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Tales From the Boom and Bust
Comments () | Published April 21, 2010

Please Sell Me Your House!

Desperate buyers wrote letters to sellers pleading their cases or even sent flowers or a cake along with their offer. They waived inspections and contingencies and put down big deposits. Some wrote escalation clauses with no ceiling or offered to let sellers stay in the house as long as they needed for free.

Dana Marlowe, Silver Spring homeowner: “Our home search took 14 months in 2003 and 2004. We put in 21 offers. The first few were really exciting. We would walk through the homes saying, ‘We could paint this wall green, and we could put the couch here.’ Then our agent would get back to us. After a while, we became immune to the rejection sting.

“There was one house—it was in a great location, but it was just a little Cape Cod and there were holes in the walls with wires coming out. It went for $100,000 over asking, the contingencies were waived, and the buyer threw in a trip to Hawaii.”

Dave Singleton, homeowner in DC’s Cathedral Heights: “I got knocked out of bidding wars constantly. I was putting all these escalation clauses in, and I felt like I was in Las Vegas. The agent calls you and says the price is about to go up again—you’ve got three minutes to decide.

“I made 11 offers. In one case, I went $30,000 over the asking price and I had to go get drunk afterwards. I was willing to waive a lot of contingencies. It’s amazing, when you’re caught up in it, what you’re willing to let go.”

Robert Jenets, Stuart & Maury: “I remember one buyer who had sold his home in another state. When we identified the property he wanted, we knew that we were in for a bidding war with probably 10 to 12 offers. I suggested a big deposit, and I was happy for him to do 10 percent. He said, ‘I can actually do more than that.’ I think the house was on the market for around $1.25 million. His dad was advising him, and because he had sold his former house for a huge profit, the dad said to me, ‘What if our deposit was $500,000?’ It just blew everybody out of the water.”

David Howell, McEnearney Associates: “There were buyers literally going door to door or sending letters to entire neighborhoods, begging people to sell. If you have a buyer willing to pay more for your house than it’s worth, at some point you say, ‘Okay, I surrender.’ ”

A New Gilded Age

Rising home values and plentiful credit made it easy for owners to finance renovations with home-equity loans. New houses got bigger and fancier. The HGTV culture was born as home improvement became almost an obsession.

William Lange, Lawrence Doll Homes: “When I started with the company, there was clear differentiation between large custom homes, upper-middle-class homes, and starter homes. But as the boom set in, builders just started putting out a big product. You ended up with these big houses that filled up the lots. They blew up like a balloon.”

Developer Monty Hoffman, CEO of PN Hoffman: “The market continued to heat up and heat up. And the market is our boss; that’s who we build for. The market wanted larger condos—more drama, more glitz. I look back at those designs and call them the ‘big hair’ units—like if you look at a 1984 picture and everybody has big hair.

“They were filled with drama: two-story living rooms, large lofts, commercial kitchens. It’s much like how we look back at the fancy apartments built during the Gilded Age.”

Kevin Gilday, president of Gilday Design Renovations: “Customers started asking, ‘When can you do it?’ rather than ‘How much will it cost?’

“In the ’90s, most of our countertops were plastic laminate with a Corian or wood edge. You’d use granite or concrete maybe once or twice a year. Then it started happening once or twice a month.

“A GE refrigerator had always been fine, but all of a sudden appliance packages started going from $5,000 or $6,000 to $10,000 or $20,000. I remember almost apologizing for the first one I did in the early 2000s. It was in McLean, and it came to something like $19,000. The homeowners said, ‘Don’t worry. We knew it was going to cost that much.’ ”

Growth in the Suburbs

In the close-in suburbs, modest homes were replaced by mini-mansions and high-rise condos sprung up around Metro stations and town centers. Farther out, bedroom communities appeared in areas that hadn’t been considered part of the metropolitan area.

Developer Carole Sherman: “If you go over near Walt Whitman High School, to see one of the smaller houses is sort of unusual now. I don’t think there’s any area in Bethesda that hasn’t been touched. It’s hard to drive around Bethesda and not see something new.

“Think of the money the county makes from young couples coming in, filling up the schools, paying the taxes. The houses go from $5,000 a year in property taxes to $18,000. And it supports all those restaurants in downtown Bethesda. Those are the people who are going out to eat all the time.”

Bonnie Swanson, co-owner of Crisfield Restaurant, which opened in Silver Spring in 1945: “When I was growing up, downtown Silver Spring had stores like Jelleff’s and JC Penney and the Hecht Company. But from about 1978 to 1988, there was nothing. It was awful. For a lot of years there were only three or four restaurants in town. Now as you drive down Georgia Avenue, the old storefronts that were vacant are full again. Silver Spring no longer feels like a suburb. It’s just an extension of the city.”

Bill Denny, Long & Foster: “We saw folks from Arlington, Alexandria, Falls Church move out to Prince William. Those folks were doing well on the sales of their homes, netting hundreds of thousands of dollars, and they would just roll it into their new homes out here. Their new house would be twice the size.”

Kenneth Wenhold, Metrostudy: “Prices were going up so fast in the core that it pushed people to the fringe. Manassas in 2000 was an outlying area where you didn’t see much growth. But throughout the decade it got bigger and bigger. Then all of a sudden Haymarket, which is even farther west, became a viable suburb. And then Warrenton in Fauquier County. The next thing you know, you have Culpeper—which is way out there—becoming a viable residential submarket where homebuilders are going in and putting up homes.”


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Posted at 12:00 AM/ET, 04/21/2010 RSS | Print | Permalink | Comments () | Articles