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Saturday, May 30, 2009
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88 comments:
I've been quiet for a while, but still checking in. I've been busy, so I've missed out on most of the fun. Here's an update:
On the sell-side, my grandfather passed a little while ago, so that takes the pressure off to sell now, but it's still moving forward. It's definitely a different story on the other side of the river. MD real estate has so much in common, but works so differently.
On the buy-side, one of the townhouses I've been watching on my street sold at auction (for a lot more than I expected). The other three are still vacant. One had some work done this week, including removing a tub (in pieces, dunno if it was in pieces before they removed it) and installing some appliances. That will probably help attract a sale and likely increase the price more than the cost of the units and labor. Strangely this is a bank-owned property, usually they don't bother with that kind of work.
Other sell-side news: I'm still seeing lots of properties under contract and then the contract falls through. 60% of the houses I've been watching that are under contract are on at least their second contract.
As a reminder, this is all at the ultra-low-end in Eastern PWC.
Bottom line is that what I'm seeing is indicating that low prices aren't enough. There's still credit issues afloat for many of these buyers, and that some of the properties are in such bad shape that even very low prices aren't enticing the cash investors out. Or that there's simply too much inventory in that range for the cash investors to want to absorb.
"But you did so well timing the stock market, that you really don't "need" to also push your luck with your housing which is a whole lot more of a pain in the butt."Unfortunately, I did not do well in the market. In the 2007-2008 timeframe, my overseas, growth, small cap mutual funds did poorly. The picture in my trading account was not pretty either.
I watched the DJIA fall to 12,500 and finally began shifting to interest-style accounts early last year.
After shifting out of equities, I began running simulations, mock trading accounts, and lost even more.
A couple months ago, well after the DJIA bottom, I eased back into equities. I had a couple lucky breaks so I am up in real money. I've even taken profit.
I've been tracking the immunozone, where I live. The information and discussion here is useful. Even though I do not agree with the idea that Arlington/Alexandria/DC are about to plunge, it helps to know what others are thinking.
My sense is that the worst is over. The immunozone has bottomed out. I was not planning on selling unless I had clear signs that my home would fall to half the 2006 peak.
If it becomes clear that valuations will hold, then rise, I can comfortably put money in upgrading my place.
There are many personal decisions that are connected to the state of the housing market, not just buy/rent.
I am seeing very low inventory in the bottom tier, perhaps PWC is different? What few reo's AND shorts that come on are quickly bid-up and gone in less than 3 days (often, 1 day!).
At this point, unless this supposed "deluge" of reo's comes about, we have clearly bounced off the bottom for the low-end.
I am hoping to get 2 or 3 more in my target area, but prices are up 10-30%.
Still nothing for sale in my own neighborhood. It will be interesting to see what happens when one comes up.
p.s. was told yesterday by an reo lister that B of A is going to go strictly with "shorts" for the next 6 months.
Contrarian,
Yes, commercial was overbuilt. Are you just now realizing this?
Since the world is ending, why even care about office space?
Fifty empty buildings...BS
What vacant space there is will be sucked up by stimulus spending along with energy, health care, and education programs from Obama's new budget.
Office SpaceOffice SpaceOffice SpaceJobs
Xpovos,
I think your 60% figure is just about right. Just this morning, I saw a place that had gone under contract in less than a week come back--after being U/C 3 months. Not a short sale, either--REO. And it's not just ultra-low-end. Moreso mid-range, like $350K-$500K around here.
It will be interesting to see if the jump in mortgage rates tanks even more contracts...
I would be stunned if the fall-out rate is anywhere near 60% - I don't care what price range. Perhaps CRT has the numbers.
Qualification: that is my observation from my little corner of PWC. So it is very narrow. But very blatant, too.
So when I see that there are more contracts than new listings on the monthly MRIS report, I take it with a grain of salt. The proportion of contingency contracts has grown steadily since 2006, as well. I used to do a percentage breakdown, but haven't for a while.
"More than 50 office buildings stand empty or virtually empty in Northern Virginia, with 46 lying beyond the Beltway. "Yes.
That was the case in the early 1990's too. Build-outs stopped. The same, all over again.
That suggests that we've passed the bottom. (No guarentee) The cycle of concept, planning, funding, construction, sale/lease, and build-out is so long that people get caught holding the bag.
No one will build with this overhang until the back inventory is worked off and lease prices start climbing.
Then the coiled spring will cut loose.
The ones I saw falling out were in the $650-$850k range, and they were not distressed properties.
@J@,
I was here in the 90's too. It seems many here were not and have not studied boom/bust cycles.
The inventory (res and comm) will be absorbed and this will be followed by a shortage and catch-up and the whole thing will repeat again....
NoVa,
60% of that price range is falling out? No way.
The inventory numbers continue to amaze me. Click on the link for MRIS - nova inventory and compare May '05, May '06, May '07, May '08 and May '09.
Is there really that much "shadow" inventory out there? Or, are we past the bottom?
