Wednesday, October 11, 2006

New September MRIS Numbers

The new monthly numbers for September 2006 are out from the MRIS the multiple listing service for the area. YoY = Year over Year, that is the comparison between September 2006 and September 2005. These numbers include all housing units ( not just single family residences but also condos and co-ops).

Northern Virginia (Fairfax County, Fairfax City, Arlington County, Alexandria City, & Falls Church City, VA (NVAR))

  • Median Price: $445K
  • Median Sales Price YoY: -7.29%
  • Average Sales Price YoY: -5.71%
  • Total Units Sold YoY: -34%
  • Average Days on Market YoY: 192%
  • Active Listings YoY: 67%
Baltimore City Area (Anne Arundel, Baltimore City/County, Carroll, Harford, Howard (BALT AREA) )
  • Median Price: $268k
  • Median Sales Price YoY: 3.08%
  • Average Sales Price YoY: 1.69%
  • Total Units Sold YoY: -30%
  • Average Days on Market YoY: 63%
  • Active Listings YoY: 81%
Washington, DC (just the District of Columbia, no suburbs)
  • Median Price: $455k
  • Median Sales Price YoY: 8.59%
  • Average Sales Price YoY: 10.76%
  • Total Units Sold YoY: -15%
  • Average Days on Market YoY: 94%
  • Active Listings YoY: 74%
Please note: The median price in DC was $455K in September 2006 which was a huge jump from August 2006 was $397k or July when it was at $415K. I am not sure what caused such a dramatic increase in the median in DC. If you have a theory please post. Verify it using stats from MRIS.

Prince George's County, MD
  • Median Price: $330K
  • Median Sales Price YoY: 6.45%
  • Average Sales Price YoY: 6.47%
  • Total Units Sold YoY: -28%
  • Average Days on Market YoY: 88%
  • Active Listings YoY: 113%

Montgomery County, MD

  • Median Price: $435K
  • Median Sales Price YoY: 1.4%
  • Average Sales Price YoY: 1.52%
  • Total Units Sold YoY: -29%
  • Average Days on Market YoY: 148%
  • Active Listings YoY: 77%

Loudoun County, VA

  • Median Price: $440K
  • Median Sales Price YoY: -9.28%
  • Average Sales Price YoY:-4.79%
  • Total Units Sold YoY: -41%
  • Average Days on Market YoY: 230%
  • Active Listings YoY: 50%
For more numbers on jurisdictions not mentioned here please go to MRIS Market Statistics. The housing market in the Washington, DC area is experiencing a significant decline. The above numbers are nominal dollars, looking at real dollars (inflation adjusted) the dollar declines are even greater. The real estate agents must be hurting now as the total dollar sales volume for Northern Virginia is down 38 compared to September 2005. The market will continue to decline as we head into the fall and winter months. The spring / summer boom, which many in the housing industrial complex had hoped for, failed to materialize. In the metropolitan DC area a declining housing market is reality.

85 comments:

  1. Looks like there's a modest decline in Northern Virginia, and that's about it.

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  2. It may be worth noting that September 2005 may have been a little past the bubble's real price peak.

    Having said that, the results for DC, Montgomery, and PG County seem weird in that they still show nominal price increases. From what I have seen anecdotally, I find this difficult to believe. Part of it may be that the least desirable areas (some of which are in these three areas) may experience their bubble last. Part of it may also be that since sales are down so much in PG and Montgomery Counties, a completely different mix of homes is selling, although the median and average price increases are similar.

    Still, it may be that there are still some idiots out there buying. The mainstream media articles about the bubble have just started showing up in the last couple months, so more severe declines may be about to begin.

    Congratulations to David. A year to a few months ago, he was predicting just this kind of outcome, and getting verbal abuse on his own blog as a result. He was right, and his critics were wrong.

    A Redskins fan

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  3. Living_On_Logan_Circle_Since_1999October 11, 2006 7:51 AM

    DC continues to be a destination. Enough with the exurb sprawl already.

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  4. "Please note: The median price in DC was $455K in September 2006 which was a huge jump from August 2006 was $397k or July when it was at $415K. I am not sure what caused such a dramatic increase in the median in DC. If you have a theory please post. Verify it using stats from MRIS."

    This question keeps cropping up. The MRIS stats available online do not go back far enough to illustrate the fundamentals of the increase.

    Homes in DC proper, in the middle of the city, near everything DC has to offer, have been dramatically depressed for FORTY YEARS. This includes neighborhoods in the often-coveted "Northwest" quadrant. The value of land and architecturally significant homes in the heart of the nation's capital has finally entered the modern era: bubble or no bubble.

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  5. one thing to note is that when sales volumes drop, the effect of outlier sales (very expensive or very cheap) on median prices is magnified. My bet is a couple of reaaly expensive homes were sold last September.

    the analogy is when Bill gates walks into a crowded bar he raises the median income off all patrons in the bar by x. When he walks into a sparsley populated bar he raises median income by 3x.

    What would be useful, would be to have the weighted-average price (on a zipcode squarefootage basis) and the full price range of price points comprising the median. That would allow folks to have a much better sense YOY pricing trends on an apples to apples basis. Unfortunately, even if MRIS was interested in providing an accurate picture--it would simply be too much to ask of them to compile the statistics that way.

    Anectdotally, I've been looking at SFHs in DC since last october when I sold at the top. Based on my own experience, asking prices have come down 10- 20% in nominal terms in the following neighborhoods: Dupont (condos and coops), Glover park, AU park, Woodley, Chevy Chase, 16th street heights, Logan (condos), Kent, Palisades and foxhall.

