majority of residents (15 and older) of DC, Arlington, and Alexandria are never married, widowed, or divorced/separated. However, in Fairfax County, Loudoun County, and Prince William County a majority of the residents (15 and older) are married.So don't listen to CRT's claim that all these high-income residents are demanding SFH. A lot of high-income residents of these inner areas are not even married (let alone married with children). So there is less demand for large housing.
tbw, I don't think CRT means that there is a literal shortage of housing for $200k income households in DC or Arlington, but I think meant to use the numbers on the additional # of these households compared to total additional housing units to show the pressure on prices. I'm not sure I completely understand the reasoning behind the methodology either (e.g. why not look at $100k-$200k housholds, of which there were probably many moving into Loudon and PWC to buy the $300k-500k houses there, which would make their surplus look a lot smaller).
"TBW said...That is about a 30% increase. Not enough to justify 100% or more increases in home prices."TBW - think of it this way. Suppose (pre bubble) there were 5 homes available for purchase and 5 buyers with the following incomes:50K 75K 100K 130K 180KIf everyone bought at 3X income, prices of homes would be150K 225K 300K 390K 540KNow suppose that 7 years later, 4 more people moved in such that incomes of all 9 people are50K 75K 100K100K 130K180K180K180K 180KMedian income is now 130K or +30%. Now, in an area like Loudoun, a builder could come in and build 4 houses and again, everyone would pay 3X income. But what happens if thanks to land constraints, the builder can only build 2 more houses? If so, prices of the 7 houses would go to the higher income brackets meaning prices would look like this.300K300K390K540K540K540K540KIn this case, median home price grew 180% while median income grew only 130%. Yet this increase in home prices is still driven by fundamentals - in this case, the last 2 people (the 50K and 75K households) were priced out of the market and now have to rent. Now, this is just an example, but you can see the problem here - if you do not build enough homes to match income growth, some people will indeed be priced out as the price gains skew higher. In Loudoun & PWC the answer is always build more. In places like Arlington, Alex, and perhaps McLean - that isnt always an option. Thus in these cases price growth can exceed income growth and yet still be sustainable.Also, Im not saying this example is precisely what happened. You could make it more extreme or less extreme to enhance or diminish the "skewing" of prices to incomes - yet the point is, income growth does not have to meet home price growth if supply has not kept up with demand.
One question I have is if CRT is looking just at new SFH or new forms of all housing. While I agree a rich family in Loudoun wants a nice SFH, I'm not convinced a rich divorced male (non-custodial parent) in his 50s or rich single male/female in his/her early 30s living in Arlington desires a SFH.
CRT,Are you looking at all new houses or just new single family homes? For reasons I've just posted, I think a lot of rich people in the inner suburbs and DC desire smaller housing even if they are rich. Anecdotally, I am a single male (and have many single male friends). None of us currently are looking for a single family home regardless of our income. It's not like once some of us reached $100k+ we had to have a SFH. Now if we have a family down the road we will want all that space. But I think to many of us it feels wasteful to have all those rooms for just one person.
A memorable article from a while back (that shows plenty of well to do people are content in a condo and not just SFH):Long known as a magnet for young singles just starting out, Arlington's "R-B corridor" is quietly attracting a large number of middle-aged people looking to start over. The rapidly urbanizing stretch of suburbia is becoming the place to move in Northern Virginia after a life-changing event, like divorce, the loss of a spouse, a cross-country move, kids moving out or parents dying.http://www.washingtonpost.com/wp-dyn/content/article/2007/05/20/AR2007052001675.html
crt's numbers were for all construction. I see that the time was ripe to revisit this issue.And it was not just low-incomes that contributed to the first wave of foreclosures out in PWC. It was the newness of the loans in general that helped create a spiral of price declines.And what about my 4.6x income for the _median_ value of the price of the house to the income of the owner in 2007? Half of this area bought with worse conditions than 4.6x income! If only half of those people don't receive the wage increases they're anticipating, that'd leave 25% of homeowners in 2007 in dire straits. Have 25% foreclosed already? I don't think so.
