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Wednesday, July 1, 2009
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99 comments:
housebuyer said last night:
The vast vast vast majority of our country has large sums of debt an virtually no savings. All of these people are better of because their CC card or ARM payments have gone down.
Cara and I disagreed. Anyone know where we can find hard data?
I've always thought there was a large group of people with a lot of savings and a large group of people with no savings and massive debt. Put the two together and you have a 0% savings rate. It's not that the median American does not save money but the savers are offset by non-savers. (And now even the non-savers are beginning to save and thus the savings rate is inching up and is projected to hit 7%).
Continuing to today.
Housebuyer: "100K combined between the accounts would be the wealthiest decile."
Really? 100K doesn't seem like all that much. It is a lot to me but I know people who accumulate that much in their checking accounts.
Cara: "Many of them will have taken out reverse mortgages or will do so soon"
Could you verify this. I don't know anyone with a reverse or has indicated a need for one.
I saw a headline a few days ago...spending down, savings up..well, I've thought for quiet a while now that people were socking away every penny they could to ...BUY a house...even before the 8,000 BB..PWC county was selling like hot cakes in the <300,000 before this was in place.
@J@
I know 3 relatives who took them out during the bubble (non-local) but that's anecdotal, I'll see what I can find.
We have thought/talked about a reverse mortgage. Don't really need to do it but as you guys know..I'm not selling for less than what a SS or foreclosure..just "aint" gonna happen. There is another thing to consider.Its called housing shortage. If you think I'm the only seller unwilling to sell, take another gander at the MLS. I bought in 97 and for less than my neighbors currently for sell..geez, they are taking it in the shorts. One bought new at the last bubble and now selling for a steep discount..dude..You guys need to think a little deeper. Us old buggers that bought or built in the last bubble is in a hurting way in PWC..no kidding..I bought in 97 and have 1 home loan and I can't sell for a profit after you subtract the cost of selling. So, it truely is at a stand off in PWC, Manassas 20111 area. You will have to buy a foreclosure, SS or new build in Woodbridge, Bristol,Gainesville and Haymarket and these are all considered falling markets by sales due to upcoming bank sales.
an informative timeline history of reverse mortgages
(not what you asked)
HUD news release 2007
Since 1990, more than 308,000 senior homeowners have used HUD's reverse mortgage program, which covers almost 90 percent of the reverse mortgage market, to borrow against the equity in their homes, making cash readily available to cover necessary expenses. There has been a 10-fold increase in the number of reverse mortgage loans backed the FHA between 2000 and 2006. More than 76,000 seniors obtained a reverse mortgage through HUD in 2006, compared to just 6,637 people in 2000. The number of HECM's insured by the FHA has steadily increased over the past 17 years, with the largest increases coming over the past six years. The FHA insured 18,084 loans in 2003 and more than doubled that amount to 37,789 in 2004. In 2007, the FHA has already backed 69,833 loans, putting the HECM program on pace to surpass its 2006 total this summer.
Best I could find.
"I bought in 97 and have 1 home loan and I can't sell for a profit after you subtract the cost of selling."
How is that possible? I was under the impression that even in Manassas prices were still way above 1997 levels.
Arkey,
Transaction levels go way down during the long-slow-flat periods, for exactly the reason you describe. Only those who have other reasons why they want or need to sell will sell. That's not the same as a shortage. Buyers will buy what they can afford, where they can afford it. They have mobility and other options.
Yours is a move-up market things haven't progressed fully there yet. Wait until next spring when the real potential buyers for your house can sell their own house (because competition from REOs will be way down), then see what they are prepared/able to pay. Presumably it will be more than you paid in '97. One would think. But it may not be what your house is intrinsically "worth" either, if they can't sell their own houses for as much.
Your long-commute nice land move-up market is normally thinly traded, it will go back to that again.
"3 relatives who took them out"
Good enough for me.
The diffence in perception might have to do w/ demographics. Folks I know, close in, older, paid for homes, are doing OK on SS, small pensions, Gov medical, some are still working.
No expenses really so they don't have to do a reverse. Biggest expense is probably RE tax.
@J@
none of them are around here though, one in CA, two in New England, all three were in high-house-price areas, and took them out to pay for full-time or near full-time in-home medical assistance (which wouldn't have been covered under any plan I know of).
Re: the debate about how much people have in savings, etc.: Sorry, I don't have data but just an anecdotal observation re: the comment about the size of JP Morgan accounts, etc.
