Hattip to reader the_nothing for this article from WTOP:
"After the uproar over Fairfax County's property assessments, those assessment will be mailed out again Thursday. The bottom line: The assessments are the same, but the breakdown between your home's value and the value of the property your house sits on will be different. Overall, residential property values declined an average of 3 percent countywide".Also, be sure to check out Tanta's Tale of Real Estate Predation over at Calculated Risk. The article is in response to the Washington Post story this morning entitled "My House. My Dream. It Was All an Illusion," by Brigid Schulte.
84 comments:
"'My House. My Dream. It Was All an Illusion.'
Latina's Loss in Va. Epitomizes Mortgage Crisis"
It's E REED again!!!!!
Also, be sure to check out Tanta's Tale of Real Estate Predation over at Calculated Risk. The article is in response to the Washington Post story this morning entitled "My House. My Dream. It Was All an Illusion," by Brigid Schulte.
A must read. Anyone who thinks this is isolated or anywhere close to done needs to read that article. When credit was easy for something and then becomes difficult, there is a drop in sales volume *and* prices until the market reaches a sustainable bottom.
Between investment emotions, CR's excellent graphs, inventory, credit, and the overall economy. We're years away from a real estate price bottom. Get your down payment in order. Remember, as the buyer YOU have the money and thus YOU set the rules. :) It will take the REIC another year to wake up to that fact; never forget everyone else just wants your money. Remember the golden rule. ;) By 2009, you'll see a true buyers market.
Got Popcorn?
Neil
That poor woman, she had a dream and its was crushed. All because she committed fraud. Her excuse, she does not read english.
The news this morning estimated that there are 2 to 4 million habitual gamblers in the U.S. That does not mean homebuyers. That is the numbers for online and vegas and lottery stuff.
I'm glad to see that Harriet posted this, in addition to the Calculated Risk commentary.
Yes, KH, it's E. Reed, the eyesore capital of Alexandria. I'm about 95% certain that the sellers of the houses mentioned in the article (the one on E. Reed and the one in Springfield) kicked back a portion of the inflated sales price to the RE agent, mortgage broker, and who knows who else. Ms. Ortiz, the so-called "victim" in the article had to have known that this was a scam. Someone "pretends" to be her husband at the closing?
Doubtless, Ms. Ortiz was promised more than mere home ownership when she signed those papers, a fact she conveniently omits. The author of the article hasn't connected the dots.
Per Wapo's own realestate database, Richard Eubanks bought it in 2004 for $160k and sold it in 2005 for $430k.
I have a feeling that Richard Eubanks was a landlord who cashed in his chips when the bubble drove prices through the roof. Wapo records show that he bought quite a few properties on Reed St. in the 1990s and started selling them 2004.
Not sure if this url works or not:
http://tinyurl.com/22cy4q
Terminator-X: "it's E. Reed, the eyesore capital of Alexandria. ... this was a scam"
I agree. They must have been running scams on everyone.
The paradox is that if the city took over all the lots, leveled them, they could sell the lots for serious money, more than the scammers were making.
Check out the Sunday Post's story called "the Ring of Fire".
KH posted:
Check out the Sunday Post's story called "the Ring of Fire".
That concept is interesting. But as other blogs have noted, we're now transitioning into the phase where the bulk of the foreclosures will be $500k+. Prime credit was able to obtain longer lock periods on their loans. Only this month do we start seeing the resets matter. Since there is a long delay between resets and foreclosures...
Only a few weeks ago did the first foreclosures hit the market anywhere I want to buy. Look on the BoA reset graphs. Both color code by loan type. Both agree we're at the start of the $500k resets.
This isn't a bad thing. Its a correction. Corrections, in the past, have allowed the US to invent new industries and balance spending with income.
This downturn is being called "The great squish down" for a reason. The greatest bubble is in homes priced for the top 5% of income earners.
Got Popcorn?
Neil
I am back in town again...
The whole "ring of fire" thing is just yet another article that completely misses the point of what is taking place.
Foreclosures are a symptom of the problem, not the problem itself.
The basic problem is affordability. Foreclosures speed price declines but in the long run the whole region is moving down.
Mclean and other high-end areas have held up better, but they are also showing clear signs of impending price declines.
Look at 22102 and 22101 on MRIS. (Mclean)
22101 saw 12 non-condo homes sell in Feb, with 209 on the market.
22102 saw only 4 non-condo homes sell with 102 on the market.
Does that sound like a healthy market to anyone here?
Talk about shoddy journalism...
kh:
In that ring of fire article, the agent says that there is no foreclosure crisis in " McLean, Great Falls, Vienna, Oakton, Fairfax Station and most postal areas of Northern Virginia..."
Well, there may not be a 'foreclosure crisis', but even in such high-end areas prices have fallen anywhere in the range of 5--20% from their peak levels, in nominal terms. Even if an optimistic person were to assume prices would stay at current levels over the next 2 years, on an inflation adjusted basis, the fall would be much higher from the peak in 2005.
