Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Question for people out there, especially since so many people on this blog appear to be the serious saving type. I thought it'd be interesting to see whether this extends to retirement as well - is everyone here maxing out their 401k's or at least getting up to the employer match?
If you put money under your mattress for the last month you could have "saved" more money than your 401k - at least for any money beyond the employer match. Or you could have simply day traded the money but that's "looked down upon" by the people in those funds because they think they know more than you. Of course for index funds, you really are on your own with regard to protecting your investment. Even before the most recent declines, it never fully recovered to the level it had been at (dow was over 14k at it's peak).
To further expand, it makes sense to put money into your 401k up to the employer match. Anything beyond that is mere propaganda and is really just gambling. "Experts" tell you that you need the tax deduction now because you make less income when you retire. That may or may not be true based on an individual basis. Lets say you are in the top tax bracket. That's 35%. There's no guarantee that in the future your tax rate won't be higher, even with lower income. I'm not sure if you (or the "experts" are aware) but the government is running huge deficits and adding massive debt. At some point this will need to be paid down and that time is rapidly approaching. This will be paid through tax increases and benefit reductions.It definitely makes sense to get your employer match since it's very unlikely your taxes will be high enough in retirement to destroy all of that and match what you've got now. As for the additional amounts beyond employer matches, it's totally a gamble that you're going to be paying less taxes in retirement. IMO, I'd gamble on putting the extra money into an after tax mutual fund. Plus the money is more easily accessible if needed.
Matt- I am putting in 8%, which maxes out my employer matching and assuming my company has a pretty good year will put me very close to the limit. I have been building a down payment fund and additional savings to have after we buy a house so I felt like I should max out my employer matching, but not the 16.5K limit.Jeff- If you don't like stock funds you can always invest in bonds or treasuries with your 401K, in which case you have not lost much if any money over the past month. It is also a little absurd to be looking at a one month time frame on your retirement plan. Many studies have shown unless you are a very very good trader, it is much better to put your money in an index fund in a retirement account where you pay little transaction cost and no taxes compared to day trading. Seeing that I work at a hedge fund I agree that it is possible to beat the market substantially, but do to transaction cost trading is a negative sum game where you are competing with professionals that can move faster and have better information.
Jeff- I agree with you that taxes will go up in the future. This is why I put my money in a roth account where I pay taxes now at my current rate and will not pay taxes when taking my money out. Either way I think you are missing the tax implication of retirement accounts. In a retirement account your income is taxed once regardless of how much is grows. If you take the money as income now you are taxed now and you are also taxed on all of the capital gains and dividends you get along the way. So you end up being taxed far more if you don't put your money in a retirement account.
housebuyer, I agree that trading for a single month is a bit ridiculous and I haven't bothered to do this. I can tell you that while I didn't pull out at the peak and put the money back in at the bottom that I definitely prevented some losses. When the market (in July 08) hit 12k, I shifted all of it to the bond funds. After it hit 9k, I shifted it all back to the stock funds. I could have done better but I wasn't trying to "do the best", I was simply trying to prevent massive losses and it worked. If I hadn't been obsessing over the snow the last week I might have moved some then also.
Speaking of capital gains, the capital gains tax rate is very low right now so it seems like it would definitely make sense to pay that rate right now than the tax rate on ordinary income now or in the future.If you put 1,000 dollars into a 401k then pull out 10,000 dollars in the future - you pay the regular tax rate on that entire 10k. That's much higher than the standard tax rate on 1,000 and capital gains rates on 9,000. A roth is better because you don't pay taxes on the earnings. I really don't think that placing money beyond employer matches into a 401k is a good deal for anyone that is actually capable of saving money.
I agree with Jeff. Only fund a 401k up to employer match, then any other funds you want to invest for retirement should be put in roth. Although there are types of roth401ks that I have heard of that are the best deal if an employer is matching.My husband had been putting in 401k up to employer match, but new employer does not match so we are not funding a 401k. We are paying off debt and will prob start funding a roth after the debt is paid (about 10 more months I think till we are debt-free).Once we are debt-free we can save up a substantial dp as well, so can afford a more expensive house (if necessary). Probably double $300k to $600k that we can afford at that point. But I don't know if I'd even be comfortable paying that much even if we could afford it.
We never qualified for a roth, but opened one (and fund it) for our son. We have always done the full 401 and IRA.Just one of the pieces of the pie.p.s. index funds and tips only for us!
Where do you guys see annuities in retirement planning? We rolled all 401k into a guaranteed annuity that gains at least 3% annually, but I had thought annuities are for older people who want something more conservative, although that might just be our conservative floor and fund otherwise in the future. Any thoughts on annuities?
