Thursday, March 27, 2008

Open Question for Blogger

Here is your chance to ask questions. Please post questions that you may have regarding the housing market. I will answer the top 8 questions in a post over the weekend.

27 comments:

  1. I live in Baltimore, MD, in the Canton Neighborhood. I have seen certain houses stay at high asking prices for over a year. In the past few weeks I have seen some of those very high prices come down. To put it into perspective I have seen one house go from 525K to 439K. I have also seen two short sale/foreclosures in the past 6 weeks that have sold for a 40% discount (500K to 290K). Both of these homes were not destroyed, just some scuffed paint. I'm trying to figure out how these comparables will affect offers I am about to make on Sunday. I would like to base my offers on a historical rate of return from say the price in 2000. What do you think would be a good % rate annualized?

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  2. This blog really sucks - your moderation of comments adds nothing to the discourse, and the posts themselves are just regurgitations of other people research and thoughts. Question: How are you going to fix this blog, or, if you are not, why are you keeping it online?

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  3. how many posts has lance made?

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  4. What was the median price of a home in the Washington, D.C., area before the bubble (around 2000-01) compared with the median price now? If prices were to return to a "normal" trendline, what might we expect the median price to be if this bubble were to completely deflate?

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  5. Gentry of the Landed VarietyMarch 27, 2008 5:51 PM

    In early May of last year, you posted a photo of 1256 New Jersey Avenue. It was for sale at the time. It was listed as an 8 bedroom, 7 bathroom home.

    "Gorgeous façade awaits your vision. Currently configured as a 7 unit
    building with 7,196 interior Square Feet. Terrific location, Around the
    corner from the New Convention Center and just a few blocks to METRO.
    Needs work but screams POTENTIAL"


    That property sold recently.

    Do a Google search on the address (1256 New Jersey Avenue NW) and you'll see that it was listed at $1,199,000.

    The property is currently undergoing renovation. A dumpster is parked outside on N St, and workers are working inside as I write this.

    Any ideas regarding what it sold for? If prevailing wisdom on this blog is accurate, it should have sold for under $500,000, perhaps much less, because the property is basically uninhabitable and is in a "Bad" area. AND we are in a recession AND the housing market is in a steep decline AND DC is not immune to the declines. Remember, the sale transaction was completed within the last month or so. (March 2008)

    Anyone? My guess is that it went for $12.31 and a couple of Colt 45 Malt liqours. No wait, I'm guessing that the previous owner paid the new owner $1,200,000 to take it off his hands.

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  6. This comment has been removed by the author.

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  7. In early May of last year, you posted a photo of 1256 New Jersey Avenue. It was for sale at the time. It was listed as an 8 bedroom, 7 bathroom home.

    -----------------------------------

    Do you even know that neighborhood?
    The projects next to that place make Potomac Gardens look like Beverly Hills.

    You can talk gentrification all you want. I don't see the DC government making those projects go somewhere else.

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  8. "Do you even know that neighborhood?"

    I know it well.

    The deconstruciton of Sursum Corda has begun. Go look; the contractor's trailers are sitting there on NJ Ave and the demolition crane is in place. The nearby Temple Courts project is coming down now too. "Now", means; people are being moved out "now" because the buildings are coming down "now".

    And it has only just begun.

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  9. "You can talk gentrification all you want. I don't see the DC government making those projects go somewhere else."

    They go, but slowly - DC is essentially 20 years behind Alexandria. Ya know "the Berg" from the movie Remember the Titans - well it was a real place between Old Town and Del Ray. Parts of it are there, but its going, block by block (about 1 block leveled every 2-3 years).

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  10. Anon 7:45 said:

    "Do you even know that neighborhood?
    The projects next to that place make Potomac Gardens look like Beverly Hills.

    You can talk gentrification all you want. I don't see the DC government making those projects go somewhere else."

    hmmm ... the first step in buying a home is to know your city and what public works and development/redevelopment projects are planned for it.

