Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post off-topic ideas, your local house search updates, MLS finds, and links here.
Prince william crackdown on illegals working. http://washingtontimes.com/article/20080313/METRO/85529729/1001http://www.wavy.com/Global/story.asp?S=8003084This creates an interesting housing situation as well. Where are they going to go? What happens to the houses they had in PWC?
What happens to the houses? They get bought by hardworking Americans who simply want a place where they can raise a family and grow old.
We just moved here last summer and are renting a townhouse. I've been watching this site and others. Coming from southern VA, the home prices are still a shock at current 'falling' prices. But, we've started to look at homes and are amazed. We go into $500k homes, that last sold for $700k and they are in short sale situations, or foreclosures. In most of them, it is obvious just looking around that they are in over their heads. Several that we have gone in don't even have bedroom furniture, but, have matresses on the floors and clothes piled in the corners. I feel sorry for these folks, but, why can't people figure out, on their own, what they can afford and what they can't? I think a lot of people got caught up in hearing how much folks where making off of real estate, knew they wouldn't be here for long, hoped they'd make more money by the time the adjustments came, etc., but, what a bad bet. I feel sorry for them, but, they did it.We have been approved for a home in the $650k range, but, there is no way I'm going over $450k. I am not living to make a house payment.Last summer, there was nothing in central Loudoun under $500k with 4 bedrooms. Now we are seeing almost one home per day hitting the market within our criteria. All short sales/foreclosures. As buyers, we are still holding back, watching the prices fall.
Well said M. Own the house, don't let the house own you. I got approved for a 700k loan last year and no way was I going to buy a 700k home. (would approve you have a loan that would use over half your take home pay? what were they thinking!!) People just didn't use sound econmic sense and just thought short instead of long term.
Well said M. Own the house, don't let the house own you. I got approved for a 700k loan last year and no way was I going to buy a 700k home. (would approve you have a loan that would use over half your take home pay? what were they thinking!!) People just didn't use sound econmic sense and just thought short instead of long term.Well said Steve. ;) The Sheeple stampeeded to far one way. Now they'll go the other. In addition, the baby boomers are entering the years where they cut back their housing consumption. One example (non-baby boomer), my grandmother now needs help at least once a day to function. So she is selling her two homes and moving into a spare bedroom of one of my relatives. We're also seeing broke kids move back into mom and dad's McMansions. Partially to help pay the mortgage.Full doc mortgages on stricter guidelines will not restart this bubble. We're done with about 1/3rd of the downward timeline. Multiple years ahead with the greatest price breaks in ~2009. So buyers be patient until 2010 to 2015 (a long buying window ahead). Get that down payment in order. :) The runup of home prices in 2003/2004/2005 won't happen again in our lifetime. We'll go back to sane home prices appreciating with incomes.Got Popcorn?Neil
2 things I would like to comment on that has been on my mind for a bit.1stIn the past several weeks I went to the wife of a former coworker that pasted away a number of years ago that works for Long & FOster. I went by the office to see her and she turned me over to the mortage person in the office. I forget what company name he works for, but he informed me that the company he works for is owned half by Long & Foster and the other half is Wells Fargo. Isn't that convient...2ndI was looking at home prices in Loundon County and it seems some of those people don't get it that the bubble has burst and there asking prices are ridiculous...
On ongoing irritation of mine finally evolved into full-blown frustration. Who overlooks "listings ethics"? I have said many times before that "new listings" which are in no way new listings have caught my attention over and over--sometimes several times for the same house that has been on the market continually for months and invariably shows as a "new listing" every few weeks. But this description today did me in:9444 WATERFORD DR MANASSAS, VA 20110 Price: $271,800 "Priced 70% belwo assessed value. move in with major equity. short sale requires bank approval."The assessed value for this house is $316,100. A 70% discount of that would be $81,540, right?Besides the "new listing" lie, I have seen assessment value misrepresentation just as often. "$100,000 below assessed value!" "WAY below assessed value!" How do they get away with these things?I know sellers are desperate to unload, but this kind of dulplicity is what contributed to the extent of the mess in the first place.And Steve, I think they go back "home," or they follow the jobs (I have heard anecdotal stories about North Carolina recently). And their houses stay vacant for a long, long, long, long time, until the banks that own them slash their prices enough that they sell to someone who can afford to sink some money into them to make them habitable again.Two houses that we seriously considered were vacant for almost a year before they sold--both for about 50% of their last purchase price.And M, we have seen that same phenomenon many times...incredibly palatial McMansions with, perhaps, a large flat-screen TV, a living room set, and then just mattresses and sleeping bags in the bedrooms. Or maybe there is furniture in every room, but it is very modest. Finished basements empty. And yet people don't want to blame banks for their sloppy lending practices?
tabitha said..."Besides the "new listing" lie, I have seen assessment value misrepresentation just as often. "$100,000 below assessed value!" "WAY below assessed value!" How do they get away with these things?"This goes back to one of my earlier rants about most real estate agents. The sad fact is, they have very little regulation or legal liability for just about anything they do or say. Courts often view these sort of statements as mere "puffery", and essentially put the burden on the buyer to do his/her own homework (i.e. let the buyer beware). Unfortunately, the agents know this full well and they realize the chances they will ever be sanctioned or (successfully) sued for any of this behavior is close to zero. Certainly there are some very repitable agents out there - but they are in the minority. Remember, for most of them their #1 motivation is making the sale & getting paid.
