“The End Of The Condo Craze” In Washington
A housing report from the Virginia Pilot. “Home building will be under continued pressure rhis year, speakers at Old Dominion University’s annual real estate forecast predicted Wednesday. Hampton Roads builders have to contend with a large inventory of existing homes still on the market, J. Van Rose Jr., president of the realty firm Rose and Womble Enterprises, said.”
“ODU’s E.V. Williams Center for Real Estate and Economic Development conducted Wednesday’s program. In its annual review-and-forecast publication, the center called attention to a sizable inventory of unsold homes in Hampton Roads. The number of active sales listings surged last year from 3,000 in January to more than 10,000 by November, said the real estate center.”
“For the 12 months through November, the number of closings on single-family detached homes in Hampton Roads fell almost 10 percent, while closings on existing condominium units fell 7 percent, the report said.”
“Home sellers will likely become more realistic about their asking prices, and builders, the research center said, ‘will probably be quicker to offer incentives that translate into increased affordability.’”
“The most significant change to the housing market in coming years, Rose said, will be the abundance of homes in the mixed-use projects planned for Hampton Roads. More than two dozen projects, with 13,075 housing units, have been approved or will be approved shortly, he said, and another five projects are in the works. ‘That’s going to change the landscape’ for housing, Rose said.”
“Demand for apartments in Hampton Roads will remain strong in part because of a wide gap between the cost of renting and the cost of buying a home, said Aubrey Lane, president of Great Atlantic Management Co. Renters.”
The Washington Times. “Last year was a gloomy one for real estate in the Washington area, and home builders didn’t fare any better than the rest. New-home sales were down 20 percent last year. In fact, it was the slowest year for builders since at least the 1980s.”
“‘If we haven’t hit bottom, we’re pretty close,’ says Victor Furnells, regional sales director for Hanley Wood Market Intelligence. ‘And I think we’re going to stay at that level for a while.’”
“In the existing home market, which saw sales drop 23 percent last year, that change in market forces caused time-on-the-market figures to go up and prices to go down. As sellers understood what was happening, they began lowering their expectations, spiffing up their homes and offering buyer incentives. New-home builders used many of the same strategies.”
“‘This is a business for home builders, so they don’t have the same emotional attachment that a homeowner has. The large, publicly traded builders have been hit. Many of them have taken huge write-downs in their land values. But after that, they are ready to move those properties at reduced prices. So they are more highly motivated than a homeowner to take that financial hit and get on with business,’ according to Clark Massie, president of TETRA Corp.”
“This connection between the sales climate and new home prices is most clearly visible in the condominium market. The region’s condo market was flying high in 2005 and slowed dramatically in 2006. After appreciating faster than other housing types, condos were suddenly out of favor.”
“Dozens of new condo projects were under way when the slowdown occurred, so builders had to act quickly. Some converted the buildings to apartments for rent. Others adjusted their pricing to suit the market forces.”
“In Montgomery County, condo sales fell 16 percent last year, and the median price per square foot went from $465 to $432, a drop of 7 percent. In Fairfax County, sales dropped 55 percent, and prices went down 6 percent.”
“Another difference between the resale market and the new-homes market is how the new sales climate affects large companies and the thousands of people who work for them.” .
“‘Many of them are training them to be more flexible with consumers, to listen more than they talk. You realize how important this is when you learn that 70 percent of the sales staff has been in this industry for less than 3 years,’ Mr. Furnells says.”
“Apparently, some home buyers are taking advantage of such inexperience. ‘We’ve heard about consumers who actually sign a contract and pay a deposit of as much as $50,000, and then use that contract to haggle with other builders,’ says Mr. Furnells. ‘They tell a builder at another development: ‘I’m willing to walk away from my deposit if you will give me a great deal.’”
“That is certainly a creative, but perhaps unethical, approach to home shopping when market dynamics are shifting around the way they are these days.”
“The end of the condo craze is leaving real estate developers looking for other options. Developers in the Washington area are dumping their proposals to build condominiums and switching to apartments as a glut of new and old condos slows sales.”
“In the latest move, a project in Takoma Park originally designed as condominiums, then canceled, is being reborn as an apartment complex.”
“Last month, Centex Homes suddenly canceled the condo project, citing unfavorable market conditions. ‘I guess the condo market got a little bit saturated,’ said Ronny Salameh, Centex Homes’ division manager for Maryland and the District. ‘Until all that inventory goes away, it really slows down the condo market. It opens up for the rental market.’”
“Condominiums still are selling in the Washington area, but they are being bought by people who plan to use them as their primary residences instead of investment properties that offer a quick buck when they are re-sold a few years later.”
“‘People are buying them for the correct reason today,’ said Grant Montgomery, VP of real estate research firm Delta Associates. ‘They’re a home first and an investment second. During the craze, I think that was inverted.’”
“In 2004, 13,557 apartments were converted to condos in the Washington area, Delta Associates reported. Last year, no apartments were switched to condos.”
“In 2005, Monument Realty planned to convert the 574-unit Park Center apartments in Alexandria into condominiums but switched back to apartments in May. Developers of the View 14 housing project being built at 14th Street and Florida Avenue Northwest originally designed as condos until the condominium market slumped. In December, Level 2 Development said the 183-unit building would be used for apartments.”
“Last year, condo resale prices fell 6.1 percent in the District, according to Delta Associates.”
DC prices off w big gov spending like a drunken sailor
the 35 recently elected are trying to spend more
Well, if they can get the troops out of Iraq it will be hundreds of billions less.
Ha! Not a chance.
Of either, or both?
Of government spending decreasing.
Maybe we could use it for butter.
