Monday, July 24, 2006

Condo News

Chicago: Condo market feels a chill
Washington: Who'd Want To Live There?
San Deigo: Condo Conversion-Conversions
Posted by David at 7:08 PM

69 comments:

  1. DavidJuly 24, 2006 5:20 PM

    "I understand it's your blog. However, by limiting speech you run the risk of driving traffic away. You should delete the comments instead of closing the entire discussion if you feel so compelled."

    Fair point. :-) I don't have time right now to delete all the obnoxious comments that were popping up in the thread.

    ReplyDelete
  2. AnonymousJuly 24, 2006 5:59 PM

    Its Abdo's money; he's either a genius or a fool. He's proven to be the former on all of his past projects. The people of this country should thank him for the role he's played in turning our nation's capital around.

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  3. DavidJuly 24, 2006 6:11 PM

    "Its Abdo's money; he's either a genius or a fool"

    200K + for a studio there? yikes

    ReplyDelete
  4. AnonymousJuly 24, 2006 6:40 PM

    David,

    We are all adults here. I think we can read the comments and "edit" them for ourselves.

    ReplyDelete
  5. AnonymousJuly 24, 2006 7:36 PM

    I am relatively new to this blog but I feel that some filtering and moderating is necessary to have a decent dialog. Otherwise the comments section will degenerate to the lowest common denominator or be filled up with spam and infuriating troll comments with graphic language and personal insults, obnoxious hacks, etc., etc. I should know, I sometimes give in to the temptation to do this myself. However, to be fair, a sincere contrarian case should be allowed. As long as everyone knows the rules I don't see the problem.

    ReplyDelete
  6. LanceJuly 24, 2006 8:24 PM

    His idea is pure genius. He's basically creating a wholly self-functioning new neighborhood for people who want to near the city's attractions but can't afford the already gentrified areas and won't buy in a transitional neighborhood. Centrally-located, clean, safe, and most importantly cheap! It'll never be another Logan Circle or Georgetown, but this city needs more affordable housing like this for the middleclass that is otherwise being priced out of areas they would find attractive.
    Another hot area where I heard he is involved is the H Street NE corridor where lots of players are buying up properties with the intention of creating a new Logan Circle-type area. Personally, if I were cash strapped, I'd take the H Street cooridor over this Bladensburg Road development, but that is because I like old houses. Not everyone does.

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  7. LanceJuly 24, 2006 8:30 PM

    David said...
    "200K + for a studio there? yikes"

    LOL ... David, just take the last zero off of the price ... it'll make it more palatable ... that's what I did when I was looking last year ... By doing so, I was looking at 1980s prices again and better able to compare areas/houses/etc. I know, you're thinking ... "but the price is 10 times higher!" .. yeah, but in real dollar terms, the monthly payments on these houses today are no higher than they were 20 years ago due to (1) the difference in interest rates between then and now (6% in 2005 when I bought vs 20% in early 80s) and (2) of course wages are higher too. So, when you think about it, offering a studio so close to the action for only "20 grand" is pretty affordable when most District condos are selling for closer to "50 grand"!

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  8. LanceJuly 24, 2006 8:32 PM

    btw, i know i'm gonna get flack from those bubbleheads that refuse to "think outside of the box" ... and are still waiting to buy that first home ...

    ReplyDelete
  9. DavidJuly 24, 2006 8:38 PM

    Lance,

    "but this city needs more affordable housing like this for the middleclass "

    199K+ for a studio in a sketchy neighborhood is NOT affordable.

    ReplyDelete
  10. DavidJuly 24, 2006 8:40 PM

    Lance wrote: "LOL ... David, just take the last zero off of the price ... it'll make it more palatable ... that's what I did when I was looking last year ..."

    This is very ridiculous. Then I'll also take a 0 off of my salary. Ouch.

    ReplyDelete
  11. AnonymousJuly 24, 2006 9:17 PM

    Lance wrote: "LOL ... David, just take the last zero off of the price ... it'll make it more palatable ... that's what I did when I was looking last year ..."


    this may be the most bizzare thing i have ever read on any blog ever??

    :wtf:

    and i swear when you are upside down on your mortgage (by a lot) you best not be the one whinning for a government bailout..

    i can hear it now "but the appraisal said it was worth 700K wha wha, but but what do you mean my ARM is resetting,, wha wha...what do you mean i can't refi unless i bring 200K to the signing , wha wha but but my realtor said prices would just level off, wha wha.

