Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Any fellow Arlington residents check their 2012 tax assessment on the county website today? The assessment on my SFH went up 10%. It is now within 5% of the assessment peak it hit in 2006.I was not expecting it to go up this much, probably not going to contest it though.
Interesting trend map of Arlington shows where the 2012 assessments went up or down in the county.According to this map, N. Arlington generally went up, and S. Arlington generally went down.
location, location, location...Fairfax won't be out until the end of Feb.
Jewel, didn't you have work done on your house? If it required a permit, Arlington just loves to nail you with a bigger than average increase.
Ace,I did some minor projects - granite counter tops, landscaping... nothing that required a permit.The funny thing is, the big project just started 2 days ago. The basement is getting refinished - adding a full bathroom, legal bedroom and tearing down wood paneling.You think this project would affect my 2013 assessment?
jewel,It's all about pulling a permit. That is how and why the County re-asseses.
AnonWhy do you hate condos? Are they not housing? or is only a house a home?
"pat said... AnonWhy do you hate condos? Are they not housing? or is only a house a home?1/21/12 10:58 PM"Huh? I said something on the other thread about a "median house" no more no less. It appears though, that because I didnt say anything about condos, you assume I make a value judgment about condos and that they are "hated".If I may, you really need to try to keep your emotions in check when constructing your arguments. It really clouds your judgment, causing you to lash out against things that are not there. Best example I can think of was when the topic was something like Fannie and Freddie, and Leroy once said something critical about Barney Frank and his involvement therein (again no more no less, thats all he said).In your mind, you saw this as some sort of indirect attack on Frank being gay (which was irrelevant to the discussion) and a partisan attack on democrats (which it wasnt).In that case, your emotion took over and you lashed out at leroy for being a "gay basher" and (to paraphrase) "not denouncing Tom Delay for murdering people"...I didnt say much at the time, but my jaw was on the floor when I saw that exchange. In your brain emotion so overtook logic that you made 20-30 phantom leaps ahead in some sort of political bash session that simply did not exist, nor had any chance of developing. I suspect thats the sort of thing going on here and my supposed hatred of condos. For the record, I dont mind condos. Its a good option for those who perhaps cannot afford more. Also, for the older set who wants to own, but doesnt want to deal with certain maintenance issues (grass cutting, etc). I could even see myself moving into one some day.But again, that is completely irrelevant. Look, I have no problem taking an occasional snark at an opponents position, pushing an occasional button of theirs. But dont let it consume your thoughts, and cause one to lose focus. When it comes to constructing a logical, readable arguments, just try to keep your emotion in check, and focus more on what is said, versus something largely imaginary, leaving you kicking at phantom enemies in the the darkness.
Anon,Your posts are very entertaining. I'm glad I'm not on your radar!pat,Your belief that people buying in Arlington are going to have to sacrifice their kids education or their 401's is comical. As to working mothers; get out of the 60's.As to prices and investment, why do you think that an area that tumbled 50% (your nabe) is a better investment than an area that remained stable and grew? Could you explain why your nabe will appreciate more?You do look at a home as strickly a "numbers" thing. Rent/buy ratio's are not very important to people looking for a home in which to raise their children, form neighborhood friendships and put down roots. As we have discussed, ad nauseum, some areas will never "pencil out". My house doesn't - but my rentals do. I could do even better if I bought section 8 rentals in war zones. Fat chance of that.
"Va_Investor said... Anon,Your posts are very entertaining. I'm glad I'm not on your radar!"Thanks. I know it makes me a bully, but intelectual honesty is a pet peeve of mine. A measure of self accontability will hopefully help one increase their accuracy over time. Thus, if you made an error in judgment, and someone call you out on it, you have two choices: (1) Come clean, accept some accountability, retain your credibility, and move on.(2) Lose credibility by choosing to spin, flail, deflect, in the hopes that your detractor will lose interest in you, and everyone will forget the exchange over time. The vast majority of people choose #2 because they assume I will lose interest. When I dont, they entrench further, depleting more and more of whatever credibility they may have. Yet it doesnt have to be this way.Robert made an error in judgment. I called him out. He chose option #1, retained credibility and it was over.Kevin made an error in judgment, he was called out. He chose #2 at first, but when realizing the criticism wouldnt stop, he chose #1 and it was over. I made an error in judgment. Knowing Kevin was going to call me out, I choose #1 calling myself out. It was over. Contrarian made (many) errors in judgment, when called out, he chose option #2. When he continued to be called out, he chose #2 again, and again, eventually deleting all his posts, becoming a joke. Even now, he could choose option #1 and start rebuilding his credibility. Yet he chooses #2 every time.Pat thus far continues to chose option #2. At any time, even now, he can choose option #1. Take some accountability, and move forward. How many times he want to choose #2 before all his credibility is gone is his choice...
