CONGRESS, PLEASE GET YOU ACT TOGETHER!

   Well, the first bit of fall out has occurred.  A client who was a government employee has decided to delay for a bit.  Although promised that he would be paid, no paycheck is yet forthcoming from the powers-that-be. And, I understand and support his decision.  Lenders are going to be leery about loaning, not only to government employees, contractors, etc, but also, I fear, they may require more and more stringent hoops for borrowers to jump through, AND for the homes to qualify for the loans.  I expect that greater amounts down will be the next step, or greater reserves for a loan.  If it hits the wall Thursday, then I expect the worst.  Hold onto your hats, folks.  It may be a rough ride.

   Now, I am weirdly optimistic about our country.  I think our forefathers created one of the very best systems of government in the world,  a government in which it is difficult for power to get concentrated into any one person or groups hands, and one in which the iron fist of tyranny rule <of either the majority or minority> is softenened by taking time to get implemented, funded, and still can be challenged before the courts.  But, the rules have been changed, and, now, the minority (and don't fool yourself, it IS a minority, and a fairly small, if vociferous and extremely well funded one.) is holding the government hostage until it has its way.  As mature a reaction as a 2 year old not wanting to eat his vegetables.

Price vs. Value - musings on sur-realty.

In the USA, we tend to buy based on price.  We go into a grocery store, a gas station, even a doctor's office and we tend to decide to buy based upon a posted price.  We don't haggle with the cashier, the pump jockey, or the doctor either.  If we don't have it, we don't buy it.  Oh, we shop around, but we don't try to negotiate at the retail level.

Except for a few things.  One of those is Real Estate.  And, its the reason why the terms 'price', 'value', "appraised value", "assessed value", and other terms lead to a certain amount of confusion and/or hard feelings.  Is there an OBJECTIVE value for Real Estate?

Well, we keep trying.  People like Objectivity. It means we didn't overpay for something. One of the ways that appraisers evaluate the 'price' of a property, is by figuring out, how much it would take to DUPLICATE the home, starting with a bare lot, and building from scratch (or near scratch).  But, that is hard to do, in a limited area like the District, where there are few, if any, bare lots to build from.  And, to duplicate a home, does that include the costs to build it to Today's building codes, as opposed to the codes of yesteryear?

See the problem?  Another way that appraisers determine 'value' is to look at other properties, hopefully identical in terms of location, condition, quality, size, etc. that sold recently, making adjustments for any differences, and using those sales to get an 'objective' value.  See the qualifiers there?  'Location', 'condition', 'quality', 'size', 'recently', and 'adjustments'  ALL require the appraiser to make a subjective decision.  <Yes, even size: to wit; is a house that has a certain square footage, with x bedrooms, equate to one that has the same square footage, but x+1 bedrooms?>  There are some rules about this, but they flex. A garage next to the Capitol, seems to me, is obviously of more utility, than one out in the wilds.  For one thing, you can actually park your car!

Personally, I would prefer to have to criticize a teenagers poetry, than be an appraiser.  They are brave and hardy souls, with an impossibly difficult task.  Because, in my humble opinion, <and it is humble.  I know how little I know.>  The Value of a property is more than 50% Subjective criteria, and applies individually to the buyers involved. Buyer A is looking for a money-making investment; Buyer B, a home in a certain location or district, Buyer C found her dream house, Buyer D is so tired of paying rent, etc.

The only real objective value for a home, is what someone is willing to pay for it.  If someone is ready, willing, and able to pay for it, then Adam Smith rules! <no relation> Thus, the value of a home may be anywhere from Nil, to Gazillions, all for the same home.  The only real question is; how much is it worth to YOU; and, if forced to sell, could you recoup your investment.  Since markets change, styles change, NEEDS of the Market Change, at best, all you can get is a guess, an educated one, to be sure, but just a guess.  Crystal Balls are cloudy, Fortunes are obscure, and the Future is unwritten.  All Real Estate is a Gamble.  Don't forget that.  ~aws

Now would be a goods time to buy that second home. Lots off aging baby boomers moving closer to civilization (medical support) .

DC may be one of the more interest Real Estate markets.  Extremely good, relatively stable, but still exhibiting extreme sensitivity to the political & economic zeitgeist, even if the results of change is less likely than ever to prognostication.  For example, this political game of chicken being played out on the Hill has had an unfortunate affect on many individuals, some being furloughed, some being sent home, and i am sure, some being fired.  Certainly a hiring freeze has occurred for many contractors and sub-contractors;  in addition, pubs, restaurants, retail, etc. must be feeling, if nought else, the lack of 'bodies' no longer at their accustomed locations.  My guess is, a net cooling of the market, as people swing from the bullish "He who hesitates is Lost!" towards the bearish "Look before you leap!".   Look for an increase on Days on Market; and, a slow down and decrease on sales prices.  How much?  ah, there's the rub.  It depends upon how long this goes on! and on! and on! An appropos cartoon on xkcd.com  is here: http://xkcd.com/1274/