Thursday, August 12, 2010

Bits bucket

I'm on summer vacation. I'll be back in about ten days. In the meantime, consider this a bits bucket post. Leave any housing news or thoughts in the comments.

32 comments:

  1. OK, so I have been thinking about buying in DC and have generally been looking at places in Petworth, Columbia Heights, Pleasant Plains, as well as the Atlas District NE and the Stadium and Navy Yard areas. I recently looked at a couple places east of the Anacostia near Pennsylvania Ave and the new Yes Organic Market...thanks to the "And Now, Anacostia" blog, I'm curious about Anacostia near the Big Chair Coffee.

    I typically only look at places that need a decent amount of work that are under $350K with the idea that I have roommates and/or rent the basement. (I suspect some others have had the same idea if my read of Craigslist is accurate). Generally speaking, the places I look at are $50,-$100K off their bubble highs. I haven't looked at condos because I'm put off by the fees and I feel like the condo market in DC is overbuilt.

    Considering I'd like to be close to a commercial area and public transport, what other areas am I overlooking?

    Alternately, shoot down the idea that buying in DC as I've described it even makes any sense...

    And am I right to be suspicious of condos...?

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  2. Given the info you provided; if I were you I'd wait until after the Mayoral election in November. If Fenty stays in office, I'd consider buying. If Fenty is voted out, I'd reconsider buying.

    I bought a home in a 'transitional area' in 2003, sold in 2009 for a substantial profit, and moved out of the area entirely. Which is another way of saying that I voted with my feet.

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  3. Agree with Anon @ 2:33 regarding waiting til after the election. Gray is a member of the old guard and IMO, a real threat to the progress DC has seen since 1998.

    Dont get me wrong, if Gray wins, I dont think DC suddenly falls apart, but I will be watching it alot more carefully than I am now.

    P.S. If you want to have a stake in any of this, be sure to vote this November.

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  4. I have some advice for you. DC has some real budget issues that are about to become a lot of trouble fot its citizens. If you value secure personal and real property, and you value your own safety, stay out of DC!

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  5. I love this article! It was simply play money. No big deal. Let the people have a good time.

    During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.

    The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.

    Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.

    The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.

    “When houses were doubling in value, mom and pop making $80,000 a year were taking out $300,000 home equity loans for new cars and boats,” said Christopher A. Combs, a real estate lawyer here, where the problem is especially pronounced. “Their chances are pretty good of walking away and not having the bank collect.”

    Lenders wrote off as uncollectible $11.1 billion in home equity loans and $19.9 billion in home equity lines of credit in 2009, more than they wrote off on primary mortgages, government data shows. So far this year, the trend is the same, with combined write-offs of $7.88 billion in the first quarter.

    Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. “People got 90 cents for free,” Mr. Combs said. “It rewards immorality, to some extent.”

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  6. Funny, I hadn't thought about the election in reference to this real estate decision, but I suppose it makes sense.

    My impression of Fenty matches up with yours in that what I see as a white, reasonably affluent, urbanist intellectual snob living in NW is the redevelopment of lots of neighborhoods, entertainment districts, and ultimately expansion of the tax base. All good for DC. I have a friend that has worked in DC's social services though who is passionately anti-Fenty. It sounds as though women's shelters, the foster care sytem, and other social services are really getting shafted.

    I don't know how much Davis could reverse what's already in motion (and it seems there is enough momentum to coast through four more years IMO--H St NE, The Yards at Navy Yard, SW Waterfront, Col Hts...) but certainly budget management and the direction of DC's public schools could have a big impact.

    I wish we could get Bloomberg on secondment in DC for a while...

    @Anon12:37, I'm not sure I'm comfortable heaping blame on homeowners who pulled equity from their houses while saying nothing about the bankers who lent them the money--isn't it their profession to make sound lending decisions? Where is the article from, BTW? Do you believe the 10 cents on the dollar stat?