By the way, Pat, heres your latest from when you were still being honest with yourself:"pat said... AnonI'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 sureyou have it bookmarked that 2012 was the make or break year. Either the icefloe breaks loose by then, or it never will.9/9/11 2:48 PM"I guess technically, you dont have to call it til the end of 2012. The problem with waiting of course is even if it tanks, while the 37K in appreciation will melt away quickly, the 69K in unnecesssary rent (which at 2K a month will be 91K at the end of 2012) just gets worse over time. Still, If you also think the now 69K, then 91K rent obstacle will be overcome, stick to your guns! 2012 just started! I could be wrong and you could be right.That said, it should be obvious to even you what I am doing here. I am metaphorically boxing you in. I will bookmark this post and raise it again on 12/31/2012 if necessary. You are at a crossroads here, one we all have to face when climbing our own wall of worry and calling bottom. You can make the bottom call, and stop the clock here. Or you can let it run, possibly compounding the mistake, but possibly vindicating you in the end. Its the quintissential risk vs reward decision. The choice is yours.
One of my clients found a vacant lot in North Arlington for $140,000 via a Realtor we recommend, our in-house builder fixed the setback issues and designed the house for a $335,000 build, and the as-completed pre-construction appraisal came in at $675,000! Unbelievable. If you can find vacant lots close-in to D.C. in Northern Virginia with setback issues you could make a killing. My client is going to flip for a $200,000 profit. I'm happy for him but a little envious!
Jewel, did you see this article on the increase in assessments this year? Overall, commercial property went up ~13%, much more than residential property.arlnow.com
oops, sorry for the typo -- 13% should have been 12%. Residential property (all types) went up around 1-2%.
Jewel,As an Arlington neighbor, thanks for the reminder. I just looked and my tax assessment is flat. Woo hoo!This year I hope to redo the kitchen, add a deck, a new shed, and possibly a hottub.Hopefully the tax man doesn't notice. :)-My $0.02
Ace,That article is what prompted me to check my assessment :-)Maybe they regard my house as commercial property (hence the higher than expected assessment)... just kidding.
Anonyou use median buyer, the median residence in arlington is a condo.by specifying houses, you down filter most dwelling unitsand then you get all pissed off when i mention failed or failing condos like meyerton.if you are going to cutoff the bottom of the market, insist yield is irrelevant and then demand a certain result, you can get any fixed result.if you believe yield is irrelevant, sell me a $1 option on your house for the inflation adjusted price in 30 years. That would be intellectually honest.
cherylultimately something will change, too many dual income families are stretched too thin.they bet on dual incomes and rising house prices, thats a really risky bet.
pat,While I respect your opinion, I fail to see any basis in fact. Do you have data that would support your contentions?
cherylhttp://motherjones.com/politics/2004/11/two-income-trap"Middle-class parents are stretched thin these days. Between health care costs, child care hassles, looking for a home in a good district, and paying for college, raising a child is becoming increasingly expensive. Little wonder, then, that married couples with children are more than twice as likely to file for bankruptcy as their childless counterparts, and 75 percent more likely to have their homes foreclosed. And the danger is growing worse by the year: In 2002 1.6 million people filed for bankruptcy, many of those middle-class parents. a record . As Elizabeth Warren and Amelia Tyagi note in their book, The Two-Income Trap: Why Middle-Class Mothers & Fathers Are Going Broke, having a child is now "the single best predictor" of bankruptcy. ""The trend was severe enough thatthe Republicans changed the law to turn americans into debt slaves.i'd suggest you read teh interview and the book. She's running for senate from massachusetts.
"Looking for a home in a good district" was one of four reasons cited. Now (vs 2004), with home affordability levels at 40yr highs, I wonder what weight housing is given in those 4 factors?Are we still discussing N. Arlington or the region in general? You are aware that our region is the wealthiest (income) in the entire country?
Pat,I think one could just as easily propose that, based on the motherjones.com article, in the future, a much higher proportion of people will choose not to have children, because they are concerned about costs, or fear the financial risks.Many couples may be stretched to afford houses on their two incomes (and many more singles are stretched), but it doesn't follow that that will cause them to cut back to one income, which I think was your prior argument. An individual household can't do much to stop supply and demand.
