From the Post: "Nevada and Arizona had the highest foreclosure rates during the quarter. Foreclosure filings in the District and Maryland fell during the quarter, but they increased in Virginia".
Also, the WSJ reports that "Year over year, housing starts were 48.4% below the pace of construction in March 2008".
Thursday, April 16, 2009
The Unparsed News
Posted by Harriet at 8:59 AM
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53 comments:
I wonder if requiring home owners to be behind or deliquient on their mortage before they can negioate a lower interest rate or loan modification has an impact on these figures.
Here are this months numbers from Realtytrac (i.e. 1 foreclosures per X number of households). As always, the higher the number, the better the area is doing...
Mar 2009
Arl - 1064
Alx - 836
Ffx - 361
Lou - 246
PWC - 148
DC - 866
Mo Co - 505
PG - 256
Remember Last month when I noted that NOVA numbers were the best ever (contrary to the state where they were getting worse)? Well, turns out that was likely just a blip. The rates above are not nearly as good as last month.
That said, they are pretty much right in line with what we have seen for the last 12 months. All NOVA counties are the same or slightly better rates than they have posted all year.
The other side of the river, especially Mo Co, has clearly gotten worse - it used to post Arlington type numbers, now it looks alot closer to Fairfax in its position in the pecking order.
In any event, this report suggests last month was just a blip, and that we are pretty much where weve been all year. Arlington continues to be best, PWC the worst - expect the price divergence to continue.
crt,
Wow. 1 in 361 houses went into foreclosure in 1 month in FFX? Or does this include all NOD's 30,60,90 day delinquencies etc?
It must, (hence the double counting complaints about Realtytrac) otherwise that would annualize out to 1 in every 30 houses going into foreclosure this year!! Which can't be right. Still, if every distressed house gets triple counted that's still more than 1 in a 100 homes getting foreclosed on in FFX and 1 in 40 homes in PWC.
That's nuts. Any better guesses on my fudge factors?
Another foreclosure metric:
We've discussed the "# foreclosures per total households" metric for measuring foreclosure rates before. This is just the given number of foreclosure filings for the month by RealtyTrac for PWC:
December 2007: 862
February 2008: 306
March 2008: 1,497
April 2008: 645
May 2008: 797
June 2008: 776
Fall 2008: hovered around 1,000 each month
December 2008: 1,101
January 2009: 866
February 2009: I forget
March 2009: 902
So PWC foreclosures peaked last fall, but they are still higher than last summer, and holding steady at that rate.
Also, I saw the same trend this month as the past few months: nicer, wealthier areas (Bristow, Gainesville) have higher rates (calculated by # foreclosures versus total households) than the poorer areas (Manassas, Woodbridge). The locus of foreclosure activity has definitely shifted.
Cara - yeah, that includes all types of foreclosure activity, so theres alot of double/triple counting going on, and many of those will never make it all the way through to actual inventory.
Still to say that 1 in 30 homes in FFX would have foreclosure activity at some point in the last 12 months? I dont think thats too much of a stretch.
Tabitha, your missing feb # for PWC was 633 (the blip). Overall though you are right - it has improved since the summer/fall.
Your info on the high priced/low priced is interesting. I wish I had been tracking that for a while over several zips - cest la vie.
crt,
To clarify, by "nuts" I wasn't doubting the veracity, just stating amazement. That's a lot of distress.
I think they "be crazy" in reporting numbers for PWC...
Taken from PWC page...
As of December 15, 2007, there were an estimated
134,516 housing units in Prince William County. This
represents an additional 36,464 units since April 2000.
Of the total number of housing units in the County, it is
estimated that 76,708 (57.0%) are single-family detached;
35,009 (26.0%) are townhouses;
Then I read an article that said PWC had a foreclosure rate of 8%..well, even at 10% that would be about 13,500 dwellings..duh, we have sold close to that many between 04/08-04/09. PWAR and PWC averaged selling 800 a month easy. I just don't have the exact numbers for each month. So, I have my doubts about shadow inventory and this "increase" in reporting.
tbw..the bottom.well in PWC/Manassas in the <200 and the 350-500 range it is white,smoking hot.Everything is selling above list with multiples. So, that market has already bottomed.I say this so you can watch certain zips and market activity. Will you catch the bottom? I doubt it. People are buying like crazy in Woodbridge, Bristol and Gainsville and they haven't bottomed out but Manassas has. Manassas gets all the publicity so the public thinks that is the area to avoid..not so..gotta watch your specific area of interest.
oopsy, i got my threads mixed up and my answer to tiredbubblewatcher is in the other one of today's buckets...
wait, so did your place sell Arkey? Or did you take it off the market?
