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Monday, September 21, 2009
Northern Virginia Bits Bucket 9/22/2009
Posted by Harriet at 11:50 PM
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89 comments:
NY Times reporting that the FDIC is floating a novel solution to shoring up its DIF:
Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors.
...
Bankers and their lobbyists like the idea because it is more attractive than the alternatives: yet another across-the-board emergency assessment on them, or tapping an existing $100 billion credit line to the Treasury.
...
Borrowing from the industry is allowed under an obscure provision of a 1991 law adopted during the savings and loan crisis. The lending banks would receive bonds from the government at an interest rate that would be set by the Treasury secretary and ultimately would be paid by the rest of the industry. The bonds would be listed as an asset on the books of the banks.
Rather than levy a higher fee on deposits which would hurt all banks, reward the strongest banks by taking a loan from them, rather than the treasury. I think it's genius. I think it's absurdly generous to the banks, but at the same time, the FDIC is there to make banking safe, funded by fees on deposits, keeping this self-insurance self-contained makes a lot of sense to me. I've been saying that the best way to shore up the FDIC is for banks to make money again. This accomplishes both, shores up the fund and gives some stronger banks more profit/assets. Brilliant.
(this contrasts strongly to my immediate gut reaction which was, Dude, you borrowed from the Treasury during the S&L crisis, what's so wrong about doing the same thing now?)
I think I want to ralph . . .literally.
Overheard in the lobby of a hotel this morning. Some recent grad (my guess at best 24), going to UNLV for one more year plans to buy a house in north Reno for 285-300. I have no idea how much she makes (heard she recently got her 1st job, she is practicing law-but man if that's what new lawyers sound like it's really over saturated with idiots) but if she makes over 100k I'll buy someone lunch. The greatest comment about this whole overheard conversation was something along the lines of "you're moving away in March" "Ya, I plan on renting it out, and if I can't rent it out it will just sit". She'll be using her trust fund for a downpayment plus it sounded like she was taking up a private loan from a rich (somebody she seemed to know well).
Shoot me now . . . now maybe she is smarter than you're average bloke, but from what I overheard she had not thought out this idea real well.
I don't know about DC, but Vegas . . . prices may move up and we may get another bubble, but you know what they say. The time to sell is when you start the newspaper boy tells you to buy. This is about as close as the modern equivalent.
I will say the interesting thing is that she didn't really know much about the 8k bride. She really didn't seem too bright on RE.
I really think I'm going to ralph.
gte,
I take it this conversation was somewhere in Nevada.
Sounds like someone with more money than sense. There will always be those, unless/until life teaches them otherwise.
But yeah, buying for 1 year, rent it out, or it could just stay vacant, at a price tag over what I'm willing to pay for a primary home. Sigh.
MM You are right about 22207 being the best value in N. Arl. My agent has been tempting me with cheap condos from that zip code all year and I finally bought one from an estate at $155,000. It is a big one bedroom and with some paint up clean up fix up and even a large condo fee which includes all utilities, I will rent it positive. Buses run by the building all day and well into the night to Rosslyn Metro but if it is not walkable to metro it is a bargain. Another clue is that houses on the west side of Glebe Rd from Lee Hwy to Chain Bridge were rarely torn down because they were too valuable. Now there are tear downs all over that neighborhood. The builders are starting to see that they can offer large lots (unlike in Metro accessible 22201 and 22205) but have to offer the same price as in those areas. That little ART bus runs all over the 22207 area, but it doesn't make up for Metro. All of this is pretty ironic as the political movers and shakers who worked to get Metro into areas of Arlington which needed revitalization all lived in 22207. In fact, one of the former members of the Arlington County Council who was primiarly responsible for Metro died this year and her house in 22207 sold at a bargain price.
Anie-
I think the problem is that most wealthy people have an issue with taking the bus although they have no issue with the metro. So if they can't walk to the metro they basically don't count the fact that they live close to the metro.
I hadn't really looked in that area before today, but you are right there are bunch of nice houses at much lower prices than most of N. Arlington
It's not just about walking to the metro--it's about walking to everything else. I personally don't mind taking a bus to the metro, but I want to be able to walk to restaurants, shops, the pharmacy, etc.
The parts of 22207 around Lee Hwy are fine, because they are walkable to other things (and the rush hour bus that goes directly into the city is awesome--the 3Y), but the farther north you go from Lee, the less and less you can walk to. I don't want to have to get in my car or wait for the bus to go everywhere.
But then again, that's me. I'm one of those people who puts a premium on walkability and couldn't care less about having a detached house with a big yard. Other people have different priorities.
Paka-
You definitely are not alone. As I said I don't know much about the area so I didn't realize you couldn't walk to anything. I also find it mandatory for places I live to be walkable to some restaurants(at least panera, cosi, chipotle... some fast food that is at least quasi healthy). It also must be close to trails for running. I am busy enough that it is nice to have the amenities I need close to home.
http://franklymls.com/FX7154867
list $300k
new price $320k
comments:
OFFER ACCEPTED 9/20/09. MULTIPLE OFFERS RECEIVED.
