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Friday, August 27, 2010
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58 comments:
Blogger Ace said...
Here's what happens when you indulge your grand vision in building a house while ignoring even the most basic buyer needs and wants for a house half the price.
Such as: a functional kitchen with reasonable cabinet space; a small, usable back garden (at least), rather than an oversized garage that you cannot maneuver a car to park in; a house well-proportioned to the lot size; room space rather than hall space; a master closet that is large enough for at least one person's clothes, etc.
AX7333273
What a shame. This house could have been great.
Am I a prude or did I miss some great social upheaval where modesty and decorum was thrown out with yesterday's newspaper?
No curtains or shades on any windows. WTF? No one ever walks around in their birthday suit in their own home?
Trust me, be thankful I have curtains. You'd gouge your eyes out with a fork.
Holy cow (shaking head).
From The Atlantic: Is the Buyer Credit Really To Blame for Poor Home Sales?
Wow! 30 yr at 3.75%. Can this be true?
Texas Native,
I like clean modern stuff, but the kitchen reminds me of my grade school cafeteria - I felt sick just looking at the picture.
TN, it's pretty common around Arl & Alex for new builds not to come with window coverings. So any new buyer had better budget for that.
Harriet, it was actually a high end German kitchen. But there is nowhere to put stuff.
Link to the cabinet company for the Alex. green house:
Bulthaup
my #s are off so i deleted the post
Va
Where? Thks!!
contrarian,
just getting all the numbers out there so we can all reach our own conclusions.
Ace, the kitchen is high-end, but it's just not my taste. Morgue crossed with 70's school art room. It's the ridiculous hallways that bother me the most.
Cara, there are just so many (expensive) things wrong with the house that could have been avoided, it hurts the brain.
cara,
I was looking at Amerisave this am.
thanks VA,
so you mean like these:
Today's Mortgage Rates
August 27, 2010
Loans up to $417,000 Rate APR
30 Year Fixed 3.750 3.933
15 Year Fixed 3.250 3.594
3 Year ARM 2.500 3.359
FHA Rates Rate APR
30 Year Fixed 3.750 4.330
15 Year Fixed 3.500 4.152
I'm not sure if the normal rates quoted as national averages are rate or APR.
I'll see if I can dig out the points on that... for my own loan as a refi it looks to be about 2.2 pts to get that rate. So sure, at over 2 pts 3.75 (or 3.93 APR) is totally plausible.
cara and contrar,
I'd "buy up" the rate to 4% or so and have no points/closing costs.
I'm still thinking FHA for the assumption reason.
contrarian said...the powers to be are finally concluding we are in a depression, not a recession
Link?
Anon
I don't believe in Bidding wars.
If they make you happy, bid like mad.
I personally hate auctions too, I prefer to negotiate a price or set a walk away price
bidding wars are just like auctions, i spent a summer going to junk auctions and I saw people bid above retail price for used goods.
It's a psychological mania, they want to win, and the auctioneer uses basic psychology to force a contest.
that's what a bidding war is, the realtor is trying to force you to do things that aren't in your best interest.
me i prefer to set a BAFO offer.
make the offer and F&^* it, i can always walk.
To me Housing is a commodity.
lots out there, lots to go.
you want to get in an arms race with someone? Cool. nothing is stopping you today.
nothing stopped you for the last 7 years.
As much as you blame the people here for hucksterism, the decision was solely your choice.
you could easily have been one the 35% of DC area residents underwater on a mortgage.
please tell me what properties you were looking at, that the "Hucksters" here talked you out of?
Cara
actually here's how i do the math
on getting to 35% underwater in mortgages
100 houses @ $100 Value each.
33 houses with loans of $33
33 houses with loans of $66
33 houses with Loans of $100
now try and goal seek between 34% negative equity and 73% LTV.
what that gives me is
that bottom quadrant is 25% underwater.
or you can drop everyone's value by 15%, and that bottom quadrant is
15% underwater, the top quadrant is fine and the middle quadrant is fine.
the problem is about 5% of houses are on the market, while 33% are underwater.
do the underwater ones open like a floodgate or do they stick around?
every motivated seller from the upper 2 quadrants can walk with decent cash today, if they want to sell in a week, they price aggressively and move out.
every underwater seller is looking at a short sale a foreclosure or a check at closing.
how does that tie up? where does the game go?
i've got a guy i know who is $100K underwater on his townhouse in springfield. Nice place close to Metro, but, his income has taken a huge hit and he's looking at a NOD.
when his place moves out, does it go for wwhat he paid or what his bank gets?