Most people who are old enough to have accumulated sizable retirement accounts and other investments (and maybe many others as well) do not keep all of their savings in one place. It would be unwise for them to do so, since their money is not insured by FDIC at places like T Rowe Price, Fidelity, etc. And most people are not going to put most of it in bank CDs, etc., because of tax considerations and concerns about keeping up with inflation (although obviously the poor performance in the stock market over the past couple of years has changed things somewhat). This is particularly true for the boomers, most of whom are not old enough yet to retire at a normal retirement age, and for the group that is about 35-45 now.
So, judging a household's savings from the size of accounts in one bank or investment company, such as JP Morgan, is really misleading.
As a "move-up" Buyer In LoCo I am actually looking at new construction at this point-
Some Builders are now cheaper than Re-sellers ( that still wants the 2006 price, even though they own it outright & have been on the Market 350 days!)
And you don't have to wait 6 Months for a Short Sale to go thru or get out-bid (and over-pay!!) for a foreclosure!
Anon412...I bought at the bottom for 325,000, one loan for 80,000, throw in another 30,000 for real estate fees...listed at 15% above 09 assessment which I think was reasonable. Buyers still wanted to knock off between 50,000 and 85,000dollars off list..Nope, aint gonna happen. Most of the homes in my area were built in 89 thru 91..top of the last bubble and are about 100,000 grand deeper into equity as you guys like to call it. There are still plenty of homes to be bought between 400 and 500 that are newer..like 2004 - 2006, smaller, 1/4 on acre instead of over an acre with nasty commutes. I'm close in quality built, easy commute, quick access to VRE, shopping and Fairfax county line..3to 5 miles to the million plus home in Clifton and a 1/2 mile away from the million homes in Ellis Planation with great schools. So, ya see..I'll be staying awhile adding 2% a year to my retirement.
Spunky...just be careful on your loan..LOCO is another falling market due to SS/Foreclosures..sometimes when you buy new..the bank will not appraise what you singed to pay for on the dotted line and you have to come up with the difference, I knew one guy it was 50,000 in early 2008.
I guess I still don't see how you can't make a profit. If you have a 1 acre lot, I'd think you could get well over $400k.
Arkey,
That still didn't give enough information to parse what your list price was or how much money you'd liquidize in a sale.
But past discsussions of your particular situation have gone so poorly that I think it's best if we don't re-open that can of worms.
I still think it's the case that the "real buyers" the best market for your home is people moving up from something smaller. People who's kids are already in your school districts, people who already do that commute and agree with you on it's "ease". Those buyers didn't exist last spring because they couldn't sell. That will pass, as those buyers get less and less competition from REOs and can more easily move-up.
Not knowing much about the Manassas market I looked up people in 20111 who bought in the late '90s and are selling now. Not a lot of examples, but this one is pretty good. Bought for $390k in 1998; just went under contract at $599k.
http://franklymls.com/PW6993321
So that's 65% appreciation in 11 years which seems like plenty of profit to me.
Er, 53% appreciation. Still not bad.
..sometimes when you buy new..the bank will not appraise what you singed to pay for on the dotted line and you have to come up with the difference
Yes thanks Arkey, I am aware of this-
If we do Build that little piece will be in the Original Contract :)
I'll have to get my RE Attorney involved, but that's always a good idea anyhoo....
I'm just shocked that Builders are giving out such good deals now...wonder if they'll be any sweeter next Fall/Winter...
Don't know if anyone already noticed and posted this tidbit hidden in a Fairfax County budget article:
"The number of Northern Virginia jobs in April had declined about 19,600 from a year ago, and Fairfax County's unemployment rate that month was 4.5 percent, higher than the last two economic downturns.
On a brighter note, home sales in the county rose more than 23 percent during the first quarter of 2009, and the number of days required to sell a home has fallen after rising for 41 consecutive months.
There are about 1,300 foreclosed homes in the county owned by mortgage lenders, down from a high of 2,257 in September 2008. But officials warned that the housing market might yet take a turn for the worse if the foreclosure rate increases."
Arkey, how much equity did you suck out of your house? Being a housing-bubblehead won't help you sell. This is a free market.
Anon412..yep, 2 houses down..she bought a foreclosure after we bought..It closes July 7th..I don't think you will see that 53% profit on the close price. But I used my home laon to update kitchen/baths and pool..she hasn't done anything to her house..all original inclusing appliances..just wait till it closes and then you will understand by I pulled up my pants and went home. I'm on a hilltop cul de sac with a nice pool and flat back yard..super nice lot..
