As we head into the new year, total housing inventory in Northern Virginia has continued its steady march downward since peaking in August 2007. Available inventory is at a five-year low for January. We'll keep a close watch on inventory as we head into the Spring selling season which generally starts in earnest after the Super Bowl (weather permitting).
The dramatic nature of the rise and fall of inventory in the last five years can be seen here in this roller-coaster graph of Prince William County.
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. These numbers are extrapolated from Virgina MLS.
To read this chart, start at the lower right-hand corner of each section (labelled "2005") and read your way left. It's a little quirky, but it works for me.
(Alternately, here's the spreadsheet on a separate page).
Sunday, January 3, 2010
Current Housing Inventory
Posted by Harriet at 9:38 PM
Subscribe to:
Post Comments (Atom)
40 comments:
Although inventory is continuing to fall this month may just be seasonal, it appears to have fallen about the same amount in previous Decembers. So I don't think we will really know if inventory is still falling spring. If it rebounds than we may have hit the bottom of inventories, if it doesn't rebound than inventory really is still falling.
Seasonal???
Look at YOY on the MRIS data.
Clink on today's inventory. It is startling. I brought it up earlier in the last post.
I guess no one reads or cares about what I post.
Va Investor: I read and care about what you post. You and Cara seem to be on opposite sides of the coin, but you both are wise ladies and when both of you talk about falling inventory, I know it means something. If inventory stays down in Fairfax and Arlington we might try to sell some family houses this year. We have a generation of 37 grandchildren and grandnieces and nephews about to start their college days, and we need some serious money for the next 12 years.
Harriet,
I need to ask a favor. I tried to email you but was unsuccessful. If you are unable to email me, please post that and I will provide my email to you.
Thanks.
Va_Investor said
As far as houses depreciating, this is comical. My last house was built in 1918. What do you think the remaining useful life is on that house? Given what I've read here, it should have been bulldozed decades ago. In fact, 80% of the houses in the town I grew up in should be worthless due to depreciation. Those grand old victorians.
Let's keep the 1918 Victorians but bulldoze the 1950s ramblers. :)
Va_investor, housebuyer,
The fall from December to January is similar in magnitude or percentage to most previous Dec to January trends. That's all housebyer means. I.e. once we entered the time period where inventory normally falls, i.e. post September-ish, then it becomes impossible to tell the difference between "normal" and still cliff-diving. (unless that drop was remarkably different). Strangely enough, (I think because the blog was focused on Arl/Alex) the drop in 2008 in inventory in Fairfax was remarkably stronger than in previous years, but we didn't really pay it much heed.
Oh that's right, we all though REOs would make up the difference.
Too bad that didn't materialize.
Anywho.
At this point we could be at the bottom of the inventory counts and start up this spring, or would could be eroding even further. No way to tell that I can see.
However, I expect that any further inventory declines will firm up prices, and bring more confidence to potential sellers seeing less competition. Now, the average seller doesn't have a good handle on what is "normal". But they can tell when there are only 1 or 2 houses for sale in their entire neighborhood in April for goodness sakes. In places I've been following the 2000 some odd inventory in FFX Cnty translates into inventories that are that noticably tiny. Less than 2000? And prices will go up. Not much, but enough to bring out more sellers. There's just no way around it that I can tell. (barring economic armageddon)
Oh, and did I mention my new neighborhood is the coolest? We drove around to check out the X-mas decorations on New Year's Day. No all out and out war like Jersey, but lots of cheer.
And one house complete with the leg-lamp from the Christmas Story.
Inventory 1/3/09: 10,927
Inventory 1/3/10: 5,191
I wonder what the bears would be saying if the numbers were reversed?
Cara said...At this point we could be at the bottom of the inventory counts and start up this spring, or would could be eroding even further. No way to tell that I can see.
Uh, inventory has declined 20 straight months. I'm noticing a trend.
Robert
All trends eventually are broken.
Given that the declines are smaller than last years declines (although similar percentage-wise), and we are entering winter, I stand by my statement, that basically unless you did seasonally adjusted numbers you can't tell if the past three to four months is seasonal or the continuation of the 20-month trend.
Just as the peaking inventories meant something had to give at the top, which was eventually price declines, these low inventories means something has to give as well. Soon prices can't keep falling. Because there's just not enough sellers willing to sell at lower prices. But I also strongly suspect that if bidding pressure ticks prices up, more inventory will appear.
Besideswhich, continuing the same percentage declines is a Zeno's paradox, you'll never reach zero that way. (okay, so you will, because houses are finite, but you get the picture).