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  6. I wrote about how median prices can go UP in market while property prices are going DOWN. You can read about a real example of this happening during Q2 in Orange County here:

    How "Median Home Price" can mask market weakness

    This price action is pretty normal at a top, in my opinion.

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  7. Don't forget the actual declines are about 3-5% more than what is reported here because of a significant amount of incentives including closing cost assistance, rate buydowns, etc. These are also old numbers as there is a 30-90 day lag between contract and closing, this numbers will continue to deteriorate.

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  8. Yikes! My ZipCode MRIS Data For September


    Zip Code 20003:

    Sales Data/ 2006/ 2005/ % Change

    Total Sold Dollar Volume: $ 15,986,336/ $ 23,370,757/ - 31.60 %
    Average Sold Price: $ 592,087/ $ 615,020/ - 3.73 %
    Median Sold Price: $ 594,500/ $ 562,000/ 5.78 %
    Total Units Sold: 27/ 38/ - 28.95 %
    Average Days on Market: 51/ 28/ 82.14 %
    Average List Price for Solds: $ 629,085/ $ 617,545/ 1.87 %
    Avg Sale Price as apercentage of Avg List Price: 94.12%/ 99.59 %

    Hm. Could've been worse. Interesting, isn't it, how 1 $million+ house sale improves the September Year-Over-Year averages for this zip code?

    Total NEW listings: 77
    Total Properties Marked Contract: 16
    Total Properties Marked Contingent Contract: 8
    Total NEW pendings (Contracts + Contingents): 24

    Plus, only 27 properties changed hands in September, 2006.

    According to the MRIS report, there were 166 active listings.

    Today, there are 189 properties for sale in the 20003 zip code.

    August data, however, looks way better than September's. Hm. Maybe that's because September sales included only 2 condo sales under $400,000 in August and NO SFH sales under $500,000.

    ***By the way, families with school-age children have historically tried to complete their moves before school starts. Surely, those who must move before school starts might be pressured into paying more.***

    In September, 5 properties sold at closing prices between $350,000 and $499,000.

    As always, please let me know if I've misinterpreted the data!

    DC Housing Bubble Blues

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  9. Theory of why DC median rose: more sales in expensive areas, fewer sales in less expensive areas.

    I haven't done a thorough check, just a spot check of a few zip codes: 20018 with a median sales price of about $400 K down 60%. 20018 with a median of $225 sales are down 32%. 20015 with a median of $852K - and average of $960K - saw an increas in sales of 62%, including 9 sales over $1 million. 20016 with a median of $750 is down in sales, but only by 17%. 20007 (Georgetown Univ zip) with $750K average had sales go up 14%. 20017 with median of $370,000 had sales down 60%.

    While not a thorough analysis, these numbers weren't cherry-picked. I used a few zip codes I knew, and found a couple others for less expensive parts of the city. Someone with more time on their hands may want to do a scatter plot of median price versus change in sales to see if my theory holds up.

    I should note the counterintuitive fact that it is possible for the median price to go down in every zip code, or every precinct, of the city, but still have the median for the city rise. This can happen if the distribution of sales changes across the city with more expensive areas having more and less expensive areas having fewer sales. Similarly, the median price could drop for the city as a whole, yet rise for every zip code, if the distribution changes in the opposite direction.

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  10. Theory of why DC median rose: more sales in expensive areas, fewer sales in less expensive areas.

    I haven't done a thorough check, just a spot check of a few zip codes: 20018 with a median sales price of about $400 K down 60%. 20018 with a median of $225 sales are down 32%. 20015 with a median of $852K - and average of $960K - saw an increas in sales of 62%, including 9 sales over $1 million. 20016 with a median of $750 is down in sales, but only by 17%. 20007 (Georgetown Univ zip) with $750K average had sales go up 14%. 20017 with median of $370,000 had sales down 60%.

    While not a thorough analysis, these numbers weren't cherry-picked. I used a few zip codes I knew, and found a couple others for less expensive parts of the city. Someone with more time on their hands may want to do a scatter plot of median price versus change in sales to see if my theory holds up.

    I should note the counterintuitive fact that it is possible for the median price to go down in every zip code, or every precinct, of the city, but still have the median for the city rise. This can happen if the distribution of sales changes across the city with more expensive areas having more and less expensive areas having fewer sales. Similarly, the median price could drop for the city as a whole, yet rise for every zip code, if the distribution changes in the opposite direction.

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  11. Also noteworthy: the median price in northern Virginia is down a whopping 11% since the peak in July 2005!

    Given the stats on minimal average down payments and the high use of payment option loans (many with rate reset features triggered by increased LTV ratios), its likely that half of the 2005 buyers in NoVA have negative equity (including vaporized down payments) and no chance of refinancing or even short-selling (remember, the personal savings rate is negative). Therefore, foreclosure will be the only way out.

    It's a shame that so many people let greed or fear take control. Too many people bought without ever intending to occupy (the flippers) and too many people bought because they feared being priced out forever. It's also a shame that so many housing bulls continue to mislead people into thinking this correction is only temporary. They are doing a grave disservice to others.

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  12. "Anectdotally, I've been looking at SFHs in DC since last october when I sold at the top. Based on my own experience, asking prices have come down 10- 20% in nominal terms in the following neighborhoods: Dupont (condos and coops), Glover park, AU park, Woodley, Chevy Chase, 16th street heights, Logan (condos), Kent, Palisades and foxhall. "

    Yeah, nice anecdote, but the numbers don't bear this out. Prices are up again. Learn to live with it.

