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Saturday, February 13, 2010
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51 comments:
Harriet - Looks like spambots are starting to target your blog. I assume you can actively edit comments?
I don't think homeownership should be a prerequisite for childbearing at all. I think that the ideal situation is to have a home within which to raise children. There is a difference between ideal and reality, as we all know.
I forget who posted the video a couple of days about how OneWest is making more than 100% of a homes value when it gets foreclosed. It appears to video was fake and that OneWest actually does take losses on loans that go bad
http://www.calculatedriskblog.com/2010/02/fdic-responds-to-blatantly-false-video.html
"sehrwunderbar said...I don't think homeownership should be a prerequisite for childbearing at all."
Of course not. Home-ownership is way overstated.
You can always rent a home - it is cheaper right now, plenty of supply & keeps you mobile...
We chose to wait almost ten yrs to have a child. We wanted to be financially set and not go through the struggles our parents went through.
That was our decision and I have no interest in deciding what is "right" for others. Many of our friends had children right away and are doing just fine.
We had friends who stayed in a non-descript TH until their kids entered HS. Who cares really?
At times like this when people can own a TH for the cost of rent, I'd like to see as many people buy as possible. Even if they will never get the pay raises to move (or don't care about moving) to a sfh, I'd rather have people own free and clear at retirement, than piss away 30yrs on rent.
Which group do you think will be more reliant on gov't transfers in old age? Forced saving is what I see when people buy instead of rent (with equal payments). I know there is alot of talking about "saving the difference". Two points; there may not be a difference at present AND my experience is that "what comes in, goes out".
For the record I have never said people should own a home before having kids.
In fact, I think that mindset has caused a lot of people to make bad decisions. My former classmates who felt they *had* to have a home before the kids were born bought in Leesburg, Ashburn, Woodbridge, etc in 2006-07.
tiredbubblewatcher said...\
For the record I have never said people should own a home before having kids.
For the record, no one here has said that. HayfieldGrad made it up. Most people would prefer to own a home before having kids, but that doesn't always make the most sense financially.
VA_Investor said...
At times like this when people can own a TH for the cost of rent, I'd like to see as many people buy as possible.
You can't own a townhouse for anywhere near the cost of rent with a convenient commute to Tysons. For some of us the commute is the most important aspect of the home since we want to be able to spend time with our current/future family.
Townhouse rentals in my apartment complex start at $1860 a month, and you can find much cheaper nearby, especially from private owners who are now accidental landlords. We are literally across the street from the Tysons Galleria. Renting from an apartment complex has the advantage of knowing you will never have to move because the owner decided to sell, and that maintenance is taken care of right away including sidewalk shoveling and yard mowing.
Where in Tysons can you get a townhouse like that including the HOA fees and home maintenance costs. Not even close.
Here we go.....
I believe Cara can offer up a number of TH's in her locale, as I can in Reston, Herndon and Sterling.
...sorry folks, no N. Arlington and Tysons Corner. I do think the Westerlies in McLean are in reach.
I'd bet Centreville, Franconia, Countryside, Burke, etc., etc., etc., are perfectly doable.
Va_Investor said
I'd rather have people own free and clear at retirement, than piss away 30yrs on rent.
Who here is proposing people be eternal renters? I have never proposed that. Jeremy has never proposed that.
We are just saying the housing ladder is a bad idea outside of periods of extreme price gains.
intentionally obtuse....misleading...distorting and hijacking the discussion....
prior statements: TH's are not the american dream.
argument: many are affordable and the equivalent of rent.
new statements: Not in any "good/great" location.
argument: not everyone can afford or wants a ladder or sfh.
now: no one is advocating people become lifetime renters, just that there aren't any DECENT TH's!
and on and on we go.
TBW said:
"We are just saying the housing ladder is a bad idea outside of periods of extreme price gains."
Actually, I wonder whether it's a good idea when prices are going up in an extreme fashion. I suppose if the comparison is between these two people, it is:
a) Person A buys a condo, TH or small SFH, planning to later sell it to buy a "nicer" place (however defined) (let's say 10 years later)
b) Person B also wants the same "nicer" place on the same time frame, but rents and deposits the same amount of money in the bank as Person A does during the 10 years; rents go up at about the same pace as sales prices after Person A buys.
If you change some of my facts (e.g., that rents don't go up as much, that Person B is able to save much more $) you might argue that even when home prices as escalating rapidly the ladder may not make sense.
