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Thursday, September 17, 2009
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86 comments:
Holy schmoley:
Wa Po: The "Buyer's Market: A Tale of Caution
(Sorry if it is a repost)
Starting to look like the old West out there with some of these gunslingers...:)
E. Razzi new home costumer satisfaction
Someone was thinking of buying new? Here's a survey of satisfaction and percieved quality by JD Power and associates.
Wow, Texas Native, that is one crazy story. Thanks for posting--I hadn't seen that.
Texas Native,
No one's posted it that I've seen. I read it, sounds mostly like the listing agents were a bunch of twits!! The buyers had a reasonable price they were willing to pay, a target neighborhood, and with persistence nailed both. Pain in the butt, yes.
This is the one that steamed the heck out of me:
"The lender wouldn't give her the information without our permission, so Tarot Card Lady asked someone else to run the numbers for her. Her conclusion: We could afford to pay more than we were offering.
I explained to her agent later that she had been right but for one small detail: the 2-year-old at home with uneven bangs and an unhealthy obsession with Elmo who needs to be minded during the day for a small fortune. "
LA: you can "afford" to pay more. WTF. What gives you the right to try to get more money from a buyer just because their income "can handle it"? Live your own darn life and I'll live mine thank you very much. Just want to smack them.
Cara, that steamed me too. Tarot card lady is just crazy, and I would run far away from any seller like that.
We don't have any spawn yet, but we have factored in future daycare costs into our budget in our search. Childcare is crazy expensive in DC, and neither one of us can afford to stay home (we earn almost the same amount, so it's not like one spouse is bringing home significantly less than the other).
Texas Native, thanks for posting. That, for me, is a testament to the horrid market response to the $8000 buyers bribe, and why I will not partake in such a manipulated market. The yin for the yang here is that for every bubble dollar and buyer being created now, they will be lost at some point down the road. That's when I'll be looking.
Cara: "I read it, sounds mostly like the listing agents were a bunch of twits!!"
That is pretty much on par for agents these days.
"LA: you can "afford" to pay more. WTF. "
That is what disturbed me more than anything in this article. No, you don't have the right to see my finances. Low ball the sh*t out of these greedy bubble sellers. They are given this one great opportunity to sell in a post-bubble time period at a bubbly price. Sucks that they had to use the kid as a sympathy token, as their finances really aren't anybody else's business.
Cara & PaKa: Yes, that really bothered me too. Even if the family didn't have daycare costs, whatever their reasons for not wanting to spend as much as they could "afford" were none of the listing agent's damn business. Maybe they want to take 4 vacations a year. Maybe they collect expensive paintings. Or maybe they'd just like to save money. It's irrelevant!
kevin,
i'm curious where specifically you're looking if you don't mind sharing.
Yeah that would be bad for most of us on the board if people try and get us to pay what we can afford rather than what we want. I for one know I have zero interest in buying a house that is even within a couple hundred thousand of what I can "afford"
I was really dispassionate about that article. It is a business transaction and you have to be prepared for ANYTHING. I would expect the LA to lie and bully. Not much different than buying a car. Everything that comes out of a car salesman's mouth is a lie to me unless proven otherwise.
paKa,
I hear you. I have been polling friends on daycare costs in case I go back to work and it looks like the first 45k or so of my salary will be for daycare/nanny (for two kids). That sucks.
Tarot Card lady makes me want to puke. How can it possibly be a Buyer's Market (I guess that's the point of the title, huh?).
(random aside to Tabitha starts here):
If Tabitha is around today, you are my new hero. I have been watching my friend's 1 year old twins plus my two for the past few days b/c she had a daycare crisis (she showed up to her daycare lady's house and the daycare was shut down, no warning even!). Speaking of daycare costs, she pays a week ahead and is quite pissed off. Anyway, I am wiped out! How you keep sanity is a mystery to me!
Oh, and you used Birthcare for your home birth, right? Did you see the USA Today article about them?
(end random aside to Tabitha)
I don't know, Robert. I am with you on the car salesman thing, but I don't think most normal people expect every economic transaction in their life to be morally questionable.
When we sold our house, it was all very civilized with no shadiness on either side.
I guess its up to your perspective on who was/is greedy. I read the article as the son saying his mother had an offer for 485,000 and the inspection showed termite damage which she fixed but the buyer walked anyway. They are approved for 485,000 and comps suggest the house was worth 485,000and they offer 450,000. Quiet frankly, I'm surprised the seller sold to them after revealing what they would take and still being offered a low-ball. Just my opinion but I think they were closer to staying in the market than buying except for the brokers involvement. I haven't run nor would I ever think of fiancially qualifying any buyer, that is the agents job. But I will tell you this, so far we have had 3 with pre-qualifying letters that had expired that didn't qualify the second time at bat and 9 that thought they could qualify and couldn't, 3 buyers with (2)homes unwater and 1 with equity that couldn't get fiancing because of previous BABS, 1 FHA skimmed by a hair but I felt at the time prices were stablizing and riseing, FEB 08, and I was afraid they couldn't or wouldn't be able to keep up with the appreciation in taxes & insurance. I know you guys thinks are sellers are evil and greedy and that is fine but some of you need to take a longer look in the mirror.
