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Saturday, May 2, 2009
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26 comments:
Hey Doug, regarding your post about high Arlington assessments, check this out:
http://franklymls.com/AR6870161
--Assessed for 2009 for $1,288,000, an increase of nearly $90K from the prior year
--Sold this week for $1,025,000
How did its value shoot up 8% for the assessment year 2008, but drop 20% since then?
And this is the third house in this range that I've posted in the past week or so, that sold for much less than assessed value and/or asking price.
I think the standard response from local governments is that assessments did not increase at the same pace of home prices; homeowners in the past got something of a break but homeowners today are getting hit with the residual effect. I think this is not incorrect in a lot of places, but I am seeing a number of instances where, instead of catching up with the "true" value of a house, the assessment surpasses it as the values continue to fall. I expect this situation is further complicated by the fact that governments are trying to prop up their budgets.
Gruntled, I agree that this is what they would argue, but the first factor can't possibly fully account for such an abrupt change in value - only a small part of it. Arlington's values simply have not be changing at that dramatic a pace; I have been watching them a long time. Frequently if you look at the houses near the ones in question (nearby RPCs), there is not a similar up and down movement in Arlington's own assessments. Errors or your second factor are more likely to be involved.
Ace,
You asked yeseterday where I've been looking. Mostly in Fairfax, particularly 22030. But I've also been keeping an eye on Centreville, Vienna, and Oakton.
My goodness--I take my eyes off PWC for a couple weeks, and listings like these crop up:
"most overpriced"?
10909 RAVENWOOD Dr
MANASSAS, VA 20111
Price: $700,000
PW7045321
4BR/1.5BA/1200sqft/built 1966
last sale: $660,000 12/15/2004
2004 assessment: $283,800
2009 assessment: $318,200
"also most overpriced, but at least you get the car and the furniture"
7408 KALLENBURG Ct
MANASSAS, VA 20111
Price: $920,050
PW7035864
listing description:
"EVERYTHING conveys with a good offer. This includes a 2007 Toyota Camry, furniture, custom electronic and standard blinds, drapes, fixtures, chandeliers & TOP of the LINE appliances. Over 1 acre of land and is certainly an impressive home. End Unit with privacy. Ask agent for list. Theater ready surround sound room in basement. 6 rooms! Make your offers. Very negotiable."
last sale: $865,975 12/30/2005
2009 assessment: $575,700
"yet another, but at least it's on the Occoquan"
10637 AVONDALE Dr
MANASSAS, VA 20111
Price: $885,000
PW6875827
last sale: $585,000 5/31/2002
2009 assessment: $544,100
I admit I'm out of the loop, but it still seems to me that high-end PWC is ridiculous.
Wait--one more, then I need to get back to unpacking:
6040 SHALLOW FORD Rd
MANASSAS, VA 20111
Price: $1,389,000
PW7045932
2009 assessment: $639,000
Its highest assessment, in 2006, was $1,010,700.
That's $370/sqft. What realtor signs off on such a listing?
Thanks, Kevin, from the comments of people posting here about those areas, it certainly looks as though the bottom hasn't hit yet.
Ace: Regarding AR6870161, it is a newer construction house on very busy intersection of Westmoreland St and Williamsburg Blvd and greatly affected by noise from nearby Rt. 66. New construction houses in the neighborhood, but on side streets and away from Rt. 66, sell in the assessed price range. However the assessor did not consider the effect of the traffic and noise on the market value of the house. As you point out, the assessor was wrong and the market was right. The house across the street from it is about to go to settlement way below its assessed value too.
Thanks, anielarke, I agree. It should not be that difficult for Arlington to factor in those location-related flaws, since they don't change, and they greatly affect value.
Sorry to pollute a new thread with more about me, but Tabitha's on this one, so..
Went to http://franklymls.com/FX7045091 with Jeff Royce yesterday. You can check out the fabulous pictures he took. The location and lot and landscaping and neighborhood are fantastic. Someone is going to be very very happy in that home. Heck the tot-playground is 50 feet away behind a couple trees.
But it's not laid out in a way that maximizes our most needed spaces, which is what we would need to fit in a 1,014 sq foot above grade house. One full bath and one tiny bedroom are downstairs as well as that family room, hence the family room is even smaller than it looks in the pictures. This would be great, perfect even, for an adult family member to share the house with you. But not so useful for us, with only one bathroom for the 3 upstairs bedrooms and living area.
