February homes sales were on the weak side in Fairfax, Loudoun, and Prince William counties. This might have been partially due to the extreme February weather. The prices buyers were paying, however, were well above last year's.
Wednesday, March 10, 2010
Northern Virginia February Housing Sales
Posted by Harriet at 10:53 AM
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Or the price points buyer's were buying at were way higher. Or some combination of both.
Thanks for the table as always!!!
Look at the Texas Ratio, that
tells you the market is still really
unhealthy.
In an ideal market there is one buyer/seller. or one sell/active.
here we are still at 6:1....
WTF?
The prices have moved up because the weakest sisters have been destroyed, now the middle tier is starting to give up.
People have exhausted 401K's to keep up mortgages, now they are selling.
Pat -- Huh? A 1:1 ratio for sellers to listings is an ideal market?
Unless I am misunderstanding you, I think your "Texas Ratio" is what we refer here as Months of Inventory or MOI -- the number of listings divided by sales. Harriet posts this every month.
Anyway, as you can clearly see, a 1:1 ratio is NOT the sign of an ideal market. We had close to 1:1 ratios back in 2002-2005, and that lead to 20% a year price increases. Clearly thats not "ideal" now is it?
The MOI ratios that are bandied about as being "healthy" or "balanced" usually range between 4:1 and 6:1 depending upon the source. I dont know which one of those is correct, but I can certainly tell you 1:1 is far from ideal.
pat,
what is the Texas Ratio?
You could look at my old metric, new listings versus new contracts and contingencies, to see whether new inventory is appearing faster than it is going under contract. For most of last year that was 1:1, and now that's slightly over 1:1 but still below 1.5:1, but for now that simply tells you that people are starting to list their houses for the spring market.
I think he is talking about months of inventory which I think historically the national average is ~6.
The texas ratio relates to banks solvancy and if it any bank that is 6:1 has failed, which is why I assume he is talking about something else.
texas ratio
Wow,
We are seeing an upward trend when I expected exactly the opposite. I think inventories are fairlie down, comparable to the normal in 1999.
Cara,
I do not kwow why you get so defensive when talking about colonials. People like bedrooms on second level, because it gives them a separation from the kitchen and living room. I understand you don't find that important, or attractive or a reason enough to call the house a colonial. But that is how the term is being used, and many people prefer those types of homes over ramblers, split levels and split foyers.
Note how the modern definition says nothing about the facade, which was in the original "colonial" from the 18th century.
When enough people call something a colonial or whatever is the case, then that term defines whatever it is people call it.
dc2,
Did you miss the part where I said I'd drop it because there is no other name for the style?
Why does it get my goat?
Because I'm from New England?
And because a month or two or three ago, I looked hard at the data from my neighborhood to try to ascertain if there actually was any difference between the four house types once you'd accounted for the different number of beds and baths and it simply wasn't there. (other than a slight bump for cape's, which is part of why you see no objection from me on that front). On first glance it was there, but once you took out all the ranches with only 2 bedrooms and 1 bath, it went away. The low prices on the split-foyers likewise can be fully accounted for, not by the asthetic, but by above ground square feet. (It wasn't there in the Days on Market either).
If you want to make the claim that the demand to supply ratio is higher for 2nd story bedrooms than it is for first story bedrooms, then back it up with data. Yes, some people like that. Quite possibly even a majority. Give me a neighborhood or zip code or something where you or I can look at the sold data and see it in action. Because what matters is not whether the majority of buyers prefer 2nd story bedrooms, but rather if the supply of said houses is too low relative to the demand. My neighborhood, apparently they built just the right ratio of the two-story to one story houses. That, presumably, is not always the case.
Find me a counter example.
This property regularly came up in several screens I ran, but it just didn't look appealing enough for the list price vienna
The thing I find surprising is that this was a REO for almost a year with no price drops and some one decided it was a good idea to pay more than list. Why on earth would you offer more than list for something that has been on the market for months?
"HB said - Why on earth would you offer more than list for something that has been on the market for months?"
HB,
There is a sucker born everyday - lot more of those in NoVA than anywhere in the country....
Having said that - it could have been a short before it turned foreclosure...
