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Wednesday, March 18, 2009
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72 comments:
http://franklymls.com/FX6870539
According to Yahoo Foreclosures, this castle is under foreclosure and being sold for $3.5 mil.
Nova's web novel -
I sent the link to some doomer sites, here's the initial feedback:
Person A: "Good find . . . I have been distracted from other work this evening reading this."
Person A: "Here is a paragraph from chapter 3 which, when I read it, I had one of those bwahahahaha moments. I wonder how long it will be until something like this actually happens?"
""Meredith had access to a lot of data, and no social life. She took the data from Citigroup,
ran her own analysis ...."
Person B: "'Meredith' actually existed. Her name was Doris Dungey, though her fans knew her as "Tanta"."
crt--
forgive me, but i cannot find a previous post of yours that described items to include in our sales contract. am i just thinking of financing and home inspection contingencies? and are there any possible terms to stipulate some pain for the sellers if they break the contract? since they do not put up earnest money, i cannot imagine such a thing, but with Mr. D involved, I would feel better with some safeguard. thank you kindly.
novawatcher,
Nice find.
Is this what people mean when they talk about Oakton being posh? Someone literally built a castle in 2005. OMG. How many of these monstrosities are there in the DC metro area? Who builds a castle? Or just as importantly who builds a castle when the obviously (in retrospect) can't afford it?
Tabitha, home inspection, title insurance and a survey for sure.If any recent work has been done make sure payment has been made,liens against the title, liens can be after closing for prior work. Taxes have been kept up to date and HOA fees if they apply. You got a great deal. Just think of PWC as being first in a long line of area property declining in value. We are probably the only safe place to buy.
or, looking at the bird's eye view, who builds a castle but leaves no good space left for their personal tennis courts? (appears to a be a requisite feature of the neighborhood).
Oh I forgot..septic/water inspections, too. If the septic hasn't been pumped within the last 5 years, require that be done or proof that it has been pumper recently within a year or 2. and termite inspection..some of the local boys in PWC do all this in one fell swoop, termite/water/septic inspections.
OT question....
Does anyone here know how to read a credit report? we just put in an application for a rental and i asked the agent to forward our credit report which he did. So this is the first time i actually see my own report with scores (it just never occurred to me to ask for a copy in the past). It's from Equifax with a 'Beacon 5.0' score. So, is this not a 'FICO' credit report and the score is not the 'FICO' score used by lenders? Is there a way to estimate the FICO score with my Beacon 5.0 score? Also it seems it a joint-account report as we have the same Beacon 5.0 score which I think is a bit odd because I've been told in the past my credit score is better...
http://www.reuters.com/article/newsOne/idUSTRE52H00Z20090318
Ruh Roh
Tabitha, if you don't yet have a signed contract, you could put in a penalty (e.g., $10K) if they fail to close, to cover the costs and aggravation of your having to scramble to move at the last minute. However, be prepared for them to freak out if you do this. When I tried to unsuccessfully to sell a unique house, someone came forward just after I had made a long term contract to rent it and made a good offer to buy it. My major concern was that, once I had paid the tenants to move, the buyers would back out and then I would be out $, have no buyer, and have no tenant (and that it would be very hard to find one). It was extremely reasonable for anyone in this position to have the attorney write in a provision that they would have to pay me a penalty if they put me in this terrible position but they just could not "get" why we were insisting on this and scotched the deal altogether. One way of looking at it is that they were never that serious, but if so, it would have been nice if they hadn't wasted my time and very stretched budget (2 houses to pay for) with my attorney and theirs to try to find suitable language.
MM,
the Beacon 5? That's the new mortgage geared one!! (It's also designed by Fair Isaac and graded on the same scale). In the usual FICO, indeed things would be separate, but it makes sense that for buying a house (or renting I guess...) they should be scored together. So, in a normal FICO there's a section which lists things you were scored on, like length of credit history, percent of available credit currently in use, payment history, (I can't remember what else and mine are at home). It tells you what those values are without giving away their secret recipe for how that creates the numerical score. What are the categories on this new Beacon 5??? Inquiring minds want to know because this is exactly what I was waily waily about the other day, this new Beacon 5 is what we're going to be judged under for mortgage applications going forward.
I saw a link to this video of Frank Llosa's great advice, when using franklymls. Although a lot of you know all this info anyway, I just think he does a great job of putting a lot of info together in a very succinct and understandable way--especially for first time buyers.
http://www.youtube.com/watch?v=rHVbw05NoX4
Disclaimer - I am not in any way connected to Frank's business - just an admirer of how he works and appreciative of all he does to get info out to all of us.
On closer inspection, it appears that the owner passed away last summer.
novawatcher,
Thanks, that makes a lot more sense.
