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Tuesday, June 23, 2009
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109 comments:
Hye
Krugman, on green shoots, 1930 style
Via the WSJ’s Real Time Economics, a blog that has been keeping track, day by day, of what the Journal was saying at the same day in 1930. What’s striking is the optimism: story after story says, in effect, that the worst is over and recovery is just around the corner:
Col. Ayres, VP Cleveland Trust, predicts an abrupt recovery in stock and commodity prices by Labor Day due to current consumption exceeding production. Distinguishes between two types of depression, “V”-shaped and “U”-shaped.
...
Cara-
Interesting graph. I do find the comments a little strange. The WSJ person asserted this is nowhere near as severe. The blog takes contention and says that worldwide this is equally severe its just that the 1930s were worse in the US and the current crisis is worse in other countries.
Seeing that the WSJ article is mostly for US readers doesn't that make him correct. Lets be honest people care about their economy far more than they do about eastern European countries that are the hardest hit.
Wow median prices really moved up for existing home sales in May. Sales were up 2.4% to 4.77 million and price moved from $166.6K to $173K. That is over a 3% move upward.
It will be interesting to find out what Case-Shiller says. Is this just the fact that a higher percentage of sales during spring are non-distressed or are prices rallying
What is surprising is the move up in sales with so many problems with the new apprisal system that started MAY 1ST. It stopped more than a handful of sales, everywhere across the country not just in pockets.
housebuyer: what stats are you looking at? I'm looking at an article on Bloomberg that says average price fell 0.1 percent from March, and 6.8% yoy from April '08.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aLU_yVWfAiFE
Whoops, that link was for April. This article, which is for May, says that Purchases increased 2.4 percent to an annual rate of 4.77 million, lower than forecast, the National Association of Realtors said today in Washington. The median price fell 17 percent, the third-largest decrease on record.
Housebuyer - you are looking at monthly stats, which is problematic because of seasonality. As I assume you know, home prices rise in the warm months, fall in the cold months. As such, the 3% rise this month is not particularly noteworthy.
A better comparison is to look on a year over year (YOY) basis. When compared to May 08, prices are down 17%.
Nova-
I used this link. I know prices are still down a ton YoY. I don't think anyone would contend that so the more interesting metric is what they did MoM instead. As I said this could be related to non-distressed housing starting to sell.
http://finance.yahoo.com/news/May-existing-home-sales-rose-apf-490162850.html?x=0&sec=topStories&pos=main&asset=&ccode=
CRT-
If its not noteworthy you should be able to find some data anytime during the crash that showed a 3% rise during the crash. I am pretty sure that you will not be able to find a single monthly gain.
Also if you look at the case-schiller index 3% would be the largest monthly gain ever. Even during the bubble years the highest monthly gain was 2.2 for the national index.(This may not be comparable since he uses rolling 3 month averages)
I am not saying that the crash has ended, but I am saying that at least this piece of data is very different compared to anything we have seen before this.
To finish my comment I agree that median prices can have a large bias due to what sells. So if you want to attack the number I would use that argument, but if you are trying to say that it is non-news because 3% is noise you will not find any data to support that conclusion.
Cara-- Thanks for the link. Very interesting blog. The comment that struck me especially was this:
Commerce Secretary Lamont denies tariff will hurt trade. Notes that 80% of imports are duty-free or will have duty reduced or unchanged under the new tariff. Says flexible clause of tariff can be used to address remaining complaints of foreign countries. Notes that trade has increased for many years in spite of previous tariff increases. Treasury Secretary Mellon also has defended the tariff, and being the third richest man in the world he would certainly be opposed to it if he thought it was damaging to business.
At least THAT's a mistake we aren't likely to repeat. Krugman has been worried, though, that we will make another mistake made in both the Depression and Japan-- and as soon as things show any signs of picking up again we'll start to try to balance the budget-- sending us right back into another tailspin.
"people care about their economy far more than they do about eastern European countries that are the hardest hit."
Except that the great crash of 1929 DID in fact have major initiating events from overseas.
@J@,
Will you stop it with your silly claim that bank accounts are only earning 1%. Everyone here knows how to use the internet and can find reliable banks that are giving 2% interest. I even know of some that are paying more than that for a few months on new accounts. And CDs are paying higher rates.
The Fed cannot go any lower than it currently is. I don't know when they will raise the rates but it will happen at some point and the bank accounts and CDs will then pay more again.
And I was making 5-6% on savings in 2006 and 2007. And five to two percent since late 2007. So there's been plenty of interest available during these housing bust years.
And I meant to add that this international effect is the thing that perhaps has me worried the "most" (most of the little bit that I AM worried).
Everything else seems to be a study in contrast between the two 80-years-apart periods:
Service economy versus manufacturing
In a war versus between wars
The percentage of population in poverty
The difference in fed actions
The executive branch policy actions versus inactions.
The executive branch awareness and seriousness of purpose versus the Hoover whistling toward the graveyard.
The existing of the FDIC versus the nonexistence.