Ace-I agree you can make that claim just as easy. Also in reality that is what is happening. The fertility rate has fallen dramatically babies born This shows two things. One the number of kids born has been falling for the last 100 years, but also as times are tough people cut down on the number of kids. I am sure you can make points both ways about what this would do to housing prices, but I just wanted to point out that rather than women leaving the work force they have choosen to have fewer kids...
Anon: can you give real-world redfin examples of this post 2009 appreciation you speak of? I can give examples of NoVA and DC (NW) houses bought in 2009 that are now on the market for their 2009 prices or LESS than their 2009 prices.
mikeAnon wants to sort of have it both ways. He focuses on 22207 as the idyll of existence, which I can't comment on, i didn't track the neighborhood.However he also locks onto the CS-Index as the definitive measure for housing in the area.it's a funny thing because the CS-Index takes in the whole MSA which is moving heterogenously.PG is back to 2002, 2001 pricing, The eastern half of the district has been falling back to the historical trend, while the NW and Immunington have been floating high and higher.that's ultimately just delaying the inevitable in my book.And declinging family size just makes the whole mess worse. What's driving people to buy big houses? Families. If fewer people are having kids, well that's just sucking down the demand.People without kids are less interested in houses and more interested in condo's, townhouses and apartments.
"Pat said... mikeAnon wants to sort of have it both ways. He focuses on 22207 as the idyll of existence, which I can't comment on."Oh, I think you can. BTW, thanks for being so obstinate as to not answering the 2012 question that I actually went back and found it. I retract everything I said about calling bottom by 2012 as that wasnt the issue. Its even better, you see, as the true topic was your pontification on N. Arlington and why we should wait for the "inevitable" -40% drops from peak. http://novabubblefallout.blogspot.com/2010/04/northern-virginia-bits-bucket-4202010.htmlFirst, Pat presents his "proof" that I just havent waited long enough... that N. Arlington is finally imploding, just like he said it would, all we had to do was wait a little bit longer..."pat said... funny, nice beautiful houses in North Arlington are dropping in price 20%, and we don't hear any "Glug, Glug, Glug" noises from certain posters.Beautiful places, and probably the listings are approaching a more realistic price, especially for that area."When it was pointed out that all his proof amounted to was a guy going from delusional to reasonable, and as a result, the house sold for 6% off peak. I tell Pat:Anon said...Pat - When the price drops an ADDITIONAL -34% I was promised were just around the corner, I will apologize to the doomaid guzzlers who told me I was foolish to think it was "different" here.Undeterred, Pat continues his thesis of inevitable high end implosion:"pat said... The anon:certainly California continues to exhibit all the signs of market collapse. It's also the largest real estate market in the country, so, it's really going to affect the national numbers.http://lansner.freedomblogging.com/2010/04/19/selling-o-c-mansion-wait-3-years/62985/The high end market is completely locked, and the low end market is still rotten with Option-ARMS.the issue is broadly speaking will Arlington, Alexandria, etc face the same issues as the broader market.My fundamental feeling is that "A rising tide lifts all boats, An Ebb tide lowers all boats"...The decline of the high end market merely takes longer as these people have more resources."This was of course, the bullshit we'd all heard for years. Knowing that this was going to be a never ending parade of horrors, all reaons why we should just wait juuuuust a little longer, my response to pat (all caps added for emphasis): "Anon said...Pat -- that was the argument in 2008, before you were here (and before CRT blew it out of the water with the MoCo comparison)Let me ask you something which I suspect you will not answer but here goes.Its now 2010, the big "meltdown" I was promised in 2003, 2004, 2005, 2006, 2007, 2008, 2009 & 2010 still hasnt happened yet. At best prices are now stagnate -- at worst they are going up as we sit here debating this. At some point, everyone but the most delusional will give up on their argument for why "it just takes longer" to hit Arl/Alex. When is that date for you? Again, thats a serious question because there is no point in having a debate if you are someone like Contrarian who likely wont admit "maybe it wont happen here" til 2025 or thereabouts.SO AGAIN, WHATS YOUR DATE? 2010? 2011? 2012? HOW MANY MORE YEARS BEFORE YOU TOO DECIDE "MAYBE I AM JUST WRONG?"Pats response on the next thread, and pay attention here kids:"pat said... IF ARLINGTON DOESN'T CLEAR BY 2012 WELL THEN ITS IMMUNE.but look at the california data, volume is frozen above $2MDo you want to continue to stand by that statement today? Again, 2012 is not over. Anyone waiting for 2001-2002 prices have already flushed a couple hundred K in apppreciation, whats another few dozen K in rent right?
