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Friday, October 23, 2009
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76 comments:
If my color-discerning abilities are right then this WSJ delinquency map
says that the general NoVa area of interest is in the 6-12% category for percentage of 1st-lien mortgages that are overdue or in foreclosure.
(I'm pretty sure there's one color of pink lighter than the shade that's over us).
I know we'd all like finer detail in our statistics, but even 6% of ALL FIRST LIEN mortgages is a heck of a lot more houses than are listed for sale....
accompanying article
I can't tell whether we're the lightest pink but in any case, good point.
Sorry things didn't work out yesterday but you didn't want a PMS house anyway. :-)
Ace,
I was actually incredibly relieved when we didn't like it. Normally I've gotten antsy when there's nothing for sale that I would want to buy. But now that we technically can buy... it's reversed. Because I really wwould prefer to wait until the $8k either sunsets or is extended, and we know what we're dealing with. And I'd rather wait until the Thanksgiving-superbowl dead season to buy, and it'd be nice if interest rates went up a bit pushing more buyers with less saved out of my price range. (that's asking for too much in the near term). And by the end of December we won't have to dip into the maintanence or emergency funds at all to have the DP on $325k which I think is going to be sufficient to buy what we want.
So it's actually a relief that this wasn't a home that we just couldn't let pass us by, and instead was a total fixer-upper with some bad bones to boot. (Love the neighborhood though!)
Cara, I feel the same way. And I want to know what will happen when sellers start getting realistic about the 10-15 months of inventory in some price ranges (as your article points out) that has been at that level for more than a year now.
Ace,
Yup, the stuff you're looking at is definitely the market with the greatest uncertainty.
I think it may be a death by a thousand cuts, though. A realistic seller, with the financial ability to undercut the competition, by just enough to draw interest will do so. 3 or 4 other sellers will also luck out simply by matching that value. And then it takes another daring seller to pull it down another notch...
Either that, or you're about to see a bunch of short sales hit the market.
Are you seeing shorts? I see shorts as the canaries in the coal mine. As long as it's just shorts, they don't effect the pricing of the real sales much (because of the hassle and unpredictability factors) but I think the existence of shorts reveals the presence of weak hands that will have to capitulate (in this case foreclose).
No, not many shorts, but lots of people sitting on the market a long time. In some cases, it is clear they have more invested in their property than the market will currently bear, so it is understandable that they will hold out as long as they can. In other cases, they appear to simply be waiting for "a better market." But without talking to the sellers in each case, it's hard for me to know. I just know that, if they can't sell at anything close to their asking prices in this market of very low interest rates, it's too scary for me to contemplate the position we would be in if we bought such a place and then, because of medical or other emergencies that can't be foreseen, we would have to sell before we planned to.
As we've discussed before, compounding this are two factors. First is the difficult position of having to sell a house at the same time one finds a house one really wants to buy. In years past, you might be able to stretch, use up most of your cash savings, and get financing for the full balance of the move up house, then sell your old house, or you could put in a contingent offer that sellers had grown accustomed to expect from move-up buyers. But with today's high prices and with most of your equity you want to use for a down payment in the current house, the first is hard or impossible to pull off, and sellers now think they don't have to entertain the latter, mainly I think because of the vestiges of the bubble and of what Realtors keep telling them about how they mustn't consider these offers even if the buyer shows a willingness and ability to sell the old property quickly. Second is the mismatch between what new home builders are selling (McMansions) and what the market wants to buy/can afford to buy. I simply don't believe that they have to do this to make a profit, though I do agree that with the zooming cost of land in some areas it is much harder to profit on smaller houses than it used to be. I believe they want to make a BIG profit and that's what the bubble showed them they could do, but times have changed. If these homes were still selling well you wouldn't see so many price drops and you would see many fewer months of inventory.
Compounding the issue for me personally (but not for most people in the market) is that my style preferences are different from the prevailing ones, and I just can't bring myself to justify paying so much for a house I simply don't like, when there are so many other things to do with that money, including feeling secure as the money grows in savings.
If there were currently 4 or 5 months of inventory in the areas in which I were looking, then the choice is simple: this is where the market is and will be in the future, so bite the bullet, compromise, or stay where you are. But the fact that the market really is NOT in equilibrium so added to all of the other stresses above, you are risking a huge loss like so many other people are now facing, really reinforces being patient.
Ace,
"I just know that, if they can't sell at anything close to their asking prices in this market of very low interest rates,..."
yeah... it is vaguely amazing, that even at historically rock bottom interest rates, these properties are still at 10 MOI or more.
In my price range interest rates translate to 30-60-90k losses, in your price range that's 90-120-180k losses... If there's not enough buyers now at these prices, when there should be more able buyers than ever, wth is going to happen when everyone's buying power drops?
Just as I feel that 5% interest rates are a bad time for me to buy as a buyer with 20% available, 5% interest rates are an even worse time for you to buy.
And yeah, in your more complex situation, you need to wait until there's more than just 1 interesting listing every few months, you need to be in a situation where there are a goodly number, fairly frequently, so that if one seller poo-poos your home sale contingency, another seller won't. Or enough good move-up houses that a home-of-choice contingency makes sense.
A few thoughts/concerns from a tax lawyer on the homebuyer tax credit--pulling demand forward, etc.
http://www.taxgirl.com/hey-kid-wanna-buy-a-house/
Thanks Scott,
That was well written and had more cogent details than the NYTimes article...
I like that argument, that you can't extend the tax credit because the IRS can't handle the work-load...
Cheaper houses, that's all the incentive buyers need. Isn't cheaper money (5% rates) more than enough?
As if in support of my recent comments on this board:
http://enews.earthlink.net/article/top?guid=20091023/4ae13850_3421_1334520091023779753468
URL: "http://www.taxgirl.com/hey-kid-wanna-buy-a-house/"
REASON: Your request was denied because of its content categorization: "Social Networking and Personal Sites;Society and Lifestyles"
That's just awesome. My company blocks everything. Is it short enough that one of you can post it here? If not, I'll read it when I get home.
for kevin
Hey Kid, Wanna Buy a House?
October 23, 2009 · 1 comment
Information involving potential fraud with respect to the first time homebuyer’s credit continues to make headlines. After initial reports that over 100,000 refunds were perhaps inappropriately distributed, the IRS has released more data about fraud relating to the credit.
