Happy back-to-work day, all. Wall Street should have stayed closed or something. Is anyone out there taking advantage of these low interest rates?
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Tuesday, September 6, 2011
Northern Virginia Bits Bucket 9/6/2011
Posted by Harriet at 10:49 AM
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37 comments:
Harriet-
I close on my house in less than two months, so I should be locking in my rate in a little less than one month, so unless something crazy happens I should be getting near all time low rates.
hb,
Just locked on a refi. 60 day because it's so complex. I'm buying up the interest rate to cover all closing costs - lender and title company. With my luck, if I pay them I'll end up selling next year and the apr will be thru the roof.
I'm only doing it to cash-out and free up some cheap money. Unbelievable how much documentation they want!
Congrats HB. I didnt know you were under contract.
Question to all with good to excellent credit, what are you getting as quoted refi rates with no points? I see the advertised numbers, but I dont want to start down that refi road til I know what you can really get. I have a 4.875 30 yr fixed now, but I dont want to refi again unless it makes sense.
Housebuyer,
Good news - I hope you get a great rate.
kevin
http://ftalphaville.ft.com/blog/2011/02/22/494851/
you think CS is getting thown off by this?
Anon & Harriet-
Thanks. I am having a place built in Vienna that should be done in late October.
congrats hb. Great area. I've lived in 4 different places in Vienna.
Think long-term will continue down?
If you have excellent/good credit and are looking to buy home, this should be good news.
http://realestate.msn.com/new-mortgage-limits-another-hurdle-for-the-housing-market?GT1=35010
And those who believed 03/09 was the lowest point, good luck !
Vin,
I gather your reference to 3/09 is the most recent CS bottom. How low will we go? The lower conforming amounts is old news; in fact rates for loan over 417K are already higher and have been.
The fact is that we have the highest income in the nation and an extremely low comparative unemployment rate. I'd rather get these rates and get on the am schedule with a home I own but I don't really care if others prefer to rent or think renting is a better choice. It's a matter of personal choice.
ATK (NYSE: ATK) announced today that it will relocate its corporate headquarters as of October 1, 2011 to Arlington, Virginia, where the company will expand its existing office space. The company will continue to maintain a strong presence in Minnesota, including approximately 210 Minnesota-based corporate employees. In total, ATK employs approximately 2700 people in Minnesota. ATK currently employs approximately 3500 people in the Mid-Atlantic region, where it operates facilities in Maryland, Virginia and West Virginia.
Virginia Governor Bob McDonnell welcomed ATK to northern Virginia, and said, "We are pleased that ATK is joining the vibrant aerospace and defense community that contributes so much to the commercial base of our state, and look forward to the company's continued growth and progress here."
"Vin,
I gather your reference to 3/09 is the most recent CS bottom. How low will we go?"
Im curious about that too Vinny. Im also curious if you will be here in the future to stand behind that guess -- or if you will simply fade away a-la John Fontain, Neil, Terminator X, Leroy, Novawatcher, Tired Bubble Watcher, Spider, GTE8111, Anon 410, Zerodown, Joel and Sojnia, Spunky, and countless others who confidently declared that March 2009 was "nowhere near the bottom".
The Anon,
I think John Fontain bought an Arlington house, some time after 2009, so that may be the primary reason he doesn't visit now.
Anon
I've got about a year before I have to eat crow, so, i've got a crow marinating, if neccessary :-)
I said a while back, and I"m sure
you have it bookmarked that 2012 was the make or break year. Either the icefloe breaks loose by then, or it never will.
Now that said "Nationally" the market looks lousy. 18 of 20 markets priced in a down summer.
Summer is the peak sales season.
Interest rates are at record lows.
Yet still 25% of mortgages are underwater.
12 million people are unemployed
and will at this point never get jobs again.
We have 64% of all americans can't come up with $1K for an emergency.
so 1//3rd of american's aren't agains the wall every day.
now will DC and NYC float above this like the city in the clouds from Star Trek, or will the hillbillies come down and burn the cities? I"m being metaphorical here.
But if the DoD or DHS budget is cut, it can't be good.
Interest rates must revert to trend, and I know it's disputed, but I think rates do affect price.
finally the baby boomers are retiring now. The Leading edge
Boomers are now 66. Will they want to work for another decade?
DC is loaded with boomers.
Now household formation and migration are all demographic challenges, but Stock market wealth and housing wealth are tied together.
As boomers liquidate and begin downsizing, i think that will continue to be a headwind.
The 90's were the perfect tailwind,
now we have 3 imperial wars, A global financial crisis. Japan covered in radioactive waste. China peaking out. Hihg energy prices.
Stagnating wages.
