Housing Bubble GONE CRAZY in DC: Middle Class Priced Out!!

[rbajai]

I thought this baby was going to pop five years ago when I was still living in DC and saw how crazy the housing market was there. So when I began to read this article, I thought, "I remember when they were talking about the poor being priced out of the housing market." But lo and behold, they're not talking about the poor here. They're talking about the MIDDLE CLASS!!

When I was living in DC and looking for a house, I found that you had to be making at least $100K to be able to afford ANYTHING - but now, I suspect that is more like $150-200K and on up. Of course, people aren't making that much, which is why the article below points out that the middle class are being priced out of the market.

I thought the bubble was going to pop back then. But one thing I do know: it WILL pop at some point. What goes up must come down. It is economic law.

Note: Montgomery County, Maryland, is just north of DC and includes such suburbs as Bethesda, Rockville, and Silver Spring.

<snip>
The Montgomery County Council will consider a proposal today to require that 10 percent of homes built in new developments near Metro stations be set aside for middle-class families being priced out of the county's soaring real estate market.

Council member Steven A. Silverman (D-At Large) said the "workforce" housing initiative he is proposing would help people who earn 80 to 120 percent of the area's median income -- $89,000 for a family of four, or $71,000 for a family of two. That would essentially include families with incomes of about $50,000 to $100,000, he said.

http://www.washingtonpost.com/wp-dyn/content/article/2005/10/10/AR2005101001585.html?referrer=email&referrer=email

[mattclearing]

1. All true.

I'm actually selling out and bailing. I love DC, but I don't want to move to the boonies.

[Solo_in_MD]

3. DC and NYC make CA prices look sane

[drmom]

52. ...and that's saying something!

[Mayberry Machiavelli]

61. Believe it or not, some CA cities are still worse. Santa Barbara, S.F.,

San Diego, Santa Cruz. I've lived in both areas and moved away from San Diego a little while ago and still follow this...

I constantly wonder how many people in America can pay 600-700K and up for a 1400 square foot fixer upper like in some of these areas.

[rbajai]

7. Yes indeedy.

Also to note that the folks mentioned in this article - teachers, firefighters, policemen - none can afford to live even close to where they work.

When I was living there I remember stories on the news where policemen had to commute in from Manassas or Fredrick. Now they have to go even further out I suspect, because these places are getting maxed out as well. Boy I would hate to have to commute from West Virginia or Pennsylvania.

But the fact remains, the middle class now cannot even afford to purchase a home anymore in the DC area. Salaries haven't kept up either, especially amongst city, county, and state government workers.

Something's gotta give.

[MildyRules]

17. Then who is buying these

houses? My wife and I just sold a house (Crofton, Md) and bought another (Ashburn, VA). LOTS of new homes being bought out there. Seems SOMEONE is buying them--there can't be THAT many rich people ot there.

[mattclearing]

20. I don't understand it.

Efficiencies in my neighborhood are going for $220K+. That's why I'm selling...this can't be sustainable.

I can't imagine paying three times my mortgage for my place, but someone's going to do it.

[MildyRules]

21. Obviously, they can afford it

NoVA has a robust economy right now, so that's helping to drive prices up.

[lildreamer316]

32. You know; I really think

it is people still living off their credit. If they haven't screwed up thier credit rating, a bank will give someone making 50k a year a loan like that--irresponsible and greedy lending has alot to do with it. If they have been keeping up with their CC paymentsl then it is probably all gravy. Stupid, but true.

[rbajai]

43. I agree.

It's the only way people can afford it. I mean really - with all the bills people have to pay - then on top of that a $3000/month mortgage? I was making $57K per year in 2000, monthly take home pay was about $2800 per month. That wouldn't even cover an average monthly mortgage in the DC area, let alone all the other bills I have to pay. And I even live way below my means.

If you factor in cable TV, phone, utilities, cell phone, car payments, college loans, children's college loans, internet, housing maintenance/upkeep, gas, car maintenance, etc. - well you get the picture. It's debt that's keeping this housing market - and economy - afloat.

[Midlodemocrat]

44. Friends of mine just bought in MD.

He is a Secret service agent based in DC, she works with me. They paid $407,000 for a three bedroom, not too large home. Interest only mortgage, with the hopes that the price will continue to rise so that if/when they move, they will have some wiggle room.

