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Wednesday, January 25, 2012
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67 comments:
contrarian,
Why are you even following Waterfront Road? I'd expect that anything on the water would be 1.2-1.5. If these prices didn't crash in 2008-2010, why would they now? Like the better neighborhoods in N. Arl,, waterfront in 20194 is not dropping. You missed a couple of good buys on Lake Anne and maybe a couple on Lake Thoreau.
Absent some catastrophic event, you'll be waiting forever to get a better deal (unless you bought a Courthouse foreclosure like I did).
contrarian,
Why are you even looking? Why not wait for the collapse? There are some decent buys in McLean (2mil now 1.2,etc.). Once a house is paid-off, there is little relevance to the original price. This is especially true now with the rent/buy equation.
"Contrarian said...The Federal Reserve is propping up prices with "quanitative easing," but they can only hold prices up for so long before reality intervenes once again."
Yep, and when this happens, say 2134 or so, you probably need to get a provision put in your will, authorizing your great great great grandchildren to dig up your grave, drag it across town to my grave, and hit a button on your coffin which causes an internal megaphone to triumphantly proclaim...
I TOLD YOU SO!!!
I too shall instruct my progeny to be there, hear the message, and bow their heads, thoroughly humbled...
"Contrarian said...In the mean, while Neil eats popcorn, we travel around the world while also preparing for the collapse."
Been a long time since I thought about ole popcorn boy. Did you know he shut down his housing crash blog and turned it into an E books blog? True story...
BTW, VAI, as I noted on the other thread, you know who else was good at the (post a fallacy/get it shot down/run away/repeat the falacy/perpetuate the cycle) thing, good ole Neil.
When Case Shiller was tanking, he wanted this to serve as proof that Arlington was tanking, so he would say "Case Shiller is weighted toward the inner areas".
Of course, this is wrong as (a) Homesales outside the beltway outnumber immunozone sales 10:1 and (b) CS does not account for Condos which (proprotionately) is a much greater % of the housing stock in the immunozone.
Yet, once he saw this, and even knowing it was wrong, he would just go silent, run away, wait a few days and then repeat the falacy. It took a while for him to give up on that.
Most interesting to me, despite him living out in LA and wanting to buy in LA, he was obsessed, and I mean simply obsessed about Arlington. He knew this CS thing was a lie, knew it wouldnt fly here as it had already set of our bullshit detector, yet he so wanted it to be true...
For a while his whole blog was filled with posts not about DC as a whole, but just Arlington, providing his "proof" that it too was tanking hard. Of course his readership, the vast majority of which had never even heard of arlington were like OK, thats great and all, but what does that have to do with the 90% of us who who want to live in LA were you do?
My favorite was the day he and some bull were debating some minutae like Wells fargo, or something, and then, out of the blue he just erupted, blurting out (in sum) I dont care what you say!!! Arlington is going down!!!
Kinda like that kicking phantom enemies in the darkness thingy.
Eventually, he recovered from his Arlington obsession, and eventually, was one of the first people to publicly admit "I was wrong...Arlington is immune". I give him kudos for that, but I will never understand the obsession about a small area 2000 miles from him...
oops, replied to this on the newer thread.
VAI, from the prior thread...
"Va_Investor said...
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."
God I remember that too. Since he was 2000 miles away and had no idea about the differences (and this is back when "its different here" was verboten), he would post crap about Lou/PWC & apply it to Arlington, recieve his rebuke, and then REPEAT IT ALL OVER AGAIN!!!
At least Neil was civil. Do you remember the other LA poster NOZ?While he only wanted to live in LA also spent an inordinate amount of time trying to prove DC=LA, and (by his own admission) fighting the "righteous king county shills" in seattle. Again, all part of the "its not different anywhere" mentality. Anyway, if anyone pointed out how he was incorrect about something, his comeback was pretty much always "oh yeah, well your just a fuckwad!!!"
That place was a real hornets nest for a while. Plus unlike here where everyone needs a screenname, 90% of his traffic was anonymous so there were no consequences for saying or making up any stupid thing you wanted. I was still 99% a lurker back then, but I will admit, I did post as an unregistered anon there a few times to give neil the business :)
I have a question for you guys. I occasionally read this blog for informational purposes but now I'm looking for your thoughts.
I have a house in Front Royal VA (www.frorova.wordpress.com shows the lower floor)that I purchased in 2004 for 246,000 usd. It was the cheapest home I could find near Warrenton where my job was. The house when I bought it was two units - but in order to purchase it as a non-investment property, the mort lender told us we had to provide an order that showed we were requesting the utilities company to come and re-attach the upstairs unit's electricity meter to the downstairs unit. In that way I was able to purchase the home as a single family home and then qualify for the mortgage. I of course canceled the utilities request once the house was purchased and rented the upstairs apartment while I lived there.
