Capitol Hill neighborhood. Just because.
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Bubble Meter is a national housing bubble blog dedicated to tracking the continuing decline of the housing bubble throughout the USA. It is a long and slow decline. Housing prices were simply unsustainable. National housing bubble coverage. Please join in the discussion.
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The best way to get the housing market thriving again is to drop prices to the point where supply equals demand. Home sellers might not like it, but it's good for buyers and it's great for Realtors.
For Realtors, the best way to make more money is to sell houses quickly, and the best way to sell houses quickly is to convince the seller to drop the price.
For Realtors, the best way to make more money is to sell houses quickly, and the best way to sell houses quickly is to convince the seller to drop the price.
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The subject matter of your photo is simply: Value.
ReplyDeleteAesthetic value. Emotional value. Historical value. And yes, economic value.
I'd hate it if I didn't go home to my brownstone in DC every night. (I'm not lance)
At a certain point, no one will pay 30K for a Star Wars action figure no matter that it has "Aesthetic value. Emotional value. Historical value. And yes, economic value." I know, "You can't live in a Tie Fighter" and "they're not making any more Millennium Falcon's". Blah blah. At some point, the cost of an item in question exceeds all of those aforementioned values. And that point is in our past. DC/NoVa = done.
ReplyDeleteI bought for 125K in 2002 and sold for 280K in 2005. That's a 124% increase. Ridiculous. Adjusted for 3% inflation since 2002 (since houses have appreciated with inflation since the turn of the century), the house should be worth ~154K. To reach that level, the 2005 sale price must decline by 45%.
How hard is this to understand?? Jeebus!
MrBubble
I'd hate it if I didn't go home to my brownstone in DC every night.
ReplyDeleteI feel the same way about my place in Old Town Alexandria. There is something about these places that really is appealing - not necessarily just their age, but all the other intangibles that make them - well timeless.
Its a shame that so few builders (and frankly buyers) understand this anymore...MUST BUILD MONOLITHIC MCMANSIONS... ASTHETICS , UNIQUENESS AND CHARACTER DO NOT COMPUTE...MUST BUILD PLACES SLIGHTLY APPEALING TO THE LARGEST SEGMENT OF SOCIETY...LOWEST COMMON DENOMINATOR HOUSING FOR ALL...
People of suburbia - it doesnt have to always be this way. Rise up against your opressors and demand something better!!!
Yep. You gotta be looking at at least $3M worth of bricks there. At least.
ReplyDeletejames said:
ReplyDelete"I bought for 125K in 2002 and sold for 280K in 2005. That's a 124% increase. Ridiculous. Adjusted for 3% inflation since 2002 (since houses have appreciated with inflation since the turn of the century), the house should be worth ~154K. To reach that level, the 2005 sale price must decline by 45%.
How hard is this to understand?? Jeebus!"
You crack me up. It's hard to understand because people will do like you did ... they will let the market decide what is the best price to sell/buy at and NOT use your "scientific" method of figuring what "value" is. Tell me James, if you so believe in your scientific way of determining value, why didn't you sell your house for what it should have sold for(per your methodology) and instead sold it for what the market would bare? (It sounds like you are applying a double standard ... "scientific" for buying and "what the market will bare" for selling ...)
anon said:
ReplyDelete"Its a shame that so few builders (and frankly buyers) understand this anymore...MUST BUILD MONOLITHIC MCMANSIONS... ASTHETICS , UNIQUENESS AND CHARACTER DO NOT COMPUTE...MUST BUILD PLACES SLIGHTLY APPEALING TO THE LARGEST SEGMENT OF SOCIETY...LOWEST COMMON DENOMINATOR HOUSING FOR ALL..."
I don't think it's that builders are building any different now than they did 100 years ago. (I'm not talking about materials/workmanship but about letting the market drive what goes up.) For example, most of our old row houses were built as identical units ... for cheap. It is the intervening decades (and centuries) and homeowners tinkering with their homes that have given these homes their individuality and "warmth". Remember the aged brick once upon a time was new brick ... and looked like the brick on every other house on its street.