TBW - I feel certain some areas will hold on to the bubble gains, if not for the spectacular income growth (i.e. Arlington up 43% in 7 years - most of that coming in the 200K+ income category), but for the fact that the area has really changed dramatically in the last 10 years.
I recently heard a demographer saying people's perceptions of ballston as an area "in decline". Virtually no one thinks of ballston that way anymore and buyers are reflecting that in their pricing.
So unless the pawn shops and "se habla espanol" car dealerships common 10 years ago return - I think its safe to say ballston will hold on to a greater percentage of its bubble era gains than other areas that havent changed much.
Cara..I'm taking it off on 5/3. that is 90 days. Will probably put it back on in the fall higher like around 600. The market has gone up since I listed. I now have 2 neighbors listed both higher than me and they need to sell.I have a San Diego person coming on 4/20. I'm still showing like crazy..even tonight at dinner time..6-6:30. My main competior is banks...seems like they give a better rate to buyers on their foreclosures than they do to re-sells..just found this out..I'm getting so cynical I'm starting to believe all this traffic is nothing more than people getting ready to list! I watch this one person down in front taking pictures on Easter Sunday..like I've said..this market is crazy. I've never, ever seen anything like this. kinda fun really except for the inconvience of being chased out all the time. Its coming off in May because I open the pool and after I clean and keep it up I plan on using it without an audience!
tiredbubblewatcher,
it depends on the employment in this area. if there is still enough yuppies with decent incomes who want to live in these condos, they may keep some of the bubble gains. also note that rents in the area are pretty high, you end up paying at least $2500 for a two-bedroom apartment in a highrise, which is about what you will pay for $450000 condo including interest deduction, insurance and condo fees.
arkey,
Okay just clarifying. So you're just outside of the market that you say is selling like hotcakes.
One hopes you're not taking yours off the market in deference to your two neighbors who "have to sell". Having two near-neighbors priced right above you is good way to convince buyers that yours is the one that's priced "just right" (assuming the houses are similar). At least it seems to me like a better plan then pricing it higher in the fall on the logic that the pickings will be fewer and thus the buyers will be desperate to get in on the last good deals of the bottom...
TBW,
Re: where prices bottom out in the more "desirable" areas. This is where I think interest rates do/will play a key role. For example, taking a look at Harriet's recent yearly #'s shows Arlington with a median price of $215k in 2000 and $336k in 2003. Factor in that interest rates in 2000 averaged 8% and in 2003 were about 5%, and you are looking at almost identical monthly mortgage payments (PI) of about $1700 at each purchase price. So personally, I see 2003 prices as being a real sticky point provided interest rates stay at their currently low levels.
tbw,
from your discussion it seems to me that the sticking point is rents. If rents could be assumed to not drop, and you can use the lower monthly payments to absorb a 25% loss, then it seems to me like its time to start shopping. But rents being $2500, and at 2006 levels still... I'd say take a 10% discount off of rents and re-run the numbers. Because as CRT said, in the Ballston corridor, some of these gains were not just the bubble, some of them are real. I don't personally know the area, but if what everyone says about it has an ounce of truth in it, I don't expect prices there to go under a 2002 roll-back, even at the absolute bottom.
One dynamic that hasn't been discussed as much, is that for the less expensive areas, the rents in the more expensive areas cause the purchase prices to look cheap. Whereas if you're already living in the most expensive area? There's nowhere for people to move from. So the rents in expensive areas help prop up the prices in other areas, but no where other than transplants from Manhattan makes near-metro Arlington or Capital Hill or Chevy Chase or Georgetown look reasonable.
The point I'm trying to make is that rent decreases if they happen in these places may have a more direct effect on the prices for condos there.
Cara..my house is well priced under 08 assessments and it's a tad bit over the hot market of the 350/500. I'm at 565..the other one 3 houses down is 674 and the one out on the main entrance is 588..all the same age (89/90)..pools, private, parklike primo subdivision. I'm taking it off in May because I swim and garden and have fun. I don't want to be bothered at the last minute with lookers. Desparate buyers?! Hey I've bought quiet a few homes in my time and I've always bought when I needed a home not by price points, charts or whatever. I buy homes, some people buy investments but I've done ok with just buying a home and selling a home. It's never been my retirement package! I'll price it to market in the fall. Right now I'm priced at 08 winter and spring 09 is listing 10% higher than me. Heck even foreclsoures in my zip are listing at 100% of 08..DUH!
"TBW said...
I agree. I wonder what happened that got everyone interested in the area this decade. The Orange Line has been around for quite a while."
