Wednesday, November 30, 2005

PBS Interview with David Lereah

David Lereah [ my nemesis ] is the cheif economist for the National Association of Realtors was interviewed on PBS by Gwen Iffill.

GWEN IFILL: For months, economists and homeowners have been on the hunt for any sign that the nation's robust housing boom may be going bust. This has week has brought mixed news.

The Commerce Department reported today sales of new homes rose a record 13 percent in October, but yesterday, the National Association of Realtors reported sales of previously owned homes fell by nearly 3 percent in the same period. What to make of all of this? For help, we turn to David Lereah, the chief economist for the National Association of Realtors.

For help?. Lereah is biased. Where is the counter argument? We need a debate. Get Ben Jones' on NewsHour.

GWEN IFILL: Was there ever such a thing as a housing bubble?

DAVID LEREAH: I don't like to use the word "bubble" because bubbles burst.

GWEN IFILL: Exactly.

DAVID LEREAH: Balloons don't burst. You can put air in a balloon and it can expand or you can deflate a balloon, where air comes out. So if you're looking at different metro markets around this country that got real hot over the last four years, I like to use the imagery of balloons because they're getting hot. You're putting more air into those balloons. The prices are going up. But now air can come out of the balloon rather than the balloon popping.

GWEN IFILL: So we're hearing a hissing sound rather than a pop.

DAVID LEREAH: I think that's probably the best analogy to use right now.

Ifill says "Exactly." How about some tough questions? Or are you just going to agree with Lererah?

GWEN IFILL: If you're an average home buyer for whom owning a home is your major investment you'll make in your own life, you look at these numbers and you're trying to decide should I be selling now, should I be buying now or should I just stay out of it, what?

DAVID LEREAH: Well, if I'm not a homeowner and I'm thinking of purchasing a home, I would always purchase the home. Be a real estate owner; own property and you'll benefit from equity gains and wealth gains over the years. Have a long-term horizon.

If I'm looking to sell right now, you know, it's still a seller's market but it's starting to transition to a buyer's market so it's a good time to sell if you want to right now.

If I'm a buyer I'm still looking at historically low mortgage rates; even though mortgage rates have risen somewhat, they're still hovering around 6.25 percent. That's historically low. That's low-cost financing. I would take advantage of that.

Lereah says "Well, if I'm not a homeowner and I'm thinking of purchasing a home, I would always purchase the home." Bad idea. Of course he is from the Realtors Association and 'cannot' say that in the bubble markets he would consider holding off purchasing a home.

2006 mortgage conforming limit rises to $417,000

"The conforming limit will rise to $417,000 in 2006, an increase of almost 16 percent over the 2005 limit of $359,650. That's the limit for single-family homes in the continental United States."

"Conforming mortgages are home loans that conform to standards set by Fannie Mae and Freddie Mac, the mortgage giants that keep money flowing by buying home loans from lenders and selling them as investments. The conforming limit marks the maximum loan size that Fannie. ("

Certainly, the housingheads will be cheering this decision.

Tuesday, November 29, 2005

It's the Inventory Stupid!

Not convinced that the bubble is about to burst?

Calculated Risk posted this:

"The 496,000 units of inventory is the all time record for new houses for sale. On a months of supply basis, inventory is at a reasonable level.

This is a very strong report. The pronouncements of the demise of the housing market now appear premature."

It's the inventory stupid! Look at the inventory flooding the market in the bubble markets.

Note: Calculated Risk is certainly not stupid. Calculated Risk has many valuable insights and I am a dedicated reader of his blog. The phrase is priceless in this case.

New Home Sales Shoot Up?

The Commerce Department reported that:

Sales of new homes soared at a record pace in October in what could be a last hurrah for the booming housing market. The Commerce Department said that sales of new single-family homes shot up by 13 percent last month, the biggest one-month gain in more than 12 years."

"The increase confounded analysts who had been predicting that new home sales would decline by 1.8 percent. The rise in new home sales was accompanied by an increase in prices, with the median price increasing by 1.6 percent from September to $231,300 in October. ( Yahoo)
So what does this mean? Experts are 'confounded.'

One poster on The Housing Bubble Blog wrote "You, know I'm not totally convinced that this boom has completely run its course."

Another poster [ pchander100 ] wrote "I am very suspicious of the new home sales numbers. In California, new home builders are offering incentives to sell homes, while the inventory is piling-up. Yet today's numbers show a 49 percent increase. These numbers are rigged."

Ben Jones' had this to say "Keep in mind the incentives the HB's have been offering, like the Sacramento story yesterdayrevealed. Thesee guys have a lot of margin in their pricing so they can hold a fire sale."

There is a large degree of error to these commerce reports "This is 13.0 percent ( ±17.7%)* above the revised September rate of 1,260,000 and is 9.0 percent (±18.2%)* above the October 2004 estimate of 1,306,000." The "A 2.5 percent (±3.2%) above appears in the text, this indicates the range (-0.7 to +5.7 percent) in which the actual percent change is likely to have occurred. All ranges given for percent changes are 90 percent confidence intervals and account only for sampling variability ( Commerce Department Report )"

Read little into this report. The 13 percentage increase likely reflects a large degree of error combined with increased incentives from homebuilders ( who have been 'taking away' sales from existing homes ).

Great Story On Another F*cked Borrower

Check out the Post "I need to do a refi cash-out to get money to pay my mortgage." . Amazing the stories that are coming out of the lending business.

Monday, November 28, 2005

Pop Goes the Bubble

US External Debt and The Bubble

In the book The United States as a Debtor Nation it says the following:

More fundamentally, even if foreign investors give the United States an unlimited length of rope by continuing to finance ever-greater buildups in US external liabilities, there is a problem of long-term burden for the US economy as it becomes increasingly indebted abroad. To the extent that the borrowing is primarily directed not towards financing investment but rather toward financing high levels of private consumption and government dissaving, the accumulation of foreign debt amounts to mortgaging the country's economic future. Eventually, there will be a price to pay in the form of a major terms of trade loss as the external debt is serviced. This will reduce the real standard of living of US citizens - many of them of the next generation- from levels otherwise attained as real consumption is eroded through higher import prices. Injudicious, and perhaps inequitable, deferral of the adjustment burden into distant future is a fundamental reason to address the external deficit even if a sharp break in confidence and a hard landing are considered unlikely.
The housing bubble is a significant contributing factor in the ever growing amount of US external liabilities. Mortgage debt is being bought by foreigners. Furthermore, the housing bubble has allowed a huge amount of home equity extraction, which has fueled strong consumer spending. A significant portion of this consumer spending is being spent on imported products. All this increases US external liabilities.