So, rack up another "limited" item which increases the value of these homes ... the warmth and uniqueness brought about by aging ... like a fine wine.
"People of suburbia - it doesnt have to always be this way. Rise up against your opressors and demand something better!!!"
ReplyDeleteNo kidding - and say hell no to all the BS Strip Malls and Chain Restaurants too. Lemmings.....
You can go home to a brownstone every night without owning it. In fact, it may be possible to be far richer (and happier) going home to your rented brownstone than going home to your "owned" brownstone that you bought with a zero-down, $700K loan in 2005, that you have put another $50K of work into, and that has you worrying about the reports of increased criminal activity nearby, even as you now realize that you likely can't sell it for as much as you owe on it.
ReplyDeleteI live in capitol Hill, but can't place that block.
ReplyDeleteThey still have bars on the windows -- up towards H Street?
So you are out looking?
"I feel the same way about my place in Old Town Alexandria"
ReplyDeleteI'm a few miles away across Del Ray. My small SFH is nice, old, brick, slate, but it's the 15 minute commute that gets me.
I can be the last to leave the office and the first home.
I can't imagine anyone saying, "bag this, I'm going for the 2 hour one-way commute, that'll save me a couple hundred grand on my house."
Call it 220 work days a year. 3 hours/day tariff over close-in. 6600 hours over a decade.
At a 200 grand delta, that's 30 bucks an hour to commute.
660 hours commuting a year is 4 weeks of 7x24. Close in gives me a month's vacation, taken 3 hours a day.
What's bizarre is that you'll probably get the two hundred grand premium plus interest when you sell.
Even stranger, someone who went for a $600K place in Manassas in 2005 is probably down a hundred grand or so but his evil twin, who dropped $800K on a choice close in crib, hasn't lost value.
"I bought for 125K in 2002 and sold for 280K in 2005"
ReplyDeleteIn Lorton, VA? Manassass? Where?
Nice photos. But I'm not sure I'd want to live where bars are required.
ReplyDeleteBanks took another step to tighten credit: (Hattip Tanta)
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/22/AR2008022202987_pf.html
tightening credit will have its impact.
Got popcorn?
Neil
Ponzi's supporters were outraged at the officers who arrested him. 17,000 people had invested millions, maybe tens of millions, with Ponzi. Many who were ruined were so blinded by their faith in the man or their refusal to admit their foolishness that they still regarded him as a hero.
ReplyDeletefrom: http://en.wikipedia.org/wiki/Ponzi
History is repeating itself.
Got Popcorn?
Neil
Blackbeard, you're overlooking the bars on the windows and doors. Those have gotta add another thousand bucks or so.
ReplyDeleteDavid,
ReplyDeleteHave you looked into the NAHB/Wells Fargo afford ability index?
http://www.nahb.org/page.aspx/category/sectionID=135
Funny thing, Washing prices are falling faster than the Florida bubble markets.
So its not just Case-Shiller showing the wheels have fallen off. In fact, Wells Fargo is showing a much faster price decline in Washington than Case-Shiller.
Got Popcorn?
Neil
Anonymous said...
ReplyDelete"I feel the same way about my place in Old Town Alexandria"
I'm a few miles away across Del Ray. My small SFH is nice, old, brick, slate, but it's the 15 minute commute that gets me.
I can be the last to leave the office and the first home.
------------------------------
kh! why you going anony?
Others have pointed to the bars on the windows.
ReplyDeleteIndeed, needing to make what you want to think of as your home into a stockade is not a good thing.
But shared walls? Ghetto!
Simple Factoid -- it was a condo in Falls Church near Seven Corners.
ReplyDeleteLance wrote: "You crack me up. It's hard to understand because people will do like you did ... they will let the market decide what is the best price to sell/buy at and NOT use your "scientific" method of figuring what "value" is. Tell me James, if you so believe in your scientific way of determining value, why didn't you sell your house for what it should have sold for(per your methodology) and instead sold it for what the market would bare? (It sounds like you are applying a double standard ... "scientific" for buying and "what the market will bare" for selling ...)"
