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Saturday, January 9, 2010
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65 comments:
The Arlington Co. newsletter, The Citizen, Jan-Feb 2010, reports that "Real estate assessments overall (including residential) are expected to decline 5-12 percent."
I should have added that these assessments are released in January and they are based on July 1, 2008-June 30, 2009, with some adjustments for sales June 30, 2009-the date the assessments are prepared.
Here's a really interesting property for those who like to do renovation work. Could be a real stunner once fixed up. Too much of a project for me.
http://franklymls.com/FX7218946
The price history on this home makes me laugh.
Yeah, Jeremy, but I give the owner credit for shaking off the delusion relatively quickly. Looks like a pretty good deal now for anyone who wants to live in Great Falls. Big, lots of land, mostly updated nicely.
I love the granite they chose for the kitchen.
c, a very interesting house on a pretty lot, but as you say, a LOT of work and $ will be required, and it will still be a very small house.
Actually, I see from frankly that it's a short sale, so maybe the seller didn't get wise voluntarily.
http://franklymls.com/FX7194976
The price history on this home makes me laugh.
Hahahahaha, sob, sob, sob...
Jeremy,
We need a similar shake-out for many more sellers and investors alike. It is going to happen, just a question of when and how - fed is all in and interest rates are already edging up.
As expected, inventory is inching up...fasten your seat belts - we are landing and the ride can be rough.
My mailbox is getting unmanageable with all the alerts I am getting for price reductions and new listings. It seems like repeat buyer tax credit is helping sellers come out of the closet.
"spider said...
As expected, inventory is inching up...fasten your seat belts - we are landing and the ride can be rough."
Yup -- take a look at the first chart:
http://www.recharts.com/nova/nova.html
That 2010 trend line is unmistakable. This is clearly the STAMPEDE Spider warned us about. 20,000 units available by mid summer YAAAAAAHOOOOOOOO!!!
Glug, glug, glug...
Robert/housebuyer et al
Look at the pricing of the home c found. And search for Hollin Hills. These homes are just as bubbly and taking forever to come down as homes in Vienna.
As I've said pretty much everywhere in Fairfax County SFH are taking a while to come down. There's nothing special to Vienna or other areas near Tysons. Or by school district etc. We just happen to have a lot of people here looking in central Fairfax County. But this shows pretty clearly that if we had some people looking in the West Potomac area that they too would be flabbergasted at still seeing high prices.
http://www.fcps.edu/HollinMeadowsES/
Michelle Obama apparently visited the local elementary school (the one that the house c found feeds into.)
The Washington Post article is interesting.
spider said...As expected, inventory is inching up...fasten your seat belts - we are landing and the ride can be rough.
Let's see if the demand monster can eat them all up.
TBW, I think availability of credit is a big factor in any further declines you will see.
Predictions I've seen say it will ease slightly in 2010, but I'm not going to guess.
nice article, TBW.
"Robert said -
Let's see if the demand monster can eat them all up."
Many people who could have bought already did to get in before 2009 tax credit expiration. Repeat buyers are not adding new demand. Interest rates are marginally higher than fall of 2009, means less purchasing power.
In the meantime, rental vacancy rates are hitting new records. U.S. apartment vacancy rate hits 30-year high
"In the fourth quarter, U.S. asking rents fell by an average of 0.7 percent to $1,026 per square foot, the largest single-quarter decline since 1999. For 2009 asking rents fell 2.3 percent, also the largest decline in 30 years."
"Effective rent fell 0.7 percent in the quarter to $964 per square foot. The 3 percent drop for the year was more than three times the deterioration in 2002."
"Never before have we observed rental properties in so much distress, both on the space and pricing side," Calanog said. "Declines in asking and effective rents may be massive, but landlords may at least be retaining tenants as opposed to losing income altogether from dealing with vacant space."
In defense of spider...
I think there is a phenomenon of inventory begetting inventory.
Look what happened from March to July of 2006. Credit was still easy. Home prices were stable. There were no job losses, yet inventory skyrocketed.
