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Thursday, April 23, 2009
Northern Virginia Bits Bucket 4/23/2009
Posted by Harriet at 6:00 AM
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61 comments:
Odd view of reality...
1) woman purchases condo in 2003 for $130,000
2) woman sells condo in 2009 for $199,000
3) woman complains about "losing $20,000"
http://www.msnbc.msn.com/id/30351355/
Buck,
Thanks for the link to the interesting article. I think the couple meant that they sold at 20K off of the peak price they could have gotten for it in 2007, according to the article.
More signs of higher-end price movement in N. Arl:
http://franklymls.com/AR6975972
Update Type: PRICE
Address: 1228 STAFFORD ST N ARLINGTON, VA 22201
Current Price: $1,159,900
DOM/P: 76/76
Original Price: $1,249,900
Date Last Updated: 4/22/2009 1:22:08 PM
The nearly identical house next door sold in mid 2007 for $1,263,000.
It's a nice, big house, 3 blocks (really) from the Ballston metro, with a 2 car garage, but it faces the bleaches of a high school playing field.
bleachers, that is.
gah.
This is exactly the math that Ace is doing, but with a sickeningly sweet NAR syrup running all over it.
Anyone who bought a 1 bedroom condo under 700 sq feet should be tickled pink to escape it no matter the price... (unless we're talking Manhattan or Paris)
ace,
that's a lot of open houses...
I like that they admitted it's "craftsman inspired" not craftsman.
It's a nice house, a little severe for my taste, but too many windows are wasted by facing other buildings, and the direct proximity to the football field is definitely a drag.
yes, Cara, if only prices here were like Western Washington's...sigh...
ace,
well, and also these aren't exactly traditional move-up buyers... These people were escaping from one of the extra rungs that were added to the housing ladder in the boom years. In normal times they would never have felt the need to buy that first apartment in order to position themselves to moveup, they could instead have just kept renting a larger place and saving up. But kudos to them for escaping a collapsing rung.
I can think of a lot of positives for living there. Of course, I love football (enough that I would enjoy being able to randomly go to games at a high school where I have no affiliation) and having the track that close would eliminate any gym membership need.
The location is also quite nice, of course. But the price range is so far out of my league as to be amusing.
"It's a nice house but it's not worth that much". My guess is it would sell for $850K. Getting them to that point will be ... painful.
EDIT: I meant to mention that the item that scared me was not the bleachers, but the insane construction job on the other side. Satellite imagery is usually a few years out of date, so it might be an issue, but that looked like an intense project, so it might be. A walk-through is essential.
Xpovos, I think you are who the seller (the original builder-it's vacant) is counting on - or a family with a teenager or two who could just walk across the street to school.
It's also very close to the Quincy tennis courts, etc., a real plus for other buyers.
The nearby streets are also a mix of nice condos, apartments, tiny little houses, modest houses in various states of repair, and bubble era builds like this one. For some people this is great; for others, they prefer homogeneity and stability.
So it may sell at nearly the current asking price - just depends on whether someone who doesn't mind the drawbacks and who has and is willing to spend that amount of money comes along. It looks to me as though the builder will keep dropping the price in order to get it off his/her hands (wow, what a radical concept!), until that good fit is found.
Yes, xpovos, there is construction going on - it didn't strike me as too annoying when I went to the open house, but who knows what will happen in the coming months.
One other problem - there is a grossly oversized (for the lot) tree in the front yard that blocks all the sun to the house and to other plants in the yard, which are dying. This tree needs to be taken down - which will cost thousands of $.
Ace,
Should be a fun one to watch then. But if the seller is counting on me, he's out of luck. Even someone 'like me'. I'm not poor. I'm just not wealthy. And even wealthy families feel a lot less wealthy with kids
But, then again, I feel that way about most of Arlington. So maybe it's just that other people are better at prioritizing a living place. Also, much more suitable for move-ups. First time buyers who were renting are a harder group to bag there.
That house also suffers from a pet peeve of mine - proximity to a major highway. You'll be able to hear the white noise of 66 at all times there.
