‘Sellers Aren’t Getting The Sun, Moon And Stars’ In DC
The Washington Post has this report on the DC area. “As ‘for sale’ signs sprout at the start of the high season for home-buying, properties are staying on the market longer, and prices have leveled off across the region. The pullback has been most marked in areas of red-hot growth such as Loudoun County. Builders have flooded the county with homes, helping temper demand.”
“The number of homes listed for sale in the region has tripled in the past year. There were about 26,800 houses for sale in the Washington area at the end of February, up from about 9,400 a year earlier. ‘Sellers aren’t getting the sun, the moon and the stars anymore,’ said Jill Landsman, a spokeswoman for the Northern Virginia Association of Realtors.”
“‘We’re coming out of a market with 25 percent to 30 percent appreciation each year, and no seller wants to accept the reality that that’s not the case anymore,’ David Howell, VP of a real estate firm in McLean. said. ‘There is clearly inventory out there that is still priced like the market of last year, and that’s the kiss of death.’”
“Many people remain astonished by the prices some sellers are asking for. ‘Even in the office, we say, ‘They want $1 million for that?’ Howell said.”
“In June, Alice Jacobson and her husband, put their spacious colonial-style house in Loudoun County up for sale for $949,000. It sold nine months later, for $150,000 less. Alice Jacobson said they learned the hard way that reaching for the high end of the market was a mistake. Pricing the house at $949,000 ‘killed us,’ she said. Because the house remained unsold for so long, it almost felt as if it ‘had a curse on it.’”
“They had bought another house and were carrying two mortgages. They needed to sell, so they lowered the price and offered to help with closing costs.”
“Diane Kohn is in a race to sell her home. The owners of a bright red rowhouse on Capitol Hill had reduced the asking price. All that stood between her and the house was her two-bedroom, two-bath condo on the other side of the Hill. She had to find someone to buy it, within 30 days. Otherwise, she risked losing the rowhouse to someone else.”
“With an asking price of $414,900, the condo made its debut amid speculation about rising inventory of houses for sale and buyer uncertainty about prices. ‘We had a turnout that was not embarrassing but not encouraging,’ said Malcolm Carter, an agent who erected for-sale signs in the snow.”
“Kohn, who got an update later from her agents, guessed most were neighbors who had come to gawk.”
“Kohn said she believed her condo was priced fairly, having compared it with other properties for sale in the neighborhood. ‘I really don’t want to sell it for less; I can’t afford to,’ Kohn said. The condo was appraised at $419,000 last year when she took out a home-equity loan.”
“So it went, and when the open house was over, Kohn’s condo was still very much on the market. But in the end, the same market forces that had left Kohn without a buyer had also played in her favor. The seller of the red rowhouse on the other side of the Hill had not been bombarded with offers, either. After 30 days, Kohn’s bid remained the only one. The seller agreed to extend Kohn’s contract until the end of this month.”
‘“As ‘for sale’ signs sprout at the start of the high season for home-buying”
I anxiously await to read the obits when they go from the sprouting stage to the blossoming stage.
And… the “crop” will grow or die, depending on how much the sheople decide if the realtor bull$h!t fertilizer will work or not.
I am so glad we sold our DC house last summer.
I am so glad I sold my L.A. Home last summer.
I’m so glad I sold my Loudoun Co. townhouse last fall.
I’m so glad we sold our home last fall.
so glad we sold our west los angeles sfr las fall
I’m so glad I talked my mother into selling a house she inherited in the UK in late 2004.
I’m not unhappy I sold my house in Canberra, Australia, in early 2004.
I’m so glad I didn’t buy in June 2004 when I moved to DC.
I’m so glad we rented when we moved to SD in Fall 2004.
I’m pissed off that I was apparently born too late, and have been unable to buy even a condo yet for my family.
Well, that shut them up. I’m so glad I sold my OC home in 2000 and I miss out on $500,000 profit. Been renting ever since.
THE RE PIMPS. Any other observations about this crew?
Donald Trump and Other Amazing Speakers
Don’t miss Donald Trump and the rest of all our all-star line-up when the Real Estate Wealth Expo comes to your city! Choose a city below to register for this event of the lifetime!