There were sellers clued into the bubble that planned long in advance to try to get out at the top. The only metric I can see they were looking at was inventory. Help me if there was something else.
So, if inventory does go up significantly, it could lead to even higher inventory. A virtuous circle of increasing inventory.
IMHO there is too much demand, but anything is possible.
spider, didn't you see this from yesterday...
Rents are Falling Almost Everywhere…Except DC
DC was the #1 market out of 79. The top six markets had flat or rising rents.
Robert,
Did you miss the following in that same article??
Speaking of DC, it was actually one of only six markets that saw rents rise or stay flat in 2009. Still, the market is softer here than it has been for years, so local renters should feel emboldened to push for perks and deals.
And a link: DC Apartments Roll Out the Move-in Incentives
"Robert said - So, if inventory does go up significantly, it could lead to even higher inventory. A virtuous circle of increasing inventory."
Absolutely, it always does. This is exactly what I said couple of months back. As soon as the news of further weakness is clearly established, there will be a rush for the exit, sellers and investors alike. There are many sellers waiting to get out - and yes - this is the virtuous cycle I was referring to.
Add to that the fact that tax credit extension one more time is very unlikely, investors/flippers won't support the market and will likely stay on the sidelines.
Coincidentally, I happened to come across this little fact, under the category of "things we didn't know a year ago":
4. Analysis of Greenland ice samples shows Europe froze solid in less than 12 months 12,800 years ago, partly due to a slowdown of the Gulf Stream. Once triggered, the cold persisted for 1,300 years.
Sound solvable to everyone? Sound like we have plenty of time?
http://www.att.net/s/editorial.dll?eetype=Article&eeid=7020757&render=y&Table=&ch=ne
spider,
I'm not claiming that the market is as strong as 2006 or 2007. But, rents are rising and that feeds directly into fundamental analysis by investors.
The report forecasts Washington, D.C., will be the healthiest rental market in 2010 for the second straight year.
So, last year and this year as well.
Have fun negotiating your free rent and incentives.
TBW - Actually, there is something to distinguish the McLean/Vienna (Tysons) area from others in Fairfax. Look at the US News & World Report listings of top schools: Langley (Gold Medal), Madison/Marshall (Silver Medal), McLean High (Honorable Mention). All of these schools (and Oakton) were rated highly the prior year as well. Woodson and Lake Braddock were highly rated as well, but they are further away from the main job centers (DC and Dulles/Tysons). Prices may yet come down further, but they'll still be higher than the Alexandria part of Fairfax County, or Burke or Fairfax for that matter.
Mozart-
I think all of us know that Vienna is desirable. This has been the case for a very long time. With this being the case TBW does not see why Vienna would keep more gains than Fairfax. e.g. Vienna used to cost 5% more than Springfield now it costs 20% more what caused this change. Langley being ranked high is nothing new.
PS I made up the 5% and 20% numbers, they may be slightly off of reality.
I apologize to the lawyers on here, but I hate our legal system HAMP How do judges allow people to fight a foreclosure saying it is unconstitutional...
"Robert said...
In defense of spider...
I think there is a phenomenon of inventory begetting inventory.
Look what happened from March to July of 2006. Credit was still easy. Home prices were stable. There were no job losses, yet inventory skyrocketed.
There were sellers clued into the bubble that planned long in advance to try to get out at the top. The only metric I can see they were looking at was inventory. Help me if there was something else."
Robert -- neither you (nor spider) was on this blog but we figured this out a few years back.
That massive runup you saw in spring 2006 was all the flippers running for their lives as they pushed prices higher and higher til they could not find a greater fool to sell to -- a classic sign of a bubble, and of a bubble "bursting".
If you recall, back in early 2006, Reuters and a few other outlets were reporting spiking inventory and heavy losses in select submarkets in NOVA, Denver, Boston, etc. however, the rest of the U.S. was at the time still doing OK (remember those early calls for the bubble being "contained")?
Well, turns out, Northern Virginia, Denver, Boston, etc. were just the "canary in the coal mine". Once these went south, in early 07 the banks tightened up credit not just here but nationwide.