Ring of fire article doesn't focus on fundamentals.subprime is part-1 of the big problem "asset bubble".I think by this year end it will be clear picture how big the problem is?
I think Richard Eubanks was slowly flipping houses there. In 4/29/2004 he bought it and in 8/25/2005 he sold it. That is according to the tax records, http://realestate.alexandriava.gov/detail.php?accountno=14142500
So it may be he found a some hidden treasures on that street and saw an opportunity to make some money. I hope all invovled are being invistigated by the taskforce that has been set up. I would love to see some of these crooks go to jail and do Federal time which means they will do 90% of the sentence.
Neil,
Prime ARM resets will not be expensive at all until the Fed starts ratcheting up the rates again. As of right now, LIBOR + 2.25% ( common prime ARM rate ) is 4.95% which is likely lower than the rate they locked in 3-5 years ago.
Treasury based ARMs are resetting even cheaper.
Thats why most people feel the subprime loans are the main problem - because their margin is 6% instead of 2-2.5%.
"Prime ARM resets will not be expensive at all until the Fed starts ratcheting up the rates again."
And there is the puzzle.
The fed is offering low rate money to investment banks as well as commercial banks. This blast of cash has yet to hit the system.
And yet, some here suggest that they are right about something that didn't happen in 2005, 2006, 2007, and 2008-to-date.
IE, Lance losing on his house purchase.
I know this is a NOVA blog, but since kh insists on continually harping on this point and trolls like the biggest trawler in New England:
1825 16th St. NW
Square Footage: 5,500 - six fireplaces, garage, etc..
Original Listing Price: $2.395 million (May 28, 2007)
Closing Price: $1.85 million
(Jan. 31, 2008)
Price Cut: 23 percent
http://www.washingtoncitypaper.com/display.php?id=34686
"The fed is offering low rate money to investment banks as well as commercial banks. This blast of cash has yet to hit the system."
You are wrong, LIBOR is the true average lending rate between banks, and it has dropped substantially.
Although it is not as low as the FED target rate ( in a normal credit market it would be ), its dropped from 5.65% in the last 6 months to sub 3%.
Also, I dont know if anyone else noticed but the normal flow of 0% credit card offers is flowing again after disappearing for a few months.
dominic, if you're really serious about buying a home some day, you really need to understand that anyone can ask anything they want for their home when they put it up for sale. And it's not a price reduction when it ends up selling for about what it should have been listed for to begin with.
Typical, predictable lance troll response: "if you disagree with me it is because you don't have a house."
And of course, if you do have a house, how could you disagree with lance and kh?
It couldn't be because that some people think that financial bubbles are bad? Could it?
Sorry to burst your bubble, lance, I have nice house in Chevy Chase, DC. Bought it in the mid 1990s.
And I do wish financial harm on you and others like you. Lots of it.
Go back to Marin County.
There is no need to wish financial harm on lance just because he is a troll.
Here's a interesting one for you all. I was looking at a foreclosure and noted the previous owners name. I was kinda curious who they were and did a little digging. Just wanted to see what happened and what the story was. Well after some digging I found out a few news articles calling him a real estate investor and such with a private venture. I dug some more and found out that he works for one of the bigger real estate firms in the area. Thought that was interesting that a real estate person had his house foreclosed on... Dug some more and found where they(him & his wife) bought a condo almost a year before the bank took possesion completely. At the time they bought the condo both there names were on it, then 4-6 months later his name was taken off and only her name is on it. 6 months later the bank foreclosures on the old house and takes possesion. Seems like he is avoiding the bank and protecting his butt from the banks and other creditors since I gather that he doesn't want any property in his name. And this guy was a FBI Agent to boot...
For a variety of reasons, my wife and I are very unhappy with our agent who is helping us buy a home. We would like to terminate the relationship after unsuccessfully bidding on a house. However, there is another house we are interested in which she showed us.
If we were to fire her, can we use another agent to put a bid on this house or do we need to continue to use her to bid on that house? We never signed an agreement with her. If it matters where we live, we're in Northern Virginia.
Also, after the failed bidding attempt, we are beyond discussing the situation with her to try and work through it and simply want to tell her our personalities do not mesh (which they don't) and that we would like to pursue our housing search with a new agent.
Any advice is much appreciated! We're first time homebuyers so the whole process has us very nervous.
thanks
How to sell 50 NEW homes in a day...
http://www.youtube.com/watch?v=VgTdxEGauok
Pretty easy - sell garage townhomes for 86k, 2700 sq ft 3 car garage lakeside properties for 210k.
This is where the "undesirable" areas of NOVA ( like PWC ) may be at in a couple years.
Oh Slogan, as long as you never signed an exclusive agreement you are good.
Never sign that crap, thats for suckers.
Slogan74: You do not need a realtor to place a bid on a house. I would get a lawyer, however.
You don't need a realtor, but if you want to tap into the commission, you'll need one. I suggest using a service like Redfin in combination with an attorney to look over the docs once everything is done. You probably don't even need the attorney, but with the 2/3rds of the 3% commission you get rebated back, you'll do fine. 9 out of 10 realtors are worthless.
