Please post your local house search updates, MLS finds, on-topic ideas, and links here.
June sales data will be out tomorrow at MRIS.
NVAR has June 2009 statistics available. Check the first comment of this post to see CRT's compliation of year-over-year price trends for the last 30 months in Northern Virginia.
Thursday, July 9, 2009
Northern Virginia Bits Bucket 7/9/2009
Posted by Harriet at 6:00 AM
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47 comments:
NVAR just put out their median prices for NOVA in June -5.7% YOY.
FWIW, heres the year over year median pricing trend for the last 30 months in NOVA (Arlington, Alex, FFX, FFX city, Falls Church, Vienna, Herndon & Clifton).
2007
Jan +0.0%
Feb +2.8%
Mar -3.5%
Apr -3.5%
May +3.9%
Jun -2.0%
Jul +0.8%
Aug +3.5%
Sep -1.1%
Oct -5.2%
Nov -7.6%
Dec -3.2%
2008
Jan -12.1%
Feb - 8.6%
Mar -12.8%
Apr -12.0%
May -13.8%
Jun -15.1%
Jul -16.9%
Aug -17.9%
Sep -20.1%
Oct -17.5%
Nov -21.2%
Dec -22.3%
2009
Jan -20.0%
Feb -22.5%
Mar -16.5%
Apr -13.7%
May - 7.4%
Jun - 5.7%
It is looking increasingly likely that the most intense part of the storm has passed. The question now is will prices turn consistently positive YOY (a V shaped bottom), or will we start to see random "+" and "-" marks each month as we did in 2007 (in line with an "L" shape.
Alternatively, its possible we will see consistent single digit YOY price drops into 2010, meaning this is not the bottom. I think this is possible, but my guess is the most likely scenario is a bunch of "+" and "-" marks will be the order of the day in 2010, or beyond.
CRT-
I agree with your prediction of a bunch of + and -. I think there was a pretty big rebound in prices from March-June. Prices have stabilized and I think will trail slightly lower, but having a rebound mixed in with a general negative trend will probably lead to no obvious pattern in YoY numbers
FWIW (which probably isn't much), here is an article from the Washington Business Journal in which PMI Group says there is a 92% chance of prices falling further in the DC region:
http://tinyurl.com/myfr3t
"Mortgage insurer PMI Group Inc. says home prices continue to fall and will likely be even lower in two years."
"The Washington area — which includes the District, Northern Virginia, Maryland and parts of West Virginia — showed a 92 percent chance of lower prices."
I'm not sure how they concluded 92 percent instead of 90 percent or 93 percent. And I don't put too much faith in many of these forecasts given that the same forecasters never saw the bubble coming in the first place.
http://franklymls.com/FX7097922
seems like a good deal
lol GT, nice find! Looks like the $395k gets you only part ownership. What a weird listing.
"Fractional ownership/co-ownership of Exclusive Furnished luxury private suites in lavish mansion with five star resort and spa like amenities. This is the perfect second home, time share replacement, extended stay, condo solution, or private retreat. Luxurious amenities include house keeping, laundry, chef, meals, limousines, fitness center..."
housebuyer,
The reason I am saying housing is as affordable as it was in the early 1990s is family wage growth is up about 80% from 1990-2008. Even inflation during this period is ~65% over this time period. The CS index says housing is us ~80% in the same time period. So housing prices since 1990 have gone up the same as family wage growth and only slightly more than inflation.
CS index is too broad. Doesn't it use the *entire* DC MSA? That goes all the way out to WV and Southern MD, right?
I don't think you'll find that Arlington, Fairfax, or nice DC homes are only up 80% since 1990. I agree with you that there are some nice bargains out there (many of which are listed on the front page of this blog) -- do any of us dispute that? But I'm not buying in Woodbridge.
Also, CS represents what homes sold for and not list prices. In areas where there are still a lot of "stubborn sellers" you don't see list prices anywhere near the sold averages.
Jeff-
I agree its a very strange listing, because it doesn't even tell you how much of the fractional ownership you get.
