DC Housing Market ‘Entrenched In A Slowdown’
The Washington Times has this report from DC. “Home sales are plummeting at double-digit rates in the Washington area, the National Association of Realtors reported. Markets in Virginia that enjoyed the most rapid appreciation during the boom, are now experiencing a faster decline and tougher adjustment than slower-to-bloom markets.”
“Virginia home sales plunged 23.9 percent in the spring quarter, compared with a year earlier, the association said, while Maryland and D.C. sales fell by 16.5 percent and 15.6 percent, respectively. The sales decline in Virginia put it in the same league as California, Florida and Arizona, where the biggest run-ups occurred.”
“The fall has been steepest in the condominium market, where investors and first-time buyers have a large presence. Scattered metropolitan areas and resorts with overbuilt condo markets are seeing outright price drops, including the District (and) Virginia Beach.”
“‘The U.S. housing market is entrenched in a slowdown,’ said analyst Ryan Sweet. ‘So far, all indications are that the housing market is slowing in an orderly fashion,’ Mr. Sweet said, ‘but we are still early in the housing slowdown.’”The Daily Press. “Only two cities in the country saw a greater increase in home prices than Hampton Roads from the second quarter of 2005 to the same period in 2006. The statistics come even as many real estate agents in the area have said for months that the market has slowed. There are also thousands more homes for sale right now than at most times in the past two years.”
“‘Yes we went up very fast. We peaked. In the meantime there will be people dropping prices, there will be bargains to be found,’ said Donn Irby, past president of the Hampton Roads Association of Realtors. ‘The frenzy is gone. That’s over,’ said Perry Pilgrim, president of the Virginia Peninsula Association of Realtors.”
“One caveat: A more zeroed-in look at the numbers does show a potential slowing-down. Statistics specifically for the month of June, showed that home prices only climbed 8 percent from June 2005 to June 2006, according to the Virginia Association of Realtors. That marked the first time since 2003 that Hampton Roads did not see double-digit price growth in a 12-month span.”
The Fauquier Citizen. “For various reasons (a greater inventory of homes, higher interest rates and higher gas prices, for example), the residential real estate market recently has favored buyers rather than sellers, according to local Realtors.”
“‘This is a very normal process,’ veteran Realtor Joe Allen said of the housing slowdown. ‘I’ve been through this three times.’”
“He believes some properties are priced 15-20 percent ‘too high,’ largely because homeowners want what their neighbors got a dozen months ago. ‘It’s understandable they want last year’s prices,’ Allen said, but also unrealistic.”
“Jim and Cheryl Warner put their home on the market last October. The Warrenton couple wanted $509,000 for the place, which includes three bedrooms, three -and-a-half bathrooms and a finished basement. They knew putting their home up for sale in the fall probably would produce little buyer response.”
“But the Warners thought they’d get at least a few inquiries. As it turned out, only one person came by the place in five months. After talking with their Realtor, the Warners dropped the asking price to $450,000 for their Brenda Court home.”
“That generated a ‘fair amount of traffic,’ (about six visits) but no offers, Warner admitted. About a month ago, the couple cut the price to $435,000, or $12,600 less than the county commissioner of revenue values the home for tax purposes.”
“The price reductions trouble the Warners because ‘any time you drop your price, it’s pure equity you’re losing,’ he said. ‘We can’t go any lower, (because) we’re turning around and buying into (an expensive) market just like this one.’”
“A decade ago, the Warners paid $158,000 for the two-story, 2,600-square-foot home.”
“Despite the hardship, Cheryl Warner will continue to commute until the right buyer knocks on their door. ‘We can do that, but it’s putting a strain on our family that we don’t want to continue with,’ her husband said. ‘The waiting comes with a price. We had no idea it would take this long.’”
If house prices really do start dramatically declining in the next couple years, would there be ANYONE who wants to buy at all? Once we are in a confirmed price downtrend, who in their right mind would want to stump up a lot of cash if the asset stands a good chance of losing another 10% of value in the next 10 months?
The irony is that the more prices fall, the less attractive it is to buy.
I am curious to hear from other participants on this blog as to when they would decide to actually buy. Would you buy once prices dropped 30%, 50%, 80%? Or would your decision to wade back into real-estate be more a factor of waiting to see that the market had “bottomed”, with no further depreciation for a year or two?
once price drops 65-75% i will buy
Why would you buy even if prices declined 75%? Why not wait till they drop 90%?