HB,Interesting article.Jewel,Good luck finding tenants for all your bedrooms in that nice little commercial property you got there!Pat,The vast majority of people without kids at home prefer a SFH if they can afford one and if they don't have disabilities that make maintenance and yard work difficult. They just don't want McMansions with 5 bedrooms and bathrooms. Many people want and need space for visitors, parties, etc. You don't need kids to want a big kitchen or a big great room to have people over to watch the game. Many want privacy and control, e.g., no arguments or loud music coming through the walls, but no condo association fees or rules. Around here, that may be difficult to afford in the neighborhoods they want to live in.
http://franklymls.com/AR7160097back UC, 57 DOM, was 577 DOMat 255K.Frank thinks it will go for 220Kwhich is probably not a bad price,I don't like that area, but, as utility housing, it's a decent price.
"contrarian said... Anon. I guess you think when (not if) the whole financial system collapses, housing will maintain its current pricing structure, huh?"As if on cue the Lord of Self Delusion returns. He stands alone, the only one thusfar to cross the Hal Turner rubicon to the Permabear side. From deep within the DoomStar, he bellows: Contrarian: Obi-Anon has taught you well young Pat. However, he was not truthful about your real father...Pat: He told me you killed my father!Contrarian: No Pat. I am your father!!!Pat: NOOOOO, ITS IMPOSSIBLE!!!Contrarian: Search your feelings Pat...You know this to be true. Join me on the Permabear side of the force, and together we shall delude the galaxy as father and son!!!You dont need to decide now Pat, but when you do, turn away from him. Turn away...
Pat,I think for the selling price prediction, the frankly site simply reduces the asking price by some factor X the amount of time on the market (maybe time at the current asking price). So each day that prediction will go down, until it sells.
AnonHere's a question you won't answer."You insist yield doesn't matter to the median buyer in north arlington of a house. OK. Does yield matter to you? what yield will you expect for a option to purchase your house now?"pat....i've asked before and youve dodged... shouldn't you reflect the median buyers mindset?
contrarian said..."I guess you think when (not if) the whole financial system collapses, housing will maintain its current pricing structure, huh? You claimed the other day the 2009 bottom was the final bottom.Hey Contrarian,So when will know that the financial system collapses? What are the signs? Will banks cease to exist and we'll go back to the barter system?
David,In his book, Debt: The First 5,000 Years, the anthropologist David Graeber revises the assumption of many economists, that barter is a more "primitive" form of exchange. In fact, he cites many examples of forms of exchange in ancient civilizations and "primitive" societies, and surprisingly, none of them are barter-based. Many are either monetary or credit based.
So in the event of a currency collapse, a reversion to barter is unlikely.
"pat said... AnonHere's a question you won't answer."I most certainly would. In fact, I would be interested in a 20-30 post back and forth session, where I could learn a few things about the way you specifically view yield, how you calculate it in different situations, the works. I may learn a thing or two. And I do mean this in all seriousness because I have a few clients who are investor minded like you and it would be helpful to get a sneak peak into that mindset. However, as I noted before, I simply cannot continue to have these 5:1 type exchanges where I answer 5 of your questions, and you duck mine five times. In that regard, it is now your turn to answer one of my questions, and I think you know precisely what that is. In that regard, let me go so far as to extend you an olive branch here. If you are willing to come clean, and accept a modicum of accountability, I will be willing to wipe the slate clean - a start over in terms of my dealings with you. I will give you the benefit of the doubt the same way I give any new poster here. Interested?
