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Friday, August 14, 2009
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94 comments:
Ugh, just wanted to vent some frustration. The wife and I found an REO we liked, saw it twice, scheduled time with a contractor to estimate renovation costs (and view the property a third time).
The kicker: it's been under contract for a month (before our first visit). Lock box on the front still and they even dropped the price on the listing while under contract!
Amazing. We were distraught, but our Realtor was about to burst an aneurysm. It made her so mad how unprofessional some other Realtors are . . .
Anyway, just had to vent.
Yet another REO came on the market in our old neighborhood:
http://franklymls.com/MN7134581
I feel like this listing could say a lot about whether the frenzy that began in Manassas in the spring is passing or intensifying. The last three sales in the neighborhood were for $212K, $220K, and $230K, and the $230K was a short sale with many tasteful upgrades. Last winter, two REOs sold for $250K, so prices were obviously still trending down, though the final sale prices were all over initial asking, so it appeared a bottom had been found. But $279K? Is this bank getting a little too ambitious? Or have buyers really lost their minds?
StayingPut,
Did your agent call the lister prior to you seeing it? You can't rely on "active" status in the mls.
I've had a contract on a short for months that is still showing "active".
Your agent should call prior.
Tabitha-
Wow I didn't realize how much bubble has been undone in manasses. The bank is listing it for 10% below the 2002 sales price and you think that is way to high. Are they actually all the way back to 2000 prices out there?
Tabitha,
Things are very "frothy". It's 2003 - 2005 all over again, except that prices are still well off peak (for reo's below 300K).
Are we seeing the "pent-up" demand? Many have been on the sidelines for years.
Tabitha-
I think that since "things are selling" & "green shoots" are being tossed around, Sellers/Banks think they can get a bit more for listings right now.
I'm waiting to see who's still For Sale come November, & what price they are at then.
(Staying Put - I ALWAYS have my Agent call the Listing Agent of a Short/Foreclosure BEFORE we even go look at it, just for the reason you have experianced !!)
It was an automated number to give out the lock box combo. That's all she got.
It wasn't until she e-mailed the holding group (not the realtor) that she got a reply that it was under contract.
What got us was that they "updated" the listing with a lower price, while it was under contract. Weird.
housebuyer--
To put it mildly, Manassas is back to 2000, or the late 90s, or actually the 80s in some of the bad neighborhoods.
Just noticed a July closed sale a couple doors down from that new REO listing for $207K. So the bank is probably delusional. But if they still find interest at that price...we'll see.
spunky,
It's not that they "think" they can get more, they CAN get more.
Have you noticed all the places changing from "contingent" back to "active" at higher prices? I'm seeing them right back under contract. If you follow the comps, you see big upward movement in low-end pricing since the winter.
StayingPut -
I've been writing about your situation for about a month. In your situation, some real estate agents are courteous enough to update the Remarks section while still leaving the property "Active." But, most do not. You've learned a lesson about short sales and REO's. I can imagine your frustration. There are a lot of people that have gone through the exact process you just went through. So at least you have company in your misery.
Robert,
Hence the question, what is the real inventory? Perhaps the "shadow" will be offset to some extent by the "shadow" under contract.
Va Investor-
Yes, the low-end has gone up
That isn't the market I am watching however
buy now or be priced out forever!
I ALWAYS have my Agent call the Listing Agent of a Short/Foreclosure BEFORE we even go look at it, just for the reason you have experianced !!
I definitely agree with this. When I was seriously looking, my agent would call all the list agents of the properties I was interested in and when we'd head out, she'd say, "This is under contract, this one is only taking back-ups -- we can go if you're still interested, this one has two offers already, and these two are still free and clear."
VA_Investor -
I saw a blog post from San Diego that did a pretty good analysis of what he/she termed, "reverse shadow inventory." The estimate was 20-30%. So, the market is much tighter than the headline inventory numbers. For Fairfax County with 3200 actives, that would be 2560-2240. About 2 months of inventory, but I think the market has sped up in the last couple of weeks.
Calling anielarke, please come in anielarke...(and anyone else who wants to comment):
This under-construction house has been on the market for about 4 months, though franklymls.com shows it as new:
http://franklymls.com/AR7133310
I've driven past it several times and have seen little construction progress, e.g., no workers there on sunny days, no change except a basement's beginnings for some time. You'd think they'd be almost done by now.
How do they get 4950 square feet from what appears to be an approx. 45 X 30 exterior size on all levels including the basement? Are they counting the detached garage? Is there another partial 4th level that isn't shown in the floor plans?
Any chance that those underground springs in the neighborhood are under this house? I know someone who lives near there who put in a very extensive sump pump system (which works so far).
The house seems to have a good floor plan (with some edits), but seems pricey for the size it really appears to be (not the 4950 sq. ft.), even taking into account the green premium.
What's going on with this house?
Sorry, I calculated the home's dimensions incorrectly - it's larger than 45 X 30 on each level. More like 55 X 30 on one level, larger on the basement level, smaller on a third (given that some space is lost to the open ceiling on the first floor).
Are we taking demand from out years or is this "pent-up" demand that will continue? Anyone want to take a stab at the amount of "pent-up" existing?
I gather, from the exchanges here, that most of you are looking in the 500K+ range; are things moving?
We know the lower-end is very hot and that the demand is from investors and first-timer's.
Possible good news for owner occupants.
