‘Indications Show The Bubble Has Popped’ In N. Virginia
The Fairfax County Times has this update from Virginia. “Oh what a difference a year makes in Northern Virginia’s once red-hot home real estate market. For most of 2005, Realtors were bemoaning a lack of inventory as desperate buyers all but wrestled each other to make the first offer. Ask those same Realtors. Or better yet, ask this year’s home sellers whose properties have been on the market six weeks or six months instead of six minutes-with no buyer in sight.”
“The overriding reason for what Realtors insist is a cooling market, rather than a market free-fall, appears to be the burgeoning inventory of homes for sale.”
“Even a cursory count of ‘For Sale’ signs in many neighborhoods suggests the change. According to the Northern Virginia Association of Realtors’ figures, in Fairfax County there were 2,184 active listings, year-to-date, in June 2005 and 6,506 in June 2006, a 198-percent increase.”
“In Loudoun County, during the same period, there were 1,473 actives in June 2005 and 4,052 in 2006, a 175-percent increase. Prince William County and the cities of Falls Church, Fairfax and Alexandria saw similar gains.”
“Although many sellers are dropping their asking price, affordability remains an issue for many prospective home buyers throughout Northern Virginia. Potential buyers, for their part, are often looking for bargains, and many of those buyers who for one reason or another can delay their purchase are doing exactly that, experts say.”
The Rappahannock News. “Last year, Rappahannock County and Northern Virginia experienced a surge in real estate sales. Referred to in the media as a real estate ‘bubble,’ this surge created a seller’s market. Now, home sellers and real estate firms are experiencing a ’slowdown’ and indications seem to show that the ‘bubble’ has popped.”
“‘Eventually it just got down to the point that people recognized that things had gotten out of hand,’ explained Sam Snead, a longtime student of Rappahannock real estate.”
“The majority of real estate on the market in that area caters to buyers interested in living in sub-developments with easy access to Washington, D.C. Generally the Rappahannock County real estate market is considered to be a separate entity. ‘Our buyers and our properties are different,’ pointed out agent Thorne Auchter.”
“According to MRIS, in June 2005, the total dollar volume of sold real estate in Rappahannock was $1,399,800. This year, the same month yielded $525,500, a decrease of 62.49 percent. In addition, the average sold price of those homes has decreased by almost 25 percent. ‘The number of people calling the office is definitely less,’ said (realtor) Denise Chandler.”
“Snead believes that the strong competition between real estate consumers was exacerbated by news coverage about the ‘real estate bubble,’ debating when it would end and what the consequences of the artificially raised prices might be. ‘I blame it on the media,’ said Snead.”
“Most prospective home buyers have to rely on the sale of a current home in order to be able to afford the purchase of a new one. With prices artificially inflated by the ‘bubble,’ these consumers are having trouble selling their old homes, which slows sales down. ‘Ninety percent of people have to sell a house to buy a house. It’s a Catch-22,’ said Snead.”
“Although the market is slowing down, and a slower market means less sales and less commission, area realtors were united in their lack of concern about the perceived bursting of the bubble. Auchter compared the exaggerated seller’s market of the bubble to ‘picking vegetables before they are ripe.’”
“According to Snead, as demand drops and homes sit un-bought, prices will drop until they reach a range more comfortable for home buyers and the banks that loan to them. ‘The market is correcting itself, and that’s what will bring prices back into line,’ said Chandler.”
“Snead also believes that a market which has swung back to favor the home buyers is not necessarily a bad thing. ‘There’s opportunity in a good market, but there is also opportunity in a bad market. Now, there’s going to be some bargains out there,’ said Snead.”
A related link:
‘Make no mistake - we are in a buyers’ market, as you can see from these numbers. If you are looking to buy a home in Loudoun County, there is no better time then the present to buy. If you are selling a home in Loudoun County, make sure your home isn’t overpriced and be ready to negotiate.’
Ahhh yes — the classic no better time then the present argument.
Buyer’s market == 50% drop in prices
And we’ll also know we’re in a Buyer’s market when the market is clearing (sales instead of stagnating inventory) and Buyers are happy while Sellers are in financial distress.
Also, the ever-present:
‘Our buyers and our properties are different,’
Buyer’s market = Cheaper to buy than rent (you save $ by buying when compared to equivalent rent)
Fools market = when it costs more per month to buy than rent, and the purchased asset is depreciating in value.
