Auctions & Foreclosures: DROdio Real Estate attends
From recent Hudson & Marhsall Real Estate Auction (October 2007)
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You can inspect the properties beforehand. You just contact the listing agent and they'll show the house to a bidder like they would anyone else.
ReplyDeleteHeh...another developer gives up. Senate Square went rental.
ReplyDeleteJohn's right:
ReplyDeletehttp://www.senatesquare.com/
I live close to Senate Square and have been hearing rumors for a while now, but now it's officially official.
Correct, SOME of the properties can be inspected, but you can't buy it and then inspect it, like a normal property.
ReplyDeleteFrank
John said...
ReplyDelete"Heh...another developer gives up. Senate Square went rental."
I wouldn't look at it as "gives up". The developer simply made a smart business decision. He/she looked at the numbers and decided that at this moment in time it was simply a better decision to either (a) sell the building as one entity to someone looking to run and manage an apartment complex or (b) manage and rent the units until such time as the numbers warrant selling them rather than renting them out.
Either way it's a rational business decision. Why make it sound like an "act of desperation". It isn't.
Lance, I am afraid you have once again completely missed the implications of what has taken place here.
ReplyDeleteYou are right, this is a rational business decision on the part of the builder, but that is simply stating the obvious.
What is more important is what it says about the builder's outlook on the market.
The builder expects condo prices to fall back to their fundamentals, rents.
If they builder believed they could sell the condos for significantly more than they could make by renting them out they would have gone forward with the condo plan. (During the bubble years very few apartment buildings were constructed because it didn't make sense to build them when an equivalent condo would sell for far more than its value as a rental. This trend is now reversing.)
The builder clearly now believes that they will be unable to sell condos above their fundamental value as rentals and are modifying their plans accordingly.
What does that say about where this builder sees condo prices going?
The answer can be found by applying any of several more or less standard metrics. Regardless of which you prefer, the answer is going to be that the cost of renting and buying a similar condo are going to be very similar.
(It is possible condo prices will fall to a point where it is actually cheaper to buy than rent, this would not be an unprecedented development. Regardlesss of whether or not that happens, it is clear the builder no longer expects condos to sell at a premium over their fundamental value.)
Careful, Lance. The renters who pay your mortgage might leave for one of these nice belly-up condos gone rental, then the bank man comes a'knockin' for your deed...
ReplyDeleteOf course, this won't do anything to the asking prices of the surrounding homes. Because, you know, this is Manhattan. Oh wait, in the Manhattan RE market this condo project wouldn't have gone rental.
ReplyDeleteLeroy,
ReplyDeleteDon't bother. Lance isn't here for the rational discussion. I guarantee you that in this thread, he will in different posts state that this is why prices will increase. The salable units will vanish to rentals.
But then he'll declare that rentals will shoot up in price, ignoring all the new rentals. He's done it before. Logical consistency and a fundamental understanding of econ doth not exist in Lance World.
Leroy,
ReplyDeleteYou're fogetting one part of the equation - in a slow sales market, the builder doesn't make any money -- in fact he loses money -- as the condos sit there unoccupied. That doesn't mean that the price of any given condo is going to fall back to the price of renting one. That doesn't make any sense since you get more as a buyer than a renter.
Except in the worst real estate markets, buying is always much more expensive than renting.
john - rentals ARE shooting up in price.
ReplyDeleteAnon,
ReplyDeleteTrailing indicator. As more "repartments" and failed condos move to the rental market, supply expands and price stops climbing. Econ 101.
"You're fogetting one part of the equation - in a slow sales market, the builder doesn't make any money -- in fact he loses money -- as the condos sit there unoccupied."
ReplyDeleteThat is because the condos are overpriced. If the developer held a no-reserve auction I guarantee you every one of those condos would sell. The problem isn't a simple lack of demand. It is a lack of demand, at the current price.
"That doesn't mean that the price of any given condo is going to fall back to the price of renting one. That doesn't make any sense since you get more as a buyer than a renter."
I disagree, on both points.
This does demonstrate that the builder anticipates rentals being more profitable than selling condos.
There are several accepted methods to compare rental prices to sales prices and they all result in similar costs to rent or buy a similar property, depending on the downpayment used etc.
It is also not true to say that you "get more" as a buyer than a renter and that therefor prices for buying should be higher.
While in the long run a buyer will almost always come out ahead, there are several major drawbacks to buying:
A buyer gives up flexibility. A person who anticipates changing jobs or moving within the next several years would not want to buy.
A buyer assumes much more risk.
A buyer has traditionally needed a significant downpayment.
"Except in the worst real estate markets, buying is always much more expensive than renting."
This is simply not true. I am not saying that the price to rent or buy a similar condo are generally identical, but they are generally similar.
"Don't bother. Lance isn't here for the rational discussion."
ReplyDeleteyeah, I know. I have encounted him on another blog and am familiar with his particular version of reality.
I mostly put that post up for everyone else.
I think these reverse condo conversions are an interesting trend. I am looking foward to seeing what kind of rental prices they ask for these units.
I think there is a lot of good dicussion that could be done on exactly what the value of these units as condos is once we know what they rent for.
"Except in the worst real estate markets, buying is always much more expensive than renting."
