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Thursday, May 14, 2009
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88 comments:
List a SFH under $300k, get bid to the sky in 2 days:
http://franklymls.com/FX6989608
DOM 2
list price: $299,300
closed price: $375,000
09 Tax Assessment: $429,000
all the bells and whistles:
BANK OWNED..and a very impressive home this one is. Gleaming hardwood floors welcome you to this large home on all levels..including bedrooms.."WOW". 2 fireplaces to include on in the mstr bdrm, w/ large walk in closet, dbl sinks his/her closets...Kitchen is upgraded with Granite and new appliances, large deck..backs to privae tree lined lot. School behind home. Oversized 2 car garage.
There are good deals out there to be had, you just have to be willing and ready to bid up for them, and acknowledge that the list price is not what you'll have to pay for it.
Did this buyer get a good deal? I'd say so, and at $375k for a 2,268 sq ft above grade house, I'll take that as a comp, thank you very much mr. buyer.
Is that a bottom price? Maybe not, but I don't think it's far off. Maybe 10% more to go, tops. JMO. Does that mean I'm willing to step into this fray, not really...
A CR post not to be missed: Mortgage Equity Withdrawal Symptoms.
Calculated Risk posts a new paper on Mortgage Equity Withdrawal (MEW): "House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis" by Atif Mian and Amir Sufi (both University of Chicago Booth School of Business and NBER) (ht Jan Hatzius)
quoting from their abstract:
"we estimate that the average homeowner extracts 25 to 30 cents for every dollar increase in home equity. ...Our estimates suggest that home equity based borrowing is equal to 2.3% of GDP every year from 2002 to 2006, and accounts for over 20% of new defaults in the last two years.
"
In case anyone thought it was just new purchases that were going into default.
Cara,
I would have loved that house, my wife would have murdered me however...NO Basement. I actaully saw that house, thought of playing for it then the wife caught on...No basement no way she says..It is true no basement means very little storage.
-RJ
thanks RJGEMS.
I wasn't in the market at all yet when it was listed. No basement is indeed a deal breaker for many many people in this area. That makes the over 2200 sq feet suddenly feel a lot smaller. I still say whoever did buy it will be very happy though, even if that increases my estimate of their potential losses to maybe 15% if they had to sell at the true bottom, competing against a larger fraction of well priced homes.
Cara: neighbor sold for $500k in 2005, so 75% of peak isn't too shabby.
novawatcher,
"Cara: neighbor sold for $500k in 2005, so 75% of peak isn't too shabby. "
I'm not sure which direction you meant on that, not too shabby of a discount to have gotten, or not too shabby of a price for the bank to have managed to get.
In any case, 25% off peak for a SFH in a well-established neighborhood at this stage in the bottom process is not bad at all. There's a lot of support this spring for SFHs in Burke. I think it will burn through, and they'll keep going lower, but I could be wrong and I'm beginning to prepare for that (by saving for longer).
Tis hazardous to value a house based on a comparison to an insane price.
JF,
true. But $165 per sq ft isn't bad for a SFH. Now, the fact that people usually expect that 2,268 sq feet to come with an additional 800 sq ft of below-ground space, makes it a bit more dubious.
Cara,
If you think worst case is another 10-15% drop; what do you think that likelihood is?
Va_investor
What's the likelihood of another 10-15% drop on a house like this one?
I really don't know, so I'm just giving it the bayesian, 50-50. There's too many variables, most of them external to Burke. I am being completely honest when I say I think this owner will be very happy with their purchase. But that's about all I can tell.
If it stays at this price, we could buy something like it next year comfortably without feeling like we were putting ourselves out on a limb (for the note amount relative to our incomes). So, I'm pretty happy with $375k, and as the most conservative person financially that I know, I'd say that means many others will also be comfortable with this price for a decent sized, upgraded SFH, hence the healthy Burke market this spring. It's really only external things like job losses or a large portion of HELOC and bubble purchases going sour that could move the market lower than this particular sale. IMO.
On the other hand, it is the hope for SFHs like this one (when we're ready) that are preventing me from pulling the trigger on a less expensive TH. So, I am also proof positive that lower prices on SFH will sap demand from the TH market...
