HOW LOW IS IT GONNA GO?
Logan Circle one-bedroom. After being on the market for 44 days, the price is $419,500. Started out at $424,500. Condo fee: $327. Loft style unit. Features: "Chefs Caliber Kitchen, Wall of Windows," washer/dryer in the unit, parking space, common-area party room and patio, fitness center. The Radius is located at 1300 N St. NW. MLS# DC5492217
High ceilings.
Looks a little cluttered.
Given the amenities, this price does not seem all that high. You have to ask how much lower a seller like this should go on price, given that the unit from the looks of it could rent in $1700 range. $419,500. Fair price? What It Worth to Ya?!?
Update: MLS# MLS DC5510839. Still active after 27 days on the market. Now that the Super Bowl is over and the snow is gone, it should be interesting to see what happens next.
February 18, 2006
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9 comments:
How does this not price seem high? If rent is $1,700 per month, then the annual yield ($20,400) is less than 5% of the purchase price. Not to mention additional carrying costs, such as insurance, fat condo fees, and property taxes. The landlord, with a montly nut well in excess of $2,000, will have negative cash flow. Wouldn't you rather invest your $$ in a safe tax exempt bond yield over 6%? Yet more evidence that an ugly correction in RE awaits the DC area.
I was sloppy. It should say: "How does this price not seem high?" Sorry for the confusion.
Hello. There have been a couple others at the Radius on Craigslist for prices from 389K - 439K. Both one bedrooms. They've been there for at least 2 months.
Everyone needs to remember that we do not live in Manhattan, and 600 sq ft is NOT worth $400,000. It is the sincere hope of every seller that they'll get rich from their property sale, but I'm hoping that the 44 days this property had spent on the market is an indication that DC is waking up from it's real estate funk, and properties will be begin to be sold for what they are worth. The Radius is a great example of overinflated prices in Logan, and with an abundance of new units being constructed, the bubble analogy seems only too applicable.
A friend of mine rented an identical unit in that building last fall. It was a 6 month rental and the place was furnished. She paid something like $2,300 for the efficiency and an extra $200 for the garage space. I had looked at a few places with her and this was a real bargain compared to the other places in terms of both location and amenities. I don't know how much of a difference it made that the place was furnished, but I can't imagine that making a $600 difference as is implied in the other poster's reference to a $1,700 rent. I wonder if he could have been looking around the holidays when real estate doesn't move? I agree prices have become ludicrous, but this is after all DC. And I mean that seriously. DC was for a long time undervalued ... and compared to other international capitals it is still VERY undervalued. NYC is fantastic, but DC has a growth potential looming over the horizon that NYC can only dream for. The basic economics are there. This administration has grown the federal government to heights previously unimaginable. And while the country may be indebting itself to pay for this, a very large proportion of this money is being spent right here. If I had the extra cash, I'd snapp a few of these places at only $400K ... 10 years from now we all be looking back wishing we did!
True DC is losing residents, but what's happening is familes are moving out and single people moving in. The singles have higher incomes than the whole familes.
funny handle tulips
(I'm the anonymous with the friend who paid $2,300 for the furnished unit.) Exactly, a correction is occuring. As Washington expanded to the outer burbs, it did so at the temporary expense of its inner city ... Like an organism growing, it took its strength from its center (i.e. the wealthy with their capital moved to the burbs) so that it could reach out and expand its scope. Having reached to the point where commutes in from the outer burbs have become impossible, the wealthy residents (and their capital) who made possible this reaching out are now moving back into the very center that was originally their home. The center has begun to fill ... Not necessarily people-wise but rather capital-wise. The single family home that had subdivided into a multiple family home when the upper income families had vanished, is now reconverting to the single home it originally was ... and becoming home to these upper income families again.
also ... the reality of the federal labor pool today is that it is made up mostly of government contractors and HIGHLY compensated government workers. The incomes of both groups combined is far greater now then it was even as recently as the last census. I.e., the money is there. If it weren't, you wouldn't be seeing one bedroom units going for $400K, would you?
IF real estate were only bought to rent out, then your analogy with a stock's p/e ratio would work, however it is not. It's main function is to provide shelter for its buyer OVER THE LONG TERM. And because over the long term the fundamentals support the $400K price, it is not a bubble ...
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