tag:blogger.com,1999:blog-13164186.post7558680997369538231..comments2024-01-27T19:26:32.604-05:00Comments on Bubble Meter: Your Turn: How Much Have Prices Fallen in the DC Area?Davidhttp://www.blogger.com/profile/11169148764438565562noreply@blogger.comBlogger54125tag:blogger.com,1999:blog-13164186.post-60343330730399346132008-01-31T18:08:00.000-05:002008-01-31T18:08:00.000-05:00"those 20 something year-old ex-interns, middle-in..."those 20 something year-old ex-interns, middle-income government workers and transit employees and immigrants from suburban Maryland, CAN NOT AFFORD the payments on these depreciating assets stuck in the middle of gang-banged, car-thieved, vandalized, gogo club shot out, so-called "gentrified" areas of DC."<BR/><BR/>Thats why they (at least the immigrants) are all moving out to my hood in Manassas & beyond. The way things are going, it will be like the 1950s in reverse. White flight into the city, and all the inner city poverty will be priced out to the fringe. Huge PWC McMansions are already being inhabited by 3-5 families of MS-13 members - its not much of a step to solve the affordability problem by turning them into subdivided group homes like you see in the old Mansions in DC. or subsidized govt housing. God I cant wait to get out of PWC!!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-68552112886697316002008-01-31T16:02:00.000-05:002008-01-31T16:02:00.000-05:00Rent vs. own calculations? Neighborhood by neighbo...Rent vs. own calculations? <BR/><BR/>Neighborhood by neighborhood YOY inventory assessments? <BR/><BR/>Painting the wall in the kids room? <BR/><BR/>All this is SOOOOOOO January 2007. <BR/><BR/>If you don't think a house/townhome/condo that was debted to - I mean purchased by - someone PRIOR to 2005 is going to lose at least 30% of its value MOST areas in the Greater Washington DC area, you are in for a shitty 2008. <BR/><BR/>Breaking news to all you sleepy folks in DC: all those 20 something year-old ex-interns, middle-income government workers and transit employees and immigrants from suburban Maryland, CAN NOT AFFORD the payments on these depreciating assets stuck in the middle of gang-banged, car-thieved, vandalized, gogo club shot out, so-called "gentrified" areas of DC. A Target in Columbia Heights doesn't change the fact that residents there can hardly afford the metro rail increase, let alone to purchase one of the hundreds of half a million dollar condos coming online in the next year.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-49445842508018523472008-01-28T14:40:00.000-05:002008-01-28T14:40:00.000-05:00if you look at average home prices in Northern Vir...if you look at average home prices in Northern Virginia since 1975, it is clear that we are back to historic growth rates if we simply have zero appreciation through 2009. Not really that big of a deal after the recent run-up. If you have to sell and you bought in 2005 or 2006 then you are likely hosed. Tough. ....<BR/><BR/>Country is going to add 25 million people in short order. Where are they all going to live?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-52349074773268906392008-01-26T12:03:00.000-05:002008-01-26T12:03:00.000-05:00And that does not mean that the shelter you get fr...And that does not mean that the shelter you get from owning the thing is valueless. This is not enron. This is common sense. You seem to have none.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-29940522985473873722008-01-25T17:21:00.000-05:002008-01-25T17:21:00.000-05:00Okay, now everyone agrees but are still arguing. ...Okay, now everyone agrees but are still arguing. <BR/><BR/>Shane is saying owning a house is an expense if appreciation is less than inflation. I'd argue to use the interest paid on the loan instead but that doesn't really matter.<BR/><BR/>Others are saying that renting is also an expense so you have to consider that. Shane agrees but that wasn't his point.<BR/><BR/>That being said, I do disagree with Shane about the Enron accounting comment. Nobody is fudging anything. We all have other sources and most will come out ahead if we pick the expense that is minimal - renting or owning. If owning expense is minimal (unlikely now) then I darn well will be in good shape...