GDoN Revisited by Hipchickindc – 1328 F Street, NE

Hipchickindc is a licensed real estate broker. She is the founder of 10 Square Team and is affiliated with Keller Williams Capital Properties. 10 Square Team is a princeofpetworth.com advertiser. Unless specifically noted, neither she nor the company that she is affiliated with represented any of the parties or were directly involved in the transaction reported below. Unless otherwise noted, the source of information is Metropolitan Regional Information Systems (MRIS), which is the local multiple listing system. Information is deemed reliable but not guaranteed.

Featured Property: 1328 F St NE
Legal Subdivision: Old City #1
Advertised Subdivision per Listing: Capitol Hill
Original List Price: $779,000.
List Price at Contract: $779,000.
List Date: 08/07/2012
Days on Market: 8
Settled Sales Price: $765,000.
Seller Subsidy: $0.
List to Net Sales Price Ratio: 98.20%
Settlement Date: 09/28/2012
Bank Owned?: No Short Sale? No
Type Of Financing: Conventional
Original GDoN post is: here.
The listing can be seen: here. To see pics, click on the camera icon after opening the link.

As I’ve mentioned in other Good Deal or Not Revisited (GDoN-R) posts, the extremely low interest rates are pushing the monthly affordability of mortgages down while allowing a larger pool of buyers to qualify at higher price points. Buyers are paying increased prices in DC than they were a year ago, and a large part of the demand is focused upon properties that have been renovated with all new systems, fixtures, floors, walls, etc. Although raw product (i.e. un-renovated houses) is scarce, business is good again for area developers.

There are renovated properties to be found all over the city. It’s worth noting, however, that areas that did not previously see a lot of this type of sales activity during the early and mid 2000’s boom market are experiencing a current revival. There tends to be a larger availability of houses that are good candidates for rehab at prices that make sense for investors.

When buyers begin paying hearty prices for the finished product, they start to comp each other out, and voila…the market prices and demand in that area can change quite dramatically in what seems like a short period of time. One of the comments on the original GDoN post was “That will never sell for that price. Maybe in 5 years”. The mentality of buyers (and appraisers, and real estate agents, and tax assessors) is more like “if the houses down the street were of similar size and condition and sold for x, then that’s current market value for the location, size, and condition.”

This immediate area (within 1/5th of a mile of the subject property) saw no sold prices for houses over $700,000. in 2011. There have been three sales in addition to the subject over $700,000. so far in 2012.

The listing agent for 1328 F St NE was Lala Ragimov with Fairfax Realty, Inc. Connie Carter with Long and Foster real Estate, Inc. represented the buyer.

25 Comment

  • I agree completely with HipChick’s analysis of the DC market dynamics. I’ve been looking for a house, and can afford more house because of the interest rates, but, everyone else can too. It’s driving up prices and leading to bidding wars particularly with the lack of inventory. My concern is what might happen in a few years when interest rates rise. These houses will be less affordable. Having lived through the Florida bubble (and still owing an underwater house there) I’m very skittish about where the DC market is headed especially considering the uncertainly with the Federal budget.

    • +1

      Her analysis is spot on. I will be very interested to see how this all pans out in a higher interest rate environment in 4 to 5 years (when I’ll be looking to buy).

      • +2. I was seriously interested in buying for the last year and a half, and I bid (and lost out) on a lot of houses, many of which had multiple offers / escalation clauses. In 2012 the prices for similar properties to those I saw last year have jumped significantly (and even less inventory). So I’m stopping the house hunt for a while, and will see where the market goes in a few years. (Luckily I already own a place that I like; I just figured with the low interest rates it was a good time to try to get into something bigger, closer to metro, different neighborhood, etc. But so did everyone else, I guess.)

        • Just curious, when your agent tells you that others have put a bid down on the house you just bid on, is there any independent means available to verify this?