Has anyone else found the sawbuck realty re-design of their website more cumbersome and less useful?
Arkey, Anon found your neighbor's house, which went under contract for right around your asking price. As Anon pointed out, that's over a 50% profit. Isn't that good?
And Ellis Plantation WAS a neighborhood of million dollar homes. Now they're selling for about half that:
http://franklymls.com/PW6611430
http://franklymls.com/PW7056934
http://franklymls.com/PW6903669
http://franklymls.com/PW7054938
http://franklymls.com/PW6896456
http://franklymls.com/PW7090724
http://franklymls.com/PW6190101
http://franklymls.com/PW6988278
At least the one second from the bottom finally went under contract after being on the market for three years.
Pools can be tough. In temperate climates a lot of people don't want one, unlike somewhere like CA where it's considered a necessity.
So I don't think you get your money back from that when you sell the way you might with an updated bath or kitchen. But if you enjoyed the pool, that's what matters.
For your neighbors, even if they get a lot less than 53%, if someone had put money in stocks in 1998 and had to sell now, they'd be losing money or barely breaking even (in nominal, not adjusted for inflation, dollars). So housing purchased in the 1990s is still doing pretty well as an investment.
There have only been 8 closed sales over 400k in 20111 in 2009. That one neighbor got a buyer, but it really was like hitting the lottery and may indeed have a huge markdown, all of them seem to have at least $25k off the last list price (except two that "hit the numbers" probably because they changed the list before going under contract).
This is compared to 39 in the previous 12 months. There just are no buyers. And if you look at these houses, I find it hard to believe that their worth less than $500k, they're huge, and with nice, large lots. I stick by my theory that there are no buyers right now for this market, but they will come back.
Wow, Tabitha. I looked at the 2nd from the bottom house and, IMO, that house is pretty ugly. The carpets, the kitchen ... ick.
Anon412...I re-surfaced, re-tiled..the pool was there when I bought..just maintenencae that is done and should last another 8-12 years depending on how ell you maintain.
Cara..yes, I agree..solds suck but UC have picked up considerably since I've been off the market.
Tabitha..those EP are all SS and foreclosures and all but 2 have sold or are contract and most of them are not the high end, they assess right around my assessment..I personally wouldn't touch a DR-Horton home. Google thats all I gotta say. I watched those homes being built.
You have no idea how much I loathe Ellis Plantation. Why anyone ever shelled out over a million bucks for those monstrosities is absolutely beyond me. Every time I drive past them on the PWPkwy, stark and staring, I shudder.
My kids call them "the naked houses."
Your neighborhood kicks their bottom, Arkey.
"Your neighborhood kicks their bottom, Arkey."
I agree with that just from looking at the pics of the neighbor house. Mature trees, hilly, probably houses that don't all look the same... much better than a new subdivision built by a developer who could care less about design or a sense of place.
Tabitha,
Or maybe I'm wrong... That's a lot of inventory of huge-ass homes. You may not want to sell, Arkey, but 34 others are competing for a handful of maybe 5 buyers right now... Almost makes you wish you had half a million burning a whole in your pocket to go buy a big home in Manassas with water access!
http://franklymls.com/PW7082631
Cara, the problem with the inventory of huge-ass homes around me is that most (not all) of the sellers are still asking too much. I doubt they are doing that for fun. I'm sure most of them owe more than they can get, have too much $ to convince a bank to do a short sale, don't want to go through foreclosure and have their credit destroyed, and hate hate hate having to throw away so much money every month. So they wait in limbo.
Combine that with the scarcity of buyers, and you have a very interesting situation.
Arkey, I don't mean to beat a dead horse, but here's the arithmetic that doesn't make sense to me, and maybe not to others.
Let's say you could sell the house for $600K, which is about what the non-updated comparable was listed for and will sell for less, so it seems you think your house might be worth more because yours is updated by $80K. $600K less selling costs (realtors' fees of 6% plus buyers' closing costs and other expenses of sale = 10% estimate) of $60K would be $540K.
You said your basis is $325K plus $80K in improvements. Let's assume all are capital improvements and not maintenance or non-house expenses. So your basis is $405K.
