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Saturday, June 27, 2009
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15 comments:
The free publicity for the Arl. green house may be paying off; it's under contract:
http://franklymls.com/AR7023985
Let's see how close the sales price turns out to be to my original prediction of $1.1 mill. (when it was first listed 3 months ago)!
Since the Washington Post's real estate coverage came up yesterday...
Here is a great example of their excellent advice:
http://tinyurl.com/nv6vrw
The example they pick is of two hypothetical mid-career teachers making $68k each, (136k as a couple) with 30k in savings.
"We assumed our buyers would take out a 30-year, fixed-rate mortgage. That's a conservative choice, but a consumer favorite. They could stretch their money by choosing among a variety of types of adjustable-rate loans, but, of course, that poses a risk that their payments could rise significantly in the future -- very likely more quickly than the pay raises most teachers in their mid-30s can anticipate.
We gave this financial profile to an experienced real estate agent, Anita M. Centofanti, a member of the board of directors for the Greater Capital Area Association of Realtors and an associate broker with Long & Foster Real Estate in Bethesda. We asked her to estimate how much our king and queen of the chalkboard could afford, and to search for homes on their behalf.
"I'm trying to keep our hypothetical couple well under $600,000," said Centofanti. "It turns out there is a lot to choose from.""
Now, to their credit they did at least mention the risks of some of the exotic mortgages... but turning to a realtor to tell you how much you can afford?
That is like asking a car salesman how much you can afford...
Predictably enough, the answer they get is just nuts. Under $600k? We aren't dealing with a couple young doctors just starting their careers. These are mid-30s teachers who's salaries are not going to skyrocket over the next decade.
The house they ultimately select for the hypothetical couple is $530,000... giving the couple a monthly mortgage payment of $3160.
Once taxes and insurance are thrown in that will be roughly 50% of their take-home pay.
...and this is for a couple they speculate would be raising a family at this point in their lives.
What could possibly go wrong?
Leroy-
It really is amazing if you have good credit banks are still willing to let you get places that are 5 times your income.
"It really is amazing if you have good credit banks are still willing to let you get places that are 5 times your income."
Yeah, more proof that lending has not yet returned to pre-bubble underwriting standards.
There are cases where 5x income might make sense, but they are the exception to the rule.
I suspect that the government's various efforts to prop up the market will just result in a long ugly chapter in the housing market's history.
Artificially loose lending using tax-payer money trying to keep housing prices from returning to a sustainable level.
"There are cases where 5x income might make sense, but they are the exception to the rule."
I would suspect mostly an individual who is expected to see an ever growing income.
Say, Someone who is in a surgical residency
and wants to stay in town as a practicing surgeon.
or
A student finishing law school and can't sit the bar until year end, but, has great grades and has been working in lawfirms as a paralegal for years.
or
A tradesworker in an apprenticeship program.
But very rarely do people see dramatic shifts in income without leaving an area.
@j from fri:
i wouldnt compare ing savings accounts to a standard b&m checking account. maybe compare ing's electric orange offering 1.6%+
http://home.ingdirect.com/products/products.asp?s=ElectricOrange
but i would agree it wouldnt be worth it to switch and deal with a slightly less convenient checking for .6% difference.
i personally use b&m checking, ing cd's and electric orange, couple other savings accounts and more recently a kasasa account giving me 4.44% on balance up to 50k and 1.76 for over that
went to an open house at the place for sale in T's old complex.
http://franklymls.com/FX7073879
I was wrong. This is a terrible measure of how quickly T's place would have sold if it were on the market today. Original 1980's single-pane windows, deck needs work sooner rather than later as does the siding and roofing. Owner's so cheap that the couldn't afford primer + matte paint just went for one coat of glossy. Cheapest on-sale pergo downstairs, thin new carpet upstairs. (although the installation job was good). Couldn't afford the $20 for new doorstops and a wall patch. Cabinet refacing, in a color that did not work at all with the flooring, disregarding entirely the junky particle-board interiors of the cabinets complete with poorly laid contact paper and mildy warped shelves. Didn't bother to open the fridge, didn't want to know.
And the place came complete with a parking nazi wandering around checking out all the cars because while there may have been a visitors parking area somewhere, I sure as heck didn't see any.
This is the problem with listing at $279k, you get people at the open house who expect at least a $260k level of niceness. And then it doesn't deliver and you get no offers. The agent at the open house was not the listing agent, just a guy trolling for new buyer contacts, and he admitted that there were no offers or hints of offers to date.
It would be an ideal place for a recent divorce with two kids looking for great schools and a workable house for way under rent. If it were priced accordingly, like somewhere under $210k. You'd hope to move out before any of the major work needed doing. Other than that, I just don't see a market for this place.
Best guess closing price, $240k, if, and only if, the seller realizes quickly that he needs to drop the list price to somewhere in the $255k-260k to attract the right buyers.
So, T, I apologize, this listing will not give you any idea of how long it would have taken to sell your place, because it is not comparable and is not listed at the right price.
Cara: I detest that cheap pergo flooring. We were at an open house today that had that flooring. It always makes me shake my head and think, "Jeesh, the first thing I'd have to do is to replace this cheapo flooring".
Thanks for the report, Cara. I agree about Pergo, though I know people who like it. Any predictions about what it will sell for?
Not all Pergo is the same. There's the stuff my mom and Dad had in the place they built, which was sweet! Beautiful, variable, and even lower maintanence than wood, and totally unscratchable as far as we could tell. Then there's the one step down stuff that is still very practical as well as nice-looking, but which will date your place, and then there's the one step up from vinyl stuff (this place was kindof between the last two categories), and then there's actual vinyl flooring that is just wood patterned (which my friend put on a landing to replace a distressed lower-level area).
Anyway, if this place goes under contract in the next two weeks I predict $245k, if it takes longer than that? I predict $230k.
Put me in the "i hate pergo" group too.
But I'd like to talk about the Market. In normal times we'd be entering the summer dead zone. I'm still hearing multiple offers, etc. on lower-end (350K minus).
p.s. I've had no trouble leasing-up new acquisitions (without concessions).
VA Investor: Talked to my agent today about a Fannie Mae condo in a decent building in Arlington which is becoming tempting as the price was just reduced substantially. She does more "normal" business mostly in Arlington and says the biggest problem is lack of inventory. Buyers are not seeing good things and those which are okay seem to be selling in under a month. She thinks the seasonal slowdown will begin next week at 4th of July and then pick up in mid-August as people get into the "back to school" mode.
I have had no problem renting anything. However, I notice that tenants from Craigslist are becoming a little unreasonable about security deposits (they don't think they should have to pay one). Is there a tenant website advising tenants to resist paying security deposits?
anielarke,
Perception is reality. The concessions (no deposit,etc.) are being widely advertised by some "big" developments. This is something I am used to seeing in the winter, not now. I think blogs like Craigs List have tenants thinking they hold all the cards.
Frankly, "no deposit" really costs us nothing - one month "free" costs money, but not if we were losing the month anyway (due to dates, timing).
This area has always had strong demand, it's just a variation of "strong".
I'm more the type to ask a little under-market to get a loooong-term tenant. Turn-over is the killer. We all know that.
I am surprised low-end is remaining on the market at all where you are. My areas, stuff goes immediately.
"i personally use b&m checking, ing cd's and electric orange,"
Thanks. Your, Va_Investor, and others endorsements means a lot.
I plan to stick w/ the known but it's good to have options and back ups.
my experience is that a tenant who cannot pay a security deposit, cannot pay the rent either.
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