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Thursday, April 3, 2008
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42 comments:
Take a look at the $450k price drop on this house. I've seen it and it's very nice and ~1/2 mile to the Clarendon metro. But it's on a busy street and all bedrooms are configured the same, as master bedrooms. Anyway, it looks to be a sign of trouble in the close-in suburbs!
Nice house, bad location. I dont know why those tear down artists pick such bad locations! Who wants to fall asleep each night to the sound of traffic? No kids, dont EVER play outside... ect.
Still pretty pricey, although at 7000 square foot its price/sq ft is pretty decent for Clarendon.
I don't think it's just that house. From what I have seen thus far in 2008, Arlington homes priced over 1 million are not moving. This has tended to affect new construction the most.
Yeah well Jumbo loans are pretty outrageous right now. That probably hits a lot of peoples buying power. Plus if they currently own, its impossible to move up.
Doug,
Though the sound of traffic may initially seem troublesome, in a few weeks it all becomes familiar background noise, and nobody will be bothered.
My office building faces a street with significant traffic. When I moved to a corner office with a view, I was bothered by all the traffic. But now I don't even notice it.
That is the way it works for many people. This principle is used successfully in treating tinnitus; a small device that produces persistent 'ringing' sounds is surgically inserted, and the people who suffer from tinnitus soon come to see the ringing as a background noise that doesn't bother them.
But I don't know if there are negative long-term effects.
Well that may be, but the first rule of buying real estate is dont buy on a busy street or near power lines.
It has something to do with noise and more to do with your children's safety.
Also, some homes very near $1 million have moved. Two such homes moved in 22205 in March. They were both older 4 BR in very good shape, and had yards that were nontrivial. (i.e. consistent with the size of the home). One thing that is killing new construction is that they are squeezing 5BR monstrosities on tiny N Arlington lots. If you are in the market for a $1 million+ home, you want one that has a yard. Otherwise why not just buy an awesome townhouse?
Will they take $600k?
That location isn't horrible, but it isn't great either. Kirkwood is busier than most of the neighborhood streets, but it could be a lot worse (like on Washington Blvd. for example). Besides the somewhat higher traffic, Kirkwood just isn't a very pretty street. Most of the houses are horribly ugly 50's/60's tract houses with steep back yards.
At $999k, I think this house will finally sell. The owner paid $600k for the land and probably put another $400k to $500k into construction of the new house. Add in carrying costs, and he is definitely taking a sizable loss on this project. But that's what often happens when you buy high and hope to sell higher.
"At $999k, I think this house will finally sell."
Something around there is about right for many of these homes. If new construction does wind up dropping its prices to around $1 million that would then set off a chain reaction for all other properties, as there is a ton of new construction on the market . . .
bubbleboy, i was just thinking the same thing. if the market were logical, buyers would look at that price and think, "if that house is $1m, then for a house half the size and quality without many of the updates (i.e., many of the older houses in the neighborhood) i should pay $X."
$X in that case would be alot less than current market prices, that's for sure. For example, if the Kirkwood Rd. house goes for $1m, what should 315 N. Barton go for? Much less than it's current $725,000 asking price, that's for sure. Maybe $400k tops.
We'll see if logic prevails or not.
Calling Novawatcher! Cory's post is linked to the house I asked you about recently. Interesting - looks as if the owner is trying to start a bidding war, by pricing it below his cost (probably) and not taking offers until Ap. 13. If it were in a better location (and with a bit better decisions on the interior) it probably would have sold for close to the original asking price.
"Well that may be, but the first rule of buying real estate is dont buy on a busy street or near power lines."
They also say, don't buy the most expensive house on the block. This one is much bigger and WAS pricier than all the surrounding houses. (It also backs up to a school, and there appears to be some construction going on in the school's side lot.) The only neighboring houses close in price (to the old price) are probably the Bromptons townhomes down the street. It will be interesting to see what it eventually sells for.
Uh, right, no Orange Line houses are selling for over $1M....