Anon 412 - I agree, MOI in DC is high and prices will have to come down in DC - I have long held that DC is running behind and I suspect DC will have its worst year (pricewise) in 2009. However, even with a -10% reduction, prices in DC (2000-2007) will have risen more than anywhere else. The shortage is likely one of the reasons why.TBW - for starters, please purge that Arlington data. Not only is it wrong, but it has been on this blog for years and caused way too many arguments. We had suspicions early on that was way off (S&P & a few other things suggested much higher income growth) and then Cara found the ACS data blew that Arlington county data off its moorings altogether.http://www.census.gov/prod/2009pubs/h170-07-18.pdf ACS housing survey DC metro area 2007? pdf I encourage you to look at this in more detail, it is more recent, and much more substantial and comprehensive than the Arlington Co data. The demographic community has been scrutinizing this very heavily - I will take it over year 2000 Arlington Co. data any day.In any event, you will find it absolutely accounts for people dying (the total population number is the answer) as well as in and out migration.As for your contention that people will choose smaller homes - I think thats true. However, if most people had the choice between a 1,400 sf 2/1 condo, or an 1800 sf 3/2 SFH, I think they will choose the latter. Incidentally, to this point, the ACS data for arlington indicates the most explosive growth was in median FAMILY income (+53% in 7 years). The correct model is not just what single non-custodial males want. The real question is what do 2 parent DINK or 2 parent 1 Kid 1 dog families want?
CRT, I agree with your prediction that 2009 will be the worst year yet for DC. I'm probably more bearish than you, though, as I think it could be -15%. I also think that while it may be the worst year *yet*, with the unknowns on interest rates and the $8k, 2010 could be worse. Of course that will affect everywhere in the region, but DC would be included in that. Still, I do agree with the general point that when all of this is said and done, DC will have kept more of its price gains since 2000 (or 1998) than anywhere else in the region, because more of it was based on fundamentals.
Anon 412 said...tbw, I don't think CRT means that there is a literal shortage of housing for $200k income households in DC or Arlington, but I think meant to use the numbers on the additional # of these households compared to total additional housing units to show the pressure on prices. "Exactly. "I'm not sure I completely understand the reasoning behind the methodology either (e.g. why not look at $100k-$200k housholds, of which there were probably many moving into Loudon and PWC to buy the $300k-500k houses there, which would make their surplus look a lot smaller)."Anon - your methodology makes much more sense. The reason we havent looked all the way down the line is that it would be a huge undertaking and Im not up to it. The reason I ever brought it up was to refute the income gains must match price gains idea that circulated here for years (see my example). It was for that purpose only, but Cara wanted it for this thread so I posted it again. I had no idea it would stir the pot so much! "TBW Said...There is no shortage in DC. On the contrary, there are more areas for well-heeled individuals to live than ever. Neighborhoods that in the 1990s you would hesitate to visit are now very fashionable (Logan Circle, Columbia Heights, U Street, Chinatown, Adams Morgan, Mount Pleasant). And Foggy Bottom and Dupont Circle have lower crime rates and fancier units."TBW - you may not realize it but this is EXACTLY my point. In the 1980s, the "only" place for the wealthy to live in DC was georgetown. As more and more wealthy come into the city, they move on to these other places like Adams Morgan, Logan Circle, even crime ridden dumps like U Street and Columbia Heights. In so doing, they make the city more and more unaffordable - they take places (like U Street that would have gone to the 75K income crowd when it was seedy) and turn them into fashionable places where the 75K folk really are priced out.
Cara said... crt's numbers were for all construction. I see that the time was ripe to revisit this issue."Cara - Yep.. I think the problem for TBW (as a relatively new poster) is that we assume he/she learned as much as you and I have over the years - which isnt the case since they werent active back then to learn it. Its a shame there isnt a "must read thread" section which contains everything every new poster should read to get up to speed about what we think we know about income growth, populaiton growth, flipper concentrations, junk loan concentrations, etc. TBW - this isnt a knock against you. I think you are a very good addition to this blog. Just understand that she & I were discussing long ago vetted info, and pretty much speaking "past" you in this case. I apologize if my posts came off as snippy.
CRT, if it were possible, I think it would be very interesting to see income growth in DC by zip code or neighborhood. My guess is that while in places like Adams Morgan or U Street, there really was a dramatic change in the demographic of people living there, in places like Georgetown, Cleveland Park, or on the other end, Anacostia or Deanwood, there wasn't really much change in income (is my guess). Yet these neighborhoods also saw an extraordinary growth in prices since 2000. In the poorer neighborhoods I'm sure that was fueled by subprime lending (and prices have really started to crash and inventory is really high if you look at e.g. zip codes 20020 or 20019). For the neighborhoods like Georgetown that are rich now but were also rich back in 2000, I don't understand how housing prices have still doubled there since 2000.
