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Saturday, March 13, 2010
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43 comments:
Anonymous, if prices do start to tank in Arlington, I hope you're around here at the time. Will be interesting to see if you can take it with as much joy as you dish it.
Kevin: I think Anonymous said he wants to buy in Arlington in the summer when his lease expires. Wouldn't it make him happy if prices start to tank in Arlington? I can't remember if you want to buy in Arlington, but you should also be happy if prices start to tank there.
Me, I looked at the econ and financing fundamentals and the direction of my life, and determined that prices for what I wanted were not going to tank in Arlington. So I bought. If you think prices are going to tank for what you want to buy, don't buy. Anon thinks prices are not going to tank for what he wants to buy, so he will buy when he is ready/out of his lease. It sounds like Anon understands the realities of the Arlington housing market while you are trying to work outside those realities. Again, do what you want to do, but the realities are not on your side.
Yep. I can hardly imagine how big that crow would be if I had to choke it down :)
Condo buyer, I'm not an AR lurker, never really considered buying there. I think the Anonymous would probably rather not see prices go down significantly just so he can enjoy rubbing it in anybody's face that dared make a prediction in the past that ended up not happening (yet).
Another Saturday of hunting. The rain today should be extra fun. I'm not getting any good vibes from any of the properties, though.
I'll post another recap, and some after-fact results and wrap-up from last time.
Kev -- its my own personal cross to bear. I was literally days away from buying when someone told me about this thing called "the bubble".
I was introduced me to a magical world of people who seemed so wise with all their metrics and charts and what not. They told me not to worry -- Arlington is not "different" or "special" -- thats just "wishful thinking". I listened and learned, eagerly lapped up their doom aid -- glug, glug, glug, glug, glug.
To be sure, they were right about large swaths of this area, and saved alot of people alot of money. However, their predictions for areas like Arlington turned out to be an abject, miserable failure.
As I result, I am now 7 years older and it will cost me a cool quarter of a million dollars more when I do buy. Like I said, I got issues.
Xpovos - I like house hunting in the rain. Defects in roofs, gutters, land and foundation are more obvious.
"I think the Anonymous would probably rather not see prices go down significantly just so he can enjoy rubbing it in anybody's face that dared make a prediction in the past that ended up not happening (yet)."
Actually you have this kind of backwards.
He claims he was 100% ready to buy back in 2002 and that some nefarious people convinced him that it was a bad time to buy... and he has been waiting ever since.
Now he tries to irritate people here rather than just accepting that it was his decision and there is really nobody else for him to blame.
The Anonymous said...
As I result, I am now 7 years older and it will cost me a cool quarter of a million dollars more when I do buy. Like I said, I got issues.
Well that just... sucks. I don't know what to say except that it's probably a bigger sign that Arlington's day will come, though the fundamental changes in its demographics over the last decade will mitigate owners' "losses". The vast majority of people around here that stayed away from housing during the bubble have no regrets. Is Arlington the only place you're looking? Prices in Falls Church have fallen considerably.
If you pay close attention to Arlington metrics, the county has too much inventory compared to 1999. Granted it can be absorbed since the population has grown since 1999. But, I have a feeling a lot of those homes in the $700s can go down in price. There is room for that. The sweet spot is $600k, but there are not many homes at that price range. I think those who want to sell for more may see their house prices go down. Of course I am talking basically about small ramblers or small colonials, in the 50s, not really updated. It takes a lot to stomach buying what is in my opinion a non-livable house and paying that much for it. To me all those homes are tear downs.
The Anon, some of the better neighborhoods in Arl have dropped 10% or more since the peak, while others have declined much less, if you believe the Arl. Co. assessments accurately indicate comparative value (we all know they are off for valuing individual houses because the Co. doesn't factor in some important variables). And as dc2 said, if you look at the inventory tables Harriet posted recently, the inventory in Arl. is much closer to the peak year, and farther from the trough year, than is true for most other counties. At the same time, houses that seem fairly priced are going quickly, while others sit, sit, sit.
I really don't see a clear pattern as to which neighborhoods have gone done more or less. And I don't know if these facts suggest that the ones that are staying high right now will decline later. But if you aren't limited to just one neighborhood in Arl., you may find a deal. Like others here, I am also expanding my window shopping beyond Arl., and that may work for you as well.