Unfortunately, the agents know this full well and they realize the chances they will ever be sanctioned or (successfully) sued for any of this behavior is close to zero. There are a few good Realtors (tm) and other members of the REIC. Most would put their parents at risk of foreclosure for their commision. There is a reason the industry was ranked so low this year ethically. Who did the survey? IIRC Forbes magazine. There is a simple way to fix this. Require the assessed value be part of the listing, minimum 12 point font. :) There are three people against the buyer in a sale: The seller, the seller's agent, and the buyer's agent. That's just a fact and every buyer needs to know that. There are rare exceptions... very rare.Got Popcorn?Neil
Carlyle Capital collapse. Credit crunch fears remained front and center after Carlyle Capital, a fund run by Washington, D.C.-based private-equity firm Carlyle Group, said late Wednesday that it expects its creditors to seize all of the fund's remaining assets after negotiations to prevent its liquidation failed.The company, which has seen the value of its home-loan assets plunge with the collapse of the housing market, said that it has defaulted on about $16.6 billion in loans as of Wednesday. "http://money.cnn.com/2008/03/13/news/international/Carlyle_refinancing.ap/index.htm?postversion=2008031313I wonder if they defaulted on all the swell Condo's... now rentals in the area... hmm... And Steve... the house hopefully will bring values down more... Ah.. the nothing spreads on....
Do foreclosed properties pay property taxes ? It appears not and if not how is it legal to not pay taxes ? I recently called the Loudoun county treasurer's office and they didnt seem to have a clue, they put me on hold for 15 minutes and then came back and said its up to the owner to pay the taxes and I then repeated my question and said, "The bank is the owner"...took em a minute to recover and say oh, uh I guess they dont pay it...they will have the new owner (when it ever happens) pay the back taxes to take the property...Does this sound wrong or what ? I know I have to pay my taxes on time, why do the banks/title holders not have to pay their taxes ? And if not, what is their incentive to sell the home in a timely fashion, think of all those uncollected taxes the county is not collecting and then look as your tax rates go up up....I think this is a national issue
"Does this sound wrong or what ? I know I have to pay my taxes on time, why do the banks/title holders not have to pay their taxes ?"The banks are certainly supposed to pay. If they dont, the taxes become essentially a first lien on the property. As such, someone could buy the tax certificates and foreclose on the bank! I think there is some jackass on weekend infomercials that you see & he is all about pimping his system - buy tax certificates & get the property "free & clear" - essentially same sort of thing.Typically, if you do buy a tax certificate from the county, & try to foreclose, the bank wises up quickly and pays off the taxes - thereby wiping out your lien. So in essence, the banks are certainly supposed to pay, but unless there is someone out there buying up the certificates and threatening to foreclose on them, the banks may let the taxes run (unpaid) and have the back taxes paid when the property is sold to a third party.
Rob_Chuck,You have an interesting delima.1. If the banks do not pay their taxes on foreclosed homes there are consequences: cities and counties will have to cut expenses (read layoffs).2. If the banks do pay their taxes on foreclosures, they have to cut expenses (layoffs and fewer loans). Certainly the 2nd path leads to more bank failures. Either path results in a slowing of the velocity of money which further crimps home prices. In the case of Detroit, they were so aggresive in pursuing 1st leins that banks simply abandoned the market. (Homes and any business in Detroit.) Don't underestimate government greed. Many will go the path of Detroit. Got Popcorn?Neil
neil said:"1. If the banks do not pay their taxes on foreclosed homes there are consequences: cities and counties will have to cut expenses (read layoffs)."Why? The taxes simply get paid a few months later when the property is transfered.Neil, sorry but I can't help but notice that you relish the possibility of "bad things happening" to us. Why is that?
Neil:"Many will go the path of Detroit."
As one writer pointed out, the government gets its money on real property one way or another. But I wouldn't draw a straight line from foreclosure to government layoffs. Governments carry large amounts of unpaid taxes on real property from year to year. And even if deliquencies rise, there are offsets, such as tax exemptions that run out on commercial properties. Where governments take their biggest revenue hit is in declines in income taxes (due to payroll cutbacks) and sales taxes (due to consumer pullback), money collected by the states and partially returned to the local communities. Low interest rates hurt their typically underfunded pension investments, which stings them badly as well.