Sarah,
Why would balancing the budget be bad? We started balancing the budget after the 1991 recession and things were great during the rest of the 1990s.
I see no evidence that the stimulus has worked. Or many of the other measures. It seems more like it has delayed the inevitable. Part of why things became so bad is because we delayed the inevitable with the 2001 recession.
housebuyer yesterday said...
someone bought it from them. This person and every other person that didn't sell was a loser. Thus there were more losers than winners.
This is why it's better if most stocks throw off high dividends, they do in other countries.
Whoever owns at least has an income from profits (sometimes past or future, not current profits, in thin times.)
This creates an incentive to hold, and creates an incentive for the buyer to be the company itself, because if the company buys back stock to its treasury (at a high price, or if the price eventually gets low enough to seem reasonable to the company), then it reduces its dividends-payable liability--it "pays it to itself".
And because the company is throwing off profits, it doesn't have as much tendency to be getting rich or getting to be a monopolistic behemoth through acquisitions.
So, it both directions, the market it more stable, less volatile. Less dangerous place for the little guy.
This is turn discourages speculation and hedge-fund types of leveraging, which again further tamps down dangerous volatility.
HOWEVER---you wouldn't know it from some of the foreign stock markets in the last decade or two--some have been even MORE volatile than the U.S. markets! But I don't think those (Russia, India, etc) are the ones I'm speaking of that have traditionally high dividends...
Metro Accident History
It's very disturbing what happened last night. It's also disturbing how these accidents are occuring with more frequency.
Metro can barely operate its current system and one wonders how poorly they will operate it when the Silver Line is added. Hopefully the various governmental entities will finally give Metro the support it needs to avoid more computer errors and rail derailments.
"The sales results missed economists' expectations, and stock markets headed lower on the news. Home sales had been expected to rise to an annual pace of 4.81 million units, according to Thomson Reuters."
housebuyer, I think this may be the other important caveat (in addition to the change in median due to changing composition). Here's the thing, "economists" expected more home sales than happened, while at the same time the price was higher than last month. This hints to me that part of the reason sales weren't as stunningly good in May as they had hoped was because house prices haven't gone down as far as they need to to garner that type of buying support.
So, I guess another headline could be "some lucky stubborn sellers get their wishes this May". If I'm right about that interpretation.
From CR:
"Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April ...
"
There's your "mix" changing for you. Fewer of these properties were distressed, and hence what sold in May may have had a larger percentage with that "move-in ready" premium, in addition to not having any continued REO-discount (if there is such a thing beyong the condition of the property, some places there is, some places there isn't anymore).
housebuyer,
and if you take a look over at CR now, I see a lot of wiggles that look the same size as the current ones...
woops, but that was the sales uptick not the price uptick.
Still, if REO's were 45% of sales in April then the median will only be 5% away from the max REO price (under the erroneous assumption that REOs populate purely the bottom of the market). In May, at only 33%, the median is 17% "higher" well up into the normal sales portion of the market.
There's your price gain.
Cara,
Thanks for finding the percentage of distressed sales. I think MOM is too easily distracted by such noise. I suspect a lot of what some here deem an uptick in price in PWC and elsewhere is mostly fewer really worn out homes being put on the market.
Also, you note
This hints to me that part of the reason sales weren't as stunningly good in May as they had hoped was because house prices haven't gone down as far as they need to to garner that type of buying support.
That's correct. But I'd also stress fewer buyers because of job losses and many people feeling insecure about their job even if they have one.
Foreclosure sales dropped from 45% share in April to 33% in May. I think that is the clue for any increase in median price.
tbw,
yeah, I think, especially on the national level, that less job security, or actual job loss is probably more of a factor than price, (particularly if the price change is purely in the mix).
No one wants Metro fares to go up; the jurisdictions (DC, MD, VA) don't want to raise taxes and provide more funding, the union certainly doesn't want to give up anything, and the system is aging.
Ergo, more accidents, more mechanical failures, more delays. Predictable and expected.
Are they getting any stimulus money? I never checked / don't remember.
The new 6000 series cars are coming on line, after years of planning and production, design and testing, but they are only serving to satisfy higher demand--to the ball park, the later weekday hours, etc--not serving to replace the original 1000 series cars, which, last evening as soon as I heard a 1000 series car was involved in the colliding train, anticipated today's faulty-equipment news scenario.
After this, expect an announcement that they will never use or avoid using or perhaps HAVE been avoiding using 1000-series car pairs as end car pairs on either end of any train--and I helped write the software a few years ago that will help them to do that when they make up the train "consists" in the yards every day.
Scott,
DC, MD, and VA all agreed to put up matching funds for more federal money in the bill pushed by Tom Davis last year. I think eventually more money will come from that.
It just should've passed years ago but idiots like Tom Coburn put holds on it because he saw it as pork. Which is idiotic because Metro primarily serves the interest of federal government employees.
