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As readers of the blog may now, I lived in Washington DC (about two miles from the Mount Vernon estate to be precise) for about nine years before transferring to Atlanta in late 1998. I take the family back once a year, partly to let the kids see the historic and educational sites and partly to let the kids visit their childhood friends.
Just returned and I have to say that Washington is a train wreck about to happen…
...as we drove around the section of Alexandria between Old Town and Mount Vernon, I was struck that there was at least one "for sale" sign at every street corner, and at some points, five, six or seven. Talking to old neighbors, everyone knows the gig is up and they're trying to sell. But to whom? The friends we stayed with pointed to a new "McMansion" down the street, vacant with weeds growing up yet no sign out front. Foreclosure. Our friends say those houses that do sell are currently taking about four to six months to sell (but I figure that's an understatement given the growing number of "for sale" signs cropping up). And this is in a "close in" desirable neighborhood, not an on-the-edge part of exurbia like Loudon County.
In an previous post, I revealed that my wife and I bought our starter home in Mount Vernon for $216,000 in 1991 and sold it for $223,000 in 1998. Similar houses on that street were going for $549,000 during our previous visit in April of 2005 (and neighbors said prices continued to rise into the summer, to upwards of $600,000). My own guess here is that prices will come down AT LEAST $100,000 and perhaps $150,000 in this price range. I suspect my old house will be back down to $425,000 by the time the mania plays out. Lots of option ARMs and lots of investor-owned properties = lots of foreclosures and panic sales.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.