“Speculative Homes Are Sitting” In Maryland
The Examiner reports from Maryland. “In 2006, the real estate market in the Baltimore region took a tumble. Local real estate experts believe that the market’s success in 2004 and 2005 spoiled many property sellers, who had a hard time adjusting to more pedestrian sales in 2006. Deborah Ford, a professor of finance at the University of Baltimore, sees a reason for the decline and a need for sellers to adapt.”
“‘The demand is not there, and people aren’t buying anymore because they’re scared they would be buying at top price,’ Ford said. ‘The only way sellers can sell property now is to lower their prices.’”
“Recent data from Metropolitan Regional Information Systems Inc. shows just how much the market has come down. Total sold-dollar volume dropped from around $13.01 billion in 2005 to $11.79 in 2006, a decline of about $1.22 billion for Baltimore City and Anne Arundel, Baltimore, Carroll, Harford and Howard counties.”
“The biggest drop was in Anne Arundel, where there was a 12 percent, or nearly $450 million, dip in sales for 2006.”
“Thomas Hough, president of the Anne Arundel County Association of Realtors, sees things a bit differently. ‘Last year was probably our third best year ever, with 2004 and 2005 being No. 1 and No. 2,’ Hough said.”
The Capital in Maryland. “Although county home sales fell 20 percent last year from 2005 and a glut of unsold inventory has affected housing starts nationwide, home builders like Winchester Homes in Edgewater are still confident about Anne Arundel’s luxury-home market.”
“‘They can afford to buy houses like that because they are shrewd economic people,’ said Charlie Buckley, a Realtor in Anne Arundel County.”
“The opportunity for home builders to buy land for single detached waterfront homes has become increasing rare, said John Kortecamp, executive VP of the Home Builders Association of Maryland. ‘They’re bulletproof,’ Mr. Kortecamp said. ‘You’ve got a commodity that literally the market cannot get enough of.’”
“Mr. Buckley said home prices for waterfront homes in Anne Arundel County dropped 10 percent last year from 2005, giving buyers an extra incentive to look for a bargain this year.”
“Despite headlines about the real estate market that have given even the richest buyers pause, Larry Burrows, president of Winchester Homes, said he’s confident about luxury buyers here. His company is offering closing cost assistance for buyers.”
“‘They have been selling,’ he said of the homes in the Homeport community. ‘There’s no question that the market for the last year has been adjusting.’”
The Gazette. “This spring, eager Maryland homebuyers will ‘jump off the sidelines,’ to make purchases, says one housing expert. But they might not find the surplus of new, single-family houses on the market they expect.”
“As builders continue to throw attractive incentives to prospective buyers this winter via the media, such as free Audis, boats, decks, and irresistible home upgrades, the ‘public is assuming there is a great inventory of unsold new homes out there,’ said housing analyst Kenneth Wenhold.”
“Wrong, Wenhold said. Builders are just trying ‘to cut each others’ throats’ to lure buyers with incentives, said Wenhold, regional director of Metrostudy. The incentive trend began early last year as home sales slumped.”
“The good news for builders, he said, is that ‘we are starting to see traffic pick up. ‘They are not discounting prices, though, because there is still weakness in the market,’ Wenhold said.”
“Gopal Ahluwalia, staff VP for research at the National Association of Home Builders’ Economics Group, foresees stability.’I think that in the spring, things will have leveled out when the inventory has gone down’ nationally, Ahluwalia said.”
“But maybe not in Maryland, said Kathleen Maloney, executive VP for the Maryland State Builders Association. ‘We are hoping by the spring some of our builders will have been making corrections, and amending start dates to get rid of inventory,’ Maloney said.”
“Judging by how counties are ‘pulling’ residential building permits, she said, there should be an upswing in March.”
“‘What we have been seeing in the market is that speculative homes are sitting,’ Maloney said. ‘You are seeing builders offering closing cost incentives, waiving origination fees and administrative costs, plus free upgrades on carpets and kitchens, landscaping and fencing, which makes it a great for buyers. One condo builder in Ocean City is giving buyers a boat.’”
