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Tuesday, November 3, 2009
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74 comments:
Anyone looking in N. Reston may want to check out 1501 Stuart Road, Reston 20194.
It's listed at 499K; well below it's '09 assess of approx 570K.
The house was purchased in 1987 for over 270K and had an addition in 1995. 2 car garage and finished basement on 3/4 acres. It looks ok from the outside, but the fact that there are only 2 pictures might mean the interior is not so great.
p.s. don't know what is up with those stumps lining the driveway(?).
Man I someone really got screwed here. These are only a couple of houses apart, appear to have similarly updates. They are also the same size, yet in August one went for 350K. In September the other one went for 300K. Nothing like finding yourself almost 20% underwater 1 month after you bought...
http://franklymls.com/FX7103906
http://franklymls.com/FX7116858
VA-
The outside of the house looks nice, but frankly MLS says its a short that is already under contract. I don't know how many people here want to get into bidding wars on short sales.
housebuyer,
Oops, I should have gone to Frankly! I'm a back-up on some shorts - they tend to fall-out.
This is another example of "phantom" inventory. It shows up "available" on another search site.
housebuyer,
better kitchen in the first one, way better two baths in the second... Hard to self-justify paying $50k more... Ouch.
I am assuming that MRIS inventory numbers include all these under K shorts. Is this correct?
One condo devel. I follow shows 10 available. All but one are UC. The "one" is probably sold by now as it came on last week as an reo.
VA-
Yes I am pretty sure that the inventory includes shorts that are under contract.
Cara-
I agree that the first has a better kitchen and that the second has nicer baths. I figured the two were basically offsetting. Either way $50K is a ton for houses in that price range. I am actually surprised everytime I see houses in that neighborhood. It is much less expensive than everything about it. I assume there is a good reason though.
va_investor,
We're assuming they do. I don't think anyone has hand checked them. There's always been a discrepancy between the virginia mls and the mris. So we think the virginia mls doesn't count under contract listings. But we haven't hand verified that either (that I recall anyway).
This is part of why I've been using the lower-right-hand box, and comparing new listings to new contracts/contingencies. The flux of listings isn't a metric that's ever been widely used, but at least it's easy to interpret. Are there more new sellers than there are listings that have snagged a buyer or not. For my zips of choice, new listings has just beat out new contracts/contingencies for every month other than July (could have been June, my memory is unreliable that way). However, inventory is still shrinking, presumably because some sellers are delisting without selling.
Cara,
Carrying over the Builder discussion; just where are these Builders going to put the new homes? Clearly not inside the beltway or anywhere close to it.
But you are correct. RE is cyclical and Builders will build (and overbuild) and we will go through the whole cycle again.
Va_investor,
If I were a builder I'd be buying teardowns in the greater Alexandria area. It's close to a lot of jobs (just not financial ones), has multiple metro stops vaguely convenient, has the "alexandria" and Mount Vernon names. Totally ripe for revitalization with big enough lots to support bigger houses to boot.
I'm not a builder though.
Cara,
Big Builders don't do piece-meal teardowns. They would try to assemble an entire block or more.
This land grab is good for one particular place I own an interest in in Falls Church. There is at least 10acres(maybe 17?) in an aging co-op development. It's zoned for highrise condo's.
If they allowed investor's to buy in there, I'd be picking up 5 or 10 at today's prices.
VA-
If you look at Redfin land only listings there are a couple of dozen listing inside/ just outside of the beltway that are at least a couple of acres. I imagine developers only need 3-4 acres to make a fairly substantial TH complex.
Housebuyer,
Guess it depends on the zoning.
va_investor,
What you've just described sounds like a very risky buy. Why would they pick that co-op development in particular? That's a lot of assumptions. I guess given the breadth of your RE investments, if this one flops or takes 10 years to pan out it's a well-taken risk, but that kind of gamble really is only for pros (like yourself).
Cara,
Yes, you would be taking a "flyer", but it's extremely cheap living. The land deal is in the works. They tried it in 2005, but couldn't get enough owners on board. The "old" people (who are dying off) didn't want to sell. The place was built in the 40's and needs several million in infastructure work which would really jack the monthly fees. The buildings themselves are functionally obsolete. Tear-down is the only practical option.
It is just a matter of time and it may take years. Payments would be well under FM rent. If I had a young relative, I might encourage them to take a good look.
