Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Pending home sales hit another low The number of homes under contract for sale fell in March, hitting a record low for the second consecutive month, according to a report released Wednesday. The National Association of Realtors' (NAR) Pending Home Sales Index fell to 83 in March, down 1% from a downwardly revised reading of 83.8 in February.
Great Zillow.com charts on the washington DC area.http://www.zillow.com/quarterlies/QuarterlyThumbs.htm?msa=Washington+Arlington+Alexandria+DCHome Value Changes, Appreciation, negative equity,
Substitution Effect BS from last page for those who argue in the face of facts. First - on Jumbo Prime arms forcing a wave of foreclosures in Arlington...ARMS are resetting DOWN for prime borrowers. As of right now, ARMS are resetting to around 4.75%, and the latest Fed rate cut hasnt even taken hold - that will likely drop it to 4.5%. Most ARMS were taken out at 5.25% - 5.75%. Payments will be LOWER - nobody is going to foreclose on a lower payment! On Ford Truck sales used as example "proving" that there is a substitution effect in N Arlington Hello - Ford Trucks do not equal Arlington real estate! Talk about a stretch! Lets see some DATA on N. Arlington instead of a high school metaphor! Like I said - there are MORE inventory gains in Falls Church, Mclean and Alexandria than in Arlington Co. Look it up! That means there ie NO substitution effect in Arlington. If those other areas inventories dropped, or rose more slowly, your arguments would make sense - but they are gaining more homes than Arlington. So buyers are NOT moving out further or the statistics would back you up - which they dont!
And please stop arguing that just because an economic principle exists, that every market will follow it. Hello - oil prices anyone? They are not following any principle of economics - highest supply surplus in 5 years yet the prices are surging. Argue facts, not some theory that you arbitrarily change based on the the real data when it comes in to make it look like you are correct.
First - on Jumbo Prime arms forcing a wave of foreclosures in Arlington...ARMS are resetting DOWN for prime borrowers. As of right now, ARMS are resetting to around 4.75%, and the latest Fed rate cut hasnt even taken hold - that will likely drop it to 4.5%. Most ARMS were taken out at 5.25% - 5.75%.Sure the fed saves the rich guy but doesn't bail out the poor person who is now homeless.
Mark Twain famously wrote: "There are three kinds of lies: lies, damned lies and statistics"You are really stretching to say that just because inventory isn't going up in Arlington, it automatically means that people are not substituting other areas for Arlington. You are saying that the statistics don't support it, well show us some sort of evidence that people aren't moving to other parts of NOVA instead of Arlington. Where is that proof?You think this is so irrefutable, where is your evidence? Besides that fact that inventory isn't going up. I think sales figures would be a better indication. Also, the affordability figures on housing would also be a good start. Just saying that inventory is going up in other counties is a sign that there is no substitution effect doesn't make it so.I'm a millionaire. Wait. That didn't make it so. Hmmmmm. I guess that doesn't work.
Bay400,New equestrian estate in Bellevue!! $495K. The house isn't much, but it's in the community I think you said you liked.Frankly MLS (will be there tomorrow)Homes Database
Just as virtually no one predicted the extent of the disaster in FL/CA/NV I think NOVA/DC is also going to be a wait-and-see. We can all make predictions for either direction.There were all types of new loans, massive speculation, purchases driven by fear of being priced out.On the other hand DC/Arlington has made a comeback and is a *much* more upscale city than even 10 years ago and with gas prices skyrocketing, living closer is more desirable to many people.For Sonia and myself, we've discussed this as to what we want to do. We'd like to stay in the DC area but move in closer (we can afford it now). On the other hand, we've no intention of becoming house-poor and locking ourselves into paying for what we consider ridiculously overpriced housing. Your opinion may differ as to that.If price/income ratios keep the way they are, we'll probably move. Previous comments aside, DC is not NYC and there are several cities on our list where we could go and be just as happy (and quite a better quality of life if things stay the same here).So, we've given ourselves up to two years to watch and then we'll decide. I expect by then the trend for DC will be much clearer.
