510 NETTLE TREE RD
STERLING, VA 20164
List Price: $259,900
Prior Sale: $446,000 04/14/2005
Listing Date: 02/20/07
-41.7%
Price Reduced: 04/09/07 -- $499,900 to $485,000
Price Reduced: 09/17/07 -- $450,000 to $399,999
Price Reduced: 09/21/07 -- $399,999 to $369,500
Price Reduced: 09/24/07 -- $369,500 to $333,000
Price Reduced: 10/05/07 -- $333,000 to $299,900
Price Reduced: 11/02/07 -- $299,900 to $289,900
Price Reduced: 11/24/07 -- $289,900 to $279,900
Price Reduced: 11/28/07 -- $279,900 to $259,900
On Market: 283 days
Here's a brand-new listing on the same street with no photo available:
613 NETTLE TREE RD
STERLING, VA 20164
List Price: $224,900
Prior Sale: $410,000 08/17/2005
Listing Date: 11/29/07
-45.1%
Friday, November 30, 2007
Inelastic Demand
Posted by Harriet at 11:29 PM
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29 comments:
Thats a fairly nice area, however I do not know the house/street specifically. The area is older homes, 70's era. Lots of cookie cutters with some varying style and bigger homes. Probably no sealant in the concrete or tyvec wrap on the house, both of which can be fixed to add value. Certainly north of it, Sterling Park, is not desirable. It does not have a garage so it does loose some appeal.
I don't think the lack of garage is to blame for the price decline. It wasn't there in 2005 either was it?
Anyone want to guess how long it will take that house to sell for >450k again?
A 0.45 million dollar home requires a garage, in my opinion. It will go up to 450K again in 2014, but only if someone puts a second floor, a garage, brick front, maybe some stables (and strikes either diamonds or oil on the property).
A 0.45 million dollar home requires a garage, in my opinion. It will go up to 450K again in 2014, but only if someone puts a second floor, a garage, brick front, maybe some stables (and strikes either diamonds or oil on the property).
JOhn said...
"A 0.45 million dollar home requires a garage, in my opinion. It will go up to 450K again in 2014, but only if someone puts a second floor, a garage, brick front, maybe some stables (and strikes either diamonds or oil on the property)."
John, Be realistic. You're talking about a house for less than half a million in a major metropolitan area. For that measily a price, one would normally think "small condo". So, do you expect servants to come with the house too? LOL. Come on, we're talking about a VERY inexpensively priced house. Be realistic and quit living in the past. Back when a half million dollar house was "something" you didn't have admins making close to a hundred grand per year as you do now. Times change and everything is relative!
Has the fake lance moved over here now too? Or was that supposed to be serious?
We just went by that house today. Neighborhood isn't discernibly different than Sterling Park, which is just a couple of streets away. Lot is smaller than others we've looked at in the area and it's not level, but it's still plenty large for the price. The real problem (other than the fact that the lock box has been stolen) is that this is a short sale, which means it'll take FOREVER to get a yes/no on an offer and most people just don't have the time.
Any current information on what's going on in Stafford County?
Lisa,
I looked up October sales at MRIS for Stafford. It looks like inventory is over 12 months and selling prices are 10% below list prices.
Fauquier sounds somewhat similar. There are generally lower asking prices on houses in Prince William than in Fauquier. I attribute it to two possiblities: first, that Fauquier experienced massive price runups at the end of the bubble, thus sellers are more reluctant to lower; or second, that it's perhaps a more desirable location for local ambiance and amenities.
The Dad,
Thanks for the report. The other property - 613 Nettle Tree - is listed by REO Realty. Generally that agency deals with bank-owned houses, and they're very efficient. The listing doesn't say it's bank-owned, but with a 45% haircut it probably is.