TBW-
Obviously ever neighborhood is different but I think at least for Fairfax it is pretty close. I know my parents bought a 3,600 sq. ft. place in Fairfax Station in 1987 for 270K. According to CS index prices have gone up 151% since then so according to the index it should be worth 680K. There are two houses for sale in the neighborhood one is 675K the other is 600K(but it is a short sale). So it looks like at least in that example the index is very close.
So of course some neighborhoods do better or worse but I really do think that it is not so far off that you should discount it entirely.
housebuyer,
I think you proved my point. Fairfax Station is up 151% and not 81%...
Fairfax Station is no tonier or less tony than it was in 1990. At least with Ballston-Rosslyn we have documented a lot of reasons why it would have outperformed other areas (although still not justifying 2006 prices or even 2009 prices) since 1990 given the massive demographic changes to that part of Arlington, much lower crime rate, much nicer homes/stores there, and an increase in people wanting to live in walking distance of Metro.
I see no paradigm shift in Fairfax Station since 1990 so I see it's 151% increase as bubbly.
GT: The place is owned by a realtor.
Jeesh, it seems like it's the fifth big house (seemingly in trouble) I've seen that's been owned by a realtor.
TBW-
TBW I was looking to a different time frame. My earlier comments where saying that it is no worse to buy now than the early 90s. It is a time to buy now than the mid-late 80s. Also the 80% wage growth was from the 90s, you would need to add another 5 years of high wage growth to go back to 87.
My point was the the index appears appears to work. My parents bought at a trough before the last bubble. If you looked at the value of their home I think it was ~375K by 1990 and then stated flatish for a decade before it started going up again.
So I agree Fairfax Station is no different now then it was 20 years ago. I also am saying that it appears to follow the CS index and the CS index shows that it is no worse to buy now than 1990 if you adjust for inflation or wage growth.
housebuyer,
I also am saying that it appears to follow the CS index and the CS index shows that it is no worse to buy now than 1990 if you adjust for inflation or wage growth.
Yes it is in Fairfax Station. Wage growth is 81% according to you and home prices increased 151%.
Are you saying wage growth is 151% from the late 80s? Then show me what the late 80s price was, not what your parents paid in the 90s (around a mini-bubble in the region).
Also another problem with your argument is that the early 90s were a mini-bubble in the region. Not sure why we'd want to use that level of affordability rather than mid to late 90s or early to mid 80s.
But I didn't quibble and noted that even if I accepted your desire to use early 90s that most places most of us are looking at still are not that affordable.
housebuyer,
i would say it would upset me somewhat to have 8-10 years of flattish prices after i buy, i mean i will be able to handle it, but it will mean that i'll be losing money essentially due to inflation.
i do not hope to buy at the bottom, only want my house price to increase with inflation.
TBW/HB - I agree that prices are still too high/not affordable given the income growth in the area. However, I think the way it is going to resolve itself (going forward) is with rising incomes & sticky prices.
Take a look at the CS index for the early 1990s bubble. Basically, all the price declines were 1990-1992. Then from 1992-1998 prices were just about absolutely flat. Likely, housing was still not affordable, so wage inflation took 6 more years to catch up and provide support for those sticky prices.
Applying that lesson to today, I think we are transitioning from a market that had no ability to exhibit stickiness (Late 2007- early 2009), to a market that soon will have the ability to once again exhibit sticky (basically stagnate) prices.
So bottom line is (as I see it) absent a truly massive inventory spike or Contrarian's deflationary spiral, you dont have much fear of a pricing "crash" in your future.
Given that, if I was a buyer and could afford it now, I would likely go ahead and buy and take advatage of the low interest rates, understanding of course, that any "equity" you get is via paying off principal, not through appreciation.
Moreover, if you are still "priced out" today, I wouldnt worry too much about it so long as your wages are (or likely to) rise. If this an L shaped recovery like I am guessing, home prices will stay flat allowing your wages time to catch up as necessary in the months and years to come.
It is looking increasingly likely that the most intense part of the storm has passed. The question now is will prices turn consistently positive YOY (a V shaped bottom), or will we start to see random "+" and "-" marks each month as we did in 2007 (in line with an "L" shape.
Alternatively, its possible we will see consistent single digit YOY price drops into 2010, meaning this is not the bottom. I think this is possible, but my guess is the most likely scenario is a bunch of "+" and "-" marks will be the order of the day in 2010, or beyond.
