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Saturday, November 7, 2009
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32 comments:
The Semiconductor Industry Association (SIA) today announced that George Scalise, president of the organization since 1997, will retire at the end of 2010. SIA will immediately begin a search process to identify possible candidates for a successor. SIA also announced that in connection with the transition, it will relocate its headquarters from Silicon Valley to Washington, D.C. The move is expected to be completed by the end of 2010.
Where do you think? Tyson's or 267 Corridor?
Va_Investor,
Maybe neither. SIA already has a DC office for lobbying purposes. Not surprising since that's what trade associations do. 975 F Street NW.
SIA Staff
This association has 15 staff members -- two in DC, one in China, and presumably the remaining 12 were in San Jose. So I guess this nets us 12 new jobs.
Mid to long term trend for DC jobs:
- Spending is out of control
- Deficits are running at all time high and unsustainable
- New taxes are on the way and spending cuts will be top on the agenda
On relative basis, job market in this area has helped the housing prices considerably avoiding overdue correction. This can not last forever.
This also means this area will considerably underperform in next couple of years on the downside compared to already corrected markets.
On a separate note, some of the flips I am seeing are absolutely unbelievable. Human psychology of riding free 8k overrides the sound judgement.
What surprise me the most is how soon the crowd forgets bad memories of similar euphoria going ultra-bad very recently.
spider,
I, too, have seen some unbelievable fips. Most recently, 100K to 250K. It looks like they put about 30K in.
RE: SIA
My bad. I heard that there is going to a BIG announcement soon and I just assumed...without looking up the company.
p.s. heard a back-story on SAIC. They would have moved here much sooner but the top guy loved San Diego and they had to wait for him to retire. Same with SAI?
Minor counter-point Robert.
Heard that Congress will hold the federal budget hostage until January. It will take another few months for funds to pass through the pipeline.
Several out-of-work government contractors report hearing, "We'll have a job for you, as soon our contract comes in."
In the swirl of the rumor mill, default on home loans has been mentioned.
Your basic thesis holds - Jobs affect housing. Jobs in the core federal enclaves and the nearby contractor facilities keeps the value of housing in those areas.
There may be a temporary disruption in the housing market until funds are distributed.
Next step in the much needed correction process is for flippers to get burned. This should get us on course to prices that are realistic and in line with income levels.
Rents are under pressure across the board - we need some buyer education to be able to handle simple rent vs. buy analysis. This is severely lacking in this region.
Paying anything more than 15 years worth of current rent - and I might as well buy some land on the moon.
"spider said...
Next step in the much needed correction process is for flippers to get burned."
Spider -- we already had that...
http://www.virginiamls.com/charts/FairfaxCounty.htm
The enormous run up in inventory, circa 2006-2008 was the flippers running screaming for their lives. Those days are long gone.
the Property ladder types
got hosed in 07/08.
We have a lot of flippers trying
to pick up foreclosures and
then flip them.
They are going to get burned
if Congress would turn off the
Housing Bribe.
Yes, we already had that in 2007/2008. But, seems lesson was not learnt, which clearly tells me we are not done yet with the cycle.
Here is a great example - someone hoping for 200k profit in 2 months with this one.
http://franklymls.com/FX7183355
Do they sell sanity around here? I might start a shop!!
Spider, I know this is beside your point, but that looks like a pretty nice house (wonder why they didn't show the back yard, though?). I wonder how the flipper did not get outbid when it was for sale a couple of months ago. Doesn't seem from the assessments that that neighborhood has declined anywhere close to the level of that 2-month-old price.
The fact that "flips' are available is an indiction that there are some under-priced properties out there. I do not think many appraiser's are too generous these days. I do think that certain segments of the market over-corrected on the downside. There also is a bit of a frenzy on the low-end right now.
The question in my mind is whether we will revisit the lows. I doubt we will unless the Economy really gets alot worse.
Ace - may be I am oversimplifying it. But, the reason he/she wasn't outbid is likely because it isn't worth more than what he paid for.
Granted, there are some sales at insanely high prices in this neighborhood (I can't explain these outliers besides buyer euphoria)
But, this particular sale and couple of others I noticed tells me that we are moving in the right direction overall.
Spider-
I think the flipper will get close to what they are asking for. I have seen a lot of pretty crappy ramblers in mediocre condition going in the 500s. This is a much larger house that is in very good condition and pretty new... I never saw the original listing, so I am wondering if they bought an unlisted house from the bank.
housebuyer - you could be right and it might even sell at that price - I doubt it though. But, you never know how 8k can impact sound judgment.
I would say, 3500$/month rent would be very reasonable for that area and house. This puts the value at around the price he got it couple of months back.
housebuyer, I'm inclined to agree with you. There's something strange about that price in the 600s. We have friends who live somewhat near that house, in a similar size and style of house, and houses near them are selling in the 800s. They've come down from the $1 mill. mark. I believe Stanley Martin (the builder) has a good reputation (relatively).
That said, I don't follow that area closely so could be way off base.
@J@ said
Several out-of-work government contractors report hearing, "We'll have a job for you, as soon our contract comes in."
I too have friends who worked for gov't contractors who have either lost their jobs or tell me they fear they may lose their job because their company lost a contract or it was not renewed etc. I actually have been surprised at the amount of bad news I have heard because I thought gov't contractors were doing relatively well. I guess the only safe people are those with a federal government job.
@J@ also said
Heard that Congress will hold the federal budget hostage until January. It will take another few months for funds to pass through the pipeline.
