Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Ouch:
(AP) -- A federal grand jury has charged the former chairman and chief executive of KB Home with multiple counts of fraud and other crimes related to a stock option backdating scheme that authorities say bilked the homebuilder's shareholders out of millions of dollars.
The 20-count indictment returned Thursday charges Bruce E. Karatz with 15 counts of mail, wire and securities fraud, four counts of making false statements in reports filed with the Securities and Exchange Commission, and one count of lying to the company's accountants, according to the U.S. attorney for the Central District of California.
Karatz, 63, faces up to 415 years in prison if convicted on all charges.
88 comments:
Reminder - Washington Post Real Estate Chat today with Maryann Haggerty and Elizabeth Razzi.
1:00 PM, join them or submit your questions.
"Back on the Market due to buyer not being able to get Full Loan commitment. Home Inspection & Appraisl R done. Show this house w/ confidence. Sellers R packing"
Never saw that before in a listing.
I am super-grumpy this morning because the PWC assessments have still not been updated. I was told they would update their server Thursday night. Why do they torture me this way?
Why do I care? Getting my dream house rides on the assessment coming in lower than our offer.
But that would mean you are overpaying Tabitha.
Doug, this is the one house I am willing to overpay for. I could die happy on a rocker on the front porch and be buried in one of the pastures.
Crossing fingers for you Tabitha!
Tabitha-
Is this the divorce house you've been trying to buy?
So it sounds like the deals not dead?
Yes but that type of irrational exuberance is what got many people into this financial mess.
"Back on the Market due to buyer not being able to get Full Loan commitment."
Translation: The house didn't appraise for the contracted sales price and the bank wouldn't lend more than the appraised value, therefore, the purchasers walked. But come buy our home for the inflated price anyway please.
Yes, this is the divorce house. Hope is still alive. I think I managed to convince Mr. Inflated Price that his appraisal was baloney, and he'll feel like he's squeezing us for every last drop if the assessment is under our offer, as it should be, because our offer was 15% less than last year's assessment, and as you all know, PWC assessments should be at least 15% less than last year's.
And so we wait...
And JF, that is exactly what that means, but why would they ever share that specific info with the world?
Bethany bankruptcy
"Lenders are “starving” 16 apartment complexes owned by Irvine landlord Bethany Group, forcing employees, contractors and utility bills to go unpaid, the company alleged in 18 bankruptcy cases filed Wednesday in Santa Ana.
Bethany Group LLC, owner of seven apartment groups across the country, made the filings in three of its investment portfolios, which collectively own nearly 5,000 units in Texas and Maryland."
This is a wierd one. I don't know what this says about the rental market to come, but just wanted to get this out to anyone in MD who may be renting from a Bethany property.
Tabitha, this is the house you're interested in? Looks nice -- good luck!
http://www.redfin.com/VA/Manassas/10861-Peachwood-Dr-20110/home/9341573
Tom,
I don't know, I think it needs more fuddy-duddy valences and wall-paper.
No, Tom, "our" house is not on the market right now. It was last year, but it did not sell. We are trying to buy it before they put it on the market this spring.
For goodness sake.
I just called the assessment office, and now they are saying they'll be online NEXT Friday. I can't believe this.
Our landlord, who is not returning our messages, said he wants us out by April 30. Time is running out.
Anyone an insider at the PWC assessor's office?
tabitha said: "but why would they ever share that specific info with the world?"
Information is power when it comes to negotiating, so it doesn't make any sense that the sellers would reveal this info that could give an advantage to prospective buyers. It is flat out dumb to do so. But this stuff happens fairly frequently.
I once talked with the seller of a house who told me she really needed to sell because of bankruptcy issues. Needless to say, I priced my offer accordingly (about 25% below asking) and my offer was promptly accepted. Had I not known about the bankruptcy issues, I may have offered significantly more. People do the darndest things sometimes.
A little OT, but interesting story. I had a developer client who ridiculed these guys for not leveraging to the hilt on their condo project. 3 years later, it looks like these guys are doing well whereas I am now assisting my client through bankruptcy proceedings.
http://www.bizjournals.com/washington/stories/2009/03/09/story18.html?b=1236571200^1789686
Update on the 751 ten cent checks my mom had to cash from her evil landlords: She went to Bank of America on Wed, and because she is not a BofA customer, they only allowed her to cash 50 checks as a nonbanking customer, for a whopping grand total of $5.00. It didn't help that she got there during the 4 o'clock hour and they close at 5.