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-63745775225614336022008-01-25T12:46:00.000-05:002008-01-25T12:46:00.000-05:00"Add to that - The intangible enjoyment of watchin..."Add to that - The intangible enjoyment of watching homes next door to you sell for 100s of thousands of dollars less and those new owners making a fraction of the mortgage payment you are...yep, that's just gotta be so mentally soothing."<BR/><BR/>Heres one you forgot, the intangible fear that a dirty bomb goes off and my place is really worth $0. Thats why I said ALL the negatives and ALL the positives. <BR/><BR/>Dont think your point didnt cross my mind when I bought back in Oct 99 and thought I was paying waaay too much - turns out thankfully I was wrong. Like I said, these ALL go into the equation. But this phantom appreciation aside, the positives still outweigh the negatives. <BR/><BR/>The Idiot Anonymous.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-36554140972622213552008-01-25T12:10:00.000-05:002008-01-25T12:10:00.000-05:00"It doesn't matter if you use caps, you still know..."It doesn't matter if you use caps, you still know absolutely nothing about accounting."<BR/><BR/>Hey, if it's my accounting vs. Enron/Countrywide/etc. I'll take my accounting any day. You're accounting leads to turning an expense into income. Mine calls it what it is an expense.<BR/><BR/>Lance,<BR/>last word I'm going to say on this. <BR/><BR/>Take heating a home. Generally, you have the choice of electric, gas, or do without. Electric right now is prob. cheaper than gas. So you choose electric. The fact that you are spending less on electric, doesn't mean you are making money at it. <BR/><BR/>Same with a house, you have buy, rent, live in a box. Just because buying may be cheaper at a particular point in time compared to renting does not negate the fact that it is almost always going to be an expense.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-7847802386722860092008-01-25T09:42:00.000-05:002008-01-25T09:42:00.000-05:00:Clearly you are right, the value of staying in a ...:Clearly you are right, the value of staying in a house you love indefinately - $0<BR/>The value of painting a wall a different color or doing whatever the hell else you want - $0<BR/>The value of not having to deal with some Jackass landlord - $0.<BR/>The value of not having your wife, question why you havent bought, despite the number of times you have run the financial implications of "buying versus renting" by her - $0"<BR/><BR/>Add to that - The intangible enjoyment of watching homes next door to you sell for 100s of thousands of dollars less and those new owners making a fraction of the mortgage payment you are...yep, that's just gotta be so mentally soothing.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-16957013709942833622008-01-24T20:18:00.000-05:002008-01-24T20:18:00.000-05:00Shane,Yes, you are right. If the choice is betwee...Shane,<BR/><BR/>Yes, you are right. If the choice is between "living in a box" and living in one's own home, then yes it is going to be more expensive to live. Period.<BR/><BR/>Most people though aren't faced with the choice of "living in a box" or living in one's own home. They are faced with the choice of living in someone else's investment or in their own home. Given this, they must factor in the rental value if they buy since they would be paying rent if they did not buy.Lancehttps://www.blogger.com/profile/12216089306021385355noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-68242066942445033812008-01-24T16:42:00.000-05:002008-01-24T16:42:00.000-05:00"And that wouldn't even account for the intangible..."And that wouldn't even account for the intangible qualities of life that come from living in one's own home..."<BR/><BR/>Another load of NAR bull."<BR/><BR/>Clearly you are right, the value of staying in a house you love indefinately - $0<BR/>The value of painting a wall a different color or doing whatever the hell else you want - $0<BR/>The value of not having to deal with some Jackass landlord - $0.<BR/>The value of not having your wife, question why you havent bought, despite the number of times you have run the financial implications of "buying versus renting" by her - $0<BR/><BR/>Look, no one is saying that there arent A TON of negatives that go along with ownership - what many of us are saying is that when ALL the negatives and ALL the positives are put together, for MOST people, the value of the intangibles is something greater than $0. <BR/><BR/>The bubble heads here seem to equate everything down to dollars and cents that come directly out of your pocket - things that make SOME people (i.e. homeowners) happy - clearly have no value and its nothing more than us all being duped by the NAR propaganda regime. Look, if it really was just down to dollars and cents out of pocket, why dont we all just live in a Van down by the River?