Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
My father, a non-bubble watcher, e-mailed this to me last night.I think this might be a contra-indicator: total saturation.But it's still funny.Warning: YouTube link. Audio not necessary, but highly recommended.
Hitler was a flipperhttp://www.youtube.com/watch?v=bNmcf4Y3lGM
On a less comedic note:CPI fell 1% in OctoberDeflation is here. No run-away inflation riding in to the rescue to resuscitate prices to their previous highs. (There never was the necessary price-wage spiral anyway)Yeah, cheap X-mas presents!!
Yeah... deflation. The fed can't be happy to see that. They have done pretty much everything they can do inflate and they don't seem to be having any luck.
Like others here, I am amazed at the resiliency of NoVa housing prices, and how the banks have been sitting on some of their properties. But anyone else notice what is happening on the stock market with Citi and other financials? Seems that Treasury Secretary Paulson's declaration he's not going to buy toxic assets with TARP money is resulting in people dumping the dodgy paper they are sitting on, and capitulating. Will the banks and others holding property now give up as well? I think so, because they all realize they now need cash soonest. So when will this become evident in the housing market? I think we will see within weeks as even close-in houses in Arlington and other still highly-priced areas suffer. There are 6,000 mostly local jobs changing hands Jan. 20. That is a lot of property coming on the market, and some new demand as well. The shakeout we have been waiting for may be at hand. But, having expected that before, I am curious to see how much of a downward pressure this will amount to. I'm laying bets on 20 percent.
Arlington home prices drop 20 percent in the coming months?Define "coming months", and the amount you are willing to wager.
As of right now, there are 80 foreclosed homes in Arlington, 29 of them are under contract. So 51 foreclosed homes available out of 870 homes on the market. The number of available homes has been slowly dropping. So I doubt these banks will suddenly need to firesale these homes in Arlington.Even if they did dump them at some crazy low price, thats such a small number of homes I doubt it would drop the prices by more than 5-10%.
xxxDefine "coming months", and the amount you are willing to wager.xxx24, $10
It is hard to talk about Arlington as a single area. 22201 and 22207 are very different from 22202 and 22204. Those zips will not have the same price changes. But -20% for all of Arlington county starting from November 2008 to November 2010? How do you figure that? Pull yourself away from the abyss! Does anyone know anything about this Turnberry Tower development?http://franklymls.com/AR6581607Looks like they believe they can increase price at the top end of the market.
I would like to hear some details on how the NOVA area fared during severe recessions in the past, including the Great Depression.Because we have waited 3 years to buy our first home, I have some family pressure to buy during this winter.We are seeing some good price cuts starting in the last week.The problem is that in the spring season prices may not be cut much, as we have seen over the last 2 years. So, waiting would mean renting at least till next winter, which will be frustrating to us.But I am torn because I think this crisis is not going to end anytime soon, serious price drops may come only later as the recession becomes severe. So prices have to continue to drop. But what about the possibility of much tighter mortgages with higher rates?What does everyone here think about buying now?Thanks for your thoughts.
tedk,we're in the same boat. and i don't see any big drops in N Arl with the way the inventory is shaping up. my approach is when we can't put it of any more we buy where our budget takes us, and be happy with the decision.
blacksilver, 22202 is more like 22201 and 22203, than it is like 22204. Check out the prices and demographics, if you doubt it. The presence of metro stops is probably a big factor.
TedK,A relative of mine spent the Great Depression in a government job here in NoVA, and he said it was like nothing happened.I don't have any predictions here, of course. We based our decision mainly on the costs of renting vs. buying, and because renting was difficult. There are better prices (in some cases) now than even two months ago when our lease was up, because of winter.Interest rates are looking pretty good at present.
quite a few contracts in 22207 in the last week or so -- i counted about 10, including four 1.4 MM+ homes. on top of that we're seeing some listing price increases, i think we're definitely in for a surprise for Nov sales.
tedk: I was once told the only housing recession Washington has ever seen came in 1950-51, as the World War II boom ended. This area was regarded as being pretty recession proof, and for the 45 years I have lived here, it has been that way.On the other hand, I think the current prices are way out of line with reality. I cannot understsand how people bought some of these properties at the prices they paid, with any expectation that there would be another sucker to buy it from them at the same price later.But my instincts have been proven wrong. In Arlington, we have not seen the price declines I expected to see. Indeed, construction continues here, as I find when I drive around the county. I am sure there will be some pain. The government payroll is not going to grow under the new regime, simply because there's no money for it. Some of the businesses that thrive on the payroll, are already reporting declining business, and there are a whole host of non-government businesses that have located here that are in trouble. You can read their financials if they are publicly financed.Harriet found happiness in Gainesville after waiting for a while, and I see others who are still buying. I would not worry about mortgage money, because there is plenty of that. After this recession ends, I would think there will be a sharp increase in mortgage rates, and some inflation. But for the next few months, we are going to be preoccupied with the prospect of deflation, and that seems clear to drive mortgage rates down.If you like the area, find something affordable, and are happy with the price, then move on it. If you think your job is not secure, or you haven't found something you really want, then wait six months and see what it looks like next summer.
Ace: do you know the average sales price for these last four zips in last few months? Quick inspection in terms of the properties going under contract show that 22202 is at a disadvantage to 22201 to 22207 - but i'd be happy to be proven wrong. I agree with you the difference with 22204 is bigger.
