The Big Question Is Whether We’ve Seen The Bottom
A report from the Washington Post. “Residential property values are dropping lower than county and city officials had projected, foreshadowing an even tougher budget season next year. There are 20 percent more houses for sale now than at this time last year, said said John P. Grzejka, Manassas’s commissioner of revenue, and the number of foreclosures continues to rise. The foreclosure rate and the flooded market are blamed for the falling property tax base.”
“‘The big question is whether we’ve seen the bottom or if we see a continuing drop in values because of more houses on the market. The pressure is to continue to lower their prices,’ he said.”
“The Prince William Board of County Supervisors budgeted for a 2 percent overall drop in assessed real estate values, but the county is seeing a nearly 4.5 percent drop when comparing prices from May 2006 to those in May 2007, said Allen Scarbrough, the county’s investment portfolio manager.”
“Nearly 700 homes in Prince William County entered the foreclosure process in the first quarter of 2007, according to RealtyTrac. RealtyTrac data show that during the first three months of this year, 68 Manassas properties either were the subject of a default notice, were posted for sale or were repossessed by a bank.”
“That compares with the first quarter of 2006, when there were 12 in Manassas; itself a significant increase from the first quarter of 2005, when there (was) just one in Manassas.”
“‘It just seems like the foreclosures are really hitting the construction workers’ areas and some of the lower-end demographic,’ said Supervisor W.S. Covington III, who said local real estate agents had told him that some county neighborhoods are seeing closer to a 9 percent drop in values.”
“Prince William and Manassas had some of the highest rates of subprime lending in the Washington region, according to a March study by NeighborhoodInfo DC, a project of the Urban Institute and the District’s Local Initiatives Support Corp. Nearly 18.5 percent of the county’s new-home purchases or refinanced mortgages in 2005 were through subprime lenders, according to the study.”
“In Manassas, 23 percent of 2005 mortgages were made by subprime lenders.”
“These types of mortgages are very favorable to people who have ‘informal income,’ such as illegal immigrants and people who are self-employed, said Peter Tatian, a housing expert at NeighborhoodInfo DC. Buyers who thought they were going to ‘flip’ a house for a higher price also were candidates for these mortgages, he said.”
“‘Even if those homes don’t go to foreclosure, people end up having to sell at unfavorable terms for them. Whatever they put into that home, they are likely to lose,’ he said.”
From WSLS in Virginia. “In May of 2006, 575 homes were sold totaling more than $199 million in sales. In may of this year, only 443 homes sold totaling a little more $97 million. That’s a 23% drop in sales.”
“Kit Hale, a local realtor and the 2006 president of the Virginia Association of Realtors, says we are in a slow down with more homes on the market.”
“‘Homes were not staying on the market long the last several years, so now, yes, the inventory is up,’ Hale said. But, he adds that the housing market is essentially correcting itself.”
The Times Community. “The real estate business…seems to be facing the most difficulties right now, after several boom years. National surveys show that residential real estate has been hardest hit, even in this area, which some have called ‘recession-proof.’”
“For Valerie Frank, president of Preservation Mortgage in Warrenton, 2005 was great, and 2006 was steady, but 2007 is very slow.”
“‘I think it’s going to get worse before it gets better,’ she said. ‘This is a first-time homeowners market, an investor’s market, and definitely not a refinance market. Property values just are not there anymore.’”
“‘I’m seeing a lot of foreclosures in Haymarket, and they are beginning to happen here in Fauquier County left and right. People who are in this business are suffering,’ Frank said.”
“Steve Vento, executive VP for Angler Development, has seen the residential side of the business dry up.”
“‘Last year was a challenge, and 2007 is proving to be challenging for us, as well,’ he said. ‘Last year was substantially worse than 2005 for us. Residential lots that we prepare are not moving at all. We’re hoping that this is the bottom.’”
“‘The economy is an anomaly to me,’ he continued. ‘We still have good job growth, mortgage interest rates are still low, but residential is not moving. I think what has happened is the investors who used to buy houses to flip them later for more money have all left the market, and that’s caused the market to slow down.’”
“The big question is whether we’ve seen the bottom or if we see a continuing drop in values because of more houses on the market.”
The big answer is that unless the laws of economics have been repealed, ever-increasing inventories lead to a continuing drop in values.
‘The big answer is that unless the laws of economics have been repealed, ever-increasing inventories lead to a continuing drop in values.’
Maybe that ruling of the Surpreme Court that price fixing is ok?
One could certainly argue that the laws of economics were severly stretched over the past 6 years. As for calling the bottom on this one, show me the facts in support of the call. I agree with you on this one GS, since logically all the indicators point down. Inventory, tightening credit, foreclosure activity and a soft job market, particularly in the higher paying job market where it might make a difference and lastly, the obvious disconnect in bubble areas between rents and ownership costs.
We might be halfway to the bottom sometime in 2008 and about 2/3 to the bottom by 2009. Some of you are predicting 2012 to be the bottom with prices staying sticky for a few years before recovering slowly in line with inflation and salaries.
“One could certainly argue that the laws of economics were severly stretched over the past 6 years.”
Shills in real estate and on Wall Street have assured us all that asset prices (houses, stocks, etc) always go up — in the long run. I would counter that the laws of economics eventually apply in the long run. It is possible to have an extended period (say from 1982-2000 for stocks and Treasuries, and 1982-2005 for houses) when asset prices go higher and higher relative to underlying fundamental values, but eventually, asset prices revert to reflect the fundamental value of the underlying real asset. Of course, high rates of inflation can obscure the correction, as many untutored observers mistake nominal price increases for real price increases.
Increasing inventories and increasing forclosures can only lead to more price drops.We are not even close to a bottom.This could take several years to play out.There were so many bad loans made that it just might buckle the whole system.People were makeing loans out of their bedrooms by day while stripping by night.I’m sure the savy investors are licking their chops over all these amateur investors going belly up.Another transfer of wealth going on.
“People were makeing loans out of their bedrooms by day while stripping by night.”
I assume you are talking about Las Vegas real estate investers here…
I’m thinking about my neighbor real estate agent who works nights as a topless dancer at the strip joint near where I work. She lives in her own $500,000 house. Real woman of genius.
Is $500K what she paid for it or what it’s worth now?
Do you get to enjoy the hot tub with her when she gets off her night shift?
boy, 500k is a butload of $1 dollar bills. I used to have a friend of mine who worked in a bank, and nobody wanted to take the deposits from the stripper, lots and lots of crumpled $1s.
“This is a first-time homeowners market, an investor’s market, and definitely not a refinance market.”
I almost needed to lie down after reading this drivell!!! WTF, these “reporters” (chimps) need a good old fashion ass kicking…. I’m talking medieval style, not any of this sissy 20th century crap.