Slogan, one thing to consider is that the seller probably has a contract with a Realtor that specifies s/he gets 6% of the sales price. If you have a Realtor as an agent, the contract usually specifies s/he gets half of that. However, if you DON'T have an agent, the seller's Realtor (and his/her brokerage, etc.) keeps all 6%. So there is really no advantage to you if the seller has such a contract. Only if the seller has no agent at all and isn't one of those people with an inflated view of the worth of his/her house could you benefit by going it alone. If you get another buyer's agent who is good at negotiating and willing to work to find the right comparables, etc., your agent will probably get you a better price than you could get on your own, so if the seller has to pay 6% anyway, I would try to get a good agent to represent me on the other house.
first, I think it is worth mentioning what a great site this is (as I first time contributor).
second, to Slogan, if you really want to fire your existing agent, you should proabably do it in writing and cc your lawyer (assuming you have one). That makes it official.
slogan,
Your real estate agent will be owed a commission by the listing agent who will be owed a commission by the seller if you end up buying the place. (It doesn't matter if you have a contract with your agent or not.)
Lance, I don't think that's true legally (though it may be true from an ethical standpoint) but will hope a VA lawyer, which I am not, will chime in. In general I believe in real estate it has to be in writing to be enforceable.
Here's a website that is helpful re: buyer agency:
http://tinyurl.com/28nn8f
Ace,
The enforceability here is between the listing agent and the selling agent (i.e., "showing" agent). In order for an agent to show a listing that isn't their's, they normally go through Multiple Listing Service (MLS). The agreements signed by both agents when they joined MLS (or more exactly, the agreements their brokers signed when each joined MLS) ensure that the selling agent gets a cut of the listing agent's commission. Else, why would an agent show a listing which wasn't their's? (Or more exactly, their broker's ... since real estate agents just represent the broker they work for.)
Honestly, this is pretty basic stuff. I'm surprised to hear people on here who claim to know a lot about the real estate market not knowing this stuff.
Lance, are you a real estate attorney? If not, I think it would be a good idea if you left the legal questions to them.
In your example, it's not at all clear that the fired person who was unable to make a deal constitutes a "selling agent." And apparently you did not check out the link I provided to a site that described a situation with a Realtor who had no written contract with a buyer. That Realtor did a lot of research to help the buyer with a house s/he was bidding on but did not receive a commission. The lesson he took from the incident was to be sure to have a written agreement with the buyer.
Ace,
The link you provided talks about exclusive agency. The situation in question has absolutely nothing to do with exclusive agency. This is really basic stuff. The agent who showed the property to the original poster is owed their share of the commission if the original poster ends up buying that property. There are no "if's and's or but's about it." Go ask your real estate attorney.
Lance, since you're not an attorney, why don't you offer your suggestions about talking to attorney to the person who asked the question? I'm not involved in the transaction. And, by the way, "theirs" doesn't require an apostrophe. That's pretty basic stuff. You may want to bear that in mind before going into lecture mode.
Ace,
Slogan said: "However, there is another house we are interested in which she showed us."
The key word here is "showed". If the deal gets consumated, she is owed her commission from the listing agent (or more accurately, her broker is owed a share of the commission from the listing agent's broker.)
And btw, I don't see where "real estate law" and its requirement that deals be in writing come in to play here. This is all about contract law and contractual relationships between the selling and listing brokers, between the agents and their respective brokers, and between the seller and the listing broker.
This has to do with the law of Agency ... and not with Real Estate law which governs how the offer is made and accepted (e.g., the "in writing requirement") and how the property is transfered or not (e.g., the "specific performance" consideration unique to real estate law.)
The one person with which this has nothing to do with legally is the original poster themselves.
Lance: Once again, wrong, wrong, wrong. The MRIS contract does not say that the agent who first shows the house gets "dibs" on the commission.
At the very least, Slogan74, you can fire your agent and ask his or her broker to assign you a new agent. I would not recommend putting an offer in without your own agent. The amount of work to be done to get from offer to closing is significant. That is where a good agent will really earn their commission.
My House. My Dream. My Joke.
A woman buys a house in some strange co-sign arrangement that leads to monthly payments of $5,000 ... and that's indicative of the housing market? That is National Lampoon scale adventure. If this was the most perfect market imaginable, low prices, great interest rates, plain talking mortgage brokers, that buyer would have still messed it up.
Slogan74,
Here is a piece from the WaPo that may help you:
http://tinyurl.com/2zrjrz
ASK a Virginia Lawyer, or any reputable Virginia Law housing web site. Then follow the guidlines as to what you signed. NEVER, and I mean NEVER take the advice of a D.C. dunce.
Caveat Emptor said...
Slogan74,
"Here is a piece from the WaPo that may help you:
http://tinyurl.com/2zrjrz"
Interesting. First you say I don't know what I'm talking about ... and then you supply a link backing up what I said ...
And oh Caveat ... you'll note that I said "actually broker" ... " So, yes the broker could assign another agent to complete the transaction.