My evidence is purely anecdotal, so I have no problem with it being ignored. Likewise, my anecdotal evidence on homes sitting empty not on the MLS or any other listing I can find, yet still being shown, trashed out, auctioned, etc. My data is all from a very small section, too, so well worth ignoring.
Unless it's a trend that shows up elsewhere, and I'm just seeing the bottom end of it.
And to reiterate, I'm looking in eastern PW at the ultra low end. Sub-100K up to about 180K, with occasional glances at the low 200s for more comparison. Listed inventory in that range is definitely 'down', and a large percentage of that decrease is houses under contract. My observation over the past few months has been most of them coming back on the market for another week and another extended period of under contract.
Take it as you will: misunderstanding, incorrect, beginning of a trend, or partial weakness despite strong demand. Could be any of those.
@J@ and Va_investor
bottom of what, exactly? Sales, builds, RMBS, CMBS, jobs, the economy? These are all timed differently. Check out calculated risk for the normal sequence of bottoming processes.Commercial real estate is almost always trailing the business cycle, and thus has these overbuilt times with leftovers from hopeful boom building that was behind the ball, and then takes a while after the bottom of everything else before it's absorbed and takes off again.
I don't know about this whole coiled spring part of the process... But then again, I don't know exactly where either of you live, and even if I did I wouldn't be familiar with it enough to say how quickly a rebound could happen there. Phoenix and Las Vegas are definitely coiled springs, if you haven't taken a look at the NYtimes graphic on the case schiller index you have to check it out!
Case Schiller YoY price changes by city
Cara,
My reference to "bottom" and "inventory" quite obviously referenced residential.
I happen to think inventory is the most critical indicator of Market trends.
Feel free to disagree.
va_investor,
(well that was hardly the only thing under discussion)
If by bottom in inventory then yes, I think that's coming rapidly (though it is local). I do not agree that this will create the bottom in price (at least nationally) but that opinion is taken from Calculated Risk.
If selection is what's most important to you, then now is the time to buy.
Cara,
As far as "coiled spring", those were not my words. I fully expect a period of flat prices. That said, the deeply discounted pricing of Q4 '08 and Q1 '09 seems to "springing" back up.
va_investor, yes, those were @J@'s words.
You agree with the long slow flat period like in the 90's will come this time around, too? You haven't talked much lately so this had escaped my attention.
Cara,
Who cares what happens nationally? I sure don't. If you think that pricing and inventory are unrelated that's your prerogative.
You don't care what happens to the rest of the nation's economy???
There's a difference between unrelated and non-simultaneous.
Cara,
Please stop with the parsing. You said "nationally" in the context of housing prices and that was what I responded to.
I don't care about housing prices in Las Vegas or AZ or FL...., but I don't think they are going much lower, either.
I didn't say I saw 60% falling out. But, I have been following that price range for a while, and until this last month or so, I hadn't seen any fall out of contract. Now I've seen at least three that were bought during this spring's buying frenzy.
nova,
Probably apraisal issues.
contrarian -
Are you reading the 'regular' business pages. Bank after bank is raising capital on the OPEN market. They are selling stock to private investors. They are re-capitalizing without any government assistance.
There are not 46 empty office buildings in Northern Virginia.
Vacancy rates are 12.9% at the end of Q109, not even close to 18% during the 1990-91 recession. And the pipeline is nearly empty.
Robert,
There is alot of distortion here. I don't understand why Housing forums tend to draw so many that want to view every glass as half-empty; even if they have to "make-up" the data. To what end?
I happened to work for an S&L when it was "physically" (think guards escorting people out) taken over. The early '90's were painful. The early '80's were painful. The 70's....
The sun always seem to rise each day...this too shall pass; but, maybe not for some here. There will be another dire forecast...perhaps a plague or a nuclear war or global warming or....
Whatever, Robert. I've seen the see-through buildings myself. They are not hard to miss along the Dulles and 28 corridors.
NoVawatcher,
Did anyone claim that there hasn't been over-building? Do you claim that this has never happened in NoVa before?
Contrarian,
How do today's vacancy rates compare historically? And to prevent any Cara-ism's, I refer to NoVa.
Also, you still haven't explained why any of this would matter given your dire forecasts for our world.
Contrarian
Land value is not an intrinsic thing, it's a function of income of the land.
remember the japanese land bubble where 1 sq meter of tokyo land would buy a county in iowa?
the deal is that when residential medians exceed 3X median income. Now some areas may command a premium, like georgetown or the river, but, when the median exceeds 3X we know it's a bubble
Pat,
Where does the 3X come from? The rule of thumb was 2.5-3X when rates were 12%. What is the reason that you don't use the 28/36 conservative ratio's of years ago?
Do monthly payments really not count? I know the current argument is that rates can only go higher and that will cause prices to drop. Did prices drop when rates went to 18% in the early '80's?
