Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
housing scenario forecast
Blanket predictictions that address the entire county as "one" are not very relevant, imo, to NoVa. And, I clearly don't understand the supply/demand statements about lumber.None of these conomists seem to agree on anything. I expect stagnation for a number of years.I don't think it's helpful to any purchaser to look at the US Market as one. I'd care much more about specific dynamics, and more specifically the intended house.
And, I clearly don't understand the supply/demand statements about lumber.A much less shorter answer is that he thinks the price of lumber is a tell in the way housing is going to go in a given market. Falling demand + rising lumber sales = oversupply = falling home prices = market continuing to stagnate or tank.Lumber to the housing market is as steel used to be to the automobile market (can probably say steel is to the Caterpillar market nowadays).It's an insider reference. For the homebuilding industry, the price of lumber drives the bottom line, next is labor. Which is why in the 80's there was so much interest in stamped steel studs for residential construction when the price of steel dipped below the price of wood (as one example).The other change was a movement away from the blue collar journeyman trades (mason, carpenter, etc..) to day laborer types. Each change drove costs down and raised margins. The electricians are the only holdouts from those days. Fiercely protected. Plumbers too, but much less so.FWIW.
VA- I agree the lumber comment is pretty silly. Housing starts have basically been at all time lows for the last year. Sure some houses are being made and some of them are speculative, but houses are being made at a much slower pace than houses are being demolished and demand is growing. So the net surplus of houses is decreasing. The other reason the lumber comment is meaningless in my opinion is that in the last year I can't think of any commodity that hasn't gone up a ton. No one wanted to build anything a year ago so you could get these commodities at dirt cheap prices because there was a huge over supply. Since then mining has slowed down and the economy has picked up causing prices for the commodities to rise. The other thing I find a little humorous is that I think the author doesn't understand that the housing chart is inflation adjusted. He claims that on the CS housing chart prices will fall 7-15% over the next several years. If this is the case is probably means nominal price drops are basically nothing and inflation chips away at real house price.
I hadn't read the persons last comment that he expects the drop in 2-3 years. In which case inflation may be able to get the ~7% drop, but to get to 15% there would likely be a 2-3%/year nominal drop in addition to the 2-3% inflation.
Lumber prices are now ~$320 per 1000 bd ft. This is only slightly above where lumber has been each of the last major troughs. So I really see the 50% more as a comment that people no longer think the world is ending rather than a sign that the housing market is booming again lumber price It would be like saying that the economy was booming in May 2009, because oil prices had skyrocketed 50% from $30/bbl to $45/bbl
Closing time. I don't have to go home, but I can't stay here.
Xpovos-Congrats and good luck. Don't do what my brother in law did. He thought he could just wire the money for his DP, but didn't realize that his JP Morgan account could only wire $50K/day and his DP was supposed to be closer to $500K. So he had to drive from here to the closest JP Moran branch, which is in New Jersey to get a certified check.
housebuyer-At least he knew he had to wire the money... We closed earlier this Spring and as we were walking through the house the day before closing my agent made an offhand comment about having our cashiers check ready, leading me to say "what now?" He asked how we else we thought we were going to pay, to which I honestly responded that I thought I'd just write them a check. In my defense, I've written similar magnitude checks for cars before and the most they've ever asked for was for me to call or login to my bank account and show them the balance. [shrug]I immediately called my Midwestern credit union only to find out they only send outbound wires twice per day, but the closing got delayed anyway to problems on the seller's end so it all worked out.
Last day for contracts with the $8k. It'll be fun to see if there's a bigger dip in inventory this week in the overall charts than "usual". http://www.recharts.com/nova/nova.htmlLooks like FFX Cnty's last three weeks' bumps are all similar (which makes sense given they're all effected by the $8k). But it's only through 4/29 now, and agents aren't necessarily perfectly prompt in marking things UC. Of course there is no normal. I guess we'll have to compare it to the inventory wiggles over the next month. If the wiggles all remain of the same magnitude then that would be a very good sign that the $8k was not a big driver around here.
Oops, I'm forgetting that Friday should have the most new lists, so it'll probably bump up in today's number's tomorrow. So it looks like 3 weeks ago was the biggest week for securing contracts with the $8k. Wow, caution and housing going together, who'd a figured? (Where "caution" is defined in this example as making sure you were going to get the $8k rather than waiting until the last minute).
