From Bloomberg:
``We are clearly on the edge,'' Greenspan told a group of energy-industry executives yesterday at the Cambridge Energy Research Associates' 27th annual CERAWeek conference in Houston. He reiterated comments from last month that the odds of an economic contraction are ``50 percent or better.''
. . .
``Home prices will continue to weaken,'' the 81-year-old former Fed chief said. ``When a bubble breaks, you go to primordial fear.''
29 comments:
For what its worth, MRIS has put out its annual report for all of 2007. Not surprisingly, median prices are holding up much better in the inner areas than they are in the outer ones.
2007 median prices
DC -0.24
Alexandria +2.47
Arlington -0.26
Fairfax -2.13
Loudon -9.26
PWC -9.08
Culpeper -12.21
Annual sales are generally down from last year, and farther off last years pace the farther out you get. The only one showing more sales in 2007 than 2006 was Arlington (+0.26).
The complete report can be found here.
http://www.mris.com/reports/stats/yearly_reti.cfm
Wow, Alexnandria increased - thats impressive. I doubt 2008 will be nearly as rosey.
I predict -5-7% Arlington/Alexandria, -10-15% in Fairfax, -20-30% further out.
Im sure most of you bubbleheads will say thats not not aggressive enough so lets hear some other people grow a set and make a prediction...
I don't want to hijack the blog, but I saw this today. It's PWC so feel free to ignore it if you think it doesn't impact the rest of the area.
Prior sale: $420,000.
Current ask: $190,000. (-55%)
Prior ask: $299,900.
I couldn't find out which bank owns this now. The data on Washington Post still has an individual owner listed. I'm guessing this means it's not just Deutsche Bank throwing in the towel here.
This house is much newer and in much better condition than the other.
PWC is toaster central.
2007 vs 2006
Total Sold Dollar Volume: -13.41%
Avg Sold Price: 0.07%
Median Sold Price: -2.13%
Total Units Sold: -13.47%
Avg Days on Market: 33.87%
Avg List Price: 1.25%
Avg Sale Price as a
percentage of Avg List Price:
94.43% 95.54%
Fairfax County, Fairfax City, Arlington County, Alexandria City, & Falls Church City
That does not include the train wrecks in Loudon and PWC.
I think 2008 vs 2007 is going to be even worse - just look at Jan 2008 vs Jan 2007 :
Total Sold Dollar Volume: -50.72%
Avg Sold Price: -7.15%
Median Sold Price: -12.09%
Total Units Sold: -46.92 %
Avg Days on Market: 20.59%
Avg List Price for Solds: -5.21%
Avg Sale Price as a percentage of Avg List Price:
91.40% 93.31%
Look at that again - Sold dollar volume down FIFTY PERCENT! Same counties as up top. Can't blame it on the weather either, this January has been unseasonably warm.
I've already called for 20-30% off of peaks prices (mid/late 2005) for all of NOVA. I don't know when the bottom will be - maybe 2009.
xpovos, that home is "owned" by Javiar Salazar...this is listed in the MLS notes :
"ALL OFFERS SUBJECT TO THIRD PARTY APPROVAL."
so it's almost definitely a short sale.
The last owner sold it for $96,000 in 1985, then it was bought for $420,000 in 2005. So let's assume inflation and a small gain add up to 6% a year (which is insanely high). If you start from 1985, the home "should" be priced at $307,885. Let's try a more reasonably 3% - $173,386. Huh, now for sale at $190,000. STRANGE
2007 vs 2006
Total Sold Dollar Volume: -13.41%
Avg Sold Price: 0.07%
Median Sold Price: -2.13%
Total Units Sold: -13.47%
Avg Days on Market: 33.87%
Avg List Price: 1.25%
Avg Sale Price as a
percentage of Avg List Price:
94.43% 95.54%
Thank you for the good data.
Just consider 2008 has higher inventory and FAR lower sales.
So far inner areas have lost sales more so than gained inventory. But... DC inventory shouldn't be increasing at all until the weather improves! The fact its a nearly linear ramp up in inventory during 2008 has interesting implications. I'll publish new charts later in the month on my blog. ;)
Got popcorn?
Neil
Question for the group,
At what point do distressed sales start influencing comps?
I know the die hards will say they don't but at some point, as volume increases, it has to put pressure on regular sales.
Is there any information on that subject. Perhaps a percentage? I.e., a distressed sale represents 80% of a regular market sale?
Thank you,
My $0.02
xpovos,
I put Nibbs in the "Top Discounts" column. Woodbridge has over 2,400 properties on the market.
Zip Code - Today's Actives - Jan. Sales
22191 - 860 - 44
22192 - 596 - 37
22193 - 1129 - 67
Mytwocents asked:
Is there any information on that subject. Perhaps a percentage? I.e., a distressed sale represents 80% of a regular market sale?
The best summary is a review of the 1990's in LA. I've asked for the link and will post here as soon as I get it. It really is the best analogy for DC (job losses/relocations, afford ability, exurb over-expansion, affluent areas that crashed in price due to speculation despite affluent income growth, etc.)