Not a chance! You are dead right. How many ways can you spell F.I.A.S.C.O. The US military-industrial, these state parasites, desserve a good lesson. The insurgency in Irak seems to well financed. By who? By Iran probably. By Russia? or even by China. Maybe. Anyways looking at the US today, and looking at the numbers; horrendous budget deficits, exploding trade deficits, surreal personal debts, bankrupted and busted manufacting sector, I think we in North America will have a depression not a recession.
Close on who funds the insurgency, but no cigar. The correct answer?
Our dear allies Saudi Arabia.
Where do they get the money to fund the insurgency? Us, in exchange for their black gold.
Fat chance. Bush and the Republicans couldn’t care less about the economy. The only thing that counts is their buddies in the arms business. The USA is more and more like the ex-USSR: balooning military spending, corrupt oligarchs from Goldman Sachs and JP Morgan pulling the strings and bankrupted middle class voting for these crooks. And I don’t think that that it will under Hillary Clinton’s Dems. A real mega banana republic.
Bush will be kicked of of office if economy gets too out of hand. You can only buy guns for so long without buying any butter.
Apparently you are not familiar with the US political system, W has about 22 months left, and he isn’t (can’t) run for Prez again!
Apparently you are really not familiar wih the US political system. Congress, not the president, holds the purse strings. Congress is the one authorizing spending. Congress is not owned by Bush or by the Republicans.
flat, I’m curious, what do you do? What industry are you in that doesn’t benefit from Big Government spending?
I have to agree. Northern Virginians can get very tiresome as they bash the government , seemingly unaware it is they who have their collective lips more tightly wrapped around the federal teet than any other breed.
It is a very prosperous region and the source of that prosperity is the Capitol Dome across the Potomac, nothing more.
Correction, that should read the source of that prosperity is
the taxes from the poor working schmucks around the country.
Amen, brother… It always amazed me how much MD and VA managed to skim of the top of the FEDERAL taxes that were coming from 50 states.
Also, I love how they deny DC the taxing authority it needs so they can use their funding power to play god in DC politics … meanwhile MD and VA get to levy taxes on wages earned in the District. All gain, no pain.
As Stanley and Danko said, it’s always easier to spend other people’s money.
gps tracking to service contractors
07’s going to sck
has China shot down any more low orbiting out of service weather satellites lately?
GPS? You mean you use that gov’t issue set of satellites that was engineered on gov’t research grants and labs and utilized gov’t issued launch vehicles to put them in orbit?
Wow. That’s a lot of freeloading.
The only thing booming in the US is the arms business. That’s about it.
You all are so blinded by your ideology. It must be tough to wake up every morning with the feeling that armageddon is just around the corner.
I am glad, however, to see the negativity in some corners. That means the economy should do well at least for a while. It’s when everyone becomes a Pollyanna that you have to worry.
What a pack of BS. Bill you are full of it.
Hey Marc,
Be careful of what you wish for. The arms industry is the only thing that we can’t offshore due to trying to keep ahead of the Chinese and Russian counterparts (yeah, both are still in the mix…one supports itself and the other sells its goods.). Any good, any product that can be used in civilian life can be.
Do you have any idea how many tech ideas come from the military industrial complex (let’s start with this very internet that began as arpanet). How about the technology developed for those planes flying overhead and those GPS units that give everyone and everything their location (like those airplanes overhead). Did you know the military complex pushed the idea of the radar, transistor (for your computer that you type on), and many other leading edge technologies? Thirty or fifty years from now when robots control the vehicles we are driving in, we’ll be able to thank that wonderful “arms business.”
Yeah, my job (I’m an electrical engineer) is totally dependent on the military for their spending. Otherwise, I may be in the same boat as those Intel, Hewlett Packard, etc. engineers….seeing my job shipped off to India and the Far East.
This type of economic stimulus was tried by two well known politicians. Both were bloody dictarors. One was Adolf Hitler and the other Joseph Stalin.
IKE was right. His prophetic words about the danger of the military-industrial complex menace is true. Instead of just thinking about your little job, you should read about what happens to countries that spend too much on war. You are just proving what I was saying about the ex-URSS, but also the Roman Empire, the Greek Empire and many many examples. Eisenhower, one of the greatest politicians and general of US history, was right.
Marc,
Why do you come to my blog and rant in such an off-topic manner? The people in the DC area might want to have a discussion about their market.
Marc’s rant isn’t totally off. corporate welfare to for-profit defense contractors is one of the pillars for why the DC housing bubble is “different”.
corporate welfare to for-profit defense contractors is one of the pillars for why the DC housing bubble is “different”.
Perhaps, but any such fundamental “difference” should also be reflected in incomes and rents for the region. As far as I can tell, house prices in the DC area are as disconnected from these fundamentals as they are anywhere else.
He’s in the cheeto-eating business. Business is booming.
I thought the cheeto-eating business was related to a lot of crunches.
“We’ve heard about consumers who actually sign a contract and pay a deposit of as much as $50,000, and then use that contract to haggle with other builders,’ says Mr. Furnells. ‘They tell a builder at another development: ‘I’m willing to walk away from my deposit if you will give me a great deal.’”
Okay, that’s the single most absurd thing I’ve ever read on this blog: “Oh please, we’re just a bunch of neophytes, don’t take advantage by giving one of us a non-refundable $50k deposit.” How exactly does a $50k sunk cost INCREASE your leverage?
Tom Sawyer this guy is not.
Money laundering?
? I don’t follow.
This is a timely post for me (Virginia) as I was going over some numbers from January last night.
Culpeper County, VA, was one of the last D.C. exurbs to take on wild growth and price appreciation and it seems to be the one suffering now from overbuilding.
