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Wednesday, August 6, 2008
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19 comments:
Check this out...
http://www.virginiamls.com/charts/FallsChurch.htm
http://www.virginiamls.com/charts/Arlington.htm
Arlington inventory down sharply, Falls Church inventory up sharply.
I.E. SUBSTITUTION EFFECT IS TOTAL BS!
People on this forum hypothesized that moving slightly out to save money would drive down prices in closer - wel its NOT happening!
Falls Church is the cheap man's Arlington, yet its inventory climbs while Arlington declines.
BTW Im not saying prices are not dropping in Arlington, just that NOBODY significant who is shopping in Arlington is moving out for more home.
Arlington looks to be down 10% from peak.
Doug, did you not notice that EVERY other city or county -- except Loudoun and FCC--that the site you linked tracks has the same pattern in July as Arlington has? The fact that the larger neighboring communities close to Arl.--Alex City, Fairfax County--as well as all of the outer counties except Loudoun conform to the same downward pattern in July is consistent with a substitution effect.
And, Falls Church City is tiny and has an small inventory of around 60 homes, so chance alone could account for it.
ps just in case some readers aren't aware of it, the majority of homes in "Falls Church" are in Fairfax County, not Falls Church City.
Falls Church City has its own schools and many characteristics, including high home prices, are quite similar to Arlington's.
doug,
That's Falls Church City (60-80 homes) versus Arlington County (~800 homes). Not particularly directly comparable numbers. That Falls Church inventory "sharp increase" of a whopping 20 houses, is not going to impact the 800 some odd in an entire neighboring county....
Thanks for the link to some numbers though!!!
Cara, it's not even that dramatic. FCC has an increase of about 4 homes in inventory July 08 vs. June 08, and an increase of about 10 homes in inventory July 08 vs. July 07, according to the graphs Doug linked.
Ace - you might as well give up on ole Doug and the substition effect. If the hypo of an evil genius saying "move to PWC or I will kill your family via sharks with laser beams" didnt convince him. I dont know what will.
As to the inventory pattern and Loudoun, are you seeing something I am not? As I see it, every county (including Loudoun) is down except FCC and I agree that FCC being up is insignificant due to its tiny sample size. Are you saying you see something different in Loudoun?
I.E. SUBSTITUTION EFFECT IS TOTAL BS!
doug: don't be a narlmbla. By definition, the substitution effect takes time, and to think otherwise is to not understand the effect or to purposely misquote others' positions in order to score internet points.
crt,
Oops-you're right! I must have thought I was clicking on Loudoun when I had clicked on FCC instead.
And you're right about futility :-)!
Falls Church = Cheap Man's Arlington? Hardly. We have our own school system (better than Arlington's) and our own city services for which, oh by the way, we have the privilege of paying the highest property tax in the area.
We're a small community, so the differences are often magnified but we do have a very livable community that I like very much.
Doug,
Falls Church City (22046) is the same market as most of North Arlington (22205, 22207, 22213). Good schools, restaurants, close to Metro, etc. If one is tanking the other will soon fallow.
This one cracks me up: FX6824749
This is a typical 20171 2 story, sort of shabby, listed at $625,000. As a SHORT SALE! The really funny part is that to get there you need to drive past FX6721347, which is the same model, on a corner lot, in better condition, and is not a short sale or REO. And is asking $474,900, and is still not moving.
File this under "unclear on the concept..."
-Jason
Jason,
Which is why REOs make up a huge amount of sales. (this is exurbs, but REOs were 1/2 the sales in Fauquier and 2/3 the sales in Culpeper last month (h/t Piedmont Real Estate Blog)). I see in the declining inventory numbers the unwillingness of 'regular' people to bother listing. I don't think I would if I didn't absolutely have to. It would just go against my human nature not to think better times were coming at some point.
Jason, even before I got the part about FX6721347, I was about to say that that price is crazy, as non-distressed homes that are nicer have been selling in the mid $400s.
I don't have MLS for solds that you can view, but here is an arguably nicer listing for much lower:
http://www.franklymls.com/FX6799616
Here's one for $399k that looks equivalent:
http://www.franklymls.com/FX6747667
And, roughly the same asking price as the bank, you could get this:
http://www.franklymls.com/FX6815598
Harriet said:
"I see in the declining inventory numbers the unwillingness of 'regular' people to bother listing. I don't think I would if I didn't absolutely have to. It would just go against my human nature not to think better times were coming at some point."
I completely agree.
Harriet said...
"I see in the declining inventory numbers the unwillingness of 'regular' people to bother listing. I don't think I would if I didn't absolutely have to. It would just go against my human nature not to think better times were coming at some point."
The only thing that bugs me about this is what is normal amount of inventory (not months of inventory but total inventory).
Take FFX for example.
http://www.virginiamls.com/charts/FairfaxCounty.htm
Right now its just under 7000 houses. Compared to two years ago when it was about at 8500, yes it is down. However when compared to 3 or 4 years ago, (when it was at 2,500 and 2,000 respectively) its still unbelievably high.
Mind you, 3-4 years ago, it was probably too low as that was still the bubble run up days, so I dont expect it to get that low. However the question still remains what is normal for this time of year?
It doesn't matter what "normal" inventory is, even if you could determine it, with adjustments for the variables that affect inventory that may be at unusual levels (or not) right now. What matters is how many potential sellers are currently waiting on the sidelines. Inventory (normal or not) doesn't cause this number; it's partially a function of this number. This is directly measurable though I don't know of anyone who has measured it.
"Ace said...
It doesn't matter what "normal" inventory is, even if you could determine it, with adjustments for the variables that affect inventory that may be at unusual levels (or not) right now. What matters is how many potential sellers are currently waiting on the sidelines. Inventory (normal or not) doesn't cause this number; it's partially a function of this number. This is directly measurable though I don't know of anyone who has measured it."
I was afraid we would go down this road again... I dont necessarily care about sellers "holding out" or "price anchoring" or any of that right now. What I want to know is very simple - what is normal - meaning IF THE BUBBLE NEVER HAPPENED - IF WE HAD A NORMAL MARKET - what would fairfax look like?
Would it be say 3000 in the winter rising to 4500 in the summer? Or perhaps say 2000 in the winter and 5000 in the summer? Or perhaps 1000 in the winter and 1500 in the summer?
If anyone can give me anything (even a guestimate) that has just numbers - nothing about anchoring or wishing prices or any of that - I would be curious to know what people thought.
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