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Tuesday, March 3, 2009
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67 comments:
Citigroup to lower some mortgage payments
http://biz.yahoo.com/ap/090303/citigroup_mortgages.html
How will this impact a first-time home buyer?
I think it will keep starter home prices from falling as much.
and...is it any wonder that ....
"Mortgage delinquencies up for 8th straight quarter"
http://biz.yahoo.com/ap/090303/transunion_mortgage_delinquencies.html
It seems from many sources that home owners are being given incentives NOT to pay their mortgage. This is a serve Moral Hazard that may make things better off in the near short term, but much worse off in a few years.
Just my opinion.
Buck,
It's for the unemployed. This is one initiative that I whole-heartedly agree with. Essentially forbearance, with no interest charges for 3 months for the recently unemployeed. This means that those who still don't find work will still lose their homes, but it will avert totally unnecessary foreclosures for those with brief periods between jobs. That's awesome!!! A clear winner for Citi, avoiding foreclosure loses, and no real moral hazard (you'd still had to have laid away some emergency savings to cover the $500/month).
It's brilliant. If this "props up" home prices, so be it.
DC Class 3 properties tax rate to hike from 5 to 10%
In bizarro world, DC is considering? raising taxes on "blighted" properties, otherwise known as fixer-uppers. Anyone care to explain that logic?
I know it's slightly off-topic, but while I'm hoarding up enough for a hefty downpayment I think we're going to have to rent again this year. Any thoughts on whether N. Arlington rents will be going down? I've seen the same posting on craigslist for a place at 1021 Garfield for about a month. It's a one bedroom + den and they want $2400 a month. They just dropped it from $2500 a month, but it still seems a bit high to me.
Benjamin,
I can't speak to N. Arlington specifically, but I would say to look for bargains. Pick up a copy of the DC apartment guide at any metro stop. These just list all the managed apartment buildings in the region. At a guess, managed buildings will be more able to run specials and discounts to attract new tenants than individuals will. My complex has already dropped it's rent on my unit from the $1604 I pay (leased Sept 08) to $1575 today. And that's just the advertised price. One month's rent free and other enticements are common practice now. (and we have almost no security deposit because of good credit scores)
Look for deals on Craig's list and the MLS, but be wary of deals that seem to good to be true, or discounted rents from recent owners.
Benjamin,
My wife and I are currently renting a 1BR condo 2 blocks from the Courthouse metro for $1785. We'll be moving out in June to try and find a larger and cheaper place, probably in the Shirlington area. Almost all the apartment buildings I've looked at in this area are now running specials, usually 2 month's free rent on lease signing. Prices seem to be a little lower than we're paying in the immediate area and if you calculate in the free rent it goes down significantly. It seems like a good time to be looking for a place to rent.
We're also right next to a small block of upscale condos (one's currently for sale for $850k) and one of them is listed for rent. It's a 3BR I think. The rent was $4000 initially and has dropped to $3500 and now $3300 because they aren't getting any takers. It was first listed probably 6 months ago.
Cara,
Where are you living? I've seen a few deals recently from large apartment complexes. Is the general consensus that you can get a better deal from a complex than a private owner? My fiance and I currently rent in the Meridian building over in Gallery Place (Chinatown), but to be honest, the quality of the apartment is awful. Cheap carpet, thin walls, ugly white/white appliances.
Cara,
Here is a TH in 22015 that went on the market this weekend and is already under contract.
http://franklymls.com/FX6992794
It was priced just over $2k under the 08 assessment and almost $78k over the 09 assessment. That is a listing price of 27% more than the 09 assessment.
It was bought by a guy in Dec08 for 270k and he redid the kitchen and likely the fireplace (not sure if he added the hardwoods or not) and now has it under contract for ?? but it was listed at 370k.
I lived briefly in that same model, and it has 3 upstairs bedrooms and the 4th bedroom is not technically a bedroom but is located on the basement level.
This one has the same SF as my 2 story TH. Mine does not have HW floors on the main level nor granite countertops, but it does have "new" everything, from cabinets (kitchen and all bathroom vanities) to carpet to paint to siding to roofing to landscaping to attic insulation to a number of other "new" items which may not raise the asking price as much but should entice buyers.
As I am preparing to list my TH, I have run a search for all TH in the 22032, 22015, 22152 and 22153 zip codes (mine and the 3 surrounding most likely to have TH. Here is the text string I used for the search:
"TOWNHOUSE, -3bdr, -2bdr, (22032,22152,22015,22153)"
I can break down the findings like this:
I found a total of 47 TH in those 4 zip codes with 4 BR. I would venture to say that at least half list 4 BR, but the 4th may technically not qualify as it is in the basement and does not have the proper egress to define a BR. Mine has 4 BR on the 2nd level.
At any rate, of the 47, 15 are below 300k. 1/3 of them are already under contract, and all 15 were either short sales or foreclosures.
The next price range, where I am considering starting, is the 300-325 range. There are 8 TH in this range, 3 being SS/Foreclosures. 2 of the 8 are under contract, with 1 overlap in the SS/Foreclosure. This leaves 4 TH in this price range that are regular sales.
One is a definite 3 BR, as commented in the narrative of the listing. Of the other 3, 1 has been on the market 2 days and the two others have been there for 137 days or more.
The next price ranges which I am not as interested in comparing (as they are vastly higher than mine will list) are 330-375k (10 TH, 5 of which are SS/Foreclosures) and then 380-480k (14 TH, no SS, did not verify if any are foreclosures).
I guess in addition to sharing my story, I can add this fact:
Within my search, I found 7 TH in those zip codes that have been on the market 10 days or fewer.
5 of those 7 are already under contract.
I have a hunch, and maybe it is my optimism, that those looking to buy a TH as a first home are eager to do so and "strike while the iron is hot".
Yes, those savvy "watchers" on here may wait for prices to dip even lower, but I do believe with the interest rates, the first time homebuyer incentives, and the fact that this is the first time in 4 years that prices are as low as they are, is enticing many of these people to buy now.
As for those who say home prices have not dropped, it all depends on where you are looking and how large a house you are talking about.
I can tell you this:
In 2005, my neighbor's TH (similar to mine but without a fireplace) was assessed for 239k and he sold it for 376k (57% over assessment!). His assessments increased up to 327k in 2006 and stayed around 315-338k until 2009 when they dropped significantly.
So while many speculators are waiting to see what happens and for prices to drop further, there are many in this region who either can't wait or don't want to wait, and they are grabbing up the "good ones" when they see them.