Anon412 said... CRT, I agree with your prediction that 2009 will be the worst year yet for DC. I'm probably more bearish than you, though, as I think it could be -15%. I also think that while it may be the worst year *yet*, with the unknowns on interest rates and the $8k, 2010 could be worse."Nothing wrong with -15% Anon 412. Heck, even -50% is possible if contrarian's doomsday deflationary scenario comes true. But as you point out, that will hit not only DC, but also, PWC just as much."Anon 412 said...Of course that will affect everywhere in the region, but DC would be included in that. Still, I do agree with the general point that when all of this is said and done, DC will have kept more of its price gains since 2000 (or 1998) than anywhere else in the region, because more of it was based on fundamentals."Yeah - that was really what I was getting at. For the longest time, the "its moving in" crowd was suggesting that Arl, Alex & DC would suffer the same fate as did Lou & PWC. It seemed clear to me for a while that it wasnt going to play out like that. Clearly there was a lag, but it was only a few months and not enough to see the huge price discrepancies we were seeing.Still, even as late as November the idea was "it just hasnt hit yet" and that a mass "capitulaiton" event would come soon enough. Heck even as late as January it was suggested that there was this weird subsection of Arlington homeowners who would come out this year and drive inventory higher YOY. I never understood the reasoning behind that. In any event, it was only once the early signals of the bottom came into view that the "its moving in/it just hasnt hit yet" crowd has gone silent. As I noted to Cara earlier, its a shame we didnt find this data about changing fundamentals til 2009. To think of how many of those 2007-2008 arguments could have been avoided altogether. Still, better late than never.
"Anon 412 said...CRT, if it were possible, I think it would be very interesting to see income growth in DC by zip code or neighborhood."Believe it or not, it should be available when the full 2010 census comes out. The ACS data suggests they will have a full panoply of info down to individual zip codes! I for one am waiting with baited breath to see it. "Anon 412 said...For the neighborhoods like Georgetown that are rich now but were also rich back in 2000, I don't understand how housing prices have still doubled there since 2000."This is the toughest one to figure out. Think of it this way though. Suppose that Georgetown was the #1 choice of those with an option, and that Logan Circle while now very nice, is still a #2 choice. If so, you still are going to have a shortage of georgetown homes with a surplus of buyers - the only way to clear that market is with rising prices. On the other hand, suppose the gentrified Logan Circle was just as nice as Georgetown - there was no clear #1 vs #2 distinction. If that was the case, you have essentially doubled the supply meaning prices would not rise at all since the market clearing mechanism was increased supply (just like it is out in the burbs where they can simply take raw land replicate all or nearly all of many of the things that make an area desirable). This example isnt dispositive, but thats my best guess as to why the Georgetowns of the world rose as much as the rest. We know the Georgetowns of the world were not taking out junk loans, we know the Georgetowns dont have foreclosure problems. We do know there has been alot of high end income growth in the city, but was it in Georgetown? Unfortunately, we have to wait til 2010 to find out...
kevin, i am so hooked on that modifications forum. each story is more fascinating than the last. i love this guy:"My loan is with wa mu, they are very hard to get a hold of, i have a loan balance $835,000, the payment is $6371.00 payment,tax and insurance included. 7.52%, my gross income is now only $7500 i used to make $9500.00 a month, i have a $380 car payment my company pays for , about $1600 in credit card debt, which i am not paying because i can't afford them, i sell cars and sales were very slow last year and the first months of this year, do i have chance for a loan modification, i want to keep my home. I need to know how i can approach wa mu in a loan mod."then he says he actually "owns" five properties, and:"Do you think it is ok to say i live in the homes becuase i tell them they are rentals and they tell me to short sale them .i don't want to sell them. I and breaking even on all of them and one day know they will have equity again."but wait:"Do you think they will work with my rentals i am 5-6 months late on all of them currently. I am really desperate now. I am on my feet and want to keep them all."???
Re: Georgetown, I wonder if it had to do with not "junk" loans per se, but loans that took an optimistic assumption about someone with a variable income (e.g. your income was $500k in 2006 so you can buy a $1.5MM house even though in 2009 it might have gone down to $150k), stock market wealth, and bubble equity from the sale of a property. If so, with these sources of wealth drying up, it seems to me like prices in places like Georgetown would have to eventually fall to fundamentals, even if it takes a really long time.
