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Wednesday, February 10, 2010
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89 comments:
WSJ blog, "FHA Loan Defaults Surpass 9%."
"Officials at the Federal Housing Administration take every opportunity they can to assure the public that the agency is weathering the housing downturn just fine. But the latest batch of numbers show that defaults on loans backed by the government insurer show no signs of slowing."
"Loan defaults crossed the 9% mark in December, ending the year at 9.12%, up from 6.82% one year earlier and 8.94% at the end of November. Through 2009, the agency had insured 5.8 million loans worth $752.6 billion, or a 24% increase from one year ago."
"To offset expected losses to its capital reserves, the FHA is planning to hike the fees that borrowers must pay for that insurance. The FHA charges two different insurance premiums. The first is paid upfront and is set to rise to 2.25% of the loan amount, up from the current level of 1.75%. The second is charged annually and is currently set at 0.5% to 0.55% of the loan amount."
"The agency last week said it would ask Congress for authority to raise the annual premium to 0.85% to 0.90%, and once that happens, it will reduce the upfront premium to 1%. Agency officials said those changes would raise the most money for the government without shutting out a large chunk of potential home buyers."
http://blogs.wsj.com/developments/2010/02/09/fha-loan-defaults-surpass-9/
Blogger MM said...Texas Native,
Would you buy a house built in the early 1900s? Is the maintenance a never ending nightmare?
No, and Yes.
Many folks forget or are unaware that maintenance is required even on brand spanking new homes. Even more so with the current construction methods. Slime doesn't wash itself off of siding on the North side of the home. Free mulch over 10 years changes drainage patterns in your lot. Even more so if everyone around you is doing the same. Contractor white paint with low VOC usually means chalking in as little as 3 years.
A well constructed home is little different than a ruggedly built vehicle. Jeep Cherokee's (One of my favorite local vehicles) are simple, solid, easy to maintain, well built vehicles that people continue to drive well in excess of 200,000 miles. Some homes are the same way. Quality construction, with thoroughly vetted codes, built by knowledgeable craftsman last and last and last. Few ramblers, split levels, or split foyers I've inspected appear to great investments at a half million dollars.
In my travels to Europe, single family homes I've inspected in some regions are so well constructed the shells are reused over and over again. My FIL lives in a home that was built in 1890, its solid as a brick, well constructed, and requires very simple maintenance to keep in good condition. It's made of native stone, old growth lumber, with a basic open floor plan that's easily adaptable as each generations changes its wants and needs.
Wish I could find one of those here....Seen a few close ones out near Front Royal...:)
Brick ramblers built in the early 1950's and 60's for Blue Collar starter families will forever be small cramped homes no matter the color of the wall paint, the beauty of that wood floor, or that third bedroom and bath you've crammed into the basement. Nothing says 1960' floor design like trying to put a King Size Bed in a Rambler Master Bedroom and realize almost all of the usable space has disappeared. That combined with a master bath with vanity, commode, and stand up shower crammed into a closet sized space are signs of yesterday and a bad investment given today's consumer expectations.
It takes a difficult to understand group think to accept these issues as "great investments" at $500K average price.
This dates back to 2008, when the Northern Virginia Association of Realtors (NVAR) published their "Year in Review." I'm just coming across it now. Interesting to me is the chart, "Ratio of Median Home Price to Median Household Income." Based on this chart, I would think the following must happen w/r/t Arlington: (1) median household income must rise; and/or (2) median home price must fall.
To be sure, the pre-boom ratio for Arlington appears to have always been higher than the "Historic affordability threshold," but it remains significantly higher than normal post-boom. Unless I'm missing something, I think something has to give.
http://www.nvar.com/Portals/1/marketstats/2008yearendpressconference.pdf
Mike-
That is interesting, that both Arlington and Alexandria are so much further from their historical price/income ratio than in the past. I wonder if it includes renters incomes also, because I wouldn't be surprised if a ton of rentals units were made in Arlington over the past 5-10 years. Since most of the rentals are one bedroom units you would expect these people to make well less than the median home price.
Mike,
What origination dates for the FHA defaults? The past 2 yrs have been for homes at much lower prices and imo carry much less risk of substantial losses.
To whoever said no one had the "balls" to tell people to move to cheaper areas.
I've suggested that several times. It's clearly an option, but not a palatable one for many who have connections to this area.
RE: Housing ladder. I mentioned that certain people will never be able to afford more than a TH and asked whether they should buy one or continue to rent forever. The answer is crystal clear to me, but I receieved no response from the poster to whom I responded. Should those people move and give up a gov't or union job and leave their family? It's a personal choice.
