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Friday, July 10, 2009
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About Me
69 comments:
Declines everywhere except Arlington.
*cough* substitution effect is BS! *cough*
LOL, you jokers should just admit you were way off base on that one.
well Stafford looks like it's curing itself.
Price drops and volume increases.
closer in is still sinking, but, arlington is moving up a little bit.
I'm of the one swallow does not make a spring school
Arlington # of sales is up from a very low July 2008, but still is at the 2nd lowest point in 12 years. Still not healthy, and my guess (without yet seeing the #s) is that the "higher" end (e.g., above $800K) still has huge MOI.
Alex. seems to be similarly situated.
Arlington is going to get theirs, one way or another.
Pat, it was like this last month also.
The fact is, the outlying counties are consistently worse month after month, with the exception of maybe 2-3 months in the last 3 years where the massive decline in prices in outlying counties spurred a buying frenzy.
Its tiring being right, month after month, and having these yoyo's keep spouting off that buyers are going to start dumping Arlington properties like hotcakes to move out to Fairfax or Loudoun because of their cheaper prices.
The FACT is, Arlington had a much smaller bubble, and is in a much more desirable location, and will continue to outperform the exurbs unless obscene price drops cause temporary insanity out there!
Ace,
The only point you prove is that in wealthy areas people are not "forced" to sell. Of course, you will have your odd exception - but that's always been the case.
Doug: "The FACT is, Arlington had a much smaller bubble"
If this is a fact, do you have data to back it up?
No, VA_investor, there are any number of hypotheses you could generate about why the Arlington numbers are as they are. Yours is one, and I think you're at least partly right though I would add that many would-be sellers are not realistic about current values. What I did was point out facts, and added my assessment that it isn't a healthy market, i.e., if there were a clearer balance of supply and demand the level of sales would likely be closer to the median for the 12 year period.
Arlington has been at very low sales #s (12 year low or next to it by a spot or two) for many months. So of course anyone can propose any causes that he/she wishes but the data here are insufficient to test the propositions.
kevin, CRT has posted those numbers several times. Maybe you could ask him to do that again.
Ace,
I believe know the numbers.
link
If the bubble swelled prices in other areas by 2.5x their normal prices, and Arlington was 2x their normal prices, I challenge the language used that it was "way less" of a bubble. That's my only gripe really.
I believe *I* know the numbers. Would like an edit button, please.
housebuyer,
I guess its possible the government grows and does not increase the number of contractors, but I find this pretty unlikely.
I agree that is normally the case. The only wrinkle is what the Obama administration will do. Obama and Gates claim to want to have fewer contractors and more federal employees. Whether or not they really do that is another question.
PWC Median Price / LoCo Median Price
1997 0.74
1998 0.74
1999 0.72
2000 0.70
2001 0.70
2002 0.73
2003 0.76
2004 0.75
2005 0.77
2006 0.80
2007 0.86
2008 0.64
2009 0.56
PWC has either overcorrected or Loudoun has undercorrected.
OK, Kevin, I just meant that CRT has tracked (and posted) Arl vs. other locations over a long time period (10 years?) and I believe his numbers showed Arl median values increased less than other areas - can't recall the exact magnitude of the difference but maybe CRT can post them again when he gets time.
These tables do not really give you a picture over whether prices have gone up or down in a year. Look at this chart and May's chart.
If you look at May's chart you would conclude prices went down in 1999 and 2001 for Arlington County.
But looking at today's chart you would not see any decrease in price in 1999 or 2001 for Arlington County.
In the May chart, Alexandria cost less than Arlington in 1998 but in today's chart, Alexandria cost more than Arlington in 1998.
These charts are helpful but there is a lot of noise in them.
Ace, I believe that to be true as well, from the data I've looked at. I just hope that if Doug is still lurking, he can clarify what he meant. The bubble really wasn't that much smaller in Arlington.
Initial comments:
Inner Counties.
Headline is once again Arlington posting it second consecutive "+" month - something we havent seen since sept-oct 07. Also, one of the reasons median prices are up is that high end is slowly returning to normalcy (700-900K is thawing 900k-2.5MM is still frozen).
As medians were skewed down by the lack of high end sales, they will skew back up when high end returns. I think thats basically what we are seeing everywhere, its just most pronounced in Arlington the suffering was the least. Look for Alexandria to exhibit this as well in the next few months.
Outer Counties:
Outer counties are definitely returning much closer to inner counties in MOI and severity of price drops. Of course it took one extra year of 20% price drops to get there, but they have now seem to once again all behaving similarly.