Its hard to say for sure TBW, but its likely demographic. Im still trying to get my hands on more info before I post this, but it looks like Arlington, like DC was suffering from a decade after decade of "white flight" as people continued to flee to the farther out suburbs. In fact, were it not for the 1st generation immigrants moving into Arlington (say 1980-2000), its population would have gone into freefall.
This all did start to change around 1998-1999. They remade Ballston into a closer in reston town center, and people (particularly high income whites) responded. Almost a "if you build it they will come" sort of thing.
Again, im still trying to get my head around some of the demographic info I have (ACS reports), but if its anything like I suspect, its a pretty signifcant change in people who are now interested in places like Arlington. I will try to post some of that data in the next few days.
arkey, I've been to one of your open houses ;)
Really Tabitha..I only had one in Feb.
Yep. I haven't been watching your house since, just because we locked onto the one we are closing on tomorrow.
I have dear friends in that beautiful neighborhood. One sale there was used as a comp for our house's appraisal.
TBW,
I think the idea was that everyone would want it, not just young singles and dinks. The "town centers" around here were case studies in my sister's urban planning classes. There's a whole town-center movement in urban development.
"TBW said...
I think one reason for the increased desire for Reston Town Center-Ballston type living might be later marriages and later first children."
Thats the demo - and yes at the margins it is continuing to increase. And the developers do seem to get more $$$ per square foot on the town centers when properly designed.
Ancillary to that (and totally anecdotal) is the concept of "walkability". Look at how many people on this site want something that is "within walking distance of ABC" or how many MLS listings note how its "walkable to this or that".
Again just anecdotal, but gut tells me that walkability wasnt a common selling point even a generation ago...
As much as I'd like prices to go back to early 2002 (I bought then and sold in spring 2007) and even though that was the beginning of the steepest part of the bubble run up, it's hard for me to think general prices will go down that far unless the national economy gets REALLY bad.
Why? Because that winter we had planes flying into our buildings, anthrax in our mailboxes, snipers at our gas stations, and, a bit later, the highest regional unemployment since before the internet boom started. And, in 2001, interest rates bumped up before 9-11 knocked them down again.
And after that, we had Homeland Security hiring up, congress spending like drunken sailors (more hiring, bonuses, etc) tax law and other changes (hiring and revenue for policy firms), a lobbying orgy (hiring, revenue) and banks giving loans away for free.
So, back toward 2002 prices, sure, but down past the mid-winter prices that year? Probably only in a Black Swan scenario, like another airplane or a lost decade.
I'm still spending a lot of time looking at the Woodbridge, Montclair, Lake Ridge and Dale City listings. I'm definitely seeing a lot of activity in the sub $300K SFH area, no doubt about that. But I'm also seeing list prices continue to come down; albeit much more slowly than last year so far.
Anything in poor shape and THs are lingering though. It's simply astounding. Clearly there is a price premium for a SFH over a TH, but quality for quality, it's getting close to $150K, or about 50%. That's a very large hit, and I would expect some equilibrium to return. That might come from TH prices rising as inventory falls.
But my 'money' is still on SFHs coming down a few more notches.
"I wonder if Arlington might be very tied to how well (or poorly) DC is doing. If Arlington picked up around 1998-99 that corresponds to when DC finally got rid of Mayor Barry and the Verizon Center helped revitalize the eastern half of downtown."
I actually think it could work the other way. As DC gets less corrupt / more livable, Arlington loses its comparative advantage. Unless you have kids, but most people don't want to raise their kids in a condo.
Can someone help me validate some rent vs. buy assumptions? Assume rent is $1650 - $1750 for a townhouse (outer Fairfax County). I would calculate a good price to buy at about $250k - $300k, but with a firm stop at the 300k range. Assume 5 year ownership.
Two calculators I checked:
1. USAA2. New York Times (thanks, cara)
What do you think?
That's interesting about Reston, I thoughy that was considered a nice area. I lived in 2 different townhouses in 1998-2000, one on Silentwood Ln and the other on Glencourse Ln. Both are very close to South Lakes HS. I know nothing about the school really but I don't remember hearing anything bad about it at the time.
I've always liked that area much more than other places outside of the beltway in Virginia. The neighborhoods were very green and had great running/walking trails. The shopping centers were nicer than the giant strip malls prevalent everywhere else in NoVa. I'm surprised that it's considered an undesirable area. I never liked the Reston town center though, at that time it was rather small and sat in the middle of a ton of undeveloped land. There wasn't much to entice anyone to go there. I've heard that it's MUCH larger now, I'll have to go check it out sometime.