I know we have mentioned the recession causing the birthrate to drop, but this article is saying it may be the lowest birthrate in our countries history birth rate
This obviously is part of the reason fewer houses are being bought.
Cara-
It looks like you are going to make life easier on your kid. With record low birthrates there should be less competition in his/her activities and schooling :)
Pat,
(my math was just setting up an equation for the average of the total group, given breaking it up into two parts and assigning a guess for the mean LTV of the 34.7%)
We had the break down by percent negative equity a few weeks(?) ago....
NoVa discussion of which we were both a part.
Calculated Risk link
VA had 12% 0-- -20% equity
12% -20 -- -50% equity
7% -50% or worse
so... 31% total, is a little worse than the MSA's 29.5% underwater, but not by much, but the worst hit should have been within the MSA probably... So I'd guess that the full 35% break down about like
5% LTV 95 - 100 (duh)
10% LTV 100 - 120%
10% LTV 120 - 150%
10% LTV 150+
Yes, there will continue to be foreclosures. There have been foreclosures ongoing in these neighborhoods for 3 years now.
Townhouses in the suburbs have the potential to get hit particularly hard (as most of the condos have already hit cash-flow positive and gotten tons of turnover). Why? Because very few people who want to live in a suburb actually prefer them to SFHs. Therefore they need to be cheaper.
hb,
Could be. Or he could be part of a wild run-up in 2010/2011 as those who have put it off start having kids again.
Blogger Ace said...
TN, it's pretty common around Arl & Alex for new builds not to come with window coverings. So any new buyer had better budget for that.
8/27/10 11:07 AM
Thanks. I was aware of that. My problem remains is that so many don't.
Don't budget.
Don't install.
Don't care.
Take a drive around Tyson's McMansions.
Big bright uncovered windows everywhere you look. Hey Sam! Nice farmer's tan! Hi Ethel... looking good for 65!
Snort.
Sorry to rant but its a pet peeve of mine here.
Same for Bethesda. Same for other parts with new builds. Wide open windows so you can watch Mcfamily sit at Mcbig dinner table through their Mcbig Thompson's Creek windows.
Buncha damn voyeur's if you ask me.
LOL.
cara
plain forgot about that CR discussion,
i was in vegas a few weeks ago explored a bit saw lots of empty CRE
i think RRE is just not selling
i should take that CR chart, plug in the numbers, try and estimate values
for people in the middle
TN-
Although I agree most people just don't have window treatments because they don't want to pay for them some people just like having their windows open. I really like being able to see out particularly in areas with a lot of animals so even though I have had window treatments at all my places I only used them when I didn't want people looking in.
@Pat
"the problem is about 5% of houses are on the market, while 33% are underwater.
do the underwater ones open like a floodgate or do they stick around?"
This would only apply if every owner of "underwater" property wanted to sell. The thing is, the market value of your property could very well have taken a hit, but as long as your income hasn't, you can continue to make payments indefinitely.
My condo in NE DC (bought in 2006) has lost at least 40K in value. Technically, I'm underwater. My income, however, has almost doubled since then. So I continue to make my easily affordable payments. I have a luxury of not caring about my underwater status. I imagine I'm not the only person in this situation.
NN,
No. Quit being rational. You will walk. That is the only way. You will, nay must, walk on your property en masse. It is the way of the market. It is the clear choice for everyone in the market whose property has at all declined.
Sorry to inform you of this,
My $0.02
"Pat said...I don't believe in Bidding wars.
If they make you happy, bid like mad."
They dont make me happy. They do however make sense SOME of the time. Especially when I can get something for less than what I would have been willing to pay.