I think it made some sense in my old life in the midwest, where housing prices were half of what they are here (or less) for comparable places (so both the cost of ownership and transaction costs were much less), while incomes were maybe 20% less. Thus, home owners had the opportunity to save a lot while not sacrificing much or taking on a huge risk, and prices went up at about the same rate as inflation each year (or maybe a bit less, but they didn't drop). And, there was proportionately less job loss and more employment opportunity than most places face today, making it less likely that an owned home would be an albatross that made it hard for someone to shake in order to take a new job.
I really don't want to argue the merits of the housing ladder. Perhaps it has gone the way of the dinosuar. Everyone I know is on house #3.
Today's generation seems to be far more mobile and the transaction costs of frequent moves tend to eliminate benefits (tangible or otherwise) of owning. Taken to the extreme; maybe owning at all is not financially sound(?).
Regarding the suitability of TH ownership long-term, we have a large population that will never reach median income, let alone exceed it.
My discussion was about Joe median buying a TH and living out his life there. Even if this "affordable" TH is in PWC or Loudoun or Route one south or, or , or.
The immediate reaction here was that there are no TH's in Tyson's (or N.Arl, McLean, Bethesda, etc.) People, please realize that there are plenty of folks out there whose "dream of homeownership" doesn't involve, or even contemplate, the "rich" neighborhoods.
I'm not median and I doubt many here are. I just happen to think that it is good for people to own and eventually own free and clear.
We aren't talking the loose lending and high prices of the past 6 or 7 yrs. In fact, the areas where Joe less than median will be buying have been hammered. It truly does cost less to own in many areas. Not one's where Joe above median (and on his way up the corp. ladder) wants to live.
Let's think about this from a macro-social standpoint. What is best for all of us? Any stats you can produce show the vast amount of net worth is home equity.
8K is cheap in my mind to clear out the blight, get places renovated and afford the masses the opportunity to own.
There is really no excuse to be so self-centered (and high and mighty) when looking at housing policy.
Don't think people can't possibly be content in a Lorton or Woodbridge TH.
Jeremy,
Your response to reecon's post on 2/11 about his/her OB/GYN friend expecting a baby boomlet in 9 months from the snow storm left little room for interpretation as to whether people should own a home before having kids. Clearly more than a few people took your comments to mean something different.
You said: "I would hope most people are a little more responsible about that sort of thing (having kids) if they don't have a home or other kids already."
Then in response to sehrwunderbar, you responded with the following: "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." You were both insulting and incorrect in your lead in on this post.
Whether you used specific words or not to describe your point, what I read in your postings is an implied suggestion that owning a home first is preferred over having kids first.
I'm in agreement that your posting was one of the more obnoxious ones I have read on this blog.
Well I have no apology for you. Most people would prefer to own a home before having kids. Most people prefer a townhouse to a condo, or a SFH to a townhouse. It's just reality. You should adjust your expectations if reality offends you.
Now just because most people prefer those things doesn't mean everyone can afford them when they want them. This is also reality. It doesn't change the fact that they want them.
VA_Investor said...
I believe Cara can offer up a number of TH's in her locale, as I can in Reston, Herndon and Sterling.
I have no doubt you can. For people that want to live in those places it may make more sense to buy than to rent. For people who don't want to leave by 6am just to get to work on time (those of us working in DC or Tysons at least), it still doesn't make sense to buy a townhouse now with the hope of moving up later. Buying a townhouse is much more expensive than renting one here, and we will be able to save money faster toward that future home purchase by continuing to rent rather than settling for the townhouse now. I'm not trying to disagree with your blanket statement, just saying it doesn't work for many of us here.
Jaime said...
"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." You were both insulting and incorrect in your lead in on this post.
You can see how I would think she was pregnant since just the other day she was talking about how she's already started stocking up on diapers. I do not believe I was incorrect in stating that, "most people given the choice would prefer to have bought a house before having children."
Jaime,
After rereading this I realize that you added your own emphasis to my quote to make it seem like what you wanted. You added "(having kids)" to frame the quote to mean one thing when the quote was talking about something else. I hoped most people would be more responsible "having sex", as in use protection if they weren't planning on kids yet. I think that was obvious if you read my post and the one right above it.
Reecon was talking about accidental pregnancies resulting from the blizzard.
It is bad form to alter quotes like that. People like you do make it irritating to have a real conversation on the internet. Guess you have to do stuff like that when you don't have a leg to stand on otherwise.
I have a question for the blog not about people having babies. I'm reviewing our real estate agent agreement and it has the following line:
The Broker’s Fee shall be 3% of the purchase price or MLS offering, whichever is greater, plus $345.
