Fairfax County Goes House Shopping

"While other communities are addressing the housing crisis primarily with counseling and such financial help as utility payment assistance, Fairfax is plunging deeper into the issue by agreeing to spend more than $10 million of local tax dollars toward the purchase of as many as 200 foreclosed homes. The county will purchase 10 homes outright; the rest will be purchased directly by qualifying buyers with the help of government-backed, low-interest loans. Buyers will be eligible for subsidized mortgages as well as low-interest second trusts of up to $70,000. Most of the assistance will be directed to first-time buyers earning up $75,600, or 80 percent of the area median income. Most purchases will be limited to $385,000 and will exclude condominiums".

There are 16 reader comments so far at the Washington Post's website, and all of them are negative about this new program.

Poll Results

Here are the final results of a recent blog poll.

If house prices were the same, where would you choose to buy a primary residence?

Votes: 358

Fairfax County: 105 (29%)
Arlington: 100 (27%)
Alexandria: 37 (10%)
DC: 31 (8%)
Loudoun County: 30 (8%)
Falls Church: 25 (6%)
Prince William County: 12 (3%)
Fauquier County: 7 (1%)
Further Out: 7 (1%)
Stafford County: 4 (1%)

Northern Virginia Bits Bucket 6/30/2008

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Northern Virginia Weekend Bits Bucket 6/28-6/29, 2008

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Northern Virginia Bits Bucket 6/27/2008

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Northern Virginia Bits Bucket 6/26/2008

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Northern Virginia Bits Bucket 6/25/2008

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S&P/Case Shiller Reports

From Reuters:

"The S&P/Case Shiller composite index [XLS file] of 20 metro areas fell 1.4 percent in April from March and slumped by a record 15.3 percent over the year.
. . .
The 20-city month-over-month decline was the smallest drop since the August-September 2007 period.

S&P said its composite index of 10 metro areas slid 1.6 percent in April for a record 16.3 percent annual drop.

Home prices in a dozen of the metro areas have fallen for eight straight months".

Northern Virginia Bits Bucket 6/24/2008

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"We're Stuck"

News from Prince William County (h/t Sarah):

"Mike Klepac was supposed to move into his three-story townhouse the day before Thanksgiving 2006. But construction did not start until two months later. Before he could unpack a box three months after that, houses were going for nearly $100,000 less than what he paid.

Even though the value of his home has dropped, his tax bill will go up an estimated 21 percent this year.
. . .
'We're stuck,' Klepac said. 'I don't think I would have moved to Prince William County. I felt I was getting into a brand-new community with all these luxuries. They haven't delivered.'

He and other residents complain about living in a construction zone with bulldozers and mounds of dirt, and they are angry about unstaffed gatehouses and non-functioning streetlights. The county has limited ability to force developers to deliver projects on time, with the exception of public roads and infrastructure".

Mr. Klepac is also concerned about his job moving before he can. Calculated Risk today links to the NY Times article Home-Not-so-Sweet-Home, which brings up the disadvantages to homeownership such as Mr. Klepac is experiencing: financial risk, less labor mobility, and the cost of commuting.

"Hot Spots"

Last Thursday the George Mason University Center for Regional Analysis released a report entitled Foreclosures in the Washington DC Region. [60 pp. PDF] The report was prepared for the Metropolitan Washington Council of Governments. (Blog readers Sarah and Kob commented on it in the Bits Bucket on the 19th).

Page 18 describes the rapid rate of increase in foreclosures in the past year:

"The number of foreclosures in the Washington DC metropolitan area has risen dramatically over the past year. The region had one of the lowest foreclosure rates among the major metropolitan areas in the first quarter of 2007. However, in the first quarter of 2008, the rate of homes going into foreclosure was nearly six times higher than it had been in 2007. As a result, the rate of foreclosures in the Washington DC metropolitan area—measured as number of homes entering foreclosure per 10,000 owner-occupied housing units—shot past New York, Houston and Chicago in the first quarter of 2008 (Figure 12). The rate of increase in the Washington DC metropolitan area is similar to the experience in Phoenix, Los Angeles and San Francisco over the past year".