Meshell,
Just one question: When a buyer makes and offer and the LA says he has a better offer, how many times out of 10 does he/she really have a better offer?
Arkey, I did question the author's strategy of offering significantly less than what they were willing to pay ($450k when they'd pay $485k). I didn't see it as greedy, but perhaps just counterproductive. I think they might have had an easier time if they had started off with something closer to their best and final offer, maybe $475k, still leaving some room for negotiation but less likely to have the seller dismiss them.
Anon412,
I also found it odd that they never deviated from $450k regardless of the list price, isn't it customary to bid such that your expected contract price is half way between the list price and your bid? And if that's too much of a low ball just start "near" your highest and best offer?
Meshell,
seriously, people are scum, but does everyone you ever do business with have to be scum?
MM,
I'm looking in Vienna, and Fairfax zips of 22030 and 22031. Needless to say, prices are nowhere near what would satisfy me as non over-inflated.
Robert, I have no idea!? What do you think?
Arkey, you wouldn't tell someone to pay more for your house because they can afford more, though. You would reject their offer or counter, or whatever, because you think your house is worth more. I didn't know a seller could even get that kind of financial info on a buyer.
"eshell,
Just one question: When a buyer makes and offer and the LA says he has a better offer, how many times out of 10 does he/she really have a better offer?"
Never.
Nah, Cara, I don't think most people are scum. (Not sure about the subset of realtors. I can't figure out why lawyers get such a bad rap [hey, we do pro bono!] when realtors are the true sharks!) You just remember the scummy people more, so it seems like there is a greater population of them.
OK, borrowed twins are waking up. Is it too early for a drink?
Cara,
When we last bid a house we started out near what we're willing to pay, which was $40K lower than the list. Seller eventually came down half way, we walked away, they came back and offered $5K above my final offer. But it was all too little too late.
I'm not sure if we'd be better off start with something even lower (so the "...expected contract price is half way between the list price and your bid..."). We might not even get a serious counter.
Anon412, I think it was just inexperience and distrust of real estate agents. First time buyers that really want to buy a particular house should just flat out ask their agent what their initial offer should be and they will put you in the ballpark. First timers "think" they know what they are doing from reading stuff on the interent but negoiating a deal is what you need the agent for, use them. They can and will get a feel for what the listing agent is looking for, ballpark, not specifics but it will keep you from wasting everyones time. And if you the buyer don't think its worth that just keep looking for your home.
Kevin
You and I are looking in similar areas but also add Reston to my search. I'm underwhelmed too.
She wasn't a first-time buyer, though. But yes, perhaps a good agent would have talked her into offering a little higher.
kevin,
thanks. don't know much about the prices but Vienna is a lovely town (a jog-by observation from someone who jogged through its 'old town' area every Sat morning since Spring)
i'd be interested if it wasn't so darn far from work...
MM,
JMO but if your max contract price is such that the half-way point system leaves you with offering something that will be turned down, it may not be worth putting it in at all.
I agree with Arkey on the advice that that's part of what you have a buying agent for, to feel out what the seller's are looking for in an offer. If your agent advises that nothing under X will receive serious consideration, and X is above what you'd be willing to pay, then don't put one in.
(I didn't mean all people are scum, just that one can go around assuming everyone's scum until proven otherwise, Not that I personally can handle living my life that way)
Meshell, house payments vary with yearly escrow accounts held for home insurance and taxes. The offer was low and maxed out their approval limit so, I didn't feel bad about saying no. Because I thought it was proably in our best interst and theirs. It was a low offer not a low-ball. The offer was the primary factor with the fiancing being the weighted factor.
Making an offer does not hurt I think, even if there is a chance it won't be even countered. You don't lose anything except for a bit of your time and some of your agent's time. This can work out well for you, if the seller knows that you are serious (e.g. have funds for downpayment, have financing pre-approved, etc).
Not offending the seller is another story, you don't want the emotional element to get in there (unless it is empathy and altruism towards your family from the seller).
Arkey-
I wouldn't pay too much attention to their offer limit. Redfin told us we should get a new offer letter for each house that matched our bid. We probably could have gotten approved for twice what our highest offer letter was for. So rejecting them straight out may not be the best idea.
housebuyer,
Same, that's what Jeff wanted us to do too. The two offers we put in were within a couple thousand dollars so we didn't bother, but yeah, a pre-approval can be written for that specific property.