    :lol:

    ReplyDelete
  12. AnonymousJuly 24, 2006 9:21 PM

    "spam and infuriating troll comments with graphic language and personal insults, obnoxious hacks, etc., etc. I should know, I sometimes give in to the temptation to do this myself."

    Freakin Hilarious!

    ReplyDelete
  13. AnonymousJuly 24, 2006 9:23 PM

    from the Washington article:

    Abdo's competitors in an increasingly skittish industry, city planners and Mayor Anthony A. Williams -- a close friend -- are paying more attention than ever to the 46-year-old developer, who arrived in Washington from South Carolina 14 years ago.

    if i was the Mayor i would start to distance myself from this guy a.s.a.f.p.

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  14. AnonymousJuly 24, 2006 9:26 PM

    a quick question for Lance (who seems to be a self proclaimed RE expert)

    lets say i owe 600K and values plummet and i just walk away (which is what EVERYBODY DOES HERE IN SOCAL) and the bank takes the property and sells it at a fire sale for 400K, a 200K shortfall.

    what happens next cause i sure don't have 200K???

    TIA.

    ReplyDelete
  15. AnonymousJuly 24, 2006 9:27 PM

    Thank you David for stating "199K+ for a studio in a sketchy neighborhood is NOT affordable". How do people who make $30k or $40k a year afford to make mortgage payment let alone shop at those high-end retails Adbo is trying to bring is beyond me.

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  16. AnonymousJuly 24, 2006 9:31 PM

    "if i was the Mayor i would start to distance myself from this guy a.s.a.f.p. "

    You guys have me rolling tonight!

    ReplyDelete
  17. AnonymousJuly 24, 2006 9:34 PM

    All this bubble talk is starting to scare me...

    ReplyDelete
  18. John FontainJuly 24, 2006 9:46 PM

    lance said - "Centrally-located, clean, safe, and most importantly cheap!"

    Funny, cause it's none of those things.

    Thats a horrible area for the whole foods crowd. Not safe at all. Violent crimes, drug dealing, etc. That project may prove to be Addo's undoing.

    Its easy to look like a genius in a bull market. Let's see how well he fares in rougher weather.

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  19. AnonymousJuly 24, 2006 10:01 PM

    I think both the bubbleheads and Abdo might be right on this one.

    Abdo bought a bunch of land in 1992, back when even DuPont Circle was practically unliveable. DC house prices slid down for 6 years after that, but Abdo's approach still paid off.

    I can easily forsee a steep tumble in DC housing prices over the next few years, and the areas that Abdo's developing being very nice places in 10-15 years.

    Of course, Abdo also reminds me of the analogy I've heard between entrepreneurs and NFL cornerbacks. Every cornerback thinks they can take on a wide receiver one-on-one, even though it's impossible.

    ReplyDelete
  20. LanceJuly 24, 2006 10:18 PM

    This comment has been removed by a blog administrator.

    ReplyDelete
  21. LanceJuly 24, 2006 10:23 PM

    Anonymous said...
    "a quick question for Lance (who seems to be a self proclaimed RE expert)

    lets say i owe 600K and values plummet and i just walk away (which is what EVERYBODY DOES HERE IN SOCAL) and the bank takes the property and sells it at a fire sale for 400K, a 200K shortfall.

    what happens next cause i sure don't have 200K???

    TIA."

    Short answer: it's not gonna happen, especially not in an area with a thriving economy like southern California. Longer answer: What do you care what values do? You bought the house to live in, right? And you got qualified when you took the loan out ... so even if you happen to have an ARM, don't worry you can afford it. Even longer answer: I know a troll question when I see one. Which of you bubbleheads wrote this one?

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  22. AnonymousJuly 24, 2006 10:27 PM

    the bank can and will 1099 you for what the difference is, i've seen this happen first hand.

    the bank knows you don't have that kind of money so for them it's just a write off and it's called "foregiveness of debt" look it up.

    somebody that seems so bullish on RE who doesn't know this is VERY SCARY!!!!

    that was a bit of a trick question cause i knew you didn't know the answer just like this guy i met who's wife is in RE (they own 3 houses..so much for that "damand" huh!!!) for the last 5 years which will go down in history as the best 5 ever.....much like the florida land grab of the 20's.


    and yes people will be underwater to the tune of 200K last "correction" was 40% off the peak...do the math.


    p.s. socal economy is booming BECAUSE OF REALESTATE. my god are you in for a shock.

