A Tsunami Of All Tsunamis
The McLean Connection reports from Virginia. “By all accounts, Ali and Shanaz Alavi bought their new home in Great Falls for a bargain basement price. The couple purchased the five-bedroom home sitting on five acres of gated woodland for $1.1 million. The property owner, Jennifer Lynne Ridley, had been trying to sell the house for just under $2 million for the past 18 months.”
“With no success through traditional channels, Ridley decided to put the house up for auction June 22, with the bidding starting at $750,000. Even with initial bidding starting so low, auctioneer Azzie Kahn had expected the house to draw a higher selling price.”
“‘That is incredible. We were expecting much more than that. This home, ladies and gentlemen, is going to make some family very happy, especially at that price,’ said Kahn, before calling the property for the Alavis.”
“Almost all Realtors would admit the housing market, even in areas like Great Falls and McLean, has slowed. ‘There are more homes in the market than there are buyers for,’ said Realtor Sepideh Farivar, who added, a person has to be motivated to sell in this market.”
“Joe O’Hara, a Realtor with Washington Fine Properties, said he expects to see prices drop on many of the homes in and around Georgetown Pike. ‘Most of the homes along Georgetown Pike are very expensive. There are a limited number of buyers and lots of sellers.’”
The Star Exponent from Virginia. “Six months into the year and it’s already worse than last year. Through June 13, a total of 187 properties went into foreclosure this year in Culpeper, county records show. The month of February was the worst so far with 55 foreclosures, including the vacant lots.”
“In 2007, banks foreclosed on 182 properties in all in the town and county of Culpeper.”
“Today’s foreclosure problem is also caused by declining home values, like in Culpeper County, ‘that put homeowners ‘upside down’ with their mortgage,’ the Virginia Department of Housing and Community Development report says, ‘and lead to tightened credit standards that limit homeowners’ refinancing and resale opportunities.’”
“Nancy Heflin, president of the Greater Piedmont Area Association of Realtors, said she has never seen anything like it in her 19 years in the business. And she doesn’t expect the picture to improve anytime soon.”
“‘We are anticipating another flood of foreclosures in the fall,’ said Heflin of Front Royal.”
“‘It was the people who the bank tried to make exceptions for because of the market we were riding like a rocket ship,’ she said. ‘The home sales prices were escalating every year - it was 20 percent one year and 20 percent more on top of that the next year.’”
“Lower income citizens or people with less-than-stellar credit that banks would typically pass over for home loans suddenly qualified, Heflin said. ‘But then the market stopped all these people who shouldn’t have gotten these loans were in trouble.’”
“Steve Baugher, executive director of the Virginia Association of Mortgage Bankers said northern Virginia has been hardest hit by the foreclosure crisis.”
“‘I have a feeling you guys are six, eight months late coming into it,’ he said of why the rate in Culpeper keeps getting dramatically worse. Baugher said, he got a report indicating that some 60 percent of the home sales in northern Virginia were from bank-owned sources, or foreclosure properties.”
“‘So there’s a heavy inventory of bank owned properties that needs to be liquidated, a lot of foreclosures properties that have to be sold,’ he said. With real estate values dropping, homeowners get frustrated, Baugher said. ‘They are struggling, the house is worth less than what I paid for it so what’s the point?,’ he said.”
“Baugher said he’s never seen so many foreclosures in his 35 years in banking. ‘We just came out of a frantic market, got overheated and it sort of collapsed.’”
The Virginia Pilot. “Wachovia Corp., the Charlotte, N.C.-based bank with a major presence in Hampton Roads, continued its retreat on speculation that it would cut its dividend for the second time this year. Battered by losses on mortgaged-backed securities that it packaged and sold, the nation’s fourth-largest bank is under mounting pressure to raise additional capital.”
“Shares of Bank of America and SunTrust Banks, two other large banks that have suffered losses on mortgage-related securities, are both down since year-end 2007. Both have a strong presence locally.”
“‘The news keeps getting worse because banks didn’t know what they owned,’ said Larry Bernert, a principal at the Norfolk money management firm Wilbanks, Smith & Thomas Asset Management. ‘That’s still the case.’”
My Fox Washington DC. “Thousands of DC homeowners could lose their houses and not just because of the mortgage crisis. In the first six months of this year, foreclosures in the District jumped 30% over all of 2007.”
“Homeowners owe the District a combined $45 million in property taxes and the city is demanding the money.”
“As of July 1st, 6,500 property owners are behind on their taxes. The Office of Tax and Revenue says if not paid up the property will not only be sold at a tax sale in September, they will also be foreclosed on in six months.”
The Community Times from Maryland. “The Office of Community Conservation recently added a staffperson to help homeowners facing foreclosure, which has quadrupled in Baltimore County over the past year.”
“A state report from the first quarter of 2008 shows 11,380 ‘foreclosure events” in Maryland that include mortgage loan defaults, notices of foreclosure sales and lender purchases of foreclosed properties. That was a 17 percent increase over fourth-quarter 2007 and a 617 percent rise since this time last year.”
‘Baltimore County had 930 foreclosure events in the first quarter of 2008…in contrast to a year ago, when first-quarter foreclosure events totaled 236. ‘I’m receiving a lot of calls from people who never thought they would be faced with foreclosure,’ said Yvette L. Foreman, the office’s new housing and community development coordinator.”
