From yesterday's discussion with Maryann Haggerty and Elizabeth Razzi, Washington Post Real Estate editor and columnist:
"Arlington, Va: We bought our house three years ago and intended to stay for many years. Now my husband's job may be transferred to the south. Based on our zip code stats and our neighborhood's sales, it looks like we could probably break even or make 2-5 percent on our home if we sell, but then there's the issue of the Realtor's commission.
. . .
Waldorf, Md: When we bought our home, the base price of the model we bought was $427,900. The builder has since lowered this price to $404,900. Additionally, other homes for sale in my neighborhood sit on the market for at least 6 months with multiple price drops.
.. .
Hyperventilating in Maryland...: I need to relocate for a job in June and need to sell my house. I went online to see what some of the houses in my area were selling for. To my horror, there are 3 houses in my subdivision listed at below what I bought my house for 3.5 years ago! All three are "pre-foreclosure" or short sell listings. How will that affect the price at which I can sell my house? My house has also been completely renovated, including new siding and roof. Will I be able to make any of that investment back?
. . .
Falls Church, Va: Good afternoon, ladies. When can we expect to receive our tax assessment in Fairfax County? I've checked www.fairfaxcounty.gov/dta but there's no information as to when the bills are sent. My husband and I are very curious to see what it says since we purchased the house last year for $35K below the '07 assessment and two houses down the street from us sold in the fall for even less than we paid."
39 comments:
New listings from today:
$369,000
8654 HUDDERSFIELD WAY
BRISTOW, VA 20136
$510,000 (07/08/2005)
$443,900
9508 VINNIA CT
MANASSAS, VA 20110
$575,000 (5/2/2006)
$599,000
8700 LORDS VIEW LOOP
GAINESVILLE, VA 20155
$750,000 (9/2/2005)
$459,900
13309 IANS WAY
BRISTOW, VA 20136
$684,124 (6/30/2005)
Few more, a little older:
$329,900
10487 LABRADOR LOOP
MANASSAS, VA 20112
$475,000 10/2/2006
2 days on market
$379,900
8762 TOMISLAV ST
MANASSAS, VA 20110
$585,000 (08/16/2006)
23 days
$420,000
10578 TALISA LN
MANASSAS, VA 20112
$575,000 11/1/2005
8 days
$389,900
10468 GENNA LN
MANASSAS, VA 20112
$529,000 6/30/2006
100 days
$279,000
8822 Fort
Manassas, VA 20110
$390,000 1/10/2005
interesting sale history:
12/29/2004 $204,750
10/3/2000 $193,000
5/29/1998 $154,900
5/9/1988 $141,000
So in ten years (1988-1998), its value increased $14,000, but in one year (2004-2005), its value almost doubled, from 200K to 400K?!
"So in ten years (1988-1998), its value increased $14,000, but in one year (2004-2005), its value almost doubled, from 200K to 400K?!"
Yep, that's called reverting to the mean.
A decade of suppressed valuations suddenly let loose, like a coiled spring.
Even more shocking, there are probably several years in the early 1990's when the valuation fell YoY, that's if they tried to sell.
No one paid much attention because a bookseller hadn't been hawking his "Real Estate will Crash in 1992" book or doing TV interviews.
That's the basis of the bubble thing.
lol...
KH, oh my gosh your right! I'm going to run out and buy right now!
Nah, I changed my mind. I'm going to wait a few more months go I get what I think is a good price on something I like. The purchase will be based on personel goals and reasons not an area buying frenzy to get in on "the game"
THATS THE BASIS FOR THE BUBBLE.
"I'm going to wait a few more months go I get what I think is a good price on something I like."
You could wait a few years, or maybe 10 years. If this is "1991", prices will pull back about 10% and go flat for a decade. The best value was in "1999", which will be about 2015.
If this is already "1999", the price pullback is behind us. Prices will start climbing, first inside the beltway, then it'll make it's way outward.
As people lose money in the stock market, affordability will drop and they'll see the dream slipping away.
So KH, your saying I should wait until there is a marked increase in prices inside the beltway before I purchase in Northern Virginia. Thanks, that sounds like good advice.
No, he is saying no matter what you do... buy now.