Interestingly too, the focus is clearly shifting to MD, as the laggard. For the first time in 30+ months, PWC was not the price drop king. That title now goes to Prince Georges county posting a -19.1%. MoCo is only slightly better at -15.3%. Their day of reconing was delayed, and (likely) wont be severe as outer county VA, but they clearly have a ways to go.
Finally, note too that outer county sales are down in BOTH Loudoun & PWC. As I have noted before, this was likely to happen as the ocean of foreclosures dried up. This will likely cause some to suggest sales are down (i.e. pain will increase), but once again, its getting harder and harder to beat YOY sales records as excess inventory dried up and you are running out of houses to sell.
I think its still to early to call anywhere healthy, but as far as price declines go. I think youve seen most of what these stats will show us.
Ace/Kevin. Regarding price increases. The runup from 2000-peak was
Arl +129%
Alx +132%
Ffx +130%
Lou +132%
PWC +182%
Obviously, PWC was much larger, but so too has been its decline. So yes the prices increased just as much in Arlington as in the other 3 areas. The reason the bubble was "smaller" is that the fundamentals were just that much stronger in Arl (and Alex) than elsewhere.
I think that just brings us back to the old argument of whether Arlington fundamentals improved drastically since 2000 while not improving all that much in those other areas. It doesn't matter if Arlington is a nicer area than FFC, what matters is the comparison between the current version of Arlington vs. the 2000 version of Arlington.
No one's convinced me that Arlington is that much nicer now than it was in 2000. Nicer? Yes. But not nearly enough to justify the bubble by itself (or even come close). I don't really want to start up that discussion again but I had to chime in with my disagreement of that assessment.
Jeff - I agree, Arlington got to big for its britches. Yes incomes increased more here than anywhere else in the USA that Ive looked, and desirability has really improved, but its still way ahead in pricing. Thats why I think these + signs are a bit overstated. Yes the declines might be over, but I really doubt any legit gains will be seen til incomes further catch up.
I only looked at PWC, but did any other areas see:
#1 decreased sale activity YOY
and
#2 decreased sale activity from May to June?
whoops, posted before I meant to...that's what happens when you have a keyboard-slapping baby...
anyway, it seems, from looking at the chart, like pwc is the only county with a significant decline in sale activity from last year. and a quick check showed a decline from may to june, as well. what does that mean?
Thanks, CRT.
Tabitha..thats PWAR, not the whole county. PW,MP and Man. It means we are literally running out of houses to sell. I think if you check contracts/cont you will see more were signed than houses listed. No biggie except our under 400 buyers are migrating to Stafford. I got the poop eer scoop on 7005 but I don't have a way of sharing and really don't wish to violate my new neighbors by posting thier business on a board.
Finally, note too that outer county sales are down in BOTH Loudoun & PWC. As I have noted before, this was likely to happen as the ocean of foreclosures dried up.
Man, you get off the hook easy. I post this and they try to run me off this blog.
EXACTLY RIGHT.
And increasing prices will snuff out foreclosures and short sales going forward. If you can sell your house for more than the mortgage+transaction costs, no need to short sell. It's the 9th inning of the foreclosure crisis - in this area.
Oh, novawatcher, IMHO.
CRT,
Ace/Kevin. Regarding price increases. The runup from 2000-peak was
Arl +129%
Alx +132%
Ffx +130%
Lou +132%
PWC +182%
This is very helpful. I think maybe one of the pieces of confusion when we discuss Arlington is that some of the Arlington boosters think when we say "why isn't Arlington falling as much as the others" you think we mean PWC? I've never meant PWC. I've meant Fairfax. And apparently I should also mean Loudoun County too.
Looking at the various charts we can see Fairfax County has dropped quicker than Arlington and yet both went up the same amount in the bubble. So the question is will Arlington drop the same as Fairfax but in a slower fashion or will Arlington hold on to more bubble gains?
Btw, I admit my biases as a native of Fairfax County (although I currently live in DC), but I find it hilarious sometimes how some of you Arlington and Alexandria residents act like Fairfax County is the Cousin Oliver of the region. Ummm, last I checked, Fairfax County was the richest county by median income in the nation (minus one year where Loudoun was ahead), Tysons Corner alone has as many jobs as Miami, add in the other job centers like Reston and you have plenty of jobs, most of the schools are very well regarded, our first president George Washington lived in Mount Vernon, the crime rate is massively low, and it has a lot of nice shopping.
I mean honestly some of you act like riding from Vienna, Dunn Loring, or West Falls Church, Franconia-Springfield, Huntington, or soon the future Silver Line is some massive injustice. Yeah, it's longer to DC than Ballston but it's not that bad. And besides, not everyone works in DC. People seem to forget that.
