‘We Have Come To The End Of This Wave’
The Connection reports, the ‘Condo Craze Fizzles’ in Virginia. “The craze began in December 2003 like a shock wave, 492 rental properties would be going condo. By May 2005, the city of Alexandria lost more than 2,000 rental units.”
“By the time that Park Center registered with the General Assembly to go condo in September 2005, residents of its 574 rental units faced a stark choice: buy or move. But less than eight months after applying to go condo, Park Center scrapped its condominium project, opting to revert its property to rental apartment units.”
“Some officials at City Hall see Park Center’s retreat as a sign of future trends. ‘We probably have come to the end of this wave,’ Melodie Barron, a division chief in the Office of Housing said. ‘This also happened in the late 1980s when several condo projects were shelved.’”
“Urban planners say that housing trends are cyclical, with supply and demand forming peaks and valleys over the decades. To illustrate that point, Ralph Rosenbaum, a demographer in the city’s Department of Planning, turns to a listing of ‘residential properties authorized’ from the city’s 2005 statistical profile. It shows several prominent peaks in the mid-1960s, the mid-1970s, the late 1980s, the late 1990s and our recent spike.”
“The city has 1,518 condominiums that are under construction, 320 condominiums that have been approved and 2,349 potential condominiums that are under review. The future may see some of these projects reconsidering their development strategies.”
“As early as last summer, Deputy City Manager Mark Jinks predicted that Alexandria’s market would be experiencing a slowdown. ‘I think you’ll see a lot of these condo conversions becoming rental properties,’ Jinks told City Council members at last year’s annual retreat.”
“Last year, the condominium assessments increased by 23 percent, with the average condo going for $287,765. The Office of Housing estimates that a family would need to have an annual income of $86,627 to afford that kind of a purchase.”
“‘While individual circumstances vary, for most current residents, the cost of purchasing will entail a substantial increase in monthly housing payments above the cost of renting,’ wrote City Manager Jim Hartmann on the subject of condo conversions. “
“‘While individual circumstances vary, for most current residents, the cost of purchasing will entail a substantial increase in monthly housing payments above the cost of renting,’ wrote City Manager Jim Hartmann on the subject of condo conversions.
This has been true in greater DC for 4 years…
And purchasing on this basis only pencils out if strong YOY gains are foreseeable for the indefinite future time horizon. Now that prices are generally falling, I am wondering whether some buyers begin to suspect the equivocation of us bubble fiends who lie like truth?
“Siezed Luxury Homes (aff)
Profit from a housing bubble. Others loss is your fortune.”
I copied this from an Ad on this blog. I never saw anything like this last year!
The future may see some of these projects reconsidering their development strategies.
An understatement soon to be repeated everywhere.
Now that this bubble is finally bursting after so long, I almost can’t quite believe it. Someone pinch me.
OT, but very interesting; here’s a little report about how the published home sales statistics are over 2 months behind the real data.
So just think, as bad as things are getting now, its actually much worse.
Sorta like how Jefferson Davis “reconsidered his strategies” after Appomattox Courthouse.
Ouch, that’s a painful analogy for this part of the country.
Though to put it more accurately, if not less painfully, you could say “Sorta how Jefferson Davis reconsidered his strategies after Sharpsburg/Antietam”, since in this housing bubble we are far from the “Appomattox” stage; prices are only now in the process of beginning the long, painful retreat.
Yeah, that’s why I posted it.
You’re right though, we’re a long ways from the “Appomattox” of this bubble burst.
“office of housing” soviet sounding
he’ll keep his job
108 condos settled in the month of June.
http://www.nvar.com/market/marketstats/jun06/axcc0606.PDF
This is the city of Alexandria, Va
‘This also happened in the late 1980s when several condo projects were shelved.’ Urban planners say that housing trends are cyclical, with supply and demand forming peaks and valleys over the decades. To illustrate that point, Ralph Rosenbaum, a demographer in the city’s Department of Planning, turns to a listing of ‘residential properties authorized’ from the city’s 2005 statistical profile. It shows several prominent peaks in the mid-1960s, the mid-1970s, the late 1980s, the late 1990s and our recent spike.’
‘As early as last summer, Deputy City Manager Mark Jinks predicted that Alexandria’s market would be experiencing a slowdown. ‘I think you’ll see a lot of these condo conversions becoming rental properties,’ Jinks told City Council members at last year’s annual retreat.’
There were several RE people last summer who were saying history would repeat itself, regarding condos. But very few would listen.
Perhaps if these numbers, current and historical, relating to counts of permits approved were disclosed along with everything else then maybe some buyers would have made pause. Every little bit helps, and even being curious it isn’t clear to me how to access these numbers without sending this person a massage asking pretty please.
Hold on, Betamax…
You ain’t seen nothing yet! This is just the beginning of the crash. Before it is over, you will see prices of homes plummet. During the Great Depression of the early 30’s, home prices fell 90%. They didn’t come back to pre-depression prices until more than 25 years later.
So sit back, take a long breath and prepare for dramatic drops in home prices starting this year and progressing for a couple more years until they bottom out.
It ain’t gonna be pretty!
So if I have a million in ‘cash’ and a million in ‘equity’ and the mother of all recessions hits, and the banks don’t go under water; am I better off making 12-15% on my savings than — ?
This is off topic -but i posted on bits and no one answered - is the sign in feature on Realtor.com gone, or is it my imagination - if they took it off there, I can no longer save my searches and watch the prices fall en masse and this would be a significant anti-consumer shield they are trying to put up
Knowledge is power. Attempting to conceal the housing bust in the internet age is futile.
If it was there before, it’s not there now. However, I checked their sitemap and noticed that they are part of Homestore, Inc. I went to Homestore.com, and there they *do* have a “sign in” feature for (I suppose) all of the service areas.