She went back again yesterday and was able to open an account for free for the sole purpose of depositing the remaining 701 checks. The banker confirmed that the landlords' account had the remaining $70.92 owed to her, and the banker supposedly put a hold on that amount so that no checks would bounce.
I got a pretty good chuckle out of this CL ad offering a building lot in Clarendon for sale for $989,000.
http://washingtondc.craigslist.org/nva/reo/1060448015.html
The lot is about 6,400 and their asking price is several hundred thousand dollars above current market prices for similar lots.
It's funny enough that they set their asking price so high, but what's even funnier is that they claim they won't even take their listed asking price of $989,000. The ad says they will only accept offers ABOVE their asking price!!
Talk about delusional. But these are the same sellers who last time tried to sell the same house for $1,200,000 (this is a dumpy 60's era house that doesn't fit in with the style of the neighborhood).
Do people like this really think they have a shot at selling for anywhere near their asking price?
MJC,
Thanks for the update. Still crossing fingers but it sounds like it will work out okay.
MJC, unbelievable. Just to really piss them off, she should her former landlords a sweetly written thank you note after the checks all clear. That will make their blood boil. Something to the effect of:
Dear ex-landlords,
Thank you so much for sending those checks to me. I went to your bank and they happily cashed them for me without problem. I wish you hadn't gone to all that trouble to send the money to me, what with all the time and effort you spent stamping those checks and the money you spent to mail them off to me. Why, you could have just mailed me a single check and that would have worked just as well for you and not costed you that postage. Oh well, thanks again for sending the money to me. It was actually quite fun for me to be able to walk into the bank with 751 checks to cash. I felt like a big shot.
Thanks again and best wishes,
X
I love it! "I felt like a big shot!"
I've been encouraging her to do something in response, but it was a big step for her to even send the letter I wrote requesting the money back that she was rightfully entitled to. So, if she gets all of the money with no problems, I don't think she wants to respond.
One of the landlords is a forensic psychologist, so I kind of wish there was some way we could report his behavior to whatever board licensed him in FL. I'm not sure if he has to maintain a particular ethical code to keep his medical license.
Are N Arl prices finally coming down to Apr 2005 level? This 22207 home on Glebe Rd (I actually like a lot) is listing at the exact same price it was bought in Apr 05. It took 5 months to come down to this new price. Will it sell soon? It's also for rent for $3K/mo.
Unemployment now over 8%...
Does anyone doubt we will see double digits before this is over?
What a mess.
Alright, which one of you wrote this smart, well-written comment on today's Washington Post R/E chat? (i'm disappointed, but not at all surprised, at the two dodo birds' responses)
"Vienna, Va.: Maryann and Elizabeth, I hear so much emphasis from people - including our elected leaders - on keeping home values from falling and putting a 'floor' on plummeting prices. Since by every account (OFHEO, Case-Shiller, etc) and in every market (except Detroit) home prices are still way too high compared to historical trends and inflation indexes, why is there such a push to keep prices artificially inflated? In the end they will meet their fundamentally supported levels. Do people not realize this? Or, are they trying to spread the pain to more people over a longer time, like what happened in Japan? It just sounds unbelievable that after eight years of soaring prices, nobody can accept that they're coming crashing down to Earth. People are blaming foreclosures for this phenomenon. Of course, foreclosures are the symptom and not the problem. D.C. area prices went up 2.5 to 3 times their value from 1998 to 2006 without any substantial household GDP increase. Are people just equity-greedy and ignorant about the numbers?
Maryann Haggerty: You say values are "still way too high" as if it were an indisputable fact. The reality is, plenty of sensible people dispute that.
Elizabeth Razzi: Well, I don't exactly see myself in the greedy or ignorant camps. And I don't agree that foreclosures are only a symptom, and not a great contributor to the problem. I see the government's goals not so much as setting a floor on prices, but to interrupt a downward cycle that is reinforcing itself. Increased numbers of foreclosures are driving down neighboring values, increasing foreclosures, and demolishing more equity. People lose jobs. That increases foreclosures, drags down equity, people quit spending, more people lose jobs. Repeat ad infinitum. That's the cycle the govt folks are trying to interrupt."
