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Friday, June 26, 2009
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28 comments:
For Sale, Still: Grand Homes in Gracious Neighborhoods
Key quote (channeling Cara):
Even in the best of times, high-end homes take longer to sell because there's thinner demand for them; this down market has exacerbated matters.
That's because pricey homes are the province of move-up buyers, many of whom have watched their home values decline, their financing options shrink and their net worths erode as the economy soured. For trade-up buyers, the $1 million-plus homes that were within reach a few years ago are no longer an option. These prospective buyers are reluctant to take on debt even if they can afford it. And as they retrench, high-end sellers are left in a lurch.
I was reading this blog entry: Razzi attacking most of the people on this and similar blogs
I spotted some comments that seem like maybe are from some of you. One mentioned being profiled a few years back (2006). I remembered the articles from then. Is James Cave one of you?
Young Professionals Talk Housing Market
Article Just on James Cave
This quote is hilarious in retrospect (and was clearly wrong to many of us at the time):
"Two years ago, he should have bought," Milton told the group, nodding to emphasize his point. "At some point you've got to get in. Real estate is the only sure investment."
The following quote just leaves me with my mouth open in shock:
Homeownership makes Casey feel as if she has more control over her destiny, even though she pays 75 percent of her net income for housing, including the monthly co-op fee.
Dios mio!
It would be nice if the Washington Post interviewed that group in 2009 and asked what they thought now.
Are we forced to conclude by this listing that we are back in bubble times????
http://franklymls.com/AX7033394
$425K for 960 sq ft? in ALEXANDRIA???
This is GEORGETOWN prices!
Wow, the responses to Razzi's post actually do a pretty good job of explaining things to her.
If she still doesn't understand why a correction in real estate is ultimately good for the city and its inhabitants then I don't think she ever will.
She is just too simplistic to see anything but: "high housing prices mean we are all good investors"/"higher prices mean higher commissions."
Just to clarify, I am referring to her characterizing real estate blogs as "pessimists" populated by investors trying to build their "wee empires."
On this blog and others I have seen, the overwhelming majority of posters are just ordinary people trying to make the best possible decisions with their money.
The mainstream media utterly failed during the housing bubble. That is what really drove the creation of the blogs. People who could see that something was badly wrong with the housing market and wanted to understand what was happening could not get their answers from the Washington Post and similar publications.
Most major newspapers, including the Post, turned into apologists, if not cheerleaders, for the bubble. They would write an occasional article saying something like "Our economy is so strong affordable housing is becoming a real issue," but the overall tone of their reporting was always that "it was another great year for homeowners" and "first time buyers need to get their foot in the door!"
Scott-
It looks like it also has a fully furnished basement. So it is closer to 1500 sq. ft. Still sounds a little pricey...
tbw,
If the move-up buyers had done the "normal thing" and bought a mid-priced home 10 yrs ago, they'd probably be in good shape to buy one of these places. Chances are, any "loss" off peak price of the existing house will be more than made up for on the move-up.
Secondarily, their incomes should have increased over the past ten years.
TBW,
I've written about the $1M+ market and how it has too much inventory and prices are still falling. I advise against $1M+ housing until (hopefully) inventory numbers come in.
Well, no doubt, there was a lot of bad advice given at or near the top of the bubble. However, go back in time on this blog, October, November, December, and check out how many people gave piss poor advice at that time. Most likely it balances out.
Va_I, all that would be true if the would-be sellers of the higher end houses were pricing their houses appropriately. But in many cases, they aren't. Check out franklymls as well as the article TBW posted and other sources, for evidence. These dreamers think that the buyer you described, who will not be able to sell for 2006 prices, will somehow be able and stupid enough to buy at 2006 prices. So their houses are sitting.
The Most Lucrative Job in Washington
A little older but most likely a growth engine...
2008 Lobbyist Spending
No date given on YTD totals...
