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.
Two comments. First on the CS numbers should be 125 comment, I wonder why the author used inflation not wage growth. I am pretty sure most of the housing gurus think it moves with income not inflation. Particularly since people really upgraded houses in the last decade and started using much more expensive materials... I think this would say housing should be in the 135 range..As to the math comments from yesterday. I am pretty sure most schools in FCPS offers Linear Algebra and Multi Variable Calculus, but they are offered through video tapes. At least I had friends at Woodson and a couple other of schools that offered this(they were called the dead professor tapes.) As to TJ offering those classes it actually has enough math classes that you can take them your sophomore year and continue taking additional math classes for the next two years.
Is it just my imagination, or has there been a recent rash of foreclosures in some of the nicer areas? I'm looking out in Gaithersburg/Germantown and it certainly seems to be so there-- a bunch of nice-looking townhomes in the $100-$150,000 range. (Condos are now so beaten down that I can get one that doesn't seem to need much work for $60-$70,000-- the kicker is the condo fees are all at least $500/mo.)Don't know if this is across the board in the DC area, but using zip realty's map tool for foreclosures I found this one in Reston: http://franklymls.com/FX7118345And here's a single family in Alexandria within easy metro-walking distance: http://franklymls.com/FX7117973 (There are some others within a mile or so of the metro, but aside from the townhome for $173,000-- listed as having possible structural issues-- that's the closest.)If it's true that there are beginning to be more foreclosures in 'better' areas I wouldn't be surprised to see an uptick in prices as people wanting some place to live grab those higher-priced (but now within reach of more families) places rather than the buyers mainly being cash-flow investors snapping up the super-cheap ones further out.
Unless you want to be a string theorist there's no reason you need to have taken Multivariable Calculus and Linear Algebra before college. Most colleges will do a better job of teaching them anyway. (with the possible exception of TJ). What I'm saying is, if I had to do it again, I would have repeated Multivariable Calculus and Linear Algebra in college, and just taken them simultaneously with ODE's and PDE's. If you're going to go into engineering, and thus have tons of required courses, I would still advise retaking them because they're so fundamental it's worth doing them twice. Of course any punk-ass kid like myself who had these courses in high school isn't going to listen to this advice.We had a very well meaning and well-educated in person teacher for multivariable calculus and linear algebra (matrix algebra), but I basically relearned it all in my physics courses. Which was fine. I got to take entertaining math courses in college for fun.(north shore chicago, not NoVa, and ~20 years ago)(wow this is now way way way off topic)
Sarah,The "alexandria" one is in Springfield. (or Franconia, or whatever...) We've been seeing SFH's at those prices, REO's and not for at least 1.5 years in the area around the Franconia/Springfield metro. I haven't kept track of whether REO's subsided since this spring in that area, but there were certainly "plenty" through April.We've personally chosen not to buy here, because we like the schools and the feel of Burke better. But plenty of other people at my husband's work are chosing Springfield or Huntington to buy. Kingstowne would be the posh neighborhood development that's also walking distance to Franconia Springfield metro. It's had some REO's too.
"Housebuyer said...I wonder why the author used inflation not wage growth. I am pretty sure most of the housing gurus think it moves with income not inflation."Housebuyer, I think it is both of them, serving as a high and low collar (inflation on the low end, and income on the high end). It was either Krugman or Smith who once explained it well.For example if you live in the wide open expanses which characterizes about 90% of this country, you have virtually no competition for land (why compete when you can just build nearby, or move to another fungible low cost locale in another state)? In these low competition areas, in a normal market, house prices should move on the low end, which is to say they should keep track with inflation.By contrast the remaining 10% of the country has high competition for land, and there arent as many fungible substitutes. In these areas where buyers are more likely to compete with one another for scarce resources, they are likely to bid up the price based on what they are able to pay (i.e. income).Mostly, this area moves along with income, certainly fairfax and the like. Other less desirable areas like say PWC and beyond may move more in line with inflation.
CRT-First although you are right that 90% of land in our country is wide open my guess is something like 50% of the people in the country live in areas where land is not wide open(just my guess). I was also trying to say that it should go up with wages because people decide to use nicer materials as they "got rich". So even in the areas where land was only increasing with inflation, prices could increase with wage growth as everyone was adding redoing kitchens and bathrooms.The final reason I say they should move with price is that you can look at price/income for the last 100 years and see that it is fairly flat(excluding the recent boom). For this is be true by definition houses are increasing with wage growth, probably partially because people decided to make nicer houses.
housebuyer,I'm still not sure I buy your whole houses are nicer theory. Or rather I'd like to re-interpret it.Out where we're looking very few homes have been upgraded like you say. Whereas in Vienna or Alexandria proper or Courthouse or where-ever it is that people like in Arlington, most places have been thoroughly redone.I think this is a function of people not being able to afford intrinsically nicer homes, and instead dolling up what they can buy. If you make a goodly income, but all you can buy is a 1950s bungalow then, after a few years you're going to want to upgrade it. And since the upgrades are cheap compared to the price of the house, you'll have the money to do so. In regions that didn't explode out of affordability until the bubble, there's been less time for this conversion to happen. Only the flippers and a choice few long-term homeowners did these renovations. In other words, I think you're putting the cart before the horse, here. People redid their baths and kitchens and floors and added crown molding, because compared to the cost of buying an intrinsically better home, these changes were cheap. And, the home ATM was there to provide the funds if you couldn't save up ahead of time for it.
Cara-I agree. I know why they did the changes, all I was trying to say was that I think the last decade had far more people doing work on their house because they were led to believe it was a good investment. I don't think they will get all of the money back that they spent on their house, but I do think they will get some which is partly why I would expect housing to move with wages not inflation.
housebuyer,Around here, they go with wages, which is all that really matters for the discussion.In Burke right now? Actually you get all your money back and then some. Move-in ready and fully updated is commanding a premium well above the cost of the materials and labor. It kinda has to be the complete package though. But people are paying $20k more for wood floors that would only cost at most $8k to install. They can amoritize that payment over the life of the loan true, but still, people are getting their money back.I still think people did these changes for their own enjoyment, with the investment/sale-ablility at the back of their heads, but each person's different.