Jim Kunstler's Post

Check out Jim Kunstler's Season's Greeting Post . Sure sometimes Kunstler get the facts wrong and is overly dire; but makes solid points.

60 Minutes Piece on McMansions

Here is the link to the story 'Living Large'. Read it.

Ads on Housing Bubble Blogs

About a month ago Ben Jones over at The Housing Bubble added Google Ads to his blog. Some of these ads are from companies that are in real estate or mortgage lending.

One reader critical of The Housing Bubble Blog set up this blog. On it the reader writes:

This blog is dedicated to the memory of Ben Jones, the "freelance writer" who posts which is sponsored by the real estate biz. Or, more accurately, the memory of what is left of Mr. Jones's credibility. We posted to Ben's blog and he quickly deleted our simple and respectful question: "What's with all the links to real estate agents, lenders and other bubble heads?" So, Ben, we're giving you another chance. What's up?
1) Has Ben Jones' Blog lost it's credibility'?

2) Should housing bubble blogs accept Google Ads, if some of them the ads are from companies that are housing cheerleaders?

I want input from my readers on there two important questions.

Sunday, November 27, 2005

Black Friday. Sales Surveys are Mixed

Retailers must have been disappointed by sales on Black Friday. "Data from ShopperTrak showed Black Friday sales were down a slight 0.9 percent from a year ago to $8 billion. ShopperTrak said sales in the South were particularly good with the Midwest coming in second. Major retailers will release November results later this week ( CNN Money 11/26 )."

The data from ShopperTrak shows Black Friday sales down 0.9 percent from 2004. That is significant. Why? An increase in sales would be expected because of inflation and a growing population. According to poster Betamax:

It's interesting to read how the retail shills are now downplaying the importance of Black Friday as a predictive indicator, though obviously they'd be saying the opposite if sales were up.

As expected the retail interests played down the decline in sales ""While Black Friday is important to retailers, it's not always the best indicator for consumer shopping patterns during the remainder of the holiday season, which should allow the retail industry to continue feeling optimistic," said Michael Niemira, chief economist and director of research for the International Council of Shopping Center ( CNN Money 11/26 ),"

However, Visa said consumers charged up their credit and debit cards on Black Friday as total U.S. spending on Visa branded cards jumped 14 percent to $3.9 billion [from last year's Black Friday]. Does this mainly reflect a increase in sales or a change from other payment methods to Visa? [ Great more credit card debt. ]

The National Federation of Retailers reported that "The ceremonial kickoff to the holiday season began with a great deal of fanfare as 145 million shoppers flooded stores and the Internet hunting for popular electronics, clothing, and books. An NRF survey conducted by BIGresearch found that the average shopper spent $302.81 this weekend, bringing total weekend spending to $27.8 billion, an incredible 21.9 percent increase over last year'’s $22.8 billion."

"More than 60 million shoppers headed to the stores on Black Friday, an increase of 7.9 percent over last year. Another 52.8 million shopped on Saturday, a rise of 13.3 percent over 2004. The number of shoppers out today is expected to be close to last year, with about 22 million people shopping. NRF Press Release"

ShopperTrek says Friday sales were down 0.9 percent. The National Federation of Retailers said sales The NYTimes had this to report "Visa found that shoppers spent 24 percent more on electronics this Black Friday - a category ShopperTrak largely overlooks - while purchases at specialty retailers inside the nation's malls rose 16 percent. Consumers, Mr. Cohen said, "are clearly in the spending mood."

So how will the Christmas Season be for Retailers?

So far it is looking decent. Time will tell.

See my earlier posts.

Black Christmas [ where spending growth is less then inflation ]

Black Christmas II

* This post has been updated due to more information being available*

Local Realty Add

Saturday, November 26, 2005

Bubble Market Defined

There are a huge number of bubble markets across the USA. What is a bubble market?

A bubble market is any area where residential real estate prices will decline more then 20% in real dollars [inflation adjusted] over the course of 3 years. In most bubble markets, the peak price was reached in June, July or August of 2005.

Many bubble markets will experience real price declines much greater then 20%. Some may experience price declines of 60% in real dollars over the next 3 years. Of course some markets may keep on declining for more then 3 years.

Friday, November 25, 2005

Black Friday: Consumerism Unleashed

Today is Black Friday. According to Wikipedia "Black Friday, the day after Thanksgiving in the United States, is historically one of the busiest retail shopping days of the year. Many consider it the "official" beginning to the holiday season. ... Most retailers will open very early. "

The above picture shows crazed shoppers fighting in a Walmart story in Orlando, Fl [ a bubble city] . CNN has this story. Minimum credit card payments are about to rise.

Will this be a solid holiday retail season for retailers? Will consumers refinance again to fuel one more materialistic binge? Will fears of a housing bubble, high home heating costs and new bankruptcy laws curtail spending? Will consumers continue to spend more then they earn? How much debt will be raked up on those credit cards?

Thursday, November 24, 2005

Happy Thanksgiving

Happy Thanksgiving to everyone!

Growing up I've enjoyed the Macy's Day parade which happens every year on Thanksgiving in NYC. This year I see those balloons go by and I think pop.

DC: 7441 8th Street, NW

The house located at 7441 8th Street, NW is avialable for sale at 415K . It was bought on 04/15/2003 for 230K. "The home is semi-detached with 3 levels, including 3 bedrooms, a finished basement, one full bath and 2 half bath." It is located in an alright area in the northern part of the city ( proper ).

Will it sell in a resonable amount of time at this price? Probably not.

Bubble Basics

In the vast majority of the bubble markets, price appreciation is either negative or is basically at zero.

  • Interest rates are rising
  • ARMs are adjusting
  • Property taxes are rising
  • High winter heating costs are coming
  • Housing inventory is building
  • New bankruptcy laws have been implemented
  • Increased minimium credit card payment are coming soon.
  • Housing bubble awareness is increasing
The housing 'loud hiss' continues to loudly hiss. The RE cheerleaders are claiming that the slowdown is seasonal. They are wrong.

