"Think Indianapolis and Cleveland."

[DanS]

Re: "Think Indianapolis and Cleveland."

Originally posted by Lancer
Why do you think this is?

1) No population growth

2) The real estate market has been devastated recently by deindustrialization and other factors, such a poor state government

Here's a blog post that I wrote about the market in those areas and why it might be tough sometimes to live in areas with poor real estate markets, even though housing is cheap, and why it might be easy sometimes to live in areas where housing is expensive...

http://carriedaway.blogs.com/carried_away/2007/02/tough_living_in.html

[DanS]

Originally posted by Rufus T. Firefly
Here's your compare-and-contrast (Kuci should especially appreciate this):

$215k in Pittsburgh buys you a four bedroom, two bath single-family home in the pleasant, safe, solidly-middle-class neighborhood of Squirrel Hill.

The roughly same amount of money, spent in a similar DC neighborhood (I chose Friendship Heights), gets you this studio condo.

Sometimes I really miss Pittsburgh...

On the other hand, the Washingtonian will have been paid to live in his condo the last few years, on an effective basis.

[asleepathewheel]

I moved from Indianapolis to Houston about a month ago.

This article, is woefully out of date.

Recently (this summer) Indianapolis (and Indiana more generally) has been pretty devastated with property reappraisals. My friends who own homes (generally between 150k-300k) have almost all been hit with insane tax increases, some around 200%. I forget the numbers they told me, but it was quite shocking to them. I know the fixed income people are just devestated.

Here is an LAtimes article on the situation, the indystars articles are all archived and must be purchased.

You can't imagine how thrilled I was that I made the decision to rent during my time in Indy. Good luck unloading a house in that situation without taking a loss.

Indiana also has one of the highest foreclosure rates in the country. link

So, I guess if you just look at the median rates, everything appears fine and dandy, but man, its not a good place for the recent owners. Now, it might be a good time to buy a house, if you were planning on staying for 10 years, like a friend of mine who bought a house a few weeks ago for less than it sold for 3 years ago....but good luck if you've been in for a few years and are trying to get out or even just live on the same income....

[Apocalypse]

Houston has nice and low housing prices still. You can still get a 4+ bedroom house in a nice suburb for under 200k.

[Zkribbler]

Originally posted by Apocalypse
Houston has nice and low housing prices still. You can still get a 4+ bedroom house in a nice suburb for under 200k.

Holy Mother of Pearl!!

To compare, I just pulled out some classified here:

Mt. Washington (~ 50-yrs-old, n. of downtown) 4 bedroom = $650,000.
Eagle Rock Hills (with view) 2 bedrooms = $650,000.
1988 Chinatown Condo, adj. downtown, 3 bedrooms = $410,000
Long Beach condo, 2 bedroom = $265,000.

(I hate you guys. I really, really hate you guys.)

[Lancer]

asleep, that popped my dream of one day living in Indiana.

Zkrib, but we don't get the deep and abiding joy of living in LA.

[Zkribbler]

Originally posted by Lancer
Zkrib, but we don't get the deep and abiding joy of living in LA.

It's more like a deep and abiding love of not having to take a 50-60% pay cut to move elsewhere.

[Lancer]

Very valid point. Plus, they let you get away now and again and come visit.

[Rufus T. Firefly]

Originally posted by DanS


On the other hand, the Washingtonian will have been paid to live in his condo the last few years, on an effective basis.

You lost me there. Elucidate for the econ-illiterate, s'il vous plait.

[DanS]

Sure, but it's more personal finance than economics. It was detailed in my blog post, but I'll repeat here.

Your effective cost of living in a house that you own equals the mortgage payment, insurance, and maintenance (called carrying costs) minus the appreciation in your home value and minus the amount of the mortgage payment applied to principal.

Somebody living in the $215k condo in Washington for the last 2 years will have been paying high carrying costs, but those costs will have been more than made up by the 24% appreciation in home value -- i.e., he is being paid to live in the condo.

Over the last 2 years, Pittsburgh has experienced -1.2% appreciation on a $112,200 median-priced house. In other words, a homeowner will have paid the carrying costs plus about $55 a month in non-cash costs due to the fact that his house depreciated.

Over the last 2 years, Indianapolis has experienced -4.6% appreciation on a $117,100 median-priced house. In other words, a homeowner will have paid the carrying costs plus about $225 a month in non-cash costs due to the fact that his house depreciated.

This is why it's tougher to live in places like Indianapolis and Pittsburgh than meets the eye and easier to live in places like San Diego than meets the eye. This is why it's easier to live in parts of Northwest DC than meets the eye and tougher to live in parts of Southeast DC than meets the eye.

[DanS]

Originally posted by Zkribbler
(I hate you guys. I really, really hate you guys.)

[Lancer]

[Rufus T. Firefly]

Originally posted by DanS
This is why it's tougher to live in places like Indianapolis and Pittsburgh than meets the eye and easier to live in places like San Diego than meets the eye. This is why it's easier to live in parts of Northwest DC than meets the eye and tougher to live in parts of Southeast DC than meets the eye.

The personal finance makes sense, but I'd dispute this last point, on two counts. First, it's not harder to live in Pittsburgh than meets the eye -- as long as you don't care about the value of your home. Most Pittsburgher's don't; they plan to die at home (the median resident age of Allegheny County is, or was when I lived there, higher than in any county in the US, outside of Florida).

DC residents, being a transient lot, do care about the value of their homes. But it's easier to live in parts of DC than meets the eye only if you can get into the housing market to begin with. With median housing prices at 10x the median DC salary, fewer and fewer people can get into that market. DC is like an all-inclusive luxury resort that is a "surprising bargain" overall if you can afford the exhorbitant rack rate to begin with.

But I take your overall point.

[mactbone]

Not everyone was hit as hard on the property taxes - really the biggest uproar I heard was from people on Meridian street in their giant homes.

Indianapolis is not a city with a lot to do downtown and it only takes about a half hour to get there from the various suburban areas. I'm amused by the prices they're trying to charge for places downtown because they're ridiculously expensive compared to the kind of place you could get near the edge of town.

[DanS]

Well, the upshot is that you have to pay attention to the way the real estate market in your area works and how your particular situation may be impacted.