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Wednesday, June 10, 2009
Northern Virginia Bits Bucket 6/10/2009
Posted by Harriet at 6:00 AM
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68 comments:
"I'm fine with that--promise me zero! Just one thing--relieve me of this 12% charitable contribution to people already better off than me, and let me invest for MY retirement, not Shaquille O'Neal's!"
OK, you get zero.
Just keep paying your fair share to supplement your parent's and aunt's and uncle's retirement. Thank you.
Happy?
I've heard people say what you just did for 20 years.
Well, it's 20 years and I don't know any boomers who have it knocked.
Today's the day and the boomers are busted.
Home equity? The Manassas McMansion? Pffft.
Investments? GM, Cisco, Fidelity Growth? Pffft.
Likely, you will be there too.
Wake up, sweet Scott, it's a beautiful morning in the NOVA Bubble Housing Dream Blog.
-@J@
So, I'm bursting to tell this. I've been frankly staggered at the number of McMansions on my block that have sold rapidly over the past six months, for big bucks at or near asking. "Who," I wondered, "would take such a risk in this market?"
Lo and behold, a neighborhood couple informed me they were probably going to be transferred in six to eight months. I was sympathetic; they'd just overpaid for for a lovely refurb just over a year ago. Oh, not to worry, they said, our company promises to make up the difference if we're transferred and can't sell the house for what we paid.
WOW
This certainly explains at least some of the cavalier attitude on prices / purchases in my neighborhood. If *know* you won't be losing any money -- or if, more typically, you know you won't be losing a boatload of money -- you're far more likely to just pay list.
I wonder if that "make you whole" deal stays in effect if you're laid off?
gruntled,
gah. nice new twist to playing with other people's money. It's just rent to these people. An insanely larger rent than it needs to be, but rent nonetheless. Sigh.
Gruntled-
I wonder how many companies are doing stuff like that. I would think with most companies trying to tighten their belts stuff like this would not last long. Although I guess if you are in an industry where you move fairly regularly they would need to compensate you for this(I think it is hard to force someone to rent for their entire life...)
@J@,
I am a Boomer and know many other Boomer's. "Busted"? Hardly. None are in any financial trouble.
My bet is that SS becomes means tested before too long.
housebuyer,
the sons and daughters of corporate movers I knew growing up usually bought one house early on which they intended as their home base, and then rented it out during their two year stints at other places while renting out nice big places from other corporate types while away. Sometimes they'd sell that first house and buy someplace else if it was clear they'd be there for the long haul, or they'd accumulated enough money to build their dream home.
But, actually renting (while also being a landlord) was the norm, not the exception. Sure, these folks still were compensated well for their moving/relocation expenses. But the companies didn't necessarily buy the house, that didn't start cropping up until sometime in the nineties as far as I could tell, and didn't become the default until sometime after that.
Va_investor,
You don't know anyone nearing retirement or in retirement who's having to hold off for a few more years or drastically scaling back expectations?
No worries, all the ones I know will make up for the deficit of people that you know.
Cara, here is a house you liked that sold quickly but for much less than asking.
The following listing has been sold:
http://franklymls.com/AR7045924
Closed Price: $1,035,000
Seller Subsidy: $0
Net Price: $1,035,000
Close Date: 6/8/2009
Original Price: $1,125,000
List price : $1,125,000
Address :713 CLEVELAND ST N ARLINGTON, VA 22201
DOM/DOMP :6
Subdivision :LYON PARK
Cara,
I guess we run with different crowds :).
Gruntled, that factor has influenced housing markets for a long time. You may see it less in a market dominated by govt. (although the govt. sometimes provides limited guarantees too), education, non-profits, small businesses, etc. as opposed to profit-making large businesses.
Do that many Companies still move and relocate (and eat all the house expenses) these days?
That was the norm when I was a kid (60's/70's DuPont brat here) but I hardley think that many Companies can handle that kinda cost these days...
Maybe I'm wrong
Cara, I must run in your crowd. While most of the people I know are private about money and I suspect they are not nearly as close to the edge as people who are just starting out, paying off student loans, etc., there is NO QUESTION they are changing retirement plans. Obviously people in the federal govt. in the old defined benefit plan have far more security, but I'm not in the fed. govt.
With a few exceptions, anyone in private plans and in his or her late 40s or early 50s who was not heavily invested in the stock market (or otherwise) had not saved very much, and/or was not following the advice of respected financial advisers, who urged that to keep up with and beat inflation a significant part of one's portfolio must be in the stock market unless one is very near retirement (e.g., 65 and planning to retire before 70). So people in the boomer age range (and it's a big range) are very much negatively affected by the downturn, unless they are the oldest boomers, had moved everything to cash, in a defined benefit plan, or bought successful rental properties many years ago at cheap prices.