"gone down", not "gone done." Sorry.
Oh, I dunno about tear downs dc2
Seems like this property in your "sweet spot" would be worth putting money into, provided nothing too drastic was going on in the basement. A good bit of money really but still worth saving IMHO.
http://franklymls.com/AR7204949
And I very much like the looks of this one, which I would call Classic, not really updated, though it is currently Under Contract (it didn't linger long under DOM)
http://franklymls.com/AR7270688
c, your second one is a good example of being in a good neighborhood that's gone down about 10%. In addition to probably needed $150K of work, the first one is on a busy street (condition and busy-street location being two of the major factors Arl. doesn't consider). If one can stand the busy street, and if the house is structurally sound, a low ball offer may get you a pretty good-sized house (by Arl. standards) in a good school zone.
ps that lot is huge by Arl. standards for a house that size.
And my $150K estimate is minimum - it would be more than that to do all that an owner might want to do (unless you can do the work yourself or are an investor, etc., with a volume discount), but it wouldn't all have to be done overnight.
While on the subject of "its moving in", I might as well post the annual YOY median price changes by county. I like this measure because while any individual month can be subject to wide swings, the annual reading tends to smooth things out.
Long time readers will recall that from the year 2000 to the peak, median prices in each county grew as follows:
Arl +129%
Alx +134%
Ffx +129%
Lou +132%
PWC +182%
Given its disproportionate rise, PWC was destined to suffer a horiffic crash. The other 4 were so close in gains, it was assumed the losses would be close between them.
By the end of 2008, the losses in PWC were severe as expected. Yet the relatively light losses suffered by Arl & Alex vs Ffx & Lou led to a widening price differential. Thus, the gains from 2000-2008 were now as follows:
Arl +105%
Alx +115%
Ffx + 78%
Lou + 67%
PWC + 60%
At this point, the calls of "its moving in" were at a fevered pitch, the assumption being, given enough time, all areas would have roughly equal gains. I however disagreed, noting the disproportionate income growth and other demographic changes which suggested Arl (& to a lesser extent Alex) had become more valuable (relative to the rest) than they were before. It was thus my assumption that contrary to "its moving in/it just takes later to hit them", Arl & Alex were at the same point in the correction cycle, just destined to not be hit as hard.
So, were the early losses in 2009 enough to offset the gains later in the year? Was this the year Arl & Alex would suffer a more severe downturn than the rest such that they would all balance out? Turns out, the 2009 median price movement by county was as follows:
Arl + 0.22%
Alx - 5.49%
Ffx - 4.85%
Lou - 4.28%
PWC -10.50%
While the gap did close slightly for Alex, relative to Ffx & Lou, that wasnt the case in Arl. After 3 straight years of losses, Arlington, the least hit area to begin with, was the first to post a slight gain. Thus the price differential for the period 2000-2009 is as great as it has ever been:
Arl +106%
Alx +104%
Ffx + 69%
Lou + 60%
PWC + 43%
In my opinion, the differential between Arl & Alex versus the rest of the area is too great. My best guess is that a 20-25% differential is all that is supported by disproportionate income growth & demographic shifts. Therefore, I do expect this differential to diminish over time.
That said however, it is certainly in doubt that the differential will lessen via price drops. Given the area performance for the last few months, its very possible for PWC, Lou & Ffx to all post gains greater than those posted in Arl & Alex.
2010 will mark the 5th year of this correction cycle. While govt supports may or may not have delayed part of the correction cycle, it is simply ludicrous to believe that Arl & Alex are going to suffer a disproportionate loss (relative to the rest of the area) from this point forward. IMO, "its moving in" was on its last legs going into 2008. The results of 2009 confirmed, its moving in was DOA from the start.
To The Anonymous,
In addition to "it's moving in", don't forget that Einstein grade theory, "the Substitution Effect." It will garner the Nobel Prize for economics in a few years.
Like you, I heard the chants in 2002, "it's a bubble, a bubble, I tell you."
"Have a glass of doomaid."
"Sell your place in Immundria now, you can thank me later."