Cara -
This is a map to the Burke property. Zoom in on the home. Doesn't it seem particularly small relative to the other homes on the street? Not sure what that means. Also, notice that the house backs to the school yard. The kids make a lot of noise during the day. Also, you may have soccer games and baseball games all day on Saturdays. Just trying to be helpful.
Google Maps of Burke Property
Constantine, novawatcher, cara, tiredbubblewatcher
Okay, we've trashed Trump and Steven Fuller, but nobody wants to address Knight Kiplinger and his comments in the Post article:
But while stimulus money will be spread all over the country, managing it will fall to Washington, said Knight Kiplinger, editor in chief of Kiplinger's Personal Finance and a self-described "voracious student of the Washington economy." He compares the expansion possibilities to Washington's growth around the Civil War, World War I, the Depression and the Great Society, saying that even when other metro areas' economies struggle, Washington's generally grows.
"It's relentless," he said.
I have no idea what will happen to real estate prices. If I had to guess, I think they will go up.
From 2002 to 2006 prices went up month after month without pause. From the inflection point -- somewhere in late '05 to early '06, prices decresed month after month without pause. Now, prices are rising. I think prices have only been increasing for 2 months, maybe 3. Is it going to go up month after month for the next 12, 18, 24 months. It may. I've always told my frieds/family not to buy when prices are falling. Wait until the rise for 3, 4, 5 months straight and then buy.
I think we are there. I'm particularly bullish because of the massive expansion of the Federal Government. Time to buy. But next month will be good, and the month after that. I expect 36 months of month after month of increasing prices.
I personally have no way to increase my exposure to real estate. So, I'm not putting my money where my mouth is.
IMHO
Another one in the Arl. trend --
Huge, nice new house with nice lot
Assessed at $1.57 mill. Originally listed for $1.599 mill.
Sold for $1.36 mill.
http://franklymls.com/AR6839724
Hope these influence the lower price ranges too.
Ace said: "Huge, nice new house with nice lot. Assessed at $1.57 mill. Originally listed for $1.599 mill."
I notice the listing describes the house as Arts & Crafts style. It seems like every builder in North Arlington calls their houses Arts & Crafts or Craftsman style, when in fact they rarely are. This house is a perfect example of that happening.
robert said: "Now, prices are rising. I think prices have only been increasing for 2 months, maybe 3. Is it going to go up month after month for the next 12, 18, 24 months. It may. I've always told my frieds/family not to buy when prices are falling. Wait until the rise for 3, 4, 5 months straight and then buy. I think we are there."
Tis hazardous to view a regularly recurring seasonal fluctuation as anything but that.
JF, not just a seasonal fluctuation, but it occurs just as A) the $8000 buyers bribe is available and B) the foreclosure moratorium's effect on the market is felt.
Whoa! Robert, did you think about these factors when declaring the market bottom? Has it occurred to you that the end of the moratorium means that a few months afterwards those assets will start hitting the markets? What if there wasn't a buyers bribe? Think all those fence sitters would still be rushing to buy?
robert,
I think the lack of a basement is it's biggest downside, but yes, not everyone wants to back to a school, but that's the magnet elementary for that area, so others will value it. There are mixed sizes in that neighborhood, many bigger, many similar and a few smaller. They built a slew of really tiny homes in Burke, 1014 sq ft.
Foreclosure Tsunami Expected in Second Quarter of 2009
RISMEDIA, May 14, 2009-National Short Sale Center, a short sale company, has announced that the nation is on track to experience record-setting amounts of foreclosures and bank-owned properties in the second quarter of 2009. After the first quarter of 2009 set a new record with 803,489 foreclosure filings, the company is predicting a first-ever quarter with more than one million foreclosure filings.
“We’re returning to pre-moratorium percentages, with a rather large initial increase in the second quarter as properties that have been in the moratorium flood through,” says Travis Hamel Olsen, president of National Short Sale Center. “From our data, we are forecasting more than one million foreclosure filings in the second quarter of 2009.”
After a 10% decrease in foreclosures for January, foreclosure activity across the nation increased 6% in February. The so-called “Sand States”-California, Florida, Nevada, and Arizona-top the lists of foreclosure rates.
