Sunday, April 23, 2006

Mention in the Washington Post

The Bubble Meter Blog was mentioned in a front page article in today's Washington Post. The article is titled 'Doors Close for Real Estate Speculators'. Kirsten Downey, the Washington Post reporter, did a phenomenal job reporting on the speculative episode that is occurring in the metro Washington, DC housing market. Read the article; not just because she mentioned my blog.
Some projects became particular investor magnets, and, more recently, the subject of real estate blogs criticizing speculative excesses. For example, the local Internet blog Bubble Meter focused last month on what it called "the bubblicious bench." At one recently completed condominium called the Halstead at Dunn Loring, a luxury condominium complex in Fairfax County, a park bench outside the building bristles with real estate agent lockboxes to permit vacant units to be shown to prospective buyers or renters. On a recent morning, there were 49 lockboxes there, outside a building that has about 200 units.
Thanks for the mention in the Washington Post. It feels great to be mentioned. :-)

Bubblicious Bench & Flippers (3/26/06)

Thanks to all the readers who informed and congratulated me on the Washington Post article. You all rock.

Bubble Meter will continue fighting the good fight!

12 comments:

  1. Stay tuned. Lots of posts planned for this week.

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  2. The author of this Post article may be diligent and hard working, but she's not terribly bright. This sentence makes absolutely no sense:

    Unlike with stocks or bonds, which can simply be sold, a seller of real estate has to find a willing buyer or renter because a mortgage obligates the owner regardless of the value of the asset.

    What do you think happens when you sell a stock or bond? Someone buys it. You cannot sell something (stock, bond, house, condo, etc.) without finding a buyer for it. Hence, the first part of this sentence makes absolutely no sense. At all. Frankly, it's embarrassing that this would be published in the Post.

    The second part of the sentence is a bit more interesting, but is completely unrelated to the first part. In the second part, she notes that the leverage used to buy real estate exposes purchasers to obligations that are not relevant when something is purchased in full as often happens with a stock or bond. However, if you buy a stock or bond on margin, then you face the same potential risk that the author points out in this sentence.

    This is neither here nor there for the main content of the article (which is fascinating), but I wish that newspaper reporters would take some econ classes before writing this garbage.

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  3. woohoo! Keep up the great work David! Maybe they should just be cross linking to your blog for their news? It would be a great improvement in my opinion.

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  4. Dumbcompany - of course you need a buyer for a stock, but the point is that they're essentially liquid, and hanging on to a stock is not in itself expensive. Hanging on to a mortgage, however, is. And since each residence is different, they're not commodities, and therefore you can't always find a buyer willing to take it off your hands immediately at some price (with market prices set by a few dozen to a few million trades per day of the exact same item.)

    Of course you already know this if you've taken any econ courses, and you already know the difference between real liquidity and not. So why are you getting on her for a less-than-clear sentence?

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  5. I am one of David's devoted citizen reporters. I may have actually been the origin of the bubblicious bench photo, as I forwarded him the pic from my phone several months ago. I also provided an update on the Halstead several weeks ago which included an accurate unit count for the Halstead development. Well, I visited once again this past weekend to show my parents (who were visiting) several condo developments in the area. The Halstead was on my list.

    Well, on Saturday, we stopped in for a visit. On prior visits, there had been a bevy of nervous owners eagerly waiting in the lobby for folks to enter, so they could show their units. Both times I had previously entered the building, I had been met immediately inside the door. This time was quite different. Upon entering the lobby, we were met by a single security guard. I stated that we were interested in a 2 bedroom, and asked if the person that showed units was available. The guard responded that the guy in charge of that had "stepped out". So...I took my parents around to the various amenities of the building, under the steady gaze of the quite unfriendly security guard.

    Upon returning to the lobby, I asked the guard whether "the guy" had returned...and he hadn't, so we thanked him and left. What to make of this?

    My take is that the owners/builder/developer is trying to crack down on owners renting/re-selling units until after the second phase of the development hits the market, as they likely still have some VERY nervous owners who have not yet closed on their units in the second half of the development.

    It is likely that they saw the article on Saturday and hired the security guard to help in their effort to limit additional scrutiny until after the construction has been completed.

    Also of interest, in a tour of Westbriar condos (which is directly across the street from the Dunn Loring metro), I found out that the agent that was escorting us around THAT development was the lender's liquidating agent. The development had actually gone into foreclosure several years ago, and construction had been frozen. They are trying REALLY hard to unload their last few units to bagholders so they can finally get that pig out of their portfolio.

    My suspicion is that the Halstead folks are aware of those circumstances and are getting quite nervous about owners int he second bulding who have NOT taken delivery changing their minds and backing out of their sales contracts. If that happens, they may well face a similar fate.

    (David, sorry for such a long comment on your bandwidth. Love your blog and love the discussion here.)

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  6. mjh,

    Thanks for your very valuable comments and information that your provide. The Halstead at Dunn Loring is now ground zero for the bubblicious condo market in the DC area. I am sure the developers just love this blog and you. Keep up the outstanding citizen reporting.

    David

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  7. Thanks, thanks, thanks to the Post for finally picking up the ball and running with it. The folks on the blogs and at CL have been wondering for months why the press was seemingly ignoring the obvious problems in the DC housing market. Better late than never! Thanks to K. Downey (who I'm sure will get a lot of hate emails from flippers for telling the truth) and thanks most of all to David and the citizen reporters on this blog. It was a great article. And front page nonetheless!

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  8. " Thanks to K. Downey (who I'm sure will get a lot of hate emails from flippers for telling the truth) and thanks most of all to David and the citizen reporters on this blog. It was a great article. And front page nonetheless! "

    Amen John. Well put. I sent the reporter a thank you email as suggested by reader Dorothea.

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  9. I lived about a mile from the bubblicious bench 14 years ago and got burned by the last DC-area housing bubble. I bought a condo in 1992 at the peak of the last one, was forced to sell (due to a divorce) a year later and took a 7% loss . . . of course on top of having paid on a traditional mortgage that is mostly interest in the first few years, as well as condo fees.

    Ultimately I lost a small fortune.

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  10. On the one hand, I congratulate the Post for finally addressing the real estate issue. But, it is long overdue. The lack of reporting was getting embarrassing - inventories up 500% in some counties and no story?! That was negligent.

    Maybe I just missed it but I also have not heard any comments on the story that ran last week (in the Post Business section)? It was a fluff piece that basically said "no one really knows where real estate is going." (Link below)

    http://www.washingtonpost.com/wp-dyn/content/article/2006/04/19/AR2006041902320.html

    Also of interest - anyone else notice how neither story was in the real estate section? One was business and the other, front page. Sort of an anything to avoid being next to all those ads for new homes….

    IMO, the Post still has a long way to go.

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  11. I saw that article on Saturday. Congrats on the mention. Now that the Post is on this, we know that the demise of the bubble is truly imminent. Now the masses have all the information they need to completely finish this bubble.

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  12. Do not support lib pressMay 15, 2006 1:56 PM

    "On the one hand, I congratulate the Post for finally addressing the real estate issue. But, it is long overdue. The lack of reporting was getting embarrassing - inventories up 500% in some counties and no story?! That was negligent."

    The press is still focused on their bigger agenda of regime change. The Sunday AM TV talk shows are focused on some database of phone calls (I think it is a good idea. If they catch Habib making trouble who was he calling?), and having a military presence to help gaurd our borders from illegal invasion. Real estate bubble, potential for national recession due to low employment and busting the banks - not yet news. they will be driving via the rear view mirror on that one.

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