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Friday, November 6, 2009
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43 comments:
Urban Land Institute - "Emerging Trends in Real Estate 2010" published yesterday.
real estate investment 2010
Investments in Commercial Real Estate and Apartments:
Washington DC #1
Developments in Commercial Real Estate and Apartments:
Washington DC #1
Construction of Homes for Sale:
Washington DC #1
And look at the gap between WDC and the #2 player in each bar chart. Stunning!
Robert-
Although DC is the winner for all of these the graphs say that investments in DC are fair at best. So I am not sure being the least bad investment is necessarily a good thing...
Good, we need more apartments, as I've said before rents are outrageous here.
(I know, no one agrees with me).
Oh, and the shadow inventory? Is real. There are 118 bank owned or pre-foreclosure properties (80% bank owned) in 22015 alone. My realtor, Jeff Royce, just sent me the mother load and I'm not going to share. Sometimes, knowledge is power. Get your own agent. (and sift through the hundreds of listings to find the ones with potential yourself).
I'll let you know what percentage of the ones I care about are already re-sold, what percent are not on the market yet, and what percent are already listed when I'm done drinking from the fire-hose.
Earlier in the week tbw stated something along the lines of "tax assessments will be down everywhere". I commented that I assumed that mine would be going up next year due to recent sales in my neighborhood. Last night I pulled the Frankly '09 sales data for 22046 (FC city and some of unincorporated FC ffx co). After getting rid of a few obvious new builds and updates, I found that the average sale in 22046 was 3% over the '09 tax assessment. In my neighborhood, it was 5% over, and a recent sale of a house similar to mine (updated, but nothing special) was over 20% over tax assessment. I'm not saying that prices have risen that much, or at all, but I think that in certain places because of the lack of sales (and types) that were happening last year, the tax assessments actually undervalued the properties. I'm not happy about it, but I am prepared for it.
housebuyer -
True. The composite score for all factors had DC at 6.2 with 5.0 being fair.
Robert, you're reading your own graph wrong. Only the first category was over 5, and that wasn't a composite, it was "investment" as opposed to "developments". Either that, or you need to give us a link to the main article.
Cara,
How do you reconcile this with your data from Royce?
It says 5 bank-owned and 19 shorts in 22015.
Cara,
The composite included more than just those three graphs. I don't have access to the entire report.
Here's the quote I'm basing the 6.2 on:
Even if San Diego's 5.0 score was 0.1 of a point higher than last year, it was still ranked lowest among the top 10 “global gateway markets,” with Washington ranked first at 6.2. A score of 1 is called “abysmal” and 9 “excellent.” The lowest overall score for the top 15 markets was 3.8 for Phoenix.
Robert,
That's what I have to figure out. I'm guessing that a good chunk of the 118 have already re-sold. But, for instance Sunset Woods? which just got listed like last week? Has been bank-owned since March. So, there are is a serious delay time between taking ownership and putting them on the open market for whatever reason.
Now, we looked at Sunset Woods, and it has the potential to be a money pit. Serious water damage to the hard-wood floors in the kitchen when someone removed the frigerator, possible damage to the deck given that they power-washed it way too hard, potential rotting around the bay-window in the eat in kitchen, which may indicate that the untreated deck has damaged the exterior house wall...
Waiting until one of these in your favorite location comes up on the MLS and assuming it will be in decent condition and available at a good price is the wrong way to use this data. But a knowledge of the plethora bank-owned choices that will be trickling on, is useful to inform one's decision about how much to pay for a well-maintained place in the same or a comparable sub-division.
You can't overlook the good deals from real sellers, a well-maintained place has it's own value, but I do think thorough command of this shadow inventory will be instructive. But, as I said, I haven't sorted through the fire-hose yet, so I don't know what I'll conclude.
Increase supply, drive down prices.
Cara -
So, you agree with the Sawbuck stats that there are only 5 bank-owned homes for sale in 22015?
Sure, a command of the shadow inventory is nice to have, if that is indeed what you have.
Robert said
"Sure, a command of the shadow inventory is nice to have, if that is indeed what you have."