Cara,
Sorry don't have the time to pull data to prove if there is a higher demand for second story houses or not. However, I am not sure what data can prove since people may prefer those homes but not be able to purchase them. I just agree with the realtor notion that colonials are preferred in this area. Some people prefer one level living. Me included, but not ramblers. I like the ramblers that have not resemblance to what you find around here. Ramblers with Mediterranean style made out of concrete. These are usually fairly large and all in one level.
Spider-
It was at least a REO for several months, having seen the info.
I agree there is a sucker born every day. It also reminds me of a quote from gone in 60 seconds about there are too many self indulgent wieners in this city with too much bloody money. Although perhaps talking about a 500K house is not the best example of that :)
A week ago Forbes came out with the richest counties in the US. Not surprisingly you can pick your favorite DC suburb and it is on the list
<a href="http://en.wikipedia.org/wiki/Highest-income_counties_in_the_United_States> rich counties </a>
dc2/cara,
I've seen two type of split levels:
(1) enter house, can go up or down, down is basement-y, up is main floor with bedrooms, kitchen, living room, etc - generally a small home
(2) enter house on main floor - kitchen, living room, etc, nothing is above or below the main floor; to the right (or left) is a split up are bedrooms and down is the basement
dc2 - from your definition of colonials #2 could count but I think when people say colonial they are thinking that L shaped (or U shaped) around the staircase three story house.
cara - are you sure that the $/sq ft is the same for colonials as splits or ramblers? I'm skeptical. Can you show some examples? I agree that obviously part of the price difference is more square footage but I think it goes above that.
cara said
Because what matters is not whether the majority of buyers prefer 2nd story bedrooms, but rather if the supply of said houses is too low relative to the demand. My neighborhood, apparently they built just the right ratio of the two-story to one story houses.
Maybe I'm reading you wrong but you seem to be saying hey some people are buying these split levels and ramblers so everyone can't hate them.
If so, I would say you have to take into account how many people are buying the land/community and putting up with the outdated homes there. If a hurricane or some major disaster tore down all the houses in Burke and they had to rebuild it from scratch I predict the developers would find absolutely no demand for anything smaller than a three story colonial (in terms of SFH).
TBD,
Number (1) in your scenario is a split foyer. number (2) is the split level.
I believe most colonials have staircases in the middle, but people call colonials to everything with bedrooms and bathrooms on the second floor.
The term "colonial" obviously sells because it is what people prefer. I have even seen THs called colonials becasue they have bedrooms on the second floor. Now I think that is kind of strange, but it is to signify that bedrooms are on the second level.
Re: Today's MRIS data
I do not think that the mix of homes are the only explanation for the upward trend in price this month. I find it very hard that the month of January/closing in February most buyers in all counties decided to go for the more expensive type home. That they all somehow coincided on that. So, without further examination of the sales data, I would argue that it is a real trend upward in prices.
Last Sunday a realtor told me the same, that she had seen an uptick in prices. The data confirms it.
And didn't we see also an uptick in median price in the January data. This may be a trend.
The bottom is over, except for areas with inventories higher than let's say 1999. If inventiories increase over those levels once again, we may see further price declines.
dc2,
A realtor told you now was a good time to buy? Gasp. It must really be safe then! ;)
I would agree we hit bottom *if* we had gotten here without a variety of government programs. The big question for this spring and summer is how the market reacts to the removal of the various programs (MBS buying to lower mortgage rates, $8k tax credit, etc).
Maybe people will keep paying these prices at 5.5%+ interest and/or without the $8k. Maybe not. It will be interesting to see what happens.
I do think the notion that once we hit bottom we better rush, rush, rush to buy is unlikely to be true. I think we'll see flat prices for a while or 1-2% gains.
Nobody is talking about rushing to buy, but about the bottom in prices. I agree that the uptick can be very measured and over a long period of time.
dc2-
I think its less of a rush to buy higher price houses as there is less demand from the 8K getting people to buy lower end properties. The months of inventory of high end properties is still very high although it is down from the peak.
cara
sorry i had the texas ratio confused.
My mistake, but the active to sell ratio still seems high to me.
tbw, dc2,
I did it a while back... and don't feel like repeating it. But all I did was make refinements on frankly solds searches until I got apples to apples. First cut ramblers versus colonials looked like everyone was right, but it turned out to simply be that post-1974 they haven't built any ramblers or ranches in Springfield/Burke. (which speaks to your point about a hurricane). So then I took 22151 King's Park which was mostly all built within a period of 3 years. The differential persisted, but then I noticed that there were a bunch of 2/1 ranches skewing it low compared to the 4/3 and 5/3 colonials. When you limit it to 3 or 4 beds and 2 or 3 baths, only the small cape premium remains.
