April 7, 2006

Northern Virginia Inventories Surge By Triple Digits

The northern Virginia realtors have the March numbers out. Please note the files on the link are PDF’s.

The following are single family homes, inventory numbers are year over year:

Arlington County

Active listings up 274.4%, with the median down to $650,000 from the $669,154 high in 2005.

Alexandria City

Active listings up 390.3%, with the median flat and average price down.

Falls Church City

Active listings up 291.7%, and the median is higher with only one home sold under $500,000.

Fauquier County

Active listings up 204.3%, with a median at $390,000, down from $419,950 in 2005.

Fairfax County

Active listings up 496.4% with the median and average price down from the 2005 highs.

Loudoun County

Active listings up 434.7% with a year to date decrease in contracts of 23.5%, The median is down $5,000, even with triple or double digit declines in price ranges beneath $500,000.

Prince William County

Active listings up 497.2%, with a flat median price even with big declines in price ranges below $300,000.Compared to 2005, contracts are down 26.4%, year to date.

The only two condo and co-op reports were pulled up; Loudon County which saw an increase in active listings of 608.5% and a decline of year to date contracts of 21.3%. And Prince William County saw an increase in active listing of 800% and a 16.3% decline in year to date contracts.

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Comment by Ben Jones
2006-04-07 13:37:18

Those with an interest in this area should download the PDF’s and look at the inventory charts. It look like March 06 was when sellers rushed the market.

Comment by GetStucco
2006-04-07 16:49:42

N Virginia flippers be flucked. Next to crash, IMO: Any markets West of the Mississippi formerly known as frothy.

Comment by OC_Stomp
2006-04-07 13:37:31

No comments?!?!?!!?!?!?

Comment by vstan
2006-04-07 13:42:19

Sacramento new home sales fall 57%, yuba city fall 93% …………… WTF 93%, Yes, that’s fall i.e. 7% new homes sold since last year
Great time to buy….
Soon builders will be launching “buy one, get one free each year for life” deal….
So much for housing shortage…
From the article “Sacramento County saw a 58.6 percent decline, from 2,660 to 1,101, with larger drops in Elk Grove and Natomas but increased sales in Folsom.

Yuba County saw the sharpest percentage drop, down 92.8 percent in a year from 497 sales in first-quarter 2005 to 36 in the first three months of this year”………..

Comment by Brad
2006-04-07 13:57:17

“Yuba County saw the sharpest percentage drop, down 92.8 percent in a year from 497 sales in first-quarter 2005 to 36 in the first three months of this year”

You don’t get those kinds of numbers if most of the houses are being bought as primary residences, especially as the builders are dropping prices and offering incentives. The 497 sales Q1 O5 were probably 80% floppers.

Comment by crispy&cole
2006-04-07 14:13:36

I love how this clown blamed the bad weather. LOL. So last year was any different, actually last year it rained constantly up and down the valley! They also, as excepted, throw around some #’s from 2003. LOL.

Comment by HousingBear
2006-04-07 13:54:18

So, when will we see selling pressure reflected in the price of a house? Kind a like stocks, heavy volume to the downside (selling) should reflect a decrease in the price, as equilibrium between the sellers and buyers is met.

There is not enough volatility. I guess houses have a low beta?

Comment by scdave
2006-04-07 14:06:02

HBear; Watch for the Elephants in the Market….They will get their product sold…Likely offering low fixed interest rates…Everyone one else will need to compete with price….

Comment by bottomfisherman
2006-04-07 16:29:43

What we are witnessing is a classic market selloff that, because of lack of liquidity and sticky pricing, it is happening in slow motion. In the stock market, the price correction would have happened immediately as sellers flood the market. IMO, it is fascinating to watch a market correction happen at this slow, but sure pace.

Comment by GetStucco
2006-04-07 16:44:49

Stock market crash = AZ desert flash flood minutes after a heavy downpour

Real estate crash = CA landslide, with maximum damage 4 mos after the rain stopped falling

Comment by bottomfisherman
2006-04-07 16:50:45

It will be interesting to watch the rain-soaked hillside give way…

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Comment by Sammy Schadenfruede
2006-04-07 18:47:26

It will be interesting to watch the rain-soaked hillside give way…

It’ll be even more interesting, and amusing, to watch the gin-soaked flippers give way….

