Last month, Fairfax, Loudoun, and Prince William counties broke their three-year losing streak in year-over-year median prices for December. Arlington County showed a record median price for December at $558K.
Sales volume was down an average of 10% YOY in the Northern Virginia region.
Source: MRIS
Sunday, January 10, 2010
Northern Virginia December Housing Sales
Posted by Harriet at 7:47 PM
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54 comments:
Arlington is cookin'!
I know that's certainly true in my neck of the woods (22207, walking distance to Orange Line Metrorail). Houses around here are selling like hotcakes, and for top dollar too.
Don't know what it's like in other areas of N. Arlington, much less in S. Arlington (which is really like another county altogether).
Tom, if you will check MRIS, 22207 was essentially flat with respect to sales price in Dec.
Unfortunately, you can't break down the zip codes into neighborhoods.
A quick glance at the other zip codes revealed (and I do mean quick--I may have overlooked something, and obviously other factors not shown in the MRIS tables played a role):
--A lot of the increase occurred in 22203 and 22202. In both zips, a disproportionately large # of SFHs sold relative to condos (compared to the # of each on the market).
--Volume of sales were way down (-44%) in 22206, which, like 22204, has always had lower median sales prices than the other Arl. zips. Sales were down about 9% in 22204 and prices were also down about 11% in this zip.
--22201, which like 22203 has a lot of higher end condos, had a big price increase (32%) but a volume drop (19%); mix of condo/SFH appears about proportionate to the unsold units'.
--22205, which has almost no condos, had a big jump in # of houses sold (80%) and the median sold price increased also (13%).
Taken together, these results suggest that the mix of housing sold played a big role.
I should have added that, while 22207 was essentially flat as to median sales price, the volume of sales was up 115%. Because this is the highest median price zip in the county, again, there is more evidence of the mix being a major factor in what appears to be a big jump up in median sales price.
It also shows Tom is right about a large # of sales in 22207 (which has few condos), but the median prices are not going up. Of course, with this zip and all others, we don't know whether the houses sold this year are in other ways comparable. So we don't know from these #s alone whether the same house would have sold for more in 2008 vs. 2009.
Fairfax looks a lot like the 2005 numbers.
I agree with Ace regarding the mix; actually, if you look at SFH's within .5 miles of Metro, the market is as thin as I have EVER seen it, even back in 04-05. Sales have not been as good in the nominally "better" neighborhoods of 22207, however.
Ace said
Taken together, these results suggest that the mix of housing sold played a big role.
As I suspected. Thanks for doing the leg work.
Looks like home prices are going up.
Looks to me like more upper tier sellers have come to their senses and are finally reducing prices to a point where they can sell. To each his own.
Perhaps most interesting is that the ratio of sold/actives for SFH's in the north-of-50 zip codes is around a 2.
Oddly, 22201 has the worst ratio in that regard (would have expected 22205 there).
Chinese Housing Bubble
"The government has helped pump up the property market by keeping interest rates low, the currency undervalued and the fiscal spigots open. Standards for bank lending have been lax, with lending rising at a 30 percent annual pace in 2009"
What will a Chinese economic crash do to us? Aren't they the ones buying a lot of our cheap debt?
Jeremy,
China is actually a much smaller holder of American debt than the media would have you believe. Here is a breakdown of who holds American debt.
As you can see only a little more than a quarter of debt is held by foreign investors. Here is a breakdown of foreign investors:
http://www.treas.gov/tic/mfh.txt
As you can see Japan holds almost as much debt as China. But this is not the 1980s anymore so talking about Japan does not capture the American attention as much so they focus on the Chinese.
China is 23% of foreign investment and since foreign investment is 28% of debt holding that means China has about 6.4% of American debt (if I did the math right).
So long story short -- China is an important purchaser of debt but not totally vital.
If China were to totally exit the market (which I think is unlikely) that would probably have an upward pressure on interest rates but there are plenty of other buyers so it would be limited.
However, China falling apart also could spook a lot of investors. We have low rates precisely because so many investors have been timid and ran to Treasuries. So I actually fear if China were to fall apart we'd see even more people running to Treasuries.
It's precisely because emerging markets (and other risky investments) seem safer again that there's less demand for bonds which has helped raise mortgage rates.