Arkey,
Were the expired statements pre-quals or pre-approvals? I know you said pre-qual but you could have been using that in a general sense. Pre-quals are pretty useless, no under-writing is done at all, pre-approvals should be pretty solid (modulo the assumed interest rate).
Meshell,
(an aside to your aside)
I am feeling far from hero status today, with a nasty cold, cranky baby, unmotivated homeschooled kids who haven't done their morning chores when it is lunchtime, and a house that looks like it was hit by a bomb. You are very good to do what you are doing. My sixth was a twin, but one didn't make it, and so I have never had that experience. I think I might end up in jail if I need to do that some day. No matter how early you get up, no matter how late you go to sleep, no matter how you never sit down, you are never never never done.
And we used Birth By Design, but I must go check out the group you mentioned the next time I neglect my kids and hide on the computer for a minute.
And to end my OT rant, if it costs $45,000/year for daycare for a couple kids, what would it cost/year to wet nurse one, diaper two, and teach five? Because it looks like I might make more than my husband...in my mind.
Sorry, back to your regularly scheduled real estate banter. At least I'm not treading into politics!
Cara,
I sorta kinda disagree. My last home was sold lower than what I would've originally accepted (the # I gave my agent). Everything changes everything when both side enter a serious negotiation.
In my case, I was going to trade up, but ended up renting so I was OK with not getting the full 'bubble' equity in my head. (but have been kicking myself since.)
But maybe most don't function this way, I don't know.
Cara, the most recent was a pre-approval..last time on the market one was a pre-approval and one was a pre-qualifying.
In this market, I'm not so sure that is a smart thing to do, per pre-approvals, since I've personally seen pre-approvals spiff, piss-a-dear. Once you accept an offer and go U/C you are off the market and you set your new market price if the buyer walks and or gets kicked to the curb. I'd get a pre-approval for what you set as your max price. Your loan approval limits do not set the market value for a house. Does it weaken your position if you are offering less than list? That I can't answer because some houses are way over priced and some (like me) are priced in the foreclosure/SS ratio of % of assessment to list price. No, I'm not going to give you any harder deal than I would anybody else. I know what I want out of the deal and the first one that punches my ticket, wins! GAWD forbid if I got 2 buttom punchers but the one with the best fiancial situation wins.
MM
There's always fudge. Additionally I assume you gave your agent the lowest number you thought you'd accept, not the lowest number you'd consider a reasonable bid. There can be quite a bit of difference between the two.
And I agree with Konstantin, it never hurts to put in a solid well-documented offer.
This whole realm of offering realistic things to organic sellers is so far removed from what's available in my target market right now it's surreal. Almost every property in the price range we'd be willing to allocate towards housing is a short sale. So this is pretty academic right now for me at least.
"Quiet frankly, I'm surprised the seller sold to them after revealing what they would take and still being offered a low-ball."
Obviously, they didn't have a better offer, so they took the author's offer. I'm actually surprised the buyer kept dealing with the seller's agent. I would have moved on after the first hang-up.
I think people are way too emotional when it comes to buying/selling houses. Why the hell would you be offended by ANY offer as a seller? If you don't like it, counter, or sell to someone else. Same goes for buyers. If the seller doesn't want to sell to you for what you're willing to pay, buy from someone else. It's their house. They have a right to sell it for as much as they want. If you REALLY want the house, then pay what the seller wants.
Seems pretty simple to me.
I also don't understand why so many people are now willing to take on $200K+ in debt because the govt is handing out $8K to do it. If that $8K is really the breaking point, then you probably shouldn't be buying. I'll point back to the couple buying the $750K house in CA:
"We felt like we had to hurry and buy before the end of the year so we wouldn't miss out on the tax credit. That turned out to be truer than we thought: As we got closer to the end, we realized how much closing costs and other fees would add to the purchase price, which was high enough already."
"The $8,000 tax credit is saving us. Wedding, new house, we're tapped out. We're definitely big fans of the tax credit!"
"We'll use some of the credit money to updating some of the home's circa-1950's decor..."
That's just stupid. And no, it doesn't have anything to do with their professions. If $8K is "saving" them, then a $750K house probably wasn't the best choice.
Meshell said: "Is it too early for a drink?"
No.
Arkey,
Just to clarify, my bank advised me to get approved for the list price regardless of my offer (unless my offer was going to be over list). I'm not sure if this is what Jeff would have advised or not.
That sends the signal of, yes, I can afford to buy your house, no worries, but here's my offer of what I think it's worth.