Cara,
if it was just for the unemployed that is a different story, however...
The hardship assistance is not just for the unemployed. divorce, relocation, natural disaster, job change....
"Are you unemployed?
Have you had a change in jobs that has caused a decrease in your income?
Have you had to relocate due to loss of employment or a job transfer?
Is illness affecting your ability to make your current mortgage payments?
Has divorce affected your ability to make mortgage payments?
Has there been a recent death in the family?
Have you been impacted by a natural disaster?
If you answered “Yes” to any of the above questions, we may be able to assist you (based on investor or insurer guidelines on your loan)."
http://www.citimortgage.com/Mortgage/Home.do?page=hardship_assistance
Jeff B - responding to your comments the other day:
I 100% agree with your "NoVa can't compete" with moving out of the area. I have good friends who moved to Raleigh NC and are paying about half what they would have paid here for a similar lot, SF and distance commute to their workplace.
If you have that in your mind, you'll make yourself sick trying to find a place. If that truly is your mindset, I would definitely move elsewhere.
As for my comments on "now being a great time to buy", I am basing it on two factors:
Home prices are lower now then they have been for many years (yes, you can find the exception to the rule, but at least where I have been looking, that statement holds water) and interest rates are the best they have been in many years.
Sure, in a dream world, everyone would buy when the market had completely bottomed out, and you may be wondering when that is going to happen. And I don't blame you for that, I would have liked to wait until the most "perfect" moment as well.
I decided to make the move now for a number of personal reasons in addition to the two I mentioned above. I won't get as much for my TH as I could 1,2,3,4+ years ago, but I will also get that larger SFH for less than I would have 1,2,3,4+ years ago.
I decided to buy a house that I can live in for 5 years, or for 10 years, or for 15 years. Unless something changes dramatically for me, I don't "have" to move out in 10 years. I can stay there for as long as I want to because it has enough space and it is in a great neighborhood with great schools.
Could I have waited 2 more years and bought it for 30-40k less? Maybe so. But I would have sold my TH for a similar loss, and while my 4 BR TH is fine for me, I will love the new space and a change of scenery.
For those of you on the "sidelines" in terms of home ownership, I can see why you may want to time things perfectly.
But for those of us already "in the game" and looking to "move up", this is as good a time as any to make that move. Unless you fear for your job security or loss in income.
Otherwise, my opinion is that both my TH and a SFH will have decreased in value at a similar rate (or amount). Sure, you could net yourself quite a bargain if you buy a short sale or foreclosure. But talking just regular sales here, I know I won't get the same sale price as my neighbors did 1,2,3,4+ years ago. And being choosy and shopping wisely, I will buy a SFH for a price that is lower than what it was 1,2,3,4+ years ago.
So that is what I mean when I say it is a "great time to buy". It may not be the "perfect" time, and everyone is in different shoes. In some neighborhoods/zip codes, it may not be a "great time". But based on my 4+ months of looking in the areas I am looking, it is a great time.
Benjamin,
I think you'll get a better deal from an apartment complex right now because of the free rent specials. They essentially hand you $3000-$4000 in cash but keep the rent the same every month. Private owners browse around a bit to see the 'going' rate and have a difficult time factoring in those handouts. So they price close to what the apartment complex will charge but without the cash.
I hate the tricks that the housing industry in general plays to keep prices propped up but it is what it is.
T,
I don't think you're making a terrible decision by any means. The answer to your situation though is to sell your TH and rent until the market does bottom. It doesn't sound like you want to do that though which is understandable - it does have its downsides. The potential monetary benefit to you could be pretty substantial though if you did go that route.
The housing market is similar to the stock market right now - everyone is trying to pick the bottom to get the best deals. It's very difficult to do that with stocks but I think it's much easier to do it in the housing market. Things move slowly enough that I think the bottom will be noticed on this blog and elsewhere well before it moves up far enough that I might 'miss' the bottom. So I'm not even really looking to predict the housing bottom. I'll just wait until it happens and then look to buy. I don't believe prices will rise at high enough rates in the next few years that missing the bottom by even a year will be that painful. I believe that buying too early, however, could be very painful.
T,
That's great news on that quick sale!! I think you're right in the while the iron is hot thing.
Given that yours is a true 4 bedroom, you can neglect all the posers. (they're just frustrating aren't they?)
Yours will show well, but not have the hardwood and granite that give immediate evidence of the renovations that have been done. So, I would discount off this most recent list price by 20k, and go for it!! I think you'll be okay at 20% over 09 assessment since things have started moving in your neighborhoods and people do heavily prefer move-in ready. You should be able to price 5-10% over shortsales and REO and still get a buyer because of the condition.
Looking good!!!
Price in some but not all of the probable 10% under list offers that align with the current list-to-sale price ratio. I seriously look at properties these days and go, they're listing at $333k to "guaruntee" $300k, especially if they're owners (short-sellers are still half fantasy land).
There was a pretty short sale this morning on Redfin, 319k in Japonica with ~1800 square feet. Sigh, can't quite stomach that price yet, but I'm very hopeful as more sellers start putting things on the market that there will still be the place for me by July.
Buck,
Good follow-up. In the morning news they made it sound as if it was only for job loss. Many of those other conditions don't seem like more of a moral hazard to me though. Just the traditional reasons people ask for forbearance or mods. So, I'm still okay with the plan, but I can see how it gets grayer.
benjamin,
I'm down in "Kingstowne" Alexandria. So not relevant for you.
Look for cinderblock 1960's construction for it's fireproof and sound proof qualities (unbeatable), and make sure the place passes the smell test (literally). If you require things like W/D in unit you tend to get the better places anyway.
Benjamin,
echoing everything others have said, rent is coming down in N Arl., especially for the apt complexes. i'm looking in 22201, 22205, 22207, 22209, and 22213 myself, and i can tell you this with 100% certainty: rents for homes NOT near metro are coming down, for condos, THs, and SFHs. since i don't need metro i have the luxury to expand my searches and be very flexible. maybe it's the the case for you, but keep looking, good deals are out there. and if you like that Garfield st unit a lot just make an offer and see what happens.
Jeff - by your statement:
"I believe that buying too early, however, could be very painful."
I take it that you think prices will drop significantly over the next couple of years?
Although this is not a good measure, because it is a look at only two houses, I can say this:
I will compare my current TH neighbor and the neighbor for the house I am looking to buy.
The most significant increase in assessments the last 5+ years came between 2005 and 2006.
