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.
spider said: "On housing, someone at work told me recently (who is looking to purchase TH) - "Do you know prices have doubled for folks who purchased 5 years ago in this region even after the recent price drops?""You must have a typo, or i'm reading it wrong. Prices have NOT doubled since 2005. Maybe you meant 10 years ago?Enjoy the snow.
Looks like another nice flip: PW7248653Sold for $1.1 Million in 2006.Foreclosure, purchased by flipper for $446K in Nov, 2009.Listed at $619K, UC in 7 days.$446K was a steal. $600K might not be that bad.
novahog-I guess I should have read your comments before I posted almost the exact same comment on yesterdays board.
Are house prices doubling in 10 years a normal thing? Also, is that a good thing, or just sign of inflated market?I was reading the Falls Church free newspaper yesterday and said housing assessments were down 6% overall (SFH was only 2% though) for 2010.
Yeah whomever told Spider that quote doesn't know what the eff they are talking about. Probably something their retarded realtor told them.
sehrwunderbar said..."Are house prices doubling in 10 years a normal thing? "No. Generally speaking they track with inflation. Generally.
wunderbar- I think it tends to grow with local wage growth. Which nationally is pretty similar to inflation, but for some geographies does better or worse. In the DC area wages are up ~60% this decade so you might expect houses to be up approximately this much. There are some other factors including mortgage rates that also have an impact.
Also to piggy back on Kevin's comment. Doubling in 10 years is very reasonable during high inflation/wage growth times like the 80s. However inflation/wage growth this decade was much lower so you would not expect this sort of movement.
WOW! wages going up 60% over ten years sounds huge! Although, I haven't really been a member of the workforce to know that. But, even with the average yearly increase of 2% still seems high because it's 3x that!
Even accounting for inflation, 3% average yearly, it's twice that.
HB/Novahog, Sorry, I don't think posted conversation that accurately. He was really referring to the fact that people who bought around 2001 or so (approximately 5 yrs prior to correction) - have still doubled their money. As you said, exact accuracy of this statement is dependent on the specific area. In general, as we discuss all the time - he was correct in that we are still holding on to large portion of the bubble gains in most of FX county. The fact that he believes so much on his RE agent seemed funny to me..."sehrwunderbar said... Are house prices doubling in 10 years a normal thing? Also, is that a good thing, or just sign of inflated market?"Prices follow wage-growth, they always did & they should. Median wages have definitely not doubled in last 10 years.
I guess I'm a bad person, but I love it when Owner is lister + Va.R.E.broker sold for less then original listing.3/19/2009 $899,9002/2/2010 $727,000compared to the above, this home fared much better with a less agressive pricing.9/25/2009 $799,0001/29/2010 $745,000another recent sold for less6/22/2009 $760,0002/4/2010 $700,000
http://www.wusa9.com/printfullstory.aspx?storyid=95126 Snow driving tips.
Spider- Thanks for the clarification that makes a lot more sense.Wunderbar- Nationally I am pretty sure wages went up ~30% over the decade which is the 2-3%/year you are talking about. The DC area just had a very strong performance. I don't have the exact numbers, but CRT posts them occasionally and if I recall correctly all the counties are up ~45%-65%. I may be off a little bit, but the main point was DC's income growth has been much higher than most of the country.You also need to take into account changes in areas over time. Both DC and Arlington went through a bit of a face lift of the past 20 years so these housing markets have larger gains over the past 20 years compared to areas like Fairfax Station, Clifton, Great Falls... That have always been nice
housebuyer, that makes sense. I remember hearing that the area used to be a lot less built up like 20 years ago. Then people started realizing where the "action" is and more and more people moved here and started building up and out all over the area.If George Washington could see this "swamp" now, lol.
Wunderbar-At least during the summer it still feels like you are on his swamp :) Yeah I do worry a little about the fact that there is a lot less buildable land near DC than there used to be.
There is also wealth effect. In that, stock market was flat to down in last 10 years. General terms, this means our economy hasn't done much. This makes me think NY/DC's housing is highly suspect compared to let's say TX or CO - given the unbelievable speculation that occurred here during the bubble. I also think next 10 years will be terrible for public employment & wage growth for this region - market will force Washington to reduce the deficits unlike what some people think.
