Values Are Headed In One Direction — And It’s Not Up
The Tribune Review reports from Pennsylvania. “During the first three months of 2008, 1,187 houses were foreclosed in the five-county Pittsburgh region, the second highest total for a three-month period on record, according to RealStats. Another report found that during the 23 months between January 2006 and November 2007, 9,046 homes had foreclosure proceedings in Allegheny County. Carl Grasha in Monroeville, has been specializing in the sale of foreclosed properties since 1971. He finds that 80 percent to 90 percent of the houses he sell have debris and rubbish left in them.”
“Often, the problem stems from the lack of funds the former owners had to maintain the properties. ‘I had to remove nine dumpsters full of trash out of one house recently, just to get it into safe and clean condition,’ he said.”
The News Post from Maryland. “Auctioneers saw it coming. They knew the subprime loan frenzy would cause many homeowners to mortgage their futures. ‘In 2005, we found that some homebuyers were not well informed, yet they had no trouble getting no-documentation loans,’ said Paul Cooper, VP at Alex Cooper Auctioneers, based in Towson.”
“‘You scratched your head,’ he said. ‘It didn’t make sense. When the trouble came, it wasn’t a real shock.’”
“David Prinsky, an attorney for (a) Washington-based law firm, said that in early 2006 he figured trouble was on its way. ‘Everybody knew that the anniversary dates for graduated interest rate loans would come due in 2008, and that a lot of people would be caught in that,’ he said…referring to 2/28 subprime loans, with deals of two years at a fixed interest rate and 28 years at a higher variable rate.”
“Once the variable rates hit, many borrowers can’t afford their mortgage payments. ‘Bank of America saw it three years ago when it announced that it was no longer offering creative financing,’ Prinsky said.”
“‘For investors to buy distressed properties as a profession, yes, they can make a lot of money. But one or two bad decisions can cost them,’ Prinsky said. ‘For that reason, these investors tend to be very conservative, and property values are now headed in one direction — and it’s not up.’”
“The foreclosure problem is having an impact on the Frederick community. Appraiser Wayne Six says foreclosures negatively affect the local real estate market in two ways: increasing the volume of inventory, and foreclosed-on homes selling below market value that tend to pull down the market.”
“‘Newer tract subdivisions where homes are three years old or less are typically the worst case scenario. This is because our local market peaked in June 2005,’ Six said. Some homeowners with those newer homes are finding themselves what Six calls ‘upside down.’”
“In 2006, 455 foreclosures were filed in Frederick County Circuit Court. In 2007, that number more than doubled to 1,025. This year, as of April 18, the foreclosure count stood at 485, and experts say there’s worse to come.”
“Foreclosures this year include $219,000 townhouses in Hillcrest Orchards and $650,000 single-family homes on quarter-acre lots in the Villages of Urbana. And the problem is affecting people across the economic spectrum, from construction workers to white-collar employees.”
“Frederick County hasn’t quite hit bottom yet, said appraiser Wayne Six. Typically, Frederick County has a balanced housing market when about 1,100 to 1,200 homes are for sale. As of April 21, 2,023 homes were available, he said.”
“Inventory has grown since mid-January, when it was 1,850 homes. The county is seeing 40 to 45 sales a week, compared to 20 to 30 a year ago, but 60 or so homes are still coming on the market each week, Six said.”
“‘It’s like we have a fish on (the hook), and he’s still taking the line out a little bit, but he’s not smoking the reel like he had been,’ Six said.”
“Generally, areas taking the hardest hits now are the ones where home prices rose the most, said Andy Bauer, a regional economist for the Federal Reserve Bank of Richmond. In the Mid-Atlantic region, Prince George’s County and Virginia’s Prince William County are having the biggest problems.”
“Prices are adjusting, but housing inventory throughout the Washington-Baltimore region is going to need to fall farther before being cleared out, he said.”
The Washington Post. “After self-proclaimed handyman Kevin Garvey had browsed more than 30 houses in Northern Virginia, the price and location of the single-family house off Liberia Lane made the first-time home buyer move to Manassas.”
“‘There were a lot more options in Manassas than in other areas,’ said the 24-year-old, who looked in Leesburg, Centreville, Ashburn and Alexandria before buying the $305,000 house. ‘This was a bank-owned property at a good price. It was an offer I couldn’t pass up.’”
“Garvey is one of many first-time home buyers making their way to the area, real estate agents said. After a plague of foreclosures, Prince William County, Manassas and Manassas Park finally have some positive activity in the housing industry.”
“‘I’m happy to say we are seeing a lot of first-time home buyers,’ said Carolyn Capalbo, a real estate agent in Manassas. ‘People are seeing the prices come down to a point where it makes sense to purchase. What they would be paying in rent versus a mortgage is about equal, so there is a strong argument to buy.’”
“Because of the number of foreclosures in Prince William, Manassas and Manassas Park — 659 in March — a lot more affordable houses are on the market, real estate agents said.”
“Although Garvey, who moved from Tallahassee, said he didn’t expect to buy a house at age 24, the prices here vs. in Florida made it a better option. ‘What I found interesting here with the foreclosures was I could get a better deal than what I could have gotten in Florida’ for the same size home, Garvey said.”
