Northern Virginia's January 2012 housing sales were up .6% YoY, and median prices were up 9.4% to $344,750. The average days on the market increased 4% to 77 days.
(The above statistics include Alexandria City, Arlington County, Fairfax City, Fairfax County, Falls Church City, Fauquier County, Loudoun County, Manassas City, Manassas Park City, and Prince William County).
Friday, February 10, 2012
Northern Virginia's January Housing Sales
Posted by Harriet at 11:08 PM
Subscribe to:
Post Comments (Atom)
43 comments:
Arl up 17+%
Loudoun up 18+%
poor cousin Fairfax up 2+%
Remember, CS has a several month lag time so the above numbers are much more timely.
Sales up -- volume up -- prices up -- all done with 12% less inventory.
So much for the "local peak" nonsense we heard for much of 2010-2011... Hopefully no-one fell for that wishful thinking, instead relying on inventory as the much more accurate indicator of potential market distress.
http://www.recharts.com/nova/nova.html
numbers certainly look good for arlington.
I'll have to admit some jealousy about Arlington. I should have known something different was happening when it seemed everyone (pretty much) cared only about Arlington - and this goes back to David's blog. There were some people on Craigs List that were also obsessed with Arlington as far back as mid-2006.
I don't know if anyone was familiar with the guy (tooskineejs) who, certain of a 40+% decline in Clarendon), sold his family home in 2005 and moved to a rental a few blocks away. He expected to buy back in by 2008 at a 40% discount. In the meantime, his rent was higher than his old house payment. He laughed at and mocked the fireman that bought his old house. I called him a day-trader or reverse-flipper. The worst thing was that he was so obnoxiously certain about the 40% and the "it's coming in". He ran away a couple years ago
VA_I,
I'd be happy to welcome you as a neighbor. It's never too late!
Seriously, I think you meant as an investor, but I think you'd enjoy living here.
And, as we are now almost certain we're going to add on rather than move, I could definitely use your advice!
My own opinion about why there has been some resiliency (in addition to the many factors CRT documented and that we've all discussed ad nauseum) was that most of Arlington was "under-priced" relative to the competition when I was shopping in 1999. I put "under-priced" in quotes because most people think that the idea that anything in this area is under-priced is ludicrous. But you know what I mean. We were and are really fond of Alexandria, esp. the Old Town area, and like some parts of DC, but for the combination of things that we wanted and the price at that time Arl. had the most options. However, if I had it to do over again, knowing what I know now, I think I might have looked for a tear down or a house that needed less work (going more to one extreme or the other).
We don't have the courage (or the youth) that Pat has--otherwise there were probably some good DC options, but I am really glad he is helping to continue the transformation of DC.
"We don't have the courage (or the youth) that Pat has--otherwise there were probably some good DC options,"
Ace
i'm almost 50.
however no kids, just a cat means, i don'y care about schools and the macro trend is to urbanization.
if we get $5/gal gas this summer, i think the exurbs will die off.
0.02 says
"
It seems that a room in a group house for $800 is a screaming deal. $1000 is more typical. For a simple 3 bedroom house then, or something that can accomodate 4 roommates, the cost runs between $2800-3500.
On a cash flow basis, that would readily support a $500-$600K mortgage. I would hazard that that really helps put in a floor on the N Arlington colonials."
um two pence,
what's the difference between renting an apartment or buying a condo and sharing a 3 BR house with 3 other people?
If anyone wants to know why i'm so bearish on North Arlington, that line above says it all.
Does the median buyer want to compete with 4 20 somethings to to buy a house? 2 income household, what you describe is a 4 income household.
So to use Anon's standard framing...
Should the Median Buyer who wants to "Get on with their life" expect to have 2 roommates along with a full time working spouse in North Arlington? Wow.
Talk about "Fuckage". Dealing with 2 roommates. so much for intimacy.
privacy, etc.
I've got a dated, but very roomy 2 BR apt in Sout arlington, 1.2 miles from Clarendon Metro.
I can easily ride the 77 bus, which stops staggering distance from our apartment, it's a buck for fare, and it runs until 10:30 at night.
