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eavesdropper
Participant[quote=CA renter][quote=eavesdropper]
Nicely done on the sale, eavesdropper. 🙂Thanks for filling us in on what’s going on in your market. From everything I’m hearing and reading, it sounds like your area is doing exceptionally well. Of course, like here, there are areas that have held up better than others.
The market’s still crazy here, if that’s any kind of forward-indicator for you. We’ll see if this changes over the next year or two.[/quote]
Thanks, CA renter. We were extremely fortunate. Within a less than a year, sale prices of the houses in our development had dropped by $100K (but, damn, I miss the closet space!)
Sale prices in our new development have actually gone up a bit. Not enough to be statistically significant, but, oh, so much better than dropping. But I’m convinced we’ve got a way to go before things bottom out here.
Northern VA seems to be having a much tougher time of it than we on the MD side of DC. But their growth during the aughts was much less controlled than ours, mostly in the exurbs. Individuals buying new construction for $250,000 were seeing their appraisals go up to $325K before building was complete, and “values” were at $500K+ before the wake-up call. I think that they were double-whammied by the high commuting costs in 2008 in addition to changing market conditions.
But even though I believe that our market is far from bottoming out, we do have a certain stability in the employment sector lent by the presence of the Federal government. As I mentioned in an earlier post, I don’t think that makes us recession-proof, but it’s a helluva lot more than most areas have these days.
But I am curious about one thing that’s been discussed in this thread: Denial. Is it as strong in your neck of the woods as it is here (documented for posterity on “Real Estate Intervention”)? Time and time again, I meet people who readily acknowledge the severity of the real estate crisis, but, somehow, feel that their home is different, and that they’ll have no problem charging, and getting, significantly more money for it. Is denial still as prevalent in SoCal as it is here, or are most sellers finally getting the message (before the “message” comes from their mortgage lender)?
Participant[quote=paramount][quote=sdrealtor]Just to clarify eavesdropper is in DC not San Diego. We have a very active RE market here, far more active than most places. There is huge demand here for well priced homes in any market, good or bad. That just isnt true in most markets across the US and I suspect DC might be one of those.[/quote]
I’d say the RE market in the DC area is “healthy” compared to most areas of the country including California – for one thing the unemployment rate in the DC area is among the lowest in the country.
The DC area is basically immune to recessions – that’s a dirty little beltway secret that’s not such a secret anymore.
Of course that low unemployment rate comes at the expense of the rest of the country since the vast majority of employment in the DC region is in the form of gov’t workers and beltway bandits.
That being said, I doubt there is a ‘huge’ demand even in the DC area. Will these realtor’s ever stop with the BS?[/quote]
Paramount, I don’t know if I’d go so far as to say that the DC area is recession-proof, even though there’s no question that there is one stable source of employment in the government. But there are a lot of residents in this region that aren’t government employees. A huge service industry, along with high-end retail, flourished in this region due to the presence of well-paid govt. employees, and there’s clear evidence that the recession is hurting them. And the beltway bandits are definitely feeling the pain. IMHO, before this recession ends, there will be layoffs of government employees, or, at the very least, a significant revision of their salary levels, PTO, and benefits. In all likelihood, there will be a lot more outsourcing of positions that were traditionally in-house (thus, putting an end to the pain of the beltway bandits, but not the people they hire. Think Walmart).
As for the RE market here, after a very slow 18 months, the market for lower-end “starter” homes ($100K-$300K) is picking up quite a bit, but not much else (in a few “inside the beltway” areas, starter homes are a little higher in price). There doesn’t seem to be a whole lot of actual money in this region – essentially, the “robust economy” I kept hearing about from 2002 thru 2006 was being fueled by high-end retail shopping, and purchases of luxury automobiles and second homes in many of our waterfront communities and nearby ski resorts (just like in several other areas of the country). If you have a home to sell that’s above $450K, you have to wait for the move-up buyer to sell their home first. The problem is that many of the move-up buyers can’t sell for a price that is even remotely competitive because they’ve stripped all the equity (and I’m talking 2004 or 2005 equity here) from their properties. So the same thing is happening here, just later than California, which is why I keep my eye on what’s happening in that part of the country.
The good news is that, if you were prudent back in 2002 or 2003, and rented instead of bought, you can now purchase a very nicely-appointed 3000 sf Chesapeake Bay-side house with fabulous views for $700K instead of the $1.5 mil it would have cost in 2006. And the prices are still going down, down, down.
Participant[quote=paramount][quote=sdrealtor]Just to clarify eavesdropper is in DC not San Diego. We have a very active RE market here, far more active than most places. There is huge demand here for well priced homes in any market, good or bad. That just isnt true in most markets across the US and I suspect DC might be one of those.[/quote]
I’d say the RE market in the DC area is “healthy” compared to most areas of the country including California – for one thing the unemployment rate in the DC area is among the lowest in the country.
The DC area is basically immune to recessions – that’s a dirty little beltway secret that’s not such a secret anymore.