“Foreman said that the mortgage crisis is hitting every income level. ‘The difference is, they’re not just low- and middle-income homeowners,’ Foreman said. ‘Now it’s everybody.’”
“Mary Harvey, director of the Office of Community Conservation, agrees. ‘We have heard from everyone. From very modest income homeowners to folks with the $600,000 house in the valley. It also impacts your ability to rent because of [bad] credit ratings.’”
The Gazette from Maryland. “Home foreclosures are skyrocketing in Montgomery County, jumping six-fold over the last year, hitting Silver Spring, Gaithersburg Germantown and Montgomery Village the hardest, according to a recently released state report. Foreclosure activity in Montgomery County jumped nearly 800 percent in the last year.”
“Eric Friedman, director of the county’s Office of Consumer Protection, said the county has had to play ‘catch-up,’ noting that until recently his office didn’t even have a category for logging foreclosure issues.”
“‘Whenever there’s a crisis, in Montgomery County you say ‘Oh, that won’t happen here.’ That clearly wasn’t the case,’ Friedman said.”
“on April 3, Gov. Martin O’Malley signed a package of laws that halted new foreclosures, slows the foreclosure process and safeguards against future abuses. But those reforms are only a 90-day ‘de facto moratorium’ on new foreclosures, foreclosure specialist Jacob Geesing, said at the COG conference last week.”
“‘The [court] clerks better be ready for a tsunami of all tsunamis because there’s a huge backlog that’s about to explode,’ he said.”
“Amid the staggering foreclosure statistics, what stunned County Council President Michael J. Knapp perhaps the most was to learn that more than half of all foreclosed homeowners never responded to letters and calls from their lenders.”
“In Montgomery Village’s Eastgate community, homeowners association dues delinquent more than 90 days totaled $5,661 in May, a spike 80 percent higher than the 443-home community has seen since the beginning of last year. In Germantown’s 684-home Cinnamon Woods community, 42 percent of homeowners were late with their $124 monthly HOA fees through the end of 2007. Nearly half of those were more than 90 days past due.”
“In Silver Spring’s Glen Waye Gardens Condominiums, six of 214 units have been abandoned in the past year. Inevitably, communities will face the specter of emergency fee increases, said Frank Rathbun, a spokesman for the Community Association Institute.”
“‘Commonly metered’ condo communities - older communities where electricity, water and gas are paid collectively - such as Silver Spring’s Glen Waye Gardens are being hit the hardest, said board President Vicki Vergagni.”
“Vergagni has lived in the 214-condo community since 1975. She has never seen anything on the scale of the associations are facing now.”
“‘It’s hitting us every which way you can guess, and it’s hitting the people who had nothing to do this mess in the first place,’ Vergagni said referring to high foreclosure and bankruptcy rates. ‘It’s like we’re hitting the people that can least afford it. They’re hitting them again and again and again.’”
The Cape May County Herald from New Jersey. “Judy Kruk is packing up her things. This used to be her grandmother’s home, and was hers, until June 18. That’s the day she lost it to the bank.”
“After she lost her job she went on unemployment but it wasn’t sufficient to cover her mortgage. The mortgage, like so many others who are facing similar financial straits, had an adjustable interest rate.”
“‘Once it went to variable, every three months it seemed it was going up and up and up,’ she said. ‘Because of late payments, the interest and late fees were adding up.’”
“In Cape May County, foreclosures since 2004 have been on the rise. From 275 In 2004, to 615 In 2007. In 2008, in the first quarter alone, 247 were filed. If 2008 continues at the rate filed through March, by the end of the year there will be 988.”
“While Kruk was still working, she ended up declaring bankruptcy, and it wasn’t the first time, she said, candidly. But after she lost her job, it became impossible to keep up payments.”
“‘Once I lost my job there were no payments being made at all,’ she said. ‘They started threatening the sheriff’s sale.’ That happened in September 2007. The balance of the mortgage owed was approximately $118,000.”
“She had the house listed for sale. It’s been on the market, she said, since last May. If the short sale had gone through, she might have come out of the sheriff’s sale with some cash in hand, as the buyer would have bought the contents of the house as well. But that didn’t happen.”
“Kruk said the reality of her situation has finally sunk in. She had ‘a rough weekend’ she said, after the sheriff’s sale on June 18. ‘It’s been hell,’ she said.”
The Wayne Independent from Pennsylvania. “One hundred twenty-five writs of execution - the last step before a foreclosed home goes up for Sheriff’s sale - have been filed in Wayne County through the first half of 2008. The total matches the number of filings for all of 2007.”
“‘And we’re only in July,’ said Linda Billard, chief clerk of the Wayne County Sheriff’s Department.”
“Wayne Bank President Bill Davis, says the sub-prime foreclosure crisis can be laid at the feet of big money center banks and investment houses who made loans that, ‘really weren’t prudent for the borrower.’”
“Davis says payments made by the borrowers weren’t even covering interest. ‘The value of the home is worth less than what they paid. The mortgage is more than the original amount, so they’re really in a box,’ he said.”
“Honesdale National Bank VP Mark Graziadio says they know their customers and would never put them in a loan that wasn’t right for them. When it comes to the national problem, Graziadio says, ‘You have people in loans who shouldn’t have been there to start out with. That’s really the crux of the crisis at this point.’”