I think that's about the right balance.
I apologize but I'm having a hard time figuring out what you're trying to say with parts of your comment.
"since I've personally seen pre-approvals spiff, piss-a-dear."
What does that mean???
"Once you accept an offer and go U/C you are off the market and you set your new market price if the buyer walks and or gets kicked to the curb."
Are you saying that having gone under contract and come back out hurts your eventual contract price more than sitting on the market during that time?
"I'd get a pre-approval for what you set as your max price."
That's definitely the simple way to do it. And if you have your heart set on every attribute your home must have and have priced that out, such that all homes you're looking at are within 10k (or at most 30k?) of each other that's probably fine.
If on the other hand you're still open to trading a garage for not paying the extra 30-50k, or have a broader scope of what you're willing to pay depending on what you get for it, then that's not so feasible.
"Your loan approval limits do not set the market value for a house. "
Of course not. I don't think I implied they did.
What you're trying to accomplish is not giving away any more information than you absolutely have to.
We routinely offer ~ 10% less than list (in Loco over 500K market)
Even our Agent agrees with this strategy, he even says it's usually factored now into current asking prices...
While I agree with Robert you should take everything the opposing realtor says with a grain of salt, at the end of the day they have ethical obligations.
They might fudge and say "I have another offer." It's your job to pin them down -- where is the other offer, how much higher, etc. You'll probably find out the other offer is the same or maybe even worse.
If there's not even another offer then maybe you should report them to the NAR and state groups for ethical violations. I think most of the people that unethical though are gone from the realtor job by now.
If they don't have another offer they usually say "I think another one is coming in" which can be truthful as they may have genuinely heard from a buyer's agent that they are considering bidding. You just say this is my offer and I'm not countering against offers that do not yet exist.
Probably 90% of the negotiation is puffery on their end. But I don't think 90% is outright fraud. And of course, there are times where they have a better offer. And buyers engage in puffery too "I don't think I can go any higher" when in reality they are willing to bid $20k more.
Arkey,
I agree that early on a lowball bid is a waste of everyone's time. But for homes that have sat on the market for 180 days or especially 365 days I think it's fair to submit a lowball offer. The lack of response from the market shows the listing price is unrealistic.
What do you all think of fees paid to buyer's agents here in NOVA, for bidding on foreclosures or short sales?
Its a lovely bait and switch type deal for the buyer's agent (they know that the steals in NOVA) often have contracts under a week of listing.
So here you are as a buyer, knowing you have a two day window or less to put an offer on the property. 1) You come up with Earnest Money Deposit oh and 2)Your agent says "we have problems getting full commisions from bank" so my senior broker mandates a $350.00 processing fee for all shortsale or foreclosure bids.
Whatever happened to buyer's not paying commissions (but feel forced to pay this fee) as they need the AGent to push through the offer?
I thought there was legal recourse, but the charge is quite standard, just not advertised.
See this trulia link: http://www.trulia.com/voices/Home_Buying/Compliance_processing_fee_for_Buyers_Agent-151819
TBW, consider that the owner may have rejected multiple "lowball" bids during that time.
I do find it strange, though, when sellers accept offers that are well below the asking price, such as a recent rambler in 22207, renovated, that went for $1.125 mill. but had an asking price about $1.3 mill. If the seller had set the asking price at $1.175, for example, which is a lot less than $1.3, the seller might have gotten that price or close to it - maybe more. Many buyers probably didn't look at the house because they thought it was priced too high for them and/or compared to comps and that the sellers were probably not going to negotiate far enough downwards, so why waste their time, when there are a lot of other houses on the market.
This is also why some sellers might be "insulted" when buyers "low ball" - because there are some sellers out there who WILL accept much lower bids than their listing price. A lot of emotional twisting could be avoided if sellers would work with good agents who do a good job of finding comps before setting the listing price.
tiredbubblewatcher said...
"While I agree with Robert you should take everything the opposing realtor says with a grain of salt, at the end of the day they have ethical obligations."
Only in the absolute loosest of ways. Now I have to clean up my keyboard from the milk that shot out of my nose when I read that....
kevin,
Trust me -- in a few years you'll like realtors again. We just have too many of them because so many were created during the bubble. So many realtors still are *desperate* and will take any listing no matter how unlikely it will sell.
As more and more of them leave for jobs that actually give them money there will be a healthier supply of realtors. And those realtors will be busy with homes that are actually priced reasonably. And so when the crazy seller says "I want to sell this home for $700k" and all comps are going for $500k the realtor will tell them it's a waste of their time since they know it's going to sit on the market forever.