TBW: the other option is that Loudoun houses have become more nicer, relative to PW, over the past 10 years or so.
TBW-
I agree as a native Fairfax County resident who currently lives in Ballston and works in Tysons I would say I much prefer Fairfax.
Most of Fairfax is nice suburban neighborhoods that are great for raising a family and having land. Arlington has some nice neighborhoods like this also particularly N. Arlington, but to be honest I really do not care for most of the neighborhoods south of the metro and would not feel safe walking around them after dark.
I only live in Ballston now because it is convenient for both my fiancee and I to get to work(I work in Tyson's she works in the city). The places we are looking to buy are all in Fairfax though(mostly Vienna/Dunn Loring)
Tabitha - regarding sales. PWC is simply running out of inventory. Look at inventory, its about 1/2 of last june. To think sales would remain the same is not realistic. The bigger picture is MOI. Thanks to a drastic reduction in inventory, and a (relatively) small reduction in sales, MOI is now much tighter than it was a year ago.
Robert, the reason I would like to think I do not catch as much grief is that I have always tried to call it as I see it. There was a time when I was more bearish, and im not afraid to point out serious weaknesses. Also, theres the issue of diplomacy. I think if you were a little less abrasive, you will find you get a more measured response.
TBW - regarding the comparison of ARL/PWC - I dont think anyone suggested that. We learned along time ago that PWC ran up far more than the rest, so we understood why it would run so much farther down.
Regarding, Arl, Alex, FFX & Lou. The bigger question was, they were so closely linked during the run up, why were they so different on the run down?
Also, I may be speaking out of turn, but I dont think anyone thinks Fairfax is a pariah. Fairfax has long been the gold standard for the NOVA area. As I see it, instead of being the clear #1, Fairfax is now the clear co-#1.
Harney: When Default is a Strategy
Among the study's sobering findings:
Moral precepts keep large numbers of financially struggling homeowners out of default, but only to a point. Fully 81 percent of household heads said they believe intentional defaults on mortgages to be "morally wrong." But that high percentage begins to crumble as negative equity grows.
If negative equity were to reach $50,000, 7 percent of those who consider strategic defaults to be immoral said they would walk away. At $100,000 negative equity, 22 percent would do so. At $200,000 negative equity, 37 percent of those with moral objections would nonetheless default, and at $300,000, 38 percent said they would.
Among those who had no moral reservations about defaulting, the percentages were much higher. At $50,000 negative equity, 20 percent said they'd walk. At negative $100,000, 41 percent would do so, as would 59 percent at negative $200,000 and 63 percent at $300,000.
The researchers found that age, tenure of homeownership, the frequency of foreclosures in a person's Zip code and even politics influence an owner's willingness to bail out of a mortgage. Owners under the age of 35 are less likely to have moral problems with strategic defaults, as are self-described political "independents," compared with Republicans and Democrats.
An important factor in walkaways, according to the researchers, is the level of foreclosures that owners observe in their community and their personal acquaintance with owners who have defaulted. In the latter case, owners who know someone who defaulted strategically are 82 percent more likely to default themselves, compared with owners who do not know anyone in that situation.
The higher the number of foreclosures in a given Zip code, the higher owners' willingness to walk away, the researchers found, suggesting what they call a "contagion effect that reduces the social stigma associated with default as defaults become more common." High numbers of foreclosures also appear to create a "vicious circle" that increases neighboring owners' negative equity and greatly raises the probability of additional defaults, foreclosures and equity destruction in the area.
Ahh Arlington. Sweet precious Arlington. It sits there, mocking all bubbleheads in its refusal to take the big fall.
Remember years back when we were promised it too would come crashing down? There was such certainty, even arrogance in the rhetoric "trust me, close in areas always fall last" "oh were just getting started" "Its only the third inning" "its not different here -- thats just wishful thinking" we were told. Oh how wrong they were.
Turns out, Arlington is indeed "different" and "special" in the sense it had a meteoric rise, and a laughingly small crash. The signs it was gong to be like this were there early, but were ignored. Instead we were told, "just wait, it will happen" -- the doom aid was dispensed, and we lapped it up, glug, glug, glug...
I cant help but think how different my life would be now if I had not listened to those fools starting way back in 2003 on the message boards, and later in 2005 & beyond on the bubble blogs.
Now, its mid 2009, and they have mostly slunk back into the shadows, never to be heard from again. I hope they lurk here. I hope they see how truly wrong they were.
