A Major Example Of What’s Happening Across The Country
The Baltimore Sun reports from Maryland. “The Station North Townhomes had no shortage of pre-construction buyers, lured by the promise of luxury living near Penn Station in Baltimore’s emerging arts district. Prices in 2005 reflected a red-hot market, rising tens of thousands of dollars with each batch of new contracts. Now, amid a housing slump that has builders slashing prices and offering giveaways, Station North’s developer is looking for tenants.”
“‘The sales just pretty much stopped,’ said James D. Campbell, a principal with Somerset Development Co.”
“Somerset hopes to rent the 14 unsold homes in the 32-unit development, offering a lease-to-buy program or straight rentals, with monthly payments ranging from $1,600 to $2,400.”
“Somerset’s sale prices, which started at a range of $280,000 to $300,000 in summer 2005 and climbed in a matter of months to the high $400,000s for the largest corner units, have already been reduced. They now range from $300,000 to $450,000. Campbell said additional price cuts were not an option.”
“‘We didn’t want to price them so low that it didn’t make any kind of economic sense,’ Campbell said. ‘Renting will be a better strategy.’”
“Melissa Wallace-Johnson moved in June from Silver Spring, where she and her husband rented, to Station North, where they bought their first home. The couple got a reduced price of $339,000 with upgrades such as granite counters.”
“‘If we’d bought in Silver Spring, it would have been double the price,’ Wallace-Johnson said. ‘We’ve fallen in love with the neighborhood. You can tell it’s on the verge of something.’”
“The couple does not regret the decision, despite the conversion to rentals, which Wallace-Johnson said is a better route than slashing prices to try to sell.”
“‘We went into this knowing we would not be there forever, but we didn’t go into it to make money,’ she said. ‘We wanted to buy and own. We’re confident we won’t lose money.’”
“WCI Communities Inc. has returned deposits to everyone with reservations for its Plaza Residences - the 23-story tower planned near the Columbia lakefront - while keeping the reservations intact, the company said in a statement this week.”
“Barbara Byrd, who lives in the nearby Lakeside condos with her husband, was one of those surprised last week to receive a deposit check back from WCI. Byrd said her excitement when she first saw WCI clear the land quickly evaporated when she saw grass planted on it.”
“‘It doesn’t look like anything is happening now,’ she said.”
“‘It’s an example right in our own community of the impact of the housing slump,’ said Del. Elizabeth Bobo, whose legislative district includes Town Center, where the tower is planned. ‘What I hear from people in the industry and related industries is that it’s hitting the high-end market as hard as any others. It’s a major local example of what’s happening across the country.’”
The Washington Times. “Despite falling home prices and interest rates, the Washington area still is priced far above the earning power of most home buyers, according to a study.”
“Purchasing a home in the Washington area requires a steady income of at least $121,197 a year, according to the Center for Housing Policy. The median personal income in the region is $46,782 a year, according to the U.S. Census Bureau.”
“Registered nurses, who earned the highest median annual income among high-growth occupations at $63,291 a year, are making only slightly more than half the money needed to buy a home, the nonprofit group reported.”
“The other occupations — retail salesman, customer service representative, food preparation worker and office clerk — earned median annual incomes ranging from $21,566 to $39,473.”
“Economic trends of the past few months suggest affordability problems might be lessening. However, real estate executives say the home buying market still is in turmoil.”
“‘The lower pricing would normally make housing more affordable but the lending requirements have tightened, so buyers need more money for down payments than they did two years ago,’ said Aaron Liebert, real estate developer JPI’s managing partner for the Washington area. ‘This has helped the rental housing market, except that there is now a large number of for-sale units — houses and condos — that are being rented individually at deep discounts.’”
“Average rent for a two-bedroom apartment in Washington was $1,286 a month in the third quarter of 2007, the Center reported.”
The Connection from Virginia. “Fallout from the real estate bubble is not likely to blow over in the next year, but it may have struck a blow for the cause of ‘affordable housing.’”
“Real estate agents emphasize that tumbling sales prices have created a buyer’s market. ‘For anyone who buys in the next 12 to 16 months, this is the best time IÕve seen to buy since about 1991,’ said longtime Loudoun real estate agent Nancy Yahner. ‘For anyone who bought in 2005 and 2006,’ she acknowledged, ‘it’s hard on them.’”
“Last year, the average sales price of a home in Loudoun fell by about $40,000, from $547,429 in 2006 to $507,542. It was a significant drop, although not as drastic as the $108,922 leap in sales prices between 2004 and 2005.”
“Following that spike, market activity plunged in 2006, with 5,919 residential units sold that year, as opposed to 9,123 the year before. ‘I think buyer confidence is quite low out there,’ said Yahner. ‘People are scared.’”
“She also attributed the slump to the record number of foreclosures last year. A couple of years ago, when banks were able to borrow money from the federal government at low rates, a number of ‘less traditional’ institutions were lending money without requiring borrowers to verify their incomes, debt ratios or other qualifications, she said.”
“‘Practically, if you had a pulse, you could buy a house,’ said Yahner.”
“Melinda Hetzel, deputy commissioner of accounts for Loudoun’s Circuit Court, said she had seen some 600 to 700 foreclosure accounts filed last year, while her office had never seen more than 100 such accounts filed in any previous year.”
The Post Gazette from Pennsylvania. “A report released yesterday suggests that contrary to many perceptions, Pennsylvania did experience a housing bubble. The Keystone Research Center in Harrisburg recently completed the first detailed study of the housing market in the state, which concluded that hard times still might be ahead for Pennsylvanians due to fallout from subprime mortgages.”
“‘While the run-up in housing prices began slightly later in Pennsylvania than in the rest of the nation, housing prices here have mirrored the national trend since 2001,’ said Stephen Herzenberg, a KRC economist.”
“He said that in just five years, from 2001 to 2006, housing prices rose 54 percent, compared with an overall inflation rate of only 13 percent. ‘Housing price hikes far outstripped increases in rents and the cost of construction,’ Mr. Herzenberg said. ‘That is clear evidence of a bubble in Pennsylvania.’”
“According to data in the report, the counties with the greatest share of new home mortgages originated in 2006 that were subprime were Forest, Cameron, Venango and Fayette.”
“An estimated 45,500 subprime mortgage foreclosures are projected in Pennsylvania between the third quarter of 2007 and the end of 2009, which the study’s authors say represents a loss of $2.4 billion in property values.”
The Morning Call from Pennsylvania. “Rural counties in central Pennsylvania and the Philadelphia area are expected to bear the brunt of the mortgage lending crisis in the state, but the Lehigh Valley will also have its share of home foreclosures, according to the Keystone Research Center.”
“In Forest County, in northwest Pennsylvania, 46 percent of the mortgages originated in 2006 were subprime, Keystone estimates. In addition, some neighborhoods in the Slate Belt, downtown Allentown and Easton, and Carbon County had levels of subprime mortgages in 2006 that exceeded 30 percent.”
“‘There is still a lot of uncertainty. [The] area had a large increase in prices. That makes us nervous,’ said Mark Price, one of the economists who authored the report. ‘The concern going forward is what happens if prices begin to decline.’”