Anonback in 09/10 i figured the banks couldn't hold non-performing inventory too long because the political ramifications would become insufferable.certainly Obama shot all of his credibility by bailing out the POS bankers with TARP and by giving Bernanke Carte-Blanche to extend 13 trillion in credit to these 1%ers.in that respect we had the tea-baggers who were hard core republicans who didn't want to knuckle under to the banks and the OWS movement which is basically disaffected democrats who are enraged at Obama for backing walls treet against main street.we are now in a election year.will the banks be able to maintain a zero return environment?will obama be able to pump a liquidity event?The GOP views it as in their interest to sink the economy, the weak link is housing. So let's see what happens.And yes I have the investor mindset, because I don't accept a 0% yield on a 30 year obligation, nor do I believe that people can't "Get on with their lives" in rentals.so, how should yield be calculated?there is a classical body of literature that covers that.but seriously.I'll buy a $1 option to buy your house for the CPI adjusted price 30 years from now." You seem to think zero percent return is perfectly acceptable, so,accept my option. It's a free dollar to you.it's not excercisable until 30 years go by or you have a bona-fide offer to purchase from another party.In my world, it's probably not a great option, because, the downside risk is pretty long there. The way for the Immune areas to fall in price is to underperform CPI over time. we could shorten the term of the option at your discretion because 30 years is a long time, but, 30 years ago a 30 year treasury bond would yield 20+% http://mortgage-x.com/general/treasury.aspright now prices are being sustained by continous government intervention. 90% of the mortgages are being written by Fannie,Freddie, FHA and the FHA is backing 750K mortgages.is that good policy? Why should the FHA which is supposed to help the poor get started houses, be buying mortgages in North Arlington?Do you think that is sustainable?is that politically viable?even the republicans are now attacking wall street. that political environment was what was driving my timing, because it's all about the funding.without credit, the prices of all housing falls by 30%.but fundamentally the banks are in terrible shape. they loaned out hard against real estate, and then washed out hard tha tpaper all over the place.i just viewed a market that depends upon 90% government intervention as unstable over any period of time.
Pat-I think you are being a little unfair to Anon when you keep on trying to sneak "real prices" into the equation. Many of the people on this board I believe Anon included think nominal prices will stay flat for several more years and we all expect inflation (except Contrarian) so we believe real prices will fall. Unless you are a cash investor yield is not that important. What you care about is the yield vs. funding cost. So if you can get a mortgage at 3.5% and the yield is 4.5% (after costs are taken out) your RoC is ~10%. Also I know yields are low, but they are low on all assets including cash and will stay that way for years so do you have a proposal about how to safely earn a 5%+ real yield. (I am generally a fan of large cap stocks with decent dividends)Also as a side note it looks like ZIRP will continue at least through 2014.
“Pat said…In my world, it's probably not a great option, because, the downside risk is pretty long there. The way for the Immune areas to fall in price is to underperform CPI over time.”I think you would be intrigued by my answer, and I would love to answer it for you, but I cannot. Do you know why? Because, the only thing I saw that was close to an answer to my question was:“Pat said…Lets see what happens”Respectfully, isnt this jusw what you said in 2010? And again, no more 5:1…I do continue to extend the olive branch here Pat, and I am writing this in as a dispassionate way as I can, but what I am trying to get you to do (as I was trying to get you to do on that day in 2010) is a mental exercise. In your latest thread, you list 7-9 questions or concerns that continue to influence your outlook on the “immune” question. If you listed every question or concern you have at least mentioned on this blog, that list would probably be around 50. This is what I continually refer to as your “parade of horrors”. Ideally, what I was hoping you to do (at least mentally) on that day in 2010 was to make that list, and perhaps rank them. Decide whats important. Decide whats not. Had you done that, it would be interesting to see:How many were on the list then?How many are on the list now?Have you overcome any of them such that you now consider them “manageable”, and thus crossed them off?For those that you have overcome, did that make your list get shorter, or did you just add new ones to replace the old (i.e. fukushima)?How short does your list have to be before you declare “immune”? IMO, part of your problem is that you (like so many on this blog) see something that is hitting somewhere else, and assume the same thing will happen "everywhere", i.e. the nowhere is different thesis. As we have seen, that "nowhere is different" meme was probably the most destructive thing that happened to all of our thinking, as the last 5 or so years clearly shows us. Apparently, those tales from the LV Sun, or the LA times really werent that relevent or impactful to those of us in DC. Also, another perhaps more damaging thing is that IMO you are confusing things that are “inevitable” and assuming they are “imminent”. For example, back in 2002 my own personal parade of horrors list would include a govt default. Now, with an unlimited timeline (like 1 to 10,000 years) I would say this is indeed “inevitable”. Yet, is it in any way imminent? Prechter thought it was in 1988 and has been on the sidelines since. Many people thought in 1815 the 1812 debt would blow us up. Further, had I put this on parade of horrors list back in 1998 and (had I not overcome it) it would be on the list now, and even say 50 years from now. So basically, if I ever wanted to buy, ever, I would have to accept this risk, climb over that horror, and put it into the category of “nothing I can do about it”. Or, if I could not overcome it, I would have to say “since this risk will never come off my list, im willing to rent for the next 50 years, even if it means paying much more in the long run.Continued...
