‘Soft Correction’ Underway In San Diego
The North County has this report on San Diego’s housing bubble. “In one of the strongest signs yet that the housing market is cooling, San Diego County’s inventory of unsold existing homes is fast approaching 16,000, twice the total one year ago and five times the number in March 2004, a local real estate agent said Tuesday.”
“Dennis Smith in Carlsbad, said the number of unsold single-family houses and condominiums on the market reached 15,842 late Tuesday afternoon. Smith said that figure compared with an inventory of 8,449 on March 8, 2005, and 3,020 on March 15, 2004.”
“‘We’ve gone up by 400 properties in the last five days,’ he said. ‘That’s 80 properties a day.’ At the same time, sales are declining sharply.”
“The inventory buildup comes on the heels of reports that countywide sales for January fell below 2,000 for the first time in years. The total of 1,876 sales for that month was down sharply from 2,297 in January 2005 and 2,599 in January 2004, according to the real estate listing service Sandicor.com. In January of each of the three previous years, sales totals exceeded 2,300.”
“In North County, sales of existing homes also fell sharply early this year, as the January total of 533 sales was 27 percent off the 2005 pace of 732, Cal State San Marcos economics professor Robert Brown reported last month.”
“‘We are just experiencing a soft correction,’ said Nicole McAllister, for the University of Southern California’s Lusk Center for Real Estate, noting she does not consider the buildup to be alarming. ‘I don’t think (the market) is headed for any catastrophic burst,’ McAllister said. ‘We’re going to gradually see sellers adjust and soften their prices a bit. I don’t think it’s going to turn around and tomorrow everybody is going to get all these great deals.’”
“‘This is still just the beginning of a cooling trend in real estate,’ Christopher Thornberg, senior economist with UCLA said. On the other hand, he said, it remains to be seen if prices will fall at some point or flatten out for several years. Thornberg is one who subscribes to the theory that Southern California is in a ‘housing bubble,’ a term used to describe a market where home prices inflate beyond what incomes can sustain.”
“Given today’s low interest rates, Thornberg suggests a healthy ratio of housing prices to income levels is 8- or 9-to-1. ‘”Right now we are at 12-to-1, and counting,’ he said. Thornberg suggests homes are overvalued by 25 percent to 30 percent.”
“For his part, Smith said the buildup is ‘absolutely going to keep a cap on prices. I don’t expect the bubble to burst, but the air has been let out of the bubble.’ For now, prices are holding steady, Smith said, noting that preliminary reports suggest prices were about the same in February as they were in January.”
“He said Oceanside’s Quail Ridge is illustrative of an emerging trend. There, one of his clients who is trying to sell a two-bedroom, two-bath, 1,152-square-foot condo is offering it for a range, between $294,000 and $324,000, rather than a fixed price. And Smith said the owner is offering to pay the first six months of principal and interest, roughly $11,000, to any buyer willing to pay in the high end of that range.”
I would not want to be part of this so called soft landing in san diego! This is one of the most overpriced areas in the state. I think there are going to be a lot of people in trouble over there. They better toss all the viagra away and stock up on paxil
Actually, The Economist magazine has long identified San Diego as one of the most overpriced locales in the world…
All right, we just went from “Soft Landing” to “Soft Corrrection.” Next stop “The Mother of All Corrections.”
Try $194K by the same time next year…
“He said Oceanside’s Quail Ridge is illustrative of an emerging trend. There, one of his clients who is trying to sell a two-bedroom, two-bath, 1,152-square-foot condo is offering it for a range, between $294,000 and $324,000, rather than a fixed price. And Smith said the owner is offering to pay the first six months of principal and interest, roughly $11,000, to any buyer willing to pay in the high end of that range.”
Could somebody please explain to me how this “range” works? Why would anybody offer anything more than $294,000? Why wouldn’t the owner just set the asking price at $294,000?
It’s something the idiot re agents developed during DIFFERENT times. No different than their sellers, these boobs are going to have to seriously adjust their tactics in order to sell a house.
Sounds like the wacko “Round Robin Auction” we heard about earlier. All these are PT Barum-style RE shenanigans to get those last few suckers to part with their cash.
The reason for offering a range price is so the seller can give a kick-back to the buyer . Its a way of extending credit because the lender will probably lend on the higher price and the buyer is getting a kickback . Back in the old days when I did lending , this was a major no no unless you were putting a major downpayment down also as a buyer . The Seller is saying your real price is the lower price but I will give you a kick back if you go for the higher price and the lender will finance it ……
“Could somebody please explain to me how this “range” works?”
Step 1: Realize you just way overpaid for your condo.
Step 2: Open door to range.
Step 3: Turn on gas.
Step 4: Insert head into range.
Step 5: Wait for the sweet release of death.
Oh, not that kind of range? Woops sorry!
I think the price range is something used to confuse the unknowledeable buyer. It makes them feel as they are getting a deal.
