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Saturday, October 18, 2008
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35 comments:
Thanks. Interesting to see how well Arlington County is doing.
n. bruce, as shown in other info posted here, Arlington sales have been near the decade low for the same month, for some time. In other counties, prices have dropped more and sales are way up. So whether Arlington is doing "well" depends on your definition. I wouldn't say it's doing "well" when so many homes are sitting on the market unsold, with small or no price drops - discouraging would-be buyers from buying and other would-be sellers from selling (who may be one and the same in many cases - e.g., the move-up buyer who wants to sell but can't find a reasonably priced house to buy).
That chart appears to show median prices in Mont Co and Howard Co are holding up just as well as in Arlington. But the experience of people on the ground with actual prices is that there has been a significant decline. The median, in an environment of significantly fewer homes being sold, may be skewed toward higher priced homes.
HI
Haven't been around much, but while driving through Fairfax county today - there aren't as many for sale signs as before.
You might have seen a bunch - but now it is a few.
Supply is down hard since August?
Can anyone confirm?
I'm renting in N. Arlington in 22207. I've noticed there aren't many homes for sale within walking distance of Ballston Metro, and those that do sell seem to get top dollar. One of those was on my street last month and another on the next block about two months ago. VERY expensive sales prices.
Don't know about other areas of Arlington -- just my neck of the woods.
Bas,
Yes, supply is down seasonally as well as YOY. Fairfax County graph from Virginia MLS.
Actives/solds haven't changed much just in the last month. Year over year, it's a different story, though. Here's the list of September sales.
http://www.housingtracker.net/askingprices/DC/Washington-Arlington-Alexandria/
See the above link. It shows the
median price is $324,500 as of
October 13, 2008. It peaked around
$481,000 in May 2006. That is about a 33% drop from the peak. I think the median household income in the area is around $105,000 for Fairfax County. See:
http://www.cleveland.com/datacentral/index.ssf/2008/08/county_household_income_washin.html
anthony darmiento: Have you seen what $324,500 buys you in Fairfax?
To put it another way: the data is very skewed by condos. If your idea of a SFH is an apartment (condo), then maybe those numbers seem like a good deal. To me, a SFH is ideally a detached home, or at worst, a townhouse.
I'm still seeing too many places like this:
FX6836835
and this
FX6829637
That's why I use the 75% number as a better measure of SFH in Fairfax Co.
NovaWatcher, the problem is that a single family home is really not the median in Fairfax County. It definitely is not the median choice for the median family that wants to live in Fairfax County. Look at the dominance of townhomes in Fairfax County, and block out the condos. If the median family (earns $105,000) wants a single family home that costs no more than 3 times their income, then they can travel further south or west to Prince William County as well as Loudon.
novawatcher
Those are pretty large houses, even if they do need work. In Franconia Springfield the little 1940's-1950's houses are tanking worse than the townhouses. I don't mind a townhouse, I'd just like for some of the reasonable sized ones to come down under $300k. Right now many that I might like to consider next year are still upwards of $450k.
To me, a SFH = 4br, yard, trees, 2 car garage. And the places I listed are laughable at their listed prices.
A lot of the misconceptions are that a townhome near a metro stop should priced as the same as a townhome far away from a metro stop. Just like emotion ruled during the 2002 to 2006 run-up, now emotion is ruling during the run-down. A typical 3 bed/2 bath townhome in Franconia/Kingstowne is selling around $315,000 (includes help for closing cost$). That price is close to 3 times median income. What do you all reasonably expect, the ratio of price to income for a townhome to drop to 2.5? Is that mean prices will drop to 2002 levels?
We have friends who bought in late 2003 and pay a total of $2000 per month for their 3 bedroom/2.5 bath townhome; they have offers to rent it for around $1800. Perhaps those that can't sell should rent their units.
a.d.
the median household income in Kingstowne is not 100k, it's closer to 70k, making 210k = 3x income, not 315k.