The land is (or will be) simply too valuable to do anything other than highest and best use. It's adjacent to FC City and very close to Seven Corner's. Hillwood Square.
is there a calculator out there that adjusts house prices to inflation? iow i'd like to put in a sold price and year and get a inflation (and other things too?) adjusted price for 2009. i think i've seen it posted here before but wasn't paying attention. tks!
...very close to Seven Corner's...
not sure it's a plus though :)
What I see (since I work w/ Builders in the Area)
Small, local Builders do "infill", which is teardown in old, inner beltway neighborhoods & build new homes.
The National Builders land developers/buyers don't have on-the-ground knowledge of this area, so they generally buy large plots of land (or old Farm land, think Dominion Valley Country Club) and mass build in these locations
VA-
I assume this is the complex you are talking about right?
http://franklymls.com/FX7042172
If so the mortgage would cost ~700-900/month (depending on the sales price) and the co op fee is 600/month. Can you really rent something like this for ~1500/month.
I also find it funny that they call the kitchen updated. That is one of the most dated looking kitchens I have seen.
MM-
This is not housing related, but it is a general inflation calculator. I don't know exactly what you mean by a housing calculator.
http://www.westegg.com/inflation/
Housebuyer,
Where do you get 700-900 for the payment?
Say the purchase price is 120K and you finance 100K. At 6% this would be $600/month. The co-op fee of $600 includes ALL utilities AND RE taxes and all exterior maintenance.
So, you would be looking at $1,200 pre tax. Subtract out $100 or $150 for the utilities and you are at $1,050 or $1,100 pre-tax PITI.
This is for the listing at 130K. I think it would be possible to go even lower than 120K. Those places are not selling. I'd go in at 100K on the estate sale.
Did you notice all that empty land that the Assoc. owns?
p.s. They don't allow investor's to buy and no rentals. If I were in my 20's and single, I'd buy one and get a roommate to pay $600 or so. Of course, I would be betting on a big payday in a few years - but I am a gambler.
WSJ on the Unemployment and Tax credit watch
A hurdle has been passed, others may come up because the Republicans don't like that they have shut down any votes on canceling TARP. How? I'm not familiar enough with procedure to even guess.
So, no news really, just Congress as usual.
va_investor,
Right, because it's a co-op. No renting out your unit after owning even, yikes. No wonder the prices are so low, no competition.
Gambling which involves reducing your own quality of life. Not for everyone. (gambling while supposedly increasing your quality of life with an expensive home, now that's something most americans can get behind...)
VA-
I was not counting the benefit of the downpayment, because this is now lost money rather than earning something elsewhere. So I said 700-900. Including the downpayment you are right it is probably 600-800. So your total cost is 1200-1400 a month. Once you subtract of utilities it is 1050-1300. I was just curious if you could get that for those places. I don't know what something like that would rent for since I would never live there.
I also am not sure you can get much lower than 120K. Things in the 120s appear to be selling pretty well, the only things that have been lasting a long time are the places in the 150. The estate sale has only been there for 4 days so I would think you would need to wait before you get a much better price.
http://franklymls.com/default.aspx?m=R&h=600K&s=Hillwood%20Square
Cara,
What type of rental could you get for $800 or $900 (the after tax cost)? If you were 24 and making 40K, why not live there instead of renting? I'm figuring a 100K payday is coming in 4 or 5yrs.
It is a safe community (owner's only) in a great, close-in locale. With a roommate, the cost would be ridiculously low.
I guess you and I just think differently.
p.s. I'd ask for assumable owner-financing for 7yrs at 5% interest only.
housebuyer,
I'd check expired listing and call the assoc. office. They maintain a list of places for sale (there usually are some that are not in the mls).
I wouldn't live there now, obviously. But I might have at 22 or 23.
Regarding the opportunity cost of the downpayment, eventhough this is a legitimate cost, most don't figure it in and I would argue that there is no guarantee that the return would exceed the interest rate on the mortgage.
Va_investor,
If most people thought like you, then these opportunities wouldn't exist, would they?
Most people in their 20s are too busy living their lives to be even considering taking on this gamble.
If you don't mind roomates anyway, most would prefer to share a house in Dupont for similarly 700/month or less rather than live in an ugly looking primarily retirement community.
One of my favorite former landlords started his rental empire in this way (buying and sharing costs with roomates) but he didn't start with something who's main pay day would be if a builder comes and buys everyone out.