Contrarian - unfortunately my data doesnt go back that far, and after 1 months time, realty trac removes the old data. That said here is what I have (households per thousand in foreclosure)
May 08
Arl - 1216
Alx - 1108
Ffx - 331
Lou - 197
PWC - 111
Jul 08
Arl - 1357
Alx - 751
Ffx - 226
Lou - 169
PWC - 103
Aug 08
Arl - 1200
Alx - 1204
Ffx - 306
Lou - 227
PWC - 95
Sep 08
Arl - 1142
Alx - 944
Ffx - 271
Lou - 200
PWC - 87
Oct 08
Arl - 1185
Alx - 862
Ffx - 309
Lou - 182
PWC - 95
Nov 08
Arl - 1029
Alx - 852
Ffx - 411
Lou - 228
PWC - 145
Dec 08
Arl - 1064
Alx - 1171
Ffx - 299
Lou - 230
PWC - 121
Jan 09
Arl - 1099
Alx - 739
Ffx - 435
Lou - 285
PWC - 154
Feb 09(improved #s - likely a blip)
Arl - 1658
Alx - 1232
Ffx - 478
Lou - 317
PWC - 211
Mar 09 (back to normal)?
Arl - 1064
Alx - 836
Ffx - 361
Lou - 246
PWC - 148
As the rationale for foreclosures is transitioning from flippers/speculators (heavy in the outer areas) to job loss (widespread in all areas), I expect the huge divergence in foreclosure rates by area to diminish. This looks to be happening, but its awful slow. Now with the bottom in sight, I have my doubts as to whether all areas truly will converge at a single "burndown" rate.
Jeff B -- count me in as another that is perplexed by the Reston "undesirable" statement. I have good friends that live there in one of the original Reston SFHs. It's gorgeous -- great parklike yard, tall trees, neighborhood dotted with neat contemporaries and interesting architecture. I've never heard them complain about the schools, either (no high schoolers yet, though). But still, I always liked Reston (the Town Center, too), and I also remember studying it in school as a model for suburban planning!
Regarding Reston,
South Reston has always had somewhat of a bad rep but there are many very pretty areas there. South Lakes HS will probably improve in scores, etc. with the redistricting. Many who thought their kids would be going to Oakton are livid.
South Reston will also be helped by the Metro coming in.
North Reston is beautiful and the elementary schools are top notch. We feed into Herndon Middle and Herndon HS in my area (not the best, but not bad). I can tell you everyone was concerned about the possibility of South Lakes or Rachel Carson when the redistricting hearings were going on.
The Town Center is virtually unrecognizable from a few years ago. The orginal Lake Anne Plaza has just been approved for major redevelopment (new residential, office, retail, etc).
It will be interesting when Metro arrives. Obviously a very positive thing for all of Reston.
Va_investor,
I don't think the things I like about Reston will benefit from a metro line. I'm pretty sure there will be a strong push to develop a lot more on all that green space. Like tbw said it all depends on personal preference. I'm sure plenty of people in Reston will welcome the extra development.
How can you not love a place that takes a chance on something like Terraset (despite Terraset's shortcomings)?
Thanks for the links too tbw, who knew Reston had its own blog!
Interesting color scheme on the blog, I wonder how they were able to get the Reston Association to approve it...
blacksilver 2010
For 1650-1750, I agree completely with your 250-300k owner-occupant numbers. However, I disagree with the rent number for "outer fairfax". 4bdrm TH's near the VRE in Burke are going for around $1550. So, I think the additional downside risk is in rents. The new norm for a TH rental could easily be $1350 for far from the metro/VRE and $1450 for walkable to public transit/ convenient to the fast road to the closest major employers. So I'd lop at least $100/month off your rent if not more.
Thanks, Cara! Where I'm looking, and I confess to vagueness, the TH rent range is a personal guess; there are THs above that and below that, but 1650 - 1750 looks right for the type of TH I am looking for. I can find a lot of listings with 09 tax assessments in this price range. Somewhat fewer with list prices in that range.
Jeff B,
The Reston "green space" is sacred and won't be developed. What's going is the old plaza at Lake Anne and some of the other low density structures. Similarly, at RTC the "older" strip centers with the big box stores are planned for demolition and much higher density.
It's all in conjunction with the two metro stations arriving in a few years.
In my observation, parts of South Reston were very poorly planned. In particular, the parking is woefully inadequate in many condo and TH developments. It seems also that low-end housing was too concentrated forming "pockets" of "bad" areas which all seem to be in South Reston.