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  7. I think the election question is overblown - the substantial fiscal issues are real regardless of who wins, and the mayor (and the chancellor) have much less influence than you might imagine.

    The macro trends which the "immunington" believers constantly promote are not so subject to mayoral elections. If it's true that people of means are willing to live in smaller, denser urban footprints in exchange for shorter commutes and public transportation, and that incomes and credit scores for that group will remain immune to a double-dip, then the demographics will continue to shift - driving crime and school achievement statistics in positive directions. I'm a bubble-head myself, but I still believe that some of those trends are real and that DC is different.

    I think you might also look at Brookland and up near the Ft. Totten metro. That's NE, but the proximity to PT makes it much less isolated, and there is some nice, not yet overpriced, housing stock there.

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  8. Montpellier, you raise several good points, and reasonable people with intimate knowledge of socio-economic history and trends in DC will agree with all of them.

    However, the notion that DC is fundamentally immune from the rest of the nation's economic woes is fallacious.

    I discovered www.calculatedriskblog.com via this blog (which I've been reading since 2007) Read it for a few weeks and you'll see that overall economic trending is downward, globally, and perhaps you'll conclude that DC is not immune.

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  9. James Doakes - not to speak for Montpelier directly, but I dont think its an all or nothing proposition.

    Some people think "immune" means, nothing, literally "nothing" will happen to the subject matter. I dont think that is what Montpelier meant.

    I think Montpelier meant "immune" in the sense of "less of a decline" compared to the subject matter.

    Personally, thats why I think "immune" is a terrible word to bring into the debate. "insulated" perhaps, but "immune", no.

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  10. "Montpelier said...The macro trends which the "immunington" believers constantly promote are not so subject to mayoral elections."

    Montpelier/JAC, this is Anon@3:37PM here.

    I am a bit skeptical of this statement only because the turnaround in DC started in 1998, which happened to be EXACTLY when Marion (the bitch set me up) Barry was finally out of office for good.

    I cant tell you how many people I know refused to buy in the city and be under the thumb of that race baiting asshole. After he left, some of them did buy however.

    Perhaps it was the case that the vast improvements in DC (demographic shifts, etc) would have happened even if Barry was still there, but the very very coincidental timing is the only thing that gives me pause.

    If I had to decide right now, I would agree with JAC that there is enough forward momentum in place for the improvements to continue regardless of who wins. However, given that we are so close to the election (the primary - which will decide the mayorship is on SEPT 14), I would be inclined to wait.

    If Fenty wins, its business as usual, if Grey wins, I would wait a bit more just to make sure he isnt Barry part II, (I dont think he is, but I just dont know yet). Incidentally, JAC who is Davis?

    Also, on a side note, while DC's finances are a bit shaky right now, its not too different than anywhere else in the so called immunozone. Plus they are far far better than the finances of places way out that got crushed by the housing bubble, and really alot of the US in general (DC just recently got its first ever AAA bond rating). Thus, while I do think they are a cause for concern, its only slight.

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  11. Looks like Delray is not as desired as some thought. Prices for two bedrooms were $2,800.

    One bedrooms from $1,600
    Two bedrooms starting from $2,165
    Del Ray Central has everything you're looking for and more! Get a home that fits the independent spirit of the town, designed with an artistic flair and complete with fine finishes and elegant appointments.

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  12. I discovered www.calculatedriskblog.com via this blog (which I've been reading since 2007) Read it for a few weeks and you'll see that overall economic trending is downward, globally, and perhaps you'll conclude that DC is not immune.

    I've been reading CR since 2005 (one of the very earliest of the commentariat). I called myself a "bubblehead" above - I think good ole Lance called 'doomers' 'bubbleheads' - let me be clear: I'm part of the crowd that thinks real estate values are way out of line with fundamentals and need to fall.

    I have still come to the rational conclusion that in some areas of DC - by which I really mean inside the Beltway - are "immune". They'll go flat, but they won't crater.

