Doors Close for Real Estate Speculators
After Pushing Up Prices, Investors Are Left Holding Too Many Homes
By Kirstin Downey
Washington Post Staff Writer
Saturday, April 22, 2006; A01

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."

While condominiums were the product of choice for investors, luxury
neighborhoods also fell prey to real estate speculation, leading to
the prospect of price drops even in affluent subdivisions.

"Here we had it even in $1 million homes," said Kenneth Wenhold,
Virginia and Maryland director for Metrostudy, a real estate
information firm.

Robert Toll, chairman and chief executive of Toll Brothers Inc., which
builds luxury homes, said in a recent conference call with analysts
that the Washington market was the hardest-hit in the nation by
investors who bought properties intending to flip them, and who have
put the homes up for sale. "We can feel the impact of speculative play
coming back into the market," he said.

Nobody knows exactly how much of the real estate boom was driven by
investment and speculation. Experts say that between 15 and 30 percent
of all purchases were made by investors, rather than by people who
bought homes intending to live in them. Some bought the properties for
cash, sometimes with equity they pulled out of their own homes, so
there is no loan record. Other buyers pretended on loan applications
that they would live in homes they really intended to flip, so that
they could qualify for better loan terms or get around developer
restrictions on investor-buyers.

Some projects became particular investor magnets, and, more recently,
the subject of real estate blogs criticizing speculative excesses. For
example, the local Internet blog Bubble Meter focused last month on
what it called "the bubblicious bench." At one recently completed
condominium called the Halstead at Dunn Loring, a luxury condominium
complex in Fairfax County, a park bench outside the building bristles
with real estate agent lockboxes to permit vacant units to be shown to
prospective buyers or renters. On a recent morning, there were 49
lockboxes there, outside a building that has about 200 units.

Manuel Tagle, a real estate agent with Fairfax Realty in Falls Church,
is representing two units there, both owned by investors, one of which
is for sale and one for rent. He owns a unit there himself, which he
has rented out.

"There's a very high concentration of investors," he said. "I have
seen a lot of investors selling now. They see values going downhill."

The prevalence of investors -- and now their disappearance -- is
causing real problems for owner-occupants who want to sell, sometimes
against competitors willing to cut prices substantially because of
profits they made in 2003 or 2004. Mike Pugh, a real estate agent with
Re/Max Allegiance in Arlington, is trying to sell a condo at the
Halstead for a woman he says bought it for her retirement home, then
became ill and went to live with family. Pugh said his client, who he
believes was one of the few purely owner-occupants in the complex, is
likely to lose money she had saved over a lifetime.

"We aren't investors, but we are being punished by the market as
though we were," he said.

They face plenty of competition. Delta Associates, an Alexandria real
estate research firm, said there are about 25,853 new condos being
marketed locally now. But only about 1,996 new condos were sold from
January to March, down from 3,520 in the first three months of last
year. And the area's multiple-listing service, which lists mostly
previously owned properties, showed about 5,500 condos and co-ops for
sale in March in Washington and the close-in suburbs. That was about a
fourfold increase from about 1,400 listed in March 2005 with the
service, Metropolitan Regional Information Systems Inc.

Some developers are struggling to sell units in the face of
competition from the investor-buyers who want to dump the properties.
Many had sought to protect themselves against an invasion of investors
for just this reason.

A National Association of Home Builders survey of builders last year
found that about 52 percent of builders tried to sell only to
owner-occupants, 33 percent prohibited renting the unit out during the
first year after settlement, 29 percent declined to make multiple
sales to people with the same last name and about 28 percent kept the
right to buy back the unit at the same price if the owner sold in the
first year.

But many failed to ferret out investors or could not resist the buzz
of a fast sell-out when speculators flocked to purchase. A quick sales
pace allowed the builders to ratchet up prices more quickly for those
who got to their doors behind the early birds.

Speculative buyers at the hottest part of the market were able to put
down a $20,000 deposit on an uncompleted unit, then close on the
transaction and sell it to someone else the next day, pocketing
$60,000 or $70,000.

That spawned a "get-rich-quick" mentality, said real estate agent
Frank Borges Llosa, of FranklyRealty.com, who said that the people who
got in earliest made the most money, while those who came later are at
greater risk. Unlike with stocks or bonds, which can simply be sold, a
seller of real estate has to find a willing buyer or renter because a
mortgage obligates the owner regardless of the value of the asset.

"People who got caught are in trouble," Borges Llosa said.