Jeff- Congrats on timing the market pretty well. You did much better than most people, as I said some people do well. The average person unfortunately has an uncanny ability buy at the top and sell at the bottom. Also as I said try not to confuse 401K with stock investing. As you did you can change your allocation in your 401K from stocks to bonds whenever you want.As for your math I think you are missing the issue with compounding.For this example I will assume your tax rate is 28% now and 35% in the future and long term gains stay at 15%(which only helps your case). In your 401K example you put in $1,000 pretax which turned into $10,000 a 900% gain. You then tax this at 35% and are left with $6,500. Otherwise you get the 1K pay taxes on it which leaves you with $720 this increases $6,480 (900%) to 7.2K. Once you pay the 15% rate on this you are left with $6,228, which is less than you would have in your 401K. If your tax rate goes up by less than 7% or if cap gains is increased to 20% as Obama said it will the 401K outperforms by even more.
VA- There are only income limits on Roth IRAs if you want a Roth 401K I am 99% sure there are no income limits. This article also appears to agree with me. roth 401k
Citibank announces they will let you live in their house for free for an additional 6 months, on top of how many months you've already stopped paying, AND give you $1000 cash to move out at the end. All in exchange for handing over the deed and walking away debt free.
Shamrock thanks for the update. This could be a very interesting program if it catches on. citi article this is the link to the article shamrock was talking about
Another factor that hasn't already been mentioned is that the income brackets triggering higher rates change over time for tax purposes, as Congress takes inflation into account (except for the AMT). And, allowable deductions may increase (e.g., interest, taxes) so that your net taxable income is much lower with the same gross income. Although I haven't looked these up (they should be available on the web somewhere), here's an example.Let's say when you were 25 the marginal rates looked like this:First $10K of income 0%Next $25K 15%Next $25K 25%Over that 35%When you're 50 the rates might have looked like this:First $30K of income 0%Next $50K 10%Next $50K 20%Next $50K 30%Over that 35%When you're 67 and ready to retire, the rates might look like this:First $40K of income 0%Next $60K 10%Next $60K 20%Next $60K 30%Over that 35%So the rate you are paying on the same income will likely be lower. Therefore, taking the money out of income subject to taxation now, in your 20s; getting the tax deferred treatment of it and the compounded income and gains; and getting the lower tax rates that are likely when you begin drawing the money out all work to your advantage.The only real downsides are that you do lose capital gains treatment of some investment gains and that once contributed you can't withdraw the $ without a penalty, but you can get loans against it, and if you really must have the $ or leave an employer or are 59 1/2, you can get it.
"Perhaps you are giving your friends bad advice today. I told friends not to buy in 2003-2004 forward, but my advice changed in later 2008."LOL, that sure wasn't what you were telling people on the internet, not your friends I guess..."Lance is right, it is a gamble. I would buy if I could afford it. Lock in an affordable payment for te next 30 years. The gamble is that prices will fall and interest rates will remain stable. It is a fool's game unless you have some superior insight that no one else has. The truth is that short-term (5yrs or so) no one knows. Hell, if it was a sure thing, there would be no debate. What we do know from history is that buying a house is a smart move.I never worried about this stuff when I was starting out. My dad told me to buy when I was 22. Good enough for me (I was lucky to get such good advice). You people have much more info than I had. We all know that we are well off the highs. I think renting is as much of a gamble as buying. So my conclusion is buy if you want to; rent if that makes you more secure."- VA_Investor 7 Jan 2007"The most interesting Article was on page one of the Business Section. A poll, conducted last month, of 54 top economists revealed that NOT ONE expects a recession in the next year. The clear consensus is that the Economy is on sure footing with strong employment numbers and increases in manufacturing.The FDIC study that I referenced last week examined the history of Housing Booms and Busts and concluded that, absent some shock to a local economy, busts do not follow booms as a matter of course. In fact, if I recall correctly, busts occurred in only 17% of the instances cited and ONLY when local economic problems existed. It is ironic that BH's dismiss this study by saying "it's different this time" - the same language that HH's are ridiculed for using.What we are witnessing is a normal RE cycle and, according to sources referenced above, the worst may be over. I see no evidence suggesting a bursting of any bubble."- VA_Investor 7 Jan 2007"I think that it is quite possible that prices will drift lower in 2007, but I have no crystal ball and won't pretend to be any sort of "fortune teller". This spring season should be very interesting.If I wanted a house and could afford a fixed-rate mortgage, I would buy. I certainly wouldn't count on being able to sell unscathed in less than 3 to 5 yrs. The fact is that it is just as foolish to expect major price declines as it is to expect substantial appreciation."- VA_Investor 7 Jan 2007http://bubblemeter.blogspot.com/2007/01/bubblesphere-roundup.html
People shouldn't be puting money in retirement and thinking they can fall back on that and just take the penalty. If a person just can't make it if they put into retirement, they should either get another job or find other ways to save money.If people weren't spending $5 on a cup of coffee twice a day there's at least $300/month there to put into retirement. It all adds up!I don't think Americans are saving very much these last 50 years, fo some reason people have started saving less and less. Is it because of credit cards, I don't know?
