Remember the recent bubble and crash -- it could happen again
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Anonymous
But housing always go up, so he should leverage as much as he can! Who cares if it is 4x his income, that is old fashioned |
Anonymous
" pockets in the market are a little crazy riht now " because the OP has promised developers an" up zoning" of just about every residential neighborhood in the city, except G'town. The developers are, therefore, out there in residential neighborhoods outbidding professional couples by maybe a 100K over the highest bid , paying cash with 24 hr settlement. Then they hold the property and wait for the zoning re-write to go through so they can gut it, and build their "pop up" little boxes of condo units and sell each of the 2-4 condos for about $650 ( maybe 250K less than paid for the entire house ( $900K) Don't believe me, read the real estate sales and get out the property assessment OTR mailed you in March. Property assessments went up on average of 20% this year in residential neighborhoods of the city. For most home owners that means some home on their block was bought for 100K more than last year's assessed value , and therefore THIS YEAR everyone on the street's assess went up 100K. Keep in mind , this is BEFORE the zoning re-write is passed. Just wait until you get next years' assess after the zoning re-write is PASSED 10% cap with homestead deduction will hold many in their homes for a few years, but eventually in 7-10 years, home owners ,not 65 or older, will be "taxed out" of their homes, their homes will be chopped up into little condos and then the 800K 1 bedroom condo in DC will become the " new normal" as will the 10K a year property tax bill on remaining single family homes. This is a real estate agent's wet dream , which is why they JUMP to bid up on a house, and why they and developers constitte 50% of teh campaighn donation money going into Mayor's race and City Council elections this year.( they are covering all the candidates) Developers will slap the NIMBY label on anyone who challenges them . The OP's zoning re-write is their new best friend , akin to the easy loan approvals and cheap credit of the late 90's up to 2007 era. BOTH were/ are poor social policy based purely on GREED. Perhaps that is what the origianl poster is sensing….For which , of coarse , a poster immediately slammed him/her , alledging that he/she " did not understand basic economics" Actually, the OP's sense is dead on target, the market is skewed to one interest , and just like in late 1990's-2007 its very poor social policy. It may not result in a " bubble burst" , but it will in 10-20 destroy the 100 acheivemnt of the McMillian plan in term sof making DC a city charcaterized by lower buildings letting in air and light , large set backs allowing for tree lined street scape , and single family home onwership near in to highly competetive jobs in DC. But the developers who frequent this board ( and OP staff as well) will jump to SLAP the NIMBY label on anyone who wants to dialogue on this. Developers even posted a 7 foot tall NIMBY billboard at Columbia and Ontario Place because the home owners on that block are going through proper channels to try to protect their street from pop ups. ??? is do you want to live in a small condo box of an apartment with cheap dry wall construction and chipping " high end bamboo flooring " or do you prefer a real house ? Do you like the " air and might" of your 2-3 story residential street or do you think its just fine that every home on your block get a pop up ( in some cases 5 more stories) just so some developer can make a killing. Its a worthy dialogue, but before the afternoon is out the developers will be rushing to close the conversation on this forum. |
Anonymous
| Wow - are you drunk? |
Anonymous
| PP here, sorry I spitballed that prices were 10 percent higher than the peak bubble. According to C-S they're 25 percent lower. Please continue to use a number I pulled out of my ass if it aids you in this delusion. |
Anonymous
FHA has zero down, negative arm, interest only, no mortgage insurance stated income loans? |
Anonymous
What field are you in, do share ? |
Anonymous
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As someone who works with proprietary mortgage data for a living, this is patently false. People in this area are incredibly leveraged, and the most common buying strategy is to use every last cent of your liquid assets as a down payment and take on the biggest loan the bank will give you. This makes the market very vulnerable to even mild shocks like jnterest rate hikes. I still see loans with minimal down payments on million dollar properties. For instance PenFed brought back a zero down mortgage last year that allowed for DTI in the 40s. This is insane, and yes, these loans are being used to bid things up around the metro area.
At the lower end of the market, as someone pointed out, FHA has replaced subprime. You can get a loan with sub 600 FICO and/or less than 5 percent down in some cases. This is just one of the many reasons FHA is currently insolvent. You are delusional if you think the DC market is dominated by buyers with 20 percent down and 760 FICO.
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Anonymous
And? You still make 150K five years out of college! I agree with PP - you sound like a whiny, entitled douchebag. Get some roommates. Live on the 25K a year your peers - even those with unused graduate degrees! - manage to survive on and in ten years you can have the home of your dreams. Most people will never be able to afford. |
Anonymous
see, a slap down in just 8 minutes AND it is a Sat AM ! |
Anonymous
People leverage more here because we have the most stable and robust job market in the usa perhaps the world. Yes sequester put a damper but we are past that now. There is no way either side of the aisle wants to tank the economy. |
Anonymous
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Sorry. Not PenFed but navy federal credit Union for the zero down loan.
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Anonymous
| NASA FCU has it too. |
Anonymous
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Everyone knows the economists had it ALL right the last time.
-"Home prices have been rising strongly since the mid-1990s, prompting concerns that a bubble exists in this asset class and that home prices are vulnerable to a collapse that could harm the U.S. economy. A close analysis of the U.S. housing market in recent years, however, finds little basis for such concerns. The marked upturn in home prices is largely attributable to strong market fundamentals: Home prices have essentially moved in line with increases in family income and declines in nominal mortgage interest rates." Johnathan McCarthy Sr Economist and Richard Peach VP, NY Fed, December 2004 -"Yet basic economic logic suggests that this apparent evidence of a bubble is anything but. Even in the highest-price cities, housing is, at most, slightly more expensive than average." Chris Mayer and Todd Sinai, Professors, Columbia Business School 09-19-2005 -"While such signs of speculation are troubling, there is no sign that there is a housing bubble." James Glassman, American Enterprise Institute 05-24-2005 -"Housing bubble? What housing bubble? The signs are in place for a further run-up in real estate. Breathe easy, mortgage holders. There’s still no place like home." - Jim Cramer "Mad Money" CNBC 12-08-2003 -"Mr. Hassett of the conservative American Enterprise Institute thinks housing prices will be pretty much O.K. He acknowledges there might be some bubble dynamics at play in some regions. But he argues that for the most part people are paying more for homes because their incomes are higher and interest rates are lower, reducing the cost to own a home. He expects that rising interest rates would raise this cost and home prices would then decline proportionately. But he sees no reason to expect a catastrophic decline. 'I don't think a catastrophe is very likely,' he says."- NY Times July 25, 2004 |
Anonymous
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Oh my favorite... from the Washington Post March 2, 2005:
"The housing markets will cool as interest rates rise and as affordability declines, but they won't crash. Most markets will flatten for a while or increase at lower, more historical, rates. A few may decline for a year or two. But we won't have a crash." |
Anonymous
| Fair enough. It should be emphasized that Jim Cramer is not an economist. He is a talking head that gets paid to drum up hype, not analyze the economy. And for what it is worth, many economists were screaming about the bubble (e.g., Dean Baker at CEPR) |