LA (Apr), Altanta (May), Chicago (Oct), NYC (Nov), Boston (Dec)
Donald and his buffoons will continue to pimp RE as this whole bubble implodes on them. Will they change their tune as more evidence comes our way? It would be nice to hear.
The site is http://www.learningannex.com
Any other observations.
Need 2 Leave,
As I posted the other day… The Donald and Rich Dad/Poor Dad are in bed together in San Francisco- pitching “has been” techniques for creating wealth in R.E.
If they want to save any kind of dignity or FACE, they are going to have to weave some VERBAGE about TIMING in the market, and pitching the technique of having CASH ready when the housing market bursts and corrects itself.
I think it is too late for them- they booked last year and have pre-programmed seminars. They are definitely getting caught, pants down around their ankles. Not a very good visual
FYI: verbiage…
Thanks Amigo, ‘preciate it.
By the by… you have had some great quotes from Shiller, etc- What books or articles would you recommend to us to read to learn more on the stuff that is often times the “basis” of your own belief systems when it comes to commenting on the wacked economics of this housing bubble? Serious question… would love to read what you have read or are reading. SB BB
Or the Donald and Kiyosaki could give the same schtick they always give. If you actually listen to what they say they always emphasize the need for positive cash flow from day one. Anyone
actually following their RE advice would be running screaming from RE at the present time.
Yes, Kiyosaki’s site has been warning people for more than a year that this is NOT the time to get into real estate. He says it’s the biggest mania he’s ever seen. He’s now telling people to buy precious metals.
That said, he must figure that if morons insist on being told how to get rich for nothing in RE, he may as well make money telling them at these seminars, or else someone else will…
An idea: We could stage a protest outside the one of these seminars, complete with bubble banners, big placards with statistics on growing inventory, slower sales, stories of FBs and F’d flippers.
Dreaming…but it would be fun!
Sorry for typos.
What someone owes on their POS has no relevance to the true market price at the time of sale. It is whatever someone is WILLING to pay for the POS.
“With an asking price of $414,900, the condo made its debut amid speculation about rising inventory of houses for sale and buyer uncertainty about prices. ‘We had a turnout that was not embarrassing but not encouraging,’ said Malcolm Carter, an agent who erected for-sale signs in the snow.”
“Kohn, who got an update later from her agents, guessed most were neighbors who had come to gawk.”
“Kohn said she believed her condo was priced fairly, having compared it with other properties for sale in the neighborhood. ‘I really don’t want to sell it for less; I can’t afford to,’ Kohn said. The condo was appraised at $419,000 last year when she took out a home-equity loan.”
Interesting how in DC the market for single family home rose so much faster than the market for condos. That’s partially because there are so many condos and because so many dc submarkets (columbia heights etc.) suddenly are people’s radar screens.
http://www.dcbubble.blogspot.com
It is interesting to see peoples thoughts on interest rates and a refueling of the bubble should interest rates drop some again in the near future. Underlying this scenario is the fact that wages are not increasing and the fact that sooner or later people will come to realize that someone making $150,000 can not afford more than a $300,000 mortgage and have a decent standard of living. Those making less then this will have to scale down their expectations.Those buying property in the more remote areas will get ’screwed’ but hey, if they are under 40 they still have time to save for their retirement and tell their grandchildren of the ‘Great American Housing Bubble of 2000′.
Your comment is relevant to something I heard on the radio today on the way to Mass. Something along the lines of ‘condos in arlington, beautifully appointed, perfect for the first-time homebuyer, priced just right at 400k-500k’
I’ve been working for 17 years since college and even at my salary, with no debt and savings, if I put down 20%, that is still a stretch. Even if you add a second income to that, still a stretch. Incomes have not inflated to the extent home prices, food, gasoline, etc., etc.
If these prices hold up then I’ll tattoo my forehead with the word fool, but in no way does any of this reflect the reality of incomes of most of the people I know, whether single or a dual income household.
I would rent for the rest of my life before I’d commit to anything like that. It simply flies in the face of anything resembling common sense. I would not give up my freedom to move and change my life for a crappy condo, or even a non-crappy condo.
I thought 3x of household income was norm.
$450,000 is pretty resonable for somebody making $150,000… $300,000 is definately a little low.
Right now people making $50,000 are buying $450,000 houses. That’s a problem.