Cara-Where I am looking something get more than money back some don't I agree there is a huge move in ready premium. So if you can make your house move in ready it is definitely worth it. Also things like stainless steel vs. white appliances will get over 100% of its money back. On the other hand maintenance that is not visible gets very little back> New windows, replacing the roof, HVAC get you some money back but nowhere near the investment. So if your HVAC is 15 years old but still sort of works I would not spend the 10K to replace it let the person who buys do it in a year when the HVAC breaks. Basically I think there is a shiny rule of thumb. If it makes something look shinier you will get all of your money back if not you wont. Obviously tastes may change in the future, but right now new shiny things are the fad.
housebuyer,Indeed the actual important maintanence things don't seem to get your full investment back. Of course you replace those because they need doing, and you're still living there... Those are just part of the costs of owning.I'm not a huge stainless steel fan myself. I'm going to cover the fridge with photographs and postcards anyway, what difference does it make what color it is underneath that? But I still may go stainless when appliances need replacing, if the premium isn't too high, just because I'd hate to get dinged for it when selling.
cara--try CleanSteel. Looks like stainless, but holds magnets/cleans better/doesn't dent.My brother is waiting to hear back about the investment property he is trying to buy in Manassas. As of last count, less than a week on the market, there were 8 real offers. For his "best and final," he went over list with $5K towards closing. Can't wait to see how it works out.Oh--for financing, with 25% down, he could get 5.65%/0 points, but for only 10% down, he was right around 8% interest WITH 2 points. Interesting, no?
tabitha,I'll try to keep that in mind. Cleansteel.I take it those were for a declared investment property, right? Still, very interesting.We're going to get dinged a 0.75 pt fee for buying a condo with 20 rather than 25% down. Sigh.
Tabitha-Do you know if he has a really bad credit score? My office mate just did an FHA loan(3.5%) down a couple of days ago and got 5.25% APR with 0.375 points. There suggested pricing was 5% with 1.25%
Cara-By the time the short sale goes through you may have saved enough to feel comfortable putting the extra 5% down :-pThat sounds like a really harsh penalty, it may be worth just borrowing the extra 10K from a credit card that will give you a 0% loan for a year or something like that. I know you don't want debt other than your house, but if borrowing the extra 10K costs you 1,500 it may be worth it...
housebuyer,It's a one time fee, not a change in interest rate. So, 0.75 of less than 180k is only $1350 anyway. So, it's probably going to make more sense to simply pay the fee. But indeed, if the process takes long enough, we could easily put down the 25%. One of the main reasons we're asking for closing cost help is so that we can pay points and fees and stuff on the off chance it goes through quickly.What we discovered from examining your suggestion of a 5/1 or 7/1 ARM is really how much a lower interest rate matters especially if you're paying the loan off quickly. What it taught us is that we need to do two calculations when considering whether it makes sense to pay points for a lower rate, (1) what does it save us if we pay at the 30 year rate, (2) what does it save us if we pay at the 15 year rate. (there's no way I'm getting my husband to go for the 5/1, you should have seen the look on his face, like, what alien has replaced my wife?)
HB--No, he has a fantastic credit score, off the charts. Works for Booz Allen. But this is an investment property in Manassas, and banks are just not happy with this area.
Tabitha-Wow that is really interesting. I didn't realize that they were so much less fond of investment properties.Cara-Yeah points area a very complicated to decide what is the best for you. You need to try and estimate how quickly you will pay off the loan, when you expect to move, and the worst of all the tax implications of having a higher APR(the whole interest is deductible aspect...)
and an updateWe have a signed contract and an appointment for the inspection tomorrow evening (with verification that the power will be on then).
housebuyer,on this size loan there will be a very short period of time where the interest plus property and state income taxes exceed the standard deduction, so I tend to just ignore it entirely. I sort of assume that there are costs that aren't occuring to me now that the tax benefit will "go towards".
Great news, Cara.Also, most people who itemize have other itemized deductions besides the interest and RE taxes, so it provides more of a benefit (relative to the standard deduction) than you might think (until you get into AMT territory). For example, they may have charitable contributions, employee work expenses, tax preparation fees, car tax, etc.
Cara-Good point, your right on a $180K house interest will not be much more than the standard deduction. Congrats on the contract, although I am a little confused. Is there any reason you are inspecting it now rather than waiting for the bank to approve the contract? Is this just so you can start looking at other houses if the inspection shows a lot of problems? Otherwise I would just wait, no reason to spend money on an inspection for a house where your offer might not be approved
housebuyer,True -- most schools provided the opportunity for a tape multivariable/matrix algebra class. I think one student at my high school did that. However I think a lot has changed since you and I graduated high school. Here is a quote from a 2006 WaPo article:More than 500 students in the Montgomery and Fairfax school systems, the region's two largest, are taking multivariable calculus, a course traditionally taken by math majors in their second year of college -- at least in the old days. That means the students have a full year of college-level calculus under their belt before they leave high school.These "post-AP" courses, once taken by a tiny share of elite math students, are riding a growth curve. Montgomery County offers multivariable calculus to 265 students at 12 schools and will add a 13th in the fall. Fairfax County has 242 students enrolled in the course and expects the number to pass 300 in the coming school year. The Anne Arundel County school board approved its own version of the class, called Calculus III, last month to meet rising demand.I'm sorta conflicted by the trend. On the one hand, I think it's a bit excessive to be taking multivariable calculus/matrix algebra in high school. On the other hand, most of 4th-7th grade math was repetitive and unchallenging for an advanced student and I think it's better for them to take Algebra in 7th grade.
Ace,Aside from charitable contributions which are beginning to add up enough that it will matter, the rest of ours would be small potatoes. Most people the biggest one is the mortgage interest itself. And at current interest rates, and our loan size, it's just not that big compared to the standard deduction.Now, if you already have enough deductions that you're itemizing before buying, that's another story. And one that involves the AMT...My gut feeling is that if you have to calculate all of that in order to justify your loan terms, then you're probably paying too much for your house. Just be happy when your taxes are lower at the end of the year and be prepared for the fact that the AMT may mean that you get no net benefit.
CRT,Mostly, this area moves along with income, certainly fairfax and the like. Other less desirable areas like say PWC and beyond may move more in line with inflation.First of all, PWC is not a "less desirable area." It has some really nice areas and some not nice areas. Like every locality in this region.Income growth in PWC probably exceeded inflation. It was the #31 richest county in 2000 and the #9 richest county in 2007. Whereas Fairfax County was #2 in 2000 and #2 in 2007.
housebuyer,Basically, if there's something major found that we aren't prepared to pay for, we don't want to be waiting around assuming it will be honkey-dorey. This way also provides the benefit that the number presented to the bank is the real number, that there won't be any further negotiations after the bank's approved the contract price (if they do). It's a small place, it's not that expensive to get an inspection. I want to know what I'm really getting into before I commit to waiting around for this to close.
By the way, the 2007 American Community Survey came out August 2008. I am waiting with baited breath for the 2008 ACS. :) :) :)
Cara-That makes sense.TBW-Maybe 500 is slightly more than when I graduated(2002), but is basically the same. In TJ ~75% of students will take these classes which is 300-350 students. This leaves 150-200 people who took it in the rest of the county or about 10/high school. My guess is you have a full class(20-25) students in the good school McLean, WT Woodson, Langley... and 2 or 3 people watching the videos in the other schools. This is just my guess I have no real idea.
