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Sunday, November 2, 2008
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27 comments:
This was cute:
Home Value Denial: Not Just a River in Egypt
How homeowners percieve the value of their properties relative to Zillow's property valuations.
Relevant quote for here:
"Homeowners in northeastern states showed perceptions most out of line with reality, Zillow said. While 71 percent of homes in the northeast lost value, the Misperception Index came in at 20."
(though I guess we're really the southernmost mid-atlantic state...)
i think the real question is - will the prices *EVER* come back to the boom days level? if the common belief is that someday the 'lost' value (often 20-25% from peak) will return, then many homeowners will believe they can ride it out thus refuse to change their perceptions. if on the other hand the boom days are believed to be gone for good, a la the tech stock burst, then more people will be realistic... IMHO.
What's up with short sale MLS listings? So often the listing agent can barely be bothered to post 1 photo, do they not make a usual commission on short sales? For instance, here is the complete description for FX6908556: SHORT SALE,SPECIAL ADDENDUM AND THIRD PARTY , LENDER'S APPRROVAL REQUIRED.
mm,
The real estate bubble of 2003--2006 was a once in a century event, as even Greenspan has now acknowledged. In real terms (meaning adjusted for inflation), prices are not going to come back to the bubble levels until another century, when a new once-in-a century bubble comes along.
Even in nominal terms, it might take another 15 to 20 years to see 2005 levels.
But many homeowners who took out home equity loans and those who regret not cashing out at the top, are still in denial and keep believing that those prices will come back in a few years.
Oh and just to get your blood boiling
potential credit card relief put forward by banks and "Consumer federation of America"
Credit Card Relief?
"THE ASSOCIATED PRESS
November 1, 2008
With defaults on credit card debt spiraling amid a global financial downturn, banks already reeling from the mortgage crisis are losing billions more from unpaid credit card bills.
Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy.
The new pilot program, which the banks hope will become permanent, could involve as many as 50,000 people struggling with credit card debt. On an individual basis, the amount of debt to be forgiven would rise according to the severity of the borrower's financial situation, up to a maximum of 40 percent." ...
Talk about moral hazard...
If I charge a house, will I be forgiven twice?
shamrock,
i read it somewhere indeed agents get less commission for short sales. i assume foreclosures too.
eponymous,
too funny!
...and then you've got this place, which has no pictures anywhere on the web, as far as I can tell.
Doesn't seem to be a short sale, just a poor listing agent.
http://www.franklymls.com/FX6820442
I thought this place looked familiar. I'm glad I saved the original listing.
New listing:
http://www.franklymls.com/FX6909900
Old listing:
All properties sold in the hunters valley subdivision in 2007 averaged a selling price 27% above tax assessments. This fabulous and spacious home, ideally situated...
News to the original listing agent: it looks like this place will buck the trend. Originally listed at $849k and tax assessed at $787k, it's now back on the market at $749k (as of today, it's been on the market for 434 days). I guess that marketing technique didn't lure in the buyers!
No 27% above assessments for you!
Here's another poor agent.
http://franklymls.com/AR6883453
This one has ONE photo. There are photos on the agent's site, but how many buyers will take the time to go there? I went to the open house and (unlike many houses with limited photos) it is a VERY nice, large, well built, family-style home. It is probably originally about 1940, built up two stories. Some of the owner's choices of artwork, etc., were rather odd, but a good stager could solve all problems and photos could be taken. The major selling impediment? Road noise from 66 behind the house. The neighborhood is otherwise quite nice and it's not too bad of a commute.
Their agent was not at the open house and prospective buyers were told by a sign to go next door to another open house and ask the agent there to let them in. How many just walked away? And of course, the substitute agent couldn't answer some questions because he wasn't familiar with the house.
Doesn't the listing agent "get" how to sell houses, at this price, in this market?
And if you can believe it - these poor owners were transferred (or at least one spouse was) and they really need to sell. They are already taking a big loss, having just bought the house in 2005 (unless the employer is helping out). The last thing they need is a lazy and/or incompetent agent.
So, any predictions about what the October sales (for the Decade of Sales) figures will reveal?
Ace: That reminds me. My wife and I went to an open house 2-3 months ago, and the agent never answered the door. We figured that agent hadn't gotten there yet (it was 1:30, open house was 1-4pm), so we went for a drive.
We came back, and I decided that if the agent wasn't there, I was going to leave a note for the owners. We rang the doorbell again. Nothing. We rang it harder, and this time we heard something. Apparently the doorbell was sticky, and needed a real good push to ring.
By that time it was 2:30, and we were the first folks to sign in. I wonder how many other folks walked away? Eventually, the house was taken off the market. Too bad, as it was a nice place (still overpriced, of course).
ace:
well i'll state the obvious for Arlington - listings down, sales way down, med/avg prices off slightly.
but i do expect Nov #s to be brutal.
This is a new twist:
FX6854382
LOCATION * * * LOCATION * * AWESOME DEAL MINUTES FROM 395 & 95 * * SHORT DISTANCE TO MAJOR SHOPPING CTRS * * 3BR & 2.5BAS * * ENJOY THE UPDATED KIT * * * 3 FINISHED LVLS * NO FHA--CONV AND CASH ONLY * * HOME INSPECTION FOR INFORMATIONAL PURPOSES ONLY AND SOLD AS IS. * * MINUTES FROM WASHINGTON DC * * *
NO FHA???? Excuse me, but isn't that illegal?
Let's see it's a 3 story town house with a good location and a great price: $234,900. Why exactly do you think that is? Could it be that the place has major damage that the FHA would require be repaired before moving in, that they're hoping the sucker they find won't ask them to pay for??? Hmmm, ya think?