“The dam is breaking for foreclosures and bank-owned properties,” added Olsen. “In the next three months, we are going to see more than one million foreclosures hit as the foreclosure moratorium is lifted.”
sseedragon
I would use caution when taking the words of someone with a vested business interest in facilitating short sales when they speak of a coming REO tsunami.
Which is not to say they couldn't be right, just that just as NAR spins things to try to make them sound like NOW is always the right time to buy, this guy has skin in the game too, and has invested at least his time and energy in learning how to facilitate shorts, so his business plan depends on an increasing supply of despondent home-owners ready to give up on their properties.
short sales including relocation funding now part of the "homeowner" help plan:
WaPo, Obama Administration Expands Housing Aid Plan
"For example, if the homeowners do not qualify for a loan modification, their lenders could receive up to $1,000 if they allow the home to be sold in a short sale. In such deals the lender accepts less than the value of the mortgage. The homeowners might also be eligible for $1,500 for relocation expenses. "
Gee, took them long enough. I'm wary of the "might" in that sentence. I've been saying (to my husband anyway) that we need to start facilitating short sales for months now. Do you think the administration realizes that making shorts less painful may drive prices towards affordability faster?
I notice the listing describes the house as Arts & Crafts style. It seems like every builder in North Arlington calls their houses Arts & Crafts or Craftsman style, when in fact they rarely are. This house is a perfect example of that happening. When you say it's a perfect example of a houses which builders call Arts and Crafts, but aren't, what elements disqualify it from being Arts & Crafts?
Kevin & John, Yeah, maybe I'm wrong. Prices will resume their trend down after the "tsunami". Sand states, dude. And probably Michigan, Ohio, and Indiana. No sand her. No manufacturing base.
Why the foreclosures anyway? Because people are underwater and can't refinance. What if prices rise and people can refinance. Uh oh, no more foreclosure crisis.
Why doesn't anyone recognize the unique characteristics of the DC metro market? Sure, Detroit will fall off a cliff. But Washington DC with Barack Obama? NFW.
About the $8k bribe: does anyone think the government will not continue with inducements? Didn't they just make PMI deductible? They expanded conventional mortgages to $729k, and on and on and on. The "bribes" will keep coming as long as the real estate market is soft. HOMEOWNERS ARE VOTERS!
robert,
Yes, I think they will stop it. As soon as the REOs start tapering off. Because they don't really care about home-owners, they care about banks. So when the REOs are gone and "organic sellers" feel its safe to return, the buyer bribe will be gone too.
(though, if things do turn worse with the "tsunami", $15k for all homebuyers is coming soon).
I don't think BHO is the tax-and-spend liberal you seem to be hoping for, and I'm pretty sure he isn't being as kind to defense contractors... While Paul Krugman would like the administration to spend our way out of this mess, BHO seems reluctant to do so, and keeps talking fiscal responsibility.
Robert,
You are right about DC/VA/MD is a different animal compare to the rest of the states. But the housing settlement will be negative and some area will effect more then others but one thing for sure that credit markets will be harder to obtain when the Foreclosure Tsunami occurs.
Cara,
I grew up in Lake Braddock. I always watch the listings in that community. It is "sold out". Every time in the last month and a half an SFH comes on the market it is undercontract in less than a week. A week because they are managing multiple offers. I'm bullish on Burke. Lake Braddock is the nicest place in Burke. I would buy the next SFH and expect to pay 5% more than the last one sold for. In a year you'll be glad you did.
Robert
Robert,
Our unemployment rate is about half the national average, but I suppose that doesn't factor into the equation.
I'm sure glad that I didn't put new money in the RE market after 2002, but there is only one property that I really wish I had sold. I tried to sell it in '05 but couldn't get my husband to go along.
Anyone that was here in the late '80's and early '90's has seen what can happen to RE over the short-term (10yrs). Of course this go around is much worse - but mainly for very particular areas/neighborhoods/regions. It's really a mixed bag.
I truly believe that it was the low end stuff that went to ridiculous heights and that stuff has been crushed back down.
Everything has corrected but at very differing levels. Witness the whole "Arlington" discussion that takes place here on a daily basis.
There are a number of solid reasons to believe that DC will weather this far better than most.
And, I happen to have great respect for Knight Kiplinger - a fellow alum.
Robert, the high employment in the DC region did nothing to stop prices from falling. I think your perceived bounce is just that - perceived and imaginary.