Officials from the Internal Revenue Service testified before Congress that as much as $600 million of taxpayer credits are “suspicious.” Of those, the IRS suspects that 73,799 claims totaling almost $504 million appear to have been distributed to individuals who would not qualify as first time homebuyers. And – wait for this one – 582 taxpayers under the age of 18 years old, including several 4 year olds, applied for and received the credit. The legislation does allow for minors to apply for the credit but as young as 4? That seems to indicate some kind of attempt at income shifting or other manipulation from parents who were ineligible for the credit.
And it gets worse. More than 19,000 taxpayers have been identified as making application for the credit for properties that were not even purchased in the first place. Nearly 74,000 taxpayers already owned a home, apparently under the impression that the “first time homebuyer’s” bit didn’t apply to them. Many were over the income limit or applied for more credit than they were entitled to received.
Over 3,000 taxpayers did not file with a Social Security number, using an ITIN instead. The IRS issues ITINs to individuals who need a taxpayer identification number but who are not eligible for a Social Security Number. Both resident and nonresident aliens are eligible to apply for an ITIN but the numbers of taxpayers with ITINs claiming the credit has lead some to believe that significant refunds were paid to those illegally living in the country and not eligible for the credit.
All honest mistakes? Not quite. The IRS has flagged at least 8,000 claims for criminal fraud. Currently, 115 are under investigation as criminal cases.
Despite all of the bad news, realtors and not surprisingly, bankers, want to extend the credit. Some on Congress seem to agree including Sen. Johnny Isakson (R-GA), who wants to expand the credit to dole out refund an additional $17 billion. Billion.
However, the White House is not as positive. Treasury Inspector General J. Russell George said, “Based on the administration of the credit today, I am very concerned about the IRS’s ability to effectively administer the credits that are claimed before the Dec. 1 deadline, let alone any credits that may be claimed within future extended deadlines.”
In response, the National Association of Realtors had this to say: “Without congressional action now, the market and our national economy may freeze again — possibly as soon as this month.”
Which begs the question: why not watch and see? Is it possible that a market solely driven by government incentives to buy isn’t a real market at all? Fraud notwithstanding, is the credit just creating false demand or accelerating existing demand? If we give an incentive to buy today instead of tomorrow, who buys tomorrow? Do we keep incentivizing until we can’t stop?
This worries me (yes, I’m channeling a little Tim Gunn here). I’m not really a fan of tax policy solely to manipulate behavior in the first place (home mortgage interest deduction, for example). But once you start, how do you pull the plug?
Cara, I guess the one bright side is that, if things continue (scary market and/or few interesting listings in our price range), I may soon be in your situation in that we'd have a big enough down payment to get the new place without selling the old place first.
And where's Robert, to tell us that it looks as if IRS will need to start hiring soon to investigate all the $8K bribe fraud and that will push up housing demand!
Sigh...I wish *something* would scare the Congress away from any thought of extending and broadening those bribes...
Ace,
And once you have say, 10% towards the purchase price I would start looking into a bridge loan for the rest.
Obviously you'd have to do your own math on that, such that carrying the two new loans and the old one isn't so onerous as to make it impractical.
So . . . I was running a variety of Fairfax Co zips in FranklyMLS. Usually I look at the same 3-5 zips and fume. But I looked at zips I'm not interested in and came to the following conclusion:
It's not just Vienna/Oakton where SFH sellers are asking 103-120% of '09 assessment. It's everywhere in the county.
I think I was thrown off recently when HayfieldGrad and I were comparing price drops for Springfield TH versus Vienna TH. In that circumstance there are greater price drops for Springfield. But if you want a SFH in Springfield? Sellers are just as reluctant to list below '09 assessment in Springfield as Vienna.
So I take back all my complaints about Vienna/Oakton. The SFH sellers have the same mentality all across the county.
Cara said
Are you seeing shorts? I see shorts as the canaries in the coal mine. As long as it's just shorts, they don't effect the pricing of the real sales much (because of the hassle and unpredictability factors) but I think the existence of shorts reveals the presence of weak hands that will have to capitulate (in this case foreclose).
I think shorts, foreclosures, and motivated sellers *are* the market. Anything "on sale" is selling like hotcakes and gets multiple offers. Anything priced 103-120% of the '09 assessment seems to be on the market for 180+ days. At least in Fairfax County.
The only time I see a line through a high listing price on FranklyMLS is when the '09 assessment is outdated because the assessment no longer applies (tear down rebuild or very substantial remodel.)
Everyone shopping for homes in Fairfax County has the same mentality that at least I do when I shop at Bed, Bath, and Beyond -- I'm using a 20% coupon for any item I buy and not paying retail.
[Btw -- learned this from a customer ahead of me a while back. You can bring 2+ coupons to the register and get more than one 20% discount in one transaction. At least at the BBB I shop at. I used to think it was one coupon per transaction.]
tbw,
yeah, no one is even close to using the tax assessment from the 2008 sales as the "basis" for their pricing.
This particular instant is the worst I've seen it all year, but yeah, 5% over is conservative, 10-20% over is the norm right now.
And the ones I've looked into seriously? You can pick out which comp they were using for setting their list price. Oh, that one identical to mine in everyway, sold for $316k in August, I'll list for $329k, despite the fact that a bigger unit sold for $305k in September... Or that really nice one with the great location up the street sold for $325k, I'll list for $335k despite the fact that mine has original 1983 single-pane windows and looks like a trash-out on the inside. In both instances numerous sales in 2008 were in the $280k range for REAL, non-REO sales, $250k for REOs...
But the bubble mentality of always set your list just a little higher than the most recent sale, is back in full force, and in some cases is being rewarded.
I really really want the $8k to be allowed to sunset. I can save up $8k, have done it, many times over. I want these people to stop rolling over and playing dead to seller's demands for WTF prices for the $8k dog biscuit.
Cara,
Thanks for the WSJ map. Ace -- I agree with Cara that we are not lightest pink but the second lightest pink (meaning 6-12.4%). Look at the Dakotas -- that's the lightest pink.
I worry about the future of Florida with that much of the state dark red. That's just insane.
tbw,
Around me the 103-120% over tax assessment are hotcakes so long as the list price is under $400k. No one's touching the short sales anymore, many are still under contract, but relatively few new contracts on shorts in the last month. And there are no REOs, none to speak of anyway, comparatively.
