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Tuesday, July 22, 2008
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27 comments:
Just got a letter from a builder whose house I visited last month.
Paraphrasing:
"We've just lowered the price of the house you visited for 1 last time. As you know the housing market has been tough and we've lowered the price of this fabulous house several times (from 899 to 749 now). If the house doesn't sell at this price soon we will be taking it off the market and offering it as a rental until such time as the market improves."
The house is appraised by Fairfax County at $890k.
Last night we were flipping through tv and stopped on House Hunters. (Nothing else was on.) The episode was "Looking in Nashville", originally aired April 17th, 2008, and probably filmed up to six months before then. It featured a priceless quote from the realtor: (imagine Nashville-twang accent...)
"Now, we're really lucky here in Nashville. We're insulated from that housing bubble they keep talkin' about on tee-vee."
It made me LOL. The irony...a realtor -- on a real estate show -- on tv -- saying that.
I thought this was also somewhat relevant to the conversation yesterday about the pumpers disappearing.
"If the house doesn't sell at this price soon we will be taking it off the market and offering it as a rental until such time as the market improves"
That I seriously doubt. These builders are under a tremendous amount of pressure to sell...at any cost. A good 90% of them financed the land acquisition and development costs. If they do not sell and service their debt, they will be deemed out of covenant and the lender will have carte blanche to call the loan due.
That said, some of these guys have been able to restructure their debt, and the rental market is strong enough that some lenders are likely to start allowing them to service debt via rental payments. However, I dont think we are there just yet. As I see it, this is likely no more than a threat to get you to buy now (typical builder stuff).
And now Wachovia is in serious trouble:
http://tinyurl.com/6gohhq
Possibly the biggest piece of news in the story: "And beginning Friday, the company will no longer offer mortgages through brokers, joining other lenders making similar moves to exit the troubled sector."
on the subject of long distance commutes:
http://www.msnbc.msn.com/id/25722409/
Shamrock - that better have been a beautiful 5000 square foot house for that price in Fairfax County.
I remember a few years back when a "luxury townhome" in Chantilly would cost that much, lol!
Hey Shamrock-
tell the Builder you are VERY interested in renting this house for 1500.00 per Month!
The old "put up or shut up" !
Ewww - you might miss out on this one & there's only THOUSANDS more out there to purchase !!!
crt, spunky, I didn't consider it to be a bluff, but that certainly is a good possibility. I was more thinking that this house could become part of the "hidden inventory" of houses that owners want to sell but aren't listed for sale.
Doug, it's 4000 sq feet plus unfinished basement, and really is spectacular. Maybe they would take 600k. $150/sq foot seems to be the average sale in herndon.
If the house doesn't sell at this price soon we will be taking it off the market and offering it as a rental until such time as the market improves."
Or, they might be forced to do this:
http://www.franklymls.com/FX6769493
Notice that the house is being sold "as is." Check out the pictures of the interior.
Oh, and it appears that they forgot to mention the trustee's sale on July 25, 2008:
http://tinyurl.com/6l4hvr
Also notice that this house is in McLean.
Joshb, I think I saw that episode too. Wasn't it the one where the couple got out of the market for awhile to wait for prices to come down (then decided to go back into the market due to having another child)? If not, it was another Nashville episode, I think. I guess that Realtor didn't convince the homeowners.
"shamrock said...
I was more thinking that this house could become part of the "hidden inventory" of houses that owners want to sell but aren't listed for sale."
Shamrock - by the nature of the builders financing, "hidden inventory" isnt nearly as much a concern in the new home market as it is in the resale market. Many of the builders build on leverage, and the loans they take out have very very restrictive covenants on what the can and cannot do (rental financing is an entirely different animal than new home financing).
In most cases, even if renting was not expressly prohibited by their loan, if they started to rent, they would quickly fall behind on their debt service and the bank would call the loan.
Even worse, these guys are so desparate for cash that it is often better for them to sell at a huge loss than it is to rent. Think of it this way, if you need 200K to make payroll this week or all your staff starts leaving, its much better to sell a 500K house for 250K than it is to start receiving payments of 4K a month in rent.
It is conceivable that this builder is not heavily leveraged (some of the smaller ones are not). However, by and large, the nature of the new home business is such that if they do not sell, they die - quickly. Thus, hidden inventory isnt as big an issue here as it is in the resale market.