I noticed that Culpeper county had 640 active listings and 19 sales. http://www.mris.com/reports/stats/
Isn’t that 33 months of inventory?
What does that much inventory portend? It seems rather extreme.
I have to share a funny. Our rental house is going on the market this spring. It’s not going to be easy living through this, but the LL gave us a large discount on the rent for the coming months, and we’ll have plenty of time to pack. And observing agents and buyers will be worthwhile.
I try to get along with the agent, but her personality is abrasive. I met her two years ago and she was gushing over R. Kiyosaki. (Bleah). (This time, she was on the cell phone arguing with her cousin over his foreclosure).
I noticed she was standing with her hands on her hips with her head perched off to the side while she was chin-wagging. Then I noticed my 2-year-old son doing a perfect imitation of her. It was difficult to keep my composure.
a little RADON dust will go along way
or mold in the drywall
you could be a squatter for years………
In our zip code, in this price range (500K+) there are currently 42 months of inventory. And the agent seems like the type to price too high. I’m not exactly worried about a quick sale.
Are you suggesting he should find some of this, or plant some?
I actually wish this particular LL all the best, not that it will help. They took a job transfer and got stuck. Then the agent recommended waiting a year until “the market got better”. (Another reason I don’t get along with her — she gives bad advice).
This happened to me once. My roomates and I hated the agent so we’d do stuff like leave a pot of boiling cabbage on the stove (ah, the odors of east Poland), turn off the heat down to like 50 degrees, or move the furniture around in stupid ways. If we happened to be in the place when she was showing it, we’d say stuff like, “it’s cool if you like heavy metal, cuz the kid next door’s band totally rocks!”
This went on for like a year, and finally the agent quit. Then the landlord wised up and, after a quiet month to lull us into complacency, he held a big open house while we were out of town — sold!
the only “jobs” (taxpayer transfer payments)are at tysons/dulles corridor and DC
how many hours is that in rush from culpepper?
Over one hour. I live in PWC and it takes me 45 min to get to Alexandria and that is at 5:20 am and 1 hour to go home at 3:00 pm.
sorry I was worng for culpepper it was 1 45 to 2 hours on a good day.
Jesus. That sounds worse than LA.
I was out in Alexandria for a training class last Sept. only had to drive 4 miles and it took 30 minutes…plus, I got lost
Yeah, that sounds right… And even in 2000 I knew people were moving out from PWC to Stafford … Insane.
BTW, do you ever slug or ride OmniRide? I used to work for PRTC, just curious.
I was driving on Rt. 29 yesterday afternoon - and I noticed a couple new housing developments in Culpeper from the road — both townhouses and good sized (probably 4 br, 2.5 ba) SFRs on nice little 1/8 acre lots.
Seems crazy to move that far out to the exurbs only to buy new construction with that kind of density.
Chin-wagging. I love this blog. lol
“Gawd, how could I have been duped by my heroes so easily?”
“‘If we haven’t hit bottom, we’re pretty close,’ says Victor Furnells, regional sales director for Hanley Wood Market Intelligence. ‘And I think we’re going to stay at that level for a while.’”
Victor will eat these words, once the missing subprime bid knocks things down a few more levels…
“‘If we haven’t hit bottom, we’re pretty close,’ says Victor Furnells, regional sales director for Hanley Wood Market Intelligence”
Hey, Victor, people pay you guys big money for this kind of crap “Intelligence” If on one hand we might have hit bottom, and if on the other hand we might be close. Thats an economic forcast?
Boy, did I pick the wrong industry to make a living at. When my boss asked me for a decision on a project, and was given one shot to make more forecast, and I had to live with it. This clown gets 2 shots at a forecast, and then revises it three months later.
Every week the same clowns who were predicting explosive growth for the next 1000 years (immigrants, baby boomers, low rates don’tcha know) come out to call the bottom.
How can you possibly have a clue when the bottom will be if you completely missed the possibility of a top?
When Sam Zell buys back EOP (recently sold for $39b) for $10b then I will call a bottom.
‘I guess the condo market got a little bit saturated,’
Yes, i see, and the Elephant Man as a bit of puffiness around the eyes…………
remeber, dont invest in Real Estate, you’re better off putting your money in fake tits for a Thai stripper……….(no joke)
one thing Ben — Hampton Roads / Norfolk is about four hours away from Washington… Philadelphia & Baltimore are actually much closer..
My neighbor from Northern VA bought two rentals in Hampton Roads in 2005. I imagine speculation there has been rampant from equity-rich Northern Virginians. She gushes over how “cheap” it is there.
she’s way underwater now
wait till they dump a carrier group
Actually the Hampton Roads area is supposed to lose the “Oceania Master Jets” base due to encroachment cited in the latest BRAC rounds…
We’re supposed to lose a carier group next year to replace the one being retired this year! It was announced by the Navy, but everyone seems to have forgotten…
Ding, ding, ding!
Hampton Roads was one of the fastest appreciated markets nationwide about a year ago. I believe your neighbor is a good examplar of the reason. Well, when I started tracking Va. Beach condos is summer ‘05, there were only 186 for sale. Now there are over 900 (and inventory still increasing). Your neighbor is going to learn that it is going to get even “cheaper.”
wow - you must drive slowly! I get to VA Beach (past Norfolk) in three hours…
We sold our home in zip 20171 about this time last year in NoVA as the market was starting to slide. Good location in Fairfax Co. and I have noticed that the single family dwelling prices have slid about 9%. A similar home around the corner from us recently sold for 92K LESS than ours. This spring should be interesting….
N VA off 4% in 05
9% in 06
07 ???????????
depends if gop grows bals and cuts some spending
Wow, impressed to see our Pilot article make it on the bubble blog. As you may guess, I, “Ethan”, always comment on every real estate and not so real estate article on the Pilot hammering home what I believe will happen in the future.
