Case study of what's going on in Washington

Posted by: Dean Foust on November 21, 2007

This from the Northern Virginia Housing Bubble Fallout blog, shows the asking prices for a home in Woodbridge, which (if memory serves) is about 15-20 miles south of Washington D.C. Just keep telling yourself: Washington area real estate NEVER goes down…


woodbridge.jpg1926 WILLOW LN
WOODBRIDGE, VA 22191
List Price: $115,000
Prior Sale: $315,000 4/25/2005
Listing Date: 04/21/07
-63.5%




Price Reduced: 05/23/07 — $339,900 to $319,900
Price Reduced: 06/20/07 — $319,900 to $289,900
Price Reduced: 07/19/07 — $289,900 to $278,900
Price Reduced: 09/13/07 — $278,900 to $249,900
Price Reduced: 10/19/07 — $249,900 to $239,900
Price Reduced: 11/19/07 — $239,900 to $115,000

On Market: 213 days

Reader Comments

Meredith Morris

November 25, 2007 3:05 PM

Let's get serious. This is such an unrealistic example of what is typically happening in the market today in the metro DC area. This example is a true outlier statistically, and from my research, sets it apart from other homes sold in that area since April. In that particular neighborhood since April 2007, 7 homes have sold for an average of 93.72% of their asking price and the average sale price of true comparables to this home, that have sold in that neighborhood since April is $276,692.86. You can find extreme examples like the one you used in almost any market and they do not paint an accurate picture of the true value of properties selling or the market in general.

CD

November 28, 2007 12:18 PM

Basically, this is an auction price - the theory being is that if you price it low enough, and get enough eyeballs to look at it (which they certainly are doing thanks to this and other blogs) you will get buyers bidding against each other until the house reaches a market clearing price (i.e. the old law of supply and demand).

Bottom line, dont think this will be the price it eventually sells for - the true price (i.e. the market price) will almost certainly be higher.

Jon

November 28, 2007 3:30 PM

I think you are right. DC is not Detroit where everyone is getting laid off.

I think the writer needs to get a serious beating on his performance review for this one!

D Brown

November 29, 2007 7:10 PM

The problem with this example is the final price drop. A cape like this would probably have sold for $200K. Why the sudden drop of over $100K? Did the bank take possession and sell at $115K? It might well have if well into the mortagage and holding 20% of original sale price.

Analyze all factors before rendering judgement. This sale wasn't typical, but the real sale prices in greater DC are in fact down 30% from peak. Make no mistake about that.

Spencer

November 30, 2007 9:00 PM

Certainly it is an outlier, but it does demonstrate how sick and unhealthy the market it - dc market homes can't find proper clearing prices because homes prices got way out of hand. the original post by meredith unfortunately is potentially misleading because we don't know what the original prices, ie were the listing prices coming down, and of course 7 homes is still not a good sample set. and regardless, 6-7% drop vs list is still pretty darn bad.

Frank

December 1, 2007 5:37 PM

No. I call this "Soft Landing". Get ready for the worst to come.

Jon

January 15, 2008 10:51 AM

It sold for $150,000. Let's get serious Meredith Morris, this is a perfect example of what is happening in the current market. Anyway who buys today and doesn't extract at least a 30% discount is going to be underwater within a year or two or three.

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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.

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