March 31, 2008
Local Buyers Find Foreclosures Via Tour Bus
The Washington Post has an interesting report about a new way for house buyers to scope out the market. Local real estate agencies are organizing "Foreclosure Tours," using a big, comfy bus to cart around prospective buyers, along with agents and even a house inspector.
The idea seems a little grim, but foreclosure rates are soaring (they hit a record high nationwide at the end of 2007) and for buyers with the means, it seems to be true what they say: it's a great time to buy. Though we haven't heard about these tours going through the District, they are hitting all the suburbs — Prince William, Prince George's, Loudoun and Fairfax counties all have tours. The agents aboard the buses give informal lessons on buying foreclosures — which can be complicated by minor to major repair jobs, inhabitability issues, initial inspection difficulties, and, of course, problems with the foreclosed owners (though the Long & Foster agents in the article note that they only tour vacant houses).
The blogger at DC Home and Condo Prices, who tracks monthly sales and vacancy data, notes that while prices in the District may have remained steady or even risen, sales volume has continued to plummet, making buying a house inside the Beltway more difficult than almost anywhere else in the nation, though we may have plenty on the market from which to choose. In addition, the Post ran another story this weekend about Washington region foreclosure struggles affecting even those who didn't have risky financial situations, when their entire surrounding neighborhood did. All together, this puts the D.C. suburbs in a unique position from a buyer's perspective, with a housing market that's actually suffered the effects of the creditor collapse, resulting in hugely competitive prices next to the District's. Potential buyers are hitting up these deals in the burbs hoping for a big resurgence over the next few years as the market eventually recovers.
Of course, even these buyers don't seem to be willing to save too much if it means a longer drive through one of the worst commutes in the nation. The Post concluded with this oh-so-true quote about foreclosure buyers from a real estate agent, "Most people aren't going for price. They gauge by commute time."
Photo by billadler
|
DC has been rather immune to the foreclosure crisis because of the high paying jobs/government and college educated workforce. Driving thru parts of California, Detroit, Ohio, even Baltimore and it just opens your eyes to just how big a mess this is becoming for the rest of the country...ugggghhhh.
I wonder if maybe we aren't going to be seeing an odd reversal occurring in the next few years in the DC metropolitan area: higher income people moving into urban and close-in suburban areas, and poorer people moving to the 'burbs.
Standard and Poors housing data shows DC prices down around %9 year over year for ending 2007 and double digits down in January. It makes no sense to say that becasue sales volume has plummeted that it makes it harder to purchase a home. Sales volume is an indicator of how homes are selling. This post needs work.
Cranky:
Some Canadian-flavored economists agree with your insight.
I posted a DC-area foreclosure mash-up on my website last week. Check out PropertyMaps.com - type in Washington, DC and select Foreclosure in the "Property Type" box. It gives quite a bit of information.
From the dchousingprices site:
I continue to believe the high end homes - those costing more than $1MM - are skewing the results. The data show that the average sales price for a District home was $571,458 in January. Of 213 homes sold, 27 sold for more than $1MM for a total dollar volume of $40,343,953; all but two were in Wards 2 and 3. In other words, 12.68% of January's recorded homes sales accounted for 33% of the dollar volume. Excluding these homes, the average home price in the District is $437,455, about 25% less.
In other words, a THIRD of your sales are to people who can afford million-plus-dollar homes. That's offsetting an overall decline in home prices.
For the sake of your tax base, you'd better hope those people stick around.
From the post article here: http://www.washingtonpost.com/wp-dyn/content/article/2008/03/30/AR2008033002193.html
"The benefit of this is that everyone is here at one time," said Debbie Jeffries, a Centreville resident who was hunting for something with enough garage space for her mint-condition 1985 Lincoln Town Car. "I want rock-bottom prices."
O where to begin. OK, (1) the BENEFIT cited is actually a problem. It's called competition--which means you may pay MORE for that foreclosed home than you would if all those other rubes weren't also riding the short bus. (2) Enough garage space for your what? Your "mint condition 1985 Lincoln Town Car"????? Res ipsa loquitur.
ALSO from that article: "As a buyer, you can still get in with zero money out of your pocket," [Kellian McIlwrath, a loan officer from Wells Fargo-affiliated Prosperity Mortgage] said, adding that banks are so eager to sell foreclosed properties that they are offering cash back to provide borrowers with enough for a down payment and closing costs.
I'm not sure but, haven't we seen this flick before?
"I wonder if maybe we aren't going to be seeing an odd reversal occurring in the next few years in the DC metropolitan area: higher income people moving into urban and close-in suburban areas, and poorer people moving to the 'burbs."
I'm confused Cranky, isn't that exactly what's been happening for years, if not decades? The close-in suburbs have become too expensive for most middle-class worker, and most of the new development in the city has been skewed towards the high-end. The middle-class has been pushed out to the exurbs.
And those S&P numbers, are they for the DC metropolitan area, or for the District proper? I think the District proper has not suffered remotely the crash that the suburbs (and particularly the exurbs) have.