That said, there are indeed some reasonable 3/2's at 300-315k, which is why we're even considering buying next year. There are still a lot of them with WTF prices though, even ones that are not walking distance to the metro.
What do I expect? Nothing, the market will do as it pleases, as will I. What am I willing to buy for, is the question. If we can't afford to weather a brief job loss, start a family, and still find a property that we'd be happy in for 5-10 years minimum, then we're not going to buy, we'll keep saving money by renting, and saving our savings for emergencies not locking it up in a down-payment. This means that whatever we get has to be affordable on 1 of our 2 incomes, (at the 3.5 times level), and we recognize that this means our housing will be modest relative to our incomes, and that's fine. But I'm not going to bother to buy a 1200 sq foot townhouse with 3 bedrooms crammed into 2 stories with no basement or possibility for expansion.(Although a lot of those are listed at $250k or less)
And my general impression is that until discerning conservative buyers like me are attracted back into the market, price declines will continue. Buying has to become attractive again, not merely feasible.
Since recurring costs (PITI + HOA, etc.) should, at most, be 90% of rent, that means that your friends should be paying $1620, not $2000. Sound like your friends overpaid in 2003.
When I bought in 2002 I overpaid. I knew something was wrong when my monthly payment was equivalent to rent (there were a few rentals down the street), as owning had been cheaper than renting everyplace I had lived up to that point. I hadn't really thought out *why* it should be that way, I just knew that something was fishy. It probably helped that I had almost moved here in 2000, and so I saw first hand how prices had shot up during that short time (almost caused me to break my contract and not move here). But nonetheless, I didn't have a formal reason as to why owning should be cheaper than renting.
Hey Ace,
You are off on your facts. Inventory is dropping in Arlington.
http://www.virginiamls.com/charts/Arlington.htm
Hey, Doug,
No, you're wrong.
(a) where did you find the word "inventory" in my post in this thread?
(b) Check out Harriet's decade of sales, which is completely consistent with what I said.
Yes you are wrong - you said
"I wouldn't say it's doing "well" when so many homes are sitting on the market unsold, with small or no price drops "
Which is an idiotic thing to say when homes are selling well, inventory is dropping, and prices are not declining much.
Sorry but the facts are against your silly theory. The decade of sales chart showed similar levels of sales and DOM to 2006.
Out there in Loudoun and PWC things are not doing well, price drops and foreclosures everywhere.
Those problems are not affecting Arlington, so to say those counties are doing well and Arlington is not - well only a tool would say that!
Doug, maybe if I typed more slowly, it would be easier for you to understand? There is nothing inaccurate in anything I said.
There is nothing inconsistent between what I said and the fact that inventory is lower than at the same point a year ago. In fact, I pointed out that there are people who are on the sidelines waiting for prices to drop further, which would be entirely consistent with lower inventory.
Rather than commenting on stuff that you have misread, misunderstood, and/or misinterpreted, you might want to check out not only the Decade of Sales data for each of the counties Harriet includes, but also all of the Arlington listings in franklymls. You will see many, particularly at higher price points, that have been on the market for a long, long time.
How the second lowest sales out of the past 10 years constitutes "selling well" escapes me. But you will note that, in my post, I didn't call people idiots or tools if they used different definitions than I did for "doing well."
I'll leave any future comments to people who speak more fluent "dougian" than I do.
"Which is an idiotic thing to say when homes are selling well"
You don't really need to read past this line in his post. Anyone delusional enough to think homes are "selling well" in Arlington right now is well beyond reason.
It is like when lance tries to claim that 90% of the area is stagnant or climbing. You just have to accept that you are dealing with either a liar or some kind of mental case. Neither is worth arguing with.
Cara, you are wrong about the median household income being $70,000 in 2008. The census bureau's fact finder site states the median income was around $78,000 back in 2000! I think based on a 3.5% annual increase in salaries that it is around $102,000! I think you need to adjust your housing expectations here in Washington DC. Perhaps you can find the home at the price you desire further out in Fredericksburg or Manassas.