In Burke/Springfield right now, people aren't selling houses, they're selling tickets to $8k.
I really wonder how many of the seller's who have listed recently will keep their house on the market if the $8k sunsets before they find a buyer. They'll be pretty picked over no matter what.
Cara,
I agree with all that. I think also playing a role is "I'll set the price 15% over what I want because everyone is going to lowball me and so then I'll get what I want."
But what they are not appreciating is that many buyers like me will just sit out the market because we can't tell who is expecting receiving a lowball and has no real intention of getting listing price and who is going to have a histrionic don't you know how special this property is???? reaction. I don't want to deal with that nonsense.
tbw,
Burke/Springfield has has a lot of short sales for 2 years now. I'm wondering if we're finally running out of buyers who have the stomach for that process. I really think REO's are "healthier"...
tbw
"a histrionic don't you know how special this property is???? reaction. I don't want to deal with that nonsense. "
Ah, one of the reasons I have realtor. Even if a seller reacted that way, I'd never know it. Likewise, Jeff's not going to tell a seller random off-hand insults I made about the house. Or transcribe for them my pontifications on the state of the market and why 5% interest rates are the wrong time to buy, rather than the right time to buy.
Cara,
Here is one sub-$400k Burke property no one is touching.
http://franklymls.com/FX7069727
Perhaps had they put a realistic price when they first listed it in May they would have sold it. Listing for almost 200% of assessment? What drugs were they on? Even listing for what they paid in 2005 would have been way too aggressive. Also, what drugs were they one when they paid that much in 2005?
And what drugs was the realtor on when he/she decided not to redo the exterior picture? Isn't that a mother and daughter having a dog relieve itself in one of the bushes in the yard? Not making me want to see the home.
Also, imagine being in one of the houses further down the court of that Burke home. Your back yard has a couple trees separating you from the sound of Burke Centre Parkway. I don't think that's enough of a sound barrier.
The TH community to the west at least put in more of a tree barrier between it and the parkway.
Ace,
Putting aside the issue of where prices are going; we were in a situation in 1993 that is similar to yours.
Our house had been on the market with a "home of choice" contingency. Well, a terrific bargain came up. It was exactly what I wanted. We had to move quickly because there was another offer.
We decided to rent-out our existing house and qualified for the new one quite handily.
If this is something you might consider, you should get a pre-approval based on the rental amount.
google's acting wierd and so I had to delete a comment... sorry. Nothing to do with the comment itself...
MM said...
"Tom,
yes, [Waverly Hills] is probably the second most desirable neighborhood behind Lyon Village for families, due to all the amenities you mentioned.
i think the county should tax these neighborhoods a whole lot more than the rest, wouldn't you agree?"
Er... no!
Thanks Cara!
This news is actually a good thing, might put the brakes on a credit extension.
Regarding the tax assessment vs listing price, without any extreme exceptions, I silently laugh at people trying to sell at say 120% of 09 assessment. Unless there is some unknown improvement to the house, you couldn't get me to pay more than its currently assessed value, as even that is a delayed valuation. Sellers are idiots. At least 90% of them are. Selfish idiots.
http://franklymls.com/DC6996996
Well we are starting to see frenzy behaviour at the low end again.
Lists for 155K and sells for 200K?
I had seen a similiar property to this one,
these are Doll Houses, Cute, small, if you
are just starting out, they aren't bad, but
you don't want to raise kids in them and the kitchens are miniscule.....
150K i thought was a little high for the sqaure footage, and someone wants to pay 200?
Well chalk that up to 3.5% FHA.
Kevin,
How about not buying? If you are waiting for those TH's to drop to 250-300K, you might want to extend your lease for 20 or 50yrs.
And my apology to Cara. You were the one that said that I was either an excellent troll or a complete moron.
Cara,
Did you officially get out of your short?
kevin said...
"Sellers are idiots. At least 90% of them are. Selfish idiots."
Definitely the stupidest remark I've read on this blog in a long time. And that's saying something!
va_investor,
All parties have signed the release of the escrow on the short. So it's on to TH shopping.
I think I understand now what you've been getting at in the last couple buckets, you kept saying Cara, and I kept not being able to follow what you were talking about.
I apologize that I characterized your propensity to get into fights on this forum as trolling, when in fact it is just how the strong emotions regarding housing happen to manifest themselves in your writing (and that of kevin, and tbw, and ...). I am sorry that this name calling hurt your feelings more than I realized, given that you still remember it and I don't.
(by no means do I claim I never said things at you in anger, I'm certain I did)
Yes, these topics bring out emotions in all of us, even me, despite my best efforts to always self-edit before posting.
Please accept my sincere apologies.
Lucky for me, my spotty memory works both ways, I'm certain you insulted me as well along the way, I just couldn't possibly tell you what it is that you said. Please don't bother to refresh my memory, because I do think it's best in the past.
(that goes for anyone who feels the need to go dig up these conversations)
-Cara
Sorry Cara,
I didn't phrase that very well. It was Kevin that called me a troll and complete moran. I meant to apologize to you for making that mistake. I should know that you don't make those type of statements.
Sorry to inetrupt the flow but I am still amazed at the mess caused by housing in the US?? Please stand next to a housing construction site in NO.VA.
What you see is a set of 4 X 4s connected vertically to the horizontal 4 X 4s. The gap in between is filled by a thin peace of wood and covered by a layer of foam and aluminium siding. On the inside a fake wall called Drywall is installed and painted. Now these are fake houses by any imaginable standard. Then they are called luxury townhomes and luxury single family.
Let's be honest that this a cheap way of providing housing to people but it's nothing more than that. It's not an investment if it looks so cheap when you see the uncovered parts from the attic. It's not an investment if little kids jumping in the house can crack the flooring.
And now regarding the favorite term used by realtors "LOCATION". Let's choose less fancy terms for that such as "closer to work" and more crowded and more polluted areas.
VA-Investor, thanks very much for sharing your experience, but there are a few reasons that won't work for us. First, we want to take the equity from this house to have a reasonable payment on the new house. It is only because of the constraints of the market that we are even considering doing anything but that. Second, we have been accidental landlords before and do NOT want to do that again. Third, I do not think that rents in Arlington cover the true cost of the house, including not only out of pocket expenses but also the opportunity cost of the money invested in the house.
So we'll sit tight and hope we'll get more certainty about where this market is going. I'm one of those socially progressive, fiscally conservative types.