TBW that's exactly right. Any kind of FTQ helps treasuries and lowers mortgage rates, at least until the U.S. is on the other side of the FTQ equation (which will happen, but likely not in our lifetimes/until China completes a totally peaceful political transition).
Arl jumps to the highest median price EVER! That's right, not the highest Dec but EVER! It barely beat the previous high of Nov 2005's $549,450. But I guess if inflation-adjusted it's not as high as Nov '05.
Is this mainly the move-up sales activities due to the $8K credit?
BTW, if this doesn't bring out a post or two from CRT, I don't know what would!
TBW said...However, China falling apart also could spook a lot of investors. We have low rates precisely because so many investors have been timid and ran to Treasuries. So I actually fear if China were to fall apart we'd see even more people running to Treasuries.
Agree, but I'm not sure it will be a real estate bubble popping. There is rampant corruption and I can see some rouge trader making a bad bet of colossal proportions, bringing China to its knees and scaring world markets.
BTW, I expect at least one significant market event in 2010 that brings back fear of financial Armageddon - much larger than Dubai - but, it fades and markets return to their ascent.
Robert I thought we were worried about Yemen this week. TBW You aren't married, but my advice is not to come between a wife and her handbags or mostly her shoes.
I assume a lot of the mix difference is not just that higher tier houses are selling, but also fewer lower end sales came in, because people had rushed to get them done in November for the tax credit. Obviously the credit was extended, but I think people already had their plans in place.
It also looks like months of inventory may finally be leveling off. I don't remember, but I think we decided that months of inventory is not that seasonal, because there are fewer listing and sales during the winter, I may be wrong about this though.
So glad I waited all these years only to pay peak prices in Arlington.
Ace -
You did all that work. What is the apples to apples comparison? 5%? 0%?
As an interesting side note about the fed MBS buying program. I was looking through some materials this morning and it looks like Freddie and Fannie are currently holding ~100 billion fewer MBS than they are allowed to. It appears that the fed has been buying a significant chuck off their books. I assume they will relever their portfolio when the fed stops buying and the spreads widen slightly.
The Anon and MM, take a look at the numbers I posted. It's clear that there has been a big drop off in volume sales of the lower priced properties (did the tax credit push those sales to earlier months?) and an increase in the sales of the higher priced SFHs, maybe for the reason Jeremy suggested (prices dropping to move houses). The #s do not suggest that the same property went up significantly, if at all.
And as posted yesterday, the co. anticipates a drop in assessed values of 5-12% including commercial prop. There's no way they'd be doing that if sales prices for the same house were increasing.
Robert, see my last post. MRIS doesn't drill down as CS does so that's the best I could come up with.
The Anonymous,
Just buy this home and you'll be happy ever after :)
Ace -
When Arlington sets their assessments, is it based on the value of the property as of January 1, 2010, or is it something like June 30, 2009?
Robert-
Ace will know better, but I am pretty sure Arlington uses sales from the last 3 years or something like that. Its assessments are much less accurate than Fairfax
Robert said...
"What is the apples to apples comparison? 5%? 0%?"
The most recent Case-Schiller "apples to apples" comparison says it is -0.4%
Jeremy -
I don't care about PG County.
I described Arlington's process (very briefly) yesterday:
https://www.blogger.com/comment.g?blogID=4787878578920468587&postID=1270513452990121378
You can get more details on their site. But spend more time looking at the numbers by zip code and type of house above. They aren't perfect, but they tell a tale. The big, expensive SFH zipcode, 22207, sold a LOT of SFHs in Dec. Two others that have a mix of SFHs and condos, sold few condos and more SFHs. The lowest priced zips, which had more foreclosures and have more condos and generally high volumes, had a big drop off in sales.
You can also look at frankly's sold figures and see that, unless a SFH was a tear down/new construction or was described as recently and comprehensively renovated, in general, the house sold for around the value of LAST year's assessment, or less, in 2009, INCLUDING December 09. This is consistent with the Arl. Co. assessment forecast I posted, and with the mix change for Dec.
That said, my anecdotal observation is that certain neighborhoods are still selling at (to me) eye-popping prices, including Lyon Village and some parts of Clarendon and Lyon Park, if the house isn't on a busy street or doesn't have another huge, immutable flaw.