Both my and my neighbor's TH increased about 85k between 05 and 06, which was about 36% more than the 05 assessment. In late 2005, my neighbor sold his TH for 138k over the 2005 assessment (58% more than 05 assessment, and that number was still 50k over the 2006 assessment). His TH is now being assessed in 09 for the same number as it was in 2005, (although I think the market value of that house is likely 24% more than it is assessed for).
The neighbor of the house I am looking to buy had an almost identical story to my TH neighbor:
Their SFH increased in assessed value from 05 to 06 by 127k. But the house was sold in late 2005 for 200k above the 05 assessment (40% higher), and the sale price was still 70k more than the 06 assessment. Their house is now being assessed in 09 for the exact same number as the 05 assessment. The "seller net" we are getting the house for is approximately 167k less than their neighbor's sale in late 2005, and the properties are quite similar (a difference in 09 assessments of 3%, though ours has recently been majorly remodeled).
So here is the big question for you then:
In 2005, the two properties I was looking at (my neighbor, and potentially my future neighbor) were sold for 138k and 200k over the 05 assessed values, which was between 40% and 58% more than that years assessment.
Now, the 2009 assessments mirror those from 2005, and time will tell, but I believe market value for these homes is still about 45-55k above that 09 assessment. Obviously it is not the 138-200k over, but it is still about 50k over (just my opinion).
Are you predicting that sale prices drop to exactly the 09 assessed values? How far are you foreseeing things declining?
I say this simply because from where I stand, things have already come down a substantial amount from their 2005/2006 levels, at least in the areas I am living and areas I am looking to buy.
I realize things can drop more, but are you really forecasting such a serious drop that you would consider it to be "very painful" to buy now?
Again, I am on of the least intelligent people here when it comes to real estate and forecasting. I have stated here before I do think things will progressively decrease and then may stagnate. But I am not ready right now to predict market value/sale prices equaling the 09 assessments. I think homes in this area are selling for above 09 assessment price (not shorts/foreclosures). Time will tell what happens in 6-12 months. Could 2010 assessments be even lower than 09? Wow if they were, but I guess anything is possible.
I just am curious to hear your forecast, because I want to know how painful it will really be. If someone were to buy at anytime in the last 4 years, now would be the time. It would have been "very painful" to buy in 2005. But I'm not so sure the same can be said right now. Just my opinion.
Cara - that is pretty much my next question:
I think I have a fair understanding of the true market value of my TH, and I would like to get that value for it.
The scary part is what do you list it for to walk away with that number without scaring off buyers.
I fear the ranges I am looking at, listing mine for 10% over would leave me very lonely.
I have walked through several houses that were "priced right" and incited actual bidding wars, where we were told there were already 3 offers on the house (it was on the market for about 4 days) and if we wanted to land the house, we would have to offer above asking price.
Is it unreasonable to list for 315 in the hope of walking away with 300? 315 is less than the 08 assessment. Obviously 300 is more than the 09 assessment but I truly believe based on "what's out there" that 300 is a great deal on my TH.
T,
To each his own, but if that buyer purchased a TH Burke for 375k, man, they must either 1. Really love THs (and some people do) or 2. Not know that area. I have passed on many O’ SFH obtainable at ~375k for one reason or another in that area (many of them nice).
Second point, as someone who has lived through many housing cycles I can tell you this. The bottom is NOT ‘V’ shaped, it is more like a bathtub curve, with the expanse of the bottom being determined by the height of the bubble. Since this is the largest housing bubble (really all asset classes, not just housing) in recorded history; the second largest being in 1895 (If you bought at the height in 1895 you did not make your money back adjusted for inflation until 2003 – and this assumes you paid in cash) – the bottom with probably be wide. It my experience no housing cycle has every had a bottom less than 3 quarters, so an easy rule of thumb would be a ‘good time to buy’ is when you see two consecutive quarters of across the board ‘null’ pricing – so even if the bottom is 3 years, it makes no difference if you buy in the second month or the last because the prices will be flat or close to it for the duration.
Third point, I wish to discuss some talking points from earlier. Why I do not add to by bids based on seller upgrades unless they exactly match my expectations. Let us do this by example: T, wishes to sell his home to me, he has carpeting and thinks that adding hardwood it would bring a better price. So he chooses a middle of the road composite and spends 25k for materials and labor. Now if he has lived with the hardwood for awhile he will take Cara’s advice and add 50-70% of the upgrade to the price or if he upgraded just to sell, near 100%. Now I come in and look at the house and see the nice floor, but now you are asking me to pay a ridiculous price for something I could have done myself for 6-7k! Add to this, if I do an upgrade it is with top end materials and I also tend to fix any structural deficiencies (note, the structure may be up to code, but sloppily done) when I tear up a floor (would you have done that? – and how could you prove it to me if you did?) Further, as a previous poster stated, houses are a depreciating asset you need to ‘upgrade’ roofs, siding, driveways, etc, just to MAINTAIN value. I am not going to give you extra because you replaced a roof or siding that needed fixing, but I WILL subtract if the roof or siding needs fixing. Look, a house is just a depreciating commodity like a car, it is not your retirement, your ladder to a bigger house and so forth…..Before anyone says anything, yes you could have made a killing selling and flipping houses to the rubes from 2002-2006 – but you can do that WITH ANY commodity during that commodities bubbly times…tulips, corn, pork bellies, copper, real estate – just another asset class.
-King
My friend has a gorgeous 3 bed/2 full/2 half ba TH, with a 2 car garage. The place is in great condition, there's a kitchen island, nice cabinets. He spent $2K to stage it, and that does not include any renting of furniture (they borrowed from family.)
His TH went under contract in Ffx in less than 3 weeks for full list price - $500K. He got 2 offers, 1 for $450K and 1 for $485K. He countered the $485K offer with $515K but with $15K towards closing costs and they accepted. It went under contract right before Ffx assessments came out.
I'm happy for him, but as a potential home buyer, I'm shocked and scared that people are still paying full price when the list price is not reduced to show any kind of significant deal. By the way, his 08 assessment was $505K and his 09 assessment is $460K.
I'm with KingMer: I can't imagine paying $375k for a townhouse in Burke, let alone a townhouse without a garage.
t,
yeah from your numbers before I couldn't immediately tell where all these things sat (list price, assessment, hope price, etc).
I think you have a pretty good picture of things. Asking 315 to make sure people look is a good idea, and if they automatically slap a 10% discount when they offer on the TH, counter back. 8-9% off is current average (check MRIS monthly stats by zip) so that means 5% off a well-priced place is still a steal.