I'd be happy to talk Trustee sales. Just ask your questions.
housebuyer, that's a good point. It would be so much more informative if the data included only (or separated out) owner-occupied housing prices: o-o income.
VA-
I am pretty sure that the 9% is based on the entire set of FHA loans. I don't have exact details on the FHA loan portfolio, but I am pretty sure it is loaded with loans from late 2007-2010. During the bubble very few people used FHA, because it was cheaper to get a 80/20 loan from a bank than to use the FHA.
Ace-
Although removing the renters would definitely help, I actually think Arlington would still be high. Several people have commented that they/their neighbors would no longer be able to afford to live in their house, but since they bought it 20 years ago the payments are manageable and the people have no intention of leaving. So I am not predicting prices or incomes for Arlington, but I imagine the price/income ratio is higher there than most of the other suburbs.
"Mike said...
To be sure, the pre-boom ratio for Arlington appears to have always been higher than the "Historic affordability threshold," but it remains significantly higher than normal post-boom. Unless I'm missing something, I think something has to give."
Interestingly enough, when this issue first came up back in 08 we noted it actually likely never will reach traditional metrics of affordability.
As you noted, even in pre boom levels, Arl (as well as Alex & DC I think), exceeded "historic affordability thresholds". This is not uncommon in very dense urban areas where you have an interesting mix of high and low income individuals with a small middle class. In Manhattan, the median home price is 20X median income. In certain zips in DC it was above 9X even at pre bust levels.
Unfortunately, these are likely to get worse over time. Joel Kotkin has done some interesting work on this, noting its an unfortunate aspect of the "middle class squeeze" seen in urban areas.
Agree, housebuyer, I think several posters here have also reported the same thing, and I know it's true for a few friends in Alexandria.
Texas Native, I'm sure you're aware of this, but the problem causing people to "accept" such houses at high prices is that the land (location) is the vast majority of the cost. No one thinks houses with those flaws are a great deal at $500K+ or even at $100K without the land. But for people with jobs in the District, it's a very difficult tradeoff -- daily giving up an hour or more of your life in traffic (and other disadvantages of living farther out), vs. settling for those little houses with their inherent disadvantages. People whose jobs are in Tysons or elsewhere obviously don't have the same tradeoffs. Until we have 21st century transportation options (e.g., metro that goes everywhere, as in many European capitals), we'll see insane prices for those houses, and even if transportation were immediately transformed, the prices will still be high (e.g., analogous to the New York situation with the more extensive subway). And I'm not holding my breath...
One thing I don't "get" is that a few street over there is a house that has been vacant for years. The owner lives out of town, but why not get an agent to sell it? It's highly unlikely he is upside down, and from what the neighbors know, he is not incapacitated. The neighbors next door have to deal with rats, mice and other problems because of the neglected house, and anyone who has to sell nearby will get a lower price because of this house. The neighbors wish there were some way to force a sale, but apparently there is not.
CRT said: "we noted it actually likely never will reach traditional metrics of affordability."
OK, but why wouldn't it at least reach the same level of afordability pre-bust? I'm not sure I see an answer to that question in your post.
Even if, pre-boom, it exceeded tradt'l levels, why shouldn't it adjust to those same levels (setting aside why it shouldn't over-adjust to the downside)?
To VA: I don't know the answer to your question. The article didn't specify.
Ace,
Perhaps the neighbors can prevail with the County and have the place considered a "public nuisance".
Jewell,
The Trustees used to freely give out the bid amount. They no longer do that (claiming "privacy issues").
The first call you make from the Courthouse steps is to your insurance agent. Risk of loss transfers as soon as the hammer falls, so to speak.
The Trustee has to deliver "good" title. As long as you obtain an extended owner's title insurance policy at closing, you should be fine. Certain issues such as an IRS lien may be a concern, but as a general matter the Trustee has obtained a waiver pre-auction. If they have not followed the proper steps, the IRS has a certain time period to take the property. I think it is 6 months, but they have to pay you what you paid. Your risk is improvements you have made and inability to sell until this time period has passed. Ask the trustee is such a lien exists and whether she/he has in hand the required waiver.
Mechanic's liens are a possible concern if work has been done in the previous 90 days. Again, affirmative coverage (on your title ins.) is available for that concern.
Take any and every opportunity to see as much of the house as possible prior to sale. Walk around it to examine the roof, hvac, other problems and issues. Look in windows. Check for access points if the property is vacant.