If this appraises for $320k I'll bite my arm off.
Please let the $8k die, please, please let it die.
Cara-
I agree that is a pretty blah looking TH. Nothing special at all about it and it looks like nothing has been updated in years(at least for sure the kitchen has not been updated). That price wouldn't bother me if it was closer to the city, but Burke is too far out for small blah townhouses to be going for 3 times the median income...
housebuyer,
The owners that I lauded the other day for their beautifully redone place (in a location that's more convenient to the VRE, but not in quite as tippy top of schools, and will have more train noise), accepted the offer at list price of $324k because they were afraid there was no point in taking higher bids because they won't appraise anyway. That may be "too" conservative.
But these jokers are looking to hit the jackpot. In truth, there haven't been many REO's or shorts in that particular neighborhood, comparitively speaking. And there have been a number of ~$300kish sales in there over the past year. But those had all been updated significantly. An appraiser would have to see this as a rising market to think this made any sense.
I say it's an appraisers job to not allow sellers to take advantage of buyers trying to trade an $8k in cash for overpaying by $40k compared to May/July comps of truly comparable finishings.
Something that looks like this out in Burke should be no more than $250k when it's all over. Many on here would put it even lower.
Cara: "Please let the $8k die, please, please let it die."
LOL You're word to god's ears. This credit is absolutely horrific. When it was announced, we knew what the impact would be, and I immediately knew I wasn't going to be buying this year. Nice to have your life put on hold by a bunch of industry whores getting their way with Congress.
Or rather, it's an appraiser's job to know that in any other market than the month of September 2009, this place would not find a buyer unless it were priced under $300k, and thus that the bank's collateral is not secure for any higher than that.
kevin,
Nice to have your life put on hold by a bunch of industry whores getting their way with Congress.
Yup. I wouldn't have put it so colorfully, but my husband will get a kick out of this one. This fall was the perfect life/financial timing for us to buy, but we have to wait (whether in this short or not). Compared to the length many waited during the bubble, it's nothing, but it still irks.
tbw,
because each one is a multiplicative factor on the home price itself.
You need to take the price X and multiply it by 1.YY to get the increase in price at an income increase of 1.YY, and then you take that price and multiply it by whatever approrpiate factor for the current affordability due to low interest rates.
Notice that no one bothered to do the hard part of checking your math on the interest rate part. Bunch of lazy know it all gits that we are.
Your argument will probably still hold, it just won't look quite so dire.
Must watch:
link
Re: county median income #s from yesterday's thread
Has anyone investigated whether the Arlington median's higher increase may have resulted from the departure of many lower income Arlingtonians (in addition to or instead of the influx of more higher income people or other factors)? As housing prices have increased and jobs for people in construction and related trades, and some services such as house cleaning, hair salons, etc., have declined, many two or more job families who once lived in Arlington may have left to be closer to jobs or to find more affordable housing.
TBW,
I think using the Census data for median household income is too conservative. There is quite a bit of income that isn't captured. Without going into too much detail - at first - why wouldn't you use the BEA estimates vs. the Census. Here's a quote showing that the BEA numbers are 35% higher than those from the Census numbers.
BEA estimates that personal income for the US was $8.678 trillion in 2001, as compared to a CPS money income estimate of $6.446 trillion.
Census vs. BEA
Doing a little reading, I don't even think the BEA numbers capture everything that would go through a homeowners mind before taking out a mortgage.
Cara-
The problem with appraisers is they don't actually give the exact value. As long as you are within 5-10% they basically say you are the market so your price is fine. So you can easily be over paying by tens of thousands of dollars and the appraisal won't help you
Frustrating conversation at lunch today.
A younger co-worker (25?) is dating a guy who just moved to DC, and they rented an apartment in the neighborhood she likes, somewhat on my advice that he needed to get to know the area before buying, and that shopping while local would be a lot easier, and that if anything, the DC condo market will go lower in price not up, so there's no harm in waiting.
Well, now I can at least sleep soundly that their lives are not predicated on my advice... They're shopping for a 2-3bdr in the 400-500k range last weekend and this weekend hoping to put in an offer this weekend and close in time for her to qualify for the first time buyer credit.
OMG.
statements that scared me:
"I don't even want to think about the market"
"We went to all open houses, so we stayed and talked to the seller's agents for like half an hour each... It's good to hear what the seller has to say" (okay so that could be true about condo's, but you really need to read the docs...)
"The offer, is going to have so many words, I don't want read that"
"That's just what the prices are, and they're down $50k from July!" (list prices not solds)
Of course the other colleague who's house-buying strategy consisted of picking the most expensive possible area, and then upping what he was willing to pay by $150k then $200k til he could get what he wanted was there as well....