“‘It just seems like the foreclosures are really hitting the construction workers’ areas and some of the lower-end demographic,’ said Supervisor W.S. Covington III, who said local real estate agents had told him that some county neighborhoods are seeing closer to a 9 percent drop in values.”
Well it nice to see my neck of the woods going national. My wife and I are always looking at data from PWC, Manassas, and Manassas Park. We are just amazed of the house own by banks or needs a short sale or are foreclosed on. Even the REO houses don’t sell until they discounted at least 35% of the original MLS listing. In fact I know of 5 properties in the Manassas Park that the banks can’t off load. Two of them are in the “NEWER SECTION” of the Manassas Park.
Let this Titanic sink to the bottom.
Manassas is so screwed. My wife and I are acquainted with a couple who purchased a 650k new home in early 2006. The scary part is that she is a waitress at a very ordinary restaurant and he is more or less a maintenance man.
They recently said they “decided” to sell because the house was “too big” for them. I fully expect them to be foreclosed upon before the end of the year.
‘Manassas is so screwed. My wife and I are acquainted with a couple who purchased a 650k new home in early 2006. The scary part is that she is a waitress at a very ordinary restaurant and he is more or less a maintenance man.’
If you multiply this times 300k people - you can start to get a picture of what California is like. Everyone thought that it was Sutters Mill and the Gold Rush was on. The gold is simply laying on the ground and allthat a person needed to do was reach down and pick it up.
300K? I think you are being awfully conservative in that number. This is the La La land of money should be spent and not saved, and what you own is your self worth. I suspect people who were free and clear on their houses were also sucked into this retarded situation as well. So, look at this like probably more than 300k, and when it hits here, all bets are off we will be hitting the un-navigated rapids of the US economy.
300k screwed homebuyers in Cali? Thats how many we have just in L.A County.
Really glad I sold my Bristow, VA home in 2003. If I had a crystal ball I would have waited until 2005 (prices went from 100% nominal appreciation from ‘98 values to over 200% from 2003 to 2005) but I’m glad I don’t have it anymore.
big anwser is nonest
why is a hotel chain worth 3x% more today than monday ?
I don’t get it- will all the foreclosed folks be living in hotels soon
Control.
Cause paris said so. ” That is so hot”.
No because a claim on earnings is worth quite a bit less than a claim on earnings and decision making authority on the assets.
Expected earnings losses for Hilton Hotels hence other hotels are expected now to do better than in the past. The Hilton chain, which includes Embassy Suites, Doubletree, Hampton Hotels, Homewood Suites, and Conrad Hotels, also has a nationwide boycott going on against them.
“‘The economy is an anomaly to me,’ he continued. ‘We still have good job growth, mortgage interest rates are still low, but residential is not moving.
Job growth where? Walmart? Real Estate does not take a “job”. It takes a high paying professional job. I don’t see the growth in this area, except perhaps in the medical industry.
So true, GH. Another government statistic that aggravates me. “Employment growth” means nothing when people are working low-paying jobs with poor/no benefits. Just like the cost of living index means nothing if you take out the costs of food and fuel. I used to think these “experts” were purposely painting a rosy picture; now, I sometimes wonder if they are so insulated by their own wealth and position that they truly do not see what is happening to what used to be the middle class.
I am acquainted with a fellow who is an HR VP for a company that has about 400,000 employees. He mentioned that it is projected that within 5 short years that fewer than 15% of Americans working in the private sector will have employer provided heath insurance.
The floodgates are about to open. This will wreck havoc with the healthcare industry. So, I expect that within the next few years we will be seeing the birth on national health in the US. The real question is how will it be funded?
Will this havoc include the industry lowering its prices so that the Average Joe and Jane could actually afford healthcare?
They may be forced to.
Will this havoc include the industry lowering its prices so that the Average Joe and Jane could actually afford healthcare?
I just received a statement today from my insurance company for some lab work I had done. The total bill was $581. Since the lab is in our network and they have agreed on prices beforehand, my insurance company paid $40 and I owe nothing. Now tell me someone isn’t getting ripped off with health care costs. If they can do the work for $40, some poor sucker out there without health insurance is getting billed $581.
Medical billing is about like wishing prices on housing. They bill a fortune, knowing they’ll only receive a small percentage of that. No insurance company would pay the full amount, and neither would any cash-payer. That is why medical collections will quickly settle for about half of the amount owed rather than forcing the patient into bankruptcy and getting nothing.
This is a big problem if you try to do without medical insurance and pay cash. The cash price is many times higher in general than the “agreed” insurance price. I would love to be able to switch to catastrophic coverage and be able to still see a doctor, but the system is not set up to work this way.
Many young couples who work inside the Beltway were forced to buy in places like Warrenton (and beyond) because they were priced out of the closer-in suburbs. Now they are stuck with hellish commutes and negative equity.
We are seeing significant (20%+) discounts in the outer burbs but prices are holding in Arlington/Alexandria/Fairfax — for now.
Ive been following a few places in Alexandria. One has been on the market about 3 months and the price has been dropped 15k every 20 days. (Started 689k, now 625k) They are bring proactive, but I think the starting 2005 bubble price was so high that its going to take more months of the 15k every 20 days before it sells.
Another house near me has dropped 50k in 2 months.
Some stuff is selling in Alexandria though, probably to my ex-neighbors who thought it hit bottom.
Things are starting to drop in my Arlington neighborhood, zip code 22202. And most houses are just sitting on the market.
Chris, do you have any predictions on how low prices will go at the Eclipse once it is finished and all current buyers under contract settle?
That’s the monstronsity over at Rt. 1 & Glebe Rd., right? I saw a sign twirler for that one a few weeks back, and that pretty much tells you all you need to know. I bet that one craters.
That has to compete with all of the older better-located condos in Crystal City, but the thing is that the Eclipse is not really within walking distance of any Metro stop, and the Potomac Yard area is considerably seedier than Crystal City. I like to shop at Potomac Yard, but I sure as hell wouldn’t want to live there. Just on the other side of Rte. 1, you have the old Lynhaven neighborhood, which is very ghetto.
That’s where this whole thing doesn’t make sense to me. I see the requests (demands) for 2-2.5x or 3x income for the prices of homes, and I think about the median for this area–75K–and I do the math. It just doesn’t add up. No way that SFH in NOVA, even PWC hit 225K. I just don’t see it! Now, I’d love it, but I’m saving up for the 280K house, because I really can’t see the SFHs in this area going for much less than that. (That’d be a 30% reduction).
Why not? It all depends on the credit that is available. A house can only sell if there is a buyer with financing. Historically, the D.C. area has long been slightly above the 3x income threshold, from what I’ve read here, but not much higher. There certainly isn’t anything like the “sun tax” that you get in Calif. beach communities where people have long payed a much higher % of income.