T,
What general area are you selling and looking to buy? In places like Arlington and Alexandria I think the question you posed is the million dollar one. Will they keep their bubble appreciation or won't they? I think the market was already well out of control in 2005 so I don't consider a return to those prices to be the bottom.
I don't have any greater ability to forecast things than you do. I think about the traditional affordability of housing as being based on income and continue to see a chasm between what people around here are making and what they're paying for houses. I felt the same way during the peak years of the bubble and it kept me from buying. I don't think prices in Arlington and Alexandria are reasonable now because of this.
It's certainly possible (and the belief of several on these boards) that Arlington and Alexandria will stay at their new inflated levels. I honestly don't know what will happen. What I do know is that using any of my personal valuations of what something is worth...nothing in Arlington is a good value. In my experience if there's a conflict between what something is worth and what something *should* be worth that conflict will be resolved by the market at some point. It may be 20 years from now or it may be next year. Since I don't know which it will be I won't take the risk of buying in this market in the areas that have so far been immune to price drops. There's a lot more risk vs. potential reward for me.
As for actual numbers, I can't predict that and you shouldn't listen to me if I do. The only prediction that I need for my own purposes is the prediction that houses are much more likely to continue falling than to start going up. Do you have a sale history of the house you're looking at? Can you find any comps around 2000-2001? I think that might be a reasonable indicator of what prices might go to in a worst-case scenario.
Also if you're moving up the house chain it's not an even trade to compare your TH to a SFH. If prices drop 10% in the next year your 300k townhouse would lose $30k. A $600k SFH would lose $60k.
Ok, I'll make one prediction. I do think 2010 assessments will be lower than 2009 assessments.
T: your Burke Townhouse is a flip. You'd be paying a $100k premium for $50k in upgrades.
Neighbors of 9764 High Water CT:
9766: sold 1/5/09 for $314,000
9764: sold 12/5/09 for $270,000 <---- Looks like they're trying to flip?
9767: sold 5/18/05 for $422,000
9754: sold 5/27/04 for $337,000
9753: sold 7/18/00 for $166,000
New whisper numbers for Feb are out and WOW are the bad!
Alexandria
Sales - 91
C & C - 168
MOI - 8.2 (estimate)
Inventory is down over last year, but not as much as sales. Hence, MOI is increasing - not good.
Arlington
Sales - 86
C & C - 50
MOI - 10.2 (estimate)
Again, these can sometimes be low, but if they verify, I am SHOCKED at how bad this looks! Sales would be a new all time record low (any month). Even worse, look at the contracts & contingents. At least with Alexandria, with the high C&C you can say, buyers still want to buy, (but are having problems closing), but not Arlington. Only 50 contracts & contingents???? Still, it could be better when MRIS comes out but, if not this is the worst looking thing I have ever seen! Also, MOI if it verifies, will be the worst ever for Arlington.
Fairfax
Sales - 774
C & C - 1332
MOI - 7.3 (estimate)
If you focus on sales, things look dire. If this trend of the last few months continues, sales in Ffx will soon be down YOY. However, if you focus on MOI, you will note that declining inventory is helping keep the MOI number in relative balance.
Bottom line - this is now the 3rd of 4 months where the healthiest markets have experienced convulsions. We saw a bit of this last winter, so maybe its seasonal. However, things were starting to look better this time last year. This year they dont.
I will give Arl & Alex one more month (two tops) to show this is another head fake. Otherwise, even without inventory ever returning (YOY) it looks like these markets are in a world of hurt.
T said...
I have walked through several houses that were "priced right" and incited actual bidding wars, where we were told there were already 3 offers on the house (it was on the market for about 4 days) and if we wanted to land the house, we would have to offer above asking price.
Hold on a sec T. I have yet to see a home on the MLS that didn’t have “another offer coming in this afternoon”, or “you better act quick, we have someone bringing in an offer tomorrow”, or “there’s been a lot of interest in this listing” etc...etc…
Did you verify these three “offers”?
Robert's right: I've walked through numerous houses that had "two bids coming in this afternoon', only for the house to sit on the market another 6 months.
Oldest trick in the book.
t-
i must concur about other offers. i think the first thing every realtor is required to say these days is a variation of "there's a ton of other offers pouring in, so you better offer over list."
that being said, i concede that the past few times i scoffed at realtors who called me and said i had to get an offer in immediately, because the owners were entertaining other offers, i was wrong. the places went under contract a few days later. so they're not always stretching the truth.
just verify the other "offers" before acting on their line.
CRT--
why do you torture me with whisper #s!! i am already in agony waiting for PWC assessments to come online (supposedly Friday), and now i need to wait til next monday for PWC #s! i expect sales to be up, but not at the top...
CRT,
I think these numbers could be outliers, mostly because of the uncertainty with the stimulus effect. If I was buying a house this month, I would wait with closing until the effects of it are clear. There are plenty of people out there, that want to become knife-catchers --- from my empirical experience.
I went to quite a few open houses this month and there was a lot of people looking. But it seems to me that less people were walking around saying how beautiful this house was (commonplace tactic to convince yourself that you have to buy something), or how nice this th is. They were talking price/financing/affordability a lot. So it seems more "just looking" people setting their bottoms firmer on the fence.
I'm thinking that sales numbers for Arl/Alex will start to drop much more significantly next fall, when all the effects of job losses will sink in and people will understand that the crisis we experience becomes more or less permanent one. I do not think we'll have very heavy job losses here, but wage stagnation will become obvious to most and we all know that it is much easier to buy an overpriced house if you expect significant increase in future income. Remove that and prices will drop a lot --- and fast.
"just verify the other "offers" before acting on their line."
Hey Gang-
Quick question - how does one REALLY verify "other offers"?
Wouldn't that catch way too many RE Agents in their lie?
Do they really give out that kinda info??
t,
as for timing the purchase. TH's have experienced most of their eventual drop (in Burke) they have at most 10% more to go to make sense over renting. Whereas the "desireable" SFH's have not seen as much crunch yet. I know you gave a counter example to this general trend, but with the weakening of equity coming from the move-up buyers not getting the premium they were expecting the trickle up is just starting for true price-support levels. (as opposed to the speculative purchases you listed).
So, best case scenario, 2010 assessments will be under 2009, but sales prices will only be down 5% in your target range. (likelihood ~40%) This could be followed in 2010 by another 5% drop, or by flatness (50/50). Next case, (~50%) 2010 assessments will be 15% under 2009. Probably flat to slightly rising thereafter. Worst case, I give a 10% chance that 4-5 bedroom 2500 sqft, nicely remodeled SFH's in Burke go down 20-30% within the next two years.
