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Thursday, September 3, 2009
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74 comments:
NEWSFLASH
Frankly's "solds" data now also gives you rental listings.
In only important to Cara "news" the nice semi-upgraded end unit in Woodwalk sold for $270k (minus a small kickback)
http://franklymls.com/FX7103961
(they'd installed ceiling fans in all the bedrooms which given that no overhead light was standard, I think is their biggest improvement)
And another of the shorts just came back out of contract with a bank approved price of $245k
http://franklymls.com/FX7103263
Now I say there are reasons why the one we have under contract should not be valued as highly as either of these, and that our "discount" is approximately in line with what it should be (for needing new floors, having the original heat pump, a non-functioning dishwasher and questionable frig, etc.) But still these high prices make me nervous.
On the other hand the fact that that bank got back to the buyers so quickly with their counter offer almost makes me jealous (if it's true) regardless of the fact that I don't think there's a chance that these units will maintain $245k after rates go back up and the $8k evaporates and hence there's no way we're going to pay that.
I know, you can't pay tomorrow's prices today. But what's the point of a short sale if you can't get tomorrow's prices today? I still think I should get a hassle-factor discount...
This is an old article but was linked to something else I was reading. I missed it months ago.
Prince William County (and Manassas, Manassas Park) Get Governor's School
I don't think this is a huge deal but is a plus for many potential buyers in those areas. I imagine few students all the way out in Manassas wanted to commute all the way to Alexandria for TJ.
Also just a little bit of trivia from today's Post -- Education Secretary Arne Duncan's kids go to Arlington Science Focus Elementary School.
Jeremy/Cara,
That article about federal hiring was about 2009-12. I do think we will see most of that hiring by FY 2012. Note that we did not see much FY 2009 hiring because Obama and Congress mostly kept Bush's numbers intact. The FY 2010 requests do have some substantial hires. Robert was very, very wrong :) short term but only a little wrong long term. It does seem we will have more federal employees in FY 2010, 2011, and 2012 but as they noted in the Post the percentage of workers who are federal employees will still be smaller than the percentage in the 1960s-70s. So this is not a new, new Deal or Great Society but an uptick from before.
The big unknown is how jarring or non-jarring is the contractor to federal employee transition. Do SAIC, Boeing, et al have the ability to slowly transition out employees (most of whom get federal gov't jobs) as Robert predicts? Or do a lot of those people end up unemployed for 6-18 months while trying to get a similar federal job (or do they lose them to veterans)? Also, do SAIC et al end leases in Tysons Corner etc and GSA puts all the new employees in DC serving as a counterbalance to the past 30 years where jobs moved outward instead of inward?
I think low end probably already bottomed or soon will, middle and high end bottom in late 2011 or 2012. 2006 peaks not reached again until ~2022. L recovery. The "upticks" we have seen lately are just foreclosures as a smaller part of sales.
Remember also that federal workers have European style retirement plans. Even if you totally screwed up your TSP (401k for the gov't) you still have a defined benefit + social security. So I can't imagine they'll really feel the need to stick around too long.
Plus I think we'll see strong stock returns over the next three years.
If you were banking on the TSP, the defined benefit looks pretty tiny.
I think it depends more strongly on how taxing or rewarding the job is. You also have the issue that in a lot of places there's a big experience/age gap between the large cohort of retiring workers and those to whom they need to hand over the reins. Some people need to stay on to smooth over that transition.
contrarian,
Because I think at some point in 2010 we will be out of the recession and growing in 2011-12. Naturally the stock market will go up. I'm not saying we will be hitting 20,000 at the DJIA but I think we'll have erased all or almost all of the drop from last fall.
Cara,
I don't think anyone really needs to bank on TSP. FERS is ridiculously generous (not as generous as CSRS but still pretty huge.) Once I saw how ridiculously generous it was (if only I knew as a law student) I've been rushing to get into the gov't before Congress tightens the belt again.
