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Wednesday, April 7, 2010
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57 comments:
Diana Olick at CNBC's Realty Check
says her inside sources tell her that foreclosures will be up when the reports come out next week.
Or as she puts it the pig in the python is showing it's face.
(which seems exactly backward to me as only un-digested pig would be recognizable, and hence that would mean the python is coughing the pig back up, i.e. through loan mods or something... but anyway...)
Cara-
I would not be surprised at all if she is correct. BofA said they expect foreclosures to be up 600% and several other banks have also commented that they will increase the speed between owners going delinquent and the house being foreclosed.
hb,
Yup, it looks as if the "stampede" is finally actually coming. What remains to be seen is how many are actually left in this area, and where.
I hope the WaPo does a redo of their foreclosure map from last June. It would have been nice if they had just kept it up to date...
We shall see. We've heard rumors like this before during the past year and a half. Also as has been pointed out, it might not be as bad in our area. Of course, my fingers are crossed=)
WSJ Blog
First America Core Logic report on when underwater borrowers will resurface.
They have DC as fairing amongst the best with underwater borrowers returning to positive equity nominally in 2015. It appears from the chart to be based primarily on the prediction of higher yearly appreciation here (since we go from 4th best equity to highest equity by the end of the chart).
Take it as you will.
kevin,
I don't know, previous rumors were more rumor-like in my memory. I don't recall a statement from BofA or similarly large bank before.
But yes, after all this waiting, we'll wait and see some more to see how/if this pans out here.
All,
Any thoughts on how much something like this (http://franklymls.com/AR7270734) is overpriced? It's listing for almost $570K. Opinions?
-Ben
http://franklymls.com/AR7068886
Is the only semi-recent comp in that development, sold for $560k in 7/09. Fiddle with Frankly's sold data to see what else you can find for comps that aren't in that complex, but might give you a greater breadth of comparison.
It is a reasonable size, well updated condo easily walking distance to the metro in Arlington... So it just might still command peak prices for all I know.
Cara,
Yeah, I saw that comp. It is quite a bit more updated than my original listed, but it does seem to be the only one in the complex. Obviously the location will still command quite a premium, but I'm thinking it's still overpriced by about 30K.
-Ben
Ben,
I agree. I was thinking around 536k considering previous solds were selling about 105%-110% of assessment value.
Rob
Ben/Rob
Yeah, I think my "updated" reaction was a little off. The kitchen's still dated. It's just well staged and well painted.
30k is pretty close to 5% off (28.5k) which to my mind would make it not "overpriced" at all, just a normal list price with a bit of bargaining room.
Previous articles about the foreclosure tsunami were basically asking, "where is all the shadow inventory" or predicting when the "tsunami" would hit. I get the impression that most foreclosures will be in states like California, Nevada, and Florida. But there have to be more foreclosures here, too. I think there have been too many properties that simply go off the market, and too many local, word-of-mouth stories about people in distress. This will have to have some effect of lowering or simply stabilizing prices in the region's market.
I have noticed one Leesburg neighborhood, Tavistock Farm, where I have seen nothing but foreclosures or short sales in the low 400 range in the last year. In the last week, several organic sellers have marketed their properties. The houses at the higher prices are really beautiful, but will people erase recent memory of better deals and pay the huge difference?
This is a big if, but if we start seeing a number of streamlined short sales in the coming weeks, then I wonder if these sellers have any chance of getting their asking price, or if instead, these properties will languish on the market unless they lower their prices?
Tavistock Farms: Market in April 2010
2009-Q1 2010 Solds in Tavistock Farm
Cara,
I agree. Normal bargaining room. That's a really convenient location too. Super close to the metro and being on the north side of Fairfax drive saves about 10 minutes in the morning getting onto 66 West bound.