ReplyDeleteThis is one of the biggest false myths about housing that i have ever seen. Aside from bubble periods when the price of houses far exceeds intrinsic values as determined by fundamentals (rents), the opposite is in fact true - renting is generally more expensive than the initial cost to buy (on a monthly basis).
I don't know why people often say the opposite, but i suspect they don't know better and are impaired by a recency bias in which they forget all but what they have witnessed in recent bubble years (and assume the recent experience is normal).
Up until 2000/early 2001, the average single family house in Fairfax county could be purchased for approximately the same amount as rent. And this was not viewed as unusual in any respect.
Maybe if thought of in a context outside housing, people would understand the flaw in this myth, so here goes:
Do car dealers lease cars to you for less than their cost? No.
Do shopping malls lease their space to tenants for less than cost? No.
Should the owner of residential real estate rent you his property for less than his cost? No.
There, see how easy that was. Renting normally costs more than owning due to the profit element in the arrangement. Owners expect a profit, or return, on their investment. If there was no profit element, investors wouldn't buy real estate as an investment.
Now the young and inexperienced may ask, "well if owning normally costs less than renting, why wouldn't everybody just own?" The answer is capital and credit, something a great many people don't have (most often in the early stages of adulthood).
Anti-housing trolls are in a bit of denial about the benefits of ownership versus renting. You own significantly more rights as an owner than as a renter, and so it always, except in times of market trauma, costs more to buy.
ReplyDeleteYou people make your ridiculous arguments with absolutely no date whatsoever -- do you really expect any reaction besides the mockery you currently recieve? The tone you use to be so absolutely wrong is astonishing. Show me one piece of data that shows, historically, it costs more to borrow some (but not all) rights to a parcel than it does to obtain ALL rights to a parcel as an owner.
You can't find any such data, because it's nonsense.
Behavior like this is the reason why people on this site will never be anything more than marginal trolls. Those of us in the real world are laughing at you. All the way to the bank.
And before you call me a bitter, paniced owner, let me assure you that the amount I owe on my home is about half of my annual household income. It's not the housing market that's the problem -- it's your collective arrogant ignorance.
"You people make your ridiculous arguments with absolutely no date whatsoever "
ReplyDeletedata, that is.
As you can see, I don't make my substantial living as a typist.
"I don't make my substantial living as a typist."
ReplyDeleteDon't worry, it was still funny the way you wrote it.
Not "ha ha" funny mind you, but more like "it is funny watching this loser pretend to know what he is talking about."
Anonymous said...
ReplyDeletejohn - rentals ARE shooting up in price.
October 12, 2007 8:08 AM
This is completely FALSE. Where do you get your data? Rents are dropping like a rock. Every friend I have that is renting has had there most recent lease either drop in price (whether by incentives or out right price drop) or remain flat.
Wait, I can just say false things to. The sky is orange and housing is going to appreciate 10% this year.
Rents are dropping, a lot. Plus, you can get great deals from housing landlords. I rent at a 50% premium to purchasing the same property.
There is no reason to debate the good and bad vs renting. Owning a home is slightly better then renting but in reality is based on personal life choices. Freedom required, job stability, etc.
The only debate left is how far will housing fall, when will it stop, and what affect will it have on the rest of the economy
Bob
"
ReplyDeleteThis is completely FALSE. Where do you get your data? Rents are dropping like a rock. Every friend I have that is renting has had there most recent lease either drop in price (whether by incentives or out right price drop) or remain flat."
Oh, well, all of my friends' rents went up. I guess you lose the argument.
Seriously, post some data or STFU.
I suppose it is too much for your little binary brains to grasp, but have you considered the possibility that you are BOTH right?
ReplyDeleteIn some portions of the DC area rents are in fact dropping. In others they appear to be rising.
If we're talking about the same shitty seedy suburbs that most of the posters here seem to obsess on, then yeah, I'm sure they're not demanding very much money to live there.
ReplyDeleteHard times in Bob's neck of the woods. Hard times.
ReplyDelete"If we're talking about the same shitty seedy suburbs that most of the posters here seem to obsess on, then yeah, I'm sure they're not demanding very much money to live there."
ReplyDeleteYou idiot... all of DC is a backward dump of a city. There isn't a single part of DC that would be worth leaving a real city for.
Nice parts of DC are like a nice Kia, laughable.
Just moved into a duplex (dedicated apartment building) with granite and stainless steel one block from metro and underground parking. I can jog home from K Street. Lease is $210 less than they were asking last year. No way would a mortgage on a condo like this in this location be anywhere near the rent I am paying. If it were, I would buy.
ReplyDelete" If it were, I would buy."
ReplyDeleteGee, why? According to the Trolls, you get so much more as a renter.
"Gee, why? According to the Trolls, you get so much more as a renter."
ReplyDeleteYou are really blowing us all away with your inability to grasp the simple concepts we have outlined for you.
I would totally take your advice on complex financial matters... lol
"You are really blowing us all away with your inability to grasp the simple concepts we have outlined for you. "
ReplyDeleteI reiterate - post anything other than anecdotal evidence in support of your preposterous positions or STFU.
"I reiterate - post anything other than anecdotal evidence in support of your preposterous positions or STFU."
