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Saturday, August 8, 2009
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85 comments:
Y'know, I've been watching the MLS for several years now, and for the first time, I can honestly say that there in nothing in my search area that interests me. Nothing.
Agreed NOVA. I hate to say it, but I keep going back to the oldtime bear Neil/GotPopcorn who warned that inventory would be so picked over at bottom that (all things considered) its better to be a bit early versus too late.
For me, the certainty of the bottom was/is probably worth it. Since we dont have crystal balls, I would hate to buy "a bit early" only to find out it was a dead cat bounce. Still, I didnt expect to have such a dearth of options in mid summer, generally the peak of the inventory cycle.
I guess at this point, I am hoping for a bit of a price bounce -- hopefully that will coax a bit more decent inventory onto the market.
NoVa and Anon,
Today's wapo RE section explains and reinforces what many here theorized about people holding off on selling.
It won't result in a huge wave coming on at once, but will ensure a steady release of new inventory in the coming years. Perhaps part of the reason that we experience periods of stagnation (years) following boom/bust cycles.
Re: WaPo article.
What a typical POS real estate agent.
When meeting with sellers, Mary Lowry Smith, an agent with Coldwell Banker Residential Brokerage in the District, quickly asks sellers how important it is that they sell their home. She also asks how quickly they need to sell it.
Read: I won't waste my time or resources if the sellers aren't desperate.
Waiting out the current market with an unattractive asking price in the hope that some buyer will bite generally isn't recommended, Lowry Smith said.
Read: I won't get paid if sellers wait out the market. I will try to get the sellers to lower their price as fast as I can.
Novawatcher,
Yeah everything that's come on lately that I like is all short sales. Meh. Doesn't count. Just as bad as WTF pricing.
(says me who's waiting hopefully on a short sale right now)
Once the bottom is in and you have that certainty, then you can shop in leisure for the right home.
Robert,
With that intro I have to read it! :)
I've always seen a lot of homes I like whenever I look on redfin.
Robert -- realtors work on contingency. Hence they can make decisions about whether their time is worth something they know will not sell. It's no different than a plaintiff's lawyer who works on contingency deciding not to represent someone with a frivolous lawsuit.
There is nothing on the market for me right now. Nothing. My realtor thinks that there will be a little more after Labor Day, but right now I think we might be waiting until next Spring or later.
The crazy thing is that there is so. much. buyer. demand. We went to see a house today that came on the market yesterday, and when we got there, there were already 5 realtor's cards on the kitchen counter. Tons of buyers out there! The house wasn't what we were looking for (we knew that before we went in), but we wanted to check it and the neighborhood out anyway.
TBW, it's not that I'm naive. It's just the "quickly asks sellers how important it is they sell their home" as the first question part that struck me as a little crude.
paka
yeah, I think the Wapo has like a 3 month delay in it's local interest stories. In April? I can totally see delisting. Now? Get your house out there and sell it! It's unfortunate that the WaPo is discouraging anyone other than the "motivated sellers" to sell right now, because it's really not a bad time so long as you're okay with today's comps. Maybe Loudoun County hasn't picked up yet.
Robert,
It's not just that it's crude, it's insulting, because it makes the assumption that the seller is a nit-wit who's totally disconnected from the reality of the comps. Sellers can search the internet for comps just as easily as buyers can. Why would the buyers be more web-savy than sellers? That's age-ist.
Absolutely, Cara.
I can understand sellers who bought in 2005-06 sitting on the sidelines, but those who bought earlier than that (at least in Arlington), will see a profit if they sell now, and they will have very little competition.
Hmmm, if there's one thing I've learned from this blog it is that I want to cram my open houses if I have one down the road. Ask friends to attend the open house and make it seem like there's a lot of buzz and interest.
I'm not saying you all are seeing fake couples at homes. I'm just saying I'm realizing that having a crowded open house probably works wonders. It's almost so obvious that I have to imagine it's been done before.
It wasn't an open house. There isn't even an open house scheduled. The listing doesn't even have pictures of the interior.
Unless there is some conspiracy where realtors collect cards from their colleagues to display in their houses at all times, there was a lot of interest.
tbw,
I doubt there are many "fakes", but there probably are a few. If we go back to having 15+ at open houses, you are seeing real buyers.
I haven't gone to an open in years.
paKa,
Many agents don't even leave a card.
Robert/Cara,
You guys are forgetting reputational effects. If you hire someone who thinks their home will go for $800,000 when it's really going to go for $700,000 and the seller is someone who comes off as someone who will not budge then there are going to be hurt feelings all around.
Then the next time the seller is talking with neighbors and discussing realtors he/she says "don't hire x, they were horrible and were too lazy and did not sell my home."
I was reading an article once about good clients and bad clients for lawyers and there are people out there that are just not worth the hassle. There are just tell tale signs that someone will be a problem client. I don't really deal with individual clients except in pro bono cases and I spotted the troublemakers pretty much from day one. You end up spending MUCH more time on these problem clients and it's just amazing how unappreciative they are of your work (especially when the firm I work for is giving them the equivalent of tens of thousands of dollars of legal work for free.) On the other hand, I've had pro bono clients who tried to demand they pay money for the services and I had to explain very firmly that was not necessary.