A few years later my job with the Federal Government relocated me to Miami for three years and I rented the bottom unit out as well.
When my tour in Mimi was done I redid the house because I thought I would move back into it but when I came back up to DC but my position at work had been replaced by a contractor and I ended up getting a job with the DOD - a 5 hr daily commute. So I purchased a condo in DC, got married, long story short I now am in a 33% tax bracket and, mostly because of the taxes and no longer qualifying for deductions related to that house I have found myself in a catch 22. I essentially make too much money to break even anywhere. The house brings in $1725/mo with rent the mort (w/all taxes/ins) is $1981. So after paying $570 in taxes and the difference in income vs expense ($255)I end up paying $825 out of pocket. Needless to say I do not qualify for any refi programs. To make up for this difference I've been renting rooms in my DC place to cover it but that also falls short.
The house is now valued at between 131,000 - 175,000 usd. I have great credit, already own my permanent home, have a car for transport.... Is there any reason to hold on to this house? The monthly expense is putting me on the brink - I can't save for the cost of fixing it should something go wrong. I also do not understand enough about rental property to see how the house's value could be so much less than it's monthly income. Someone could essentially buy it today, with a 30yr mort, live on the first floor and have the entire house financed by a renter who lives above them....
Anyway - keep or foreclose. This is the question.
Frorova-
There are several things to think about. First, is how important is your credit too you. If you have the house foreclosed it will significantly hurt your FICO score, which if you need a loan or think you will apply for a different job could be very bad.
In Virginia technically the bank could come after you for other assets you have, beyond the house. Although this is possibly it is fairly unlikely.
Third if you were able to refinance the house at today's interest rates how close would you be to breaking even? In Obama's state of the union address he said that he will get something passed that allows everyone to refinance their house.
If you don't care about your credit and aren't worried about banks going for your assets you may want to consider bailing on the home. If you do this you may want to talk to the bank about seeing if they can give you something in return for handing over the keys rather than just letting the house go through the foreclosure process.
I agree none of the current plans would do anything for you. During the state of the union Obama mentioned something about allowing all mortgage holders to refinance article about the plan
It is possible that nothing comes of this plan, but I assume we will know within a month or two on whether Obama could get a plan into law that would allow anyone to refinance.
As a negotiation position you could try and tell the bank they have two options either give you a zero point mortgage at 4% or they can take the keys. Effectively tell them you will not make any more payments at the old rate and they can chose their path. Although I would only try this if you really are willing to have them take the house and deal with the risks that come with this.
LOL re 2134 "I told you so." I wish you could "like" comments on blogs.
My $0.02.
Anon said:
"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."
I do not think fear either is driving Pat at all but his values and priorities as I stated in the previous post.
I actually think Pat is very courageous. He bought is a dicey area in DC which could turn around and be a great investment in the future or not. I would not have had the courage to buy there because for me safety comes first and foremost (another personal priority).
So Pat is certainly not driven by fear, but by his personal priorities and decision.
Regarding higher discretionary income in North Arlington, I do not necessarily buy your argument. As you just noted incomes are similar as in other parts of Fairfax County, but you forgot the main expense in that equation, your mortgage, for which savings are much smaller, and there goes your discretionary income.
People without children would have more discretionary income, but that is true for any other part of Northern Virginia that is more affordable.
VA investor,
I did not say people are sacrifing en massa their retirements or vacations to live in North Arlington.
I did say that many people (not the super wealthy, of course) do not think so carefully about the implications of buying expensive homes and that it can affect lifestyle choices such as the ability to take vacations and their retirement plans (may need to work longer or sell that home to retire, for example).
I do know people who live in nice homes in Arlington who have not been able to travel abroad for many, many years because they cannot afford it. They are willing to accept this lifestyle to live there although for them traveling abroad is highly desirable.
The bottom line of my post is that people choose where to live based on personal priorities and that buying in one neighborhood over another is a very personal decision.
anon
you bookmark neals blog, which I guess I never even saw, but I vaguely remember something about someone who would talk about popcorn.
You obsessively bookmark Anon, mine, and about a half dozen other people's remarks, just waiting for the day you can bring it up.
which means you are also indexing and cross reffing their work.
What do you do for a living?
Are you some Government Librarian on suspended duty, who reports to an empty office all day and has nothing better to do then make files of every internet A&*hole who offends you?
Jeez, cheryl vaguely remembers things, but she has a real life.
What are you doing? Sitting in an empty house in 22207, daming everyone who convinced you that you shouldn't have bought in 04?
wow.
