The for rent rowhouse is located at 1203 I Street NE in Washington, DC. It rents at $1750 a month. "Newly Renovated 3BR, 1.5 BA Townhouse with updated baths, brand new appliances, new blinds, new hardwood floors, and carpet. Contains exposed brick interior, french doors, washer/dryer, Central AC/Heat, security system and off-street parking. Ready for immediate occupancy. Minutes from Union station metro, seconds to Metro-bus"
The for sale rowhouse is located at 1237 I ST NE in Washington, DC. It is available for sale at 525,000. 3br 3 ba. "Gorgeous victorian close to h st. And noma dev., union station. Great finishes thru-out - crown moldings, tray ceilings, gleaming hardwoods, gourmet kitchen, deck, fireplace, masterbath w/jacuzzi and so much more!!! Tenant occupied but will deliver vacant.,1,224 Sq. Ft" MLS#: DC6079106
These two 3br renovated rowhouses are located on the same block and their 2007 assessed values differ by less then 10,000.
Let us calculate the cost of buying. At 525,000 lets assume one has decent credit and takes out a loan for the full amount and pays an average rate 6.7% using a 30yr fixed mortgage. Your monthly mortgage payment would be $3387 according to bankrate. Minus mortgage tax deductions of perhaps $900 a month. Taxes will run about $200 a months and maintenance and insurance costs will add in another $450 a month.
- Total Ownership Costs: ~$3150
- Total Renting Costs: $1750
Posts
michael - do whatever makes you happy. How you bubbleheads believe ONLY housing will crash is incomprehensible to me. Yeh, your stocks and bonds and jobs will be fine. Only housing will tank, and you all can "swoop in".
ReplyDeleteReal BubbleHeads aren't planning to swoop in until perhaps 2008 at the earliest. This thing will take a few years to unwind. We will be sitting on the bottom for another few years after. Don't rush in on the 15% drop we will see by December. The smart money will sit on the sidelines while the home debtors bleed to death.
ReplyDeleteduck and cover,
ReplyDeleteAgain; with what are you going to swoop in? You think homeowners don't have more money than you? Assuredly, most do.
Va_investor, I could "buy" a house this week if I wanted. I've got closing costs and down ready to go. The idea is to buy low sell high, right. Buying at the top of this speculative RE bubble would be about the stupidest thing I could do.
ReplyDeleteBy 2008 there will be plenty of inventory with prices at least 33% off current prices, probably more. If interest rates are higher I will have a bigger down and pay off the loan faster. By then the stupid money will be flushed out and buying a house will be a much more sound financial decision.
duck and cover, i think you've missed va_investor's earlier point. IF real estate prices went down 33% as you are stating, it would have a disasterous ripple effect on the economy as a whole ... And as a member of this economy, you would be hit personally. I.e., The value of those stocks and bonds that you plan to use as a deposit and closing costs would collapse by a lot more than the 33% you are hoping for for RE prices. (Don't believe me? Look how far they went down during the dot.com bust ... and THAT didn't even involve something as all encompassing to most everyone in this country as your hoped-for 33% decline in house prices!) As such, you wouldn't have the money to put down anymore ... assuming there were even banks left standing to make you the mortgage since under your scenario they will all have taken it in the shorts because of people walking away from the valueless homes. Additionally, with the collapse of so many industries related to housing, you might very well find yourself unemployed. Afterall, if everyone has just lost their shirts, why would they be spending money going to restaurants, buying new suits, etc. etc. The irony is that you are wishing yourself harm in wishing others harm.
ReplyDeleteLance
ReplyDeleteAre you still on here giving relationship advice?
Lance, to go down 33% is only to roll back to about 2003 or 2004 prices. Most of the 33% down would involve erasing the gains of 2005. Those gains were brought about by speculators buying with 0% down on the hope of another 33% gain in 2006. A 33% correction won't hurt as bad as you think unless you are in the biz. It might set of a panic and a depression, but more likely it will set the fundamentals back on a more sustainable course for future growth.
ReplyDeletePeople cheering for it to go up another crazy amount in the future are cheering for young people to pay greater % of my paycheck so they can make more money. Damn them for trying to gouge the future homeowners for their own greedy desires. Speculators and house flippers will get burned in this anticipated 33% drop scenario and they would deserve it. Homeowners will still have their houses and will get lower taxes out of it. Going back to 2003/2004 homeprices doesn't sound that scary to me.
va_investor said...
ReplyDelete“duck and cover,
Again; with what are you going to swoop in? You think homeowners don't have more money than you? Assuredly, most do. “
Then why the increase in foreclosures?
Oh and I forgot to add if anyone cannot stand to be upside down in their "investments" they can always call firebugs.
ReplyDelete"Or we could rent for half the cost and save the remainder to invest in equities, bonds, future down payment. "
ReplyDeleteYeah, the stock market has been a dynamite investment the last 5 years. You must be rolling in dough.