I got this from my girlfriend and it was sent to her by a L&F realtor. I find it amusing given the current state of the market. I wonder if he is in denial...Real Estate Tip:Buyers Remorse If you are like most buyers who sign a purchase agreement on a new home, you will almost certainly feel a wave of overwhelming anxiety. You may begin to question your judgement -- did I pay too much? Is it the right home? Can I really afford the mortgage payments? How can I get out of it? This response--referred to as "Buyer's Remorse"--is completely normal!Call your friends who have owned a home for a few years if you experience an attack of buyer's remorse. Are they bothered by rapidly escalating home prices? Probably not, because that means the value of their home is increasing. Did they feel anxious when they first signed the agreement? They may tell you that they felt just as anxious as you are feeling, but now are really glad that they went through with the purchase. Have they made improvements to the property that heightened their enjoyment of the home? They will probably say they much prefer the creative freedom of being a homeowner compared with having to ask the landlord's permission to put in a garden or paint the living room. When you experience a buyer's panic attack, be strong -- you have a great deal to gain!
I have a question for the group (I know I'm posting late in this thread so I may repeat in the next bit bucket if people don't notice this): If inflation really takes off like it did in the Seventies -- I'm talking double digit inflation for a couple of years -- can we inflate our way out of the housing decline? That is, if housing prices would otherwise be falling, but inflation is driving up prices, would housing prices appear to be "stable," or, to put it another way, could inflationary pressures push up housing prices that would otherwise be in decline?Now, obviously, if you've got an adjustable rate you are totally hosed under this scenario. Likewise if your wages don't keep up with inflation at all, you're in bad shape. But suppose you have income that general paces inflation and you have a fixed rate mortgage; I'm thinking you do okay in this scenario. Opinions?
Thanks to all the comments here....Given the news of a 16% increase in real estate taxes and a 7% increase in water/sewer taxes/fees mentioned on WTOP today - I will take a VERY conservative approach in my looking at the Foxcroft community. Yes, I have been approved for $170K. But I question how they came to that value. Even in todays market; if I were the one making the loan - I have serious doubts as to my future in these properties.
"can we inflate our way out of the housing decline?"Well, that is the question of the year isn't it? This appears to be what the Fed is trying to do. Obviously it isn't as simple as that... but they understand perfectly well that their current rate policy will weaken the dollar and stimulate inflation. They appear to have decided that this is preferable to simply letting the irresponsible actors fail. That said, though inflation helps debtors in most cases... I don't think it is going to save the housing market. Inflation simply isn't going to rise far enough fast enough to prevent the worst of the bust from unfolding. The next couple years will likely prove to be the "worst" of the bust. Only a massive spike in inflation could devalue the dollar fast enough to make a difference. Inflation could shorten the multi-year period of stagnation that will take place following the next couple years but that is a good ways down the road.Plus, if inflation does spike to high levels, interest rates will be sure to follow. Higher interest rates will of course raise borrowing costs and act to slow the housing market even more. (Though from a personal standpoint it would play to my advantage as I expect to be a cash buyer when I do purchase.)So in short... can we inflate our way out of massive debt? Yes, it can be done and it has been done before. The costs to the economy are severe however and nothing is going to save the housing market in the short term.
"I'm talking double digit inflation for a couple of years -- can we inflate our way out of the housing"It didn't happen in the 1970's. While food, energy, the stuff you buy on a daily basis was shooting up, housing and stock-equities were flat to falling. It was after the 1970's inflation settled down that the stock market and housing rose in the 1980's. That's counter-intuitive as what is a house but a pile of commodities and stock is fractional ownership of "stuff" and things that produce and distribute "stuff".
Gruntled asked:"But suppose you have income that general paces inflation and you have a fixed rate mortgage; I'm thinking you do okay in this scenario. Opinions?"The scenario you lay out is exactly what happened in the '70s. (And coincidentally ... or not ... we were in similar circumstances vis-a-vis with war debt mounting and the "guns and butter" argument coming in to play.) And yes most mortgageholders made out very very well as the real value of their debts sank at rates far in excess of the rate of their mortgage. (I.e., they were maybe paying between 5 and 7% interest on a fixed 30 yr mortgage, but inflation was in the double digits.) And JUST LIKE you say, after the initial high home price rises of the early 70s, prices seemed to stabilize in the mid to later 70s, but inflation at double-digits were really making them more affordable for new buyers. (Of course, the mortgage holders were still far better off since they were repaying pre-inflationary balances with post-inflationary salaries.) You observation about adjustable rate mortgagees being in less good a position is also correct. But they're not as bad off as it seems as first. For one thing, most of these people will most likely be refinancing to a fixed rate within the next couple of years (i.e., right before the really high inflation hits us ... and it will since the Fed is doing exactly now as it did in the 70s ... real low rate at first to try and contain things via stimulating business ... and then real high rates once stagflation has set in.) Additionally, even those that do stay with the adjustable rate still have a capped rate that is something like 5 pts over whatever the initial rate was. So they might be paying 9% interest when inflation is at 20%. They're still making out.