I expect things to get pretty ugly in Metro DC. Incomes simply haven’t and aren’t rising sufficiently to support such silly prices.
Tell me about it.
There is a row house around the corner from me - renovated, 3 beds. Ask has been lowered twice and now stands at 799K.
Directly across the street from this stands a comparable house. Renovated, 3 beds. Roughly the same size. It is for rent. Ask is $1,775 per month.
Now, the 100-year mean relationship between rent and fair market value is about 150 times one month’s rent, or about $270K for this particular house.
Are we at bottom? Methinks no way.
In my ‘hood, there is a 1920’s-era duplex that went on the market a few months ago for $699k. It’s pretty sizeable, actually, but that’s ridiculous. Well, after a little while with unattended open houses etc., the delusional owners have marked it down all the way to $674k. Good luck with that.
Can you sources this 150 times one month’s rent? I’ve seen it here frequently, but it’s so completely out of line with everything I’ve ever seen that I can’t get my head around it and would like something a little more concrete than a blog post to back it up with.
I can’t “source” it per se, but I know that when I moved to the D.C. region in 1993, mortgage payments were typically *lower* than rent on a comparable property (that didn’t include taxes or insurance, of course). The deal was that you rented only as long as it took to get a downpayment, since your monthly finances would actually work out slightly better as a buyer. I’m not sure when it switched over locally, but I would guess around 2000 or so, when I first noticed house prices starting to rise dramatically.
Xpovos - All kidding aside, go to Amazon.com or Ebay and buy a used copy of any “Homebuying for Dummies”-type book. Make sure to buy one with a copyright date before, say, 2002. The historical facts have in no way changed, but it is possible that a more recent author has been caught up in the mania and will tell you “it’s different this time.”
Most of those kinds of books will lay it out for you.
100 times rents is the rule of thumb for real landlords, allways has been. If you hvae any RE experiance this isn’t something that has to be sourced, it is simply math. At 100 times rents you can make enough money per month to justify your time managing the rental. Any bubble appreciation is just iceing on the cake. I sold my 2 rentals 02′ and my primary residance in 03′…. I will have no problem repurchasing similar property for much less than I sold for and missed the top by 2 extreme years. I would have made over 300k more if I hit the top, but the lump sum cash return from selling my rentals came out to a presant value (in gov bonds) such that I would have had to manage the rentals for over 15 years to break even. I knew from exp. that in 15 years those rentals would be cheaper than what I was selling them for. At purchase the buyers of my rentals were negative over $800/mo..when there crap loans adjusted over $1,400/mo negative, but of course they both refinanced pulling out about $150k/rental and now losing several thousand a mont each!!! HHAHAHAH, they paid me to much and pulled out $150k more. Guess if they can get away walking it might not be to bad for them. When I was younger I sure would have taken $150k in exchange for a shitty credit rating.
If all these toad FB walk without reprecussions that will be the deal, millions with hosed credit in exchange for big tvs…. Might not be that bad for them since bad credit will be the rule rather than the exception.
That is my only hope for our economic future. If this unfolds fast enough J6P will escape from his crushing house payment and then use that money to pursue mindless consumerism that may cushion the collapse.. wishful thinking?
Rich,
I’m okay with the economic future scenario you depict as long as the “investors” who took out $150K either go to jail, work off the money doing community service (with their names displayed for all to see), or are not allowed to purchase another property for, say, 25 years.
Personally, I prefer the last two. Public humiliation and the inability to trump people who have good credit and a desire to own a home.
Well, if you’re comparing median SFH to median income, then I think that’s not comparing apples to apples. In this area the SFH are either newer McMansions or are 25+ years old. I would consider the median house to be a townhouse. The SFHs in this area have traditionally been reserved for high income people or move-up buyers.
Also, keep in mind, before taking the median income, I would subtract out 30% because the lowest 30% should not be buying a house at all. They should be renters. So, then I would take the median of the upper 70% and compare to the median of all houses - not just SFH’s.
Even if you do that, we are still way out of any traditional affordability standard.
Nah, they’re starting to drop in Arlington, too. I live in the Crystal City area, and a crappy old SFH on my block sold for $605k in 12/05, had a whole bunch of illegals move in, foreclosed in 06, and just sold (to an obvious pair of “investors) for $525k. Things are moving down, but slowly. I’ve lived in this little ‘hood for about 5 years, and there are now far more houses for sale than I would have believed possible, and nothing’s moving at all.
Will it drop as much as Prince William County? Probably not, but you never know. It’s drastically overpriced for what you get.
Many young couples who work inside the Beltway were forced to buy in places like Warrenton (and beyond) because they were priced out of the closer-in suburbs.
Nobody was “forced” to buy anywhere. They made that choice of their own free will.
“The big question is whether we’ve seen the bottom…”
How ’bout NOOOOO!
How about going outside in the public square and shouting ‘HELL NO’. NO,NO,NO,NO and NO!!!!
What question?
Bottom no where in sight. In 3rd of 9 innings to go. So much pain ahead for the debtorhomeowners
agree renter. and this one is probably gonna go extra innings.
we cannot discount the fact that as long as the gross inequity exists between wages and pricing, first time homebuyers can’t get in the game, except when we fudge the rules to issue a phony ass subprime to stoke the market. the chickens are coming home to roost, albeit not as fast as we vultures would like. save your cash and watch is crash.
This is a first-time homeowners market, an investor’s market, and definitely not a refinance market. Property values just are not there anymore.’”
No its not a first time buyers market, no its not a investor’s market and no prices are still way to high
I agree. Look at South Bay LA. Prices are down only 10% from their peak, and they doubled in price in 4 years.
Yep, there are only so many people that can actually afford a $900k mortgage, and based on the pricing of the last couple of years, you’d think that LA had millions of people earning 250k plus. As far as I can tell, it ain’t so, and it’s only a matter of time until prices reflect the reality of incomes rather than teaser rates…
“refinance market” any national numbers from 2002 through 2007 on the volume activity for this newly ‘found’ monitary market?
I think that statement is from his perspective as a mortgage broker. I don’t think he’s necessarily claiming it’s a good time to buy. I think he’s saying from a broker’s perspective, any deals he makes is going to be from first time buyers and investors because the other potential areas of business are dead.
“I think it’s going to get worse before it gets better,’ she said. ‘This is a first-time homeowners market, an investor’s market, and definitely not a refinance market. Property values just are not there anymore.”
Why can’t they just lock these liars up? Study after study, and article after article cites that affordability for first time homebuyers is the worst in history, but yet the press continues to hand these losers a microphone.
I love these D.C articles! The D.C area can’t go down. We have the Federal Government. The Iraq war. Immgrants, illegal and otherwise are always moving here. It’s all gonna go on forever. The spending party will never end! Don’t you people know that?
