The US "ecomony nearly stalled in the first quarter with growth slowing to a pace of just 0.6 percent. That was the worst three-month showing in over four years."
"The new reading on the gross domestic product, released by the Commerce Department Thursday, showed that economic growth in the January-to-April quarter was much weaker. Government statisticians slashed by more than half their first estimate of a 1.3 percent growth rate for the quarter." (AP News 5/31/07)
As the US housing market continues to decline and consumer spending weakens look for negative growh in the 2Q & 3rd quarters of 2007 & beyond. The US recession has probably already begun.
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On a more local note:
ReplyDeletehttp://custom.marketwatch.com/custom/iwon-com/news-story.asp?dateid=39231.2473965741-896735367
anon 7:04 nice post.
ReplyDeleteAs to the gdp, interesting economics unfolding right now. GDP is in the tank yet manufacturing indexs are starting to look good. Its really starting to look like the housing crash as decoupled from the rest of the economy. Maybe, the other econmic data is just rising up for the time being and will be heading back down, but who knows. One thing is for sure, housing is tanking a lot faster then I thought.
the real bob
This won't surprise any of us on this blog. Looks like it's "Game Over" for overstrapped HELOC consumers, and they're the losers.
ReplyDeleteSomewhat off topic, but I saw a site in Minyanville today called alexa.com. This site allows you to track web traffic for most web sites going back to 2002. You can see the page views, website rank by traffic, etc. I suggest you try it out with realtor.com. Anyone thinking the big turnaround in housing is right around the corner will be shocked by the total collapse in web traffic the site is experiencing. Try the 3 year tab and look at page views and web ranking. Total meltdown. I offer this tidbit as a little piece of info that may be useful.
ReplyDeleteThe Fed chief is 100% correct when he says the problems in the mortgage and housing industries are contained.
ReplyDeleteThey are contained to the planet earth.
Core inflation falls back inside Fed's target zone
ReplyDeleteRate cut on the way? That would spur the housing market.
GDP growth did slow, but that doesn't mean a recession is imminent. Other economic data shows an improving economy. For example, today's job growth data was better than expected. I agree that the housing slump is a drag to the GDP, but calling it a recession may be premature. I prefer to wait to see what the future holds.
ReplyDeleteThere are enough financial conservatives in this country to keep it afloat as the growth slows. Slow and steady.
ReplyDeleteGood to see though that that the panic blogs are staying true to form. The bread and butter of the chronically fearful.
I was thinking that we were probably starting a recession a month ago.
ReplyDeleteLooking at the various graphs, I think we've just entered a 'shaded' area.
Job Growth Strengthens Economy
ReplyDeleteSpending and Hiring Rise While Inflation Eases
By Nell Henderson
Washington Post Staff Writer
Saturday, June 2, 2007; Page D01
The U.S. economy strengthened in recent months, as a solid job market encouraged consumers to boost their spending despite the housing slump and high gasoline prices, a slew of new figures showed yesterday.
Employers picked up the pace of hiring and the unemployment rate held steady at a low 4.5 percent, the Labor Department reported. Factories also became busier in May, while inflation eased slightly in April, other reports showed.
Together, the news depicted an economy on the mend since the start of the year when economic growth nearly stalled, fanning worries of recession.
www.washingtonpost.com/wp-dyn/content/article/2007/06/01/AR2007060100585.html?hpid=sec-business
For the Hamptons, a New Peak For Prices in an Ocean of Cash
ReplyDeleteSales May Be Slower, but Prices Just Keep Climbing
By Kathleen M. Howley
Bloomberg News
Saturday, June 2, 2007; Page F24
Ron Baron, founder of the investment company bearing his name, didn't hesitate to pay $103 million for a 40-acre parcel in East Hampton, N.Y. It was the record for a residential property in the United States and just a little less than double the annual compensation of some of his neighbors.
