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Tuesday, October 21, 2008
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40 comments:
this baby is back on market...
(if you can, check out the pictures first before you look at the price...)
4/5/1 Colonial 8,516 sf in the heart of N Arl 22207
partial description:
"4 finished lvls w/3 car garage located in convenient Arlington.Large kitchen w/breakfast room,15FT+ family rm,huge master..."
i'll post back later and share with you what i think the problem might be. (yes, tom, i know, it's because it's not within walking distance to the metro and on the ballston-rosslyn corridor)
mm, does your theory include a Merchant's Tire & Auto shop?
Too many bathrooms to clean? No Bosch dishwasher in the second kitchen? Bizarre lack of an island in the main kitchen? ;)
I like the wrought-iron art on the walls, I should get some of those.
It's only 1.7 miles to Ballston Metro, so a nice long walk for those so inclined.
But seriously, the price seems appropriately low given its proximity to strip commercial.
Interesting. I also noticed what appear to be oak cabinets in the kitchen - don't know why any builder wouldn't know that those haven't been au courant for awhile.
The one thing that seems consistent throughout Arlington is that owners are having a lot of trouble selling houses on busy streets, or too near commercial or utility, etc., property. In the boom days, people were settling for these, maybe because they were confident that if they had to sell later, they could. Of course, I believe in the real estate maxim that there is a right price that will sell any house. This particular house seemed to a good price for everything except the location but obviously it's not low enough yet.
ps, I also wondered if it has no back yard, given the way the house seems to be situated on the lot and the lot's size, and the absence of photos of the back yard. A big minus for people shopping for this size of house, since wouldn't most of them have kids and/or pets?
Looks like the specuvestor bought a lot originally facing Buchannan and built a house reoriented to 22nd Road. Therefore, the house (which doesn't fit the style of the neighborhood) has practically no back yard. Why do specuvestors do such stupid things?
I am relatively new to Northern Virginia area. I was looking for a single family home in Herndon, or Reston area.
What zip codes are most desirable in that area?
Vinny, depends on what you "desire". You get the most house for the money in 20170 in herndon, and 20191 in reston. The tightest market where prices have held up pretty well is in 20194 (reston). Traffic can be a bit of a bear at times near the Reston Town Center in 20194, 20190. The best schools are probably 20194 and 20171, unless you can get into the Langley HS pyramid in northern areas of 20170 and 20194.
Is there any concerns of bad neighborhood/ gangs in 20170 area?
Interesting trend on PWC YOY median price declines:
2008
Sep -43.31%
Aug -43.28%
Jul -39.62%
Jun -38.07%
May -33.04%
Apr -29.72%
Mar -29.73%
Feb -27.40%
Jan -25.46%
2007
Dec -16.23%
Nov -16.22%
Oct -13.04%
Sep -8.27%
Aug -2.82%
Jul -8.93%
For starters, notice how the "specific gravity" of price declines has increased MOM (almost) for about a year now.
Anyone want to take a stab at the biggest YOY median price decline that PWC will have?
If I had to guess, I would say this month (-43.31%) is the biggest YOY decline PWC will have. I say this because the declines really started to ramp up in Oct 2007, meaning it gets harder and harder to beat YOY price drops in percentage terms. Thoughts?
I think Prince William County prices have leveled. Any Alt-A mortgages that are to be reset in 2009 or 2010 will not be a factor given the government $700 billion bailout. The NY Fed Reserve website has some good info on distress mortgages.
A.D.
Alt-A loans resetting in 2009 and 2010 won't be an issue because of the bailout? Are you serious? Yes the bailout might keep the interest rates low, but those loans are still intrinsically risky, especially in the current recessionary environment. As Tanta from calculated risk put it, sub-prime loans make sense as a way of charging people for being higher credit risks, Alt-A never made sense because instead of poor credit, these people had fantastic credit, but low assets and no reliable documented income.
Ny Fed has good data? They used to let us see it on a zip-code by zip-code basis, but now it's just by color-coded map with no scale-bar even.
Cara, tell me specifically what the bailout will do for risky loan owners? Can they refinance at lower rates or keep the same rate? Have you read the specifics about the bailout such as the government being involved with fire sales?
By the way, what is your estimate on the typical annual appreciation rate for a home in Kingstowne before the 2001-2006 run up? Is it a 5% increase per year?
Is there any concerns of bad neighborhood/ gangs in 20170 area?
Some people might be concerned with areas in the town of herndon, mostly in the south and western sections. But even the worst sections of town are pretty safe. Check out this mapCrime Map
Anthony,
What? You were the one who said the bailout was going to make ALt-A resets moot. I was calling you on that.