I am very sympathetic to a realtor who does not want a problem customer and I think 90% of sellers pricing way too high are problem customers. Why not get the seller who is realistic about price, who will love how quickly you sold their home, and recommend you to all his/her neighbors?
When I helped the elderly relative hire a realtor I didn't shop around. I asked a few friends who they used and just went with the one that got the highest recommendation. Reputation is huge in that line of business and is WAY WAY more important than your website or advertisements (IMHO).
As I said I think you are seeing genuine interest. I'm just saying it sounds like it can't hurt to have fake buyers unless that violates some law.
You're reading too much into the cards. When we went around to 4 places a few weeks back that resulted in us putting an offer in on one, there were at least 7-12 realtor cards at each of them (due to the artificially low SS listing that had just come up and that has since revised its price back upwards, probably due to too much traffic).
However, it's 3 weeks later and the one we have a SS contract on is the only one of the 4 under contract. Even the one with the "no bank will go for this" price didn't get an offer acceptable to the sellers if it got any at all.
So, don't read too much into buyers walking through a house. Heck, some of those cards were from agents trolling for good listings to recommend on Frankly and attract a buyer to sign with them.
tbw,
I totally get your analogy to problemm clients. They walk in the door and say "you are my 3rd, 4th. lawyer" - and suddenly my calendar was too full to take on any new work.
Here is a good article on problem clients for realtors.
Cara -- if the realtor does what is suggested in this article (show comps) and the seller is still adamant they know better what the price is, then surely you can't blame the realtor for passing on being the agent, right?
tbw,
Yes the realtor has a right to be discerning, and many good reasons to do so. But there's a huge difference between that and having the people skills to be tactful in ascertaining a seller's situation and mind-set.
It's like when my mom was getting bids for her move. She got some ludicrously high prices, and was all upset, and I just told her, that doesn't mean they think your move should cost that much, it means they don't want your business, either because it's too different from their usual routine and thus they are unprepared for it, or because they're too booked up with easier jobs. When you find someone who specializes in the niche of high-quality moving of expensive breakable stuff in three different directions half way across the country, their price will be one that's reasonable (too low and you should steer clear as well). And that's exactly what happened.
PaKa,
Two different owners of two identical $800K (today's price) Arlington houses - one who bought in 2006 and one who bought in 1999 - are "losing" the same amount of money, if they sold today, relative to what their homes were worth in 2006 and what the same homes may be worth in 2010. That's one reason why a seller who bought in 1998 may not want to sell today. If a homeowner believes that conditions couldn't be any worse for sellers in his/her situation than they are right now (e.g., that his/her would-be buyer can't get financing, that foreclosures are competing and bringing down prices, that the uncertainty in today's economy is scary, that it's a "buyer's market" that will required him/her to do a lot of expensive fixups s/he wouldn't have to do in normal or sellers' markets, etc.), and he or she does not have to sell right now, then she or he is being rational to wait. A price $100K lower than what one could have gotten a year or two ago is the same $100K whether you bought in 2005 or any other year.
The real difference between these two homeowners is that people who bought in 2005 or 2006 who are on the market now probably are more likely to be forced to sell due to job loss, illness, divorce, etc.
An additional reason why a "long-time" (10 years isn't very long time to own a home) owner may not want to sell right now is that the owner doesn't see a house currently on the market that is sufficiently appealing, as evidenced by some posts already on this thread, and it is harder to get financing in the move-up market, in some instances.
The argument that the longer-term owner would have more reason to sell in a "bad market" is like arguing that someone who doesn't have to sell would unload stocks in a "bad market" if s/he bought them at a low price.
At least in the range I'm using in my example, only if homeowners think the market is going to drop further or they find a great house to buy would an "optional" seller put a house on the market these days.
I agree that any good agent is not going to take a "waste of time" listing. Why expend time, $$$, and effort on over-priced listings.
Some agents will "buy" a listing by taking it on and then demanding huge price reductions, but the vast majority will walk away.
There are still things that interest me, but they are shorts or priced too high (or both-see below). Plenty of buyers are out there, they're just not finding much. I think plenty of sellers are waiting, which could well be a mistake. More inventory will eventually send prices down, but then maybe we'll find bottom and the market can stabilize without government and bank manipulation.
After waiting two months, we just pulled out of our short sale because the lender upped the ante and wanted 100% of appraised value (their own appraisal, which was interestingly exactly 90% of the 2004 purchase price and well above the list price at which we contracted). We countered at 90% of appraisal, but the lender wouldn't budge. We're hopping out of the buyer's pool until we see things making a little more sense.
ps I should have added: this excludes the delusional sellers we've discussed so frequently. There are still plenty of them on the market who apparently believe that someone is going to pay their >2006 price without corresponding improvements.