  • 765k! Yikes, P.T Barnum was a genius– you could probably get something nicer in Bethesda for that! Anonymous you sound like a used house salesman (aka “real estate agent”). Rather than buy what you can afford at a nice rate, you’d rather buyers incur more debt?! Re: federal budget– stop spreading the FUD (fear uncertainty and doubt). A bidding war? That’s absurd

    • 2nd anon. Wouldn’t a real estate agent be toting what a great market DC has? That now it the time to buy, etc. I was making almost exactly the opposite point. Regarding the Federal budget uncertainly, I applaud your decision to live in a state of denial. I’m sure that will get you far. Re: bidding wars..it’s a reality. Almost any home priced fairly received multiple offers. Buyers are using escalation clauses to make sure their bid is competitive. A carriage house in Logan just sold over $100K over list.

      • Yeah, Anon #2′s comment is just bizarre and contradictory. Not sure what point(s) she/he is trying to make.

      • Just curious, when your agent tells you that others are have put a bid down on the house you just bid on, is there any independent means available to verify this?

  • Real estate is totally crazy. You can easily look up permits and see that a house bought at $350k was flipped in a measly three months and is now listed/sold for nearly $900k. Also some of the bathrooms and bedrooms don’t seem to meet code. And the finishes are so shoddy, I just don’t know what people are thinking.

    Two recent examples are
    http://www.redfin.com/DC/Washington/1518-Potomac-Ave-SE-20003/home/9919340
    http://www.redfin.com/DC/Washington/514-14th-St-SE-20003/home/9917908

    And it’s funny, because this one (http://www.redfin.com/DC/Washington/1508-Potomac-Ave-SE-20003/home/9919318) actually looks like they took some care and used expensive finishes since it was more of a renovation than flip, but that only bumped the price up slightly. But since it sold for nearly $900k, I think that’s why the others nearby are listed at the same price despite the huge difference in quality.

    I was in one of the quick flips, and house hunters were oohing and ahing at a 2nd floor laundry room, despite the fact that the dryer vent tube was exposed from the back of the dryer all the way up to the ceiling. I mean, it’s a gutted house, they couldn’t have put that behind the drywall? Same place had an oven that had a quarter inch gap between it and the surrounding granite, you could see the cuts and scrapes in the granite, and this is the first thing you see when you walk into the kitchen.

    I just don’t know how people pay so much for so little.

    • A lot of younger people I know (under 35) are paying with family money for the down payment. I know exactly one young person who saved up for her downpayment all on her own and it took her 6 years to get enough together to get into a $350K condo/townhouse in outer Alexandria.

      When you’re spending someone else’s money you tend to be frivolous about your purchases and not ask the hard questions. I also think a lot of people – especially those whose parents were highly paid professionals – really don’t know anything about home repairs, construction, and maintenance. They (falsely) believe that “new! shiny! stainless!” = quality.

    • People pay so much for so little because the only other option is moving to either a very high crime area (you could get this house in Congress heights for a fourth of the price) or way out to Prince William/Loudoun/Howard Counties etc…No crime, better schools but soul sucking two hour commutes every day. I am surprised that people always get so superior on these postings like “NO WAY is anyone gonna pay close to that” well welcome to DC. Is this a bubble?. No one can say for sure until it pops. I just read the latest job stats this morning though and DC (proper) added a significant number of jobs over other states in the Country. So that is a HUGE driving force in our real estate market. That could be a bubble too. I think low interest rates play a bigger role though.

      By state, the District had the third largest over-the-month (August 2012 to September 2012) numerical increase in employment – Texas (+21,000), followed by Pennsylvania (+17,800) and the District of Columbia (+14,200). The District employment increased from 725,400 in August 2012, to 739,600 in September 2012.

      • I bought a house 3 blocks from here two years ago for $250,000. Yes, it needed work and isn’t quite as large, but this is absolutely insane.

        • I think it’s insane you found a house two years ago for that price. Unless by “needing work” you mean “needed to be gutted”!