I should note, hidden inventory is possible in that a builder has say 75 units for sale, but lists only 5 on the MLS to generate a false impression that "hurry only 5 left". However, this is a trick that has been going on since time immemorial. The idea that new home stock is being rented and thus adding to hidden inventory is by and large, unlikely.
Zerodown,
And still asking 1.7 mil.
Just wow.
ace, this particular episode was a young college student buying a condo. She split the down payment three ways between her and her divorced mom and dad. After she chose the most expensive condo (but it was only "slightly" out of her price range!) with the worst kitchen, two extra bedrooms that are too small for beds, and no washer and dryer, she explained that she's really happy to be a homeowner (which I mentally replaced with: homedebtor) this young, since it makes her feel accomplished.
She did have pretty good decorating skills and taste in paint colors though.
But Harriet -- you just don't understand:
Seller's Description
An Absolute Steal at $1.75 Million. INSTANT EQUITY/ GRAB IT NOW!! PRICE JUST REDUCED BY ONE MILLION DOLLARS!! You will be astounded by the quality and detail throughout this castle of ...
http://www.zillow.com/HomeDetails.htm?zprop=72485953
And yes, the side of the house sits right on RT 123.
Zero,
Yeah, Beverly Road rang a bell as being rather -- traffickey.
This mansion is in Clifton. At least it's finished, though lonely-looking . . . 10% down and "low owner financing".
Wow, Harriet, that is one amazing place.
Joshb, I hope she'll be in the place long enough to build some equity. It will be interesting to watch HGTV over the next few years to see if the shows will be realistic enough to portray today's markets.
And here's my latest home-stalking du jour:
http://franklymls.com/AR6705497
What a shame it is sited on too small a lot, much too close to the houses on both sides, and too close to Wash. Blvd. I'd also prefer maple or cherry floors and something other than doctor's- office-white cabinets.
Yikes. Big cube. It looks like the box the house next door came in.
"And yes, the side of the house sits right on RT 123."
I have seen this house quite a few times and always wondered what was going to happen with it. I think work stopped more than a year ago if not more.
It is in Mclean, but come on... the house looks ridiculous compared to those around it and it is right on a major road.
Shamrock - if they turn down the 600k, offer them 650k but have them finish the basement with a full bedroom, full bathroom and rec room.
That wont cost them 50k but it will be worth for you in in the long run.
LOL, gruntled, with a little Gumby influence as well.
Ace,
I think I like the 70's modern better than the contemporary modern. I adored that house you pointed out with the waterfall in the back a couple of weeks ago, but this doesn't do anything for me. Besides the kitchen is just odd. For 1.45 million dollars, you get practically infinite counter space and next to no cupboard space above waist height, so you have to consantly bend over to get anything. No fun.
gruntle, LMAO.
Hi, cara, I completely agree about the kitchen. While it is nice for letting company mill about, bending over for everything does seem to be a needless hassle. A lot of times even with houses I really like, I find myself wondering if designers/architects have ever had any experience cooking, entertaining, doing laundry, etc. In many cases, all it would have taken was a little more thought (no more expense) to give the house a much more workable feature. In this case, I guess the builder is hoping to sell the house to those who are under 40 and don't think about knee bending, backbending. This builder has a history of building really beautiful modern houses (IMHO, though they aren't the 70s style you prefer) but overpricing them pretty badly. One they had listed I think in the mid $2 mills. then dropped to $2.2 mill. then sold for around $1.9. The house next door to this one at 6301 Wash. Blvd. was first listed near $1.6 mill and finally sold for $1.275 mill.
I visited the 70s contemporary we both liked at an open house and sadly, it had a tired, cheap "feel" that didn't come across in the photos. The lot wasn't as big as it looked in the distorted photos, though it was nice, with no usable back yard. The various owners had invested next to nothing in maintenance and upgrades yet wanted a huge profit, which they won't get. The house needs at least $100K of work to get it into good shape.
Ace,
I wonder what the architect got paid for such lack of pedestrian thought to go along with and sustain the unrealistic pricing. I do actually like that style, but more for converted mill-buildings and the like, not stand alone homes.
Thanks for the report on the million dollar 70's house. Yeah, pictures can definitely be deceiving. I don't know if it's sour grapes, but somehow I'm glad my dream house isn't really my dream house in person.
Cara, maybe they need "pedestrian focus groups." :-)
I swung by the Quantico house on my way home. It's so ugly it's cute, like a pug puppy. I think I'll have to go to the open house.
ace,
definitely!!! And report back, please!
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