Other friends of mine from graduate school, similarly bought a house and rented out the attic and the basement to meet the mortgage which once those rents were subtracted off the costs was less than married student housing on campus.
But the people who do this are extremely rare. It takes a different mind-set.
And I, at that age, didn't have two pennies to rub together on my 14k grad student stipend, so I just can't relate. (300/month rent on a shared 1920's duplex with 5 other students, my room was actually a porch...) Furthermore, there was absolutely no way I could have known that I was going to stay in the same region of the country not to mention the same city (which obviously, I didn't).
I would get a roommate and live in the building I am currently living in. 2 bedrooms go for $1,700 it is newly renovated, 20% bigger, across the street from the metro, and in a nicer location (this is just my opinion). The problem is even if the payday is 5ish years away you may never see it. At that point you are likely ~30 possibly married and may have decided its time to move on. If you knew the exact day you would get your payday you could wait longer, but seeing it has already been voted down in the past do you really know that it will be voted for in the future.
http://washingtondc.craigslist.org/nva/apa/1442893570.html
housebuyer,
It's my understanding that they have the votes and a Commercial Broker putting together a package. Of course a $1,700 rental will be nicer; 3k would be even nicer. If you could own and pay $400 per month (roommate) and still sock away alot of dough, I just don't see a downside. It's not a slum. They were going for the high 200's or more. How much further, worst case, would they/could they drop?
Oh well, this is just how my mind works at times. I know I'm not your "normal" buyer.
"Regarding the opportunity cost of the downpayment, even though this is a legitimate cost, most don't figure it in and I would argue that there is no guarantee that the return would exceed the interest rate on the mortgage."
All of that may be true, but it is still a cost to you that should be factored in, if people are doing the rest of the math. Take it to the extreme and maybe you'll see my point. Let's say you bought the place for cash at $120K. Your net return is NOT the full amount of the roommate's check, or if there is no roommate, you aren't living there only for the cost of the coop fee. If you could have gotten a CD for 3% then that $120K would pull in $3600 per year, with zero risk, as opposed to the potential loss on your house. If you're willing to take a bit more risk, you can get a higher return than that. So you have to reduce the payments you're receiving by that amount to get a more accurate picture of what the place is costing and benefiting you.
I'm not saying that $3600 (or more) is a tremendous amount of money or that this is a good or bad investment. I'm just saying that it is not zero and shouldn't be ignored, especially if as is the case for most other properties, they are significantly more costly.
Extending what Cara said, if everyone saw it as you did, they would all be putting down the maximum down payments on their houses.
Ace,
I don't think I said that I would ever put "the max" down. I just pointed out that the downpayment "earns" the mortgage rate. The "opportunity cost" needs to reflect that.
Ace said
However, he's been active in a party that usually seems to have plenty of "consulting" jobs available for people with his demographics. So "it just don't add up..." other than for what you said.
I agree. The fact that there was no lobbying/consulting job waiting for him shows many of those types of companies right now are pulling back on hiring.
He's not the only one this has happened to. Former Attorney General Alberto Gonzales went about a year or two without employment before getting a job at a law school. Former Attorney Generals are not supposed to have problems getting jobs. While it's true he had some PR issues so did Ashcroft and he had no problem getting a job when he left the Bush administration earlier this decade.
tbw,
it might be FmrAGAG was being picky.
I agree with Va_Investor and spunky. You never see a big name attached to tear down/rebuilds in the inner areas.
Toll Brothers et al will probably stick with developing Loudoun and Prince William Counties. There are still a few parcels to be found in Fairfax, Arlington, and Alexandria but the bulk of it will be exurban development. I don't think we are even that far from Loudoun east of Route 15 and the I-66 and I-95 corridors in PWC from being built out or about as built out as Fairfax, Arlington, or Alexandria. I could see that happening by 2016 or so, maybe earlier.
The issue is what happens when that area is built out. Do they start lobbying for suburbanization west of Route 15 in Loudoun? Making Fauquier County the next Loudoun? (And so on)
Right now the exurbs seem a little mad at developers. Loudoun County is asking Governor Kaine to make that 4,100 acre site (that was originally going to be 15,000 homes) into a state park. If Loudoun keeps that much land in the eastern section undeveloped I find it hard to believe they'd ever let them suburbanize west of Route 15. But county boards change their minds on growth every six years or so it seems.