Hi-
I am needing the advice of all here.
We are thinking about making an offer (lowball, of course!!) on a house that is owed by a Relocation Co.
Does anyone have experiance / advice on dealing with them as Sellers?
Thanks! :)
Cara,
Well I'd love to tell you what the categories are but I don't really know what I'm looking at (hence the questions...) and I don't think it's the full report - only two pages. My free reports have 11+ pages I think.
But anyways, here's how it looks at the top:
Report Results
Beacon 5.0 score: ###
000##/0000#/0000#/000##
TIME SINCE MOST RECENT ACCOUNT OPENING IS TOO SHORT
TOO MANY INQUIRIES LAST 12 MONTHS
TOO MANY ACCOUNTS WITH BALANCES
LENGH OF TIME ACCOUNTS HAVE BEEN ESTABLISHED
I'm guessing the 000## etc numbers are corresponding to the 'TOO MANY...' line items but can't be sure. For instance, the TOO MANY ACCOUNT WITH BALANCES line would correspond to 00005, but we each have 4 accounts with balances.
Anyway, hope this helps.
Ace,
One feature I loved on frankly was that it showed the true 'original' listing price for re-listed properties. But I've noticed it doesn't do that for all listings anymore. Did you notice the same?
the_Nothing and contrarian,
I guess my question is, these articles are about the worst of the worst bubbles, ones where prices at their height reached over 10 or 15 times the median income. Where there really were no affordable options if you felt you "had" to buy. The corporate leverage added on top of these mortgages will continue to be a drain on the economy.
However, I'm not so sure that we'll see a prevalent walk-away mentality here, where it was always possible to buy a decent place to live somewhere for 4-5 times income even at the height of the bubble. Maybe not where you'd prefer, or the size/age you'd like, but it was always an option. My point is that frugal buyers (even those who couldn't wrap their brains or their lives around renting) could always choose trade-offs in order to be able to afford what they bought. And those that pushed a bit are likely to be the best candidates for the bailouts.
So my question is, what fraction of 2007/2008 buyers do you think will eventually default in our region? My guess was somewhere between 1 in 10 and 1 in 5. If it's 1 in 10 it will be a slow bleed, if it's 1 in 5 in a given neighborhood, it could create the spiral. What's your guesses?
mm,
thanks.
The score part itself is indeed that short, if you pull your credit report from either of the other two credit bureaus you can pay less than $10 to get the credit score. If you bother to do this please report back with a comparison (perhaps percentage-wise) on the two scores.
Tabitha - I think between the comments of others here, most everything I would like to see is covered.
Regarding a penalty for the seller if he backs out, what ace is referring to is correct, but I would package it as whats know as a "liquidated damages clause", the idea being, if he backs out, in lieu of you having to sue and prove your damages (exceddingly hard to do), you are entitled to a set amount of damages (say 10K or so). As your husband is a lawyer, have him make sure the penalty is structured as liquidated damages if you want to include that term.
Also, even if you do not have a penalty/liquidated damages term, make sure the contract says if he defaults you are entitled to "equitable remedies" and/or "specific performance". In laymans speak, this means that if he backs out, you can go to court and (in lieu of damages) the court can force him to sell the property to you per the terms of the contract.
Finally, make sure the contract has a "prevailing party" clause meaning that if one of you has to sue the other, the winning party shall be entitled to reimbursement of their attorneys fees. This is very important because in reality, the chances that you would ever be able to get monetary damages is pretty slim (even with that liquidated damages clause - many judges like to dance around it) and most attorneys know this. However, if you have a clause saying if I win you have to pay both your and my legal fees, it does make some parties (who otherwise would try to take you to court, knowing you cant recover) think twice about what they are doing, and hopefully do what you want and simply sell you the darn place.
Good luck...
By the way, please remember that whatever info you see these days on foreclosure rates stabilizing, it is not very accurate. Foreclosure rates really reached a plateau, but only after almost all the big lenders startded foreclosure prevention programs. At the same time number of seriously delinquent loans (90 days and more) continues to grow pretty fast.
"Barnard, who already has stopped making payments on five investment properties purchased in 2005, is on the verge of giving up on his own home that is now worth roughly half its $800,000 purchase price."
What a lowlife flipper piece of shit. I guess he's another "victim" homeowner.
Nothing/Contrarian/Cara - I think its important to distinguish between what is/could be happening on a national scale versus what is/could be happening in our local area.
This issue of a negative feedback loop is certainly possible, the idea being the more prices are down to begin with, the more current homeowners are going to decide to walk away, causing values to fall more, causing more to walk away, etc. etc.
