Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Luxury still sells even in Burke, when it's priced right. This gem:http://franklymls.com/FX7000124"finally" went under contract after 28 days at the $319k price.Now if someone could just go scoop up this one:http://franklymls.com/FX7023769so that I don't have to think about what I can't afford, that'd be nice.Now, the funny thing about the second one is that the owners still chose to list over their 2004 purchase price. (As did another of these units down the street in an undesireable location backing up to a major road, with fewer pretty upgrades). Now, these are pretty duplexes, a good size 2000 sq feet, so a great compromise home, but do they really command more than the near peak 2004 prices? Neighborhood comps make it hard to say, there were over $390k sales prices last year, but there were also a number of REOs under $300k. The prospect that something like this second one might be priced in our price range next year may be one good reason to hold off... Going month-to-month in September and buying off-peak season is sounding better and better based on the completed sales I'm getting...
Cara, why do agents use those distorting cameras? If they think it makes rooms look larger, maybe it does, for viewers with fish (or fly?) eyes. To every else it's impossible to get an accurate sense of the room and annoying. Are you really sure you can't afford the second or do you just want to stick to a strict guideline?
31 year old mom of 8 year old and 3 year old, with 3rd child on the way, looking too buy in woodbridge. I was wondering if anuone had any recommendations on subdivision located near the VRE with pretty good schools?This is my husband and I's first house, as we have been waiting out the bubble, so any advice is welcome!!Thanks! Christina
christina,check out greatschools.net for school rankings and characteristics. schooldigger.com will map them for you, which is useful, but their rankings are inaccurate.Ace, the fish-eye doesn't bother me because it allows you to get a wider view than a regular digital camera. The digital cameras have inherently narrower fields of view than analog cameras had due to their limited CCD size. So, I actually like the fish-eye. If you're going to buy it, you'll walk through it anyway.At $398k, no I can't afford it. If it were to come down to $300k then technically, yes we could, but we'd rather have the full 60k DP, and a fully funded emergency and repair fund before buying at that price, which would be next spring rather than this spring.What I'm hoping is that this one:http://franklymls.com/FX7015203comes down to under $300k due to it's terrible location. The problem is, we don't know how much equity either of these owners have, so it's possible that they, personally, can't sell for under these list prices. So basically I'm thinking about watching this neighborhood like a hawk waiting for a seller who can meet me half-way.
There's a lot of optimism out there. The stock and bond markets are reacting nicely. The housing market is moving into the spring selling season with lower prices, but everyone seems to be OK with that on the whole. And we're even having legitimate calls for bottoms in certain areas.None of that is necessarily a bad thing. But every now and again, I need some bad news and some pessimism. But it had better be reasonable, otherwise out come the tin-foil hats.So, here are some very legitimate reasons to look past the current excess optimism and remember that we're still in a world of hurt.1) Unemployment is still going up. Unemployment stats tend to lag overall economic recovery, including from the housing market. If this was the bottom, we've still got months of unemployment shake out.2) We still haven't had a single major home builder go bankrupt. I personally don't think this downturn will end without that happening. Most of the best had options on their land and cash reserves to cover major price depreciation that we've seen. But the weak players? Someone has to be dying out there. The BK could come post trough as well3) The XLF (Sector Spider for financials) is still significantly below it's 200-day moving average. Technically a sustained recovery needs the XLF to breach and maintain the 200-day for a while. Historically financials lead the way out of recession. When the XLF does go above the 200-day and stays there, the recession will be on it's way out, or over.4) Housing inventory is still at historically high levels, even not counting shadow inventory. Transactions are also up this year so far making MOI and DOM numbers look good. At some point we run out of buyers, even folks like Cara and me. If there are still sellers at that point, it will be worse than ugly.5) The results of the stress test will be finished end of this month. That could be a source of major confidence loss; either from lack of transparency--or from transparency showing banks in bad straights. Either of these could absolutely wreck the current optimism fest we're having. 'Cause bank balance sheets are still bad. 6) All the stimulus, federal, Fed, state and corporate will end some day and all the growth it is sponsoring and maintaining will go away. Even if it is unwound neatly (a feat so daunting that I think it to be pretty much impossible) that will still be a major net drag on the economy short-term (though clearly better long-term).All of this points to such a prolonged recovery that if this was the bottom, we're already overbought and are likely to have several years of minimally impressive results. This may be the corner of the L. I don't think so, but that's extreme pessimism. Even just the base-pessimist says: from the corner, it's a long horizontal line.
ace,p.s.But here's the rub. If the second one sold for $311k in 2004... That says really bad things about its appropriate price going forward. Basically, what discount off 2004 pricing is going to be a true near bottom price? Given it's location backing to a major road and a good 1.8mile hike to the VRE, even with the large space, I can't imagine this is worth more than $260k. But I also can't imagine that the current owners will accept such a bid. Unless they're moving back to Europe (based on the duvets).
