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Saturday, March 8, 2008
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21 comments:
It seemed that since the last month or two of 2007 until the "Spring selling season" saw asking prices in the area I'm looking at (West Springfield) remain relatively high. The did come down from peak bubble prices, but $675k to $450-$575k still isn't affordable. One house, bank owned, was (is) advertised at $375k, which was on par with only one other house in the Orange Hunt area. All the others are asking for $400k+. Anyone know much about that area? Schools? Build quality? How's the HOA?
Arlington sales numbers in more detail
http://tinyurl.com/29mbet
I am shocked, shocked to report a significant uptick from the January numbers across the board, and under-7-months absorption in all categories. But of course, Arlington prices are in the middle of heading down to 2003 levels, says Neil and Harriet...
fd,
Not once have I ever said or implied "Arlington prices are in the middle of heading down to 2003 levels". I hope you are making an honest mistake and not just stating falsehoods. I'm here to examine the market, not to make specific predictions down to the very year.
And as for the report you linked to, compare a possible (and I haven't seen the MRIS data yet) 136 properties sold and "under 7-months" absorption to the following:
Arlington County
Year, Sold, Inventory, Ratio, Price
2007 205 723 3.53 $470,000
2006 175 753 4.30 $515,000
2005 199 211 1.06 $450,000
2004 211 201 0.95 $345,000
2003 228 281 1.23 $299,500
2002 194 237 1.22 $287,450
2001 187 272 1.45 $239,500
2000 125 345 2.76 $199,900
1999 155 605 3.90 $176,000
1998 145 N/A N/A $182,500
136 sold is the least number of properties sold in February since Y2K, when the months of inventory was closer to 2.8 months and not "under 7-months".
This agent also writes: "More contracts for single family homes were ratified in February than in any single month since last July. That’s big!"
Not really. She needs to prove that "that's big" by showing prior year February sales compared to their prior summer, autumn, and winter monthly sales (typically slow months).
Of *course* there's a February uptick from January. I expected it, if you didn't.
Daily Tabitha update:
As a family, we liked the house after taking our closest look yet. Strategic question: should we lower our offer to compensate for the fact that the seller changed it to an "as-is" sale in their counter? Especially after we learned today that the neighbor's underground gutters are pointed at the basement, which therefore gets wet in heavy rain? (Otherwise, it appears to be a well-maintained home.)
Fair enough, it might have been others and not you.
Folks can't say the sky is falling based on terrible January numbers on the one hand, and then discount improved February numbers (relative to January and historical Januarys) on the other. Well, they can, it is just intellectual dishonesty.
Tabitha,
Can you reply with the MLS # of the listing?
Thanks and good luck,
FD,
I've been pretty vocal about the fact that I think that N. Arlington prices will fall. I continue to have that opinion. Just because you have an uptick in the sales numbers for one month doesn't mean that inventory and prices won't go down. I attribute the recent sales to the ultra-low mortgage rates and people buying in because (in my opinion erroneously) they think they're getting a great deal. It will happen, it will just take time.
FD, Zmonet, Harriet, today's Post has yet another article about the real estate mess. This one is about flop-houses.
In the reader's comments, I found a post that I could have written.
I offer it up,
"I need to point out the obvious in your tale of pity.
You bought in Manassas Park. You bought in an area significantly less expensive than surrounding areas; in addition, you bought in an area with a bad reputation.
When you bought your house for a "great" price, you based that price on what you were paying/getting compared to other options for sale. Heck, if your house is 5 years old, you may have a beatiful house with granite and huge bathrooms and sky lights and all sorts of goodies.
But it is still in Manassas Park.
You bought someplace no one really wants to live. I am sure you have a really nice house; a house that would cost 2 to 3 times as much in close in Fairfax County. Guess what? You get what you pay for.
When you decided that all those goodies in a new home were worth living in the middle of bumble-crud in a place with a bad reputation, that was your decision, and a bad one.
You know all those houses you laughed at in Fairfax and Alexandria that were "old" with small bathrooms and no closets?? Well, I own one of those and am still way ahead of the game. The equity in my house in over 300K; granted, about 2 years ago it was over 400K, but I am still 300K ahead.
Sorry, but people used to laugh at me when I didn't want to move out (WAY out) to get more "house" for less money. Glad I stayed.
I am sorry for you becuase you do sound like a "nice guy", but if something is less expensive, there is a reason. And if something sounds too good to be true, usually it is."
Interesting?
