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.
http://franklymls.com/DC7652564#remarksassessed at 366K, short sale list at 300K.Bank wants to try and get out at 20% down.
Anonymous,My point is that the "market price" realized in a bidding war is not the true market price. Psychology and emotions play a lot in these bidding wars to drive the price up excessively and beyond comps for example. During the bubble years, this is what happened, and people were more willing to outbid the other because they thought the house value will double again in 10 years, so the more they paid the more they would make later. I am concerned about paying any significant amount above a listed price I consider fair based on comps. As I said, I much rather pass the opportunity and buy another house or even an ugly duckling which I can fix to my own taste and will then be valued higher. In fact I have never met a house I did not think needed some kind of renovation or change. So even those houses that go into bidding wars often require more $ to make them your own.
Anonymous,Re bidding wars, I also don't need the validation you describe from others to buy a home through a bidding war. I buy what I like at the price I think is fair based on comps and analysis. I would not overpay a penny just because others are driving the price up in a maniac bidding war.
In case anyone missed it, there is an interesting WaPo article about the new (new to me, anyway) FHA rules regarding condos. These rules are a definite head-wind against the condo market, no question. The part that bothers me is the attitude of the folks interviewed. They almost act as if an FHA mortgage is their god-given right. People -- it's the gov't backstopping these loans. If you don't like it, go conventional! Jeez.
http://franklymls.com/AR7569060sells 2004 for 255K,sells today at 196K...down 20% in Immunington....maybe someone should have had a bidding war for this one.
Hey Mikey,FHA originated in the 30's out of the Great Depression as a way for people of lesser means to be able to buy a house. Did you ever see that Christmas movie about Pottersville?Perhaps you believe we should go back to the times where only people of substantial wealth could buy a house? There are many societal issues that come with that discussion. When I got an FHA in the the early 80's my mother said: "aren't those for poor people"?I won't go into the intense underwriting on FHA loans, but this is the reason that they were not a huge portion of the bubble financing.If you believe that buyer's should have a 20% downpayment, then you believe in the perpetuation of wealth disparity.
PMI seized by insurance regulator's in AZ. This is a national mortgage insurance company. What happens if others go under? I suppose that new companies could be formed that don't carry the losses of the past 5 yrs. Underwriting criteria is vastly different now.Over the weekend I watched a discussion of projected housing trends (nationwide) and the economist predicted a further decline of 10% thru 2015 (I think). He also discussed Zandi and Shiller. I suppose there are as many forecasts as there are economists.What was interesting (and consistent with my thinking) is that the level of homeownership will continue it's downward trend. He suggested that it is societal and based on the flexibility of moving for employment and the uncertainty in the belief that buying is a wise "investment". He also said that rental investment is a good choice.
On now--If you're interested, WAMU 88.5 is having a Diane Rehm segment involving Dean Baker (who sold his house in 2004, because of bubble concerns) and Mark Zandi (of Moody's).
On Sunday morning/afternoon, I posted in response to Va_Investor's message. Now, I do not see it. Strange.
"DC2 said...My point is that the "market price" realized in a bidding war is not the true market price. Psychology and emotions play a lot in these bidding wars to drive the price up excessively and beyond comps for example. DC2 - this is really more a comment on sychology and emotions than it is bidding wars. The market price realized at any given time is almost always a reflection of psychology and emotions at that particular time. Thus, as it was when prices were going up, people were bidding prices up further based on that trend continuing into the future. Likewise, in 2008 when prices were crashing, they werent bidding based on current prices. They were trying to build future declines into their present day bids to protect themselves.Further, its not always wrong. There were alot of people who were bidding based on future price increases in the early half of the decade and for some of those people (or most of them in the immunozones) that was the right decision. It was only in 2005-2006 that this turned out to be incorrect.
"DC2 said...Re bidding wars, I also don't need the validation you describe from others to buy a home through a bidding war. I buy what I like at the price I think is fair based on comps and analysis. I would not overpay a penny just because others are driving the price up in a maniac bidding war."DC2 Just so you know, this whole topic started because Pat made a blanket statement that all bidding wars should be avoided by all people at all times. Yet, I dont think you (no any other reasonable person) would disagree with that. Lets say that a house was listed for 500K, but that if pushed, the Seller would accept much lower say 385K. Lets say too that you would be willing to start your offering400K for it, and would be happy to pay up to 450K for it. If there was no bidding war, you may offer your "fair price" of 400K. The seller, (tickled that you came in above his 385K) accepts. Now, say that 2 other people start a "maniac bidding war" where one starts at 300K, and they keep bidding against one another over and over again, til they push the price up to 360K, at which point one of them withdraws.Thus, if you know that the highest bid is 360K, what is the harm in you offering 365K? Who is to say he doesnt drop out entirely at 380K and the seller accepts your offer of 385K? In my example, your participating in the "maniac bidding war" saved you 15K. You can change the example how you see fit, yet it remains clear, there are indeed some situations in which a bidding war makes sense.In any event, I really dont understand this complete aversion to bidding wars. You go in with a minimum and max price, and if someone outbids you, you withdraw and move on. Is that not how others operate?Do some people here have so little self control that once they enter a bidding war they fear they will end up prevailing and buying, no matter what the final price?
Ace,What did Baker and Zandi have to say?pat and dc2,While I hate bidding wars (as a buyer(: , I have been in many. Some I've bought, some not. It all depends on what the right number is for a given individual on a given property.
Here you go, VA-I:Rehm RE show
Thanks Ace. Interesting conversation. Zandi clearly is not the doomer he was.
Thanks for sharing this with us! Some really amazing features.basement remodeling northern Virginia
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