$540K net selling price less your basis of $405K would leave you with a net profit of $135K. Therefore, unless you put a lot more into your house than the $80K that you didn't describe in this thread, I don't see how you are simply breaking even. Even your selling price is only $500K, you are still making money - not a lot, but more than breaking even in a nominal sense. ($500K - 10% selling costs = $450K net selling price, less $405 = $45K net profit).
So while I certainly understand your not being willing to sell at $500K, for example, and Cara's advice to wait may work well for you, it's really not correct to say you'd only break even at the likely selling prices today, is it?
Ace makes a lot of good points about savings. I'm realizing that one paradigm shift that I might not be considering is I'm forgetting that baby boomers are now beginning to retire.
The previous generation of retirees (who lived through the Depression) had a large segment of people who never touched the stock market. And a lot of them had pensions. So many were pretty happy with bank accounts.
Baby boomers on the other hand were pushed into 401ks and in the 80s and 90s (especially the 90s) saw great stock returns so got into the market much more heavily.
But anyways, early Boomers are still early 60s. That leaves 65+ who are probably still conservative investors. And some cohort of those 30-65. Paltry interest rates is almost certainly lowering some of their spending.
@J@,
I have known some people to consider reverse mortgages. Culprit always was medical costs.
If there's one thing most of us here (who seem to range from late 20s to 40s?) can do for our long term financial health it is to live as healthily as possible and hopefully lower our chance of heart attack, stroke, cancer, and diabetes.
I've seen a lot of articles recently stating that most people facing bankruptcy are not spendthrifts but facing high medical costs.
I just gotta say that the house 2-doors down from Arkey's has so much fluff, I can't believe it sold! I think I got a cavity looking at the pictures.
Amer, if you mean the curtains and stuff, it's not my taste either but any smart buyer would overlook that. I actually think it's pretty nice underneath the furnishings.
kevin,
I don't think she liberated any of it. I think she just wants to retire.
Pot-shots aren't very helpful if they are mis-aimed.
Ace, that's why I asked how much of her equity she liquidated. Of course she didn't answer. House became an ATM machine and she's angry at buyers for not subsidizing it.
Nobody that bought over ten years ago should be so stubborn.
Cara: "Pot-shots aren't very helpful if they are mis-aimed."
How was that a pot-shot? Look, just because she's sensitive doesn't mean we can't ask her these things. It's really bizarre that under the circumstances she's laid out that she'd be anywhere near "breaking even". Cmon, stop sucking up to her and realize something is wrong with her story.
kevin,
"realize something is wrong with her story. "
That's possible. You're right, it can't hurt to ask.
Ace's math is pretty persuasive for why Arkey's logic isn't making sense to us.
But I do also know a lot of stubborn people. Heck, I didn't sell my knife-catching Cisco shares until 3 months after the most recent peak. (and still lost money).
hot from the CR comments threads: bloomberg predicting another S&P 500 slump:
Smaller lenders in the gauge have lost 23 percent since climbing to a four-month peak on May 8, while builders have tumbled 25 percent from May 4, when they reached the highest level since October. Concern that mortgage rates, credit losses and foreclosures are increasing spurred retreats in the companies forecast to be among the biggest beneficiaries of $12.8 trillion in government stimulus spending.
Slumps in bank stocks foreshadowed previous declines in the S&P 500 as investors focused on real-estate losses that curbed lending. Regional banks’ 51 percent plunge over 28 days starting Dec. 8 came a month before the S&P 500 began a 28 percent slump to a 12-year low of 676.53. The lenders’ all-time high in February 2007 occurred seven months before the S&P 500’s record.
for now the markets seem to be liking the prospects for more stimulus spending with the new 60 seat democratic majority (or something else entirely, I'm a terrible market shrink).
Tabitha,
Every time I drive past them on the PWPkwy, stark and staring, I shudder.
My kids call them "the naked houses."
In my humble opinion, the homes were bad the minute you told me they were visible while driving on Prince William Parkway.
Tabitha,
This is wandering from the main topic, but I've lived in new houses without much immediate landscaping, although with trees around the neighborhood.
We're on a wooded lot now. The super-bad mosquitoes and ticks chase us inside. My garden doesn't get any light.
I'm back to liking naked. :-)
Harriet, still OT, I must say the ticks gross me out, and rarely a day goes by that we don't discover one on someone somewhere. But I can't blame the woods too much. When we rented a barenaked house with a drainage ditch in the back, one of my girls came inside with--I kid you not--dozens and dozens of those awful super-tiny ticks. She must have hit one of their favorite spots.
