Virginia Renter Is Still Banking on a Bust
Saturday, September 30, 2006
Arlington renter James Cave is still waiting to buy.
In the spring, he said he thought the housing market was overpriced and headed for a fall, so he is feeling quite smug these days about his decision not to plunge in.
"There was no way I was going to jump into the real estate market that wasn't grounded in reality," he said recently. "But what'll happen to all these people who bought?"
In 2003, 2004 and early 2005, Cave felt a lot of pressure from his friends and acquaintances to buy a home. A senior graphic designer with a video production company, he has been socking away half of his salary into savings for several years, and could have easily produced a substantial down payment. Instead, he spends $1,400 a month to rent a condo in a new building in Arlington.
"I'm totally happy," the Washington-area native said. "All the people who were bragging about prices going up are suddenly silent and worried about what their properties are worth."
Cave continues saving his money, waiting for what he thinks will be a flood of foreclosures when people are faced with escalating payments and can't sell for enough to cover their mortgages.
"What I'm waiting for is when the housing market is at its bottom," he said. "I think we're a long way from there. I personally think it's going to get really bad. It's like the Internet craze."
Cave said he is watching the market carefully, keeping track of for-sale signs in his neighborhood. Many units are for sale in his building, he said, and few of them seem to be selling. It seems to him that the investors who own units in the building, like his own landlord, are becoming more anxious to sell.
He frequently visits open houses for new condominium complexes in the area. He has been noticing how many are offering generous incentives, such as free hardwood floors, kitchen cabinet upgrades and free parking or condominium fees. And there are still several new buildings under construction.
Now he thinks he will wait for the market to drop enough so he can afford to buy a single-family house -- not a 1940s-era fixer-upper, but a nicer place. He thinks he would be willing to pay $300,000 for such a house, not the $600,000 many owners are now asking.
He said, "I believe my patience will work for me."