I would say we’re in a fools market.
No better time??? So I can still pay 700k for a 400k in Loudoun County???? Please! It’s still so overpriced there. We’re renting for $2500 whereas buying is over $4200 - which was an offer that was made to us to purchase a 675k today at a 2008 price of 729k @ 3.5% on an owner finance!!!!! I said “no thanks” I’ll wait!!!
For those who are interested in better semantics, the proper wording would be, “If you are looking to buy a home in Loudon County, there has been no better time than the present to buy.”
Followed by, “and there will be no better time to buy than the future”
I blame it on the media,” said Snead snidely.
Whiplash!
“It’s a Catch-22,” said Snead snidely.
Whiplash!!
I’m off 50K from last may and NO ONE here EVER gets fired, 90% of my neighbors are on the fed TIT
22151
If you’re in Fairfax, take a look at the Fairfax Extra in today’s Washington Post. The City Elders, in their wisdom, are trying a $16 million experiment with traffic rerouting, with *narrower* lanes to “slow traffic” through the city. They claim the new two-way traffic program, scheduled to start August 5, will slalom traffic through a series of relatively sharp turns and new traffic lights, with new cross-traffic patterns, all for the benefit of the new project (not scheduled for completion until late 2007). They then proceed to claim that all of this will “only add 20 to 30 seconds” to a commute. Right. Pull the other one. Gridlock, followed by total avoidance of Fairfax, is a near-certainty.
closing doe,doe ed,hud and several other fed agencies w soviet sounding names will help traffic
Every place is different, but traffic calming like this is big in Menlo Park and has actually worked wonders. Driving is more orderly and smooth and pedestrians enjoy walking instead of being always in fear. In many cases the alternative is closing off streets and that usually messes up the flow, reduces available alternative routes, and makes flow on open streets that much more intense. This may turn out badly in Fairfax, but it has been a big win in many other areas where it has been implemented. On the good side, nothing boosts property values like a positive pedestrian experience.
Traffic calming has been tried here in Santa Monica, and has resulted in gridlock throughout the downtown area. The city now has to deploy handwavers with white gloves to direct traffic and keep the frustrated drivers from completely freezing up the streets.
It has also resulted in heavy traffic on once quiet residential streets, with angry motorists blowing through stopsigns on a regular basis. A formerly quiet intersection 1/2 block from where I live now has near-accidents on a twice daily basis with much honking of horns. Periodically there will be a battle of the SUVs. Sometimes they both end up upside down in the street, or wrapped around trees or telephone poles.
Traffic calming is social engineering gone berserk.
It’s even worse than “calming” in this instance because the traffic is being rerouted to drive past the new commercial establishment solely because the builder wants that. It has nothing to do with prudent traffic engineering. It has nothing to do with helping people get to where they’re going. It has everything to do with trying to force commuters to drive past a new retail establishment. It ought to be illegal. In fact, there’s a rumor that VDOT is looking in to this because localities aren’t allowed to reroute main roads without VDOT approval, and VDOT regulations require wide lanes and minimal turns for main routes.
Where’s Cote?
KIA, they are trying to turn it into a destination like old town Alexandria, but unfortunately FFX city is all traffic, no charm.
Loudoun County is done. I was at a party last week and was talking to a woman we know who’s a realtor. I asked her how it’s going and she said, “I’ve pretty much stopped selling real estate. Now I’m spending most of my time helping my husband with the books for his business.”
There are For Sale signs in Lansdowne (a planned community in Leesburg and ground zero for the Loudoun County bubble) that have been up for over a year now. You’d think that sooner or later, people would realize that the music has stopped, they’re the greater fool, and they’re not going to get $600K for a crummy townhouse 30 miles outside of DC that sold for $250K three years ago.
It takes a while for ‘mental’ capitulation. As a business person, I have experienced substantial losses in my years (and thankfully, enough gains to remain employed!)
Taking a large financial loss — even on paper — really hurts. The process begins with coming to terms with your new future and understanding that all the things you had imagined to do with your lost money are gone as well. The mourning isn’t just for the $$$$, but for the change in retirement plans, vacations, the adulation of your spouse for being sucessful, etc. Telling your spouse is the first big step. Then telling your family and friends. At each step along the way, you wonder if they think less of you.
