The market will continue to decline for the homebuilders, especially those building mainly in the bubble markets.The two monthly reports that measure the health of the home construction industry were released this week. The U.S. Census Bureau and U.S. Department of Housing and Urban Development issued its report on housing starts in June and the National Association of Home Builders in conjunction with Wells Fargo published their monthly Housing Market Index (HMI) for July. Taken together the two reports are a good indication that the real estate market is definitely slowing and that builders are not optimistic that things will get better soon.
The HMI is derived from a monthly survey in which builders are asked their perceptions for current single-family home sales and their expectations for sales over the next six months as either "good," "fair," or "poor" and asks them to rate current buyer traffic from very low to very high. Any total score over 50 indicates that more builders view conditions as good rather than poor.
In June 2005 the HMI was at a recent high of 72. By May of this year it had slipped to 42 and this month it is down three more points to 39. All three of the survey components slipped but most notable was the decline in the index for sales expectations over the next six months which fell five points to 46. The index gauging current sales was down four points to 43 and the index gauging traffic of prospective buyers dropped from 29 to 27.
Builders in the Western region recorded the biggest dip in confidence, a decline of 9 points to 51. That region had kept a high level of confidence for some time and, even with the recent drop its builders were still more optimistic than those in the Northeast (36), the Midwest (21) and the South (50). The South was actually up two points since June.
The National Association of Home Builders Chief Economist David Seiders said that builders were concerned about the eroding affordability of home ownership and the withdrawal of investors and speculators from the marketplace. But he also said that builders fear more tightening of monetary policy by the Federal Reserve that could drive up interest rates even further.
"In terms of historical comparison, the HMI's movement is essentially in line with readings from the 1994-95 period when the Federal Reserve tightened monetary policy and a fairly orderly cooling-down process occurred in the nation's housing markets," Seiders observed. "That is what our forecasts anticipate happening in the current period, provided the downside risks of rising interest rates and a bail-out by investors/speculators do not become too pronounced.
Friday, July 21, 2006
Housing Market Index Falls To 1994-95 Levels
The Housing Market Index is low. It is now in line with reading from the 1994-95 period. New from Mortgage News Daily:
Subscribe to:
Post Comments (Atom)
Posts
I think by the end of the year, it will
ReplyDeletebe under 20, it's all time low in 1991.
SD Union Tribune: "'We are experiencing the impact of the long-anticipated slowdown in housing markets, particularly in the San Diego and Washington, D.C., areas,' said Ian Cockwell, Brookfield's CEO."
ReplyDeleteGreat. Next thing you know, they'll be mentioning DC in the same sentence as [insert Florida town name here].
HMI Graph
ReplyDelete"I think by the end of the year, it will
ReplyDeletebe under 20, it's all time low in 1991"
People think all kinds of stupid things.
"People think all kinds of stupid things."
ReplyDeleteYep. Denial has no remedy.
Good week for the enlightened ones on this site. I could not have written a better script...inventories high, NAHB confidence low, real estate mouthpieces starting to change their tune, Term "soft landing" looking for a new place to roost, rates creeping up and ARMs looking like a bad idea for even the most hapless individuals. It is happening fast, and the fruits of being on the sideline are ripening. Congrats to those who have been able to resist the temptation to do something stupid, like buying in the course of the past year. The market is adjusting as we speak.
ReplyDeleteTo me, a 30-40 % price correction, or reversion to the mean is a soft landing...a govt bail out, or major recession/depression would be a hard landing, so the term is relative.
The problem is that all this is happening before prices have even corrected. Prices are down a little, but that isn't moving anything. The next step is for prices to move down. This step may take 3-5 years.
ReplyDeleteDC... the amazing thing about DC is the people that have been doing the buying. I am from Maryland, and I loved the area growing up in it in the 70s and 80s. I feel great loyalty to it. I see a lot of things (crime spreading to previously safe areas, heavy traffic, fewer green areas, too many out of town yuppies etc.) that I don't like now. But I still have loyalty to the area. But I won't pay any price to live here.
OTOH, I work with a lot of out-of-town yuppies. I know others through various other channels. They hate it here. They can't wait to move back to whatever pit they crawled out of. And yet, they slap down half a million for a townhouse in cruddy condition in a ghetto. It makes NO sense.
There is so much room for DC area housing prices to go down that it is not even funny. I watched in the 80s when people who had lived in this area for a long time, who loved it here and were emotionally connected here, people like that moved out against their will because they had no choice- bullets crashing through your window will do that to you.
Now, these houses are 30 years older, in high traffic areas, and while the greenery is disappearing, the crime is still there. It's more spread out than it used to be, but it's still there. And the newcomers have zero loyalty to the area, and no desire to stay here the rest of their life.
When the Feds simply can't hire anymore, and actually start cutting, and when local counties can't afford cops for everywhere, then things will really start to spiral out of control. And I imagine it could unwind very quickly, as many homeowners (if you can call someone who has a 500,000 buck debt with the bank an owner) quickly realize they want to get out as fast as possible.
But no, I'm just a whacko. Carry on buying and selling these old homes for half a million or more. DC area real estate never goes down. Just ask the old money in Riverdale and Anacostia... or second thought, maybe not ruin the fun.
A Redskins fan
"And yet, they slap down half a million for a townhouse in cruddy condition in a ghetto. It makes NO sense."