Also, it's possible that the Obama administration will look to eliminate a lot of defense contracts. Don't assume that regional household GDP will just magically jump up in the region.
We know why the foreclosures happen. Because people really couldn't ever afford the homes, and/or they don't want to keep paying into something that is worth way less than they owe. They will continue to walk away so long as there isn't recourse.
Lastly, this is a market correction. It bottoms out with a thud, not a bounce.
linkIt might even overcorrect.
By the way, I find it interesting that you're not talking about the 800 lb ape in the room: the foreclosure moratorium.
I'm watching CNBC and the text on the bottom of the screen says, "Sweetening the Pot of Housing Rescue Incentives".
Robert: "I would buy the next SFH and expect to pay 5% more than the last one sold for. In a year you'll be glad you did."
That's what a good friend of mine was told three years ago. He now owes twice what his house is worth. Scaring people into the market because they'll be "priced out forever" is not just painfully ignorant, it's cliche and insulting to those who have fallen for it and been burned.
Why do you think this market is so hot? I'll say it again, because you dodge it like the plague: FORECLOSURE MORATORIUM. Three months worth of foreclosures pent up are going to hit the market. Additionally, we're seeing record new NOD's.
robert,
There's not that many houses that are right next to Lake Braddock. I've only seen one since I started keeping an eye on Burke in late February, and it was indeed gone in a week (maybe two). In the wider area, well-priced SFHs are indeed gone in a week, but there are a couple that are just sitting that I can't wrap my head around why they haven't sold. What's so wrong with this one:
http://franklymls.com/FX6999943
It doesn't seem out of line with other successful organic sales, I don't get it.
I love Burke, but I want to have the full 20% down on anything we buy (mostly because of a personal intense loathing of paying interest when I don't have to) so we're not quite prepared to go to the >$350k level to get something reasonable sized. (which is why we've been thinking THs).
Foreclosure moratorium? All I know is what seedragon posts on this board. His article says foreclosures going from 800K to 1M. That's 25% more foreclosures from 1Q to 2Q. I think that'll be easily absorbed.
The other 800 ape is the on-going assistance programs from Barack Obama. I haven't even read about what he introduced today, but I'm sure it will be more of the same - support for the housing market. More to come.
Obama not the tax and spend liberal? We won't know until it is all said and done. Would you agree that the Democratic Congress is tax and spend? Do you really think they will "cut" programs? The government will expand. Look what Knight Kiplinger said. On the order of WWI and the Great Society.
robert,
follow my earlier link to the WaPo article. It has the details on the new program you seek..
Robert,
You're mighty selective on what you read if you're unaware that there was an essential stoppage of foreclosures from December until March. I cannot imagine that anybody following the market doesn't know about it. It has to appear in at least one out of every three news stories relating to the housing market.
Or maybe you're just pulling my leg.
LOCAL unemployment expectations:
WaPo D.C. Expects Unemployment to Top 11 PercentThe District of Columbia's chief financial officer predicts the city's unemployment rate will increase to 11.5 percent next year.
In prepared testimony Thursday for a House subcommittee hearing, Natwar Gandhi said he expects the city's economic conditions will continue to deteriorate as employment and wages decrease and office vacancies rise.
Still, he says that while D.C.'s job base has been weakened by the nation's economic slump, it is faring better than most places.
...
Contraian - Perhaps BO is not "eligible" to be President. Do you seriously think with a Democratic Congress he will have any trouble? Doubt it. Even so, we'll get Biden instead. Dems will still rule.
Robert as bullish as I generally am on this board, I think your view of rising prices is a bit too optimistic.
As I see it, even places that havent gone fundamental demographic change (i.e. fairfax & loudoun) are still overvalued. However, I still think they will bottom soon (before they should in a free market) and then have a years long "flat period" allowing the fundamentals to catch up.
The reasons are myriad, but I think the 2 reasons we wont fall as far as we should are:
1. Market Manipulation. The govt intervention is designed to help those areas not as far along as us, but it helps us even though we are farther enough along in this correction and dont really need it. Case in point, even before the rate cuts, foreclosure moratoriums, etc. Hardest hit areas like PWC were already seeing increased sales and diminished inventory. Adding the manipulation just accelerated the already established trend. However, even if the manipulation disappears, the trend (which preceeds the manipulaiton) will not.