Maybe I am missing something does everyone here know how to read English? The contract to buy a home is very simple to read. Why do we need to bail people out who failed to understand what they were signing. Now in those cases where their was fraud I completely support helping people out. However, we all sound like the kid at carnival who wanted to stay too long and then got sick. The only people that are getting hurt are those that are trying to flip a house they bought in the last 3 years. If you had a liar loan or 2/28 3/27 product then you darn well better have understood what you were doing. I just bought a house for 800k in purcellville that last sold for 1.1. It didn't take a rocket scientist to figure out that to buy a 1.1m home you needed to make about 300k. If you don't make that much maybe you shouldn't be buying the darn home. Additionally, (and yes I work in financial services), I find it astonishing that banks are now apologizing for asking for full doc for the new baby-jumbo's.
"Hello - Ford Trucks do not equal Arlington real estate!"It was an example to help you understand what is taking place. You are obviously too emotionally attached to Arlington real estate to think rationally about it."Like I said - there are MORE inventory gains in Falls Church, Mclean and Alexandria than Arlington. That means there ie NO substitution effect. If their inventories dropped, or rose more slowly, your arguments would make sense - but they are gaining more homes than Arlington. So buyers are not moving out further for better deals - because the prices are approximately the same in those areas!"You really don't understand what we are talking about here I don't think.You don't need shrinking inventory in the outer areas for there to be a substitution effect. I don't know where you got that idea. The substitution effect has been taking place every year... this year, during the bubble years, and before. The substitution effect occurs any time potential buyers weight costs against benefits. It happens all the time, period.Second... your "proof" that the substitution effect isn't taking place is completely without merit. Arlington is TINY in comparison to its neighbors. If Arlington loses 20 houses to Fairfax county that is >10% of Arlington's total sales. What is 20 sales to Fairfax? A drop in the bucket... You could transfer EVERY SINGLE ONE of Arlington's 179 sales in March to FFC and FFC would STILL have fewer sales YoY. You could subtract EVERY SINGLE ONE of Arlington's 179 sales in March from FFC's inventory and FFC's inventory would still be up a huge amount YoY. You need to think these things through a little more.
"And please stop arguing that just because an economic principle exists, that every market will follow it. Hello - oil prices anyone? They are not following any principle of economics - highest supply surplus in 5 years yet the prices are surging. Argue facts, not some theory that you arbitrarily change based on the the real data when it comes in to make it look like you are correct."You think oil prices are defying economic principals?If you could make a decent argument for that you could win a Nobel Prize... but of course you won't. The factors dictating oil price behavior are extremely complex. There are a lot of very very smart people that have spent their entire professional lives studying oil prices, and in many cases making huge amounts of money off predicting oil prices. ...but doug just "proved" that oil doesn't obey economic principals in a message board post... I guess all those econmists studying one of the most closely watched markets in the world just wasted a lot of years in school...lol
Leroy, Fairfax County is FFX, not FFC (that is Fairfax City); but why let facts get in your way.
Facts?Your prefered abbreviation is a "fact?"
And please stop arguing that just because an economic principle exists, that every market will follow it. That's pretty much what bubbles are, (temporary) violations of basic economic principles.
Hey everyone--Just caught up with your comments from yesterday, which was my birthday, so I was otherwise engaged and unable to respond ;)We are at peace with our rental. It is a short-term lease, so, as Harriet wisely suggested, we will be watching the November-January inventory carefully, hoping to do well that time of year. Perhaps some of the short sales we avoided now will be foreclosures then. Not to mention the savings we will accumulate. And perhaps we will know what job my husband will have after the Marine Corps. You may recall that was a huge source of stress for us--to buy before we know his post-Marine Corps employment. Renting again was probably always the wiser choice, but moving frequently is just so awful, especially when you have to do it yourself...As always, I hate to engage Lance, but I had to clear up a couple things: we have lived in whatever the Marine Corps told us to live the past 8 years, including a 3BR trailer that was renovated as soon as we moved out, a 600 sqft concrete block townhouse that was demolished as soon as we moved out, and even hotel rooms for weeks at a time, all with four and five kids. We are quite adaptable and could care less about pretentious details. We are all about the practicality of life as a big family.The first two houses we put offers on were 2100sqft and 2800sqft. The next houses were much larger, but they were only about $50K more, and by borrowing from family, we would have been able to finance them. We usually offered about 10% under asking. All the houses that have sold went for just under or just over what we offered. All the houses that refused to come down to our price range are still on the market. The last offer we made was our second true "lowball," and we were 99.99% sure it wouldn't work, but felt we should at least ask, since that doesn't hurt us at all.Acreage has never been our primary consideration--you must have me confused with someone else. We've mainly wanted to stay in our neighborhood, and if not, to get a house our grandchildren could come home to...and that means we are picky.Shouldn't we be picky about the home in which we want to live? Especially when the financial health of at least nine people rests on the consequences of that decision?
