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Monday, January 18, 2010
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42 comments:
Et Al
The average american has net household worth of under 10K.
That was a stat from the a few years back, i'm sure it's no better.
People particularly of the younger generations don't save.
I had 12 engineers reporting to me, all well paid, well educated, half of them wouldn't join the 401K program. It took incredible pushing from the management team to increase enrollment.
and of them, 4 of the guys took out 401K loans within a year.
Sure, one guy had a baby, another bought a house, but still, only 1/3rd of them were using the program as it was meant to be "As a retirement savings plan".
The rest saw the quarterly statements and just couldn't resist the urge to spend it.
Now DC has a better population, and witht he large number of feds people here are more risk averse, but still.
VA_Investor
"Why shouldn't flippers take advantage of FHA?"
Now i'm paraphrasing, but the purpose of FHA was to let poor people buy houses not to let flippers maximize ROI.
Pat-
Please don't make up statistics. This is why most of the people on here provide links when they give numbers. Such as I will say even after the stock market and housing markets fell the median net worth is over 100K (the average is much higher than this). I don't see how your stats could be even remotely close to correct. Unless you are talking about globally not the U.S. or something like that. Also based on the median income in Nova you would expect the median net worth to be north of 300K.
net worth
According to this site in 2007 the median net worth was 120K and the average was 556K 2007 net worth
From previous bit -
HB,
I am sure you have noticed new supply coming to market in that area - couple of apartment complexes on Gallows around Dunn Loring metro. The one has been more than 90% vacant for over a year now (on strawberry ln).
And, I am not counting lights - I know this for a fact from talking to them.
HB, thanks for those links. In pat's defense, I think some sites do not include the value of homes one lives in or the value of defined benefit pension plans in their calculation of net worth, which greatly lowers the mean net worth (though that $10K figure is lower than any that I have seen).
Something interesting in one of your links was how gigantic (compared to others') the net worth of self-employed persons is. This little fact should be borne in mind when lawmakers cry about how tough things are for "small business owners." Obviously if we are talking about someone who is trying to make a go of her hair salon or a boutique or mom-and-pop restaurant, that's one thing (and that's what those lawmakers want you to think of). But as these figures suggest, many "small business owners" are in fact making tons of income and have accumulated substantial wealth, far more than wage and salary slaves.
Spider-
Sorry for the confusion I was not thinking about places south of there. I was mostly thinking within a block or two of either metro. Yeah there I think the Falls Church area has some issues.
Ace-
I think a lot the self employed people I know keep their savings in liquid places rather than 401Ks, because they are more likely to need it. Seeing that the net worth calculator doesn't count retirement savings I think this is one of the large differences.
Also to be fair I think the numbers I reported are low, because they should be counting retirement savings, but oh well.
http://en.wikipedia.org/wiki/Wealth_in_the_United_States#Wealth_Inequality_and_Class
In 2004, the wealthiest 25% of US households owned 87% ($43.6 trillion) of the country’s wealth, while the bottom quartile held no net wealth at all.[2] The middle 50% of the country held 13% or $6.5 trillion of the total household net wealth.[2] The previous data are taken from analysis of the Survey of Consumer Finances (SCF) which over samples wealthy households. This over sampling more accurately represents the true wealth distribution [since most of the wealth is concentrated at the top]. This data shows that the top 25% of American society holds on average a net wealth of $1,556,801 which is 33 times more than those of the lower middle class, or the 25th-50th percentile.[2]
Folks
The Botomw quarter have Nothing.
the Lower Middle Class have very
little about $50K per houshold.
So it's a little better for the exact median household, but for the average poor person or working poor
or even just damn hard struggling type, they don't have wealth.
this number in Wikipedia is from 2004, add in 25% destruction of house values, add in growth of household debts particulary in the
poor, and yes, you are easily in spitting distance of $10K per person.
My brother is almost 50, he's not a schmuck, 2 masters, decent job(100K), badly married and he's worth $200K household.
Pat-
My survey showed the median at 110K. The graph on the upper right side of the wikipedia page you showed says that if you combine the median incomes of the 25%-50% and 50%-75% buckets you get a median that is also 100K+.
I fully agree there is significant income inequality and there are lots of very poor people in the country. This stat is not really relevant to this blog. We are talking about Nova and yes there are poor people here also, but far fewer than most places. The median income is over double the national average, so looking at national stats distorts the local picture.
Also I am not sure why you were subtracting from housing values that were taken in 2004. Most like it uses the 2004 assessments, which are from 2003 prices. But even if it does use the 2004 real value, CS shows that we are at 2004 values so you still would not need to subtract anything from this. I do agree with you that people amassed debt during this period so you would need to take that into account.