2. You are right about the govt programs/ jobs picture. I have a book detailing the history of this area - I was stunned to see how well it fared in times of war/depression. If history is nay guide, as I see it, the worse the country gets, the better(paradoxically) this area does. Ironically, the best way to get lower housing prices here is that the recession lets up, the govt relaxes its stimulus programs, and the market falls to its long term historical average. I seriously doubt that will happen.
Again though, the reason we wont see a rise (other than seasonal) is that we are still overvalued. In the rest of the country (where they arent as far along), all the govt spending, foreclosure moratoriums, etc. are going to take an overshoot (i.e. deflation) off the table - however, the long term trend line will be hit regardless.
Here, its likely that those same measures will provide a permanent higher floor without the reversion to long term trends. However, by establishing that permanent artificial floor, that just means prices will stay flat til fundamentals catch up and cause prices to rise again.
Robert, seriously, are you kidding or serious about not knowing there was a foreclosure moratorium going on for three (extended to four) months, imposed by Fannie/Freddie and joined by other major banks?
Kevin,
If you know about the Foreclosure Morotorium, then other investors know about it too. It's already factored into prices. Sort of like the stock market, when a company is going to sell more shares in the future, the current stock price will reflect that. But like I said, seeserpents post says an increase of 25%. You are seeing foreclosures being easily absorbed right now, do you really think another 25% is going to tank prices?
Cara,
That house looks okay, but wouldn't have the ammenities of Lake Braddock. There is the lake along with two pools, plus you can walk to Lake Braddock Secondary School. Still, you'd have to take a look to see if there is anything strange.
DC unemployment to hit 11%. DC proper always has a much higher unemployment rate. FFX county has more people that DC proper. When I say DC metro, I'm talking about Montgomery, Fairfax, Loudoun, PW, PG, etc.
Contrarian -
If unemployment in DC metro hits 10% then prices will be flat to decline. 15% prices will fall. But your graph is for the country as a whole. We need to limit our discussion to DC Metro.
CRT, good post.
Actually, the thing that will keep a lid on prices is the overhang of seller. There are a lot of folks out there that are at or near retirement and missed the bubble prices. If prices creep up, then a lot of these folks will take advantage and sell and move to Florida. Same thing with the stock market, an overhang of sellers. That's why when Gold hits $1050/oz, I'm in. No sellers after $1050.
Robert
(re Lake Braddock) If I dissect things into those tiny of regions I'll never buy a home. Luckily, there's lots of good things about Burke Centre and other neighborhoods within Burke.
I think the real reason on this particular house is that its yard is too small. If you want a SFH, it's because you want a yard. Otherwise why pay for a SFH? It's also closer to a main road than many would like.
Robert: "If you know about the Foreclosure Morotorium, then other investors know about it too. It's already factored into prices. Sort of like the stock market, when a company is going to sell more shares in the future, the current stock price will reflect that."
That is absurd. It's not like the stock market, for two reasons:
1) housing prices are STICKY, stocks are not.
2) buyers are IGNORANT. Sure, some see these things, others do not. People knew that there was a housing bubble, so why were people buying in 2006?
Can somebody else please step in and either tell me I'm crazy or tell Robert that he's missing an obviously large part of the picture here? His ignorance about something that is very well known is frustrating me.
Robert again: "You are seeing foreclosures being easily absorbed right now, do you really think another 25% is going to tank prices?"
Maybe, but I'd sure like to hear why you think they are going to RISE amidst increasing foreclosures, which is absurd.
Seriously, this is as painful as debating David Lereah in 2005 about whether there is even a housing bubble. I'm going cross-eyed here.
kevin
we've all given up. CRT seems to have tempered him down to the possibility of flat prices...
Kevin - I disagree with Robert's reasoning (what the foreclosure moratorium did), but I dont disagree with his conclusion (it wont affect prices much).
Case in point, look again at our inventory levels.
http://www.recharts.com/nova/nova.html
The moratorium started in november. Did its enactment affect inventory? If it did, I sure as heck cant see it. Inventory trend lines did not change much once it was enacted.
