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.
kevin, don't click this link.
Robert said..."You make it seem like I'm out here on an island by myself. I can post expert after expert that says WDC is going to see significant job creation over the next few years. "You are out on an island by yourself. I can post you expert after expert saying there are going to be significant price declines in real estate over the next few years, but you'll still think prices are going to rise.MM,Typical garbage, it'll never stop.What's really funny is that it sounds like they're going to expand the credit to move-up buyers. Anybody with at least an elementary knowledge of supply and demand knows how that will pummel the housing market.
Anielarke, Thanks for the numbers about our rent & payment differences. We liked your tip on short sales and had not heard that appraisals helped shorten the time. We don't mind Springfield or Burke because we both work in Fairview Park and the commute isn't too bad from there. The townhouse we rent has some features we can add to any townhouse we buy so that is okay to buy an older place. We are going to see some townhouses this afternoon and even if it is a short sale we might only have to pay the higher rent for a few months.
waiting_too,good luck! If Blarney Stone isn't on your list, check it out. It's in the best condition of any place we've seen in the slightly lower price bracket. I think you could probably get it for $310k.
this home has so many personalities and characters, and maybe because of that it sat for months and was sold well under list (and tax asses).
Kevin,How do move up buyers create more supply than they do demand? They create liquidity and transactions... Adding more of both brings the ratio of supply and demand closer to 1.I think it depends strongly on what you think the sellers will be selling and what they will be buying. How is that distribution going to play out.Boondoggle, total boondoggle, but if it creates more supply amongst the homes I might want, I'll roll with it I guess.
MM, I always thought that house was baffling. It looks like the kitchen is in a loft. I didn't know it finally sold--thanks for the link.
Cara, Thanks for the tips. We weren't going to see the short sale but if it there isn't too much damage from the shower it might be fixable. Agent said it is an approved short sale (I guess because of the time) and they pay $10,000 for closing costs. We want at least a brick front so if Blarney Stone has one, we will look at it. Another one is coming up on Pond Spice (or Spice Pond?) in Burke Center that is supposed to be good. We will check the sex offeder registry for all places. The garage is nice but not worth losing resale value.
It is approved, 330k with 10k back. The wood is rotted. Your call on how much that's going to cost to rip out.Blarney Stone has a brick front, it's drawback is bedroom size/shape, (11x8? and 12x8?, small master) and nothing particularly appealing about the location. (nothing bad either, just no lakes or woods or whatever). Pond Spice/Quiet Pond area around Terra Centre has major parking issues, and 3 registered sex offenders.
Cara, they'll add more supply than demand because many more will list, not all will sell and move up. Contrast that to before, where they were only inducing demand. Now they're inducing both, but supply first. On top of that, since they are move-ups, the demand they're creating once they sell will likely be on the higher end than the lower end. So a lot of houses will be selling, and the only surge of buying will come from those that actually sell. Does that make sense?
kevin,yeah. makes sense. Just as you were against the $15k for everyone, I'm still against this, even if it works in my favor. It's still just as wrong, wrong, wrong wrong.Just unabashedly purely for NAR and NAHB. (and me, but I know they're not thinking about me).If it does bring prices back to the trend line of pre-2002 I should be happy about it, but man what a waste of money. They just can't stop tinkering can they?
o,o,o, it gets worse.They have to buy their new place in a limited time frame. Not sell the old one, what happens to prices when people are carrying two mortgages and just need to cut their losses?? Or happens to rents?Yikes!!!This is such a bad idea. Jaw-dropping.
I just read Calculated Risk's account of the new tax credit and nearly had a fit. We closed the sale of our condo on Friday.Now it appears we would have been eligible for the "move up" buyers tax credit if we had stayed an extra 6 weeks!! (We would have lived in it 5 years as of January.)So now we are stuck buying into an inflated market with our tax dollars (and our kids' future tax dollars) subsidizing this nonsense.http://www.calculatedriskblog.com/2009/10/home-buyer-tax-credit-to-be-extended.html
"kevin said... Cara, they'll add more supply than demand because many more will list, not all will sell and move up. Contrast that to before, where they were only inducing demand."Kevin - not sure I follow - especially why the prior one was only inducing demand. Can you explain further?
Cara and Kevin, I totally agree, even though we will benefit (probably) when selling the current place. I could maybe support some sort of targeted credits for areas that have been especially hard hit by foreclosures. This is not to help/hurt NAR or bad behavers, but to help to innocent neighbors who owned before the bubblemania or bought during it with conventional loans that they are paying, and are now surrounded by empty houses that are attracting vagrants, vandals, etc., and bringing their neighborhood values down.But since I am one puny vote I don't figure it matters too much.
wanting_to_moveit is completely capricious and insane. We'll see how far it gets.
