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Wednesday, March 3, 2010
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52 comments:
To C:
you referenced this property in yesterday's thread: http://franklymls.com/AX6960799.
I saw that property before it went under contract. It was TINY. I know most row homes of that era are small, but this thing was TINY. Note the address: 402 "1/2" ROYAL. Maybe it was cut in half at some time ago. I'm sure ppl familar with the area could probably answer that question.
Also, it was an unfinished remodel. The upstairs, as I recall, need some serious repairs. I think a window was knocked-out of the back door too.
When I saw that this house went under contract for 500K, I knew there was still something terribly wrong with the DC/VA housing market. It's now assessed at $485K: http://realestate.alexandriava.gov/detail.php?accountno=12568500. That's still way too much for me, (or anyone with sense, in my opinion).
Mike - given the 1/2 adress and the relatively recent (1870) build date, it very well could be a "spite" house.
It was not uncommon at the time for owners to build another house on their single lot to "spite" people who would cut through their yard to get to where they were going. Given its address (so close to the corner of Royal & Wolfe), that very well could be the case here.
New record (since November) for fastest time to UC in my neighborhood of SFHs in the $375k-$450k's (with a few exceptions).
3 days.
Nicely renovated/finished properties at competitive prices go fast. I know, this is news to no one.
Could still be the $8k, could also be the new $6.5k incentive, because these are perfectly good move-up houses coming from a condo or small townhouse.
Will the pace really slow down in May heading into the normal peak buying season?
Will the continued short-sales and REO's really dampen the demand for move-in ready simple transactions more than it has done so already?
Mike/CRT -
Remember the infamous local Spite House at 711 Barton St?
http://archipreneur.blogspot.com/2009/03/skinny-house-in-arlington-va-spite.html
It was the subject of much bemused commentary here on the blog at the time.
Ace said...
Hey, John Fontain,
The seller of your (un)favorite skinny house (some of you call it the Spite House) at 711 N Barton has finally decided to get serious about selling it (price drop from $1.125 mill to $950000).
I know, I know, you wouldn't buy it at any price!!!!
ttp://franklymls.com/AR6920391
5/7/09 1:03 PM
Though with 5 bedrooms, 3.5 baths and 2880 sq feet I wouldn't call it TINY...
Mike -
I agree that price is absurd. I sure am glad I am not looking for places in old town if something that small can cost that much.
C,
Did it ever sell? That link just shows it as off-market.
As a side note, a reference book I have says that the land on Royal Street (together with the stable, dwelling house and blacksmith's shop) was purchased by Jacob Fortney in 1793 for £450.
Its interesting to see they wrote the contract in Pound Sterling when the U.S. Dollar was the currency of the land. Perhaps the people at the time had serious doubts about the value of the Dollar in this new fledgling country :)
Scroll down for an example of an Alexandria spite house:
http://www.pointclickhome.com/decorating_design/articles/skinny_living_0
CRT - I pulled the Alexandria tax records for that property. Most of the nearby properties on Royal St are that size or even significantly smaller.
Cara - The Skinny House got rented out. Google Arlington Whatever happened to the skinny house
I tried to post a link but it was too long to work.
Re 711 Barton, he must have rented it.
I believe the Alexandria Spite House (the one famous for being narrow) was built in an alley between two houses. That's why people began calling the Barton house by that name. The builder carved up a small lot and built a house that isn't tiny but is so narrow it is similar. The house also lacked a DR and was close to parking lots, a church or commercial prop. Etc. Looks as if buyers were smarter than the developer.
C: I do remember that place - the Mickey Simpson house I think. Does anyone know if it ever sold?
Novawatcher - yes that is probably the most famous spite house in the area. At 7foot wide, its about as narrow as the come. I once found one that is 5'6" wide in the front, but it "opens" up to a full 9 feet wide in the back!
thanks c,
Whatever Happened to the skinny house?
Rented it out for $4600/month.
If you could get a 5.5% interest rate on the whole amount that's not far off from rental parity....
nevermind I did that rent versus buy calc wrong.
Ignore my first comment - just saw that it rented.
C, it may not be an actual spite house if most on the block are that size (I havent walked down that way in a while).