This type of home is not a 450K house in any market. Period. Some people here are living in a real bubble and apparently have never lived anywhere else. They have nothing to compare what they have and apparently know ZERO about other metropolitan areas. In Boston this house wouldn't bring in 450K, in Chicago this house wouldn't bring in 450K and right now in SF this house wouldn't bring in 450K. In none of the metropolitan areas in the South or SW would this house bring in 450K.
The lies people tell themselves can contradict every expert in the field and yet the person is stalwart in his or her belief. (The flat-earth people held on for a long time.)
I am lucky to have a relative very close to "big-picture" in the lending community. She knows more than me or anybody on this blog. Over the holiday she and I had a great opportunity to chat about the financial problems facing this country. She has consulted with the White House in the last year. This area was highly over-priced and the over-pricing was created in part by RE speculators who were keenly aware of the lax mortgage lending practices of the last 5 years.
The White House is concerned about offering the rate freeze to RE investors or people who bought way beyond their means. Right now experts are working weekends on how to discern the "wheat from the chaff." If the owner couldn't have qualified without a creative teaser loan there is a good chance unless there has been a marked increase in earnings, that person will be out of the equation. So for the investor who never lived in the house or lived only a short period of time.
People over-bought. Plain and simple. If it were not for the creativity of the lending industry, probably 65% of the people who bought in the last 4 years would not be in a house the price and/or size they are struggling to stay in. Period.
There are rumblings on the Hill that Congress may take a second look at the capital gains issue. The capital gains tax was lifted in 1998 (?) on the sale of houses. The intent of that was to help people who had been in their houses for many years (elderly) and where the value of their of their home increased to the point that they would have been slammed on capital gains when sold. It was not intended to help the flippers or those who invested simply for the ROI. The huge profit taking is an unintended consequence of 1998 legislation.
Some people on the Hill have even gone so far as to say that the interest deduction on a home should be eliminated from the tax code. I don't believe that will happen because it would further hurt current homeowners. I personally believe it is a good idea, but know that many Americans rely on the 20 cents on the interest dollar they get when itemizing.
The financial community wants average person to "invest" in equities and other things rather than real estate. Buy a house to live and presume it would never increase in value. Too many people have their net worth tied up in a house. That is dangerous and foolish. To re-enact the capital gains tax and eliminate the tax deduction would force people to buy only what they could afford in the way of a house.
It is not a right to own a home, to deduct interest or not pay capital gains tax. It never has been a right.
How long till that house sells for more than $450k again? I'd say about 18 years. Figure a few more years of falling/stagnant prices, followed by normal appreciation at 4% a year should bring the price back to $450k in about 2025.
Lance said ...
John, Be realistic. You're talking about a house for less than half a million in a major metropolitan area. For that measily a price, one would normally think "small condo". So, do you expect servants to come with the house too? LOL. Come on, we're talking about a VERY inexpensively priced house. Be realistic and quit living in the past. Back when a half million dollar house was "something" you didn't have admins making close to a hundred grand per year as you do now. Times change and everything is relative!
---------------
You aren't serious, are you? If it is "worth" $450K, then why has the bank lowered the ASKING price to $260K? Condo prices should sink the hardest. Expect a $500K condo to either be in a VERY desirable area, and/or be huge.
I think you must hate my data by now. Assessed value for the home posted :
2007 $390,400 (y priced at $260K?)
2006 $422,400
2005 $291,600
2004 $236,200
2003 $213,800
2002 $189,800
2001 $164,700
2000 $144,600
1999 $133,600
1998 $133,600
1997 $133,800
1996 $131,600
1995 $131,600
1994 $128,300
1993 $130,800
1992 $136,600
1991 $136,200
1990 $136,900
1989 $124,400
1988 $107,500
1987 $93,700
When I see this, I see a trend - I see minimal or inflation gains only until 2001. I also see a painful drop in tax revenues. *evil grin*
Let's be honest, you shouldn't have to pay $500K for a below average home in NOVA. You didn't have to 7 years ago and you shouldn't have to now.