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  13. Looking over the data in Arlington, what's remarkable is that in most zip codes, SFH over $700K (much less condos or townhouses) just around selling. Exceptions are 22207, and, to a limited extent, 22201. Eventually, these houses will have to come down in price, which will put further downward pressure on the cheaper houses, too.

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  14. It is interesting that prices still have not fallen to the levels that people on this board said they would. Prices are not going back to the levels they were in the 80's. 10 years from now people on the sidelines will be wishing they had bought during this correction. One thing about a correction: the people waiting to time the market usually miss when the market is headed back up.

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  15. "the analogy is when Bill gates walks into a crowded bar he raises the median income off all patrons in the bar by x. When he walks into a sparsley populated bar he raises median income by 3x."

    this example works for the average, not median. Median equals middle, your thinking of average.

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  16. Take a look at the WaPo article - http://www.washingtonpost.com/wp-dyn/content/article/2006/10/10/AR2006101001284.html

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  17. outintime said:
    "the analogy is when Bill gates walks into a crowded bar he raises the median income off all patrons in the bar by x. When he walks into a sparsley populated bar he raises median income by 3x."

    I think you meant "average" income. When discussing "medians", Bill's higher-than-high income would have no different effect than someone with just a high income walking into the room. "Median" is just the spot where 1/2 the people in the room are making less than the median and half are making more. The salary of the richest person in the group doesn't affect the median ... Just like the price of the most expensive house sold doesn't affect the median price.

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  18. David -- are you planning to do an analysis of this information relative to that in the Moody's report of lat week?

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  19. Has anyone looked at possibly fraud as the reason prices are rising in DC? It's happening in Colorado. See: http://www.rockymountainnews.com/drmn/real_estate/article/0,1299,DRMN_414_5046223,00.html

    ..."But perhaps an even worse problem is mortgage and appraisal fraud, Mygatt said.

    "We have been seeing many more homes on the market, and average prices (in most months) are going up, which does not make any economic sense," Mygatt said.

    Two days ago, a Coldwell Banker broker severed a listing agreement with the seller of a home priced at $850,000 because the broker suspected he was involved in a fraudulent sale.

    "For five or six months, the home received zero offers," Mygatt said.

    Out of the blue, the seller received an offer for $1.1 million, $250,000 above the asking price.

    However, the seller would then contribute the additional $250,000 to a nonprofit limited liability company, so the seller is effectively receiving the $850,000 he wanted, Mygatt said.

    The beneficiary of the nonprofit group is the buyer, Mygatt said.

    Mygatt suspects the buyer will pocket the $250,000 and let the house go into foreclosure. But before that happens, the home will be listed as a $1.1 million sale, helping to skew the Metrolist numbers higher, he said.

    He said these kinds of deals, often with lower-priced homes, are becoming increasingly common.

    "This could not work without appraisal fraud," Mygatt said.

    Appraisal fraud is being targeted by Erin Toll, the new head of the Colorado Division of Real Estate.

    Toll said Thursday she has received more than 200 e-mails and phone calls about suspected appraisal fraud since the Rocky Mountain News reported on Sept. 27 that she is going after shady appraisers."

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  20. "Yeah, nice anecdote, but the numbers don't bear this out. Prices are up again. Learn to live with it."

    reminds me of an old quote "who are you going to believe, me or your lying eyes?"

    Having actually sold a home, cashed in, and then spent a lot of time looking at houses to buy, I am pretty damn sure i belive my eyes. On an appples to apples, street to street, feature to feature basis asking prices are definitely down 10 - 20%.

    Markets are localized and highly specific i actually look at the houses and the asking prices, etc. Comparing comps is better than looking at MRIS stats if you know your houses and sub-markets.

    if you think prices are going up, go catch a falling knife--maybe I'll wind up buying your foreclosure.

    Me i will take my time. I don't kid myself that i'll be able to time things perfectly twice--no one rings a bell at the bottom.

    But, it doesn't take a rocket sceintist to know we ain't close yet. too much inventory and toxic debt to work out of the system. Maybe late 2007 spring of 2008.

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  21. Prices down? But, I thought the DC metro area was different with all the government jobs and all. Funny how it is now only going to be a broef correction.

    Yeah, keep telling yourself that.

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  22. Lance is right about the median and Bill Gates.

    My problem with using any of these measures (median, mean, whatever) echoes what was said by outintime.

    The problem is that it's not clear what characteristics the median house has... If last year, the median house was a $397k 3 bedroom SFH in Columbia Heights and this year it's a $455k 3 bedroom house in Columbia Heights, then you can say that a price increase or descrease is a reasonable. But if this year the measure the $455k house was a 4-bedroom in Columbia Heights, then it's clear that the statistic is not a perfect measure of how the market has changed.

    So maybe one year more small fixer-upper houses sell and another year more already-renovated high-quality houses sell. Or one year it could be houses in a good neighborhood and the next year more houses sell in a lesser neighborhood.

    In this sense, it makes sense to look more localized area.. e.g. If you limit the median analysis to 3 bedroom SFHs in zip code 20011, then you'd have a better shot at guessing what's happened to local prices. But even then, you could have totally different qualities of houses within the neighborhood.

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  23. I believe that the rise in condo's in DC is due, in part, to the commuting problems in Northern Virginia. DC workers helped create the housing rush to buy, but the state government keeps stalling on creating the nessesary roads and schools. Driving to a job in DC or taking the train, it will cost you $250 or more a month for gas or tolls or parking. The privite toll road from Asburn to Leesburg wants to become the most expensive toll in the US ( I do not remember the accual proposed number). Plus its taking 2 hours to get to work. SO, it would be smart to buy a condo in DC and cut costs and time on the road. Too bad these same people cannot find anyone to buy thier townhouse in Ashburn. Also, the condos being bought may be larger in sq footage to accomadate families, increasing the the average price of all condo sales.