They have no car debt and no student loan debt, and are qualifying on at most 30% of pre-tax income, so I can't complain, except that this is the woman who still squirms when you say marriage, and who hated how pushy he was about getting serious... He seems like a sweet guy, and they do go welll together, and yet, buying a condo in DC after knowing each other 8 months? Just doesn't seem like the most brilliant plan ever....
Sorry, had to get that out so I can go on living my own life.
But the number of condos they built, and how many are turning into luxury rentals now, and why, oh why not just wait and see for one more year??? She said it's this week or next July. (I don't know why) Is it wrong of me to hope she doesn't find anything to her liking?
Kevin-
You really think that is a much watch video. That was a huge waste of time. The guy has no supporting points for any of his claims. He contradicted himself multiple times about what the future holds and he is basically just trying to get some fame by making bold claims.
Robert, very interesting find,
Sorry for cherry picking but this quote was too humourous not to share:
Both personal income and money income are more limited concepts than the Haig-
Simons-Hicks (HSH) theoretical concept of income as the maximum amount that can be
consumed in a given time period while keeping real wealth unchanged.
Why do I suspect that HSH was the underpinning of the HELOC revolution? Because as long as you borrowed enough new equity to both pay for your mercedes and pay the new higher payments on your debt, you didn't loose any wealth, you just accessed it. Or maybe it was a post-facto justification of why the bubble won't pop?
(I'm assuming the author's of this paper aren't suggesting that the HSH is the right measure, but I haven't read that far).
To the people discussing 22207 -- Do any of you have thoughts on Glebe Elementary? The area is nice and close to DC but that school ranks a 3/10 on greatschools.net, (which bases its rankings on state test scores relative to other schools in the state) while most of the N. Arlington schools around highway 66 rank near the very top (8/10 to 10/10).
This is one reason I have avoided looking at houses in that area. Anyone know why that school ranks so low?
Calculated Risk points to the most comprehensive article on the debate over the extension of the $8k yet:
Las Vegas Sun
summary: the $8k is good politics but bad economics. (with the exception of a very few economists who pull out numbers like $63,000 pumped into the economy with every home purchase, really????)
Whatever the arguments, an extension of the tax credit is gathering momentum. The entire Nevada delegation supports it, for instance.
And as with the wildly successful — and expensive — “cash-for-clunkers” program, the visible increase in home sales will likely encourage Congress to extend the break, especially as unemployment and foreclosures keep rising.
As Sen. John Ensign said last week on the Senate floor in support of the measure, “Clark County, where Las Vegas is, has over a 13 percent unemployment rate. I don’t think folks living there think the recession is over.”
I think that last statement wins the irony award. The last thing unemployeed people need to do is buy houses... Are they really going to support a continuation of a hand-out for the "haves"?
Wanting to move,
I'll let you in a secret on Glebe ES if you promise you won't bid over $533K for that California Contemporary home.
j/k
Glebe ES is very diverse both racial and socio-economically speaking, i.e. high percentage of low-income and Hispanic students coming from neighboring apartments. But think back five, six years before Lyon Village really took off, people had doubts about Key ES. Now it's viewed as a pearl. Same thing is happening to Glebe. I would definitely NOT avoid any property just because of the school.
Cara,
As I understand it, the Census survey does not count 401k contributions as income. And of course company matches or profit sharing either. There are others, but this seems to be the simplist example that the Census survey is too conservative.
So, for example, you have a two-earner couple making $75,000 each. If each contributes the maximum to their 401k it would be approximately $30k.
Are you going to tell me that this family really has an income of $120k?
I think I have my facts straight, but anyone correct me if I'm wrong.
Robert,
That is indeed what it says in the article.
I, however, would argue that yes, they do indeed have an income of $120k with which to make their home-purchasing decisions. Borrowing your DP from the 401k is so 2005. And reducing your retirement contribution to pay your mortgage is normal once you've already bought the house and are hitting a rough patch, but not so reasonable when buying it to start with.
Also you're going to have a range in terms of whether people actually max out their retirement contributions. Maxing out the matching is probably the norm IMO for people with census income of $120k, but maxing the full $30k/year is probably not all that common.
For those who do it? One would assume they are very conservative with their finances, and probably won't want to go over 28% DTI anyway at most.
