Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Monday, February 8, 2010
Subscribe to:
Post Comments (Atom)
Northern Virginia Real Estate Statistics
REAL ESTATE SEARCH
County Assessment Websites
Buy/Sell Without an Agent
Local Real Estate Agents
Housing Economics Blogs
Local Interest
Housing Bubble Links
Eastern Regional Blogs
Western Regional Blogs
- Bakersfield Bubble
- Bay Area Real Estate Blog
- BubbleInfo (N. San Diego)
- Burbed (San Francisco)
- Dr. Housing Bubble (SoCal)
- Patrick.net (San Francisco)
- Portland Housing Blog
- Professor Piggington's Econo-Almanac
- Rancid Truth (Orange County)
- Sacramento Land(ing)
- Seattle Bubble
- SoCal Real Estate Bubble Blog
- Socket Site (San Francisco)
Real Estate Blogs
REAL ESTATE AUCTIONS
90 comments:
http://franklymls.com/DC7251255
Failure to launch, about 40% of the units i'm tracking fail to launch,
this one? it's been up twice and the bidders get all crazy like it's 2004 but then they can't finance.
I think some of you misunderstood my comments from yesterday. I was talking about market drivers. That I thought we should talk about that. Some of you jumped in and thought tax policy was not a market driver. I disagreed and posted a link supported what I said and how it affects demand. Some told me I need to take Econ again because of this comment. Well that is what I was refuting.
I did not mean to say that everyone on this site was whining about prices. The only whining I was referring to was individuals, and I am not assigning anyone in particular, who feel that at age 20 something, or with one income, think they should be able to afford their dream home. Some of you thought I was talking about you, when I was not. I just put everything together in my message.
Pat,
They cannot finance because of the location of the property?
I don't think mortgage interest rates are insanely low. When I bought in 1999 my 30-year mortgage was 6.25 percent. Today it is about 1 percent lower, even though the Fed rate is at lot lower. I would argue mortgage rates could be a lot lower but they are not. Anyone knows why, other than banks don't really need to lower their mortgage rates to get the customers they want? In other words the market also dictates the interet rate.
dc2-
The reason rates are not lower is because they do not track fed funds. Instead they generally track the 10 year treasury, because both have a weighted duration that is ~7-8 years. Historically mortgages have been ~1.5% higher than the 10 year treausury which is about where they are at now.
I agree that the 8K adds demand now, so if you do not qualify for the credit you should wait until it goes away in a couple of months and you can compete against less demand.
Thanks, housebuyer. That is right it tracks the 10-year Treasury bond. But I had read some time ago that the 10-year Treasury bond should be lower.
DC2,
I agree with your assessment. A lot of whining on this board. I've been following the housing market since 2003. I think a point that is missed is that historically, prices don't really retract in housing around here. Even in the early 90's after the run-up from the late 80's prices only stagnated. And that was with the early 90's recession making things worse.
Fast forward to 2005-6. Yes, prices got way out of hand. And the market corrected by collapsing in on itself. Home prices typically suffer AFTER a recession. Instead, this time, the housing market declined and lead into the recession. That is unprecedented. And that is the bubble market correcting itself. The fall out lasted from when things came to a grinding halt in May of 2005 through about 2008.
Again, this is what a lot of the current posters are missing. The bubble market has worked itself out significantly.
Now then, 2009 into 2010 we are having your typical recession. Housing prices will be impacted by this, there will be a second wave of downward pressure on prices, but it will not be of the magnitude of the 2005-8 collapse of the bubble. It will be more of the same sticky flat prices you saw in the early 90's.
There may be a bit further to go, approximately 5-10% maybe, but that's not gauranteed. There are enough buyers on the sidelines willing to risk that 5-10% as a trade off to owning.
My $0.02
dc2 said
"I did not mean to say that everyone on this site was whining about prices. The only whining I was referring to was individuals, and I am not assigning anyone in particular, who feel that at age 20 something, or with one income, think they should be able to afford their dream home."
What do you think they should be looking at? If they have the money to buy something nice, why shouldn't they?
Also, your idea of "dream home" might not be someone else's and vice versa.
There should be no reason why people can't complain about pricing in any market, it has been done since the dawn of time and will not stop anytime soon...
Sehrwunderbar,
I think the difference is complaining about prices vs complaining about prices by asserting one's own opinion as the only rational meaningful position.
:)
My $0.02
OK, I got ya now.
BTW, I've been looking at Springfield and Falls Church on franklymls and looks like some places are within our price range and still same distance (or closer) to our church.
Any thoughts on those two areas, like better neighborhoods etc? I don't care about schools because we will either homeschool or go private.
mytwocents,
I don't see anyone doing that, do you? Contrarian is basically gone and everyone else seems basically reasonable in their opinions (even though they are different) about housing. Other topics do tend to get a bit more unreasonable/testy when they are discussed.
VA_Investor (yesterday): I know that many here think interest rates should cause one to discount today's prices because rates are "artificially" low.
I don't think they are artificially low any more than I think it's artificially cold outside. But that, along with the buyers bribe, creates a prop for housing prices, and helps keep them artificially high.