All that has to be a horrendous headwind.
"contrarian said...
Anon,
Despite all the ridicule you offered the other day, you did not respond to the point I made"
Nor am I likely to. All you do is point to this or that "metric of doom", over and over again, without any reference for timing, nor adressing the fact that none of your pet metrics have made a shitsworth of difference in your overall thesis of massive deflation (dow down to 400, homes everywhere 90% off peak).
Youve been doing this since 2006, (and probablty for years before). You are doing it now, and will still be here doing it in 2016 and well beyond -- all the while, sitting on the sidelines, growing older, watching life pass you by -- renting til the day you die.
Plus seeing as its all the same minutae from you (which you will delete and later pretend you didnt say), I will just keep track of your original predictions as they continue to fail, and just laugh and laugh and laugh.
Also, as Ace noted about JF before, as I too have bought, I am now becoming less and less interested in checking in here. I am obviously not alone seeing as this site is now pretty much dead. Many of us are moving on with life.
Not to worry though. I will always come back from time to time -- just less frequently than before. I can only hope that Harriet keeps this blog open for years to come. I do take tremendous satisfaction in an old prediction about you which is coming true:
As the years go by, if this isnt playing out like a deflationary grand whatever, the rest of us will slowly dissipate to the winds, purchasing homes and living our lives. Still im sure he (Contrarian) will still be here, angrily calling us all fools and saying it just hasnt happened - yet. 6/15/09 12:10 AM
Quite prescient dont you think?
"Pat said...All that has to be a horrendous headwind."
Pat, with all due respect, I dont think you are cut out for homeownership.
I say this because if you really are letting things like Fukushima influence your decision on buying, you will never be happy, always worrying the worlds latest "crisis du jour" will cause your home to plunge in price.
This outlook in turn affects your bidding price, and largely explains why you have been outbid, time and time again, by others looking at the same houses. The only way you will ever buy a house is if (by definition) you are the least bearish person interested in it. You have to become willing to be the "greatest fool" willing to pay a higher amount than all others.
I sincerely doubt this will ever happen. You were somewhat bearish than most when you first posted here. Likewise, at the bottom of the market you were severely bearish, again, outside of the norm. likewise you remain bearish outside of the norm now 2+ years after the market bottom. Going forward, I see no point in the cycle in which you will be less bearish than ALL OTHERS who are willing to consider some house that you are interested in.
As such, I really think you should consider renting for an extended period of time -- perhaps forever. There is nothing wrong with this. People in europe do it as a way of life. Moreover, given your outlook, I truly believe buying will make you unhappy (i.e. constantly worried about this or that crisis), and thats no way to live ones life.
"The wheels are going to come off in 2012"
Wow, what a relief. Only 15 more months of high-anxiety. Then we will know. Definitively.
Not that it matters at this point but...
I've been here for a long time, mostly lurking, but posting occasionally. We're on our second house now over the past six years, which is hilarious as nobody was a bigger housing doomer than I was (my skepticism actually goes back a decade to a Harvard study on the disconnection between wages and prices). I do think that the banking system is going to take another hit because of overvalued loans; I do think that we're going to see real devaluation (not inflation) going forward; I do think we're looking at a global economic decline.
But here's the thing: Life goes on. The real value of my house is probably going to go down, at least in the short term; that doesn't mean I don't need a place to live. We could choose to rent, but that is frankly a pain in the butt at our age; we'd rather not have our landlord decide how much we're going to be paying for housing in a decade (or perhaps even deciding that we need to move out next year).
You can have an (arguably) pessimistic view of the economy and real estate and still be in the market for a house. It just made me extremely aggressive when it came to closing a deal. We take other steps to insulate ourselves from what we expect the environment to look like over the next couple of decades, with hedges set up in case we're totally wrong.
I think where people can really lose themselves in this is where they want to make a big score: Buy a palatial estate for ten percent of what it once sold for. They hoard all their resources waiting for the inevitable bottom, confident that they'll see it when it's there.
One of the fascinating things about con games is they're usually based on the greed of the victim. Con men have a saying: You can't cheat an honest man.
If you're putting your life on hold, betting that you can make a killing in the inevitable decline to come, you're letting greed take control of you. You can, however, engage in prudent, long range planning designed to minimize your losses and maximize the chances that you and your family have a pretty decent life, compared to most other people on the planet.
Anyway, that's how I think about it.
Anon
you woukd have hated my house in oklahoma. 156K when the house across the street was 400K. Later sold it for 214K.
Or damn you must hate my Apartment renting for 1070, when nearby 2 BR's slightly better sell for 290K.