“‘Real estate agents said the Prince William market is heating up more quickly than others because it took a bigger hit.”
“The housing market is looking much more affordable in Prince William than in other places,’ said Stephen Fuller, an economist at George Mason University. ‘Prices got way too far away from reality across the region. Prince William is adjusting more substantially and will be a much better housing market in the long run because there is a better balance between value and price.’”
“The MRIS data show the average recent sale price of a Manassas house is $195,500, 40 percent lower than last year. In Prince William, it’s $299,600 — a 26 percent drop. The average cost of a house in Fairfax and Loudoun is still more than $400,000.”
“‘As a small-time investor, you can’t go wrong, especially now,’ said Lou Coletta, who just invested in his second Prince William property. ‘Prince William was hit the hardest, and prices have taken a tremendous drop.’”
“Keith M. Elliott Jr., with Re/Max Olympic Realty in Haymarket, said that though houses are cheap, buyers need to be cautious because foreclosed properties come as-is. ‘The state of some of these homes was disgusting,’ said first-time home buyer Sue Lozano, who looked in the Prince William area before settling on a house in Chantilly. ‘People just didn’t care what state they left them in.’”
The Free Lance Star from Virginia. “The residential rental market in the Fredericksburg area has stayed strong as housing sales and prices have slumped, local Realtors say. Linda O’Sullivan, an agent who does both rentals and sales, said rental prices have stayed steady or even gone up in the past couple of years, a time in which median sales prices in the Fredericksburg area have dropped nearly 25 percent from peak to trough.”
“She said demand is mostly coming from people who were thinking about buying a home, but who have decided to wait out the recent economic downturn.”
“Realtors say foreclosures have played a role also in the demand for rental property. A Thursday search of RealtyTrac turned up more than 1,000 foreclosures each in Stafford and Spotsylvania counties. ‘All those people going into foreclosure have to live somewhere,’ said Cathy Butler, property manager in Spotsylvania.”
“O’Sullivan said the Fredericksburg area has traditionally had a strong rental market. The developers of Cobblestone Square in Fredericksburg are banking on that strength as they transform the community off Lafayette Boulevard from condominiums to apartments.”
“Chris Waller, who is VP of Cobblestone partner Garrett Development Corp., said apartment developers have shown interest in the undeveloped portion of the community. Eighty-four condos have already been built at Cobblestone, and about 60 have been sold. Waller and other Cobblestone developers are looking for a buyer who will build 292 apartment units at the site.”
“Waller said if they built all those units as condos, it might take years to sell them, leading to fire-sale prices. But he said the apartments should prove popular.”
“‘The market won’t allow anything else right now,’ Waller said.”
The Citizen Times from North Carolina. “Western North Carolina hasn’t been hit as hard as most places by the wave of home mortgage foreclosures sweeping the country, but more families are losing their homes, and the problem appears to be worsening. The number of foreclosures in WNC for the first three months of the year was still up 20.3 percent over the first quarter of 2007.”
“‘There are some time bombs out there,’ said Victor Moore, a financial adviser for (a) consumer credit counseling agency serving WNC. ‘It looks like (the increase in foreclosures) will go beyond a one-year event.’”
“‘The lenders really set it up’ in some cases so that adjustable rate mortgages, or ARMs, were hard for borrowers to resist, said mortgage broker Kent Wolff. ‘If you had someone with extremely damaged credit … they’d say, ‘Well, congratulations, you’re approved. Your rate on (an ARM) is 8.5. Your rate on a 30-year fixed (mortgage) is 11 percent.’”
“Wolff said…it is ‘absolutely, positively correct (that) there were a large number of less scrupulous brokers’ just looking to make a quick buck on a loan.”
“The causes of the problem locally and nationally are similar: Lenders lent too much, borrowers borrowed too much, and when what had been a spectacular upward climb in home values finally faltered, or a borrower suffered a financial reversal, both sides were left exposed.”
“‘People got used to — on both sides of the ledger — thinking that home prices are always going to go up,’ said Mark Pearce, North Carolina’s deputy commissioner of banks.”
‘Another report found that during the 23 months between January 2006 and November 2007, 9,046 homes had foreclosure proceedings in Allegheny County. That’s a rate of one per 65 housing units, said the University of Pittsburgh’
That’s about as bad as any place in the country. BTW, these UHS in the Washington Post are trying to pull this rent equals mortgage baloney again. I’d bet they are comparing nice rentals versus trashed out foreclosures. Or they’re just lying.
But but but!!! Rural areas and locations in economic decline didn’t see massive price increases!!!!
So far the Fb “investors”, flippers and lenders are merely dazed and confused by the shock of the 1st lessons of the housing boom demise.
As the SHOCK wears off, they are about to learn their next big lessons in RE and Economics 101…PAIN.
Pain…HURTS but it’s a wonderful teacher. Just ask any curious 4 year old with a burnt finger
Count Rugen: [admiring his torture contraption] Beautiful isn’t it? It took me half a lifetime to invent it. I’m sure you’ve discovered my deep and abiding interest in pain. Presently I’m writing the definitive work on the subject, so I want you to be totally honest with me on how the machine makes you feel. This being our first try, I’ll use the lowest setting.