Thus, as a result of the nationwide credit tightening, the rest of the US did not see a 2006 peak like we did. The rest of the US saw an inventory peak in 2007/2008 -- roughly a year to two years behind what we had here.
http://3.bp.blogspot.com/_pMscxxELHEg/SzDgQt1uUYI/AAAAAAAAHFY/WowIIfP3ItI/s1600-h/EHSNovInventory.jpg
So thats why we never saw a a second peak back in 07/08 like the rest of the US. We worked out so much of the problem inventory relatively early on.
So thats why I feel confident we are not going to see a second "stampede" as Spider seems to suggest. We could have a phantom inventory dump, but thats a different phenomenon, and something that looks less and less likely as time goes on. As a general rule, when inventory peaks it peaks -- period. To my knowledge there has never been the occurrence of a second stampede as Spider suggests. Moreover, given the track record of those who argue why "its different this time", im not very inclined to agree with him.
Anonymous -
Makes sense. That bulge in 2006 was many years in the making. I don't see anything similar. If anything stumps me it is the lack of sellers.
Robert
As long as Bernanke holds interest rates nagative it doesn't hurt so much to hold on to underwater property hoping the tide will go back out.
but I take a look at this
http://bubblemeter.blogspot.com/2010/01/my-dc-housing-predictions-for-new.html
and i see a huge bubble, not adjusted for any large demographic shift.
in 2000, there were already almost every woman who could work was working.
this was solely the effects of increasing leverage as people went from 28% DTI with 20% down to 50% DTI wiht nothing down.
Prices rose and people treated their homes as ATMs
i'd be curious if anyone has stats for how many HELOCs were drawn in
fairfax county.
so prices have been coming down 20-30%, but they can fall a lot more.
Mozart,
The high schools you mention are amongst the least diverse and not representative of FCPS. You do realize that only 46% of the school population in Fairfax is white and that 25% of students are eligible for Free or Reduced Lunch. All of those schools are close to 65%+ white and have less than 10% FRL.
I'm starting to look for a new rental because my landlord will be selling our place at the end of the lease. It looks like there's a lot of compression in the market but there are places available. The even slightly lower priced places are going VERY fast in the rosslyn-ballston corridor
I went to a place to look at a small two bedroom near the courthouse metro which I thought was appropriately priced and it was snapped up with multiple offers. Same with a 1br I applied for.
The landlord of the 2BR said he thought this was the best time to buy in this area because he doesn't think prices will go down any further. I'll still be renting though so oh well.
So I just found out today that my sister has gotten a realtor and started looking at homes near Fredericksburg, focusing on an area called Lake of the Woods. It caught me off guard since she has no down payment saved whatsoever. She plans to use her tax return for her down payment. Apparently her income is low enough that she will qualify for EIC, which is 5k with 2 kids, plus she'll get back the majority of what she paid in during the year. Makes me sick how much free money she gets, but at least I feel a tiny bit better about all of the taxes I have to pay since she's getting them.
Anyway, to my point/request. She works at the courthouse in Fredericksburg. Her price point is 150k. If anyone knows that area and can give me some advice to pass on to her it would be appreciated. Yes, I will try to convince her to save more money before buying.
Actually, I just looked up the EIC income limits and I think she'll be sorely disappointed this year when she does her taxes. Her courthouse job might not have put her over the limit for the few months she had it last year, but she has to have made enough to phase out most or all of the credit this year. Advice on the area to pass on to her is still appreciated though.
I wonder how many FHA 3.5% bubble buyers in the lower price tiers got their down payments from a tax return, rather than actually saving money...
I was watching one of those "my first home" shows on HGTV last night. This episode featured a librarian trying to buy a house in Portland.
She had $5,500 on hand and was buying a $225K house.
The house she ended up buying was a fixer, and among other things needed some new wiring, a new furnace and new kitchen appliances right from the start...
I just don't see how that makes sense. She seemed like a nice lady and all, but how do you commit to buying a house without a penny to your name, and who would loan you the money?
I wonder how many FHA 3.5% bubble buyers in the lower price tiers got their down payments from a tax return, rather than actually saving money...