"TBW said...First of all, PWC is not a "less desirable area." It has some really nice areas and some not nice areas. Like every locality in this region."Really? You mean to tell me there are not people living in PWC who would prefer to life in FFX but for the price for a similar house? And no, not all of PWC is less desirable, but on the whole (good and bad areas alike) is it really not as desirable as Ffx (good and bad areas alike).If you prefer, let me revise my statement:"Mostly, this area moves along with income, certainly fairfax and the like. Other less desirable areas like say XYZ and beyond may move more in line with inflation."Now you can plug in any area you deem that is less desirable, all things considered. That was the point."TBW said...Income growth in PWC probably exceeded inflation. It was the #31 richest county in 2000 and the #9 richest county in 2007. Whereas Fairfax County was #2 in 2000 and #2 in 2007."Yes and this helps prove my point. In PWC median prices bottomed in line with (or perhaps slightly below) the long term inflation adjusted trend. Moreover, after a slight bounce, it looks to again be back at inflation. By contrast, fairfax never got back down to the inflation adjusted trendline before it started moving higher.
CRT,In a Washington Post Magazine article they implied residents of Waldorf want to move closer in once they make more money. They noted this response in a later edition of the magazine:lisahulvey wrote: I am completely outraged by this article. As a resident of Southern Maryland, I feel that this article has portrayed this lifestyle as typical of a Waldorf family. Most Southern Maryland residents are hardworking citizens who live here because they want access to the major city and all of its amenities but also desire a more suburban/rural atmosphere to raise their families in. Not because we "Dream of making more money someday and moving into a posher suburb." You can't label everyone in these exurban counties as people who dream to live closer in. Some people prefer living further out. Obviously some well to do people prefer these exurban areas or else Loudoun County would not be battling Fairfax County for having the highest median household income in the nation. Also, if people did not prefer further out places than Fairfax County would not have a higher median household income than Arlington and Alexandria.
TBW - thats fine. If you want to believe that PWC is not less desirable than FFX then great, substitute PWC for area XYZ and then go back to my earlier post.
CRT,I don't think this is really about PWC vs FFX. I think this is really about you trying to imply everyone wants to live further in which is not the case. Most of your comments seem to be about an alleged paradigm shift where Arlington and Alexandria went from less desired areas to the desired areas.
to jump in here.no, it's really about the secular change in affordability of various cities with time. DC is on the ascendency job/wealth wise, such that bubbles will no longer fully deflate, but instead leave behind pockets of more expensiveness. and an overall new baseline price.At some point when high cost-of-living or inability to expand makes DC a relative loser of job-creation, then prices relative to incomes may decline. But the ascendency does create two groups of people, renters and owners with a huge barrier to entry between them. Then the question becomes, is that actually happening here? And to what sub-regions does it apply?
Cara - perfect. (Thanks)...
Here are a couple articles that suggest significant changes in government contracting may be upon us shortly."In memoranda scheduled for release Wednesday and in September, the OMB will outline steps the Obama administration hopes will help save $40 billion annually through improved acquisition practices. Department and agency heads are being told to cut contract spending by 3.5 percent in each of the next two fiscal years. "http://tinyurl.com/l64xmxAfter seeing a doubling in contractor spending during the previous administration it looks like the party is over. One key question will be how much of this ~7% spending cut is turned over to GS employees and just how much less they get paid to do the same work.The administration numbers suggest a $40 billion annual "savings" but considering the highly dubious nature of other administration estimates who can guess what the real savings will be.I suspect if indeed we see something similar to a $40 billion annual reduction in contract spending it will be felt in the DC area. (although it could take a while for it to do anything to the housing market)Here is a second story in a similar vein..."The government’s 16 intelligence agencies have transferred thousands of contractor-performed jobs to federal employees in recent years to reduce the community’s overreliance on contractors. And they intend to insource thousands more, says the intelligence community’s top personnel executive....An internal 2008 staffing review conducted at ODNI’s behest found that contractor employees make up 29 percent of the workforce at intelligence agencies, but those contractors cost the equivalent of 49 percent of the personnel budget.In response, the Senate Select Committee on Intelligence passed a 2010 intelligence authorization bill July 17 that would force agencies to reduce their use of contractors by 5 percent next year. Details of the bill were made public last week. "http://tinyurl.com/nsmcwxThis article is more clear in stating that what they are doing is taking contractor jobs and converting them over to GS jobs. This may not be as big a deal for the local economy as what is described in the first article, but more GS employees at the expense of lost contractors is a net negative for the housing market as good benefits or not, they don't have sufficient take-home pay to support prices in NoVA.
I think there are many people that would like living in PWC or even farther out if only it wasn't for the commute. Maybe one day many of the tech jobs will actually get the promise of telecommuting, but I'd still be stuck in NoVA because my wife will still need to get to work. Since it seems like most families in this area are moving toward the two income approach, I think farther in will always be more in demand, even though it is technically "less desirable" to many of us.
TBW-I actually like the more suburban areas, but just don't want a commute so I am not bashing on them with this next comment. I think its pretty clear that PWC is considered less desirable than FFX otherwise it would not cost less to live there. You can determine how desirable by price. If one place has more people want to live in it these people will buy there until the price goes up.Clearly this is not true for everyone as I said I love the suburbs and having better scenery, but as a whole I think house prices are the best way to determine what is most desirable over the entire population.
Cara,This area has been rich and had low unemployment for ages.
housebuyer,I agree with what you wrote. I don't think that's what CRT initially wrote. CRT did not make a comparative statement -- PWC is less desirable than Ffx. CRT just wrote that PWC was a less desirable area -- it read to me like something you would say about say Anacostia. I just felt like it was being painted with a broader brush than necessary. Not all parts became Manassas Park.
tbw,which is why it's absolutely amazing that it's managed to remain affordable as long as it has. An interesting thing to track would be what percentage of the population is "native" versus moved here from elsewhere over the course of time. I think NoVA in particular may have needed a critical mass of outsiders before it could be considered desireable. It is Virginia after all, and to most people north of here, that's the south. And Maryland doesn't have a much better reputation either. As it is now, I was the 3rd of my friends to move to this general area.And adding in north-easterners with their ideas of housing prices (and their accumulated equity) sure doesn't help affordability.
TBW it was a comparative statement. Sorry it wasnt clearer.
Fairfax County is Very Rich Article from 1999In 1999: Almost 19 percent of Fairfax households have more than $150,000 in annual income, sixth highest in the country. That's up from 4.5 percent and a 20th place ranking a decade ago. So yes, Fairfax has gotten comparatively richer. But it's not like 20th place in 1989 made this some shabby place. In 1999: About one of every eight Fairfax households has accumulated a net worth of more than $500,000, according to Claritas, which places it fourth nationally, behind Nassau County, N.Y., and Morris and Somerset counties in New Jersey. Montgomery is seventh.Again, VERY VERY rich in 1999. And McMansions in 20194 were not $1M+. Va_Investor got hers for $600s despite 1 out of 8 homeowners with net worths of $500k or more.
