Tuesday, May 09, 2006

Bubble Meter Blog Mentioned in Washington Post Express

The Bubble Meter Blog was mentioned in the Washington Post Express yesterday.


  1. Census bureau population projections for the year 2030. (less time than the number of years left on the average 30-year conforming loan; which represents at least 50% of all existing home loans.)

    These numbers represent net increase in the number of human beings in each state:

    Virginia + 2,746,504

    Maryland + 1,725,765

    District of Columbia - 138,645 (yes, this is a net decrease based upon past trends)

    These numbers do not include the projected 11-12 Million undocumented immigrants, many of whom live in VA. What impact do these factors have on the supply and demand for housing? How will these numbers manifest themselves physically? (think of traffic congestion, suburban sprawl, limited infrastructure, building height restrictions in DC, availability of land, etc.) Discuss.


    (p.s. a bubblehead here once said that "available land essentially does grow on trees". If you believe that, then set the notion aside for a few moments and see if you can at least see, from a strictly academic perspective, how it may not grow on trees. Kinda like how you might ponder the existence of aliens even if you don't beleive in life on other planets.)

  2. congrats david.


  3. "illegals cannot legally get loans to buy houses or even condos"

    This is probably one of the stupidest things I have ever read. So it's illegal to loan money to an illegal alien? Cite please?

  4. Bryce - Their is plenty of land and businesses and people will expand to fill it. Just look at the Dulles Corridor which has become a thriving business center while twenty years ago it wasn't. Also, if you look at past census data you will see that housing kept pace with population. You can find that information on the Fairfax County website if you care to look. I'm sorry but your argument is pretty weak.

  5. "Also, if you look at past census data you will see that housing kept pace with population. "

    Exactly.... now think about what you said for a little while. Perhaps do so while you are driving around the "town" of Dulles. You'll have plenty of time to sit in your car and think... and look...

    What seems to be lost on people here is that everyone needs a place to live - including the illegals. The illegals do indeed seem to be jammed into places like Seven Corners. Now here is the tricky part: Seven Corners used to be the "suburbs" In the 1970's (30 years ago, BTW) it was "out there" in relation to DC. Those apartments they are jammed into WERE "nice" at one time. Now the place is left behind economically. It has a Goodwill Shop right on Columbia Pike. Remember, that USED to be the nice suburban neighborhood. It became a thriving business center on its own.... just like "Dulles".

    What will the current burbs look like in 30 years? You're telling me that Dulles is a "thriving business center on its own". Yeah, going to lunch on a weekday in incorporated Herndon will show you that a lot of people work there and that getting a table for lunch can be extremely difficult. Reston is a better example... $1M condos in the "town" of Reston. Office space being overbuilt....I don't think that Reston will look like Seven Corners in 30 years, but Ashburn probably will. And Ashburn WILL be built out by then - every available building lot will be occupied with a building. (That means prices will go up until civilization ends, even though Ashurn is a lower-middle-class slum)


  6. "Also, if you look at past census data you will see that housing kept pace with population. "

    I read this again. I hope housing keeps pace with population! Otherwise there are going to be a lot of homeless people!

    *HOUSING IS A NECESSITY* Get it? If not, I suggest trying sleeping outside tonight.


  7. I think a better way to look at housing for illegals (they broke the law sneaking into the country - they're here illegally) is to see that housing speculators buy places and rent them out to illegals. Beleive it or not.... renting out housing to 10+ Million illegal aliens adds to the aggregate demand for housing in this country....

  8. Bryce,

    Housing markets are local right?

    I pulled the census data from the following site:


    I defined NOVA as the following:

    Alexandria City,
    Arlington County,
    Loudon County,
    Fairfax County,
    Prince William, County,
    Fauquier County,
    Stafford County,

    If you add up their populations you get 2.07 Million. The state's total population is 7.46 million.

    So roughly 28% of all Virginia's live in "NOVA."

    Now back to your 2.75 million more people by 2030. Since it was a 30 year projection from the Census Bureau, some of that growth is probably already baked in but I'm still going to be generous and divide by 25. So, 110,000 people per year will be coming into VA. Of that 110,000 only 28% live in NOVA to impact our market so that's 30,800 people per year coming into NOVA.

    I think it's safe to estimate that not every single one of those individuals will have their own seperate property. Some will be couples, some will be children etc. So I will be generous again and say that there will need to be a house for every 2 people. So that's 15,400 residences needed per year.

    What is the total volume of homes added to the market each year by builders? This doesn't seem like such a large number for such a large region.

    My $0.02.

  9. Point of clarification:

    Housing is a necessity.

    Buying is not.

  10. Bryce - As Dulles Corridor becomes more crowded new business centers will emerge just like Dulles corridor emerged to meet the expanding population. Maybe they will expand into the plains or elsewhere, who knows. The point is we are not as constrained by land as you would suggest. Why are you so intent on fear mongering? I don't know if housing is going to go bust but I highly doubt housing will become so constrained that everyone becomes homeless. You are really reaching.

  11. WHAT?! I'm not even alluding to the idea that people will become homeless. The fact is that the population is growing. This is a fact.

    Everyone needs a place to live. That is also a fact.

    How is bringing up those two facts "Fearmongering"? Wow.