Robert,
ReplyDeleteForeclosures will be picked-up by investors like me who know what they are doing and have cash- not a neophyte like duck and cover with his 20% down.
No, my question was not “who will buy the foreclosures”
ReplyDeleteva_investor said...
“duck and cover,
Again; with what are you going to swoop in? You think homeowners don't have more money than you? Assuredly, most do. “
Then why the increase in foreclosures?
Robert,
ReplyDeleteI have never argued that we aren't in for a correction a la early 90's.
Stagnant sales and dropping prices always lead to an increase in foreclosures. That does not mean that renters have more money than owners.
When renters suffer adversity (job loss, illness, emergency bills etc.), they get evicted. Owners get foreclosed upon. Same difference.
My point is that if the sh@t hits the fan; chances are "duck and cover" will be doing just that.
Without reading the other 200 comments, when rents fall far, far below mortgage payments on a comparable property, that's what's known as a "housing bubble". Do not buy as it will ultimately burst (if you are truly comparing apples to apples).
ReplyDelete"Yeah, the stock market has been a dynamite investment the last 5 years. You must be rolling in dough."
ReplyDeleteActually, we have. Heard of commodities? Emerging markets? International Value index funds? They've done fairly well the past five years, even with the recent dips.
Do your homework, boy scout - and study the numbers.
I believe va_investor has pwned! all of your silly butts. But most are too thick-skulled - or oblivious - to even notice.
ReplyDeleteSo go on then! Carry on about the housing market dropping 33% in the next few years, how you'll swoop in and buy a mansion in Potomac for only $200k, and how you will outsmart all those other suckers out there. Do whatever it is that you need to reassure yourself that you have made the right decision, that you have outsmarted everyone else, and that you are sitting pretty on that 33% off mansion.
Of course, if all the housing prices do in fact drop 33%, you will likely be out on the street corner selling apples and doing a little dance for a nickel. But at least you can go to sleep at night in that massive - and cheap! - mansion in Potomac.
David's site has become a bore. It's the same ol, same ol.
“Fritz said...
ReplyDeleteI believe va_investor has pwned! all of your silly butts. But most are too thick-skulled - or oblivious - to even notice.”
Sure, and it looks like “investors” are just eating up this market. Yea, looks like there putting a real dent in inventory. If this is such a great time to buy, why aren’t they buying? We should see inventory rapidly decline as investors eat up all this prime real estate.
“…David's site has become a bore. It's the same ol, same ol….”
Glad to here that, good riddance. Unless of course, you have pertinent data to support another boom in real estate………….
Didn’t think so.
Nice knowing ya "fritz".
Robert,
ReplyDeleteThe smart investors haven't put new money into this market since 2002 or 2003. Unless, of course, a DEEP discount was available.
The smart investors will be on the courthouse steps in a couple of years buying foreclosures and flipping them to the "duck and cover's" (and David's) of the world.
“va_investor said...
ReplyDeleteRobert,
The smart investors haven't put new money into this market since 2002 or 2003. Unless, of course, a DEEP discount was available.
The smart investors will be on the courthouse steps in a couple of years buying foreclosures and flipping them to the "duck and cover's" (and David's) of the world."
How is it that “smart investors” will be buying in a couple of years, however for the home owner it’s “buy now or forever be priced out, real estate never goes down, and they're not making any more land"?
See ya, "Fritz." Take off, hoser! Go to Canada - the market is still hot there. Maybe those nice people up there will take at face value your arguments for buying housing now without challenging you and hurting your feelings.
ReplyDelete"The smart investors will be on the courthouse steps in a couple of years buyig foreclosures and flipping them to the 'duck and cover's" (and David's) of the world.'"
ReplyDelete- Maybe we'll just keep on renting. After all, we have no self-esteem and are penniless. That's why we're not big, tough guy home buyers right now like you, Robert.
"..and they're not making any more land."
- I heard some home builders are looking at funding a space mission to find land and build on housing in Uranus.
Robert,
ReplyDeleteYou clearly are not quoting me.
1200 blk of I street? Does the house come with a bullet proof vest?
ReplyDelete“va_investor said...
ReplyDeleteRobert,
You clearly are not quoting me.”
Nope, but with this tone:
“….But I see SO many EXCUSES here, I believe that some of you may never buy (I could lose my job, we could get pregnant, prices could drop,...I could get hit by a bus...).
Buy or don't - who cares? My tenants make me happy every month as my mortgage balances decrease. Please, please stop whining! If you truly wanted to own, you would.”
I’d like to know why investors can wait while the common buyer can not. If we truly want to buy we will. But why can’t we wait it out just like the “smart investors”? No matter the excuse, when prices come down, those excuses will be weighed against the price of the house. If the price is right, the other excuses will be negate.