Cara, I have had buyers that were pre-approved for my price range. They had/have been looking for so long ( 1 last Feb and 1 this month) that the pre=approval had expired. We do not accept offers from buyers without a current pre-approval loan amount, both times they couldn't get approval for their previous loan amounts. I don't know why in either case and don't care as its none of my business. The only thing I can think of is they aren't getting the lecture us old timers got when we bought our first homes, don't buy anything, don't change jobs, don't miss any payments..etc..
Yes, going U/C for a price lower than what you actually wanted isn't a smart move when the market is going up. To many buyers are walking without recourse because they found something they like better. Oh Yeah, earnest money..duh, most of us sellers or old plugs know thats a joke. Anyway, if I went U/C and it didn't work out, I'd return to the MLS for that amount or that's what the realtors say to do because that is what you and a buyer agreed was FMV or you just close shop. That's a trick I've noticed they use on SS to set a foreclosure MLS price. A house is listed as a SS knowing that it will foreclose before any SS can be approved and if they get an offer, they use that as the foreclosure price.
I fully expect people to protect their privacy as much as they can. I find it ridiculus the amount of information that has to be divluged to the government in securing a home.
I didn't think you did say loan approval set market, what I was trying to say your loan limit should be high enough that the seller is comfortable that you can or will get fiancing since I've seen previous loan approval limits be dis-approved on renewal.
Arkey said,
Yes, going U/C for a price lower than what you actually wanted isn't a smart move when the market is going up.
Oh dear. I don't think even Robert thinks your home is currently going up in the current market. It's lower end homes that have seen a slight bump.
You need to sell now for what you can get. Next year you'll be getting even less. I guarantee your PWC assessment is going even further down. Right now you are asking $60k above assessment. Do you really want to ask $80-100k above assessment?
TBW, I agree with you. Case in point. ME! My favorite subject. When I went on the market the first of Feb 09, I set my price at 95% of 08, my neighbor set hers at 10% above 08. I got showed to death, 2 good offers but no fiancing. One had equity but couldn't pull out the equity to buy mine, a no-no. Then they tried to sell and came off the market in July. The other wanted to buy and rent for a year till they returned to the states, again, a finacing No-no. Anyway, I pulled it off the market in May and my neighbor stay on. She only had 10 showings that whole time and sold in July. She was the smart one. If I had it to do over I would have listed 10% over 08 and just waited for a low-baller, even steven without the fuss and muss.
Donovan,
Pick a broker that doesn't have that fee, like Frankly.
TBW..I guarantee your PWC assessment is going even further down. Right now you are asking $60k above assessment. Do you really want to ask $80-100k above assessment
Interesting comment. But I think you were one of those that claim 20111 had more foreclosures coming and a 30% drop in my 09, it was 17%by the way. The 30% was sfh for the whole 20111 zip. Hoodbridge and 20112 might, and, I say might have a decrease in 2010 but not much. That is where the foreclosures are. And 20112 most of those homes are selling 100,000 to 150,000 above their 09 assessment so I'm not to concerned about pricing in the future.
tiredbubblewatcher said...
"Trust me -- in a few years you'll like realtors again."
I never liked them in the first place, so this is very unlikely. It's beyond the obvious problem that they are unprofessional parasites, it's the commission system and the cartel created in the market. They are overpaid and the system is antiquated. There is simply nothing to like there.
The young and the wealthy dwell in DC
Perhaps it’s the district’s mix of power and possibility, but Washington D.C. is increasingly drawing in the young and the wealthy, according to Nielsen Claritas. A new demographic spotlight finds that 16 of the top 50 counties where the highest concentration of the young and wealthy live are in the Washington D.C. area.
This demographic—those aged 25-34 who are making over $100,000 annually—is also prevalent in the high-density areas of San Francisco, New York City and Chicago.
Loudoun and Arlington top the list at 1 and 2, Alexandria is 7th.
explains a lot don't you think?
That story made me laugh because we also bid on Tarot Card lady's house.
At the time, she had it listed for 540K (she had started out much much higher.) She rejected our bid -- but ended up accepted even less a few months later.
We could have afforded her asking price but we did not want to pay it because it was clear that the houses in the neighborhood were coming down in price quite dramatically and we had a feeling that six months down the line the $540K house would be worth $500K and we would have lost 40K in cash just like that.
Turns out we were exactly right.
Cara, you are oversimplifying my "broker fee" issue.
My point is, if these broker fee's to buyer's agents are part of the processing fee for foreclosures and short sales, local real estate boards should mandate disclosure of this fee at the time of first meeting between agent and buyer.
Yes, "frankly is great", yes many should use them. But lets face it many people working dont have time to be novabubble/franklymls forum goers all day. Afterall, isnt this why we pay our agents, to do the comp search for us (Im finding miost buyers agents do shi*** comp analysis in NOVA) -- and I drop them rapidly
The real issue, is there an ethical obligation for a buyer's agent to reveal this fee prior to submitted offers (where buyers, per market demands must sh** or get off the pot) -- then get roped into extraneous fees to complete offer paperwork.