Any attempt to save money is doomed to fail. It simply can't be done. If you try, you will only make things worse. Stop fighting the unstoppable juggernaut that is real estate. Oppose it and you will be crushed!
Ignore all the forward looking indicators that show the market will continue to fall for some time to come. Ignore the experts predicting further large declines in the area. Ignore your own good sense.
Buy!
Buy Now!
If you can't sell your house, then probably the best thing is to rent or use a lease/option to buy. Use the services of a competent real estate agent or an attorney. You can save money if you do it yourself by using contracts online.
"As people lose money in the stock market, affordability will drop and they'll see the dream slipping away."
Are you calling for a bear market, KH? But housing will stay the same or go up even though people cannot afford it? So, demand goes down (credit crunch and less money from stocks), but home price goes up. Gotcha...
The previous bullish real-estate comments must be by realtors. The reality of the situation is quite different.
The market has turned south. There are currently record number of properties in pre-foeclosure. When the lenders take these back as REO's, they will resell them into a buyers market. Lower sales prices will be the new comparable sales for ALL surronding properties.
Which will make the whole situation worse for buyers who bought now. They will quickly find themself in an "upsidedown" in their equity.
This is only the begining of a major correction in real-easte. Where the bottom is nobody knows.
But I pity the persons who will buy now thinking they got a deal.
"But I pity the persons who will buy now thinking they got a deal."
But it is possible to get a good price now, if you buy at a price that is well ahead of where the market is now, right?
Here's my reading of the current real estate market. Prices have been driven thought the roof over the past several years because of ridiculously low interests rates and speculative purchases intented to be flipped and through a relaxation of lending standards.
Many of these home-buyers used inventive mortgage options that required minimal down payment and teaser rates that would reset in a couple of years from inception. These questionable loans were bundled into investment securities and sold thoughout the world.
Now that interest rates have risen, these new home owners cannot afford the increase in the cost of their mortages and are in distress/default. This cycle is on-going and will continue through 2009-10.
Downward pressure on prices will continue at least through this period. Waiting a couple of years would seem prudent to avoid owing more that your home would be worth.
The real deals have not even begun...yet. Yes, you can get a good price today if your "looking back". But IMO in six months you may not feel that way when you see other homes selling for less than what you paid on your "good deal" today. And your home is worth less than what you owe.
Buy now or be priced out forever, they aren't making any more land. Pride of ownership.
oh, and Susanne researched this.
I completely agree that there will be far better prices later this year than there are now...my question is, what would your guidelines be for a good price now, if you had to buy now? From various online sources, I have compiled some guidelines: less than $100/sqft, less than 2002 prices, less than inflation appreciation since the year it was built. Are these good guidelines, or should the price be even more aggressive than that?
Note that this is for established, good neighborhoods in and around Manassas, close to the VRE.
That other doug is not me BTW.
I just wanted to respond to "serge". Distressed sales and foreclosures are not supposed to count in the home appraiser evaluation of a property.
However they will play into potential buyers minds, and they will get better deals from "normal" sellers as more of these properties flow on the market.
As long as there is an increased flow of foreclosures, property values will drop rapidly. Once the flow becomes constant, values should begin to flatten. Once they are all eaten up, it should be bottom.
Tabitha, it sounds like you are doing a lot of really good research. The truth is that no one here is going to be able to tell you for sure what the right price will be.
If you keep researching the market and keep track of what houses are selling for in your targeted area you will be able to make as good an estimate as anyone what will sell and what won't.
You are lucky that Manassas is being hit earlier than the inner areas so a good opportunity to buy should also come earlier.
Watch the inventory and sales numbers in your desired areas. Those are the forward looking indicators for what prices will eventually do. If inventory is sky high and sales are low... then prices will continue to fall.
That said, you don't need to wait until the absolute "bottom." That will probably take well more than a year to arrive even in Manassas.
I wouldn't be surprised if you can find a really killer deal sometime this coming summer or fall that will be within spitting distance of the bottom without having to wait forever.
Just keep your eyes on the market, bargain hard, and don't be afraid to walk if the sellers aren't willing to give you what you want.
If you are well informed you will be able to spot a really good deal when you see it.
Time is on your side.