Comment by LV_CPA
2006-04-07 14:03:35

30 yr fixed, no points, up to 6.75% today. Now if the OTC would start clamping down on the I/O’s and option-ARM’s, we’ll see some pricing action.

I was leaning toward the slow and painful decline, but I’m switching over to the guillotine camp.

Comment by boulderbo
2006-04-07 15:04:55

this in my email box today, think there might be some revision to the kamikazee option arm, nice spin though

Indymac Bank® is revolutionizing pay option lending with the introduction of a new line of products designed to meet customers’ needs in new ways. FlexPay® Option ARMs feature a completely new approach to establishing the starting minimum payment - one that doesn’t rely on a discounted starting interest rate that may confuse customers.1

Benefits - Coming Soon!

Hybrid ARMs that include payment options (minimum, interest only, fully amortizing)
12 MAT adjustment terms that soften key payment changes

Be sure to check your e-mail for our official product launch!

Comment by Housing Wizard
2006-04-07 15:10:24

Boulderbo Do you know what the margin is and over what index on this new arm?

Comment by boulderbo
2006-04-07 15:16:32


the email from indymac is the pre-announcement. they’ll drop the hammer on monday. my guess is that “one that doesn’t rely on a discounted starting rate that may confuse” means close to fully indexed. methinks the option arm is toast. btw, indymac was one of the more aggressive option arm lenders out there three months ago.

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Comment by Housing Wizard
2006-04-07 16:00:19

Yes , I noticed Indymac Bank was really trying to get deposits lately,( last three months ). Won’t put my money in that bank .

Comment by GetStucco
2006-04-07 16:55:56


Please let me know when the Forgivable ARM is introduced, as I am highly interested :-)

(Maybe unbeknownst to me, these are already prevalent…)

Comment by Sammy Schadenfruede
2006-04-07 18:50:56

Please let me know when the Forgivable ARM is introduced, as I am highly interested.

Not to be confused with the forgettable ARM, wherein the deep-underwater FB simply lays the keys on the counter and loads up the moving van in the dead of night, leaving Mr. Banker holding the bag.

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Comment by scdave
2006-04-08 02:56:45

Forgivable ARM …..forgettable ARM


Comment by dcbubblehead
2006-04-07 15:35:55

right on, LV_CPA! by the time people realize it’s a bubble, it’s too late. that’s where we are now. i think it’s going to be positively bloody because most folks either a) put little to no money down or b) they stripped out any equity they had. those two factors, i think, will make for a quick plunge followed by a slow bleed.

not sure if you saw the condo report on cnbc yesterday, but there are a lot of folks caught with their pants down in the condo market. if you price out some of the condos for investment purposes to be cashflow positive, they’d need to be priced 50% down from where they are now in clarendon (the on location site for cnbc yesterday).

Comment by John Law
2006-04-07 14:14:37

I wonder when a reporter will ask questions like,

if this is such a rich area, why is inventory up so much?

if everyone wants to live here, why is inventory up so much.

I don’t know the state, but are these areas close enough to DC to get help from it’s job growth? that would be another question.

Comment by dcbubblehead
2006-04-07 15:27:25

dc proper is a very small area. it’s only 100 sq miles. dc is surrounded by two states: virginia and maryland. most of the areas referenced in the NVAR report are fairly close by (fairfax county, alexandria, arlington, falls church). there are some places referenced like fauquier county and loudon county that are in bumf*ck, but there are lots of folks in those areas who commute. areas like lorton, va are speculator infested due to the closure of a prison facility that attracted a lot of folks there. it’s gonna be UGLY when it’s over.

Comment by NOVAwatcher
2006-04-08 03:51:37

Yep, I count most of those counties as DC, which is really just one big sprawl. The eastern edge of Loudoun is part of DC (or at least the sprawl) as far as I care, and the same goes for all of those counties listed. The other side of Loudoun is rural, with lots of horse farms etc.