I don't have data on that small of a level, either prior to the run up or during. I just go by the feel of Harriet's monthly "month of sales" posts for the whole county to get a sense of things. And the area as a whole was flat for a very long time in the nineties, then had only 2-3 years of "normal" 2-5% house inflation before shooting up into 10-20% bubble math. It's the long flat period after the last bubble that makes me unconcerned about getting priced out when we do finally reach bottom.
We're obviously having communication problems here...
Cara, you don't need to waste your time with the trolls. You have already been more than kind in your responses.
Anthony:
I randomly grabbed a street (Worsley Way) and went through the tax database, with the last sale I used occuring in 2001 (overlapped the beginning of the bubble).
For all of those repeat sales transactions, the average annualized rate of return was 1.9%.
Low -5%
Q1 0.2%
Q3 3%
High 11%
Cara, I think that it won't be a "factor" since the $700 billion bailout will offer attractive options to those mortgage holders. And I asked you if you know the specifics of the bailout plan? Is that being a "troll" (thanks Dominic) for asking such a question?
Okay, so a 5% price appreciation for a $175,000 home in 1999 would yield about $285,000 today. From what I have seen, most of the townhomes in the 22315 area were around $175,000 back in 1999. That means prices need to come down to their mid-2002 levels.
However, from what I've read the average appreciation for the nation is around 6% for the last 50 years, excluding the 2001-2006 run-up.
Cara, you stated: "It's the long flat period after the last bubble that makes me unconcerned about getting priced out when we do finally reach bottom."
That is so revealing. It shows that your ambition obviously is reflected in the content of your posts. And I am not stating that a $700 billion bailout to bring stability to the housing market may not set so well in that ambitious plan of yours, (or for other ambitious buyers on this blog for that matter).
you've read wrong: According to OFHEO, between 1990 and 2000, national prices increased at an annualized rate of 3.5% (my spreadsheet doesn't have data before 1990).
Anthony, I'm not trying to be a jerk, but don't throw out numbers unless you can cite a source or you have crunched them yourself.
Another point I'd throw out there.
Prior housing downturns were preceeded by an economic downturn. The basic progression being the economy gets rocky, people lose their jobs, bankruptcies and foreclosures follow. Today, we have a housing boom/bust cycle that is leading the downturn.
The fallout from that downturn is a likely recession which will lead to a second wave of distressed homeowners. I fully expect there to be a secondary wave of foreclosures in late 2009 early 2010 depending on how severe this current downturn ends up.
My $0.02
A.D.
What have I read about the bailout? I get my executive summaries from calculated risk.
The 700 billion dollar bailout has very little to do with home-owners. The earlier hope for homeowners (H4H) plan did, but I wouldn't call it attractive. Read Tanta's posts on how Sheila Blair's takeover of IndyMac will effect borrowers (i.e. not at all) despite "aggressively" pursuing modifications.
If townhomes got back to $285k I'd be pretty happy about it. But historically 6%? Who are you reading NAR? Historically homes keep up with inflation, no better, no worse, especially if you factor in the other costs of homeownership.
Ambition???? Right, how greedy of me to want to be able to comfortably afford my own house after finally having years of graduate education for both me and my husband pay off in two above average paying jobs. Ambition. Right. Vulture buyer. Yup, that's me. Equating the choice to be fiscally conservative and financially responsible with ambition and scavenger-like greed. Quite revealing indeed.
(that long-flat period is where the your inflation hypothesis comes in by the way).
NovaWatcher, fair enough and here is my data source:
http://www.ofheo.gov/hpi_city.aspx
I found data for the DC metro area going back to 1976. I calculated 7.08% annual appreciation from 3rd quarter 1976 to quarter 2 of 2008.
I entered on my spreadsheet a 30% drop in quarter 3 and a 10% drop in quarter 4 for 2008. As a result the appreciation drops from 7.08% to 6.66%.
Any opinions on this data?
A.D.
Re: OFHEO HPI
Good starting point. But there are some quibbles/problems with HPI/reasons it differs from Case-Schiller.
The biggest difference with Case-Schiller is that HPI only tracks those houses within the HUD, FHA and conforming loan limits. Thus it excludes the more volatile sub-prime and jumbo categories. The secondary thing is that Case-Schiller tracks same-home sales, like Nova Watcher did for you on that one street, whereas HPI tracks medians or quintiles or something like that.
There's a much more indepth and less mis-remembered analysis of what the OFHEO numbers really mean at CR OFHEO versus Case
AD,
Do you think including the abnormal bubble period from 2003--2006 in your average appreciation rate makes sense? Calculate from 1976 to 2002 and see what it shows.