ReplyDeleteAwwwww...poor boo boo. Watching the purchase you made lose $ while others laugh? No one cares what you say or think. Your ilk are channeling the Kevin Bacon character at the end of Animal House. It's so great to watch your pain. I am loving this.
Ok, so... data...
ReplyDeleteHere it is!
According to HUD, the 50% rent in DC in 2001 for a 3bd rental was:
$1236
Source: http://tinyurl.com/23pqst
According to MRIS, the average selling price of a 3BD attached home in DC was:
$215,065
Source: http://tinyurl.com/3a9nzz
The average interest rate on a 30 year fixed rate mortgage in May 2001 was:
7.34%
Source: http://tinyurl.com/2hsrpe
Assuming a 20% downpayment(43,013) that results in a monthly mortgage payment of $1184.
$1184 is very close to the 50% rent on a 3BD rental of $1236.
For comparison
In 2006 the 50% rent in DC for a 3bd was:
$1580
Source: http://tinyurl.com/37z74a
In May 2006 the average attached 3bd home sold for:
$487,260
Source: http://tinyurl.com/3a9nzz
In May 2006 the average interest rate on a 30 year fixed mortgage was:
6.75%
Source: http://tinyurl.com/yqffpv
Assuming a 20% downpayment(97,452) that results in a monthly mortgage payment of $2528.
$1580 is not similar to $2528 obviously.
If you play with the specific dates, regions, and rental sizes (1bd,2bd etc) you will get slightly different results. In all cases the results from ~2001 and before are going to show rental prices and purchase prices at a near 1:1 ratio.
Now, knowing the sort of person that generally posts anonymously on blogs and claims to know more than everyone else there... I suspect these numbers will somehow not be good enough for you, but hopefully the more reasonable readers here will find them useful.
wow, pwned!
ReplyDeletehard!
It's not that there's anything wrong with your numbers, it's that they don't help answer the question. I hope you didn't think I'd be suprised to learn that in 2001, buying was a great deal compared to renting. Do you think that may have had something to do with why home sales exploded at around that time?
ReplyDeleteSimilarly, I hope you don't think I'm suprised to learn that buying had become much more expensive than renting by 2006. Nobody disputes (or at least I don't) that the relative cost of owning vs. renting is a major factor in many people's decisions to rent or buy.
What this argument is about is what constitutes a "normal" rent/buy ratio.
My position is that it is normal for it to be more expensive to buy. There's nothing wrong with your data - it just doesnt answer the question.
More info on the comparitive cost to buy vs. rent, which supports my earlier statement that it has not historically been more expensive to own than to rent...
ReplyDeleteWSJ: Cost to rent vs. cost to buy (notice in 2001 the US average of 1.02 indicates it cost more to rent than to buy and that this ratio was computed to the exclusion of all ownership costs besides principal and interest):
http://online.wsj.com/public/resources/images/PJ-AJ201_pjHOME_20061212202025.gif
Graph showing relationship between prices and rents...
http://www.cepr.net/graphics/housin1.gif
Fortune Magazine discusses the historical price to rent ratio:
http://money.cnn.com/magazines/fortune/fortune_archive/2003/12/22/356104/index.htm
And a graphic showing the change in home prices as compared to the change in rents:
http://duende.uoregon.edu/~hsu/blogfiles/pricerent_NYT_05.gif
thanks John, perhaps that will help our verbally abusive guest avoid putting his foot in his mouth in the future at some point.
ReplyDeleteUh, that shows the cost of owning to be much higher than the cost of renting since the Nixon administration.
ReplyDeleteGuess verbally abusive friend was right.
john pwn3d himself. there's a 15 year blip in the post-WWII period where it costs more the rent than to buy, and other than that it looks like anon is absolutely right - it always costs much more to buy.
ReplyDeleteWhich should be obvious.
I don't understand which side john fontain is on - that graph destroys leroy's argument. I thought you were trying to prove that renting and buying should be about the same.
ReplyDeletefontain = a lance that rents. what a buffoon.
ReplyDeleteThis is a particularly weak showing from the bubblehead crowd. Guys - you don't have to argue every point. It's clear that the market is unhealthy. Arguing untenable positions makes you look absurd.
ReplyDelete"I don't understand which side john fontain is on - that graph destroys leroy's argument. I thought you were trying to prove that renting and buying should be about the same."
ReplyDeleteI really don't think that graph shows what you seem to think it shows.
Without knowing more about what exactly that graph is supposed to reflect I can't comment in detail, but that graph does show rental and purchase prices to be similar.(which is what I said)
What you need to look at is the difference between the red and blue lines, and they aren't generally far apart. There are brief periods where the gap widens in the early 80s and early 90s but otherwise the two lines remain near each other.
It is only starting around 2000 that the two lines show a large disparity. The rest of that ~50 year history shows the two lines to be within ~10 of whatever unit this chart is using.
Besides, I never said that buying was generally cheaper, or for that matter that renting is generally cheaper.
Here is what I said since you seem to have forgotten:
"I am not saying that the price to rent or buy a similar condo are generally identical, but they are generally similar."
That graph does indeed show the two to be similar.
If possible lets keep this discussion above the childish name calling.