TBW, the PWPkwy from Manassas to Woodbridge is actually rather pretty--same with the one from Manassas to Quantico. But there are a couple stark housing developments along each one that make my skin crawl.
The mosquitos around our new Vienna rental are terrible too. It's a beautiful yard but I have to put on a hazmat suit to go out there without getting 20 bites.
I grew up in Pennsylvania and don't remember there being these annoying little black mosquitoes up there. We had the big ones but they weren't nearly as much of a nuisance and they weren't out during the day. The ones down here are active around the clock. I googled them a little bit and it looks like they might have been imported in the last 25 years from overseas. For those of you from the Nova area have these guys always been around?
Tabitha,
Sorry I was unclear. I'm not attacking the Parkway. I agree it's nice. I'm attacking buying a single family home in the suburbs on a major road.
[Note that I've before attacked homes abutting Chain Bridge Road or Leesburg Pike.]
I am also from Pennsylvania where there is less of a problem and can also barely use my townhouse backyard for most of the summer due to mosquitoes. I suspect the problem is due in part to my neighbors' awful English ivy. If I buy a place, I would definitely check for mosquitoes.
http://www.arlingtonva.us/Departments/ParksRecreation/scripts/parks/ivy.pdf
contrarian -- really good articles lately.
Key quote (IMHO):
Lobbying spending across all business sectors was flat in the period, after rising 15% from 2007 to 2008.
So the lobbying industry currently is flat. Law firms are down. Another explanation for the problems in the upper segment of the housing market in this area.
Re: mosquitoes etc. I'm thinking of applying several tubes of our pets' Frontline to the back of my neck.
More seriously, there are insecticides that you can put on grass and these do work (if you aren't surrounded by trees). But it's always a debate about whether it's the right thing to do for the environment and a lot of these insecticides can be toxic to birds. No perfect solution - or maybe someone knows of an effective insecticide that isn't toxic to animals or otherwise harmful?
LB, our neighbor has that awful ivy too, and doesn't tend the yard well. The ivy is very hard to keep it out of our yard, even with a tall privacy fence. Grrr!
We got a bottle of this and it seems to be working well:
Repel Lemon Eucalyptus
My wife found a consumer reports article and this was the highest ranked non-DEET spray. It smells kind of like citronella but it does say to wash it off when you come inside like with DEET, which is a pain.
I'm sure the rains this year have a lot to do with how bad they are but I never remember them being a problem during the day in other places I've lived around here. Maybe Vienna's just too swampy.
RE: mosquitoes
These do not seem to be as bad out here, and I'm told that in the "country," there are more birds and frogs and such to eat those mean, awful things. They always love me the most in a crowd.
There are still enough for me to eye the Frontline, myself. Or buy some black market DDT, environment go hang. Why did God feel the need to make 'em, anyhow?
(love to go OT sometimes)
Morgtage Refi Plan extended to people 25% underwater
I thought the whole reason they limited it to LTV of 105% was to bail out normal people and let the idiots and speculators suffer for their decisions. Obama is really starting to tick me off.
whoops, looks like contrarian beat me to it.
Jeremy-
I agree I don't like giving it to people that far underwater, but there are plenty of people down over 25%. Although you are only down that much in DC if you bought at the peak you could have bought well before the peak in places like Detriot, Vegas, Miami... and you are easily down 25%
Jeremy/housebuyer,
Hey, if it is now a full recourse loan, good then. Make them pay for what they borrowed. While I'm all for more foreclosures to help bring prices to sane levels, maybe FRE and FNM can salvage some of our tax dollars and milk the bubble buyers that want to keep their houses.
kevin,
In VA, it always was a full recourse loan.
But for my friends who bought in 2005 for $400k on a 5yr ARM I/O loan with 20% down (and who haven't been paying principle) this may make the difference. Why? They want to switch to a fixed rate amoritizing loan anyway, and not have to sell. But, with 105% as the limit and recent sales at $340k, it was tough to get through to the bank that, yes, you qualified. But if the new limit is well above their LTV it will hopefully be easier to get in line.
They're willing and able to keep paying for their mistake of naively buying too soon, and enjoying their home for that time. Why not let them? (not that the recast will actually bankrupt them or anything).
