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Wednesday, October 8, 2008
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16 comments:
From today's Wall Street Journal, DC area prices need to fall another 27% to restore affordability:
http://s.wsj.net/public/resources/images/P1-AN180A_HOUSI_NS_20081007213613.gif
and the related article:
http://online.wsj.com/article/SB122341352084512611.html#project%3D
This correction isn't anywhere near over.
jf,
sounds about right to me. i know i so want that 600K 3/2/1 colonial down the street but it won't make sense to buy until it goes near 400K.
here's hope if/when it does, lenders will be willing to loan me 320K/15YRs again, and at not much higher than 7%.
Wow...somebody bought this property that's been derided seriously.....
http://www.franklymls.com/PW6811727
The WSJ article looks accurate to me. With the increased tax bills and pressure on the budget deficit, should we expect a federal government RIF in 2009 or 2010? Obama has compared himself to Reagan; McCain would be even more likely to push for a RIF.
And what about baby boomers retiring? Won't some people want to sell here and buy in places like Florida? Retirees may need to delay plans and won't want to take a loss, but if the purchase price is even lower...?
Buyers and sellers still think the Washington DC market is protected by its special status because of the stable federal government jobs. With corporate layoffs happening, state and city budgets clamping down and cutting, can the federal government be far behind?
Regarding PW6811727: Somebody paid $380,000 for a trailer? WTFx1000!!
John, don't you go bashing my flip on these boards.
I did a lot of hard work on that place!
;-)
Interesting:
Pending home sales up 7.4 percent in August
October 8, 2008 - 1:30pm
By ALAN ZIBEL
AP Business Writer
WASHINGTON (AP) - Pending home sales rose 7.4 percent from July to August, an unexpected piece of positive news for the battered U.S. housing market.
The National Association of Realtors said Wednesday its seasonally adjusted index of pending sales for existing homes rose to 93.4 from an upwardly revised July reading of 87. The reading was the highest since June 2007.
Home sales are considered pending when the seller has accepted an offer, but the deal has not yet closed. Typically there is a one- to two-month lag before a sale is completed.
Wall Street economists surveyed by Thomson/IFR had predicted the index would fall to 84.9.
The index, which sunk to a record low of 83 in March, stood at 85.8 in August 2007.
Sales are picking up in places that have seen the most severe declines in housing prices _ including California, Florida Nevada and Arizona, plus Rhode Island and the Washington, D.C. area, said Lawrence Yun, the trade group's chief economist. Still, Yun does not expect home prices to rebound until next year and only expects a modest gain of 2 to 3 percent in 2009.
A major unknown is how the worldwide financial crisis and economic slump will affect the housing market.
Despite numerous efforts by the Federal Reserve to encourage banks to lend more, lenders have kept tight reins on mortgage lending, and average rates on 30-year mortgages have remained over 6 percent for most of the year.
The latest effort by the central bank came Wednesday, when the Fed and six other major central banks around the world slashed interest rates Wednesday in an attempt to prevent a mushrooming financial crisis from becoming a global economic meltdown.
The Fed reduced a key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent and the European Central Bank sliced its rate by half a point to 3.75 percent. Also cutting rates were the central banks of China, Canada, Sweden, and Switzerland.
There's no guarantee, though, that mortgage rates will match the Fed's cut.
That's because long-term interest rates, which influence 30-year mortgages, don't always move in sync with the Fed's action, which lowered the interest rate banks charge each other on overnight loans.
However, the Fed action will reduce borrowing costs almost immediately for U.S. bank customers whose home equity and other floating-rate loans are tied to the prime interest rate. Bank of America, Wells Fargo and other banks cut their prime rate by half a point to 4.5 percent after the Fed announcement.
Here's a nice house in Arlington (22207) for 765K:
http://www.fallproperties.com/dynamic_new/asp/detail.asp?l=&p=159&o=1
BTW, a traditional Arlington colonial (with a nice addition) one block away went on the market last month for 985K. It's now under contract.
N. Arlington neighborhoods within walking distance of Metrorail on the Ballston-Rosslyn corridor continue to fare quite well!