What?? I bought and sold for what the market would bare [sic]. What's your point? I would have sold for 154K, but because it was "worth" more to someone else since that person had no methodology, I sold for 280K. I knew that it wasn't worth 280K because I couldn't rent it out for 2800/month (1% of the purchase price). This stuff isn't very hard.
Lance, I can't believe that you are still banging this drum. The national real estate market is crashing and people are starting to realize that renting isn't the worst thing in the world. I rent now in SF and my rent is covered by the money that I make investing the money I made on my condo sale in NoVA. Pretty sweet, IMHO.
MrBubble
"Wells Fargo is showing a much faster price decline in Washington than Case-Shiller."
ReplyDeleteAnother overly broad index heavily weighted toward the garbage counties (West Virginia for god sakes), and this is supposed to be a good indicator for prices falling "in Washington". About as worthless as Case Shiller for indicating prices inside the beltway.
ReplyDeleteAnother overly broad index heavily weighted toward the garbage counties
So what index shows what is really happening in the beltway? Case-Shiller is far better than the median price. Whatever index you propose needs to be an index that goes back to at least 1991 to be of any value. If there is no such index... We'll use what we have, which are pretty good indicators of the trend.
Got Popcorn?
Neil
anon said:
ReplyDelete"But shared walls? Ghetto!"
LOL ... Anyone who would say that has just said a whole lot about themselves. I guess Park Avenue dwellers are living in a ghetto huh? Of course, it's that kind of thinking that allows McMansions to get built ... that quickly become the tenaments of their time. And yes, 100 years ago the same thing happened in the then "outlying" suburbs of Dupont and Logan.
"Another overly broad index heavily weighted toward the garbage counties"
ReplyDeleteMore made up bullshit naturally, but don't let that slow you down!
those bars keep the value from escaping :)
ReplyDelete"Simple Factoid -- it was a condo in Falls Church near Seven Corners."
ReplyDeleteAlso known as "Little El Salvador". Goodwill runs a major operation in Seven Corners. There are no Metro train stations in Seven Corners.
Seven Corners VA has nothing to do with Capital Hill DC, and Capital Hill is the subject matter of this blog entry.
Anyway: The Motley Fool chimes in on current housing valuations here: Link
LOL ... Anyone who would say that has just said a whole lot about themselves. I guess Park Avenue dwellers are living in a ghetto huh? Of course, it's that kind of thinking that allows McMansions to get built ... that quickly become the tenaments of their time. And yes, 100 years ago the same thing happened in the then "outlying" suburbs of Dupont and Logan.
ReplyDelete------------------------------
I hardly think my SFH in 20015 is a McMansion, nor will it become ghetto. It does, however, afford a quiet setting, good schools and walking at night without any worries. And, it will be much easier to sell than your hovel.
Anyway: The Motley Fool chimes in on current housing valuations here: Link
ReplyDelete----------------------------------
That story says that new houses are worth more than old ones because they are built better and with more expensive materials.
I guess Park Avenue dwellers are living in a ghetto huh?
ReplyDelete--------------------------------
There you go again. Equating Manhattan with DC.
But now you've equated Park Avenue with your borderline portion of S Street?!!
Bwahahahahahahahahaha....
"So what index shows what is really happening in the beltway? Case-Shiller is far better than the median price."
ReplyDeleteWhy is this the case? Median price has its flaws, but the best thing about it is that it is based on a county by county basis. It would seem reasonable to me that if median prices in a "garbage county" (as another anon so quaintly put it) fell say 2.5X or 3X as much as it did in Arlington, it is reasonable to assume that their losses are proportional to the disparity in the fall in median prices.