“Like in Florida, where a man told Graziadio there are 52 foreclosures in his hometown. ‘What were (lenders) doing? They were lending more than they should have. They got people into loans that weren’t structured right for the people. And they did it just so they could generate mortgages …or so they could sell real estate,’ Graziadio said.”
‘Amid the staggering foreclosure statistics, what stunned County Council President Michael J. Knapp perhaps the most was to learn that more than half of all foreclosed homeowners never responded to letters and calls from their lenders.’
Here’s your answer:
‘With real estate values dropping, homeowners get frustrated, Baugher said. ‘They are struggling, the house is worth less than what I paid for it so what’s the point?’
These gov/community guys really don’t get it. There is no magical 1-800 number that can make people cough up thousands of dollars to a lender so they can ‘hold on’ to a depreciating box. If they don’t have a big attachment to the place, they’ll walk.
BTW, somebody get a cardboard box ready for the va infestor troll.
Did I miss a troll?
Hot damn, Ben! You gotta let one through. Just one, please, pretty please, for ol’ times sake.
Va_Infestation was a old troll.
Her and TxChick were good friends.
Oh, I remember now. This was a while back. (Wasn’t such an active poster then.)
We’ve often estimated here that probably 50% of FBs are outright fraudsters (and the rest are simply stupid).
So, if you know exactly what you’ve done, you’re not very likely to call some 1-800 number to talk to your bank.
yeah, that paragraph really jumped out at me as well :
:::: ““Amid the staggering foreclosure statistics, what stunned County Council President Michael J. Knapp perhaps the most was to learn that more than half of all foreclosed homeowners never responded to letters and calls from their lenders.” ::::
So when you calculate a percentage of people who just see no point in replying, because they know they can’t handle the increased mortgage, then another group of investors/speculators that had no long-term intentions of holding a mortgage, and add a few misc categories, that “50% never responded rate” is based on false date, skewed to show that lenders are extending a lifeline but the lazy homeowners just wont lift a finger to help themselves. err, yeah right !
Also, is there a common source of all these quotes we keep hearing from around the country about people who “dont respond” to foreclosure letters? Is it from the (gasp) bankers? Lenders? Or in other words, an industry that BENEFITS from distressed people, whom they claim don’t respond to foreclosure notices?!
When you see credible reports nationwide about lenders foot-dragging in replying to pleas from homeowners for a work out, in addition to banks playing shell games to avoid paying taxes & other cleanup/holding costs on REO props, then bankers credibility goes out the window.
I mean, hey, I’m willing to give the banks the benefit of the doubt at first glance . . . there ARE two sides to every story . . . however, given the nature of their business AND their proven track record of immense profits-before-people, the self-serving excuses wear thin after awhile.
Now this doesnt excuse borrowers greedy behavior, but there is plenty of blame to go around for everyone in this debacle, and you get a little tired of the bankers perpetual finger pointing at everyone but themselves.
Comment by va_investor
2006-09-19 05:27:18
We saw 25% drops for single family and up to 40% drops for condo’s in the early 90’s. That is what I think is reasonable for this go-around. I have no crystal ball, but I would bet that we see more declines in the next two years.
Huh? Maybe I just didn’t read enough?
Typical MSM MORON reporters they wont print what they paid for the house or if they are heloced to the eyeballs……or just trying to gouge the next victim
————————–
Ridley decided to put the house up for auction June 22, with the bidding starting at $750,000.
There are still people buying in nicer parts of the DC area. Hell, I sold my place in Arlington earlier this month. If that house was really worth anywhere near $2 million they could have sold it quickly if they just lowered the price often enough. My guess is that it will probably sell for $500k in just a few years.
There are some beautiful properties in Great Falls, and there are some run down shacks too. This one was probably more of the latter.
The Cape May County story -
If the house was an inheritance from grandma, and Judy already went bust once before she lost her job, there has to be a refi or a HELOC in there somewhere. There’s tips at the end of the article about how to avoid foreclosure but they left out the part where you should be very afraid of HELOCs .
Where did the $100k go? That’s a lot of loot!
it’s not enough to take care of itself… a couple months off work.. some baubles and trinkets.. a vacation.. a car.. $100K.. poof.
joeyinCalif,
Do you have any idea how frustrating it’s been over the last several years having to listen to people with less than 10K in their 401K describe 100,250,500k tax free dollars like it was “no big deal”?
Poof indeed.
what you say may help prove my point.. average people income is maybe $50K a year.. that’s a million bucks in 20 years.. ten times the $100K.
They’ve managed to accumulate perhaps 5 or 10K.
Where does it all go?
Managing one large chunk of money is no different than managing a steady stream of money, except that the chunk’s escape is more sudden and obvious than was the steady stream’s.
joeyinCalif,
Right. Assuming Mr. @ssclown had NO other bills, costs or expenses it would take a DECADE just to accrue this very amount he’s being so casual about.
I knew a few guys in the Navy that never left the boat/base and left with tidy sums. Then again it’s a very “insulated” world where all your basic needs are met ( even if you are in the brig ) but in the Real World… ain’t happening.
All I can say is the next guy that says “You’re almost 50 and you don’t have a Harley..!?” ( I’m going to break a beer pitcher over his head )
*Ben Jones does not condone the use of violence
Are those bubble-bucks or real bucks? In terms of rock n’ roll bubble bucks ( and the good times ) that’s chicken feed!
She was a dealer at one of the casinos.