House prices in the beach retreat that draws such folks as director Steven Spielberg and billionaire investor Thomas H. Lee rose 14 percent during the first quarter, even as the national median fell. The Hamptons, former potato farms where seagull cries now mix with the sounds of well-tuned Ferraris, are boosted by salaries on Wall Street, 40 minutes away by helicopter, said Diane Saatchi, a broker at Corcoran Group in East Hampton.
"People have made an incredible amount of money on Wall Street over the last few years," said Saatchi, who started selling real estate in the Hamptons 19 years ago. "For them, spending millions on a summer home to be near their friends isn't a big deal."
Housing bubble YouTube video:
ReplyDeletehttp://www.youtube.com/watch?v=cEs1waa6HT4
Lance said...
ReplyDelete“For the Hamptons, a New Peak For Prices in an Ocean of Cash….”
Thanks for the update on the Hamptons “Lance”. Wait….are you counting on the likes Steven Spielberg and billionaire investor Thomas H. Lee to bail out D.C.? OooooKay.
Lance said...
ReplyDelete"Job Growth Strengthens Economy
Spending and Hiring Rise While Inflation Eases"
www.washingtonpost.com/wp-dyn/content/article/2007/
06/01/AR2007060100585.html?hpid=sec-business
Hey “Lance”, thanks for the link…what…you didn’t think some of us would check it out? Yea well, let’s round out the details with a few lines you failed to post:
-Housing remains the economy's biggest weak spot. Home building plunged in the first three months of the year. That helped to slow the growth of overall economic output, or gross domestic product, to an anemic 0.6 percent annual rate.-
-Some analysts questioned whether the Labor Department data might be overstating job growth in a number of ways. In particular, they are puzzled by the fact that the number of workers in home construction has declined less than 4 percent over the past year while the number of housing units under construction is down more than 15 percent.-
About that YouTube video:
ReplyDeleteIt's worth noting that all of that money that people lost buying homes that they couldn't afford didn't simply disappear. Almost 94% of it was gained by the people who sold homes to those people who couldn't afford them.
The Hamptons aren't in DC, Lance.
ReplyDeleteAs for the great economy, I'm tickled. My portfolio has been averaging 20% over these last few years, gains I would have lost out on if I'd been dumb enough to put any of that money into a house in DC back in the crazy overpriced market of 2005. Thank God I didn't listen to idiots like Lance.
Now, I'm getting it all. My portfolio's gone like gangbusters, and more and better houses are more affordable. Go me and other smart renters.
Seems like people have something against Lance here.
ReplyDeleteI think his 2 articles highlights the following:
1. The divide between the rich and the poor are getting wider.
2. Weak housing does not necessarily lead to recession. It may happen, but it's not evident to me yet.
20% is awesome.., I think this run is going to produce many, many millionaires. The more the dollar falls, the richer we are going to get. Even inflation and higher gas prices is a boon for some as higher margins sneak on in. GDP does not mean as much as it once did thanks to the global economy. Any upcoming recession we see will be blanketed by further devaluation of the dollar. Hiring is up because it's springtime, nothing new with that, America is still shedding good living wage jobs. The race to the bottom is not over yet people.
ReplyDeleteHOW DARE YOU INSULT MY PROFESSION!!!
ReplyDeleteRealtors have been around since the dawn of time. In every ancient tale of creation, there are stories of realtors being created before average men, because someone had to sell them the land to farm.
It’s true. In the middle ages, we sold castles with moat upgrades and helped serfs get into starter farms. Without farms, no one would have survived the black plague. That’s right, realtors actually stopped the black plague. And don’t you forget about it.
Watch out when you’re in Phoenix, because I read in Realtor Monthly Magazine that your “no-realtor-flipping-transactions” are actually illegal. Check the books. Only realtor-negotiated transactions in the state of Arizona. It’s a fact. That’s why Phoenix is growing so quickly. It’s posted the highest rate of growth since the years following the Louisiana Purchase.
If you’re not careful, you could get yourself on the Nation Realtor’s blacklist.
Sincerely,
Carmen Sandoval
hAHAha, losers can't afford to both own their own home and invest in the stock market.