MM and Wanting to Move: the part of the 22207 zip code which goes to Glebe Elementary is very close to Ballston, thus the neighborhoods have increased in popularity in the last 10 to 15 years and the school has followed. It is also a newly-built school which replaced the "open classroom" plan which was popular in the 1970s. The part of 22207 I was talking about earlier goes into the Jamestown Elementary School which used to be "the" school in N. Arlington. But houses served by that school are not near anything so they became less popular. Other parts of 22207 are served by Nottingham and Tuckahoe Elementary Schools. These areas are slightly closer to shopping areas (particularly Tuckahoe), so the houses are popular. Schools and their desirability have changed a lot in Arlington. Washington-Lee is now the school parents want, but a few years ago the people in Lyon Village had to almost storm the school board to get the IB program at W-L. The same has been done at Marshall High School and Stuart High School in Falls Church, both of which recently added the IB program. Talk to parents and teachers rather than relying simply on the internet for advice on schools.
housebuyer: "You really think that is a much watch video. That was a huge waste of time. The guy has no supporting points for any of his claims"
He is a trends analyst. Sorry if that was a waste of your time. God forbid your rose-colored glasses get blemished.
Kevin-
I don't know why you continue to say that I have rose colored glasses. I am pretty sure I am fairly close to the middle of opinions on this blog. I have been fairly accurate on my housing predictions so far and my prediction for housing is flat for the foreseeable future unless interest rates spike up in which case housing prices will fall.
So it is a little absurd that you consider this optimistic. As for the economy I think we are out of the recession unemployment will peak in 3 months and it will take at least 2-3 years to get back under 7% unemployment.
I just think rather than saying it is a must watch you should have given an excerpt...
tbw,
Indeed the difference only changes the magnitude of your argument not the substance.
I'm sorry, I can't come up with anything that I didn't already say.... but it's like resistance and capacitance, somethings are mutliplicative and some are additive.
If you're only doing one thing at a time it doesn't matter which you do. $30k more income by itself will qualify someone for X more home price depending on rates etc., or 1.3 times the original income will qualify them for 1.3 times the home price so long as you keep the other assumptions the same. Thus 1.3 times the income is the "right" way to do the calculation, and it's multiplicative. The interest factor is also multiplicative (modulo the complicating factor of the interest deduction) thus you need to multiply them both by the starting number to get the final number.
I'd tell you to look at a textbook or Wikipedia, but you need to figure out which situation you're in, multiplicative or additive, and I'm not sure that's going to be there....
TBW,
I would guess the BEA data and the Census survey would yield similar percentage gains. I bring it up because I thought you were using some type of income multiplier to determine what the true value of housing should be, like 2.5x or 3.0x.
Like you said before, the Census data does not include capital gains, on stocks, bond, or houses. Or capital losses as well.
Gifts, inheritances, and insurance payments are also not counted as income.
tiredbubblewatcher,
oh lyon village has lots of kids. they have the option of going to either Key or Science Focus.
tbw,
First of all, all the studies show that students who take AP classes and get at least a 2 on the AP test do better in college than those who were never exposed to AP. Second, Anielarke is a substitute teacher who has been in many of these schools she has talked about. She is not relying on Jay Matthews. Third, Jay Matthews provides the Equity and Excellence rating(E&E) in his list. The E&E rating tells you what percentage of Seniors from a High School have estimated to graduate passing at least one IB or AP test. The national average is 15% while all the NOVA high schools(including Wakefield and TC) are well over 20%. There are a lot of high schools around the country that do not have the resources that NOVA high schools have so they do not offer college-level classes.
Re: buying a condo with your boyfriend of 8 months. I agree with Cara and tbw that it's incredibly stupid. I imagine if you split up it'd be almost as messy legally / financially as a divorce with no kids. In fact, a married couple with no kids who were renting might have an easier time. And if you were really convinced you weren't going to split up, why weren't you married?
Anon-
Its simple when they split up. I am sure they are putting virtually nothing into the house so if they split up they will probably just bail on the house and ruin their credit...
Yeah it doesn't make any sense to me to buy a house with someone that you have never lived with. Living in small areas with people can quickly make you change your opinion about someone.
Robert, if you look at the definition of income I posted from the Census website a day or two ago, I think it included virtually all income (e.g., capital gains) and did not deduct for 401K contributions made out of that income. The number seemed more analogous to gross income than to adjusted gross income (which would reflect the income after a 401K employee contribution, for example) in an Internal Revenue Code sense.
TBW,
Actually, none of those items -- realized cap gains/losses, inheritance, gifts, insurance proceeds -- would be the most significant item not counted in either the Census or the BEA income calculations that would influence home buying, it would be unrealized capital gains on houses, securities, and businesses. Having worked for SAIC during a strong growth period, a lot of wealth was gained through appreciation of the stock. Since SAIC has never paid a dividend, it would not show up on either the BEA or Census calculations. But, this wealth most certainly influenced the buying power of those people that had stock. I'm talking about several billion dollars added to the balance sheets of SAIC employees in the DC area from 1990 to the present. That is just one example.
The elephant in the room is the value of the housing stock in the area. A trillion dollars of appreciation over the last 20 years? Hundreds of billions at least. A trillion dollars of unrealized capital gains that never shows up on a household income calculation. The baby elephant is gains on securities like SAIC stock or IRA/401k gains + other outside investments, small businesses, rental property, stocks and bonds. As I understand it, none would show up on an income statement.