“‘It is true in Pennsylvania we have not yet had the level of foreclosures in Ohio and Michigan to our west, and not as much of a decline in housing prices as places like New Jersey and New York to our east,’ said Herzenberg. ‘We have steered a narrow path between those two extremes. That does not mean we are out of the woods,’ he added.”
“The report said three factors will help determine which areas will be hit hardest by the expected wave of foreclosures: the percentage of subprime mortgages; the rise in home prices; and unemployment rates.”
The Philadelphia Inquirer from Pennsylvania. “Numbers for December and all of 2007 were not yet available for the seven counties surrounding Philadelphia, said Joseph Wadsworth of Hanley Wood Market Intelligence.”
“For the first 11 months of 2007, net new-home sales (minus cancellations) in the seven suburban counties fell just 11.3 percent from the January-November period in 2006, Wadsworth said.(Hanley Wood began tracking sales within Philadelphia in August, so no comparisons with 2006 are available.)”
“The pace of sales may have fallen off, but newly built homes are still appealing to some buyers.”
“‘I’m not one of those people who follows what the media and the public say,’ said Vera Germanotta, who, with her daughter, Maria, bought side-by-side units at Westrum Development Co.’s Villas of Packer Park in South Philadelphia, where prices range from the mid-$300,000s to the low $400,000s.”
“If there’s a new house you really want, you buy it, said Kathleen Czermanski, who has settled in at Wicklow, a development of eight $1 million-plus carriage houses in Wayne. She signed a contract in August 2006, long before the foundation was dug.”
“‘I wanted to buy there when I first heard about it three or four years ago,’ said Czermanski.”
“But her house in Malvern isn’t selling, even though ‘I’ve reduced the price three times and put $30,000 more into it, even after [putting] a new kitchen and three bathrooms into it.’”
“Czermanski took out a swing loan in the meantime, yet ‘I don’t regret buying the new house, not for a minute.’”
“If there’s a new house you really want, you buy it, said Kathleen…”
That’s all well and good Kathy, but if you wanted it so bad then why are you trying to sell it already?
Signed contract in 8/2006 before foundation was dug - the place is barely a year old! It’s a $1M house - not a pair of shoes. I take longer to settle on buying a package of bacon (rear see-through window packaging).
Hey John,
I don’t think she’s trying to sell the new house right away. She bought her new house before selling the old Malvern house. Not a smart move if you can’t afford 2 houses. She doesn’t regret buying the second house? Not yet.
I’m getting a refund on those speed reading tapes.
“not a pair of shoes” LOL!
Way to kick off Friday John! You… you.. mean she can’t just “return” it? ( I know MY wife would bring them back! )
“Czermanski took out a swing loan in the meantime, yet ‘I don’t regret buying the new house, not for a minute.’”
Uh,, we weren’t asking.
It’s fools like those with the “gimmie, gimmie now!” mentality that will land them in financial trouble for life. Theres hundreds of things I want in life but I can have maybe 5% of what I want.
Rich isn’t having everything you might want. It’s knowing that you could have it :-).
Nah, its wanting what you have, not having what you want.
I thought my family growing up was the only one brought up to study bacon in the same fashion! Well, good to know - brings back amusing memories!
I thought I was the only one who did that?! Do you check the dates also? Can’t tell you all how many times I find expired food at common food chains. It was bad yogurt I found last week…next week it will be sausage. Expired food, expired listings…hmmm It is now buy two get two free now deals and I’m not buying.
Speaking of Pennsylvania, Bloomberg reports that JP Morgan Chase sold a bunch of state school districts derivatives with the promise that it was “free money,” and ended up causing the districts to slash services and raise taxes.
http://www.bloomberg.com/apps/news?pid=20601109&sid=ay5LDbjbjy6c&refer=home
The employment report shows that private employment was basically unchanged, while government employment fell. I still say rising taxes (and prices) and deteriorating public services is the way the pain of the housing bust will be transmitted to those who had nothing to do with it. First construction, real estate brokerage and mortgage banking. Then Wall Street, retail and government. What’s next?
What’s next?
Healthcare!
Everything is next.
Bloomberg reports the Bush plan to have states bail out subprime borrowers is failing because New York and Ohio have found that (surprise) if they document income there is no way they can make the payments.
http://www.bloomberg.com/apps/news?pid=20601087&sid=al4wLYqTFa10&refer=home
And, I expected insurance companies and pension funds to take a hit. But Bloomberg reports drug and computer companies are taking losses because they invested their cash in investments back by subprime mortgages. These are growing businesses hobbled by something they have nothing to do with.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahRL6qEbt6W4&refer=home
‘The concern going forward is what happens if prices begin to decline.’
You betcha. No wonder they want to re-inflate the bubble if they can.
I read both of these this morning. It’s not just the insurance and drug companies, but some hospitals also invested in this stuff.
I’m not surprised the Bush plan is failing. It was more a public relations/election year move to make the public believe the republican party is helping the poor homeowner. Who in their right mind with the housing mess making headlines daily would invest in a losing plan to bailout the investor/homeowner who purchased beyond their means and are now upside down?
if they document income there is no way they can make the payments.
And that’s the problem that is going to dog all of these efforts. A very large percentage of people just can’t afford the houses they are in, no matter what you do to rearrange the financing.
So if housing prices tank, then the subprimers would be able to afford their payments? Now that would be interesting. The banks would totally have to re-appraise properties to new low levels, and we HBBers would truly then truly benefit.
This was in an article in the latest copy of BusinessWeek. It look like the forces are starting to change their tunes:
And that could be just the start. Brace yourself: Home prices could sink an additional 25% over the next two or three years, returning values to their 2000 levels in inflation-adjusted terms. That’s even with the Federal Reserve’s half-percentage-point rate cut on Jan. 30
While a 25% decline is unprecedented in modern times, some economists are beginning to talk about it. “We now see potential for another 25% to 30% downside over the next two years,” says David A. Rosenberg, North American economist for Merrill Lynch (MER), who until recently had expected a much smaller slide.
Here is the Business Week article link (31 Jan 08 cover story):
http://tinyurl.com/2ntj4u
25%? Oh, I think it will be more than that, America. But it’s a very good start…
I found this on MSM.com It sure looks this way!
Is US entering Japan’s nightmare?
Japan’s bust started with a real-estate boom, lax lending and the propping up of financial firms — and its recovery took a decade. The Fed’s rate cuts keep the US on the same path.
A grand total of 43 borrowers in 3 big states helped since July/August…..talk about a failure of monumental proportions.
My jaw just hit the floor. 43 borrowers out of how many millions of impacted home owners?
Do we start a pool on how many of the 43 realize its smarter to just walk?
Got popcorn?
Neil
And they’re all in Ohio.
New York - 3
Massachusetts - 4
Ohio - 36
No hope for the bubblistas. None.
But Bloomberg reports drug and computer companies are taking losses because they invested their cash in investments back by subprime mortgages. These are growing businesses hobbled by something they have nothing to do with.
Oh yes they do. They are the lenders. If the loan originators had had to keep the loans themselves, this fiasco would not have happened.
“hobbled by something they have nothing to do with”? What a distortion! These businesses invested their money, and they had “nothing to do with” it? Bloomberg needs to hire better copy editors.
If prices decline, people can afford housing.
If people can afford housing, they will not be dependent upon Government to provide housing. They will also not be providing a steady revenue stream for Wall Street pigs via absurd mortgage payments and refinancing fees. They’ll… be FREE!
