There were so many homes for sale especially on the fringes of the neighborhood. One house that we toured was in need of renovation and located near the Potomac Avenue Metro Station.
I got talking to a friendly Realtor and he said three significant things:
- He bought 8 condo units. Yikes!
- Condo prices are declining.
- Condos are more vulnerable then single family residences due to the overbuilding in the condo market in the Washington, DC area.
Posts
I know an agent who bought over 20 condo's. This genious has been in the business for four years.
ReplyDeleteHe tried to palm a few off on me. What a dope.
va_investor,
ReplyDeleteWould you like to do a guest post?
if so please email bubblemeter@gmail.com
I don't think there is an overbuilding of the condo market -- it will be nice to have more relatively affordable housing options close into the city.
ReplyDeleteI'm sure glad I don't own a condo, though -- condo prices are going to come down a lot.
But just because it's bad for investors doesn't mean its bad for DC.
"But just because it's bad for investors doesn't mean its bad for DC."
ReplyDeleteTrue.
The "expensive and gentrified" neighborhood that you saw is EXPANDING. The houses for sale on the "fringes" of the 'hood are being sold by long-term residents (read: not yuppies) who are taking advantage of the multiples of six figures they have in home equity. These are people who bought their houses 20, 30, even 40 years ago. They aren't part of the "bubblicious" craze you covet.
ReplyDeleteLand in "fringe" neighborhoods of DC is UNDERVALUED. Get used to it! THIS IS THE CAPITAL OF THE UNITED STATES OF AMERICA - IT IS NOT GOING TO BE A SLUM 20 YEARS FROM NOW. IF YOU THINK THAT IT IS, please, please, please GET OUT OF HERE!
"They aren't part of the "bubblicious" craze you covet."
ReplyDeleteMany of them would not be selling if the bubble did NOT happen.
Huh? So 30 years of home equity (my next-door neighbor in DC bought from his father in the 1970's) is entirely due to Bubbliciousness?
ReplyDeleteOr does it have something to do with the nature of real property ?(of which Real Estate is a part)
Houses that were GIVEN to people in the 1980's can now sell in the $300's and they are a BARGAIN for the person buying them. Another $30K (conservatively) in renovation and you have a 3 or 4 story REAL townhome in a REAL town for $330K. And, you OWN a piece of land in the capital of the United States.
Land in DC is undervalued. Smart people can find it.
"Huh? So 30 years of home equity (my next-door neighbor in DC bought from his father in the 1970's) is entirely due to Bubbliciousness?"
ReplyDeleteNo. Thats not what I said. If there had been no bubble many of the long time homeowners would not have sold now as the selling price would only be much less.
bryce, you are talking about two separate and unrelated things. Whether DC and other major metropolitan centers are going to come back into favor as the place to live (and I would argue that they will) has nothing to do with pure insanity of the bubble markets we've seen forming around the country.
ReplyDeleteYes, the fact that cities are likely to become more popular again, after mouldering for a few decades while the public played out fantasies of being a landed aristocracy does mean that the price declines will probably be less precipitous in the cities than the distant suburbs. But anyway you slice it, when prices double and triple in the space of a few years you are seeing a speculative mania. And prices will decline.
anonymous said:
ReplyDeleteBut just because it's bad for investors doesn't mean its bad for DC.
This is true. Somebody will buy these condos, and it won't be section 8 folk. These condos will sell, most likely at prices that are far below what's currently posted on the signs. And this is a good thing for regular people that need places to live, even if it's bad for the speculators.
Land in "fringe" neighborhoods of DC is UNDERVALUED. Get used to it! THIS IS THE CAPITAL OF THE UNITED STATES OF AMERICA - IT IS NOT GOING TO BE A SLUM 20 YEARS FROM NOW. IF YOU THINK THAT IT IS, please, please, please GET OUT OF HERE!
ReplyDeleteIndeed! And this is more or less the attitude that helped drive out the middle class out of DC resulting in residents coming to Virginia to do their shopping.
It's a scandal that the capital of the U.S. is such a blighted hellhole. I remember during communist times how russian TV would show slums within photograph distance of the white house.
Imagine what the city will look like after the bubble pops!
Somebody will buy these condos, and it won't be section 8 folk.