Housebuyer,There are income limits on Roth IRA eligibility. Anyone who works is eligible for a Traditional IRA (even with an employer provided 401k plan). This is not the case for Roh IRAs. A quick google search provided the following phaseouts for couples and individuals:There are maximum income limits for Roth IRA contributions. During 2010, married individuals who file jointly can contribute $5,000 ($6,000 if 50 or older) to a Roth IRA only if their modified adjusted gross income (MAGI) is below $166,000. If their MAGI is between $166,000 and $176,000, then they can contribute some amount less than their full limit. If their income exceeds $176,000, they are not eligible to contribute to a Roth IRA for 2010. These numbers are unchanged from 2009 due to the lack of significant inflation. In 2008, this phase-out range was $159,000 to $169,000.For single individuals, the Roth IRA phase-out limit is lower: $105,000 to $120,000 for 2010. While 2009's numbers were the same as 2010's, a single individual’s income restriction was between $101,000 and $116,000 during 2008.Traditional IRA contributions also become ineligible for deduction off of your gross income once your MAGI is above a certain threshold.Here is where I pulled that info from: http://retireplan.about.com/od/iras/a/2010_ira_limits.htmMy $0.02
mytwocents-Yes this is what I was trying to say, that roth IRAs have income limits, but a roth 401K does not. This does not help you unless your company offers both a roth 401K and a traditional 401K, but I think the number of companies that are doing this is increasing.
Leroy,Where are the links to what you were saying? 40-60% off? I think my words (cherry picked as they are) hold. I wasn't telling anyone here to do anything.You, on the other hand, promised N.Arl would drop at least 40%.I got the best two deals of my life in 2004 and 2005.Could we see the entire thread????
sehrwunderbar, I agree.The guy who wrote The Millionaire Next Door said in an interview with Vanguard recently (it might be on their site available to anyone) that the number of people with $1M in investment net worth, excluding housing equity, in our area and the north east, and in California, is lower than the average relative to incomes, compared to the rest of the country. This suggests that because people have to spend so much more of their income for the same level of housing in high cost areas, that they have less to invest for retirement or other purposes.
It's my opinion, based on no evidence, that if people put money away into retirement, they are less likely to fritter it away on $5 lattes, the latest fashions, and other things that they don't need.
Ace, I would agree. I am a stickler for living on less than one makes. We live on 50% or less of what my husband makes and I don't feel like we are slumming it. Of course, once we have children we will need to use more money for new necessities, but I have already started the diaper stockpile, lol.
Ace- I assume you are right that it has a lot to do with the high cost of living, but it could also have a lot to do with how quickly peoples pay increases hear compared to other regions. There are a lot of laywers, consultants, finance analysts... around here that are making 100-200K 3-4 years out of school. Even if these people lived very frugally they could only have ~100K saved based on their total after tax earnings for 3 years being ~200K. So their income to net worth looks very low. On the other hand in many other regions pay tends to move more slowly so the only way to be making 200K is to be high up in a company, so they are likely older and have had more time to save.I guess my question is do you know if he adjusted for age when doing his study?
I agree with Ace's comment at 12:19 re 401ks.Also keep in mind state income tax. Many people live in a high income tax state while working and then retire in a state without an income tax -- like Texas, Florida, or Nevada. And there are plenty of states with a state income tax but one lower than Virginia's. Here's all the info you might want on state income taxes.
"Where are the links to what you were saying? 40-60% off? I think my words (cherry picked as they are) hold. I wasn't telling anyone here to do anything."-As always- the link to the whole thread is right there in my post. I have neither cherry-picked posts nor deprived anyone of the opportunity to read them in context.Anyone interested can read the entire discussion, which leaves no doubt as to what you were advising people to do."You, on the other hand, promised N.Arl would drop at least 40%."Now now, lying is unbecoming.
Va_Investor saidWe never qualified for a roth, but opened one (and fund it) for our son.If you are funding your son's retirement savings account I have a strong hunch you are funding his down payment fund as well. I meet a lot of people whose parents are funding the down payment. Parental support is not entirely out of the question on my end. I'm not sure why that should be necessary. We are slowly becoming a caste society if the only people who can have a middle class lifestyle are those with parents who can subsidize that lifestyle.1950-1970s: One breadwinner + no parental support = middle class lifestyle2000s-2010s: Two breadwinners + gifts from parents and/or grandparents = middle class lifestyle
tbw,Thanks for the state income tax link!"1950-1970s: One breadwinner + no parental support = middle class lifestyle2000s-2010s: Two breadwinners + gifts from parents and/or grandparents = middle class lifestyle"Reminds me of a short story I read in German class. Everyone is work work work to retire doing what they could be doing if they didn't have such a fast-paced life. I think many people in this area work all day (80 hours a week even) to buy a huge house. They have like 2 children who never see them and nobody is home except to go to sleep. If all you need is a bed, I can see why many find no problem with the condo lifestyle...