I understand that the $345 goes to Long & Foster as a standard fee they charge to everyone. My mother-in-law tells me it is something they had to start doing as the agents got more and more of the 3% and L&F gets less. She said when she first started working there it was split 1.5% to the agent and 1.5% to Long & Foster. My concern is with the "MLS offering" part of the clause. The way I read it, if the house is listed at 700k and we get it for 650k, then out of our own pocket we have to come up with $1500 extra to pay our agent so he gets the full 3% on 700k. Is this normal?
We will meet with him to sign the agreement the next time we have a home we want to see. I want to bring this up, but wanted to know if it was a normal practice or a greedy realtor first.
Va_Investor,
Let me clear something up for you.
Joe Less Than Median who can never afford anything more than a TH has my blessing to buy his/her TH and own it in full at retirement. Hope he/she does.
I'm talking about the people (like your niece) who want a SFH but got a TH to be on the housing ladder and not "throw away rent." My opinion is the housing ladder is bunk and they should rent until they can get the SFH at 30 or whatever. When all the 25-29 year olds buy condos and TH to get on the housing ladder they end up screwing themselves because SFH are based in part on the price of condos and TH. And when a bunch of buyers (who traditionally did not buy homes) bought homes that raised prices on the lower end raising prices on the higher end.
This fell apart when one day people said $400k for a 1 BR condo that I can rent for $1500 a month? That's silly.
(who traditionally did not buy homes until about 30 or so)
Jeremy-
Attached are a bunch of town houses that have ~5-15 minute commutes to Tysons and cost the same or less than renting from your building. Most of them are also significantly larger. Perhaps these commutes are a little longer than from your place, but I don't think you want to fight the battle of a 10 minute commute is was too long. If you want I can find more places that are equally far. For the mortgage I used 0% down 5% mortgage rates and 1% tax. I figure the mortgage deduction should basically offset the cost of maintenance.
http://franklymls.com/FX7162130
http://franklymls.com/FX7014700
http://franklymls.com/FX6998796
http://franklymls.com/FX7002090
http://franklymls.com/FX7023074
http://franklymls.com/FX7105769
Thanks housebuyer, but I think your commute times are quite a bit optimistic. I will give you that they are still within a reasonable commute though. The last two might be within 15 minutes during a morning/evening commute - the others I'm not sure I could get to in 15 minutes right now (8am on a Sunday). FYI, It takes 10 minutes just to get onto 495 from SAIC on Rt 7 during rush hour - did that back when I lived in Burke. Going West is worse.
The prices are close to the cost of renting from my apartment complex, but like I said you can get much cheaper renting from private owners. My rent comes with a gym, basketball court, lawn service, maintenance, and the ability to walk to work. I know that I pay a premium for these things over other nearby communities. If you are counting the mortgage deduction towards maintenance, then also figure in the fact that we get the standard deduction now and subtract that from my rent.
Anyway, none of those places make sense to me personally when I can just rent a little longer and skip the townhouse "rung" altogether - saving myself the cost and aggravation of an additional home purchase & sale. If I had bought one of those townhouses when I started renting here in 2006 I'd be so far underwater right now that it would be years before I could consider moving up to a SFH in Oakton.
I contend that I was right in saying, "it still doesn't make sense to buy a townhouse now with the hope of moving up later.", but wrong when I said, "You can't own a townhouse for anywhere near the cost of rent with a convenient commute to Tysons." Townhouses really have dropped in price since I last considered them. SO glad I didn't buy.
Jeremy-
You are probably right that I was being optimistic on travel times. My office opens late so travel times for us are much better for us than most people. At 10AM you can get from Courthouse to Tysons in 20 minutes so I just think of any place closer than Ballston as a 15 minute commute. You are right though at 8-9AM commutes are probably at least twice as long.
I think you are probably making the right decision to wait, but if you didn't think you would ever be able to buy a SFH it could make sense to buy a TH instead of renting so at least in 30 years they wouldn't have a mortgage. Seeing that rents are comparable now you would also expect that rents would be far more expensive than buying in a couple of decades.
Since I started this whole babies after snowstorms discussion as what I thought would be an amusing side-note discussion, but I have seen it went seriously wrong. The only quote I would change is Jeremy's frequent references to "most people" to "most people I know." There is a whole big world of "most people" out there who may not have the preferences of Jeremy or in fact have an preferences at all. Call them irresponsible or whatever you want, but this board does not represent the reality of "most" people's lives.
A small point in Jeremy's post:
"If you are counting the mortgage deduction towards maintenance, then also figure in the fact that we get the standard deduction now and subtract that from my rent."