That is bad - time to lower rates and get the Bubble going again!
Which is why I’d like to see the GSE’s promote “low priced housing” rather than “affordable housing”. I think most of us on this blog understand they are the same thing. But their recent actions lead me to think that the PTB seem to think that low rates, higher limit’s etc., is the answer; when in fact it’s been a big part of the problem.
“Czermanski took out a swing loan in the meantime, yet ‘I don’t regret buying the new house, not for a minute.’”
Ok, What the heck is a swing loan? Like a bridge loan? Or is it a loan that you end up swinging from?
Give ‘em enough rope.
Not that long ago there was this weird concept that you SOLD the house you were living in before buying another one.
Actually this is the opposite. Pretty sure “swing loan” is what is more commonly called “bridge loan” - where you buy the new house before you sell the old one. The assumption being that:
- You need $$ for downpayment on the new home
- Those $$ will come from the equity on the existing home sale
- However existing home sale will happen after the new home purchase (e.g. just due to logistics - like the folks buying your home can’t close until date N, but you want to close a few days/weeks earlier on your new house.
- Bridge loan would be given by the bank to “bridge” the two closings - give you a loan for the purchase with the intent that it’s paid off shortly after by the sale.
Problem is what happens if the sale of the existing home falls through after the purchase of the new home happens. That’s the risk with a bridge loan. That risk is huge nowadays, thus I’m guessing bridge loans aren’t used very often anymore.
That’s what my folks did when we moved from western Pennsylvania to eastern Pennsylvania. We rented a house while the two CFOs figured out what to do. The decision eventually came down from on high: Purchase land and build a house on it. My folks still live in that house, 41 years later.
I thought people used a contingency clause so they could purchase another home with the proceeds from the sale of their existing home. It’s crazy to be on the hook for two homes.
Contingency clause becomes irrelevant after closing though. It’s only good for the period between when the contract is signed and when the closing happens. Say you’re planning to close on selling house A, but first you’re buying house B a week earlier. So you if you close on buying house B, then a week later can’t close on house A due to buyers of house A backing out, you can’t turn around and get a refund on house B.
Contingency clause is only good if you plan to close on selling A after signing the contract on buying B, but *before* actually closing on buying B. Then if the sale of A falls through, you can get out of the contract on buying B, since it hasn’t closed yet.
In the scenario of closing on buying B after selling A though there’s no need for a bridge loan, because the funds needed to close B have already been acquired by selling A.
I watched the History Channel’s documentary on Mexican/Central American gangs last night and I was shocked, I tell you, shocked to see the extent of their establishment in Virginia and Maryland. Worse than Fla which is unbelievable. I was wondering if it had anything to do with illegal construction workers that spread like a cancer throughout the country along with the bubble.
You just hit on something that I often wondered about. What does it say about us as a nation that we would all take such great pride in our “valuable” homes when they are obviously being built to a large degree by people who are here illegally. What kind of hypocrites are we to pretend we live in a society governed by laws when our very dwellings that we sleep in every night are being built using illegal labor?
As a society, we all just looked the other way. I guess it’s true. A man can’t see something when his entire way of life depends on him not seeing.
One of the very good reasons NOT to buy a house built in 2003-2007, especially in a cookie-cutter development (most of the Phoenix suburbs/exurbs).
It doesn’t matter WHAT you paid when the foundation cracks or the roof trusses shift. Not to mention all the drywall, stucco, plumbing, and electrical short-cuts taken by the laborer who just a week before was picking tomatoes in California.
However, this is a reason that 2008-2011 will be a GREAT time to get a high quality custom house built by skilled craftsman desperate for work.
Ill be buying a house built well before 2000, try more like early 1900s. They used to be built much better back then. They are also nicer and cheaper than those ugly tract houses.
Those MS-13 guys were gangbangers. They do construction too??
From gangbangers to hammerbangers.
… and now back to gangbangers. *Sigh*
Since we are making sweeping statements here, I have personal experience of first rate work from those ‘illegals’ as opposed to the work from the cranked up white people……busy tweaking while building.
Bubble, that goes for a lot of the food we’re eating, too, grown with illegal labor.
that whole series on history has been excellent
give us your armed to the teeth huddle masses….
these gangs are nationwide
John Mauldin’s newsletter this week gives a really interesting analysis of Mexican drug dealing, immigration, etc — some really good reasons to end the “war” on drugs (i.e. take the profit out).
Palmetto:
Why watch it on tv, just drive through college park and some of our other wonderful areas in Hillsborough County to see these gangs. But do it during the day because the night hours are full of monsters in these areas.
And now we have Hillary, McCain and Obama, falling over themselves to hand these folks citizenship and the vote.
Whenever I read the papers on the Metro (Examiner/Express), invariably, there always seems to be a story of a violent murder, usually by knife, machete or sword, that is attributed to an individual with a Latino surname- a few days later there is then the follow up story indicating that perp is an illegal. The illegals are all over this area and are truly an epidemic. The thing I don’t get is that many of them work construction, yet home prices are beyond the means of even the highest wage earners, i.e., me.
I also call BS on those commenting about the DC Metro market- I dare anyone to try and find a two-bedroom apartment in DC metro for $1300/month that is not in Crackton and/or populated by those receiving government aid - it just ain’t happening.
Finally, anyone who buys now is just crazy - hope you like being priced in.
$1300 is quite possible in DC Metro for 2-bedrooms. Friends of mine have done it in Gaithersburg and Germantown, and even a somewhat dumpy apartment one in Alexandria. Those are not “Cracktown”. They were actually decent areas. Or does your idea of “not in Crackton” mean McLean or Potomac? Did you even bother looking at Craigslist?
http://washingtondc.craigslist.org/nva/apa/558286349.html
is just one example of many.
Decent area, but that’s an rush hour drive of more than an hour.
What, you want LESS than an hour in the DC area? Ha! And I want a butler.
Gaithersburg/Germantown isn’t really D.C. metro. I live about 4 miles from George and Laura and I pay $1297 for a 1bdrm with no d/w or w/d. And this was the best deal I could find.
Believe it or not, my friends in Leesburg and Frederick think they are “DC Metro Area”. And they might be. I dunno, igf it’s close enough for a commute (even a painful one) is it still “Metro Area”?
It’s the DC-Frederick-Baltimore MSA, if you measure a metropolitan area the same way Census Bureau statisticians do. I certainly would consider the bordering counties/cities as “DC Metro”–it’s only 1 hour from Gaithersburg/Germantown to DC because the traffic is horrible; you can get to the DC line in about 30 minutes otherwise.
“first rate work from those ‘illegals’ as opposed to the work from the cranked up white people……busy tweaking while building.”
Ahhh….yes…the…White boys on meth argument when one is dicussing illegal aliens. How original.
St George just had their biggest drug bust (cocaine) in the history of the area a couple of weeks ago. DEA agents tracked back the supply “train” from the East coast. The trade originated in our Town.
The five suspects were Hispanic. Two are identified as illegal as of last week. My guess is that the other guys probably are too.
Grafitti, unheard of in this area three years ago is now rampant. Local police have identified over 150 gang members living in our Community (including Sureno and MS-13).