The thought of an interest only loan terrifies me. When we moved from CT, we sold our house for $103,000, what we owed the bank, but we had paid $175,000 for it. The bubble burst and there you go. All our equity right out the window.

[LiberalEsto]

101. That happened with our first house in Maryland

We bought a house in Gaithersburg for $147,000 in 1990, when prices were high just prior to the B*sh I economic recession. We ended up selling it a couple of years later for $135,000, a $14,000 loss.

We bought another house for $153,000, and ended up selling that at a $3,000 loss six years later, despite a load of improvements.

But then we bought our current house, which has increased in value by at least 140% over 7 years. Our old houses would now sell for about $300,000 and $360,000, respectively.

Real estate prices rise and fall. Sometimes you win, sometimes you lose. But prices this time around have skyrocketed out of control, and it's hurting a lot of people.

[MountainLaurel]

8. Same here, tasteblind

Can't do it even on two middle-class salaries.

[rbajai]

10. Agreed!

We tried to base a home purchase on two salaries when we still lived in DC, but it didn't work out. We still couldn't stretch it. And at that time they hadn't come up with "no interest loans" yet.

If we hadn't picked up and moved to a more sane city we would have been still stuck in our one-bedroom apartment with increasing rent. There was nowhere else to go. We had to get out. Now if we had purchased a home in 1978, we would have made a killing in this high priced market. Ah, but the riches are not meant to be I suppose...

[rbajai]

11. By the way Mountain Laurel, where did you pick up your handle?

My favorite mid nineties computer game "Dust" by Cyberflix has a character in it named "Mountain Laurel."

[MountainLaurel]

27. It's a tree/bush

Typically found in Appalachia, and it just sort of came to me when I was looking for a handle.

[Daphne08]

2. Same here in California!

It's unbelievably insane! (We're planning on leaving in a few years since we can never afford a home here.)

[rbajai]

9. Good idea.

Go for it. We did it and are happy we did.

[architect359]

25. May have to do the same

Where did you go? Did you get a house? Here in SF, CA - well, you can imagine - the lowest I saw recently is 400K +/- to start and is a dump (rotting floor boards at first floor, iffy plumbing due to jerry-rigging over the years...) You'd have to sink even more $$$ to fix it up! Ideally, I wouldn't mind a fixer upper being in the profession that I'm in - but when more often than not, you either have to tear down or gut it, well, ... Ack, sometimes, I feel like I'm just complaining too much. Just saw this as an opportunity to vent, sorry. :) on the outside, x( on the inside. :D

[Buddyblazon]

74. Architect...

I recently bought a fixer upper in Denver. 113,500. In an up and coming old neighborhood where houses are going for 170-200k. Inexpensive for Denver really. But one of the few where there's still room for growth.

My sister just came for a visit from KC. Her and my brother and law acquire property for a living. Used to fix and flip. Now acquire and rent.

I had all these grandiose plans for the house. It's 90 years old. I wanted to do some stuff from underneath (in the crawlspace) because the floors aren't perfectly straight. But Sis came in and said, "No!".

She continually told me, "Do NOT over improve. You will lose much of the money you will make on the place.". She told me that I was way to concerned about the floors. They purchased many houses with floors that weren't perfectly straight. And on their first few houses they had over improved and actually lost money. That was about 50 house ago.

I guess I'm rambling. But my point is...as an Architect (my assumption based on your handle) I'm sure you want everything to be structurally perfect. I know I did. And I'm not an architect. However, if you're not looking at the house as the one you'll be in for the next decade or more, it may not be financially wise to spend all the time and money on making an old house...into a structurally brand new house.

The things that she did tell me to spend money on:
The front of the house. Curb appeal. Curb appeal. Curb appeal. Make it pretty. But she shot down my idea for a wrap around porch. Too much money. Instead focus on making the present portico pretty. Shrubs and flowers. Spend money on the old picture window by putting in one that opens.
The bathroom.
The kitchen.
Enclosing the back porch and turning it into a laundry room. Quick way to add footage and since it has a foundation underneath and a roof over it...exponentially cheaper than adding on from scratch.

Just some ideas. Sorry for the prolonged reply. But the hardest part for me is to get out of the "This Old House" frame of mind where I drop so much money that I lose money...and put myself into a "Family Handyman" mindset.

[Zynx]

71. Come to the Midwest. If you can stand the winters you can buy a hell of a

house here for $200,000 to $300,000 whereas $300,000 in California gets you virtually squat even though the economics of the areas are not that much different.

