Just how sick is the housing market? - Page 9 - PhillyBlog

JoePSU · #81 (**permalink**) 03-26-2007, 10:28 PM

Quote:

Originally Posted by gekko

http://www.youtube.com/watch?v=0f6wrXXv8Zw

When stuff like this starts creeping into popular culture, it's a bad sign for the bulls. I remember Bart and Lisa working for a dot.com on The Simpsons when the market started to falter.

Besides the fact that I just got cancer, if I had bought a house last year, I would be a wreck right now on the major change in the national market alone. Every day I read articles on Bloomberg on economic releases on housing, that basically call the REALTOR press releases out on the carpet with real data.

BigH · #82 (**permalink**) 03-26-2007, 11:40 PM

Man there really is no topic that gets people talking than real estate today (especially on this board). I forgot to mention a funny "you know you are in a bubble market when" story. I took a cab after working late in the office in CC. I started chating with the cabie. When I told him were i lived he said "You rent? You should not rent, you should buy a condo in center city." He mentioned that he just took the real estate agent exam and is trying to sell real estate on the side. He went on to say that he knew the city on a block-block basis better than anyone else.

After it was all said and done, he gave me a realtors card in a nice plastic case with a small black stand!!! I was so amused I gave the guy my address when he asked if he could send me a "packet" with information.

So, you know you are in a bubble market when a cabbie trys to sell you real estate.

nyddog · #83 (**permalink**) 03-26-2007, 11:42 PM

Been watching this carefully, and I fall somewhere btwn 3rd & Brown and Big H on this one...

I live in 19106, I'm a DINK, we fit the demo, and have considered at some great 2br places on our block in the 400-500 range. Agreed with all you said, 3rd, in that we can afford it and that the numbers are nice. Issue for me is that although quality of life in OC/SH is great the rest of the city is lacking. There are times I cant help but feel like a bullseye around here.

There are some things to consider in Philly's high end market: SH is stunning, but I see another side to this...In 19106, there are wealthy established middle age profs/families in fields whose compensation does not vary widely city to city as they are in the upper salary brackets already. More importantly, these same people have climbed the real estate ladder-theyve bought and sold and rode the market, in some cases very well. Many of them are transplants-on our street, looking at friends who range from mid 20s to mid 50s, my neighbors are from NYC (tons), Boston, Georgetown (DC), Chicago. Their homes were anywhere from abt 400k to 1.6 million. Key is that they all sold elsewhere, and thus Philly looks even more attractive. 3rd, you're dead on in that for 2M in NY or Bos or Chicago youre not getting 6000sf of anything. They then come and look at SH, which is one of the nicest urban n'hoods I've ever seen, and are smitten, let alone compared to the 2br apt they'd get in NY, and will deal w the rest of the city for the savings.

For me, and those of us in another situation, I have to say I relate to what Big H is saying here. I can swing it, but if I leave in a few years, can I sell it, or will I lose money or be unable to sell? I'm 28, it would be my first home, so I havent ridden the market yet, and I cannot afford the chances that our imaginary 2M Soc Hill relocation family can. More importantly, since Im young, my only source of real income is my job. Im an analyst. I'll triple my salary in NY, double it in Bos or Chicago. My partner is in PR. He'll at least double it elsewhere. This is a big consideration for us-even though NYC housing is high, so is the opportunity. I honestly do not believe housing prices will hold and/or climb on steady ground in Philly til we fix our infrastructure/quality of life. Im here for an MBA, a resume, and a kick ass apartment at 1600 a month. Im not dropping significant money on a home when its not certain I'll see that cash back again. And the market suffers, because I have plenty of friends who can afford to buy and do not b/c of what I just mentioned. Philly really needs to look at what sets it apart from those other cities with vastly more expensive real estate and adapt accordingly to sustain a solid market in CC. (Or dont, if you want houses to stay at 300 a sf) I feel the decline in OC since we got here a couple yrs ago-businesses cant stay open, slow moving condo projects abound, and it just feels like things are at an impass. Dont get me wrong-Im happy. Its a great deal for me, for now, at 1600 a month. Just dont know if I can "afford" the market here.

