(h/t The Anon.) "And, the caveat is, this assumes that we are not, in fact, entering another Great Depression. It assumes that the recession lingers through much of this year but that there is some recovery in 2010".
Thursday, March 26, 2009
Bottom
(h/t The Anon.) "And, the caveat is, this assumes that we are not, in fact, entering another Great Depression. It assumes that the recession lingers through much of this year but that there is some recovery in 2010".
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22 comments:
RE professional calling bottom number 2,953,442.
Ahh but Kevin in your last post you just said "If I were looking in PWC, I would probably have bought by now."
So which one is it my friend?
For others, especially in other areas this is NOT YET the time to jump on the bottom bandwagon. Either we are already there, and the inventory isnt going to do much (so you have plenty of time), or we're nowhere close to bottom, inventory wont drop for a while, and you again have plenty of time.
PWC is not the entire RE market of the country obviously. And the reasoning behind buying in PWC was the shrinking inventory.
These people have been calling the bottom every month for the last two years.
Will somebody PLEASE let me know when we hit the bottom in Loudoun Co ??? - (East of Route 15)
Please :0)
Kevin, read the post - her call was for PWC.
Also, for realtors calling bottom, heres what she had to say earlier
"Excess supply in a free market economy inevitably pushes down prices. As long as this gap is as large as it is currently, there's NO SIGN OF A BOTTOM from a price perspective. Aug. 19, 2008"
Translation, yes she wants to sell homes, but shes not a run of the mill shill. I trust her a hell of a lot more than most!
Harriet - thanks for the hat tip.
Anonymous, true. This whole bubble has made it nearly impossible for me to give the benefit of doubt to anybody in the RE industry. Their collective clout is worth nothing.
Or a really.. really really long painful.. correction.
As the sharks have smelled blood in the water and expect nothing less than a good meal.
Expectations have shifted... while the economy suffers and salaries stay the same. Expect consumer tastes to remain the same.
PWC knife catchers have soaked up all the decent inventory. Doesn't mean house seekers will just give in and buy a townhouse. More inventory will have to become available... as townhouses can be bought near occoquan and on the other side of the river at reasonable prices and less commutes.
Like kev said.. PWC is not the entire bloody market. Its the cheapest ...or was. Those that caught knives felt the need to do so. The others waited on the sidelines for a reason.....And probably have the means to wait longer.
The real estate bubble burst/market is at the very bottom of this withering tree of an economy. There's a lot more moons that have to line up before it corrects itself.
ANd we haven't seen what gov directives have done yet. MD should get a boost with the brac and those that kno know some other agencies are playing shuffle inside the beltway. Those moves with change things tremendously.
no crystal balls...
¿ Et Tu Harriet ? :)
OK - I still think this is a month or two early, but given the inventory issue, worthwhile to bring up. If {WC inventory keeps shrinking at its current rate, it will be 1/2 what it is now in April, so its certainly an issue.
I still think its a Low end, PWC issue for now, meaning high end housing in PWC & Elsewhere may bottom later, maybe much later. However, with inventory and other stats showing a bottom, its going to be that much harder to see.
I think too Ms. Emery is incorrect about sales being at bottom. Reason being its going to be hard for PWC to beat its YOY sales records of 1,000 a month when youve only got 1,000 homes to sell. Then again, if this is a "one in one out" dumping of the REO inventory as I suspect, we could have 1,000 homes and 1,000 sales each month in PWC for a long time.
"I'm going to do it! I'm calling a bottom! You can tell me I'm crazy. And, I won't entirely disagree."
"Bottoms are unknowable when you're there."
And yet she is calling a bottom.
"You know it's the bottom after the fact when the statistics confirm it. So, anyone who tells you this is the bottom is, at best, guessing."
So if anyone who tells me this is a bottom is, “at best, guessing” and she is telling me this a bottom, then doesn’t that mean that she is, “at best, guessing”?
"I look relentlessly at the numbers, day in and day out."
Cool, at least she’s going to back up this prediction with reams of hard data, unlike all of the other pundits who make false bottom calls.
"I watch for trends. I study this stuff as though I was prepping for a final exam."
I’m ready to dive into the details and see her analysis. The numbers are coming any second now...
"And, everything I see makes me believe we're at a bottom here."
Good, good, good, so show us "everything you’ve seen." All the trends, all the numbers you study day in and day out. So excited to finally see some analysis. Here it comes...
"In places like Prince William I think it's clear we've already passed the bottom and all those people who are still waiting had best hurry up!"
Wait. That’s it? That’s all the support you can muster for your bottom call? What about all the numbers you study day in and day out? What about all the trends you referenced? What about the “everything” you see that makes you believe we’re at the bottom?
"Prices are already starting to rise."
Really? MRIS data shows PWC prices are down 36% on YoY basis in February.
I'll believe we've hit bottom when XLF gets back to the 200-day moving average. Either because the average keeps coming down, the price goes up, or the most likely, some combination.
Until then, we're in for more pain. This is a nice bear market rally. I'm certainly enjoying it. If I were a better market-player, or had more capital, this would be a huge opportunity.
Realtors see a lot of activity, certainly they are happy. I can understand that all these people who wanted to buy a house in PWC but rented instead, are seeing 300k houses as a huge deal compared to 500k price in 2006. I would be really scared if these houses did not get bought at all. But I think there will be several more layers of REO getting to the market. And those who will jump off the fence later will be benchmarking a good deal to spring 2009, not summer 2006 prices.