Who bought the previous housing that's now the home of section 8 folk?
People like bryce don't understand the cyclic nature of city life. Young people move in for a few years, value goes up. Young people have kids and move out, value goes down. Its happened to NON land locked cities for the last 50 years.
ReplyDeleteWe should be grateful that Bryce is letting us in on this amazing opportunity. I mean, I only grew up in DC during the 80's then lived there from 94 to 05 -- what do I know about the cyclical nature of the city? I guess it really is "different this time!!!!!!!!!!!!!!!!!!!!!!!!!!!"
ReplyDeleteSo, Bryce: how are those projects on North Capitol doin'? "Projects" as in "public housing." Too bad they're not building a stadium there...no eminent domain dealie available. And how are those 52,000 condos cited by the Washington Post as coming on the market within two years doin'?
Jerkstore
DC wasn't that great 20 years ago, it may be better as time goes by, but it won't be at these prices relative to incomes. The 20 and 30 somethings that are scooping up "loft-style" condos will be in quick retreat for a suburban lifestyle as soon as they get married and have their first kid. People are simply not going to raise kids in this town. The result will be the cyclical pattern the prior poster described.
ReplyDeleteSomething that will continue to put pressure on young couples to move OUT of DC is the poor quality of the district's schools. Most people on an average salary that live in the district cannot afford decent schooling for their children. That has also helped push up home prices in Arlington and Alexandria (making them more expensive on average than DC), as people move in that direction.
ReplyDelete"cyclical nature of city life"?
ReplyDeleteYep. The city dates back to the late 1700s. What was the city like in 1850? I'm guessing that your world view(s) just aren't that comprehensive. Expand your horizons to include more than just your parent's lifetimes, and you'll see the broader picture. (you solipsistic suburban twits)
As for projects on North Cap: Sursum Corda is going down. It is a done deal. Groundbreaking is scheduled for this year.
The old GPO (gov print office) is being converted into... uhh... "loft style" housing for solipsistic suburban twits. ATFE is consolidating its headquarters next to the new NY Ave. Metro Station near North Cap and NY Ave. The building is standing there now - still under construction but it is there. Go take a look.
XM Satellite radio is headquartered at FL and North Cap. Go take a look. IT IS THERE.
Please, people. Look in the mirror and recognize yourselves for the bitter people you are. Acknowledging your problems is the first step toward getting healthy again (if you were ever healthy in the first place)
Sarah,
ReplyDeleteI'm not arguing that prices will not drop overall.
I am arguing with the guys who claim to know what is happening in DC, yet don't live in DC. I completely agree with what you said; a return to liveable urban communities is in the cards over the next few decades.
Empty-nesters who raised their kids in the 'burbs need to live somewhere, right? (is everyone here aware of the demographics of the "baby boom" generation? How old are they now?) And why would they keep living in that poorly made house in Ashburn? They can't get anywhere without a car in Ashburn, the streets and roads are literally clogged with cars, and there are no cultural ameneties to enjoy there.
Empty-nesters will return to cities. And DC will always enjoy a large (and growing) diplomatic community.
For the record, I'm looking forward to a return in normalcy in the housing market so that the sweeping changes taking place in DC can actually *accelerate.*
bryce,
ReplyDeleteI agree strongly with your points that huge redevelopment is occuring in the Washington, DC proper. It is amazing what has happened in the last 5 years. I see it first hand as it is related to my job.
I don't agree with everything Bryce says, but I do agree with his outlook on the District. Section 8 folk have been being displaced to the suburbs for a while now. How's suburban living in Hyattsville or Capitol Heights? Try worse than DC. There's some pretty sketchy areas out in No. Va too. Suburban living was founded on the principal of cheap gas. Now that that has changed for good, the living patterns will also change, albeit over time.
ReplyDeleteThe renewal of the District was already well underway before this bubble gained so much momentum. And it's not just here. There is a renewed interest nationwide in urban living.
However, this does not mean the District prices aren't overvalued and won't fall. They will, just not as much (percentage-wise) as the far flung suburbs. $3 gasoline is here to stay, and will most likely continue to trend upward. How attractive is that McMansion in PW county going to be when it costs $10 each way to drive that Hummer to the city everyday for work and sit in traffic for 2 hours?