housebuyer, I don't know. You probably have to buy the book to find out.Here's the url--you can go to this site and click on the "act rich be rich" article:http://www.vanguard.com/web/email/100209_MoneyWhys2.html
"VA Investor said...You, on the other hand, promised N.Arl would drop at least 40%."Its true VA investor -- Leroy never said it would drop 40%. Instead, he would just strongly imply it. Normally, someone would say, "I dont think N. Arlington will suffer the big drop the other areas did". Leroy would then reply along the lines of "it just takes longer to happen" or such nonsense. Or he would look at the median price posting and say, everyone has come to terms with reality EXCEPT arlington by now. He continued this until prices started going up -- then he just went silent. Now (Jan 2010) when you call him out and point out what he said in this thread or that, he responds, saying, "well, you just didnt understand what I was trying to say".Watch -- my guess is that is what he will say to me now.
sehr, re: condo lifestyle, many people without kids or without them at home also like the space a SFH with a yard provides. They like to have friends over for dinner or to watch a game, host office parties, have cookouts, etc. They may have pets and like to garden. They may like a bit more quiet and independence from neighbors without losing the neighborhood feel. I'm not entering the battle over who should be entitled, etc., but rather that there are certain benefits that a SFH provides that are harder to get in condos and townhouses.
housebuyer, here's more about the book - I think this might have been the first I had learned of it several years ago.http://www.washingtonpost.com/wp-srv/style/longterm/books/chap1/millionairenextdoor.htm
Ace-Thanks for the link
"Watch -- my guess is that is what he will say to me now."No, I will just call you what you are, a liar.I have been very open about my predictions, both those that came true and those that did not. I always expected Arlington to decline(and it has) but I most certainly never made any prediction along the lines of:"I promise N Arlington will drop 40%"On numerous occasions I predicted the exact opposite, that outlying areas would see both the steepest and most extensive losses. I get it that you are looking for someone to blame for your regrets, but making up lies about me isn't going to help you one bit.
There are currently 6 detached homes in 22153South Springfield. They are mostly 1970s/1970s splits and all but one is currently under contract. The Pohick Estates subdivision in Lorton also has 3 homes listed for sale from 264k-285k. It looks like there are also 5 detached/duplex homes listed for under 300k in Burke. If these are not middle-class neighborhoods, then will someone please explain to me what a middle class neighborhood is supposed to look like. All these neighborhoods remind me of the neighborhoods I lived in as a kid.
Ace,I am not talking about who is entitled to what either. I am simply saying that it is funny that people are willing to pay so much for basically a place to sleep at night.I obviously know that different people prefer different types of housing. My husband and I prefer a SFH. There are many reasons and having an apt here only magnifies those reasons.I was merely pointing out something I think is a little odd, people need to work basically all day to afford a place they hardly frequent except to sleep...
oops, I meant to say that the 6 houses in 22153 were listed for under 300k.
sehrwunderbahri agree, people work 2 high stress jobs, commute miserable distances,so the cat can have a big place and the kids can be neglected.The Superintendent of Montgomery county schools was sleeping while his kid was hosting drug parties in the basement. Finally, some girl got raped at one of them and it made the papers.I'd rather have a smaller townhouse or rowhouse in close, have an easy commute, and deal with the cramped quarters. I don't need a music room.
Yes, sehr, I understand that. In part of my reply I was just trying to clarify that I was not commenting on the debate others were having about who should be entitled to what, how much housing should cost, etc.
President Obama, Bernanke, and Jim Cramer are in a MOVIE about hedge funds called "Stock Shock." Even though the movie mostly focuses on Sirius XM stock being naked-short-sold to near bankruptcy (5 cents/share), I liked it because it exposes the dark side of Wall Street and reveals some of their secrets. DVD is everywhere but cheaper at www.stockshockmovie.com
pat,I think you missed my point. Living in the th or condo close in might cost even more, I don't care about location I am speaking more to the price. People live "close in" and will pay twice the amount for a third of the space, then continue working crazy hours in order to continue paying crazy prices(for even less). It makes no sense to me either way...
Sandra- Are you trying to sell us movies? Based on the site it looks like a bad uninformed movie also. The stock had fallen from 60 down to 2 on its own, because Sirius and XM were massively unprofitable and the movie wants to blame short sellers for the next $2 dollars of price fall... Maybe it was short sellers fault maybe it wasn't, but the only reason it mattered was these companies were so unprofitable that they needed to continue issuing shares to finance their losses no matter how low the stock went. It sounds more like a company issue than a short seller issue to me.