The following are just December, January and Feb:
922 Daniel
2507 9th
2139 Scott
1806 Wayne
1717 Barton
1711 Harvard (for 50K more than paid for in 06)
508 Kenmore
Don't get me wrong--the Kirkwood house is probably not overpriced but more to the point is in a bad location as others have pointed out and any buyer looking to pay $1MM for a Lyon Village house probably does not want such a busy street. But the idea that $1MM homes are not selling is wrong.
ace: I thought that house looked familiar. At first glance, it looks like a pretty darn nice house, but once you start looking at it in more detail, there are some very goofy things, particularly in the kitchen and the exterior. If you look at the exterior from some of the satellite photos, you'll see that the big back yard in the photo is really the neighbor's front yard, etc.
That's true, Novawatcher, though the house is huge--and the back yard, pretty big--by Arlington standards, which buyers will trade off against the things you and I don't like about it. I think there will be multiple bids at this price. Here's my estimate: I think it will sell for around $1.2 million. Anyone have a better bet?
One more, 812 Highland sold for 1.5 MM just a few weeks ago.
I dont see how it can have a big back yard with a 7200 square foot lot. I mean the house is 7000 square foot so its gotta take up a huge chunk of that lot.
I think that picture was taken from some other yard with a wide angle lens to make it look bigger.
Doug said...
"I dont see how it can have a big back yard with a 7200 square foot lot. I mean the house is 7000 square foot so its gotta take up a huge chunk of that lot."
It's a 2 level house with a partially finished basement (i.e. recreation room), divide the 7,000 sq feet among the 3 levels ... and you don't have a 7,000 sq foot footprint on a 7,200 sq foot lot. You have something closer to a 2,500 sq foot footprint.
Why is it BHs are ALWAYS trying to find something wrong with any home that is beyond their means?
Its not beyond my means, we could qualify for at least twice that amount, but I wouldent spend 1M on that house thats for sure.
fd--from the data I have available to me (MRIS zip data) 1MM+ homes are selling at about 1/2 the rate (relative to inventory) that they were a year ago. That means more homes on the market, longer to sell, and greater likelihood of a price reduction.
Also, this is not just N. Arlington, it was also a DC/MD issue in the prime zips. March will probably tell a more complete story, however, when those data come out . . .
Doug, in addition to what Lance said, the house is positioned close to Kirkwood, so the front yard is small. The photo is a bit distorted. I go by this house during commutes so I'm relying on having observed it directly.
I don't think it is simply people on this board who find fault with houses like this. The entire market of buyers are obviously seeing the same problems, or other problems, or else someone would have snapped up this house long ago. That's why the significant price drop has occurred. When people have this amount of $$$ to spend on a house, they can be a lot more demanding than when they are spending half this $$$. I agree with the poster who pointed out that some developers made big mistakes in choosing locations of houses to tear down and sizes of houses to squeeze onto lots.
Actually, the house is not 7000 square feet (the lot is). I believe on the two above grade floors, Arlington Co. says it's about 3700 square feet, and the garage takes up part of the basement level. IIRC, the ad itself said the house is about 5000 square feet, which would be about right, if you count the finished, non-garage part of the basement level as well.
Also, it is not legally in Lyon Village - the agent advertised it as such because Lyon Village is a premium neighborhood. It is legally in Kirkwood Terrace, according to the listing. I think Lyon Village begins east of the eastern side of Kirkwood, and this house is on the west side.
http://franklymls.com/AR6631800.html
"Also, this is not just N. Arlington, it was also a DC/MD issue in the prime zips."
Check out Mclean, 22102 and 22101.
In 22102 95 of the 102 houses on the market are >$1 million with 61 of those >$2.5 million.
Want to guess how many houses >$1 million sold in Feb?
1
One single house sold. So there are 95 months of inventory if you only look at the high end of the market, but that metric is pretty useless when you are dealing with a single sale. The only thing you can really say is that the market has frozen.
In 22101 the situation is similar.
139 of 209 houses on the market are asking >$1 million.
There were 5 sales in the month of Feb in that price bracket.
That is 28 months of inventory.
Obviously the question is whether or not these markets will begin to move again but if the rate of sales does not increase prices will inevitably decline.
Mclean is the very top of the market in the region and at least as of Feb it has all but frozen.
It will be very interesting to see what the next couple months of data shows.