Lobbyist spending since 1998
Link
That means more federal employees, more grantees and contractors, and more wealthy lawyers and lobbyists setting up shop inside the Beltway—both to get a piece of the federal budget (or, more recently, the $7 trillion-and-growing pot of federal bailout honey), and, as the federal regulatory state expands, to lobby for regulations most favorable (or, least unfavorable) for their clients.
contrarian,
Interesting article. The thing that struck out to me is the basement pool. I read an article (back in the boom days) about how a pool can make it a lot harder to sell your house. People correctly view a pool as a lot of maintenance and so if you are not someone who will use it a lot it's not worth it. It actually lowers the value of the home to you because you'll rarely use it and you'll have to keep it clean.
I wonder what her neighborhood is like as well. I wonder if it's a neighborhood that is mostly college faculty. If so, then she is screwed because UMass Amherst probably has a hiring freeze and salary freezes.
If it's a mix of faculty and students then she probably overimproved the home. No one would want to buy that home and rent it out to four students because it's too nice and you could never get a rent that covers the mortgage.
Also, because college students on average are more prone to parties, being messy, etc you do not want a supernice place to rent out to them because it will likely get not so nice after a year or three of renting out to them. Although if anyone here rents out near the GMU campus and has not found that to be the case I'm all ears.
Robert said...
Link
That means more federal employees, more grantees and contractors, and more wealthy lawyers and lobbyists setting up shop inside the Beltway—both to get a piece of the federal budget (or, more recently, the $7 trillion-and-growing pot of federal bailout honey), and, as the federal regulatory state expands, to lobby for regulations most favorable (or, least unfavorable) for their clients.
The Cato Institute's Chris Edwards estimates that in 2005, the average federal employee made $106,579 per year including benefits.
Are we to use the historic 2.5x income to determine affordability or, should we place that around 7x income circa the bubble years?
Scott: AX7033394 settled on 6/26/09 at $435,000 and the seller paid $10,000 toward the buyer's closing costs, making the net price $425,000. This is a small group of condo townhouses in Del Ray arranged around a large front lawn and with parking for many of the units at the rear, so it has a nice street presence. I have been following this unit because the duplex I am currently renovating to flip is one street away. The duplex is fee simple with no condo fee so that adds to the value as a condo fee does not have to be included in the monthly cost for qualifying.
Also, for Konstantin: I was at the "sell out party" for Liberty Center earlier today. They have 7 one bedroom units left. They would not tell me how many two bedrooms, but I think there are many more. The "concierge" in the lobby told me that there are 21 move-ins scheduled for the building between Monday and July 15. He wasn't sure of unit size. The swimming pool and gym seemed pretty crowded so the building seems to be filling up.
Also, the same developer is doing the Metro bus lot across the street. The agent at Liberty Center told me they are doing the commercial buildings first (DARPA has already rented one of the buildings) and the residential part will lag by at least a few years.
Finally, all of you know that Elizabeth Razzi used to work for the National Association of Realtors? It only matters because she seems to avoid analysis as much as they do.
I'm going to take a little break from this blog. I like 95% of you but I just feel like meshell a week or so ago and am just personally offended by Robert's comments. I have friends and family of all ages facing either minor annoyances (pay cuts or no pay raise) to major problems (getting fired or not being able to move up the chain). I have co-workers and family delaying retirement because of losses in their 401(k). It's just a really bad time. These are all people who are hard workers and have been playing by the rules.
I am just disgusted that Robert wants to imply that there is something wrong with these people. It's a tough time right now. While most of my friends and family are doing quite well and have not been hit by the recession, it's just not like the boom years where *everyone* was doing swimmingly well.
The question is not whether things are tough now; it's when we will get back to normal. I just do not know where Robert gets off claiming things have recovered. It's just insane.
I know this is a website and I should not take it so seriously but I am taking it seriously and I need to just step away because Robert is really pissing me off with this nonsense.
tbw,
Do what you need to do. Personally I can't read the WaPo chats anymore because they just make me angry. Not the same level, I know.
Best of luck to all your friends and loved ones. Hope the setbacks are temporary and the major changes end up being for the better.
tbw,
Yeah, I do find Robert annoying . . . I can't yet determine if he really believes all that comes out of his mouth or not. Sometimes he just seems so over the top that I find it hard to believe that he really believes it all.
For example claiming that 100k new people coming here at GS7-8 positions will be a boom to housing.