Vanka, sounds as if you made a very smart move. Delusional banks!
Ace,
Good point. Again my point of view is getting biased by Burke. I don't know if its due to the careful planning that did a great job of optimizing what proportion of the housing stock was at every "level" or just it being cheaper and more of a niche market, but there are a lot of good move-up homes that sellers would be interested in. I think that the prices are too high, but that's just me apparently because they are selling.
But yes, would-be-sellers like yourself are not going to sell until they like what they see in the market for their own new home.
TBW,
Understand your point. Nothing you say I disagree with. Still, if an experienced realtor can only sell your house based on price alone, why pay the 3%? Get a discount realtor.
TBW, I agree with your take on the article, although maybe the Realtor could be a bit more tactful.
As a seller I would WANT a Realtor who wants to sell as quickly as I do. There is nothing worse as a seller than finding yourself stuck with a "listing agent" - someone who collects a ton of listings but does little to get them sold and instead expects "selling agents" to do all the work and bring buyers in. The key is balancing so that both the seller and the Realtor are doing all that is reasonable to get the house sold - the seller doesn't want a lazy agent who expects the seller to list well below what the house is worth but the agent doesn't want a delusional seller who expects tons of free advertising, networking, etc., to push an overpriced, ugly house.
Vanka,
Thanks for sharing. That's basically what I'm worried will happen with our short. That we're the sucker, forcing the bank to come to an "approved price" which will be above what we're willing to pay, and then they'll get to put it active again at an approved price such that someone else will be able to buy it quickly (albeit for more than we were willing to pay).
I am hanging tight to the two remaining shorts I have under contract. I, of course, believe they are at the bottom because we've seen such a bounce on the low end. Well, one can hope...but the numbers work and that is all I really care about (not really - I hate to see people get a better deal. I've always been highly competitive and, well, money is money!).
I understand that, Ace. And I definitely view 2006 differently from sellers, I guess, since I consider those prices "fake" to begin with. I doubt we'll see 2006 prices again for a long, long time, so if sellers are using that as a comparison, they will not be selling for another 10 years at least. And that is their choice, obviously.
But I suppose for the sellers who would turn around and become buyers in this same area, there isn't much choice for them either, even in the next move-up bracket (which is still less than the $1 million+ range, which is saturated with homes).
I don't think I'm reading too much into the cards. I just know that there are tons of buyers out there with nothing to buy. I know several of them personally, so I'm not basing this off just the cards.
Cara,
The only shorts I've seen come back on at a higher price are the one's where the original buyer (you) back out.
Cara,
We've played that role in two shorts now, which is enough for us.
Cara,
Looking at Sawbuck.com, Burke has the lowest MOI in Fairfax County. You are in the eye of the hurricane.
I do believe there is a certain price range where it is appropriate to wait - $500k to $700k.
This whole move started with $50k townhouses in PWC. It has steadily moved up from there. Will it spread all the way to $500k - $700k? I can't say that I know, but if I were in that range, I would closely watch inventory. If I saw three months where inventory increased, I would cut my price 10%.
paKa,
As the wapo article pointed out - sell low/buy low is a wash. The only real damage is to those exiting the Market entirely or the ones who entered the Market at peak.
Move-up buyer's in '04-'06 were not harmed because they got top dollar from the old place. People selling now and re-purchasing are in the same situation.
Cara, PaKa, et al., we all may be in agreement; maybe not. My post was an attempt to explain why I believe that there are probably a LOT of homeowners right now who are not listing their houses for sale, for many good reasons that don't vary by date of purchase, and they aren't going to be persuaded to come out from the sidelines unless they really must move or find a great house at a non-2006 price to move into (the value of which has to intrinsically offset the huge transaction and moving costs). It really is not a function of hoping to get a 2006 price in a market that is much lower than that (except for the hopelessly delusional) but rather a function of the things I mentioned in my post.
So I do not think the sideline hypothesis is a myth at all.
va_investor,
I'm not sure how that's different from what I said. Or if it's different. We have a contract, we have a price we're willing to pay, and if the bank comes back higher than that, and the seller can't make up the difference then the contract will be void because the short sale addendum couldn't be fulfilled. However, I wouldn't call that "backing out" simply because of the negative connotation there. But we often misunderstand each other so perhaps "backing out" carries no such meaning for you?
Perhaps you mean the listings where the bank comes up with a price after the initial contracted buyer has long since given up and voided the contract.
In which case, are you implying that as long as their's still a willing buyer on the line that the bank will be more willing to agree to the contract price? Because that's not what Vanka found, anyway.
In other words, I don't know what you mean.
Cara,
This is what I mean. There is much time and effort that goes into a short (and this includes the Bank). I don't think any party wants to start over.
Did your offer come close to listing? A BPO (is done to price the property). I doubt too many Lenders are going to go back and re-evalute that initial price. I've closed on two shorts. I've had back-ups on others that closed at initial price. Many buyers back out because of the wait (they find something else, get cold feet, whatever) and, from what I've seen, the listing price has gone up.