It's like saying prices always go up, or nominal declines will continue until "fundamentals" are reached. Trends end when supply and demand dictate they do. Fundamentals are primarily useful for things like establishing a cash-flow positive floor, and personal decisions on how much it makes sense for an individual to pay for a house.
The counter argument is that if prices do tick down more inventory will also appear in the form of underwater borrowers giving up. But for now that process is slow. Possibly too slow to prevent rising/stabilizing prices in the entry level.
Cara said...All trends eventually are broken.
Agreed. I would bet inventory goes down next month as well....but I wouldn't bet much at these levels.
It is absolutely true that higher prices will bring out more sellers.
Rest of your post was beyond my comprehension level.
Robert,
I'd bet February will be lower too, if we mean the first ten days of February. But yeah, I wouldn't bet much.
Cara,
I guess I don't understand "seasonal" adjustments. I thought that if you compare Oct to Oct, Nov to Nov, Dec to Dec, etc., that this takes into account seasonal adjustments. Could you educate me?
Also, I believe the low inventory allows the (possible) addition of new inventory, whether reo's or organic, to be absorbed in an orderly fashion. Of course, this would completely disregard any increase in demand that may occur at the first sign of warm weather.
Va_investor,
It's a matter of which derivative do you want to look at. The YoY or MoM declines, or the first or second derivative thereof.
YoY is all you need to correct seasonality for the straight rate of decline. But if you want to know the curve you need the next derivative or two.
So you need to look by eye or by number at how the percentage decline from say September or December to January compares to the percentage decline before. And in fact in FFX it just might be worse if you look at the inventory chart. I'm guessing this is because a lot of sellers were spurred on by the $8k and now we have a dirth of sellers as well as buyers.
But yes, absolutely, low inventories like these means REOs don't need to offer the discounts they used to. At least that's what I'm seeing.
Hmmm -- no sign yet of the "STAMPEDE" of inventory, via burned flippers heading for the exits that Spider predicted we would see in the spring.
In fact, it looks like total inventory in NOVA has dropped from around 6200 to 5200 -- nearly 1000 units since when he first uttered this statement.
Hopefully for him, we will rise back to the 6200 units in the upcoming months and he can tell us again what the upcoming STAMPEDE will be like.
Yaaaaaaahoooooooo!
To be fair, spring is months away. We're honestly barely into winter.
I think inventory means something, but at the moment I don't much care, the inventory I see is all priced (asking) lower than inventory a few months back. Some of these are the less desirable properties that didn't sell in the fall. Others aren't. But for the most part, we're trying to look at prices here, and what I'm seeing (anecdotally) is that inventory is down, but so are prices.
Theoretically lower inventory means prices go up, but that may not materialize if the assumed constant there (demand) is actually not constant because of less ability to get financing, less government intervention, or less actual demand because buyers have been pulled forward.
two things lead to reduced inventory: cost and market efficiency.
i can't prove it or make logical arguments, but as i've said before, i believe internet house and mortgage hunting have changed the inventory dynamics.
VA_Investor and anyone else,
You can use hwimsey@gmail.com.
X,
Generally the Holiday Season (11/15 - 1/15) produces the lowest prices and sparse inventory. Only highly motivated people want to go through the selling process during this time period and only the most determined buyers want to be out house hunting instead of Christmas shopping. It is often a good time to find a bargain.
As for Spring. My experience is that the Spring buying season starts in later February - not that far off.
Va_investor,
Judging purely by T's experience last spring, spring doesn't start for family dwellings (his was a 4 bdr TH) until April. I'm guessing a lack of doom and gloom, and the stock market not around 6000 will mean spring comes earlier for all market segments this year. That, and the bizarre timeline on the 6,500 and 8,000 credits.
MM,
Thanks for the reminder. Daily inventories of 2000 with monthly inventories of 4000 (FFX Cnty) to me implies most homes are under contract within 2 weeks. For certain that means that most of the inventory is actually priced competitively, such that buyers and sellers can quickly agree. But I do think that the internet has a non-negligible effect in facilitating both transactions and pricing agreement. Finding comps has never been easier.
If you're right and things have changed fundamentally on a mechanistic level then we should stop tracking inventory for historical comparisons and purely track sold volumes. It's still useful for the post 2005 comparisons I would think though. I don't know though, when did redfin and frankly and zillow get fully up to speed?
Oh and Robert, a bigger house than ours just sold for 1% less the other day. It was on main cut-through road though. (wouldn't have suited our actual needs/wants as well) See, it's all about the variance.