As one of my colleagues (who has a very good income) put it, "they're going to have to carry me out of here in Depends."
Ace,
Yeah I do love that house. 8% off list was accepted quickly, and during the spring selling season. Interesting.
Va_investor,
Indeed, I doubt we have any acquaintances in common, that would be highly unlikely. :) These, unfortunately are my mom and my inlaws. You may or may not recall me saying I'd be getting some money from my mom when she sold Dad's boat? Yeah, well, I decided she needed that money more than I did, to cover closing costs on her refinance, more drainage stuff for the house, etc. For us it just means pushing back our purchase time-frame a few months, for her it means not having to tap the principle on her retirement accounts. We've got to plan in the long term, in case she outlives her funds and needs to move in with us, or into someplace we pay for.
Kids. The ultimate retirement fund. Worked in the bad old days.
spunky, I think they still provide the benefit, but they are much more reluctant to transfer people compared to the past. They are also looking more closely at cost of living when deciding where to open new locations. They may also set limits on how much they'll pay. And, as we all know, they may outsource to low cost-of-living countries and eliminate some jobs altogether.
But in the end, if it's for the org.'s benefit that you transfer (rather than your own wish to move exclusively), they will pay what it takes.
Gruntled,
I did wonder how many corporate relocation companies were doing it -- I saw a lot of them lose money in the last few years. I don't think they take the risk for just anyone -- likely the company makes a decision that it's worth it to them.
Is anyone else finding that the only things at good prices left are short sales?
I know this simply makes sense, it's spring, the REOs are simpler so should get snapped up quickly, and few owners are interested in listing at market price to get a quicker sale, and those that do are indeed gone quickly...
But still, it's dissappointing that the only things that are listed at/near prices I'd be willing to pay for that particular property are all shorts. (at the moment)
How difficult was this process, really?
If you have a 3-bedroom townhouse in North Arlington that is close to the metro and priced under $700,000, you will most likely sell your house in less than a week on the market this spring/summer.
Hot market
Cara,
In my experience it's gotten a little easier in the last year, as more and more banks realized that they could save the legal fees and have some maintenance done on the house during the selling process.
That doesn't mean it's as easy as a bank owned house, and when we were looking there were frequently several above asking price bids on both shorts and REO. That could be a neighborhood issue.
Cara-
I am going through the process right now. It does not appear to be difficult it is just painfully slow. I put a contract in 3 weeks ago, one day later the owner signed it, and we have been waiting on the bank since then. Our agent has been talking to the bank on a weekly basis trying to get them to move it along, but so far it hasn't helped.
If you are not worried about speed the process is great, as I have said before the only thing that is frustrating for me is I can't lock in a rate until the bank agrees. Rates have gone from 4.8% to ~5.6%, which effectively cost me ~$20-$30K. In reality what it probably means is we will just use a 5 or 7 year ARM, where the rates are still ~4.5%. We plan both to have moved within seven years and have ~70% of the house paid off so even if rates go its not a huge problem.
Cara,
I heard that the Banks are pushing shorts these days, rather than foreclosing.
I was at a closing yesterday (actually buying a short) and both agents agreed on this.
The consensus was that few reo's will hit the market until August/September - but, we'll see.
Scott
If you're looking, there are several church denominations that allow one to opt out of social security (because the churches provide for each other in retirement). You'll have to join and fill out the proper form (you can google it) most of them would involve substantial changes to your lifestyle, but by no means do all of them. Also, there are a few states that opted out of social security for their state employees when it was created (I know Nevada was one but I'd guess there are at least a few more).
housebuyer,
Keep us posted. (Which I know, you've been doing anyway...)
Va_investor,
Aug/Septmeber would be fine by us!! As I said, our time frame has shifted, such that September is the soonest we'd feel comfortable putting in an offer.
Housebuyer,
I signed the contract in January!
I think they are going much more quickly now. Much depends on the lister and whether the seller has supplied all the necessary paperwork to the bank.
I'm with you Cara !
The Fall/Winter Market is always the best for Buyers
That's when I'll be throwing offers as well, probably at what didn't sell this Spring & is old & stale by Fall..
Here is a snapshot of my short seller.
Couple, mid-30's. First investment property. Paid absolute peak. Tenant paid zero for 8 months (?).
Their price 380K; mine 200K.
p.s. they did not have to sign a promissory note for the deficiency (which is unusual).