I just heard that Fannie has a new rule requiring properties stay on the Market and keep accepting offers for 15 days if the high bid is from an investor.
Any agents out there?
Hmm. So, update on my short sale. My lender's appraisal came back and the townhouse appraised for higher than my contract price, which is good. But I guess the appraisal got flagged in the new computer system that scores appraisals now so it has to go to a 2nd tier review. Neither my loan officer nor I know what could have flagged it -- she sent me a copy of the appraisal and everything looks like it was filled in correctly, so I wonder if it's because it appraised for much higher than my contract price. Maybe they'll ask for more comps or something. We'll see.
Good luck inkstone!
How long were you under contract? I think that the 2 I have remaining will close because I heard that they had gotten approval and the appraisals were done.
Maybe I shouldn't be happy about that(?). But, actually, the comps were trashed and these are nice and already tenant occupied.
VA,
I was looking in the $400K-$700K range in Ashburn (20147 and 20148, SFH). Not much left. Most are going UC within a week or two. Although, i do have a few on my watch list that have been UC for 6+ months. Started looking in 2005. We all know what happened next. I'm back on the sidelines.
20148 Detached and Active
20147 Detached and Active
Most of these listings are out of the question. A few townhouses showing up, as well as builder listings.
OT, watched pre-season football last night. There were endless car commercials pushing "cash for clunkers". Made me want to puke.
The only good thing about eating our down payment fund right now is it seems like house-shopping at the moment is unbelievably frustrating. I am a bargain-hunter and it would drive me nuts to have the system gamed unfairly so someone else would get to snag the good deals. UGH.
(OH, and Ace, we drove by that house a few weeks ago. It definitely stands out on the block. It needs a few acres of land around it--it looks totally ridic shoehorned on that lot.)
novahog,
I hear you. I'll be paying for all the cash-for-clunker's too.
Just add it to the list.
VA Investor,
I put in an offer on May 1 and the sellers accepted it on May 7. Their bank countered on July 28. I did another looksie the next day just to make sure things didn't south during the time it was under contract and it hadn't so I accepted their counter, and I got the approval letter on August 3. The bank wants to close by the end of the month. So, not the shortest wait in the world but not the longest either.
inkstone,
I have 2 from May that I expect to close within 4 weeks. I don't know what the appraisals are. I do know the comps and I am happy with the numbers. Either one of them (or both) may have been 10% lower in later 2008, but c'est la vie.
In my opinion, neither one had a fair time on the Market to draw the best price. There were definitely some shananigans going on. It seems Banks have wised up to that.
Meshell, :-) - like 80% of the new builds in Arlington!
I asked a builder why he didn't build some smaller places for those of us who do not need that much space and would prefer a bigger garden. He said many of the costs are fixed and that it cost almost as much to build a McMansion (my words) as a smaller place. While I don't doubt that some costs are fixed, I really doubt that a high % are. I think the real reason is that during the bubble years, they could sell the big 'uns and get a much bigger price than they could get for the smaller houses on the same lot. To be fair, a lot of buyers also think like this - thinking in terms of priced per square foot, which favors the big house on the small lot. "Gee for only $100K more, I could get a much bigger place..."
I think we'll see some more properties coming on the market in September. Apparently, posters here are the only ones in the DC area that don't get a month off in August every year to go sip iced tea on the porches of our beach houses.
VA Investor,
My agent says the same thing, that prices were lower in late 2008 but it is what it is. I wasn't ready to buy then anyway.
We're putting ours up in September. Starter TH near Vienna metro. Others in the area are UC in less than a week and our particular neighborhood only has 3 up for sale (out of 120 or so).
We bought in early 2002, so we'll still have a decent down payment . . . if we can find a house worth upgrading too.
Anyone want to take a stab at the amount of "pent-up" existing?
NoVa has a population of 1,973,513. So, let's say existing pent-up demand is 800k - number of current owners.
Of course, most of those folks can't afford a place.
Thinking of the flipper vs renovator distinction, I noticed a few places today that made me ask: when do you determine whether granite countertops constitute lipstick on a pig?
For this first house, I think the renovations were pretty nice, though the investor is looking for more than twice what he paid in May:
http://franklymls.com/PW7124190
But these ones, I don't know:
http://franklymls.com/PW7129147
The investor wants three times what he paid last November.
http://franklymls.com/PW7070341
I don't think an investor is involved here, but granite? Does that really add anything? At least it's "two houses for the price of one."
I just heard that Fannie has a new rule requiring properties stay on the Market and keep accepting offers for 15 days if the high bid is from an investor.
Good. I'm tired of infestors coming in and ruining neighborhoods.
Usually, I can't tell from the listings whether it's all lipstick (or smoke and mirrors), but inside houses I can usually see.
It's the small details like the trim molding, or countertop seams, or whether damage on a wall was spackled/skim coated or just painted over.
Hard to list them all here, but I have my red flags that throw up the alert when we've gone through some homes. It is amazing how many people put nice countertops on really awful cabinets and cheap appliances and expect top dollar from a "new" kitchen.
NoVa Hog -
You haven't been able to snag a deal out in Lansdowne - it's 20176
I KNOW they've got deals there, as I have friends that live there & bemoan there losses constantly to me...
Or are you like me - refusing to even look there because of the $300 a Month HOA fee !?!