From the article:
Bank of America and Merrill Lynch analysts estimated this week that only 6% of agency loans bear LTVs between 105% and 125%, and said that any expansion of the Home Affordable Refinance would have only a “minimal” impact on repayment speeds seen among securitizations when mortgages refinance.
tbw,
well the real question is what is the overlap between that 6% and the ?5%? of defaulting loans in the same portfolios. It could have a minor impact on refinance rates but a major impact on defaults. (even if 50% of reworked loans re-default)
Arkey: A lot of people, like me, consider a pool a liability. I'd have to have a crew come and jack-hammer it out and fill it in.
Re: mosquitos
My cousin is renting a townhouse across the street from the Reston Town Center and was complaining that she and her two toddler-aged children couldn't go into the backyard because of the mosquitos.
My mother told her about these things called Mosquito Swallows, that are traps that you fill with water and dead leaves, and they attract and trap mosquitos that will lay eggs there. The new baby mosquitos will also be trapped and will die. It's perfectly safe (no chemicals) and, over time, significantly reduces the numbers of mosquitos.
Now my cousin uses her backyard, and she is raving about these Mosquito Swallows.
Re: mosquitoes
I bought a few citronella plants from Merrifield Garden Center last year and put them on my deck. Seemed to help. I had to go to the Fairfax location.
If you don't mind flying rodents, you could also get a Bat house
Jessica,
Thanks so much for the mosquito swallow tip. We're using a bug zapper with octenol but it can only do so much. I think it's thinned them a little.
What we are dealing with is the asian tiger mosquito. The above website says it came to the U.S. in 1985. "This displacement may mean that the Asian Tiger could be the only mosquito species in a given area, if it has driven off the indigenous species. This aggressiveness may also explain why mosquitoes in your neighborhood seem worse than you remember as a child, even if you grew up in the same area."
Cara..that house went UC after it was off the market for 2 months..water can be an issue on river road..sometimes it actually is..BUT..these are nice homes and somebody got a deal.
I'm probably being too liberal here and rarely worry about insects but the description of the mosquito swallow sounds so inhumane.
Maybe we should make sitting out on the patio during the summer part of any open house. ;) That way you can see how many bug bites you'll get.
mosquitos:
I don't understand why no one's pointed out the screened-in porch solution.... I know it's not the same as a backyard the kids can run around in, but still, works for adults, built-in shade too.
the mosquito swallow makes me want to re-check for all sources of standing water more than it makes me want to buy it, but I'm in an apartment...
Hi Ace..I was listed at 565,000..as long as the PWC assessor and Wells Fargo maintains its worth more than 500..I do, too! I still have "money" in my equity account. The offers I got back in Feb,Mar and April were below my 09 assessment. The majority of all SS and Foreclosures are now listed over 09 assessments...unless they are in really bad shape. I'm not complaining or even waiting for 2006 prices..mine would have sold between 750 and 800 in 06. I would have taken 550, 540 or even 530. I "gots" to familiar with "buyers thinking" on this blog so I cut and run. I wouldn't want some of you in my neighborhood. It's nice.
re: Mosquitos
I've noticed that a lot of houses around Vienna have a section of patio that is screened in. After hanging out in one a few weeks ago and getting eaten alive on my non-screened patio last week, a screened-in patio is on my must-have list (even if I have to install it myself).
Wow Larkey, that comment had it all: delusional pricing rationale, ad hominem insult to all of us, and of course no explaining what you've been asked more than once: how could you only break even given the "facts" you've provided us. Cara kindly wrist-slapped me for suggesting you used your house as an ATM. For her sake, couldn't you explain the math a little bit better?
Contrarian-
Other than maybe Robert I think everyone agrees that unemployment is not good in Nova. It is obviously much better than most of the rest of the country, but it is double what it was a year ago.
Either way it sounds like of the 35 people who got laid off some must have found other jobs seeing they turned down offers to take a different government position
housebuyer,
Either way it sounds like of the 35 people who got laid off some must have found other jobs seeing they turned down offers to take a different government position
My guess is they got an early retirement offer (able to take the pension earlier than usual).
Regarding the make Fairfax County a city article -- what a really poorly done article. I say this as someone who is overall a fan of the Washington Post.
Griffin is not really seeking to make Fairfax County a "city." At most, they are attempting to make one portion (Tysons Corner) a city. But even then it's only a "city" in the sense that Ballston-Rosslyn is a "city." Note I put quotes because B-R is not as city-like as DC.