DC2-
I think most people expect that the 10 year treasury yield will probably rise not fall over the next several years. The government continues to be printing money at record rates at some point investors may demand additional yield to compensate them for continuing to support the governments spending. Who knows though everyone has a different opinion on where treasuries will go and are making investments accordingly.
housebuyer - rising interest on the national debt is bad although I expect it too. The higher the interest rate, the more important to invest in other currencies and gold. Once most countries have hit 12 - 15 percent they default on their debt.
the 'dream house' with termite damage that i saw last week got a contract. i guess not everyone freaks out about termites like we did. i wonder what kind of discount the buyer's going to get.
Jeff-
I worry about both of those investments. Most countries are in as bad if not worse shape than us so you need to be very careful about which currencies you buy. Also gold has very little intrinsic value other than people decide it is worth something. I prefer to stick with commodities that have underlying value, as they should be more stable over the long term (e.g. food/metal/energy...)
housebuyer, commodities are not particularly stable, they fluctuate radically. I know someone that decided to day trade various commodities and ended up losing 150k on margin. Apparently he couldn't keep to his plan of ditching the commodity when the prices hit his "floor". He must have thought they were going to recover. As far as energy, remember oil got to 150 a barrel and people were buying at that price? Then 3 months later it was 50 bucks? Those guys lost 66% of their investment. People were talking 200 dollar oil so they thought they would buy at 150 and ride the gravy train.
If you are not a believer in gold, then buy platinum. It has many uses and has a very small supply.
MM,
I wouldn't freak about termite damage unless it's structural and an engineer has serious problems. It is important when you get a termite inspection that shows extensive invasion/damage to get a structional engineer out there.
We bought a 1920 house once. We were only the second owners, so there had not been a series of inspections over the years. Joists had to be reinforced and the house raised slightly to replace the sill plate across the front. At the time it cost the seller 10K.
Everyone keep your termite warranty in place. Those little monsters can work quickly!
$0.02 said..."Again, this is what a lot of the current posters are missing. The bubble market has worked itself out significantly."
I dont think they are missing that as much as they are lamenting why it hasnt happened in their neighborhood.
As prices were driving significantly lower, bulls were here saying, not in my county, in my zip, in my neighborhood, on my street, etc.
Now its the same thing but in reverse. Prices have bottomed but the bears insist "not in FFX, not in Vienna, not in my neighborhood, not on my street..."
VA_Investor - Just invite a bunch of ants into the property. They kill termites. :)
Anon,
Could you do me a big favor and pull my bottom 2 posts from yesterday's thread onto this one. They are the very last comments on that thread and are relevant here. I know everyone, I am totally lame and lazy when it comes to learning my laptop. (hangs head in shame...)
Anonymous,
Very well said. Thank you for clarifying what I was trying to say.
My $0.02
Nova,
To follow up on the end of yesterday's thread, I have another example. It's one house and anectdotal but so is the Oakton house.
In my old Vienna neighborhood, prices peaked at 420K +- in 1990 or 1991. I bought the same model in 2000 at a huge discount. After doing the usual (new kitchen, flooring, paint, landscape, etc), I flipped it for 435+-.
Do you truly believe that the dead decade of the 90's has no relevance to prices today?
So those places peaked at 850K+- in 2005 and there are recent resales at UNDER 600K. What bubble remains?
My comment on yesterday's thread shows prices from 1988 to present.
The Anonymous said...
I dont think they are missing that as much as they are lamenting why it hasnt happened in their neighborhood.
I can't speak for others, but I have been seeing price drops in the areas I'm looking. The prices didn't start coming down until this past year, but they definitely are now. Last year everything I really liked was listed at 799k, and this year it seems those same houses (or very, very close comparables) are listed at 699k. That's a huge drop in my eyes. I think we are more trying to figure out where it will stop so we can go ahead and buy - at least that is my interest at this time.
I am already happy because some neighborhoods I had ruled out last year are now on the cusp of "affordable" for me - especially if I wait until Spring 2011 to buy. If the prices stagnate or even go down another 5% that's just a nice bonus.
The Anonymous said...
Now its the same thing but in reverse. Prices have bottomed but the bears insist "not in FFX, not in Vienna, not in my neighborhood, not on my street..."
I guess this is what I really disagree with you over. You say prices have bottomed but I don't see any proof of that. Maybe prices in the low end have bottomed, but most of the active posters here aren't looking in the low end. I haven't seen anything yet that convinces me Vienna/Oakton/Great Falls has bottomed. I've seen proof of price declines, but no proof of a price bottom or floor in those areas.
I've stated before that I'd rather miss the bottom and buy a year later than buy a year too early. If you can show me proof of a bottom you will make me feel much better about buying this year rather than waiting until next year.
Jeff-
I agree commodities are not stable particularly in the short term. I was talking more about over the long term (decades) they tend to have values that move with inflation. Gold on the other hand has virtually no intrinsic value, so it can have a much larger price swings.
waiting too said
Reecon and TBW: You both make good points. One thing reecon referred to was the cost of child care which is very high in this area.
Yes high child care costs are the result of a high cost of living. I would not be shocked if in many families the wife makes more than the husband because child care can be lucrative.
In fact, I recall some article a while back that many Latino men were learning "women" jobs because they paid so much better than the traditional "men" jobs.