This whole neal thing has me gobsmacked.
Oh, and I expect you will bookmark cross-reference and keyword this under "Personal Attack"....
When perhaps you should file it under pity.
DC2
If you recall, I've been posting
MLS entries from NE DC, Cap Hill, SW
as well as arlington and Alexandria
for years.
I've been willing to make tradeoffs between life in any of those areas.
I like arlington, i like the warm ever loving socialist government with police officers who have been to animal encounters training and government workers who call you back within 90 minutes.
However, I've recognized that the value plays were all over NE DC, because Case-Shiller was showing a macro number that was cinderella and yet i was seeing slide in my universe of targets.
I managed to get one of my targets for 30% less then the ask price, which Anon somehow thinks i could have gotten for far less 2 years earlier.
the plumbing work is giving me coronaries, but it's how these things go.
at least i debugged an electric issue this morning.
Frorova. Thats a tough break. Generally I will agree with HB that your best bet is to negotiate with the banks.
The only thing I would add is, before you stop missing payments, you might want to tell them you are at the end of your rope, and ask them, quite candidly, what programs or remediation strategies (if any) do they have for:
(a) people who are struggling but still making payments
vs
(b) people who are already missed one payment or more.
I dont follow all the govt programs plus the bank may have internal programs which are for (a) but not to help (b). Others are designed to help (b) only so you would need to go from (a) to (b) to qualify. Also, note that once you become (b), you may not qualify for anything designed to help (a). Overall its a tough choice and you need to get educated before you make it.
You may not find anyone at the bank who is willing to tell you what your "best" strategy is, but you might. Also, they should be able to help guide you to the info on the various programs so you can read up for yourself and make an informed choice.
One thing to know, whenever you tell them you are "going" to quit payments, they likely wont believe you. Understand from the banks perspective they have heard this 1000 times before, oftentimes from people in your situation with a good job, decent income, and value their credit rating... enough such that the banks assume your are bluffing and wont follow through (most people in your demographic profile dont). Thus be prepared to do just what you said you were going to do if thats what it takes to get any serious attention.
Also, you may want to talk to an attorney out there in the area. He may advise for example, not paying the bank but putting your money into an attorney escrow account. This shows the bank that you are seriously planning to walk away and that they need to give you some sort of break, but at the same time shows that the money is sitting there and you are negotiating in good faith with the intent to keep making payments of some sort (hopefully with your credit rating intact), once negotiations conclude. I dont do enough of this sort of work to know, but you might find an attorney out in the area who has built up a nice sucessful niche practice out there helping people who are in your shoes. Certainly wouldnt hurt to see who is out there and what if anything they can do for you.
In any event, good luck.
$002 -- glad to see someone appreciates my efforts to entertain :)
"DC2 said...I do not think fear either is driving Pat at all but his values and priorities as I stated in the previous post."
That may be, and is the right thing for him to do, but I dont know why that makes him conclude an area is going to see some sort of -30 to -40% drop. Thats the only part of his logic I question. Just because I may want to buy in manhattan does not mean that I will be able to afford it, or that it must "crash" down to some level that people in my income bracket and risk tolerance can afford.
"DC2 said...Regarding higher discretionary income in North Arlington, I do not necessarily buy your argument. As you just noted incomes are similar as in other parts of Fairfax County, but you forgot the main expense in that equation, your mortgage, for which savings are much smaller, and there goes your discretionary income.
People without children would have more discretionary income, but that is true for any other part of Northern Virginia that is more affordable."
DC2 - its not "my argument" that you need to buy, its the census data who said it, not me. Also, I did not "forget" the main expense in that argument is a mortgage. If you go back and look at what I said, the census data backs out the cost of certain costs like food, clothing, shelter (i.e. a mortgage), etc. to come up with its info for discretionary income.
As it turns out, once the mortgage has been paid, clothes are on their backs, and food is in the pantry, the people in that area still have more money than just about anywhere else to spend on vacations, or whatever else they want.
Perhaps you were not here when we found and discussed that data set 1.5 - 2 years ago. The income gains in that area were simply nothing short of spectacular, and really helped alot of us understand why prices were the way they were. Sure I too know some people like you describe. But I also know people who are not like that. In the end, I trust the census data more than my own personal sample size of a few families I know.
"Pat said...You obsessively bookmark Anon, mine, and about a half dozen other people's remarks, just waiting for the day you can bring it up."
I do, but only because its a few people who said something that wasnt particularly smart, and then are so stubborn that they continue to perpetuate that misinformation to the detriment of this blog. In neil's case it was that continuing to post misleading information.