Now, how does this relate to your parade of horrors list? Well, we know that one of yours is certain metrics such as price to rent. However, as we here have shown you (over and over again I might add), is that in some places those metrics started to diverge in 1975, and have not returned to baseline yet. Thus, had the 1978 version of Pat known this he might have declared “Prices are unsustainable and will implode!!! Im not gonna buy til that metric improves” and thus pass on that "unsustainable" 22K list price. Further, since those metrics never have (at least not yet, i.e. “inevitable”, vs “imminent”) returned to baseline, the 1982 Pat would pass on 48K, as would the 87 Pat pass on 99K, the 91 Pat on 142K and so on (these aren’t real numbers but you get the idea)…Has that metric really been that helpful to him? Further still, what if price/rent had returned to baseline in 2001, and the 2001 Pat triumphantly declares “I knew I was right” and buys at 230K, has he really gained much by waiting, paying 19 years of rent and THEN paying 208K more?I submit to you, Pat that you are basically doing a similar sort of thing here (regarding N. Arlington’s “immunity”). In 2010, you looked at your 50 item mental wall of worries, and said “if not by 2012 its immune”. Now, in 2012 you are still seeing that (probably) same 50 item wall of worries, and (while you don’t want to admit it) thinking, “if not by 2014 its immune” or whatever. And, just like the 1975 version of Pat would have done, you now keep pushing that timeline forward over and over and over again, in 2-3 year chunks of time, until, one day (say maybe 2026), look at those 2006 prices and say “gee maybe they weren’t so unsustainable after all”. As we sit here, time (and its evil enemy known as inflation) are hard at work…constantly pushing up whatever long term trendlines are at play, constantly turning those “IMPLOSION” events that ZH, Denninger, etc write about turn into mitigated nothingburgers once they get here. Will this always work? No, of course not…2008 is proof that implosions can happen. However, when (not if) but when those inevitable events hit, will they hit with enough force to vindicate your -30% thesis? Also, just because they are inevitable (and I agree most of your items are), are they really imminent? Even if the worst event you can fathom hits the immunozone in 2038, causing prices to crash down to year 2019 values, does it really matter to us here in 2012? I can see you now, emotional, wanting to write some response along the lines of “your wrong Anon, I know im right about this!!! After all, yields, zirp, Bernanke…” Stop pat…stop right there. I have heard your parade of horrors a thousand times before, the whole jumbled, marginally cohesive mess. Just stop, delete what you wrote, relax, and address your wall.continued...
Actually, perhaps you really should write it down. You don’t need to tell me whats on it…you don’t need to tell me what needs to happen for those items to be overcome. All you have to do is make it, prioritize it, exclude the unimportant stuff, and highlight the important stuff and tell yourself, when if ever, will I overcome these such that it is immune? When is your date pat? Is it really 2012? 2014? 2016? And when those 2014-2016 dates come, will you once again, bargain with yourself again and say 2018…2020… and I will once again, be here, rehashing what you wrote in 2012?Again, I don’t need an answer now, and maybe you should wait til the end of 2012 to decide. However, I can tell you I wish I had done such a list in 2003. And, once I overcame it in 2010, (and got over how much in rent alone, saying nothing about appreciation I lost), I was much happier. Just so you know my list was, and still is inventory, months of inventory, land scarcity, vastly improving demographics, etc. Basically the few things that were reliable both on the way up, and on the way down. Your list may, justifyably, vary... Now, could I lose it all in a sudden, out of nowhere, not on my list, reversion to the mean? Sure. However, as is the case with the dirty bomb, just because it is inevitable does not mean it is imminent. In any event, the only reason this is important is because you are potentially at a very important crossroads right now. On the one side lies Contrarian who I strongly suspect has been doing this to himself his whole life. He sees you there, sitting on the banks of the rubicon and bellows out to you… Join me pat…these guys are wrong…one day…you and I will be vindicated…soon…just wait and see… On the other bank lies all of us, who build up a wall of worries, address them, climb over them, and one day move on. Again, I continue to extend the olive branch of a new more reasoned exchange with you, but you really need to address this Pat. If not for our sake, for your own.
pat,Buyers do not care what "pat" thinks a house is worth. The market dictates prices. I have never heard of a buyer talking about cap rates, ROI, ROE, etc., etc.,. You are thinking of what investors buying CRE worry about. Heck, I don't even work-up those numbers.If you want to insist that some particular "cap rate" or "yield" is going to make a difference to someone who wants a home to raise their family, you are wrong.Your purchase might represent an excellent cap rate, but do you truly believe upper-middle class families want to live in a sketch area of DC? People have always paid a premium for location.If your "yield" was a requirement, there would be a ton of inventory in all the nicer areas. Why is there so little inventory? Supply and demand, pat. Econ 101. Open up 1000 acres of developable land in N. Arlington and you may see the price declines of Haymarket.