But, but Robert... there is no shadow inventory. You've told us so, so many times...
Robert,
It's sounds about right to me, I assume it's the same thing I'm getting from Frankly, they both pull from the MLS.
Given that all the sawbuck REO's are in my list? I see no reason to doubt it yet. But as I said, I'll let you all know, how many of these are out of date (i.e. already sold to new owners). My spot checking leads me to believe that only about 1/3 of this list is yet to come. Given that I have 3 other zips I'm also searching that's still a goodly chunk.
Keep in mind, this is just a sliver of the "shadow" inventory as more broadly defined. This only shows ones the banks already own, plus ones they're listing for auction, plus ones that they've begun foreclosure proceedings on. So, this is only the truly doomed, practically guarunteed to hit the market sometime (unless bundled to investors) portion of the shadow.
Cara,
Speaking of "bundled", I got another list last week of about 80 Virginia properties that I was told could be had at 60% of BPO.
I could choose what I wanted as long as it wasn't spoken for. Many local ones were too high priced for rental (ex. BPO 675K). These higher priced ones were mainly in Loudoun.
The one I wanted at RTC was already gone (of course). This is the second such list I have received. I'm sure there are many others.
Cara said...
"Good, we need more apartments, as I've said before rents are outrageous here.
(I know, no one agrees with me)."
Sorry, I'm one of them that doesn't agree. Unlike the price to own, I think the cost of renting around here pares well with the income levels of the region. But anecdotally, I notice rents are dropping. And with the delusional bubble-clinging homeowners not wanting to sell "at a discount", they are adding to the rental supply when they're moving, driving down the costs to rent.
"Oh, and the shadow inventory? Is real."
Most of us knew this to be true, though the reasons for it are debatable and varied.
Robert: "So, you agree with the Sawbuck stats that there are only 5 bank-owned homes for sale in 22015?"
Realtytrac say there are 418.
kevin
Yeah, well, I'm originally from the show me state, so until I see the solid examples, I don't truly believe anything is real. I don't operate on faith or even logic, I operate on data.
kevin
I've seen the realtrac ones before, and those are BS. Way way too many of those have actually already been sold, and others may never get to foreclosure. So there's way too much chaf there to sort through to find the wheat.
kevin -
Well, I guess waitingtoo's posts that they were increasing his/her rent from $2400/mo. to $2700 in Vienna seems to have missed you list of anecdotes. Also, she/he said they were eliminating Burke and Springfield from their buy list and were focusing on buying in Fairfax/Vienna. One more buyer pricing you further out of the market.
County says there are 969 bank owned homes. Better to trust the county or Realtytrac?
LJJ - never said there was zero shadow inventory. As you can see, Fairfax County has 969 bank-owned homes and I'll guess only 500 are lsited, so shadow inventory is 500 or so, which is insignificant by any measure.
Seriously, how can anyone expect housing prices to go up with unemployment at 10.2% and climbing?
Unemployment hits 10.2% The price correction will continue.
Robert,
Just because waitingtoo's LL is increasing the asking rent to $2700 doesn't mean they'll get it. My entire apartment complex has been lowering rents for over a year now. It's the same as your comment yesterday about asking prices of homes not mattering, only solds.
I know you are all dying for this in blow by blow form.
So, in zip number one, 90 out of 118 are in subdivisions I haven't already eliminated (no condos, no Greenfield Farms, there do exist homes of reasonable size). Of these, 60 have foreclosure dates within the last 12 months. (anything longer and I'm not going to bother to follow through). Of these 60, 20 are auction listings in the recent past or near future. Near future auction listings I can't verify because the owners should still come up as the purchasers who are in dire straits. That leaves 50ish to follow through by hand. Spot checking so far shows these 50 are "real" although some have already been marketed and sold.
If released slowly this could still be considered a trickle relative to the currently 78 listings, but its a trickle with some good neighborhoods in it. Mostly the less desireable neighborhoods, but not exclusively.