ReplyDeleteIt is an unusual phenomenon, I agree. I believe that once someone comes to a large city such as DC, NY, LA, SD, etc, that they have a hard time going back to a slower pace. I think the same would be true for those who were to go to NY from DC. It is hard to go back because the pace, though annoying, is highly contagious. People don't even take advantage of the "culture", but they feel like they would be missing something if they went somewhere smaller.
As for prices...I was thinking back on a place that I bought in Fairfax in 2000. The original owner paid $145k in 1988, and sold it in 1998 for $115k. I bought it in 2000 for $140k - It took 12 years for it to get back to its original value, and the original owner took a 20% haircut. Don't tell me prices don't go down - been there, seen it, and bought a T-shirt.
"So what you're saying is that I should start worrying about my 103% leveraged, zero-interest ARM with an additional $100K HELOC?"
ReplyDeleteNice, Whitey
godot said:
ReplyDelete"To me, a 30-40 % price correction, or reversion to the mean is a soft landing..."
LOL ... but you can't really be serious, can you? LOL
anon:
ReplyDelete"the crime is still there."
uh, no ... that's where you're wrong ... you're right later when you talk about it being spread out ... particularly to PG County in your backyard.
anon:
ReplyDelete"When the Feds simply can't hire anymore, and actually start cutting, and when local counties can't afford cops for everywhere, then things will really start to spiral out of control."
LOL LOL LOL ... sorry, but this is your funniest statement yet. So, you think the Feds "simply" won't be able to hire anymore, anytume soon? Where did you hear that the fed govt is shutting down shop? Pls forward the email so that I can plan accordingly too! And ditto re: cops and counties. Do you think counties are going out of business or something? Hardly considering all the cash rich people that have been moving in with the purchase of expensive houses there with high property taxes. I realize, this doesn't fit your plan of stealing others' properties, but "oh well" ... you'll learn to live with deminished expectations!!
Lance, let the hate out, let the rage explode. Denial is a hard thing, the pain you are recieving and will intensify is awfull, but reality and actuality are at your doorstep.
ReplyDeleteYou need to go to the RE bummer tent. The rest are waiting.
Post has a story this morning on the Census revising its figures and showing that the DC population - contrary to its previous estimates - has INCREASED by more than 30,000 since the last census. That sort of puts a damper on previous assertions by Bubbleheaders about the hordes of people fleeing DC and how its going back to being an urban abyss. Hopefuly David posts a thread on that story.
ReplyDeleteLance-
ReplyDeleteOn crime...
The homicide rate in DC is lower than at the peak of the crack epidemic. But there are still far too many homicides and other crimes in DC.
The homicide rate hit a record in P.G. County last year, higher than any crack epidemic year. Other inner suburbs have higher crime rates than 20 years ago.
Places like the U Street corridor seem to be doing better. However, there is still too much crime there to justify a $500,000+ price tag for a townhouse that would need renovation, in a neighborhood that certainly hasn't finished its transition, and may not.
But overall, I was careful to say "the DC area." There has been some improvement in some areas (widely touted, and often exaggerated, but improvement nonetheless) and worsening in others (usually ignored in the press). Things are better than at the peak of the crack epidemic, but they are still not good enough to justify the prices I see.
If I am going to plunk down $500,000- which is more than five times median houshold income in Montgomery and Fairfax Counties, and more than 10 times median household income in DC- there better not even be graffiti.
On Federal hiring...
The Federal government does go through periods of retrenchment, you know. It did in 1993-1996 (approximately). There were RIFs at Federal agencies, and house prices bottomed. When your country is running a gigantic trade deficit, and your government is running a massive budget deficit, sooner or later you need to have spending cutbacks. You don't want to need to sell your house at the same time that thousands of Federal workers and contracters are trying to sell theirs, in a market that is not generating jobs. In my experience, DC's economy follows the country. We start booms last but we also end them later. Our time will come.
On "stealing" houses...
I don't have any plans to steal any houses. I will pay a fair price for a DC area house, and that fair price will include considering the crime and traffic levels, the age and quality of the house, etc. At current price levels, my definition of fair is usually 30% of typical asking prices around here. If a fair price is not available, I will rent. If rents rise to where the expenses are like housing costs, I will reluctantly (because I do like the area) move. I have lived in several southern/midwestern cities where real estate prices are a fraction of here, and I could buy there at a fair price. But currently, I regard rents here as very fair, and a small part of my income, so I will be here in the DC area for a while yet, I expect.
A Redskins fan
Lance would love for the majority on this blog and around the nation to "BUY NOW" That's ok lance, I'll just wait for awhile and buy later..say mid 2008. He wants all to feel his pain.
ReplyDeleteRedskins said:
ReplyDelete"At current price levels, my definition of fair is usually 30% of typical asking prices around here."