So although, sellers may end up losing more money by waiting, the extra time is of value: it is helping people come to terms with their impending financial loss.
America is in for a major ass-whacking…run for the hills!
LMBO!!
Taking a large financial loss — even on paper — really hurts. The process begins with coming to terms with your new future and understanding that all the things you had imagined to do with your lost money are gone as well. The mourning isn’t just for the $$$$, but for the change in retirement plans, vacations, the adulation of your spouse for being sucessful, etc. Telling your spouse is the first big step. Then telling your family and friends. At each step along the way, you wonder if they think less of you.
Well put! Obviously, you have a few scars from your experiences.
– from someone with a few scars too.
“So although, sellers may end up losing more money by waiting, the extra time is of value: it is helping people come to terms with their impending financial loss.”
Hah! It would be cheaper to sell sooner and hire a shrink.
True! It is after all only money. Loosing a bunch isn’t like getting being inflicted with disease or the loss of a loved one.
But unfortunately money is how we keep score. And it sucks to lose.
Having said that, I’ve been prudently renting for the past 5 years. My rental payments here in So Cal would barely buy a median price house in the high desert. Yet, I rent near the beach comfortably putting money towards a downpayment in the not too distant future.
I’m waiting for a 50% (real) haircut from today’s prices.
Thanks for the insights, Centralbanker.
Well thought out response. What I’ve been ammazed at is how many people have been in this game for the investment but hang on to the hype that real estate never goes down, and are therefore not willing to accept the fact that their “investment” may have actually lost money.
great insights, CB, thanks.
Unfortunately, in this instance, the extra time to come to terms will ensure they chase the market down with even greater loss.
Yep, neighbor across the street bought for $400k in Jan 05, and tried to sell it for $500k in Sept 05. Reduced the price to $460k in Dec 05. No takers. According to Zillow, it never sold. New people moved in, so it must be renters.
In contrast, neighbor a few doors down put their place on the market for $430k in March and it sold in a few weeks. That means the person mentioned above is hosed — they moved to Wisconsin, and there is no way that the renter is covering the mortgage.
The funny thing is that when the place that sold for $430k came on the market the same time as two other townhouses a few doors down — one for $450k, the other for $435k. Of course, the $430k sold, and the others have been sitting there since March.
There are going to be quite a few hosed individuals in my neighborhood — basically anyone who bought 2004 or later. Prices shot up so much that I’m assuming that none of these individuals could have afforded to have bought using a 30-year fixed with 20% down. BTW: these places sold in early 2000 for $185k!!!
Look for 185K again in early 08! Deja Vu!
I’ve noticed that a lot of flippers got excited about the slowdown from September ‘05 through last winter. They seemed to think they were getting a relative bargain and their plan was to sell for big bucks in Spring ‘06.
Well said John. Check out my comment above regarding the “offer” we got to buy right off Cascades. Glad I read this blog and do my research and make it my business to keep up with what’s going on not just on Wall Street but Main Street too!
We put our townhouse for sale two weeks ago and only two buyers have visited so far and mostly neighbors visited the the two open houses we’ve had so far. We just dropped the price by 5% and still no interest.
We bought our house seven years ago and its fully paid so we have no reason to panic but we pty those who bought within last year.
wondering when we’ll hit 04 pricing= youch
You have to decide whether you want to move or not.
If you do, 5% is probably not enough. You need to undercut your competition and do it quickly, otherwise prices may well overtake you on the way down.
Have a think about the fair value of your house - what sort of person lives there, how much can they afford to pay. Anything you can achieve over that is fantastic, but hold out for too much more and you may regret it for a long, long time.
Regards,
Loafer
My advice is to only accept offers without home-sale contingencies and with a large earnest money depost. Price your home to be competitive with current listings not prior comps. Good Luck!