But what about the substitution effect? Wasnt it proven to be a fact, and it was only a matter of time before Arlington fell 50-60% from peak?
LOL at that retarded argument! What ever happened to those guys, they vanished when it turned out they were wrong.
1 year ago today in the annals of glug glug glug news...
"Terminator-X said...
It's hard to gauge any trends from Dec. and Jan. numbers, which are always too thin to reflect the state of the market. But everything is in place for the correction to finally take hold in the immunozones: the job market is deteriorating; jumbo spreads remain wide; flat-to-lower prices are squeezing those who had been tapping equity to get by; and decade-low sales levels will make it more likely that prices on distressed sales to dictate the market. [BTW, this is why prices are down in PWC on high sales volume]. Stubborn sellers beware; the underlying math is more stubborn than you."
FINALLY take hold??? Mere months before YOY started going up and he's still thinking the big "it" hasnt happened? Talk about timing, calling for doom right before the upturn. Glug, glug, glug...
Wonder what happened to him? His advice should have been "Stubborn BUYERS beware, the underlying math is more stubborn than you are".
Or how bout this gem:
"Leroy said...
We will know the close in sellers are capitulating when we see volume spike back up again along with a sharp drop in prices.
I kind of suspect we will see a big spike in inventory again in a couple months as some of the "shadow inventory" get lists to take advantage of the "spring market."
Last year when this happened, sellers ultimately pulled their homes from the market rather than accepting market prices. We will know we are seeing capitulation if this time around we see a spike in sales and a sharp drop in prices."
Close in sellers are capitulating? Ahh yes that was back during the its moving in days of severe denial. Should have been close in sellers HAVE capitulated but since you were so convinced "its moving in" that you missed it completely. Glug, glug, glug...
Hey Spider, this quote from Leroy sound familiar:
"I kind of suspect we will see a big spike in inventory again in a couple months as some of the "shadow inventory" get lists to take advantage of the "spring market."
Sounds like he was predicting a STAMPEDE for the 2009 market doesnt it. Wonder how that one turned out?
Anonymous-
By no means do I think there will be a stampede of inventory, but it was a reasonable premise a year ago. Shadow inventory is real the number of houses in foreclosure has been increasing steadily for several years, while the number of houses in REO has basically been constant. Right now there are about 6X times as many houses in foreclosure compared to those in REO. If banks figured out a way to speed up this process it would increase inventory. Obviously this area has fewer foreclosures than most, but we still do have a lot of foreclosures.
So as I said I don't think banks will speed up this process so rather than a lot of inventory what will likely happen is it will trickle out over the next 5+ years as a steady force to help keep real estate from appreciating. I see this as another reason for a long flattish period.
Fairfax county # of sales down only 13% YoY, despite an inventory (over the course of the month) which was down 32%. That's impressive. To get that many sales in December after the 8k was supposed to expire, despite a ravaged inventory...
And the median price was up again both MoM ($350k to $365k) and YoY (from $320k).
That's a surprisingly healthy December compared to the expected post-8k demand lull.
Cara-
I think the sales are surprisingly healthy, but I think the price is not that healthy. I made the assumption you would see fewer low end sales, because the credit was set to expire. Fewer low end sales would have changed the mix dramatically, which obviously helps the median price.
"Close in sellers are capitulating? Ahh yes that was back during the its moving in days of severe denial. Should have been close in sellers HAVE capitulated but since you were so convinced "its moving in" that you missed it completely. Glug, glug, glug..."
In the last year we have seen the largest and most comprehensive government intervention into the housing market we have ever experienced. Do you think MAYBE that has something to do with what the market has done over the last year?
Besides, if you had bothered to actually read that quote you would see I was not predicting massive declines in the coming year, only describing the pattern you would expect to should capitulation occur on a large scale. (I did expect to see the declines continue, but I was open to the idea that no mass capitulation would take place, that is what that quote was talking about... the fact that such a capitulation HADN'T taken place the previous year.)
While on the subject...
Here you are trying so hard to avenge some bad advice you claimed to have received years ago before this blog even existed that caused you to miss your big chance to buy... and this is the best you can come up with?