I don’t know about the rules for AC casino workers, but a couple of ideas:
roulette table
blackjack table
Perhaps employing the Double Down method of Instant Wealth Magic?
I was wondering the same thing. If you inherit free and clear, you shouldn’ owe anything except taxes and insurance. Ok, if you had to make major upgrades-roof, maybe-I can undestand. That does not mean new cabints and such just because you want them.
Serial Bankruptcy-er:
Reported:
While Kruk was still working, she ended up declaring bankruptcy, and it wasn’t the first time, she said, candidly
What really happened:
While Kruk was still working, she ended up declaring bankruptcy, and it wasn’t the first time, she said, candidly.
““O my friends were so impressed with my parties, new car and cloths, they all envied me. But sooner or later those horrible bills come due. But you have to live for the moment she said with a smile. Easy come easy go. As long as there is bankruptcy available why worry”
I’ve been reading about bankruptcy, since I anticipate we’ll be seeing a lot more of them. To review:
Chapter 7 - Corporate or individual, liquidates property and auctions off virtually all assets
Chapter 9 - Municipal
Chapter 11 - Corporate, but may be reorganize and still be actively traded (i.e. recent airline filings)
Chapter 12 - Family farmer bankruptcy
Chapter 13 - Individual debt restructuring
SIPA - Recovery of stockholder interests from failed brokerages
http://www.uscourts.gov/library/bankbasic.pdf
I used to think the 2005 bankruptcy reforms were a bad idea, but now I’m not so sure. Of course, taxes and student loans may never be discharged except under unusual circumstances or unless you die without an estate.
NSO,
Do you think Chapter 9’s will spike along with Ch. 11’s and 7’s? I’m doing an independent study paper this semester on Ch. 9 with one of the authors of BAPCPA as my supervising instructor. He was initially skeptical that Ch. 9 was a worthwhile area of study, but once I explained the multiple whammies of 1.) municipal funds and school budgets investing in MBS paper to enhance returns; 2.) dropping developer proffers and real estate taxes; 3.) inflexible labor contracts with municipal employees with unsustainable benefit arrangements, it piqued his curiosity.
I definitely think late this year we will start to see some defaults from the smaller ‘bedroom community’ municipalities without much of a tax base other than real estate in danger of Chapter 9, especially in California and Florida. I’m sure you already know about Vallejo.
All the reasons you gave are also great reasons that these bankruptcies will climb. Don’t forget that the auction rate securities market has tanked and therefore they won’t be able to sell their debt that way either. Chapter 9 is interesting with regards to potential Constitutional issues as well.
As we all know, a house without stainless steel appliances, granite countertops, and other “bling” is uninhabitable! haha!
“As we all know, a house without stainless steel appliances, granite countertops, and other “bling” is uninhabitable! haha!”
That seems to be the prevailing view on HGTV. You simply must have a giant master bedroom complete with double sinks (wouldn’t want to spit your toothpaste down the same drain as your spouse), walk in shower the size of my upstairs bathroom and built in jacuzzi.
“‘The news keeps getting worse because banks didn’t know what they owned,’ said Larry Bernert, a principal at the Norfolk money management firm Wilbanks, Smith & Thomas Asset Management. ‘That’s still the case.’”
My Fox Washington DC. “Thousands of DC homeowners could lose their houses and not just because of the mortgage crisis. In the first six months of this year, foreclosures in the District jumped 30% over all of 2007.”
“Homeowners owe the District a combined $45 million in property taxes and the city is demanding the money.”
“As of July 1st, 6,500 property owners are behind on their taxes. The Office of Tax and Revenue says if not paid up the property will not only be sold at a tax sale in September, they will also be foreclosed on in six months.”
This reminds me of a discussion we had a couple of nights back regarding what municipalities should do about myriad vacant properties whose ownership status is in limbo. The owner of record should be charged back taxes. If payment is not made, the owner should be foreclosed and the property sold at a tax sale.
I am missing the Constitutional issue that Joey raised, as the legal process involved would appear to not violate constitutional takings clauses. (Not sure whether attorneys would agree with me?)
As for laws and penalties regarding non-payment of property taxes, i think that’s strictly a local matter.
hey PB.. you sure seem anxious to get these properties confiscated by banks or the govt. But what then? I mean, how’s that going to help the situation?
I always try to be wary of unintended consequences..
“But what then?”
If payment is not made, the owner should be foreclosed and the property sold at a tax sale.
If munis get aggressive with tax collection/repo, as this unwinds further, could it be possible that lawsuits about excessive tax appreciation would become popular?
At the end-game, when everything’s worth 50%, people will be able to point to tax levels and claim they were obviously based on the fraudulent runup.
That might already be the case, but when the gov’t starts taking things to support their excess claims against property, that can only lead to people and their lawyers pushing back.
I think in the face of existing levels of empty homes, you might see tax forgiveness, down the road — anything to keep homes occupied.
“…anything to keep homes occupied.”
EXCEPT lower prices, at least here in Maryland, DC, and NoVa. Gotta keep the debt train going!
There are numerous potential benefits to the suggestion I made above, including:
1) providing affordable housing for new entrants to the regional workforce;
2) removing the blight problems due to having a large number of vacant homes;
3) filling vacant homes with taxpaying residents.
The advantages might be offset to some extent by accelerated rate of price decline, as price discovery at tax sales could “screw up the comps.” Perhaps it is fear of a lower overall property tax basis which makes municipalities reluctant to vigorously encourage sale of vacant homes?