I simply cannot stand it when people who do not know something (or know its wrong and then state it anyway), come here and declaratively state that what they say "is" somehow an axiomatic fact. Also, when it turns out they are wrong (either because they didnt recall something correctly, or were posting opinion as fact), just admit it for god sakes.
In my line of work, when you know something, you can state it as fact, but when you dont know, its probably best to qualify it, or state it as a question, open it up for others to see and discuss. Bounce ideas off one another, and see if you can learn something.
For a long time, Neil didnt do that, and you didnt either. Remember your "Texas Index" or whatever? IIRC you came in and said it was too high, but it turns out you had no idea what you were talking about. Now, had you said something like:
"hey what about this (whatever you were calling the texas index) thing? Isnt it too high? Doesnt that mean prices are going to fall?"
There is a good chance that someone would have come along, corrected it, gotten you up to speed, and that was that.
In all fairness to you, you were kinda late to this blog so perhaps you were still getting up to speed and it was unrealistic for me to expect you to know what you were talking about yet. Still, it (and other things you said) were yet another case of someone coming in, stating something they do not know as axiomatic fact, and perpetuating the misinformation this blog fed off of for some time.
Here you go Pat, it was the "Texas Ratio"
http://novabubblefallout.blogspot.com/2010/03/northern-virginia-february-housing.html
Notice how you start with misinformation as fact:
"pat said...
Look at the Texas Ratio, that
tells you the market is still really
unhealthy.
In an ideal market there is one buyer/seller. or one sell/active.
here we are still at 6:1....
WTF?"
Now thankfully, myself (rudely), Cara, and HB set you straight, but if we had not been there, (i.e. had this been early on) who knows how long people would be believing in the "texas ratio" (you meant to say MOI) and a 1:1 relationship which is completely off the mark?
Now, I will say this, as a point to you. Downthread you backed off and apologized, but even then, your stubbornness kicked in and you still wanted to maintain that MOI ratio (which was fine btw)
"still seems high to me"
I again took a swipe at you noting the market disagrees with what you think. Even leroy who was a bear (yet knew what he was talking about) took a swipe at you stating you didnt really "think" but "believed".
Leroy too had a tendency to bookmark and in his case tamp down misinformation, mostly on the bull side, but sometimes bearish (i.e. contrarian). I always thought he was too harsh on VAI who seemed reasoned in her tone, but I did think he was particularly good at squelching misinformation that came from Lance and KH.
Pat, heres another one, 2 threads later:
http://novabubblefallout.blogspot.com/2010/03/northern-virginia-bits-bucket-3122010.html
Notice how toward the end of that thread, you were saying CS national "needs" to hit 100.
Earlier on, both, HB and I had told you you were wrong, that index is not inflation adjusted, and probably only "needs" to hit 130 or so.
Yet, here you were, again, stating misinformation as fact, and both HB and I had to again correct it. I gave you the benefit of the doubt and thought maybe you forgot, but jesus it sure seemed like stubborness to me.
Oh and finally, from that same thread, but around the middle, I ask
"Anon said...Pat, your argument is basically "it just hasnt happened yet". Let me ask you, when will this blessed event happen? How many years are you willing to say "it just hasnt happened yet" before you conclude "maybe it isnt going to happen"???"
Your answer at the time:
"Pat said...Now, if QE ends and rates return to normal, and prices don't crash or stagnate, then i'll admit i'm wrong"
And my response:
Anon said...Pat -- thats a very good attitude to have, assuming you stick to it, and dont come up with a new reason if it doesnt come to pass.
Too many "permadoomers" will say "when ABC hits, it will bring prices down" and then when ABC hits and nothing happens, they then say "when XYZ hits, it will bring prices down", and so on.
All seems kinda familiar doesnt it?
WaPo: “Washington housing prices fall in 4th quarter”
“A new report from Delta Associates shows that the area had been building modest momentum in terms of home sales and price increases until the final months of 2011, when the availability of [jumbo] federally backed loans expired and local hiring, particularly in the professional services sector, started to slow.”
“One of the bright spots was in parts of Northern Virginia, where prices either held steady or saw very modest increases, particularly in Loudoun and Prince William counties.”
“The average price of a home in the urban core of the District, Alexandria and Arlington fell 6.2 percent to $508,235.”
“The number of days a home spends on the market increased by 10 days to 80 days in the fourth quarter of 2011 compared to the same period in 2010.”
“Still, inventory remains very low, and as a report out earlier this month by MRIS showed, it’s at a low not seen since 2005 in the area. Delta’s report does not forecast any uptick in housing — particularly prices — during the first half of 2012, but is hopeful about the rest of the year. The region, it implies, remains in a holding pattern until policymakers are more clear about spending cuts to the federal budget and its impact for local contractors and employees.”