BigH · #84 (**permalink**) 03-26-2007, 11:50 PM

Hi Brown,

I understand what you mean. You make some good points. So are you a homeowner in 19106 or 19107? If so, when did you buy your last place? What do you think the outlook is like in 19106 and 19107 next year and next 5 years in terms of growth?

Just trying to guage where you are coming from.

Quote:

Originally Posted by 3rd&Brown

This is tricky. These numbers when published are often lower than you would expect, but we forget how many transient student/renters live in those areas (as well as retirees on fixed incomes who are living off dividends). So, the last I remember reading, for 19106, median family income was somewhere around $85,000. Now, I know that doesn't sound impressive, but keep in mind that number include 100s if not 1000s of young people whose income is sub $10,000 per year who are being subsidized by mommy and daddy.

However, if you were going to walk around Society Hill, knock on doors of owner-occupied homes and take a survey of family income, I would say the typical home is occupied by a family with an income of $250K+. That might even be low. For every 1 person who gekko would describe as over-leveraged in that area, there would be 5 others who are more like Stephen Starr, Stephen Grasso (Gyro Worldwide), Jeremy Siegel (world-reknowned economist), Terry Gross (NPR's Fresh Air), Lynn Abraham, Stephen Burke (Comcast #2), the Spain family...all 19106 residents and countless law partners, surgeons, business owners, etc.

Young professionals who own their places in Old City...I would say they average $85K+ per person. Singles would be likely to live in 200-300K condos (1 bedroom) and dinks would be more likely to live in 400-500K places. Not even a stretch.

Listen, I know this isn't LA, NY, SF, blah blah blah blah blah or even Boston (which is very over-rated). Nonetheless, real estate here is a relative bargain. Our quaker values have taught us to be thrifty and austere. Guess what? We are, even at "inflated" prices. Un-airconditioned dumps in Boston's mid-range neighborhoods sell for $500-$600 per SQUARE FOOT. That's Boston (it really is a small city, folks...industry there isn't significantly different from here...pharma, mutual funds, law, consulting, etc). NY is $1000+ and SF is about $700. Philly is still sells at a significant discount. When I say you're smoking, that's what I mean. Sure, our city has a lot of problems to overcome. However, I'd take Society Hill over virtually any neighborhood in Boston any day. 6000 sf houses in SH that sell for 2 million would be 6 million easy in Boston. That is a significant discount. A relative bargain.

We're complaining that $300 sf in one of the best urban neighborhoods in North America is too much. My point, is at the center of a 5 million person metro, you're simply wrong.

MayfairMeat · #85 (**permalink**) 03-27-2007, 12:00 AM

nyddog:

Do you got the "We Moved Here Blues"? Second guessing?

I kinda went through that. I am not looking for homes in Center City though--my ideal home is DIY since I know carpentry and electrics, and actually want a big home... so Philly is ideal for that. Boston has already revamped most everything that is revampable... and housing prices and cost of living wipe out what I would get even if my salary doubled.

Chicago was one place I had considered, but the gentrified neighborhoods outside the Loop are now facing a HUGE transit dilemma. The L is so old that parts of it are being shut down for repair--making the need to drive a must for a lot of people. Commutes that would normally be 25 minutes on the L now take an hour or more. The Red Line is in especially poor shape.

The only revampable mega Victorians left in NYC are not even in NYC--it's Newark... and prices are... believe it or not... going up there and strange new people are popping up in one of America's crappiest cities: people who have these things called jobs which require creating documents called resumes. Still... it's Newark. Bleah.

That's were Philly comes in. Still a player, but populated with haters. But look around you... the houses are awesome just about anywhere you go... and if you flick the dice right--you can find something you want and the price you can afford and not rape your retirement or second mortgage your future doing it like many DINKs do to get a 2BDR /w a door man in New York.