Novawatcher, good point on housing prices increasing in 2002. But I am trying to factor in variables within the Northern Virginia market such as the source of government-related jobs, distance from a metro stop or the beltway, as well as this $700 billion bailout coupled with the Fed lowering interest rates.
Do a search and you should be able to find a post months ago looking at interest rates (30yr fixed) vs. incomes going back to 1998. To cut to the chase, with all of those things accounted for, houses are still overpriced (except perhaps Manassas).
A.D.
Anything more recent and yet as reliable? A quick google search yields anything from $48k to $98k for Kingstowne. I was initially basing mine off of Hotpads.com, which 6 months ago said the median was 68k in Franconia Springfield, but now they have it under 48k, so they're obviously not to be trusted.
The best I can get is the American Community Survey (2007) but I can only get median income on a county-wide basis (Fairfax County 105,241). Which given that includes everything, doesn't seem very likely, Alexandria City is at
80,806, which I would think would be closer, but obviously just a proxy. American Community Survey, county level median income
And I can rent, thank you very much, and continue to save money hand over fist, and if I just wait another 6-7 years, buy a house outright. In the meantime having financial security, flexibility and earning, not paying, interest. See? There are many options. Pick your own.
cara: This lists $76k for Kingstowne (22315) in 2004:
http://www.city-data.com/zips/22315.html
http://factfinder.census.gov/home/saff/main.html?_lang=en
The above website shows that for zip code 22315, the median family income was $86,890 back in 1999. And Fairfax County estimated the median income to be around $105,000 for 2008. If income rose 2% a year since 1999, that means it increased from $86,890 to $103,841 for zip code 22315. Anybody disagree with the Census Bureau data for zip code 22315 (Franconia) or against the assumption that income rises 2% a year? I can provide that Washington Post article that recently stated income has risen 4% a year in this area, mostly due to government contractor bonuses.
Cara, did you state you want to save in 7 years to buy an house outright? So you want to save $250,000 in 7 years? Does that mean you all will direct one of your two incomes to just savings?
Assuming that the AGI is correct (it may not be), it could be that income dropped in the area.
On the other hand, if this chart is a reflection of the quality of census data, then something doesn't pass the smell test (I let you figure out what stinks):
http://www.fairfaxcounty.gov/demogrph/gendemo.htm#inc
Anthony,
Essentially that's what we've already been doing for the last 4 years. My salary pays for all our expenses, my husband's pays for extra's like dinners out and vacations (and moving expenses when we moved to NoVa from MD for the shorter commute), but otherwise goes entirely to savings (after taxes).
The difference between this and taking on a huge mortgage is that, if life happens, and we can't save that much on any given month, no ill consequences occur. Thus, while we're totally willing to put over 65% of our take home towards rent and savings, we'd be unwilling to put even 40% of our combined take-home to a mortgage.
Admittedly, if we were to save up $350k, (outside of retirement savings which are separate) I doubt I'd be willing to put it all in a house. I'd probably want to start our own business or something...
I'm both risk-adverse and loathe paying interest, so this is a "reasonable" strategy for us. We'll probably do something in between, like put 20-40% down and get a 15 year mortgage on our first house (which is kind of crazy) or get the 30 year loan and treat it like our personal version of pay-option (i.e. pay it at the 15 year rate).
I haven't re-run the numbers recently for current interest rates on savings and loans and rents, but last time I checked the optimal amount of time to be saving for a down-payment for our parameters was about 6 years. Although if there are good places that I want to buy, at a price we can afford, then we, like everyone else, will buy anyway.
anthony,
As regards the census data, there's a couple other zip codes also in easy walking distance to Springfield Franconia station. And I wouldn't trust that with that tiny sample of one zip code that just applying 2% or whatever inflation would accurately represent incomes over 8 years.
So yeah, there's a lot of fudge factors with median income for such a small area, and median price versus median income whether that should be a factor of 2.5 to 3.0... Lots of places to choose to fudge.