I'm a big fan of anything walkable to RTC. RTC is certainly not Ballston or DC, but has become the next best thing for those who work or live out this way.
The demographics seem to include both young and old with close by housing (particularly in 20194) attracting well-educated young families.
blacksilver2010
It's also my personal bias that one should not actually compare the rent of the place you want to buy, but rather one rung down the housing ladder. i.e. it's reasonable to expect more from your bought home than from a rented one. This allows for the less easily calculated additional liabilities and sacrifices that owning entails. Like less job flexibility, and possible unanticipated major repairs. Using straight apples to apples is appropriate if you are looking for a cash-flow positive rental, but otherwise it seems a bit like post-facto-bubble-mentality justification for buying when you really expect considerable appreciation. JMO.
I also think if rental parity hasn't even been reached then for TH you have guarunteed losses to come. Rental parity may or may not happen for SFHs but its the normn for THs and they could very well become investor-priced if things go badly.
Cara, good advice, thanks. I don't think we are done with price declines either. If I do make an offer, I am planning on using 2009 tax assessments and 2002-2003 sales prices as comparison points in addition to comparables. I should do some research to see where THs are selling in comparison to the 09 tax numbers as most listings I see are above the assessments, but at least some non-distressed contracts are happening under them.
What should I do? My house in Vienna, for 7 months with several price reductions. It is now down to $619,000. Same house across the street, although with no updates, sold in August 2008, for $689,999. Another house on the street is under contractor for $720,000 so I don't think our asking price is too high. Lots of traffic, everyone loves the updates, but no real offers. Two down sides, a large carport but not garage and a smallish backyard. However the house across the street had exactly the same size yard and a carport. Yard is about 10,300 sq feet. House is 5 bedrooms, 2 and 1/2 baths, fairly large rooms. After 7 months I am firing my real estate agent. I am considering rent for two or three years, until the market comes back up. Wise idea? Or not?
Thanks all.
Eva,
Go to the MRIS website fro your zip code:
http://www.mris.com/reports/stats/zip_stats.cfm
There you can find out the number of solds per month in your price range/bedroom number. I think you'll see that up above $500k, 6 months of inventory is pretty typical right now. So sitting for 7 months doesn't necessarily mean anything other than the fact that right now stuff over $400k is sitting. The thing is, what you've got to be is the next one to get sold in your neighborhood and competing neighborhoods.
How's your staging? How are your pictures? Are they showing the rooms well or are they showing your furniture? Cull them to only the most favorable ones, make people want more so that they have to come take a look. Is the yard impeccable? Are there any small fixes that only cost $50 or less that you haven't done but might look daunting to the buyer?
Make your house the best one on the block at its price.
As far as renting, would rent cover your mortgage? Would it leave extra for a month of vacancy? Extra for fresh paint, new carpet or refinishing the floors when the tenants leave? If not, deduct from the current price those future costs that fixing the place up after tenants will cost when you go to sell in the future.
There's a lot of uncertainty on the part of buyers right now, and your house may be priced above the conforming limit, and is certainly above most first-time buyers who are the main buyers right now as move-up buyers can't sell any easier than you can. That will pass. So, 2-3 years from now may be a simpler and more straightforward time to sell than now. Will the going price for your place be at or over your current list price? Hard to say. Are you in a neighborhood with intrinsic worth relative to nearby ones, i.e. the highest rated elementary and high schools nearby, the largest lots, the best location relative to major routes (i.e. convenient but not polluted with noise or particles)/ the metro. If so, then you'll probably do fine in 2 or 3 years whereas this is a tougher environment when no one really knows what the prices should be. If not... you may want to cut the price even more and try to run.
But really, 7 months, for that market segment means your house is not the most desireable one in the neighborhood or the most underpriced, but it doesn't necessarily mean that your real estate agent is a schmuck. You might want to do some stealth investigation of them though by having a friend call them to get a showing...
Eva You may actually have reduced the price of your house so much that you are attracting the wrong buyers. With only one sale in Pickett Estates since Jan 08 (your listing agent was listing agent for that house)at $689,900 and the one under contract at $720,000, buyers are going to immediately ask "what's wrong" with your house since it is priced so low. The photos look okay so it doesn't seem to be a problem with the house However, suggest you go to it and really see, smell (especially) and understand what buyers are seeing. Also, what is your agent doing to market it? The Vienna market is tied to the school year and your agent should be gearing up for major open houses, advertising, particularly on websites. Agent is probably tired of the listing and your are clearly tired of it. You two need to get together and really see what you can do to make the sale happen. April, May and June are your last chance before September, so it would be good if you could make the most of the spring market.
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