Cara-
I entirely agree that mix changes may have driven some or even all of the price difference. I was just making the comment that I believe this is the first time we have seen an uptick. It may not be real, but the fact that we didn't see "noise" create a move like this before may say something. My guess is it means prices did not fall this month and the reduction in distressed sales made the median price go up. We will find out in 3 months when case shiller comes out.
As a side note any predictions on what we see in DC for April. My best guess is that we see prices were within 0.2% of being flat
You need to look at the NorthEast numbers in the existing home sales report. It is much stronger than the rest of the country. I don't feel like pulling the data out. The Metro accident still makes me want to puke.
"Housebuyer Said...
As a side note any predictions on what we see in DC for April. My best guess is that we see prices were within 0.2% of being flat"
-0.2% versus March? Phew! Thats a bit too green shootish for my tastes. I would take the under (more severe loss) on that.
That said, I do think the decleration (of losses) will continue on a YOY basis. If I had to guess I would say -0.8% over last month.
D.C. Area Makes All the Best Lists
Brace yourself for more cars moving vans on Washington-area roads: Two national magazines have us on their "Best of" lists.
In the July issue, Kiplinger's Personal Finance (which happens to be based in the District) ranks the Washington metro area third on its list of Best Cities 2009. Number one is Huntsville, Ala., followed by Albuquerque. "It's all about the percentage of a certain type of job," said Bob Frick, senior editor for Kiplinger's. Professional, creative-class workers such as engineers, artists, architects and educators, are thriving in such cities, he said.
Washington was also highlighted recently in Forbes magazine's list of Best Cities for Jobs, by Joel Kotkin. "The Obama-led stimulus, including the massive Treasury bailout, has transformed the town from merely the political capital into the de facto center of regular capital as well. Watch for D.C. and its environs to move up our list over the next year or two. Already the area boasts one of the few strong apartment markets among the big metropolitan areas in the country, which will only improve as job-seekers flock to the new Rome," Kotkin writes.
CRT-
I was basing my -0.2% of extending the Feb to Mar trend. The calculation is a 3 month rolling average. It had been falling at over 2% a month so for it to go to -1.2% in March that means that prices were probably flat in March giving the calculation (Jan-Feb-Mar) = (-2%-1.5%-0%)/3=-1.2%.
So if March was flat I think April will trend upward a little and you will get something like (Feb-Mar-Apr)=(-1.5%-0%+1%)/3=-0.2%
Sorry in advance that the text is sloppy.
CRT (and others),
Any lookie loos in Alexandria near the Dairy Godmother after Obama and daughters visited? Alexandria is a big place so not sure if any of you live near that store.
I think there is an untold story unfolding in the DC area economy right now. I mentioned it before, but I can't find the data to confirm or deny its existence.
That would be an uptick in residential construction. I can't get home starts or building permits out of Fairfax, Loudoun, or PWC past April 2009.
I've browsed builder websites and nothing definitive one way or the other.
Sill, I can feel it in my gut that building is starting to re-ignite.
So, that's a prediction from me. You can hold me to that, and I will eat my humble pie if I am proved incorrect.
I want to change my term 'uptick' to double. Second half home construction will be double the first half.
Robert,
Top Destination Cities for 2008
DC was #19 last year. Maybe it will shoot up this year but everything you cited always has been true (lots of smart, professional people here, federal gov't softens recessions, etc).
I think you are right that a lot of people are drawn to the DC area because of jobs. BUT I think there is probably a lot of sticker shock which scares people away. Particularly if your job actually is in DC (which most of the non-DOD federal positions are) because all the moderate to nice neighborhoods close to DC jobs are EXPENSIVE.
So I think that's why you see cities like Atlanta, Houston, Las Vegas, and Chicago (etc) still ranking highly on those lists. You can still get a nice job in one of those cities and housing costs and overall living costs are not that bad.
There's a reason why a huge percentage of non-natives in this region are former NYers -- only to them (and a few other areas) does this region seem like a bargain.
But you may end up right. Maybe U-Haul will show DC #1 for 2009.
I'm moving to Huntsville along with everyone else.
"I'm moving to Huntsville along with everyone else."
Albuquerque for me!
The list doesn't lie...
Robert,
The local sections (Fairfax Extra, Loudoun Extra, etc) that come on Thursday usually have a list of projects proposal and building permits in the respective county. The website makes this enormously hard to find (and it's not as nice as the print version) but here is the most recent one for Fairfax County. If you have the time you can see if you can dig around for the older ones:
Projects Proposed Fairfax County
If you look at building permits you can see references to a few new subdivisions in Fairfax County.
housebuyer,
Okay, so maybe the guy with 10 houses in Detroit is not crazy, but how about the Californian who bought 178 properties?
Investors Buying Up Tons of Detroit Homes
Is it 2005 again?
From another CNN Money article:
Demand for homes is very limited right now. The weak economy has slowed it in several ways. Immigration has fallen, young people are less likely to move into their own places and more families are doubling up with relatives.
New household formation dipped to about 1 million last year, down from 1.4 million a year during the boom, according to the report.