Cara,There have been tons of people moving here since the 1950s. Urban flight from DC does not alone explain the MASSIVE increase in population starting then.Every time I read an obituary in the Washington Post about some civil servant it is like so and so grew up in ___, NY, came down to DC to work for ___ agency, lived in ____ portion of VA or MD, died in ____ retirement area. ;)
tbw,Indeed. But after the last bubble prices didn't plummet straight to their pre-bubble trends, they fell initially, but it took ten years of stagnant prices to return to trend. So the existence of all these rich people prevented the late-80's bubble from fully deflating, just like they'll prevent this one. The difference being, that this time, maybe some of that wealth will get baked in. When things permanently separate from the fundamentals of rent versus buy, there has to be a first time. It's happened in plenty of other cities before, the question is, is it happening here this time? Or do you want to wait 10 years for the most affordable house in real terms again? I think the upper tiers still have a lot of downside potential. And I wouldn't buy in them now, no reason not to wait it out, because they won't be going up anytime soon. But there is the possibility that they won't fall any further.
I LOVE this quote:"It's just amazing the number of young people that can afford these $400,000-and-up prices," said real estate agent Nancy Daniels of the Prudential Carruthers brokerage, who helped Ryland secure his house deal. "People in their thirties with little kids."A mere 10 years ago people were amazed someone in their 30s with kids was spending *gasp* $400k+ on a home.Now people think the bottom of this market should be able to afford $400k+ to buy a crappy home.
TBW-Part of the housing was still so affordable back then was people put all of the money into the stock market. With tech stocks screaming higher people thought it was silly to waste money on a house when you could make 50-100% a year trading stocks. When these stocks crashed the fed started its easy money low interest rate policy that is responsible for the start of the housing boom.
Another great quote from the article:Good incomes have afforded John Gerndt, 39, who works for a defense contractor, and Karen, 35, his wife of three months who works as a hospital wellness coordinator, some pleasurable moments on the golf course. Together, he said, they have a joint income of $120,000, a bit above what Fuller said is the Fairfax average household income of $115,430.Gerndt said he and his wife play golf once or twice a month at the public Pleasant Valley Golf Club in western Fairfax, a short distance from the $300,000 house they bought in the Virginia Run development.$120k combined income. $300k house. 2.5x income. Now housebuyer will demand I point out the interest rate. It appears it ranged from 6s-7s. So this wasn't one of those years where mortgages were 10+%.
"TBW said...There have been tons of people moving here since the 1950s. Urban flight from DC does not alone explain the MASSIVE increase in population starting then."TBW - Cara never stated or implied anything of the sort.If I may, I think there is a major major disconnect between what she is suggesting, and what you are saying. I think you need a little more background info to fully understand what she is saying.Cara (and anyone else) there have been numerous research articles on this by Shiller and a few others on this phenomena. Does anyone have anything handy they can post?
"Now people think the bottom of this market should be able to afford $400k+ to buy a crappy home. "No. "They", I, think the housing ladder is here to stay as the barrier to entry remains high. There are some really nice TH's in West Springfield High School district that are spacious, and a quick 5 minute drive to the metro for well under $400k. If you insist on a SFH being intrinsically better, then you'll have to settle for something dodgier or smaller, because too many other people in suburbia agree with you.There's no "should". There's only what is.
housebuyer,100% agree. But aren't you sorta agreeing with what many of us are saying. Housing prices got out of hand because the stock market crashed and so people moved to a housing bubble.Maybe you agree with that and feel things have gone back to fundamentals. I think though we still have a lot more home investors/flippers than we did pre-tech crash bubble.Hopefully the DJIA keeps exploding and the housing bubble finally ends and they all chase the huge gains people might make in the stock market over 2009-10.
Cara,I agree with you that the market price is based on how many people want a home.However, we had non-crazily low interest rates from 1946 to 2000 and mortgage lending requirements. Mortgage lending requirements are slowly coming back (stymied by the ridiculous FHA loan 3.5% down payment) and the big question is how long we will have these historically low interest rates.
er so while the historical mortgage lending requirements and interest rates are out the window, it's hard to say market forces are in play. It's easy to buy a place for $800k when you don't need to put down 20% and the rate is only 5%. Much harder when you do need a real down payment and it's 8% interest.
CRT,Here is what Cara wrote:An interesting thing to track would be what percentage of the population is "native" versus moved here from elsewhere over the course of time. ...And adding in north-easterners with their ideas of housing prices (and their accumulated equity) sure doesn't help affordability.I think my response was very much on point. I said the non-native population has been high for a long time. I don't think you'll see a spike during the 2000s. You'll see it shoot up between 1940-1970. Probably also a lot of increase between 1970-90. 1990-2009 is probably much less of an increase. If anything, it might start to decrease as the millenials like housebuyer and me stay here and we are considered natives.As for northeasterners, again, I did respond to that. We've had people from NY and neighboring states move here all the time. Go to a local Catholic church or Jewish synagogue and you will not find a lot of First Families of Virginia.
tbw,indeed lending standards and rates are a big shock to the system that is coming soon. However, since unemployment wise and months of supply wise, we're doing "better" than almost the entire country, and lending standards and interest rates are primarily national, I would posit that they won't change "soon enough" for here. By the time rates get over 7%, the REO's and shorts will be long gone, or at least down to 5% of the market. And if we see some price stability, then lending standards will be more lax here than elsewhere, as we'd be a market where bank's collateral is safer.Personally I have a hard time fathoming paying $800k for a house, any house, so I can't speak directly to your example. But $800k would also go a really long way in Burke/Fairfax Station, so perhaps you should just look for a pocket of affordability to buy in.
TBW-Not that it is hugely different, but interest rates where in the high 7s low 8s around the time of your article based on http://mortgage-x.com/x/ratesweekly.aspAn 7.75% rate vs a 5.25% rate increases your monthly payments by 30%. So that couple would probably make ~160K now and could get a house at 3X income(payments are less). So they could get a place for 480K. I looked for sales in "Virgina run" in mid 1999 and found this "15256 SURREY HOUSE WY" It sold for 355K or 20% more than they paid. Its tax assessment is 550K if you take off the 20% it would be 460K which is basically just what they can afford now.So prices monthly payments may be slightly less affordable than then, but not very much.
TBW-I think in 1999 housing was under its fair long term value it got to fair value in 2003. By 2006 it was way over its long term fair value. It has recently in the past 6 months gotten close to its fair value. I agree if interest rates shoot up it would really pressure housing prices. I am starting to think it will not shoot up. Instead it will creep up from 5% to 7% over 4 to 5 years, but income gains over this time period will allow housing prices to stay flatish as this happens.
Cara,Unemployment and foreclosures are a red herring. Okay, they are relevant, but the main thing to focus on is median household income. Without a doubling of median household income from 1998 levels there is just not going to be support for double the price on a home.Low mortgage interest rates and federal tax credits cannot escape the fundamental role median income plays in home prices. Eventually very low mortgage interest rates end and federal tax credits likely end.Frankly, the only thing that seems to be stopping market reality is that the Fed has kept interest rates at ridiculously low levels from 2002-05 and late 2007-present.
housebuyer,Sure. I'm open to 2002-03 being around the fair price. Some of the market has gotten there but a lot of it has not. You'll hear no complaints from me if Oakton/Vienna/Fairfax et al bottom at 2002-03 prices. It is 2009 after all (and it may be 2010 or 2011 by the time that happens.)Note though that yesterday Va_Investor was arguing the bottom for her home in Reston was the 2005 or 2006 price. That's the main thing on here I'm debating.