That’s right. It’s different here. My realtor told me so.
“In May of 2006, 575 homes were sold totaling more than $199 million in sales. In may of this year, only 443 homes sold totaling a little more $97 million. That’s a 23% drop in sales.”
As usual the MSM misses the real story. Based on the above numbers, the May 2006 average price (not median) was $346K. The may 2007 average was $219K. That’s a breathtaking 37% reduction in one year!
“In May of 2006, 575 homes were sold totaling more than $199 million in sales. In may of this year, only 443 homes sold totaling a little more $97 million. That’s a 23% drop in sales.”
Bill,
I picked up on that too, but from a different perspective. They are saying sales are off by 25%, but the DOLLAR AMOUNT is 50%.
I would say that is a 50% reduction in sales, on 25% less houses. That’s much more honest.
-D.
At what point can we all assume that the MSM is “missing the story” on purpose? Is it really possible for 99% of RE articles to spin the story in a positive light, with all the facts to the contrary, and it not be by design?
My sentiments exactly - there’s no way that the more than 50% drop in dollar volume was lost on the reporter. Any ten year old that has learned division would notice this - the failure to report it as such is pure spin (what spin there is left to be had…).
That’s what jumped out at me as well, especially since the numbers are rather round. Why don’t they just tell it like it is, are they trying to fake people out by distracting us with the 23% drop figure. I guess they think that we really aren’t paying any attention.
Dollar volume primarily affects realtors, as their commissions are directly proportional to it. But if for example dollar volume dropped 50% and total sales dropped 50% then the average price would be unchanged. That would leave homesellers happy (relatively), but a lot of realtors would see their fancy cars repossessed, as mentioned in one of yesterday’s threads.
A 37% average selling price decline hits homesellers like… Well, I’ll let auger inn provide the metaphor.
Please don’t think I didn’t appreciate the segue Bill!
Oh Waitress!
A 50% drop in prices on a 23% drop in sales? That’s not a reductions, that’s falling off the cliff!
I suspect that a lot of the problem with the media is laziness. It doesn’t take much effort to just quote some PR flack from the local realtor association, and these stories are probably dashed off very quickly. The RE “news” section is a very unglamorous part of the news business. Look at how poorly most dailies cover business news in general.
I totally agree…. check the July 4th edition of the Gazette (the local newspaper for the MD burbs)… the Homes editor literally uses Yun quotes for 1/4 of her article and the rest is also stock release. It’s 95% skewed toward the poor homeowners who can’t sell their homes at vastly inflated prices.
It ain’t just laziness. Ask a sampling of people to solve the following.
575 homes sold for a total of $199 Million.
The following year, 443 homes sold for a total of $97 Million. What was the average change in price, in dollars and percentage?
The vast majority of those under 30 could not give you the answers, even with a calculator. Many would not even be able to give you the average price for each year.
If we are already seeing houses now for 50% off, then we can expect to see further drops in the next months and years. This is music to my ears as I have been priced out of almost any house almost anywhere. A 50% drop would make houses in many cities and states affordable to us middle class people.
Questions:
1. Is said drop based on peak prices in q4 2005?
2. Are the drops adjusted for inflation?
3. Will even “cheap” locations experience as much drop? Less? more? I get conflicting answers on that. Some say cheap locations are undesirable and therefore must drop more. Others say cheap locations are more affordable so most people will buy there over the more expensive locations.
4. If the disparity between “cheap” and “expensive” locations shrinks enough, won’t it make more sense to pay a slight premium(as opposed to a huge premium) for the desirable location?
5. Is there really a such thing as “location, location, location” or is this made up by realtors and speculators to justify the bubble prices?
*also see all my replies above*
If your house is on the beach, it will hold it’s value much better than if it were in Fontana or Fresno. So, location is important in some respects but over all there will be declines.
Of course the beach is an exception, there is almost no such thing as cheap oceanfront unless you go to Canada(probably far north) where its winter, winter, winter and almost spring.
But the problem is the *cheapest* location is not affordable for middle class! Why is an acre of land and a 3 bedroom house in the midwest or some rural area over $100k? This makes no sense!
You don’t have go to the far north of Canada to get cheap oceanfront. Just past the end of the roads.
Ocean Falls
Regarding #3, it will depend on how local job markets hold up. For instance, where I live the median household income is higher than in San Diego County, yet our median price is less than half. From that I would infer that there will be less pressure for house prices to drop here than in parts of SD (like Escondido)
My prediction, on the predictions, next month will be two things:
A. “A great time to buy”
B. “Near or at the bottom now”
Then next month will be the same, and the next and the next and the next, until we see some serious truth in reporting and the ramp up of the pain and some real things happening that can’t be ignored. Something like global warming would be bad be it man made or natural, however when NYC and SF are under water will people really start to get a clue of how bad it is and then they will say what should we do to reverse this now?
The bottom will be in when no one is calling it. No one will be calling it because no one will be talking about real estate. No one will be interested in it. Surviving real estate agents will be taking the bus to work, just like the mid-’90’s.
A friend of mine is selling his clapboard 1950’s house in Rockville (Maryland), had it on the market a couple of months now. What a bargain, 3bdrm/1bath for roughly $375k. Ouch! He actually was surprised it didn’t sell the first weekend at such a “bargain” price. Hmmm…
Anyway, he got an offer on it over the weekend, the first offer he’s got so far, and what was it? He won’t say. All he will say is “below $350k”. So he told the realtor he “will not even counteroffer such a ridiculous lowball”!!! Aiiiieeee!
As another friend of mine would say, sometimes that first offer is the one you should take, and he really should have just grimaced and taken it.
(This other friend could not sell his empty house for a year, and he’s now renting it out. His first offer was $10k below his $320k asking. He countered with $320k. They took a hike. Months later, he had his house priced at $310k! No takers then, though. Doh! It sat empty for over a year, and now he’s renting it out and losing money every month.)
It’s hard, very hard, for some people to get it into their heads that prices are falling.
Thanks for the interesting stories. These homeowners all believe in that ” DC is special and will be immnue to the bust”. They are too slow to catch the wave (offer). Many of them will carry their home to the deep bottom if not being foreclosed.
Fortunately for these two friends, they each have so much equity in the houses and (so far) such decent jobs that they can afford to keep the old houses.
That’s part of the problem for them, though: They don’t HAVE to sell, so they end up in a poor investment over the long term as these things depreciate and run up costs in maintenance, utilities, insurance, taxes, and their old (albeit low) mortgage payments.
It’s truly scary when you actually run a spreadsheet on these places and show them the opportunity costs entailed in keeping those places (even if rented), but then again, if they ever annoy me with the “it’s different here” cheerleader talk, and I want to get rid of them for a couple of days, I just start pulling up some spreadsheets. Their eyes glaze over and they leave me alone for while!