Wednesday, November 23, 2005

Quote of The Day

"That the free-enterprise economy is given to recurrent episodes of speculation will be agreed. There-great events and small, involving, bank notes, securities, real estate, art, and other assets or objects-are,over the years and centuries, part of history. " - John Kenneth Galbraith

Tuesday, November 22, 2005

Cold Weather, Cooling Prices In Boston

As reported by the Boston Herald:

But on Beacon Hill, the median price fell by 10.4 percent, to $394,500, as total units sold plunged by 9.2 percent in the quarter, data shows.

In the South End, the median price of condos fell by 14 percent, to $472,500, with unit sales off by 37.8 percent compared to a year ago.

“The prices are coming down,” said Virginia Saillant, a Realtor at Atlantic Properties in the South End. She expressed confidence the market will bounce back, once inventories are sold off.

Two Books

At a local Border's bookstore I came across these two titles. On the right is David Lereah's "Are You Missing the Real Estate Boom?" and on the left Jon Hanson's "good debt, bad debt."

The very small words on the front cover Lereah's book are "Why home values and other real estate investments will climb through the end of the decade - and how to profit from them." Lereah, the chief economist for the National Association Realtors is a major bubble cheerleader. Now, with bubble evidence mounting, his latest talking points are that there will be a soft landing in the bubble markets.

Note: David Lereah should read the book on the left.

Monday, November 21, 2005

Chill Hits Housing

Crain's Chicago Business reports Chill Hits Housing: High-end homes taking longer to sell; brokers bracing for a slowdown:

In a cooling residential real estate market, it's chillier at the upper end.

After watching home values soar the last few years, sellers continue to slap hefty price tags on their homes. Yet buyers, wary of overpaying at the top of the market, are balking at the high prices. The result: Houses priced above $1 million are taking longer to sell.

"On the sellers' end, they're still thinking that the market is up, up, up," says Patti Navilio, a Chicago broker. "When you reach a peak, everybody's got too high expectations."

While Chicago-area residential brokerages expect to close the books next month on a record sales year, they're already seeing signs of a slowdown, especially at the high end. Mortgage rates are rising, and talk of a housing bubble has given some buyers pause.

The real estate market tends to slow down in the late fall, but it's slower than usual for this time of year, says Maureen Mohling, manager of Coldwell Banker's Winnetka office. The number of buyer appointments in the office declined 10% in October from the same month last year.

Price-cutting has become more common. In May, Michael Welborn put his six-bedroom house in Wilmette on the market for $2.7 million. He paid about $1.8 million for the property in 2000 and spent close to $500,000 remodeling it.

"Nothing happened," he says. So he dropped the price to $2.5 million, and showings have picked up — but still no takers."Ordinarily, a house like this in a location like this would come and go in a month and a half," says Sue Hertzberg, the Coldwell Banker broker selling the property. "It's just an indicator of the market."

Sales of less expensive homes are holding up better. Single-family suburban home sales rose 2% in the third quarter over the prior-year period, according to the Chicago Assn. of Realtors. Houses sat on the market for an average of 70 days, vs. 71 in the year-ago period and 44 in third-quarter 2003.

Sales of single-family homes in the city fell 4% in the third quarter, and the average market time rose to 64 days from 62. In October, sales of all residential property types in the city were flat.

Web Traffic Increasing on Bubble Meter Blog

The above graph shows that traffic has been increasing during the past 4 weeks on this blog. Thanks to all my readers for reading and posters for posting.

Sunday, November 20, 2005

Homes for Sale in a Silver Spring Neighborhood

Here is a map of houses available for sale in a neighborhood in Silver Spring, MD. Silver Spring is a suburb of Washington, DC. This neighborhood is literally just in the beltway. The beltway ( I-495 ) is visible on the map. It is an area of single family homes. The zipcode is 20910. Inventory is way up from 4 months ago. The competition is fierce. May the best priced house sell.

Washington, DC: 313 17TH ST SE

A rowhouse located at 313 17th Street SE is being offered for sale at 399K. The rowhouse is located in an area that has just started to gentrify. It was bought on 12/09/2004 for $199,440 . Some remodeling was performed. Will is sell for 400K in a reasonable amount of time? Not sure. It is 'cheap' compared to other rowhouses in solidly gentrified neighborhoods in DC. However, this area is just starting to gentrify. Plus, the outside facade does not look like a house that gentrifiers would typically buy. The gentrifiers would generally want to remodel the outside.

Saturday, November 19, 2005

Cheerleading Quote of the Week

Marilynn Ferreira, who sits on the Board of Directors for the San Benito County Association of Realtors had this to say about buying a house now:

People who are waiting for prices to fall will miss it, and interest rates are just going to go up. But putting a roof over your family’s head is always the best investment you can possibly make.
Always? What if your income is 40K, you have no down payment, and some sub prime lender offers you a loan for 350K and you are buying in a bubble mecca. Oh, by the way there are other ways to put "a roof over your family’s head," its called RENTING.

The New American 'Hissing Housing Bubble'

William H. Gross is chief investment officer at Pacific Investment Management Co. (PIMCO), the world's largest bond-fund manager, with $513 billion in assets. In an interview published in the October 26 Business Week, Gross observed: "Housing is the asset that has kept this economy going. The second-mortgage loans and the like. The homeowner taking advantage of capital gains and withdrawing equity — that’s what has kept consumption going. If housing stops, equity withdrawal ceases" -- and the consumer economy grinds to a halt.

Indications are rife that the housing market has cooled off and started to contract. Nick Godt, market analyst for The Street, noted on October 27 that the “average price of a new home … fell to $285,700 in September, from $287,500 in August.... Amid slowing sales, the supply of new homes on the market has risen sharply and is now up 20% year on year.” “No wonder price gains are slowing,” comments Ian Shepherdson, chief U.S. economist at High Frequency Economics. “Builders have over built and have to cut inventory.”

For several years, analysts have warned that the housing and mortgage markets constitute a speculative “bubble” that will be pricked when interest rates begin to climb. Between June 2004 and this November, the Fed has consistently increased interest rates to the “point where real housing prices have peaked over the past 35 years,” Gross points out. “Make no mistake about it,” he warns, “the froth in the U.S. housing market is about to lose its effervescence; the bubble is about to become less bubbly.”

Tom Barrack, generally considered one of the world’s most savvy real estate investors, is more blunt about the housing bubble. “There’s too much money chasing too few good deals, with too much debt and too few brains,” he told Fortune magazine. “That’s why I’m getting out.” Along with the impact of higher interest rates, Barrack cites a steep increase in the price of building materials and labor, with construction costs spiking 30 percent in the past nine months. “It’s the busted deals caused by construction costs that will cause a [downturn] in the market,” he concludes

Article from The New American.