So you didn't buy back in 2002 or whatever, boo hoo.
Do you want sympathy or something?
Your sob story is somewhat less than compelling in light of the huge numbers of people who have suffered far worse than you can claim as a result of this bubble.
housebuyer,
Good point, it would be interesting to see that breakdown into condo townhouse and single family that the Anonymous posted last month for this month.... I'll see if I can dig it up.
What is even funnier to me is how Leroy and his other "substitution effect" parrots always claimed that what they were describing was an indisputable fact!
According to them, my argument that N. Arlington prices would probably only fall 10-15% due to it being such a desirable location, was not even worth debating because it goes against the mighty "substitution effect" law of nature, lol, they said was in the process of acting out.
When I called their idea a 'theory' I would quickly be corrected by 2-3 posters who would point out that it isnt a theory, it was actually a "fact" or a "law" and I was wasting my time arguing against it despite the fact that the numbers supported my view again and again.
They even had a few people say it was going to correct more than in the exurbs.
Doug, I have already explained to you too many times to count. You have proven to be unable or unwilling to understand.
What you are doing is trying to do now is set up a strawman to knock down, and you aren't even doing a good job of it.
I could just as easily lie and say:
"According to Doug, sniffing paint is good for the brain..."
"Leroy said...
In the last year we have seen the largest and most comprehensive government intervention into the housing market we have ever experienced. Do you think MAYBE that has something to do with what the market has done over the last year?"
For the entire market? Yes. For just Arl? No chance. At that point Arl was doing about +20% better than the rest of the area (prompting the "its moving in" cult to develop).
Do you mean to tell me that you believe but for the govt intervention, Arlington would see that missing -20% it needed to catch up with the rest of the area (while presumably the rest of the markets would have remained stable)???
"Leroy said...
I was open to the idea that no mass capitulation would take place, that is what that quote was talking about... the fact that such a capitulation HADN'T taken place the previous year.)"
Are you kidding? Talk about a revisionist history! If thats the intent of what you were trying to say you have a strange way of showing it. If that was your true intent, I would expect to see statements like:
"Its entirely possible that Arlington may escape the mass capitulation the other areas had seen..."
Show me where you once wrote something like that?
"Do you mean to tell me that you believe but for the govt intervention, Arlington would see that missing -20% it needed to catch up with the rest of the area (while presumably the rest of the markets would have remained stable)???"
Nope, that is not an argument prediction I ever made. So I don't really feel any need to address it.
"Are you kidding? Talk about a revisionist history! If thats the intent of what you were trying to say you have a strange way of showing it. If that was your true intent, I would expect to see statements like:"
That is in no way revisionist. Try reading what I actually said:
"Last year when this happened, sellers ultimately pulled their homes from the market rather than accepting market prices. We will know we are seeing capitulation if this time around we see a spike in sales and a sharp drop in prices.""
What about that is unclear? As I stated clearly, we hadn't yet seen mass capitulation in Arlington and laid out what I would expect to see should that take place. You appear to be a native English speaker so this shouldn't be hard for you.
"Show me where you once wrote something like that?"
I don't need to produce quotes to refute whatever argument you cook up years after the fact.
The onus is on you to show that I predicted something, not on me to prove that I did not predict something.
That would be like me saying: "Prove to me you never thought Enron was a good investment!"
Leroy....time to start hitting that "delete" button!
"Leroy....time to start hitting that "delete" button!"
I have nothing I would want to delete.
Unlike some, you for instance, I will freely admit that I was wrong in some of my predictions. Things unfolded more slowly than I originally predicted for instance, and I also underestimated the government intervention.
On the other hand... I never claimed that Arlington would see the same declines as the outer areas so it is kind of funny watching the trolls try to pin that on me.
I said the exact opposite on numerous occasions, but sadly they seem to be more interested in misrepresenting my previous statements than having an honest discussion.
Leroy,
Ooooo....kay!
Leroy ownz Doug
"I think it is safe to say that Arlington is going to see a slower and smaller bust than was seen out west. The price increases during the bubble were smaller as a percentage in Arlington than places out west and as you pointed out, a smaller portion of Arlington homes were purchased during the bubble years."- Leroy 7/8/08
http://tinyurl.com/ygnz3oh
Happy?