I second the "ask a lawyer" suggestion... as well as the one to take everything Lance says with a huge grain of salt.
His track record here could hardly be worse and he will jump off a cliff before he admits he was wrong about anything...
Leroy ... LOL ... okay, show me where my track record could "hardly be worse". So far all you've ever been able to point to are quotes that don't line up with where you think things are going.
Re: this whole issue of firing your real estate agent
In my view, Lance is partially correct and partially not - and certainly it is not "simple stuff" as he suggests. Yes there is an issue of agency involved - specifically implied agency Also, there is an issue of contract law involved - specifically the matter of an implied contract (i.e. even without anything in writing, it is understood, that I will show you houses, and you will cut me in on the commission.)
Now that (in brief) is the legality of the situation. The other side is the practicality. Specifically, an agent who does not have an exclusive listing agreement (or any agreement in writing for that matter) likely has an extremely difficult path ahead of him/her to establish their claim to the comission. The agent will have to sue the principal, allege an implied contract existed, cite specific facts that prove their case, prove the damages that the agent suffered as a result of the principlals actions, and then recover.
Keep in mind to that absent an agreement in writing between the agent and principal stating the winner of a lawsuit gets attorneys fees, - the agent who does have the guts to sue and win will almost certainly not recover attorneys fees. That in of itself is usually enough of an inhibition to prevent someone from filing suit.
Thus, without looking at it for more than 2 seconds, I would say that theoretically the agent has a claim. Practically speaking, if the agent came to me with this fact pattern, I would likely tell them to forget about it, and get things in writing from now on.
Actually under UCC since the value of the services rendered is greater then 400 dollars, you would need a contract for the bad realtor to get the commission. Not an attorney, but sure do know this stuff.
If you have not signed an agreement you can bring any realtor you like.
Leroy ... LOL ... okay, show me where my track record could "hardly be worse".
----------------------
Lance said (on March 25, 2007 at 10:19 PM)...
"Robert ... open your damn eyes! I looked at a couple open houses today in the District. Prices are up by a high degree. Houses that last year were going for $1.0 to $1.2 million are now just under $2.0 million ... That is a HUGE increase ... in only a 12 month period. And we aren't talking about McMansions ... just your average rowhouses in nice areas.
-------------------------
"Average rowhouses" at just under $2 mill? ... 5,500 square feet, six fireplaces, plus garage and no renters to help with the i/o mortgage = "average"?
--------------------------------
Cue Bob Dole circa 1988 - "Stop lying about my record."
---------------------------
LOL
""The fed is offering low rate money to investment banks as well as commercial banks. This blast of cash has yet to hit the system."
You are wrong, LIBOR is the true average lending rate between banks, and it has dropped substantially. "
Sorry, by "system", I meant the end result, the output, the economy, what we're talking about here, the aggressive promotion of mortgages, the product, the stuff that we see.
You are correct about the input end, LIBOR, money churning around in banks.
When the blast of cash hits the economy, the manifestation may relight housing prices, put builders back to work, drive up the price of building materials.
And the anti-Lance's will still insist that close-in real estate valuations will fall, as they have in PWC. 10% ain't a bubble bustin', even a 15% pullback is just noise.
"Robert ... open your damn eyes! I looked at a couple open houses today in the District. Prices are up by a high degree. Houses that last year were going for $1.0 to $1.2 million are now just under $2.0 million ... That is a HUGE increase ... in only a 12 month period. And we aren't talking about McMansions ... just your average rowhouses in nice areas. "
Dominic, what's your point? Dupont/Logan row houses have indeed increased in value substantially. And they are still increasing in value. (And it was these homes being discussed in that thread). During 2005 alone these houses went up in value from 25% (Dupont) to 40% (Logan).
All I know is that in February, McLean had a 19+ months supply of houses.
Lance said...
“Dominic, what's your point?”
Lance it matters not what Dominic’s point is, you’d never understand it. We get it. We understand, we’ve moved on. Hell, one of the largest investment banks could fail and you’d never get it.
kh said...
“And the anti-Lance's will still insist that close-in real estate valuations will fall, as they have in PWC. 10% ain't a bubble bustin', even a 15% pullback is just noise.”
You, behind the granite countertops and the faux wood blinds. Slowly……put the lipstick down, let the pig go…
Lance said: "Dupont/Logan row houses have indeed increased in value substantially. And they are still increasing in value."
Absolutely. Take, for example, 1244 10th St. NW, which sold for $850K in 2002, and went for $1.1 million in January of 2008, an increase of...wow, less than five per cent per year over a six year period before adjusting for inflation. Better than a savings account. Weirdly, it was valued at nearly $3 million before somebody picked it up.
"You, behind the granite countertops and the faux wood blinds. Slowly……put the lipstick down, let the pig go…"
Oh man, you almost had coffee spewing out my nose. Well done!
I think you (and the other anti-Lance's) still miss it.
Here in zipcode 22305, the lower priced TH's are down about 10%. In 2005, they were selling for $450K. The sweetspot is now about $400K.
