These inventory numbers were extrapolated from VirginiaMLS.com. The total "Northern Virginia Inventory" represents the combined housing inventory (that's listed on the MLS) of Alexandria City, Arlington County, Fairfax City, Fairfax County, Falls Church City, Loudoun County, Manassas City, Manassas Park City, and Prince William County.
Unlike the prior four years, inventory in Fairfax, Loudoun, and Prince William Counties has decreased from March-May instead of increasing.
Sunday, May 3, 2009
Current Inventory
Posted by Harriet at 10:51 PM
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25 comments:
Wow! Inventory in NOVA is less than half what it was a year ago! Amazing.
So, what does this mean?
It means there is less inventory.
At least there is more inventory to choose from than there was in '05, when every last one was over-priced to boot.
Happening in California too.
pffft..what does it mean? That buyers will be saying I should have bought in 08, just like the sellers are saying I should have sold in 05. Eva you wouldn't think it was amazing if you had been apart of the frenzy. Good Lord what an experience.
It means that housing inventory will flatten out at or around these numbers, amybe a little higher as more distressed sales start happening (this largely depends on the region's employment picture). House prices will continue to fall. When we reach a bottom in prices, more inventory will start coming online. Pent up demand works on both levels, those buying and those selling.
It means that a moratorium of foreclosures, manipulation by the banks via shadow inventory, and a very incentivized pool of potential buyers have converged to let the falling cat bounce. It's market manipulation.
With Arlington now below 2007 levels, inventory everywhere is now down on a YOYOYOY basis.
It was about one year ago when inventory started declining on a YOY basis that the theory was outside the beltway has capitulated but inside the beltway inventory is down not because of capitulation but because sellers there are just somehow better than others at holding out (i.e. they will eventually return, inventory will rise again).
Amazingly, even early this year, this theory lived on. Hopefully these results will be the final nail in the coffin of that line of thought.
Looking forward, the question is, when do the outer county trendlines turn from down to flat? Also, will there be a seasonal lessening of inventory in the autumn, or will it just stay flat on a year round basis?
Arkey,
Did you get the price you wanted for your house?
Konstantin said...
No, I'm off the market. I tried to cancel but after a long discussion I agreed to de-listing and revisiting the subject later. It's been extremly tiring life event! We have had realtors/customers roll up at 8pm without a phone call to view..got a copasauer spotlighting at mid-night..now, that kept me awake for hours...thankfully I knew where my 20 year old was so no panic there but egads..oh the horror stories I could tell..I was out of the house Saturday from 12:30 till 4pm..only 2 lookers but they stayed and stayed and stayed. 12:30 to 1:30 didn't leave till after 2 and the 2 didn't get out till 3:45..you can only drive around or park and read so long. We have had numerous "buyers" stay 45 minutes to an hour and a half. GOOD GAWD what the hell are they doing?
Arkey,
Just wanted to make a point, that while there is definitely a pick-up in buying activity, people are generally buying what they can afford these days and do not just snatch the first available property as they used to do in bubble times. A foreclosure in a nice condition, an appropriately priced house in a nice location will sell. Anything expensive (in absolute terms) or overpriced (in relative terms) won't.
No one should use 2005 inventory as a measuring stick. It was insanely low. The drop we have seen YOY is nothing short of remarkable and confirms what my experience has been in searching for lower priced reo's.
Lower tier reo's do not have to be in nice/good/decent condition to draw multiple offers in a couple days. The pricing is such that investors can fix these places up and still make good cash-flow.
Just look at DOMM and how fast everything is going under contract.
Even if we see an influx of new reo's, I think the bottom is in for the cheap stuff.
Konstantin..I agree with you on that but we have had 37 realtors show the property that have said its at market value..we are in homefeed back..we have had 4 to 6 realtors that specialize in foreclosures in that bunch. We have had only 2 say its over market but both had buyers that wanted to buy below 09 assessment. My competetion is the new house foreclosures and the market point. Its hard for first time buyers for property over 550. It is a nice neighborhood..doctors to my left and across the street, Sprint and GE east coast division managers ..if you catch my drift. I know my neighbors and have watched these kids grow up. Working is easier than selling anyway!
crt,
well, Arlington and Alexandria inventories have dropped but not far, and not nearly as far as other places, so there could still be more of a stare-down continuing.
Arkey,
Exactly, first-time buyers do not want to throw themselves under the 16-ton mortgage and buy something really affordable (not necessarily cheap in my opinion), but something that will not be too burdensome.