FERS Handbook
On page 8 it shows how the pension is calculated. 1% of your high-3 average pay times years of service (or 1.1% if you retire at age 62 with 20 years of service).
So let's say someone retires at 62 with 20 years of service and their high-3 average is $100,000. That's $22,000 a year and $1,833 a month. HUGE. If they had 30 years of service that becomes $33,000 a year and $2,750 a month. HUGE. And that's before social security and any TSP distributions. They get a retirement health plan for those retirement years before Medicare. And if they took our advice and paid off the mortgage most of that is play money minus any amount needed for health care expenses.
The pension benefit for most private sector workers is $0 a month.
Interesting conversation yesterday. It took me a while today to catch up after taking yesterday off to move. By the way I keep on forgetting how much moving sucks, next time I really do need to hire someone to do it. Or at least higher a couple of the day laborers that were siting outside the uhaul place.
As another comment the apartment that I liked and thought was way overvalued just went under contract. At the time after countering our final offer was 40K under the sales price. Since then another couple of months went by and the owner dropped the price a couple of times. I am really interested to see if the house will sell below or above our final bid. I am guessing below.
tbw,
It may be "HUGE" but people are greedy. And people do plan ahead using their expected retirement incomes...
Thanks for pulling up the pdf. (it actually goes up to 1.1% for over 20 years of service, but then there's a 10% reduction so that your spouse can also get 50%survivor benefits).
Another way to look at the same numbers is that given that 35 years of service is about the maximum anybody would end up accumulating, the FERS benefit stands at at most 35% of your highest earning years before tax. That's still quite a paycut, and one most people will want to supplement.
In addition to the fact that more and more people are NOT taking our or Michele Singeletary's advice and paying off their mortgage before retirement.
But yes, people will eventually retire. It's just that I've heard the refrain that jobs are coming when the boomers retire for so long, it's kinda like the wave of foreclosures that's coming, except people have been foreseeing it for longer.
TBW,
Regarding the survey about Federal hiring and your doubting response, you made me recall a Facebook quote from my sister. She is a big Duke fan and wasn't too pleased that UNC had just won the National Championship in basketball this past April. She wrote the following, "I still think UNC is overrated."
housebuyer,
Congrats on the new apartment.
It's always an interesting exercise seeing what someone else paid for something you seriously considered buying. I imagine it's even more so when you actually put in a bid and entered negotiations. So far though, for properties I've been watching, the prices have a lot of spread, as much as 5% lower and 10% higher than I expected.
Robert,
I think you mean me, not tbw for the principle doubter. Did you read the article? They were doubting themselves. It had more caveats than conclusions.
tiredbubblewatcher said...
"Because I think at some point in 2010 we will be out of the recession and growing in 2011-12. Naturally the stock market will go up. I'm not saying we will be hitting 20,000 at the DJIA but I think we'll have erased all or almost all of the drop from last fall."
That drop was a correction in itself. Trillions of dollars of equity creation spurred the economy and drove stocks to artificially high prices. The opposite of that must now take effect. Take a look at the indexes going back 30 years. Tech bubble BOOM... correcting... housing bubble BOOM... now correcting...
Cara,
Okay. I did start reading the article, but once I figured out it was an article about a survey, I went to the source I don't see the caveats you are talking about.
Robert,
the source is a government recruitment website. You expected to get caveats from them?
or from your link:
The Partnership for Public Service is a nonpartisan, nonprofit organization working to revitalize our federal government by inspiring a new generation to serve and by transforming the way government works. To learn more, visit ourpublicservice.org.
Still it is possible that the reporter is inserting more cautions than are truly warranted for the sake of "balanced" reporting.
I still say GMU's reporting on the actual hiring is both the most accurate and most promising measure so far.
Cara,
Interest rates seem the better story at the moment. How low do you think they can go? Are you surprised that after the Fed withdrew from further purchases of treasuries, they have gone up in price and down in yeild...by about 50 basis points. Is 4.5% possible? 4.0%?