I am not perfect, nor have I ever claimed to be. I will gladly admit when my predictions have proven inaccurate and discuss why that was the case.
You on the other hand still don't seem willing to admit that what the region experienced was a bubble... and that the "bitter renters" you tried to goad into buying back in 2006 had the right idea when they chose to wait for price declines...
Va_Investor,
Speaking of deleting posts... one post from you a couple of days ago i found extremely insightful was deleted very quickly. I understand if you want to keep that information to yourself, but would like to make sure I'm not misunderstanding your intent.
Tks!
"Leroy said...
On the other hand... I never claimed that Arlington would see the same declines as the outer areas so it is kind of funny watching the trolls try to pin that on me."
Thats true, you never did say that "specifically". You were always very careful about what you said (like a politician). However what you thought was never in doubt.
For example, 3-4 months before the glug glug glug statements I noted above, was this thread:
http://novabubblefallout.blogspot.com/2008/11/decade-of-october-sales.html
As was the case before you and Terminator X are discussing how everywhere "except Arl & Alex" have come to terms with the new market conditions.
CRT then points out your glug glug gluing is mistaken. You kinda concede his point but you then say
"On thing I can tell you for sure is that those houses are not going to simply levitate while the rest of the market falls away beneath them."
So if those homes in Arl & Alex werent simply going to levitate above the rest of the market, what did you think was going to happen to them?
The answer was, you thought it was clear that Arl & Alex would "revert to the mean" as you had said time and time and time again. It was a good thought, but it was wrong, plain and simple.
MM,
Actually, I felt there was no interest. The info was asked for and I gave it and offered to answer any questions. Nothing. So I took it down.
Leroy,
Are you talking to me? And you complain of strawmen and distortion. Hilarious!
I'm not the one who claimed to see the future with a crystal ball. My comments early on (2006) were very insightful in terms of the reasons why certain areas would be harder hit than others.
Were you not part of the group that promised 40% declines in N.Arlington? And 60%+ in the outer circles? And these declines were to occur by 2007 or 2008.
I was always completely honest about what I was doing on a personal level. I just never had your magic 8 ball and didn't pretend to.
I believe that I was the one who pointed out disparities in price increases by area/neighborhood and also the demographic differences and turn-over rates.
Now this has somehow become general knowledge. Very humerous.
Doug
I've been one of the housing bears
but, that's because I don't like playing a game the Fed is trying to rig.
The Fed is trying to bail out Fannie Mac, and keep rates low. Low rates would be great for existing homeowners, but it's a trap for new buyers.
I sold my place out in the midwest, cashed out and am waiting for rates to normalize. I watched my folks try and sell 5 houses during the high interest period in 82.
Sure sucked.
Houses are like bonds with a camping permit.
plus i rent a 2BR in south arlington for $1K/month plus utilities.
Would i like to own? sure, but,
would i like to lose 20% within the first year when rates rise?
i'm seeing very schizo pricing and
until the rates stabilize who knows whats going to happen.
the big one that will force us to move or buy will be the day the wife gets sick of hauling laundry to the laundromat.
"Thats true, you never did say that "specifically". You were always very careful about what you said (like a politician). However what you thought was never in doubt."
I am generally careful about my wording because precision of language is important in my profession. It is an added benefit around here where people seem hell-bent on putting words into my mouth...
"So if those homes in Arl & Alex werent simply going to levitate above the rest of the market, what did you think was going to happen to them?"
Oh I was predicting they would fall obviously, but what I was not predicting was that they would somehow fall in lock-step with the rest of the region.
All of these discussions were in the context of whether or not Arlington was "immune" to price declines.
"The answer was, you thought it was clear that Arl & Alex would "revert to the mean" as you had said time and time and time again. It was a good thought, but it was wrong, plain and simple."
I did not say Arlington would "revert to the mean" time and time again. Please don't lie about my previous predictions. If you think I made such a statement, provide a quote.
I expected price declines, but that those declines need not be as quick to arrive nor as extensive as those seen in other parts of the area. I have already provided you with a quote from 4 months before this more recent discussion saying exactly that.