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  24. waiting for godotOctober 11, 2006 4:06 PM

    Good Lance...my first and possibly last comment in agreement with you about median v/s average.

    Side note - often the top 5% and bottom 5% are taken out of the Average to keep the numbers from being skewed

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  25. "Prices down? But, I thought the DC metro area was different with all the government jobs and all. Funny how it is now only going to be a broef correction.

    Yeah, keep telling yourself that. "

    Hey Einstein - the post says that prices are up.

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  26. In a nutshell, more house (or condo). When folks are looking in a down market, they don't lower what they already figured they could afford, they raise standards. Especially given how intransigent sellers are about facing reality.

    So if all you could afford was a condo out by the public housing project on Cap Hill, you now take a look at the Ust flood of Lofts. Why not, the Cap Hill condos aren't dropping any faster than the Ust Lofts as sellers refuse to face reality.

    So low end buyers stay out waiting for the marginal property seller to suck it up, and mid-range/higher buyer look at what they could get for their money and move to better stock.

    I know I'm already eliminating properties I was once stuck with as my only option right off my list, as other development have had to discount. End result is no loss in median sales price on the books, but a huge real loss as I'm getting units that I was priced out of a year ago.

    This also explains NOVA, as people who were priced out of DC (Suburban types never considered marginal areas...talk to one of them and you find out they see anything outside of "safe" NW to be a war zone) now can consider upscale developments in DC. So the units they were originally stuck considering in Reston lay unsold.

    This lag effect will last a few months, until the marginal sellers face reality and drop prices. Then you'll see a steep drop as low end buyers move in.

    All of this pattern is enhanced by the low volume, which as has been noted emphasises outlier patterns. A marginal shift in buyer behavior can swing the numbers dramatically.

    I predict that by January you'll start seeing consistent monthly drops.

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  27. We give up. Time to buy. Not.

    What we are seeing, folks, is typical of a falling market. What is not reflected in a statistal analysis of sales prices is what is being bought and sold.

    Nice houses in DC, on nice blocks, are selling, yes, at last year's median (real) prices. Buyers are now getting more for their money, that's all.

    House need work? It'll sit.

    Crack house next door? Uh, uh.

    Seller won't accept inspection contingency? Kiss my ass.

    In my neighborhood, the really nice ones are moving. The garbage, including overpriced nice ones, is sitting. And the garbage will sit until prices reflect what is being "offered for sale."

    I'm sure there's glee in today's numbers. But even real estate agents are beginning to publicly lecture sellers on pricing.

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  28. waiting for godot said:

    "Side note - often the top 5% and bottom 5% are taken out of the Average to keep the numbers from being skewed "

    AND I agree with YOU! (I also agree with the anon who illustrated why the "average" or "median" house from period to period isn't necessarily the same house in the same area or even with the same characteristics! This is a point I've tried to drive home when people try to look at buying a house as an investment and start quoting all these stats. Truely I think they mean little because a home isn't an interchangeable commodity or share in a company. You really have to look at a particular property and size it up in relation to what you personally are going to get out of it over the years, and where you think the surrounding area is going to go over the years ... which also affects what you personally are going to get out of it over they years. Once you know that ... and you know your expected budget, THEN you can make a buy or not-buy decision. And how you arrive at this decision will be a personalized one. It's how you want to spend your money ... and has NOTHING to do with making an investment. Go buy a stock if you are looking to invest money. Your emotions, needs, and wants don't need to be factored in when you are buying a stock. There you can just look at the stats and see if it gives the kind of return you are seeking at the risk you are willing to tolerate.)

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  29. Typical response for a “buyers market”. “Hey, my realtor said it’s a buyers market! Let’s go buy today or we’ll be priced out!”

    Inventory is still high, ARMS will still reset.

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  30. Also, in support of what I posted on more house...run some zip code numbers. I don't have a ton of time, but a quick hit on a couple shows what I expected. Big inventory jumps in marginal zips, lower inventory jumps in "nice" zips. Of course, the inventory bloat continues everywhere (which also supports the points).

    As long as unsold inventory bloats, the upcoming hit gets worse. Unless you believe there are an ever increasing number of "going to jump in" buyers, in a period the housingheads gloat about record homeownership %.

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  31. Lance said...
    “You really have to look at a particular property and size it up in relation to what you personally are going to get out of it over the years, and where you think the surrounding area is going to go over the years ... which also affects what you personally are going to get out of it over they years. Once you know that ... and you know your expected budget, THEN you can make a buy or not-buy decision.”

    And that my friend, is called an investment. I’m not going to “invest” the years for a 300K+ falling apart, no yard, box of a home. I personally, would not get much of a return on investment over the years. Will others? They are counting on it, as seen by the number of exotic loans out there. I wonder what type of return these folks will get when they are underwater, need/want to move or move up, and can’t sell?

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  32. I think all could benefit from a quick refresher in statistics...

    1. The higher the sample size, the more accurate the results (as sample size goes to infinity it actually represents our real life)... therefore, if number of sales have dropped 30%, your sample size got reduced by 30% and your accuracy was thus reduced.

    2. Confidenence intervals - while the median price of a home is a nice easy to digest figure, no one every talks about the confidence interval. Look, the data comes from set, which in today's market is getting smaller, and thereby loosing its accuracy. So, if the sample size is 100, and the median is $300,000K, and today the sample size is only 50, with a mean of $350,000, it could well be that more houses cost less due to accuracy indicators.

    So, numbers are fun, but make sure you understand what the underpinnings are and how they work.