Wait, so if this extension gets passed, the couples earning between $150k - 250k only get to use the credit if they already own a house? Am I reading that correctly--no first-time credit for them?I'm totally against this credit extension, but if it passes, I'm a little ticked that we won't even get to use it. We earn too much to qualify for the 1st-time credit, and I guess we won't qualify for the other one either. I guess it's better that way--I don't have to go against my morals if I'm not eligible, right? :-P
You know what else this is about? This is about transaction tax revenues. The government gets too much money from real estate it's fate is too intertwined with NAR.Ace,agreed, I could be okay with some sort of targeted program for areas that have seen massive price declines and high vacancies. What? I don't know. Me, now a temporary member of the party of no. (on this one issue)
CRT,I should correct my statement about the original credit and demand. The first credit induced demand primarily, but I'm sure some sellers out there figured out that the artificial increase in prices was something to take advantage of. This new credit to move-ups spurs supply first. Only that supply that gets absorbed turns into new demand. So if a thousand people in the county are selling now because of this bribe, five hundred actually land a contract and go on to buy again, you'll have a net increase in supply. Only instead of maybe 1 in 2, it'll be like 1 in 5 moving up. Like the multiplier effect with spending, this propensity to sell will flood the market with supply, but not do much for demand.They'll all be out there at the lower and middle end trying to compete for a very empty pool of buyers. I think this will be very devastating to the market in the short term (again, in the long term these gimmicks mean nothing).Cara,It's a horrible idea. It's so wasteful. But unlike the last one that propped prices up, this will likely push them way down. It might cause some relief at the higher end, but I suspect that will be offset by a fierce competition at the lower end.Either way, this is probably very good for us. I'd much rather this all stop right now because it's wasteful and futile in the long-term, but it might be worth taking advantage of. There will be a lot of desperate sellers out there who will come to reality after their first new mortgage payments start, and pricing to sell.These are just my first thoughts, as this is much more complicated than the first credit issued. There are so many unknowns here. But two things are certain: sales volume will increase as a result (a gift to NAR, the only objective), and it will cost the taxpayers a lot.
WaPo New Home Sales Fall...
CRT,I asked the same question yesterday of Kevin and haven't seen a response yet.The only way I can see this new credit as being "bad" for home prices is if it stimulates a large number of sellers with huge equity stakes in their current property. In that case, those people might be willing to undercut their competition to sell quickly, get the credit, and move up.However, this still depends on them getting the move up house for a lower price and, as was noted, there is higher demand created on the second rung of the housing latter.And oh by the way, why so quick to throw away equity just to get back $8000 on your next purchase? At best I see the stimulus accelerating price discovery with the roughly $8k bonus that has been credited with propping up housing prices so far having farther reaching effects.What am I missing that explains unintended consequences of a housing value fallout???My $0.02
paKa said..."I'm totally against this credit extension, but if it passes, I'm a little ticked that we won't even get to use it. We earn too much to qualify for the 1st-time credit, and I guess we won't qualify for the other one either. "What's funny is that I make too much as a non-owner for the credit, but if I were an owner I'd qualify. So they're basically saying to people like me "don't buy a house unless you're going to sell a house." What the f***?
mytwocents,Saddling yourself with $200-300k of mortgage debt for the sake of $8k seemed pretty idiotic too. But that didn't stop the $8k from stimulating demand (which did eventually result in more sellers coming off the sidelines to rake in the higher prices). If the sellers all list at 5-10% over comps so that they'd be able to get their ideal home, I don't see how this added supply helps anyone. It's just like during the bubble, there were tons of houses for sale and nothing to buy.If however it facilitates price discovery... AND the assumption by many here that prices are "too high" by fundamental standards holds true, then price discovery should mean lower prices.That $7290 doesn't include a realtor cut, so it's "pure" profit. While we on here think it's incredibly foolish for owners to be motivated by this bribe, "incredibly foolish" apparently describes a good chunk of Americans, given recent history.I think Kevin's 1 in 5 is a bit exaggerated, just as my prediction that $8k would juice prices by $40k-$100k (by leverage) was also not realized.
Cara,I don't know whether my 1/5 was over or under-exaggerated (though I admit it was made-up) since we're looking at such a short window of time. This would be stretching it even for some people trying to buy/sell in a normal market during June. I think very few of these folks motivated by the credit (which still, probably won't be a whole lot) will be hard-pressed to get their houses ready, list, find a buyer, and close on another house in such a short time. Given the absorption of demand and the time period this covers, the net supply added will far exceed the demand it creates. Your remarks about price discovery are exactly what I have been thinking. The upper end of the market could take a decade to find it's spot, but I think this will hasten the bottom of the market for everything else. These are just initial thoughts, I'm still ingesting this. It's much harder to discern this credit than say the last one. It's more complicated and bizarre. And dumb.
kevin,I'm wondering if this one is just too dumb to happen. I think I'll hold off on the hard work of ingesting, until it's passed and signed into law. The idea that you have to have a contract on your new house by April 2010 is a ridiculously short timeframe, and may make people buy their new home before selling their old home which would invert the order on supply and demand as well as create a new class of must-sell inventory.I suspect that just as with the last one, this one will induce different people to do different things and the aggragate impact will only seem obvious in retrospect.
