Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
For all of you playing along at home, last night we went to see:http://franklymls.com/FX7178210It's a no.It's 1495 sq ft including the basement, but at least 100 of that is hallway, and the remaining amount was not allocated judiciously in our opinion. The eat in kitchen area was a nice size, at the expense of a tiny living room, the storage area in the basement with the W/D was huge, at the expensive of the living area downstairs, the second and third bedrooms were totally reasonably sized, at the expense of the master bedroom, who's bathroom was inefficiently large.There were other little things that gave us pause, but the bones just weren't right so it hardly matters. The buyer who paid $260k for that in March of 2008 out of foreclosure, overpaid, ones with decks went for less.My opinion is the builder spent more time on the cute factor for the exteriors than they did thinking through the layout. The organization would be fine if the whole house were expanded 20-30%, but in 1495 sq ft? It was a poor choice.So, we'll get our escrow money back, keep an eye out over the next couple of weeks, and then retool our search for an expanded area in early November.
arkey,Are you saying that there's suddenly now two buyers waiting in the wings?
Does anyone have any recommendations for a reputable company for asbestos testing and asbestos removal? This is for residential homes in Arlington built prior to the 1950's. My understanding is that it is best testing and removal be performed by two separate companies.Any suggestions would be appreciated.Thank you,My $0.02.
I am always fascinated with how housing blogs treat the recent turn around. Years ago, they were all negative, and rightly so because reality was negative. But that made it hard to distinguish between the realists (calculated risk, Piggington, this site that would treat a positive sign as a potential positive) and the permabears (Mr. Mortgage, Patrick, etc.) where positive signs were nothing more than doom in disguise.I think I have found the mother of all permadoomer sites:http://reallyfuckedhomeowner.com/Clearly, the title of the blog (and the charming picture of a house packed with explosives, burning) shows you, this guy has no agenda to push. Clearly when things turn around, he will be the first one to spot it and tell his readers. I love his new post explaining why an increase in listing prices is nothing more than increased desperation of homeowners. Years ago, this guy told us lower listing prices is a sure sign of doom. Now, he is explaining why higher listing prices is yet another sure sign of doom! Too bad increased listing prices is also a sign of the bottom. Yet never fear, this guy is able to distinguish between a true bottom (where listing prices rise) and a false bottom (where listing prices rise). Glad to know he has such immense powers to distinguish. Clearly his view is unbiased and could not be colored by what he wants to see happen...Hey Contrarian, after this blog wraps up, you might want to head over to this site. I am sure he will be there for years, perhaps even decades from now, explaining how any increase is nothing more than a sign of increased doom to come - the sheeple will get slaughtered, but his select few readers shall be the true winners, buying homes in prime areas at 90% off peak. This guy has a deep reservoir of doom aid, from which you can glug glug glug for all eternity.
Texas Native,That is impressively using every inch. I approve. :)
Cara,There were other little things that gave us pause, but the bones just weren't right so it hardly matters.I don't know why, but when I read your comment above it brought me back to this one from our Spring shopping:http://franklymls.com/FX7010280We actually had to see this house twice to believe it. First row of photos, 5th photo. Nice BLUE bath. Interesting use of every square inch of space under the 1941 built frame.7th photo, 1st row. Just in the upper left of the photo, barely peeking in, is the narrowest walk-in closet I've even seen crammed into a roofline.When you said "bones" I remembered this home because I think I saw all of its "bones" when I was there.
The Anonymous said..."Too bad increased listing prices is also a sign of the bottom."Right. Not a sign of a $8000 bribe for buyers to jump in the shark tank, thereby increasing the housing demand. Has to mean the bottom is here, because increased demand would never cause prices to rise.
kevin,If you read it, I recall his argument was that the higher list prices are a sign that seller's are anticipating people low-balling, so wanting to give themselves negotiating room. No mention whatsoever of increased demand. And heck it could be true wherever he lives.
Cara, I don't believe the blogger's explanation, nor do I think the anonymous was right in asserting that we're at the bottom. Just pointing out that because there is nothing natural about the market with these influences at hand, there is nothing that can be concluded until these influences are removed. I think that the listing prices speak for themselves. I don't see how there could be a sudden aggregate increase in response to anticipated low-balls. There's just no force to create that kind of behavior in the larger scheme of things.
kevin,I agree with you that the blogger's argument was nonsensical. I believe that was Anonymous's main point, that flaming housing debacle dot com or whatever was going to remain bearish no matter what, because given a piece of data he just comes up with some bizarre interpretation to twist it into yet another sign of DOOOOM.What you're saying is quite different. It recognizes the reality of higher prices this summer and fall, attributes it to the crazy low interest rates and $8k bribe (which is accurate), and infers that when thes are removed, the bottom could fall out.Where you and Anonymous disagree is on how long can the new level of government manipulations persist.
