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Monday, March 2, 2009
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35 comments:
What is the "Jim Ratio" and is there any significance to the numbers falling back to 2006 levels?
I'm guessing that splitting the difference between 2006 and 2005 "could" be a sign that prices will start climbing. If so, that's still a ways off.
Would be interesting to see those numbers by country too.
Today's weather is baking in an excuse for March's numbers to be subpar.
Thanks but the "Jim Ratio" seems a little optimistic. 2009 does not feel like a "hot market".
Given the economy, I don't expect people to start bidding wars.
Thanks for the numbers, by region will be even more interesting.
So far this confirms what we've been anecdoctally reporting about our redfin mailings, way more things going under contract lately.
People are putting in bids, that's for sure. Whether they close and what they close for is another question. And then there's the, is this the dead-cat bounce or the true bottom...
But this is definitely a flag to would-be sellers, the buyers are there, come and grab us.
We got a breathless postcard from the local realtor in our mailbox saying that a 2BR/2BA in the Belvedere building in Rosslyn had gone under contract/sold for $590k on the the first day of listing.
This is unbelievable, especially as there are 6 other places in the same building of the same model for at least $50k less. (Still way overpriced)
http://franklymls.com/default.aspx?m=R&l=200K&h=1000K&s=belvedere+22209
Other posters were wondering who's buying $600k homes in this market. I'm wondering who's buying $600k 2BR condos! The building is 20 years old too.
To follow up from the weekend's bits bucket, I'm in the same boat as Gen Y Dink, Jeff B, tiredbubblewatcher and others are in with regards to age (just turned 30), income, situation (two married professionals, no kids), and I currently rent in Arlington. We want to buy a SFH or townhouse with 3 bedrooms and 2 bathrooms that is within a mile to the metro.
I only know one other couple my age who owns a house, but their combined salary (over $300k) is well above what my spouse and I bring in. All of my other friends rent.
We are also seriously contemplating a move from this area. When I think about buying a house here, even though we've saved up a huge downpayment over the last 4 years (and paid off massive student loans at the same time) and could swing a $500k mortgage, I just don't want to. I don't want to be paying so much money for a piece of crap house with a horrible commute. Even being a mile from the metro isn't all it is cracked up to be, I know--it's not like riding metro is a pleasant experience nowadays. I don't want to start feeling nervous about the jobs market (we couldn't afford that big of a mortgage on one salary).
And no offense, Cara, but your link with the $250k houses in Springfield was downright depressing.
If we do stay here, I start to think about priorities--for the amount of money we'd save by renting instead of buying, we could afford several nice vacations every year, max out our retirement savings (god knows there won't be any social security 40 years from now), save for our kids college educations, etc, etc, etc. Lots of things that I wanted now don't seem so important. Do I need a space for a home office? Probably not--I could image all my files and save them on my laptops (backing up everything on external hard drives of course). Do I need a space for guests? People who visit can get a hotel or sleep on my couch. Do my hypothetical future 2 kids each need their own room? While they are little at least, they could share. It's almost like a living-in-Manhattan way of thinking, but without those Manhattan salaries.
So for now, unless prices start coming back down, we are either going to move or stay here and continue to rent a small space.
MM,
yes, they are indeed the bottom of the barrel. If you want to look at nice things that may come into your price range you need to check out the listings between 350k and 500k. A lot of nice listings are around the $425k mark (last I checked). These are the parts I think will continue to settle down. And there's lots of nice townhouses between $300k and $350k that would meet all the needs you mentioned. It's a matter of, does the blue line meet your commuting needs. The inventory is a little picked over right now, and there are lots of "posers" in that range too. ("3 bedrooms" where the 3rd is a finished unsegmented basement...). But if you can comfortably swing $325k, and have no great yearning for a yard to maintain, then there's actually quite a bit to choose from down here.
Cara (I think you meant to address me, not MM), we've considered the blue line and decided the area of Franconia-Springfield is just not for us. We'd like to be closer to our jobs in the city. If it weren't for the fact that both of us work downtown, we would be open to areas further out.
WW, I can understand your frustration. Housing in the most desirable areas (such as N. Arlington) remains out of reach for most folks in your age/income bracket, and that isn't likely to change. I do believe in the housing-ladder approach, however, which is what enabled me to buy in 22207. Still, everyone has their own personal frustration level/timing/career and life goals, and what works for one person doesn't necessarily work for another. Good luck to you!
WW,
oops, who knew I could have upside down dsylexia as well as left right.
Yeah, the yellow line is a straighter shot to downtown, but I really don't like Huntington.