Va_Investor,
The Laurel Hill Master Plan for the former Lorton prison site includes a subdivision of 181 townhomes. The plan also includes 171 multifamily units. The 171 multifamily units are going to be a readaptive reuse of some of the historical buildings and the townhomes would be new builds. Two builders, the Christopher Company and Integrity Homes, have restarted building in the Gunston Cove subdivision off of Route 1 in Lorton. I think they are putting 80-90 sfhs there.
VA_Investor, I'm not saying you did say that. I am saying that, using your logic, that would be the rational conclusion that buyers would reach and that would be how they would behave. The fact that they don't suggests that they are pretty well aware of the value of the cash they have and what other uses they have for it, so it is not cost free to sink it into a down payment or the full cost of the house.
That, along with the problem I pointed out in the arithmetic, I think shows why it doesn't make sense to ignore the down payment and what it could earn elsewhere. I'm just saying that information should be factored in, along with all the other information.
MM,
Well he ended up with a job at Texas Tech in Lubbock, TX. And these articles were rampant while his search was ongoing.
To be fair Michael Mukasey (who was attorney general after him) easily got a job as a partner in a major law firm in NYC. So it might not have been the economy so much as most law firms, law schools felt hiring him would be bad PR.
Here is an interesting find from the Restonian blog. The quiz Bob Simon made Reston salesman take. Anyone think the average realtor in Reston could pass a similar quiz today?
Bob Simon's Quiz
Anyways, here are some highlights:
[The School Board] has a budget for the 1966-67 school year of $63,000,000. The System is rated among the best in the nation. [pg. 4]
Real estate taxes: Rate - $4.05 per $100 of assessed valuation. Assessed valuation is now 40% of market value.
Sales Tax - 3% [pg. 4]
How can a Reston resident get domestic help?
6. Inquire of Mrs. Price at the snack bar. [pg. 7] Sounds a little shady to me...
Transportation
Public bus service starting at 6:40 am to Washington is available, with travel time to the end of the line at 11th and E Streets, 1 hour.
Route 7 will be dualized in a year or so, which will provide high speed access to the Beltway." [pgs. 7-8]
It took an hour to go from Reston to downtown DC in the mid-1960s at 6:40 am?!?!? I know a lot of the major roads did not yet exist but you would think there would have been so much less congestion. I guess even then a Reston-DC commute was tough.
VA-
Wait you were saying $800 was the total payment? I thought you were saying that the owner would pay 800 and the roommate would cover the rest of the cost. How did the total payment get down to 800?
The $1,700 place I showed was assuming each person was putting up $800 in which case this isn't that different.
You guys dont know squat about the inner areas.
Both Stanley Martin and Winchester Homes have recent developments inside the beltway.
By recent I mean within the last year they had lots available.
Stanley Martin still has places available, both in Vienna and Alexandria. The question is more is there enough space to do several massive projects. I don't think 100 additional townhouses will have a huge impact. I actually think there is still plenty of space, but don't have exact figures.
tbw,
I don't think it was traffic, but the country bumpkin roads that existed in large parts of Fairfax Co. You should have seen all of the two lane country roads that existed in the Lorton area until the early 1990s. Pohick, Rolling, Gambrill, Hooes, and Silverbrook are just some of the roads that have been greatly widened and straightened.
housebuyer,
No, I was saying the total would be $1,200; but if you take out 150 for utilities and factor in the tax savings, you are down to 800 or 900. A roommate would pay $600 of that. So the actual cost to own there would be about $400 or less.
I heard this report last night on the radio and heard the reporter claimed 'the President has voiced his support' to the extension or something to that effect. and went back to search for it on their website but that particular language is not in the story. Has anyone heard the POTUS said anything on this extension recently?
Home Value Highwire
Darci Marchese, WTOP Radio
Nov. 2 - Changes to the Homebuyer Tax Credit
WASHINGTON - The tax credit for first-time homebuyers will live on - and there will be more incentives for homeowners.
The tax credit is getting an extension and a facelift.
The U.S. Senate version - which is nearing a compromise - would extend the $8,000 first-time homebuyers tax credit through April 30, 2010.
The credit was set to expire on Nov. 30.
The legislation also offers up a $6,500 tax credit to homeowners who have lived in their homes for five years. There are some restrictions: homeowners with incomes above $125,000 for single filers and $225,000 for married couples won't be eligible. The homes also need to cost less than $800,000.