On my blog I have a link to a CNN article about Freddie and Fannie having trouble selling bonds. Sadly, what I predicted about Jumbo loans from them scaring away investors is coming true. The government cannot mandate liquidity. Lance,Don't twist my words; my patience for you snips about anything that might suggest Alexandria is going down... I don't relish bad things happening. We're between a 'rock and a hard place' with very tough decisions ahead. If you're so convinced Alexandria is bullet proof, blog the data! I'm not seeing anything but more value for the dollar.I do try to predict what will happen, not what I want to happen. The reality is we're in a recession and its going to be a doozy. I want people to be prepared and not to panic. My predictions have been surprisingly accurate. So have David's. Instead of dismissing... read. Real estate and economic cycles were described well enough in Adam Smith's 1776 book "Wealth of Nations." If one is good with analogies, that book still describes today's economy over two centuries after its first print! As to inflation, its double digit, while wage increase are very low single digit and about to go negative. :( Its import inflation and domestic deflation. Not a good situation. This bind is going to decrease the fraction of income individuals can pay for a house and we all know home prices are determined at the margins.Got Popcorn?Neil
Leroy,Reading your take on inflation/interest rates/stagflation, it appears that we are in complete agreement where things are going. I understand where you prefer to be paying cash for a house AND, where provided your savings and earnings keep pace with inflation, you will be getting a beter overall deal than those who must rely on a mortage.But, wouldn't agree that for those who rely on a mortgage, getting that mortgage now at the lower rate is better than waiting a few years and getting it at a much higher rate ... even if nominal house prices don't go up as happened in the mid to late 70s (or even the do go down some)?
Neil,I've never mentioned Alexandria ... not once. (kh has as well as some anon.) Are you having problems keeping track of who is who? Is anyone who opposes your viewpoints (and more specifically your tactics) just "one entity out there"? LOL
"But, wouldn't agree that for those who rely on a mortgage, getting that mortgage now at the lower rate is better than waiting a few years and getting it at a much higher rate ... even if nominal house prices don't go up as happened in the mid to late 70s (or even the do go down some)?"If all other things are held equal... it is obviously better to get a lower interest rate when buying with a mortgage. The problem is that prices are currently falling and if anything the rate of decline is increasing.You said: "even if nominal house prices don't go up as happened in the mid to late 70s (or even the do go down some)" It is silly to suggest prices will do anything but continue to fall for the foreseeable future. The bust will likely continue for at least another couple years before stabilization at a lower price point takes place. I do suspect that we are going to see some significant inflation within a few years and that as that happens interest rates will inevitably rise, but as of today a potential buyer is still better served by remaining patient and letting the bust return affordability to the market.
I'm going to repost my question at the top of the next bit bucket, so hopefully discussion will move there...
Leroy said:"It is silly to suggest prices will do anything but continue to fall for the foreseeable future. The bust will likely continue for at least another couple years before stabilization at a lower price point takes place. "If you're talking about new developments and perhaps condos, what you say is true. But for the vast majority of places (i.e., established neigbhorhoods and single family homes) we haven't been seeing the kind of price drops you're talking about. Most places have either stagnated in price or gone up a little in price. So, you're advice may be good if you're looking out in new developments or for a condo, but if you're looking for your average single family home in your regular, normal, established neighborhood, the higher interest rates won't be offset by lower prices. Would you disagree with this assessment?
"Most places have either stagnated in price or gone up a little in price."Huh?Even knowing your track record I am inclined to believe this statement is some kind of a mistake on your part and you aren't honestly trying to say that "most places" haven't declined in price. What did you mean to say there?
lance said..."But for the vast majority of places (i.e., established neigbhorhoods and single family homes) we haven't been seeing the kind of price drops you're talking about. Most places have either stagnated in price or gone up a little in price."Lance - while I agree with your general sentiment about inflation, I think the statement above is a bit broad, dont you? The only places that have stagnated or gone up a little are generally around Arlington, Alexandria & DC. Places like Fairfax, Montgomery & PG are certainly established but all are falling and in the case of PG rapidly. Moreover, if you believe (as I do) that months of inventory (i.e. supply & demand) are a good leading indicator of prices, there are a lot of places (in fact a majority of places around here) that have more than 10 months of inventory, meaning there is tremendous pressure on prices to come down. Thus, if Leroy or others are looking at months of inventory as a leading indicator of where we are going, I think its fair to say that for most places, the downward pressure of months of inventory currently exceeds the upward pressure of inflation.
Lance, I guess it depends on where you look.My old community (Reflection Lakes in Herndon) has seen some major price drops. Sold in 2005 my TH for over $350K.On the street that I once lived, there are four properties for sale. One is listed for $299K, and I know that owner - a very well maintained home and nicely upgraded. That is a 15% drop since I sold my place there. The other three on that street are averaging about $170K. These are not upgraded to to the same level that the first one I mentioned, but maybe not that bad either. But those are showing a 51% drop since I sold in 2005.
Look at it this way...http://www.fairfaxtimes.com/media/photos/2008/03/12/A-ForeclosuresCOVER-0313.jpghttp://tinyurl.com/2a2uapOr this way:http://www.bloomberg.com/apps/news?pid=20601087&sid=aw61M2mwbf48&refer=homehttp://tinyurl.com/37tq24Shoot... just scroll down a couple posts on this blog and look at the decade of sales numbers...(where every single region is showing declines from peak)There is no realistic doubt that values are falling virtually across the board at this point with conditions continuing to worsen. Anyone trying to assert otherwise is either hopelessly clueless or dishonest.