Yeah, that makes a lot of sense from a marketing standpoint.
you forgot to ad, “while smoking a cigarette”
It’s a cute little guessing game that allows the seller’s property to show up in searches looking for a lower price point than the seller really wants, BUT the buyer is also shooting for that special (and now highly elusive) someone who still might want to throw in $30K over his silly high end price to clinch the deal. The actual current value of the home may or may not fall within the listed range and YOU get to guess. You can thank Prudential for trademarking this lame practice. Their ranged price listings will end with xxx,xxx,876.
Goofed. I meant
“BUT our SELLER is also shooting for that special (and now highly elusive) someone… not buyer.
Psst, Ben.
When are we going to be able to edit posts?
I think youre assuming this range pricing does work, and I dont believe it does. You always end up selling at the bottom of the range - at best. Feel free to chime in if anyone has other evidence, but I can say in my case I went with a spoken value range here in SD and sold at the bottom of that.
It is somthing that agents invented as a new marketing tool.
you see, the market started to slow down and selling seminars (for real estate professionals-term used lightly) needed something new. The simply came up with this so-called price range-what it means-I have been in the business 18 years and i still do not know.
I still make offers lower than the first price.
gee, I’ll go for the high range and feed the squirrels too
“Thornberg suggests a healthy ratio of housing prices to income levels is 8- or 9-to-1″
What does history consider to be a helathy ratio?
It is higher for CA than most other places — roughly on the range from 6-9 over the long haul (a paper by Case and Shiller documents this). So Thornbergs “healthy ratio” values do not seem wildly out of line. And his statement about overvaluation considering current interest levels is reasonable. The big question is whether current low interest rates can last forever…
I believe he means 6-9 X PER CAPITA income, which equates to about 3-4 X family income.
A typical existing home costs 3.5 times a median family income, compared with a longstanding 2.7 ratio, according to Goldman Sachs.
Typical for SD? The average for the whole country is too low to characterize SD’s experience.
The GS number is the nationwide average, but even with the traditional CA ratio at 6:1 we now have SD at 12:1. I smell a 50% correction a’cummin…
Yes!
I have always thought a 3:1 ratio was ideal, at least as far as lending standards go. If you make a $100K you can afford a $300K house. This probably assumes a 30 year fixed and 20% down. I bet if you crunched the numbers with “normal rates” it works out pretty well. 12:1 is totally out of wack, that is $100K affording a $1,200,000 house. Affordabilty is totally screwy in many areas.
Los Angeles is presently at about 10x HOUSEHOLD income. Highest ever. Proudly- the worst affordability in the nation according to the Wells Fargo Housing Opportunity Index.
The per capita income in LA is just over $20k according to the 2000 census. That would put the median price at about 28x per capita income. I can’t imagine Thornberg could mean per capita. Scary figures though, huh?
It may be soft now, but the correction will get hard within a year or so. This does not necessarily mean fast, slow can be even more painful. I still maintain a 50% nominal drop in prices is not out of the question and likely in SD.
By the way, where did they get this 8 or 9 to 1 ratio? Historically, a home you can afford should be no more than 3 times your gross income. Is this a net income figure? Please enlighten me on this.
The ratio actually is higher for CA historically than most other places. This is because it really is nicer to live here than, say, Tulsa. There are two main effects of this:
1) Labor supply — more workers depress wages relative to what the same occupation might pay in a place which is less attractive to live in (e.g., St. Louis, MO).
2) Housing demand — more people looking for a place to live in SD versus STL translates into higher demand for housing — a premium for living in coastal CA.
Consequently, the ratio of home prices to incomes is historically above 3 for SD and other desirable places to live. If you want to buy in SD, but are only willing to do so at a ratio of 3, then you will truly be priced out forever.
He’s talking per person, not per family. You are enlightened.
Soft Landing: v. the end result of taking a 2×4 to the kneecaps.
Hard Landing: v. the end result of taking a 2×4 to the back of the head.
Price Range: n. the difference between what we want and what we hope you’ll offer.
Inventory: contraction. “Realtors -invent a story- to explain rising supply.
Overvalued: see underwater.
Good stuff
“Given today’s low interest rates, Thornberg suggests a healthy ratio of housing prices to income levels is 8- or 9-to-1. ‘”Right now we are at 12-to-1, and counting,’ he said. Thornberg suggests homes are overvalued by 25 percent to 30 percent.”
That is a big given. Thorberg speaks as though today’s interest rates are part of normal market conditions. If you look at the past 46 years worth of interest rate data, you will soon discover that the last time interest rates were around their current levels was back in the 1960s, when we were still on the Bretton Woods system of fixed exchange rates, and when the USA enjoyed uncontested economic superpower status. But perhaps Thornberg believes that interest rates have reached a permanently low plateau
“Given today’s low interest rates, Thornberg suggests a healthy ratio of housing prices to income levels is 8- or 9-to-1″
It is a sign that something is terribly wrong that anyone can think that interest rates have anything to do with the value of a home. I doubt if at any other time anyone would have thought of suggesting such a thing. Why should a person think that it is OK to pay $500K when the interest rates are 5% for a house that will only be worth $300 when the interest rates are 7% just because it comes to the same monthly payment? Then if interest rates go up to 7% they will have to bring $200K to the table if they need to sell their house!! Of course I didn’t do the exact math on this, but you get the idea.