On page 27, "hot spots" for foreclosures (both current and potential future) are examined:

"Using address-level foreclosure data from RealtyTrac we analyzed the prevalence of homes that have entered into foreclosure over the period between March 2007 and March 2008 to identify those neighborhoods (defined by Census tracts) where foreclosure activity is most concentrated (i.e. 'hot spots.') From this analysis, we identified several concentrated neighborhoods: 1) City of Manassas, 2) Dale City area (Prince William County), 3) Gainesville/Bristow area (Prince William County), and 4) Accokeek (Prince George’s County).

We also identified tracts where foreclosure levels are relatively low but where there has been a substantial increase in the number of foreclosures in recent months. These 'impending hot spot' neighborhoods include: 1) Germantown (Montgomery County), 2) Centerville (Fairfax County), 3) Herndon (Fairfax County), and 4) Alexandria (Fairfax County).

Last, we identify four neighborhoods with very low numbers of foreclosures but with declining housing markets. These 'potential hot spots' include 1) Olney (Montgomery County), 2) Falls Church (Fairfax County), 3) Vienna (Fairfax County), and Adams Morgan (District of Columbia.)"

Northern Virginia Bits Bucket 6/23/2008

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Northern Virginia Weekend Bits Bucket 6/21-6/22, 2008

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Northern Virginia Bits Bucket 6/20/2008

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Northern Virginia Bits Bucket 6/19/2008

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Northern Virginia Bits Bucket 6/18/2008

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Only Needs a Buyer . . .

10241 RACQUET CIR
MANASSAS, VA 20110
Listing Date: 07/11/07
Prior Sale: $460,000 6/20/2006
-39.0%
On Market: 342 days

ZipRealty Price Track

Price Reduced: 07/18/07 -- $488,000 to $444,500
Price Reduced: 07/25/07 -- $444,500 to $397,000
Price Reduced: 08/03/07 -- $397,000 to $349,900
Price Reduced: 08/11/07 -- $349,900 to $319,000
Price Increased: 09/25/07 -- $325,000 to $345,000
Price Increased: 10/05/07 -- $340,000 to $350,000
Price Reduced: 12/17/07 -- $350,000 to $340,000
Price Reduced: 01/04/08 -- $340,000 to $317,000
Price Reduced: 01/05/08 -- $317,000 to $280,000

Comments: "... ONLY NEED A BUYER!!!! Ready to close on or before 4/28/08 for $280,000.00 and $8,400 for closing cost help".

Where Would You Live?

In today's bits bucket, blog reader KH mentioned a story from the Washington Post about the hundreds of drivers that take advantage of Dulles "airport business" (i.e., buying a cup of coffee) to gain access to the Dulless Access Road. This helps commuters save many minutes off of their morning commute from "out there".

KH asks: "Why do people make this drive?"

(WSJ: Suburbs a Mile Too Far - h/t CRT)

Hog responded: "I wouldn't move my family to DC for any price" and suggested a poll which I've posted on the right-hand column of the blog:

"If house prices were the same, where would you choose to buy a primary residence?"

Northern Virginia Bits Bucket 6/17/2008

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Inventory and Price Reductions

Source: ZipRealty

DC Area Housing Affordability

Calculated Risk today has some posts about the National Association of Home Builders (NAHB) June Housing Market Index (HMI) results.

That reminded me to post an updated affordability chart for the Washington Metropolitan Statistical Area. The NAHB/Wells Fargo Housing Opportunity Index (HOI) has data going back to 1991. I extrapolated the DC portion of the data from the National Association of Home Builders' data published on May 20th.

HOI is a measure of the percentage of homes sold in a given area that are affordable to families earning that area's median income.

Northern VA "Unraveling" in 2006

Day 2: Bust (from the Washington Post)

"In Northern Virginia, things were also unraveling. Kevin Connelly, a mortgage broker at Pinnacle Financial's Vienna office, fielded calls from desperate homeowners.
. . .
By last summer, the atmosphere was motionless in his office. Each morning, Connelly visited a Web site called 'the Mortgage Lender Implode-O-Meter,' which chronicled lenders that were going under. His day 'went from talking to 10 people and doing eight transactions to talking to 10 people and doing one transaction,' he recalled.