Two stabbings in Jan. One suspect illegal. The other stabbing involved around 5-7 “Hispanics” that ganged up on a white boy at Dixie Downs park. The word is (from my friend in the Sherriff’s dept) that at least half of them have illegal alien parents. The family of the victim has left the area and the victim isn’t pressing charges. They are afraid.
Last year, 2 murders (illegal 13 year old tortures a 14 year old (white) girl with a knife, then strangles her and then rapes her right next to our only Bi-lingual middle school and number 2 an execution murder, a shot behind the ear, of a local Indian by an illegal gang member), 3 rapes, a child molestation (illegal goes into house and gets caught in the homeowners bathroom with the owner’s 3 year old girl and his own pants around his ankles) and several stabbings.
These “documented challenged” individuals moved into this area because of the housing bubble here. They brought their friends and numerous low-lifes that follow any group that is engaged in practices like welfare fraud and documentation fraud. They and their relatives were needed by our local builders and developers (who should be held accoutable for their complicity in these crimes) for labor. They get the benefits (cheap labor) and the Citizens get to pay for the privilege in their blood or the blood of their children.
Our local Catholic Church got rid of the Irish priest 3 years ago and replaced him with an alien from South American (he has since become a citizen). The Church now allows different representatives from South America (one coming from Guatemala this month) to hand out Matricula consular cards to the locals who don’t have documentation. Our local newspaper The Spectrum has Spanish only newspaper (El Sol) that list ways to deal with life in a county where you are not invited (numbers to call and people to contact for services).
This story is being repeated all over this Country. It is ONE consequence of the housing “bubble” that I don’t hear or see many people in the public “eye” talking about.
That is one of the many reasons I have nothing to do with the Catholic Church anymore (12+ of catholic school, etc)
steadykat, Utah’s well known among the illegals as a good place to be, easy to get driver’s licenses, etc. I know when I was living on a farm in W. Colorado that employed illegals (not my deal, I was just staying there for a short while) I would talk to them (I speak enough Spanish to get by) and they were always going to Utah for this or that documentation.
We see the questionable types all over here in Maryland; I have no idea how many are gang members, but illegals are swarming the place. It’s gotten so bad that the new Lowe’s they built nearby has practically every sign in bilingual Spanish/American mode. Gotta keep the illegals happy so they can build our McMansions by day and shoot each other by night!
I suggest you bone up on your Spanish…they aren’t going anywhere.
built nearby has practically every sign in bilingual Spanish/American mode.
Uh, Spanish speaking people are not all illegal. We have had much more open immigration policies even back 12 years ago.
It is a problem, but like most problems, perception often trumps reality.
It’s gotten so bad that the new Lowe’s they built nearby has practically every sign in bilingual Spanish/American mode.
It think that all Lowes HW stores are like this.
Actually, a lot of Salvadoran fled to this region during the 1980s.
“‘We didn’t want to price them so low that it didn’t make any kind of economic sense,’ Campbell said. ‘Renting will be a better strategy.’”
I’m confused. I’m familiar with Baltimore City and the prices have not dropped to the point that properties cash flow positive with respect to the properties I am familiar with. Is their intent to rent them out and convert later because they think the market will rebound, or is it true that they cant sell units even at postive cash flow pricing? Something doesnt make sense to me. Perhaps they need rental payments to meet their debt service obligations and if they sell for less than projected they will blow financial covenants they have with their lenders. Thus, the true story is they have cash flow problems rather than they are better off renting then selling which doesnt sound right to me because I still see inflated prices and reasonable rents.
I live in Baltimore City myself and park next to the Station North development every day on my way to the MARC train. As an Architect I can assure you all that there is no way those condos are worth 400K. Its your typical stick built, plastic plumbing & chip board siding POS. It will be falling apart in less than 10 years. I have absolutely no doubt of that.
The neighborhood is “interesting” but again, there is NO WAY its worth 400K to live there. Go ONE BLOCK east and you are deep into crackville. I suppose that makes some amount of sense because the people who bought at Station North must have been on crack themselves.
The neighborhood was nice once upon a time and is mostly built of solid, turn of the century brick row houses. THOSE need to be renovated and restored but it breaks my heart when they are torn down in favor of some poorly built POS which won’t even be a bad memory in another hundred years. Stupidity everywhere you look.
Baltimore is a hosed as every other place in this pathetic excuse for a nation. I would move overseas in a heartbeat if I had the means.
I wish there was a way to have the architects run the projects rather than the builders. So much cheap product these days at outrageous prices. I will never understand why the public tolerates it. There are many of us that have the same thoughts. I am currently living in Denver and they are building multimillion dollar homes with synthetic stucco, cheap windows and doors, home depot standard materials, etc. I dont get it. The often tear down beautiful tudors and craftman bungalows in decent shape to do so. Its really disturbing.
Believe me. I wish we had more controll over the situation as well. For the most part Architects have become little more than tools for the developers I’m afraid. Money talks. Everything else, design, principles, construction standards, takes a walk. I’ve grown very disillusioned with the field. Read James Kunslers “Geography of Nowhere” to see why.
I’m afraid my impression of Baltimore has been influenced by “The Wire”. Dead bodies interred within decrepit rowhouses. Yousa.
Love the Wire too, but west Bmore and Prop Joe’s east side are probably stand-ins for inner city neighborhoods in any major town. Cleveland, Buffalo,Detroit, et.al.
Amen!
Just out of curiosity, what different type or method of construction would last lots longer than 10 years? If I was a buyer, what would I be looking for?
they are “speculating” that the market will turn around soon.
Isn’t the real estate recovery when the massive fraud is exposed, hopefully eliminated and prices return to what market forces and income levels demand? I keep hearing talks of a rebound but this massive bubble was never real. Have the tech stocks “recovered” to their overly inflated prices? Are people actually talking about when they will turn around return to the late ’90s prices?? I just don’t get the massive level of denial. I mean it doesn’t take a degree in economics to see this - although I know alot of finance professionals that believe real estate will “recover” to 2005 prices. ???
“Have the tech stocks “recovered” to their overly inflated prices?”
No dc. I’m calling my state representative today!
At this point, my worry is prices won’t drop enough to be affordable for a large number of people. Prices won’t rebound however. There will be alot of people renting and relocating for years to come.
You seem to be a newbie so I will repeat something that is said all the time on here. Some may disagree as to its truth, but it is a common theme that I agree with. The bubble will be gone when we get back to historical rent/income/price ratios. This means a 30-40% drop in most major metropolitan areas. This however can take many forms. For example, a 10% drop for ‘08, a 5% drop in ‘09 and and 5 years of stagnant prices (assuming around 3-4% inflation) will get us there. The most dramatic drops will occur when the problems with banks and number of foreclosures on their books makes it a requirement they engage in fire sales. This is probably 6 months - 1 year out IMO. Picking a random date is useless as to what prices will revert to. Its all about the ratios and economic principals when one sets aside assumed 10% or greater appreciation.
Ah, but the inflation trick will only work if wages go up. I don’t see that happening, or certainly not at a rate where it will really matter (1% a year, assuming you have a job, or something like that.) And, even if wages DO go up, we still have rampaging inflation everywhere else. Imagine the effects of $4 a gallon gas, or how about $5?