Friday, November 18, 2005

8406 Hartford Avenue Silver Spring, MD

One of the houses that I have been following has been sitting on the market. The prices keep on dropping:

The house was originally listed for 679K; then reduced to 649K, then 629K, and now 599K. See my blog post about 8406 Hartford Avenue.

The price has been reduced once more to 579K. That is 4 reductions totally 100K or 14%. Why? The housing bubble is popping in the DC area. Also, just down the street is 8300 Hartford Avenue. ( MLS MC5402312 ) which is available for 579K ( it had been reduced from 599K. Which one sells first? and for what price?

Urban Institute Report: 'Housing in the Nation's Capitol'

The Urban Institute released a major report detailing the housing situation in Washington, DC . Basically, affordable housing is disappearing as prices soar. Gentrification is a contributing factor to this major trend. The reports has reccomendations.

New Mortgage Related Blog

Over at Another F*CKED Borrower Blog there is some wonderful information about the mortgage easy credit practices. Here is a great post:

This bwr had a car payment of almost $800 a month...and only made about $28,000 last year. Wanted to buy a 400k home...but would look at a condo "if they had too". Somehow I don't think that spending 34% of ones gross income on a car payment is the best thing to do...but what do I know. That USED to be the rule when buying a house. Oh how times have changed. There is no way I was going to help this guy get a loan...but I'm sure somebody out there will "state" his income so that he will "qualify". This bwr has all the makings of AFB...but maybe they will be lucky...let's hope so.

I'll be watching this blog. Keep up the solid reporting.

Inventory Rising in Washington,DC

While driving around the District today, I came across these two for sale signs right next to each other. ( image was taken on my camera phone ) This occurence would have been very rare one year ago. In the District, listings are up 62 percent from October of 2004 ( Washington Post 11/11.

We Need a Protest at NAR

We need a citizen's protest at the National Association of Realtors in Washington, DC. They need to be called to task for their lousy, deceitful, cheerleading propaganda. See my post on NAR's anti bubble housing reports .

Wednesday, November 16, 2005

Sacramento Housing Market

There are some great statistics and graphs over at Lyon Real Estate for the Saramento area housing market. Check it out.

Thanks to poster Happy Renter for finding this information. :-)

NAR's Housing Market Reports

The National Association of Realtors just posted a link to their 'Market-by-Market Home Price Analysis Reports' on their homepage. In a August letter to Realtors, David Lereah writes of the upcoming anti bubble reports:

This project is incredibly labor intensive. My staff is working overtime to provide you with the necessary information (reports) to respond to the irresponsible bubble accusations made by your local media and local academics. Please be patient and you can expect to begin receiving the first batch of these reports just after Labor day.

The NAR did not allocate the necessary resources to properly write local housing reports. Instead, they presumably used a shoddy computer program to do a 'program and paste' job to 'write' these very similar reports. Some of the holes found in their research include:

  • The conclusion for every market is the same. In the executive summary the reports conclude "With home prices rising strongly in most parts of the country, there has been widespread media coverage on the possibility of a housing market bust. A thorough analysis of the metro market, as detailed below, reveals that there is very little danger of this." ( Thanks Felix who posted over at Calculated Risk)

  • Even markets that are regarded as the most over-priced and are already experiencing contraction, such as Boston and San Diego, say "A thorough analysis of the Boston-Cambridge-Quincy metro market, as detailed below, reveals that there is very little danger of this." ( Thanks to poster Felix who posted over at Calculated Risk)

  • So shameless is their cut-and-paste work that the data sometimes contradicts the text! For example, the Philadelphia analysis says "jobs are being created and ... suggest potential for further price gains.". However, the Philly numbers - right above this comment - contradict this statement and shows negative 3 year job growth (-0.2%, compared to 7.2% for the top 20 metros) and negative net migration of -4,800 over the past three years! The job situation is called "unfavorable". ( Thanks to poster Felix who posted over at Calculated Risk)
  • One thing I noticed in looking at the anti-bubble report is that the price-income ratio seemed extremely low. Well, if you look at the table footnotes, the definition of income is "per capita income multiplied by the average number of people per home"!!! Logically, this means that a family with 4 kids is able to afford more house than a DINKY couple. Laughable at best.. ( Thanks to poster John Laws Ghost )
  • In each market the NAR puts the housing market under a 'stress test.' In the Philadelphia market "The local housing market will experience a price decline of 5% only under extreme unlikely scenarios. For example, mortgage rates rising to 12.5% in combination with 114,000 job losses could lead to a price decline." If mortgage rates really hit 12.5%, and 114,000 jobs were lost a much greater decline would occur. What is NAR's formula for these stress tests?
The work of NAR on these housing reports is contradictory, deceitful and lousy. NAR should be ashamed of their research.

Tuesday, November 15, 2005

NAR: 3Q Median Sales Prices

NAR Third Quarter Median Sales Prices werereleased this morning. Link. Median Sales Price of Existing Single-Family Homes for Metropolitan Areas.

Here is a list of those metropolitan areas where the price median sales price fell in the 3rd quarter 2005 compared to the 2Q 2005:

  • Albuquerque, NM
  • Charleston, WV
  • Colorado Springs, CO
  • Decatuar, IL
  • Dallas-FtWorth, TX
  • Edison, NJ
  • Green Bay, WI
  • Kankakee, IL
  • Memphis, TN
  • Minneapolis-Saint Paul, MN
  • Rockford, IL
  • Sarasota-Bradenton-Venice, FL
  • Southbend, IN
  • Souix Falls, SD
  • San Francisco-Oakland-Fremont, CA
  • Pittsfield, MA

The 4th Quarter, NAR reports will show many more housing markets experiencing price declines. Despite NAR's anti housing bubble propaganda the bubble will pop.

NAR: Market-by-Market Home Price Analysis Reports

Check out NAR's Market-by-Market Home Price Analysis Reports. The really funny thing is they even use the url something ... pages/anti-bubblereports with the words 'anti-bubblereports.'

Much more to come on NAR's anti housing bubble reports. I have started to go through these reports. The housing bubble bloggers and readers must go through these misleading reports and point out the truth. The truth will prevail. Let freedom ring.

Note: Check out Detroit's report. LOL!

NAR: Anti Bubble Q&A

Check out the National Association of Realtors Questions & Answers page regarding the housing bubble. It attempts to dispute the housing bubble theory. It is a great read:

Housing Bubble Prospects Q&A

What is a housing bubble?