Donovan,
Got it. Yes, I think it's terrible that these fees are not disclosed. There are also some brokerage houses that are adding a $350 fee on the LA side, that must be paid and isn't pre-disclosed.
Frank had a post on this I think... I think both practices are probably against local MLS regulations...
One solution, get all your realtor friends to vote for Frank for the next president, and maybe he'll crack down on this crap.
Yes, it does, Cara, but why don't we have more cool houses with all those rich young hip homebuyers? Why do the available new houses look just like mass produced midwestern houses, with maybe a few more gables (which cost about 1/3 of the NoVA prices)!
Arkey said,
But I think you were one of those that claim 20111 had more foreclosures coming and a 30% drop in my 09, it was 17%by the way.
I have never made any predictions like that. I don't have specific predictions other than that almost every home in Arlington, Alexandria, Fairfax, Loudoun, and Prince William will have a lower 2010 assessment than 2009 assessment. The various county managers have admitted this is coming.
Completely off topic. Have you guys seen Dr. Horrible's Sing-Along Blog? My wife and I saw it last night and thought it was damn good. It was made to watch for free on the net although it has real actors.
http://drhorrible.com/mushortio.html
In this area you need to make a whole lot more than 100K to be able to afford a custom built house. All of the houses look the same because it is much cheaper for the builders to create houses this way. In order to get something that is hip you probably need to buy a house tear it down and build a new one. If you do this fairly close to DC you are going to spend at least 400K just to get a lot and that's before you start building a new house. Either way your total cost will likely be at least $1MM and 100K is not even close to what you need for this.
This are is a little strange in the fact it has a ton of people that make 100-200K but it has far fewer people making several million compared to other wealthy areas.
Jeff
It doesn't just have "real actors" it has Neil Patrick Harris and Nathan Fillian!!!
sorry. totally loved Dr. Horrible, it's even better than the Bufficle.
Cara,
That explains nothing. As the article noted these localities were high up in 1990 and 2000. As I've said a million times -- this area has been rich forever.
My parents in the 1970s spent 3x as much on a SFH as their relatives elsewhere. This is not new.
tbw,
1) there was a trend noted there.
2) What it explains? Is the continued high prices for little condos along the orange line.
If enough of the first time buyers make over $100k then those who make less will be priced out. It's a supply and demand thing.
The rich get richer applies to neighborhoods as well as people. If these areas weren't wealthy in 2000 or 1990 or 1980, they wouldn't have drawn these new wealthy people to them.
But housebuyer, that doesn't explain the ugliness (my subjective opinion) of a lot of the new builds, which was my question.
Pairs of those rich young hip people are buying up big expensive but ugly homes. I don't know why they don't insist on the same level of attractiveness that is seen in Chicago condos on HGTV, for example, and in some Arlington condos as well.
Ace,
Can you post some examples of the homes you think are ugly?
What fraction of new homes over a million do you think are hideous? Approximately?
On here you tend to post ones that I actually like, other than the spite house, and those four strange monstrosities. Yes, fake craftsman is everywhere, but we have become quite a homogenous nation, fashion-wise.
Cara,
It said households making more than $100k. Some of these households are two income families. A lot of these stats are more about cultural aspects of the various areas than how "rich" everyone is. I'm not shocked that in urban areas there are more people without kids and both spouses are working full time.
There was an article indirectly about this in the Washington Post Magazine. The author noted back home in the heartland she is some weirdo who was not married yet at 26 but in DC her friends thought she was marrying pretty young.
Everyone I know who is married with young children is making less money than if they had no children. One spouse (almost always the wife) is working part-time or not at all. Sometimes the dad also moves to a less stressful/hours heavy career.
Ace,
Whoever said DC area young adults were hip? Whoever said people who make a lot of money are hip? :) :) :)
In all seriousness though this is a pretty conservative/preppy area. Not politically of course. But style wise.
tbw,
I agree that it's not surprising that metropolitan areas are where young households making over 100k live. But most metropolitan areas are also expensive.
What this explains is why 2bdr condos can sell at $400k in Arlington. (I'm not looking there so I'm just using an off-hand round number)
I'm not sure what you're getting at with the hypothesis that couples with kids make less. I don't know what conclusion you intend us to draw from that. That 26-34 year old HHs make over 100k but 35-45 year old HHs make less than that so SFHs should be cheaper than Ballston condos? See, I told you I didn't follow.
Good point, TBW!!!!
