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tonybologna

Housing Bubble in Washington DC

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As most know, real estate in the city of Washington DC has been increasing at one of the highest rates in the nation, about 20 % per year. One must wander how this can be sustained given the facts that:

1. Most people wouldn't voluntarily raise their family in Washington DC

2. The young single professionals and the like that have moved into Washington DC the past five years will in time leave in order to have families.

3. Housing values are far past their construction and labor costs.

4. Crime still remains a problem in some areas...

For example, housing prices in the area of North capitol st nw to 5 th st nw north of NY AVE are in the neighborhood of 220,000 to 500,000 dollars for a row home. This typically contain two to three bedrooms, maybe a basement or basement rental, and a small front and back yard with street parking only. Typical square footage is rarely over 1800 square feeet, ,usually about 1300 square feet. These areas still suffer from homicides as below, where a 17 year old and a 24 year old have been murdered in the past week just a few blocks from each other:

http://www.washtimes.com/metro/20050531-101249-1467r.htm

http://app.mpdc.dc.gov/newsroom/newsroom.asp?sid=3213

My question is how and why people pay these prices for these row homes given the environment they are in? There is nothing to do in walking distance in this area- no good restaurants, nightclubs, or parks that are in decent shape. You have to drive to Chinatown or downtown to do anything. If a democratic president is elected and government spending is finally cut instead of swelling up like a balloon like it has been for the past five years (Homeland Security = Porkfest), Washington DC will have to see serious government spending cutbacks and the whole real estate market will suffer as the private sector in DC is not very strong, whereas it is much stronger in Northern Virginia.

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Those are some high prices! I believe, however, that Washington is going through transformation much like other cities in the US. After years of neglect and decline, cities that were once written off as dead are sparking new life. I think it is the beginning of gentrification. The first stage is young, single, hip urbanites moving in and displacing poorer groups. These newcomers help repair some of the damage, and the economy improves over time. After a while, as the areas stabalize, more, and different, groups start coming in, children, wealthy minorities, etc.. A more middle/upper class situation then develops. It can be a painful process, and there are usually setbacks, but I think Americans are beginning to realize that urban living has some advantages, especially the younger, more sophisticated ones. I think suburban lifestyles will always be preferred, though. Sadly.

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It is as you say, a housing bubble. People are willy nilly investing in real estate now as they did in tech stocks in the late 90s. Like all bubbles, a lot of people are going to be burned when it pops.

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Considering how much homes cost in northern VA, I'm not surprised. In fact - those row homes sound like better bargains than all the crummy ranch style homes in Vienna or someplace as that. Very dissapointing, I had wanted to move there 2 years ago & had a good job offer, but the homes are too bloody expensive there. It's a bummer....

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