I watch South Eastern LoCo & Northern PWC myself, I think you & I are the only ones on this Blog that watch this far "out"
Ace said:
Apparently, posters here are the only ones in the DC area that don't get a month off in August every year to go sip iced tea on the porches of our beach houses.
Definitely not me. Everyday I run the risk of melting into a puddle and being absorbed into metro's carpeted trains of fire.
StayingPut--my biggest pet peeve (or at least one of them) is people who slap granite countertops on old cabinets and call it a "kitchen remodel." That adds zero value to me as a buyer, since now instead of just looking old, the kitchen looks schizophrenic.
paka,
That's what I meant. New countertops, a coat of paint, and cheap (but new) appliances on old cabinets and call it a remodel.
I'd rather have a harvest gold (or avocado green) kitchen from the 60's to remodel myself. Because they price all that into the house and you are still left with upgrading it later so you essentially pay double for that particular remodel. Grr.
Spunky,
We're interested in Broadlands more than anything else, but we haven't ruled out 20147 or 20176.
Or are you like me - refusing to even look there because of the $300 a Month HOA fee !?!
I've ruled out all neighborhoods with a $300K/month HOA fee. Brambleton, Belmont CC, etc.
I think you & I are the only ones on this Blog that watch this far "out"
I think you're right. Doesn't seem that far out to me. I'd prefer to be as far from DC as possible, but not "way out". Ashburn seems like a nice balance. Not too far out, but not too close either.
paKa,
Carpeted trains of fire! HAHAHA!
Re: HOA, a friend who is paying about $300 per month raised a question with another friend and me about that same question. We told her that water/sewer/trash pickup etc. per month in Arl. is often $80 or more (higher if you water the grass, which you don't have to do in a townhouse/condo association). Grass mowing and very basic trimming and edging is more than $100 a month for a small yard. Exterior repairs/replacement and maintenance spread out over time would be another chunk. And her complex has a nice pool and tennis courts (and nice landscaping, lots of trees) and paved parking spaces, which of course the two SFH-owners of us don't have. So we thought $300/month was pretty reasonable.
Tabitha,
The first house is really nice and seems like a very fair price - I would definitely like that one if we were still looking - Love that family room and the size of the lot!
Wow, Tabitha, nice find. Buy one, get one free!
That middle house's yard just made me cringe. Can you say Mosquito Love Nest? The bugs have been insane this year--you would need to bathe in DEET if you lived there.
Ace, you know, our water bill IS really high. Why is Arlington water so expensive, anyway? We can only take 2 minute showers and never water the lawn and our bill is always around $100. For that price, I'd really prefer sparkling water coming out of the faucet.
Ace, Re HOA:
The places with $300/month HOA out in Ashburn don't include exterior repairs/maintenance or lawn care (except for maybe Belmont CC). So, you have to add those expenses anyway. For a SFH or TH, i'd say much more than $100/month is too much. If cable/internet is included, then $150-$200 might be OK.
Broadlands HOA is about $65/month: community center, outdoor pool, tennis courts, playgrounds for the kids, snow removal, and trash.
Ashburn Village is about $100/month: all of the above plus an indoor pool, gym, and basketball courts.
I think Ashburn Farm is similar to Broadlands.
Those both seem like reasonable fees for what you get. I associate $300+/month with condos.
So I just typed in that Broadlands zip code mentioned upthread out of curiosity and saw this listing. Just wondering what "seller not responsible for rollback taxes" means? Never seen that before.
http://franklymls.com/LO7036469
Gotcha, novahog. My friend who was asking is in a townhouse community and it sounds as if a lot more of her expenses are paid.
Meshell, is that $100 per month or per quarter?
Hey all, I noticed when I am using FranklyMLS I am having problems seeing the pricing history.
One of the above posters was able to spot a 50% increase flipper investor for thsi one:
http://franklymls.com/PW7124190
and my analysis is falling short in the area.
Also, I notice sometimes I see seller blocked sold data caveats on zillow.
How do we find the complete pricing history to avoid falling into a flipper's huge windfall trap (which often unnecessarily inflates pricing)?
Thanks, lookign for a house for my baby and family
MadCap,
You can find all the sales for the property Tabitha posted from the PWC property tax assessment database. There are links for all the counties databases on right-side of the main page. It looks like this property was bought by FFC Properties LLC for 162,501 on 5/14/2009. The sale was marked XC which is a foreclosure according to the FAQ glossary.
Meshell,
Re: Roll back taxes
I found this: Land Use Assessment Program
Loudoun County adopted the Land Use Assessment Program in 1973. The program provides for the deferral of real estate taxes on real estate that qualifies for agricultural, horticultural, forestry and/or open space uses. Assessed values under the program are generally less than those estimated at fair market value.
Changes in use, rezoning to a more intense use (Title Sec. 58.1-3237) and the split off or subdivision of lots (Title Sec. 58.1-3241) may trigger rollback taxes. When rollback is issued, the taxes owed are based on the difference between land use value and fair market value for the current year, as well as the previous five tax years. Rollback taxes will equal the deferred tax, plus simple interest; currently at 10% per year.
Hayfield, you beat me to it. Thank you so much.
Also, MadCap, if you cannot find the data you are looking for in the PWC online database, either because it is too recent (there is a little lag time for the online database to reflect recent activity), you can always go to the courthouse's land use office and look at their database, which is free, but not very user-friendly. But it can be a treasure trove of details. I strongly recommend it!