The Old Dominion University economists forecasted not so long ago that residential RE would go to the moon. Also, the Van Rose dork that runs the local Rose & Womble real estate powerhouse, I think his kid may actually be involved with the ODU report.
I try to call in to some of the radio shows and spread the bubble view, but obviously being salespeople they don’t like this.
I had someone accuse me, on the Virginia Pilot site, of causing the market to go down with my negative talk. I got a chuckle out of that.
There was another article about the taxes in Portsmouth, VA going up… and about half of the comments were talking about how sale prices are down 10% and all this other negative RE talk. I thought it was awesome.
Median household salaries in some cities = $60K, some are around $33K … median home price according to housingtracker.net = $360K. 3-4 years ago $180K now goes for $330K. No huge increases in salaries, but there have been more well paying jobs thanks to the Iraq fiasco.
They are still building large 5 bedroom houses and duplexes in Ocean View Norfolk, a lot of them for the rental market since not many people who have a big family can afford the prices. I can see they might be able to rent them out in the summer and pay their costs but I don’t see them being able to pay the mortgage in the winter. I have two new duplexes just down the street, one has for rent signs and the other just sits without even the lawn being completed
Beyatch, go to the rose and womble site, click on Williamsburg real estate, and see how many condos are for sale in the “new town” development — at $300 s/f in some cases. There’s gonna be a world of hurt there.
If you want to see exactly where the condo market is hurting in Norfolk, take a stroll down Colley Avenue in Ghent. Stop at the corner of Colley and Brandon and count the number of for sale and for rent signs around that block, not to mention the Princess Anne which just finished reconstruction for a condo convert.
At least one of the rentals had a flier, and the asking price per month was at least $600 more than any other unit I’ve seen in that area for the same size. Alligator is eating somebody up.
And here we were being told to brace ourselves for rising rent in the D.C. area. Now the story is that new construction projects going up will be rentals–and what’s going to happen to that massive inventory of new and/or empty condominiums in Northern VA and Rockville/Silver Spring?
Tiberias - rising rent is a typical scenario when fear of buying takes hold. I gotta tell you though, I have been watching rents very carefully - they in fact appear to be falling. The rental inventory in my neighborhood is growing, and asking prices are coming down. I rent a fully renovated 2bd/2 and a half bath for $1,750 - a pretty good deal 18 months ago. I am seeing a lot of similar houses, in much better locations, advertised for the same amount - and sitting empty. This is going to get very interesting….
Hahahaha, Rockville! Last time they built a high rise in Rockville it became Section 8. Did you know that?
Watch the stupid city government try to eat that project like a snake swallowing a light bulb. Funny, feeling some indigestion here…
>>>>“Apparently, some home buyers are taking advantage of such inexperience. ‘We’ve heard about consumers who actually sign a contract and pay a deposit of as much as $50,000, and then use that contract to haggle with other builders,’ says Mr. Furnells. ‘They tell a builder at another development: ‘I’m willing to walk away from my deposit if you will give me a great deal.’”
“That is certainly a creative, but perhaps unethical, approach to home shopping when market dynamics are shifting around the way they are these days.”
Paying a $50,000 deposit you’re ready to walk away from? As a negotiating tactic? Shrewd — NOT! I call bull—t.
This does sound creative, but it also doesn’t ring true. What I would suspect is that the homebuyer might have already plunked down his $50k but only now sees even better deals, which are even better than a $50k discount.
The builders (or maybe only this one who is quoted) consider this move by buyer to be an evil ploy, but it was more likely an inadvertant screw-up. The buyer was initially led down the garden path by the builder’s salemen, and only somewhat later did buyer’s remorse lead the poor buyer to look at other developments where he found bargaining room. Which is many developments these days!
I agree, if this is a negotiating tactic it’s a stupid one, no wonder people were paying so much for homes.
I had friends where the builder pulled the same trick. They had already put down a depost, but the builder found another sucker to buy the place at a higher price, they then proceed to squeeze buyer #1 for a higher price.
LMAO. This can’t be real. Here’s a better tactic: don’t pay $50k and lose it; just start by haggling with builders for a great deal because they’re screwed, they know it, and they’ll cave.
Or a better tactic still: save hundreds of thousands by not buying anything just before prices tank in ‘07.
What’s next? Cutting off their leg to get a deal on a wheelchair?
Oh yes, more observation from Hampton Roads. LOTS of Condos going up, and some projects are just breaking ground. For one condo project, the city of Norfolk, VA hooked them up with a 20 million dollar loan to make it happen (I think maybe 60% is sold?).
Houses for sale EVERYWHERE. Lots of crap with huge prices, considering the low income. The one thing the region had going for it was that it used to have a low cost of living, but that has changed. Lots of speculation.
Craigslist is jammed full of rentals, many at nosebleed prices. People listing rentals @ $3K a month in a region where average household income is $60K. Many rentals are fixed right around what the Navy’s housing allowance is… but overall rentals are really expensive too.
The apartment building I’m renting is emptying out… and the property management company has a huge list of vacancies. I see other large properties listing their stuff on craigslist at competitive rates. I think competition is starting to heat up.
Overall, the population sort of incrased, but mostly due to babies being born.