"Pat said...I personally hate auctions too, I prefer to negotiate a price or set a walk away price"
I always have a walk away price. With an auction, I may get it for less than that. If I dont, I walk away. Simple as that.
"Pat said...bidding wars are just like auctions, i spent a summer going to junk auctions and I saw people bid above retail price for used goods."
Hopefully, SOME people will do more research buying a home than buying junk at junk auctions.
"Pat said...It's a psychological mania, they want to win, and the auctioneer uses basic psychology to force a contest."
Yep, and I feel sorry for those that have no self control. Now, for SOME people who do have self control...
"Pat said...me i prefer to set a BAFO offer.
make the offer and F&^* it, i can always walk."
Thas fine for you. Is it a rule for ALL people? Or can SOME, who can excersice some self control, enter into a bidding war, and perhaps get it for less than their walk away price? If you have self control, why not enter into a bidding war that is BELOW your walk away price, and then walk away if it exceeds that?
"Pat said...As much as you blame the people here for hucksterism, the decision was solely your choice."
Yep, as I have said I f*cked up.
"Pat said...you could easily have been one the 35% of DC area residents underwater on a mortgage."
Except I was looking in the immunozone from the get go.
"please tell me what properties you were looking at, that the "Hucksters" here talked you out of?"
Mostly around Clarendon & Del Ray. Bungalow style joints that were going for 340-380K back when I first heard about "the big bad bubble" and why it was wise to wait til it bursts. It has long since burst and those places are going for 650-700K now.
TN, sorry to tell you something you already knew.
Personally I just lurrvvs those open windows. My life would have no excitement at all (aside from this board) if I couldn't stroll past and see Uncle Conrad and Aunt Ginny putting away their Whole Grain Cheerios.
I think I may be repeating myself but our last house had huge custom windows and no window coverings even though it was 18 years old and the neighbors were steps away (yes, an architect and his family lived there). Didn't like spending all the $$$ but liked the idea of uncovered windows even less. I'm sure our neighbors were relieved.
newbieinNovA
There's a rambler in King's Park that's going to have an open house on Sunday that isn't on the MLS yet:
8511 Parliament Drive
Springfield VA 22151
Sunday August 29, 1-4 PM.
Of course since there's no MLS listing I don't know what the price is going to be, but it's a nice location and supposedly remodeled kitchen and baths, long time owner (1988). This realtor tends to price competitively.
Saved w.o. comment -- other than glug, glug, glug, glug, glug...
contrarian said...
Robert said...
contrarian said...the powers to be are finally concluding we are in a depression, not a recession
Link?
8/27/10 12:25 PM
We are in a depression much worse than the 1930s.
The U.S. has $202 trillion in unfunded liabilities.
Statewide retirement plans such as CALpers are mostly invested in the stock market. As the stock market collapses, so goes those people's retirement. Illinois' retirement plan is having to sell off assets to make current payments. California and Illinois are simply the first of many to begin imploding.
I expect civil unrest to ensue when people realize: the value of their assets (cash accounts, stocks, bonds, 401(k)’s, and housing) they were relying upon for retirement have collapsed; and, their “guaranteed” city, county or state pension benefits have vanished.
The most telling evidence that problems lie ahead is this chart, showing the Total Credit Market Debt as % of GDP.
As the chart shows, the Total Credit Market Debt as % of GDP normally runs around 150%. To put things in perspective - and as the chart shows - during the 1930's depression it went as high as 260%. During the current depression it was as high as 375%.
As the Total Credit Market Debt returns to the more normal 150% range, the entire financial system (stocks, banks, housing) should implode - just as it did during the 1930s.
Still have any doubt it is worse today than during the 1930s depression, Robert?
Enjoy the collapse! :-)
8/27/10 3:09 PM
REgarding the Robert Shiller posted by (deleted - blank blank blank)....
......................
If NAR hasn't put out a hit on Shiller yet it's just a matter of time. He is so gonna get sniped walking across New Haven Green.
LOL.
Anon
you are calling for doom and gloom in the credit markets and stock markets but somehow real estate will do great?
WTF?
TN/Ace said
Here's what happens when you indulge your grand vision in building a house while ignoring even the most basic buyer needs and wants for a house half the price.