"infestors" eh? Where would the renters live?
"infestors" eh? Where would the renters live?
Many of them would probably be able afford their own homes.
That's a good one. "own their own homes"? I think that was tried in 2003-2005. Besides, not everyone even wants to own. Maybe NOBama will start giving away houses next.
Considering the conditions of some of the houses I looked at renting, some in pretty nice Oakton and Vienna neighborhoods (4br houses, not starter homes or old working-class homes), I say that the landlords brought down the neighborhood.
VA_Investor said
That's a good one. "own their own homes"? I think that was tried in 2003-2005. Besides, not everyone even wants to own. Maybe NOBama will start giving away houses next.
No, it was 'tried' just about every year since WWII -- except for the bubble years. For instance, when we bought our little Del Ray townhouse in 2000 for $119,000. Or when my parents bought their first house in Berkeley, California for- I think my mother said- $5000 on my father's graduate assistant salary.
You may be able to make a case that we're moving into a second gilded age when ordinary wage earners are no longer part of a broad middle class-- there are plenty of statistics to suggest that -- but if you want to claim it never existed you'll have to wait until my generation and my parents' are dead. We remember a very different country.
Sarah, et al,
I refer to all the burger flippers, cab drivers and housekeepers that got no doc, no down loans that they never would have qualified for. These neighborhoods of "owner's" are over run with foreclosures which is the true reason for their decline.
How many investor owned houses are trashed foreclosures? Do you think it's investors stealing appliances, light fixtures, etc or punching holes in walls and pouring paint all over the carpeting?
Do you think investors paid 300K for stuff worth 100K? Not any investor I know.
If anything, investor's are improving these neighborhoods by rehabbing the housing stock. I'm sorry you don't want to live next to renters.
Sara,
Re: Homeownership Rates (source Wikipedia)
During your childhood (?) 1960 the rate was 62.1% vs. 68.9% in 2005.
VA_Investor,
The only thing you will get FLAMED about more than posting anything positive or optimistic on the board is criticizing Barack Obama. For some reason housing bears love Obama. I can't really see the connection, but it holds true here.
Sarah There is a good article in Saturday's (8/15) "Wall Street Journal" about renters becoming a bigger part of the housing market. I would link it for you but I get the paper version instead of the online version. I moved to my condo when I retired about 10 years ago. Before that I lived in a neighborhood in Arlington where it was hard to sell houses 10 years ago. I kept my house and have a niece and her two kids living there for a token rent of $100 per month and she pays the utilities and I mow the lawn and take care of the yard because I like that. Most of the people in my children's generation did not want to live in their parents' houses in my old neighborhood because they were too small, so they are renting those houses too. I keep an eye on 7 rental houses in my old neighborhood and these houses look good even though they are rented. What caused the problem in my neighborhood was people coming in starting about 2004 and buying up the houses for crazy prices. We thought the prices would go up more, so none of us sold, now to our regret. However, most of the houses which sold in that time were sold to people who couldn't really afford the mortgages and when the construction business went away, most of those houses were sold as short sales or foreclosures. The houses were not taken care of and/or had bad work done to them. I saw one man put in a bathroom in a porch and used a hose running from an outside water faucet for the shower and to wash the waste through the toilet. It wasn't connected to sewer lines. These houses have now been bought up either by investors who are fixing them up and renting them or by young people who are fixing them up and living there. The house next to my son's godmother had 17 people living in it this winter with 1 bathroom but the county would not do anything about it. The young man who bought it is over there today putting the finishing touches on it. He told me he has two roommates coming in paying him $800 each for a room and a shared bath. He is going to have the bedroom and new bath he put upstairs. He figures he is making money by having the roommates.
Reecon,
This "slumlord" crap is greatly overdone. How many LL's out there let their property (investment) go down the drain?
From the posts here, I gather the majority on this board are renters. I wonder if they are trashing the places they rent and/or renting from slumlords.
Now, clearly, it appears they don't want to live anywhere near renters - the irony!
And, Sarah's version of past uptopia is completely debunked.
Robert,
Quite interesting, all the complaining about the 8K and cash-for-clunkers yet Obama is still on teflon. Perhaps there are more Bidenites who believe paying higher taxes is patriotic.
meshell:
"Ace, you know, our water bill IS really high. Why is Arlington water so expensive, anyway? We can only take 2 minute showers and never water the lawn and our bill is always around $100."
did you check for a leak? turn off all water uses, and
see if the meter is still moving?
Ah, yes. When confronted with something, instead bring up Barack Obama (as if any of us care).
"Y'know, I thought that the Zune was a real dude".
"Maybe NoBama will start to give out iPods next".
See how easy that was?
I have a short but not-too-flattering of landlords owning single family homes.
My first experience was from 15 years ago. The house two over from mine was a rental. I had to call the city at least twice to complain about upkeep (e.g. their lawn was above my knees -- and no, that is not hypebole).
Of the 5 houses I toured this past spring, 4 of them looked like crap (to varying degrees) inside and out. The one that was actually nice and in good shape was being rented out while the owners were out of the country.
One house had the toilet sitting in the bathtub. On the outside, the screen door was off and resting against the house.