Stucco - It is perfectly legal and not uncommon for localities, at least back East, to levy huge property tax increases on empty houses - to force owners to sell and for exactly the reasons you’ve outlined.
The 6,500 houses facing tax auction in September is a momentous thing. These are not “fake” auctions - the bidding starts at zero and the high bid gets to hold the tax lien - homeowner pays up, winning bidder keeps the spread between his bid and the bill. Homeowner doesn’t pay the bill, it’s off to seizure…
Going to be messy around here this fall.
Hopefully this idea will catch on, and the free market can take care of the foreclosure problem before politicians have a chance to pass the bill on to the taxpayer.
Here, here.
First round of knife catchers get burned.
They played their purpose, but now it’s time for the prices to drop into equilibrium. Once the cool air of fall arrives the REO’s and overall psychology should start to turn from bargains to get out before it’s too late.
Once “Housing never goes down” turns to “Housing is the worst investment ever, better to rent” we will be in the green.
Sorry FB’s. The party has been over for a long time. Accept it and let’s move on to a normal market.
You got it. This fall and winter are going to put the nail in the coffin of the housing market. The “grab the REOs before they’re gone” mentality is going to be history, and the all the knife-catchers who thought they were smart buying this past winter and spring are going to start bailing on the “bargains” they bought.
This fall and winter, banks will be begging people to buy REOs are prices that would make monthly costs of owning far below those of renting. The number of REOs will be so high and their prices will be getting cut so fast it will scare the shit out of America.
If you think the housing market is ugly now, wait until Christmas time.
Keep the popcorn popping,
Red Baron
Sorry to nit pick, but the summer is already hammering in the nails. The fall and winter markets will serve to bury the market six feet under.
Does anyone have statistics on the number of listings in the NoVA MLS/MRIS by month? Are listings down? The reason I ask is that I was up in that area (Rt. 7 corridor in Fairfax County) last weekend and spent some time driving through our old neighborhoods. I did not see an abnormally high number of For Sale signs in any of the developments I drove through.
Here are good sites:
http://www.recharts.com/nova/nova.html
http://www.virginiamls.com/charts/index.htm
http://www.mris.com/reports/stats/monthly_reti.cfm
Some good links:
www dot virginiamls dot com
recharts dot com
www dot mris dot com slash reports slash stats slash monthly_reti dot cfm
(last post didn’t go through, perhaps since I included that actual addresses)
Wow, Thanks Ben. This is the first I’ve heard of DC metro in trouble being reported in the media. The only satisfaction here is that maybe the madness is finally starting to end. But the mess its leaving behind is going to last for a long time. It still disturbs me that so few people were able to recognize the insanity of it all. Most people believed it was real. Scary.
I’ve never been to Great Falls, but I looked it up in Wikipedia and the neighbors around that $1.1M house must be in deep shock right about now. Assuming the house is not a wreck, 5BR on 5 acres that close to Washington must be pretty darned desirable in normal times. It would be interesting to know how the Fairfax County Tax Assessor deals with it, if they’re allowed to set the tax basis at other than the transaction price.
I haven’t been to Great Falls in a few years but it is one of the nicest areas in N Va (or DC for that matter). The person buying this place may have bought at a very, very good price.
Generally these are very well built houses (estates might be a better word) sometimes with several acres included. If I had to live in the DC area and (dreaming here) money wasn’t an issue, Great Falls would be one of my first choices.
IMO, Non-reserve auctions are probably the best instrument to determine today’s actual market price.
I was posting above about how there are some properties that are truly worth millions in Great Falls, but there are also suburban ranch homes from the 1960s that should be selling for anywhere near a million. Great Falls is also always undergoing the unofficial expansion that occurs around wealthy areas. Places that used to be considered Herndon or Reston are somehow ending up on the MLS as Great Falls.
I meant “should NOT be selling for anywhere near a million.” We need an edit feature.
bink,
It’s a colonial, typical Great Falls “nice”.
$1,100,1000 For a 5 Bedroom House . What a Bargain!
I see it a thousand times and I still cannot get my head around this kind of thinking. Why would anyone anywhere in the world think this was cheap?
Maybe because I’ve always lived in the ” Cheap Parts of the World. I know a few ” Fabulously Wealthy ” individuals and only one lives in a Million Dollar Home , and I guarantee You it would make this Place look like a Shack.
For someone who is 50 , and worth 50 million or so , I guess I could see blowing some money on a Castle. But when I hear of working class people , or even regular little small business owners , buying a regular house that has 80k to 100k per Year in carrying, operating and lost opportunity costs, that’s just a box of lumber on a little chunk of dirt. Well , the word INSANITY just keeps popping in my head.
I’ve always loved to travel and see New things.
Can anyone give Me Directions to this Alternate Universe that so many others live in? It must be something to see.
$1 million for a nice house on 5 acres in Great Falls is probably not that far out of whack, assuming the house is a nice one. This is sort of “Park Avenue” in the DC area, maybe “main line” if you know Philly.
It’s the near-million cookie cutter cracker boxes on a tenth of an acre or central ghetto townhouses that stand out as monuments to the bubble. I bet the broad who sold this one would have got her $2 million in spring ‘05.