My $0.02
Benjamin,
I've noticed out in Loudoun, that sellers who put their properties on the market at the beginning of the year increased their prices, mostly because of some comps generated during the fall rush to take advantage of the 8k tax credit. Unlike their neighbors' successful, immediate sales during the fall rush, current sellers have had to come down in price in order to get a contract.
Also, as you can see from the Arlington comps, the property you have posted has been sitting on the market for over a month, while the more appropriately priced properties all went under contract in about a week. Sitting on the market for a long time is often a symptom of overpricing.
Disclaimer for my excitement about the upcoming foreclosures: in the neighborhood where I have a contract on a short sale, recent sales, both regular and short, have gone for the asking price. We got a contract with a lowball offer in the cold of January when inventory was tight, but that recent activity makes me skeptical that the bank will accept our price. The possibility of more foreclosures restores a tiny ray of hope that our price might be accepted, but just that a tiny ray.
Thanks all,
Now that I've introduced myself with a semi-nitty gritty question I suppose I should do an actual introduction.
I am a relatively new gov't attorney here in DC (GS-12). I originally came here for undergraduate back in 2000 (GWU) and stayed on for law school (GMU finished in 2007). Maybe TMI, but I do have significant student loans from law school. I got married last August (wife is a nurse).
We currently rent a condo in Clarendon and are probably going to buy a townhouse in the next year or so. We want to stay on the Orange corridor, probably not farther than Falls Church, but preferably inside Ballston (a tall demand, I know).
Anyway, that's where I'm coming from when I make future comments.
-Ben
REdealseeker,
I haven't looked as thoroughly through comps as you have, but at first glance it looks like a lot of hopes are hinging on this sale:
$540k for nicely updated.
(including exterior).
Can it stand? I don't know. My neighborhood similarly had no high sales before late spring 09, and since then has developed a bifurcated market of SSs/REOs and real sales of updated models going for 70-100k more. It's even recently developed a mid-market for non-updated real sales $20-30k above distressed. So it's possible that the recent distress will be ignored, even possible that continued distress will bifurcate and allow real sales at a separate price. It's also possible that both this neighborhood and my neighborhood will recollapse back down to REO-only pricing during the next REO wave.
Don't know. Depends on the extent of the shadow inventory remaining in each neighborhood. And the willingness of appraisers to have seperate tiers.
I agree about the condo near the metro, though it might go just a little bit higher (maybe $543K). It's clearly overpriced or someone would have bought it at the asking price or maybe $10K below, before the 34 DOM it currently has accrued, in this heated-up spring market. Most of the high rise condos in that neighborhood are quite nice, so no discount is applicable (probably) for being surrounded by them.
Ben,
Congrats on the job and being able to stay in the area! And with GMU, your loans could be a lot worse.
Best of luck in your search. I started posting here about a year before I was actually ready to purchase financially/life/work wise.
You need to find out what's available and what it costs so you can strategize how to manage your debt/savings and figure out your time-frame. 3 years of savings may be enough, or it may behoove you to stash away some more before taking the plunge. No way to know unless you know what things cost.
The Berkeley is near the townhouse/condo Ben pointed out. I had friends looking to buy in there very recently. Most of the 2 bedroom stuff is at asking prices in the 520-560 range. I think that's way too high and makes the 3 bedroom townhouse/condo that much more appealing at the same price point.
Ahh, it's actually a 2 bedroom plus den according to the Arlington County website. Assessed at 487k for 2010 as well.
Looks like the previous owner spent $520k in 2006.
Arl Website: http://www.arlingtonva.us/
Departments/RealEstate/
reassessments/scripts/
Inquiry.asp?action=view&lrsn=21982
My $0.02
Here are some of the parameters.
The man is older and retired on social security. If he rents, it will take most of his SS income. He has some savings but not a lot.
Instead of renting, his daughter may combine his savings with some of hers and buy a condo apartment or a very small house.
She realizes that there will be taxes, utilities, condo fees, maintenance such as replacing a refrigerator, dishwasher, HVAC, washing machine, every few years.