Neil,
ReplyDeleteI work for a local condominium sales firm... We track the entire market on a quarterly basis, taking stock of both new home sales and resales. Our data is much more real time than case-schiller, which I think we can all admit has it's faults. While I agree that it's the best and most unbiased national statistic available, I think when looking at the strength of a specific market one needs to drill down to specifics of that region.
In terms of sales, the outer suburbs are definitely hurting. Prices have dropped substantially, days on market and inventory are soaring.
When you look at the close in markets however (arlington, alexandria, dc, etc.) it is a different case. Prices are flat, days on market and inventory are up, but substantially less than the rest of the market.
Looking at specific new home communities, I have seen a substantial spike in velocity.
Some examples of sales last week at various communities (I'll omit the names, but I'm sure you can guess the jobs):
250+ unit condo on capitol hill (SE) - 5 sales
150+ unit condo in clarendon - 4 sales
250+ unit condo in Mt. Vernon Triangle - 2 sales
Sales pace is averaging about 8-12 units per month at these communities. Not bubble days, but very healthy.
We have dropped prices to adjust for the market and now we are selling. These are real sales that will settle in 30 days. I'm not saying the market isn't flawed, but from someone that is on the ground (and admittedly biased), things are moving and the sky is not falling.
As I recall from your past posts, you aren't from the region. Some of the nuance of the market may be eluding you. I'm not saying things are perfect. They are not. But I am arguing that product is moving once price is adjusted. We are not dropping pricing after that. Once people see a value they jump off the fence.
Sure, if rates spike and capital dries up, things will change, but for now, things are stabilizing.
"If there is no such index... We'll use what we have, which are pretty good indicators of the trend."
ReplyDeleteNo. Neil - you dont live around here so I wont begrudge you this too much - however, even your most pessimistic bloggers such as Leroy have admitted that THUS FAR prices inside the beltway have not fallen anything like they have out in places like PWC & beyond. Thus, to assume that Case Shiller, Wells Fargo, or anyone else who agglomerates prices based on the entire MSA has no idea what is going on on a county level.
You will note that I said thus far because I think the fall will still come, maybe later this year. However, the evidence is clear that for whatever reason, there has been a very clear divergence of prices inside and outside of the beltway.
Incidentally, why are you so fixated on this market anyways? In your blog, you have several entries dedicated to truly noteworthy meltdowns on either the State (CA & FL) or City (LV or PHX) level. However, you also dedicate several entries to little Arlington County, VA. Since you dont have a dog in this fight, why do you care so much about this tiny area? Why do you spend so much time & energy trying to expose it as a fraud? The much larger DC MSA has melted down so doesnt this make you happy? Why not just accept the fact that with a few exceptions, (Arlington, Alexandria & DC) that the DC metro has melted down, and leave those of us who live around here debate how much farther down they will go. Quite frankly, your obsession about the inner areas that dont affect you one way or ther other seems unhealthy.
Hey Lance,
ReplyDeleteI'm bored with my superiority here in Loudoun county. Time to shake things up; go somewhere, see some sights, you know?
So what do you recommend? Dulles Town Center Mall? or Fair Lakes Shopping Center? I'm ready to head on over to either place in my car! Oh wait, perhaps we should head to Tyson's Corner? Woooweee, I love that place; it sure is fancy. But the traffic and parking scare even me; a dyed in the wool superior car-centric McMansion dweller. Hey, my life revolves around sitting in traffic, and your's doesn't, so that makes me better than you.
(The Wife and I save heading into DC for special occasions; you know, like major sporting events, the best dining in the region {except for Red Robin and Macaroni Grill here in Loudoun}, and sightseeing in places like Capital Hill - maybe we'll see you around on one of those special occasions?! I'll know its you 'cause you'll be all ghetto without a car.)
$100 for one barrel of crude oil is now "normal." Where does it go from there....? Anyone? Anyone? Bueller? Bueller?
Lance, let's go to the mall!