ReplyDeleteTrying to understand the problem here. Housing prices are down less than 2 percent overall, county-by-county some much less, some much more. This is a very insignificant decline after 100%+ price increases over the build-up To me, it is the perfect soft landing.
ReplyDeletePersonally I bought a house in Fairfax County, VA for about $950K last summer - at the time Zillow had it at $1,050K, now Zillow has it down to $975K - but do I really care if it goes up or down if I plan to live there 10 years and raise my family? You want to rent and change schools each year for your kids? You really can't look at your home as solely an economic investment. Primarily it has to be your "home". IMO what your house is worth now is about what it will be worth in 2010, which is obviously a decline when inflation is considered, but paying down the mtg note each year and providing a stable home for your family have to be included in the economic calculation. As for the flippers who were simply gambling, good riddance and who cares if they lost money?
by the way, first year associates (25 year olds) at DC law firms now make $160K base, not counting bonuses. Plenty of people can afford these houses.
LOL... it is "lance" all over again. (that is to say your post sounds a lot like a guy we had here for a long time that was famously slow witted. At this point he only posts rarely and doesn't hang around to get corrected. On the off chance you are actually a different poster I will give you a serious reply)
ReplyDeleteA few things in response to your post.
First, yes, prices are down only slightly from the peak after an unprecidented run up. That isn't much of an argument for this being a soft landing however because prices are not done dropping yet. RE markets move SLOWLY, especially down. If prices are still only down a few percent this time next year and the year after we can start to talk about soft landings. I personally think this fall is when we will see the steepest declines.
You don't particularly need to care what your house's paper value is if you don't intend to sell. You are 100% correct and I hope you are happy with your purchase.
Most of us don't view homes solely as an investment and few of us are aspiring RE investors. Most of us are considering purchasing sometime in the next couple years and are watching the market closely to get the best possible value for our money. We all have our own reasons and circumstances so please don't fall into the trap of trying to define us to serve some argument you are trying to make.
"by the way, first year associates (25 year olds) at DC law firms now make $160K base, not counting bonuses. Plenty of people can afford these houses."
This isn't an argument that holds water. (not even a teacup's worth)
While it is true that there are SOME in the area that make quite a bit of money, that doesn't explain the fact that prices have more than doubled in just a few years while salaries in the area have not.
In 2000 young lawyers at major firms were still getting paid several times the median income. Nothing changed between 2000 and 2006 that explains the huge run up in home prices based on fundamentals.
You might as well say: "The NFL minimum is >150K a year, plenty of people can afford these houses."
Or
"A GS-15 can easily make more than 100k a year, plenty of people can afford these houses."
Or
"CPA's can easily make more than 100k a year, plenty of people can afford these houses."
etc etc
The argument falls apart when you consider that these groups have always been in DC. They have always made far more than the median income, and they have historically bought a far more expensive house than the median value for the area.
What makes this a bubble is the fact that prices, in all segments of the market, have doubled without any justification. When that young DC lawyer decides to buy a house he can easily afford for $700-800k... he is going to find that it will be nothing like the house he could have purchased in 2000 on the salary a young DC lawyer was making in 2000. So while he can still buy a house, he can't buy an equivelent house. This is true from top to bottom in the market with the exception being that at the bottom of the market the people who used to be able to afford only a cheap house, can now afford nothing at all.
To the last commenter. I think those are fine points. People who buy without crazy expectations and are willing to pay the implicit insurance premium of foregone returns to lock in their housing price are fine by me. I think they're paying a high implicit premium right now, but hey, it's their life. And more and more good deals are around, so it's all good.
ReplyDeleteBut on the 160k for 25-year-olds, that's VERY few and far between, at some high-end DC law firms. A person sent a link once about DC law salaries at some of those white shoe firms. I think they were hoping to show that a whole bunch of people make a lot of money, but all they showed was maybe 1000 youngsters make some big dollars. That's not anough to support this housing market.
Like it or not, most law school grads in this town are really eking out a fairly marginal living, especially when you count their loans.