Cara & Konstantin: About appraisals and N. Arlington (that was for Tom)orange line condos:
You are right that the extremely low priced short sales in S. Arlington had no trouble appraising early on because there were better comps in November & December 2008 than in April 2009. I had no problem in buying and then in flipping them because of the conventional or cash buyers I had. I had one FHA 5% down loan come in on a house last week and I might take it because it requires only one appraisal and the buyers are both Hill staffers and using the Senate credit union. That would be my first experience with an appraisal under the new rules.
I have other orange line condos in older buildings which I have rented very successfully and wanted to try some of the newer buildings. They aren't worth flipping because I can make more money with houses. They are fine now as rentals. Many of the new construction condos were trying to discourage flipping by limiting rentals. If you can go into a condo sales office on Tuesday Wednesday or Thursday when there is more likely to be a host or hostess rather than a sales agent, you can ask them to let you read just about anything and they will give it to you. If you look at the condo docs you will see the restrictions on rentals are still there, but they are widely ignored. If you really want to buy a condo as an investor, you can do so.
I follow real estate and put money into it when I feel the time is right. I guess I am making a call on the bottom by saying I have stopped buying and will wait for the next cycle.
anie,
I agree that the bottom has come and gone. Just glad that I got what I got.
Anielarke said: "I follow real estate and put money into it when I feel the time is right. I guess I am making a call on the bottom by saying I have stopped buying and will wait for the next cycle."
Bravo. I've been doing the same thing -- buying real estate in N. Arlington and renting it -- since 1987. I've always made money. I'm now actively looking for an investment property within walking distance of the Orange line.
contrarian
CR draws in readers like you with sensational "news". Perhaps there are 46 office condos that are empty and he's calling those buildings. He cites the two foreclosures in the article as well. I had read about those, but can't find any other commercial foreclosures in the entire area. TWO FORECLOSURES IS NEWS?
Please understand where CR is coming from. They distort the facts to show the negative, because that's what their reader base likes to read. Surely you can see that?
Robert, can't you understand though? All the real estate in the country will become valueless. The USD will become valueless. We'll all be forced to immigrate illegally into Mexico to work in their booming construction and farm industries. They legal Mexican citizens will tell us to go home, they will want us to die when we get sick because they don't want to pay for us at the hospital, and they want our children to be uneducated because they don't want to pay for white kids to go to school.
That's the way it's going to be, it's a fact. The real estate, the dollar, the country will all be valueless and impotent.
Or at least that's the kind of ideas I think some people believe. Personally, I think the recession will be over by year end and this whole future ARM recast threat will be nothing more than a paper tiger.
Yeah, sensational news like Baltic-dry goods index and inverted yield curves.
And those empty office buildings are just a figment of my imagination.
va_investor
for analysis use the 28/33 DTI you play with that
but 30-36% of household income is the limit, But i think it should be lower for 2 income families higher for single income families.
now 3X is just a rule of thumb
now how is the economy changing, Financials are shrinking hard. Consumers are now saving.
Apparently someone hasn't heard that prices have come down. In the description, it's listed "occupied by one single male." I guess that's supposed to be a good thing but I don't understand why. It actually seems kind of strange to me. I mean, why would one single male want a 4,000 square food house???
http://franklymls.com/21023643
I found this little article well worth a read. It doesn't have any really groundbreaking new info or anything, but it was well written and to the point.
http://www.chron.com/disp/story.mpl/business/steffy/6448656.html
http://tinyurl.com/ljrmtu
jeff, "one single male" has been trying to sell that house since 2006. And he was asking $719,000 until February 17, 2009.
When I saw that price drop, I said (jokingly), The bottom is here!
It's assessed for $393K. His neighbors sold for $350K and $385K this April.
How can he not understand that no bank would LET someone pay that much?
Washington Post "But happy she is not. Still burdened with $150,000 in law school debt, she is working for a firm that has frozen its salaries. "All that, and this is the payoff," she said. "I get to work and work and work for no raise and no bonus."
She and her husband, who works for the government, would like to sell their home, move somewhere where the pace of life is slower and start a family. But that will have to wait; the housing bust drained $150,000 from their home's value and they cannot afford to sell. "The economy has suddenly made it so we are stuck," she said. "My spin$150K + $150K = $300K
That seems like a lot of money.
Not to slam lawyers or any other profession but degrees seem to have lost value.
Wow. I see Lance and a sock puppet or two have returned...
How could I have stayed away so long?
Leroy,
yeah, that was well-written and succinct. thanks.
gruntled? You've missed the last two weeks, where as kob? said, we've has a bubble in comments? Nah, Robert is not Lance, Robert is now using facts and articles and basing things in numbers occasionally (in addition to randomly making snipes at targets he knows we'll all defend). Robert obviously has the capacity and will to learn and change and think. Lance he is not.
anielarke, thanks for the update. Yeah, it sounds like you've already bought a great stable of horses for the next races, being a landlord on the orange line in desireable condos should make you a mint over the next decade. It doesn't even matter if the bottom sticks around for a while or if we're still 5-10% off of it.
A few threads ago you said something along the lines of "trust your instincts". Which made me laugh, because I don't think most people have as good of instincts as you do.... So, for the rest of us, we need to try to check what our instincts are saying against all the data and information we can get to be able to judge whether they're "instincts" or "magical thinking".
