2540 PORT POTOMAC AVE
WOODBRIDGE, VA 22191
List Price: $454,900
Prior Sale: $740,000 9/5/2006
Listing Date: 07/18/07
-38.5%
14318 RANDALL DR
WOODBRIDGE, VA 22191
List Price: $249,900
Prior Sale: $374,900 11/30/2005
Listing Date: 07/24/07
-33.3%
3641 THOMASSON CROSSING DR
TRIANGLE, VA 22172
List Price: $515,000
Prior Sale: $741,595 1/31/2006
Listing Date: 07/25/07
-30.6%
9516 LOMOND DR
MANASSAS, VA 20109
List Price: $305,900
Prior Sale: $430,000 10/16/2006
Listing Date: 07/19/07
-28.9%
14323 FULLERTON RD
WOODBRIDGE, VA 22193
List Price: $282,900
Prior Sale: $395,000 6/12/2006
Listing Date: 07/17/07
-28.4%
13504 PHOTO DR
WOODBRIDGE, VA 22193
List Price: $300,000
Prior Sale: $412,000 12/21/2005
Listing Date: 07/21/07
-27.2%
7918 BRIGHTON WAY #18
MANASSAS, VA 20109
List Price: $199,900
Prior Sale: $270,000 12/21/2005
Listing Date: 07/18/07
-26.0%
9600 LAURENCEKIRK PL
BRISTOW, VA 20136
List Price: $515,000
Prior Sale: $694,000 5/16/2006
Listing Date: 07/24/07
-25.8%
16547 SHERWOOD PL
WOODBRIDGE, VA 22191
List Price: $214,000
Prior Sale: $285,000 4/3/2006
Listing Date: 07/24/07
-24.9%
15832 FOURMILE CREEK CT
HAYMARKET, VA 20169
List Price: $424,000
Prior Sale: $553,479 2/21/2006
Listing Date: 07/21/07
-23.4%
4411 EVANSDALE RD
WOODBRIDGE, VA 22193
List Price: $279,900
Prior Sale: $360,000 6/7/2005
Listing Date: 07/19/07
-22.3%
13098 QUATE LN
WOODBRIDGE, VA 22192
List Price: $689,900
Prior Sale: $862,464 5/1/2006
Listing Date: 07/19/07
-20.0%
6064 OMEGA LN
MANASSAS, VA 20112
List Price; $425,000
Prior Sale: $510,000 4/5/2005
Listing Date: 07/21/07
-16.7%
14306 BISMARK AVE
WOODBRIDGE, VA 22193
List Price: $299,000
Prior Sale: $355,000 12/7/2005
Listing Date: 07/20/07
-15.8%
17480 DENALI PL
DUMFRIES, VA 22025
List Price: $350,000
Prior Sale: $415,000 9/13/2005
Listing Date: 07/20/07
-15.7%
12031 INFANTRY LN
BRISTOW, VA 20136
List Price: $575,000
Prior Sale: $681,910 3/21/2006
Listing Date: 07/20/07
-15.7%
4125 AGENCY LOOP
TRIANGLE, VA 22172
List Price: $499,000
Prior Sale: $587,659 5/3/2006
Listing Date: 07/20/07
-15.1%
8144 CELLO WAY
MANASSAS, VA 20111
List Price: $365,900
Prior Sale: $430,000 2/21/2006
Listing Date: 07/24/07
-14.9%
6009 OMEGA LN
MANASSAS, VA 20112
List Price: $379,900
Prior Sale: $438,500 1/7/2005
Listing Date: 07/23/07
-13.4%
9628 TARVIE CIR
BRISTOW, VA 20136
List Price: $493,500
Prior Sale: $570,000 6/1/2005
Listing Date: 07/25/07
-13.4%
11655 BREVET CT
BRISTOW, VA 20136
List Price: $469,000
Prior Sale: $534,900 6/28/2005
Listing Date: 07/19/07
-12.3%
8948 YELLOWLEG CT
GAINESVILLE, VA 20155
List Price: $430,000
Prior Sale: $487,240 12/8/2005
Listing Date: 07/23/07
-11.7%
15218 JEANS CT
WOODBRIDGE, VA 22193
List Price: $525,000
Prior Sale: $575,000 6/8/2006
Listing Date: 07/20/07
-8.7%
9901 HENRICO ST
MANASSAS, VA 20109
List Price: $440,000
Prior Sale: $482,000 11/2/2005
Listing Date: 07/19/07
-8.7%
15800 BOBOLINK DR
WOODBRIDGE, VA 22191
List Price: $395,000
Prior Sale: $430,000 5/15/2006
Listing Date: 07/20/07
-8.1%
8313 ROLLING RD
MANASSAS, VA 20110
List Price: $400,000
Prior Sale: $434,900 11/18/2005
Listing Date: 07/23/07
-8.0%
13526 KASLO CT
WOODBRIDGE, VA 22193
List Price: $370,000
Prior Sale: $399,999 9/28/2005
Listing Date: 07/21/07
-7.5%
8995 BREWER CREEK PL
MANASSAS, VA 20109
List Price: $399,000
Prior Sale: $415,990 9/5/2006
Listing Date: 07/18/07
-4.1%
8161 HILLCREST DR
MANASSAS, VA 20111
List Price: $465,000
Prior Sale: $450,000 9/21/2004
Listing Date: 07/20/07
+3.3%
9723 KING GEORGE DR
MANASSAS, VA 20109
List Price: $270,000
Prior Sale: $254,400 7/30/2003
Listing Date: 07/25/07
+6.3%
Wednesday, July 25, 2007
Prince William County -- On the Market
Posted by Harriet at 8:14 PM
Subscribe to:
Post Comments (Atom)
61 comments:
Some of these listings reflect a drastic drop in price in less than two years. Smells like fraud to me.