Now that DC is getting a vote in the house, have you taken a look at Eastern Market?
This may be an unpopular post, but it is my honest opinion:
The "woe is me" and pessimistic "sky is falling" attitude on here is quite surprising. I can't imagine what the average post was on here in 2006, 2007 and 2008...
The opportunities out here right now are for the taking, and now is the time to take advantage. Whether it is to buy someone's short sale/foreclosure, or to buy someone's "starter" house as they move up to buy a larger SFH to take advantage of the deals.
With interest rates the way they are, and housing prices being at serious lows from the last several years, I can't see why there is such a negative attitude.
Looking to buy a house myself, I looked for months and months at a set price level (500K) and this is what I will share with you:
My 500 number was conservative to what I really could afford. I searched in about 12 different zip codes, some in FFX and some in PWC. It did become quite frustrating not finding what I thought I would. A good, respectable neighborhood with great schools, and a house that "looked" like the one I wanted.
My lesson learned was this (for Gen and others):
If you have exhausted all houses within a particular price range and haven't found what you are looking for, are getting eager to find something:
1. Look one or two zip codes away from your "dream" zip code. You can stay in FFX Cty but just shift where you are looking.
2. Look at a purchase price of 15-25k more than what you had in mind, assuming you were being "very conservative" in your earlier numbers.
3. Keep in mind repair/replacement costs on many of the homes you are looking at. If you are looking at 500k homes but they need new windows or other key items (new carpet throughout, they have exterior moisture damage to wood, they need new cabinets) you can look even higher. These items can be expensive and since no seller gets dollar for dollar on their repairs, you can get them at a discounted price if you buy a more expensive house with these items already repaired/replaced.
Anyhow, when I increased my price range from 500k, I suddenly found 4 houses in great neighborhoods that I really liked. They may have added 10-15 minutes to my commute and will cost a bit more per month, but I will be living in a very comfortable house, paying a ridiculously low interest rate, and enjoying the quality of life much more than I would had I settled for a 500k house in a seedy area with mediocre schools.
My last bit of advice: Just because the market is great for buying now, don't think you have to find your "dream house" right now. All of you 30 year olds, you have many years to go before you need to find that dream house. Get in while it is a great time, get something you will be happy living in, and enjoy your life for another 10 years and then move up.
I think some people could be limiting themselves due to geographic area. If you will only buy in a certain zip code, then you may have to wait and wait and wait. But just because you are waiting and frustrated, does not mean it is not a great time to buy and does not mean there are not some reasonably priced, very nice houses for the taking out there.
Also, for the Franconia Springfield TH that are 250k, might I suggest looking at 300k and a little further West? I have not run any searches, but it seems from the list you displayed, many of those homes need a fair amount of work and unless you are living there for 10+ years, you may not get back all you put in out of pocket. Bump up to 300k instead, and search in 22152 and 22150, and I am sure you will find some better options. The commute may be(no more than) 10 minutes longer, but I bet it will be well worth it.
Sorry for the optimism...
T,
I'm just not in love enough with the D.C. area to make those sacrifices. Sure I could live in the outer suburbs in a decent SFH for 'only' $500k. But that's not appealing to me.
We all have a different set of criteria for what we'd like in a home. We look at what's out there and match it up with our likes/dislikes. The real problem results when I look at options that don't involve living in the D.C. area. There's no way NoVa can compete. I consider $500,000 to be a lot to pay for a house. If this area provided a ton of ancillary benefits then I might consider it. To me it doesn't.
I'm not committed to leaving this area. We'll be renting for another year at least to see how things go and decide what we'd like to do. At this point though I don't believe this market will move to a level that will appeal to us.
I really am mystified with statements of the "now is a great time to buy" variety. I didn't buy 5 years ago because those prices had no basis in reality. Sure prices are cheaper now but that by no means makes them a good deal.
Also if you're talking of buying a place to live in for less than 10 years I'm afraid that low interest rate might not end up as that much of a benefit. What happens when you go to sell in 5 years and the lowest rate out there is 9%? Do you think people will still be willing to pay as much as now if overall prices have been stagnant?
Tom,
I suggest that you buy several condos in n.arlington. It will help you quickly move up the housing ladder. Did i say up? Oops.
T,
I'm looking up to 300 for our search, and including Burke. There are actually a lot of good deals in Burke, but I strongly prefer the metro to the VRE for convenience. So, I'll be weighing that when we start our search in earnest.
