Source: MRIS
Monday, February 11, 2008
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44 comments:
Nothing to see here, move along....
On a more serious note... sales down 40-50% in the "close in" areas that "haven't been hit."
That to me is more important than the median price in this case.
Wow - for all the inside the beltway believers (myself included) this looks like a serious chink in the armor. Up til now, the inner areas seemed impervious to very high increases in months of inventory (YOY) that the outer areas were routinely experiencing.
Yes one month does not make a trend, and they still arent as bad off as the outer areas who have had double digit inventory for many many months. Nevertheless, to see such a large jump indicates that as of this moment there is pretty strong pressure on prices to head downward.
crt,
I agree. The dramatic drop in sales in Arlington and Alexandria surprised even me.
And Realtors® can't blame it on the weather. January was downright mild.
I think most people here know that I have predicted that the bursting bubble would eventually reach all parts of the metro area, but I am still very surprised by these numbers.
I did not expect to see such a sudden change in buying behavior. Sales were down and inventory was up in the Dec "Decade of Sales" update but not nearly to this extent.
Considering that these are the January sales numbers and volumes are low these may not represent a new trend. The next couple months will tell us more of course.
If this is indeed the beginning of a new trend then we will shortly see significant price declines in the "close in" areas that have so far been minimally impacted.
In the long run reasonable housing prices are better for everyone in the region, but in the short term there is going to be a lot of suffering.
Leroy,
I will keep checking back at the MRIS site because I'll have to keep convincing myself it's not an error. It's true that the rest of the year might not follow suit, but it's likely that starting out the spring market with so few sales will have an impact on the rest of the year.
I went and double checked the numbers myself :P
I think your blog may be in for a quiet month.
It makes the recent real estate pumper piece that was linked to a few days ago look even more ridiculous...
From Feb 6 2008...
"Hot Market: Arlington VA -- Double Digit Gains Return
by M. Anthony Carr
Days on market are dropping, prices have begun an upsurge and multiple contracts have returned. A walk down memory lane? No, just another market turning from buyer to seller in the last few months in the shadow of the White House.
Arlington County, the first Virginia community across the Potomac River from Washington, D.C., is entering the beginning stages of a seller’s market. In December 2007, the average price for a single-family home jumped 21 percent over a year earlier."
I know that the author of this piece didn't have any particular interest in giving an honest assessment of the market, but it is still frustrating watching people misuse statistics this way.
Leroy,
That's why I looked at the zipcodes quoted in those articles that were mentioned. 22207 seemed to be solely responsible for that figure of 21% YOY gain. That zip had 19 sales, 9 of which were over $1 million - and probably McMansions. The other 3 zips discussed were either flat or down ~10%.
I am surprised by these inventory numbers as well and would expect that even North Arlington will have a very tough spring season.
My $0.02
As someone else said, one month does not a trend make. However, volume almost always precedes price. When inventory/months supply starts shrinking YOY, then we might have signs of a bottom.
Look out beloooooooooowwwwwwww!
I dont think inventory shrinking represents a bottom. I think its when inventory starts shrinking at an accelerated rate. Thats when you will see prices stop falling as that represents more people entering the market.
I just checked the January 2006 vs January 2007 reports for Manassas City and Manassas Park City, and found some interesting highlights:
Manassas City
-35% median sold price YOY
Avg Sale Price as a
percentage of Avg List Price: 81.55 %
34 sales to 674 active listings
Manassas Park City
-24.44% median sold price YOY
Avg Sale Price as a
percentage of Avg List Price: 88.38 %
29 sales to 484 active listings
Mansass Park actually improved from Dec 2007:
-38% median sold price YOY
Avg Sale Price as a
percentage of Avg List Price: 80.25 %
22 sales to 501 active listings
But for all my focus on my area, I found the other numbers impressive, as well.
oops, so sorry, I meant January 2007 versus January 2008!
Harriet,
Great data! Do you ralize sales are 2 to over 3 standard deviations below the median?
In an ANOVA statistical analysis, it says the process is broken. Now, that's obvious...
This is now the 5th month is a row where all the DC data you present shows a 'broken process.' Sales have to double just to return to a normal market. Forget those lies that the market will rebound. (Ghad, my FIL takes those lies 'hook line and sinker.')