Got a short today. Sold 2005 for 350K (yes, way too high). My price 155K. It was already approved and the buyer backed out. I close in 3 weeks. I really believe that these type of prices are "no lose". It only needs slight paint and carpet cleaning (maybe new carpet). Built 2005. Practically move-in.
But, I'm a risk taker.
Jeremy said...
Seriously, how can anyone expect housing prices to go up with unemployment at 10.2% and climbing?
Unemployment hits 10.2% The price correction will continue.
Seriously, how can anyone expect the stock market, commodity prices, real estate prices (worldwide) to go up with unemployment at 10.2% and climbing?
Unemployment hits 10.2% The price correction will continue.
when do the new housing credit rules begin? my friends just closed on their house last week and i was curious if they'd get the credit since before they had too high of an income...
GT,
unknown as of yet, but I'm guessing Dec 1. At earliest it would be date of enactment.
also, (to cara i guess since she is the only one i know using frankly/jeff royce). are frankly's realtors strictly in house? the realtor on his site for PW county/manasses appears to work for another broker or on her own.
GT,
his "advertized realtors" that show up depending on where you are listing are not necessarily "his" realtors. You'd have to ask Frank, whether his agents exclusively work for him, but I'd bet they do. Go to his main page linked to from the mls search and there's mug shots of his realtors and some have descriptions. If you want to work with frankly, write Frank telling him what area you're interested in and he'll assign you to the most relevant realtor. I know Jeff does stuff out in Loudoun and Manassas, but I think that's partially because people's search criteria are that spread out.
Robert, studies have shown that stock prices go up when firms announce big layoffs because costs are lowered for that firm. Stock market measures aren't necessarily highly related to the overall health of the economy, especially not over the near term. Further, US firms that outsource to India or China and displace a lot of US employees may be more profitable while US unemployment rates rise. Multinationals further complicate the picture. That doesn't mean that at the macro level, people in the US are necessarily able to afford to pay more for housing.
Traditionally high unemployment "helped" keep inflation low for the many other households where members who wanted to work held jobs.
It's a complex picture.
"Jeremy said...
Seriously, how can anyone expect housing prices to go up with unemployment at 10.2% and climbing?
Unemployment hits 10.2% The price correction will continue."
Jeremy -- Here is a good article on the subject
http://www.calculatedriskblog.com/2009/03/business-cycle-temporal-order.html
It appears that the normal sequence of things is for housing (a leading indicator) to recover while unemployment (a lagging indicator) to continue to get worse.
Note -- I had a hard time accepting this premise (housing recovers before unemployment) and had it not come from such a reputable source, I would have shrugged it off as bullish spin. Still -- im glad to have found it as it allows me to focus more on things that could lead to lower prices (i.e. shadow inventory) while not being distracted by things (increasing unemployment) which dont historically tell us much.
I guess I'm not "wanting to move" any more. We finally did it. Got a contract on a house in N. Arlington (I know, I know...) but the location, schools, and layout are perfect for us and we were happy to put an end to a saga which has dragged on for almost a year -- and our family is about to expand. (It was the one house DH and I could agree on.)
There was a lot of negotiating on our part and in the end the net price to us (counting seller subsidy) is almost 50K below the tax assessment. (The vast majority of houses we checked out in the area are still on the market or have cut prices. Many look nice in photos but we saw so many "lipstick on a pig" scenarios from poor maintenance or just bad layouts and tiny room sizes. This house, thankfully, seems solid.)
I'd like to thank all the people on this blog. I've learned a lot from your discussions and I hope you all find homes that make you happy.
Kevin,
I've browsed Realty Trac, and all it does is make me wishful about what's (not necessarily) out there.
Also, after I've perused Redfin and frankly, if there's nothing for me to get excited about, I then sometimes look through the Washington Post's Virginia Trustee sales. I've learned the hard way, looking for available real estate in the legal notices section is setting myself up for disappointment.