Griffin just means hey let's become a city because state law gives cities more powers than counties. I mean, the City of Fairfax, Falls Church, Manassas, et al are clearly suburban. Some of them have historic downtowns but at best are "towns." I would say Richmond is the only city-city. I would say it's a stretch to even call Charlottesville, Harrisonburg, Blacksburg, et al cities.
Just a little ramble.
My prediction (or foolish hope) regarding a lot of these tax increases (like making Ffx Cty a city or a meals tax) is that these are just scare tactics for political cover for the hardest county cuts.
It's an old trick and all the local counties did it last year. You say "oh we might have to do all these new taxes," it freaks everyone out, and so people stay quiet when they cut the budget.
If you don't threaten new taxes then when you start cutting everyone is like "how dare you cut that renovation of my local elementary school" or "how dare you close libraries one hour earlier on Fridays." etc
The opposite trick is to threaten cutting GT programs, music programs, close a library, etc until people are like "no, we can't have such drastic cuts" and then you have political cover to further raise the property tax.
It's a silly little game but IMHO preferable to massive deficit spending at the federal level wherein we never balance the budget.
TBW-
You are probably right. Either way I guess my point was that there should be many better articles out there that say we are losing jobs. I feel bad for the people, but our economy is definitely bad enough that 35 jobs isn't really news. Unless your Robert who thinks no one has ever lost a job :)
Did someone say jobs?
"But the federal government and contracting industry are among the few sectors in the area creating jobs. For instance, according to the nonprofit Partnership for Public Service, the Department of Defense is looking for 50,000 contracting and acquisition officers, part of President Obama's move to reduce outsourcing. The Department of Veterans Affairs is looking for 17,000 doctors, nurses and others to work in VA hospitals, part of Obama's plan to improve services for veterans. The Social Security Administration, which already hired 5,800 this year, is planning to fill 5,500 more positions next year. And the FDA is seeking to fill up to 600 positions, including inspectors and contract officers who would staff the new Center for Tobacco Products."
"About one-fifth of the positions -- or about 120,000 hires -- would be in the region, experts said."
Hm ...
I wonder where the other 4/5ths will be.
I found this blog from LA:
http://loveinthetimeofforeclosure.blogspot.com
Since people here are good at running the numbers to detect the real story, here is their story, in their words:
"My husband and I bought this house two and a half years ago [9/06]. We put 20% down and immediately started to build our dream home. We renovated our kitchen and yard to create a place where we could start to have children."
"On July 10, 2008 my husband lost his job and we lost our family income. Almost all of our savings went into the house and we were immediately in dire straights. We put our house on the market exactly 28 days after he lost his job as we quickly realized we didn't have enough to keep up with our mortgage. We both scrambled to find jobs. I am a playwright and hadn't brought in any money in five years. We both found new employment in October. By then we had sold off all of our stock, we sold some furniture, borrowed money from family and were denied any assistance from the bank. Our first mortgage is through Countrywide and our second is through National City. We requested assistance through a mortgage workout plan with Countrywide but were denied as our loan was not subprime and was not on an arm but a 30-year-fixed. While pursuing all angles to find a way to keep the house, we also went above and beyond to market it. From creating a blog about the house to submitting pictures to design websites. We drew interest, but no offers.
When we received our "Letter of Intent to Accelerate" from the bank we were too far under water to pay the required lump sum to clear our debt- back payments and late fees. We are presently 'in foreclosure' with Countrywide without a sale date. We are in the process of pursuing a Short Sale as we have had no offers on the house after reducing the price to the original sale price."
Two questions: if they put 20% down, why are there two mortgages?
And had they been asking more than 2006 prices all this past year? In LA?
Tabitha, it's only a guess, but I think they took out a 2nd after moving in, to renovate the kitchen and maybe to spend on non-home items.
They are lucky that they had only one income when they moved in (so they wouldn't have gotten in debt even more deeply) and that both are now working.
Tabitha-
Wow unless they got a house that was falling apart in 2006 and turned into a beautiful masterpiece they must have been real delusional to think they would get more than in 2006. Aren't prices down ~50% in LA???
I've been following this blog for a couple months now and would like to join the discussion. I've never contributed to a blog before and I am not an expert on real estate. I am also not from the area, but I will be moving to it soon. And I have a PhD, which seems to be a prereq for this blog ;), so here goes...
I'll start with a contribution, but I have far more questions than I have answers.
Early in my reading of this blog someone posted data on active listings and median sales by area from 1998 through 2009.