Doesn’t it matter what your down payment is? So we should be saying this is the appropriate mortgage you can afford, not how expensive a home you can afford.
There’s a disconnect here, I’m afraid. If rents are $2000/month, & home prices are out of out of reach, where does that guy or even family making $65,000 or less live? Isn’t that 1/2 the population? They might make too little for either option. But people don’t make the choice to live in the street unless all other options are exhausted.
Another point to ponder….Not sure how many bloggers have young children but don’t recall hearing anyone comment on the drive for good schools and low crime neighborhoods. These needs are HUGE for families. People don’t want their kids assaulted on the way to school or picked up by a pedaphile. They don’t want their kids in school with the kids of drug addicts or illegals that don’t speak the language. And they will dig way deep to “believe” they’ve found a place with reduced risk. To quote the former Clinton speechwriter that just purchased around the block from us, “We were looking for a little piece of Americana.”
Ok now I’m scrolling down and reading those comments….oops!
In the Washington area, it is actually a luxury for many young people to even have their own apartment. Those that don’t make enough have to have roommates. And even there, there’s different levels. For example, having a separate bedroom and bathroom is the top level of the roommate world, next down is a private bedroom but shared bath, and the lowest is a shared bedroom and bathroom, or even lower still, sleeping in the living room or other common area. Believe me, as a young person, I’ve seen it all.
“Many people remain astonished by the prices some sellers are asking for. ‘Even in the office, we say, ‘They want $1 million for that?’ Howell said.”
I’m still trying to catch my breath about the reports that $1million dollar homes are littered all over this country now.
Some fellow blogger recently pointed out that people have stopped looking at the “price” of a home and are more focused on the PAYMENT of the home.
No one is paying attention at price and with the LOW LOW interest rates, then A.R.M. and Exotics… it allowed hugely over priced homes to seem like REASONABLE payments.
Fast forward when the rates on the A.R.M.s tick up and the same folks that bought in to the “cheap” payment are stuck saying “WTF was I thinking!”
“WTF was I thinking!”
It’s a lot like drinking too much, then picking up a girl at a bar. Upon waking up in the morning with a terrific hangover, you look over in shock at that stranger asleep on the other side of your bed…
It’s a lot like drinking too much, then picking up a girl at a bar. Upon waking up in the morning with a terrific hangover, you look over in shock at that stranger asleep on the other side of your bed…
Good analogy. If you have ever been in that situation, you understand the term “Coyote Love”
I suspect we will see a lot of people sacrificing a limb to get out of the trap.
I’ve been following listings closely on ziprealty.com and it seems that SFHs outside the beltway and condos are the types of housing that are really going to come down. One can find entire streets for sale in Woodbridge and out by Dulles. All around DC, there are thousands of condos popping up for sale, too. I think there will always be someone willing to buy a SFH inside the Beltway, but I do think prices on these will come under pressure, but not to the extent that condos are going to be crushed.
You are absolutely right. I’m still seeing SFHs in and around the beltway holding price, but It is hard to justify buying a SFH in Sterling for 450 when you can get a SFH in Vienna for 50k more. Big difference in commute and neighborhood quality and security.
I agree that condos will fall much farther than SFH or townhouses in the NoVA area. Being from the Reston area I don’t necessarily believe your inside v. outside the beltway comparison. Places like Falls Church inside the beltway are closer in distance to the city but the traffic is so horrible on Rt50 or Rt 7 that it takes longer than a commute from Reston or Dulles. In my opinion many of the schools outside of the beltway are better than those of Arlington/Falls Church. School quality is a much more important factor for SFH prices than condos.
There are also pockets of falls church, Herndon, etc. that will deteriorate more than others because of the influx of illegal immigrants. When new home construction slows and the home equity refi- remodling binge stops these day-laborer communities will be hard hit. Not to mention low skilled labor will be less able to deal with ARM adjustments because their wages do not grow at the rate of the skilled federal employees or contractors.
If you are very close to the Tollroad, I agree and yes there are some neighborhoods (think parts of Annandale) that are wayyyy worse than parts of outside or around the beltway. What I am referring to is those areas (and I wasn’t clear before) close to 66 or close to 395. Yes 7 and 50 (and 29) are a mess depending on when you begin your commute. But I have found that proximity to the major commute roads is a biggie (and the closer you are into DC and also the closer you are to 66 or 395) the better your life is.