I've even knocked on doors and asked owners if they want to sell. You at least get a glimps inside before the door is slammed in your face.:)
Thanks, VA_investor. Taking your advice I found a county ordinance on "blighted" properties. Without knowing more about repairs the owner has made, I wonder why this property hasn't been declared as blighted. I'll mention it to the neighbors.
But I guess I just don't understand why someone who owns valuable land wouldn't get rid of it, for economic reasons. Most people I know could definitely use the $400+K. He surely isn't going to get more for the property as the years go by and the house deteriorates.
"Mike said...Even if, pre-boom, it exceeded tradt'l levels, why shouldn't it adjust to those same levels (setting aside why it shouldn't over-adjust to the downside)?"
Mike, it looks like what happens is that each subsequent bust it only gives back part of what it gained in the boom.
To put it another way, even places like manhattan were once at 3X but over time sucessive booms and busts have put it at 20X "historically". Some time in its history it "boomed" to 6X, then bust brought it back to say 4.5X...boomed again to 8X, bust pulled it back to 6X... and so on and so forth till the most recent era when it busted to 20X.
Again, this is just for urban cores - its very infrequently seen in suburban areas where land is in abundance and expansion serves as a pressure release valve. Indeed some "suburban" areas like Orange County CA do this too (likely will bottom at 5X income) but they are rare.
Note, Bob Shiller does think that urban areas do have a limit (like 40X or something). At that point, he believes that supply and demand get back into balance by (and he is serious about this) building new cities! Thus, if he is right, there is a limit on how unaffordable places can get, but it can be pretty severe.
And all along I thought the FDIC and banks were going to play nice:
How to make money on buying mortgages at 70% of Face Value and then making over $100K on a short sale and a gov't check
Once again, I have to ask, if you're underwater on your mortgage, what financial incentive does the average drowning homeowner have to continue sinking into the deep blue abyss?
TBW said: "My guess is none of you bulls who think these SFH prices have a basis in reality have the balls to say p$70eople making $70k should be moving to other metro areas. Which makes me wonder if you truly believe these SFH do not have more price correction to come."
$70K is well below the median household income. So yes, people making $70k cannot afford a SFH unless they buy a foreclosed, distressed property. And I am not a "bull" type. I look at what is happening in the market.
Do I think people making $70K should be able to afford a SFH in inner suburbs? Please tell me where are you going to construct all those homes for all the people who make less than the median household income? There is less, and less space in the inner suburbs. All you can build in inner suburbs are condos and/or townhomes.
So it is not possible for a person or family making $70K to afford a SFH in inner suburbs unless it is in a distressed location or a foreclosed property.
What is wrong with buying a condo or townhome? Why do we feel we are entitled to a SFH? Do you know how many families live, raise kids, and live happy lives in condos and townhomes. Many. Life is not about more and more material things.
I understand you and a lot of people want a SFH right now: Immediate gratification as we have been poorly raised to believe we deserve. But are we really entitled particularly in area were the median household income is above the 70K?
So if someone is going to make $70K, they can either get a roommate with whom to buy the SFH; marry someone who is also working; get funds from parents; buy a condo or townhome; continue renting until they can make more with time and age (patience people); or move somewhere else if no other option appears appetizing.
I do not think the person making %$70K is without options.
Ace,
The guy could be in a nursing home, mental hospital, prison, ect.
I've seen it before.
Ace,
Maybe he is dead? Have the re taxes been paid? Where is the bill going?
TN-
You have the financial incentive that all your borrowing costs will be higher if you default/short sale because your credit score will go down. These could easily cost thousands to tend of thousands of dollars, but is likely very small compared to the possible 100+K many people are underwater.
Jewell,
I forgot to mention old mls listings. You may get lucky and get pictures and remarks about upgrades/condition. I've even bought ones that were currently listed. People don't even tell their agents about the foreclosure in many cases. Don't you tell the agent, just look it over and buy at the Courthouse. I bought one that was already under contract. I sold my contract to those buyers. The agent was shocked. I called her on my way home from the Courthouse, told her I owned the place and asked if her people still wanted it. LOL. Quickest money I ever made.
VA_investor,
According to the neighbors (who may be wrong) he isn't in those conditions, but I can't think of any other reason why this happens. The tax bills are paid. He lives in rural VA.
It's not the only property like this in the neighborhood, though some of the others that are run down are occupied, and happily there aren't many of them.
good luck, Jewel.
Jewel,
Make sure (ask the trustee) if they are foreclosing on a first trust. You can also look at tax records to match up purchase date with loan in trustee's ad (of course, there could have been a subsequent refi).
