The Washington DC housing market is not a bubble for 3 reasons:

(1) This is a government, defense, and high-tech center. I believe we have either the 3rd or 2nd-worst traffic in the country. Everyone wants to be here, because this is where the jobs are. That puts upwards pressure on house prices, and it isn't going away any time soon.

(2) There is a TON of money running around this town. It's clearly shown by the fact that people can handle $3500-4500/month mortgage payments. And because of the level of incomes here, that's not going to change any time soon, either. As my dad said, this is as close to a recession-proof town as you'll find.

(3) Shortage of land. Every bit of unbuilt land - even small plots that are only big enough for 10-20 houses - is being gobbled up by eager builders who sell half their houses when the houses don't even exist, and will not be built until 6 months after they're sold!

In this area, we have a total seller's market. The situation may drift back and become somewhat more of a buyer's market (and I actually would see that as positive), but there's no way it's going to become a total buyer's market. I don't know how young families buy into Washington, but it really doesn't matter. SOMEONE is buying, as fast as they can!

Actually it has. If you don't think there was a housing boom in 2003--you maybe weren't paying attention to the market. Our house DOUBLED in value from 2001 (320K) to 2002 (645k). We paid waaaay to much for our house and are really only now recovering a leetle bit from body blows of the last 11 years.

Are you really going to take the stand that the housing bubble reached its peak in 2003? Do you want to revisit that statement?

Remember, cycles in markets occur from peaks to valleys, not from one random point in time in the upswing to another.

Anonymous wrote:

Anonymous wrote:Clearly you guys have not lived in this area very long. About every ten years or so it gets like this.

Well, it hasn't been 10 years since the last housing boom.

Actually it has. If you don't think there was a housing boom in 2003--you maybe weren't paying attention to the market. Our house DOUBLED in value from 2001 (320K) to 2002 (645k). We paid waaaay to much for our house and are really only now recovering a leetle bit from body blows of the last 11 years.

Anonymous wrote:At least 5 more years of up

I sure hope so. Then gonna take my money and run from the DC area.

At least 5 more years of up

From the second article:

"Over the past year, large private-equity firms such as Blackstone Group BX +1.51% and Colony Capital have spent billions of dollars buying up single-family homes. Blackstone says it has purchased 20,000 homes since early last year. It is buying more than $100 million worth of homes a week and has spent $3.5 billion so far."

PE firms are not HFs, but similar concept here.

Huh? Hedge funds are buying houses? Please explain.

"Yes, it will not be the same kind of bubble. But a bubble fueled by Federal MBS buying and government mortgage guarantees, and low-down payment FHA loans (has the FHA been bailed out yet? or has the Fed managed to pump enough money supply to avoid it? http://www.nytimes.com/2012/11/17/business/audit-shows-housing-agency-facing-shortfall.html), is still a bubble. But yes different than bubble from 'creative' bank financing.

Also, to some degree, this *nationwide* bubble is fueled by an inventory pinch, which results from hedge funds and private equity scooping up property and pushing inventory down, ie supply-side bubble versus our earlier demand side bubble. They are looking for yield b/c the Fed has driven rates so low.
http://online.wsj.com/article/SB10001424127887324034804578346800317118568.html"


+1

Yes it has nothing to do with low interest rates. No bubble here.

The boom is just starting.

Anonymous wrote:
http://blog.redfin.com/blog/2013/04/the-2013-real-estate-bubble.html

Sorry, but, yeah...this is a mini-bubble.

22,000 lost gov't and gov't contractor jobs (read: high paying) slated to be replaced by construction and service industry jobs (read: low paying) does not a successful local economy make.

Sorry, but DC's boom over the past decade is over. Budgets are flat, if not being cut, and to those saying "but look, Sequestration hasn't affected jobs here!"...please keep in mind that Sequestration hasn't even occurred yet, be ready to start reading headlines come July (when the cuts are actually scheduled to happen). You'll have extremely upper class, and then lower-middle class jobs...this is evident to anybody who has actually worked at a DC gov't contractor (for instance, my five years spent at Lockheed at various locations in the DMV). All the jobs they are cutting are redundant senior management roles that paid for these ~$400-$500k houses in the 'burbs. Those jobs are declining and you're left with people like me, an analyst whose direct manager was a division VP. Enjoy!