So, in sum, I don't think it's a matter of Banks saying "this isn't enough", rather than the deal falling out and a subsequent re-evaluation of market prices.
Robert,
There's only one community that has come down to what I consider to be a good value that's in my price range, which is of course the one I have an contract in. So it's largely irrelevant to me. If we end up needing to pay more we also need to wait and have more saved up.
The listings we'd be interested in if they were just a bit lower in price peaked sometime in May/April? and are now back down to their March levels. But over this time we've honed in on which areas we like and don't like a lot further.
What's interesting (or random) is that in the past 7 days there have been 13! new listing under $400k in 22015. That may be noise, but it's a larger lump than I've seen since May. (24 in the past 2 weeks)
22016 0-400k
sort by listing descending if that link doesn't already do that.
Va_investor,
No BPO was done before the listing price was set. So, the fact that our offer was very close to list is kinda irrelevant. The listing agent said that a BPO was being done and he expected it to come in at list, but that's not the same thing. It is however, why I have high hopes.
The sellers bank is indeed putting in effort, and they happen to also be my bank... not that that should help anything, but it might.
Cara, et al,
Has anyone actually experienced a short (within the past 6 months) not go through due to price?
I was a back-up on one that I became a primary on 2 weeks ago. It was a pretty good deal, but I backed out. This was due to the other stuff I had bought in the interim. It was relisted at 10% more and immediately went under contract.
I'd like to know if anyone has an example of a bank refusing the initial deal.
Va_investor,
That's what Vanka just said, he's been that buyer twice.
Cara,
I haven't seen that poster before, so I'd kinda like some details. That is not my experience and that is why I asked to hear from others.
I've closed on shorts, so I believe I have more credible info than those that haven't.
Whatever...you and I seem to clash on alot of things. Probably too much in common...
Cara,
That is a lot of listings. Sawbuck says 47 sales in 22015 in the last 30 days or 10 a week, but that is total sales, not < $400k.
I would think inventory will level off this Fall or move higher. With fewer buyers, and a constant stream of REO's, it makes sense.
But next Spring could be strong. We'll have to see what happens to Health Care and Energy when Congress returns. I know you think this is a bear market rally, but a higher stock market traditionally has led to greater consumer confidence and spending. If the Dow can get above 10k and stay there and we really do get a modest cyclical recovery in the overall economy, say 2% growth in Q4 and Q1 and interest rates stay below 6%. If that happens, I would recommend buying before the Super Bowl.
Forgot to mention the Stimulus kicking in.
Va_investor,
I sincerely hope you're right, because I really do think this is the right "house" for us. I'm just trying not to get my hopes up unrealistically. But knowing that you have closed on a few shorts (and other here did too last winter) is definitely a comfort.
But it's only been since July 27th that we've had a signed contract, so it's not like I would have expected to have heard anything yet.
I haven't seen that poster before, so I'd kinda like some details. That is not my experience and that is why I asked to hear from others.
I provided as much detail as I care to, except I will add that the bank came back at over $50K higher than list (our contract was slightly over list). We offered 90% of that (their appraised amount) and the lender rejected it- they wanted 100%. I'm not suggesting this is typical, but it is one recent example. On our first short sale, the bank came back slightly below list, which was higher than our contract and more typical of the process, but we just didn't like the TH enough to go with their price.
Vanka, Va_investor,
Thanks for giving more details.
The other thing I think we have going in our favor as far as the bank not coming in over the list price, is the fact that there have been 3 SS's listed in this complex for months now without moving. "Ours" and two at 10% more. Given that those are sitting, unloved and unwanted? I think that "proves" that that price is unreasonable. The new listing from an owner that's the same price as ours (but in a much worse location within the complex) helps a bit too, given that it's not under contract yet either. These things scare me for the long-term value of this complex, but there won't always be short-sales, that will pass. On the upside, if I were allowed to argue with the bank, I think I could make a good case. But that's not gonna happen, so I just hope the broker who's doing the BPO figures this stuff out on his own. No one wanted this place at $265k (72 days), $239k (70 days), and it took 30 days to get the first contract while listed at $224, and another 2.5 weeks to get a second contract (ours) at that list price when that one fell out. Who needs comps with a history like that? Clearly the market has spoken. We'll see if the bank can live with that loss though.
(just because one with a cuter exterior, end unit location, new counters and ceiling fans went under contract at $284k within days of listing is not the point)
Robert,
If that happens (which it very well may) I think you're right. Which is part of why we're now painfully going month-to-month on our rental. Or that could be because I'm just ready to get this over with.
Robert,
The 6% realtor fee is totally outdated. If the gov't wanted to do some outside the box thinking to help the housing market it could have worked to lessen that 6% by encouraging states to simplify the sales process. There's no reason why FSBO should be as difficult as it is.
Robert,
Agree this is not a bear market rally. Been saying that for months on this blog. We will see some ups and downs in the market but overall trend line through Super Bowl should be good.