It is getting very difficult to purchase at the courthouse. I spoke to someone that went to Loudoun yesterday. There were 40-50 properties set to go that day, according to the Wash Post. 5 were available apparently. MOST get pulled back by the trustee. Anything of value gets picked apart by investors. Any of you that hit the trustee sales, correct me if I am incorrect.
at a treasury public auction last Mar they used 'reverse bidding' i.e. - opening the bid at a very high $ then go down until someone answers it, then go up again.
i was told this is not uncommon for hot properties.
plan a strategy if it 'reverse bid' and opens at $850K.
Jewel,
You've got alot more intel than most due to that listing.
What was the ask vs. loan amt in newspaper ad?
They could have been upside down at a price lower than old listing due to heloc, judgments, etc.
Junior liens will get wiped out by a foreclosure on the first, but must be paid or negotiated for a regular sale to occur.
will the storms and frigid weather force some retirees rethink moving down to FL and put their houses on the market? i'll buy the house across the street from me in a heartbeat haha.
"VA Investor said...
The Trustee has to deliver "good" title. As long as you obtain an extended owner's title insurance policy at closing, you should be fine."
This is VERY good advice and one of the things I think everyone here should do.
In many instances, when you get title insurance, it insures your lender, but not you specifically. However, the cost of obtaining additional OWNERS coverage is minimal (as little as $25). Thus whenever you are getting your title insurance, ask the settlement agent in advance for an Owners Policy as well.
So I very much second VA investors advice here. This is one of those very clear "ounce of prevention, pound of cure" things I feel very very strongly about.
@dc2
" . . .Life is not about more and more material things."
"$70K is well below the median household income."
Very true, but I find these statements incongruous with each other.
From: http://en.wikipedia.org/wiki/Fairfax_County,_Virginia
it states household income is 102k. The median male income is ~60k and female income ~40k.
Household income is just that a household i.e. anyone above 18 living in the same domicile.
I don't know maybe I'm a dunce, but I find the fact that the median male income added to the median female income comes very close to the household income interesting. In other words, in order to obtain a median household income both spouses must work (and from the looks of it full-time jobs).
If life in this area weren't about material things you wouldn't need both spouses working full-time just to match the median household income so you could afford a house. Townhomes aren't cheap either . . ..250k, that's not cheap. 100k that would be cheap.
No, the conclusion is that both spouses work just to be able to afford a townhouse. Fairfax SFH's are what 500k+. 102k can't afford 500+ unless you either want to continue to leverage up (i.e. housing ladder) or you really want to play risky.
To wit: co-worker recently bought a 500k house in c'ville. He makes at best 10% more than me and is maybe 3 years older. The only way he could afford it was to leverage up, sell his TH he bought in '02 and get married with his wife working. Do the bulls really think a SFH is for the elite few who were lucky, stupid, or both?
The median takes into account those that have worked for 20 years to new FTHBs. . . anyway you slice it 102k and 500k+ for a SFH is nuts.
Va_Investor,
Thanks to the internet, that intel is also available to anyone who's wiling to do 5 minutes of googling. I'm sure your 'pro' friends will have no trouble finding them. But the good old legwork will pay off.
Mike,
The one Arlington auction I went to had three pulled and one sold.
gte,
Median is half above and half below. We live in an extremely wealthy region and there is only so much land where you would want to live.
I know people who commute from Fredericksburg and farther. I'm sure they would have relocated if they wanted to. Apparently they don't.
So yes, SFH in coveted areas is for the elite. What else is new?
You can argue that things were different 10, 20 or 30yrs ago and you may be right, but what would cause us to enter a time-tunnel?
From what I've read, the boomer's intend to, largely, retire in place. Now we are seeing the "boomlet" generation giving up the condo/social life and settle down in marriages and kids. They are the well-heeled that bought in Ballston and so forth and they can afford 6 or 800K for N. Arl and other desired locales.
gte811i,
You need to make MORE than the median household income to be able to buy a home in this area. I do not dictate this. The market does.
As Cara pointed out, there are less SFHs than condos and townhomes in the housing stock. It is just pure math that someone making $100K would have difficulty buying a SFH.
When I say life is not about more and more materials things is because we need to realize that not everyone will be able to buy as SFH, and that is ok. People are happy in townhomes.
Those who are more ambitious in the financial sense, patient, get better jobs with more pay, get graduate degrees which usually represent higher pay, will be able to afford more easily that SFH. And yes, this area is full of double income families who happen to be your competition to buy a SFH.