A small point in the grand debate, but...re: "certainly Obama shot all of his credibility by bailing out the POS bankers with TARP"Bush, not Obama, signed it into law.
Anonymous,You and Pat are talking different things and that is why you will never get the response that you are looking for from Pat.For Pat, it will never make sense to buy in North Arlington. Prices are to high compared to rents. He also believes prices are unrealistic and unsustainable. He also cannot afford it at the time and does not want to compromise his education, retirement plans and other things which are a priority for him in the process of buying a property in North Arlington. A lot of people think like Pat. I also know a lot of people don't think like Pat. They do not think about retirement plans, vacations, and other lifestyle choices when they buy in North Arlington necessarily. I agree with Pat's priorities. I do think, though, that prices in North Arlington will probably hold and appreciate slowly as long as there are people willing to pay those prices. (per my previous comment on priorities) I have the financial ability to buy in North Arlington and have considered it, but cannot stomach buying a place that is so much more expensive, when I can live 10 minutes away in a wonderful home and communinity with very if not better schools than North Arlignton and pay much less. I would only consider buying in Arlington if my commute was shortened considerably by doing so and if the entire financial pciture fit with my lifestyle and retirement plans. I do not want to be forced to sell my house, for example, to be able to retire. Many people in Arlington are house rich but cash poor. They cannot afford to travel abroad for example. They also will have to sell their homes to cash in and retire somewhere else. Also, let's not forget the more expensive a house is the more you pay in interest overall, besides your larger principal. That is more money out of your pockets and less savings to invest in higher yield opportunities, to vacation, or to just do other things. So, buying in one place over another is a very personal decision and it all depends on priorities. Pat will never agree there is a good time to buy in North Arlington because it does not fit with his values and priorities. He cannot recommend to anyone to buy in North Arligton, which is the bottom line answer you are looking for.
By the way,On the occasions I have been very close to deciding to buy in North Arlington, I pulled the plug because I could not imagine myself paying so much for a place I would not be able to enjoy due to airplane noise. I do not know where you live in North Arlington, but the entire Military Road area (east and west) is quite loud. I enjoy being outdoors on the deck and yard. Spend most of my time outdoors whenever weather permits. I could not tolerate the plane noise in that area on top of the additional dollars I would have had to spend.People tell me you get used to the noise. I don't think so.So again, it is a very personal decision.
Anon"long pile of trivia deleted"it's a wonderful skill in rhetoric,you have,pity it's worthless in reality.You seem to think that paying rent is utterly foolish, well, if that rent islower then the rent on money and you invest the difference.Anon blurts out about how in 82, the best idea was X.well if the yield was 2% and you could instead put money into the stock market yielding 15%, ultimately that's the betterinvestment.Anon dances around a fundamental question which is "Why do renters have frozen lives?" I've been renting in South Arlington for 8 years.In that time, i've done the things i've wanted to. Heck I even built a organic garden.
dc2,I'd like to see the overall DTI number for N. Arlington. Are your assumtions based in fact? How do you know that people are sacrificing retirement saving and vacations, en masse, to live in expensive or semi-expenive locales?Many professionals in this region can comfortably afford to live in N. Arlington. Liar loans are gone so I would imagine that anyone who bought in the last few years "qualifies" for their mortgage.I can't comment on where you live and why it may be priced so much lower. I also can't comment on the big demand for N. Arlington as I've never really explored that issue. It is what it is.My point is that what be a huge sacrifice does and will drive these purchasers elsewhere to more affordable areas. I'm sure some are stretched now but expect that their wages will increase as they move up in their career.Those who have reached a plateau in their earnings (and these earning are inadequate) are, more as less, priced out unless they have a large downpayment or other source of funds. Same goes for Bethesda, Chevy Chase, Mclean, etc.I'd have to see the income and debt levels. As I've said before, my neighborhood had a whopping one short-sale (which involved a divorce and a heloc). Contrarians desired neighborhood probably had about the same, if any.
HB,Agree on the large cap dividend play and the "true" opportunity cost of the downpayment. I'm taking the pre-pay the most expensive debt approach. My debt is all mortgage debt and I am prepaying my highest rate loans. This after maxing retirement vehicles.