Jeremy:
What is the name of the Tyson's condo building you mentioned yesterday?
-Pac
Haggerty is totally lost. Razzi seems to have some brain power left.
JF
I don't know, but at least they took the question. I doubt they're going to publish my snarky response to their response...
"Razzi seems to have some brain power left."
She has been saving it up...
Haggerty either has no common sense or she is completely delusional:
"Maryann Haggerty: A study out last week from Green Street Advisors found that rent-own cost ratios in the DC suburbs are more favorable toward buying than they have been in 18 years."
Does she really believe this? Prices soared 150% while rents rose with inflation and she believes rent-own cost ratios are at their most favorable point in 18 years?
tbw,
The part about bad SFH's or condos asking just as much as nice ones during the bubble, and some still thinking they can do that now, I can totally agree with.
To clarify, I was using "immunozone" too loosely, I didn't think you meant it was actually immune from price declines, it just that your arguments seemed based on "nice" areas having "worthy" borrowers who really want to stay there, and have the wherewithal to do so indefinitely, which is the same argument that people kept giving for why certain neighborhoods would retain more of their gains than others. And it seems to me that we don't know the makeup of the borrowers, their jobs and balance sheets as well as we think we do, so blanket statements about "poor" people (who, if we're going to make blanket statements I would say tend to rent apartments and buy houses, anyway) or those wild and crazy non-public-transport using car drivers, don't seem like good measures of how much distress we'll see in individual complexes. Speculators ran the gamut, from those looking for "value" in "safe" areas, to those looking to find the cheapest thing they could cash in on.
Notice how Maryann doesn't respond to this follow up comment (nice job Cara!!) with the names/sources of the "plenty of sensible people [that] dispute that." Looks like she was toeing the company line without being able to really back it up...
Vienna, Va.: Thanks for taking my question, but which sensible people dispute what all economists are saying: that home prices are too high? I haven't heard of anybody worth their salt argue that. Per the last Case-Shiller housing report, prices are at early-2004 levels. This "spiraling" is nothing more than an asset correction. Look at the historical trends. Prices in our region are down about 30% from the peak, yet at the peak they had nearly tripled. There is simply no quantitative way to say that we have overcorrected. Yes, equity is being lost, but it's bubble equity. It's the price to pay and anybody that's a responsible homeowner and not using their equity to fund their lavish lifestyles won't be hurt.
Again, this is not a reinforcing cycle. People are being selfish about their equity and are clinging to an absurd vision of the bubble values of their houses.
Elizabeth Razzi: Thanks for your opinion.
JF,
not mine. That was the original poster (based on city) I'm just impressed they included the follow-up at all.
tbw,
fair enough. Good clarifications.
"Maryann Haggerty: A study out last week from Green Street Advisors found that rent-own cost ratios in the DC suburbs are more favorable toward buying than they have been in 18 years."
-----
If Maryann Haggery would bother to do her own frakking math, she'd realize that that is blatantly wrong. But, that might actually require doing some research of her own instead of parroting news releases.
After the number John Stewart did on CNBC, you'd think that these two would think twice about being industry shills. Someone needs to do an expose on their past predicitons.
"Someone needs to do an expose on their past predicitons."
I remember one chat when Maryann said that homes in Arlington would never again be affordable to single income households. And I think she believed it!!
Best chat ever...
I wish they had answered my question.
JF,
This comment about single income seems to stand true for now. At least for something like a median income. I would say that the median single income is probably about 90-100k in the n.arlington, i doubt that home prices for sfh there will drop to 250k (which will make them affordable by this board's prudent borrowing standards). i would expect sfh to drop about 30% at most, so cheapest non-teardowns in the 650K range will drop to something like 450k. and this still will require plenty of job losses and foreclosures in this area. have to remember, there are people here which still pay 350-400k for one-bedroom condos in clarendon. and consider it a bargain.
JF,
This comment about single income seems to stand true for now. At least for something like a median income. I would say that the median single income is probably about 90-100k in the n.arlington, i doubt that home prices for sfh there will drop to 250k (which will make them affordable by this board's prudent borrowing standards). i would expect sfh to drop about 30% at most, so cheapest non-teardowns in the 650K range will drop to something like 450k. and this still will require plenty of job losses and foreclosures in this area. have to remember, there are people here which still pay 350-400k for one-bedroom condos in clarendon. and consider it a bargain.
