Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, off-topic ideas, and links here.
My community in Victory lakes has a message board. Thought I would post some good housing quotes from it here:"Posted on:17-MAR-0801:56:47 PM Oh... this is really depressing. Why didn't I rent for 2 years? I'd be able to get my house for almost 200K less than what I paid!I'd be able to get a house with SO MUCH more space for about 50K under what I paid.Anyone know of a nice bridge I can go jump off of?""Max PowerPosted on:17-MAR-0809:14:46 PM Forget the bridge, just give me a case of Jack Black, no not the actor. Drinking heavily works every time. "
"Posted on:16-JAN-0810:25:54 AM Well, I hate to say it, but it's not the interest rates that drive the market - it's supply and demand. And I'm thinking that supply will continue to beat out demand probably well past next year. The only thing that's going to change this market out here is if we have a really big reason for homes around here to sell. Right now we've got over 100 homes in foreclosure - and those will need to go first, so that means we need over 100 families who are compelled to buy out here. But you also need to factor in that there are probably well over 100 homes for sale out here that are not in foreclosure (yet) - so we're talking well more than 100 families have to be out here looking to buy.Other than that FBI center that's coming out here, I don't see a lot of business growth that will bring those buyers. And since that Eli Lily plant isn't going to happen (though that's probably not such a bad thing), I think it might take a while before a lot of that happens.So, with all that said, here's my prediction - for what it's worth - we probably won't see things start to shift back to a seller's market until at least 2012. We'll see dropping prices through 2009, then a leveling off in 2010, then a slow rise (about 2-3% from the bottom e.g, my 650K home will be around 475K, so 2-3% from that figure) for a couple of years, before things move more in the owner's favor with larger appreciations starting in 2013. I'd say the next time we see a big market like we just had will be in 2016-2020 - and that's when I hope to break even. I'm sorry to be so glum about this, but like others have said, we just need to ride it out. I know I have to live somewhere, so I'll live here for the next 8-10 years. What other choice do I have. I might take advantage of these upcoming low rates and improve on my house - I can see a number of areas that need improvement - such as these builder's grade windows, the lousy furnace, the terrible hardwoods, the HORRIBLY drafty front door, etc. - or, I might just keep everything status quo with the house, but refinance into a lower rate and throw more at the principal so I can pay this down so I can at least have some cash if/when I sell.We all might as well enjoy our homes, I think we're all going to be in them for a while longer. "
Something to think about ....http://www.youtube.com/watch?v=ljbI-363A2Q
Wow steve,That guy in the 2nd quote really sums it up. They are all 200k+ in the hole, their homes are cheap and falling apart after only a couple years, and they need to stay there until 2020 to simply be able to break even and walk away without owing. You can see why so many people in PWC are tempted to foreclose and start anew.
The quality of homes varies in my community. It seems during the great build period 2003 - 2005, the builder was rushing to get as many homes built ASAP, so quality suffered. I bought a resale that was build in 2004, so the previous owner went through a lot of pain. However I still had to go through my share when moving in 2007. I was lucky I guess in buying in 07 instead of 05, probably saved 100 k. But some of these owners are really upset in the prices they paid. So far there are only 3 foreclosures in my community of about 150 homes (Phase 2). But I wouldn't be suprised to see that jump to well over 10 or 15 by this time next year.Not sure what the foreclosure rules are in Virginia. I thought the bank come come after you for the difference, between their sale price and what you owed on the note. Anyone know?