It's right across the street from the Central library though, which is nice.
Xpovos, this is definitely a move-up house, even if the price drops a bit further.
Topic for discussion:
How did we get to a world where 'move-up' houses make sense.
If you're renting, presumably you're saving cash for a downpayment (our smart renters who want to buy, not a generic renter).
If you've bought, you're clearly gaining equity against your mortgage (if not against the property these days).
The two are roughly equivalent. Yet the move-up buyer has 2x real estate transaction (whoops, there goes 6%+) and the renter has only the one.
The move-up buyer is also most likely not just committing to a 15-year (or more likely 30-year) mortage, but re-committing to an additional 15/30 years on top of whatever period of time they were in the previous home (better have been 5+).
If we assume that people don't buy a first home until 30 and do spend 5+ years there, you're lining up the paying off the mortgage of a move-up with 65, at a minimum.
That's uncomfortably high for me looking at life expectancies, lifetime salaries, health in the U.S., elder care costs, and a host of other issues. I'm sure other people have done this calculus as well.
And, of course, none of that even considers re-financing activities.
xpovos,
I think it has something to do with how normalized moving from city to city has become in the US, and something to do with the life-cycle of your pay. Once people got used to buying every time they had to move for work, the entire concept of paying off a mortgage completely went out the window. And then when people moved later in their careers when they were making more money, they wanted houses that reflected that increase in status. Once they built move-up houses, people who didn't have to move for work started to want one...
It's all predicated on either assuming you'll never pay off the loan (out of income rather than a sale), or assuming you'll eventually get enough raises that paying it off quickly will be trivial.
Xpovos,
Two things immediately popped into my mind when I read your post. One is - how many people actually take 30 years to pay off their mortgage? Secondly, and this is coming from someone who is currently renting but may buy a "starter house", is that small to moderate cost premium of owning and transacting over 5-7 years is outweighed in my mind by the psychological benefit of owning vs renting. Since moving out of the dorms, I've rented for about 10 years. I'm done.
On a completely separate topic. I see houses on Frank's site all the time that are under contract, but only have a days on market of 0 or 1. What is really going on with these properties? Is it some technical issue? Why list at all if there is already a buyer?
Ace,
That house has been for sale a lot longer than 76 days. I used to go swimming at Wash. Lee and saw that house for sale well over a year ago. Might have even been close to 2 years ago.
Nobody is going to pay that kind of dough and live that close to a high school.
He ought to drop it to 850k or something. The location sucks.
Fred,
The foreclosure market is quite hot in NoVa, I was at a house a few Sundays ago listed on that Friday, and there were 4 others touring it. It was under contract (at well above the asking price) by Monday. It seems the new model for banks is list a house at 10% below the recent sales, take a few days or a weekend to gather offers, and sell to the highest bidder. Perhaps the listing realtor decided those were good enough deals to poach.
The Stafford street house is just a few blocks away from what was my favorite Arlington house for sale: http://franklymls.com/AR6971312,
(and interestingly has the same house number - the house numbers used vary by block in Arlington, and a quick search of assessments showed only 16 1228s in the county). The assessments are almost the same (off by about a quarter of a percent).
That house was listed at $1,875,000, but I don't know what it's under contract for. At an open house I heard one person tell the realtor they'd love to buy it if it was priced $500,000 lower. I like the Vermont Street house location better. Even though it's a little closer to I-66, it's further from the school. It's also a little bit bigger (6200 sq ft finished vs. 5000+).
I haven't seen the inside of the Stafford street house, but the Vermont street house was all highest quality. According to the realtor, the builder built it to live in, but had to move out soon after it was finished. You can see the custom front door that was used at http://www.mendocinodoors.com/TheArlington/default.html.
"Xpovos said...
How did we get to a world where 'move-up' houses make sense."
Xpovos - the problem is you are looking at this as a fully rational buyer. Fully rational buyers dominate this board, but are much more rare in real life.
In real life, people are (for lack of a better word) lazy. For most of the population, home equity is like a forced savings plan. At the end, you get your principal back, plus inflation (which few people in real life put much thought into).