[Count Rugen activates the water powered torture machine. Wesley writhes in great pain]
Count Rugen: [calmly] As you know, the concept of the suction pump is centuries old. Really that’s all this is except that instead of sucking water, I’m sucking life. I’ve just sucked one year of your life away. I might one day go as high as five, but I really don’t know what that would do to you. So, let’s just start with what we have. What did this do to you? Tell me. And remember, this is for posterity so be honest. How do you feel?
[Wesley cries and moans in pain]
Count Rugen: Interesting.
I’m not sure so much that pain is the teacher as the tool…
Got Popcorn?
Neil
exeter — Not massive price increases, but perhaps massive cash-out refi’s?
The foreclosures aren’t really getting that much attention around here. The cost of gas is grabbing the headlines. Homes seem to be sitting a long time as well. From what I have gleaned from being here for almost a year is that Pittsburgh had a relatively small house flipping environment compared to other states and speculation wasn’t quite as ramapant. Heloc have been popular and I have met multiple people that have taken out loans for remodels since rates were so low. But I was quite surprised to see that many high priced homes in upscale areas like Fox Chapel and Sewickly have go into foreclosure.
I was in California for a few weeks last month. I was shocked coming back from Lake Tahoe on Friday afternoon how light the traffic was. Coming down 680 around 5:00 we only slowed down around the Capitol Expressway. I always used to get slammed right at Jackson if not earlier!
“The foreclosures aren’t really getting that much attention around here. The cost of gas is grabbing the headlines.”
Which brings up a thought I’ve had over the past 6 months. If it weren’t for the massive fuel/food inflation, how much larger would the nominal price declines in housing be right now? I believe that fuel inflation is masking massive price deflation of everything else. Or is the fuel inflation the cause of the hard goods deflation? I’m not an economist but I know what I see on Main Street and it doesn’t jive with the MSM at all.
Grocery store visit yesterday. Empty.
One bag $18.
2 avocados at .79
one bag of lettuce.2.50
half carton of eggs 1.59
salad dressing 2.50
oil for cooking
tomatoes. 4.99
18 and change.
OH MY GAWD. I have ben working and haven’t been in town to actually see the prices go through the roof.
That may sound like small change to some, but there were only a couple of things, and since I only brought 20 with me, dang. No wonder the stores are empty.And gas prices.
And people are buying the houses as the prices drop?
What, does these people really think that the prices are stabilized now?
hooooey.
Diesel at $4.50 just boggles my brain. Somehow things are staying together but I think we may be running out of enough duct tape and bailing wire.
Even MacGuyver would have a tough time with this situation!
Streettalk around me is of a definite ‘wobbling’ of peoples sense of affordibility. Buying patterns for cars has shifted - and the next leg will be the changing travel patterns due to cost. It is getting very expensive to do things on a whim - and America is all about buying on a whim.
I’m always pleased when travel drops somewhat — it brings down the price of hotel rooms, which has to be one of the biggest ripoffs going.
Sooner or later you will all believe me:
Pres Bush is the GREATEST pres in creating underground jobs we have ever had. I know so many who work for cash, including me…we spend i eat, put gas in the car, pay rent, but very rarely use a checking account….Its just the nature of how things really are today.
it would be great if i could get a job on the books with taxes taken out, but employers don’t want to step up to the plate anymore.
———————————————————
Somehow things are staying together
Of course they are lying - how else are they to get all of us into overpriced housing? If people noticed that renting cost half as much as “buying” (or even less!), they might wake up and stop “renting from the bank” while waiting for their loan to recast so they can lose the house anyway.
How does a 24 yr old. handyman afford a 300k house????!! I JUST DON’T GET IT.
He has a government job. Maybe he cuts diamonds.
He is a fool to buy more than what he can afford especially in a market that is not even at the beginning of the bottom.
A 24 year old can’t be expected to have the judgement to see through the smoke and mirrors of the MSM.
The only fool here is the bank that financed him, which will stick it’s hand back out to his employer (Uncle Money) once he goes upside down.
A 24 year old can’t be expected to have the judgement to see through the smoke and mirrors of the MSM.
Good point. He was in high school when the bubble began. How could he imagine a different world?
He may also be influenced by his well-intentioned but ill-informed parent, peers or co-workers, who may be telling him to “get in or be priced out forever”.
BayQT~
I think a lot of handymen don’t pay much if anything in income tax or FICA. That jacks up disposable income a bunch. That said, though, he’d have to be getting a no-doc.
Whoops - my boo-boo. Didn’t read the part about his having a government job.
He doesn’t. The bank probably sold the house with favorable financing just to get rid of it. My guess is that the loan is interest-only for a couple of years. After the reset the loan will go into foreclosure unless by then he’s married to a woman with a job. In the DC area a handyman married to an office worker can carry, but just barely, a $300k home. Maybe that’s what the bank is counting on?
BTW, many maintenance workers with regular jobs at apartment complexes and office parks also moonlight off-the-books. The cash income can sure come in handy.
How does a 24 yr old. handyman afford a 300k house????!!
Being in debt so deep that one little economic downturn will put him in the same foreclosure group as all the other sheeple!
With today’s affordability products, we can get ANYONE into a house!
