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.
This is only moderately relevant locally, since delinquencies were under control in the first place, but I do find it impressive that 60+ day delinquencies has finally started to come down for the first time in 12 quarters. mortgage delinquencies You have to assume that the market healing across the country would mildly impact prices here. Although this news will likely get lost in the chaos today compared to the $1 Trillion package the EU & IMF put together that is lifting global markets ~4-5%.
hb,All recessions eventually end. Economic indicators suggest that we've turned the corner. It's my understanding that jobs lag(?).I'm glad to live in this particular region as so much is reliant on gov't spending and we seem to be attracting alot of companies relocating from other parts of the Country.Once again, glass half-full.
hb,First decline in 12 quarters (3 years) is nothing to sneeze at. Now, the fact that it should have been helped by tax refunds means it's doubtful to be the start of a trend yet. But, declining in a typically declining quarter is a heck of a lot better than continuing to increase.
Other good news that might get missed: CRreports that the NMHC? quarterly apartment survey show tightening, with 64% of respondents saying vacancies have dropped. Not bad. Household formation may be starting back up again. Very good news. CR thinks this won't lead to higher rents for at least another 6 months or so (nationally) so no pressure on house prices, but reduced vacancies implying the absorption of the overhang of overall housing supply, both owner-occupied and rental is a pivotal first step. Oh and VA, you mentioned off-hand that you don't think the construction pipeline will be bringing more properties to the area. Personally I think about now, or 3-4 months ago, is when builders will start anticipating future stability and growth and start providing more new construction homes again. In the DC area, not nationally. I don't think they'll exceed demand, but I do think the demand for brand-new construction is a little disjoint from that for older homes, such that even if there were still an excess of older homes on the market (which there isn't using MOI), some people would still strongly prefer new housing.
And in bad but not unexpected news CR reports that Fannie Mae had another $11.5 billion dollar loss in the first quarter (down from a $15.2 net loss in the 4th quarter of 2009) and sees no profits for the indefinite future.
cara,I have seen some recently cleared new developments, but I doubt they will build on spec. As far as I know, commercial lending is loosening somewhat but not that much. Loans that were impossible to get (w/o 50% equity) are now easing.
We're considering building a two-story addition to our standard brick colonial in N. Arlington. Anybody have a ballpark estimate or know an online source for the expected general magnitude of cost? I realize we will get cost estimates from contractors when we start interviewing them, but I'm curious to know something more before we start that process.Thanks.
Tom,No, but when you do find out, please post about it?
Tom,A lot will depend on things that are unknowable. Like your soil quality, of all things. Two-stories and you're going to need a good foundation, which means deep digging. My folks put in a foundation-addition, and they've got some of that wonderful clay we have around here. Cha-ching for the builder.Other than that, I'm not sure how much the extra story will add to it, but a single story addition is not uncommonly $100-$120 per sqft in my experience.
Tom, are you planning to hire an architect to design it and supervise the construction process?
Census: Share of Americans on the move edging up
Cara-I would have thought the 8k had very little impact. The only possible impact I can see is that maybe it raised housing prices so the people could sell rather than fall behind on their mortgages. Is there something else I am missing?
hb,I'm not sure which topic you're refering to. Friday's inventory discussion and me and VA saying supply as well as demand was pulled forward by the $8k?I'd say the blip up jump in FFX cnty supply at the start of April is pretty suggestive of pulled forward supply IF May and June don't follow suit. If May and June also show strong gains in numbers of active listings then it was all just seasonal. If May doesn't then I would say it's likely that both May and April listings got pulled into April.But that may not have been the topic you meant.
Cara-Sorry I should have clarified I was talking about your first comment today were you said."First decline in 12 quarters (3 years) is nothing to sneeze at. Now, the fact that it should have been helped by tax refunds means it's doubtful to be the start of a trend yet. But, declining in a typically declining quarter is a heck of a lot better than continuing to increase."
not uncommonly $100-$120 per sqft in my experience.It is a lot more if you are adding to an existing home. $100-$150 if you are building a new home from scratch. Adding to an existing home is more costly than building new because builders have to attach the new building to the existing one and deal with all the problems that will surface from the existin older unit. I will say it is between $150-$200 sq feet particularly in your area. It also depends if you are renovating a kitchen, bathroom, etc. Those items are the priciest, and what quality materials do you put in the addition (from windows, to lighting to everything else.)