doug: "So buyers are NOT moving out further or the statistics would back you up - which they dont!"There are many different reasons for selecting one area over another. I have lived in Falls Church City for many years. In the next 18 months or so, I will most likely be purchasing a larger place for my family. I like this area, but I have no need for the metro and don’t have to worry about commuting to DC.If I had to move today, there’s a good chance I would buy in Ashburn or Haymarket. For example, I could probably get a 4+ br, 3+ ba, 3,500+ sqft house on 1/3 acre in a nice neighborhood in Haymarket for $500K or less. A similar house in Falls Church City would easily be over $1 million (at least right now). That’s enough of a difference for me to buy the $500K house. If that gap narrows and I find a similar house in Falls Church City for $600K-$700K, I’ll probably stay in Falls Church.I’ll admit my situation may not be common, but I doubt it’s unique.hog
Doug said..."Like I said - there are MORE inventory gains in Falls Church, Mclean and Alexandria than in Arlington Co. Look it up! That means there ie NO substitution effect in Arlington. If those other areas inventories dropped, or rose more slowly, your arguments would make sense - but they are gaining more homes than Arlington. So buyers are NOT moving out further or the statistics would back you up - which they dont!"Doug - you have your facts confused. First off the county that is rose the slowest (i.e. the smallest increase in YOY inventory) is Alexandria NOT Arlington. Second, there is actually one (and only one) county whose inventory has DECLINED since the beginnig of the year and that is PWC (5171 on Jan 1 vs 5066 today). http://www.virginiamls.com/charts/index.htmYour argument still misses the larger point on how the substitution effect works but for petes sake, please get your facts straight in the first place.
Leroy you hit it on the head with this commment:"It was an example to help you understand what is taking place. You are obviously too emotionally attached to Arlington real estate to think rationally about it."From all of Doug's posts it just seems he has a real hatred for all restate in PWC. Care to explain. Please don't make me have to dig up all your past posts either.
"From all of Doug's posts it just seems he has a real hatred for all restate in PWC. Care to explain."True, I dont like it out there. I dont like the slackers at my office who live there stumbling in late all the time blaming traffic, only to complain about gas prices incessantly. Oh, and Leroy, if you want I can find 5 articles on Bloomberg where experts interviewed say oil is not following market fundamentals. People, who quite frankly, put your knowledge on the subject to shame.:)
Some stupid Realtor shilling, but data nontheless:http://tinyurl.com/45ovx8
"Oh, and Leroy, if you want I can find 5 articles on Bloomberg where experts interviewed say oil is not following market fundamentals."Ah... but you said something different there than you did before. Asserting a market is currently disconnected from fundamentals is completely different from saying it isn't "following any principal of economics."Perhaps the difference is lost on you, but it is a big big difference. The fact that markets can deviate from fundamentals is a well known phenomena that was described by Adam Smith in 1776...In no way are speculative bubbles at odds with "economic principals." Anyone who studies economics will study speculative bubbles long before they reach graduate level coursework.You are making yourself look very foolish here. You might consider asking questions rather than making pronouncements when venturing into subjects you don't understand.
you have to keep in mind that doug says arlington sometimes, and then when that doesnt work says North arlington at other times.it's hard to keep up with all the activity here, but i'd also like to chime in that i am another soul that doug doesnt think exists. as i am considering alexandria city, fairfax county, springfield, falls church, pwc, lorton, even arlington now that South arlington listings are hitting my inbox.these guys dont get it that not all the jobs are in dc. it's so closed-minded and frustrating, especially for a !NoVa! blog.and how come huntington metro area is never brought up? why isnt that area doing better, it's on a heavenly metro line for crying out loud?oh, and what happened to Got Popcorn?
Jason asked for this yesterday: Charts illustrating falling prices moving inward: http://novawatch.blogspot.com/Chart #3 ("Percentage from Peak Prices") does a beautiful job illustrating this.
