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Wednesday, June 29, 2011
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30 comments:
http://franklymls.com/DC7589676
this went for about 10% over Assessed
after 10 days.
Nice place, very clean, quiet location. Lot of positives.
http://housingstorm.com/2011/06/infographic-what-you-need-to-know-about-the-case-shiller-home-price-index/?source=patrick.net#blog-single
it may just be me, but doesn't it seem like in 140 years there is a long term reversion to mean?
Now DC is sitting at 186, will that
continue, or will there be a reversion to mean?
"Pat said...
it may just be me, but doesn't it seem like in 140 years there is a long term reversion to mean?"
In this case, its just you. That graph assumes all the cities had the same data pre 2000, but thats simply not true. CS normalized all cities at 100 in the year 2000 but before (and clearly after) that, they had vastly different tracks. For example, in 1987 it looks like the New York city line would have been an astounding 40% above the San Fran line!
Bottom line, that graph is tremendously disingenuous. The commenter "Andrew Jeffrey" (who I believe is one of the founders of the financial site minnyanville) notices this too.
"Pat said...
Now DC is sitting at 186, will that
continue, or will there be a reversion to mean?"
Could be - DC could be headed for a crash back down to the long term trend line for the CS 10. Just remember by that logic, you also have to believe Detroit is ready for a massive spike in values just to crawl its way back up to the trend line.
On the flip side, you can believe in fundamentals is causing the disparity of DC and Detroit versus the long term trend line. In this case you believe the +30% above inflation growth in DC, versus the -1% below inflation contraction in Detroit has something to do with DC being at 186, versus Detroit being at 63.
As a believer in fundamentals, I think the latter is a much better solution than the former (all cities revert to the mean)...
Pat-
It looks like the new data is not adjusting for inflation. Shiller's long term graph adjusts for inflation, but his monthly index does not. I know we have been though this many times.
Inflation since 2000 has been ~33%, so you would need to adjust all of the numbers down respectively. If you do this the 20 city index would be back to its historical level. So nationally there is no bubble. Then as Anon said there have always been some cities that outperform others. I am sure if you look at NYC, LA, San Fran,DC ... over the past 50-100 years prices went up dramatically faster than in most parts of the country.
We should remember one swallow does not a spring make and one city does not a recovery make.
Tyne national case shiller is poor, what's: dodging well?
Dc, NYC and SFO.
Dc prints money, NYC prints credit and SFO prints stock.
The rest of the world is falling hard.
Will the game go on?
When the titanic was sinking the bow was sinking as the stern rose.
This is inevitable.
Dc is rising but the nation is in trouble still
Now maybe the top 10 percent are going to continue to propsper while the bottom 90 percent sink. But I think
The macro problems will continue to rise.
Does it make sense to lock in 1 percent yields?
Nope
"pat said...
We should remember one swallow does not a spring make and one city does not a recovery make."
True. But thats a different question isnt it? The original question was "DC is sitting at 186, will that continue, or will there be a reversion to mean?" The question was about the one swallow which (in certain cases) can stay separate from the spring for a long, long, long time 24 years and running to be precise...
BTW, im not ignoring your question in the prior thread about cap rates, yeilds, etc. As a buyer and not an investor, I simply dont focus on that enough to give you a cogent answer.
BTW pat, I should say too, im glad to see that it seems you recently have been focusing on the Brookland neighborhood. Assuming the DC gentrification trend of the last 12+ years continues, I think this is a good neighborhood to focus on.
Many of the hot, discovered, on their way to gentrification hoods already seem have the gentrification premium built into them. U Street/Shaw and Columbia Heights seem to have a full premium. H Street, Petworth & (unbelievably) Anacostia all seem to have a buzz about them which is likely reflected in the price. Also, I dont like the size & asthetics of the old city places you look at -- I just dont personally see as much potential there.
Still, for whatever reason, Brookland seems to have little buzz, yet it has all the hallmarks you would look for. Close to the metro, good housing stock with "old bones", "curb appeal" etc. In alot of ways, it reminds me of Del Ray, Alexandria, 15 years ago.
And while I havent looked deeply into it, based on the prices of the places you are posting, they seem to be a pretty good value (on a sq. foot basis). In Del Ray similar places (fully renovated) can sustainably go for 700K all day long. Brookland's potential is there, so assuming that it eventually turns the gentrification corner the way Del Ray did, this seems to be your upside target, IMO.
I've been watching old city, Trinidad and brook land
All potential places.
IMHO.
Personally, I feel the same way about Trinidad that I do about old city -- im just not "feelin it" so to speak. I also think its several more years behind the others in terms of getting a criticial mass of gentrification, and it may never. Then again, that lack of premium or potential for premium is probably what makes it good as a rental in terms of cap rate, etc...
Judging from your price point, Shaw/U is probably too pricey. Same with Columbia Heights. Have you looked at H St, Petworth or Anacostia?
anon
we look at H ST NE, in fact,
i've got some actives in the H ST Corridor, it's why i like Benning Rd,
less premium pricing, and the redevelopment on H St has to roll out along Benning.
IMHO.
http://franklymls.com/DC7635365
now here was a value opportunity in brookland.
Assessed at 341K, priced at 170K,
went U/C in 3 days.
Not a bad location, small chunk of land, needs work, probably 40-50K but it's not a shell.
Contrarian,
That article points to DC growing by 0.8% annualized over the next 5 years. So a property worth $500k today will be worth $520k+ in 5 years time. That growth offsets most of the transaction cost to sell and the amortization schedule on the loan pays down about 8.5% of the principle.