Sorry, but as you might be able to tell, im seriously pissed off, and (for the handful of you who share my plight), you probably also think from time to time -- where the hell is the big drop we were promised -- how did it all go so horribly wrong?
Maybe I need to have some Nuremburg trials here. Comb the records, and drag out the most egregious errors in judgment. At the end of the day, we are all responsible for our own actions. I made a mistake in not buying in 2003 and I realize that now. However, If I cant get the 2002 prices I was promised, I can at least get some closure out of figuring out where exactly it all went so wrong.
NoVAWatcher,
TBW: the other option is that Loudoun houses have become more nicer, relative to PW, over the past 10 years or so.
Really? Aren't most of the new homes in both counties built by the same developers?
I could buy that over the 2000s the Loudoun-PWC differential could have gotten wider because the Silver Line looked to be more of a reality and I think (although am not sure) that Loudoun has had more job growth than PWC. However, the opposite happened. Over the 2000s PWC was catching up.
This is because as CRT's data shows PWC had the largest bubble -- which makes sense since I think it had the most stated income loans and ARMs of all the localities so things become a Phoenix/Vegas there.
I think the new differential we see 2008-09 is an overcorrection because there are/were so many foreclosures given all that mortgage nonsense.
Let me look at median household income growth:
Loudoun 2000: $80,648
Loudoun 2007: $107,207
Increase: 33%
Prince William 2000: $65,960
Prince William 2007: $87,243
Increase: 32%
Both got richer at essentially the same rate.
Fairfax 2000: $81,050
Fairfax 2007: $105,241
Increase: 30%
Arlington 2000: $63,001
Arlington 2007: $94,876
Increase: 50%
Hmmm, that could be a rationale for a smaller drop in Arlington than Fairfax and Loudoun County.
The Anonymous,
and a laughingly small crash
Even if this is the bottom for Arlington (still up for debate), you call -20% "a laughingly small crash"? If you bought a median Arlington home in 2006 you would have lost $100,000. That's a lot of money. I would not call that a small equity loss.
Using the chart on this post, Fairfax is down 24% from peak, Loudoun 30% down from peak, and PWC 50% form peak. So if today is the bottom for all four counties (I doubt it), then Arlington's drop is not that much smaller than Fairfax or even Loudoun.
The Anonymous,
I cant help but think how different my life would be now if I had not listened to those fools starting way back in 2003 on the message boards, and later in 2005 & beyond on the bubble blogs.
Thank your lucky stars that you listened to housing bears in 2005 and beyond and did not buy a home in Arlington then. You would have lost money.
As for 2003 -- what message board/blog did you have this discussion in? I would love to see it. I have a feeling this conversation is made up. I don't think there were any Northern Virginia bubble blogs back then.
I can't speak for Cara, housebuyer, et al but I think most people here are like me and started looking buying 2005 or later (I actually started in 2007). For all of us, it was the right thing to do not to buy a home.
For many (like those in Vegas, Phoenix, PWC, and maybe some other Northern Virginia localities we shall see) 2003 was not the time to buy as well. But maybe, just maybe, 2003 was a good time to buy in Arlington. Or the bottoming of that market will result in an equity loss relatively small such that it is offset by having gotten to own your home the past six+ years.
If that ends up being the case, then on behalf of housing bubbleheads, I apologize. You were the one person in America who was not a bubblehead who listened to us pre-2005. You are our one victim. We will have to assuage ourselves with the fact that we saved millions since 2005 from making the worst financial decision of their life.
tbw,
It's all local, isn't it? I doubt many of the Arlington doomers were thinking S. Arlington. Where is our Clarendon guy who sold in May of 2005 and PROMISED 40% declines?
Fx, overall, may be down X% - but that doesn't mean every zip or neighborhood is. Some are down 70% and others 10%.
This is the problem with generalities.
twb,
It all depends who you listened to and what your experience was. I pretty much stopped buying in early 2002. Things were getting crazy. I don't know when the blogs started. I didn't need the input.
Look hard enough and you can find a bargain in any market.
The Anonymous,
FYI, a few months back, I bought an unlisted SFH in a desirable area of FFX, close to work and feeding into excellent schools, for 80% more than what the owner had paid in the early 1990's. What I paid was at late 2003 levels.
My wife and kids are happy and the home is in good condition. Waiting for 4 years indeed paid off for me. I expect a long period of stagnation and possibly a small loss in the next few years, but I am going to stay put forever (say 20--25 years) if external forces don't force me to change the plan.