"VAI said...I'd like to see the overall DTI number for N. Arlington. Are your assumtions based in fact? How do you know that people are sacrificing retirement saving and vacations, en masse, to live in expensive or semi-expenive locales?"DC2 & VAI - regarding the incomes, I think if you look at the census data, Arl had the highest discretionary income (i.e. income left over after shelter, living expenses, retirement, etc. are accounted for) of pretty much anywhere in the region. This is because (on the whole) the while the total incomes are similar to FfX, & MOCo, since they have fewer children (again on average) they have even more money to spend on discretionary items like vacations or whatever else they choose.That aside DC2, I think I agree with alot of what you just said about Pat. Im now beginning to not really think his primary driver is fear, but some other emotion. Really, I dont know what to think. Im speechless...
"VAI said...Many professionals in this region can comfortably afford to live in N. Arlington. Liar loans are gone so I would imagine that anyone who bought in the last few years "qualifies" for their mortgage."I had kinda forgotten about it, but if you recall, one of the early assumptions of this blog was that the only way the Arl types can afford to live there must be that they were irresponsible, and loaded up on toxic Option Arm and Alt A loans. When the NY Fed data came out and showed they were not more irresponsible, or even average, but actually were the most responsible in that Arl homeowners took out the fewest percentage of toxic loans of anyone in the area, it was a real seachange on this blog.
Anon,Yes, the mantra was that they were blowing thru their savings and assets in order to hang on by their finger nails and that is was only a matter of time when these resources would be depleted and Arlingtonians would join the masses and crash and burn. The "delay" in the "come to Jesus" day was based solely on the fact that they had assets that would see them thru for a couple of years. This was the basis of "the it's moving in" argument.Little consideration (no consideration?) was given to a miriad of reasons that certain areas got creamed.
"VAI said...Little consideration (no consideration?) was given to a miriad of reasons that certain areas got creamed."That was the one that had me completely stumped. For example, every once in a while, someone who wanted N. Arlington to tank would say:"since they have more resources, it just takes more time for N Arlington to fall"On its face, it made perfect rational sense. It usually reassured the speaker who wanted the immunozones to tank, and presumably other posters who wanted the immunozones to tank, and was thus not questioned. Also, it was never stated as a theory (i.e. "perhaps its just that in N. Arlington)...Instead it was always stated as simple axiomatic fact.First time I heard it, say 05-06 I said "OK" sounds good to me. Guess I just need to wait. Well, the problem was, by late in the game, someone more interested in accuracy than simple reassurance would question that statement noting:If that is true, why did other high end areas out in Loudoun, PWC, etc. tank a long time ago?No one could ever answer that. Instead the person who made the statement, as well as everyone who wanted to believe it, sat there, silently saying nothing. For me that was more than enough to put that theory into the "asked and answered" category. Despite you stating it as fact...its clear it was a theory, and its clear it has been disproved. And (unless and until new evidence came to light), it was not useful to repeat it. Well, apparently, I was the only one, because not more than a few days after it was shot down, a new post would appear, sometimes even by the same person as before:"since they have more resources, it just takes more time for N Arlington to fall"First few times I saw that, I remember thinking, "is this groundhog day?" Why would they again repeat it, again as axiomatic fact? Did the person who perpetuate it not see where it was shot down? Perhaps they read but somehow didnt understand?Of course once again, some rational head would bring the counterpoint, followed again by silence, followed by a few days passing until again repeated, perpetuating the cycle, over and over and over again.For as long as I live, Im not sure I will ever understand that...
Anon,I talked about it (on David's blog since 2006 or 2007, I believe). It was Lance and me against the world. I didn't agree with Lance's optimism, but I clearly went into the differences between Loudoun and PW. Neil and his "popcorn" annoyed me greatly. So smug and confident at a time that nothing was a sure thing.I stated on numerous occassions that we needed to look at turnover. How many bought at peak with no underwriting? Well, clearly, all the new delivery in Loudoun and PW met that definition. Many purchases were by speculators with no intent to occupy (false demand). Others had no assets, no downpayment and inflated income.Then we have the lower end, which greatly impacted CS and reo inventory. For God's sake, my housekeeper bought 3 house!There were cogent answers to why certain areas tanked and others didn't. Arlington wealth was one I cited because they could weather a job loss (the few that this might affect) - not that it was just a matter of time before it all fell apart. I also cited lack of turnover (no down/liar loans) and move-up equity.Anyone who gave these issues a fair look could have seen that the "it's moving in" argument was ricidulous.
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