    In case you didn't know, most of the land in NOVA has been owned by private hands since the 1600's. (Loudoun was a man, as was Fairfax, as was Prince William... these were all "landed aristocrats" [look it up])

    The land comes at a price. People NEED a place to live. There isn't enough existing housing to accomodate 5+Million additional people without *BUILDING NEW HOMES*. They don't need to be SFH's, they could be rental apartments - BUT NEW CONSTRUCTION is necessary.

    Will building a nice 300 unit rental community in Western Loudoun 20 years from now come free of charge? NO. There is intrinsic value in housing because demand slopes upward indefinitely, while the supply of land slopes downward toward exhaustion.

    The same holds true for crude oil, by the way. So the next time I see a GM advertisement on TV for alternative fuel vehicles, I guess I just jump to the conclusion that GM is "fear mongering" by stating the fact that oil prices will climb until all the oil in the world is exhausted (a possibility in YOUR lifetime if you are under 30)


  12. hm. I saw "the Daily Show" recently, and they were "Poll Smoking" a recent poll that showed the following:

    1) 30+% of Americans are overweight
    2) 30+% of Americans are clinically obese
    (That is more than 60% of the people on the path to chronic disease) and
    3) 29% of Americans acknowledge that they are overwieght or obese.

    The obesity epidemic is a reality, yet most people don't recognize it, even when they are part of the epidemic. This has been a central issue in my life for many years, and I put my money where my mouth is. I'm investing in health care companies because health care is THE growth industry for the next 20 years.

    People are living longer and longer, yet unhealthier and unhealthier, lives. The $ is in propping up the health of these people who don't take care of themselves. (are you one of them? perhaps one of the third of the country in denial about your own health?)

    If people can be so blind when looking in the mirror - I imagine it must be easy for them to overlook obvious demographic trends. (e.g. growing population and the fact that housing is a necessity.)

    Yep, you're right. I'm beating my head against a brick wall. Seems most of y'all on this site are the bricks.

    Now go eat something.


  13. Bryce - Of course owners of the land will want to be paid. However, the supply of land available will prevent land owners from charging whatever price they would like. I'm really not sure what you are getting that though. Everyone agrees that housing will need to expand and it will just like it always has. Maybe one day we will run out of land but we aren't even close.

  14. Two Cents, where do you live? I don't need a street address, but a neighborhood designator would be useful.


  15. OK, go look up a plot of land in Orange. Find something around 10 acres, enough for an apartment community with multiple hundreds of units.

    I'm sure you'll get it for a song, given the wide open spaces out there. And in 20 years, the price will have declined well below the rate of inflation.



  16. I'd rather not have you needlessly needle me like you do "Sarah in Virginia." Where I choose to live does not impact my feelings on the following:

    1. 6% real estate commissions are a hold over from an outdated business model.

    2. Home prices have increased significantly faster than wages, GDP, and inflation therefore they will either level off for a substantial period, fall off slightly, or both.

    3. I believe the inventory and pricing trends available over the last 12 months for the Greater Washington Metropolitan area support my position in 2 above.

    4. Anyone who has bought over the last 2 years who plans to live in their home and work in this area for the foreseeable future does not have to worry - housing is cyclical.

    5. I am not a dooms day believer. Ingenuity and market forces will provide solutions to our problems. The only question is whether they're timely and/or painful to wait for.

    6. Whenever someone says "This time is different" they're wrong. :)

    My $0.02.

  17. Well said, .02. You wouldn't happen to be a "Fool", would you? (of the Motley, variety, that is. It isn't an insult!)


  18. health care is fine and dandy but premiums are going to price people into changing their lives, much like gasoline's effect when it hits $6-7/gallon. the market will sort it out.

    my wager's on soy farms... ever step foot in a Trader Joe's? every single item on the shelves is "soy-based", and tasty too. and after bird flu, the new catchy commercial jingle will be "Love those soy nuggets from Popeye's".

  19. Thank you Bryce.

    I'm not an official Fool if there is such a thing. I have read a lot of their stuff though. They make some interesting points.

    My $0.02.

  20. Interesting post on Craigslist:


    First, the listing realtor ADMITS that home prices are DECREASING in DC. Then the realtor tries to justify buying now - realtors reasons that increasing interest rates will erase any savings from lower prices if one was to wait for prices to drop further.

    About a month ago, this property was listed for $519,900. Today, it is listed for $40,000 LESS!

    If I had bought the day it was listed for approx. $520K, @ 6% my payments would be approx. $3117. To erase the $40K savings the interest rate would have had to go up by 0.765% in 1 month.

  21. Anonymous,

    I was playing with a similar calculation last week. If memory serves, for a $100,000 loan at 6% interest fixed for 30 years, the payment is approximately $600. For every .1% increase in interest rate, you have to decrease the $100,000 by $830 to keep your payments at approx $600.

    From my back of the napkin calculations then, 40K divided by 5.2 (normalizing your example to 100,000K) you would have saved $7692.30. So, a loan for $92,317.70 would have a $600 payment if the interest rate were 6.927% So I actually get a rate higher than the one you quoted. (I think my math is in the right ballpark - memory here...)

    For those that can afford to save for a down payment then, if you can save .83% of the loan for every .1% increase in interest rates you can get ahead of the market (start affording more for a change).

    This is still a pretty tall order though. About $4k for every .1% interest for a $500k home. Of course, this can be offset by 3 factors: decreasing home prices, increased wages affording you a higher monthly payment, lack of competition from buyers with no downpayment.

    Just a little food for thought.

    My $0.02.

  22. David,

    Congrats on getting more publicity.