Some investors are holding on to the properties they have, but they
are not expanding their empires. Ruben Cuya, 37, a Peruvian immigrant
who works as a quality control technician at Cuisine Solutions Inc. in
Alexandria, bought his first rental property, a townhouse in Lorton,
in 2002, using the equity from his own home for the down payment. Then
he bought an additional rental property in that same way each of the
next two years.

"This year I'm not buying," Cuya said. "It's not a good year to buy."

The situation has made home shoppers more wary about making purchases.
Real estate agents say many are so leery about where prices are headed
that they are engaged in a kind of stare-down with sellers as they
seek to negotiate for lower prices and more concessions.

"The buyers are there, there are people who want to buy," Borges Llosa
said. "But they see no immediacy to buy now versus next week."

Some buyers are even walking away from transactions. Lawyer Angana
Shah, 36, almost bought a new one-bedroom apartment in Adams Morgan
last month for $454,000, but as the settlement date approached, she
found herself "petrified" over the high price and worried that values
would fall.

Then, during the walkthrough, she learned the place was smaller than
she had been promised. The developer was unwilling to cut the price,
so she decided to walk away from the sale and got her money back. She
was glad she did because prices have flattened and she can now afford
a two-bedroom instead.

"I don't want a one-bedroom anymore," she said. "I want a two-bedroom.
Now people are begging people to buy one-bedrooms. The market is
better. I couldn't have bought a two-bedroom last fall and prices for
one-bedrooms are falling."

Yeah a relative near cambridge MD, reports homes arent selling a a new
home developer cut price 50 grand to try and move them along....
without much luck, existing homes are taking a beating

now what of those who refinanced repeatedly to pay off credit card debt
and get the deduction for interest? as home prices drop they may owe
more than the homes are worth, futher depressing prices

With 3 buck a gallon gas prices perhaps going to 6 bucks a gallon or
more, and bush threatening iran with nukes, the endless iraq war, I
think the country is about to see the economy in a recession.

that will drive home prices even lower. if you have cash buy at the
bottom.

lack of presenditial leadership will be remembered as a major factor in
the coming ecnomic disaster.........

we are entering a disaster

wrote:

Yeah a relative near cambridge MD, reports homes arent selling a a new
home developer cut price 50 grand to try and move them along....
without much luck, existing homes are taking a beating

now what of those who refinanced repeatedly to pay off credit card debt
and get the deduction for interest? as home prices drop they may owe
more than the homes are worth, futher depressing prices

With 3 buck a gallon gas prices perhaps going to 6 bucks a gallon or
more, and bush threatening iran with nukes, the endless iraq war, I
think the country is about to see the economy in a recession.

that will drive home prices even lower. if you have cash buy at the
bottom.

lack of presenditial leadership will be remembered as a major factor in
the coming ecnomic disaster.........

we are entering a disaster


Isn't that nice you have a presidnet who doesn't seem to care of
anything for ordinary Joe?

On 22 Apr 2006 09:10:04 -0700, "
wrote:

lack of presenditial leadership will be remembered as a major factor in
the coming ecnomic disaster.........

Well, Bush wanted his place in history. At this rate it will be right
next to Andrew Jackson.

But who knows, if he keeps trying maybe he can make it all the way to
the bottom.

Bush appears disconnected from the reality of our countries troubles.
he has the typical behavior of a alcoholic. I think he is back on the
booze........

The big issue is high gas prices will cripple our economy, and he
doesnt appear concerned.

On 22 Apr 2006 12:58:48 -0700, "
wrote:


The big issue is high gas prices will cripple our economy, and he
doesnt appear concerned.

They're already hurting around here. I'm in a tourist town in South
Texas, on leave at the moment to take care of a sick parent. The local
merchants are hurting first because tourism is down due to the high
price of gasoline, and second because people need to travel long
distances to get anywhere out here so a major portion of their
disposable income is now going for gasoline instead of buying goods at
the marginally-profitable small stores that keep this town alive.

I don't see any fix for it, though. The way I see it, Bush gave the
go-ahead to the big oil companies to set prices. They did so, raised
prices, made money, but then OPEC decided they wanted that money
instead so THEY raised prices. The oil companies raised prices again
and cited OPEC as the cause. OPEC raised prices some more. The oil
companies raised prices again and blamed OPEC, then Katrina and
various other scapegoats and around and around it goes.

Even if some new President reins in the US oil companies and restores
competition, OPEC has learned that they can get more for their oil
and, being a cartel, they can't be made to back down.

So, once again Bush has gotten us into something that nobody can get
us out of.

The founder of OPEC was quoted as telling his members....

DONT get greedy or they will find a replacement for crude oil...

Maybe 6 bucks a gallon will do it? Wholesale unemployment? Bush nuke
Iran?

bush is leaving a legacy allright, one that will sullen the republican
party for many elections to come.