Cara, Correct interpretation, as always. Like last week when you decifered for me VA_Investor's strange assertions that were driving me nuts, you have a good way of "cara-fying". Sorry...I don't deny that without the $8k bribe, we could have in fact seen the market bottom here. I just don't know. I look at the housing prices tracked for inflation, where they deviated, where they came down to, and believe that because of the increased household GDP in our area outpacing inflation over the past ten years that prices don't have to go back down that far to meet their natural bottom, we're still not close.So comes the issue of the buyers bribe. Well, when that goes away the first thing that has to happen is the removal of the increases that occurred because of it. I'd say prices generally shot up between 5% and 10% during this period. So we return to prices of last winter, but now that the buyers bribe will be gone (let's pray that happens), there is an essential absence of any first time buyers for several months. Desperate sellers will react, as they always have, and the pricing free-fall will commence. If FHA raises its standards and/or rates, that will really push prices lower as well.These are my opinions and thoughts. Please feel free to dispute or back them up. I just see too many inevitable downward-pushing forces that have been the proverbial cans kicked down the road to believe we're anywhere near bottoming out. I'm actually flabbergasted that the govt could take such manipulative measures and people don't consider it when analyzing the market. "Oh it bottomed!" No, it didn't. Stop looking at just the numbers and think what could be causing this, and whether it is permanent.
Kevin -- as Cara points out, there is more than one explanation for this. (a) increased prices, or (b) increased desperation, we can now add to that your point of (c) increased manipulation. Any one of these is an acceptable answer. To assume its one, without considering the others is where I disagree with the author's objectivity.
Kevin,Your post-Nov scenario definitely could happen. I'm just worried that it won't. The have's and the have-nots are so distinct in this recession, there's a question of whether people with good jobs will go out an buy as soon as prices dip down to last winter's level. (I think prices will do this just because it's winter and more foreclosures are continuing).A heart restarted by a CPAP machine can keep on ticking for years. Or it may need double bypass... or develop a-fib and never truly recover...For the nation, and California/Florida/Nevada? I'm totally and completely bearish. This summer/fall was a total bear trap for some nice tasty FHA buyers. For NoVa, I don't know. But gosh darn it a reasonable sized condo with a basement in Burke/Springfield shouldn't cost us over $300k. So I'm once again hoping a little more air gets let out of the bubble soon as the first-timer gap appears. But if NoVa falls, the rest of the nation is going to falling a lot harder, and I worry that the response of the government will postpone our nice affordable houses another year or two or ten.
The Anonymous,I agreed, and I think that if someone is to use the prices as the true barometer, then try to come up with an excuse, it should be credible. The author's is not credible because (I am presuming) that there is nothing to back that up. That is, no force or instigation to point to. My theory of course on why our prices went up is because of the buyer's bribe. That is a known occurrence obviously, so the inference could easily be made. Did the author have any sort of similar inference to draw his claim? It just sounds lazy....
Really, his agenda of being doom driven rather than reality driven was evident from his predictions this spring. http://reallyfuckedhomeowner.com/2009/03/29/rearranging-deck-chairs-on-the-peninsula/"Here is why we are in for that second more hellish ride straight to the bottom. In the short term the credit markets will get a swift kick when we finally have a large bank failure come to light. Give it 3-6 months and my FDIC insured money is on Bank of America. There goes the financing revival."Yep -- the catastrophe late 2007-early 2009 was mere childs play -- March 2009 & beyond was about to get "hellish" -- glug, glug, glug...But wait theres more:"Well while prices have begun to level in the outskirts like Vallejo they haven’t really begun their fall in Silicon Valley and the Peninsula." Glug, glug..."Right now people here think “whew that wasn’t so bad” (only a 10% drop in value) but in reality what these market movements (dramatically falling median home prices) presage is a large fall coming to the Peninsula this year."Glug, glug, glug..."My prediction (or is that a “sinking feeling”) is that this summer will feel “soft” on the peninsula and that will prick the confidence bubble leading to the same panic here that happened last year in the suburbs. This is when 30-40% price drops (peak-to-trough) become a reality in Palo Alto by summer 2010."Yep -- apparently, the rising asking prices is the confidence pricker he is talking about. Since Palo Alto prices stagnated March til now, the rising asking prices is clearly a prellude to the "hellish" 30-40% drop that will start now, and end "by summer 2010" glug, glug, glug, glug, glug, glug......
