March, 2006

Market Commentary:

Hidden new home discounts revealed.

When a builder’s sales start to slow, there’s pressure to reduce price. But, there are ways that builders reduce prices without actually changing the price of their homes, and we’re starting to see these efforts.

For the past 3 years, sales of new home subdivisions and condominiums have been brisk. In early 2005, it was common for entire buildings to sell out in a day, with potential buyers camped out the night before units hit the market. In 2006, that has changed – the market is much slower.

While many new buildings and subdivisions remain in high demand, there are a number of cases where new home sales are slow, and the developers of those projects are getting nervous. For some projects, an oversupply of units, unreasonable price points, or inferior design or location have left builders with a large quantity of unsold units. For these developers, this is a very scary situation.

It’s logical to expect that in these situations, price drops are inevitable. However, developers are highly resistant to reducing the list prices of their homes, even in a slow market. For years, developers encouraged buyers to purchase units early, indicating that prices would increase as the project neared completion. A price reduction would turn this on its head. It would likely anger those who had purchased units earlier at a higher price. Fearing a loss of equity, these purchasers may be prompted to void or default on their contracts, exacerbating the developer’s unsold unit problem. This can also harm the developer’s reputation, making sales of the developer’s future projects more difficult.

Instead, developers have found ways to effectively reduce the price of their units without changing their price lists at all. These price drops are subtle, and are not well publicized, but our teams at Corus are well aware of them. We’ve seen four methods that developers are using:

• Buyer cash incentives: Developers often provide purchasers with incentives to use their preferred lender or settlement company. These incentives have been increased. For example, a builder may have previously offered $3000 in closing cost assistance for using their preferred partners, but might now increase that figure to $10,000.
• Deadline-based cash incentives: Developers are providing other cash incentives to purchasers to buy units by a specific deadline. In December, many builders were anxious to boost their 2005 sales numbers, and offered incentives to purchasers who closed by December 31st.
• New features may be added. A builder might provide a finished basement or add granite countertops in the kitchen without increasing price.
• More negotiation is occurring. In 2005, developers were generally unwilling to negotiate on any element of a new home contract. Today, some are willing to bend on both price and features.

Mortgage & Finance:

30 year fixed rate: 5.81%

According to bankrate.com, 30 year fixed rates are at 5.81%, but could go higher.

Bankrate.com reports that the average interest rate on a conforming 30 year fixed mortgage is at 5.81% as of February 23rd. This is down from the previous week’s rate of 5.87%. This is up from a low of 5.1% reached in the spring of 2005, but is still favorable relative to longer term historical averages.

According to Bankrate.com’s panel of economists, rates are equally likely to stay level as they are to rise over the next 35 to 45 days.

Market Commentary:

Zillow.com: Fascinating to use... but is it accurate?

The home valuation website Zillow.com launched this month, accompanied by an incredible amount of buzz. It’s fun to use, but we’re troubled by its inaccuracy.

Zillow.com is a new website created by the founders of Expedia. Backed by more than $30mm in venture capital financing, Zillow’s management spent much of 2005 in development mode, while keeping the true nature of their company a closely guarded secret. During the week of Feb 7th, they unveiled their site – a free home valuation tool.

To use Zillow, a homeowner types his/her address into Zillow.com. The site provides an aerial view of the local neighborhood, accompanied by Zillow’s estimate of the home’s value. Zillow also displays its value estimates of all neighboring homes within the aerial view. The user interface is brilliant – it’s intuitive and fun to use.

The problem is that in many cases, Zillow’s estimates lack accuracy. At Corus, we compared a group of our recent sales to Zillow’s own estimates. In a few cases, Zillow’s estimates were surprisingly close to the property sale price, but in one case, Zillow’s estimate was $400,000 below the sale price. Here are a few specific examples:

• On a home in Glenside, PA, the actual transaction price was $250,000, while Zillow’s estimate was only $214,000.
• In Potomac Falls, Virginia, Corus sold a single family home at $630,000. Zillow’s estimate: $636,481.
• Corus recently sold a home in Maryland for $415,000 – not far from Zillow’s estimate of $424,217.
• Corus sold a single family home in Arlington, Virginia for $719,000, while Zillow’s estimate was just $499,100.
• Finally, Corus sold a large single family home in McLean, Virginia for $2,323,750. Zillow’s estimate was only $1,950,000.