The first one, Port Potomac, is almost certainly fraud. The comps were selling for ~$500,000 even at peak. Then that one sold for $750,000?
Interestingly, it's also tops on the list for a second time now, as it had been previously listed at $499,000. I guess it gets one of those special "Reduced Price" tags now.
We can't be sure whether it is fraud or not, but we can be sure it wasn't a transaction representative of fair market values in its locale. There can be a multitude of reasons for these outlyers including fraud and non-arms' length transactions. Either way, they don't tell us much about what our properties are worth if we go to sell ... or go to buy.
xpovos-
That house in Port Potomac is over 3600 square feet. I know the new homes right now are starting at 400,000 for the cheapest with no options and an unfinished basement that, when included, brings the total square footage up to 2600+.
I can easily see how a house sold earlier in the boom would go for 750+, especially if you assume they threw in a bunch of options.
The M/I model home would sell for about 720,000 now with all the options included, and its upwards of 4500 square feet. Their base price is 550,000.
Daid J won and Lance lost.
lance,
I don't consider all of these listings outlying or out-of-the-ordinary properties. They were all listed in the last six days, and except for two, were all sold in 2005-2006.
I list properties that were sold in the last two to three years.
Wow, now we know for sure that this blog is getting off the ground. A troll has even moved in...
This is a sort of a "if you build it, they will come" kind of thing I think.
Lance has lost to Harriet just as he did to David J.
Harriet,
Outlyer is a statistical term (i.e., doesn't refer to whether the homes are near in to DC or far out). It is the "Bill Gates" number. It gets thrown out from calculations of median and average and from determining the trend ... because it is not representative of what is happening out there. As someone said, some of these "sales" you're quoting are due to "fraud" (i.e., values get inflated to defraud mortgagors) or perhaps not-arms length transactions (e.g., divorce settlements), etc. And like any outlyer they shouldn't be considered when trying to determine what is going on because they only serve to obscure the truth.
Harriet,
An anology to what you are doing would be if you went through the obituaries and pulled all the deaths of those who died under the age of 30 and then posted those obits as "representative" of what is happening ... all 20 of them out of the 4,000 total. Yes, it would look like life expectancies suddenly dropped and it would be scary, but it wouldn't be true.
You are doing the same thing in regards to home sales. My question for you, why do you want to be pulling data out of context to scare homeowners? You know as well as everyone else on here that for every anomoly you are finding there are 100 sales that are not represented by that anomoly. To then post these as reprensentative is disingenuous. I also have to question why you would want to disingenously worry homeowners? I mean, you wouldn't want to worry people that the median age of death had suddenly fallen to under 30, why would you be trying to worry homeowners that their properties were suddenly worth pennies on the dollar? What would motivate you to go to so much trouble to do this?
Lance,
I understood the "outlyer" term perfectly, although I thought you meant "outlying" because you've referred to outlying areas as not mattering.
If you can take every listing on the market, find its corresponding prior sale, post it online, and come up with some statistical analysis, more power to you!
I've never stated that these listings were statistically representative of the "median" market price.
I find the fact that a property can sell for 30-40% less than it did one or two years ago interesting and relevant to the mortgage market fallout.
As to your last question, I think these listings help clear up the notion that real estate is a "can't lose" proposition. I know people who are hurting right now because of risky loan situations, as they were given that very same advice. They were told by lenders that when their loan adjusted, they could "just refi" and that renting would be "throwing their money away."
Harriet said:
"I find the fact that a property can sell for 30-40% less than it did one or two years ago interesting and relevant to the mortgage market fallout."
But if we're talking about those few properties whose sales prices were propped up because of mortgage fraud or non-arms length transactions (such as divorce settlement sales), why are they relevant to the mortgage market fallout? They would have happened regardless. Now if you were posting average sales prices and/or median sales prices and these showed the same value declines, then yes it would be interesting and relevent. But to just post cherry picked data that is "the worst" doesn't help clarify what is happening.
You do understand that these anomolies have been there forever and will be there forever, don't you? Like the obits for people under 30, you'll always have these "scary" events ... but they have never been the norm ... and more importantly, nothing has changed to make them now the norm. True, you don't come right out and make the claim that they are the norm. But by posting them as you do, you insinuate they are.
As for the unqualified "can't lose" claim that some real estate agents have made ... of course, that is also disingenuous! And deserves to be pointed out for what it is too.