Rather then you laugh away, why don't you tell me this. If you were going to buy a investment property, what Cap Rate would you expect from it? If you were going to buy a home, what Cap Rate would you expect from it if you had to rent it?
Pat-
I am not looking at real estate for investments. I would comment though that interest rates and real rates have fallen dramatically over the last 3-4 year so you should adjust cap rates down with these rates. There is no reason that you should be able to get the same rates on real estate that you did in the past, but you get worse rates on all other asset classes.
This is particularly true because most people are financing the house and are getting much lower interest rates.
pat,
I doubt anyone here cares about cap rates. There are no investors except me; just homebuyers. Yes, they may consider rent vs own costs but that is about it.
I don't care about cap rates and many, if not most, small investors don't care either. If I wanted a decent/good/excellent cap rate, I would be buying in war zones with section 8 tenants. These places do not appreciate and a few bad tenants will destroy any cap rate you anticipated.
There has always been a trade-off between cash flow (cap rate) and appreciation. Due to the extremely tenant friendly laws of DC, I wouldn't even set foot there.
Obviously your desired/required cap rate is not working out for you. Others continually outbid you. I've had section 8 tenants (or low income) and I can tell you that the majority are a freaking nightmare.
People who care about cap rates are buying commercial - large apartment complexes, office buildings, hotels etc. I know for a fact that these cap rates are very low right now for various reasons.
Soldier on if you want but don't think your investment and anticipated return will be better than those purchasing a family home. Chances are you will be buying yourself a "job" and you should account for and put a price on that.
Vinny, I get also your reference and I will refer it to my friend. Thank you.
house and lot for sale Philippines
contrarian,
I am buying a place for 220K that rents for 2K. So what is your point? The world is ending? How much lower do we go? This was a mid 400's house in a nice neighborhood.
I never would have sold my "home" at peak eventhough I knew a significant correction was coming.
If your personal home represents that much of your net worth that a drop in value prevents a good night's sleep; your choice was and is the best for you.
There were a ton of idiot, newbie, specuvestor's and I have bought many of their defaulted, stupid mistakes. For me, a couple hundred grand would cause heartburn but I'd get over it.
How much below 3/09 will we have to go for you to declare victory? As you know, your desired nabe has rebounded nicely.
Contrarian:
Made exactly the same call you did: Sold the house, rented during a market decline. Then decided that conditions had changed enough that I could declare victory and get back in: Got a much nicer house for what we'd sold our old place for two years before, in the same neighborhood.
You could be right: The economy could completely lock up in a couple of years, and then you'd be able to buy a house very inexpensively. But there are a lot of dependencies there: Would you be able to get a mortgage? Would you have to pay cash? Would cash be available? Would an inflationary surge kill the value of your pile of cash?
Anyway. That was my thought process.
contrarian
if you listen to va-investor, she quit buying in 03, except for 1031's and started back in in 09 when a lot of air came out.
not a bad strategy so far. However, she's a little better heeled then most.
I was looking around in 03/04 and it just seemed psycho. properties producing 5K in monthly rent selling for a million? The place we are renting appraised at 900K for 3K monthly rent.
Now it appraises for far less.
Now what happens next.
National markets have sunk hard, the DC market has stalled. are we seeing a dead cat bounce, or are we into a decade of slow miserable slog.
clearly there are areas that are bound to improve in value because of local growth.
There are also areas bound to just stagger.
me i look for solid cash flow, but that means looking in hoody areas that look to transition.
i've posted several properties on my radar.
Contrarian,
I have not written in a while but your post about your situation made me want to respond to you.
It is interesting how many people who write on this blog are just protecting their own interests, you included.
The difference between you and others who write on this blog is that you are cheering for the economy to go down, regardless of how this can affect people and the entire nation. You thrive from other peoples' misery and you feel you deserve it. Others should pay for you so you can live large as you gloat on your post.
You have no respect or empathy for those who could have bought a home for their family and may be underwater now becaue of the housing downturn in some parts of the country. You set yourself as if you were a hero because you sold your house at the peak to another fellow who is now underwater? Where is your sense of morality here.
So, everytime you criticize others who with facts show that the housing market is not as bad as you are trying to make it in close-in areas of northern va, what you are sayting to everyone in this blog is that you want them all to fail economically, so you and only you my friend can profit from their misery.
I am not certain of what the future holds. I knew there was a bubble in 2004 and saw it deflating as early as 2005. But I rather side with those who are optimistic and would like to see everyone do better economically and the country to prosper, than those who rather benefit from shorting the country economically and from other people's miseries. Like if in the end you could escape that misery yourself.
"Contrarian said...
gruntled,
We sold near the top of the bubble. The question now becomes whether to buy a place when - as you acknowledge - the banking system is going to collapse. When the banking system collapses, housing prices will drop, just as they did in the 1980's in the Heartland.
