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Saturday, August 22, 2009
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23 comments:
RE: the interesting phenomenon of REO asking prices versus last asking price as a short sale
http://franklymls.com/MN7140917
Here's a house in our old neighborhood that provides an excellent example of the progression from "outrageously overpriced because we bought high and/or cashed out" to "short sale desperation" to "more pragmatic REO."
Last sale:
1/20/2005 $560,000
PREVIOUS LISTING PRICE HISTORY
1/13/2009 $680,000 162 days at price
6/24/2009 $399,950
CURRENT LISTING PRICE HISTORY
8/21/2009 $305,000
09 Tax A: $446,300
If you see a crazy inflated price around here, what you're usually seeing is someone frantically trying to believe someone else will save them from inevitable financial destruction. I just wonder why realtors take those listings.
Bank prices have gotten very pragmatic. And pragmatism pays with multiple offers, though not always a final price much higher than asking.
Yeah that dude was smoking the crakpipe pretty hard when he paid 560k for a 20 year old house in Manassas, but he was certifiable when he listed it for 680k!
Considering how low the incomes are in that area, 200-250k seems like a reasonable price.
Tabs,
The owner is a flipper/realtor so I guess that is why it was listed so high originally (my parents know a neighbor on that street). He apparently went crazy buying properties and then declared bankruptcy last year.
Doug, that neighborhood (over by All Saints) was traditionally one of the nicest in Manassas (city proper)--before all the other "developments" were built. So if you were going to spend too much, that neighborhood wasn't a bad choice.
680 to 305k, though, is crazy.
I think that's a fair price for that house, unless there's something really wrong with it.
This one sold for right around the same price, and looks smaller and older:
http://franklymls.com/MN7125281
Meshell,
Thanks for the intel. I wondered what the story was...we had our eye on that house, except for the pool taking up the whole backyard. We always walked past it on the bike path between the two parts of the neighborhood. I knew it must have become bank owned when I saw the grass a mile high earlier this summer.
I think there is no question that IS the nicest neighborhood in Manassas, though houses had been taking two and three years to sell until recently. In fact, we almost bought a house right across the way, on Trusler, but after being on the market for almost three years, someone came in and put it U/C right under our noses.
Thank goodness! It sold for $525K, and for another $25K, we got our dream house.
But I do miss the kids being able to walk to church and their friends' houses.
There's the house on Peabody that will have been for sale for four years pretty soon:
http://franklymls.com/MN6747559
Doug said...
Yeah that dude was smoking the crakpipe pretty hard when he paid 560k for a 20 year old house in Manassas
Waiting for a comment from Arkey (whose Manassas home was listed at 565k)...
Meshell,
I agree with your comment in yesterday's post that the unemployment stat is questionable. That's why I like to look at this chart
BLS Stats including U-4, U-5, and U-6
The other measures of unemployment that include discouraged workers did go slightly down as well 0.1-0.2% between June and July.
My guess is that there is a 10% chance things are getting better and a 90% chance this was the result of a lot of people becoming underemployed. As more and more people are running out of unemployment benefits they might be more willing to take that retail job even though they were previously a white collar worker.
From the Post:
It's one of the biggest unknowns bugging would-be buyers of houses and condos this summer: Will Congress let this year's $8,000 tax credit for first-time buyers expire as scheduled 14 weeks from now? Or will the credit get a second life and be extended for another six to 12 months, taking pressure off buyers, realty agents and settlement companies?
...
But can any of this happen before the Nov. 30 deadline? The key complicating factor here is Congress's heavy load of higher-profile, pressing issues that will get attention before anything else in September and October. That includes health-care reform, climate change and energy, financial system regulatory reform and a new Consumer Financial Protection Agency, among others. On top of that, a tax-credit extension would cost billions in lost revenue -- a big negative when the federal budget deficit is already wallowing in a record amount of red ink.
In the end, however, given the political economics of the housing credit, the odds favor some sort of extension, probably later rather than sooner. Don't bank on a bigger credit, however, or on a broadening of the concept to cover all buyers next year.
First-Time Home Buyers in Limbo As Congress Weighs Credit Extension
LOL, Tabitha, small world-you all go to All Saints? That's my parents' church. 5:30 Saturday Mass; left side-strategically perched by the side exit ;).
Please put me out of misery if I ever have a house for sale for 1266 days and counting! I looked at the property assessment and the owners paid 28k for the place---really, they can't afford to go any lower? I wonder how much more they could have sold the place for if they had priced it reasonably 1266 days ago?
Meshell,
I actually know the details of that house, and they are sad.
When we first moved here in 2006, it had already been for sale for a while, and they started off asking $750K, but had recently marked it down to $699K. Before you fall over laughing, note the 2006 assessed value. Yikes.
When we were in a moment of desperation back in 2007, and they were asking $525K or so, we actually thought about putting in an offer, because we loved that neighborhood so much. But at the time, our realtor was saying he couldn't even think of offering less than $400K, but I knew full well that the place was only actually worth maybe $250-$300K. Solid, cute little house, but not a thing had been done to it since it was built. Needed virtually everything redone. We had even called our realtor to the house to write up an offer, and I just couldn't do it. I knew it wasn't worth anywhere near as much, and that I was acting rashly.
