Wishful thinking or possible future?
My renting friends keep saying the market is going to bust. The housing market, because 5 years ago, they, with their single salaries could have bought in the city. Nothing big mind you, but a small bit of terra firma, or a very small studio condo. But they were too cool or what they could buy was not good enough, so they waited. And now we are here with vacant crack houses starting at 200K. So they (okay mainly just Bigg Al) keeps saying the market is going to bust, it is going to bust like the tech stocks. I say deflate. Also even if my house reverts back to the price I bought it at, I still got a house. Roof over my head. Bed to sleep in. Basement that floods. Mine, all mine. Unlike tech stocks I'm not left with just worthless numbers on a screen.Keep saying the sky is falling, as long as terrorists don't strike and the roof stays up, I'm good.
posted by Mari @ 8.4.05
13 Comments:
As long as driving into DC takes forever..DC prices will keep going up. Who wants to spend hours a day in the car.
Prices will not continue to rise. Salaries must rise inorder for people to purchase. Are you gonna buy 400 grand studio condo. This is all one big sham thats gonna crash soon. The only markets where stability and growth are going to occur are Vegas, NC-Raleigh, and Miami. I would flip my house and wait a year or two and purchase another house.
Perhaps DC may suffer a 10% - 20% decline in values (then again, maybe not). Regardless, those that didn't buy years ago will continue to be priced out of the market.
For the last ten years there have been the naysayers who insist that the market will collapse. With the exception of one scenario (terrorist attack) it is highly unlikely as the main industry for our region is booming (government) and there are no signs of a slowdown.
With rates the way they are a stagnation could happen for a year or two but a collapse or even a reverse of the market is almost impossible.
It seems like basic economic principle that housing prices will collapse eventually. But I think for every one of us homeowners, we all know at least half a dozen people who want to buy. I read somewhere in the Post that the rate of new construction building in the DC area would meet the need for 20 years. The rate of increase be slow or flatten but the price will never decline or contract.
Yup, I know a fair number of people who want to buy and range from those who just can't afford anything to people who are picky and can't afford that house with the yard and the good schools that's ready to move in that they could afford back in Nebraska. But housing prices could go down, how much I don't know. I've been told that in the 90s (during the Barry years) you couldn't give houses in DC away the market was so bad. Maybe instead of a terrorist attack, instead a really bad mayor will make housing prices go down.
MARION BARRY 2006!!!
Oh I forgot. Anonymous people, please use your initials so I can separate one anon from another anon. And when I'm moody I delete anonmous postings. Today. I'm in a good mood.
Loved your post. I still rent, and wish -- really wish -- I had bought four years ago. But divorce and other stuff ... In my building, foggybottom condo I rent, condos that were selling for 60K five years ago are now closing in on 200K and they are tiny studios with nearly $500 monthly maintenance charge. A townhouse on Snows Court (nice name for an alley right behind me) that was 170K is now probably well over 300K. I still see condos under 200K but competition for them is so intense, I dunno. Do I think there is bubble? To some extent -- prices can't keep going up 10%-plus a year that's impossible. I bought a house in Connecticut in 1987 (moved to DC in 98), and in 1989 during the bubble crash then, it lost nearly a third of value. Took 10 years before I could sell it above the mortgage, so that's made me a little gun shy about buying. Rent prices aren't bad, so if you save extra, what might otherwise have to spent on a mortgage and upkeep is invested, so renting isn't necessarily a total disaster if your monthly cost aren't bad. That's an upside. But do I think prices in the city will fall? One big plus for DC is that unemployment rate, which may be the lowest in the US. As long as there are jobs there will be buyers. But if the economy slumps in a serious way, housing prices have to take a hit. They always do. Other areas may take more of a fall. But this is all so much speculation, and if I were a rocket scientist about it I wouldn't be living in a rented condo. ;-)
I've owned my home in Shaw for 5 years now, and while I'm happy that my home has gone up in value in that time, I'm actually looking forward to a dose of reality in the market.
I moved here because there is much I like about the neighborhood. A neighbor woman brought me a plate of cookies to welcome me--she's lived here for two generations. The retirees next door sit on the stoop all day and keep an eye on things. Frankly I'm nervous about a neighborhood made up of wealthy newcomers, who have less of a tie to the community and less interest in preserving the neighborliness that I love in Shaw. Most of us are not here for a financial investment--we're here to live our lives.
I'm not hoping for a burst of a bubble, but a bit more sanity in the market would be good for the hood.
I moved because of the home prices and regret everyday of it. Just be patient renters. There may come a day that a home costs less than 600 grand. I'm thinking about coming back, but i will live in the suburbs of Baltimore before i move back into DC. The prices are absurd.
I would think sanity and mathematics dictate that the prices stabilize. It's wishful thinking to assume the prices will rise. How many salaries out there can afford this market? Not everyone earns the $80-120K salaries that seem to represent the newer buyers in DC - according to The Post that is.
Prices are going to quit increasing at the same rate. But I'm not sure economic logic dictates a drop. D.C. is a unique city: 1. Prices in D.C. were severely deflated in the 90s when much of DC was a bombed out shell, far worse than most other cities. Part of the snap in price increases reflects the snap back from artificially depressed housing environment. 2. D.C. is an unusually urbanized city packed into a small geographic space, with limited room for creation of futher stock, thanks to vertical caps on buildings. 3. Getting in and out of D.C. is a disaster. 4. Much of the increase occurred after lawyer salaries--followed by all other salaries in jobs that compete for lawyers--skyrocketed around 1999-2000. There are a lot of lawyers in D.C.
All of these factors suggest much of the rate increase has been rational. Lots of people, familiar with D.C. in the 90s, gasp at prices in East Shaw etc. But it's not that crazy when you realize how conveniently located East Shaw is. 5 min. from downtown. 5 min. from U Street and Logan. 5 min. from Capitol Hill. It should have been yuppified long ago. Nonetheless as rates increase, more people move to the center city area (as in natural), the housing situation is going to stabilize. I'd expect there will be a long period where prices don't increase--perhaps a decade.
I've said it before, & others have touched on some of these points. Housing price increases will slow, because of rising interest rates, but:
1)Many of the people moving into DC are retirees/empty nesters w/ lots more money than us. They've seen where interest rates can go, & under 8% is still a bargain.
2)The commute from the burbs wears on people, & since the prices in alot of cases aren't THAT different, many will put a premium on quality of life & move in.
3)Gubby spending is off the hook, & won't be slowing anytime soon. This "war on terror" is the new cold war. It will go on for decades, & won't be cheap.
4)DC metro area is the new IT capital of the US. Lots of us geeks are young, & don't want to live in the burbs.
5)Many people are buying places as a group. So while housing in DC may be getting too much for young single workers, it isn't out of reach for 2 or 3 of them.
I'm sure there are more reasons, but I really don't think prices will contract. The double digit gains per year will probably stop for awhile, though.
T
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