Similar stories here. Actually, there are bullish people than bearish around me. Most of them are normal homeowners. They do not pay as much attention to the financial and housing market as I do , but they do not like my bearish comments. They use the realtor’s cliché of the booming time over and over again. Anyway, these people are not going to affect the market too much because they are not likely to buy an other home nor sell their existing home in the near future.
That’s exactly what happens, time and time again. Your 1st or 2nd offer is usually the best and it only goes down from there.
Actually, considering what my house in College Park Zillows for, I’m surprised that he couldn’t get $350 in Rockville. I wonder what It would have gone for in 1999 when I bought my house.
I live a little outside of PW County.
There is a 5-year supply of houses in Culpeper County in the 400K plus range. (That’s south of Fauquier and Prince William County (Warrenton) and people do commute to D.C. from there).
Even the “it’s a steal” foreclosures aren’t selling this summer out here. One nearly new house I toured has been marked down 30%, (from 450K sale price in 2005 to 300K) and it’s not getting any takers.
Some examples of the decreases:
18174 CAMDENHURST DR
GAINESVILLE, VA 20155
List Price: $450,900
Prior Sale: $703,000 5/17/2006
Listing Date: 04/24/07
-35.9%
13203 KEYSTONE DR
WOODBRIDGE, VA 22193
List Price: $266,500
Prior Sale: $413,455 2/20/2007
Listing Date: 02/11/07
-35.5%
2540 PORT POTOMAC AVE
WOODBRIDGE, VA 22191
List Price: $479,900
Prior Sale: $740,000 9/5/2006
Listing Date: 04/16/07
-35.1%
3820 LIGHTFOOT ST #318
CHANTILLY, VA 20151
List Price: $280,000
Prior Sale: $430,000 11/22/2005
Listing Date: 05/20/07
-34.9%
6529 ATKINS WAY
GAINESVILLE, VA 20155
List Price: $459,900
Prior Sale: $698,190 10/18/2005
Listing Date: 06/15/07
-34.1%
http://www.novabubblefallout.blogspot.com/
I’m not surprised that Woodbridge is tanking - the commute up I-95N in the morning is hell. Some folks do ride the train, but that has it’s disadvantages - namely, limited operating hours.
I couldn’t imagine commuting from Culpepper. The exurbs were latest to the party, and it seems they are the first to tank. Folks in the close-in suburbs are still pretty smug - for now.
HOV, my man. I do this every day: http://en.wikipedia.org/wiki/Slugging and it could not be better. The hardest part is getting to the parking lot and actually finding a spot.
Slugging is great if you work government hours. Not so great if you are in the private sector, since the HOV lanes turn ‘regular’ at 6:00. I slugged for awhile and liked it, but with my current job there is no way I could do it. And the bus line out to PWC sucks and is expensive. That’s why we rent a lot less space closer in to DC now.
Sorry for offtopic…
10 year bond is back up 5.11%
Oil hit 72 bucks a barrel.
Dollar is heading south so fast it is making me head swim…..argggghh.
If it can happen here (the DC exurbs), it can happen anywhere. There are pretty decent employment opportunities, even in the outlying areas, including a lot of technology and defense-related work — and growth in homeland security related technology field. Traffic is pretty lousy — but there is some commuter train infrastructure. The area from Tysons out to Dulles airport offers a lot of employoment opportunities — and those are not “killer” commutes from much of Prince William County or Loudon County (although commuting in DC is pretty brutal from those areas). Educational system in Northern Virginia is pretty good, and it feeds into a pretty excellent set of state colleges (UVa, William & Mary, James Madision, George Mason & Va. Tech). Population has been growing pretty steadily with the economy — and Washington area is a magnet for a lot of immigrant communities, especially Asian and, oddly enough, a concentration of immigrants from El Salvador. The federal presence will always be at least a stabilizing factor in the economy.
But - the funny thing is, none of that “it’s different here” stuff trumps too much inventory, over-building, too much creative financing to “get people into” more house than they can afford, or even people stretching themselves to the limit even if they can qualify for a decent 30-year fixed mortgage. Folks, NOTHING trumps too much inventory (except, perhaps, a lot of time for that inventory to be absorbed).
On the plus side, this trend hopefully slows development in the super exurban counties like Faquier, Clarke, Madison, Orange and the Shenandoah Valley. It’s probably inexorable that these gorgeous areas will eventually all look like eastern Loudon County — but, hopefully the process at least slows for a while.
While the Fed Gov’t and Fed Contractors do supply a fairly stable employment base, for the most part, the jobs are middle income jobs. When you start to get housing prices at 5x + annual income…people are living from pay check to pay check, and that only works if they have ARMs. ARM re-sets will wreak havoc. D.C. area is in for a lot of pain
Middle income? A GS-11 can make over $70K in the DC area. The companies that suck the federal teat pay their people almost as much. I guess it depends on what one defines as “middle income.”
http://www.opm.gov/oca/06tables/txt/gstbls.txt
I know what the Pay Sched say, but almost every one is a 13 step +, with many being 14’s and 15’s. A journeyman FBI agent (or any 1811 for that matter) easily pulls down $100K with OT!!!
The median household income in Loudoun is first in the nation at $98k, followed by Fairfax, which is 2nd in the nation at $94k.
Yup, and that still doesn’t get you into a $600k home using responsible financing.
Testify ChrisO, Testify!
94K is nothing in this area.
94k is just fine. $700k houses are the problem. But not for much longer.
I live in Mobile, Al and I really don’t think household incomes of $50k-$100k are very good at all. I just don’t see how people can live very well in DC on that level of pay.
my kid is 4.0 ,eagle and varsity lacrosse- getting into UVA is a joke
you need the 4.0 for WM&Mary
That’s the great thing about Virginia — UVa is incredibly hard to get into, on account of not being huge and a comparatively high out-of-state student body for a state school — but the remaining state schools are pretty excellent alternatives.
I’m a UVa grad myself, and I loved it, but I totally understand the frustration of folks in Northern Virginia who have, excellent, high-achieving kids that can’t get into UVa. It’s the opposite of the housing bubble — not enough inventory (spots in the freshman class) to match demand.
Having known a person who worked in the Admissions Office at UVA, the way things are done in VA, you need to move to a smaller, more rural, county. They try to distribute amongst the counties. Less competition & more opportunity in other, smaller counties I would thing.
I think it’s been that way for at least 20 years. I knew someone from NoVa who went there and he said that admissions discriminates against kids from metro DC and in favor of those from more rural, less economically advanteged parts. Remember that as a state school, UVa has to keep the legislature happy in order to keep them writing the checks, and there are a lot of delegates who represent areas far from DC, both culturally and otherwise.