Hello, i am looking to buy a town home in the independence - manassas area. There are couple for sale. i need some suggestion on price. here are the homes i am intrested please check them out and please suggest a good price for each. and also give me suggestions that is this good time to buy. i am renting now....so thanks. PW6743834PW6531933PW6688351PW6629453
That is an interesting blog. It is nice to see someone doing that kind of work and posting their results. A wider sampling of areas would be better, but that would obviously be a huge amount of work.
man,Not sure how you could read this blog and be ready to buy. ;-)I know the independence area, pretty nice townhouses there.Basically you are in the drivers seat being a buyer in this market. For that area, I wouldn't pay over 250 k for townhouse, also make sure no one is behind you either.Can't get one for 250 k, rent for another 6 months or a year. Then come back, the sellers should be willing to take anything by then.Any house that has been on the market more than 100 days by this October should be pretty desperate.PW6531933 is my choice, but it's a short sale soo good luck with that...
leroy: I'd like to move a little more outward (Manassas) and inward (McLean). Manassas was just a mess, so I gave up, and I ran out of steam with McLean.Maybe I'll add those later this summer, but I really have to be in the mood, as it requires combing through the tax records by hand, as well as verifying the quality of the comps (aerial photos, tax listings, MLS listings, etc.,).
Looking at Doug's complaints about people who get in late to the office from PWC, I am reminded about the absence of flex-time for many jobs within the Beltway.Correct me if I am wrong, but I think most government-related jobs (and most jobs inside the Beltway) require starting at 8:00 - 8:30 am.(even if we assume that Lawyers, Lobbyists and the likes have much more freedom and flexibility).Personally, I need the freedom to start at any time I find convenient, and I don't relish the thought of rushing to catch the Metro every day to be at work by 8 or 9 am.I can't understand why people would make such a big deal about DC jobs and close-in real estate; the fact is many people would simply not want to work in DC and close-in areas, and they wouldn’t want to live there.
doug,you have a complete misunderstanding of what is driving oil prices . . . in fact what you read from "news sources" attribute the rise in prices to "speculators". If you actually understand economics speculators in a market are absolutely wonderful, they help stabilize a market to find its equilibrium point much quicker than if they weren't there.There are 3 crucial items which drive oil prices, 1) Supply/Demand (duh) 2) Geopolitical risks 3) debauching of the US dollar.Most people understand 1, so no need to talk about 1. 2) All the saber-rattling from the US to Iran induces a LARGE amount of risk to companies which pump oil from that region. The fact that we are in Iraq inducing a large amount of risk . . . like it or not the region was much more stable before we invaded.3) This is THE most important item in oil prices today, yet no one talks about it. Over the past 5 years the US dollar has lost ~38% of its value! Since oil is trade in US dollars internationally, a weaker dollar only means higher oil prices. Let's say 5 years ago 1 barrel of oil is at $50, in order to make up for the debauching of the US dollar (theft by the US gov. to pay for wars-by the way), that same barrel of oil would have to be worth ~$83 in order for those same companies to get the same value as they did 5 years ago. Factor in additional expected devaluation and you start going over $100+. I do believe oil is overextended, but that is the nature of markets. The majority of the rise in oil has to do with the worth-less-ness of the US dollar.Let's put this another way. Since 05 the US dollar has lost ~15-20% of its value. Hmmm, if the avg. value of a DC house was 450k, and now it's 350k, it would really need to be 562k in order to equal the same value it had in 05, or approx. a 38% drop in value!This is what happens when you fight wars, offer everyone handouts without raising taxes (not that I like or want more taxes).Another example . . . since the Fed started dropping rates last year oil has gone from ~75 to ~124 . . . coincidence, I think not. Sooner or later this deliberate devaluation of the currency in order to stave off a recession and a national default b/c of the massive amounts of credit extended since 01 will show up in other products (it already has and will continue). Unless the Fed starts raising, and raising soon we will have 200+ oil, 2000+ gold, 50+ silver, and a whole mess of other things before this nasty cycle is over.
"I can't understand why people would make such a big deal about DC jobs and close-in real estate;"Right, because DC jobs have no relevance on this blog.Man, this is hilarious. I am really beginning to think this blog is made up of bitter quasi-tech support and other people who look at their bosses with envy...
We love you Narl!
narl said""I can't understand why people would make such a big deal about DC jobs and close-in real estate;"Right, because DC jobs have no relevance on this blog."...and then there are the people who apparently think there are no decent jobs outside of DC?Actually, for the tech industry (which I'm in -- but not tech support, sorry) -- I hardly *ever* go into DC for business. Neither do the majority of my techie friends. In fact, one of the reasons I'm hesitant to move to north Arlington is I've seen the (supposedly reverse commute) traffic on I-66. Bleah!And so, narl, NARF! :-)
For the 100th time, it makes no sense for someone who does not work in DC to live in Arlington. I don;t know anyone who has claimed otherwise.
narl: "I am really beginning to think this blog is made up of bitter quasi-tech support and other people who look at their bosses with envy..."In the view of some DC government workers and lobbyists, having a PhD in Electrical Engineering from a top 10 University only entitles one to a "quasi-technical support" job!