Same thing with stuff like that Bank of America "keep the change" plan where they round up YOUR money and put it into a savings account earning minimal interest. Hugely popular forced savings plan.
Same thing with people who claim 0 withholdings so they get a bigger tax return (an interest free loan to the government). Another forced savings plan that makes little sense.
Really this is where classical economics buts up against behavioral economics. Classical economics assumes people are 100% rational, but they rarely are in the real world - people are lazy.
Chicago School does alot of interesting work in this behavioral economics area. If an employer has a opt in 401K plan, participation is low. If the employuer has a opt out 401K, parcitipation is much higher. Require people to fill out their tax return, tax collection rates are low. Fill out the return for them (based on last years return), have them sign it if correct, tax collection rates jump significantly.
In any event, I think you are right. From a purely rational actor standpoint, the concept of a "move up" house makes little sense for the reasons you stated. In the real world, where 90% of the buying public is less rational than this board, its just the way things go.
CRT, Cara,
Thanks for the insight. Particularly the reminder of behavioral economics. Stuff I didn't know about until a few years ago. I took one Econ course in college. Macro. Easiest A I ever got. The behavioral side is clearly more complicated.
I also have to wonder how much of it is really accurate. Once you go behavioral, you inherently go psychology, and that's a very soft science.
xpovos,
the other thing is the unknowability of the future.
For me, there's no way I'm going to go over my current budget just to get the nice house. I'm going to go ahead and buy, the best house I can buy, within my current income limitations including for the possibility of needing to drop back to one income. But, just because I'm going to buy now (with something cheaper than renting) doesn't mean that 5-10 years from now, if the future has gone well, and our incomes have gone up significantly that I might not choose to move-up then. Of course I may decide to put that money to better use elsewhere, but in any case I don't want to pay now for what I won't need in the near-to-mid term.
The "big construction job" near the Stafford St house was the new Washington-Lee High School which was built on parking lots and old playing fields. The old school is now being torn down for new parking and playing fields. Arlington flips the spaces when they build new schools. Alexandria did the same thing with the new TC Williams High School. The builder of Stafford knows what he is doing -- there is an uptick in new construction home sales in 22205, 22201 zip codes so this house will follow at the edge of 22207
"Xpovos said...
I also have to wonder how much of it is really accurate. Once you go behavioral, you inherently go psychology, and that's a very soft science."
Yep very soft. Hardline economists dont like it because it would mean the "laws" of economics have lots of caveats. Behavioralists like it because it consistently beats the hardliners when it comes to applying the laws to real life situations.
To the discussion on why buy a starter home, this has been going on for *long* time. The rationale has made sense that if you are in a growing metropolitan area with some inflation, housing was a very good investment even with inflation factored it. I don't have numbers, but I bet that if you are looking at people buying housing in developed close-in suburbs of metro areas like DC, NYC, etc. you will find returns competitive with investing in the S&P 500. You have to exclude from national averages sales in relatively undeveloped areas with much slower price increases, wage growth etc. Prices also used to be competitive with renting on a relatively uniform basis.
It is much more than just competing with inflation, it is the fact that good properties in good locations do gain in real value as supply diminishes relative to demand. And as others have pointed out, there are advantages to buying which a "rational" actor may still enjoy. If you expect average 2-3% inflation over a ten year period, there are huge economic advantages to buying vs. renting! When inflation is now 0% or less - not so much.
Maybe there is some laziness involved, but I see it differently. No one can be an expert in everything. Not everyone is going to understand that you can buy TIPS as a risk free way to avoid inflation. That there are investments better to housing does not mean that all people can find them. This isn't laziness for the same reason I don't consider myself "lazy" because I don't know how to engineer a bridge or save someone dying on an operating table. We can't be experts in everything.
All that said, it is a very real question if the housing ladder will work for someone buying now. It hasn't worked the last few years and it still may not work for some time to come. If we go back to a heavily regulated lending environment (circa early 70s) and a period of stagnant growth, the ladder could be broken for another decade.