tbw,Because I think there will be a gap in demand regardless. If it gets extended, people won't feel rushed, if it goes away, those with little to no cash will have to save up for a few months/years.Of course, I said I was waiting, and then went and looked at every listing in my new expanded area. Slim overpriced listings, but maybe if they age a bit, they'll be ripe for the picking.(oh and you were sooo right about that listing being a flipper. The pictures were from a year ago before he rented it out for the year, probably hoping for a better market to sell it in, which has indeed arrived if anyone likes it, if not I bet he rents it out again for another year)
"TBW said...Maybe you'll realize that the bears here (other than contrarian) are pretty mild compared to most housing bears."TBW -- yes. Most of them ran away after it became clear it wasnt going to be the armageddon they predicted. Thankfully, we still have Contrarian."Kevin said...I think that if someone is to use the prices as the true barometer, then try to come up with an excuse, it should be credible. The author's is not credible because (I am presuming) that there is nothing to back that up. That is, no force or instigation to point to." Precisely. I havent looked it up, but to my knowledge, there is no historical precedent for this (what he is describing) happening. A healthy drop in listing prices, followed by a healthy drop in sale prices followed by an increase in list prices, followed by capitulation?Also, why now? Why at 3+ years into the downturn? I could see this happening in the 06-07 timeperiod, but to think it would happen now, after a healthy, just not spectacular decline? Sounds dubious to me.
"TBW said...I do object though (not saying you do this but others do) that when I say mortgage rates will go from 4s to high 6s/low 7s between now and December 2012 that I'm treated as akin to these people."Noted... By the way, regarding your earlier point about seasonality, I dont know why it isnt more widely reported, but there is a seasonally adjusted CS index out there which removes this as a factor:http://www2.standardandpoors.com/spf/pdf/index/SA_CSHomePrice_History_092955.xlsThis shows prices are still rising, but at least not as much as on the non-seasonally adjusted series.
What's it matter, I have it on good authority (popular TV and movies) that the world is going to end in Dec 2012 anyway.
Cara,In response to the shadow inventory and accidental landlords question, yes I did run into a couple accidental landlords, i.e., people who didn't want to be landlords, but ended up in that position because they didn't want to sell in the current market.These were people who owned their homes long enough that the rent probably covered there expenses with money left over. They had tried and been unable to sell because of "low-ball" bids. They did not want to be landlords, but they also did not want to sell too far below the peak value.These are people who moved out of their houses, and would have sold at the time they moved in a normal market, adding to inventory. Now they are waiting until prices go up, or until they tire of being landlords. This is shadow inventory, as it is housing available to buyers willing to pay the right price, much like an clearly overpriced listing. The owners have already decided they want to sell. It is just not officially on the market now, as the owners know that it will not sell at their required price. As prices rise these houses will soak up demand, slowing the price rise. If it takes too long for prices to rise some will capitulate and sell. Worse case, if prices would start to fall again, some could decide to cut there losses and sell for what they can get, further driving down prices.For anyone wondering, this is not a definition of shadow inventory I made up. Other use it, including Calculated Risk:http://www.calculatedriskblog.com/2009/08/shadow-inventory.htmlwhere it falls into the "Homeowners waiting for a better market" category.
tiredbubblewatcher said..."This is why NAR, NAHB, etc are so adamant about the $8k credit being extended. That would be a double whammy of winter + no more credit."Or, for us tired bubble-watchers, it would be awesome. Not trying to wait this game out forever, let the market move on its own!
KeithKI think we're totally on the same page. It's just that to me what you've described is a mechanism for keeping prices from rising quickly, as opposed to an independent mechanism for price drops. The wrinkle you just added, that if there were a drop, some of these folks capitulating could reinforce the downward momentum, is an interesting one.I see those who are barely covering the mortgage with the rental income as the more likely suspects for rapid capitulation, than those with pie in the sky ideas about what they should get for their home. But everyone will reach a tipping point sooner or later. Kind of like I eventually sold my knife-catcher Cisco shares last year (pre-AIG/Lehman Bros) to have the losses cover my interest income from ING...