If we are going to see it anywhere locally, we are going to see it in our own implosion testing lab of PWC. Further, if this is true, it will show up in one of two places - either
(a) existing inventory would increase (either they at least TRY to sell before they walk, or list as short sale, or listed as foreclosure gone REO)
or
(b) foreclosure rates would increase.
Applying this theory to the data, we see that it doesnt look to hold water. For starters, existing home inventory in PWC is plunging like there is no tomorrow - its really incredible how quickly it is disappearing.
http://www.virginiamls.com/charts/PrinceWilliam.htm
Inventory is declining everywhere in NOVA but no where as substantially as in PWC. Thus in terms of inventory, we see no evidence of a negative feedback loop.
Second, what about foreclosure rates? As Tabitha can attest, they have not gotten any worse since the summer, and if anything this last month suggests there is substantial improvement (as it was for everywhere in NOVA).
So again, there is nothing we can see here locally that suggests that a negative feedback loop is forming. If anything, the data for PWC suggests it is starting to bottom.
So again, on a national scale where inventory IS rising, (unlike NOVA), and foreclosures are basically flat to slightly worse (unlike NOVA) I could see that happenening.
http://2.bp.blogspot.com/_pMscxxELHEg/SaVoEVthSBI/AAAAAAAAEn4/hqQIiUh3tlk/s1600-h/EHSJan09NSAinventory.jpg
Also, I could even go so far to say thats possible in MD where inventory is near its alltime peak and foreclosures are flat.
However, to suggest it is happening in NOVA, one of the few areas where the data is runing contrary to the national data, I find that to be a very hard conclusion to draw...
"Konstantin said...
By the way, please remember that whatever info you see these days on foreclosure rates stabilizing, it is not very accurate. Foreclosure rates really reached a plateau, but only after almost all the big lenders startded foreclosure prevention programs."
Konstantin, I agree, but to follow up on my prior post, I shoud point out that last month is the first time NOVA acted differently than the rest of VA.
Case in point, even with all the foreclosure prevention programs, VA statewide foreclosures still increased 15% (Feb 09 vs Feb 08)
By contrast foreclosure rates in Arl, Alx, Ffx, Lou & PWC decreased 25% (Feb 09 vs Feb 08).
What does that mean? So far, its just a one month trend so right now its just a blip. However, if it continues, you do have to wonder why NOVA is able to buck the trend we see across the rest of the state.
crt/arkey/all,
Thank you so much for the contract advice. Will incorporate all I can.
I know this has been discussed at length here, and I do not want to force repetition, but could anyone offer a quick reprise as to the "points versus no points" debate?
My (very numbers-smart consultant) brother said to not pay points, because it is money out of my pocket now, and a mean bank charge, and even though I want to live in the house til old age and beyond, it is better to pay more interest which is tax deductible than to pay their upfront fees because of inflation.
I'm not sure if I got his argument down exactly, but that's the gist of it.
Would love to hear all thoughts...bro, if you are reading this, I think you're a flippin' genius, but info is power, man.
Hi there -- Does anyone have opinions about the area around West Falls Church metro (within a mile metro) versus the area within a mile of Dunn Loring metro?
We are considering buying a 4 bdrm house and notice a substantial price difference between the two locations. (415K-600K around Dunn Loring versus 600K-650K around WFC). WFC prices seem very bubble-ish while one metro stop out there seem to be more short sales, foreclosures and generally more reasonable prices.
Anyone have any experience with Haycock, Shrevewood, vs Stenwood elementary schools? Any thoughts about commuting to DC from Dunn Loring vs. WFC? Is it worth the premium in price?
Any opinions would be appreciated. Thanks.
CRT,
good points, but from what i know there is about 3.5 million loans in US that are seriously delinquent right now. that's a lot. and this number is growing at accelerated pace actually.
i would be surprized if there are many of these in arl/alex, but most likely a lot in nova overall, since there was a large price drop there already and many foreclosures.
also, if prices drop, say 15-20% from the peak in the arlington/alexandria sometime this year, the foreclosures and delinquencies will start to increase, if people get underwater they tend to default much more often, that's a fact.
and i believe there is a very high chance that due to the overall decrease in prices in nova this 15-20% threshold will be crossed in arl/alex sometime this year. it did already for condos, but not for sfh in nice areas.
obviously level of local unemployment will be a very important factor, and from what i understand about it --- it's already about 12% in US if you count it honestly (i.e. factor in people who ran out of unemployment benefits, self-employed, lag in claims and people still on severance packages). not sure where it is locally, but will definitely rise this year, not sure about next, when big federal spending finally kicks in.
DCgirl, commute will not be a problem, neighborhoods around Dunn Loring are very different from WFC, and some of them are nice, some pretty ugly.