The problem (for you) is that there are plenty of people whose definition of fair is much higher than yours. I still think you are misleading yourself because you are looking at "house price" vs. "monthly payment". I know when I first learned of the going house prices a couple years ago, I was flaburgasted and thought I could never buy that move up house. But then I did the math and realized things were no more expensive then (2004) than they had been in 1999 when I had bought the condo. A combination of factors including lower interest rates and better financing plans had made the situation so. And, now that I am in the house, I am realizing that because of the rental income that it afforded me (that I couldn't do with the condo), I am actually living here for far far cheaper than I was in the condo and able to sock away dollars in the 401K and in stock to a degree that I couldn't imagine possible before. But, even if I didn't have the rental income. Once you take the additional tax benefit from a larger mortgage into account, I would have been spending the same to live in the house as I was in the condo. It's really all just a matter of sitting down and doing the numbers. And remembering that there is never a bad time to buy if it is a home you are buying. Timing the market only applies to speculators. If you are in it for the long haul, and especially if this is going to be your home, you will end up financially much more secure than if you don't buy. There's absolutely no question about that. If you're looking to speculate, then no, now is not a good time to buy. You're better off waiting a year or so and seeing if prices go down 10% or maybe 15% and then buy with cash. (Interest rates are rising and they will negate your 10% - 15% discount ... and then some if you finance the property!) Of course, I am assuming you have lots of cash available, 'cause people without the cash to lose, should not be speculating ... it is the equivalent of gambling. You're trying for the big shortterm gains, but you need to be prepared for the big shortterm loses from which there may be no recovery. Myself, I am content to just have my piece of the American dream and know that no one can put me out of it or raise my "rent" on it! I'll leave the speculating to others. Meanwhile, I'll just keep socking away my extra income into the 401K and stocks.
And ditto re: cops and counties. Do you think counties are going out of business or something?
ReplyDeleteYour blind faith is showing. Article in Post just last week about how counties and cities did nothing but spend spend spend all the extra $ from those sky high property taxes (of course). Now, they realize the increases are gone and the pain is coming. What do you think happens when counties have less budget? They 'cut funding,' cancel programs, scaleback on projects, i.e. people lose their jobs. (Haven't you ever talked to a teacher at a state school who lost their job due to budget cuts? It happens.)
The writing is on the wall now and is getting clearer every day. It is reaching a crescendo in the MSM and will soon be openly acknowledged in public forums. (Within 2 years, I predict the SNL skit.) The only question now is how bad it is going to get...
Anon 8:42 is absolutely right. States and counties have plenty of cash right now, which solves many problems. For example, take Silver Spring. I have lived here since the late 90s. It wasn't bad in the late 90s, but it wasn't as nice as now with all the renovations. Whenever the county talks about what they have down to downtown Silver Spring, they talk about their New Urbanist plans, the green spaces and fountains, the way they got restaurants and employers to come, etc.
ReplyDeleteWhat they don't talk about is that I have noticed a LOT more cops and security downtown. In other words, besides the cost of the renovation, you need a constant payment for a lot of security.
When tax revenues start drying up, suddenly you can't afford as many cops. And then crime goes up, and then real estate prices go down more, and then revenue goes down more, and the cycle starts to work in reverse.
I'm not saying that will happen in Silver Spring (though it might). But it does happen and has happened elsewhere.
A Redskins fan
Lance,
ReplyDeleteYou absolutely can pay too much for a home, even if you intend to live in it.
High payments on a home loan can eat up savings that could go into investments for retirement or other expenses you want in the future.
Even if you pay cash, overpaying for a house is a waste of capital that could have gone into better investments.
And even if you intend to stay in a house for a while, you need to be ready for the possibility of some period of unemployment... if you needed to, could you sell your house in a down market and still get out without massive debt? These are important questions, and they need to be considered even when buying a home to live in.
A Redskins fan
The premise of Lance's argument is that your mortgage payment serves as a hedge against inflation.
ReplyDeleteBut won't it still serve as that hedge whether I am paying a $1500 mortgage payment or $3000 one? In fact, it will take much less time for a $1500 payment to seem ity-bity than $3000. (AND lower payment allows for both the inflationary hedge AND some left over $ for other diversified investments.) That is why it is better to buy low and why it is not always a good time to buy. That is why price declines matter and why people should wait, even if it is only for a 10% drop.
The natural extention of (Lance's) mortgage-as-a-hedge position is that the more you pay for your house, the better your inflationary hedge. And if you are so worried about inflation that you are willing to overpay for a home to act as a hedge, you might as well buy gold, since it is more liquid anyway.
I don't know about you guys, but my stock portfolio is crashing much worse than my home equity right now. Where do you put your capital?
ReplyDeleteredskins said:
ReplyDelete"When tax revenues start drying up ... "
again, why on earth would tax revenue start drying up ... higher housing prices have drawn higher paid folks to places like silver spring ... these folks have more income than the folks they have taken the place of ... and, as such, more income to be taxed ... i.e., as i've said before, you see correctly what is going on, but you draw the 180 degree wrong conclusion from it. i'd be interested in knowing what causes this ... as there was a time when i did similarly ... my only guess is that you are going into it all thinking that wealth is a static and defined limited amount, and not understanding that wealth is nothing more than the combined efforts of everyone working at any one time ... more people working? more wealth ... less people working? less wealth ... simple as that ... and THAT is why large mortgages are a good thing ... people need an incentive to work ... you have a commitment to meet? well, you will work to meet it. No real commitment to meet (i.e., just a low rent?) well, you won't do that extra work ... work = wealth ... a pretty straight forward and simple theory don't you think?
dc_too,
ReplyDeletehow many time do I have to tell you ... I am already earning enough more at work to cover the increase I have planned for at the 10 year mark ... i.e., I am 9 years ahead of schedule! ... and this doesn't even count the fact that my rentals are covering the mortgage now ... and will continue to do so through rent increases (which I control) over the next 9 years. The trick is to plan ... and not try to "time it right" like bubbleheads are doing whether they realize it or not. Sorry, I rather be responsible for my own future than to gamble with what the market is going to do as you are doing whether you realize it or not! I still say, that only people with cash to lose should be gambling as you are doing. Homeowners should not be gambling with the roof over their heads! It's insane to do so! You need to plan. Which is why I agree that there really are some people out there that are really better off renting now than buying. But the keyword is "now" ... the end game should be to buy when appropriate ... And I don't mean "gambling" on prices taking a nose dive as "planning" ... 'cause making decisions based on prices falling something like 50% ain't "planning" but rather "wishful thinking."
