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Saturday, July 4, 2009
Northern Virginia Weekend Bits Bucket 7/4-7/5, 2009
Posted by Harriet at 6:00 AM
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32 comments:
Robert said to let others post first but this one is amusing.
Cash is King for Investors
Here're a few cherry picked quotes:
"Even with today's minuscule returns, cash seems to have become a sought-after asset class among investors who intend to keep it as a part of their portfolios for the long term."
"money market mutual funds -- which are low-risk, highly liquid investments -- exceeded 25 percent of the market capitalization of the Standard & Poor's 500 index,"
"So they are clinging to their cash, especially in plain-vanilla accounts like money market funds, which now yield on average only 1.3 percent,"
"...hoarding cash so that they can fund operations, buy other companies or to ensure they can satisfy their debt refinancing needs going forward."
No wait, that only applies to big corporations, pension funds not to small players.
"Robert said to let others post first but this one is amusing."
I'm confused. What is so amusing about that article? I didn't get much sleep last night, so i might be missing something.
FYI, i think Robert is married. You should probably chill out on the e-flirting.
@J@-
You don't have enough money in your money market account to buy other companies :-p
"FYI, i think Robert is married. You should probably chill out on the e-flirting."
Things just haven't been the same for KH/@J@ since Lance dumped her...
"What is so amusing"
...is that cash in low interest MM is a major trend.
Returns of 1.3% was cited.
Some here claim a better approach than outfits, fund managers, individuals who manage millions, billions.
Just saying, someone needs a little education. Might be the big dogs got it wrong.
I'm not taking sides. I stated what I was doing.
"You don't have enough money "
Of course not. Does anyone?
I do have enough to invest in RE, small businesses, stock, back out-of-work people struggling to find their footing, fund charities, at my own pace, on my own schedule.
It's a mark of a small, nasty person to run others down, make snide remarks. Not saying that you fall into that category but look around.
Adios, my friend. I'll be doing work for a charity (this is one of neediest of the needy in this area) this afternoon. My holiday, my cash. That's how I roll.
@J@-
Yeah I was just trying to tease that the article made it sounds like normal people were the ones with high demand for money markets. Yet it also said money markets were full with money getting ready to buy companies...
Clearly both of these are not talking about the same people. I wasn't trying to be mean, just make a teasing comment at the article.
Well I hope everyone is having a great 4th of July and can see some great fireworks and not get hurt in the process :)
I'm sure this has been posted here already, but maybe it gives a little insight into why Arlington housing prices are so high.
http://www.youtube.com/watch?v=4T1RMuoQnKo
Funny stuff.
This is a follow-on to the tail end of the 7/3/09 bits bucket.
"I guess that is fair, although there are definitely a lot of places in the Tysons area where starting salaries are $60-65K(many consulting/finance jobs). So within a couple of years these people are in their mid 20s making 75K each and spending 400K if you make 150K is very reasonable." - housebuyer
I am not picking on you housebuyer, your post was just what brought this to mind...
What is a bit sad to me is that it has become so accepted that all families are two income families with both adults making good salaries... and that this is what is required to buy a house that a single income family, an average income at that, could have purchased easily not that long ago.
It was not that long ago that a family with a single doctor, lawyer, engineer, CPA, or architect, etc... would expect to comfortably buy a nice house in a nice neighborhood regardless of whether or not both adults worked.
Now it seems people just expect that a family will have two such high-earners just to make the math work. Regardless of whether both adults want to work, I know my wife does, having both work shouldn't be necessary just to buy a starter home that a single such professional could have easily bought 10+ years ago.
As a society we are working harder and harder to maintain our standard of living, or even a reduced standard of living. This is the mark of a country that is becoming poorer, not richer.
"It's a mark of a small, nasty person to run others down, make snide remarks. Not saying that you fall into that category but look around."
Yeah, because you do nothing at all to bring it on yourself.
We get it, you are a small time investor with delusions of grandeur. You think because you bought a few shares of stock and inherited some family real estate investments that you are somehow a "player" and worthy of some note.
There is no disguising your level of expertise, no matter how many times you switch names and there is nothing clever about your little comments or continual appeals to the other trolls to back you up.
Leroy-
In all of these places you can get starter homes much cheaper than 400K so that one highly paid professional can buy a place. I was just saying that for families where they do have two earners they may consider 400K as a starter home.
Also wages have risen 30%-40% in the last decade so someone making 60K in 2000 is similar to someone making 80K now.
So for a family that makes 60K, there is always the option of having a slightly longer commute or getting a smaller starter home.
Would I love to be able to buy with home prices another 25% lower? Absolutely. Do I think housing is highly unfordable? Not really.
From yesterday, Cara said: "So, I think you need to prepare yourself for the reality that when prices finally do seem to line up with what you're willing to pay, they will also be aligning that way for many other move-up buyers."
I get all that. I'm willing to pay $600K for the right place. The problem for me right now is that the selection is very slim.
I found your quote from the other day:
"Stuff over $500k is not selling very quickly anywhere (that I know of) indicating a lack of price support there..."