If it can happen here (the DC exurbs), it can happen anywhere. There are pretty decent employment opportunities, even in the outlying areas, including a lot of technology and defense-related work — and growth in homeland security related technology field.
That’s all true in the well-heeled I-66 corridor. But not so much down I-95, which is mostly low-paid military and long-distance DC commuters, with tons of illegals and Section 8. There’s a reason why Woodbridge is known locally as “Hoodbridge”.
Yeah — a lot of density right there in Woodbridge. And a lot of cheap developments around Dale City built in the 80’s, as I recall. Of course — that’s pretty much the case all along Route 1 all the way up to the Beltway.
Not nearly as bad a commute to DC (or the Pentagon or Crystal City) as a lot of places farther out — and you do have to have the train as an option. But, still — a tough commute unless you have the flexibility to work something besides a normalish 9 to 5 type job — it sure doesn’t help that there are always a lot of folks besides just commuters on i-95.
If you lived close to one of the train stations or had a boat that you kept on the Occoquon river, it might be okay. But, otherwise, the 95 corridor leaves a lot to be desired.
Yeah, we moved out of Woodbridge and into Arlington because of boredom and the horrible traffic, even though it meant that we have far less space now. But we don’t have kids, so it was an easier call. Dealing with I-95 during rush hour? A good argument for suicide.
“The federal presence will always be at least a stabilizing factor in the economy.”
In 2 years the new administration will have to try to bring the deficit down and dollar up… there could be quite a few RIFs as well as less contracting out to beltway bandits.
for a while there was a theory that the UK thing would happen here
” as the central bank struggles to contain rising prices and a booming housing market.
You did see that BoE just raised their rates by a quarter point to 5.75%, eh? I imagine all my UK friends are cursing, since none that I know of have fixed rate mortgages — and this isn’t the first rate hike, nor will it be the last.
the interesting part is that they have been hiking rates for quite some time now and it doesn’t do any harm to home prices. Just like New Zealand where mortgage rates of around 10% have not been able to contain the bubble. Apparently the flow of free money keeps adjusting upwards with home prices.
That’s the thing that has really amazed me about the UK. I was sure they were poised for a fall back in 2004 or so, yet prices started gaining ground again. Some of that is no doubt due to their restrictive planning rules that reduce the ability of the market to build more houses.
I’d still be very wary of betting on high UK prices to hold, though, in the longer term. I see rents in parts of London way below the cost of owning. Flats in some of the suburbs where I used to live are giving landlords about 6% gross yield. That’s way too low, given the cost of money, and other parts of London are even worse (for landlords).
The interest rate hike today and another anticipated one later this year certainly has to be putting pain on the BTL’s and also plain old homeowners, since almost every morgtgage there is either an ARM or a hybrid ARM.
But the fun part of bubbles is how long they go on, well after sense would indicate (in retrospect) that the party is over. I’m just glad I’ve got no skin in that game.
“The Prince William Board of County Supervisors budgeted for a 2 percent overall drop in assessed real estate values, but the county is seeing a nearly 4.5 percent drop when comparing prices from May 2006 to those in May 2007″
No problem here. Just get a prop 13. All those who bought late or refi’d can have a higher assessment until they sell. This way you can have an orderly retreat on your tax base.
“These types of mortgages are very favorable to people who have ‘informal income,’ such as illegal immigrants and people who are self-employed, said Peter Tatian, a housing expert at NeighborhoodInfo DC. Buyers who thought they were going to ‘flip’ a house for a higher price also were candidates for these mortgages, he said.”
Since when did we start issuing mortgages for ‘flipping purposes’; this is just pure insanity.And the quote below is just classic.
“‘The economy is an anomaly to me,’ he continued. ‘We still have good job growth, mortgage interest rates are still low, but residential is not moving. I think what has happened is the investors who used to buy houses to flip them later for more money have all left the market,
Just wanted to give all you guys and gals an on the field update. Tuesday night I went for some laps in the pool at our apt complex. Well a guy who I have seen before in the apt gym came in for some laps. This time I engaged him in some talk. Well before I knew it we spent 30 mins. talking about RE. Come to find out he works for Wells Fargo as a branch manager. Although not in the mortgage dept, he had ALOT to say about this mess. Seems he and GF are not caught up in this either. He knows what is going on and will not bust his/her future in trying to buy.
Anyway, he said that everyday, yes, everyday, several people come in looking for relief/help/refi whatever you want to call it. However, it is already too late. He told me that most are already underwater, have reupped the CCs, spent whatever equity is available and IF they got a new rate, it would be much higher. Bottom line is that the party is ending for these people. Oh, for those who don’t know I live in Rancho Santa Margarita. Yeah, South OC. The place that NEVER, EVER, WILL DECLINE! Right.
Well, he was really nice. We also talked about how banks operate, vis-a-vis, the whole fractional reserve and how banks sometimes have to get money from sister branches if they run out. Some real scary stuff goes on that the avg. Joe like me doesn’t even know about and you guys have taught me a lot. All I know is that this economy is running on empty, but the avg. J6P hasn’t figured it out because sportscenter hasn’t run a story on it. Full disclosure, I am a sports nut, but I do try to keep up with what is going on.
Also, I have to comment on this one…
“‘The economy is an anomaly to me,’ he continued. ‘We still have good job growth, mortgage interest rates are still low, but residential is not moving.”
I call IDIOT OF THE YEAR AWARD on this one. Residential is not moving because housing is too expensive and job growth is in areas that do not support the cost. Read my writing, getting a job as a McDonalds manager for 40K/year does not qualify you for a 500K house, unless you have 450K to put down, which I don’t think is gonna happen in this lifetime.
Meant to say, 350K to put down.
The really scary thing is that in the bubblicious areas that Joe Q Public has come to accept as “normal” that someone making 50-75K can afford a 500-600K house.
I have had headhunters call trying to lure me back to SoCal. When I tell them that I couldn’t afford to buy a house if I moved back they are incredulous. Since the job would pay about 100K, I should be able to afford a 700-800K shack. Plus, I should have 400K equity in my current house (umm, my current house isn’t worth 400K).
Its like the story of the frog in the pot that is slowly brought to boil. Unlike the frog that is tossed into a boiling pot, he doesn’t jump out.
I was having a beer, or two…maybe three…yesterday at a little grill/cantina in OB (Ocean Beach, San Diego). I had my pooch with me, and so, the waitress starting talking to me. She goes on to tell me that she just can’t wait to find a little house in OB, less than 3 blocks from the beach for 500K. Now, this girl, although nice…is a WAITRESS, with an UNEMPLOYED boyfriend!
The mindset that 500K is affordable is only present in someone who actually has no FREAKING clue what they are talking about. I told her be ready to pay 4-5K per month in mortgage and taxes…she was like: “it’s ok, i will get a renter.” She is basically CLUELESS…Clueless…cluelesssssss…
Experience is the best teacher, but a very harsh one.