TBW, so true. I have seen several houses on the market for $X that was out of our range, that suddenly went under contract and sold for $X - 20% or more of X. Wha' hoppen???? If the seller was willing to go that low, why in the world not list at a price closer to that? We might have offered on one or two of those, and surely others would have on other houses, and the seller might have made more money.
Cara, current house is paid off, after years of scrimping. So we wouldn't have to deal with 3 loans. What we considered was we could use the line of credit for the bridge so would have 2 loans temporarily, then would offer the current house for less than the comps., to sell it quickly.
Kevin I rent in that townhouse development you like. The owners are just about evenly split between young East Indian families and Chinese families with many children among them. All of them will probably want to sell as the kids approach middle school as it is Luther Jackson and then Falls Church High. Unless all the kids get into Thomas Jefferson, that development could empty fast and pull down prices.
Ace: I've seen that too. It's made me kick myself for not putting in a lowball (although technically, if they price it too high, is it still a lowball?).
Santorini said...
Sorry to inetrupt the flow but I am still amazed at the mess caused by housing in the US?? Please stand next to a housing construction site in NO.VA
Right on brother Santorini...the two worst inventions of the 20th century are Day Laborers and Nail Guns.
I built quality homes in the 1980's when a two by four was as much as 1/8" of an inch bigger than it is today. Back when roofs we plied with plywood and not MDF. When lumber was wood, and not manufactured crap like beams.
The one thing I focus on here in NoVa when I am forced to consider buying a 40+ year old home as a "good deal" is the fact that they were built in the day when the trades were alive and well and staffed with folks who knew a beam from a cross, a level from a spade, and a truss from a rafter.
I'm partly at fault, partly to blame. I let my personal standards slip to the point one day I realized I was creating homes for people I knew and loved, and couldn't sleep at night worrying about the crap that KB was making us build. So I left, went back to school, and chose another life and career.
Modern home construction may be more environmentally sound and sensitive, but from a structural perspective, what I've seen in new home construction is crap. Pure and simple.
I will mill my own lumber and forge my own nails before I spend one dime of my money on wire nails, particle board, MDF, Chinese sheetrock and engineered beams.
There is a new home down the street in Vienna I watch when I walk the dogs. One day after the framing and MDF went up it rained for 5 days. Not a single tarp covered the frame. Every 2x4 and panel was completely soaked.
Yeah, that's gonna be good for the new homeowner. Rot and mold before the walls go up. And just to add icing on the cake to ensure that the kids that are born and raised in that home with lifetime allergies, wrap the outside of the structure with non permeable Tyvek vapor and moisture barrier and be sure to use high efficiency windows too, just to drive that final coffin nail so every spore will never be able to escape that home.
Unbelievable the ignorance today in home building.
:)
:( was meant not a :) lest y'all think I am dancing on someone's grave...
Sellers are idiots. At least 90% of them are. Selfish idiots.
Kevin,
I am going to respond to your observation for two reasons. One of them being I am stuck in an airport waiting for a flight back to that land of "stupid selfish smelly sellers". Ok, I added the stinky part.
I don't think sellers here are any more stupid than anywhere else in the USA. I think what we have here is herd mentality. It's not unique to NoVa.
No one ever wants to admit they made a mistake. We were told when we were kids that we would get to make 3 or 4 really big important decisions in life and we should try and not screw those up. Marriage, buying a home, having a kid/raising it, and a few others were the ones we all need to get right lest we suffer the consequences. Well, the fact is, is that millions of folks, here, there, and everywhere, have screwed the pooch when it comes to home ownership. Not everyone who purchased a home in the last 7 years or so screwed up, but a lot did, far more than we normally expect. We all expect to see one village idiot from time to time, just not a whole village of idiots (with apologies to u know who for the village reference).
Home ownership is scary. Because of the amounts and time involved. And to screw it up, and then have to live with that mistake is more than many people are willing to rationally face and deal with. Many folks are just walking away, compounding the pain for the rest.
I've spent the week in San Diego, ground zero of the real estate insanity that's gripped this nation for the last seven years. I drove to an older section of San Diego to research a former home of personal historical significance. The homeowner had emailed me years ago asking for background data on the original owner which I provided. Today I got a chance to take a photo of the home and the historical marker, a personal "to-do" thing I've been wanting to check off since 1996. Now it's done. I was more than a little shocked to discover that this home, little different from any other in this neighborhood, was built in 1933 and expanded at least 4 times over the years. It was purchased for $790,000.00 in 2007. (thunk). [That was my jaw hitting the street]
The original owner, and subject of my research, paid $612.00 for it in 1933, along with 15 acres of land that went with it.
After touring the home, and seeing what's left of that 15 acres (about 12,000 square feet is the current lot) I would feel comfortable offering about $650.00, but only if they cut the yard for a month after the closing. The house looks its age.
California is where the Kool-Aid is made in very large batches and consumed with gusto.
There are a lot of things wrong with sellers listing homes for 120% of last appraised value. But that ignorance is not isolated to their home valuation skills.
For many of those folks, after looking over what they paid for those homes just a few short years ago, its apparent to me that this is neither their first nor their last mistake.
Life is cruel sometimes. It offers no right or wrong, just choices. Choose this or choose that. Your life becomes the sum of your choices.
So choose wisely.
:)
Texas Native You should get stuck in more airports so that you can keep writing what could be a very good book. The contractor I use for houses I flip shares your sentiments about new construction, and that is why he renovates older houses after years of building new homes. I never buy a house or duplex to flip unless it was built before 1965. In my opinion that was pretty much the end of construction with any quality. I bought some new condos this year as rentals and had my contractor with me at the punchlist inspection. For each of the condos we had at least 80 punch list items. I made the developer replace one of the furnaces because it had never had the filter installed and you could look into it and see the mechanical elements were caked with drywall dust and other gunk from construction. The other furnaces had filters you could barely remove, they were so coated with debris. The punchlist guy told me that most of the buyers had not done home inspections and would never know how filthy the filters were. I bet most of the people have lived in that building for over a year with filthy filters and barely circulating air from the furnaces. Also, when buying investment condos, I always buy on lower floors. The developer prices them lower because they don't have much of a view (most tenants don't care about that and won't pay more rent for a view). The real reason I buy them is because the inevitable roof leaks don't reach those units. If you check with condo management companies in Arlington, you will find that most of the buildings sold in the last 20 years have had major roof problems. Similarly, one building has had its sprinkler system replaced 3 times (the system would just go off arbitrarily and soak units) and several other buildings had to replace the systems 1 time. Then there are the garages that get flooded, the trash chutes someone forget to line with metal that catch on fire, etc., etc. My life advice is to buy older houses to live in -- you can always add clean and shiny elements, you cannot retrofit quality workmanship.
va_investor,
No problem. I meant my apology anyway, even if it was prompted by me misunderstanding you for what must be approaching the 500th time. :) Cheers.