Housing article
-------
Seems to me more evidence that investors are taking up properties.
Robert -- still feel confident that the housing market can be strong even if it prices out everyone born after 1979? I think it's not going to recover until that age cohort can get into the housing game. Foreign investors cannot make up for pricing out that age group.
[Actually really more like price most people out who were born after 1974]
Interesting links TBW. That was an annual report for 2008. How times have changed.
I know you caught the Rome comparison. I wish I had thought of that first.
TBW-
Wow 178 houses is pretty absurd. I at that point you better have someone else manage the properties, you can never look after that many places. Although that is not really comparable to 2005. The person said the properties were under 10K each. In 2005 people were buying dozens of places and many of them were $500K or more.
Man this delay on my short sale is starting to worry me. Zillow(not a good indicator) says the value of place I am trying to buy has gone up about 12% since I put the contract in 6 weeks ago. I will be pissed if the the bank doesn't accept our offer which was at market price when we put it in, but may be below market price now. Ohh well I guess this is the problem with dealing with short sales.
"I know you caught the Rome comparison. I wish I had thought of that first."
If it is any consolation, that is an exceedingly dumb comparison.
housebuyer,
I don't think your price is the hold-up here. I think it's the owners wanting to get out of a recourse loan.
Not that that's consoling in anyway. Since the alternative is they eventually reject your bid outright and you have to start looking again.
Best I can say is, crossing fingers for you. And hey, by the time they accept the offer, interest rates may be back down again.
Housebuyer - could be...Nothing wrong with your calculations as I see it.
My guess stems from looking at the performance over the last 30 months when prices started to fall. Essentially, im skeptical of something as small as -0.2% as that would be the smallest decline since June 06 (the first month case shiller went negative). Lets put it this way - if you are right I will buy you a coke.
TBW - was Obama at the Fairy Godmother? I saw the story on the news but I wasnt sure where he was as the volume was turned down. It did look like Del Ray though.
Cara-
Thanks. Yeah my agent has been telling me the slow part is the bank needs to talk to the investor that actually owns the mortgage and negotiate with them. You are also right that it is fun watching interest rates slide back down :-D
CRT-
You definitely could be right, I know that my prediction is on the optimistic side. Generally my nature is to be optimistic, but conservative. AKA I think things are always looking up, but I prepare for things to get worse.
housebuyer,
I meant it was like 2005 in that people are buying a lot of properties in one year. Nothing wrong with being a home investor but I imagine on average people do better building up a home portfolio over a long period of time rather than just one year.
I'll admit that many of these investors are different in that they are likely buying these homes cash instead of with crazy mortgages.
Robert,
You said:
Interesting links TBW. That was an annual report for 2008. How times have changed.
Can you wait until we see results for 2009 before you say "times have changed"? :)
If there's one thing that boils my blood it is that you claim something has occurred before we have hard data.
You *think* or *project* DC will be higher on the 2009 list. You do not *know* that yet.
CRT,
Obamas at Dairy Godmother
Photos of Obama and daughters at the store and nearby onlookers. Maybe you'll see a neighbor who got to see it.
Being totally lazy about my C-S prediction and using FFX Cnty median as my proxy, the median in FFX Cnty went up MoM in April (340k-ish) compared to March (320k-ish).
I do think this reflects more purchases of move-in ready stuff and fewer REOs.
So balancing these two things, I'd say that the MoM change will be between -0.5 and 0.0.
partially taking this as my guess just to be slightly different than other people's guesses.
If it's more than -0.5 down my guess is that the upper tier suffered most because that's where there's the most leeway for accepting lower offers. If it's actually up MoM, then my guess is the bottom tier will be leading the way with another monthly increase of as much as 2%.
TBW said...
Robert,
You said:
Interesting links TBW. That was an annual report for 2008. How times have changed.
Can you wait until we see results for 2009 before you say "times have changed"? :)
If there's one thing that boils my blood it is that you claim something has occurred before we have hard data.
You *think* or *project* DC will be higher on the 2009 list. You do not *know* that yet.
Guilty.
From the WP today...
Watch for D.C. and its environs to move up our list over the next year or two. Already the area boasts one of the few strong apartment markets among the big metropolitan areas in the country, which will only improve as job-seekers flock to the new Rome," Kotkin writes.
From: link
The $787 billion American Recovery and Reinvestment Act is expected to create or save some 3.5 million jobs nationwide over the next two years. And as the government ramps up its army of bureaucrats to help oversee and implement the stimulus, Washington will become ground zero for new jobs, many of which will be filled by people moving here from somewhere else.
From: College Grads Choosing Washington over Wall Street
Wall Street may be losing its luster for new U.S. college graduates who are increasingly looking to the government for jobs that enrich their social conscience, if not their wallet.
"D.C. is the only place where we can point to that is actually adding jobs right now, and we also know that the government is hiring thousands of people to oversee both the (economic) stimulus package and all the associated projects," said Marisa Di Natale, Senior Economist for Moody's Economy.com.