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  33. So what happened to that terrible deficit some people were so worried about? The collapse of the economy seems to be dealyed for a while...

    "WASHINGTON (Reuters) -- The budget deficit narrowed to $248 billion in the fiscal year just ended from $319 billion in 2005 in spite of record spending, as revenues were the highest ever, the Treasury Department said Wednesday.

    It was the smallest budget deficit since a gap of $157.8 billion in 2002.

    The 2006 figure compares to an estimate of $250 billion issued by the nonpartisan Congressional Budget Office on Friday. In its last budget forecast in July, the Bush administration had said it expected the 2006 deficit to come in at $296 billion.

    Revenues were $2.407 trillion, and outlays were $2.654 trillion, the Treasury said. The government's fiscal year ended Sept. 30."
    (http://money.cnn.com/2006/10/11/news/economy/budget_deficit.reut/index.htm?postversion=2006101112)

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  34. Robert said:
    "And that my friend, is called an investment. I’m not going to “invest” the years for a 300K+ falling apart, no yard, box of a home. I personally, would not get much of a return on investment over the years. Will others? They are counting on it, as seen by the number of exotic loans out there. I wonder what type of return these folks will get when they are underwater, need/want to move or move up, and can’t sell?"

    Call it what you will, but for a someone (or a family) looking for stability in terms of having a fixed place to call home and a known and constant housing cost, that $300K may very well be worth it ... even if it isn't for you personally, which is the point I'm trying to make. Actually, as the last several years have shown, it really is worth it for most people ... Just not for you. And that is one difference between evaluating an investment and an expense. When evaluating investments, it's pretty much straight forward because people are really looking to 2 bottom lines: (1) what dollars am I going to get out of this thing and (2) how relatively sure am I to really get those dollars out of this thing without losing my "investment" or the return dollars themselves. Expenses are very different creatures. When making a decision regarding whether to incur an expense or not, a lot of other factors come into play. And those factors will vary widely by individual. For example, a family with small children might put a lot of emphasis on good public schools and safe play areas around the house. A single 20-something might be more interested in access to nightclubs and restaurants. Each of these buyers will look at the very same place with very different sets of eyes and different criteria ... AND no one place will be the same in their eyes. Each place to live --- even if similar condos in the same building --- will be viewed as unique. And THAT is why I say when you are lookig to buy a home, you are looking to make an expense decision and NOT an investment decision. The fact that you Robert don't feel it's worth it to pay $300K for a house while others do, supports my point. If this were just an "investment", then the only consideration you'd have would be "is my money safe here and will I really get the return I am looking for?" (assuming of course, that you actually had the money to make the "investment".)

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  35. Stages of Denial

    Question: We discuss drops in prices for sales coming slowly as intransigent sellers are still not fulling facing reality. But what about the effects on rentals (for those of us waiting it out?)

    From what I've seen on craigslist, there are now dozens if not hundreds of units coming online monthly in our area alone BUT prices have not come down. Are they living in a fantasy world ("I'll just let some renter pay my mortgage until prices go back up and I'll price it how I feel like.") Are they getting these asking prices or are they also sitting around with empty units thinking that the perfect renter will appear at their doorstep?

    So maybe, like with addiction, they're slowly lowering standards and rents is another layer for them to go through before escaping denial?

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  36. One thing to note: total dollar volume of sales in DC was down 5.9%. When condos are excluded from the analysis, total dollar volume declined 9.54%. At the same time, the condo share of units sold increased YoY from 44.3% to 48.8%.

    I think the rise in the median price can be traced to three things:

    1) The average sales price for 2 rooms or less detached increased 48% YoY while volume remained constant, and
    2) Ditto for 4 beds or more detached, but average price increased 30% and volume increased 18.52%.
    3) These were the only two categories of housing that showed flat or growing sales volume; all others declined 6.42 - 36.73%.

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  37. So....surprise surprise suprise, we are in a correction. Housing prices are cyclical folks. Anyone with the slightest knowledge of historical housing cycles has been expecting this since 2002 or 2003. Big yawn.

    The only wild card is interest rates. In terms of prices and market activity, expect a repeat of the early to mid 90's. Bad if you bought in 2004 or 2005 and paid "market price" AND have to sell, otherwise ho-hum.

    I haven't commented for awhile because it is all so boring and has been talked to death. My question for some of you; if you are safely out of the market, why follow every blip with a magnifying glass. Get a life. Don't we all know what is ahead for the next few years?

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  38. To the poster that thought DC condo prices will go up b/c of the commute from NOVA (they mentioned Ashburn.)

    1. Not everyone that lives in Ashburn is commuting to DC. Many work in Reston, Dulles, Leesburg and Tysons.
    2. The reason they commute from Reston and don't live in DC is the quality of the schools. If you have school aged kids, you will not want a DC condo. Period. End of story.
    3. Astonishingly enough, a lot of people LIKE their 2 hr commute. They say it helps them "unwind."

    So, really, keep dreaming about your DC condo price going up. With all of them flooding the market and no buyers, I really don't think there's any chance.

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  39. Anon 9:09 pm - allow me to translate your statement into layman's terms:

    "Increasing sales prices are reliable, but decreasing sales prices aren't."

    What a bunch of hogwash. Whether transaction volumes are down 30% or not, the number of transaction is still sufficient so as to draw reliable conclusions.

    I'll also have you know that it isn't 'sample sizes' that we are dealing with. The mean and average prices are based on the entire population of transactions, not a 'sample' of those transactions. I believe you are confused or trying to confuse others.

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  40. "Hey Einstein - the post says that prices are up."