Lance has lost to Harriet just as he did to David J.
So Lance thinks that any property with a falling price must be an outlyer? Why am I not surprised?
Lance, if all of these properties are outlying "anomolies" because they "must have been mortgage fraud" but all of these "anomolies" were originally reflected in the sales price data a year or two ago, what does that tell us about sales prices back then?
I can only infer you are suggesting, in effect, that peak bubble prices "weren't real." And if that is the case, why shouldn't we expect prices to drop well below the "non-real anomoly prices" of the peak?
Harriet, you are doing great work.
Some moron true believer who got constantly humiliated by the knowledgeable commenters at Daid J's site is now coming here and spouting his usual gas. Now he's down to blatantly diregarding evidence by claiming that it MUST be special cases because it's not the answer he wants.
If he had an ounce of sincerity, decency, maturity, or committment to truth, he could easily check up on these listings and see whether they are special cases. Of course he doesn't, because he can't handle the truth, which is that your listings are real purchases that people made and now those people are taking real baths because the market has crashed in outlying areas, and the crash is now moving inside.
You can treat him as somebody honest if you like, but you'll soon see him for the cretin he is. He will continue to say these are non-arms-length transactions with zero evidence because that's what he has to believe to maintain his own pathetic illusions.
Speaking as someone who has been house shopping in the
relevant area... (in anticipating of purchasing late
next year)
I can say without a doubt that these numbers are not
statistical anomalies.
Many houses in the Manassas area are literally blocks
away from new home developments where prices are being
slashed in an effort to generate sales.
One development I have looked at has dropped its
prices from the "high 600s" to the "high 400s" and the
salesman at the site told me a home could be had in
the mid 400s. (with more than a few free upgrades)
This is a link to a 2005 story about the development:
http://tinyurl.com/2tyosz
This is the current webpage for the development:
http://tinyurl.com/2zavva
That is a $200k base price cut from ~660k to ~460k.
This site is on Clover Hill RD within Manassas City.
There are houses literally down the street that are
still trying to sell with asking prices far above the
cost of a brand new home. (Might make an interesting
blog post if you have the time to do the research,
this is a little bit of an unusual situation because
this is a case of a new development being built
amongst homes 10-15+ years older)
Lance is either hopelessly delusional or an ordinary troll.
Leroy,
Did you really expect anything any different from these developments at the very edge of the metro area? It's normal and understandable that areas "on the edge", be they at the far reaches of the metro area or at the dividing line between "desirable" and "transitional", will experience large fluctuations when going from the boom side of the cycle to the down side of the cycle. But they are not the norm ... nor are they representative of what is happening on the whole. To portray them as such is disingenuous. People who bought out on the edge knew they were taking a chance. For those who bought for the right reasons (i.e., to actually live there) it doesn't matter if they can sell for as much as they paid or not ... because they aren't selling. For those who bought for the "wrong" reasons (i.e., to speculate), they had to know that the potential for high rewards is always accompanied by high risk.
In any case, as others on here have pointed out, some (if not "many") of the sales Harriet is listing are obviously due to fraud or other non-normal sales transactions. They are not representational of what the average homeowner would experience if he/she were to sell now ... not even if that homeowner happened to be in one of these "on the edge" locations.
Fear mongering is wrong. Plain and simple. And these lists are fear mongering.
Those of you who purport to be decent people, how can you justify this fear mongering?
Lance has lost to Harriet just as he did to David J.
And Keith, Leroy, and others ... when you have to resort to insulting your debating partner instead of giving a reasonable counter to what they have said, you have lost your argument.
"Did you really expect anything any different from these developments at the very edge of the metro area? It's normal and understandable that areas "on the edge", be they at the far reaches of the metro area or at the dividing line between "desirable" and "transitional", will experience large fluctuations when going from the boom side of the cycle to the down side of the cycle. "
Maybe you didn't read what I wrote very carefully.
This development is within Manassas City proper amongst houses built at least ten years ago, and in some cases ~20 years before. This is not a development spouting from a field on the "very edge" of the metro area. Manassas is itself a significant population center with its own commercial and industrial areas, not some bedroom community full of commuters.
"But they are not the norm ... nor are they representative of what is happening on the whole. To portray them as such is disingenuous."
There is nothing "disingenuous" at all about discussing the price of real estate in Manassas VA. Did you somehow get the impression that my observations about Manassas were intended to apply to DC? or Boston? or maybe Detroit? My statements, just like the blog post you are responding to, were about Manassas/PW county and no other area.
"it doesn't matter if they can sell for as much as they paid or not ... because they aren't selling."
Unless they get transferred, or married, or divorced, or there is a death in the family, or they lose their job or... I could go on and on of course. What you are saying is simply completely false.
It is never a good time to overpay and it is never an enviable position to be upside down on a mortgage. Many homeowners will weather the storm without a problem, others are in for a rough ride.
"Fear mongering is wrong. Plain and simple. And these lists are fear mongering. "
Now you get to your real agenda here I think. You are concerned that negative news will impact the housing market and ultimately affect the value of your house, so you are here trying to combat the negative news personally.