Well I (we) were pretty dead-on if I recall about this past credit. Drive up demand and prices at the cost of future demand. Well, now is that future with far less demand, and it really sounds like they are going to spur supply with the new credit more than demand. I agree we're probably getting too far ahead of ourselves as this isn't even legislated and voted on yet, but the market is lame right now and it's more productive to speculate about the impact of this than for me to rail on endlessly about how much I hate these tax credits.
My 0.2 cents:I suspect one unintended consequence relates to the next wave of REOs. If one argues that many of the home purchases under the tax credit were short sales and foreclosures and that supply is currently low, the intent of the bill might be to induce owners of non-short and REO first time buyer properties to sell and move up. Owners of the non-short sale/REO properties had no incentive to sell their presumably better properties at prices that would have to be competitive with the shorts and REOs. Maybe now that move-up homeowners who delayed their sales waiting for demand to return have an incentive to sell. They could take advantage of the credit and free up move-up housing. Sellers of non-short and REO first time buyer houses might be more willing to sell as more move-up inventory is available. Introduce the expected flood of shorts and REOs and there is too much supply at the lower end, prices fall again, and the sellers of non-short and REOs again have no incentive to sell. The move up sellers may again have no incentive to sell as there will be no demand. Perhaps the real question is can Congress control the next wave of REOs.
rapidly evolving home-buyer credit status: Calculated RiskYesterday I heard a compromise had been reached on extending and expanding eligibility for the home buyer tax credit, and that the housing tax credit would be attached to the extension of unemployment benefits, and that the Senate would vote today - and a House would follow shortly. Hold on ...Albert Buzzo at CNBC reports: Senate Vote On Home-Buyer Tax Credit Unlikely Today. Buzzo says there is "no chance" the Senate will vote today on the home buyer's tax credit. There was hope last night that a vote on one of several versions might be voted on Wednesday but a battle over legislation extending unemployment benefits is taking priority and right now there's "no agreement" on that issue ...CNBC's Diana Olick provides the same details that I heard on the tax credit: A Compromise on Home Buyer Tax Credit? and adds: [T]here may have been a bit of a revolt among Democrats who didn't want the controversial measure attached to the Unemployment Insurance bill.And from Andy Sullivan and Corbett Daly at Reuters: Reid had wanted to attach a bill to extend the homebuyer credit as an amendment to a bill to lengthen insurance benefits for unemployed workers. The Senate voted 87-13 on Tuesday to take up the insurance benefit bill, but did not attach the homebuyer tax credit to the measure as Reid had wanted.Despite that apparent roadblock, Senate Finance Committee Chairman Max Baucus, who has been involved in negotiations over the tax credit, told Reuters late on Tuesday that he expected the Senate would vote on the bill sometime this week.As Ms. Olick concluded: "Stay tuned. It could all change dramatically."
Whoa, what happened here? Could it have been a bidding war on this one? Listed at $619,000 and closed at $669,000.
Paka, Wow. What's up with that? Is it unusual in AR for a house to sell that far above its assessed value? While I can't imagine the tax credit impacting people able to buy a house that expensive, I guess a couple could really stretch themselves and do it. Or maybe they had a big down payment.Cara, thanks for the update. This thing is all over the place. I wish we could send the whole Congress on a permanent vacation.
Kevin-I'm in your shoes with you - can't qualify for the first credit & can get the move up credit now either.We HAD been in our home for 5 years when we sold in '06, but have "hung out" & rented for the past 3 years-so I guess we're not move-up Buyers now either??
PaKa and Kevin, I think MM posted that house previously and didn't know what to make of the small dining room, but IIRC, we all thought it was a nicely done house, with lots of $ put into the upgrades as described.It's not at all unusual for a house to sell that far above assessed value if it has been updated well, with $ and good taste. Arlington generally does NOT assess updates and upgrades, unless the owner adds square footage. So owners of run down houses are overpaying taxes and owners of upgraded places are underpaying. So the assessed value is for the average house in average condition of that size and location, # bedrooms, etc.It looks as though the agent used a bubble era pricing strategy
oopspricing strategy, of pricing it below market value in order to generate a bidding war, and it apparently worked.
Here's an interesting story I heard for a colleague. Apparently he was going to put a bid on a house that already had another bid pending. The other bid had an escalation clause. He thought "What sort of idiot writes in an escalation clause these days?"So for giggles, he put in the highest bid he could, just with the intention of triggering the escalation clause. Sure enough, the escalation clause triggered, causing the other bidder to pay more.