“Nicholas Nickleby said...
ReplyDelete- Maybe we'll just keep on renting. After all, we have no self-esteem and are penniless. That's why we're not big, tough guy home buyers right now like you, Robert.”
Whoa, I’m not a home buyer, not right now. I’ll admit that I house hunt regularly to test the market. One of these sellers with a 200+ DOM home will have to be the first to fold. I’m not going to wait five days before I’m ready to buy to start looking. I figure I’m anywhere from six months to a year and a half from thinking seriously about buying, but in the mean time, I’m not going to pass up a deal.
Either I misunderstood your post, or I did not make my previous post clear..
Historical Tables
ReplyDeleteTable 11A. Median asking Rent for the U.S. and Regions: 1988 to Present
Median Rent (monthly + dollars)
U.S. Total
1988 - 343
1989 - 346
1990 - 371
1991 - 398
1992 - 411
1993 - 431
1994 - 429
1995 - 438
1996 - 444
1997 - 442
1998 - 461
1999 - 461
2000 - 483
2001 - 518
2002 - 568
2003 - 589
2004 - 615
2005 - 605
2006 1st Qtr - 600
Table 11B. Median Asking Sales Price for the U.S. and Regions: 1988 to Present
Median Sales Price (dollars)
1988 - 59,200
1989 - 54,200
1990 - 62,700
1991 - 63,700
1992 - 73,300
1993 - 69,600
1994 - 72,200
1995 - 77,500
1996 - 81,200
1997 - 87,700
1998 - 87,800
1999 - 89,400
2000 - 90,400
2001 - 93,300
2002 - 111,100
2003 - 117,100
2004 - 122,100
2005 - 140,100
2006 1st Qtr - 159,500
Source: Current Population Survey/Housing Vacancy Survey, Series H-111, Bureau of the Census, Washington DC 20233.
So there was a link on historical DC RE listings showing an average $3000 cost for a house and attempting to show (based on some mythological 10% yoy stock appreciation) that home ownership was bad "investment decision".
ReplyDeletehttp://www.daileyint.com/hmdpc/2005/06/dc-housing-bubble-110-years-of.html
Well it looks like maybe the returns were comparable - based on DJIA - the Dow in 1896 (earliest I could find) was at 40.94. Today it is at 10792. See http://tinyurl.com/qdnwx
Assuming that your $3000 investment matched the performance of the Dow Jones industrial average over that time you end up with $790,815.82 That's about what a nice home in the good areas of the district is going for. (by good, I mean Wilson HS - schools are important to families).
David mentioned doing comparisons in other neighborhoods. I would love to see a comparison in NW - Cleveland Park, Cathedral, AU area. I am looking, and I really don't care whether I rent or buy. But I don't want to compare the cost of renting a 2BR condo with cost of buying a 3BR house.
Va_investor seem to have the right idea. While a situation may not make sense for an investor, it may make more sense for a renter.
And I know from experience that the GREAT deals in the 90's crash needed cash to capitalize on. Normal occupiers couldn't get in there (some exceptions of course).
Trying to decide
Anon 9:10
ReplyDeleteGreat analysis! And the results you state aren't limited to the Wilson HS area of town. Having done some research in the Washingtonian Room on building permits for houses on my street (Dupont), the larger 2 story ones were built for approx. $3,000 in the 1890s ... and are today going for $1.3M and up. I.e., a far better return than the DJIA!
I meant to say "larger THREE story ones".
ReplyDeleteLance, without a doubt, is in the RE business. How else does he claim to know so much about RE and then cheer shamelessly for it?
ReplyDeleteWhat are yhour RE holdings, Lance. And, most importantly, when did you buy them? (I hope not within the past two years!)
Of course, being in RE nowadays means business is slow - prices are too high b/c of speculation, after all - and buyers aren't interested this summer. So Lance has lots of time to contribute to this blog...
Keep fighting the fight, Lance! We know the housing market has picked up when you no longer contribute here!
Don't respond Lance. This is typical "troll bait". Anything personal you tell them will be used against you and then you will accused of bragging.
ReplyDeleteAny financial success you have enjoyed will only heighten the jealousy, anger and insults directed at you.
Been there. Done that.
LOL, no one gets banned from blogger. Someone is pretending to be David. Realt-whores who have been so shamelessly pumping RE deserve to be in prison based on the financial damage inflicted on hapless home-debtors.
ReplyDeleteNot prison. They should be forced to rent and wear a sign over their clothing that says they rent!
ReplyDeleteThe shame!
The lowered self-esteemed!
The agony of worrying about the voracious landlord kicking them out on the street tomorrow!
The ability to finally save some money, since rents are 50% cheaper than owning in DC!
Not 50%; see David's own analysis.
ReplyDeleteAnd this only apllies if you bought at the absolute peak of prices. The analysis also places zero "value" on ownersip.