    ReplyDelete
  23. AnonymousJuly 24, 2006 10:35 PM

    Short answer: it's not gonna happen, especially not in an area with a thriving economy like southern California. Longer answer: What do you care what values do? You bought the house to live in, right? And you got qualified when you took the loan out ... so even if you happen to have an ARM, don't worry you can afford it. Even longer answer: I know a troll question when I see one. Which of you bubbleheads wrote this one?

    here's the answers to your q's

    1. resale, duh!!!! come on dude.

    2. IO ARM stated income, i mean who couldn't get approved in the last 4 years, pul-lease.

    3. the bubble head that wrote this is the one who was upside down to the tune of 35% during the last RE only goes up bubble.


    and if i walked away (which everybody else did) i would have gotten a 1099 for 60K....there were 5 of these on my street alone.


    i will freely admit that the mistake i made was not buying up every 200K house for 100K back then but getting money then was near impossible since so many banks has so many bad loans money was tight....and i had already been upside down for years with no end in sight...these houses sat empty for YEARS.

    ReplyDelete
  24. AnonymousJuly 24, 2006 10:38 PM

    It's a new paradigm, and everybody who doesn't buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.

    Renters, and anybody born in a future generation, will not be able to afford a $10,000,000 starter homes in 15 years. They will live in tent cities, and Hondas.

    This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent

    ReplyDelete
  25. DavidJuly 24, 2006 10:46 PM

    "it's a permanently high plateau" - 1929

    LOL!

    ReplyDelete
  26. LanceJuly 24, 2006 10:49 PM

    "Anonymous said...
    Thank you David for stating "199K+ for a studio in a sketchy neighborhood is NOT affordable". How do people who make $30k or $40k a year afford to make mortgage payment let alone shop at those high-end retails Adbo is trying to bring is beyond me."

    I know from when I bought my first condo, my lender said I could go up to 45% of gross income with a 98% loan. (I could go to something like 49%, if I could come up with 10% down vs. the 2% down.) 45% of a $40,000 income is $1,500/mo ... and 45% of a $30,000 income is $1,125. An interest only loan on $196,000 loan (i.e., the 98% loan) is going to give you a payment of $1,061.67. On top of that you need to add property tax ($101.20 in the District) and condo fees ... $200? per month. That brings us to $1,362.87/ mo. which is still within budget for the person making $40,000 ... or even someone earning $36,500. Come up with 10% down and payment drops to $975/mo. And since you can now go to 49% of gross income, the $40,000 earner can go to $1,633.33 and the $30,000 earner to $1,225. Total housing expense are that $975 + $101.00 taxes + $200 condo fee = $1,276.20. So, these places basically ARE affordable to even those very very few people earning that little who have only one income to rely on ... which is a point to be made. How many people do you think are out there who want to work and live in DC, are single, and make that little but yet are ready to buy? And compare that to the number of people making at least double that are out there. And David, from what you are paying on your rent, I sure know that this $30K to $40K range doesn't apply to you!

    ReplyDelete
  27. LanceJuly 24, 2006 10:57 PM

    John Fontain said...
    "lance said - "Centrally-located, clean, safe, and most importantly cheap!"

    Funny, cause it's none of those things."

    John, you don't get it. He's creating a neighborhood where now there isn't one. It is a fresh slate ... it will be as clean and safe as he wants to make it. Look at the map, you'll see how this parcel of land is off by itself on the east side of the city ... like Georgetown is on the westside. I bet if someone had told you 10 years ago that Logan Circle would be what it is today with its $600,000 condos ... that could then be had for next to nothing, you would have said that that next to nothing was too much "for that neighborhood." Fortunately some smart people did, and those who paid something like $150,000 for whole Victorian rowhouses in that neighborhood now have homes worth far in excess of $1,000,000. They were visionaries ... like Abdo is and bubbleheads aren't.