Annon 8:56,
ReplyDeleteLet me help you with your understanding by deconstructing your miscellaneous thoughts (can’t really call them an argument).
1. I don’t know where you got the 2% number, but it smells bad. Must have pulled it out of your arse. By your own figures, your house is down 7% from where Zillow.com said it peaked. The S&P/Case-Shiller index is down for the first quarter nationally by 1.4%. The regional index for the Washington area peaked in April 2006 and is down about 5.3% as of March, with all indications that it is headed lower. Housingtraker.com, which tracks asking prices, says prices are down 10% in D.C. from last year with inventory up 7%. Do you think prices cannot continue to drop?
2. Yes, your house is an investment, and you do not plan to sell it immediately. But the real costs of homeownership are going to take a helluva lot longer to recoup than 2010, or even 2016. Today, if you sold your house for 975,000, you would have lost money.
I’ll assume some numbers. The purchase price of your house was 950,000. I’ll assume 5% down payment, $15,000 in closing costs rolled into the mortgage, for a total mortgage amount of $917,500. If you took out a 30 year fixed mortgage at 6.25% interest, you paid $57,000 in interest in the first year, plus $9,500 in taxes. Total sunk cost in 1 year: $115,250 (includes your 5% down). How much are you going to need to sell it for to recoup that one year loss? Well, you will need enough to pay off the mortgage, which is $907,000 plus $115,2005 for sunk costs, plus $15,000 for your closing costs plus $10,000 for your buyer’s closing costs (it’s a buyer’s market now). Total price: $1,047,205. But wait, you need to pay a realtor 6%, so you better list it at $1,110,000. Just to break even. So, what you need is the market to increase by 17% to break even. Unfortunately, this first year it is down 5%. So next year, you need 22% (roughly) appreciation to break even. This is all assuming, of course, that you haven’t had to replace the roof or do any other repairs.
I’m not doing this to beat up on you, but as an illustration of what the problem is: The housing market you saw over the last 5 years is gone, and the “soft” landing is going to continue for a while, which is going to be awfully hard for many, many people. Depending how hard, you may or may not make money in 10 years (at which time your mortgage will be down to about $750,000, but you will have paid about $533,000 in interest and another $100,000 in taxes. Yep. Half a million in interest. I raise this so that other buyers out there realize what they are getting into and, hopefully, realize that housing prices in this area are too damn high.
3. As far as starting salaries for first year lawyers go, be careful. This is the salary at only the top firms for students that graduated with top grades from top schools. Most lawyers will earn much less. But even with these salaries, the most they should be able to afford is $480,000, which is just above the median home price in the area. If you factor in their student loan debt, it is actually below the median.
I looked up full-time median income and annual hours worked for several different occupation categories in the DC metro area. Here they are:
ReplyDeleteManagement $72,966 - 2096 hours
Computers $81,931 - 2089 hours
Arch. & Eng. $70,783 - 2084 hours
Lawyers $150,010 - 2055 hours
Education $47,929 - 1604 hours
Physicians $125,001 - 2231 hours
Here is my source:
http://www.bls.gov/ncs/ocs/sp/ncbl0873.pdf
anon 8:56 PM,
ReplyDeleteTry to sell your house for 975, you wont get close to that. I think the fairfax drop is actually pretty significant. You should check out, http://novabubblefallout.blogspot.com/
Some houses are selling at a 30% discount.
I really hope you arent a government worker with another interest only loan.
the real bob
Anonymous said...
ReplyDelete“Trying to understand the problem here…….This is a very insignificant decline after 100%+ price increases over the build-up To me, it is the perfect soft landing.”
For such an “insignificant” decline, why the increase in foreclosures? For an insignificant drop, there should be absolutely no foreclosures. No worries. It should be easy to put a home on the market an take the 98% “gain” and move on.
However, that’s just not the case is it? More and more NOD’s are being issued along with more inventory hitting the market. If this “insignificant” drop has caused this many problems, what would another -5%, -10%,-15% do?
Hold up! Real estate only goes up?
