is Washington DC in a bubble again?

Submitted by patb on February 5, 2013 - 11:20pm
yes
80% (8 votes)
no
20% (2 votes)
Total votes: 10
Submitted by UCGal on February 6, 2013 - 9:07am.

Housing bubble - or out of step with the real world type bubble?

The latter is for sure.

Submitted by no_such_reality on February 6, 2013 - 9:24am.

DC is a bizarre microcosm.

Lots of DINKS and lots of highly compensated people, lobbyist, lawyers, consultants all being paid by people that want to feed on the government. Think Solyndra.

Median household income was $84.5K. Carmel Valley's median income is $82K. Just think, an entire metro area making more than Carmel Valley on average.

And the average Federal worker has a total comp package of $107K (includes retirement and health benefits). I'm guessing that's a $80K salary.

http://online.wsj.com/article/SB10001424...

All that said, DC also has a disproportionate amount of highly educated, highly motivated people.

FYI, the census.gov site is updated, 2010 census data is available down to the CDP level.

Submitted by sdduuuude on February 6, 2013 - 11:06am.

I think you have to go back to the early days of Piggington and run the numbers that Rich ran back then to determine.

The key numbers are the price/rent and price income ratios.

What do those look like ?

Submitted by moneymaker on February 6, 2013 - 8:04pm.

When you say DC are we refering to the Virginia area as well? Everywhere the Metro runs? I would guess the actually population of DC is not all that high. Just a minute...

Submitted by moneymaker on February 6, 2013 - 8:10pm.

Washington DC has a population of ...632K, more than I would have thought. More than 50% black as well-http://quickfacts.census.gov/qfd/states/11/1150000.html-total population is growing @ 2.9% about the same as GDP.

Submitted by spdrun on February 6, 2013 - 8:30pm.

He was specifically speaking to the city, though northern VA ain't cheap either. Trinidad used to be an utter toilet (streets closed by cops due to gang violence) as recently as a year ago, if it isn't still.

Submitted by paramount on February 6, 2013 - 11:24pm.

no_such_reality wrote:

All that said, DC also has a disproportionate amount of highly educated, highly motivated people.

I guess this is true relative to the country overall, but at least in my field it's much easier to go from California to DC, than the other way around.

We rarely hire from the DC area, and we generally feel that jr/mid level here is equal to a sr+ in DC.

That's because employers can be more choosy in California.

Many who do just fine in the DC area in terms of their job and skill level, would not survive in Cali.

Submitted by kev374 on February 8, 2013 - 1:45pm.

It's not only DC, it's everywhere. Orange County is also in a bubble... prices have increased sharply, what used to be listed for $330-350k for a small townhome is now listing north of $400k, so $50k jump in a year? LMAO! Based on what fundamentals? This is nothing but pure bid-up speculation.

And of course the inventory situation is pathetic...if you exclude properties priced 25-30% over 2009 prices (new underwater listers trying their luck) and also exclude junk dilapidated inventory there is virtually nothing for sale!

Submitted by no_such_reality on February 8, 2013 - 1:51pm.

Part of that is the insanely cheap cost of money, particularly for Government supported conforming loans. It's higher now but for a while there, it was running 3.125% with no points on conforming.

The loan payment on $400,000 is less than two bedroom rents.

Submitted by spdrun on February 8, 2013 - 1:53pm.

$50k jump in a year, but $100k fall since 2006-7 for Orange County. Whereas DC never really fell from bubblier times.

Submitted by paramount on February 9, 2013 - 12:15am.

Remember, it's not that things are worth more, it's that the dollar is worth less.

Submitted by CA renter on February 9, 2013 - 12:48am.

paramount wrote:
Remember, it's not that things are worth more, it's that the dollar is worth less.

Bingo. Worth less, and the price of using someone else's dollars to leverage up costs less as a result. Gosh, if only we could figure out how this ends...

Submitted by kev374 on February 9, 2013 - 9:57am.

spdrun wrote:
$50k jump in a year, but $100k fall since 2006-7 for Orange County. Whereas DC never really fell from bubblier times.

2006-2007 prices were supported by funny money which doesn't exist anymore so those price levels are not relevant ;)

Submitted by spdrun on February 9, 2013 - 10:39am.

^^^

Except in DC, apparently.

Submitted by AN on February 9, 2013 - 11:45am.

CA renter wrote:
paramount wrote:
Remember, it's not that things are worth more, it's that the dollar is worth less.

Bingo. Worth less, and the price of using someone else's dollars to leverage up costs less as a result. Gosh, if only we could figure out how this ends...


I thought leveraging is a recipe for going broke?

Submitted by CA renter on February 9, 2013 - 6:19pm.

AN wrote:
CA renter wrote:
paramount wrote:
Remember, it's not that things are worth more, it's that the dollar is worth less.

Bingo. Worth less, and the price of using someone else's dollars to leverage up costs less as a result. Gosh, if only we could figure out how this ends...


I thought leveraging is a recipe for going broke?

It is when it all comes falling down! Using leverage in order to buy things up in anticipation of future price increases is a recipe for disaster. Many people are ignoring the disposition plans for many of today's institutional buyers who (IMHO) are underestimating the true costs of maintaining all of these units over time. They are getting decent returns on these rentals because of the tight rental market (which is an anomaly caused by the foreclosures and the withholding of inventory at the same time), but those returns will look pathetic when (IF???) interest rates ever normalize.

Submitted by patb on February 9, 2013 - 9:40pm.

i am using the MSA

Submitted by patb on February 9, 2013 - 9:41pm.

flippers are trying to sell properties in trinidad for 550K