GDoN Revisited by Hipchickindc – 648 Morton Street, NW

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: 648 Morton St NW
Legal Subdivision: Columbia Heights
Advertised Subdivision per Listing: Columbia Heights
Original List Price: $599,000.
List Price at Contract: $599,000.
List Date: 08/06/2012
Days on Market: 10
Settled Sales Price: $586,000.
Seller Subsidy: $0.
List to Net Sales Price Ratio: 97.83%
Settlement Date: 09/19/2012
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.

This post is a continuation of a theme that I’m seeing over and over as I profile settled sales in the District of Columbia for Good Deal or Not Revisted (GDoN-R) posts. Generally, the theme goes something like this: what happens when you have historically ridiculously low mortgage interest rates + good jobs and income + an influx of new residents every month who are coming for the good jobs and because they hate their suburban commutes + all the houses are getting snapped up pretty darn quick and in many cases with competing offers + developers are making money again buying houses (relatively) cheap, fixing them up, and selling them wherever they can find them. Add to that revitalized areas with good restaurants, yoga studios, accessible public transportation, a burgeoning local theater and arts scene… I could go on.

For those who have not been playing along, the last several GDoN-R posts have featured homes in locations that several commenters to the original Good Deal or Not post pooh poohed as being unworthy of the listed price of the property. In each case, the properties sold not only quickly, but within a close range of the listed price. In last week’s post I described how some areas of the District of Columbia are experiencing a rapid revival due to an availability of raw product (un-renovated houses) for builders, and buyer demand for the finished renovated houses (similar to the present subject property).

After last week’s GDoN-R post I did some poking around the new September numbers that were recently released. It was interesting to see that many of the neighborhoods with startlingly high year over year gains in median price were neighborhoods that may have been considered (and might still be considered by many) to be off the beaten track.

The zip code 20010, which includes the subject property (as well as Columbia Heights further west and Mount Pleasant) shows a 17.23% increase in median price when comparing September of 2012 with September 2011. The average number of days on market in 20010 decreased year over year by 55.88%, reflecting how rapid the market pace is right now.

25 Comment

  • It’s still in the middle of Park Morton… which might be going away… and which might be replaced by something better… I for one am super excited about what this price means for my home value.

    • +1.

      The idea that a house so close to Park Morton can sell for this much seems crazy to me, but it bodes well for Park View overall.

  • I think when the question is presented about X property listing being a good deal or not, that is not the same question as is X property listing priced too high, too low or just right. Something being a good deal itself usually insinuates that it would be priced lower than expected or that it is valued or should be. Being a good deal doesn’t mean that X property will not be snatched up at a higher price because someone might come into the city and buy it. You mention how people are coming into the city (from suburbs or elsewhere) and that suggests that they may not have an overall feeling for DC real estate by neighborhood. It might also say that they want to live in the city so much they are willing to pay higher prices, whether or not the X property is worth it or a good deal. The fact that you point out it’s a good time for developers to come and take unrenovated houses and sell them even more suggests to me that they are not good deals because they are not being renovated with quality being first and foremost but instead thinking of an easy sale requiring less care and quality. I don’t find this all that helpful to say that the number of days on market in 20010 decreased year over year by 55.88%. What does that really mean and how many years back are you looking at? If a house sits on the market for 400 days and now it’s only sitting on the market for 200 days, that’s still not all that great, though better than 400. The point where I will agree with you is that DC’s housing market in general seems to be relatively healthy.

    • Sorry, “year-over-year” or “yoy” is industry short hand for saying that compared to the data from the same month one year ago. I had stated that in the previous sentence, so I mistakenly assumed it would carry into the next. The 55.88% decrease in days on market for that zip code refers to the comparison of September 2012 to September 2011.

      • Thanks for explaining year over year. I did know what that meant but thought it would be an interesting question to take the y-o-y back more than one year. What I didn’t find useful was the change noted in percent (55.88%) because I don’t know how long homes stayed on the market the year before. While a change in 55.88% seems impressive, if homes were on the market for 400 days in 2011 and that changed to 200 days in 2012, an improvement (yes), a great one (maybe not so much).

