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Friday, November 14, 2008
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18 comments:
Hmmm...
21653 MITCHELL CT
Last sale - $880K
For rent - $2,500/month
Wow, somebody should have put the crackpipe down before paying 880k for that home in ASSburn!
Those shoddily built, track homes will be selling for 300k before this is over.
Novahog, that's amazing. After taxes and other expenses that guy is getting about 2% annually for rent. It is still way cheaper to rent than buy right now in most cases.
On another topic, I was reading an article on yahoo finance where some real estate agent said she expects prices in the DC area to drop 15-18% in 2009, and she also said if you can wait til 2010 to sell that's what she recommends, because the market will be more stable then. WT**?? More stable but 15-18% lower? Sell now, even 5 or 10% lower than comps if you have to, and you make out much better than waiting for the "stable market".
"and she also said if you can wait til 2010 to sell that's what she recommends, because the market will be more stable then."
Maybe RE's want to keep inventory from exploding?
Also, most of them can't make even semi-honest comments about decline percentages without throwing in some completely baseless verbiage about how "things will come back."
"Those shoddily built, track homes will be selling for 300k before this is over."
Yes, they will eventually sell for 300K, probably even less and here's your explaination of how it will happen:
http://www.moneyandmarkets.com/the-great-american-housing-nightmare-next-phase-27880
(http://www.washingtonpost.com/wp-dyn/content/article/2008/11/13/AR2008111302145.html)
(http://www.washingtonpost.com/wp-dyn/content/article/2008/11/13/AR2008111303859.html)
mortgage fraud...two cases
Novahog, you didn't even mention all the jet noise the Mitchell Ct. house will have. It's also (for me at least) on the wrong side of Dulles.
WTF?
Contemporary fans, remember 2720 Quincy, which I reported had sold (in late August) for more than I expected, at $1.4 million?
http://www.arlingtonva.us/Departments/RealEstate/reassessments/scripts/Inquiry.asp?action=view&lrsn=6958
It's now for RENT for $4K per month.
http://www.homesdatabase.com/frankly/cgi-bin/aa.fcgi?+OGFmNjYzYzYzMjRjMzExMWZjNDUxMjgwOTEzOTA4MmMSlI0iZbI78etCOGgJJazwJfdlVte4iAPR53bKEL9Q6GD9dMLSTjDXFr2tuWouMFHJJfUZcCO2EVmh
How does that make economic sense?
I was looking at this property, and actually decided to run the numbers on it. It's not bad, assuming the place is in decent shape.
It doesn't work for me as a long-term property, and I don't want to get sucked into that 'buy your way up' mentality. When I buy a house, that's my house, probably until I die, but at least until I need to move a significant distance (e.g. out of state) for a job.
Still, it might make financial sense for someone in a similar situation to me to buy it.
It's nice that it's an end unit at the backside of the development. A little close to the highway exit, but plenty of tree cover.
I am conspiratorial enough to believe the powers that be want real estate to collapse. So today we have the Treasury Secretary say he's not putting Tarp money into failed mortgages, and the mortgage indexes respond by swooning. So what does this mean for our neighbors who have been sitting on their for-sale properties, refusing to reduce the price to meet the new realities. I think it is not good for them. There has to come a time when NoVa homeowners realize the jig is up, and the only solution is drastic devalulations. I still believe it is going to happen, although I acknowledge I also felt that way a year ago, and nothing measurable occurred.
Edward Allen,
Paulson is likely to finish his term without doing anything about this issue. Even though the new administration and Congress will probably do some more about the foreclosure issues, those hoping that such actions will prevent further price declines are misguided.
On the other hand, the claims by Martin Weiss (in the link that Spunky provided above) that there will be another 50% drop twice in succession is probably far too pessimistic--at least for the DC area.
Their basic point is valid though--i.e., we already have a recession, which is going to be very deep; if that deep recession becomes a depression, then the real price drops haven't even started.
I used to teach in that part of Ashburn. I was told that I'd be teaching in an affluent neighborhood full of educated parents. In reality, the schools are terrible (gangs, discipline problems, etc.) because many of the people living in those formerly $880k houses are poor, uneducated, and possibly in this country illegally. What a great idea to give out $880k loans to construction workers!
xpovos-- not bad, but there are quite a few single family homes in that area going for about the same.
Nice Indian Girl-- I have a foreign-born friend who's a construction worker with a house in Ashburn. He was trying to convince his wife to sell a few years ago, but she wouldn't go for it-- two small kids and, at least in that area, good schools.
He was pretty scathing about his co-workers who thought they were living the American dream by buying $500,000 houses. Something along the lines of, 'How dumb do you have to be to think you can afford a half a million dollar house on $50,000 a year?'
It wasn't the foreign workers who mostly thought that way, though. It was the American ones who had bought this line of goods-- at least in his company. That was the same company that threatened to fire him if he didn't take the Kerry sticker off his car. He grew up under communism and was getting pretty fed up with American 'freedom' last I talked to him.
It's probably too late for them to sell now. I hope they're doing all right. He went independent after getting fed up with the quality deterioration at work-- and his wife was doing real estate part time...
EA & TEDK - I agree. Whatever attempt the tarp plan would have made to establish a floor for housing prices is now gone - tack a few more percentage points onto the downside pricing.
Another thing to look for is new REO inventory. Unlike some of the sensationalist conspiracy theorists out there (Mr. Mortgage, for one), who suggested the problem was massive, the word from the few residential bankers I work with didnt think it was a big problem (at least for this area).
That said, some credible bankers have suggested in the last 1-2 months, banks HAVE been supressing a decent amount REO inventory on the assumption that the Cavalry was riding in to save them. Now that it looks like the Cavalry isnt coming, the banks will now continue to unload it. Thus, if this is true, look for a decent sized (and swift) bump up in all inventory levels in the area.
great link spunky!!
ace,
wow, that is completely bizarre.
crt,
Mr Mortgage thinks that because he's based in CA. So I had discounted that as something only relevant to areas with the largest percentages of creative lending and house price increases. But you have some contacts who are telling you that banks may have been intentionally holding back REO inventory here in hopes of some as yet unknown government intervention that would some how favor them for still holding the foreclosures??? Really? That's surprising. Definitely something to watch for this winter and spring as a greater understanding of what the new administration can be needled into doing is reached.
But I guess I can see them assuming that the spring will bring something like a stronger tax incentive or rebate for first-time buyers of foreclosed houses, which could definitely create a temporary stabilization if people suddenly had 3.5% or more free money from the government to put down.
Cara Said...
"Mr Mortgage thinks that because he's based in CA. So I had discounted that as something only relevant to areas with the largest percentages of creative lending and house price increases."
Cara - I agree. Mr. Mortgage's comments and claims are actually not too far off the mark as they relate to california - the problem as I see it is he speaks as if the whole US will see similar conditions (I saw a "Milwaukee Bubble" blog that once cited Mr. Mortgage to show how bad it will be in Milwaukee :)
"But you have some contacts who are telling you that banks may have been intentionally holding back REO inventory here in hopes of some as yet unknown government intervention that would some how favor them for still holding the foreclosures??? Really?"
With regard to the guys here locally - I should say, they have always been a good reality barometer. In the past, they always treated the hidden inventory as not much of an issue. They are now saying it could (and I stress could) have become an issue in the last few months as various banks were looking for some Govt relief.
I think its wise to hedge a bit, because my contacts in the residential world are few and far between - however, I have found these guys to be credible, so its something I will be watching for closely in the next few months.
sarah,
There are, but that is the 'bad' side of town, as it were. The townhouse subdivision is in substantially better shape. Most of those single family houses there need to drop even lower.
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