It is true that Arlington prices haven't fallen as many had expected. I was someone who thought prices in ARL would fall something like 20--25% while in FFX it would be 30-35% and more in PWC. I was wrong about ARL since I think prices have fallen only about 15%.
However, I think you are being too harsh on some people for their reasoning. At that time people said that there would be a sharp fall, no one could know how the Fed would intervene. Maybe such massive government intervention has made it a drawn out process, softening the fall but prolonging the stagnation. But these are not predictable interventions.
Personally, I would suggest letting go of ARL and finding a home in some nicer part of FFX, like Vienna, Great Falls, etc where prices have fallen significantly. My friend paid
$900K in 2005 for a nice colonial home built in 1977 with 1 acre of land in Great Falls. Similar homes are now selling for $725--750K in the same neighborhood.
I recognize that the commute may be an issue if you work in DC, but I wouldn't be so fixated on ARL and overpay for very old homes that need a lot of maintenance, no matter how many people are willing to pay the high asking prices and causing the prices to stay high.
TBW: I actually don't know much about PWC, but I was thinking that one possibility [which could be completely wrong] is that Loudoun had more new development than PWC, and that the new development was further up-market compared to previously existing homes.
The Anonymous: I still have the cajones to say that Arlington will correct. I'll also reiterate that I expect this to take a long time, and 2009 was never in my time-frame (something I've been saying for a while). 2013? 2017? None of the areas with old housing stock are going to correct as quickly as PWC. After all, one of the reasons PWC and Loudoun fell so fast was because there were so many new homeowners who bought near the top of the bubble, whereas in the Arlington there were precious few.
TBW - the differential is actually a bit bigger than that. Instead of comparing all prior Junes, CRT does a series where he takes the annual gains vs. declines (like his numbers before). CRT, can you post the declines too?
With regard to the other forums, believe me they have been out there FOREVER. This was a big one for me back in 2003.
http://washingtondc.craigslist.org/forums/?forumID=6&all=N
I know some here heard bubble talk going back til 2002 or before. The venom over there and the 40% off "blood in the streets" was all the rage, even back then.
BTW -- I have no problem with you -- you have always been pretty reasonable with your opinions. At the same time however, I would appreciate it if you would not suggest that I "made up" these discussions when its clear you are pretty new to this.
Ted K. Thanks for the comment. You too were always reasonable in your statements. Glad to hear things worked out for you.
Novawatcher. Still on board huh? Thats fine -- you too were very reasonable from day 1.
Let me ask you -- do you expect Arlington to correct via stagnation, or outright price declines? Stagnation is great and all, but that doesnt do me much good. I was promised frog marches dammit!
The Anonymous: I'll hedge my bets and say that it could be through stagnation.
I'm the only one on this board that think greed and fear play a bigger role in housing than affordability, income growth, unemployment, blah, blah, blah.
Anonymous,
You weren't hallucinating. We bought in *2002* in Arlington, and a close relative with 30+ years experience in DC real estate advised us several times not to buy, telling us we were buying in at the top of the market: "X for [our crappy house] is insane!"
The Anonymous-- I was surprised, too that there was any serious talk of a bubble in 2003. I certainly didn't hear it. The price rises were, indeed, startling, but they weren't yet soaring into never never land as we've seen since. I think Ben's bubble blog started in 2004. That's the year I began thinking, "My God, what's happening here?" instead of just, "Wow, the value of our townhouse has really shot up!"
My experience was sort of the inverse of yours-- I couldn't believe the amount of grief I got from the housing heads, both before and after we sold in 2005. I agree that there was a fair amount of nuttiness on the bubble side as well-- particularly on Ben's blog-- but since I seemed to be a favorite target on David's bubble blog I confess I find it a little hard to sympathize.
Of course-- who knows? Maybe there were just a few idiots who amused themselves by attacking both sides alternately. My takeaway from it? If people are resorting to insults and sneers it's because they don't have any other arguments. Either grow a thick skin or walk away.
I worked on the first for awhile-- and then I finally did the second.
No, Vienna isn't that much further out than Arlington, and not everyone works in DC. But my spouse and I both work there.
When dealing with Metro disasters, and they happen pretty frequently, I'm comforted by the fact that if worse comes to worse, I can walk home. It's only 4 miles and takes me 1 hour and 15 minutes.
I can also opt for the bus (and just one--no switching required), and the 38B or the 3Y takes me to Arlington, like today!
If I lived in Fairfax, I couldn't walk home. Maybe other people don't think like that, but I do. I'd move back to DC if it weren't for the crappy schools (can't afford to buy a home and pay for private school, so we're stuck in NoVA).
So for us, yes, it's Arlington or nothing.