The Baltimore housing blogger posted this in the comments today:
‘There is no way the bank is going to throw David Esteppe out of his home. He’s going to leave first. And, he says, he’s taking the barely used, $1,549 stainless-steel range with him. And the refrigerator. And the rest of the appliances. ‘I have all the receipts for everything I purchased,’ Esteppe says on a sunny day in early January. ‘So those appliances are going, those cabinets.’
‘Small glitches in this otherwise beautifully rehabbed two-story rowhouse a block from the Creative Alliance at the Patterson have kept it from selling for the past eight months, he says. That and the asking price, which started at $385,000 and dropped, twice, to $325,000.’
‘I need at least $410,000 to pay off the note,’ Esteppe says. (The lenders took the house back in the first week of February.)’
That would be me. I implore everyone to read that piece, and imagine it occurring countless times all over the country. It is an excellent investigational article, and the mortgage broker in question is a real schlub. Note the comments from some of his “clients” at the bottom of the page.
On a separate note, kind of a shocker from the Examiner, who’s RE stories are filled with quotes from brokers and agents and portray nothing but sunshine. And it was even more surprising, considering the small bounce in sales volume the area saw last month (+3.5% or so). I don’t even bother to read their RE section anymore.
Nice article. From busboy to real estate tycoon in five short years. It sounds like Carey and his friends are flipping properties back and forth, back and forth and driving the comps up in the process. Too bad the house of cards is starting to crumble.
This is classic downturn fare. Houses stripped of every removable article. Last time in Socal, even light fixtures and faucets were removed. Houses were completely gutted when they went for foreclosure.
Chuck Ponzi
http://www.socalbubble.com
lol would be funny if he said I am taking the support beams and the brick and I am selling them too and just leave a completely gutted shell… lol and when bank comes in and they hold the auction it collapses so all they have to auction is the lot…
Funny, but true… I heard of houses being stripped of copper pipe and wiring even in Socal… that’s insane.
So, yes, in many cases foreclosures sales are a real crapshoot. Due to the fact that you need to pay in cash at the courthouse, and the nondisclosure of problems, at the apex of the downturn, you can expect to see houses going for 30 to 40 cents on the dollar. Right now there is too much money and they are still going for 75-80 cents.
Patience is a virtue, those with a lot of cash and patience will be handsomely rewarded in 2009-2011 in Socal or thereabouts.
Chuck Ponzi
http://www.socalbubble.com
My understanding is that if the lender wished they can file theft charges where “permenant fixtures” are concerned since they have become part of the house.
But, with the right tools and know-how, “permanent fixtures” aren’t so permanent.
Filing charges is an expensive and time consuming practice. Pretty soon, everyone’s attention will be to getting rid of the houses, not getting a few thousand back from a deadbeat borrower.
Look at C. Serin. What he did is criminal, but noone’s going to actually go after him. He’s not a big enough fish.
Chuck
http://www.socalbubble.com
> Look at C. Serin. What he did is criminal, but noone’s going to actually go after him. He’s not a big enough fish.
Wouldn’t his creditors go after him and urge the bankruptcy court to deny him protection? What that be too much work for them, you mean, for the actual wages they could garnish?
It’s called the “blood from a stone” principle.
Whats the point. Garnish his wages? If you had 7 year garnish put on your wages (there is a time limit) at his age would you bother to even work?
The return is no worth the invetment.
Has he ever worked?
Lol. Apparently he was a php monkey but he quit his job to become a real estate tycoon.
In Fla, personal poperty becomes part of the real estate if it is “permanently attached”. He might get away with the refrideg and stove, but the cabinets are a stretch. But now that he has announced his intention, he pasically screwed hiself.
What an a**hole.
Like stis when you’re stupid: John Wayne
If this guy doesn’t put back the cabinets and the appliances that were permenently attached before he put those improvements in ,it might be a crime or at least it could be charged against the foreclosure to fix.
I know of a foreclosure where the FB took the upgraded stairs and all the appliances . Also the lender can add up all the damage done as part of the amount that is written off ,which is taxed to the borrower . Heck renters can tear a place up also when they leave .
Just think of how many angry FB’s there are going to be ?Rather than the borrowers blaming theselves for gambling in real estate they are going to take it out on the world .
Alot of these flippers aren’t taking care of the property that live out of state either . As the months roll along the homes will go downhill and the lender will get even less for them or have repair costs . What a mess ,some of these sub-prime borrowers got in for less than it would of cost to rent a place .
