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Saturday, March 20, 2010
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40 comments:
Anybody have an opinion on how accurate Zillow home value estimates are?
Hi, Tom, I think they may be generally OK for a neighborhood, but they don't work for individual houses. For example, my house is currently valued by Zillow at about 12% less than that of a slightly smaller house and lot 4 doors down from me. Arlington values our houses about the same. I have made more improvements and updates than my neighbor has (which neither Arl. nor Zillow accounts for). The only factor that I can see that explains Zillow's valuation is that my neighbor has one more bathroom, which shows up on the Zillow records--and it's in the basement. But that bath. can't possibly be worth 12% of the house value--it's just a statistical artifact.
When I last posted this, several other people here chimed in with similar observations, IIRC.
Franklymls.com says Zillow values are worthless.
I should have written more clearly - Arlington says our houses have about the same value (less than $5K difference). They were built in the same year by the same builder (pre-war).
Interesting report from the OECD (highlighted by Huffington Post and patrick.net):
Is America the "land of opportunity"? Not so much.
A new report from the Organization for Economic Co-Operation and Development (OECD) finds that social mobility between generations is dramatically lower in the U.S. than in many other developed countries.
So if you want your children to climb the socioeconomic ladder higher than you did, move to Canada.
The report finds the U.S. ranking well below Denmark, Australia, Norway, Finland, Canada, Sweden, Germany and Spain in terms of how freely citizens move up or down the social ladder. Only in Italy and Great Britain is the intensity of the relationship between individual and parental earnings even greater.
Article
March 18 (Bloomberg) -- Democratic congressional leaders would raise to 3.8 percent the Obama administration’s proposed new Medicare tax on investment income to generate an estimated $210 billion to help fund a health-care overhaul plan.
The rate is higher than the 2.9 percent President Barack Obama proposed in February. The new tax would apply to income from interest, dividends, annuities, royalties, capital gains and rents for individuals who earn more than $200,000 annually and joint filers reporting more than $250,000, according to the legislation.
“It’s a big deal,” said Clint Stretch, a tax analyst for the consulting firm Deloitte Tax LLC. “It extends dramatically the reach of the Medicare hospital insurance tax.”
The first-time Medicare tax on investment income would start in 2013. It would push tax rates on capital gains and dividends that year to 23.8 percent for high-income people if Congress goes along with Obama’s proposal to let those rates rise to 20 percent in 2011 from the current 15 percent. It would be the highest rate for long-term capital gains since 1997.
Interesting that rent income will be paying the Medicare tax.
tbw,
My eyes, my eyes!!
The house we placed a contract on ended up in a bidding war. We won out, but it feels a bit Pyrrhic, as I'm going to be feeling quite stretched from my conservative position for a considerable period of time.
"Yay! We got the house. Ohshitohshitohshit."
It's our new mantra.
I think this is what it's probably supposed to feel like. Doesn't mean I'm thoroughly enjoying it.
Xpovos,
congrats! you've got the house, the others didn't, and that's what matters.
Congrats, Xpovos!!!
The thing about Zillow is, although I recognize it may not be so accurate about an individual house, I wonder if it's accurate about reporting pricing trends. Regarding my own house (N. Arlington, walking distance to Metro), it says it's increased in value over 10% just since January 1.
zillow may be useful for trend data.
i would absolutely regard it's pricing data as garbage.
Tom,
Dunno about N. Arlington, but the market I've been in (Eastern PWC) was absolutely on fire over the past month or two. Any property that showed well and was priced even close to reasonable has been moving very fast. Stinkers and overpriced are lingering.
This may be the tax credit redux and the spring selling season, but there's some genuine optimism involved too. People are putting their money behind a recovery, even if they're paying it lip services.
I think prices are still down overall (we're paying ~$90/sqft), but up strongly since January makes sense. (We're paying 30% over 2010 assessment--which have been absolutely all over the place in terms of accuracy).
Zillow is pretty accurate for our area, not just pricewise (off a little) but in gauging momentum. Ignoring some of blips, it's at least an additional useful tool.
Thanks, Xpovos. N. Arlington has been doing very well also the past few months. Open houses for places I've visited have been mobbed and gone under contract very quickly.
I'm not actually in the market. Just interested in keeping tabs on my home's value. I must say that my already-strong confidence in N. Arlington has strengthened even more.
Xpovos,
Congratulations! And best wishes.
If you're feeling stretched from your conservative position, beware the sudden urge to fix everything to your liking or buy extra furniture. It really helps to put off spending for a long while until you adjust to everything.
TBW/VA
I'm definitely for an additional tax but I'd have to say that it should all be on capital gains and not interest income and some of the others listed. The top tax bracket for capital gains is only 15%. So while this might bring it closer to 19%, that's still significantly lower than people could pay for simple interest income.
Xpovos, that's great news!
Tom, the Zillow changes are a function of whatever has sold recently. In your neighborhood (and mine), houses are in a variety of conditions. If the recent sales are in better than average condition (e.g., if many are totally updated), then the % will go way up, but that doesn't mean that the neighborhood in general has gone up by the same amount. If the recent sales are estate sales or other homes that haven't been updated, then artificially it will appear that the AVERAGE house has gone DOWN in value.