I check Realtor.com often, as well, but never looked for or used their sign in feature.
BayQT~
Thanks,
See. i have used their sign in feature to save searches to see how many homes came up under certain price points & sq. footages in several areas I am looking at (basically watching more and more larger homes come on the market at cheaper and cheaper prices ) - and you can also mark individual properties and catch the price drops on individual homes as well. Powerful for the buyer - devastating for sellers.
From
http://www.realtor.com/RealtyTimes/marketconditions.asp?open&poe=realtor?open&link=http://mktc.realtytimes.com/mktc/conditionsviewjs/California~Costa_Mesa~hs_jimdwyer?open&pID=r.com2
“Moderate Economic Growth in the coming months has established the Key Word for the Housing Market in 2006 as BALANCED–With a return to a more normal rate of price growth.”
Then, from
http://phoenix.bizjournals.com/orlando/stories/2006/07/24/daily21.html
“The market is becoming more balanced, with greater negotiating give-and-take between buyers and sellers”
Or from
http://www.dailyprogress.com/servlet/Satellite?pagename=CDP/MGArticle/CDP_BasicArticle&c=MGArticle&cid=1137835551865
“Meanwhile, sellers are adjusting to a more balanced market, and can’t simply shoot for top dollar if they expect their property to move quickly.”
Also from
http://today.reuters.com/investing/financeArticle.aspx?type=economicNews&storyID=2006-07-11T161305Z_01_N11454985_RTRIDST_0_ECONOMY-HOMES.XML
“At the same time, housing inventory levels are balanced in much of the country, so overall price appreciation will be at a normal rate.”
from
http://www.voncannonrealestate.com/marketTrends/Baby_and_Echo_Boomers_How_Generational_Trends_Affect_the_Real_Estate_Market.php
“This will keep the real estate market balanced and with steady growth.”
from
http://www.realtydirect.net/news/?Pub=830
“This new, more balanced, housing market calls for a new set of operating instructions for home buyers.”
You think there are some talking points out there, with key words like “balanced”, likely enumerated by the NAR? You think there is a perspective the NAR is trying desperately to peddle? You think? YA THINK???
These are very easy to find with google. I think the American Media B-52’s have carpet-bombed the United States with “Balance Bombs”.
“Buyer’s Market”, “Balanced Market”, buyer/seller give-and-take, this is ridiculous!
I started reading about the bubble from this and other sites around January 2006. I am very fortunate that my ignorance did not cause me great suffering.
I sold my first home (condo) in CT in 1997, and as would be expected the price backed up 3% from the price I paid in 1993, but I had built equity so I was fine.
Bought in 1997 in PG County, MD, as it was where I could afford at the time. I knew then that as soon as we had a child and he approached school age I would move. That time just happened to be spring 2005, so I sold well ($441 vs $208) and rolled most of gains into a bigger house in WV. Still have about the same mortgage ($1700/M), and have an equity shield even if my house drops by 50%, which feels good.
I was lucky (although some may say I would have been more lucky if I were a renter now (2 dogs and now a horse make it tough), but I do feel for those misguided souls who bought in 2005. The woman (single) who bought my poorly constructed box bought it to live in and as an ‘investment’. Although here credit score was 800, she got talked into some f’d loan (through the realtor, predatory Black on black lending) that cost her $16000 loan costs. She will be toast, as she listens to the windows rattle and watches the curtains rustle when there is a breeze outside.
Anyway, to conclude my off topic rant, this site is spot on and will save many lots, although the reality will give some nightmares. Keep up the good work.
Our old neighbor had a townhouse to sell in Reston, VA in April 2005. It sparked a bidding war and was sold for 435K. It had been purchased in 1998 for 140K. In 1994 we bought the house to the left of it (same model, same condition) for 135K.
It appears as though a single woman purchased it.
Now the house on the other side of it is languishing for 359K.
What a difference timing makes.
Some of the new condo stuff in Alexandria defies belief. Much of it is on the far north end of town, near the Potomac Yards shopping center. You can’t walk to the subway, traffic is horrible because of the shopping center, and best of all you’ve got the lingering remains of the area’s former seediness just a few blocks away. Where do I sign up???
Well, if they actually carry out the plan there it will probably be quite nice– especially if they add another metro station. But to get to that point you’ll have to live through years of construction, torn-up streets and horrible traffic. Hmm…
Nah… I think I’ll wait ’til the work is done!
more repartments, what happened to rents going up?
Rent going up is a bunch of b/s. In Sacramento rents may rise a little bit n nicer apartment complexes, but if you want to rent a house from some dumbass investor there are plenty. I say HAGGLE, tell the idiot this “listen hear moron I will pay you $200 below asking for a one year lease”. He will take it, because he is up to ass in mortgage payments.
And when he stops making his payments to the bank, and goes into foreclosure, you will be out your deposit and rental payments and no place to live. Make sure that rental house is not in foreclosure before you give the owner any money
Not a repartment — in Toronto –we sold our house and moved into a somewhat upscale apartment two years ago — one month free and a $200/month knockdown on listed and legal rent…. first renewal of lease with no increase ( still $200/month off)– just got notice that the second lease was coming up for renewal in 90 days — still at the original discounted price in spite of escalating utility and taxes over the past two years.
I live in Richmond, VA. The apartment complex I live in went condo a month after I moved in. When my lease was up last month, I was told I could go month-to-month, with no increase in rent, until my unit sold. Last week, I got an offer to renew a one year lease with only a $15/month increase because I was a “valued resident.” More likely, it’s because their sales have slowed and the units are overpriced. The unit across the hall from mine has been vacant for months.