Wunderbar-I agree with you, but at least Pat has the point that if you live close in your commute is short so you get to spend all of your free time with your family
TBW said"Also keep in mind state income tax. Many people live in a high income tax state while working and then retire in a state without an income tax -- like Texas, Florida, or Nevada."I advise any Virginia resident planning to retire out of state research the tax implications very carefully. I have heard of Virginia demanding that citizens who move out of state pay full Virginia income tax on their pensions. I am not a tax professional but the Virginia tax website has this to say:"A nonresident is a person who is not a domiciliary or actual resident of Virginia, but who received income from Virginia sources during the taxable year."Income from Virginia sources" means income derived from labor performed, business conducted, or property held in Virginia, as well as lottery prizes and certain gambling winnings. Examples of Virginia source income include:Wages or salaries received for services performed in Virginia;Income received from the rental or sale of Virginia real estate;Income, including interest, received from a partnership, S corporation or other business that operates in Virginia"ref: http://www.tax.virginia.gov/site.cfm?alias=ResidencyStatusIt seems that the state govt has argued in the past that a pension earned while technically domiciled in Virginia counts into perpetuity as "recieved for services performed in Virginia" even though the retiree no longer lives in the state. I invite comment from anyone who has a thorough knowledge of Virginia tax law to discuss this.
Anon,"did not understand"Why is it I get called a liar?!?tbw,Yes, the dp is coming from his college fund, which, in essence, is our money. While I didn't receive that benie, I did get a debt free education (undergrad: we paid for grad school and my husbands college loans).I'd guess a decent percent over the years have received dp assistance.As a group, we parents lament the lack of drive in our kids and all acknowlegde where the responsibility lays.To all who are discussing The Millionaire Next Door: Terrific book. I read it when it first came out and passed it along.To whoever brought up the 401K Roth, thanks. I've already got my husband looking into it.
"Why is it I get called a liar?!?"Because this is a lie:"You, on the other hand, promised N.Arl would drop at least 40%."...as was your claim that you advising people not to buy during the peak bubble years.
Matt, to answer your original question - yes, I am maxing out my retirement plans. I am older than most of the posters here (I like to think of myself as still middle-aged, though!) so there is no question that it makes sense for me.
Leroy,People here can read those threads and decide for themselves whether I "told people to buy at peak bubble years". Your reading comprehension leaves alittle to be desired.Also, as far as actual popping of the bubble, please refer to Harriet's charts in the post immediately previous. As of January 7th, 2007 do you see a bursting?Someone had to play devil's advocate to you doomer's. Did things drop more than I thought they would? Yes, in some areas.I had always maintained 25-40%, based on locale and housing type. These were broad averages. Go ahead. search my comments on this blog and bubblemeter.I saw 25-40% last go around and expected about the same. I didn't foresee financial armaggedon and the near meltdown of the economy. So, sue me.You were part of the group happily cheering a collapse and the thought of buying housing for pennies on the dollar
Ace saidsehr, re: condo lifestyle, many people without kids or without them at home also like the space a SFH with a yard provides. They like to have friends over for dinner or to watch a game, host office parties, have cookouts, etc. They may have pets and like to garden. They may like a bit more quiet and independence from neighbors without losing the neighborhood feel. I'm not entering the battle over who should be entitled, etc., but rather that there are certain benefits that a SFH provides that are harder to get in condos and townhouses.Ace is on fire today! One thing that helps singles and childless couples is they do not have to worry about schools and I think can be a little less worried about crime which saves money.
HayfieldGrad,Good find. All but one appear to meet the criteria I laid out. Do you think any went for $280k or less? A couple were listed above and based on patterns we've been observing may have been sold for more than list. Also these are all short sales. Interior pictures are not available for most. Saying "as is" makes me think they are not move-in ready.So it appears these are out of reach for the $70k family.
"Va Investor said...You were part of the group happily cheering a collapse and the thought of buying housing for pennies on the dollar"Yep, Leroy, Terminator X, Neil, and John Fountain -- the four horsemen of doom -- were all sure that if we simply waited long enough, places like Arlington would suffer a similar sort of armageddon as the rest of the area. True, he did admit that the least desirable areas would do the worst, but he simply couldnt accept that Arlington had become one of those desirable areas. Whenever anyone suggested, maybe enough time has gone by, maybe it is different in arlington, the response was always...no place is immune...its moving in...it just takes longer...After Fohn F. bought and Neil and Terminator ran away, Leroy remained -- still convinced that if we wait long enough, "its moving in" will somehow come true.
and to be clear I'm not saying they are not move in ready because they lack a nice kitchen. But instead not move in ready because the foreclosed owners punched a hole in the wall or never fixed the flooded basement etc. Assuming all these homes have at least $20k of fixes required that again puts them out of the $70k income -> $280k home (4x income) range.
So I've never thought we had many illegal immigrants in Northern Virginia but people have told me we do. If we did/do have many illegal immigrants in this area, then this would mean there has possibly been a population decline:The latest official report on illegal residents for the year 2009 released Tuesday by the Department of Homeland Security claims that the number of illegal immigrants living in the United States dropped by a million in two years.According to the report, "Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2009," 10.8 million illegal immigrants lived in the country in January 2009 down from a peak of nearly 12 million in 2007--a drop of seven per cent.The decline came after the unauthorized population grew by 3.3 million from 8.5 million to 11.8 million between 2000 and 2007. If the official estimates are correct, this is the lowest population of illegal immigrants since 2005.
well, TBW, I don't mean to be a sexist, but all the single women with or without children I know do consider crime incidence when considering where to live, and I would not be surprised if most other people do as well, particularly if they have been victimized.