I really think that from late 2003 onward there was a serious attempt from the REIC to seek out sub-prime borrowers and speculators because of the easy money low down loans .
When I purchased a fairly new (barely two year-old) post-foreclosure house near Phoenix in 2002, the original owners (or somebody) had removed the entire garage door opener unit and four ceiling fans. Surprisingly, they left some fairly nice window blinds, and an apparently unused dishwasher. The dishwasher still had the little sample packets of dish detergent that often come with a new appliance.
It is fairly obvious what is happening right now in ALL bubble markets. Sales prices are flat or down, sales volume is way down, and inventories are exploding. What the REIC is failing to acknowledge, or accept, is that a huge percentage of those buyers of the last several years, are todays sellers. And most of these properties purchased by these speculators, were at price points which end users balk at. Not only won’t we pay these prices, we aren’t even interested in the prices they paid for them to begin with. And so they go into foreclosure. The banks are going to have to eat hundreds of thousands of dollars per home. The loan amounts due on the foreclosures I am seeing in northern NV, are well above and beyond what people can afford, or want to pay. This spells very bad news for the lenders. While these drops in price and volume seem big now, they will pale in comparison to what’s on the horizon. In Reno, prices are already at late 2004, and volume is down over 30% compared to that time. I think this shows that, even though prices are way down, demand continues to deteriorate. A very ominous sign for the industry.
With the obvious deteriorating demand, what do you think will happen with all the new downtown development of new condos and the conversion of old hotels into condos? I think that there is more trouble on the horizon, and the city is turning a blind eye even though I think a lot of the blame lies squarely at their feet. I really don’t think a lot of people here are wise to what is really going on under the surface of things. This isn’t a very big city and through conversations at work, those I have with other locals, and things I have overheard it’s like there is this ripple pulsating just under the surface waiting to explode.
Oh man, don’t even get me started on the joke that is the condo conversion/construction in downtown Reno, particularly the converted casinos. While these builders tout their sales numbers, these are only deposits. I have a sneaking suspicion, that many are speculators who will walk once they see how bad the market is deteriorating. The prices are in the stratosphere, and for units which don’t even have windows that fully open, let alone balconies! And, you’re living right in the middle of the second worst transient population per capita in the country! They will undoubtedly become rental units. I cannot see any way around it. These developers are going to take a bath, they just don’t know it yet.
Could be trouble with those transients! I hear the whole Reno police force is on assignment in Miami.
I go to Reno once a year and I am always struck by the amount of homeless wandering the downtown/casino area. Why are there so many here? It gets cold in the winter.
suzanne, lmao
Pazuzu;
The casinos are warm and the buffet is only 3.95
I don’t know if the people in Maryland are dumbasses or just plain arrogant. From one article to the next…..what a freakin’ attitude.
Lol. People in MD think they do everything better when in reality they are just plain average. They probably invented the phrase “pat yourself on the back.”
huh ?
They are not discounting prices, though, because there is still weakness in the market,’ Wenhold said.”
I know. I used to think Metrostudy was alraight, but now I can see they are just like so many other ‘consulting’ firms.
Isn’t this a bald-faced lie: ““The good news for builders, he said, is that ‘we are starting to see traffic pick up.”
Didn’t they just report the traffic number index — and it was down, and everyone expected it to be up?
When I saw that quote I thought that Ben had mis-typed it. Apparently not. So I nominate this one as the blog’s Idiotic Quote of the Week.
That ball I threw up in the air will not be coming down, because it is still being affected by gravity.
That’s true - I woke up on the ceiling this morning.
Read all of Wenhold’s comments and it makes sense; he’s a complete idiot.
“I’m a home builder and, if I don’t build new houses, I don’t make any money. Sure, I know there is a glut, but what else can I do? My kids need to eat, my jet needs fuel, and those country club dues aren’t free.”
It is an easy problem to pinpoint, but not an easy problem to solve until the builders get no new loans from the banks.
I hope they build re-sales right out of the market, or themselves into bankruptcy, or both.
My belief is that mass private builder bankruptcies and shut-downs will occur in earnest pre-summer. Summer will probably be a good time to buy some cheap tools, pickups, boats, jets, fine art, country club memberships, and spoiled children.