I didn't sell. I have monitored the doom-talk which is interesting and funny. The Glug-glug is very funny.
My place is worth much more than it did in 2002.
Ah, the return of KH/@J@... misunderstanding very simple concepts as usual.
The substitution effect is fundamental economic behavior.
You may not understand it, but anyone who has studied economics will have been exposed to the concept in their first semester.
Type it into wikipedia sometime and spare us your embarrassing inability to grasp the concept.
CRT said,
"In my opinion, the differential between Arl & Alex versus the rest of the area is too great. My best guess is that a 20-25% differential is all that is supported by disproportionate income growth & demographic shifts."
How do you compute a 20-25% differential between Arlington and other counties to be fair? What is the number based on, exactly. Please give us figures to understand your estimate.
C,
Thanks. Both houses have potential but they are both on busy streets or close to a very busy street. That is why the price reflects it (66). I wouldn't purchase or consider either one.
i was under the impression the CS national index was inflation adjusted, but the regionals aren't...
And S-P doesn't provide much useful documentation.
http://jamesoncapitalllc.net/wp-content/uploads/2008/12/case-shiller-chart-updated.png
here's it inflation adjusted to1890,
look how flat it is. I don't expect it to get much better
"Leroy said...
Now he tries to irritate people here rather than just accepting that it was his decision and there is really nobody else for him to blame."
Its true, I have no one to blame but myself for listening to the doomers such as yourself. Back in my lurking days, I used to really enjoy seeing you, (along with your henchmen Terminator X, John Fountain & Neil) take Lance & his merry band of idiots to task for their fantasy views on DC. You especially seemed to be very much the glue that held the doomer view together -- letting the henchmen run loose when warranted, and reigning them in when they got out of line.
Cracks in the facade emerged however when CRT appeared and poked major holes in the view that all areas were going to implode. His views were very reasonable and unlike the "pumpers" you dismissed as trolls from days past. In the face of his sometimes devastating critique of "its moving in" all you & the doomers could offer in response was to say "maybe", but more often than not, he was just another "pumper" of Lances "new paradigm" or the response was "it just takes longer" to hit the immunozones. That should have been a sign to me that the emperor has no clothes, but I ignored it.
Another sign was when your court jestor, Neil ran away in Mid 08. Neil was an idiot when it came to the ins and outs of this area, but he knew data, and what it meant. He later admitted he ran away became apparent to him the data suggested Arlington would suffer only half the losses that the other areas did and he didnt want to hear it from Lance. Still, I ignored it as you, John Fountain & Terminator X held firm in your view it will hit the immunozones -- eventually.
Next was the loss of your liege John Fountain in late 08. JF bought in Arlington, claiming to get a house at the 40% off prices he knew would eventually come -- meaning he was either a liar or the luckiest guy on the face of the planet. This should have been a major sign to me, but I ignored that too.
Then, suddenly, in early 09 2 events happened.
First your trusty squire Terminator X just disappeared. He kinda sorta admitted he was wrong about the Immunozones, but not really. Looks like he too got out while the getting was good.
Second, it was Cara & CRT's wonderful analysis of the ACS & other data on the Immunozones. Their work basically blew the doomer view out of the water -- apparently the "new paradigm" was true in certain areas after all.
Finally, it was the turnaround in prices which you completely missed. It first appeared in Arlington which you said was "only" due to its very bad number the year before, or other such nonsense. Then, as those increases continued in the sucessive months in Harriets "decade of sales" series, you suddenly went silent.
So in the end, you are right. Had I never listened to you or similar doomers in days past, I very much wouldnt be here now. I am bitter, angry, and disappointed, and in the end, its all my fault. Most of the doomers past are now gone. Fortunately for me & my misplaced anger, you are still here, defending your views til the bitter end. Thank you for that.
"Pat said...
here's it inflation adjusted to1890,
look how flat it is. I don't expect it to get much better"
Pat -- here I speak for myself and (I think) Housebyer too -- we dont think it will get much better either.
Still, though, that is an INFLATION ADJUSTED chart, not Robert Shiller's NOMINAL chart.
Your INFLATION ADJUSTED chart showed the 1980s boom peaked at 123 and bottomed at like 110. Just understand, that in NOMINAL terms that peak was in the low 90s and the bottom was in the high 80s.