According to the BLS inflation calculator: http://data.bls.gov/cgi-bin/cpicalc.pl
$100 in 1976 is equivalent to $384.50 in 2008. That's an average annual inflation rate of 4.3%.
So if the 6.66% is taken at face value, homes in the DC area have beat inflation by about 2.3% per year.
My $0.02
"Do you think including the abnormal bubble period from 2003--2006 in your average appreciation rate makes sense? Calculate from 1976 to 2002 and see what it shows."
The sheer size of the bubble is such that the result you get will be heavily influenced by exactly what end point you pick.
2000, 2002, 2004, 2006, 2008... Each will give a significantly different answer. (That alone should be a strong indicator that what was taking place in that period was not typical.)
For Case-Shiller same-home sales for the DC metro area (which starts with 1/1987).
Through 1/2000: 3.4%
Through 1/2008: 5.8%
Through 7/2008: 5.3%
Tedk, notice I factored in a 30% drop in quarter 3 and a 10% drop in quarter 2 for 2008. Yes, I also calculated around a 6% gain for 1976 to 2000. Of course, places like Kingstown (22315) and other Northern Virginia enclaves (i.e., Mclean) with very good schools may be below this 6% average. And I willing to discount that rate to 5.0% as the average appreciation for a home.
NOVAwatcher, please post that Case-Shiller index link. It is not that I don't believe you, but I'd like to see that link to keep it for my own record. That is valuable info.
...or you could just fish through the Fairafax county database and calculate the resales yourself.
AD,
OK, 6% from 1976 to 2000 sounds reasonable. But one should always keep in mind that coming after periods of massive bubbles, the rate of appreciation could be near zero for a decade or more.
One could take different periods and calculate the stock market returns and say the market has on average returned 8%, but for many people, the last 10 years the stock market hasn't even kept pace with inflation. Had they kept their money in money market funds or CDs, they would be ahead now, after the crash.
Take a look at the Dow. It is as if the stock market had grown from 1995 to 2008 at the same slow, steady rate till 1995. The tech bubble and the real estate bubble, and their popping, has been a washout. That kind of reversion makes me very cautious in committing to real estate.
Real estate is not exactly like stocks, but the historical patterns are troublesome. Of course, one can't wait forever. I just think that luck has not been with the people who have to buy in this environment.
Tedk, from my calculations if the market was to finish 35% YTD for 2008, then the average annual return for the S&P 500 (excluding reinvested dividends) would be 7.92% from 1950 to January 2, 2009. The average return is 8.6% from 1950 through 2007. Correct me if I am wrong, but didn't dividends didn't matter much starting in the mid-80's when the focus was on "growth stocks" versus "value stocks".
Including reinvested dividends, the S&P would return 10.76% from 1998 through 2008, if the YTD return for 2008 is -35%.
AD:
"Including reinvested dividends, the S&P would return 10.76% from 1998 through 2008, if the YTD return for 2008 is -35%."
That 10.76% must be the cumulative return over 10 years, right? In that period, the cumulative inflation alone would be much higher.
Anthoney, here is a link to the case-shiller data
http://www2.standardandpoors.com/portal/site/sp/en/us/
From January 87 to July 08 the 10 city composite is up 5.03%/yr and washington dc is up 5.32%/yr. Inflation is 3.22% in the same period. So "real" real estate appreciation is around 2% annually. Considering you pay 1-1.25% annually in taxes and another 1% or so in maintenance, there really is a 0% return. Not paying rent saves you 4-7% annually, but "real" s&p investment return is above 7%, so that is also a wash at best.
Tedk, that is 10.76% annual return from 1998 to 2008, not a cumulative return for 10 years (1998-2008). I don't have inflation data, but I guess inflation would be around 4 to 5.0% a year for the last 10 years.
That is good data Shamrock. Thank you.
AD:
I was simply looking at the S&P chart to date. Without including dividends, it is pretty much zero or negative return over 10 years (Today's S&P = 955 and from the chart it was roughly the same or a little higher by end of 1998?). A 10% annual return would have to mean the dividend alone was 10%... I am wondering if your calculation includes something else or looks at a different time frame.
Tedk, I stand corrected. The average annual return (includes reinvested dividends) for the S&P 500 for 1998 to 2008 is 3.39%. This is based on the assumption that 2008 finishes -35%. I read online that many financial pundits are considering 2000-2010 as the "lost" decade.
novahog:
you've got it. that's my theory. i think it's not just the 'eye-sore' factor, it's also the noise. and they open 7 days a week, from as early as 7am to as late as 9pm. that's a lot of noises to bear.
all in all, location, location, location.
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