Comment by DC_Too
2006-04-08 05:54:32

DC proper is indeed small - the population is about 500,000. For readers not familiar with the area, Fairfax County is the largest of the DC suburbs and is home to over a million people. That inventory is up nearly 500% in Fairfax County is nothing short of breathtaking. It will be interesting to see the March numbers for DC proper, especially condos.

Comment by dcbubblehead
2006-04-07 14:20:52

the washington, dc area has higher than average income. people who were disenchanted with the stock market invested in real estate around here. i know a lot of folks out here tha own multiple properties. kinda sucks to know some of hese people.

Comment by GetStucco
2006-04-07 17:00:08

Kinda sucks to know FBs around SD, esp. since I tried to warn some of them, and earned their ire in the process…

Comment by NOVAwatcher
2006-04-08 03:56:36

It’s funny, because just a few weeks ago I was at a party and I was talking to someone about realestate. The other person had a friend who was flipping properties in Denver, and he was considering taking out a heloc and doing the same thing. Luckilly, I think I convinced him that home prices were going down, and that the days of flipping were long gone.

The funny thing about DC is that compared to much of the US, the population of the DC area appears rich. However, with homeprices being what they are here, I could take a substantial pay cut, move to the mid west, and have more money left over after expenses because housing would be substantially cheaper.

Comment by kathleen
2006-04-07 14:24:21

according to homesdatabase.com, there are almost ONE THOUSAND homes for sale in 2 Loudoun county zip codes — 20176 and 20177 i think (both Leesburg). I found that shocking.

Comment by Housing Wizard
2006-04-07 14:32:17

Does any body know why Virginia would be hit this soon with high
inventory and prices declining . Anybody know in more detail what is going on in Northern Virginia .

Comment by arlingtonva
2006-04-07 14:51:37

Anybody know in more detail what is going on in Northern Virginia .

Yes. People keep chanting the D.C. mantra: the government is always hiring and so there will always be a strong economy here. So I assume investors think there is little risk of losing in the D.C. market.

Comment by dcbubblehead
2006-04-07 15:29:10

arlingtonva nailed it on the head. i’ve heard folks say “there’s only so much land”, or “as long as DC is the capital of the U.S., you can’t lose.”

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Comment by Tom DC/VA
2006-04-07 16:13:33

Prices doubled between Jan 01 and May 05. Wages did not.

Comment by Arwen U.
2006-04-07 17:57:07

Agreed about wages. I know four highly experienced network engineers/security engineers. They are still making close to what they were four years ago. The DoD jobs pay well, but not enough to raise a family and buy a house on one income.

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Comment by mojo
2006-04-07 17:12:19

Are you kidding? Prices have gone mad. “Starter townhomes” for first-time buyers priced at 600k? WTF? There are no more first time buyers who, or in my case, will get into this game.
That is why the market is correcting so suddenly.

Comment by scdave
2006-04-08 03:07:22

“Starter townhomes”….priced at 600k..!!!!!!

“SAY WHAT” !!!!!!!! UV GOT 2 B F…..G KIDDING ME!!

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Comment by NOVAwatcher
2006-04-08 04:08:14

For you ZipRealty fans, here’s one of my favorite price reductions:

And then we’ve got this clown who thought they could get $515k for their townhouse (LO5520596), when a nearly identical unit is for sale down the street for $430k (LO5541321).

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Comment by Arwen U.
2006-04-07 18:18:22

Anybody know in more detail what is going on in Northern Virginia .
For the most part, simply the bubble bursting. We’ve had a huge number of flippers, and I’ve noticed that many of those are from other countries.
This is a very transient area. There are a great number of temporary military and government assignments. People come and go and need to sell or rent their place out when they leave.
I know two people personally who are trying to sell now. The first because the house is too big and expensive, and the second because the seller wants to cash out and move south. We’re close to attractive, less-expensive areas just to the south with good jobs. So why stay.
We also have an incredible, incredible amount of building. Loudoun and Prince William counties were all flat farmland, and there is still gobs of it left. We had two 20-somethings visit us from D.C. to pick up some furniture we advertised on craig’s list, and their jaws were dropped when they got here (we live 1 hour west of D.C.). They said “we thought there was a land shortage”.