Meshell-- That reminds me of something my mother told me about their first house in Berkeley. They paid something like $6000 for it. Their neighbor, who'd paid maybe $4000 just a few years before kept telling them they'd WAY overpaid.
Of course, looking at the Case-Shiller chart for those years it's easy to understand why they would have thought that-- they were just coming off of two decades when housing prices were way below their long term averages. That serves to remind me, whenever I'm tempted to make any predictions-- that prices can stay out of whack a l-o-o-ong time. Or as Keynes said, "The market can stay irrational longer than you can remain solvent."
Anonymous In Oct 2005 we bought a standard brick colonial in a nice Arlington neighborhood with a nice family room addition and recent kitchen for $710,000. We had to pay about $20,000 above asking and we were scared but we were motivated buyers. We had 2 children under 3, lived in a 2 bedroom townhouse at Fairlington and my husband's employer made it very attractive financially to work at home. We thought we were buying at the height of the market but just needed more space so it was worth it. We knew we weren't likely to move so there was no concern about selling at a deficit. I was scared again when we started to get updates from the neighborhood realtors showing that houses like ours were selling in the $675,000 range in 2008. In June a house like ours sold for $717,000 but was listed for $725,000. After almost 4 years we are about back where we started with prices but the house has given us a lot of other things that the credit card commercial would call "priceless" We've made great friends in the neighborhood, our kids are in nice schools with friends from the neighborhood, we can walk to an old library while a new one is being built, a hidden away playground, and 2 shopping areas. My husband loves working at home because he gets his work done much faster and has more precious family time. If it is financially possible I hope you find a house soon and go for it. We aren't smug about what we did, maybe just more relieved that that particular big step is over and we can relax.
The bubble talk started in 2002.
From then forward, BH friends called me foolish for not selling.
Every year since 2002, they said it was about to happen, and when it did, it would be horrible.
I expected a 10%, perhaps as much as a 15% drop from peak to trough.
I figured that between the costs involved in selling, moving, renting, lost tax breaks, buying, and moving again, plus the value of my time, a 15% drop did not justify selling.
So I stayed put.
Peak to trough - I'm not confident that I could have spotted the precise peak and sold, nor is it clear that I could buy back at the trough.
Examining the data, Arlington peaked in 2006 but Alexandria peaked in 2007. The drop so far is less than 15%.
Funny thing is that after the peak in 2007, their rhetoric stopped. Prices peaked, prices pulled back but less than 15%.
Even with the pullback, my place is way up, it's more than doubled since they urged me to sell.
Prices could certainly fall further but I'm not betting on that either.
The Anon
"According to a 2007 estimate, the median income for a household in the county was $94,876, and the median income for a family was $127,179.[15] Males had a median income of $51,011 versus $41,552 for females. The per capita income for the county was $37,706. About 5.00% of families and 7.80% of the population were below the poverty line, including 9.10% of those under age 18 and 7.00% of those age 65 or over. In 2004 the average single-family home sales price passed $600,000, approximately triple the price less than a decade before, and the median topped $550,000.[citation needed]
[edit]"
that's why it's going to fall
22207 was interesting:
Sales up: 27.27%
Median price down: 12.61%
Average price down: 10.15%
Days on Market up: 40.68%
Mortgage Default Crisis - Brutal Past 2-Months
The Anonymous said...
I made a mistake in not buying in 2003 and I realize that now. However, If I cant get the 2002 prices I was promised, I can at least get some closure out of figuring out where exactly it all went so wrong.
I have recently provided you with information from independent sources, which confirm that prices are to continue declining in the NoVa metro area for several more years. They include:
1) Washington Examiner:
The nose dive in home values that began in 2008 won't fully abate until 2013, top [Fairfax] county staffers said in a briefing to supervisors.
2) PMI Group:
The Washington, D.C., area — which includes the District, Northern Virginia, Maryland and parts of West Virginia — showed a 92 percent chance of lower prices [over the next two years].
3) Page 6 of the PMI report shows the risk rating for the D.C. metro area is "high" and increased from 88.2 (4Q/08) to 91.7 (1Q/09).
The Anonymous,
BTW -- I have no problem with you -- you have always been pretty reasonable with your opinions. At the same time however, I would appreciate it if you would not suggest that I "made up" these discussions when its clear you are pretty new to this.
Sorry. I just reacted the way I did because you said you wanted a "Nuremberg Trial." As you may know, the first rule of internet discussions is not to bring up Hitler or anything involving Nazi Germany lest you undermine your credibility.
paKa,
When dealing with Metro disasters, and they happen pretty frequently, I'm comforted by the fact that if worse comes to worse, I can walk home. It's only 4 miles and takes me 1 hour and 15 minutes.