Maybe a better indicator is to look at the rent/buy equation. Once rents cost more than owning then maybe buying is the better bet. Still, I wouldn’t want to buy if I felt that prices were in a free-fall and might fall even more.
Maybe a better indicator is to look at the rent/buy equation.
yep, that describes my outlook. When it makes sense to buy, I’ll buy. If it makes sense to rent, I’ll rent.
And it ain’t going to make sense to buy for quite some time.
Wouldn’t it be silly to purchase a home if prices were in free-fall, even if rents fully covered ownership costs? Why not wait until the market had stabilized, and was even starting to trend up, before taking the plunge into ownership at all?
I don’t care what I pay for a house, as long as the price including net tax cost, ins./maint./etc. is less than renting. Plus deduct a big wad of change for my family’s time value doing the extra chores instead of sitting on the beach. That’s precious to us…more precious than having a document that says we owe XXX,XXX on a house.
At what point, payments on a 30 year fixed rate loan (at 100% financing-not that I’m going to actually borrow that amount but that I’m using that as the measure) are lower than monthly rent less ownership costs, I’ll be buying as many properties as my capital will allow. I don’t care to time the market but enjoy positive cash flow investments (of all kinds).
To give you a counter example, I’ve bene employing capital in the stock market and certainly haven’t found the absolute bottom of most investments, but apply additional capital when ever it can be put to use at rates well above my perception of the risk level. So far I can’t complain.
as long as the price including net tax cost, ins./maint./etc. is less than renting.
Even then, assessing the direction of the market is a worthwhile exercise.
House prices are not likely to fall far below rents. Given the preference to owning, if all else is equal I would buy. Here in San Diego, the cost of buying is approximately double or more the cost of renting, so I could easily say it would take a 60% drop here to get me interested, even if I felt prices may fall further.
Hmmm… I am not so sure that prices couldn’t fall SUBSTANTIALLY below rent. If everyone is shell-shocked from a collapsed housing market, and houses are viewed as one of the worst places to put your money, the interest in owning might evaporate: particularly if there had been a long established trend of price declines over several years. Very few people would want to buy a home if there was a very real prospect it would be worth 20% less in another year.
House prices are not likely to fall far below rents.
At any given time, I agree. But if house prices are dropping quickly, then renting will be seen as a method of preserving capital. “Why buy today when you can buy cheaper tomorrow?”
That was the motive behind my “market direction evaluation” comment above.
The psychology is the same as when housing prices are rising: People are paying for expected appreciation/depreciation (just like stocks). Thus, when they are appreciating, people are willing to pay a lot more. When they start depreciating, people are willing to pay a lot less.
For instance, what are you willing to pay for a house that you are convinced will go up in value? The answer is whatever someone is asking for it. This is Schiller’s arguement for why housing prices can’t simply plateau. When housing prices are going up, current prices reflect expected future appreciation. When they aren’t going up anymore (like now) people aren’t willing to pay as much because there is no expected future appreciation. As a result, they must go down.
This psychology also results in the market overshooting in both directions. I will be willing to buy as soon as prices decline so that it makes more financial sense to buy than rent. However, this type of fundamental valuation clearly does not reflect the psychology of the market, otherwise housing prices wouldn’t be where they are now. Thus, I would expect prices to decline beyond that point…to where they were in 1993 when I was considering buying instead of renting and conventional wisdom what that real estate is the worst investment a person could make.
“The irony is that the more prices fall, the less attractive it is to buy.”
This is an excellent observation. It is one more illustration of the principle that the forces that worked to drive prices up may also work in the opposite direction to drive prices down. The irony used to be: “The more prices rise, the more attractive it is to buy.” That is until prices stopped rising.
It is also speaks to the importance of not listening to the herd when investing.
You make some good points- the fundamentals will return and some markets may end up being “dead”.
I think of my parents old house in Central Cal. They bought it new for 88k in 1989 and tried to sell for 120k in the mid-nineties; they could not give their house away back then because the market was so dead. They sold in 1991 for 130k and now zillow says the place is worth 248k. Eventually, the market will die and the days of “not being able to give away your house” will return.
that’s when i’m buying.
