Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Saturday, November 27, 2010
Subscribe to:
Post Comments (Atom)
Northern Virginia Real Estate Statistics
REAL ESTATE SEARCH
County Assessment Websites
Buy/Sell Without an Agent
Local Real Estate Agents
Housing Economics Blogs
Local Interest
Housing Bubble Links
Eastern Regional Blogs
Western Regional Blogs
- Bakersfield Bubble
- Bay Area Real Estate Blog
- BubbleInfo (N. San Diego)
- Burbed (San Francisco)
- Dr. Housing Bubble (SoCal)
- Patrick.net (San Francisco)
- Portland Housing Blog
- Professor Piggington's Econo-Almanac
- Rancid Truth (Orange County)
- Sacramento Land(ing)
- Seattle Bubble
- SoCal Real Estate Bubble Blog
- Socket Site (San Francisco)
Real Estate Blogs
REAL ESTATE AUCTIONS
Blog Archive
-
►
2011
(170)
-
►
November
(9)
- S&P/Case-Shiller® September Home-Price Index
- Northern Virginia Bits Bucket 11/28/2011
- Northern Virginia Bits Bucket 11/23/2011
- Northern Virginia Bits Bucket 11/22/2011
- Northern Virginia Inventory Update
- Northern Virginia Bits Bucket 11/15/2011
- Northern Virginia's October Housing Sales
- Northern Virginia Bits Bucket 11/4/2011
- Northern Virginia Bits Bucket 11/1/2011
-
►
October
(13)
- Northern Virginia Bits Bucket 10/31/2011
- Northern Virginia Bits Bucket 10/28/2011
- Northern Virginia Bits Bucket 10/27/2011
- S&P/Case-Shiller® August Home-Price Index
- Northern Virginia Bits Bucket 10/25/2011
- Northern Virginia Bits Bucket 10/21/2011
- Hoocoodanode?
- Yup - It's Different Here
- Northern Virginia Bits Bucket 10/19/2011
- Northern Virginia Bits Bucket 10/17/2011
- Northern Virginia Bits Bucket 10/13/2011
- Northern Virginia's September Housing Sales
- Northern Virginia Bits Bucket 10/4/2011
-
►
November
(9)
27 comments:
What are your thoughts on buying a house that is much bigger than what you need, and needs work? Do people find uses for this space or do they regret the added expense, maintenance, etc.?
I've never regretted extra space, it's just a question of affordability. Extra space costs money up front, and it will continue to cost extra with repairs and taxes.
I can think of several uses for extra space - office, home business, workshop, guest room, study, music room, library, etc.
Ace
My place in Ohlahoma was a 4 BR 3 Ba
house. I was a bachelor at the time.
i got it because it was cheap.
would i prefer a smaller place? it would have been less repair and capital.
but it was a deal.
i would have prefered a smaller place walking distance to town or a
farm house.
space is handy though..
BM
Me i think the market is still messed up.
http://www.movoto.com/neighborhood/va/arlington/22204.htm
median HH income is running 60K.
http://www.trulia.com/real_estate/Arlington-Virginia/
average listing 660K, average sale 466K
thats sort of a problem.
Pat: Anon said you are harmless and to let you have your fun. However, the Trulia data show that the average list price for properties for sale in Arlington as of Nov 17 was $628,589, while the $446,000 was for the median (not average) sales price for properties sold between Aug and Oct 2010. If you look at the data Trulia presents for the Cherrydale neighborhood, the average list price for properties for sale as of Nov 17 was $802,258 while the median sales price for properties sold between Aug and Oct 2010 was $1,025,000. Since this is an inverse relationship from the data from the overall County, would you conclude that prices in Cherrydale have increased over $200,000 in a few months? Of course not: both sets of numbers are skewed. The County numbers include a much broader range of houses from the cheapest condos in 22204 to the priciest houses in 22207. Cherrydale is a neighborhood of mostly single family higher priced houses. It was just that more expensive houses were selling between Aug and Oct 2010 while less expensive houses were for sale as of Nov 17. Again, you are looking for a cheap property, but for those who aren't we have to operate in a marketplace with a short supply of good houses and prices that are not falling.
BM
i cited the county stats because thats a good pool
besides i said if you want to get a 600K house have fun. Go for it, don't ask my permission.
fundamentals are important i posted the median income too, which is the real problem
incomes are inadequate to buy so people overload on debt.
BM
http://wapo.st/gqN1kX
funny this came out.
"particularly in areas such as Washington where the census reports the median house value is $388,000 and the median household income is $85,000."
when people get sick of the debt it will decline.
