The condo development 2020 Lofts which is located in Washington, DC at 2020 12th Street NW is infested by flippers.
A special thanks to one of my readers, DC Condo Watcher, who sent in this amazing picture of the lockboxes. Who wrote: "Just came back from a newer condo building on 2020 12th Street NW in DC. There were 18 lockboxes on two bars outside the building where real estate agents hang the lockboxes for condos on sale. There was no room left on the two bars so this particular condo that I was seeing actually had its lockbox directly on its door (to the actual condo unit inside the building). When walking down the hallway I noticed one more lockbox hanging off the door know of another unit. And that was walking down just one wing of this 12-14 story building. Therefore just extrapolating: 18 lockboxes outside, 2 on each floor of the 14 (28) = 46 units on sale in one building alone! This is much worse that I thought." There are 146 units in this building. Please note that not all these units are for sale. Lockboxes are also used to allow agents to show prospective renters units. Some of these units may be for rent.
The poster also visited one condo unit "2020 12th Street NW, the particular unit I saw was unit #T-10, a terrace level unit (which means it lies about 50% below grade - i.e., no sunlight). Just as astonishing is the number of units on sale at this building, is the astounding greed prevalent in the DC market."1BR, 1BA, terrace level (which means it's half below grade and you feel like you live in a basement - the windows are shorter than normal, and are located towards the upper part of the walls). It was 724 sq. ft., s a pretty decent size 1 br for DC.
It was never lived in, brand new, so the owner had change of circumstances or was an investor. everything in the condo was builder stock, so i am quite certain that the seller/owner did not spend any money to upgrade anything.
Oh yes, parking was included, but it conveys with the condo (as opposed to a deeded spot) - so the original $269K price came with parking as well. The building is definitely in an already gentrified area - it's just north of U street, so not as nice as your Dupont circle or Logan circle location, but still pretty good"
This unit was purchased in 9/2005 for $269K, and now the seller wants $395K. That approximates to a $126K profit (minus selling fees of 6%). I am certain that the owner did not put any money in the unit because it's brand new and advertised as "never lived in". I can tell that everything there was "stock". To see the Listing
Speculators have infested the condos at 2020 Lofts. Now, realizing that the market is changing, many of the speculators are now trying to sell. The peak prices were in in July 2005. The glut of condo inventory is already bringing prices down in the Washington, DC area. As the bubble continues to pop, condos prices are more vulnerable to large percentage price decreases then single family houses.
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Trying to make that much of a profit in under 4 months is excessive! It's good to know that blogs like this give those of us looking for affordable DC housing some insight into the market. I am going to wait a little longer; those greedy "investors" will panic and drop their prices even more.
ReplyDeleteI smell fear among the recent condo flippers. Those that bought 3 years ago can sell at a large profit.
ReplyDeleteLOL at 395K.
ReplyDeleteStill, an interesting part of the equation for these flippers must be the carrying costs for these things. If Joe Flipper in this case bought the place for 269, and holds it 4 months, besides all the closing costs he has to cover the cost of holding that thing for 4 months. If he has some kind of crazy mortgage with very little down, that cost could be quite substantial.
He may have to get like 300K just to break even.
"Those that bought 3 years ago can sell at a large profit."
ReplyDeleteI doubt many people bought condos three years ago. The bubble (in DC at least) was just getting started, and it was houses. Condos were still relatively reasonable then. Of course, there's even more now, but somehow these flippers want us to believe that higher supply means higher prices.
Yeah, there are tons of flippers in DC. Which explains why there are so many condo ads out there.
ReplyDeleteMy friend recently was handed a flyer for a condo off King St/Route 7 in Alexandria while he was in a shopping plaza(i think it's called Palazzo or something). I kid you not!
David, these are the articles I love about your site. I can go to many places online and get the same grim statistics, but your local perspective (DC/MD/VA) is great. Thanks and happy holidays (maybe I'll get a condo as a present for Xmas!!!).
