‘Empty, Brand-New, Accruing-Interest-Every-Month’
The Gazzette.Net reports on spec home sales in Maryland. “The buyers of the custom-built home in the Village of Martin’s Additions will receive an added bonus for their roughly $2 million purchase, a fully loaded Acura SUV, with a three-year lease paid in full. For Chevy Chase builder Noel Fisher, who bought the lot and built the house, the promotion is a sign of the times.”
“‘Obviously with the market a little bit slower than it’s been in the recent past, I was trying to come up with an incentive to get a potential homeowner to come in and look at the house,’ Fisher said.”
“With a large inventory of speculatively built houses available in the southern part of Montgomery County, the formerly red-hot real estate market has seen the mercury move a tad closer to lukewarm, say builders and real estate agents. As a result, builders with speculative houses on the market are coming up with creative ideas to woo the suddenly more discriminating buyers.”
“‘There are 65 houses right now in Bethesda-Chevy Chase above the price of $2 million,’ said Jane Fairweather, a Bethesda Realtor. ‘And 51 percent are spec houses, empty, brand-new, accruing-interest-every-month spec houses. There’s huge choice, with very few buyers right now.’”
“‘As custom spec builders we got a little bit spoiled with the way things were a year ago,’ Fisher said. ‘We definitely have to do what we have to do to get people in there and get an edge over our competition.’”
“As for offering a new car to a prospective buyer, it’s a nice gimmick, but not likely to be a major selling point, Fairweather said. ‘Rarely can you entice somebody with an Acura who’s going to pay $2 million-plus on a house,’ she said. ‘If you want to give them a Rolls, you want to give them a Mercedes, OK. What it does do for the builder is it gets him noticed.’”
“With a possible decline in speculative building, Fairweather foresees a corresponding reduction in the number of houses being torn down and replaced. The result could be new opportunities for young first-time homebuyers, as well as retirees on fixed incomes, in communities that have lost most of their affordable housing in recent years.”
“‘Their prices will go down,’ Fairweather said of the older homes, ‘because an end-user isn’t going to pay top dollar, which I think is a good thing. All this stuff goes in cycles anyway.’”
“The buyers of the custom-built home in the Village of Martin’s Additions will receive an added bonus for their roughly $2 million purchase, a fully loaded Acura SUV, with a three-year lease paid in full. For Chevy Chase builder Noel Fisher, who bought the lot and built the house, the promotion is a sign of the times.”
This is really a great deal for a period when fossil fuel prices are through the roof. Just in case your McMansion’s heating bill does not sink your budget quite enough, you get a free SUV to soak up any remaining discretionary income.
Forget the car - the news is the inventory. 65 houses for sale, above $2 million? Jesus H. Christ! The hamlet of Bethesda is well-to-do, yes, but the population is only about 60,000 people. Drive through it and blink - you missed it. This is unbelievable.
There is this one place called Bethesda Crest, at the intersection of Cedar Dr and Rockville Pike those townhomes start in the 1.5 million range. I think people are nuts to pay them, I saw a lady the other day walk from her place to the metro. I guess thats all the cash she has now that she bought this white elephant.
SUVs are not all created equally, and this one is a Honda at heart it gets 20 mpg. If an extra $30 to fill up is breaking the bank, a person wouldn’t be living in Bethesda. Per capita (including the kids and old people) income is almost $60k there.
Per capita $60k? Lets assume that $150k per home?
That makes $500k affordable for the median, $1 mill for those with money at the top stretch to $1.5 mill.
Gee… why aren’t those $2 million homes selling. Reminds me of Florida, 1925.
Neil
How does per capita $60K translate into $150 per household? Are the kids working in the coal mines?
Yep. The coal mines and cloth mills for the kiddies.
I assume, like so much of America, they have one adult child at home. If I’m wrong… All it does is notch my numbers down. That doesn’t exactly weaken the point I was trying to make, those homes cannot sell at those prices. 
Its like Florida 1925, everyone wants that rich sucker to buy in. Well, instead of being an FB, people are waiting… and waiting…
Someone more musically talented than me needs to take the “Money” sond from the musical “Evita” and modify it for the real estate song. But please keep the line “acountants only slow things down”
Neil
$60k sounds a little low, as Fairfax counties’ median income is around $80k.
I believe that Fairfax figure is per household, not per capita as the Bethesda figure was.
What a bunch of cheapskates - they don’t actually give you the ownership of the SUV, just the lease! This baby can go for about $40K fully loaded easily. The 3-year lease is $15K top.
It’s sort of appropiate. The dealership will take back the SUV at the same time the 3/1 ARM lender will take back the house.
Good call!
