“Agents Made a Lot of Money”
Real-estate companies typically ask for 6 percent of each sale, and many were selling a house a week. The number of licensed agents in Maryland, Virginia, and DC doubled in the first half of the decade.
Bill Denny, Long & Foster: “I had a dog-walking business before I became a real-estate agent. I jumped in in April 2002, and within 30 days I was working on two contracts. It was gangbusters from day one. You had your cell phone ringing from 7 in the morning until 10 or 11 at night.”
Diana Hart, TTR Sotheby’s International Realty: “On a Sunday morning you would call your buyers and say, ‘Here is where you’re going today.’ They would fan out—maybe five or six different sets of buyers. Then in the course of that three-hour period—1 to 4 o’clock—they would call you and say, ‘We found the house.’ So you would drop whatever you were doing with one set of buyers to rush and see the house they liked. And figure out how you were going to fashion an offer that would be competitive with the ten other people who were also there looking at it with their agents.”
Nancy Taylor Bubes, Washington Fine Properties: “I would schedule a listing a week. I would get it ready, have it on the market by Friday, open on Sunday, sold by Tuesday.
“In the height, there was a year when I did $100 million.”
Diana Hart, TTR Sotheby’s International Realty: “Agents made a lot of money, but it was exhausting. You would show a house to a buyer and say, ‘You have five minutes to make one of life’s most important decisions.’ You weren’t in a position to properly address buyers’ concerns.”
Joseph Himali, Best Address Real Estate: “Agents ate out a lot. They went on a lot of trips. The status symbol was having an assistant. The other agents would know you’re too busy to handle the small stuff.”
“I Knew There Was a Problem When . . .”
As the market overheated, some people saw signs that the bubble would burst.
Mark Schacknies, on the Clarendon condo building his company quickly sold out: “We noticed that no one was moving in. You would look down these long hallways and every single door had a lockbox on it. Craigslist was flooded with ‘for sale by owner’ listings.
“Around that time, the Washington Post wrote an article about the high amount of investors buying condos. They thought it was somewhere around 20 to 30 percent, and they were saying that’s such a huge number. By our estimates, it was three times that much.”
Developer Monty Hoffman: “Every plumber and attorney thought they were developers, and it was slopping up the market. We would continue to churn our diligence on sites because we wanted to keep doing what we were doing. We looked at the math and would say, ‘That didn’t make sense. Okay, we pass.’ All of a sudden, a whole year goes by and we realize we’ve passed on all of it. We probably looked very closely at 20 deals. None of them made sense to us anymore. People were betting on futures.”
Kenneth Wenhold, Metrostudy: “One of the owners of our company always says he knew there might be a problem when he was sitting at a restaurant talking to a client and a busboy interjected to say that he owned three rental properties. That’s when you know something might be amiss.”
David Jackson, who writes a blog called Bubble Meter: “In spring 2005, I started looking for properties in Silver Spring. After about two months, I was convinced there was a massive bubble and I wanted to spread the news.
“The online debate got nasty. Our nickname was ‘bubble heads.’ Some people referred to the other side as ‘housing heads.’
“The housing heads said there isn’t going to be a bust. Most had a lot of money at stake—they were mortgage brokers, they were real-estate agents, they had just bought an overpriced home.
“One of my readers commented on my blog about this bench outside a building, so I drove into Northern Virginia to see it. I gasped. There were 47 lockboxes on one bench. I took photos and posted them on my blog. A few weeks later, the Washington Post wrote about the bubble bench.”
Phones Stop Ringing
Prices began falling in late 2005. Some argued that the market was just leveling off after years of double-digit increases, but by 2007 it was hard to ignore the signs of a crash.
Developer Mark Schacknies: “Around February 2007, we were working on a project in DC’s Shaw—beautiful building, great little units.
“We threw a preview party in a nice boutique hotel, got some wine and cheese, a DJ. Even if you weren’t going to buy a condo, this would have been a pretty swank party to attend.
“An hour into it, we were like, ‘Did we misspell the address?’ Not a single person showed up, not even a nosy neighbor. We sat there with a couple dozen bottles of wine and just drank and talked about what had happened.”
Jennifer Miller, former homeowner in DC’s Palisades neighborhood, who now lives in California: “We put our house on the market in May 2007 for $950,000, and it sold in a day. Then a week or two later, nothing else sold. Everything was ‘days on the market: 20 to 30’ and dropping asking prices. Our friends would say, ‘I can’t believe you sold your house.’ ”
A former mortgage broker with American Home Mortgage on the day his company went under in 2007: “One day we had money. Then the people who were lending us millions of dollars every day said, ‘You know what? This might be a little too risky.’
“We had to call every client who had a moving van packed and a house ready for settlement and say, ‘I’m sorry, you can’t settle.’ They were left scrambling. I had 23 people to call. Twenty-two said, ‘God bless you—good luck.’ Only one person was a jerk.”