I hope so. I’d like to pick up a welder, a tile saw, and maybe a travel trailer.
I’m going to ask my parents for a set of carpentry tools. One may well become available when their neighbor, the carpenter, goes out of business. From what we’ve seen from our side of the property line, he’s already in trouble.
And a trophy wife too, but they do come fully equipped with $100k of credit card debt.
ben is getting predictable, I like it.
bit bucket
florida
homebuilder/fed news/mortgage stocks
midwest(although today seems like maryland)
ending the day with cali and arizona.
makes it easier to remember what you read and about what region it covered.
he’s ignoring the boom markets of parts of WY and Rifle CO
and katrina subsidy land
People are actually moving to Rifle CO! OMG talk about an armpit.
Not to mention I have never seen one post about the RE boom in Nebraska, North Dakota and South Dakota.
It’s a rolling bubble. The wannabe “investors” have been buying into that “market timing” crap that the infomercial freaks preach. There is still a lot of stupid money, mostly borrowed, which is driving up prices in these places. The knockout punch is coming soon.
My uncle is in the black hills of south dakota and land has got pricey out there too.The land in the hills is a lot more expensive than flatland.I think he got 320 acres of flatland near sturgis for 500/acre a few years back.It has got more expensive since then.I am going up there next week to vist and will check back in with prices.I am going to deadwood to party with kevin costner
You just noticed Ben likes to end the day around 5-6pm PST with a west coast story that will keep the commentariate busy with 200-400 comments until the early-morning east coast story.
I think he needs to post some Europe/Asia stories in the middle of the night.
I think he has a lot of nerve attempting to sleep with a blog to run.
Now, stop that, Mugsy! You’re making me laugh loud enough spark concern among my over-indebted and HELOC-ed neighbors!
Where I live, in eastern Baltimore County, there are fields and fields of $500-$700K homes for sale that are either not started yet or are under construction that just aren’t moving, even at reduced pricing. And just because these new homes are supposedly selling doesn’t mean they actually will close, as we all know about the cancellation factor. All these new home buyers have to sell their house first, and they’re trying to get a great deal on their new home without adjusting pricing on their old house.
Existing homes are languishing on the market, and I found a seller that took out $535K IO loan of his home on 9/26/06, listed it 10/1/06 for $650K and it’s now down to $574K. This guy bought in ‘04 for $360K and could probably sell for $425K easy, but he’ll never ever get what he owes. On 10/1 he also bought a new $700K home with an 80 (IO)/20. This is happening all over my area. Baltimore might not have the condo blowup speculative aspect, but many, many people bought more than they could afford and speculated that way. That seller has over $1.2 million in loans hanging over his head and about $8000 in payments monthly. I see listings like this every day.
i live in Charles Village in Baltimore, and there is a huge block that was demolished to make condos (starting in the 400’s) and it has just been a pile of dirt for a long time. Website doesn’t have any info. I don’t see them ever being built. Plus, for that much money, I wouldn’t want to live near Hopkins students … you can live near the waterfront for that … So who knows how condos will hold up. Another group of condos just finished across the street, and they don’t look like anyone lives there …
I just moved from Charles Village. The location of the condos is great (provided you have parking), but the condos themselves? Er, I watched the construction, and it didn’t look particularly strong or stable to me. Granted, I don’t know anything about construction, but it really looked like they were using plywood for most of the walls.
I figured that they might get near the asking price (”low 300s” last time I looked); wealthy parents sending their kids to Hopkins might purchase them. They do look pretty empty though. I’d love to know how many have actually been purchased. I have been seeing older condos around campus (mostly on University Ave) for sale on Craigslist and Zip for much less.
The thing about college-town condos is they need to cash-flow.
The funny thing is, Hopkins just opened a brand new 620-room dormitory catty-corner from these new condos. It’s estimated that about 5000 students live in the Charles Village neighborhood. Assuming that most of the rooms house at least 2 students, the dorm itself just took a big chunk of likely renters out of the pool.