John, do you have any additional information on what that chart is supposed to depict? Without units or explanation it isn't very useful.
The graph shows that buying is always much more expensive than renting. Yeah, the gap has widened recently, but leroy, you were dead wrong. You said:
ReplyDelete"The builder expects condo prices to fall back to their fundamentals, rents."
AND
"The builder clearly now believes that they will be unable to sell condos above their fundamental value as rentals and are modifying their plans accordingly."
AND:
"The answer can be found by applying any of several more or less standard metrics. Regardless of which you prefer, the answer is going to be that the cost of renting and buying a similar condo are going to be very similar."
Fontain's graph shows that, in real dollars, it's generally 1.5 to 2x more expensive to buy than to rent. He's embarrassed himself and you.
Actually, a lot of points on that graph show that it's several times more expensive to buy than to rent. Considering the rise in rents (which the graph clearly shows as well, by the way), the ratio now looks no higher than it was at several points along the way.
ReplyDeleteThis has been a very bad defeat for anti-homeowners.
Here's a subprime article from the Washington City Paper:
ReplyDeletehttp://www.tiny.cc/IdVcU
Happy weekend, all.
prices are sinking in the burbs and the city. nothing posted here or anywhere else is going to stop that for several years. proof? mls
ReplyDelete"Fontain's graph shows that, in real dollars, it's generally 1.5 to 2x more expensive to buy than to rent. He's embarrassed himself and you."
ReplyDeleteYou either don't know how to read a graph or aren't interested in an honest discussion.
In either case I am not interested in spending a great deal of time explaining things to someone who clearly doesn't have any real interest in learning.
In general the TCO should be 150 to 180 times monthly rent. That's what prices tend to drop to.
ReplyDeleteAs I'm seeing complexes with 10% vacancy... that means rents are dropping. No "proof" as the bulls on here demand. Just anecdotal.
But I ask this, who is going to blink first. Those that are living comfortably or those whom are having trouble paying their bills?
I see debates over the "trees" of this downturn. The fact is that similar homes are going for less. The quantified way to show that is Case-Shiller. The mortgage market is getting tighter and tighter. Tightening credit markets for an equity always drive down the price of that equity. We see it happening.
Notice how the auction didn't sell out? Those homes still need to find a buyer. I still see VERY high inventory.
Got popcorn?
Neil
""Fontain's graph shows that, in real dollars, it's generally 1.5 to 2x more expensive to buy than to rent. He's embarrassed himself and you."
ReplyDeleteYou either don't know how to read a graph or aren't interested in an honest discussion.
In either case I am not interested in spending a great deal of time explaining things to someone who clearly doesn't have any real interest in learning."
I guess you're done denying that you said the cost of buying should equal the cost of renting. You lose. Now get lost, troll.
"
ReplyDeleteAs I'm seeing complexes with 10% vacancy... that means rents are dropping. No "proof" as the bulls on here demand. Just anecdotal."
That's funny, there's plenty of proof to the contrary:
http://www.chicagotribune.com/business/chi-mxa1007rentalsoct07,0,1567230.story
"Fleeing Rents in Capital, Nonprofits Buy Condos
New York Times, United States - Oct 9, 2007
By EUGENE L. MEYER WASHINGTON, Oct. 5 — Buffeted by steadily rising rents and a shortage of space for midsize offices here, a number of nonprofit "
"You will still find it tough to find a vacancy in the most lavish apartment buildings in the District. Delta calls such buildings Class A and measures a vacancy rate there at a mere 1.3 percent. And rents for those units rose 6.5 percent over the past year, the most in the region."
http://www.washingtonpost.com/wp-dyn/content/article/2007/09/28/AR2007092800749.html
I guess you're a moron.
http://www.realestatejournal.com/buysell/markettrends/20061012-haughney.html
ReplyDelete"In Washington, D.C., the owner of the Ellington, a 190-unit rental building on U Street, has a 12-person waiting list, and nearly a half dozen renters are paying rent two to three months before their move-in dates. San Francisco renters are showing up early to open houses and racing to fill out applications before other applicants. In Manhattan, some renters are offering landlords more money than asking rents, while others are paying the equivalent of the entire year's rent upfront in cash."
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/23/AR2007032300863.html
"But if you want to rent, remember that you're in one of the toughest markets for renters. Vacancy rates -- or the number of units available for lease -- are among the lowest in the country, rivaling those of New York and Los Angeles. The Washington region's vacancy rate was 3.4 percent, compared with a national rate of 5.9 percent, according to a first-quarter report by Delta Associates, a real estate information firm in Alexandria."
Neil is a moron.
"According to the rental stats from the region's MLS, Metropolitan Regional Information Systems, Inc., in the District of Columbia, the average days on the market for rentals has dropped below three weeks. The average days on market last year at this time was more than 10 weeks. In addition, the average unit rented last month is bringing in $840 more annual income than the average unit rented a year before. Wealth-building is on the march.
ReplyDeleteIn neighboring jurisdictions around D.C., the same is happening -- Montgomery County, Md., days on market dropped less than half to 30 days. Fairfax County, Virginia's days on market has dropped to just 23 from 59 in a November to November comparison from this year to last. Meanwhile, the average unit annual income is up by more than $1,000 compared to a year ago in Fairfax. Montgomery County investors are bringing in nearly $100 more per month last month than they were able to fetch a year before -- that's $1,200 per year increase in revenue. "
Neil is a moron.
