The rowhouse located at 1817 D Street SE is being offered at 599K.
"Very nicely done! SemiDetached Federal Porchfront, 3 Bdrms, 2 full baths, kitchen to dream for, granite counters, stainless steel appliances, hardwood floors, finished basement, Parking. DEEP SIDE YARD. Renovated masterfully by a fabulous contractor of quality and style"
The MLS number is DC5419847. For pictures of the gorgeous interior go to Prudential Carruthers Realtors and type in the MLS number.
The area is really the gentrification frontier. It is about 3 blocks from the Stadium-Armory Metro station.
The owners bought the place 04/25/2005 for 366K. They spent a huge amount on renovating it. Perhaps 75K - 125K. They are trying to sell it for 599k. Huge potential profit in a small time.
Will it sell at this price?
NOPE.
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The houses in SE were designed for the middle and working class, probably back in the 1950s and earlier.
ReplyDeleteThat's not a bad middle class starter home, if the neighborhood is nice and the inside is renovated. If so, it might be worth $150K.
I think they might be able to get 450K.
ReplyDelete600K is out of the question.
Greed, pure greed. Now we get to see the battle between greed and fear as the market has turned...
ReplyDeleteOK folks, now you are slamming on my neighborhood :)
ReplyDeleteThese houses are all about 100 years old. They were indeed built for middle and working class people. David posted a Walter Street house here, too. That is a one-block street that is lined with tiny row houses that were built for the household help - the maids and gardeners that supported the middle class a century ago. Thus endeth the history lesson. Oh, by the way, they are all outrageously overpriced when compared to the local rental market. This is still a "transitional" neighborhood - people are leary of renting here because it's "not really safe." Funny the same people will borrow a fortune to buy - why? Because they think prices will go even higher. Unless, the bubble pops...
"I think they might be able to get 450K"
ReplyDeleteReally? Why?
Personally, I wouldn't pay anywhere near that much.
There are enough 'fools' out there who are willing to buy at 'reduced' prices ( ie from the 599K). 450K is not that much when you get a toxic mortgage. It has much gentrification potential.
ReplyDeleteDavid: I think you are missing something in your thought process. I don't mean to be critical, just want to point something out that I think is important.
ReplyDeleteFirst, I've commented on some of your posts anonymously (because I'm techno-challenged and can't seem to get a user name and password going...) Anyway, the part of Capitol Hill these houses are in is indeed "transitional." House sale prices (and asking prices) are approaching those in, say, Glover Park, north of Georgetown. And this is the important point - when the bubble pops, these "transitionally located" houses will be the last ones in DC to recover.
Why? Take the Glover Park example. That is an absolutely solid, middle and upper middle class (more upper than middle) neighborhood. Though it is no more or less susceptible to the bubble mania, should (when) prices collapse, Glover Park will not subject to the same sort of blight as eastern Capitol Hill. These Hill houses are a stone's throw from chronically poor, public housing projects that are not going anywhere soon. There are many "old school" families left in the neighborhood as well. And what I mean by that is famillies without well-socialized and supported adolescent children - potential trouble should the community/political will that keeps things under control weaken.
What I am saying is that marginal neighborhoods like this one (and I live there and like it, so I am not some suburban 'fraidy-cat or snob), will probably get hammered, and will stay down for a long time. When rationality returns to the housing market, people will figure out they can buy a row house in, say, Glover Park, for the same price as in eastern Capitol Hill. Those buyers will not be subject to the mania, or the panic, and figure out (rationally) that they can live in neighborhoods with safer streets and vastly better developed retail amenities - this is no small thing. My friends in "better" neighborhoods are aghast when I tell them I have to push my milk money underneath three inch-thick, bulletproof glass to make the purchase at my local market. Oh, and I don't go to the store with any more cash than I absolutely need to make a purchase to begin with :) What rational person pays $600,000 for a row house in this environment?
My point is that when this thing blows up, people who have bought late in the cycle, on the urban fringe, are going to get hurt the worst. People that bought early, and have cashed out, made HUGE money, far more than anyone in Glover Park has. It's the old risk/reward equation, and the risk is now exceedingly high.
Thanks again, David, for the excellent blog!!
Anon 9:06,
ReplyDeleteI agree with what most of what you say.
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"House sale prices (and asking prices) are approaching those in, say, Glover Park, north of Georgetown."
Wouldn't a house like this in Glover Park be at least 100K more?
Also this house is over priced compared to other asking prices for similiar houses in this neighborhood.
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Indeed when the bubble pops the prices in these trasitional ( fronteir) neighbrohoods will fall much more then the traditional neighborhoods. However, in this post I was focusing on this particular house and its price and its location and not what will happen after the bubble pops.
Thanks for the well written comments. I will devote a post in the future to the points you make.
David
David - Undertood. I think I misundertood one of your comments - you were talking about a "fool," not about value. My apologies.
ReplyDeleteAlso, if you sniff around Glover Park I bet you could find a house comparable to the D Street house, in the 600K range - not that much of a stretch in a 6% mortgage market.
It really depends on the transitional neighborhood and its location. Transitional neighborhoods located close to U St., for example, might do better than remote eastern Capitol Hill. You can get massive increases in size and decreaes in price in Shaw and LeDroit Park, which are walking distance to other areas where very small 900 sq. ft. condos are going for huge amounts of money and also in close proximity to entertainment hubs. In some areas, the dividing line between the two markets is literally the matter of a few blocks.
ReplyDeleteFor each neighborhood, it depends on whether there is an equivalently priced substitution neighborhood that is better. For those willing to live remote Capitol Hill, I suppose its plausible Glover Park would be a substitute. But for those wanting to live close to city center, there may be parts of Shaw, Ledroit, Columbia Heights that meet the bill but are priced much better than nearby areas. People wanting to live in U may not want to live in Glover Park. Hence, these neighborhoods may stand a better chance of retaining value--or even benefitting from buyers who are priced out of closely adjacent parts of town.
The same might hold for Capitol Hill: I imagine Lincoln Park will retain prices better than other areas, for example, given the progression of gentrification, and its relative location.