We are about 40% black, and there is a good amount of violence. News has alot of murders/shootings type stuff in it. Our local well known entertainers (outside of say, Bruce Hornsby) is Missy Elliot, Timbaland, Teddy Riley, the Clipse, N.E.R.D/The Neptunes and other hip hop acts. Mostly a navy town. Lots of bible beaters and Bush/Cheney stickers. The more I look at it, and the cost of housing… the more I think about DC. I’m a tech guy, Unix/computers electronics embedded stuff and all that. I compete my way into what should be awesome jobs where I can learn stuff… then after the fight it’s absolutely boring crap. DC is looking more and more attractive all the time. I figure, cost of housing is higher up there, but so is the pay. So when I do retire and perhaps go somewhere else, I’d have more invested. Perhaps flawed, but …
I’m considering Cary, N.C. Have you thought about that area? So much cheaper than D.C. The pay does not seem high here in D.C. at all, especially in the technical fields.
try cape carteret and new bern too
cary = Containment area for yankee retirees
not a bad thing
I was looking at Raleigh, N.C. … There is a good tech industry down there as well. I don’t know.
I was about to sign a lease on a 1800ft commercial space in downtown Norfolk. It would be as-is. I specifically said what I cared about was no roof leaks, and working HVAC. So I get contract in hand, and right before I sign it prop mgmt springs some thing on me… HVAC is AS-IS, and I will need to pay $2033 to bring it up to the point of actual testing (freon loop could be bad)… on 6 MONTH lease!? I’m like you have to be kidding. Property mgmt guy is a large residential company for downtown Norfolk. Sort of a bummer, but I can throw my large computer collection in storage and save tons of money.
I kept saying, “But it will only get cheaper month after month as mortgage firms and other real estate related businesses close shop at first, followed by others effected by the fall in consumer spending after the fall in consumer confidence after housing prices errode.” He said my doom and gloom outlook wouldn’t get me anywhere.
I love it.
Oh yea, the commercial space was to be for a hangout of local computer/tech people to work on new projects such as ethernet enabled home thermostats and computer security work, along with taping of video content for youtube… not business. Sort of a bummer, but if it doesn’t happen, I save money to buy property after bust!
More to the point, population-wise, our major industries are leaving. Ford is shutting down (where are they going to go?). Oceana is on the block. The Navy itself wants Oceana gone, so sooner or later it’s gonna happen no matter what the politicos do. The Kennedy has been decommissioned so a carrier battle group (5000 active duty plus families) are headed off to Jacksonville. And now you can’t find a decent house to buy for less than $200k unless you’re in the howling ghetto.
Next.
Coupla things . . . yesterday, I received a Happy Home Anniversary card from my realtor. WTF?? I’ve never seen one of those before . . . and it was for a 6 yr anniversary. I’m guessing things are a little slow right now.
Also, I’ve been watching a home accross the street that has been languishing on the market for over a year. Was a “kiddie condo” purchased for college students (really a SF house, 2500 SF) spoiled ass kids . . . but I digress.
Home was on market for $359k (way overpriced to begin with), then $335k, $299k . . . finally sold at $286k. Now, new buyers are gutting the thing - carpet, cabinets, appliances, just saw a huge load of sheetrock delivered. I’m guessing its a fix and flip but don’t see how the numbers are going to work if it hits the market again. If so, GF flippers are still active out there . . . if not, well GF buyers (falling knife catchers) are still active out there.
This is going to take a while.
mold from bong water ?
If it was inhabited by college students for any length of time, then all that sheetrock might not be just to fix and flip. It might be just to make it livable again for the new buyers themselves if they want to live there.
Many of the college kids I know neither clean nor maintain their abodes. Some outright destroy things in drunken parties. And when their parents have bought it for them, it’s amazingly even worse! (Maybe they’re more worried about landlords/deposits. If it’s parents who own it, they figure it’s no worry?)
And yes, I was in college, too. And no, I still would not rent out a place to people like me! Well, OK, if I could charge enough rent and have huge deposits…
“And when their parents have bought it for them, it’s amazingly even worse!”
Hoo boy, you got that right. Fortunately we only bought a car for our son when he went to college. Lots of things we bought for him weren’t cared for in any way. It was an amazing transformation when he graduated, got out on his own, and began paying for his own stuff.
lol
“That is certainly a creative, but perhaps unethical, approach to home shopping when market dynamics are shifting around the way they are these days.”
I agree, this is competely unethical. The nerve of these buyers to take advantage of the high inventory/low demand situation! Don’t they realize that the real estate game is like golf? It’s all about honor and ethics. If you cheat you just cheat yourself. Geez. When the builders had the upper hand they could have charged ridiculously high prices when demand was highest…but they let their moral compass guide them and chose to charge only what they needed to turn a meager profit. And this is how we buyers repay them!?
Real quick: what’s that website with the subprime implosions on it? I’m chatting on IM with a mortgage underwriter/broker in Marin County and want to show it to him. Txs.
http://ml-implode.com/
Thanks. This dude is a tough nut to crack. He works in Marin and also in Scottsdale AZ with rich people so they see no evil. But I’m working on getting a few admissions out of him
http://ml-implode.com/
And for a look at rising foreclosures in Marin:
http://marinrealestatebubble.blogspot.com/
Utah leads in home price growth
The state’s 18% gain is more than double the U.S. average. California shows a rise of 4.6% in the fourth quarter.
From Bloomberg News
March 2, 2007
The real estate boom has gone West. And Northwest.
The state with the fastest-growing home prices in the fourth quarter was Utah, at 18%, more than double the U.S. average, a government report showed Thursday. Wyoming was No. 2 at 14.3% and Idaho was third at 14%. Washington gained 13.7%, and Oregon was fifth at 13.5%.
California came in at No. 35, with a gain of 4.6%, compared with 21% a year earlier.
Nationally, the real estate market stagnated, with a gain of 5.87% from a year earlier, the slowest pace since 1999, the Washington-based Office of Federal Housing Enterprise Oversight said. The report doesn’t give an average price, only the percentage change. The West and Northwest benefited from strong job markets, more affordable housing, population growth and vacation home sales.