I calculated the ratio of listings to sales and regressed median price (by area) on this ratio lagged by one year. This model test for a relationship between this year's ratio of listings to sales and next year's price.
The model output suggests that for 1998 - 2009 for every one unit increment in the lagged ratio of active listings to sales, there is a $9200 drop in the median price, without controlling for area specific effects.
For the data posted at the time, the only area that had a higher ratio of active listings to sales in 2009 than it had in 2008 was Arlington. All other areas (Alexandria, Loudin, etc.) saw their ratio drop slightly from 2008to 2009.
For what it's worth...
Kurt, you're the man. I'm not good with numbers myself, but goodness, I love it when other people give me well-crunched numbers. Welcome!
A question:
Looking at the second graph in CR's Foreclosure post yesterday, I can't help but wonder where the newly initiated foreclosures are going?
http://www.calculatedriskblog.com/search/label/ForeclosureP
There are about 275k new foreclosures initiated each quarter. SS are trivial and completed foreclosures are about 100k per quarter. Add it all up and active foreclosures should be increasing at a rate of just under 200k per quarter.
But the graph suggests they are incrementing at under 100k per quarter.
Things that make me go hmmm.
number crunching rulez
"I wonder where the other 4/5ths will be."
Spread out over the rest of the country, perhaps the rest of the planet. Certainly some of the jobs will be in Europe and Asia. Anyone know if civil servants man the space station?
Figure that 1/5th of the jobs are concentrated in this area and that the immunozone will receive a disproportionate share.
Kinda explains the why of recent events, at least to me.
But hey, they earn less than Biglaw so how much could that skew prices?
@J@ left out Stephen Fuller's quotes:
Thus, analysts say, the regional unemployment rate could climb to as high as 7 percent next year.
"We need to add more jobs [than the 24,200] to keep unemployment from going up," said Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University.
Because the newly created jobs require special skills, few people losing jobs will likely find new ones in the government and contracting sectors. "We're not growing jobs fast enough," Fuller said.
When Stephen Fuller is bearish on regional unemployment you know it's going to be bad.
"When Stephen Fuller is bearish on regional unemployment you know it's going to be bad."
No joke, normally his NOVA related outlooks are optimistic to the point of being delusional.
Kurt,
I had that same reaction to that graph in CR yesterday. That's a lot of pipeline.
link to that entry
And it appears to be a very leaky one. There are two main contributions to the leaks, (1) cure-rate, people actuallly catching up themselves (2) having the foreclosure put on hold while a "work-out" is investigated. Given the anecdotal evidence from NPR's Marketplace that Bank of America, anyway, puts the foreclosures on hold just in case a deal can be worked out, even if the procedure has already started, I'd say factor 2 is the biggest one. Banks don't want anymore foreclosures on their hands than they absolutely have to have. They're going to keep delaying the inevitable as long as possible and stretching this housing downturn out. Some of these people will actually be given loans they can handle, most won't and will just show up in inventory even later.
Cara-
I assume it work out better for the banks to hold off on the inventory anyways. If prices tank they get less for the houses they sell and more people are underwater, which will cause them to give up to. While if we banks let out the foreclosures as a slow trickle than they hope the market can absorb them without too much pressure on prices.
There is also another place they could be going. Aren't a lot of banks selling hundreds of dilapidated foreclosures at a time to investors without ever listing them. If this is the case they may not show up in sales records(depending where they are getting the records from)
housebuyer,
my comment wasn't intended to impugn the business model, just a commentary on what it appears that they are choosing to do.
The blue bar (foreclosures begun) to the red bar (foreclosures in process) and to the green bar (foreclosure "sales") all have leaks. And the bank does have to "sell" it to itself before it could sell it to investors in bulk, so that shouldn't be the issue.
e.g. in Q4 to Q1 the red bar went from 690k to 850k, an increase of 160k. But there were 260k new foreclosure starts in Q4 that "should" have gone into either the red or the green bucket. And the green bucket has been litely shrinking, despite the increases in the red bucket. That sounds like work-outs to me. Despite an increasing pipeline of people in trouble, banks are managing to decrease the inventory of REOs for sale. Which is impressive, if they can keep it up. It may be unsustainable, however, because an increasing number of these defaults are due to loss of income, so unless the jobs picture turns around quickly, a lot of these people are simply living in houses they can no longer afford. That group of REOs will keep coming, despite the best efforts of banks.
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