ReplyDeletehttp://www.youtube.com/watch?v=9mJAsgIIfNM
"{except for Red Robin and Macaroni Grill here in Loudoun}"
ReplyDeleteLMFAO - dont forget Carabbas and Cheesecake Factory - best frozen pre packaged, boil in bag food around!
Local RE Guy,
ReplyDeleteYou are giving us static information, not anything that is predictive, such as the number of units that are expected to come on the market, the disparity between renting and owning, the historical difference in price to median income, etc.
The homes closer in are in better shape, and are more attractive to more people. However, all you see now is a lag in the fall in innner districts. There is clearly some correlation between price in the inner and outer parts of the area, and these will have to return to balance.
I hope you are not paid for your stategic analysis because if you were, you would be so FIRED!!!!
Come on! Don't bash Carabbas. They run those cool advertisements on the radio all the time! You know, the ads you hear over and over while you're stuck in traffic day after day, traveling to and from your superior neighborhoods, paying higher and higher fuel prices, including the costs associated with heating and cooling your slap-dash constructed McMansions.
ReplyDeleteYou know what I think we should do? widen the roads! Asphalt is derived from petroleum; that could mean higher gas prices. You know, food prices are on the rise. Food gets to you via truck, and you must drive a car and sit in traffic to buy your food. Don't forget that you can't earn a living to pay for your food or your nice neighborhood unless you slog through traffic, day after day. Damn, it sure must be nice to live in the suburbs.
"even your most pessimistic bloggers such as Leroy have admitted that THUS FAR prices inside the beltway have not fallen anything like they have out in places like PWC & beyond."
ReplyDeleteThey may not have fallen as much as PWC (and I don't think anyone has suggested this), but that have fallen. The average price in the closer in areas (including Arl, Alx, PG, Mont, DC, and Fx) is down 12% from the top.
That's huge, especially considering that the crush is just starting in closer in areas.
"The average price in the closer in areas (including Arl, Alx, PG, Mont, DC, and Fx) is down 12% from the top."
ReplyDeleteI dont doubt this stat for a second, but it is part of the same agglomeration problem noted above. It is worth asking how much each of those counties contributed to this 12% decline. I would say that Fx and PG are responsible for a ton - and maybe Mont to (I havent looked into it). I would also say that Arl, Alex and DC have THUS FAR contributed fairly little to it.
Correct?
"I work for a local condominium sales firm..."
ReplyDeleteSorry, buddy, that's all anyone needs to know to qualify your "analysis."
"Neil - you also dedicate several entries to little Arlington County, VA. Since you dont have a dog in this fight, why do you care so much about this tiny area? Why do you spend so much time & energy trying to expose it as a fraud? The much larger DC MSA has melted down so doesnt this make you happy? Why not just accept the fact that with a few exceptions, (Arlington, Alexandria & DC) that the DC metro has melted down, and leave those of us who live around here debate how much farther down they will go. Quite frankly, your obsession about the inner areas that dont affect you one way or ther other seems unhealthy."
ReplyDeleteI noticed the same thing about him, maybe he does it with other areas too and we just dont notice. It does seem odd though.
You notice how whenever someone calls him out on a subject he goes silent - no more comments to that post. Its as if he wants us to believe that he is too busy slaying the dragons of the bubble blogs to read the old posts. The reality is almost certainly different - he sees, he knows - he just chooses not to respond to the difficult questions.
How bout it Neil, care to comment on this? Its a legitimate question.
Lance - maybe we'll see you around on one of those special occasions?! I'll know its you 'cause you'll be all ghetto without a car.)
ReplyDeleteLOL. You should have added, You will know its me because when my wife and I step out of my ginormous SUV, we will be the only fatties on the block - kinda like tourists in NYC.
I know some folks like living in these kinds of homes, but it would make me so depressed to come home everyday to a house like that. I have a .37 acre lot in Fairfax and it feels cramped sometimes, this would be misery for me. I guess everyone is different though.
ReplyDeleteyou don't get it....the whole city is your yard....you just have to share it....
ReplyDeleteand if that ain't for you, I don't know what to tell you.