Intrest rates and home prices have always been hand-in-hand. It might not be right…but it has always been like this.
Not so. Home prices rose during the 70’s-early 80’s inflation with sky high rates. Prices fell in many places in the early 90’s as rates were dropping like a rock. Rates and prices have not historically always moved together.
Prices are set at the intersection of supply and demand. The greatest limiting factor on demand for real estate is purchasing power. Easy credit and low interest rates increase purchasing power, and therefore increase demand. Like it or not, if a prospective buyer is able to pay $500,000 for a house that he wants, that’s what the house is “worth.”
Things get messy, I’ll grant, when people forget that interest rates and credit standards fluctuate — but if people consistently thought things through, I would never have worked in either of my jobs (lifeguard and litigator).
“‘We are just experiencing a soft correction,’ said Nicole McAllister, for the University of Southern California’s Lusk Center for Real Estate, noting she does not consider the buildup to be alarming. ‘I don’t think (the market) is headed for any catastrophic burst,’ McAllister said. ‘We’re going to gradually see sellers adjust and soften their prices a bit. I don’t think it’s going to turn around and tomorrow everybody is going to get all these great deals.’”
I, I, I, I…I I I am too dumbfounded by this statement to write anything intelligent. I’ll have to try to comment on some other aspect of this article…
SB BB
note to self - don’t piss away $50k and send my kids to USC.
As often noted on this blog: Follow the money. Who
are the major donors to the USC Lusk Center?
I am prepared not to be shocked.
Lusk is a major developer/builder in San Diego. Possibly could be a different “Lusk”, but I doubt it.
In other words Nicole is saying “It’s just a mere flesh wound”
“soft” correction? maybe that’s where they put a towel around the baseball bat.
Cereal,
“Soft” correction may also mean ADMINISTRATION of CARBON MONOXIDE… they don’t seem the least bit “aware” that anything is happening. It’s just warm + fuzzy… “just mild adjustments”
“Given today’s low interest rates, Thornberg suggests a healthy ratio of housing prices to income levels is 8- or 9-to-1. ‘”Right now we are at 12-to-1, and counting,’ he said. Thornberg suggests homes are overvalued by 25 percent to 30 percent.”
IF you eliminated goofy finance packages for mortgages these days (which, by the way- seems to be the ONLY way average, John + Jane Doe can purchase their first house in San Diego…
The “over value” may be more like 50%. I don’t know what the median price of a home in SD is- maybe $800k?? That’s a lot of bank required on a standard, professional, 2 Doe income!
I don’t know the current median prices, but from September 2005 the median price was: $616.870. (From Median House Price in SoCal at All Time High…)
OT, but Fed’s Poole just gave a speech on housing
http://www.stlouisfed.org/news/speeches/2006/03_08_06.htm
Pretty dull stuff just like you’d expect from the Fed — no national bubble, some places overvalued, housing will level off at a high level (you know, the whole “permanently high plateau” stuff). But what I love is a headline that just crossed on the wires saying Poole (in Q&A) thinks lenders “do a pretty good job” of judging mortgages. My response:
HAHAHAHAHAHAHA
They have lent money to anyone who can fog a mirror — and sometimes, even people who can’t, if that story several months ago about a dead person getting a mortgage is to be believed. They haven’t just cut standards. They’ve completely abandoned them.
Pretty good job. That’s rich.
Ever wonder what the inventory numbers will look like around the November election season?
PHX>50K inventory
“In one of the strongest signs yet that the housing market is cooling, San Diego County’s inventory of unsold existing homes is fast approaching 16,000, twice the total one year ago and five times the number in March 2004, a local real estate agent said Tuesday.”
ziprealty inventory = 17,577 — fast leaving 16,000 seems more apt! (And then there are lots of FSBOs out on Craig’s list, and new homes under construction whose orders will soon be cancelled, etc.)
Ouch– Those cancellation hurt!
CTX, down >2% thus far today…
CTX downgraded yesterday by S&P to “hold” and today by Susquehanna Financial to “Neutral”.
TOL, KBH down as well.
Zip realty also counts Back-up offers-the stats that agents use do not
“We are just experiencing a soft correction,” said Nicole McAllister, executive director of development for the University of Southern California’s Lusk Center for Real Estate, noting she does not consider the buildup to be alarming.
“I don’t think (the market) is headed for any catastrophic burst,” McAllister said. “We’re going to gradually see sellers adjust and soften their prices a bit. I don’t think it’s going to turn around and tomorrow everybody is going to get all these great deals.”