Here's the backstory: the owner must have decided to sell at the peak, because she and her husband bought a place in Sumner Lake (a new development close to the Prince William Hospital) before they sold their house. They paid $539,900 for the new one in May 2006, and now it is assessed for $314,100. I highly doubt their first house is worth $314,100 now. In the meantime, her husband passed away. So now, instead of having cashed out their "$28K in the 70s" house, the poor lady is upside down by at least $200K on her new house, and can't sell her old house, which has been vacant for more than 3 years.
If she had asked $499K in 2006, it probably would have sold, non-updated and all. But since she had just spent $539K on a house half that size with no yard, and since the City of Manassas told her it was worth $750K, why would she have done that?
So sad.
PS Small world indeed! We're the family with naughty brown children constantly being brought outside and spanked ;)
I'd seen three contracts for a short sale, this one has four:
Link
All--long time lurker, occasional poster here. I have a quick question for the experts and franklymls-savvy among you: is it possible to find out how much a contracted-but-not-yet-closed house was purchased for? There are several yet-to-close properties that would be useful comps but I have no idea what they went for.
Thanks in advance for any tips you might have on this!
Good evening folks, some open house reviews for MD here: http://marylandbubblefallout.blogspot.com/
Forgive me if this topic has been dealt with already, but WTF is an "open house" "by appointment"? Does that make sense to anyone?
Hokietown,
You could check the County Assessment Website for previous sales. Here's Fairfax County's Site. Other counties are listed on the front page of this blog.
Hokietown, someone once told me that Realtors cannot (by law?) (by their code?) (by tradition?) reveal a contract price before the sale closes, because--if the sale does NOT close--it could adversely affect the price the seller might get from the next buyer. And the seller's Realtor is obliged to act in the seller's best interest. For example, let's say I was interested and willing to pay $300K but found out that a contract for $280K didn't close. I might then offer only $280K.
Hokietown, I misunderstood your question. I thought you were asking about previous sales, but it does appear that you’re asking about the current contract price. Ace is right, there’s no reason for the seller to disclose the contract price to anyone other than the current buyer. Technically, it’s not a comp until it closes anyway.
Thanks Ace and Novahog- not surprised but wanted to make sure!
Millions of people face shrinking Social Security checks next year, as officials project that benefits will stay flat for the first time in a generation.
The trustees who oversee Social Security are forecasting that there will be no cost-of-living adjustment for the next two years. That has not happened since automatic increases were adopted in 1975.
By law, Social Security benefits cannot decrease. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to rise slightly.
...
Cost-of-living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels.
Social Security Expects No COLAs for 2 Years
Sounds like contrarian is right that deflation is occurring.
In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the annual inflation rate falls below zero percent, resulting in an increase in the real value of money — a negative inflation rate.
Am I missing something? I recall many spirited arguments where some of you say contrarian is wrong about deflation but looks to me like the official gov't statistics show deflation is occurring.
TBW-
I don't think anyone has claimed there was a minor amount of deflation over the last year. I am pretty sure the CPI is down 1-2% during this period. This is almost entirely due to the drop of oil and food prices. I am pretty sure the core is up ~1%.
I think we just don't believe we are going to see long term deflation or massive deflation as in a great depression scenario.
In fact seeing how severe this recession has been and how quickly energy prices fell I find it amazing that the core inflation rate has not fallen.
Tbw,
Thanks for the links.
I agree with K. HArney's conclusion but at the same time hold it suspect. The man can't read legislation. His "expert columns" have been subtly wrong on at least two occasions. (not that I'm going to be able to find them) and worse, he doesn't respond to criticism at all. I've written asking his source for information he states as fact more than once, with no replies. So, I just flat out don't believe him anymore. Although I already know everything he stated in this one with respect to legislation is true.
His page is generally more rumour than truth, and things usually pan out differently than he predicts. Although he has given the occasionaly useful head up, like on the HVCC and the new lender Truth in Lending statement requirements.
"TBW said...Am I missing something? I recall many spirited arguments where some of you say contrarian is wrong about deflation but looks to me like the official gov't statistics show deflation is occurring."
TBW -- I dont anyone disagrees that deflation is occurring, its just the size and scope of the deflation that contrarian thinks well see that most of us disagree with.
For example, heres what deflation looked like during the great depression:
http://2.bp.blogspot.com/_P6hcLu1z9Nw/Sox4tEgj3pI/AAAAAAAAAmw/A2SwGL5puw0/s1600-h/deefl.gif
However, this is what we have today:
http://1.bp.blogspot.com/_P6hcLu1z9Nw/Sox5IUwFGfI/AAAAAAAAAm4/F6mamndMoe0/s1600-h/infll.gif
On a year over year basis it looks like we have 1-3 more months of deflation before we go positive YOY. Not exactly the situation that leads to 90% off home prices contrarian predicts.
I agree that I do not see things getting out of control akin to the depression. I thought some though said there was no deflation and I just wanted to note that was wrong.
I wonder what all these stats would be if health care costs were under control. I presume health care is in the CPI basket of goods?
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