patrick.net

it seems like all of the jobs are being concentrated in a handful of areas. So people who cant find work in other parts are migrating to job centers. Which is Driving up rents and housing prices.

@Patrick.

The amount of BS thrown here by few new IDs that suddenly appeared after this thread is up is just ridiculous. Can you check what's going on?

@toothfairy.

PesainCAT had nice explanation about some numbers, though I think it's based on 2009 data. what zzyxx said above is something to think about, segregation, which quite is true for every life in DC area. DC metro is a hugh area spanning 52 counties and 4 states. Among them, fairfax county is the biggest in terms of job oppotunity and job pay (lots of hi-tech companies, accounting firms, legal firms, retail stores, military firms such as boeing and Lockheed Martin, Northrop Grumman and SAIC. Can you smell "lobbyist" there? Fredie and Fannie? Sure, they're in fairfax). DC is second largest. it is the center of our elected crooks. They don't do a shit though, they are pretty good at petting their buddies, the lobbysts, back. And about 20 thousand federal workers and 5 thousand DC workers that are working hard under the pressure from those crooks. Not getting as much as people like to think they do though. Then the montegomary county MD, bio research in NIH and some other stuff like genome project etc is going on in there. It's about 100 miles long wide spreaded area full of job opportunities.

That's what DC metro is. and what makes it unique is ... there's no job center like that in 100 miles. Take a look at the map. To the south and the west, you won't find anything. To the east and the north. You see baltimore and philadelpia, but you know they suck.

It's 2.45am in washington. I gotta go, may write something if I feel like to after i wake up.

"With these wars coming to an end I don't see why there wouldn't be a massive cut in all the governemnt service positions and contractor jobs. These cuts will happen. Why do you think these wars are being slowly pulled back. The lose in jobs would be tremendous if we cut everyone we should cut and pulled out of these foreign wars immediately."

Would that this were true, but it's not. We're now hitting Pakistan with ten drone strikes a month, and Afghanistan is sucking as much money and material as ever. There are secret wars in Libya and Yemen, and Iraq ain't going away with the largest U.S. embassy on earth in Baghdad.

The military-industrial complex, which is calling the shots to whoever is the president, grows ever larger and more powerful.

Don't worry about job losses in this sector too much, at least until the country collapses. Ancient Rome is a good model for what's happening here at comparative hyperspeed.

monkframe says

The military-industrial complex, which is calling the shots to whoever is the president, grows ever larger and more powerful.

I would have to disagree. The defense department is taking 450 billion in cuts over the next decade. Iraq is being drawn down as we speak and they are only negotiating how many advisor roles there will be. Afghanistan has a planned draw down in 2014 and planning is already occuring.

http://www.npr.org/2011/09/24/140748420/defense-leaders-make-their-case-against-budget-cuts

With the drawdown in Iraq and Afghanistan comes huge contractor cuts. You have to understand we don't fight wars the way we used to. All services on the major military bases in these two countries are contractor heavy. If we have 100K in military forces in Afghanistan, we easily have 100K of civilian contractors. It helps the government in a few ways. They don't have to cover civilians through the VA and build up a massive force. It also helps in deception when you actually have 200K people (military/civilians) fighting this war but the only number that is reported is military on the ground.

http://tpmmuckraker.talkingpointsmemo.com/2009/12/so_how_many_private_contractors_are_there_in_afgha.php

As we start drawing down and reducing defense spending, so go the jobs. I have seen the beginning of this drawdown and it is happening very slowly and methodically.

I'll believe the so-called cuts to defense when I see them.
I also don't buy the "drawdown" theory. It's window dressing for the gullible American public put up by the politician-generals such as Petraeus.
The US has no intention of withdrawing from its colonies. Control of regions and resources is what it's all about.
800+ US bases around the world say so.

WASHINGTON (AP) — A Republican on the Senate Armed Services Committee said Sunday that the U.S. should consider military action against Pakistan if it continues to support terrorist attacks against American troops in Afghanistan.

"The sovereign nation of Pakistan is engaging in hostile acts against the United States and our ally Afghanistan that must cease, Sen. Lindsey Graham of South Carolina told "Fox News Sunday."

"He said if experts decided that the U.S. needs to "elevate its response," he was confident there would be strong bipartisan support in Congress for such action."