Oops - sorry… for a moment there I thought it was still 2005!
But hey, they were will to loan any amount of money to anyone at stupidly low rates. Now come the consequences (or at least until the Federal Reserve finds a good way to pass the buck to the taxpayers!)
I bet you that the prices for houses that are more than 30 miles commute to DC like Urbana, Frederick, Hagerstown, Martinsburg, Manassas, Ashburn, Woodbridge etc. will all go down more very swiftly. They are already almost 50% down from early 2006 prices and we should see another 20-25% drop by 2008 end. All the media and realtors have been touting to buy in this FOOLs market. WHat a bunch of losers as they cannot provide facts and call themselves ethical.
Not everybody commutes to downtown DC. Gov contractors locate in office sprawl in the suburbs. You could have a 15-minute commute to your office in Frederick MD or Reston VA (close to Dulles Airport) and only have to travel to DC for occasional meetings.
But I still don’t think that will help house prices. If the Republicans cant’ hold the White House, will contractors go bust?
I’m not seeing 50% drops in prices. I’ve done really detailed analysis on some properties in Rockville, Frederick, and Hagerstown. Prices, actual selling prices on a sqft basis, are down about 25-30% from peak. (The “median home price” can be a bit deceptive, since it’s comparing apples of 2006 with oranges of 2008.)
That said, the trend is still downward, so where I counseled a friend to take the -30% price hit and run with the offer in hand, it’s because I expect that by later this year he’ll be happy to get -35% or worse if his place doesn’t sell now.
It is at least 50% down in places that are 50-60 miles commte like Hagerstown, Martinsburg, Kearneysville etc. I didn’t mention Rockville.
It’s not 50%. Seriously. I’ve looked. These are about 30%, at worst 40% in some very new developments. Where are you getting your info? (I get mine from the official assessments sites that show actual transactions.)
Ashburn is down almost 50% from 2006 prices? I’ve seen a few foreclosures like that but they were exceptional. What source are you using for your information? I rent in Ashburn and still only see outrageous prices on nice homes. Thanks.
Funny thing about Urbana. Even though the houses and townhouses are kind of big and quite overpriced, they’re extremely close together (especially the new houses and townhouses off of Carriage Hill Dr.). It just blows my mind that people would pay so much for such tiny yards, especially considering that it’s Frederick County (at Germantown or Gaithersburg prices).
One good example of extreme stupidity in Urbana is 9406 Penrose St (in the new Carriage Hill Dr. phase of Villages of Urbana). Some guy paid $1,250,000 in Dec. 2006 for this house. It’s big (5500 sf) but only 1/3 acre (and that’s one of the bigger lots in the neighborhood), only has a 2-car garage, and is one of those McMansions with a brick facade in the front but siding on the side and back of the house. The guy then tried to sell for $1,280,000 last year, but kept reducing and it finally sold at $895,000. But even that is still way too much. Then just the other day, I see a house in Foxlair Acres in Gaithersburg (Montgomery County, closer to DC) with 2 acres, a pool, and 3-car garage, asking $825,000.
I spent about 6 months living in Manassass when I moved to the D.C. area in late 2006, and it was obvious that Manassass, Chantilly, Centerville area was in major bubble territory and the market was just starting to turn down. The $199K median home price is quite a drop from where prices were 16 months or so ago, and I can maybe see median prices going as low as $150K in Manassass, or about another 25%.
Just out of curiosity, what’s the commute time into DC from manassas? I’m assuming it’s miserable.
I-66 is really bad during peak hours.
IIRC, you can take the VRE commuter train straight from Manassas to Union Station.
I think it is at least 2 hour if you drive single, because part of I66 is HOV only. All the altertives are local roads with countless lights.
Yes, from the Beltway to TR Bridge, it’s HOV-2. Without a passenger you are skrewwed because all the driving alternatives stink for single drivers.
And yes, you can take VRE as a much better alternative - if you work near a train stop. It’s a bit over an hour each way and about $200/month. Not too bad if you work near Union Station (or Crystal City/etc.), and even though you are over 2 hours a day on a train, I for one find that I can get a lot of reading and catch-up work done on trains as compared to driving.
It’s not just the commute. Manassas - esp. Manassas Park - has become a critical hub for illegal aliens. The zero percenters have carved up 3/1s into boarding houses, with four families per, breeding like bunnies. The area is Homey Central for MS-13. The area needs to be razed, IMHO - it will never recover.
Also wanted to mention that even at $150K, I would NOT consider purchasing a typical house in Manassass, not even the new POS townhouses off Hwy 28 that Hovnanian was asking $375K for a year and a half ago….Manassass is your typical lifeless/souless burb and you’re probably looking at 2 hours or more of commuting time to/from D.C. on weekdays. And to Ben’s point, even at $150K, the rent vs. buy calculation still favors renting…
These median prices are heavy on condos, which have a rapid natural depreciation rate. Far fewer new developments are being built so, other things equal, prices should gradually fall anyway.
What if gas goes to $7 or $10/gallon? 150K will look awfully dear for a median “home” (think 2/2 condo unit) in a used-up, rough-and-tumble exurban location like Manassas.