TBW - why wouldnt your 70K family move to Prince George's?For example, heres a nice looking 4/2 on half an acre for 250Khttp://franklymls.com/PG7250179In fact, a search of *Prince George's Detached* reveals there are over 1,000 homes available for under 300K. Why wont your mythical 70K family live over here where there appears to be plenty of affordable SFH close to the beltway?
Thanks anon,I appreciate your having my back.
TBW-I don't that many illegals left DC. I think it was mostly CA & FL, because there are no longer enough jobs.
Hayfieldgrad,Good finds. There's also a bunch more shorts right above the $300k mark throughout Burke/North Springfield/West Springfield. (In case the hypothetical family in question has a DP fund saved up or inherited).Tbw,While I hear what you're saying about the housing ladder leaving people stranded, I think someone made a really good point that perhaps the worker who never gets more than cost of living raises may in fact be better off staying in their TH they bought ambitiously when they were young. Heck, they could have it paid off by 55 even without accelerated payments, and their housing costs will keep decreasing relative to inflation. Also I just think that in a high cost of living area, it's unrealistic to expect to be able to move directly into a relatively close-in single family home, without having saved a sizeable down payment. In the meantime such young folk should have realized some of those wage jumps, and may also make more than $70k by the time they buy.At current rates a $240k mortgage is less than most people's rents. Not the avid-bargain-hunting folks on here, but most people in the area. So, if you have 20% down and can't afford a $300k house right now, you also can't afford to rent close-in either. (aside from 1 bedroom basement apartments and the like, which are totally great options and many of my younger friends live in them).
housebuyer,I would beg to differ on illegals leaving. I'd say 90% of the illegals I knew when renting in Manassas were involved in construction. I don't think those jobs have come back. Back then ('07ish) many were talking about leaving. I'm sure many have.
The Anonymous said: "Yep, Leroy, Terminator X, Neil, and John Fountain -- the four horsemen of doom -- were all sure that if we simply waited long enough, places like Arlington would suffer a similar sort of armageddon as the rest of the area. True, he did admit that the least desirable areas would do the worst, but he simply couldnt accept that Arlington had become one of those desirable areas."Well said, Anonymous. As a N. Arlington homeowner, I've always been confident of this neighborhood's RE strength and I haven't been disappointed. That's one of the reasons why all of the properties I've purchased have been in N. Arlington
A new topic for discussion: I just spoke to an old pal from my OB/GYN practice who reminded me how good snowstorms were for business. He expects a baby boomlet around 8-9 months from today. Since babies seem to be a major reason for people to buy houses,how do you think this might affect the housing market in the fall?
I would hope most people are a little more responsible about that sort of thing if they don't have a home or other kids already. The ones that aren't probably aren't in a position to buy anyway.
Jeremey that is perhaps one of the most obnoxious things I have read on this blog. Throughout history is has been known that there are sorts of baby booms after huge snowstorms.
VA_Investor:North Arlington is almost all Jumbo Primes, i think we are seeing a 10% deliqnquency rate in Jumbo Primes nationally. Now people in North Arlington like NW DC or Bethesda/Chevy Chase have more resources and can hang on longer, but, a deflating bubble pricks all zip codes.I think it will be more graceful, but, the pain does spread around.Sehr:I look at housing as utility plus emotion. I do want to buy a place, so I can customize it, but I rent a 2BR for 1K/Month Plus, why would i buy a condo for 2K/Month plus fees?I like living close in, I hate commuting.
Oh, I forgot. You're pregnant and don't have a home. Did you plan it that way? I think most people given the choice would prefer to have bought a house before having children. I think that the people who plan years in advance to save a down payment are the responsible type that won't accidentally get pregnant just because it snowed and they're bored. My guess is that the vast majority of any post-snowstorm baby boom will come from existing families and irresponsible people. Do you disagree?
Snopes.com has this to say about the supposed baby boom:It is a common belief that the number of conceptions increases during natural disasters or crises that keep people confined within their homes for unexpectedly long periods of times. Nine months after such events (blackouts, blizzards, earthquakes, erupting volcanoes, ice storms, and even strikes by professional football players) reports about "baby booms" in local hospitals invariably appear in the media. However, these "booms" typically prove to be nothing more than natural fluctuations in the birth rate (or, in many cases, no variation in the birth rate at all). We never hear about these fluctuations when they are not preceded by some unusual event; conversely, when such fluctuations do occur, people go scrambling to find some earlier event to attribute them to (even though evidence establishing any causal connection is lacking).http://www.snopes.com/pregnant/blackout.asp
Jeremy,Agreed, getting pregnant out of boredom is a dumb thing to do. Isn't that one of the main reason teenagers get pregnant?I don't consider myself a "traditionalist" generally speaking, but I do think a house should come before kids, if possible.
