Reply to How much higher do you think DC area prices can go long-term?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]What the heck are you all talking about? My family lives a very comfortable life in PG County on one federal salary. PG is seen as some sort of ghetto, but its around #68 (out of 2500 or so) counties as ranked for median household income in the country. The schools are not as good at Montgomery County or the close in VA suburbs, but those areas have the absolute top schools in the country, so you really don't need to make too much of the comparison.

Living in NW DC and some of the "preferred" close in suburbs is totally unaffordable, but that is just those areas.

We own a 2300 sf house that is walkable to a few nice neighborhood amenities. Paid less then $300K a few years ago (and the value is similar today) Tons of great friends within a few blocks. Our young kids can play on our sidewalk with little supervision. Kids attend a great public Montessori school.[/quote]

We'll talk once kid is in high school. [/quote]

Not PP, but are you saying the high school situation is better in DC?  As far as I can tell, people in DC don't have a better school situation than PG.  The big advantage of DC is probably small commute but that usually comes with a small house.  But don't suggest that people are paying a million dollars in DC for the schools.

People pay more for the schools in MOCO, but the commute is probably worse there than in PG (depending on where you are commuting to downtown).

I live in PG, and I actually don't want the prices in PG to go up astronomically.  A modest increase each year is fine.  It's better for tax assessments anyhow.  I also don't want the density in PG that MOCO has.  I'd like for PG to remain middle class.

But that's really not the topic of the thread.  As for rising prices in DC, the problem is that when people talk about it, the real question is can salaries continue to go up in DC.  That's where the bubble is.  People at one point in history thought Detroit was a stable place.  There were so many protected union jobs, it was a center of industry.  What could go wrong?  But times change, and unsustainable salaries are just that:  unsustainable.

DC will never be detroit, because the government is not going to pack up and leave.  But a lot of the contractor, IT, defense and intelligence jobs are dependent upon ever-increasing government budgets.  And I don't think it is sustainable.  Sequestration has not even taken full effect, and it isn't over.  People don't realize future cuts in the works.

As baby boomers retire, most of those jobs are not being filled.  They're being eliminated.  The idea is to downsize.

a lot of retirees who remain in area and can still afford high prices for everything are retirees who cashed out one job and now "consult."  But again, I don't think those salaries are sustainable at the level they are now.

It's not just in real estate that bubbles happen.  And I think the bigger issue in DC is salaries, not real estate.  Lets add to that that while DC was once thought of as a place where jobs were aplenty, it is increasingly becoming the case where for every position, there is a flood of overqualified applicants.  It seems to me that will put downward pressure on salaries.

As for IT, so many of those positions can be done remotely.  Expensive real estate makes teleworking more appealing to employers, contractors and feds alike.  And teleworking also allows people to move farther out.

Sure, these are all long-term trends.  And maybe things will still shake out to be okay.  But I think it's short-sighted and naive to assume that things can keep going up at the rate they are now.

And for the posters who always chime in that DC is priced low compared to capital cities in other countries, they seem to miss one crucial point:  capital cities in most other countries are not just the center of government but also the financial center and the center of commerce.  DC is not the financial/commerce center of country.  The dynamic of DC is very different from London or Paris or Tokyo.

The other thing is that these threads seem to assume that many people paying high prices for houses are not over-leveraged, but I think the "we make 300k HHI and are struggling" posts are evidence that  there are a lot of people over-leveraged.

Of course, there's also the argument that there is going to be some huge wealth transfer because of baby boomers.  But that assumes the baby boomers won't squander their wealth before they die.[/quote]

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