"I guess you're done denying that you said the cost of buying should equal the cost of renting. You lose. Now get lost, troll."
ReplyDeleteWow, we have an angry annoytroll on our hands.
Anyone interested in what I said can simply scroll up and read my comments. I never said the cost of buying should equal the cost of renting.
What I did say is that the condo builder expects condo prices to fall back to their fundamentals, which are determined by rents, but that isn't to say that the value will be identical.(or for that matter that renting should be more expensive)
As I said in that post there are several different "standard" means of estimating what a rental property is worth. They result in slightly different answers, but those answers are generally that the cost of a condo and a similar apartment are similar.
Here is my original statement.
"What does that say about where this builder sees condo prices going?
The answer can be found by applying any of several more or less standard metrics. Regardless of which you prefer, the answer is going to be that the cost of renting and buying a similar condo are going to be very similar.
(It is possible condo prices will fall to a point where it is actually cheaper to buy than rent, this would not be an unprecedented development. Regardless of whether or not that happens, it is clear the builder no longer expects condos to sell at a premium over their fundamental value.)"
This really isn't that complicated and at this point I an convinced you are just interested in wasting everyone's time.
Don't worry about that dipshit, it is just lance slinging poo from hiding.
ReplyDeleteWhen you buy, you can build equity -- when you rent, you are throwing your money out the window.
ReplyDeleteAnd don't forget the mortgage interest deduction.
Renters build equity for landlords. A real estate investment (SFH, for example) is one of the only vehicles where (over 30 or 15 years) someone else (renter) can pay for an asset that will be worth hundreds of thousands of dollars to be owned free and clear. The stock market might have great returns, but the stock brokers don't pony up the money for you. Renters do.
"When you buy, you can build equity -- when you rent, you are throwing your money out the window.
ReplyDeleteAnd don't forget the mortgage interest deduction."
Hey cool! Someone decided to bring tired old cliches into the discussion!
First off, your entire post is tangential to the real discussion going on here about the fundamental value of condos based on their value as rental properties.
Second off,
Whether to buy or rent is a simple economic decision and it has nothing to do with "throwing money out the window."
In cases where purchase prices are grossly inflated, as is currently the case, it makes more sense to rent.
You can build equity much more quickly by investing the difference between what you would have to pay to purchase and what you have to pay to rent in today's market.
Besides, many people need or want flexibility depending on where they are in their lives or careers. Buying is almost never a good decision unless you are certain you are going to remain in the same home for at least 5 years.
Gotta hand it to leroy, when he's shown to be full of shit, he doesn't turn tail. He digs in. Good for you, leroy!
ReplyDelete"Buying is almost never a good decision unless you are certain you are going to remain in the same home for at least 5 years."
Except for, you know, often during the last half century.
"
ReplyDeleteWhether to buy or rent is a simple economic decision and it has nothing to do with "throwing money out the window.""
Not for most people. Most people want to own the home to own the home, and the bundle of rights that comes with it.
Plus - and this is what most of the idiots on this site ignore - it is often the case that you simply can't get the home you want by renting. If it's a simple economic decision, it might make sense to live in a van down by the river. Or a rental townhouse in silver spring.
ReplyDeleteThose of us who care where, and in what, we live, may choose to buy because we choose to live in houses that are sold, not rented.
you think posting over and over and over again as annoymous makes you sounds like more people? you are just trying to pretend to be lots
ReplyDeletestop cluttering up everything
Who cares if it's more people, he's right and you're wrong. STFU.
ReplyDeletepoor lance...
ReplyDelete"Those of us who care where, and in what, we live, may choose to buy because we choose to live in houses that are sold, not rented."
ReplyDeleteYeah, because renters don't get to choose "where and in what" they live.
I can see why you post anonymously...
Wow, we have an angry annoytroll on our hands.
ReplyDeleteYea. Pretty funny.
That old rule of don't buy unless you're going to live there 5 years is so true. I know quite a few people who lost money on short term stays. This time, buying 5 years won't do it.
Glad to see the district has such a low vacancy rate. That way they'll be people to fill those condos as they go to apartments. :)
So how many flips are you stuck with troll? I'm sure you saw the bank reports on Friday. Oh... that's going to make getting a mortgage easier... As long as you have a large down payment.
Case-Shiller clearly points to fast declining prices. Prices going down pre-mortgage crisis. I cannot wait to see the September and October numbers.
Troll, if telling people you disagree with to "STFU," go move to a country that doesn't have freedom of speech.
And the complex I'm in does have high vacancy. TROLL, PULL UP NEW DATA. THE MARKET HAS DRAMATICALLY CHANGED SINCE YOUR 2006 ARTICLES.
As your own article noted. " But some suburban landlords are lowering their rents "
Any my wife heard about commerical REIC layoffs on the train yesterday. If things are so sunny, why are the small shops laying off? Nothing that will make the Post though...
Inventory is high.
Sales are weak.
Thus prices will be driven down as has already been proven
I'm sleeping well. You?