...I'd move back to DC if it weren't for the crappy schools
Yes that is about 90% of the reason I moved into DC. So I could walk to work. I found Metro very unreliable. While I'm supportive of the Silver Line I would like Metro to fix the current system first before expanding it. Let's get a second Rosslyn tunnel, express tracks, etc.
That being said, I've talked this issue over with some coworkers. They will check washingtonpost.com and/or wmata.com to see if things are running smoothly before leaving. If it's a disaster they have a backup plan. For most it is a friend who can drive them home or to their cat at the Metro stop.
Is this an impossible thing for you to set up, paKa? I mean, how many times per year would you need that? I would say five max and really more likely once or twice a year. Delays happen a lot but severe enough delays that you would have considered walking home to Arlington from DC. Is there no one in your support network for whom this would be possible?
cat at metro stop should be car at metro stop...
homeowner,
After almost 4 years we are about back where we started with prices but the house has given us a lot of other things that the credit card commercial would call "priceless" We've made great friends in the neighborhood, our kids are in nice schools with friends from the neighborhood, we can walk to an old library while a new one is being built, a hidden away playground, and 2 shopping areas.
Everything you listed would be true if you were renting that home. Having bought your home provided none of those priceless moments.
Tiredbubblewatcher We rented in Fairlington for 5 years before we bought. I should have added that another reason we bought was to have more control over how we lived. We had a very nice landlord but every time we needed a repair it would take a long time to get to it because we first had to go to the management company who took it to the landlord and then we had to wait for the repair contractor and take time off to meet the contractor. There were more tenants at Fairlington than in our neighborhood but if we ever had any issues there we had to go through the same process and wait longer to get approvals because we were tenants.
I don't think we would have had the same experiences in our neighborhood if we were renting. We have a few rental houses in our neighborhood mostly owned by foreign service or military people who go back and forth between the houses and postings. When they are in the houses we become friendly with them. When tenants are in the houses, we don't even know their names. The tenants are more the neighborhood nuisances than neighbors. They don't take care of their yard, their pets or even do simple things like bring in their trash containers.
I suppose we could have rented until 2008 when prices in our neighborhood went down and saved $42,000. But the uncertainty of renting, the potential to have to move several times, the moving costs and disruption to our family now with 4 children, and I guess our simple desire to put down roots made us buy at the wrong time.
When interest rates were very low this year, we refinanced our first trust so that helped save a good deal of money monthly.
We don't regret it but I suppose we should. Tabitha has addressed the many intangibles of owning versus renting much more eloquently than I can. I guess it just comes down to not always making the best economic decision but the best decision for your family which does not put them in economic peril.
"*cough* substitution effect is BS! *cough* "
Take some 'tussin for that cough, Doug.
I am as gleeful as Doug that the big bubble was a big nothing close-in. The drop of 10-15% in Alexandria after 100-150% gains is noise in the data.
Figure an average Alexandria (Arlington, DC) SFH gained $300K and then fell $50K.
This is after 6 years of hearing "any day now" and "it's coming to your neighborhood."
The end of the bubble is probably a done-deal. Seems that half you BH are buying or have bought. Many got good deals as a result of their research, timing, patience. Good for you!
On the other hand, those who bought pre-2002 are well situated, so it's a wash.
(Contrarian Doomer mode): This game may go into overtime. The economy is still on the rocks, unemployment will likely pass 10%. I know many, many people who have lost their life savings in the market over the last couple years. That's not savings on the order of $50K, they have lost a half mill, a mill, more. Some have gone from being millionaires to basically destitute. If they have a job, they're among the better-off. Some are unemployed or underemployed. This includes people with solid degrees, tickets punched, good work history, etc.
With that awareness, I am hard-over on the cash, safety side but I am making investments in people, local businesses, my place (the new bathroom, HD LCD screen, etc), and beaten down equities that look promising (SLM, watching INTC). I'm working with advocates for the needy, basically giving friends who play in that venue some "spare change". If you think you have it rough, talk to someone who helps out at a 503c homeless/abused women's shelter.
I "think" I've made the right decisions but who knows.
I'd like to know what doomers like Contrarian see going forward and what everyone on both sides (BH and HH) expect.
My sense is that we are near the bottom but that the economy will limp along for 2 or 3 years. This will keep a cap on housing valuations but it won't drive prices down.