So much for your "drawdown" theory, especially if a great thinker like Perry is elected next year. Obama seems willing to bomb the crap out of innocent people as well.

monkframe says

Obama seems willing to bomb the crap out of innocent people as well.

LOL. Qaddafi's mercenaries were not "innocent people", clown.

monkframe says

So much for your "drawdown" theory, especially if a great thinker like Perry is elected next year.

Well, it is up to the voters to tell the politicians to stop beating the war drums.

Listen, I understand your frustration at this time. People are out of jobs and we are still embedded in the never-ending wars or conflicts. The small conflicts will never change because we must look after our international interests. I truly believe the American public has no appetite for another long term and expensive conflict fiscally or righteously.

I am in the military and everyone in the military sees the writing on the wall. It is common sense. Defense spending is about to get a serious downsize and I think it is a fiscally smart decision at this time. Our country can't afford the price tag of our defense complex at this time.

There is no propaganda here. The government moves slowly and the military are not much faster. It takes time to wind all these programs down, but I can tell you we are beginning to wind some of our programs down.

The bad news is, we already created trillions of dollars in debt due to these wars. We should have been protesting the invasion of Iraq in 2003 but oh wait…. Everyone was flipping houses, getting HELOC money to buy BMW’s and take great vacations while I was eating sand for the past 10 years. BUT NOW you want to start bitching about the MIC?? Hypocrite!

The defense budget is available for anyone to look at:
http://comptroller.defense.gov/budget.html

This first chart shows the increase since 9/11. This is the cost of going to war.

The second chart is the downward trend in forecasted budget expenditures. I think this forecast with minor decreases is pretty laughable if we are out of Afghanistan and Iraq. Again, John Q Public needs to educate themselves before the cost of the military exceeds our ability to function as a nation.

This doesn't include the VA budget either. Due to our expenditures in OCO for fast procurement of equipment that saves lives we have a higher casualty rate and lower KIA rate. This means there are 100's of thousands of newly injured veterans that the VA has to now support since they were not killed in action.

The VA has tripled in budget expenditures since 2001.

Budgets that have tripled: DoD, Department of Agriculture, Department of Homeland Security, etc...
Budgets that have quadrupiled: Department of Labor, Department of State, Executive Office of the President, Small Business Admin, etc...

The government expanded rapidly in a lot of areas and will have to be parsed back. However, will it be parsed back in the appropriate areas, or will this be an excuse to go after social programs?

Or, maybe we have a revenue problem. Percent of budget outlay versus Defense spending.

But that doesn't make sense? The Tea Party and extreme republicans said we must cut taxes!

See how quickly I can work on both sides of the arguement. Hell, I could even bounce it off GDP and the trend wouldn't look bad at all.

I've lived in or just outside DC since 1963. The area has gone from being a small, just-desegregated southern town to a metropolitan area. I actually remember when cows roamed at Tysons Corner, now one of the largest shopping and office centers in the country.

Housing prices can only exist when there's income available to support the monthly payments. DC has a huge population of people who make excellent salaries and have extensive benefits. No less important, the job base here is rock solid-- no one is shipping government jobs overseas.

I live not far from the Bethesda Medical Center, FDA, and NSA. My neighborhood is filled with medical researchers, engineers, medical doctors, mathematicians and computer scientists. With such educations home prices are not much of an issue. Moreover, it's entirely common to see households with two professionals, both with six-figure incomes and benefits.

PersainCAT --

I understand your point. Now, would you then say that two-income households should be banned?

>>>I wouldn't mind seeing a stronger policy on lending though so all those regions that spend 50+% of their income on housing cant get a mortgage.

The traditional ratios for a conventional mortgages were 28/36 for fixed rate financing, 33/38 for adjustables, 31/43 for FHA and 41/41 for VA loans.

These ratios are much tighter than what you suggest. Yet if you combine small ratios, low rates and high incomes you can still get mammoth mortgages.

Mr. and Mrs. Smith make $300,000 a year, $25,000 a month. With a 28 percent front ratio they can spend $7.000 for mortgage interest and principal, property taxes and property insurance -- say $5,500 a month for principal and interest. At 4.25 percent they can borrow $1,085,486.37.

Home costs in the Washington area are substantially lower than prices in many California areas -- thus there have been fewer foreclosures here and home prices have not fallen as far.

OurBroker says

Moreover, it's entirely common to see households with two professionals, both with six-figure incomes and benefits.

