Finally - h/t Robert for checking today at Virginia MLS:
The total "Northern Virginia Inventory" represents the combined housing inventory (listed on the MLS) of Alexandria City, Arlington County, Fairfax City, Fairfax County, Falls Church City, Loudoun County, Manassas City, Manassas Park City, and Prince William County.
Total inventory is at its lowest point since July-August, 2005. Peak inventory was in August 2006.
(Here's the spreadsheet on a separate page).
Monday, October 5, 2009
Current Housing Inventory
Posted by Harriet at 9:50 PM
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29 comments:
For all of the counties except Arlington, current inventory is less than half of peak level inventory - in most cases, much less than half - closer to a third. But Arlington unsold inventory remains well above half of peak level. My bet would be that a disproportionate share of that is >$900 properties. There still are more homes selling in this range at prices I consider surprising, but not many. Others do take multiple listing price cuts to sell. I wonder if prices will creep down or if we will continue to play a waiting game.
ps - thanks, Harriet, for posting the #s.
I don't know what to make of Arlington. But did you guys notice that the inventories in Loudoun and PWC are back in line with 2002/2003 levels and may be trending up slightly again? That's got to be a good sign for a possible healthy bottom in the outer counties.
Cara-
That is pretty impressive that inventories in these areas is back to 2002 levels, because there is a much larger housing supply to draw from. Loudoun and PWC were 2 of the fastest growing counties in the country during the last decade. I wonder if inventory can continue to shrink during the winter. If it does inventory will become very tight by next summer.
housebuyer,
Good point, I hadn't factored that in. PWC inventory has flattened and is turning slight back upwards in both PWC and the Manassas designations, and Loudoun is flat, so I don't think inventories will shrink in the winter (unless a huge number of people decide to take their homes off the market, which even if it happened, they'd put them back sometime in the spring, so shouldn't matter much).
I'd be very surprised if rather than go back to pre-2002 prices, "we" instead went well under 2002 inventories. But I've been surprised before.
This level of inventory is definitely a sign that the builders are right to restart construction (in Loudoun and PWC at least) if they can identify underserved sub-markets.
The thing I have noticed about Arlington, is that the teardown market is dead.
No buyers, no sellers and not much of anything under construction.
Doug,
Hmmm, interesting. A lack of appetite to pay for a house twice? Or just a lack of available financing? Hard to say.
I've noticed that too, Doug.
I would guess there is a lack of financing. Financing is much tighter in the jumbo market. Not too mention I assume it tightens even more when they need to lend you money with the hope the contractor does a good job building a new house. I am pretty sure financing to small businesses is tight now so it is also difficult for the contractors to get the financing.
Increasing inventory in the summer and fall of 2005 is what made be believe that the "party" was over.
It's certainly hard to reconcile the low inventory numbers with the, supposed, wave of new foreclosures.
I heard on one of my shorts yesterday that I should expect to wait quite awhile because lenders are completely swamped with these. It appears that shorts are becoming more plentiful than reo's.
I am still seeing a large number of UC shorts showing as available. I realize that they do fall out to some degree, but I wonder what the "true" available numbers are. Both of mine are showing available.
Cara, I think it's partly due to a basic mismatch between what is demanded and what builders want to supply. Anecdote alert (wish I had better data): there are so many people I have talked with who want a medium sized house (2200-2700 square feet plus a basement) and are willing and able to pay a fair price for it. There are few existing houses in Arlington that can be described this way. They are either much smaller and older, or much, much bigger and much, much more expensive. But the builders keep wanting to produce McMansions because there is more profit in it for them, as long as people buy them. Obviously, it is very possible to build the houses people want at the prices they can pay because similar houses are being built outside of Arlington - just add on the higher cost of land in Arlington - but it isn't happening. The builders seem to be waiting the market out. So until this message is clearly heard by builders, I think Doug's observation will continue to hold true.
Va_investor,
Thanks for the status update on your short.
I don't know about Reston, but Burke's had way more shorts than REO's since at least March. 3 to 1, 6 to 1? Something like that?
Hard to say how the balance will play out, will banks hire more SS specialists to handle the load? Or move more of the shorts into foreclosure? Or do nothing and let the shorts pile-up, knowing that eventually if they are the only decent priced things for sale, people will buy them? Who knows? A bit of each, probably.
No more recent word on our short yet, but it's only been 10 days since it was passed on to the "second stage negotiator" who supposedly is the person who handles presenting the short to the investors...
Ace,
They'd be happy to find a 2200-2700 sq ft house, but would they be willing to do the legwork of finding a tear-down or a lot, and taking on the construction loan, thus assuming the onus of risk and debt? Unless they are, builders are going to keep building what they think will turn them the best profit. Now if those big houses start dropping in price... perhaps builders will see better value for themselves in building a house that's "just right" rather than spending any more money on materials that isn't netting them as much more profits as it used to. But given that the land is still 1/3 to 1/2 of the expense...
Cara, I'm telling you what at least one builder (which anielarke knows well) told me, as well as what I have observed. There surely are some people who don't want to do what you described, but there are other people who are NOT in this category. They don't want McMansions but builders aren't willing to build smaller places because they make less money -- but they still make money -- on smaller places.
As an example, look at the two silly new builds being offered at Daniel & 10th St (see the reviewer comments) in 22201. Tiny lots, busy street, no garages--one unusably small house (about 1400 square feet above ground - hey, we already have older houses of that size, of much higher quality) asking $1 mill., and a bigger place next door asking $1.3 mill.