Ditto the older 1/1 garden apartment condo's. The peak was just over $200K. Now? $180K.
Minus 10% after all the huffin' and puffin' about bubbles and just as the doc Bernake injects billion$ of "horse" into the old nag?
I have found bank-owneds and other bizarre sales that are down 30% from previous sales but I suspect fraud was involved. (E REED)
Real houses in nice neighborhoods aren't languishing on the market. Two older places near me just sold in 5 weeks and 2 weeks. One is a 2 bedroom, the other is a 3 bedroom.
The asking prices were over 600K. I'm sure they got their number or very close to it.
FYI, although I have a stainless refrigerator, my stove is white and 25 years old and my counters are scratched laminate.
"Sorry, by "system", I meant the end result, the output, the economy, what we're talking about here, the aggressive promotion of mortgages, the product, the stuff that we see."
If you mean mortgage rates, those are tied directly to the 10 year treasuries. Their link to the FED rate is purely coincidental in that the FED usually lowers rates in times of economic stress, and people tend to buy treasuries in those times also.
As long as the stock market does good, treasuries do bad, and vica versa. Since the Dow is rebounding, rates are getting worse.
If you mean loosening of mortgage product, that wont happen.
The FED is trying to fuel interbank and business commerce. Large businesses need to lend/borrow money in order for the economy to operate on a day to day basis. That is the type of stimulus the FED is looking to accomplish, not lower mortgage rates.
"When the blast of cash hits the economy, the manifestation may relight housing prices, put builders back to work, drive up the price of building materials."
lol
Hurrah! The Fed fairy will save the real estate pumpers!
Because unaffordable housing, high building material costs and senseless speculation is what we really want...
At BEST the fed might find a way to slow the decline but even that hasn't been seen yet.
"Dominic, what's your point? Dupont/Logan row houses have indeed increased in value substantially. "
The point is that you were caught lying, again.
"I looked at a couple open houses today in the District. Prices are up by a high degree. Houses that last year were going for $1.0 to $1.2 million are now just under $2.0 million"
You said you VISITED rowhouses that had gone from 1-1.2 million to 2 million over 12 months.
Lets see the evidence. You couldn't produce any back when you first lied and I doubt you will be able to now...
Don't forget, you said "average rowhouses," rowhouses you have visted in fact... It shouldn't be hard to find a number of examples...
Of humorous note - my mother has a sub-prime mortgage that is adjusting...her payment just DROPPED $2,000 a month because of the treasury rates. LOL!
BTW, housing where I'm looking is basically at a standstill. I haven't seen any real activity for weeks.
Leroy asked:
"Lets see the evidence. You couldn't produce any back when you first lied and I doubt you will be able to now..."
Ah ... how typical, I posted my "proof" back then, but you chose to ignore it then as you will now. One such house I visited was 1625 R St NW which sold for $493K in 1998 and for $1.8M in 2006. You can re-research the rest yourself. 'Course you won't since BHs have an uncanny ability to ignore anything that runs counter to their theory that "there's a bubble out there and that means that ALL house prices will fall dramatically!"
Okay, let's put the shoe on the other foot. Can you show me how ALL prices have fallen dramatically in the DC area? Here's your chance to prove yourself right. Of course, you'll ignore this request to since you know you can't show this as having happened ... despite the bubblehead proclamation that this is "going to happen" going back AT LEAST to 2002 ...
AlexA said...
"Of humorous note - my mother has a sub-prime mortgage that is adjusting...her payment just DROPPED $2,000 a month because of the treasury rates. LOL!"
AlexA, I'm glad for your mother, but I doubt that a mortgage that can drop that much ($2,000 a month drop) is a "sub-prime" mortgage. It is more likely a regular "ARM" (adjustable rate mortgage.)
Sub-prime mortgages are "above-market-rate" mortgages issued to people whose credit history isn't good enough for them to qualify for "at-market-rate" mortgages. (I.e., they cost more than regular mortgages because the risk of default is higher.) These are the mortgages we're talking about when we hear about the liquidity problems out there. There are enough of them out there to have caused the fear that is at the root of the liquidity problem, but they aren't nearly as prevalent as regular ARMs. (A sub-prime can be structured as an ARM and usually is ... but not all ARMs are subprimes. Actually, relatively few are.)
From the comments I've read on here, I suspect most bubbleheads have lumpted all ARMs into the "sub-prime" mortgage category and have taken from that an increased (and incorrect) importance from the problems related to sub-prime mortgages.
"One such house I visited was 1625 R St NW which sold for $493K in 1998 and for $1.8M in 2006."
and yet here is what you said...
"Houses that last year were going for $1.0 to $1.2 million are now just under $2.0 million ... That is a HUGE increase ... in only a 12 month period."
Lets see...
"last year" and "in only a 12 month period."
and you post an example of a price increase between 1998 and 2006? An 8 year period?
Lets see some examples of the "average rowhouses" that you "looked at" that have gone from $1 million to $2 million in the relevant TWELVE MONTH period.