    ReplyDelete
  28. LanceJuly 24, 2006 11:04 PM

    anon said:
    "the bank knows you don't have that kind of money so for them it's just a write off and it's called "foregiveness of debt" look it up."

    assuming prices really did drop that much (which we all know isn't possible), so what kind of individual walks away from their debt for no reason other than that the house they bought to live in now has a paper value that is less then when they bought it? my first thought is "scum", my second is "incredibly stupid" since they don't seem to know how to differentiate between a home and an investment. Lastly, if you think the SoCal economy is thriving because of real estate, you need to go do some research. Try all the government money going into all the federal installations there as well as your ever present movie and tv industries, etc. I'm not familiar with your economy, but common sense tells me that real estate is driven by the surrounding larger economy ... and not vice versa as your statement implies. People need jobs and money before they can buy ... and at the end of the day, that has to come from their earnings past and present.

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  29. AnonymousJuly 24, 2006 11:05 PM

    "And since you can now go to 49% of gross income"


    my god are you delusional.

    making more of your gross income allowable to home monthly payments IS NOT MAKING IT MORE AFFORDABLE.

    40K - 49% leaves 19,600 left, - SS taxes leaves 16,800, - state taxes (ca) leaves 13,600, which leaves 1200 a month for everything else.....who could live on that???

    p.s. i assumed you would not spend a dime on federal income taxes.

    ReplyDelete
  30. LanceJuly 24, 2006 11:09 PM

    Anonymous AKA BILL AKA HOUSING NEWS said: ...
    "It's a new paradigm, and everybody who doesn't buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.

    Renters, and anybody born in a future generation, will not be able to afford a $10,000,000 starter homes in 15 years. They will live in tent cities, and Hondas.

    This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent"

    How funny! Afraid David is gonna tell you to get out again? You've posted these exact (and assinine) words how many times in the past under your own name? Don't you think David's gonna know this is you?

    ReplyDelete
  31. DavidJuly 24, 2006 11:11 PM

    Lance wrote:,

    "An interest only loan on $196,000 loan (i.e., the 98% loan) is going to give you a payment of $1,061.67. On top of that you need to add property tax ($101.20 in the District) and condo fees ... $200? per month. That brings us to $1,362.87/ mo. which is still within budget for the person making $40,000 ... or even someone earning $36,500."

    Are you REALLY suggesting that someone who makes 36,500 can afford a loan for 196,00 or almost 5.5 times their annual income. That is obscene.

    "And David, from what you are paying on your rent, I sure know that this $30K to $40K range doesn't apply to you."

    I actually share my monthly rent with some friends who also live here. You do NOT know how much I make which is a very good thing.

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  32. AnonymousJuly 24, 2006 11:13 PM

    i'm sorry lance you are lost when it comes to socal RE.

    ...just a little FYI the movie business is moving out big time....and as reported by the OC register 40% of all new jobs in the last 5 years are directly RE related....read that part again 40% DIRECTLY RELATED.....which means another 20% not directly related.

    BTW when you can't afford the house you bought cause you don't have your mortgage broker job how do you make the payment??

    trust me Lance i live here i've seen what can happen.....even that RE guy i meet who's wife is in the RE business for the last 5 years said "just buy and the secret is don't use any of your own money that way if prices fall you just walk away"

    that's how the subject of the 1099 came up with him and THAT IS THE MENTALITY OUT HERE.

    ReplyDelete
  33. LanceJuly 24, 2006 11:18 PM

    anon asked:
    "which leaves 1200 a month for everything else.....who could live on that???"

    let's see ... that more than what most folks just living on Social Security get ... and it's more than what people living on unemployment get ... and it's more than you were living on in college --- unless the 'rents spoiled you ... which i'm starting to realize may be part of the problem with some of the bubbleheads. they want everything and they want it now ... and they've figured out how to get it ... they're mortgaging their future (pun intended) to live well today ...

    ReplyDelete
  34. LanceJuly 24, 2006 11:20 PM

    David said:
    "I actually share my monthly rent with some friends who also live here. You do NOT know how much I make which is a very good thing."

    So, you really do live in a group home in Silver Spring like a couple of anons have been saying ... How did they know that?

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  35. LanceJuly 24, 2006 11:24 PM

    anon said:
    "that's how the subject of the 1099 came up with him and THAT IS THE MENTALITY OUT HERE."