Perhaps we’ll have a Third Battle of Bull Run. The Rebs beat the Yanks in the first two, but this one will be between the haves and have-nots. If history is any indication, whoever wins may lose the war.
Perhaps we’ll have a Third Battle of Bull Run. The Rebs beat the Yanks in the first two, but this one will be between the haves and have-nots.
This battle was decided a long time ago.
good point on condos- land may go up or down ,but structures go down at inflation minus 1-4%?
hence condos ,especially in the burbs sck
“‘As a small-time investor, you can’t go wrong, especially now,’ said Lou Coletta, who just invested in his second Prince William property. ”
Wow! I CAN’T go wrong! Its simply not possible! We’d better get our asses to Manassass!
LOL! Sounds like a great slogan for Used House Sellers in that area.
“David Prinsky, an attorney for (a) Washington-based law firm, said that in early 2006 he figured trouble was on its way. …”
What a visonary! If only Ben Jones would have had this kind of foresight. (Sarcasm Off)
Along with Kent Wolff and the other genius Mark Pearce. Gees, by 2006 most of us were already sick of the boom and looking for the bust? Yeah lots of “smart” people running around these days it seems.
What earthly good would any advice ( other than walk away ) had been in 2006? When you’re b@lls deep in it… it’s a little late to be thinking about using a rubber? Don’t you just LOVE hearing whinning from MB’s about how no one is qualified and over extended on their DTI? How everyone’s credit is trashed and swamped with debt to even be considered for a loan? Gosh, wonder how THAT happened? Again with the standard and customary disclaimer that ‘other’ people wrote those loans but no, myself.. “I” wasn’t involved in ‘that’.
“Just out of curiosity, what’s the commute time into DC from manassas? I’m assuming it’s miserable.”
Tried to post a response a second ago, but I’ll try again….commute time in to D.C. probably averages 45 minutes to 1 hour in the morning and probably 1 hour to 1.25 hours in the evenings…
And how many miles are we talking?
From Manassass to Arlington, it’s about 30 miles and then about 35 miles from Manassass to D.C….as RE_MESS mentioned, Hwy 66 is notorious for bad traffic. Lots of homes built up along Hwy 66 beyond the beltway in the last 10 years, so you had more people moving out to the burbs (Manassass, Chantilly, Fairfax, Reston). The one big difference in these D.C. burb areas from say burb areas in Texas like Sugarland or Spring (Houston area) and San Marcos or Kyle (Austin area) is that there are a lot of companies with offices in the D.C. burb areas, so I can see why people in places like Chantilly or Fairfax would buy a house in the area if it were close to their office…..most people in Kyle or Sugarland or Spring in Texas are looking at 20 mile commutes in to work each morning b/c there aren’t any major employers with offices in those locations.
That’s a good point: most people do not work in DC, nor inside the beltway. For example, there are a lot of tech jobs along the corridor between Dulles and the beltway. Heck, AOL and MCI are located on the other side of Dulles near Ashburn.
Sure, there are a lot of jobs in DC, but not everyone works there.
Indeed. Look at the pile of tech stuff around Reston as well. Or on the Maryland side, all along I-270. I’d venture a guess that up to half of DC area workers work OUTSIDE the beltway.
Yep, Reston was what I was thinking of, but I couldn’t remember the name of that corridor. Either way, lot’s of people have jobs well outside the beltway and have no urge to live close to DC.
The commute to D.C. from Fairfax in the a.m. is about 50 minutes to an hour IF there are no accidents, problems. From Manassas - an hour at the minimum. 66 is a parking lot up to the beltway and then its’ all HOV inside the beltway to D.C.
However, there are gov’t offices all over the place. I took the article to mean his gov’t job is located near or in Manassas. But still, a 20% downpayment on a 305k house is 60k. And he’d have to be making around 68k to realistically afford the balance. A friend of mine just said her 20 something daughter is making 72k working for the gov’t after 3 yrs in. She lived at home for a couple of years. So, I guess its possible but I still don’t believe its likely.
It is not exactly because it doesnot count in traffic. It takes me 20m just from Vienna Metro to 495 (about 3 miles) almost each time. I would say it might be around 2 hours.
Could someone please explain why the stock market is doing good?
It is doing good all across the globe including China and India. Have I missed some major event that has happened that the equities are being traded higher after the Bear Stearns bought out or that Feds will not do any more rate cuts or that housing is not coming back until the year 2014.
I think it’s doing good because all the big monied people in the world.. big and small corporations and banks and even governments.. have a vested interest in it. If the Market destabilizes, they lose bigtime.
So, there’s a lot of time and effort and money being expended and sacrifices being made to support the market… a bucket brigade of money douses the little flare-ups before they become an inferno.
Since i know that (or since i believe that), i’m not afraid to buy stock and i’m not inclined to sell.. and the market is safe.
Precisely - the market will probably decouple almost completely from reality during this Recession. It’ll go up and down, making lots of people a fortune on the churning, while the real economy goes off a cliff. But don’t worry about the price of gas or food if the Dow hits a new high, right!?
I was only pointing out where i think the market support is coming from. BSterns threatens to fold and the market rescues it.. and not for altruistic reasons, but for the survival of the hive itself. In better economic times BS would be toast.