Of course that low unemployment rate comes at the expense of the rest of the country since the vast majority of employment in the DC region is in the form of gov’t workers and beltway bandits.
That being said, I doubt there is a ‘huge’ demand even in the DC area. Will these realtor’s ever stop with the BS?[/quote]
Paramount, I don’t know if I’d go so far as to say that the DC area is recession-proof, even though there’s no question that there is one stable source of employment in the government. But there are a lot of residents in this region that aren’t government employees. A huge service industry, along with high-end retail, flourished in this region due to the presence of well-paid govt. employees, and there’s clear evidence that the recession is hurting them. And the beltway bandits are definitely feeling the pain. IMHO, before this recession ends, there will be layoffs of government employees, or, at the very least, a significant revision of their salary levels, PTO, and benefits. In all likelihood, there will be a lot more outsourcing of positions that were traditionally in-house (thus, putting an end to the pain of the beltway bandits, but not the people they hire. Think Walmart).
As for the RE market here, after a very slow 18 months, the market for lower-end “starter” homes ($100K-$300K) is picking up quite a bit, but not much else (in a few “inside the beltway” areas, starter homes are a little higher in price). There doesn’t seem to be a whole lot of actual money in this region – essentially, the “robust economy” I kept hearing about from 2002 thru 2006 was being fueled by high-end retail shopping, and purchases of luxury automobiles and second homes in many of our waterfront communities and nearby ski resorts (just like in several other areas of the country). If you have a home to sell that’s above $450K, you have to wait for the move-up buyer to sell their home first. The problem is that many of the move-up buyers can’t sell for a price that is even remotely competitive because they’ve stripped all the equity (and I’m talking 2004 or 2005 equity here) from their properties. So the same thing is happening here, just later than California, which is why I keep my eye on what’s happening in that part of the country.
The good news is that, if you were prudent back in 2002 or 2003, and rented instead of bought, you can now purchase a very nicely-appointed 3000 sf Chesapeake Bay-side house with fabulous views for $700K instead of the $1.5 mil it would have cost in 2006. And the prices are still going down, down, down.
Participant[quote=paramount][quote=sdrealtor]Just to clarify eavesdropper is in DC not San Diego. We have a very active RE market here, far more active than most places. There is huge demand here for well priced homes in any market, good or bad. That just isnt true in most markets across the US and I suspect DC might be one of those.[/quote]
I’d say the RE market in the DC area is “healthy” compared to most areas of the country including California – for one thing the unemployment rate in the DC area is among the lowest in the country.
The DC area is basically immune to recessions – that’s a dirty little beltway secret that’s not such a secret anymore.
Of course that low unemployment rate comes at the expense of the rest of the country since the vast majority of employment in the DC region is in the form of gov’t workers and beltway bandits.
That being said, I doubt there is a ‘huge’ demand even in the DC area. Will these realtor’s ever stop with the BS?[/quote]
Paramount, I don’t know if I’d go so far as to say that the DC area is recession-proof, even though there’s no question that there is one stable source of employment in the government. But there are a lot of residents in this region that aren’t government employees. A huge service industry, along with high-end retail, flourished in this region due to the presence of well-paid govt. employees, and there’s clear evidence that the recession is hurting them. And the beltway bandits are definitely feeling the pain. IMHO, before this recession ends, there will be layoffs of government employees, or, at the very least, a significant revision of their salary levels, PTO, and benefits. In all likelihood, there will be a lot more outsourcing of positions that were traditionally in-house (thus, putting an end to the pain of the beltway bandits, but not the people they hire. Think Walmart).
As for the RE market here, after a very slow 18 months, the market for lower-end “starter” homes ($100K-$300K) is picking up quite a bit, but not much else (in a few “inside the beltway” areas, starter homes are a little higher in price). There doesn’t seem to be a whole lot of actual money in this region – essentially, the “robust economy” I kept hearing about from 2002 thru 2006 was being fueled by high-end retail shopping, and purchases of luxury automobiles and second homes in many of our waterfront communities and nearby ski resorts (just like in several other areas of the country). If you have a home to sell that’s above $450K, you have to wait for the move-up buyer to sell their home first. The problem is that many of the move-up buyers can’t sell for a price that is even remotely competitive because they’ve stripped all the equity (and I’m talking 2004 or 2005 equity here) from their properties. So the same thing is happening here, just later than California, which is why I keep my eye on what’s happening in that part of the country.
The good news is that, if you were prudent back in 2002 or 2003, and rented instead of bought, you can now purchase a very nicely-appointed 3000 sf Chesapeake Bay-side house with fabulous views for $700K instead of the $1.5 mil it would have cost in 2006. And the prices are still going down, down, down.
Participant[quote=paramount][quote=sdrealtor]Just to clarify eavesdropper is in DC not San Diego. We have a very active RE market here, far more active than most places. There is huge demand here for well priced homes in any market, good or bad. That just isnt true in most markets across the US and I suspect DC might be one of those.[/quote]
I’d say the RE market in the DC area is “healthy” compared to most areas of the country including California – for one thing the unemployment rate in the DC area is among the lowest in the country.