9011 GEORGETOWN PIKE
Tax assessment history:
2008 $1,770,190
2007 $1,669,860
2006 $1,562,860
2005 $1,377,860
2004 $1,124,075
2003 $1,031,260
2002 $817,235
2001 $729,675
2000 $663,340
Sounds about right. Zeropoint, below, says it last sold for for 680K in 1998. That was the very tale end of many years of stagnation following the early ’90’s price declines. A 60% nominal increase after ten years (probably more like 40%, inflation adjusted), is a little high, sure, but this one is not a poster child for the Washington DC-area bubble. Things went up over 600% in some parts.
Read the thing on Montgomery Village - talk about a wildly overpriced, exurban ghetto…..
Bill,
Yes, listings are off their peaks of the last two years. Like the article says, “sellers have to be very motivated” to sell in this market. But Fairfax County May sales were at a decade low, too.
Fairfax County inventory.
“Shares of Bank of America and SunTrust Banks, two other large banks that have suffered losses on mortgage-related securities, are both down since year-end 2007. Both have a strong presence locally.”
“‘The news keeps getting worse because banks didn’t know what they owned,’ said Larry Bernert, a principal at the Norfolk money management firm Wilbanks, Smith & Thomas Asset Management. ‘That’s still the case.’”
_______________________________________________________________
We are very close to push meeting shove, and if B of A doesn’t know what they own, how confident can you be that they have any of your money, that supposedly is in their trust?
Beat the rush, and get your money out of American Banks, on the double.
If B of A does not know what they owned before they purchased CountryWide. I am sure they now know they own a bunch of BullS… after they purchased CountryWide.
On a Balance Sheet I know there is a Debit and Credit. But where is the line for the “Whole lot of BullS….”.
countrywide is a well established mortgage structure and network that extends from coast to coast.. it’s something BofA sorely lacked and lusted after.
It may look like a dumb investment in this period of bubble-deflation (although 2B is dirt cheap, imo) but i suspect that in 10 years BofA will likely rule the market.
I suspect Amadeo Giannini would roll over in his grave if he knew what has become of what he established in 1904.
joey,
As many here have wondered BofA stopped writing subprime paper in 2001. It may well have been why they were tasked by the Fed to have this “shotgun wedding”? If they had the foresight to distance themselves before this became a problem, why get involved now?
Secondly I don’t see any value to MB’s, period. They have no inventory, RE ( to speak of ) and very little in the way of assets. CFC’s own “proprietary” Desktop Underwriter has been debunked and all I see is liability. They may as well operate out of the trunk of their car. BofA could have accomplished dominance in the marketplace *without them. No?
BOA isn’t going to let CW write subprime anymore. Now, I don’t know what they will define as subprime so it may not be identical to BOA’s loan products.
BOA does have exposure to subprime, but it’s where they loan money to companies that do subprime loans or buy subprime loans (hedge funds, etc), not the solitary home buyer.
Yea lusing for something always ends up good. Like paying $18/share?
Ask Elliot S. about lusing after something!
It’s in the equity section of the balance sheet. Next to Good Will.
McLean house was built in 1979, and last sold for $680k in 1998. From a picture in Zillow, it doesn’t look like it has any major additions (except a solar panel - can’t tell if it’s photovoltaic - but is probably thermal in this area), or any significant landscaping or a pool or anything like that added. Lot looks nicely wooded.
They had a gain equal to $42k a year for ten years - so, when you pull everything out, they probably lived nearly rent-free for 10 years.
Of course, if they heloc’d it, their payday might well be less - and it’s surely at least a couple hundred thou less than if they’d onloaded it in 05 or spring 06.
“After she lost her job, she went on unemployment but it wasn’t sufficient to cover her mortgage”
Note to Self:
Don’t get mortgage payment greater than can be covered by unemployment check if you have NO SAVINGS!
Don’t get a mortage if you have no savings.
To invent a Bush-ism, “You don’t have to be a rocket surgeon to figure this out.”
They “misunderestimated” their debt obligations.
Most people I know are just a paycheck or two away from bankruptcy. I think I’m about 4-5 months of paychecks away, currently.
“on April 3, Gov. Martin O’Malley signed a package of laws that halted new foreclosures, slows the foreclosure process and safeguards against future abuses. But those reforms are only a 90-day ‘de facto moratorium’ on new foreclosures, foreclosure specialist Jacob Geesing, said at the COG conference last week.”
I know Massachusetts passed a similar bill. Does anyone have a summary of states that have passed these moratoriums and when they might be ending?
From what I can tell Mass was first, apparently May 1st. Article was not clear as to whether not it was a 60 or 90 reprieve. So either July 1st or August 1st things should pick up.
As an aside. I looked at a home approximately 6 months ago that had been abandoned and had been condemned. It just went officially back to the back last week. Snails pace to say the least.
This is outrageous. Never mind the government interfering with a contract between two fully-informed parties, it will probably contribute to the decay and vandalism of soon-to-be foreclosed houses.
I don’t think it’s an actual moratorium…. basically MD used to have one of the easiest foreclosure laws in the States… banks didn’t even follow them to the letter, they were more generous with the timeline. The new laws basically just put MD back into the average for time to foreclose. I can’t recall which blog had a whole summary of it… calculated risk? housing despair? the balimore housing bubble? Ah, they all start to merge together.
