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Old 09-14-2006, 06:39 PM
 
27 posts, read 117,028 times
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They say the real estate market is on the bubble what do that mean for Northern Virginia the homeowners will they loose money meaning that $500k+ plus house will be worth a lot less soon?
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Old 09-14-2006, 06:53 PM
 
Location: In the City of Williamsburg, Va
291 posts, read 1,251,174 times
Reputation: 92
Default When is this happening?

Is it just North Va or all of VA? This is the first time I heard of this. I always heard that real estate was overall a good investment, safe and always increased unless of course you lived in bad area or in a town that had tons of affordble housing. In our case, we live in the so so area, but there is hardly any kind of affordable housing and our values more than doubled cause of that...I like to learn more bout this bubble bursting, when will and where will it happen? Thanks.
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Old 09-15-2006, 09:19 AM
 
146 posts, read 766,842 times
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Default Northern VA

Definitely a bubble brewing here. Median home price has doubled in five years or so. Tons of overbuilding, rents far below monthly mortgage payments ($1600 vs. $2600 in my place). A townhouse runs you $350K, a SFH $500K. Hell, a 2-BR condo is $300-325!
I heard Va Beach might be bad too, but the DC area is way overpriced. Buyers like me are either priced out or sitting on the fence. Do some Googling and check out the Craigslist DC housing forum for plenty of links to stories.
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Old 09-15-2006, 06:02 PM
 
Location: In the City of Williamsburg, Va
291 posts, read 1,251,174 times
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Default Thanks for the information!

It is much appreciated!
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Old 09-15-2006, 10:28 PM
 
73 posts, read 125,972 times
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Look, the "bubble" in Northern Virginia real estate will not burst. Home prices will increase at slower rates over the next few years (0-3% rather than 8%), but so long as the unemployment rate remains next to zero and wages remain high, the "bubble" will not burst. It's a simple formula of supply and demand and demand for housing has not been exhausted. A real estate bubble bursting would show a distinct and rapid decline in real estate prices and Northern Virginia isn't even close to that.
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Old 09-16-2006, 05:54 AM
 
Location: In the City of Williamsburg, Va
291 posts, read 1,251,174 times
Reputation: 92
Default Well...

I have often heard that real estate in general is often a vefy safe investment cause most homes and land tend to increase throughout the years and not descrease, unless of course its a real rough area. I do think Northern Va has little to worry bout and I had heard its stabalizing myself and will gradually go up again, as its a cycle. I also believe my neck of the woods will also do that cause its a tourist area and littered with rich people. The thing is no one has a magic ball and predict the future here either. life is a gamble at times, live it and worrying bout it surely will not fix things, the only thing worry does is add more and more of the same Take care.
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Old 09-18-2006, 09:18 AM
 
146 posts, read 766,842 times
Reputation: 100
Default No bubble?

Hokie, interesting opinion but it flies in the face of facts. Inventory is up 112% since last year and prices are down 8%: http://housing-watch.com/regionview....ity=Washington
Additionally, even the National Association of Realtors concedes that prices in overheated markets like DC will decline at least until mid-2007. Forbes' prediction is more dire, calling for virtually flat prices until 2016: http://www.forbes.com//2006/09/06/cx..._09-7homeslide
I don't believe everything I see in the news but when what's in the news jibes with my intuition I take note (and plan to keep renting!): http://www.bloomberg.com/apps/news?p...CRw&refer=home
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Old 09-18-2006, 09:51 AM
 
73 posts, read 125,972 times
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jmark, it depends on how one defines bubble bursting, which is the point that I was making. There will be no rapid, terrifying drop in home prices that destroys people's livelihood. And, btw, they've been predicting a real estate bubble burst for 50 years and that has yet to happen. I work in the real estate industry (appraisal) and I would bet you $1 million that Washington, DC home prices remain stable (slight decline-to-slight increase) over the next few years and nobody except the big development companies will be hurt. The bubble is not bursting.

But it all depends--does one believe the "bubble bursting" is a decline in prices, a stabilization of prices, or a collapse in the industry? In the industry I work in, the term defines collapse. And I will tell you from the groud floor, my appraisals aren't in collapse by any stretch.

I will say though that I recommend renting for people right now. Home prices are way out-of-whack with rental rates. But that's just the nature of big metropolitan areas--the secret is to buy when the difference between buying and renting is smaller.
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Old 09-18-2006, 11:31 AM
 
146 posts, read 766,842 times
Reputation: 100
I guess when you say "Home prices will increase at slower rates over the next few years (0-3% rather than 8%)" when home prices are currently down 8%, you define bubble as a collapse greater than 8%. How does that opinion justify your recommendation to rent for now? When do you think will be the right time to buy?
There was a good article in the post about appraisals, I'm sure you saw it: http://www.washingtonpost.com/wp-dyn...53.html?sub=AR
I found it on this refreshingly honest realtor blog: mod cut
Anyway, I would like to get your take as an appraiser on how you value, say, a townhouse, where the comps sold for $425K a year ago but now there's 20 places on the market within a four-block area and they're asking between $360-430K (and still not selling).
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Old 09-18-2006, 02:45 PM
 
73 posts, read 125,972 times
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jmark, once again, a bubble "bursting" implies a collapse in the market. While in the Washington, DC metro area home prices have declined some, I can state matter-of-factly that homes in many places in the area have increased. My mother retired this summer and sold her house in Dunn Loring (Tysons Corner) for 3% more than what it would have sold for last year. I would suggest that less desireable places (Annandale, for example) have been driving the fall in the average. People are not willing to drop huge quantities on homes in undesireable areas.

But there's something blatantly obvious about real estate that people are missing. It's not just the supply and demand of housing, but the supply and demand of money that drives prices. Interest rates in the last few years have been ABSURDLY low making borrowing dirt cheap--this allowed for large price increases each year in home prices because people could afford it. In the last 2 years, however, there have been roughly 20 interest rate hikes and this has driven up the cost to borrow SIGNIFICANTLY and this has caused people to balk at buying homes priced for 2002 and 2003 interest rates. The stabalization and decline of home prices is part of the natural cycle and it does NOT imply that there is a real estate bubble about to blow up.

I justify my position about renting because it's still a lot cheaper to rent in D.C. metro. I calculated this last year, but I found that it would take roughly 10 years of living in one's newly purchased home before any financial benefit at all would be gained.
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