The S&P/Case Shiller® composite index (graph here) for the month of September was released today.
"'We have seen broad improvement in home prices for most of the past six months,' says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. 'However, the gains in the most recent month are more modest than during the seasonally strong summer months. Fewer cities saw month to month improvements in September than in August in both seasonally adjusted and unadjusted figures. Nationally, the U.S. National Composite rose by 3.1% in both the 2nd and 3rd quarters of 2009. Both the 10-City and 20-City Composites posted their fifth consecutive monthly increase with September’s report. Earlier some analysts voiced concern that the end of the first-time home buyer program would result in a drop in activity. While housing starts did slip in October, the federal government recently extended and expanded the first-time homebuyer tax credit.'"
93 comments:
Thanks, Harriet. As several of you have asked, what would the numbers be without the very low interest rates and buyer bribes?
Not very surprising. I think next month's data will show a substantial dropoff as the the effects from the buyer's bribe disappear.
Ace, I wish I knew the answer to that question. It's painful looking at the numbers knowing that they're kind of meaningless given the manipulation of the market. I don't even buy the seasonal argument as those variations aren't nearly as wild as what we've been witnessing.
"kevin said...
I don't even buy the seasonal argument as those variations aren't nearly as wild as what we've been witnessing."
Speaking of which, has anyone seen the seasonal index (I cant find it on the revamped CS site)? I think this is the first month where the seasonal index trends down, but im not sure.
Eh, only 11% annualized appreciation this month.
Kevin-
I think it is very unlikely next months data will show a substantial drop off due to how the index is constructed. It uses a rolling three month average of prices, so not enough of the index moves in a given month to drastically change the index month to month. My guess is the index will be fairly flat to up ~0.2%, and two months from now it will start to trend downward at a couple of tenths of a percent/month
Robert-
The home price value went up 0.5% at least according the the S&P website which is 6% not 11%. Also based on the fact it uses a rolling average and went from +1.7% to +0.5%, that most likely means prices were actually down in September. My guess is October is within 0.2% of being flat and we start seeing negative numbers two months from now.
Given the concentration of low-end distress sales, I would dimiss lower sales prices all together. And, what price range attracts first time buyers?
Are these the seasonally adjusted or not seasonally adjusted? They look as if they've already had some of the seasonality removed to me.
So, for that reason and everything housebuyer said about the rolling average, I bet this means C-S like prices were actually down already in September despite the buyer bribe and the ridiculously low interest rates.
October closed sales were the highest relative to list prices all year, so given the extra level of $8k desperation I'd say we might not see as strong of a drop off until November starts figuring into the moving average.
Still 180 puts us right back at November 2008.
So, last bubble it took 2 years of modest declines before we entered the long-slow flat period of vacillating seasonal pricing.
So far it's been 3 years of spectacular declines. Think that's enough? or are we about to chart a new trajectory? Could go either way.
There is no question that C-S will trend lower. Let's not forget C-S is looking into rear-view mirror. Most of this area is already trending back down using the recent sales data. 22182 as an example below. But, it is the same story across the board.
22182
Sorry for deleted msgs...
spider,
wow, I like that irrational exuberience in listing price per square foot lately.
Hope springs eternal.
Yes, I feel that seller expectations (investors specially) have gone through the roof in just a few months. I expect declining sales in coming months because of this widening gap in expectations.
spider,
I think they're just trying to get lucky. I saw a number of purchases this summer that were well over comps. (and others that were well under) You can't be the lucky seller unless it's for sale.
At least one of the semi-flippers that I've been watching (bought as an REO in spring 2008) has now pulled the listing off the market presumably after not receiving offers near their $75k mark-up (gross not net).
wow, spider, who buys those giant mansions right on the highways? If I was going to spend 2.5 mil on a house, that would pretty much be my very last choice.
Agree. I also feel investors will cause a bigger correction than it would have been otherwise - as they are skewing the market against the real homeowners. As I said before, when they realize this is not 2003-2006 all over again - there will be a stampede.
Meshell...I was really referring to the trend chart below that for that area.
spider said...
"Yes, I feel that seller expectations (investors specially) have gone through the roof in just a few months."