"p.s. they did not have to sign a promissory note for the deficiency (which is unusual)."
Uh, I'd call that darn LUCKY !
Obviously this journalist doesn't realize that without the $8k buyer's bribe, there would be no activity in the Washington area.
Spunky,
The IRS will be sending a large bill! No break for investors on the debt forgiveness.
Robert,
That is only a WSJ article...come on! :)
Va_investor, Robert,
Well it's really only a 3 paragraph opinion piece, with stale statistics from which they draw dubious conclusions (government workers are the largest sector, but still only a little over 20% fed/state/local combined? Not obvious to me that 1 in 5 people feeling secure in their jobs is enough to turn things around...) But hey, if the WSJ's not bullish on something, who is? Actually their recent spate of bearish opinion pieces had started getting me to think that it really must be the bottom if even the WSJ is looking grim. But, lo and behold, they're back to the party line, hence no bottom yet.
;)
Robert, considering that the article doesn't even address the issue of housing, I don't see why the author should mention the $8000 buyers bribe. You couldn't be more single-toned and off-topic if you tried. I think that your early retirement is rotting your brain.
I liked Robert's title. I thought it was funny. A good play on Patrick.net's retitling of all their articles.
Then again, I've been told I have a low-bar for humor.
"just because some of the movies I like are terrible, doesn't mean every movie I like is terrible" -me, often.
And they're up!!! (May MRIS)
Go looky!
Kevin,
Yes, employment rates have nothing to do with the housing market. Robert couldn't be more off-topic!
Cara,
Am I looking at the wrong numbers or are available down?
"I am a Boomer and know many other Boomer's. "Busted"? Hardly. None are in any financial trouble."
Come on. I'm on your side generally but you are not paying attention.
Fannie, Freddie, Sallie, Bearing Point, AOL are all local companies.
401(k) to 201(k) is not a math problem.
I figure, you need a paid for house and enough savings to spin off $30K+/year forever or you're in trouble.
That's a mininum of a half mill in cash, a mill would be better.
How many Boom's have that? The better off ones have a couple hundred grand and think that'll last forever.
@J@,
I'd say a mil is minimum. You have to take into account that the Boomers are going to benefit from the largest wealth transfer in history.
I guess it all depends on your perspective. I'm sure there must be net worth data somewhere.
And in the blow by blow Burke report. (I know, this matters to so many people other than me...)
Sales were actually down from April(56) to May(47), despite lower days on the market and almost exactly constant active inventory (180ish). This is only 56% of 2008's inventory, so as CRT said it's not surprising that units sold is down YoY. The average and median sold price drops were back to the -15% YoY trend, which they'd departed from in April.
But the good news as far as I'm concerned is mainly that an equal number of new properties were listed as went under contract/contingency. So, inventory/selection hasn't fallen yet. I don't want to read too much into that small faltering in number of units sold to conclude that the spring buying is slowing or the rate increases are having an effect yet. Need another month to tell that.
VA-
My agent has talked to the bank and everything is in place and the seller has lawyers to negotiate with the bank. I think one thing that may be slowing it down is they will not sell the property unless the bank agrees to write off their debt. I think they will just go into foreclosure otherwise.
I don't think they care about their credit because they already have their "dream home." They took out a home equity loan in early 2007 to take all the equity out of this house and used it to upgrade into a larger house.
housebuyer,
They extracted the equity in order to buy/build another house. And are holding up the process unless they can have that ill-gotten gains free and clear. I don't know that a lawyer is going to be enough to get the bank to sign off on this. Depending on what the terms of the home equity loan were? That could be construed as fraud. I'm not a lawyer, perhaps others here can speak from a greater well of experience on this...
You might not want to get too attached to this place and keep your eyes peeled and your options open for other choices...
housebuyer,
I know where I got the idea that this was fraud, Tanta from calculated risk:
Tanta: let the short sale scams begin If you click on the comments and read the boxed ones by Tanta, you'll see that she clearly thinks that fraud is likely to be involved in this sort of thing.
Tanta's almost always right, particularly on things involving the mortgage originators and servicers.
Cara-
We are definitely keeping our eyes open. I am pretty sure they were free to do whatever they wanted with their loan. If you stop paying on your house I am pretty sure the banks only recourse is taking the house back is that correct?
Either way our contract says they need to have an answer back by June 30th. If they don't we will probably either walk away or submit an offer that is !10K lower seeing they are wasting our time and the house is worth less to us due to the rise in interest rates
Cara-
I am pretty sure that no bank will allow them to get a mortgage while he is making payments on both houses. The person is also intentionally trying to deceive the banks. In my case they fully intended to make payments on the house and sell it for a profit in the future. So although it might just be semantics there are some subtle differences.