The DC area is basically immune to recessions – that’s a dirty little beltway secret that’s not such a secret anymore.
Of course that low unemployment rate comes at the expense of the rest of the country since the vast majority of employment in the DC region is in the form of gov’t workers and beltway bandits.
That being said, I doubt there is a ‘huge’ demand even in the DC area. Will these realtor’s ever stop with the BS?[/quote]
Paramount, I don’t know if I’d go so far as to say that the DC area is recession-proof, even though there’s no question that there is one stable source of employment in the government. But there are a lot of residents in this region that aren’t government employees. A huge service industry, along with high-end retail, flourished in this region due to the presence of well-paid govt. employees, and there’s clear evidence that the recession is hurting them. And the beltway bandits are definitely feeling the pain. IMHO, before this recession ends, there will be layoffs of government employees, or, at the very least, a significant revision of their salary levels, PTO, and benefits. In all likelihood, there will be a lot more outsourcing of positions that were traditionally in-house (thus, putting an end to the pain of the beltway bandits, but not the people they hire. Think Walmart).
As for the RE market here, after a very slow 18 months, the market for lower-end “starter” homes ($100K-$300K) is picking up quite a bit, but not much else (in a few “inside the beltway” areas, starter homes are a little higher in price). There doesn’t seem to be a whole lot of actual money in this region – essentially, the “robust economy” I kept hearing about from 2002 thru 2006 was being fueled by high-end retail shopping, and purchases of luxury automobiles and second homes in many of our waterfront communities and nearby ski resorts (just like in several other areas of the country). If you have a home to sell that’s above $450K, you have to wait for the move-up buyer to sell their home first. The problem is that many of the move-up buyers can’t sell for a price that is even remotely competitive because they’ve stripped all the equity (and I’m talking 2004 or 2005 equity here) from their properties. So the same thing is happening here, just later than California, which is why I keep my eye on what’s happening in that part of the country.
The good news is that, if you were prudent back in 2002 or 2003, and rented instead of bought, you can now purchase a very nicely-appointed 3000 sf Chesapeake Bay-side house with fabulous views for $700K instead of the $1.5 mil it would have cost in 2006. And the prices are still going down, down, down.
Participant[quote=paramount][quote=sdrealtor]Just to clarify eavesdropper is in DC not San Diego. We have a very active RE market here, far more active than most places. There is huge demand here for well priced homes in any market, good or bad. That just isnt true in most markets across the US and I suspect DC might be one of those.[/quote]
I’d say the RE market in the DC area is “healthy” compared to most areas of the country including California – for one thing the unemployment rate in the DC area is among the lowest in the country.
The DC area is basically immune to recessions – that’s a dirty little beltway secret that’s not such a secret anymore.
Of course that low unemployment rate comes at the expense of the rest of the country since the vast majority of employment in the DC region is in the form of gov’t workers and beltway bandits.
That being said, I doubt there is a ‘huge’ demand even in the DC area. Will these realtor’s ever stop with the BS?[/quote]
Paramount, I don’t know if I’d go so far as to say that the DC area is recession-proof, even though there’s no question that there is one stable source of employment in the government. But there are a lot of residents in this region that aren’t government employees. A huge service industry, along with high-end retail, flourished in this region due to the presence of well-paid govt. employees, and there’s clear evidence that the recession is hurting them. And the beltway bandits are definitely feeling the pain. IMHO, before this recession ends, there will be layoffs of government employees, or, at the very least, a significant revision of their salary levels, PTO, and benefits. In all likelihood, there will be a lot more outsourcing of positions that were traditionally in-house (thus, putting an end to the pain of the beltway bandits, but not the people they hire. Think Walmart).
As for the RE market here, after a very slow 18 months, the market for lower-end “starter” homes ($100K-$300K) is picking up quite a bit, but not much else (in a few “inside the beltway” areas, starter homes are a little higher in price). There doesn’t seem to be a whole lot of actual money in this region – essentially, the “robust economy” I kept hearing about from 2002 thru 2006 was being fueled by high-end retail shopping, and purchases of luxury automobiles and second homes in many of our waterfront communities and nearby ski resorts (just like in several other areas of the country). If you have a home to sell that’s above $450K, you have to wait for the move-up buyer to sell their home first. The problem is that many of the move-up buyers can’t sell for a price that is even remotely competitive because they’ve stripped all the equity (and I’m talking 2004 or 2005 equity here) from their properties. So the same thing is happening here, just later than California, which is why I keep my eye on what’s happening in that part of the country.
The good news is that, if you were prudent back in 2002 or 2003, and rented instead of bought, you can now purchase a very nicely-appointed 3000 sf Chesapeake Bay-side house with fabulous views for $700K instead of the $1.5 mil it would have cost in 2006. And the prices are still going down, down, down.