Also you started by saying "net household worth of under 10K" now you are saying "10K per a person," which number are you going for?
If you exclude housing wealth, retirement wealth, and the value of your belongings(e.g. cars, clothes, wedding rings...) I could believe the median is close to 10K per person. Although obviously this value is much higher in here.
I thought I remembered us deciding that homeownership rates went up because of the bubble ownership rates This data actually shows that ownership rates actually started increasing in 1990. They continues to peak when the bubble did and have come down. They are currently at the same level as in 2000, but this is still well below the trough in the late 1980s. I wonder how much further down it will go. I am convinced that we will continue to see the homeownership rate fall, because there are still tons of people living in houses they can't afford.
I no this is national data and also not that relevant to prices, but I thought it was interesting.
Sorry my link didn't work try this
homeownership The data is on the 4th and 5th page depending if you want seasonally adjusted
HB
I think my origninal stat should have been 10K/person.
Now beause income inequalityand wealth inequality is so bad, you need to be very wary of any average, because you are dealing almost with an exponential cliff not a smooth distribution or a normal function.
I've worked at lots of companies in the DC area and I was horrified how many reasonably compensated sorts were 2 paychecks from disaster.
One firm i worked at, they switched the admins from bi weekly to monthly pay, and almost all of them had to take pay advances to get
through that month.
The company had to make interest free loans to them of 2 weeks pay and then amortize it out, one day a month.
unbelievable.
as for housing wealth, it's not really much of wealth, if you can't extract it. it's got a future discounted value in deferred rent avoidance, but near term it's not much.
just be wary of any average wealth numbers. When Bill Gates goes to a high school parents night for his daughter, the average wealth is 200 Million.
the averages no longer mean much when 1/4th the population has nothing. And by the way that means a lot even here. The people in Anacostia? How much do they have? The working poor down on route 1? What do they have?
Frankly I know far too many people who have decent incomes but can't save a dime, partly due to poor discipline, but the system is stacked against them.
Pat-
I absolutely agree that wealth needs to be handled as a median. In my post the 110K number was the median. The mean was 556K, but as you said who cares that Gates and Buffet combined add ~1K to every families average net worth. I think it said that the median for families making over 75K-1254 was ~300K. This is probably a more accurate number for Nova seeing that the median income is over 100K.
I agree household wealth is not very easily extractable, but many people who have owned for 10+ years are paying very little due to having a small loan and having refinanced it at 5%, so the rent avoidance is real.
HB,
Here is the chart for home ownership I posted earlier: Linky
I think we will tick back to 64% or so in next few years.
Spider-
Thanks for the graphical version. I added my link, because I think yours is not through 2009, but I could be wrong. It is sometimes hard to tell with graphs.
I originally thought it was 64% in 2000 and agreed we would get down that low. Seeing that in 2000 we were at 67%, I don't think we will make it to 64% maybe like 65.5%, but who knows. I am definitely in agreement with you that it will continue to go lower over the next couple of years.
pat,
FHA is not for poor people. You do know the lending limit is somewhere around 700K? Yours is a common misperception among the uninformed.
FHA does not allow investors to profit on the backs of the little guy. How many average buyers would set foot in an reo, let alone buy one?
If investors can't sell the properties that they have renovated, then they won't buy them. The houses will remain a blight on communities and neighborhoods.
Sounds like a plan to me.
HB, I didn't see the info at your link about what was included (other than they noted that house wealth WAS included). So I don't know what that site included or excluded. Typically defined contribution plans like 401ks ARE included because people know what their account balances are. In defined benefit plan there aren't individual accounts and most people don't know what the present value of their benefit is - only what they would qualify for if they stayed until retirement. So my hunch is that the #s you cited DO include 401ks.
I would have to see evidence to be convinced that self-employed people--particularly those like the people at your linked site who have high net worth--are less likely to contribute to 401ks than the average wage/salary employee.
VA_investor, the FHA's high limits are recent (since March 2008).
http://www.hud.gov/news/release.cfm?content=pr08-030.cfm
"Beginning today, HUD will offer temporary FHA loan limits that will range from $271,050 to $729,750. Overall, the change in loan limits will help provide economic stability to America's communities and give nearly 240,000 additional homeowners and homebuyers a safer, more affordable mortgage alternative. The maximum amount of $729,750 will only be applicable to extremely high-cost metropolitan areas such as: New York, Los Angeles, San Francisco and Washington, D.C.� HUD also calculated new limits for loans to be purchased by Government-Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac."
one last thing - I should have said self-employed are eligible for other types of deferred comp. plans (e.g., Keogh) designed specifically for them.
Ace,
The FHA limit was over 400K prior. There has never been a limit on income and the "poor people" thing is just plain wrong.