It would be helpful to know where the "dwelling house, stable, and blacksmith's shop" were located on that 1793 (multi parcel) conveyance to figure it out. Clearly, all the houses there today are second generation development.
Cara-
As long as the owner put 20% down and has no opportunity cost for money it is close to rental parity, assuming 0% down it is pretty far off because they have 25% higher mortgage payments and have to pay PMI
hb,
I usually do 0% down to roughly account for the opportunity cost on the DP. But yes, there are ways one could justify this price on the basis of that rent if one was so inclined. That was my first reaction to them getting that high of a rent.
which makes more sense? what would you do?
a) pay $50K more to get a 3 br
or
b) buy a 2br but finance and add a 1br few years later for, say, $100K.
tks!
Cara,
is $4600 the asking or actual rent?
MM,
unless my reading skills/short term memory have failed me again (possible), the article claims that the actual rent was $4600/month on a 1 year lease, asking was $4800.
Cara-
I agree I normally look at 0% down, I was mostly just saying what assumption you need to make to get the numbers to work.
MM if you are pretty sure you are going to need a 3rd bedroom I would get it now. Adding a lot of footage to your house is a pretty big project and could be less then pleasant to do.
MM,
A lot of variables there. Do you have an impending need for the 3rd bedroom, or do you simply think you want it eventually?
Is the 3rd bedroom add-on going to make your house larger than most of the surrounding houses?
Where is the additional $100k going to come from to finance the upgrade?
I recently bought a small 3 bedroom house in Arlington that I figured could always be expanded out the back. In the short term, I have no need for additional space so it's really just a thought exercise. However, if I was serious it severely impacts my plans for renovations on those rooms that are adjacent to where the addition would go. In other words, I wouldn't want to redo those rooms twice.
So, I guess this doesn't really answer your question...
If pressed, I would buy the 3rd bedroom now if I needed it. Otherwise I would wait and figure out at a later point if the third bedroom was necessary to either add it or move.
$0.02.
MM, mytwocents
I concur with mytwocents.
If you need the 3rd bedroom within the immediate foreseeable future, then buy it now.
We likewise bought a 3 bedroom with the idea that if we ever really felt the need for more space and didn't want to move we could consider an addition off the back with a new master-suite above and a library/bedroom below. Or just buy a different house. But that's over 10 years down the line at least. (and doesn't interfer with any other more realistic plans we have for the house/yard).
Cara,
That's my dilemma. I want to build a deck out the back of my house. However, if I really am considering an addition, I should not build a deck within the space the addition would go.
Hmm, I wonder if I can build a deck foundation that could simply support the weight of an addition if/when it ever happens?
My $0.02
MM,
I would definitely go with the 3 bedroom. I've gotten estimates in the past for additions and they are expensive and you never know what interests rates will be down the road.
Resale is important too. If you had to sell before any addition, you'll have a broader pool of purchasers.
With 3 bedrooms, you can have a den and a dedicated guest room. If practical, you can temporarily remove a wall and have a large master.
For 50K, I wouldn't give it a second thought. What is the difference in sq. footage?
your choice between the two?
the $530K 3.5-br
the $480K 2.5-br
0.02, the add on would be financed, though not the entire $100K (that's not the actual $ anyway)
MM - I am assuming if you buy the cheaper house, you would want to add not only a bedroom but a bathroom too? Maybe that is why your budget is 100K...
One thing I would want to know regardless, is what is the current "footprint" of the cheaper house? In some instances, your buildable space can only be a certain percentage of your outdoor space - and if this house is already close to that percentage, you cannot build out (you may still be able to build up). You are probably OK here, but I would want to know that regardless before I made my decision.
That being said, assuming the above were true, I would choose the cheaper place. My main concern about the more expensive one is that it looks like a flipper special. That was a quick flip (bought late 2009), and its possible there could be problems that were intentionally concealed that will develop over time. Not saying they will, just that they could.
By contrast, the other one (purchased in 2005) was likely a scraper that the homeowners renovated with the intention of living there. If thats the case, they were more likely to fix any little problems they found along the way. Plus the last few years of seasoning any problems they would have should be apparent by now.