“As long as we have job growth here, nothing will slow us down,” said Gary Cannon, the co-owner of Re/Max Associates in Salt Lake City and president of the Salt Lake Board of Realtors.
Utah’s unemployment rate was 2.7% in January, below the national rate of 4.6%, according to the Utah Department of Workforce Services. The average home sales price in Utah in 2006 rose 14% to $251,413 from $219,746 in 2005, according to the Utah Assn. of Realtors.
In December, Wyoming’s unemployment rate was 3% and Idaho’s was 3.2%, according to the Bureau of Labor Statistics. Washington and Oregon lagged at 5% and 5.4%, respectively.
Strength in the energy and mining industries has boosted Wyoming’s housing market.
Prices in Oregon are also starting to rebound.
“We have been kind of behind the curve on the price increases around the nation,” said Art Kegler, the president of the Oregon Assn. of Realtors and owner of American West Properties, based in Boardman, Ore.
Boise, Idaho, has seen its population increase as people from Nevada, Arizona and California move to the state, said Andy Green of Keller Williams Boise and Green Group.
Green said the pace of sales has slowed in Boise over the last year and “prices have not been appreciating at the rate they were.”
The fastest-growing markets during the five-year real estate boom that ended in 2005 didn’t make it to the top 10 in the recent quarter. Florida ranked No. 11, following New Mexico, Montana, and Arizona.
Florida prices grew 9.5%, slowing from a rate of 27% in 2005’s fourth quarter. New Jersey prices gained 5.8% and New York grew 4.9%. Massachusetts was the slowest growing state, with a gain of 0.45%. Prices fell in one state, Michigan.
“The data shows that, on the whole, prices are still rising, albeit at a much slower pace,” Federal Housing Enterprise Oversight Director James Lockhart said in the report.
Uh, dude, this is a DC/NOVA thread. You ought to be posting these in Bit Bucket.
Thanks hall monitor.
Builders see some growth in residences
Standard Pacific reports a 40% rise in new-home orders for January and February. Permits for single-family houses are up, a trade group says.
By Annette Haddad, Times Staff Writer
March 2, 2007
California’s beleaguered housing industry received some traces of positive news from reports Thursday that showed improvement in new-home orders and single-family home permits.
Standard Pacific Corp. said preliminary new-home orders in January and February rose 40% in California from the same period a year earlier.
Meanwhile, a builders trade group reported that permits for single-family homes in January rose 18% compared with December, their first month-over-month increase since June.
The two-month gain by Standard Pacific was the direct result of what the Irvine-based home builder called a “more aggressive pricing strategy” — deeper discounts and better incentives to lure buyers.
Overall, however, Standard Pacific said its orders for the period fell 19% compared with a year earlier, tugged down by weakness in Arizona and Florida. But, if that percentage holds for the remainder of the quarter, it would be an improvement from a 40% decline in orders during the fourth quarter.
The January-February results were “no surprise” to Daniel Oppenheim, a building sector analyst for Banc of America Securities who had forecast a 19.5% drop in the company’s orders. March, he said, would be a more telling month for order trends.
March “will set the tone for the remainder of the key spring selling season,” Oppenheim said.
Standard Pacific also reported some shrinkage in the rate that buyers were canceling orders. In January and February, cancellations fell 24% from a year earlier, which was better than the fourth quarter’s 43% plunge and last year’s 26% drop.
Also Thursday, D.R. Horton Inc. of Fort Worth said its sales were improving in California, where it is the No. 1 builder.
Alan Nevin, chief economist for the California Building Industry Assn., said traffic at new-home communities had picked up since the start of the year.
“Developers say the lights went on at the beginning of the year,” Nevin said. “People are tired of waiting to buy.”
The trend hasn’t yet been reflected in the number of permits California builders are obtaining, he added. In January, 9,798 permits were obtained, down 21% from the year before, the builders group said. Still, the number of permits for single-family houses rose 18% in January compared with December.
Builders have been scaling back production for more than a year as they work to reduce inventories of homes already in the pipeline. Permit activity is still coming off the 2005 peak, when 200,000 were issued. Nevin sees the current year hitting more normal levels of 155,000 to 170,000 permits for all types of homes.
Not sure if this was talked about already…
New Century fails to file 10-K report
By E. Scott Reckard, Times Staff Writer
March 2, 2007
New Century Financial Corp., struggling to revise last year’s financial results after badly miscalculating its losses on risky mortgages, missed a Securities and Exchange Commission deadline for filing its annual report Thursday.
Not filing the 10-K report could trigger a new sell-off in the company’s stock, already battered by New Century’s disclosure last month that it had not accounted properly for losses on soured mortgages it had to repurchase from loan buyers.
The Irvine-based lender is the largest independent maker of higher-cost sub-prime mortgages to high-risk borrowers in a lending sector that has been rocked by bankruptcies, forced sales and huge losses.
On Wednesday, publicly traded rival Fremont General Corp. of Santa Monica failed to file its annual report as scheduled.
Without quantifying the damage, New Century disclosed Feb. 7 that it had gravely underestimated its losses, sending its stock plunging 36% the next day.
It closed at $15.85 on Thursday, down 69% from an all-time high of $51.22 on April 28. Its shares have declined in value by $1.96 billion since the peak, and by $793 million since it announced it would restate last year’s results.
The stock market losses have triggered at least nine federal securities-fraud lawsuits alleging that New Century concealed its problems from investors last year while its officers and directors enriched themselves.