Cara, I don't like most of the faux Craftsman houses primarily because they are built cheaply and oversized, or simply because there are so damn many of them and nothing else to choose from, just as others may dislike Colonials. Most aren't hideous. There's nothing inherently wrong with them. But it's the same ol', same ol', and definitely not hip. Some are also poorly designed, with way too many rooflines & gables, mixed styles inside, bad floor plans, too many different materials on the front and only siding on the sides, etc. Lewis, the architect in the WaPo, wrote a great column about this a couple of years ago.
Here's one example of an overdone exterior (and facing 66 to boot):
http://franklymls.com/AR7145786
I do like this one - too much house and $ for me of course but I think it's nicely done on the inside (though not hip):
http://franklymls.com/AR7033878
I just don't understand why the kids want 21st century metro style for their condos but then a "let's pretend we live in a small town in 1920" for their houses. I'm not saying there is anything right or wrong with either. Just don't understand the taste shift and homogeneity.
I'll try to keep an eye out for examples to post in the future.
Here's the Lewis column I found interesting:
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/12/AR2006051200858.html
I would never buy a $1M+ house that close to 66. I don't care how cool the house is.
Me either, MJC - that's probably why it continues to sit, despite asking price drops.
Ace,
That article's hilarious.
Sad but true.
Yeah, glancing over AR7* crafts* is depressing, aside from a few of the original 1920's ones. Most of them having nothing to do with craftsman style.
Ace,
Here's my hypothesis. During the boom years most new homes were built on spec. So there was no buyer around to complain about the layout or taste level until it was too late.
From Realty Times by Spencer Marker, RE Agent in Fairfax, Co.:
"The bad news is that the number of home owners that have received notice that they are beginning the foreclosure or are going to a trustees sale has more than doubled from the low point and is up 70-80% over the months preceding the high point of active foreclosures. This is the largest national lender. This is their number and you have to assume that all the other ones have proportionally the same numbers. This is specific to our market. This is not Florida numbers or Nevada or California; it is Northern Virginia numbers. So that tells me that the next wave is indeed going to impact our market and there is no longer a question that it is coming.
"
Ace,
Those are move-up homes. No one 25-34 can afford that even if they make $100k+. That requires either a substantial down payment or $400k+ in income. So the tastes of 25-34 year olds are irrelevant there. It's what 40+ year olds want.
Cara,
I think the jury is still out on what Orange Line condos are going to bottom at.
Anyways, my comment was that sure you might find some couple making $120k at age 28-29. Will they be making $120k when they are 33? If both kept working they'd probably be up to $140-150k. But perhaps during that time period one took unpaid FMLA leave (plus some paid parental leave), maybe even two babies. Now one is part-time or maybe even stay at home mom. So now they are making $80k-100k. And $15k goes toward the baby (child care, clothes, more food, etc).
So it would not be smart to buy based on the $120k salary at age 28-29. Back in 1980, you probably already had a child or two, one parent stay-at-home or part-time, etc, and child care expenses already known and so your disposable income was only going up, up, up when you bought a home. Now I think some people are buying only to see life cause their income to go down (although eventually go back up again.)
Also, I still think that Orange Line condos (and condos everywhere) were bought mostly to flip and not for the long term. It's really a small segment of the market that does not want at least a townhouse. I mean, we had tons of single men and women with their own modest SFH to themselves in my neighborhood.
Plenty of singles and DINKs like to have their own garden, room for pets, space for all their crap too! :) Remember also that when you live in an urban area it's not just your home that's more expensive but your clothing options, restaurant options (and DC has a 10% restaurant sales tax), and it's noisy.
How often do you hear fire sirens or police sirens? I hear them *a lot.* I'm getting too old for this... :)
Anyways, just a lot of random asides there. I guess I just am pretty skeptical that condo living is going to remain trendy in this area beyond the downtown core.
It'd be really interesting to see the numbers of condos in Northern Virginia pre-2000 and 2009. A lot of the condo buildings in Arlington used to be apartments. They converted them. There just was not that much demand for condos.
I'd guess in 1999 we had 20% of the number of condos we have in 2009 in Northern Virginia. It was a really, really, really, really niche market.
TBW, that would make sense, but the same styles predominate in other price ranges as well. Further, from the data given to me by a Realtor a couple of years ago, it is NOT 40 year olds who are buying those houses. It is 35 year olds and younger.
PS TBW, remember that the vast majority of new homes in Arl. are bought by couples, most of whom have two incomes. (In other areas that are less expensive, my guess would be that the % who buy new and are single would be higher). In my earlier post, I referred to "pairs" of these folks.
The bad news is that the number of home owners that have received notice that they are beginning the foreclosure or are going to a trustees sale has more than doubled from the low point and is up 70-80% over the months preceding the high point of active foreclosures.