Tax Refund = Saved Money
Just change your withholding.
HayfieldGrad said...The high schools you mention are amongst the least diverse and not representative of FCPS. You do realize that only 46% of the school population in Fairfax is white and that 25% of students are eligible for Free or Reduced Lunch. All of those schools are close to 65%+ white and have less than 10% FRL.
Why does FCPS even publish these statistics? What's the benefit?
i suspect 3/4 of the people buying
at 3% down were on the Tax credit,
that program wasn't really moving
until the Treasury announced they would work with HUD and FHA to let you use that as part of the credit.
For the bottom tier that exploded
purchasing, because most of the people
who were trying to buy under that program at that time did not have
ever 3.5% down.
Dr Piggington i believe called it
the return of the 0% mortgage.
HayfieldGrad said: "The high schools you mention are amongst the least diverse and not representative of FCPS."
Wasn't the point of Mozart's post that Langley/McLean/Madison/etc help those areas? Your response sounds like a confirmation. If they're considered top schools and they don't represent FCPS, then i assume the other schools in Fairfax County aren't as good?
novahog-
yes that was Mozart's point, but as I said they have always been the best schools, so this shouldn't change their relative value compared to other areas.
Leroy, those shows drive me crazy too; they are often accompanied by the home shopper saying things like, "this kitchen (bath, etc.) is REALLY awful", or "I really prefer granite/stainless steel." Perfectly functional rooms are downright offensive, because they were updated more than 10 years ago and are out of style, even though the homeowner has a tight budget.
In HGTV's defense a lot of those shows were made more than a year ago, so I hope banks have tightened up a little since then--for these home shoppers' own good.
housebuyer said: "...they have always been the best schools, so this shouldn't change their relative value compared to other areas."
I agree.
Trying to figure out what HayfieldGrad's point was. Stats about free lunches and diversity? The response didn't have anything to do with what Mozart was saying.
Novahog-
Good point.
Many people who could have bought already did to get in before 2009 tax credit expiration. Repeat buyers are not adding new demand. Interest rates are marginally higher than fall of 2009, means less purchasing power.
Seems you always talk about demand as if population is fixed. What about these people:
Of the new positions, 50 percent to 60 percent will be filled by people who now live outside Washington, he said, particularly recent college graduates who tend to be more mobile.
For every new federal job, economists predict there will be one to one-and-a-half new government contracting jobs created. And many of those folks also will be coming from elsewhere.
He argues this is important because the area doesn’t have a glut of idle qualified workers, so it’s seeing an inflow of people to fill professional and business services jobs, as well as government jobs.
Officials at some of the agencies said they are recruiting in the region and around the world. But even an influx of hires relocating here could help by spurring demand for houses and apartments.
Analysts said they expect the new jobs to drive demand for housing in the region, accelerating recovery of the market.
"The job growth in D.C. will bring new people into the labor force and drive demand for apartments and houses," said Frank Nothaft, chief economist at Freddie Mac. "That will have a ripple effect in [boosting interest in new houses] and creating construction jobs."
Re the McLean/Vienna schools - there's a strong argument that the differences in performance between the schools in McLean/Vienna and Springfield/Alexandria are more pronounced now than in prior years. In this regard, Fairfax is becoming more like MontCo (where the difference in performance between the Bethesda/Potomac/Rockville schools and the schools in the eastern part of the county) and less like Loudoun (where the top schools aren't as high-performing as those in Fairfax or MontCo, but the differences among the schools aren't as pronounced). That may be one reason why the spread is staying wider.
Hayfield Grad - Yes, the McLean/Vienna schools are less diverse than those elsewhere in the county (although both McLean and Marshall are more diverse than you suggest). The least diverse high school in the county are Langley, Madison and Woodson. However, test scores at McLean and Marshall are quite high, and these schools keep getting accolades from Newsweek and US News as well, so those school districts are also generally coveted. Some well-heeled potential buyers will continue to prefer Langley over McLean, or Madison over Marshall, without specifically acknowledging why, just as even more such buyers will prefer McLean and Vienna over Springfield or the Alexandria part of Fairfax. I don't see that changing any time soon.
housebuyer said
I think all of us know that Vienna is desirable. This has been the case for a very long time. With this being the case TBW does not see why Vienna would keep more gains than Fairfax. e.g. Vienna used to cost 5% more than Springfield now it costs 20% more what caused this change. Langley being ranked high is nothing new.