She and her husband work and believe they have enough savings to make this happen.
They have much research to do, not just on neighborhoods but on the tax consequences.
The condo, house, whatever they buy could be a money loser but they are optimistic that over 10, 15, 20 years, however long her dad can live independently, the place will hold value.
20 years from now, they could sell or rent it out.
I am not comfortable sharing the details of how much savings they have, that is too much like a car salesman asking "What can you afford to spend?"
I have avoided any discussion of their savings.
Many here have a good knowledge of neighborhoods and are actively checking prices and availability,
If you see a less expensive but safe area with smaller homes or well maintained garden apartment condos, please pass that on.
The daughter and her husband are looking too.
Thank you.
In 2009, I don't think I received more than 3 or 4 "Price Drop" emails from my Frankly MLS email bot.
I've just peeked in the Frankly MLS email folder and that same bot, un-tweaked since I created it back in June 2009, has more than 25 "Price Drop" emails since 02/15/2010.
Interesting.
What does it mean?
Absolutely nothing is my guess.
:)
Blogger cara said...
...Or as she puts it the pig in the python is showing it's face.
(which seems exactly backward to me as only un-digested pig would be recognizable, and hence that would mean the python is coughing the pig back up, i.e. through loan mods or something... but anyway...)
Dunno. Depends if she's talking about the Python's entrance or *ahem* exit.
Still funny tho' (either way).
I love analogogiees. I just can't spell it worth a damn. Or did I mean simile? Or metaphor?
Coffee...need more coffee...
Sorry, repost of my response to HB from prior bucket...
HB,
Our discussion has always been a house that you buy for yourself to live in. Essentially, by buying a property in one tiny little corner - you are speculating on wages going higher in that region for future years. There is absolutely zero guarantee that it will come to fruition. Your seem to claim this is a safe bet - it actually isn't...not even close.
Diversified REITs are a different story - of course. But, these are actual investments - you can't live in them or save on rents as your calculations seem to suggest.
I dunno...foreclosures..seems like I've been hearing this for almost 2 years. I do know in PWC the 2 neighborhoods that concerned me were Bear Creek and Ellis Plantation, BC 2010 tax assessments increased about 4% while EP droped another 6/7%. EP was/is loaded down in SS and foreclosures but most of them have washed through the system. They are about a mile apart but EP was built and sold at the height of the bubble. I think you will need to pick a neighborhood/area and do your homework.
"Spider said...
you are speculating on wages going higher in that region for future years. There is absolutely zero guarantee that it will come to fruition. Your seem to claim this is a safe bet - it actually isn't...not even close."
Of course its not guaranteed. Other than the sun rising tomorrow, please tell me what is guaranteed?
And I love how you say its "not even close" to a safe bet. Not even close??? Perhaps HB is looking at past results to get a gauge on the future. If he did, he would find that incomes in the DC area have risen 40 of the last 40 years (1969-2009) 40 for 40 is a pretty good -- sounds to me like it IS a safe bet -- as safe as any bet about the future.
Further, he is talking about the long term isnt he? Its true, its conceivable we may get a year or two of declining incomes in this area if deflation really kicks in, but isnt it a SAFE bet to assume that over the long term (10-30) years, that incomes will do what they have done over the last 40?
Oh, and if the answer is "no", and you reiterate your claim that "its not a safe bet -- not even close", please describe to me what if anything is close to a safe bet for you when it comes to making projections about the future of the economy???
Tag,
I am quite familiar with Reston and have a number of rentals in the area.
I stick with North Reston for many reasons (although I do have something on the water in S. Reston).
One N. Reston development that I am quite happy with is Northgate. It is at the intersection of Weihle and Baron Cameron. Churches (if important) are across the street. The bus is 2 blocks, or less, away.
The office staff is efficient and friendly. The maintenance workers know those units inside and out and will do repairs for $20/hour. I've noticed no "gang" stuff. You can check with the office; but I'm sure I would have heard of any issues from my tenants.