    The original post said DC metro area- last I knew NOVA was DC metro area. Now go finish that d*ck you were eating, d*ckeater.

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  41. remeber when lance and va_investor said that foreclosures dont affect property values. Well this guy was in the business longer then both of you.

    “Mike Rosser, a retired mortgage banking executive, said that foreclosures often cost lenders $35,000 to $50,000 on each home. They also drive down property value"

    So, once again you both were wrong.

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  42. I am Anonymous October 11, 2006 1:04 PM, Today in the Washigton Times front page, an article about the high cost of the commute and people passing on Reston for closer digs near jods in DC.

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  43. If you have a theory please post:

    2000 sheiks moved in last month!

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  44. Bubble-ology gets more and more tortured as their predictions don't pan out. You're the ones who are going to be in collapse by January.

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  45. I suspect that Va_Investor has stopped posting because the "comment moderation" feature has caused the blog to slow to a crawl. While I like that I can more easily keep up with postings, the dynamism of the blog has been stifled. David, can't we try going back to regular status to see if the nusance poster has maybe gotten bored too?

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  46. waiting for godotOctober 12, 2006 10:30 PM

    You guys seen this? Freakin' Hilarious...

    http://www.youtube.com/watch?v=TxylHPnoloI&eurl=

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  47. Lance said...
    “Call it what you will, but for a someone (or a family) looking for stability in terms of having a fixed place to call home and a known and constant housing cost, that $300K may very well be worth it ... even if it isn't for you personally, which is the point I'm trying to make. Actually, as the last several years have shown, it really is worth it for most people ... Just not for you.”

    And evidently, given the increase in foreclosures and exotic loans while income levels do not keep up, it’s not for “most” people.


    “The fact that you Robert don't feel it's worth it to pay $300K for a house while others do, supports my point. If this were just an "investment", then the only consideration you'd have would be "is my money safe here and will I really get the return I am looking for?" (assuming of course, that you actually had the money to make the "investment".)”


    As usual, you can barley keep up with your own diatribe. You fail to realize that time is the largest investment. While you continue your rant in terms of monies, you fail to acknowledge that yes, while these “most”(1) people have a roof over their head, the next few years will not be pleasant for some, down right nasty for others and the money invested for this “time” will bring some heartache.


    (1) Speaking of “most” people. The current figures I have, show that 68% of the U.S. currently own, and figures that you produced some months back show that, if I recall correctly, 80% of those own a second home. So, that leaves ~30% of us “others” to quickly and efficiently buy down the current inventory.

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  48. Man, I couldn't disagree more about the quality of the blog since moderation went into effect. The quality has really gone up. Just look at this thread. I don't agree with every post on it, but the posts are well thought out, polite, and mostly interesting.

    It's like the old blog, but with all the chaff thrown over, so you just get the good stuff. My post count is down (no doubt also improving the quality) only because I have been extremely busy of late. The moderation has worked great, IMHO.

    A Redskins fan

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  49. Lance is right about the comment moderation. What used to be a lively debate has become an interminable bore.

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  50. As for DC, one month does not a trend make.

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  51. This may be a bit off topic, but I wonder what affect the rise in crime in some of the more touted neighborhoods will have on prices.

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  52. This is a bit off tangent, but I'm wondering what affect these increases in crime in highly touted neighborhoods will have on home prices. If any.


    http://www.washingtonpost.com/wp-dyn/content/article/2006/10/12/AR2006101201813.html

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  53. Lance is right about the comment moderation. What used to be a lively debate has become an interminable bore.

    Childish bickering and random insults a lively debate? Please... Your blathering comments are part of the reason comment moderation was turned on, along with all the other bitter anonymous posters and trolls.

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  54. David,

    Has the decline to date been more or less severe than you expected? Seems to me that there has not been much of a decline yet at least in comparison to the recent runup.

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  55. Robert,

    No, I don't remember ever hearing anything about 80% of all owners having a second home. It was that 80% of all second homes/investment properties were owned free and clear.

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  56. originaldcer asked:
    "This is a bit off tangent, but I'm wondering what affect these increases in crime in highly touted neighborhoods will have on home prices. If any."

    I scanned through the article this morning, and I think they said something about the new patrols that were put in to control the crime spike working well since they were instituted a couple months ago. Fenty has been very critical of the police department focusing too much on federal needs and not enough on the needs of District citizens, so I suspect we should see continued increased law enforcement far out into the horizon.

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  57. originaldcer asked:
    "This is a bit off tangent, but I'm wondering what affect these increases in crime in highly touted neighborhoods will have on home prices. If any."

    I scanned through the article this morning, and I think they said something about the new patrols that were put in to control the crime spike working well since they were instituted a couple months ago. Fenty has been very critical of the police department focusing too much on federal needs and not enough on the needs of District citizens, so I suspect we should see continued increased law enforcement far out into the horizon.

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  58. I agree with OriginalDCer. What many of these yuppies buying in "gentrifying" areas don't realize is that the people who grew up in those areas still know them well. And a small but significant enough number of them are criminals. This isn't to say the prognosis is grim; only that you should receive a substantial discount for buying a property there. If there are muggings, beatings, and shootings all around, that isn't worth half a million bucks, even if you are a Saudi prince married to a high profile lobbyist.

    A Redskins fan

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  59. From the Friday, October 13, 2006, Washington Business Journal "Commercial Real Estate Transactions": "14 S Street KMG LLC to 14 S Street Holdings LLC, 14 S Street NE, Washington DC 20002, Lots 1/2 Block 14 Bloomingdale, $1,850,000.