So in INFLATION ADJUSTED terms like this INFLATION ADJUSTED chart of yours, we agree, it will settle around 100.
However, in the world of NOMINAL charts that Case Shiller uses -- the one that everyone else uses -- we think that 130 (for now) is the bottom, inflating over time as inflation continues.
Anon
however we have been in an era of very bizarre inflation.
I'm not even sure what inflation is, with OERs collapsing the last few years, are we even deflating?
the C-S stuff is confusing, some of it's normalized to 2000, with an index of 100 some is inflation adjusted to 1890, and some is just nominal.
I'm still very troubled that the Feds have weighed in so hard in the market, 8K buyers bribes, 5% money, 3% FHA loans.
the feds are 90% of the market for mortgages
All of those indicate the market is still very sick.
That said I have a offer on a place.
it's a lowball on a short sale, but,
there are opportunities out there.
I think this year there will be a lot more.
Wow, I have been promoted to captain of the army of doom!
Or is that general?
Honestly, it is pretty pathetic that the best you can do is make up lies about what I predicted.
I have provided you my actual predictions over and over again... predictions that explicitly ruled out the idea that "all areas would implode" or any of the other idiotic things you have invented and tried to pin on me.
At first I thought you were just having trouble understanding what was being said, but at this point I can only conclude that your basic problem is that you need a villain to blame for this mistake you think you made years before we ever crossed paths and have chosen me... how charming.
"Had I never listened to you or similar doomers in days past, I very much wouldnt be here now. I am bitter, angry, and disappointed, and in the end, its all my fault. Most of the doomers past are now gone. Fortunately for me & my misplaced anger, you are still here, defending your views til the bitter end. Thank you for that."
Ah yes... so you more or less admit it.
You have to blame somebody for your own mistake, and failing to find anyone who you can plausibly blame you are happy to go after someone you only encountered years after your mistake and that never had anything to do with it.
I see that since you are so desperate to find someone to blame for your own failure you are happy to try to invent one... lying about my predictions and track record out of some kind of pathetic need to "win" something.
Honestly I find this whole thing amusing in a way. Poor you... boo hoo... priced out forever...
Your life would be great and you would be living in a N Arlington mansion if those evil bubble believers from 2003 hadn't gotten into your head... now it is all gone.. the dream is dead... lol.
Here you have been saving for what? 7 years? You should be sitting on a mountain of cash.
If you had the income to buy in a nice area in 2002-2003 then you should EASILY have the savings to buy in a nice area today... except you don't seem to.
My guess is that your problems extend way way beyond failing to buy in 2003.
Seven years of income growth, seven years of savings, seven years of studying the market...and what has it gotten you?
A bad attitude and a need to find a scapegoat apparently...
You really might be the poster-child for what VA_Investor has always said about (some) renters... they always claim to be saving like crazy but as the years go by the money never seems to have amounted to much...
The Anon... While I agree with you that Leroy may be being a bit charitable with his former predictions, lets look at this in a bit of a vacuum.
Performance 2000-peak
Arl +129%
Alx +134%
Ffx +129%
Lou +132%
Given their very similar runup, why SHOULDNT he think Arlington will "revert to the mean" just as the others were? In the early days, it was the logical decision to think Arl & Alex will fare as poorly as the others during the bursting. It was the illogical decision to say it was different there.
And if you told me back in 2005, back before any of us had really thought through this well, that in 2009 the difference in retained gains was 40+ points between Arl & Lou, I would have said you were crazy. Its very possible, I too would have said "its moving in/its just taking longer".
Recall too, that Leroy didnt have access to those income stats showing disparate performance til early 2009. None of us did. Its true, there really were some amazing income and demographic changes going on there to justify many of the gains, but without the stats, that was indeed just wishful thinking.
Far be it for me to tell you how to run your life, but if you really can pay for it as you said, may I suggest you just bite the bullet and buy. Something to get your focus off the bubble and perhaps give you some closure.
"Given their very similar runup, why SHOULDNT he think Arlington will "revert to the mean" just as the others were? In the early days, it was the logical decision to think Arl & Alex will fare as poorly as the others during the bursting. It was the illogical decision to say it was different there."