Obviously, there is a psyhcological value ( a LARGE one) or this entire blog would be moot.
there is a psyhcological[sic] value ( a LARGE one)
ReplyDeleteThe psyhcological value will be negative when you realize how much you over-paid. Watching your home decline in value year of year over multiple years will weigh heavily on some( think Detroit). In the next few years the positive "psyhcological value" will be with renting.
Keep telling yourself this and you will end up 60 and still renting.
ReplyDeleteThere will be a huge amount of regret in the home-debtor community, regret for not selling at the top in 2005, regret for paying rent to the bank for the declining asset, and regret for paying waaaay to much for the house you probably had to settle for because the one you really wanted you lost in a bidding war.
ReplyDeleteAbout the only regret that's regularly seen is by bubbleheads wishing that they had bought several years ago so that they would have made a large bundle of money like all the smart people did. There's enough sour grapes on this website to make enough whine for years of postings.
ReplyDeleteand, quinn:
ReplyDeleteHow long will this huge regret last? Until the next boom?
When the house is paid for, the only regret will be from the renters.
Most people will not have their homes paid for until they are beyond 60 years old. Being a homeowner is great, but sadly most people are home-debtors, suckered into overpaying for their declining asset. In the DC markets people are overpaying by hundreds of thousands. Then they have to pay taxes and interest on that.
ReplyDeleteLook at the 100+yr housing price vs. stock price analysis above.
ReplyDeleteAgain - for how long will the regret last? The rest of one's life?
Lets suppose that based on rents the above house is overpriced by $200K and suppose you have to pay back that $200K at 7% interest and it takes you thirty years to do it. We can play with numbers in different ways but the point is that you will have lost well over 1/3 of million bucks over the lifetime of the loan. Who wouldn't have long term regret about throwing that kind of money away. You investors might think be able to stomach losses in the $100K's, but the average joe homeowner who might only have a few $100k in their retirement funds at retirement will deeply regret a loss like that.
ReplyDeleteThe trolls must have just had an ARM adjust. Just waiting for more foreclosures to hit the market. We may need riot gear to place bids.
ReplyDeleteAt the guaranteed rate of 20% appreciation that we are entitled to in DC this home will be worth close to 4 million in 10 years. Check it out.
ReplyDelete1 year --> 640,180
2 years --> 780,629
3 years --> 951,892
4 years --> 1,160,729
5 years --> 1,415,383
6 years --> 1,725,905
10 years --> 3,815,827
This is a real no-brainer, it screams buy. I can just quit my job once I own this place and take out HELOCS for living expenses. What could go wrong? Whats that realtwhores number, I'm gone run right down there and make an offer.
Va_Investor, Thanks, I understand. It's becoming really obvious that the bubbleheads on this blog aren't capable of understanding much other than jealousy. They should ask themselves why it is the apparently more successful bloggers on here that are the ones taking the position that any burst bubbles won't be more than a slow and short-term fizz and not the monumental and permanent decline in prices that they so helplessly keep clinging to. But no, they can't happen. After all they are all just soooooo smart, aren't they?
ReplyDeleteIf you're interested in a blog where non-biased information supporting both pro and con position is posted, try "Inside the DC Bubble" (www.dcbubble.blogspot.com). I think the blogger might be on vaction, as there have been no updates since June 4, however it is generally interesting reading, and the discussion on there isn't hostile like it tends to be on here.
Read DC Bubble to find out about how RE never goes down - because there's this new "paradigum" in the market here. Lance is a big housing cheerleader on that website. Must be one of the smarmy agents who gouge us 6% for selling our RE.
ReplyDeleteBy the way, anyone ever heard of an S curve? speculation? market correction? unsustainable market forces?
Lance - I'm not expert. Maybe you can explain those things to us. Thanks.
http://smhbn.blogspot.com/
ReplyDeleteHere's another "non-biased" website. (Cute word, Lance - i think you meant to say the blog you mentioned accords more with your sentiments. A bit more hoensty out of you, please. So many of us look to you for life-coaching advice.)
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B15CBFA40-B271-46D0-8731-88B1F2D1B0BC%7D
ReplyDeleteThis is another great non-biased source of info on the real estate market. Enjoy.
http://www.marketwatch.com/News/Story/Story.aspx?guid={906B0246-8E9B-400E-8F9B-CC72BC1D2A4A}&siteid=mktw&dist=
ReplyDeleteI'm sorry. I'm not good with this computer stuff. Here's the Marketwatch link.
Enjoy.
Total Ownership Costs: ~$3150
ReplyDeleteTotal Renting Costs: $1750
Waiting to buy until home prices come down, meanwhile saving your money for a down payment: Priceless
STOP POSTING IN MY NAME! I HAVE CONTACTED DAVID AND ASKED HIM TO BLOCK YOU FROM THIS BLOG!
ReplyDelete