Anon,
I seriously doubt the census data include data for discretionary income.
Census data includes data for household income. The fact that household income on average has gone up in North Arlington by whatever percentage does not automatically mean there is more discretionary income.
I do not read posts everyday, but I have been on this blog probably two years before Cara started posting.
In any event, I am an example of it. I can buy in North Arlington and choose not to for many reasons including having more discretionary income to do other things (early retirement, travel abroad every year, etc.)
Post the data on income if it is easy for you to repost and we can have a more intelligent conversation on the subject.
forovora
I don't think there are any programs to help you out. The Programs are all designed to increase bank income or reduce bank losses, not, help out individuals.
Basically, you have two choices.
1) keep paying, and losing $200/month.
2) Walk and see what happens.
Bad news, you seem to have the choice between cock and shit...
Good News, There is plenty available.
Mike,
Not sure who Delta Associates is but the data is pretty interesting. The graph also tells the story well. Of course data has to be subdivided by zipcode.
More from the story:
* The average price of a home in the urban core of the District, Alexandria and Arlington fell 6.2 percent to $508,235.
The District: Prices fell 7.3 percent
Alexandria: Prices fell 1.4 percent
Arlington: Prices fell 5.8 percent
* The average price of homes in the “inner ring” suburbs, including Fairfax, Montgomery and Prince George’s counties, fell 6.9 percent to $367,886.
Fairfax County: Prices were flat, down 0.3 percent
Montgomery County: Prices fell 7.4 percent
Prince George’s County: Prices fell 9.9 percent"
dc2,
I was just responding to pat's contention that masses of people in N. Arlington are sacrificing retirement, kids college and vacations. I doubt this is an accurate picture.
You decided to forego that location and purchase in a less expansive area so that you could save more and travel, etc. This type of decision goes on all the time. Pat's suggestion that people throw caution to the wind and buy in Arlington at any cost is absurd.
There are a large number of people in this region (the wealthiest in the nation) that can afford N. Arlington, McLean, Great Falls, Bethesda and Chevy Chase without scarificing anything. Those that can't afford it, buy elsewhere.
Just because a house is expensive doesn't mean the buyer can't easily afford it. I would suggest that higher income folks actually spend less of their income (as a percentage) than middle income earners and renters.
VA investor,
I agree that there a lot of people who can afford all the locales you mentioned. I do think that there are more relatively lower income people who choose to live in Arlington (not Great Falls or Mclean, necessarily) and stretch to do so.
Data on income would tell the picture more clearly.
The Arlington vs. Fairfax county equation can be analyzed by looking at household income for locales (zip codes if you wish) vs. the average house price in those same zipcodes.
Sure, the more money you make the lower the percentage you spend paying a mortgage.
But, I would bet that there are more people with higher discretionary income living in Vienna, Annandale, Springfield, Burke, possibly McClean and Great Falls, and other locales (when you compare apples to apples-- similar type/size of homes) than those living in Arlington.
Have not seeing the nitty/gritty data. I am waiting for Anon to post it. I may be wrong but that is my impression which can be easily proven or disprove with data.
Here is a sample of some different area zips:
N. Reston 20194 $132,600
S. Reston 20191 $ 87,000
Herndon 20170 $ 75,000
McLean 22101 $215,000
N. ARL 22207 $160,000
S. ARL 22204 $ 57,000
Vienna 22182 $155,000
This is the Average AGI for 2009. Source melissadata.com
"Income Tax Statistics Lookup"
DC2,
I agree with VA_I and The Anon re: the demographics and income of N. Arlington residents. I also agree with The Anon that the "stretched" residents are unlikely to push house prices down any more than is happening in other areas. Unless and until there are big changes in the employment picture, e.g., by greatly reduced govt. spending for contractors and lawyers, a double dip recession, etc., there are going to be plenty of buyers willing and able to buy the houses of the few N. Arl. residents who decide they are so stretched that they have to sell.
Feel free to find and post data beyond what VA_I has, but the data that have been posted here in the past are inconsistent with the idea that many people there are stretched so much by their house payments that they can't afford retirement savings, travel, etc. As has often happened in the time I have visited this site, you and others seem to be thinking primarily about young, recent buyers, who are the minority of all homeowners in N. Arlington. Most people have owned their homes a long time, pre-bubble. Maintenance and upgrades are costly, since these houses are typically old. But I don't see much evidence that many in N. Arlington are unable to afford basic repairs.
If you find data comparing zip codes, be sure to control for the ages and life stages of residents. In Arl., esp. in 22201, 22202, 22203 and some parts of 22207, there is a high proportion of younger residents who are renting while going to graduate school at Georgetown, GW, etc., living on loans and scholarships (i.e., low or negative income) in addition to the many young professionals who are in the early stages of their career and pay growth. I would guess there is a higher proportion of these in N. Arl. (and in Crystal City) than in McLean, Great Falls, Vienna, etc. These will bring the income averages down.
