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Thursday, October 22, 2009
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39 comments:
So I wake up to look at yesterdays "Maybe Yes, Maybe No" thread and what do I find -- multiple consecutive deleted posts -- phantom conversations with snippets from deletions -- looks like we had another TBW eruption last night!
TBW -- I note again, its annoying to see these the responses to your remarks, without the context of what you said. If you dont plan to stand behind it, dont post it my friend!
Okay that's just strange. He didn't even say anything particularly inflammatory, and one of his points (which was the same as mine) that Loudon County McMansions were going for $400k or less at the peak and hence didn't require a $200k income was a valid one for figuring out how one should interpret the building numbers.
But he just went through and deleted all of it...
Cara-
I agree and have argued that point to no avail in the past so I decided not to argue it yesterday. I mean if you wanted to push that argument further you could say well there have been more new houses in Texas every year than new people making 200K. Thus housing prices in Texas should always be going down. This obviously makes no sense.
Instead the argument should be more like there are X new people making enough to afford the price of an average new house. So in Arlington you would need to know how many new people are making 200K. In Fairfax it might be more like 150-175K. In PWC it might be more like 125-150K or something like that.
You at least need some way of accounting for peoples incomes compared to the average price of houses that are for sale.
housebuyer,
And CRT's rebuttal is that yes, that's what one would want to do, but, it's still useful around here, because the disparity between builds and new 200k+ HH's in and of itself illustrates that the median price of a new build in Loudon or PWC has to be such that lower incomes can support it.
I would also argue that it may be the case that those willing to drive huge distances just to get a questionably built McMansion, may also be more likely to have chosen their purchase price more emotionally and less rationally than those willing to trade down to a lesser product to keep a short commute. Obviously, like all generalizations, it's terrible one to then apply to individuals. And plenty of folks like Tabitha and Arkey prefer the VRE and serenity, such that their decision to move to PWC was not purely to make their money go further house-wise. (which might indicate a propensity to also spend a greater portion of ones income on housing).
Housebuyer/Cara - actually if that is the takeaway you both got from what I am arguing then clearly I am not explaining myself well. And if so, I need to apologize to TBW as I snapped at his misunderstanding of my point too.
In hindsight, perhaps bringing up "new builds" clouds the issue. My point was I hear "why the heck hasnt XYZ fallen" all the time - even in Loudoun & PWC people wonder why XYZ is still "holding up"?
My point was intended to be "if" your XYZ area is at the top of its relative food chain, its insightful to know who your competition is, and in that regard I bring up the number of new +200K competitors you need to compete with.
Now, the corrolary is that its helpful to know the potential new supply to meet that demand, but as cara points out, if that supply was some product that isnt appealing to the top of the food chain, its not particularly relevant.
Thus, for this exercise, it might be helpful to ignore the new builds alltogether, and just focus on the new number of people at the highest end of the food chain who can affect the cost of a particular neighborhood, and potentially, those below it as well.
CRT,
Right, so instead you might compare the number of new 200K+ households to the number of listings of 800k+ homes. Because you have to compare it to something (total housing stock or population are the other obvious choices)
Can you grab that, since you have both sets?
CRT,
This is also similar to my revelation that there were 14k more fence sitting renters in FFX County making over 150k in 2007 than there were in 1997, and hence that my competition made more than me... and that there were a lot of them.
Here's a quick question (part of this was inspired by Cara's searches):
Let's say you have two houses, one at $550k and the other at $530k ($20k difference), and the buyer easily has 20% down for the $550k house. Both houses are in great shape, and the only difference between the two houses is that the cheaper one has a badly dated kitchen that needs to be replaced (you could substitute other things, like an HFAC or a roof in this scenario). The cost of the kitchen remodel would be....you guessed it, $20k, or the difference between the two.
The out-of-pocket cost savings ($4k difference in down payment) isn't enough to pay for the kitchen remodel. And let's pretend that the potential buyers are financially prudent, and they don't want to touch their emergency savings to pay for the kitchen remodel, so the only money they are willing to use is their 'house' money. Would it make more sense to buy the more expensive house? Alternatively, is there a way to finance the kitchen (or roof, or whatever) costs, such as cash-back at closing?