Why would anyone want to buy at all? Because they will think its cheap compared to the prices they got used to. Trust me, there will be many buyers who chase this market all the way to the bottom, just not enough to prevent the inevitable rout.
Same thing happened in the tech stock wipe out. If you liked Cisco at $120, you simply loved it at $80, and really backed up the truck when it hit $40. Today it lingers at around $20 and most investors feel so burned that they’ll never own the stock again.
So what’s the buy sign? I agree with the others: buy if you can cover the total costs of owership by renting it out.
So what’s the buy sign?
IMHO, the real buy sign is when the sheople all around you think that buying a house is a crazy money-losing exercise. Phrases like, “Why would you throw away money for a monthly interest payment to the bank?” are key buy signs.
I agree with JP.
“Be fearful when others are greedy. Be greedy when others are fearful.”
The time to buy is when interest rates have been falling. I think that signals the bottom is at least near. You can never tell the exact bottom, except in the rearview mirror.
interest rates have been falling since 1980. there were many bad times to buy. i don’t really care what interest rates are. i care what my total cost relative to my income. it is influenced by interest rates, but not driven buy them. i’d rather pay a higher rate and a much lower purchase price.
For my family here in waaaaaaay overpriced Rancho Santa Margarita, I am using two indicators. I have looked at the rend vs. buy option and it looks like I am still way ahead as prices would have to be $400K before it beat renting. Secondly, I have to consider the amount we can afford. Based on one salary we are looking at $300K and that is with almost 1/3 down. So for us in this bubbly mosh-pit, prices would have to come down 50-60% before I even thought about it. Lastly, I have been looking hard at S. Carolina and I have to admit I was impressed. Even if prices come down 50% you aren’t getting much land and all these homes are the same in RSM. YUK!
Bough a HUD repo there at Galleria Road in 1999 I think it was. Trust me, in that jacked up POS SFR suburban sprawl slum place, there will be plenty of cheap stuff again this go around. If you have good job and credit, you will be able to name your price.
someone is always buying or selling due to life events, job change or whatever
I can understand why some people are “always” selling. But I don’t see why the reverse is true (i.e. that some people are “always” buying). You might be forced to sell due to a life change, but nothing FORCES you to buy. You can always rent. I suspect that before this real-estate cycle plays out we will reach a point where the majority of people would rather rent.
The irony is that the more prices fall, the less attractive it is to buy.
You’re absolutely right. It’s essentially the reverse of the “buy now of get priced out forever” bubble mentality. It feeds on itself.
I will buy when Average Joe Sixpack tells me that real estate is the worst investment around.
Sopme people buy for the singular reason that, in their mind, it takes a big piece of uncertainty out of their life. IMO, that factor should not be underestimated by those who intend to scarf up when the elephant is on the ground.
Here on the blog, we have a tendency to gauge our house-buying proclivities against those of our fellow bloggers, but when we actually go out there to buy, like it or not, there still will be other potential buyers with an entirely different mindset from our own. I think this points to another oft-mentioned opinion here, with which I happen to agree — buy (just) before the bottom, because your choices will be a lot greater. The (just) part is for those who think they can time it pretty well.
“bottomed”
There’s no rush.
I agree, there is no rush. I plan on stockpiling money for 2-3 years. I’ll get interested when rent/own ratios are in line as well as looking at buying for $100 per square foot or so.
Much like the higher prices beget higher prices, lower prices will beget lower prices. Nobody with 2 working brain cells will want to step in front of this derailed locamotive.
OT - But front and center in this morning’s Oregonian is a very candid, fair aprraisal of the RE situation which until now has been holding up well in Portland, Or.
Housing Boom Might Be Kaput:
http://tinyurl.com/pcp6v
Another OT - Didn’t ZIP realty used to tell you how many homes there were for sale across the country? Not there anymore just as it was about to hit 1 million! Couldn’t be a coincidence could it? Us tin-foil hat types want to know…
the number was probably too big for people to read comfortably. once you get to 1,000,000, it’s easier to write 1 million+ homes since it’s easier to read. themlsonline website said 51,000+ and, when I do a query at edinareality, it tells me that there are now 54,000+ homes around minnesota. three months ago, there were 30,000 homes/TH’s/condos for sale so 24,000+ more have been added over the summer.
