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Why DC Real Estate is Still Doomed, part xviivibbq

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14

October 07, 2008 – Comments (8)

Home price slaughter

(full size)

(From the WSJ. )

DC: 34% of purchases from last 5 years are underwater. Prices still need to drop more than 26% before usual levels of income to home value are re-established. Economy is getting worse. This will mean more walk-aways, more forclosures, and continued drop in prices. I would add that, no matter who wins the election, tons o' that government & military spending will be going byebye soon, and this region will likely slide.

That, in a nutshell, is why you won't see me bidding on a house here until the real pain arrives. Things are going to get a lot worse before they get better, and there's nothing the bailout crew can do to stop home prices from cratering. They're out of bullets.

Sj

8 Comments – Post Your Own

#1) On October 08, 2008 at 1:30 AM, xserver (< 20) wrote:

There's a house in my neighborhood that has an asking price of $799K, but Zillow has it priced at $533K. These are modest tract homes in a modest area of San Diego County...I still can't get past the $533K price for these, yet someone wants nearly $800K?  When are people going to capitulate?

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#2) On October 08, 2008 at 5:43 AM, DemonDoug (90.12) wrote:

they won't.  they will mail in the keys and let the bank capitulate for them.  It is happening, and has been happening for a while, expect it to accelerate downward for a while.

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#3) On October 08, 2008 at 6:13 AM, outoffocus (23.68) wrote:

As well it should. Home prices TRIPLED within the 3 years (2004 to 2007) I lived in NOVA.  Rents were ridiculous, and builders built subdivisions (not houses, subdivisions) on every square of grass they could find in the NOVA area. It was disgusting.  You wanna know why pollution is so bad in that area? Its because there are not trees left. =P

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#4) On October 08, 2008 at 6:18 AM, outoffocus (23.68) wrote:

Also, I told someone in 2006 that there was a contracting bubble (sounds like an oxymoron) in DC that was unsustainable. Those years in DC where all these people were making 6 figures are coming to an end.  DC's economy only exploded because of UNPRECEDENTED government spending over the last eight years and the government's INSISTENCE on contracting EVERYTHING out.  I think its safe to say thats not going to happen anymore.

I hated living in DC.  Everything was too expensive and overcrowded and the area was too polluted.  I'm glad I left when I did and I dont plan on looking back. 

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#5) On October 08, 2008 at 9:03 AM, abitare (45.19) wrote:

In Bethesda, MD a house that cost $350k in 2000, they now want $700-800k. It is ridiculous.... Reality and the market will correct this silliness. I think...

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#6) On October 08, 2008 at 9:23 AM, giantSwan (< 20) wrote:

Yes, I've been waiting for a housing correction for YEARS now. This isn't just DC -- no one wants to capitulate.  I think people would rather see the price stay the same and their money worth less.

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#7) On October 08, 2008 at 12:11 PM, TMFHighYield (77.74) wrote:

OK, I may be a bit biased here since I purchased a home in the DC area just a few months ago, but I think the figure is a bit misleading. I'd rather see the data inside vs. outside the Beltway. In my neighborhood inside the Beltway, for instance, we've seen prices hold up remarkably well as gas prices have forced most to move closer to their job, typically in DC/Arlington/Alexandria. Outside the Beltway in places like Manassas and Stafford, home prices have plummetted for the very same reasons. No one wants to pay $500k for a two hour commute with gas prices in the mid-$3s when they can pay the same amount for, granted, probably a smaller home, but easier access to public transportation and/or a much shorter commute. Home prices in the area are a far cry from what they were in 2005-2006, and they could fall some more, but 26%? I don't think so. With Obama coming in January, you can also expect a much bigger government, further fueling the DC economy.

Cheers,

Todd 

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#8) On October 08, 2008 at 4:29 PM, giantSwan (< 20) wrote:

I don't believe it's the economy or population increase fueling DC housing prices. I think it's all stemming from speculation and 'fake money' that's been pumped into the housing market. If you look at Case-Shiller housing price index you could make a solid argument that DC home prices (beltway and environs) still have a 32% drop from July 2008 prices. This is entirely possible. I'm basing this on a pre-bubble year of 2002.

Again, or our money will be so worthless that the value in US dollars stays the same.

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