Participant[quote=CA renter][quote=eavesdropper]
While I do firmly agree that the “worth” of a property is what someone is willing to pay, I don’t believe that this is the dynamic at work when a lender preemptively sets a price that is far below most of the recent sales in a neighborhood. And forcing appraisers to cherry pick sales is not a way to “normalize” the market – no more so than when it was done when prices were on the upswing.
[/quote]Trust me, if the house is worth $400K (or more) and the lenders are listing it for $300K, they will get multiple offers in the $375K to $425K range. I’ve seen this over and over and over again this past year. However, if the lenders are listing homes for $300K, and other hopeful sellers are listing for $450K (and not selling within the first 60 days), then it’s the lenders who are getting the prices right, while the “regular” sellers are having a difficult time coming to terms with the real market values of their houses.
[/quote]
CA renter, you are on the money with your statement about prices not being set correctly if there hasn’t been sale within 60 days, and I am in agreement 100%. It’s for that reason that I specified “recent sales” and not “recent listings” in my earlier post. Any lender, or realtor for that matter, who uses listing prices as setting the worth of a house isn’t doing their job. But it’s just not right when they’re setting prices well below recent sales. And they’re not getting multiple offers, either. Much of the DC market is priced well below what the SoCal market was. So a $450K house is definitely a “move-up” house for many people who live here, which means that people have to sell their existing houses first. And there’s not a lot of buyers around here with the funds to speculate on bargains. Our selling atmosphere is getting a little more brisk, but it’s not what yours is. It’s mostly centered on $150K to $300K properties, or on some of the late-constructed luxury developments $800K to $1.2 mil that were bought for top dollar as the market started to slide, resulting in lots of defaults.
The scenario I laid out in my post was not a personal experience, but has been taking place in a community near mine. I went through an experience that is more in line with what you’ve mentioned above. Our last child is in h.s., so we decided to downsize in Sept. 2007. We narrowed our search to an very popular upscale townhome development in a Chesapeake Bay community that was built in 2003. During the salad days of 2004 thru 2006, their prices rose from an avg of $400K to a high of $700K. It was Feb 2008 by the time our existing house was ready for the market, and it was the first time that people in this area were acknowledging a distinct downward trend in pricing (Sales of houses had definitely slowed over the prior year, but excuses for this abounded). My belief was that this “housing correction” was going to take several years, so I figured that we were going to take a hit on whatever we settled on. So I set about finding a development that had the best chance of recovering when prices began to rise again, and getting it for the lowest price possible. However, all of the 10 or 12 houses we looked at were listed at between $575K and $700K. A property came on the market listed at $495K. The seller, who had already started to construct a large luxury home a few miles away, obviously hadn’t gotten the memo that it was a buyer’s market, and it was a really tough fight to get him down to $465K. I’m pretty sure he set the price thinking that it would pull in multiple offers. The reason it didn’t was the same reason we slugged it in negotiations. An exhaustive search of the tax records revealed that out of 23 sales in the prior 18 months, 22 of them were below $523K in price. 19 of them were below $500K, and five sold for between $450K & $465K.
I don’t know if the reason that the listing prices were so much higher because sellers were insisting on it, or because the LAs hadn’t done their homework and, and as a result, had not advised their clients properly. All I know is that a lot of homes didn’t sell, and were back on the market a year later at the prices they should have been a year earlier. But, because prices had continued to slide, they were still chasing the market. Case in point: my neighbors. Gorgeous property, 3300 sf. Initially on market at $700K in summer of ’07. Down to $659K when we started looking in early ’08. Reduced to $600K in May ’08 when we bought. Got a contract, but sale fell thru in 8/08, because lender wouldn’t approve price (probably because ours had sold for $465K a few months earlier). House finally changed hands in October ’09 for a sale price of $500K.
I can’t speak for your area, or even most of the DC area, but I know that there’s been a ridiculous amount of talk about “what my house is worth” in my county (Maryland, 30 minutes east of downtown DC). I do know that there were a lot of HELOCs taken out in these parts, and people were using their mortgage amounts as estimates of “worth”. And still are, as you can see from UC Gal’s posting about the HGTV show, “Real Estate Intervention”. What’s happening is that they’re talking themselves straight into a short sale. In general, a lot of the residents here remain in serious denial about what’s happening in housing. It took me 3 years to convince my husband to move, but at least he saw the light before it got too far into the slide, and we managed to collect most of the “value” that had accrued in the aughts. But we made sure the house was model-perfect, and set a selling strategy with which we stuck, that included significant price reductions when indicated.
Participant[quote=CA renter][quote=eavesdropper]
While I do firmly agree that the “worth” of a property is what someone is willing to pay, I don’t believe that this is the dynamic at work when a lender preemptively sets a price that is far below most of the recent sales in a neighborhood. And forcing appraisers to cherry pick sales is not a way to “normalize” the market – no more so than when it was done when prices were on the upswing.