Are the government's jobs numbers even remotely accurate?The payroll number for December was revised to a net loss of 150,000 jobs. The government had previously indicated that 85,000 jobs were lost in December.Job losses continue but rate fallsAnd is it just me or is it ridiculous that we lost 20k more jobs yet our jobless rate goes down? People still want jobs, they just can't find them and gave up for a little while until the job market improves. It doesn't mean they're not unemployed. Will the rate go up in the Spring when all these people (many construction workers) want jobs again?
Jeremy, that's a great point. It seems that instead of facing the truth, someone in power wants to hide it. I don't understand, we all know that the economy isn't that great as far as jobs are concerned, why hide it and make themselves look like liars too??
Jeremy...Yes. We haven't peaked on unemployment yet.
Spider said: "Sorry, I don't think posted conversation that accurately. He was really referring to the fact that people who bought around 2001 or so (approximately 5 yrs prior to correction) - have still doubled their money."We bought our SFH in 2001 in N. Arlington near the Orange Line. Based on recent neighborhood sales, I'm confident that although our home value hasn't doubled, it's holding at a little over 80 percent appreciation. Believe me, we're VERY comfortable with that!
housebuyer,Where are you getting 60%? According to Fairfax County the median HH income was $82,000 in 2000. A 60% increase would put us at $131,200 after the decade ended. The latest figure is $107,400. So it's more like a 30% increase.
Jeremy- I think everyone realizes the situation on jobs is bad. Cara posted something yesterday that showed the number of people that have left the work force. I agree that most of these people will look for jobs in the future although perhaps some of them just gave up and retired. The reason why they historically have accounted for changes in the workforce size is because overtime the number of women working has increased and this was the easiest way to deal with this. It doesn't really make sense for them to change the methodology for how they calculate things just because we are in a bad recession. This just means that as the economy improves people will reenter the work force keeping unemployment very high for the next several years
TBW-I was trying to recall the stats that CRT posted several times I don't remember the exact numbers. Perhaps he was talking about the decade before the recession 1998-2008 or something like that. I think 60% was also Arlington and maybe Loudoun I think Fairfax was ~45%. I may a little off with the numbers.
sehrwunderbar,Unfortunately crazy markets seem to be the norm here. Either super hot or super cold. Here is a great article. A couple years back this paper had the median home price for Fairfax County (or Northern Virginia I can't recall) since 1975 (ignoring Loudoun and PWC since the metric would not have included those in 1975). This does not have that data but some interesting data. I'll summarize what it says with calculation of what it is implying the median sales price was. I wish they posted the numbers because I know they have that data.1975 - Median home price $58,7391976 - + 6.2% price (~$62,380)1977 - + 7% (~$66,747)1978 - + 7.4% (~$71,686)1979 - + 11.4% (~$79,859)1980 - + 12% (~$89,442)1981 - "double digit increases hits $100,000"1982 - unclear "double digit increase gone"1983 - price up modestly; sales WAY up (probably because interest rates went down ~3% between 1982-83)1984 - + 2.5% ($107,000?; guesstimated 2-2.5% for 1982-83)1985 - "up modestly" ($110,210 if 3%)1986 - + 7.8% ($118,806)1987 - + 16.6% ($138,528)1988 - Unclear; $152,381 if 10%1989 - $175,0001990 - - 0.25% ($174,562)1991 - + 17.3 ($204,761)1992 - - 1.1% ($202,508)1993 - + 3.3% ($209,190)1994 - "up a bit" ($210,000)1995 - "up a bit" ($212,000)1996 - + 1.4% ($214,968)1997 - + 3.2% ($221,846)1998 - + 3.7% ($230,055)1999 - $240,0002000 - $250,000 2001 - $285,0002002 - ~$300,0002003 - "up considerably" ($360,000)2004 - + 21.8% ($438,480)2005 - not stated but ~20% $526,000 You all know the rest.
housebuyer,Maybe it was Arlington then with the 60% growth. It definitely got closer to catching up with its neighbors. (Probably if you compared apples to apples and controlled for Arlington's younger population they would be equivalent.)
sehrwunderbar,There are three boom cycles in there (75-81, 86-91, 00-06) and three bust/modest growth cycles (82-85, 92-99, 07-?).My guess is we will have negative or tepid growth for a while now and then another crazy cycle.