VA_Investor,
per the same article, prior to March 2008, "FHA's loan limits in these very high-cost areas were capped at $362,790." For other areas (the vast majority of the country) it was the lower # cited earlier, $271050."
I'll leave it to others to debate what constitutes "poor". The point is that the limits have always been well below the $700K that you pointed out, until less than 2 years ago.
Ace
Thanks for the links on FHA.
Yes, Bush and the Banksters got FHA into the game, and basically FHA is now providing the steam for a bubble
that wall street was posting.
It will explode like all bubbles, only worse and now entirely on the books of the taxpayers.
Before it was on the banks, hedge funds, pension funds and private investors.
Then Cheney guaranteed Fannie Mae because the chinese threatened his life.
Then Paulsen and Bernanke guaranteed every piece of paper in the system and bought over a trillion and a half.
and they pushed FHA to replace wall street.
FHA used to be for working poor housing, then the banksters and republicans decided FHA is for flippers.
VA-Investor gets very defensive when you point that out.
pat,
Look squarely at Chris Dodd and Barney Frank for the Fannie debacle.
FHA is not for the working poor. When I got an FHA in the mid-80's, my uninformed mother said the same thing (FHA is for low-income). FHA does not provide investor loans. Do you prefer boarded-up houses?
Have you sent your absentee vote up to Marcia...er..Martha?
How did this go under contract at this price? Does it look like that someone is trying to skew the comp?
Linky
Condo Buyer I live in an older building in Rosslyn and there are 1bedroom condos in the building. I checked with the front desk today to see if any are for sale and there aren't any. If I hear of anyone selling a 1 bedroom, I will post the info for you here. It's a nice building with big units, nice pool, garage, new gym and good management.
Spider - Do you know what the contract price was on the Vienna property or are you just reacting to the offering price. The offering price is about $35K higher than a property in the same neighborhood and school pyramid that sold last year:
http://franklymls.com/FX6954963
Mozart,
I am referring to the list price & the fact that it went under contract in 13 days. It was sold at 825k in 2006 & assessed at 700k.
The one you linked was sold at 730k.
Spider - The property that sold last year was orignally listed at $775K and sold for $730K; this one was listed at $810K and it seems that neither of us knows whether this house was in better condition (more upgrades) than the house that sold last year or what the contract price is. Properties between $700-850K in Vienna in FFX continue to go under contract pretty quickly (some prefer the Town of Vienna to the county neighborhoods, but the houses that go on the market in the Town of Vienna tend either to be older ramblers on the market for less than $700K or brand-new houses at or above $1 million.
Could we please not push falsehoods based on political agendas?
The facts have been carefully documented here:
http://mediamatters.org/research/200810100022?f=s_search
va_investor
do you have an email i can reach you at?
It looks like the house spider posted has an extra bed and extra full bath compared to the comp. So you would expect it to go for more. I agree I would much rather see that house going for much lower so it was in my price range, but unfortunately the market is what it is not what I want it to be.
Ace said..."Could we please not push falsehoods based on political agendas?
The facts have been carefully documented here:
http://mediamatters.org/research/200810100022?f=s_search"
Ace, I did not read through the "facts" you referenced, but doesn't mediamatters.org have their own political agenda: "Help us fight conservative misinformation"
I'm not saying they're right or wrong, but I could easily say...
The facts have been carefully documented here:
Economic Meltdown Fueld by Frank/Dodd
pat,
I do have an email I can give you. You won't give me a political spanking, will you?
What would you want to talk about?
va_investor
I want to bounce a deal structure off you offline.
while i'm a progressive liberal,
i also recognize some people have good talents. While I'm a bear on the market for real estate I also recognize opportunity can be found even in the worst of times.
pat,
Why don't you provide an e-mail address where she can contact you, so she doesn't have to list her info publicly here? (Although I must admit it is very easy to find addresses for VA_Investor with all the homes she owns and rents out).
Novahog, if you didn't read the facts in the article I linked, I don't think you (or anyone else) can assess its accuracy.
The article I linked points out what was actually said and done and by whom. If you want to read it and take issue with any of what it says, based on evidence you have, be my guest.
Jeremy,
Wow. Is that statewide or national?
I take back every negative thing I've ever said to you! :)
Multi-state if you count the one in Baltimore that needed the skylight fixed. Don't blame me though, blame Google. Google knows everything about everyone.
I don't own anything in MD.
My mistake then, however there are many listings by people with the username VA_Investor. That one was listed in 2007 with an email address va_investor@hotmail.com. Don't kid yourself though, there are tons of databases out there with information about us all that we didn't think was public. I'm sure with the random anecdotal stories we've all told on just this site someone could easily come up with a name and address for most of us if they actually took a few hours and tried.
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