The second house had all sorts of things visibly wrong with it. The gutters looked like they hadn't been cleaned in over a year. Wires were hanging off the houses (multiple home-made satelite/cable installs). The deck was rotting and falling down. The bushes had overgrown the side walk. The front door-knob had been replaced with an interior locking doorknob. After talking to the renter, who was a professional working in DC, he didn't have too much respect for the owners. Their opinion was that it was the renters who were responsible for the small stuff. Hence, the renter (who was a nice guy with a family) did everything half-assed and as cheap as possible. Online I found complaints by the HOA about the owners not taking care of downed trees.
Those last two houses, if in good shape, would have sold for ~$800k at the peak of the bubble in Oakton and Vienna. Both of them had been bought in the 90s.
The other two I don't remember much about, except that they were yucky.
More problems at the high end:
TRUSTEE''S SALE OF 2547 Donns Way, Oakton, VA 22124. In execution of a certain deed of trust dated January 26, 2007, in the original principal amount of $1,155,000.00
http://www.fizber.com/virginia-buy-single-family-home-9707950.html
http://www.zillow.com/homedetails/2547-Donns-Way-Vienna-VA-22124/52840080_zpid/
http://mypublicnotices.com/washingtonpost/PublicNotice.asp?Page=PublicNotice&AdId=1513010
NoVAWatcher, for what it's worth, when we were involuntary landlords of a SFH, our written lease spelled out very specifically that the tenants were responsible for mowing, changing filters, gutter cleaning, and all other maintenance. We were responsible for repairing things that broke through no fault of the tenant, e.g., if the water heater stopped working, we had to pay for repair/replacement, but if the tenants flushed a bath towel down the toilet, they had to get it fixed. A draft of the lease was sent to the tenants (the husband was in commercial real estate!) for changes before the final version was prepared and signed by all parties. Despite this, these tenants continued to claim everything was our responsibility until our lawyer got involved. They trashed the house, lied to us, brought in another tenant not authorized by the lease, changed the locks without telling us even though we NEVER visited the house, etc. These charming people also insisted that we have the ducts professionally cleaned (which we weren't required to do but did) because the wife's "allergies" were bad, but they left the house reeking of tobacco, even though the lease specifically prohibited smoking in the house (the wife was a smoker). At least they did pay their rent, though the repairs when they moved out went into the thousands.
So, my point is that we don't really know from the tenant's (or a landlord's) statements alone who is supposed to do what, especially with SFHs, where the leases are different and tenants typically are expected to do more, than where there is a big apartment complex. Obviously, there are bad landlords and bad tenants and good ones of each.
I think part of the problem occurs where the rent is insufficient to cover all the property's costs, which I would imagine is pretty common around here now. The landlord is already losing money and doesn't want to invest any more than necessary. That doesn't make it right if s/he is obliged to pay for something, but I think that's why it occurs.
Sorry folks,
None of the garbage I've walked through in the past 6 months was LL owned. And it seems the examples put forth here are LL's by default.
btw - gutters and overgrown shrubs and lawns are 99.9% tenant responsibilities.
nVa_Investor: you're looking at foreclosures bought during the bubble, not SFHs bought during normal times.
2ndly: I don't care if shrubs and gutters are the tenants responsibility. The truth is that if it wasn't a rental, and therefore did not have a landlord, it would have been well maintained and cared for.
Frankly, I remember reading one of the rental contracts this past spring and thinking "F-you. I'm paying rent. If you want your gutters cleaned every year, hire someone to do it every year and factor it into the rent."
After all, my current landlord has people come out once a year to clean the gutters of the row of townhouses that he owns. He also has a lawn service maintain the grounds around the townhouses. IMHO, it's the owners responsibility to take care of their sh!t and keep it well maintained.
I knew I would get flamed for that - my Obama comment.
Our house went on the market this morning and we have just had the 8th buyers through the house so I am camping out at my sister's house for the weekend with 4 children and husband visiting his old grad school friends. We have a rental but it is a condo with dream tenants so I have nothing to complain about. But I think there are some good landlords and tenants and some bad landlords and tenants. We have a few rental houses in our neighborhood all owned by the same family. They get great rents because of the location, and I know they give the tenants a choice of doing the lawn cutting and yard maintenance themselves for a lower rent or paying a higher rent for "all inclusive" maintenance. Believe me, we have some owners whose houses do not look that good. My real estate agent paid to have the front and side yard of our next door neighbor cleaned up last week because it made our house look bad. The owner was fine with it and asked the agent to clean up the back yard too. It was too much to tackle, so we positioned our umbrella table so most of his yard not screened by trees would be blocked from the view of people coming out onto our patio. The neighbor on the other side keeps her house and yard as neat as a pin, and she is an older lady who does all her own work. So there are good and bad landlords, tenants and homeowners.
homeowner -
Eight potential buyers in 12 hours!!! Looks like you'll be managing a multiple bid process. I hope you have someone with the right skill set, whether you or the agent.
VA_Investor said... During your childhood (?) 1960 the rate was 62.1% vs. 68.9% in 2005.
Yes-- that's what I said. Home ownership rates jumped dramatically after the War-- from 43.6% in 1940 to 55% in 1950. They continued up, slowly but steadily throughout my childhood. They stalled in the 1980's and then started creeping back up again in the 90's. And then I think we're all agreed that the bubble years pushed them up above their natural rate for awhile-- abetted by banks and cheerled by Bush and people like yourself. Here's the link to the Census data on home ownership: http://www.census.gov/hhes/www/housing/census/historic/owner.html
The idea that a majority of people owning their own home is some crazy utopia that never really was and will never be again is just more of the 'buy now or be priced out forever' scaremongering that tricked so many people into stretching far more than they should have to buy before it was 'too late'.