"I don't know about you guys, but my stock portfolio is crashing much worse than my home equity right now. Where do you put your capital? "
ReplyDeleteCitibank E-savings account...it pays 5% interest right now with zero risk. A good place to preserve wealth while the storm blows over. I moved about 50% of my investments to this in mid May and plan to keep it there until some of the current financial risks abate. Ex: Housing, Oil, War, etc in other words, until Lance is the last bull on the planet..I think it is getting close to that time. Oh, never mind, I forgot about Larry Kudlow
http://tinyurl.com/fwa2q
novasold said:
ReplyDelete"Believe me I don't welcome this but for someone to state that the government can't stop hiring hasn't worked around govies that long."
what you may not realize is that whenever the govt hires less civil servants, it hires more contractors. govt contractors get the govt more bang for their buck without the longterm pension and other commitments that come with govt employees. so, yes, you can expect less govt workers out there ... just don't expect less govt work per se ... especially not under these world conditions and the window we have for better controlling these conditions via techonological solutions. in all its 225 year history, the us fed govt has NEVER shrunk ... you can tell that to your friend who likes to spend their time around the water cooler ... Gotta love these anecdotal stories that PROVE a point!
Lance,
ReplyDeleteWere you investing prior to March of 2000? Were you as bullish on stocks then as you are on housing? Your post come across as though you are not aware of the risks to housing at the moment. Am I misreading you?
godot,
ReplyDeleteyes ... i had a 401K ... borrowing on that 401 in 99 allowed me to purchase the new condo ... coincidentally, i borrowed when my investments were at an all time high ... and repaid when they were at an all time low ... yes, i was lucky in that respect, but again, my focus was on getting a "roof over my head" NOT on making money through speculation. I don't know how many times I have to say it, what divides you and I is that you don't see the difference between having a roof over your head and speculative investing ... and I do. You make all your decisions based on when you can "buy low/sell high" ... Sorry, but that is gambling in my book and has no place in the decisions involving a roof over your head. I am risk adverse and not willing to gamble that prices will really fall 50%. Maybe I'm also old enough to know that it won't happen, 'cause if it really were to happen, there are people in the know who would have already acted accordingly ... and they haven't. Sorry, I believe in that story about the rabit and the snail. I will get much farther than you just by planning and making good low return decisions all the way than you will by gambling on that big one time return!
"$500,000+ price tag for a townhouse that would need renovation, in a neighborhood that certainly hasn't finished its transition, and may not.
ReplyDelete"
Do you know how stupid this sounds? Updated townhouses in thriving urban neighborhoods are worth millions of dollares. $500,000 is a miniscule pricetag. There is so much room for appreciation of real estate within DC, it's ridiculous. Everybody thinks "well, I don't have that kind of money, so the prices are unsustainable." Well, newsflash - urban real estate is not for lower-middle class people like yourselves, who are struggling to raise a family. That's what the suburbs an hour from downtown are for.
"not willing to gamble that prices will really fall 50%. Maybe I'm also old enough to know that it won't happen, 'cause if it really were to happen, there are people in the know who would have already acted accordingly"
ReplyDeleteMaybe you have seen this...here were some of the people in the know in the late '20s - early 30's...
I have found that for every person in the know, there is another in the know who has the opposite opinion - in the final analysis, it is all gambling.
http://www.gold-eagle.com/editorials_01/seymour062001.html
people need an incentive to work ... you have a commitment to meet? well, you will work to meet it. No real commitment to meet (i.e., just a low rent?) well, you won't do that extra work ... work = wealth ... a pretty straight forward and simple theory don't you think?
ReplyDeleteThanks for the entertainment Lance. Your posts are getting a little silly, don't you think?
A mortgage is the only incentive to work?!?! How about the need to eat? Geesh.
And the work = wealth thing. Tell that to any manual laborer. Are you trying to say the 'harder' people work the richer they become? Are you serious? What measure are you using here?
PS - Also, what measurement are you using to say that the federal government has NEVER shrunk? Do you mean the budget? The number of employees? The article below from the GSA says different so please provide data:
http://government.zdnet.com/?p=2083
Obviously the link below shows the benefit of working for the federal government versus the private sector (not that we are arguing that). But the numbers are important too.
ReplyDeleteWho knew that from Q1 1996 to Q2 1997 (about a year) more than 61,000 gov employees were laid off?
Guess it can happen.
http://www.publicpurpose.com/lm-mass.htm
"Who knew that from Q1 1996 to Q2 1997 (about a year) more than 61,000 gov employees were laid off?
ReplyDeleteGuess it can happen."