PS I made up the 5% and 20% numbers, they may be slightly off of reality.
Actually, I think the going assumption on this blog had been that Vienna went from 5% more (or whatever) to 20% more (or whatever). BUT, I think that's only the case at the condo/TH level.
I think if you look at the SFH level that prices have been very sticky in Vienna (or similar places) AND in the Alexandria section of Fairfax County.
Take the home c found. My guess is that neighborhood (along with many other SFH neighborhoods in that area) comprise the rich or upper-middle class kids at West Potomac HS (and presumably some people in that area get into TJHSST). Those neighborhoods will have fewer (or delayed) foreclosures for all the reasons rich or upper-middle class neighborhoods in Vienna have had them.
As I think we've all noted a million times, the foreclosure hot zones generally have been poor neighborhoods. So these middle or upper class neighborhoods in SE Fairfax County are dropping as slowly as Vienna.
So I am arguing if we had more people looking in that area then we'd see more people saying "I can't believe this house in the West Potomac area still is listed at its 2005 price."
Robert said...
"Tax Refund = Saved Money"
Not if the majority of it comes from a government handout, such as the Earned Income Credit or the First Time Homebuyer Credit.
HayfieldGrad said
The high schools you mention are amongst the least diverse and not representative of FCPS. You do realize that only 46% of the school population in Fairfax is white and that 25% of students are eligible for Free or Reduced Lunch. All of those schools are close to 65%+ white and have less than 10% FRL.
What HayfieldGrad conveniently leaves out is that Fairfax County is not 46% white but instead about 65% white. But perhaps Census 2010 will give us a different number. Also, I don't know what percentage of Fairfax County is impoverished but I doubt it is 25%. Probably more like 10%.
HayfieldGrad,
You claim to have moved around a lot growing up. I don't know what utopian, color-blind society in America you lived in. Maybe I missed it and it's never been reported on.
But I dare say Woodson, Herndon, Westfield (etc etc etc) are about as good as it gets in America with income and racial melting pot.
I'm sick and tired of you calling parents who send their kids to those schools racist. When I went to college there were people who had never met a Latino or Asian in their community or schools in central VA. I met someone who grew up in Idaho who never met a black person until they came to Northern Virginia.
You can make fun of the sort of high school I attended all you want but I'm convinced from my life experiences that at 18 I was more culturally aware than 80% of the white people in America. Heck, by age five (if not before then), I knew the difference between Chinese, Japanese, Korean, etc and Mexican, Puerto Rican, Honduran, Costa Rican, Cuban, etc. I knew what Ramadan is and had classmates with a hijab.
There are plenty of places in this country where they call every Asian person Chinese or every Latino Mexican. They don't know anyone who is Jewish or Catholic let alone Hindu or Muslim.
This area is a melting pot, mixing bowl, whatever cliche you want to call it. Just because some kids go to a school that is majority white does not change that fact. There's a big difference between Woodson HS and some community in rural VA or rural whatever.
I'm just so sick of your whining.
Some kids teased you about Hayfield HS. Move on!!!
TBW - Hayfield Grad is correct as to the percentage of White students in FCPS. It's a good bit lower than the percentage of Whites in the county as a whole, as the demographic mix in the county is changing rapidly towards Hispanics and Asians.
There are wonderful neighborhoods in the Alexandria part of the county that feed into West Potomac. Query whether housing prices in those neighborhoods would be significantly higher today had FCPS not decided years ago to shut down Fort Hunt High School and merge it with Groveton to create West Potomac.