No, my son is twelve. His needs are pretty minimal, an iPod, subscription to World of Warcraft, long baggy shorts. My daughter, she's the one that is a little too self-aware. It's mostly about clothes with her. No drivers in the house. Dude, cell phones are mandatory. I imagine all of those times when my mother couldn't find us when we were kids. Cell phones take away 90% of the worry.
I would disagree with the inheritance issue. A lot of it does roll back into the area - it has in my family, but nothing compared to the unrealized gains from housing and securities.
Anyway, I don't see how you compute a trough in home prices without peering in at the balance sheets of Northern Virginians. How you would calculate it from there, I have no idea.
annielark,
Having lived in the area of 22207 served by Jamestown for the last 22 years, I haven't seen any signs of it becoming less popular. While it may not have increased in popularity as much areas near the metro, my assessment has more than tripled in the last 15 years, and I've seen that type of appreciation in sales prices too. There's no shortage of people willing to pay $600,000 - $700,000 for houses to tear down and build $1.5 million houses in their place.
I'd agree Jamestown is not as much "the" school as it once was (which I'd ascribe to changes in management), but there are still people paying the steep premiums on houses in this area to get their kids into Jamestown. With the exception of those neighborhoods within easy walking distance of a metro (other than EFC), and maybe Lyon Village, from what I've seen, this area (which includes Country Club Hills) is among the most expensive in Arlington. I think you'd have trouble finding an area in Arlington which commands more of a premium, or as some would put it, is more overpriced.
It's not surprising, though, that condos are cheaper in the 22207 area. It's not the type of area where you'd expect the stereotypical Arlington condo owner to live. The few condos in 22207 aren't in the best area - though it's not a bad area either, but Lee Heights shopping center is not Clarendon.
Housebuyer,
I'd be interested in finding out which 22207 houses are selling cheaper than in other parts of Arlington (not counting the Ballston-Rosslyn corridor). I suspect that a lot of them are in the area behind Glebe School, between Glebe, Lee Highway, George Mason, and 16th Street. Some are are probably on busy streets like the ones mentioned earlier right on Glebe road. I haven't seen many in the Taylor, Jamestown, or Nottingham areas - the northern tier of the zip code.
Is there any good source to compare relative cost of real estate by neighborhood? Median wouldn't be much good with the variation in housing types, sizes and ages. Individual comparisons of houses are tough, especially when so much of the value is in the land (79% in my case), and it's hard to tell from the internet what makes one lot worth much more than another. Any suggestions?
In my friends defense... They have been living together since April when he was in town in her one room in a shared house rental in Dupont, and moved into a 1 bedroom apartment together in July. And "they" or rather he, will be putting a significant amount down from the sale of his house in Colorado. At least 60k if not 100k. But, presumably that would be considered to be his equity not theirs.
Thinking about it more, they can totally swing $400k, given that downpayment with what I know about their incomes and lack of debt. It'll be more a question of will they find something to satisfy her at that price, and will he put his foot down on waiting until the end of their lease if they don't find something great now. I'm going to put my faith in him for the time being, since she said he's doing all the research, and she's mostly there as a yes/no.
TBW: I am not looking at Jay Matthews' rankings for Yorktown and Washington-Lee, I am talking to the parents and students I teach. Parents want the IB program offered at W-L because students who score high enough on final tests can cut out at least a semester of college. With tuition at the average private school at $40,000, parents like that. Students and parents like the IB program because it teaches critical thinking which is very important for success in college and life. Even the students not in the IB program prefer W-L because it does not have the social pressure of Yorktown. Yorktown and W-L pale in comparison to H.W. Woodlawn. Now that is a good school. What do the parents and students you know say about Yorktown vs. W-L vs. HB?
Ace,
I read your post about how the Census does income. I read some other stuff too and cap gains/losses, 401k contributions and employer contributions and of course unrealized gains are not included in the Census income data. That's my understanding at least.
Robert, I agree there is some ambiguity about capital gains when stocks etc. are sold (are these considered "regular" payments?) but I don't see where you are getting the info that 401k contributions made by employees are somehow excluded from consideration in the Census definition. I'm happy to be proven wrong. Do you have a link for this? These contributions are excludable for income tax purposes up to limits, but I did not see where the Census allowed this as a deduction.
It appears to me that the Census considers as income other payments that aren't considered income for tax purposes, possibly because they are trying to measure the cash (except for realized capital gains, if those are excluded) that people have available to spend (before taxes). Since 401k employee contributions are elective, people could choose to take that pay home. I agree that employER contributions are different in that they aren't considered income for Census or income tax purposes, nor are capital gains on the sale of a personal residence up to the maximum limitations.