[/quote]Trust me, if the house is worth $400K (or more) and the lenders are listing it for $300K, they will get multiple offers in the $375K to $425K range. I’ve seen this over and over and over again this past year. However, if the lenders are listing homes for $300K, and other hopeful sellers are listing for $450K (and not selling within the first 60 days), then it’s the lenders who are getting the prices right, while the “regular” sellers are having a difficult time coming to terms with the real market values of their houses.
[/quote]
CA renter, you are on the money with your statement about prices not being set correctly if there hasn’t been sale within 60 days, and I am in agreement 100%. It’s for that reason that I specified “recent sales” and not “recent listings” in my earlier post. Any lender, or realtor for that matter, who uses listing prices as setting the worth of a house isn’t doing their job. But it’s just not right when they’re setting prices well below recent sales. And they’re not getting multiple offers, either. Much of the DC market is priced well below what the SoCal market was. So a $450K house is definitely a “move-up” house for many people who live here, which means that people have to sell their existing houses first. And there’s not a lot of buyers around here with the funds to speculate on bargains. Our selling atmosphere is getting a little more brisk, but it’s not what yours is. It’s mostly centered on $150K to $300K properties, or on some of the late-constructed luxury developments $800K to $1.2 mil that were bought for top dollar as the market started to slide, resulting in lots of defaults.
The scenario I laid out in my post was not a personal experience, but has been taking place in a community near mine. I went through an experience that is more in line with what you’ve mentioned above. Our last child is in h.s., so we decided to downsize in Sept. 2007. We narrowed our search to an very popular upscale townhome development in a Chesapeake Bay community that was built in 2003. During the salad days of 2004 thru 2006, their prices rose from an avg of $400K to a high of $700K. It was Feb 2008 by the time our existing house was ready for the market, and it was the first time that people in this area were acknowledging a distinct downward trend in pricing (Sales of houses had definitely slowed over the prior year, but excuses for this abounded). My belief was that this “housing correction” was going to take several years, so I figured that we were going to take a hit on whatever we settled on. So I set about finding a development that had the best chance of recovering when prices began to rise again, and getting it for the lowest price possible. However, all of the 10 or 12 houses we looked at were listed at between $575K and $700K. A property came on the market listed at $495K. The seller, who had already started to construct a large luxury home a few miles away, obviously hadn’t gotten the memo that it was a buyer’s market, and it was a really tough fight to get him down to $465K. I’m pretty sure he set the price thinking that it would pull in multiple offers. The reason it didn’t was the same reason we slugged it in negotiations. An exhaustive search of the tax records revealed that out of 23 sales in the prior 18 months, 22 of them were below $523K in price. 19 of them were below $500K, and five sold for between $450K & $465K.
I don’t know if the reason that the listing prices were so much higher because sellers were insisting on it, or because the LAs hadn’t done their homework and, and as a result, had not advised their clients properly. All I know is that a lot of homes didn’t sell, and were back on the market a year later at the prices they should have been a year earlier. But, because prices had continued to slide, they were still chasing the market. Case in point: my neighbors. Gorgeous property, 3300 sf. Initially on market at $700K in summer of ’07. Down to $659K when we started looking in early ’08. Reduced to $600K in May ’08 when we bought. Got a contract, but sale fell thru in 8/08, because lender wouldn’t approve price (probably because ours had sold for $465K a few months earlier). House finally changed hands in October ’09 for a sale price of $500K.
I can’t speak for your area, or even most of the DC area, but I know that there’s been a ridiculous amount of talk about “what my house is worth” in my county (Maryland, 30 minutes east of downtown DC). I do know that there were a lot of HELOCs taken out in these parts, and people were using their mortgage amounts as estimates of “worth”. And still are, as you can see from UC Gal’s posting about the HGTV show, “Real Estate Intervention”. What’s happening is that they’re talking themselves straight into a short sale. In general, a lot of the residents here remain in serious denial about what’s happening in housing. It took me 3 years to convince my husband to move, but at least he saw the light before it got too far into the slide, and we managed to collect most of the “value” that had accrued in the aughts. But we made sure the house was model-perfect, and set a selling strategy with which we stuck, that included significant price reductions when indicated.
Participant[quote=CA renter][quote=eavesdropper]
While I do firmly agree that the “worth” of a property is what someone is willing to pay, I don’t believe that this is the dynamic at work when a lender preemptively sets a price that is far below most of the recent sales in a neighborhood. And forcing appraisers to cherry pick sales is not a way to “normalize” the market – no more so than when it was done when prices were on the upswing.
[/quote]Trust me, if the house is worth $400K (or more) and the lenders are listing it for $300K, they will get multiple offers in the $375K to $425K range. I’ve seen this over and over and over again this past year. However, if the lenders are listing homes for $300K, and other hopeful sellers are listing for $450K (and not selling within the first 60 days), then it’s the lenders who are getting the prices right, while the “regular” sellers are having a difficult time coming to terms with the real market values of their houses.