So you’re telling me that bringing a dog to a bar helps you get chicks to talk to you? NOW you tell me!
Mine does (mini-dachshund) handsome as hell, gets the women fawning over him all the time…kinda funny…
__________________________________________________
“Maybe she meant that she will rent it along with a few other roomates. If the rent is $2000 a month, with enough roomates all splitting the rent, it becomes “affordable”
Houses in OB are little, like 2bd/1bath, there is no “enough roomates” here…
works like a charm. anyone who loves and takes good care of their dog is probably a decent human being. that said, lots of women are drawn to dogs, and it does give you something to talk about. tell your sons.
What bank will give some waitress making $30k a year a $500k mortgage? With the meltdown of the subprime lending, I would be shocked if she “qualifies” for more than about $150k financing.
Maybe she meant that she will rent it along with a few other roomates. If the rent is $2000 a month, with enough roomates all splitting the rent, it becomes “affordable”
Maybe she meant that she will rent it along with a few other roomates. If the rent is $2000 a month, with enough roomates all splitting the rent, it becomes “affordable”
This reminds me of a TV show from a long time ago in San Diego: San Diego at Large. It had a skit called the “Adventured of Biff and Skippy”, which was basically the misadventures of two nerdy surfers who bussed tables at the Çhart House in Pacific Beach and shared a studio apartment in PB with umpteen roommates.
The waitress is the kind of person who writes the contracts that never close. They waste everyone’s time. That’s why the pending contracts number is double the actual sales number.
Don’t you just love that dog beach? We take trips down from L.A. every chance we get with our shepherd. Last weekend was gorgeous.
not to be picky, but for the sake of accuracy, actually frogs will jump out .. being cold blooded they get more and more active with rising temps, and if there’s a way out it will get itself out.
A better analogy might be to replace the frog with a human RE investor circa 2005-6.. but then the analogy would be redundant.
snopes.com had a page on that frog-legend if i recall
LOL they will all get foreclosed. A $50k salary is good for around $125k of house and thats the price middle class should pay. If house prices don’t drop enough that a $50k income can afford it, either rent(if still affordable) or just move to a cheaper state.
Love Prop 13!! Tax on inherited house valued @$400,000: $800/year
Built in 1973 /no refis/ mortgage paid/ no major tax increase revalue per Prop 13 family exemption upon estate transfer to child.
Say what you will about CA but once in a while you catch a break.(Although we will catch a big break soon when the overdue earthquake arrives).
Prop 13 is grossly unfair, and it’s one reason I left California, never to return. It shifts the tax burden onto the young.
> It shifts the tax burden onto the young …
if they are not heirs to the land owning class. In this case (see original posting) Prop 13 creates a nobility - and like in France 1789, the nobility has to pay less taxes. We know how that ended.
nobility?
your dad busts his ass 6 days a week humping boxes at the Warf and manages to save a down payment and buys a home in SF .. meanwhile the State tries to tax the family into oblivion as that home’s value, through no “fault” of dad’s, rises..
Enter Prop 13.
Kids inherit the house and are suddenly, somehow akin to blue blood aristocrats?
gimme a break..
Kids inherit the house and are suddenly, somehow akin to blue blood aristocrats?
In a word: Yes.
I agree that prop 13 is unfair. I prefer Colorado’s TABOR. It indexes spending increases to inflation and population growth
The housing market bulls, like the NASDAQ bulls of 2000 are quite skillful at implanting uncertainty into the heads of the general public. They are losing the opinion war so as a consolation prize since they can’t convince there’s a bull market, they can deny certainty there’s a bear market. That’s the intent. Creation doubt-maybe we have, maybe we haven’t and wrap it up in a shawl of academic conjecture to disguise the intent. Always keep the issue in a question mode and never certainty of a conclusion that, no we have not reached bottom.
I have lived in No.VA. a long time. After Reagan got elected the defense dollars poured in and began changing everything. Probably the strangest side effect was almost all the landmarks I associate with my youth are gone. It is like I moved and never left home.
The biggest diference between this time and other real estate run ups is it will really be different this time. Why?
No.VA has one thing in common with L.A. and other metro areas. For a large portion of the population it’s about what you own. Usually it is all purchased with credit, equity, and bonuses.
My guess, and it’s really only that plus my reading of FFX County stats is the average family is at 5x salary to purchase price on a house. I have a huge and varied extended family and based on their comments people are very stretched right now.
Out of my immediate little circle I think there is at least 5-7 families that will not weather a recession mostly due to the trap of a dual income lifestyle. I get no glee or personal joy from what is begining to happen.
Also I think the idea of China making cars with Chrysler is a huge deal. I read at 1/5 the price for sale in Mexico. At 1/2 the price they will eventually kill Detroit and all the little companies that make parts.
Yep, all of the “DC is different” people are full of it. It’s going to be blood in the streets here. And it’s not just the 5x income houses, but the his-and-hers Beemers, the European vacations, tuition for Muffy and Skip at the “right sort of school” etc. etc. etc. No. Va. doesn’t go so much for the trashy sort of bling that Calif. does (Hummers), based on the comments here, but you can see it around here nevertheless.
Re: China Autos. I think that chrysler is doomed long term. Just as their sisters GM and Ford, their product is not very good. I wonder how good a product that is made in china with lots of very important parts that need stringent Quality Control. Granted Chrysler has never been the beacon of QC, but lets face it. Most chinese products are of very low quality. Recall of tires that did not have a 1″ wide gum strip leading to many fatalities is just one case. I wonder how many chryslers will have their wheels fall off due to bad rubber in the suspension? How many blown head gaskets?
For history just go to Korean cars like Kia, and Hyundai. They are both crap. Kia was bought by GM after it went bk, and now we get the aveo, made by them. It is made with recycled soda cans as a body, that is how thin these things are. Hyundai has the worst reputation for quality in the world, bar none of the multinationals. Their cars are cheap, ugly, low powered, and unconfortable to boot. They break down regularly, and have the same appeal as a drunken slug.
The automotive industry has improved its quality markedly over the last 30 years, but I think that is about to come to an end. Picture chysler cars breaking down because a newly hired chinese peasant forgot to adequately torque a head bolt, or forgot to put a cotter pin on the steering.
We are in for interesting times, and the minute the first chrysler is imprted for china, is the last day that I think about buying one… I will stick with my Element, thank you very much, made 85% here in the USA of American made parts….
GM already has a huge presence in the Chinese auto market (in fact, it is their most profitable division), so it wouldn’t surprise me at all to see subsystems or entire autos coming from China in the near future. I know both of the major Chinese automakers are plotting longterm U.S. sales strategies, though they have put that off because they can’t even satisfy the huge domestic demand at the moment.