Interestingly, a friend just entered into a contract on a house (after dropping price). The buyer wanted to put down a $1,000.00 earnest-money deposit on a house of over $300k. My recommendation: make them get serious, raise the deposit to something reasonable. Realtor: not if you want to keep this sale. Realtor says it’s standard nowadays to only require nominal earnest money. I say: look out! If property values drop, buyers will bail out in droves, particularly if they only have $1k on the line. It’s only rational economic conduct. We’ll see if that sale goes through…
Your giving bad advice in this market
“You’re” before someone has a tizzy
you dropped it a measly 5%.if you want to sell drop it 10% every 2 weeks till it sells.dont be greedy!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
I am guessing you are trying to get 2005 pricing for your home, correct? If so, a 5% cut off that price is not going to garner even a bit of interest at this point. My former house here in Washington state (where the market has just started cooling) just sold less than a month ago. When the realtor pulled the comps, and arrived at a price which she felt was high, but achievable, I cut that by nearly 10% and that was my original listing price. Guess what? I got an offer within a week! Why? Because my home showed much better than the others in the neighborhood because of the price!! 30 day escrow cash in the bank, seeya. My neighbor, on the other hand, is dreaming of a windfall as he priced his house above 2005 levels. His house has now been for sale for nearly a year. I keep telling him, you gotta lower that price or you are gonna lose more in the long run, but he vehemently disagrees, get’s emotional, and says “prices are only going up around here”. Do yourself a favor. Cut emotional ties with about 30-50k of that money you were already counting, and unload the place now. In your case, you did not pay anywhere near that anyway. Stop trying to be so greedy and you will make a nice profit and move on with little hassle.
Well done BB. Had a guy buy a rental house from me by the local university in Feb, make some improvements (legit), and list it for over a $100k higher within a month. He’s still waiting as the house sits empty. Not much time left though, as the students will be locking up places to live over the next month. After school starts, the renters don’t look again until spring.
Thanks implosion. One important detail I forgot to include was that the offer for my house was ABOVE my asking price. They threw in an extra grand to make sure they got the place. I don’t care what anyone says, people buy based on price and want to “feel” like they got a good deal even in todays market of overpriced POS’s. If everything on the block is $450k and up and languishing, my listing (clean as a whistle) would enter the marketplace at $399,900. Serious buyers in the area would jump on it and quick. I have always done the same thing when I sell my vehicles. I find all the comparables in my area, note how much they are listed for (which is usually high blue book), and I knock off at least a grand, usually more and sell it in one or two days. The other idiots vehicles sit for months at times, as they wait endlessly for top dollar for something which is depreciating every day.
BB - But…but…but, that would totally ruin the comps!.. Then the neighbors would be mad and might have to talk to you about it.
I can just hear the conversation:
Neighbor: Now Banter, we all have noticed that you have lowered your house price. Don’t you think that your greedy attitude of wanting less money NOW is less important than our greedy attitude of wanting MORE money later?
BB: No, I just want to sell the house and get it done with. You could sell at $399k, too. you only paid $250k 3 years ago.
Neighbor: Well, not quite true. My HELOC is pretty hefty. My Humscalade cost $60k, and that home theater set me back $15k, and the Hawaii trip cost a lot too. If I don’t get $425, I’m toast. I was planning to wait ’til next year to sell, just before my I/O, neg-am ARM resets……
I used to think it would be interesting to move to that part of the world, NoVA, and only recently checked the what-can-you-buy-for-X scene…I’ve been reading this blog a good couple months mow and should have known better I guess, but I was still *shocked* at the crap 400K buys you in desirable towns there! And the appeal is…what again? Long crowded commutes to places? Major rat race with sweltering summers and no ocean-view or quick jaunt to natural beauty of some kind? The ‘fundamental’ behind this is, what again…*jobs*?! That’s just silly, and this area’s bubble is one of the ones most obviously based on nothing but speculation and mass psychosis, imho. Last I looked years ago things were expensive, as I’m guessing they most often are in a ‘fundamental’-y kinda way related to the jobs picture and schools, but current levels are so ridiculous it’s like the X-files aliens came and messed with everyone’s brains.
I really do feel bad for people that bought at the top. I been in Leesburg and commute is just at atrocious even on weekends. I work near pentagon and some of coworkers from Landsdowne are taking 1:45 to 2hrs to come to work. They are paying toll fee on top of parking fees at work. I would think only reason to buy place there is if you worked in Dullas corridor and nearby.
Yep, I know a lot of people that visited the area and thought that it would be a great place to live. Once they’ve lived here for a while, they hate it. Aweful traffic jams, overpriced crappy housing, tiny yards, and aweful rat-race mentality. I can’t wait to get out of here.
ditto, looking at Denver, their bubble is in a more progressed state w/ foreclosures and much higher inventory. plus they have great skiing nearby!
The aliens have always been here - the work on the Hill!!!!