Here is the problem CRT... that wasn't what I was predicting...
I always said that the inner areas and most desirable areas would see the smallest declines.
Most of those 2006-2007 debates that The Anonymous is now working so hard to misunderstand revolved around "is there a bubble?" At first we had pumpers like lance and VA_Investor doubting whether there was even a bubble "It is a normal cycle"-VA_Investor or "Things are just getting started because it is a new paradigm and DC is the capital of the world"-Lance
Then once it became undeniable that prices were falling in parts of the area we had people claiming that inside the beltway was immune, etc etc.
I certainly stated that the bust would reach all parts of the region(as it has), but that was never meant to mean that all parts of the region would feel the bust equally.
In my next post I will include a few of my own posts from 2006, 2007, 2008 where I said explicitly that I did not expect the inner areas to see the same kind of bust as the outer areas.
" As always Condos and the outer suburbs will be hit the hardest. I think over the next five years median prices in this area will drop 30-45% with about half of that coming from inflation. Following that period another 5 or so years of a stagnant market would normally be expected but I am not going to pretend to be able to see that far out as inflation, the economy and everything else plays a role in that." - Leroy 22 Sept, 2006.
http://bubblemeter.blogspot.com/2006/09/mortgage-bankers-association.html
"Prices in Georgetown have been stable, and may actually be slightly up from last year. The lowest end of the housing market is getting hit first, and it will get hit the hardest in the end. A SFH in Georgetown is going to be a relatively attractive property regardless of what the market does and it is not going to get hit nearly as hard as condos or far out suburban houses."-Leroy 17 Jan 2007
http://bubblemeter.blogspot.com/2007/01/nytimes-buyers-scarce-many-condos-are.html
"I can't speak for anyone but myself obviously, but I think it is pretty obvious the more desirable areas will see smaller declines than the least desirable areas by a wide margin.
One of the more noteworthy aspects of the recent bubble was that during the frenzy anything would sell at ridiculous prices. Tiny poorly constructed houses, run down rowhouses with boarded up neighbors, townhouses at the edge of the city, houses in crime plagued neighborhoods, it didn't matter.... they all commanded high prices.
Now that the bust is moving through the area it is obvious that less desirable properties are getting hit earlier and harder than more desirable properties.
This should be no surprise of course. In a market where there are too few buyers for the number of sellers what do you expect to sell?
I suspect we will see price stabilization around the 2003-2004 level with lower end areas getting hit harder than higher end areas. Once prices stabilize we will see a long period of stagnant prices while inflation will continue to eat away at values.
In the end we will return to fundamentals. The question will be exactly what the fundamentals at that point will be. We have had huge numbers of apartments and condos added to the market on the one hand, while on the other the city continues to grow and the economy here is strong. If there is a serious recession or a large cut in government spending obviously prices will take a greater hit.
As clueless as lance is, he has occasionally been on target in pointing out that neighborhoods that really have changed play by different rules.(Which isn't to say they won't decline in value, they may simply decline less.)
Personally I think a lot of the "gentrification" that took place during the bubble was an illusion. High prices drove desperate buyers to move into neighborhoods they wouldn't previously have considered the same way it drove buyers to buy "million dollar" homes on tiny lots next to major roads. We know these people bought, but is their simple presence "gentrification?" Will they stay? Only time will tell.
I think for the most part the sorts of buyers that were forced to buy in bad neighborhoods were fringe buyers from the start and will probably be less likely to stay in those houses over the long run. The same is true of those who convinced themselves that all bad neighborhoods eventually "gentrify" and bought in hopes of making a profit." - Leroy 10 April 2008
http://novabubblefallout.blogspot.com/2008/04/decade-of-march-sales.html
"The outer areas get hit first because they have the greatest percentage of marginal and recent buyers, but in the long run the bust will reach everywhere where bubble pricing was seen.(which is the whole region)
The inner areas are getting hit slower, but they are now feeling the bust and will ultimately see significant price declines.(Though not as much as places like PWC...)"- Leroy 21 May 2008
http://novabubblefallout.blogspot.com/2008/05/arlington-county-on-market.html
In summary I really don't know what else to say.