Texas Native,
as anielarke said, that was good stuff.
Va_Investor said...
"How about not buying? If you are waiting for those TH's to drop to 250-300K, you might want to extend your lease for 20 or 50yrs."
Well I'm going on two years of renting right now while prices have fallen overall in the region about 30%, despite the govt's best efforts to please you bubble-heads and temporarily prop up prices. So you can ease up with the hyperbole, pal, I know what I'm doing.
Tom: "Definitely the stupidest remark I've read on this blog in a long time. And that's saying something!"
You're right, only buyers are selfish. Shame on us for not wanting to pay prices that are bubble-level and completely unsustainable. Let me pay you a premium for taking that pile of rubble off your hands.
Texas Native/Anielarke - I personally agree with much of what you say. My house will be 206 years old next year - yet last time it was appraised, it was given an "effective age" of 20 - clearly this place was built to last.
I think much of that came from the early American ethos that we inherited from Europe. Go to any European city and you will see buildings 3-400 years old or older. They have been adapted, again and again, for various uses over time.
I think alot of building after say 1940 was based partly on "planned obsolesence" - made to last a generation or so, and then replace as necessary. At the same time though, this philosophy is not necessarily a bad thing.
If everything was "overbuilt" the way my place was it would be prohibitvely expensive. Many would not want to pay for something built to last 200+ years when they only plan to use it for 30.
Further, any repairs may require specialized obsolete knowledge which that can be very expensive. For most repairs now, you can simply hire someone with very general knowledge at very little cost. Compare that to the cost for my neighbor to replace the hand carved cornice and dentil work that hadnt been in common trade practice for about 100 years (he had to hire a group from Philadelphia to do it).
Additionally, these old places are not easily adaptable to all the new technology available. Wireless, for example does not work well with solid brick walls. This place had to be retrofitted substantially for earlier "technologies" like electric, indoor plumbing, etc. Even moreso, uses of land change over time (industrial to commercial to residential or back again).
So there is an argument to be made that its simply much more efficient to build cheaply and built "not" to last. Sure, the 150 year old steam laundry converted to condos is really really cool - but it sure would have been easier, and less costly to build a cheap steam laundry - and then flatten and build new condos when the use required.
Dont get me wrong. I very much enjoy the old stuff. Were it not for the 70 years of neglect and abandonment (1860-1930), its very likely, the federal & victorian houses in my neighborhood would have been replaced by ranch sytles and split levels by now. Thankfully, that "overbuilding" allowed this area to survive 70 years of neglect with no real adverse consequences. Still, while I very much appreciate the way they used to build stuff, I see why they dont "build things like they used to" anymore.
However thats not necessarily a bad thing.
anielarke,
I agree that most renters could care less if they are on levels 3-6 versus 7+. But I do think many renters do not want to be on Level 1. Anything on the ground floor facing the streets is much more likely to be burglarized. Or a criminal might break in and rape the homeowner. So I think a lot of people refuse to rent a ground floor apartment/condo and that lowers the rents you can demand. I assume you know this but I don't think you made it clear.
Regarding new homes...
I pretty much agree with everything CRT said.
Don't forget that the cost of raw materials and labor is much more now than it used to be. Don't sugarcoat how labor was treated between 1789-1940s or so. Many impressive structures in the early U.S. were built via slave labor, indentured servants, or minuscule wages. There were no minimum wage laws, maximum hours laws, etc in the past. Things were rough. Part of why these structures were economically feasible is because we used to live in a society that abused and took advantage of people.
I don't know what the prevailing wage is for a day laborer building a home now but I'm pretty sure it's orders of magnitude more than what people in the 1940s were making. And I'm sure they get more breaks and fewer hours worked per week than in the past.
Many impressive structures in the early U.S. were built via slave labor, indentured servants, or minuscule wages.
LOL. Snort. I don't think so. You want to explain how someone, an indentured servant or a full journeyman mason or carpenter decided one day..."Hey, I am going to help build this large Federal Building and get paid minuscule wages by the man!"
Many buildings? As in a majority?
Seriously, I know this is a real estate blog, but good lord, where in God's name did you attend school to get a perspective on America like that? Was it here in the USA or overseas? I would like to know.
America, from coast to coast, is covered with impressive structures built by native born Americans and immigrants practicing a skill or trade they learned in the old country. The reason they came here was for the opportunity to practice, in freedom, their artform, be it laying bricks, making lumber or furniture, or helping build one of the world's most impressive hydroelectric dams.
Hoover Dam. The innumerable schools, hospitals, federal buildings, parks, etc.. built by hard-working Americans in the WPA and the CCC under FDR. Empire State building - Unionized American Steel Workers. The entire Interstate system. The St. Louis Arch - American ingenuity and design. The Golden Gate Bridge. The Transcontinental railroad (immigrants, no slave labor). Not a single standing monument in Washington D.C. was built with slave labor. You think those thousands of masons who built the National Cathedral, numerous federal buildings, museums, etc... were non-union low paid slaves? I think not.
That's an interesting perspective you have on construction of "many impressive structures" built by slaves, indentured servants earning minuscule wages.
The vast majority of slaves were associated with agrarian sectors of the U.S. economy. That means farming for you Tech grads. The trades did not allow slaves as journeyman. Indentured servants were not tradesman. And low wages were suffered by every segment of society at one time or another depending on economic conditions or other economic factors in play.
Care to share a list of those "slave built structures?". 'cause I didn't have that history class in school and I needs to catch up on me schoolin'.
I'm just sayin'... in *my* little backwoods school in Texas Mr. Lindecker used a slightly different textbook than the one you may have had.
The impressive structures in D.C. were built by skilled craftsman who dedicated their lives to learning a trade and raised it to an artform. You don't get that kind of work from slaves of any color. The Romans knew this back in the day. So did the Greeks.