"Wow. I see Lance and a sock puppet or two have returned...
How could I have stayed away so long?"
I don't think any of the latest round of housing pumpers are lance, but VA_Investor used to play Lance's sidekick back on the bubblemeter blog.
Leroy,
If that is your "take away" from all of my posts on bubblemeter, I suggest you re-visit them.
Everything I have said from day one has been, for the most part, spot on. Failure to criticize another's comments is not the same as agreeing with them. Shall I conclude that you are Contrarian's "side-kick"?
"Robert said...
Please understand where CR is coming from. They distort the facts to show the negative, because that's what their reader base likes to read. Surely you can see that?"
I Think you are a bit off base here Robert. As much as I like to harang Contrarian for his stories from the likes of Wavers, Patrick and Mr. Mortgage, I certainly wouldnt put Calculated Risk into that category.
As a matter of fact, CR is regularly posting a number of articles that suggest a bottom is coming into view. He regularly infuriates his readership by pointing out that some things are bottoming.
This wasnt always the case. CR was extremely pessimistic last year & the year before -- less so now. In fact, he is one of the few bloggers who does not seem to have an agenda or axe to grind.
Serious question for PWC-watchers:
Has anyone else noted exceptional delusions in the >$500K market? Do you think this is because of HELOCs and 2nd mortgages combined with too much income to get a short sale approved, or just pure stubbornness? I've posted some examples previously, but here are some again:
7421 CLOUDS HILL Pl
MANASSAS, VA 20111
Price: $750,000
2009 assessed: $510,400
(unfinished basement, non-updated kitchen)
10697 MOORE Dr
MANASSAS, VA 20111
Price: $685,000
2009 assessed: $475,700
(similar house nextdoor taken over by bank for $350,000 in January, assessed for $379,700)
7778 BRACKEN Ct
MANASSAS, VA 20111
Price: $675,000
2009 assessed: $443,100
10909 RAVENWOOD Dr
MANASSAS, VA 20111
Price: $700,000
2009 assessed: $318,200
(purchased for $660,000/2004 when assessed for $283,800, now a short sale at $700K?)
10637 AVONDALE Dr
MANASSAS, VA 20111
Price: $885,000
2009 assessed: $544,100
10200 SOUZA Ln
MANASSAS, VA 20111
Price: $1,144,000
2009 assessed: $665,400
6040 SHALLOW FORD Rd
MANASSAS, VA 20111
Price: $1,389,000
2009 assessed: $639,000
12585 BRISTOW Rd
NOKESVILLE, VA 20181
Price: $795,000
2009 assessed: $553,400
10301 WINDY RIDGE Ln
NOKESVILLE, VA 20181
Price: $1,295,000
2009 assessed: $693,600
Could these prices really just be delusions of grandeur? Or are the listing agents being told "we need this price"? Why are agents taking these listings at all?
Tabitha,
I am not an agent, so this is only a guess.
1. The seller can't sell for less due to heloc's etc. Or, the seller is in no need of selling. Or, this property is headed to foreclosure.
2. Why would an agent bother? Attempt to "buy" the listing with the plan to get the seller to reduce price. Throw up a sign in the hope of attracting other business that will "pay-off". Or, sit back and await the foreclosure/short while having an inside track on that listing.
??????? Doubt any time, money or effort is going into the marketing of these places.
"If that is your "take away" from all of my posts on bubblemeter, I suggest you re-visit them.
Everything I have said from day one has been, for the most part, spot on. Failure to criticize another's comments is not the same as agreeing with them. Shall I conclude that you are Contrarian's "side-kick"?"
You did a heck of a lot more than fail to argue with him.
And for you of all people to say: "everything I have said from day one has been, for the most part, spot on."
That is a level of denial that isn't often found in rational people, especially considering how many people here are familiar with your "predictions" going back several years. I mean it would be one thing if nobody knew your track record and you made a claim like that, but why lie when you don't even have a chance of fooling anyone?
"What we are witnessing is a normal RE cycle and, according to sources referenced above, the worst may be over. I see no evidence suggesting a bursting of any bubble."- VA_Investor, 7 Jan 2007
I mean that was in Jan 2007 when the bubble was already beginning to burst and you STILL couldn't figure it out, that or were lying.
Neither speaks well of you.
and on the subject of you and lance...
Here is just one example:
http://bubblemeter.blogspot.com/2006/10/federal-reserve-is-trapped.html
or here:
http://bubblemeter.blogspot.com/2006/10/david-lereahs-new-book.html
or here:
http://bubblemeter.blogspot.com/2006/07/just-take-out-that-heloc.html
or here:
http://bubblemeter.blogspot.com/2006/09/ryland-homes-40-off-sale.html
etc...
Leroy,
Cherry-pick all you want. Have you seen alot of "bursting" in N.Arlington? I have only seen a normal correction in many areas locally. I predicted 25-40%. I also pointed out that the crappy areas, that had been filled with immigrants, where prices tripled, would be the ones to "crash". That and new construction in the hinterlands.