<BR/><BR/>I understand Lance said it therefore, it must be attacked instantly and with much vengeance, but for god sakes, please cut down on this "renter/ hero" crap. In return, I promise to not ever denigrate someone who never wants to buy.<BR/><BR/>The Idiot Anonymous.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-92070366446926024102008-01-24T15:52:00.000-05:002008-01-24T15:52:00.000-05:00It doesn't matter if you use caps, you still know ...It doesn't matter if you use caps, you still know absolutely nothing about accounting.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-5054652834863856172008-01-24T15:49:00.000-05:002008-01-24T15:49:00.000-05:00shane is right...based on the limited information ...shane is right...based on the limited information we know, the person from conn did not likely break-even on the sale. there are factors that would change the break-even analysis, but it's likely this person did not break-even. that being said, what's happened in the past is over, so there's no need to dwell over it. i would caution this person to not purchase real estate for the sole purpose of making money. depending on the length of time to retirement, 'investment' money would likely be better off in stocks over the long-term. the greatest threat to our money, savings and investments is inflation.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-3376387568057479092008-01-24T11:39:00.000-05:002008-01-24T11:39:00.000-05:00No wonder this country is in such a mess, and no w...No wonder this country is in such a mess, and no wonder we have such a big housing bust. People can't do simple math, and can't do simple finances about what is an EXPENSE.<BR/><BR/>We could say before he lived in a box or with someone else. I am not talking about opportunity costs--(i.e. the cost of renting vs. the cost of buying vs. the cost investing the money) that's a different beast.<BR/><BR/>I am explaining how much the MORTGAGE costs in real terms. <BR/><BR/>"Wrong. He lived in the house, he gets to add the FMV of that privilege to the credit column."<BR/><BR/>NO, sorry you are WRONG!! The guy could have lived in a BOX!!!, with his mother, he could have been homeless!! Again, I'm not talking about OPPORTUNITY COSTS. I'm talking about the TOTAL EXPENSE OF THE MORTGAGE-how hard is that to get it through you thick skulls. <BR/><BR/>The total cost of the mortgage was ~280k, he sold for 200k, i.e. the mortgage cost him 80k. Again, I'm not comparing rent vs. buy, vs. invest. <BR/><BR/>Over 15 years he spent 80k+ on the mortgage. Using your logic, if he had spent 120k+ on rent over 15 years, he's made 40k+ dollars in 15 years. No he didn't "make" 40k, he "spent" 40k LESS than he would have, but that doesn't negate the fact that he still spent 80k over 15 years.<BR/><BR/>Using this screwy logic that he made money, is how the government fudges deficits all the time. "Well we didn't spend as much as we would have . . . so we're really up 50 million this year" . .. when they are still in the red, just not as much as the previous year. <BR/><BR/>Let me reiterate one more time for you people with insanely thick skulls. I am not comparing opportunity costs.<BR/><BR/>Let me give you an example of opportunity costs. If the guy lived with his mother and put the money that would have gone to mortgage payments and invested it at 8% plus the down payment at the end of 15 years he would have had ~375k, in the bank. He could have lived with his mother for 15 years, and then bought the house at 200k outright with money left over. Let's say rent was 10k a year, he would have spent 150k in rent over 15 years. Let's say the guy doesn't want to live with his mother so investing and earning 375k doesn't work. I've already shown that the mortgage costs is ~88k, and renting costs are 150k. So he decides to buy a house . . . smart choice based on the opportunity costs, but it DOES NOT NEGATE THE FACT THAT THE MORTGAGE was an EXPENSE over 15 years of 88k.