As for the “moral” component of the stock market, which assures that those who make a lot of money eventually suffer for it, which keeps commodity prices low enough for everyone to comfortably afford, and drags the stock market down so it keeps pace the economy’s lowest common denominator.. to my knowledge, it doesn’t exist.
In better economic times, Bear Stearns doesn’t go under.
In better economic times, Bear Stearns doesn’t go under.
My meaning is in better economic times these guys are at each other’s throats. A failing company is not rescued.. it is targeted, tortured, chopped into pieces or eaten alive, digested and flushed.
The (U.S.) stock market performing well? The stock market had a good month in April. But the stock market had a terrible 5-month period from mid-October to mid-March. Over the past eight years the market as a whole has an annualized return of approximately zero (give or take a couple per cent) in U.S. dollars, and decidedly negative with respect to inflation or a basket of foreign currencies.
Who are “the Feds,” by the way? Is that kind of like the people who patrol the border or search you at the airport?
In the short term, oil is due for a major correction - based on reduced usage, sudden supply or a change in world tensions - say to the +/- $90/bbl. level. If so, the market will react like it’s on crack - and my feeling is that some wish to be ahead of the curve. Should be a great summer and one hell of a fall.
An analyst said that oil needs to go back down to $80/barrel for airline stock to be worth buying. And I heard an expert say that oil operationally should cost ~60-75/barrell — I guess he meant the rest was speculation?
There is no reduced usage in oil. We can perhaps think locally in terms of the value of services, and somewhat locally in terms of things like food and lumber, but not in terms of oil. Worldwide demand is edging up - slowly, but the directioin is up. Supply is the issue. Higher supply is beginning to build in some places in the Western Hemisphere but will take years to make a decent impoact. Meanwhile the big supply areas are dwindling or else are political tinderboxes. I agree prices will come down eventually, but $200 is more likely than $80 - for now.
Paul, everything you say is dead-on. But I just can’t ignor that back-of-the-neck creepy that says we’re in for a sudden drop - slam/bam - with the equity markets doing a yahoo into the 15/16000’s in a month. Then, yeah a real hard spike to 200 or so.
“The housing market is looking much more affordable in Prince William than in other places,’ said Stephen Fuller, an economist at George Mason University. ‘Prices got way too far away from reality across the region. Prince William is adjusting more substantially and will be a much better housing market in the long run because there is a better balance between value and price.’”
Interesting question: will the areas that accept reality and bottom more quickly be in a better position to bounce back when the recession finally plays itself out?
“‘As a small-time investor, you can’t go wrong, especially now,’ said Lou Coletta, who just invested in his second Prince William property. ‘Prince William was hit the hardest, and prices have taken a tremendous drop
Oh Yeah !…Better jump into THIS “Black Hole” with the ends kicked out Mr and Ms All American Investors. You can’t go wrong and it’s as snug as a financial grave
lol
Look at my latest graphs. DC has just arrived at what could be a constant burn down. Now is not the time to jump in.
Got Popcorn?
Neil
Funny how “everyone” now says that something was fishy about all this - too bad that didn’t matter during the run-up!
I like the bit about the $219,000 townhouses to $650,000 single family homes in Frederick, MD. Frederick is basically the gateway to the boonies, and yet people managed to turn that place into a commuter suburb to places like DC, which is insane! This Bubble will also not be over until people realize that townhouses should not be costing $200,000 and single family houses costing $600,000+ should be rare items for the truly rich, not slapped-together temples to greed built in huge numbers in sprawling tracks across the land. People cannot afford such overpriced housing, and until that becomes clear, there will be no recovery, no matter what the “experts” think.
Even funnier when you are in one of the last holdouts (Seattle area) and there are excuses from all the numnuts about how we will skate by the housing downturn. In a year or 2 they will be saying that they predicted the downturn.
I hear ya. Down Portland, Oregon ways, the kool aid has not started to wear off yet. In the little town where I live outside of Portland, prices have been pretty steady, and the number of houses on the market is still increasing.
This was our situation in PHX for a long time. Then the foreclosures hit. The banks don’t mind liquidating the houses that had insurance like PMI and FHA. There is enough of them in this low volume market to really take the prices down hard. And each price drop is another round of foreclosures and another round of post-foreclosure liquidations.
Was out running errands before I hit the Tucson Folk Festival. Saw a local REO agency’s “for sale” sign swinging in the breeze, as it has for many months. In fact , that sign’s been up long enough to attract graffiti.
motepug,
My observation as well. My oldest daughter has been trying like all get out to get their home sold and while they have had a TON of open houses and showings… not (1) single offer to date. We haven’t seen a lot of realtors dropping out of the ranks so we must have the same flavor of kool-aid? They still talk up our local Marion County market like the turn-around could be any day now!
I hope I’m wrong but with nearly everyone in OR having ’some’ hand in realty I can’t imagine how this *won’t be painful? Our little town has had a number of “MEW-fed” businesses go under already. Lots of antique and knick-knack dealers really struggling and we’ve had a furnishings store shutter down. The local diners are near empty and even vehicle traffic is down. It’s clear everybody “needed this boom to last just a little… longer?” Now they’re straddling multiple properties/projects with NO exit strategy. Other than suffer and “wait”.