[phaseolus]

4. When I was in the area on business a few years ago...

...1998 or so, I remember reading in the newspapers that the housing market in the DC area was practically monopolized by ONE real estate firm. Their control over the market was tight enough that they were able to raise the commission to something like 10% of the purchase price, where it had been 6%, as was typical nationwide....

Has anyone studied what effect that company's had on the market? I wouldn't be surprised if they're a force for evil...

[DancingBear]

12. That never happened

The company was Long and Foster, and once other folks in the financial industry found out about it they hammered them.

There was one guy in particular who had a radio show, and just laced into them on a weekly basis.

They backed off.

BTW, they are big Repub donors, but a friend of ours is a broker for them and she's a good Dem.

OTOH, a former Media Relations guy for The Heritage Foundadation is also a broker for them - and works in the same office! I met him once (before i knew what he used to do), and I remember telling my friend how spooky he was. "Well", she said, "let me tell you what his previous job was..."

We're undecided as to what we're going to do when we put our house up for sale.

[MountainLaurel]

5. Unfortunately, yes

There was an article last year that showed that people making the average public servant income (around $37K a year), would be unable to afford to buy even a condo any closer in than, say, Loudoun County. It's disgusting.

Today's WashPost has another article about an area in Capital Hill where $500K gets you a rowhouse next to a corner where drug dealing is the daily business and where murders are in the double digits for the year.

My fiancee and I will probably be leaving in the next year or so as well. Even with the $$ we'd make selling his place, and with a two-income no-kid family, we just can't afford to buy a place big enough here for two people, two dogs, and a cat. The traffic is horrendous because more developments (including a greater percentage of high-density condos) are going up every day with no increase in infrastructure.

[rbajai]

13. Agreed!

You hit it the nail on the head, MountainLaurel. All the reasons why we chose to move out of the DC area, and glad we did. DC is nice and we miss it somewhat, but the living is very stressful there and will break your wallet. Other cities may not be as pretty, or as exciting, or have as much to do, but at least you can LIVE.

Gridlocked traffic, priced-out housing, stressed-out living? Not for me, thank you.

[MountainLaurel]

24. Yeah, quality of life was a HUGE issue for me

I'm not one of those people who gets personal satisfaction by being able to say "I'm the deputy associate assistant director for X Agency," and have found that when you're commuting two hours a day (for a 15-mile drive from DC to Annandale), there's no time for other activities. I can't imagine how people with kids ever get to see them.

Now, my commute is only a mile (lucked out on a job near our condo), but I nonetheless don't want to stay. The fact that our scooter has been stolen twice sitting right in front of our building chained to a signpost and two women have been raped in the park across the street, in what is considered to be one of the area's safest neighborhoods, has added to the situation.

[LynneSin]

6. It's going crazy everywhere, makes me hesitant to buy now

because I think that in a year the bubble is going to burst across the country.

[MadHound]

14. Actually, come out here to the Midwest

And you will find that the housing bubble is nowhere near as bad as on the coast. Two years ago my wife and I picked up twenty acres of land with outbuildings and a 2400 sq ft(granted, it was a bit of a fixer upper) house, all for the price of $140,000. This is in Mid Mo.

Travel to the nearsest small city, Columbia(pop, 100,000 plus university students) and starter homes are going for $50,000. Larger houses are in the $80,000-$150,000 range, depending on size and location.

So come on out to Mid Mo, and help turn this red state blue again.

[rbajai]

18. Wow...

Talk about affordability...

[LynneSin]

19. Well, there's one flaw with your plan

I don't want to live in Missouri or for that matter any other city that is more than an hour from the beach or a major metropolitian area.

I'm just a confirmed east coast gal who if she could, would buy a home somewhere in the Art Museum Section of Philly but can't afford it so she'll deal with downtown Wilmington Delaware instead. I'm about an hour from the closest beach (although I drive a little bit further for a prefered beach) and I'm 30 minutes from Philly. I could take a train and be in NYC in 2hours.

Plus my job (with a great salary) and family are all in this region.

[MildyRules]

22. And Lynne

since a LOT of people agree with you, they are willing to pay more to live there.

[shrike]

30. Having lived in both regions (East and Midwest)

I assure you, there are many sophisticated metropolitan areas here. And plenty of beaches, albeit not saltwater.