The fact is that whether you like it or not, the data this blog makes available provides a useful perspective on the housing market. I have taken the time to investigate many of the houses that have appeared on this blog and while some seem to represent fraud many do not.
"Those of you who purport to be decent people, how can you justify this fear mongering?"
Decent people don't state bad news right lance? Decent people would all do our best to be eternal RE bulls...
Is this even bad news? Many people will suffer greatly because of the popping of the real estate bubble, but on the other side of that coin many responsible hard working people will now be able to buy at sustainable prices and enjoy a better quality of life.
"when you have to resort to insulting your debating partner instead of giving a reasonable counter to what they have said, you have lost your argument."
This from the person questioning our "decency" for reporting or discussing negative data on the housing market.
I am familiar with you from the bubblemeter blog and have seen more than enough of you to know that you aren't interested in an honest debate.
Exactly, Leroy. This guy lies to himself and then tries to make everybody else buy that lie, never offers an actual fact, engages in ad hominem ad infinitum, and then tries to claim he deserves a real debate. Derision is the only thing that befits him.
Lance to Harriet: "Why would you be trying to worry homeowners that their properties were suddenly worth pennies on the dollar ?"
So revealing!
An aging homeowner, thrilled with the insane appreciation of houses over the last few years, wants the appreciation to continue.
Who cares how many skilled professionals commanding top salaries cannot afford to buy at this market? Who cares what the insane price levels do to teachers, policemen, firemen and the community, and ultimately to the local economy? Who cares about market fundamentals or regression to the mean?
Anyone who reveals facts about market cycles that raise doubt about whether I can keep my hard-won 'equity' is 'fear mongering'(Of course, I know it was my market savvy and skill that caused my house price to appreciate; it was those "outlyers" (sic.) who got their appreciation through plain luck or fraud).
Here is a little more information on what I was describing earlier:
Go to maps.google.com and enter:
9557 CLOVERHILL RD, Manassas VA
That is the address of a house for sale at $458k. It was built in 1987 so it is now 20 years old.
If you scroll to the left just slightly... you will see a tree filled area between "hastings" and "cloverhill" rds. The area I am talking about is surrounded by two circles and a relatively large structure.
That is where the new development is going up.
9610 CLOVERHILL RD Manassas VA, built in 1986, is right behind the development and is asking $440k.
These houses, and others in the area, are competing directly with new build houses at almost the same price with very modern features and new appliances etc.
That is a difficult possition to be in. Especially when you consider that even the new homes aren't selling... (the model home has been on the market for 250 days, probably because of its inflated price due to it including every possible option)
Forgive me for starting this thread and then bolting. The first house is listed for nearly 40% less than its last selling price in September 2006. That smells like fraud, i.e., the 9/06 selling price was artificial, the buyer and seller split the inflated mark up, then the buyer walked away from the house, leaving the mortgagee-bank (or whoever) holding the bag; hence, it's again for sale quickly.
I've disagreed with Lance in the past on bubblemeter, but I have to agree with him here. This is a likely a statistical outlier. PWC is getting hammered, but not to the tune of 40% in a year. Nevertheless, Harriet is doing a great service by posting this data, outliers and all. Fraud drives up comparables and property taxes, and is an indication of potentially inflated housing market.
Terminator, so you'd say you suspect fraud in maybe a handful of cases?
I think you have a legitimate point on the 9/06 sale, but that the vast majority of these listings are genuine sales and resales. The worst cases match up with the zipcodes with the highest foreclosure rates.
Keith said:
"I think you have a legitimate point on the 9/06 sale, but that the vast majority of these listings are genuine sales and resales."
I have no doubt that vast majority are genuine sales and resales. It's just that they are the worst of the sales and resales and not representative of what is happening to the average homeowner ... not even in an edge area like Manassas. (And yes Leroy, Manassas is an edge area. It may be long established as its own center, but in its new role as a suburb of the DC Metro area, it is an "edge" area very much affected by the growth spurts - and retractions - of the whole.)
"(And yes Leroy, Manassas is an edge area. It may be long established as its own center, but in its new role as a suburb of the DC Metro area, it is an "edge" area very much affected by the growth spurts - and retractions - of the whole.) "
I love how you ignore everything else I corrected you on and try to nitpick that one point...
Yes, Manassas is part of the metro area, but that doesn't mean it is somehow dishonest to examine real estate prices in Manassas. The neighborhood I was talking about is a 20 year old neighborhood, not some brand new development that smells like sawdust and paint.
"It's just that they are the worst of the sales and resales and not representative of what is happening to the average homeowner ... not even in an edge area like Manassas."
Yes, they are the "worst" short sales, but they ARE representative of what is happening to people who rushed in and bought at the peak of the bubble and are now forced to sell for some reason.
Why don't you educate yourself?
Go to:
http://www.mris.com/
and look up: "Manassas City"
In June there were 616 active listings and only 37 sales. (nearly 16 months of inventory)
The total dollar volume sold is down 50% YoY.
Average sale price is down 12% YoY.