By summer's end, he said, 'I was working alone in that office.'"

Fairfax County -- On the Market

419 ARKANSAS AVE
HERNDON, VA 20170
Listing Date: 06/06/08
List Price: $209,000
Prior Sale: $535,000 9/14/2005
-60.93%

3865 HAVENWOOD PL #70B
ALEXANDRIA, VA 22309
Listing Date: 06/09/08
List Price: $121,500
Prior Sale: $300,000 10/13/2005
-59.50%

511 FLORIDA AVE #T3
HERNDON, VA 20170
Listing Date: 06/11/08
List Price: $119,900
Prior Sale: $260,000 8/25/2005
-53.88%

1020 QUEENS CT
HERNDON, VA 20170
Listing Date: 06/10/08
List Price: $130,000
Prior Sale: $270,000 4/20/2005
-51.85%

6174 GREENWOOD DR #202
FALLS CHURCH, VA 22044
Listing Date: 06/08/08
List Price: $128,500
Prior Sale: $265,000 7/19/2006
-51.51%

See Fairfax County -- 6/15/2008 for more comparisons from this week's listings.


(Links by FranklyMLS.com)

Northern Virginia Bits Bucket 6/16/2008

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Boom, Bust, Aftermath

This promises to be a good read -- the Washington Post is running a series on the credit bubble, tying it in with anecdotes from our area.

Today: The Bubble

"The young woman who walked into Pinnacle's Vienna office in 2004 said her boyfriend wanted to buy a house near Annapolis. He hoped to get a special kind of loan for which he didn't have to report his income, assets or employment. Mortgage broker Connelly handed the woman a pile of paperwork.

On the day of the settlement, she arrived alone. Her boyfriend was on a business trip, she said, but she had his power of attorney. Informed that for this kind of loan he would have to sign in person, she broke into tears: Her boyfriend actually had been serving a jail term.

Not a problem. Almost anyone could borrow hundreds of thousands of dollars for a house in those wild days. Connelly agreed to send the paperwork to the courthouse where the boyfriend had a hearing".

"Normal Sales"

I'm starting to see more listing comments specifying that the property is not a foreclosure or a short sale. This is an interesting sign to me of the upside-down nature of the market, where so many of the new listings are distressed.

5260 SUMERDUCK RD
Sumerduck, VA 22742
Beds: 5 Type: SFR Sq. Ft.: 2,880
Lot Size: 2.5 Acres MLS #FQ6789794
Baths: 3/1, Built: 2004, $/Sq.Ft.: $144
List Date: 06/13/08 On Market: 1 day

Description:

This is a Normal Sale. Fax offers to 866-315-3540 . . .

Northern Virginia Weekend Bits Bucket 6/14-6/15, 2008

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Northern Virginia Bits Bucket 6/13/2008

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Attention: Haggerty and Razzi up at 1:00 for the Washington Post's "Real Estate Live". I just thought I'd mention it 'cause it's Friday the 13th, not to mention a slow news day.

Northern Virginia Bits Bucket 6/12/2008

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Northern Virginia Bits Bucket 6/11/2008

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A Decade of May Sales

Source: MRIS

From the Last Resort to the Last Straw

From BusinessWeek:

"A Bush administration official on Monday warned against overly broad government intervention to stem the housing crisis, arguing that lawmakers' proposed foreclosure prevention program would saddle taxpayers with too much risk.

The Federal Housing Administration, which guarantees loans made to borrowers with poor credit, could be weakened by a plan for the agency to back as much as $300 billion in new loans to help borrowers refinance into cheaper, fixed-rate mortgages, said commissioner Brian Montgomery.

'We are not designed to become the federal lender of last resort, a mega-agency to subsidize bad loans,' Montgomery said in a speech at the National Press Club".