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-51796199665887325222008-01-24T10:17:00.000-05:002008-01-24T10:17:00.000-05:00"And that wouldn't even account for the intangible..."And that wouldn't even account for the intangible qualities of life that come from living in one's own home..."<BR/><BR/>Another load of NAR bull.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-17030877286022766272008-01-24T07:54:00.000-05:002008-01-24T07:54:00.000-05:00"Look geniuses, if you factor in a "fair market" r..."Look geniuses, if you factor in a "fair market" rent value, you also have to factor in a whole host of other terms . . . such as maintenance, such as HOA, CONDO fees, and taxes on the housing side of the equation. This all goes into a Rent vs. Buy calculation. My point in doing the calculation was NOT to do a BUY vs. RENT calculation. How many times can I say that."<BR/><BR/><BR/><BR/>Wrong. He lived in the house, he gets to add the FMV of that privilege to the credit column. Period. You're trying to make a point. You failed.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-8634606063726001972008-01-24T01:23:00.000-05:002008-01-24T01:23:00.000-05:00shane,you're half way there to understanding anony...shane,<BR/><BR/>you're half way there to understanding anony when you say that maintenance costs etc could be taken into account. add in rental value and net out those extra costs that a renter wouldn't pay and that is the "income" value of owning the house. take that rental value and inflate it to account for the fact that that income could/would be re-invested longterm during the period you owned the house. then add THAT to you net gain and you'll be closer to estimating true "return" on your investment ... and that should make it clear that the owner is far far ahead of the renter ... And that wouldn't even account for the intangible qualities of life that come from living in one's own home.Lancehttps://www.blogger.com/profile/12216089306021385355noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-10794271866503950442008-01-23T17:32:00.000-05:002008-01-23T17:32:00.000-05:00"but you need to add the fair market rental value ..."but you need to add the fair market rental value of his home into the credit column. Your calculation is worthless as is."<BR/><BR/>If you are comparing x versus y (i.e. costs of renting vs. costs of buying) you absolutely MUST add in to my calculations the costs of renting a comparable house.<BR/><BR/>I AM NOT COMPARING x vs. y. I am comparing x at time t vs. x at time t+delta.<BR/><BR/>Look geniuses, if you factor in a "fair market" rent value, you also have to factor in a whole host of other terms . . . such as maintenance, such as HOA, CONDO fees, and taxes on the housing side of the equation. This all goes into a Rent vs. Buy calculation. My point in doing the calculation was NOT to do a BUY vs. RENT calculation. How many times can I say that.<BR/><BR/>My point is: a house is an expense. Very rarely will you MAKE money. Whether the loss is only in real value, you still LOST money. If the stock market went up 10%, but inflation was 15%, who gives a rat's butt that you sold for a gain . . . you still LOST money. It's called the ILLUSION of WEALTH. You are poorer today than you were yesterday.<BR/><BR/>Was the expense of owning vs. the expense of renting less, probably. That wasn't my point. My point is they are both expenses. Selling for a nominal gain is completely psychological. It makes us feel good to see a green sign instead of a red sign. <BR/><BR/>By not taking into account real losses, everyone just kids themselves, and everyone thinks they are more wealthy than they really are.<BR/><BR/>I was only pointing out that you would need to sell for x amount in order to get back to where you started from.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-15327447839957268522008-01-22T18:48:00.000-05:002008-01-22T18:48:00.000-05:00"I've lived in DC for a total of 11 years. Congest..."I've lived in DC for a total of 11 years. Congestion and traffic are two reasons why I live in DC. Not like "Sarah in DC" who lives in Virginia and plans to move to Maryland. I live in DC, and I'm close to everything at best, and I have a reverse commute, at worst."<BR/><BR/><BR/>Not to mention that anybody who would asset that QOL has gone down the last 10 years in DC is, of course, an imbecile.