Median sold price is down 14% YoY.
Units sold is down 43% YoY.
Average days on the market has doubled from 52 to 112.
Average list prices are down 8%.
Sellers are now only getting 93% of their list price, on average. (down from 97.24 YoY)
The list you are claiming "isn't representative" includes houses listed anywhere from a few percent below their 2006 sales price to 30% or more below their 2006 sales price. That is consistent with the fact that the median price in Manassas is 15% down YoY. Of course these are the worst of the worst, but the fact is prices are down 15% YoY in that area and are falling faster now than they were earlier.
That is what happens when a real estate bubble pops. Do you really think you are going to prop up home prices all by yourself?
Leroy, You think a 15% drop is a bubble bursting? Go educate yourself. Va_Investor and I talked about 20% or more price drops for your area ... and we didn't consider that a bubble bursting. A bubble bursting is when you lose nearly all value because it wasn't there to begin with. The 15% you've lost now and the 5% or more you will lose in the coming months is just due to the good regular real estate cycle. Edge areas are always affected in the down cycle. And again, it doesn't matter if you smell sawdust there or not EVERYTHING in Manassas is "edge". The a good part of the reason Manassas experienced the 200% or greater increases it experienced since 2000 was due to people being pushed out of the inner metro area bringing their money with them and bidding up the price. With the down cycle, they can now look closer in ... thus translating to less pressure on edge places like Manassas ... Think of it as a wave ... the wave is receding. And if you really think I or anyone else is trying to influence prices, you are off your rocker. You are however exhibiting all the signs of someone who doesn't understand what is happening around them ... and has to find scapegoats for "causing" that which they don't understand. Educate yourself and perhaps you'll feel a little less bruised. But for God's sake, quit trying to make things look worse than they are. Things are just as everyone expected them to be. And THAT is not a bubble. There's no "blood in the streets" as David J and his sheeple liked to say. Anyone who bought a home to really live in it has nothing to worry about ... They have their home. And they have their priorities straight. They arean't confusing the buying a home with making a financial investment. They know that with a home they've made an investment in themselves and their family.
"You think a 15% drop is a bubble bursting? Go educate yourself. Va_Investor and I talked about 20% or more price drops for your area ... "
Do you think prices are done dropping? RE markets move slowly, prices will continue to drop for at least another year from today in all likelyhood.
"A bubble bursting is when you lose nearly all value because it wasn't there to begin with. The 15% you've lost now and the 5% or more you will lose in the coming months is just due to the good regular real estate cycle."
Don't try playing semantic games lance. You aren't going to redefine the word bubble to suit your argument. The main stream media is all over the story. I watched the CEO of Freddie Mac talking about the "bubble"(his words) on Bloomberg a week ago or so.
"You are however exhibiting all the signs of someone who doesn't understand what is happening around them ... and has to find scapegoats for "causing" that which they don't understand. Educate yourself and perhaps you'll feel a little less bruised. "
Heh, I find it funny that you made that statement without any knowledge of who I am or what I do for a living. (I actually showed that to my wife who also got a good chuckle out of it)
You are no RE expert lance. I will leave it at that...
If you think I am being overly negative... well go ahead and think that... it won't matter a bit to the market.
You are no different from the various dot com perma-bulls who were frantically posting on message boards 6 months into the bust saying:
"of course there is a correction happening, but we all knew there would be, this is completely normal after a run-up like this, 5% or more down and then we are back on the way up!"
When I decide to buy I will do so at a price that will have saved me more than 100k PER YEAR that I waited from when I first began looking to buy in late 2005. Why don't you turn that number over in your head a bit?
Leroy said:
"When I decide to buy I will do so at a price that will have saved me more than 100k PER YEAR that I waited from when I first began looking to buy in late 2005. Why don't you turn that number over in your head a bit?"
Leroy, each and every one of us have to make our own choices. You are chosing to buy a property now that is going down in value by $100K a year.. I chose to buy a property that has gone up by some $300K since I bought it in 2005. It took a little more work to make some educated calculations as to which types of properties would increase in value (including the "where located" part of them), but I felt the extra work was worth it for not having to wait. We'll both be okay. If single family property values ever start to drop downtown (in the District), then I'll have a large hedge to protect me. If property values of the types of places you are looking for ever stop dropping, and you can time it right, you'll finally be in your home.
"Leroy, each and every one of us have to make our own choices. You are chosing to buy a property now that is going down in value by $100K a year.. I chose to buy a property that has gone up by some $300K since I bought it in 2005. "
lol
Same properties lance... that is what is so funny about all of this. The houses I am looking at HAVE "gone up" hundreds of thousands of dollars since 2005, and now they are on their way back down again.
Now of course you don't think YOUR house is subject to that same trend. Fine, believe that if you want, it doesn't really make any difference to me. Your house isn't in a neighborhood I am considering and isn't relevent at all to this discussion.
"It took a little more work to make some educated calculations as to which types of properties would increase in value (including the "where located" part of them), but I felt the extra work was worth it for not having to wait."