“Snead believes that the strong competition between real estate consumers was exacerbated by news coverage about the ‘real estate bubble,’ debating when it would end and what the consequences of the artificially raised prices might be. ‘I blame it on the media,’ said Snead.”
Yes, yes Mr. Snead. I understand how much you care and that damn MSM just doesn’t care who’s livelyhood it shreads. But Mr. Snead, just for the record, when prices were spiraling out of control upwards did you believe that was due to the strong competition between real estate consumers and exacerbated by news coverage about how much money you and your cronies pocketed? Dah!!!
Last night I went to a local grocery store in Arlington Va and there were only two cashiers. There were lines of more than 10 people in length. I was wondering to myself whether this was a sign. How are stores going to find cashiers when the cost of living is so high?
Young people need a Timothy Leary to guide them away from expensive cities where cubicles await them.
There may be a few local realtors who are coming available to the workforce
“The overriding reason for what Realtors insist is a cooling market, rather than a market free-fall, appears to be the burgeoning inventory of homes for sale.”
How many more times will we need to read assurances that the market is cooling before nobody can deny that it is in a free-fall?
It’s like that moment, when you throw a ball straight up into the air. It seems to stop right at the top.
All the momentum is gone, the ball pauses and gently begins it trip back to earth.
We are just past that pause, and the RE pundits are trying to convince us that the ball actually stopped. Those of us reading this blog know that it will accelerate on the way down. We are not in free-fall yet, but soon.
Shel,
My husband and I are both local and I am dying to move somewhere else. We never will though becasue both of our families are here. Its sad because even a few years ago, this was a much different and nicer place to live. Now everywhere is crowded, crowded, crowded. We live right outside DC and its a major PITA just to jaunt down to the mall or museums. A ride to see the Cherry Blossoms turns into an existential crisis–the great press of unwashed humanity. It is so aggravating. I wish everyone would go back from where they came from. This wish includes people from other parts of the country who just bitch about how much they hate it here (these people almost always work in politics), illegal people who hang out on street corners waiting for day jobs, and fat tourists.
DC is not a major metropolis, it was for a loong time just a sleepy southern city full of bureacrats turning the cogs of government.
My mind boggles everytime I head out to the hinterlands of Loudoun County (to me, it should all still be cowpoke farmland) or Warrenton and see all the McMansions and townhouses. We went to a country bed and breaakfast a year or so ago and it took an hour and a half just to get out of the “suburbs.” And the commute from the hinterlands!! No one sensible would choose to live like that.
wow, sorry for the rant…
It’s true all the the tourists seem fat - what is up with that?
I was just down in DC looking at the area as I’m considering relocating for a job offer from NJ. Everyone in DC seems skinny. I was in Alexandria on Sunday and everyone was either jogging or biking. It’s a very healthy place. If you go to other parts of the country, like PA, you’ll be shocked at all the obese people.
The main thing that makes me nervous about the area is the traffic and congestion I keep reading about. I think in a year from now, however, the home prices will be more affordable
Everyone is skinny in D.C. because everyone smokes. It might diminish after the ban goes into effect, but being sandwiched between two tobacco states has taken its toll. Smoking cigarettes is honestly the only thing I miss about D.C.
Ugh, you can keep DC. I don’t know why anyone would volunterly live there.
I was stationed at the Pentagon, it started out as TDY but eventually lasted 2 years. One of the worst times I had while in the Army. All I wanted was OUT of there. From what I’ve read it sounds 10 times as bad today. We had a small apt in Clarendon Circle (in Arlington) and hated every day living there.
jamie wants BIG GOW to do something- now he’s a whiny socialist
No. Va. We bought at the top of the last market in Fairfax and it took 10 years for us to gain a small amount of equity. They had bidding wars last time around too. We were young and there was no blogs let alone an Internet really so the only info we had was the Washington Post.
I have been tracking a subdivision next to us which has (currently) a mix of 650k townhouses and 850k+ houses. We have also stopped at a couple new developments going up next to us. My observations:
1. Zipreality is not correct. There is far more houses with for sale signs then they list. The area I mentioned above in Zip shows 5 listings. Last night we saw probably 12+ signs.
2. There is an amazing amount of condos showing up here as the result of new building - none of which seem to be moving. Average price for a 2b/2b is 425K+ This is an area which really never had condos.