Pat-
If you look at median income for all of Arlington it is ~95K for the median household and 127K for the median family. In addition Arlington has a very high percentage of singles that rent 1 bedroom places. So since very few of them will buy places without a partner you should either ignore their incomes or count the value of their rentals as if they were one bedroom condos instead of apartments. I do agree that Arlington still has a high price/income ratio, but it is no where near as bad as you make is appear.
median income
Blogger housebuyer said...I do agree that Arlington still has a high price/income ratio, but it is no where near as bad as you make is appear.
Ok. So Pat is overly pessimistic. Let's do a full 360 analysis.
What is good?
What is median?
What is bad?
What defies common sense?
What confirms common sense?
Who are the savvy homebuyers?
Who are the clueless?
Those numbers would be a help to all of us here.
I will say that 2x to 3X times annual income should be median for a mortgage in today's economy. Any more than that, the risks outweigh the reward long term.
It's a pet peeve of mine that almost every time someone here posts a counter point to someone's point that we don't do a full 360 analysis and try to define the boundaries, all of them, not just one side.
pat,
Why do you focus on Arlington, a traditionally expensive place to live? We couldn't afford it 30 yrs ago (starting out) so why is that the standard now?
This (NoVa/DC/MD) is a high-cost region. Yesterday's post showed national stats on price declines and, guess what, DC faired the best YOY.
Your assertion that prices are out of whack is not only untrue but historically incorrect. The example of 385K on an income of 85K (or 95K) is quite in balance given the rates available today. Since when did affordabilty fail to factor in the cost of a mortgage?
If you insist on 2.5 to 3x income as the point when buying makes sense; I suggest that even your example, given a 20% downpayment, meets that criteria in many, many metro locales (quite possibly Arlington).
I understand that you do not believe "move-up" equity or the idea that incomes rise over time to be relevant, but is this a realistic position to take?
Some of us cannot afford the most desireable ares or the nicest homes. Your contention that there is nothing decent available is absurd.
If your standards are higher than your wallet, perhaps it's time to re-evalute rather than attack prices you perceive as too high.
I still think that some areas of 22204 and 22206 have great upside potential, especially with the trolley coming in and with worsening traffic problems throughout the region. Currently the prices are well below those in nearby parts of 22202, 22201, 22203, and 22205. It's an extremely good location for those commuting to DC. But there is some risk.
Ace,
I'm quite sure that a number of places have great upside potential. The key, of course, it to determine which ones!
Examining future zoning/transportation plans is one way to see the future. Moving into safely established in-demand areas is usually a very safe bet, but may not produce the same upside as those with some risk.
For those unable or unwilling to pay the premium required; edge areas with a good upside potential would seem a logical alternative.
Years ago I visited a small town that had just released their new Master Plan. I paid for a copy of it and gave it a good look. I was in my later 20's.
p.s. go for the big house!
Thanks to all for your opinions about big houses. I have my eye on one (overpriced & on the market a long time, needs expensive work, not a popular style, etc.) - we'll see. More opinions are welcome.
The reason I mentioned the So. Arl. areas that I think may move higher is that Pat has had his eye on that general region, as well as others. I'm not saying that there aren't other areas that look ready to rise.
Cheryl
i very muc distrust the low rates.
i think they are a trap.
if rates rise you are promptly unerwater.
now can rates rise? i think so, unless you go FHA you have a real risk.
a price should be sensible at historic rates not helicopter ben rates.
i like arlington and i dislike the fact that even midcareer making great money the area is dangerously pricy.
i just think given a high enough strain, the market unwinds.
me if the place stays unaffordable i'd rather move to burlington
Pat If you haven't found anything you wanted to buy in the 22204 zip code in the last 2 years, you are probably better off renting, particulary as you like your neighbors. Not everyone is meant for homeownership and you may be one of those people who can enjoy the benefits of renting while continuing to watch the market as a point of interest. We have some family homes we rent in the 22204 zip code so there are always good rentals available.
Thanks for the link, contrarian.
This pgh. was interesting:
"The widespread affluence also has kept Washington looking flush in comparison to other urban communities, many of which have a greater share of residents stretching to pay their housing bills. The percentage of Washington-area homeowners who are severely burdened is the lowest of the 50 largest metropolitan areas in the nation. Looking at renters, the region is in the middle, ranking 25th."
Pat -- one of the many many things we learned (and put to bed) long before you got here was the Median Income vs. Median Home Price metric in Arlington.