Such as: a functional kitchen with reasonable cabinet space; a small, usable back garden (at least), rather than an oversized garage that you cannot maneuver a car to park in; a house well-proportioned to the lot size; room space rather than hall space; a master closet that is large enough for at least one person's clothes, etc.
Now here is someone who can totally work a space.
contrarian, Shiller's interview seems interesting. I tracked him for a while now. Robert and anon would say - double dip shouldn't matter to our immunozone of NoVA. I say - Oh sure...
"In this week's Big Interview, the WSJ's Simon Constable interviews Robert Shiller who flat out says that an economic double dip may be "imminent." This compares to his earlier warning that he saw the chances of a double dip at over 50%. Guess that probability has now doubled. Notably, Shiller also believes that when the NBER looks back at the data, Q3 of this year will mark the beginning of the second dip of the recession. Ironically, since up to now the previous recession has never actually officially ended, very soon the NBER will merely confirm that the recession which started in December 2007, will have continued for three years, in what is possibly the longest recession on record. Furthermore, those looking to sell houses are advised not to listen to the interview, as the co-creator of the Case-Shiller Home Price Index also added that he is worried housing prices could decline for another five years. He noted that Japan saw land prices decline for 15 consecutive years up to 2006. Following up on this week's weakest new home sales data in history this should probably not come as a big surprise to most....."
Well, hello spider!
I think I missed your response about housing being "expensive". You implied that, historically, housing prices need to drop.
I gave a report that affordability was at a 20yr high. Care to comment?
Check out the main picture for this listing:
FX7420014
They totally photoshopped the driveway and front walk. The colors are unnatural too. I don't know who provided the picture (seems a bit too much work for a listing agent to take it) - but it still seems wrong to use a photoshopped picture even if the client provides it.
Dave Aronheim was our agent up until we got rid of him this spring. He never seemed shady, just very slow to respond to email and never remembered any details about our home preferences. He actually seemed surprised every time we asked him about a contempory home and would ask, "So you guys like contemporaries?"
Va_Investor,
I just went back through the past two weeks of posts searching for the word "affordability" and could not find you giving any report that affordability was at a 20 year high. The closest I could find was,
Va_Investor said...
Va_Investor said...
spider said:
"housing still remain(s) expensive"
I read that we are at a 20+yr high in terms of affordability. Was that article wrong?
Can you please provide the link to your article? I would like to read it. Is that 20 year high national or local? I know in the past people have talked about the 30% national drop and you have dismissed it as irrelevant. I'd like to see the data on this supposed "affordability."
Lurking her for a while and just made first bid for house in Arlington. Our offer was rejected because of sale of home contingency, and the agent sent our agent a very diplomatic note but we could read between the lines. House is in nice area we really like and was priced in $750-$800 K range and has been on market for about a week. Our agent is friend of my wife's and suggested we go in with contingency for selling our townhouse which we have to do. Our offer was about 7% off list. My wife has been crying for last 2 hours and is furious with me, our agent and just about everyone else because she thinks I am cheap and our agent (her friend) gave us bad advice. Any thoughts if we should go back or wait and see what happens.
http://www.zerohedge.com/article/rosenberg-explains-why-not-one-new-home-priced-over-750000-sold-July
"..The high-end market, in particular, is under tremendous pressure. In fact, it is becoming non-existent. Guess how many homes prices above $750k managed to sell in July. Answer — zero,"
is this new houses? California only? I'd figure Anon is out there
flipping million dollar properties.
Cheryl(VA_I)
while I believe Housing is at a 20 Year affordability zone, it may got to a 30 year affordability zone.
It's cheap because interest is low.
If interest rise, prices may drop again, or interest rates may drop more.
Bernanke certainly wants to drop rates more.
NN
Great your income doubled in 5 years.
and for the average household that lost 18% in income?
yes you can afford to lose a lot
on your condo.
Is that true for people who are just hanging in there? A former Department manager at Circuit City now a salesman at BestBuy?
A former Construction Superintendent pulling 50% less income?
anon
If you are so unhappy, I can point you at some great properties for a million in DelRay. Why not man up
buy them. If you are convinced they are good solid values, then write the check, stop wasting money on rent,
and cowboy up.