[/quote]
CA renter, you are on the money with your statement about prices not being set correctly if there hasn’t been sale within 60 days, and I am in agreement 100%. It’s for that reason that I specified “recent sales” and not “recent listings” in my earlier post. Any lender, or realtor for that matter, who uses listing prices as setting the worth of a house isn’t doing their job. But it’s just not right when they’re setting prices well below recent sales. And they’re not getting multiple offers, either. Much of the DC market is priced well below what the SoCal market was. So a $450K house is definitely a “move-up” house for many people who live here, which means that people have to sell their existing houses first. And there’s not a lot of buyers around here with the funds to speculate on bargains. Our selling atmosphere is getting a little more brisk, but it’s not what yours is. It’s mostly centered on $150K to $300K properties, or on some of the late-constructed luxury developments $800K to $1.2 mil that were bought for top dollar as the market started to slide, resulting in lots of defaults.
The scenario I laid out in my post was not a personal experience, but has been taking place in a community near mine. I went through an experience that is more in line with what you’ve mentioned above. Our last child is in h.s., so we decided to downsize in Sept. 2007. We narrowed our search to an very popular upscale townhome development in a Chesapeake Bay community that was built in 2003. During the salad days of 2004 thru 2006, their prices rose from an avg of $400K to a high of $700K. It was Feb 2008 by the time our existing house was ready for the market, and it was the first time that people in this area were acknowledging a distinct downward trend in pricing (Sales of houses had definitely slowed over the prior year, but excuses for this abounded). My belief was that this “housing correction” was going to take several years, so I figured that we were going to take a hit on whatever we settled on. So I set about finding a development that had the best chance of recovering when prices began to rise again, and getting it for the lowest price possible. However, all of the 10 or 12 houses we looked at were listed at between $575K and $700K. A property came on the market listed at $495K. The seller, who had already started to construct a large luxury home a few miles away, obviously hadn’t gotten the memo that it was a buyer’s market, and it was a really tough fight to get him down to $465K. I’m pretty sure he set the price thinking that it would pull in multiple offers. The reason it didn’t was the same reason we slugged it in negotiations. An exhaustive search of the tax records revealed that out of 23 sales in the prior 18 months, 22 of them were below $523K in price. 19 of them were below $500K, and five sold for between $450K & $465K.
I don’t know if the reason that the listing prices were so much higher because sellers were insisting on it, or because the LAs hadn’t done their homework and, and as a result, had not advised their clients properly. All I know is that a lot of homes didn’t sell, and were back on the market a year later at the prices they should have been a year earlier. But, because prices had continued to slide, they were still chasing the market. Case in point: my neighbors. Gorgeous property, 3300 sf. Initially on market at $700K in summer of ’07. Down to $659K when we started looking in early ’08. Reduced to $600K in May ’08 when we bought. Got a contract, but sale fell thru in 8/08, because lender wouldn’t approve price (probably because ours had sold for $465K a few months earlier). House finally changed hands in October ’09 for a sale price of $500K.
I can’t speak for your area, or even most of the DC area, but I know that there’s been a ridiculous amount of talk about “what my house is worth” in my county (Maryland, 30 minutes east of downtown DC). I do know that there were a lot of HELOCs taken out in these parts, and people were using their mortgage amounts as estimates of “worth”. And still are, as you can see from UC Gal’s posting about the HGTV show, “Real Estate Intervention”. What’s happening is that they’re talking themselves straight into a short sale. In general, a lot of the residents here remain in serious denial about what’s happening in housing. It took me 3 years to convince my husband to move, but at least he saw the light before it got too far into the slide, and we managed to collect most of the “value” that had accrued in the aughts. But we made sure the house was model-perfect, and set a selling strategy with which we stuck, that included significant price reductions when indicated.
Participant[quote=CA renter][quote=eavesdropper]
While I do firmly agree that the “worth” of a property is what someone is willing to pay, I don’t believe that this is the dynamic at work when a lender preemptively sets a price that is far below most of the recent sales in a neighborhood. And forcing appraisers to cherry pick sales is not a way to “normalize” the market – no more so than when it was done when prices were on the upswing.
[/quote]Trust me, if the house is worth $400K (or more) and the lenders are listing it for $300K, they will get multiple offers in the $375K to $425K range. I’ve seen this over and over and over again this past year. However, if the lenders are listing homes for $300K, and other hopeful sellers are listing for $450K (and not selling within the first 60 days), then it’s the lenders who are getting the prices right, while the “regular” sellers are having a difficult time coming to terms with the real market values of their houses.