Also, and very anecdotal, I have to say I find traffic whether commute or just at anytime to be better in Vienna than when I lived in Sterling.
FWIW, and it’s just one opinion, I think some parts of Loudoun (and I speak to it b/c I lived there) are going to be really hard hit b/c of the timing of the loosening of lending standards. I think that many of the illegals or low wage earners bought there b/c it was cheaper when the standards where lowered. I bought in Sterling in 2001 and there were no big problems out there, but it turned into a horrible situation within 2 and 1/2 years. If those mortgages go belly-up and people can buy more in a more secure area closer in, ugly city. And based on my own experience and observation, that’s going to happen. Reston is probably the one exception in the area, even though not Loudoun proper. It’s always remained a quality neighborhood and it is close to Dulles TR for the most part.
The big risk for all of NoVA , in my opinion is, what happens to the condos when they don’t sell? What of the many construction projects under way? What happened in parts of NYC was that they became projects/section 8. Be careful where you invest and buy in NoVa. Look around and be careful you know what’s going on in your neighborhood and what is planned for it. Even if you buy and invest at the bottom. It’s a real problem here in NoVa.
People were only willing to pay half as much for those same homes inside the beltway 5 years ago, so they have room to correct in price, too.
I think the entire NoVA area is still one where any house can sell *if* it is priced correctly. The relative value of real estate inside the Beltway will always be higher than further out, but even in western Fairfax Co, Loudoun, PW Counties, if something is priced right it will move.
If you’re saying that further out areas will take a higher % price hit, that very well could be the case. I think that in the coming years commute time is going to increase at a faster(possibly much faster) rate the further away from DC one goes and that could be a factor in the outer suburbs decreasing in price more.
What is really incredible about the NoVA market is the amount of speculation taking place at the high end ($1m+) by ordinary folks who can’t afford to lose a hundred thousand dollars or more. Look at this $1.3m house in Lansdowne. “Never lived in”, yet it was bought last summer by a couple that lives in Great Falls:
Land Book Owner As of Jan 1, 2006
AFNANI, SHAHAB A & ELAHE OMIDI- R/S
800 WINCREST PL
GREAT FALLS VA 22066-2736
Recordation Date: 09/01/2005
Sale Price: $1,166,500
Most recent Instrument ID: 200509010099073
Deed Year: 2005
Nobody’s going to pay $1.3 million for this place. It’s nice, but it’s not worth $8000/mo to live in, and there are few people who can really afford that anyway. The only people that would have been interested in paying that much are flippers. Besides, Loudoun County is littered with homes just like this. This place will probably sell eventually for under a million. What do you suppose the odds are that the owners can take that kind of a financial hit?
“This place will probably sell eventually for under a million.”
Try about $500,000.
“What do you suppose the odds are that the owners can take that kind of a financial hit? ”
Zero percent chance.
I agree. I was at my friends house over the weekend. This is Laurel part Howard county. There were at least six for sales signs for townhome condos that I saw driving through one block. All were priced 500k and up. I think it needs to be lowered least 10% in order for any chance to sell.
“Diane Kohn is in a race to sell her home . The owners of the bright red row house on Capital Hill had reduced the asking price .”
If I was the seller of the bright red row house , I would tell Diane Kohn to hit the road . Kohn is using outdated comps to price her condo ,( she wont come down in price ), yet the seller of the row house came down to sell . Kohn is wasting everyones time because she can’t really afford the row house at the price she needs to get the condo sold at. Kohn is a example of a person who is financed to the hilt . If I was the row house seller’s real estate agent I would of never accepted this deal , and I certainly would not of continued with it .
So would I. At the very least, the contract would state that if I, the seller, received a like offer or better during the contract period from a qualified buyer that was non-contingent, that Ms. Kohn would have 24 hours to either pony up the nonrefundable earnest money or forfeit the contract. The fact that the row house owner has not played hardball with Ms. Kohn speaks volumes about his potential market as well.
But maybe he has some heloc checkbooks to play with too! Who knows!
Once you accept a offer it kinda kills it for getting better back ups , the agents don’t push the property as much, (especially in a high inventory market .) You can’t screw around with these people. That just what my position would be .