I live in the Midwest now, and while I miss the East (great place) I love the affordability here and the freedom it gives me. Unfortunately, there are tradeoffs and choices we have to make. Only you know what you can do without, and what you can't.

[MadHound]

31. And thus the bubble is inflated

I understand wanting to stay where you're at, I feel the same way about my home. But out on either coasts, you not only got people like you who are from the area and wanting to stay there that are boosting up housing prices, but in addition you've got hundreds of thousands of other people moving into the area every year, thus sending the housing market soaring. Something is going to have to give soon, and thus the bubble will burst.

And I'm just the opposite of you, I can't stand major metro areas. Been there, done that, got the pictures, don't want to go back. I guess I'm just a get back to nature type of guy;)

[LynneSin]

47. Plus, I've had Rick Santorum as my senator - I never want to go back

:scared:

[rbajai]

15. The debate is over

whether the bubble is across the country or just in certain "bubble cities" such as DC, LA, etc. Of course, we've seen an across the board rise in housing prices. But many cities have seen prices rise much slower, particularly in the midwest and the south. So if we see the bubble pop, it will hit the bubble cities especially hard, but other cities won't feel its effects as much. You know, the 'ol principle "the bigger they are, the harder they fall."

What WILL happen though is that it will hit the economy overall VERY HARD I suspect. It's the real estate market that's kept us afloat the last few years through the recession. Now if that crashes, there's nothing left. We could see this bubble cause more pain than the tech bubble burst of 2000.

[HughBeaumont]

16. The good time to buy down there would have been 5-7 years ago . .

My sister and her husband bought their house in Silver Spring near Briggs-Chaney for 215k. Her house is now worth 450k and it's a 25-year-old home with sewage issues. As you move North up Old Columbia Pike, the increase in bubble worth is astronomical. Anything near a Metro station is ridiculous.

If I had the money 5-7 years ago and bought 3 properties down there, I'd be semi-retired by now.

[nadinbrzezinski]

23. It is not only DC

it is also San Diego, where the median cost of a house is 650K, and other markets

This maddness will stop for one reaon and one reason alone, people will be unable to buy... no I am not a believer in the market place but it will happen

[ultraist]

26. 220k is the average price of a home in my area

I live in the Triangle, in NC and 220k is the average price of a home. 220k buys a nice three bedroom, three bath, 2000 sq ft, family home in a decent area. It's still very affordable here. 500k is the average price of a home in SF and other cities, but here, 500k will buy a beautiful, 4000 sq ft home on a large lot.

[salin]

28. I seriously doubt that 500,000 is the ave cost of a house in SF

back in the late nineties a tiny two bedroom house in Menlo Cost would go for $425,000 - certainly not the "ave" size house- and thus probably not the average price; just north of SF in Marin - fairly small homes were going for just under $1,000,000 in about 1999. I can't imagine that the housing market in SF was cheaper than that just north and south of SF.

Point that out because when on lives in an affordable market (which I do now, having moved back to Indiana) - we rather deflate what we think it means to have an expensive market.

Then again maybe prices in SF have seriously declined since I left the area in 1999.

[Midlodemocrat]

46. You're right. My brother just paid $1M for his 3500 square foot

house just north of the bay.

[ultraist]

49. 3500 sq ft is above average size. 511k is the average price in SF

I said average price of a home. SF has far more rentals than the national average (66%) and the average size of a home, is smaller than other regions of the country. I noted the average sq ft and price of my area, because average size and price are regionally specific. Obviously, sizes will be smaller in metro areas compared to the suburbs where land is not scarce.

Average price of home in SF is around 500k, as I posted:

http://www.homegain.com/local_real_estate/CA/san_francisco.html

Real Estate Market Data San Francisco San Mateo County California United States
Total Housing Units 79,568 133,038 5,411,903 115,904,743
Average Home Price $511,470 $608,083 $304,168 $173,585
Median Rental Price $506 $972 $563 $471
Owner Occupied 33%

[Midlodemocrat]

51. Here 3500 square feet is considered average

anything smaller is considered a starter home.

[ultraist]

53. In SF, average size is 2600 sq ft

$199 per sq ft is average price. $199x2600=511k-- average price, although that is dropping, according to US Census Bureau stats.

http://www.homegain.com/press_center/press_releases/show_release?pr_year=2000&pr=2000_09_21

By comparison, cities with the priciest real estate by the square foot were:

San Francisco Bay Area - $199 per square foot;

BTW, I'm not basing this on just my opinion or what a friend paid, but on stats that originated from the US Census bureau. Perhaps your personal perspective on this varies somewhat from the overall reality. What facts are you basing your assertions on?