I've walked back drunk, i've taken the 10B back drunk at midnight, i've even taken a taxi drunk for 7 dollars.
Somehow that 1100/month i'm saving covers an amazing amount of alcohol, bus fare and shoe leather.
I know Anon is just waiting for me to say "I"m wrong, North Arlington is special", but the rational analysis doesn't support it.
If Apartments in North Arlington are 2100 for a 2BR and a group house is running $4K, it would seem one or two Apartment buildings would increase supply and eat up this craziness, or maybe rationality would strike and people would opt for different locations.
pat,
I know of a new rental building that opened a year or so ago and was practically leased-up before opening. There is retail on the first floor. I believe it's in Clarendon. It's upscale because it has to be. Land and construction costs aren't going to allow for any mid-level housing to be added. So what is your reasoning about supply surpressing prices? There is alot on the drawing board for the new metro's out this way and I can guarantee you that none of it will be as cheap as existing stock or even close to it.
Ace,
There was a time when I thought Westover was quite nice. I used to drive Wash Blvd daily in the early 80's. The Ballston corridor was nothing but ugly strip centers and parking lots. I didn't know enough to know enough to investigate the Master Plan. I knew big things were planned, but I completely dropped the ball. I should have bought some places - maybe near Whitey's, so I could stumble home on a Saturday night.
"Pat said...Should the Median Buyer who wants to "Get on with their life" expect to have 2 roommates along with a full time working spouse in North Arlington?"
No, but the 1 or 2 earner family better make as much or more as the 3-4 young'ns who choose to triple or quadruple up to make it work. Remember, when you first got here, we discovered the data showing what, something absurd like 10,000+ new families making above 200K moved in to the area? Thats plenty of economic firepower to keep prices high on the N. Arlington bungalows...
"Pat said...If Apartments in North Arlington are 2100 for a 2BR and a group house is running $4K, it would seem one or two Apartment buildings would increase supply and eat up this craziness, or maybe rationality would strike and people would opt for different locations."
You would think so. However, location is such a driving force. Look at NYC for godsakes. People are priced out all the time, yet there are plenty of people who are willing to pay ungodly sums to be at that location such that the prices remain astronomical.
In a way, this is how cities mature. On a "highest best use" analysis, (as VAI notes), the only "rational" use of the land is to put up multi-family dwellings -- and for most cities, over time, thats the way they develop -- single family places are demolished and replaced by high rises. Yet, even today there are a few remaining 2-3 story brownstones in manhattan that go for multiple millions of dollars. Clearly N. Arlington is nowhere near Manhattan, but you get the idea... On a rational basis, no one should pay as much as they do to have the "privilege" of living in that location when they could make so much more by razing it and putting up a condo building. Yet, they do it all the time...
"Pat said...I know Anon is just waiting for me to say "I"m wrong, North Arlington is special", but the rational analysis doesn't support it."
And it probably wont (except for HBU analysis, see above). Again, thats because you think like an investor, not an owner (i.e. you think things must pencil out or if they dont, prices must crash to make them pencil out).
According to a rational, good ROI investor type approach, each of the following markets should be due for a massive crash: yachts, rare wine, fine art, baseball cards, lakotah-sioux cradles, manhattan, muhjedar pottery, avon decanters, tube amps, coca-cola memorabilia, N. Arlington, Faberge eggs, stamps, coins, limoges, Alexander Caldre works, etc, etc, etc, should all "crash". Yet, they do not because the people who make these markets dont think like you do. The sooner you understand this, the better off you (and your understanding of the way things work) will be.
Here's a blog from Mark Hanson who argues that forecloses and REO raise housing prices...
http://bit.ly/wCSD3g
it's funny,
I needed a tool, (No, not you Anon),
a drywall corner bead smoothing tool,
and had to go to the HD in Hyattsville.
Now Cheryl refers to PG as a sewer, toilet, and other sorts of less then friendly adjectives.
All i saw were upscale retail openings and new town houses. Given the relatively lower housing prices, but the presence of the green line is starting to trip the same developement process we saw in all of North Arlington.
seems like a better investment may be out that way.