You should try actually living in those neighborhoods, it's nauseating to see a house for sale on my block. I'm renting a house for $1400/mo, then see this crap:
http://franklymls.com/FX7190980
These sellers' spirits need to be beaten down.
Cara: "I think they're just trying to get lucky."
Either delusional or that, yes. I think occasionally they're proven right, too. Like a conversation I had with my dad recently about a neighbor of his that was listing at peak market prices. I told him nobody would ever pay that price. He said "really, nobody?" I had to sort of eat my own words for a minute and admit there are a lot of stupid and/or rich buyers out there that are either uninformed or don't care about getting ripped off. So it could happen, but not likely.
Interesting Econobrowser article.
The scatter plot chart in the middle of the page tells me, we may not have gotten our "fair share" of declines yet. Why? We are clearly on the branch where the price declines are semi-linearly related to the price run-up since 2000. But we're on the low side (decline-wise) of that scatter. Sure, there are many other places also on that low side, and it looks like we're less than 2 sigma out (by eye, don't do stats this way...). And many here, myself included believe this area will fair "better" due to stronger increases in wealth during the run-up timeframe that have changed the fundamentals and will continue to do so.
But it's a really cool plot. On this graph our percentage gains are higher than Las Vegas! But they are the outlier on the fall (their gains were more concentrated in time).
spider said...Regardless of that, I don't think even a bull can ignore the fact that current time is the best environment for housing in quite a while - low interest rates, buyer bribe, mortgage modifications, FHA insurance etc. It can only get worse from here the way I see it.
Hmmm. The best? What could possibly get better?
More jobs.
Higher incomes.
Higher stock market
Higher consumer confidence
More credit available
More private investment
More public investment
Fewer foreclosures
Less inventory
And for the record, interest rates can go lower and the USG can provide more support.
Yeah, the best.
Kevin - I think that seller bought in '05 - it is likely it will be a short or foreclosed. But...yeah, tell me about it..
Cara,
Responding to yesterday's comments: Belvoir never went to South County and has gone to Mt. Vernon for the last decade or so. If you don't think class tension exists at W. Springfield and Lake Braddock you are naive. WS, LB, and SCSS have very similar neighborhoods feeding into them thus they have some of the same class tensions. As for Robinson, people covet that school because it is mostly made up of upper middle class and wealthy kids.
Figure 13 for the paper cited in that post is also very interesting because it compares our current drops to historical ones, and says to me that it's not over yet...
Kevin: is this your peak-market-price dingbat?
http://franklymls.com/FX7035921
This place is the same size but is *a lot* nicer inside (I bookmarked the photos on Zip last year).
http://franklymls.com/FX7159574
Cara - that's an interesting chart.
If you look at the video I posted in yesterday's bit, it shows where we stand right now nationally compared to all the way back to 1890 inflation adjusted housing prices and what happened during previous cycles. We are far from where we normally would have been....
hayfield,
By Belvoir I didn't mean base housing in specific, I just meant people who work there. Which describes the whole area.
Care to guess which elementary school I'm actually buying in?
Cara, thanks for posting that. Really interesting plot, and I think it's very indicative of how overinflated this region in general still is, certain areas withstanding.
Novawatcher, yes, that's the sort of garbage I'm talking about. We (my family) sold a house in that first one's neighborhood, but nicer and with a massive addition for $450k in 2001. It's absolutely insane for these delusional sellers to be asking over $700k for much smaller houses, let alone $900k. I'm guessing these people hang out at Robert's house on the weekends, inhaling helium, talking about unicorns, the loch ness monster, and completely baseless market predictions.
Spider-
I saw your video yesterday and either it is old or the guy doesn't really have his data right. I have created that same chart he did and housing is ~20-25% not the ~35-40% he was saying. Some would also say that housing should move with wage growth not inflation, which also helps bring it down closer to fairly valued. My main point is that in most of the country housing is not significantly overvalued, D.C. is one of only a few areas that kept such a high percentage of its bubble gains.
Are Home Prices Rising
Interesting post from the Atlantic. They note that Case-Shiller has gone up the past four months but the National Association of Realtors data shows declines the past four months and wonder about the discrepancy.
Before certain people hyperventilate I'm not saying NAR is right and C-S is wrong. But I think the Atlantic is right to note this is interesting and wonder why there is the discrepancy.