I live in the DC area and I track properties in my area on http://www.virginiamls.com and ziprealty. I’m noticing that a lot of listings in my neighborhood are now showing up as “contingent no kickout”. Is that a condition by the seller that basically disallows what Diane Kohn is trying to do? I.e. sign a contract to buy a house but needing to sell your current house to come up with the money?
Yes, mostly.
Wizard - Don’t know where you’re from, but this story takes place in my neighborhood. If you read the article, you will see that, essentially, this woman is asking almost as much money for her two bedroom condo as she offered for the three bedroom house. That, on its face, speaks volumes. She will never get $400+ in the location we are talking about. There are simply not enough Greater Fools left.
Right . You can’t mess around in a declining market . Kohn wants the row house seller to give her more time to get top dollar . As the row house seller I would say “Go ahead and sell your condo and come back and make a offer ,maybe the place might be available.”This will get her off the seat if she wants the row house bad enough.
Utterly OT, but I laughed my a** off tonight while watching The Simpsons. They obsessed over a big HDTV plasma television set, and the first thing I thought of was Homer taking out a HELOC in order to buy it.
I watch a show on Bravo earlier called ” The Real Housewives of the Q.C.”.
It was bizzare. If the show is representative of the “O.C.” , it’s disturbing.
Are the real housewives desperate?
Yep, certain pockets of OC are pretty well representative of that show. I caught a bit of it and it was hilarious.
I am a born and raised OC dweller.
OC home to the smug and self-satisfied.
Saw that show — what a bunch of materialistic robots.
All they care about is possessions. And the 16-year-old daughter complained that the convertible Mercedes she was given was a “hand me down” because a button was loose.
Vacuous parents bringing vacuous children into the world…
I went feeling hopeful to a house in a location I like in Ann Arbor, new listing…but they had bought 2 years ago, done some remodeling, and had, seriously, *THREE* plasma tvs plus assorted other media systems…it was kinda funny, but sad because I knew for sure they’d not come down off the at least 60K-too-much asking price. Sad for them too that I was one of two names on the OH sign-in list at closing time.
Is anybody really pissed that America is in this big mess , especially knowing what it is going to take to correct it .
Pissed! I’d have to say I’m incredibly furious that this multi-level marketing scheme has been allowed to flourish for the last five years. But, the power and money in this country wanted it that way.
Problem is, I know we couldn’t muster a fraction of the folks that turned out for the immigration demonstrations across the country. The great majority of folks in this country, from migrant farm workers all the way up to neurologists don’t even perceive that a huge catastrophe lurks just around the corner.
Nobody that I try to talk to believes it . They just look at me with that deer in the head lights look. Nobody wants to believe it might be a real hard landing .
We really need to stop being politically correct and eject these illegal aliens who are destroying the way of life we have created in this country.
I can’t believe their demanding rights when they’re here illegally. Get in line for the legal process…honey and pay some taxes toward our infrastructure…our schools and hospitals, then we can talk about rights.
You are so right my friend…. it saddening. I WANT MY COUNTRY BACK!!!!
Look to Europe if you want to see where a terrible immigration policy can take your country. Let’s hope our illegals are a bit less sensitive to satirical cartoons. (Unfortunately, I don’t think that is the case, and I also don’t believe our government would defend its free speech principle if put to the test…)
I have been for a while. But no one around me seems to care…it’s not pleasant subject matter…ya know.
That should read….I have been angry about our economy setting up for a big fall.
We have not seen the tip of the iceberg yet. This titanic is gonna go down fast and ugly.
Not fast….slow, painful, and ugly.
US WILL SAVE THE TREASURIES BY HURTING FOREIGNERS AND US BANKS
They will deflate by having the overseas investors taken down while sparing the T-bill market with the “NewBank”. In a flight to safety investors will jump on treasuries strengthen the dollar and crashing gold. Searching NewBank, check out
http://www.dailyreckoning.com/Writers/Mogambo/DREssays/MG030706.html
Very funny.
The first US bank to go down will be JP Morgan. Over 800 US banks hold derivatives.