From today's post at IHB:"Bear rallies bring out another phenomenon: overhead supply. When prices drop, people who may want to sell do not because they cannot get the price they want. This pool of would-be sellers do not appear in the inventory statistics, but they are out there. Once prices start to rise, these sellers come out of hiding and list their properties for sale. Most will list their properties at a breakeven price hoping to get out without a loss. Of course, the cummulative impact of all these new sellers in the market is the death of the rally."Gee, fits exactly the two new listings I posted, doesn't it?xpovos, good points, especially on the stress tests. It's definitely worth waiting to see the impact of those on confidence before calling a "bottom".
Cara,Those are both nice looking places. In regards to pricing on the second, the listing notes they renovated and expanded, so I'm guessing some of that is baked into the price. However, it seems to me what is really causing the price stickiness (on this and other properties in non-distressed, non-overbuilt areas), are current low interest rates. I can remember not that long ago, circa 2000, when an interest rate of 7-8% was considered "good"! So if someone's just looking at monthly payment, and for example can pay 2000k/month on housing, a 300k mortgage would be feasible now at 4.5%; however, at 8% it would be closer to 200k. That disparity is what concerns me most about housing prices moving forward, because I just don't see how the fed can keep rates this low indefinitely.
Christina,My husband and I just purchased a home in Manassas Park (Blooms Crossing), but we also were very interested in parts of Woodbridge. We really liked the Lake Ridge areas, spoke to parents at the area playground and they raved about living there. They are close to the VRE, Express Bus service to the Pentagon and other areas, good schools. The Lake Ridge subdivision is the largest one in PW county. It's elementary, middle and hs are dedicated to those residents. It is designed so that no school is more than 5 minutes away from every home (if I remember correctly). Great recreational offerings too (pools, playgrounds). All kinds of housing to choose from - townhouses and single family residences. I liked the area a lot but liked the small-town atmosphere of Manassas Park even better. Best wishes in finding a home you will love!By the way, first time poster here. I have really enjoyed lurking and benefiting from the wisdom and experience of folks here. Thank you for such an interesting blog that I can't stop reading, even after my home search is over!
GiGiIt's such a terrible lot though, and upgrades can't undo that.Good point about the interest rates. They were equally low in 2004 (or close) but they can't stay this way forever. And unless there's wage inflation to go along with it, prices will have to come down. Both of these sellers are looking for "get out of jail free" cards. But someone is going to take that loss, and I don't want it to be me.
Cara,No problem, just had to share my case of the Mondays.
Has anyone had the same observation of this RE trick:I have recently seen 2 homes go "Under Contract" with a new listing price at about the same time as the home gets a ContractEx: a home in PWC (Haymarket) with a DOM of >300 listed for 650K, suddenly changed to 535K & "Under Contract".I think the home has been lowballed & the RE Agent is trying to "soften the blow" ?Anyone else seeing this?
spunky,I've seen it on short-sales, where essentially by changing the list price they are allowing competive bids before selling to the offer.
Cara,100% agreed, which is why we've remained on the fence. It was low interest rates that got the bubble rolling, then speculation/flipping, funky loans and loose lending standards that really stoked the fire. Now that lending standards have tightened and speculators are mostly out of the market, what happens when interest rates inevitably rise? That concerns me more than anything, especially given the transient nature of our lifestyle!Spunky -- I have also seen that done. It may be some agents like it to appear they are able to sell their listings at 100% list price. Or, if one was to be more altruistic, maybe they change list price to actual contract price to give a better picture of the comps out there. I imagine it's not fun trying to tell another seller their house is worth only 5-something when another appears to be under contract at 600+.
Thanks Cara-I don't know if they were Short Sales or not, but that gives me a good place to start looking for more info-thanksXpovos-I agree with all you wrote about the "Spring optimism" we are currently witnessingThat's why I'll be shopping hard in July/August, when a bit more Economic news has hit-the-fan and all those Spring Sellers (and left overs from last Fall that are still listed for 750K) haven't sold.................We'll see who wants to make a deal then
spunky--i have seen that phenomenon more and more. i assumed it was agents trying to look like they got asking price, but perhaps i was being too harsh.
tab,gigi,spunkyIf the seller's agent wants to make sales (i.e. live) then their first job is to get their sellers to list at prices that will encourage bids. So, changing the list to reflect the actual bid helps the seller's agent and the firm to convince their sellers to price accordingly and get transactions. Conversely, it keeps away sellers who can't afford to sell for that price, which means less time wasted.So for anyone willing to look at the big picture, changing the list price to reflect the real near-future comp, makes perfect sense.