_____________________________
God forbid buyers should get “all these great deals.”
BTW, inventory is over 16,000, according to Bob Casagrand at RealtyTimes.com (too lazy to link). And although we are coming off of historic lows (around 3,000 in March 2004), we are fast approaching — and much closer to — historic highs (around 19,000 in 1996, I believe).
GS, I’m not sure where you got such high price:income ratios, but I can assure you they’re much too high. You will be able to buy a house here in SD for 4X income (or better) when the dust settles, I’ll bet you a beer on that! FWIW, I bought a home here for $118,000 in 1998. You’ll see similar prices again. Just have patience to wait out the cycle.
Spaulding Smails: Doody on the housing bubble!
LOL!
Thanks for the “Whatever Happened To?” John Barmon. Too bad he wasn’t he interviewed along with Harold Ramus, et al for the Caddyshack DVD.
snickers?
Tootsie Roll, as I recall
No, Baby Ruth!
No big deal!
Bob Casagrand
February 2006:
San Diego Housing market The story so far in 2006, Inventory increases and Demand declines. Closed sales finished the month at 1,831 versus the 2,400 I expected. This is a decrease of 25% from the 2,486 from last February. This is caused partly by the short month, many escrows did not close in 28 days. However, if I combine the 600 January pending sales that did not close in February and add them to the February pending that will total 3,300 sales for March which will be a 20% decline from March 05.’
‘January and February combined sales of 3,794 is down from the 5,018 sales in 2005 by 24%. This would seem to indicate a serious decline in demand in 2006, if the trend continues. The days on market for February averaged 70 days, up 21% from the 58 days last February.’
Inventory continues to grow while demand continues to drop. As of this writing, March 7, the single family housing inventory stands at 16,912, or 6 months supply based on February’s pending sales. Since the first of January inventory has increased by over 3,500 homes or 26% while demand is down by 24%. While the average price in February was $623,000, up 7% from February 2005, the supply/demand situation requires us to look inside the numbers to find out what is going on. The sales mix in 2006 has 9% fewer homes under $400,000 and 20% more homes over $900,000 versus 2005. This skews the average upwards without indicating that the price of a home has actually increased.’
This is an illision of increasing value that will prolong seller’s preceived right to inflated values. An interesting correlary will be effect of a sales drop on upper-end homes. When this finally happens, the apparent price drop will be substantial and fast.
This is a decrease of 25% from the 2,486 from last February. This is caused partly by the short month, many escrows did not close in 28 days
_____________________________________
Is this the first year we had 28 days in February. Lets see 30 days has September, April, June and November; all the rest have 31 except February which has 28. Nope! Next excuse!
Ha HA HA. Dammit, you never know when you’ll get hit with a 28 day month to screw up your y-o-y comparisons.
T1-”Soft landing”
T2-”Soft correction”
T3-”Soft crash”
Soft Annihilation
Soft Catastrophe
etc.
Don’t forget “soft armageddon”
To give an example of overvaluation based on my own purchase in 1998 (for ease of calculation, I’m using 100% financing (no down) and rounding:
Bought 1998: $118,000
Loan: FRM @ 7%
Monthly pmt (no tax or ins): $786
Comps sold 2005: $470,000 (conservative)
I determined what should be a current price based on non-bubble conditions. Affordability by actual price of the home, and affordability by monthly payment. I’m assuming same DTI ratios over time. Therefore, if one gets a 10% raise per year, the monthly payment goes up 10%.
Scenario #1: Wages are stagnant. Interest rate would be the only delta. To maintain the same monthly payment of $786, going from 7% to 5.5% would mean the house should have appreciated to $139,000. If it reverted to this, that would imply a 70% drop from peak.
Scenario #2: If wages went up 10% per year from 1998 to 2005, and monthly P&I went up 10% each year, we would get a monthly pmt of $1,529. To get that at 5.5%, price would be $270,000. That would be a 43% drop from peak.
Scenario #3: House was undervalued in 1998. Add 25% right up front. After adding 25%, house appreciates 10% PER YEAR until 2005. This would be exceptional appreciation. Price would be $287,436. That would imply a 39% drop from peak.
As you can tell, the #2 and #3 scenarios are VERY, VERY BULLISH. I think people really need to run these numbers for their own homes (or homes you’ve been watching over the years) to get a grasp of how bad things are.
Hope that explains my doom-and-gloom beliefs to those who think this will be a “soft landing”.
Ouch. You should post these numbers over on CL.
Now, that would be mean, Lou!
If you’re feeling a bit bored, feel free to copy #s over there (or anywhere, for that matter).
Here’s my scenaria. Keep in mind that DC was supposedly undervalued in 2000 and correctly valued in 2002:
2000 - $180k (brand new construction)
2002 - $240k
2005 - $460k
Based on the 2002 data, and the historic increase of 5% a year for this area, the same place is correctly worth around $300k today.