"Most places have either stagnated in price or gone up a little in price." --LanceThus far, I have held off on directly responding to one of his quotes, but I, too, need to give him a chance for some qualification. Is this for some defined area that you have referred to in the past as an area of particular interest/expertise? Because surely, surely you are not referring to the areas often under discussion here.Every day, I check new listings in PWC that have at least 4BR/2BA. If the house was purchased in 2004-2006, the asking price is at least $200,000 less than the previous purchase price, on average. But wait--there is no need to expound upon this. This whole blog is devoted to hard numbers/examples of this fact.So again, perhaps you are referring to a very defined area?
Steve, you hit the nail on the head for me. Though for some of us 1/2 of our take home pay is a reality for rent/mortgage. The trick here is to make sure that you can actually live with that. Darren, I agree that the asking price even in Fairfax City units that I have are way out of wack. Looked at this unit (http://www.franklymls.com/FC6268709.html). Nice unit, but does not match up with a couple others in the neighborhood. But this one has been out there for over 400 days DOM-P and DOM-M!The unit is vacant as of last week. Assuming that it has been vacant since first listing, the owner has put out about $5K in condo fees and about $1800 in taxes. Must be nice to eat $7K a year without a buyer. BTW, newer listings are in the $180K range.BTW, loved the post from your GF's realtor! This the same thing that my agent has been trying to use on me as we look at properties. M, in looking at properties a week ago I was shocked as well in occupied units in the community I am looking at. A bank owned unit needs gutting because of the dog/cat piss/feces soaked carpet. another unit was a 2 br that was converted in to a 3br unit. The new BR is 9x9 room created by walling off a part of the living room. There was two mattresses in each of the two regular BR's and one in the "new" BR. Add to that the couch in what remained of the LR looked like a sleep sofa!Tabitha, thanks for the info. But some of what I have been reading since I decided to re-enter owning my own home is making me mad. We all have seen the stories of folks that can afford the payments - but the owners are walking away from their mortgage because the homes value has fallen below what the home is worth now. I rarely use this term , but WTF???!!!! Since when does home ownership mean profits in just a few years? People like this should be blacklisted from ever owning a home in the future. Wannabuy and CRT, understand your comments all too well, Working with an agent that is both a customer and friend of mine of many years. Lucky for me I am (as he is) to wait for things to work out. But I do feel some pressure to "make things work: on the couple of properties we have looked at.
Tabitha,PWC is an area that 10 years ago no one from "the Washington area" in their wildest dreams would have considered commuting from. It was considered far outside the Washington area. Ero, it is a "new development" as far as prices go. I've been saying for years now that when the boom ended new areas such as that would be hit. Did I think values would drop by 40%? No, I thought it would be more like 20 - 25 %. (That was what I posted on Bubble Meter.) MOST of the metro area is still within the beltway and the counties straddling the beltway ... (and I don't mean the parts of Fairfax bordering PWC which, again, 10 years ago no one from "the Washington area" would have condidered commuting from.) Most of these areas have stagnated in price and many have continued to increase price. (For example with the exception of "really marginal areas", prices in the District have been going up and not down since the supposed peak of prices in 2005.)Yes, you're going to get a bargain looking out where you are looking. But, as many have noted, those places were never worth what people were paying for them 2 years ago. Now, would they have been worth what they were paid for had the housing boom continued another 5 to 10 years? Yeah, maybe ... but that is the nature of the housing cycle. You take a risk when you buy in "new" places (including "marginal" places in old cites) whose fortunes aren't yet know. Even now, buying where you are buying is a risk. Who knows what the next 10 or 20 years will bring to that area? It doesn't have a "metro history" to use as a guide for going forward. It is still an unknown quantity. Of course, with high risk comes high opportunity. It could be that PWC becomes the place to be after the market works it way out of its current problems and what you buy today will double in value today. But no one knows.
(For example with the exception of "really marginal areas", prices in the District have been going up and not down since the supposed peak of prices in 2005.)I should have said "with the exception of "really marginal areas" AND CONDOS" Condos always seesaw far more than single family homes in value. (I've read that that may have something to do with the substitution effect ... i.e., people buying condos when they can't afford a SFH ... and not buying them when they can). Anyways, take the condos out of the mix and most established areas in the traditional metro area (where the vast majority of us live) have not dropped much (if any) in price since 2005.
The only problem with “decade of sales” numbers is it is a monthly snapshot (yoy) and given the small numbers of sales these days, pretty easy to skew. It is helpful to look at median sales for all 12 months of 2007 as it will smooth out month by month variables. This is also from the same MRIS source that Tabitha uses:D.C. - 0.24Arlington - 1.44Alexandria + 2.47Fairfax - 2.13Montgomery + 1.14P.G. - 3.03Loudon - 9.26P.W.C. - 7.88Culpepper -12.21Places farther afield are consistently posting double digit price drops too.This shows that the top 6 “established” areas are defiitely doing much better than the other (arguably) non established areas. I guess lance could say drops of -0.24 to -3.03 are small enough to consider them “stagnating”, but I would disagree.That said, I stand by my earlier statement about inventory levels and their being a leading indicator of price pressure. Established areas of Fairfax & Montgomery have around 10-11 months of inventory and P.G. has a whopping 23 months! Thus, there is little doubt in my mind that prices in these established areas are going to be down, even with the mitigating effects of inflation.