It will be very interesting to see what happens to rents in the spring, when the students leave.
i didn’t notice parking with the condos. The ones that are built are in the 300’s, and ones that haven’t been built yet are in the 400’s. I agree, they don’t look too great/sturdy to me …
oh, and why buy for that much (for a one bedroom condo) when rents in the neighborhood for a 2 bedroom range from $700 - $1200 a month? I have a spacious apartment with 12 foot ceilings, hardwood floors, lots of historic detail … super cheap.
The condos are way over-priced for the area. If I wanted to buy (which I don’t, at least not until 2008 at the earliest), there is a 6 br 2 ba huge rowhouse two blocks west of the condos on Guilford for $319k. Since it has been sitting there for at least 2 months now, I bet you could pick it up for $300k. In fact, when I left there were 3 houses for sale just on the 3200 block of Guilford. Hmm, buy a well-constructed brick rowhome with several bedrooms/bathrooms, or a shaky studio condo (and god only knows what the HOAs are) for the same price?
Even in Charles Village, I see empty homes for sale and/or rent all over. I just moved to a house in Ednor Gardens for $1200/month- 3 br, 1.5 ba, basement, fenced yard, little patio on the front. There are 3 vacant homes for sale in a 2 block-radius. And this is in a “stable” neighborhood in the city.
The official numbers for Baltimore city are reported to be staying fairly high, but that is not the reality I see on the ground. These articles here seem to me to be showing that Baltimore is just now getting to the tipping point. We saw similar articles coming out of CA/AZ/FL a few months back (the ones that say “there is no problem, we are still selling, there are just a few consessions being made, a few incentives being thrown in, nothing unusual…”)
I think Baltimore was always a bit behind regarding the condo-mania, and as a result didn’t overbuild as drastically as other metro areas once they saw the consequences. That’s not to say we don’t have our fair glut, but it’s less than other areas.
If you want to see a “condo glut”, come to South Florida. There are building cranes as far as the eye can see. We’ll be giving them away (literally) in the not too distant future.
giving away the cranes? or the condo’s, i’d sure like to have a crane in my PUD backyard to see what the association says
Hey don’t go knocking Hopkins students!
I must say I went back to Baltimore after many years away for an alumni event last year was surprised how much the Charles Village area had changed. Even then I don’t know about paying these sums for a Condo there. I agree with you that at these prices it just doesn’t make economic sense.
Hey, I’m one too. No worries!
well - pay that much to live near students in general
No knocking Hopkins . . .
I know a former business associate in Annapolis (Anne Arundel County, where demand is supposedly still great for luxury homes) who recently took his luxury home off the market because it hasn’t sold in over a year. Don’t know what the reduction history was, if any.
OTOH, friends recently sold a tiny A-frame overlooking the water for almost $900K after only a short time on the market. It’s definitely hit-or-miss. The article says 2006 sales volume was just 10% below 2005 numbers, so obviously a lot of homes are still selling.
As long as Annapolis and environs are flush with DOD/Contractor cash, those types of homes will probably still sell.
“…friends recently sold a tiny A-frame overlooking the water for almost $900K after only a short time on the market. It’s definitely hit-or-miss…”
But it’s mostly miss. That is a stupid price for a tiny place in that area. I’d like to see the sales details on that.
Hello from Annapolis! I live on the water. A guy on our street bought a tear-down in 2003 for $625K. He put in a pier, steps down to the pier, new siding, some interior renovations. He is on his fourth listing realtor. He started at $1.7M. Now he is down to $1.389M, about the same price it has been at for 6 months. Do you think he wants too much for it? Do you think he will ever figure out ITS THE PRICE?
By the way, the realtor listed as “Mr. Waterfront” who said the waterfront market has dropped 10% in price here from 2005 to 2006 is a guy with a good reputation. He only sells waterfronts, and I find his quote to be very believable.
Off thread a bit, but I just read an absolutely frightening stat quoted by James Grant in his testimony before the House Financial Services Committee, February 15, 2007:
“Of all the residential mortgages outstanding in the United States, 80 percent were originated after 2002. Of all the subprime mortgages outstanding, 75 percent were originated after 2003.”
http://www.lewrockwell.com/orig8/grant1.html
All I can say is WOW. And what % of those long-time home owners that refied, got themselves into ARMs becuase the payment was (temporarily) lower….
This deserves its own thread.