But would these folks necessarily be happier than those who raise their kids in townhomes? I do not know, but I will guess not necessarily.
VA_Investor,
Don't want to give too much away - just in case I've got some competition on here :-).
But the listing price 6 months ago was in the $800's.
The 2010 tax assessment is in the $600's.
The foreclosed loan amount shown in the newspaper is in the $500's. This loan is from a few years ago.
Alot of work was done on this house, but no additions were added. I think fair market value for this house would be mid to upper $600's.
I am hoping that I will outbid most investors, since they are looking to make money and I am looking for my primary residence. Time will tell though...
Ace,
I support private property rights, but I do think that in an area zoned tightly for houses, there should be some kind of residency requirement.
There is a 5,000 square-foot model home, built by NV Homes in Warrenton in 2003, that has housed only two jaguars in the garage for five years. It's really rather depressing for the neighbors to live next to an empty house for years. It is well maintained on the outside, but I've never seen an un-lived-in house not deteriorate.
Regarding median salary for women being $40K. That is interesting. I do not any women making $40K. They are making a lot more than that.
VA investor,
We seem to be on the same wavelength in knowledge and experience. Thanks for your comments. I learn a lot from you regarding investments.
Ace: Arlington Co has a very good blighted properties section under inspection services. Call them at 703-228-3232 and they can take a complaint. There are many vacant properties all over Arlington including in my old neighborhood where I own or help relatives with 8 houses. From what I know of my neighborhood, many owners of vacant houses are waiting for houses to increase even more in value. It doesn't cost them much to have the house as they often inherited it or it is paid off. There is also inertia where people just don't get around to selling. There are also houses we call the "shrines to mama" where grown children can't bring themselves to sell mama's house because they finally have to reconcile themselves with her death. It's not just houses because we have vacant condos in my building which aren't for sale.
"Regarding median salary for women being $40K. That is interesting. I do not any women making $40K. They are making a lot more than that."
You may not know them, but I guarantee you that you see them every day...
MM,
Yes, everyone will have the old listing. By "intell" I meant as opposed to a house w/o a prior listing.
dc2,
Thanks. I appreciate yours as well.
reecon, all good points and good info. Thanks. I will pass this along to my neighbors (I don't have the direct evidence of blight so I can't make the report).
Harriet, agreed.
Jewel,
Good luck. Many do get cancelled (even post sale!). Don't be afraid to pull the trigger! Figure investors need to pay alot less than you due to transfer costs, carry costs, opportunity "cost" and immediate fix-up (rather than taking your time as you can), profit....
There are some dumb investors that may overpay. Do your homework. Get your loan lined up. I often went over my pre-set number and you may decide to (or not!).
Leroy,
I think you are missing my point. $40K in this area in generally an entry level position. It is in the federal government.
I do not think someone who is just starting a career is going to be able to afford a SFH. That has not being the case in a long, long time. It was not the case in 1999, when prices of homes were the cheapest.
Hey, not even secretaries in the federal government make $40k. They make more. An entry level GS-7 position pays $42,000 in the Federal government in case you did not know.
Also, you have to understand that median household income includes people renting, who will never be able to afford to buy. They will continue renting. So, people working for minimum wage are included in that median household income, and they will never be able to buy in this area unless they have lots of savings.
So, when we are talking about median household income, we should be talking about the median household income of those who own homes. That is higher than the median household income which includes everyone, even those who will never be able to afford any property.
dc2-
If you exclude the income of renters you should also exclude the properties they are renting from the median house. They people tend to be renting condos or small townhouses that are also way below the median price. So yes the median income may rise from 100-150K but the median houseprice may go from 400 to 600K in which case things are no different.
CRT said: "Arl (as well as Alex & DC I think), exceeded "historic affordability thresholds". This is not uncommon in very dense urban areas where you have an interesting mix of high and low income individuals with a small middle class. In Manhattan, the median home price is 20X median income. In certain zips in DC it was above 9X even at pre bust levels.
Unfortunately, these are likely to get worse over time. Joel Kotkin has done some interesting work on this, noting its an unfortunate aspect of the "middle class squeeze" seen in urban areas."
Bingo!
I was reading an interesting article from Barclays today talking about the impact of a new tax plan Obama had. Obama wants to make it so the maximum deduction for mortgage interest on families making over 250K is 28% rather than their marginal tax bracket. After doing some math it showed that this would effectively increase wealthy peoples payments by 7-8% assuming the tax bracket stays at 35% and if it goes back to 39.8% it would be even larger. This obviously will only hit ~5-10% of families, but could have a small impact on prices in some of the wealthier neighborhoods. Just another reason why expensive neighborhoods may continue to struggle in the coming years.