Builders in this division are starting to undercut the owners of older units (townhouses in this case), with prices (minus discounts) starting in the high $300s.
After all, if they could make a profit by selling at $180k 6 years ago (land bought at the same time), if things aren’t moving, they can reduce the prices of new construction quite a bit and still make a profit. I fell sorry for those that bought in the last 2 years, but caveat emptor.
BTW, above numbers do not take recession/depression into consideration. That would make it much, much worse.
Ca Renter: This is excellent! You asked where we were in Oceanside–we were close to College and Chroma. We’re currently overseas, so 9 hours ahead of you, which is why I didn’t see your post until much later. Thought I’d respond now. I always enjoy your posts–I feel like neighbors!
Thanks, Pamela! You’re military, if I remember correctly? Hope you enjoy your overseas tour! I’d be happy to keep you informed about the old ‘hood. Take care!
What I don’t get is how all this talk oif “soft landings” or “soft corrections” is supposed to make them feel warm and fuzzy. Anyone who gets what has been going on realizes that even if we were to have a soft landing, even if it were to just plateau, we’re hosed!! This fools game we’ve been playing for the last 5 years depends upon constant appreciation, and lots of it! Mortgage-equity-withdrawl has been the economy, period! If we flatline, then that drys up the equity and the recession (possible depression) we’ve been postponing is finally upon us. Flat home prices = end of consumption, loss of jobs, foreclosures, ect.
In order for this stupid charade to continue there must be constant appreciation. All pyramid schemes eventually tople, no exceptions. Some last longer than others, and as far as that goes, this one has been pretty impressive.
I totally agree with, but I have accused of being doom and gloom.What we dont realize is that the foreign central banks have been bailing out fannie Mae and Freddie Mac, if they decide to diversify (i.e. no longer pumping liquidity into the US housing market) America is screwed… and they are getting tired .
Accroyer,
Absolutely! Asian economies are financing our currency bubble. They are caught between a rock and hard place because they need to prop up our economy in order to sell their exports.
Their domestic economies simply cannot consume all they produce. In order to avoid excess capacity, they must export. In order to export, they must prop up the dollar. In order to prop up the dollar, they must lend our exported dollars back to us.
If they decide to diversity into euros, they will pop our bubble… and theirs as well. Yes, they are tired of it, but they have nowhere to go.
However, the excessive amount of dollars will ultimately cause its value to fall. It’s supply and demand (oh sorry, I meant “demand and supply”). When that happens, the goose that laid the golden eggs will be dead.
But don’t worry, we can borrow our way out of it.
Soft correction, my @ss. this is gonna get ugly. Actually it is already. I’ve been been watching the 92123 zipcode. I have a very decent amount for down and would like to buy there when prices are a fair value.
Anyway, asking prices are already down 80k to OVER a 100k from what homes were selling for last year in that hood. When I checked the comps I was surprised to see that larger homes were going for much less per sq ft (under 300 sq ft) and smaller homes were going for much more per sq ft ( fom 400 to 450 per sq ft). I checked quite a few homes and saw this pretty consistantly.
Check this totally screwed seller, MLS #: 062007897 , bought for 555,000 on April 11, 05
ZipRealty Price Track:
Price Reduced: 02/20/06 — $535,000 to $499,000
Price Reduced: 03/03/06 — $499,000 to $475,000
Asking price down 80k with no takers…………………
this is gonna get ugly
One thing is for certain, that property you referenced already is UGLY.
You’re so mean, heheheh. It’s not that bad but a half million dollar property it’s NOT. I’ve seen waaaay worse. People weren’t even cleaning up the trash, hauling off the junk or painting. Basically doing nothing and getting top dollar or close to it for dumps. And some of these dumps were in the GHETTO.
92123 is in Kearney Mesa area (I used to live on Spectrum in the Avion Apt complex). Are these existing homes that you’re seeing a price reduction in? There were new townhomes built there last year that we like but they were WAY overpriced at $650K.
92123 is Mission Village and Serra Mesa. Yes, those were existing homes I was looking at. Condos don’t much interest me. I’d like a nice yard. I have a big dog, various other critters and a very large pot ghetto (by this I mean lots of tropical plants in pots) that need a home. Some of the condos is that area are nice but some are really butt ugly and they are all waaay overpriced. Ahh but what isn’t way overpriced here…………..
Larger homes usually cost less per square foot. As long as the quality is similar, this is expected. They both have the same land prices…just the improvements (buildings) should cost more.
I have a freind who’s family beach house got appraized at 1.5 millon dollar “houses” in Ca where the land is worth 1,425,000 and the houses replacement value is only 75k (very old and small). They are going to tear it down and build a 3 story (2500sf) house on the lot and they expect the value to increase to around 1,750,000. Obviously in this case the land price is everything.
There are currently 19561 listings in San Diego County (and growing every day!)