Thanks Konstantin. Can you elaborate a little on what you mean by "different"?
tabitha,
go to the WaPo's mortgage calculators and they can give you how long it takes for paying points to have paid off in terms of lower interest.
should I pay points
You're brother's right, usually, but not necessarily in this environment, because (1) it's unlikely rates will get this low again in the foreseeable future, so refinancing later is not amongst the options, (2) points are unusually inexpensive right now in terms of bang for your buck (3) if you want to calculate in his tax savings part you can, roughly just multiply the time-to-make your money back times 1.XX where .XX is your marginal tax rate. (that's Cara's guess math, I didn't bother to think about it at all, but that should be the rough order of the effect, since the bare calculation uses all the additional money your paying each month in interest and you want to discount part of that).
Tabitha - from what I understand, points are also tax deductible.
"If you paid points, the amount should be listed on the 1098 statement from your lender. This document also notes how much mortgage interest you paid. Both of these deductible amounts go on line 10 of Schedule A."
So you don't have to worry about that.
My own personal math involved a break even calculation and the guess that whatever rate that I buy down to right now, I am unlikely to see (without paying a similar amount of points) in the next 4-6 years.
Buying points makes no sense if the rates could be dropping in the next few years, or if you could refi soon (if you put down less than 20%) once your principal is closer to 80% of the original loan and you can now get a better rate.
For me, putting down 20% and buying points made a lot of sense. Rates are great right now, and unless we see rates on jumbo conforming in the low 4s thru 4.5 (w/ zero points) in the next 5 years, I will have made the right decision.
DCgirl,
I would suggest that you drive around these neighborhoods, it is much better than to read my descriptions. Age of neighborhood, people who live there, quality of construction, acreage, amenities --- I think West Falls church is much more settled. A lot of people who bought in Dunn Loring i believe bought during the bubble, so the foreclosures are not a surprise to me.
Thanks. We've been around WFC but not Dunn Loring yet. We'll check out some places there this weekend.
CRT--
For starters, existing home inventory in PWC is plunging like there is no tomorrow - its really incredible how quickly it is disappearing.
http://www.virginiamls.com/charts/PrinceWilliam.htm
Inventory is declining everywhere in NOVA but no where as substantially as in PWC.nve
I think inventory everywhere around here is about to JUMP UP for the spring selling season. February is the low every year!
I bet inventory will be 30% higher, at least, for just about every city/county. Maybe 40-50%, if there is a bunch of bank inventory they are waiting to put up.
From that graph you linked to, Feb 09 inventory isn't that much lower than Jan-Feb 06--and by Aug 06 inventory was among the highest ever.
I certainly think you are positing a trend based on picking the exact low point of the past and next 12 months.
I expect Alexandria and Arlington spring/summer inventory, for example, to be higher than any month since spring/summer 06.
http://www.recharts.com/mris/mris_15.html
(see the 8th chart down.)
What remains to be seen is, how will this affect PRICES, since we've already dropped prices "quite a bit".
I think it depends on "inventory differentiation".
If 6 owners in Alexandria's Cameron Station try to sell their identical THs in the same month, they will be forced to compete on price--and I think we can guess how that will end up--for smart buyers at least. But a unique SFH on a quiet street two streets over from Metro? Perhaps a happier ending.
Which leads to one final interesting inquiry: How many SMART buyers will be out there this year? How many DUMB buyers are left? If all the dumb buyers are already in at too-high prices, or already walking away or being foreclosed and/or are ineligible to buy based on no credit or no cash, and if the smart buyers play hardball on prices, I think we'll see another slump toward reasonable prices. If the dumb buyers are still out there and buy-capable and are bidding prices up or paying listing prices, then prices may stay stubborn for another season, and perhaps until a future new wave of resets possibly washes more inventory in.
Is it "everyone back in the pool" time, in close-in neighborhoods? I doubt it. Being an ex- and possible future repeat homeowner myself, I hope not, at these prices.
gotta love the NYTimes headline
Fed to Buy $1 Trillion in Securities to Aid Economy
By EDMUND L. ANDREWS 6 minutes ago
The Fed dramatically increased the amount of money it will create out of thin air to thaw frozen credit markets.
and the markets roaring reaction:
At 2:50 PM ETMarkets »
S.&P. 500
800.70
+22.58
+2.90%
Dow
7,547.27
+151.57
+2.05%
Nasdaq
1,501.52
+39.41
+2.70%
NYTimes article on today's fed actions
One question related to housing prices I am interested in knowing your theory on:
According to the graph shown by Harriett about 1 week ago, the average sale price for homes in Fairfax County was down to late 03/early 04 levels, at $307k.