    "The housing projects are scheduled to be torn down and replaced by one of former Mayor Tony Williams' signature initiatives, a mixed-income New Community in which current residents will be guaranteed subsidized housing alongside hundreds of market-rate and workforce housing units, as well as a high-end supermarket, hotels and retail.

    http://tiny.cc/8p8n6

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  11. How are mortgage rates determined, and how does lowering the Fed Funds rate effect them?

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  12. The housing projects are scheduled to be torn down and replaced by one of former Mayor Tony Williams' signature initiatives, a mixed-income New Community in which current residents will be guaranteed subsidized housing alongside hundreds of market-rate and workforce housing units, as well as a high-end supermarket, hotels and retail.

    http://tiny.cc/8p8n6
    ------------------------------

    What is your point? One project replaced by another project. So what? The same murdering, raping, robbing criminals that terrorize people will still be there in the new housing project.

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  13. "DC is essentially 20 years behind Alexandria. "

    You just said that one of the top 3 over-inflated housing markets in the United States (Alexandria, VA), is '20 years ahead of Washington DC'?

    OK. You've just made an argument FOR the future of DC's real estate market.

    Well done.

    Marketing a meltdown

    It was bound to happen.

    With 5,000 homes estimated to be foreclosed on this year in Alexandria and Fairfax County, and Forbes.com ranking Alexandria as the nation’s second most inflated real estate market, a clever local Realtor has come up with a “chartered foreclosure bus tour” which will take off on “an exciting adventure” to view real estate deals. “Take your pick! Free foreclosure bus tour!” blared the announcement from the tour guide and Realtor, Cristin Patti of Long & Foster, who’s orchestrating the event.

    At “no charge” to participants, the chartered bus will take off from Long & Foster’s 500 Montgomery Street in Old Town on April 19 and return to the same location by early afternoon.



    Here
    is the full link.

    http://www.alextimes.com/article.asp?article=9031&paper=1&cat=155

    (Alexandria Times, March 2008)

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  14. "One project replaced by another project"

    Actually, no.

    First, NPR is moving across the street from this location. CNN is already there. DOJ is consolidating ALL office space there in 2010.

    The "project" itself is over 225,000 square feet of commercial, retail, and residential development. (This is after the "bad" place is torn down - and the demolition is underway now)

    The residential component will be less than one-third "low income". In fact, most current residents have chosen not to come back.

    Mixed use is the best use for major developments. It is the way of the future in DC. You'll see Northern Virgina further 'Balkanized' because there are no mixed use developments. Only the haves, and have-nots, in their distinct geographic locations. (Unless you are talking about Alexandria, where the projects are mixed in with the 'other' housing units)

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  15. "You just said that one of the top 3 over-inflated housing markets in the United States (Alexandria, VA), is '20 years ahead of Washington DC'?"

    ******************************

    You really should read the Forbes article that the Alexandria Times article inaccurately summarizes. The Forbes article ranks Alexandria the second most overpriced suburb IN THE SOUTH based SOLELY on how long it would take the median salary in Alexandria to save enough to afford the median home there. Very different than calling the city the most overinflated in the entire nation.

    From Forbes:

    "Median home price: $539,200

    Median household income: $80,449

    Gross income to buy house: 6.7 years

    Unaffordable means a very different thing in the South than it does in California. Alexandria may be in one of the most affluent areas in the country--right outside of D.C., home to many of the nation's richest counties--which makes housing more affordable on a relative basis. A household income of $80,449 doesn't put you in a strong position for a median home, but might be enough for a starter home."

    http://www.forbes.com/2008/01/31/housing-pricey-suburbs-forbeslife-cx_mw_0131realestate_slide_9.html?thisSpeed=15000

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  16. "You just said that one of the top 3 over-inflated housing markets in the United States (Alexandria, VA), is '20 years ahead of Washington DC'?"

    $Bling - Not sure what you were talking about, but I was referring to the gentrification trend.

    My brother in law works in Old Town Alexandria surrounded by $1MM row houses. One of the long time residents Talks about how 40 years ago OT was essentially all slums - wake up on a saturday morning & find used condoms on the street.

    Around then OT started its gentrification revival. 20 years later (i.e. 20 years ago) the govt responded to OT citizens complaints by breaking up the concentrations of poverty and destroying the govt housing known as the berg - that process continues today, and is now starting in DC.

