Good news for the Middle, Dear Readers. It looks like the most affordable places to live and work are between the Mountains. That is, of course, if Big Banking stops demolishing existing low cost housing because it brings down sales prices.
The past few years since there has been a lot of public attention focused on the U.S. housing market, first because of the role of toxic mortgages in the collapse of our economy and subsequent shock waves sent through the economies of other countries. The interest continues because despite three years passing and a certain amount of improvement in the economy, American homeowners are still losing their homes to foreclosure, defaulting at historic rates, underwater on their mortgages, and seeing negative capital appreciation.
No state or region or city has been spared this phenomenon, however, some areas have been hit worse than others. The National Capital Region has avoided the worst of it, partially because of the stable economic base in this area, and partially because of the predominance of primary—rather than recreational—properties.
Having said that, the DC housing market has had its struggles in recent years, particularly, the escalation in housing costs leading to a loss of moderate cost housing and average folks in the area devoting more and more of their monthly paycheck to housing. Recently, it was reported on a number of websites that a *parking space* was for sale in Dupont/Adams Morgan for $100,000. Folks, I am simply going to tell you, that parking spaces do not sell for $100,000 in DC. Not even in the trendy neighborhoods, not even if it covered, secured, attended parking. Recent transactions in the same neighborhood with parking spots selling for over $50,000, are on the edge of real estate sanity, probably the wrong side.
What is all the more stunning to me about this is going back 10 years to 2001, when I was a summer intern here in DC, there were studio condos on the market for less than $100,000 in the same neighborhood. Now those studios price in the $200,000s, at least.
There are major cities in the U. S. where $100,000 still purchases a nice home in a decent neighborhood—an older home, maybe a dated kitchen, maybe only one bathroom, maybe smallish bedrooms. As much as I don’t understand how property values can escalate so much in one neighborhood in such a short time, I don’t understand how there can be such a strong gradient in the same country, using the same currency.
I do have to wonder sometimes, when I see these outrageous prices and hear real estate professionals say things like, “A place sold in that building for $400,000 last weekend, so this weekend the price is $410,000,” how this really works. In securities regulation, there’s a concept called “making the market” which have regulatory limits. Given that home mortgages are now part of the Industrial Complex and get wrapped together into bulk securitized investments that are sold all over the World, isn’t this something that the financial regulators should look at?
Rolling back out from that inside the Beltway thought, no $100,000 parking spaces for me. There’s got to be a Middle of the Road option somewhere.