These Prices Are Insane! Running the numbers on a real estate market gone bust

809 6th St. NW, No. 55

Original Listing Price: $589,000, (March 18, 2006)
Closing Price: $426,000, (Feb. 1, 2008)
Slash Rate: 28 percent
Square Footage: 1,000

(Photograph by Darrow Montgomery)

A swanky Chinatown/Gallery Place address. Garage parking. Granite counters, hardwood floors, and high ceilings. A building roof deck with urban vistas to spare. All these features couldn’t save this condo from the condo market. The previous owner listed the property for $589,000 in March 2006. By late June of that year, the price had dropped to $559,000. Then the owner got foreclosed on, and the bank took over the property. That’s when seller’s agents Melissa Chen and Andrea Evers came into the picture. They listed the house at $449,900—just as the news about the sub-prime crises dominated headlines, says Chen. Bad timing. “There was hesitation on the market,” she says. The condo itself wasn’t flawless, either: It faced the back, and one or two windows looked directly toward the building next door. “People buy based on floor plans before they actually see the finished product,” says Chen. “There are going to be one or two or more units with bad views in every building.” The view makes a difference on the investment value. Chen says she’s seen units that overlook the access ramp to the garage.

“If the buyers knew that at the time, would they have bought that unit?” asks Chen. “I’m sure they wouldn’t have.”

2101 R St. NW

Original Listing Price: 1.6 million (Aug. 22, 2007)
Closing Price: 1.2 million (Dec.18, 2007)
Rate Slash: 25 percent
Square Footage: 2,600

(Photograph by Ruth Samuelson)

This Kalorama semidetached was originally designed by Nathan Wyeth, architect of a White House addition. (The property is approximately one-third of the house in the picture.) Built in 1907, it is “light-filled all day,” with high ceilings and rich detail, including extra large windows, plantation shutters, bookcases, moldings, Chippendale staircases, and a great deck, according to an Internet listing. All of that looked quite impressive when the property first came on the market and was fully furnished. According to buyer’s agent Stephen Israel, it was being rented out by a wealthy British man who worked at the World Bank. “It probably had beautiful artwork, beautiful furniture,” he says. “So the agents came in and saw ‘Wow, we’re going to get $1.6 for this.’” Then the tenant moved out and took all of his fancy stuff. Completely vacated and empty, it became apparent the space needed a little work. The buyer, who asked not to be named, was looking at properties in Kalorama, Georgetown, and Old Town Alexandria for several years. By the time she came upon the R Street property, the market “had cooled off and was by all accounts looking to go further south in a much more difficult seller’s market,” she says. She was able to put down an offer toward the beginning of the winter, a slow period for real estate sales. “My terms were very clean; I could close quickly,” she says.

6311 Alcott Road, Bethesda

Original Listing Price: $1.95 million (May 6, 2007)
Closing Price: $1.61 million (Oct. 31, 2007)
Slash Rate: 18 percent
Square Footage: 5,330

(Photograph by Ruth Samuelson)

This four-bedroom, four-and-a-half bath brand-new house in Bethesda came complete with “unbelievable finishes,” including a surround-sound system, a 50-inch plasma TV, and an “au-pair suite” with a full bathroom. For those boomers looking to grow old at 6311 Alcott, there was also an extra-special perk: an elevator. Going through the floor, as it turns out, is an apt metaphor for this property’s sales history. It sat on the market for 164 days. Having listed in May at $1.95 million, it dropped to $1.85 million in June. By August, it was down to $1.79 million and by September, another $100,000 was knocked off the asking price. Buyer’s agent Val Tedeschi says that properties in Bethesda, particularly in the close-in areas, are still selling well—just not as fast as before. This home was built on spec by a builder, says Tedeschi. “Newly constructed homes are sitting a little longer,” she says. “[The builders] are carrying these properties: They are paying for the construction, the land, many of them have loans.”

CP Housing Index

57: Number of times “foreclosure” comes up on washingtonpost.com for the last two weeks

0: Mentions of market downturn on front page of the Web site of the Greater Capital Area Associations of Realtors

318: Total single-family home settlements in D.C. in January 2005

152: Total single-family home settlements in D.C. in January 2008

342: D.C. homes built since 2003 and currently on the market

20: D.C. condo price appreciation, 2004 to 2005, in percentage terms

2: D.C. condo price appreciation, 2007 to 2008, in percentage terms

36,951: Number of luxury apartments in the pipeline in the D.C. metro area at the end of 2007 “largely driven by the reversion of condominium projects”

436: Total condos and co-ops on the market in D.C. in January 2005

1,313: Total condos and co-ops on the market in D.C. in January 2008

3: Months offered rent-free for a 12-month lease at the Fenestra Apartments in Rockville

2,500: Amount in dollars on American Express gift card offered w ith lease on a two bedroom at the Senate Square apartments, 201 Eye St. NE

591: Total single-family homes on the market in D.C. in January 2005

1,475: Total single-family homes on the market in D.C. in January 2008

2 to 3: Average rejected condo offers per client during boom, according to an agent

0: Average number of rejected condo offers per client now, according to the agent

5: Times “housing” was mentioned in this year’s State of the Union address

0: Times “housing” was mentioned in last year’s State of the Union address

81: Average number of days on market for condos in Northwest sold in January 2008

35: Average number of days on market for condos in Northwest sold in January 2005

54: Number of comments posted on D.C.-area blog Bubble Meter in response to post titled “Your Turn: How Much Have Prices Fallen in the DC Area?”

8: Average number of comments posted on D.C.-area blog Bubble Meter

Sources: Delta Associates real estate research firm, Greater Capital Area Association of Realtors, HomesDatabase.com, real estate agent Ed Carp

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