Cara,
I've never felt there was a lack of inventory. Every time I go on FranklyMLS or redfin I see plenty of homes I like. Even in these "low inventory" days. I imagine SFH inventory in central Fairfax County (which ranges from $400-800k) has gone down but perhaps not as much as homes in the ($200-400k) category. I would guess that Jeremy, kevin, and spider also have found plenty of homes they like (just not crazy about the prices.) Same with housebuyer in Dunn Loring (although that's a very small geographic area so if inventory went from 20 to 15 there it could make things hard for him.)
My guess is that Ace also has had her pick of inventory in the $800-$1M range in Arlington. These homes have been sitting on the market unless they are a definite bargain. Or I guess full price near the Orange Line in Arlington (referencing that home I thought would go for less that did not).
Given where most of the buyers who regularly post here are looking and their price range I suspect none feel inventory has dwindled such that they feel pressure to bid at list prices or hurry up and buy. But maybe that's why NoVAWatcher and a few others are buying.
VA-
I read what you wrote yesterday. Inventory is down 53% this month and it was down 53% last month. I agree inventory is down a ton compared to last year. My question is if you adjust for seasonality is it down from a couple of months ago and this question is less clear
Cara said
Besideswhich, continuing the same percentage declines is a Zeno's paradox, you'll never reach zero that way. (okay, so you will, because houses are finite, but you get the picture).
This is why I love this blog. References like that. :)
And one house complete with the leg-lamp from the Christmas Story.
NOTAFINGA!
tbw,
I think most buyers look in smaller price brackets not by house-type.
My feeling for inventory is all messed up anyway because I've had to change my target search area multiple times.
But I just think 1 house per subdivision of 900 homes is awfully low.
TBW-
There is still plenty of inventory that I like. Although I am mostly looking in Dunn Loring, I am also looking near Vienna. My bigger issue is I keep on switching what I want to buy. The fiancee and I are still in our young/mid 20s so we keep on wondering if we should get a condo for 5-7 years and then by a SFH when we are looking to have kids or should we get the SFH now. Although more space would be nice there is a lot to be said for not needing to do any maintenance or yard work for a while.
I would consider renting for another couple of years, although if I want the condo life I may as well buy, because the rent/buy ratio is pretty even and it gives you more freedom to decorate as I want...
The Anonymous said
Hmmm -- no sign yet of the "STAMPEDE" of inventory, via burned flippers heading for the exits that Spider predicted we would see in the spring.
Yeah I don't see a stampede of flippers. Flippers prefer to lose a little bit each month rather than one big loss right away. I have a few friends renting condos bought between 2005-07. Let's take one example below:
Friend rents condo bought a little over three years ago for $2,000 a month for about three years. We have estimated the landlord pays approximately $2,700 per month on PITI + condo fee (factoring in tax deductions). $700 x 12 months x 3 years = $25,200 total ($8,400).
Condo is now probably worth at least $50k less based on comps. Landlord (as far as we can tell well to do person) can probably easily take the $8,400 annual hit (although if friend moves landlord will lose even more in lost rent and any extra cleaning done).
So let's say (laughably IMHO) that over the next three years the condo goes back up in value to what the landlord paid in late 2006. Landlord will still have lost $50,400 from the rent-mortgage differential. And most likely more because I doubt my friend will rent there for six straight years.
Many flippers are IMHO are going to regret not having stampeded in 2007.
Actually I don't think $8,400 is nothing to the landlord. Probably means fewer restaurant nights or less expensive clothes or whatever. But I don't think $8,400-$10k loss each year will be enough to cause a foreclosure minus landlord losing a job.
VA_Investor,
I don't doubt either point, because as I've been watching, I think I've seen evidence that you're right... and clearly you've been watching longer than I have. But it's still a bit of a misnomer. (Spring at least)
I'm hopeful that I'll see some of these prices carry over until then at least.
housebuyer,
Well I don't have any hard data but I think outside of 2000-06 the vast, vast majority of people bought homes they could see themselves living in indefinitely. I think that traditional mindset got disrupted when waiting until you could afford what you liked was impracticable with 20% price increases each year.
Your statement shows you already know you'd be happiest in a SFH. Just rent until you are ready to get one.
IMHO people buying condos should be people who see themselves living in one indefinitely. That's not an uncommon mindset in Manhattan or parts of DC.
Cara,
thanks for 'dis-proving' my theory, it's not that hard at all isn't it? haha.
anyways, since no one has yet to answer CRT's question on what MOI is normal, i'll chalk it up as another lie the RE industry created to try to generate maximum transactions/sales for commissions gains.