A "distressed sale" one bedroom can be had for about 120K. Condo fee of 250 + or - includes ALL utilities. the only expense is cable and phone.
On a higher scale, Parc Reston is a good value in my mind. Right across the street from RTC with an underground tunnel to avoid crossing Reston Pkwy. Again, very friendly staff. High condo fee (350?) includes no utilities except water.
It's my belief that both have a tremendous upside due to the Silver Line coming in 5 yrs or so. Also, RTC is terrific and the entire dulles corridor is a great job center.
Depending on downpayment (20-30%), these places cash-flow nicely.
Hope this helps.
Spider-
Seeing that DC is one of the two or three most important cities in our country I would expect that if wages grow in the rest of the country they will likely grow in DC. If they do not grow for the country nearly every asset class will perform terribly.
Also for a REIT the calculations hold rather than saving money on your rent you get the other persons entire rent. I tried to make sure I set of the numbers in a way that you could replace you buying with a landlord or anyone else and the return on the asset class still looks the same.
So yes it has been a terrible investment recently and will likely be a mediocre to bad investment for the next 5 years, but at some point I expect the future returns to look a lot like the past returns. Although as every financial adviser will warn past returns are no guarantee of future returns.
Spider,
Many REIT's got slammed over the past couple of years. It's probably a good time to get back in. Who knows?
VA-
I think a year ago was a great time to buy, its less clear that now is still a good time to buy. Many of the REITs have recovered to levels close to their all time highs. If you want I can find some graphs that show the recent run up.
Ohh Contrarian, sweet Contrarian, im so glad you are still here, glug, glug, gluging away on the doom aid.
By the way, we are coming up on the 1 year anniversary of the incident where you took the last remaining threads of your credibility and went WOOOSH, flushed them down the toilet.
What incident is that you say? Why thats the incident where you insisted that the insidious hatemonger and perpetual liar HAL TURNER WAS A CREDIBLE SOURCE for the stress tests.
https://www.blogger.com/comment.g?blogID=4787878578920468587&postID=2506282792057139774
Of course, its not nearly as funny to read now that you have deleted all your posts. Still, you can glean alot of what was said at the time by looking at others responses to your lunacy.
Too bad Hal Turner was hauled off to jail before he could release his stress tests. That would have been worth a ton of laughs!!!
"housebuyer said...
Spider & Pat-
I agree Detroit is a disaster. Their economy has been falling apart for decades..."
this reminds me, with all the hoopla in the msm over federal employees and how much $ they make....
my first thought was, hey kill two birds with one stone. federal employees make all that $ b/c the majority live in the high cost of living dc area. detroit, cleveland etc, have much lower costs of living and have much infrastructure in place already. why couldnt federal agencies (that dont need most of their employees in the dc area for whatever reason) have 50% or more of their workforce transferred to detroit et al? instead of paying 4k employees $100k in dc, pay them $60k in detroit with maybe $5k in travel to come to dc for a couple weeks a year if need be. the leases for buildings would be much lower as well.
this revitalizes the midwest some, saves taxpayers $, and gives better quality of life for the employees. thoughts?
That's funny. I see a reply to contrarian but no posts from contrarian. Just a bunch of "deleted by author" entries.
Seems oddly familiar...
Could this be because the stock market is up 37% in the last year? And employment (including reports about hiring and job leads from the recruiters I'm talking to) are recovering nicely?
Interesting...
I guess this just isn't your grandfather's great depression...(AS I TRIED TO EXPLAIN IN DETAIL.)
Scott said...
Interesting...
I guess this just isn't your grandfather's great depression...(AS I TRIED TO EXPLAIN IN DETAIL.)
No, Scott. It's worse.
Round 1 was IndyMac, Bear Sterns & Lehman Bros.
Round 2 began with Dubai, then Ireland, then Greece. Soon, it will spread across Europe and then the U.S. and Japan then India and China.