Robert,
That's way beyond my expertise. Nothing that involves stock markets or other fungible markets surprises me because they never do what I expect.
Someone on CR claimed that buying treasuries was one method people were using to essentially short equities. I.e. that the rise in treasury prices was due to "people" "feeling" that the stock market's long summer rally was going to loose steam for a while. So the low yields on treasuries actually precedes the causal thing of people losing faith in a further bull run in stocks....
See how I sound like I don't know what I'm talking about when I babble about things that I don't know what I'm talking about?
Could mortgage rates hit 4.5%? Yes, but if they did, I would guess more people would be worrying about their jobs and their retirement than they are right now.... Treasuries below 3% sounds like deflation to me....
housebuyer: Or at least higher a couple of the day laborers that were siting outside the uhaul place.
One word: Craigslist
Take a help wanted ad out on Craigslist. Be brief, but plainly state that you are looking for short time help, will pay cash, and expect an honest day's work for cash payment.
You will be amazed at the response you will get. I had over 75 responses. Ended up interviewing two primary candidates, and two backups. I made it clear to the primaries that if any "drama" popped up, I'd replace them on the spot with someone waiting in the wings. We moved the entire house in one day. From 5AM to 10PM. D-O-N-E. Didn't break a single thing. I gave each guy a $100 bonus I was so happy.
Craiglists rocks if you're careful and know how to use its strengths and minimize its weaknesses.
And no... I didn't hire Mogambo from Nigeria who wanted to send me a cashiers check I could cash before I hired him. What a tool.
tbw: ...That's $22,000 a year and $1,833 a month. HUGE.
Nice. Some muni pensions were as good...or better.
The wife has a muncipal gov't pension that kicks in when she is 50. $2400/month. Took 15.5 years to get it, and 1/2 of it was 100% paid, the other half she had to pay about 4% per pay period as her contribution.
It was so good the new Mayor killed it less than 30 days after taking office. Folks had 6 months to switch over or GTHOOD. So, mass exodus of oldtimers.
Neat way to run off all the older folks and significantly reduce your benefit costs....
Regarding the $8,000 new home-buyer credit -- I found this interesting -- a new home development right off the FFX Parkway in Springfield (and I mean right off the parkway!) had been dropping prices all summer. Then today, they upped their prices on all three model homes by ... you guessed it, exactly $8000.00. Here's the listing for one:
http://franklymls.com/FX7047678
Looking to cash in before the credit expires in a few months, perhaps?
Cara..another change in topic...shadow inventory.I've been reading and from what I understand they are basing it on the numbers they have collected and totaled on NOD and trustee sale notices and compared to MLS data. If that is there premiss, thats shakey.There is little or zero shadow. Frankly says he has all sold data but nada..Bear Creek has had 2 close that he doesn't have..one closed July 8 and it hasn't even been recorded yet. We have had 3 healthy sales close at 535,545 and 550 and 1 UC..and a foreclosure with a history. We had 1 foreclosure in 07 that I know never hit the MLS because it was bought at the courthouse so it never made it into the MLS, the other poor thing has had every notice and junk thrown at it. Its actually been sold close to a year under a SS and then foreclosure. It took it so long because with because there was a lot of legal issues with lots of paper to clear title. One foreclosure proceeding was against a couple, the second was against the person that got the house in the divorce..it was a mess and on the MLS various times from 07 thru 09. Thats just 2 examples out of my very small neighborhood.
GiGi
That's hilarious! Especially on a $700k+ house price. Guess they're hoping for that crane operator and his soon to be bride...
I just don't understand the attraction of a beautiful new home from which you can see the FFX County Pkwy...