"Regarding median salary for women being $40K. That is interesting. I do not any women making $40K. They are making a lot more than that."
And, I recall hearing of many people saying that they didn't know anyone who voted for Nixon...
"I think you are missing my point. $40K in this area in generally an entry level position. It is in the federal government. "
Entry level what?
You have to remember that most people aren't college educated and can't count on making that kind of money.
It all depends on what circles you move in. If you and your friends are all college educated and on one kind of a career path or another... well then 40k is not much at all, but there are many many many hourly employees in Northern VA who aren't making 40k a year.
tbw, very well said.
----
Man, one thing I will not miss in the least if/when I ever get out of here; the elitist mentality.
Okay since the feds. make this place go round; a recently promoted GS-15 makes in the neighborhood of 110-120k. In most orgs. it will take 15+ years to hit that (if they get it). I know a gentleman in his 50s 30 years work experience, highly skilled who was hired by the Fibes as a GS-13. I'd say in general median Fed. employee is a 11-12. That's in the ~90k range. So the avg. govey can't really afford a home here. The only way they could is if their spouse worked. Now 90k + 50k-60k and you're getting there.
So that's the buyer that could realistically afford a SFH in the metro area. A fed. working for 10 years (or highly paid contractor) and their spouse working. Highly paid lawyers would also qualify. Pray tell, how many people in this area fit this (doctors, lawyers, etc)? Now how many people fit this AND will have substantial income increases in the next 5-10 years to justify increasing prices.
I'd be really interested in knowing the standard deviations from median, b/c I really can't see it being too terribly wide, but maybe it is.
"So, when we are talking about median household income, we should be talking about the median household income of those who own homes."
I think that tells you very little, except how much people are stretching to buy (i.e. how lose is lending). Tracking the above vs. median household income over time might give a better picture as to how realistic/unrealistic things are in comparison to previous times.
Maybe DC is becoming like NY . . . at least VA is honest about moving. I just can't fathom why anyone would argue that becoming like NY, or Cali is a good thing!
/snark
Oh wait a sec, it's good for those who bought b/c they will be the ones who benefit from the rise; how un-elitist and selfless! And they will take all this new-found increase in prices and leverage themselves more and more and more until . . . . only they can buy!
/snark
If so, oh well. You move from high-cost areas to lower cost areas and don't go back.
Side-topic on the elitist attitudes: I don't get involved in the schools issues b/c I find them absolutely hilarious. I graduated HS in podunk Iowa w/ 83 kids. We had 3 AP classes; my HS did very little to prepare me for college. I am currently working on a PhD. It's not about schools, it's about the desire to learn, the tenacity to move forward, and the willingness to sacrifice. Unfortunately, more wasted bits are stored here on which HS's are quality vs. parents instilling their kids with good values and the desire to learn.
Jewel,
If you do go Fri could you made a note and post back what the bank/winning bids are for the Harrison St and the Fillmore St houses if they do go through?
Thanks in advance.
"It's not about schools, it's about the desire to learn, the tenacity to move forward, and the willingness to sacrifice. Unfortunately, more wasted bits are stored here on which HS's are quality vs. parents instilling their kids with good values and the desire to learn.'
GTE, couldn't have put it better myself :)
"I'd be really interested in knowing the standard deviations from median, b/c I really can't see it being too terribly wide, but maybe it is."
Here is some income data for Fairfax VA. (Fairfax city I believe)
Household income:
* Less than $10,000: 229
* $10,000 to $14,999: 123
* $15,000 to $19,999: 173
* $20,000 to $24,999: 270
* $25,000 to $29,999: 243
* $30,000 to $34,999: 262
* $35,000 to $39,999: 439
* $40,000 to $44,999: 461
* $45,000 to $49,999: 330
* $50,000 to $59,999: 862
* $60,000 to $74,999: 1055
* $75,000 to $99,999: 1441
* $100,000 to $124,999: 712
* $125,000 to $149,999: 581
* $150,000 to $199,999: 501
* $200,000 or more: 331
This is from the link I posted a minute or two ago in the Jan sales thread.
The bottom line is that the fat part of the curve is in the 50-125k range.
How come all the college educated couples who bought in the mid to late 20s, I know, bought townhomes? They bought what they could afford. Some of these couples bought 9-10 years ago and are raising children in these homes today.