Edward Allen - re: giving up on the TARP, I agree that this very well could cause banks to dump more inventory (to the extent they have it), however, I think the last place you will see that phenonemnon is in Arlington.Arlington had very few foreclosures to begin with - and they seem to sell as fast as they show up. Also, the one market I would NOT be supressing inventory is Arlington - especially as others noted - sales (in relation to inventory) have been pretty robust since the bubble burst...TED K - regarding this area and the depression. Here are a few blurbs from "A guide to historic Alexandria" By William Carlyle 1994 (ISBN 0-90754-190-2):"Were it not for the Great Depression, there might not be an Old Town today. The first administration of Franklin D. Roosevelt brought tens of thousands of new federal employees to Washington. Newcomers in need of housing learned they could buy a house in long forgotten Alexandria for very low price - patch it up - wall in the back yard like a New Orleans garden, and have a comfortable living situation. Others took notice of the need for housing, and looked to Old Town for business investment. In the words of Sarah Hooff 'We's buy a house for $300, clean it up and paint it and sell it for $400'. Congressman Franklin Korell of Oregon, looking for housing in the Washington area, purchased six or seven area homes, restored them, and sold them for a profit. Towards the end of the decade, many area homes were selling for well over a thousand dollars." Such is the perversity of this city. Certainly, Alexandria is not cheap, and I absolutely do not see home prices increasing anywhere as a result of any new government projects. However, if the Great Depression is any guide, the more the govt tries to step in and fix the problem, the more likely those efforts are to prop up the local economy.
edward: did you miss 1992-1998? Prices for houses in the metro area were flat and even declining in some cases.
Ted K - im in the same boat as you -- getting itchy to buy. My own analysis is that prices are indeed cheaper duing the winter months than the warmer months meaning im likely to pull the trigger this winter as well.If your concern is "serious price drops" why not look in the areas that have alread had them? PWC may not be your cup of tea, but the huge glut of foreclosures in Loudoun might yeild some good deals.
Ted K,I feel your pain. From your other comments I gather you're looking in the Arlington/Fairfax City?? area? We've only been on the sidelines trying to buy for a year, I can only begin to imagine what 3 years feels like. Where we're looking I am starting to see some really reasonable deals, prices are down to within 10-15% of rental parity on a cash-flow basis in year 1, even including all the extra expenses of owning. And prices are just now cropping up at the level of what my husband and I said we'd pay for such places. Like there's a new Essex House unit listed for $225k, that we said this spring after going to an open house, mmm, wouldn't pay more than $210k for that. That's getting pretty darn close. If that's what's happening where you're looking? I'd say jump right in!! We're not just because we just signed a new lease and moved in September.If not, run all the numbers, all the scenarios. Use the ginnae mae rent versus own and affordability calculators, try the one at irvine housing blog. And then see, at your various price points is there something worth buying, that you would be happy in? Given deflation in the CPI, interest rates are not going up anytime soon. No worries on that front for at least a year or two. But waiting is painful. If buying makes sense on a cash-flow basis in year one, how much will it really hurt you if prices go down 15% from here to the bottom? I think that's about the most one can expect in the regions you're looking at. If it makes sense on a cash-flow basis, you should still be able to continue to save for the eventuality of having to bring money to the table to sell. And hey, if you work with Frankly on the purchase they'll now list your house for free if you end up losing money on the re-sale within 5 years. So that's a 3% cushion on the normal cost of selling a home.
MM, Harriet, Edward, Crt, The Anon, Cara,Thanks for all your suggestions. I am looking strictly within a few school districts in FFX. Not looking at ARL.Loudoun is too far for me.Because of some family issues, I prefer to stay within about 5 mile radius of my office. These are established neighborhoods and most of the stock within the $500K range is split levels without a basement, which we don't like. 3-level Colonials in decent condition are just beginning to get listed at just above $500K (used to be listed at $650K and above just a year ago, but that was just a wishing price). That makes it possible for me to think about making offers, but the thought of a financial tsunami worries me because making a large financial commitment in that environment may not be good.My broker just quoted a rate of 5.75% for a 30 year fixed mortgage.By the way, though the conforming loan limits have been increased to $727K for this area, many banks still like to make the best offer to those who stay within the old $417K loan limit.
Ted,That's interesting that banks are sticking to the old limit like that. It makes sense in retrospect, given that at some point in the future these houses will need to be sold, and the limits will come back down, so if you want to make sure there will be a future buyer keep it traditionally conforming now.$500k is a significant financial commitment. (Do you have the 20% down to keep the loan conforming i.e. under $417? Having to put 20% down, and not having the option to go the 3.5% route and still get the good rate puts you at a difficult price point, keep in mind that other buyers at your price are having this same hesitation, which could mean that the slide from 500 to $429.9 could be a lot faster than the first $150 knock off)Our $250-275k price point leaves much less room for worries. But in any case my advice would be that you want houses that you like to be at the price you need for at least 3-6 months before taking the leap to buy one. Last spring there existed the occasional TH in Franconia Springfield that we could have bought, but the ones coming online now at that same price point are so much nicer and more numerous that now is just a much "happier" time to buy in terms of finding something we really like, as opposed to something we could make work. If the houses you like are just now coming into your target price range, I would say you don't have that much longer to wait. Of course I also think this spring will be a blood bath when the wishful thinking prices still haven't gotten any offers by April or May.
Cara,I worked in other places (Maryland, Canada) for a few years before moving to my current job about 4 years ago, so I can afford to make 20% down on a home up to $500K, but that doesn't mean I will buy just anything that becomes affordable. The value has to make sense. Also, in a severe financial crisis, we want to conserve as much cash as possible. $500K is just an upper limit, but the offers I make will be less than that. If certain conditions are not met, I am prepared to wait.
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