Now that the moratorium was lifted, lets again look at inventory. Is there a flood of new properties coming on the market? Is inventory rising? The answer again is no.
Granted, the moratorium has only been lifted for a few months, but given the speed in which foreclosures work through the system in VA, the effect on inventory should be very very soon.
Bottom line is, I think its terribly important to distinguish between things that do affect our area, and things that dont. So far, I see no evidence the moratorium has affected things one way or the other.
Alright, someone give me the numbers on the foreclosure moratorium for DC Metro. What is the increase from March, to April, to May, etc.
CRT,
Novawatcher posted the article (for you, no less) about the impact of the moratorium lifting. It lags, so it hasn't happened yet, but will soon apparently.
Tsunami
Looks like inventory going down nearly everyday...
Housing Inventory in NOVAWhen is the tsunami going to hit? Shouldn't we see at least some evidence by now?
Concerning unemployment -- from iTulip:
The official U3 unemployment rate shows about 5.5 million job losses since the unemployment rate low in 2007, while the U6 rate shows about 10 million job losses... and my reconstructed U7 rate shows 13.1 million job losses.
"Kevin said...Novawatcher posted the article (for you, no less) about the impact of the moratorium lifting. It lags, so it hasn't happened yet, but will soon apparently."
Thats fine Kevin, but again, if it the enactment didnt affect inventory trends, why will the lifting affect it? Its one thing to repeat what other prognosticators have said (its a tsunami and its coming), its completely different to make a compelling case for why it would make no difference when enacted, and a tsunami when lifted...
Contratian, CRT,
I think the answer is the shadow inventory. CRT is right that if there were no substantive changes to actual inventory when enacted, then perhaps the lifting of the moratorium will do nothing great as well. But we know that foreclosures lag greatly. Inventory keeps dropping during a season when it historically climbs. Why? Perhaps this is a result of the moratorium, and we'll see a substantial increase roughly four months after we *should* have seen a typical seasonal increase yet did not.
kevin, crt contrarion
Shadow inventory, yes, but:
Inventory is going down because more homes are closing than are being added to the mls. (sorry for the statement of the obvious).
However, on a local level I'm finally seeing those "coming out of the woodwork" listings. Many of whom listed last summer and pulled off in the winter. Sure, they're at "you've got to be kidding me" prices, but some sellers are seeing this as a good time to test the waters, that's for sure. So I predict a seasonal uptick in listings in FFX county for May.
I've also for the first time actually seen a short go directly to "off market" with no offers. I know this must have been happening for years as things became REOs, but it's the first time I've personally witnessed it.
Will these sprinklings of new REOs be absorbed? Right now? Probably.
"Contrarian said...We all know it makes no sense to have 5,000 foreclosures (or even 3,000) every month for 16+ months and the inventory be on the decline."
Contrarian the reasons why are
1. The realtytrac figures are inflated because a NOD counts as a "foreclosure" just like a "NTS" and a "REO". By their admission, they only track foreclosure "activity" actual foreclosures are lower.
2. Sales have picked up tremendously since Jan 08 - more than enough to take down every single REO.
3. Bulk sales (like my client) who purchased 120+ foreclosure properties without a single one of them ever showing up as a "sale" on MLS
4. Increase in loan modifications.
5. Shadow inventory (which is certainly real).
6. Sales on the courthouse steps are increasing (a foreclosure that never becomes inventory, the way things used to work before REO became so common).
7. REDC type auctions. I dont know if these foreclosures show up as inventory, but many do not show up as sales.
Honestly, I could probably think of a number of other reasons. None of them are dispositive - yet taken together, its entriely logical for realtytrac to show a lot of foreclosures, yet have declining inventory.
"Kevin said...I think the answer is the shadow inventory. CRT is right that if there were no substantive changes to actual inventory when enacted, then perhaps the lifting of the moratorium will do nothing great as well."
BINGO! It doesnt really matter how many or how little go into foreclosure if there is a bottleneck limiting them on the way out. The shadow inventory is real, but as I have long said, I think its a "critical mass" issue. If the banks suddenly reverse course and start releasing more than the market can absorb, prices will fall. If the banks just keep on doing what theve been doing for 12-18 months, prices will stay steady. To me, it looks like they have every intention of doing the latter, not the former, for as long as it takes to clear the decks.