This is why i originally posted. In my search area, it appears that $500K is selling (or going UC) quickly right now.
Hope you all enjoyed the fireworks. Falls Church had a pretty good show last night @ George Mason HS.
Novahog, I agree with houses over 500 going under contract quickly. In my area 20111,20112 there has been an uptick in the 500-600 going UC since June. I think June had around 10 and for the county around 24/25. This just started as far as I know sales were sluggish through the first 4 to 5 months of the year. I'm assuming that its buyers that were trying to buy a SS and gave up because they need to get in a home before school starts. Remember I said..assumed. I don't have a clue as to why the 500 - 600 is starting to move. I have just noticed that it has.
"As a society we are working harder and harder to maintain our standard of living, or even a reduced standard of living. This is the mark of a country that is becoming poorer, not richer."
Amen
Why o why do people cheer high cost of living (high home prices) when they know labor in China and India is replacing American jobs in part because of their low cost of living?
I'm not going to say it's unAmerican, but you sure don't care about your neighbors' livelihood if you want the government to artificially prop up home prices. Because keeping home prices high will price your neighbors out of the labor force.
housebuyer said...
Also wages have risen 30%-40% in the last decade so someone making 60K in 2000 is similar to someone making 80K now.
housebuyer, that may be true for nominal wages-- if you stay in the same job. But wages haven't been keeping up with inflation, for the most part, and many formerly well-paid workers can now only find work at much lower salaries. As Econobrowser noted back in 2005, we've had declining real wages for a generation now. The only group which has seen wage gains much above inflation are the upper 5% of earners.
Some of that decline has been masked for families by adding a second wage earner, with wives typically now working, but as Elizabeth Warren pointed out in her Berkeley lecture, this leaves families less secure, since the loss of either job can cause a financial crisis.
novahog,
Point taken, you have indeed shown that there are places where UC's of $500k homes have picked up considerably.
Spring has arrived for that larket segment too it appears. How long it will last is another question.
I think I should start my, "it's the 5th of July, do you know where your buyer is?" taunting. Soon, it will be a real fear.
Leroy, Tom, Sarah
Here, here! To find a place that we can afford (not comfortably, but do-ably) on one salary my husband and I are looking at 1300 sq ft two story condos out in Burke!! It's our choice to stay within the boundaries of one of two incomes, but it is most definitely a lower standard of living than a GS-12 could have expected in the DC area only 7-10 years ago.
Cara said
...most definitely a lower standard of living than a GS-12 could have expected in the DC area only 7-10 years ago.
I can sure attest to that. We bought a townhouse in Del Ray in 2000 and could have qualified on my administrative assistant income alone.
My sister and her husband -- whose combined income was probably close to 3 times ours-- bought a single family home in 2005-- outside the beltway-- for a little less than we sold our town home for-- and could just barely afford it on one income.
It didn't get much reaction yesterday so it probably does not even need a response but HayfieldGrad was way off the mark with comments regarding FCPS. I would guess that the county put a cop in every school (this was done 10+ years ago btw) because to only do it at the problem schools would further stigmatize them.
Instead of listening to HayfieldGrad try to scare you away with crazy claims that gangs are at these schools, you can go to fcps.edu and look up any school you are interested in and there is a "Safe and Secure" tab that gives you information. I have a feeling that where you see a 1-3 at a FCPS you would see a 50-250 at a DCPS.
A lot of the middle schools have after school activities not for delinquency concerns but because kids like to play intramural sports or join activities (akin to high school). Trust me, the "bad kids" are not staying late at school because it's totally optional to take the late bus home.
DC area CRE vacancy
D.C. area office vacancies reach 12.3%
Baltimore Business Journal - by Jeff Clabaugh Contributor
The Washington, D.C., area’s commercial real estate market saw a net absorption of negative 726,100 square feet in the second quarter, the third straight quarter of negative absorption, according to Cassidy & Pinkard Colliers.
The commercial real estate services firm says the Washington region’s office vacancy rate has now reached 12.3 percent.
Lease losses in the last three quarters meant “virtually negating any growth in net demand we had in 2008,” said Kevin Thorpe, director of market research for Cassidy & Pinkard Colliers. “There are flickering signs that the local economy may be reaching an inflection point where conditions should begin to improve, but the commercial industry still has a ways to go before demand returns in a meaningful way.”
In D.C., net absorption was negative 230,900 square feet, pushing D.C.’s vacancy rate to 9.6 percent. In Northern Virginia, net absorption was negative 666,700 square feet. Northern Virginia’s second quarter office vacancy rate climbed to 13.6 percent.
Suburban Maryland’s office vacancy rate was 14 percent, with a positive net absorption rate of 171,500 square feet in the second quarter.
Thorpe predicts the growth in federal government will lead to an increase in demand for office space, but says the Washington area has more new space delivering over the next two years than any other market in the country.
As a result, “we are entering into a period of steady rent declines,” he said.