    If you are getting a 1099 from them, then that means you are having to report that forgiven debt as income ... and pay taxes on it ... So, it's not quite as scott-free as you are saying ... On $200K, that would be something like $50,000 in Federal income tax alone ... plus state taxes ... And, I don't know for sure, but my guess would be that you'd have to pay social security and medicare tax on on too ... You better think twice before walking out on your responsibilities ...

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  36. AnonymousJuly 24, 2006 11:39 PM

    man I live in chicago and my yuppie neighborhood has had a non stop new construction since 2001..anyway I now see a hell of a lot of condos for sale and a lot of open houses....and 2 stalled new construction projects within 6 blocks of wrigley...$900,000 for a 3 bedroom condo 4 blocks from the Latin Kings ...I don't think so..It is so funny to see all of the grafitti white out on my neighbors suv garages..viva la libertad...

    ReplyDelete
  37. AnonymousJuly 25, 2006 12:41 AM

    Lance, dude????

    my point is THAT YOU HAVE TO PAY TAX ON IT!!!

    most people out here think if you walk away the debt is gone!!

    man dude, you are one confused RE bull mang!!!

    ReplyDelete
  38. LanceJuly 25, 2006 12:54 AM

    anon said:
    "man dude, you are one confused RE bull mang!!!"

    okay ... in one breath you advocate walking out on your mortgage 'cause the bank will forgive all ... and in the next say "whoa, buy you're going to have to pay tax on that!" ... and you think I am confused?

    ReplyDelete
  39. AnonymousJuly 25, 2006 12:55 AM

    Lance,

    my point is i didn't walk out my responsibilities but trying to point out TO YOU that many will and that will make this bubble crash big time.

    so many WILL walk away just like last time which makes the pain so much worse when the bubble pops....which it will here.

    as a matter of fact when i was upside down i talked to every realtor and lawyer i could find to find out what my options were and THEY ALL said. go buy a new home (for less) and just say you are gonna rent out the old one (of course i couldn't do that all my money was put into my overvalued boat anchor of a home that i bought at the wrong time) and as soon as you close on the new home stop making payments on the old house and just mail the keys to the mortgage lender.

    everybody i asked, realtor, lawyer, friends, said the same thing.

    this one lawyer started in about how i saould start a nevada corporation bla bla bla.

    i stuck it out, it took 15 years but i made money but not near as much as i SHOULD have if i would have just followed the market.

    and that's my point: IT MAKES NO SENSE TO OVERPAY FOR ANYTHING, ESPECIALLY A HOUSE CAUSE WE ARE TALKING 100'S OF 1000'S OF $$$$

    ReplyDelete
  40. AnonymousJuly 25, 2006 12:58 AM

    in one breath you advocate walking out on your mortgage 'cause the bank will forgive all


    I never advocate walking out on a mortgage??

    i'm trying to enlighten you to what poeple here in socal think and do.

    man dude try and read my posts more carefully

    ReplyDelete
  41. AnonymousJuly 25, 2006 1:39 AM

    Anonymous said...
    "and that's my point: IT MAKES NO SENSE TO OVERPAY FOR ANYTHING, ESPECIALLY A HOUSE CAUSE WE ARE TALKING 100'S OF 1000'S OF $$$$"

    Anon, you’re missing Lance’s point:

    Lance said...
    “….I do believe that for a prospective homeowner (or longterm investor) there IS…. no bad time to buy”

    ReplyDelete
  42. AnonymousJuly 25, 2006 2:14 AM

    robert,

    well, okay i guess you're right then.

    personally i think that paying 600K for something that you can buy for 400K 2 years from now is silly. (please don't tell me that prices will not drop that much i've already seen prices 100K less)

    especially when most people can't really afford the 600K (that's why over 50% of new home purchases are ARM's in socal) and will more than likely lose the house and ruin their credit.

    if you can not afford a 30 year fixed mortgage then you can not afford the house.....end of story.

    ARM's are designed for people who HAVE the money but don't want to use it for the home purchase but if they were to get in a bind can refi by bringing money to the table when prices adjust downward.

    oh and one does not take out an adjustable rate mortgage when rates are at 40 year lows...they have only one way to go, one takes out ARM's when rates are at their peak.

    IMHO anyway.

    buying a home is the biggest financial decision we will all ever make (for the most part) it's not just a home as this current run up in prices and all these blogs can attest to.

