Scott Wall

Thanks Greenspan. Your 2004 Fed speech helps me complete my series of today's reality check:

"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home."

At the time Greenspan was the Master of the economy. So like good little boys, lenders provided greater alternatives. Let's see, we had Pay Option ARMs, interest-only, 2/28, 3/27, 15 year, 30 year, 40 year, and of course many of these were available via stated income no documentation loans. Those old-fashion traditional mortgages were expensive ways of financing homes since American households had much less money and needed creative financing to bridge this gap between wages and housing aspirations. It didn't seem like anyone had any fear of repercussions during the bubble and all financial prudence was thrown out the window and any historical measures meant nothing.

Today the rhetoric is heating up regarding bailouts and the Fed is becoming more and more embroiled in this mess. It would appear that they are going to pull out all stops to keep inflated prices high. Any of these measures are simply going to prolong the inevitable correction. We either deal with the issue now or face multiple years of deflating prices like Japan did. There isn't any other scenario. The ideal scenario would be stronger inflation pushing up wages but given that we are in recession it is highly unlikely that wages will be shooting up in 2008.

Pull the band-aid quick or the pain is just going to last longer.

If you are waiting for the Fed to save us, you might want to look elsewhere for your ray of sunshine. In his latest Financial Market Strategies report, Wells Fargo senior economist Eugenio J. Aleman indicates that people banking on a Fed rate cut to spur home sales are looking in the wrong place for help.

In fact, he thinks that even if the Fed slashes rates it would do little to help the market. Here's his reasoning:

"Let's say that the Federal Reserve lowers the Federal Funds rate to 2%, does this mean that we are going to start buying homes and U.S. automobiles again? The reason why nobody is willing to buy a home today is not that interest rates are too high; the reason is that home prices are too high. Nobody will want to buy a home today when they know that if they wait they could get the home for a large discount.

"This means that it does not matter what the interest rate is on mortgages; nobody is buying. And thus, it does not matter what the Federal Reserve does with the Federal Funds rate. And I actually believe the Federal Reserve knows this. They are well aware of the ineffectiveness of the Federal Funds rate to help bring back the U.S. housing market and/or the U.S. auto sector. Thus, I still believe that many of the Federal Reserve Governors are going to be reluctant to lower the Federal Funds rate even if they ultimately go ahead with a decrease in the rate on January 30th."

Aleman argues that the bigger concern for the Fed right now is inflation.

CLICK HERE for full report.

Online home-price tracker Zillow says it's deepened its database and upgraded its valuation math (RELEASE HERE.) The company''s "Zestimates" have drawn healthy criticism for frequent inaccuracies. However, has more homes are brought into the database, accuracy are expanding down to the county level.

Zillow indicates the Washington Metro data now has 97% of the homes with Zestimates, 41% are within 5% of the selling price, 65% are within 10% of the selling price, and 84% are within 20% of the selling price.

Prince William data has 87% of the homes with Zestimates, 43% are within 5% of the selling price, 68% are within 10% of the selling price, and 90% are within 20% of the selling price.

By the way, Zillow puts typical Prince William home values down 9.0% in a year.

Why not try Zillow out and report back what you find about the homes you know best and the Web site's "new math" ...

You can also find this post and others at http://www.ask2agents.com/

United Van Lines' annual report on where its moving vans take people shows that Washington DC last year again had far more moves IN than relocations out.

United says it had 1,116 (58.5%) inbound moves to DC last year vs. 793 (41.5%) of their business. DC has remained inbound since the inception of the study (1977).

Virginia (51.6%) stayed strong with its 12-year inbound trend. However, Maryland (54.1%) retained its 16-year outbound tradition. Michigan (67.8%) once again captured the top outbound spot, followed by North Dakota (67.2%) and New Jersey (61.0%.) National report IS HERE.

These United Van stats, usually seen as a barometer of management-level relocations, reinforce the notion that many families find the Northern Virginia - D.C. area a good place to call home, particularly due to the strong job market.

You can also find this post and others at http://www.ask2agents.com/

Below is information from the VDOT Project Website. As one of the many sitting in traffic, I find this to be (1) on the technical side - pretty neat and (2) on the commuter side - long overdue and way too long to wait [2010]

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What's being done

Route 29/Linton Hall Interchange Improvement Project is one of the largest construction projects in Virginia. The current total estimated project cost is approximately $181.4M.

The purpose of the Phase IV - I-66/Route 29/Linton Hall Road Interchange project is to construct a grade separated interchange at the existing Route 29/Linton Hall Road intersection, creating a fully limited access facility on Route 29 between Virginia Oaks Drive and Heatcote Boulevard. The interchange will be a single point urban diamond interchange (SPUI), with a braided ramp configuration along southbound Route 29 between I-66, Linton Hall Road and Gallerher Road.

The interchange will include 4 bridges:

B632 - Route 29 and Ramp K over Norfolk Southern Railroad

B633 - Linton Hall Road over Route 29

B634 - Route 55 over Norfolk Southern Railroad, and

B635 - Ramp G over Ramp K.

Also associated with this project are the removal of at-grade railroad crossings (Norfolk Southern Railroad at Gallerher Road, Route 29 northbound and southbound) and two traffic signals along Route 29. Following completion, Route 29 will be a 6-lane divided facility between I-66 and Virginia Oaks Drive and will operate without signals or obstructions within this same area.

Phase IV Plan Roll in PDF Format

Features

Proposed Construction Phasing - Maintenance of Traffic

There are three main phases of construction - Phase 1 is broken into two parts that can be completed mostly at the same time.

Below is the preliminary breakdown of various construction phases with a rough estimated construction cost at this time:

Phase 1A - Detour Construction - $10 million - includes Route 29 & Linton Hall detour construction and temporary railroad signal crossings. Estimate construction time for this phase is 6 months.

Phase 1B - Interchange Construction - $50 million - includes Linton Hall Road bridges over 29 and NS Railroad NB 29 Bridge over NS Railroad ultimate grades of NB 29 and portions of interchange ramps, and access roads. Estimate construction time for this phase is 24 months.

Phase 2 - Interchange Construction - $30 million - includes SB 29 bridge over NS Railroad Ramp G bridge over Ramp K ultimate SB 29 grading and portions of braided ramps. Estimate construction time for this phase is 12 months.

Phase 3 - Interchange Construction - $5 million - includes final portions of Ramps I and J and minor detours to facilitate final construction. Estimated construction time for this phase is 6 months.

Estimated Total Construction Time: 4 Years

What's being done

Summary of other I-66 Projects

Phase I (UPC 63724) - University Boulevard - new alignment Construct a four-lane divided roadway with a bridge over I-66 from Wellington Road to Rte 29.
Status: Construction completed and opened to traffic on August 06.

Phase II (UPC 69113) - I-66 HOV widening from Rte 234 Business to the Rte 234 Bypass. Add one HOV and one SOV lane to EB and WB converting the existing four lane divided interstate to eight lanes divided.
Status: Construction completed and opened to traffic in November 2006.

Phase III (UPC 70043) - I-66 HOV widening from Rte Bypass to Rte 29. Add one HOV and one SOV lane to EB and WB converting the existing four lane divided interstate to eight lanes divided.
Status: Construction started on December 2006 with a completion date of August 2010.

Traffic Data

Based on traffic counts, Route 29 carried 46000 vehicles per day (ADT - average daily traffic) in 2005, and is anticipated to increase to 63,000 ADT by 2035. Linton Hall Road's count in 1998 was at 9000 ADT, and by 2005 that number had increased to 15,500 ADT. By 2035 it is anticipated to grow to 42,000 ADT on Linton Hall Road.