Anon
"yachts, rare wine, fine art, baseball cards, lakotah-sioux cradles, manhattan, muhjedar pottery, avon decanters, tube amps, coca-cola memorabilia, N. Arlington, Faberge eggs, stamps, coins, limoges, Alexander Caldre works, etc, etc, etc, should all "crash"
Who buy yachts? , faberge eggs, Calders?
how many people in Immungington own yachts and Faberge eggs?
David-
That is an interesting theory, but if you look at a correlation of neighborhood prices with foreclosures you will see that areas with the most foreclosures have fallen in the most in terms of prices.
Maybe if all foreclosures went to investors who rehabbed the house and resold it then things would be different, but this is not the case. Most go to 1st time buyers who can get them cheaper than normal inventory, so the normal inventory does not sell/needs to have its price lowered.
"Pat said...how many people in Immungington own yachts and Faberge eggs?"
Probably very few. But thats immaterial, and you know this...
The question is, if yields on these items are so terrible, why dont prices crater?
"So what is your reasoning about supply surpressing prices?"
depends, when you have to sell,
it sure can.
http://www.nytimes.com/2009/04/01/business/01boats.html?pagewanted=all
"Some of those disposing of their boats are in the same bind as overstretched homeowners: they face steep payments on an asset that is diminishing in value and decide not to continue. They either default on the debt or take bolder measures.
Marina and maritime officials around the country say they believe, however, that most of the abandoned vessels cluttering their waters are fully paid for. They are expensive-to-maintain toys that have lost their appeal.
The owners cannot sell them, because the secondhand market is overwhelmed. They cannot afford to spend hundreds of dollars a month mooring and maintaining them. And they do not have the thousands of dollars required to properly dispose of them.
When Brian A. Lewis of Seattle tried to sell his boat, Jubilee, no one would pay his asking price of $28,500. Mr. Lewis told the police that maintaining the boat caused “extreme anxiety,” which led him to him drill a two-inch hole in Jubilee’s hull last March"
while the ops cost for a faberge egg is fairly minimal, "Security, insurance, dusting", the ops cost for a million dollar home can get really ugly. Taxes, Insurance,,,
and that Two Income Household holding a mortgage for 30 years?
so much for a parent taking time off because one of the kids is special needs.
so much for one of the couple ever getting a major medical condition.
Cheryl is fortunate that her husband makes bank but the two income trap is a very serious problem.
People bought in to North Arlington houses because of the W&L school.
I think being trapped, on that grindstone, is foolish over the long haul.
As for why markets stay irrational?
Well, if i knew that i'd be warren buffet, but, if the biggest asset of a professional family is their home and they are going to stretch every penny to get a zero percent yield, well, they damn well better have a great pension plan because they won't have money for a 401K.
funny thing about markets, though,
when they change, people find they are swimming naked.
Anon
"According to a rational, good ROI investor type approach, each of the following markets should be due for a massive crash: yachts, rare wine, fine art, baseball cards, lakotah-sioux cradles, manhattan, muhjedar pottery, avon decanters, tube amps, coca-cola memorabilia, N. Arlington, Faberge eggs, stamps, coins, limoges, Alexander Caldre works, etc, etc, etc, should all "crash". Yet, they do not because the people who make these markets dont think like you do. "
can you bank finance these items?
Does the FHA let you borrow 750K against them? do they have any utility value?
If your argument is that North Arlington Housing is a "Luxury" good that people will pay any price for, and are in the Sotheby's trade,
(Which at least in Foxhall road DC, are sold by Sotheby's realty), then shouldn't these be all cash transactions, and shouldn't the FHA have nothing to do with financing the Luxury goods of Arlington?
"Pat said...can you bank finance these items?"
Oftentimes, yes. If you havent covered it yet, pull out your copy of Blacks, and look up "purchase money security interest". If a bank sees a market value in an item, it may elect to finance its purchase, regardless of its utility. Fine art is a prime example...
"Pat said...If your argument is that North Arlington Housing is a "Luxury" good that people will pay any price for..."
Not "any" but high... high enough to prevent good yields.