As CRT says, which could you live with?
a)Prices hold steady (or recover) within 5 years and you went through the trouble of renting in between homes.
b) Prices weaken significantly and you loose 10% of your DP even after 5 years.
c) Prices fall through the floor and you bought in too early.
How risk adverse are you? This presumably will be your "dream home" or at least one you can make into such. How much does it really matter to you if it falls 20% (inflation adjusted). How much are you willing to do to avoid that 10% chance of occurrence?
There's a chance, even a good chance that 2-3 years from now there will be good land available for under $100k, on which you could truly build your dream home for less than $500k. Isn't that worth renting for? Sure, this mentality is just as objectionable as those who bought during the bubble hoping for huge cash gains, but so what?
Who knows when the bottom will hit. I agree as some have posted here, that when it does hit, it will stay level for quite a while. It would seem though that bottom will be near when the number of foreclosures and short sales are greatly reduced. However, when that does happen, I would expect the market to rebound somewhat given that these distressed sales are priced significantly below healthy sales. I think now could be the time to buy if you are pursuing a short sale or foreclosure given the discount implicit with these type sales. That implicit discount will be gone when the market has been cleared of these type sales.
Full disclosure: just closed on a SS TH so maybe this is all just wishful thinking!
CRT - thanks for those numbers...Its stuff like that that give me hope!
Robert & Novawatcher. Im not sure how this story from T stacks up on my Realtor BS meter. As I said before, I think the degree of boasting is more indicative of the truth. For example:
Realtor -- "We have another offer coming this afternoon so hurry"
BS meter -- 99% chance they are lying.
Realtor -- "We have another offer so hurry"
BS Meter -- 95% chance they are lying.
Realtor -- "We have 2 other offers so hurry"
BS Meter -- 90% chance they are lying.
Realtor -- "We have 3-4 offers so hurry"
BS meter -- 50% chance they are lying (they probably have 1 or 2).
Realtor -- "We have 5,6,10, etc offers so hurry"
BS meter - They probably arent lying (why say 10 offers when only 5 would incite a fence sitter)?
So my initial thought is this is a 50-50 shot they are lying. However, the fact that they said "you need to offer over asking price" is a bit brazen which makes me think there is something to it.
However, T, I certainly would ask to see the competing offers since the realtor said they were already in.
Good discussion guys:
KingMer - I think you have to realize something by your statements: you are likely not the "average" homebuyer. You sound like a "construction guy" (for which I am one, too) who likes to put in a lot of work and knows what you are doing. You'd rather do something yourself than have someone do it for you. I don't blame you for that. But the fact is, the majority of homebuyers are not like that. Maybe in this market more of them are out there, but this is an "out of my ass guess" that 75% of all people would rather buy a house that needs minimal work than buy a house that needs a lot of rework. In this comparison, you have to assume that you are getting the same level of "deal" on both properties.
You are right, if you are a "picky" buyer who wants a particular type of hardwoods and if you don't have that type in a house you are buying, you would rip up the floor and put a new one down, it is not an "upgrade" for you.
But for most people, myself included, I consider the fact that there are two similar houses, and one has a linoleum floor and the other has hardwood, I will expect to pay more for the hardwood floor and consider that to be an "upgrade" over the first house. Even if it is not the exact type I like, it is still better than linoleum, assuming I don't rip it up. I will admit, I was in a house I really liked that was newly remodeled, and had laminate wood flooring. It did disappoint, because I would rather have real hardwood, but still, I would pay a little more for that than for linoleum.
The thing that is good about buying a house that has been upgraded is you don't have to pay full price for the materials, nor do you have to deal with the headaches of doing it yourself or the inconvenience of having someone else do it for you. You typically will get a percentage on the total price, as you indicated in your reply.
Lastly, although I look at it from a different perspective, our conclusions are the same:
A house with a new roof, siding, windows and driveway is worth more than one without those items being new.
You say that the first one is not worth "more", but the one that needs new items is worth "less".
I just say that I will pay more for a house that has it than one that does not, but only if they will need replaced soon. Either way you look at it, we arrive at the same conclusion.
A house with double paned, 1-2 year old windows is going to be worth more than a 1985 house with original, single paned windows that need replacing soon, provided "all other things being equal".
Whether you want to say that you won't pay more for that but that you will discount a house if it has the 25 year old original windows is, to me, irrelevant if the bottom line is you agree that the house with the upgraded materials is "worth more" than the one without.
Again, it should be no insult to say that your outlook on home improvements is not the "norm" for most buyers out there. Not everyone is capable of doing all that work themselves, nor even knows about grades of hardwood flooring. If they wanted hardwood floors, they would pay for them to be installed, or they could pay 60% of that price and buy a house that has recently received hardwood floors (and is factored into the price). Again, if someone is trying to profit too much and is jacking the price of their house up 15k because they paid 10k for hardwood floors, that makes no sense. But if they raise the price 5-6k, it is completely understandable to me.
The house I was looking at when I was told that I would have to offer above asking due to several offers already being in was this one:
http://franklymls.com/FX6979238
Which is currently under contract. It was a foreclosure listed for $70k under 08 assessment, and had been pretty well upgraded.
My problems with the house were the fact it was not 3 true levels, it was a split level with no basement. The MBR was on the main level, along w/ 1 other BR. The lowest level had ductwork cutting through bedrooms such that I could barely walk into the room without ducking (or at least feeling like I was uncomfortably close to hitting my head) and many of the rooms were small.
I liked to lot size, the fact it backed to trees, but I could not get past the issues I raised above and was not interested in putting an offer on it, even though it had many appealing aspects.
I do believe the realtor when he said the number of offers, and it did go under contract very soon after.
I have been involved in several situations over the last few months where:
A) I low balled an opening offer to a very nice normal sale, and was outbid (and not even countered) by another person. I was told they "had another offer" and so I needed to get mine in. When mine came in as low as it was, they went with the other buyer.
B) A huge house that was a foreclosure with a pool and some nice features, but was in a "less than desirable" location, part of town, school district. I was told they were looking at another offer, and I hesitated in submitting mine. I was then told they already picked a primary, but I could submit a backup. I was one of several and was selected to be the "1st backup". I withdrew the backup in order to put my offer in on A) above
C) I was the primary offer on a foreclosure in a nice area, with nice schools. I knew the house had a mold issue but after learning of all the other issues the house had during the home inspection, I backed out due to the amount of money and time that would need to go into the house to fix it up.