Most of the $570 trillion in derivatives are held by overseas investors. These will collapse from the housing bust causing defaults. The default follow like dominos to mortgage backed securities, then collaterized debt obligations and lastly to derivatives.
Controlled deflation will be the Fed’s goal so that the dollar will rise. This will help the US government as investor, institutions and countries buy Treasuries as a safe haven. US Treasuries held as reserves will not be sold off avoiding a dollar devaluation. Win -Win for the Feds. Lose-lose for derivatives, MBS (which are explicitly not backed by the US).
Controlled deflation is the Fed best choice among bad choices.
I doubt the deflation can be controlled by lowering Fed rates to zero, but the Fed will try to “mop up”.
This is kind of scary. Fannie and Freddie hold lots of derivatives. I think they will go down with them. Who else?
Melody,
We may never know what happens with those Fannie derivatives, because they seem to have carte blanche from the NYSE to postpone their financial reports indefinitely. And if they ever do get around to producing their financials, do you think they will willingly disclose their derivative position, or even have the wherewithal to do so?
GS
“It’s all in the “I Can’t Freaking Believe I Am Seeing This (ICFBIAST)” category, because this is monetary corruption at its absolute worst! The government sells debt to get money to spend on their deficits, and the bank creates the money to buy the debt. Debt and money supply both expand, and it expands to create a bigger and more expensive government and higher prices! This is economic suicide!”
Nah — just a page out of the Enron playbook…
Check out this picture of the bubblicious bench at a new condo development at the Dunn Loring Metro Station. Condos are going down hard in the DC area.
David, I think that photo is on Ben’s photo list… could be wrong.
Maybe it was of this bench. I just took this particular picture yesterday.
David
A realtor yesterday that told me that builders limit condo purchases as investments to less than 10% of total condo purchases. He seemed to believe that B.S.
Regarding open house attendance: I don’t think those are only neighbors coming to “gawk”. I think home owners are trying to get a feel for the market because they question whether they want to/can afford to hold their house if it’s not appreciating 20% a year…. in other words, they are trying to guage how much their own house is worth because they too might (have to) sell. No better way to do that than attend some open houses and see what sells.
The seller agreed to extend Kohn’s contract until the end of this month. — I spend a lot of my free time fishing — IMO sure sounds like playing a fish on the line.
“Pricing the house at $949,000 ‘killed us,’ she said. Because the house remained unsold for so long, it almost felt as if it ‘had a curse on it.”
This is not a matter of vodoo nor black magic — they simply overpriced the home, and it did not sell until they adjusted the price down to reflect the market price under newfound normalcy, which includes no spec premium for 10%+ YOY gains in perpetuity.
Read about Reset Button - Sitty Pretty update.
Read about Nothing Negative about Palm Springs Sitty Pretty update, it’s getting funnier.
Sitting pretty bought the house at 1080 S Farrell Dr, Palm Springs, CA 92264 for 475,000. The zestimate shows it’s worth 453,000…. what is she going to do?
She still hasn’t sold , so somethings wrong . The houses around her are selling .
Ahh, Loudoun County… my favorite topic!
This statement in the Post article:
Builders have flooded the county with homes, helping temper demand.
Show how much press reporters don’t understand basic economics. Yes, builders are flooding the county with homes, but that hasn’t impacted demand, it’s impacted supply. What has impacted demand is the disappearance of speculative buyers. The townhouse market in particular has been overrun with them.
People out here are delusional about what their homes are worth. For example, someone thinks this tear-down in the podunk town of Purcellville (sixty miles from DC) is worth over a half million bucks. From the price, you’d think it was in Palo Alto. No doubt this place would have sold a few years ago for under $150K.
That is an excellent observation.
What a deal! And it even comes with window A/C units for that price!
‘I really don’t want to sell it for less; I can’t afford to,’ Kohn said. The condo was appraised at $419,000 last year when she took out a home-equity loan.
In other words, “I’m hoping that some idiot will come along and pay off my home equity loan for me by overpaying for my condo.”
OT:
LA times article on law enforcement focus on interest rate spread bonuses.
http://www.latimes.com/business/la-fi-kickback27mar27,0,7888441.story?coll=la-home-business
Here is the latest state of the market report on Washington DC:
http://dcbubble.blogspot.com/2006/03/no-more-talk-of-rising-prices-but-no.html