Touring open houses this spring will be entertaining... :)
Got popcorn?
Neil
"I dont think inventory shrinking represents a bottom. I think its when inventory starts shrinking at an accelerated rate. Thats when you will see prices stop falling as that represents more people entering the market."
The bottom will be years "wide." I don't think it will be too difficult to spot when it arrives.
Sales will slowly begin to climb back towards historical levels and the excess inventory will begin to disappear. Eventually everything will come back into balance, but it won't happen over a few months, more like a few years.
Leroy said:
The bottom will be years "wide." I don't think it will be too difficult to spot when it arrives.
Typically 18 to 30 months wide. This is hitting a barn, not a bullseye. ;) We, as buyers, can hit the target.
I had this argument with my FIL. There is a reason he's not allowed to negotiate for vehicles.
Got popcorn?
Neil
One month does not make a trend, but this doesn't bode well for the area of Alexandria where kh and I live. I'm still seeing the lower priced townhouses in Del Ray (i.e., less than $450K) move quickly. These numbers in general may be impacted by the jumbo spreads.
Term-X,
this market is nuts.
Here's a mystery. Have you been watching this place? It's a 2/1, 810 sqft wood frame cottage on a 1332 sqft R2.5 lot.
BOWMAN NANCY J sold it on 6/29/2006
for $409,000 to STEPHENS MARY. On 1/2007 the assessment came in at $355,513. Why not $409K?
It's on MLS at $449,500 as a * short sale *.
Shouldn't it be $349K?
KH,
Perhaps the current owner purchased with a negatively amortizing loan? And/or extracted more equity to do some of the remodeling that the realty site mentions. That could explain why it's listed as a short sale.
As for the assessment being nowhere near the sales prices, well, this seems to be pretty common. Though looking closely, the assessment has been increasing dramatically over the last 5 years. It doesn't look like the assessment increased by any less than 10% per year for 5 years.
My $0.02
Wow
Two years ago everyone I met would tell me prices will never fall here.
Man were they wrong.
When I see those number I fear what's next for the economy and my job
The one thing not talked about much are all the baby boomers getting ready to retire. I can't believe they all want to stay in DC with the traffic and cold weather. Things could get more ugly than you can imagine if many start to move to greener pastures.
Neil,
Thanks for the statistical info! I know you check in here for the 10-year numbers and thought you'd enjoy this one especially.
Please let us know how the open house tours go! I haven't been to one in two years, which is a loooong time for me. The last time I let slip the word "crashing" and got a look of incredulity from the agent. It was slightly embarrassing so I decided not to go to any more. Better to just stay home and pop that popcorn.
arlingtonva,
Not to mention the property taxes. I know plenty of retirees who've moved on just because of those, and usually to a much nicer house in the outlying counties. They can still pop in to Arlington or Fairfax to catch up with friends. Winchester and Charlottesville, for example, have fine medical care and other amenities.
"The one thing not talked about much are all the baby boomers getting ready to retire."
ArlingtonVA - anecdotally at least, the odds are that the boomers are going to help the close in areas much more than they hurt them. As it stands right now, they by and large now live out in the suburbs and have for years. With their kids now grown, many dont see the need for a large house anymore, and trade down by moving into the inner city areas. Other factors that would favor this moving in tendency is greater access to healthcare, transportation, nightlife & entertainment.
Again, there really havent been many studies to support this, but there is a decent amount of anecdotal evidence that they are the ones leading the economic revival that is happening in and around large cities in the U.S. My in laws are the perfect example as they want to move from their big suburban house in Eastern Loudon Co. into a small townhouse in Old Town Alexandria. Again, just an anecdote, but it certainly seems plausible.
kh said ...
...assessment came in at $355,513. Why not $409K?
It's on MLS at $449,500 as a * short sale *.
Shouldn't it be $349K?
No. For a 810 sqft place with one bathroom, both amounts should be about $160K. ($200/sqft). CERTAINLY no higher than $240K!!! :)
From Harriet:
Thanks for the statistical info! I know you check in here for the 10-year numbers and thought you'd enjoy this one especially.
Thank you for the data! Hey, do you mind me graphing the data and publishing it on my blog as part of my national overview? I do give you full credit. :) You of course can take any graph you like off my blog (or even ask for custom ones).