I don't believe a rallying stock market = rallying housing market. The stock market rallied from 10,000 in mid-2006 to 14,000 in October 2007. Horrible time for the housing market.
Note sure how you justify keeping the Fed rate at 0% if the DJIA is above 10,000 and the new jobless numbers keep dipping. And car dealers are running out of cars b/c of cash for clunkers.
At Friday's settlement, February fed-funds priced in about a 96% chance for a 0.5% rate, up from about an 84% chance as priced in at Thursday's settlement.
The data-induced sell-off had lifted rate hike odds in the December fed-funds futures to as much as 50% for the mid-December FOMC meeting. The December contract wound up at Friday's settlement pricing in about a 30% chance for a 0.5% rate versus about a 27% chance on Thursday.
WSJ Article
Do you dispute those odds above? What could they possibly say next February if this trend continues? That the Fed is keeping rates at 0% because once rates go back up we'll have another housing crash? ;)
TBW-
I think the way they would say it is they do not want to choke of the recovery before it gains enough steam. I agree they will likely increase rates by February. This makes the assumption that unemployment does not get any worse. Friday's numbers were amazingly good, but I am still worried that unemployment will continue to rise.
There is also a little risk that oil will start to choke of growth. More expensive than any time in the past excluding 2008 while the world is in a global recession... High oil is really detrimental to trade and I would really like to see oil prices come down or at least have Saudi Arabia say they will keep oil from going higher by releasing oil as necessary.
Ace, By George you got it..There is a certain price point where geez by golly people are NOT going to put themselves through a move. I'm there, I know. First time buyers really have no idea how much it costs to sell a home and re-locate. There has to be some incentive to put yourself through the aggravation of selling. If others like me are comfortable, it might take years to pry us out of our homes. You know the old saying, a bird in the hand kind of thing. Just because prices have tanked in some areas does not equate across all the states or even in a specfic state. I'm not going to sell at a price where I would have to lower my standard of living and increase my costs. Thats just silly.
I closed on a short sale about 3 weeks ago. It was actually a pretty smooth process and the only hiccups benefited me.
Here's my story... The house came up on a Saturday with an open house Sunday. It was listed low and the open house was very crowded. On Monday their were 5 offers (3 well over asking, including mine) and we were selected. It went under contract within about 3 days. We used a VA loan and the VA appraisers, who are notoriously strict, came back below our offer price but above the asking. This did not kill the sale, the bank just agreed to the new price as did the sellers, which was great for us.
Side note - I found this interesting that the VA appraiser came back lower than 3 buyers were willing to pay on the 2nd day on the market. I thought prices were determined by what people were willing to pay for real estate? Guess that's only if they have cash. Basically the VA wants some equity now since these loans are traditionally 100%. Thing is it's sold off anyway so not sure why they care, but anyhow it worked out well for us.
About 1 week before we were going to close (about a 6 week wait) a new issue emerged. The seller's bank was fine with the short sale but the PMI company decided that the seller would have to accept a promissory note for $65K (less than what was being forgiven, not sure how they came to this number). This could have been a major problem. Multiple things here, the seller could have refused to do this, also in our case this was a couple who were braking up so they had to come to some sort of agreement between the two. Luckily the seller agreed to accept the note and we went ahead to closing one day early actually.
We ended up with a house that probably has 20%ish equity. And regardless of what it would sell for we love the house and plan to be here for many years. The previous seller's in 2004, that this couple bought from, did major high end renovations including a brand new kitchen with all the bells and whistles and finishing a full walk out basement that is to die for. We basically got the house at the 2002 price all HGTVed out!
So how did this work out so well? One reason... I never use a buyer's agent. The seller's agent was looking for someone like me so they could make both sides of the deal. On account of this he doesn't care if the price is a bit lower with me cause he's making way more money by getting both sides of the deal. Who do you think negotiated that promissory note acceptance? Who priced the house low and got a ton of traffic at an open house. A major key to getting these shorts is to come to the table without an agent. They are extremely motivated to do everything they can to make this deal work. These days technology allow savy buyers access to all the information you need, no need for an agent.
Tiredbubble - I totally agree with you on the outdated 6% commission. Real estate, even with the recent drops has appreciated far faster than inflation. The 6% is ridiculous and even a barrier for many seller in this market. I'm one of those with my condo. I could get what I owe but we are at the cusp. Once you add $15-20k for realtor commission on a $300K sale, I'm simply priced out. I either have to bring that $20k to the closing table or rent it out and max out my monthly cash flow for a few years. Not ideal but at least for me it's an option. All in all I'm not complaining. This house is leaving me with a strong net in real estate but it would have been nice to see the government affect some change that would have actually made a difference.
I'm not a fan of any increased spending and think most of the stimulus is a total mess but at least cash for clunkers is putting some $ in the hands of consumers. The $8k is ok, but why not do something more direct for all to benefit? I just find it ironic that we all want to believe real estate is a much more pure example of supply and demand than it really is, mainly forces at work here.