          Seriously… I was househunting in Capitol Hill around that time and remember seeing a house on the market for less than $600k. My wise realtor thought the price was suspiciously low and discouraged me from seeing it, so I went on my own. The place was in terrible shape (I’m surprised it was even safe to walk around in) with a terrible layout (kitchen in the basement and the 2nd bedroom was incredibly tiny). Yet it drew crowds and sold that week because the price was unheard of for the area. So it’s beyond incredible that you were able to buy for so low. That’s great, but don’t pretend it’s normal.

          • By three blocks away I mean 3 blocks further East (just over into Rosedale). I don’t understand why any rational buyer would fork out 2-3 times as much for 13th & F when there really isn’t much difference in amenities, schools, or transportation options.

            Rather than celebrating, I’m getting skittish… this feels a whole lot like 2007 where everybody was congratulating themselves on earning truckloads of cash for very little money down. That’s what I mean by “insane”.

        • What’s insane is that you’re wasting time on this blog that could be better spent celebrating, even two years after the fact, possibly the most amazing real estate deal that I’ve ever heard of. I looked for a year and a half in this area and was outbid on several properties that were much, much more expensive than $250k. Seriously, you should feel very, very lucky.

          • Last year a couple on my block bought a foreclosed 3 BR rowhouse for around 170K, 203K rehabbed it into a huge house with an excavated walk in basement, and have a brand new home the same size as this thing for a mortgage in the ~330K range. THAT is the most amazing deal I have ever heard of.

          • Seriously! That’s the nice thing about having a foreclosure on your block… too bad it doesn’t happen often around here.

  • Here’s an example of what you can get a mere 16 miles away in North Bethesda (1 mile walk from White Flint Metro) for 36k less:
    http://www.sawbuck.com/md/rockville/9-Plantation-court
    I’m not a fan of the suburbs but this is close enough in with great schools to illustrate how inflated 1328 F st and the other examples are

    • Ok, but North Bethesda is not nearly as convenient for a lot of people. My commute, for example, would take five times as long from there (probably more with traffic). I did the suburban lifestyle for a while saving up for a downpayment in DC, and it is completely soul-crushing and draining to spend several hours a day stuck in a car. A lot of don’t need the extra square footage and would rather be in a walkable community.

      • You have some solid points but they are heavy on the hyperbole. I grew up in that particular N. Bethesda neighborhood so I know what I’m talking about. Likewise I commuted into downtown dc via the metro for a while after I finished school and its not that bad– 45 minutes door to door if you work near a metro station. Even in a car the 16 mile commute from there to downtown dc is at worst 1.15 to 1.5 hours. Yes my current 20 minute walk from Adams Morgan is far better but “soul crushing”… Not really. Yes you need a car to even buy groceries, but my whole point was to show how inflated these dc flips are.

        • I thought we were talking about the Capitol Hill/H Street area, not Adams Morgan.

          Anyway, my point is that not everyone with the money wants to live in a big house in the suburbs. Buyers have varying tastes and some would rather live in a smaller place where the quality of life is better.

          • I was discussing ridiculously inflated housing that happens to reside in the Capitol Hill/H Street area by contrasting them what you can get for less in North Bethesda. Likewise, you can get the same for far less in other central neighborhoods like Brookland and Petworth for that matter.

            Your point is well taken, but I would add that the examples we’ve discussed seem like surreal spikes in the graph reminiscent of the irrational exuberance of 2007.

          • Well duh. You can get a similar house for less in Congress Heights, Winchester Virginia, or Tallahassee. Different places have different price points.

  • As someone who lived in this house for almost three years, and doesn’t recognize it from the interior pictures, I have to imagine that the price was well worth it. The amount of space inside the house was always more than we could fill, and while it did have serious heating issues, I’m sure they were taken care of in the renovation.
    Our landlady tried to sell the house while we were there- somewhere around $350-$400K, but it needed so much work that no one took it at that point.
    It does make buying a home (as a young couple) incredibly daunting.

  • prices are what they are until they aren’t.

    it’s cheaper to buy than rent. duh.

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