[Midlodemocrat]

54. The prices in San Fran are dropping?

Wow.

My brother bought his first house in Concord in 1998 for $350,000, 2200 sq ft. Sold it in 2003 for $745,000. Doubled the price in five years. Can you imagine?

[ultraist]

58. This month yes.

Why don't you look up the facts rather than just cite your brother's situation? Reality is not based on your bro's situation.

There were a couple of recent articles about the housing boom beginning to slow, in the NYT and the WP. Sales prices are slipping and the inventory on the market is growing.

Yes, I can imagine. I'm in real estate investment and have been flipping properties for ten years. I also own rentals. ;)

[Midlodemocrat]

63. Because frankly, I'm not that interested

and I am always far more interested when a person has anecdotal evidence rather than facts.

Cheers.

[ultraist]

66. Ok.

:rofl:

Cool by me. :toast:

[Zynx]

69. The median price in California(the entire state) is now above 500

from the most recent data I saw from about a month ago. It's possible that the data there isn't too current. Median prices nationwide are well above 200 now.

[Demobrat]

80. No, prices haven't declined.

I live in SF. The median home price is about $690,000. $500,000 will get you a 600sq ft 1 bedroom condo on a noisy street.

[rbajai]

48. I LOVE Raleigh-Durham.

Always have. Beautiful. Would move there in a heartbeat...just hasn't worked out for me...

Nice to hear that housing hasn't gone THAT crazy there...

[Mayberry Machiavelli]

64. Dallas prices are like this too. Noncoastal U.S. doesn't have the

bubble phenomenon.

Granted I find the coastal big cities of the West and Northeast to be much more desireable for scenery, culture, and people more politically like me.

I'm hoping the price madness stops soon so it can be more affordable for us to move back to CA (sorry to those who just bought homes there recently).

[LiberalEsto]

29. I live near Rockville, MD, and couldn't buy here today

The aging ramblers and split levels in my neighborhood - built in 1967 - are now selling for $500,000 or more. When we moved here 7 years ago, houses were $200,000, tops. We couldn't possibly afford to buy here today.

I want to know who on earth can afford a $500,000 house these days. How do they do it? Can people actually manage mortgage payments of $3,000 a month? What if one member of a working couple gets seriously ill? What if someone has triplets? What if someone gets fired?

Our kids are both in college and up to their ears in loans. I can't envision them being able to afford anything here in Montgomery County, MD, even an apartment.

On top of the high cost of housing, everyone's heating costs and transportation costs are skyrocketing. Health insurance costs and copays are rising disproportionately - we've gone from a $5 copay to a $15 or $25 copay in just 5 years, and we're lucky to even have coverage. College costs are through the roof.

How are people supposed to live these days? People talk about the erosion of the middle class. I think the B*sh misadministration is DELIBERATELY trying to wipe out the middle class with its policies. Eventually there will be a ruling class of billionaires, and the rest of us will be impoverished serfs.

If the Democrats can rally around one cause. it should be protection of the middle class as an endangered species.

[MildyRules]

33. Then WHO is buying all these

homes in new developments proliferating all over NoVA and Mont. Co??

[Ravenseye]

37. Probably still investment people

People saw all the money made from housing investments in the past decade and are still doing it. or just starting. They think they'll make their money back.

It's like in the early nineties. Comic book prices exploded. Older comics that once cost 5 or 10 bucks suddenly were priced at 20-40 dollars or more. New comics sat on the shelves for one week, then suddenly AT LEAST doubled in value. Some comics would sell out so fast, and have media coverage (like the 'death of superman') and people would buy and buy and buy. They thought they'd be worth something.

Plenty of people made money selling comics during that time, or even speculating. Buying some comics at 4 bucks each then turning them around and selling them a few months later for double.

Then it imploded. All these comic book companies had published all these comics, and special ediiton covers, and people had paid the exobrorant prices for them....only to realize that there wasn't anyone to buy them. Everyone had at least 2 copies of the death of sduperman still in it's bag....why would they buy one from you.

Prices plummeted. The comic book industry almost died because of it.

Think of that and think of houses. People are still speculating. The prices will drop when peopel realize that there is nobody there to buy their homes. Then you'll see a crash, that's what I think.