I’d make them through in the gas and insurance for three years as well.
I’m stunned! These builders obviously are the product of out-based education or under the Darwinian theory of natural selection they are about to become extinct…!!!!
McMansion buyers do love their tall station wagons (aka SUVs), don’t they!
Well wow whoopity do! Let’s assume, on the way-too-high side, that the vehicle lease payment is $1,000/mo. At that cost, they are knocking off $36K on $2M — less than 2%. To use the vernacular that used to grate on me, “2% is so last-winter.” Knock off 20% and give me a call, so we can start dickering.
$625/mo. Present value about $20,000. Pathetic.
Yeah, also, if I am living in a 2M house the least they can give me is a Mercedes or BMW SUV if not a Range Rover. Acura, what will the neighbors think?Ha, ha.
For those tempted to “re-post,” I think postings are delayed right now/today.
So much for that idea — guess my post vaporized. Even assuming a ridiculous $1K/mo lease payment, that deal is less than 2% off the price of the house. 20% might get the dickering started.
Who’s going to pay the premium on the ‘over milage’ at the end of the lease? The man behind the curtain; the builder is BK.
they can get me to buy a $500,000 home if they give me a MacClaren
I’d take an Enzo myself but more than likely it would wind up being from this site.
http://www.wreckedexotics.com
whoops - typo above…
“‘Their prices will go down,’
BLASPHEMY!
“All this stuff goes in cycles anyway.’”
And yet more BLASPHEMY. Unless by cycle you mean it always cycles up.
it’s interesting how quickly this has turned. I wish SOME reporter would ask these builders/realtors/brokers the tough questions like:
“oh really? 6 months ago you told us that RE only goes up, and that we had to buy now or be priced out forever!”
sheesh
clouseau
A young guy here in Salinas just gave up a good paying job (with a national company) because his wife is taking a transfer to Lubbox, Tx and she’ll make more money. They just had a baby and he will have no job when they get there. But never mind, because housing is cheaper there they already purchased via a RE agent. If he waited a year he could transfer anywhere in the country…..gotta love these young’uns…
Are these incentives actually working?
A “free” car lease with a home purchase is even dumber than a “free” car. Who in their right mind would pay for a 3-year car lease with a 30-year mortgage?
And if you could afford a $2 million dollar home, why wouldn’ t you simply buy that Acura with cash?
WOW!! You will loan me a car for three whole years!!!! Where do I sign!
“Lease is subject to a .90 per mile upcharge on any mileage exceeding 3,000 miles per year.”
Then they can add the “upcharge” to their budget because if the buyer of the $2million home commutes to work where they have to get up at 0′dark-thirty to get there, they will quickly eat up that 3,000 miles. And from Bethesda? I’ve travelled to DC many times to visit and have driven on the beltway…it ain’t no joke.
BayQT~
Ben, thanks for all your work on this blog.
Up here in Vancouver, people are still arguing that trees grow to the sky, and it’s refreshing to come here and have my convictions reaffirmed by the deathknell of the bubble being sounded again and again in articles and posts here.
Every morning, I look forward to turning on my computer and finding out about the latest evidence that sales are dropping, prices are falling, and flippers are flopping. Thanks to this blog, every morning feels like Christmas morning. I love it!
Vancouver is about a year behind the US bubble. As the US was about a year behind UK and Australia bubble. You might have to be a little more patient than most of us.
“Thanks to this blog, every morning feels like Christmas morning.”
Great way to put it — I head for the computer with the same enthusiasm.
my wife and my son think , i ‘ve addition problem. they cant figure out if it is Bubble addiction or computer addiction
not addition , –”addiction”
Prices are slightly(plummeting) in Humbolt County.
http://www.times-standard.com/business/ci_3940260
Check out the headline! It says “House prices drop slightly for most of Humboldt county” yet the text says that the median house price fell from $349,500 in March to $310,000 in April.
Forty-thousand dollars (over 11%) is a “slight” drop? Just goes to show how poorly the media understands the data.
Check out the headline! It says “House prices drop slightly for most of Humboldt county” but the text says that the median price fell from $349,500 in March to $310,000 in April. Forty-thousand dollars (over 11%) is a “slight” drop?
I guess this is an example where the media just don’t understand the data.
You saw that one too!
See what I mean about the Eureka paper? They try to spin everything in such a positive light as far as RE goes. “Slightly” is hardly how I would describe a 15-20% drop in a month.
But, I will admit, living here I will tell you that most of this “drop” is nothing more than the standoff between buyers and sellers…and the very few number of transactions completed. Anything that is priced below comps here moves quickly, although sellers who hold out hope for last summer’s prices are getting pounded. A new house in the neighborhood I rent in recently dropped from $549K to $509K…and like almost all the others, it has been empty for many months.