Tabitha: "including a 3BR trailer that was renovated as soon as we moved out, a 600 sqft concrete block townhouse that was demolished as soon as we moved out,"My God! Tabitha, you are rough on housing!"all with four and five kids. We are quite adaptable and could care less about pretentious details"That might explain why they had to demolish the concrete block TH....Happy Birthday and I am pulling for you. -kh
Here's a mystery to me--unimportant in the grand scheme of things, but a question someone may be able to answer:9409 BeauregardManassas, VA 20110This is the first house we almost put an offer on last year. It had been for sale for almost two years when we did. We backed away, and soon afterwards, an "under contract" sign went up. I later saw that it sold for $400K 1/23/2008 to some couple, and shrugged and thought they had paid too much.The last time I checked the Manassas City Assessor's site was this past weekend, when I was using that house as a comp. Of course, it still listed that sale as the most recent sale for the house.Today, I was checking all sales in Manassas in 2008 between $300K-$600K (there are very few), and I noticed the Beauregard house was now showing its most recent sale as $549K on 1/23/2008, to Weichert Relocation Services. Weichert was the realtor for the house for the two years it did not sell. The previous owners, who paid $575K in 2005, had relocated, and Weichert was their relocation company.Why did the sale information change? What did Weichert do?And the mystery of bank takeovers counting as sales continues...so many of the 2008 sales I looked over today were actually banks taking houses, not actual sales; furthermore, most of the "real" sales were purchases of foreclosures from banks, for anywhere between $30K and $100K+ less than 2008 assessed values.I don't see this particular area bouncing back any time soon.
Novawatcher, fantastic data! Thanks a ton for putting that together. Doug... nah. Not worth my time.-Jason
Jason: What shocked me the most was the Ashburn data. I don't know much about the area, but I got the impression that it grew with the tech industries around Dulles. I guess if you work out there, it would be a pretty nice place to live (well, except for the insane price increases).Another thing to keep in mind is that the 2008 data is year-to-date. There are two caveats: (1) some people may say that the winter months are the slowest and tend to have the lowest prices, (2) that is true, but many of these places were 'sold' much earlier -- say October, November of 2007 -- but didn't officially close until February or March of 2008. That's actually before or at the beginning of the credit crunch/return to normal lending standards. IMO, that means "you aint seen nothing yet".Backing up that last statement is the fall of prices in 2006 and 2007. That was before the big wallop on the credit markets in August 2008.Actually, inflation adjusted, fall of 2009 might not be a bad time to buy in Ashburn, if the trend continues. Of course, the trend might go below my inflation line...
Doug:"ARMS are resetting DOWN for prime borrowers. As of right now, ARMS are resetting to around 4.75%, and the latest Fed rate cut hasnt even taken hold - that will likely drop it to 4.5%. Most ARMS were taken out at 5.25% - 5.75%.Payments will be LOWER - nobody is going to foreclose on a lower payment!"It's true that the ARMS are not resetting to a high rate, but saying that payments will be lower for the ARMS crowd (prime or sub-prime) is misleading. A lot of people took on ARMS loans with options such as interest-only payments. According to this Washington Post article, in 2005, 54% of home loans in DC were interest-only. In MD and VA, 1/3 of the new loans were interest-only. Methinks these, and other ARMS loans with similar options, are what really forcing folks to foreclose; because even with the reset low fixed rate, the new payments are simply too much.