hb,Not the $8k, the normal yearly getting your refund back, usually clears up some defaults moving them from 60 or 30 day to current. That's what CR has always said, if I'm recalling correctly.(of course I don't think I've ever gotten a refund before April so I don't know about this theory)
Xpovos said: "not uncommonly $100-$120 per sqft in my experience."It is a lot more if you are adding to an existing home. $100-$150 if you are building a new home from scratch. Adding to an existing home is more costly than building new because builders have to attach the new building to the existing one and deal with all the problems that will surface from the existin older unit. I will say it is between $150-$200 sq feet particularly in your area. It also depends if you are renovating a kitchen, bathroom, etc. Those items are the priciest, and what quality materials do you put in the addition (from windows, to lighting to everything else.)If you are deaing with a "Design Build Company" prepare to be schoked also.
Ace, yes, my preference is to hire an architect. Do you have any experience with that?
Cara- That makes a lot more sense. Contrarian-My guess is that over time the government totally whipes out stock holders and makes Fannie/Freddie government entities again. It is possible they kill both of them while making a new entity that has the same general purpose.
last graph, 7-day Inventory - go up:http://www.altosresearch.com/research/MD/bethesda-real-estate-markethttp://www.altosresearch.com/research/MD/rockville-real-estate-markethttp://www.altosresearch.com/research/VA/vienna-real-estate-markethttp://www.altosresearch.com/research/VA/alexandria-real-estate-markethttp://www.altosresearch.com/research/VA/arlington-real-estate-markethttp://www.altosresearch.com/research/VA/herndon-real-estate-markethttp://www.altosresearch.com/research/VA/reston-real-estate-market
Tom, when I was considering something somewhat like your project, I talked to several architects and to a design-build firm. I second what DC2 said about the latter, and another friend said the same thing.Architects have several different ways of operating and charging, and the ones in the highest demand obviously charge the most. They can charge you a flat fee (in the tens of thousands) for the design and preparation and other fees to supervise the construction of the project, make changes, etc., or a percentage of total costs (e.g., 10%) to do all of this. This will add a significant amount to your bill, but if they are good, the house will look and function much better, and they may be able to do many things more easily than laypeople, because they understand the permit processes, know good craftspeople, etc. I told several firms we wanted to spend $300-400K for a <1000 square foot addition, and one told me it might be possible. Another told me "with that budget, we could tear down walls and reconfigure your existing space--it would be great" etc. etc. In other words, they thought it would be smart to spend that amount of money tearing up a house that already has been almost completely refurbished, and end up with a ton of aggravation and a VERY expensive ~1500 square foot house. We didn't agree.So I think a lot depends on what you are able to do yourself and whether you can connect with a like-minded firm. But no way would I expect it to be less than $200 per square foot--none of the estimates I received were close to that. One firm quoted approx. $200/sq ft around 2003 or 4?, and that did not include kitchen cabinets, counters, appliances, and other expensive add-ons.So I hope you'll have more luck than we did. When I added the aggravation factor to the expense and the elements that could not be changed, we decided to go a different direction.
MRIS April stats are out.FFX cnty: 2010 2009 % Change Total Sold Dollar Volume: $585,646,300 $450,933,291 29.87% Average Sold Price: $443,336 $386,073 14.83% Median Sold Price: $379,000 $340,000 11.47% Total Units Sold: 1,321 1,168 13.10% Detach/Attach Average Sold: $601,474 | $356,573 $501,052 | $318,358 20.04 % | 12.00 % Average Days on Market: 42 85 - 50.59 % Average List Price for Solds: $460,190 $418,634 9.93% Avg Sale Price as a percentage of Avg List Price: 96.34 % 92.22 % detached housing average up 20% YoY. One had better hope that's mix not a real gain. I mean, it's gotta be at least partially the mix as the high-end unfreezes, but yikes is it scary looking.
Have you thought at all about starting your own blog Cara?I don't mean that as a slight to this blog in any way, but if you scroll down the front page it is obvious Harriet's attention is elsewhere at this point.