[/quote]
CA renter, you are on the money with your statement about prices not being set correctly if there hasn’t been sale within 60 days, and I am in agreement 100%. It’s for that reason that I specified “recent sales” and not “recent listings” in my earlier post. Any lender, or realtor for that matter, who uses listing prices as setting the worth of a house isn’t doing their job. But it’s just not right when they’re setting prices well below recent sales. And they’re not getting multiple offers, either. Much of the DC market is priced well below what the SoCal market was. So a $450K house is definitely a “move-up” house for many people who live here, which means that people have to sell their existing houses first. And there’s not a lot of buyers around here with the funds to speculate on bargains. Our selling atmosphere is getting a little more brisk, but it’s not what yours is. It’s mostly centered on $150K to $300K properties, or on some of the late-constructed luxury developments $800K to $1.2 mil that were bought for top dollar as the market started to slide, resulting in lots of defaults.
The scenario I laid out in my post was not a personal experience, but has been taking place in a community near mine. I went through an experience that is more in line with what you’ve mentioned above. Our last child is in h.s., so we decided to downsize in Sept. 2007. We narrowed our search to an very popular upscale townhome development in a Chesapeake Bay community that was built in 2003. During the salad days of 2004 thru 2006, their prices rose from an avg of $400K to a high of $700K. It was Feb 2008 by the time our existing house was ready for the market, and it was the first time that people in this area were acknowledging a distinct downward trend in pricing (Sales of houses had definitely slowed over the prior year, but excuses for this abounded). My belief was that this “housing correction” was going to take several years, so I figured that we were going to take a hit on whatever we settled on. So I set about finding a development that had the best chance of recovering when prices began to rise again, and getting it for the lowest price possible. However, all of the 10 or 12 houses we looked at were listed at between $575K and $700K. A property came on the market listed at $495K. The seller, who had already started to construct a large luxury home a few miles away, obviously hadn’t gotten the memo that it was a buyer’s market, and it was a really tough fight to get him down to $465K. I’m pretty sure he set the price thinking that it would pull in multiple offers. The reason it didn’t was the same reason we slugged it in negotiations. An exhaustive search of the tax records revealed that out of 23 sales in the prior 18 months, 22 of them were below $523K in price. 19 of them were below $500K, and five sold for between $450K & $465K.
I don’t know if the reason that the listing prices were so much higher because sellers were insisting on it, or because the LAs hadn’t done their homework and, and as a result, had not advised their clients properly. All I know is that a lot of homes didn’t sell, and were back on the market a year later at the prices they should have been a year earlier. But, because prices had continued to slide, they were still chasing the market. Case in point: my neighbors. Gorgeous property, 3300 sf. Initially on market at $700K in summer of ’07. Down to $659K when we started looking in early ’08. Reduced to $600K in May ’08 when we bought. Got a contract, but sale fell thru in 8/08, because lender wouldn’t approve price (probably because ours had sold for $465K a few months earlier). House finally changed hands in October ’09 for a sale price of $500K.
I can’t speak for your area, or even most of the DC area, but I know that there’s been a ridiculous amount of talk about “what my house is worth” in my county (Maryland, 30 minutes east of downtown DC). I do know that there were a lot of HELOCs taken out in these parts, and people were using their mortgage amounts as estimates of “worth”. And still are, as you can see from UC Gal’s posting about the HGTV show, “Real Estate Intervention”. What’s happening is that they’re talking themselves straight into a short sale. In general, a lot of the residents here remain in serious denial about what’s happening in housing. It took me 3 years to convince my husband to move, but at least he saw the light before it got too far into the slide, and we managed to collect most of the “value” that had accrued in the aughts. But we made sure the house was model-perfect, and set a selling strategy with which we stuck, that included significant price reductions when indicated.
Participant[quote=CA renter][quote=eavesdropper]
While I do firmly agree that the “worth” of a property is what someone is willing to pay, I don’t believe that this is the dynamic at work when a lender preemptively sets a price that is far below most of the recent sales in a neighborhood. And forcing appraisers to cherry pick sales is not a way to “normalize” the market – no more so than when it was done when prices were on the upswing.
[/quote]Trust me, if the house is worth $400K (or more) and the lenders are listing it for $300K, they will get multiple offers in the $375K to $425K range. I’ve seen this over and over and over again this past year. However, if the lenders are listing homes for $300K, and other hopeful sellers are listing for $450K (and not selling within the first 60 days), then it’s the lenders who are getting the prices right, while the “regular” sellers are having a difficult time coming to terms with the real market values of their houses.
[/quote]
CA renter, you are on the money with your statement about prices not being set correctly if there hasn’t been sale within 60 days, and I am in agreement 100%. It’s for that reason that I specified “recent sales” and not “recent listings” in my earlier post. Any lender, or realtor for that matter, who uses listing prices as setting the worth of a house isn’t doing their job. But it’s just not right when they’re setting prices well below recent sales. And they’re not getting multiple offers, either. Much of the DC market is priced well below what the SoCal market was. So a $450K house is definitely a “move-up” house for many people who live here, which means that people have to sell their existing houses first. And there’s not a lot of buyers around here with the funds to speculate on bargains. Our selling atmosphere is getting a little more brisk, but it’s not what yours is. It’s mostly centered on $150K to $300K properties, or on some of the late-constructed luxury developments $800K to $1.2 mil that were bought for top dollar as the market started to slide, resulting in lots of defaults.