One of the lawsuits, filed by the law firm headed by shareholder-lawsuit attorney William S. Lerach, accused New Century insiders of selling 665,334 shares at inflated prices last year for proceeds of more than $26.6 million.
Laura Oberhelman, a company spokeswoman, said New Century doesn’t comment on pending litigation. “We do intend to defend ourselves vigorously,” she said.
Separately Thursday, shares of IndyMac Bancorp fell by $2.17, or 6.3%, to $32.16 after the Pasadena-based mortgage specialist said this year’s profit would be lower than in 2006.
Most of IndyMac’s loans are in the “alt-A” market — loans to borrowers who don’t fully document their income or assets but who have good credit scores.
Expressing disappointment, IndyMac Chairman Michael Perry told shareholders in a letter: “I believe we will emerge from this difficult mortgage environment a stronger and more competitive company.”
Delinquency rate up on some Countrywide loans
From Bloomberg News
March 2, 2007
Countrywide Financial Corp., the biggest U.S. mortgage lender, said payments were late on almost 20% of the sub-prime loans it manages for clients.
Delinquencies of 30 days or more on “nonprime” loans, or those to borrowers whose credit ratings fell short of the highest criteria, widened to 19% as of Dec. 31 from 15% a year earlier, Countrywide said.
From JL’s blog.
Home-selling slump nears 17th down month
Quite a week with updates from four leading measures of regional home prices! The latest data, the freshest reading of the bunch comes from DataQuick. The median selling price for all kinds of residences remains just above year-ago levels — and 5 percent below June’s peak of $642,500. (Results by ZIP code are HERE.)
Activity remains sluggish.This will likely be the 17th straight month that shoppers bought less homes than the year-ago period. The last such streak longer than a year ran 15 months and ended in Dec. 1995. If the current pace of decline holds, last month will have been the slowest-selling February since 1995.
For the 22 business days ending Feb. 13, the numerical details by market slice …
Slice Price Vs. ‘06 Sales Vs. ‘06
House $670,000 +0.0% 1,370 -8.3%
Condo $450,000 -3.2% 538 -22.4%
New* $547,250 +10.6% 372 -25.6%
All $610,000 +0.8% 2,280 -15.1%
* Includes single-family homes, condos and recently converted apartments
If you’ve forgotten, here’s a quick recap of this week’s regional price index releases. (More detail on these measures can be found by clicking on the provider’s name or CLICKING HERE) …
Provider Latest Year ago
OFHEO +5.5% +20.0%
S&P/Case-Shiller +2.0% +21.6%
DataQuick +0.8% +12.1%
Realtors -1.5% +10.2%
Lyon Homes’ cancellations, prices down
Here’s some financial highlights from O.C.-based William Lyon Homes, builders in California, Arizona and Nevada …
The cancellation rate of buyers who contracted to buy a home but did not close escrow was approximately 33% during 2006 and 16% during 2005. However, the cancellation rate from January 1, 2007 through February 25, 2007 has decreased to approximately 21%.
… and …
During the fourth quarter of 2006, the average sales price of homes (including joint ventures) was $491,500, down 7% as compared to $531,000 for the comparable period a year ago. For the year ended December 31, 2006, the average sales price of homes (including joint ventures) was $512,200, down 6% as compared to $546,000 for the year ended December 31, 2005. The lower average sales price reflects a change in product mix and an increase in the use of sales incentives due to the slowing of new orders and competitive pressures.
I enjoyed the insights into the Condo market in Hampton. I happened to visit Hampton in Nov on a business trip. After my business wrapped up, I wandered around the historic part of downtown Hampton by the aerospace museum, and was amazed by the condo construction activity. Seems like a couple of huge condo complexes were going up. The complexes were about 75% complete. I remember a lot of construction noise from the jackhammers and a lot of what appears to be illegals busily working(don’t remember seeing anything resembling an European type face in the workforce). I wondered how in the hell the economy could support such a large complex, as the jobs are all government related and, while good, can’t support what I assume to be 500K and up condos. Anyone care to comment how everything is working out. I imagine the complex is nearly completed. My intuition when I saw the complex going up in Nov, well past the bubble peak, is that this whole thing would wind up in foreclosure.
Basically, I have no idea how anyone local is affording the condos. There are plenty of these $300K+ condos, and the big facilities have sold a number of $1-2 million dollar condos. I can sort of understand the Virginia Beach oceanfront, as people do go there during the summer and perhaps there is some market to rent them out as vacation rentals (I’m not sure, many of the locals avoid the Virginia Beach resort strip in favor of places like downtown Norfolk). With the rapid appreciation of the homes in the region, it has provided a good amount of equity for people to borrow against to buy other investment properties. I do believe there is a number of people that do that. I have two friends in my small circle of friends that each own 8 houses. It’s a transient area, and there is alot of military that come and go. So there is also alot of people that buy and then resell 2 years or 4 years later when the get relocated, if they don’t rent it out. My guess is equity + lots of financing. Listening to the radio shows, I hear people calling in 1 year out of bankruptcy looking to buy new homes so… if the lenders will give it out.
It used to be that on the local newspaper’s website (PilotOnline), every mortgage broker ad listed had either stated income, or no income verification listed as a bullet point. This was at least 12 paid advertisements.
Hello,
I saw my first short sale on Zip for Loudoun County. Probably had been more but I missed them. I also noticed a house that had been foreclosed (Wachovia). The seller before he went under was asking 520k approx. They want 700K plus for it now.
Loudoun foreclosures are still rising but not as fast as I expected. Fairfax county prices are holding semi-steady. What is amazing is the number of condo projects around Vienna metro and in Fairfax City that should be finishing up soon. Plus there is a couple big mixed used dev. going in around that metro stop soon.