I can't believe that housebuyer was the only one to harp on the 10-yr today. It really has been a shocking rise in the last week. And the translation to mortgage rates -(per USAA)5/26/09 - 0.375 points gets you 5.0%5/27/09 - 0.375 points gets you 5.625%That is $150/mo more on a $400k mortgage in one day.
"Anon 412 said...If so, with these sources of wealth drying up, it seems to me like prices in places like Georgetown would have to eventually fall to fundamentals, even if it takes a really long time."I think thats a near certainty Anon 412. We are in a recession, we are in a deflationary environment. The reason prices are going down is because potential buyers are losing those wealth sources, or some are losing their jobs (in which case the pool of free spending buyers) is drying up. This is pretty much precisely what should happen in a recessionary environment - as the fundamentals change, so do the prices.Recall though that is very different thing than what we saw during "the bubble". The bubble assumed there has been no change in fundamentals, the whole thing is a ponzi scheme driven by junk loans and excessive credit - take away the credit - all the price gains will evaporate. We clearly know now that in some places there was more than just the bubble to support prices.
Well, my point was that even though Georgetown homebuyers weren't taking out subprime loans, the wealth they used to purchase their houses -- whether it was their stock portfolio, their move-up equity, or a bonus working at a law firm with clients in the financial sector -- in some cases was fueled by those who were. So a lot of it really was bubble wealth, indirectly.
Fred, I commented in CR about that, but not here. I thank my lucky stars CR pointed out the low-spread weeks ago and I was able to light a fire under my mom and get her to refinance now rather than later. She got a 4.875% lock. All's going well.
So, I'm trying to extract the number of "fence sitters" and "shadow sellers" from the two pdf files of ACS data. The concept is to base this on the shear number of first time versus move-up buyers normalized by number of households and how that changed from 1998 (when it was a great time for everyone to buy) til 2007 (as a measure of the bubble years).The (presumably) excess in move-up buyers would be a measure of shadow inventory (or move-up buyers stolen from now). and the lack of first timers would represent the shear number of pent-up demand.The beauty is FFX County is one of the sub-areas, DC is another. The other beauty is that if we knew exactly how many fence-sitters there are, and how quickly they're buying, we'd have a prediction for how many months it will take for them to run out!!!The complication is that the 1st time versus not is an integral over all owners, not just representative of who bought in that year. This makes it harder to tease out what the decrement or excess is for either.I think, sadly that I shall have to think on this and report back later.Seriously though, any question, how many more bathrooms are there per occupant, anything, it's in there.The nice pretty PDF of 2007 wasn't released until Feb 2009, so we shouldn't blame ourselves too much for not finding it earlier.
Fred,I've been reading other blogs about the Treasury market today:Megan McArdle: Sovereign WoesThe Market Ticker: It is Failing, All of ItFinancial Times: Exploding Debt Threatens AmericaCalculated Risk: Record High Yield CurveGOOD JOB on the refi for your Mom, Cara.
"Still, even as late as November the idea was "it just hasnt hit yet" and that a mass "capitulaiton" event would come soon enough. Heck even as late as January it was suggested that there was this weird subsection of Arlington homeowners who would come out this year and drive inventory higher YOY. I never understood the reasoning behind that."That was when this blog nearly jumped the shark. Everyone was in such denial. I blame alot of this on Lance -- he made this blog so adversarial. As soon as you pointed out how Arlington wasnt acting like the exurbs, people thought you were presenting another Lance argument and accused you of saying "Arlington is different". Those were some dark days...
CRT said: " its no surprise that Arl & Alex (and parts of Fairfax) prices have generally held, whereas Lou & PWC prices have cratered."Bingo, CRT. Very interesting exchange that followed. The doom and gloom crowd here that tends to blame "greedy owners" for the failure of N. Arlington prices to slide is indeed way off base!