As broadly interpreted, a housing bubble refers to an unsustainable gain in home prices. The premise is that a price bubble is at risk of “popping,” resulting in a loss of equity.

Has there ever been a national housing price bubble?

No, not since good recordkeeping began in 1968. There was a national decline in the 1930s during the Great Depression; however, home prices were not a prime concern in that era. The greatest issues were essentials such as food, clothing, employment and shelter of any kind. Declining home prices were a natural result of a general economic collapse caused by the stock market crash in 1929.

What is the “normal” rate of home price growth over time?

Since 1968, the national median existing-home price has increased an average of 6.4 percent per year. However, that includes a period of high inflation. A better frame of reference is in relation to the overall rate of inflation. Home prices typically have increased 1.5 percentage points faster than the rate of inflation, as measured by the Consumer Price Index.

What are the biggest factors that drive home prices?

In simple terms, it gets down to supply and demand. The inventory of homes available for sale has been historically low since 2001, which is why home prices have been rising at above normal rates.In a balanced market between home buyers and sellers, there typically is a six-month supply of homes on the market. Over the last four years, the supply has hovered around 4.5 months. By contrast, in the recessionary period of 1990-1991, there was in excess of a 9-month supply.

What conditions are necessary for home prices to soften or decline?

Generally, two conditions are necessary for price softness in a given area: an oversupply of homes available for sale, and adverse economic conditions – generally a weak local job market. Sometimes these conditions occur against a backdrop of overall economic weakness, recession or high interest rates.

Where and when have home prices declined in the past? What were the general market conditions?

Most metropolitan areas, especially in the Midwest and South, have not experienced price declines in the era of modern recordkeeping. In the period from the mid-1980s though the early 1990s, many metros in the Northeast and on the West coast saw localized declines. Typically, this occurred in large population centers with very little capacity for growth. When housing shortages developed during a period of high demand, prices grew at sharp double-digit rates – often over 20 percent per year – for several consecutive years.After local economic conditions declined in those areas, home sales stalled and the inventory of unsold homes rose, which eventually led to price softness or decline.

How long have home prices declined in the past?

Although there are exceptions to any general finding, most metro areas that experienced price declines were relatively short lived (several years). Most homeowners who went through such downturns -- but stayed in their home for a normal period of homeownership -- still netted healthy gains when they sold. People view homeownership as a long-term investment as opposed to the kind of quick-in, quick out investment that Wall Street is fond of. Unlike stocks, homeowners don’t panic sell simply because a home down the street sold for less. Home prices tend to be sticky on the downside -- usually a single digit decline in any given year following a sustained period of double digit gains. Very few people buy at the top of a market and then sell in a short timeframe. After several years, home prices level and return to normal appreciation patterns.

Should we be concerned that home prices are rising faster than family income?

No. There are three components to housing affordability: home prices, income, and financing costs – the latter are historically low. During the last four-and-a-half years of record home sales, there has been a shortage of homes available for sale. As a result, home prices during this period have risen faster than family income. However, in much of the 1980s and 1990s, the reverse was true – incomes rose faster than home prices.On a national basis, according to the Housing Affordability Index published by the National Association of Realtors, a median income family who purchases a median-priced existing home is spending a little over 20 percent of gross income for the mortgage principal and interest payment. In the early 1990s, a typical mortgage payment was in the low 20s as a percent of income, and in the early 1980s it was as high as 36 percent. Overall housing affordability remains favorable in historic terms.

What are the prospects of a housing bubble?

There is virtually no risk of a national housing price bubble, based on the fundamental demand for housing and predictable economic factors. It is possible for local bubbles to surface under the right circumstances, but that also is unlikely in the current environment. There are tight supplies of homes available for sale in most of the country, and labor markets have been improving. In other words, the two conditions necessary for price softness do not exist in most of the country.The strong underlying demand for homes results from the simple fact that the population is growing faster than the supply of homes. In addition, it is highly unlikely that the cost of construction will decline. In fact, construction material shortages are expected to continue and the cost of building and development is trending up. Baby boomers remain in their peak earning years. Echo boomers – the children of the baby boom generation – are just entering the period of life in which people typically buy their first home. The echo boom is the second largest generation in U.S. history. Considering the median age of a first-time buyer is 32, echo-boomers will be a big factor over the next decade. In addition, immigration has been strong for many years. Census data shows that immigrants eventually achieve homeownership rates higher than do native born Americans – this also will be a strong factor in housing demand in the future. Also, minority ownership rates have been trending up. All this means the demand for housing is historically high and is one of the reasons 2005 will be the fifth consecutive year of record home sales. Even in an economic downturn, the demand remains.

If conditions become unfavorable, home buying may be postponed, but a general price decline remains highly unlikely.What is likely to happen with home prices?

The forecast is for mortgage interest rates to rise slowly over the next year, which will have a minor breaking effect on home sales. The good news is that will help inventory levels to recover and allow the market to come into a closer balance between buyers and sellers.In other words, a general slowing in the rate of price growth can be expected, but in many areas inventory shortages will persist and home prices are likely to continue to rise above historic norms.

NAR & Lereah: Full of Contradictions

The National Association of Realtors (NAR) is busy disputing the 'Housing Bubble Theory.' They make the preposterous claim that 'new analysis of 130 markets by NAR shows no support of a housing bust.' Let us examine some of David Lereah's recent statements. David Lereah is the chief economist for NAR stated

  • 'The air is coming out of the balloons" ( Late August)

  • "'The boom is showing some signs of tiring" ( October 31st )

  • "'Some markets are more susceptible to interest rate risks and shock,' he said. 'I cannot guarantee that there will be no hard landings.'""

  • '"The country is really unbalanced when it comes to the price of a home. The boom has really discriminated across America. The biggest risk I see right now in California and other parts of the U.S. is the element of risk introduced by adjustable-rate mortgages and interest-only loans and negative amortization loans,' he said."

It is time for the NAR and David Lereah to get their story straight. The hypocrisy is quite apparent.

Monday, November 14, 2005

Lereah on the Proposed Mortgage Changes

The Realtors association’s chief economist, David Lereah, called the proposal “irresponsible” and the timing “terrible,” since the real estate market, while far from taking a nosedive, is slowing noticeably. “When you combine the long-term effects of the hurricanes with rising interest rates, such a plan would do severe damage across the board,” he said. (RISMedia 11/14

Update: 1668 Oak St NW

On October 22, 1668 Oak St NW was blogged about. It was listed at 621K. I t was just reduced to 599K. Sounds familiar.