There have been a couple other situations I have dabbled in the past few months as well.
I have heard all kinds of stories about how "if you don't submit an offer, we are taking it off the market for a few months" to "the seller is going out of town and needs to know before they leave"....
But for you pros out there, how do you determine if the seller is stringing you a line of BS or not regarding # of offers?
I really believed a lot of it was BS, until I saw for myself lately that there indeed are people out there, eager to buy and quick to make offers.
Jeff said:
"Also if you're moving up the house chain it's not an even trade to compare your TH to a SFH. If prices drop 10% in the next year your 300k townhouse would lose $30k. A $600k SFH would lose $60k."
From what I have seen in comparing my current neighborhood to the neighborhood I am interested in moving into, it was definitely not a clean percentage difference from one to the other, in terms of sale price during equivalent periods or assessed values. Within the neighborhood, yes, but between neighborhoods, no.
For instance, the 09 assessment on the SFH dropped 55k from 08, which was about 10% of the 09 value.
The 09 assessment on my TH dropped 70k from 08, which was about 28% of the 09 value.
If sales price/market value has a similar downward trend for both properties, I actually would have "more to lose" if the TH reached the 09 number than the SFH.
MJC said: "In my experience if there's a conflict between what something is worth and what something *should* be worth that conflict will be resolved by the market at some point."
Equally, that conflict will be resolved by changing one's understanding of what something "should" be worth!
t,
right now it seems as if there are slim pickings for properties you want at the price you want, and you are getting frustrated by getting bid out of things that don't seem like they should have that much traffic.
(1) this could be signs of a deadcat bounce.
(2) wouldn't you sleep much easier on a month to month rental (90 day notice by either party) with your depreciating asset out from under you and a known amount of money in the bank earning a meager 1.9% (at ING).
Right now your worries about the sale price of your TH are conflating and aggravating your aggressiveness in pursuing low prices on your move-up home. Separating the two issues, and having the time/patience to match your expectations of the price things are worth with the price things will close for seems like a better overall plan.
What will it cost you? $2-3k extra in paying movers twice (and the hassle thereto?) As long as your rent in the interim is less than or equal to your current PITI, you shouldn't be losing any money, just losing the downside risk on the TH.
If people still seem to be leaping at the properties you described? I'd say that means it's too early in the game. That TH I mentioned? Was bought in 07 for a serious discount from the 05 price, and now they'd like someone to step up and take the rest of the fall, you don't need to make that mistake the 07 buyer did. Higher up is time-shifted, but looks okay because it was never as inflated percentage-wise.
lol true enough Tom.
I guess I prefer my rough estimates of affordability over ambiguous claims of increased desirability. Over time I think people will make other areas desirable if prices are unaffordable in an area, which will then cause prices to decrease overall.
Totally different (off topic) subject:
Can anyone recommend a company for homeowners insurance? Any site out there with free rate quotes online, preferably one that compares multiple companies? I tried one but it was a facade for Farmers.
T -
We just went with VA Farm Bureau (out of Manassas) on our TH. I've always found their insurance to be very competitive. We are paying just under $500/yr for homeowners with a $1000 deductible. Once we install the security system we are planning to put in, I suspect it will drop even more.
T,
Real estate types tend to be a lot like carnies, they might be fundamentally good people, but they are in essence morally bankrupt. Thusly, I have used the following policies for decades.
Agent : There are offers on the table, submit yours.
Me : Let me see them.
Agent : That is not our policy.
Me : Then I must withdraw my interest.
Reality : The property sells (I haven’t kept track of the percentages) or I get a call from the realtor in 1-7 days respectfully asking me to submit an offer – this WILL ALWAYS lower my bid 5-10% and demand concessions – I DO NOT play the good cop/bad cop game, or any of the other realtor games – People have got to realize the buyer is in control, the buyer does not need to buy, ever…eventually, the seller needs to sell; and there no shortage of housing in NOVA. – That is why the saying goes “You make money on a house when you buy it, not when you sell.”.
I have also gotten into the habit of using a real estate lawyer; might as well have someone that has fiduciary responsibility to you….If you are wonder who the ‘buyers agent’ has fiduciary responsibility too, ask the simple question; who pays them?
Cara: your rent/buy ratio is way messed up. If you actually want to make a business of being a land lord you need to pay no more than 100x rent – I don’t care if you are in McLean VA or Huntington WV (FYI, those apartment complexes in DC and around Fairfax and such paid much less than 100x rent to build their units), you NEED to OBEY this rule. The Dutch made this rule up ~300-400 years ago and it still holds today. This covers maintenance, loss, amortorized improvements, insurance and IF YOU ARE LUCKY a 5-7% per year return on the money.
Yea people say 120-135x rent and I say, ooowww -3 to +3% ROI, just put your money in the bank! I swear some people have no idea that a going concern needs a reasonable chance to make money!
-King
"I guess I prefer my rough estimates of affordability over ambiguous claims of increased desirability."
It is the difference between wishful thinking and objective analysis.
KingMer,
100x is fine by me. Almost noone on this blog other than Tom is considering being a landlord. The one I brought up today is T asking about being a renter for a year or two between owning, not being a landlord. Hence the wierd break-even point.
LOL-
KingMer - I LOVE the way you operate!
And yes, you make money when you buy RE, not when you sell it!!
Us older folks know this, as we've "done it" a few times & have lived thru past cycles..
Tabitha said...
why do you torture me with whisper #s!! i am already in agony waiting for PWC assessments to come online (supposedly Friday), and now i need to wait til next monday for PWC #s! i expect sales to be up, but not at the top..."
Sorry Tabitha. I wish I got them for PWC. I find the whole thing fascinating because it gives us an insight into how the market is actually responding versus what we "think" it should do. For a long time we saw alot wishcasting that never took into account how the market was actually responding. That is mostly gone and I think this blog is better for it.
Harriet,
I was going through some old articles I archived and found this gem (circa Nov 2006):
http://money.cnn.com/magazines
/fortune/fortune_archive
/2006/11/13/8393160/
index.htm?postversion=2006110109
Not only did the NAHB index presage the start of the post-1994 bull market in stocks, but its decline starting in 1999 foreshadowed the equity market collapse that came the following year. Builder confidence rebounded in November 2001 - a year ahead of the stock market upswing that began in October 2002.