As for anecdotes--I can see any you offer, and raise you one. Aside from my neighbors, I have many acquaintances from all parts of Arlington (and elsewhere), and I can tell you that none of my anecdotal experiences are consistent with the idea that they have to forego travel, etc., to make their house payments. My anecdotes are consistent with the data that have been reported here many times. I am sure that you know some people who are stretched and I am sure there are others out there. I am just questioning the proportions.
Many of my acquaintances have modest houses because they chose, as you are doing, to buy less than they could afford, and have been fortunate to have remained employed during the time I have known them. Many other acquaintances, who, like you could choose to be house poor in Arlington (or not), have chosen to buy elsewhere, simply because somewhere else is more appealing to them. But it doesn't follow that many N. Arl. people are house poor--many of them bought at a cheaper time or may have more money than you or I do.
So, I would not "bet the house", so to speak, on the idea that N. Arl. homeowners in general are unable to shop at Whole Foods because they are house poor. Denying the statistical reality of who owns houses in Arl. isn't going to help anyone make accurate predictions.
DC2,
I should have added, that, like VA_I, I also wonder where you bought that is only 10 minutes farther away (from DC?) than is N. Arl., and has good/better schools and is "much cheaper." I guess it depends on your definition of "much", but I don't know of any places like that.
Ace-
The other question could be about the 10 minutes. I live right next to the vienna metro and thus 66. I can get to N. Arlington in about 10 minutes without traffic. The schools are definitely better and houses are cheaper. The problem is if I try and drive their during rush hour or take the metro it takes a lot longer so I am curious if DC2 lives in an area like this.
Va investor,
Thanks for the stats. I mistated what I meant to say. I did not mean to say that North Arlington had a lower income than all those locales, but the spread between the income and the home price is larger. That is what I am talking about when it comes to discretionary income. Although it is interesting that Vienna 22182 has a higher income, and probably on average lower home prices than 22207. So there you go.
If you look at home prices in those zipcodes vs. income (I have not done the analysis) but I would want to know that is the spread relative to the income people have in those zipcodes.
This just makes sense to me. Arlington is a desirable neighoborhood and people are willing to stretch out more to live there. The stats may prove that. If this is so, it also comes with the price of less discretionary income. That is all.
dc2,
Trulia's heat map can zero in on zip code median sales prices.
These numbers are as of 12/11
Med$$ AGI
N.Reston 20194 500K 132K
S.Reston 20191 382K 87K
Herndon 20170 316K 55K
McLean 22101 730K 215K
N. Arl 800K 160K
S. Arl 340K 57K
Vienna 650K 155K
So, this may be an "ah ha" moment but there are lots more samples that would have to be looked at to get anything statistically relevant. Trulia did note that 22207 and 22314 (alex) were the top locales in terms of desirability. So, high demand may be driving the difference. I think this portends well for those areas.
Dc2
It also depends on when people bought the houses. It is possible in established areas people may not be able to afford their own house at current prices.
As for 22182 I used to work there and the area has very little housing and most of what it has is newish
dc2,
You still aren't controlling for the renters/ages of the population. Vienna probably has more young families with kid-related expenses. Those numbers show nothing about discretionary income.
Ok. Here are some numbers which are apples to apples.
Of course we are making a lot of assumptions and these are very rough points of comparison. Maybe differences are not as stark, but there are some differences.
MRIS December stats for detached 3- bedroom properties show the following:
Vienna 22182 - $591,333
Vienna 22180 - $460,375
Falls Church 22046 - $551,250
Fairfax 22030 - $432,833
McLean 22101 - $675,233
N. Arlgington 22207 - $635,159
I do not have all the equivalent average incomes for these areas. Missing Vienna 22180, Falls Church 22046, and Fairfax 22030. VA investor found 22182 has higher average incomes, so there the theory holds. There was no data for Vienna 22181 for that month.
These are closer in neighborhoods with good schools. Both Falls Church and Vienna 22180 are about 10 minutes or less from 22207 if you take the HOV lane. If you bought a hybrid car before July 2011, or have two passengers, you can still take the HOV.
Even McLean for the difference in home price which is a little higher, the average income is substantially higher.
We also know that 3-bedroom detached properties in McLean and Vienna have .24 acres or more in land, compared to .20 or less in land in 22207 on average.
Ace,
Younger peple with kids will also have lower incomes. So there is a lot that needs to be controlled for that we do not know to get exact numbers for discretionary income.