Comment by Sammy Schadenfruede
2006-04-07 18:57:18

I know that in 2002, someone did a poll in N. VA that asked people, if your primary income source was cut off, how long would it take before you ran into serious financial difficulty? A full 70% said a month or less, which I found astonishing. That was before housing prices reached completely insane levels like they did in 2005. People are leveraged up to their eyeballs in debt, and living paycheck to paycheck. My guess is that the huge spike in inventory is the trailing indicator of an even bigger spike in blind panic among people who took on way more house-debt than they could afford, and now they see the writing on the wall.

Comment by DC_Too
2006-04-08 05:59:09

Wizard - “Northern Virginia” is a very big place - land is abundant and there has been immense amounts of construction - which continues today. There are almost no barriers to the supply side of the equation, accept traffic jams.

Comment by Annata
2006-04-08 11:46:45

Speculative bubbles are inherently unstable. Asking what specifically triggered the crash is a bit like asking what triggered an avalanche: If you look hard enough, you might find that a small bird knocked over a rock on the mountaintop, but it would be unhelpful to say that the avalanche was caused by a bird.

Comment by freeloading roommate
2006-04-07 14:28:34

An 800% increase in inventory merely represents a return to a more normal market with single digit gains in home values for 2006 making this an excellent time to buy, especially for investors and first time homebuyers.

Comment by crispy&cole
2006-04-07 14:31:02

Actually a 100,000% is normal - so 800% is cleary both a buyers and sellers market!

Comment by cereal
2006-04-07 14:44:19

i’m still swishing around the 93% drop in sales for yuba. how can that happen to one of the great cities of the earth?

Comment by Housing Wizard
2006-04-07 14:52:30

People can’t afford the prices and higher interest rates any more .

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Comment by cereal
2006-04-07 14:54:09

yup, yuba.

new york

Comment by crispy&cole
2006-04-07 15:01:02

Yeah Yuba is a shit hole. I think they have the highest unemployment in the nation. Why would you even build homes there???

Comment by bottomfisherman
2006-04-07 16:31:50

For moron flippers, of course.

Comment by crispy&cole
2006-04-07 14:58:03


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Comment by GetStucco
2006-04-07 16:57:24

And the median is up, century-over-century, making it a great time for long-term investors to buy…

Comment by steinravnik
2006-04-09 19:09:01

sounds like a david liereah press release to me. Dave, is that you?

Comment by arlingtonva
2006-04-07 15:02:21

Northern Virginia residents have counted their chickens before they’ve hatched.

Sellers won’t find many first time home buyers willing to put $500,000 on the line in a declining market. Few first time homebuyers mean few housing upgrades which results in a very weak market.

Comment by arlingtonva
2006-04-07 15:14:20

A few weekends back, I was walking by an open house in Arlington and decided to check it out. It was a 1 bedroom, 1960 condo. The halls smelled like urine and it had ghetto air conditioning. Asking price: $320,000.

The realtor told me a study came out that showed rents were about to rise dramatically. Yea right. A nation with a negative savings rate is going to pay significantly more for rent. Is that mathematically possible?

Comment by Moopheus
2006-04-07 16:05:05

Apparently landlords here in Brooklyn think so. Rents have definitely been going up. How long people will be able to pay remains to be seen. The idea of correction here is to raise rents until the rent/buy ratio is equal at bubble prices.

Comment by Housing Wizard
2006-04-07 16:14:24

Paying higher rental rates because of 40% speculation buying last year in this Country turns my stomach,(and I’m not even a renter ).

Comment by JP
2006-04-08 02:41:49

I found the rent increases were due to the “Craigslist” effect. Landlords look at comps on CL and then come up with a number. Try finding 5 places you like, then offer less. Some fraction will want to fill the place, and you’ll get a lower rent.

I wish that CL would make better use of a Rents-Wanted section. It’s all supply side at the moment.