TBW-
I don't know NARs methodology my guess is it doesn't adjust for mix particularly well, so mix could be some of the difference. The other difference is that because they are looking at different time frames due to the rolling average. For the CS index when you compare the index change from August to September the only months house prices matter are June and September, because both months have the July & August prices. So it is possibly prices in September are higher than June even if they are down from August and September levels.
It really seems like no one in the media understands how the index is calculated. Below is the methodology.
"Home sales pairs are accumulated in rolling three-month periods applying the repeat sales methodology and the index point for each reporting month is based on sales pairs found for that month and the preceding two months"
HayfieldGrad/Cara,
Seeing as South County only opened in 2005 I think it's still in the process of getting a reputation.
I am optimistic, however, because there seems to be a pretty active group of parents involved in the school which always bodes well. They successfully lobbied Fairfax County (even in this time of tight budgets) to fund the construction of a South County Middle School. This was approved in the school bonds referendum earlier this month.
----
HayfieldGrad said
As for Robinson, people covet that school because it is mostly made up of upper middle class and wealthy kids.
Just as it would be wrong to say Lee HS has only poor students it's also wrong to say Robinson is "mostly made up of upper middle class and wealthy kids." There are plenty of upper middle class and wealthy kids at Robinson but there are also plenty of middle and working class families as well.
Maybe based on national metrics you could call some of these families upper middle class based on income. But given the cost of living here I hardly think you can call a family living in a modest SFH or TH an "upper middle class family."
HayfieldGrad -- part of why I knew there was a bubble was precisely because schools like Madison, Oakton, Robinson, Herndon, Woodson etc always had a large middle class population. That's why it was so obvious the 2006 prices were ridiculous because homes were selling for what had previously been Great Falls/Langley HS prices. And despite what Robert thinks there just are not that many rich people in Northern Virginia.
"Spider said...
As I said before, when they realize this is not 2003-2006 all over again - there will be a stampede."
A "STAMPEDE"??? Really? Do you seriously think we will flirt with 23,000 units of inventory like we did in summer 2006?
http://www.recharts.com/nova/nova.html
No offense but this sounds like the "glug glug glug" thinking that infected this blog last winter (i.e. the fiscal crisis will cause 2009 inventory to explode)
and the winter before (the credit crunch will cause the 2008 inventory to explode)
and the winter before (no way 2006 was the peak, the deepening crisis will cause 2007 inventory to explode)...
"TBW said...
I'm not saying NAR is right"
Could be - after years and years of getting it wrong time after time, their due -- stopped clock and all that :)
... to see a house for sale on my block. I'm renting a house for $1400/mo, then see this crap:
Hey neighbor...
I walk my dogs past that house on the weekends. It's been on the market for awhile it seems.
;-]
housebuyer - I knew the video was old - I think it is from Feb '09. We haven't corrected much from that point..I was just posting that to compare current situation to similar periods in our history in a bigger picture - last few months didn't change much.
Wage mostly follows inflation - however given outsourcing and global competition it is likely wages have not risen in some industries as much as inflation in last decade. In any case, they both should not be that far apart however.
I think it is obvious, but you all do realize that NOVA is carrying a significant part of the load on the CS numbers. Farifax County inventory is 2.6 months. PG County is 8.1. The district is 4.7. MoCo is 3.2. PWC 2.2.
See, spider, rates can go lower:
Lowest I have seen at Zillow.
And despite what Robert thinks there just are not that many rich people in Northern Virginia.
If we look at household income, the picture grows starker. After the 2000 Census, the richest county in America was Douglas County, Colorado. By 2007, Douglas County had fallen to sixth. The new top three are now Loudon County, Virginia; Fairfax County, Virginia; and Howard County, Maryland. All three are suburbs or exurbs of Washington, D.C. In 2000, 14 of the 100 richest counties were in the Washington, D.C., area. In 2007, it was nine of the richest 20.
Move along, no wealth here.
Robert - I am sure you are hoping Fed will bring the rate below 0% and 30 yr can go further down from here.
If that happens, it will be in response to a depression much deeper than what we have now. I am sure people won't line up to buy real estate in that situation.