I drive a LOT for my business, $ spent on gas isnt available for other
things....

"arachnid" wrote in message
...
On 22 Apr 2006 12:58:48 -0700, "
wrote:


The big issue is high gas prices will cripple our economy, and he
doesnt appear concerned.

(snip)

I don't see any fix for it, though. The way I see it, Bush gave the
go-ahead to the big oil companies to set prices. They did so, raised
prices, made money, but then OPEC decided they wanted that money
instead so THEY raised prices. The oil companies raised prices again
and cited OPEC as the cause. OPEC raised prices some more. The oil
companies raised prices again and blamed OPEC, then Katrina and
various other scapegoats and around and around it goes.

Even if some new President reins in the US oil companies and restores
competition, OPEC has learned that they can get more for their oil
and, being a cartel, they can't be made to back down.

So, once again Bush has gotten us into something that nobody can get
us out of.

This long predates Bush- it has just gotten worse since he got in, mainly
due to him ****ing off the countries with the oil, along with China finally
realizing how to play in the world market and consuming 3 times what they
used to. BTW, the government can't 'set prices'- the oil doesn't belong to
them. Most they can do is throw their weight around.

aem sends...

"arachnid" wrote in message
...
On 22 Apr 2006 12:58:48 -0700, "
wrote:


The big issue is high gas prices will cripple our economy, and he
doesnt appear concerned.

They're already hurting around here. I'm in a tourist town in South
Texas, on leave at the moment to take care of a sick parent. The local
merchants are hurting first because tourism is down due to the high
price of gasoline, and second because people need to travel long
distances to get anywhere out here so a major portion of their
disposable income is now going for gasoline instead of buying goods at
the marginally-profitable small stores that keep this town alive.

I don't see any fix for it, though. The way I see it, Bush gave the
go-ahead to the big oil companies to set prices. They did so, raised
prices, made money, but then OPEC decided they wanted that money
instead so THEY raised prices. The oil companies raised prices again
and cited OPEC as the cause. OPEC raised prices some more. The oil
companies raised prices again and blamed OPEC, then Katrina and
various other scapegoats and around and around it goes.

Even if some new President reins in the US oil companies and restores
competition, OPEC has learned that they can get more for their oil
and, being a cartel, they can't be made to back down.

So, once again Bush has gotten us into something that nobody can get
us out of.


To some extent, WE can have an effect. But unfortunately, that requires
effort and behavioral changes, which some meat heads intperpret as someone
trying to control them. Oh boy....imagine if our grandparents felt that way
when victory gardens were suggested during WWII.

wrote in message
oups.com...
The founder of OPEC was quoted as telling his members....

DONT get greedy or they will find a replacement for crude oil...

Maybe 6 bucks a gallon will do it? Wholesale unemployment? Bush nuke
Iran?

What's scary is that the idiot might actually nuke Iran because he thinks
it'll somehow boost his legacy in the eyes of Americans. There are clear
heads in the Pentagon. Hopefully, they'll pummel him before he gets any
stupid ideas.

Bush is a tipical republican.

They all crooks and corporate whores.

Yeah look for a suprise right before the congressional election to
boost his stature.

Frankly his behavior scares me. He appears disconnected from todays
reality..

Doug Kanter wrote:
big snip


To some extent, WE can have an effect. But unfortunately, that requires
effort and behavioral changes, which some meat heads intperpret as someone
trying to control them. Oh boy....imagine if our grandparents felt that way
when victory gardens were suggested during WWII.

You sell us too short, I believe. During WWII FDR had something called
"Fireside Chats," and I believe he asked the American people to
sacrifice, and, with that leadership, as you say, they did.

Recently, however, I seem to recall the threat of some terror group
posed at Wall Street, and the leadership repeatedly said to "keep
shopping." If we are repeatedly asked to do nothing special, make no
sacrifice, and we faithfully carry these instructions out, aren't we
then, today, every bit as valiant as our grandparents, who also did
what they were asked to?

wrote in message
ups.com...
Doug Kanter wrote:
big snip


To some extent, WE can have an effect. But unfortunately, that requires
effort and behavioral changes, which some meat heads intperpret as
someone
trying to control them. Oh boy....imagine if our grandparents felt that
way
when victory gardens were suggested during WWII.

You sell us too short, I believe. During WWII FDR had something called
"Fireside Chats," and I believe he asked the American people to
sacrifice, and, with that leadership, as you say, they did.