I just sparred a bit with Elizabeth and Maryann about overpriced DC housing. Apparently "sensible minded people" might disagree with me, and housing prices should be propped up so bubble buyers can use their imaginary equity to purchase gold plated Cadillacs and robotic sex dolls.
I was snarky and Maryann got snarky back! Sweet!
Kingstowne, Va.: Maryann, prices in the D.C. area are indisputably "way too high". The only people disputing that are members of NAR. But yes, Elizabeth has a point. Foreclosures are both a symptom and a mechanism through which the damage is being spread.
Maryann Haggerty: Obviously, this is an article of faith among many people. (We have a bunch of similar comments here.) Those people, however, do not at this point seem to include the chairman of Federal Reserve, the Secretary of the Treasury and many others who think that indeed the correction needs to be slowed or stopped. Who knows? Maybe they all have their real estate licenses, too.
"Obviously, this is an article of faith among many people."
I love how they immediately resort to implying that people who recognize housing is overpriced aren't rational. ("faith," versus "view," or "conclusion," ect)
kh used to try the same thing here.
Kevin,
so you were Vienna?
Nicely written first submission and response. Well said.
(as opposed to my snark, for which she got the last word by virtue of the forum)
Cara,
Thought I'd get your take on this since I think you follow the Kingstowne market pretty closely. A friend passed along info from an acquaintance of his about a townhouse in Kingstowne that he's trying to sell. We're not looking in that area but I'm curious about the real value of his place.
Here's all the info I have, culled from the email:
"Roughly 2 miles from the springfield metro. The townhouse is about 1600-1700 sqft. and 25 years old. He bought it 3-4 yrs ago for around $350k"
I did some searching but it's hard to judge without a better sense of what neighborhood he's talking about. The guy said his friend is looking to break even which makes me think the market is lower than $350k for such a place. Any rough estimates based on the townhouses you've looked at?
"Those people, however, do not at this point seem to include the chairman of Federal Reserve, the Secretary of the Treasury and many others who think that indeed the correction needs to be slowed or stopped."
There is a difference between thinking the government should do something to prevent the economy's further deterioration and thinking that house prices are becoming too low. I've never heard Bernanke or Geithner say house prices are too low and, therefore, must be propped up. Maryann is implying that because the government is taking action to help the economy that that means Bernanke and Geithner believe house prices are too low. That is an unsupported assumption.
I wonder if even they understand that. This isn't about housing prices getting too low, and nobody is seriously proposing that it is.
Jeff B,
Without a neighborhood, or at least a direction it's hard to say precisely...
But for $350k he'd need to have either over 2000 sq feet or be within 1 mile of the metro or be fantabulously upgraded. (all three and he'd get over $400k still.)
2 miles is a hike, but if he's in Hayfield view I'd take it off his hands for $240k. More realistically, someone else may bite for as much as $275k. Most that are not selling at $275k are considerably smaller (1200 sq feet) but a lot closer to the metro 1.25 miles.
So, in conclusion, if it's spotless, impeccably maintained, and renovated by either himself or whoever flipped it to him, he might get buyers interested with a list price of $315k to $325k, but that's about the limit for something that far (and he's starting to need to compete with the nearby SFH's that are junk, mostly, but listed around $210-250.)
Jeff B, if the place is 25 years old, it isn't in Kingstowne. Kingstowne was woods back then.
JF,
Yup the very first things built in Kingstowne proper (i.e. that have acess to their rec facilities and stuff) were built in 87, so 21 years ago. So, he's not going to get any Kingstowne premium.
Thanks for the insights! I was wondering about the age too, most likely it's somewhere in that relative area and he just name-dropped Kingstowne.
I have to restrain myself when I get unsolicited emails like these. I was pretty sure he'd never break even on the place but it's not really my place to say so.
Also in this market there's no way I'd entertain buying a house from an acquaintance of any sort. I expect to be buying from someone taking a loss and that doesn't make for a pleasant situation.
Jeff B,
Well it depends on what he calls "breaking even"...
The 6% commission is going to be a killer though, even if he got $350k.