CRT,
"To me, it looks like they have every intention of doing the latter, not the former, for as long as it takes to clear the decks. "
This may actually also be changing. Every single new REO listing I've seen in the past 3 weeks has been from Bank of America. All have been within a week or two of buying them back. I think some of the more stressed banks are starting to break ranks to get their inventory sold before prices fall further... At the moment, it's just speculative, but if it keeps up...
External stresses are the key "worry" in NoVa. This is one of them.
CRT
There are currently 20 listings that fit the criteria "FX* America" in frankly. all appear to be REOs (at a glance anyway).
Shall I start tracking them?
8 are under contract, so we certainly seem to be absorbing them fine so far.
for the record:
5/14/2009
FX* Bank gives 1371
FX* Bank active 450.
I'd say it's being absorbed. In fact, I'd say we could take another 25% handily at this rate.
(this is not a total count, because I've seen plenty REOs that don't say bank anywhere in the listing, it's just on the tax record)
Cara,
That house is a detached townhome. Who wanting a SFH would ever buy that?
When the people who voted for him find out he, as a lawyer who taught Constitutional law, was not qualified under the Constitution to run for president, things could get unpleasant very quickly..
Better check the tin-foil in your hat.
It's not like there's some secret that has to get out to the people who voted for Obama. They've heard the arguments and find them about as credible as the arguments that GWB was behind the 9-11 attacks.
tiredbubblewatcher -
I think I've put up a lot of strong arguments for favorable trends for DC Metro real estate going forward.
Yes, there isn't an administration I can think of that hasn't expanded the Federal Government, but if you are an investor, that's a good thing. Imagine if GM made more and more cars every year...that would be good for Detroit.
CRT, do consider looking at those inventories that it's very unusual for the pattern we've been seeing over the past few months, particularly after the preceding several months of inventory declines. Every other year starting at 1 Feb or 1 March we see increases. But this year we see a decrease. For this to happen as defaults mount defies reality. I'm guessing it is the moratorium. I'm also guessing that (whenever) the end of the moratorium causes the unleashed flood to hit the market, it'll be very obvious.
tiredbubblewatcher -
You know that I didn't say DC would change like WWII and Great Society. Knight Kiplinger did.
keithk said: "what elements disqualify it from being Arts & Crafts?"
-front porch columns do not extend to ground, but are broken by porch
-round, ornate rail posts on the interior stairs
-non-square interior newel post
-contemporary kitchen cabinets
-non-period interior window trim
-no a&c interior trimwork or moldings
-attached garage
-steeply pitched gable above garage
this is basically a colonial style house wrapped in a faux craftsman exterior.
"Kevin said...
I'm also guessing that (whenever) the end of the moratorium causes the unleashed flood to hit the market, it'll be very obvious."
Kevin - again I think you are severely overstating the effect. Consider...the moratorium started in November correct?
Now when the moratorium started, it should cause the trajectory of the inventory decline to change (i.e. theoretically, it should decline more rapidly after November).
Did that happen? Id say the answer is no. To me it looks like the trajectory didnt change from before the moratorium started to when it was in effect.
So again, if the effect going in was pretty much zero, why will the effect coming out be a tsunami?
kevin,
the other thing is, you may be sorely disappointed when that REO wave happens (if it does).
FX* bank >350k only 409 listings.
the vast majority of REOs are still in the mediocre TH/SFH home housing stock type. The only effect price drops in that range will have on the upper range houses is a lack of move-up buyers. And that's slow acting. Especially when so many people have decided to skip the bottom rung altogether and have been saving during their nomadic early career years, and are able to buy $450-600k houses from the get go. I think major price movement may continue to be concentrated on the fringes of below $250k and above $1mil.
OTOH I do agree that until August/September we won't know what bank selling strategies have been implemented in our area and the effect they'll have on the market.
There are things that have changed since November. Notably CRE defaults and losses increasing as well as increasing credit card losses. These effect bank balance sheets and hence effect their ability to hold back the tides of market forces and manipulate the market by reigning in supply.
"Contrarian said...
The Anonymous, you may want to pay attention also as we have another Elliott Waver here on this video."