True, and excessive job loss related to the recession may result in more fire sales causing the decline to be more immediate and possibly result in an economic environment where we should be below historic norms. It will be interesting to watch how it plays out. My main point was just that because I believe housing is 40% overvalued does not necessarily mean I believe that the market will drop 40% this year or that prices will ever be 40% below what they are today. Lots and lots of factors, all aggravated by the government’s mishandling of the crisis that has emerged. Part of me wishes for the immediate drop and let the chips fall where they may, but that will necessarily result in job losses and bankruptcy for millions (and possibly me), some innocent some not. Thus, I am left torn. It will correct eventually. Just a matter of a 3 year road, 10 year road, etc.
Ok, I can see that scenario if external factors don’t change. But in D.C metro, people are moving in and out constantly due to their jobs. So, many have to sell NOW or SOON. But there are no buyers at the inflated prices. Same thing with divorce. Now add in the recession which will cause job loss and again, have to sell NOW but no buyers at inflated prices. In a market where most people can wait it out, I can see a more gradual decline in prices. But not in a highly transient city with a recession looming.
Bingo! I am with you on the “transient city” issue. I have had a hunch for a long time that a huge amount of demand on the buy side was coming from people who typically come to DC for a few years and then leave. They bought into the bubble - why not make a few bucks, right?
Without 20% annual appreciation, that whole crowd will revert to its historical behaviour - renting. Poof goes that portion of demand.
Tim, I agree with your comment about reversion to historical price/rent ratios, but to whom is your “you are a newbie” comment addressed? When you start a comment this way, at least post the comment as a reply to someone in particular! (Maybe you just had a slip of the hand…)
I thought I did, but things were not processing right this morning. It was in response to DC-Renters question in the immediately preceeding thread. It was not a jab at the intelligence of the question, but an assumption based on the fact that I was not familar with the name and the question has been discussed at length on this board.
To reiterate, the “newbie” comment was meant to apologize for me repeating things already discussed, and not addressed to the nature of question or intended to be anything negative towards the poster.
No worries, Tim. I didn’t take offense.
“The four-story, four-bedroom homes, with granite kitchens, open floor plans, huge windows and garages, sat in stark contrast to nearby blocks of boarded and vacant homes.”
On the side of one of the buildings is a huge sign that says: “sophisticated urban living”
(((shakin my head)))
Classic bubble building, 400K condos in a crackhead neighborhood. At night all those units are dark except one which looks “staged”. I understand the concept of building around the train station which people can use to get to their jobs but it ain’t gonna work at those prices.
They should have taken the picture at night so people could see how dark it is.
Spook,
Yes, yes, “The Dark Towers of Financial Doom”. YOU… have one too? Here in Portland we sell that as “urban grit”.
Dark Towers… Sounds like something from the Lord of the Rings… “In the land of HELOC, where the Shadows lie…”
I read a book about urban planning that talked about Portland and the big push to build by the train stations and that NO one wanted to live in ‘em. But the dream never dies.
I’ve seen that staging phenomenon where I live too. Late at night, I’ve driven by obviously unoccupied “urban lofts” and seen lights on and furniture and artwork visible.
One of my friends just moved his daughter out of a place like that in a moderately dangerous neighborhood near downtown Baltimore. One too many assaults there, one too many muggings, it seems. Thing is, even though the condo building itself seemed safe, she dared not venture out at night. Nice way to enjoy the sophisticated cultural treats of urban living, eh?
Fortunately, she was too poor when she moved to Baltimore to buy a condo, so she had to settle for renting. A blessing in disguise! So all she had to do was wait till her lease was up, and she’s out free and clear. That’s not the case for any owners who decide to move out. Ouch! They be stuck.
They could easily walk away and give it back to the bank.
Well, true, but she has no obligation, no problems to her credit. She just walks away clean and easy. If she’d bought, there’d be all the aggravation of collection calls, foreclosure, and if you were fool enough to put down significant money, that’s gone as well. She did well (enough) by renting.
With the dollar continuing to fall and with inflation running rampant (Proctor & Gamble just announced a 6% across the board price increase for all their consumer household products), how much further can nominal housing prices fall? I ask this because real prices (inflation adjusted) are falling much further than the nominal prices (actually $ value). It seems this is the FED’s plan. Devalue the dollar and inflate so much that the housing market finds a “bottom”, in terms of nominal value.
If we step back and think about this for a minute, this action by the FED will have to have some affect… right? By devaluing the dollar so drastically, asset prices would have to stop dropping (nominally) eventually… ?
mojo,
Exactly. That’s what they’re “fathoming” for right now! Of course raising wages to a point to where there would be an intersection between incomes and home prices is…. well, simply out of the question!!!
Except that incomes (denominated in dollars) are dropping at the same rate.
So there is no “bottom” in terms of nominal value. In fact it will be worse because affordability will plummet as will all forms of discretionary spending.
As has been stated here repeatedly, you can’t “inflate” your way out unless wages increase which they won’t because of Chindia.
Except that incomes (denominated in dollars) are dropping at the same rate.
Yep and consumers will cut back even more as inflation ticks up further making matters worse. Kind of reminds me of the impact on consumers in mid 70’s and early 80’s.
Bingo - death spiral time.
Consumers are maxed out on debt and are losing their jobs. Wages are going nowhere, and inflation is rising rapidly. People are tapped out and have to reduce spending… resulting in more job loss, more debt, more reductions in spending, etc. Meanwhile, a huge chunk of the eCONomy hinges around massively overvalued, poorly built junk-houses packaged into insane financial scams at 10x leverage or more, even as the houses crash in “value” with no meaningful bottom in sight since people cannot “afford” them with toxic loans anymore, nor is there any hope of earning power to increase. Hence, prices can just keep falling, taking everything else down with it.
Faster Pussycat,
Well said, and I suppose that’s the reason for so much of the head scratching among bubble-observers? Again “I” contend that we’re in such dire straights and this whole scenario is so…. day-to-day, they’re just trying to dampen the noise from the impending re-set implosion by… whatever means available! (They’ll confront all the unintended consequences later)
(Always loved the movie btw. Russ Meyer was a genius!)
The scenerio you’ve outlined is more and possible. Re-ginning an explosive credit play and pushing out another layer of dollar debt will not improve wages - the only useful part of the Bush plan is the investment package, and that is terribly front loaded with the accererated write-offs. Chindia will eat our lunch money should they repatriate those billions of dollars. We may end up with 10% inflation and a flat ecomony for 20 years.
Just for the sake of argument, I would say that incomes are increasing quite nicely in some regions. Forbes just released a report on the “10 wealthiest counties in America” which showed that Fairfax County VA now has a median household income of slightly more than $100k. This is up from the census bureau’s report of $88k which was released in 2005. That is about a 14% increase in about 2.5 years.
I realize that not every place in America is like this area. But are there any metrics showing rising incomes in other regions?
BTW, I don’t currently own a home, so I’m hoping prices fall through the floor… I’m just trying to see this through the eyes of B. Bernanke and understand their “plan”.
And just to kick your ass, I will say that even if there are 100 counties like this in the US, what happens to the rest?
Most importantly, there is a “substitution effect”. If neighboring rents are cheaper, people will move to take advantage of it, and hence as always, the bust comes “outside in”.
The bust may start in Jamaica, NY and Manteca, CA but it will end up in Park Ave. and Pacific Heights not just with a whimper but with a bang!