Aspects of my predictions have proven wrong, but I never predicted that all areas of the region would "implode" or that Arlington would see the same sort of decline as PWC.
I expected the exact opposite and said so clearly enough on more than one occasion.
If you asked me whether the bust would reach the whole region, a common discussion in the context of "immunozones" etc, then my answer would of course have been yes... all areas experienced a run-up and all areas have since seen a decline.
That isn't the same thing as predicting all areas would experience identical declines.
The pathetic thing about all of this is that for some reason The Anonymous has decided he needs to find someone to blame for his decisions besides himself and in the absence of anyone who was actually around in 2002-2003 or who was making the sorts of predictions he claims people made to him... he seems happy to make up lies about someone who wasn't around when he made his decision and who didn't make those predictions.
CRT said...
"...Recall too, that Leroy didnt have access to those income stats showing disparate performance til early 2009. None of us did. Its true, there really were some amazing income and demographic changes going on there to justify many of the gains, but without the stats, that was indeed just wishful thinking..."
i think we've all agreed it's more than income because income along don't/won't support current price level. it's also bubble-equity + old money.
Leroy - I think the Anonymous' (and now my) point can be summed up in this thread from Jan 2009, a mere few months away from Arlington & the rest of the area prices going positive.
This is an extremely long and multifacted thread, but I will take choice snippets to keep the focus straight. I hope you find this to be fair, but if not here is the whole thing.
http://novabubblefallout.blogspot.com/2009/01/northern-virginia-bits-bucket-1152009.html
"CRT: As long as Arlington remains the first choice of many, this process is playing out over and over again. Each time as their first choice falls enough to reach their market clearing price, it is purchased over the second choice, even though the second choice may have fallen by a greater amount in percentage terms.
Leroy: I don't know that I agree with that reasoning CRT... With the growing disparity between the prices in the close in areas and those in farther out areas the substitution effect will strengthen...Arlington and Alexandria have been shielded to a large extent, but their prices are dropping very rapidly by any standards other than those of this current bust. In the end they will end up returning to SOMETHING SIMILAR TO THEIR HISTORICAL TRENDLINE. (emphasis mine)
CRT: I agree that this should happen, yet, this is looking more and more debatable as time moves by..."
Leroy: No, it really isn't.
This is just a case where we are watching something so closely that we are missing the forest for the trees.
The real estate market moves very very slowly. We are already seeing large declines in close in areas. They have not declined as much as the outer areas, and probably never will, but they have a long long way to go.
The only way to argue that one area or another will somehow stay at bubble level pricing is to SHOW A MASSIVE SHIFT IN THE FUNDAMENTALS IN THAT AREA. (emphasis mine)
CRT: Suppose that generation ago, you had 95% of people who wanted to live a suburban lifestyle, and 5% who wanted to live an urban lifestyle. Housing and prices would reflect those desires via the mechanisms of supply and demand.
Suppose now, 10% of people wanted to live an urban lifestyle. The problem is, you have now doubled demand and not doubled supply. In this case, the only way to achieve a market clearing price is for prices to rise.
Suppose too there is a bubble. As it deflates, so long as the demand is still there, those that were formerly priced out will migrate back in as soon as it hits their market clearing price. To put it in parlance that everyone here can understand, there are knifecatchers out there every step of the way to soften the blow. Again, prices go down, but just not as much as they would have if we still had the 95/5% situation a generation ago.
Leroy: This is a "new paradigm" argument.
Basically what you are saying is "what if the fundamental rules have changed because buyers just want something different now than they used to?"
That doesn't mean it is wrong, but I for one am going to need a lot of convincing that that is what is indeed happening when we have other more mundane explanations for what we are seeing.
If our two basic theories are:
1. We have a massive and well documented real estate bubble that affected this region heavily. The bursting of the bubble has not played out identically in all areas, resulting in some areas falling faster than others.
2. Buyers today just don't want the same thing they wanted a few years ago and are now willing to pay far more for a house in Arlington relative to similar houses in the rest of the region than they have in the past.
I JUST HAVENT SEEN MUCH EVIDENCE that suggests buyers today are really that different from buyers 10 years ago. Slightly... maybe, but not enough to explain a swing as large as we are seeing."