Aside from that, as I recall, you are in a moderately priced (for N. Arlington) neighborhood (e.g., Waycroft/Willet). As others have noted here, mid-price range (and lower) properties have been selling well for the past 6 months or so, and prices may have bottomed. It's the high end that doesn't appear to be consistently going up. These are just general observations and may or may not be true about your specific neighborhood or micro-neighborhood.
Good point, Jeff.
Jeff,
Time to put on the thinking cap.
It's only a sign of what is to come. Wealth re-distribution.
Xpovos..90sqft..you got a deal. Every place I've bought..its been like that. Yeah..shit..I'm always leary of over extending..I never have because I'm very conservative. I grew up poor as a church mouse and I think that is where it comes from. I think all buyers have some form of second thoughts.
craw space/basement question:
has anyone gotten estimates or any idea the cost/impact of turning a craw space into a basement? we saw a house that could work but only if converting the craw space and existing unfinished basement into a finished basement. the craw space is about 300 sf. i guess the bare minimum work would include 1) digging and getting the dirt out; 2) waterproofing walls/floors; 3) electricity/wiring etc.?
i know it's expensive but wondered if there's even a slightest chance that it'd still feasible...
tks!
Arkey,
Yeah, I think intrinsically it's a steal. Great price per sqft, solid location, huge plot of land that can't be 'eminent domain'ed or made less attractive--it backs to a county owned drainage facility, but even that's far enough away not to be a concern of any sort.
The trouble is that despite the deal, it's a stretch. Probably a bit early for me to be buying, but the deal called; and honestly, $8K helps. It means that the second year which might normally be one where something breaks and everything falls apart will still be safe. But I tried as hard as I could to forget it existed when I was doing my math. Fortunately, I have a habit of saving money and sticking it somewhere and forgetting about it. So, after signing the last version of the contract and fretting about money for a few more minutes I remembered another $4K I had stashed.
So, my only second thoughts are about how much it's going to suck trying to pay this mortgage for the next ten years while inflation fixes that for me.
I've been pretty public about myself, finances, identity, etc. Do people want to see the house, or would they prefer not to know?
Xpovos...about the only thing that can't be patched or repaired to limp thru are pipes and heat..everything else roof..patch..appliances..used from craigs list..just don't start a major renovation that invloves the plumbing. And yes I'd love to see your new home.
MM, turning a crawl space into a basement is probably going to be expensive. It'll involve jacking the house up, digging a hole under it, and building a new foundation under a house already in place. It's _doable_, but fairly expensive on a per-square-foot basis. Don't attempt this one yourself, unless you're a professional engineer and/or a contractor with a background in doing this.
Dave,
Thanks!
I didn't know it's that involved, especially the new foundation part. Half of the space is about 6' tall and the other 4'. So I was only thinking about moving the dirt out of it.
So I guess it makes sense a full basement has good value.
MM,
Perhaps you will get some "ball park" figures on Fixit Forum.
X,
It would be unnatural not to have "buyer's remorse". I forgot your situation, but are raises, promotions in the forecast?
VA, a raise (paltry I'm sure, but not non-existant) is a 99.9% certainty in July. Promotions are likely to happen at some point, if only in the sense that I have skills and can hop jobs if really necessary. I have a standing offer with a prior company if I ever want to go back. Depending on circumstances that might be worth while since the contract has moved from a nobody to Lockheed Martin making it much better for the ones actually doing the work.
But, to get to your gist, yes, I'm certain of my capacity to 'grow into' the mortgage.
Our contracted house.
Xpovos-
Congratulations! I like your new house. Looks like it has been well maintained. And, I like the foyer with its open staircase, probably not as common in houses built in the 1970s as they are today.
I met my husband after he had just purchased his first house (the townhouse we currently live in). I think he was pretty tense about the amount of money he was shelling out for his monthly mortgage payment, too. But it has all turned out fine. We were especially lucky he bought before the worst of the bubble. We also have had sufficient space for our two children to run around and...run me in circles.
xpovos, I think that's a great house on lovely land, and though I don't know Woodbridge, it seems like an excellent price for what you are getting.
Add me to those who have said they felt much as you did before buying their first house, but it all worked out.
Xpovos..Nice home..wonderful size lot..I also think it looks well maintained and taken care of. Nice size house, too. I think its a bargain. It certainly is currently livable for 90 a sqft I thought you had bought a fixer. You did great.
X,
That back yard is awsome! Very nice house. Congrats!
Xpovos,
That is a nice solid house, on a great lot, and from the description it sounds like you shouldn't have too many surprises in the near term maintainence wise. (Or as few as one can hope for). I hate the stretched feeling too, but I think in the end you'll be glad you bought as much house and land as you did and from someone who appears to have cared about maintainence and had the funds to take care of it. Because unless you move for a different job, I see no reason you'll ever need to incur any transaction costs in the future.