For example, I had seen a Foreclosure Sale notice for a house in Ashbrook Village (Ashburn), and so I kept thinking and hoping it would eventually come onto the market as a short or foreclosure. Not long ago, it was listed as a regular sale, and sold within 3 days of coming onto the market, probably for 50k more than some recently closed short sales in that neighborhood. (http://franklymls.com/LO7194044)
I found it really odd that it came onto the market as a regular sale, until I realized, maybe this was a strategic defaulter, who changed his/her mind? If the person were truly in trouble, would a regular sale be possible? Since the house is only 4 years old, it's likely the seller does not have much equity, and will have to bring quite a bit of money to the table to close the sale.
Congrats, wanting_to_move!
Sounds like you got a great house for yourself and for a great price in this market.
Enjoy your new home.
Wanting to move,
congratulation! i'm sure it's extra sweet now that the tax credit is extended. so go spend (some of) that $8K 'found money'!
also kudos to you for doing us future N Arl buyers a big favor of getting almost 50K below the tax assessment. Atta girl!
i hope our search/purchase next year will be equally successful.
Congratulations, Wanting to Move, I hope you and your family will be very happy! And didn't someone say that all those N. Arlington houses were selling for well over their assessed values? :-) You must be one whale of a negotiator! Totally agree with the "lipstick on a pig" comments and glad you didn't fall for all the "staging" nonsense.
Thanks.
MM -- I only WISH the tax credit applied to us because after putting down our 20% dp the coffers will be bare. But alas we sold our condo about 6 weeks short of having lived in it for 5 years so even the extended benefit won't apply.
We felt empowered to bargain with the sellers because our condo buyers had bargained so hard with us. Also, the house was more expensive than initially planned, so we really had no choice if we wanted it.
Just want to add that I learned a lot on this blog that helped me negotiate. For example, when the sellers' realtor sent over several comps that supported their price, I was able to go to franklymls and under 'solds' dig up the old listings and interior photographs of the comps. That allowed me to see in detail what kinds of upgrades had been done, and more details about the houses, in order to give a credible response to the agent about why I didn't think the higher comps applied.
Wanting to Move,
Congratulations! It sounds like everything is coming together - a new home, and a new addition to the family. That's wonderful.
Also, I'm sure it's a relief not to have to search anymore! Now housing related decisions are a lot simpler, and generally less expensive. Choosing paint color isn't like agonizing over your price range.
Ace -
Nothing you said I disagree with, but there is a synchronous movement in stocks, commodities, and real estate taking place across the globe. To ignore it is folly in my estimation.
It is obviously brought on by cheap money. Will it lead to a self-sustaining (w/o gov't help) recovery? It may not. I think there are some good arguments against. I'm betting that it will. If it does work then those holding cash and gov't notes should fare poorly in purchasing power going forward. And those with stocks, commodities, and real estate will do well.
IMHO
Wanting to move - excellent timing, even though I know that wasn't your objective.
Congrats also to VA_Investor for getting a property she wanted.
Robert, agree that govt. intervention is playing a role. Some of it was to shake up what could have been a too-negative overreaction (paralyzing fear?) to earlier conditions, which would not require continued stimulation after a point. And govt. intervention is not the same in all countries, of course.
I hope everyone has a nice weekend and that your RE dreams come true (mine too, one of these days).
Private investment.
DuPont Fabros (DFT) reported its third quarter earnings late Tuesday, including four previously undisclosed leases in Northern Virginia. Significantly, the company was able to quickly fill space that was being vacated in its VA3 data center in Reston, Va. The deals continue the torrid pace of leasing in Northern Virginia, which is currently the most active market in the nation.
Unbelievable Mortgage/Refinance offers.
Only 3rd
Robert: my landlord has held rent steady, for over a year, and given some of the vacancies, I wouldn't be surprised if rent was lowered.
Fred,
Just to be clear I said I think all parts of Fairfax County will have lower assessments. No predictions about other localities in the area.
Also, I'm talking in the aggregate. IMHO, a map like this will continue to show assessment drops. My theory will be tested ~Feb 2010 when Fairfax County puts out another map like that (assuming they do something helpful like that each year.)
I don't know what percentage change Fairfax will see but I expect it to be negative.
I can't make any predictions about your particular block because I don't know where you live. But you shouldn't share that so it's a moot point.
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