I agree with leroy, and wanted to add - dont fall in love with a house. Be mentally prepared to walk away from any deal without being destroyed. There will always be another house that you like just as much, even more perhaps.
Tabitha,
I echo Leroy's sentiments and think you're applying a good methodology for your search.
I would also suggest not falling in love with the best deal for the sake of its being the best value at the time. I've done that and regretted it because after the purchase there were a lot of things that frustrated me about actually living in the house or neighborhood. This time I hope I'll know my own self better. That's partly why we found it impossible to buy back in the mad-rush days of 2005. I knew being forced to buy in haste would leave me repenting at leisure.
Not falling in love is not going to be a problem. We are a military family, and we have made all kinds of places our home over the years. We have the opposite problem--we are so ambivalent about the houses themselves, we will have a hard time pursuing any one house. And after another military family (friends) bought a home by Quantico this past summer, only to discover it is sinking into the ground and not habitable and therefore a total loss, we are proceeding with extreme caution and paranoia--better to lose $500 on a home inspection and walk away than lose everything. Thankfully, with inventory being what it is, we have almost too many choices.
The main limitation is that we have to buy by spring at the latest, because our lease is up in June, and our landlords are coming back to their house. We could rent again, but as a family of eight with two cats, we are not easy to move, and since this is a mid-tour move, we have to do it ourselves. We are ready to settle down.
Since our upper price range is the mid-300s, and most of the inventory in Manassas is foreclosures and short sales, or trying-to-avoid-a-short-sale, or stubborn original owners who refuse to accept they missed the bubble, time is on our side only a little longer, as negotiations will probably take longer than usual. It is easier for us to walk away when we still have plenty of time until we have to move; we cannot control how long banks take to get back to us. (Of course, we will assure any potential sellers "we can always just rent again.")
Further, while there are several neighborhoods we like, they are all older ones--not the new construction pop-ups. We like where our rental is right now, but even though nothing--not a single house--has sold in it the past year, they are all still asking $600K-$700K. Our next favorite neighborhood was selling in the $500Ks-$600Ks until last spring, but now, they are in the $400K-$600K spread, with several foreclosures and pre-foreclosures, so we have more hope for it, and since the houses sold new in the early 90s in the $300Ks, if we were able to get one for the mid-$300s, we would feel it was a safe price. Our third favorite neighborhood has a similar situation.
This is why I am really anxious to hear any input about guidelines for pricing a safe deal NOW.
Harriet, that is brilliant advice--thanks so much! We almost made that mistake in December with a relo house...we were saved from ourselves by a lousy seller's agent...thank goodness.
Tabitha-
Whatever you do, I'd wait until next Fall, for two reasons:
1) We need another flopped "Spring" market to further pass along the message to Sellers that the Market in NoVa is bad, despite what the Economic boys at GMU say.
2) There is supposed to be another MAJOR ARM reset this summer, which will further kick prices down & add more Foreclosures to the heap
Yes, look for houses around 100 per square foot (and less!)
But wait as long as possible!
Watch the neighborhood you move into - you don't want it to be a Foreclosure 'hood, that will continue to decline after you buy into it!
Tabitha:
Good luck on your house search in an older neighborhood. I would simply say that if you're expecting a price drop in the small number of neighborhoods in N. Arlington within walking distance of Metrorail, forget it. House sales in those neighborhoods are still doing quite well and there's no incentive to reduce prices. In fact, those few neighborhoods can be considered as being in a different place from the rest of DC/N. Virginia, in that they possess a rare and increasingly valuable commodity: walking convenience to Metrorail.
You didn't read much of the thread did you Tom?
I still see there are those who not only don't read well, but they insist time and time again that apparently most people want to live near a METRO. At my company few want to live near a METRO because they don't work in the District. As a matter of fact they don't want to work in the District at all.
The few contributors who repeat themselves over and over are one-trick ponies. For goodness sake give it up. Please. Tabitha and many who read this blog DO NOT want to live where you do. The arrogance of some is amazing.
"In fact, those few neighborhoods can be considered as being in a different place from the rest of DC/N. Virginia"
So it's different there, eh? Riiiight! Too funny. DC/NoVA are toast.