Notice that I did not say above or in my earlier post that this is the ONLY problem. But it is a problem.
PS, Cara, I saw a huge, architect-designed, luxury house in Fairfax this weekend for less than $170 IIRC per square foot ASKING (plus the cost of land). So a builder ought to be able to buy a tear down or vacant lot in Arl. for $550K or less, for example, and put up a 2500 square foot house so that the total cost, with profit, would be less than $1 mill. They just think they can do better than that, because they have, for several years.
My point is that I think they are waiting out the market because they believe it will get better rather than responding to this demand.
woops, make that "Danville and 10th".
Ace,
That's very strange. People who have the money, and the means, and could clearly get financing are getting turned away by builders who'd rather deal with a client who's building something bigger? I suppose it's possible this is occuring on some scale. But it seems more likely that there's something missing from the picture, like a lack of builders, or that builders have bought up the tear-downs and now want to maximize the use of their land, not "waste" it on a smaller house, and they want to be spending their time improving the assets they already hold so they can unload them, not building for someone else right now. Some additional dynamic.
Or put another way, I have a hard time seeing how what you described could occur in a healthy market. Where both credit and builder's balance sheets were in decent shape. Which says to me that if your friends just wait another year or two, they'll be able to build their dream house.
Mickey Simpson paid $700K for BOTH those lots in January. Tear down costs are minimal (less than $20K usually). So the land for his houses for each house was probably less than $310000.
It's not strange at all, if the builder is still finishing other projects and honestly believes that the market is still there for the high profit big places.
That does not mean their perceptions are correct. And they would not be the first businesses to go out of business because they misjudged demand, temporary changes, etc.
An example of a builder who HAS decided to downsize (at least temporarily) is Sagatov. They have sold and are currently building 3 out of 4 houses (at Nottingham and 23rd) that are mid-sized (for $1.2 mill. or less) compared to the big houses they used to sell (at $1.35 - $1.6 mill.).
ps - re: "healthy market" - I have said for quite some time that I don't think the current market in Arlington for this range of house is "healthy." The volume of sales is extremely low, for example.
woops - my arithmetic was wrong - lot cost per Simpson house - $360K not $310K. Still well under the cost of buying a teardown on a single small lot and a relatively small portion of the cost of a new build given that it's Arlington.
Over 300K for the land equals a 900K to million dollar home.
I'm not surprised that Arlington is holding up so well, given the demographics. I would imagine that destitute owners are few and far between.
p.s. 300K for a lot seems cheap.
There is a short in my neighborhood. If I had any friends interested I would tell them to take a run at it. It's over 700K, so that eliminates alot of the competition.
When this house came on the market, another one (beforehand, the only listing) immediately dropped their price 60K.
What kills me is that these people (the short) have owned since 1992. They paid high 400's. They must have cashed out when their place was 950K. How would you like to be 60yrs old and in this situation? I'd kill myself! Can you keep your retirement accounts when negotiating a short? How about BK? I bought a short where the investor couple was totally released. Are lender's still doing that?
p.s. the husband used to be picked up every morning by a driver in a black sedan.
Ace,
you mean these two:
http://franklymls.com/AR7163501
http://franklymls.com/AR7163500
If you're right about Sagatov, I think that proves what I was saying, that patience may bring some of the builders around to a new way of thinking.
Cara/Ace,
If land costs are that high, I don't think builders will construct anything for less than a million. If an individual were to buy the tear-down, would it make sense in the long run to build a small house?
I suppose that if you don't consider resale and just want something that will accomodate your personal needs, it won't really matter if you build 1,800 sq feet.
I have a property with a lot value of 500K and "improvements" of 70K. In order to justify tearing it down, I'd have to spend at least 400K. No thanks. Let the next person do it. It's fine for us (all 800sq.feet).
Va_investor,
The small houses built don't contradict your statement, they're ~2000 sq feet and priced at ~$1million or more.
If those same houses were to drop to well under a million, Arlington would have to reassess whether the land was really worth as much as it thought it was.
"Ace said...
For all of the counties except Arlington, current inventory is less than half of peak level inventory - in most cases, much less than half - closer to a third. But Arlington unsold inventory remains well above half of peak level."
Ace - just a reminder, one of the reasons Arlington inventory didnt fall much is it never got totally out of control as some of the outer areas did.
Heres a little different way of looking at it - number of homes available now versus total number of homes in the county. As of todays date:
Arl - 0.75% available
Alex - 0.76% available
Ffx - 0.82% available
Lou - 2.01% available
PWC - 1.21% available
To be fair, Arl/Alex have a greater % of rental stock that is never available so they should naturally be a little lower than the outer three which have more similar percentages. Still this shows that despite the lack of fall in inventory Arlington remains the strongest.
FYI - this is what the ratio was 1 year ago.
Arl - 1.33%
Alex - 1.72%
Ffx - 2.21%
Lou - 6.39%
PWC - 5.56%
All have improved, but especially the last four YOY as they got that much closer to Arlington's performance.
CRT,
very interesting...
Just curious was that using actives or total listings? MRIS or the Virginia inventory site?
In any case the fact that under the same metric, FFX cnty homes for sale is only slightly higher than Arlington and Alexandria which do indeed have a lot more rentals is a darn good sign to me. Tells me that the flattening that I'm seeing is likely to hold at least for this winter. A flattening of inventory might help calm current buyers' fears of "buy now while there are still houses for sale".
Hi
I think these information and the graph tell us about the right ratio of inventory. I think Reverse mortgage is better than to other loan and it is better for homeowners.
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