The flip side of course is that with the cheaper one, you will be adding on at some point and likely living there while its happening. Some people dont mind it that much but for me (actually my wife), it was torture.
Still, my concern about a new, investor motivated renovation vs. a slightly older, owner motivated renovation would be the determining factor.
Thats my 2cents on the matter.
MM,
that's 4 versus 3 bedrooms, and I agree with CRT, the cheaper one is the nicer house.
MM, I agree with VA_Investor re: adding on is quite expensive and if it is possible to find a place with the current space that is in need of lots of your touches, the total cost will probably be much less.
I don't like the looks of the first of the two houses, and agree with Cara about being careful about flips (and it appears from the sales history that the first was in terrible shape when the current owner bought it). But there is a BIG differential in house size between them (notice the assessed value differences). I would also reiterate the advice many here have given about driving/walking around the two homes at various times of the day because some parts of 22204 are quite nice and undervalued and other parts are, er, not.
Arlington Co. has the zoning rules on its website though they can be a bit complicated to follow (e.g., not only the house but the driveway, detached garages, etc., are covered by some rules). Also, if you click on the details for each home's assessment, there is info about how close each house is to the maximum lot coverage now.
Here is a NYT article on what I presume is the most famous "spite house" in Alexandria from 2008.
This one is particularly crazy at only 325 square feet.
hey guys
I submitted an offer on a place in DC.
It's trashed, it's a short sale,
but, the price is very aggressive.
I'm pretty bearish on the housing market, but that also means one should look for opportunities.
Pat-
Good luck on getting the place and good luck on handling the clean up if you get it :)
Pat,
Good luck! Keep us posted. Hopefully if you're the highest bidder, they'll institute those fast short-sales for your case. Good to hear you've found something who's price seems worth buying (while it's still listed as opposed to after the fact).
yeah, if i get it, i'll need some luck and a lot of help, but the structure looks sound and i've seen worse in mechanicals.
lets see what happens, i'm a backup offer, but the primary offer seems flaky.
Thanks for all the links today, everyone, and good luck, Pat.
I am looking for a SFH in the Crippen's Corner area of Reston but thus far nothing has come available in the last month or so (weather I suspect)...
Is anyone familiar with that area enough to comment on it?
Will listings overall begin to pick up in the coming weeks?
Any insight would be greatly appreciated!
Mick-
I know very little about that area the only house that is still on the market I could find there is http://franklymls.com/FX7234218 although it is under contract so that doesn't really help you. It looked like last year only 5 houses were sold in crippens corner so you may just have to wait a couple of months between listings. That is always one of the problems with looking in a really small area that sometimes you just need to wait it out.
http://franklymls.com/DC7219071
here's a good example ofpolicy inflating the market.
Lists for 315K, sells for 361K
but through homepath zero down with the 5K give back.
When does everyone think shorts are a no-go for any chance of a contract closing in time for the 8K. Now?
I think that unless it's pre-approved and someone backed out after approval, they are not an option for those wanting the 8K.
This means more demand for regular and reo's?
Va, any insights for Mick?
I don't think shorts ever pulled that much demand away in the first place. But yes, at this point it's definitely too late to both get a short and the $8k. But if there are no REOs in the area you're looking in, and the shorts are $30k or more under real sales (after all condition related adjustments are included) then that $30k still beats the $8k for a lot of buyers. Not all, mind you. Cash on hand is "better" than a lower price for some people. But I think the people going after short sales were always the ones who focused on net.
Cara,
I'm not too familiar with Crippen's Corner. Doesn't seem there is much turnover.
As to the shorts and the 8k. First, people are stupid. Second, anyone wanting/needing the 8K will be dropping out of shorts left and right.
Va,
My point was I don't think the "stupid" people were in the shorts contracts in the first place. Only the bargain hunters. Which, I'd say, indicates some level of savvy.