:)
Texas Native Thank you so much for responding to TBW about the abused workers who built so many impressive structures. I couldn't muster the energy to respond because I was chuckling so much about his advice to me not to buy condos on the first floor to rent because a criminal could rape the homeowner (that would be me). You who worked in construction and I who have completed and paid for many construction projects cannot compete with the "knowledge" gleaned from Wikipedia.
PBS: Slaves Built the White House, U.S. Capitol
Did you know that slaves helped build the White House and the U.S. Capitol? Or that right in front of where Barack Obama is going to take his oath of office used to be a tent city for slaves and workers?
In his book, "Black Men Built the Capitol," Jesse Holland explores the "secret history" of Washington DC and tells stories of how slavery affected the nation's capital.
In this video, Holland tells some of their stories and ends by stating that the inauguration of Barack Obama as the president of the United States "closes a circle in American history to have an African-American taking the oath of office, and becoming the most powerful person in the United States, and yet still live in a building that was built by some of the least powerful people in the United States, African-American slaves."
Architect of the Capitol's Report on Slave Labor Used to Construct the United States Captiol
---
anielarke -- It's official policy at most colleges across the country to keep women off the ground floor and make that a men's floor precisely because of rape/violence concerns.
CCC members made $30 a month (with most of it meant to be sent home). $30 in 1939 is worth $466.12 now. That's less than what many in the construction business make now.
The CCC was not the smorgasbord of pay and benefits that the modern GS-payscale professional and white collar worker makes now.
Only on this blog would it be a debatable point whether raw materials and labor are vastly more expensive in 2009 than 1789 or 1935.
*That's less than what many in the construction business make now per week.
This resolution just passed the House earlier this year. Clearly necessary given how ignorant (in fact, chuckling ignorant on anielarke's part) some are. anielarke -- maybe once this marker is put up you should visit the Capitol Visitor's Center. I think you are the one attempting to cull knowledge solely from the internet.
Whereas enslaved African-Americans provided labor essential to the construction of the United States Capitol;
Whereas the report of the Architect of the Capitol entitled `History of Slave Laborers in the Construction of the United States Capitol' documents the role of slave labor in the construction of the Capitol;
Whereas enslaved African-Americans performed the backbreaking work of quarrying the stone which comprised many of the floors, walls, and columns of the Capitol;
Whereas enslaved African-Americans also participated in other facets of construction of the Capitol, including carpentry, masonry, carting, rafting, roofing, plastering, glazing, painting, and sawing;
Whereas the marble columns in the Old Senate Chamber and the sandstone walls of the East Front corridor remain as the lasting legacies of the enslaved African-Americans who worked the quarries;
Whereas slave-quarried stones from the remnants of the original Capitol walls can be found in Rock Creek Park in the District of Columbia;
Whereas the Statue of Freedom now atop the Capitol dome could not have been cast without the pivotal intervention of Philip Reid, an enslaved African-American foundry worker who deciphered the puzzle of how to separate the 5-piece plaster model for casting when all others failed;
Whereas the great hall of the Capitol Visitor Center was named Emancipation Hall to help acknowledge the work of the slave laborers who built the Capitol;
Whereas no narrative on the construction of the Capitol that does not include the contribution of enslaved African-Americans can fully and accurately reflect its history;
Whereas recognition of the contributions of enslaved African-Americans brings to all Americans an understanding of the continuing evolution of our representative democracy; and
Whereas a marker dedicated to the enslaved African-Americans who helped to build the Capitol will reflect the charge of the Capitol Visitor Center to teach visitors about Congress and its development
Now, therefore, be it
Resolved by the House of Representatives (the Senate concurring),
SECTION 1. PLACEMENT OF MARKER IN CAPITOL VISITOR CENTER TO ACKNOWLEDGE ROLE OF SLAVE LABOR IN CONSTRUCTION OF CAPITOL.
(a) Procurement and Placement of Marker- The Architect of the Capitol, subject to the approval of the Committee on House Administration of the House of Representatives and the Committee on Rules and Administration of the Senate, shall design, procure, and place in a prominent location in Emancipation Hall in the Capitol Visitor Center a marker which acknowledges the role that slave labor played in the construction of the United States Capitol.
(b) Criteria for Design of Marker- In developing the design for the marker required under subsection (a), the Architect of the Capitol--
(1) shall take into consideration the recommendations developed by the Slave Labor Task Force Working Group;
(2) shall, to the greatest extent practicable, ensure that the marker includes stone which was quarried by slaves in the construction of the Capitol; and
(3) shall ensure that the marker includes a plaque or inscription which describes the purpose of the marker.
Texas Native,
Btw, you missed a comma. I said were built via slave labor, indentured servants, or minuscule wages
"or minuscule wages" refers to the post-Reconstruction period. I'm not claiming slave labor was used during the construction of the Federal Triangle series of buildings in the 1930-40s. I *am* saying workers there were paid minuscule wages. Workers then did not make anywhere near what workers now make.
Did you ever read Upton Sinclair's The Jungle about the horrible working conditions faced in the meatpacking industry in the early 1900s?
The CCC was unskilled manual labor lucky enough to have a job.
One of my grandfathers was in the CCC, and knowing him and his age at the time (17? 18?), I would have hardly called him a skilled artisan.
tbw,
Where is your source that most colleges do not let women reside on the ground floor? Since most women are most at risk of being raped by someone they know, I don't see how such a policy would help. If this is a standard policy than my twin sister and I must have attended the only two colleges in the country without such a policy.
Tbw: Again, my two simple statements that I don't buy houses and duplexes built before 1965 to flip and that I don't buy condos on higher floors lead to screeds from you on slavery/exploited meatpacking workers, the CCC, and the abitrary period between 1789 and 1940s when apparently everyone who had anything to do with building in this country was abused (not sure why 1789 was your origination date for worker abuse, but so be it). My second comment about not buying condos without views lead to your warning about rape of homeowners and then policies about women living on the first floor of dorms. When I was at CBO we did quite a bit of work on slave reparations, and I assure you that your internet research is as accurate as my knowledge of the subject. As for not buying condos on the first floor to rent: duh???
anielarke,
If anyone is guilty of a screed it is you. I was merely pointing out that the free market does (despite what you said) result in lower rents for ground level apartments. The reason is that they are viewed as less safe.
I do not base everything on internet research. In fact, everything I have stated on here is based on life experience, facts, news sources, etc.