Okay I'm an idiot. There is a graphic online. Oh well, it was a fun game to guesstimate the prices.GraphicI'm printing this out this time. I regretted losing this the last time I saw it. It's a valuable sanity check.
TBW-Thanks for the site. One thing everyone should remember about the median price is that over the last 30 years the average house size was increasing. I don't have any data on this, but I think it is pretty clear for those of us who have been looking for houses. The 60s ramblers are not as large as the 80s colonials which are smaller than the 00s McMansions. So even though the median price was increasing during many years during the "bust cycles." Prices for similar houses were likely at best flat.I agree with TBW that we will likely see most of this decade as low price growth and then have another boom either the end of this decade or early next decade.
I've seen some of these boom and bust cycles and really don't have any reason to think that they won't continue (in this region).One thing that is usual, as far as I know, is the dramatic rebound in the lower-end. Perhaps people didn't learn a lesson OR we saw a massive over-correction.I don't see the same situation in the mid-upper brackets. Of course mid-upper didn't drop 50% - 70% off peak.The big question is when we turn the corner on this recession and whether another shoe will drop causing a double-dip or worse.I see some signs of stabilty, but also alot of fear and doubt.Looking ahead I believe the boom will again emerge by 2015-2020.Last time around, peak to peak was about 15yrs. This would put us at 2020. I hope this happens as it would coincide perfectly with my exit plan.
It is interesting to see whether the Greece Debt crisis is going to continue to derail the stock market/risky assets. I think this would be particularly bad for confidence. People know the jobs situation sucks. If their stock portfolio falls I think the little amount of optimism left would fall.
MM I don't think you are a terrible person as we saw some very overpriced houses when we were looking before the holidays. We actually saw the first house on 37th St. and would have bought it but it wasn't really near anything. At any rate when we saw it, the real estate agent was there. He inherited the house from his parents and he was trying to fix it up but he was doing only minimal work to it. It was clear that he was very emotionally-involved with the property because he wanted to show us things, such as his father's garden, told us about his mother's cooking, etc. Our agent was reluctant to show it to us because she knew the story and wasn't sure if he could part with it even though he had reduced the price considerably by the time we saw it.
housebuyer,I would think home sizes are playing a role and yet my parents paid in the $60s (the median home price in the mid-1970s) and that home's value has tracked this median . . . until the bust. Now it's still worth according to Fairfax County the mid-$500s whereas the median home is low to mid-$400s. Which I think just shows homes in Vienna are due for a drop.
HBBear in mind while we see the new McMansions, the median house in this country is still fairly old. Of 140Million dwelling units, less then 10% were built during the boom.The Median house only added one room over 30 years. Which would be standard, most people aren't living that well, while The TV shows show the nice houses most people are still living in older units.
I used an Excel spreadsheet so this did not take as long as it might seem. Using the Sun Gazette's median price, Freddie Mac's median interest rate, the price-to-income ratio based on the interest rate from the article Ace found I have found the income needed to buy the median home in Northern Virginia (this metric excluded PWC and Lou). I only went back to 1991 b/c the article did not have price-to-income ratio when interest was 10+%.I have bolded good years to buy according to this metric (defined as years where median HH income exceeded income needed to buy median home. A few years were missing median HH income data.]1991 $72,237 [Median HH income $61,000]1992 $65,7571993 $61,582 [$64,000]1994 $68,362 [$66,000]1995 $66,320 [$70,000]1996 $66,906 [median HH income N/A but based in 95, 97 numbers higher]1997 $66,949 [$72,000]1998 $65,099 [same caveat as 1996]1999 $71,192 [$81,100]2000 $79,613 [$82,000]2001 $81,474 [$84,700]2002 $86,529 [$85,300]2003 $91,859 [$80,800]2004 $111,146 [$88,100]2005 $135,293 [$94,600]2006 $143,781 [$100,300]2007 $142,450 [$105,200]2008 $118,464 [$107,400]2009 $99,162 [N/A]1994 was sort of a fluke b/c interest rates were temporarily high. I also think 2002 was essentially close enough b/c otherwise you ended up like the Anonymous who is tired of waiting. I think this means if you can find a home 20% or more off peak and get a ~5% mortgage rate you might just be safe. Unfortunately, I don't think the areas I'm looking (or spider, kevin, housebuyer, Jeremy or those looking in Arlington) have gone 20% off peak yet. And by the time they do interest rates might be 6-7% necessitating further price drops.
