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Saturday, October 31, 2009
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26 comments:
http://franklymls.com/DC7050285
so i looked at this place,
i wanted to get people's opinions,
it's got mechanical damage, particularly a roof leak
the tenant who is in has 5 cats and a lot of stuff in the place, it's packed to the ceilings, so no home inspection is practical.
it sold for 213 in 2003, and for 490
in 2005.
what do you folks think?
Pat, Gallaudet is a rough area but you probably know more specifics than I do. I would NEVER buy a home without an inspection, especially not one this age, and not when the description indicates it won't qualify for certain mortgages due to its condition. Sorry I can't be more positive.
im figuring it needs 30K in mechanical repairs,
new roof, some plaster repair
and the furnace/HVAC are rough, it looks like the bones are good, the
biggest one is the tenant, i'm not sure if she wants to burrow in
i'd be tempted to bid low on cashi guess i would want to treat it closer
to a heavily damaged property rom a price POV.
pat,
how familiar are you with DC landlord/tenant law? it can be really hard to get rid of someone who doesn't want to leave.
pat,
Why do you keep bringing up that neighborhood? Because of these plans? I suspect many of those buildings have fallen through. I know they did move the ATF and EEOC there but I suspect there are not enough gov't agencies left to move there to fill all that commercial space. I doubt any of these can be built on spec now and it will take a while to get a major tenant. It might take until 2022-26 to make that map a reality instead of 2012.
TBW
the reason I like the Old City area is it's close to metro which is good for me and my girl, it's close to capital hill because i do some work on the hill and it's relatively cheap compared to NW. I do a lot of travel, so close to greyhound and amtrak and being able to hop a train to BWI is a big advantage for me.
I'm looking for a place under 300K
http://franklymls.com/DC7194108
now what is interesting is the sudden rush of ownership changes, this has all the hallmarks of a flip fraud.
1/8/02 sells for 145K
7/15/05 sells for 540K
3/15/06 sells for 612K
12/21/06 sells for 760K
now it's on foreclosure sale for
300K,
I'm sure that this has been discussed to death, but what is the theory of so-called immune areas falling further?
Shouldn't all "bad loans" fall out at the same time? I have posited my theory about overall financial status and "turnover-new development" as factors.
There seems to be a consensus here that N. Arl and Alex will not fall much more and attention has been turned to Vienna and Oakton. Some have said that these areas "need" to fall/correct. My question is why? Why would there be such a delay?
You could argue that wealthy people can hold on longer and, of course, this is true. There are college funds, 401's, stocks, etc. to deplete should disaster occur. Chances are that there are even relatives that can help out (unlike the thousands of Hispanics being foreclosed upon - not meaning to sound racist, but many send money home and the opposite is impossible).
So yes, this is a bad recession and people will lose jobs (or have any of the "usual" financial calamities) but why would anyone expect huge declines in wealthy areas? In the early 90's it seemed that the Market just froze. The only people selling were those that HAD to or really wanted to.
I was living in a nice neighborhood then. I wasn't as clued in because there was no way to search on-line. Friends practically "gave" their house away because they desperately wanted to be in FL. They didn't care much because they were given the house (and a ton of dough) by a relative. That is the type of person who will sell in this Market. That and people that are desparate in other ways.
I may be going out on a limb here, but I think flat pricing will take care of further corrections.
VA Investor said: "I'm sure that this has been discussed to death, but what is the theory of so-called immune areas falling further?"
Well, although I expect the worst offenders here will deny it, much of the root cause is a mixture of (a) envy; and (b) hope that prices in N. Arl./Alex. would fall enough so that some of the folks here could buy there. All sorts of convoluted economic constructs have been presented here to justify the coming crash in prices in those areas. Problem is, none of them have come true!
Which is why you don't see those theories being posted here much anymore.
VA_Investor,
We're always trying to figure out what's going on here. I think the consensus is that 1) incomes didn't go up at all in the areas that fell further 2) there were so many houses built out in those areas that supply/demand created a very fast correction, 3) many more 1st time homebuyers out there with risky loans, more defaults and foreclosures, quicker correction.
It took Japan well over a decade to bottom out. The mentality of "this area is safe because it hasn't fallen much" alarms me greatly. I'm not saying Vienna/Oakton are due for as MUCH of a correction, but there really isn't any economic justification for them having bottomed. At all. Nowhere close really.
Kevin,
I can agree with the first part of your statement because that is what I have thought all along. It's just plain common sense.
The rest about Japan, etc., I don't agree with.
Well once our bubble popped, Japan's became the penultimate example. Ignore those lessons at your own peril when investing.
just commenting here so I can read the discussion.