If you look at homes in that homes range, in N. Arlington, new construction ( tear downs ) in 900k-1.2M there isnt a lot there.
AR6587835 - right on busy road
AR6686045 - in the shadow of 66
AR6541657 - contract
AR6349566 - contract
AR6649220 - right on busy road
AR6686492 - right on busy road
AR6631800 - the listing in question
You really have to look higher to find places that are really nice, and are in a good location, with a decent sized lot.
I think its only a matter of time until those higher homes drop in price because they are sitting there not moving at higher prices, but its clear homes are moving in this range as long as their is nothing horribly wrong with them.
AR6341231
AR6705497
These are my personal favorites. They are adjacent to one another. The first, which is right on Wash BLVD has already lowered price (twice I think). The second is still under construction. It is clear that from one home you will be able to see into the windows of the other, thus lowering the value of both. Neither has any yard to speak of.
Bubbleboy, I thought the same thing. Right on Wash Blvd - yucko, and on the farthest reaches of Arlington - and much too close together. I like the interior's modern design but think some of the choice were questionable - battlegray kitchen cabinets? Why not choose something sleek in maple or cherry to have wider appeal? And the dark, dark, bathroom cabinets and tile...ditto. Notice how, as you take your relaxing spa bath, you can look right...into your neighbor's window. What a shame--this house could have been great.
oops - should have said I was commenting on AR6341231.
The era of the uber-expensive newly built house kicked off in the Clarendon area with the sale of 608 N. Highland Street in 2003. It sold for the shockingly-high-at-the-time price of $1,162,000. This was for a 4,000 sqft 'bungalow' designed and built by Mickey Simpson.
When it first came on the market, the price tag was viewed as ridiculously too high by folks in the neighborhood. But sure enough it sold and the confidence game was on (once one guy steps up and pays a high amount, other people feel more inclining/comfortable doing the same).
Other builders, such as Terry Showman, started pricing their houses just as aggressively.
Simpson built more houses with less square feet and kept raising the price without resistance by an ever-hungry market of buyers. 608 Highland resold for $1,500,000 less than four years later. Simpon's other smaller houses started fetching similar amounts.
Other folks started seeing dollar signs and snapped up old houses and put up huge in-fill houses. BCN properties has sold many an in-fill mcmansion at prices north of $1,500,000 (for huge houses on relatively undersized lots with said houses looking decent on the outside but built cheaply on the inside).
Due to the large demand for new-builds in the neighborhood and buyers willingness to pay high prices for them, lot prices soared in a very short period of time. Lots that sold for only $300k to $350k in 2003 quickly shot up to $600k to $800k within a year or two. With absolutely insane profit margins on these projects, these builders could afford to pay crazy-high prices for the lots.
The market was in no way rational for these new build houses. With the average builder paying $500k for the lot and $500k in construction costs, and then turning around and selling the house for $1.5m or more, they were making irrationally large profit margins. No rational buyer should be willing to pay that kind of profit margin to a builder.
Of course, when the new builds started selling for $1.5m, the older, smaller houses in the neighborhood that had previously sold for $400k to $500k started to look really attractive in relation to the much higher price tags. Voila! The prices of the older, smaller houses shot through the roof.
The result of all of this happening for a period of several years is that the market has become conditioned to these high prices and people think they are normal. It will be interesting to see if that starts to change over the next couple of years. I think it is starting now.
John Fontain,
Interesting comment. I think it eventually has to go back to the equilibrium that existed before the run-up craze.
So the question is, what was the median income of the owners in their respective neighborhoods and what was the median home value?
Since I know many people who, in the span of 1-2 years, could no longer "afford to buy their house" I would suspect that the median value to median income ratio grew well above it's long term trend (in a very short time frame).
I would argue that the buyer pool for that location/lifestyle hasn't changed much so the ratio has to come back into line with what it was historically.
Time will tell.
My $0.02
I think the interior of the house (AR6341231) looks really cool, and the house may have cost 500-600k to build.
But that lot isnt worth the difference! You couldent pay me to live on W. Bvld on that puny lot.
Good luck backing out of the driveway for 20 years without getting killed!