It shouldn't be hard for you. Afterall, they are average right? You looked at some didn't you? Just tell us which average rowhouses you looked at.
Time for you to run off to a new thread again...
"Okay, let's put the shoe on the other foot. Can you show me how ALL prices have fallen dramatically in the DC area?"
Btw, this is of course another of your strawmen. Show me where I said that...
Of course that is about as likely as you providing the locations of the rowhouses you claimed to have personally visited that have gone from $1 million to $2 million over twelve months...
Leroy said...
""Okay, let's put the shoe on the other foot. Can you show me how ALL prices have fallen dramatically in the DC area?"
Btw, this is of course another of your strawmen. Show me where I said that..."
So you don't believe in the Bubble theory ... i.e., that prices across the board are artifically inflated and they'll come crashing down once it becomes apparent? Are you saying you don't think that is the case? That at least for some homes their price appreciation has been based on real appreciation in value? You mean you actually agree with me? ... and not with the Bubble heads? Interesting ...
"So you don't believe in the Bubble theory ... "
Ah yes... are you once again appointing yourself the official spokeman of the "bubbleheads?"
Funny how your "version" of the "bubble theory" seems to have so little in common with the actual beliefs of actual "bubbleheads."
You just can't get away from your strawmen to save your life can you?
...and you also can't provide any proof to back up your lies about visiting rowhouses that went from $1 million to $2 million over 12 months.
""If you mean loosening of mortgage product, that wont happen."
I mean the end step. Interest rates fall. The mortgage bundling market (ie FNMA) comes back to life. The firms that buy the bundles rise from the grave. Mortgage originators (if that's the term, I mean outfits that deal with the public) start running ads with 1-800 numbers. If not 125% or 100%, we get 95% type products.
The game starts over.
I think it's going to happen again.
Everyone knows you lose to the "house" in Vegas but people keep going back.
Leroy, I saw the mortgage statement myself. She stated it was an I/O mortgage, but I didn't butt in to ask. It was just comical to see it drop so far!
kh said...
“I think you (and the other anti-Lance's) still miss it.
Here in zipcode 22305, the lower priced TH's are down about 10%. In 2005, they were selling for $450K. The sweetspot is now about $400K.”
Only $50K? Next time you have $50K lying around, just send it my way. Coupled with the monies I saved by renting, that would make a nice down payment.
"Next time you have $50K lying around, just send it my way. Coupled with the monies I saved by renting, that would make a nice down payment."
Yes it would but that wasn't my point.
In the close in parts of Alexandria, some segments of the housing market have fallen since 2005. I track the numbers using the offerings on MLS, the sales prices recorded in the city's databases.
Like CRT, I own. I've discussed the "bubble" with friends since 2002, one fellow has been franticly trying to convince me to sell. Mostly for the BH Mantra reasons, overpriced, too high-too fast, no one can afford, rent/buy ratios, etc.
My counter arguments? Well, I've stated them on Harriet's blog before but fall into 3 groups:
1) prices HERE, 22305-Alexandria, are not high for the QOL.
2) this is a world capital and a world city. All the others, even in the 3rd world are more expensive this close in. Still cheap compared to a New York brownstone, London (Mayfair), Paris, Mumbai. (this is where I channel that wise man, Lance.)
3) prices were flat in the 1990's, it's about time a TH sells for a half million.
I drove out to Centerville for a meeting yesterday. At 7:30 AM, It wasn't a bad commute, outbound.
Don't know where you're looking but if I were buying with a 300-400K price point, I'd look at places like Fairlington and Shirlington. Although the units are old and small, the setting is park-like. I see units like that on the other side of Northridge, might be Parkington. These are on bus lines and not close to the Metro.
I'd snag one now and move up to a SFH during the next boom. That's how I went from TH to SFH. I've paid less than rent almost the entire time; I don't believe the "rent saves money" mantra.
"prices HERE, 22305-Alexandria, are not high for the QOL. "
Right right, the your neighborhood is special argument. Sure prices doubled, but that was justified. Afterall, it is special here!
"2) this is a world capital and a world city. All the others, even in the 3rd world are more expensive this close in. Still cheap compared to a New York brownstone, London (Mayfair), Paris, Mumbai. (this is where I channel that wise man, Lance.)"
We have been over this before... over and over and over again. First, bubble conditions exist in many of the cities you just listed. This is not a local phenomena. It is a national and international one. Turn on the news sometime.(Try the BBC)
Second, it doesn't matter what real estate costs in London, or anywhere else. On the one hand you try to claim that neighborhoods 30-45 minutes away have nothing to do with yours... then you turn around and try to compare yours to a city on another continent completely...
What matters is that there has been no earning growth in DC to match what housing prices have done. Housing has become unaffordable and the situation is now resolving itself.
"3) prices were flat in the 1990's, it's about time a TH sells for a half million. "
Yeah, and it is "about time" my old Honda sold for a half million as well.