I think a lot of it is the idea, that if it hasn't fallen very much yet it "can" fall alot further than stuff that's clearly reached affordable sustainable prices.
It's like potential energy. If you're at the top of a hill, you have a lot of gravitational potential energy relative to something sitting at the bottom of the hill. It doesn't mean you will roll down the hill unless you already have momentum in that direction, but it does mean you could. So for the truly risk-averse high priced areas seem like a disaster waiting to happen, as opposed to a sign of unseen underlying fundamentals of strength.
I do think there will be a time at which each of us says that "if it hasn't fallen yet, it's not going to". Its just that that time is different for each of us. When can we call the all clear?
Even I who am trying my damndest to find something to buy and stay in for the next 10-20 years, even I have to say, probably it's too early to sound the all clear.
Cara, well put.
I don't see any real risk in places like Manassas. But I look at prices in Vienna, compare them to the peak (practically the same now that the "credit" has done its job), and I see a fantasy land of housing prices that will have their price discovery some day, and I wouldn't want to buy into that pie. I think the belief of "it hasn't fallen as much in this area, so it's probably not going to fall as much in the future" to be a very ignorant way to analyze the market. Not saying anybody specific to this blog/forum is saying such a thing, but I've heard it in social circles and at work before, and it makes me cross-eyed.
kevin,
But you do understand the logic behind that argument though, right?
If prices haven't fallen enough to put people in negative equity positions then there's no distress, people who need to sell can just sell without it becoming a short or foreclosure. And places not falling indicates a fewer of the previous types of risky lending, which one would expect would correlate with the risky lending higher up the food chain.
It's going to take a push to budge Vienna from the top of the hill, or ledge it's lying on just below the ridge, I'm not certain that push exists. It could exist, and that's the reason for caution.
I think a lot of people thought about the bubble as what goes up must come down. As if prices were thrown into the atmosphere and are free-falling back. Which is true in Vegas. But here it's more like prices being rolled up and over a hill, and we're trying to discern the underlying terrain.
Places like Reston, for instance are probably already safe to buy in. They've fallen quite a bit for various products (I'm very fuzzy on this so my apologies if my generalization isn't accurate) and moreover the positive recent changes are tangible, and the future positive changes are known.
Vienna is harder. Maybe waiting_too is right, maybe it's not just more desireable but also attracted better builders who built more quality stuff. That seems plausible to me. Who knows?
Robert,
Indeed my analysis is too local. I think more people will be coming here that in the past might have looked to places like Hotlanta.
Cara: "If prices haven't fallen enough to put people in negative equity positions then there's no distress"
Yes, but that's also more equity and more downward wiggle-room. You don't need foreclosures alone to correct a market. They just make it happen fast. I think towns like Oakton and Vienna can be legitimately bubbled up without risky loans. Lots of move-up buyers loaded with their own bubble down payments. Of course, the bubble will be unsustainable in the long run.
"Vienna is harder. Maybe waiting_too is right, maybe it's not just more desireable but also attracted better builders who built more quality stuff. That seems plausible to me. Who knows?"
I certainly don't know. The bubble has really put a big question mark on everything around here. Believe me, if I didn't have to commute to Tysons every day (or anywhere near the beltway), I'd have already bought a house in PWC. I just feel stuck in this area, and 66 is a death trap for commuting from out there. (sorry for the mini-rant)
kevin,
Yes, that is true, people with equity be it from buying before the bubble or transfering bubble equity from another property, always have the choice to sell as quickly as they want to, by choosing to list below comps using their wiggle room.
But if sellers' aren't getting as much as they think they deserve, then only those few sellers who have other motivations for moving will list. Keeping inventory and sales low. People have to want to sell, just like people have to want to buy.
Are Vienna townhouses seeing the kind of stand-off that Ace is seeing in the 900k-1.2 million dollar range? Months of supply is our best indication of whether sellers and buyers are seeing eye-to-eye on prices.
Until you see MOI go up, I don't think sellers are going to have to use their wiggle room.
Kevin,
One whole in my argument is clearly that MOI only tells us about right now. It tells us nothing about 3 months from now, or about how many people will take a look at Vienna/Oakton prices and decide they really loved Woodbridge afterall.
Have you taken a look through the Vienna zips you're interested in to see how well or poorly their median income actually matches up with the median prices? It seems to me that the income distribution is fairly accurately matching up with the Burke/Vienna price differential.
oh dear, whole -> hole.
If prices haven't fallen enough to put people in negative equity positions then there's no distress,
Cara,
I always like your reasoning because they trigger memories of things I've witnessed and stored away in my subconscious.