I'm guessing these people hang out at Robert's house on the weekends, inhaling helium, talking about unicorns, the loch ness monster, and completely baseless market predictions.
That's right. Me, Ivy Zelman, Knight Kipplinger, Joel Kotkin, The CEO of KB Homes, Rupert Murdoch, John Burns, Tom Lawler, Dean Baker, Stephen Fuller, and, of course, VA_Investor, and @J@. Alternative opinions are welcome.
spider, I hope we're talking about the same thing - mortgage rates. Unless you know where to get a mortgage at the Fed Funds rate. Please tell me.
4.60% is not zero last time I checked.
I am also talking about mortgage rate - Fed is still the anchor rate last time I checked. Here is what I said:
"Robert - I am sure you are hoping Fed will bring the rate below 0% and 30 yr can go further down from here."
Any opinion on 22042 and falls church high pyramid?
Spider-
Prices are much more reasonable and have fallen more significantly than peak compared to many of the neighboring zips. The schools are some of the worst in the county, but still better than schools in most parts of the country. I am not a huge fan off falls church, but it does offer much better deals than all of the surrounding areas.
housbuyer - I want to avoid any bad school pyramid - I have a young one coming due for elementary. How about 22043/22046? Any specific region in Falls Church where schools are fine and prices are not out of whack? I know - most likely the answer is no as most area are I follow don't make any sense here. But, I haven't looked at this particular neighborhood and can use some insight from folks who might be closely watching.
Also, I am not sure how future redistricting might change falls church - specially high school which seems to get bad ratings.
This is one of the worst flippers I have ever seen as far as I can tell all he did was update floors. He claims appliances and windows are new, but the fact there are no pictures of them makes me question it. Either way the house does not look very impressive for the 130K profit the person is looking for.
http://franklymls.com/FX7210520
Only in DC do we get to do stuff like this in the middle of a severe recession:
Link
housebuyer - this is exactly the kind of negative impact investors are generating by pricing out real owners.
Let me tell you. An RE agent I know owns 12 homes most of them not rented out waiting to be dumped at better prices. I am curious as to how many such homes will become inventory once people understand it was a false bottom.
Spider I don't know much about the elementary school I only know the Falls Church high school is not very good. 22043 is pretty decent from what I have heard. I don't know much about 22046
spider,
You sound like a replay of me from two years ago. Everything I thought before getting to the subtleties of this forum, is exactly what you're bringing too.
Wage inflation has generally exceeded CPI by 1-3%. Where it was that this was proven to me I can no longer recall. But I'm pretty sure it was Case or Schiller and a plot of house-price with wages.
Cara - We could disagree on nuances like wages vs. inflation. I can tell you - industry I work in - wages have lagged inflation. Many other industries you might be correct in that wages have risen more.
However, I have been closely monitoring specific regions of the market for over 3 years. And, I don't see us getting out of this mess without further correction.
we found ahouse
Spider,
As I've mentioned before, 22043. Haycock elementary and Mclean pyramid. Close to everything. Check it out.
Sorry, sent the last post too soon. We found a house, but we have to wait until next week when it is officially on the market. It is in Arlington and in a neighborhood we really like. We have been stalking it for 3 days since our agent told us about it. Two of the neighbors have introduced themselves because we have been by there so many times. All the neighbors are rooting for us! Will let you know more later.
Robert,
Where do you come up with your months' inventory numbers? Can't find them at Case Shiller.
Thanks in advance.
"I think it is obvious, but you all do realize that NOVA is carrying a significant part of the load on the CS numbers. Farifax County inventory is 2.6 months. PG County is 8.1. The district is 4.7. MoCo is 3.2. PWC 2.2."
Sawbuck Wash Metro
These are accurate and at the zip code level are updated in real-time.
spider,
I looked for a long time at Falls Church, mostly 22042. Obviously, the prices there have been hit very hard. But, of course, the places with the "better" school triangles (unincorporated 22046 and 22043) have not had nearly the fall. I certainly didn't find that magic place with good schools and reasonable housing prices. So, we finally decided that instead of trying to compete with all of the other first-time home bribers, er buyers, for the cape cods between 50 and 29, we moved our price range up and bought a more expensive, long-term house instead north of there in the Kilmer/Marshall zone. Not much help, I know. Good luck with your search.
spider,
Most of 22046 is Falls Church City, but some of it is in Fairfax County. Falls Church City's main attraction is the schools, but no deals there.