Either way you are correct that we should keep our eyes open.
Cara - I know you know this but from your earlier post regarding Burke, you said "So, inventory/selection hasn't fallen yet."
For each person looking to buy, each person has a price range they can afford. I think the broad sweeping "inventory/selection hasn't fallen yet" in Burke is far too general.
Inventory on the low end has been decimated. Thus, to make up for that, inventory on the high end may be extremely healthy (high). I don't know, I was not concerned at all w/ SFH or any house over $375k when doing my research. But it would make sense, if the average inventory in Burke "hasn't fallen yet".
I think the thing each person on here reading this needs to know, for their own personal applications, is that such "overall" housing numbers are not going to help you, individually, that much in terms of buying a house.
Each person needs to do their own research in their own price range and in their own desired locations, and for their own desired property type. After that, they won't need some monthly study to tell them what is going on with the market they care about. Because they'll know better than that generalized study what is going on with their focused market segment.
I know you know this Cara - I'm more stating it for the casual lurker who is looking to get into buying a house (perhaps in Burke) and thinks that the inventory as they will find it on the market is healthy. That is not the case, and you may be better suited to purchase when it is healthier. That should not stop them one bit, however, from looking and learning and researching... which is how they will determine when the best time to buy for the property they are interested in.
Sorry @J@, I'm not busted. Sold my house in May 2007 (purchased Feb 2002). Sold my stocks in Sep 2007.
My net worth is 5 times my annual salary, and it's stayed at that level for two years. Getting ready to buy a house 20% cheaper, and stocks 40% cheaper.
And, I guess you are JUST TOO STUPID to get what I'm saying, after I said it three times.
NO ONE IS PAYING IN FOR YOUR GRANDPARENTS. That's not where the money is going. It is being taken RIGHT BACK OUT to give to the middle managers and CEO's of McDonnell Douglas, Northrup Grummond, Lockheed, etc, and MAKE THEM RICH on YOUR back. And then THEY can afford $800K houses in Arlington and McLean. Which is EXACTLY why YOU probably paid too much, and why these houses are STILL too expensive.
The fact that you can't see this is either that you are TOO STUPID, or, you must be PAID not to see it, in which case you must be one of these people who is sucking from the government teat. Congrats on that. Anyone in that situation CANNOT COMPLAIN about the bailouts and the deficit spending.
And my parents and aunts and uncles are just fine, because they SAVED for retirement and had REAL jobs.
Since when is it "my fair share" to keep paying in when the biggest promise ever made to me will be broken? McCain ADMITTED he would break the promise. Still wanted the money to go to the rich--but at least he was straight talking!
Wait until your pension blows up, Enron-style. Then you'll understand.
housebuyer,
I can't find a reliable straight-answer to this question online, this was the best I could do:
Recourse versus non-recourse HELOC states
Anybody have a better source for whether VA is a recourse or non-recourse state for home loans, especially HELOCs? (Recourse, meaning that they can come after the home-owner, not just the property).
What I do know is that, in VA, the bank can release the title from the lien, without releasing the debt. Whether that requires the seller to sign a promissory note at closing, thereby agreeing to take on that debt as un-collateralized or not, is another question.
However, HELOCs can have specific limitations on how the funds would be used. If there were limits, like home-repair, maintanence, or upgrades as the only allowable uses, then whether other people break the rules and buy cars on them or not, it's still a violation of the contract.
In any case, I say your best-case scenario with this place involves them being late to the date, and you revising your offer down 10-20k.
Cara,
VA is fully recourse on ALL mortgages.
Sharp Football Analysis,
actually, in Burke (22015 specifically), it's still only the low-end that's listed at all... If you mean relative to last year, then yes, as I said inventory is down from 300-something to 180. People aren't daring to put their SFHs on the market. Who knows why.
But yes, in general, you do need to look at the state of your particular target price range. That's all broken down nicely in the MRIS.
va_investor,
Thanks! That was what I thought.
So, there's your answer housebuyer, yes, the bank does have the power to go after your seller.
Cara-
Ohh yeah I forgot I do have another short sale example. My brother bought a 1700 sq. ft. place in Centreville 2 months ago. The deal went down in a very strange way. He was using the same bank that was selling the property and he offered $210K and he would pay no closing costs. The bank took about a month to get back to them but when they did the bank offered $190K but they pay $8K for closing costs.