We are renting a place that was built during the bubble. It was brand new when we moved in. The owner paid $500K and we are renting for $1800. On top of that, the owner is paying HOA fees and property taxes. The owner is also paying for all repairs and upkeep. Plus, the owner is having to pay tens of thousands in interest on the $500K loan, which he will never see again - only a fraction of which is recouped in tax deductions.
When we move out in 4 or 5 years, the owner will have to paint, carpet, and update various appliances (stove, dishwasher, refrigerator, washer, dryer, etc.), which amount to more costs to the owner, which we will not have to pay out-of-pocket.
Today, this $500K townhouse is valued at $300K and I expect prices to drop much further.
So, every year the owner pays tens of thousands for us to have the privilege to live here. When we finally decide to purchase a place, prices will be much, much lower.
We had lived in the place we sold for almost fifteen years. When we sold during the bubble, it was time to replace appliaces, kitchen cabinets, paint, carpet, etc., etc., which would have been about $30K. Instead, we let the buyer spend that money.
Now, while we are renting for a decade while prices are dropping, I would rather be living on someone else's dime. Let the landlord lose the home value. Let them pay the HOA fees. Let them pay to fix repairs. Let them pay to replace carpeting when we move. Let them pay to have appliances, paint, cabinets, etc., fixed and/or replaced when we move.
In the mean time, we are paying fairly cheap rent for what was a brand new place when we moved in.
But, I guess to you, the fact that two individuals (the landlord and the renter) voluntarily entered into an agreement, you see that as "greed" since the landlord (a victim?) is losing his ass???
I saw it as greed when people - including my landlord - bought homes during the largest bubble in the history of mankind. That greed turned around and bit those people in the a**. Anyone who coundn't tell it was a massive bubble was, in my opinion, delusional. Logical people bailed out.
I simply believe there are times to "buy and hold" as Warren Buffer used to say, and there are times when "buy and hold" is a bad idea - now being one of them.
I believe there are times to own a home, and times it is better to rent a home. Now, I believe, it is better to rent.
9/12/11 12:21 PM"
Nothing to say here, but glug, glug, glug...
"contrarian said...
DC2 said...The difference between you and others who write on this blog is that you are cheering for the economy to go down, regardless of how this can affect people and the entire nation. You thrive from other peoples' misery and you feel you deserve it. Others should pay for you so you can live large as you gloat on your post.
dc2,
I am not "cheering for the economy to go down." The fact is, the country is in a depression and has been since 2000. Many people were too wrapped up in the greed of the GWB housing bubble to see the depression. A housing bubble that caused the entire banking system to become insolvent. GWB's answer to the problem was to "go shopping."
Being powerless over a complete economic implosion, all I could do was sell and stand aside while the whole system collapses. My stating the obvious, is not cheer leading.
As the story goes, there are three types of people:
"Most of the people in our society are sheep. They are kind, gentle, productive creatures who can only hurt one another by accident." ... "Then there are the wolves,...and the wolves feed on the sheep without mercy." ... "Then there are sheepdogs," he went on, "and I'm a sheepdog. I live to protect the flock and confront the wolf."
You are essentially saying I am a wolf. I disagree. I have been a sheepdog.
While most others were calling the bottom in housing three years ago, I warned the housing implosion had much, much lower to go. I have also warned the banking system and stock market are going to collapse, and that when they do, it would drive down housing further. And, I said to expect civil unrest to break out around the world, including here in the U.S.
I suggested Bank of America and Citigroup would probably be two of the next big banks to fail. No major revelation, as I provided the chart which shows BAC going to zero. Moody's downgraded those banks Wednesday.
I have also said several European countries would become insolvent. Again, nothing new as it has been in the news for quite some time. Now, Calculated Risk has a daily European update, which yesterday said: "The Greek 1 year yield is at 130%." You think Greece is insolvent yet?
That, to me dc2, is stating reality. That is a sheepdog, not a wolf. Exercise your free will at your own peril. But, what I have said is really nothing more than common sense, rehashing what is/was in the media every day. It was obvious during the housing bubble, and it is just as obvious today.
If you call pointing out reality, "cheering for the economy to go down," you may want to re-assess your view.
9/22/11 11:18 PM"
Now this one, ladies and gentlemen, is pure comedy gold. For future reference, I did boldface the part where Contrarian calls himself a "sheepdog", but other than that, this is it,
Contrarian's original prose, the verbatim ramblings of a madman...
Glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug, glug......
Economy is unstable, and so real estate industry. I hope this one's ain't that of a bad news for real estate course students.
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