Seen enough yet?
I am honestly not sure what your intent was in posting that.
Even in that same thread I stated that I did not expect to see Arlington fall to the same extent as the outer areas:
"We are already seeing large declines in close in areas. They have not declined as much as the outer areas, and probably never will, but they have a long long way to go. "
Now in retrospect I wish I hadn't said they have a "long long way to go," as I now suspect most of additional real value lost will come in the form of inflation, but hey, prior to most of the government intervention and given the trends at the time it seemed reasonable.
My basic argument was that there is a historical relative pricing between the different areas in Northern VA.(This is where the substitution effect discussion came in, a concept I know you understand even if some here struggle with it.)
It is possible for these relative pricing relationships to change, but I hadn't seen evidence of a sufficiently radical change to explain why Arlington would remain at peak pricing while everywhere else fell.
You yourself said something very similar in this same thread:
"While the gap did close slightly for Alex, relative to Ffx & Lou, that wasnt the case in Arl. After 3 straight years of losses, Arlington, the least hit area to begin with, was the first to post a slight gain. Thus the price differential for the period 2000-2009 is as great as it has ever been:
Arl +106%
Alx +104%
Ffx + 69%
Lou + 60%
PWC + 43%
In my opinion, the differential between Arl & Alex versus the rest of the area is too great. My best guess is that a 20-25% differential is all that is supported by disproportionate income growth & demographic shifts. Therefore, I do expect this differential to diminish over time."-CRT
As for this portion:
"With the growing disparity between the prices in the close in areas and those in farther out areas the substitution effect will strengthen...Arlington and Alexandria have been shielded to a large extent, but their prices are dropping very rapidly by any standards other than those of this current bust. In the end they will end up returning to SOMETHING SIMILAR TO THEIR HISTORICAL TRENDLINE. "
Again, I am not sure I am seeing what you are in this. I see that you emphasized the portion about Arlington returning to something similar to the historical trend-line, and I assume you are reading this to mean some kind of doomsday drop. Arlington never deviated as far from its historical trend-line as did areas like PWC and I said over and over again that I did not expect Arlington to see the same kind of drop.(even in this same thread)
Things can and do change within cities and I am certainly open to the possibility that Arlington has become somewhat more valuable relative to some other areas, but I don't believe it to be a night and day difference.
The Anonymous,
You keep saying it was a mistake not to buy in 2002 in *Arlington.* Incorrect. It would have been a mistake no matter what part of the area you were looking in. I don't think prices have bottomed below 2002 prices anywhere. Except perhaps the lowest of the lowest end which you were certainly never going to look at.
Even if you had been looking in Ashburn in 2002 you should have bought. Heck, even if you were in an Ashburn neighborhood that is now listing for less than 2002 (I don't think any such neighborhoods exist...), then you'd still have eight years of mortgage payments.
So enough of this Arlington discussion. My understanding is we are talking more about whether 2007-10 Arlington prices make sense. Not 2002 prices. 2002 prices were fine as they were pretty much everywhere in the region.
The Anonymous said
I was introduced me to a magical world of people who seemed so wise with all their metrics and charts and what not. They told me not to worry -- Arlington is not "different" or "special" -- thats just "wishful thinking". I listened and learned, eagerly lapped up their doom aid -- glug, glug, glug, glug, glug.
My guess is their metrics were not flawed but their comparison point was. What I mean is you probably saw them put together some charts on where Arlington prices had gone between 1997-2002 or something like that. If they had moved the comparison point back to 1988 or 1990 the 2002 numbers would not have looked crazy but instead a correction to the buyer's market of 1993-98.
The Anonymous said
Second, it was Cara & CRT's wonderful analysis of the ACS & other data on the Immunozones. Their work basically blew the doomer view out of the water -- apparently the "new paradigm" was true in certain areas after all.
Remind me when did you moved to this area again? How the h*ll did you live in Arlington (presumably you were renting a few years before almost buying in 2002) and noticed the large changes? You never felt like things were getting nicer/safer in Arlington or DC? I don't need to argue on the internet all day or read the ACS data to know the area around the 9:30 Club in DC is a lot safer today than it was even a few years ago.