Let the standoff continue!! Keep on raisin’ Bernanke!!
happy renter, thanks for the update on Humboldt Co. I see very little information on that area but I have been examining the price trends. It looked like things took off only 2 years ago or so up there. Any guesses on how quickly it could unwind based on personal observations?
This site has Humboldt data and analysis:
http://www.humboldt.edu/~indexhum/realestate/
Huggybear,
There are still plenty of old equity locusts swarming out of the Bay Area. These people seem to have endless supplies of cash, and this area is certainly becoming another bona fide retirement community (like Bend Oregon, I mean, who ever heard of that place ten years ago?).
Still, as the speculators lose money on their properties there, here, and throughout California, it will unravel here. But, I seriously think this will be among the last to fall in the state. Kinda goes along with the isolation factor of this place.
Inventory according to the MLS is up to 756…and was about 500 at the beginning of the year. Obviously, some of that is seasonal, but many of the same houses have been in and out of escrow a time or two (or three) and the asking price tends to drop a little after each episode.
I’m still holding out hope I’ll be able to buy a decent home here in 4-6 years for a reasonable price. We’ll see.
Anthony, thanks very much for the info. It seems like the time table for unravelling could depend on how you view it. Since prices in Humboldt seem to have escalated sharpley since ‘02 - ‘03 it might only take only 2-3 years to unwind.
My observation is that outlying areas are usually the last to benefit from the appreciation but are the first to fall when prices decline. At least that’s what I’m hoping happens in this case.
Three out of ten buyer’s who bought in ‘05 are ‘UPSIDE DOWN’, in Humboldt County. Good Link. Always liked that area, years ago, for fishing and hunting. Now, occupied by socialist pot heads
“the formerly red-hot real estate market has seen the mercury move a tad closer to lukewarm”
Thanks Captain Understatement!
I just searched the MLS for “new an never occupied” homes in the Treasure Valley around Boise. The results- 780 homes! This number does not included anything under construction.
We’ll see this more and more across the country as new construction owned by builders and flippers just sits.
I ran the numbers for “under construction” in the Treasure Valley (Boise area)- nearly 1200 homes under construction and for sale.
Brandon,
It’s been awhile since I’ve been up that way but we do get up to Priest Lake from time to time. 1,200 homes “under construction” could be redefining the concept of an “old west ghost town” Can someone cue the Spaghetti Western theme music please?
200k off of this home in Palos Verdes, CA 2861 square feet and lot size is 6720 feet. Having a lot size so large means there is roughly 5 maybe six feet between your house and your neighbor!!
564 Via Media, Palos Verdes Estates, 90274 $1,995,000*
Status: ACT Orig Price: $2,199,000
Wow, lots of greed here
Sale History
08/09/2002: $1,300,000
Washington Times “Charting the Local Market” is in today with numbers from local realtors, some of which include the aforementioned Maryland areas.
Metrowide Resales
-2005- -2006- Change
January 8224 7590 -8%
February 9112 7818 -14%
March 11099 9929 -11%
April 12882 9372 -27%
May 13898 9280 -33%
June 12752
July 11415
August 10932
September 9287
October 9104
November 7869
December 6559
Oh my! Seems the slump is getting worse as the weather gets warmer! May is usually the top month (but not this year - March might be) and it’s a downhill slide from there. I’d be crying if I were selling and really needed to get top price to pay out the Princ+HELOCs.
Sorry for the poor spacing in the table above. I hope you get the point. (Sellers are not getting the point, apparently, given their reluctance to drop prices!)
NoVa, I do get the point:
2005 2006 %drop
April 12882 9372 -27%
May 13898 9280 -33%
Those are compelling numbers since April and May are, along with June, the peak sales months. Will be interesting to see the DC Metro June sales number when it is reported.
I head for the computer to check our information. MERRY CHRISTMAS everyone. Christmas in July for all.
I’m not sure how big (in sq. miles or popuation) Chevy Chase is, but I checked the MLS for Monmouth County NJ, roughly 430 Sq. miles and 600K population, and found 290 homes listed for $2 mil or more.
I know this is supposed to be a wealthy area, but come on. My last check for the $1 mil and over crowd turned up nearly 800.
This MLS usually doesn’t have much new construction on it btw.
In Menlo Park and Palo Alto, CA (decent areas, but not in the same league as Atherton, Woodside, Portola Valley or Hillsborough) there are 31 SFRs listed for under $1M and 98 SFRs listed for more than $1M. 46 SFRs are listed for $2M or more.