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  60. The Friday, October 13, 2006, Washington Business Journal "Residential Real Estate Transactions" column includes this property sale in Bloomingdale: "Edward Belanger and Robert MacGregor to Alan Gongora, 70 V Street NW, Washington DC 20001, Lot 23 Block 21 Washington, $720,000."

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  61. I think the small rise in prices is false. Do you take into account the huge "seller credits" "seller consesssions" "seller subsidy" (whatever you want to call it) happening in the market right now??
    Sales prices are considerably inflated and don't reflect the true market. I am a realtor in Silver Spring, Md., I am finding most homes being sold near or at their asking prices but with huge credits from the sellers. A 450,000 house may sell for 450,000
    but if the seller credits a Buyer 17,000 - 18,000 for closing costs or repairs or whatever, What is the REAL selling price of the house?? Unless you are a realtor and have access to the MRIS database, the general public only knows that the house sold for 450,000 -when in reality it sold for $432,000!

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  62. All Crashes Should Be So Good

    By Kenneth R. Harney
    Saturday, October 14, 2006; The Washington Post, Page F01

    www.washingtonpost.com/wp-dyn/content/article/2006/10/13/AR2006101300664.html

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  63. I'm 30 and make about 90K a year, have about 10-15K cash, I rent right now and would love to buy. I live in the Arlington (Courthouse) area. My question is who is buying these 500K 2br condos? I mean I make a decent salary (not even counting my bonus) I can't figure out who is buy these places? I mean a 500k mortgage is no joke! My GF is a lawyer who makes easily over 150 and her price range ends at around 450k (30 year fixed etc.). This just seems like simple economics if people can't afford it how are they still being sold for that amount and not decreasing! ????? WTF??? All you folks sit and talk about price "correction" and "bubblelicious" blah blah but I'm not seeing it. Also I can't think what it would be like to only make like 50/60K in this area, do you get a subsidy from government? LOL

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  64. http://www.exchangeca.com/bin/web/real_estate/AR188706/ACTIVATE_FRAMES/HOME_SEARCH/La+Jolla/1152906128.html" Normal Market -

    In a normal market, there is fairly a large number of homes available and an average number of buyers. This market does not necessarily favor the buyer or the seller. A seller may not have as many offers on their home, but he or she may not be desperate to sell either. Again, it is the buyer's responsibility to be prepared. During a normal market, the chances to negotiate are higher than in a hot market. As a buyer, you can expect to make offers at lower than the asking price and negotiate a price at least somewhat less than what the sellers are asking...
    www.ExchangeCA.com

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  65. ANON 10:37 asked:
    "My question is who is buying these 500K 2br condos?"

    People like you and your fiance are buying these condos. And the relative high salaries you are earning are a major reason behind the rise in real estate prices. You alone on your $90K salary would be roughly in the same position I was in when I bought my first condo ... You'd be spending something like 46% of your gross income on this if you had to buy it with nothing down and didn't want to go the interest-only route. Of course, once you take into account all the tax savings you'd get, the real percentage of your income going to housing would be far less. If you and your gf bought together, which would seem the natural progression for you and whoever you end up getting married to eventually, your housing expense burden would be far less than for you alone. It would be relative "cheap" compared to what a single individual pays. The long and short of it is that because you and so many others CAN afford those prices, and you are all bidding against each other for the limited number of houses/condos available, the places WILL sell for what you can afford. That is how prices get determined ... plain and simple.
    And sorry, but I don't feel sorry for you and your gf having to pay so much. I feel sorry for the average person who doesn't get paid nearly what you do. Sorry, but under the more egalitarian rules we used to operate under in this country, no 30 yr old would have been making $90K/yr while the average Joe working hard all his life is lucky if he is making $50K. But, your salary --- like the prices of housing in areas where the haves live --- is inflating beyond belief because we've divided ourselves into the haves and the have-nots ... And since you can't lower people's salaries, it is the salaries of the haves that inflate ... and the prices of their housing follows the same path ... forcing the have-nots to segregate physically from the haves as they seek lower-priced housing in "non-bubble" cities .. which are also cities without the opportunity to earn what you and your gf are earning. It's a sad state of affairs, but you should be the last to complain. YOU are one of the lucky ones!

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  66. "the rhetoric is just way overwrought."

    Especially on this blog.

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  67. anon 8:20,

    You really hurt my feelings. You sure sound like one of those anon trolls about which you complain.

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  68. It just keeps on coming. Two blocks from the US Capitol, a new $1 Billion development.

    http://www.akridge.com/whatsnew_pdfs/PRRLS%20-%20BPlClosing.pdf

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  69. With respect to the crime statistics I posted. We also have to remember that plenty of neighborhoods did not see the destruction or closing of public housing. What did happen was empty lots or empty buildings became condos. Therefore the criminal element in those neighborhoods did not move anywhere. I'm not as positive as Lance. I don't think that there will be a dramatic decrease in crime especially in newly gentrified areas. It will probably take several years before there is a decent shake out in places like Shaw, Columbia Heights etc. Don't get me wrong..I'm not saying those are natural bad areas, but the pick pockets etc. who lived there aren't going anywhere just yet. And let's remember that the article seemed to focus on areas outside of Ward 8.

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  70. From CNN.com today:

    "The population of the United States will reach 300 million early Tuesday, the U.S. Census Bureau says. The United States has become a "supersize, metro-nation with a fast-growing population, and supersize appetites for housing, land and resource consumption," one expert says. The U.S. is now a vastly different nation from the one where the Baby Boomers were born."