This is totally weird. You post these numbers and they scream that there is a V bottom forming, and then you make up some analysis from somewhere else. Duh, prices are shooting higher and will most likely continue to do so. Obviously, not forever, but at this rate we will be + YOY in the next couple of months.
My guess is all + for 2010.
TBW-
I specifically said that my parents bought the house for 270K in 1987. I am not sure why you think I said they bought in the 1990.
I was talking to the comment that it is much worse for people now than in the past to buy a house. I was just trying to say that there are many times in the past that are not any better than buying now. In fact if you are willing to spend 28% of your income on a mortgage and plan on keeping the house now is actually a pretty decent time compared to historical data.
Konstantin-
I agree it would be nice to have the house go up with inflation. But even if it stays flat you don't have to worry about things like short sales if you decide to sell. Your mortgage also stays flat rather than going up with inflation. I have never tried to say now it a good time to buy, its just no longer clear that it is an awful time to buy.
CRT-
What you laid out it what I also expect housing to do. I think if interest rates go up quickly we will likely have another leg down. Absent that I expect flatish for 5ish years before moving with inflation. This of course assumes we get out of this recession and go back to growing GDP 2-3% a year
housebuyer: the early 90s? you mean the peak of the last bubble?
Has anyone seen the new rules for the new ETFs related to CS. The stock tickers UMM and DMM now let you be on whether you think housing is going up or down. I can't find what the rules for how exactly they are valued. There is something about them moving 3X the movement of the index.
Right now the down bet is worth 36.9 and the up bet is 13.1. I assume if housing stayed flat they would both be worth 25. So is the fact the up is valued at 13(48% below 25) mean that people expect the index to fall 16%(48% / 3X leverage)??
That seems a little aggressive to me, obviously this is for the entire country not just DC, but a 16% drop is very significant. If this starts to play out the government will definitely continue trying to manipulate the market.
Link
Fairfax faces new $315 million shortfall with no easy cuts in sight
By: William C. Flook
Examiner Staff Writer
June 30, 2009
By William C. Flook
Examiner Staff Writer
Making the cuts required to close a $315 million deficit facing Fairfax County in 2011 will be even harder than the already bruising round of reductions the county has just completed, officials said.
A gloomy forecast dashed hopes that the recession would stop squeezing Virginia's most populous county anytime soon. The nose dive in home values that began in 2008 won't fully abate until 2013, top county staffers said in a briefing to supervisors. Worse, commercial and other types of nonresidential land values appear ready to fall off a cliff.
Supervisors only months ago finished closing a $650 million shortfall for the upcoming fiscal year. But while the budget gap for fiscal 2011, which begins next July, may be half as much, officials cautioned it will be much harder to close. The figure already assumes no pay increase for county employees, flat capital funding, and no additional funding for schools, bus service or information technology.
"The [deficit] number is smaller, but it's a harder number to crack this year," said Deputy County Executive Ed Long.
The discussion reignited deep-seated policy differences among the supervisors, who kicked off their annual retreat in Herndon's Frying Pan Park on Monday. Mount Vernon District Supervisor Gerald Hyland, a Democrat, angrily implored the board to explore a meal tax, which would need to be put to referendum. Republican John Cook, who represents the Braddock District, said the only way out of the problem was to restructure county spending.
"We're not solving this by just fixing this year's number," Cook said. "We have to do something systemic."
Taxes from homeowners make up the single largest part of county coffers, and Monday's briefing offered little good news on that front. Home values are expected to drop 10 percent in fiscal 2011, a decrease only slightly less harsh than the previous year. The deficit is also caused, however, by a staggering forecast drop in other tax bases, especially revenue from apartment and office buildings. Nonresidential real estate revenue is expected to fall 18 percent in fiscal 2011, the largest drop in at least two decades.
Nova-
Yes I know the early 90s was not a great time to buy. But many people here still claim that the current time is far worse than any time in the past. I was just showing that we are currently no worse than the 90s. Also that does not give any benefit to lower interest rates.
I know you can not just look at monthly payments. But if you assume you get a 5.5% loan now vs. a 7% loan(good historically) you are saving 1.5% a year. If you stay in your place 7-10 years(an average amount of time) the interest rates saved you 14-20% of the price of your house. If you take 10-15% off current prices now looks better than much of the past.
