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More Proof that DC Real Estate is Dead

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October 04, 2007 – Comments (8)

Found this ad on the front page of the post today.

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Note it's next to a story about record low unemployment. (Center column, bottom of page...)

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And it is a big fire sale. Just take a peek:

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And, of course, refresh the page, and the home fire sale ad is replaced by a hard-up condo project. Who wouldn't want to live above a hotel overlooking some of the busiest, noisiest traffic in the DC area? (Not shown here, of course. Camera angle is KEY.) And only $400,000 or so for a measly 700 Sq feet! In an area where you can rent that for about $1,200 a month...

SP32-20071004-153708

8 Comments – Post Your Own

#1) On October 04, 2007 at 5:10 PM, floridabuilder2 (99.34) wrote:

sigh..... Caps is becoming like the biased media... always negative reports... never a glimmer of hope...  I see that craftmark homes is providing the big incentive.... hmmm... lets see if KHOV matches

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#2) On October 04, 2007 at 11:16 PM, TMFSpiffyPop (99.36) wrote:

Seth, what do you mean by "dead"?

To me, the word "dead" is a deep and important and peremptory word. It seems like you don't use it the same way. If that's the case, what am I to take away from your blog (which I have otherwise generally enjoyed reading)?

FYI, home prices in the DC metropolitan area are higher than 2006, according to a WTOP report I heard this evening. And no, I'm not someone with rose-colored lenses looking for what I want to see; I'm not in the market. But even assuming they're somehow biased and misreporting the truth, I think it's actually even more inaccurate to headline with a word like "dead."

We all have different standards, I suppose, for our own uses of the language. But respecting language and making words true, making words count, will build credibility not just for the language itself, but more important, for the people who use it.

Good visuals -- I really like how you bring a lot to your blog. 

Signed,

A Regular Reader 

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#3) On October 05, 2007 at 4:54 AM, saunafool (98.94) wrote:

Seth, that's whay on my blog, I use the word "toast" to describe the housing market.

Sales down 20% ish over the past year, prices flat to falling depending on where you live, price to income remaining at all time record highs, foreclosures up several fold from a few years ago. It doesn't mean there is no pulse, it's just burnt and old and dried up.

Toast.

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#4) On October 05, 2007 at 7:48 AM, TMFBent (99.83) wrote:

With all due respect, Dave, you're looking at the wrong numbers, or rather, the news you're hearing is reporting lousy numbers.

Case/Schiller index -- the only home price index that gets rid of the biasing effects of additions, etc., showed the DC area's home prices took a 7% tumble year over year. And this fire sale is on the heals of the major fire sale that Hovnanian (or was it Horton, now?) had because, quite obviously, they couldn't move their overpriced merchandise now that loans aren't crazy anymore.

You know what the median income around DC is, right? You know what the median home price is, right? You know how affordable the median home is to the median income (without gimmicky option-ARM), right? (Completely unaffordable, as my two-income household will attest.)

Prices have nowhere to go but further down. And if we ever get politicians in our capital who are interested in reigning in runaway federal spending, the government-contractor-fuled economy around here will pop and there will be a big world of hurt for those trying to sell houses they bought at the peak a year or so back. 

Dead seems a pretty good description to me, but since I figure it'll be even deader in a few months, I'm willing to take a page from the princess bride and call it "mostly dead."

The party is over. Look past the mainstream media's astoundingly ignorant reporting on the subject, and you'll see.

FYI, home prices in the DC metropolitan area are higher than 2006, according to a WTOP report I heard this evening. And no, I'm not someone with rose-colored lenses looking for what I want to see; I'm not in the market. But even assuming they're somehow biased and misreporting the truth, I think it's actually even more inaccurate to headline with a word like "dead."

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#5) On October 05, 2007 at 8:02 AM, TMFBent (99.83) wrote:

A few figures, cobbled together from a variety of sources...

Median household income, DC area: $63,000 per year.

Median home price: $400,000 (I've not seen a liveable home in this area for that price, and if anyone has, please send the listing my way. The 800 sq-foot, unrehabbed, 1950s 2-BRs near me go for half a million still...)

Median income per month: $5250

Mortgage Payment per month on Median Home (10% down, 30Y fixed at 6.5%): $2,798, or 53% of monthly income.

Raise your hand if you think spending half your income (before costs for home maintenance, of course, or $400-800 per month association fees for the condo...) on housing is a good idea? When you can rent equivalent (or better) space for $1700?

This is why so many homes were sold with awful option ARMS and other "affordability" products. And this is why, in the absence of those products, home prices must fall. Econ 101, folks. There's simply not enough money to keep pushing home prices up. The Ponzi scheme is over, and there's only one variable left in the equation to move...

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#6) On October 05, 2007 at 8:05 AM, TMFBent (99.83) wrote:

Oh, and by the way, for those just keeping score at home, my compatriot, floridabuilder is a bit too deadpan. You need to assume the winky face after his post. He knows how bad RE is getting, he knows it from the belly of the beast.

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#7) On October 05, 2007 at 2:23 PM, ByrneShill (75.61) wrote:

It's too bad we can't literally short houses and condos.In Vancouver, canada, the Mortgage Payment per month on Median Home is 73% for condos. Almost nobody would be able to afford their own homes today. Anyone with half a brain would make a killing shorting condos there.

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#8) On October 05, 2007 at 5:19 PM, TMFBent (99.83) wrote:

Well, ya can short the Case/Shiller futures on the Chicago Merc. and stuff built on it.

See this.

BTW, I've been to Calgary recently. Same deal. Relatives who've done well trading up -- but kept their old places and make some very nice cash flow renting them out. Wouldn't want to try to buy, though, especially not with our worthless U.S. scrip!

 

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