But... Here's the thing. In FFX cnty they've kept building, continually since that period in the 40s when they built tons of tiny 1-story houses for returning GI's. (not really ramblers any more than the 60s colonials are colonials), but since the mid 70s they haven't built any more single story homes so the ratio of 1 to 2 story homes has been corrected by further construction to more closely match the tastes and needs of today's buyers. (Evidently anyway, if not then there would be a price differential).
However, in Arlington? (pure guess, I'm not from there, nor have I explored it much) or anywhere that was heavily built out in the 40s, there could easily still be an excess of small single level homes, that is still correcting, but only slowly because of lack of land.
So, I'm pretty darn confident about the lack of a price premium for Springfield 60s colonials over Springfield 60's ramblers, that I've investigated thoroughly but this does not mean that there isn't a premium for two stories elsewhere in NoVa.
You have to wonder though, at some point we're going to start to need more 1 story houses again, either that or put elevators on everything, so you have to wonder if they're going to start building them here again, or if the existing excess in say Arlington is sufficient. My guess is there will be a market for slightly larger ramblers in the next ten years that is not met by the current stock (which is mostly too small for current taste).
Still, all in all, I contend that the burden of proof still lies with everyone who's backing the common wisdom. I'll go find the link to my earlier machinations...
My investigations in their blow-by-blow back and forthness:
12/3 bits bucket
I think it continues into the next bucket.
"DC2 said...
I do not think that the mix of homes are the only explanation for the upward trend in price this month. I find it very hard that the month of January/closing in February most buyers in all counties decided to go for the more expensive type home. That they all somehow coincided on that. So, without further examination of the sales data, I would argue that it is a real trend upward in prices."
DC2 - this has been going on (in most areas) for at least 6 months now. No doubt its real.
That said, the only issue is as TBW said, how we got here. Once the govt training wheels are removed do the prices remain? We shall see.
Pat -- you may think it the ratio is high, but apparently the market does not.
Actually, there are 1 story homes with basements built in the early 1990s in Springfield/Lorton. The Middle Valley subdivision has whole street of ramblers like this one. The Crosspointe subdivision which spans over the Lorton and Fairfax Station zip codes also has some 1 story homes like this. Also, the builder for the 10 home Laurel Overlook has a 1 story model as one of the 4 home designs. Looking in frankly, it seems at least 3 lots were advertised as "1 story" living for this new community.
"Pat -- you may think it the ratio is high, but apparently the market does not."
He doesn't "think" it is high...
..."believes" maybe?
I agree that there is no rush to buy and that prices in the mid to upper mid range will remain stagnate for at least a few years.
I also believe the downside is not the big concern that it was. The 8K, imo, mainly affected (affects) the lower end. The low end overcorrected due to the huge volume of distress sales.
Pat, I wouldn't count on significant numbers of more expensive homes becoming distressed. I really don't believe that many people will deplete assets to the extent where a sale is necessitated. Just my thoughts based on the fact that move-up buyer's usually used equity from prior home sales to put cash down and have accumulated other assets.
Obviously this is not universal, but a stable market will cut the number of drastic discounts. I think we are pretty much in agreement that there is much demand for discount homes and we are starting to see higher comps.
Despite tbw changing the argument by stating that the quality of the inventory has caused prices in the low end to go up dramatically, a knowledge of this market (under 200K) proves this theory wrong. Now tbw abandons that argument and states that he doesn't care about that market. Fine.
I pointed out a great buy in Vienna in 2008 but this was dismissed as "one house". Yeah, fat chance.
The argument that mid-upper prices will fall is something that I don't particularly agree with; but I can't predict the future.
Most here seem willing to wait. Hours spent on line looking at every bit of information may give you some insight, but the bargains take immediate action and some level of guts.
Charyl makes some very important observations, and I generally agree with her, but have some other points of disagreement.
While there were people who did climb the property ladder, there were also people pulling equity using HELOC's and second trusts, and leveraging their lifestyle via debts.
LA was the worst for this, but there was plenty of it in DC too.