        • Average Days on market in zip 20010 for September 2011=68 and for September 2012=30 (and current buyers know that it’s not uncommon for properties in this zip to be on market for the weekend and gone the next week).

  • OK, we get it. There is too much demand / not enough supply. Everything sells immediately. So why are we even talking about “good deal or not?” There aren’t any good deals. Everybody knows that. Why are you asking the question?

  • As someone looking to buy a home in this general area, it’s pretty disheartening to see the number of houses bought for sub 300K prices flipped for 400K increases four months later. It’s not like developers are doing quality jobs – many of them tear out any character from the interior of the house and feature the same cheap cabinents and lackluster finishes in every reno.

    • I’m finding that this market is being driven by the consumers. A lot of the listings that I represent are properties that homeowners have lived in and gradually updated over time. Homeowners are generally more likely to address unsexy things like re-pointing (which is expensive). Personally, I’d rather have a well maintained house and do cosmetic updates myself.

      • I wholeheartedly agree with the point about cosmetics – I’d rather have a house with good bones that I can appoint with my own tastes rather than a place redone with the cheapest possible materials.

      • I should also clarify that there are some excellent builders out there that I would buy from or advise (and do) my clients to buy from in a heartbeat.

    • why not buy one of the cheap fixer-uppers yourself then?

      • That’s the idea – it’s hard to compete with cash offers.

      • Because some people don’t have the skills, cash, time, expertise or patience to do the renos; that’s why so many people like to buy finished homes.

      • exactly. people complain about developers “flipping,” but of course they just like to complain in the abstract.

      • jim_ed

        Tried this. Offered 320k financed for a short sale. Bank refused, ended up taking 265k cash 3 months later.

        I know banks want their money right away, but that just seemed insane to us. That house is currently being flipped.

  • I find this “ra ra, see I told you so” attitude of a realtor unprofessional, especially considering the outsized commissions for a position that assumes zero legal culpability and whose entry level qualification stems from a few hours of night seminars and an online course.

    Go be a realtor in Detroit, the inland empire or any town in rural America where you have to do more than spend 30 minutes putting an ad together for MLS and spending two hours at an open house for your $17,000 dollar commission (the one for this house). I was raised in a rural town in Vermont where even today the most expensive house in town would only sell for 300K, and it would take 8 months to do so. I would be surprised if the average listing agent in the District the past year or so spends more than 7 or 8 hours total between the first meeting with that client to the last hour at the settlement table, which brings me to my primary point…

    It doesn’t take any skill to be a realtor in a housing boom.

    And to your point, many homes in this section of town have sold for less than asking. A 4 minute perusal of Redfin shows us the below homes all sold for under asking in the past 5 months.

    1331 Kenyon: –10%
    749 Princeton: –7%
    3530 New Hampshire: – 5%
    1114 Lamont: –8%
    469 Luray Pl: – 7%
    609 Kenyon: – 4

    Having seen 3 or 4 boom periods here in the District since I’ve lived here, I can tell you, this one too will end, and it will be painful for the folks who paid these prices. Everyone says “it will be different this time”, and it never is. There is no new paradigm with housing. It booms and it busts. The trick is not being caught when it goes, or being ok with riding out the 2-4 year fall in prices, and 3-5 years of price stagnation afterward.

    You don’t have to drive more than 30 minutes west to see places like FFX and Loudoun County (which go back and forth every year as the richest counties in America) to see the devastating effects when the boom ends. Median prices of homes in Loudoun fell what, 25% from 2007 to 2010, and this was the richest county in America.