Last day of the tax break... I wonder if there's a way to compare the number of listings that go to contract today vs. the number that went last Friday (and eventually, next Friday).
Dave,That's what I'm trying to do with just the inventory charts. Inventory bumps up on Thursday's and Friday's with new listings for the weekend, and comes down with contracts during the week. But for a more exact answer, you could see if it's somehow do-able with sawbuck, since they're the only ones I know who keep the history of when homes go under contract (and back out again).
Earlier, I meant "country" not County.I believe that the low-end (that had bottomed) accounted for most of the 8K factor. I may be wrong but I agree with another poster that people buying 500K+ houses don't care too much about 8K.They want to know if we are near a bottom; and there are many opinions regarding this.OT,This Gulf oil situation is absolutely crazy in this day and age.
cara,I think the Redfin alerts are pretty good as well. Homesdatabase lags. Other agents sent me alerts as well. It's interesting and curious as to why some are a day or two faster than others.
It'll be interesting to see what happens when the 8k expires. Anyone want to make predictions?I'm going to guess (for the 2-3 month timeframe) "activity drops a little, prices stay roughly the same to slightly lower", with a small listings uptick in late May/early June as parents who didn't want to move during the school year get to the end of the school year.
VA,It's catastrophic and incredibly sad.
Cara & VA-I can't believe that BP didn't try and get help from the military earlier if they didn't think they could handle the situation. I thought that in this day and age we were very capable of containing spills and using bacteria to eat the oil...
Re: people looking for $500K+ houses and the $8K creditI'm not sure if it's that they don't care, because they may be very good money managers and $8K is $8K. They may not care in the sense that they aren't going to grossly overbid for a house and pay $30K, for example, to save $8K. I think the more important factor is that many of them didn't qualify for the $8K or $6.5K, due to income limitations. For single buyers (and there are a lot of them in this area) the income limitations are pretty severe, relative to the high housing costs. And for those looking for somewhat more expensive than $500K homes, there is no credit to the limit on the house price to qualify.
should have been "no credit DUE to..."
hb,I'm beyond myself on this oil situation - very remnant of the hurricane. For Christ's sake. What in the Hell is going on with the Administration?
hb, vaI'm beside myself but not with the same optimistic outlook on human capabilities. 200,000 gallons a day? In 6-8 foot seas? Then again I get all my real news from NPR.
Thanks, Cara, for the link. The article does a nice job of educating those of us who know little about offshore oil drilling. Although the present BP oil rig disaster is terrible, there are huge differences between this situation and Katrina, with respect to what caused the situation, many humans put at immediate peril while the administration "flew over" rather than take steps that could have been taken, etc. Xpovos, I hope your closing went smoothly! Another one (of us) bites the dust - or grabs the brass (golden) ring, as the case may be. I hope your soon-to-be-enlarged family is very happy in your new home.
re: the lumber debate, isn't that world lumber demand that the author is discussing? And aren't developing countries demanding quite a bit of lumber these days?
cara said (in part)If you think that just really nice expensive houses are enough then you're missing an entire cultural layer that I cannot impart in a blog entry. I grew up on the wrong side of both sets of tracks in one of the richest towns in America. Until you've attended a few 16th birthday parties that cost 5x as much as my wedding (which was admittedly extremely inexpensive) you can't really understand. Woah. I never said there are not some really snobby home buyers. I might not be as unfamiliar with this market as you think since I meet lawyers all the time who make $800k or above every year.I agree with you that some of these executives are very, very rich. But the average salary is $200k. That means many will be making less than $200k. Of course some will have wives/husbands making a lot of money as well. Some will not. I am just noting that many of these people will be in the $150-250k range. If I recall correct your husband and you are not that far below $150k in joint income. So it's not like they are all orders of magnitude richer.
tbw,I thought the average you were referring to was for some subset of FFX or Loudoun county not Northrop Gunman executives. I hadn't seen a statistic on the average or median pay of the 300 relocating employees.