Do you happen to have any previous February sales data? I didn't find those sales in your archives. I'm a big fan of both graphing data and running statistical checks (outliers, e.g., 2004 and 2nd half 2007 and now 2008!).
Your inventory closely matches what I track on ziprealty and thus I will later 'marry the two together.' Bottom of the DC inventory was 2/4/08. For 2007 it was 2/8/08 Considering the superbowl, that date difference is a wash.
What isn't 'a wash' is the 33% more inventory DC wide! Wow! That's a Phoenix (city) like increase.
I'm a bit perplexed by Alexandria city. Let's just say I'll join the crowd seeing how that one plays out.
Got popcorn?
Neil
This one's right near Court House and priced at $580k for a 1 bedroom. Looks ready for a crash.
mytwocents said...
"Perhaps the current owner purchased with a negatively amortizing loan? And/or extracted more equity to do some of the remodeling that the realty site mentions. That could explain why it's listed as a short sale."
There's definitely something strange about it. That house is walking distance to the Del Ray restaurant row but not the Metro. I like walking but it's over a mile, that gets old on cold rainy days.
That's a high price for something that tiny and on a rowhouse lot.
I kinda agree with scott's overall estimate but I could see it selling for $300K in a hot market maybe even $350K.
$449K???
$449K is just not realistic. The problem with HH fantasy prices is that when that place does sell, say at $300K or $350K, it'll be proof that real estate is dropping like a rock in this area.
Maybe I'm going over to the BH side but $449K is almost a half million dollars.
For a half million, you should get a very nice 2/1 SFH (or OK 3/2 condo), with reserved parking, and a 10 minute walk to the Metro.
Instead there are fantasy listings like this, $319K 1/1 Condo within sniffing distance of the bus barns and sewage plant.
"The problem with HH fantasy prices is that when that place does sell, say at $300K or $350K, it'll be proof that real estate is dropping like a rock in this area."
Well, someone did buy it for $450k didn't they? One house does not make a market but all the available information points to increasing pressure on all parts of the area's RE market.
As we have explained before there is no magic spell affecting prices in your area. It is just another neighborhood not that different from any other. Some people will prefer it and be willing to pay a premium to live there, others won't have any interest at all. That is always how it works.
At the end of the day the houses aren't that different from what is available in surrounding areas.
the Home-moaner Blues
"this place could make the cover of Po-house magazine"
CRT: I think the idea of retiring boomers moving into the city is a myth. Of the retirees/about-to-retires that I know, none are moving into the city. They may not need the big house any more, but the last thing they want is smog, noise, and congestion. I actually know of one couple that is considering retiring to Leesburg.
Granted, this is all anecdotal, but I have a hunch that the "moving inward and buying condos" was a meme put out by a salesman years ago. Since then, it has caught on like an urban myth.
Of course, I could be wrong.
Does anyone think the increased grantor's tax has had any effect on sales?
do you mind me graphing the data and publishing it on my blog as part of my national overview?
Neil, not at all, have at it. I haven't done the February sales yet, but I plan to soon and I'll keep you posted.
An interesting piece from WSJ Online. It talks about Fla, Az, and CA, but the concpet applies equally to No. Va.
Homes in Bubble Regions
Remain Wildly Overvalued
February 12, 2008
If you own a home in a former bubble region like California or southern Florida, there's bad news… and really bad news.
And they suggest that it is still way too early to go bargain hunting in these markets, although -- of course -- there is always the occasional deal around.
The bad news is fresh market data published Monday night by real-estate Web site Zillow.com. They show prices, as expected, kept slumping through the end of last year.
But the really bad news is that, even after a year of misery and falling prices, homes in many of these regions still aren't cheap. They remain wildly overvalued compared to average personal incomes.
There is a strong long-term correlation between the two figures. And in many regions, house prices would still have to fall a very long way to get back into line.
How far?
Try around a third in Florida and Arizona -- and closer to 40% in California.
Yes, from here. The long-term chart for California is shown below.
Even if house prices stabilized, it would take a decade or more for rising incomes to catch up.
The data on median house prices and per capita personal income in these states have been tracked by Karl Case, economics professor at Wellesley College. (He is one half of the duo behind the closely-watched Case-Schiller real estate index).