Pat-I guess I should have been clearer I wasn't trying to say the average house was a mcmansion. I was more trying to say that each year the new houses are bigger than the previous year which marginally moves the median up. So perhaps each year the median house grows 0.5%-1% per a year so over 30 years it has grown 15%, which explains part of the difference.TBW-I would be interested in your parents 2010 assessment. I think Vienna did well in 2008 because it very few foreclosures. But while many places improved in 2009 I didn't really see any improvement in Vienna.
HB/pat, Yes, most of the housing supply in FX county is old & that's what most people here are targeting. So, size doesn't have as much impact on comparing valuations. New homes are mostly out of reach in this region unless you are reasonably old, born-reach or interested in spending significant portion of your life commuting.
housebuyer,Yes I will be interested to see the 2010 assessment. As far as I can tell comps in the neighborhood are not selling for that much.
spider,I think a lot of people were able to do McMansions because of the miraculous home equity growth in the area. Say you bought a median home with 20% down payment when you were 30 in 1980 for $90,744. In 1991 your home is now worth $204,886. That's probably $150k of equity there (home value increase, 20% dp, principal payments on 10 years of mortgage).You could then buy a McMansion for $400k, have more than a 20% dp, and presumably are making much more at 41 than at 30 so you can afford the new 30 year mortgage.
[I'm not endorsing doing another 30 year mortgage. Just what I think most of those people did.]
And that's the idea of a "housing ladder," right?Do you think it's a good idea in current markets to try to do that?
The housing ladder has sure worked for me. Bought my first place (condo near Court House) in 1987. Later, a TH; now a SFH. All in N. Arlington, all walkable to the Orange Line.
Wow, weather channel says that most snow on record for this area was 1922 Knickerbocker snowstorm. It said there was 3.06 liquid inches, and we are getting 3.0 liquid inches to rival that and expect some area to recieve over 30 inches. WOW!
some of you might have read the WaPo chat already but here's something interesting (even to the reporter) quasi-related to the 'shadow inventory' theory:Anonymous: Actually when a bank forecloses on real estate it only has a limited time to sell it. Used to be two years. OREO (other real estate owned) is tracked closely by regulators. From a former bank examiner.Elizabeth Razzi: Interesting. And what happens if it doesn't sell? ...Anonymous: As you well know everything sells if you price it right. The bank incurs and accounts for the loss on the loan at time it forecloses. Whatever money it gets when it sells the property it can reclaim it as income to offset those losses. It isn't allowed to sit on the property and wait for the market to improve. That is the whole point of these laws, as it prevents banks from engaging in RE speculation. Which is why truly banks never want to foreclose. FWIW.
sehrwunderbar,Well yes and no. Many on this site have used housing ladder to imply you have to start with crappy housing that traditionally was for poor people even if you have a middle class salary.The example I gave was someone moving from middle class to upper middle class (or upper class) housing.If you bought the median home at around age 30 in 2010 for $431,018 I think it's safe to assume that by 2020-21 it will be at or close to 2006 levels $537,741. Giving you some equity to bid on the McMansion at 40-41.However, you might be outbid by those of us who waited until 2011-12 who bought our median home for $400,000 or $375,000 assuming we still have not yet hit bottom. ;)
sehrwunderbar,Of course this assumes no Voelcker era interest rates again and that the local economy stays strong with median HH income continuing to increase. I am a short term bear but a long term bull for the region.
sehrwunderbar,This is a good example of what the housing ladder acolytes wanted middle class people to believe they were supposed to buy:http://franklymls.com/FX7174515Note that this sold for $275,000 in 2007. Using the price to rent ratio for 2007 that means this would've been a neighborhood for someone with a middle class income of $72,751. Now it presumably sold for ~$189,900 and with the price to rent ratio for 2009 it required an income of $43,689. Anyone familiar with the area would agree that's a more realistic salary level for the families that live in that complex.And you might say hey $44k is not poor/working class but keep in mind these units are for working class families and not the condo units that are occupied by single professionals or DINKs (such as a condo building in Clarendon or whatever). This letter shows a family of 4-5 making that sort of salary would probably qualify for free or reduced lunches. Also, many of these units are rented out probably to people making less than what you need to own it.