[MildyRules]

39. I'd buy that if these houses

were being rented; they are not. People are buying them and living in them. I don't think we'll see a crash here in the DC area. Prices will level off and we won't see double digit growth; heck, they may even decline a bit, but I don't see the prices crashing.

[ultraist]

67. I agree, I doubt prices will crash in most areas

Prices are already starting to decline a bit in some areas and the high appreciation rates cannot be sustained, so yes, there will be some slow down but unlikely a crash.

[MildyRules]

70. Very true

There is no way the market here in the DC area can continue to grow at 20%+ each year. Our house isn't even finished being built yet, and already it's appreciated by 8%. That can't continue. It will ease off to 0-3% soon. Doesn't matter, we plan on living in it for at least the next 20 years.

[Zynx]

90. Show me a bubblesque growth rate that hasn't been followed by a

price correction. Look at any market whether it is the stock market, housing market, tulip market, etc and prices correct. They do not level off and wait for fundamentals to catch up. Currently, the fundamentals do not support anything close to the real estate valuations in DC, Florida, California, New York, Boston, or Arizona. Fundamentals(population and income growth) are not improving at a double digit rate. I'm sorry, it just ain't happening. When stocks far outstripped their fundamentals we saw what happened. Even stocks like GE can't trade for more than 25x earnings and they declined along with the trash. The same is true for housing, though it is slightly less volatile.

[MildyRules]

91. Exactly--

the key is "less volatile." Even when the housing market was "corrected" in DC and in Calif before, they did not crash. We'll reach a period of no or some negative growth, but the markets will not crash. Especially in areas where demand exceeds supply.

[LiberalEsto]

42. Drug dealers, maybe?

And occasionally people who buy a house and rent out rooms to 6 to 10 other people for help paying the mortgage.

[MildyRules]

45. Nope

That ain't it. Just regular families.

[ObaMania]

55. Status minded dopes..

.. who wind up being house poor and virtually have to leave these houses unfurnished.

I will LMAO this winter when their $600. - 700. heating bills come in.

I live in Loudoun County, VA which is like the US's second fastest growing county and bought new 2 years ago. No way in hell I could buy the same house I live in today. Within a year, my house appreciated by 40%. I'm starting to see a leveling off of prices in my community now, and with that go all my dreams of riches and taking the equity to buy a reasonable house in NC to retire.

[MildyRules]

56. What development? Who was the builder?

We just bought in Loudoun County.

[ObaMania]

59. Belmont Greene, Caruso Homes! n/t

[MildyRules]

60. I know the area well - NICE place

Us: Villages of Waxpool, NV Homes.

[ObaMania]

100. Nice... We almost bought an NV in our development.

Hey, it could be worse though.. S. Riding and Lansdowne have really skyrocketed. What kills me are the 1M townhomes in Lansdowne :silly:

[LiberalEsto]

62. I wish I knew

All the WashPost real estate ads for new-built homes depict mansions. Places with two or three car garages, multiple fireplaces, cathedral ceilings, sun rooms, granite countertops, turrets, moats, etc. The prices are unbelievable.

There is not a single ad in the Post for a new house of modest appearance. Nobody is building simple ranches with 3 bedrooms, 2 baths, a carport, etc. No developer is going to waste money building houses like that on the unbelievably expensive pieces of land in the DC area.

We need a new GI bill to create affordable housing not only for today's Iraq veterans, but also for the struggling veterans of Vietnam.

We need to insist that places be set aside to build moderately priced homes, and enforce that rule. Montgomery County, Maryland, does have such a requirement, but local developers, who contribute hugely to local political campaigns, always find ways to wiggle around it.

[MildyRules]

65. You must be looking

at a different WaPo than I'm getting. I see houses of all types advertised there: single family, town homes, condos, etc. Of course NEW construction ads are going to emphasize the bigger homes, but the existing home market is vibrant as well. I know; I just sold mine. BTW, I've yet to see any moats!

[LiberalEsto]

76. I was discussing new construction only

Of course there are plenty of homes of all types being sold. I'm just disgusted that the only new stuff being built is intended for the rich.

[MildyRules]

81. Then there must be an awful lot of "rich"

because they are building thousands and thousands of new homes here.

[LiberalEsto]

83. They seem to multiply like cockroaches..... nt

[Romulus]

36. I live near Brookeville

and a house on the block (c.1958 2-brm ranch) is on the market for $518k!!!