Jeremy-
I am seeing the same thing with prices now. This could just be due to the winter market, but I don't think it is. In general I agree with you that the mid to high end market still looks pretty weak, because there is less move up equity that can be used to support these prices. There are some buyers like those of us here that can afford 600+K for their first house, but I think this is the exception not the rule. So without move up equity these places could underperform the starter market, which doesn't need move up equity to support it. I also don't think we will see large price declines, because there are not many distressed sellers so people may just wait it out. So I currently expect prices to fall ~5-10%, but I am happy to wait and save a while longer.
The Anonymous said...
I dont think they are missing that as much as they are lamenting why it hasnt happened in their neighborhood.
That's my gripe. If I worked out further west, I would have bought a house in PWC or Loudoun a year ago and not complained.
Prices have bottomed but the bears insist "not in FFX, not in Vienna, not in my neighborhood, not on my street..."
Have prices bottomed out? With the credit bribe implemented last year, it's impossible to say. The markets got their temporary bump, but will have to retract accordingly when it's gone. So no, it's not bottomed. Sticky areas in particular have a way to go, IMO.
Jeremy said...
I can't speak for others, but I have been seeing price drops in the areas I'm looking.
I'm starting to see that too. Just over the past month though, and in small anecdotal numbers. Will have to wait for the credit to die before the real impact of its existence can be wrought.
Here in my neighborhood (N. Arlington within walking distance of the Orange Line), some neighbors down the street are a lawyer couple. She deals in real estate on the side.
Bumped into her today while we were "inspecting" our snow-bound street. She said she'd just come back from showing a client a house in our neighborhood (yes, today, Monday; such is the demand around here). She said the house was on the market for 1.16, slightly above what the owner paid for it three years ago. She said there are multiple offers on the house and she's certain it will go for over the asking price.
She also said N. Arlington RE in general is doing great.
Kevin,
Does 8K really impact someone buying a 600K+ house? Seems like pocket change.
Va_Investor, below are your last posts in yesterday's thread. All I'm doing is copying and pasting.
==============================
Va_Investor said...
Nova,
Some time ago, I went to great lenths to set forth an example of Vienna prices (which I believe was at the same level of "desirability") in Vienna 22182 (previously, Vienna 22180) during the late 80's.
We bought a home in a nice subdivision of Vienna in 1988. The house was built in 1978, so it was ten yrs old. The price was 355K. The neighborhood peaked at about 420K in 1990 and dropped to under 325K for our model. The 325K had a double lot which was spectatcular, a beautifully finished basement and a brand new kithchen. Ours had none of that. I'm not aware of any distress sales. MLS was not readily available to me at the time.
Although our house sold in May of 2005 at 850K (after brand new everything, a finished basement, deck, etc), I have seen homes going in the 700's. I'll have to pull comps again to update my info.
So....355K to 750(?) from 1988 to 2009 is not reasonable?
Perhaps Oakton exploded in some drastically different manner during that time frame. We were always in the McLean School District.
This is MY STORY and I'm sticking to it!
fwiw, my current nabe in Reston 20194 sold in the high 400's-low 500's (depending on model) in 1992-1994 (a market trough). The two most recent sales were approx 700K (SS) to 815K. The 700K sold for 490K new and I believe the other about the same.
These homes (the smaller of the models here) peaked at 975+-.
I don't see any bubble left here or in the Vienna nabe.
2/8/10 12:00 PM
Va_Investor said...
WOW!
Some sales under 600K for my old Vienna nabe!
2/8/10 12:27 PM
Tom,
I don't dispute your neighborhood is doing well, but please don't expand it to "N. Arlington within walking distance of the Orange Line" because, you know, that includes a lot of neighborhoods.
BTW, the home near you with 150 showed up during its snowy OH is Under Contract. Care to guess the contract price?
Hey MM,
THX
Mozart said
Comparing the Oakton HS district of the early 80s to Oakton HS district today is an apples-to-oranges comparison. Even through the first half of the 1990s, the Oakton area was pretty much squarely in the middle of Fairfax high schools in terms of performance and, therefore, its perceived exclusivity. South Lakes HS frequently had higher SAT scores than Oakton HS during this period.
The school districts that have remained top-performing for two decades have been Langley, Woodson, McLean and Madison, and only those. Over the past decade, some high school districts - most notably including Oakton, Marshall and Chantilly - have become higher performing. Others - including Lake Braddock, West Springfield, South Lakes, and Lee -have slipped in relative terms. Still others - including Robinson, Herndon, Centreville and West Potomac - have pretty much held their own.
Hooray for the internet and access to information. Let's look at how schools ranked in 1992 and today. I am leaving out Westfield and South County which did not exist in 1992.