pat saidI worry about what happens as the 10 million unemployed exhaust their benefits. The word from the senate is there will be no further extension, and technically the average UI benefit is below the poverty level.See this HuffPo article. They are not talking about cutting off unemployment benefits but limiting it to 99 weeks. It looks like even if they extended it that it would only be another four weeks (since the 103 weeks is cited.) I think they will continue passing bills that allow people to get up to 99 weeks. So the numbers are much smaller than 10 million:In California, 100,000 people have already exhausted their benefits. State officials told Bloomberg that people who've exhausted 99 weeks include 57,000 New Yorkers (a higher number than in Schumer's letter), 130,000 Floridians, and 30,000 Ohioans.I think extending their unemployment benefits is not really solving the problem. Why not have a federal jobs program like the New Deal CCC? I doubt that people unemployed for 99-103 weeks are going to be hired by the private sector when they are likely swamped with resumes from people currently employed or unemployed for a year or less.
I agree with you that some of these executives are very, very rich.Yes. But the average salary is $200k.No. That means many will be making less than $200k. Not many.Of course some will have wives/husbands making a lot of money as well.The gender split is nowhere near 50/50. Some will not. I am just noting that many of these people will be in the $150-250k range.Not many.So it's not like they are all orders of magnitude richer.Define rich and order of magnitude.:)
TN,but they may not all be straight either... :PJust picking on you since, to me anyway, a slash just implies multiple possibilities not equal probabilities.
Closing is finished. We are home debtors!It went very smoothly. They asked I pass on some advertising for a job well done, so here it is:Our agent was Denise Lee. Her websiteOur lender/originator was Charlotte Quinn of Primary Residential. Her websiteOur closing was Key Title. Their websiteAll was perfectly smooth, awesomely aboveboard and looking out for our best interests.
Congratulations Xpovos!!!Enjoy it.
TN,My source that the average salary is $200k is the Governor of Virginia. What is your source? About 300 employees, who McDonnell said earn an average of $200,000 per year, will be involved in the move, a mixture of workers relocating from Los Angeles and new ones hired in Washington. A summer 2011 move-in date has been targeted. ArticleI never said the gender split of executives was 50/50.
This oil spill sounds like the kind of thing oil companies will use to raise prices to $3.50 or $4. :(
TBW- I have no source, but your numbers make way more sense. On Yahoo finance it shows how much the top 5 execs make and they make between $1.2MM-$2MM. You have to imagine that if the CEO is only making $2MM, that the top 300 people are probably only making a couple hundred grand. I think people around here vastly over estimate how much upper management makes in most industries.
TBW,Oil companies can't "raise oil prices." Oil is a commodity traded on a market. Speculators may bid the price up but oil companies can't manipulate the market. I'm pretty sure that every time oil prices spike people yell and scream and cry foul and there's never any evidence that the oil companies themselves can manipulate the price.My $0.02
hb,I recall recently posting that something like 13.4% of the households in FX Cty make over 200K. So these guys will have alot of company.
"I recall recently posting that something like 13.4% of the households in FX Cty make over 200K. So these guys will have alot of company."How many households are there in Fairfax County?
mytwocents-I agree that oil companies do not set the price. In reality they provide very little of the worlds oil and they can't collude well enough to set prices. To some extent OPEC can collude to raise prices, although historically they have been pretty bad at setting prices. The real problem tends to be massive growth in developing countries and back in 08 there was a lot of speculation
As of the 2000 census; 350,000 households. I couldn't find anything more current.
So, 350k * .134 = ~47,000If the average salary of the 300 employees is $200k, the median is certainly lower than that...Even if we assumed every single one of them was going to live in Fairfax County(very unlikely) it still wouldn't make a meaningful difference.
Good for you Xpovos. Glad everything went smoothly for you.I closed myself a couple of months ago. I went under contract a couple of times but walked away when home inspectors found major undisclosed structural damage for which the owners were not willing to negotiate. Finally closed a couple of months ago on a property in good condition.To paraphrase a well known fairy tale princess "Ya gotta kiss a few frogs to find your prince!"
Congratulations, Xpovos. I hope you enjoy the weekend!
Thanks, all. For me the kissing of frogs was in the form of viewing many unsuitable properties by price, and many other problems over the years. Never tried to put a contract in until this one, but was well prepared.
Re: executive payI have no way of knowing whether the article TBW linked included bonuses along with salaries, but for many top executives, bonuses are a significant part of most years' pay.
Also, I don't know how many, but at least some of those 300 are surely administrative and support staff rather than managers, which would bring down the average pay.
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