I second your line:

I want to know who on earth can afford a $500,000 house these days. How do they do it? Can people actually manage mortgage payments of $3,000 a month?

We looked into selling our house (been here since 2002) and buying a 5-acre place in Western Howard this year (spouse has a horse she currently keeps in a boarding barn down the road). We make almost $200K in household income, and we couldn't afford a $500K mortgage. At least not afford the mortgage and have a life at the same time . . . so we refinanced for 30 years and renovated the kitchen, instead.

[Ravenseye]

38. Friend of mine jsut bout a 500k near Boston

They had been paying I think 2300 a month in rent, and then bought a place for just under 500k. I think their payments are in the 2700 a month range. They both work, and can barely afford it. They're just scraping buy, but they just figured they had no choice. paying 2700 a month towards a mortgage on a house you own they see as better than paying 2300 a month on rent.

I would agree with them generally, but I think that right now it might be a better time to actually be renting, than buying. Prices keep going up, but I think when the time comes and it hits that point, people who are stuck might be screwed.

I just can't see this continuing. Plus banks up in those areas are giving mortages to people for 500k that they wouldn't give in other parts of the country. My wife and I make about the same as they do up in Boston and no way we would have been approved for half a million here.

[ultraist]

95. Boston is now the most expensive city to live

http://www.boston.com/news/local/massachusetts/articles/2005/09/08/report_rates_boston_most_expensive_city/

[rbajai]

50. Excellent post!

All good questions. I scratch my head over these things too.

[LiberalEsto]

57. The class gap is growing in Russia too

Raw Story has a link to a story about the way the very rich live in the former Soviet Union -- in gated communities, with almost no contact with the rabble (who earn an average of $250 a month) outside the gates. Isn't unfettered corporate capitalism "wonderful"?


http://www.guardian.co.uk/russia/article/0,2763,1588617,00.html?gusrc=rss

[Mayberry Machiavelli]

68. Hey LiberalEsto, I grew up in Monkey County, parents still in G'burg.

We should do a DC get together when I'm in town visiting sometime, Bethesda or Dupont Circle or Adams Morgan or Georgetown!

Although for whatever reason, the idea of GEORGEtown seems distasteful these days...

[LiberalEsto]

77. Matcom is from Derwood.

I'd love to meet you and any other DUers. I've got college-age kids who hang out in Georgetown.
Why don't we start planning a meetup?

[Mayberry Machiavelli]

79. Yeah but he lives in Boston area now I think. I'll be back east in Feb,

if I do it right I might just hit DC, NYC, and Boston but at least 2 of the 3.

Added you to buddy list, will PM/email when I have some plans...

[formernaderite]

85. remember alot of people are putting huge downpayments on

these housees, courtesy of the house they just sold.

[MildyRules]

87. Very true

That's how we afforded our new home--we had a lot of equity from the old one.

[Captain Hilts]

98. Crappy ChChMD split level w/o driveway and lousy kitchen: $750K

And the kitchen needs to be gutted. Half a driveway. No garage.

BUT walking distance to Friendship Heights or Bethesda Metro. Near Norwood Park.

That's Chevy Chase.

[11 Bravo]

34. I'm in Fairfax County ( just west of DC).

We bought a two-story, 4 bedroom, 2 bath house in 1991 for $195,000. Today our realtor says that if we want to list it with her, she would list it for $575,000 and claims that we would eventually get $600,000 + for it. It's crazy! The house is a 50 year old shoe box!

[MildyRules]

35. Sell!

Move out to Louden county with me!

[11 Bravo]

40. I can retire from teaching next year and have been offered a job

at the Udvar-Hazy Air and Space Museum. I may be seeing you in Loudon sooner rather than later!

[MildyRules]

41. Cool!

One thing about the UDASM--do you know they charge $15 for parking??? For the Smithsonian, I find that unconscionable!

[Tracer]

72. The bubble is bursting, and I can prove it.

When HGTV & A&E jump on the bandwagon with shows like "Flip This House", "Property Ladder", "Buy Me", "Sell This House" etc., you can be sure that the housing bubble has jumped the shark.

[Zynx]

82. That is the sure fire sign. Also, when you see real estate investing clubs

that never existed in any serious number before. That's just like the stock investing clubs of the late 1990s. The current real estate market is one of the most clear cut bubbles I have ever seen in my study of economic history. One thing we know about bubbles is that, once they actually form, they pop. There's no soft landing for bubbles. Markets simply correct their excesses.