"Blacksilver said...
The rationale has made sense that if you are in a growing metropolitan area with some inflation, housing was a very good investment even with inflation factored it."
Good point, there are areas where (given good income growth) they will beat inflation. I was speaking more form a national perspective where (like you said) there are underperforming areas which balance out the performance vs. inflation.
"This isn't laziness for the same reason I don't consider myself "lazy" because I don't know how to engineer a bridge or save someone dying on an operating table."
Very true. I meant laziness in the strict sense of saving and planning for the future. Also, lazy is my word. The concept the behavioral economists use is something else which escapes me..
XPovos: I know quite a few psychologists and neuroscientists that would argue against your statement that psychology is a soft science (whatever the hell 'soft' means). Heck, it wasn't until Kahneman (a psychologist) and Vernon Smith that economists actually did real empirical experiments.
As for starter homes, they only work when you have inflation. In fact, that's the magic: if your payments go to a mortgage instead of rent, you add a bit of inflation and enough time, you can come out even, or even ahead.
Of course, without inflation, they make no sense.
One other point: it's not just inflation, it's also leverage.
If you take $20,000 and invest it with a rate of return of 5% a year, then after 5 years you'll have $24,310.
If you use that same money and as a 20% downpayment on a $100k house that inflates at the same rate, then that house will sell for $121,550 after 5 years. Even if the transaction fees were high (e.g. 10%), that would net you $109k after the sale. Pay back the loan ($78k left let's say), and you've now got $32,000, which is $8k more than you would have earned with that money in the bank.
"Heck, it wasn't until Kahneman (a psychologist) and Vernon Smith that economists actually did real empirical experiments."
Yep - I was lucky enough to have Smith for one of my classes in law school - he would always work behavorial econ when he could - fascinating stuff.
The guy is getting a bit long in the tooth now, but he still lectures & does the symposium circuit. If you ever get the chance to hear him, I highly recommend it.
novawatcher (re: leverage)
You can buy stocks on margin too. It doesn't make it a good plan. If an investment requires leverage in order to make serious money, then it's not a very good investment is it?
But, yes, this is what people think about housing because it's the only leveraged investment most people make.
NoVAwatcher, maybe I'm getting too OT here but I completely agree that some people hold misperceptions about the nature of social science research. It's often a reflection of their not having had courses in psych. (for example) where they were actually required to read the research (as opposed to someone's general summary of findings), so they don't understand the experimental designs used.
Much of what is published in econ. journals is theoretical modeling as opposed to controlled empirical research. Which is "hard" and which is "soft"?
Back to housing - the costs of paying mortgages with borrowed money on which interest is paid should be factored into the leverage example. If I invested my $20K in the stock market but borrowed another $100K to invest it, I would need to make back enough not only to cover inflation but the interest I paid for the borrowed $100K. The housing example is slightly different to the extent that I get some use value out of the house but not out of stocks, but the analogy is still basically sound, I think.
One other small point I'd add to the tradeup discussion is that if you keep your house for the entire 30 years, you should be able to make much higher than the minimum payments after a few years, barring illness, etc. Also, I don't think that "status" is a major driver for most people to move up. I think for most people, the decision is driven by job or personal life changes (e.g., marriage, divorce, kids) and by their ability to afford a house that better meets the needs that they have at the time. You might have to sacrifice a lot of space or a yard in early years, that really limits your enjoyment of your life, so when you can afford it, you may want a house that better meets your needs, rather than to spend it on the latest fashions, expensive travel, new cars, or other things that others might value.
I also think that the moveup decision was much easier to make in past years and in cheaper parts of the country. Transaction costs, dependence on two incomes or a very high single income to afford a modest house, and the risk of putting yourself in harm's way financially make this much tougher, e.g., moving from $350K to $600K is a very different decision from the decision to move from $100K to $150K.
ace
$100k to $150k isn't very realistic anywhere. More like $100k to $250k.