3. Nothing is selling. A few have moved. Otherwise no.
4. Prices are dropping and a lot will help with closing. Some require you to use their closing company.
5. The 800K+ houses usually were bought for 600+ a few years ago. They seem to be holding out for that 100K appreciation at a minimum.
6. A suprising amount of houses we look at in Zip (No. Va.) in the 800K+ range show bedroom photos with fans. To expensive to cool?
7. The 3 townhouses for sale in the above dev. were all bought for around 400 - 450k. One is at 589K the other 2 which are almost identical are at 650K approx. None are selling. In the last two years the average price of purchase for these models ranges between 600 - 700K. Not looking good for recent buyers there.
8. Traffic is bad but it the outer suburbs that have it the worse. They build like fiends with out adding roads to support the building.
9. That area of Fairfax (Fairfax City) is trying to change into a upscale, brick, old towne, eastern artsy, cute resturant, theme park look.
10. Parts of the county have become ethnic enclaves. Annandale = Koreatown for example. No big deal except for those who it is.
Fans in the bedroom? You mean ceiling fans? Ceiling fans rule, as you can turn them on, open up the bedroom door to the bathroom, and not have to worry about the bathroom being all steamy or fogging up the mirrors.
Umm… until after a few years you notice the mildew and water damage in your main bedrooom. There’s a good reason why bathrooms have fans which vent directly to the outside… and it’s not just for any errant smells…
Ah,,more like fans you plug into a socket and point at yourself.
Has anyone checked the Odyssey (2001 N 15th st) in Arlington? I looked at the Arlington County tax assessment records online:
http://www.arlingtonva.us/Departments/RealEstate/reassessments/scripts/DREADefault.asp
Is has about 15? floors and floors 1-4 seem to have sold pretty well but as you go higher (prices as well) it drops off to nothing. I couldn’t find a single sold condo in floors 8-15, and hardly any in 5-7. Thats alot of unsold condos. Many of the ones that sold on lower floors are either for rent or for sale on craigslist.
A LESSON IN HOW TO SPEAK OUT OF BOTH SIDES OF YOUR MOUTH, AT THE VERY SAME TIME:
QUOTE NUMBER ONE:
“‘Eventually it just got down to the point that people recognized that things had gotten out of hand,’ explained Sam Snead, a longtime student of Rappahannock real estate.”
QUOTE NUMBER TWO:
“Snead believes that the strong competition between real estate consumers was exacerbated by news coverage about the ‘real estate bubble,’ debating when it would end and what the consequences of the artificially raised prices might be. ‘I blame it on the media,’ said Snead.”
SO WHICH IS IT?
DID IT GET OUT OF HAND?
IS IT THE MEDIA’S DUTY NOT TO REPORT IT IF IT DID?
DOES THE MEDIA TRY TO NOT REPORT THINGS THAT GET OUT OF HAND?
My head is going to pop in a moment.
I blame it on Sam Snead.
I blame it on Sam Snead
It’s par for the course.
Hole in one, rainman.
I posted this on another thread but it seems appropriate on a N. VA thread.
Northern VA Flopper story (get the tissues)
“Owner pins hopes on real estate auction
And that auction would bring to an end New Baltimore resident Dean Oriend’s final hope for a profitable investment for his children and family’s future”.
http://tinyurl.com/ewesd
And the irony - one mile from this auction site is a huge sign outside of Century 21. It says “The Market is Fine, Jump on in, Call us for the Facts.”
For Northern Virginia Bubbleheads:
This article on the front page of the Washington Post this weekend stunned me, and this week in the Fauquier paper there’s an editorial saying how incredibly intelligent Fauquier is for getting their fair share of profits from the builder. Not even questioning the ability of Centex to sell retirement homes for 850K and up.
http://www.washingtonpost.com/wp-dyn/content/article/2006/07/15/AR2006071501004.html
“In the frenzy to build subdivisions in Northern Virginia’s exurbs, one of the nation’s largest housing developers has offered to write the small Fauquier County town of Warrenton a $22 million check, an unprecedented cash donation, according to Virginia real estate specialists.
In exchange, Centex Homes of Dallas would get permission from county and town leaders to build a subdivision just outside Warrenton with nearly 300 luxury homes for seniors, starting at $850,000.
The $22 million — almost half of Warrenton’s annual budget — would pay off the debt on a new swimming pool complex in the town of 8,000 people.”