Sara said:
"...abetted by banks...and people like yourself..."
And this follows your "renters..should be owners, not investor's"
I correct you on your dear old memories and you state I'm a "buy now or be priced out" fearmonger.
I am the one who said that people who never should have bought were put in homes and this is the cause of the foreclosures.
How do you reconcile the obvious contradictions in your attacks on me?
Robert We don't have any offers yet but we hope the house sells quickly. Our agent found a house for us through another agent before it went on the market. If we can get our house sold before Sept. 7, the people will keep it off the market and sell it to us. It is a rare 4 bedroom 2 bathroom upstairs house in an area we really want. We worked with our agent to buy this house, and she is one of the best agents in Arlington. I refer her to people in my mother's group all the time and she gets good results for them. Plus she is smart about financing and always gives good advice. We went through scenarios about what to look for in a buyer versus price. The certainty of the deal for us is more important than squeezing every dollar out of the house. So we are hoping for a non-contingent buyer who is well qualified with conventional financing -- as I said we are hoping!
Yes, everything is about you, Va_Investor.
housebuyer,
Agree, it's not always the highest offer that is the best. There are so many terms. Difficult buyers are sometimes easy to spot. It sounds like you have a good agent. Realtors get hammered on this board, but some are worth their weight in gold.
It also sounds like you are in the sweet spot of the market. It's hot where you are selling, but maybe less so where you are buying. Sometimes things line up in life.
Keep us updated.
Robert: I'm about the last person anyone would call a Democratic sympathizer. But blaming this on the community reinvestment act is gross misrepresentation of history. I would go so far as to say that that is either a deliberate meme put out to deflect blame, or even worse, political opportunism (i.e. party over country). The last one particularly irks me, as it comes darned near close to treason in my book. There is nothing as irksome as warning about he derivatives mess for years, and then someone comes in and blames it on CRI and everyone runs with that. Instead of worrying about derivatives, we've now got people hot and bothered about the CRI. IMO, CRI is lame, but wasting energy on it rather than derivatives...seems deliberate at times.
I know a few Wall Street quants that are laughing their ass off at that one (blaming CRI). Believe me, cheap computing power and [flawed] advanced statistical modeling (as well as a misunderstanding of human behavior) had far more to do with this mess. I would go so far to say that had CRI never been legislated, we would still have gotten into this mess, as derivatives and tranches were coming, one way or another. Whether it would be as bad as it is is open to debate, as Greenspan's post-911 interest rate plunge had a multiplicative effect.
So, Barney Frank had nothing to do with this? Is that what you are saying? And the CRI?
CRI = CRA when I type too fast and think too slow.
And yes, I think Barney Frank is a weenie. And, no, I think Barney Frank had nothing to do with this, other than lax oversight. Blaming those guys is lazy thinking and misses the point (although sometimes I think that is the point).
Tranches and other derivative voodoo were coming one way or another (I actually considered becoming a Wall Street quant in the 90s). Phil Graham's and Bill Clintons deregulation at the turn of this century set everything up for disaster, when in truth, they needed to be regulated*. Afterall, sunshine (i.e. transparency) kills all germs, or however the saying goes. And transparency, to me, is reasonable regulation. I know of village in Norway and a school district in Pennsylvania that would agree.
* I can't believe I'm saying that, but when the world has a long history of falling banks, fool me twice, won't get fooled again. Pragmatism rules out over my libertarian idealism.
I've been a renter in 4 different places now since 2002 and none of them have required us to maintain the gutters. I agree that if the landlord wants someone to climb up on the roof and clean the gutters then he/she should add it to the rent and hire someone to do it. I'm not climbing up there for a house that I don't own. Yardwork is fine, and has been written into my leases one way or the other every time. The chimney was always swept professionally before we moved in, and written into the contract that should we use the fireplace we would have it done when moving out. That is fair. However, I'm not cleaning the gutters, patching the roof, or paying to have a dead tree removed from the property. Those are joys of homeownership - and I'm a renter!
"if the landlord wants someone to climb up on the roof and clean the gutters then he/she should add it to the rent and hire someone to do it."
Absolutely.
It's the cost of doing business.
Both parties were asleep at the switch at best, that or actively promoting courses of action that exacerbated the bubble.
Both parties bought into the BS idea of "promoting homeownership" though a bizzare system of government intervention in the markets with insufficient regulation, a recipe doomed to failure.
Fannie and Freddie were classic examples of this approach. The whole world assumed they would receive government backing if necessary, and treated their debt accordingly, this allowed them to monopolize the segments of the mortgage market they participated in. They then took every risk imaginable while carrying out one accounting fraud after another.
Honestly Fannie and Freddie were just about the worst possible approach to the problem.
A government bureaucracy wouldn't have made the risky choices Fannie and Freddie did because it would have had no motivation to seek a profit.
On the other hand...
Truly private companies without "implicit" government backing would never have been able to grow as large as Fannie and Freddie did and completely dominate most of the nation's mortgage market.
The Democrats screwed up particularly badly by protecting Fannie and Freddie from badly needed regulation in the years leading up to their ultimate collapse.