My house is probably down 10% - not the 40-60%, you were calling for.
p.s. Lance was pretty much on target about DC, don't you think? Or can't you even admit that?
"What we are witnessing is a normal RE cycle and, according to sources referenced above, the worst may be over. I see no evidence suggesting a bursting of any bubble."- VA_Investor, 7 Jan 2007
As startlingly ignorant as that is, it's neither surprising nor unheard of at the time. A whole lot of heads in the sand, angered by the "doomers" that brought about falling home prices;)
Kev,
Do you think it might be helpful to have a little context or would that mess up whatever your purpose is?
"according to the sources referenced above..."
Semantics is all you have. What part of my stating my opinion that we were seeing a "normal" correction (along the likes of the 25-40% drop I SAW FIRSTHAND in the early '90's) is so objectionable to you?
What was YOUR handle on bubblemeter? Were you among the doom and gloomers giddily wishing the end of the world and 60% price drops in N.Arlington?
I'm not bitter about anything. Quite obviously, others are....
"Cherry-pick all you want."
Cherry pick? Those were totally typical examples. All I had to do was go back to the archives and pull up a few. Really now, you should know better than to try to misrepresent yourself when people here know better.
"Have you seen alot of "bursting" in N.Arlington? "
Who said anything about N. Arlington? Do you have any idea what a tiny piece of the overall city that is? Clinging to N. Arlington as the champion of of the DC real estate market is just as valid as claiming Manassas represents the region's market.
"I have only seen a normal correction in many areas locally. I predicted 25-40%."
Uh huh...
You do realize how nutty you come across right?
Yes, there was a downturn in the 90s.
This most recent bubble was far larger and far more damaging. Trying to pretend this is just a repeat of the 90s to avoid admitting you were wrong when you failed to recognize the bubble doesn't make people conclude you weren't wrong.
It just makes it obvious you are the kind of person who can't admit you were wrong, no matter how obvious it already is.
VA_Investor: "Semantics is all you have. What part of my stating my opinion that we were seeing a "normal" correction (along the likes of the 25-40% drop I SAW FIRSTHAND in the early '90's) is so objectionable to you?"
There was absolutely nothing normal about it. Normal means there is a pattern, that this has happened before. You can use semantics to make the case that it has, with a value drop of like 5%, but certainly NOT price drops of freaking HALF. Like I said, I heard many people talking like you a couple years ago. "Nah, it's nothing, this happens all the time."
"What was YOUR handle on bubblemeter? Were you among the doom and gloomers giddily wishing the end of the world and 60% price drops in N.Arlington?"
I don't think I've ever posted on bubblemeter. I didn't *wish* for anything to happen, and I find that generalization of doomer = schadenfreude not only insulting but also very disingenuous. People want houses to be affordable. This whole ponzi scheme has to end. People are ignorantly incurring lifetime debts based on a system they think is fair and normal, instead of bubbled and manipulated. You're arguing out of self interest, which is understandable. But I did opt to get out of this market (sell my crib) when you were calling everyone chicken little for pointing out the most obvious asset bubble ever seen.
I think we are mostly clear of the Subprime bubble wreckage. Most of those have failed, foreclosed and are now working out the end of the pipeline.
Now the Alt-A and Option ARM bubble is still wrecking and the Jumbo Prime is just failing now.
12% od all mortgages are now in foreclosure,
when it hits 25%it's done, or when the Prime foreclosure passes it's peak it's over.
Last comment Leroy,
Call it whatever you want (bubble, crash, correction....). The fact is that my prediction of 25-40% was pretty much on target.
It is also a fact that I encouraged all my friends to stay out of the market post 2004 and I, myself, put no new $$ in RE after 2002. I started buying again in Nov '08.
I'll let my actions speak for me. You would have to spend days reading old posts to have any real picture of the context of my comments.
Some people choose to interpret what is said in a light much different than what a "reasonable" reading would reveal.
I'll leave it at that.
And no, I don't solely focus on Arlington - I happen to live in Reston. My recent tax assess dropped 5%.
There are REASONS that the areas that got killed suffered that fate.
Leroy,
Last comment on the issue of my bubblemeter posting of 1/07:
Please go to Housingtracker.net and look at the charts for 1/07 for inventory and median price for the DC Region. There was no evidence that we were falling off a cliff or crashing, bursting or whatever....
Unlike many others, I never claimed a crystal ball.
VA_Investor, when did you say we were going down 25-40%? I know others have pulled quotes of you generally dismissing the bubble fallout, but I'm interested if these more accurate predictions you may or may not have made can be found.
Here's another big, higher-end Arl. house that sold for much less than valuation ($1.45 mill.) and asking price (courtesy franklymls email alerts):
http://franklymls.com/AR6638770
Closed Price: $1,250,000
Seller Subsidy: $0
Net Price: $1,250,000
Close Date: 5/28/2009
Original Price: $1,479,900
List price : $1,399,950
Address :3307 JOHN MARSHALL DR N ARLINGTON, VA 22207
DOM/DOMP :473
Subdivision :MINOR HILL
Kevin,
I'll have to go back and search bubblemeter and craig's list (formerwinner). I stated that from the get-go. I also called the peak (may '05) in July when I saw inventory start to climb. By the fall of '05, I was advising friends to "walk" on deposits.