Wow lance...There is more wrong in your post than I have time to correct.Hitting just the major points,It is absolutely untrue that before 10 years ago nobody "in their wildest dreams" would consider commuting from Manassas.Second, as has been explained to you more times than I can count, most people in Manassas are not commuting to DC. For that matter... the overwhelming majority of the metro area is not commuting to DC.Third, you have not withdrawn your original comment about "established areas" holding their values. Virtually the entire region is now showing declines including huge swaths of "established areas."
"We all have seen the stories of folks that can afford the payments - but the owners are walking away from their mortgage because the homes value has fallen below what the home is worth now. I rarely use this term , but WTF???!!!! Since when does home ownership mean profits in just a few years? People like this should be blacklisted from ever owning a home in the future."This is a perfectly reasonable decision on their part.They signed a contract that stated they would repay the borrowed money or surrender the collatoral(the house).They are fullfilling the terms required by their agreement by turning the house over to the bank and there is nothing whatsoever dishonest or underhanded about doing so. This is not that different from pawning a ring and later deciding you don't want to pay the money back to recover it. The deal is simple, pay back the money or surrender the ring. Now, understandably the lenders are unhappy that they are getting the short end of the stick on the deal, but there is nothing unethical about what is taking place. The lender could have protected themself by requiring a significant down payment to shield them from exactly this sort of behavior in the event of price declines, but many lenders failed to do so and are now paying the price for their short sightedness.(note, different states have different laws regarding mortgage debt so what I am saying here is dependent on local law.)
"This shows that the top 6 “established” areas are defiitely doing much better than the other (arguably) non established areas. I guess lance could say drops of -0.24 to -3.03 are small enough to consider them “stagnating”, but I would disagree."Those are good numbers crt, but I just want to point out that as we all know the price declines accelerated through 2007. That coupled with the fact that the bulk of real estate transactions take place in the spring and early summer means these numbers are well behind the current market.
CRT said:"I guess lance could say drops of -0.24 to -3.03 are small enough to consider them “stagnating”, but I would disagree."Yes, I would. Compare this to 25% plus per year "gains" over a 5+ year period during the boom. The 0.24% to -3.03% is small and insignificant. Take out condo sales (which have been a gigantic part of the mix here in the close-in areas over the last 2 years) and these insignificant numbers become even more insignificant. These numbers become even more insignificant when you consider that MOST homebuyers aren't buying their home with the intent to resell it immediately ... but to actually live in it for many many years!
leroy said:"Virtually the entire region is now showing declines including huge swaths of "established areas.""Hopefully you've already read CRT's post showing that this really isn't so.
"Hopefully you've already read CRT's post showing that this really isn't so."lol...What else is there to say lance? You look at a report showing that virtually the entire region is seeing falling prices and you conclude the opposite...
Lance & Leroy - a couple of things:"I just want to point out that as we all know the price declines accelerated through 2007."I agree Leroy. Starting in Sept, things got pretty bad, and they took another hit hit this Jan. Thus, I dont doubt that 2008 numbers should be worse."Condos always seesaw far more than single family homes in value. (I've read that that may have something to do with the substitution effect ... i.e., people buying condos when they can't afford a SFH ... and not buying them when they can)." Lance this is true, but this is also exactly why you cannot exclude them. Condo inventory is staggeringly high inside the beltway - mostly because jackass builders (many were clients of mine) who kept building or converting old apts without any regard for potential demand. Worse too, nearly all are luxury condos which are designed to compete against SFH close in. Thus, thanks to the substituiton effect, & oversupply of condos, SFH owners close in like you and I have to compete against an ocean of discounted condos. True, condos would be considered "inferior goods" in terms of the substitition effect, but SOME potential SFH buyers will certianly peel away given the difference in prices between condos & houses. Thus, its really disingenuous to exclude condos because at the margins all the friggin luxury condos out there are dragging things down.
crt said:"Thus, its really disingenuous to exclude condos because at the margins all the friggin luxury condos out there are dragging things down."Even if over the long term the substitution effect from condos will as you think bring down the price of SFHs, my statement that the numbers being bantered around today are lower than they would be if you didn't include condos in those numbers stands. Your numbers say that price went down 0.24% yoy in the last 12 months for DC. What I am pointing out is that a glut of new condos hit the market in the last 2 years. So, rather than having a normal mix of say 1 condo selling for every house sold, it's probably more like 5 condos selling for every house sold. So, if last year condos went DOWN in price by 2% and houses went UP in price by 5%, you could end up with the overall number being something like down the 0.24% you list ... And irrespective of whatever you think substitution will do in the future, today it can be said that house prices in DC are still up. And that is not disingenuous.Furthermore, while the subsitution effect is there ... it's also important to remember that there are other factors at work ... most particularly the price of the land on which on property sits. As the Fairfax realignment in allocation between land and building shows, the value of land in our area continues to rise exponentially. So while looking forward it's possible that substitution of condos for house could reduce the pressure on house prices because of decreased demand, the increasing relative value of the limited land under the house is putting equal or greater pressure for prices to rise. Would you disagree about the increasing value of land and its bearing on the price of houses (which have far more land devoted to them in relation to sq footage of living space than do condos)?