I am actually seeing what I think are deals and then I slap myself. 200% appreciation and I get hot over a 10% price drop.
I know of a few foreclosures in my neighborhood too - the banks want peak prices for the houses. This may be just like last time - the regulators had to come in and force the REO’s off the bank’s books. Took years to completely unwind.
Loudoun February sales news quoted from a local agent:
http://askmerv.choice3realty.com/
“I’ve updated the chart for single family, detached homes (less than $1,000,000) sold with February 2007 data. After a November/December small positive bounce, average sold price in February is down about 5% from last month. Seller subsidies are still averaging about $10,000. None of this is a good sign for sellers. Great news for buyers. Another month or so brings the spring buying season. Keep watching.”
“Apparently, some home buyers are taking advantage of such inexperience. ‘We’ve heard about consumers who actually sign a contract and pay a deposit of as much as $50,000, and then use that contract to haggle with other builders,’ says Mr. Furnells. ‘They tell a builder at another development: ‘I’m willing to walk away from my deposit if you will give me a great deal.’
I fail to see why this would entice another builder to offer a “great deal.” What’s in it for them?
At best, maybe they could threaten the SAME builder (the one holding their deposit) that they will walk away unless the builder throws in some incentives. Even then, if I were the builder, I’d say “fine,” pocket the deposit, and move on to the next idiot.
Oh yeah, and I bet anyone who pulls this will fail to include that lost $50k as part of their basis cost when bragging about the “bargain” they got from the new builder.
Oh, CENTREX is offering 3% off new homes to Feds, military, county workers to show the love we all deserve.
“Leaking water and animal waste caused an estimated $80,000 damage to a vacant condominium where firefighters on Wednesday found four pit bull dogs being kept under strange circumstances.
The owner of the three-story condo, Ron Kaufman, wasn’t at the scene. The home had no furniture and appeared vacant, except for the dogs and a Volkswagen Jetta in the ground-floor garage, Flaherty said.
A notice on the door said a foreclosure was in progress. ”
http://www.columbian.com/news/localNews/03012007news110215.cfm
Does anyone have opinions on Howard County, MD? It seems like they have a glut of million+ dollar Mcmansions there, similar to the condo glut in the DC metro area.
I’ve seen the same developments listed for a few years now (in Woodbine, Glenelg, Glenwood, Dayton, Clarksville, etc). There aren’t many houses available in each development due to the zoning restrictions so it has surprised me that the builders have continued to raise prices even into the slowdown. Although some are now offering incentives and closing costs, they’ve raised the prices from the $900’s to million+range just since the summer of ‘05 (so it doesn’t seem like a bargain; they just raised the price to cover the incentives). Note that these same houses were in the $400’s-$600’s in 2003.
I’m also somewhat surprised by the number of flips I’ve found in the area. Many of these upper priced homes are for sale by people who have only owned them 1-2 years and are still seeking huge profits over what they paid for them.
We lived in Montgomery County, but moved out of state last summer. We are now considering moving back, and so would appreciate any insight from those in the area.
Thanks!
Thinking of moving back? Plan to rent. This might take a while to settle down — as in a couple of years time before it’s reasonably priced. There will have to be much pain inflicted before prices are forced down.
Here’s a fine example real close to where you are talking about. It’s in Frederick County, a few miles west of the Howard County line, I think. I haven’t been out that way myself, but here are the stats. (Might be Nikki-Blog’s area, come to think of it!)
12201 Timber Run Court, Mount Airy, MD.
1.46 acres, a mere 2821 sqft (add finished basement?).
Sold in may 2005 for $608,000. Asking price was $600k!
The house has not been occupied since, and from what my friends who live near there say, it’s gone on and off sale for $649k or $679k (pick your date) with no success. The only homes sold in that development lately went for the upper $500k’s — uh oh, this looks like a flip turned bad!
Buyers put 5% down, I am told. They are hosed. Poor bank.
I wonder if they are even paying the monthly nut by this time?
I’ve lived in Rockville since mid 2002. Reasonable, modest cape-cod walkable to town center. I thought it was expensive, but frankly the mortgage is below rental equivalency and less than 25% of our incomes when combined. During the last 5 years, things became ridiculous, people down the street paid an absurd sum for an 1850s farm house with one bath (family of 5) and wobbly pine floors.
Well, the $2 million spec homes in my neighborhood aren’t selling. I was out running and saw a funny scene. An estate agent/ owner/ speculator was outside his spec home pacing nervously, walking up readjusting the turf on the lawn, steps back and then suddenly he pulls up the for sale sign and repositions it, steps back, etc.
House on the market for $1.5 million, reduced from $1.7 million. On market since Oct 2006. Teardown, although this one, I think used the old ranch house as a core. House is butt ugly. Purchased Nov 2005 for $790k.
I just got a chance to check back. Thanks for the responses. We would consider renting, but so far, we haven’t seen many homes for rent in that area. We’d like to live near one of the schools in Howard County with good test scores as we have a son who is now in school. He’s in a very good school right now and loves kindergarten.
We sold our townhouse in Rockville last summer and are currently renting in California, but we will have to move again this summer. Although we know the prudent thing to do is wait for prices to come down, it is hard. We’d love to buy a house and settle in so that our kids can stay at the same school and make lasting friendships. By driving prices to such insane levels these flippers ruined it for all of the young families who want to buy but can’t. I guess we all just have to hang in there.
After all, they will have to lower their prices or the market will lower the prices for them. Resistance is futile.
I am in the process of buying a townhome in Chesapeake, VA and I am starting to get nervous about it. I don’t see how prices can continue to escalate. At what point does VA become like California? Everyone tells me buying a house is the way to go, but I worry maybe I should have waited another year.