More square feet to be delivered than any other market? And yet a net negative absorption rate? Yup, we may not be in as bad a position as many areas, but our CRE is hurting too. Too bad for those foreign investors with no where to park their cash. No wonder cash is so valuable right now, it's a lot better than investing in CRE in NoVa.
Cara-- did you see the C-R piece on declining apartment rents in Los Angeles, as well? I think I'm seeing some of that on the low end here-- I've rented rooms in MD several times in the last year rather than impose on the relatives when I come and it seems to me asking rents have gone down in that time from around $650 for some place nice and well-located to more like $500. I'm thinking there's more competition from people trying to keep up with mortgage payments now.
Saw this Dan Quayle quote in C-R comments and can't stop laughing: "Bank failures are caused by depositors who don't deposit enough money to cover losses due to mismanagement."
Yup! We're such meanies!
Leroy, TomA, Sarah, et al.,
Agreed. Also, there is a much higher (than many people believe) proportion of households comprised of one person in addition to one-income households with more than one person. It's something like 30% of all households have a single person and many others have a single earner with kids. It's simply a mistake to assume that every household has two earners or the capacity to have two. And if it's disastrous for a two income household to lose one of those incomes, it's even more disastrous to lose the only income, especially when there is only one person who COULD work.
As others have said, the statistics show that many if not most American households have not had real gains in income (after accounting for an additional member going to work) in quite a long time.
It's scary.
Cara, re: your comments on the other thread - it's very easy for the rest of us to spend YOUR money. :-)
If it helps, when my ex and I bought our first house post grad school, we bought a place with a sales price about 1.2 times our combined income. We were scared to death of the expense even though we didn't have or want kids and had limited school debt. That house needed a lot of work and so the ratio really should be increased, but still...compared to the 3 or even 5 times income people spend today...wow. So I have to remind myself of that when I am tempted to chime in with those who say, "oh, Cara, don't worry so much, go for it", etc., etc.
Washington, D.C.
Table 3 on p. 7:
Negative Equity (Percent) 47
Average Difference between Mortgage Balance and House Value (Dollars) 52,113
Total Amount in Negative Equity
(Thousands of Dollars) 3,397,760
see also Chart 6 on p. 12
From Cara's linked article:
Thorpe predicts the growth in federal government will lead to an increase in demand for office space, but says the Washington area has more new space delivering over the next two years than any other market in the country.
I'm so sick and tired of the "but the federal gov't will..." in every regional article -- is it required by the NAR that we hear this with every piece of bad news?
Also, how much of the federal gov't growth is not being accommodated by federal gov't buildings? I know that the feds lease space but they also build massive structures like the new DHS HQ.
Some good reads in Sunday's WaPo:
Thomas Jefferson died so deep in debt that his beloved estate, Monticello, had to be sold to satisfy his creditors. James Madison also left behind mounds of financial obligations. But John Adams, the man Jefferson turned out of the White House in 1801, died rich and debt-free -- despite sharing his predecessor's careless attitude toward money. What was his secret?
His wife.
On Money, a Founding Mother Knows Best
This one is not really as on point but was a good article and I think a good reminder to all of us how hard many in the region have it (not just the young parents but the father housing all of them -- commute from Southern MD to Ashburn? Yikes!):
Bobby Krotendorfer didn't expect to be a father at 19, or jobless at 20. But he's determined to be a loving dad and strong breadwinner. The first part comes easily.
"Yeah I was just trying to tease that the article made it sounds like normal people were the ones with high demand for money markets. Yet it also said money markets were full with money getting ready to buy companies..."
You're a decent person and give and take is part of posting and having an opinion.
I had so-so success this weekend w/ the charity, accomplished about half of what I hoped. Finally stopped working Sunday noon to hang out for crabs, beer, and talk.
The discussion included the housing mess, to include a friend who we suspect will lose his waterfront home.
The housing bubble is a joke compared to the fallout, 9.5% official unemployment, underemployment such as PhD's working at McDonalds, families doubling up to make rent, other families breaking up, stress, abuse, people taking extreme risks with the money they have left.
@J@
"The housing bubble is a joke compared to the fallout, 9.5% official unemployment, underemployment such as PhD's working at McDonalds, families doubling up to make rent, other families breaking up, stress, abuse, people taking extreme risks with the money they have left. "
Indeed. The fallout to the economy and the stresses that has put on individuals and households and families is the calamitous part.
Contrarian,
Very interesting article, but I would point out that these percentages (and all tables within as far as I could tell) were for sub-prime and Alt-A loans only. So, 47% of the active lack-luster loans issued in the DC are are now underwater. Not quite as frightening.
Cara,
Yes, I agree, but as this LA Times article suggests, Another wave of foreclosures is poised to strike. There goes many more of the sub-prime and Alt-A's, plus many prime loans.
"The fallout to the economy and the stresses that has put on individuals and households and families is the calamitous part."
Cara, you are right.
I don't think this can be fixed in the near term. Until recently, I was pretty optimistic but given the layoffs at government contractors with security clearances, IT types, professionals, Biglaw, auto, retail, financial, etc, it seems that no one, no sector is immune.
A lot of housing bubble charts, some old, some new
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