For the 500k and above --- it is a totally different story, you need a high income or a lot of equity from the previous home, which is a bit problematic these days.
I know some people who bought up this spring and was quite surprised by their optimism --- they believe that renting out their old home is a very good idea (they probably never experienced a situation when there is no tenant for 2-3 month) and that they can easily afford paying mortgage on more than 4X of their current income.
"well, Arlington and Alexandria inventories have dropped but not far, and not nearly as far as other places, so there could still be more of a stare-down continuing."
Could be Cara - however, if you remember from the other day when we looked at inventory as a percentage of all homeowners per county, last year, Ffx, Lou & PWC had a much higher percentage than did the inner counties. It is only now, one year after the large decline in outer county inventory that all 5 areas have similar ratios.
Thus, I think the more likely explanation is that the outer counties just had that much more work to do (i.e. excessive foreclosures) to get back to a sense of parity with their inner county bretheren.
CRT,
I had forgotten that, sorry.
But there's also my expectation that more urban places would be inherently more mobile and transient, even amongst the owners. This would explain why a "normal" MOI in ARL/ALex was so low, relative to the country as a whole. And it would imply that the current market is limiting that mobility against people's wishes and best interests. But, it could also be that this will just shift a larger percentage of residences to be renters to maintain their freedom of movement, in line with what we have been discussing about urban housing trends in the long term.
Sorry to be so loosey goosey and number-free.
No worries cara - interesting line of thought. You are right - given that the types of people living inside the beltway has changed dramatically in the last 10 years, its probably safe to assume the "mobility" rates of the past are out the window.
Im not sure which way that swings though. On the one hand, if the area has become that much more desirable to a demographic that has a history of moving, mobility should be higher than outside the beltway. On the other hand, if thats the way it used to be, but now once people are getting married they actually stay versus formerly migrating to the burbs, then the mobility should be same as it is outside the beltway.
Hard to say - I gotta ponder that some more...
CRT, there are surely multiple factors at work.
I'm not sure whether you are arguing this, but your data and the inventory levels don't refute the hypothesis that there are a lot of sellers in Arlington who simply are not listing their houses because they don't consider this a good time to be selling. Whether they are a larger or smaller percentage of the population in Arl. vs. elsewhere is also an empirical question for which we have no definitive data.
I agree regarding inventories in Arlington staying up. I have been watching this area, and it seemed that inventories were rising. That is confirmed by the data.
It is true that 2005 inventories were insanely low, but when you look at the percentage it has gone up from 2005 levels, compared to Fairfax County, you will see that Arlington has relatively higher levels of inventories compared to Fairfax County. This does not bode well for Arlington.
There are an insane number of properties in Arlington over a $1million which are not moving. I think prices will have to come down.
Ace lets put it this way. When we first saw the decreasing YOY inventory, the bearish assumption was, its a temporary thing, inventory cant stay down, it will rise again YOY. Can anyone really defend that position anymore?
CRT,
It's increasingly difficult to claim that this is a "dead cat bounce".
Unless something horrific happens.
I am not saying that we aren't in for the price stagnation we saw in the 90's; but at least housing is becoming quite affordable to many and I'd rather approach 2020 ten yrs into the AM schedule, locked into an historically low interest rate, and with some wage growth effectively reducing my housing cost.
va_investor,
that depends strongly on your market sector.
Picture the $300k REO SFH that I looked at this weekend. It was the FIRST SFH listed under $300k in a good neighborhood away from road-noise/pollution, in Robinson District. Literally the first one. So of course people are stumbling over it. But the market between 300k and 500k is populated almost exclusively with tricked out townhomes. The next level of SFH above 1000 sq feet is trying desperately to cling to the $500k mark, but it's slowly crumbling. What happens to the SFH buyers when some of the bigger ones come down from the $455-479 "bargains" closer to $375-350, where many of them should be based on modest size and little updating. The 1000 sq foot ones don't look so inviting anymore and come down closer to the $200-240 range they should be in.
Basically, the bottom end is reaching stage 2. In stage 1, the price declines were self-driven by their own REOs, in stage 2 the price declines are driven by the availability of better choices for not too much more money which will lessen demand.
And given that most of the, "well I could by this year or next year" folks in this price point, are buying now because of the $8k incentive, and thus will be depleted next year? The low end demand side could get hammered.
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