Yeah thats true Steve, the best way out at that point is to declare bankruptcy. The only problem with bankruptcy is that the court may decide you make enough money to still pay off your debts, and will garnish your wages. So really you need to lose your job in order to get out of town without owing a ton of money. But your credit will be hosed really bad from a foreclosure and a bankruptcy. Likely wont be able to get a car or house for 5-10 years, and may not be able to rent a decent apartment. Also, if you have credit card debt, the rate will go through the roof on that amount of damage. Still, that might be a lot easier than being upside down and paying interest on an asset that is losing massive amounts of value by the month.
doug said:"Still, that might be a lot easier than being upside down and paying interest on an asset that is losing massive amounts of value by the month."With statements like this it's not surprising that so many people are having a hard time figuring out how to buy a house. I don't know of any homeowners who sit around thinking "wow, what is my home worth today? if it's gone up enough, should I sell it? if it's gone down should I sell it and cut my losses?" that kind of thinking is for financial investments ... not for an "expense" which is what your home is.what you're saying is tantamount to "wow, gas prices are cheap this month, I should drive to California and back to take advantage of these cheap prices" or "wow, gas prices are high this month, I should walk the 20 miles out to work in Herndon this month since I'm not going to make money off that tank of gas if I use it."Bubble heads have a confused understanding of what owning a house ... i.e., incurring an expense ... is.
dunce said.."With statements like this it's not surprising that so many people are having a hard time figuring out how to buy a house."you dont think people in credit card debt dont sleep at night? you dont think people who need that home atm are wondering everyday how they can now pay for their lexus payment?yet you're a homeowner who visits these blogs EVERY day to gripe that prices are stable. pot meet kettle
gt said:"you dont think people in credit card debt dont sleep at night? you dont think people who need that home atm are wondering everyday how they can now pay for their lexus payment?"Interesting ...(1) makes assumption that people who own homes are "in credit card debt"(2) makes assumption that people who own homes are are drawing cash out of their homes ("home ATM")(3) makes assumption that people who own homes are making payments on luxurious cars It sounds like we have someone here who is VERY jealous of homeowners and somehow thinks that by assuming in HIS mind that they are in debt and/or irresponsible, that that makes HIM a better person. Sorry GT, it doesn't.
Lance, I would agree with your thinking if this were anytime prior to 2006. We're in uncharted waters and someone thinking about the current and future value of their home and acting accordingly is not wrong or the same as traveling to California to purchase gas. I'm amazed you even make that argument.
Z ... who said anything about going to Calif to purchase gas? (I said driving to Calif ... when they didn't need to ... thinking they were "saving" money because gas was cheap ... ) The point I was trying to make is that if you treat a home purchase like an investment rather than the longterm expense it is, you're going to make some terrible mistakes. It's an expense to be minimized over the long haul. If you get confused and treat it like an investment, then you're going to get bit eventually like the flippers did.
"(1) makes assumption that people who own homes are "in credit card debt"(2) makes assumption that people who own homes are are drawing cash out of their homes ("home ATM")(3) makes assumption that people who own homes are making payments on luxurious cars"Lance, I'm on your side in the BH V HH discussion. My opinion is that over the long haul, close-in DC home prices will rise beyond anything we can imagine. We'll see Rome, Paris, London, Hong Kong, Seoul, Tokyo, Mumbai, prices. However, I've worked with people who looted every cent from their home equity. My ex-boss did that in 2005 to buy a $40K truck. He confided that he wasn't sure that he had enough equity or that his income would support the debt. He wasn't the only one at the company who was livin large in '05. I just realized that the home equity drainers all lived outside the beltway and one lived in PWC.Perhaps they lived there because the small, less than ostentatious older homes in Arlington, DC, and Alexandria were not their style.Contrast that with my neighbors, several of whom have paid off their places.
kh, good analysis. keep in mind though that BH beliefs are that ALL homeowners have been this irresponsible. the whole bubble theory is in fact built on this assumption that ALL buyers have been irresponsible. when you or I or anyone try to explain that this only applies to the few (and not the many) ... who happen to be for the most part where $'s bought more ostentatious homes ... they cry 'liar' ... 'cause it punches a mighty hole in the theory that ALL prices are in a bubble.