On the other hand... the Republicans were completely useless when it came to regulating Wall Street as the financial bubble there was growing out of control under the Bush administration.
The basic problem is that it is far too easy to buy off Congress.
Congressmen may not quite work for their bank rollers, but they are certainly hesitant to do anything that might complicate their future funding.
Landlord tenant relations are a matters of contract. If the tenant prefers to pay more so that yard work etc. Is done, that's what the contract should say. If instead the parties agree to a rent conditioned on the tenant's doing yard work, etc., then that's the tenant's responsibility. It's that simple.
In our case, we started with the standard lease ageement for sfh in that state, and both sides made modifications. So it was a pretty typical lease. We were also out of state, which the tenant knew, and neither of us wanted a mgt. Company.
The terms you want and agree to are not necessarily what someone else signed into his/her lease.
Went to an open house today. The house looked much better in pictures than in person, but that's a different story. The realtor could not figure out how to turn on the AC so instead she opened all of the windows. That's not how to sell a house on a 95° day.
Va_Investor,
My take on what Sarah is saying (or my gloss) is that a regular white collar worker (or even higher paid blue collar worker) could afford to live in a decent SFH in the Madison-Oakton-Woodson HS districts. Using a 3x income rule one could have bought a modest SFH in those nice school districts with a family income of $85,000 or so from the late 80s to 2001-02 or so. Those who had more money could have moved to pricier areas like McLean, Great Falls, or North Arlington. Those who had less money could have moved further out to Chantilly, Centreville, etc. And as we've gone over some would trade space for shorter commute and take a small rambler or TH further in or take the longer commute for a McMansion further out rather than modest SFH.
When home prices more than doubled in those areas the required family income similarly doubled. housebuyer argues because of lower interest rates it's more like 4x income. So 120% increase in average home price and 4x income that requires a family income of ~$140,000. This came over a matter of five-six years. That is crazy. Remember that we are talking about modest SFH, not McMansions.
It's relatively easy for a married couple in their early 30s with both parents having college degrees to get to $85,000 -- even if one parent works part-time b/c of children. If one person is doing particularly well you can even afford a stay at home parent. To get to $140,000 you have to have both parents in fancier jobs and almost certainly no one SAHM or part-time. As we've noted a million times there is no evidence salaries increased enough to make $140k the new $85k and because of divorce and more singles there are plenty of people not in two income families. So the housing bubble if not corrected was going to shut out an entire generation from the middle class lifestyle.
And even pre-bubble it was tough enough to have a middle class lifestyle in this area -- most people only got it by moving further and further out because home prices were expensive even in 1998. But it worked out because most people who choose to live her long term and want a middle class or above lifestyle are highly educated and can get a white collar job.
Robert,
I think you are Obama's biggest fan on this blog. You are like those creepy people during the primaries who practically worshiped him. I can't seem to reason with you that Obama operates in a federal government with three co-equal branches (Congress, President, and Judiciary) and is further constrained by the media, public opinion, midterm elections, and the willingness of investors to buy up public debt.
I see no evidence that moderates in Congress will support the massive deficits (or huge tax increases) needed to support the expansion of gov't you predict. I see plenty of evidence that the media already is getting critical of the deficit spending, evidence that public opinion wants to end these massive deficits. Midterm elections TBD and continued willingness of China et al to invest in U.S. debt remains TBD. But there are signs they would not want to see the current deficits become the norm.
You are in so much denial about the belt tightening that is coming that I can only guess you worship Obama and think nothing can stop him. ;)
"When home prices more than doubled in those areas the required family income similarly doubled. housebuyer argues because of lower interest rates it's more like 4x income. So 120% increase in average home price and 4x income that requires a family income of ~$140,000. This came over a matter of five-six years. That is crazy. Remember that we are talking about modest SFH, not McMansions."
Exactly, there have always been expensive parts of DC as there has always been a lot of money in DC. What has changed in recent years is that rather than expensive neighborhoods, we are talking about whole regions of the city being incredibly expensive.
It used to be that someone living in this area and making a good but unexceptional salary could expect to buy a decent SFH in a decent neighborhood.
Nothing special, but decent and affordable.
Even with the bursting bubble that balance has not yet been restored.
Robert,
Really, a comparison from San Diego? For at least as long as you've been reading this blog, we've been assidously avoiding applying CA numbers to the DC market. Occasional qualitative comparisons are one thing, but if there's anything that's been learned here it's that our affordability and mortgage markets were never as insane as San Diego, and hence that the trajectory of both our bubble and its deflation has been and will be strongly divergent. So to casually apply a San Diego number now that it's convenient for you is a bit specious.
I know, you weren't around last time we shouted someone down from applying the dire CA numbers to the DC market. So just sharing some of the accumulated wisdom. Qualitative comparisons can be illuminating, quantitatively our markets are about as divergent as they can be and still both have had bubbles.
inkstone,
Good luck, and thanks for keeping us updated.