Got popcorn?
Neil
David,
ReplyDeleteHuge cancellation rate in DC on home purchases!
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/12/AR2007101202273.html
or broken up if it doesn't post well:
http://www.washingtonpost.com/
wp-dyn/content/article/2007/
10/12/AR2007101202273.html
To think, the "mortgage disruption" is getting worse. For those of us with large downpayments saved, this will make things far more affordable.
From the article this lept out:
“The most dramatic rise was among condominiums, where the cancellation rate jumped to nearly 124 percent from 13.5 percent a year earlier, which means there were more cancellations of previous sales than there were new sales.”
Oh... that's going to make it tough to find someplace to rent. ;) How many more buildings are going to go apartment now?
Got popcorn?
Neil
anon said
ReplyDelete"when you rent, you are throwing your money out the window."
Dumbest comment ever... How much money do you throw away in interst every month? You dont get all of your money back with a tax deduction.
I pay 1600 a month for something that would cost about 3500 to mortgage, 20% down 30yr fixed. Do the math on that, if you can. You soon see that it is not smart to buy and banking the extra 2g's per month, plus not having maintenance fees is putting me farther ahead.
Once again, there is not argument here about the benefits of home ownership, most of us want to buy a home, we just want to make smart purchases.
As for your rent prices. I have lived here since 2003. Every year my year has went up, until this year. So, something has happened recently to the vacancy rate.
bob
Lance -
ReplyDeleteDC is CRUMBLING!!! BAHHAHAHAHAHA! Dumbass!
Look at those cancellations rates you moron.
Where is VA_Infestation? Licking her wounds I assume - LOSER!
Every year my year has went up, until this year. So, something has happened recently to the vacancy rate.
ReplyDeleteYep. Don't quote out of date stats.
David, the link above on the cancellation rates is really worth a read.
Got popcorn?
Neil
""Those of us who care where, and in what, we live, may choose to buy because we choose to live in houses that are sold, not rented."
ReplyDeleteYeah, because renters don't get to choose "where and in what" they live.
I can see why you post anonymously..."
Looks like you have a bit of a reading comprehension problem.
Hey Neil, you're ignoring the 2007 reports. I'll take what reputable news sources say over what you say, you douchebag internet troll.
Are you still praying that your company flings you to Tampa or Cincinnati so you can afford a house? What a pathetic loser.
my goodness, the hostility here has ramped up by several factors. Funny how it seems like the ones doing the most name calling and cursing are those who are HHs.
ReplyDeleteHmm, does that mean they are hurting pretty bad, why would housing bring out such hostility unless they are a) just trying to irritate others or b) in serious trouble and about to go through a process called foreclosure , or feeding the big alligator. Hmm, it does make one wonder.
My lots of anger anon 2:57.
ReplyDeleteI did look at the 2007 reports. They note rent is weak in the suburbs. I quoted from that article pointing out the weakness in your train of logic. Apparently your reading skills need work. The market has dramatically changed in the last few months. Or did you miss that?
I agree with anon 4:53, it sounds like the bulls are hurting. I've never heard of anyone having their mind changed via insults.
As to affording, I've always noted the issue is that those that work for me cannot afford. I'm just looking ahead. We're trying to do the best for everyone at the company. Anon, do you feel the technicians don't deserve to own a home? But we've had this conversation before, or are you so stressed over your flips anon that your memory is going?
Notice the bulls ignore the dropping sales and spiking inventory? Notice that they ignore all the failed auctions? The additional auctions being scheduled. Everything is pointing to a national repeat of the 1990's California downturn.
Prices will drop 6% to 20% over the next six months. Now I assume David means October through March (but he only predicts 6% to 13%). Well... from what I see we're well on track. The DC area is one of the most overbuilt areas.
All those pretty condos. ;) Coworkers talk about how smart it is to rent... Incredible money saved. All of the big defense companies are planning reorganizations. Not just my company.
Got popcorn?
Neil
Notice something in the following link? When sales were ok, the realtors (tm) would update within 14 to 16 days the previous months sales.
ReplyDeleteLately, they are still in the process of updating July market conditions! More than one coworker has commented that the lack of news implies things are really bad. More than one person at the stores has been overheard by yours truly commenting that "the Realtors are hiding something." (That person isn't a bubble blogger either!)
Time for the REIC to get their but in gear and update! The lack of information is starting to concern quite a few people. Time to stop hiding information and publish it. Let's face it, if its ok to publish the information within 2 weeks if information is good, you should also do that if its weak.
http://ziprealty.typepad.com/marketconditions/washington_dc_area_real_estate/index.html
Don't forget, Case-Shiller is down 7.2% by July YOY. August was the start of the credit crisis that is only getting worse.
If we have September data by Thursday, I'll be ecstatic. But wait... we're still waiting for August data! The NAR stranglehold on the data must be ended. Trust me, this is making a lot of potential buyers angry. More than one has stopped looking because the lack of information freaked him out.
Oh.. if buy/rent is such a good deal, go ahead and buy. You first. ;)
Got popcorn?
Neil
Hey Neil, don't sweat the annoytroll.
ReplyDeleteWhoever it is knows they are wrong... that is why they can't do any better than sling poo from hiding.