Got popcorn?
Neil
N. Arlington 22207 within walking distance of Metrorail continues to do just fine. I think this has to do with the fearsome traffic situation in the Washington area more than anything else -- and that situation won't be improving anytime soon!
"N. Arlington 22207 within walking distance of Metrorail continues to do just fine."
Tom - right now this is true, as it is for all of the inner areas. Much to the chagrin of many of the Bears on this blog, 2007 wasnt a bad year for any of the inner areas, at least when compared to the implosion taking place outside the beltway.
That said, dont discount the ominous clouds on the horizon. Jan 08 had a huge explosion of "months of inventory" for all of the inner areas. In fact, MRIS stats for 22207 show that it has 11 months of inventory as opposed to just 4.94 months in December.
http://www.mris.com/reports/stats/zip_stats.cfm
As I noted before, one month does not a trend make, but even for a somewhat bullish blogger like me, this trend has got me worried that we just might be out of luck.
"At what point do distressed sales start influencing comps?"
It's happening now in outlying areas and will happen soon close in. Check out the chart "foreclosures and short sales as a percent of listings" at the bottom of this McEnearney link:
http://www.mcenearney.com/tips/nova-marketwatch.php
24% of PWC listings are foreclosures or short sales, and it's 14% for Loudoun, 11% for Fairfax, and less for closer in areas.
The higher the percentage, the greater the effect.
Doug, I think your predictions for 2008 and quite reasonable.
Sometimes you find interesting stuff on other blogs:
http://www.economicindicators.gov/
Due to budgetary constraints, the Economic Indicators service (http://www.economicindicators.gov) will be discontinued effective March 1, 2008.
Their mission statement:
Economic Indicators.gov is brought to you by the Economics and Statistics Administration at the U.S. Department of Commerce. Our mission is to provide timely access to the daily releases of key economic indicators from the Bureau of Economic Analysis and the U.S. Census Bureau.
So is the federal government really having budget constraints, or are they just trying to hide how bad the economy is getting during an election year? Thankfully enough of the bearish statistical blogs provide similar services, so we won't go without information.
Got popcorn?
Neil
Neil,
it is very interesting that the government, which normally acts as if money is infinite, now can't find the few dollars needed to publish those statistics. I suspect that the government is trying to influence the public's perception of the economy, because they know full well that the state of the economy is largely a matter of perception. No one is fooled, and it only makes them look like liars. By that I'm referring to all those "the fundamentals are sound" comments our "leadership" can't seem to stop saying.
Interesting quote Harriet posted: "When a bubble breaks, you go to primordial fear." He couldn't have thought of that earlier, now could he? He values integrity so highly that it never occurred to him that others may not have any. I truly believe he is a good man, but how naive can one be?
I don't dislike Bernake either, but I think the nation needs a Fed Chairman who instills fear. Like Dr. Volker. Or perhaps "needed fear" is the right phrase. It's too late now.
Does anyone know what happened to Merv over at Northern Virginia Real Estate Blog? None of the charts have been updated in weeks.
crt said:
"2007 median prices
DC -0.24
Alexandria +2.47
Arlington -0.26
Fairfax -2.13
Loudon -9.26
PWC -9.08
Culpeper -12.21"
And prices in each of 2004 and 2003 went up something outragous like 100% a year. These relatively small "declines" are supposed to be a bubble bursting? It looks more to me like the air in the real estate market is just doing a little stabilization.
No bubble here. Keep eating your popcorn Neil. It'll keep you busy while you watch life (and your opportunities) go right on by you!
David said...
"Does anyone know what happened to Merv over at Northern Virginia Real Estate Blog? None of the charts have been updated in weeks."
I hear he's been busy closing on a new house! ;)
"And prices in each of 2004 and 2003 went up something outragous like 100% a year. These relatively small "declines" are supposed to be a bubble bursting? It looks more to me like the air in the real estate market is just doing a little stabilization."
100% per year? Why do you even bother to write things like that lance? Everyone here is well informed enough to know that those numbers aren't even close to reality.
As for the declines representing "a little stabilization" only time will tell.(not that you will admit it when it does...)
Even out west in Manassas price declines started very slowly... only a few percent down at first. You of course tried to use that to say that there would be no bust... we all know how THAT prediction worked out.
"No bubble here. Keep eating your popcorn Neil. It'll keep you busy while you watch life (and your opportunities) go right on by you!"
Right right, life is overpaying for a house huh? I don't even think you realize what a joke you have made yourself into at this point.
The writing is on the wall...
"I predict -5-7% Arlington/Alexandria, -10-15% in Fairfax, -20-30% further out. "
That could happen but I'm starting to guess not. Take a look at these for sales with recent sales intermixed.
The SFH are selling; the attached-row houses are selling slower; then there's W REED AVE, which is about 3 blocks long, call it the PWC-MS13 of Alexandria. A lot of places for sale there considering how short the street is.
We talk about gridlock in Jumbo money but the $1+M market seems healthy compared to the $200-$400K segment.