ReplyDeletehttp://biz.yahoo.com/seekingalpha/070604/37282_id.html
This is Anon 8:56.
ReplyDeleteYou wrote: "That isn't much of an argument for this being a soft landing however because prices are not done dropping yet. RE markets move SLOWLY, especially down. If prices are still only down a few percent this time next year and the year after we can start to talk about soft landings."
ok, so almost 2 years off the peak and you are still saying "wait until next year"? come on - the market has spoken and the result is a soft landing with prices stabilizing. Those that bought before 2005 are sitting pretty. You are of course right that real estate moves down very slowly, so any talk of steep declines is ludicrous. It doesn't happen. We could have 2 more years of 1.5% annual declines but that is worst case scenario.
"ok, so almost 2 years off the peak and you are still saying "wait until next year"? come on - the market has spoken and the result is a soft landing with prices stabilizing."
ReplyDeleteHere is exactly what is happening to home prices in the DC area. Here is a century of home prices nationally.
This is anon 6:31
ReplyDelete"ok, so almost 2 years off the
peak and you are still saying "wait until next year"? come on - the market has spoken and the result is a soft landing with prices stabilizing. "
The peak was in late spring of 2006, at least as far as prices are concerned. We are only 1 year off the peak and prices have barely started to decline. I am not only saying wait 1 more year but wait 2 more years. The indicators we have available to us and some analysis indicate that prices will almost certainly drop at least 15% from the peak. So long as there are still thousands of sellers who are waiting for the market to "recover" so they don't have to cut the price on their house the market is NOT done dropping.
1. The Case Shiller index, a trailing indicator, shows the DC area down ~5%.
http://www.bizjournals.com/washington/stories/2007/05/28/daily5.html
2. Housingtracker, a website that tracks ASKING prices and is therefor a leading indicator, shows the area down ~10% from the peak.(but doesn't take into account that buyers are frequently offering, and getting, less than asking price while during the boom market the reverse was true.)
3. Spring is always the strongest period in home sales. It is when the most sales take place and when most of each year's price increases are recorded. With spring now officially a bust, price declines will increase speed.
4. Finally, the tightening of credit standards did not begin until early this spring and it is not yet done. The effects of the rationalization of lending practices are not nearly priced into the market yet.
"Those that bought before 2005 are sitting pretty. "
Check out the "Greater Northern VA Housing Bubble Fallout" blog...
That blog only tracks houses that are selling beneath a prior sale. If someone bought their house in 1992 and is now selling for 40% off peak values, it won't show up on that page. Also, those numbers are not the result of an automated collection of data. The creator of that blog compiles them herself. Therefor it is safe to assume she is missing more than a few.
When all is said and done the market will hit equilibrium somewhere significantly below 2005 numbers.
"You are of course right that real estate moves down very slowly, so any talk of steep declines is ludicrous."
The fact that it moves slowly does not rule out steep declines. Just a year ago people were saying that RE doesn't decline, at all. This most recent bubble was unprecidented. This will not end quickly or easily.
"It doesn't happen. We could have 2 more years of 1.5% annual declines but that is worst case scenario."
Two years of 1.5% declines? We are already down 5% right now. (and that is the Case Shiller index, which is the most reliable you are going to find because of its data collection methods)
I think you fail to grasp what is really going on here. Your "worst case scenario" is far better than the numbers we are already seeing and is nothing compared to the numbers we are likely to see.
This is Anon 8:56 again. Wow, the person assuming those certain numbers lives in fantasyland.
ReplyDelete"Total sunk cost in 1 year: $115,250 (includes your 5% down). How much are you going to need to sell it for to recoup that one year loss?"
#1. I AM NOT GOING TO SELL THIS YEAR OR NEXT, so these #s are moot. You should NEVER buy a house unless you plan to live there at least 6+ years. Get some sense. Anyone looking to sell a house after one year will of COURSE lose money. Real estate investment is always a long term proposition (ignoring the foolish flippers and gamblers) and owning a home is not solely an investment.