Funny how "established areas" turned into single family homes in DC, not condos. I propose we exclude all SFHs in the top 25% price bracket because these houses tend to be less volatile than the market as a whole and are thus not representative. How does that sound to you lance?
Leroy said:"I propose we exclude all SFHs in the top 25% price bracket because these houses tend to be less volatile than the market as a whole"Nope ... top price places tend to be MORE volatile because of a relative scarcity of buyers at the highest echelons.Leroy, if you'd really been following what I've had to say over the last couple years you'd see that I've been basically on target. I'd said from the start that it will be the new/transitional areas that would be affected by an end to the boom as well as condos. And that the vast majority of homes out there ... i.e., single family homes in established areas (which probably make up 80% of the whole) would be largely stagnate in value (i.e. stay within 5% of their value.) Further more I'd said that outlying areas would go down 20% to 25% (which might be wrong if what I'm reading on here about the average in outlying areas being 40% ... but the numbers CRT just gave don't bear that out) and I'd said condos would go down around 15% (add more if the condo is in an outlying area such as the 40% down areas.) I've been right on the money. Can you say the same?
Lance a couple of things..."my statement that the numbers being bantered around today are lower than they would be if you didn't include condos in those numbers stands." Granted, but they are also lower than what they would be if you didnt include the flippers, or the garbage loans, or whatever other factor you want. They would aslo be higher if each SFH had a gold bar hidden in the floor. Thing is, the reality of the situation is that youve got to include the condos if you want to be realistic about prices. "What I am pointing out is that a glut of new condos hit the market in the last 2 years. So, rather than having a normal mix of say 1 condo selling for every house sold, it's probably more like 5 condos selling for every house sold."FWIW - here are SFH v Condo sales for the last 7 years in DC. SFH Condo07 3,466 3,95606 3,979 3,77205 4,942 4,23704 5,397 3,742 03 5,207 3,50102 5,105 3,11401 4,619 2,777 There is certainly some skewing lately but it isnt nearly as substantial as the 5 to 1 you are suggesting."there are other factors at work...most particularly the price of the land on which the property sits"AND "Would you disagree about the increasing value of land and its bearing on the price of houses (which have far more land devoted to them in relation to square footage than do condos)?"I will admit, this is a real quandry for me and I dont know the answer. I agree with this statement in general, that the land SHOULD work this way for the SFH vs Condos, but im not sure it works out that way in reality.In fact you could make an argument in reverse. Like you I live in an urban area, I have 2,000 sq ft of land as do most of my neighbors. As part of the urban lifestyle, I like the fact that I dont have to mow, and fertilize and worry about grubs. I think this is a statement that a good percentage of urbanites (not all but a good %) would agree with. Assuming this is correct, you could make the argument that the land itself is almost more of a liability! Thus, if this is true, and assuming no oversupply, the condo owners prices should keep tabs within a range of the SFH because for urbanites, our land ownership is really inconsequential to the urban lifestyle we desire. I made this argument up on the fly and im not totally happy with it so feel free to poke holes in it. Certainly, if I was an appraiser and worried about "highest and best use" absolutely, the land is where the value is. Problem is, buyers dont think this way. So as paradoxically as it seems I cant with confidence say that the value is with the land for the buyers in our market.
"Further more I'd said that outlying areas would go down 20% to 25% (which might be wrong if what I'm reading on here about the average in outlying areas being 40% ... but the numbers CRT just gave don't bear that out)"Here are my numbers from the MRIS reports:Manassas (20110)median sale price 2/2008 vs 2/2007$ 230,000 $ 369,900 - 37.82 % Total Sold Dollar Volume: - 20.12%median sale price 2/2007 vs 2/2006$ 369,900 $ 370,000 - 0.03 % Total Sold Dollar Volume: - 47.72%(DOM increased 150%) Manassas Park (20111)median sale price 2/2008 vs 2/2007$ 212,000 $ 329,990 - 35.76 % median sale price 2/2007 vs 2/2006$ 329,990 $ 370,000 - 10.81 % Total sold dollar volume - 64.75%
AAAA!!! I just clicked on "publish comment" instead of switching back to the MRIS website. 'Scuse me...let me finish this...
