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Friday, August 22, 2008
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21 comments:
can you spell 'inventory'?
I know just a couple days ago I was so concerned that the listings in my price range has dropped from 21 to 19 in a couple of days. but check this out - so far in Aug, in 22207 zipcode, homes between $580K and $800K, I'm seeing 50% more listings (15) than the entire month of July (10)!!! And there're 10 more days to go before Aug ends! (courtesy of franlymls.com)
I know it's raw data and doesn't include sold properties, and they're out of my price range anyway, but I'm excited! The No Arl Aug figure could be telling! Let's hope the inventory goes nowhere but up from now on.
Ok - I called you tax-delinquint Arlingtonians deadbeats a couple days ago - but I guess you were just all conserving your wealth .....
www.nbc4.com/money/17242839/detail.html
(I just heard about this in the radio this morning)
Also - here's the original biz journals article. rankings are in a box on the right.
www.bizjournals.com/edit_special/69.html
Sorry you'll have to cut and paste URL into browsers - I cut the http:// to make the rest of url into message.
"How to avoid celebrity real estate blunders"
http://tinyurl.com/5apr47
mm,
Watch this closely. If you follow July trends in nicer areas such as 22207 since 2005, you'll see the following pattern: (1) 2005 -- very hot, with high sales and super low inventory; (2) 2006 -- much slower sales with much higher inventory; (3) 2007- slightly higher sales with slightly lower inventory; and (4) 2008 - very low sales and lower inventory. Prices are down 5-10%, but that only applies to the consummated sales, which are much lower than in 2005. There's a bid/ask disparity, also known as a "stare down."
What does one make of this? The lower sales reflect that demand at current asking prices has diminished. The lower inventory reflects that owners are less inclined to sell in a slowing market. Owners are anchored to peak prices, which they psychologically deem as "their money," and they won't capitulate to lower demand unless circumstances so require (i.e., distress) or other sales clearly reflect that the market has changed. If you read the comments here or at BubbleMeter, you will come across assertions that the nice areas are immune to price corrections. It will likely take foreclosures and/or job losses to put significant price declines into effect in the nice areas. Big law firms are now hurting (see link), and delinquencies on Alt-A and prime are rising rapidly. We shall see . . . .
http://www.law.com/jsp/article.jsp?id=1202423942132
To quote from the study:
"The study also said Arlington’s housing market and unemployment rates remain stable, despite a sagging economy and downturns in other real estate markets.
The county has the lowest unemployment rate in Virginia, 2.6 percent in July 2008 compared to a national unemployment rate of 5.7 percent, according to the Virginia Employment Commission.
Prices in the residential real estate market are holding steady as of July 2008, according to Metropolitan Regional Information Systems Inc., the area's multiple-listing service."
So, MM and Terminator, run along now to bed and try to calm down. Prices in N. Arlington are doing just fine!
Tom,
Why are sales at 10+ year lows? That should concern you, and I'm certain that it does; otherwise, you wouldn't be here. Bid/ask disparities are not the sign of a healthy market. In terms of jobs, etc., I see nothing, absolutely nothing, to indicate that our local job market will do anything but deteriorate over the next 2 years. Our financial system is taking enormous losses, consumers are cutting back, and credit is tightening. We won't be immune.
Terminator X
I see nothing, absolutely nothing, to indicate that our local job market will do anything but deteriorate over the next 2 years."
Our market has deteriorated significantly - it went from being super fast job growth down to much much more moderate growth:
http://www.houston.org/blackfenders/10AW001.pdf
The reason I think, its still "holding up" is that the jobs are still gaining. I think its no surprise that LA, with the huge job loss they are experiencing is now seeing big hits in their high end market.
So the question in my mind is will the jobs picture go from a net positive to a net negative. If it does, I think you will see a another round of price drops, this time starting at the core, and working its way out. Again, we shall see.
Arlington overall is healthy economically,
that doesn't mean that the north arlington
housing market is healthy.
over 50% of the housing units sold in arlington
in 2005 were Whacky mortgages.
That meant that the fundamental price was not
set by 3X household income but by what DTI
could be qualled at and half these were liar loans.
Compare medina income to median price, that's
the end of the game.