I looked at rought cuts. Anon claimed Census publishes discretionary income stats, which I really doubt because they do not do that type of analysis. I am still waiting for Anon to publish the discretionary stats he talked about with so much certainty.
Things to consider for discretionary income include:
Cost of maintaining your home. I know that if you want to get something fixed/painted in North Arlington, often builders/painters charge you a premium.
We can assume cost of clothing and food is all the same.
Cost of energy, water, gas, other utilities can be assumed that is all the same too for equivalent homes (3-bedroom detached properties).
Cost of gas may vary, but that is hard to calculate. And it all depends where someone works.
So I decided to look just at the cost of the house and the income.
We are assuming that differences in types of people including: renters/owners/retirees/young people with kids/young people without kids/older people with or without kids/ would be about the same for all the neighborhoods, for 3-bedroom detached properties.
dc2,
Could this snapshot in time merely reflect the fact that N. Arlington did not fall 25% in price as alot of FX CTY did ? The young professionals want to live there. Trulia says it's the most desired locale. I don't know what the basis for this data is or why 22207 is so hot - but it is.
Perhaps as prices come back up in other zips the income equation will be more in line with prices OR we could see Arlington just continue on it's merry way.
DOH! Why didn't I buy in N. Arlington?
VA investor,
To me the data tells me other neighborhoods have a greater chance of going up in price, therefore of being better investment opportunties for the time being.
dc2,
I don't agree.
Dc2
I don't know whether the census deals with discretionary income or not, but they do a lot more than the 10 year census. They regularly are interviewing people collecting all sorts of stats. Some of the surveys they give people have several hundred questions.
dc2,
The 2012 FY Fairfax County Adopted Budget Plan has a detailed narative with charts and graphs on demographic trends. I wish I knew how to link. While not zip code specific, it is pretty interesting to read. I wonder if Arlington puts out the same data?
As to N. Arlington, do you find it odd that this entire blog seems to center on this area and has for years (with Bubblemeter before it)? Telling, I think.
Va investor,
A lot of the people on the blog live in Arlington I guess and like to talk about their neighborhood.
I talked about it in the context of the not so nice dialogue Anon was having with Pat where he/she basically kept asking Pat when would he say it was a good time to buy there.
I think some people obsess about it.
Va investor,
Cara used to talk a lot about Springfield and Burke I think. Did she end up buying in Burke? I cannot remember. So people talk about where they are buying or where they live.
Don'r remember the name of another lady with five childen who bought a really large home with lots of acres in some outer burb. She used to talk a lot about that area.
I know you talk a lot about Reston and Herndon.
So I guess people have questions and want some validation/advise/or just want to tell about the places where they are buying or live in.
dc2,
Yes, Cara wanted Burke, I believe the woman you speak of with the large family was in PW, kevin wanted Oakton or Vienna, can't remember where LeRoy or Jeremy (Vienna?) wanted to buy. Robert was in Great Falls. Strangely enough, contrarian practically wants to be my neighbor. Pat wanted to be in Arlington but chose a more economical alternative in DC. Arkey was selling in Manassas. Don't know where CRT was. We had someone here from Alex. I believe Harriet is in the exurbs (PWC or Loudoun). But the conversation has always seemed to be dominated by Arlington.
I bought in Oakton. Vienna is too expensive for the type of lot/yard we wanted. We have a mostly flat 3/4 acre backing to a wooded park area with a nature trail. Plus, the thing I hated most about living in Arlington back in the day was feeling trapped after work because traffic was so horrible I didn't feel like going out in it again to eat/shop/etc. Vienna is quickly turning into that, especially along 123.
I feel like Arlington has been the hot topic for the past year because it is so expensive and never dropped that much. The rest of us all got a chance to buy in after the price drops. Many of the Arlington posters are still waiting (and thus still posting).
cheryl
Paying 5X AGI may be affordable with the Zero INterest rate policy, but,
when interest rates rise?
Housing is priced according to monthly payments, not inherent value.
Well pat, the fed just indicated that rates would remain low thru 2014 so I think I will worry about that bridge when we cross it. Do you believe that this era is somehow different from the early 80's? Higher rates = higher inflation = higher income (?). Wraps, ARMS, NegAm, Assumptions, etc.
Contrarian,
I would agree that a house depreciates over time, but land appreciates and location, location is what dictates that appreciation.
contrarian said:
"When 20% downpayments are required"
Could you cite your source on this? Clearly FHA doesn't require 20%, nor VA. From what I hear 5% down with PMI is readily available now.
Ok contrarian. No FHA. No VA. No fannie, no freddie. When? When do you suppose the gov't will shut down these programs and cut the legs out from under the housing market? The cat's already out of the bag. Today's loans are much safer.