Cheap interest rates are keeping this from coming as an avalanche, but, that won't be forever.
We have a cascade of bad Commercial Real estate and if Geithner tries to bail them out, i think there will be rioting in the streets.
that stuff needs to fail.
the VA and DC markets are different. VA had much faster foreclosure, DC has slow foreclosure.
Ultimately I think the large number of people underwater in DC will translate into a steady rise in walkaways.
Thanks Hayfield,
I hadn't run into those because they were just outisde of my price parameters, but very good to know!
I would add a couple more factors that favor purchase sooner rather than later:
1. Interest rates are at (or near) all time lows.
2. Not everyone wants to live under the thumb of a LL. There are tangible benefits to ownership as well as intangible.
3. The market for homes over 600K is weak.
4. Renting puts you further down the amortization schedule. Rents may be cheaper now (for reasons stated above) and there will be a break-even point in terms of cost and appreciation at some point. Also, LL's are being foreclosed on at a high rate and you may be moving whether you want to or not.
Absent a double dip or some shock to the (local) economy, I see minimal buying risk. You all seem to be wanting to buy long term. You will most likely face the usual risks - death, divorce, job loss, illness. Insurance handles 3 of these.
"Not everyone wants to live under the thumb of a LL."
You must be a pretty hellish landlord to have to deal with...
Va_investor,
Which 3? What kind of insurance covers job loss, or is it divorce?
(hayfield, I really like that first house btw...)
VA_Investor said...
I would add a couple more factors that favor purchase sooner rather than later:
1. Interest rates are at (or near) all time lows.
2. Not everyone wants to live under the thumb of a LL. There are tangible benefits to ownership as well as intangible.
3. The market for homes over 600K is weak.
4. Renting puts you further down the amortization schedule. Rents may be cheaper now (for reasons stated above) and there will be a break-even point in terms of cost and appreciation at some point. Also, LL's are being foreclosed on at a high rate and you may be moving whether you want to or not.
I disagree with your factors being in favor of purchasing sooner rather than later.
1. This is realtor talk. We all know that low interest/high price is the worst time to buy. What happens when we want to sell in 10 years and the interest rate is now 8% or more?
2. Apartment complexes are great, and rent townhouses too.
3. It may be, but many sellers in this price bracket don't yet realize this. If you can find a good deal then yes go for it, but many of us disagree on what a "good" deal is.
4. More realtor talk akin to "renting is just throwing your money away." All of us are saving way more money renting than we would be accumulating equity if we owned right now. True we may be a year later on our amortization schedule, but the thing that matters is the loan amount and that number will be smaller with the larger down payment we can put down after another year of renting.
Jeremy,
Besideswhich there's nothing stopping you from getting a 20 year loan to get "ahead" on that amoritization schedule.
Jeremy,
Has anyone cited a correlation between higher rates and lower prices? I thought the general consensus was that higher rates come with inflation which comes with pay increases. I know I have discussed buy-downs and arms and FHA.
Save away, but don't forget leverage if prices start going up.
Cara,
You are right. Insurance covers 2. Nothing is risk free. A job loss should only precipitate a fire sale for the unprepared.
No one wants to address the elephant in the room? Many of you want champaign on a beer budget. This constant mantra of "prices must come down" goes unchallenged and has lost it's relevance - unless 5 or 10% is a reason to rent for another 3 or 5 yrs.
Leroy,
I'd love to have you for a tenant!
Va_investor,
Sorry I was just checking my sanity on the 2 versus 3 out of 4 thing.
You could always buy the champagne of beers, that's cheap. Or Andre, also not more expensive than beer by volume.
:)
To extend this analogy, I would say that I bought the champaigne of beers, a 60s house in a close in commute (for me), and Tabitha bought and Arkey was selling Andre, champagne houses just with long commutes. "Similar" price-wise, well, not that I could have afforded that additional 100k+.
I think the "consensus" on what happens with interest rates and prices is the position of myself, CRT and a few others, it's not necessarily accepted by all or most, we're just often louder. Every time the discussion comes up there are still people on both sides.
VA_Investor said...
Save away, but don't forget leverage if prices start going up.
And I sure won't forget about leverage as prices in my target range continue to dribble down for the next 12 months - maybe even more than dribble depending on who you ask about all the government support ending. It works both ways.
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