NovawatcherThat's mean. Funny, but mean.:)Yes, we all really liked that house. It's definitely one I can see someone falling for hard and bidding up. Or obviously multiple someones.
Going to see 4 FC's in LoCo & PWC in an hour w/ our Agent todayAsked our Agent to call all of the Listing Agents for the houses BEFORE we see any - we won't be viewing any that are "collecting" ContractsNot doing a bidding war on a foreclosure....!!!!!!!!!
spunky,Best of luck!!!
Ace, I agree, the pictures show that it's much nicer than the county assessor thought.
some interesting dynamics in the immediate neighborhood of that bid-up skinny dinning room home...total of four homes on the same block listed in Sept.the bid-up home went on the market right after this 4/2/0 w/ drvwy home went UC. it sold for $636,000 net, or $13K below listing;a couple of weeks later, this 4/2/0 w/ drvwy home was listed at $649,000. no contract or change so far.four days after that, this 4/3/0 w/ drvwy home was listed at $645,000. Price dropped to $630,000 about a week later.so, basically they're all very similar in size and style (2/1 on each level, on 7-8K sf lot, the bid-up home is the only one without a driveway), and even on the same street and spitting distance to each other. So the true difference is really the house. my guess is the owners of the active listings were encouraged by the level of interests their neighbors' homes draw, and tried to lure the lost out bidders. what will the sellers and buyers think/act now that the sold prices are made public? where does price go from here? i'm eager to find out.
There is one aspect of the home-buyers credit that I think has been overlooked on this blog. It isn't only about propping up the housing market, but also the consumer-based economy. I imagine that very few people actually ended up using the programs that forwarded the credit for the down payment, so what we are left with is a bunch of people that traded a higher sales price that is amortized over the length of the loan for $8k cash. And what are new homeowners better at than basically anyone else? Spending money quickly.
Novawatcher,That's all fine and good but escalation clauses should have a ceiling. Your colleague is fortunate that his bid was not higher than this value or he'd have a ratified contract right now. It's all fun and games 'til someone loses their good faith deposit...My $0.02
MM, one key difference between the skinny dining room house and the others is that the SDR house owners added on about 200 square feet IIRC. Given that the others are only 1188 square feet, that is a very big deal. It's also on a somewhat bigger lot than 2 of the other houses (Arlington values this less than I do). I suspect the would-be sellers of the two unsold houses think the sales price suggests theirs should have sold by now too at their asking prices but I don't think buyers will agree.In the case of the 3rd house, I think the owners chose updates that appealed to them rather than to most other buyers (except I think the kitchen appears to be broadly appealing--but the house is a mix of Victorian and contemporary and 50s Colonial--not good, especially in a small house). Eclectic can work but I don't think it does here. So I think that will hurt its resale value, even though obviously the furniture shouldn't make any difference.In the case of the 4th house, we see what the claustrophobic kitchen probably looked like in the SDR house before it was opened up. The cabinets don't look pretty in the photos. What do you think?
Fred,No it's definitely been brought up. If you want something stimulative give money to people who are most apt to spend it.That aspect is just not central to anyone's concerns here, so it doesn't get revisited often.
MM, also the SDR house had a nicely (from the photos) finished basement; one of the unsold ones appears to have an unfinished (and rather scary looking, typical Arlington unfinished) basement and the other's description says it's finished but I didn't see photos of it.
well the air getting pumped intothis bubble will roar out much fasterthen the last bubble
Pat, agreed. Prices will reset pretty fast, given the precedent in home prices. What will be interesting is if the uptick in prices itself will motivate people to sell, and how much they'll misjudge the lack of demand that awaits them.
Kevin said: "Wow. What's up with that? Is it unusual in AR for a house to sell that far above its assessed value?"No, it's not unusual in N. Arlington.As a N. Arlington homeowner, I find it amusing to read the many moans and wailings posted today about the extension of the house purchase credit. People, calm down and shake off the cobwebs. Deal with the fact that Washington area real estate is expensive. Focus on something you can afford and get on the housing ladder. It's worked for me for the last 22 years!
Tom,did you mean get on the hot air housing balloon :)
MM, et alI've never posted here before, but have read the comments from time to time to get some persepective on this market (moved here recently from the southwest and in major stickershock!). Just an Fyi; I've looked at all four of those homes on that street since that's the area we want to be. I think the reason the 5021 24th st n. house isn't selling is because it smelled overwhelmingly like smoke throughout the home and the worst was the cat smell in the basement.Also, the house with the bidding war had 13 bids on it, w/the "winning" price being $675,000. The price had to come down because the appraiser couldn't appraise it that high... interesting.
Sorry, should add that I heard about the 13 bids on the house from another realtor. Can't "back up" that fact, other than as "hearsay".
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