TBW,
Having lived in Arlington since 1987 I haven't noticed any change in how safe the neighborhoods around me have become in that time (Roughly, the areas North of Lee Highway and east of Sycamore and Powhatan). In terms of nicer, a lot of small old homes were torn down since then to be replaced by larger new ones, but it wasn't as if these smaller homes constituted urban blight. In fact, a lot of the neighbors preferred the old ones. Yet, based on the assessment of my unchanged house over that time, home prices have more than tripled and are only down slightly from the peak. I don't think you can make a case for these price levels based on the fact that Arlington got safer and nicer over that time. There are a lot of other areas of Arlington that were also very safe and nice then, and are very safe and nice now.
I can easily see how someone could live in Arlington for a long time and not notice any changes in how nice it was or how safe it was. (They probably couldn't help noticing that there are a lot more restaurants, but I don't think that explains the appreciation). The "immunozone" differential appears to apply whether or not an area of Arlington got discernibly safer or nicer.
I honestly cannot see any changes in the safety or niceness of my area of Arlington and a lot of other areas of Arlington, that would account for how prices held up versus other Northern Virginia suburbs. But I've only lived in Arlington 23 years. How long have you lived here?
(I think if you were going to look for explanations you'd be better off looking at the demographics of the region - more people with the income or wealth to pay a lot for a close-in house in a nice area - and worsening traffic that makes that shifts the trade-off between cost and time).
KeithK thank you for defending Arlington's "safeness and niceness." I have lived in Arlington for 76 years as of March 26 (except for two years in Korea and Okinawa)and I lived for about 65 years in a part of Arlington TBW would never consider safe or nice. But it was safe or nice and home to me and many other people. When I moved to a condo in Rosslyn people in my neighborhood warned me that Rosslyn was not nice because it was deserted at night and neighbors did not know each other. Well I think Rosslyn and my condo are both safe and nice. TBW has a typical suburban mindset that anything that hints of urban is not safe or nice. He wants to think that Arlington pre-Metro was filled with urban blight because that is why his parents moved to Vienna and he was raised with that perception. The demographics of Arlington have changed dramatically, but that did not make it safer or nicer, it just made it more affluent. Many other areas, including Vienna, became more affluent, but I don't think that made Vienna any safer or nicer than it was 50 years ago. It is just more built up and has more nice people.
KeithK,
If you are asking how long I've lived in the DC area then longer than 23 years.
You said
(Roughly, the areas North of Lee Highway and east of Sycamore and Powhatan).
We are not talking about the areas north of Lee Highway!! We are talking about the Metro corridors like Ballston, Clarendon, Crystal City, and some SFH/TH neighborhoods that surround them. I know I didn't make that clear but we always make that distinction so I thought that was understood.
If you don't think Clarendon in 2010 is different than it was in 1995 then I don't know what to tell you. I never said it was a slum in 1995 but it certainly was not as upscale as it is now.
reecon said
He wants to think that Arlington pre-Metro was filled with urban blight because that is why his parents moved to Vienna and he was raised with that perception.
WOW. A lot of assumptions there. How about my parents were working in Fairfax County. Do they now have permission to have bought a home in Fairfax County instead of Arlington?
reecon-
I think TBW and I have similar views on this. If so I definitely do not think everything that is urban is dangerous. I have no problem walking around Georgetown, Dupont, Ballston-Clarendon, Rossyln... On the other hand 20 years ago things were much worse. Obviously it was never as bad as Anacostia or any of the really rough parts of DC, but that does not mean it was safe.
Here are the crime numbers. arlington crime rates
If you notice in 1990 there were ~3x as much crime as there is currently. This includes far more murders, forcible rates, robbery... So I think you should be realistic and at least admit that Arlington is much safer now than in the past. So it may not have been a war zone in the past, but it also wasn't an area where you wanted your kids walking around at night by themselves. Although I could understand if you ignored the 70s-90s. When you grew up crime was low and currently crime is low so these time frames may be the most important when thinking about crime in an area.
Even after the significant improvement Arlington still has ~400 violent crimes per year, while Fairfax county has ~1,000 fairfax crime" This is a 2.5x factor, but Fairfax has 5x as much population, so it is still 2x as safe as Arlington.
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