Doug,
I'm aware of Stanley Martin's Shirlington Crest and similar projects. If you read what I said I noted "there are still a few parcels to be found in Fairfax, Arlington, and Alexandria." It's nothing like the amount of land available in outer counties.
va_investor,
Tax savings? a 20 something with tax savings on a 100k/120k house? How could the interest and taxes possibly exceed the ~10k standard deduction, and by how much? And even if it did, we're talking someone in one of the lowest income brackets.
VA & Cara-
The place I was showing also gives some utilities and Cara is right there is no way that someone making 40K will get any tax exemptions from his $700/month mortgage. I assume the person also needs to pay for insurance. Also is it possibly a 22 year old making $40K has a 20% down payment?
I think counting those as deductions is about as fair as me claiming that living next to the metro saves you ~$400-500/month in car payments and insurance.
HayfieldGrad,
There are still some "country bumpkin" roads in Fairfax County in 2009 particularly in Oakton. Hunter Mill, Stuart Mill, Vale, Lawyers, West Ox etc etc. Georgetown Pike in Great Falls is still pretty old fashioned.
Organizations like this http://www.hmdl.org/ I think are what keeps some of these roads old fashioned. I imagine the county wants to widen Hunter Mill Road (the website notes that VDOT has the right of way to make it four lanes) but these groups raise a lot of ruckus over that. I must say these country roads are quite scenic and pretty but I'm not sure a 1M+ population county should still have these little roads.
housebuyer,
But living next to the metro DOES save you $500/month in car payments and insurance if it means you don't own a car.
:)
(says me who has now decided I like the housing choices further away more than I like having only one car...)
Cara-
I agree, I just don't think a 22 year old will get rid of his car. I do think if you are married than you can easily live with one car in which case the savings are real.
If the City of Fairfax and Town of Vienna let Route 123/Chain Bridge/Maple Avenue be a real thoroughfare instead of how it was in the 1950s that also would have helped congestion. housebuyer's commute from Fairfax Station to Tysons probably would have been 15 minutes shorter if they widened 123 in those two areas.
Of course, keeping the road narrower in those areas helps Fairfax City and Vienna so I can't blame them. But you really shouldn't be building a major office/jobs center if one of the four major roads that gets you there has such limited capacity. But I don't think I need to convince anywhere here that Tysons had some poor planning.
housebuyer,
My sister didn't buy her first car until 32, and I have friends in Adams Morgan who similarly are carless intentionally.
Cara,
You are right. I forgot about the standard deduction. It's still cheap living with a huge upside potential. I'd try to get a 3 bedroom and have 2 roommates. "By Right" several hundred condo's can be built on that site.
I know it's not for you or, most likely, anyone else here. The talk about builders brought it to mind.
va_investor,
Understood and rightly so, of course talking about builders brings to mind the most attractive (price-wise) building potential property that you've come across recently.
tbw,
I take Hunter Mill all the time off the Toll Road to Reston. The 3 way stop and the one-lane bridge are something, but I like the drive. I also take Hunter Mill to go to Vienna and find it refreshing.
Va_Investor,
Oh yes the one lane bridge is definitely something. I agree that it can be a fun, scenic drive particularly on the weekends or non-rush hour on weekdays. I just meant anyone regularly commuting via that road might not be ecstatic that we've kept it the way it is.
Think the federal government's efforts and increased net jobs for this area are good news for housing? I agree with you. But it's not clear cut.
http://www.forbes.com/2009/11/02/blue-state-middle-class-exodus-opinions-columnists-joel-kotkin.html
The article's emphesis is on out-migration from 'blue' areas in general, but it touches on evidence that Washington, D.C. and 'greater Washington' population is in the opposite direction.
Sure doesn't feel that way.
xpovos,
Interesting article. He brings a lot more politics to it while ignoring the simplest explanation. The elephant in the room is OVERPRICED HOUSING. His biggest disparity in high cost of living is government spending? Pshaw, that can't hold a candle to how much more you have to spend on housing. It's a lot more visceral too.
This is exactly the post-urbanization decline at the end of the urban cost spiral that CRT and I have been expounding. Eventually, you price out families who would like a better life.
Doug said...
"Both Stanley Martin and Winchester Homes have recent developments inside the beltway."
Has anyone seen the Stanley Martin - Shirlington Crest development?