Basically, where we're at is that, this may indeed be the bottom, but if it is, we need to move up to the $300k price range to get what we want. That's still in our affordability limit, but not for this year, since we don't have the 20 down for that yet and are unwilling to pay PMI (and see no reason to hurry). So, we're seeing what's out there for $250k this year, and if we don't find what we like, I'm sure there will be plenty at $300k next year. If we get a windfall from my mom selling Dad's boat, that plus the $8000 back from the Fed may enable us to buy closer to $300k this year, but we're not there yet.
But I agree, in many areas, now is a good time to buy, and your advice on how to expand your search is modest and reasonable.
I think a lot of people on this blog are looking for the 600k homes to come down into the 350k range, and that hasn't happened. Whereas the 350-425k townhomes have capitulated down by about 100k.
I also think that the general economy will factor in, and hasn't had its full impact on the housing market yet. Things are getting visibly worse in the economy, and while DC will be insulated from this somewhat, it will have some impact on our house prices as well. That may be only a marginal 5-10% impact, but it does imply to me that there's no hurry.
Dream home? You must have me confused with that couple in the Washington Post article looking at the 1800 square ft townhouse, because a place that size would be a dream home to me. LOL,
Just wanted to share the resolution to a story that I posted about while ago. My mom rented a condo in south FL for 2008. She tried to work with the condo owners to go month to month after a year and they refused, so she moved out. Now, when she moved in, she had problems because the hot water heater broke leaving her with no hot water for 2 weeks and a leak that inconvenienced her. The owners were stingy and compensated her for maybe 4 days or 8 days of rent, but certainly not the full 2 weeks. They also did not install all light bulbs. They were pretty nasty to her during the term of the lease, so when she moved out, she took 2 of her light bulbs back that she bought.
So, the owners sent her her $800 security deposit back, minus $75.92 for light bulbs ($5.92) and for some nonsense 'repair' to rewire the VHS player and TV back together ($70). They sent her bills for these items to show why they took money out of her sec. deposit.
I looked at FL law, and the landlords were required to send my mom notice that they were intending to impose a claim, and if they did not send notice, they forfeited their right to impose a claim on the security deposit. I wrote a letter on my mom's behalf saying this, and saying that there was no requirement in the lease with respect to the 2 things they charged her for, and my mom signed the letter.
They send her a certified letter saying they are looking into her claims. On Friday, they sent her a package. It cost $14 to send. Inside of it are 750 ten cent checks, and a 92 cent check. These people bought a stamp with my mom's name on it, and a stamp that says "No dollars and 10/100", and they had to date the checks and sign the checks by hand.
Who does that?!
Moving from in close to "out there?"
This article is clearly a fabrication because we have it on good authority that there is no such thing as a "substitution effect."
People who want to live in close simply won't live anywhere else, no matter how cheap prices get.
(Seriously though for a second, I feel bad for these people. It sounds like they haven't done much research and aren't getting much good advice from "their" realtor.)
"Who does that?!"
A Psyco
turn them into the Florida BBB
Konstantin said: "Tom,
I suggest that you buy several condos in n.arlington. It will help you quickly move up the housing ladder. Did i say up? Oops."
Konstantin, if you read this blog back a few weeks, that's exactly what I said I was interested in doing, though it's to buy one condo, not several. I realize you're being sarcastic, but you may not realize this is actually a good time to buy a condo in N. Arlington.
MJC,
That's absolutely insane. Has your mother talked to her bank to see if there's an easy way to deposit that many checks? Maybe they have an idea of how to deal with the situation.
It would be fantastic if the landlord's bank charged a fee for writing a check below a certain amount.
MJC-
Those landlords sound insane! I'm glad your mom moved out...I wouldn't want anyone who would do that to have a key to where I lived!!!
Cara-
I laughed at the houses in your Springfield 250k link. No offense, but talk about the Land of Misfit Toys. Its like someone in the 60s decided they were going to *try* to build the ugliest houses in the world, and Springfield was the lucky locale!
Tom,
I do not have much practical experience in real estate, while you have plenty, and it is local experience, which is even more important. I'm currently updating loss forecasts for certain loan cohorts and things get more grim every month. It used to be sub-prime loans only which were in danger of default, but now it is anybody whose ltv (where v is a big unknown, to be honest) is higher than 80%. The big advantage of n.arlington I can see --- there is almost no REO sfh properties there currently. Quite a few REO condos though, and more will come.