Actually, that would tilt the comparison unfairly toward renting. Once you itemize, you can take a number of other deductions that you can't take as a standard-deduction-taker, that for many people make the mortgage interest and RE taxes *almost* purely additional deductions. For example, if you itemize, you can also deduct VA income taxes, local and car tax, etc., and certain employee business expenses, which would partially offset the standard deduction's value. Depending on your situation (e.g., higher income people will pay higher VA income taxes) these will take most of the place of the standard deduction, leaving most of your mortgage interest and RE tax deductions as available to reduce your AGI.
reecon,
Sounds like you would predict this snowstorm is not going to increase demand for housing then. I agree.
Fairfax County 2010 Assessment Notices will be Mailed February 23, 2010
I know a few of you disagreed with my contention that as a general matter we will still see lower assessments. I'm sure here and there we will see homes with higher assessments but looking at the countywide map we'll still see flat or declining assessments.
For those who disagree can you be specific on areas where we will see a higher 2010 assessment?
I know other localities already released their 2010 assessments. Did anywhere have increasing assessments? Do they feel Woodbridge or Manassas or Ashburn or Sterling has recovered? I know a few of you have argued that we are long past the bottoms for those markets (I think Va_Investor has said 2008 was the time to buy in some of those) so I'm curious if the assessors found that to be the case and raised assessments.
Jeremy said
FYI, It takes 10 minutes just to get onto 495 from SAIC on Rt 7 during rush hour - did that back when I lived in Burke. Going West is worse.
What about forgetting about Rt 7 / I-495 and instead getting onto International Drive which becomes Gallows Road and taking that south and joining I-495 much later. Not sure if that's quicker. I have to imagine I-495 is less congested after a bunch of people get off to take I-66W.
Ace-
I agree you surely can not count the entire standard deduction if you are renting, because everyone has fairly significant deductions. If nothing else your state taxes are deductible and would lower the value of the standard deduction.
TBW-
Gallows is much better than 7. It normally only takes me 5-10 at 6PM minutes to get to Dunn Loring. I could make it down 66 to the vienna metro area or Mantua in another 5-10 minutes
To Jeremy:
Others may have responded already but BA agreements are negotiable. The agreement should state that his compensation will be what the listing broker is offering in the MLS, (As long as it isn't too low, like 1%) If he demands 3%, tell him to take a hike. When interviewing agents, you should also ask for all of the transactions, in pgf form, that he has closed in the last year or so. His name will be in the sold listing. You'd be surprised how many agents, (most) that do very little business.
At least someone in the Washington isn't brain-washed or corrupt...
Volcker Says Must Let Big Financial Firms Fail
Jeremy,
I believe the emphasis I provided and highlighted is correct in the context of previous post. The post you responded to was contextualized around having kids (a baby boom). Since I'm sure most of us know how babies are made, I doubt you were trying to make the point that people should 1) abstain from having sex during snow storms, or 2) abstain from having sex before buying a house.
You also can't ignore or reconcile the second quote further down the page for which you said "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."
So what were you trying to say in this statement? Did you mean that most people would prefer to buy a house before having sex?
You are laughable. By the way, I'm not looking for an apology. You can also stop acting like you know what most people think and want in this world.
Happy Valentines Day!
I'm so over this whole baby discussion and people who go out of their way to get their panties in a bunch. I went to seven different elementary schools and I won't do that to my kids. I believe I've already made my opinion known on the matter, so I won't waste any more of everyone else's time.
Thank you Mike for the BA advice. I read "3% of purchase price or MLS offering, whichever is greater" as "3% of final price or 3% of list price, whichever is greater." I see now from what you said that it means 3% OR the MLS offer percentage of final price, whichever is greater. I'm much more okay with that since we are getting back 25% of his commission by way of my mother-in-law being our referring agent.
I forgot to mention we went to this open house today and were severely disappointed. The 3 downstairs bedrooms were super tiny (much smaller than in the colonials we've seen), and the upstairs was virtually unusable as a bedroom. It technically had a half bath up there, but it was along the sloping wall and I definitely could not stand up in front of the toilet or sink. The whole upstairs was like one long fat hallway.
Anyway, we met the listing agent and he lives directly across the street. I thought that was a little weird. I don't know what they think makes this house worth $629k after it sold for 560k in 2007. All the (cheap) renovation work was done in 2006. Maybe that listing agent has just as much wishful thinking going on about his neighborhood and own house as the seller.
Jeremy, that house also looks ugly...IMHO.
Spider-
If you notice Volker says that when firms fail the government should merge them or orderly wind them down. I agree with this. The problem with last the crisis is that no firm was strong enough to acquire AIG, Citi... The government also had no plans on how to orderly wind down such large companies. So it likely could not have been done. Hopefully the government has been spending a lot of time over the past few years trying to figure out how you can wind down huge interconnected companies so the next time something like this happens they are prepared.