#2. You cannot include interest and taxes as sunk costs. Perhaps you could include any delta over those amounts (after taxes) over comparable rental prices.
#4. I had the seller pay my closing costs.
#5. I wouldn't use a realtor if I were to sell, which I am not.
#6. Unfortunately most will never be able to afford a nice home on a single income. So these lawyers likely have spouses, no?
"But on the 160k for 25-year-olds, that's VERY few and far between, at some high-end DC law firms. A person sent a link once about DC law salaries at some of those white shoe firms. I think they were hoping to show that a whole bunch of people make a lot of money, but all they showed was maybe 1000 youngsters make some big dollars. That's not anough to support this housing market.
ReplyDelete"
hahahaha, yeah, only about a thousand. Keep dreaming. I love the "there aren't that many lawyers making big money in DC" argument. It's about the most pathetic one we see recurring around here.
Hey james, how come your salary figures for lawyers in the "DC area" includes Baltimore and West Virginia?
ReplyDelete150k is not what a DC lawyer makes -- the market is 160k IN THE FIRST YEAR. I'm a 4th year, and my raise just took me up to 210K per year, not factoring bonus. For perspective, I only owe 230k on my morgtgage. I could give a sh*t what the real estate market does. If it goes down, good - I'll buy a huge house. if it goes up - good, I'll sell my condo for a lot of money.
And there are thousands just like me in DC. Don't kid yourself.
"Hey james, how come your salary figures for lawyers in the "DC area" includes Baltimore and West Virginia?"
ReplyDeleteBecause that's how the U.S. Bureau of Labor Statistics classifies this Metropolitan Statistical Area (MSA). Why would any attorney work in Baltimore if he could make $60,000 extra in nearby DC?
But if BLS statistics aren't good enough for you, go to salary.com. It lists the 25th and 75th percentile salary plus bonus for an Attorney I in Washington, DC as $79,222 and $112,364, respectively. The 90th percentile salary plus bonus for an Attorney I in DC is $129,125, so your $160,000 number for a typical entry-level attorney is completely fabricated.
Plus, if you want to become a partner in a law firm, don't you have to buy into it? They don't just hand you a huge ownership stake for free, do they? That's got to take a serious chunk of cash out of your paycheck in the early years.
"I could give a sh*t what the real estate market does."
ReplyDelete"And I'm going to prove it by reading real estate blogs and arguing with people and posting."
"Plus, if you want to become a partner in a law firm, don't you have to buy into it? They don't just hand you a huge ownership stake for free, do they? That's got to take a serious chunk of cash out of your paycheck in the early years. "
ReplyDeleteYou still make more as a young partner than you do as a young associate.
James said:
ReplyDelete"Why would any attorney work in Baltimore if he could make $60,000 extra in nearby DC?"
Probably 'cause he's not good enough to work in DC ... or buy a house there for that matter. There's a reason housing prices (and salaries) are higher here ... They reflect the allocation process that occurs when you have limited availability of something deemed desirable by those with the wherewithal to compete for that limited item. Lawyers get paid much more here than in neighboring Baltimore and West Virginia ... and housing costs a lot more. It's just a fact of life. Nothing to get angry about ... but something to understand if you are going to make good personal decisions for yourself ... rather than just waiting around for prices to drop ... Since that isn't going to happen.
"rather than just waiting around for prices to drop...Since that isn't going to happen."
ReplyDeleteFrom Housing Tracker :
DC median: 9/05 - 499
DC median: 9/06 - 460
DC median: 6/07 - 435
It has happened, is happening, and will continue to happen.
those are asking prices, moron.
ReplyDeleteKeep in mind that probably a very large number of the lawyers in DC don't work for private law firms. There's a big public employer in the area called the U.S. Federal Government. It has a large need for lawyers and is not known for paying as much as private business (except for low-skilled jobs, in which case it generally pays more than private business).
ReplyDeleteAll this talk about the lawyers in DC ignores the fact that there are probably far more military, intelligence, and defense contractor employees in the area.
"those are asking prices, moron."