Stop saying that the only people who raise children in these types of homes are white trash. Stop all the stereotyping. Stop saying that middle class people don't live in townhomes. I know middle class people who have raised their families in them, who continue to buy them because that was what they could afford, and are raising families in them today. That's fine that you don't want a townhouse, but stop saying it is wrong for others to live in them because townhomes are only for poor people and not for families.
TBW said:
"dc2 - at least Va_Investor had the balls to say she thinks these people should move. You can't seem to say it. You claim they should move but then try to guilt trip them for daring to want more than a TH."
Which part of my options did you miss when I said moving was also an option?
Also, did you read my post when I said that if the rest of the world consumed to the level we do in the U.S. we will need 5 additional Earths?
I think you can put these two together. Wealthy people live in condos and townhomes. People who only want SFH as the only acceptable dwelling ARE THE ELITISTS.
TBW said:
"I never said "inner suburbs." I said Northern Virginia. As I noted you would have trouble finding a SFH for $280k (four times $70k income) in Prince William County or Loudoun County."
Try Woodbridge, Manassas. I am sure you can find it there.
Regarding Median Household price of homes on sale, those that are rented are not included in this housing stock because these are not on the market.
So, no you do not need to remove apartments or housing rented if you remove the income from renters from the median household income to compare apples to apples.
Also median household income of people who own property includes people retired, so it is still undervalued to the true median household income needed to buy a property in the area.
TBW,
I watched your video. Could not watch more than 5 minutes because it is highly annoying.
This is Louisiana according to you. Where in Louisiana???? I bet the average household income in Louisiana is a lot lower than Virginia, let alone Northern Virginia.
Why can't you afford a SFH if the people in the video can? Because you are not in Louisiana.
MM,
Can you post the trustee sale links to the homes on Harrison and Fillmore?
The Harrison Trustee sale looks like its on the 26th:
http://mypublicnotices.com/washingtonpost/PublicNotice.asp?Page=PublicNotice&AdId=1762706
I tried searching for Fillmore, but couldn't come up with anything.
TBW,
"Many secretaries start out lower than GS-7. GS-7 is the starting level for white collar college grad positions. Many secretaries have to be promoted to GS-7 and when they are that's the highest level they can get as a secretary."
Not true, secretaries make GS-9 salaries also.
Forget Louisiana... head to Ohio.
Built in 1927, evidently for someone with taste...
http://tinyurl.com/ygqg4qx
A similar house to prove the first isn't a typo or something...
http://tinyurl.com/yzrynjx
And for a buyer on a somewhat more limited budget...
http://tinyurl.com/yhr7fmx
Or a 350k budget...
http://tinyurl.com/yjghurb
Wow, lots of deletions again.
Last year there were houses for 280K in Herndon, Reston and Sterling.
I just saws ones in the past few days in Reston and Sterling.
Why aren't TH's acceptable long-term housing?
Va investor,
THs are acceptable long term housing and as a first home. I do not understand all this obsession with the SFH.
In fact, many townhomes are bigger than SFHs, particularly the very old ramblers which have ony 1,000 sq feet of living space. That size is similar as a good size apartment. Go figure.
All the TH I've seen are 1200sqft or less, where are you finding these huge ones that are so much cheaper and affordable compared to SFH??
Sehr,
It seems the issue is not whether affordable housing exists (in any form), but the "location" of said housing.
For some here, only "certain" neighborhoods qualify as acceptable housing.
CRT & Tom: I'll confess that I have not read Joel Kotkin and/or Shiller's work on this topic, i.e., that after each subsequent bust, the mkt only gives back part of what it gained in the boom. I'll have to give it a review. I have to say, though, I'm skeptical ... too often I see theorists come-up with explanations to justify the non-justifiable. Recall, for example, that people had reasons/justifications as to why internet stocks should not follow traditional P/E ratios. People also justified why oil should be at 150 barrell. People had theories why home prices could only go up. Like I said, I'll give their work a look, but it'll have to say more than, "this time is different."
I also disagree with DC2 that said when determining the median income (for purposes of income/home price ratio), only those that own homes should be counted. That's never the way the income/home price ratio has been calculated in the past. To me, that smacks of cherry-picking the data. Sort of like ignoring distressed sales when determining the average/median home price. Plus, it would amount to a non-functioning market b/c renters, under dc2's theory, will never earn enough to own ... who will buy the starter homes, then? It will be the renters, of course. This is why you must include their income in the ratio.