The real point for me is that if Kingstowne residents really make so much money, shouldn't that mean we also enjoy a higher standard of living, not a lesser one?? I mean, a greater chunk of our incomes is going to taxes, if we still have to pay the same fraction to obtain just "acceptable" townhouses, rather than SFH with yards, what's the point of making more money? I think "we" need to shift our pride from the cost of our houses, to the quality of our houses, and demand more for our hard-earned money. On the way up the market has us competing for lesser and lesser quality homes, on the way down is the time to force the market to give us more and more house for our dollars.
Cara, you wrote: "The real point for me is that if Kingstowne residents really make so much money, shouldn't that mean we also enjoy a higher standard of living, not a lesser one??"
I don't want to sound like an elitist but if you want to pay less in taxes (for the best public schools) than move to another county. Also, how many people own townhomes and SFH in Kingstowne that do not have at least a bachelors degree? how many are Kingstowne households with both spouses working make only a combined $100,000? LOCATION LOCATION LOCATION
Exactly NOVAwatcher, I agree with your assessment with
http://www.fairfaxcounty.gov/demogrph/gendemo.htm#inc
I wonder how many mid-level civil servants (i.e., GS-13's and GS-14's) and government contractors live in Fairfax County. I think some folks have this impression that a large townhome or a small SFH should be within reach to the plumbers (i.e., $50,000 per year) and admin assistants. Kingstowne isn't one of those areas, but I think south Alexandria near Fort Belvoir is. But I know folks here don't want to mention the upcoming addition to Fort Belvoir in 2 years due to BRAC. That would mean real estate prices may go up. And that causes some pain to folks to envision that prices won't hover at 2.5 times income.
A.D.
By taxes, I meant income taxes, you know those federal and state things they charge you that in most states are progressive, i.e. a larger percentage for those who make more. Can't escape those.
Kingstowne is also a community with a huge percentage of young families. Hence a chunk of people's earnings needs to be reserved for expenses related to kids, and therefore is not available for the mortgage. Arlington, by contrast is more geared towards high-school and college age children, with parents who being further along in their careers, are also making more, and may have money from their first-house to roll-over.
Lots of factors come in to play in determining housing prices for an area. You're refrain of get out if you can't stand the heat, is just a different take on the usual "buy now or be priced out forever", "they're not making any more land", and "drive until you qualify". Those were memes, propagated by the real-estate-industrial-complex, that played upon people's real fears. They weren't neccesarily good advice in the bull market, and they're totally out of touch with reality now.
I also find it odd that we're having this fight at all, given that very early on I pointed out that the existence of townhomes in the $315k range was reason enough for us to seriously entertain looking for a place next year. To be more specific there are half a dozen properties on the market right now that if we hadn't just signed another 1 year lease (and suffered through moving) we'd be seriously considering. It's just the huge overhang of WTF pricing, and the jumps in price based on tiny gradations of properties that irks me. As a buyer it "feels" like there's nothing in between the $200k dated tiny garden condo, and the $450k 3-storey garage townhome with granite-pergo-steel. That's not true of course, and we will find something, but there's a lot of price discovery has yet to occur.
Valid points Cara. But you'll have the same problem with state tax if you go to the other side of the Potomac. Plus Fairfax County taxes are reasonable considering the quality of services, and especially the school system.
I have seen 3 bedroom/2 bath townhomes priced around $325,000 nearby 22315/Kingstowne. 90% of that is $292,200. Perhaps prices are coming down to reality. Let's see what the 30 year mortgage rate looks like in the next 4 months.
Anthony Darmiento said...
"I wonder how many mid-level civil servants (i.e., GS-13's and GS-14's) and government contractors live in Fairfax County."
Or even more so in N. Arlington. I'm a GS-15 civil servant (currently bumping up against the salary cap, grrr!). I don't know of any other civil servants in our neighborhood in 22207. Half the homeowners seem to be lawyers. Some are retirees who have lived here for decades. The remainder are in various businesses, including many business owners. This demographic/income mix seems pretty typical in N. Arlington.
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