So basically it took a month and they got the house for $12K less than they offered. You wonder why banks are losing so much money :-D
SFA,
actually what I said is not quite true. The distribution of listing has indeed not changed noticably since April, but there are in fact a whole chunk of people who would like their half a million dollars please, those just aren't selling.
But, that's not your point. I know, sorry, just correcting what I wrote.
I just looked at my zip (20194) and it is very telling about the (lack of) meaning of these figures.
Va_investor,
Yeah with only 29 sales and 75 listings, it'd be hard to figure out anything. You'd need to cast a wider net and sum them (by hand, sadly) to get a more meaningful sample.
50 sales/ 180 listings is a lot easier, and the price ranges are way more clumped, such that one or two outliers don't mess up the whole deal.
Okay, Cara, have at it...
I envy people with real estate in Washington DC. -- Rupert Murdoch
as I far as I can tell there is no recession in Washington DC.
Well if Murdoch said it, it must be true.
Robert,
Murdoch's is brief and more about the politics that he thinks Obama is going to do than anything else,
the second is at least grounded in people who actually own real estate here. But if CRE is the business you know, and have the experience in, then you're going to have to find the best place to keep doing that business, and indeed DC would be a good candidate under that critieria. Be careful what you wish for though, there's a lot of money out there looking for places to go, and it could very well create overbuilding here, if we're not there already.
I'm certain there are more stories with bullish sentiments than I have time in the day to examine. Perhaps you should start the anti-patrick.net service and link to only the most reasoned and reliable of them. I'm not sure if this would make a profitable venture....
"you are JUST TOO STUPID "
OK.
Seems to me my mom, aunts, and uncles are collecting social security but maybe I am JUST TOO STUPID.
I pay a lot to SS and as a corp, I see both sides. It's a cost of business.
Like Cara, I know many people who have been affected by the economy.
FYI, my place in Alexandria is holding value just fine (maybe down 10%?) Like VA_invest, I hold other RE. I am cashing out one investment because the man who managed it died last year. I don't have the bottom line on that yet but might pay off my place... -shrug-
My 401(k), SEP's, trading accts are up. I took defensive measures in early 2008 and went aggressive, a couple months ago. I missed the precise top and the bottom.
Scott said: Sorry @J@, I'm not busted. Sold my house in May 2007 (purchased Feb 2002). Sold my stocks in Sep 2007.
Funny, cause I sold my house in May 2007 (purchased July 2002) and sold half of my stocks (too wimpy to go 100% then) in July 2007!
People aren't daring to put their SFHs on the market. Who knows why.
Because they are "waiting until next year for the market to come back". I kid you not. When I was looking at Vienna rentals in Jan/Feb, more than 1 owner said that they were renting for a year so that they could put it back on the market "when prices come back in 2010".
...and we're renting in Vienna for a year to wait for prices to come DOWN some more :)
I think a lot of people think that they can just wait this out. I wonder what it would take for the 'common wisdom' on that to change.
Fed Would Be Shut Down If It Were Audited, Expert Says
"If the Fed examiners were set upon the Fed's own documents—unlabeled documents—to pass judgment on the Fed's capacity to survive the difficulties it faces in credit, it would shut this institution down," he said. "The Fed is undercapitalized in a way that Citicorp is undercapitalized."
NoVAwatcher said...
"Funny, cause I sold my house in May 2007 (purchased July 2002) and sold half of my stocks (too wimpy to go 100% then) in July 2007!"
I'll join the backpatting parade too: sold in Oct 2007, bought in Dec 2002, and reallocated my 401k from stocks in Sept 2007=)
"Because they are "waiting until next year for the market to come back". I kid you not."
This is absolutely true, as sad as I am to say. These people truly believe that this correction is the anomaly, not the bubble. In fact, they almost refuse to accept that their house's value is even over-inflated. Some of them can be convinced of the truth, though it takes some serious one-on-one intervention. But the stubborn ones have no idea how much they are screwing themselves over by "waiting it out".
If anybody thinks Commercial RE is doing great in DC, he must be crazy. Go check any of the developers in DC, no matter how well-connected they are, they are just burning through their cash with no projects right now.
ROFL... Fairfax gets $1 million for foreclosed homes
$1mil ...what a joke.
Robert (or anyone),
Your first link has an "expert" claiming DC and Crystal City are doing great in commercial RE. Crystal City?!? Isn't it suffering after losing the USPTO and soon many DOD offices after BRAC?
I know Crystal City wooed BNA but has it wooed anyone else? From what I understood, Arlington County was worried about Crystal City the most of its submarkets.
The fact he cited Crystal City makes his analysis seem very sloppy to me and points to a chance he was just speaking from the hip.
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