Ummm, you know there are 4 factors in prices: supply/demand of goods AND supply/demand of money. If 100k people move here and only make 50k a year, housing ain't moving up in prices. Consequently if 100k people moved here and made 200k a year, housing prices would definitely go up.
I think Robert suffers from assuming the median is like him (i.e. some mid-level to senior project manager at a major beltway bandit, dual income making 200k+, who's major goal in life is to see how much debt he can accumulate.) Umm, no most people in this area are not federales, and the median household income is 90-110 depending on the county, most federal employees RETIRE here at a GS 12-13 level, which is anywhere from 85-95.
"personally offended by Robert's comments."
Private note to TBW - Take your time. Do what you must.
Do not take Robert's comments as a personal attack on your world view.
Reality is aligned with both of you.
On the Robert side, I have a professional job, earn a good living, not Biglaw money but good enough. My RE holdings have increased in value. There may have been a 5% or 10% drop recently. After our RE manager died last year, we liquidated a holding and I have investment cash. Stock, 401(k), savings? Everything is up because I pay attention to the "Contrarians" and went defensive over a year ago.
I am seeing what you are.
I know people who are out of work or are way underemployed, giving up on the idea of college for their kids, fearful, angry, hurt.
I don't agree that they did everything right. In hindsight and compared to life choices of extreme thrift, they were irresponsible.
But how could they know what was coming?
One mantra in Blog is that "anyone could have seen the housing bubble build."
Perhaps anyone should have seen that the overall economy was about to crest and fall.
TBW, I hope you'll reconsider, and just skip over posts that are not helpful to you or with which you disagree. It's a very difficult time for a lot of people and in many cases, it's simply a matter of bad fortune, for the time being. Hope things are better for everyone who's struggling or not thriving, soon.
"I know this is a website and I should not take it so seriously but I am taking it seriously and I need to just step away because Robert is really pissing me off with this nonsense."
He is a troll, what do you expect?
In all likelihood he is a troll that has been posting on this blog or bubblemeter under one name or another for a long time, that is what most of the trolls seem to do.
As for whether or not he believes it... Who cares? I don't think he cares... The sorts of people who come to blogs for no other reason than to be disruptive aren't looking for any kind of actual debate or learning.
"The Cato Institute's Chris Edwards estimates that in 2005, the average federal employee made $106,579 per year including benefits.
"
Be very afraid of citing Cato for anything.
tbw - don't leave. Robert is just one of those ones calling bottom. Kevin predicted that many would call bottom a couple of times this year.
Lots of wonderful people are facing hard times. I'm living in a gated community with 2 forclosures in stones throw...and one empty since November. Those people might have made poor choices but others are trying. One neighbor has 3 jobs while her husband just got laid off. You know what's coming there...Nice nice people too.
Robert just wants us all to believe we're at the bottom. He is very very wrong.
I've often wish the blog had feature where you could ignore certain usernames just because of Robert. He is annoying and I skip most of his posts. You are not alone TBW.
Hey Robert, if you wait for inventory to come back in, you wont get a screaming good deal.
If you can afford, and want a 1M dollar home, you should go out and lowball every desperate builder you can find. Offer them 40% off the list price and see if they jump.
I know a guy from our office got a home that was originally listed for 1.45M for 975k recently. He said the builder cursed and spat at him after closing, lol!
well the one girl in the story would probably laugh at us.
Her condo that she says she purchsed for $189K is Zestimated at $339K. (note: wapost recent sales say she pay $210K, which may not be accurate either). Thats a nice $100K+ tax free windfall.
Bruce Milton, who paid $210K now sees his prop Zestimated at $215K. Not that bad if it would sell for that much; only an $8 loss after commission.
no story here.
pat,
If Cato is fudging the numbers, their ideology would push them to fudge the numbers higher... not lower. Since lower case robert is trying to floor the salary, Cato is a reasonable choice.
You can use a biased source when the biased source is usually reasonable, and when the bias is known and actually doesn't hurt your point if the bias is assumed.
That said, I haven't seen Cato institute's numbers being attacked any more than any other political think tank.
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