It’s still there. Sitting at 915,701 as of this writing.
http://www.ziprealty.com/maps/index.jsp
Still does. Logout first, then click on the “Complete MLS homes updated throughout the day”. Shows near the top of the next page. Note that if you’re logged in and you click it, you get a different display.
And the magic number is…….915,701.
>
nad in the 15 minutes since you posted that , they now show 915,727!
So 26 additions in 15 minutes. Or 1.7 new listings per minute. Somebody do the math and see where we’ll stand in October .
By my calculations, there will be about 1.1 million homes for sale by October if the additions hold at that level and sales continue at the same pace. But they won’t, of course. They’ll be worse.
That’s depressing. I can remember when McDonalds hit 1 million burgers sold.
I think by this winter end a lot of extra fat on the house prices will go away. Houses that were priced in low 700s are selling now for low 600s and by the end of this winter they should be around 550s. This would be a time to negotiate for the buyers and buy them around low 500s. I don’t think the prices will go as low as low 400s in at least 2 years.
Declines in Washington, Virginia, New York, New Jersey, California, Connecticut, Oregon, Colorado, Florida, and elsewhere.
I guess this is the “froth” the spinmeisters were referring to last year, and when the “froth” is national, do the little “froth bubbles” become a big bubble yet?
realtors jumped at froth as a nice bubblebath term. AG meant froth as an apt indicator of something terribly wrong w/ the system… like the froth around Cujo’s mouth.
“…do the little “froth bubbles” become a big bubble yet?”
I think there’s a point to be made around that question. It is that when prices in the bubble areas retreat, the differential between those areas and the hinterlands, to which the less affluent or more cautious retreated for financial safety, becomes less and less and so prices “out” there must drop as well. At a minumum, I’d think this theory applies to a big circle around all major metro areas. Roughly akin to those old “potential nuke-damage” maps from the 1950s.
That is, IMO, what will bury those folks in Warrenton, Virginia.
‘We can’t go any lower, (because) we’re turning around and buying into (an expensive) market just like this one.’
Perhaps they should rent? Or is that too obvious of a solution?
They’re not buying into a more expensive market in Frederick Co., MD. The median there is 315K. The median in Fauquier is 434K. Gimme a break.
The buyers in the market now are people that are pushing equity earned from one overpriced house to another overpriced house.
only making 250k on the sale- should we send them money ?
In 2001, we looked at the same model on Brenda Court in Warrenton. They were all selling for ~$240K at the time.
In 2003, you could have bought a big new McMansion on a large lot for 500K. In 2005, they asked way too much to begin with. Now, you can buy a large new home from a builder for 450K.
The realtor they interviewed, Joe Allen, doesn’t sell homes to the common man. He sells mostly the horse properties. When he tries to sell normal real estate, he asks too much, imo.
“Jim and Cheryl Warner put their home on the market last October. The Warrenton couple wanted $509,000 for the place, which includes three bedrooms, three -and-a-half bathrooms and a finished basement.”
“A decade ago, the Warners paid $158,000 for the two-story, 2,600-square-foot home.”
So they completely expected to get a 350k over what they purchased the house for 10 years ago?
This is why buyers are sitting on the sidelines. With sites like zillow.com we know what you paid for the house 10 years ago and no way in hell am I going to subsidize your retirement.
Talk about entitlement mentality.
No shit. Zillow will be the death of these people.
So true. Zillow is a house-of-mirrors. I look at the prices of houses sold 3 years ago in the Bay Area. They tend to be 50-60% of what people are asking now. As a potential house buyer, I always think to myself: I am not in the wish-granting business. I am not here to make somebody’s dream of easiest riches they will ever make come true.
I wonder how much they took out of the house ATM- i have a gut feeling that’s why a lot of existing home buyers are resisting lowering the price too far.
$158K to $509K in 10 years … I dont think so.
The best it can do is 5-6% or so year over year.
That comes to $270-300K current market value…
this pig is overvalued by 38.9%….
FWIW we come to our majic 40% every
study comes up with regarding overvalued RE.
They need to smell the coffe sell and rent for 1-2 years.
and buy their new home for 50cents on the dollar. No brainer!
And normal is 1% over inflation - say 4/5%. That puts the house at 240K or so. I can hear the indignant yell from the Left Coast.