Obviously hind site being 20/20 buying in 99/00 would be great, but should we only compare to the best time to buy or some average which involves the late 80-2003ish.
Buy now or be priced out forever -- the great V is coming!
Nova-
I hope you are making fun of Robert not me. You will be hard pressed to find a comment from me that says prices are going up long term. I correctly say that CS would be up in the summer months, but that was just extrapolating a rolling average and seeing what the market did. Going forward I expect a small drop after the summer followed by several years of flatness.
housebuyer: don't worry, that last post wasn't for you.
HB - yes - looks like we are pretty much in agreement.
Robert - A "V" is possible, but so too is a head fake, with a nother small drop next year. A mini "v" that turns flat is a real possibility too.
However, to make a case for the "V" you have to explain why affordability isnt a problem. I believe it is a problem, and am laying out a case for it to resolve itself.
Do you believe affordability is a problem? If no, your hypothesis makes sense. However, if you think affordability is still a problem, lay out a case for me where prices rise, yet affordability does not become a bigger problem.
I think we've seen a "v" on the low end. Perhaps there was an over-correction. I've seen prices jump quite a bit in my target markets. Time will tell. I'm certainly not expecting anything other than flat pricing for the next few (or more) years. We may even lose the 10-30+% on the low end if this huge shadow inventory emerges.
p.s. wsj had an interesting article today (c1). People are getting some good deals, but I was surprised that the over-all percentage recovery on reo's is as high as it is.
Va_investor,
I suspect that the bottom may very well be in and a v will follow soon for Reston. People there can reasonably assume that prices won't stay flat, that there will be appreciate 2-5 years out once the new metro line is completed. So, since there are secular improvements visibly on the horizon, Reston will v.
If however, you'd like to buy some rental townhouses in Burke, they are starting to come fast and furious. And no longer being snatched up immediately. I don't get it. Just 3 weeks ago an underpriced REO commanded 32 bids and went for well over asking, and yet it's taking a week or two to find bidders on the new ones, and the bulk of the ones that have sold sold for no more than $5k over ask, if not $1k under. So, if there is no obvious appreciation potential? Prices on the low end are starting to head downwards again after this spring thaw. Or at least distress is reappearing faster than it can get gobbled up.
Robert - A "V" is possible, but so too is a head fake, with a nother small drop next year. A mini "v" that turns flat is a real possibility too.
I don't have a problem with this statement. All of those scenarios could happen. I'm only saying the trend looks like a V. If we were having a V, this is exactly what the data would look like. There is nothing in the data to suggest a 'head fake.' When that shows up in the data, say 3 months of increasing inventory and lower median prices, I will call it like I see it.
However, to make a case for the "V" you have to explain why affordability isnt a problem. I believe it is a problem, and am laying out a case for it to resolve itself.
I thought affordabililty was as good as it's been in a long time. That's what I keep reading.
We have THE tightest credit conditions in a generation right now and people are still buying houses. I see that easing going forward. Not bubble credit, but better than we have today.
Do you believe affordability is a problem? If no, your hypothesis makes sense. However, if you think affordability is still a problem, lay out a case for me where prices rise, yet affordability does not become a bigger problem.
Interest rates are 5% or a touch above. Unemployment among homeowners is probably something like 4%. And you know I expect the Federal spending to weave its way through the area. If my bullish thesis for DC Metro doesn't play out like I expect, then okay, I'll be wrong.
We saw home prices double and triple from 2000-2005. Since 2005, we've seen prices go down from 15-50, 60, 70% in some areas (nationally). And now we've seen some snap back off the lows.
WHAT THE HECK WOULD LEAD ANYONE TO BELIEVE WE WILL TRADE FLAT, OR WITHIN 2-3% A YEAR FOR WHATEVER NUMBER OF YEARS.
Sorry folks, my bet is on volatility, up and down for the next 10 years.
Cara,
You might be correct that the "land grab" on the low end has diminished; but I am seeing these properties listed much higher than they were in Oct to March. This is the "v" in the low end I was talking about.
Am I correct that you are talking 250K plus?
I signed a contract today for a condo in N. Reston for less than 120K. As far as I know, there were no other offers (I should have gone lower). These were 250K at peak.