"if you'd really been following what I've had to say over the last couple years you'd see that I've been basically on target."Post of the year!Out of curiosity... what did you mean when you said this?"Didn't someone just post a Washington Post article from today showing (a) established neighborhoods in the District have flatlined in price while (b) transitional neighborhoods continue to go up in price by leaps and bounds? Wouldn't it make more sense to buy in one of these transistional neighborhoods now before the prices rise even further? Or is it "bubblesense" to instead wish upon a falling star that prices will suddenly and magically fall even thought that has NEVER happened in US history before? "Bubblesense" ... I like that new word! It's aking to "Bubblespeak" and "Bubble-economics"! "You click your heels, wish upon a star, and all your dreams come true!" Ignorance truly is bliss, isn't it?!" -Lance, June 28, 2006 8:46 AMhttp://tinyurl.com/28hv3zWhile you are explaining... please shed some light on this little gem..."Also, our home-loan lending industry is one of the finest in the world. Having learned from the lack of controls and oversight back in the 20s, in today's controls and oversight see to it that very very few buyers who bought won't have been qualified to carry whatever their payments are capped at. I.e., when people get qualified for their loans, they get qualified using the highest interest rate that the loan can ever go to. For example, even if loan rates are 5% when someone buys and rates in general rise, the increase is capped at something like 10% ... and it is that 10% that the buyers would have been qualified at. And I don't believe for a moment that we have a substantial amount of loans out there where the lender was either fraudulent or just simpley didn't verify application information in accordance with either the law or good business practice. I could go on and on as to why the bubbleheads' chickenlittle beliefs are based on complete misunderstanding of many many things ..." -Lance June 26, 2006 9:17 PM
Now where was I?Bristow (20136)median sale price 2/2008 vs 2/2007$ 333,693 $ 419,950 - 20.54 % Total sold dollar volume: - 16.13 %median sale price 2/2007 vs 2/2006$ 419,950 $ 385,000 9.08 % Total sold dollar volume: - 4.92 %*note January 2008:Total Sold Dollar Volume: $ 10,329,288 $ 20,397,578 - 49.36%Gainesville (20155)median sale price 2/2008 vs 2/2007$ 380,000 $ 429,950 - 11.62 % Total Sold Dollar Volume: $ 8,092,200 $ 22,028,616 - 63.27 % median sale price 2/2007 vs 2/2006$ 429,950 $ 560,000 - 23.22 % Total Sold Dollar Volume: $ 22,028,616 $ 18,343,895 20.09 % I'm just cutting and pasting here, and it's just one month.For all these zips, the ave. sale price vs ave. list price is somewhere between 80-89% this year, vs the low 90s last year.According to the NVAR market summary for Feb., county wide, the ave. sale price is down 29%.For those who want good news, slightly more houses were selling in Feb. this year than last, and DOM has gone down a little bit (150 to 144 for PWC according to NVAR). But sellers are getting a smaller % of their asking price, and I would bet seller's concessions are significant.Does this in any way prove the drops I mentioned earlier?
CRT,I look at the value of land more from the "what's it's highest and most valued use and what's it worth under those circumstances"? ... and not what's its value to the person who happens to own it right now (i.e., you and I).In this case (let's say our 2000 sq ft plots), in an urban setting, the value of the land rises to what it could be worth to a developer putting up a multistory condo building with hundreds of units. That makes our 2000 sq ft plots worth a lot more than what we're doing with them now. Yes, granted that in the short term laws and regs limit the potential use of such land. For example, on my piece of property which is in a historic district a developer could only go up some 50ft ... because of zoning laws ... and would have to incorporate the facade ... because of historic preservation laws. Incorporating my neighbors lots with mine he could put up something mid-size though not gigantic shortterm. Longterm, laws change and things happen ... and a developer will probably someday be able to put up a 40 story tower on my property. Yes .. I mean and hope real long term ... like a couple hundred years out. But the possibility is there and gets factored into the value of the underlying land ... MY use of that land doesn't ...
Leroy"Out of curiosity... what did you mean when you said this?"I don't know since I don't the know the context that was said in. If you want to cut and paste things out of context, I can do that too. It's a lot of fun pulling words out of context and then pasting them into other contexts to make it look like someone said something they never said. Do you by chance work for a politician Leroy?
lance, I would like some proof (point to a thread) that you said outlying areas would go down 20%+, otherwise . . . I call BS.
gte, it's on Bubble Meter. Sorry, I don't know how to search old posts short of doing a google Internet search ... and that's too laborious. If you know how to do it more efficiently, go over to Bubble Meter and read my posts from 2006. (Maybe Leroy can show you how to do it!)
"I don't know since I don't the know the context that was said in. If you want to cut and paste things out of context, I can do that too. It's a lot of fun pulling words out of context and then pasting them into other contexts to make it look like someone said something they never said. Do you by chance work for a politician Leroy?"Lance, I included a link to your statement.Here it is again since you seem to have missed it:http://tinyurl.com/28hv3zAs anyone can see by following the link that is a complete post from you and was not taken out of context in any way. Similarly your statement about the quality of the US lending industry was not somehow taken out of context. Lets not pretend your record is anything but dismal.
Leroy, PWC and Mannassas has been part of the bedroom communities as much as the Woodbridge are has been for over 20 years. It was the place that cheap homes could be found....To be honest there are bright spots. I a friend bought a TH in 2001 in what I think is South Arlington area. He bought at $145K, and is now looking at most still selling in the $400-500K range. But that is not the norm....
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