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Next Monday, October sales will be out at MRIS.
Thursday, November 6, 2008
Northern Virginia Bits Bucket 11/6/08
Posted by Harriet at 1:24 PM
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I haven't seen a lot of sales action here in the exurbs, although I know people who are looking to buy -- it seems like there are still quite a number of bank-owneds that can be picked up for much lower prices than what's listed as they're just not moving. It seems like with winter coming banks might want to think about getting more aggressive about lowering prices. The competition to buy seems to have lessened now. (I'm looking forward to the October sales for confirmation of these observations).
Somewhat unrelated, but I thought I'd share this gas-price anecdote: I received a flyer in the mail about a month ago from our bank's credit card department telling me I could get $20 worth of free gas from Chevron or Texaco if I filled up the tank 3 times at those establishments and paid $50 each time. I think the most I've ever been able to put in my vehicle is about 19 gallons, and that's if I'm willing to really drive on empty (which I'm not). So that works out to about $2.63 a gallon. But prices have fallen further than that, so the bank sent out a new flyer, changing the amount to $40 for each fillup in order to qualify for the $20. Now I would have to put in 19 gallons at $2.11 per gallon. The latest price I saw here in the D.C. exurbs was $2.09, and now oil prices are near $60 a barrel, so I wonder when we break $2.00. It's going to be difficult to meet the $40 fillup requirement, so I'll probably pass on that one (or else bring our lawn mower along).
Harriet-
Why don't you tell us all about your recent experiance purchasing a home. ( that is, only if you are comfortable doing so!)
Did you find it hard to get financing, as is being reported?
Any other issues / ordeals in the process?
Thanks from those of us still holding off for Winter pricing :)
hear hear! to realistic pricing.
In Franconia Springfield it's still the exception, not the rule, so still wishful thinking for banks to universally adopt it, but we can hope, and someday it should change.
Forecast 2009
"Home prices in the nations 10 biggest metro areas are projected to keep falling in 2009, with Miami and Los Angeles suffering most."
Miami: -18.8%
Los Angeles: -17.2%
Next on the list...
DC: -17.1%
I know these are just projections and i don't read too much into them...most of the "experts" haven't exactly been right the last few years. Still, DC is expected to be one of the worst performers next year.
Not sure i agree with the advise for sellers to wait until 2010 to sell. Doesn't seem logical if prices are expected to keep falling in 2009???
I like the author's jab at Yun...
"Lawrence Yun, chief economist of the perpetually optimistic National Association of Realtors, says he expects prices to rise 2.8% in 2009."
"Harriet said...
The competition to buy seems to have lessened now. (I'm looking forward to the October sales for confirmation of these observations)."
I am too, especially after I heard these early whisper numbers...
"Here's some information about the most expensive home sales in Northern Virginia (Arlington County, Alexandria City, Fairfax City, Fairfax County, and Falls Church City) for October 2008. All information was obtained through MRIS.
Overall, there were 53 sales topping $1 million during the month of October 2008 (10 more than in September 2008). It appears that despite the financial crisis, there are still plenty of people in the D.C. metropolitan area with money to purchase their dream homes."
http://activerain.com/blogs/bablock
This guy has a history of being a bit bullish in his figures, so I am skeptical until MRIS comes out.
Regarding your comment on gas. Now that the apparent oil bubble has burst and the prices are cratering, I am curious to see what (if anything this does to exurban locales). For all those stories about people moving closer due to high gas prices, I remained somewhat skeptical because there was simply too much low hanging fruit (i.e. more fuel efficient cars) to write off the exurbs as commuter havens.
Some say, the damage has been done, and that now that consumers have seen how bad fuel prices could get in the future, they will think twice before buying in the exurbs. There may be something to this, however, if we are truly in a deflationary period, gas prices may remain down for years to come. It will be interesting to watch.
""Lawrence Yun, chief economist of the perpetually optimistic National Association of Realtors, says he expects prices to rise 2.8% in 2009.""