I based (guessed) 25-40% on my personal experience of owning 10 or 12 properties in the early '90's.
My personal residence in Wolf Trap Woods fell 25%, peak to trough, and I had a condo at The Rotonda that dropped 40%. I said, even back in 2005 that condo's would be hit the hardest.
I'm not good at the computer - don't know how to cut and paste or, really, do much at all. This is used against me because people know of my limitations and can "cherry-pick" a quote, here and there.
I have no need to distort or misrepresent. Others seem to have agenda's. Yes, I've always claimed that you can find a great deal in any market. This is the truth. I've pissed alot of people off by suggesting that housing prices in 2005 were no worse than what I faced in the early '80's (with interest rates climbing to 18%). I've also angered some by stating that this generation seems to have "entitlement" issues when it comes to housing...so there are quite a few that want to portray me in a false light. Whatever....
Va_Investor:
"I'll have to go back and search bubblemeter and craig's list (formerwinner). I stated that from the get-go. I also called the peak (may '05) in July when I saw inventory start to climb. By the fall of '05, I was advising friends to "walk" on deposits."
I was too, as of ~2003. Which is why I don't have sympathy or agreement with people that complain now that "nobody could have known this was going to happen." Of course we could. You knew it, I knew it, and we did the best we could to warn our friends at the expense of "trying to dash their dreams". No basking in other people's misery, but they can't say they weren't warned.
"I based (guessed) 25-40% on my personal experience of owning 10 or 12 properties in the early '90's. My personal residence in Wolf Trap Woods fell 25%, peak to trough, and I had a condo at The Rotonda that dropped 40%. I said, even back in 2005 that condo's would be hit the hardest."
I'm surprised a condo in the Rotunda dropped that much already. I believe all areas around here are due for a 40%-70% drop peak-to-bottom, inflation-adjusted. But still that's surprising. Is it true that the condo fees there are atrocious? That's what turned me off from buying one of them seven years ago.
"I'm not good at the computer - don't know how to cut and paste or, really, do much at all. This is used against me because people know of my limitations and can "cherry-pick" a quote, here and there."
Ctrl+C copies, Ctrl+V pastes, Ctrl+X cuts. One thing I've learned about dicking around on the internets is that every now and then when someone makes a statement that you think can shut them down later on, you must bookmark it. Someone pulled out that gem on you and I have to say it sounded exactly what every real estate agent was telling me two years ago, trying to scare me back into the market. "This is normal," is what they said. I LOL'ed.
"I have no need to distort or misrepresent. Others seem to have agenda's. Yes, I've always claimed that you can find a great deal in any market. This is the truth."
I find it really hard to believe that you could say that about, say 2005 or 2006. I mean there just weren't ANY winners there.
"I've pissed alot of people off by suggesting that housing prices in 2005 were no worse than what I faced in the early '80's (with interest rates climbing to 18%)."
Well that alone is definitely pretty far from the truth. While back then people were being fleeced in interest rates, home prices were insanely low. Future interest rate reductions led to rather pleasant home price increases and chances for refinance. We're in the exact opposite situation right now. Artificially low interest rates with almost no change of going lower nearly assure that future home values will plummet by astronomical proportions. If rates reach say 8% from their current 5%, that is practically a 25% cut on the value of what you owe so long as you operate in a bank-leveraged market. It's really really scary to me.
continuing:
"I've also angered some by stating that this generation seems to have "entitlement" issues when it comes to housing...so there are quite a few that want to portray me in a false light. Whatever...."
Well I won't argue that the entitlement issue is something that plagues this country overall, but here's how I see it: I know many boomers that are worried about their house's value and their 401k values. Rightly so, but those have been experiencing a decade or so of irrational growth (a bubble) that will have a price discovery eventually.
The attitude I perceive is that nothing else matters so long as they get what they think they deserve. Now granted this selfishness might never have been an issue if they didn't plan on buying the beach house and yacht five years ago, but that doesn't excuse the greed. Meanwhile I see every attempt by the govt to revive stocks with stimulus, prop up home values with buyers bribes and artificially low rates, and I can't help but think they want to keep the bubble going so that they can cash in.
I hate to generalize, but we're already doomed with unfathomable govt debt, and now we have to more or less bail out their 401k as well as pay bubble prices for their houses. I'm not a conspiracy theorist, but I hardly think that my generation is alone in wanting entitlements. In fact, at least from my own perspective, I just want an affordable house. Not a steal, not a profit, just affordable.
For all the hand-wringing over the dollar’s slide, the expanding U.S. deficit and the nation’s AAA credit rating, the bond market shows international demand for American financial assets is as high as ever.t
Va_Investor said...