Great house! Great price. Congratulations!!!!!!!!
Xpovos,
Congratulations! That's an awesome place. The jitters and second guessing go away pretty quickly after you make the first couple of payments.
I also find comfort in the fact that a lot of the long time bears on this website (myself included) are all pulling the trigger.
In my humble opinion, the corner has been turned on any major downside risks.
My $0.02
mytwocents,
Agreed on the "after the first couple payments" thing. We've only made one so far, but even that was a relief. With each one, and continuing to see your frugalness pay off, the payment, even if it's higher than rent was (I'm not sure whether that's the case for xpovos or not) will start feeling normal and manageable. I know that was the case each time my rent went up "drastically" when moving for jobs or a better commute or to go month-to-month.
$200 or even $400 a month seems like a ton, until you notice that many of the one-time purchase expenses you had in the past, well, are purchased, so you don't need to budget for them. (Like dishes, pots and pans, mattress pads, pillows, whatever household goods you didn't get as hand-me-downs and needed to buy once upon a time.) And then you get a raise or two and you're fine, even dandy. You find you do have money for things like 30-year term life insurance, or whatever else you had been meaning to do but had put off...
Oh, yeah, this place is going to be a substantial increase over renting. Cheapest version of the loan gives me a ballpark of $300/mo more.
We'll adjust.
Xpovos,
That's painful, but I've had similar jumps (dollar-wise, not necessarily percentage). Suburban NJ to Boston (+$600) suburbs of Boston to MD (+$450), and again from MD to NoVa (+$200) (although that was significantly mitigated by the lower income taxes) and then going month-to-month (+$300).
It sucks, but yes, you will adjust. And you have a great house!!! And you don't need to save for a downpayment anymore! That money can go towards a maintainence reserve and then college and retirement. It'll be fine. It'll be really nice to be keeping that money, instead of knowing you'll eventually have to pour it into a house. (or being tempted to do so). Now you can diversify.
It'll be awesome. You've been very conservative, and now you'll really be able to start accumulating that cushion and retirement that you want, having fixed your housing cost by and large. (please forgive the fact that I am now assuming that you want what I want)
cara,
No problem, by and large, we do. The next big expenditure will be the medical bills for child #2. As burdensome as that will be, and the combined increase in housing costs and decrease in salary (wife leaving work after two kids) I know there are huge advantages there too, even financially. I won't be driving in to work as often and there's the huge tax benefit too. House + 3 dependents means that I'll be paying practically nothing in federal taxes compared to what I've been paying.
Xpovos,
congrats, looks like a very nice home. if commute works for you this is a very reasonable choice.
Oh, mytwocents,
I've been thinking about that a lot too, how many of our bears are buying--some of them despite being bears still! I take my buying to be a perfect contrarian signal. We are at the peak of this upturn and are getting ready for our next down leg. :-D
Honestly, though, I try to always put my money where my mouth is. In October 2007 I took all of my retirement savings out of stocks and stuck it in guaranteed growth positions. Last week I finally moved the guaranteed stuff back into stocks. In the meantime, all new contributions had been going straight to stocks. I missed the absolute bottom by a year it seems, and while I see no reason why this market is working the way it is--I see too many storm clouds on the horizon--the fact is, they're on the horizon, and that's a long way off. I'll enjoy the sunny weather while it's here, even if I can't understand it.
So, I'm sticking my money where my mouth is in the housing market too. I see an awesome home at an intrinsically good price, I'm on it. With a stick to beat off the other offers, as necessary.
Xpovos,
I used to tell all of my friends that when I finally bought, be prepared to see their housing values plummet. :)
Still, I have a friend who managed to buy a rundown foreclosure in late 2008 when the foreclosure inventories were tremendous. I figured him getting a great deal in the midst of professional flippers and land lords meant it was a sign of peak availability. Sure enough 6 months later when I started looking things were mighty picked over.
Following on that was CRT's excellent analysis and final conclusions on the Arlington market.
And then I started seeing people like myself that had been on the sidelines for a long time start lining up purchases.
I figured I'd make the jump. Plus, I really wanted my own place.
At this point, try not to pay too much attention to the overly pessimistic bears on this site. I'm not advocating a blind eye, mind you, just for your own peace of mind for the next couple of months!
My $0.02
VA Investor,
With regards to getting loans, part of the thread from the weekend, I was required to make a minimum downpayment of 15% if I wanted to get a conventional loan at the best rates (4.75% 30yr/fixed during 4th quarter 2009) and I have an 800+ fico.
I don't know about you but I think that's much more stringent than years past. Additionally, I had to provide 3 months worth of bank statements to verify assets and that I actually had the money and wasn't borrowing it.
Thought you'd like some actual feedback and not "I typed my stats into bankrate..." You are correct in that things are tighter.
My $0.02
Cara,
One of the reasons I wanted to throw that out there is because, as VA_investor pointed out, there's a lot of hyperbole being thrown around at how easy lending (still) is. It has been my experience that it is not nearly the same now as it was in the 2004-05 time frame.
My $0.02
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