Are you going to repeat your wonderfully simplistic and flawed graphing exercise where you "prove" bubble pricing is justified by defining it as the end state and then solving the equation to determine the appreciation required to reach that end state?
Housing rises with inflation. If everything else you buy hasn't doubled in price since the 1990s(along with everyone's salary) you might ask yourself why your house should have.
"I'd snag one now and move up to a SFH during the next boom."
Yes, the bubble mentality is alive and well. It is ok to overpay because appreciation will bail you out. Just buy now and wait for a "boom!"
"I don't believe the "rent saves money" mantra."
What isn't to believe? The numbers are clear on this one. Nobody can force you to like them but it isn't a question of belief.
Leroy said:
"On the one hand you try to claim that neighborhoods 30-45 minutes away have nothing to do with yours... then you turn around and try to compare yours to a city on another continent completely..."
You don't get it do you? The people living in the centers of international (and financially/politically important) cities, have much in common with each other than they do with those living on the periphery of their own metro areas. ... And would be more likely to move to another such urban area elsewhere around the globe than they would be to move to a far off exurb of any of these cities. Think about this for a minute ... and what it means.
AlexA,
"Interest Only", like "Adjustable Rate Mortage" refers to the terms of the mortgage and not to its rating (i.e., riskiness/cost). (I.e., It doesn't mean she has a subprime mortgage.)
I doubt she has a subprime mortgage. If her payment could drop by $2,000 a month, then the mortgaged amount must be very very high. And since people who must resort to sub-prime mortgages would not normally qualify for a very very high mortgage, intuitively I don't think we're talking about a subprime in your mother's case.
Interest Only mortgages are an effective way for the financially savvy to better leverage their money. (I.e., as bubbleheads have pointed out, houses don't have a high financial return on investment. As such, it makes sense to put as little of your own money into your house and to use as much in borrowed funds as possible ... freeing up you money for investment in vehicles with far higher returns. Your mother must have a good financial advisor.)
"You don't get it do you? The people living in the centers of international (and financially/politically important) cities, have much in common with each other than they do with those living on the periphery of their own metro areas. ... And would be more likely to move to another such urban area elsewhere around the globe than they would be to move to a far off exurb of any of these cities. Think about this for a minute ... and what it means."
----------------------------------
Yeah, we get it. You think S Street is Park Avenue and you belong at parties and important social functions with the kind of people who live on Park Avenue.
What are you? The Walter Mitty of DC?
"You don't get it do you? The people living in the centers of international (and financially/politically important) cities, have much in common with each other than they do with those living on the periphery of their own metro areas."
Lance, you'll never convince him.
A few years in Europe with their $9/gallon regular may change his viewpoint. $100 to fill up a Honda?
He'll be bragging to Europeans how he knows a guy with a majestic TH only a short distance to the U.S. version of Buckingham Palace.
"You don't get it do you? The people living in the centers of international (and financially/politically important) cities, have much in common with each other than they do with those living on the periphery of their own metro areas. ... And would be more likely to move to another such urban area elsewhere around the globe than they would be to move to a far off exurb of any of these cities. Think about this for a minute ... and what it means."
Right right, the old "everyone in DC" is a high-roller myth. Let me guess, you think you are somehow more important because you live in DC as well huh?
You are living in a fantasy world where you are some kind of world elite because you happen to do IT contracting IN THE WORLD CAPITAL AND SEAT OF GLOBAL POWER OMG!!
Second, even if it were true that DC were among the world cultural and financial centers you like to compare it to, that still wouldn't mean it wasn't expericing a RE bubble.
Tokyo, NYC, LA, etc... every single one of these cities, which can't even see DC in their rear view mirror, have experienced terrible RE bubbles. You are just grasping at straws.
"A few years in Europe with their $9/gallon regular may change his viewpoint. $100 to fill up a Honda?"
Why do I suspect that I have spent more time in Europe in the last month than you have in your entire life?
Yes, gas is expensive there.
"He'll be bragging to Europeans how he knows a guy with a majestic TH only a short distance to the U.S. version of Buckingham Palace."
Um, "US version of Buckingham Palace?"
You mean the White House? They know what the White House is you know...
Yeah, I will no doubt be just tripping over myself to regale some Europeans with tales of how some guy bought a townhouse in DC. They will no doubt be shocked...
Where do you get these ridiculous stereotypes?
"The people living in the centers of international (and financially/politically important) cities, have much in common with each other than they do with those living on the periphery of their own metro areas"
Leroy - to be fair, I think there is some truth to this. I stated earlier that (all things being equal - assuming I could find a comparable job) before I would move to Chantilly, I would move to (a) San Francisco(Sausalito) (b) London(Westminster) (c) Seville(el arenal) or (d) Dubrovnik(anywhere).
On the flip side - neighbors within 5 houses of mine are from urban areas of (a) Caracas (works for BP) (b) Sau Paulo (some weird dental exchange thing) and (c) Geneva (retired). When we spend time together - I really do feel that in some ways I have much more in common with them than I do with old friends who live out in Herndon.