I took a look at a couple of the townhomes a few months ago. They had some nice interior features, but no yard and had rooftop patios instead. The aspect that bothered me the most was the neighborhood and the schools, which aren't the best in this part of Arlington. (The development is near the intersection of Glebe and 395) I was surprised to learn so many people are willing to spend $600k+ on one of these.
XPovos,
I think that describes reality quite well actually. It's pretty common to live it up in the city (or quasi-city) when you are in your 20s and then settle down in the suburbs when you hit the median first time homebuyer age of 33.
I've long been curious what the average of condo buyers in DC and Arlington is (or even those condo buyers near the Vienna Metro or the Dunn Loring condo building housebuyer is renting in.) I've long been worried we overbuilt condos because loose lending (particularly low down payment standards) led to a disproportionate amount of mid-20s first time homebuyers. On average, what someone who is middle or upper class and 24 thinks is a great place to live is a lot different than what a middle or upper class 33+ year old thinks.
That's why I think condos have been especially suffering in this market. Condo lending has become the strictest under Fannie/Freddie rules (and soon FHA rules) and that has lowered the number of 23-28 year olds available to buy them.
I think we are going back to the 1980s-90s model where the average buyer of a condo is someone like Va_Investor who plans to rent it out and thus is only buying it if it's at or near rental parity.
Oh and I have tons of friends living in Manhattan now (who grew up in suburbia, USA elsewhere) that could never in a million years afford a home in Manhattan. For a variety of reasons (college/grad student housing, illegal rent control apartment, lower standards when renting) many people can afford to rent a place in Manhattan but never could afford to buy there.
When they are renting it's easy for Manhattan to win over DC or Arlington (or Houston or Chicago or wherever they are from). But (with no offense to any NYC area natives here) there stops being a coolness advantage when your home purchase options are New Jersey, Long Island, Staten Island etc versus suburban Virginia or suburban Maryland (or other hometown). So a lot of people come home. Already many of my high school/college friends Manhattan adventures are over. The only ones I expect to stay up there are the ones who married a NY native.
tbw,
If you go back to the last correction in the early-mid '90's, you will see that condo's took a much larger hit then too. I only have anecdotal evidence (what else is new?), but we had a condo at The Rotunda that dropped 40%. And by checking tax records on more recent purchases, there is a clear disparity between SF's and condo's.
I don't know why this is. Lender's cracked down on condo's back then, too. They always seem to close the barn door after the animals are gone. The steeper drops may be attributable to average length of ownership (turnover helps produce a fast bottom). I don't see people settling (sp?) in for the long term in a condo as they would a house.
Cara and TBW, I agree about the most simple explanation's being ignored. The reason is probably that one can make a good case that the reason prices are high in some cities is that people want to move there and bid the costs up, but that also means that some people will be driven out later by those high costs.
The #s are interesting but the author needs to stop being blinded by polemics.
I notice his arguments depend on using % of change or per capita change rather than absolute numbers. My guess is that the picture is quite different if you are looking at how many people are actually going to city X versus city Y.
Were the public sector pension obligations substantially underfunded prior to the increase in funds during the period he tracked? I believe I have seen figures to that effect elsewhere. If so, he's criticizing states for delivering on their promises after reneging for a long time.
He also sings the praises of families and denigrates non-families as urban goods/bads, but in fact, households without children currently residing in them typically use far fewer services (schools being the most costly, but also libraries, recreation facilities, public transportation in many cases) per household tax dollar. Communities like Arlington benefit greatly from high contributors/low service users and can keep tax rates relatively low partly for that reason. Singles and child-free/childless households aren't all people in their 20s who want to drink every night and move at the drop of a hat. That's not to say that families aren't a good thing or that have a good mix of demographics and a strong middle class core isn't desirable; it is; it's just to say that from a purely economic standpoint, his argument on this point (because of the political blinders) is as weak as his others.
I hate having to read cr*p like his "interpretations" in order to see some interesting numbers, but that's the nature of some publications and their editors, I guess.
Ace,
I agree Plotkin was attempting to make a political argument. I was not endorsing that. It's clear from this article and the one Robert has put up a few times (whose message was gov't spending props up the DC area) is clearly pushing a Republican political talking point.
But it is true that for decades now the NE corridor and Rust Belt is losing people to Virginia down to Florida and west to California (although very recently California is losing population for the first time). I don't think it's all taxes/regulation/etc. North Carolina, for example, has a top bracket of 7.75% state income tax. It is probably true that NY/NJ have some of the highest tax burdens but CT I think has relatively low taxes. New Hampshire has no income tax on wages nor a sales tax. And again California was exploding in population most of the post-war period despite having sizeable taxes and public welfare programs.