I'm trying to parse this.
"doubled from the low point"
That doesn't sound like much. The low point of foreclosures? It was practically zero in 2005.
"up 70-80% over the months preceding the high point of active foreclosures."
The months preceding the high point? Why not just "the high point"?
If both statements are true. Doubled from the low and up 70-80% from the high, then the high and low numbers must be something like this:
Low = 1000
Now = 2000 (double off the low)
High = 1142 - because 1145 + 75% of 1142 = 2000
So the low point is 1000 and the high point is 1142?
How silly is that?
Please correct me.
We know for a fact that actual foreclosures in Fairfax, Loudoun, and PWC are running 50% below year ago levels. I posted a couple of days ago from quotes from the county recorders.
Cara, I think you're right - during the bubbly years, buyers were crawling all over each other to buy anything that was for sale. But I wish we'd see a shift in this as time goes on.
a couple of 3brs dropped below $500K mark - which one would you choose?
3/2/1 no yard on Lee Hwy (this came back so last SS must've fell through)
fake 3br (it's actually finished attic) on Glebe Rd just dropped $60K the day before.
MM, I'd pass on both due to the busy streets. I really think a $500K SFH buyer is much better off outside of Arlington, unless they are willing to take a chance on certain parts of S. Arlington. The land costs just leave so little for the house and if you put a lot of $ into the house after buying it, you run the risk of pricing it out of the neighborhood.
I think those two busy-house streets you posted, MM, are rental properties. No one wants to live for real on those busy streets. I suck at math but I don't think the numbers work, do they? Rent would be around $2000-2200 for those, IMO.
MM: you couldn't pay me to live in Arlington. But on the other hand, if the first place was near a Taco Bell/KFC, we might be able to work out a deal.
tbw,
The one of your random asides that struck me as having merit, I'd re-work as the idea that many of the condo owners bought because they viewed the condo as a necessary step in the housing ladder towards getting what they really wanted.
I can't speak to how many condo conversions there were in the last decade, but one can look at the price trajectory of condos that were condos throughout and see if it was delayed compared to SFHs. I don't care enough to learn how to do that with the Arlington county site, but I know what happened to the condos and co-ops that I'm looking at in Burke (forgive me for using my own market for the 40 millionth time). In the rest of Burke, appreciation re-emerged after the low flat period starting in about 2000. In Woodwalk, prices didn't budge until 2002, and were still only slightly higher in 2003. They took off in 2004/2005. This indicates that the condos were only desirable as less expensive alternatives to the THs and SFHs.
Now, I expect, but haven't looked, that condos in Arlington took off sooner than condos way out in suburbia. However, the same principle that the condos primarily have value as less expensive alternatives to what you really want, is still probably true.
So, what's going to break their back, other than huge numbers of underwater homeowners? It would be substitution. First timers seeing that SFH's are within reach either in Arlington or in somewhere else that they are okay with making the trade-off to live in. Since SFH's in Arlington are still totally out of reach, the housing ladder approach isn't broken yet. But if SFH's come down significantly further, yes, it could crush the condos back down to cash-flow positive.
(luckily what I'm buying is already close enough to cash flow positive that I don't care).
However, I still think you're being stubborn in not acknowledging the simple fact that $100k HH's of 25-34 year olds explain how it is that the condos are still selling now at their current prices. The target condo market does have the money and the means to pay those prices. It explains that, as well as why there aren't more foreclosures and short sales in the condos, because the majority of the buyers did have the means. That now some of them may be delaying having kids and working two incomes longer than planned to pay for a condo that they are growing to hate is tragic, but it is reality.
The rest of your argument boils down to "if everyone in NoVa wanted what I want from my life then no one would buy where I don't want to buy." Count your blessings that they don't. The more people who want the same things you want, and who make similar incomes but are willing to put more of it towards the house? The more likely you are to land in the nightmare situation of truly being priced out forever. Be very very glad, for each and every person who likes condo living above the metro in Arlington. That's one less buyer you have to compete with.
TBW, I feel your pain.
I wonder how long it will be before single and DINK "urban pioneers" will take over more of South Arlington. Unfortunately, there isn't beautiful architecture to attract them as there is in most cities, and even some in DC, which seems to be the main force, along with low prices, elsewhere. But it's interesting to me to see how powerful segregation is as one factor (not the only one of course), preventing an area that is otherwise as close to employment centers, shopping, entertainment, medical care, etc., as is much of N. Arlington from "gentrifying." It's still relatively cheap to live there (relative to other parts of Arlington).
Ace, Meshell, NoVAwatcher,
you guys are NOT invited to my house-warming party!!! and we're serving Taco Bells.
j/k :)
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