Sunday, January 29, 2006

Update II: 716 5th Street ,NE - Reduced Again

The large renovated rowhouse located at 716 5th Street ,NE in Washington, DC has still not sold. Originally it was listed at 975K, then reduced to 925K, and now it has been reduced once more to 850K.

Original Bubble Meter Post (9/25/05)

Updated Bubble Meter Post (12/29/05)

Latest Craigslist Post

The Craigslist Post reads "PEN HOUSE, SUNDAY, JANUARY 29 2PM - 4 PM
SUCH A STEAL! This 6 BR, renovated home has mulitple bedrooms, parking, granite kitchen, original floors, and a 1 BR rental in basement. If you need the room, this house has it! Central Air, Radiator Heat, 3.5 baths, private patio, and room, room, room, ROOM! Right off of H street, where the next big renaissance is happening ( check out all the new business/ residential/ community plans!) REDUCED TO $850,000. Per Square Foot, THIS is the BEST VALUE ON THE HILL! "

So will it sell at the reduced price of 850K?

Possibly. I bet the reat estate agent is becoming increasingly desperate to sell this property.

The weird thing is this property is being listed by THE SMITH BROTHERS REALTORS who are the same people who listed the property at 1817 D Street SE (see below post). These properties are in nearby neighborhoods. This property was reduced a significant 75K ( from 925K to 850K), in contrast to the other property that was reduced a mere 9K ( from 599K to 590K).

9 comments:

  1. I don't know. The issue isn't just the size of the reduction, but how close it is to "true value," which will eventually reassert itself.

    In other words, if this thing was worth a lot less than 950 a few years ago (I don't know- I am making that up just as a hypothetical example) and is now listed at 850 reduced from 950, it still could have a long way down to go.

    It will be interesting to see.

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  2. high drops more than low end..till high drops spook low end and lo and behild, all prices start falling 2-30%...And panic sets in.

    Fair price for this monster: 500,000 k. No more.

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  3. I think one of the other previous stories says that the house last sold for 550,000 (I could be wrong).

    If its last sale, within a few years ago, was for 550,000, then 850,000 is hardly a reasonable price now. Rents in the DC area have not gone up that much. While 75,000 is a serious reduction, I would think it could be only the first of several.

    And that is assuming that 550,000 was a reasonable price in the first place. Maybe the palce is worth even less than that. After all, the median income in DC is something in the area of 50-100,000 bucks a year. So that could mean that either this is a really high end house or else it has a long way down to go.

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  4. Think it is reasonable to assume that the appreciation of the past 5 or 6 years has been totally hallucinatory and will be wiped out.

    If a home sold for 200K in '97 and now is on the market for 900K, how would anything below a 500K reduction (back to 400K AP) make sense?

    That's what I'm looking for: total wipeout.

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  5. No way you'll find that type of reduction. There is too much demand around here. And there are plenty of people with the kind of money to purchase something like this, especially in a low rate environment like we have now.

    I do believe some properties are overvalued, mostly suburban condo units, but you can't take a unit like this (in an improving neighborhood, probably renovated) and say it must be overvalued by 40% just because it may have sold for $xxx 10 years ago.

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  6. Do I get his hat with the sale?

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  7. Looking for a wipeout down to 97 prices may be too much. But as a renter in the DC area, I can assure you that rents in this area have gone up at a very reasonable rate the last 6 years. There has been some increase due to increased occupancy, which probably reflects the increased jobs in the DC area. But nothing like the increase in house prices.

    What a lot of these people new to the DC area don't realize is that

    (1) when government contracts, (and it does sometimes), DC jobs disappear. Yes, DC does have recessions (I have actually heard newbies assure me it does not- I grew up here, let me assure you that it DOES).

    (2) there are a lot of hardcore criminals, and potential hardcore criminals, in the DC area. When you buy a house in a "renovating" area, you are usually buying a house in an area that was unbelievably violent 10-20 years ago. Those people, and their kids, are often still in the area. Yes, the area may become nice. It could also go back to what it was.

    (3) newbies have no loyalty to the area. They will leave at the first sign of trouble. Some of these neighborhoods could collapse quickly. I have seen loyal, long-term residents leave the area even though they fought hard to stay- but it just became too dangerous. What will these yuppie, late-drinking newbies do when the neighborhood shows a few signs of trouble? Run.

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  8. Some interesting comments here - I in fact looked at a house on 5th Street, about a block from this one, in the year 2000. It was a three-story house with an unfinished basement. It was huge, and needed a gut renovation. The asking price at that time was $70,000. Now, the house David has posted is about a half-block south of H Street, NE. The house I looked at was a half-block north. H Street is generally (at least historically) considered "the railroad tracks," neighborhood wise. At the time I was looking, a good quality gut renovation would have cost about 150K. So, in 2000, a house this size, fully revovated, would have been valued at between 250-300k, depending on which side of the "tracks" it was on. I would characterize the neighborhood, in 2000, as dangerous. Everyone I know that lived there got mugged - it was part of the "cost of living." It has gotten significantly better, but is still rough when compared to other parts of the District.

    The house David has posted MIGHT bring $3000 in rent. $2,500 is more like it. So 500K is probably fair, given the size of the thing as advertised. Keep in mind, that many of these places are advertised with "stunning renovations," but when you go and look you find new paint and cheap Home Depot linoleum roled over hardwood floors. In short, the place may actually look more like the Little Rascals' clubhouse than a proper Victorian rowhouse.

    The point is, it is outrageous to pay 900K for a place like this, but a long-time owner is entitled to a premium due to overall improvement to the neighborhood.

    That these guys are willing to cut their price significantly, this early in the game, suggests they will get out fairly high. We'll see.

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  9. The price reductions reflect poorly on the house. If I were to bid on this house, hopefully never because of the crime in the area, I would offer much less than the asking price.

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