You can still flip!!!
1406 Powells Tavern Pl, 20170
Mr Sponaugle takes down $140k in 4 months.
05/28/2008 $525,000 SPONAUGLE TROY J DAKSHANAMURTHY SIVANESAN
01/16/2008 $385,000 COUNTRYWIDE BANK N A SPONAUGLE TROY J
10/24/2007 $640,253 PINEDA LUIS A COUNTRYWIDE BANK N A
12/21/2005 $644,000 GUASP L JEAN PINEDA LUIS A
09/03/2003 $418,000 DILANDRO SUE K GUASP L JEAN
Tom - dont expect the upward sales trend to continue. This report is based on contracts for August. August was a tranquil time in comparison to what we saw in the last month. The recent turmoil is not in any way friendly for housing - anywhere. September sales likely will beat last year based on our August pendings, but dont expect that to continue. Honestly, I wouldnt be surprised if September pendings (which we will be announced friday) are 1/2 of last years tallies.
ON THE OTHER HAND, blacksilver2010, I wouldnt expect to see the govt start to lay off people any time soon. The great depression was perhaps the biggest influx this city has ever seen as the new dealers came and needed places to live.
In that regard, here are the comments of our OL buddy - Nouriel Roubini - advocating for the creation of a new new deal - huge defecit spending and investments in infrastructure - imagine the bureaucracy (and manpower) needed to administer this!
http://finance.yahoo.com/tech-ticker/article/91744/Fire-Paulson-Bernanke-and-Spend-Like-Mad-Advice-for-the-Next-President?tickers=%5EDJI,%5EGSPC,%5EIXIC,DIA,SPY
Short term, I would not be surprised to see some serious disruptions in our housing markets. Long term, as long as the ole gubamint does what the gubamint does, this is probably the best place in the US to ride this thing out.
The hits that people are taking in the stock market are definitely going to impact people's perception of their wealth and thus affect their housing decisions. The only positives are the Govt's tax stimulus, its plan to purchase MBS and thus the minimization of foreclosures. If even with that level of intervention, house prices are at best flat. The freezing up of credit is likely to nullify any such positives, and I see continuing price declines or stagnation over the next year.
Also, given the huge deficits, any increase in Govt role in the financial/real-estate sector may be balanced out by cutbacks in other areas like Defense spending.
John Fontain: I don't know what PW6811727 sold for, but I can tell you for certain it was more than I would have paid.
>Buyers and sellers still think the Washington DC market is protected by its special status because of the stable federal government jobs. With corporate layoffs happening, state and city budgets clamping down and cutting, can the federal government be far behind?<
DC's economy is one of the most diversified in the nation. NOVA's unemployment rate right now is 3.6%; nationally its 6.1 And large numbers of federal workers, especially in intel, don't even turn up in official stats.
I think this is one of the best areas in the country to ride out the storm. And how many administrations have come into town promising to cut some jobs, only to increase them?
" CRT said...
...Honestly, I wouldnt be surprised if September pendings (which we will be announced friday) are 1/2 of last years tallies..."
I don't know what the YOY numbers will be but I actually think the economic turmoil and market uncertainty make more people, both sellers and buyers, willing to deal. obviously sellers are worried declining value and end of selling season, but buyers are worried about declining mortgage availability as well. those who are ready to buy and have loans lined up will want to get things done asap.
MM Said:
I don't know what the YOY numbers will be but I actually think the economic turmoil and market uncertainty make more people, both sellers and buyers, willing to deal.
I would agree with sellers, but if I was renting and was unsure about my or my wife's job strength than the economic turmoil would keep me from buying. Obviously that isn't everyone, for instance those with kids need the stability of school systems, etc., but having no (or little) debt and the flexibility to move have a lot of value in these times.
Personally, I've upped my lease until early 2010. I did the lease/buy calculator with the value of home I'm thinking of buying and even though the home I'm renting is probably worth 225% of what I'm likely to buy, the rent/buy calculator said it would be better to rent even after 30 years! This factored in a 2% appreciation/year for buying. I think this demonstrates that especially at the mid/higher end that renting is still much more affordable.
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