Class of 1992 SAT Scores
1. TJ - 1361
2. Langley - 1130
3. Woodson - 1118
4. McLean - 1103
5. Lake Braddock - 1091
6. Madison - 1088
6. Robinson - 1088
8. West Springfield - 1084
9. South Lakes - 1082
10. Oakton - 1063
11. Marshall - 1059
12. Centreville - 1052
13. Fairfax - 1031
14. Lee - 1026
15. West Potomac - 1023
16. Herndon - 1020
17. Chantilly - 1017
18. Hayfield - 1008
19. Annandale - 1001
20. Mount Vernon - 995
21. Stuart - 985
22. Falls Church - 969
23. Edison - 963
Class of 2009
1. TJ - 1492 (-)
2. Langley - 1227 (-)
3. Woodson - 1210 (-)
4. McLean - 1208 (-)
5. Madison - 1176 (+1)
6. Oakton - 1157 (+4)
7. Robinson - 1140 (-1)
8. Marshall - 1137 (+3)
9. Chantilly - 1121 (+8)
10. Lake Braddock - 1114 (-5)
10. Herndon - 1114 (+6)
12. Fairfax - 1105 (+1)
13. West Springfield - 1103 (-5)
14. Centreville - 1092 (-2)
15. South Lakes - 1074 (-6)
16. West Potomac - 1067 (-1)
17. Edison - 1032 (+6)
18. Annandale - 1031 (+1)
19. Stuart - 1029 (+2)
20. Lee - 1027 (-6)
21. Hayfield - 1012 (-3)
22. Falls Church - 999 (-)
23. Mount Vernon - 954 (-3)
I have bolded those that moved three or more spots.
So it is true that Oakton has gone up the "rankings" so to speak by Mozart's metric. However, it's worth noting that in 1992 the difference between Madison and Oakton was 25 points and in 2009 it was 19 points. Do any buyers really care about that?
When it is said that the lower end prices have bottomed out, what does that mean? What is lower end prices, what Was the band and what did it bottom out to?
for example, if $300k is bottom band and went lower, what is it at now? And what would $300k be? Am I making sense? What is mid-range and higher end price?
Thanks!
I guess I'm asking what are the bands, where did they lower to and what do you think bottom would be considered for each.
Mozart -- Thanks for pointing out that South Lakes scored well in the past. Since you knew that why do you think there has been such a large drop? As Herndon's climb in the rankings show there should have (IMHO) been a positive effect from the growth of Reston as Fairfax County's #2 office space submarket (and obviously the growth of Tysons should help Reston as well).
Another thing worth noting is that while Lake Braddock and West Springfield are ranking worse they also have SAT scores higher than McLean had in 1992. So on a comparative nature among subareas of Fairfax County the Burke area might be less rich, but on the other hand, it's probably about as rich now as McLean was in 1992. So it's hard to say it's suffering.
Va_Investor said...
Does 8K really impact someone buying a 600K+ house? Seems like pocket change.
More like $450k and below, and yes most certainly it does. That's cash in-hand (and thus not comparable to the lump sum of the loan), or bridged to their DP which they may not have had beforehand. In that case, the govt was literally "creating" a buyer by subsidizing some or all of their DP.
So yes, it makes a big impact, and the market price increases reflect it almost perfectly.
Using this these are the estimated percentiles (not exact since I'm using 2006 percentiles on 2009 results) of the students attending each school FCPS:
1. TJ - 99th percentile
2. Langley - ~80th percentile
3. Woodson - ~79th percentile
4. McLean - ~78th percentile
5. Madison - ~75th percentile
6. Oakton - ~73rd percentile
7. Robinson - ~70th percentile
8. Marshall - ~69th percentile
9. Chantilly - ~67th percentile
10. Lake Braddock - ~66th percentile
10. Herndon - ~64th percentile
12. Fairfax - ~63rd percentile
13. West Springfield - ~62nd percentile
14. Centreville - ~61st percentile
15. South Lakes - ~58th percentile
16. West Potomac - ~56th percentile
17. Edison - ~52nd percentile
18. Annandale - ~52nd percentile
19. Stuart - ~50th percentile
20. Lee - ~50th percentile
21. Hayfield - ~49th percentile
22. Falls Church - ~44th percentile
23. Mount Vernon - ~37th percentile
Amazon.com is out with its list of the nation’s 20 Most Romantic cities and the Washington area ranks high on the list.
Amazon bases its rankings on per capita sales of romance novels, sex and relationship books, sexual wellness products and Barry White CDs.
By those measures, Amazon says Alexandria ranks as No. 1. Arlington ranks No. 7 and D.C. ranks No. 11 on the list. Richmond also made the top 20 list.
“Virginia, with three cities in the top 20, may be for lovers like the state’s tourism slogan says, but Florida is for romantics with four cities – Miami, Gainesville, Orlando and Tallahassee – ranked among the Top 20 Most Romantic Cities,” Amazon (NASDAQ: AMZN) says.
tbw,
I think that the redistricting is going to pull up the numbers for South Lakes. What we have had is a huge influx of ESL students in South Reston. Unfortunately, when Reston was planned they seemed to have put more of the low-end housing in the south portion. I believe the County owns some low-income complexes over there.
I think S. Reston has it's nice areas but the entire community feels cramped and too dense. It's also, for the most part, an older housing stock.
Carson MS and S. Lakes have had a bad rep for awhile. I became aware of it when we moved to Herndon in 1993. I don't know if anyone remembers the "prostitution scandel" at the middle school; but I doubt anyone who was out this way at the time (late 90's, early 2000's?) will soon forget it.
In some ways the spiral down for SL has been self-fulfilling. The worse it gets, the less demand from affluent/well educated buyers. It hasn't necessarily benefited from the Dulles Corridor to near the extent N. Reston (with RTC, etc) has.
I posted this few days back as well...8k has an absolute impact on up to 650k market.
- 8k with 90% leverage adds 80k froth. - Psychological factor of getting "free money" or rather losing out on it.