TBW-
Yeah I agree that it does have a little of the 2005 feel of these people think they can not lose money so they should get in as much money in as possible.
You are right that if you are building a portfolio you should get a geographically diverse portfolio over years rather than buy a every available property in a city and do it over a couple of months.
"the Dairy Godmother"
Del Ray... It's walking distance. Maybe a half mile away
Pretty good stuff.
"Everyone here knows how to use the internet and can find reliable banks that are giving 2% interest. "
Neither of my banks will go that high. I just check on-line.
I know people who lost real money in Jeffry Levitt's Old Court Savings and Loan chasing too-good-to-be-true returns.
People who should have known better invested with Madoff.
I prefer to use banks that I know to be sound.
"Del Ray... It's walking distance. Maybe a half mile away "
Do you live in Alexandria or something?
@J@
you're semi-bullish on the RE market, but you don't trust the FDIC?
What? Just look for FDIC insured in the bank details, or is your complaint that you have too much cash on hand and that you couldn't possibly dole it all out to various FDIC insured banks.
One tip though, if the bank's advertising on Calculated Risk? It's in deep doodoo. It's been true so far, not that any FDIC insured deposits have been lost to date.
"Neither of my banks will go that high. I just check on-line.
I prefer to use banks that I know to be sound."
Even by your standards KH/@J@ this is a pretty ignorant thing to say.
You "know to be sound" huh?
...and how exactly do you "know" that?
Have you examined their books?
Could you make sense of their books even if they let you examine them?
Robert,
That's just more of the same from you. Not hard data. Just some people speculating. Also, link #1 discusses how many jobs are likely to come through 2012. This has been a sticking point between us for a while. Those gov't jobs are going to be too late to offset the pain that is going to come in 2009-10.
Regarding link #2, I don't know anyone who moved to NYC for the job. They moved there to be in NYC. Also, that article is quoting students at HBCUs. Students at those schools have always liked DC a lot. DC with Atlanta and Houston have long been cities of choice for economically prosperous blacks as opposed to NYC. There is a higher number(!) (not just percentage) of blacks making more than $100k in the DC area than in the NYC area. Which is amazing given the population differential. You probably have not noticed because many of them live in DC or Prince George's County.
@J@,
What a silly thing to say. There is no risk in putting money into an FDIC insured bank and keep your balance under the limits (previously $100k, now $250k).
"That's just more of the same from you. Not hard data. Just some people speculating."
Not only that... but you can say variants of the same thing for virtually any prosperous city in the country.
Unless you buy into Contrarian's theories, this current recession is not going to radically remake the American landscape.
NYC is going to recover just as it did from previous bubbles, so will LA, and Boston, and San Fran, and yes, DC.
Being economically prosperous does not mean housing bubbles and busts won't occur. If anything, the opposite is true. It is generally in economically prosperous cities that the very worst housing bubbles form. (See LA, San Fran, NYC, Boston... etc)
In the long run DC will be just fine, I don't think anyone here questions that.
What is obnoxious is the stupid cheerleading we get from the housing pumpers who seen unable to accept the reality that even in a city with a good overall outlook there can still be serious downturns.
Robert,
Census Data Shows Fewer Americans Moving
The bureau found that the number of people who changed residences declined to 35.2 million from March 2007 to March 2008, the lowest number since 1962, when the nation had 120 million fewer people.
Experts said the lack of mobility was of concern on two fronts. It suggests that Americans were unable or unwilling to follow any job opportunities that may have existed around the country, as they have in the past. And the lack of movement itself, they said, could have an impact on the economy, reducing the economic activity generated by moves.
...
For decades, several trends have driven a decline in American wanderlust.
Two-earner families have become more common, and finding employment for both spouses in a new location can be challenging.
The influx of 1.1 million overseas foreigners was the lowest since the 780,000 in 1995.
-----
I bolded the two-income earner portion because it's so relevant for this area. We have so many couples here where both have professional jobs and career paths that it's just not easy for them to move. And the types of people who would move here and settle in North Arlington or McLean are likely to be that type of couple.
This isn't the 1950s. Women are not just going to abandon their careers and roots in one city just so the hubby can get a new job in DC.
I bet on a Texas housing bubble blog, the TX Robert equivalent is quoting this article:
Across the nation, unemployment is sky-high, the housing market is sucking wind and recessionary fears have frozen Americans in place.
Just don't tell that to a stream of new residents who are "voting with their feet" that Texas is the safest place to ride out the storm and the place to be when the economy recovers.
Even in the midst of a recession, economists, demographers and relocation experts believe the Lone Star State is on the cusp of becoming The New California.
Or maybe it already is.
From the Midwest to the Pacific, job seekers are heading to Texas
"Even in the midst of a recession, economists, demographers and relocation experts believe the Lone Star State is on the cusp of becoming The New California."
Texas really might become the next California, hopefully in a good way. (That is to say productivity, dynamic companies etc, and hopefully without the chronic budgetary problems, dysfunctional government and over-powered interest groups...)