    I believe something that Tanta pounded home on CR over and over: it's a matter of the details of the underwriting. On a macro scale, the bubble is a function of the enormous changes in credit - easy credit - which allowed people to leverage wages, tremendously. That's fundamentals.

    So, when you try to predict doom, you have to also work from first principles and fundamentals.

    If the demographics of DC were the same as they were in 1998 or 2000, you'd see the same thing happening that is happening lots of other places in the country. I see, in my neighborhood, the apocryphal tale playing out for some long-term residents - people whose wages were not that great, didn't increase, and used the home ATM.

    But the truth is: a lot of those people were already being replaced with a completely different demographic - as measured by age, income and education. More importantly: those people work in government - see my point about "private sector" above - and the government isn't going into recession, not in DC.

    I'm not really 100% persuaded that trend will continue - I think it's an artifact (to some degree) of the fact people wait much longer to get married and have kids. They have jobs and need a place to live, and want an urban life for the access to excitement. They don't run for the 'burbs (and those schools) since they don't have kids.

    I look around the neighbhorhood - which is a bit too 'hood for the price if you ask me - and there is no way I'd pay the current prices to live there, not for the housing stock, schools and neighbors. If I had kids, I'd definitely be heading for the 'burbs.

    I do not think Tony Williams changed things enough "overnight" that people started moving into DC...the 1998 date coincides much more closely with the great credit loosening. Housing prices were still 'sane' in DC as recently as 2003.

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  13. @James Doakes - I really mean only some areas of the area inside the beltway - others are falling, as I've noted on this site recently. I think some of the newer "up and coming" hotspots are due for a real fall - particularly stuff east of Rock Creek Park.

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  14. Anonymous@4:10 - I confused my Gray's and was thinking Gray Davis instead of Vincent Gray...hehehe....

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  15. "Montpelier said...

    I'm not really 100% persuaded that trend will continue - I think it's an artifact (to some degree) of the fact people wait much longer to get married and have kids. They have jobs and need a place to live, and want an urban life for the access to excitement. They don't run for the 'burbs (and those schools) since they don't have kids."

    Montpelier, that may be more sustainable than you think.

    There is a line of thought, (and I am guilty of this too) in that "well these people are just here until they have kids...when they have the kids, they move to the burbs" and that therefore this is not a sustainable trend (i.e. they are gonna leave).

    After giving it some more thought
    though, I think that in and of itself IS the sustainable trend. If it is true that "people are waiting longer to have kids" as you say, that in and of itself is enough.

    For each person or couple who (compared to a generation earlier) stays an extra 2-3-4 years in the city before going to suburbia, that reduces the number of available residences for that additional period of time. This in turn reduces the overall availability of an area, thereby increasing competition.

    To put it another way, suppose there were 100 houses and the average turnover per dwelling was 5 years. This would mean in any given year there are 20 couples moving out and 20 units available for new couples to move into. And presumably you get 20 new couples a year moving in, thereby perpetuating the 5 year cycle.

    However, say you take that same 100 houses, but (because they are waiting longer to have kids), the average residency is now 10 years. If so, there are now only 10 units available in any given year to be bought. However, you still have the same 20 couples a year who want to move in, but only 10 places for them to buy. Now you have a shortage, and the basic method of alleviating a shortage is for the prices to rise such that only the 10 who are most willing to pay for it are the ones who get the places.

    Note, im not saying that is whats going on in your area. I have never been there and dont know the demographics in the slightest. However if (a) people in your area really are waiting longer to have kids and move out and (b) if this is a societal trend which is likely to continue in the population at large, then you very much do have a "sustainable" phenomenon on your hands.

    Just my $0.02

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  16. A major urban area that de-emphasizes children? That's Utopia! I'll gladly pay a large premium to live in such a place!

    Pass the cyanide capsules, please....

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  17. A major urban area that de-emphasizes children?