The second factor plays much bigger role than most people think...
Let's not forget with 8k credit, most can afford to buy 80k worth of additional house than they would otherwise.
200k - 40% (280k buying power)
300k - 27%(380k buying power)
400k - 20%(480k buying power)
500k - 16%(580k buying power)
600k - 13%(680k buying power)
Just to clarify, I am assuming 10% DP on average for above numbers..
So, let's not say 8k doesn't have any impact on our market...it absolutely has an enormous impact.
And not missing out on free 8k is "priceless" of course.
Kevin,
I'm well aware of the effect on the low end. I was specifically speaking to those wanting 600K+ housing.
Va_Investor,
I think you might mean Hughes MS and not Carson MS? Hughes is the one that feeds into South Lakes.
I agree with your theories and that's what I've always thought was the case. But was that not true in 1992? Or have they built more low income housing in South Reston in the interim?
I can remember people calling South Lakes a "ghetto school" back in the 1990s. But as Mozart pointed out and the data confirms it was doing pretty well. Maybe it's just a self-fulfilling prophecy: if enough people call an area ghetto it becomes lower income. Sorta akin to the "blockbusting" of the 60s and 70s where realtors told everyone the neighborhood was falling apart and people moved out and then the neighborhood feel apart.
Interesting. This appears to be from 1998.
WASHINGTON - A 13-year-old student at a suburban Washington middle school was arrested Friday and charged with soliciting other youths his age to perform sexual acts in exchange for money, authorities said.
The arrest came after the boy, a student at Langston Hughes Middle School in Reston, Va., told authorities he operated a prostitution ring, sources familiar with the investigation said. The boy was charged as a juvenile and held Friday night at the Fairfax County Juvenile Detention Center.
More than a half-dozen youngsters allegedly were involved, police said. But police also said they had not determined whether any sexual activity occurred.
They said the 13-year-old became the object of their inquiry as the result of a school investigation Wednesday of a teacher's report that some money was missing.
When the boy was questioned, the sources said, he had about $75 in his possession and explained that it came from a prostitution ring he had organized at the school, according to the sources.
A number of girls questioned told authorities that they thought they were joining a social club, according to sources familiar with the investigation. The girls said they paid the boy $5 to $10 to introduce them to eighth-grade boys at Reston Town Center, and that no sex was involved, the sources said.
Even for higher-priced homes, the impact is not negligible...
700k - 11%(780k buying power)
800k - 10%(880k buying power)
tbw,
Yes, thanks, I meant Hughes. That well covered event put the nail in the coffin, so to speak. It certainly was the talk of the town!
spider said...
And not missing out on free 8k is "priceless" of course.
The potential stupidity of one buyer is large enough. Aggregate it and we have a huge swath of stupid (but rational) buyers that can be manipulated into making the biggest purchase of their lives without having done any research of their own (not like their Realtor would tell them that prices are up and they're paying a premium far exceeding the bribe).
Va_Investor said...
I'm well aware of the effect on the low end. I was specifically speaking to those wanting 600K+ housing.
It will have some impact, no doubt. If the lower end gets a massive price boost, that will transcend upwards through competition (or lack thereof) and through move-up buyers benefiting from this horrendous bribe.
MM said: "I don't dispute your neighborhood is doing well, but please don't expand it to "N. Arlington within walking distance of the Orange Line" because, you know, that includes a lot of neighborhoods.
BTW, the home near you with 150 showed up during its snowy OH is Under Contract. Care to guess the contract price?"
MM, I wasn't expanding my neighborhood to cover all of N. Arlington near the Orange Line. I simply identified my neighborhood as one that is within walking distance of the Orange Line.
As for the house under contract: they were asking 729K, and I reckon they got more than that. This neighborhood is that hot.
sehrwunderbar said
BTW, I've been looking at Springfield and Falls Church on franklymls and looks like some places are within our price range and still same distance (or closer) to our church.
Any thoughts on those two areas, like better neighborhoods etc? I don't care about schools because we will either homeschool or go private.
Falls Church covers a lot of area and includes a portion that is incorporated and a lot that is not. Homes in Falls Church feed into McLean, Marshall, Falls Church, Stuart, and George Mason if you live in the city. Homes that feed into Falls Church and Stuart generally cost less than those feeding into the others. If you are sure you do not care about schools I would say buy in the Falls Church or Stuart areas and save yourself some money. Just observe the area in the day, at night. Go to the local shopping centers, the local parks. Do you feel comfortable there should be your main question.
I forget if you've mentioned where your husband works. If he needs to take Metro that should play a large role in your housing choice. You don't want the drive to the Metro to take forever.
My observations about Springfield are the same. Prices will be dictated in large part by schools and access to the Franconia-Springfield stop. Determine where you feel comfortable.
Re $8k credit. Because of the massive differences in AGI limits for singles vs. marrieds it was mostly irrelevant to singles in Northern Virginia for a wide range of homes but available to marrieds for up to a lot of upper range homes.
From the article Ace found with 5% interest rates the income to price ratio is 4.3466.
Pre Nov. 6, 2009
Single $75k-$95k AGI Limits
$325k mortgage (full $8k credit) to $410k (no credit)
Married $150k-$170k
$650,000 (full credit) to $735,000 (no credit)
New AGI rules after Nov 6, 2009:
Single $125k to $145k.