Cara,first listing is kinda nice. does not have a garage though. i like the back-yard a lot, and finishes seem to be decent. nice work from the reo company and a quick sale.
Slate's the Big Money, What if housing never bounces back?An interesting take on the future housing prospects. A sobering historical perspective from a vibrant neighborhood in NYC.
"A final recommendation that will have a significant impact on how defense organizations are staffed and operated. Under this budget request, we will reduce the number of support service contractors from our current 39 percent of the workforce to the pre-2001 level of 26 percent and replace them with full-time government employees. Our goal is to hire as many as 13,000 new civil servants in FY10 to replace contractors and up to 30,000 new civil servants in place of contractors over the next five years."This isn't going to make the beltway bandits happy...http://online.wsj.com/article/SB123904207376593845.html?mod=googlenews_wsj
mortgage rates and house pricesT, jaime, GiGi and others have asked how mortgage rates impact prices. Here's a great graph illustrating how the intuitive idea that lower monthly payments enables higher prices doesn't hold water historically. New Zealand had a similar plot via patrick.net The San Diego one has more bubbles and troughs so is more illustrative I think. Basically, outside of the current bubble, prices and mortgage rates go hand in hand, not inverse. In NZ over the long term the correlation was only 0.1 (i.e. not significant/not correlated either way). But both show that current mortgage rates do not appear to be causally connected to prices. The good side of this is that we can't necessarily expect prices to head down when interest rates become sane again. The downside is that... hmm, not sure what the downside is. Harriet, enough people have been asking about this, that this one might need a coverpage link.
Cara,Interesting links. I don't think there is any question that monthly payments have become more affordable now based on lower interest rates. However, I'm not sure how one can extrapolate from there that higher interest rates won't affect prices? Just based on my experience, it seems prices and interest rates have operated somewhat in tandem with each other, the exception being the peak bubble years of 2003/4-2006 when all lending standards had been tossed out the window. While certainly now home prices have declined in conjunction with interest rates, I don't think it's *because* interest rates are falling -- rather it seems prices have just become more aligned with interest rates in terms of monthly payment affordability. Another thing worth noting is many people weren't using 30-year fixed mortgages during the bubble's peak; rather they were relying on exotic loan products that created a false sense of affordability, which in turn helped push prices upwards. There's some good historical data regarding interest rates back to 1971 at www.freddiemac.com/pmms/pmms30.htm that at the very least shows how current low rates are unprecedented in our lifetimes. It would be interesting to see this data plotted against median home prices over the same time frame, if any data expert out there was so inclined!
Sorry, but I wouldn't pay $400k for a duplex in Burke.
Leroy,Good quote. I've always wondered how you can take a government employee making 50-70K/year and replace them with a contractor billing $100-150/hour, or approximately $200-300k/year, and somehow "cut costs." Sure you don't have a pension, and maybe you have a more highly skilled employee, but really I just think it's a racket...My $0.02
Government contracting has gotten way out of hand over the last decade, and not just in the Pentagon. There are many cases where it makes sense to make use of them, but the promises of lower costs and greater efficiency have never materialized on a wide scale.The government simply isn't that good at negotiating with or penalizing contractors. Rather than seeing the "efficiency" of the commercial world brought to the government world we have seen contractors learn to play the game far better than the government itself seems able to. There is simply no reason the federal government should be relying on such a massive number of contractors to fill what are essentially permanent positions.
GiGi,yeah, that's not what I was trying to say...My point was that interest rates are not causally connected with home prices. The last thing I would have intended to suggest would have been that the lower interest rates now caused the price declines, that's just crazy. What this data shows is the two things going in tandem, which means that they're both probably caused by the same thing, i.e. inflation and fear thereof. In an inflationary environment it makes sense to lock in your housing costs despite the high interest rates that the fed sets and banks require in that monetary environment. But yes, the reason for the drastic departure from this trend was (at least partly) the proliferation of non-amoritizing products.We are at historic low interest rates, but a more subtle question would be how those interest rates compare when inflation is subtracted off? If we are in a deflationary environment then these 5% interest rates are at least as onerous as a more typical 8% interest rate is in a 3% growth environment. Really these things need to get compared over at least a 5-10 year time frame from loan origination. I.e. integrate the inflation over that time and compare it with the interest paid out somehow... My point being that now is only a uniquely good time to buy a house at these interest rates IFF you're not overpaying for the house AND inflation kicks back in to over 3% within the first 5 years of buying.Novawatcher,I wouldn't pay 400k for a duplex in Burke either, that's why I'm hoping it will come down in price. I think it's not worth more than $300k, even the nicer one.
Cara: I was thinking the same thing ($300k would be more reasonable).
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