    Bubble aside - 20 years ago, this part of alexandria certainly wasnt overpriced. Long term, the city trend (DC & Alexandria) breaking up concentrations of poverty will continue.

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  17. This major renovation and development is a stone's throw from that address on New Jersey Avenue:

    http://dcmetrocentric.com/2008/03/26/the-yale-steam-laundry/



    Oh, so is this one:

    http://cityvistadc.com/amenities/

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  18. The only reason I care amout this bubble is that the thrifty people who tried to budget their money will have to pay to bail everybody out!

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  19. Here's a question:

    Do you predict today's (3/31)Housing Tracker's numbers to be an all-time inventory high? (And we've only JUST started the spring selling season.)

    My answer: Yes!

    http://www.housingtracker.net/askingprices/DC/Washington-Arlington-Alexandria/

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  20. area before the bubble (around 2000-01) compared with the median price now? If prices were to return to a "normal" trendline, what might we expect the median price to be if this bubble were to completely deflate?


    Price to income discussion on pre-bubble would be interesting.

    As to the anon who doesn't like this blog, stop posting or start your own blog. David has provided good insights and predictions over the years.

    Mixed use is the best use for major developments. It is the way of the future in DC.

    I agree. After spending time in NYC, mixed use provides a far improved standard of living as long as its tied into the mass transit system.

    But that doesn't overcome the current disparity between price and income.

    What fraction of DC will retire in the next decade? My company is facing a loss of 60% of our workforce to retirement within 12 years. We are having to shift operations to regions where young people can afford to buy to accomodate this demographic shift.

    Got Popcorn?
    Neil

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  21. "Mixed use is the best use for major developments. It is the way of the future in DC. "

    I hole heartedly disagree. Mix used is a hippy dream world where the rich and poor can live together in harmony. Reality is, they don't. Before anyone calls me a snob, don't. I have been poorer then most people in this country. As a kid I got free school lunches and we had food stamps for a little while. We would go to our aunts house and pick apples from her tree so we could eat. Incidentally, I now hate apples.

    Being poor, the worst thing for me was to see on a daily basis how much better other people had it. All it did was make me angry and jealous. We moved to a lower income neighborhood, everything changed. No one had the new gi joe, or the new bike, we all were the same and it was better.

    Mix used is terrible. All it does is make people feel good about them selves and anybody with a brain can see that this is an idea forced upon the middle class. Go into Potomac, or great falls. How many mixused developments do you see there? None.
    Just my 2cents.
    Bob

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  22. "We are having to shift operations to regions where young people can afford to buy to accomodate this demographic shift."

    Raytheon is not the yardstick by which everything else is measured. Unless you're a narcissistic do-nothing.

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  23. Neil said:
    "What fraction of DC will retire in the next decade? My company is facing a loss of 60% of our workforce to retirement within 12 years. We are having to shift operations to regions where young people can afford to buy to accomodate this demographic shift."

    Sounds like your company has chosen to put itself at a disadvantage against those companies willing to pay their employees what it costs to be where the employees want to be. I wonder how many top ranked Harvard or Yale grads you're going to get to move out to Omaha or Peoria.

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  24. "I [Bob] have been poorer then most people in this country. As a kid I got free school lunches and we had food stamps for a little while. We would go to our aunts house and pick apples from her tree so we could eat."

    I am shocked to learn this. SHOCKED.

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  25. "As to the anon who doesn't like this blog, stop posting or start your own blog. David has provided good insights and predictions over the years."

    He didn't even follow up on this post. It's lame as hell.

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  26. tear down the wallApril 02, 2008 6:21 PM

    "I hole heartedly disagree."

    You meant to say; "wholeheartedly disagree."

    Anyway, the point is that high density low income housing projects are being torn down in DC and other major US cities right now.

    We can debate the viability of what will replace the projects, but that doesn't change the fact that projects are coming down now.

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  27. "I wonder how many top ranked Harvard or Yale grads you're going to get to move out to Omaha or Peoria."

    ----------------------------------
    NONE lance!! Not a single, solitary one. They ALL want to live right next door to you! That's the sole reason they went to college.

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