Comment by novasold
2006-04-07 17:02:09


I believe this is total shit. I sold in Loudon and live in a very cushy easily commutable neighborhood in Vienna in a SFH (small ranch) and pay 1750 a month. When I was searching, there were plenty of homes in that range in Fairfax Co. and I was willing to go higher. People may raise rents, but the homes sit and wait for tenants unless they are willing to rent their home and have it turned into a flop house.

I believe the NoVa market and the lines given for the hugely inflated prices, was fueled by speculators, flippers and lax lending standards. This area is going become very turbulent when the shit hits the fan.

Comment by DC_Too
2006-04-08 06:03:41

Novasold - I’m with you on that. I sold into a bidding war in ‘04 and have no trouble finding cheap, adequate rental housing since. In fact, I’ve even upgraded, once, at a discount. Moving is a notch below root canal in my book, but I will do it again if the numbers justify it. We’ll see…

Comment by Bruce Dickinson
2006-04-07 16:00:53

The condos that I am tracking in Tysons/McLean are showing amazing range in asking price now. The peak last summer was 375k for 3 units. Now one of these sucker investors put a unit on the market for 375k (he paid 362k last summer). The asking price hit 399k last summer with one crazy outlier that started at 419k. What an exercise in futility. The realtor lies (of course) and says that it is one of the biggest units but it is 90 sq. ft. less than one that went on the market for 275k. It is “priced to sell”. The owner here paid 88k in 1999……..

It’s hard to know what units sell for here if anything actually sells but I am confident that we are about 20% off the peak and this place is 26.7% off the peak…. wow, things are moving faster than expected although these units obviously experience quite a blow off from 90k in 1999 to 375k in 2005.

Talk about a market out of whack……..

Comment by Bruce Dickinson
2006-04-07 16:18:22

On the other hand I am surprised (disappointed) to see some houses in my neighborhood (McLean) sell in the $800k to $1 million range. When I see the sign go up I laugh and predict that it’s going to be stuck for a while but they seem to seel after a while.

p.s. The 275k that I mentioned earlier has a tax valuation of $317k. Wow. In Fairfax county the tax value should represent the market value of the preceding year. So during the bubble you would see that the assessed value would reflect the sales price of Q1 of the preceding year so would have no relation to the asking price in, for example, Q3 of the tax year.

There is quite a few teardowns that are probably going to sell for $2 million. The amazingly poor construction is shocking. The OSB panels they are putting are not flush. When I drive by I shake my head.

One $2 million house sold after 9 months on the market. Small plot of land and looks silly next to the 1950s ranch houses.

Comment by Sammy Schadenfruede
2006-04-07 19:06:02

There is quite a few teardowns that are probably going to sell for $2 million. The amazingly poor construction is shocking. The OSB panels they are putting are not flush. When I drive by I shake my head.

As unfathomable as this may seem, those illegal immigrant teenagers building those houses don’t seem nearly conscientious enough for someone earning $7 an hour under the table, with no benefits, working for some fly-by-night West Virginia construction outfit.

Comment by scdave
2006-04-08 03:20:13

The OSB panels they are putting are not flush.

Oh, don’t worry….We can cover that up with a little brick & stone…

Comment by GetStucco
2006-04-07 16:54:04

It will be interesting to see how the mainstream media spins this triple-digit inventory increase, as any idiot can see the soft landing theory is completely inconsistent with the empirical evidence, at least for the Northern Virginia local markets…

Comment by Salinasron
2006-04-07 18:04:53

Before rents are raised to much the government (state, city, etc) will step in a enact rent control and you won’t be able to able to evict them….happy days are here again, here again…

Comment by arlingtonva
2006-04-07 18:22:29

That’s an interesting site: nvar.com

Here is an article dated 8/25/2004 titled ‘THE HOUSING SUPPLY SITUATION JUST GETS WORSE AND WORSE’.

“In the fall of 2002, the Center for Regional Analysis at George Mason University conducted an analysis of future housing supply and demand in the greater Washington area. Conclusions of that research were that the collective land use and development policies of local governments in the region have resulted in an existing deficit of 43,200 units”

I love how they get a university to support their b.s.

So what do they say now?