I notice you have no back-up for your ridiculous 20% down claim. You meant now. Don't give me crazy speculation about sometime in the future.
contrarian,
You said 20% down now. Just admit you are wrong. Instead you bring up the Euro-zone, China and Japan. You also bring up what appear to be "hedges" by freddie. I wish I had shorted CS in 2006 or 2007 when I wanted to. Companies and individuals place hedges everyday.
DC2 said...Anon claimed Census publishes discretionary income stats, which I really doubt because they do not do that type of analysis.
DC2. As HB noted, census does much more than just the decennial census. In particular, we relied extensively on certain data sets called American Community Survey (ACS) on the American FactFinder page
http://factfinder2.census.gov/legacy/aff_sunset.html?_event=&geo_id=16000US0670000&_geoContext=01000US%257C04000US06%257C16000US0670000&_street=&_county=santa+monica&_cityTown=santa+monica&_state=04000US06&_zip=&_lang=en&_sse=on&ActiveGeoDiv=geoSelect&_useEV=&pctxt=fph&pgsl=160&_submenuId=factsheet_1&ds_name=null&_ci_nbr=null&qr_name=null®=null%253Anull&_keyword=&_industry=
Unfortunately, it looks like this link (which I had apparently bookmarked in a santa monica vs. N. Arlington comparison) is now broken. Also, it looks like the census has completely revised the data series, and I dont know how to manipulate it.
In any event, feel free to peruse it at your leisure as there are literally hundreds upon hundreds of data sets (percapita income, median HH income, discretionary income, disposable income, median family income, etc, etc.). Also, I think you have to look it up not by community or zipcode but census tract. N. Arlington is either tract 1002 or 1006 IIRC.
Also, going back to the idea that people here are more stretched than others, in addition to all the other points that Ace & HB notes, please recall the NY fed data which showed that in terms of toxic loans (Subprime, Alt-A, Option Arms, Pick-a-pay, etc) N. Arlington had the lowest percentage of these loans in comparison to similar wealthy areas outside the beltway.
Clearly, if they were so stretched they would have engaged in as much or even more of that reckless, toxic loan crap that similar wealthy areas outside the beltway did. The data showed they did not, (one of the reasons the N. Arlington area imploded the least) indicating that these people were no more stretched than anywhere else, and (if anything) even less stretched than their outer county bretheren.
As an aside, heres an interesting article re: Japan.
http://news.yahoo.com/japans-population-shrink-two-thirds-2110-073853204.html
IMO, Japan has another 20-50 more years of deflation ahead of it, possibly much more. Imagine how crushing a debt burden it is when a govt debt run up by over 100 million people must be paid back by only 50 million!
This in a nutshell is why the "USA is the next Japan" meme is so off the mark. So long as we continue to increase in population, we are not likely to be facing a deflationary environment anywhere near what Japan has faced for the last 20 years, and likely will be facing for many more generations.
""Pat said...You obsessively bookmark Anon, mine, and about a half dozen other people's remarks, just waiting for the day you can bring it up."
I do, but only because its a few people who said something that wasnt particularly smart, and then are so stubborn that they continue to perpetuate that misinformation to the detriment of this blog. "
Like I said, you obsessively bookmark half a dozen people waiting for the day you can bring it up.
Wow.
I do pity you.
Anon-
I also saw that article on Japan yesterday. It really is amazing what is going to happen to that country if they don't loosen their regulations on immigration. I can't imagine how detrimental it is to a society to let the population shrink that much. Entire villages and cities would probably end up being deserted...
Anon,
You claimed to have data on discretionary income from the Census. I am fairly familiar with what the Census publishes. Just admit you were wrong and the Census does not publish such data.
Regardign Alt-A and other kinds of loans, yes people in outer burbs did sign on loans not knowing what they were doing. Once those loans went up in interest rates they could not afford them.
You still have not disproven my theory of discretionary income vis a vis 22182 and other nearby neighborhoods.
DC2 said... Just admit you were wrong and the Census does not publish such data.
Well seeing as it is my charge, and I am unable to prove it, (i.e. while I remain convinced the data is in there, I am unwilling to find it), then yes, it is true I have no proof of what I claim.
If you want to believe these people are somehow different than the rest of the area, and that they are truly hanging on by a fingernail (based on your personal observations) vs. the rest of the area where they are more "responsible", then I guess thats your perrogative.
That said, how do you explain the much lower incidence of junk loans (subprime, Alt-A, option Arm, etc) in this area versus anywhere else?
Pat said...Like I said, you obsessively bookmark half a dozen people waiting for the day you can bring it up.
Guilty as charged...
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