Jewel,
sorry it's not Harrison, it's 2542 N. Greenbrier. too much shoveling...
the Harrison you found had been on the market forever, and went UC over a year ago: AR6550893. Perhaps you'll see the buyer there bidding. Or maybe Va_Investor will pick it up then sell it to the buyer and make a quick fortune again :)
below is Fillmore, not sure why it's not on WaPo (i don't keep links just the actual ads). it's a new home in Lyon Village and assessed at mind-boggling $1,990,700, but i suspect it'd be pulled by Fri. here's it's old MLS linky:
=========================
Trustee's Sale of
1601 N. Fillmore Street
Arlington Virginia 22201
In execution of a Deed of Trust dated March 7 2007 recorded in the Clerk's Office Circuit Court Arlington County in Deed Book 4076 at page 538 the undersigned will offer for sale at public auction the property described in and conveyed by said Deed of Trust being known and designated as: Lot 366 Section 1 Lyon Village as per plat of same recorded in Deed Book 200 at Page 179 among the Land Records of Arlington County Virginia
Sale shall take place on February 12 2010 at 11:00 a.m. at the front steps of the Circuit Court building Arlington County Virginia. Sale shall be subject to such other matters of record as lawfully affect the property. The property will be sold "as is" without any guaranty or representation as to condition or title and will be subject to such other terms and conditions as may be announced at the sale.
The successful bidder may be required to deposit 10% of the sale price in cash or by cashiers or certified check at the time his bid is accepted. Settlement in full shall take place within 10 days of sale and shall be in cash or by cashiers or certified check.
M. RICHARD EPPS P.C. Substitute Trustee
FOR INFORMATION CONTACT:
M. Richard Epps P.C. Substitute Trustee
605 Lynnhaven Parkway Suite 100
Virginia Beach VA 23452
757-498-96002
February 2 11 2010 682702
dc2,
Where do you live? What kind of home? I suspect you preach austerity but live in a pretty large SFH.
Va_Investor,
I can't get mad at you because deep down you are as "snooty" as the rest of us. Your life story that you've told us about yourself shows you've never slummed it either. 22182, 20194.
You are one of us
one of us
one of us
:)
Sehrwunderbar asked:
"All the TH I've seen are 1200sqft or less, where are you finding these huge ones that are so much cheaper and affordable compared to SFH??"
Actually, DC2 is right, there are lots. This is just one that I saw on my first scroll through of Fairfax listings. At 390 it's equal to or less than comparable SFHs in the area. It's UC but there are quite a few actives to match or beat it.
http://franklymls.com/FX7202856
TBW
Slummed it in 22182? Dude, I can't even aspire to 22182. I will count myself lucky if I can achieve 22150.
Which I guess puts me in the bottom tier of this blog.
MM,
Got it... 1601 N. Fillmore and 2542 N. Greenbrier. I will report back what I find out! (Assuming the auctions are not canceled due to snow)
c,
You misread. I said she *has not* slummed it.
I did misread it, TBW. I'm just slummy.
"Mike said...
CRT & Tom: I'll confess that I have not read Joel Kotkin and/or Shiller's work on this topic, i.e., that after each subsequent bust, the mkt only gives back part of what it gained in the boom. I'll have to give it a review. I have to say, though, I'm skeptical ... too often I see theorists come-up with explanations to justify the non-justifiable"
Well then I can tell already you are not going to like what they say. The long and short of various explanations of these areas that violate the 3X rule of thumb is basically "its different here".
Despite what some of Shiller graphs contend, there is actually very little data on home prices prior to 1980s. What we know however is that there are certain areas where the 3X rule of thumb has been violated for 30 years and counting, so they are speculating how areas like manhattan, etc got up to 20X income that they are now.
It could be that these guys are wrong. It could be that in some areas it just takes a loooooong time to "revert to the mean" as they say. However, if an area has violated the 3X rule of thumb for 30 years with little sign of reverting (and if anything getting worse over time), its probably ok to say its different in certain areas.
Oh come on now tbw,
We slummed it pretty good in the early to later 80's. Although WE didn't consider it slumming.
I can really seeing you buying an REO in Colerain Township (outside Cin.) in 1981. Bi-level, blue collar nabe, fixer-upper.
How about a fixer in WFC with 3/1, shag carpet (urine soaked), pealing paint, no AC, coppertone and avocado filthy appliances, etc., etc. I'd bet you'd of been all over that one.
I won't go over all the others that you would have turned your nose up at. We made hundreds of 1,000's in the 80's taking on these places. We didn't walk into 22182 with just a savings account.
Also, due to the same work ethic and intelligence, we were making 200K by age 30 (20 yrs ago) at our "jobs" and had 10 rentals and a weekend place.
You reap what you sow.
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