[Mayberry Machiavelli]

73. I think the housing bubble will burst, but prices won't completely crater

like comic books or beany babies or tech stocks, all of which can have essentially zero value (tech stocks I'm mainly talking crap companies with no earnings that people were speculating on).

There will still be a demand for people to live in these big coastal cities. There will still (hopefully) be jobs there. The land and the home will have intrinsic value.

So while home values have a LOT of room to come down it won't be quite the same as other speculative phenomena I think.

It WILL have a humongous impact on the economy as a whole, and on consumer confidence etc...

[Zynx]

75. It could be on the order of the S&P 500 correction.

I could easily foresee various housing markets decline by 25-40%.

[Mayberry Machiavelli]

78. Oh yes... certainly that much.

[formernaderite]

84. There are plenty of great neighborhoods in PG county

that are just as close if not closer to the capital than Montgomery county. This seems to be largely a white issue based on fear of living in a majority black county, and perhaps a bit elitist. One of my oldest kids just helped his best friend move into his first home in Mt Rainier a cool, hip neighborhood in PG....house is huge, needs some work. He looked in Brentwood and Riverdale too, these are great working class neighborhoods with older turn of the century houses and alot of Deco and mid-century. I also know that old Bowie, Cheverly, and New Carrollton have many nice neigbhorhoods....I mention these because they're still very mixed ethnically, if not majority white like Bowie.

[MildyRules]

86. One problem with PG County -

SCHOOLS. That's the reason many won't buy there.

[formernaderite]

93. Come on....there are crappy schools in Montgomery county too

and there happen to be some great schools in PG. The schools may have more lower income and low test score kids, but that doesn't diminish what they can teach.
I know some folks who live in silver spring in montgomery county, and have kids who attend an elementary school in langley park...this school has great resources, but lousy test scores. Why? A transient foreign population. Her kids, who are very bright are thriving even though their school looks like many PG county schools. Remember, except for some very poor neighborhoods in PG, most of the schools face the same problems as in every other district.

[MildyRules]

94. The fact of the matter is

PG County schools score 150-200 points lower on the SAT than do schools in the other counties surrounding DC. Yes, there are crappy schools in EVERY county, but as a whole, PG county schools score much lower than their counterparts. That's one of the main reasons housing prices are much cheaper there; people would rather buy elsewhere. I'd have loved to have saved 50% and bought in PG County...I was just not sure I'd ever be able to sell when the time came.

[formernaderite]

102. my point was that the sat scores reflect the population

not the schools. The teachers graduate from the same universities as those who teach in montgomery county. As you saw from my langley park example, even schools in montgomery county can test low, if the population is largely immigrant or minority. That doesn't mean that children who are ready to excel can't. Fact is that minority populations score similarly whether in montgomery or pg county. There's just a whole lot more minority in pg.

[Tierra_y_Libertad]

88. The market is shrinking. The speculators are selling to the speculators.

Just a matter of time until all the McMansions will be sitting empty or prices will drop like an lead turd.

[MildyRules]

89. That's only if supply far

oustrips demand. I'm not seeing that in this area at all.

[Tierra_y_Libertad]

97. But, where is the "demand" coming from.

I live in a slightly rural area with acreage limits. The prices here are still going up. But, and it's a big but, the only people who are able to buy are those selling overpriced houses to buy overpriced houses. Effectively, new buyers are out of the market. At some point, the only people who will be able to buy are those who already bought and "own" (with whopping motgages) their own crackerbox monstrosities. The neuveau riche have already bought their "see me I'm somebody" displays of square feet. Whose left?

[MildyRules]

99. People like me and you

I was able to buy a new house because I made money selling my old one (we needed to move to VA from MD). If I could NOT have sold my old house, I would not have been in a position to buy a new one. A family who owned a townhome bought my single-family home. A single mother who was renting, bought our buyer's townhome. In an area like DC, we have a lot of demand and supply is barely keeping pace. That's why the values are so high.

[CitrusLib]

92. I live in a county that has seen one of the highest % increases in price.

I bought my home in the spring of '04 and could not afford to purchases it 18 months later if I had to. It went up 40% in value while the family income stayed level (thanks to gas prices). It blows my mind.

[ContraBass Black]

96. Every time I go home to Manassas, (Prince William County)

It seems that another large forest has been replaced with a development of very big houses built very close together.