For fellow housing bears

[Anonymous]

For those of you who dont listen to the realtors and MSM, please share your opinions of the housing market.

We get quite a bit of hate on this board, but an area as educated and well-informed as dc should have more than 1 prevailing opinion.

[Anonymous]

Federal budget cuts will result in a significant loss of jobs in the area. The national economy will continue to improve, and interest rates will rise nationally. These two forces will pull down demand and increase the cost of buying, respectively. Housing prices will at minimum not go up as much as some may think and could actually go down locally.

[Anonymous]

Without trying to read the tea leaves on proposed budget cuts, my take on the DC area is that housing costs are way beyond historical norms, relative to HHI. This has been made possible by abnormally low interest rates. When rates rise (and they will) to historical norms (the average thirty year rate is 8.5% or higher) housing will be hit and probably hard in this area.

Households can and have borrowed four and five years' income at three percent interest for housing. That will be impossible at 8.5% or higher. Ergo, prices will come down. The math determines it, not some agent's opinion.

[Anonymous]

As I read the various millennials threads, it's easy to imagine the assumed greater fools don't have the $$$ needed to keep prices high.

[Anonymous]

Anonymous wrote:Federal budget cuts will result in a significant loss of jobs in the area. The national economy will continue to improve, and interest rates will rise nationally. These two forces will pull down demand and increase the cost of buying, respectively. Housing prices will at minimum not go up as much as some may think and could actually go down locally.

It will take a lot more than that to drain the swamp.

[Anonymous]

The ceaseless cycle of defense bloat, lobbying, and contractor greed will keep this area recession proof and prices increasing quickly. Get off the fence and just buy already (maybe!).

[Anonymous]

A lot of people get significant down payment help from parents in this area.

[Anonymous]

I'm thinking big picture here.

I think it's going to be a mixed bag short term. I don't put tons of stock in Fed job cuts and scale backs having a huge impact locally. The bureaucracy will grind on slow and steady as usual. The rising rates due to improving economy will affect pricing on the margins, especially on the low- and mid-price homes.

Long term (10-20-30yrs) however there are ominous signs. Automation (not brown ppl) will decimate the job market. American leadership has not been making the appropriate investments in higher education, job training, future energy, and so on to keep us competitive globally. The boomers are going to be a drag on our resources and more attractive overseas opportunities for our young will drain some talent. I'm not a doomsday prepper kind of person in the least. However, I do think civil unrest and some pretty challenging times economically are coming though. The magnitude of these issues is uncertain, but somewhat controllable if we have the political will. Not sure we do. I guess what i'm saying is i'm not bullish on the health of real estate or my 401k plan long term. That's why I bury gold in my yard

[Anonymous]

Anonymous wrote:Without trying to read the tea leaves on proposed budget cuts, my take on the DC area is that housing costs are way beyond historical norms, relative to HHI. This has been made possible by abnormally low interest rates. When rates rise (and they will) to historical norms (the average thirty year rate is 8.5% or higher) housing will be hit and probably hard in this area.

Households can and have borrowed four and five years' income at three percent interest for housing. That will be impossible at 8.5% or higher. Ergo, prices will come down. The math determines it, not some agent's opinion.

DING, DING, DING! Virtually everyone I know sitting in a 1.8 million house had one or both of the following:

1) "Help from family" - which is to say, money that was likely not earned in the region
2) The enjoyment of some ridiculous equity explosion, that they kept rolling forward to properties - which is to say, they could never pay to house themselves and live a good life in the region, while saving for a $700,000 down payment. They "saved" for their down payment by living in a house that just magically increased in value.

DC salaries, when you look at other ultra expensive cities are very low. We don't have loads of hedge fund folks or techies who are getting multmillion dollar bonuses, and we consider "rich" people to be big law attorneys. Further, government salaries are capped very low at $200k.

Also, Millennials have absolutely no money. Yeah, sure, a few of them do. I am a Millennial and it is very hard to break into the housing market, and no Millennial is going to enjoy the easy equity Gen X and Boomers took for granted. Millennials also aren't willing to buy properties they don't like. Millennials spend all their money on chai lattes and Chop't salads, and they want the best of everything with minimal inconvenience. In 10 years, do you think they're going to line up to buy your crappy new build which will by then be dated and probably falling apart?

I love that you started this thread, OP. I am a home owner (hot area, close in burb, straight 10s on the schools), and I'll still be delighted when this ridiculous market right-sizes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Without trying to read the tea leaves on proposed budget cuts, my take on the DC area is that housing costs are way beyond historical norms, relative to HHI. This has been made possible by abnormally low interest rates. When rates rise (and they will) to historical norms (the average thirty year rate is 8.5% or higher) housing will be hit and probably hard in this area.

Households can and have borrowed four and five years' income at three percent interest for housing. That will be impossible at 8.5% or higher. Ergo, prices will come down. The math determines it, not some agent's opinion.

DING, DING, DING! Virtually everyone I know sitting in a 1.8 million house had one or both of the following:

1) "Help from family" - which is to say, money that was likely not earned in the region
2) The enjoyment of some ridiculous equity explosion, that they kept rolling forward to properties - which is to say, they could never pay to house themselves and live a good life in the region, while saving for a $700,000 down payment. They "saved" for their down payment by living in a house that just magically increased in value.

DC salaries, when you look at other ultra expensive cities are very low. We don't have loads of hedge fund folks or techies who are getting multmillion dollar bonuses, and we consider "rich" people to be big law attorneys. Further, government salaries are capped very low at $200k.

