Saturday, May 03, 2008

Making Lemons from Lemonade

As Help Save Manassas President Greg Lettiecq commented on BVBL a few weeks ago, PWC home sales are actually up compared to last year.

Today, Greg notes that the Washington Post has noticed:

Even the Washington Post has noticed: the residential real estate market in Prince William is heating up, and the crackdown on illegal immigration is a contributing factor to this positive development:

And what does the Washington Post say is the big factor? From the article Home Prices Receding, Sales Rising:

Because of the number of foreclosures in Prince William, Manassas and Manassas Park -- 659 in March -- a lot more affordable houses are on the market, real estate agents said.

Yup. We have so many foreclosures, our homes are affordable again. Don't believe it? Here's more from the article:

the price and location of the single-family house off Liberia Lane made the first-time home buyer move to Manassas.

"This was a bank-owned property at a good price. It was an offer I couldn't pass up."

"People are seeing the prices come down to a point where it makes sense to purchase. What they would be paying in rent versus a mortgage is about equal, so there is a strong argument to buy."

What I found interesting here with the foreclosures was I could get a better deal than what I could have gotten in Florida" for the same size home, Garvey said.

There are lots of good deals out there, and anytime you have a commodity where there are good deals, there will be buyers lining up."

Real estate agents said the Prince William market is heating up more quickly than others because it took a bigger hit.

The cost is what brought Joe Munsell from Springfield to Bristow.

The MRIS data show the average recent sale price of a Manassas house is $195,500, 40 percent lower than last year. In Prince William, it's $299,600 -- a 26 percent drop. The average cost of a house in Fairfax and Loudoun is still more than $400,000.

Not exactly a report to cheer about. Our market was overbought, and due for a correction, but not much more than any other place in Northern Virginia. It's clear something peculiar to our county has made our county much more unattractive to drop our market by such a large amount.

But some think that making lemons out of lemonade is a good thing, and that an influx of first-time homebuyers purchasing homes that used to be people's move-up homes is a good thing.

Greg calls this a "positive development", probably because he isn't trying to sell his house. Although he has an odd definition for "value".

Now that many neighborhoods in Prince William County no longer resemble gang-infested collections of flophouses for illegal aliens, the value of entire neighborhoods has dramatically increased, making them substantially more attractive to potential homebuyers.

Normally, if you really fixed up a neighborhood, prices would go up, and people wouldn't want to sell. In this case, large numbers of people are abandoning their homes, much like what happens when you run a neighborhood into the ground. The "value of entire neighborhoods" is defined by the price people are willing to pay to live there -- and by that measure, our neighborhoods aren't "valuable", but instead "value-priced".

Greg predicts that rapidly dropping prices will lead to rapidly RISING prices:

Not only is the Rule of Law Resolution lowering costs for the county, but it is contributing to what is certain to become rising real estate assessments as actual competition is developing among buyers in the marketplace.

Maybe some time in the future there will be competition again, but the reason our market prices have collapsed is because, unlike Fairfax, there IS nobody "competing" to buy houses here -- at least there wasn't until the prices were reduced to fire sale levels.

It's kind of like a store running a going-out-of-business sale, and bragging about how many customers it is getting.

Greg may be correct that the illegal immigration resolution caused this -- if housing prices dropped more than other jurisdictions because we drove enough people (illegal and legal) away that we have a glut of houses.

Making our county, our state, and our country less friendly to people here illegally is the right thing to do. However, it's hard to be happy that the result is a collapse in our housing prices. While holding a clearance sale certainly brings in the bargain hunters, I'd much rather have REAL competition for our houses, driving up the prices, because PWC is a wonderful place to live.

A rational approach to handling illegal immigrants, one that doesn't make our legal immigrant community feel like second-class citizens, would make our county more desirable, without all the animosity, and without our county turning into an outlet mall for used houses priced to sell.


Citizen Tom said...

Charles - Just because it happens to be Greg's opinion does not necessarily make it the wrong opinion. Nonetheless, I am not going to waste my time talking about Greg's opinion.

The market does what the market does. As you yourself noted, our area is overbuilt. So prices dropped. If that was the only reason for the fall in prices, we would not have much of a problem. Unfortunately, Federal policies created a bubble. The government allowed lenders to loan money with too little restraint using unconventional loans. So prices shot up. Inevitably, when the mortgage came due and prices dropped in our overbuilt market, price dropped as dizzyingly as they had risen. Now people are discovering they have paid absurd prices, and they feel like suckers. At the same time the people who waited and refused to use unconventional loans probably feel vindicated.

Let's put these changes in perspective. When prices shot up, I wondered how my children would ever afford to buy a house in this area. Now that prices have dropped, I think there is some hope my children may one day be able to afford a home around here. Just the same, my house is still assessed at almost twice what I paid for it in 1996. said...

The spin on the housing market is as odd as the spin on the modified resolution. Glad to see not everybody is buying the propoganda.

Concerned about Amnesty said...

CT -

Thank you for the perspective. Not only did houses spring up over night, but people were engaging in bidding wars for resales. For example, my in-laws bought a house in Dale City for $140k. Two years later (in 2003), they sold it to close to double after being listed only one day.

The bubble burst and economists warned that it would happen. Nobody listened. Lenders gave money to people who could not afford it. Deals were made so that the loan had a low rate for 2 or 3 years, and then it spiked up, which left a majority unable to pay their mortgage. Houses were overpriced to begin with and realtors and developers took that and ran.

My house is 10 years old and has doubled in value. According to a recent tax assessment, it is still at double the value. People can now afford to live in PWC. Houses are priced at where they should be.