Right right, I get it lance, you are a RE expert because you bought your first house in 2005. I can see that with credentials like that your RE consulting services must be in high demand. I won't keep you from your important work. :P
"We'll both be okay. If single family property values ever start to drop downtown (in the District), then I'll have a large hedge to protect me. If property values of the types of places you are looking for ever stop dropping, and you can time it right, you'll finally be in your home. "
Yeah, I guess you must just be the king of the world.
Actually I kind of like the idea that property values for the "types of places" I am looking at might never stop dropping.
Maybe I will pick one up for free and live rent free the rest of my life! Remember lance, housing isn't an investment!!
Leroy said:
"Maybe I will pick one up for free and live rent free the rest of my life! Remember lance, housing isn't an investment!!"
I agree fully. It isn't an investment. It is an expense that needs to be minimized over the long run while still meeting your needs.
"I agree fully. It isn't an investment. It is an expense that needs to be minimized over the long run while still meeting your needs."
Glad to hear we are both watching the end of the bubble in a good mood!
Leroy,
I don't think we agree on what a bubble is. You think: "Maybe I will pick one up for free and live rent free the rest of my life!"
I know, I've heard bubbleheads say or and over again that "there will be blood in the streets" and "we will pick properties up for pennies on the dollar."
I think bubbleheads have picked up these expectations from stock markets where bubbles truely can develop. Real property is different because of the inherent value of the land itself, its limited availability over both the short and medium terms, and the fact that people must live somewhere. An individual stock can devalue to "pennies on the dollar" because the present value of all expected cash flows from the organization and assets represented by that share of equity can truely approach zero. That cannot be the case with real property except under more than exceptional circumstances (eg. Love Canal in NY state.) The present value of all expected benefits coming from any individual property will always be substantially more than "pennies on the dollar" lacking a major problem with the fundamentals. And by fundamentals I mean those factors that both lead people to need housing in a certain area and permit them to purchase it. In this area --- and in the nation in general --- those fundamentals are "a growing economy" and "a growing population" ... both of which both put pressure on the limited availability of places for people to live and permit them to buy those places. Yes, in the short term, these places may seem unaffordable to many because the relationships between income and housing expense get out of line as they are now. But to expect housing expenses to drop substantially to "get back in line" is viewing the situation backwards. It is putting the horse behind the cart. The opposite will occur. Companies and organizations needing human capital to fuel continuing economic expansion end up in the end paying more to attract those hew human resources. I.e., salaries and wages rise to bring the relationship between salary levels and housing expenses back in line. That's the way it has always been and nothing will change this time around. And to sit around waiting for housing prices to drop to a level where "Maybe I will pick one up for free and live rent free the rest of my life!" is to be waiting in vain for that which will not happen.
Once again, Lance loses. He lost to David J, lost to Harriet, and lost to Leroy, so now he makes up pretend people to argue with. It's kind of like a three-year old with his imaginary friend.
Keith,
You do remember how David J. banned you from his blog, don't you? What makes you think Harriet will put up with your childish antics anymore than David did?
So the cat is out of the bag--lance bought a house in 2005 and has nightmares about all the people saying that house prices are due for a fall, even in DC. No sane person is saying houses will sell for pennies on the dollar. Many people waiting will start buying when prices fall back to 2003 or early 2004 levels.
But it is a matter of basic math that a house that appreciates 100% needs to fall only 50% for it to go back to zero appreciation. 30%--50% fall from peak prices in 'nominal' terms, happening over 4--5 years, is not out of the realm of probabilities.
Defense spending may be frozen or rolled back--cutting off what is called "beltway banditry" of easy money for many technology contractors; a serious credit crunch can occur if many lenders implode; a series of foreclosures in an area can causes a drastic change in mass psychology; a recession may come out of nowhere--in a capitalist market system, many things happen when people least expect it. And if it can happen on the way up, why not on the way down?
Wow lance... I offer you a great chance to save face and quietly move on... and you prove beyond any doubt that you are both over your head in this subject matter and have no interest whatsoever in educating yourself.
"I think bubbleheads have picked up these expectations from stock markets where bubbles truely can develop."
You have clearly never taken even introductory coursework in economics if you think you have a prayer of redefining the word "bubble." It isn't going to work, you might as well try to change the meaning of white to black.
"Yes, in the short term, these places may seem unaffordable to many because the relationships between income and housing expense get out of line as they are now. But to expect housing expenses to drop substantially to "get back in line" is viewing the situation backwards. It is putting the horse behind the cart. The opposite will occur. "
You need to do some research into what "fundamentals" means in an economic context. In cases where a bubble develops it is because the price of an asset has diverged widely from the basic economic fundamentals that govern the value of that asset. What you don't seem to understand is that the price of housing is determined by the consumer base's ability to pay, not the other way around.
In the case of this bubble, the consumer base's ability to pay was briefly increased dramatically, due to the loosened lending standards and changed borrowing practices. These conditions are disappearing from the market with the inevitable result being that housing prices are now dropping back to a lower level more in line with historical trends.