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  71. "I rent right now and would love to buy. I live in the Arlington (Courthouse) area. My question is who is buying these 500K 2br condos? I mean I make a decent salary (not even counting my bonus) I can't figure out who is buy these places? I mean a 500k mortgage is no joke! My GF is a lawyer who makes easily over 150 and her price range ends at around 450k (30 year fixed etc.). "

    Does this really take that much imagination? If you bought it together, obviously you could afford it. Also, if you were selling another place, you could afford it.

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  72. Lance said...
    "The long and short of it is that because you and so many others CAN afford those prices, and you are all bidding against each other for the limited number of houses/condos available, the places WILL sell for what you can afford. That is how prices get determined ... plain and simple."


    Ah, bidding wars! That’s so 2003 Lance. As the inventory can attest, these homes/condos are not flying off the market.

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  73. "supersize appetites for housing"

    But not in Washington, DC, apparently. DC's population is currently around 600,000, down from a high of over 800,000 in the 1950s.

    On the other hand, perhaps DC's superior public schools, low crime rate, consumer- and business-friendly tax policy, and sterling public servants will be the impetus for a surge in population growth in time for the 2010 census, thus reversing a half-century decline.

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  74. I have a feeling that the slowdown may not be as bad as people think (though those who think there won't be a drop are doubly foolish). With shrinking inventories and homebuilder stock on the rise (the stock market predicted the housing slowdown), I have a feeling that we'll see a return to a normal market by 2008. Of course, that could all go to hell if the economy does. But, sadly for the bears and the bulls, things won't be as bad, or as good, as either side imagines.

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  75. Disagree. I am looking for a dead cat bounce end of this year/ beginning of next where everyone wipes their brow and says 'whew! wasn't as bad as we thought it was going to be,' then the bottom will fall out - taking the stock market and economy with it.

    If this doesn't happen, then we have entered a new paradigm.

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  76. ""supersize appetites for housing"

    But not in Washington, DC, apparently. DC's population is..."

    Rather than engage this assertation directly upon its un-informed and caustic low level; all are encouraged to look into the latest census numbers for DC proper. Population is up by over 70,000 people. The numbers speak for themselves.

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  77. Actually, daytime (commuter-driven) population in DC is approaching the 1,000,000 mark.

    Enjoy your drive home on this rainy autumn day!

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  78. anon 12:28 said:

    "On the other hand, perhaps DC's superior public schools, low crime rate, consumer- and business-friendly tax policy, and sterling public servants will be the impetus for a surge in population growth in time for the 2010 census, thus reversing a half-century decline."

    I guess you don't know that the population has been increasing every year this decade?

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  79. anon said:
    "Disagree. I am looking for a dead cat bounce end of this year/ beginning of next where everyone wipes their brow and says 'whew! wasn't as bad as we thought it was going to be,' then the bottom will fall out - taking the stock market and economy with it.

    If this doesn't happen, then we have entered a new paradigm. "

    OR, it could just be the old same same paradigm since what is occuring right now is really no different than what has happened each and everytime real estate prices have peaked out. I think the problem is the bubbleheads look at the selling price as the number upon which to gauge cost, when in reality cost is what comes out of your pocket at the end of the month. And THAT is greatly influenced by interest rates for those not self-financing their purchases.

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  80. Ok I have no intention of living with my GF right now, the point I was trying to establish is who are these people on single salaries buying 500k properties? I want those jobs...oh wait I guess you can get one with one of those neg-amor loans right? LOL

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  81. Well interest rates for 30 year fixed loans have been inching down for quite a while. It's good for people who are looking like me and are honest about not stretching themselves too thin. I'm not a bubblehead, but I do believe that some of the "prices" are ridiculous relative to the area/neighborhood. I'm not talking about the District itself, but some of the neighborhoods and their demands. Outside of asking prices and sale prices for recent home purchases I don't have much else to go on. In many of the neighborhoods where I'm looking not much has changed hands in 9 months to a year...it's rather difficult. I have to go with my gut. Even the agent I've been working with has mentioned that the homes were priced well above the range she would consider them worth. It's subjective.

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  82. "Ok I have no intention of living with my GF right now, the point I was trying to establish is who are these people on single salaries buying 500k properties? I want those jobs...oh wait I guess you can get one with one of those neg-amor loans right? LOL "

    And I told you your gf could afford it if she could put 20% down -- like, for example, if she was selling a smaller place.

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  83. anon 11:18 said
    "If you bought it together, obviously you could afford it. "

    I am always in utter amazement by these types of statements. This is a major problem in our country. What if they decide to have kids? Maybe one of the parents should stay home and actually raise the kids instead of letting some 18 yr old daycare provider do it. Utterly amazing.

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  84. "I am always in utter amazement by these types of statements. This is a major problem in our country. What if they decide to have kids? Maybe one of the parents should stay home and actually raise the kids instead of letting some 18 yr old daycare provider do it. Utterly amazing. "

    I am always in utter amazement by these types of statements. This is a major problem in our country. I didn't tell him he SHOULD do it. I told him he COULD do it.

    Utterly amazing.

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  85. "Ok I have no intention of living with my GF right now, the point I was trying to establish is who are these people on single salaries buying 500k properties? I want those jobs...oh wait I guess you can get one with one of those neg-amor loans right?"

    Its a 1) lot of investors who got in early, many with their dot com and other stock market loot, 2) a lot of people who took out interest only and negative amortization loans, 3) people who already owned real estate and and rose with the tide, and 4) people who make a really lot of money (there are quite a few), lobbyists, medical people, attorneys, some entrepreneurs, developers, and others. Depending on where you live, you can look up a particularly hot building to see who owns, then google them, if you promise not to stalk them. Its generally not surprising that they seem to have jobs that would pay way above average.

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