Since you have made no further mention of your lie about me promising 40% off in N Arlington am I to assume this is the closest to a retraction you can bring yourself?How old are you anyways?"People here can read those threads and decide for themselves whether I "told people to buy at peak bubble years". Your reading comprehension leaves alittle to be desired."Yep, and as always I included the entire thread you were commenting in..."Someone had to play devil's advocate to you doomer's. Did things drop more than I thought they would? Yes, in some areas."LOL, so THAT is what you were doing all those years. Whatever you do don't just admit you were wrong. That might put a scuff mark on your ego!"You were part of the group happily cheering a collapse and the thought of buying housing for pennies on the dollar"I have posted my predictions here before and I expected nothing of the kind. Lying really doesn't get you anywhere. Don't you think maybe it is time you showed a little maturity?
"Yep, Leroy, Terminator X, Neil, and John Fountain -- the four horsemen of doom -- were all sure that if we simply waited long enough, places like Arlington would suffer a similar sort of armageddon as the rest of the area."Ah yes, the old "repeat the lie over and over again" tactic... charming."True, he did admit that the least desirable areas would do the worst, but he simply couldnt accept that Arlington had become one of those desirable areas."Um, WTF?Where did I say Arlington wasn't a desirable area?Do you think just making up one lie after another will somehow get you somewhere?I get it that you think you missed your big chance to buy back in 2002 or whatever, I guess it sucks to be you. In retrospect I should have bought some Apple and Google stock back then...(even if I didn't really have any money to do it with)"After Fohn F. bought and Neil and Terminator ran away, Leroy remained -- still convinced that if we wait long enough, "its moving in" will somehow come true."Again, WTF? I haven't bought because I don't even live in the United States right now. I will buy when I return. (And no, not in Arlington...)
Just one final note, in case anyone here is interested in a prediction I actually... oddly enough this is from an exchange with VA_Investor back in 2006...First from VA_Investor (Naturally not advising people to buy in 2006, because yesterday she claimed she was advising people NOT to buy in 2006)======================="I don't post often anymore for various reasons. It is futile to attempt to penetrate the preconceived notions of the "bubble" (meaning 50% price drops), the bitter mind-set, the sense of "entitlement" and the other noise that gets in the way of reasonable thought and analysis.The person who posted the she refuses to consider anything other than N.Arlington is a very good example. This person demands (deserves) the excellent schools and great commute. There are many areas that are perfectly acceptable to most people. But this person will fight their own price war by renting. Yes, that will show them (the REIC). Good luck.I've talked about sacrifice and starting out, but this falls on deaf ears on the Bubblemeter. You guys know best. No generation has ever been in your shoes.There will be a tremendous crash (not in 2006, I guess) and all the BH will get houses for 50-70% off. Nevermind that this will be at the financial ruin of their cohorts. They deserve their demise. You deserve these houses and the current owners do not.No, you don't have to settle for Loudoun or even S.Arlington. Herndon, Reston, Sterling? No, no and no. A fixer-upper? You don't have to live in a POS! Dammit, you'll rent!The problem is that you don't shut up about it. Whine, whine, whine. I am sick of it. Just rent and shut up please. MIT released a study recently that concluded that it costs no more, as a percent of income, to buy now than it did in the 60's, 70's, or 80's. Google it and then tell me how tough you have it. (dataminer has done this calculation, too).A poster above (or below) claimed he could only afford a crumby condo on 130K per year. Honestly people. You are so concerned about every sentence that comes out of the REIC, but you blithely let this type of crap slide by. It would take me an afternoon to find and buy a very acceptable townhouse in N.Reston....oh, I forgot, not a "cool" neighb.Enjoy the pity party. Maybe David's "crash" will come in 2007."- VA_Investor 28 Dec 2006===============================And this was my response:==============================="I wish I could say it is a shame you don't post here more... but it isn't.Your entire post is nothing but a ridiculous straw-man argument. Where on earth did you get the idea that everyone who believes there is a bubble is expecting anything like a 50% price drop?Newsflash... a 10% drop is a LARGE drop in the RE world. The 25-35% drop that I expect would be the worst in the area's history.The drops the area saw in 2006 are already severe. On what basis do you assert the crash wasn't in 2006? The crash STARTED in 2006, and it isn't done yet. It took five years of unprecedented growth to reach the peak. Did you expect that to evaporate in six months in the always extremely "sticky" housing market?When you can find a way to make a well reasoned argument without resorting to trying to pidgeonhole everyone on this blog as expecting a 50%+ price decline I will be interested in what you have to say."- Leroy 28 Dec 2006==================================As always, with the link:http://bubblemeter.blogspot.com/2006/12/this-blog-is-not-about-me-it-is-about.htmlWhat is funny is that years later people are STILL trying to claim I was predicting 50-70% declines or whatever, even when I went out of my way to be clear about what I was and was not predicting. Nothing is ever good enough for some people.