As long as MoCo and PG don’t decide to do a Fairfax styled buying spree, it will all work out OK. The DC metro area needs a good shock to the system. Prices that were too high compared to the median income doubled or more in 5 years have declined around 15% or so on average.
It will be interesting to see what happens in the next 5-10 years as the bubble continues to deflate and more than 20% of the federal workforce retires.
The moratorium on foreclosures will end at the same time the FED stops taking junk at the Discount Window (or whatever the lastest money laundering tool is) and trading it for money.
In other words, Maryland is on track to become a ghetto with empty houses being sold for absurd prices next to bums living rent-free in houses they could never afford. But at least this will prevent honest savers from owning a house, so all is well!
From that same story in the McLean Connection:
“Those who can afford to buy a home in Great Falls may also be looking for something different. With the rise in gas prices and utilities, many people are looking for smaller homes on smaller lot that are closer to where they work — which is why the markets in Arlington and Washington D.C. have remained fairly stable, he said. ”
Thats what I dont get - the distance between McLean and Arlington is like 5 miles. No way gas is causing them to move. Yet, Arlington has like a 5 month absorbtion rate - even better on high end homes. What the hell is going on here???
Traffic in DC is so bad that five miles is a very long way in rush hour. It’s perhaps a psychological reaction as much as anything else.
And you can take public transportation easilty from much of Arlington. People who live in McLean are too good to mix with the unwashed masses on the Metro or a bus.
Only five miles? Sheesh, ride a bike to work.
Unfortunately DC is very much not bike friendly. There are a couple of rails-to-trails, but unless they match your commute to work, you’re hosed - it’s generally a very dangerous ride on a non-existent shoulder.
You’re not from around here, are you?
Biking between arbitrary points in greater DC is for those with a death wish. (I used to live in the SV bay area. I miss the biking terribly.)
Probably obvious, but my reply was to combotechie… packman has a faster trigger finger.
The city that is the seat of our government is not bike friendly? So much for leading by example.
“(I used to live in the SV bay area. I miss the biking terribly.)”
Biking to work is definitely addictive. I’ve been doing it steadily for 28 years. The grumpiest of my days are the ones that, for various reasons, I am forced to drive.
So Cal sucks for cars, rocks for bikes. The weather is good and the ride is flat. And most drivers are (finally) coming around to the idea that bikes have a right to the road.
Yep. Well - given that DC politicians have historically been in bed with the oil companies - Rockefellers thru the Bushies - it’s not in their best interest to promote non-oil-burning modes of transportation. I’m dismayed but certainly not surprised.
I did a lot of work in DC at one point. I worked with a person who rode his bike to work every day. One day he was biking across Key Bridge and someone hit him. He wasn’t hurt at all, bike had little damage, the car that hit him wasn’t going very fast. He got on the bike again but then the person who hit him backed up to see if he was OK, totally crushed the bike and put him in the hospital for a couple of weeks.
Uh, public transportation is not cheap. I knew a teacher who lived in Fairfax and drove to her job in DC because it was cheaper than the metro. Of course, that was about 4 yrs ago.
Stupid question - does the DC metro run on gas or electicity — anybody know?
DC Metro is electric.
(It is expensive compared to many other big city trains, but its also nicer than many, too.)
Metro is expensive, especially compared to NYC. Fed workers are somewhat insulated from that because of the transportation subsidy, but for a single commuter, it should still be cheaper to metro unless she has access to free or very cheap parking at work.
From the McLean Connection piece:
“Those who can afford to buy a home in Great Falls may also be looking for something different. With the rise in gas prices and utilities, many people are looking for smaller homes on smaller lot that are closer to where they work — which is why the markets in Arlington and Washington D.C. have remained fairly stable, he said. ”
Are you kidding me. I know sales close in are brisk, but no way these people are moving 5 miles from McLean to Arlington to save on gas!!!
One thing I am curious about is whether or not the price per sq. ft. will increase substantially for tiny <1000 sq. ft. homes. Lately, I’ve seen these homes on grandfathered half-lots being listed for only 10-20% less than neighboring homes on full lots in anticipation of this. It makes me wonder where this new trend will lead. Not sure yet if they are actually selling faster than their larger neighbors (though nothing is really selling unless it is less than about $250K).
“though nothing is really selling unless it is less than about $250K”
Thats the thing though. In Arlington, Alexandria & DC the absorbtion rate is still less than 6 months. Amazingly, the expensive stuff (say 500K & up) sells faster than the cheap stuff! What gives??? (My own personal theory is its a vast right wing conspiracy to screw me, the bitter renter, from seeing a legit price drop where I want to buy).
If that’s the case, then you either have a lot of 200K+ wage earners in your area, or a lot of newly minted FB knifecatchers who will drag out the inevitable.
That area is crawling with corporate lawyers, so 200+ a year is not a problem.
“‘Commonly metered’ condo communities - older communities where electricity, water and gas are paid collectively - such as Silver Spring’s Glen Waye Gardens are being hit the hardest, said board President Vicki Vergagni.”
The tragedy of the commons!
Everyone will keep the A/C on 24/7! And if we ever get pluggable hybrids (like th Chevy volt) the people who charge their cars will get a great deal.
Like DUH!!!
What is this, rocket science?
No, this is real estate. Rocket science is for people who have brains.
Can anybody prove that this existed from the beginning as a kondoz?