Yeah, but listen to their tone. Even though they have been dropping the price, they are still in the mentality that it is worth so much more than it really is. Hell, by their account, the county thinks so too, so where could they be going wrong? First, the assumption that the market was still going up by pricing the pig waaaay above assessed value. Again, plays into their mentality. Gosh, using their math, they might as well hold on for another decade, and the beast might just be worth 1.65 MIL!!!
Retards
Would require a 39% reduction in current asking price to get to the ‘current market value’(equilibrium value), but is actually 70% overvalued if wanting 509K.
That’s the same math, which may be your point. 1 divided by .7 is 1.42. Any percentage of reduction is an offset to a much higher percentage of increase.
Right, I was referring to Larry’s stating it was 38.9% overvalued. If 300K is the price determined to be the FMV, then it’s commonly referred to as being 70% overvalued if they are asking 509K ( (509-300)/300 ).
But hey, the bottom line is it’s 200K more than any of us is going to hand to Jimmy and Cheryl!
(Oh, wait …. I mean it’s 200K more than we are going to borrow from the bank, which is on loan from investors – to give to Jimmy & Cheryl. Yeah, that’s what I meant to say….)
If they sell their home for $435,000 and owned it for ten years they earned about 10.50% per year, on average. If their home went up by 4% (about inflation) it would be worth about $235,000. Big difference.
The time to buy is when the rents is approximately the same the mortgage payment AND you can buy a house as home you can live in for 10 years with a loan you can stomach for 10 years. You must have your social situation (kids, schools, etc) included in the plan.
it would be interesting to know what the cost of having to wait months to sell your home is. very interesting thing to think about. my coworker said that prices weren’t going down and I tried to educate him that discounts, upgrades, incentives and other overhead aren’t included in the “sold for” price.
it’s interesting to think that automakers uses incentives to protect the resale prices of their used cars, etc…. so, overall, they do allright.
“it’s interesting to think that automakers uses incentives to protect the resale prices of their used cars, etc…. so, overall, they do allright. ”
Automakers don’t give a rats ass about resale, they are not in that game.
Not true… Automakers care about resale vaule because it has a direct impact on leasing prices. The faster a car depreciates, the lower the residual value at the end of the lease, the higher the lease payment is. Thus the best values in leasing are usually cars with the best residual values.
Also, whenever an automaker uses an incentive, it actually lowers the price of used cars of that make/model. That includes the use of rebates and dealer incentives… another reason not to buy American cars. They have to use heavy incentives to sell them, killing the residual value of the used cars. Traditionally the Japanese makers like Toyota and Honda and the luxury makers like Mercedes and BMW have the best resale value because they don’t have to use heavy incentives
“We can’t go any lower”
This isn’t a limbo dance Dahling, it’s a meltdown. You’ve a bunch of equity in the place, for now. Yet the greed continues to prevent you from realizing it.
“any time you drop your price, it’s pure equity you’re losing”
As opposed to what? Cowrie shells?
you’re funny.
They already lost the equity! Dropping the asking price is just their realization that they have lost the equity. The house is only worth what a buyer is willing to pay for it in today’s market which likely isn’t even 435k.
For those of you who aren’t familiar with the area, Warrenton is out in the boonies. It is not a reasonable commute from there into the DC area, although many try. I assume the $3 gas is killing many of these folks.
That’s right, boonie-ville is Warrenton. Driving into DC every day from there in your SUV would not only be expensive, but also aggravating and time-consuming.
I haven’t been out to Warrenton, actually, and though I hear from people that it’s a decent place (except perhaps the bland developments) I haven’t heard of many jobs out there that would support anything near $500k, so it’s no surprise those greedy sellers can’t move that house! (I’d want more than 3 bedrooms for that price way out there anyway.)
The article said the lady was commuting 4 hours a day and sometimes sleeping on a cot at work.
The funny thing about markets is that they are driven by greed and fear. That’s why people chase the profits up and why they chase the losses down. Greed and fear…
This couple really has the ability to reduce and most likely they will pay a lower price for the new place they buy .If they charge 100K less they will pay 100k less for another house .Can’t they see things that way ?
And save $6K in Realtor(TM) commissions as well. High housing prices don’t serve the public…
The funny thing is that they seem to think that $435k is a bargain for a house in Warrenton. That’s so far out from DC as to not really be in the DC metro area. Ten years ago, that was the sort of place that you retired to. Now it’s become a place where people commute from. Crazy.