    These artificially low interest rates are half the reason these homes are selling like they are, but 3.5% 30 year rates are unheard of, anywhere at any point in history and will (be allowed) to normalize as soon as the economy gets its feet back. For every 1% point in rate increases, housing affordability drops by about $50K, meaning when the 30 yr rate tracks back to 5.5 or 6 percent, the prospective buyer of your house lost the ability to borrow ~100-150K.

    The people who bought this house should hope that DC’s gentrification keeps its double digit turnover for another 4-5 years, the national economy continues to struggle for another 3-5 years and mortgage rates don’t go anywhere either because when gentrification stops, jobs aren’t as plentiful and interest rates rise, these “urban pioneers” are the first to suffer. Don’t believe me, look at Trinidad.

    In 2000, it was going to be the poster child for real estate gentrification. From Oct 2000 to Oct 2005 median house prices increased by $300K from 153K to 458K, then started falling double digits every year till Oct 2009 when it hit 346K, a 25% decrease. Even now, two years into the biggest housing boom the District has ever seen, Trinidad homes haven’t regained the value they had in 2005.

    My advice, don’t be goaded into buying something in a housing boom. You will regret it later, and when the boom stops you can take your time picking and choosing your preferred house.

    • Right, and just more broadly, there’s a big difference between “it was a good deal at that price” and “a realtor conned someone into buying it at that price.” Lots of people (maybe most) make truly bad real estate transactions, so the fact that a transaction occurred tells us extremely little about whether it was a good deal.

    • OTOH if prices decline when rates go up, and you bought when they were low, you have the advantage of locking in the low rate, right?

      I agree though if you can’t afford to sit out a decline, you need to be careful.

    • Your anti-realtor rant is pretty strange. The low barrier to entry means there’s plenty of bad realtors around. It does not mean the job itself doesn’t take any skill. It means the competition during boom years is brutal, because the market gets flooded with people who think it’s money for nothing (like you!). And then after the boom, bad ones bust out and do something else for a living.

      If it’s easy to do, easy to get into, and overpaid, shouldn’t we all be doing it?

      • I don’t think Joker’s comments were “strange” at all. FWIW, i appreciate his pro-consumer antie-hype perspective and think it provides a welcome counterbalance to HipchickinDCs sales lady-esque enthusiasm (whose Posts I also appreciate and look forward to). BY the way, i would recommend to everyone that the best way to refer to a “real estate agent” is to use the phrase “used house salesman” (or sales lady) and that’s not meant as an insult.

    • Lol! If you are so smart, why aren’t you rich yet? You should be buying on the dips and selling at the peaks.

      My wife and I bought a foreclosure (builder got foreclosed on before he finished). Including all reno costs we got a spacious 3bd/2.5 bath for 440k. Only owe 305k on a house worth well upwards of 600k. Note is only (including everything) $2050.

      I have other rental properties that make a healthy profit every month.

      I just bought a house last week in Anacostia. After basic renovations and closing costs it was slightly less than 100k. Think I won’t make money renting that?

      You are missing one point – if people can lock in these low rates, they can lock in a low payment versus rents that often increase. Certainly there is no point in buying a place if you won’t own for at least seven to ten years. Barring that, it will take a massive meltdown to lose money long term. My wife and I also own a large amount of stocks, but they have their own problems. What do you invest in, by the way?

      Also, there are so really lame agents out there, but mine is a retired lawyer. My best friend is also one, has a BA and (I would bet) has waaaay more integrity than you. It’s all good, though.

  • Sort of OT but…

    I have lived at my house for 10 years – bought just head of the boom. In all that time I have gotten a few fliers for houses being sold – which is also realtorish for “if you are thinking of selling our buying keep me in mind.” But in all that time I have never gotten unsolicited mass mailing for speculators, flippers, whatevers wanting to know if I was interested in selling because they would buy. In the past 2 week or so I have gotten 2 – from different groups. The first was more of a letter where they used that font that looks handwritten and the second was more of a cheap postcard. I know them for what they are but I still wonder what is driving that and what parameters outfits like that use to come up with their lists (I know that use property tax databases but how do they target).

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