TBW-I agree with you that prices should not be at 2005-2006 levels at least not for another 5-10 years. I think they should probably be 2004 levels. 2003 was fair value and it is 6 years later so you should have some gains which gets you to early 2004 levels. At least all of the places I am looking at are basically 2004 levels. I am fully open to the idea that prices could go down ~10% from here, but think cheap interest rates and a check from the fed can make up for those losses as long as you stay in the house for 5+years.So I don't think we are at amazing values, but instead something that is basically fair value.
tbwUnemployment and foreclosures are what are keeping the interest rates low... indirectly. If the low interest rates outlast the period of distress here, then those prices are here to stay.House prices don't "have" to do anything. Just as a huge explosion of wealth didn't inherently drive up house prices in FFX sooner, unless there are more foreclosures and distressed sales than there is a market for those homes, prices don't "have" to come down either. This is what creates the long flat period. The fact that no one _has_ to sell. Until current owners have accumulated enough equity the hard way, or gotten enough pay increases. At which point they'll start moving up, and appreciation can start again.Just deaths and divorces isn't going to be enough inventory moving to change prices. ( I forget the other two D's). People who want to buy will indeed be forced by lending terms to buy "within their means", but that's no guaruntee of what will be available at that price. Only distress on the part of sellers can do that.
housebuyer,Agree with all of that as I'm optimsistic about wage growth-employment in the region. There will come a day for 2005-06 prices but it's not here yet. Give it another 5-10 years.I would agree with 2004 but for the recession and higher unemployment. What's happened since late 2007 would have lowered prices even had we never had a housing bubble. We have had a lot more unemployment and many people's 401ks went down 40-50%. Hence I think 2003 is more likely the bottom. But since many neighborhoods are still asking 2005-06 prices and will probably drip down over another 1-2 years they might bottom at 2004. Curveball is the contractor issue. If they really do ramp that down and go with GS employees that could be devastating to the outer suburbs. I believe the government will house many of those employees in DC instead of Tysons-Reston and veterans preferences, affirmative action programs, etc will change the demographics of who holds those jobs. I don't see a 1:1 replacement if they move from SAIC et al to DOD/DHS civilian.
Cara,Agree with your comments. There is always going to be more distress (foreclosures, unemployment, greater need for job mobility) in the lower end of the housing market. Most people living in Great Falls do not have to sell. That's why there is a buyer-seller stareoff.Inherent in your buyer-seller stareoff with sellers waiting to wait however long it takes is a devastating effect on the vacation/retirement home markets. Does the 63 year old retiree whose home used to go for $800k but now $600k eventually stop caring about the $200k difference (particularly when he/she bought for $400k) when the retirement home in Miami is now only $150k instead of $450k?
TBW-I would not be surprised if we hit 2003 levels. For us I just figure the savings from a good interest rate plus the 8K makes it worth buying now in our case. Even if the 8K gets renewed we would not be able to get it next year, because once we are married we are over the income limits. I still can't believe that if two unrelated people buy a house than can split the credit in any way they want so I can just have the fiancee get the whole credit.
tbw,I expect that the retirees will run the math that applies to them and move when it seems like a good idea. They also have stock market losses to contend with (if they hadn't pulled back in time), so may now be counting on some of that equity to live off of in their cheaper retirement home.But yes, everyone will do their own math and sell when the time is right for them, which is why this drags out.And yes, the vacation/retirement areas are getting pummeled, and will continue to drag. Of course some of us renters could just decide to continue to rent where we work and buy our vacation home. That's what all my parent's friends in New York City did.
Sorry for the double post - there was an error in my math..."TBW said...Without a doubling of median household income from 1998 levels there is just not going to be support for double the price on a home."TBW - this is part of the problem. This statement is not meaninful unless you compare other indicators of supply and demand.For example, lets say in area X there are 4 people who want to buy whose income is as follows:30K 90K 90K 120KMedian income = 90K.Say there are 3 homes for ownership. If everyone bids up prices to 3X their income, prices for the homes will be270K 270K 360KMedian home price = 270K. The 4 people compete for the 3 homes, the last one is outbid and he rents.Everything looks good so far right? Now, assume 3 more people move here but because of the scarcity of land only 2 more homes are built. Incomes of those people are30K 30K 60K 90K 120K 120K 150KMedian income is still 90K. What if all 7 people compete for the 5 homes again at 3X income. Now we see180K 270K 360K 360K 450KMedian home price is now 360K as the top 5 win out, and the bottom 2 rent.So in this case, we have a situation where median income =90K but median home price = 360K. On the surface it appears like prices are 4X income, but in reality everyone is paying at 3X.This is the sort of crowding out process you see in areas over time. If area X has more land, they solve this problem by building more. If land is scarce in area X price serves as the balancing mechanism.This is why even back in year 2000, you see prices at anywhere between 5X income and 20X income in desirable coastal areas. . In Loudoun the answer is simple, you just build more homes til supply and demand are in balance. In areas were land is more scarce, this isnt always an option and thus price serves as the balancing mechanism.
crt,likewise if there are 5 homes for sale and 4 people buying, because everyone's sick of their houses that they bough pre-bubble and never intended to live in for more than 5 years, then the highest income person doesn't have to pay 3x their income, they just have to outbid the next guy. which is why, even with rich people, if they can find the home they want for well under 3x or even 2x their income, they won't inherently bid it up. And homes in Reston could stay "reasonable". But the bubble defeated that.
TBW-This is an interesting article I saw about the wealth of different areas http://www.cnbc.com/id/31927494 It claims that 5% of people in DC have over $1MM in liquid assets(excluding retirement accounts and houses) and 5.5% of people in VA have this. If that is the case I am sure NoVA has above 5.5% and southern VA has less than 5.5%Either way the population of NoVA is much larger than the DC population so there must be several times as many millionaires here. This doesn't mean that there are way more people that make over $1MM a year, but I would think they correlate pretty well.
"Cara said...likewise if there are 5 homes for sale and 4 people buying, because everyone's sick of their houses that they bough pre-bubble and never intended to live in for more than 5 years, then the highest income person doesn't have to pay 3x their income, they just have to outbid the next guy."Very true cara. Actually, even in my situation, the second round of pricing would (theoretically) be like this180K 270K 360K 360K 361KThe 150K person doesnt need to pay 3X income due to (in my case) no competition. All he needs to do is outprice the two 120K buyers by going slightly above what they were willing (or able) to pay.
tbw,Please bear in mind that I bought my house on the Court House steps; site unseen. Look to my neighbors who bought two months later in the high 700's for FMV.If you go off of FMV, I think you would agree that this nabe had no bubble.p.s. you seem to have tracked me down. I'd appreciate it if you kept this private.
Va_investor,How is 700k to 1.2 million in two-three years not a bubble?It's not as big as the truly low end which went from 70k to 200k, but it's still not normal appreciation alone.