We’re experiencing the March of the Dead Furniture Stores here in Tucson. I’m also seeing a lot less motorized traffic on the road, which is quite nice, as I get around by bike.
As for dining establishments? Well, let’s just say that it depends on which one you’re talking about. Some are still quite busy.
It’s easy to sell a house, just lower the price to meet the market. But when it’s your own kin’s money on the line, it becomes much more personal. Good luck dinOR - have enjoyed reading your comments over the years.
I don’t know what kind of kool aid they serve here in Oregon, but it must be some special type. Guess I never got any, but then again, I’m just a bitter renter.
Found a house I liked. It would rent for at most $1800. 120 times rent is $216K, and I’d even to to $250-300K because it’s a nice place, good location. It’s priced at $450K, yet it’s not really that overpriced compared to the competition.
We got a long, long way to go.
I just saw a picture of the little house I boarded in during college in the Roosevelt area of North Seattle from above on Google Earth. It has doubled in size since the nice elderly owner sold it. She moved into an apartment overlooking the lot after. I’m glad she didn’t live to see that house razed.
For years, I’ve had my great-aunt’s beautiful farm house in Weatherford, TX on my Zillow favorites, hoping that the price would go down enough I could buy it back. I waited too long. The most recent buyer razed the house, got the zoning switched to commercial, and built an office building there. As for me, I went in the bathroom and threw up.
townhouses should not be costing $200,000
Only $200k! That must be in a not-so-good neighbourhood. A friend of mine who lives up in Frederick County is renting a townhouse that his landlord bought for $425,000. And that was a typical price in that area. (We looked it up as we researched the landlord’s mortgage, just to be on the safe side, you know.)
It’s really funning to consider the evolution of the rationalizations offered by the bubble-deniers. Two years ago the mantra was “prices will never drop in the DC Metro area!” Then it changed to “Maybe the outlying areas, but never inside the Beltway.” And then “prices will never drop in the close-in areas of Alexandria and Arlington!” Now the mantra is “prices will never drop in those neighborhoods in north Arlington that are within walking distance of a Metro stop.”
Nice old stone house went up for sale in my neighborhood (Haverford PA) for $799k. Needs a lot of work, but lots of potential, good location/schools/etc. Was originally listed by Duffy realtor, then got snapped up hard, now relisted by PruFoxRoach for $1.5M! I believe they are going to do a big renovation of the place, but it’s really hard to see this being very profitable. Lots of stuff for sale around here, but definitely some stickiness in prices, and no really good deals to come by (yet).
I am curious as to any other observations in the Philly burbs, esp. Haverford, Ardmore, Bryn Mawr area (Montgomery County, not Delaware).
I’m in Montgomery County bordering Bucks County (Willow Grove / Hatboro / Horsham area). Very sticky here. Also no real deals to be had. And still stupid FBs taking the leap.
My parents live in Chester County. Mom reports seeing quite a number for “for sale/for rent/whatever” properties.
I’m in Chester county. Inventory is just starting to build for Spring season. Lots of Stubborn sellers and some stupid buyers jumping in. Not seeing any price declines that i like. Still seems like everyone is looking for price appreciation. It’ll be interesting to see what’s still on the market and for what price come July and August. I’m also seeing more Bank owned homes on market but it’s always the high end houses that are out of our price range anyway.
I also tend to watch houses listed by school district. Typically Coatesville schools have the most houses on the market at 615 …BUT….West chester schools is a close second at 605 house on the market due to the major glut of townhomes ( which their still building more of!)
I am looking at Arlington, VA prices…..considering relocating there from Los Angeles. I don’t know a lot about DC area, lived in Fairfax until I was 15 (that was more than twenty years ago). Have a potential for a very good job in Arlington, but I don’t want to commute. I currently rent in LA after selling my previous house a couple years too early.
Prices seem to be down only a few percent from the peak. Anybody have an on-the-ground view on what is going on with Arlington?
Also, what are the best portions to focus my search if I decide to move there? I’ve got two elementary age children. I like to be able to walk to stuff, so that is very important.
Anyone know of useful resources for research?
Arlington and Alexandria prices so far seem to be holding up better than most other areas. Maybe it’s the “don’t wanna commute” crowd. For elementary age children and walking… wow, near in… I kind of like Alexandria, but it’s still pricey, even for rents. (After living in Europe much of my life, I don’t find many of these places actually “walkable”, as in being able to actually walk to store/school/pub/park/movies/etc.)
A “good job” can get you a rental almost anywhere, depending on how “$good$” it is, you know. I can’t imagine if you want a place big enough for kids that you’ll escape for less than $2k/month, and that won’t be for a new place. But any rent you pay is certainly cheaper than buying now.
Whatever you do, don’t make ‘em live in Manassas while you commute in and never get to see them!
And here’s a typical rental you might look for, $2150/month:
http://washingtondc.craigslist.org/nva/apa/665725481.html
Actually seems a little under the price I’d expect for a place like that. Better check out that landlord to make sure he’s paying his mortgage!
