Reply to I think the bubble is popping.

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[quote=Anonymous]Huh, those down payment numbers are interesting. They are only for 30 days prior, so grain of salt, but still interesting. Adding more Maryland zip codes to round out the conversation:

Downtown Silver Spring (20910) 14.6%
Wheaton (20902) 11.9%
Takoma Park (20912) 8.8%
South Laurel/Bowie (20708) 10%
Mount Rainier (20712) 0%

One factor I think you need to consider is that the neighborhoods I list here are MUCH more likely to attract starter home buyers, who are always going to have less money for a down payment. I'm a little surprised to see this 0% for Mount Rainier and Hyattsvilee, but none of the other numbers surprise me at all based on the sort of buyers who tend to look in these neighborhoods (lots of young couples just starting out, some people with young kids fleeing the city who can't afford to go West).

The point is, I don't think this reflects anything other than the fact that these are more affordable areas with smaller homes and less wealthy buyers. It doesn't mean money is "moving" to the Potomac region -- that's where the money has been forever. It also reflects the fact that buyers of 500k starter houses are more likely to go with a smaller down payment (which is generally fine, a 15 year fixed rate mortgage on a 500k house, even with limited down payment, will still be a great investment in this area because of the economic stability and growth), than people buying a 1.8m house in Bethesda or CCDC. These are extremely different purchasers.

Long story short, I think prices in the DMV will flatten a bit because they've grown so exponentially in the last two years (I think we may already be seeing that this buying season) but I don't think it's a bubble or that it's popping. The region continues to grow its base of well-paying jobs and there is nothing about the economics of DC to indicate that the income bubble is popping, and that's what is driving housing. So long as government, tech, and the businesses that serve both (law firms, consulting firms, accountants, etc.) is strong in this area, there will be demand for educated professionals and the money to compensate them. I think it's unreasonable to expect your housing value to double in 5 years, but I also think housing in this area, even in the less expensive and desirable areas, will continue to be a good long term investment.[/quote]

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