We are still in the early stages of a depression - one worse than the 1930's.
GT-
Perhaps a few of the agencies could pull this off. I think the problem is that no one wants to be the person to try and revitalize Detroit. A very large percentage of employees would likely quit their jobs rather than live in Detroit, which is often viewed as a failing/dangerious city. You also can't use a lot of the unemployed in Detroit, because they lack the skills necessary to do many of the government jobs.
Hey Contrarian - I clicked the old Hal Turner link for a laugh, and it looks like Hal Turner (or his family) is back at it again...
http://family-of-hal-turner.blogspot.com/
The latest news is that apparently, the FBI made Hal Turner say all those hateful things about the jews as part of an undercover operation...
Hal Turner now claims that in the course of his secret ops for the FBI, he found out that jews were responsible for the 911 terrorist attacks, and how the US retaliated by putting a needle in Ariel Sharon's neck to make it look like he suffered a stroke.
He also says that the FBI had him work on the Oklahoma City bombing investigation, and the CIA sent him to Brazil to help thwart Syria and the Lebanese militias -- WOW!!!
So it turns out, Hal Tuener is not just a janitor from New Jersey. He is also a trusted informant of the US Treasury, the FBI and the CIA, and has worked on some of the most gripping stories of the last 10 years -- WOW!!!!!!
Thank you once again for plugging us in to this man who you insist is a "credible source" of info -- LOL!
Scott, Contrarian is forgetting to tell you about round 3. The one where his "credible source" Hal Turner says that the US is secretly sending AMERO coins to China to prepare for the coming collapse of the US currency.
http://www.truthed.com/videos/179__hal_turner_shows_an_amero.htm
My guess is Contrarian doesnt want you to know this, because he is busy relying on his "credible source" and buying AMEROs now before the dollar becomes worthless
http://www.dc-coin.com/una2009100amerossilverproof-likeseatedlibertywithddc-1-1-1-1-1.aspx
Hey Contrarian, how much of your stockpile soon to be worthless cash have you traded in for AMEROS??? Glug, glug, glug, glug, glug, glug, glug, glug...
hb,
You are correct on REIT pricing. The older I get the faster time seems to go by. The bottom was clearly more than a year ago.
I hear alot of grim news on commercial paper. But, on the other hand, there is a ton of money trying to chase down these deals. This I am pretty familiar with.
"Comment deleted
This post has been removed by the author.
4/7/10 2:12 PM
Comment deleted
This post has been removed by the author.
4/7/10 2:35 PM"
Wow, that was fast... even by Contrarian's standards.
Saved without comment, merely for future context, especially in light of its imminent deletion by Contrarian
"Contrarian said...
Scott said...
Interesting...
I guess this just isn't your grandfather's great depression...(AS I TRIED TO EXPLAIN IN DETAIL.)
No, Scott. It's worse.
Round 1 was IndyMac, Bear Sterns & Lehman Bros.
Round 2 began with Dubai, then Ireland, then Greece. Soon, it will spread across Europe and then the U.S. and Japan then India and China.
We are still in the early stages of a depression - one worse than the 1930's.
4/7/10 3:47 PM"
Anonymous, inventory is inching up slowly..towards 10k level that you predicted.
cara - I don't see stampede yet. But, I do notice inventory getting a lot better...8k demand hang over should make it more visible this summer.
http://franklymls.com/AR7010489
here's an odd one
almost 400 DOM, it wasn't selling at 149K
and they raised the price?
we don't like the area, too far from anything, but, if it goes for 149K it would be good for a rental.
Mr. Bernanke finally seem to be getting it:
Bernanke: Economy not 'out of the woods'
"Mortgage delinquencies for both subprime and prime loans continue to rise as do foreclosures," he said. "The commercial real estate sector remains troubled, which is a concern for communities and for banks holding commercial real estate loans."