Yeah I know where the Palazzo on Rt.7 is. It's pretty close to Park Center and two blocks away to 395 exit. I heard a year before that the penthouse unit there start from 900s and a 2-bedroom starts from 400s. I'm so happy to see those either "flippers" or "fools" get burnt.
ReplyDeleteCompare the monthly expense of one of these condos to renting.
ReplyDeleteYou have a 3-500 condo fee. Utilities. Taxes (which are higher because many jurisdictions tax landlords on profits but tax condo owners on the full property). Insurance. Maintenance.
Add all those up. It's almost the same as renting. And that's if you own it completely. If you're adding on to that a crazy loan.... it's even worse. Plus you're making a leveraged bet on DC real estate at a price peak.
And so many more condos coming on line in the DC area now.
I think condo prices have to come way down... down to levels many of these flippers may believe is impossible.
Here are some November stats of Nova from nvar. Active listings have gone up by 258.15% compared to November of last year. yikes!
ReplyDeletehttp://www.nvar.com/market/pressrelease/prnvnov05.html
I just "bailed" on a new condo purchase in Reston, VA. I had a 30K deposit tied up there for over two years. The construction was shoddy and the builder really cheaped-out on the finishes. It was promoted to be the most elegant building etc. - what a disappointment.
ReplyDeleteDue to my excellent lawyering, I was able to secure a total refund of all my deposits. I heard others were bullied into closing.
Anyway, lots of these units are for sale and nothing is moving. Am I just an idiot greedy flipper? I think not. I knew going in that if the market crashed that I would walk away from my deposit. Part of the cost of doing business. I have made plenty in real estate over the past 20yrs and you don't make money on every deal - not in real estate and not in any other investment.
When the market tanked in the early 90's it was the condos that fell the hardest. 40% declines were not unusual. I have no idea what will happen in the next few years- but I never buy anything where I am not making money (enough to weather a downturn) going in.
By the way, I am a long time investor. I have owned some of my properties over 15 years. I occasionally "flip" - if this makes any less disliked by most of the posters on this site.
Can you believe I was kicking myself for not buying at 2020 lofts. I was sooooo close to writing them a check. I live accross the street and am glad I did not jump in.
ReplyDeleteI live in the middle of montgomery county. I have no idea what the market is doing here because none of my neighbors are selling. The turnover rate in my neighborhood is very low.
ReplyDeleteAs long as people are willing to pay exhorbitant prices, sellers will be willing to sell to them. I don't blame the flippers for the high prices; I blame the morons who pay what they ask.
I was looking (for fun, NOT to buy!) at an open house on 10th & V NW, near the 2020 lofts, but farther from the metro and closer to the gentrification border.
ReplyDeleteIn any case those condos were the most absurdly priced I've seen in my many visits to condos--2Br/1BA for $650+. The realtor giving the open house actually cited the 2020 Lofts, as in "The 2020 Lofts are completely sold out. Buy now before prices go up more!".
I said, "have you seen the lockboxes around back? Everybody is selling, not buying, the 2020's." He had no answer.
Also, the lockboxes in your picture may not be all of them--I've seen 20+ at a different location. I'll check and send a picture if they're still there.
This same type of thing is predicted to happen here in Utah within the next 10 years. It is a bit scary to see results like this but I guess I still have a few years before I need to worry about it...
ReplyDeletewell... I definitely agree with everyone who is saying that the speculators are getting burned in the 2020 lofts.
ReplyDeleteMy partner and I actually just purchased a unit in there (to live in) for a decent price -- then again, we paid more than 100k less than the original asking price -- given how much we saw they had paid for the unit and the financing they obtained to flip it -- at best they're going to break even... at worst, well we'll just leave it at that.
glad i found this blog. these flippers make me sick. lots of states have laws against this and DC should too.
ReplyDeletewe bought from a flipper (didn't want to, but we needed housing and wanted something new, so we had little choice).
the guy made at about 170K off us. and he only took posession (thus payment) 5 months prior.
greed is HUGE here.