"Pat said
over 50% of the housing units sold in arlington in 2005 were Whacky mortgages.
That meant that the fundamental price was not set by 3X household income but by what DTI could be qualled at and half these were liar loans"
Pat - Just so you know we have discussed this issue as it relates to Arlington for some time. It turns out that in Arlington there are (as of January) only about 1300 adjustable liar loans left in the entire County. Of these 400 have reset, and the remaining 900 will reset at a rate of between 100-200 a year for the next several years.
It also turns out that there are 2-3 times as many of these junk loans in Fairfax county and beyond. No doubt part of the reason Arlington has not fallen as much as its farther out counterparts.
Note, it very well could be that there were far more of these loans in Arlington at one point. However, these loans overwhelmingly went to flippers and it looks like the flippers (who were not that pervasive in Arlington to begin with), got out of the market back in middle to late 2006. Thus, many of those loans were ejected from the powder keg well before it was lit.
It is thus that I have a tendency to agree with Terminator X and The Anon who are focusing on issues like jobs to determine Arlingtons fate. If job loss becomes pervasive in this area, look for inventory to rise (perhaps as MM is seeing) and given how pathetic sales are these days, prices will have to follow suit.
A couple of notes:
Pat: I'm not one of those that is on the 'Arlington is Special(tm) bandwagon", but comparing median incomes to medians prices isn't foolproof. I'd be more comfortable comparing the 90th percentile before and after -- in other words, seeing how the 90th percentile has risen relative to SFH prices over the past decade. Why? Well, there are more apartments than SFHs, and in all likelihood a median income household will be renting. It's always possible that the median income stagnated while the 90th percentile skyrocketed. Or not.
CRT: If you are going to compare the number of funny loans in Arlington vs. Fairfax, you really need to compare the rates rather than counts, since Fairfax is probably bigger. I think someone (maybe you?) has done that, and Fairfax still looks worse than Arlington. Having said that, I think it would be interesting to compare (norm) by the number of new mortgages.
For example, it could very well be that the FM:SFH (FM = funny mortgage) ratio is lower in Arlington than in Fairfax, but that could because Arlington has more older houses that are paid off. But, if the FM:NM (NM = new mortgage) ratio is high -- in otherwords a large percentage of homes bought in Arlington were with funny mortgages -- then that would suggest that Arlington's SFH prices were not driven by fundamentally higher incomes.
Not that I really care about Arlington one whit, as I never plan to live there, but it does provide an interesting intellectual exercise.
Novawatcher - a few comments and responses:
"but comparing median incomes to medians prices isn't foolproof. I'd be more comfortable comparing the 90th percentile before and after -- in other words, seeing how the 90th percentile has risen relative to SFH prices over the past decade."
I agree - Arl & Alex are both difficult comparisons because they are both majority renters. I think its like 60% rental market, 40% owners market (outer counties are 80% owner occupied by contrast) - and yes the median owners income is probably different than the median renters income.
"CRT: If you are going to compare the number of funny loans in Arlington vs. Fairfax, you really need to compare the rates rather than counts, since Fairfax is probably bigger. I think someone (maybe you?) has done that, and Fairfax still looks worse than Arlington."
I should have been clearer I was speaking in terms of percentages - As you suggested, close in about 3% of homeowners financed with junk farther out it was around 6-7%
"it could very well be that the FM:SFH (FM = funny mortgage) ratio is lower in Arlington than in Fairfax, but that could because Arlington has more older houses that are paid off. But, if the FM:NM (NM = new mortgage) ratio is high -- in otherwords a large percentage of homes bought in Arlington were with funny mortgages -- then that would suggest that Arlington's SFH prices were not driven by fundamentally higher incomes."
Thats an execllent question - I think a little better (or perhaps starker) comparison would be Arl vs Lou as has FFX a pretty old housing stock too. Still - its a great question - I wonder if anyone has looked into that?
"Not that I really care about Arlington one whit, as I never plan to live there, but it does provide an interesting intellectual exercise."