"Bernanke also said the United States must confront its profligate ways sooner rather than later if it is to avoid a fiscal crisis. Americans will have to make tough choices on the balance between higher taxes and lower spending on various priorities, he said."
pat, just a guess, but because it's a short sale--they probably got plenty of offers at the lower asking prices, but the bank wouldn't approve the prices. So the new price may reflect what the bank demands. That may still be above market value, though, but the bank may have to learn that lesson.
Tag
I recommend that you be a bit more specific about what your friends are looking for in the way of a neighborhood. Closer in? Further out?
If they want a small house with a yard I also sugget looking in the Springfield and Annandale areas. Some neighborhoods are better than others but there are many ramblers out there. I can take or leave a rambler but they are all one story (or two if they have a bsement).
Kingstowne has some garden style condos, lots of convenience to shopping etc and is relatively safe.
Several of my friends like the condos in Shirlington and they have held their value fairly well. That area was built in the 40s and the condos are townhouse style. They are smaller than preferred these days but the buidings and the neighborhood retain a lot of charm.
Look up the listings on Franklymls nad take advantage of the crime (c) and walkscore links to see if the neighborhood is more or less safe and what amentities are close by.
http://www.msnbc.msn.com/id/36231595/ns/business-real_estate
Basically, says that rates might hit 6% shortly. I remember a discussion on here that that could mean a dip in prices people are willing to pay because the mortgage payment will be higher.
Any predictions on that?
Tag - For Shirlington, I meant the Fairlington community specifically, so use Fairlington as your search term. You can still find units there for under 350,000.
c,
Tag's friends are looking specifically Reston neighborhood to be within a few minutes of the daughter. (this weekend's thread I believe)
Thank you Cara, I did miss that part and stand corrected.
Sorry Tag :(
Greetings from the Immunozone.
Two houses under contract on my street (one the same block/same side), one 8 days on market the second 3 days.
http://franklymls.com/AR7282580
and
http://franklymls.com/AR7296233
Same model house, except the first lists its enclosed former porch as a bedroom. That one also has a much bigger yard, backing to parkland (the photos do a really poor job of showing the view & the map that comes up at the bottom of the listing shows it 3 lots too far to the west)
I'd guess from the quick sale that they were sold for close to asking price. The asking prices were 19% and 18% over assessment, respectively. The first sold for $613K in 2004 and current asking price is $825K. I can't believe it would have sold for much more at the peak.
Can't say I fully understand it, but there are clearly people willing to spend an awful lot to live in this area.
It will be interesting to see if both stay up. Within just over a block from my house we currently have one almost new house (replacing a teardown) for sale, one under construction (mine), one just demolished with the foundation going in, and two marked for teardown (which could take months if they have as much trouble with Arlington County as I did).
"Basically, says that rates might hit 6% shortly. I remember a discussion on here that that could mean a dip in prices people are willing to pay because the mortgage payment will be higher.
Any predictions on that?"
People here have gone back and forth on that. Historically mortgage rate increases have not correlated with reduced prices, but there are a few good arguments on the other side as well.
Historically rising mortgage rates tended to correspond to high inflation. (so even if nominal prices remained steady real values were dropping)
Historically interest rates haven't been this low. With rates as close to zero as you are ever going to see even "small" increases are meaningful.
Plus the housing market in general is still pretty fragile.
Keith-
Do you know if the houses were that nicely updated when they sold last time. My guess is no so rather than having their price rise from the renovations the price instead only was flattish with peak pricing. So without the renovations the houses might have been down ~5-10%.
KeithK,
I know this is a totally irrelevant comment, but I think what they really need in that first house is more sage green. Go for the gusto, why have only half the rooms in various shades of green when you could have them all?
(I say this knowing full well we would have to repaint our whole house if we ever sell it, I have a similar prediliction towards blue).
KeithK
And I'd buy the second house just for the rock-scape in the back yard.
(although, it may be just the pictures but the room sizes look really cramped)
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