I am looking at "first time homeowners". Most people in the DC metro area who got into the working world after undergrad education in the early 2000s probably could not afford to buy a place right out of school. In 00 or 01 or 02, they thought (based on housing prices) they needed to save "X" for a downpayment. By the time they had "X" a couple of years later, prices were skyrocketing. (In 01 avg price was 220k. In 04 it was 327k, over 100k more.)
These people could not afford to buy, so they rented, likely for the last 4+ years.
Now that prices have fallen so much, and these people are 30 years old, they are looking to buy "starter homes", be it cheaper SFH or townhomes.
Is it crazy to think that the future price stability of these types of homes may be better than larger homes for this reason, particularly in this area?
I don't have the numbers, but I know the DC metro area is full of people who have their college degrees and the number of jobs in this area is likely higher than the national average.
So long as these people have been saving any money, still have their jobs, and have been renting (because they could not afford to buy), they are likely to be looking to buy now or in the near future, no?
I say this in response to a comment made by Scott:
"If all the dumb buyers are already in at too-high prices, or already walking away or being foreclosed and/or are ineligible to buy based on no credit or no cash"
When I read that, I immediately thought of this group of potential home buyers who are not "dumb" but also are not experienced, but have been renting and finally (after 4+ years) can afford to buy a 1st home. These people would not be "already in" because when they finally were "in the market to buy", the prices ran away from them. Now that the prices have come back to them, they can afford to buy. I think the NOVA area has a large % of these people, higher than most other areas of the country. Thoughts?
Cara,
but if there is more money in the market, won't it be natural for nominal prices for stocks to go up? inflation should affect stock prices as well.
still i don't feel that these money will go into our pockets anytime soon, so not that afraid of inflation.
cara/t--
fabulous, thank you so much. looking at 5.0% or lower no matter what, so will do well any which way, but wanted that calculator--perfect!
T,
I think to answer your question you have to look at the rate of homownership in the area over last 10 years. I do not think that it is too low. Some people who wanted to buy have not bought, some people who shouldn't have bought --- bought; obviously we see more activity in the cheaper tiers, but I'm not sure that it makes these purchases safer.
t,
median age of 1st time home buyers during the boom went down not up. from historically semi-constant levels of 32 down to boom levels of 28. This basically steals buyers from these year-classes and pulled them into the market earlier, making them scarcer now.
No one should be buyer right out of college or even 2 or 3 years later. Ever. To think otherwise is to have listened to the bubble-speak. It's just not smart, and most people know that.
I would strongly bet that your effect is much smaller than the effect of people having been pulled into buying when they weren't ready yet by the lowering of underwriting standards and the abuse of creative loan instruments. I say this because moving the entire median down 2 or more years implies a lot of young people.
That said, it would be nice to be quantitative about these two competing effects.
Konstantin,
Is this in response to my NYTimes Fed action remark? I think the market is just rallying because it feels the Fed is bringing on the cavalry, and the market is too stupid to understand that this quantitative easing has simply been massively less effective than true interest rate cuts would be (if they were still possible) when we go up against the zero lower bound (see Krugman).
DC girl-
Haycock ES is in the mclean school pyramid, which is generally seen as very good (although I don't know anyone personally there so who knows ?!).
Some areas near the WFC metro might be Falls Church City, which has very good schools and nice neighborhoods. There is always a price premium if the house is in Falls Church city vs. Falls Church, Fairfax County.
Once you get out to the DUnn Loring area, some of the neighborhoods are best accessible via the beltway vs. 66-that's a negative for some people. The roads around Dunn Loring metro seem generally more traffic-choked to me. And some of the areas are definitely way nicer than others.
"Scott said...
I certainly think you are positing a trend based on picking the exact low point of the past and next 12 months.
I expect Alexandria and Arlington spring/summer inventory, for example, to be higher than any month since spring/summer 06."
Scott - actually no, I am basing inventory trends on what we have seen since summer 05
http://www.recharts.com/nova/nova.html
I dont wish to go over all of it now, but I can tell you we have been discussing this issue on this blog ad nauseam for a good 18 months now.
Every year since 06, we have had someone suggesting inventory will spike and surpass that 06 level. It didnt happen in 07, it didnt happen in 08 and its looking highly highly unlikely to happen in 09.
Regarding the bank inventory, which we have also been discussing for the last 18 months, I think its likely they will continue to do what the likely have been doing for a very very long time now and dispense it slowly like a time release capsule.
Bottom line is anything could happen but lets just say if it does, its going to shock a lot of us here here who have watched as the stated inventory continues to whittle away on a YOY basis.