Obviously, that was a different president, someone capable of communicating
without someone's hand up the back of his shirt. And, the reasons for the
sacrifice were more easily understood. A war is a pretty clear reason. Now,
we're in a different situation, one where the "enemy" may be a period of
economic change which a large segment of the population is wholly incapable
of understanding. It will require a much better president than the current
one to lead the country through this period. In fact, it will require
someone who's been successful in business, not in politics. Someone capable
of dealing with trends which are not yet clear, instead of reacting to the
obvious things, like burning buildings. It'll require a leader capable of
deflecting enormous amounts of criticism for making unpopular decisions.
And, someone who can spot political barnacles who have no skills other than
appearing in the right place when they see a chance to speak just to hear
themselves speak. The White House has always been a popular place for that
species. It's gotten us into two or three wars that were none of our
business.



Recently, however, I seem to recall the threat of some terror group
posed at Wall Street, and the leadership repeatedly said to "keep
shopping." If we are repeatedly asked to do nothing special, make no
sacrifice, and we faithfully carry these instructions out, aren't we
then, today, every bit as valiant as our grandparents, who also did
what they were asked to?


Being asked to keep doing the same thing as yesterday is not so noble a
task. I hope you were being sarcastic with that remark.

On 22 Apr 2006 12:58:48 -0700, "
wrote:

Bush appears disconnected from the reality of our countries troubles.
he has the typical behavior of a alcoholic. I think he is back on the
booze........

The big issue is high gas prices will cripple our economy, and he
doesnt appear concerned.

============================
Can you at least tell US what you would do to lower the prices at the
Pump...

I am retired, living on a fixed Income...and have 7 vehicles in the
garage.. so Yes Gasoline prices do have a pretty good impact on my
budget....

BUT

Right now the supply of oil is actually at an 8 year high,,, The
demand however is at at all time high...Oil Companies are opperating
at a 9 percent profit margin (not unusual and not as high as most
industries).. That translates to about 25 cents per gallon... What is
the actual Federal and actual States Taxes on that gallon of Gas?

Please Give the World your answers...

I am NOT about to even try to Justify the retirement package of Exxons
CEO... (just a few million too much in my opinion) but then again I
bet the shareholders are extremely happy with what he has done with
that company (a true turn around for sure)... A shareholders suit
against the board of directors is almost a sure bet...

Wish I had some answers...

Bob G...

In article , rg327
says...
On 22 Apr 2006 12:58:48 -0700, "
wrote:

Bush appears disconnected from the reality of our countries troubles.
he has the typical behavior of a alcoholic. I think he is back on the
booze........

The big issue is high gas prices will cripple our economy, and he
doesnt appear concerned.

============================
Can you at least tell US what you would do to lower the prices at the
Pump...

I am retired, living on a fixed Income...and have 7 vehicles in the
garage.. so Yes Gasoline prices do have a pretty good impact on my
budget....

Sell six and fill up the seventh. (Though I haven't a clue what
the number of vehicles in your garage has to do with the price of
gas).

BUT

Right now the supply of oil is actually at an 8 year high,,, The
demand however is at at all time high...Oil Companies are opperating
at a 9 percent profit margin (not unusual and not as high as most
industries).. That translates to about 25 cents per gallon... What is
the actual Federal and actual States Taxes on that gallon of Gas?

IIRC it's $.46 here, though fixing highways is rather important
too.

Please Give the World your answers...

I am NOT about to even try to Justify the retirement package of Exxons
CEO... (just a few million too much in my opinion) but then again I
bet the shareholders are extremely happy with what he has done with
that company (a true turn around for sure)... A shareholders suit
against the board of directors is almost a sure bet...

The retirement package of any company executive should be of no
concern to non-stockholders.

--
Keith

Doug Kanter wrote:
big snip


Being asked to keep doing the same thing as yesterday is not so noble a
task. I hope you were being sarcastic with that remark.

I was.
Also, I wasn't going to reply to this because that would keep this
thread going, but I got an e-mail:

From : Alan Sanderson
Sent : Sunday, April 23, 2006 4:30 PM
To :
CC :
Subject : Can we keep the CROSSPOSTED PHILOSOPHY out of " HOME REPAIR"

so I'd also like to take this opportunity to apologize, both to Mr.
Sanderson, and any others who were disturbed by this off-topic post in
this newsgroup.

wrote in message
oups.com...
Doug Kanter wrote:
big snip


Being asked to keep doing the same thing as yesterday is not so noble a
task. I hope you were being sarcastic with that remark.

I was.
Also, I wasn't going to reply to this because that would keep this
thread going, but I got an e-mail:

From : Alan Sanderson
Sent : Sunday, April 23, 2006 4:30 PM
To :
CC :
Subject : Can we keep the CROSSPOSTED PHILOSOPHY out of " HOME REPAIR"

so I'd also like to take this opportunity to apologize, both to Mr.
Sanderson, and any others who were disturbed by this off-topic post in
this newsgroup.