Since that doesn't appear to be sufficient for you, here is another quote from two weeks after the most recent discussion you linked to:
"None of these theories that try to explain how it is that Arlington's prices could have shot up with the prices of every other part of this region, and yet possess some fundamental backing that the rest of the region didn't do not strike me as very plausible.
Arlington is clearly not a healthy market right now. Prices are falling and sales are at decade lows and have been for months. It is not as if business as usual has continued in Arlington while everywhere else has experienced a correction.
What we are seeing in Arlington, and similar areas such as Mclean, is that the sellers there are more willing/able to hold out for higher prices. In the long term prices will still correct, they are just doing so more slowly.
If in another couple years Arlington's prices are still hovering above those of the rest of the region it may be time to start trying to come up with an explanation for what has happened. I think what we will see is a continued steady decline that will ultimately restore something similar to historical relative pricing. (Arlington may have become somewhat more valuable relative to the rest of the area, but there is just no way it moved this much this quickly.)" - Leroy 11/25/08
Now, clearly we have not seen continued steady declines so that aspect of the prediction was wrong, but I attribute much of that to the government intervention that has been taking place over the last year.
The important thing to take away from this quote was that -once again- I was stating clearly that I expected Arlington to experience more gradual declines and that it need not arrive at price parity with the rest of the region.
Not only that, but I was open to the possibility that Arlington's relative value had increased during the bubble years, just not sufficiently to justify the price differential of 2008.
(continued in next post)
YOU TOOK PART IN THIS DISCUSSION.
You responded to my prediction by saying:
"All thanks for the comments - and sorry I got a bit snippy too - its just im itching to buy and Goddamn close in areas arent cooperating!
Recall my background - I hesitated to buy in 2003 because of the sky high prices - grew increasingly worried as prices continued to skyrocket into 2005 - relished the impending doom in 2006-2007 - and now watched in amazement as the rest of the metro area is in free fall while Arl is in slow burn mode.
My fear is that I am the ultimate contra indicator - I show an interest in an area it skyrockets - I finally pull the trigger and ONLY THEN it plummets - the gods are out to get me!
As leroy pointed out, if this small drop in pricing continues for a "few more years", then there may be something too it. For me, I may be at that point after only 1 year. Credit was taken away everywhere at the beginning of the year - when it left, some areas crashed, some areas largely held - why?
Its the "why" that I find frustrating and vexing, and all the tried and true real estate rules we know dont work on a local scale. 6 months inventory = healthy? Even CRT had to modify that theory to fit what we see. Median home prices = 3X income? There are huge and glaring exceptions to that rule.
What I proposed, is that areas can and do change in desirability over the years. Unless it was preordained to be special from day 1, at some point in its history, Adams Morgan went from 3X income (affordable) to 6.9X income (unaffordable) in 1999. At some point in its history, Del Ray went from 3X income (affordable) to 4.5X income (moderately unaffordable) in 1999.
As leroy noted: "Arlington may have become somewhat more valuable relative to the rest of the area, but there is just no way it moved this much this quickly"
This was my point from the beginning. Prices are too high and will continue to come down - period. My suggestion is that the more gentle rate of burn down COULD (emphasis "could") be an indication it will not make it all the way back to where it was in terms of pre bubble affordability. However, to deny that anything has changed since 1999 to make Arlington even slightly less affordable than it was before is like whistling through the graveyard."- The Anonymous 11/25/08
http://tinyurl.com/ybw6n5o
You can hardly claim to be unaware of what I was saying at that time considering you responded to my prediction and clearly understood what I was talking about when you did.
I would appreciate it if in the future you would not try to misrepresent my predictions.
Any change in predictions made in 2008 are worthless. The game was already over, too late to place a bet.
If you were to stand back and look at it, the entire "moving-in" (complete with concentric circles) argument was absurd. I asked on numerous occasions what would cause this delay?
There are many reasons that things (prices) have unfolded as they have in the various areas of the region. I've been putting those reasons out for (probably) over 3 yrs.
Now we have people having a "come to Jesus" moment - only way too late to matter.
Ok. Now it's time for my favorite stalker/troll to pull a couple snippets out from years past. Just to head one off at the pass; I have always maintained that good deals are available in any market. This is usually twisted into "it's always a great time to buy any property".
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