Cara:
"median age of 1st time home buyers during the boom went down not up. from historically semi-constant levels of 32 down to boom levels of 28."
Interesting. The only way I could explain that is these young, 1st time buyers who bought during the boom did so because they thought their home would be worth 10-20% more each year, so while they were "stretching" themselves, they thought they would see immediate returns.
Other than that, I don't see how a younger (and theoretically lower income) crowd could afford to buy their 1st in 05 or 06, when that same home was likely 58% cheaper just 3 years earlier.
How could they "not afford" to buy in 2003 when the avg price was 275, but suddenly afford to do so 3 years later in 06 when the avg price was 470? I would think these potential 1st time buyers would have been priced out. Maybe, they simply bought cheaper homes than they would have 3 years prior, but still bought?
t,
in your scenario in 03 they weren't really looking because they were saving up. in 05 they heard whispers that you didn't need money down anymore!! And got approved for a 80/20 loan with the 80% at a 3% teaser rate on a neg-am interest only loan...
At IHB there's a great chart of "afforability" by loan product:
Irvine housing blog: how affordability products make prices unaffordable
NoVa is not SoCal and did not have the prevalence of "affordability products" but you get the idea.
t,
and yes, some of them did buy condos instead of houses, which helped drive those out of affordability as well.
These are the classic questions of the bubble....
"Interesting. The only way I could explain that is these young, 1st time buyers who bought during the boom did so because they thought their home would be worth 10-20% more each year, so while they were "stretching" themselves, they thought they would see immediate returns."
Of course they did, during the bubble countless people became speculators even though they claimed they were just looking for a "home."
Once people got it into their heads that housing just magically appreciate they were suddenly comfortable overpaying because they thought they would make a profit.
"Other than that, I don't see how a younger (and theoretically lower income) crowd could afford to buy their 1st in 05 or 06, when that same home was likely 58% cheaper just 3 years earlier."
They couldn't afford it, that is the whole point.
"How could they "not afford" to buy in 2003 when the avg price was 275, but suddenly afford to do so 3 years later in 06 when the avg price was 470? I would think these potential 1st time buyers would have been priced out. Maybe, they simply bought cheaper homes than they would have 3 years prior, but still bought?"
They couldn't afford it, despite that, there were suddenly countless lenders willing to give them the money to buy regardless and telling them it was a good idea to do so.
There were countless idiots cheering rising prices and trying to invent theories that would explain why they would continue to rise. We used to have a guy here who would explain at great length how DC was the "next Manhattan."
"Leroy said...
We used to have a guy here who would explain at great length how DC was the "next Manhattan."
LOL, and that 90% of the area pricing was flat or up! I miss Lancey!
CRT/Leroy/Cara - I have to chuckle as I read the last few posts. 3 gristled old vets of the bubble blog get out there and "educate" the newer bloggers weve seen in the last few months.
Its interesting how there is a collective knowledge this blog has on inventory, affordability products, etc. that we just assume everyone knows, but the fact is many of our newer posters may not.
Harriet - maybe you should have a series of bubble primer posts so that relative newcomers can get up to speed.
We all appreciate the education. If there was none to be found here, we wouldn't be asking the simple or complicated questions and trusting in the response. You guys do a good job and have a lot of patience, and I for one appreciate it! Plus, you knock sense into the random bits of news or postings which have little basis in truth, and that helps just as much.
T - its good to question. Even us longtimers dont have all the answers. I believe the new perspective is refreshing because you guys may find something us longer tenured types think we knew, but you are able to point things out we missed. Keep it up.
I had to look for Dunn Loring on a map, because I honestly didn't know where it was. It turns out that I looked at some rental houses near there in the east Vienna area. To be honest, we didn't think the neighborhoods -- at least the ones we looked at -- were very nice. Rusting cars in the driveway, clunkers parked in the street, that sort of thing. But, there were also some neighborhoods that were nicer. It's something you definitely want to check out yourself.
As for Falls Church, my GPS took me to Road Runner Sports taking some crazy backroads through the neighborhoods. Personally, I found many of the neighborhoods in that area charming.
My chuckles for today...
Someone didn't go without a fight..
http://franklymls.com/PW7005083
And...please move out of the way of the camera. Your blocking the excitement of the white house...
http://franklymls.com/PW7007919
how could i have missed this cute 2/1 Bungalow in Cherrydale on a decent 7K+ sf lot?
oh bummer it's sold "AS IS".... yeah, for $850K.
Just to clarify, when I say "dumb buyers", I don't mean inexperienced. You can be inexperienced and still educated yourself and be savvy. Use a buyer's agent, use a spreadsheet ten different ways to confirm you can afford a certain place, etc, etc.
I did.