Heck, even the idiot that was originally trying to argue about rental and purchase prices finally ran off. (or turned into a child)
"Heck, even the idiot that was originally trying to argue about rental and purchase prices finally ran off. (or turned into a child)"
ReplyDeleteRan off or had so clearly won the argument that there was nothing else to say.
Chuckle. I seem to have struck a nerve. Losers like generals and CEO's? Yes, real seedy neighborhood.
ReplyDeleteI notice the bulls are totally avoided the point. The REIC isn't posting the latest information while the anecdotal evidence is pointing to fast dropping prices. Sales are plummeting everywhere! (miss the last article on this blog?). Customers are very concerned. The mania is going into a classic correction.
I'm convinced your having trouble paying your bills. Unable to get a HELOC? Business down? Job security not what you want? Perhaps laid off?
Oh, anon, thank you. You're making my point to any lurkers better than I ever could. ;) Re-read what you've posted in this and other threads and realize what message its sent to everyone. People who are confident of their position use diplomacy to make an argument. Once prices drop another 20%, you'll understand how you helped broadcast the panic. Snicker
Got popcorn?
Neil
Wow, another well thought out argument from the troll.
ReplyDeleteDon't call Neil those names. He was the kid who picked last in kickball, the kid who watched Star Trek, and the kid who ate tunafish for lunch.
ReplyDeleteNow he has a computer screen to protect him, and he can make snide reamarks w/out fear, and follows it up with that woeful popcorn tag, that he thinks is waaay to clever.
I feel bad for him.
"Now he has a computer screen to protect him, and he can make snide reamarks w/out fear, and follows it up with that woeful popcorn tag, that he thinks is waaay to clever."
ReplyDeletetroll, if you are going to waste everyone's time the least you could do is try to be more clever.
David,
ReplyDeleteI found a new blog you might like. Interesting article. Look how much the inventory is spiking up and how the dollar value of homes transacted is dropping YOY. Clear evidence only the high end properties are selling and Case-Shiller tells us they're selling at a discount.
http://www.dchousingprices.com/2007/10/mris-september-housing-report-market.html
Got popcorn?
Neil
Got popcorn?
ReplyDeleteHow about - Got a huge dick in your ass?
faggot
OK,
ReplyDeleteNow the code has been cracked,
the nameless one who hides behind the title 'anonymous' and hurls insults and cursewords and acts like a big brave man, whom it seems to lack a backbone to either come up with an identity or attatch initials or a name at the end of his/her/its post,
seems to only post on saturday.
David, is there some way to lock down the blog on friday night and open it up on monday morning?
It might keep out the riff raff who have nothing meaningful to contribute to the discussion.
Also, knowing the blog is down for the weekend might give the bloggers a weekend rest from the pro or anti bubble housing debate.
A little rest from the weekly grind might just do the trick to allow bloggers a chance to rest up for the weekly housing discussion.
Just a thought.
My error, he seems to post on sunday too.
ReplyDeleteClose down the blog on the weekend to discourage the vulgarities perhaps?
Neil,
ReplyDeleteYour analysis is not very good. Case-Schiller tells us very little about any single jurisdiction within the DC MSA, which runs from WVa to Southern MD, and District is probably the most unique of them all as it is the only urban one.
There is also no "clear evidience" that only high end properties are selling. Neither the blog you reference or the actual MRIS data indicate this. In fact, if you use properties over 500K as your high-end metric, the proportion of high end sales has dropped YOY. If you pick 1MM as high end the same is true. That's the reason the median has dropped - less high end sales.
What the MRIS statistics don't tell is how much of a discount those homes are purchased for. While they do list the sales versus the listed price (which does show a discount these days) they do not show the original listed price. We only have anecdotal evidence for that.
I think the explanation for the Average price going up YOY is the 2 $5MM plus sales in Sept 2007. These are outliers and they are screwing up a rather thin data set.
Correction - too many tabs open last night. The average sold did not increase YOY. But the drop would have been much larger and closer to the median drop if it wasn't for the two $5MM plus outliers.
ReplyDeleteThe link to the graph i posted with "red and blue lines" (the CEPR graph) has been misread (it appears deliberately so) by a number of folks who incorrectly think it proves that buying has always costed more than renting.
ReplyDeleteA simple reading of the legend reveals what the blue and red lines represent. The blue line represents rents (i.e., what you would pay periodically to rent a house) and the red line represents house prices (i.e., the entire price of the house, not the monthly payment).
It should be noted that both the red and blue lines are not actual dollars, but are indexed values, with 100, or "par", being listed as the year 1953. Thus the graph shows the changes in house prices and rents relative to their 1953 levels. In addition, the index values are adjusted for inflation.
This does not mean that it cost $100 to rent a typical house in 1953, nor does it mean that you could buy a house in 1953 for $100.
Instead, the graph is simply designed to show the pattern of changes in rents and house prices over a long period of time and how they do or do not correlate. As the graph shows, house prices (again, not the monthly payment, but the entire purchase price of a house) and rents correlated within 18% of one another for the entire period from 1953 to around 1999.
After 1999, house prices diverged significantly from rents.