(owner Washington Mutual for $300k on 9/15/2008, on a $332k prior sale in february 2005)
The good news being there are 3 story townhouses in good locations in Kingstowne at or below rental parity (if you disregard the upfront costs of repairs).
MM, interesting. I predict that Arl. home sales in lower price ranges are steady with prior months but that overall, sales are down slightly, prices still sticky. This is based on watching franklymls.com over time, and seeing very few grayed-out (under contract) houses in the upper price ranges, and lots of "sitters." It still appears that nice houses priced near Arlington assessment value (or proportionately less if in poor shape, proportionately more if renovated well - but not sky high; "proportionately" meaning relative to the cost and value added of the renos that have been done or need to be done) are selling quickly and everything else sits. Houses that are on busy streets or otherwise have undesirable locations where the problem can't be changed must be priced MUCH less than similar houses without these problems or they sit too. We'll see!
MM & Ace with regard to Arlington, I generally fall in line with you - sales down slightly but not too bad.
I will say that we could see the biggest median price drops ARL has seen. Why? Well if the market jitters are going to hit someone disporportionately, it will be the high end. If sales are off on the high end, but still stable on the low end, median prices will skew down accordingly.
In a way, it may be like what we see out in Lou and PWC. They both show huge median price drops, yet a good portion of that is probably because foreclosure sales are so strong. With so many low end foreclosures selling, it shows an awfully big drop in median prices.
So I think we could see the same sort of thing here - not because of greater low end sales, but instead, because of hesitation in the high end sales.
Note, Im not going to bet you another $1 on this, I both already owe you for a failed arlington prediction - I dont feel confident in what I am saying, but I do think it is certainly possible.
Predictions for Fairfax County:
Inventory down (based on the lack of new listings in October, relative to previous months). Months of inventory flat, median sales price flat, days on market the usual bi-modal distribution of priced-right or not moving (not that one can read that from the months of sales data alone).
Betting against my own best interests, so that I can be pleasantly surprised if I'm wrong.
Anyone else here not really seeing a drying in credit?
I bought a computer recently, got instantly approved for $8,000 at 0% for 12 months. I cant imagine spending that much on a computer, got a pretty badass system for $1300.
I get 3-5 offers a week for credit cards, 0% for 12-15 months, $30,000 limit, mostly from CITI.
The only thing I see drying up are the absurd refinancing deals, although I am getting about 1 offer a month for a home equity line.
crt,
my prediction is not the same as yours - i say sales go way down (and avg down more than med). wanna bet? :)
(btw your $1 Aug debt is now trading at $1M in the CDS market.)
------------
cara,
remember this walk-to-orange-line-courthouse-station condo that went under contract in 5 days? i was so puzzled by it but now it's back on the market, so i guess that contract fell through. let's hope that's a sign of rationale and reasoning have prevailed.
btw, anecdotal evidence from my fairfax co-workers guarantee you a pleasant surprise for Nov.
doug,
I continue to get 0% balance transfer offers...and sometimes I take advantage of the free money ( invest that in a CD and get some interest). Perhaps the volume of such offers is a bit lower now. Anyway, I proactively work to maintain a very high credit score and thought those who don't have high credit scores may not be getting such offers any longer.
my prediction is not the same as yours - i say sales go way down (and avg down more than med). wanna bet? :)
OK MM - Im a sucker for some action in fictitous dollars. I have no feeling for avarage vs median prices, however with respect to sales, I think you are going too low too early - hows this:
I say Arlington sales in Oct are 145 (for reference last October they were 174). You pick the over/under.
mm,
Really? It fell through? Hmm, perhaps lenders are coming to their senses even when buyers are not. That may be reading too much into it though.
I think it is too soon to see the effects of the latest economic news on the housing market, especially in Arlington. Don't forget that the sales that show up in the upcoming data closed in Oct, meaning they went under contract in Aug-Sep.
I don't think we will really know how the markets are reacting to the recession/stock market correction until spring.
Doug - with regard to credit - it really hasnt seem to affected consumer credit much.
The most immediate effects were seen in commercial credit - about a month ago, it was nearly impossible to obtain a revolver or working capital line for any sort of business that doesnt cash flow well.
Since then things have improved - slowly but steadliy, as can be seen in the graph of the ted spread:
http://www.bloomberg.com/apps/cbuilder?ticker1=.TEDSP%3AIND
In sum, commercial credit has gone from being impossible to obtain, to just very expensive. This is the way it should be - high prices are allowing those healthy businesses who need credit outcompete those who really didnt need it, or who were destined to fail anyways.
Its still a lot more costly than I would like it to be, but I think its appropriate given the economic stress out there. At least things are moving again...
CRT, maybe Doug will let you borrow $1 from one of his card/credit line offers? No wonder the housing market is so tough--with people like CRT tightly clinging to those $1 bets, who's going to take a gamble on a mortgage :-)? It's your civic duty to get $ flowing!
Seriously, both you and Leroy have raised good points.
Can't wait to see those Oct. figures for all the counties.
I can't remember who also liked the 70's contemporary on Quincy St. in Arlington - the one with the waterfall - but it sold for $1.4 million, well over Arlington assessment, even though it was showing its wear. That and the Gumby house on Quantico really surprised me. Guess when people (with some money or ability to obtain a loan) really fall hard for a house, they fall hard. Or I was just wrong about both of these properties. Naaaahhh....
Ace,
That was me.
They are unique and beautiful properties, so falling hard happens. As for the cookie-cutter recent builds that are asking 1 million (not the fake craftsmen homes, when well done with no stupid mistakes I really like those), that buyer who falls in love and overbids is much less likely. I worry about my friend in Rockville. She has an excellent location, and a spacious, well-designed house, but it's missing that "it" factor that would make someone fall for it enough to be willing to pay near her asking price. But Boston, where she's moving to hasn't fallen like we have. Sigh.
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