Why is Sonders worried now? Just look at the chart. Over the past year, the NAHB housing index plummeted 54 percent. Were stocks to follow suit, the S&P - 1400 in late October - would be trading below 700 this time next year.
S&P closed today at 696.33.
My $0.02
CRT -
r u sure you didn't miss a '1' in front of Arlington's C&C of '50'? does it make sense for C&C to be so much lower than previous months (265 combined Jan/Dec)? I did a quick search on MRIS and from what I could see Arlington has always had 100+ C&C.
only reason I could think of for this low C&C is financing could be much harder than buyers thought. (after being snubbed by a lender i wouldn't be surprised if true.)
CRT -
i just counted on Frankly and stopped at 200...
i guess that could be 50 new C&Cs - still too low i think. each of the 5 zipcodes i track could easily have 10+ new C&C in Feb.
Konstantin - you could be right in that these numbers are outliers. I do think it will take another month or two to tell for sure. However, I bring it up because I think each month this continues, it causes permanent damage down the road (in terms of price declines). Yes, Arl & Alex will likely be selling OK by this summer, but what damage has been inflicted by this "seizure" we are seeing now?
MM - yeah that 50 number is STUNNING. Sometimes, the whisper numbers turn out to be wrong, and this may be one of those cases. However, if it is not, you have to wonder (especially given how every other county has huge C & C), what is going on here?
I've never been able to figure out quite what C&C means in real terms. There are houses listed on Frankly that have been under contract for months. So plenty of them might be false results.
But yeah there are boatloads according to Frankly. I also know of quite a few in the zip codes I check.
mytwocents : No, no, no! It's all Obama's fault! He caused the market to crash because the market has no faith in him!
j/k -- just paraphrasing a lot of the nit-wits on the WaPo boards.
T said:
"Could 2010 assessments be even lower than 09?"
Absolutely. All but the already hardest hit areas of PWC will likely have lower assessments in 2010. The economy, housing market, and unemployment numbers haven't even hinted at turning around - and inflation is very minimal. What in the world could possible make assessments go higher next year?
Good news everybody...According to the NAR, housing affordability is at an all-time high!
The HAI indicates a median-income family, earning $59,800, could afford a home costing $283,400 in January with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest; affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of that amount. A year ago, the typical family could afford a home costing $263,300.
Yes, because nothing got us into this mess like people being encouraged to buy houses that were 4X-5X their annual incomes. I'm sure all these people can just easily depend on Social Security for all of their retirement needs, too, right?
T said:
"Could 2010 assessments be even lower than 09?"
Jeremy beat me to it, but PWC and Manassas/Manassas Park assessors have already publicly stated that assessments will be down again next year. Right now they are forecasting an additional 15% average drop, but they underestimated the drop this year. The Manassas City assessor said that 2009 assessments COULD NOT drop as far as prices would suggest they should, because the local government could not function on such severely curtailed revenue.
I am curious how you think assessments next year could be higher anywhere.
Hi, Benjamin-
We rent a house in north Arlington (22205, over by the hospital). 3 bedrooms, 2 baths for $2600--its about 1500 sq feet plus unfinished storage.
$2400 for an apartment sounds really high to me. We are not walking distance to Metro though (well, you could walk but it would be like 1.5 miles--I don't consider that walkable, really).
MM & CRT,
I only have "eyeball data" and am happy to wait as CRT advises for the confirmation or not of the whisper numbers, but CRT's numbers are not at all hard for me to believe. I've been keeping an eye on the SFH Arl. listings over about $800K, and that market is moribund and has been for several months. There is MUCH more activity in the approx. $500-700K SFH range. Check it out at franklymls.
Sellers in the approx. $800K+ range, which include a lot of developers trying to sell new homes (that are rapidly aging!), simply are out of touch with prospective buyers in this market. As others have noted, prices have greatly outpaced incomes, and this year many employers are freezing salary increases or laying people off --and I am talking about high end jobs here.
These are also people who either have investments in the stock market that in normal times they might sell to buy a house but no one with any brains would do that now (and take a big loss) unless they have to - especially not an overpriced house. Those who are middle-aged also are well aware that their retirement accounts (as well as the savings they otherwise could have used on a house) have been devastated, so they are much more reluctant to gamble on a high-priced house than 3 years ago.
And most prospective buyers in this range (and/or their agents) aren't idiots - they know nothing in this range is moving, and that price drops will continue - it's just a matter of how much and how rapidly.
Finally, I was amazed when a Realtor showed me a printout of moderately high end sold homes last year, and nearly all of them had 100% or other extreme financing, and we all know what's happened to that in the past year. Any $800K+ seller (or should I say "asker") who isn't taking these factors into account, who prices his/her house well above assessment without huge costly improvements not reflected in the assessment, and who can't seem to count the days his/her house has sat unsold at the asking price, can look forward to counting a lot more days.
In contrast, nearly all of the houses in the below $800K range that are selling are well-priced, many below assessment, even with improvements. The few that aren't well-priced sit, just as with nearly all houses above that range, which are still bubbly-priced.
Yes, these observations include the so-called desirable Orange Line locations.
Jeff B wrote:
"I don't believe prices will rise at high enough rates in the next few years that missing the bottom by even a year will be that painful. I believe that buying too early, however, could be very painful."
I couldn't agree more. I also agree that the bottom will be wide like a tub.
So if you had to rank the best methods for estimating the value of a home in a post bubble market what would they be? (Add more if you have them):
1) Comps
2) Income to Price ratio
3) Assessed Value
4) Appraised Value
5) Rental Prices x 100/120/130
6) Historical Market Appreciation from Price in Year X
7) Zestimate
8) Other common approaches?
What order would you put them and why?
KingMer said...
Reality : The property sells (I haven’t kept track of the percentages) or I get a call from the realtor in 1-7 days respectfully asking me to submit an offer – this WILL ALWAYS lower my bid 5-10% and demand concessions – I DO NOT play the good cop/bad cop game, or any of the other realtor games – People have got to realize the buyer is in control, the buyer does not need to buy, ever…
True story:
Known by my co-workers for my real estate research techniques; and just after the crest of the bubble, I assisted one of my co-workers in negotiating a price down to $330K. The offer was accepted. For one reason or another, the original co-worker backed out.
Co-worker #2, hearing of the price became interested. We turned over all pertinent info to co-worker #2.
#2 runs out and offers………$330K. I’m thinking WTF??? Offer $250K or $300K…you’ve got a no shit base line price point….
Owners counter with $360k…#2 counters with $350K. Sold.