Is there really that much "shadow" inventory out there? Or, are we past the bottom?
“Are Banks Keeping Foreclosed Homes Off the Market?
Posted by: Chris Palmeri on May 21
Buyers looking to purchase foreclosures should still have plenty of opportunities. Only 30% of bank-owned properties are listed on the multiple listing services, says Rick Sharga, senior vice president at foreclosure listing firm RealtyTrac. He figures banks still own as many as 500,000 properties that they want to sell but haven’t put on the market.”
http://tinyurl.com/r5yg25
Va_Investor said...
Leroy,
If that is your "take away" from all of my posts on bubblemeter, I suggest you re-visit them.
Everything I have said from day one has been, for the most part, spot on.
Bwaha..Normal..Bwhaha..Market..Bwhaha
Federal Reserve puzzled by yield curve steepening
Tom: Not sure what you want to spend for an investment property along the orange line, but there are some okay prices out there among resales. Despite the problems with the garages and so/so construction, Station Square is doing okay because of its location. However, a real estate agent who lives in the building (I think he runs a FSBO company)is trying to buy up units in the building and is cutting deals with owners who want to sell. 1021 has had a few issues with mold because of the roof and parapet leaks, so there are some motivated sellers in the building. I did not buy in either building, despite the superior location, because I see special assessments in the future.
Cara: I have a similar scientific background and can match my data grubbing skills with anyone on the blog, but I have done my best work on instincts. When you see the right townhouse in Burke, you will instinctively know when to buy. 26 years ago my husband bought a townhouse in Burke, and I lived there for 4 months before I insisted on moving back to Arlington (from whence I came). My big regret is that we did not keep it because it is about a quarter of a mile from the VRE station. He paid about $50,000 for it, and I am guessing it would now bring in the $300,000 range. One time I did not follow my instincts to hang onto the townhouse even though I hated the townhouse and Burke....
"It is also a fact that I encouraged all my friends to stay out of the market post 2004 and I, myself, put no new $$ in RE after 2002."
You were doing anything but advising people to stay out of the market. You were posting day after day about "bitter renters" and how the bubble was no big deal and how you had to deal with much worse blah blah blah.
"I'll let my actions speak for me. You would have to spend days reading old posts to have any real picture of the context of my comments."
Your actions have spoken for you. Maybe your inability to cut and paste the links I provided you is part of the problem. Reading your own words might refresh your memory a bit. Besides, I did spend days reading your old posts, back in 2006 when you were making them, I used to read bubblemeter regularly.
"Some people choose to interpret what is said in a light much different than what a "reasonable" reading would reveal."
You made a ton of comments. There overall message is quite clear and there is no issue here of people somehow misinterpreting you.
"Please go to Housingtracker.net and look at the charts for 1/07 for inventory and median price for the DC Region. There was no evidence that we were falling off a cliff or crashing, bursting or whatever....
Unlike many others, I never claimed a crystal ball."
This has got to be the most telling comment of all from you.
Even in early 2007 you couldn't recognize what was taking place. By that point the bubble was already becoming front page news.
Half the time you want to claim you accurately predicted what was going to happen... then you turn around and pull the same "how could anyone have known?" business.
It didn't take a crystal ball, just a brain. We aren't talking about predicting exactly where/when/how the burst would play out, but it was beyond obvious that the bubble was bursting by that point.
And just to go ahead and finish this discussion up:
"Oh, I know the new mantra is "subprime meltdown". I guess everyone has either forgotten or completely discounted the regional stats of last week. What were are regional numbers on defaults? Less than 1/2 the national average?
Perhaps two people are making kool-ade - David L. and David J. Each have their blind loyal followers; but reasonable, rational observer's see that the middle ground may be where we are headed (on average - we already know, those of us who can read and comprehend, that is, that even within regions there will be differences). Lance's neighborhood appears to be fairing quite well as compared to, say, Loudoun. Prince Georges is up significantly.
Is it possible that, as a region, we drop 10 or 20%? Sure. Is it likely we drop 40 or 50%? Now that would be unpredented and, absent some severe blow to the economy that brings on an all-out depression, highly improbable. House prices didn't drop over 30% even during the Great Depression.
The more likely scenario is one we have seen before. Prices, generally, drifting lower, follwed by some years of stagnation. I sure wouldn't bet on a crash. But then, I don't have David J.'s (or David L's, for that matter) crystal ball or economic acumen." - VA_Investor, 26 March 2007.
http://tinyurl.com/ljv9p3
"This "owning vs. renting" debate is getting old. Most of the people who rent claim that they want to own eventually, but the timing is wrong. They await the "big crash", as they have for years now. Good luck with that.
Others are just too nervous to pull the trigger. Lance is right. Anyone can come up with an excuse. If you wait long enough, you will never own your home free and clear by retirement. A depressing thought." - VA_Investor, 4 July 2006
http://tinyurl.com/n873gj
"I agree that you need to plan to stay put for at least 5 years. I do not agree that some vague thought that you might prove out of the area prior to that is a sufficient reason not to buy.