It’s places like Warrenton, Leesburg, and Stafford County that are going to crash first. You have to be extremely desperate to buy in order to buy that far out from town, and the supply of desperate buyers seems to have dried up. There is some business/military within easy commuting distance of those communities, but not enough to generate much housing business. I haven’t been through Warrenton in a number of years, but it used to have a really neat old-time small town feel. Is any of that still there or has it been transformed into a sea of crap boxes?
tough carbon footprint- 2+ hr commute,but gov workers will do anything to get to that pension
I commuted from Woodbridge for awhile. I can’t even imagine how soul-crushing the commute from Warrenton to downtown DC would be. The total distances might not be all that bad by L.A. standards, but I’ve lived in both places and believe that DC has worse traffic than L.A. on a mile-per-mile basis. Just driving ten miles around the DC area can be a brutal experience.
my sentiments exactly. i am philosophically opposed to commuting more than 30 minutes to any job.
I simply cannot handle bumper to bumper gridlock. It increases my blood pressure and I eventually came to the realization that there is a better way of life for me. Some people are able to cope, I am not. I like a slower pace. I admire those people who are able to remain unaffected as they sit in their car for hours on end every day living through the horror of an infrastructure crumbling under the weight of overpopulation and substandard planning.
Absolutely right. I’ve lived in both places, too. Driving around LA is a piece of cake by comparison. I wouldn’t stay in the DC area if I couldn’t afford to live within close walking distance of a metro.
Jesus you’re bitter about gov’t workers. Give it a rest.
Ah, but will they carpool?
There are no pensions anymore. Not since the 80’s.
“Jim and Cheryl Warner put their home on the market last October. The Warrenton couple wanted $509,000 for the place, which includes three bedrooms, three -and-a-half bathrooms and a finished basement. They knew putting their home up for sale in the fall probably would produce little buyer response.”
…“Despite the hardship, Cheryl Warner will continue to commute until the right buyer knocks on their door.”
I drove through Warrenton on my way back from a weekend in the Shenendoahs a few months ago and was stunned to see that it had become a DC bedroom community in the last few years. Warrenton is an hour and 1/2 drive into downtown in ideal conditions. In rush hour it has to be more like 3 hours. $500,000 is dreaming - you can buy a house much closer to DC for that much right now.
And, even in May, I noticed Warrenton was covered in ‘For Sale’ signs and newly completed spec homes. I shudder to think what the market is like there now. There must be 1.5 houses for every person that lives there.
A close friend lived right off Warrenton’s main street until recently. Still has that old time feel, with some bigger retailers on the edges, like Giant and Borders. It’s a pretty nice mix actually.
Commuting was hell though. My friend worked from home, so it was all right, but when he had to come in occasionally for meetings, it was a 3-4 hour commute each way during rush hour. I didn’t visit him often, or if I did, I left at very strange hours, because what should’ve been an hour trip for me could take 2+ hours with traffic.
Bottom line: Warrenton, nice place to live, but with rising gas costs, housing prices there and further along the I-66 corridor are going to go down, down, down.
“The price reductions trouble the Warners because ‘any time you drop your price, it’s pure equity you’re losing,’ he said.
I like this logic. If they raised the price by $500,000, they would gain that amount in equity. Hee… Hee… What you are really losing is air when you reduce the price!! Or is it a thousand little balloons popping at the same time???
Yeah, it’s like this: “If you lower you’re asking price in the woods, and no buyer is around to bid on it, did you really lose any equity?”
?? of the 9.8 % employed in RE and related how many will be out by Xmas ?
10% 20 ??
that’s alot of people
If I were to buy a property in this market, I would first go to the local register of deeds, find out what is owed by the present owner, then I would go to the treasurers office and find out the assessed valuation. I would pay no more than the assessed valuation, regardless of what percentage of market value its at. Example:
Property for sale at 399,000. ROD records say that the owner has 2 liens on the property, five years old. A first at 200,000 and a second at 50,000. 250,000 of debt 5 yrs old. So, probably very little of it paid off. I can guess than that this property was bought at or around 250,000. Then, I go to the treasurers office and find out the property is assessed at 280,000. based on this and the liens, I would offer no more than 285,000 on my first offer. I would, in detail draft a letter to the owner, via the realtor, with the offer, explaining the anmount of the offer. I would add in the letter, that 5,000 over the assessed valuation is a gift to the owner. Every owner knows what their assessed valuation is and this approach lets them know your an informed buyer. It will be rejected, but hey, at some point in time, one of sellers will see the reality in your offer. Most likely, all properties for sale in this market are over their assessed valuations. The assed valuation is a good reference point.