It makes me wonder, if that is a "measily" price, then you must make well above the average salary around here. I'm also guessing you own a nice place you bought for well under $300K more than 5 years ago. It's mostly these folks who neglect the current numbers.
If you somehow could put $90K (20%) down and get a 6% 30 year loan, the PI itself is $2,160. Add in another $300 for taxes, $30-$40 more for home insurance, and additional money for yearly maintenance.
I am sure this place can be rented for well under $2,000 a month. In fact, I looked and in same area are 2 equivalent homes asking ~$1,500 rent. So not only are you out closing costs and the opportunity cost of $90K ($4,500 a year just sitting in the bank), you have to pay > $1,00 more a month for it! Still not worth it even with part of the PI being principal and tax deductions.
If sold for $260K with the same terms as above, the monthly PI is $1,250. Add in tax, insurance, and maintenance and LIKE MAGIC, you are at the rent numbers.
We are all in agreement then... The place is a hole.
Excellent example of the out of contol run up in prices for any house in NOVA.
Heh. In case you were wondering, the listing was just removed. Someone must've had an offer accepted.
There's the new comp!
Keith said...
There's the new comp!
------------------------
;-)
Excellent. See? The market truly does work itself out.
Keith said...
"There's the new comp!
12/2/07 10:01 PM"
Okay, I could swear I already posted a response to this. But, Keith sorry but "distress sales" don't get used as comps by anyone. I.e., not by appraisers for mortgages, not by assessors for property taxes, and certainly not by sellers or their agents when pricing a property. And there's a simple and good reason for that ... distress sales do not represent what future buyers and sellers should expect a similar property to sell for. In the case of distress properties (including foreclosures etc) and non-arms lengths transactions (eg between relatives or a divorce settlement) there are "other" factors affecting the price. Hence the property is not selling for "fair market value" and it cannot be relied upon as a "comparable" by anyone ... Nice try though! :)
The new listings is BANK OWNED
And here is an old photo of it
http://matrix.mris.com/Matrix/Public/Email.aspx?ID=22302021414
or
http://tinyurl.com/2m3pje
Thanks, Frank!
That 2002 listing shows that 613 Nettle Tree sold for $206,950 on 12/18/2002. Then it sold again on 8/17/2005 for $410,000. Back down to $225K in 2007.
Here's the county assessment history:
2007 $379,600
2006 $408,400
2005 $269,600
2004 $221,100
2003 $197,900
2002 $174,100
2001 $148,100
2000 $130,400
1999 $119,600
1998 $121,100
1997 $121,300
1996 $119,400
1995 $119,400
1994 $116,700
1993 $118,600
1992 $123,800
1991 $124,800
1990 $122,100
1989 $110,400
1988 $94,800
1987 $81,700
First off I would like to say great blog. I have been amazed at the cost of housing in this area, I still think that there is a lot of additional downward momentum in pricing. I suppose, that last comment will probably upset lance, but I honestly believe this to be the case.
Living in Manassas Park, I see a significant number of for sale signs. I see these signs not just in Manassas Park/Prince William County but even in the nicer parts of Fairfax County such as Burke Lake and Clifton as I criss-cross back roads on my way to I-395. I have driven by these places for months with little signs of activity in terms of a sale.
Where I currently live I think some folks are giving up as many for sale signs have been replaced by for rent signs. Currently my wife and I rent a town house, we are going to be in need of a larger home though, for my wife just gave birth to twin boys on 11/27. I could not be happier as a father of now four, two girls, and two boys, but I feel great deal of pressure to get my family into a home, but I do not feel comfortable to making a purchase in this current environment.
Lance, regarding your assertion that foreclosures "don't count," Bears Stearns disagrees. This is from the Wall Street Journal:
"The projected supply of foreclosed homes is equal to about 45% of existing home sales and could add four months to the supply of existing homes, says Dale Westhoff, a senior managing director at Bear Stearns. This is a "fundamental shift" in the housing supply, says Mr. Westhoff, who believes that home prices will drop further as lenders "mark to market" repossessed homes."
gregor said...
but I feel great deal of pressure to get my family into a home, but I do not feel comfortable to making a purchase in this current environment.