Single $550k (full $8k) to $630k (no credit)
Married $225k to $245k.
Married $975k (full $8k) to $1.065M (no credit)
-----
So the $8k credit was not that valuable to single people for homes more than $325k until the AGI limits were expanded in November.
Of course that ratio assumes no more than 28% DTI and we all know tons of people still violate that.
Spider-
I agree that 80K is a big number, but I think people look at the monthly payments in addition to buying the maximum house they can afford with their DP fund. Also how many people that qualify for the 8K can afford 600K houses much less afford 800K houses. I agree that it had a large impact on the lower tier housing my best guess is it added ~20K. Once you get into the 600K range I would think its benefit was very little maybe a couple of grand, because almost no one in this segment could even use it.
Did anyone hear that we are supposed to get another 10-20"s of snow!!!!!!
VA-
Yeah I have a weatherman who is a friend and this morning he said 8-16, but conditions will be worse than the last storm. Something about when the dry vs. wet snow is coming will impact how bad the conditions will be.
1988 was during the late-80s bubble (see graph above). Heck, I knew folks in Great Falls that bought in 1988 and admitted, during the mid-2000s, that they had bought near the top of the last bubble, only to see home prices stagnate for the next 10 years.
Heck, TBW's post above [previous thread] shows 1988 to be one of the 10 worst years.
Nova,
What's your point? So 1988 and '89 were this go around's 2004 & 2005. You argue that the 90's and it's decade of no price increases don't matter. I disagree. You want to take a 9yr time frame and say that that defines the market. That is absurd.
It is now 2010. Are you still making the overpriced argument? Well, as I pointed out, not every area is. Just check all of Vienna 22182 and get back to me.
Good points, TBW. Also, though, there is a maximum home price limit in addition to the AGI limit:
http://www.baltimoresun.com/business/real-estate/bal-home-tax-credits-0207,0,2944762.story
"No credit is available if the purchase price of a home is more than $800,000."
TBW - I think we're probably looking at the same data.
In the early 90s, there were three areas of the county with the highest performing schools. The first was McLean/Vienna (Langley, McLean and Madison). The second was Fairfax/West Annandale (Woodson). The third was Burke/Fairfax Station/West Springfield (Lake Braddock, Robinson and West Springfield).
What has happened over the past decade is that more of the schools in the Vienna area (the prior three, plus Oakton and Marshall) are higher performing, Woodson has maintained its high-performing status, and the Burke/Springfield area schools (particularly West Springfield) have slipped in relative terms. Test scores at Oakton started to be about the same as those at Madison in 2004.
I don't know why South Lakes slipped relative to the other Vienna-area schools. It had higher test scores than Oakton until the mid-90s and higher scores than Marshall until 2002. The scores at South Lakes have since continued to slide in relative terms since 2002, except for 2007, although the other poster may be right that the 2008 redistricting may reverse that trend.
Good catch Ace. I forgot about that other limit.
Va_Investor,
I think the lesson of the past is there are good years to buy homes and bad years to buy. For people who can find homes 20% or more off peak, can get a 5% mortgage, and were planning on not going significantly quicker than 30 years in paying off the mortgage, have a stable job, and find a home they like for the long term 2010 is a good year to buy.
One problem is I think 20% off describes very little of the market. Many homes are 0-5% off. Many lower end homes are 30+% off. People on the lower end are getting REALLY good deal. People on the middle to upper end are still getting screwed.
I also will remind people for the millionth time that it's not just in Vienna or Oakton that SFH are barely off peak prices. Here is a Falls Church home barely off peak: http://franklymls.com/FX7253238 Here is a home in Mount Vernon/Alexandria listing for much more than the owner paid in 2006: http://franklymls.com/FX7171437
There are still a lot of delusional sellers out there. I think there are deals right now if you are willing to go the foreclosure/short sale route/motivated seller route. But I think people will have to probably wait until 2011 or 2012 before the average SFH listing in Fairfax County is more realistically priced *regardless of where in the county it is.*
This is not a Vienna/Oakton vs. Alexandria thing. This is a $450k+ home vs. less than $450k home thing. Foreclosures are taking longer to reach those neighborhoods than they did on the lower end.
Here is a home in Annandale listing for about peak:
http://franklymls.com/FX7251346
It's not a Vienna thing or an Arlington thing.
http://franklymls.com/FX7252431 this short sale in Annandale is listed for about 6% off peak.
tbw,
Thanks for the rankings of median monthly mortgage cost yesterday. Very illustrative. The straight year rankings may be misleading however, because some of them are so close together that a straight ranked list doesn't necessarily reflect what you want to know. I would suggest using the median year as 100, and scaling payments thereto. But 2009 was so close to the median that it hardly matters. It won't truly be a good time to buy until the end of the long-slow-flat period, as we've discussed many times before. Of course that's assuming all areas get a long-slow flat period, which remains to be seen.
And as to your question of whether anyone can get the median 20% off without buying a foreclosure or SS, we did, 30% off peak prices in a normal sale. So, it's all about location and how the bubble has differentially collapsed.
(dc2, sorry for not being around this weekend to point out that indeed you've been around at least as long as I have)
Here's another huge difference between our current bust and past busts.