I have seen many older buildings (and lived in one) that were rental apprtments with a common utility services. Then were changed to kondozs
———————————————-
‘Commonly metered’ condo communities
Ah, what a joy it is to see “Bedlam on the Bay” (Maryland) back in the news on the Housing Bubble Blog! Maryland, the land where the taxes are high, the houses are expensive, and the crime is everywhere! Gotta love it!
It seems that the theory that “everyone is rich in Maryland because of DC” is running into some snags. I am still waiting for “free money” (aside from the “stimulus check!”) to show up on my doorstep because I live within the magical 100-mile circle around DC where everyone is apparently rich. Well, you’d believe everyone is rich if you looked at the housing prices!
And yet the madness continues. Looking at real estate listing in Maryland, a family making the median household income of around $65,000 for many of the mid-level counties can only afford a tiny condo or a crumbling Post-War (if you’re lucky!) shoebox, and even that will go for 4 times your income. And we still have place for sale with out-moded concepts like septic tanks and well-water (free with MTB gasoline additive!) so you can get 1950’s features for 2005 prices. Unreal!
The monthly real estate magazines are even funnier than the online listings. In effort to prove how “affordable” Maryland living is, many of the real estate magazines focus on Eastern Shore housing, as they have done so for over a year now. It’s a nice trick: look at the house and the half-way reasonable price, and then realize the house is 50+ miles away from any meaningful employment… oh, and you’d have to commute over the Bay Bridge and back every day. Yeah, it’s not like that bridge gets backed up every morning! Durr… But hey - it’s all about the illusion: the illusion that housing is affordable in Maryland, the illusion that buying houses 50 miles away (and over the Bay) from jobs makes sense, the illusion that households making $60,000 a year can afford the $400,000 “starter townhouses” offered around the area, and so on.
So, in Maryland, the madness continues. Very few people I’ve spoken to “get it.” Many still think “it is different here” or somehow believe that BRAC or magical pixie dust money falling from DC will prop things up and make housing starting at 5 times household income affordable.
Of course, we DO have affordable housing in a few places in Maryland. The forgotten western half o the state is affordable - and pretty - but there are no jobs. Oh, then there’s Baltimore, which is affordable, ugly, and full of crime. I guess there are jobs there, too, if running drugs counts!
Conclusion: there must be something in the water around here that likes to keep Bubbles going!
Isn’t most of the MD housing wealth concentrated in just a few zip codes?
I gave a woman I didn’t previously know a ride home from the Metro in Rockville, MD on Sunday after seeing a show with a group that someone at work put together. She told me her husband was lucky to be employed because his industry is in trouble. Sounded like she was relying on commissions for her income too. The house was tiny, old, and a bit delapidated - clearly needed a coat of paint if nothing else. I grew up in a 1400 square foot 2 over 4 room house on a quarter acre in MA with no garage. This place would be lucky to have 2/3 of that space inside the house and 1/2 of it for the lot. I bet they bought it within the last 2 years. Not a bad location, but not walkable to the metro either. Her assessment was that they were “almost broke.”
If they both get better jobs (both, not one or the other), they should be able to make it. If they have parents who can bail them out, they should be able to make it. Other than that, I think they are in big trouble. I don’t know what business either one is in, but 4 furniture stores have gone out of buisness around here recently. I bet the multiple car dealerships are hurting too. I’ve said it before, but craigslist is full of office furniture. I think it is coming here too. It will take a while to get out of the condo market, but it will come.
I have heard that 3x annual income is what you should limit your home purchase price to. This has obviously not been followed by most people (although in fairness, it is simply not possible). Has this ratio changed now that food and gas prices have gone up so drastically in the past year? Perhaps 2:1 seems more fiancially sound these days.
I also think that it is very funny to read all of the posts about how people should not walk away from their homes because it will ruin thier credit. Wouldn’t this be a good thing? Good credit seems to be a major contributing factor for most people who blantantly overextended themselves. It seems like a good dose of forced discipline for people with child-like financial acumen would be a good start to economic recovery.
There’s nothing around here that would be 3 x my income. Well, now that prices are down somewhat and I got a raise, I might swing a 1 bedroom townhouse in the burbs 15 miles from DC. With both of our incomes we could get a place, but a surprisingly shoddy place given the cost!
My favorite current two pieces of Maryland toast.
I feel somewhat sorry for the folks who are losing their dream house, but what the hell were they thinking. New homes in those areas never went above 800K and they were over priced. (for local who don’t know MoCo, this was “the” area before Potomac took that spot). The 2M one is such an eyesore as well… absolutely nothing looks like that in the neighborhood.
MC6800033 MC6774117
Price: $1,185,000 Price: $2,700,000
Beds: 5 Beds: 9
Baths: 4.5 Baths: 8.5
Sq. Ft.: 5,235
$/Sq. Ft.: $226
Lot Size: 0.58 Acres Lot Size: 0.49 Acres
Style: Craftsman Style: Contemporary
Year Built: 2006 Year Built: 2007
Last sold: 2004 for $262,000 Last sold: teardown before?
ugg, that didn’t work out too well. Looking left to right gives you the info on them - no sq ft info for the second house. If you look on a search engine.
MC6800033
and
MC6774117
The month of February was the worst so far with 55 foreclosures, including the vacant lots.
Oh noes! Not the vacant lots!
Won’t someone help these poor victims realize their latent American Dream?!
I wonder if Dodd’s bailout will apply to the vacant lots? You have to feel sorry for them too.