    ReplyDelete
  43. LanceJuly 25, 2006 7:40 AM

    anon 9:55 said:
    "i stuck it out, it took 15 years but i made money but not near as much as i SHOULD have if i would have just followed the market."

    So, you were looking to flip it and got upset when you couldn't? I'll say it again, there is no bad time to buy a home 'cause a home is bought for the longhaul and not for shortterm profits. Look up the word home and compare it to house .... I am talking about the roof over your head NOT some speculative venture ... and one shouldn't be gambling with the roof over their heads.

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  44. AnonymousJuly 25, 2006 7:51 AM

    I think what Abdo is doing is great. He's invested in the district when no one else would, and he's continuing to push into areas that no one else will go.

    I question how much he will be able to charge, I'm sure he realizes that prices will be much lower in a few years and is taking that into account.

    ReplyDelete
  45. AnonymousJuly 25, 2006 8:34 AM

    Anonymous said...
    “robert,

    well, okay i guess you're right then.

    personally i think that paying 600K for something that you can buy for 400K 2 years from now is silly. (please don't tell me that prices will not drop that much i've already seen prices 100K less)”

    Anon, let me fill you in on the “Lance guide to home buying”

    1.Prices never go down.
    2.They are not making any more land.
    3.Inventory, foreclosures and re-setting ARM’s have “absolutely NOTHING” to do with the RE market.
    4.Last, but certainly not least:
    Lance said...
    “….I do believe that for a prospective homeowner (or longterm investor) there IS…. no bad time to buy”


    Why would you want to only pay $400K? Why not pay a cool $1Mil for the same house and be personally responsible for automatic gentrification of your neighborhood?

    ReplyDelete
  46. LanceJuly 25, 2006 8:34 AM

    anon said:
    "I question how much he will be able to charge, I'm sure he realizes that prices will be much lower in a few years and is taking that into account."

    I'm sure he has. But you need to explain what you mean by "much lower." For example, I agree that condos may be 10% or perhaps up to 15% lower ... but most bubbleheads on here at expecting something to the magnitude of 50%. Considering a 50% devaluation would mean a depression and NO sales of condos, this isn't realistic. Are we on the same page about the 10 - 15%? (Which will translate into less of a savings then that for anyone not paying cash because interest rates will be higher by then.)

    ReplyDelete
  47. AnonymousJuly 25, 2006 8:39 AM

    An I/O loan when rates are low on a house that will soon be underwater is gambling. Maybe not on the roof over you head since I guess you can just live there forever, right?

    I can see it now, sitting on the floor because you can't afford furniture, eating beans from a can with no lights cause you can't afford that either. As your kids ask why they have to study so hard for those scholarships you say "I'm sorry I can't afford college. And yes, I could have both invested AND owned this house if I had waited 3 years. But really we are okay since there is no bad time to buy a house. In another 15 years I can still make $ from the sale. I'm sorry that will be too late for the college thing, but aren't you glad that we aren't horrible renters?"

    ReplyDelete
  48. AnonymousJuly 25, 2006 9:02 AM

    I think the project could be good..but I agree that the idea that 200K for a one bedroom condo is affordable for is wrong. It's like only single people with no kids make 30 - 40K. there are people out there who make that and have children. So basically they would have to get an interest only loan and then send their children to live with relatives. Why all the condos..is there enough space on this piece of land to build maybe some townhomes? Does anyone think this project is similar to the EYA project on route 1 in Hyattsville, MD?

    ReplyDelete
  49. AnonymousJuly 25, 2006 9:29 AM

    anon CA homeowner,

    If you bought at the last peak, you have at least seen a double on the value of your home. Quit whining about entering a down cycle.

    Sell NOW if you want to try to time the market. You can buy back in a few years. Perhaps at a lower price and perhaps at a much higher interest rate.

    btw - any sophisticated financial person knows about taxable "debt forgiveness". Duh.

    ReplyDelete
  50. AnonymousJuly 25, 2006 9:36 AM

    "But you need to explain what you mean by "much lower."

    Nobody knows that. Abdo says he's targeting the working class of DC. The working class of DC does not make enough to support the prices that he's talking about.

    ReplyDelete
  51. AnonymousJuly 25, 2006 9:40 AM

    "Are we on the same page about the 10 - 15%?"

    That's a very broad statement. Some condos may drop that much, some will drop less, some will drop more. It depends on the location, quality of construction, and a whole host of factors.