Early 80s bust - interest rates around 16%, after bust rates lower than 16% *and have never gone above that rate since*
Early 90s bust - interest rates in 9-10s, after bust interest rates lower than 9-10s *and have never gone above that rate since*
Mid 00s bust - interest rates around 6.4, after/during bust interest rates lower than 6.4
will we be able to say *and have never gone above that rate since*? That's the big question.
If you expect this recovery to be anything like the recovery after the 80s bust or 90s bust then interest rates can never go above the mid 6's.
We may very well be entering unprecedented territory for Northern Virginia since the modern era we have a lot of data for (1975+).
Cara,
Sometimes I've put motivated sellers too. Maybe you found a motivated seller?
How quickly did you have to react? There seem to be so few motivated sellers that I suspect those homes go in about one weekend.
I think we have a very disjointed market where unrealistically priced homes have 180+ days on market and motivated sellers have about one or two weekends. You'd think it would start to seep in that people need to realistically price homes but there are just a lot of obstinate people.
Oh another lesson of the past is its really hard to miss the bottom. It's not stocks. Maybe you miss the absolute best month to buy. But you tend to have about 3-4 years to get in while the getting is good.
So even if the "good" period began in 2009 (doubtful for the middle range of homes) you probably still have until about 2012-13 at least before you regret not having purchased.
The city called and told us not to put out our trash until trash day instead of the night before. They usually show up at 5AM and pick up our garbage. That means I get to be up at 4:00 or 4:30 to shovel the end of the driveway since the plows will be running all night from the new snowstorm...I'm trying to think happy thoughts right now.
By the way, I've dubbed the storm tomorrow:
Snowmageddon 2: The Snow Strikes Back
That's good to know about the housing market not being like stock market with price bottoms :)
@sehrwunderbar said...
"That's good to know about the housing market not being like stock market with price bottoms :)"
Even better, if you believe housing was a bubble, take a look at what bubbles do after they burst. Off the top of my head, bubbles to research: Japan's 1980s housing bubble and the Nikki, 1980 Gold bubble, Naz '01, Dow '29, Florida land bubble in the 20s (I think) etc.
The bottom line being if it's a bubble it doesn't come back for a long, long time and the bubble item becomes extremely cheap especially when inflation is taken into account.
Another common theme among bubbles is the "rebound" which sucks in those who see prices as cheap soon after the initial crash. After that demand gets sucked in . . down she goes.
Will that happen in DC? I don't know and I don't really care too much at this point as I don't plan on making my career or plan on raising a family here. I'm staking out a few other places to live where I can buy a 5-10 year old 5bd/2bath 2500+ sqft home on .5 acre or more for under 100k 15-20 miles from a downtown and I will be buying with cash. Same thing here would cost 600k?? Forget that, incomes aren't that much higher here in DC. If housing there collapsed another 50% I wouldn't care at all, it's an expense not a path to riches. The only sure way to riches is increasing productivity.
Is it a good time for an individual to buy here? IMO, it depends. If you can comfortably afford the payments, cheaper than rent, plan on being here a while . . . maybe it is. I just wouldn't plan on making any money on it, I'd plan on losing money on it. But, I'd also think of it as minimizing my expenses. So if it's cheaper than other alternatives, maybe.
The only way and I mean the only way housing prices are going to skyrocket back up in DC (besides an initial rebound from the initial crash to ultimately go lower) is if incomes go up. Last time I looked the Feds (which most other companies in the area base their increases on) only gave a ~2.5% increase. Housing is tied to incomes and lending, so unless lending gets crazy again or incomes start going up at a decent clip . . . anywho just my thoughts.
ps I didn't answer your ? on cheap rent. Newspaper classifieds, craigs list (not the greatest), some renters guide (can't remember the name of it), & looking at rental signs gives me a plethora of places to look for cheap rentals. In addition, one of the best times to get cheap rent is Oct-Dec. timeframe after school starts. I also do sacrifice for a little longer commute, but then again I'd probably shoot myself if I had to work inside the Beltway (not commute related, I just don't care to go inside the beltway). I've found plenty of places in Manassas, Burke, Springfield, Centreville, etc. I've also found places in DC too. It's tough to do, but it can be done, I've never paid more than 1k a month, and I don't plan to ever either.
tbw,
3 weeks.
In my area there was enough distress in the last two years to scare the pants off any sellers. All real sale list prices have been within $10k-$20k of other normal sale comps and then going for 88%-98% of list.
There's a couple well priced ones right now, that are "already" 1 week old, that aren't under yet. Of course the twit of an agent who lives in this neighborhood, hasn't actually posted any pictures of them yet.... And yet she sells like 1/4 of the properties here. Prices under comps, but apparently markets only if the need arises. (sold listings by her sometimes had interior pictures, not great ones though)
What's strange lately is that the SS discount has gone from $100k last year to $20k this year. We'll see if those find takers. Is 5% off enough of a discount to deal with the hassle and uncertainty? Are those just the lists and they'll still accept low-balls?