KeithK,How do "homeowner's waiting for a better market" compare in number to "buyer's waiting for a better (lower) market"?Is anyone here considering pent-up demand as a factor in recent price and inventory changes or is it all "market manipulation"? As an investor, the 8k isn't bribing me to do anything.
tbw,good point. We're actually more likely to move into the TH next to our best friends, once the LL has fixed it up (had the same tenant for 20 years).The month to month is an extra $200/month over "market" rates (where the market rates have led to a vast increase in parking availability).
When price trend downward because of winter and the removal of the credit, all you'll see will be REO inventory on the market again. Since many of the markets have seen their inventories mopped up in the last several months, it may take some time before enough inventory bloats the market and forces significant price declines.Outside of the recession getting worse, I wouldn't expect to see prices drop 20% just because an 8k credit disappeared. Then again, like the rest of you, I'm making predictions.
TBW,I'm guilty of exaggerating your positions, but no more so than you are of exaggerating mine. It's a push.
CRE is simply not the next shoe to drop, at least in DC:LinkToo many buyers.Interesting how they will pay such a premium for "trophy" properties. Maybe that's again the whole location, location, location thing at work.
tbw,Burke had a #@%load in 2008. For what that's worth... But I think it's all in attempted mod status now. Everything is riding on HAMP in Burke right now.
TBW-I agree that is a strange listing. I am a little confused as what they mean by "Helpful owner agent lives nearby." Doesn't an owner agent mean the agent is selling their own house?My guess is that the bank can get close to the 2003 price whether they list it as a foreclosure or not. I am pretty sure foreclosure prices are only a little lower as long as the house in in good shape. I would think the house will end up within 5% of the 2003 price.
tiredbubblewatcher said... The Anonymous, I agree those people can be over the top. I think as you(?) correctly pointed out, if anyone followed contrarian's advice they would have been really upset to have missed this market rally. tbw,Here is what you claim The Anonymous "correctly" pointed out:Yep - here is contrarian on March 5 2009 chastizing all of us for not selling everything and being 100% cash like he was.https://www.blogger.com/comment.g?blogID=4787878578920468587&postID=141772809946587924The timing of his "sell now" call is classic When you go to the March 5th link The Anonymous provided, there is only one comment I posted that day.Contrary to The Anonymous' baseless allegation, there is nothing in my statements to indicate I made a "sell now" comment. And tbw, contrary to your comment, I did not give anyone "advice" that day. But tbw, since you now agree with The Anonymous, and since The Anonymous's comment is completely without merit, please advise me of the basis behind your agreement with The Anonymous.Is it that if The Anonymous simply repeats false allegations enough, you believe the baseless allegations without reading the links The Anonymous actually provides?Thanksp.s., do we have the sheep following the blind off the cliff?
Mytwocents: For asbestos testing, International Academy, Inc., telephone 410-544-6000. For asbestos abatement, Progress Environmental, tleephone 301-338-2008.
Ah, tbw,Someone turned the light on! Median income does count! And no, rich people are not getting foreclosed on. Wannabe's are. And it appears there aren't too many of those in the upper income areas.ot,I sent a friend over to an reo today. It came on yesterday. There are already 5 offers and the place was swarming with people. It's a 4bd, 3.5 ba 3 level TH with english basement finished walkout. New paint, carpet, kitchen, baths. Blt in 1987 and adjacent to a park. All for 189K.Oh, did I tell you about the hardwood floors, deck backing to trees and new windows? It was assessed at 380K at peak.
"And tbw, contrary to your comment, I did not give anyone "advice" that day. "True -- you did not give advice that day. Instead you chastized us for not selling earlier, and wondered when we will "accept the obvious" regarding the disposition of our daily deflating assets. Most ironically, your chastizing for not "accepting the obvious" came within a day of the bottom before of the most massive run ups in history. Had your post make him decide to "accept the obvious" and sold then, how much $$$ would MM have lost.Anyways, thanks again for reminding us of your disregard for timing. Be it Precter's call for a great depression II at the beginning of a multi year bull run, or your admonisment about "accepting the obvious" right at the bottom before one of the biggest runs in history, its clear, timing isnt important in the elliott wave system of beliefs.
In case anyone wants to see the reo that I was talking about yesterday, the address is 457 Virginia Avenue, Herndon 20170.Since it's an reo, it can probably close by Nov 30. Ten contracts, I believe.
http://franklymls.com/FX7183050va_investors REO pick linked
Thanks Cara (from the computer "challenged"). What do you make of it? Hop, skip and jump to Park and ride which will have a quick ride to the Silver Line. I wonder what it will go for. My guess is 215K.Mainly couples with young kids/babies. Lots of reo's in there have closed. Potential rent $1,600 - $1,800; my guess.Clearly affordable to middle income and no work required.