tbw,You don't have to "settle" for anything. Historically, people tended to move up the ladder in houses as well as work.You make the assumption that wages only increase with inflation. I don't know many (if anyone) who stayed at the same level since college graduation.Whether using the housing ladder is a good plan depends on many factors, some tangible and some not.I think many would find your remark about buying a crappy house in a poor area offensive.My 24yr old neice is thrilled beyond words with her "crappy" place. I lived in a series of places that you assuredly would consider crappy.I know that you think the 80's and 90's, etc. were unique. I think low-end housing is (or was last year and the year before) unique at present. Your argument boils down to economic (transaction costs and possible price declines) and personal ideas about what type of house/neighborhood you "should" live in.Do what's right for you, but don't allow your issues to influence others who would be quite happy in a crappy 300K (or much less) place for the next 10 yrs. If their income remains flat, they are probably not your peers. How can you judge what house is good enough for anyone?
HBbe aware that while new McMansions come in, there are also lots of new townhouses, Condos' etcthose are much smaller.Elizabeth Warren says the median has only moved 1 room
Va_Investor saidYou make the assumption that wages only increase with inflation. I don't know many (if anyone) who stayed at the same level since college graduation.I never said this. On the contrary, I pointed out a lot of people afforded their move-up McMansion because they were making a lot more ~10 years after buying their first home.You've never described living in a place that sounded remotely crappy. I can't evaluate what your 24 year old niece is doing because you are not giving me any information on the type of home she is living in. You always act like your buying a Macy's home at 22 instead of a Bloomingdale's home was somehow equivalent to being asked to buy a K-Mart home. It's not the same.Anyways, most of this is a moot point because lower home prices and lower interest rates have made it possible for the middle class families I'm talking about to afford better than the condo development I highlighted.
Va_Investor,I also think your perspective on this is a little off because you bought so young and probably encouraged the niece to buy very young at 24. Renting is not sinful behavior in your 20s. Particularly as major life events keep coming later and later (age at first marriage, age at first child, etc). Last time we discussed this you did not believe me that median age of first marriage has gone up so I have found you the data.
pat,Good point. There definitely were more THs built in the 1990s and 2000s and plenty of condo developments in the 2000s as land became more scarce.
Pat-1 room sounds reasonable. How many rooms do most houses have 10ish? So they have grown ~10%?
tbw,I apologize if I misread you. Please don't turn it back on me. We were unusually successful at a young age.You state that a median house is crappy and for poor people. Now don't come back and say that you never said that. You might not have used those exact words, but your comments are clearly consistent with that.Every couple I know has owned at least 1 prior home with our peers mainly on their third. You have your opinion and I have mine.I am quite sure you would be unhappy with anything available under 6 or 700. Wait if you want.As far as my niece, I'm sure I influenced her just as my parents influenced me. Seeing that I found her place for her, I'm certainly not going to disparage it. It was a terrific buy (it's worth 40% more than she paid - and she also got the 8K). She is proud, her bosses are impressed and she pays about $200 per month after her roommate pays her rent.A group house is not everyone's cup of tea.
Tom said...The housing ladder has sure worked for me. Bought my first place (condo near Court House) in 1987. Later, a TH; now a SFH.Tom, your only posts the past few weeks have been to repeat the above and say "Arlington is a nice place to live." You've never answered my question about all the people who bought into your housing ladder crap with their first condo in 2006-7. How many years will it be before they get to move up to the next rung on the housing ladder? How much quicker would they be at the townhouse step of the ladder had they just rented and saved instead?Again, congratulations on your fortunate timing, but your past experience doesn't have any relevance to today's buyers.
Jeremy,I wouldn't hang my hat on some very foolish people who bought at the absolute worst time in decades. They would have been fine in 2003.