Arkey,
"they" who? The only actual calculation of shadow inventory I've seen is from irvine housing blog. And they have better data out there than we do. Dataquick is much more reliable than realty-track, and the sold numbers are all double checked by a couple of realtor friends on the blog. The main trouble with his calculation is that he assumes pre-foreclosure inventory only stays in the pipeline 12 months. For CA this is clearly not the case, it's at least 20 on average right now if not 24. But increasing the holding time in serious delinquency to 2 years from 1 only cuts the future REO inventory in half.
Here, yes, there is a whole lot of double counting going on. I'm not holding my breathe, and I prefer to rely on the foreclosure data that we have before our eyes, like the charts on the WaPo (that only go through June) but show FFX County trending higher... presumably that will level off and trend down, when? I don't know.
But yes, people will eventually retire. It's just that I've heard the refrain that jobs are coming when the boomers retire for so long, it's kinda like the wave of foreclosures that's coming, except people have been foreseeing it for longer.
Oh I agree they definitely overstate it. I can remember articles in 2001 saying 40% of the federal workforce is eligible for retirement. My main reason for thinking a good number of positions is opening up is mainly the large requests in the various FY 2010 budgets. I also think that precisely because of the market there will be a good amount retiring in 2010-12 versus the average year because we probably had few retirees in 2008-09 because of the stock crash.
As for retirement income -- I don't feel like running the calculator but you get a good amount with social security. Plus the gov't gives 1% of your salary (without deducting 1%) to the TSP and then matches elective deductions. So if you don't gamble all your TSP savings in your late 50s/early 60s you should have a really huge chunk there. 1% automatic match + 5% elective contribution + 4% gov't match = 10% of your salary each year by only deducting 5% of your salary. Now obviously many people do not do that every year but for those who do it's another huge retirement benefit. Almost no one in the private legal sector matches 401k contributions.
Robert,
Not sure I follow the point of your analogy. Are you denying that you were wrong about 2009? Look at this quote in today's article about Loudoun's budget problems:
The area is expected to experience a net loss of 21,000 jobs this year, said John McClain, senior fellow at the Center for Regional Analysis at George Mason University. But in the next few years, McClain added, the region will see net gains in jobs.
Article
Face it -- you were wrong, wrong, wrong about the federal gov't offsetting job losses this year. :)
tiredbubblewatcher,
Hate to break it to you, but if you're expecting three years of stock gains soon you're dreaming. Unless, of course, that's in highly inflated dollars! :-(
Regrettably, given the current situation I'm expecting a dollar currency "event" within a year, if not well before the end of the year.
And yes, I've put my money where my mouth is on that too....
Gigi,
That 8k price increase on the Van Metre subdivision is so weird. That subdivision has never struck me as a "first-time" buyers market. I guess I was wrong about that.
That site was also originally supposed to be used for a school. The county had been given the land, but they waited to long to build and the land reverted back to some heirs who sold it.
tbw,
I guess they don't force federal workers eligible for retirement out of the workforce like they do the military. My Dad and bunch of my friend's dads all were told to retire once they hit about 22-23 years of service. Of course, they also got just over 50% of their base salaries so a little more generous than the civilian federal workers.
joelandsonia,
Such pessimism from some on this blog. Just to be clear I don't mean we will never see some dips over the next three years but I think the three year trend will be up.
My investments in the stock market are via my 401k so it doesn't really matter if it takes 25+ years for my contributions in 2008 to recover. Okay, taking 25 years is not ideal but you get the point. My overall investment portfolio is pretty conservative. In fact, I have more in bonds in my 401k than apparently many 60 year olds from the NYT article Cara found.
Cara...the problem is relying on MLS data be accurate to gage their notifications. I don't doubt the numbers they are accumulating but have serious doubts that you can count on a 1 to 1 match to thousands of MLS databases with thousands entering data.
HayfieldGrad,
No they definitely do not force them out. I read an obit the other day about a woman who served 50 years or some very long amount of time in the federal workforce.
Does anyone find any irony that people cannot get out of luxury Redskins seats but they can get out of a mortgage?