Housebuyer Although the $8K bribe may not have a direct effect on the $600K plus market, I think it has had a ripple effect. Many of the 1 bed condos I am seeing seem to be owned by couples who bought them a few years ago, got married and now about half of them seem to have pregnant wives and want an entry level house. In Arlington that is usually a $600K plus house. If there weren't buyers for their less expensive condos because of the $8K bribe, these couples couldn't buy a house. Even if they can't use the bribe, these couples are creating demand for more expensive houses. Maybe that is why the inventory is so tight in Arlington for those almost entry level houses.
I will believe it is a bottom when there is no screaming for a buyers bribe and no forced intervention by FHA.
Va_Investor said...
It is now 2010. Are you still making the overpriced argument? Well, as I pointed out, not every area is. Just check all of Vienna 22182 and get back to me.
If you don't think 22182 is overpriced, you're crazy.
pat, I think the exact opposite. The bottom is here and gone when most people think it's a mile away. If everyone is telling you to invest in those great .com's, that great real estate, etc then it's time to SELL. If everyone is telling you that now is a terrible time then it's time to BUY. Capitulation is when everyone gives up, including the government. They're throwing credits at the market.
If the credit helps push people into the market a little early and thus helps soak up the excess houses on the market then we'll never bottom as low and less people will walk away. The shadow inventory of bank properties has been a hot topic in the past but I would think that if the banks were going to dump properties on the market, it would be before the credit expires so more than likely they're just working through inventories as normal. Shadow inventory can also describe home owner that want to sell but pulled listings from the market. Lets face it, most of these people are not going to capitulate. They'll just wait it out. As an example, I know a guy that put down 50% on his house and has owned it roughly 8 years. He's thinking about selling but decided not to because he can't get enough for it. I told him it would take 10 years to get what he wants and he told me "fine, I'll wait".
If we haven't bottomed then I don't know where the bottom is.
So I just did a quick search on franklymls for the word "party" (as in "Subject to 3rd party approval) in Oakton, Vienna, Great Falls detached homes from 500-800k and got some interesting results. 16 short sales in all of 2009 and already 2 short sales and 10 under contract just 6 weeks into 2010. We are definitely not at the bottom in these mid-high end homes folks.
If people know of a better way to search for short sale statistics on frankly please let me know.
I don't know how one concludes 22182 is any more overpriced than the McLean zip codes. It's the most expensive part of Vienna; the inventory is higher than in 22180 or 22181, but there were also substantially more over $1M sales in 22182 than the other two Vienna zip codes. There is a larger inventory of unsold properties in the 22101 zip code in McLean, where there are even more over $1M sales. If 22182 is too rich for you, go look in 22181 and other areas further west and south.
Pat-
The FHA has been "intervening" for decades, sometime more sometimes less, but you will never buy if you wait for them to be totally out of the market. They are only totally out of the market when private banks are so lose that the FHA is not needed like in 2006. I do agree that once the 8K is gone the market will see weakness. I don't think the CS will fall below its March 09 lows, but I do think high end houses will probably fall to new lows, because they were not in the bad of shape in March 09.
Jeff-
I don't know about you, but I still hear tons of people saying you should be buying real estate "its 20-30% off and record low rates..." so I would hardly call it a contrarian indicator to buy now.
What's your point? So 1988 and '89 were this go around's 2004 & 2005. You argue that the 90's and it's decade of no price increases don't matter. I disagree. You want to take a 9yr time frame and say that that defines the market. That is absurd.
No, what's absurd is picking the peak of the last bubble, calling that a well-valued price, and extrapolating forward from that. Clearly, if those prices had been well-valued, they would not have been followed by 10 years of stagnation.
Furthermore, nothing fundamentally changed between 1998 and 2002, or 2002 and 2005, to justify the outside increase in prices. It certainly wasn't wages, and it wasn't wages x fixed rates. It wasn't increased demand, as housing stock increased faster than the population.
What we are left with are animal spirits and BS loans. I remember seeing those loans advertised in 2002 next to the brochures at open houses. My father and I, at the time, thought that they were the stupidest thing we had ever seen. You'd have to be a real sucker to take out one of those loans.
Little did we know that the loan options in 2002 would look tame compared to what was coming down the road.
Didn't I post last month that 4 (or 5?) out of 20 houses listed in Oakton in the $6-800k range were REOs of various flavors?
I agree with Jeff. The two sales in my neighborhood (and the only listings) were distress. I don't believe anyone is going anywhere absent distress.
If the distress sales for mid-upper are coming, I guess we will see. I truly don't know, but I'll go back to my argument that even a job loss won't force a sale for many upper end owners due to other assets that can be tapped to tide people over.
As for 22182, a double in 20yrs is not overpriced in my mind given the compounding effect of inflation driven increases and real wage growth for upper income folks. Add in the fact that these are "destination" homes to a large extent.
If people are content where they are, why would a long period of stagnation cause them to sell? They will just stay in their home and continue (or finish) paying off the mortgage.
And I agree with condobuyer(?) that the move-up buyers looking at 600K homes are getting a boost from the 8K driven buyers.
Pregnancy is a great motivater. When we wanted to move in 1993 (I wasn't pregnant) we just decided to rent the old place even at a negative. It was a great time to buy the next home and we found a terrific deal on a distress property. We sold it at a triple in 2002 and bought our current courthouse foreclosure home.
Nova,
I guess we shouldn't talk time frames. Should we go back to 1979? It's really rather circular, isn't it?
No.
Post a Comment