I looked up the tax records. People must be very depressed. All I can say is been there, done that. It worked out fine.
Robert,
Study the 1990's re: flat pricing.
Anyone have an experience buying an HAP property? Apparently HAP is a relatively new program for members of the military who are transferred, are upside down on a property and can't sell it. Kind of a military version of a short sale. Since many military used no money down VA loans, this seems to be the alternative to foreclosures on VA loans when military personnel are transferred. I was offered a good condo today with this program, but agent said program is so new there is little info about standard waiting periods, pricing, etc.
Ace: Just looked at June 2009 sales data from N. Va. Assn Realtors. Almost across the board among condos, townhouses and single families in all jurisdictions, sales are up, median price is down and inventory is down. How close did I come in my predictions??
People keep commenting here that the low end has gone up. Can anyone give me more detail? I'm guessing it was something along these lines:
Manassas
May 2008 Median Sales Price $150,000
Short Sales/REO/etc 70% of sales
May 2009 Median Sales Price $170,000
Short Sales/REO/etc 50% of sales
Now I see the sale price going up but I also see the percentage of short sales going down. I'm guessing that if we just looked at non-short sales/foreclosures we might see this
Manassas
May 2008 Median Sales Price $200,000
May 2009 Median Sales Price $195,000
That would still be negative to flat growth in the non-foreclosed portion of that market. I am not claiming I am 100% sure of this and would love to be proved wrong. Can anyone prove to me that the alleged low end rise in median sales price is anything but a smaller percentage of sales coming from foreclosures/short sales?
CRT,
TBW/HB - I agree that prices are still too high/not affordable given the income growth in the area. However, I think the way it is going to resolve itself (going forward) is with rising incomes & sticky prices.
Ding ding ding ding. Correct answer. I have been trying to argue this for a while.
However my gloss is that portions of NVAR will probably bottom and stay stagnant at different times. I think mid to higher end NVAR bottoms late 2010 or early 2011. We still see a lot of inventory and slow selling periods for that part of the market. Low end probably already reached the bottom or will soon.
va_investor said: "I signed a contract today for a condo in N. Reston for less than 120K..."
You got me curious, so i did a search on condos in Reston. Wow, i didn't expect to see so many places for under $150K (most under contract).
Several short sales have been under contract for a long time (since Feb/March). This one has been under contract since Nov, 2008! I wonder how many will close?
BLS has some interesting information on federal employment:
Federal Workforce
In 2007, there were 284,000 federal employees in the DC area.
How many people work in the DC area I then asked? I found the following information from the Metropolitan Washington Council of Governments:
Economic Trends in Metropolitan Washington 2004-2008 (pdf)
On page 5, it is noted that 2,904,935 jobs are in the DC MSA. But even though that 284,000 number might include some people in the really far out places, I'll ignore the jobs in really far out places like WV parts of DC MSA. So 2,795,882.
284,000/2,795,882 = 10.16% of jobs in the region
Regional unemployment went from 3% in 2007 to about 6% now (probably higher now).
3% of 2,795,882 = 83,876 jobs lost
To offset that in federal employment jobs
83,876 / 284,000 = 29.5% increase
I have seen no indication that Obama et al plan to increase the federal workforce in size by 30%.
Another tepid quote from Fuller. Did NVAR forget to bribe him this year? They probably no longer have the money to do that.
TBW-
I think you also need to look at government contractors. Although federal employees are only 10% of the workforce I assume if you add federal contractors this number is much higher.
I guess its possible the government grows and does not increase the number of contractors, but I find this pretty unlikely.
Interesting points, TBW. Thanks also for the employment sector #s.
Annie, I think HAP has been around awhile but I think only homes bought before 2004 are eligble. Anyway, this agent can fill you in accurately.
Cindy Jones-Northern Virginia Real Estate & Military Relocation Services
Woodbridge
Novahog,
I didn't buy a short and I stick with North Reston. I'd bet a search of 20190 or 20194 will show far fewer availables than 20191.
I closed on a short in June (contract mid-Jan). I have contracts on 2 more...so, we will see.
Contrarian,
What difference does the mix of distress v "normal" make in the low-end bounce?
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