Philly also has unqiue "craic-house Elizabethans", a rare gem, in desperate need of saving. Not something you'd find much anywhere else.

I'm assuming you're gay (by the use of the term partner). If you are, then you would be what in my cousin's world (NYC contractor) coined a "society gay"... looking only in geographically established, desirable listings. I'm an office drone, more identifiably blue-collar on the outside... seeking-to- gentrify-something gay.

1st time gentrifiers do get a unqiue hand in single-handedly shaping their communities, mostly convincing friends and associates the charm of their original home, the sweat and tears going into restoring it, and years later--watching the rest of the neighborhood grow and expand and seeing flowerboxes start popping up in the windows. A process I've been watching happen in Fishtown and Graduate Hospital since I moved here.

The big downside about Philly is, of course, our political system. We have the Supreme Soviet running the city. Trust me, the enthusiasm was way higher when Rendell was here and during Street's first term. Street Part II was very disappointing, probably not as dramatically disappointing as Wilson Goode's was, but Street is definitely bringing back sour grapes and bad memories to the lifers in this town and to a lot of new residents.

I am hoping this scar on Philly's present growth spurt goes away and the new administration goes back to work on the city's problems... which is the source of most of the homeowner frustrations living here.

BigH · #86 (**permalink**) 03-27-2007, 12:03 AM

Great post. You and I would definitely be grouped in the same boat. I'm 26 and trying to decide if it is worth buying a 2BR over 400k or rent for $1540 a month in a great building with my roommate. He is a student, so he can't afford more than $700 a month in rent, but IF I WANTED TO (which I don't) I can swing a $2000 a month and with his $700 a month get a swanky place in 19106 or 19107. Do I think that's a good investment over the next 5 years with todays price? no way! On top of affordability, I've lived in philly for most of life. I've seen new neighborhoods in the city like the art museum, chestnut hill, and Northern Lib blossom into very desirable areas. But this drive up is not blossoming. It's madness.

Right now it feels like growth for the next 5-10 years is priced into real estate.

Referring to those rich people who lived in 19106 and 19107 prior to the boom in 2000, they are making out like bandits. They probably bought their place at rock bottom late 1980 and 1990 prices for the same reason that has driven prices now: in relative terms, they were priced out of the NYC, Boston, DC market during the 1990s. So they cycle continues..

Quote:

Originally Posted by nyddog

Been watching this carefully, and I fall somewhere btwn 3rd & Brown and Big H on this one...

I live in 19106, I'm a DINK, we fit the demo, and have considered at some great 2br places on our block in the 400-500 range. Agreed with all you said, 3rd, in that we can afford it and that the numbers are nice. Issue for me is that although quality of life in OC/SH is great the rest of the city is lacking. There are times I cant help but feel like a bullseye around here.

There are some things to consider in Philly's high end market: SH is stunning, but I see another side to this...In 19106, there are wealthy established middle age profs/families in fields whose compensation does not vary widely city to city as they are in the upper salary brackets already. More importantly, these same people have climbed the real estate ladder-theyve bought and sold and rode the market, in some cases very well. Many of them are transplants-on our street, looking at friends who range from mid 20s to mid 50s, my neighbors are from NYC (tons), Boston, Georgetown (DC), Chicago. Their homes were anywhere from abt 400k to 1.6 million. Key is that they all sold elsewhere, and thus Philly looks even more attractive. 3rd, you're dead on in that for 2M in NY or Bos or Chicago youre not getting 6000sf of anything. They then come and look at SH, which is one of the nicest urban n'hoods I've ever seen, and are smitten, let alone compared to the 2br apt they'd get in NY, and will deal w the rest of the city for the savings.