You have been unable to have a civil conversation with me ever since I pointed out that a lot of people do not like TC Williams. I ignored your last flame about Madison HS because it was clear that Cara, housebuyer, Robert, kevin, et al understood you were biased and were not going to believe the foolish notion that parents are fleeing Madison HS.
But when you say silly things like you get the same rents for ground floor apartments as 3rd or 4th floor apartments I felt the need to say that's pretty unlikely.
As for the housing issue -- I merely pointed out what anyone (other than Texas Native) would tell you in the construction industry -- that raw materials and labor cost way more now than they did back when we created most of the amazing buildings that we have in DC and across the country. I did not rely on internet research. It's something you hear all the time from experts in the field.
anielarke -- Do you honestly believe that the new ATF HQ and the upcoming DHS HQ do not cost way than earlier buildings did adjusted for inflation?
I was watching the recent CSPAN documentary on the Supreme Court (I suppose you'll denigrate CSPAN now) and a scholar noted that the Supreme Court building was finished under budget and said imagine a building project doing that now. But I guess that scholar can't compare to anielarke's time at the CBO or Texas Native's experience in the construction industry.
I also think it's the sign that you have a weak argument when you are afraid to let others comment on it. I notice anytime I disagree with you and you realize you are wrong (like when Texas Native and you denied slave labor was used for any buildings in DC), you just attack me and claim I'm not even qualified to comment here.
Anyways, from now on, I'll ignore your comments because it's apparent all I can expect is some ridiculous and mean spirited comment from you because you are still upset I dared to attack TC Williams HS.
HayfieldGrad,
Are you saying that you would offer to pay the same rent for a ground floor apartment as one higher up? Or that you have found that to be the case when you look at apartments?
Does anyone? I feel like once again I made a statement reflecting something most people agree on (there is a discount for ground floor level apartments). And only on this blog would that be attacked.
I'm not even sure that anielarke and you even disagree with me so much as just take the opposite of whatever stance I take because you are still mad that I months ago said TC Williams HS was not a good high school.
And despite the fact that an English teacher at TC Williams HS periodically writes columns in the Washington Post noting some of the challenges faced at the school (and the fact that you'll never see a home listing boasting Wakefield HS district! or TC Williams HS district! like you would Woodson HS district! or Langley HS district! which I think shows how area realtors feel about it), I'm accused repeatedly by anielarke and you as the only one with this stance.
HayfieldGrad -- you know how I noted one of the schools I went to had more FRL than Hayfield HS? You know which two neighbors were always pushing my neighborhood's HOA to lobby the county to rezone? The two neighbors who were realtors.
So I don't know which realtors anielarke and you have used but I have found realtors to be some of the biggest school snobs out there. And maybe, just maybe, it's because they found from their years of experience that school districting does play a major role in what people will bid on a home.
Again, only on this blog would it be considered a bold stance to say the strength of the local schools is a factor in what price a home gets.
anielarke,
You claim to be rich and well connected. Maybe instead of ignoring me you should read the Welsh column I posted a while back. He noted that they are having a bunch of wasteful teacher conferences with singing and not much substance. He also noted all that money spent on laptops is not helping much either.
As a rich and well connected taxpayer in the City of Alexandria, maybe you could muster all that hate you have toward me into something positive like getting Alexandria residents to support making TC Williams a better place. Instead of spending all that taxpayer money on paying teachers to attend a silly conference, that money can be spent on more days in the school calendar.
There's supposed to be a heck of a lot of money out there from the Obama administration for extended school days. Why not use some of your claimed talents toward making sure the City of Alexandria gets a share of that?
Where's your outrage as a City of Alexandria taxpayer that you spend more per pupil than residents in neighboring jurisdictions for fewer results?
Seems to me that instead of denying there are some challenges facing the City of Alexandria schools and working to improve them would not only be beneficial to the less fortunate in Alexandria but also would help your bottom line in raising property values and rents.
tbw,
I never said anything about rents being the same on the ground floor as higher up. Of course, the rents are higher above the ground floor. However, I still question your stance that most colleges forbid women from living in ground floor rooms in college dorms for their own safety.
I get it you and nearly everyone else do not want your children to go to schools with large numbers of African-American and Hispanic children. African-Americans make up 10% and Hispanic children make up 19% of the FCPS population. Every school you have a problem with has a African-American and Hispanic population greater than 30%. Every school you fawn over is less than 15% African-American or Hispanic. You only like schools that do not reflect the county demographics in which they reside.
Also, how do you know what the FRL population was at the elementary school when you attended? That can change dramatically. The elementary I attended here in FCPS has a 30% FRL, but I know that has to be dramatically higher than when I attended. If FRL children are such a determint to your future chilren's education, why don't you lobby the school board to zone schools by family income so you and your family don't have to be around poor people.
At UVA in 1998-2002 I know the dorms all had the men in the basement and ground floor, with the women on the second and third floors. JMU I know had a couple of dorms that way, but I don't know if it was campus-wide. Some of my friends went to Bridgewater College (small private religious college), and there the women and men were in separate buildings - and all doors were locked and alarmed after 10PM except the one main door. I think it was more to enforce the "no members of the opposite sex in your room at night" rule though than for actual safety.
TBW: First, I don't hate you. My only problem with you is that you don't read what I or other people say. In this weekend's posts:
1. I did not say anything about ground floor condos or apartments getting the same rent as other condos or apartments. I only said that I would not pay more for condos on higher floors because tenants would not pay more rent for units on higher floors. Somehow from this you accused me of saying that I get the same rents for ground floor apartments as 3rd or 4th floor apartments. I don't own any ground floor apartments, so I could not make that statement. I did imply that I would get the same rent for a 3rd floor (i.e., lower floor) condo as I would for one with a view (presumably on a higher floor), so I was not willing to pay more for a condo on a higher floor with a view.
2. I have no idea what the ATF Hq building and the DHS Hq buildings are going to cost and I don't think I mentioned either of these buildings.
3. I did not deny slave labor was used for federal buildings in DC. In FAct I said I knew quite a bit about the subject as I had worked on slave reparation analyses when I worked at CBO.
4. I did not say parents are fleeing Madison HS. I said I was surprised that I found discipline problems at Madison HS this year. Teachers at the school are also concerned about the new problem. I said that teachers said that some parents prefer Marshall HS because of the IB program. As you know both Marshall HS and JEB Stuart HS recently started the IB programs as a way to enrich the school and retain high performing students. The same thing was done about 10 years ago with Washington-Lee HS in Arlington and that has been very successful.