When I say "dumb buyers" I mean:
Someone who believes a realtor-on-commission when they say: "hurry, put a higher offer on this place, there's already another offer on the table."
Someone who believes the realtor is telling the truth on ANYTHING. (They are a SALESMAN. Assume EVERYTHING they say is a trick or a lie or a withholding of the truth.)
Someone who pays listing price without lowballing their offer, in THIS economy, in THIS housing market slump.
Someone who doesn't know what they can afford, and lets the SELLER agent give them advice on that.
Someone who doesn't arrive at every house showing with a prioritized checklist of their personal "must have", "nice to have", "should not have", "must not have" house details.
Someone who "oohs" and "aahs" about how wonderful a house is and how my favorite chair will go here, etc, etc, IN FRONT OF THE SELLING AGENT.
Someone who doesn't know about this blog, or franklymls, or craigslist, or MRIS, or Cyberhomes, or Zillow, or Washington Business Journal, or, or, or, ...
Etc.
In short, buying a house is a CONTEST (WAR) between you and the seller and their agent. In this market, JUST ABOUT EVERY BUYER SHOULD BE ABLE TO "WIN".
we have been discussing this issue on this blog ad nauseam for a good 18 months now.
And I've been reading this blog, and others, for at least that long, longer I think. (I sold my house in May 2007.)
Every year since 06, we have had someone suggesting inventory will spike and surpass that 06 level.
I'm not saying that. I'm saying it will go up seasonally 30% or more--which it DID do in 2007 and it DID do in 2008, in locales like I mentioned. (It STAYED high in PWC in the off season last year, so that's different. I'm not suggesting it will STAY high off-season in the close in areas.)
But most importantly, what I'm suggesting is, inventory does not have to get above 2006 levels to cause prices to drop a lot more. It only has to do what it HAS been doing each year since then, when prices HAVE dropped a lot.
And by the way--what's the catalyst for prices to stop dropping at these levels or inventory to REALLY settle down?
I think it would have to be either:
Prosperity from an AMAZING turn in the unemployment trend.
Enrichment from an AMAZING turn in the stock market (not this little bear market rally.)
or
An AMAZING government housing market bailout (not like we've seen so far) or national/local fed jobs explosion (a new war?).
Where's the trend reversal? I don't see it.
"I'm not saying that. I'm saying it will go up seasonally 30% or more--which it DID do in 2007 and it DID do in 2008."
I see what you are saying. I guess thats conceivable in Arl & Alex. However neither Arl or Alex inventory grew by 30% in 2008 peak to trough (but they did in 2007).
The rest of the 3 hard hit Ffx, LOU & PWC I find that highly unlikely. Lou & PWC likely had their high point for the year on Jan 1 & are unlikely to see it again this year. Fairfax? Its possible, given its about where it was in 07 & 08. I think though it too is on the downtrain just like Lou & PWC - the next month will tell us for sure.
"But most importantly, what I'm suggesting is, inventory does not have to get above 2006 levels to cause prices to drop a lot more. It only has to do what it HAS been doing each year since then, when prices HAVE dropped a lot."
I have no doubt prices will continue to drop. The key will be sales. Inventory is way down, but if sales burn down even more on a YOY basis, then yes you will be looking at some problems.
"Where's the trend reversal? I don't see it."
You likely wont. Theres been alot of discussion about residential investment being a leading indicator both into and out of downturns. If thats true, then it wont look much like bottom because everything other than housing (i.e. unemployment, stock market) continues to get worse and worse.
I do know for sure that unemployment is a laggard - it will continue to rise long after the worst of the recession is past. Government invervention is an X factor however - they certainly have the ability to make a down market stable, and a potentially stable market worse.
Best bet I think will be months of inventory or absorbtion rate of sales. You will note that for a long time PWC was the worst in this category for a long long time. Then, about 10 months ago, absorbtion rates increased, inventory started crashing (Apr 08), and now there looks to be the beginnings of inelasticity of prices.
http://www.recharts.com/mris/mris_11.html
In particular, look at the symmetry of prices (2nd chart). Prices trends have gone from down to flat, and are now exactly where they were 10 years ago on an inflation adjusted basis. Note, I think the higher end prices still have a ways to go, still its nice to see we do not look to be going into a deflationary spiral as some suggested.
We really need to watch this the next few months to see if it holds. If it does, then look for Loudoun & Fairfax to exhibit the same thing in a few months, then Arlington & Alexandria a few months after that.
CRT--
Okay I think I can see almost all your points of the last two posts; in particular--you may be right that PWC has been so bad that it may be "getting done" with seasonal inventory spikes. And, I agree there isn't 30% spikes in Arl/Alex for 2008--I think I was looking more closely at 2007, and 2008 was guilty by association--although still inventory moved up by 20-25% in 2008.