Cara,I never said 700k to 1.2; I gave a range. 1.2 was the very top and was for a larger house than mine. Based upon appropriate comps, I'd say about 775K to 1.1 (2002-2006).I don't know what % that is, but it's clearly not the 100-200 we saw in the low end.
CRT,You have an interesting, sound theory but it does not appear to work in practice. Based on the Arlington history given here it sounds like North Arlington was the last part to be built out. Looking around those homes they all appear to have been built by the early 1950s. Anything newer looks tear down or rebuild. So Arlington has been built out since the 1950s and forced to "build up" since. Why didn't prices explode in built out Arlington between 1950-2000 given the scarcity of land? Old Town Alexandria has been built out since the days of George Washington. I imagine the rest was built out by the 1940s and anything later probably was the portions annexed from Fairfax County. So, again, given Arlington and Alexandria have been built out since the 1950s, where was the price escalation pre-2000? There was no dearth of rich people in either locality pre-2000.
CRT,Here is Alexandria's population growth:1950 61,787 84.3% 1960 91,023 47.3% 1970 110,927 21.9% 1980 103,217 −7.0% 1990 111,183 7.7% 2000 128,283 15.4% Est. 2007 140,024 9.2% and Arlington:1950 135,449 137.5% 1960 163,401 20.6% 1970 174,284 6.7% 1980 152,599 −12.4% 1990 170,936 12.0% 2000 189,453 10.8% Est. 2007 204,568 8.0% So yes there was some flight from those localities (1980s for Alexandria and 1970s for Arlington) but they have grown since then. So don't give me "well they were not increasing in population." It didn't take until the 2000s for them to turn around.Hence what you described clearly was occuring most of the 1950-2000 time period: built out land, growing population, growing income levels. And yet prices did not reach 5x-30x income in Arlington or Alexandria.
*both lost population in the 1970shousebuyer,Did you read the 1999 article I linked today. It noted a ton of people with high net worths.About one of every eight Fairfax households has accumulated a net worth of more than $500,000, according to Claritas, which places it fourth nationally, behind Nassau County, N.Y., and Morris and Somerset counties in New Jersey. Montgomery is seventh.Home prices didn't get out of control in the 1990s despite a lot of high net worth individuals in Fairfax County.Va_Investor,I haven't tracked you down. I don't know what I said that made you think that.
Unfortunately, because of the age of most websites (and the WWW itself), it's not easy to find using free search sites like google articles about how rich this area was in the 1980s. I did manage to find you all that 1999 article. I really implore everyone to read it. You will find that this has been a rich area for a while. Martha Pennino moved to Vienna in 1956 when her husband, Walter, a decorated Army veteran of World War II and Korea, took a Pentagon job. Farmland covered much of Fairfax County, which was home to about 100,000 people and enough cows to make it one of the state’s largest dairy producers.Pennino plunged into politics and in 1967 won election to the Fairfax Board of Supervisors. For the next quarter of a century, she played midwife to Fairfax’s emergence as a booming metropolis, helping to give birth to such regional anchors as George Mason University, the Dulles Toll Road, and the town of Reston.By the time Pennino left office in 1991, she was known as Mother Fairfax. A tiny woman made larger than life by her blond beehive and sunny disposition, Pennino charmed everyone.Everyone, that is, except state legislators. She frequently went to Richmond to advocate for the region only to meet opposition from downstate lawmakers, some of whom sneered at what they called the "people's republic of Northern Virginia."On one occasion she testified before a committee headed by 69-year-old Edward Willey Sr., the irascible Senate majority leader and elder statesman of the state’s conservative Democrats. Willey didn’t see much to like in Pennino’s plan to make Reston the state's first "chartered community," with its own elected officials and the power to levy taxes.Northern Virginia, he told her, had to learn its place. "It just bothers me," he said, "that you’re always coming up with something special up there, and what we've already got isn’t good enough.""I'm not trying to be ornery," he added, "but somebody down here has to put the brakes on."I don't what more I can do to convince you all that a lot of the themes you guys keep citing -- built out areas, high household incomes, booming local economy, northeastern transplants, tension with Richmond, etc etc etc are really old hat here.
We're arguing that a tipping point was reached. We're also arguing that a bubble cycle is required to make it happen. Perhaps the fact that FFX county itself was a fantastic subsititute at low prices due in part to greater land area and more diversity of commutes* acted as a safety valve on Arlington prices until now. *lots of people want to live in FFX but not all of them want to live in the same place in FFX because they don't all work in the same place.Now that FFX county isn't such a great value for the money anymore, Arlington's high prices can more readily be "supported".
JOHN F. HERRITY, who died yesterday at 74, was a scrappy pol of the old school -- tough, profane, pigheaded and fiercely devoted to Fairfax County. ...As a fixture on Fairfax's Board of Supervisors for 16 years, including 12 as chairman in the 1970s and '80s, he took on the county's anti-growth forces, leading the drive to transform a sleepy suburban locality into the Washington area's largest and most economically dynamic jurisdiction. In the process he helped lure tens of thousands of new jobs and prestigious corporations to Fairfax and became a lightning rod for many who thought it was all too much, too fast.http://www.washingtonpost.com/wp-dyn/content/article/2006/02/01/AR2006020102102.html
Cara,If Fairfax served as a safety valve on Arlington's prices, then Prince William County and Loudoun County would now be serving as a safety valve on Fairfax County's prices. That would lower Fairfax County's which would then lower Arlington and Alexandria prices.Maybe 15-20 years from now when all of PWC is built out and all of Loudoun east of Route 15 is built out will we finally lack safety valves and prices can get out of control. But I suspect when that comes western Loudoun and Fauquier County will be the new exurbs and eastern Loudoun and PWC will be inner suburbs and Fairfax will be the "core" like Arlington, Alexandria, and DC.The only thing that stops this cycle is a huge increase in gas prices. I don't see that happening. If anything, I see cars needing less gas over the years because of increased hybrid technology. And less congestion as we encourage telecommuting. Remember also how many jurisdictions were contemplating four day workweeks when gas was $4+.
"TBW said...And yet prices did not reach 5x-30x income in Arlington or Alexandria."Correct - if you look at the income growth during that timeperiod, it was pretty stagnate. It wasnt til 1998 that income growth really started in earnest. The other part that had to happen was desirability. Even if they had the income, if desirability had not changed, they would not be actively pricing each other out (at least not as much - see caras statement).The key to all this was when we saw the ACS data - that showed us the demographic shifts in DC, Arlington & Alexandria were the the largest in a centruy. It is not conclusive of increased desirability, but it is highly highly suggestive.With regard to fairfax, it is more of a mixed bag. On a countywide basis its clear, this pricing out did not occurr. However, it could be happening on a zipcode by zipcode basis - unfortunately we wont know til the full census comes out in 2010. demand had to outstrip supply, causing parties to compete using their economic firepower to price each other out. Again, I hate to
Can you give me Census data on Arlington's median income in 1960, 1970, 1980, and 1990? I don't think you are correct in saying it was stagnant.