Depending on how much he put down, he might get away without losing his credit rating to a short sale. And if he allows himself funny math, like discounting for his "free rent" while not also accounting for the interest/tax payments he's made over the years, then he could make himself feel okay about the whole thing... I mean seriously, tons of people have to sell real estate at a loss all the time, not just now.
But yeah, I want an arms length transaction, by all means.
My brother came up with this idea...what do you all think?
I really think this could be a good solution.
I do think there is something to be said about having the government do something to help people with the housing crisis. It is a shame that a bad decision of buying a home that then loses a lot of value could potentially push otherwise responsible people into bankruptcy.
In the spirit of finding a way for the government to help while encouraging personal responsibility, I propose the government should do two things:
1. Offer low interest loans to pay mortgages for people who have suffered economic hardship (i.e. lost their job). There would be a time limit to how many months it would be good for (perhaps 6). And the loan would have to be repaid in a short term, say, 5 years. And the loan amount would be capped by what a reasonable repayment would be in 5 years - perhaps equivalent to 5% of salary or something.
So, if you make $60k/yr or $5000/month, that means you could pay back at a $250/month rate. Over 5 years, that's $250x12monsx5yrs = $15k (at 0% interest). So, the government would provide a loan of up to $15k to cover mortgage payments for up to 6 months.
2. Offer unsecuritized loans for the write-down value of a home to bring it back to current market for people that have to move. This should also be capped by your current income - say at 10% of salary over 10 years.
So, if you make $60k, and bought a $200k home that dropped 30% in value (is now $140k). The government would give you a loan to pay off $60k. The max a person could get under this would be 10% of salary, so $6k/yr*10years = $60k that they would have to pay back.
...
Each of these measures only helps those who were responsible and really need it. It also places the burden of fixing this on homeowners, instead of making someone else pay for it. I'm sure a lot of details need to be ironed out, but I think this could be a good way to pick the issue up.
I assume there is a risk of default in each case (someone could die, more to a lower paying job, flee the country), but I hope for the most part, people would do a good job of following through and repaying.
I also think this is what our government is supposed to do - not absolve citizens of responsibility, but help people who want to make the effort get through rough times. These two items also help build a more fluid workforce - which, as the age of life-time jobs at one company is dying, is likely a good idea for our country as well.
J/F,
Just wondering, have you closed your new home yet? How did the financing etc go?
tabitha,
yeah, that's more concrete and nicer than my "incentivize short-sales" plan.
My idea was for the banks to take the losses, but the fed to give short-sellers $3k cash to cover moving costs and security deposits on their new rentals. And have short-sales only remain on your credit score for 5 years, where in the first 2 you are ineligible for any mortgage, but afterwards you just have higher downpayment requirements of say 30% (year 3) 25% year 4 20% year 5.
There's always the overall solution, rampant inflation, but that'll be difficult to get started on anytime soon.
oops, i should have put my last post in quotes--those were not my words.
cara--like the "enabling short sale" idea. it still hurts the guilty and the unlucky alike, but they're going to be hurt anyway, and this is more gentle.
Cara, I'm renting a house in Vienna, just off Nutley and within walking distance to the Vienna metro. I call it my "crack shack", but it's cheap and sure beats owning right now=)
Tabitha-
I'm wondering: just because the assessments won't be online until next Friday...does that mean the info isn't publicly available yet?
Say, for instance, if a mom and her seven children (or just a few of the seven..maybe the youngest or cutest ;) --went down to the office in person on Monday and told them the whole story about getting evicted by April 30 and really needing the assessment info to convince the landlord to sell the house etc etc etc. I'm wondering if the clerk wouldn't be able to produce a copy of the assessment for that particular house a little ahead of it being posted online.
renee, i like the way your mind works.
i engaged in shameless begging over the phone. the lady held firm.
i packed the five-month-old in the baby bjorn--forward-facing, mind you--and marched straight to the courthouse, to no avail. supposedly NOONE has access to that info yet.
[wailing and gnashing of teeth]
just in case you never tire of "how to fix housing" discussions, here is one on a Notre Dame alum board:
http://tinyurl.com/7gwbbl
Go Irish!
Gloom and doom!!! Be depressed.