Robert, here's another cite on the income definition. Note that the definition is not exactly the same for the Census SIPP and CPS.
http://www.census.gov/hhes/www/income/compare1.html
Ace -
I don't know for sure, but my understanding is they only measure disbursements from IRA's and 401k's. I think they figure they capture it on the way out vs. the way in.
However, there are other tax-preferred schemes, such as, IRAs and annuities that facilitate savings to provide income during retirement. BEA currently
treats contributions to these other schemes as personal savings.
Link
Ace,
I guess the simple example would be a worker that made $50k and put $5k into his IRA in the first six months of the year and then had some financial hardship and took the $5k back out in November of the same year.
Census will count the disbursement as $5k. If they also counted the contribution of $5k, it would be counted twice.
Did that make sense?
TBW,
I assume most buyers in N. Arlington are locals. If not, ignore this post.
You want to buy at the trough in 2012. You will need depleted balance sheets of your competition.
From my own experience, I think you are competing against the guy in Fairfax that bought his first house in 2000 for $300k and has $200k of appreciation and either he or his wife have significant income gains or inheritance, or whatever and want to move for a closer commute or schools.
So, the guy uses the $200k for a down payment and takes out a $600k mortgage to buy for $800k in Arlington.
So, the guy is putting down 25%, has excellent credit and gets the lowest mortgage rates available. He is your competition.
KeithK: Not sure if this is of help, but my agent pulled together info for houses in the school areas mentioned for houses sold since Jan. 1, 2009. Because $1 million plus houses have been harder to sell this year, she looked at houses which sold below $1 million. For Jamestown: of 33 houses sold, average list was $766,257; average selling was 2.93% less at $741,948; houses were on the market average of 108 days
For Taylor: of 39 houses sold, average list was $782,026; average selling price was 1.84% less at $766,339; average of 77 days on market
For Nottingham: of 30 houses sold, average list was $673,653 and average selling was 2.16% less at $658,977; average of 78 days on market
For Glebe: of 42 houses sold, average list was $688,071; average selling was 1.96% less at $674,304; average of 60 days on market.
For McKinley which scored highest in the SOL test for Norther Virginia and is in the 22205 zip: of 47 houses, average list was $668,123 and average sell was 1.7% less at $656,450; average days on market as 48. Agent said good measure of demand is days on market. Sales prices for Taylor, generally closer to shopping, were about the same as Jamestown, but days on market good deal less. Glebe and McKinley prices were similar to Nottingham, but both schools which are closer to shopping and Metro took less time to sell.
Also for Hayfield Grad: will be at your alma mater tomorrow!
anielarke,
Should be an interesting experience given the press attention Hayfield has been experiencing. Of course it was a middle school teacher so none of the students you have should have had any interaction with the teacher.
TBW,
Fairfax? How long does it take to get in that $2M to $10M club where you work?
tbw,
Pre-bubble, homes in those areas of that square footage went for 200-300k? Really? I find that shocking because homes in Springfield or Lorton of similar size would have sold for not much less than that pre-bubble. Today, the prices in Lorton and Springfield, of course, have been greatly impacted by the volume of foreclosures and have come down a great deal. I just wonder if prices in areas of FX County not affected by foreclosures will see the large price drop you expect.
Hi wanting to move,
We are renting in the Glebe ES district right now. I would send my dc to any of the N. Arlington elementary schools, and most of the S. Arlington schools. I have heard almost all positive things about Glebe from my n'hood parenting group (Waverly Hills). The school is practically brand new and has a very warm feeling (I have a meeting there every week so I spend time lurking in the hallway/foyer).
The test scores are lower than the other schools b/c the student body is much more diverse than the other N Arlington schools. (There is an historically African-American neighborhood right next to Glebe and a few apartment complexes in the school zone.)
Oh, one downside is for some reason there are areas at the edge of the zone which seem pretty far away from the school--if you are paying a premium to live in N Arlington, I feel like you should be walking distance to elem school.
anielark,
Interesting stats. They do confirm one thing I noticed around here - as expensive as houses are a lot of people think they are worth more and overprice them.
Even when eliminating the over $1M it's hard to adjust for the mix to see what the stats are telling us. The Jamestown area has a lot more of the basic 1952-53 Broyhill colonials and ramblers than Taylor. Even accounting for country club hills (where most of the sales are probably over $1 million any way), I'd guess that the typical home in the Taylor district is newer and bigger in the Jamestown district. Nottingham has a lot of tiny houses along George Mason, but a lot of new large houses north and west of the school. I'd guess that there mix of sales tended to be smaller and older, after eliminating the $1 million plus.
Did the Glebe School stats include condos. Is any of the new development north and west of Ballston included. I'd expect new development to sell more quickly than single family homes where the owners have an emotional attachment. Clearly sellers in McKinley and Glebe areas are pricing their homes more realistically. Days on the market is a measure of demand, but demand varies with price. Slash the asking prices enough and days on market will drop dramatically. I have to agree with you though, at current asking prices the areas you point to are more popular than the Jamestown area.
