Our real estate pyramid scheme seems to be coming to an ugly end, at least in the D.C. area:
Investors who sought quick profits buying and selling real estate in the Washington region are in full retreat, dampening demand for homes, most notably for condos.
What is becoming apparent, market watchers say, is how big a part speculators played in the region's real estate boom of the past few years.... They helped send prices soaring at unprecedented rates. And now many are trying to sell, or rent at a loss. Some may eventually dump properties at low prices to get rid of them. That could weigh down values for everyone.
Sales of new condos fell 43 percent in the first quarter of the year, compared with the first quarter of 2005....
Shed no tears for the speculators. They were playing at the high-stakes table, and they had a dandy run:
David Bath, a retired dentist in Reston [Virginia], rode the boom up. A condo he bought in Vienna [Virginia] for $97,000 sold for $250,000 in a single day. He was able to sell another condo in Herndon for an even bigger profit.
Now he wants out. He has had no luck finding buyers for two investment houses and a four-unit apartment building he owns in Florida. He has been stuck making mortgage payments on vacant houses that took a lot of time and money to repair.
"It's a lot of work and I don't see the returns anymore," he said. "I'm going to the table to cash my chips in."
Oh, my heart bleeds.
And who gets screwed by this?
Mike Pugh, a real estate agent with Re/Max Allegiance in Arlington, is trying to sell a condo at the Halstead for a woman he says bought it for her retirement home, then became ill and went to live with family. Pugh said his client, who he believes was one of the few purely owner-occupants in the complex, is likely to lose money she had saved over a lifetime.
How did Woody Guthrie put it?
Oh the gambling man is rich and the working man is poor
And I ain't got no home in this world anymore
When a lot of people get rich in this country all at once, it's always "gambling men" (and women). Maybe now that's coming to an end.