Flippers Becoming Worried; Trying to Sell

Some of the more 'rational' flippers who have been caught up in this speculative episodes are worried. They are worried because they boughy in the last year or so and realize that inventory is exploding and prices are falling. These 'rational' flippers are trying to sell. Nick818 over on The Housing Bubble Blog reports:

Sounds like full swing flipping action going on.

Same with a friend, he bought a 2500sq beautiful tract house in Palm Springs area with upgrades for $620K in April 2005. He was initially going to keep it for spring of 06 to make a few bucks, but now with all that is going on,he's got cold feet, so just after 6 months, he put it up for sale, asking 689K.

As of 1 month, no one even has inquired about the place, so he reduced the price to 669K now, still no inquiries as of yesterday. The problem is the fact that in a matter of 3 weeks, there have been about 30 similar properties listed in the same walking distance area, not one has gone in escrow.

Guys, if you think flippers are coming in the market, give it another 3-4 months, it is going to be scary.

As for my friend, even if he sells now, he will probably just break even, but my senses tell me he will not be able to get more than what he paid for if he waits that long.

What cracks me up is the fact that these flippers still think time is on their side, total mistake. The longer they wait, the tougher it will get, especially when uncle Greenie raises rates another couple of quarter points.
Or check out this flipping property in the DC area. I posted about it on November 7th. Then the add listed it for 520K. Guess what? I just found this post on Craigslist.

$490000 - 20,000 in closing help.

Seller says sell, lets make a deal. Semidetached townhouse three bedrooms One and a half baths. Two levels with a back yard. Lots of new development goin on in the area. Close to Union Station. Short walk to the night life on the Hill. Close to the red line Metro. New shop opening in the next year or so. Buy Now before value rise and you miss out.

605 I ST NE

It has not been sold and the price has been reduced again. Remember, it was bought at 450K on 5/25/05. 20K in closing costs is offered. If they sell at 490K - 20K closing costs then they will be actually losing money on this property. The flippers are becoming more desperate.

Simulated Inventory Boom in Fairfax County

Housing Inventory for sale is up an incredible 122% in Fairfax County, VA ( DC suburb) in one year. The below images simulates the dramatic inventory rise in suburban DC. Please note that red dots do NOT represent actual location or the actual numbers of houses for sale.

Fairfax County, VA: October 2004
( 100 housing units for sale = baseline )

Fairfax County, VA: October 2005
( 222 housing units for sale = up 122% from October 2004 )

Sunday, November 13, 2005

Falling Leaves, Falling Prices II

The house located at 8300 Hartford Avenue in Silver Spring, MD ( DC suburb) has still not sold. I blogged about it on October 9th. Then it was listed for 599K; now it has been reduced to 579K.

Its competition is another house just up the block on Hartford Avenue ( 8406). The house was originally listed for 679K; then reduced to 649K, then 629K, and now 599K. See my blog post about 8406 Hartford Avenue.

Leaves are falling,
Prices are falling.
Buyer are baiting,
Sellers are waiting;
Sales are stalling.

Bankrate 'Mortgage rates hit 26-month high'

Mortgage rates rose for the ninth week in a row after bond investors were scared over evidence that wage earners are making more money.

The benchmark 30-year, fixed-rate mortgage rose 5 basis points to 6.42 percent, according to the national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.32 discount and origination points. One year ago, the mortgage index was 5.76 percent. Four weeks ago it was 6.1 percent.

The benchmark 15-year, fixed-rate mortgage rose 5 basis points, to 5.96 percent. The benchmark 5/1 adjustable-rate mortgage rose 4 basis points, to 5.94 percent.

The 30-year fixed rate hasn't been this high since Sept. 23, 2003, when it was 6.47 percent.

Saturday, November 12, 2005

The Coming Recession

As the housing market continues to weaken it will have serious ramifications for the overall US economy. "The collapse of the housing bubble will throw the economy into a recession, and quite likely a severe recession," warned a July report by the Center for Economic and Policy Research. Furthermore, Lehman Brothers report, "[A] turn in the housing market is central to our economic forecast. " As reported by the AP:

A downturn in housing could mean more than 1.3 million lost jobs, Goldman Sachs Group Inc. predicts, bumping up the national unemployment rate by 1 percent and the unemployment rate in house-mad California by 2 percent. Those numbers don't include likely job cuts in housing-dependent businesses, such as banking, furniture and building materials.

The Center for Economic and Policy Research predicts worse, saying a bubble burst would mean the loss of 5 million to 6.3 million jobs.

The housing run-up has financed consumer spending, creating more than $5 trillion in bubble wealth, the center estimates. Consumers have used "cash-out" mortgages to pay for everything from new kitchens to college tuition.

On August 12th and then Septmeber 29th, this blog warned about the coming recession. The current economic predicament is simply unsustainable. The double digit price appreciation of the housing boom years has come to an abrupt end. Once the housing bubble pops, a recession is almost inevitable. Here are the factors that will contribute to a future recession:

  • High Energy Costs
  • Federal Debt & Deficit
  • Coming Housing Bust
  • High Consumer Debt
  • Large Trade Deficit
  • Continued Offshoring
  • Security Costs
  • Rising interest rates
For the past 4 years the US economic 'recovery' has been too dependent on cheap credit and the housing boom. The boom is fast becoming a bust. The convergence of the housing bust with other important factors will almost certainly put the US into a recession by late 2006.

Friday, November 11, 2005

Bubble Meter Blog Mentioned in Consumer Affairs

The Bubble Meter blog was mentioned in Consumer Affairs:

Whatever the outcome, the housing market pundits are watching and waiting to see what happens next. According to the "Bubble Meter" housing bubble blog, the days of the bubble are coming to an end.

"Falling leaves and falling prices are now occurring in many of the bubble markets," the blogster said recently. "The days of double digit price appreciation are long gone."

Thanks. :-) It is always neat having your blog mentioned in the media. Lots of traffic coming.

Washington Post 'Housing Market Cooling, Data Say"

As has been reported on the housing bubble blogs "home sales in the Washington region have declined sharply, the inventory of unsold homes is up significantly, and prices have flattened and, in some cases, fallen." The Washington Post continues to get high marks for covering the local housing market.

Today's article primarily relies on the MRIS ( Metropolitan Regional Information Systems) for inventory and sales data. The trend of rising inventory and small price declines is most evident in the Northern Virginia component of the DC metro market.

