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Monday, May 17, 2010
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53 comments:
I noticed at Virginia MLS that housing inventory has started to decrease for the first time since about May 1st. I was expecting it would continue to rise through June.
Harriet, IMO its possible we are just seeing some sort of "post taxcredit" reconciliation so I wouldnt be surprised if we do head up a bit higher.
Still, I agree with you, it looks like we could be teasing out a seasonal peak for inventory. My guestimate for the year was 10,000 units (+ or - 2,000) and we barely hit above that 8K mark in late April, so this may be just about it for the year.
Housing inventory down, prices up in D.C. area
http://www.washingtonpost.com/wp-dyn/content/article/2010/05/16/AR2010051603485.html?hpid=moreheadlines
Choice quote: "Like Prince William, Arlington County also has a five-month supply of homes -- but Arlington is much healthier. It didn't see that many foreclosures and its supply of homes remained relatively steady during the worst of the housing bust.
"Arlington, like the other inner or core jurisdictions of the District and Alexandria, has held up so much better than the balance of the metro area by any metric you use," said Gregory Leisch, chief executive of Delta Associates. "It's a bright spot because it's a desirable place to live, with a high number of Metro stations and a high ratio of employment to residents."
Anonymous I don't like when you use your "Guesstimate" When you are +- 2,000 united on 10,000 your guess estimate of 4,000 on a 10,000 range isn't really a predictor at all. Now if you told me your guess estimate was 10,000 =-500 I would call that more of a range 10% of the total of 10,000 for a range :) Just my two cents. But I can predict with 40% certainty it will be partly cloudy for the next week :) chances are I will be right too :)
In my area, this past weekend saw a flood of new properties come onto the market. Generally pretty cheap, but also generally quite small.
If this keeps up, it'll affect the mix pretty substantially.
an interesting N Arl high-end home price history which may or may not reflect the overall market conditions:
PREVIOUS LISTING PRICE HISTORY
7/11/2008 $1,575,000
3/20/2009 $1,479,000 -6.1%
9/3/2009 $1,372,000 -7.2%
11/10/2009 $1,265,000 -7.8%
SOLD
5/14/2010 $1,175,000
Sorry,
I forgot who asked me about the Courthouse foreclosures. I have a friend that was out there last week.
Only two were not cancelled. The Banks both bid in at loan amount. There were about 35 people attending. The two went; one for $1,500 over bank bid. I don't know about the other.
"Rob said...Anonymous I don't like when you use your "Guesstimate" When you are +- 2,000 united on 10,000 your guess estimate of 4,000 on a 10,000 range isn't really a predictor at all."
Fair enough. Just so you know, my call came in response to Spider's absurd comment that we would see a STAMPEDE of investors headed for the exits in 2010. He wouldn't quantify what a "stampede" meant, but he said it was conceivable (not that it was likely but it was conceivable) we could break the record of 23,000+ units we saw in summer 2006.
Thus, it is only in comparison to that stampede call that I feel any sense of getting this correct, and even then, just barely.
The Anon,
I can assure you that there is no "stampede", as you know well.
What the future holds? I don't know, but I seriously doubt it's going to get much worse.
I hear that there are deals in the over one million range in McLean. I'm not out there, so I don't know. It's my feeling that stuff below 6 or 8 is not going anywhere. Just a guess.
There is a new floor on the low end as far as I know. If anything interesting comes up, at least the 8K people will be out.
Of course, I'm an investor. There is no way I would sell my home...unless....
MM, I saw that one too and had the same reaction. There have been a number of similar sales in the last 6 months. It really shouldn't be that hard to price houses in that range correctly, or at least a lot closer than >10% higher than eventual sales value, these days. Sellers should just take the assessed value, subtract for bad location, and add for recent updates as a prospective buyer would view them.
Yes, it's subjective and imprecise, but I'm contrasting this with sellers who put in, for example, improvements costing <5% of what they bought the house for 10 years ago, but asking >30% over assessed value. I'm amazed at the egos (or ignorance of the market) of people who basically don't improve their homes, or do a partial job, with very taste-specific changes, but charge what a brand new house with up to the minute finishes would cost, or more...I could blame the Realtor too, but ultimately it's up to the seller to decide the asking price and there is a lot more info out there than there a few years ago, so there's no excuse.
Ace & MM-
I am impressed with how "little" that house appreciated over the past decade. The current owner bought the house in 2000 for 730K. This is a 60% increase, which is obviously a lot, but seeing that most properties peaked at more than double their 2000 price it is clearly down a good bit from peak (or the person paid too much in 2000)
Harriet, The Anonymous,
I think it's still consistent with my thought of the other day, that May and April's sellers all got shifted into April. If that's the case, then inventory should re-assert it's seasonal rise once we move on to the sellers who (a) didn't think the $8k was applicable to their home because it was expensive or (b) couldn't have gotten it ready in time anyway, or (c) didn't even know it existed.
Actually looking at the charts it dropped May 1st, and has mostly been rising since then (particularly in Alexandria). So the seasonal increase has already re-asserted itself. Any recent decrease so far is tiny. Just looks like the weekly see-saw to me... Maybe we're not looking at the same number? I was looking at the bottom line total inventory on the Virginia MLS page.
Va_Investor,
I was the one who asked about courthouse auctions. Thanks for the info. Suppose a condo'a current market value is $200K, but the bank is owed only $75K. Are you sure that it will still sell for slightly higher than $70K? Competing investors won't bid up prices until it is at least close to $150K?