Location near a Metro, all things equal, adds value to a home. But Metro proximity has already been priced into the market, and transaction volume is dropping, even near Metro stops. Sellers in Arlington and Alexandria are in denial but have not yet been forced through desperation to drop prices; this is why volume is low yet median prices stay high. I fail to see how areas near a Metro will be magically immune to a plunge in prices in adjacent areas. There will eventually be a substitution effect.
"your saying I should wait until there is a marked increase in prices inside the beltway"
Seems to be two possible extremes. I'm not considering the BH scenario where a 3/2 SFH in Arlington/Alexandria drops to $180,000. You are welcome to wait for that but it would take a dirty bomb on the mall.
My guess was that the maximum close-in pullback would be 10%, about what happened in the 1991 to 1993 timeframe.
I consider that the high probability scenario and therefore would not rush to buy. On the other hand, if I found something interesting I would purchase it.
Overpriced condos? Who cares about them. I drove past Eclipse Condo yesterday and could smell the sewage plant OVER the diesel fumes.
"Are you calling for a bear market, KH? But housing will stay the same or go up even though people cannot afford it? So, demand goes down (credit crunch and less money from stocks), but home price goes up. Gotcha..."
Not exactly.
I'm noticing that stock indices have fallen about 10% since the recent peak. While some BH might be cleverly in contra-investments, the reality is that most have lost 10% of their down payment.
When the dot coms blew out in 2000 and 2001, money shifted to homes. In that timeframe, even as stock losses were hitting, home prices were rising.
Again, this is not a prediction or wishful thinking. It's just noticing what happened.
Might be different this time.
"Seems to be two possible extremes. I'm not considering the BH scenario where a 3/2 SFH in Arlington/Alexandria drops to $180,000."
lol...
And where did you get those numbers?
kh said
"I'm noticing that stock indices have fallen about 10% since the recent peak. While some BH might be cleverly in contra-investments, the reality is that most have lost 10% of their down payment."
huh? who keeps their downpayments reserves in the market, this market at that! come on, give us BH a lil more credit than that! i have mine earning 6 and 4.95%, not losing 10%!
"i have mine earning 6 and 4.95%, "
6 is darn terrific! Even 4.95 isn't bad.
Good for you!!!
Unfortunately, not all BH's are as conservative as you are.
Around the time of the Dow peak, some BH's said they were racking up the money, making it big in the market while housing fell. Winning in both directions.
It's wrong to generalize in either direction but many are losing ground in the market.
I believe that Arlington, VA is a unique housing market based on my experiences living and owning homes there.
I lived in Arlington, VA from 1983 - 1999. I owned a single family house in Ashton Heights (Virginia Square) and a condo in Bedford Park (Clarendon). I moved to Fairfax because my new husband has two children in Fairfax County Schools.
Arlington County was immune to the housing turmoils in the 80's, when interest rates were 18%, so it makes sense to me that it would weather this storm too. If you look at foreclosure listings, very few of them are in Arlington.
It is very nice to live in a walk to metro area even if one doesn't use it themselves. Why? Because friends, relatives, visitors and guests can use metro to visit you. Arlington also lots of bike paths, so I often rode my bike to work.
If I wanted to buy my house back today, it would be in the million dollar range, and the condo would be $400 - $500K. Sigh.
Joyrenee, I think your comments about Arlington neighborhoods close to Metro are right on the mark. It's disconcerting to others who insist the housing slump engulfs all properties to realize there are "islands" in North Arlington where home values are weathering the storm quite well -- but it's the truth.
Nobody is saying they have taken a big hit... they haven't. What we are saying is that it is extremely foolish to suggest that they won't be affected once all is said and done.
The fact is they aren't islands. They experienced the same run-up in prices as the rest of the area and eventually the bust will reach them as well.
Do you honestly think they are going to hold steady while everything else in the area falls?
Sorry, that doesn't make economic sense.
"in North Arlington where home values are weathering the storm quite well -- but it's the truth."
It's the same in Alexandria. Places held their value (within 10%) in the last two pull backs.
They are holding up fine again.
I've found some Alexandria places that are off about 5% from the peak but others are up.
People who recognize value will pay a premium for the premium location.
Thanks for sharing such a wonderful article and I look forward to reading your article blog.
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