Va_Investor saidYou state that a median house is crappy and for poor people. Now don't come back and say that you never said that. You might not have used those exact words, but your comments are clearly consistent with that.Ah, here is the source of the confusion. You did not load my link. http://franklymls.com/FX7174515The home I highlighted is *well below* the median home price for Northern Virginia. It was listed for $189,900. The median home price is $431,018. So I am most definitely not talking about a median home.Va_Investor -- Here is the boundary map for Flint Hill ES. Those condos (as far as I can tell) are the only non-SFH in that school's district. Do you honestly expect me to believe that the free/reduced lunch students are coming from the $600-1M homes in that school district? Clearly there are some working class families living in these condos.I have never said $400k homes are for poor people. In fact, there are a lot of homes in western Fairfax County in the $300s that I think are great middle class neighborhoods. In Loudoun and Prince William County I think you can find some in the $200s.
Tired Bubble Watcher That condo you mentioned was a short sale so it might not reflect prices in Mosby Landing. I had friends from Madison who lived in Mosby Landing, and 7 years ago when I was in high school they were pretty decent places. Lots of divorced moms lived there so that their kids could go to Flint Hill, Thoreau and Madison. None of my friends who lived there were free lunch but I had friends who were free lunch and so what? When you move from DC or Arlington or wherever you live to Vienna, you just might have to send your kids to a school with free lunch kids. The free lunch kids will probably survive being in school with your kids.
tbw,I guess I misunderstood your remark about crappy houses in poor neighborhoods.I said that I misread a CS chart about 1989 forward prices - what more do you want? Are you going to cite aa error (that I acknowledged) for the next few years?The "cherry-picked" remarks from 2006 have already been shot down and exposed (when the entire thread was posted). You are beginning to sound desperate. Why the distortion and spin? Not a Caps fan?
Jeremy said: "Tom, your only posts the past few weeks have been to repeat the above and say "Arlington is a nice place to live." You've never answered my question about all the people who bought into your housing ladder crap with their first condo in 2006-7. How many years will it be before they get to move up to the next rung on the housing ladder? How much quicker would they be at the townhouse step of the ladder had they just rented and saved instead?Again, congratulations on your fortunate timing, but your past experience doesn't have any relevance to today's buyers."Read some of VA Investor's posts to gain a partial refutation of your assertion. However, I do acknowledge that more and more people will have a harder time going up the ladder solely within N. Arlington as I did. The reason is that N. Arlington has moved up several notches in relative affordability, permanently. It's similar to how Manhattan is permanently more affordable than Queens.
er, make that "less affordable" !!!
tbw,What about the BS about comments from 2006?I don't know if you are just having a bad (pissed-off) day, but you consistantly come across as a major snob. I have a number of 300K, plus or minus, properties that I would be perfectly comfortable living in.Perhaps you truly make the money required the live the life. You don't want your kids associated with free-lunch kids. We get it.When you get there, let us know.
Tom said...Read some of VA Investor's posts to gain a partial refutation of your assertion. So now your argument is that the housing ladder works... sometimes... as long as you're smart enough to know when to buy and when not to.Or to put it more simply - it is smarter to rent until home prices match up with reality, and then buy what you can afford with the money you saved during that time. This is what I've been saying all along, and the fact that many of us have been renting (and saving) for all of the bubble years puts us in a position now to skip the "sometimes it works" housing ladder and buy that move up home now. I have much more money saved now than I would have equity if I bought a home in 2004-7, and I can use that money to get a much better home now rather than being stuck in my entry level starter home.The housing ladder is the least efficient way to end up in your dream home during a stable market. You lose 6% to realtor fees at every step. It only works in bubble markets if you like to gamble and get really lucky to have all your leveraged debt appreciate in value. Then you still have to be lucky enough to sell your home and rent before the crash hits if you want to keep any of the money you 'earned.'
What is with all the deleted comments?
I didn't delete anything.
Are you saying someone else deleted your posts? Or that you just don't know what the deleted posts were?
None of my posts were deleted, period. I remember at least one post by tbw that is gone. It's relatively easy to discern the author(s) of some of the posts that are missing by reading those that remain.I suppose we shouldn't even care. If I posted something I regretted, I would delete it too. I have in the past.
If you view the blog in something like Google Reader it shows who deleted all their posts. These were all deleted by tiredbubblewatcher, he usually deletes the ones related to schools. I think he explained his reason for doing so once, but I don't remember what it was.I've deleted a couple of posts here and there when I read them later and realized they came off meaner than I meant to (or should have).
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