I am somewhat sympathetic to the Redskins GC who points out these people were presented with a contract and are adults and should realize what they are signing. On the other hand I don't think it's particularly nice (or good PR) to go after people for tens of thousands of dollars who likely cannot pay it.
Another takeaway of the article is people were spending too much money! Particularly realtors who seem to be a lot of the people mentioned. I suppose they thought the days of 6% commissions on homes increasing 20% would never end. So they figured they could always afford really expensive seats. I just don't see how anyone but the superrich (which most of these people were not) could have thought they could have afforded to spend thousands on Redskins tickets each year.
Redskins article
TBW: "The area is expected to experience a net loss of 21,000 jobs this year, said John McClain"
Yippee ki-yay
TBW-
I feel bad that the person can't afford the tickets, but she did sign a contract. It is also really silly that she would back out. I am pretty sure you would be able to sell most/all of the tickets for at least face value.
contrarian you are the best. I don't know why that cracks me up but it does.
it's a lease, just like anything else.
I think the redskins make a terrible mistake
suing their fans.
if the fans can't pay season tickets, keep their deposits put their names on the list for future tickets
resell what they didnt pay for.
the skins just got a million dollars in bad publicity
Why, on God's green earth, would anyone cheer (Yippee!) job losses?
Come on people. Does nobody call anyone out here? Call me out all you want, but some of this stuff is over the top.
An update: I posted a few weeks ago about a TH short sale my wife and I passed on due to the bank coming back at a much higher price and refusing to budge. Well, after we canceled the contract it sat on the market for that price for two weeks with no bites. Then it came off the listings. Turns out they (Countrywide) did a loan mod.
Also, re: yesterday's postings- we really like having Frankly MLS. Access to such information should be standard in every market. Re: Yun's alleged comment about REOs hitting the market harder after the $8K seller's credit (oops, that was supposed to be buyer's, right, but who ended up with the extra $?) expires- I think perhaps if I were the bank, I'd release what I had to clear them out in the off-season so as not to impact the busy season and possibly generate an above average number of sales in the off-season.
I have heard that reo's are getting fewer offers ( 4-5 vs. 10-15), but I heard diffrently tonight. It's very anecdotal and localized, but I heard of situations of 20+ contracts and places going for 20-30% over list.
My friend thinks that these will fall-out due to appraisals, but I think cash investors will raise the comps. Who knows? Things are crazy on the low end and I'm inclined to step back.
I have heard that reo's are getting fewer offers ( 4-5 vs. 10-15), but I heard diffrently tonight...
It does seem to vary a lot by location. But mostly what I've seen up 'til now has gone close to or under list. A lot may have to do with the condition. Maybe REOs now are generally left in better condition? More prime vs. subprime foreclosures is what I'm reading and that may make some difference. Also more average Joes (like me) are willing to bid on foreclosures or short sales than, say, two years ago. Tons of info out there with which people can educate themselves.
I guess I am looking at what everyone wants (?). I have a history of this....
I guess I am looking at what everyone wants (?). I have a history of this....
Ha, ha! Yes, that happens to a lot of people. Sounds like that Yogi-ism again- nobody goes there anymore...it's too crowded.
Va_Investor said...
Why, on God's green earth, would anyone cheer (Yippee!) job losses?
"Yippee ki-yay" is what the character John McClain says in the Die Hard series of movies. I don't think he was cheering job losses, just poking fun at the name coincidence.
VA, John McClane is the main character from one of the best action movies ever.
Here's the famous quote from Die Hard 1 and 2. Kevin left off the best part in his quote.
WARNING, youtube video with adult language.
Die Hard
Die Hard 2
Vanka,
Were the owners living in it when you viewed it?
thanks
I'm hoping the fact that "my" owner has moved to AZ and therefore presumably has no interest in keeping the home, works in our favor. Of course they could always just foreclose, but I don't see what good that would do them.
Are you a good flip or a bad flip?