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-59226937906750231512008-01-22T18:47:00.000-05:002008-01-22T18:47:00.000-05:00"anon from Conn. I'm not trying to advocate that y..."anon from Conn. I'm not trying to advocate that you should have rented instead of buying. I'm trying to point out that even though you sold for more than you bought it, a high probability exists that you really LOST money on mortgage costs of the house. Now you can argue that you would have lost more money renting over the entire period . . . that's a completely valid argument. My point is in the fallacy of thinking "wow I sold my house for x amount more than I paid for it . . . I made money".<BR/><BR/>Let's say you put 20% down on 150k, so your total loan amount is 120k. Back in the 80s loans were around 8%. So set the interest rate at 8%. We'll say that you're in the 28% tax bracket so you get 28% of your 8% back. Over 15 years you would have spent adjusted each year from 1987 to 2002 for inflation you would have spent ~171,500 on interest and ~36,500 on principle. Since we are assuming you get 28% of your interest back on taxes, the total interest would be ~123,500. Your total cost over 15 years adjusted in 2002 dollars for the mortgage alone was ~160,000. However after 15 years, assuming you made no extra payments you still have a loan balance of ~88,000. In other words your total cost in order to pay off the loan in 2002 would be ~248,000. We also need to factor in the 20% down payment, which in 2002 dollars would be 47,500. You sold the place for 200,000. So not including maintenance, HOAs, etc, to live in the place for 15 years cost you ~95,5000, in 2002 dollars.<BR/><BR/>In order to break on the mortgage costs after 15 years, you would have had to sold for $295,500 2002 dollars.<BR/><BR/>Now if you could have rented over 15 years for less than 95k 2002 dollars, financially it would have been better to rent. I am not arguing that you could have done better renting, or that you would have wanted to. <BR/><BR/>Now many other factors come into play, what was the true interest rate your loan was at, did you refinance, did you make additional payments, etc, etc.<BR/><BR/>My only point is that using a basic calculation, and basic assumptions, you did not "make" money on your transaction and you did not break even on your house."<BR/><BR/><BR/><BR/><BR/>I know you're a genius and all, but you need to add the fair market rental value of his home into the credit column. Your calculation is worthless as is.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-17435053486058809832008-01-22T17:09:00.000-05:002008-01-22T17:09:00.000-05:00In reference to Shane's comments....I'm as big of ...In reference to Shane's comments....<BR/><BR/>I'm as big of a bubble believer as anyone but I get a little tired of hearing the talk about houses losing value in real terms. That is pretty irrelevant in many cases. If you want to do that analysis, you better add in the timed value cost to rent as well. <BR/><BR/>We talk about a normal market being one where the monthly cost to rent is approx equivalent to the cost to own. Well, if that's the case, **any** appreciation (even if it is below the inflation rate) is a net positive.<BR/><BR/>I recognize that the monthly costs are nowhere close now and that changes the equation significantly. The owner needs a higher appreciation to make up this difference. However, I suspect our Connecticut poster was not paying significantly more to own than to rent - especially after owning for a long time.<BR/><BR/>I, for one, hope nominal prices continue to decline as I don't want to wait 15 years for the market to return to norm. I am not happy at all with "real" declines.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-50564686271647876412008-01-22T14:40:00.000-05:002008-01-22T14:40:00.000-05:00" I can't help but notice how much worse traffic c..." I can't help but notice how much worse traffic continues to get in this area."<BR/><BR/>I've lived in DC for a total of 11 years. Congestion and traffic are two reasons why <I><B> I live in DC. </I></B> Not like "Sarah in DC" who lives in Virginia and plans to move to Maryland. I live <I> in </I> DC, and I'm close to everything at best, and I have a reverse commute, at worst.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-17187417150955937182008-01-22T10:36:00.000-05:002008-01-22T10:36:00.000-05:00"Don't forget to factor in quality of life. I've l..."Don't forget to factor in quality of life. I've lived in both Arlington (Clarendon) and Old Town over the past 6 years & I can't help but notice how much worse traffic continues to get in this area."