So, we liked it, and I'm definitely not ruling out houses with that plan, but not at this price. The maximum I'd want to live there is 5 years, in which case why am I picking it based on elementary schools, why not just live in Kingstowne near the metro if I intended to sell that quickly?
What will it go for? At least 300k with a 9k seller subsidy, but possibly as high as a net of 310k, given that everyone who put in an offer and lost on the house down the street will be placing bids on this too. (The one that just closed is actually on a better location than the birds-eye view would have you think, check the tax record map).
And, man oh man they couldn't' have timed their 1 weekend sale better. All the leaves are out the red azaleas in bloom, the rhododendron looks healthy, It shows off it's idyllic location to it's fullest.
So, all in all, it was good to meet Jeff, good first impression so far, and a useful outing. Way better than not seeing it and picturing it bigger than it really is.
Hey Cara,
That's great that you checked out that place. Speaking from experience (almost a half-dozen moves in ten years!), I can attest to the fact it's all theoretical until you actually get out and look. Nothing can help make up your mind faster than seeing what your dollars will buy and/or rent.
I'm also curious, have you considered buying a smaller place that would suit your needs for the next 5 years (ie. in Kingstowne, near metro), with the intention of keeping it as a rental property when you "move up"? That seems like another potential approach if you could get a great deal on something that would cash flow.
Something I have not seen before. Contingent short sales are now taking backup offers. Apparently, buyers having to wait 3 to 6 months for approval has a high dropout rate. So now change your search filter to include houses with offers on them put in a back up offer, and your first in line if the original buyer backs out.
Look at how much over assessment this house sold for
http://franklymls.com/FX6976045
And the 2009 assessment was even lower than 2008. Lately assessments don't seem to have much to do with price, at least not in Vienna.
Eva: there's always that one buy who is willing to pay way more than others for a property. It looks like these owners found that buyer.
I find these recent Vienna sales to be in a whole 'nother league, yet they sold for same/less:
http://franklymls.com/FX6930614
http://franklymls.com/FX6935227
GiGi,
We've thought about it. But the places near the metro have that metro premium, such that while indeed I have pointed out some cash-flow opportunities out there in Kingstowne, they're not yet ones I would want to live in for 5 years, or rather the ones I'd live in for that long don't cash-flow very well... It's a definite possibility for the townhomes in Burke though, that are much more competively priced...
The thing is, right now we're still saving up our down-payment and emergency funds at such a fast rate that renting one more year seems like the better option if we can't find a long term place now.
Va_investor: WaPo on new landlord investorsA fluff article really, but this doesn't help you any...
But seriously? I would say either, be patient, more will come and demand will slack as cash is depleted and debt-load is reached and demand by new landlords is sated. Or, more productively, I think what you're seeing is extremely local. Start scoping out new areas to hunt for properties meeting your stringent criteria for cash-flow goodness. Because anything that looks that good to you, will look that good to others too, so you need to try to find those pockets that fewer others are mining. And be prepared to wait til the spring market has cooled off to the autumn/winter market, to avoid getting outbid.
va_investor,
copying from the old bucket to here:
"Cara,
The wapo article was interesting, but certainly nothing new to me. The surprising thing was that the couple featured waited so long in life (60's?) to become LL's. I've been a LL since my early 20's. It's always been the basis of our retirement planning.
I'm not going out of my target areas. I have several places in three different geographical areas, all of which I know quite well. I've spent over 25yrs investing in RE and there are plenty of reasons that I buy what I buy.
Imagine the amount of time it would take to learn the specifics of a bunch of different markets. As you know from your own process, it takes a great deal of time to learn the "market" and the neighborhoods, and the values, etc.
As an investor, it's very important that I know an area inside/out so that I can move immediately when the right deal comes along. Having rentals within a 10 or 15 minute drive of my home (or second homes) is just plain practical.
I don't know that the lower tier is going any lower even if we do see more reo's come on the market. Some of the lowest prices have come and gone. "
It was just a suggestion.
I guess I'm a bit confused as to why you need to buy more properties this instant.
The market has started having seasonality again, which is a sign of increasing "health." But this doesnt' mean there won't be a few more choice purchases to make this winter.
Interest rates will indeed go up, giving a limited timeframe for the best purchases, but, here's the thing. Interest rates are mostly national. Do you really think the rest of the US is going to come out of this slump as soon as we are? Not a chance. You have a window for rates under 6, and that's at least 1 more year.