The above comment was in reply to this one:
"Welcome to my town except for enforcement has nothing to do with it here. My town of Manassas Park is a sanctuary city for illegals and we are in the same boat here. The simple fact is that the construction is wayyy down and there are very few jobs for them with the current state of the US economy. Enforcement has nothing to do with it. The illegals are leaving in droves because there is simply no more opportunity here for them because of their huge numbers and the US economy in the toilet. My town welcomes them with open arms and every day I see a neighbor who rents rooms to them lose another roommate. My townhome neighborhood is falling into a buzsaw of sales and foreclosures now that have decimated my home value and has prevented me from moving out. Now I am upside-down on my home with no way out of a 5 year old neighborhood that will be section 8 housing by this time next year if nothing changes. At that point I will have to walk away. Any guess who the banks will come after when I do that? Nice guys finish last folks. Remember that."
How bad is it?
There was a report last week that 8.8 million homeowners are upside down.
Can that be?
No one is questioning whether the #1 law of real estate still applies: location, location, location. But for North Arlingtoners to think they will be immune from the housing downturn, well, that is just wishful thinking. However, since I would guess that the vast majority of people bought their homes in N. Arlington some time ago, or sold homes with considerable equity to be able to purchase a home in N. Arlington relatively recently, they will only see a paper loss. My preceding comment about "it will happen" was made because it sounds to me like some people are saying, "Look, N. Arlington is rebounding" before the storm is over (some would say it is just beginning). The prices in N. Arlington will probably be "stickier" than other areas, but, again, they will come down from their historic highs.
I've made it well known that my wife and I have sold our townhouse in Alexandria and are renting because we want to preserve our equity. Drastic? Maybe. But we figure we have nothing to lose by taking our equity out now, moving to the area where we want to buy (in Maryland by the water), renting to see if we like it and want to make that commitment, and then purchasing when the market has turned a bit. We signed a 1 year lease and basically have an option for a second year.
http://tinyurl.com/2tpfd3
Read this article. I'm certainly one of many pointing out that things are going to get worse before they get better.
The JPMorgan report included a revised bleaker forecast for subprime-related home prices. The bank now sees prices falling 30 percent, from its prior 25 percent forecast. Those prices have declined 14 percent since mid-2006, JPMorgan said.
fd,
January was something of a statistical anomaly. I think Neil pointed that out.
I think the February numbers show clearly that the trend is still down (as in fewer sales on higher inventory). I always prefer to compare YOY numbers.
kh,
Yes, in 1999 our real estate agent warned us away from buying in Manassas Park. He only noted the industrial park too close to the houses we were considering.
I think, though, that the same could be said for parts of Sterling and Falls Church and perhaps South Arlington (to a lesser extent, of course). There are 'spots' of places that just tend to not keep up. But the poster was right about the immigrant population moving away in PWC with the slowing building economy.
Tabitha,
The basement concerns me. I would personally run away from a wet basement, unless the inspector is *sure* it's the landscaping. In that case, it could be expensive to repair. If it's a structural problem, it might be beyond expensive. I would even consider consulting a wet-basement company, (realizing that they are looking to make money). In our first house, the inspector missed the wet basement problem completely, and it leaked badly a few weeks after we moved in. We ended up paying $5,000 to a waterproofing company who jackhammered the cement all around the interior and installed a pipe. It was unpleasant having all the cement dust around the house. But it *did* solve the problem and we finished the nice and dry basement.
But in another experience, the house (a rental) was brand-spanking new and leaked badly. The water appeared to be coming in from cracks in the foundation. We felt sorry for the owner. The builder, I think, eventually gave up trying to fix it, but we moved before we heard a final resolution.
Steve--shot you an email, thanks!
Harriet--thanks so much for the detailed basement info. The seller was home again this time, much to our discomfort, but the wife did go into great detail about certain things around the house. The basement is finished except for one utility room at the back corner of the house, and one side of that room has a step-down concrete floor, and she said that is where the water problem was located, because the neighbor's underground gutter was pointed right at it. She said they went to the HOA to complain, to no avail. But she said it only happened twice in the eight years they have lived there, both after sustained heavy rains. I guess she could be fudging, but that she told us in the first place was impressive. She also pointed out a toilet with low water pressure, a crack in the corian counters, and some other little quirky things. She also showed us their maintenance records for everything. She seems to be a very, um, particular homeowner. A real shame about the situation...
The inspection company we are using is run by a personal friend, so we trust them completely. Now that we have this information, we will be sure to focus on it.