Leroy,Mine should be elsewhere too.
tom/ace,unless you want to spend a fortune on the addition, better be the GC yourself. these days it is not a problem to find some underemployed architect who will do the design for peanuts (unless you want something really grand and unique).certainly it depends on your opportunity cost.
housebuyer saidI absolutely agree that housing needs to fall in real terms, I am less convinced it "has to fall" in nominal terms. I expect the fed to keep rates absurdly low for a very long time making it possible to have inflation chip away at prices. Although that said I do agree with you that I also expect to see nominal price drops. My best guess is ~10% over 2 years.Don't we need wage inflation specifically? Why do you think we'll get that over the next few years? I'm not saying it will not happen but I can see many arguments that it will not.If you look at the data collected by SSA 1973 to 1984 and 1985 to most recently collected data you can see that we had some pretty huge wage gains in the past (and we know those were replicated locally as well.) In 1978 wages increased ~8%, 1979 8.75%, 1980 9%, and 1981 10%(!) Does anyone think wages will grow that much in their field? In the legal field we have seen wages go down. There are plenty of companies outsourcing some lower level legal work to India or elsewhere. The internet makes it much easier to move work to lower wage areas. I think the labor market might be way too competitive to ever see the wage gains we used to.
TBW-Around here government employees are and will likely continue to get wage increases. Tech companies are doing pretty well so I would expect that to help the Dulles corridor. In finance wages fell a ton in 09 and are starting to bounce back upward. I still expect our country will make a big push towards natural gas, which will create demand and wage increases for people in the energy sector. I could probably pick out a bunch of other industries that are doing fine.Basically the government is loaning money to people for free in an attempt to create inflation. Since this is the goal and usually works my base case is that in the long run we will get wage gains. Mostly I am just using the past to predict the future and although it does not always work it is right more often than it is wrong.
Jeremy,No pent-up demand? Why the heck was stuff flying off the shelf this spring? 8K? Did you forget that the liar loans are gone and underwriting has returned? How about affordability and rental parity?Sure, there are some still waiting for the big crash but I don't see much other than a bumpy road.This board is not an indicator? Whatever....As far as whether we have a balanced market in terms of supply and demand, just refer to inventory and transactions (MOI).We might get a further drop in your price range, but I'll go with stagnant prices. Wishing won't make it so....
Konstantin, I think you raise a good point. Some people also may be able to design an addition better than they can serve as their own GC, and if they have a good GC, he/she can translate the design plans into operational reality. I have a relative who did that. People told me architects and design-build firms were dying for work in the past two years, and had cut their profit margins, but certainly the ones I contacted didn't seem to be (or thought I had more money than brains).
Leroy,I've definitely been distracted this past year, just absorbing the news and watching the national and global economic horror show. Somehow, local housing has paled in comparison. :-) Quite a number of our original participants here have bought into this market locally, and feel fairly comfortable getting on with their lives, at least as it relates to their abode.I noticed this month's Washingtonian [Tales of the Boom and Bust] was dedicated to a denouement of the local housing market, so have we passed it all?I'd be happy to link to any new blogs about our local market. Just send them my way. I still enjoy reading contributions here via the comments section. It's weird, admittedly, that a blog exists mostly based on comments.
VA_Investor,Liar loans may be gone but you can still get loans with ridiculously low down payments and as of last month using money you didn't even have (the 8k) as the down payment.Truth be told I'll be just fine if my market (6-700k ish) doesn't move an inch this year. There will be more to choose from next year from the usual sales plus all the WTF 800k+ lists that meet reality when their house doesn't sell and all the neighbors within 100k of tax assessment do. And stagnant prices are worst case - most all of us agree that the higher price ranges have more downside risk than not.I don't really care what you see in the market because you've been a RE pumper for years and wrong the whole time. Someone pulled up all your "buy now or be priced out forever" post history not 6 months ago to call you on it and you came back with some, "I didn't put any NEW money in RE..." bull crap. Anyone that had listened to you back then would be underwater and you know it.As for the board being an indicator, it's obvious you don't understand the concept of selection bias. The people on this board are house hunters, so the fact that many of them bought homes doesn't mean anything other than people who look for homes eventually find them.I guess it's easy to have a rosy outlook all the time when all your mistakes are caught in the safety net of your husband's paycheck. The rest of us are working without a net here and choose to be a little more cautious with the largest investment of our lives.
Jeremy,I really don't like distortion and misrepresentation of my past comments.I recall a cherry-picked remark and then asking that the entire thread be linked. It was and I clearly remember Arkey exclaiming my vindication.It's clear that you are disappointed that prices didn't fall as far as you wanted them to. That is not a reason to mistate my prior comments (I have NEVER said 'buy now or be priced-out forever').So I may have a few more assets than some here. I can assure you that was not the case when I bought at 22, 24, 25 etc.