The graph should tell a reasonable observer two things:
1. house prices generally track rents over long periods of time
2. house prices escalated way beyond levels supported by rents in the last decade or so.
For those seeking info on the actual cost to buy (per month) vs. the cost to rent, i again point you to the first link i provided that shows the cost to rent vs. cost to buy in 2001. Notice in 2001 the US average of 1.02 indicates it cost more to rent than to buy:
http://online.wsj.com/public/resources/images/PJ-AJ201_pjHOME_20061212202025.gif
It is also instructive to look at how the price to rent ratios in the WSJ graphic have changed between 2001 and 2006. It shows that prices have diverged away from rents in the last five years (which, not incidentally, is what the "blue and red line" graph shows).
Further, the other link i provided shows the change in the price to rent ratio for several major cities from 2000 to 2005. Note that the US average price to rent ratio went from 12 to 17 over that period:
http://duende.uoregon.edu/~hsu/blogfiles/pricerent_NYT_05.gif
Needless to say, the misinformation posted by some on the "blue and red" graph speaks volumes about their interest in a honest discussion of the facts.
John,
ReplyDeleteThank you for clarifying that the links you posted are absolutely nonresponsive to the discussion going on.
It's absurd that you would post all of that and then criticize somebody else for disinterest in an honest discussion of the issues.
If you can't follow the adults' conversation, stay in the playroom with lance.
Best,
A Guy Who's Smarter than You
Thanks for the clarification John, I misread that graph myself.
ReplyDeleteIs there any sort of article or report that that graph is drawn from?
BTW, you are of course completely right about the troll. I suspect we have a very angry real estate speculator on our hands.
I think the important thing to remember here is that if we had the troll's keen insight into real estate we would ALL be spending our time posting obscenities on blogs...
ReplyDeleteLeroy said...
ReplyDelete"I think the important thing to remember here is that if we had the troll's keen insight into real estate we would ALL be spending our time posting obscenities on blogs..."
I find it amusing how the BHs who are so quick to hurl insults at anyone not buying into their "gloom and doom/'let me have it for nothing'" scenario get offended when others do the same to them. BHs have set the low bar of discussion which they now complain about.
"I find it amusing how the BHs who are so quick to hurl insults at anyone not buying into their "gloom and doom/'let me have it for nothing'" scenario get offended when others do the same to them."
ReplyDeleteNice strawman lance... "let me have it for nothing" huh? Do you think people don't realise you just make these supposed "bublbehead" beliefs up?
The bubble is popping, prices are coming down. Don't worry, they don't drop to "nothing."
Also, I am not "hurling insults" at anyone. I am just pointing out that our resident troll has spent a good chunk of his weekend posting obscenities to this blog, which probably says a lot about how pleased he is with the decisions he has made.
"BHs have set the low bar of discussion which they now complain about."
Sure lance, whatever.
Leroy said:
ReplyDelete""BHs have set the low bar of discussion which they now complain about."
Sure lance, whatever."
Ok ... then let's see if BHs can address postings they disagree with without either denigrating the poster, homeowners in general, the real estate industry, developers, etc. If BHs haven't indeed set the low bar, then discussing without attacking and denigrating shouldn't be a problem, should it?
And if I were to get a quarter from a BH for each time in the next 2 days that a BH violates "the rules", I suspect I could buy a couple more homes on BHs' money.
A housing bubble blog denigrating the REIC? What next?!
ReplyDeleteHere's a quarter; best of luck holding on to the rowhouse.
Leroy,
ReplyDeleteHere is a link to the source page for the "blue and red line" graph...
http://www.cepr.net/index.php?option=com_content&task=view&id=343
and here is a lot more info from the same website...
http://www.cepr.net/index.php?option=com_issues&task=view_issue&issue=11&Itemid=22
(note that some sections have a "more" tab that will show you all the reports they have done on the topic)
"without either denigrating the poster, homeowners in general, the real estate industry, developers, etc."
ReplyDeleteThose who claim to be 'Homeowners' and are posting here are deluded about what their property is really worth and are thus hostile about it - they deserve the verbal beatdown they get.
'the real estate industry, developers, etc.' - are filth, lower than car salesman.
""without either denigrating the poster, homeowners in general, the real estate industry, developers, etc."
ReplyDeleteThose who claim to be 'Homeowners' and are posting here are deluded about what their property is really worth and are thus hostile about it - they deserve the verbal beatdown they get.
'the real estate industry, developers, etc.' - are filth, lower than car salesman."
It's the scummy renters who are whining about having the shit kicked out of them on this thread. Boo hoo.
And the 'bailout bill' to help head off foreclosures? The "Please government make the taxpayers bail out our Ponzi scheme and keep our financial bubble inflated bill." First, it would not have done anything to stop this decline, just political window dressing around the fringes. Second, it is getting vetoed anyway.
ReplyDeleteI ain't whining. I am laughing watching you all lose your shirts. This is great!
ReplyDeleteAnd you be nice to those renters. They are keeping Lance from getting foreclosed on!
"It's the scummy renters who are whining about having the shit kicked out of them on this thread. Boo hoo."
ReplyDeleteHi Lance!
Man, must be more people losing their houses than I thought.
ReplyDeleteJust kick the shit out of us on the courthouse steps.