You realize a new fiscal year begins in October, right?

Oh goodness! You know, in my years as a financial analyst at the largest defense contractor in the world I never learned that budgets start in October! Wow...thank you!

Oh wait...I did know that, and you should know that furloughs aren't slated to start until the beginning of 3Q'13. FAA was first (heard about them recently?), IRS is next (89k jobs), then DOD (180k jobs), then the rest of the agencies. Your failure to understand that a growing housing market relies on job GROWTH an not simply job STABILITY is shocking to say the least...

Anonymous wrote:

Anonymous wrote:http://blog.redfin.com/blog/2013/04/the-2013-real-estate-bubble.html

Sorry, but, yeah...this is a mini-bubble.

22,000 lost gov't and gov't contractor jobs (read: high paying) slated to be replaced by construction and service industry jobs (read: low paying) does not a successful local economy make.

Sorry, but DC's boom over the past decade is over. Budgets are flat, if not being cut, and to those saying "but look, Sequestration hasn't affected jobs here!"...please keep in mind that Sequestration hasn't even occurred yet, be ready to start reading headlines come July (when the cuts are actually scheduled to happen). You'll have extremely upper class, and then lower-middle class jobs...this is evident to anybody who has actually worked at a DC gov't contractor (for instance, my five years spent at Lockheed at various locations in the DMV). All the jobs they are cutting are redundant senior management roles that paid for these ~$400-$500k houses in the 'burbs. Those jobs are declining and you're left with people like me, an analyst whose direct manager was a division VP. Enjoy!

You realize a new fiscal year begins in October, right?

Don't forget that there has been a 2 year salary freeze for federal employees and talk of extending those freezes as well.

Anonymous wrote:

Anonymous wrote:http://blog.redfin.com/blog/2013/04/the-2013-real-estate-bubble.html

Sorry, but, yeah...this is a mini-bubble.

22,000 lost gov't and gov't contractor jobs (read: high paying) slated to be replaced by construction and service industry jobs (read: low paying) does not a successful local economy make.

Sorry, but DC's boom over the past decade is over. Budgets are flat, if not being cut, and to those saying "but look, Sequestration hasn't affected jobs here!"...please keep in mind that Sequestration hasn't even occurred yet, be ready to start reading headlines come July (when the cuts are actually scheduled to happen). You'll have extremely upper class, and then lower-middle class jobs...this is evident to anybody who has actually worked at a DC gov't contractor (for instance, my five years spent at Lockheed at various locations in the DMV). All the jobs they are cutting are redundant senior management roles that paid for these ~$400-$500k houses in the 'burbs. Those jobs are declining and you're left with people like me, an analyst whose direct manager was a division VP. Enjoy!

You realize a new fiscal year begins in October, right?

you realize sequester is supposed to last 10 years, right? (not saying it will necessarily)

Anonymous wrote:http://blog.redfin.com/blog/2013/04/the-2013-real-estate-bubble.html

Sorry, but, yeah...this is a mini-bubble.

22,000 lost gov't and gov't contractor jobs (read: high paying) slated to be replaced by construction and service industry jobs (read: low paying) does not a successful local economy make.

Sorry, but DC's boom over the past decade is over. Budgets are flat, if not being cut, and to those saying "but look, Sequestration hasn't affected jobs here!"...please keep in mind that Sequestration hasn't even occurred yet, be ready to start reading headlines come July (when the cuts are actually scheduled to happen). You'll have extremely upper class, and then lower-middle class jobs...this is evident to anybody who has actually worked at a DC gov't contractor (for instance, my five years spent at Lockheed at various locations in the DMV). All the jobs they are cutting are redundant senior management roles that paid for these ~$400-$500k houses in the 'burbs. Those jobs are declining and you're left with people like me, an analyst whose direct manager was a division VP. Enjoy!

You realize a new fiscal year begins in October, right?

I understand that in many European cities, the home ownership rates are in the sub-20% range ... who actually owns the homes?