And even the REOs/short sales that are avaiable on the market now will not make them cashflow positive rentals. Especially with the tendency to have high condo fees. I'm pretty confident, that the layoffs will hit the population in n.arlington pretty hard, there are plenty of jobs filled right now, that do not contribute much value in IT, government (especially DoD and HS) and finance. You just need to jump-start downward spiral and it will be very difficult to go away from it. Won't say there will be something apocalyptic happening with sfh in arlington (could go down 20% easily though), but I see plenty of downside for condos. They can go down well below rental parity. And current rents do not have to continue increasing forever, unless inflation kicks in.
Meshell,
Are you serious?
There's neighborhoods just like these all over the US. I've seen them in Jersey, Tennessee, MD, Illinois. They're not pretty, but they are ubiquitous from the 60's housing boom. I've even seen some in suburban MA, and Rhode Island were one would have thought that existing stock would all have been older and nicer. Nope, they have these suburbs too. This is part of why I think this area is under-utilized and will slowly or quickly be taken over with tear-down rebuilds near the most desirable schools. During the boom this was too expensive to start, and instead happened out in Woodbridge, but given the much better commute from here, I think it will happen. Either that, or we'll turn into the new Anacostia.
My mom is going to the bank on which the landlords wrote the checks today. She had a sobering thought - what if all the checks bounce, and she is charged a $35 fee for each check? That would be $26,000+ in bad check fees.
Anyways, she is going to Bank of America today to cash the checks, and she has a stamp of her name if they'll accept that.
I'm kind of hoping that BofA does something to the landlords like charging them a fee since BofA is probably going to suffer the most from this inane prank.
mjc,
holy crap, that could actually be true. Good thing she's going to the bank on which the checks were written. She's going to need them verified in some way, to make sure they aren't even more spitefully hurting her and themselves at the same time...
Crossing fingers for her. They could be false, not have enough cash in there, or have canceled them after writing them. Given their actions to date, I wouldn't put it past them.
best of luck.
"I realize you're being sarcastic, but you may not realize this is actually a good time to buy a condo in N. Arlington."
Of course it is, just like always...
MJC, document everything just to be safe.
When dealing with the nutty types it is best to assume the worst.
Tom hearts N. Arlington
NovaWatcher said: "Tom hearts N. Arlington"
Well, I do like N. Arlington. But I've always based my decisions on RE purchases on my own calculus of expense and profit. And by purchasing and selling RE in N. Arlington, I think I've done reasonably well.
I appreciate the comments by such thoughtful posters as Konstantin and Cara. I don't know what the future holds and I don't know how long the recession will last. Could RE values in N. Arlington go down substantially? I suppose they could, but that's a risk I'm quite prepared to accept because I believe any downturn will be relatively limited and fairly short-lived. And I think the chances for an erosion in RE prices in the parts of N. Arlington I know best (yeah, yeah, within walking distance of... somewhere) are quite small. Those parts of N. Arlington are simply in high demand for the reasons I know well and buyers are prepared to pay a substantial premium to live there.
tom and t,
The holding up of premiums for certain areas, combined with buyers choosing to expand their searches to other similar neighborhoods is actually part of the mechanism behind gentrification. As owners hold-out for high prices, buyers go elsewhere and help refurbish and lift up a new neighborhood that already had enough good things about it to be worth considering as an alternate.
This could be how N. Arlington (and Foggy Bottom etc) got where it got. I.e. from all those who couldn't afford Georgetown and Chevy Chase.
We shall see. Someone's got to keep up high house prices to maintain the fabulous high schools so that I can move into the poor part of the neighborhood when my kids reach high school age.
:)
Slightly off topic, but a question I am hoping someone on here could answer. Is there a place to get recommendations on realtors? I am trying to find one that knows the Alexandria/Arlington area well. I dont want to waste lots of time looking at places that might not be a good fit. I would like a realtor that has already seen most of the properties I would be interested in. Oh yeah - I am looking for a 3-4br in the 300-400k range. Large range because it all depends on how much work needs to be done.
Thank you all in advance.
Amanda,
I don't have any realtor recommendations but others here probably do.
As for a $300-400k 3-4BR in Arlington or Alexandria, I think you'll find the pickings pretty slim. There might be a few in the far western portion of Arlington or Alexandria but you'll probably have better look looking in Fairfax county just beyond the Arlington and Alexandria borders. I can't think of any house listings recently that meet those criteria in the 2 counties.
There are some choices in that price range in the less desirable parts of Alexandria.
http://franklymls.com/AX6827086
(short sale)
or
http://franklymls.com/AX6887257
or
http://franklymls.com/AX6906984
Asking $324k, last sold for $650k in 2006... ouch!
I would be happy to look in Fairfax and Falls Church as well.
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