Private contractors picked up the slack.
anon asked:
ReplyDelete"PS - Also, what measurement are you using to say that the federal government has NEVER shrunk?"
dollars, of course. everybody knows that since reagan the feds have been doing their best to shed low productivity, high cost govt workers and replace them with highly productive, lower-relative cost government contractors that don't require longterm pension and health benefit commitments. it has been the privitization of government ... and we're almost there ... which is one thing that accounts for a us economy that is doing better than ever. (i.e. there is far less govt waste than there was pre-reagan.)
anon 12:40
ReplyDelete"Obviously the link below shows the benefit of working for the federal government versus the private sector (not that we are arguing that). But the numbers are important too."
what you are pointing out is analogous to the whole "price of tomorrow's median house" vs. "appreciation of the specific home you purchased" argument we have been having. OF COURSE, for those lucky few that area already govt workers, the risks of being laid off are relatively low compared to where one is a govt contractor or other private sector employee. And THAT is the crux of the reason why the feds are slowly replacing civil servants with contractors. Once they have hired a civil servant, they are basically stuck with them for life (and past retirement) whether he/she is really doing their job efficiently or not and whether or not long range plans for govt work change or not. So, since the reagan presidency, the feds have been letting the civil servent sector die via attrition ... while sending all new dollars to the private sector via goverment contracting. so yes, if you are already a govt employee, you are in good shape ... very good shape.
We need to see data that housing sits on the end points.
ReplyDeleteIf the median is $500K, I need to see data that most houses lie at $750K and the others at $250 (or $1 million versus $1 dollar) and that they are not all clustered around the median. That is what we have to demonstrate to shore up the median versus specific argument.
Look, if anyone actually believes that the government never stops net hiring, that local revenues never dry up, that planned redevlopments always work, and that it is always a good time to buy if you are planning to live in the property.... then they are beyond help.
ReplyDeleteI just don't believe any of that, mostly from what I have observed during my own life. So right now, I rent.
A Redskins fan
Anonymous said...
ReplyDelete"We need to see data that housing sits on the end points.
If the median is $500K, I need to see data that most houses lie at $750K and the others at $250 (or $1 million versus $1 dollar) and that they are not all clustered around the median. That is what we have to demonstrate to shore up the median versus specific argument."
You're not understand the median vs. specific argument. It has nothing to do with how spread out median house prices are from low end or high end prices. It is simply that the "median priced house" is not of a fixed address. In 1890 it might have been in Shaw in the District and in 1965 in Annandale VA and today it is in Fredericksburg, VA. The term "median priced house" only means the house that is priced at such a level where 1/2 the houses sell for more and 1/2 the houses sell for less. It is not at a fixed address .. or even contain a set list of amenities. It is a "paper house" that changes and mutates as the metro area it sits in changes and mutates. When you buy a house, you are buying a fixed, specific house, in a specific place with specific amenities. So, while the median home (and home price) might change drastically ... for example, a lot of condos get built in an area that was previously mostly houses and you end up with a lower "median house price" (AND less square footage and no yard), but while that affects the "median house price" it has absolutely NO effect on the value of the specific single family house you bought in that town before they built all the condos. Yes, with all those condos around, the median home price is probably lower for the town as a whole, but your single family house is probably selling for a lot more now than when you bought it because those condos have deminished the land available to build more houses like yours ... thus making yours rarer ... and therefore, relatively more expensive. The bottom line is that prices in general may go up or they may go down, but that really doesn't mean that the house you buy will go up or down in value in concert with the "trends" ... chances are that your house will instead go up in value as the metro area spreads further and further out ... and your house becomes relatively more and more central to the center.
redskins said:
ReplyDelete"I just don't believe any of that, mostly from what I have observed during my own life. So right now, I rent."
you're also the guy that thinks a townhouse in silver spring should go for $140K ... basically the price of a upper-end nicely equipped car ... and essentially, maybe 1/3 the price of the land it would be built on. do you see why statements like your last one make you lose credibility? honestly, can't you understand that no one is going to sell you a house (and the land it sits on) for something like 1/3 what the land it sits on sells for? or that when your average car is selling for somewhere between $40K and $50K that you shouldn't expect to buy a house for $140K? Please be a little more reasonable and a little less just wishful!
The Washington Post reported today that DC's population has increased significantly. The US Census Bureau confirmed that it's previous estimates were erroneous.
ReplyDeleteLink
Anonymous said...
ReplyDelete"The Washington Post reported today that DC's population has increased significantly. The US Census Bureau confirmed that it's previous estimates were erroneous."
David, aren't you going to give this its own thread?
Injin Lover:
ReplyDeleteWhat "green areas" within the District of Columbia are "disappearing"? Rock Creek Park hasn't gone anywhere, nor has the Zoo, or the Mall, or East Potomac Park, or West Potomac Park, or all the trees along all the major avenues, nor have all the little pocket parks that have been around for 100+ years "disappeared". The US Arboretum is as big and as green as ever.
Oh, you're talking about your Auntie Mae's lot in MD which was rezoned commercial right before they tore her house down. Get this into your head: MD is not "DC". If it were, you wouldn't live in MD.
"the age and quality of the house,"
ReplyDeleteGenerally speaking, the older the house, the higher the quality of both materials and construction. Anything pre-WWII is likely to be "better" than anything built post-1955.
In NYC, a "Prewar" apartment is generally regarded as a good thing.
"The Washington Post reported today that DC's population has increased significantly."
ReplyDeleteDC better attract new residents to fill up all the new housing
that is being built.
It should help mitigate the coming condo bust.
"Believe me I don't welcome this but for someone to state that the government can't stop hiring hasn't worked around govies that long."
ReplyDeleteThis may or may not be true. It is, however, irrelevant.
The fact is that at least 55% of the Federal workforce is eligible for retirement TODAY. As in: they can stop coming to work and start collecting the pensions *right now*.