1. North County Coastal (3000)
2. North County Inland (6278)
3. Central San Diego Coastal (1338)
4. Central San Diego (4002)
5. South Bay (2216)
6. East County (2727)
Soft this, soft that, zzzzzzzzzzzzzz…..The important thing for potential buyers to consider is this: you may make yourself a HARD TARGET for financial destruction.
Thanks for your interest in our listing and for taking the time to contact me.
Congratulations to you and all of your fellow bloggers who apparently have a tremendous amount of disposible time on your hands.
My client bought a place and was transferred one week later to San Diego by her company. I have no idea why you would wish someone you’ve never met such bad luck (i.e. taking another $72,000 haircut). I hope that you are surrounded by loving friends and family who may help you purge such a negative attitude. I also hope no one whome you’ve never met wishes such bad luck on you.
Best of luck to you in your housing search.
Gayle Damelin
al jones wrote:
CONGRATULATIONS FOR YOUR 15 MIN OF FAME ON BEN’S BUBBLE BLOG. MAY YOUR CLIENT TAKE ANOTHER $72K HAIRCUT. HERE COME BELLY-UP COURT.
$520000 - OPEN SUNDAY: Buy This Brand New Ballston Condo. W/ $72000 Of Equity!
ly to: gayledamelin@yahoo.com
Date: 2006-03-03, 8:23PM EST
THE FACTS: My client purchased this home for $591,300 in late August (http://www.arlingtonva.us/Departments/RealEstate/reassessments/scripts/Inquiry.asp?action=view&lrsn=60665) and was unexpectedly transferred to San Diego one week later. She has now decided to take an unbelievable loss on this home in order to sell it. You will not get a better deal on such a brand new, never occupied, TOP FLOOR (higher ceilings, no noise above you), 2 bedroom/2 bath condominium. If you are in the market for a 2 bedroom, 2 bath condo. on the orange line corridor, why not take a look at this? The buildings that are currently in conversion or are under construction are priced much higher. In addition this is ready for move-in so you don’t have to worry about the interest rate rising while you are waiting for your home to be delivered. Finally, you will never make another rent payment again!!!!!!
VIRTUAL TOUR: http://visualtour.com/shownp.asp?T=457241
(This virtual tour is designed for both people who are familiar with the Ballston area and those who may be moving into the area for the first time. Therefore, it starts out with approx. 10 pictures of the Ballston area before showing you the condo. Sorry if this is an inconvenience for you if you are familiar with the area.)
OPEN HOUSE: Sunday, March 5 from 1pm - 4pm Because of the wind, most of the directional signs will probably blow down. Therefore, please follow these directions: FROM WILSON BLVD. AT BALLSTON MALL - 1. Proceed down Wilson towards Clarendon. 2. When you see the Gold’s Gym on the left, please turn left onto Pollard. 3. Ballston 880 will be the building at the corner of the first intersection (Pollard and 9th Street). 4. Please park on the street and come up to unit #1025. FROM 66 EAST - 1. Exit 66 East at Glebe Road. When you exit, you will be on Fairfax Drive. 2. Remain on Fairfax Drive crossing over Glebe and proceeding to Pollard. 3. Turn right on Pollard. 4. Ballston 880 will be immediately on the right corner past the first intersection of Pollard and 9th Street. 5. Please park on the street and come up to unit #1025.
M.L.S.#: AR5530848
FEATURES OF THE HOME: BRAND NEW, NEVER OCCUPIED, PREMIUM TOP LEVEL 2 bedroom, 2 bath condominium. LARGEST home in the building. Gorgeous hardwood floors in entry foyer and living/dining area. Upgraded Berber carpet in both bedrooms. Well-equipped kitchen has granite counters and breakfast bar, maple cabinets and ceramic tile floors. The stainless steel GE Profile appliances include a refrigerator with large pull-out freezer, electric flat-top 5 burner range and dishwasher. The built-in microwave saves counter space. Both full bathrooms have maple vanities with granite tops and ceramic tile floors. The home is cable and DSL ready. There is a balcony off of the living area and contemporary track lighting in both the kitchen and dining areas. Because the home is on the top level of the building, you benefit from substantial noise reduction (by not having anyone living above you) and you have higher ceilings. A secure, underground garage parking space conveys with the home.
BUILDING FEATURES: This home is located in Ballston 880. This beautiful building sits in the perfect location but is small enough to have a neighborly feeling. It has a state-of-the-art fitness facility, outdoor pool, sundeck, patio with BBQ grills and a common area/party room with a cozy sitting area, fireplace, bar and flat-screened t.v.
