I have a "freeze warning" in my inbox from "EmergencyEmail.org", so perhaps it's likewise still early to make judgments on the spring real estate market.
But Calculated Risk is calling the spring market for the bears, summing up with "Another year, another lost selling season".
I looked over Bubble Meter's thorough compliation of March MRIS numbers, and found his highlights intriguing. Prince William County stands out as the only county with an increase in the number of units sold over last year, and that's by a whopping 20% more. The county also shows the biggest year-over-year decline in the median sales price -- 30%. It seems that buyers are definitely on the move there for the right price; even so, they have a lot of inventory (11 months) to work through. But it's a start.
Tuesday, April 15, 2008
Is the Spring Market Over?
Posted by Harriet at 10:17 PM
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If you put aside the idiotic Realtor puffery, there are some interesting and positive Arlington numbers here in terms of absorption:
http://tinyurl.com/5nu4v3
Re Manassas: Dead cat bounce
Harriet: with regard to Prince William County, I agree that a 30 percent decline from previous levels seems to be the number at which existing housing becomes affordable with a traditional mortgage. But a friend of mine recently asked me, "You've been saying that housing is overpriced by 30 percent, and this house is 30 percent down, so does that mean I can buy it safely?"
My answer was of course no, for reason that are hopefully obvious (at least to most of the people here). But this spate of sales in PWC begs a number of interesting questions: Will prices there continue to drop over the next year? Are people so hungry to own that they will simply buy as soon as something becomes "affordable," regardless of whether they're exposing themselves to another 20 percent drop? And if they are buying, does that mean that prices will stabilize in PWC? And if *that* happens, can that stabilize prices in the surrounding areas? (With regard to that last, perhaps most important, question, I would say no, as we're still in a situation where a first time buyer would have to come to the table with $100K for a downpayment, which limits the number of entry level buyers, which prevents existing owners from selling and moving up, etc....)
Gruntled,
Prices will continue to drop on 11 months of inventory in PWC.
The median is a very rough statistic. It doesn't really reflect what's going on with individual house prices or what you get for your money. It just shows about what most buyers are spending in any given month.
I don't think it a complete coincidence, though, that PWC beat the region in % gain in sales with the largest drop in the median price (as rough as it is). But only time will tell! :-)
Thanks for the mention. I agree that it seems that Prince William County (PWC) is the county where prices have fallen the most in the Washington area. The plummeting prices in PWC is indeed driving the increase in sales YoY.
That being said they still have a 11 months supply of housing units for sale. Prices will continue to fall there.
Also, it should be noted that some of the prices that available there for foreclosed homes are inline with the historical rent to buy ratio for prices.
Even if I was interested in buying in PWC, I would be very hesitant to buy now as prices will almost certainly fall significantly more As, there is high inventory, record gas prices, crackdown on illegal immigrants.
Yes, dead cat bounce & a few knife catchers driving this Spring market.
And yes, it's over & done for 2008- especially for the resale Market
The Builder market is OK this Spring, with price reductions, "free" or 50% off Options, we'll-buy-your-old-house programs et al...
Just a quick note on the math: if a place is 30% overpriced, then the price would need to decrease by 23%.
If a place has dropped 30%, then it's previous price was 43% higher.
Likewise, if a place is 50% overpriced, its value needs to drop by 1/3rd. 100% overpriced needs a drop of 50%, etc.
Those darned fractions...
[deleted and edited for those darned spelling errors]
Yeah, I think because that's happening so far out is good news for recovery. A 20% increase in sales in PWC may lead to increased, hopefully rational, exhuberance in Fairfax and Loudoun and we should see a generalized leveling out.
Any thoughts as to what the sinking house prices will do to consumable/retail prices like McDonald's or Starbucks?
Generalized leveling out? If anything, what you are seeing are hedonistic adjustments, e..g "Why should I buy a place in Fairfax or Loudoun when it now costs half as much in PW?"
Guess what that does to FFX and Loudoun prices?
Hint: the answer is not "leveling out"
If PWC keeps up their illegal immigrant crackdown, it might be a good place to buy/live in 1-2 years. Cheap, good rule of law, the only downside is the traffic, but if you can take VRE it has the potential to be a nice place to live.
Anyone know what became of that newly built house for sale on Kirkwood Rd in Arlington (was reduced from $1.6m to $1.0m in attempt to draw bids by 4/13)? As best I can tell, it has been withdrawn from the MLS (ie, not under contract or for still for sale). Anyone know anything?
I believe they are trying to rent it out for nearly $6k per month (AR6647818). Good luck . . .
1606 Kirkwood? Seems to have changed from Long and Foster to Remax/Champions.
Stealh: I slug. I love it. HOT lanes are an abomination. If they pass and actually get implemented, expect prices in PWC to get slashed again. Hard.
The Spring Market might be over.
No, I'm not turning BH but here are some updates from 22305. MLS, through the McEnearney portal shows 77 units for sale. This is up 10% from recent counts.
One place strikes me as attractive and well priced. 401 TENNESSEE AVE, a 2/1 SFH, is listed at $639K. Nice looking, good neighborhood, larger than most lots. This is not a screaming deal.
Another interesting unit but not a screaming deal either is 20 AUBURN CT #20A, a 1/1 garden apartment. It's a short sale and the asking is $169K. If I were in the market for a 1/1, I'd offer $150K. Even at that discount, it's real money.
Both places are slightly lower than I've seen in the last year or so. This might say that the Spring Market is Over.
Harriet, would you please start the Northern Virginia Bits Bucket for today(4/16)? I would like to share something that's off topic. Thanks.
spunky - can you point me to any builders in the area currently offering "buy our house and we'll buy yours" programs? I've been trying to find them but haven't had any luck...
I think a lot of the sales in PWC, at least in Manassas were on the cheaper end before the boom like townhomes and small SFHs that were assessed at one point crazily at figures approaching 400k, that are now going between $130-200k.
There are a lot of decent homes selling in the 300-400k range currently in Manassas, but I agree with those who say those are still overpriced.
I've started the bid process on a home and intend to place bids 15-20% below the 2008 assessments and/or sales listings as I feel almost certain properties will drop close to that amount in this area before they level off. I'd rather not get caught in the backdraft. The thing is convincing sellers and/or banks of that logic. I think you'd have to be a sucker to buy at anything close to a (reasonable) list unless you're a fan of instant losses.
I'm also guessing that homes in Manassas will not fall below their 2002 assessments, as I don't see the land devaluing much below where it is now personally.
I'm also have a feeling that once the level off happens, lenders will start freeing up more money for buyers....but the interest rates will increase over time, perhaps 2-3 full points.
Danny-
WCI was offering it once upon a time.
I think Builders do this "quietly", when you are actually sitting down with their Sales People...not usually advertised.
I actually had a Builder offer to pay off my 6 Months rent that I have remailing on my lease (if I bought one of their Spec's that is!)
There are several Realtors that advertise buying your home if they can't sell it.
Basically they make you start off with a pretty low price, then keep cutting the price by 10K every 2 weeks that it doesn't sell....until it does sell, if ever.
Gee, a low price to move a house, what a novel idea!! :)
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