Notable Neighborhoods: Fort Washington, PA

Garrison Greene: Is it location, location, location?

When we see lots of buyers gravitating to a particular neighborhood, we take note. The Garrison Greene neighborhood of Fort Washington, PA is one example.

When we see lots of buyers gravitating to a particular neighborhood, we take note. The Garrison Greene neighborhood of Fort Washington, PA is one example.

Over the past six months, our Delaware Valley real estate team has conducted a number of transactions in the Garrison Greene neighborhood of Fort Washington, PA. Additionally, our listings there have been selling at a relatively quick pace. What accounts for the neighborhood’s popularity? We think that it’s about location.

Fort Washington is an area where several major transportation arteries come together. The Pennsylvania Turnpike and Route 309 pass through the area, and the Blue Route (I-476) is two exits west on the turnpike. The Fort Washington SEPTA station is on the R5 line, about a 40 minute ride to Center City.

Within Fort Washington, Garrison Greene is a community of 90 townhomes built three years ago by Michael Anthony. They range in size from 1700 to 2000 square feet, with two or three bedrooms. Prices range from $300,000 to $310,000. The neighborhood is a few minutes from the train station and from the Fort Washington exit on the Pennsylvania Turnpike.

Purchasers’ commuting patterns have a strong influence on where they purchase their homes. In this case, we think that excellent commuter access will allow this neighborhood to remain popular. While Center City is accessible by rail, commercial areas in King of Prussia and Valley Forge are about a half-hour drive west on the turnpike. Other major commuter destinations are accessible as well, including Conshohocken (to the southeast) and Horsham (to the east).

Notable Homes: Arlington, VA

Colonial gone wild!

You like contemporary and your spouse likes traditional? Maybe this is the home for you.

For Sale: 2534 N. 24th Street, Arlington, Virginia 22207, $1,149,900.

Here’s what you get when you take a traditional home and contemporize it. This is a 1940’s colonial with brick façade and dormers. The current owners have gutted it, added on, and have installed a lot of contemporary elements.

Notably, much of the exterior has been covered in ParkLex, a European rain shield panel. The kitchen could be described as industrial modern – Italian Laminati countertops, bamboo cabinets, stainless steel backsplashes, polished cement floors, and stainless steel Bosch and Kitchen-Aid appliances. A modern master bath has also been added, with a large doorless shower and translucent windows.

Traditional elements of the original house remain. Hardwood floors, interior doors, some original fixtures, and part of the façade give away the fact that this home was originally a colonial.

We think the neighborhood is fantastic. It’s on a quiet street in the Woodmont section of Arlington, across the street from Fort CF Smith Park, and about two minutes from Georgetown.

The look is not for everyone. But in a town where contemporary architecture is in short supply, this home could be a good fit for someone seeking a really unique property. The home is listed by Weichert Realtors at a price of $1,149,900. The home is vacant – call us if you’re interested in taking a look.

Notable Neighborhoods: Washington, DC

Watergate Hotel co-op units go on sale this month.

A prestigious address, world-class Potomac River views, famous neighbors, and history can all be yours.

The Watergate Hotel is being converted into residential co-ops. The hotel is one of six buildings that comprise the famous Watergate complex on the banks of the Potomac River in Washington, DC. Monument Realty purchased the hotel in 2004, and is redeveloping the property for residential use.

The Watergate complex already includes three residential co-op buildings. Current residents include Secretary of State Condoleeza Rice. Past residents have included Ruth Bader Ginsburg, Bob and Elizabeth Dole, Monica Lewinsky, and Paul O’Neill.