Housing prices in this region more than doubled in a period of a little over 5 years. Salaries in this region remained relatively flat during that time period and have shown no signs of an impending dramatic increase. One of two things is going to happen.
Either salaries are going to nearly double, within the next year, or prices are going to continue their dramatic drop until the majority of the recent gains are erased.
The real reasons for this bubble are well known. Let me invite you to do some basic research before burdening us with your baseless theories of economics.
"And to sit around waiting for housing prices to drop to a level where "Maybe I will pick one up for free and live rent free the rest of my life!" is to be waiting in vain for that which will not happen. "
That was me making fun of your childish assertion that perhaps the "types of places" I am looking to buy will never stop dropping, as if somehow you are too good to inhabit such a location.
I know you think DC is the new center of the world economy. I have seen your posts to that effect over on bubblemeter.
Here are some parting thoughts for you, Manhattan, Tokyo, Hong Kong, LA, etc... have all suffered from terrible real estate busts in the last couple decades. Cities with booming economies are not magically shielded from RE bubbles, if anything they are more susceptible than relatively out of the way places with stable economies.
Leroy said:
"Either salaries are going to nearly double, within the next year, or prices are going to continue their dramatic drop until the majority of the recent gains are erased."
So, you think only salaries determine what people can pay for their homes? Have you ever considered that lots of people have lots of income coming from non-salary sources? Or do you view everything from your perspective ... and if salary is your only source of income then it must be everyone's sole source of income? I guess you don't realize the gains people pulled out of the stock market or the gains people pulled out of their real estate investments or their own homes?
The point I'm trying to get across is that your "fundamentals" are too focused on YOUR fundamentals and not on the greater economy's fundamentals. The truth is that there have been great gains across the board. You personally may not have benefited from them, but the greater economy has ... And THAT has pushed up prices. Now yes, I agree that longterm those gains will be shared with everyone as those with who have benefited depend on the labor of those who haven't yet benefited ... and a vanishing labor pool driven out by its inability to buy homes in the areas where needed doesn't help anyone. I.e., Salaries and wages across the board will eventually rise.
"You do remember how David J. banned you from his blog, don't you?"
HaHA! Now Lance is down to making up fake histories. David J. NEVER banned me from his blog.
Oh man, it's so fun to watch another one of Lance's psychotic breakdowns and total disconnect with reality!
You should consider leaving the strawmen out in the field lance...
I never said anything about non-salary sources of income, and you of course know nothing of my personal finances.
Instead of spending the time necessary to poke holes in your argument at the present time, I will instead offer you a chance to offer some support for it.
In order for your theory to be viable you need to find evidence that suggests non-salary incomes in this area have increased sufficiently to support the current housing prices we are observing.
The real trick here is not simply demonstrating that people in the region have non-salary income, because they always have, including in the pre-bubble years.
The trick is showing that there has been dramatic and unprecedented growth in their non-salary income and that that growth is sufficient to support the 100% increase in housing prices you think is sustainable.
What evidence do you have that non-salary income in the DC metro area has grown sufficiently over the last 6-7 to justify current housing prices?
By the way, when I say "evidence" I mean actual statistical evidence, not an anecdote about a specific person or a small minority population in this region such as brain surgeons, senators or whatever.(unless you can demonstrate that that population has increased dramatically in the relevant time frame, sufficiently to justify the observed doubling in housing prices.)
Once you have taken the time to support your theory we can compare your theory to the currently accepted theory, that loose lending standards and a financial mania have resulted in housing prices nationwide, including the DC metro area, to roughly double absent any fundamental changes that justify the run-up in prices.
Leroy,
Here is an article about what I am talking about as it relates to London. The same thing is happening on a smaller scale in DC. I will see what I can find to substantiate why I believe it is also happening in DC.
www.washingtonpost.com/wp-dyn/content/article/2007/07/27/AR2007072701175.html
Leroy,
Here is some of that substantiation:
Defense Earnings Continue To Soar
War, Technology Drive Up Spending
By Renae Merle
Washington Post Staff Writer
Monday, July 30, 2007; Page D01
www.washingtonpost.com/wp-dyn/content/article/2007/07/29/AR2007072900806.html?hpid=sec-business
Stocks Increase Household Wealth
Stocks now represent one-quarter of total U.S. households' assets, according to new Federal Reserve Board data -- higher than at any time in the post-World War II era. Moreover, the value of those portfolios jumped 20 percent last year, to $10.77 trillion.
www.ncpa.org/pd/economy/pd031599e.html
LOL
I hope for your sake you don't believe that those pass as evidence. Not one of them takes a meaningful step towards fulfilling any of the basic requirements I outlined for you.
The first story is about London.
The second story is about defense spending. (which you don't even successfully tie to non-salary income)
The third story is from 1999... and though at least related to non-salary income, doesn't even come CLOSE to fullfilling even the basic requirements I outlined for you.
At this point you have yet to supply a single piece of valid statistical evidence that suggests a surge in non-salary income might be responsible for the increase in housing prices.
You are wasting my time lance.