Yeah, the area you're talking about is like that. If your HH earns less than 300K or can't afford 2M SFH in north bethesda or in potomac MD, you guys are just not cutting the average.

In the mean time, a HH who earns 80K/yr, living in 250K SFH in Oxenhill MD is doing great, way above the average there.

Up to the NW DC, you're doing great when you don't need food stemp.

This is a kind of segragation we can see in DC area.

PersainCAT says

Which is part of why someone like me in their 20's earning a decent wage all i can afford if i dont want a 2 hour commute is a small crappy one bedroom condo for nearly 300k.

So, the average guy in DC metro area is doing like this. Oh, Don't forget to pay $450/mo HOA if you want that crappy condo. lol.

As we all know commuting to DC is hell to drive in and out. That's why they're paying 600Ks for having metro railrord at the backyard.

Seaside --

Alas, I work at home. Two Metro stops are within a few minutes.

Not everyone fits the profile or generality.

"The bad news is, we already created trillions of dollars in debt due to these wars. We should have been protesting the invasion of Iraq in 2003 but oh wait…. Everyone was flipping houses, getting HELOC money to buy BMW’s and take great vacations while I was eating sand for the past 10 years. BUT NOW you want to start bitching about the MIC?? Hypocrite!"

I was at every antiwar event here in the Bay Area before the Iraq invasion. You don't know me and I don't know you, but know that you have been lied to - bigtime.

The restrictions on building height, as mentioned by mdovelll and PersianCat, are downright criminal.

I'll never forget my first visit to DC as a teenager in the late '90s: White House and Capitol Building aside, it did not feel like the capital of anything.

No tall buildings, at least by the standards of this New Yorker. Vast amounts of space between all the buildings. And outside the city, automobile-dependent housing tracts that took up obscene amounts of space. Go northwest of the city and look at all those cul-de-sacs and needlessly-twisting roads. Imagine how much more compact and efficient this could be! Don't like paying those ridiculous prices for real estate? Look right there: wasted space by the mega-acre.

Washington, DC is the nation's capital. The low density at which it was built, and the even lower-density residential housing outside the city, much of which has pathetically limited access to trains and which are not livable without an automobile (no stores within walking distance, for an entire development!?) should have gotten entire generations of city planners fired. As I've said before, a "No Coloreds" community would be a disgusting, racist affront to anyone's sensibilities, but "No Non-Drivers" communities are everywhere, unremarkable, just as discriminatory... and they're sending RE prices sky high.

How was this allowed to happen?

monkframe says

but know that you have been lied to - bigtime.

Believe me, I know.

There are no tall buildings in DC for the same reason there are no tall buildings in Rome -- they would block the view.

Washington is specifically designed so that views of the Capitol are not impeded. For decades the tallest building in the city (and perhaps today) was the National Press Building. The Press Club is on the 13th floor.

OurBroker says

There are no tall buildings in DC for the same reason there are no tall buildings in Rome -- they would block the view.

Washington is specifically designed so that views of the Capitol are not impeded. For decades the tallest building in the city (and perhaps today) was the National Press Building. The Press Club is on the 13th floor.

Then the Capitol should have been made much taller!

It's really not the center of the city, though, so much as those endless, land-devouring suburbs. Had density there been built even at central-DC scale, the problem wouldn't be as bad.

My brother lives among that sprawl and the development he and his wife moved into pulled something of a bait-and-switch on the residents. Promises of bookstores and shops among the townhouses failed to materialize, and he's stuck getting in his car and onto a 50-mph highway-like road just to pop down to get some milk at what should be the corner store because there's literally no non-residential zoning within a mile of his house. Without a car, his neighborhood would be unlivable.

>>>Then the Capitol should have been made much taller!

The Capital building is on, er, Capitol Hill...

From Case-Shiller this morning:

>>>On an annual basis, 18 of the 20 MSA’s (as well as the two Composites) were down in July 2011 over July 2010. Detroit and Washington DC were the only two MSA’s that posted positive annual rates of change

Matt99999 says

I get down in the dirt , work boots, blue jeans and I am swamped with work and I havent made less than 6 figures since 1982

What do you do for a living?

OurBroker says

Mr. and Mrs. Smith make $300,000 a year, $25,000 a month. With a 28 percent front ratio they can spend $7.000 for mortgage interest and principal, property taxes and property insurance -- say $5,500 a month for principal and interest. At 4.25 percent they can borrow $1,085,486.37.