    Specifically, I believe condo conversions around here will be hit much harder than "10-15%". The nicer, newer construction won't be hit as hard, and condos in highly desirable areas will retain value better as well. Overall, I think the condo market will decline more than "10-15%" but the decline will take several years to play out.

    ReplyDelete
  52. AnonymousJuly 25, 2006 9:57 AM

    I've already seen a 10%plus drop in new condo's in desireable locales in the suburbs (Reston Town Center & Old Town Alex, for example).

    So I find it hard to believe any will retain their peak value.

    ReplyDelete
  53. AnonymousJuly 25, 2006 10:01 AM

    Lance said:

    ".......there is no bad time to buy a home.........."


    Lance,
    What is wrong with your mind? You really buy into you own B.S. Go tell your line to someone losing their entire life savings,that bought near or at the peak of the market.

    ReplyDelete
  54. MyTwoCentsJuly 25, 2006 10:01 AM

    According to NAR, Condo prices for the DC area are already down 4% from 3Q05. They are showing a loss of approximately 2% per quarter.

    I would expect this rate of loss to increase for 2Q06 and 3Q06 - but that's just my opinion.

    source: http://www.realtor.org/Research.nsf/files/REL06Q1CT.pdf/$FILE/REL06Q1CT.pdf

    My $0.02.

    ReplyDelete
  55. AnonymousJuly 25, 2006 10:20 AM

    Learah: "The market is leveling off"

    Every rising market levels off before is drops - this leveling off is temporary

    ReplyDelete
  56. AnonymousJuly 25, 2006 10:21 AM

    Abdo makes big bets in some risky areas. He has been very right so far. While it may indeed be easier to be proven right in a bull market, it still requires having the guts to plunk down serious money in an area while it's still up-and-coming -- something most on here simply can't do for a variety of reasons.

    Abdo's latest plan is definitely high risk. Yet he's still going forward with it. According to the Bubblehead Faithful, the writing is clearly on the wall that prices in DC will plummet from between 10 to 60 percent in the next year or two (that's when they'll cash out of their market-immune investments and swoop in to buy mansions for pennies on the dollar; or at least that's the fantasy). Yet Abdo - and other developers - are still making very massive bets on a continued profitable market in DC. So who is more credible in their forecast: Bubbleheaders who look for all sorts of validation for their decision to permanently rent or a guy who has made a fortune in real estate development in DC?

    Tough one.

    I would imagine that Abdo will likely offer units for lower-income residents since it gets him federal and DC tax benefits and grants.

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  57. MyTwoCentsJuly 25, 2006 10:27 AM

    Abdo was also willing to live in a store room and sleep on a cot with his bets.

    My $0.20.

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  58. AnonymousJuly 25, 2006 10:35 AM

    Yeah, he was willing to make tradeoffs in short-term comforts for long-term wealth. His gutsy entrepenuership helped him become a success.

    Something he didn't attain by a lifetime of renting.

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  59. MyTwoCentsJuly 25, 2006 10:50 AM

    Ahh yes. Because renting unequivocally equals failure.

    Thank you Fritz...

    My $0.02.

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  60. MyTwoCentsJuly 25, 2006 10:58 AM

    Donald trump once said something to the effect:

    If you owe the bank a couple hundred thousand dollars, and you can't pay, you have a problem.

    If you owe the bank a couple hundred million dollars, and you can't pay, the bank has a problem.

    My $0.02.

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  61. AnonymousJuly 25, 2006 11:46 AM

    anyone see the WSJ article yesterday on the "land rush"?

    Interesting to me since I've been buying land the last few years.

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  62. MyTwoCentsJuly 25, 2006 12:00 PM

    VA Investor,

    I missed that. Was it yesterday's paper or was it online?

    I did see something in the Washington Post about a neighborhood with homes built straddling 2 individually zoned properties. Developers were offering people $700,000 for their homes and were planning to tear them down and replace them with 2 large new homes for sale at about $1.4 million.

    My $0.02.

    ReplyDelete
  63. AnonymousJuly 25, 2006 12:10 PM

    mytwocents,


    Saw the article about Hollin Hills ( or Hall?). Lots of lots like that in Historic district of Herndon. It would be interesting to see the results of a Court fight.

    The "land" article was in the weekend edition of the Wall Street Journal. Gives some validation to my plan over the past few years.

