Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
The Recession and the Housing Drag"That is why housing was such an important generator of normal economic recoveries. To give this context, residential construction was 6.3% of GDP at its recent peak in 2005 and 2006 but has fallen to 2.4% this year, according to economist A. Gary Shilling. This is significant if you recognize that a 3% top-to-bottom decline in real GDP constitutes a serious recession.There is no painless, quick fix for this catastrophe. The more the government tries to paper over the housing crisis and prevent housing from seeking its own equilibrium value in real terms, the longer it will take to find out what is true market pricing and then be able to grow from there."Mr. Zuckerman is chairman and editor in chief of U.S. News & World Report.
If you want to read the above article for free, cut and paste the title:The Recession and the Housing Drag into the Google Home page, click search, and click on the first link. That will take you to the wire version of the story and you can read the entire article.This works for any WSJ article that asks you to pay to read. Don't know why it works, but it does.
The fixer at 20th & Quincy (that we discussed previously) is under contract:fixer
I don't recall what the consensus here was on price. I wondered whether the attic could be dormered and thought about a portico on the side for a main entrance. It's not the best curb appeal now, but I think some not too expensive exterior reno's could change that.p.s. Steve Forbes just said (on FOX) that a housing turn-around is two years out.
VA-Out of curiosity did he say what housing was currently going to do. If housing falls ~10% over the next two years I agree with him that we will likely start to see housing move up a few percent a year starting two years from now. If housing stays flat over the next two years I don't think we will see prices starting to appreciate that soon.His timing also agrees with CS futures that show housing falling ~5% by mid 2012 and then slowly going up starting in late 2012
hb,I didn't catch all of it, but he cited lack of new construction in the pipeline, some existing stock becoming obsolete and population increases. He said new building permits are way up this month and builders' see the demand coming. Then they talked about whether Builder stocks are set to recover.
VA-Thanks. IT sounds like he is talking about the fundamentals of housing construction. I do agree that housing construction will recover in a 2-4 years. Housing companies have been doing a good job of building very few houses, which is the best way to get rid of the excess inventory.I do think he is being a little optimistic saying that either permits or housing starts are up substantially housing These numbers came out this morning and are up, but they are volatile numbers and its hard to say trend is something other than flat.
If required, this would be one of the few hard correlations I would be willing to write in the big book of correlations in ink:"Jobs = Houses"As goes jobs there go home sales.My .02
i actually believe the GDP measures are broken.Unemployment is high. housing is in the gutter and they say it's over?The Wall Street recession never really hapened but main street is screwed
The next worst thing to recession:So the recession officially ended in June 2009. That is to say, things stopped getting worse and started getting better more than a year ago. The problem is that they're not getting better very fast. Fifteen months later, recovery looks a lot more like the lowest point of the recession than anything we'd consider normal.
Pat-The wall street recession may have been shorter lived, but its a little unfair to say it never happened. First 2 of the 7 major wall street firms failed and most people lost their jobs. In addition most of the major wall street firms laid off 10-20% of their employees. The percentage of job losses on wall street are significantly higher than for main street. Sure the remaining people are being paid boat loads of cash, but there are significantly fewer of these people than before the recession.
Ace and VA investor,I saw a few days ago you had discussions about the $1.27 million house on Peary. I will do some digging about that house and report back.One thing is that the current sellers increased the price by over $270K not 200k. There is no way they spent $270K plus on upgrades on that house. I know the sellers bought that house with the sole intention of selling it two years later for more money. I also know that other updated ramblers in Bellevue Forest that started with an asking price of $1.1 million for example, had to lower their price under $1 million. I would be atonished if that house sold for anything close to asking price. I would frankly be atonished if it sells again for $1million. As far as the condition of the house when it was bought in 2008, I will investigate and report back. For what is worth colonials (ramblers with second floors added, not new construction) in that neighborhood sell between $1.2 to 1.4 million, depending on how well the addition was built. So this updated rambler cannot sell for $1.270M or anything close to that. Mark my words.
dc2,Info from "boots on the ground" is always interesting to me, though others here may not agree.The reason why I had mentioned the $200K figure is that, because of transaction costs, one would lose money if s/he bought a place for $1 mill. and sunk another $200K into it and sold for $1.27 mill. or less.
HBWall Street cost 10 million people their livelihoods and did 23 trlllionin damage and perhaps a few thousand were laid off?Worse the ones most responsible paid very little price and are making big bucks cleaning up the mess.Even worse they take our money and then lobby against us?Me i'd bankrupt every bank borrowing from the Fed or Fannie
dc2 and Ace,I believe my point was missed entirely. My point is that prior purchase price is not relevant to sales price. A house is worth what is worth and the market will determine that number.
VA_I,Now we know I'm new to this, so maybe I'm not getting it. But if in 2008, the market determined this house was worth $1M, and over the last two years the market has declined, what would cause the current market to value this house 27% higher?I was a math major, not an economics major, but it seems to me that in this case, prior purchase price seems relevant to the current market value of the house.
newbie,I don't know anything about this particular house, nor do I care. Statements were made to the effect that 200K was not spent, so the house is not worth 200K more.This house may or may not be worth the asking price. My point is that a prior purchase price plus $$ spent does not equate to "value".I've flipped enough houses to know.
Obviously, in the capitalist system, the house is worth whatever somebody pays for it.Doesn't make it right.
VA_I,I get your point. You keep misstating mine. This is tiresome. Let's move on.
VA Investor,My point is that the house was not worth $1 million to start with, even if someone (there are crazy people everywhere) paid that thinking they could flip it for more money. That was their plan from the get go. I know that much. Today is not worth the $1.27 they want regardless of how much they spent. End of story.
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