22046
If the MLS number starts with "FX", it's Fairfax County. "FA" is Falls Church City.
I think a small part of 22043 is in Falls Church City, but most is in Fairfax County.
"Cara said...
spider,
You sound like a replay of me from two years ago. Everything I thought before getting to the subtleties of this forum, is exactly what you're bringing too."
LOL -- also sounds like me 4 years ago -- its really uncanny.
I almost think we all come in here preprogrammed about "how its gonna be". Its almost as if we all think the bubble started when we discovered it, and the bursting will be over on our timetable as well.
Its only after being here for months and years, after being hit with beatdown after beatdown about how the market doesnt do what we expect it to, that we eventually realize, "gee, maybe I am too pessimistic" (or optimistic in Robert's case -- or Lance before him).
Its almost as if we are predestined to make the same mistakes as all those that came before us.
spider,
much of what you're looking for is on greatschools.net
What's happening in your particular industry with respect to inflation is not what impacts home prices. What matters is incomes in the region as a whole for your competitors.
You may very well have been watching your target market as long or longer than me. It's not the same thing as hashing out ideas on here and having to defend them, and deal with solid data. Which is what's great about this forum. Kevin's been here quite a while, he's still just as bearish as you.
Unfortunately, I don't have the energy to have these conversations over again, hopefully others on here still do. There's so much we've learned, about this region about the demographic changes, about the construction, and the income changes about the mortgage types.... unfortunately no one has made a greatest hits buckets to encapsulate the links and discussions of the most relevant details. And there's way too much noise to just go back and read it all....
You're more bullish than ever after watching for three years. Why exactly? There is much you are leaving unsaid.
Anonymous,
I discovered the bubble well before you probably had a clue about it. Just because I started to post here very recently - doesn't tell you anything.
I have been closely looking at many regions of this market since at least 3 years. Just because you jumped too early does not make it a trend reversal. I have seen few friends getting burned who thought it was a bottom in 2008 - they are underwater already.
Time will tell as it always does.
Cara - about the bullish comment - I think I corrected it later. Sorry for the typo.
Waiting too, congrats! Hope it works out. You may not want to say but if you can, is the house in the neighborhood that you mentioned before?
"spider said...
Anonymous,
I discovered the bubble well before you probably had a clue about it. Just because I started to post here very recently - doesn't tell you anything."
It does tell me you have no clue about the inventory cycle. I mean seriously, a stampede by next year? Give me an idea numberswise what you think we'll see -- Ill likely take the under.
"I have been closely looking at many regions of this market since at least 3 years. Just because you jumped too early does not make it a trend reversal. I have seen few friends getting burned who thought it was a bottom in 2008 - they are underwater already."
Just so you know -- I have been sidelined for going on 7 years this spring -- and I STILL havent bought yet. Back in 2003, there were plenty of fools who introduced me to the bubble blogs and who arrogantly told me "trust me, we will be at 2002 levels soon, maybe much lower".
Of course those fools are loooong gone. Guess you can only be in denial for so long.
Cara, Housbuyer -
Inflation/wage growth eventually catch-up. They may not mirror for a shorter period - however eventually international competition ensures it happens. That's what I meant.
Linky
It can be argued, wages have risen more in NoVA compared to other metro areas. It might be true for relatively shorter period. But, longer term, increasing cost of labor will lead to rebalancing of resources - higher labor supply - which in turn leads to lower wage growth.
Anonymous,
You can't predict inventory numbers exactly. I don't expect it to go back to the earlier grand levels (although it might)
I see widening gap in buyer/seller expectations due to the perception about the direction of prices. Add to that:
- Investors holding sizable inventory
- Banks still in the process of trying mortgage modifications
- FHA support, Fed MBS program and lower interest rate propping up this market
- Pull-forward in demand that occurred due to 8k bribe.