TBW,
Americans are less mobile. You have proved that point. Two earner households is of particular interest.
However, what would inspire mobility more than losing your job.
More Americans than ever are losing their jobs. That in itself creates supply. Thousands, probably millions of people in this country would move to DC for a good paying job. They'll do the best they can with the housing situation, rent or buy. Employment comes first. People are desperate out there. That's something we agree on. IMHO, there will be not shortage of people willing to come here.
If the USG posts a mid-career job at say the Department of Agriculture, it WILL be filled. IMHO, I guarantee that.
The few things I've read suggest that applications for governent jobs is at an all-time high.
Do you really think these government jobs are going to go unfilled because people are too rooted to their current location? That's ridiculous in this economy.
Just some advice for potential buyers short sales really do take forever. I just got a notice from the bank owners bank and it will take at least 30 more days before they have an answer and they said most likely it would be closer to 60 days. Once we get an answer it will take a couple of weeks to go through inspections... So assuming I get the place it will likely be September almost 5 months after our bid. I am now understanding why people prefer foreclosures. Ohh well such is life, at least hopefully I am convincing some of you to think twice abouse short sales :)
TBW,
That was a fantastic article on Texas. I would agree that Texas would also be a good relocation, particularly for people that put a significant value on owning a large SFH on a large lot. That does make a different to a lot of people.
This was interesting to me, as my brother-in-law, who I think is a dick, works for HP in Detroit...
Selling "everything but the deer head" and leaving the Detroit area for Texas was simple math for Rodger Benton after Hewlett Packard laid him off.
"It was pretty much a no-brainer to make the move," he said. "The unemployment rate in Michigan is really high. Things are really tough up there. There’s just more opportunity here."
Like I said, unemployment creates a supply of people willing to relocate. Still, if I have a Master's degree, do you really think I'm going to choose TX over WDC?
TBW,
Wait a second. Do you believe people are relocating to Texas? Since you quoted all of these sources that say Americans are immobile, is your Texas article pure fantasy? Are people really leaving Detroit and California? How could they if they have a two-earner family? Silly, isn't it. Of course, there will be no shortage of people willing to relocate as long as there are jobs.
According to the WSJ the Obama administration's Home Affordable Refinance Program has had very little effect and is unlikely to come close to any of the target numbers envisioned by the White House.
Weakness in Mortgage Refi
Robert,
Of course the government will fill all the new positions.
I just think the vast majority of people who take these jobs will either already live in the DC area, live in Baltimore (commute by train), Richmond (commute by train or car/train or car), and "DC area" portions of West Virginia and all places in between. Most of the people moving to the area will be college graduates but I don't think GS-7 hires will be buying homes in 2009 or 2010. Give them a few years to get up to GS-12. The far away people (Baltimore et al) will get accustomed to a long commute and will not be moving to the area as quickly as they might in boom times.
There will of course be people not fitting the above paragraph who move to the area and get a gov't job or gov't contractor job. But I doubt it will be a huge percentage that will cause a mini-boom here like you do.
Why not hire the local (or quasi-local) who needs a job instead of the man/woman from Cincinnati who might move back whenever the economy recovers?
Also, some people will leave the area because of the recession. Some people can see the writing on the wall and realize they will never live an upper class life here and move to an area with a lower cost of living and jobs. I know people who did that in boom times.
There also are reports that many immigrants are leaving the area because of the recession. Those numbers are harder to track so I'm not sure how much hard data we will get on that.
Robert,
Let's also do a thought experiment.
Your favorite company SAIC has a new position. They put out a job posting and because of higher unemployment have 15 great resumes (after reviewing 1,000 resumes). 10 of the 15 live in the DC metro area. Of those 10, three know someone currently at the company who can vouch for them.
Now, if you are SAIC, do you bother to offer to pay for the five that do not live in the area to fly out to DC and stay at a hotel? No, why would you do that? Maybe in 2005 when you had two good resumes and both candidates were from outside the area (because everyone of quality in the DC area was employed with Ffx having 1.8% unemployment) you pay to fly them out. But why now?
And are those five going to fly out on their dime to DC? I don't work at SAIC so maybe I'm coming to the wrong conclusion.
I also think about 95% of gov't vacancy announcements (maybe 100%) do not pay for you to fly out here for the job.
Do you really move your spouse + kids to the DC area without a job offer just so you can interview here? People who do that usually are single college grads.
Robert,
The point of the Texas article is as I noted. Someone like you in Texas is probably on some Texas bubble blog saying "things are different here, our economy is strong, maybe everywhere else they'll have a bad housing economy, but we are going up, up, up." etc
TBW said...I just think the vast majority of people who take these jobs will either already live in the DC area, live in Baltimore (commute by train), Richmond (commute by train or car/train or car), and "DC area" portions of West Virginia and all places in between. Most of the people moving to the area will be college graduates but I don't think GS-7 hires will be buying homes in 2009 or 2010. Give them a few years to get up to GS-12. The far away people (Baltimore et al) will get accustomed to a long commute and will not be moving to the area as quickly as they might in boom times.