AREA: Ballston is a vibrant, growing, alive area! Everywhere you look, something new is being developed. Ballston Mall is across the street from your new building. It is anchored by Hechts (a May Company Department Store) and has a new Sport and Health Club, 12 movie theaters, a comedy club, Walden Books, clothing and shoe stores and many restaurants and coffee shops (including Starbucks, Panera Bread, Macaroni Grill, Rock Bottom Brewery, Teds Montana Grill, Chicken Out, Baileys Pub, Chevys and a large food court). An Ice-skating Center is under development. The Arlington Central library is two blocks away. A Harris Teeter grocery store/pharmacy is three blocks away. In addition to the restaurants in the mall, there are lots of additional restaurants/pubs/bakeries/coffee shops in the immediate area.
TRANSPORTATION OPTIONS: You new home is 2 blocks from the Ballston Metro station and a few more blocks to the Virginia Square Metro Station. There is easy access to both I-66 and Route 50. Ronald Reagan National Airport is a 24 minute Metro ride away. The Smithsonian Museums and the US Capitol are a 20 minute Metro ride away.
ADDRESS OF PROPERTY (for Mapquest Purposes) - 880 N. Pollard Street, Unit #1025, Arlington, VA 22203. Better yet, take Metro to Ballston and walk to the property! That way, you can see first hand, how close it is!!!!!
FOR A PRIVATE SHOWING, PLEASE CONTACT: Gayle Damelin at (703) 624-7900. * Gayle Damelin is a licensed realtor affiliated with the Alexandria/Old Town office of Weichert, Realtors.
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Gayle B. Damelin, Realtor
Weichert Realtors
Alexandria Old Town
121 North Pitt Street
Alexandria, VA 22314
(703)624-7900 (cellular)
(703)549-8700 (office)
(703)684-3664 (fax)
gayledamelin@yahoo.com (email)
“Licensed in DC, MD and VA”
I MANAGED TO PISS OFF THIS REALTOR. LIFE IS TOUGH.
Gayle,
I saw your postings and concerns on Ben’s Bubble Blog. No one in Ben’s Bubble Blog is wishing anyone in particular hate or discontent. The fact of the matter is we realize the Real Estate/Mortgage/Appraisal/Banking systems are going to be in big problems when this Real Estate correction occurs. People should be buying houses/condos as HOMES that they can live in for a MINIMUM on 10 years on a fixed rate loan. If you aren’t advising people that way, you aren’t doing your job quite frankly (due dilligence). Anyone not doing that is getting suckered. We realize the average Real Estate Agent like yourself (most likely) is just trying to carry a job and make a living. We realize you probably don’t agree or know what is about to happen to the housing market. It is not a personal attack on you or your client. We all honestly think it is a VERY SAD situation and it is going to get worse. Our choice is to pull our $$ off the table and let Real Estate do what Real Estate does, remain cyclical (or any other market for that matter). We do have a vested interest to some extent to see the bubble pop because the sooner it does, the sooner we will be laughing all the way to the bank. The sooner the bubble pops, the shorter the down cycle will be and the quicker it will correct. Unfortunately we are in EXTREMELY FAR UNCHARTED WATERS in Real Estate right now. Things will not be pretty. My best and most truly honest advice to you is to sell your property, rent a really nice place by the beach (like me - $600 a month) and find a nice stable government job that will bring you through this Real Estate cycle. You will lose your Real Estate job in the next year. Get out before you are the last one. Save this email.
v/r,
Mark
I took some time to send Gayle this email. I’ll interested to hear her response….
Honest to God, I just don’t get these dolts. How in the hell can people just keep thinking things will always go up? It’s not like it hasn’t happened before, as someone else has already mentioned. I know–we lost money in the early 90’s. Was everyone born in 2002? The real estate agents are getting awfully prickly–sore losers.
Nice work Mark.
> MAY YOUR CLIENT TAKE ANOTHER $72K HAIRCUT. HERE COME BELLY-UP COURT.
>You will lose your Real Estate job in the next year.
need 2 leave ca and Markmax33, you two are just as dumb as the realtor you’re insulting. But it is entertaining to see the people on both sides of the fence let their emotions rule their minds.
“Bad Luck”? Buying an overvalued home at the peak of the biggest real estate bubble of all-time has nothing to do with luck! he-he. We have a lot more of these “bad luck” stories coming in the near future.
A good statement by an Aussie official paraphrasing: “We don’t like huge runs ups and booms in realestate because they are always followed by huge busts”.
I wonder why we have such trouble stating this as fact? When we see articles like this and then read:
“‘We are just experiencing a soft correction,’ said Nicole McAllister, for the University of Southern California’s Lusk Center for Real Estate, noting she does not consider the buildup to be alarming. ‘I don’t think (the market) is headed for any catastrophic burst,’ McAllister said. ‘We’re going to gradually see sellers adjust and soften their prices a bit.
Just like “there’s no crying in base ball”, there’s no softening of prices by “a bit” after a major boom.