My take is, this will lead to much higher inventory in 2010 than what we have now. You have been observer yourself, and do you predict going any other way?
spider -
You've seen this graph:
Fairfax County Inventory
I hope you understand why a reasonable person that has watched inventory go down 15 months in a row, during perhaps the most turbulent economic crisis of our lifetimes, might reach a different conclusion than you have.
"You can't predict inventory numbers exactly. I don't expect it to go back to the earlier grand levels (although it might)"
Ok so no Stampede after all.
"I see widening gap in buyer/seller expectations due to the perception about the direction of prices."
Please tell me where you see that. I determine bid/ask spreads via MOI and Avg sale price as a % of average list price. By these measures, with a few exceptions, buyer and seller expectations are closer now than they have been in years. What are your sources?
"My take is, this will lead to much higher inventory in 2010 than what we have now. You have been observer yourself, and do you predict going any other way?"
If youve been paying attention, I too think inventory will rise as more and more sellers think its safe to return. This is not however a sign of doom -- its just part of the normal correction process like what we saw 1993-1996. Basically, just enough such that any chance of a "V" shaped recovery is snuffed out and turned into an "L".
So, my prediction is that the greater NOVA area will peak out at about 10,000 units (+ or - 20%). That would be a big rise from the 6,380 we see today. However, that would only put us back at early 2009 levels when prices started to rise. Hopefully this will be enough to keep prices flat.
So thats my take. How about you - how much inventory will we see such that there will be a "stampede"???
spider,
In my neck of the woods, it's gone from 2008 early 2009 when REO's were priced at a true discount in addition to the cost of repairs, and banks let short sales go, just to get them off the books at REO prices.
Compare that to now, when the only "discount" on REO's is the literal price of the work and money you're going to have to pour in, and bank's are coming back to short sale contracts and demanding prices from three months ago. And yet both are still selling.
Demand is outstripping supply. For everything under half a million dollars. And it's been this way for 8 months now. REO's and shorts could literally double the number of available homes right now without it pushing prices any lower.
This is not the case for the over 700k crowd, or over $900k in Arlington. But for the entry-level rungs? We may very well have already passed the bottom.... Or we could be in the nastiest government-induced dead cat bounce ever. How could you possible tell the difference?
Anonymous,
"stampede" does not mean inventory will go back to the earlier levels - although I don't predict it won't. If the shadow inventory (I know some you will jump and say show me that inventory - I think these are on bank's books - I don't know how to prove it) plays out - it could get worse.
investors and sellers on the sideline waiting for "better" days will come out of hiding when they see prices starting to dip - this will lead to stampede - it will put pressure on prices.
I posted a link about widening expectations earlier. Here you go again - do see anything going on with listing/sold gap?
http://www.redfin.com/zipcode/22182
http://www.redfin.com/zipcode/20171
One other opinion you may not share - is I see more than 50% chance of economy getting into douple dip recession - if this happens all bets of off for housing - that will be the worse scenario.
"stampede" does not mean inventory will go back to the earlier levels - although I don't predict it won't. If the shadow inventory (I know some you will jump and say show me that inventory - I think these are on bank's books - I don't know how to prove it) plays out - it could get worse.
So give me a number. What are you expecting to see next year 15,000? 18,000?
BTW -- I am a strong believer in shadow inventory. I just disagree about its disposition. For over a year, everyone said the banks would DUMP the REO onto the market. Instead, thanks to changes in MTM, it was drip drip dripped back on causing price stability.
I agree it COULD get worse. Yet, I see the banks doing exactly what theve been doing for the last 18 months, drip drip drip it out keeping prices stable - why should I believe otherwise???
"I posted a link about widening expectations earlier. Here you go again - do see anything going on with listing/sold gap?
http://www.redfin.com/zipcode/22182
http://www.redfin.com/zipcode/20171"
I will admit, I dont use redfin much, largely because the stats dont go back very far - so I really dont know what to think of that.
I do look at MRIS which goes back 10+ years
http://www.mris.com/reports/stats/route.cfm
Type in your favorite zip and I can nearly guarantee that MOI is less than a year ago, and likely 2 -- 3 years ago. Also, avg sale price as a percent of list -- a stat that was declining for 36 months without exception is now recently rising.
Cara - you are correct. However, the reason behavior of banks changed was due to the removal of MTM. It's just a accounting trick - should not change the fundamentals.