And around here recently it was, buy a house at $250k, sell when it's $500k and have to go all the way up to $800k or more to "move up". (Hence why you chose not to play)
Sorry to nitpick. It was mostly that I don't think there's anywhere that $150k is the "move-up" house.
People have different reasons and different motivations, to some "status" is a "need" in order to fit in with their colleagues, and your list of "needs" are "wants". It's all a matter of perspective and circumstance.
But yes, the debt maintanence costs should be factored in, but are usually written off as "rent". (which is part of why people did the funny calculation that as long as the interest,taxes and insurance were less than they were paying in rent, then it was time to buy).
For the psychology discussion:
it is very soft if you do not have numbers on your research, and quite often in psychology people used to describe some phenomenon wihtout any reasonable experiment, control, etc.
They are using a lot of quant methods these days, but unfortunately quite a few members of that profession are half-wits, who do not grasp the limitations of the statistical technique, do not undersatand how to identify causality, clean their data, set an experiment properly, etc. And some of that work may very well get published in respected journals, but still be bogus, just because the editors did not have enough knowledge to catch the error.
On the other hand, when professional statisticians come to the area, they tend to overlook some of the ideas in the field, lack intuition, etc.
"Cara said...
Sorry to nitpick. It was mostly that I don't think there's anywhere that $150k is the "move-up" house."
Nah - you guys are just too used to NE pricing. A girl I used to date wanted me to move with her to her hometown (Selma AL). Today, you can get a very very nice, 4/3 3200sf in a good neighborhood for 150K. Here starter homes say an older 3/2 1500 sf in a more work a day hood can be had for 89K.
Of course, my salary would only be 60% less than it is here, and I would have to live in Selma, but the 150K move up market is still alive and well "down thar in dem parts"...
I never said, though I can see how it might be misunderstood that I implied economics was a hard science. I don't even consider it a science.
And if I, as a Chemist, am not allowed to look down on Biologists and Psychologists, it is indeed a sad day. Just as the Physicists look down on me.
xpovos:
"And if I, as a Chemist, am not allowed to look down on Biologists and Psychologists, it is indeed a sad day. Just as the Physicists look down on me. "
No we don't. Or, only some of us do. And I would add, only those who would have failed chemistry if they tried it...
Heck - heres a 5,000 sf 100 year old, fully restored Plantation Home - in the best part of town - can be yours for 500K
http://www.cisdata.net/bin/rea.php3?ZKEY=0&acnt=AR51791&action=HOME_SEARCH&hs_action
(3rd place from the top if the link wont take you there)
those darned physicists with their cloud chambers -- it's just a bunch of fuzzy stuff -- they aren't even measuring anything directly!
;-)
I agree that Psychology needs to do some house cleaning and get rid of the flakes, but I also know quite a few engineers that got their asses handed to them by an experimental psychologist.
CRT,
All I can say is when I used to bring up Chattanooga TN as a comparison point a year ago I would get screamed down as a hick. And the move-up homes there start at $250k and get over $300k quick, despite starter homes available as low as $75k.
I guess everywhere I'm familiar with got a whiff of the bubble.
NY Times Chrysler bankruptcy in the worksand that was yet another hilarious one novawatcher.
Cara,
So, bringing it back home, we're seeing THs (the very epitome of a starter home) going for market clearing rent-equivalent prices across the area, though more in further out areas. Yet move-up houses aren't coming down as fast.
A couple of explanations we've heard before, starter homes were more suspect to the flipper phenomenon, and lower credit-quality buyers bought their starter homes during the bubble at inflated prices, keeping the boom going.
But is this divide going to stick around? Is it going to be a permanent and large divide between 'acceptable' and 'reasonably desirable' housing stock? And if not, what's our method for reaching equilibrium? Inflation + starter prices up; or move-up houses down?
(Oh no, it's inflation vs. deflation: part 9,673!)
Since the close in neighborhoods of Amsterdam have been the better parts of that city for centuries, and they haven't risen in value, except temporarily, for the last 400 years, I think we can safely say that housing doesn't rise in value in real terms.
