Instead of blabbing on about $/square foot (yawn) or trying to calculate a discounted cash flow analysis to determine a condo’s worth (kinda’ geeky) or defining owner equivalent rent (look it up if your Nyquil isn’t working properly), we’re going right to the fun part…real estate anecdotes that make you go “hmm..”
One such anecdote appeared in last Saturday’s WaPo profiling the fine art of lowballing and cited the example of a Madrigal Lofts purchaser who worked his way to a nice discount, ultimately purchasing a 1 BR condo in the building settling for under $300K (with parking!). Granted, the 1 BR units in the Madrigal Lofts are not the largest in the world and they’ve been promoting steep discounts in the newspapers but they do make very good use of their space which is at least half the battle towards setting up your downtown crib. And, a downtown crib is a downtown crib – no substitute for that.
Further anecdotal evidence is personal. I took a walkthrough of a downtown, resale 2 bedroom/2 bath condo with the listing agent. Without any prompting, the agent offered up that a lowball offer was on the table and that the sellers were going to “see what they could do with it.” After raising her eyebrows in disgust at that thought, she then offered that the sellers were interested in moving the unit quickly and there was room to come in with a more “fully priced” contract. Someone with a stylized ‘R’ lapel pin didn’t take (De)Leverage 101 or read Loosely Regulated Loans for Dummies (and how they artificially inflate asset prices).
Ultimately a willing buyer and seller coming to an agreement results in a sale. A full analysis of the DC real estate market is beyond the scope of this post and the good news is that incomes and employment in the DC area generally fare well compared to other parts of the country which means a turnaround could arrive here first. But based on the stories and market stats we’re seeing, we still see evidence that downtown DC condo buyers have the upper hand over sellers and will continue to do so through the rest of the year and into 2009.