I am working in Arlington now (near Ballston Metro) and have just signed a new lease on a townhouse in Falls Church. A few things I learned:
- Lots and lots of houses for sale at ridiculously high asking prices still
- Craigslist has a lot of postings for rental houses in and around the area. I also used homesdatabase, apartments.com, and realtor sites.
- It is easiest to be near the metro and ride in. moving out from the city the metro stops for me are ballston, east falls church, west falls church, dunn loring.
- Ballston is a nice area you can walk around in but rental asking prices are high and there are mostly condos available
- East and West falls church also have nice neighborhoods but it is imperative to check out the houses. One neighborhood in the area was lined wall to wall with cars (multiple families per house) in an obviously immigrant area. A nearby neighborhood might have an entirely different feel
- These areas have nice older houses built in the 50s and 60s that got purchased by “investors” who did a few quick renovations and now are trying to rent
- Dunn loring (where I moved) has better values but the area isn’t walking friendly and also more immigrant population
- Rental prices on small homes in OK shape were generally around 2000 - 2400.
- I found a great house in Great Falls that was 2500 but too large for me. It was rented very quickly, however. If you can stand the drive Great Falls is a prettier, quiet area full of trees and much less concrete.
- Coming from LA I’m sure you know this… traffic rules life in DC. Closer to metro costs more. Most people spend their conversational time discussing their commute, the latest trendy restaurants to eat at.
- People on the metro will step on children to get a primo spot on the train. Their is no civility.
Thanks for the input. The job opens up in 14 months. Renting would not be an option if I did that move, my wife would not stand for it. And we have been renting since 20004. It would have to come down to how much things drop.
I live in one of the LA beach communities. Very pricey here, and the mantra “it’s different here” runs pretty strong. However, prices are down >12% y-o-y, and some people have taken offers 20% off asking recently, not even counting price reductions. So I would say that even in the most exclusive LA beach communities, you can get ~30% off peak. And things are just starting to crumble.
My guess is the inner ring of NoVA will not fare very much different.
The biggest question is how things fare over the next year.
Arlington doesn’t seem to be affected that much - at the moment. A friend of mine is having a hard time selling her condo in n arlington but its a converted 1 bdrm that was bought at 2005 prices.
Go to Arlington Public Schools website and I believe it gives the names of 4 schools that won some academic award. FYI, Arlington schools can vary dramatically depending on the neighborhood - so you really want to do your homework before you purchase there if you have kids.
values are now headed in one direction — and it’s not up.’”
I don’t know why they always get this wrong! PRICES are going down! But the values are going up! You didn’t get much “value” paying $500K for a house in Sacramento!
Price is what you pay, value is what you get…. Are they saying owner’s equivelant rent isn’t going up?
Test. I lost my posts and want to try again.
He finds that 80 percent to 90 percent of the houses he sell have debris and rubbish left in them.”
“Often, the problem stems from the lack of funds the former owners had to maintain the properties. ‘I had to remove nine dumpsters full of trash out of one house recently, just to get it into safe and clean condition,’ he said.”
Trash comes from not having enough $$ for maintenance? Huh? If I didn’t have enough $$ for maintenance, I may have crappy windows, some leaky pipes, etc. but I wouldn’t have 9 dumpsters of trash to haul out.
Oh, for pity’s sake! Don’t these people live in areas with regular trash pickup?
In some communities it isn’t free. In Loveland your choices are:
Private: Waste Management or aother
City: Pay a flat fee for a trash cart (3 different sizes)
or
Buy city stickers and attach them to your 33 gallon trash bags.
or…haul your crap to a public dumpster at night if you really can’t afford (or refuse) to pay for waste removal.
9 dumpsters is a helluva lotta garbage.
Exactly. You can be too poor to afford a new roof, but there’s no excuse outside of laziness to have your house full of garbage! My brother was for many years poor and underemployed, but his place looked GREAT because… well, he didn’t have a job to go to! So he had a front lawn like a golf course and a back yard like an arboretum.
Yeesh, $305,000 for a house in Manassas is still about $250,000 higher than it should be.
bicoastal, your story about your great-aunt’s house made me so sad. It’s emblematic of what’s happening everywhere (beautiful sites and land being destroyed to make way for one more useless development that nobody wants), and to see it hit so close to home must have really hurt.
Just a few weeks ago, I visited a part of Fort Worth where I lived years ago (near TCU). Our old weatherboard house was still there, much the same as when we lived there, though the trees are bigger. Not that I have any vested interest in it, but for some reason I was happy to see that. I could imagine myself relaxing with a beer and a chemistry book on the front porch all over again.
But across the street and also down the block were several hideous new apartment buildings where the other small (and IMHO cute) houses used to be. Sigh. And these weren’t even attractive apartments; they look to be new but stylistically right out of 1985, and completely out of place in the neighborhood. Worse yet, looks like they removed all the old shade trees that used to be on those lots.
By the way, bicoastal, I was even in Weatherford on this trip. I thought wow, the sprawl is even hitting out there. Bummer about the old farmhouse that you miss now. I do feel for you, having seen several nice ones be destroyed in recent years. Sad thing is, a few years after the fact, most people won’t even know what we’re missing. At least west of Weatherford, development didn’t seem to be toooooo very cancerous. Or maybe I’m forgetting how empty (and nice) it really was some years back.