    Surprisingly, my husband brought it to my attention. Have been "arm-twisting" on the land deals for several years now.

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  64. ConsaJuly 25, 2006 12:10 PM

    Sales of Existing Homes Fall in June, More Evidence That Market Is Slowing

    WASHINGTON (AP) -- Sales of existing homes fell in June for the eighth time in the past 10 months while home prices edged up at the slowest pace in more than a decade -- more signs that the housing market has slowed dramatically.
    http://money.cnn.com/2006/07/25/news/economy/homesales/index.htm?cnn=yes

    Builders laying off workers
    http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20060725/BUSINESS/607250345

    regards
    consa
    http://forum.globalhousepricecrash.com

    ReplyDelete
  65. AnonymousJuly 25, 2006 12:46 PM

    "btw, i know i'm gonna get flack from those bubbleheads that refuse to "think outside of the box";

    So now following the mindless herd of the last few years is thinking outside the box?

    In fact, Lance, haven't you argued that bubbleheads are the ones who aren't listening to the wisdom of the crowd on this issue? You may accuse bubbleheads of many things, but groupthink is clearly not a sensible accusation.

    By the way, using the cliched phrase "think outside the box" signals that you really don't think outside the box.

    And spending 45% of your gross income on a mortgage, especially one that relies on creative financing, is for fools (with very rare exceptions).

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  66. AnonymousJuly 25, 2006 12:48 PM

    Like I've said before, Abdo bought in 1992, and DC prices continued to fall or flatten for years after that.

    Abdo sounds like a smart guy who's willing to be patient. I think there's a bubble and I think Abdo's projects will be very nice places in 10-15 years. The bursting of the Bubble will be good for DC's long-term growth.

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  67. wannabuyJuly 25, 2006 4:36 PM

    Lance,

    First keep posting. I like the counterpoint and you usually do so with some points worthy of considering.

    "but this city needs more affordable housing like this for the middleclass "
    Ummm... the middle class needs affordable for raising kids. Like it or not, we're seeing indications that middle class families with kids are fleeing the bubble markets. I know here in Los Angeles, no one from out of state over age 30 is willing to consider us anymore. :( (We're a good employer with salaries 10% above industry norms... but that's not enough.) I do not have links, but rather my mom does accounting for local "charities" including reviewing school board balance sheets. Since schools life off of an "income" of $X/day * #students... they are very sensitive to drops in head count.

    Now onto this housing project. Personally, I believe that there isn't enough good urban planning in most projects. This is a rare gem which is well planned out even if I have zero interest in a studio. Let's not lose track of the big picture and make snap judgements. Compared to the rest of the market, whomever is doing this project actually took time to think about things. Good for them. They'll stand out.

    I would love to see similar projects pop up around Los Angeles. Ok, add 2 and 3 bedroom units (maybe ever 4 bedroom, but not many). Ideally, one would build a *large* integrated complex around subway stops. (Ok, I know LA doesn't have a subway "system," but I can dream can't I? My cousin is working on urban planning by the Feds that might force a properly planned subway down the 28 cities throats that make up LA wether they like it or not! Now to figure out how to get Metrolink (as well as subway) to LAX... (Again, I dream.)

    If you can't tell, I'm a huge fan of urban planning. (Hire whomever did Saltzberg (sp?) Germany and its suburbs...)

    Neil

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  68. AnonymousJuly 25, 2006 5:45 PM

    i'm not sure why lance keeps trying to insult me with the "flipper" comments.

    i guess i'm striking a cord in his ill advised '05 purchase.

    i didn't even know what a flipper was when i bought at the top of the market and i bought when i did because i believed what everybody then told me.

    1. better buy now or you will be priced out forever.

    2. they can't make any more land (they sure figured out how since then though as there are 1000 new homes being built 3 miles from the pond)

    3. interest rates will never be this low again.

    4. homes NEVER go down in value.

    now i know EVERYONE of those comments are incorrect. i bought then cause i couldn't save money fast enough, homes were going up 10K a month.

    does any of this sound familiar?

    i would just like to know what's different this time that will result in a different outcome?

    ReplyDelete
  69. AnonymousJuly 25, 2006 7:10 PM

    Peak of DC market: 3Q05. When did you buy again, Lance?

    ReplyDelete

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