In the two counties and three cities that make up the Northern Virginia market, more than twice as many homes were available for sale in October as in the same month one year ago -- 7,122 homes, compared with 3,254 -- and sales are off 28 percent.

In the District, listings are up 62 percent and sales are down 28 percent.

In Montgomery County, listings are up 49 percent and sales are down 8 percent.

In Prince George's County, the listings are up 45 percent. But home sales have remained fairly stable, dropping only 2.6 percent
With the rising inventory and the fall season slowdown prices in much of the DC Metro area are falling.

( Click on image for larger version)
In the District, the median price -- the point at which half the houses cost more and half cost less -- was $425,000 in October, down from a high in August of $435,088. In Fairfax County, the peak was in July, when the median price was $503,000; in October, it was $489,450. The peak in Montgomery County was also in July, when prices hit $460,000; the median price in October was $429,000
The below chart shows the median prices in the sub markets that make up the DC market.

So what happens next? Some bubble naysayers are saying that the small price declines in much of the DC area are a result of a 'seasonal slowdown.' However, inventory is rapidly rising in the metro market last fall. The rising inventory will continue to lower prices in the coming months.

Many local real estate agents say the market is returning to normal. "We're rebounding in terms of evolving to something close to a balanced inventory," said David Howell, a past president of the Northern Virginia Association of Realtors and executive vice president and managing broker at McEnearney Associates Inc. in McLean. He said the true aberration occurred from 2003 to early 2005, when the number of listings fell to record lows, causing what he called "unbelievable and untenable" increases in appreciation

Housing experts say the slowdown is occurring for several reasons. In the past few months, a lot of homeowners put their places on the market speculatively, hoping to cash in, creating a surge in housing supply. Many investors, whether speculators or landlords, have done the same, either because they believe the market has peaked or because they cannot make enough money in rent to support the mortgages.

They are finding fewer buyers because the double-digit price appreciation of the past few years has priced many people out of the market. The recent rise in mortgage interest rates, which causes monthly payments to rise, adds to price pressures. And now, with fears that the market has peaked, more people are simply afraid to buy.

Meanwhile, new construction is inflating the housing supply, as condominium developers rush projects to market. According to a recent report by Delta Associates, 47,000 units in dozens of projects are hitting the local market in the next three years, which is about five times as many condo units as were sold last year.

The boom has ended in the DC area. The huge price appreciation is a thing of the past. Currently, housing inventory is surging, prices declining, and the 'speculative fervor' is thankfully over.

Las Vegas: La La BubbleLand

In Business Las Vegas had this to report from Las Vegas:

Most local experts have railed against any thought of a Las Vegas housing bubble, saying changes to the market are simply a period of adjustment and a "return to normalcy."

During a recent housing seminar, Steve Bottfeld, with Marketing Solutions, blanketed the front row with soap bubbles at a recent seminar.

"That is the extent of the housing bubble, there it is," he said.

Las Vegas is one of the most bubbly cities in the country. In a year or so Steve Bottfield maybe unemployed and wondering why the bubble popped. It was unsustainable. Its the fundamentals stupid.

Thursday, November 10, 2005 Blog Declares The Bubble's Death

The blogger over at the blog declares today "The Day The Bubble Died." He further states " Well, to coin a phrase, the earnings reports have come home to roost. We may be in for a severe economic shock in the next few months, but we will emerge from it stronger, with hopefully less reliance on consumer debt and inflated markets to drive our spending and investing. Today's the day the bubble died. Hallelujah." Indeed, today was an important day in housing bubble history.

I actually personally met the blogger behind this most excellent blog. The blogger was smart, astute and friendly. The blog rocks.

Wednesday, November 09, 2005

Mortgage Application Up; Refinances Down; Interest Rates Higher

"NEW YORK, Nov 9 (Reuters) - U.S. mortgage applications increased last week, driven by a brisk rise in demand for loans to purchase homes even as interest rates rose to 16-month highs, an industry group's figures showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended Nov. 4 increased 2.3 percent to 661.3.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.31 percent last week, up 0.10 percentage point from the previous week's 6.21 percent. It was was highest level since the week ended June 11, 2004 when the rate reached 6.34 percent.

The fixed 30-year mortgage rate, widely considered the industry benchmark, has climbed 0.84 of a percentage point since late June, when it stood at its lowest level for 2005 at 5.47 percent, according to MBA data.

The MBA's purchase mortgage index, regarded as a timely gauge of U.S. home sales, rose 6.4 percent last week to 465.7.

Even though the purchase index rose for the first time in three weeks, home purchase applications remain 3.6 percent below their-year ago level, Jay Brinkmann, MBA's vice president of research and economics, said in a statement accompanying the data. MBA data shows that the 30-year-rate stood at 5.69 percent one year ago.


The group's index of refinancing applications dropped 3.4 percent to 1,798.8. its third consecutive weekly decline.

Home refinances are dropping as interest rates continue to rise. Mortgage applications are up. Why? Perhaps it is because of the post Katrina effect and also some people are worried about rising rates so they are deciding to take a mortgage out now. Or the boom is starting all over again? Nope.

Freddie Mac Ad in the WashingtonPost

Freddie Mac is advertising because it is concerned about its image.

Tuesday, November 08, 2005

605 I Street NE

605 I Street NE is offered at 520K. It was bought at 450K on 5/25/05 . It was renovated. On top of all this 20K in closing costs are offered. The house is located on the very edge of a gentrifying area in Washington, DC.

Monday, November 07, 2005

Bubble Popper Post on Craigslist

One bubble popper on Craigslist posted this in the "Real Estate for Sale' section:



ARM Rates Continue To Rise

ARM Rates graphed over a 1 year period.

Falling Leaves, Falling Prices

Falling leaves and falling prices are now occurring in many of the bubble markets. The days of double digit price appreciation are long gone.

Even David Lereah, the cheerleading chief economist of the National Association of Realtors, said that "the market has him 'as nervous as a two-tailed cat in a room full of rocking chairs"

Today, the leaves were busy falling in the Washington, DC area. There were leaves everywhere. The housing inventory continues to increase. Price declines are occurring.

Condo prices are particularly vulnerable as there has been a huge amount of condo construction in the past few years in the DC area. Prices for new 1br condos in nice inside the Beltway neighborhoods are updwards of 300K ( many costing over 400k).

The chart on the right is provided by a poster on this blog who took the time to take data from the Maryland Association of Realtors. It shows stagnating and declining prices in the last two months in parts of Maryland.