I don't care whether they rent or buy. If they buy, fine, that obviously creates demand for houses. But, if they rent, that create pressure on prices too. More renters means more opportunity for landlords to raise rent, thus making the cash-flow greater and investors willing to pay higher prices for properties.
rent or buy, doesn't matter, both will impact prices.
There will of course be people not fitting the above paragraph who move to the area and get a gov't job or gov't contractor job. But I doubt it will be a huge percentage that will cause a mini-boom here like you do.
Dude, the mini-boom is already here and Obama has barely gotten started. Did you see his press conference today? Geez. That's a lot of government he wants.
Why not hire the local (or quasi-local) who needs a job instead of the man/woman from Cincinnati who might move back whenever the economy recovers?
I don't think you can discriminate based on where someone lives.
Also, some people will leave the area because of the recession. Some people can see the writing on the wall and realize they will never live an upper class life here and move to an area with a lower cost of living and jobs. I know people who did that in boom times.
Well, if they do that, there will be someone else to take their place, thus having a neutral effect on housing.
TBW,
In most cases, SAIC will not pay travel and expenses for a job interview, but a good number of positions they will. I don't know the percentages. I'll guess 80/20, in that they pay 20% of the time. It's really not that much.
I mentioned in an earlier post that my brother-in-law flew down here from Detroit about three weeks ago, on his dime, to interview with SAIC. I'm serious.
Right now, he's a consultant for HP, but he's on a contract with Johnson Controls, and they are laying off people left and right.
There is one thing that makes my brother-in-law different, in that his sister - my wife - lives here and his church (you've never heard of it) has a location here.
Most SAIC vacancies never make it to the website/general public.
Just another quote to support my thesis that lenders and just doing business as usual, processing foreclosures ASAP:
Lenders have been relatively quiet about their strategies for working through pending foreclosures, which has only fueled various theories.
But Kelly said such theories give the banks too much credit.
"We've got such an enormous portfolio of homes to deal with, we don't have time to say, 'Let's do this with this one, and let's do that with that one,'" he said.
Link
"There is no risk in putting money into an FDIC insured bank "
All banks are not the same to me.
If they're the same to you, great, have at them.
but Texas really is different.
Prices in Texas bubble _for them_ but not relative to other places. Texas has that weird problem of not being able to sue developers for defects... so NEVER buy a new home in Texas. (NPR planet money??)
But that aside, I personally anyway, do know a very large number of engineers moving to Texas for resource and green energy jobs. And, unlike here, the cost of living is still cheap (possibly though not necessarily related to the shoddy construction boom).
I think that's an important distinction, move to the DC area, which is already freaking expensive for a low-paying government job, or move to Texas, where the weather's fine, the living's cheap and the jobs are good.
No contest, if you're in a moving mood.
Cara,
go
Robert,
go join my friends in Texas?
Cara,
I lived in Texas on the gulf coast for a few years.
1 - It's hot and humid.
2 - They like their guns.
3 - No state income tax.
4 - Most things, such as local food items, auto fees, and services are way cheaper. Specific items, like a Dell laptop, are pretty much the same price everywhere.
5 - It takes a long time to get anywhere.
6 - It's full of Texans, who let you know that they are Texans.
7 - You earn less but you won't notice it. If you get 80% of a DC salary, you'll be rich.
8 - No one's always trying to rip you off.
9 - You can get decent tex-mex food.
Robert: I know first hand that we have failed to hire people from outside the area because of the housing price. One said directly to my face that he and his wife would love to live here, but there was no way that they could justify paying 3x more for housing (their 250k house would cost 750k here) considering that the pay wasn't much higher.
Here's a nice looking 2 car garage TH in Fairfax that sold for $410K - $11k subsidy. So, for $399k, you could have picked this one up in February. Great price, too bad you'll never get a TH like this for under $400k in your lifetime. You'll be lucky to find one for $480k. 20% in four months. Wow!
TH Link
I work for the Feds and we have had all sorts of problems getting people to move to DC for a few GS-13 level positions we have open. One position we are trying to fill has been open for nearly 18 months. One applicant had an issue with the housing prices here. Another couldn't sell his house in Denver to be able to move out here. In a best case scenario, it takes 4-8 months to fill a government position. Most of the people we have hired have been local, or already in the Federal government.
Cara,
What about the school's? I'm sure they have something like Thomas Jefferson HS down there.
Novawatcher, Suzanne,
A lot of people won't move to this area because of the house prices.
IMHO, as we move forward, with the high levels of unemployment, people are going to start making compromises.
Robert,
There are too many people in the DC metro area already, we don't need anymore. I think it would be better if the stimulus money were managed in a more decentralized fashion. The federal government does have 21st Century communication technology so why does all the money have to be managed here?