From my favorite WaPo columnist, Steve Pearlstein: There's Now No Question: Region Is Not Recession-Proof
near the end: ..."With all this weighing down the local economy, is it possible that the expected surge in federal spending will be enough to keep Washington out of recession? That looks to me like wishful thinking..."
need to start looking for that 3rd job...
tiredbubblewatcher--
just you wait til i get my hands on the pwc 2009 assessments. i have a list a mile long of outrageously overpriced houses out here, that will only look worse soon...very soon.
tiredbubblewatcher,
Assessment do not define market prices. Comps, and people do.
I posted a few days ago an assessment for two similar homes with a difference in assessment of over $400,000 in the Town of Vienna. These assessments are not correct. Don't lose any sleep on them.
From Real Estate live,
This one is hilarious.
Panicked in Lyon Park: Did you hear something about the Catholic cathedral at Glebe Road and Route 50 in Arlington using their parking lot to build a 10-story mixed income apartment building? I understand the land is sorely underused, but really, putting something like THAT up? I didn't think the Catholic diocese in Virginia did "social services", but with my house going up for sale I'd hate to have that kind of population pulling down my value in such a tough market.
Elizabeth Razzi: "I didn't think the Catholic diocese in Virginia did 'social services." Oh, stop! You're making me laugh. Wait 'till I tell the Bishop that one...
Out of the purvey of this blog, but just thought I'd share: looked at some condos for sale in Gaithersburg today. 1 foreclosure, 1 short sale, 1 estate sale, all in the same complex. The foreclosure last sold in 2006 for $219,000. Now going for $76,900. That one and the estate sale were in very good shape-- didn't look like they needed more than maybe a little paint. The short sale was much worse.
My take away from this: prices still falling at a good clip, and no longer just for ratty places, either.
Tiredbubblewatcher:
http://franklymls.com/FX6999470
Year Sqft price
2005 2,690 $860k
2006 2,690 $805k
2007 2,690 $810k
2007 2,690 $800k
I guess they are basing their comps on 2005-2007 sales, but that's over 2 years ago. I think that's awfully ambitious, considering that those were larger houses. My guess is that when it eventually sells, the transaction will be closer to the 2009 assessment ($652,700) than to their initial asking price ($795k).
2009 2,464 ????
How is this for a crazy assessment history?
yr. land building total
2009 $909,000 $4,963,090 $5,872,090
2008 $988,000 $2,100,000 $3,088,000
2007 $988,000 $3,000,000 $3,988,000
2006 $988,000 $2,868,950 $3,856,950
2005 $898,000 $2,632,060 $3,530,060
2004 $748,000 $2,632,060 $3,380,060
2003 $748,000 $2,438,330 $3,186,330
2002 $575,000 $2,438,330 $3,013,330
2001 $535,400 $2,179,310 $2,714,710
2000 $535,400 $1,932,520 $2,467,920
http://franklymls.com/FX6630280
Oh, they are asking $15,000,000
BTW: those are sale price for the neighbors, not assessments.
Of course, if you want to sell, you do somrthing like this:
http://franklymls.com/FX6975481
2009 tax assessment: $1,794,940
2008 tax assessment: $1,961,600
asking price: $1,490,000
result: under contract
http://www.nytimes.com/2009/03/07/business/economy/07home.html?ref=business
http://www.washingtonpost.com/wp-dyn/content/story/2009/03/06/ST2009030602462.html
"What is the name of the Tyson's condo building you mentioned yesterday?"
-Pac
It is The Lofts at Park Crest
link
Sorry Pac, wrong link. The Lofts are the apartments they build next door on top of the Harris Teeter (also extremely overpriced). The actual condos are just "Park Crest". Here is the correct link.
Neither has 10% of the lights on at night though. <-- (My unscientific way of determining that no one has been dumb enough to pay what they're asking.)
Zerodown said:
"Of course, if you want to sell, you do somrthing like this:
http://franklymls.com/FX6975481
2009 tax assessment: $1,794,940
2008 tax assessment: $1,961,600
asking price: $1,490,000
result: under contract"
You guys are still not getting that assessments mean nothing. The fact that this house was assessed at a higher price means nothing. That does not tell you what was the condition of the house for example. It could be located on a lot that backs a huge water tower, or a busy street, etc.
Houses have sold above and below assessments. Mostly above assessments in the past ten years. The fact that one house priced itself below assessment and it sold, does not mean that is the winning strategy for every home. They are not the same. You have to measure the house individually. See its condition. See comps. See what is the demand for that house in that particular neighborhood. They are not all the same.