This means that essentially everything we've seen has been inflation or predicated on expectations of inflation, because a house and 30 year fixed rate loan is essentially a pay fixed swap which is very profitable in periods of rising interest rates (high or increasing inflation). Since it's refinanceable it doesn't dramatically fall in value during lower rates.
It's the swap behavior that accounts for most of the value of a trade up home. First you buy a little swap, then you buy a bigger swap. Since you're income ratchets as well, it looked like a pretty good bet.
xpovos,
The starter SFHs, are going to be coming down. Why do I say this? On the basis of a whole whopping 2 REO's near the VRE in Burke priced under $300k? Partly, but theoretically because the move-up buyer is getting wiped out. The already invested move-up equity will allow the SFHs to remain more stable, but at some point the lack of buyers will bring the house prices down. Just not until this fall at the earliest.
It is frustating though, anything under $500k for a SFH in Burke is getting snapped up faster than the cheap THs. Why? Percieved value. People think they are "safe". But $450k for a SFH in a relatively obscure suburb is not going to be sustainable if the TH sellers can't get over $200k such that half of them are underwater until they've paid down the principle. Sure, there are people skipping rungs of the housing ladder now, because of patience and savings, but that buyer pool is limited too and much smaller than the move-up pool would have been if the intoxication had continued.
So my prediction is that this is the last good spring to sell your nice SFH for near-peak values.
(of course in all of this I'm thinking Burke, i.e. the most standard of the standard/average suburbs)
Ditto what CRT said. It can be easy to forget that in many places 150k goes a long way. Heck, even here in NOVA it wasn't *that* long ago (circa 2000) that 150k afforded a decent TH in a perfectly respectable area.
Also worth noting is the fact that many first-time (future move-up) buyers use FHA or similar programs that allow little money down. Therefore, in a normal market, this allows them to get on the "property ladder" with little loss to actual savings, allowing them to take advantage of tax deductions, build equity, and in 10 years presuming some inflation, come out ahead with a nugget of cash to put toward a bigger or better place. I can see how this approach makes perfect sense if your monthly costs are less than renting.
GiGi
Low-money down programs are my pet-peeve. Unless you live in an area where renting is considerably more expensive than buying (which is true in some places) such that saving for a downpayment is onerous on top of rent, whereas you'll quickly accumulate savings when paying off the mortgage.
Other than that, I think they should be banned. I think it's a trap to get people paying interest, fees, taxes, mortgage insurance etc. when it would only take a few more years of renting to accumulate the cash. And if everyone had to accumulate the cash, prices couldn't climb as fast.
Oh, and while yes, sometimes $150k does go pretty far, I would postulate that in those same places you can't count on appreciation to pay off your transaction costs (though I think they're also not 6% total like here). Not that that's a bad thing.
I also think each of us has their own idea of what constitutes a move-up house... or a starter house for that matter.
"Cara said...
All I can say is when I used to bring up Chattanooga TN as a comparison point a year ago I would get screamed down as a hick."
I bet. Then again, the Selma folk I knew thought Chattanooga was a high fallutin, expensive lifestyle :) Its all relative I guess...
Cara said...
I would postulate that in those same places you can't count on appreciation to pay off your transaction costs (though I think they're also not 6% total like here).
True. But the main reason there is low wages & a lack of income growth. Its a really stagnant part of the US. In the last 7 years, census indicates Selma median household income grew from 23K to 26K (+13%).
By contrast, in the last 7 years median incomes around here grew anywhere from +26% to +43%. Thats the flipside to paying for appreciation we see around here - a dynamic growing economy.
Cara,
I don't think low-downpayment programs are necessarily bad, if used properly. My husband and I used one when we bought our first place. It actually got us a lower than market interest rate and allowed us to put 3% down without any mortgage insurance. For that, we were able to buy a nicer and larger place than the apartment we were renting -- at a lower monthly price (which is what pushed us to buy). On top of that, we benefitted from the mortgage interest deduction, which was great as we were just married and had no kid deductions yet :-). When we went into it our only goal was to break even when we sold (which still put us ahead of total costs of renting during the same period of time, and allowed us to increase our savings rate).