I do think Plotkin is right though that the Atlantic ("death of the exurbs), Stuart Schwartz/smart growthers, Richard Florida ("creative class"), etc are wildly overestimating the end of sprawl/suburbia/car-centric development. I think we did see some resurgence of interest in the cities and inner suburbs of America but it's not like we don't still see tons of growth in the exurban core of America.
We have discussed ad nauseum on here whether people's tastes have changed or we just have more people marrying later and having kids later which affects things. I think all the alleged interest in the inner core comes not from suburbanites getting tired of driving so much as the average age of marriage in the DC area has probably gone from 24 to 30 over the past 40 years (or whatever the statistic would be.)
I've also discussed before why I think single and divorced men and women over the age of 35 without kids might prefer suburbia to city life. You don't need kids or a spouse to feel entitled to more than 600-800 square feet or the "luxury" of driving to a grocery store to do a week's worth of food shopping. Or the "luxury" of having a yard.
OT:
Are FHA and VA loans still easily assumable? If so, this would be a huge consideration in how I financed a purchase right now.
Say rates go thru the roof in 5 or 10yrs and you want to sell. If you've got an assumable 5% fixed rate, you will be in the cat-bird seat. You can hold a second, do a wrap-around, sell the second at a discount or have the buyer get his own second. The point is that you will get top dollar due to the financing.
I don't know the rules today. Does anyone out there know?
TBW, I agree with everything you said and hope you didn't read my comments as attacking you - I meant them only as criticizing some of the arguments of the writer of the article.
Another of the reasons why many people have moved to southern locales is access to better weather.
Ok, I found the answer. FHA loans are assumable at the original rate and terms. The new buyer must qualify under FHA underwriting guidelines.
This could be a huge hedge against rate increases causing your home value to drop or simply freezing the Market. Your house will sell with 5% financing when the going rate is 8+. Conventional loans have a due on sale clause and cannot be assumed.
I'd be going FHA if it were me buying now.
Ace,
I didn't take it as an attack. I just wanted to clarify as I had before rolled my eyes at Plotkin. I do think federal spending helps this area but I think Plotkin (and his kind) don't really think the Obama administration is going to spend significantly more (it's not like the GW Bush administration was full of fiscal restraint.) I just view most of the articles Robert puts on this topic (almost always from conservative organizations) as a political attack on Obama as some huge spender when in reality I think we'll find Obama will be in the post-war consensus for spending. Heck, it will be hard to match George "LBJ" Bush in growth of federal spending (or at least every article I have seen showed that LBJ and GWB dwarfed everyone else in between in expanding federal spending.)
I also agree on the weather issue. Who was going to move to Florida or Texas or Arizona from the north before A/C was widespread given how warm it is most of the year in many of those cities? Although A/C has existed for a while it's not always been standard in homes nor as relatively affordable as it is now.
Ace,
U Haul publishes an annual report on migration. For 2008 DC ranked 19 out of 50 states. Next report not out until March 2010.
Thanks, VA_investor.
I thought there would be some election night commentary. Surely I was not the only one following the results.
Well, perhaps more important to this blog, buried underneath the news about the elections is this from the NYT: Congress Poised to Keep Homebuyers’ Tax Credit
No info on what source there is for the belief that the House will not alter the credit. But presumably this article implies the House plans to pass the credit as the Senate has crafted it. Perhaps House leaders helped craft Reid's proposal so they didn't waste time on Isakson-Dodd's silly $15k credit.
I was rooting for Deeds but had expected McDonnell to win for quite some time. I did not expect Deeds to lose Fairfax County but he did (and the City of Fairfax). Election Map from Washington Post Fairfax had not gone Republican in a contested statewide election since it narrowly went for Bush in 2000. Loudoun and PWC not since 2004.
Last time this happened - Democratic president elected then GOP wins in VA, NJ (1993) the local housing market was dead. So I guess that's the upside. ;)
Remember also the Fed is meeting Nov 3-4 so keep your eyes peeled for an announcement. Not expecting anything monumental but they might say something interesting.
For me, the choice was between a candidate that was lame and uninspiring another one that was creepy and gave me the heebie-jeebies.
I voted by not voting.
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