Gen Y Dink..I'm glad you spoke out about buyers agents. I can't as a seller but you sure hit the nail on the head. If you really want to put in a lot of offers and get dropped kick thru the goal posts of life...use a buyers agent cause if a deal its a sang, they don't have the contacts or the right type of experience to get a deal closed.
Cash for clunkers is disgusting. It's a disgusting waste of salvagable parts, and a disgusting distortion of the market.
It's kind of funny that 4 of the top ten models bought using cash-for-clunkers are pickup trucks and SUVs:
http://www.thetruthaboutcars.com/edmunds-dots-cash-for-clunkers-top-ten-list-gets-it-wrong/#more-325538
A new kind of ugly:
http://franklymls.com/FX7130370
I suppose there might be a buyer for this place and at this price somewhere. But personally, I don't see a single surface or fixture, inside or out, that wouldn't have to be replaced.
Gen Y Dink,
Congratulations on getting a successful short sale completed. Seems to me, though, that rather than not having a buyer's agent, the key factors were that you had a VA loan and appraiser (not a bank BPO) and the bank was willing to lower their price and got the promissory note from the seller to make up their lost money. Goes to show that every short sale is different.
"Cash for clunkers is disgusting. It's a disgusting waste of salvagable parts, and a disgusting distortion of the market."
Indeed, I am amazed how many people actually seem to think this is a good idea. Destroying perfectly functional vehicles is neither good economic stimulus nor environmentally friendly. Many of these vehicles still have quite a few years of usable life remaining in them.
Think of someone with a small gardening/lawn business that needs a truck to move his equipment around. This is artificially driving up the price of such vehicles making it more difficult for this guy to find an inexpensive vehicle.
This is "economic stimulus" in the same way a hurricane is stimulus. It will create a lot of spending, but only because valuable assets have been destroyed before the end of their useful life.
This is an interesting case study in government intervention in a market though. I wonder to what extent future sales will sag as a result of the early retirement of these vehicles, significantly I suspect.
TBW,
I don't dispute the Fed rate hike numbers. I always respect the numbers where people are putting their money where their mouth is. I like market prices as true indicators. Stocks don't lie, or home sale prices don't lie, people lie, real estate agents lie. As an aside, that's why I'm pretty amazed with the recent performance of WRE. I know this is not a commercial real estate board, so I won't go on about it.
So, the Fed at 0.50% in February sounds right. Are long-term 30 year rates below 6%, or is everyone selling treasuries and there is a dollar crisis?
Stock market rally does not equal housing market rally. Fair enough. I think sub $500k market is little affected, but I can say with some confidence the higher end markets are more correlated.
I know you are waiting for prices to come in line with income and other long-term housing metrics. I can't say they won't at some point, but I think you may have to wait a little bit longer. I think DC housing is going to go higher from here, at least the next two or three years. If you want to call it a mini-bubble, fine. Then I do expect a wind down of many of these programs and some restraint in spending. So, maybe sometime around 2012, the fundamentals may be more favorable for housing prices to come in line with incomes. But, if the mini-bubble peaks in 2012, it may take until 2015 or 2016 for prices to get to levels where you feel comfortable making a home purchase.
My advice would be to buy here. Anything. Ride this mini-bubble through 2012 and sell when you see the tell tale signs of a bubble popping.
housebuyer -- Agree. Although one would think 0.5% is not going to stifle any recovery that has begun. And if it did it would show we were not really in a recovery to begin with.
Arkey -- I don't think anyone thinks you have to move or need to move. Even in a neutral housing market most people choose to retire in the area and all projections during the boom years saw this area's median age increasing. But if you would be happiest retiring in Arkansas this year then it's important to think whether it's worth waiting out the recovery since no one can predict how long it will take.
I think the people who most need to be mobile are those in the 35-50 range. They often have families to feed and while this is a strong local economy there are going to be some for whom the only good job they can get is in another metro area instead of here.
We might have a longer period of high unemployment after the recession ends than usual because the American mobility rate has become so much lower because people feel stuck in their underwater homes.
Nova-that house is hideous. Is that wallpaper in the shower stall?
I wonder what percentage of the market immediately rejects a house with an indoor lap pool--90%? 99%?
Robert,
I've pushed my likely buy date back from 2010 to 2012. However note I am only in an annual lease, have kept my down payment money out of the stock market, so I can buy each year (and any time each year if I'm willing to go through with finding a sublessor if I bought early in a lease).
If the Fed increases rates between now and early 2010 and again between then and end of June and we still see some of the signs we've seen lately then I'll probably buy 2010. But I'm pretty confident those rate hikes will speed up the process more.
I don't think a mini-bubble comes unless they pass the $15k home credit with no AGI phaseouts.
Also note that most places even in this "hot market" are still dropping in price. The few areas you describe as a mini-bubble are areas most of us are not looking in (myself, housebuyer, paKa, Leroy, JeffB, Meshell, kevin, NoVAWatcher, Ace, and REdealSeeker).
I think Cara is the only one here who is looking at the segment of the market that has seen a lot of heat lately.