good analysis. keep in mind though that BH beliefs are that ALL homeowners have been this irresponsible. Nonsense. We just believe *enough* to produce great deals. The longer I wait, the better the deals are getting. In the last downturn, I was shocked who I saw foreclosed upon. If the housing bulls want to believe their homes aren't going down like the vast majority of the world real estate. What's happening now is what the bulls said could never happen. Sales rates precede prices.Got Popcorn?Neil
"What's happening now is what the bulls said could never happen. "Not exactly. At the 2005 peak, I expected my place to fall as much as 10% from that point. It's gone up about 4% since. A BH pal and I talked it over. He recommended selling my place and renting. I said that it would cost me 15% to make a round trip from owner to renter and back to owner. He thought that valuations everywhere would fall 30%, 40%, 50% and that was why I should sell.It turned out that my BH pal was wrong. Given that the Fed is relentlessly driving down interest rates and that capital will be more available, it suggests that prices will turn around.
"It turned out that my BH pal was wrong."The same points keep being rehashed and only time will tell on this. Therefore, to state that your friend was wrong about the outcome when we're only in the 3rd or 4th inning is a little premature. At least wait for the 7th inning stretch to call the game.
kh said"He thought that valuations everywhere would fall 30%, 40%, 50% and that was why I should sell.It turned out that my BH pal was wrong."And that will likely be the case for good locations inside the beltway. They may lose 10% of their value, but nothing like out there in South Riding and Victory Lakes. I dont think it will matter how much they mark them down. Fact of the matter is, you can buy homes like that in Texas for 150-175k, except they are all brick. I see no reason why South Riding and Victory Lakes SFHs wont fall into that range, they are simply too far from any decent job to make living their worth while. Especially with gas hitting 4$ a gallon this year and ( in my estimates ) 10$ a gallon by the time the housing market actually turns around.
Doug said:"Fact of the matter is, you can buy homes like that in Texas for 150-175k, except they are all brick. I see no reason why South Riding and Victory Lakes SFHs wont fall into that range,"Maybe 'cause they areN'T in Texas? Also, a non-rush hour ride away from a major international capital is still a lot closer to a major international capital than being in Texas is.
Can't help myself...I've become the listing police...but this house has been for sale for at least two years, and turned up as a new listing today, but they didn't bother changing their listing description, which still says "PRICE REDUCED $50,OOO!!"How can a new listing have a reduced price already? ;)8894 BOND CT MANASSAS, VA 20110 Price: $549,900PS Steve...I think I have noticed several new auction notices in the Post for Victory Lakes, which has surprised me, since I have watched those listings for two years, and had begun to think your neighborhood was insulated from the foreclosure mess. Most of these auctions are for smaller models...but your prediction might come true this year, rather than next year.I still think those houses are so pretty, and it is a well-laid-out development.
"Therefore,to state that your friend was wrong about the outcome when we're only in the 3rd or 4th inning is a little premature. At least wait for the 7th inning stretch to call the game."OK, correction accepted. He's been wrong for a few years and may eventually be proven right. I'm betting that we've passed the bottom. Consider that housing starts are off (builders are going bankrupt), that the Fed is slashing interest rates (granted this still has not shown up in lower mortgage rates), the jumbo limit is going up, they're trying to fix the mortgage resale market, inflation is up (what is a close in house but a shorter, cheaper commute and a stack of inflating materials and labor).We'll see.
"I'm betting that we've passed the bottom."Nationally, and for the reasons you cited, perhaps we have. However for those of us inside the beltway, the thing that is troubling me now is months of inventory (which always preceeds price drops). During the last 2 years while the exurbs were melting, we were sitting comfortably at 4-6 months of inventory...it was remarkable in that not once from 2005-2007 could you find inner beltway inventory high enough to say look there is clear downward pricing pressure (i.e. supply exceeding demand). In fact for a lot of 2007 months of inventory were lower (YOY) than they were in 2006!2008 has come off to a bad start. All inner beltway inventories were around 10 months in Jan (anything more than 6 months is indicative of downward pressure). They have since dropped a bit in Feb but not enough to say that Jan was an anomaly. Thus in my mind, the spring sales will be the first real test the inner beltway areas have experienced.