-----------------
Congratulations on your recent additions! Totally understand the inner turmoil you're feeling about getting your family into a home, but I also think that your gut is telling you the right thing. Prices are coming down and will continue to do so for the foreseeable future. I moved here in late 2003 and resisted my friends urgings to buy as the market was skyrocketing. Several of them bought at the peak as they got married and decided to start families. Now as their home prices depreciate rapidly, think of all the money that could have been going toward college funds rather than their home.
I agree that you can't time the market, but you can certainly be patient and buy when it feels right to you.
Well, there may be some middle ground here.
While foreclosures may not "count" as "comps" -- but they may probably cause downward pressure on the list price for three reasons:
A) More houses on the market, leads to downward pricing pressures due to increased competition on the market (and small buyer pool); and
B) According to industry anaylists, each REO in a neighborhoold has the effect of reducing the value of surrounding homes by 1%
C) REOs which are "Marked to Market" with an agressive list price will push the buyer's psychological value of homes in the neighborhood down to be more "in line" with the REO price. (If I can buy House #1 for $Y, why should I offer $Z on House #2 which is the same?) It's a much harder sell.
Twins! Wow -- that's awesome.
My dh and I have four children (2 boys and 2 girls), none twins, though.
We've been feeling the pressure to move for quite some time (moved back in early 2002, and income was just not keeping pace with home prices...
Almost 6 years later, the four of us are still living in 900 sq. ft 3BR dwelling.
Our new concern is the build quality on many of the homes from 2000-2005/6 (darn contractor friends have put huge seeds of doubt).
We're now looking for a lot to owner/build and take advantage of much, much lower materials pricing.
If you find the right house, at the right price, you'll know it.
lisak said
"Our new concern is the build quality on many of the homes from 2000-2005/6 (darn contractor friends have put huge seeds of doubt)."
That is a good point, I have wondered about the overall quality of the homes that have been built over that era. In particular considering how fast the developments went up. Modern homes tend to be more energy efficient, than older houses, but older homes I think are better built and of better raw material at least with respect to wood/timber.
I think my wife and I will just have to wait it out. I see little incentive to buy now, or even during the first couple of quaters of 2008, for I think there will be further downward pressure on pricing.
I cannot remember the name of who posted on this blog, but they offered very good advice in terms of following the old rule of not spending more than 30% of household income on housing. I make a decent salary, it is probably slightly above average, but even so, for myself, prices of single family housing will have to come down significantly to be affordable if I plan on sticking to the 30% rule.
Lance said...
“Okay, I could swear I already posted a response to this. But, Keith sorry but "distress sales" don't get used as comps by anyone. I.e., not by appraisers for mortgages, not by assessors for property taxes, and certainly not by sellers or their agents when pricing a property.”
Too funny “Lance”.
Potential Buyer: “Yea, the comp next door was purchased for $260K, but I’m not going to use it. I’ll use the comp one neighborhood over that sold for $400K?” Sounds like the same type of buyer that would purchase with a no-doc, I/O, negative amortized ARM.
What’s next, using 2003-2006 price trends instead of the last 12 months? Of course listing agents aren’t using this as a comp, and of course, they make their asking price anything they want. But as seen clearly by the price reductions, this property is simply riding the market down.
in 1998 zillow estimate for the house was LESS THAN 100K.
http://www.zillow.com/Charts.htm?chartDuration=10years&zpid=12390052
AN OFFER OF: $162,889. SHOULD BE ACCEPTED
20% DOWN (APRROX 33K)
30 LOAN (6% C/N GET 5.6% BECAUSE OF AREA) AND PYMTS ARE AROUND $779 MNTH.
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