"Pat said...then shouldn't these be all cash transactions, and shouldn't the FHA have nothing to do with financing the Luxury goods of Arlington?"
Probably. But thats a separate question isnt it?
Speaking of which, im sensing another 5:1 question & non-answer session setting up here. Do you ever plan on answering my question:
if yields on these items are so terrible, why dont prices crater?
If not, please say so, and save all of us here alot of time.
Pat,
You missed my point. The income generated from a 2 bedroom condo or home justifies the cost of that home if purchased and financed today.
Of course, you immediately switch gears and claim that that house now needs 4 incomes to support it. Thankfully, Anon pointed out that it needs 4 incomes of 20-somethings fresh out of college earning maybe 40-50k per year. Hardly the position most couples looking to purchase a home in Arlington find themselves in.
My $0.02
Mytwocents: I think you may have missed the point. Please provide examples of 500-600K 3bedroom homes "along the orange line" that 20-somethings would want to rent. I don't mean to pick on you, but I have found you to be consistently way-off in your math and examples.
VA-Investor -- CS accounts for resales. The numbers you cite do not. You know this and so I find your post disingenuous . . . as if the only thing different between these two measures is time. You wish.
http://franklymls.com/DC7749460
I saw this and bid on it, in 2010.
it needed a lot of work, had mold like crazy all over the basement, i hope they decontaminated it.
325 seems alittle high given the lack of parking, and the neighborhod has issues. Plus side it's about 2 blocks from the red line there.
anon asks
"if yields on these items are so terrible, why dont prices crater?"
um you pointed to yachts, and I specifically pointed to an article where yachts were being abandoned, burned and sunk for insurance.
sounds like cratering.
"Pat said...um you pointed to yachts, and I specifically pointed to an article where yachts were being abandoned, burned and sunk for insurance.
sounds like cratering."
Oh so thats why yacht prices cratered? This is proof of your thought that yields determine their value? Suddenly, people discovered yields on yachts (which were somehow apparently "good" at some time in the past) are now bad?
Is that what you are trying to tell us?
Mike,
It was not my intent to mislead. I prefer timely data even if it's not same house sales. I have some issues about the statistical validity of same house sales during times when such a high percentage are distress. I also have an issue with the geographic footprint of Wash., as defined by CS. I watch same house sales in developments where I own property. This is the data that has real relevance to me. The general regional market is important to me in that it affects/reflects the regional economy.
Loudoun data comes as no surprise. There was an over-correction in certain segments/areas. There was no over-correction (or correction at all) in N. Arlington. I didn't drill in on zip codes. Perhaps S. Arl has rebounded(?).
Mike,
Go to frankly.mls and run a report to get all homes sold in 22203, 22201, or 22205 and you'll see plenty of homes all along the Orange line corridor that fall into the 400-600k range. For 22205 since 2009 there have been 180 solds in this range. There are currently 20 on the market.
As for my math, I use the general rule that $100k costs ~$600 a month on a 30 year fixed mortgage at 6%. Since rates are well below 6%, I don't bother to figure in taxes on top of PITI. I'm not terribly interested in a detailed analysis, just a first order swag at the numbers.
Given this "math" that turns a $3k rent into the payment needed on a $500k mortgage. If you assume a 10-20% downpayment that translates into a purchase price of $550-625k.
Also please note, lest you miss my point, that I said these (rough) numbers should establish a floor to the housing prices in this area.
My $0.02
pat, I thought something didn't add up with the boat article. You can't get insurance to pay off if you have damaged/ruined the boat yourself--so why would they owner let his story be published? And why didn't he just drop his price from $26K to avoid all the maintenance fees, etc.?
Mike and mytwocents,
I agree with mytwocents' basic point that the renter demand/ability to pay for a small house along the orange line may set a floor on prices. I agree with Mike about the numbers--that the devil is in the details.
Landlords, unless under duress or who are overseas and want to return to the house, etc., are not going to want to rent houses for simply the PITI, especially not in this slow price increase environment. They surely won't want to buy them for that purpose, today in orange line Arlington.
Maintenance/improvements on old houses is a huge expense and risk, especially when a SFH is rented to tenants, who can be rough on them.