ReplyDeleteAs we have established before, actual selling prices as a percent of asking prices have declined, so the decline is even bigger, which makes my point even stronger, thus making you the moron.
You just got pw3nd.
Keith,
ReplyDeleteThanks for the clarification re housingtraker: Sellers are asking for less and buyers are paying even less than that.
Annon:
Dismissing my assumptions as from "Fantasyland" and parsing my argument to miss the point is intellectually dishonest. My question to you is, how much appreciation do you need in 10 years to be able to break even? You assume you will make money in the long term, but even you don't have any idea how long that will be, because you don't factor in all the costs of homeownership. You have simply bought into the common assumption that is preached by real estate enthusiast, and never bothered to understand it. Here is a clue: to make money in investments, you need to buy low and sell high. Yes, real estate has tended to always go up. Oh, wait, it just went down for the first time in history. Think there might be a problem? Dismissing my comments will not make it go away.
"All this talk about the lawyers in DC ignores the fact that there are probably far more military, intelligence, and defense contractor employees in the area."
ReplyDeleteSo what? That doesn't change the fact that there are thousands upon thousands of lawyers in private practice in DC making a buttload of money.
"As we have established before, actual selling prices as a percent of asking prices have declined, so the decline is even bigger, which makes my point even stronger, thus making you the moron.
ReplyDeleteYou just got pw3nd."
Yeah, that's right. The numbers are as you say, but you're just not using them because ... well, I'm sure there's a reason you're not using, you know, the actual numbers. I'm just not smart enough to figure it out.
"So what? That doesn't change the fact that there are thousands upon thousands of lawyers in private practice in DC making a buttload of money."
ReplyDeleteYeah, but they're not going to be able to singlehandedly support the housing market. Thousands of lawyers can't support the prices of millions of houses.
there are millions of privately owned signle family residences in the DC metro area?
ReplyDeleteummm, no.
we are in the midst of a very predictable and expected correction of housing prices. why is any of this a big deal?
"Yeah, but they're not going to be able to singlehandedly support the housing market. Thousands of lawyers can't support the prices of millions of houses. "
ReplyDeleteNo, no... don't you get it? In the future all the houses will be owned by lawyers.
Instead of each buying a single very expensive house they are all going to buy entire housing developments so they will have places to race their Porches against Saudi princes!
"Yeah, but they're not going to be able to singlehandedly support the housing market. Thousands of lawyers can't support the prices of millions of houses. "
ReplyDeleteRight, they can't affect them at all. Oh, wait ...
"I'm just not smart enough to figure it out."
ReplyDeleteQuite true, because we've gone over this on this site many times before, you you indeed are not smart enough to figure it out. I was trying to be nice and leave it out so as not to totally nail you housingheads because it gets so old, but here goes from MRIS:
NVAR: September 2005 sell/ask: 98.09%
May 2007 sell/ask: 95.59%
DC proper: September 2005 sell/ask: 98.52%
May 2007: 97.59%
So yep, the ratio of actual sales price to asks are down, which makes the numbers even more stark, which supports my point, which makes you, as you yourself said, "not smart enough to figure it out." Finally, you've said something true.
Who cares how much lawyers make. Do you have any idea what the median family income in the area is? Even though many people rent in the area, there are still not enough high salary jobs to carry the housing market at this time especially with lending requirements becoming stricter and stricter. There were many people buying with low initial payments with the expectation that they would simply be able to sell for a profit once the rates reset. The fact that mortgage rates are currently rising is not going to help prices either...
ReplyDeleteI still can't believe the guy who said there are "about a thousand" big firm lawyers in DC.
ReplyDeleteHere's some data about knowledge workers in the greater Washington DC area. Legal service workers (probably including paralegals as well as lawyers) make up 1.17% of the total population. Of course you have to remember that the total population includes children. Legal service workers make up 6.3% of all knowledge workers in Greater Washington. Keep in mind that knowledge workers are only a portion of the overall workforce. Also, "there are 100,000 more people providing business and financial services than legal services in Greater Washington."
ReplyDelete