KH,
You show a realitors web site listing 72 houses for sale with 5 under contract and then you call the $1M a heathy market. Thats not even trying to be credible. You have had better comments.
How 4% of toxic loans MAY bring down the remaining 64% of the mortgage market:
http://oftwominds.com/blogaug07/pareto-housing2.html
"listing 72 houses for sale with 5 under contract and then you call the $1M a heathy market. "
I didn't spell it out.
That's my entire zip code. I wish I knew how many places are here but it's gotta in the thousands.
Of those thousands, 4 places were offered for over $1M.
Of those, 2 are sold.
The 4 places over a million are not that exceptional, that's just glancing around the neighborhood.
When the 2.2 million place was first listed, I thought it would overshadow it's neighbors.
The frame, roof, and walls are up and they are doing the interior work. Its neighbors, especially the house on the right, is not much smaller.
Drive up Russell Road to Mansion Drive. There are many places that size or larger and on larger lots.
The HH's who have the nicer and more expensive places aren't rushing to sell.
The few places that come on the market are being sold.
Scroll down the list. You very quickly run out of the nicer looking SFH and are on W REED AV or looking at small row houses.
0 Glebe Road almost looks affordable and reasonable.
I agree with the general BH sense that a half mill is a lot for a house. A mill? Who can afford that?
Who puts down a quarter mill and pays $8,000/month PITI? Someone does.
I'm offering up the data and my interpretation. My interpretation could be wrong but the data is the data.
Ralph said:
I don't dislike Bernake either, but I think the nation needs a Fed Chairman who instills fear. Like Dr. Volker.
I 100% agree. We needed a "Mother Volker" to replace Greenspan. Note: I say that in the kindest endearment as I really respect Volker. We don't need a Fed chairman to be our friend right now, we need someone who is pissed off and going to take away the punch bowl and tell us how the show is going to be run.
Lance said:
No bubble here. Keep eating your popcorn Neil.
ROTFLMAO
Do I really need to post, again, how much I'm saving renting versus buying? Oh yea... when I did that before I was told not everyone uses a spreadsheet. Sheesh. Sorry that it involve "Icky Math." While debating with you I've saved more than you had for a down payment, paid for a wedding (cash) and a new car. You? lol
I have too many coworkers stuck owning two properties due to botched sales. The statistics are on our side. Remember, I've seen prices drop 40% in 'high end' areas before.
Start your own blog if you think there is data out there supporting your position. But when the only line of defense is "I haven't seen prices drop here." Well... You are seeing prices drop.
No one has to buy. People do have to sell..
Just look at the Post's rental section. Notice something about all the featured complexes?
Got popcorn?
Neil
"While debating with you I've saved more than you had for a down payment, paid for a wedding (cash) and a new car. You? lol"
That's a lifestyle choice. Don't think that anyone has an argument with it.
It might not be everyone's choice.
Harriet,
Since I use some of your data, I'd like to let you know I put up a new article on my blog on sales with some discussion on inventory.
http://recomments.blogspot.com/
Alexandria sales are 2.4 standard deviations below the ten year median! Only part of 2004 was one or more standard deviations above the median. Every other year is pretty much within 0.5 standard deviations... except for the last nine months.
Yes... the sales meltdown is now 9 months old.
KH said:
That's a lifestyle choice.
Yes it was a choice. One many bears have made that will boost their lifetime standard of living. :)
Got popcorn?
Neil
"That's my entire zip code. I wish I knew how many places are here but it's gotta in the thousands.
Of those thousands, 4 places were offered for over $1M.
Of those, 2 are sold. "
Over how long?
Why bother linking to sites like that when we already have the MRIS numbers?
Punch in 22305 and see what it tells you...
In Jan...
7 houses sold out of 63 on the market.
The average days on the market was 160.
The average house sold for 83% of asking.
There were 21 new listings to go with 7 new contracts.
The most expensive houses sold were in the 500-600k price range.(two sold)
"The HH's who have the nicer and more expensive places aren't rushing to sell."
Housingheads? Right right... because everyone that buys a house is automatically a HH in your mind...
Nobody here is against buying houses. They are just against overpaying for them.
That seems to have proven to be a difficult distinction for you to make however.
Lance: "And prices in each of 2004 and 2003 went up something outragous like 100% a year. These relatively small "declines" are supposed to be a bubble bursting?"
I'm guessing you meant 100% over several years. Here's that graph for Alexandria, again. Take a look at page 8 of the pdf.
SFH hit 25% in 1989, related in some way to the S&L crisis I'm guessing. You remember anyone yelling "bubble!", I don't.
The whole bubble, bubble-busting, and post-bubble-buying-opportunity is just so over-hyped.
Maybe someone will make a little bread off it but I just don't see that happening for most.
If you want to live in a newish condo, then yes, absolutely, there are nice discounts available.
The $500K townhouses on 0 W Glebe also look like there's a nice discount. Unfortunately, that's still a half mill, which is real money.
Not much yard there either.
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