Va_investor,I couldn't get past the tall and skinnyness of it... and I'm just not familiar enough with the area to say what it's worth or what it will go for.But it is a move-in ready REO, and even if it did go for $220k THAT would still qualify it as affordable in my book (see my comment in today's bucket).
Cara,I like the look of it (except the rain gutter down the front). The basement is completely finished with bedroon, full bath and family room. Did you notice how high the ceilings are? Real hardwood floors, including stairs, are expensive. Turn-key ready.I could certainly be happy living there as a first-timer or condo move-up. Nice park next door. I used to take my son there for soccer and little league. 3.5 baths, huge eat-in kitchen, sep dining room with step down to open living room.My friends are too nervous to make such a quick decision. Perhaps things will die down if 8K is eliminated OR extended. I am seeing decent jumps on the low end. Don't know if they will hold or not.
p.s. Tall gets you an english basement (full daylight windows) not a cave.
Va_investor,Personally hardwooding the stairs with the same width planks as the floor is a pet peeve of mine. I way prefer to just buy the full width treads and stain and finish them to match, and leave the fronts white. Personal taste. I also think it's just a scam by the installers convincing people to do otherwise, because that's a lot more hours and work and cuts than just cutting the treads to length and maybe one width cut. So, they keep the materials cost down by using the flooring, and get to up their labor hours.FFX county says is 1228 + 135, no where near the 1828 given in the listing.... I love high ceilings too, but it's not clear to me that they actually are high... (other than the nice peaked one in the master)as usual, purely my own taste. I agree that it is a fabulous alternative compared to a condo.
Well,The basement is fully finished with closets in two rooms - far more than 130 sq ft. But let's not nit-pic. You are not paying for the stairs. Anyone can paint the fronts white. It's this type of stuff that causes people to not see the forest for the trees. Similar to "I don't like the wall color or my furniture (what value is used furniture?) won't fit or I hate the chandelier".
Va_investor,I'm not going to turn down someplace because of these reasons, I just think that the previous owners paid more than necessary for a sub-optimal job.And not in this place, in particular but in general you are paying for the stairs, it's a selling point, so should supposedly raise the price, which is why you pointed it out.I said it was a good buy. It's just not for me. If I lived up in Reston, maybe I'd feel differently, I don't know. I do know that I'd be shit tickled to death if I were seeing prices like that on the TH's down here in the neighborhoods I like. Maybe I'll be lucky and there will be some this winter. Who knows?
Cara,Ok. Last comment. Does it really matter what the last owner paid for upgrades? Current price is what matters.
Va_investor,Absolutely.It only matters if they've priced that in to the list price, and even then it only matters if it's somehow a stumbling block on the way to reaching a contract price you both can agree to.I'd go further and say it's a bad idea to buy a house that has every lick done exactly the way you would have chosen yourself. You'll really overpay then.
Cara,It's an REO. If you checked the comps, you would see it's under other reo's that I would doubt are in the same condition. No one is trying to recoup upgrades.
Va_investor,Sometimes my editing backfires. In the previous comment I specified:"not in this place in particular"I edited out my re-emphasis on this in my last comment, and in this case meaning was lost.but seriously, what part of "fabulous", "shit tickled to death", and "a move-in ready REO, and even if it did go for $220k THAT would still qualify it as affordable in my book"isn't enough for you?
contrarian said... tiredbubblewatcher said...The Anonymous,I agree those people can be over the top. I think as you(?) correctly pointed out, if anyone followed contrarian's advice they would have been really upset to have missed this market rally. tbw,Here is what you claim The Anonymous "correctly" pointed out:Yep - here is contrarian on March 5 2009 chastizing all of us for not selling everything and being 100% cash like he was.https://www.blogger.com/comment.g?blogID=4787878578920468587&postID=141772809946587924The timing of his "sell now" call is classic When you go to the March 5th link The Anonymous provided, there is only one comment I posted that day.Contrary to The Anonymous' baseless allegation, there is nothing in my statements to indicate I made a "sell now" comment. And tbw, contrary to your comment, I did not give anyone "advice" that day. But tbw, since you now agree with The Anonymous, and since The Anonymous's comment is completely without merit, please advise me of the basis behind your agreement with The Anonymous.Is it that if The Anonymous simply repeats false allegations enough, you believe the baseless allegations without reading the links The Anonymous actually provides?Thanksp.s., do we have the sheep following the blind off the cliff?10/15/09 5:51 PM"
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