Where did you hear this? My understanding was they were pretty serious about passing all appropriation bills by Dec 18 when the current CR ends. They actually are doing a pretty good job. The Senate only needs to pass four more bills and the rest either already passed or they just need to do the conference bills.
FY 2010 Appropriations
The Anonymous said
The enormous run up in inventory, circa 2006-2008 was the flippers running screaming for their lives. Those days are long gone.
Many flippers did not sell during 2006-08. I know plenty of people who still own their investment condo that they got in 2005 or 2006. They are not only waiting for prices to go back to 2006 levels but beyond. They think the current pain (getting $500-1,000 less than PITI+condo fee in rent) is temporary. I have friends renting from people like that.
Many in this area feel like Robert about the housing market particularly the subgroup that bought investment condos between 2005-06. They think this is temporary. You'd be surprised how many people think 2006 prices are coming back pretty soon let alone prices higher than 2006.
Ace said
I wonder how the flipper did not get outbid when it was for sale a couple of months ago.
I agree with Ace. That price is suspicious. My guess is that the home was not listed. I think the seller was in dire straits. The high $600s amount probably was the balance of his mortgage. He bought the home in 2003 and I just have a hunch he had a down payment and was paying down principal.
I think he was willing to take the massive loss because he probably only had 1-3 months of savings left. He probably met with a realtor and he/she told him they probably could get high $700s or $800s for the home but the higher end market is slow and it might take them 7+ months. Time he did not have.
spider -- the flippers got a steal on this one. I'm pretty bearish but I don't think that home is going below ~$780k. It went for $828k in Dec 2003. I'm docking some points for being too close to the Beltway and having a ridiculously small yard. Keep in mind that in 2006 this home (or its neighbors) would have asked for $1-1.1M. I think $865k is too much but $641k was too little. Something odd happened.
tbw,
Nothing "odd" happened. Those deals occur everyday. It's a full-time job finding them (and requires luck, cash and guts).
tiredbubblewatcher - It is assessed just around 780k..very likely will fall below that when 2010's comes out. There was a recent sale at 740k list price for a newer house compared to this one. I still see this valued at not more than low 700s.
Having said that, do you think going rent of 4400$ makes sense for this one - 780k price puts the rent at that which seems excessive to me given tiny yard & highway noise.
tiredbubblewatcher said...
"I actually have been surprised at the amount of bad news I have heard because I thought gov't contractors were doing relatively well."
The main project I work on has decided to slow the burn rate due to the government cutbacks. We're still getting the same amount of money, but had to get rid of a couple engineers to make it last a little longer. If only they'd let me choose the next couple to go...
Spider-
Larger nicer houses never really rent anywhere near breakeven. So I am not sure it is really relevant what it would rent for.
Also I don't think the 8K would have much impact on houses in the 650K-850K range. Under the first time buyers credit the max income was 150K and really doubt people making 150K are looking at 800K houses
The vultures are out and they are taking no prisoner's.
I went to look at an reo on Thursday. It was a low priced TH in a not so great area of Sterling (clearly, not the worst...). It was off Parkview near Rt.7 (Gatehouse pl., I think).
Before I went I had my agent call the lister. It had been on the market for 1 day and had 9 offers. The list price was $126,900. When I arrived, there were 4 other people milling around the front door. Apparently, some lovely creep had broken the key off in the deadbolt (you can guess the purpose of this manuever).
Being the experienced and bold (stupid?) person I am, I went to the back and checked to see whether the sliders were unlocked. Nope. Undetered, I tried to slide open the kitchen window - voila! My contractor climbed in and opened the slider. We locked back up and walked around noting what work was required.
My agent ignored the knocks on the front door from the others. After about ten minutes we went out the way we came in.
We took the back way and walked over to a comp. that had been re-done top-bottom. It had been over-improved for the neighborhood in my mind. The asking was about 250K and it had been on the market a few weeks.
Anyway, we figured the reo needed about 20-30K (depending on how far you wanted to go). I offerred 135K and was outbid (no surprise).
What was surprising was to see the flip come up as UC yesterday. Last winter you could have bought these places all day long for 100-120 (I'm fairly certain - I looked at some back then, but didn't like the nabe).
Yes, things are very frothy on the low end. I'd be careful about getting caught up in it unless you really know what you are doing.
I realize that most of you would have no interest in these type of areas.
Yesterday, we went out to re-investigate an area we last looked at 20 yrs ago. Now, that's another interesting story....one of the neighbors told us that some "shark" patent attorney was buying everything in sight....
spider, housebuyer, etc.
it would not surprise me if that house was never listed. i'd say rather it's quite common. i've seen and posted a couple of successful flips in Arlington without previous listing history on franklymls so i assume they're not listed in the MLS when the investors bought them.
bought for $400K on 6/15/2009, sold for $635,000 in Oct 09
bought for $400K on 12/26/2008, sold for $645,000 in Oct 09
tbw: "... I actually have been surprised at the amount of bad news I have heard because I thought gov't contractors were doing relatively well."
I'm seeing about a 20% unemployment rate among government IT contractors. Granted that's probably the bottom performing 20% with some overpriced types tossed in. It's also a small sample, anecdotal at best. Surprised me though.
I have never seen unemployment and on-the-bench numbers this high before. It's taking a long time for people to land somewhere.
"Where did you hear this? My understanding was they were pretty serious about passing all appropriation bills by Dec 18 when the current CR ends."
I don't follow the budget stuff but this was a caution from a government supergrade who met with his congressional counterparts last week.
He said that "money is drying up."
I'm hoping it busts loose. If it doesn't, I can see that driving the price of houses down.
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