However, the market I'm still watching doesn't have that many shorts or that many REOs. (most of the shorts have been under contract for over 8 months already, why would the buyer give up now?) If you're looking at a market where shorts are a larger percentage of available properties, then at some threshold all buyers, savy or not, will have had to consider shorts. In which case, yeah, some people, who's initial offer assumed they'd get $8k from the IRS, will no longer be happy with that offer and they'll back out. Sure. I'm not sure where that threshold would be though. Given the hold times on short contracts near me, I'm certain it doesn't apply in the SFH market in Burke/Springfield. But it could very well be applicable in the TH/condo market.
Cara-
I think some of the bargain hunters may be tricked by not so honest real estate agents. Every agent Most of the agents at shorts I saw claimed they could get everything done in 2 months. People have almost 4 months to still be able to get the 8K so I would not be surprised if people think there is plenty of time. Although I think the demand for the 8k has to be nearly gone by now. Most people who were excited for it probably used it before it was renewed, but I could be wrong.
hb,
There's also the promise of the expedited shorts process which I thought should come into play in April? Such that those promises might be accurate. But then post May 1, you end up over a barrel if you needed the cash, because you can't get into a new contract on a new house. And honestly I don't know if agreeing to the bank's higher price would count as having been "under contract" or not. Very dicey.
Cara,
I'm seeing, on average out of 10 properties, 7 shorts 2 reo's 1 normal.
And I'm probably being generous on the normal. I guess much depends on where you are looking and the price level. I have also seen multiple offers on shorts.
Cara,
I thought about the "under contract" issue too. You would be under contract, subject to bank approval. That's how I would argue it - now the IRS might think differently. I would argue that it's the same as any contingency (financing, home inspection, etc.).
When do you have to close by?
VA-
I am pretty sure you need to be under contract by April and close by the end of June
Va_investor,
Wow! That is indeed a completely different market than what I'm seeing. Yes, your dynamics are going to be very different.
If I include properties that have been under contract for over 6 months, (which I haven't been including in my mental picture, since they're really not available, although you could put in a back-up offer and hope the bank and borrower finally get their acts together), then I get more like half shorts half real sales. But I mainly think about the market as being the stuff that's "active" or was active within the last couple weeks.
I think you'd really need a tax or RE lawyer (I know, you are a lawyer, but other buyers would need a lawyer) to sort out whether such a large change as an increase or decrease in price would effect your ability to collect the $8k. Given that prices could go up or down depending on appraisal and bank approval, I think you're probably right that you'd be okay. But I'm just overly cautious.
I haven't seen a short change price. Do you see many on Frankly?
Va_investor,
I'm talking about the price change from whatever the contract was to whatever the bank will accept. These changes are undetectable with the MLS normally.
I have seen shorts come on again with a new slightly lower price when the buyer backs out with a remark that the bank has already approved the new list price. But that doesn't tell you what the initial contract was.
Cara,
I can only go with the 6 that I am personally aware of. What I am seeing is buyer-backouts that are relisted much higher due to market changes over the past 6 or 8 months OR bidding wars raising initial contract well over initial listing. I have not seen any come back on lower.
Va_investor,
It's amazing how different our markets are given that they're not far away in distance nor in price. But yeah, around me, shorts that have come back with "approved price" about half have been higher (often way above normal sale comps, guess those banks are just insane) and about half have been $5-$20k lower than the original price.
Others that have fallen out of contract have reappeared lower with no indication that there's been a bank response, so one guesses that was the previous contract price.
But our overall dynamics are different too. List prices have been increasing on short sales and REOs in my area, but the closed prices on move-in ready have been slowly but surely grinding down.
Then again very few of last year's shorts that are now $75k under normal market price have closed. So there's no telling what will happen when the bank actually makes a decision.
Here's an example:
http://franklymls.com/FX7163698
original list $390k, dropped to $330k before going under contract, came back on at a preapproved $320k, sold for $320k minus a $7,424 seller subsidy.
Cara/VA Investor
In your discussion of the effect of the impending buyer's credit deadline on local real estate, esp. shorts there's one factor I don't think either of you have considered.
The legislation for the 8K credit includes a one-year extension for military (and certain other govt workers) who are currently out of the country. Many of these individuals frequently buy and sell in the Washington DC Metro area, more so than other areas of the country. These people have a longer time line to work with. Some of them may have toured listings while on leave or had a spouse do so.
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