Hattip to KH for noting this Washington Post article on foreclosed former "flop houses".
"County inspectors. . . found that the basement had been improperly divided into four rooms and that the house was set up for as many as 15 occupants.The author of the article (Bill Turque) calls foreclosures "just as toxic for a neighborhood" as illegal occupancies. But an opportunist from the comment section has a different take:
They cited the owner, Elsa DeLeon, for a series of code violations and ordered her to bring the property into compliance. DeLeon, a Honduran immigrant, told The Washington Post at the time that only eight people lived there, all family members who were needed to help make the mortgage on the house she bought for $550,000 in 2006".
By May, it was in foreclosure, sold to Deutsche Bank National Trust Co. of Kansas City for $120,600, according to county records. The house has been vacant for months; DeLeon could not be located to comment. It will go up for auction today, along with hundreds of other foreclosed properties areawide, at the Washington Convention Center. The starting price is set at $169,000 -- less than half the value of surrounding homes.
"Folks, get out there and look at these foreclosed homes. I just bought one in the same zip, 22150, that the article talks about. [I]t was totally trashed. Carpets had been spilled and peed on, and not cleaned up, so every carpet had to go. One of the residents ran a drywall business out of the house, and the gardens, which the previous owner had cared for lovingly for so many years, became the trash pit for the leftovers from the drywall business. The roaches in this place were unbelievable. . . . I got this house from the foreclosing bank for almost $150,000 less than neighboring sales. With about $30,000 in renovations, and several months of my own blood, sweat and tears, I've got this house well on the way back to a beautiful house. And I could never have afforded it if it was in good shape to begin with".
6 comments:
Or he could have waited twelve months and the prices of those nice, unsullied homes around the pit he just purchased will have declined $150K....looks to me like housing around me is dropping by about $12K a month.
looks to me like housing around me is dropping by about $12K a month
The steepness of this decline is amazing. The 'lead dog' continues to be San Diego. They'll find the bottom first; its been that way in every real estate cycle since 1849. They haven't even dropped to price/rent, price/income, or afford ability of previous real estate peaks! Yet prices are off 25%!!! I agree with Chris Thornberg, we're only 1/3rd of the way down in the decline. 1/3rd by chronology, not necessarily price.
For example, San Diego is not going down 75% from the peak (the midwest would vacate to the West coast), but other areas whom have only dropped 10%, will drop further. Those new 'full doc' rules to $730k won't re-ignite the market. 45% DTI is still high, but that's all debt. :)
Got Popcorn?
Neil
Gruntled said...
"Or he could have waited twelve months and the prices of those nice, unsullied homes around the pit he just purchased will have declined $150K....looks to me like housing around me is dropping by about $12K a month."
Yeah ... prices dropping forever. You're probably one of those people who thought prices would forever continue rising 20% a year. Use your common sense. That's not how it works. The guy who was wise enough to realize that the house in shambles was an opportunity, is the smart one. You Gruntled, will likely be gruntled for a long time to come.
Well, allow me to retort: Wall Street analysis predicts a decline in housing prices between 20 per cent and 30 per cent before the market begins to recover (that is, before the average price of housing realigns with average family income); by that measure, a $150K decline over the next 12 months is conservative. That doesn't mean prices will be dropping forever, it means either wages go up or prices drop, so which do you think is going to happen during a recession?
This change is unstoppable; the only real question I have from an economic perspective is, if you buy a foreclosed pit at 20 per cent off, as the rest of the neighborhood prices drop 20 percent to 30 percent, will the value of your "value" also drop an additional 20 percent, or does the fact that you bought at a 20 per cent discount drive down your neighbors houses down 20 per cent and that's it?
Neil: I saw that 45% DTI and thought that was really high. I thought the traditional rules were 28% housing expenses, total DTI no more than 36%.
Gruntled is right...
"The Nothing" as we call it... is spreading. Wannabuy is correct. If you ride down 95 to dumfries.. you'll notice a half a$$ attempt at a community called barton square.. It has a sign that says you would be home by now if you lived here... well the prices of these new homes dropped 20k in a month.. New houses from the 400's to 370.
http://www.richmondamerican.com/Shop+and+Buy/View+Community.htm?mr=Northern%20Virginia&Type=Community&cm=1443&ID=1443
The nothing has laid waste to some parts of mannasas and herndon... is slowly making it way to the springfield area....
needless to say im thrilled...and will continue waiting...
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