Oh, and Va_investor,
I made an estimate months ago for the pent up demand, for FFX County it was 14,000 more renters in 2007 than 1998? who made over 150k? a year. From the ACS survey. DC had no excess, nor did PG County (I believe it may have had a decrement). Some of these have already bought since 2007, some of these will keep waiting. So far I think the cumulative number of REO's in FFX County has been about 12,000 using the WaPo graphic and adding them up in my head:
http://www.washingtonpost.com/wp-srv/package/business/foreclosure/fairfax.html
So by this measure the total pent up demand accumulated over the course of the bubble has been almost exactly offset by the supply of foreclosures. However, HH making over $150k a year are not going to be buying the TH's and condos and tiny SFH's that have made up the bulk of the REO inventory, so it doesn't really work like that. And even more people will have been holding off purchases since 2007 given the obviousness of the bubble at that time. So, I'd say we have 1 year of pent-up buyers on our hands in FFX County (2 years * 50% holding off on the purchase) and housing stock that doesn't line up with their wants and expectations.
But given that foreclosures are rising in FFX County, and clearly not overwith yet, REO's may start to outnumber buyers sometime later this year. Nothing that price won't fix.
Oh, and on the owner versus LL thing, it's all about actually having the money. The trash outs and lack of repairs are going to occasionally just be from jerks (from which no population of people is immune) but mostly its whether the owner has the funds for upkeep, whether they're a landlord who paid too much or didn't factor in vacancies and maintainence sufficiently through inexperience, or whether they're an owner who got into financial trouble and tried to use the home ATM to pay for everything, not realizing that this just delayed the inevitable. (almost EVERY REO or Short I see was bought for well under today's prices)
Cara,
I understand and completely agree with your broad point. I've been a vocal an opponent for those that rant about the national figures, that logically include AZ, NV, CA, and FL. But, my point was a narrow technical issue with the MRIS active listings. Since we've never had a housing market dominated by REO's and short sales, my contention is that the MRIS needs some rule changes regarding the status of REO's as they go through the banking system. And those rules need to be enforced, so that buyers and their agents don't waste time on listings that are basically under contract, but are listed as active.
StayingPut
The one I bought did the same thing, the price dropped but it was listed as KO well after we had it under contract. I suspect the realtor does this so they can say they got above list or something. She wasn't too happy when I took their sign down the day we closed, either.
Robert,
So long as you're backing away from the numerical statement I think we're in agreement.
Enforcement of the existing rules that stipulate that a listing must be marked U/C or contigent as soon as there is a signed contract would be highly desirable. If I were actually concerned about this, I would email Frank LLosa or some other realtor that you feel is more well-established.
When we put in our offer on the short, Jeff Royce (from Frankly) said that if the listing agent didn't mark it as under contract appropriately that he'd file a complaint against him. As it turned out the LA flagged it contingent immediately upon recieving our offer, because he was so sure the seller would take it, and we freaked out briefly thinking that a competing offer had "won". What consitutes filing a complaint and why it is that Vanka and Va_investor have not found that to be effective is another question. My guess however, is that if you get enough complaints filed against you they may take away MLS access or some such, but I'm purely guessing.
In San Diego, Jim the Realtor is trying to get them to establish a common practice set of guidelines for the short sale process. But that's just that MLS, and it sounds unlikely to happen in a timely fashion.
Cara,
I think you've seen me posting about reverse shadow inventory as regards to South Riding. At any given time, I have found about 10% of listings have some revised comments in the remarks section about only accepting backup offers, bank is working on an offer, or multiple offers received - not accepting any more offers - and these are all listed as "Active."
I don't think I'm far off assuming another 10% of the listings are in a similar situation, but the LA hasn't updated the remarks section accordingly.
So, I'm sticking to my 20-30% number unless proven otherwise.
...we freaked out briefly thinking that a competing offer had "won".
If you mentioned this before, I don't remember.
Robert,
20-30% is a perfectly good estimate if you're basing it on local data. Things go under contract so fast in Burke right now it's hard to detect anything sitting there actually under contract but listed active. Almost all of the actives are "new" so I doubt there's a lot of this reverse shadow inventory mucking things up further in Burke. But as we've now seen Burke appears to be it's own little beast (as is Reston as far as I can tell).
We put in an offer July 22nd?ish and got a signed contract back on the 28th, with a brief freakout on that Monday? you may have been on vacation then,
the day in question
As it turns out I was much calmer in my postings than I was in my frantic emails to my spouse and our realtor, so the tenor of terror/relief is missing.
TBW,
My knee-jerk reaction to your post is: dude, Obama just passed a $787B stimulus that is IN ADDITION to his $3.55T blowout budget. I don't understand how you can ignore the Stimulus as a huge expansion of the Federal Government. That's about on par with the total cost of the wars in Afghanistan and Iraq since their beginning combined.
There is scant evidence of belt-tightening other than some broad comments from the Treasury Secretary to the Chinese that Obama is worried about deficits.
Of all of your "constraints" with Obama, the most serious and out of his control is foreign or even domestic purchases of US debt. But the recent numbers support healthy appetite for our paper. Real people with real money are buying our 10 year treasury notes with only the promise of their money back in US Dollars and 3.5% interest a year. I would say that constitutes more than adequate demand for our debt. Nobody knows the future, but if you "know" interest rates are going to rise in the future, you can make a lot of money shorting US bonds. BTW, as you know, interest rates have fallen since Bernanke withdrew from future purchases of treasuries, because there is strong demand from private investors.
What still defies reality is your continued statements about how the American people are somehow going to revolt over deficit spending and expansion of the Federal government. Obama's platform was expansion of the government - health care, cap and trade, education. And they voted for him. He promised big government and they elected him. Until the American people speak again in 2010, I think it is right to assume they still want massive government and massive tax increases.
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