Now - I am the first to admit while I like DC, it cannot hold a candle to places like those I menitoned - I have no disillusions about where DC ranks on the worlds stage. However, until law licenses are transferable across international borders, I have to stay here - thus OT Alexandria it is.
I think it is more fair to say that some people are city people. If you are in a line of work that will generally keep you in a corporate or government office of some kind you will find that cities are where you will end up living.
DC certainly has some people that move or at least travel around the world for their work, but DC is no more an "international city full of extra special international people" than numerous other cities here in the US.
Even if DC were among the world's top tier cities, that still wouldn't mean it isn't experiencing a housing bubble. The whole idea that a "world capital" can't experience a bubble is just silly.
Most of them have suffered from bubbles in their past including some of the worst on record. If anything they are more likely to be subject to RE bubbles than various mid-sized or small cities.
Lance...thanks for the write up, but I already understand the nuances of sub-prime, ARMs, and I/Os. My mother has plenty of money, but iw not very bright when it comes to finance (she got her ass handed to her in the dot.com bust). She got very lucky to have her rate drop so dramatically. The size of the mortgage is large - it is a custom home in Great Falls. Beautiful place...5+ acres.
"but DC is no more an "international city full of extra special international people" than numerous other cities here in the US."
I think I would have to disagree with you there. Outside of New York, can you think of another city in the US where you would likely find more foreign nationals?
I am not talking about the "sneak across the border migrant worker" types or the large one ethnicity populations (such as the Cuban population in Miami). Put another way, where else in the US would you likely find a Brit, Indonesian, South African and Argentinian on business other than here?
Now I am not saying that this has anything to do with the development or lack of bubbles worldwide. Certainly London has one and Spain (mostly Malaga & Costa areas) has one too. If anything, you could take Lance's argument and turn it on its head - if the "multinaitonal node pan-global types" are feeling it, it will affect all these international cities as they scale back everywhere. However, among U.S. cities, I cant think of anywhere other than NY that would likely have more than DC.
Perhaps your perception of the "international flavor" of this area is colored by your foreign travel - especially in Europe where it seems like everyone is from some other country, speaks 4 languages, etc (its kinda humbling when all you know is high school Italian). In that regard NO place in the US can compare with even middling cities in Europe. I would contend this is more due to US geographical isolation and perhaps America's xenophobic tendencies. Neverhteless, when comparing D.C. to other places in the US - I really cant see where else they would go.
I am unaware of any real statistics showing the number of foreigners in US cities but I suspect DC is just one of several cities with a large foreign presence.
It is hard to separate immigrants from visitors as well. I suspect cities in the southwest lead the US when it comes to % of residents that are foreign born, but of course those individuals are mostly immigrants from the south.
There are large Asian populations along the west coast as well, but are they immigrants or visitors here for business? Telling them apart on the street isn't easy.
DC obviously has a large population of diplomats with nearly every nation on earth maintaining an embassy here. Certainly they count, but DC doesn't have much in the way of an international business presence compared to almost any similarly sized US city.
Most of the big businesses in DC are here because they sell primarily to the US Government.
I don't know, it is certainly possible my perspective is skewed but I don't see DC as a super international city, certainly not when compared to any of a dozen European capitals.(and that is just Europe)
In the end it doesn't matter. I think we agree that being an "international city" does not mean there isn't a bubble.
I dont know of any stats on it either, but I would be curious to know. And is not just the diplomats mind you. The World Bank, IAF USAID & OAS all have a substantial presence here - entourage & family in tow. There are a number of smaller international trade groups and other "self important" types like (AIA, GEF, Africare, Carnegie Endowment, WITSA, IRF etc.) are all here. God knows what they do other than seek handouts and attend conferences where they stand around talk about synergies paradigms and other nebulous concepts.
A friend of mine works in a law firm that lobbies on behalf of the Eirtrean Govt. Their firm has offices for 4 Eritreans (none of them lawyers or diplomats mind you) who work in the office with them! Every nation has its own lobby wing apart from the diplomatic corps. If Eritrea has 4people here, how many do the larger countries have?
In any event, I do agree with you on the international ranking of DC on the worlds stage. In a lot of ways DC reminds me of Frankfurt or Brussels in that (my perception) nothing about the city is so great that anyone really "wants" to be there. Instead, because of their work they essentially have to be there.
crt,
From my familiarity with the technology sector, most people in engineering and technology would prefer the West Coast or Boston over NY or DC if housing costs and overcrowding were not an issue. They are truly international cities from a "talent" perspective.
But what do people really want in terms of quality of life? Personally, I don't like traffic congested or overcrowded places in general; want to live close to my job while also staying in an excellent school pyramid. I really see nothing in DC or Alexandria to attract me.
DC has always been an international city--the bubble deniers have nothing to show why it suddenly changed within the last few years. International investing across borders in residential real estate is very small, even if it may rise a bit when $ is cheap.
"From my familiarity with the technology sector, most people in engineering and technology would prefer the West Coast or Boston over NY or DC"
No doubt TedK - this area is certainly not all things for all sectors.
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