And no one is going to want to sink a 20% downpayment into a 500-600K house for zero return - especially if alternative investments are doing well.
Let's look at the price breakdown. Approx. $2400 just for P&I at today's ultra low 4% on a $500K house, per bankrate.com. Add another $100K for a 20% down payment to avoid PMI, which has an conservatively estimated 5% annual opportunity cost (more this year--safe tax free municipal bonds returned more than that last year, and stocks are doing well this year), or ~$400/month. Real estate taxes would probably be another ~$400 per month or more. Insurance, which is higher for rented than owner-occupied property, will be at least $60 month with a high deductible. That's $3260 per month in costs for these expenses alone. A new buyer of property will also have acquisition expenses that s/he will have to capitalize and recoup through rent, if not to take a loss. That's another 3% of the mortgage at the minimum.
Even with zero maintenance (no one cuts the grass and the water heater never breaks and no toilet needs to be replaced, let alone the roof) the owner is already losing money if the rent is $3000 per month. If the owner isn't paying a management company (another 10% of rent) s/he then has to do work in order to lose money. And, s/he risks that the place will be trashed and damaged badly.
As a result, you'll see houses that people have owned awhile that they are now renting to others for various reasons. But there doesn't seem to be much demand to buy orange line SFHs for the purposes of renting them at this time. I think it's because the numbers don't pencil out.
Ace,
You put a whole lot more effort into the numbers than I did and came up with a $260 difference per month. So I stand by my swag.
If $260 per month is an issue, you shouldn't be buying a $600k house.
Again, back to my point, if you could buy a place that you wanted - for $3260 per month - that had all of the space, location, and amenity possibilities to suit your lifestyle, would you do it?
As Anon asks, what are your fear factors that you have to get over? For me, one of those fear factors was losing my job/income. So I targeted a house that could rent for what I owed per month to avoid foreclosure. In a push comes to shove situation I could either move to the ghetto and rent my place out or take on roommates, etc.
If you could get $3k in rent for a place that costs you $3260, is that enough of a hedge to help you over the edge of that fear factor?
My numbers were slightly lower, but for the couple hundred dollar difference I was willing to take the plunge. Trusting that a couple of years of payments under my belt, and inflation, would make up that slight difference.
My $0.02
Ace,
Could you put me on to those safe municipal bonds?
As an investor, I might be inclined to take a flyer on one of those cheaper SF homes in the Ballston Corridor. With rates, rents and what I see as continued demand, there doesn't seem to be too much risk.
Careful tenant selection is key to any RE investment. While N. Arlington would not produce the highest CF, it should produce good appreciation - at least in comparison to the general market.
"War zones" produce great CF but low or no appreciation and come with a less than optimal tenant pool. There are different "schools of thought" among investors. Some need big CF to live on while others will settle for decent CF with appreciation slightly beating inflation and tenants buying houses for them. I am the latter.
VA_I, Virginia Tax Free Bond fund at T. Rowe Price is one of them.
Mytwocents, I know you aren't being deliberately disingenuous, but why can't you see that the difference is a LOT more than $260 per month? I'm not going to take more time to translate the other costs that I listed into monthly costs, since you should be able to do that yourself.
Ace,
I'm not being deliberately disingenuous, I just don't care to do the detailed analysis you're referring to because in the end I think it's a waste of time. Granted, a necessary exercise if you're actively buying but not for a simple discussion.
I gave you a rough rule of thumb that differed from your much more detailed estimate (that's biased to add cost) by less than 10%.
You re-iterate opportunity costs of down payments, estimate maintenance costs, invent acquisition costs. I could counter each of these points but this just goes around in circles and in the end, amounts to a few hundred dollars.
My $0.02
anon says
""Pat said...um you pointed to yachts, and I specifically pointed to an article where yachts were being abandoned, burned and sunk for insurance.
sounds like cratering."
Oh so thats why yacht prices cratered? This is proof of your thought t
hat yields determine their value? Suddenly, people discovered yields on yachts (which were somehow apparently "good" at some time in the past) are now bad?