CRT,Isn't the "Arlington County Data" the official census data. While the ACS data is more up to date (collected every year instead of every ten) and more comprehensive, I haven't seen anything on the census site to suggest it's more accurate. In fact, the Census Bureau says when you want an actual count to use the official census count, not the ACS count. (I'd provide the link I gave here before, but for some reason a lot of the links on the census page don't seem to be working right now.)The ACS is survey based, with a small percentage of the population surveyed each year, and has the levels of uncertainty associated with such surveys. It's fine for its purpose - if your trying to plan for schools or deciding where to locate a restaurant, data from 2007 that's off by a couple percent is better than more accurate data from the full 2000 census. The way I read it, though, is that if you want the best numbers for 2000 you use the the official enumeration-based count. That's what the Arlington County uses and the Arlington County Chamber of Commerce uses. It's possible I missed the explanation here of why the ACS was more accurate, since I don't read this every day, but I when I spent some time searching the Census Bureau site I couldn't find anything to support that view.
Tabitha-I know this is probably buried, but... There is no loan modification that can help your friends. They owe twice what the house is worth. You can't fix that. The mods that banks are offering are primarily low interest rate, penalty forbearance, etc. They are NOT writing down principal. The banks and their lobbyists killed the cramdown bill so not even a bankruptcy judge can write down a loan to the value of the collateral. Sadly, it looks like foreclosure is in their future, and the sooner the better. Best bet for them is to stop paying and try to get as much free rent as possible to recoup their misguided attempts to "save" their house.-Jason
cara says:Other than Arlington, all of NoVa was either mildly or drastically overbuilt during the bubble.(Um, arlington has way too many empty condo buildings. didn't they build 12 years supply?
Thanks CRT, nice analysis. You gave a good description. It's obvious now that the Arlington/Alexandria/DC RE market was different. I think there are many factors that contributed, some less so than others. The one that appeals to me is the sheer convenience of the city. I had specific people in mind. The problem with using the statistics is that even if there are only a few thousand, fast track civil servants or GS-12 married to private sector professional, that's enough to swamp the available houses and skew the prices upward. On balance though, I know roughly an equal number of people who bought in places beyond Leesburg commuting distances, 20+ years ago. Both groups have done OK and are happy but the McLean, Alexandria types have spent less time driving and they never complain about the Greenway congestion or tolls.
@J@ said: "It's obvious now that the Arlington/Alexandria/DC RE market was different."Quite right. But if you've been reading this site for the past year or so, it's been most amusing to read the convoluted theories put forth by various posters to account for why that prices in that market remain strong, and why for certain they will soon fall. It's like the crackpot who swears the world will end on Friday... and on Saturday he's back out on the street with a new theory on why it didn't end, and it definitely will end NEXT Friday!
Oh, everyoneUmm in case you paid attention to my mis-representation of the 4.6x income number... Doh! that doesn't mean what I said it meant. The 4.6x income is what the current "value" of the house is relative to people's current incomes. NOT what the price they paid was relative to their incomes at the time. So, this tells us nothing we didn't already know, namely that in most of the DC area neighborhoods got so overpriced that the people who lived in them couldn't have afforded to buy their own houses if they had to pay bubble prices. Which we knew all along.Sorry. Too enthusiastic. Must go mull the data and it's meaning more this weekend before presenting anymore stupid off the cuff mistaken interpretations....But the "encouraging" thing I see in the 1st timer versus not 1st timer data? Is really that a good 40% or more of people even in the bubble were not buying in to the whole housing ladder mantra. This is a great sign for future stability and a sign for the culture of the region that might give reason to hope that the foreclosure rates will soon drop if they haven't done so already (hard to tell with the moratoria). Once I've looked at the data more seriously I'll let you know, but I think there may be reason to believe that the bottoming process really is beginning, and the long slow flat period will be starting shortly, such that by this fall it will be time to start making your housing choices based on current prices. Insane or not, if long-time owners and those with huge move-up equity dominate in a given neighborhood those prices aren't going to come down much. (not that these people have the power to force them up either, only banks can decide that, based on borrowers qualifications). But I'll get back to you on whether there are any huge disparities that need addressing.
Tabitha, glad you like it. I limit myself to no more than one story per day on that site. It makes me angry reading stories of these selfish jackasses wanting handouts so they can keep their overpriced houses and rental houses and investment properties. A whole lot of "But why WON'T they reduce the principal by HALF?!" Because you are a worthless deadbeat that doesn't deserve a jackpot winning prize. I hate these people.
and thanks Harriet. My Mom had lots of other things to worry about, and back in January I had told her that she didn't need to prioritize the refinance because there was no sign these rates were going away anytime soon (which was true), but once CR gave that heads up on the amazing decrease in the spread, I told her, now's the time, and she acted. (Of course by then most of the other things she wanted to get done had gotten done too, which helped).
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