Any one of us "could" move, lose a job, get hit by a bus, etc. All just excuses masking FEAR." - VA_Investor 4 July 2006
http://tinyurl.com/n873gj
"The bubbleheads have been calling the peak for 4 years now. I am not sure that the economic conditions that exist today portend a repeat of 1990.
In the end, it is just an attempt at timing. As Lance correctly pointed out; if your house drops 100K, so will your replacement house. So, unless you have a crystal ball - what are you actually losing?" - VA_Investor 4 July 2006
http://tinyurl.com/n873gj
"A 50% reduction would make a depression. Better have alot of cash because you may not have a job or stock portfolio." -VA_Investor 4 May 2006
http://tinyurl.com/m2hzhx
"rents have never = buying costs in this area. This is my 25 yr experience in N.VA."- VA_Investor 4 May 2006
http://tinyurl.com/m2hzhx
"I still haven't heard from any desperate, bitter, mislead, lied to, homedebtors. Only hearing from bitter renters.
No reasonable person (this includes me) has ever denied that real estate is cyclical. We've peaked (spring 05) and are heading down. Big yawn.
Fritz - good "steak" analogy. David does have that socialist big brother thing going on. BTW, going to Morton's tonight to celebrate annivers. - think I'll have the steak."- VA_Investor 20 June 2006
http://tinyurl.com/my27ok
"James said "If you buy a house for $400,000 and it falls to $300,000,then you have still lost $100,000."
And, you could get hit by a bus tommorrow or lose your job or get divorced or or or or or or or....
Better not risk buying a house!" - VA_Investor 20 June 2006
http://tinyurl.com/my27ok
"dc_too,
I said nothing about ARM's. Pretty stupid, IMO, to get an ARM with today's fixed rates being what they are.
I don't WANT to convince anyone to buy. Afterall, I am a landlord. I just don't want to support you renters in your old age through social welfare programs.
Oh, I forgot. You renters are saving copious amounts of money every month for retirement." - VA_Investor 20 June 2006
http://tinyurl.com/my27ok
Anielarke,
Thanks for the vote of confidence on my instincts :) We will be putting in an offer later this week IF the answers to our "can't live there unless it has" questions come back positive. If not, I think it still is clear that we'll be going with the 6 month lease. (if it's this one then we'd be going month-to-month to accomodate closing and painting and flooring before moving in).
You let go one of the ones on off the north branch of Oak Leather??? Yup, could've gotten 300 even now.
Cara, that's very exciting news. I hope it all works out.
Leroy,
A handful (taken out of context) of hundreds of posts.....zzzzzzzz
Whatever suits your agenda.
The links are right there, everyone can see that they are in no way taken out of context.
Really now, you are just being childish at this point.
va_investor, there is what you're claiming to have said versus what you're quoted as saying. You can't offer up a single link to what you're claiming, and ample links have been provided that pretty much refute your point, as well as remove the "context" in question. Give it up.
OK,
I give...
I'm not spending hours looking for posts that I don't even know how to link.
I've been an investor for well over 25yrs and bought and sold at least 50 properties; probably closer to one hundred. I know nothing and defer to all the people who have never owned.
Happy?
p.s. Kev,
Bought our first beach house at 27yrs old. Owned the replacement since 1991. Paid off since 2004.
Bought it within one hour of seeing it. Guess I should have studied Roubini? Or some charts and graphs and ......
It sounds like I really missed the hey day of my current employer's stock if you were buying beach houses in your 20's. By the way, you probably left and cashed out at the right time; they just took our winter holiday party away because "the economy is bad".
Great, you own rentals and have bought and sold some houses...
So?
Your problem is that you don't seem understand that there is a huge difference between having bought and sold a lot of houses and actually understanding what is taking place in the market.
Just look at how the various realtors have done in predicting the market. Many of them have bought and sold countless houses, and while quite familiar with the nuts and bolts of how to buy or sell a house, as you seem to be, they are generally worthless when it comes to understanding the economics of the market as a whole.
It is great that you have been able to have some success by relying on your strengths, but your track-record on predicting the market is awful.
Maybe it is time to re-evaluate what exactly it is you think you know.
Va_Investor said...
OK,
I give...
I'm not spending hours looking for posts that I don't even know how to link.
I've been an investor for well over 25yrs and bought and sold at least 50 properties; probably closer to one hundred. I know nothing and defer to all the people who have never owned.1. O’ great investor, thine wisdom hath sooth mine pocket book, my mortgage payments runninth over.
2. Ye maketh me walk by thine homes, I fear no foreclosure. For thine wisdom comforts me, a bailout ye shall surely bring.
3. Trust not thine eyes! For the great one has proclaimed this a normal market! They maketh no more land! Thine real estate only goes up!
4. Thine prophet Lance hath told us these things! Buy now or forever ye will be priced out!
VA_Invester = owned by his own posts. And why would anyone take the advice of someone who doesn't even know how to do a web search or create a link to a previous post. My 8 year old nephew knows how to create a hyperlink. 3 minutes on Google might help.
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