What's bearish about this other than opportunity cost of the money?
My $0.02
0.02
Um. Selling a house is 7 percent
Buying is 3 percent
If you are going to be somewhere 12 years the price won't matter
If you are going to be ther 5 or 7 years which is the average stay in a house then you don't do well
That said there are always deals in a bear mrket and there are always bombs in a bull market.
Cheryl is identifying deals in rest on because metro will transform that area.
I think metro will make some changes to Reston and its environs, but it won't become another Clarendon (much less Columbia Heights)... Even with rush-hour service, it'll just be too long a ride to be "convenient" to trendy areas (though it probably will make Tyson's Center the preferred hangout for Reston youth).
It definitely won't be a Clarendon and I'm not banking on anything like that. But, as far as the 'burbs go, RTC is pretty darn compelling. Metro will move prices - it's just a matter of how much. Buying undermarket in a desired area that has not "priced-in" metro makes alot of sense to me. I know people who drive all the way to Vienna to catch metro.
Reston is a large employment center in and of itself. Clearly no Tyson's, but much more livable. Making Tyson's stay alive after dark is something I'll believe when I see it. As for the kids; it would be great if they decamped to Tyson's!
Pat-
Do you have any stats to back up your claim that the average person only stays in a house for 5-7 years. Over the last 20 years the average existing home sales have been slightly over ~5MM. Seeing that there are ~115MM households home ownership rates are ~2/3rds there are ~76MM owner occupants. This would imply that the average person lives in their house ~15 years. Obviously some move a lot more frequently, but in general I think people live in their houses a lot longer than you think.
contrarian wants to live in my zip? What to make of this? You could have gotten a good deal on Waterfront Rd 2 or 3yrs ago. I'm sure I looked at an reo there. I'll have to check the sales records. We recently missed out on a terrific waterfront house on Lake Anne (675K). It needed complete updating, but what a view!
Yep. Sadly, the low watermark (no pun) was 781,500 in May of 2009. The prices are not trending your way Contrarian. Oddly enough, I looked at that reo. I don't think I saw anything "active" under 1mil. currently
Ouch. One with the same assessment as that '09 reo sold in December 2010 for 90K more (869K). More than 10% up. And if you read the description of the reo, it sounds turn-key (new stainless, paint, carpet, etc.)
http://www.washingtoncitypaper.com/blogs/housingcomplex/2011/07/01/what-happens-when-uip-buys-your-building/#more-20063
i haven't seen these hit the markets
HB
http://www.census.gov/population/www/pop-profile/geomob.html
"About 1 in 6 Americans move each year.
Over 42 million Americans moved in the 1-year period between March 1992 and March 1993. This amounted to 16.8 percent of the population 1 year old and over. Most of these persons made local moves - 26 million moved from one residence to another within the same county. Nearly 8 million persons moved between counties within the same State and another nearly 7 million changed States. During that 1-year period, 1.3 million persons moved into the United States from abroad. "
and
"The average American moves 11.7 times in a lifetime.
The "average American" makes 11.7 moves in a lifetime (based upon current age structure and average rates of moving by age between 1990 and 1993). By age 4, an American can expect to have 10.8 moves remaining. At age 19, 9.2 moves can still be expected. But by age 44, only 3.1 moves remain. The actual mobility experience of individual persons, of course, will vary from these average numbers. In addition, since these moves are not evenly distributed throughout that average American's life, we cannot calculate an average length of stay in a particular residence. "
the way i see it i 1:6 move every year, then it's kind of a 6 year turnover.
Pat-
Your article very clearly states that renters move substantially more than owners. "Renters have much higher rates of moving than homeowners.
Tenure (whether the person is living in a housing unit occupied by owners or renters) has a very strong correlation with mobility rates. Tenure is owner/renter status at the time of the survey in March 1993; tenure before the move is not known.
About one-third of persons living in renter-occupied housing units in March 1993 had moved in the previous year (32.9 percent). In contrast, fewer than 1 in 10 persons in owner-occupied housing units had moved in the same period (9.1 percent). Renters have vastly higher rates of moving than owners for all types of moves. "
So with 9% of owners moving that would imply they moved once every ~11 years. This data is also 20 years old compared to the data that I was showing, which is using current data.
I guess I should comment that the reasons it doesn't matter that renters move so often is that they do not need to pay the closing costs or Realtor fees.
housebuyer,
I agree about renters. Many rent because they anticipate a move, have roommates, get married, etc. I would imagine renters are heavily weighted toward the younger cohort, although I don't have stats to back this up. We moved alot pre-kids. I don't think people with children move (voluntarily) as frequently.
contrarian,
Your deletion leaves my posts in a vacuum. Your desire to live on Waterfront Road in Reston, 20194 has clearly not gone well since the bottom for that nabe was 5/09.
You said yesterday that prices on that street would reach 1995(?) prices within a few years. In my mind a few means 3. We'll see what 2014 brings.
Pat,
4% + 8.5% is still greater than your inflated 7% + 3%.
Just say'n...
My $0.02
0.02
if there are good deals take them, but, I ted to not believe these appreciation plays.
If you want long term appreciation, household incomes need to rise as much as the price.
So that means you should invest in McLean and Georgetown where the Wealthy hang out, their incomes are rising off the hook.
I'd avoid poor neighborhoods and the working classes, that's everywhere people go to a job.
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