Perhaps you should read the post in its entirety before you proceed to “kick my ass”.
Maybe you could not comprehend the main idea od this post, the part about trying to decipher the motives of the FED.
The FED has no choice.
Reliquify the banks now, and face uncertain future problems, or face instant collapse now.
They have no access to “magic juju pixie dust”.
Mojo:
Would you happen to be an employee of the Fairfax County government? They love to throw that statistic out - too bad a starter home (50s rambler) is going for 500-600K. I have a couple questions, though, who do you think is the largest employer in the DC Metro area? According to the GAO, including future liabilities, how much is this country is this countries’ shortfall? What happens to all those 100K jobs when the government teet is suckled dry?
No I’m not a Fairfax County employee… and I’m glad I’m not, as I seriously doubt that county employees make anywhere near the median income.
BTW, there are newer townhomes and some older SF(built in the 1970’s) homes in the $400k range available in the nicer parts of the county. These are few and far between though, as most sellers are still dillusional.
Just outside of Fairfax, in Loudoun County (another of the wealthiest in the country), prices have fallen dramatically. New 3000+ sqaure foot homes from National builders can be had in the 400’s, with townhomes in the 300’s. This sounds high, and of course it is, but two years ago people were paying about 150k more for these homes. This area is headed in the right direction… down!
Yep, in my old haunt in Loudoun, townhouses that went for $450k 2 years ago can now be had in the low-300s. Nice neighborhood, too. But keep in mind, that these sold for $180k in 2000 when they were brand new — I’d guesstimate (based on either rent or inflation) that they are work in the mid-200s today. So there still is a ways to go. I’m betting that they’ll hit that by this time next spring.
I’m starting to see the wave come in from Loudoun and now it’s affecting western Fairfax. Eventually it will works it’s way through Fairfax and all the way to Alexandria and DC.
There are pockets of wealth; Nantucket, parts of Manhattan, La Jolla, etc. This seems like cherry-picking though, as average incomes for an area doesn’t come close to some of these wealthy zip codes.
Those numbers can be misleading. My wife returned to the workforce a few years ago, so our tax returns have shown a healthy bump since then. This doesn’t mean that I got big raises, in fact, I’m still making less today than was in in 2001 (much less when inflation is factored in).
The nominal prices won’t bottom until wage inflation meets up with other types of price inflation. That’s what a lot of people don’t understand right now; inflation for goods and services have gone up a lot in recent years but incomes in general have not. Without increasing incomes, house prices cannot increase.
“We’ve fallen in love with the neighborhood. You can tell it’s on the verge of something.”
Yeah…collapse.
When are these people going to wake up?
I read somewhere that the average household income in Baltimore City was less than 40k, although it was about 60k for Baltimore County. In addition, this area is much sketchier than say Fells Point, Fed Hill, Inner Harbor, etc. I also read Baltimore City has the highest heroin consumption per capita in the US. Add onto that the massive jobs layoffs and foreclosures as the recession blossums and its on the verge of something. Something really, really bad.
Not to worry. They just need a special “affordability product”. I’m already hearing ads on the radio about cheaper mortgages based on the falling FED funds, that help you “get in” to the home of your dreams.
Yes, I heard one yesterday on 94.1 (jazz) in Tampa where the DJ said that mortgage rates would fall from 6% to 5.5% due to the fed cut.
Some sheeple just don’t have a clue how it all works!
None of it will help. The PTB, try as they may, cannot cure a solvency crisis with additional liquidity.
No, they can’t.
But they will destroy the value of my savings and help create more inflation to destroy whatever value my property now holds.
Thanks, Bernanke. You and your fellow tribesman Greenspan are really a great thing for average Americans.
Now, now - just because Baltimorgue is the drug-center of the East Coast and is full of random violence, “Stop Snitching” culture, self-inflicted poverty, and so on doesn’t mean it isn’t on the “verge of something!” Hahaha! Wow - what are these Realtors smoking? Maybe they should shamble through the streets of B’more one night and look at the druggies and gang members with automatic weapons walking around the streets and then reconsider how “up and coming” the city is!
I suppose the neighborhood was staged with 2 or 3 hiply-dressed single yuppy chicks on Segways or Vespas riding around the block repeatedly and a metrosexual guy on a parkbench with shoulder length hair reading a Metro News article.
“Cue the deer.”
LOL
Yes, but to avoid discrimination claims, you need to add one black, one asian and two dogs in the background. Nicely dressed with cell phones and ipods, or getting into their new $50k car.
Most dogs are nicely dressed, with their beautiful fur coats, but I’ve never seen any with cell phones and ipods (sorry - lol).
I guess some people like being the victims of violent crime. Not for me though. It is true that it is urban and sophisticated. They import only the finest in weaponry.
True, but every now and then you come across an old school mugger who hits you upside the head with a crowbar.
You can’t tell what it’s on the verge of, but you spend 300-400K to be there anyways?? Sheesh.
“‘The sales just pretty much stopped,’ said James D. Campbell, a principal with Somerset Development Co.”
_____________________________________________________________
“Your life is the fruit of your own doing. You have no one to blame but yourself.”
Joseph Campbell
Yes, but what if the Emperor passes laws not in my best interest that I have to follow?
‘For anyone who buys in the next 12 to 16 months, this is the best time IÕve seen to buy since about 1991,’ said longtime Loudoun real estate agent Nancy Yahner.
It’s a good time to buy if your the commision only realtor starving and desperate for business and using unethical tatics to fool the public. If your the consumer, it is not a good time to buy and people need to let these realtors know it!
Yahner. Fitting.
Fuzzy,
Richard DeKayser (C. Econ at Nat’l City in Chicago) tried to pull the same stunt in an interview yesterday. He cited 1994 (and of all years 2004?) as the only other times RE has been THIS affordable! Keep in mind though this PUTZ was in the “thereisnohousingbubble” camp from inception. Now we’re getting the echo effect amongst the rabble.
Richard DeKayser (C. Econ at Nat’l City in Chicago)
That says it all, he is trying to drum up fees for the bank he works at by making false statements to the public.
She must have been in a coma through the mid 90’s. In 1994, I could have bought the condo I was renting in a decent part of DC for about the amount of my income. No way I could do that today.
I read somewhere that the average household income in Baltimore City was less than 40k, although it was about 60k for Baltimore County. In addition, this area is much sketchier than say Fells Point, Fed Hill, Inner Harbor, etc. I also read Baltimore City has the highest heroin consumption per capita in the US. Add onto that the massive jobs layoffs and foreclosures as the recession blossums and its on the verge of something. Something really, really bad.
The Station North “Arts District” has been “on the verge of something” since the 1980s but I think the problem is they try to “manufacture” an arts district; these things are organic, take time, and you can’t skip over the part where artist live, work and produce art there and go straight to inflated yuppie housing just because you hang a few signs that say “arts district”.
Station North should have been made the refuge for all the artists priced out of DC, but the developers got greedy and tried to skip it and go straight to the inflated yuppie condo phase.
This will end badly.
Baltimore is broke, watch “The Wire” if you want to know what is around the corner from these condos.
Oh man, I just realised (again) where Station North is. Wasn’t someone else there featured in another article that Ben had on the blog about 6 months ago? I wonder how the one in the earlier article are faring.