We kept our title/settlement company, but as a split settlement, so they get theirs, we get ours. We agreed to the "as-is" change, but rather than sign off on their written-in clause, we signed the standard NVAR addendum, which defines and dates it. And we had our agent communicate in writing our readiness to void the contract if the home inspection turns up any major repairs, since we crafted the offer before we knew it was "as-is."
Now the wait begins, I guess. We just hope and pray that we've done our homework, and if this is a bad idea, divine intervention saves us from ourselves.
(By the way, the discussion on the Post's website was quite interesting. Manassas, Manassas Park, Woodbridge, Herndon...they are all paying the price for immigrant economics...)
"But we figure we have nothing to lose by taking our equity out now, moving to the area where we want to buy (in Maryland by the water)"
March 2008 - This real estate mess has not played out quite as anyone expected.
The disaster out beyond the beltway is worse that I thought it would be.
Small, old places, close in, are holding value according to the assessments but Alexandria, Arlington, and Fairfax were nabbed playing games with their assessments.
The sales in my zip code, which I watch very closely, suggest that prices already have or are about to fall 5% to 10%.
Even falling 20% ($100K on a small house like mine), I would stay put and just keep on living.
If you're living where you want to live, then the market doesn't matter. Enjoy the water.
KH said: If you're living where you want to live, then the market doesn't matter. Enjoy the water.
The market wasn't the only catalyst for our move, it was a combination of the market and the fact that we knew we wanted to move to Maryland. Don't get me wrong, we love Northern Virginia, but my wife and I work in an area of DC that makes living in Maryland the much more practical thing. I don't think my wife can handle much more of the commute on 395 into the Mixing Bowl as the traffic has gotten horrendous. Prince Georges County was out for us and Anne Arundel makes more sense. Anyway, we knew we were going to move out of our townhome in the next 2 years, so with the downturn it seems/seemed like the smart move to lock in our equity now. Only time will tell...
The 50% haircut is here already in large scale. I went to the foreclosure auction of homes in DC yesterday expecting much less by way of bargains. On the printed menu a figure was given for "previous value"
which were indeed with some investigation the market for these places a couple of years ago. (not necessarily the last offered price)
In general the homes sold in auction at 50% less. The homes in some areas were even less than half. Notably SFH prices were quite low! The exception was with the higher priced homes which went for about 20% less than bubble prices. The future is here and I know that said prices will accompany my low ball offers on properties offered on outside markets. OK granted, I didn't buy the house I wanted and feel saddened this morning at loosing it. The almost move-in ready place in Sterling sold for $230K including the 5% fee, was in a nice area and had 2 fireplaces and a 2 car garage, and a gourmet kitchen as well as other attractive features. The best bargains are yet to come and I saw the future and it is affordable!
KH, what did you mean when you said,
"Small, old places, close in, are holding value according to the assessments but Alexandria, Arlington, and Fairfax were nabbed playing games with their assessments"?
I'd be interested in the details.
Thanks!
Thanks for the heads up on your insights on the auction, DCAUCTION. Thought about chasing a couple; but I heard that the banks would be there trying to get current market value for the units.
Sounds like it was a bit different from other REDC auctions mentioned on the some other sites and blogs.
Does sound that waiting things out may lead to some better deals.
Ace,
Yeah, scroll down Harriet's blog to the Expensive Dirt section.
That's the stunt that Fairfax is pulling. Arlington and Alexandria did the same thing but not as overt.
Alexandria shifted about $50K from my house to the land and raised my total "valuation" by $10K.
I checked on neighbors places and their assessments did the same thing. $50K, $100K, or more moved from one column to the other.
Did my place actually go up $10K or is the city gaming the assessments?
This change confuses the issue and makes it harder to appeal.
One neighbor did a high-end kitchen and bathroom upgrade, the assessment on their house went down $40K. Their land went up enough that their overall assessment is up $20K.
kh asked:
"Did my place actually go up $10K or is the city gaming the assessments?"
I think this more properly just reflects the fact that individually, assessments have little relation to reality. As a whole, their rise or fall reflects trends for a neighborhood or a city/county, but individually they are almost purely the product of politics.
What you've experienced this year are the assessment people changing their method of assessment to better capture the importance of the quickly rising value of land in this area. Since the total value is determined first, what's left for the building valuation is what is left over after deducting the newly more-accurately reflected rising land value.
"Since the total value is determined first, what's left for the building valuation is what is left over after deducting the newly more-accurately reflected rising land value."
Maybe.
I was surprised that my neighbor did that high-end bathroom and kitchen upgrade and saw the building part of their assessment fall about $40K.
Other neighbors have told me that the city has not updated their assessments to reflect major additions to their homes.
Go figure.
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