Not sure where the following are looking (or maybe I missed that some already owned?): pat, Konstantin, contrarian, the Anonymous, Anon412, HayfieldGrad
The rest of regular posters (you/Robert, Va_Investor, CRT, @J@, reecon, anielarke, Arkey, Doug) own homes.
Sorry if I mislabeled anyone! It's hard to keep track of everyone.
*and Tabitha in the list of owners.
Cara,
Hi there. Was reading that you had made an offer on a short sale and were waiting to here back from the bank. Just wanted to let you know we made our offer mid-November of last year and heard back from the bank at the beginning of January 09. It was about a 6 to 7 week wait for their approval. They may be moving a little faster now, but just wanted to pass that along to you. Best of luck with the process!
NoVAWatcher, that is the ugliest home I have ever seen. That degree of hideousness is sinful.
And TBW, thanks for recalling my home-buying triumph, a story for the ages, in my mind ;)
As for the clunkers program, it's driving me bonkers for the previously stated reasons (esp. the fact that it is in no way a "green" program), but a relative just gave me a new perspective: it's destroyed her husband's used car business. The government sure tried to pick winners and losers, but are they really happy with the winners?
Tabitha,
Also, garages/car repair shops/parts dealer's, etc. are screaming.
p.s. what's your opinion on Battery Heights - I can take it; good, bad or ugly!
To use anecdotal evidence to confirm the low inventory stats:
Today, in Loudoun County, there were only two new single family home listings on Redfin. That's it. I've been looking every day since March, and that is the lowest number I've seen. And, both of them were in the 600k range.
On another point, a few days ago, on Redfin, there were a slew of mansions new on the market in the Southwest corner of the county. It was odd, that part of the map is usually empty.
Regarding Robert's comments about waiting for prices in the 500k - 700k price range to come down, they seem to reiterate the idea raised a few weeks ago about 500k being a sticking point for housing prices. Last time, it was emphasized that the problem with the price range was that it was sandwiched between move-up buyers and those buyers from the luxury home market who make or who are forced to make the decision to move down the housing ladder, creating extraordinary demand within that price range.
Now, we're talking about how very long things will be sticky. Sounds like a long, long time. Eeek.
If you're looking to move inward toward DC along Route 7 or the Toll Road, you currently have to bump up your price range about 50k or 100k each time you look one town east at comparable houses. E.g., a 425k - 450k house in Leesburg (a nice short sale) might cost 550k in Sterling, 599-650k in Herndon! So, it might literally come to mean that for every year of waiting, one becomes capable of moving one town East along Route 7, to get exactly what you want at a reasonable price range.
That's like passing the famous "patience is a virtue" marshmallow test - kids who waited for an extra five or ten minutes got two marshmallows instead of one, and in a longitudinal follow-up, it was determined that they had the most successes in life. I guess I have to be more patient to get my two marshmallows.
dgg,
Thanks for the info! We "gave" them 45 days, which would be just under 7 weeks, but don't plan on holding them to that, as long as we hear positive murmurs on something being done. I think banks are moving more quickly, but they also have a lot more offers to deal with right now, which may counteract that.
Crossing fingers for now, an picking paint colors in my head.
It seems like 2012 is likely to be the beginning of the belt-tightening by the Federal government. I can't see jobs returning in significant numbers in 2010 or even 2011. The existing Stimulus is likely to peak in the middle of next year and phase out by the end 2011. Fast forward to January 2012, the Stimulus has dried up, the $8k or $15k incentives will be long gone, home prices are likely higher, and 30 year mortgage rates are likely to be over 7%. Perfect time to sell.
Cash for clunkers is disgusting. It's a disgusting waste of salvagable parts, and a disgusting distortion of the market."
So all those tax incentives to buy SUV's was good public policy?
It amazes me the number of wingnuts who rage about
Cash For Clunkers who get all silent about the Bush stimulus for SUV and Truck purchases.
now i think Cash for Clunkers should be aimed at people getting high mileage vehicles. $5000 to buy a 40 MPG car if you turn in a car that gets under 25 MPG.
merely speccin out the bottom end, isn't the best policy.
Meshell: actually, I was thinking that the indoor lap pool was its one redeeming feature.
REdealSEEKER,
I love the child marshmallow analogy. I bet a lot of the people who bought at the peak wouldn't have been able to pass the marshmallow test as a kid.
You also describe exactly how I feel about this market. As the prices drip down I can buy further in or larger in the various markets.
I would not worry too much about inventory. There will be more new homes built in Ashburn, Leesburg, Sterling, etc over the next few years which will provide you with plenty of options even if underwater homeowners stay put which is unlikely with each passing year.
Robert,
The belt tightening already has begun. It's not so tight such that they refused to extend cash for clunkers but it is definitely tighter now than it was Fall 2008-Spring 2009.
TBW,
The downside risk of buying in Arlington right now is slight. The upside over the next two to three years is huge. There will never be a point where the risk of prices falling is zero, but the risk/reward right now is excellent. You are savvy about prices, I'm sure you can find something pretty special for $800k. It'll be worth $1M in January 2012.