That is NOT an area where I’d feel like walking home at night from the theatre or dinner at one of the local eateries. And there are some good eateries, the joy of urban living in my mind, on Charles Street — my favorite, Brewers Art, is only about a 1 km or less easy walk from Station North. But at 10 PM, after a couple of drinks, on foot? You won’t get mugged every day, but I wouldn’t do it twice a week for a year.
And yeah, real life “The Wire” isn’t too far from those condos!
Brewers Art is the BEST! Those couple blocks are fine, but once you get north to the train station, no way. I wouldn’t walk from these condos to Brewers Art.
I loved Brewer’s Art too…I liked the basement way more than the upper snooty part though
Very true. Pre-bubble the model was crackhead neighborhood to starving artist/counter-culture neighborhood, to trendy, to yuppie. They are trying to go straight from crackhead to yuppie ignoring the urban tapestry and culture necessary to make a true arts district or vibrant urban environment. Very perceptive.
And your description of the gentrification timeline is well put.
These trendy (former crackhouse) neighborhoods evolve over time, they just don’t happen cause some developer decided.
“Czermanski took out a swing loan in the meantime, yet ‘I don’t regret buying the new house, not for a minute.’”
Oh - you will. Two mortgages are going to eat you alive.
My former workplace sells new construction on the Main LIne, where Mrs. Czermanski bought and is trying to sell. I keep in touch with a couple of my co-workers. One of them tells me the builders are either slow on paying their bills or not paying at all.
(The bills are for marketing expenses, so they’re minus two on the list of who gets paid first.)
The Main Line is not immune to price declines.
My parents live about 25 west of Philadelphia. And they’re near enough to the Main Line for my mother to make sarcastic jokes about its oh-so-self-important residents.
Their nearest neighbor is a carpenter. My ever-observant mother notes that he’s home a lot more than he used to be.
My ever-observant mother notes that he’s home a lot more than he used to be.
Man, that’s harsh. LOVE IT!
Yep, that’s my mother, all right. She calls ‘em as she sees ‘em.
Those swing loans have become bridge loans..on the road to HELL.
Keep trucking Czermanski
I remember watching these condos being built and wondering which unlikely DCists were going to be gullible enough to buy. They are not in a “transitional” neighborhood- they are in a crackhead neighborhood, surrounded by vacant rowhouses, albeit close to Penn Station. They are a few blocks away from some nightlife, but Baltimore is a city in which Good Areas and Bad Areas are demarked block by block. I would not take the few block hike from these condos to Charles Street’s restaurants/bars/movie theater at night.
Out of curiosity, to get an idea of just what these residents might be in for, I looked up the address on Baltimore’s Fight Crime Online website, which shows reported crimes for a given area over a 14 day period. From Jan 1 to Jan 15th 2008, within the 1/4 mile area around these condos, there were reported 19 larceny from vehicles, 3 burglaries, 1 stolen vehicle, and 1 aggravated assault. (You can look at the query here: http://tiny.cc/JEDZQ ) I can only imagine what else occurred that wasn’t reported. They aren’t in murder/shooting central, but it sure isn’t a “safe” neighborhood. I’m afraid the FB who said that having to buy trashcans for other residents wasn’t something she expected to find in a such a costly condo is in for quite a few bigger unpleasant surprises.
Wow, only one aggravated assault in two weeks? And no robberies? Within a full quarter mile of the condos? That little neighborhood must be improving! Till springtime, that is, when the thugs come out again.
“If there’s a new house you really want, you buy it, said Kathleen Czermanski…”
Well, I approve of that! Yes, if there is anything I like to see, it is a bold and positive go-getter, who just sees a house that catches her fancy, and dagnabit, goes and gets the cute lil’ sucker!
Yeah. This is gonna end greaaaat.
Quit harshing my buzz!
It’s all good.
“‘I’m not one of those people who follows what the media and the public say,”
“Vera Germanotta, who, with her daughter, Maria, bought side-by-side units ”
“Czermanski took out a swing loan in the meantime”
“I’ve reduced the price three times and put $30,000 more into it, even after [putting] a new kitchen and three bathrooms into it.’”
Okay. This is a quadruple wammy.
She didn’t do any research.
She bought before she sold her old house
She spent more money into the old house rather than just lowering to an acceptable “selling” level.
She took out another loan.
what’s next…ban.k.cy….for..loc..ure….soup kit.ch.n..
Vera G, who doesn’t follow what the public and media say…
Yup Vera, our country was built on the productivity of rugged individualists just like you!
Vera’s house (and daughter Maria’s), folks, is a row home. A nice shiny new row home, not far from the sports stadium complex in South Philly. But attached product, nonetheless. They shelled out way too much money for anything in that area of the city.
My friends in the city throw out these figures like it’s normal to pay 3 or 4 hundred thousand bucks for a row house in the city. Sorry, I can’t see it.
I hear this a lot too. They’re not to happy to hear I paid $93k for a single in jersey in 1996.
Seriously, phillygal, I cannot believe those are going for upwards of $300K where they are. that is crazy nuts crazy nuts!
I worry about a lot of the newly gentrified areas of Philadelphia - I don’t think the center’s gonna hold . . . things fall apart.
that is crazy nuts crazy nuts!
The home I sold in 2005 was in the same price range as these “villas”. I thought I got a fair price for it.
The buyer got:
a solidly constructed all masonry 4 BR 3.5 bath home on two acres in the 19342 zip. The driveway was as wide as Darien St. in South Philly, and longer than Darien between 7th and 8th. The finished walkout basement had a kitchen, bathroom and fireplace, and easily could have been used as an in-law suite. This is what I use as a benchmark when my city friends tell me what rowhomes are worth there.
I agree with you about the newly gentrified neighborhoods.
I love it!
The notion that if you see a nice house, you buy it - it’s as if houses are cheap, shiny toys or candy at the checkout lane! Of course, considering the free money of recent years and the awful quality of many of the new McMansions, maybe the “cheap toy” description is not that far off.
I also get a laugh out of the study regarding salaries vs. housing prices (the part where the nurses making over $60K a year make about HALF of what one would need to buy a house in the area!) It’s been this way for years because of the Bubble, only now it is fashionable to talk about the truth. But, I bet few still want to realize what this means: salaries double or housing prices get cut in half. Which do YOU think is more likely? Think quickly - before your job is outsourced to some slave labor in China!
As for the townhouses in the “up and coming” areas of Baltimorgue - good luck with that! Remember: bars on the windows, don’t make eye contact with anyone, be careful kicking the druggies off your front porch… what else… oh, don’t leave anything outside or it will be stolen or used to break in… try to sleep in a part of the house that would least exposed to stray gunfire or firebombings, etc. Fun!
I got a kick out of “Baltimorgue.” Somehow I doubt the city Chamber of Commerce would approve.
Baltimore lost its “Murder Capital of the United States” rating in 2005, but they are moving up again in the rankings.
I’ve seen the horrors of that city a few times - places away from the “trendy” Inner Harbor - on business trips to some poor companies that are still located in that city (and surrounded by double-layer razor-wire - fun!)
Baltimorgue is like a larger version of Camden, NJ - an outpost of Hades overlapping our world. Once one sees street after street of ruined homes devoid of any life save for “shamblers” that glare at you as you drive by with a mix of feral animalism and raw hatred - hatred for reasons we couldn’t even begin to understand - you’ll know that there is no hope for Baltimorgue or any such city without a massive crackdown on crime along with “taking out the trash” throughout the city.