Cara/ The Anon - fun banging your head against a brick wall isnt it. Now you see why I dont post much anymore :)
Take the word of this old dinosaur, this guy will come around on his own time, or he will become disillusioned as the metrics continue to improve and disappear (remember that uber stubborn blogger "Sidelined" from years ago)?
Either way, save your breath (or fingers in this case) - its not worth it to re-educate everyone who comes new to this blog.
Cara says:
We may very well have already passed the bottom.... Or we could be in the nastiest government-induced dead cat bounce ever. How could you possible tell the difference?
easy Compare Price to rent and price to median income for that demographic.
It's getting better but i think there is room to fall
spider,
not sure what your price range is but you might want to look in the shrevewood-kilmer-marshall school pyramid. There are some nice neighborhoods north of lee highway that are 22043. Try searching shrevewood or falls hill in frankly.
CRT - Let's see in few months - I will see you eat your words. No offense..got to say it when it is called for!!!
Arrogance doesn't work. Age doesn't mean much if it doesn't make you humble. We all continue to learn and are dead - the day we think we know everything!!!
Meshell - Thanks. I will check it out.
CRT -- Yeah I guess I should know better by now. I just think back to how different my life may have been if someone would have smacked me 7 years ago before I went down the path of beliving there was a humongous bubble in N. Arlington.
Spider-
Two things about the cpi vs hourly earnings chart. First, on that time scale it is tough to say in the long run which line is higher. We were not saying wage growth is way higher, but that it is a percent or two higher. So I am not sure the graph doesn't agree.
The more important comment I have is that your graph showed hourly earnings rather than wages. Over the past several decades the work week has gotten longer and fewer moms stay home with the kids. So even if hourly earnings went up with inflation wages went up more than inflation. So as I said its nothing huge, I think over the last 30 years wages are up ~1%/year more than inflation
Spider - if you are going to make anyone eat their words, post something about inventory that one cant simply explain away later when it doesnt happen.
So give us a number -- how many units of inventory will there be in greater northern virginia next summer during the great stampede. 15,000? 18,000? More? Whats it gonna be?
spider,
Where I'm looking anyway, that's not why. It's the amazing dearth of inventory. I've been looking like a hawk for two years, and in that time there have never been fewer good houses to buy then there are now. As the Anonymous said, check out the MRIS stats. Follow your target zips like a hawk, redfin while pretty and graphic is not the same thing as solid stats. Most listings don't even have square feet listed so that graph is too distorted by small number statistics to be useful.
Banks are asking these prices because they can get them. (maybe not on all the shorts, but on enough of them that they attempt it on all of them). Look at Frankly's sold data, check out the REOs and shorts, see what percent of list those that have closed recently went for.
This winter/spring banks will be dripping more inventory than they did this summer/fall. I say this because of the failure of the HAMP modifications and the stock market's belief that the economy has turned a corner. Those who haven't been hurt yet by the downturn, are gaining confidence that they won't be hurt. With inventory this low and confidence resuming amongst buyers, banks would be foolish not to release more houses onto the market.
Now is a great time to hone in on which neighborhoods you really like, which you're doing, and sit like a hawk looking for the right house with a seller who'll be willing to take your price. And make some offers, any list price that's within 10% of what you'd be willing to pay should be fair game for an offer, you never know who really wants to sell.
Of course, the Anonymous and I both think it'll be an L shaped housing market, so next winter will be just as good...
But waiting until the _entire_ market is at lower prices may not work out so well. The lower the price the greater the demand. What you need is to find the good deals out there now, or out there when prices are within spitting distance of what you're willing to pay. So Kevin's going to wait, tbw is going to wait, feel free to join them. They will probably both get better deals price-wise than I have. (although at these interest rates, I may pay less money over the life of the loan than they do...)
waiting_too,
Best of luck!!! Don't overpay!!! Remember, future Arlington buyers are counting on you to bring down the comps! :)
pat,
depends where you're looking. Out in bedroom-community suburbia there's not a lot of "room" left to fall by that metric. However, just because there "should" be support at those levels doesn't mean there will. Condo's generally trade at cash-flow positive, not rental parity, and there's no reason why buying a townhouse should be as expensive as renting one. So, if SFHs dip a bit lower, to say $350k-$375k for good condition, reasonable size (1300+) houses on reasonable (.2+acres) lots in good school districts, then THs and condos could very well drop further, such that they're affordable on one median salary. Which, imo, is how it should be. TH's and condos near jobs won't go that far though.