From the NYT:

"WASHINGTON — The Federal Housing Administration expects to lose $4.6 billion because of unexpectedly high default rates on home loans, officials said Monday.
. . .
The projected loss is the highest in the home loan program since 2004, and officials said the F.H.A. had to withdraw $4.6 billion from its $21 billion capital reserve fund in May to cover the costs. They said the agency, which is self-sustaining, would not need appropriations from Congress to remain solvent.

But Mr. Montgomery warned that the F.H.A. would have to renew its efforts to end the seller-financed down payment program, which accounted for 35 percent of its loans in 2007.

He said the mortgages had foreclosure rates three times those of traditional loans and would push the F.H.A. to the brink of insolvency".

Northern Virginia Bits Bucket 6/10/2008

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Northern Virginia Bits Bucket 6/9/2008

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Northern Virginia Weekend Bits Bucket 6/7-6/8, 2008

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Northern Virginia Bits Bucket 6/6/2008

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Prince William County -- On the Market

8174 COMMUNITY DR
MANASSAS, VA 20109
List Price: $85,000
Prior Sale: $300,000 4/24/2006
Listing Date: 05/28/08
-71.7%

7550 WHITEHALL DR
MANASSAS, VA 20111
List Price: $66,900
Prior Sale: $233,000 4/19/2005
Listing Date: 06/03/08
-71.3%

4204 HOLIDAY CT
WOODBRIDGE, VA 22193
List Price: $114,900
Prior Sale: $390,000 10/5/2006
Listing Date: 05/28/08
-70.5%

7663 SOMERSET LN
MANASSAS, VA 20111
List Price: $90,500
Prior Sale: $285,000 3/1/2006
Listing Date: 06/04/08
-68.2%

8188 COMMUNITY DR
MANASSAS, VA 20109
List Price: $87,000
Prior Sale: $259,900 8/25/2005
Listing Date: 05/30/08
-66.5%

7912 SHARPSBURG CT
MANASSAS, VA 20109
List Price: $99,900
Prior Sale: $292,700 3/2/2006
Listing Date: 06/04/08
-65.9%

See Prince William County 6/5/2008 for more comparisons from this week's listings.

(Links by FranklyMLS.com)

Northern Virginia Bits Bucket 6/5/2008

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The Quotable Toll

(Hattip Hog)

The chief executive of Toll Brothers Inc., the nation's largest luxury-home builder, said Wednesday the housing industry is in a "depression" and any recovery could be two or three years away.

In candid remarks at the JPMorgan Basics & Industrials Conference a day after reporting a second-quarter loss, Robert Toll said he's not ready to call a bottom yet since the housing market could still get worse.

"Can the market go down another ten or twenty percent? Sure," said Toll, whose Horsham-based company will sit on cash unless a bargain land deal comes along.

He said the current housing crisis is the worst he's seen since the mid-1970s, but back then the decline was relatively short-lived. The current downturn started in late 2005.

"Maybe '74 and '75 was just as bad, but it was so short," Toll said.

Buyers' lack of confidence that home prices will stop sliding is what's keeping them out of the market, rather than lack of access to credit, he said.

And Minyanville has a statement from Pulte's CEO:

Richard Dugas, [Pulte Home] CEO, said he believes it is a mistake to believe the new housing market can correct without the resale market also correcting. This is an important point of distinction. New homes are now selling at a 10% to 15% discount to resale in most areas of the country. Historically, that ratio has been reversed.

"We clearly need resale pricing to correct, and correct dramatically,' Dugas said. He cited the most recent data from the S&P/Case-Shiller index showing a 14% decline in prices year-over-year, by far the largest on record, but noted that even that kind of decline is not enough.

"We view that [price decline] as a good thing," Dugas said, "and frankly we think resale pricing needs to continue to move down, because existing buyers are telling us they would like to buy our homes, but need to sell their existing homes, but they've obviously got to get realistic about price before they have a chance to sell those homes."

Northern Virginia Bits Bucket 6/4/2008

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Northern Virginia Bits Bucket 6/3/2008

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Northern Virginia Bits Bucket 6/2/2008

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