There’s a house down the street asking hopefully for $50,000 under the assessed valuation, but I’ll tell them you’re willing to pay 700K instead of 650K.
I am sure those county officials know the market value . . .
yea arent assessed values done annually or so? so when the market rises or tanks 20% in the middle of the year, it isnt accounted for at all.
arent they also commonly not very accurate as they may not count for a roof needing replacement or any additions on the property?
assessments/appraisals are a joke imho
Arwen, notice Terry referred to the “assed” valuation, not the “assessed”. I think we know which is more appropriate anyway.
HAHAHA!
In Va % property taxes are low but assessments (when done) stay close to actual values. In NC % property taxes are higher but assessments tend to be below market. Works out about the same. Not to mention that assessments are only done every three to four years. So I should be willing to pay relatively more in Va.? Assessment amt. and date are obviously worth knowing, but buying based on assessment makes about as much sense as buying based on what the buyer paid.
Agreed. Property taxes are a political charade. Assesments x rates is what you pay, and that is all that matters. Politicians balance the two to make their nut while appearing to be “fair and balanced” at how they get there. Good grief.
“Home sales are plummeting at double-digit rates in the Washington area, and house and condo prices are flattening, but the region is doing better than some other cities getting bludgeoned by the housing bust, the National Association of Realtors reported yesterday.”
“The increasingly depressed market conditions are the result of speculators exiting the market because they can no longer make money, combined with a toxic mix of high prices, rising interest rates and worries about the outlook conspiring to keep potential first-time buyers on the sidelines.”
The wording choice (”plummeting,” “bludgeoned,” “housing bust,” and “toxic mix”) is pretty strong language for the MSM (and the first quote was the first paragraph of the article). Are they finally starting to see the light? Let’s hope more articles in the MSM pick up on this. Because, while most thinking people understand that the housing bubble has burst, there are millions of people who have no idea or are in denial, like the couple in the article who are selling but looking to buy another place immediately. More MSM stories like this (and even blunter) will help to finally convince these remaining buyers that it’s not a good time to buy, and this will help the correction happen faster.
The Washington Times tends to be rah-rah about RE, but then so does the Post. We have a new free daily paper called the Washington Examiner. The Examiner has a weekly RE pull-out section, and when it started about a year ago, there were a few interesting articles about the state of the market (though mostly rah-rah stuff), but now that the ship has started to sink, they’ve converted the RE section into a bunch of fluff pieces on mega-expensive properties (real mansions, not the McDonalds kind), as well as “celebrity properties” and other silly crap like that. You can almost smell the denial…
wapo has been rediculously rrah-rah
sometimes thay have no mention of market conditions just fluf- they need the ad revenue and builders are buying
This morning, the same type of stupid article was in the AZ Republic. Showing us which rich people and athletes paid millions for a home. Like that has nay bearing on the typical home price.
The newspaper also had a negative article on the market:
Arizona home-sales drop worst in nation
Glen Creno
The Arizona Republic
Aug. 16, 2006 12:00 AM
A chill is sweeping over Arizona’s once-hot housing market.
Local analysts have chronicled the market’s slide from the boom-time peak of last year. Now, a new national survey says Arizona led the country with the biggest sales decline in the second quarter as the number of unsold homes piled up and prices stayed high.
Sales in the state fell 26.9 percent in the quarter compared with the same time last year, according to the National Association of Realtors. Rounding out the bottom three were Florida, down 26.7 percent, and California, down 25.3 percent. Overall, national sales fell 7 percent.
The national median existing single-family home price was $227,500 in the second quarter, up 3.7 percent from a year earlier. The Phoenix-area median rose 11.8 percent to $272,200, the association said.
Note that article still holds onto the myth of the rising Median Sales Price as an indicator of the current market, even though that stat is from the 2nd QTR and we are now in September…
I made some replies on their little blog, then later I noticed that the article was no longer on either the main page of their internet site, nor within the Money section, seems they must have gotten a few concerned phone calls from the R.E. Industry…
I’m not sure that I would refer to the Washington Times as the MSM. It’s a niche paper that caters to the Republican elite here in DC. Patrice Hill (reporter who wrote the story) has been a bit of a bear on housing in the past, though, IMO.