My mother grew up in N. Arlington and went to W&L High School. I love the area. We seriously thought about buying my grandmother's house when she was selling it in 1992, but my wife wanted something more modern, so we bought in Clifton.
As I told Cara when I joined this board back in March, now is a good time to buy, three months from now is a good time to buy, and six months from now is a good time to buy, but I fear if you wait until after the Super Bowl next year, you might miss the "Big Leg" higher in prices.
For Contrarian, since I know he is a night owl:
Freddie Mac Reports Profit
Here's an interesting rental (my apologies if someone already posted this):
http://washingtondc.craigslist.org/nva/apa/1308910434.html
It's a Mickey Simpson house that apparently isn't selling at $1,890,000.
Asking price: $11,000 per month PLUS utilities. If that seems a little steep, you have to take into account that it's only one block to the metro ... and it has a wine refrigerator.
I guess this will help carry him over until January 2012 when he can sell it for $2,450,000.
Robert,
We see things differently.
The downside risk of buying in Arlington right now is slight.
100% disagree. I view the W-L HS area as a 98% risk of further drops over the 2009-12 period.
The upside over the next two to three years is huge.
Disagree. Might be true for some cities in Texas.
There will never be a point where the risk of prices falling is zero,
Sure, never zero, but in the 0-5% range when rents/price and income/price are near historical norms. This was the case for a lot of my life in this are minus this decade and roughly 88-92.
but the risk/reward right now is excellent. You are savvy about prices, I'm sure you can find something pretty special for $800k. It'll be worth $1M in January 2012.
Disagree about the $800k to $1M price trajectory. Disagree that $800k buys anything "pretty special" around W-L HS. The nicest condo in Ballston is not nicer to me than the modest SFH I grew up in -- not saying everyone feels that way; that's just my personal taste.
Also, $800k is what partners at my law firm spent on homes. I can't afford an $800k home. Yes some spent more but many were in the $600-800k range.
Anyways, as I've noted I've pretty much given up on buying in Arlington. By the time the market settles I'll be too old to live there. Have you visited Ballston or Clarendon? It's basically extended college/grad school. I don't quite feel too old for it yet but I'll almost certainly be too old in 2012-14. If the market had been normal in 2007 I could've bought there and it would've worked out well.
The nice thing about these years of extended renting is when I buy I'll be almost certainly able to buy a place I'll live in until retirement and probably during retirement.
Oh and Robert . . . if prices in that area go from $800k to $1M (and presumably corresponding increases around this region) then as I've said a million times I'm moving further South where it will be cheaper.
Here's a good column in today's Post. Go South, Sen. Voinovich
The op-ed goes into a lot of the things we discussed earlier in this blog. I will join the mass exodus that will occur if the home prices you envision happen. As will many area businesses when they can't hire anyone my age or younger because of the cost of living.
TBW,
Back to the stock market if I can. Most bears say the stock market peak was in March/April 2000. That the rally from 2002 to 2007 was actually a five-year bear market rally.
So let's suppose the housing market peak was 2006/2007, what if this current move in 2009 is really a bear market rally and that it has a similar lifespan of 6 years before breaking through the old lows of late 2008/early 2009?
Markets work like that. I wish you luck that prices will steadily fall back in line with your metrics, but the history of capitalism suggests that it will not be a straight line.
Robert I wish you would have bought your grandmother's house in Arlington as we are trying to buy an older house in the Washington Lee district and there are very few on the market. I might have been trying to buy your house! Many of the older really small ones have been replaced by larger houses. I think many were built by Morris-Day and we really like them but they are just about $300,000 more than we can pay. We are looking for one of the older houses someone already expanded which would be in the $900,000 to $1.1 million range. Our agent thinks there might be houses on the market after Labor Day, so we are putting our house on the market (it is about 2 miles west of there) and hoping something will come up. That area doesn't feel like Clarendon or Courthouse with all the young people. It is loaded with families with young chidren but you can still walk to places, especially the new indoor pool at W-L. We go to the restaurants along Lee Hwy or Washington or to Ballston because they have more people like us with children as patrons. Also especially for the Lee Hwy & Wash Blvd independent restaurants, the food is much better and cheaper.
TBW, maybe you discussed this before and I overlooked it - sorry if so. How open are you to living in parts of Arlington OTHER than the prime school areas and/or close to metro?
There are other nice neighborhoods with a good mix of ages/lifestyles. And if you are adventurous, there are parts of 22204 and 22206 that might turn out to have the price (and quality of neighborhood) appreciation that Robert forecasts.
I wonder whether there will be a metro-light boost to areas near the Columbia Pike trolley, just before it is completed.
Robert, while I agree that the agents are NOT looking out for their clients' interests, about 90% of the listings out there are ridiculously overpriced because the dumbass sellers' heads are stuck in the clouds. Like you, they think that this pie in the sky housing bubble is here to stay. I hate agreeing with an agent, but whatever their motivation, they're likely right on this issue.
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