Im kinda in the same boat. As much as I discuss Arlington, I personally dont like it all that much (im preferential to my homebase OT Alexandria). It still facinates me that the close in areas have acted the way they have and I am really interested in figuring out the why behind it. Then again, while I am still way up (never ATMed the place) and dont plan to sell for another 10-15 years - full disclosure dictates
that my interest isnt purely academic :)
8/23/08 5:17 PM
In 2005, Arl. had:
41476 owner-occupied housing units
42657 renter-occupied housing units
http://tinyurl.com/4m45gr
So it's more like 49.3% vs. 50.7% than 40% vs. 60%.
Also, in some discussions people seem to dichotomize into own a single family home vs. rent an apartment. But a lot of people in Arl. and Alexandria own condos (i.e., they neither rent nor own SFHs). I am not sure you are treating owned townhouses - to some people they are not SFHs, to others they are "attached" SFHs. Also, there are people who rent SFHs.
ace: you bring up a good point: one thing that gets mixed-up in the mix of owner occupied is condos vs fee-simple and attach vs. detach. Most townhouses are fee-simple, but some are condos. And some, like mine are rented (actually, it's part of a complex of rented townhouses owned by the same company). I'm not sure where I'm going with this, just that I wish the stats were broken down by attach vs. detach, and maybe townhouse vs. apartment-style condos.
"Terminator," I'm on vacation and just checking in occasionally. No, I don't browse this website because I'm "concerned" that sales are at "10-year lows" or something. I just like real estate (always have), own a SFH in N. Arlington, and have always made money from real estate in the past (and all of it, I might add, in N. Arlington). Since others have made mincemeat of your assertions, I won't heap on, and will simply say good night!
Tom,
Thanks for letting me know why sales have declined. Oh, wait.
And I haven't seen any of the "mincemeat" to which you refer. Could you point me in the right direction? After you're done with vacation, of course.
"I just like real estate (always have), own a SFH in N. Arlington, and have always made money from real estate in the past (and all of it, I might add, in N. Arlington)."
So lets break this down... you own a house in N. Arlington... therefor you have always "made money" on real estate, and it has always been in N. Arlington...
Don't try to make it sound like you are some savvy investor because you bought a house back before the bubble.
Your various "it's different here" theories are carbon copies of those used by every clueless real estate pumper that made fools of themselves on this message board and others. (You would have a lot of company if you were saying the same thing two years ago... before the pumpers all chose to disappear when they realized they were wrong.)
We get it, real estate throughout the region shot up 100% or more for no good reason in just a few years... everywhere else it was a bubble, but in a small part of a tiny county(that you just happen to live in) those prices were completely justified and can't possibly obey the same laws of economics that govern the movement of the rest of the region/country/world...
Leroy, please, please calm down.
I've owned real estate in N. Arlington since 1987. Bought and sold several properties between now and then, all in N. Arlington, all within walking distance of Metrorail in the Rosslyn-Ballston corrdior. Some condos, some townhouses. Personally lived in all of them. Built up equity and profit steadily through all these transactions until I could afford a nice SFH.
So my N. Arlington real estate experience spans a much longer timeframe than just the last couple of years.
That experience gives me a perspective that some others on this site lack, IMO.
Now it's off to the beach!
Hmmm, I didn't live here then, but friends who did told me there was almost no appreciation in real estate value in Fairfax Co. (particularly, McLean) and Arlington Co., as well as other areas in the region, in the 90s. From what I've seen of the online assessments, that appears to be true. However, someone who paid much more than the minimum on his/her mortgage each month could certainly get cash at closing even though s/he doesn't makes only a small (or no) profit (net sales price after selling costs, less adjusted basis).
oops, that last line should have read "even though s/he makes only" - sorry.
Leroy @ 2:40 AM,
Thanks. I can't believe this discussion endures. The "it's-different-here" or "it's-different-this-time" mentality is the root cause of asset bubbles. Tom still can't explain why sales volumes are below 1998 levels, despite all the growth in Arlington over the past 10 years. If it's so great, why aren't people buying?
I am in no way predicting a 40-50% drop in the close-in areas, but the immunophiles display a smugness that isn't warranted, given the MRIS data that Harriet posts here every month. I own in "trendy" 22301 (Alex City - Del Ray), and I'm expecting another 10-15% haircut over the next 2 years, which may be a bit worse if the job market really tanks. No smugness here.
”Tom said...
I've owned real estate in N. Arlington since 1987.”
I forget, was 1987 pre-bubble?
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