But I don't share your concern that prices will rise anytime soon. There are too many people who can and will make their mortgage payments but will bail from the ball-and-chain hanging around their necks as soon as they've built up enough equity the hard way. This will provide a continual dependable stream of inventory for a long time going forward.
Cara,
I guess my sense of urgency is directly related to my comments concerning low-end reo's. I am in the "mood" now to get some places and I haven't seen as good a market in a very long time. I think that well located "cheap" reo's will go up 10-20% near-term.
If they go down, that's OK too as I plan to hold until they are paid off. I'm 51 and want everything paid off by 65. With the current prices and rents (and interest rates), the places I am buying will be paid off in ten years.
I am already seeing properties purchased in Feb being resold by investors (ex purchase price 115K; sale price 190K). When non-reo's are selling for 170-190 and reo's are 120, it's really a no-risk situation. I recently paid 115K and spent 15K in rehab. One neighbor paid 170 in Nov. and the other 190 in Sept. 115K - 125K are late 90's prices.
va_investor,
You may well be right, this past winter may have been the last of it. Why? because until the low-end well-placed REO inventory is gone, the housing recovery can't even start. Hence the deals your looking for will be the first thing to dry up.
I think the ARM recasts will provide a few more, the continuing income loss even more, but if you're just looking at a few neighborhoods they could all be gone.
However, if you're truly bored, look up the tax records for every street you're interested in and check out how many properties are left with owners from 05-08. (obviously also skim for bank owners). Assuming 1 in 10 will experience some adversity in the next two years, and that will give you a feel for how many more opportunities you'll have. And then plan accordingly.
You could even consider approaching one and offering to be their short-sale buyer and rent it back to them for less. Doing this while not appearing like a fraudster will be tricky... Trying to think outside the box for you here.
It'll be time consuming, but it may ease your feelings of urgency, and help you avoid over paying just to get in that last purchase.
Thanks Cara,
I guess great minds think alike. I've already searched tax records for the neighborhood I want. I expect to see some "recently" bank-owned come on in the next few weeks.
My feeling is that "lower-end" is getting close to flushing out the remaining sub-prime. Unemployment concerns (particularly in our region) are an issue, but not a major one in my opinion. I am not worried about "over-paying". I don't need to catch the bottom. If we don't see a flood of reo's hit the market, there is no way that I see lower priced low-end reo's. Comps are already up since Dec and Nov.
va_investor
"great minds think alike", maybe!
There's any sub-prime left, now? According to Housing Wire (not that I can find it) sub-prime delinquencies, NODs and foreclosures are the one market segment that's down. I would think only the altruistic target market of sub-primes are left (i.e. those who can and will pay a mortgage but needed this vehicle to be allowed to prove that).
I meant the prime stretchers who need both incomes to make the payment, and even then it's 40% of their monthly income, such that they can't build up a reserve and any income shock or major unanticipated expense will put them into default. That's the new source of REOs. (and those that stumble through will be the continuing source of regular inventory)
Cara,
Your "new" source is the same as it always was. People living paycheck to paycheck. There have always been foreclosures in every type of market and economy.
I don't see this source being nearly as monumental as sub-prime.
The difficulty for those waiting for 1mm Arlington homes to go for 600K is that they don't understand the demographics of the current foreclosure situation.
Wealthy people who live in expensive homes tend to be move-up buyers with plenty of equity and other assets. Chances are a job loss won't put them on the street or, at least, not in the form of foreclosure.
Anyway, each area is different.
Cara,
Anyway, I'm talking about lower-tier - not the entire market (although the inventory numbers are very compelling).
va_investor,
True, there's nothing "new" about this source, just the ongoing recession, and the fact that with prices down, these people won't be able to sell their way out of it.
By "prime" I mean that in the banking jargon sense, good credit, good collateral, good capacity, irrespective of price. (Just clarifying).
Cara,
I tend to correlate lower-tier and sub-prime. The massive price declines have been, for the most part, in the lower-tier.
va_investor
They are correlated, and hence the massive losses at the low and (and the massive run-up there too). But there were "prime loans" in all tiers. ALthough, if you're only looking at properties that have now reached $115k, then, yes, it's possible that the sub-prime percentage amongst such houses was well over 50% post 2003.
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