As for schools, many District public schools are bad. But this can change too. The public schools got bad because those that cared about good public schools left the District. What do you think will happen if those people come back? They will demand better schools with their votes.
Just remember this: Just because it's been a certain way for years or even decades, doesn't mean it has to stay that way forever.
I apologize for being a bit obnoxious. It isn't directed at anyone in particular; just a generalized group of people who are actually wishing/hoping/praying for the demise of their own nation's capital. I find such thinking to be objectionable and offensive; but that's just my own point of view.
ReplyDeleteIf you want our nation's captial to be and/or to remain a "hellhole" and you don't live in DC, I submit that YOU are part of the problem with DC.
From some of these posts, it is clear that there really are major demographic and economic trends that are well underway in terms of transforming DC into the place that it should (and will) become: A role model for cities throughout the nation. The fact that condo inventory is up, or the possibility that someone paid $90K "too much" for a home they intend to stay in for the next 30 years is irrelevant to the bigger picture of what is happening.
Do any of you realize the huge percentage of DC that is lawyers making $100k+ per year? Prices aren't going anywhere but up as long as these people are around to support them. That's what you don't get. These condos are STILL AFFORDABLE. The gradual gentrification of depressed areas will continue, but a lawyer isn't going to move to anacostia because it's cheaper there. Supply is still quite limited relative to the demand that this city inherently produces. Hate to break it to you.
ReplyDeleteHow about all the GS-14s who make $100K+ per year. I heard a rumor from a guy who knows another guy that says DC has a couple of GS-14's and above who work right in the middle of the DC metro area.
ReplyDeleteeh, it is almost 1:30 in the afternoon, I need to leave now 'cause it takes me 3 hours to get back to my crappy house in Fredricksburg VA. You know: I'm living the dream!
I guess I'm bitter because I sold my NWDC SFH at the top last year. And I'm a "suburban solipsistic twit" because I live in Manhattan. That's it. Oh, and I'm hoping for the demise of DC. Even though I still have a condo in Foggy Bottom.
ReplyDeleteJerkstore
Anonymous said...
ReplyDeleteDo any of you realize the huge percentage of DC that is lawyers making $100k+ per year? Prices aren't going anywhere but up as long as these people are around to support them. That's what you don't get. These condos are STILL AFFORDABLE. The gradual gentrification of depressed areas will continue, but a lawyer isn't going to move to anacostia because it's cheaper there. Supply is still quite limited relative to the demand that this city inherently produces. Hate to break it to you.
That's right... It's different in DC, heh?
Buddy, hate to break it to you, but those "lawyers making $100k+/yr" are the minority. Go look up the median income for DC. In case you didn't know, the median is the midpoint for the market, not what a few overpaid lawyers make.
I'll save you the effort. It's $40,127/yr.
http://quickfacts.census.gov/qfd/states/11000.html
bryce,
ReplyDelete"How about all the GS-14s who make $100K+ per year."
For everyone of those there are 40 - 60 times as many people who are work for the feds who make less then 100K.
Jerk,
ReplyDeleteIf you were hip, you wouldn't live in stodgy old Murray Hill or whatever the heck middle-east-side neighborhood you're in.
If you had a pair, you would have bought in Greenpoint, B'klyn, USA. Then you could be bragging about even MORE upside to your investment.
Instead..... you stick to WASPy neighborhoods. What is that about? You like it when everyone looks and behaves the same, right? (hence the pattern in your choice of 'hoods)
I guess you decided to ignore the part of my post where I pointed out that professionals making these salaries - and there are many - are not moving to low-income neighborhoods. The real housing supply for these people is still very small.
ReplyDeleteBy the way, did you hear that DC firms raised salaries across the board this year. Right out of law school, the market rate is $135k/year. Must be really hard to afford a mortage payment on that!
"For everyone of those there are 40 - 60 times as many people who are work for the feds who make less then 100K. "
ReplyDeleteThat's why God made Columbia, Maryland and Leesburg, VA.
I know, I had a GS-12 for a neighbor who sold his rowhouse for $515K last year. Government gave him an early retirement package to boot. He moved to another area of the country.
ReplyDeletejerkstore, have you ever used the term "spongeworthy" to describe yourself? I suspect so. If I'm correct, only you will know... (but I know I'm correct :)
ReplyDeleteSad.