Is that what you are trying to tell us?"
yachts are luxury items, when times get tough, suddenly, people stop buying, start selling, and the market freezes.
http://www.nytimes.com/1991/07/21/nyregion/new-luxury-tax-trimming-boat-sales.html?pagewanted=all&src=pm
"THE 10 percent excise tax on pleasure boats, coming on top of the recession, is helping to scuttle parts of the local boating industry, say those who make their livings building, selling and maintaining the boats.
The luxury tax, which began Jan. 1, is applied to that part of a new boat's sale price over $100,000. The National Marine Manufacturers Association, the industry trade group, estimates that from 10,000 to 15,000 boats nationally will be subject to the tax."
Anon
I can't swear that suddenly yacht owners discover yield merely that when times do become tough, they sure discover cash flow.
and yes when times are good, banks will loan all sorts of crap out, but when they call notes, cash calls sure suck.
I've been able to cite 2 recessions and yacht price crashes, I believe that's called evidence.
Boats are particularly driven to hits because the carrying costs are so high and the utility is so low.
at least faberge eggs are cheap to store. nice foam container and a safe deposit box.
Cake.
but paying for a luxury yacht or a luxury house, gets ugly.
Now certainly Obama seems much more in thrall to Goldman then I ever imagined, but it's still going to be a reality call ...
ACE
I think the issue for people is if they have borrowed for a boat, they can't sell it and be underwater on the note, so they "Lose" it or burn it, or arrange for a pirate raid.
much like people burning houses that they owe too much to the bank on.
pat,
Yachts and expensive cars are clearly bought with discretionary income. They will never "yield" anything; in fact, the opposite is true. They depreciate dramatically the minute they are purchased. I really don't see any relevance to the housing market. A house has a rent component (substitution cost) and does not depreciate (absent cyclical price fluctuations) long-term.
This is apples and oranges to the extreme. Further, I doubt many consider a 100K boat a "yacht". While an "investment", art and collectibles are not a necessity akin to housing.
I don't understand why you throw these up as indictitive of N. Arlington housing.
I believe the basic issue is supply and demand. If your assertions were/are correct, why hasn't N. Arl (and Bethesda, Old Town, Georgetown, etc.) succumbed to the fate of the exurbs? Can you explain why certain areas have held value? I think I can and have.
"Pat said...I've been able to cite 2 recessions and yacht price crashes, I believe that's called evidence."
Thats precisely right, and only and imbecile would assert otherwise. This is largely in line with my thesis that housing will respond to economic conditions in the DC area. Yet, when it comes to "evidence" of prices of these items responding to yields, youve provided zero, zip, nada. You very obliquely admitted the same when you said "I can't swear that suddenly yacht owners discover yield..."
"VAI said...I believe the basic issue is supply and demand. If your assertions were/are correct, why hasn't N. Arl (and Bethesda, Old Town, Georgetown, etc.) succumbed to the fate of the exurbs? Can you explain why certain areas have held value? I think I can and have."
Its interesting in that pretty much everyone here understands this, and thus understands why certain areas have held value. Our one holdout is Pat who has ZERO evidence to base his beliefs upon, and insists on using certain investor type metrics that havent proven correct in decades.
Its hard to say if his intractibility is due to stubbornness or stupidity. I think its stubborness. The problem though, is stubborness often looks like stupidity to the outsider.
For example, say someone asserted "2+2=5". Once you point out this is incorrect, a normal person would learn, concede "2+2=4" and move on.
Now a stupid person would continue to assert 2+2=5 because they simply do not have the cognitive capacity to understand better. Yet, the stubborn person would also continue to assert 2+2=5 (even though they knew better) simply because they dont want to admit to something they dont like.
Now in Pat's case, the question isnt 2+2=5 but "bad yields mean that immunozone prices must crash".
The rest of us understand, and admit "yields mean little in determining immunozone prices and havent for decades". The rest of us also understand and admit "supply vs. demand are better indicators of immunozone prices (and show prices can hold)".
Is Pat's inability to "see" this stubborness or stupidity on his part? I think its insane levels of stubbornness, but gosh its hard to tell.