BM
Anon will tell you make multiple rounds of bids, drop contingencies
and take the place. Bid above list.
Me
Tell your wife to never emotionally buy a house until the check hits the table.
Cheryl
she's a nice mix of rational and aggresive.
Me:
Your wife is doing this
http://www.youtube.com/watch?v=Ubsd-tWYmZw
and oftentimes that leads in 18 months to you doing this
http://seattlebubble.com/blog/2007/08/22/suzanne-researched-this-part-2/
if i didn't have a tax problem i wouldnt be in the marketat all
BM
You said that you have to have a contingency for selling your house before buying another. Of course most sellers want a sure thing rather than a possible thing. Did your realty agent discuss a kickout clause with you?
You said you and your wife love the neighborhood. Did you research to see how many similar properties in the surrounding area typically go on the market during the year?
You are probably going to have to let this one go, but it's not like it is the only house that will ever fit your requirements. If more opportunities pass you by due to the contingency, consider selling your house first, and moving into a rental. You will be in a much stronger position as a potential buyer.
And who knows? Perhaps the original property will still be on the market (and willing to drop) once you sell your place.
Pat -- yesterday after you flailed about for a while I postulated:
"So what will you do now? Will you continue to dig in deeper? Will you again respond in anger? Or will you now choose to go silent. I dont know, but I do want to say, thank you so much for entertaining me like this!"
I wake up this morning and it looks like "respond in anger" is the winner. A 2AM multiple post bender lashing out at me -- classic!
Leroy,
Put Housing Affordability Index in your search engine. Many news articles are listed.
buyer maybe,
Welcome. You're facing a real dilemma we've been facing as well. Although at one time home sale contingencies were pretty common (and still are in some other parts of the country), since the bubble heated up, agents have apparently been advising sellers that no way, no how should they ever accept an offer with such a contingency. This advice is given (or sellers decide it on their own), no matter what other terms are offered.
However, in addition to c's good advice, here are some other things you could consider, if the house is not under contract:
1) offer a premium price (from your perspective, you can trade this off against the huge nuisance of having to move twice) that could offset some risk to the seller of accepting your offer;
2) offer to let the seller's agent inspect your house and have input on the asking price (some buyers make contingent offers when their house is not ready to be marketed or their asking price is so high that sellers don't want to in effect take their own house off the market waiting for the buyer's house to sell - though it's technically still on the market, many buyers won't look at houses that are under contract);
3) make sure you are otherwise a desirable buyer (be pre-approved; pay for and do the home inspection now, then remove the HI contingency if the problems are small; provide time limit to close after your house sells, etc.); and
4) wait a little while; sellers who have just listed their houses are not apt to accept both a below asking and contingent offer, when there still may be buyers interested at their asking price with no contingencies.
I think you have the added problem that, as high as that price range would seem to most normal people everywhere, it is a middle of the road range for the neighborhood as you describe it. There are many buyers who may be interested (if the house is not overpriced) and will be moving from another city (having sold a house already), are renting now, etc., and who can afford it with no home sale contingencies.
I continue to be shocked, in this era of tightened lending standards, at how many people there are--even looking at twice that price range--who don't have to sell a home first. But they are out there, competing.
And of course there are many people out there who are willing to be house poor and/or to take chances that you are not. We saw a lot of people like that getting burned in the last few years, so it's not at all clear that you should be taking those chances, but unfortunately, those folks are out there bidding prices up and getting properties, at least for now. That works to the seller's advantage and hurts your position. But it will also work to your advantage when you try to sell your current place.
So, I'm really not surprised that the seller was uninterested in a 7% off list offer even without a home contingency, after being on the market such a short time, especially if the comps. for the house are close to listing price. You may have to ask your wife to put herself in the seller's position.
I hope things work out.
sorry, the web first told me my comment was too long so I broke it up and posted halves - but the first post did appear so I deleted the duplicate halves.
Anon
stop trolling.
you had all of 07 to buy in Clarendon, that you didnt is entirely your fault.
go bother someone else now.
pat
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