Posted on 04/21/2006 11:16:08 PM PDT by lauriehelds
Investors who sought quick profits buying and selling real estate in the Washington region are in full retreat, dampening demand for homes, most notably for condos.
What is becoming apparent, market watchers say, is how big a part speculators played in the region's real estate boom of the past few years. Not just condominiums, but also townhouses and single-family houses, were snapped up by investors using no-money-down financing and non-traditional loans. They helped send prices soaring at unprecedented rates. And now many are trying to sell, or rent at a loss. Some may eventually dump properties at low prices to get rid of them. That could weigh down values for everyone.
Sales of new condos fell 43 percent in the first quarter of the year, compared with the first quarter of 2005, according to one report, and there are almost four times as many existing condos for sale than last year.
"We think the softness of the market is largely due to the pulling out of investors," said Gopal Ahluwalia, staff vice president for research at the National Association of Home Builders. "They have not only pulled back, they are canceling purchases."
David Bath, a retired dentist in Reston, rode the boom up. A condo he bought in Vienna for $97,000 sold for $250,000 in a single day. He was able to sell another condo in Herndon for an even bigger profit.
Now he wants out. He has had no luck finding buyers for two investment houses and a four-unit apartment building he owns in Florida. He has been stuck making mortgage payments on vacant houses that took a lot of time and money to repair.
"It's a lot of work and I don't see the returns anymore," he said. "I'm going to the table to cash my chips in."
(Excerpt) Read more at washingtonpost.com ...
Look for the housing market to slid off the deep edge for a while.
Leaving the speculators to lick their wounds.
Probably not in most areas. Sure their are always speculators who buy up markets, it's the same in the stock market. But it will retreat and recover.
Remember, this is the Washington Compost, they love discouragement and disaster as long as a Pubbie is in the White House.
http://www.rockymountainnews.com/drmn/real_estate/article/0,1299,DRMN_414_4639135,00.html
I am not knocking Bush and the incredible run the economy has had.
The economy has to have a breathing spell.
Speculators drove up the prices for homes and condos so no one can afford to make the payments.
Something has to break somewhere and that isn't the presidents fault that some people got greedy.
That aint no joke. In new brand new developments in Califoria, ones where they are still selling new homes, people who speculated and now can sell or rent are turning to section 8 rentals.
Brand new developments are becoming low income subsidized housing ins some parts of California.
The MSM has been all out pushing for a real estate "crash" for the past 5, or more, years now. Maybe some day it'll happen and we can all rejoice in people loosing.
Can you elaborate on this, rental income vs. cost of the home? Thanks.
many formulas, it's an interest rate/housing comp guestimate usually
When rents don't go up as much as housing does in a market, it's a sign that investors are not able to flip the investment for a profit and are settling for renting in hope of an upturn.
See FReepmail (You are welcome to proof read and spell check and then repost here)
Oh my god, we haven't seen 6.5 percent since the 1960's....we are doomed.:-)
Kidding aside, I read an article about the DC market where they said that builders need to bring 40,000 units a year on line for the next 5 years....something never done.
Job growth is huge here....defining the equation.
This market is looking worse than I thought, even from one month ago here in greater Boston. One thing you can take to the bank is this: "when home prices start to drop, they drop for a long time.....not just for several months, but in many cases several years". This is a fact.
Tax eaters, parasites, exploding in population under Bush's Democrat-like spending.
Even if the next president is a real Dem rather than a wannabee, it can't continue infinitely because there are fewer and fewer workers in the productive segment of the economy producing taxes for the governmental parasites to eat. And that which is not infinite must by definition come to an end.
d.o.l.
Criminal Number 18F
You are right, its is all about government growth here.
Don't pigs get slaughtered too:-)?
How about settling for renting in hopes of getting the spouse off your back for the deal you talked her into that you in no way could afford if it did not work out.
I suspect there are some desperate people out there and very worried on top of that about mortgage rates on the variable loan they took out to do the "flip" deal.
My wife and I are not starting to hunt for deals. Won't buy yet but looking.
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