I agree, to an extent, but even if all the messages in a newsgroup were ON
topic, I wouldn't read all of them. I suspect that the people who whine the
most about this are viewing the group with all threads expanded instead of
collapsed. If they're collapsed, how hard is it to ignore just one line, the
original header?

On 22 Apr 2006 19:40:37 -0700, "
wrote:

Yeah look for a suprise right before the congressional election to
boost his stature.

Frankly his behavior scares me. He appears disconnected from todays
reality..
The whole damn bunch of congressional grifters scare me. Throw them
all out and maybe the new folks get the idea. If not, can them too!
--
Mr.E

On Sat, 22 Apr 2006 14:55:34 -0500, arachnid
wrote:

Well, Bush wanted his place in history. At this rate it will be right
next to Andrew Jackson.

What specific place does Jackson have in history that it would be
meaningful for Bush to have a place next to it?

Well, Bush wanted his place in history. At this rate it will be right
next to Andrew Jackson.

What specific place does Jackson have in history that it would be
meaningful for Bush to have a place next to it?

They're going to put Bush on the $19 bill (the price of gas)?

Gordon L. Burditt

I will grant you this. Bush is responsible for
1. starting the Iraq war and planning it poorly. he hired Rumsfeld and
motley crew of armchair hawks in the Pentagon.
2. tax cuts for the rich

Bush is not responsible for
1. All the giant SUVs the American populace has been buying
2. economic growth in China and India
3. oil being a non-renewable resource
4. conditioning of American public that they have a birthright to big
homes, big houses etc.

wrote in message
oups.com...
I will grant you this. Bush is responsible for
1. starting the Iraq war and planning it poorly. he hired Rumsfeld and
motley crew of armchair hawks in the Pentagon.
2. tax cuts for the rich

Bush is not responsible for
1. All the giant SUVs the American populace has been buying
2. economic growth in China and India
3. oil being a non-renewable resource
4. conditioning of American public that they have a birthright to big
homes, big houses etc.



All correct, except for the SUVs. He has two problems which prevent him from
being useful in this regard.

1) Another president, during WWII, was able to reason with the public and
get people to make sacrifices. Nookular Boy could never risk asking people
to give up things they believe they have a divine right to own, like stupid
cars. His presidency was gained by, and is maintained by catering to the
stupid.

2) He's stupid.

The SUVs are a problem. They are sympomatic of a deeper problem. They
pre-date Bush.

No argument that Dubya is dumb. Lot of his supporters are dumb too.
The public today is too spoilt compared to the pre-WW II public.

As far as asking the public for sacrifices politicians won't do it
because public might ask hard questions that threaten vested interests

wrote in message
ups.com...

The SUVs are a problem. They are sympomatic of a deeper problem. They
pre-date Bush.

No argument that Dubya is dumb. Lot of his supporters are dumb too.
The public today is too spoilt compared to the pre-WW II public.

As far as asking the public for sacrifices politicians won't do it
because public might ask hard questions that threaten vested interests


I know the SUV problem predates Bush. And, it would be unlikely for any
politician to step on toes by suggesting a change in buying patterns. But,
someone's going to have to do it eventually. As other have pointed out, the
cost of fuel may put an end to SUV madness. But, if any politician were to
suddenly become brave, it's unlikely it would be Bush.

"I'm a WAR president!"

On 29-Apr-2006, wrote:

No argument that Dubya is dumb. Lot of his supporters are dumb too.
The public today is too spoilt compared to the pre-WW II public.

Also keep in mind you can buy a TV for $20 these days.

--
Warmest regards,

Steve Horrillo, Realtor / C.Ht.

MLS Training http://BrokerAgentTraining.com
Join EXIT Realty http://over100percent.com

The best way to reduce dependence on gasoline is to impose a floor on
gasoline prices. A floor of $3 to $6 depending on your long term
outlook is the best way to encourage conservation and production of
substitutes.

wrote in message
oups.com...
The best way to reduce dependence on gasoline is to impose a floor on
gasoline prices. A floor of $3 to $6 depending on your long term
outlook is the best way to encourage conservation and production of
substitutes.


I guess I have more faith in one or both of these:
- The ability of Americans to occasionally do what's good for the many.
- The ability of repeated nagging to finally get through to people.

TV may be $20. Hey my cable bill is $50

[This followup was posted to misc.consumers and a copy was sent to
the cited author.]

In article .com,
says...
TV may be $20. Hey my cable bill is $50

$165, last I looked.

--
Keith