For DC girl: One of the most important things to look at in Fairfax County is whether the elementary school for the area has all day kindergarten. Generally, all day kindergarten is offered at schools with an underachieving student population in need of enrichment. For example, Haycock Elementary feeds into Longfellow Middle and McLean High Schools, has a gifted and talented program but does not have an all day kindergarten. It serves a fairly homogenous community near the West Falls Church Metro. Timberlane Elementary School also feeds into Longfellow and McLean but has an all day kindergarten and a year round school curriculum because of its underachieving students from surrounding areas. All schools in Arlington Co. have all day kindergarten, and this public policy is one reason two working parents will pay to live in Arlington. The all day kindergarten -- and relatively inexpensive after school programs -- eliminate the need for after school day care. There is more to selecting an area than the house.
Scott - the other thing to watch for (and we have Leroy to credit for this) is that you will notice how the seasonal up and down is generally diminishing as the years go by.
His suggestion (and I think it is right) is that what we are seeing is people really arent following the pattern of listing during the spring and pulling during the fall we normally see.
Instead, most of it is the desparate listers REOs, short sales and the like. They do not pull their lists with the seasons - they want to get their product moved (but of course they cant "give it away" :).
As such, you will note that in ARL in particular, the year end and beginning points are so flat, they rise over the year end levels of 2006 when their truly was seasonality of inventory.
So thats my guess for Arl & Alex neither will rise much, but neither will be able to fall much next winter when they should. Its not the sign of a healthy market.
The other 3? Honestly, theyve been controlled by REOs & short sales for so long its hard to tell. The early 09 crashing of inventory at a time it should be rising was a bit of a surprise. Best (most optimistic) case, is the banks are running out of REOs, hence its falling so fast. More likely however, the banks have learned that "dumping" REOs will crash prices even further so they will keep restricting listings till prices gain some inelasticity a la PWC.
Interesting times!
DCGirl - Haycock and Stenwood are both very high-performing ES, with Shrevewood perhaps a notch below. There are a lot of ESOL students at Timber Lane in Falls Church - it's the one lower-income school in the McLean pyramid.
As the Dunn Loring in general, some blocks are nicer than others. As you correctly pointed out, they aren't as expensive as similar houses in WFC; many of the Dunn Loring houses in the $500-700K range still sell very quickly. If a Dunn Loring SFH is on the market below $450K, it probably needs a lot of work.
Dear Anielarke and Mozart -- Thank you for those insights.
And yes, the schools are key for us. I am trying to set up meetings at each of them. I had considered all-day kindergarden as a plus -- but hadn't thought about it as an indicator of a lesser school. I had looked up test scores for all three on greatschools.com and Haycock stands out for its GT program, which is relevant to us because our son, who is in preschool, is said by his teachers to be about a year ahead of other kids his age in development and has a birthdate that will make him one of the oldest kids in his class. So suddenly its important that he be very challenged at school.
So for those reasons I have a preference for Haycock (or for a school like Shrevewood which feeds to Haycock's GT program if he tests in). However, the prices in the Haycock area still give me pause.
Houses assessed for 500K are listing for 600K-750K, and they are just very basic houses. Some of them have been on the market a long time so perhaps they will start edging down... One can only hope...
Thanks DCGirl,
that's a great site and something we've been procrastinating on doing. There's definitely large difference in High School qualities, and while it seems absurd to pick your house based on as-yet-unconcieved children who won't be in high school for at least 14 years... that won't stop me from trying to do it.
It's looking like West Springfield, Edison High School, and Lake Braddock are my top contenders... This explains why that one TH complex across the street from Edison has had 2 REO's last less than a week each before going under contract.
schooldigger.com has a nice format in that they'll map all the schools with their rankings (out of 5) on their little upside down teardrops. (and they link to Trulia if you want immediate links to houses, though I don't know about the guaruntee that their really in the district boundaries...)
okay, this is annoying, how in the heck do you find out what the current boundaries are of the school "districts" or I guess enrollments? There should be a map, gosh darn it, what's wrong with this state! or do we have school choice and I just can't find it?
Cara, I have found boundary maps on both Fairfax County and Arlington County Schools websites.
See here for looking up individual Fairfax Schools:
http://commweb.fcps.edu/directory/
See here for seeing what school attaches to a particular house address:
http://boundary.fcps.edu/boundary/
DCGirl,
sweet! Thank you so much!!
I should add that I'm not sure which county you are looking in, but I imagine that if you google "County X Public Schools" you'll find the main website and the boundary maps will be lurking somewhere therein.
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