Previous owners had stopped mid-renovations and the bank foreclosed, sold for $200k 6/10/2009:
http://franklymls.com/FX6963239
It's now finished (presumably) and back on the market http://franklymls.com/FX7151389
asking $349,900
given this comp:
http://franklymls.com/FX7114816
which closed 8/31/2009
I'd say they stand a good chance of getting asking. (I could find others in the same neighborhood at similar prices, I believe $320-$360k for renovated TH's walkable to Terra Centre is the going price)
My only beef is that many of the renovations had already been done by the first attempted renovators. But still you had to have the cash to buy it and more cash to put in it to bring it up to move-in ready. It would be nice is some of that REO discount got passed on to us regular financing joes, but he's not asking above comps so I really can't fault him. And he's taking a huge risk, because buyers for Terra Centre, onw would think care about the school year.... I think he'll win that bet, but it's still a risk.
(where him is intended to be gender neutral)
Cara-
I agree some flippers are absurd and really try and convince people to overpay. I really don't mind flippers who try and cell for the going rate. For all those Capital LLC people that want to sell quickly they are sort of doing a service making houses livable. Most of the houses they buy are in such bad shape that banks will only accept cash loans so none of us have a chance at them anyways.
WSJ article on the state of the FHA
Eyes are now turning to the FHA loans...
I don't know how this one is going to play out. Raising the FICO limits seems like a good idea, (to get better loans paying into the fund) and increasing the DP requirement slowly towards 5% also seems like a good idea, but they don't want to create the slackening demand that would weaken their existing loan portfolio....
Something about barn doors and horses... or better late than never, you decide.
housebuyer,
This was a case where only cash could be accepted because the house was not in livable condition. But, that was mostly do to the mid-renovation state, not necessarily intrinsic issues. And they have priced this totally appropriately with respect to comps, so I can't argue with them.
It's also unknowable how much of the previous renovations had to be ripped out for shoddy work.
My other beef is this neighborhood is overpriced. It's getting a $20-30k boost from proximity to the elementary school. But the Megan's Law list should give anyone pause about bringing kids here. I mean, who knows how accurate those residences are, and you're never safe anywhere, but still, creepy. So I kind of hope people are buying for the resale value, and not for their own kids.
WSJ amazingly unrealistic reluctant landlords
I know this is anecdotal reporting, but my word these people are twits.
Karen B. McIntyre, 46, a certified financial planner in Lower Gwynedd, Pa., a Philadelphia suburb, says she and her husband have been renting out their former home after they bought a newly built home nearby because of its better location and excellent price. "We may also lose some of the capital gain exclusion, but expect the increased selling price (of the older home) will make up for the decrease in capital gain exclusion."
Read that again folks. This financial planner think that they're going to make so much more money in two years compared to if they sell now, that it will offset the fact that they'll need to pay capital gains taxes on it.
I can see how they think that. Suppose their current "gain" would only be $10k because prices have dropped down to almost what they paid, then if they get as little as $3k more than now, they come out ahead, so long as the rent is covering the carrying costs. But for some reason, I get the feeling their expectations are a bit higher than that...
TBW,
RE: Jobs
It's September. I've never heard of John Mclain. And not sure what prediction you are talking about. My posts said I was surprised at the strength in the housing market because I didn't think the jobs tsunami had started.
BTW, how are your interest rate predictions panning out?
given that Frankly has rental listings... Out of 6 or 7 rentals in my "target" neighborhood (which should be plenty few enough to please GSE guidelines for funding), 3 are "accidental", by which I mean that their purchases were recent and at prices over $300k (listed rents between 1345 and 1600).
Unless they put down over 20% and/or have an interest rate under 5% they are losing money monthly (unless they are in I/O loans...) The condo fee is the kicker.
OTOH, 3 additional motivated sellers isn't exactly what I'd call scary.
Someone please explain the price history on this one....
Holey Schmoley:
http://franklymls.com/FX7024592
Cara said...
"The condo fee is the kicker."