For starters, on a historical basis median home prices in Arlington has always been 4.5X median income. This is not uncommon, nor is it "unsustainable" as this metric is highly skewed by a large number of urban poor (mostly renters). Further, this metric gets more and more skewed in urban areas over time. For example, in NYC, the median home price vs. median income was 20X way back in 2000.
Second, you should also be aware that as we discussed long ago, since the year 2000, median income in Arl grew about twice as fast as it grew in the rest of the DC area (about 3X as fast as the income gains in the country at large). Further, the vast majority of that income growth came about because of a very large influx of over 200K households that moved into Arlington over the last decade.
This info was uncovered and discussed ad nauseam in late 2008, primarily by our most respected bloggers Cara and CRT. If you want to learn more about it, go back and see these threads yourself. When faced with these largely unimpeachable facts, even bigtime doomers like Kevin conceded that Arlington was not due for a major correction.
Its funny, sometimes I forget how (relatively) new you are to this site. Anyway, if this (median price vs. median income metric) is one of your primary reasons for thinking Arlington is poised to fall off a cliff, I highly suggest you go back into the archives of this blog and educate yourself.
Pat,
"I very much distrust the low rates. I think they are a trap. If rates rise you are promptly underwater".
I've thought about this a little. I'm not as econ-savvy as most people who contribute here, but I think you'd have to ask yourself what will be going on in the broader economy to cause the rate increase, and how that will affect house prices. If we find ourselves in a true inflationary environment, house prices will probably not continue to fall.
Also, I currently have a mortgage payment (at 4%) that is lower than current rental prices. Being underwater is worse if there's excess inventory and rents don't cover the mortgage. I don't think we're seeing excessive inventory, based on the competitiveness of rentals now.
Anon
Good to know. Of course reading the archives is fairly tedious.
maybe Arlington is modeling manhattan which has been crazy expensive for 40 years.
reecon,
i have the benefit of cheap rent $1035 for a 2BR, gives me time.
i think the value of a property is it's discounted cash flow which makes most places in the MSA lousy.
http://finance.fortune.cnn.com/2010/11/22/why-the-housing-bulls-are-wrong/?iid=patrick.net#post-6578
affordability around here is still lousy,
i'm curious are investors buying properties for cash flow or appreciation? if so what sort of yields are expectd?
http://franklymls.com/AR7486735
check this out, sold in mania for 612K.
now for a short at 450K....
what do people think it will go for?
Pat-
Thanks for the article. I found it interesting. I agree that supply has barely been reduced and that it is unlikely there will be large institutional buyers of housing.
As for affordability if they are correct that housing will drop 15-30%, they are correct people should wait. Although without any justification for why housing will drop 30% I find the comment aggressive.
I think they are incorrect in showing a short term trend (a few bad years during a terrible recession) and saying that household formation will stay low. I agree it may not go to 2% and stay there, but I would expect it to at least rebound to the rate of the 90-00s. I haven't studied household formation, so I don't know when this will happen, but I would think it would start in the next couple of years as people are more comfortable about not losing their jobs than they were a few years ago...
Pat As you know cash flow tends to increase as an investor. You might buy a property in year 1 with a breakeven cash flow. As rents increase, your cash flow will tend to increase. The cash flow from family owned properties is doing a nice job educating several college age children.
I'm not sure what to make of the new household formation propositions in the article you linked, Pat. It sounds as if they are using a 50s notion of how people live--live with Mom and Dad until you finish school, then find someone, marry, and move out, since they seem to view marriages as a key indicator of household formation. But marriage can actually reduce the # of households, since many people remain single for a number of years (of course they may have roommates, probably mostly in urban areas), then couple up and move in together.
I agree that the recent high unemployment is probably the driver of household formation, and to some extent marriages, etc.
reecon
True cash flows tend to increase over time, for rental properties.
but, you have to have some cash flow
at the start.
My dad used to say "Son, if you go over at 11 PM to unclog a toilet, and, you realized you paid $300 for the privelige, you will cut your wrists".
I look at the up front cap rates and yields, i'm ideally hoping for a Duplex or triplex in arlington that cash flows, but those seem like unicorns.
DC does have them, if you are willing to look in the dumpy areas and sketchy areas or are willing to purchase a million dollar property in NW.
Pat There are side by side duplexes all over 22204 but most of them have 2 owners. The trick is to buy one side and then wait for the other side to go on the market. There are some duplexes and triplexes which are horizontal, i.e., one stacked on top of another, off Columbia Pike, near Cleveland and 13th St. and Rd. Many of these also in Addison Heights near Crystal City. You should be able to pick one up as they are on the market often.
Post a Comment