Also, Millennials have absolutely no money. Yeah, sure, a few of them do. I am a Millennial and it is very hard to break into the housing market, and no Millennial is going to enjoy the easy equity Gen X and Boomers took for granted. Millennials also aren't willing to buy properties they don't like. Millennials spend all their money on chai lattes and Chop't salads, and they want the best of everything with minimal inconvenience. In 10 years, do you think they're going to line up to buy your crappy new build which will by then be dated and probably falling apart?

I love that you started this thread, OP. I am a home owner (hot area, close in burb, straight 10s on the schools), and I'll still be delighted when this ridiculous market right-sizes.

Umm excuse me but gen X got screwed by the housing crash, we didn't get "easy equity".

[Anonymous]

Anonymous wrote:Federal budget cuts will result in a significant loss of jobs in the area. The national economy will continue to improve, and interest rates will rise nationally. These two forces will pull down demand and increase the cost of buying, respectively. Housing prices will at minimum not go up as much as some may think and could actually go down locally.

This is not going to happen. There will be some cuts but no "significant loss of jobs."

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Without trying to read the tea leaves on proposed budget cuts, my take on the DC area is that housing costs are way beyond historical norms, relative to HHI. This has been made possible by abnormally low interest rates. When rates rise (and they will) to historical norms (the average thirty year rate is 8.5% or higher) housing will be hit and probably hard in this area.

Households can and have borrowed four and five years' income at three percent interest for housing. That will be impossible at 8.5% or higher. Ergo, prices will come down. The math determines it, not some agent's opinion.

DING, DING, DING! Virtually everyone I know sitting in a 1.8 million house had one or both of the following:

1) "Help from family" - which is to say, money that was likely not earned in the region
2) The enjoyment of some ridiculous equity explosion, that they kept rolling forward to properties - which is to say, they could never pay to house themselves and live a good life in the region, while saving for a $700,000 down payment. They "saved" for their down payment by living in a house that just magically increased in value.

DC salaries, when you look at other ultra expensive cities are very low. We don't have loads of hedge fund folks or techies who are getting multmillion dollar bonuses, and we consider "rich" people to be big law attorneys. Further, government salaries are capped very low at $200k.

Also, Millennials have absolutely no money. Yeah, sure, a few of them do. I am a Millennial and it is very hard to break into the housing market, and no Millennial is going to enjoy the easy equity Gen X and Boomers took for granted. Millennials also aren't willing to buy properties they don't like. Millennials spend all their money on chai lattes and Chop't salads, and they want the best of everything with minimal inconvenience. In 10 years, do you think they're going to line up to buy your crappy new build which will by then be dated and probably falling apart?

I love that you started this thread, OP. I am a home owner (hot area, close in burb, straight 10s on the schools), and I'll still be delighted when this ridiculous market right-sizes.

Umm excuse me but gen X got screwed by the housing crash, we didn't get "easy equity".

Plenty of Gen X professionals in the D.C. metro area enjoyed the double run up in the market, and a much lower cost of entry before the initial run up.

[Anonymous]

I think there's a lot of soft data about the US economy as a whole and a lot of denial out there. I think some regions of the country are going to be in it in for a rude awakening over the next few years. Specifically for the DC area, I don't particularly think it's wise to bet that the federal government will be declining. I think it's probably just as likely or maybe more likely to increase.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Without trying to read the tea leaves on proposed budget cuts, my take on the DC area is that housing costs are way beyond historical norms, relative to HHI. This has been made possible by abnormally low interest rates. When rates rise (and they will) to historical norms (the average thirty year rate is 8.5% or higher) housing will be hit and probably hard in this area.

Households can and have borrowed four and five years' income at three percent interest for housing. That will be impossible at 8.5% or higher. Ergo, prices will come down. The math determines it, not some agent's opinion.

DING, DING, DING! Virtually everyone I know sitting in a 1.8 million house had one or both of the following:

1) "Help from family" - which is to say, money that was likely not earned in the region
2) The enjoyment of some ridiculous equity explosion, that they kept rolling forward to properties - which is to say, they could never pay to house themselves and live a good life in the region, while saving for a $700,000 down payment. They "saved" for their down payment by living in a house that just magically increased in value.

DC salaries, when you look at other ultra expensive cities are very low. We don't have loads of hedge fund folks or techies who are getting multmillion dollar bonuses, and we consider "rich" people to be big law attorneys. Further, government salaries are capped very low at $200k.

Also, Millennials have absolutely no money. Yeah, sure, a few of them do. I am a Millennial and it is very hard to break into the housing market, and no Millennial is going to enjoy the easy equity Gen X and Boomers took for granted. Millennials also aren't willing to buy properties they don't like. Millennials spend all their money on chai lattes and Chop't salads, and they want the best of everything with minimal inconvenience. In 10 years, do you think they're going to line up to buy your crappy new build which will by then be dated and probably falling apart?

I love that you started this thread, OP. I am a home owner (hot area, close in burb, straight 10s on the schools), and I'll still be delighted when this ridiculous market right-sizes.

I'm the OP, glad you liked the thread!

I'm new to the boards but surprised at the lack of econmic analysis considering the population. Realtors have dominated for too long when we all know theyre the ones who have nothing to lose.

[Anonymous]

Speaking of magic equity

https://www.google.com/amp/www.marketwatch.com/amp/story/guid/B65217A4-195C-11E7-ACE9-1B88A12ADC17