I can certainly see the possibility of northern part of the county being less popular in the future. Unless you are near a major street like Lee Highway, Glebe Road or Old Dominion, public transportation stinks. Buses that come hourly or less outside of rush hour, and not at all on weekends leave you dependent on a car.
I think for now there are still a lot of people who appreciate this type of area, even if it's not within easy walking distance of stores and restaurants. It was laid out prior to the cul de sac and feeder road development of the 60s through today. It's closer in feel to the small towns I grew up around in Pennsylvania, with at least a partially gridded street layout, houses right next to each other, often on what some here would call postage stamp size lots, sidewalks along the entire block, and front doors people actually used. It allows privacy without isolation, and encourages interaction with your neighbors. There was a discussion of the house Dean Baker bought in DC a couple weeks ago, and a lot of people here didn't understand why someone would want to live in DC and not at least be near the metro or good restaurants. Looking at the Google overhead and Bing bird's eye view, it looked like his new neighborhood had similar advantages. Since most of Northern Virginia was developed post WWII, there aren't a lot of areas with these characteristics.
I can see were this might not appeal to someone raised in the exurbs with multi-acre lots and off-road bike paths, or to someone who has lived in a more urban urban community with lots of activity within walking distance, and these will make up more of the potential buyers in the future. But for now, don't expect any big bargains on SFHs in 22207 north of Lee Highway - even if houses are selling faster in the Glebe school district.
In the WSJ, and Calculated Risk, BofA reports that the long awaited "spike" of foreclosures is coming in Q4.
How come it's always just around the corner? I'll believe it when I see it, but here's yet another teaser for a flood of nice cheap REO's.
"We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running" for a loan modification or other alternatives, says a Bank of America Corp. spokeswoman. Foreclosure sales had dropped to "abnormally low" levels in response to government efforts to stem foreclosures, she adds.
TBW,
Also looking in the Oakton/Vienna/FFX area and not liking what's available. Overpriced, underdelivering.
Regarding SAIC. I used to work there until just after the IPO. Everyone thought they would get rich. They devalued the stock for the IPO and paid a "dividend" to cover the difference for the current employee/shareholders. Since then the stock has had some peaks and not too many valleys, but has just languished in the 17 to 20 dollar a share range. No dividends or real growth. So nobody got rich. I'm almost completely cashed out of my remaining stock and if I need CC cash on our purchase I will sell the rest.
Oh well, back to hoping something good comes on the market today. :)
Cara, I agree, its always next qtr. I wonder why the WSJ didn't use a name at BoA. A reader like me doesn't put much stock in nameless quotes or opinions. It really doesn't make much sense to sit on a foreclosure till the dead of winter before listing it espically if they have already been dragging their feet for a year. You would think they would wait till spring. But what do I know?
Cara-
Although it would be great for us few buyers left on this blog somehow I doubt that banks are dumb enough to have a flood of foreclosures hit the market right after the 8K disappears. I guess if it gets renewed it may make sense for banks to try and unload as many of their foreclosures as possible while the government is helping to keep prices firm.
My guess is even if their are a flood of foreclosures it will not be that bad in Nova. Our unemployment rate is still fairly low and there were far less crazy loans in the inner suburbs.
Arkey,
I think it's more likely that BofA is fishing for another bailout. Like a "streamlined" short-sale process which takes just as long as now (hence still providing little competition for the REOs and real sales), but where the federal government directly absorbs the loss.
Okay, I know that's absurdist, but I do think it's more likely that they're fishing for something along those lines and are threatening to release the failed mod foreclosures in the dead of winter, than that they'll actually do it.
Cara, from both links:
Ivy Zelman ... believes three million to four million foreclosed homes will be put up for sale in the next few years. The question is whether the flow of these homes onto the market will resemble "a fire hose or a garden hose or a drip," she says.
From the following link.
Zelman is bullish on the development-friendly Virginia side of the Washington, D.C. market, less so on the Maryland side. She recently released a report on D.C. saying its “fundamentals are among the best in the country. It is well positioned for sustainable recovery given incremental job growth and land constraints.”
Robert,
That's actually a pretty interesting link, Robert. I agree that DC, especially NoVa will be amongst the first to recover. What exactly that entails is another question. I think it will be great for builders, and I expect the market for new homes to do well soon. The endless trickle of foreclosures and slowly tightening credit (higher scores, lower DTI, higher interest rates) will keep buyers from being able to bid prices up on existing homes.
housebuyer,
I think that there are enough buyers looking right now in NoVa to absorb REO's at 2-3 times the rate they're currently hitting the market. Even without the $8k.
The limiting factor going forward is going to be financing, as interest rates rise, people won't be able to make the same bids. So, the sooner they release the REO's the more certain they can be to command today's prices.