By the way, the fed government has always grown under every single president throughout history. The fact that a President or an administration talks about "smaller government" does not, in fact, lead to smaller government. Look into it.
The Federal Govt. can keep borrowing from the
ReplyDeleteChinese and keep hiring for ever.
The Chinese will never stop buying federal debt.
Oh wait, by "federal employees", you mean enlisted men and women in the armed forces? Yes, that sector of Fed employment has indeed shrunk.
ReplyDeleteHowever, it seems that our Fed government is hiring contractors to carry and fire weapons for us now too. Hmmm.
Generally speaking,
ReplyDeleteOlder houses suck. They're just like old computers - poorly designed, constructed and a waste of materials.
Aethecially speaking, they are appealing. That's why the faux colonial has never gone out style.
If you think a building is better constructed because it has square edged pieces of wood instead S4S, you just don't know what you're looking at.
ASSHOLE said:
ReplyDelete"If you think a building is better constructed because it has square edged pieces of wood instead S4S, you just don't know what you're looking at."
What a jerk. I hope he ends up in one of those newly consrtucted places with nothing but plywood separating apartments!
The homes that were once built by "Union" contractors are by far superior to slam and jam jobs done today period.
ReplyDeleteLOL! I'll stop by Ashburn in 20 years to see how well all those new "homes" have held up over time. Then I'll swing through Georgetown to see how homes there look in comparision.
ReplyDelete(Hey, it could happen. I could have a layover at Dulles one week and then at National the next week.)
Actually I understand the median argument perfectly Lance. But the more homes that are acutally clustered close to the median, the less your argument applies. Which is why it is important to understand what the range and distribution is.
ReplyDeleteBesides that, medians DO matter. Is it possible that the median could drop 40% but a specific home keep its value? Sure, anything's possible, but come on. I sure hope this is not what you are counting on....if so, it is the classic "but my house is different" argument.
i must say this LANCE guy is a real crack up!!! this is the best one yet!!!
ReplyDeleteAnd remembering that there is never a bad time to buy if it is a home you are buying. Timing the market only applies to speculators....
:lol:
why would overpaying to the tune of 100's of 1000's of $$$ make any sense??
RE here in socal is so far out of wack that the 40% correction we had the last time this happened (yes LANCE there was a last time) would equate to about 250K of red ink.....that makes no sense.
i bought during the last bubble and haveing twice the payment of the tribe who bought the forclosure next door was no fun, i couldn't sell i counldn't refi (without bringing 50K to the table) but i did stick it out and i did make money (sold in May '05) but if i would have just followed the market i would have never been upside down and i would have walked away with 3 times the profit...
timming the market when we're talking half a million dollars+ is the only logical choice.
my .02
Lance said...
ReplyDelete"…… that there is never a bad time to buy if it is a home you are buying…."
Thanks Lance, I'll put that one on the fridge too. Right Next to:
Lance said...
“….I do believe that for a prospective homeowner (or longterm investor) there IS….”
"no bad time to buy"
ReplyDeleteLance said...
ReplyDelete“... and this doesn't even count the fact that my rentals are covering the mortgage now ... and will continue to do so through rent increases (which I control) over the next 9 years..”
So Lance, you can charge anything you want in rent? I think the market will control your rental price.
I'm not going to argue with Lance. All I want is a promise:
ReplyDeleteLance, please promise that you'll still be posting here come January 2008. I really look forward to chatting with you then.
Lance said...
ReplyDelete“…..govt contractors get the govt more bang for their buck without the longterm pension and other commitments that come with govt employees….”
That’s a negative Lance. When dealing with contractors, it’s not what you’re going to get for a million bucks, it’s what the contractors will give you for your million bucks. The first thing a contractor looks for in an announcement is loopholes to cut services/requirements.
Lance said...
ReplyDelete“…….Once they have hired a civil servant, they are basically stuck with them for life (and past retirement) whether he/she is really doing their job efficiently or not and whether or not long range plans for govt work change or not.”
Hence the new pay banding.
Anonymous said...
ReplyDelete"Generally speaking, the older the house, the higher the quality of both materials and construction. Anything pre-WWII is likely to be "better" than anything built post-1955."
I agree on construction, but the insulation value/energy efficiency in a new home can’t be beat. I’m kinda torn between a newer home with lower energy bills and an older home with “better” construction.
Any thoughts?
my .02
ReplyDelete“i bought during the last bubble and haveing twice the payment of the tribe who bought the forclosure next door was no fun, i couldn't sell i counldn't refi (without bringing 50K to the table) but i did stick it out and i did make money (sold in May '05) but if i would have just followed the market i would have never been upside down and i would have walked away with 3 times the profit...”
Now that’s hitting the nail on the head.
"Do you know how stupid this sounds? Updated townhouses in thriving urban neighborhoods are worth millions of dollares. $500,000 is a miniscule pricetag. There is so much room for appreciation of real estate within DC, it's ridiculous."
ReplyDeleteRFLMFAO! I've read some fairly ill-conceived tripe in my day, but this statement takes the cake!
A townhouse.
In DC.
Millions of dollars.
Yep. No doubt about it. With this sort of mentality, our economy IS doomed.
Responses--
ReplyDelete- I have stated clearly in all my posts "DC area," not DC. I do this because I get bored with the argument that somehow DC prices are sane while suburban prices are not. Also, I am not as familiar with DC as with Maryland. Having said that, I do think the outlook for DC does have one advantage-- higher gas prices in the future will make center city living more attractive. But I doubt as attractive as current asking prices would require.