Some time ago, somebody posted a link to an intereactive map showing the number of cash-out neg-am refi’s over the past few years — something like 50% of parts of Cali and FL were neg-am. I looked but can’t find the link…anyone remember this?
Re: 75% of subprime after ‘03.
This gels with what a friend told me about the type of buying that was going on from ‘03-’05. It continues for what little is selling now also….
Of the all the financial news letters I have to read, his is by far the best. It costs me around $700 a year and more than pays for itself every year. Borrowing a phrase from my fashionista sister “I can’t afford not to buy it”.
Sorry I forgot to add, It’s called GRANT’S Interest Rate Observer.
> Of all the residential mortgages outstanding in the United States, 80 percent were originated after 2002.
That doesn’t surprise me at all. The interest rates went so low in 2003 that refinancing could save the mortgagee a lot of money. I rather wonder why the remaining 20% didn’t refinance - were they asleep financially, had too high prepayment penalties or too low a balance to make the hassle worthwile.
Yeah, I’d guess that the a good chunk of the 20% was those with less than 10 years left on their mortgage, they’re paying so little interest that the fees aren’t worth it.
I know someone who bought in 2001 and refinanced during that period. IIRC, a 30-yr fixed was ~7.5% in 2001, so refinancing made a lot of sense and he saved a lot of money. I bought in 2002 at 6.5%, and refinancing didn’t make any sense for me (adding in the penalties and other costs).
““Speculative Homes Are Sitting” In Maryland”
The REIC loves to try and concoct reasons why it’s a great time to buy. But this headline says it all about this market. It was entirely a speculators market. Affordability is gone. There was a story a few nights ago on the Northern NV news. The homeless problem is huge around here, and second only to the DC area. They had an online survey over the course of the one hour news program, asking “How many of you working individuals are one paycheck away from homelessness?” A shocking 76% said they were. While not a scientific survey, it’s still cause for alarm. I am starting to feel that this country is on the verge of a full blown crisis.
I live in Calvert County MD (south of Anne Arundel County). In my development we have a brand new empty house (4/2.5 3300sf) completed in Oct 06 and sold for $560,000. The story is the owners are gov’t workers who got their orders changed at the last minute so they had to put the house on the market. Well they put it up in Nov for $674,000 and have had 3 price reductions since. Its sitting at $650,000 right now. The closest comps are the other new homes on that block that top out at $650,000 (larger model, tons of upgrades) but most are around $600,000. The only thing this owner has on his side is that the builders arent doing any more sfh’s in this development so there are no spec homes to compete with. But there are other builders in the county who have spec homes available and have been slashing prices and offering incentives. Should be interesting to see how long they can pay this mortgage. The builder requires a 10% down payment to start construction so if they had walked away they would have lost $56,000. In another month or two they will probably wish they had walked away.
They are deranged if they think they can get a penny over what they paid for that. Without knowing the details, they could probably sell for 525, but a house this size and area really should be around 300-350.
And in 2 more years, it probably will be.
107% of 560,000 is… $600,000
Let me see if I understand
The Capital in Maryland. “Although county home sales fell 20 percent last year from 2005 and a glut of unsold inventory has affected housing starts nationwide, home builders like Winchester Homes in Edgewater are still confident about Anne Arundel’s luxury-home market.”
“‘They can afford to buy houses like that because they are shrewd economic people,’ said Charlie Buckley, a Realtor in Anne Arundel County.”
“The opportunity for home builders to buy land for single detached waterfront homes has become increasing rare, said John Kortecamp, executive VP of the Home Builders Association of Maryland. ‘They’re bulletproof,’ Mr. Kortecamp said. ‘You’ve got a commodity that literally the market cannot get enough of.’”
‘They’re bulletproof…but prices dropped 10%:
“Mr. Buckley said home prices for waterfront homes in Anne Arundel County dropped 10 percent last year from 2005, giving buyers an extra incentive to look for a bargain this year.”
The Rich now need a bargain?
“Despite headlines about the real estate market that have given even the richest buyers pause, Larry Burrows, president of Winchester Homes, said he’s confident about luxury buyers here. His company is offering closing cost assistance for buyers.”
…why is he offering closing costs????????
“‘They have been selling,’ he said of the homes in the Homeport community. ‘There’s no question that the market for the last year has been adjusting.’”
