Monday, November 24, 2014

The tale of two cities: Ward 8 condo values continue to plummet at an alarming rate

Can there be such a thing as too affordable?

Today The Advoc8te is posting a selection of some of the lowest price "For Sale" properties in zip codes 20020 and 20032, according to Remax. In case you were wondering, a good portion of these units first sold in 2007/2008 for at least three (and sometimes as high as 6 times) their current sale price. Without much needed retail, amneties, and transportation it is getting harder and harder to get a decent comp on a one bedroom condo located east of the river. That and other challenges are resulting in a lot of Ward 8 condos hitting the market as short sales or foreclosures. More and more Ward 8 homeowners (many first-time homeowners) are finding themselves trapped in condos that they can neither sell or refinance. An investors dream but a complete nightmare for many a private homeowner with few options.

This 1 bedroom condo was completely renovated in 2006 and could be yours for less than $50,000.

With the ever increasing demand for housing west of the river DC and rising home values and rents west of the river, why aren't more DC residents taking advantage of the the plummeting condo prices in Ward 8 by buying and living here?

Why are Ward 8 condo values plummeting even as demand west of the river properties sky rocket?

Could it be the perceived lack of quality amenities, jobs, and retail? Could it be the perception of excess crime? Perhaps all of the above?

Is there truly a lack of "affordable" housing in DC or a lack of "affordable" housing in trendy neighborhoods in walking distance to quality neighborhood goods and services? 

This 600 square foot 1 bedroom/1 bathroom could be yours for $54,900

Perhaps tales of Ward 8's gentrification have been greatly exaggerated? And if so, why? Who really benefits?


Brian said...

There is definitely such a thing as too affordable? Most real estate agents know it and landlords know it too. If the price is too low, people will believe that there is something wrong with the property or neighborhood, and the property will not attract enough good potential buyers.

Anonymous said...

If I need to own a car to get to work or shop the housing is not affordable in my opinion.

Anonymous said...

I was born and raised in SE while some of the area shown above have changed over time I wouldn't live because some of the areas are still unsafe day or night and thats the biggest problem right there

Anonymous said...

Some of those look like great deals. It would be nice to know important details though, like condo fees especially, and what the inside looks like.

Roger said...

All of these places are in transit deserts, surrounded by low-frequency bus service. 2 of the condos are about 50 minutes (acc. to Google) from downtown by transit, and about a mile and a half from the closest Metro station. One of them is even served by the incredibly circuitous bus line you tweeted about few months ago.

Anonymous said...

I think it's racism. They say there's no affordable housing except in areas that are not "safe." Yet they're willing to pay big money to live in Ward 1, which has the most crime of all other wards.

The Advoc8te said...

All of the comments here that point out why these "affordable" condo units wouldn't fit your needs are spot on and the reason why I wrote this post.

Clearly, the problem we have here is not a lack of "affordable" housing but a lack of nearby amneties, retail, and public transportation. The distance from jobs and perception of safety is another.

So I ask the question, "Should DC be investing millions of dollars in building more affordable housing east of the river or improving the conditions east of the river to make the affordable housing we currently have more attractive?"

joe (something) said...

Spot on. Advoc8te: You're right. Affordability as a concept tends to ignore quality-adjusted prices. Are these really affordable if they don't have the amenities available in other locations? Or, do you pay little and get little when buy these? A good dataset and a good regression will point to the value of each of the items in the bundle of goods purchased in a housing acquisition. Adding those amenities will increase the value of these units but it is worth it to do so. Continue adding amenities to many different neighborhoods and affordable housing supplies like these will shrink but housing quality will improve and the current system where socioeconomic inequality is mediated through the housing market will be changed.

Alan Page said...

"If I need to own a car to get to work or shop the housing is not affordable in my opinion."

Some of these condos are in the $20,000 range. If you can't afford the note on a $20,000 condo *and* a car note + insurance + parking, you need to either seriously find a better job or re-evaluate your spending.

I think the low price point may make some buyers wary, but even that isn't enough. I think a lot of these properties are poorly marketed. The only time I see condos priced this low is on CHOTR. With better marketing, particularly to investors, I can't see how these wouldn't move....

If I had a few thousand saved up, I'd probably go in for one of these myself, as investment properties.

HipByroads said...

That place on Gainesville street looks appealing. I love that green leafy street. It's like you're out in the country.

But too far from anything you need to walk or bike to quickly. If you're young and have a car, it would be nice. If you're older with no car and don't mind taking and waiting for buses, it would be more challenging for you.

Still, those places are a bargain.

Maxine Daniels said...

To Alan Page
And there lies the problem. If one purchases for investment, one does not tend to live there. What happens is you have renters. And if they are not invested in the property, is it any different from the housing vouchers that everyone decries? Where are the roots to sustain and make communities grow. Amenities are needed to attract individuals to properties and communities, but you must also have property owners willing to remain in the neighborhood.

Mari said...

The unit on Halley PL SE for $50K has a condo fee of $218 a month, add about $62+ in property tax, that's the cost to the investor if they pay cash for it. There is less ROI if they borrow. But the funny thing with condos is they can have some rule against investors. Some places are better at enforcing this than others. AND if there are too many investors it screws the resident homeowners when they want to sell because banks don't like condos with too many investors and too few owner residents.
Then there is the condo board. Some are functional and are good about those common area things and have reserves. Others are not, and least when you expect it you have to pay $5K extra because the elevator broke down and there is no money to fix it. A good condo board will keep down the number of investors. If they don't I'd worry if there are other things they aren't on top of.
One of those listings above is for an empty lot. That is definitely for an investor, a builder-investor. That would actually add to the community more than picking up a condo.
Yes, I am biased against condos.

Anthony said...

I am born and raised in Ward 8 and the area mentioned. I moved to P.G. and now work in DCPS and actually am looking at Wards 7-8 for housing in the near future because it's affordable (without getting in serious debt) and I can still live in my city as other parts of the city in my opinion are outpriced. Yes, I understand about not having high store chains, schools, etc, hurt this area and It's always been that way in that area. It's actually better now than it was when I was a child (Imagine that). I saw some of the spots like Brandywine Street listed on this site you wouldn't want to live there about about 10-20 years ago (this is where i grew up) To simply have a condo there now says a lot! I will say that some of the condos I'm seeing in Ward 8 personally are in my opinion in the wrong areas. I would like to see condos as such on Alabama Ave, as that is the spot where there is access to decent retail and congress heights train station. The areas in Ward 8 are still underdeveloped. So until D.C. decides to truly invest in east of the river as a whole, You will see small progress like (2 shopping centers) When my family had access to "0" and had to shop in Maryland. "0" growing up. A 7-11 now is in Ward 8 When it wasn't one when I growing up. Things won't change much in terms of housing prices until those investments for business happen in Ward 8.

i heart newcomb said...

I totally agree with Brian. Even after buying my house here, I was convinced the roof was going to cave in or something, because the price was so cheap! I kept thinking to myself, there's got to be SOMETHING wrong with this neighborhood or house, that allows the market price to be so undervalued. I'm glad I did not let that stop me from moving in. I haven't discovered this glaring problem yet. Pretty sure I won't.

h st ll said...

To be fair zip code wide prices are increasing.

Please do one of these with sold units though! That is more meaningful imo, what they sell at.

But yes I agree with what you wrote, lack of amenities/retail and perception of crime are all issues. I also think lack of diversity is an issue for some people.