Having owned a condo for five years and been witness to the a**-raping the condo association subjects the owners to, I will never own a condo again, and strongly recommend the same for everybody else. Looking back, the difference in what I was paying per month because of the fee, I could have bought a 3BR townhouse instead. The appreciation would have been greater, I'd have an extra room to rent out if I needed, and there would have been more of a tax deduction.
TN, that pretty much leaves me speechless. If the rationale exhibited by most sellers in this market were any indication of humanity as a whole, I would be constructing my space ship to leave this place.
Texas Native,
I've seen listings like that before where the $1,799,000 price is where they had it listed as new construction with drawings of what it could look like. Basically they're trying to sell it any way they can.
kevin,
In this instance the condo fee is IMO pretty small $200/month given what they've accomplished in maintanence and upkeep over the years. It's not a lot more than we'd be allocating ourselves in a maintanence allowance if we owned a TH separately. And, more importantly, it's no where near the kind of game changer in terms of space that you describe.
It will be interesting when I actually get my hands on the special assessment history and records of homeowner delinquencies, but on face value, the condo fee is already priced in to current prices, it's just that it's the difference between treading water and going further into the hole for these bubble buyers.
Cara, those owners also have to pay for real estate taxes and any repairs not covered by the condo association. So they are losing quite a bit (at least I consider it quite a bit) each month.
Ace,
I factored the real estate taxes in already, but not the increased home owners insurance for a rental, and haven't accounted for any vacancies. It's a great location, so vacancies should be short.
(basically I was just taking the rent versus own equation for full PITI and assuming no rental increases or appreciation, which comes up with a $240k mortgage for break-even for an owner occupant).
The fact that there are at least 3 other longer term landlord owners that can compete with them on rent (and probably spank them for dependability) doesn't help...
kevin,
but to another point of yours, yes, these suck with respect to appreciation. That long flat period after the last bubble? Lasted until 2003 in this neighborhood. If you're looking for appreciation potential, don't buy a condo. (unless you're doing so after everything else has started ticking up, the 2002/2003 buyers made out like bandits if they sold at the peak).
If we wanted appreciation potential as opposed to fixing our housing costs at a low level, then we'd need to spend more.
And if the short sale falls through, followed by the rest of the market collapsing as the 48k demand fades, then we may just do that.
Cara, what confused me was your statement that "the condo fee is the kicker." I may have misinterpreted it. My point was that even without the condo fee, the $1300-$1700 is substantially less than the out-of-pocket costs each month for those recent buyers who now have to rent.
I should have said, "who now have to rent their places to someone else."
Ace,
monies are fungible so you can pick which ever cost you want to decide is the one that puts it over the edge.
These were bought for $307, $325k and $345k, rental parity for _all_ costs including maintanence reserves, taxes, HOA + condo, etc is about $250k at 5% interest, $225k at 7% interest.
So it gets back to our opportunity costs plus monthly cash-flow bleeding discussion we had before. The $307k buyer may have put down 20% and have "only" opportunity cost losses, the others would need to have tied up a lot more than that in order to not be continually bleeding money now.
In any case, while other owners who bought at the peak may still intend to hold on because they like where they're living, these three are definite future inventory as soon as they get the chance or decide to stop the bleeding/take the losses.
Unless of course we get rampant inflation soon driving up rents.
Cara, I think it's really even simpler than that. When you add in all true costs, the current rental income doesn't cover the real costs of the units. In the past there were tax provisions that for a few owners made this viable, but those were changed and limited. More recently, owners might be willing to take a (small) hit or give up what they could be getting in an alternative investment because they thought housing prices were going up rapidly. Now, they are just bleeding.
There are a few owners around who are in the military or otherwise are out of town for an extended time, and who plan to return to their homes after renting them. But I would guess these are a small minority of owners.
Tough times for accidental landlords and ladies, no matter what you focus on - and IMHO, unlikely to get better for them.
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