Monument has not yet released details on the units for sale. But individual units are expected to start at $700,000 with the most expensive unit priced at over $9 million. The building will be owned as a cooperative, rather than a condominium. We expect at a large percentage of the units will have superb river views. According to representatives at Monument, sales will begin in late February.

On the negative side, the building is a bit dated, and its concrete exterior has definitely weathered. Also, the co-op ownership can make it difficult for purchasers to get financing for their units since many area financial institutions do not lend for co-ops. Finally, the monthly fees on the existing Watergate co-ops are on the high side. It is not yet known whether the fees on the newly converted units will be comparable.

The Watergate Complex was developed in the early 1960’s by the Italian firm Societa Generale Immobiliare and was designed by Italian architect Luigi Moretti. It is named for the last lock on the defunct Chesapeake and Ohio Canal, which diverted water from the Potomac River into the Tidal Basin at flood tide (the “water gate”). The June 17, 1972 break-in at the Watergate headquarters of the Democratic National Committee resulted in the 1974 resignation of President Richard Nixon. This incident forever cemented the Watergate’s place in American history. Even today, political scandals (both in the U.S. and abroad) are given the suffix “-gate” in reference to the famous complex.

If you are interested in finding out more about the Watergate co-op sale, please send contact Amy Richards at amy@corushome.com.

Corus News

Corus Home Realty names four new partners.

Corus executives Kathy Davila, Alison Farmer, Amy Richards, and Nikki Blythe have been named as new partners of the firm.

In early 2006, Corus Home Realty named four of its executives as new partners of the firm. They include Kathy Davila, Alison Farmer, Amy Richards, and Nikki Blythe. If you haven’t met them, allow us to provide some background on their accomplishments.


Kathy Davila is the Branch Manager and Managing Broker of Corus Home Realty’s Plymouth Meeting, Pennsylvania office. Kathy is responsible for the company’s operations throughout the Delaware Valley. She joined Corus Home Realty in early 2005, and launched the company’s first office outside of the Washington metropolitan area. Ms. Davila is a an Accredited Buyer Representative (ABR), Certified Residential Specialist (CRS), Certified Seniors Real Estate Specialist (SRES), an ePRO Internet Professional as approved by the National Association of Realtors and a graduate of The Realtor Institute (GRI). A lifelong Delaware Valley resident, Kathy currently lives in Hatfield, Pennsylvania.




Alison Farmer manages Corus Home Realty’s operations in Virginia and Washington, DC. She is responsible for the company’s McLean, Virginia and Fairfax, Virginia offices. She also works closely with clients, and has handled many of the company’s most complex real estate transactions. Prior to her current role, Alison held sales and home specialist positions with Corus. Alison has over 15 years of sales experience and has managed multiple offices and employees with previous companies. Alison is a graduate, with honors, of Michigan State University. She lives in the Dupont Circle area of Washington, DC.





Amy Richards manages Corus Home Realty’s Sales Division. She oversees a team of sales specialists, coordinates the company’s marketing partnerships, and manages companywide marketing efforts. Previously, Amy was the branch manager for Corus’ McLean, Virginia office. Amy was Corus Home Realty’s fifth employee, and is a lifelong resident of the Washington DC area. Amy is a graduate of James Madison University, and previously held marketing related positions at Verizon. She is married with two children, and resides in Potomac Falls, Virginia.






Nikki Blythe has a dual role at Corus Home Realty. She acts as Senior Service Specialist for the company’s Fairfax, Virginia team while also working as an Operations Manager. In that role, she coordinates much of the company’s hiring efforts, human resources matters, training, and special projects. Nikki joined Corus in 2002 as one of the company’s first employees. Prior to Corus, she held a variety of positions in both the Internet and hospitality industries. An avid soccer player, she is a graduate of Virginia Tech. Nikki lives in Leesburg, Virginia with her husband and daughter.