Anonymous said...
ReplyDeleteI guess you decided to ignore the part of my post where I pointed out that professionals making these salaries - and there are many - are not moving to low-income neighborhoods. The real housing supply for these people is still very small.
By the way, did you hear that DC firms raised salaries across the board this year. Right out of law school, the market rate is $135k/year. Must be really hard to afford a mortage payment on that!
So I guess all those lawyers now making "$135k/yr" are going to buy all the housing in DC, since only a person with that salary can afford a home in Anacostia, much less somewhere good.
I agree that a lawyer making in the high range of salaries for DC is not going to consider Anacostia. But my point is, if they won't, who will? Right now, nobody else can afford these properties. Which is why prices will naturally come down to the price point that people that are willing to live in an area like Anacostia can pay.
You focus too much on the smallest extreme of overpaid workers, yet ignore the rest of the market. Open your eyes and mind and look at the entire market instead of focusing on a miniscule subset.
"I agree that a lawyer making in the high range of salaries for DC is not going to consider Anacostia. But my point is, if they won't, who will? Right now, nobody else can afford these properties. Which is why prices will naturally come down to the price point that people that are willing to live in an area like Anacostia can pay."
ReplyDeleteThose people already live there, and the prices are quite low. And if you think lawyers consitute some fringe group in DC, you must not be from around here.
Those people already live there, and the prices are quite low. And if you think lawyers consitute some fringe group in DC, you must not be from around here.
ReplyDeleteSo who's going to buy all these expensive condos in fringe areas then?
"So who's going to buy all these expensive condos in fringe areas then? "
ReplyDeleteSame people who are living in them now - professionals hoping to make an investment in a gentrifying area. They are naturally a bit of a better value (or just cheaper) than condos you get in the few areas that really do have to stay active - Dupont, Kalorama, Cleve Park, sections of the hill, Woodley and a few others - for the housing market to stay hot. Some people are drawn to them. Others would just rather have a $399k condo in columbia heights than the same condo for $550k in dupont. My point is that there are enough people who can afford the latter.
I, by the way, am distinguishing these "fringe" condos from true slum areas and areas that are not near the metro, because prices are cheap there.
Anonymous said...
ReplyDelete"So who's going to buy all these expensive condos in fringe areas then? "
Same people who are living in them now - professionals hoping to make an investment in a gentrifying area. They are naturally a bit of a better value (or just cheaper) than condos you get in the few areas that really do have to stay active - Dupont, Kalorama, Cleve Park, sections of the hill, Woodley and a few others - for the housing market to stay hot. Some people are drawn to them. Others would just rather have a $399k condo in columbia heights than the same condo for $550k in dupont. My point is that there are enough people who can afford the latter.
I, by the way, am distinguishing these "fringe" condos from true slum areas and areas that are not near the metro, because prices are cheap there.
I agree with you on the target demographic of the people buying the condos in the fringe areas.
My point is that at the current prices that these projects are fetching, this target demographic cannot afford them. And I say this both from a statistical standpoint as well as a anecdotal standpoint.
If you want our nation's captial to be and/or to remain a "hellhole" and you don't live in DC, I submit that YOU are part of the problem with DC.
ReplyDeletePardon me, but how is someone NOT living somewhere part of the problem with that city?
If DC and hell, I'll say it, the left wants to attract young child-producing middle class families back to urban living, they'll have to acknowledge what those people want rather than sneer derisively at them as "ignorant" (whenever I hear that from a leftist, I'm reminded of Michael Jackson calling his accusers "ignorant". "They're ignorant!")
Most people on an average salary that live in the district cannot afford decent schooling for their children.
Whatever happened to public schools? DC spends quite a bit on public schools as compared to, say, Indiana.
There's some pretty sketchy areas out in No. Va too. Suburban living was founded on the principal of cheap gas.
Er, no. It was founded on giving people fleeing the cities somewhere to go. Gas is a small fraction of the middle class suburbanite's expenses. They won't move to the condo next to Union station just to save a little on gas.
Sorry folks, the "problem" is bigger than cheap gas or even the housing bubble.