I think there is distress in Vienna/Oakton/Tyson's, but its either cleverly camouflaged or hidden out of plain sight.
Last weekend, Giant Food Store, Vienna: I witnessed several (more than a half dozen) separate arguments between moms and kids and dads and kids. This vs. that kinds of arguments. What they all had in common was mom/day saying: "We are not wasting money, we need to be careful." I know its not a perfect cause/effect, but still, these types of scenes appear to be more frequent in that area. I happen to know a few folks in retail within the City limits and revenue, in general, is significantly down, and sliding further. There is palpable tension in regards to this issue. Would love to see a consumer confidence score for just this zip code...:)
Same area, different store (a coffee shop) I overhead two of the employees nervously discussing a meeting with the owner. A RIF was the topic.
Same area, different store again. I walked in and the owner was literally "in extremis" with someone over the phone in regards to back rent. I glanced at the computer screen as I walked by and saw Google results for "Chapter 11 Bankruptcy." Ouch.
In regards to housing, I am still seeing houses for rent come on and then go off the market unrented. Those that rent are seeing price advantages in the sub $2500/mo category. I didn't even know a sub 2500/mo category existed in 22180/81/82 for SFH's. At least it didn't appear to exist when I moved there. Except for that crack house off of Cedar Lane.
More FSBO's seem to pop on and off. I have Frankly MLS emailing me closed and new listings and the average new price for the ever present Vienna Rambler seems to be <$425K. Foreclosures/REO's are consistently hitting under $400K for the same style of house.
Is this concrete proof? No idea.
Do I have a guy feeling that price erosion is slowly washing away that overhanging ledge of 2006/07 prices?
Absolutely.
I also get the feeling that Kevin and I have probably crossed paths as we wander the 22180,81, and 82 zip codes looking for a home with value that doesn't make us go "WTF??".
(thinking)...
Some prices are ridiculously high. I understand the ones in Tysons, because the metro is moving there. That's a fundamental change in the value of the property and is justified to some extent. Others, definitely not. They might not want to wiggle on prices, but one way or another they'll fall. People will have to move at some point. One by one, they'll come to reality. Or maybe they'll all just be accidental landlords waiting for the bubble peak to return.
Texas Native,
Wow. Actually I think that's quite important. I was overhearing conversations like that 1-2 years ago, but people have seemed visibly more relaxed in the past 4-5 months here in Springfield/Kingstowne. Restaurant patronage is way up too.
The cheap beef from the oversupply of milk and stud cows is getting gobbled up at my local Giant as fast as they can shelve it. Osso Bucco and Prime Rib for all. (it's cheaper than it has any right to be but it's still not cheap)
Maybe people really did stretch themselves too thin in Vienna/Oakton, and it just hasn't surfaced yet.
two Tyson's restaurants i used to frequent (like twice a month) both went under recently... they catered to the cheapskate crowd like myself so in tough times they fell first.
Kevin said: Some prices are ridiculously high.
Amen brother. I used to live near Tyson's Green. And let me tell you about this one:
FX6972814
It's a closed listing now, no idea if it ever rented but we saw that place. You will have to Google cache it for the details.
Good God almighty. Where do I start? The cat p stains over almost every inch of carpet? The hubcap full of cigarette butts on a stool by the back door (thanks for smoking 6 inches outside).
How about the vertical embankment that doubles as a backyard (my dogs put in a budget request for ropes, pitons, and helmets).
Oh, the important stuff. The stovetop with two out of four working heat elements. But hey, those non working elements were covered with really nice trivets! The hallway toilet that...that...what....it was bad. Very bad. The commode had been leaking for some time apparently.
The overwhelming omnipresent smell of baking soda, carpet shampoo and cat poo. Shouldn't that be a Jelly Belly Beanboozled flavor? (in disclosure, last night I was sandbagged with a rotten egg + Skunk Jelly Belly, revenge is in progress).
And the punchline....we saw it Day 1 *after* the "renovation" was complete. I didn't have to shave my chin that night because I scraped it clean walking around that house.
Agent: "The owner is overseas and the home is offered as is. The rent is $2500/month, one month's deposit will be required, along with a $350/per pet deposit."
Me: "If I give you a pet deposit, and my dogs poo in the house, how are you going to be able to tell before and after condition?".
They didn't laugh. But we did.
Ahhhhh. Clueless landlords. Whoever rented that place has my sympathies.
TN, I don't even bother going to look at houses. It's been over a year since I last set foot in a listing. That's how unwilling I am to even make an offer in this market, let alone buy. That could change any day, but nothing at these prices has made me even curious.
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