Just a quick FYI- the variance in the # of homes reported for sale has to do with how you tabulate the numbers. If you look at ZIP REalty you are likely getting homes listed in the MLS (Sandicor) which includes many that are located outside of SD County in places like Riverside County, Orange County, Imperial County and even some in Mexico. This number is 16,963 as we speak. However, if you search only SD County ZIP Codes you get the real # which is currently 16,028. Hope this clears up some of the discrepancies in the #’s.
carenter - to get back to bottom, you’d take your intial price at the bottom of the last bust, in 1998, and increase by 2-5% annually for inflation, since housing keeps pace w/ inflation. Then see where you are. This method yields a 50% drop.
Historically, SD median house price/per capita income varies between 7 at the bottom and 9 at the top of the cycle. Since 1970, this is our 3rd cycle, each lasting 12 years. This top is a ratio of 12! Further to fall. See piggington.com for historical data on San Diego.
Yes, I’ve been reading Piggington’s site for over a year. I was just giving a bullish scenario to show it was not possible to have a “soft landing.” Also, we had wage inflation in previous cycles. We don’t have that now.
No matter how one looks at it, we are in for a world of hurt. This drop will be between 35% to 60% from peak (at least), IMHO.
BTW, just calculated 5% annual increases from 1998 to 2005. That would be a price of $166,038 in 2005, implying a 65% drop from 2005 peak. Yikes!
I say: “San Diego condos for everyone!”
John - why are you making comments about myself and Markmax33. We are discussing the housing bubble and I made a comment to someone that was posted on SoCal’s FB list from craiglist.org. Just my way of trying to help the bubble along. Those of us on this blog are supposed to be united against those supporting unrealistic home prices
You have to compute 5 % inflation from 1989 to now plus another 15 to 20% for wage increase in Ca. at least . That would set the bottom floor of crash I think . Also add another 25% for supply and demand factor in the Golden State , What does that come to ?
Let see….. that would be about 150% above 1989 prices could be sustained and be the floor . This is my formula and I’m sticking to it .
FOrgot to add higher building costs etc ….. So Say 180% above 1989 prices could be the floor of a crash .
Nice posts. I think what follows is called a rant?The realtor who complains that you frequent posters all have too much time on your hands doesn’t understand the lifestyle paying a reasonable amount of money for dwelling space affords one. I, for one, would rather work moderately than struggle to pay for a box with windows (house) for any amount of time.
Like most of the posters here. I think that there will be serious ramifications for the phoney escalation of housing prices. I can talk with experience about the past. In 1990 I could not buy a house with the required income qualifications. In 1992 It was easy as pie(same job same income). In 1n 1995 it was a total buyer’s market. The houses I bought in those years were each sold to me at a price reduced more than 40% of what the previous owners had paid. One I purchase from HUD and one from Bank of America. Either could rent for 40% more than PITI after some initial clean up and repair work. There is no rocket science to Real Estate. There are buyer’s markets and seller’s markets. There will be another buyer’s market and everyone in the world will know when that is. Believe it or not, we will read about it in the Union Tribune! Beware though, real estate agents are already using the term “buyer’s market” to describe the slow down. That is B.S.
As a would be first time buyer, purchasing in a real buyer’s market means your life will get easier and you will likely be relatively wealthy, compared to renters, shortly after buying into the market. That is extremely not the case now.
I am afraid that the people who used the equity from their earlier real estate aquisitions to “live rich” or those who traded up are going to get clobbered. A lot of the fancy stuff they bought will be at garage sells and in thrifties at great prices real soon. Trading up is just going to result in losing the equity while living in a bigger house for thousand and thousands of people. I am happy for the people who have choosen to trade out of the market in the last couple of years… especially the older ones. It seems like a good idea to do this still. The real estate agent was curious as to why anyone would be excited about the bubble bursting since it would hurt people? There is definately going to be a sad and even tragic side to the impending housing price slide.There will be divorices, financial ruin and maybe even suicide increases. Crime will go up and neighborhoods,especially condo areas, will start to look uncared for. On the other side, I hope the correction will allow fiscally responsible people to have the same opportunities that I described having. I hope that individuals and families who choose not to gamble the market on stated incomes will be rewarded for their reasonableness. I hope that those who secured their futures with equity gains will live to enjoy it.
I am curious as to why anyone would encourage another human being to buy a house right now in San Diego? I have had a license more that 8 years and I would discourage anyone from buying a single family home now. I have done so for the last few years. A real estate agent should be an advocate for the client. I have only sold one home to a buyer recently. I told the people I thought it was terrible idea. I told them again and again. They are very impulsive couple and would have bought no matter what so I “helped them”. I will probably help them sell it free of charge in the near future, when they are upside down and tired of paying almost three times what the neighbor pays for rent. I advised only one of them to go on the mortgage so that the other would have clean credit when the house gets taken back by the bank and it becomes a buyer’s market. Maybe they will be able to buy it back at a good price!
I have no sympathy for greedy lenders and am disgusted that we are all going to pay dearly for the reckless lending thats been going on for years. I wished Mortgage brokers, Bankers and Real Estate agents had to repay this coming national financial burden based on how many of their clients default.