Doug said:"Fact of the matter is, you can buy homes like that in Texas for 150-175k, except they are all brick. I see no reason why South Riding and Victory Lakes SFHs wont fall into that range,"LOL. Please, materials for these homes cost more than 200 k. Manassas Townhouses back in 2000 cost 200k. We are not living in Detroit or ohio here. We are pretty much living in the captial of the world. There will always be a demand since there are jobs, however since there was such a huge build up, it going to take about 5 - 7 years for the demand to catch up with the supply. Prices are going down, but these houses that have gone down 50 -60% are pretty much dumps, that had no business going for over 200 k.
Lance and KH keep setting up the same straw man arguments and denial in hopes that their meager words will stem the receding tide of home values.In my estimation, the housing surge in D.C. started out with sound fundamentals. Prices had not materially appreciated for about 10 years, rents were skyrocketing, so people found they could get a better deal by buying. Apartment renters bought condos, which caused the demand (and price) of condos to increase. So people could cash out the equity in their condos and buy townhouses, and townhouse owners could by SFH, and SFH could buy bigger, newer SFH. Let's call this leapfrogging. It was made possible by the wave of general appreciation, because people could cash out the equity in their home and use it as the down payment on more expensive housing.This would have been a normal cycle, but for the spread of free money. People simply went nuts, and bid up houses beyond what they could afford by traditional measures, because they thought that the trajectory of housing prices would continue at its then-current rate. A classic falacy of investing that is repeated over and over again, which causes bubbles. The idea that "buy now or be priced out forever" has in some sense worked, becuase now much of the market is priced out of the market. Without the expectation that a house is going to go up in value in the next 5-7 years, and may actually go down, combined with the fact that banks are only lending to those with down payments, buyers are facing the situtation that their 10% down may evaporate in the first year or two of ownership, not to mention the transaction costs associated with the sale. Add in housing maintenance costs and the thrill of home ownership is once again starting to look like a luxury that is unaffordable or at least lacking in financial sense.The problem that many, if not most, home sellers are facing right now, and which have been expressed by kh and lance, is that they *think* thier house is worth $X. It is not. Lance thinks his house has appreciated 50%. It has not. Even if he were able to get an appraiser to say that his house has appreciated 50%, and a bank is willing to buy that and lend him based on the percieved equity, that does not mean that a buyer would pay him that amount. I bet dollars to doughnuts that neither an appraiser, bank, nor buyer would agree with lance.KH seems to think that because her assessment went up 4%, that her house went up 4% too. Not so. It may have gone up 5% or 10%, or down 10%. You will never know until you put it on the market and find a buyer. Assessed values have nothing to do with purchase prices. When making offers, I did extensive research on what every house in my zip code had sold for in the last year. I found houses that had sold for slightly under or over assessed value, and some that sold for $50k to 100K over assessed value, because of renovations or improvements.There is a rediculous amount of real estate on the market that has been there for over a year. I am having the same experience as Tabitha seeing the same houses come up as new listings, which were listed last year. It is clear that the market has a different valuation of what these houses are worth than the sellers do. This will continue to create buying opportunities and selling opportunities, because a nice house will stand out from all the crap that is currently on the market.My point being, once again, is that lance and kh, you are wrong. Wrong, wrong, wrong.
Tabitha, thanks, that is funny. Per: http://franklymls.com/MN6527996.htmlit shows the house has been for sale at least 560 days, and as we all know there are games that can be played with those numbers.It looks to me as though this house desperately needs to be staged by someone from HGTV or similar--to take out all the dated wallpaper and bold paint colors, simplify and declutter, replace the dated light fixtures, etc. I'm sure this isn't the only thing holding the house back, but it isn't helping, either.
Ace, I think the six or so tenants who have about 30 cats (give or take), and the smell of 30 years of a smoker also have a little to do with it... ;)
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