A lot of people took on ARMS loans with options such as interest-only payments. According to this Washington Post article, in 2005, 54% of home loans in DC were interest-only. In MD and VA, 1/3 of the new loans were interest-only.Which may be why Goldman Sachs thinks this area will see large declines in house prices . . ."Using a model that ties house prices to disposable incomes and long-term interest rates, analysts at Goldman Sachs reckon that the correction in national house prices is only halfway through. They expect an 18-20% correction overall, or another 11-13% decline from today's levels. But their models suggest that six states—Arizona, Florida, Virginia, Maryland, California and New Jersey, could see further price declines of 25% or more."http://tinyurl.com/6e66zm
Defaults Rising Rapidly For 'Pick-a-Pay' Option MortgagesAs the growth in subprime mortgage delinquencies appears to be slowing, lenders are seeing a rapid rise in defaults on a type of mortgage that gives consumers with good credit several different monthly-payment options.These mortgages, which are sometimes known as "pick-a-pay" or payment-option mortgages but are generically called option adjustable-rate mortgages, are turning out, in some cases, to be even more caustic than subprime loans, in part because the loan balance and the monthly payments on some loans is growing even as home prices are falling.These loans have become the focus of investigations and a spate of lawsuits by borrowers who believe they were misinformed about the mortgages' complicated structure. Losses on option ARMs could be "in some cases close to subprime" mortgage levels, according to a recent report by Citigroup.On Tuesday, Countrywide Financial Corp. said that 9.4% of the option ARMs in its bank portfolio were at least 90 days past due, up from 5.7% at the end of December and 1% a year earlier. Countrywide also reported that it had charged off $125 million of these loans in the first quarter, compared with $35 million a quarter earlier. Bank of America Corp. said last week that it will stop making option ARMs altogether after it completes the acquisition of Countrywide Financial, which in recent years has been the largest originator of these loans.
http://tinyurl.com/4exfcrUSA TODAY ARTICLE"Mortgage crisis seeps to prime loans"•Rising payments The Federal Reserve's interest-rate-cutting campaign has helped minimize the higher costs that can arise once ARMs reset. Still, many prime borrowers with ARMs are seeing rate increases, which make it harder to make payments.Jeremy Brandt, CEO of 1-800-CashOffer, says "a high number of people who call us to sell their home are behind in payments and are not subprime borrowers. The typical situation is a person with great credit that bought a big house way over their means using an ARM or interest-only loan."
http://tinyurl.com/5edwljHouse OKs housing rescue despite veto threatWould allow refinancing for $300 billion of mortgages for homeownersThe measure is targeted at homeowners facing default, including many who owe more than their houses are worth.For instance, a homeowner who owes $290,000 on a house now worth $225,000 could refinance into an FHA-backed loan if the mortgage holder was willing to take a loss of about 36 percent. The borrower’s monthly mortgage payments would fall from $2,200 to about $1,200.I surely hope that no lender will agree to this???They also attached a housing tax credit of up to $7,500 for first-time home-buyers, to be paid back over 15 years. How would this credit be paid back by the home owner?? What the fudge? The package permanently raises the limit on the size of loans FHA could insure and Fannie Mae and Freddie Mac could buy to $729,750 in the highest-cost housing markets. Those caps are scheduled to fall at the end of the year, to $362,790 for the FHA, and to $417,000 for Fannie Mae and Freddie Mac.Hopefully, Bush will veto this crap bill... But we probably do need to extend permanently the housing caps
I surely hope that no lender will agree to this???It doesn’t sound like they are very interested in this provision.
The WSJ was reporting that lenders are not hot on this idea becaues they think they can get more money back from the original borrower by not doing this. Only if they're "95%" sure a borrower was going to default would they proceed with this route.So 2 questions, what about the law of unintended consequences. 1. If you bid up the home value with a fraudulant appraisal can the lender get 85% of an inflated number and be out of there - with FHA on the hook?2. Is there a time limit/timeframe on this proposal? It would force the lenders to make their thoughts on true market value known. My $0.02
Bas quoted and commented on:"For instance, a homeowner who owes $290,000 on a house now worth $225,000 could refinance into an FHA-backed loan if the mortgage holder was willing to take a loss of about 36 percent. The borrower’s monthly mortgage payments would fall from $2,200 to about $1,200.I surely hope that no lender will agree to this???"They might. I mean, as many posters on here have noticed lenders are willing to sell properties for far below market just to get them sold. Now, wouldn't it be easier for them just to refinance them at low prices to the people already in them than to go through all the bother of selling them? Considering no real estate commission or transfer taxes are involved, it would also be cheaper for them.So, the bottom line question is, if they can sell the places off for $100,000 less than the mortgage on them, why not just refinance them for that amount ... and save some transaction costs (and headaches) to boot?
zerodown, thanks for the link tohttp://tinyurl.com/6e66zmThe EconomistAmerican HousingMap of MiseryMay 08, 2008On my comp tracking spreadsheet, I have a couple of high-low range formulas linked to the C-S Index.Thanks to this article, Now I'm adding a new "worse case" Feroli (JPMorgan) index for a 35% market correction...which is very much in line with the typical 30-45% price drops I've been seeing for short sales/foreclosures in some Fairfax neigbhorhoods.