How has the market been adjusting? Sales are down.
These people spew B**lshit out of every orafice.
Each statement is contradicted.
Let me explain something to you. The newspaper quoted is the Annapolis Capitol, our only local newspaper. They always misquote people. It’s kind of a joke around here. I can just tell you in my neighborhood of Annapolis there are numerous homes that have been for sale for a year now. It will be interesting to see what the spring brings.
They are in desperate need of an editor
When an “expert” is incoherent or dismissive of simple, logical, questions watch out.
An “expert” I once dealt with, who WOULDN’T deign to answer what I thought was a logical question lost $120 million for the the bank where we worked within the year. Yes, the question I asked pertained precisely to the exposure he ignored and/or misunderstood.
I’ve never been “enthralled” with experts since.
Ben posted an article approximately a month ago stating that 60% of the condos on the market in Annapolis are vacant…
Left coast…
SoCal has 3rd highest housing-cost inflation
Think it’s costly to operate a home in SoCal? You’re correct. According to an annual tabulation of the housing slice of the Consumer Price Index, only people in Honolulu and Miami have recently suffered a worse cost fate among 27 major metro region than Southern Californians.
SoCal housing infaltion was up 6% in 2006, the fastest pace since 1981. The CPI trackers include everything from rent to utilities to the cost of home furnishings in their math. SoCal ranked third among 27 big markets in 2006 and second in 2005 when local housing costs rose 5.9%. For the 2004-2006 period, SoCal’s 5.3% average per year also ranked third. Here’s a look at the last three years of annual local hosuing inflation rates and a 2004-06 average:
Regional slices ‘04 ‘05 ‘06 Avg.
Honolulu 4.4% 5.6% 8.4% 6.1%
Miami 3.6% 6.3% 7.4% 5.8%
SoCal 3.9% 5.9% 6.0% 5.3%
Philadelphia 4.4% 4.0% 5.8% 4.7%
New York 4.2% 4.5% 5.1% 4.6%
“‘They can afford to buy houses like that because they are shrewd economic people,’ said Charlie Buckley, a Realtor in Anne Arundel County.”
No Charlie, they’re moron wannabes. “shrewd economic people” don’t buy way more house than they need or can afford.
The good news for builders, he said, is that ‘we are starting to see traffic pick up. ‘They are not discounting prices, though, because there is still weakness in the market,’ Wenhold said.”
What???? The market is weak so they’re not discounting prices???
Gopal Ahluwalia, staff VP for research at the National Association of Home Builders’ Economics Group, foresees stability.’I think that in the spring, things will have leveled out when the inventory has gone down’ nationally, Ahluwalia said.”
public is assuming there is a great inventory of unsold new homes out there,’ said housing analyst Kenneth Wenhold.”
Which is it, lots of unsold inventory or not.
This is the most confusing, contradictory article I have ever read.
These are all the experts. No wonder it’s so hard to get good data.
Fact is, builders ARE discounting prices! In some cases, they are discounting by 20% from last year’s levels.
Friends of mine bought up in Maryland: Hagerstown of all places (ugh, looong commute!), in a new development, where they paid over $300,000 in September.
By Thanksgiving, the builder was putting out ads saying “let’s negotiate, make an offer!” And they were serious. Then actual sale prices dipped to $265,000 level. Aiiieee!! $40k in “fantasy equity” gone for my friends, just like that.
Then in January, three more brand new houses on their street, just like the one they bought, were sold for… $235,000 to $240,000!!! Oh no! And we know of NONE that the builder has managed to sell since then! OK, maybe the builder isn’t negotiating — maybe they need to go down to $210k to move these things! :-O
Oh, the pain! And this poor family was only planning to stay there a year or two and then move on.
Oh, the pain! And this poor family was only planning to stay there a year or two and then move on.
I SO don’t understand this. I can sympathize with the clueless who who think that they can follow the traditional advice and get themselves in trouble becuse the market is currently insane. But except for the last few years, it has never made sense to buy if you weren’t going to be living there for awhile.
For them, they have only been homeowners for the last few years, so their experience is skewed badly by one of the best times for real estate specultaion in our lifetimes.
Moving every year or two is indeed costly, but the gain was so great that even bad decisions pay off, and they could move “up” in house size *and* pay off their new cars, over and over. I’m sure the RE agents were no unhappy, either.