The starting price of 850K makes very little sense to me. Perhaps there is a niche market out there for this kind of stuff, but it seems far-fetched. There currently are plenty of “over 55″ developments in the works; many are even flips and rentals. There is currently a Ryan community that starts in the 500’s in the same county. I also looked up the last 12 months of sales over 750K for Fauquier County.
Homes sold over 750K
2006
June — 9
May — 5
April — 7
March — 3
February — 5
January — 4
2005
December — 4
November — 9
October — 6
September — 8
August — 10
July — 10
12 month total — 80 houses sold (and really, for over 750K, many of these properties also come with acreage).
Current Inventory (priced over 750K) — 112
Centex plans - 300, and for exclusively over age 55.
I think the County’s hopes for the 22 mil might turn into vapor! This past January the county assessed properties at “Fair Market Value”, and now homes are languishing on the market at well below 10% of that recent assessment.
In a way I hope I’m wrong, and that everything turns out hunkey dory. Maybe there are enough seniors from the D.C. suburbs willing to plunk down 850K+ on a house. That way, we get the swimming pool for the younger generation. Kind of payback for us paying for their Medicare and Social Security.
Won’t somebody somewhere please do the math? If you paid straight, unamortized payments on $850k over thirty years, it would be $2,361.00 per month. Amortized over 30 years at 6.5% interest, the loan would result in monthly payments of $5,372.58 per month, excluding taxes and insurance. How many seniors or retirees have that kind of monthly income? Are the builders planning on seniors dumping $850k in cash into these houses? Wow. Not sure how many people keep that kind of cash lying around. It’s unreal on every level.
Buyers need to step back and look at historical prices.
To say a $200K sold 5 years ago now selling for $600K reduced from $750K is really NOT A BARGIN.
More like the value is under $300K to begin with. Take 1999-2000 prices and add rate of inflation or 4-5% YOY gets you the real cost one should be paying. This is prime example in California.
4-5% YOY? Use your net raise % instead. I make 20% more now than in 2000. I get $240k.
Use government’s COLA…..I get $235,000
it was so funny driving through this townhouse hood last sunday (off slaters lane, potomac greens or something like that near old town), should have taken pix of all the for sale/open house signs. down one stretch were 3, count em, 3! realtors standing outside, all alone, trying to wave a greater fool into their lair. my wife and i gave a lil wave.
i like that they had a garage in the back, but that means they have no backyard whatsoever. basically surrounded by pavement
gt,
I think I know the development you’re talking about. Ugh. If you’re
going to pay for a townhouse in alexandria, you should actually be able to walk to stores, restaurants, subway, etc., not be hemmed in by highways. Townhouses with no town make no sense to me.
In the past year, I’ve seen tons of area bashing on this blog. IMHO, the ranking for most bashed is this:
1) North Virginia
Sacto/Central Valley
2) Florida
3) DC
4) San Diego
5) Boston
6) Las Vegas
7) Phoenix
9) Texas
10) Bay Area
#1 Northern VA most bashed? But didn’t you know, folks *envy* us here! We are SO different, our economy is great and our housing market is strong!
John McClain, a senior fellow with the Center for Regional Analysis at George Mason University, also sees moderation in the housing market-and in the regional economy.
McClain said of the housing market last week, “We’re seeing a cooling off in prices and days on the market but not at record levels, by any means.” He noted that home prices in the region were actually up 4.6 percent, but he explained that those were asking prices and mask actual purchase prices.
“Close-in locations and a property priced right” still get results, McClain said, adding, “Anecdotally, two houses in my neighborhood in Arlington went on the market and sold in a week.”
Some 41,000 new jobs are expected to be created in Northern Virginia during 2006, McClain reported, more than 21,000 of which are classified as “professional” or “business services.” It is this group that is most likely to be able to afford the pricey Northern Virginia housing market.
But even in local job growth, the envy of many other metropolitan areas throughout the U.S., McClain sees moderation. “We expect 38,500 jobs in 2007,” he said, “and 35,000 in 2008. We are projecting moderation because we have been growing so fast,” he noted.
http://www.larouchepub.com/eiw/public/2006/2006_10-19/2006-17/pdf/09-13_617.pdf
“Loudoun County Real Estate Bubble Ready To Implode” — An eye-popping analysis showing what’s in store for Loudoun County, Ground Zero of the Great NoVa Housing Bubble (PDF article)