In any case, that's just one person's experience. As with everything, it's necessary to go into something realistically with your eyes wide open (which is precisely what didn't happen during the bubble, unfortunately).
Adam: counter-point in Amsterdam. Its period of urban housing development in the close-in areas also peaked hundreds of years ago. Comparisons between rapidly developing (or at least until recently rapidly developing) areas like NoVA and developed Europe are not equal. Moreover, countries like the Netherlands that keep strict control over lending laws and high taxes removed the discretionary power that enabled the bubble to get so out of control here. The "heavy-handed" governments in such countries stopped their lending banks and consumers from doing stupid things in their housing market, but they did not stop them from buying investments, albeit with less leverage, from countries doing stupid things (Iceland, UK, Ireland, USA, ...). In the Netherlands, the income tax is 52% for all income above 55k euros plus 6% VAT on essential goods (food) and 19% VAT tax on everything else. And no deduction for mortgage interest either. When no one can earn much money, the ability to build up the value of consumer purchased commodities such as houses is limited. Whether or not this is a good thing is a completely different debate :-).
Gigi said:
"It actually got us a lower than market interest rate and allowed us to put 3% down without any mortgage insurance. For that, we were able to buy a nicer and larger place than the apartment we were renting -- at a lower monthly price (which is what pushed us to buy)."
The first half says that what you got was a VA loan (which I take less issue with than FHA or 80/15/5's). The second half is the case I exempted. Where buying is significantly cheaper than renting. Although, in your particular case, saving up might not have reached the level of "onerous" that I stated before.
But that's a really key phrase there.
My continued objection in this case is that it's silly for the government to provide additional incentives to ownership in cases where ownership is clearly beneficial anyway. What's the point? And the other major objection, that it can help fuel the fire, stands.
Konstantin, very few if any of the top tier journals in psychology and related fields publish empirical research without numbers and without very rigorous research design, unless they are specifically aimed at publishing top-level theory development. Thinking otherwise simply reflects as lack of knowledge of these journals. As much as some people in these fields like to tout the need for qualitative designs, and there is some rigorous qualitative research out there, the fact remains that they rarely are able to publish in the top tier journals.
And, editors aren't the ones who are the primary gate keepers to catch the errors; the reviewers do, and the Editor makes the decision based on the reviews and on his/her own reading of the manuscript.
Lesser journals may accept lesser research, but that is true in every academic field.
These are the facts.
Cara, pick whatever number you like to illustrate the point more effectively. But go to Indianapolis and smaller midwestern cities, and you will find many neighborhoods where the median housing price is around $100K, and a 50% increase in that price gets you another couple of bedrooms, a nicer kitchen, a bigger lot, etc.
ace,
But do people really bother to move for that? Haven't they ever heard of more than one kid in a room? I think the 50% greater price houses are the starter homes for those with higher salaries. The move-up homes in those areas would be the custom-built ones. The concept of bothering to buy a house that isn't going to last you through the young family years is a bit foriegn to non-bubble areas. But the concept of building your dream home once you have the means, isn't.
One could test this by simply looking at housing turnover rates in those places versus here to see that we have an active housing ladder and they don't.
On the other hand friends of mine in Michigan did do what I would consider a lateral housing move from a short-commute condo, to a longer commute house before the twins were born. But I think the drive to buy that first condo was partially TV-induced kool-aid, because with transaction costs it was a wash with renting.
Ace,
editors, reviewers, whatever. crap gets to the symposiums, plenty of crap gets published, since a lot of methods they use are not fully understood by the authors. too many people tend to plug the numbers in the model and then interpret it with very little rigour. especially when experiments are related to surveys and human participation. for econ it is kinda easier, because it is much easier to measure the data and it is much more reliable. i do not say that social sciences are soft, just that the application of statistical technique there and design of experiments is an extremely difficult task and proving some theory properly is SOMETIMES much more difficult than publishing nice-looking result based on some data artefacts, or inaccurate implementation of a statistical method.
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