Professor Case's numbers ran through the end of the third quarter. I decided to see how they might look today, using Zillow's data for the fourth quarter.
The company hasn't posted statewide data, but the price falls across the many cities it tracks give a pretty strong picture. From these I assumed, for the sake of calculations, that California prices fell 8% last quarter from the third quarter, a huge number by historic measures but not out of line with Zillow's data. For Florida and Arizona I assumed declines of 5% and 5.5%. You could use other, more modest estimates for the recent declines: They won't change the outcomes much. I also assumed personal incomes in these states rose in line with recent and historic averages."
The results? In all three markets, the prices are well off their peaks when compared to incomes. But they remain far above historic averages.
Median prices in California peaked in 2006 at 13.3 times per capita incomes. Hard to believe, but true. They may be down now to about 11.1 times.
But that's still way above the ground. Throughout most of the 80s and 90s they ranged between six and seven times incomes.
Just to get down to seven times incomes, prices would have to fall 37% tomorrow.
Those who bought at the peak of the cycle may be pinning their hopes instead on "incomes catching up" instead. But they had better be patient. Even if house prices stayed exactly where they are, it would take around 10 years for rising incomes to bring the ratios back into any sort of alignment.
And it would take even longer before prices started to look very cheap again.
That's based on average personal income growth of 4.6% a year in California and Florida and 4.2% in Arizona.
Yes, these are projections and estimates. Time and chance will play their usual roles. And there will doubtless be different pictures within regions of the same state.
Nonetheless the overall picture is pretty clear. And, if you are a homeowner in any of these regions, none too appealing.
2008 216 3,234 14.97 $370,000
2007 358 2,856 7.98 $419,500
These ratio's do not seem to be right. I guess the ratio of 14.97% is for the properties sold to the properties available on the market. Please check the calculation. It should be ( 216 / 3.234 )* 100 = 6.68% and not 14.97.
Please update this.
Thanks,
Well wisher
Alexandria City :
2008 2007 % Change
Avg Sold :
$488,556 $480,259 1.73 %
Median Sold :
$405,000 $433,500 -6.57 %
Total Units Sold:
77 136 -43.38 %
Avg Days on Market:
108 91 18.68 %
Average List Price for Solds:
$532,731 $510,513 4.35 %
Avg Sale Price as a
percentage of Avg List Price: 91.71 % 94.07 %
Arlington County :
2008 2007 % Change
Average Sold Price:
$561,535 $496,986 12.99 %
Median Sold Price:
$422,500 $435,000 -2.87 %
Total Units Sold:
94 182 -48.35 %
Average Days on Market:
85 82 3.66 %
Average List Price for Solds:
$599,958 $533,556 12.45 %
Avg Sale Price as a percentage of Avg List Price:
93.60 % 93.15 %
Numbers show massive drop of sold homes. Average up, median down. ASKING price up. Sigh...
No luck for where I'm looking...22314 shows :
Average Sold Price:
$726,716 $577,826 25.77 %
Median Sold Price:
$542,000 $485,000 11.75 %
Total Units Sold:
25 39 -35.90 %
Average Days on Market:
103 100 3.00 %
Average List Price for Solds:
$789,524 $625,435 26.24%
Hard to tell with only 25 places sold though.
It's not a percentage.
3234/216 is nearly 14.97 listings per sale.
"Granted, this is all anecdotal, but I have a hunch that the "moving inward and buying condos" was a meme put out by a salesman years ago. Since then, it has caught on like an urban myth."
You might be right Novawatcher - but then again it might be a case of the "news" meme preceeding the reality. My close in walking neighborhood which used to be formerly nothing but dinks, now has a discernable sprinkling of early retirees who seem to go out in packs and prowl the restaruant scene.
The larger point which I was trying to make was that ArlingtonVA seemed to suggest that the retirees would hurt the close in neighborhoods. I disagree in that they never were in those neighborhoods to begin with - they were in the suburbs. But if they move further out, that neither helps nor hurts the inner cities.
"Well wisher" on ratio number,
I hesitated to use "Months of Inventory" for past month's data, but that's really what the "Ratio" number is trying to portray -- the relationship of inventory to sales.