Yes, Patrice Hill has written many bear articles on housing and the general inflation/ interest rate/ bond market issues. He is pretty much the only commentator on housing so pretty much represents the Wash Times on this topic.
However, there is a crappy Friday RE supplement filled with pieces by RE industry stooges. Especially a loser called Chris Sicks who tracks the market and will put a positive spin on everything for you.
BTW, the local Fall Church paper reported a few months ago that houses are selling 10% below the 2006 assessment. This assessment typically has reflected the selling price in the early part of the preceding year, so it’s been 20-30% below asking price during the past bubble years but now tables have turned.
The bubble was late getting to Virginia Beach, and it saw the bulk of its gains in late summer of last year… hence the good appearance of the YoY numbers. But the area has followed the same trajectory as every other bubble market with the sudden glut caused by the investor bailout and the inevitable price delines now under way.
http://askmerv.choice3realty.com/
Northern VA real estate agent blogger. Topic today is fun: “What the insiders are saying about the local market”. The answers are great.
Thanks for the link! This is an interesting site with some good stats and perspective.
From the Fauquier article:
“The couple initially wanted $849,000 for their 3,500-square-foot, split-level home and 8.5 acres off U.S. 688 west of Warrenton. Edwards and Meadows will move to a home they are building on two acres in neighboring Rappahannock County. The couple recently reduced the asking price for their Fauquier home to $795,000. Edwards and Meadows also decided to include a new pickup in the deal, worth $20,000.”
I just saw a new house on 52 acres go under contract for 785K. (Distress Sale). The county assessed Jane Meadow’s house at “Fair Market Value” for 619K, which means a good starting price would be about 595K.
There’s 15 months of inventory in Fauquier. I guess I can wait on that pickup truck.
“Statistics specifically for the month of June, showed that home prices only climbed 8 percent from June 2005 to June 2006…..”
“…..some properties are priced 15-20 percent ‘too high,’ largely because homeowners want what their neighbors got a dozen months ago. ‘It’s understandable they want last year’s prices,’ Allen said, but also unrealistic.”
Gosh, I can’t understand why these owners can’t comprehend the simple math:
8% appreciation YOY = 15-20% YOY decline in value. Jeez, how simple is that ……
(This dance to keep everyone stupid just gets more amazing…)
‘The waiting comes with a price. We had no idea it would take this long.’”
No Mr. Warner, the price is why you’re waiting!
I am worried about my sister and her husband because they bought a home before they sold their old home. Now they have been trying to sell this house for two months and are stuck with two mortgage payments. They have some equity but if they don’t get realistic it is going to cost them in the long run. I don’t understand why people hold out waiting for the cows to come home. They say their house is worth $450,000. But I say it is only worth what someone is willing to pay for it.
“But I say it is only worth what someone is willing to pay for it.”
*******
Exactly.
What they think it’s “worth” doesn’t matter.
When I see listings like this one, 700sqft for $370K, I realize that condos are so unbelievably, absurdly overpriced that it will take years for the asking prices to come down to reasonable levels. Over $500/sqft is midtown manhattan level expensive - nobody in their right mind would blow that much money on cheap, dinky places like this.
With one year of condo fees paid being a $4k value, that’s a $370k mortgage PLUS at least $333.33/mo in condo fees (will go up as energy costs go up).
Ballston’s a handy place to live if you work in DC and NoVa, but not THAT handy for an apartment you can’t really even share with a roommate.
For that kind of money, I expect culture and nightlife, GOOD nightlife, within a couple of blocks. That ain’t Ballston, unless you count the very good Pakistani restaurant there as ‘nightlife.’
Yeah, I don’t think the WashTimes is the ‘elite’ paper. Politically, it leans Republican/conservative, but the Post is still the ‘paper of record’ around here and the one that most of the elites (who tend to be Democrats around here) and decisionmakers actually pay attention to. In terms of RE, the WashTimes is largely a nonentity, since it has very few RE classified listings compared to the Post.
By the way, sure enough, once I called out the Examiner on running RE fluff pieces, they ran a story yesterday on the bubble bursting. I tend to read the Examiner most mornings on the Metro because its free. And I get exactly what I paid for it.