Hayfield Grad - This is a primarily a discussion about housing values, not whether some schools in the county are unfairly maligned. You do not need to convince me that someone can get a good education at Hayfield or West Potomac.
spider -
Here is the three-headed demand monster that is ravaging Northern Virginia inventory:
Investors:
Investors have reemerged with brute force in the Washington region's real estate market over the past few months, triggering bidding wars in some neighborhoods teeming with foreclosed properties
"What I hear is about large bulk purchase initially which do not show up in the MLS service, so we don't capture that in our sales statistics."
Relocations:
"It's a seller's market," Capalbo said. "We have a lot of relocation people who they feel like can come in and get the deal of the century but find themselves in competition over property, and they're shocked."
"The job growth in D.C. will bring new people into the labor force and drive demand for apartments and houses," said Frank Nothaft, chief economist at Freddie Mac. "That will have a ripple effect in [boosting interest in new houses] and creating construction jobs."
Organic demand/pent-up buyers:
Diggins and her fiance, George Mills, made a dozen offers on houses in Prince William County but lost more than half of them to investors making all-cash offers.
Frustrated, they gave up their search for a new home, convinced that they could not compete.
Mozart,
I'm not disputing HayfieldGrad's numbers for enrollment. My point was that she is leaving out the fact that the school system is much more diverse than the overall community. Also, every time she brings this up she acts like the average student in this country goes to a school that is 20-30% white and 50% FRL so if you dare say something nice about a school like Herndon it's because you are racist/classist which is just so ridiculous to me because Herndon is much more mixed than most schools in this nation.
I forget how long you've been here but basically any time someone says something positive about certain schools HayfieldGrad starts attacking them. I'm told it all started when Cara and someone else said they preferred Robinson over Hayfield. Then later I joined and attacked TC Williams in Alexandria and things spiraled out of control there.
HayfieldGrad is entitled to her opinion but I don't see why every time someone brings up schools she has to go on the attack. For the peace of this blog when waiting too asked a while back what people though of Wakefield HS I kept my big fat mouth shut. I don't see why HayfieldGrad can't retire this topic as well.
Robert,
Let me see if I can slay some of those heads.
Relocation -- there's always been people relocating here for jobs. In fact, a lot of my school friends who moved here in the 1990s came from CALIFORNIA specifically which their parents all complained was falling apart back then and so they had to move. During this time period the housing market in Northern Virginia was flat.
Do you have any evidence that there are more relocations here than back then? No? Okay, head #1 slayed.
Pent-up demand: Sounds to me like that demand is still pent-up. The married couple is not bidding anymore as your quote notes. Worse for you they are living in the parent's basement not even stimulating the rental market. Head #2 slayed.
I'm left with the investor head. I can't slay that. You are right there are still plenty of real estate investors and flippers in the area.
Remind me again how bubble bursts end. Do they bottom out while the investors are still going strong? Or do they bottom after the investors give up? Oh, it's the latter? That's what I thought.
Just like the couple you highlighted, I have no interest in competing in a market where investors are paying crazy prices on homes. If people are still willing to buy a condo where monthly costs well exceed the rent count me out.
I don't want to stick my nose in where it doesn't belong, but regarding % of whites, etc., in Fairfax (or anywhere else), "Hispanics" are not a race. People of Hispanic or Latino origin can be of white, black or other races. This may be contributing to some of the confusion/dispute. I realize it is not the essence of it.
http://www.fairfaxcountyeda.org/demographics
Fairfax County Households by One Race
White (non-Hispanic*) 67.7%
Asian 15.8%
African American (non-Hispanic*) 9.3%
Other 7.1%
*Hispanic/Latino households comprise 13.3 percent of total Fairfax County households and may be of any race.
Sources: VEC, Fairfax County Department of Systems Management for Human Services,
U.S. Census Bureau (2007 American Community Survey)
tbw,
Regarding investors: don't you think that perhaps the idiots lost their shirts in the past couple of years? Who do you suppose is buying now? Investor/flippers KNOW that the average dumb buyer will pay a 100% mark-up to have shiny new appliances, paint and carpet. And those higher prices are still far under peak.