To be more accurate, I should reverse the "sales" and "active listings" columns, which I can do. It's just more fun for me to look at the sales number in the first column.
Novawatcher said:
I think the idea of retiring boomers moving into the city is a myth.
Sadly, retiring for the boomers might be a myth. Their savings are so poor that they will have to down-price their living accommodations to free up cash. As soon as they realize that...
Harriet said:
It's just more fun for me to look at the sales number in the first column.
Oh, I agree. Enjoy your own format and terms.
My favorite is how the REIC is now trying to dismiss all stats. :)
Got popcorn?
Neil
Halftime Score
BH - 8, HH - 6
BH lead by 2.
City's spin:
"2008 Real Property Assessment Information
While some areas in the Washington, D.C. regional residential real estate market experienced substantial decline in value over the past year, residential values in the City of Alexandria were more stable and declined only slightly. Prices of homes remained strong due to the City’s close-in location, as well as the City’s being viewed as a desirable place to live, work and to visit. "
On a more personal level, as I feared, my assessment (and taxes) and my neighbors are up again.
Here's the Alexandria City Overview.
SFH valuation down 0.86%
Residential Condo down 4.3%
Page 8 is interesting as it shows the 1990's bubble bursting after Old Court and the other S&L's failed.
The peak to trough for early 1990's and the last few years looks similar. That doesn't mean that today's valuations will follow the same pattern.
Here's Study Group 1006 with the new 2008 assessments against the actuals.
It's pretty much as expected.
If anyone has reports from other jurisdictions, please post them.
Thank you.
KH, please don't ignore condos, which means :
BH - 15, HH - 0
No, KH is clearly right.
The bubble has passed Alexandria by!
Everywhere else in the area might have been affect by the bubble, but not Alexandria. In Alexandria the doubling in pricing that was observed coincident with the bubble that was seen everywhere else in the region is completely sustainable...
In Alexandria incomes simply doubled.
Plus, the new moat project that has been started along Alexandria City's borders (only the nice parts mind you) will effectively turn Alexandria City into a small island that will in no way be subject to the movements of the broader RE market on the other side of the moat.
It is really quite simple.
Leroy, KH produly ignores all leading indicators, and boastsabout his ignorance of the scientific method (where you use a model of behavior to develop testable predictions and then falsify with data). So why should we be surprised that he would always be the last to know? KH prides himself on that.
"KH, please don't ignore condos, which means :
BH - 15, HH - 0" For CONDOS!!
Right. Above, I did say
Residential Condo down 4.3%
I've not sure what a Residential Condo is. It's the Eclipse but what else? Is it the formal term, which refers to the ownership structure for common areas or is it the casual term, which means, a unit in a mid or high-rise.
I didn't mean to trigger that bout of babble by posting links to reports on Housing in Northern Virginia.
(It is funny though. I paid them off to regurgitate my baloney from the last year. Maybe Lance hacked into their site.)
The city's report and their websites have a lot of good information. It's useful to dig through it. Look it over. Make your own decision.
Good luck.
Astonishing data, especially the top discounts column on the right. (Although I have to believe that if a house is being cut by 50%, this isn't just an issue of supply and demand. These properties must have issues.)
Here are my observations:
-- If a property is selling less than $200k and even $230K and it's "close-in," it may be cheaper to buy then to rent -- even without factoring in tax benefits.
-- Are rent falling as hard as housing prices? Unless they set up tent city on the Mall, that's unlikely. The condo glut makes it easy to rent, for sure, and it is holding rent prices back. But in DC, and in modestly safe areas, it still cost $1,300 and up to rent. I'm sure people can point to $1,200 rents and perhaps less, but once you drop below $1,300, the trade-offs are fast and furious. That bring me back to at-these-prices buy point...
-- I am not surprised by the January decline. This is way beyond the housing market now.
-- Housing market prices become irrelevant for some people. People still buy in risky and declining markets. Houses are still being sold. The market never shuts down. And why is that? Is it because these buyers don't read blogs? I don't think so. Not everyone will sit around and hope they time their re-entry at the "bottom." For people buying now, I suspect they feel they have jobs that are secure enough to ride out a recession, and expect to stay put for some years. Bloggers can argue all they want about why housing is a terrible investment today, but if the job is safe then the issue becomes: how badly do I want that backyard garden?
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