Robert,
I might be inferring too much here but it sounds like you are implying the following:
(1) Brother-in-law heard about (maybe even got a reference) SAIC job through you
(2) Brother-in-law stayed for free at your home
Not exactly generalizable to the average American thinking about moving here.
Again, I think the average person who would come for an interview here lives in the areas previously described. Maybe also the NYC-DC portion of the Acela corridor if they have someone they can stay with.
I just don't believe a lot of people are willing to buy a round trip plane ticket + hotel costs for the MULTIPLE interviews that are likely required to get a job in the current economy.
Robert,
Two car garage. Four level TH. Fairfax. Current asking price $370,000.
http://franklymls.com/FX7032846
*NOT* a foreclosure
I think it looks like a nice TH.
Not sure why the owners have not fired the realtor though. He/she cannot spell "huge" and one of the earliest pictures is of the laundry room? Laundry rooms are not exactly exciting.
Robert,
I don't put much stock into high school rankings but plenty of Texas schools in the rankings
US News Ranking of High Schools
http://www.newsweek.com/id/201160
There are magnet schools everywhere. I also would not move to an area for the magnet school. Little Timmy might not get in.
Also, Univ. of Texas at Austin has a great reputation. And there are other strong Texas colleges and universities.
"All banks are not the same to me.
If they're the same to you, great, have at them."
That isn't the same thing as saying you will lose your money if someone chooses a bank other than the two you claim to be able to personally vouch for.
Who cares if you are happy accepting a below market rate of return on your money because "all banks aren't the same to you?"
The fact is that there are large, well-respected banks, backed by the FDIC that offer much much better rates than 1% right now and they are no more risky than whatever bank you happen to be using.
"Great price, too bad you'll never get a TH like this for under $400k in your lifetime. You'll be lucky to find one for $480k. 20% in four months. Wow!"
Can we take that as an official prediction? Or is that just more trolling on your part?
"What about the school's? I'm sure they have something like Thomas Jefferson HS down there."
Nope, no schools in Texas.
They have three of the nation's fastest growing big cities, a booming economy and an incredible variety of high-tech industries, but somehow they forgot the schools.
"if I have a Master's degree, do you really think I'm going to choose TX over WDC?"
Don't know what you do but there's decent technical work in Texas.
You strike me as a guy who can fit in anywhere and work well with people ( unlike personality types, angry, bitter, snide, generally ignored ). TX could be fun and profitable, I wouldn't count it out.
TX isn't just the big house in a Manassas-like forsaken landscape with dead cow skulls and cactus, there are vital, diverse, and interesting areas.
Robert: posting you showed for the townhouse at Fairfax Center was from 2002. This posting was for the sale from the developer (Winchester Homes) at $410,450 with $11,280 seller subsidy, a fairly common practice for developers. Next sale was in August 2004 for $570,000. That buyer tried to sell it in early 2009 at $549,990 and it came off the market in April 2009. It was rented in May 2009 for $2,600 per month.
The last sale in that development was in June 2009 for $530,000.
Townhouse (FX7032846) is not comparable. It is vinyl sided, tenant occupied (it is one of many rentals owned by the Darvish family of Darcars)and in a lesser location and community.
Still, if I have a Master's degree, do you really think I'm going to choose TX over WDC?
I would, in a heartbeat (and I know A LOT of people who think the same). I think Austin would be a great place to live -- full of culture and hi-tech industries.
Robert,
What the heck is up with you the last two days? You've gone from trying to stimulate reasoned conversations on the effect of jobs and your predictions of a quick recovery on the unemployment front, to lashing out with random and generally mis-aimed swipes.
Your comp is from 2002. Anielarke has usefully pointed out the bubble that grew even further from that mid-bubble new construction starting point. So what? Who cares? No one's forcing anyone to buy a 2car garage TH of a particular caliber in any particular neighborhood. If they were, you'd be right, I should move to Texas. But no one's forcing me to give up my inexpensive renting lifestyle and buy beyond my means, so I can make that decision later if I so choose.
But if you think half a freaking million dollars for a 2-car garage townhome is going to become the new norm, throughout all of the commutable DC-metroland area? You're on crack.
Robert said...
However, what would inspire mobility more than losing your job.
What would inspire lenders to lend to someone who has lost their job? Careful Robert, you might be on to something.
robert,
Between this and his foriegn investor spiel he might be onto something indeed. Which is exactly what anielarke and va_investor are hoping for, that this may be a uniquely good time to pick up some well-positioned rental properties.
To bad Burke is not well-positioned. Want to see some carnage amongst condo's and co-ops in what people are only now realizing is SFH territory?
22015,22032 condo,coop
play with the settings a bit, try actives only. There's a heck of a lot of pain going on. (not everything that comes up is a condo)
"if I have a Master's degree, do you really think I'm going to choose TX over WDC?"
There are a lot more private sector jobs in TX. So if you have an MBA, you may choose TX. If your master's degree is in a worthless social science, then you will probably look to work in the Federal government or non-profit where worthlessness is encouraged and rewarded.
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