Having toured AR6341231, I will say that certain aspects of the interior are impressive. But there are also numerous imperfections that should never exist for a new house in this price category. There are several large gaps in the HWF on the main level. Upstairs the sheetrock was installed poorly. It is very uneven where the wall and ceiling join in several of the rooms.
I talked with the builder quickly, and he said that house was built to "Green" standards. My guess was that they were really trying to appeal to a very specific buyer with this house.
Interesting, bubbleboy. Amazing that the builder whose reputation depends on such things would not maintain the highest standards of quality. People interested in green building will likely want high construction quality as well.
I agree with everything in John Fontain's post. That being said, there are a lot of posts on here from people who simply don't have a clue as to the type of people who live in Lyon Village (and, to a somewhat lesser extent, Lyon Park and Ashton Heights), and what they can and can't afford.
When I drive to the Italian Store I always admire the house and then wonder who put that house on a lot with a 45 degree angle. I'm not kidding, the backyard slope is that severe. I guess a good deck could help with entertaing, but a patio is out of the question. I'd love to buy that house for $1MM, but with the wierd backyard and its proximity to Kirkwood, I don't think I could pull the trigger.
Another house that will never sell is a new house next to the monstrosity on Pershing owned by Dehli Dhaba family. That thing on Persing, which has been featured as an example of bad taste in the WaPo, is hurting that little slice of Lyon Park.
By the way, 441 N. Nelson has new occupants. The house was bought for $625K in 2003. The new price has not yet been recorded but I bet its closer to $800K. The only upgrade done in that time is a new landscaping job.
Bill, I agree about that house on Pershing but I bet it will sell if they lower it another 150K. But it is a horrid, horrid house. Other homes in LP/AH are actually going sooner than I would have thought, 3211 1st went for more than in 05 and that horrid one on Piedmont (would not want to live on that street) went for 900K.
When I drive to the Italian Store I always admire the house and then wonder who put that house on a lot with a 45 degree angle. I'm not kidding, the backyard slope is that severe. I guess a good deck could help with entertaing, but a patio is out of the question. I'd love to buy that house for $1MM, but with the wierd backyard and its proximity to Kirkwood, I don't think I could pull the trigger.
Another house that will never sell is a new house next to the monstrosity on Pershing owned by Dehli Dhaba family. That thing on Persing, which has been featured as an example of bad taste in the WaPo, is hurting that little slice of Lyon Park.
By the way, 441 N. Nelson has new occupants. The house was bought for $625K in 2003. The new price has not yet been recorded but I bet its closer to $800K. The only upgrade done in that time is a new landscaping job.
Bill, I think the photos show a flagstone (?) patio already in that house's backyard, off the kitchen/family room. Fd, I also toured that house on Piedmont and totally agree with your assessment of its horridity :-). It did sit on the market a long time, though. I guess there must always be some subset of buyers who want BIG no matter what else, and for that reason agree with you about that little monstrosity, which sits next to the bigger monstrosity (and I think is owned by the same people) on Pershing.
Well, the Piedmont house was in reality a good buy at 900 I bet; it is a new house in a neighborhood where, 5 blocks over, new houses just sold for 1.45MM. But it was really cheap, strange and like I said much too close to Buckingham for comfort.
You know, though, on the other hand, given the pending redevelopment of the Pershing/Glebe corner and the bus yards, maybe Piedmont will be better in a few years, who knows.
Oh that 2nd Dehli Dhaba house that is for sale is just awful both on the inside and out. Horrible architecture (if you can call it that), house so big that there is no yard left, peers right out on the 12,000 sqft monster right next door, very poor quality materials inside (i'm talking the cheapest home depot sink in the basement bath), poor layout, and VERY poor craftsmanship.
They have an iron handrail at the front steps leading to the upstairs that is secured to the floor with machine bolts, drill holes in the floor where they misjudged where the handrail would go, etc. Horrible, horrible, horrible. That place shouldn't sell for more than $600,000.
It is the perfect example of an owner building to maximize square feet with all other considerations thrown to the wayside. It's a shame that people are allowed to build things like that in a historic neighborhood.
I really like those Mickey Simpson homes. Ive been in a couple and they are nice inside and out.
But you are right, they are always on really small lots, always in Clarendon.
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