Spongeworthy,
ReplyDeleteBy actively, vocaling, publiclly talking down about your nation's capital, and refusing to live in your nation's capital, you are contributing to a problem instead of playing a role in resolving the problem.
No, you don't have to live here (anymore), but at least you could STFU when it comes to cheerleading the negative things about DC, especially when you are indeed ignorant of the state of the nation's capital today.
I lived in NYC for 9.5 years. Where do we start with NYC? The rats? The sex slave trade? The sweatshops? The heroine trade? The ancient infrastructure? (A water main made of a hollowed out tree trunk burst in the Wall St. area in the 80s when I was living there... it is an OLD city in case no one noticed)
Or lets talk about the fact that Manhattan Island is in fact: An Island. What long-term strategic implications does that have for both the economy and the prosperity of the property owners there? Are major accounting and law firms staying in Manhattan, or are some of the biggies relocating to The Meadowlands NJ? Is mainland NJ doing any better in recent years? (I really don't know, but I suspect so because it is actually better to *be on the mainland* even if it isn't quite as stylish as being on an island)
And what has happened in the Bronx and Brooklyn? How about Long Island City Queens? (I know the answers here, so these are rhetorical questions)
People "fled" the cities to places like Levittown Long Island for what reason? (again, a rhetorical question)
Fact is; people who adhere to dogmatic economic/political/religous beleifs tend to fail in the long term. Sponge seems to think I'm a "leftist" when in fact I'm not; while clearly calling himself out a right winger.
Change is coming too fast to be a strict adherent to dogma. See: The Twentieth Century for multiple expample of the speed of change.
polishknight,
ReplyDeleteSo why did people flee the cities for the suburbs? I'll admit, I'm not old enough to remember.
I've always thought that originally it was cheaper housing, the allure of a yard, and cheap gas. Once people started leaving in mass, the erosion of the tax base caused crime and poverty to escalate, which sort of generated this whole downward spiral and caused more people to leave.
Polishknight,
ReplyDeleteI really have to disagree with your statement. Cheap gas really is an enabling factor for the massive urban sprawl we see. Our country ramped it's growth after WWII by building a huge interstate highway system to foster growth, jobs, and development. People fled to the way outer suburbs because of shortsighted zoning and big highways. The American dream was marketed as a big plot of land, with a SFH, a 2 car garage, away from the city.
If gas were much more expensive, this growth pattern would have been very different.
Um. Bryce? I kept a place in NW DC. I love DC. To ape Lloyd Bentsen: DC is a friend of mine. And I was an appointee of the last D President, btw. But keep conspiracy-mongering whatever keeps you sleeping at night. As for all your knowledge of the market: do you really think *everything* is peaches and cream? Does the fact that Donald Trump is building a skyscraper in New freaking Rochelle inspire you?
ReplyDeleteAs for the "heroine trade" in New York. Don't we need more of that? I mean, where are today's Betsy Ross's, my friends and countrymen?
Jerkstore
ewww. a political appointee? And you're proud of that? If you were truly proud of it, you'd publish your name. (Sponge Bob, right?) I beleive in a meritocracy, and respect people who earn respect; not those who are "appointed"
ReplyDeleteI've come right out and said that prices are set for a decline. I've said it several times. I've never claimed anything is "peaches and cream". You don't see my whole message because you get hung up on certain points.
Enjoy the smell of your neighbor's cooking tonight in that dark, smelly middle-east-side WASP neighborhhood condo in Manhattan.
Despite what some commenters who claim they "know DC" say, the District of Columbia has LOST population in the last five years:
ReplyDeletehttp://www.census.gov/popest/counties/tables/CO-EST2005-02-11.xls
I'm fully aware of the decline in population. What's your point? (before you answer, you may want to look into something called "demographics" rather than merely taking a "head count)
ReplyDeletebryce
Anonymous said...
ReplyDeleteI'm fully aware of the decline in population. What's your point? (before you answer, you may want to look into something called "demographics" rather than merely taking a "head count)
This is true. The demographics of the district are changing. The section 8 folk that people moved to the suburbs to avoid are now moving to the suburbs to join them. Say hello to your new section 8 neighbors, mr. suburbanite!
Actually it's families moving out, and singles moving in. So while the population decreases, the need for homes increases.
ReplyDeleteCounterintuitive, but true.