"You guys are still not getting that assessments mean nothing."
-----
They don't mean nothing -- they're a snapshot of the past, and hence a useful tool. They're not infallible, but they do help you to judge a place.
In the neighborhoods I'm looking at, most houses are selling below their 2006 assessment. That tells me something. When I see a house I like, I can look up it's 2006 assessment. If it's over 2006, I think ask myself why. It might simply be overpriced. Or, it might be when I look at the comps, the assessment is inaccurate.
Novawatcher,
Your strategy makes sense. You are looking beyond the assessment of a particular home. You are looking at other measures, trends, condition of the home, comps, etc. That is my point.
We know we are in a tough economy. Unemployment rates for the nation are pretty depressing, although they have not reached the level of the 1980s yet.
For Washington DC, the employment picture looks less depressing. The stimulus package will create many government jobs, and other related jobs, in the region. The government is the reason the area has fared better in past recessions.
No one can tell what will happen. The downturn in home prices may dip below what would have been the normal growth appreciation for the region because when there is a bubble some times the correction can undershoot.
Having said that, for those who were wondering how incomes and home prices may have compared between 1999 and 2009, I have the following stats.
A couple making $150K today (two people making ($75K each), if they worked for the Federal Government Executive Branch, they made $100K ($50K each) in 1999. This is a mid-level GS-12, step 2 position in the Executive Branch.
That same couple may have been able to buy a house for $300,000 in 1999. First-home buyers have always had difficulty saving 20 percent of the price, so chances are the couple did not buy anything above that.
Large homes in large lots with two car garages (10 year old or more for the time) sold in Annandale for $350,000. This was a split level contemporary, not a colonial. At least that was my experience at the time. New homes in Vienna sold for about $500,000, but these were in tiny lots were you could see your neighhohrs bathroom from your kitchen. New large townhomes in nice developments sold for about $300,000 in close in Fairfax County.
Let's not forget that interest rates in 1999 were about 7 percent for 30-year fixed loans. Secondary piggy-bank loans (if you wanted to avoid paying PMI) were about 9 percent. Conventional loans were about $240,000 if I recall correctly. So it was more expensive to borrow in 1999 than what it is today. That also affected what you could afford back then.
So, it was hard for a couple making the equivalent of $150K in 1999 ($100K) to buy as a first home a large home, with two-car garage, in a large lot in many parts of Fairfax County (including Vienna).
Prices may become more affordable than what they were in 1999. It all depends on the local economy. But the point is that every buyer (particularly first-home buyers) do not necessarily get to buy their dream home at their dream price in their dream location. We all have to make compromises once we see what we can afford. Sad, but true.
With time and savings buyers can afford larger homes. Don't forget that if you buy something under what you can afford today, you will be able to save more over time and sustain the economic blow in the event someone loses a job, etc.
Some people did overstrech in 1999and bought at the top of what they could afford and did fine because their incomes continued to go up. Despite the dot com bust none in their households lost their job. But that is not the case for everyone always. You need to have that emergency fund for the unexpected.
In closing, I think there are a lot of good buys currently in the market at equivalent or better pricing than they were in 1999.
dc2,
It is an interesting trick that you are using: telling us a lot of very reasonable stories and then concluding with the absolutely unsubstantiated statement.
Please give us examples of homes that are more affordable right now then in 1999. Better be in Arlington, Alexandria, nice neighborhoods in Fairfax, like McLean. Please give us a sale price in 1999 and listing price in 2008-2009. I'm looking for a place to buy and it will be extremely valuable to me.
"It is an interesting trick that you are using: telling us a lot of very reasonable stories and then concluding with the absolutely unsubstantiated statement."
A good summary... while I am at it, $500k would have gone a long way in Vienna in 1999, certainly better than what he described.
dc2
What planet did you pull those house prices from???
My boss bought a 5-year old 4 bedroom, finished basement house in a nice area of Silver Spring for $220k in 1999. You're insane. And gee, did he refinance down to 4.75% 15 year loan back in 03? Yup.
Talk about a straw-man argument. I know, I know I haven't gone back and pulled neighborhood sales like I should to substantiate my argument either, but your numbers are at least $100k off if not more.
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