Also, since we're talking inventory, I wanted to note our areawide chart which was just updated.
http://www.recharts.com/nova/nova.html
NOVAwide, inventory is way down, no doubt about it. We are days away from dropping below 10,000 listings for the first time in 3.5 years - and it doesnt look like there will be any spring bounce at all. Best bet would for it to soon surn flat.
Among the big 5, as The Anon noted, PWC is the most remarkable. I thought it would be flat through spring, then fall in autumn & winter - nope. Clearly this market has some excesses to work off before it acts normal again.
Loudoun - Similar to PWC, except not as severe. I keep expecting it to turn flat, but if this downtrend continues, inventory selection may become an issue here.
Fairfax - same thing here. Early on, when it was following that 2008 line so well I thought it might show a spring bounce - now it has broken through that 2008 trend and keeps going down. Like Loudoun, if you care about abundant selection watch this one. If it doesnt flatten soon, it may keep going down all year.
Alex - Alex is showing a ever so slight spring bounce. Inventory is down YOYOYOY, but at least its flat! I see no trend here, no reason to get off the couch & shop if you dont feel like it.
Arlington - the prized pig is acting like a normal market with a spring bounce, albeit down YOY. About a year ago, when "elsewhere has capitulated but Arlington is holding out" became popular, the theory was inventory is down now, but it will come back, it will rise above 2007 & 2008 levels.
Its still a bit to early to call that theory dead - anything can happen. However, it looks like the body is in the coffin, and the lid is being nailed on as we speak...
The art selection is interesting. Given a choice between making a bad housing investment and forced to stare at a Henry Fuseli painting, I'd rather be stuck with the housing. I could myself lucky on that account.
Thanks for that. ;-)
"Arlington - the prized pig is acting like a normal market with a spring bounce, albeit down YOY. About a year ago, when "elsewhere has capitulated but Arlington is holding out" became popular, the theory was inventory is down now, but it will come back, it will rise above 2007 & 2008 levels."
Agree. There's very big attendance at open houses in 22207 and recent sales prices confirm prices remain very strong.
I have no problem believing PWC has bottomed. Prices are such that a single income can afford a SFH there. Even if it's not bottomed in PWC, I don't see it falling 40% YOY again as that would drop the prices of a SFH to 40% below the current year's price. That would put prices well below current prices in places like West Virginia's eastern panhandle, I-81 Winchester, Hagerstown, etc. It may be that we'll see a further decline in the 10% range but nothing like the last two YOY declines.
PWC is close enough to bottom that it's (for all intent and purposes) there. Fairfax and Montgomery County haven't hit bottom yet.
I think we have to be careful with these bottom calls. I could believe we've bottomed in PWC but to say a "general" bottoming is happening is a bit much. Does that mean the entire region, the entire country, or something else? When national commentators talk about "real estate bottoms", they are usually talking about the entire country while people that are looking to buy are concerned with a specific local market.
crt,
I wouldn't count out a spring inventory increase in FFX yet. Now that I've switched to Burke, I'm getting more listings each week, and more new listings than contingency notifications. There's certainly no lack of selection.
Cara, there's definitely a swelling of listings in the past week or two. I think the banks might be dumping their assets at a higher rate.
kevin,
It's definitely not just banks. What was left on the market in January was almost exclusively banks and shorts, but I'm seeing more and more real owners putting up their listings. Part of that may be my cut-off of 300k. There's a lot more "normal" listing above 300k than below, and so maybe we're just now seeing some owners willing to price below 300k. Basically this might not be an increase in inventory, but rather a compaction down into my price bracket.
Still, it says something about the whole concept of less selection after the bottom has been reached. The pickings might be slimmer, but your money should go a lot further.
I've heard from a couple of REO Listing Agents that we will see a significant increase in listings in 2 or 3 months. I trust these guys. We will see what happens.
In this type of environment all a "bottom" means is that things stop getting worse....it doesn't mean things will get better, i.e., reverse trend and move upward.
Stay tuned.
Jeff - I think this will be a West to East bottoming. If its anything like the inventory spike, slacking sales, declining prices, declining inventory, increasing sales, etc. look for some "firming" in Loudoun & Fairfax by this summer, then Alex & Arl later, followed by DC Mo Co & Howard probably next spring. This is a total guess so stay tuned for many revisions.
Cara - a FFX spring bounce is possible but I highly doubt it - the trend just aint your friend. I do think flatness is possible & likely at some point. If flatness starts soon a possible increase back to Jan 1 levels is conceivable, but I wouldnt consider that much of a "bounce".
Good point about your submarket though. As we have noted so many times on the Hi Low inventory game, Total inventory can decrease while low end inventory increases as high priced homes get squished into lower price points. So yeah, be cognizant of the overall trend & what it may mean for the bottom, but watch your submarket very very carefully.
VA investor - I have a few commercial lending clients so I only hear from the residential side second hand, but I hear the same thing. I do know for a fact that one just engaged in a 3 month dump of about 50% of its reo, but with demand so high, buyers sucked it up & inventory just kept going down. It will be key to see how many do this, & how the market reacts. I dont expect a flood, but a long period of flatness is very likely.
Gold - couldnt agree more. No chance prices rise more than a click or two - really just noise. All this could mean, is that its just not getting any worse.
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