NoVAwatcher,
Have you heard about FHA 203 financing? I asked my lender a while ago but he never got back to me... Maybe you have better luck with your lender if so please post back your findings.
Novawatcher,
If the difference in price is truly purely the same as the cost of the kitchen renovation? Then no question, buy the more expensive house.
The math (near me) usually goes more like, 20k in updating costs translates into 40k more in price. And that's because if you are cash-poor, then amoritizing those costs makes the nicer home affordable now.
Conversely if you have more than the $4k difference in downpayment available, then under my scenario, buying the cheaper house and renovating to your own taste may make more sense.
NoVA,
In addition to what MM and Cara said, I would say that amortizing the cost of the kitchen means you pay more for it, since you are paying interest on it.
But the most important factor in this price range of kitchen (vs. one costing much more) is the hassle factor. It is a huge pain to have people in your house for 6 or more weeks, with clutter and dust daily, with potential conflicts and screw ups, and cost overruns when unexpected problems are found.
If you can truly get a kitchen you want in an existing house for the price differential you cite, you save an enormous amount of time and strain and risk.
NOVAWatcher, the prudent buyer would offer the 530k house a full price contract with 20k due back to the buyer at closing! :)
That way you get the cheaper house and the new kitchen!
CRT-
Thanks for the clarification, the point makes more sense now.
Are they still doing cash-back at closing?
"Cara said...
Right, so instead you might compare the number of new 200K+ households to the number of listings of 800k+ homes. Because you have to compare it to something (total housing stock or population are the other obvious choices)
Can you grab that, since you have both sets?"
Cara - im not sure that the 800K+ data set exists. It wouldnt be inventory as thats obviously only a part of what is totally available, and it wouldnt be sales because not all the housing stock recycles, and some of that would be double counting for houses selling twice over a certain period.
Its not a perfect match, but I guess the closest data set would be the number of homes assessed in each county over 800K? If so, does anyone know if such a set exists?
CRT,
I meant inventory or sales. These were additional households so they would need places to move to, so that should show up in sales. You might want to total them over a chunk of time...
In any case it's going to be a proxy, and the idea is to compare the ratio across counties, under the dubious assumption that whatever problems there are with the ratio as a metric, that all counties share those problems equally.
Kevin-
Just so I have a better understanding of where you think things are headed can you tell me your thoughts on this place.
http://franklymls.com/FX7188410
Am I correct in saying this is basically what you are looking for a pretty nice 3 level 3 bedroom TH. Without looking at past sales or assessments where do you think this belongs? 300K, 250K?
I think something like this will probably bottom out next winter in the 325-350K range. I am just trying to find out how different our views are.
housebuyer,
1220 above ground + full basement
(you do realize the 2002 sold price is listed there).
Despite the pretty kitchen, I think if that were in Burke, it would bottom around more like $250k, maybe less. (just because it doesn't meet my personal minimum size requirements). :)
looks to me the $8K extension is getting traction?
"... Top congressional Democrats support a temporary extension of the credit-- which expires Nov. 30--and are now wrestling with how long to extend it and with what safeguards against fraud should be included.
...
Oversight Subcommittee Chairman John Lewis (D., Ga.) introduced legislation Thursday aimed at blocking would-be fraudsters seeking to cash in on the first- time homebuyer credit.
...
House Democrats would like to have Republican support for an extension of the home-buyer credit. But Rep. Charles Boustany (R., La.) said during Thursday's hearing that GOP support will be conditioned on the extension not adding to the deficit. He said unspent stimulus funds could be redirected to pay for the cost of an extension."
on a completely different note
(about me again...)
So, I keep calling Cox everytime I'm seriously interested in a house to make sure that high speed cable internet is available there, without which my husband wouldn't be able/allowed to work from home. So far the answer has universally been yes.
My question is, are there any places within NoVa that don't have high speed cable internet or FIOS available anymore?
Cara-
First I am pretty sure everywhere in Nova has at least Cox, Comcast, or VIOS although many places only give you the option of one of these.
