>>This item is part of the May 2010 cover story Tales From the Boom and Bust. To read an excerpt from the article, click here. To read the complete account of the rise and fall of the housing market in Washington, pick up a copy of the magazine, now on newsstands.
 

When Lanham-based Kady Development started selling condos in the Floridian in 2005, the two-tower complex at 919 and 929 Florida Avenue, Northwest, in the District promised to become a sign of progress for the blocks between U Street and Howard University.

Four years later, just 32 of the 118 units were occupied, and the building went into foreclosure. Early this year, the Bethesda-based Goldstar Group bought the property and lowered prices; the condos started selling again. We talked with Mark Wood—the first person to move in—before his new neighbors arrived.

I closed on my penthouse unit in May 2008. I paid $795,000, including two parking spaces for $35,000 each.

One of the big selling points was the proposed Howard Town Center, which was supposed to be built behind us with a Harris Teeter and other stores. I hope that will happen eventually.

The condo’s finishes were extremely nice—hardwood floors, ten-foot ceilings, Italian cabinets in the kitchen, tiles from Spain. Off my balcony, I have a great view of the Capitol, the Washington Monument, and National Cathedral. I’m sure the remaining units will sell out quickly.

>>This item is part of the May 2010 cover story Tales From the Boom and Bust. To read an excerpt from the article, click here. To read the complete account of the rise and fall of the housing market in Washington, pick up a copy of the magazine, now on newsstands.
 

Ari and his wife, Rachell—who wanted their last name withheld—bought their first house, a three-bedroom in Silver Spring, in March 2007. They paid $455,000 with a five-year adjustable-rate mortgage. They won’t be able to afford higher monthly payments starting in 2012, and they can’t sell or refinance because their home value has dropped. We talked with Ari about their choice: stay and face foreclosure in two years or walk away from their mortgage.

We went into this very naively. I have a master’s in literature from Cambridge University, but I don’t know anything about money. We were advised not to put any money down. The broker said, “Save your money for your monthly payments. I’m going to get you this great ARM.” At the closing, I was signing all kinds of documents. I saw one that was showing $3,700 monthly payments in 2012—until then, our payments are about $3,000. I paused. My agent glossed over it: “Don’t look at that. You’re going to refinance before then.”

About six months after we bought, when the market started going down, I e-mailed my mortgage broker—whom I knew through our religious community—and asked him to explain more about how an ARM works. Do I have to hope that the market is going to recover enough by 2012 that the house is worth what we paid for it? His answer was “Hopefully, God will take care of it.”

>>This item is part of the May 2010 cover story Tales From the Boom and Bust. To read an excerpt from the article, click here. To read the complete account of the rise and fall of the housing market in Washington, pick up a copy of the magazine, now on newsstands.

Call them scavengers of the housing bubble. As more homes have gone into foreclosure, those in the business of cleaning up vacated properties have done well.

“Does the undertaker feel guilty about burying a dead body?” says Otis Banks, owner of the O-Team, a service that cleans foreclosed houses in Maryland and DC. “It’s nothing personal.”

Businesses such as the O-Team are hired by banks. The cleaners accompany a sheriff’s deputy, who either evicts the homeowners or ensures that they’ve already moved out. Then the team starts purging abandoned belongings and, often, repairing the house.

>>This item is part of the May 2010 cover story Tales From the Boom and Bust. To read an excerpt from the article, click here. To read the complete account of the rise and fall of the housing market in Washington, pick up a copy of the magazine, now on newsstands.

Wonder what happens to houses after foreclosure? Welcome to the fast-paced world of housing auctions.

At 8 am on a Saturday, about 100 investors, homebuyers, and spectators gather at the Grand Hyatt in DC’s Penn Quarter. James Brown’s “Living in America” blasts at nightclub decibels.

The auction house REDC has 50 homes on the block, and bids start as low as $5,000. The crowd is hungry for bargains.

>>This item is part of the May 2010 cover story Tales From the Boom and Bust. To read an excerpt from the article, click here. To read the complete account of the rise and fall of the housing market in Washington, pick up a copy of the magazine, now on newsstands.
 

Some economists saw a bubble in the housing market years before it burst. But that didn’t discourage National Association of Realtors chief economist David Lereah, whose forecasts—quoted widely by news outlets—remained sunny even as the signs of a crash became obvious.

His successor, Lawrence Yun, continued the cheerleading. Here’s a look back at what they had to say:

>>This item is part of the May 2010 cover story Tales From the Boom and Bust. To read an excerpt from the article, click here. To read the complete account of the rise and fall of the housing market in Washington, pick up a copy of the magazine, now on newsstands.
 

In 2005, Long & Foster agent Marc Fleisher was the nation’s number-one real-estate agent, racking up $277 million in sales. He employed a team of nine assistants and worked 70 to 80 hours a week. “I look back and wish I could relive it,” says Fleisher. “It was such an exciting frenzy.”

With 25 transactions totaling $37.5 million, June 2005 was Fleisher’s best month ever. Here’s a look at the houses he sold that month. An asterisk (*) indicates that he represented both the buyer and the seller; such a sale counts twice.

Reston was developed as a planned community in the 1960s and became more popular in the 1980s with the building of Reston Town Center, a hub for shopping, dining, and entertainment.

Homebuyers pay a premium for newer properties close to the town center. Condos range in price from the low $100,000s to more than $1 million. Townhouses start in the $200,000s, and there are million-dollar single-family homes. Prices are lower in nearby Herndon. Here are new developments in both areas:

Midtown Reston Town Center (11990 Market St., Reston; 703-689-0900) was built in 2006. There are two condo towers and a third building, Midtown North, which has loft-style units. Amenities in all three include a private media room with theater seating and a landscaped deck with a waterfall. About 36 units are available—half in Midtown North and half in the tower buildings. Prices range from $400,000 to $990,000.