- Lance, on median incomes, the Census bureau also publishes how many households make more than 150K, by county. In 2004, Montgomery and Fairfax had approx. 20% (a little more in each case) of their households making more than 150K. DC, Prince William, Prince George's, and one other county (I forget which right now) were all lower than that, and more like 10-15%. So there are simply not as many high-end incomes as you try to make it sound. The ACS income data are very interesting- check them out.
For me, the amazing thing is that a lot of the houses in DC and the burbs were built 50-100 years ago FOR WORKING AND MIDDLE CLASS families are now being sold "as is" at prices that only the upper middle class could afford with a conventional mortgage. That is crazy.
A Redskins fan
Lance said:
ReplyDelete"you're also the guy that thinks a townhouse in silver spring should go for $140K ... basically the price of a upper-end nicely equipped car"
Lance, 140K is the price of a townhouse or other small, below-the-median type property in many cities. This is a fact. I'm not going to pay $600-800K for a townhouse in suburban Maryland when that would buy me a small house in a good neighborhood some cities, AND leave me enough left over to set up a fund to pay for maintenance, utilities, insurance, and taxes.
Think about that. For $600K, I could have a house in a decent neighborhood in some Midwestern cities, with all expenses paid for for 40 years! The house is about 150K. Spend 50K on furniture and renovations, or a new car. Then have 400K left over, which even assuming I had no real interest income (probably a conservative assumption), would allow me to spend 10K a year for 40 years. 10K is probably enough to cover taxes, insurance, utilities, and maintenance.
Now, I know you're going to say that DC is not a Midwestern city. I love the DC area, BUT do you seriously think that having a house free and clear, with no payments for ANYTHING for 40 years, is the same as having a townhouse in Silver Spring or on U Street?
A Redskins fan
Price reduced and condo fees paid for 1 year.Sexy 2br/2ba with fireplace,awesome kitchen, extra high ceilings,lovely deck and cavernous mbr window.Amenities include front desk,fitness and business center,concierge,bicycle storage,storage room, rooftop.Garage parking space conveys.
ReplyDeleteZipRealty Price Track:
Price Increased: 03/22/06 -- $575,000 to $599,000
Price Reduced: 04/08/06 -- $599,000 to $575,000
Price Increased: 05/05/06 -- $575,000 to $578,000
Price Reduced: 07/09/06 -- $578,000 to $565,000
Do they even know that their schizophrenic pricing shows up in the MLS?
These morons, after 100s of days of not selling, have effectively lowered their price $10K.
What were they thinking? "It's not selling, must be because it's not expensive ENOUGH".
This is at 2020 12th St.
This comment has been removed by a blog administrator.
ReplyDeleteanon said:
ReplyDelete"i bought during the last bubble and haveing twice the payment of the tribe who bought the forclosure next door was no fun, i couldn't sell i counldn't refi (without bringing 50K to the table) but i did stick it out and i did make money (sold in May '05) but if i would have just followed the market i would have never been upside down and i would have walked away with 3 times the profit..."
so, you walked away with a profit ... but spent the whole time you were living there wondering if you'd make any money on this purchase? whatever happened to the concept of buying a home to live in? ... and not to gamble with? if you were still in there now ... and had no plans to move ... would you really care what you could sell if for? sorry, but i find the whole idea of gambling with the roof over one's head so representative of an entire generation that demands instant gratification and cannot grasp the concept of commitment to anything or anyone ... least of all the community they are living in and the neighbors they share their lives with. It's really a sad situation.
anon asked:
ReplyDelete"I agree on construction, but the insulation value/energy efficiency in a new home can’t be beat. I’m kinda torn between a newer home with lower energy bills and an older home with “better” construction."
why not have the best of both worlds? take an old home and put in 21st century insulation in the roof ... (9 inch, multiple-row, brick walls provide far better insulation than anything on the market today ... the problem is simply with the 20 yr old roof you have that doesn't have good insulation .. and that is easily remedied.
This comment has been removed by a blog administrator.
ReplyDeleteanon said:
ReplyDelete"A townhouse.
In DC.
Millions of dollars.
Yep. No doubt about it. With this sort of mentality, our economy IS doomed."
what rock have you been living under ... you're lucky if you can find a townhouse in DC for under a mil ... go to NYC and that is what you are paying for efficiencies ... can DC be far behind NYC? obviously not ... Okay, go stick your head back in the sand and pretend it is still 1970 ... and you can't understand why you are earning a 2006 salary .. but houses aren't priced at 1970 levels ...
redskins said:
ReplyDelete"For me, the amazing thing is that a lot of the houses in DC and the burbs were built 50-100 years ago FOR WORKING AND MIDDLE CLASS families are now being sold "as is" at prices that only the upper middle class could afford with a conventional mortgage. That is crazy."