TBW (continued)
5. I am not upset that you dared to critize TC Wiliams HS. I will say now what I said then: TC Williams HS does a good job of trying to educate a diverse group of students from many economic and cultural backgrounds. I don't think many white middle class parents think TC Williams is a desirable school so they either move from Alexandria or place themselves under financial pressure to send their children to parochial or public schools. That is their choice, and as with everything in life, they should be able to do what they think is best for their children. Upper income parents do not have the same financial strees and lower income parents do not have another option.
6. I read Patrick Walsh's last column in the "Post" before you posted it. I agree with everything he said. What he could not say is that the new superintendent is as hampered by Alexandria's nonsensical racial politics and cannot get much accomplished. Solve that problem and the next Nobel Peace Prize will be yours and will be very well-earned.
One of the reasons I retired early was to work on education issues which have been my passion since I was involved in PTOs at my children's schools. When I am not substituting, I am working at the grass roots level to make Alexandria schools better. It is a huge job with little progress or reward but the little progress can mean a lot for even a few children.
7. I don't think I ever said I was rich or well connected. I have a government pension, make $100 a day substitute teaching, have 11 cash flow positive condos and made about $100,000 in 2008/09 flipping some duplexes. The $100,000 is pre-tax. My husband is still in academe, but will retire in 2 years with his TIAA pension. We have about a $700K mortgage on our house (cash out refis to buy properties) which is worth about $1 million, maybe more if I do some updates.
Not sure why you think I am well connected either. I met the Mayor at this year's National Night Out block party in August but this was a few days after the chief of police was arrested in Arlington for drunk driving, so he was not in a mood to hear about schools.
Otherwise, I just show up at various elementary schools and do what I can do.
Try to get some rest tonight, as you know Cara will be back tomorrow morning all charged up with some new data to discuss. I might even be able to add a few things as I am almost finished reading the new George Akerlof and Robert Shiller (as in the Case Shiller Index) book "Animal Spirts," which is about how psychology drives the economy. There is a particularly interesting part about real estate market cycles.
Texas Native said...
I built quality homes in the 1980's when a two by four was as much as 1/8" of an inch bigger than it is today. Back when roofs we plied with plywood and not MDF. When lumber was wood, and not manufactured crap like beams.
TN, by no means am I a carpenter, certainly no homebuilder and I don't know all the jargon of the "new age" homebuilding products. But I have swung a hammer or two in my lifetime. I remember many, many years ago, I had to be around 9 or 10, I "helped" my dad and uncle build a large, two story barn/workshop. I remember vividly because the pitch was steep, and the plywood was HEAVY getting it up there.
Many years later, some friends of ours purchased a town home during the building stage. We stopped by to check on the progress and my friend and I went up to the second floor. I couldn't believe it, the FLOOR was made up of some sort of particle board (MDF?), I dunno what they were calling it at the time. It had rained sometime before and there were 2 or 3 spots in the floor that let's just say were "pliable". Now, cover that up with padding and carpet, spill a glass or two of water, I can't imagine the condition some of those homes must be in.
Flash forward to 2006, some other friends were having a home built in a new subdivision. Each day my friend would go over after work to check on the progress. He had to be careful and bite his tongue several times because if he complained too much, the builder threatened that he could simply tear up the contract, and sell the home to one of the 20 other folks gnawing at the bit to get in.
CRT said...
Further, any repairs may require specialized obsolete knowledge which that can be very expensive. For most repairs now, you can simply hire someone with very general knowledge at very little cost. Compare that to the cost for my neighbor to replace the hand carved cornice and dentil work that hadnt been in common trade practice for about 100 years (he had to hire a group from Philadelphia to do it).
With all due respect CRT, while the hand carved cornice and dentil work may look great, I would argue that the fact that it was hand carved or opulent lends little to the structural stability or soundness of the building.
The fact that one would need " specialized obsolete knowledge" for repair speaks to the quality of current housing inventory.
[Up a little later than I should be after being out with friends. Snuck a peak.]
anielarke,
Thanks for the civil response. I'm glad this did not escalate any further.
I think online discussions are fraught with peril in part because people cannot read tone. If you scroll back, I noted in my initial response that I assumed you knew that ground level apartments rent for less. I never implied you would not know that.
So I went into all the detail because your response was that you wrote you chuckled at my comment and implied I was naive etc. Most of my histrionics come not when someone disagrees with me but writes words like "chuckle," "spanked," etc.
HayfieldGrad,
*sigh*
First of all, as a factual matter, I have said positive things about Washington-Lee on here and it is 46% Latino + black. And I can assure you there are large minority populations at a lot of the schools I like. I don't think lily white schools even exist in this area. I think it's great there is diversity in the local school system. I have zero problem with that. I met people in college who had never met a Latino or Asian before college and I think that's just plain weird. I think it's great people get a multicultural education.
As a second matter, as I think I've mentioned before, I once talked to a member of the Arlington County Board and asked why the extreme socioeconomic differences between the three county high schools. I suggested they rezone them such that all three have demographics similar to Washington-Lee. I think that's doable particularly since it's such a small county geographically. The county board member seemed sympathetic but said it was up to the school board.
As for Fairfax County, I've never said it was a good thing we have such stark socioeconomic differences between high school. If we were designing the school system from scratch, I don't think we'd see them creating a Langley and a Stuart. We might see a lot of schools that look like Fairfax HS or Herndon HS. I think that would be a good thing.
Okay the real reason I came on here was to note the news that Reid has announced on Tuesday the Senate will vote on the unemployment benefits extension. One proposed amendment is the Isakson-Dodd bill to extend the housing credit and expand it to $15k. I think this unemployment extension bill is the most likely avenue for extension as it would probably be a bill not subject to paygo restrictions.
So keep your eyes peeled this week. I suspect the Senate (if a vote occurs on the $15k) will approve that amendment but the real issue is whether the House demands a clean bill without any riders. Or if they will be open to a housing credit extension on this bill. If they are I have to imagine it's going to be a more expansive credit like $15k but sillier things have happened.
*it's not going to be a more expansive credit...
tbw,
link? to either the Tuesday or the not more expansive part?
It will all be about the House, agreed.
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