Sure, they’d have been better off staying in one place from 1999->2005 and then selling, but they don’t sit down and do the comparison, so they don’t know that had they bought the right house at first, they’d have a low payment, lots of equity even at 30% price slumps, and not be broke and upside down like they are now. And they refuse to acknowledge that.
The sad thing is, I think they lost a heap on their last flip, and this one is looking even worse if they do decide to sell and move on anytime soon. Lessons learned during the boom are the opposite of what they need to do now, and they will (sadly) need to learn the hard way.
And yes, I did suggest that they rent, but they’d have none of that! “No equity when you rent! It’s all about the equity!” Yeah, that’s what the bank will say when it asks them to bring a check to the closing table next year: “It’s all about the equity, suckers. Bring your check for $55,342 to make up for that missing equity, please. Or no sale.”
I live just outside DC, and the only new homes within reasonable commuting distance are “attached product.” Every spare unused parking lot or old storefront is being turned into luxury lofts with Granite/Pergo. It’s mostly urban infill, which isn’t a bad thing.
There are a few older homes for sale, more attractive, but they are priced comparitively high $/sq ft and won’t sell. Lots of nasty teardowns which stick out like a sore thumb too. Fugggllly.
I know this thread is about Md., but we haven’t had many DC-area threads lately, so this will have to do.
I live in a close-in neighborhood of really old houses in Arlington, and sales have definitely decreased, though the prices don’t seem to be moving down. However, this an interesting neighborhood because of the proximity to mass transit, and it should theoretically absorb a lot of the sales that would have gone further out into the less-convenient burbs a couple of years ago.
ChrisO:
I live in a similar situation in Falls Church and lived in Vienna until December of last year.
I think part of the problem is that, atleast for the neighborhoods I lived/live in is that many of the older houses were constantly flipped in the last few years with not much updating. Don’t get me wrong, many houses were, but a lot weren’t.
Who is going to plunk down 500k plus for a three bedroom, two bath house that has 50 year old windows, kitchen, bathrooms, etc. I think in part that might explain why these areas haven’t completely absorbed all of the current sales.
I work in IT and my boss was looking out in Ashburn b/c they were offerring fabulous deals on brand new homes for what he could get in close not updated.
Anecdotal I know but I think this might be part of it.
Get this!!
A realtor told me this. They were expecting sales to pick up after the Daytona 500.
Life stink when you’e stupid, John Waynr
one sale might be made after the 500, to the winner of the 500, Harvick as he has a few more bucks than the rest of the field
I bought a place in Rockville (west/north of washington) in ‘02, and the past five years have been ridiculous. I was a little concerned at the time, but little did I know the bubble hadn’t even started yet. Anyway, with a 5.125 fixed loan, the monthly due is still less than the rental equivalency.
One day again people will realize that homes are for living in, and that they’re not “investments” but really “consumable goods”
You’ve done really well. I’m way under rental equivalency, too. Yes, homes are for living in; they’re not good investments. My primary home has more than quadrupled in price since I bought it 21 years ago. Great return, right? Noooo–it’s only ~7% compound annual return. Not that I’m complaining, since it works out to living in a nice place essentially rent-free.
But real estate is not exactly a consumable good either, since (a) it costs a hell of a lot more than a consumer non-durable, and (b) it’s durable: i.e., you don’t need to buy another one every week/month/year. The house per se is a wasting asset, but the land is not–if anything, it appreciates. So some economists would say that a home is an investment of a sort, in that you invest in it and rent it to yourself.
Yeah, I bought in ‘99 and live in College Park. I thought about cashing out in ‘05 or ‘06 but equivalent rents are higher than my PITI, and and I’ll never see a rate lower than my current 4.875%. By the time we factor in selling costs, higher rent, closing costs, and a higher interest rate, I guestimated that prices would have to come down ~40% for me to come out ahead. While I certainly thought chances were good, what I’m pretty sure of is that I can continue to afford my mortgage until 2018.
We also sold and bought in Rockville, trading up in 03. All the numbers since then have been theoretical - except what they’ve done to our assessment. We’d like to be carried feet-first out of this house - but not as a result of a tax bill-induced cardiac arrest.