Jeremy-
They probably dont think the house is worth 629K, but they are hopeful they can get out of the house without losing money. So they listed it for 629 hoping the get 600ish so after commissions they dont lose anything. Unless they did a lot of nice work they probably will not get it. Maybe it will become a short sale after a while or they will decide not to sell it...
Jeremy - Re the house you looked at over the weekend, it seems like a similar house went under contract last year at $575K, so the asking price is indeed inflated:
http://franklymls.com/FX7069875
I actually think it's an interesting exterior, in an area otherwise full of traditional colonials and split-levels, but these houses were built in the early 70s and the interior amenities (or lack thereof) reflect that.
One nice thing about that neighborhood is that it's very close to Wolftrap Elementary, but in general the houses a bit further north are nicer and newer - but more expensive as well.
tbw,
You don't need to clear anything up for me, but thanks anyway.
There is a difference between buying a condo for 82K with an 8K rebate and buying that same condo 3 yrs earlier for 287K.
Those condo's rent for 1,200-1,400 per month. It's a large 2/2 and her roommate is happy to pay $600. The condo fee is about 220. You do the numbers.
I get it. You think the housing ladder is bunk. I am not going to argue with your opinion.
Jeremy,
I think that house is pretty cool looking. Some things are stupid - like slapping that one kitchen cab on a wall that screams out for a corner cab.
Anyway, looking at the back roof line, a dormer would be an inexpensive way to convert that top floor into a knock-out master, imo.
Good eye VA_Investor. The realtor said that is what most of the other homes in the neighborhood had done. Many had also enclosed the breezeway area to make it livable space. Since we are first time buyers, the thought of buying something and immediately tearing the roof open is a little too much right now.
As for the aesthetics, at first my wife thought the contemporary homes were terribly ugly too. I happen to like them because they are different. We went to see one in Great Falls that looked very small on the outside but the layout inside was so open and well thought out that my wife has changed her opinion of these homes. I guess that is why we were so disappointed with this one.
Jeremy,
Most people around here want your standard colonial, but there is a market for contempory. Have you checked "Wolf Den" off rt 7?
Anyway, I wouldn't concern myself with ripping off a roof immediately. Perhaps in a few years when you actually need the space.
I got a rip-off estimate up here once, but got one done very inexpensively in an outer ex-urb. The change was eye-popping. I won't go into the arm-twisting it took to get my husband onboard....
We are seeing an increase in REO Homes for Sale in Northern virginia at http://www.gohoming.com and this is not signaling a turn in the economy.
Jeremy,
If you would consider N.Reston (I can't recall your commute), an reo came on a week or so ago. A nice contemporary with a two car detached garage, soaring ceilings, two decks, Armstrong Elementary, Walk to RTC, built by Peter Gulick - iow's, very cool.
It needs work and has some mold (due to sump being off) on a couple basement walls.
Ask 380K, comps 550-600K. I heard there may be a contract, but don't know for sure.
They had me at the Totem Poles on the deck!
1657 Cedar Hollow Way, Reston, 20194 FX7233533
p.s. my guy told me 4-8K for licensed mold remediation company with a certificate.
Could be wrong, but I think the area VA Investor is calling "Wolf Den" shows up on MLS/Frankly MLS as "Wolf Trap Woods." It's near Route 7, in the McLean HS district, and a mix of colonials and contemporaries.
Mozart,
Yes, Wolf Trap Woods. One section is called "The Den". Those are all contemporaries. I used to live in the "woods" - colonials. Same HOA.
There's another neighborhood in Vienna between the neighborhood Jeremy was looking at over the weekend (Tiburon) and Wolf Trap Woods called "The Trails." It's also a mix of colonials/split-levels and contemporaries. It's a bit less expensive than Wolf Trap Woods, but also closer to the Town of Vienna.
Thanks for the leads everyone. We're trying to stick to Oakton/Vienna now as a compromise for my commute to Tysons and my wife to Fairfax Hospital. There are several contemporaries in the Cobb Hill neighborhood of Oakton, and more spread amongst the colonials all along the Difficult Run Stream Valley Park. We'll keep looking and if we don't see anything by late Spring 2011 then we'll consider expanding our search area. I don't think it will be a problem since we are both okay with colonials too.
I'm thinking about a few renovations to a potential house.
Any recommendations on people for
1) drywall project
2) kitchen/bath
3) basement finishing
Thanks for all your help!
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