TBW - the earliest I have is the 1980s and unfortunately I only have it in paper form at my old job. I have posted it somewhere here, if anyone can find it. It was probably around October or NovemberI should also say stagnate is not correct. As I recall, it performed in lockstep with the rest of the area (say if FFX went up 21%, core areas went up 20-22%).It wasnt til this decade that we had the true divergence, Ffx up 26%Alexandria up 39%Arlington up 43%Loudoun up 30% (with no land shortage)PWC up 30% (with no land shortage).
Well, I'll jump in to this little foray : - ) w/ a couple of comments.I take big issue with this statement"Unemployment and foreclosures are what are keeping the interest rates low... indirectly."I really think that is 180 degrees wrong. There is one and only one reason why interest rates are low . . . the Fed is buying the MBS market. That is it, there is no other fundamental reason why interest rates are low.In fact, I would argue that in the absence of the Fed buying the MBS market, rates would skyrocket prob. somewhere to the 7-9% range.Interest rates reflect a lot of different things, they are a mix of people's time preference (buy now vs. later) and a mix of risk.Banks need money and positive cash flow right now (and have for quite a while). Unemployment is high (which increases the risk that the person you are lending to will default) . . . foreclosures are high and prices have dropped (again increasing the risk of more foreclosures). Those two factors you quoted increase the risk to banks, not decrease it. An increase in risk will mean a natural increase in mortgage rates. Banks should also be going back to 20% no exceptions . . .but FHA 3.5% down w/ 8k back making effective 0% down loans from the gov. is nixing the natural market response. That's all I have to say about that.I will make one other comment that is very interesting psychologically. I have noticed how when the bears start the process of buying there is a marked changed in their attitudes. I guess it happens with anything we buy, we buy a new car we always want to tell ourselves we got the best deal, buy a new computer, etc. I guess it's human nature that we have to become bullish in whatever it is that we are about to purchase.Having bought a car last year, I understand . . . but I think it's a good idea to step back and just think for one moment, if I bought today and prices collapsed another 50% (car, computer, house, etc), would I be happy? With my car, sure it would stink (I missed out on the cash for clunkers by buying last year . . . drat :- ). But no big deal, at the time and still today I am happy with my vehicle, it fits my needs, I bought well within my budget at a price that was happy with and if prices dropped 50% I wouldn't really care.It is very, very difficult when dealing with money and finances to not let it get wrapped up in your ego and to step back think, is it what I really want, is it what I really need, am I comfortable with what I'm paying.But hey what do I know . . . I still rent . . . (big sigh).So as a shoutout to all the former bears . . . who are the bears now?Me, tbw, Leroy?, contrarian-I'm not sure if he will ever be a bull :-).Oh, I'm a bear on value vs. price . . . prices-I'm not sure if they have bottomed or not. Value (i.e. inflation adjusted . . . I'm this side of contrarian i.e. he seems to be 90%, I'm >70% real value peak to trough . . . some areas we are there-maybe those will be the 90%ers.
CRT,I think this property would make a good "show your cards" on where one thinks Arlington will go. http://franklymls.com/AR7104132Walking distance to Ballston Metro. Tax records show sold in 2002 for $428,000. Sold in 2006 for $650,000. They are asking $674,900.The home went for $230,000 in 1991. Meaning market value in 1998 was probably $250-275k (covers probably a little more of the mini-bubble in 1991-92 followed by stagnation 1993-98).So $250-275k to $650k between 1998 to 2006. That's a Prince William style bubble and why I don't understand why you and others keep saying "it didn't go up as much in the inner areas." Not the case near the Orange Line.
gtethanks for jumping in and filling in the "..." portion of my statement. The government is buying MBS's why? To keep interest rates low. Why? So that banks can offload their REOs at decent prices with little loss. There is no dichotomy here between what you're saying and what I'm saying, I'm just being too brief. There has been no risk based pricing since who knows when, prior to Clinton? They didn't assign interest rates with risk, they just saddled suckers who were uniformed with higher rates. That's not risk-based pricing, that's price guaging. In case you missed it, what I'm buying at $220k, I am fully prepared for it to drop to CASH-flow investor value of 180k. It's just that even if that happens, the math still works out such that it makes sense for us. Positing a new long era of flatness is hardly bullish. Positing that DC may follow the same trajectory as every other major city eventually has is just pointing out what it may be time to contemplate.If tbw, or you or contrarian or any lurker reader feels confident that price _will_ go down to 2002 levels then they should wait, and as I've said many times, as has housebuyer, waiting can't hurt you. I just don't understand tbw, because everywhere I'm looking at is back at 2003 prices. I personally feel that those are too high, but my opinion doesn't really matter in the large scheme of things.
Very well said, GTE.
gte, I'm not an economist and have not read all the research on the many different types of interest rates and the many factors that affect their levels, but being ignorant has never stopped me from commenting and it won't stop me now! Demand is at least part of the picture for some types of interest rates, and I think this is one reason why unemployment is thought to be a factor. If businesses are afraid to invest much now (e.g., because they don't think they can profit from producing more goods or services because customers won't buy more and may in fact buy less), they don't ask to borrow money. Same basic logic for consumers - if they fear they will lose their jobs or won't get pay increases, they spend less, borrow less, in fact some may save at higher levels, further increasing the supply of money to lend relative to the demand for that money). Research shows that current savings rates are the highest they have been in a long time. As demand to borrow $ decreases, and supply is constant or increases, the interest rates to entice more demand should decrease, ceteris paribus and all that.
Cara,I don't believe I ever criticized your decision to purchase a home. I did once question why you were buying a condo or TH because it seemed like people making what your husband and you do traditionally bought further up the housing chain. When you explained you were purposely buying lower on the housing food chain then your income might suggest I dropped it. If you are only spending $220k the potential downsides are pretty low -- both in that market and given your income/likely net worth.You say you don't understand where I'm coming from. Look at the Arlington TH in Ballston I posted. http://franklymls.com/AR7104132They are asking $674k (actually originally asked $689,900) for a home they bought for $649,600 on 7/3/2006. They are asking *above* 2006 prices and not 2003 prices.We all know if I submitted a bid at a 2003 price (10% over 2003 Arlington assessment = $443,630) that it'd be labeled "insulting."If Arlington drops to 2003 levels I'm underwater *six digits*. And frankly I'm insulted the seller is even asking more than he/she paid in 2006. It's like he/she does not think the past three years happened.
Cara,http://franklymls.com/FX7117509This home in Vienna assessed for $422,995 in 2003. Add 10% and you get $465,294.Asking price: $734,900Look at the front -- it's not a large home. It is a short drive to the Vienna Metro station and in the Madison HS school district which is worth something. But in 2000 you probably got this home for ~$300k (2000 assessment is $279,900).People are still crazy in the markets I'm looking in. No one is anywhere near 2003 prices.