TBW knows this is a different class of investor:
"There's a big difference between [the all-cash] investor and the flipper of the housing bubble, who put no money down," said Mark Zandi, chief economist at Moody's Economy.com. "This person has all the skin in the game, and that's encouraging. It suggests that housing in the area is now appropriately valued or maybe even undervalued."
I'm sure when TBW sees "undervalued" it physically stings.
Ace,
Yeah sometimes it's hard to get the exact numbers because sites will differ on how they classify Latinos. The 65% number I had found is a few years old and in this very dynamic area we live in I'm sure that's changed. As I said Census 2010 might show it's gone down a lot (and those 2007 numbers imply it has gone down somewhat.) That being said I'm pretty sure Fairfax County is not now 46% white.
I'm pretty sure there is a mismatch. Some reasons include: (a) immigrants (Latino and Asian) have more kids on average than non-immigrants, (b) the single/DINK/empty nester population in Fairfax County is probably disproportionately white, (c) family size is inversely correlated with wealth and education level (making the FRL population disproportionate), and (d) private schools draw out some of the wealthy/white population (and other groups).
My guess is that all factors, but especially (b) and (d), are huge factors in a place like the City of Alexandria which is 60% white and the public schools are 20% white.
And if that's where Fairfax is headed (or certain subsections of Fairfax) then getting back to Mozart's topic of real estate prices, then I can easily see the prices in some neighborhoods in Fairfax County being unrelated to the quality of schools just as school quality is mostly a non-factor in places like Old Town Alexandria, Dupont Circle, Georgetown, etc etc etc.
Before anyone gets their panties in a bunch over my (a)-(d) trends I was one of five kids in a non-first generation immigrant, FRL, or low education family so I'm not saying there are not exceptions. Those are just general trends.
TBW said...Do you have any evidence that there are more relocations here than back then? No? Okay, head #1 slayed.
Suppose I didn't. Then we would have the historical 7% YOY appreciation of homes in the area based on normal relocation patterns.
TBW,
Agree with all of your race analysis. The whole subject bores me, but your post is spot on.
Robert,
In most bubbles people buy the item and do not borrow. Any collectors bubble has that as a feature. So that does not stop things from getting out of control. People paid cash to buy Beanie Babies.
---
Here's an interesting WSJ Article arguing that designer handbags were their own bubble until the recession. I had never really thought of that one before probably because I don't buy handbags nor know anyone who was in the market for such expensive handbags.
There's a lot of wealth in this country and as you've noted things can be irrational for a while. But the party always ends eventually and things go back to normal. There's still a party going on in this area as people think 20% off 2006 prices is a sale when it's still an inflated price.
Robert,
Here is something from 2007 when people were starting to wonder about this designer handbag bubble I'm just learning about.
Here's what the TBW/spider/Jeremy etc would say:
“That $5,000 Marc Jacobs bag is so yesterday’s news,” said Elizabeth Kiester, the chief creative director of LeSportsac, which is developing a line of bags with Stella McCartney that will sell for under $350, beginning in February. “The luxury market is so over the top now that it is demented. I call them limo bags. I don’t have a limo.”
Here is what you would have cited (in bold):
At Neiman, the average bag sells for about $1,200, but Mr. Downing said there is no price resistance for a pièce de résistance. A special edition of 25 Chanel bags, made in crocodile for the retailer’s 100th anniversary last month, sold out in a snap. The price of each bag was $25,000.
Even as people start to question the insanity of it all there are always going to be some [rich] people out there still willing to partake in the craziness.
Here's someone trying to sell one of those bags on ebay for $9.5k.
This is kinda amusing. I tired of using the Beanie Baby example.
TBW,
That's good stuff: hangbags
I had no idea any of that was going on.
Robert,
You said your wife works so I suspect she never got into such nonsense. Also you have kids which usually limits wasteful spending.
My guess is the average person buying these sorts of goods were kept women and/or trust fund daughters.
With some exceptions, I've found that people who are spending money *they earned* spend it a lot differently than those who are spending other people's money (be it husband/wife, mom/dad, etc).
Housing connection: a lot of people I know who bought during the worst years had parents covering the down payment fund. When a $50k down payment is not something you earned over years it changes your risk perspective.
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