Sunday, November 06, 2005

Home Mortgage Ad: MSM Funding

One toxic loan coming right up! ( Click on image for larger version )

Chicago In the Fall

On the left is a a picture of downtown Chicago in the fall time. It was taken a few years ago. The colors on the trees are just gorgeous. The fall is just fabulous. It is one of nature's fireworks. :-)

P.S. I will be posting some Housing Bubble material today. Stay tuned. :-)

Saturday, November 05, 2005

Montgomery County, MD Inventory

Montgomery County, MD is a wealthy suburban county of Washington, DC. In a local the real estate company Levin All Stars writes "In a changing market where inventory is higher than it has been in the last four years, it is crucial to have THE neighborhood experts to guide you"

In the ad, Levin Stars, published information about the increasing housing inventory in this county.
Inventory is rapidly increasing in the Washington, DC metro area. It is refreshing that these real estate brokers are readily reporting this informarion to the public.

Friday, November 04, 2005

US National Debt & The Housing Bubble

The US National Debt just reached 8 trillion dollars or 8,000,000,000,0000 dollars . The debt is sucking up investment dollars. Mortgages compete with the US National Debt for investment dollar. The credit bubble has always been a signifcant factor enabling the housing bubble. As credit continue to tighten ( higher interest rates, higher credit standards, etc ) it puts downward price pressure on housing.

Thursday, November 03, 2005

'Sunshine is the best disinfectant'

Supreme Court Justice Louis D. Brandeis once said "Sunshine is the best disinfectant," and that's more true than ever today. Think of the blogosphere as
millions of intelligent agents, all of whom are busy redirecting sunshine to
where its needed most.

Astute comments from The Big Picture . :-)

Wednesday, November 02, 2005

USAToday Article

USAToday has a front page article 'Overheated housing market is cooling off' today about the housing market. Basically, it says that the market is changing is slowing down and stagnating. Here are some of the highlights:

Most real estate agents and economists are not forecasting a real estate collapse, although some doomsayers say the bursting of the "bubble" is inevitable.

In the bubble markets we are likely to see inflation adjusted price decline of 20 - 40% over the next 3 years. I am not a doomsayer; I am realist. I have not drunk or mixed the Kool Aid.

Other signs of a slowdown:

• Ricardo Cortazar, a Realtor in Tempe, Ariz., says it now takes 35 days, on average, to sell a home. Six months ago, it took a week. Inventory in Arizona has swelled to 15,000 homes, vs. 6,000 in May.

• Vaughn Bryan, a real estate agent in San Bernardino County, has spotted another ominous trend: a rise in the number of 90-day listing contracts that expire without a sale.

• Dan Elsea, a Detroit Realtor, says it's common for sellers in the job-starved Motor City to reduce asking prices two, three or four times before signing a deal.

• Kelly Haslam of Madison, Wis., hasn't been able to sell her bungalow-style home despite putting it up for sale "by owner" seven weeks ago, hosting four open houses and dropping her price once.

• Judi Keenholtz, CEO of Empire Realty, which serves San Francisco's East Bay, says desirable homes in good school districts that used to fetch eight
to 10 bids now get three or four.

Globablization & Bubble Markets

A housing unit in a bubble market will cost much more then a similiar housing unit in a non bubble market. High local wages are generally a neccassary ingredent to sustain high home prices ( except in strong vacation markets). Wages in Bakersfield, CA are much lower the San Deigo. In the same vein, home prices are much lower in Bakerfield then San Diego. Additionally, high wages are neccasary in high cost areas to attract talented employees.

Globalizationis a continuing reality. Price equalization, including labor rate equalization, is a component of globalization. Globalization will continue placing downward pressure on US wages. Bubble markets are particulary vulnerable as the wage differentials are even greater. Given the continued march of globalization, the tremendous wage differential between the bubble markets and the non bubble markets / the rest of the globalized world is inherently unsustainable.

NAR Releases Local Anti-Bubble Research

On October 29th, Ben Jones posted this on The Housing Bubble Blog:

One reader wants to discuss the NAR's anti-bubble campaign. "This email is in response to the many inquiries that NAR Research has received from state/local associations since I delivered my presentation at the Leadership Summit in Chicago last week. As promised, NAR Research will be distributing anti-bubble reports for many of the metros across the nation to all state and local associations."
The National Association of Realtors just released anti-bubble reports for many housing markets. Notice how the wording is each report pretty much the same and just a few figures and names were changed.

Mark Zandi On the California's Housing Market

Mark Zandi, chief economist of laid out two possible scenarios for California's housing market. From, November 1st:

California's housing market is overvalued by 10 percent to 20 percent, said Mark Zandi, chief economist and co-founder of, at a conference Monday

Housing prices could take a sharp drop if interest rates rise quickly enough. Another possibility is that home prices would flatten "for an extended period of time," Zandi said.

A flattening out of prices, connected with a gradual rise in interest rates, is the most likely scenario, Zandi said.

"I do think we will see the market correct," Zandi said.

"California's economy -- its success and failure -- is intimately tied to the housing market," Zandi said.

Zandi sees a soft landing as more probable then a hard landing. A hard landing for California's housing market is pretty much inevitable because it has been a speculative episode. However, Mark Zandi is correct in noting the importance of the housing market for California's economy.

Tuesday, November 01, 2005

DC Rowhouse Rehab: 1343 Otis Place NW

The rowhouse located at 1343 Otis Place NW in Washington, DC was bought on 09/02/2004 for $308,248 by District Design Development Group LLC .

The rowhouse is located in the Columbia Heights
neighborhood which is a gentrifying neighborhood located 4 miles noth of downtown.

It was completely gutted and rehabbed and a small extension was put on the back along with a brand new third floor. Contemporary finishes. Total construction work and design fees is around $310K. A third story was added. The rowhouse has 3 Bedrooms, 3 Full Baths, 2600 sq. feet, historic Columbia Heights row house showcasing our team's innovative blend of construction, architecture & interior design. 3BR/3BA, 3 stories + bsmt, gourmet kitchen, Owners Suite w/ private deck, Bamboo Flooring, Custom Millwork, Garage Parking, Patio and Backyard, High End Design & Finish.

The rowhouse looks lovely on the inside ( click on the virtual tour).

The rowhouse had an asking price of $799k. It is under contract in 10 days.

* A special thanks to John Goldman, who is a key figure in the rehab, for providing this information. Some of the facts were verified.