Just like to say … there really are nice areas of the city, that aren’t in the Inner Harbor/tourist area. It’s not all empty rowhomes and crime. There is definitely a problem, but it’s not all bad.
“‘We went into this knowing we would not be there forever, but we didn’t go into it to make money,’ she said. ‘We wanted to buy and own. We’re confident we won’t lose money.’”
Another GF and FB in the making. Fools still think house prices won’t go down or will rebound “soon” they will all be forced to walk away in due time.
What makes them so confident?
We’re different, and we know it? That’s a new spin on the “different here” theory.
Some notes on Baltimore from one of the more sensible realtors, Dominic Cantalupo, which I think used to get mentioned occasionally in Nikki’s old blog”
The rental market has exploded with inventory as sellers are desperate to not keep making mortgage payments without any revenue. This will probably be a bigger issue for the forseeable future in this area as many sellers are simply not going to get what they need to break even, let alone make a profit. What I don’t understand is why average asking prices have gone up in each area?? There’s nothing to support asking more. This could simply be a matter of more higher end sellers needing to get out and thereby skewing the numbers. Because inventory has reduced, perhaps the inventory left standing are overpriced homes with longer days on market.
He even has some worse news for sellers:
What you paid for your home has absolutely no bearing on what it’s worth. There is too much competition and buyers will seek out those homes that have the amenities they want at a price that works.
His full report is at http://tinyurl.com/2uzo7q
I commented to a friend of mine about the phenomenon of driving through an area and 90 days later driving through the same area and seeing brand new condos. I asked him how this happened and he said a truck comes by with this gigantic pump and they stick a hose in the ground and start inflating.
So now when we see the “phenomenon” we don’t even discuss it, its like a game; when you see one you just start making the “pumping sound” and move your hands like a bicycle pump until the other person sees it.
Had to start this in response to the “grittin” and dirty looks we would get from FBs and flippers when discussing the bubble in public.
“the first rule of the housing bubble is…”
I read the above article and am surprised that even Pennsylvania experienced a bubble. Does this include Oil City/Franklin? I do agree the $100k+ houses there need to go down in price but what about the $50k and under?
In Franklin, theres plenty of $100k to $300k houses that aren’t much better than the $50k homes. Sure they are newer and on more acreage, but the huge disparity is nuts! Most of the houses sold are the cheapest ones costing around $25k.
$339,000 for a house in Baltimore is stupid no matter how you cut it.
It’s funny that “lower end” is now $100k to $200k. I would need $40k to $75k annual salary and 20% down to afford those homes. What is the median per person salary in those locations? Even if it’s $40k, this barely gets you into a $100k house and you need $20k down at that. I do not consider those prices reasonable if they were much cheaper before the bubble. My dad bought an upper middle class house(3777 living sf) in West Palm Beach on an acreage lot(with pool and tennis court) for $225k back in 1995. He sold his middle class 5/3 2300 sf house for $105k.
Wages in 1995 were almost the same as wages today and the cost of living was much lower due to cheaper gas and food. Nowdays essentals take a bigger chunk out of wages, leaving less available for houses. I honestly think a $100k house today isn’t any easier to afford than a $100k house before the bubble.
I also want to thank you Jetson for your replies. So it’s all those new jobs that’s making house prices in the southeast permanently higher. You are saying whatever houses cost won’t drop much, if at all? Guess ill be staying in the rust belt forever as I can neither afford a $150k house nor do I want to pay that when it’s so much cheaper in the rust belt and let those people move out, I don’t like overcrowded towns, too much crime and traffic.
At a recent HOA meeting a new home owner stood up and said “it can’t happen to our area we have one of the top zip codes in America, i didn’t have the heart to tell him that is what the Roman Empire told it citizens?
where you at?
From LA Times:
“Countrywide and others tell thousands of homeowners that they can no longer borrow against their credit lines as the companies tighten standards.”
Funny that there should be a mid-Atlantic section today. I was looking at RE on Craigslist DC this morning while killing time before an appt. There are still way too many POS out there with outrageous asking prices.
This is my favorite listing… an in-need of total renovation by the Ledroit “up and coming for more than 10 years and still not there” Park area.
http://washingtondc.craigslist.org/doc/rfs/558945789.html
Baltimore is looking to reduce it’s property tax (highest in the state), but IMO the only reasonable solutions are better cooperation with the state tax office and a big fee on vacant properties.
Note the “hard money or cash deals” proviso. That is because underwriting standards, the way they used to be and the way they are returning, require code level water and electric for loan collateral. This is a house that has been stripped of original plumbing and everything else of value by the cracksters.
Rising expectations
Downtown developers seek ways to lock in buyers
http://www.chicagotribune.com/classified/realestate/newhomes/chi-downtown_nh_201feb01,0,2522863.story
“For instance Swapan Goddam, a 34-year-old doctor relocating here from Atlanta, has agreed to buy a two-bedroom unit on the 20th floor with a Lake Michigan view.”
Retaining a high degree of cultural relativity, this is one of the very few instances where I would recommend a name change for Mr. Goddam.
anyone know how much a pathology assistant makes ? I googled it and came up with $66,000/year in Chicago. So she wants to buy something that is almost 9x average income for her profession.
“I suggest you bone up on your Spanish…they aren’t going anywhere.”
Olga comes in twice a month to help me with cleaning. She is from Mexico and her husband is a free-lance welder. She is taking an English class to speak our language better, and we had a discussion about economics the other day. She was bewildered by the fact that her husband had absolutely NO work the previous week, and that was not good since she had only two houses that week (dependent on the size of the house she made $160 total max). The friend who referred her to me has let her go, as they (my friends) are presently up to their nose in debt (expanding a pool maintainance business)- and I proceeded to tell her about what the housing situation was doing to the service economy. If anything, these folks are the next to be surprised by just how tight things are going to get. I’m seeing it at the chi-chi salons and nail places around here. The big pedicure chairs sit empty and the bored techs play with their cellphones at their stations. I watched the guy on the corner pressure wash his own driveway the other day- what a concept! Yes, we’ve all been spoiled by this false prosperity… but chances are, a lot of us still know how to get down and dirty when we need to, and a lot of people are doing just that. When you can’t make money in a bad economy, you don’t hang around. A lot of the extra foreign workers around here went home at Christmas and haven’t come back.
‘I think buyer confidence is quite low out there,’ said Yahner. ‘People are scared.’”
Buyers on the sidelines are not scared; just wise to all the deceit and lies spewed by NAR and Realtors.
“…it’s a great time to buy.” Give me a break…..have they no shame.
Realtors and their fuzzy logic. I am definitely not scared nor sitting on the fence. I am confidence and no where near the fence. I am quite optimistic that prices will continue to fall, and better bargains will be had for those who wait for even another year or two.
Bwaaaaaaah haaaaa haaa haaa!!!
Doom… Doom… Doom…
Care to elaborate?
“Now is the best time to buy because everything’s going up from here.”
Down is the new up!
The last time I was down at the Baltimore Inner Harbour convention center a bum outside stopped me and asked “Hey man, can you lend me a thousand dollars?”. Even the bums know the cost of living is skyrocketing.