For me, and those of us in another situation, I have to say I relate to what Big H is saying here. I can swing it, but if I leave in a few years, can I sell it, or will I lose money or be unable to sell? I'm 28, it would be my first home, so I havent ridden the market yet, and I cannot afford the chances that our imaginary 2M Soc Hill relocation family can. More importantly, since Im young, my only source of real income is my job. Im an analyst. I'll triple my salary in NY, double it in Bos or Chicago. My partner is in PR. He'll at least double it elsewhere. This is a big consideration for us-even though NYC housing is high, so is the opportunity. I honestly do not believe housing prices will hold and/or climb on steady ground in Philly til we fix our infrastructure/quality of life. Im here for an MBA, a resume, and a kick ass apartment at 1600 a month. Im not dropping significant money on a home when its not certain I'll see that cash back again. And the market suffers, because I have plenty of friends who can afford to buy and do not b/c of what I just mentioned. Philly really needs to look at what sets it apart from those other cities with vastly more expensive real estate and adapt accordingly to sustain a solid market in CC. (Or dont, if you want houses to stay at 300 a sf) I feel the decline in OC since we got here a couple yrs ago-businesses cant stay open, slow moving condo projects abound, and it just feels like things are at an impass. Dont get me wrong-Im happy. Its a great deal for me, for now, at 1600 a month. Just dont know if I can "afford" the market here.

herbacidal · #87 (**permalink**) 03-27-2007, 10:42 PM

Quote:

Originally Posted by nyddog

For me, and those of us in another situation, I have to say I relate to what Big H is saying here. I can swing it, but if I leave in a few years, can I sell it, or will I lose money or be unable to sell? I'm 28, it would be my first home, so I havent ridden the market yet, and I cannot afford the chances that our imaginary 2M Soc Hill relocation family can. More importantly, since Im young, my only source of real income is my job. Im an analyst. I'll triple my salary in NY, double it in Bos or Chicago. My partner is in PR. He'll at least double it elsewhere. This is a big consideration for us-even though NYC housing is high, so is the opportunity. I honestly do not believe housing prices will hold and/or climb on steady ground in Philly til we fix our infrastructure/quality of life.

The problem with that is that while income doubles/triples in Boston/Chicago or New York, the cost of living is significantly higher too.
(I'd say it's at least twice as high in NYC. )
Friends of mine who moved here from NYC say that they can actually afford to live much more of life here as far as culture, dinners, vacations, etc., and NYC remains just 2 hours away.

Your thoughts overall are valid and not without merit though, but then I do always say buying a home should be a lifestyle decision before a financial decision.

Gekko · #88 (**permalink**) 03-27-2007, 11:08 PM

>buying a home should be a lifestyle decision before a financial decision.

and it's typical realtor babble-talk nonsense like this that gets people in over their heads and into financial trouble. i will be glad when the bulk of you are washed out of the industry as a result of this current downturn.

Gekko · #89 (**permalink**) 03-27-2007, 11:11 PM

1 million homeowners out in the cold

4:28pm: Despite the mortgage industry's claims to the contrary, an advocacy group says that subprime foreclosures will leave 1 million fewer homeowners.

herbacidal · #90 (**permalink**) 03-27-2007, 11:24 PM

Quote:

Originally Posted by gekko

>buying a home should be a lifestyle decision before a financial decision.

and it's typical realtor babble-talk nonsense like this that gets people in over their heads and into financial trouble. i will be glad when the bulk of you are washed out of the industry as a result of this current downturn.

I'd prefer to take the high road and not say anything in response, but I can't.

I get tired of everyone asking me if this is a good time to buy a home and it's too bad it's not the same market as the last few years, eh?
It's a good time when you have a life-changing event (new baby, marriage, etc.) Then you put your financial house in order and buy the best house you can afford. What is the problem with that?

I'll be happy when less balanced individuals such as yourself flee the market, because I knew when I got into it a few years ago that the next few years would be far better for my real estate business than the last few.

I will agree that realtors dropping out of the business in the next few years will be good for those left behind, but that was something I had planned on happening.