One reason I haven’t purchased, is that I can’t compete with stupid, and I told #2 as much.
So hell yea KingMer. If a realtor contacts you after you withdraw, it should be a no brainer. Sadly, I bet it’s not. The sheeple see it as “a second chance” and do not have the wherewithal to negotiate.
Jaime said...
So if you had to rank the best methods for estimating the value of a home in a post bubble market what would they be? (Add more if you have them):
What order would you put them and why?
1) Income Price Rato: affordability is key, especially with tighter lending standards.
2) Rental Prices: Cost of Rent/own ratio-If savings in renting outweigh owning by a significant margin, especially during an economic downturn, even the sheeple (well, a few of ‘em) have to concede the flexibility (move for a job) and cost savings of renting.
3) Zestimate: While the value of zestements are a source of contention, especially those within the REI, it does have potential. Such as trend analysis. Remove the dollar value and look at the trend. I noticed zillow also shows data in percentages, better market indicator, removes the $$ bias (up or down). (While I have not used zillow in quite a some time, I wanted to rank the things on your list first)
4) Comps: Comps are historical markers. Indicators of what values used to be, not current value, especially in a declining market.
5) Appraised value: Poor home evaluation tool. Remember all those appraisers that said they were being blacklisted by the REI? Those appraisers still have to eat and things are sloooow out there.
6) Assessed Value: Same league as appraised value. It is the intent of local government to tax. Why would they attempt to reduce their coffers?
7) Historical Market Appreciation from Price in Year X. This could go up or down on your list. It could indicate how overvalued and how much correction is due (in conjunction with Income/price ratio).
8) Number of new jobs: Poor indicator without income potential data. If your local area receives or is “slated” to receive 100,000 new jobs, and on average those jobs pay minimum wage, what happens to the average home price?
Along the same vein, the “real estate is local spiel”. True, so long as you concede that those in the area will buy and sell to each other until everyone ends up in their original home. If you are counting on new (out of area) buyers, you must account for national trends also. Is that new family from Michigan who has a recent foreclosure and poor credit going to be able to obtain financing for the current average home? Does that family from Arizona who sold at a loss have the prerequisite down payment? Why are these folks moving here? Is it because the job market in their current locale necessitate a move?
Ace,
I'm OK with the whispered 86 sales, it's the 50 C&C I can't figure. What's your take on the whispered C&C?
MM, I guess I'm lumping them altogether and attempting to explain why they aren't higher. I think there are a lot of reasons why people who would like to move out of their tiny kitchens etc. to a slightly bigger house in Arlington, simply can't or won't bite on those $1.5 mill McMansions or $900K homes with many significant flaws and few or ugly upgrades. People in this range often didn't get huge windfalls but instead scrimped and saved as carefully as many other people; they were just fortunate to have more opportunities to scrip and save. And now they have lost much of those savings, and may be facing stagnant incomes or the loss of an income, like everyone else. We don't have a lot of Bill Gates here. I think these same factors that affect buyers looking for lower priced houses after those looking for higher ones. They account for why with the sticky prices or 10% reduction from a 50% too high price isn't moving inventory.
Ace - as always, I appreciate your eyes on the ground take on things. However, the factors you are describing could just as easily apply to Arlington's slightly inferior twin Alexandria. MM's point is why have the yoked twins separated?
Moreso, the whisper numbers suggest Alexandria is clocking a healthy (perhaps too healthy) 168 C & C, while top performer Arlington can only eke out 50?
The answer for me is just "I dont know" maybe its an error, maybe its a blip, maybe Alexandria recorded the worlds fastest capitulation. I guess we will just have to wait and see.
CRT,
Having not watched the Alex (City?) asking prices and listing info nearly as closely, I don't know how overpriced the listings are or whether this tendency seems to vary by price range, as it seems to in Arlington.
There is also a big difference in number of detached SFHs above $800K in Arl. vs. Alexandria City - searching "Arlington detached" yields about 200 listings above $800K on Frankly, but < 80 for "Alexandria city detached."
I'm also not aware of as many newly built SFH houses in Alex. City, at least not as close-in as some of the McMansion in-fills are in Arl.
So what's on the market seems to be substantially different in these two communities, making it hard to compare them with only a crude eyeball test. (For example, maybe there are a lot more attached townhouses in Alex. C., such as in Old Town, than in Arlington, which appeals to a different customer than a SFH.)
If the would-be sellers in Alexandria City (or anywhere) are truly cognizant of the pressures on would-be buyers in the so-called immuno-job or income or wealth categories, my hypothesis is that they either (a) are not listing their houses now, preferring to wait for a better time, or (b) have priced their properties more realistically than their counterparts in Arl. and sold them.
One other factor I haven't seen mentioned - in boom economic times, employers often covered the entire cost of a move to induce employees in mid or higher level job categories to relocate. So if you took a job with an employer with such a policy, you could buy a nice house here, knowing that if you were transferred later to Oregon, for example, the employer would pick up any loss on the sale you might occur at that time. This might encourage you to (a) buy now and (b) pay whatever it takes to get the house you want. But now that many employers are not hiring or may have suspended or limited these policies, there may be fewer buyers (fewer movers, and some may move here but rent), or those that transfer here may be much more conservative about what they pay for the houses they do buy.
CRT, at the risk of redundancy, I'd add that one other possible factor is a bigger mismatch between existing inventory and the needs/wants/ability to pay of prospective buyers in Arl. vs. Alex. City. Arl. generally has better schools, so it may appeal to more families with school age kids.
However, how many 30-somethings with a couple of kids and maybe a parent living with them and who therefore might want a big house, are willing to settle for a tiny yard AND can afford (with both wealth and income) a $1.5 mill. price tag? What if one spouse stays home to care for the kids or they have to pay for care in addition to the expenses of that big house? That has to be a small number. And how many older people without kids at home who HAVE the income and wealth want or need a 6 BR, 5 BA house, and may prefer not to pay a premium any more for the schools - hmm, maybe they will start looking in the District, in Alexandria, etc. What about all those more modest-sized houses in Country Club Hills etc. that haven't been renovated in 20+ years, but whose owners want nearly a million? Looking at my two admittedly oversimplified groups, how many members want to buy a 4 BR that needs a TON of work and additional cash, when they don't have the physical ability/time/skills/patience to deal with all the hassles of renovation for months? Given that the style of most of the newly built big places is almost invariably faux Craftsman, if you don't like that style, you'd better shop outside Arlington.
In Alex., there may be a better match between what's available and what prospective buyers want.
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