Hmmm -- this guy says S&P will hit 400 in the next six months. Yet, just last month, you provide us with the words of another Elliott wave prophet who says we will have dow 10,000 (or more) in 6 months.
http://www.safehaven.com/article-12843.htm
Do you realize how much you are undercutting your own posts and the reasons anyone should believe in the elliott wave?
I mean, one prophet interprets the scriptures to day "S&P @ 400 in 6 months", another prophet interprets the scriptures to say "Dow @ 10,000+ in 6 months".
Clearly, one of these guys will be horribly and spectacularly wrong - the type of wrong that will destroy the finances of the investor who picks the wrong prophet to follow.
You yourself have said, the wave isnt wrong, its just people's interpretation of it that was wrong. Yet if the interpretation of the wave scriptures is so hard, how can it be of any predictive value?
"Now when the moratorium started, it should cause the trajectory of the inventory decline to change (i.e. theoretically, it should decline more rapidly after November).
Did that happen? Id say the answer is no. To me it looks like the trajectory didnt change from before the moratorium started to when it was in effect."
It declined every month following, and during peak season. But not an immediate drop-off, I'll concede. Perhaps since the banks have such a massive amount of assets (shadow inventory) to not make it like a plateau. So maybe when the foreclosures pick up, the tsunami will be more like a long-term rain shower that doesn't end?
Cara: "the other thing is, you may be sorely disappointed when that REO wave happens "
You're probably right. In fact, you're almost always spot on, so I hope you just experienced a lapse of cognitive ability with that conclusion=)
TBW: "
I'm not sure what you are arguing. If you are arguing that home prices are not going down to 1999 levels I agree with you. If you are arguing this is all temporary and we'll soon be back to 2006 levels then I totally disagree."
From what I can tell, Robert is talking like the bubble is coming again.
"Kevin said...
So maybe when the foreclosures pick up, the tsunami will be more like a long-term rain shower that doesn't end?"
Yes - at least thats the way I see it. Between the purposefully or unintentionally held back REOs, and the ocean of people who arent even going to list til things turn around, it could be years upon years before prices really improve.
Along the way, prices may go up - with it the temptation to unload more inventory and more holdouts reappear - driving prices back down - causing the banks to scale back on reo & the holdouts to go back into hiding - causing prices to stabilize - tempting them to unload more inventory - repeating the cycle...lather, rinse, repeat, - lather rinse repeat...
CRT,
Today's NYT has an article by their economics reporter--about his own home's mortgage default. He hasn't made any payment to Chase for 8 months, but the bank still hasn't foreclosed because they don't have enough people to address loan modification. 8 months of free rent can amount to quite a lot. So it looks to me that this may still end up badly for the banks.
By the way, the closing on my home is tomorrow. Wish me luck :-)
http://www.nytimes.com/2009/05/17/magazine/17foreclosure-t.html?_r=1
Good luck TedK!
TedK--
Good luck tomorrow, and thanks for the NYTimes article. Fascinating read!
I found this slightly older NYTimes article about Sacramento, and it reminded me of Manassas/PWC, the market pattern described in it:
http://tinyurl.com/q55aq8
good luck TedK!!!! congrats!
that NYTimes article is stunning. I assume it's the same person they're going to cover on NPR this afternoon...
kevin,
thanks for the confidence kevin, but I am often wrong. The NYTimes story is one good example of a nice starter/move-up home that will become an REO. REO's have been "movin on up" in every other major bubble market, I just haven't seen that much of it documented here. But that doesn't mean it isn't coming.
(see my sneaky strategy of always ending up being right by arguing both sides of the same question all the time?)
and contrarion, thanks for posting the local impact of the dealer closings.
Thanks Tabitha, Ace, Cara for your wishes. The closing went well. My wife and my two boys are happy about the extra space and the schools. I like the fact that it is close (2.5 miles) to work.
I got a rate of 4.75% with 0.6 points for the loan.
I mentioned (to NoVAWatcher, I think) earlier about the lawyer's flat fee of $250 for initial contract review. Be aware that if there are amendments or if the seller is difficult to deal with, for any reason, lawyers may charge you extra for their time. It might cost an additional $250 -- 300 in legal fees in addition to the standard closing costs. But it is worth it if you are buying for the first time without using an agent and the price point reflects the absence of 6% in commissions.
TedK
Congratulations!!!!!
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