Also yes I do realize that is has the 2002 sold price I was just curious where Kevin thought it would go. Most places around there have fully furnished basements so it is almost 1900 sq. ft. of usable space definitely not big but not tiny either. I thought Kevin had basically said he was looking for something similar to this. If you think it would bottom at 250K in Burke then you are not far off my 325K guess (Didn't we decide a couple of weeks ago that historically Vienna was ~30% more expensive than Burke?)
That's what tbw said. I can't recall how well he backed that up.
The 1220 above ground tells you how small the bedrooms have to be. 610/floor could be 16 x 38, making 8 foot wide bedrooms, or 18 x 34 for 9 foot wide bedrooms but without a lot of extra space for a top hallway and bathrooms...
Or you could have one reasonable 2nd bedroom and one that's too small for anything other than a nursery or office. Which is fine, it's just small. A huge number of the 1220 and smaller ones in Burke, the owners have made into 2 bedrooms, because it was just too tiny otherwise.
too clarify, what I meant was, I'm giving you the price in Burke, because that's what I know, and you'll have to add to that the Vienna premium of your choice to translate it.
I am about to make possibly the most inappropriate comment I have ever made on this forum. Don't worry The Anonymous I won't erase it.
Can I just say, how glad I am that I'm not pregnant while shopping for a house? I am a complete and utter wreck today, just because there's a house we really might like that we could afford that we're going to go see tonight, and I'm PMSing. If this is how bad PMS and house hunting is, I can't even imagine doing it pregnant.
And it's probably all for naught to, what are the chances that there isn't something "fatally" wrong with it, or something sufficiently wrong that we couldn't possibly meet on a price?
We shall see. My gut of wanting to get this over with, is fighting mightily with my head that says there's way more out there, and deals will probably be better in February...
Cara: when my wife was pregnant, she went through also sorts of crazy nesting urges during the final months. During a pregnancy is not a good time to make rational home-buying decisions.
Well Cara, I can't pretend to know how you feel - but I do know how hard it was to convince my wife that this year just wasn't our time to buy, and that this coming Spring might not be it either. Her plan is to be pregnant next fall so she has the kid before she turns 30. I'd rather not be house shopping with a pregnant wife, so I may cave in and look a little harder this coming Spring.
Jeremy,
Thanks. That was the laugh I needed.
I understand how she feels, I'd like to be pregnant before I'm 35. Not gonna happen.
No problem Cara -- what you said is a far cry from what TBW did yesterday.
Besides, its not a big deal to remove one posting when it has little to do with the overall flow of the conversation -- but 25 posts???
I hope TBW wasnt just abducted by aliens -- or maybe the FBI. Contrarian -- you know anything about this :)
Look on the bright side Cara,
If you were pregnant, at least you wouldn't be PMSing! Well, technically at least...
"My gut of wanting to get this over with, is fighting mightily with my head that says there's way more out there, and deals will probably be better in February..."
Wait, that's not PMS, that's how I feel when I house hunt (or apt hunt, or new TV hunt...) and I'm a guy!
Cara: I saw that comment you tried to sneak in the other day about going with your gut in buying a house. That's what I told you to do months ago, of course respecting your data-girl parameters. We have gotten you away from a condo, into a 3 level HOA townhouse which you now understand you can afford. The next step is to get you into the townhouse. After that I predict you will be preggers in a week!
Housebuyer, definitely not what I'm looking for. If I get a TH, it will be newer, bigger, not within walking distance of the metro (this is not a premium I want to pay for), and with a garage. Like:
http://franklymls.com/FX7131139
or
http://franklymls.com/FX7141279
I would pay $350k for either of these.
I would never pay more than $250k for that dingy townhouse, though I'm sure if it weren't in close proximity to the metro, that's probably how much it would cost sans $8000 buyers bribe.