VA_Investor,It's clear that you are disappointed that prices didn't fall as far as you wanted them to.You have me mistaken with someone else. I am actually quite pleased with the homes I've been looking at when compared with what I thought I would get when I first started reading this blog. Our price range has gone from 500k at the beginning to 675k if we bought today and 725k if we wait until this time next year. On top of that homes in that price bracket have come down in price to meet us. Many have assessments over 200k off peak! I'm quite pleased with where prices have gone. The only thing stopping us from buying now are how much better the 750k homes look than the 675k ones, and the fact that the 750k ones might just be 725k (or less) this time next year. Personally, I'm content renting with no house upkeep and a 3 minute commute to work - but my wife is ready to buy so I'm just happy we've held out this long.I think you have me confused with someone who is shopping in Immunington or Immundria.
Thanks, Ace and others who commented on architects, G.C.s, and costs of additions. Much food for thought. Got to think about this some more!
Here is the FranklyMLS search I use for solds in 09/10 from 600-800k, and if you sort by percent of original list (%OL) you can see that I have reason to be happy.linkThe median home (#66 of 131) sold for 95% of list, while the average is much lower. Some of the listings were removed long enough that the "original" original list isn't even used by frankly for some reason, but you can see them in the price histories. I am not disappointed, and actually am still worried that if we bought today we might lost 5% or more by next year.
COntrarianWhile I'm still a bear, let's remember Greece isn't a trillion in the red.It's a lot less, and the loans it is getting is low rate ECB/IMF/Fed moneyto replace High Rate private dollars.essentially it's a refi from a high rate ARM to a lower rate FHA loan.
"I'd be happy to link to any new blogs about our local market. Just send them my way. I still enjoy reading contributions here via the comments section. It's weird, admittedly, that a blog exists mostly based on comments."...and it is a good blog, but things have certainly changed from the days when we still had people claiming that there wasn't a bubble, or that such a thing wasn't even possible in real estate. I have gone back to the early days of this blog a few times and read some of the discussions there and it is pretty amusing in retrospect. Maybe you can spin this into a blog that focuses more on economic matters in general.
Leroy,If you're missing the old days you have to become a regular reader of the Seattle Bubble Blog (who's url doesn't appear to be working right at this moment, but that is the correct one.)Their housing market is different in timing by about a year or more from ours so their in the midst of reveling in what they strongly believe will be more falling prices. Tim's great. The number of charts and graphs and interactive graphs and data is fantastic. There aren't really any bulls left on it though.But there, I think the market stands a good chance of falling strongly for another year, and because of its non-alignment with the rest of the country the government's aid to the housing market may get pulled too early to stabilize them.
Contrarian-I agree that a trillion dollar loan still isn't good, but as the others stated it is better than nothing. First it will replace high interest rates ~15% for Greece down to I believe 1%. Also finally Europe is just printing money. If the trillion dollar loan is impossible to pay off don't be overly surprised if the ECB lets the countries write off a lot of that debt. Since the money is just printed rather than borrowed there is a bit of a difference. So while I continue to agree that Europe has significant fundamental issues, I do think the trillion dollars is a positive.
Saving w/o comment to prevent eventual deletion."Contrarian said...Then, there are the BEARS, like myself, who think the second phase of the price declines are just beginning.Denial vs. reality. We are in a depression, not a recession.We had a whiff of deflation in 2008-09. The 1000 point drop in the Dow last week was the kick-off for deflation to accelerate for several more years. From here forward:Stock markets: collapse Credit (required for most large purchases): implodesHousing: collapseBanking system: collapseFreddie/Fannie: whazzat?Unemployment: worse than the 1930'sWithout credit, most people will not be able to purchase homes or cars. Housing prices - even here in the D.C. area - will crash.In memory of the U.S. economy, as we have always know it, and which it is no more, a bugler plays Taps5/10/10 11:55 PM"
I don't know a thing about Seattle and don't really have any interest in their housing market. It isn't so much that I wish for a return of the nuttier pumpers. Lance and all did have their amusing moments, but generally speaking they were rude and obnoxious. Things have been a lot more civil around here over the last year or so and I think that is a good thing.
Leroy,Ah, see I just love graphs and data. Doesn't hardly matter what they're about.
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