<BR/><BR/>Living where you do, dont you walk or take the metro to most places? For alot of us, most of what we want is maybe 2 miles away in which case the traffic changes a 5 minute drive into a 7 minute drive. <BR/><BR/>Contrast that with the people who live out in suburbia where not much is within walking distance. Have you been out on say Rte 50 at 4pm on a saturday. Honestly I dont know how those people do it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-55183836199636088162008-01-22T09:59:00.000-05:002008-01-22T09:59:00.000-05:00anon from Conn. I'm not trying to advocate that yo...anon from Conn. I'm not trying to advocate that you should have rented instead of buying. I'm trying to point out that even though you sold for more than you bought it, a high probability exists that you really LOST money on mortgage costs of the house. Now you can argue that you would have lost more money renting over the entire period . . . that's a completely valid argument. My point is in the fallacy of thinking "wow I sold my house for x amount more than I paid for it . . . I made money".<BR/><BR/>Let's say you put 20% down on 150k, so your total loan amount is 120k. Back in the 80s loans were around 8%. So set the interest rate at 8%. We'll say that you're in the 28% tax bracket so you get 28% of your 8% back. Over 15 years you would have spent adjusted each year from 1987 to 2002 for inflation you would have spent ~171,500 on interest and ~36,500 on principle. Since we are assuming you get 28% of your interest back on taxes, the total interest would be ~123,500. Your total cost over 15 years adjusted in 2002 dollars for the mortgage alone was ~160,000. However after 15 years, assuming you made no extra payments you still have a loan balance of ~88,000. In other words your total cost in order to pay off the loan in 2002 would be ~248,000. We also need to factor in the 20% down payment, which in 2002 dollars would be 47,500. You sold the place for 200,000. So not including maintenance, HOAs, etc, to live in the place for 15 years cost you ~95,5000, in 2002 dollars.<BR/><BR/>In order to break on the mortgage costs after 15 years, you would have had to sold for $295,500 2002 dollars.<BR/><BR/>Now if you could have rented over 15 years for less than 95k 2002 dollars, financially it would have been better to rent. I am not arguing that you could have done better renting, or that you would have wanted to. <BR/><BR/>Now many other factors come into play, what was the true interest rate your loan was at, did you refinance, did you make additional payments, etc, etc.<BR/><BR/>My only point is that using a basic calculation, and basic assumptions, you did not "make" money on your transaction and you did not break even on your house.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-8636308926269697702008-01-21T15:24:00.000-05:002008-01-21T15:24:00.000-05:00I been watching the Northrn VA for past 4 years an...I been watching the Northrn VA for past 4 years and prices are down drastically in Loudon county and fairfax county. I saw article in CNB Cramer saying 250 billion bailout fund for subprime securities(instead of 145billion economy stimulus paackage) to save economy. I wonder how could that prop up the economy until unless every home owner is given $200K-300K equity they are going to lose as a result of economy correcting to fundamentals when 2/3 of US econmoy is dependen on consumer spending.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-78921102392915039832008-01-21T09:28:00.000-05:002008-01-21T09:28:00.000-05:00Interesting, LeDroit Park and NW Eckington are lis...Interesting, LeDroit Park and NW Eckington are listed in area code 20001. Let's see what MRIS has to say about that zip code for Dec 2007 vs Dec 2006 :<BR/><BR/> 2007 2006 % Change<BR/>Total Sold Dollar Volume: $ 20,082,887 $ 23,188,100 - 13.39 %<BR/>Average Sold Price: $ 478,164 $ 483,085 - 1.02 %<BR/>Median Sold Price: $ 429,950 $ 437,000 - 1.61 %<BR/>Total Units Sold: 42 48 - 12.50 %<BR/>Average Days on Market: 87 91 - 4.40 %<BR/>Average List Price for Solds: $ 577,725 $ 510,149 13.25 %<BR/>Avg Sale Price as a<BR/>percentage of Avg List Price: 82.77 % 94.69 %<BR/><BR/>Of course, maybe those EXACT neighborhoods are doing well. Curious to see how they continue to do as the year unfolds.Anonymousnoreply@blogger.com