Freewheeling American capitalism may be falling out of fashion on Wall Street, but in the western suburbs of Northern Virginia, it is driving one of the greatest home-buying sprees the region has ever seen.The moral of the story: Drop prices, sell houses. It's Econ 101.
The epicenter of the boom is Prince William County, where enterprising investors are scavenging the wreckage of the housing bust at a furious pace. Last month, 1,116 homes were sold in the county, a 235 percent increase from the same period last year and more than in any other September on record, according to the Northern Virginia Association of Realtors.
The buying frenzy is the silver lining of a staggering decline in home values. With banks choking on a glut of empty, foreclosed properties, the median sale price for detached single-family houses in Prince William plunged 41 percent in the past year, from $405,000 to $239,900. ...
Nowhere else in the region has the drop in prices and surge in sales been so extreme. ...
Much of the dealmaking has been led by investors, according to real estate agents who specialize in foreclosed properties. Doctors, lawyers, engineers — anyone with good credit and disposable cash — are becoming part of a burgeoning class of landlords. ...
Because of the oversupply, banks are likely to continue slashing prices, dragging down property values for nearby homeowners, in order to maintain a competitive advantage over other sellers. ...
For buyers, the dizzying pool of repossessed property is not likely to dry up anytime soon.
Monday, October 20, 2008
Homes are selling in Prince William County, Virginia
From The Washington Post:
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More housing rental options! Can you say: "Group Home"?
ReplyDeleteIn come the vulture investors who will become slum lords. With housing prices now over correcting, something has to give. Can prices go down any further than 41%? Pretty soon housing prices will be 2 or less times household income, if not already there.
ReplyDeleteWHEN ARE THEY GOING TO DROP 41% IN BETHESDA PLEASE?
ReplyDeleteHi James,
ReplyDeleteWonder what this will do to the price of rentals in the area? I bet that they fall as the new "doctor" property managers put their newly acquired but previously vacant foreclosures up for rent...again, econ 101.
Nice post, Rebcca
I just got a hold of some great info today on both subprime and alt-a mortgage stats.
ReplyDeleteThe NY Fed has published a national breakdown by zipcode of subprime, alt-a, and the and a whole array of stats on the loans, such as % reset, % that will reset in varying periods of time, etc. It is great info that I have only begun to comb through.
According to my preliminary examination of this, the bulk of subprime resets will finish up by Aug 2009. Alt-A resets won't finish until 2011 in the Washington area. The most subprime loans were given out in PWC, like we already knew. The most alt-a loans were given out in the affluent areas. So if you're holding out to buy in an affluent area, resets begin in mass next year and won't finish until 2011.
http://www.ny.frb.org/regional/subprime.html
I suspect that the crackdown and harassment of immigrants is creating problems down there as well. The rental market will be softer. Some immigrants have bought property, and if they are underwater, they may be more inclined to just walk away.
ReplyDeleteAnonymous said...
ReplyDelete"I suspect that the crackdown and harassment of immigrants is creating problems down there as well. The rental market will be softer. Some immigrants have bought property, and if they are underwater, they may be more inclined to just walk away."
I have a co-worker who lives in Manassas (Prince William County). He says that many of the foreclosed homes were previously Hispanic-occupied. This suggests that immigrants may be playing a big role in PWC's housing bust.
You raise an interesting question: Would the downturn be as big in PWC without the recent crackdown on illegal immigrants?
Also think about this: Many Hispanic immigrants were employed in construction. When they lose their jobs, they can't pay for their own homes.
I heard from a reliable source that Sizzle-Lien is going to substitute PWC for Arlington, since Arlington hasn't declined as "The Sizz-L" predicted.
ReplyDeleteAfter all, Sizz-L predicted that substitution would be a major factor in the Washington area. Arlington=Manassas.
"Anon said...
ReplyDeleteI heard from a reliable source that Sizzle-Lien is going to substitute PWC for Arlington, since Arlington hasn't declined as "The Sizz-L" predicted.
After all, Sizz-L predicted that substitution would be a major factor in the Washington area. Arlington=Manassas."
You dare doubt my clarion predictive ability when it comes to Arlington??? As we all know, high end areas fall explosively right at the end of a downturn, for no reason at all. For example:
Palos Verdes:
1989 +1.2%
1990 -0.3%
1991 -1.6%
1992 -0.7%
1993 -0.3%
1994 -37.6%
The same thing will happen in Arlington. The worst will be over, the bubble blogs will die, and since no one is paying attention, only I will be able to take advantage of the Arlington Meltdown. I know this will happen because I have graphs that prove it. See my blog at:
WWW.IMADOUCHEBAG.BLOGSPOT.COM
Got Bacon?
Sizzle-Lien
"Sizzle-Lien said...
ReplyDeleteonly I will be able to take advantage of the Arlington Meltdown."
I plan to provide a free concert at the Arlington Meltdown.
1) WHEN ARE THEY GOING TO DROP 41% IN BETHESDA PLEASE? .....the day that you walk down bethesda row and do not see a dog.
ReplyDelete2) homes selling in PWC....a foreclosure counts as a sale.
Lien Diamond, will you sing "Sweet Caroline" at the Arlington Meltdown? Perhaps I can join you - I was a bit hit in the 1960s with Annette Funichello you know.
ReplyDeletePerhaps we can turn the "Arlington Meltdown" into a fundraiser for all the suddenly homeless, poor and destitute in Arlington.
If I lived in this county, I'd buy a new house at 40% off, and mail my keys to Paulson, Fannie and the Bank with a thank-you note with the message, "you know what to do"
ReplyDeleteRenter since 2000.