Cheryl,
I wasn't the one who called North Arlington as Luxury goods, it was Anon who was claiming the prices and market for luxury goods never fall and that North Arlington was just another luxury good.
I'm sure Anon keeps a index of where this was posted.
As for Anon who seems to have some odd distinction between Cash Flow and Yield, ultimately they are just different sides of the coin.
And if North Arlington is now a luxury good and bought as a status item, why is FHA and Fannie funding this?
What's the public policy in supporting the rich in buying bigger houses?
Thats right. I am claiming it is like a luxury good. And like all luxury goods, there will be some premium attached to ownership which will rise and fall in accordance with economic conditions, availability of credit, etc...
Also so long as such premium is attached (as it has to some varying degree for the past 30+ years, and especially in the last 10), the people who want to own, will irrationally bid the prices up above and beyond various metrics that investors use to determine good investments.
Also, given that inventory and MOI indicate that there is flat to slightly upward price pressure in the here and now on these immunozone luxury goods, I think anyone who believes they will see -40% off peak prices in the immunozone is delusional.
Am I wrong here? If so where?
sorry pat.
mytwocents,
No, the point of my post was that it amounts to far more than a few hundred dollars--closer to an average thousand $ net loss per month, if you factor in a realistic cost of maintenance and upgrades.
You obviously haven't owned a home for long or you would not dismiss these out-of-pocket costs--and opportunity costs are just as real.
Do the arithmetic, rather than simply restating your position, if you want to persuade anyone. Facts are facts. Take an accounting class about the real costs of investments.
As I noted earlier, if my #s were wrong and the revenue from renting these houses offset the costs and risks, you would see LOTS of investors buying up those properties on the Orange Line. But they are being bought primarily by owner-occupants who apparently see value beyond the investment/rental value, as currently being debated by The Anon, Pat and others. VERY few of them are being bought to rent to 20-somethings.
And, very few Orange Line SFHs have sold in the $500-$600K range since 2010. They are typically more expensive. That makes it even hard to make rental numbers work.
Arl. detached sales $500-$600K
Anon says:
"ats right. I am claiming it is like a luxury good. And like all luxury goods, there will be some premium attached to ownership which will rise and fall in accordance with economic conditions, availability of credit, etc...
Also so long as such premium is attached (as it has to some varying degree for the past 30+ years, and especially in the last 10), the people who want to own, will irrationally bid the prices up"
Anon
The people who want to own in North Arlington have Irrationally bid up prices and hope that some other sucker will come along in a couple of years and also bud up prices.
That's your position, and essentially mine too, except the laws of economics are as immutable as the laws of physics in their own ways.
Cheryl is investing out in reston because there are good deals there.
In North Arlington, people are showing off how rich they are, along with their BMW's, Faberge Eggs and yachts.
Until things get tough....
if they were really rich in North Arlington, they wouldn't need Fannie Mae to finance these in North Arlington.
Anon
So do you want to sell your house in North Arlington for Zero Yield?
Pat said...That's your position, and essentially mine too, except the laws of economics are as immutable as the laws of physics in their own ways.
Except as we have seen, those immutable laws can be "muted" for years, decades, human lifetimes, or longer...
In 2006, we had clear indications, vis a vis this thing called "the bubble" that such that these laws were going to reassert themselves. Inventory was bad...MOI was bad...Those immunozone nabes, then trading at 750K, may come crashing down to 450K, it was posited -- fulfilling dreams of bubble sitters everywhere...
By 2009 those 750K nabes had fallen only to about 710-715K, a far cry from the 450K promised.
In 2009 I said, they may have fallen enough such that they laws will again become "muted" for a considerable length of time...
In 2009, you disagreed, thinking that an "avalanche" was about to happen, and that the bubble sitter, still dreaming of 450K prices should wait a little longer.
I asked you then, when if ever will you quit giving people false hope about seeing 450K prices in the immunozone neighborhoods?
You said if they dont happen by 2012, they will never happen.
Now in 2012, you welched on your word, and continue to give false hope...citing metrics that havent proven correct in decades. Refusing to concede that 450K is "off the table".
Why you do this...is beyond me...
Post a Comment