The scenario I laid out in my post was not a personal experience, but has been taking place in a community near mine. I went through an experience that is more in line with what you’ve mentioned above. Our last child is in h.s., so we decided to downsize in Sept. 2007. We narrowed our search to an very popular upscale townhome development in a Chesapeake Bay community that was built in 2003. During the salad days of 2004 thru 2006, their prices rose from an avg of $400K to a high of $700K. It was Feb 2008 by the time our existing house was ready for the market, and it was the first time that people in this area were acknowledging a distinct downward trend in pricing (Sales of houses had definitely slowed over the prior year, but excuses for this abounded). My belief was that this “housing correction” was going to take several years, so I figured that we were going to take a hit on whatever we settled on. So I set about finding a development that had the best chance of recovering when prices began to rise again, and getting it for the lowest price possible. However, all of the 10 or 12 houses we looked at were listed at between $575K and $700K. A property came on the market listed at $495K. The seller, who had already started to construct a large luxury home a few miles away, obviously hadn’t gotten the memo that it was a buyer’s market, and it was a really tough fight to get him down to $465K. I’m pretty sure he set the price thinking that it would pull in multiple offers. The reason it didn’t was the same reason we slugged it in negotiations. An exhaustive search of the tax records revealed that out of 23 sales in the prior 18 months, 22 of them were below $523K in price. 19 of them were below $500K, and five sold for between $450K & $465K.
I don’t know if the reason that the listing prices were so much higher because sellers were insisting on it, or because the LAs hadn’t done their homework and, and as a result, had not advised their clients properly. All I know is that a lot of homes didn’t sell, and were back on the market a year later at the prices they should have been a year earlier. But, because prices had continued to slide, they were still chasing the market. Case in point: my neighbors. Gorgeous property, 3300 sf. Initially on market at $700K in summer of ’07. Down to $659K when we started looking in early ’08. Reduced to $600K in May ’08 when we bought. Got a contract, but sale fell thru in 8/08, because lender wouldn’t approve price (probably because ours had sold for $465K a few months earlier). House finally changed hands in October ’09 for a sale price of $500K.
I can’t speak for your area, or even most of the DC area, but I know that there’s been a ridiculous amount of talk about “what my house is worth” in my county (Maryland, 30 minutes east of downtown DC). I do know that there were a lot of HELOCs taken out in these parts, and people were using their mortgage amounts as estimates of “worth”. And still are, as you can see from UC Gal’s posting about the HGTV show, “Real Estate Intervention”. What’s happening is that they’re talking themselves straight into a short sale. In general, a lot of the residents here remain in serious denial about what’s happening in housing. It took me 3 years to convince my husband to move, but at least he saw the light before it got too far into the slide, and we managed to collect most of the “value” that had accrued in the aughts. But we made sure the house was model-perfect, and set a selling strategy with which we stuck, that included significant price reductions when indicated.
Participant[quote=UCGal][quote=eavesdropper]
But I digress. I really question whether she did, indeed, get her realtor’s license. Based on her mySpace page, and on her rambling manifesto, I find it very difficult to believe that she did pass the test.
[/quote]She got it. But isn’t using it.
http://www2.dre.ca.gov/PublicASP/pplinfo.asp?License_id=01845325
(You can get info about anyone who’s licensed by the state – contractors, realtors, architects, doctors, nurses, etc.)[/quote]
Thanks, UCGal. I am assuming that there are no essay questions on the test. I’m not saying that she wouldn’t be able to answer them. I’m just wondering who’d be able to score them.
Participant[quote=UCGal][quote=eavesdropper]
But I digress. I really question whether she did, indeed, get her realtor’s license. Based on her mySpace page, and on her rambling manifesto, I find it very difficult to believe that she did pass the test.
[/quote]She got it. But isn’t using it.
http://www2.dre.ca.gov/PublicASP/pplinfo.asp?License_id=01845325
(You can get info about anyone who’s licensed by the state – contractors, realtors, architects, doctors, nurses, etc.)[/quote]
Thanks, UCGal. I am assuming that there are no essay questions on the test. I’m not saying that she wouldn’t be able to answer them. I’m just wondering who’d be able to score them.
Participant[quote=UCGal][quote=eavesdropper]
But I digress. I really question whether she did, indeed, get her realtor’s license. Based on her mySpace page, and on her rambling manifesto, I find it very difficult to believe that she did pass the test.
[/quote]She got it. But isn’t using it.
http://www2.dre.ca.gov/PublicASP/pplinfo.asp?License_id=01845325
(You can get info about anyone who’s licensed by the state – contractors, realtors, architects, doctors, nurses, etc.)[/quote]
Thanks, UCGal. I am assuming that there are no essay questions on the test. I’m not saying that she wouldn’t be able to answer them. I’m just wondering who’d be able to score them.
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