Lance, "So, the bottom line question is, if they can sell the places off for $100,000 less than the mortgage on them, why not just refinance them for that amount ... and save some transaction costs (and headaches) to boot?"That sure sounds reasonable. Except for the fact the borrower has already exhibited very risky behavior by becoming delinquent or defaulting on the loan in the first place. Some lenders already burned by the borrower may not be willing to throw good money after bad. A portfolio manager may prefer to foreclose on the property, discount it and then resell it to fully documented, credit worthy borrowers than to continue dealing with deadbeats. From that perspective, they will have effectively converted a non-performing loan into one more likely to yield safe and predictable returns.
narl: For the 100th time, it makes no sense for someone who does not work in DC to live in Arlington. I don;t know anyone who has claimed otherwise.Then let me be the first.1) What about people who work in Arlington?2) Some people who like Arlington as a place to live, especially compared with development patterns of the more recently developed areas. I can get around during rush hour far easier in Arlington than I ever could when I lived in Springfield and had to use Keene Mill Road to get anywhere. One advantage of the [somewhat] gridded street layout vs. the cul de sac and connector road layout is that there are several ways to get anywhere. There are a number of other reasons many people like Arlington, but I don't really have to list them. The point is that some people just like Arlington as a place to live (while others don't, of course).3) Arlington is well located for commutes besides DC. It took me about 20 minutes to get to work when I worked in Bethesda. Tysons Corner is also convenient. I frequently go to meetings in locations in Sterling, and have no trouble with the reverse commute on 66 or the Dulles Toll Road (28 can be a different story, though). My normal commute South isn't too bad either, except for the final few miles, around Springfield Mall and local roads. Even 270 is not too bad to get to. It's a great location for people who change jobs or workplaces every few years and don't want to move each time, or people who work at multiple job sites. It's also good for couples who commute in different directions, e.g. one to Gaithersburg and one to Lorton.4) Some people like to be close to the city for reasons other than work. It's nice to be able to get to the Smithsonian in 10 minutes on weekend, for instance, or make a quick trip to see the National Christmas tree on the spur of the moment.I think I agree with the main point though - living in Arlington doesn't make sense for a lot of people. For some it's not worth the premium, and for others, it's not the a place where they want to live.As to "why people would make such a big deal about DC jobs and close-in real estate", narl's point holds. For a lot of people, these issues don't matter and they probably better off not living in close-in locations like Arlington. The reason this is such a big issue on this blog though, is that the number of people that do have jobs in or near DC far exceeds the close-in housing supply. It's a supply and demand issue, which makes the closer-in housing sell for a premium. Those people have to weigh the convenience of living close in and not spending hours commuting vs. the cost. Differing perceptions of the correct premium is a part of why people disagree on the value of Arlington housing, and that's why it's discussed so much on this blog. It would be impossible to have an informed discussion of the real value of Arlington, Falls Church or Alexandria housing without considering their close-in location.
"It would be impossible to have an informed discussion of the real value of Arlington, Falls Church or Alexandria housing without considering their close-in location."Let me soften that statement a little. It would certainly be possible to have an informed discussion of housing values based on inventories, sales and price trends, county assessments, etc., without discussing the close-in location. You do need to include the close-in location in any discussion of why these housing prices are so high to begin with.
keithk: "... living in Arlington doesn't make sense for a lot of people. For some it's not worth the premium, ... "Let's consider that premium.Two ways to look at it. Perhaps in the 1990's, you had to pay more to get the same house as out in the burbs. That's one aspect of the premium.Suppose, turning it around, you had Lance's inkling that DC and close-in was about to boom, because of, er, pan-global, something-or-other. Fast forward to today. That premium paid 10 years ago has worked out as a wise decision (or plain dumb-luck). Arlington is holding value compared to way-out-there. So is DC, so is Alexandria. Places just outside the beltway do a little worse than inside. Places way the heck out there, do even worse.Lance's BH pals think that's just because it takes time for a bubble to expand inward and, any year now, houses in Georgetown will be cheaper, never cheap but cheaper. I doubt that will happen, but anything can happen. Given the perfect vision of hindsight, the premium was money well spent.
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