Go to Shanghai - all you see are Buicks and VWs. Of course, their deal is a JV with the Chinese gov’t, so I’d be skeptical if GM came out on the good end of that one. Most people don’t…
IIRC, GM’s 3.4L engines are now assembled in China.
Hyundai beat Toyota in quality last time around… so you’re a bit behind. But I like my wife’s Element too, and my Toyota truck, made in Fremont, CA.
Japanese products were the butt of jokes for a long, long time.. they started out making crappy plastic toys post WW2.
Today that tiny country uses 50% of the world’s entire supply of the highest tech robotic manufacturing and product quality is now, in many people’s opinion, the best.
So, what’s China ultimately capable of if they focus on manufacturing for export? Time will tell, and it won’t take long, imo.
FWIW, Toyota is not highly regarded as a brand in Europe.
I have had Toyotas, and while its true they are very durable, I found that was the only thing I liked about them.
I completely agree…. Toyotas are reliable but they have crappy acceleration and even crappier breaking. If you like fun to drive imports buy German or if you really like Japanese, go for a Mazda.
“Korean cars like Kia, and Hyundai”, are you sure it was Kia that was bought out by GM? I know they bought out someone but I can’t remember who. That aside, most rating services rate Hyndai and Kia right up there with Toyoto and Honda.
As for Chrysler, I own three (van, truck, PT) and all function great and cost less then Toyota and Honda which didn’t have what I wanted. As you get older it is harder to get into and out of a car, especially hard on the knees and back and head, which makes the PT and my small Dakota ideal; plus both have great hauling ability. Honda’s Element would also work for me once my son goes off to college with the van and my daughter has taken over the PT (customized). Just call me a redneck about the truck, but with a souped up V8 and nice deep breathing pipes its my man-toy.
With China parts I probably wouldn’t buy one, but what the heck, I’d buy the stock.
So THAT’s why I only see “old” people in PTs.
“For history just go to Korean cars like Kia, and Hyundai. They are both crap.”
I, and Consumer Reports, would beg to differ. My Santa Fe finished 2nd in the small SUV category, just one point (0 to 100 scale) behind the RAV4. I’ll agree they used to be crap, and Kia is still no better than Chevrolet.
Chinese products today are where Japanese products were in the 60s and 70s. Japan’s products were once so bad that one Japanese industrial town renamed itself Usa. Then their products were labeled “MADE IN USA” with the word “Japan” below it in a much smaller font.
American cars and trucks only for me…….can’t fit in any of the cars built in Asia (my 6′5″, 36″ inseam won’t fit). Can’t afford any of the German cars that might work.
Don’t know why everyone is so down on the Big 3. Have never had any problems with the ones I have owned. Out here in the
“Great American Desert” you still see lots of 70’s and 80’s American cars…….but you don’t see ANY 70-80’s Japanese cars, with the exception of a few Toyota trucks, and RX-7s.
Have we seen the bottom? I love it. First they deny there even was a bubble. Then, in a blink of an eye, they flip and say yeah, it was bad but now it is over. It really is the same basic BS.
Always a great time to buy real estate. And if it turns out to be a bad time, I still got my commission so drop dead.
Seen in the heart of South Philly rowhouse neighborhood:
2005: 15 Luxury Townhomes starting at $399K (3br, garage)
2006: 15 Luxury Townhomes starting at $299K
2007: no completed construction in past 18 months……fully expecting
2008: 30 Luxury APARTMENTS.
Xpovos
Very informative post about the ” Slugger ” commute process. Illustrates just how resourceful people can be if they take an interest in something.
Here in Sacramento area we also have the HOV lanes but I dont know if the “Slugger” deal is in effect as the commute time/distance is shorter than DC area.
Makes a lot of sense, though.
Slugging has been around on the I-95 HOV lanes virtually since they opened. It helps, though, that downtown D.C. is the destination for a very high percentage of local commuters, and that there is a subway line to take you from the drop-off point downtown to your office. From experience, I don’t think it would work in western cities, where the workforce is far more decentralized.
Don’t mean to hijack the thread but a quick question re slugging: what happens when either party ( driver or person in-line) want to decline, as in not accept a ride or not allow a passenger to enter?
Does the passenger g back to the end of the line? Keep his/her place up front & wait for the next car?
This process is very interesting & workable as it eliminates most of the problems with buses as allowing a like-minded group of people to journey while minimizing the BS of common public transport. IE the drunks, stinking bums, predators, etc….
That’s the main reason people (myself included) are very reluctant to give up our clean, non-urine smelling, non-fellow-passenger-threatening personal transport, be it a car, mortorcycle, rickshaw, whatever.
Which leads me to comment on the hypocrisy of elected officials pushing public transport . . .. but not for themselves, of course!
Everyone from the dogcatcher on up thinks they are too valuable to waste time on the bus, let the masses use ‘em.
Sorry to veer off main topic but it does relate to real estate as in commute time/process from home. thanks
All good questions. Since I slugged for awhile, let me answer. At first, I was like “you’d have to be crazy to get in a car with a total stranger!” But the I-95 HOV lanes work well because you’ve got three people in the car, two of whom are usually sluggers, so there isn’t the ‘kidnapping’ scenario. In fact, that is probably why attempts to set up slug lines on I-66 have failed, because that is only HOV-2. Also, all of the people I saw/rode with were uniformly professional types. Never saw any dubious sorts in the entire time I rode in.
However, there is not considered anything wrong with turning down a ride if you are dubious, and you don’t have to go to the back of the line or anything like that. In fact, most morning slug line stops out in the burbs serve two or three different drop-off points downtown, so oftentimes you may have to wait awhile even at the head of the line until a car shows up that is going to your drop-off location. What typically happens is that the first two or three cars in line yell out their destination or put signs in their window, and the first folks in line get in as the right locations are announced. I never saw anyone cutting ahead or such, though occasionally you’d get some sleepy folks in the morning not paying attention. Not that I ever did that.
They system was set up totally without govt. assistance or intervention and has functioned well for over 25 years. There are about four or five main commuter lots serving sluggers, and most serve different locations, either the Pentagon and related areas, or various points downtown. The Pentagon ones are funny because all of those DOD folks get to work wicked early, and those slug lines are pretty much over by 8:00am, even though the HOV restrictions are in effect until 9:00 or so.
Another thing–one reason slugging works so well is that the most of the slugging locations are far out in exurban Prince William County, beyond the reach of the regional Metrobus system. There is a separate county-operated bus line in PWC that runs downtown, but it is inconvenient and expensive. If Metrobus ran out to PWC, I’m betting that the slug lines would have a harder time operating, though there are a few slug lines operating closer in, within the range of at least some bus service.
ChrisO
Thanks for the explanation. And it’s been ongoing for 25+ years . . . amazing!
This blog just rocks !!!!!