Leroy,
You are unable to make the connections between the supporting evidence I've provided you and your request for info ... without some serious hand holding which I don't have the time for. In brief, you're unable to see that which is clear to most others. I feel sorry for you, but considering your attitude I am not included to try to help you further.
"You are unable to make the connections between the supporting evidence I've provided you and your request for info ... without some serious hand holding which I don't have the time for. In brief, you're unable to see that which is clear to most others. I feel sorry for you, but considering your attitude I am not included to try to help you further."
LOL, I want you to know that I just showed this whole exchange to a couple coworkers.
If you think you are fooling anyone I can't imagine who.
Leroy,
It sounds like you don't know the difference between people laughing with you ... and people laughing at you.
Btw, I didn't realize you and your co-workers had Internet access on those sanitation trucks. The wonders of technology, huh?
"It sounds like you don't know the difference between people laughing with you ... and people laughing at you.
Btw, I didn't realize you and your co-workers had Internet access on those sanitation trucks. The wonders of technology, huh? "
"when you have to resort to insulting your debating partner instead of giving a reasonable counter to what they have said, you have lost your argument."-Lance
Oops!
Really though, if you think an article from 1999, an article about london, and an article trends in defense spending prove your theory that non-salary income is supporting housing prices in this area...
Leroy said:
"Really though, if you think an article from 1999, an article about london, and an article trends in defense spending prove your theory that non-salary income is supporting housing prices in this area..."
London is not an isolated case in what is now a pan-global economy. What is happening in London is happening to one extent or another in all the other "nodes" of this pan-global economy ... And Washington is one such node. (I.e., It is one of the pan-global economy's important centers.) Put another way, as the international developers coming to Washington proper have been saying, Washington has entered the ranks of the big league international cities. Under either viewpoint, it stands to reason that what is happening in London is happening here. What is happening in London is that you have people with wealth (i.e., non-salary derived resources) spending it there as they make London their base of operations. The same is happening here in many venues including lobbying (which has tripled in dollars from 2000 to 2007) and the defense industry as I mentioned. The trillions of dollars of profit (not to mention the salaries) derived here don't just end up in bank accounts. As illustrated in the London article, the money ends up driving housing prices as well. Read the article and you'll see how those defense bucks are going strong. Your main premise is that house prices must be tied to salaries. When once upon a time salaries were most people's sole source of wealth that was true. The shift to less dependency on salaries evident at the time of the 1999 article is even more so now.
Now, was it really that difficult to draw the lines between the data I'd given you? You really could have done that for yourself.
The first thing that sprang to mind in association with "pan-global economy" was a "pan galactic gargle blaster". You can see how my mind works (or doesn't).
I had to google it with the quotation marks.
Now back to the main program . . .
Rural VA, WV, PA--all these places that saw a bubble have "entered the ranks of the big league international cities." Wow, such insight!
My neighbor (two years ago) said Fauquier County, VA is a "gold mine".
"My neighbor (two years ago) said Fauquier County, VA is a "gold mine". "
Now THAT would be non-salary income. If in fact people are mining gold in their basements I may be forced to join lance in rejecting mainstream economics!
Here is a link to an article from 1994 about gold mining in Nevada:
http://www.hcn.org/servlets/hcn.Article?article_id=457
Clearly the DC metro area is one of the emerging pan-global gold mining centers just like Nevada....
Lance was right!
I better find an interest only loan while I still can...
Don't forget Fauquier's very own "Goldvein!"
http://en.wikipedia.org/wiki/Virginia_gold_mining
(Wish I could find the recent news article with people still panning the rivers around these parts).
Okay, I understand. By and large, Harriet and at least most of the posters here don't have a clue as to what is happening big picture. All they see is that homes have become unaffordable for them and that must mean that prices must drop. The possibility that there may be changes afoot in the world that end up having an impact on them .. is just too much for them to comprehend, digest ... and least of all, to react to in a way that they can accomodate those changes. I guess getting free meals at open houses is about all the "change" they're up to ...
"Okay, I understand. By and large, Harriet and at least most of the posters here don't have a clue as to what is happening big picture. All they see is that homes have become unaffordable for them and that must mean that prices must drop. The possibility that there may be changes afoot in the world that end up having an impact on them .. is just too much for them to comprehend, digest ... and least of all, to react to in a way that they can accomodate those changes. I guess getting free meals at open houses is about all the "change" they're up to ..."
Well, you've got me convinced...no more studying economics for me.
From now on I will get all my information on "pan-global" economic "nodes" from a tech support guy.
Leroy said:
"From now on I will get all my information on "pan-global" economic "nodes" from a tech support guy."
Well if you think you should find yourself a "tech support guy" to give you advice ... By all means, go for it!
Personnally, that's not what I would do ... but to each his own. Harriet is at least finding free meals at open houses. You might want to ping her for advice. At least she's figured out a way to eat for free ... for now.
Ha-ha, Leroy and Harriett totally won the debate, hands down. Of course, winning a debate with that loser troll is like hunting dairy cows with a rifle and scope.
David J and Harriet and Leroy are so much smarter than Lance, and they totally showed it to the world, while Lance totally humiliated himself for all to see.
Post a Comment