TBW: That place that was assessed for $422k in 2003 actually sold for $600k in 2004. My guess is that it would have sold for around $500k* in 2003 (still pretty silly). Keep in mind that the assessments lag by ~18 months, so the 2004-2005 assessments should have been based on what similar houses sold for in 2003-early 2004, and it just so happens that to be around $500k ($448k & $551k, respectively).Oh, and I would never pay that much for that house, because for $100k more, I could get these, which are dramatically nicer:http://franklymls.com/FX7048257http://franklymls.com/FX7092656http://franklymls.com/FX7090776* I pulled $500k out of my rear. I remember houses increasing by 20% a year back then, so I multiplied the 2004 selling price of $600k by 83%, which gave me $500k.
"TBW said...So $250-275k to $650k between 1998 to 2006. That's a Prince William style bubble and why I don't understand why you and others keep saying "it didn't go up as much in the inner areas." Not the case near the Orange Line."TBW Ive never said this or that property didnt go up that much. What I pointed out was the countywide data shows all of Arl, Alex, FFx & Lou went up 130% - PWC went up 180%. Im sure some houses in Arl went up far more than 130% - im sure some houses in PWC went up far less than 180%. Im just pointing out that the data is what the data is.As I havent been handicapping individual houses, im not going to start now. Ace, Jeff B and a few others who follow them will be able to tell you more than I.FWIW, The data says this market segment is vastly improved over the same time last year - roughly twice as many homes sold on the same amount of inventory. If this home is priced right, it will sell for 95% or more of list price, in 2 months or less. If it isnt priced right, it will stagnate for who knows how long...
TBW, I am still amazed at the sellers in Arlington who list at higher than 2006 prices. I laughed at this townhouse when it first came on the market three weeks ago. They've already dropped the price once, and I'm sure it will continue to sit if they keep it at $675k.My anecdotal, unsupported-by-statistics, observation is that if it is priced correctly in Arlington, and it is close to the metro, it goes under contract in a week. If not, it sits. I've seen a lot of price drops after just two or three weeks on the market, because the sellers know this.
oi! Shiller was on The Daily Show tonight talking about Geithner's house. Hilarious!
This article is interesting:http://dc.urbanturf.com/articles/blog/hottest_market_in_the_dc_area_outside_the_beltway/1184Sorry, I'm techno-challenged but hope you can go with that link.
"Me, tbw, Leroy?, contrarian-I'm not sure if he will ever be a bull :-)."No lists or labels for me... people will start assuming they know what I think.
Cara said..."I just don't understand tbw, because everywhere I'm looking at is back at 2003 prices."Cara - that's because everywhere you look is the very low end for Northern VA (200k is low end here). 500k+ homes certainly aren't at 2003 prices anywhere in Fairfax County that I know of. Its all perspective. We're all happy for you that the low end has come down enough for it to make sense for you to buy now. Some of us are still waiting for that to happen in our desired price ranges. It just happens those sellers have more money and have fought off foreclosures longer, so that market didn't get the rapid price adjustments the low end did.
TBW-I think it would be better showing properties that actually sold. There are always people in any market who list their house for way more than it is worth. I am sure that the person in ballston put nothing down and is trying to sell there house without taking a loss and needing to bring cash to the table. My guess is they are not wealthy and after not selling for 4 or 5 months they will switch to a short sale and lower their price to something more reasonable for the area.
Ok, real life. I lived/home owner in Arlington. We did 2 long distance moved before returning to the area. We didn't consider Arlington because of price,yard and house size. I did check on Fairfax, Springfield, Barcroft..etc for about a week until I discovered VRE and Manassas. I quickly eliminated Fairfax due to the taxes and lot/house/age/size for sq. ft price. Having lived in an Arlington walking/metro commute to the Library of C. I knew even close in, a DC commute is a DC commute..count on at least 30/45 minutes where ever you are. So what is an extra 15/20 minutes from Manassas on a train where you can eat/sleep/work or whatever. I have NEVER, not for a second regretted that decision, big house, big lot, seclusion, quiet, good schools, low taxes.
tbw, all,sorry for getting a non-constructive tone last evening.Yes, there are plenty of WTF sellers still out there. But PWC does act as a safety valve on FFX, and pockets of affordability in FFX act as a safety valve for FFX and Arlington too.It's a matter of the cards you're dealt and what to do about them. If your heart is set on buying that 20-40 year SFH now, and there's nothing out there that both meets your needs and is priced at what you feel it's worth and what you're willing to pay, then wait. Wait another year or two. But while you're waiting start investigating outside your favorite zip code to see if there is a pocket of good value, that also meets your needs. The reason why prices won't go up, why there's no harm in waiting is because people like myself and housebuyer are going to buy for the near term something we can afford and own outright in under 15 years, rather than contribute to the demand for more expensive homes. And people like yourself and many others on here aren't ever going to pay $600-800k for a simple SFH. Instead you'll wait, and go where the prices are good, where you can get a good value for your money.There are nice homes in Burke for under $500k, not a lot of them, and they're getting snapped up quicker than I think makes any sense, but they exist. If the neighborhood you've got your heart set on is just too popular, such that there's always someone willing to pay more than you there, then look elsewhere. But give it a year, in case there's more real shack-out left to happen.
Jeremy,I was looking up to the $350k range, and that's still all between 2003 and 2004 prices, I just didn't find anything worth paying more for than the cheap place we're looking at buying.But yes, that's still low-end for FFX, and the other tiers have not moved to the same extent.My other source of "perspective" is a high end house in Rockville that a friend is trying to sell for under her 2003 purchase price and not finding any buyers. I find it extremely difficult to swallow that Arlington is that much "better" than Rockville, because I personally really liked Rockville. It just doesn't compute. Even if I don't care for her McMansion style, 5000 sq ft. home.
In today's bucket I'm back to your regularly scheduled doom and gloom predictions. Data will do that to me. You've got to check out the June 28th GOA report on non-prime loans.
Arkey, I completely understand your decision. However, 30 minutes isn't the minimum commute from Arl. - I have a 15 minute commute to an employer without a metro stop nearby and I'm sure a lot of other Arl. folks have the same, with or without metro.Cara, I think it's tough to compare Rockville and Arl. as completely different tradeoffs are made. They're very different communities with different commutes. Rockville will appeal to people that Arl. won't, and vice versa. Much as I wish it weren't true, there is no way that most parts of Arlington are at 2003 or even 2004 prices. But I don't think we're at the bottom yet...
Ace,Indeed they are pretty much totally distinct. And yet the parallel universes so close together is weird and disconcerting. And I think should serve as a reasonable warning that Arlington cannot hang on to as much of its gains as it has so far. It's just implausible. There's too many other good options in the region that are getting less expensive. (not that there's any disagreement here, that I see)
Cara, agree about the price prospects, but I guess the same thing could be said for Bethesda vs. Rockville and Northwest DC, which I think are more highly priced than Arl.
oops, I inserted in the wrong place - I meant to say (NW DC and Bethesda) vs. Rockville. I perceived NW DC and Bethesda to be similarly located to most parts of Arl. but more expensive than Arl. and much more expensive than Rockville.
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