YMMV
I have to say, some of you folks are living in your own bubbles. "Where's the drop I heard about"? "You're wrong." Are you kidding me?? The only thing standing in the way of Arlington falling another 40% is the massive and unprecedented intervention of the US Gov't. Where is 60-90% of the funding coming from? Who raised the conforming loan limit? Who bailed-out Fannie/Freddie? Who implemented Hope for Homeowners? Who allows ppl to refinance even though they have negative equity? Who has to fight the NAR and NAHB lobbyist?
So, unless Arlington drops another 20% immediately, we are all wrong? What if, instead, thanks to all this inflation by the gov't, prices remain the same for 10years? Who was right, then? Do the math. Seriously, sometimes I wonder.
OK, I'll try playing "Topper" with all of youse. When we were renting an apartment in Alex. and looking for a house in spring 2000, a couple also waiting in the lobby to pay rent or something struck up a conversation. They said there was no way they planned to look for a house in this "crazy market" and they expected prices to go right back down. So maybe they were the first "bubbleheads"?
"I'd like to know what doomers like Contrarian see going forward and what everyone on both sides (BH and HH) expect."
I'm pretty much in agreement with what you've said.
Wrt, housing prices, I think the V will continue a little longer. Probably retracing at least 50% of the decline. So, if a $500k house fell 40% to $300k, I think it will snap back by year end of next year - 2010, to $400k. From there I see an average of 3-5% gains over the following 2-3 years. But, things could get irrational in either direction.
There is a chance, 30%, that we see a mini-bubble in the DC area, where prices run up to near bubble levels 2-3 years from now and then a double-digit decline when the gov't reigns in spending. I do not expect prices to break through the old bubble highs in the next 5 years. I've said many times, there will be incredible overhead resistance at the old bubble prices. Sellers will be out in force.
I don't know anyone who drives to work in the city from VA. Most of my friends/coworkers don't even own a car. My "support network" on the roads is Mr. Taxicab.
And wmata.com is notoriously unreliable with regard to updates. I check it too, even get the Twitter updates, and by the time they post anything, the problems have already been going on for a while.
No, I don't have to walk home more than a couple times a year, but I am comforted by the fact that I can if I have to. Or that I can if I just want to take a stroll on a nice day.
I also prefer a more urban lifestyle, and I'm not crazy about the neighborhoods close to the Vienna/Dunn Loring metros. Falls Church is okay, but I'd rather not live there.
I'm not criticizing Fairfax--there's nothing wrong with it. It's a great place to live. It's just not the place that my spouse and I want to live.
@Anon,
I'll prob. be a little harsh here and I don't comment too much since I have many other things going on in life . . . but dude get a grip.
Do you always seem to go about life blaming others for mistakes you think you have made?
Nobody forced you to NOT buy, just like nobody forced some people to buy at the peak in 2005.
There is only one person and one person alone that you can legitimately blame . . . yourself.
You made a bet, a calculated risk, and so far it was wrong, but that may or may not be the case ultimately.
Me personally, I don't want to or ever care to live in Arlington, so I really don't care what prices in Arlington do. What I do know is that housing prices are still by no means cheap here. They might be somewhat affordable depending on the area (but not Arlington).
Considering we are going through what is easily the worst recession in >25 years and possibly working on the Great Recession . . . I don't want marginally affordable, I want really affordable, borderline cheap.
I have a few places here or there that I look at and if the bank is willing to negotiate, great, if not, ah well I'll keep renting on the cheap.
If I'm "priced" out of this area, screw it, I'll take the money I've saved, my other assets and move somewhere were I'll just buy a place for cash and say a big FU to NOVA.
Regardless of what happens, I am in control of my own destiny, I am the master of my life, not a blog and especially not others opinions.
While I don't particularly care for Robert (mindless shill) . . . at least he doesn't blame others for his problems.
p.s. This thing is FAR from over, just look at CR's website if you think it is.
I agree with gte811i. I and my spouse have saved substantial amount of money every month by just rent and not buying. If in a year or two, the house price is still crazy in NOVA, we would say goodbye and move somewhere else and pay cash. We will be enjoying and don't ever have to worry about paying any mortgage. Living in a nice house instead of paying twice for a shitty house in arlington.
many interesting discussions, but I just had to butt in, homebuyer, Did you stumble in from a NAR convention? Why, why on earth did you put up with such a crappy landlord? Dude, get a better rental, don't buy a house for 150% of its realistic price.
Pure post-facto rationalizing. It's a great coping mechanism and I'm happy for you that you're okay with your life decisions and finding a way to be happy with them, but this should not require characterizing all renters as unworthy of even meeting and conversing with. That's just messed up.
Sorry.
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