    Is there ANY major urban area that emphasizes children? LA, MIA, SF, NYC, CHI, etc??? Seems to me the suburbs of these cities is where most of the breedin' takes place.

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  18. You haven't spent much time in NYC, have you Anonymous 3:52?


    (that's a rhetorical question, please don't answer)

    The public school system there unintentionally makes a mockery of DC's, precisely because there is an emphasis on children in NYC. Just because you don't see it doesn't mean it does not exist.

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  19. Well, 'breedin'' takes place literally everywhere.

    The dead-enders and the doucherati tend to use variants of the word 'breed' in a derogatory fashion. Too bad your parents were breeders. (No, seriously, it is unfortunate that your parents 'hooked up')

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  20. Turns out the breeders have been breedin in many a place - both NYC AND DC are experiencing a rise in the population of children under 5Y.O.

    No cyanide capsules needed.

    http://webcache.googleusercontent.com/search?q=cache:lQJ4OS6t00J:www.acf.hhs.gov/programs/cb/stats_research/+Washington+DC+AND+children+AND+statistics&cd=1&hl=en&ct=clnk&gl=us

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  21. "there is an emphasis on children in NYC."

    Emphasis indeed - Hey, breeder, get that stroller (and your spawn) outta here!!!

    http://mihow.com/articles/2010/04/12/no-strollers-allowed/

    Sounds like a child utopia!!!

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  22. @Anon - Montpelier, that may be more sustainable than you think.

    Well, it may be a permanent shift in the equilibrium: the "new normal" may be that these people continue to buy their starter homes in the urban core and remain there for up to a decade between the end of education and the start of family rearing. It may even be they decide to raise their families there. It's a tough call. I think a lot rests on whether the influx of new kids improves school scores enough to persuade people the "schools have turned around" enough to stick it out (so perpetuating the trend).

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  23. But, but, how will urban property values continue their perpetual rise if people aren't forced to leave cities because they have children?

    The very notion completely undermines Anon 4:08's thesis!

    By the way, the realtwhores are endorsing Gray: Wash Biz Journal Article

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  24. "Hey, breeder, get that stroller (and your spawn) outta here!!!"

    See what happens when paternity is unknown? The children get angry and selfish and stay that way, and vow to never have a child of their own.

    Thank you for not reproducing.

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  25. "The very notion completely undermines Anon 4:08's thesis!"

    Not necessarily. Suppose the trend was 95% of couples had kids, while 5% did not. If over time that changes to 90% have kids and 10% do not, you can effectively double the population that is looking to buy in the urban area.

    True, if you keep doing this forever, you can end up having a population that is not meeting its replacement rate. However, given what the 90% are doing now, plus the supplement in population we get with positive immigration, we dont have that problem (we arent Europe, or Japan yet).

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  26. Wow - theres just no comeback for that is there! IIRC, that was the shutdown argument that Darrow used to defeat William Jennings Bryan in the Scopes Monkey Trials.

    So good job, anon @ 4:42. I am vanquished.

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  27. Hey, so why post as anonymous--you can make up a name so folks don't have to call you "anon @ X:XX"...?

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  28. "So good job, anon @ 4:42. I am vanquished."

    Yes, I know that even a shallow twat such as yourself can see the light after a bit of soul-searching. Now jump in front of a Red Line train.

    (I won't mention the irony of your remark about evolution vs. creationism, and the fact that it aligns you with 'breeders' in the end. You're too dense to connect the dots. Darwin was on to something, wasn't he? Again, thanks for not reproducing.)

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  29. Most Realtwhores lack skills in critical thinking; which is why they are Realtwhores.

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  30. I see...that is sort of a drag because those are the very comments I have to waste time skimming through to get to the interesting stuff...

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  31. There are people who don't belong owning a home. What are the circumstances in which one should not own a home?

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  32. How can there be a recession if James is able to go on vacation?

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