8503 2nd ave is located right across the street from the Silver Spring metro station in a desirable location,. Its is 2br, 2.5 bth townnhouse, 1,216 SF . As of September 17th the property [ MLS #: MC6306916 ] has been on the market for 223 days. This is located in the metropolitan Washington, DC area.
Property Bought from Original Owner: 10/13/2005 $661,000
Price Reduced: 02/18/07 -- $699,000 to $689,000
Price Reduced: 03/30/07 -- $689,000 to $680,000
Price Reduced: 04/16/07 -- $680,000 to $669,000
Price Reduced: 05/09/07 -- $669,000 to $659,000
Price Reduced: 06/05/07 -- $659,000 to $639,990
Price Reduced: 08/01/07 -- $639,990 to $629,990
Price Reduced: 08/07/07 -- $629,990 to $619,990
Please note this property was bought originally from the developer for 279,915 on 06/21/2000.
So in about 5 years the property went up 136% for a sale of 661,000 in late 2005. If it had appreciated by 6% a year (compounded) the price would be 375K in 200 late 2005. If that theoretical 6% had continued for another two it would be valued at 421K today. However, the price it is being offered at is 619,000 or 47% more then the 421K value if the value had increased 6% a year for the next 7 years from its original year 2000 price.
The current owner is chasing the market down. The owner keeps lowering the price, but cannot catch up to the falling market (knife).
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Excellent work. It shows that prices still have a long, long way to fall.
ReplyDeleteAnd let's not forget the possibility that prices could overcorrect to the downside.
It looks like the joker who owns the place overpaid and is now reluctant to lower the price low enough to actually sell the place. As the saying goes, "A fool and his money..."
ReplyDeleteJohn Fontain said...
"And let's not forget the possibility that prices could overcorrect to the downside."
It may be possible, but it's not probable. Housing prices tend to be sticky to the downside. This means they tend to under-react, unlike the stock market which tends to overreact. Judging from the history of housing prices, I expect housing to fall in price initially, which it is currently doing, and then stagnate for many years as inflation eats away at the real price of housing. After the 1989 housing boom peak, prices stagnated for seven years.
This property isn't going to decline all that much, especially not to $421k.
ReplyDeleteMost of the new two bedroom condos in downtown silver spring are selling for 400-500k, so its makes sense that a two bedroom townhouse would be around 575-600k.
I wonder if this guy did overpay.
ReplyDeleteMy brother paid $650k and refused to lower the price to $1.2M. Some people have their own form of denial. It is amusing watching greedy people be caught in their own trap.
It took a long time in the last downturn for the "top areas" to drop in price. Many areas had flat prices which took care of the "overprice." But my folks were in a top area that held... and held... and then over two years dropped 40%. (Ouch!)
Watching people deny the obvious is amusing. This will take a long time. But at least its entertaining.
Got popcorn?
Neil
ps
The only reason my tagline would be annoying is if it points out the obvious. ;) I know people will "feel pain." Its time to laugh or cry. Too many of my friends will be bankrupt within a year due to their overpriced homes. :( But they are young enough to recover. :)
pss
No more company moves for a while. They were minor in 2007. Due to the HUGE land options purchased in Texas, we're all very curious. I'd rather stay near family, but my job is dependent upon those that report to me being able to afford a home in a good school district. Cest la vie. Big news expected in December (but likely to be delayed 60 days).
James,
ReplyDeleteWhen you have a significant overshoot, all investments can overshoot to the downside. e.g., mid-1990's LA/Orange county. Maybe they'll stagnate for a few years, but too much of the investment pool is in homes. People will have to pull out funds. Disagree? Let's see in two years. ;)
Got popcorn?
Neil
James said:
ReplyDelete"I expect housing to fall in price initially, which it is currently doing, and then stagnate for many years as inflation eats away at the real price of housing. After the 1989 housing boom peak, prices stagnated for seven years."
And that could happen now in non-growth locales. But the point that gets lost is that anyone "waiting out" the "seven years" would have been depriving themselves of those seven years. Like other life milestones, times delayed are times lost. One can't always count on timing to be "the best" but one can always just "make the best" of what they have. Anyone putting their life on hold in hopes of "a better price", is putting their life on hold ... and losing moments, times, and experiences that can never be recaptured.
Over at city data.com
ReplyDeletewhere I am a moderator, a gal from NYC wants to know if it is a good time to buy real estate in Fairfield county CT.
A Realtor said that location was important in buying 'now' and that she should offer 15-20% below the asking price.
Now think about it if you were talking about buying a Toyota Corolla for $40,000:
ReplyDeleteOne can't always count on timing to be "the best" but one can always just "make the best" of what they have. Anyone putting their life on hold in hopes of "a better price", is putting their life on hold ... and losing moments, times, and experiences that can never be recaptured.
Hey David,
ReplyDeleteCan you afford it yet? Hahahaha!
anon @ 9-17-07, 1:19 pm. "This property isn't going to decline all that much, especially not to $421k.
ReplyDeleteMost of the new two bedroom condos in downtown silver spring are selling for 400-500k, so its makes sense that a two bedroom townhouse would be around 575-600k."
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Only problem with this "logic" is they aren't selling, just listing at those prices. Big difference.
Listing and waiting...waiting...waiting...
ReplyDeleteWhere is everyone? Should we lower the price from 699,900 to 698,900?
Everything is overpriced, salaries didn't keep up. The market ran out of gullible people caught in the frenzy.
Common sense (something severely lacking in the last decade) says prices are going to PLUNGE.
Lance's quote:
ReplyDelete"Anyone putting their life on hold in hopes of "a better price", is putting their life on hold ... and losing moments, times, and experiences that can never be recaptured."
Two replys to this:
1. My life does NOT revolve around owning a house. My life revolves around enjoying my life daily. Living under a mortgage I might not be able to afford does not fall under the category of enjoying myself. Buying a house that is losing value while the real estate taxes are increasing is NOT going to add to my quality of life, decrease my quality of life yes, add to my quality of life, no.
2. There are house buyers who are losing their mortgaged houses through foreclosure who wish they had never even thought about buying a house. These foreclosed buyers are ..."losing moments, times, and experiences that can never be recaptured"
..such as bankruptcy, ruined credit, Repo men hauling away their cars for missing payemts.
Those are golden moments I would be more than willing to avoid, and foreclosed buyers wish they didn't have to lve through.
i know this project in silver spring. i watched it get built. one OTHER factor in it's sale is that the whole complex is downwind from a mcdonalds. the units on 2nd ave started being put up for sale or rent pretty quick becuase of the grease stench. Also the garages are pretty tiny for an SUV luvin' populace.
ReplyDeleteThis is now listed at 589K...
ReplyDeleteRight now you'll find "denial" everywhere. This home will very likely become a foreclosure given the rate of reductions. I recall a simmilar instance years ago. At that time I was an Asset Manager for a large national company. They had an asset inland from Malibu, CA. A gated community where the last sold property had taken place a year before. There were listings all over $1.2 million, but not sales in a year. So we listed our REO property to sell at $990,000 and eventually sold it for $875,000. OMG the belly aching from all the other agents and sellers because now we had closed the most recent sale at $875,000! But hey, the market was NOT at over a million, it was at UNDER $900,000.
ReplyDelete