You guys want to argue with someone? Try Contrarian...He makes plenty of the sorts of predictions you like to try to attribute to me, assuming any of his posts are still here by the time you sign on in the morning.
Leroy,Thanks for posting that. Very well written if I do say so myself.I still don't see where I told people to buy. I guess if YOU say it enough, people will believe it!
gte- You are probably right that a lot of the illegals in the far out suburbs are leaving. The only ones I see are in Falls Church and they are definitely around. When I moved 5 months ago, at least 10-15 were sitting at the u-haul dealership offering to help.
I'm with Leroy, I don't think there will be a boomlet. A bit more marital bliss perhaps, given one of the items my local grocery store was suddenly very very low on.I'd say most people could have braved the walk to the convenience store if they ran out of appropriate supplies for the occasion. And apparently they did so in my neighborhood.
Leroy- Most of us have learned to argue with people that at least are in the same reality as you. I have no issue arguing with TBW, Spider, Pat, VA and many others. I respect their opinions I think they respect mine, and although it is unlikely we will come to an agreement on the exact outcome the give and take lets us firm up our own beliefs and have some impact on others.Contrarian's reality is so different from mine that I generally ignore his posts so I don't get anything out of them (maybe a laugh or two) and I feel the best I could do is convince him that when the apocalyptic nuclear holocaust comes cockroaches and deep sea animals will live rather than his view that just cockroaches will survive :)
Cara- I don't think people will be that spur of the moment on deciding whether to have a kid. Particularly in a really bad recession.
housebuyer,Agreed, I'm just saying that if they ran out of preventative measures that they had on hand, they could easily walk the next morning to get more.
so, no baby Cara in Sept? j/k
MM,I was out of bandaids, personally.
Again, WTF? I haven't bought because I don't even live in the United States right now. I will buy when I return. (And no, not in Arlington...)No one ever said you wanted to buy in Arlington. However, as the months ticked by, and as everyone realized the worst of it was going to bypass Arlington, you continued to insist Arlington simply hasnt come to terms with the market. You made post after post along these lines, til prices bottomed -- then you just went silent. Unless you too now go on a massive deletion campaign a la Contrarian, this will be evident to anyone who goes back and reads the compendium of what you wrote. and speaking of which..."Contrarian said...As I have said over and over again:"No, Contrarian, you have NOT said ANYTHING "over and over" again. Want to know why?????????BECAUSE YOU HAVE DELETED EVERYTHING YOU HAVE EVER WRITTEN!!!
"No one ever said you wanted to buy in Arlington. However, as the months ticked by, and as everyone realized the worst of it was going to bypass Arlington, you continued to insist Arlington simply hasnt come to terms with the market. You made post after post along these lines, til prices bottomed -- then you just went silent."At various points I stated that Arlington was not done falling, but that is in no way the same thing as predicting that what it would experience "the worst" along with places like Manassas. (Again, something I specifically ruled out.)I predicted inner areas would suffer less way back in 2006 and that never changed. I also never "went silent." I have been posting here more or less continuously since the beginning. I have already produced the appropriate posts with my predictions but it is obvious you aren't interested in facts but rather are trying to find a way to twist things so that you can claim I argued something I never did. I can understand wanting to argue with someone that you disagree with. What isn't clear to me is why you would waste my time and yours by making stuff up and attributing it to me.
Leroy,"doth protest too much"
VA_Investor,"doth lie too much"
WowAnd I just said Leroy was playing the gay card when he blames the subprime crisis on Barney Frank
Three More deletions, now restored:"contrarian said... The housing collapse is nowhere near over, including Arlington.2/12/10 12:50 AM" "contrarian said... As I have said over and over again:--there is a second wave of foreclosures ahead;--interest rates will rise significantly;--mortgage tax deductions will be eliminated;--income, sales and real estate tax rates will increase significantly to pay off the massive federal, state and local debts;--thousands of banks will collapse (more than a hundred have gone belly-up since 2007, and another 600+ are on CR's Problem Bank List)--credit will implode to the point where only people will significant assets will be able to get a loan;--FRE & FNM will be shut down;--20% down payments will be required;--U.S. has $100+ trillion in unfunded liabilities;--U.S. institutions have $600+ trillion in derivatives (Buffet calls derivatives the financial weapon of mass destruction);...for all those reasons plus many other factors housing prices have much, much further to fall.Houses will become a residence again, instead of an investment.2/12/10 1:04 AM" "contrarian said... Many people are already underwater on their mortgage. This next wave of foreclosures will cause them to be so much further underwater, they will never break even.Many of these people are baby boomers nearing retirement. The government is wanting to punish people who bought larger homes built over the last fifteen years (many baby boomers).The stock market will eventually collapse, causing the value of all assets to deflate.Sorry Leroy, but you take the trophy for arguing with others and they know it. :-)2/12/10 1:22 AM"
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