$7K/month is quite hefty -- more than 40% of net, and could easily be 45%+ depending on your payroll deductions. Not sure I'd feel comfortable with that myself, even as a job creator.

However, when I actually did the math on this, I got more like $8K/month (pre-tax) in costs, using submedian's calculator, assuming 40% marginal tax deduction (35% federal AMT + 5% Maryland). That'd be 50% of net income even with very low payroll deductions. The loan amount alone was $1100 more than you estimated at $6620, and your estimate is probably wrong because it's a massive jumbo loan and would have a higher rate.

You can use http://www.paycheckcity.com/calculator/netpay/us/maryland/result.html to figure out what net pay would be, roughly, which of course would need to be adjusted by tax preferences like the mortgage interest deduction ($1M limit of principal + $100K equity loan, right, so if you got a $1.085M first mortgage, not all the interest is deductible).

$25,000 per month x 28% = $7,000.

If you have a household income of $300,000 that's $25,000 per month gross -- before taxes.

My example is designed to provide a general illustration. It's very much in the ballpark.

OurBroker says

$25,000 per month x 28% = $7,000.

Yes, I get that the traditional ratio supports it (and agree with you on that -- I've stated numerous times that traditional ratios are 28/36). What I'm saying is that it might not be a wise financial decision to commit such a high percentage of your net, especially in this economy where you might want to keep a cushion.

That is the maximum point at which a bank gives you a traditional mortgage. Do you really want to be at the maximum and be house-poor with a mortgage that will be quite difficult to pay off, even at such a high income?

I already pointed out that your total monthly calculation was wrong. It's actually more like $8K/month, of which $6600 is mortgage payment, so scale down the mortgage you gave us by 1/6.

If you're ultimate point is that people should not borrow the maximum available to them under lender guidelines then we agree.

My example is to generally illustrate a point. In reality deals differ considerably based on any number of variables. This doesn't make my illustration "wrong."

Q: Why is DC so expensive?

A: Because it's the seat of power, and a good warm seat in the morning is a damned expensive thing!

The Heights of Buildings act of 1910 is what limits the heights of the city's buildings. It's a common misconception that there are laws stating no building can be higher than the Capitol or the Washington Monument, though by the letter of the law, it would automatically be illegal to build a building higher than the Washington Monument. This is because the height of a building is limited to the length of the street it sits on, plus an additional 20 feet. As there are no streets long enough to exceed the height of the monument, it would not be possible to build such a building in the city by default.

I for one like the effect this has had on the cityscape. Housing woes notwithstanding, anyone who's driven East from Arlington down the GW parkway towards Reagan National and beyond can appreciate the effect this has on the landscape. Its kind of nice to be able to see more than 100 feet into the city in any one direction, and that you can be across the river in Arlington and see scenes like this:

Hi --

What a great photo. Were you along the GW parkway somewhere?

Why? Because Jumbo loans helped keep prices high.
But not after October 1

Market Current limit Limit After October 1 Reduction in Limit
San Diego $697,500 $546,250 $151,250
Fairfield, CT $708,750 $575,000 $133,750
Los Angeles $729,750 $625,500 $104,250
Washington, DC (most counties) $729,750 $625,500 $104,250
Orange County, CA $729,750 $625,500 $104,250
Riverside-San Bernadino, CA $500,000 $417,000 $83,000
Baltimore (most counties) $560,000 $494,500 $65,500
Boston (most counties) $523,750 $465,750 $58,000

Can't take credit for that one actually, though from the looks of it it had to be right off the GWP

I'd hate to nitpick this...but..

Has any developer thought of building down instead of up?

I know they have underground centers in Montreal due to the cold. Naturally there would not be a view but if it is cheap enough it might be worth it.

PersainCAT says

Besides the fact that u usually dont build below 2-3 stories underground becasue no one wants to be down there, from my understanding DC has a high water table due to the type of land its built on. So any major underground buildings run the risk of flooding.

Yes, the Potomac being right there makes a difference too. This is why certain Metro configurations that require tunneling (e.g. Metro to Georgetown) are slightly more complicated as well.

Done! says

Why? Because Jumbo loans helped keep prices high.
But not after October 1

I for one am happy to see superconforming loan limits go down. They should go back down to $417K or lower, so this is just a good start.

Jumbo loans lead to jumbo mortgage interest deductions. Working families' subsidy for the rich, it is.