Kevin-
Thanks I am not sure why I thought you wanted an older TH. I am pretty confident that these type of TH will not come down to 350K unless rates get into the 10+%. Most of these houses went for ~$300K in 2000. So to get them at $350K, would be at 17% appreciation in a decade, which is far less than inflation.
http://franklymls.com/FX7131139
07/03/2000 $314,300
http://franklymls.com/FX7141279
12/03/1999 $263,557
I don't think $350k is out of the question. Take away the buyers bribe and bring rates to a reasonable (7%) level, and given enough time it could happen. I don't plan on buying them because I think it will take forever for the prices to fall (good example of price stickiness and bubble fallout denial), but considering their sales history, there are grounds for this to happen under a scenario where the govt stops propping up prices.
Cara, Hah -- I am pregnant going through this with a sale closing tomorrow and have yet to find a house. (Have to move in 6 weeks.)
That and a bunch of other stressors going on -- had cramps all morning and was worried I was going into premature labor (I have 3 months to go.) Had to put myself on bedrest today.
We tried to do this before we got pregnant but due to factors beyond our control were unable to sell. (condo litigation blah blah).
So yeah, I don't recommend doing this pregnant.
http://franklymls.com/AR7025586
So much for immunington
Pat, most of 22204 is a different world from the rest of Arlington. There have been more foreclosures in 22204 than the rest of Arlington combined.
The Anonymous,
What happened is there is apparently some long history on this website involving CRT's $200k homebuyers thing. I guess he has been posting it since 2006 or 2007 or so. As far as I'm concerned until yesterday he has not fully explained his theory well to anyone like me who had been a regular only since this year.
I responded with what I think was a pretty intelligent response. The fact that Cara and housebuyer have had similar takeaways I think shows it was not a moronic thing to say.
So when CRT said what I felt was geeze what an idiotic thing to say this is why I don't post here it very much hurt my feelings. I don't mind arguing with people on this website. I don't even care if you are like Robert and think homes will be above 2006 prices in 2013 or whatever his stance is. I just ask that you treat me as an adult and someone who is not making moronic comments.
I just felt if anyone's take away from my comments was that I'm so stupid that they should not even bother interacting with me on here either (a) I'm being totally disrespected or (b) I've spent way too much time on here and my brain has gone to mush. So I angrily took down my comments.
I'll admit it was an overreaction to take down so many comments but I stand by my feeling that CRT's And this, ladies and gentlemen, is why I do not post here much anymore.
Does anyone want to take a crack at explaining what my analysis could mean to TBW. was a needlessly mean thing to say.
Okay so yesterday's angst was all for naught. If the interior had matched the price it would have been a real contender. But, yeah it was 50k overpriced, and I mean by today's market. Even Jeff Royce agreed. He was like, "if this was $280k I have 3 buyers who'd think it was perfect, and snap it up in a minute." But if the current owner actually "needs" $335k he's either going to be sorely dissappointed or need to be incredibly lucky. Because that price brought in the wrong buyers, it brought in us. And I know what $335k looks like, and that's not it.
anielarke,
me, sneaky?
just because one would have to read every post in every bucket to actual follow what's going on in my head....
"TBW said...
So when CRT said what I felt was geeze what an idiotic thing to say this is why I don't post here it very much hurt my feelings."
TBW - just to be clear, part of what precipated my response was something you said to the effect of me being anointed the "homecoming king". Please keep that in mind.
That said, as I noted earlier given that neither housebuyer nor (longtimer) cara really understood my point, I clearly did not explain it well, and thus, I owe you an apology.
I think what would be helpful here is patience. I found that if you first see something posted that may or may not be wrong depending on your understanding, its best (or at least more polite) to ask a question. I.e. What do you mean by that? Can you explain further? I think 1/2 of the disagreements on this blog could be prevented this way.
The second thing that I particulary need to be mindful of is how much of what I say was thoroughly discussed years ago and is now new to many posters. Thus, its probably not appropriate for me to snap at something that is new to someone else when "in my mind" that issue was put to bed long ago.
So in a way, that is part of the basis of my "this is why I dont post anymore" response. Part of it is snark, part of it is fatigue - I simply dont have the energy to go dig up all the old stuff and work through it again. Thus, I really need to think twice of posting something that at first glance will seem controversial and is only evident after a decent run through - a run through I am not willing to provide - thats just not fair.
So again, to the extent that I am responsible for much of the problem, I sincerely apologize.
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