It is nice to see the press waking up a little bit. They could have said something quite a bit stronger than that without coming close to the truth.
"Overall, there were 53 sales topping $1 million during the month of October 2008 (10 more than in September 2008). It appears that despite the financial crisis, there are still plenty of people in the D.C. metropolitan area with money to purchase their dream homes."
The whole way this is phrased makes me question it... this guy is a realtor I assume?
The sales that closed in Oct generally went under contract in Aug and Sept, before the latest financial crisis.
The fact that people are buying doesn't necessarily mean they have the money for it. This is the same sort of thing lance and the other real estate pumpers used to say... "Look at how rich this area is! It has to be with people buying houses this expensive!"
We will see the data soon enough.
"For all those stories about people moving closer due to high gas prices, I remained somewhat skeptical because there was simply too much low hanging fruit (i.e. more fuel efficient cars) to write off the exurbs as commuter havens."
Gas prices never came close to explaining high prices in close, at least not logically. Like you said there are lots of ways to save a ton of money on gasoline that are far easier and cheaper than paying twice as much for a house.
The question I have is how it affects buyer psychology. Just because we can do the math doesn't mean they are actually doing the math when buying.
I hope the recent price shock was enough to encourage people to buy more efficient cars if only for the environmental benefits. If gas prices stay lower moving forward(as it appears they will) I expect any upward pressure they has been putting on housing prices in close will fade quickly.
Leroy said...
"The whole way this is phrased makes me question it... this guy is a realtor I assume?"
Yes you have to look past the shilling, but they sometimes give you a sneak peak at the upcoming MRIS report.
"The sales that closed in Oct generally went under contract in Aug and Sept, before the latest financial crisis."
I agree, thus, I think we are one month too early to tell if buyers are hesitating (as I assumed they might). More interesting will be contracts & contingents written in the month of October.
"The fact that people are buying doesn't necessarily mean they have the money for it. This is the same sort of thing lance and the other real estate pumpers used to say... "Look at how rich this area is! It has to be with people buying houses this expensive!"
Here im not so sure. The amount of Alt A or minimal doc loans being written now is pretty much zero. Low down payment is still there, but it is with documentation of income. Presumably the bank thinks these people can afford it. This is not 2006.
"If gas prices stay lower moving forward(as it appears they will) I expect any upward pressure they has been putting on housing prices in close will fade quickly."
I think they would need to stay down for a while, a good year or so. Many people dont pay attention to macro economic forces, and assume "they might go back up again" which would affect their decisionmaking.
Still though, Im not so sure I agreed with the premise in the first place, if this was "the issue" I would think most buyers would swap out cars long before they would swap out house locations.
The one area it could have made a real difference was renters. They have far more flexibility in living situations, and very well could have been moving closer (in respectable numbers) such that they were propping up rents. So perhaps with lower gas prices this could change pretty quickly, and affect cap rates in close in areas.
I view the gas price/commuting expense as a "straw that breaks the camel's back" issue. Even if you allow for some emotionality trumping a rational calculation, a few hundred $ of gas a month is less than thousands for buying closer in. But it isn't the only factor, obviously. If you are already factoring in
--the lost time commuting;
--the unpredictability of the commute (one accident can back up traffic for hours);
--the likelihood that things will get worse, not better, as states don't cooperate or have the money for more Metro or other traffic management improvements; and
--the belief that a family needs a bigger vehicle than a Prius, etc.,
high gas prices, or uncertainty about about whether they will return during the time one owns the house may be just enough to push the decision in a different direction. (And there are of course many other non-transportation factors that influence this, such as whether you like the management of the county you're contemplating, the lifestyle offered by the area (restaurants, schools, libraries, parks, neighbors, etc.), the size of the house and yard, the style of the houses, etc.).
So I do think gas prices figure in, but they obviously aren't the major factor.
Likewise, if you can't afford gas, you certainly can't afford to buy closer in.
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