The Calculated Risk blog posts this from the Goldman Sachs conference call which was held on Monday, November 19th, 2007 at 11:00am EDT:
Eight states ... for which there is greater than 30% house price depreciation forecast would be California, Florida, Arizona, Nevada, Virginia, New Jersey, Maryland, and Washington D.C. ... 13% to 14% nationally masks some states that we have accute concerns.
14 comments:
The way that is worded it sounds like they are talking about just DC, not the metro area.
Leroy, that would make sense if it weren't for the fact that they specifically mentioned both Maryland and Virginia as well.
The way that is worded it sounds like they are talking about just DC, not the metro area.
Yeah, except they also include Virginia and Maryland, so uh, probably the whole metro area is going to drop.
Leroy, that would make sense if it weren't for the fact that they specifically mentioned both Maryland and Virginia as well.
Great minds think alike.
I think thats the average.
My guess is more like 15-20% in Arlington and Falls Church, 40-60% out in PW county and beyond, Fairfax probably will be around 30%.
I think Leroy is referring to the notion that when "D.C" is mentioned, some indexes lump West Virgnia exurbs into D.C. proper and call the whole area a region.
The way GS worded this, D.C. itself will see significant declines. But it's difficult to read their minds on this one.
"I think Leroy is referring to the notion that when "D.C" is mentioned, some indexes lump West Virgnia exurbs into D.C. proper and call the whole area a region."
Yep, that is what I was saying.
They were listing states and they specifically listed DC along with Virginia and Maryland.
Worded that way it sounds like they think the District is going to see 30%+ drops, as will Maryland and Virginia.
Yeah, VA is in for some pain!
Based on a bottoms up valuation based on rents, I'd guess DC and surrounding counties will see a 40% drop from peak levels and this will grow to as large as 60% in the further out areas such as Prince William and Loudoun.
It sounds like a lot, but it's not when you compare p/r ratios today to what they were before the bubble.
"My guess is more like 15-20% in Arlington and Falls Church"
Bought my place in Falls Church 2002 for 125K. Sold in 2005 for 280K. Assuming the usual 3% appreciation (the way it's been on average since the turn of the century), I should have been able to sell for 137K in "normal times".
So by my calculations, it's going to need a 51% haircut, at the very least. And the pendulum always swings too far, as it did on the run-up. The entire DC Metro area is FUBAR.
MrBubble
The notion of "It's different here" when referring to the housing market correction in and around the DC area has always been predicated on speculation and utter bloated-ego ignorance. Time and business fundamentals will continue to be the driving forces in this correction and will put things back into place. Housing is dead money.
I'm just thankful that those big law firm associate jobs will continue to prop up the market. Or maybe not:
http://tinyurl.com/2oowd6
Utter bloated-ego ignorance. A phrase worth remembering. And seemingly so true.
Thanks, DCANDOUT.
this might give us that 30% reduction.
Some quotes from the article,
"The Defense Department warned yesterday that as many as 200,000 contractors and civilian employees will begin receiving layoff warnings by Christmas unless ..."
and
"... shifting $3.7 billion from Navy and Air Force payrolls and $800 million from capital funds to bolster depleted Army and Marine Corps budgets and sustain roadside-bomb defense operations. But that sum would keep the Army afloat only through mid-February and the Marines through mid-March, ..."
Of course this is political posturing but something could happen.
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