Cara-
I agree there have been a lot of buyers, although I am not convinced that we are not getting to the end of the surplus in buyers. Most people I know that have wanted to buy a house have already done it or are currently under contract. Do you think there is an endless supply of these buyers or was all of the demand from people who were watching prices fall for 3 straight years and now that the market stabilized they all jumped in?
housebuyer,
I stand by my 14k fence-sitters in FFX county in 2007 number. There have not been 14k sales since then, and some of those were current owners and those who this was their timing anyway.
Given the days on market for REO's, which where I'm looking has been artificially long at 1 week as banks take multiple offers, I'd say there are a lot of buyers who've been trying to buy all year with no luck. Some, nay, many of them are currently not even bidding until the $8k dissappears and the FHA crowd thins out.
Given the short supply of organic sellers who want to sell at today's prices, I think even the normal level of first-time buyers and move-uppers for whom the timing is right for their lives/finances could easily absorb 2-3 times the current level of REO inventory.
Cara,
Even though logically I buy into all of the arguments supporting higher interest rates going forward, there is a technical side of me that says if everyone is on the same side of the trade, it will most likely move in the opposite direction.
Everyone on this board, everyone on television, and virtually everyone the internet sees rates going higher.
So, they've all sold their bonds and may even be shorting the treasury market. In a situation like this it takes very little for the market to go the other way and bond prices to rise and yields to fall.
Like I've said before, I'm not going to predict interest rates.
Robert,
That's a good point. All of our arguments are also for where rates "should" be eventually, not when. There's no particular reason why rates have to go in any particular direction in the next 6 months to 2 years.
The longer this bottom is sustained at these price levels the more secure it will be, and the more chance incomes will have to catch up to these prices.
So, I'm curious, (and ignorant) what happens when people who are shorting treasuries run out of money/time? Are there margin calls? What happens to prices/yields? Basically if the people who are betting on interest rates rising in the future lose, what exactly does that do, if anything?
Cara,
There will always be people on both sides of the treasury trade. If there were only sellers, bond prices would go to zero and rates to infinity. If there were only buyers, prices would go to infinity and yields to 0%.
So, nobody goes broke in either direction. Foreign governments seem to still be purchasing treasuries.
Everyone that takes out a mortgage is, in essence, a seller of bonds, although mostly GSE bonds. So, the more mortgages people take out the higher yields should be.
It's a whole lot easier in this age to short the treasury market - bet rates are going higher.
This EFT will go up if rates go up and vice versa. It's nearly the same thing as shorting the treasury market.
Cara-
Its not like everyone shorted treasuries at the same time, so they also will not have "run out of money at once". But yes your hypothesis is correct that they will need to cover their position by buying treasuries.
In the treasury markets you can get absurd leverage generally at least 50 to 1, sometimes higher if you are hedging your position. So if treasuries rally bringing th yield down there may be a rush to cover which could continue the trend. I would actually think if this happens the government would start to issue more treasuries because they can lock in more money at low rates and because they want a steep yield curve(long term yield minus short term yield) so that the banks can continue to make a lot of money and earn their way out of there current problems.
"Cara said...
How come it's always just around the corner? I'll believe it when I see it, but here's yet another teaser for a flood of nice cheap REO's."
Its a ploy to keep us fence sitters sitting on the fence forever. Then when prices are 5-10% off bottom, they will say, never mind, no tsunami coming...
"Zelman is bullish on the development-friendly Virginia side of the Washington, D.C. market, less so on the Maryland side. She recently released a report on D.C. saying its “fundamentals are among the best in the country. It is well positioned for sustainable recovery given incremental job growth and land constraints.”
Thats actually a major bit of info considering the source is Ivy Zelman -- the same Ivy Zelman who created the infamous Credit Suisse Alt A reset chart that Contrarian has been glug, glug, glugging from for years now.
The Anonymous,
Unsucessfully stifling a chuckle.
Just because your paranoid, doesn't mean they're not out to get you.
And there's more Ivy Zelman has the strong respect of Calculated Risk.
6/14/2007
I've confirmed with a reliable source that Managing Director and homebuilding Equity Research Analyst Ivy Zelman has left Credit Suisse. (hat tip Cal)
Ms. Zelman gained fame among housing bloggers when she confronted Toll Brothers CEO Bob Toll during an analyst conference call in 2006 by asking: "Which Kool-aid are you drinking?"
Beyond the conference call quips, Zelman is a serious and award winning analyst. Zelman was honored as the highest rated housing analyst in the nation by both the Institutional Investors All American Research Team and the Greenwich Associates Institutional Research Services Poll.
Zelman's research was thoughtful and thorough. She always called it straight, and she never drank the Kool-Aid.
I wish her all the best in her future endeavors.
Also prices are already 5-10% off the bottom so they should be telling us any day now that there in fact will be 0 foreclosures coming next year.
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