Comment by crispy&cole
2006-04-07 20:21:08


Comment by Bruce Dickinson
2006-04-07 22:35:34


This center at the third rate cow college called George Mason is a strong bubble apologist. The author McClain is the water boy for the grand guru Stephen Fuller. I have read some discussions like on the WP website and a common bull argument is that DOCTOR Fuller said such-and-such and he is a very smart man when they start to lose the argument.

Look at McClain’s latest powerpoints. They still predict +6-12% for DC and PG county and other “affordable” areas 15-20% for 2006. As long as there is job growth then house price inflation will continue. However, a 5 year old can look at their charts and see that their argument does not make sense because in 1997-2000 job growth was 50% stronger than 2003-2005…… In 1999 toward the peak of this employment boom that was especially dot.com and telecom fueled in No VA you could buy my example condo for 88k that sold for 375k in 2005.

The rental market actually reflected these trends with sharp price increases in the late 1990s and then becoming weak to flat since 2002.

In 2002 when the bubble really started to rage in DC there was virtually zero job growth. Obviously other forces were at work including speculation, shift of assets to RE in the wake of 9/11 and dropping interesting rates but certainly not intrinsic demand through job growth.

Check out his April 6 Powerpoint. They recycle the same damn slides…. at least it looks like they dropped the 6-12%/ 15-20% slide. You have to have been sipping Realtor Kool-Aid in Jan 2006 to predict 15-20% price increase for several DC area counties.

Comment by DC_Too
2006-04-08 06:08:31

Bruce - Fuller’s outfit is called the “Center for Economic Research” or some such thing. I Googled it the other day - can’t remember the exact name. Anyway, on the web page is a list of the Center’s “clients,” which include Pulte, Richmond American and other prominent commercial developers. Like Mencken said, “follow the money…”

Comment by swimming up stream
2006-04-08 10:16:23

I saw this in the Washingtonian magazine last month (March 2006, page 203):

“George Mason University professor Stephen Fuller sold a four-bedroom, four-bathroom Colonail townhouse on Potomac Court in Old Town Alexandria for $1.15 million. The brick house has views of the Potomac River. Fuller is the head of the university’s Center for Regional Analysis, which studies economic, housing, and employment trends in Washington.”

I wonder if he’s a “bubble sitter?”

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Comment by scdave
2006-04-08 03:23:43

uh oh…..

Comment by flat
2006-04-08 04:33:26

gov workers NEVER get fired- when will taxpayers in the rest of the country get angry?
answer -never they’re sheople waiting for free meds

Comment by Arwen U.
2006-04-08 05:13:51

There are government workers all over the country, not just in D.C. But you’re right, they’re leeches. I’ve heard reported recently that most of them are of the baby boom generation. Government jobs don’t pay so high that they are attractive to the young, and the housing bubble has ensured that they are even less attractive. The news report I heard predicted that there would soon be a shortage of government workers, with many currently of retirement age. In which case of course, a prudent administration would simply let the jobs go away.

Comment by Simmsays...
2006-04-08 07:05:04

Its interesting. I read data somewhere than more than 50% of the US does not pay any taxes and get benefits, so the incentive for politicians is to tax the minority and give benefits to the majoirty to get elected. I think this makes sense at a very subtle level in putting incentives to politicians to spend and give.



Comment by Travis
2006-04-08 11:10:49

There is something fishy with the settlement numbers that are used in the March report for Fairfax, Loudon, and Prince William Counties.

If you look at the February year-to-date 06 versus 05 settlements for single family homes they are all down. Fairfax (-22.1%), Loundon (-19.6%), and Prince William (-21.4%).

In March each county was also down for the month: Fairfax (-15%), Loudon (-18%), Prince William (-27%) but “mysteriously” the year-to-date numbers dramatically went up: Fairfax (+63%), Loudon (+63.4%), and Prince William (+54.3).

All of the sudden each county suddenly had a dramatic increase in their 2006 totals that “appear” out of of the sky. For example, Fairfax county had about 2,500 additional settlements for 2006 show up on top of the only 1000 that were listed for March.

Any ideas as to how this might happen?

Comment by Arwen U.
2006-04-08 17:35:19

I saw that, too. Hopefully it will be fixed. If not, we’ll breathe down their necks.

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