(huge luxury THs, spacious nice THs in great neighborhoods, and good garage THs may trade at only a 10% discount to the target SFHs of a given community)...
"Of course, the Anonymous and I both think it'll be an L shaped housing market, so next winter will be just as good..."
Yep -- just cause I dont think there will be doom doesnt mean that there is any rush to buy. Speaking of the L shape, the CS futures chart has been updated to reflect the latest results (DC is at the end of the page):
http://www.recharts.com/cme.html
As you can see, the diminishing strength of the seasonal bounce does suggest that another seasonal downturn will commence. Another month or two and CS will almost certainly head lower.
The question I have is will the downturn have enough oomph to match the prior inflection point which for DC was 165.9 back in March. Right now, the futures market suggests it will. If this confirms, there will be slightly better deals this winter than last winter.
In a few months, as CS goes lower, I expect the forces of doom to get whipped into another frenzy about another "leg" down. The key then will be to watch the YOY change which is now rapidly diminishing -- going from -19% to -5% in the last 7 months.
If it grows, then the "mother of all headfakes" thesis will confirm. If it continues to diminish, we are just seeing the natural up and down progression of seasonal change, and the doomers will be shocked as it goes positive (both MOM and YOY) next summer.
By the way -- one of the reasons I follow this is that despite the fact that it is thinly traded, it has been pretty good at predicting directional change.
Even in early 08, (before the govt manipulations started or were even suggested I might add), the futures market suggested we would see a bounce in 09.
This looked highly suspect last winter as the index was moving lower at a blistering pace. Yet the futures held steady, continuing to suggest there would be a bounce.
When the bounce did confirm, everyone looked for a reason and the idea of govt manipulations caught fire. While the govt manipulations may have indeed pushed the bounce higher than the market expected, make no mistake, the futures saw a bounce coming either way.
The Anonymous,
Wow the futures markets think most of the seasonal downturn will happen rapidly between now and January. That's fast!!!
I think they're underestimating the potential distortionary effects of the $6500 step-up bribe. Condo and TH owners from 2003 and earlier still have equity. If you give them another $6500 to move up now, they just might do it, creating even more low-end inventory, but increasing demand for the lower rungs of SFHs.
They might be underestimating Cara. The did predict the bounce, but they underestimated the strength, so maybe they are underestimating (overestimating)? this winter's bottom as well. I mean we are at 180 today, and they expect us to shave off 20 points and get back to 160 by march? Quite a rip roaring decline.
This may be an artifact of its thinly traded nature. The CS compositie (which is has much more trading activity than any given city) is showing a much more moderate decline this winter and a true bottom last spring. We will see if that one confirms better.
Anonymous - Data will prove it very soon. There is no point to keep on arguing about inventory numbers.
If you have been waiting for 7 years to buy because of a bubble (which wasn't even present in 2002) you actually are missing the most of the argument I make.
spider,
Look at the data Harriet's providing. In 2002 prices were up in Case Schiller over 10% YoY all year long. That's not an unsustainable run-up to you?
10% appreciation in a single year? That's whacked! And it's nothing compared to the 26% Arlington went up YoY in October 2001-2002.
"you actually are missing the most of the argument I make. "
The Anonymous is just trying to pin down what exactly it is that you are willing to predict. So far what you've said has all been pretty vague, and nothing that hasn't already been discussed. You sound like you have a very clear idea in your head, but it's just not getting expressed here. We're not just missing the argument, we're not sure what the argument is.
Ace The house we are waiting for is in the Oakcrest neighborhood above Crystal City. We were looking a little closer to the bottom of the hill (Addison Heights) but the house we like is brick and might require less work or work we can do as we have the money and time. We also heard of 2 good houses in Alcova Heights coming up, so that is also a possiblity if this is not as good as it seems.
waiting too, Oakcrest is very nice - I will keep my fingers crossed for you!
Happy Thanksgiving to all!
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