MM, I've heard 6 is 'normal', but I'd be willing to believe almost anything from 2 months to 12 months is in a normal range. Less than 2 months is pretty clearly indicative of an over zealous buying market, more than 12 months of a surplus of sellers (at above market asking prices).
I think the 6 month number is probably outdated too. Home buying is a lengthy process, but the shopping portion has been revolutionized by technology, though the Realtors are -generally- still dragging their heels on that one. So I'd say 4-6 months is a pretty good indicator that things are moving as they ought to.
tbw, housebuyer,
I have to concur with tbw on this one. If you know you're going to want a SFH in the next 2-4 years (if you're renting it will come sooner...). I'd say keep taking advantage of the full benefits of renting an apartment in a conveninet location. Management, mainatence, flexibility, and just paint a few walls. Paint them well, and paint them back later. I don't see the incentive to take on the double transaction costs, unless you see appreciation in the next few years beating that (which it was not my impression that you did).
There is also always the option of hiring people for the yard-work. Just sayin.
tbw,
It's 2010. 2005-2007 prices are not relevant. I would believe that the underwater flippers who were going to walk away or be foreclosed upon are already gone.
Maybe others will now sell and cut their losses, but the prices have been established and a few more sales won't matter.
Cara/TBW -
Thanks for the advice. I think I will be happier in a SFH once I have kids although this will be a while. You are probably right that I should avoid buying unless prices go below renting costs. Although saving may be harder seeing we already have a 20% DP so trying to save enough so we can buy in cash if 5 years just seems almost silly :) I guess going on more nice vacations isn't necessarily a bad thing :)
Housebuyer,
What range are you looking at? I'd go TH before condo. How far from DL are you looking?
You know me, if the right deal came around I'd buy; especially since you are looking at potentially 8-10yrs out for the move-up house. If (when) your income rises, you could pay extra principal and amortize over 15yrs.
Skip the expensive vacations and expensive cars (guns vs. butter). I'm out of my housing investment cash, but would love to keep an eye out for you.
btw, if anyone wants a cute end-unit TH for 127K in a nicer area of Sterling let me know. I've got a short (close to approval) that I'm wavering on buying. It's small, but very attractive. It comes with or without tenants (paying $1,300).
There is another in a really good local (also Sterling). End-unit, even bigger, also built 1985 (same builder). I want it but I've tied up alot of cash.
Dude, they're paying $1300 and the ask is $127K? That sounds like an easy money maker to me. Buy the house, keep the tenants. If my debt situation weren't what it is...
X,
I'd buy them both if it was entirely my decision. Unfortunately (or, maybe good) for me, I have a very, very conservative husband. He "needs" alot of cash in the bank to feel comfortable. It's taken alot of "arm twisting" over the years to have the property we have (14 rentals and 2 homes).
No amount of "we could sell tomorrow if necessary" helps. In addition, we are in the midst of year-end financials and he works in an industry that hasn't seen times this bad since the Great Depression.
VA-
Thanks for the offer. For now I am mostly looking within 1-2 miles of the metro. Preferably north or west if possible. The only reason I was looking at condos in this area, is because they are all new builds so there is a lot of distress and their prices have fallen hard. The TH are basically 10-15% off 2006 prices and are as expensive as many of the SFH.
Another main reason we have considered waiting is so that we could put 40+% down so payments would be manageable if I needed to get another job. I am working in a risky industry with few similar jobs in DC so I would probably need to take a ~50% pay cut if I got a different job.
I consider myself very conservative too, but I clearly don't 'need' to have that kind of cash hanging around. I'd have to take out a mortgage to buy the property, and even with my credit score and my banks, they're not likely to let me take a mortgage out for a rental property with the d.p. I can offer, even if it is cashflow positive.
I'm not sure I could convince my wife that going the landlord route is a good idea anyway.
HB
The ideal mortgage is sized for one income. I knew Dual Income couples
who bought places sized on the wife's salary.
They lived great. Sure small house,
but lots in the bank, lots in the 401K, nice vacation 2X a year,
and college funds for the kids.
Mortgaging 4X both incomes is a real gross mistake IMHO.
as for a condo, there are so many
condos awash in the system,
those are the ones to avoid.
now word is there is a bankrupt condo building on N street in NE,
was 600K condo's now at 350K because the condo association is BK.
Luxury units, with no garbage pickup. You need to buy cash
because nobody will finance
it, but, whenever it recaps,
the units will double in price.
Post a Comment