I think you are starting to understand what I mean by the "ever moving median house". YES, these places were build for working and middle class people 50 - 100 years ago ... but areN'T for them anymore. 50 - 100 years ago, the population of the DC metro area was but a fraction of what it is today ... there were no traffic jams... and no jobs other than Civil Service. all that has changed, now those with the means to pay for it (and it IS there) are going to want the in-close houses and they are going to spend their money to outbid those middle and working class people who don't have the means to compete with them. of course though, you are forgetting that there are lots and lots of working class homes in DC in places like anacostia and northeast. 'course I suspect what you are looking for is a bourgeois home at working class prices ... and not a working class home at a working class prices ... otherwise you would have already bought it.
redskins said:
ReplyDelete"Think about that. For $600K, I could have a house in a decent neighborhood in some Midwestern cities,"
yeah, and you also wouldn't have your cushy well-paid govt job to pay the mortgage with ... everything is relative ... you can't have your cake and eat it too ... if you are working here, you are relatively well paid. yes, you can go to a place where most folks earn minimum wage and buy a house for nothing, but you need to be prepared to earn "nothing" too there.
anon said:
ReplyDelete"What were they thinking? "It's not selling, must be because it's not expensive ENOUGH"."
this reminds me of when I once worked in a mall store selling clothing. more often then not, our manager would have us put the new arrival stuff on some back racks on a friday about an hour or two before closing ... first thing the next morning, we'd be instructed to move it to the front of the store and put sales tags on it ... apparently, it had to be offered at "full price" before it could be marked "on sale" ... and since people prefer to buy items that are on sale, the manager (following corporate orders I am sure) was making "sale" goods available to people. 'course you could argue that the full price was not really the full price since there was never any intention of selling the goods for that price ... I suspect the same thing is going on with the houses here. Everybody likes to think they are buying something that has been marked down (even if it was marked up for the specific purpose of being able to mark it down!)
lance,
ReplyDeletedid you even read my post and comprehend it???
when we are talking half a million dollars only a moron would not consider that an investment???
how retarded does one have to be to think of spending that kind of money and not think of reselling for a profit??
come on dude your bullishness is getting on the silly side now,
"least of all the community they are living in and the neighbors they share their lives with".
BTW after all the forclosures were bought up my "community" that i lived in turned into a spanish speaking neighborhood, we invited our neighbors to all our parties but there was language barrier so they just stoped comming.
one more thing lance, i didn't spend the whole time wondering if i was gonna make a profit, the realtor TOLD ME how much i was gonna make when i bought and i was supposed to be "moving up" in 3 years.
ReplyDeleteno, i spent that first 9 years wondering how much money it was gonna cost me to get the f#@k out or if i was ever gonna be back at zero again.
Lance,
ReplyDeleteI hope your other advice is better than your construction knowledge.
Bricks have an insulating R-value of less than 0.1 per inch. Your "9 inch" brick wall would would have an R-value of less than one. A "slam and jam" (quoted from a from a different genius) modern house built in the DC area will have fiberglass insulation in the wall with an R-Value of 13.
Google "material r-values" for an education.
Yeah, those old houses in Georgetown are great once you take care of the structural repairs, water leaks, heating, air conditioning, wiring, add closets, and bathrooms.
Stupid comments about how great old houses are constructed are like saying a 20 year IBM 8086 twin disk desktop is better than a laptop because it has two 5 1/4" floppy drives and you can't even get a laptop with a single 5 1/4" floppy drive much less 2 floppy drives.
Yeah, nothing beats a quality 5 1/4" disk drive.
Dumb*sses
sorry dumbass ... but I did look it up, that's why I know 9 inch thick brick walls don't require insulation ... this isn't the brick specific site I found earlier, but it'll do in explaining to you why you don't understand how R-values work genius!
ReplyDeletewww.masonryforlife.com/Energy.htm
more:
ReplyDeleteRE: Which is more energy efficient?Brick or vinyl siding clip this post email this post what is this?
see most clipped and recent clippings
Posted by Bydesignprez (My Page) on Mon, Mar 14, 05 at 14:21
Brick probably has a slight edge in terms of energy efficiency but not by much. The insulation in the wall come from what is underneath the outside sheathing. Check with your local housing department to see what is the minumum and recommnded insulation factors and then the house should meet that standard.If you are buying an existing house, some rules of thumb are that 6 inch walls can contain up to R 20 whereas 4 inch walls contain only R12. The more insulation, the greater the initial costs, but the less energy the house will consume. It's a trade off and depends what part of the country you are in as to what makes sense. I am on the frozen prairies so our minimum now is R20. The overall tightness of the structure and window numbers, placement and energy efficiency all have an important bearing. Check out the Dept of Energy or housing for more information on how to assess this.
http://ths.gardenweb.com/forums/load/energy/msg0322094513191.html?5
Redskins said:
ReplyDelete"At current price levels, my definition of fair is usually 30% of typical asking prices around here."
Lance said...
“The problem (for you) is that there are plenty of people whose definition of fair is much higher than yours.”
As seen by the drop in inventory? Oh yea, inventory means “absolutely NOTHING”, says so on the fridge.
Lance,
ReplyDeleteDid you even read your website? Here's a quote:
"However, the mass-enhanced R-Value is only significant when the outdoor temperatures cycle above and below indoor temperatures within a 24-hour period."
How's that work in DC Novemeber through April and June through September?
Here's another quote from the FAQ:
"Standard 8" hollow block's R-value is 1.75, which by itself, is not enough R-value to achieve energy efficiency"
Why does 8" hollow block have a higher R-Value rating than your solid 9" wall? Because it's hollow. Solid materials conduct heat more efficiently than air. Brick will efficiently conduct heat out of your house in the winter and efficiently into your house in the summer.
Your second link doesn't even address solid masonry walls, only veneers, it's completely irrelevant.
You knowledge base is apparently so low you don't even realize the inaccuracy of your posts.