HB, I agree with you that it's down. A couple of other points:
a) If you look at others near this RPC (on the Arl. website), the assessed values have moved at essentially the same pace. So this house is not grossly out of line with its neighbors. The 2000 assessed values, of course, lagged the market a lot (maybe 20% for most houses) but gradually caught up, with the sales price drops over the past few years. It reflects what a number of us have been saying about the fact that parts of Arl. either didn't go up as much as other neighborhoods or have fallen from peak more than some people believe.
b) This particular house may have not increased as much as others because buyers pay a premium for brand new, which this house was in 2000. It doesn't appear that the owners have done much other than to use bold paint to their taste since then. The overall averages that one sees in Arl. includes new builds since then and huge upgrades as well as smaller ones - this one appears to have improved below average 2000-present, which is to be expected given that it was new in 2000, so you wouldn't expect it to go up as much as the average Arl. house does.
c) The style of this house is not very appealing any more; if you look at other houses like it in Arl, they tend to sit and/or eventually go for less than comparable houses with a different style.
tedk-
It is an auction so yes people would likely bid it up. VA was just saying that the banks put a starting bid at what is owed to them. This way if no one bids that much, the bank will sell it as an REO rather than at the courthouse. If the banks original bid is very low there will be bidding between the investors.
Tom,
I think the WaPo journalist lives in Arlington. Why otherwise write so extensively about the one county that has a large supply of inventory (compared to others) and is seeing decreases in home prices, such as 22201 for 5 months in a row.
"Suppose a condo's current market value is $200K, but the bank is owed only $75K."
Does this ever happen? If it's worth much more than what the bank is owed, why wouldn't the owner just sell, pay off the bank, and pocket the profit?
oh, cr@p, i missed out on this one.
what in the world did they price it so high for just to settle for a low bid? ugh!
SOLD PRICE
Date Sold Price Subsidy Net Price
5/7/2010 $614,215 -$13,785 $600,430
PREVIOUS LISTING PRICE HISTORY
8/12/2009 $799,000
1/29/2010 $689,000
nova-
This is pretty rare, but occasionally happens when someone dies or has to flee the country or something like this. It regularly happens when there is a pretty small difference ~10-15%, because you can't always sell a house quickly for its real value/ you must also pay fees.
Anonymous said - "we could break the record of 23,000+ units we saw in summer 2006."
I never said that....I explained what I meant by stampede, it has to do with the rate of increase rather than actual number. Don't make up your own number and call them someone else's.
As Rob said - your this call was as good (or as bad rather) when you were making "prediction" entirely based on CS futures trading. You changed your call as soon as futures changed. Entire time, you kept on calling that as your own call until I nailed you on that one.
You have serious issues with lying...mr anon...
novahog, housebuyer,
Yes, occasionally it happens. I am not sure why exactly, but I saw a recent condo with a loan of only $45K at a location where even old 1BR condos cannot be be had for less than $150K.
NH, NB, The difference is not a necessarily a profit. The owner may have a lot more in the house/condo than the difference between the SP and what is owed to the bank. Maybe the person (if not deceased) is in denial or there's a family fight. Agree that it would be rare.
MM, that always drives me crazy too. Sorry you missed out - that looks like a pretty good deal to me. But there are sure to be others this summer.
DC2, if you're reduced to asserting the Washington Post article is wrong because of where the reporter lives -- well, that speaks volumes!
TedK, hb, nova,
The investor's will definately bid it up, but an owner-occup can always pay more than investor can.
Owner's don't have closing costs on the way out, they don't have carry costs and investor's want a certain profit margin to even mess with it. Of course you do have your occasional idiot...
There are many reasons that an owner with a low FIRST TRUST can't sell. All liens attach on a sale. A foreclosure wipes out everything behind the first (except a couple things). So an owner could have a medical bill of 200k or heloced all the equity or owe any number of judgment lienholder's all kinds of dough. The first trust means nothing.
p.s. Somethings you get extremely lucky. There may be some great deals scheduled for the same date and time at another Courthouse. But don't think rain or snow or Christmas Eve will keep the pro's away.
tedk,
I bought my personal residence at the Courthouse...just sayin'.
Spider, this is the relevant discussion from last September.
http://novabubblefallout.blogspot.com/2009/11/s-september-home-price-index.html
+++++++++++++++++++++++++++++++++++
First, your comment @11:37 AM:
"As I said before, when they realize this is not 2003-2006 all over again - there will be a stampede."
Next, my response @2:06 PM:
"A "STAMPEDE"??? Really? Do you seriously think we will flirt with 23,000 units of inventory like we did in summer 2006?"
Finally, your response @ 7:30 PM
Anonymous,
You can't predict inventory numbers exactly. I don't expect it to go back to the earlier grand levels (although it might)"
+++++++++++++++++++++++++++++++++++
Now, take that exchange back in November and compare it to what I said about you today:
"He wouldn't quantify what a "stampede" meant, but he said it was conceivable (not that it was likely but it was conceivable) we could break the record of 23,000+ units we saw in summer 2006."
Whats the problem here?
The Anonymous said
LOL -- that was the theory wasnt it? There were presumably no buyers out there other than the fed. Thus the day that they stopped buying mortgages, rates would "explode" into the stratosphere, and cause housing prices to sink into oblivion.
Oops!
You seem to be good at finding old comments on this blog. Please show me any quotes where anyone argued rates would "explode" April 1, 2010?
That is an interesting thread The Anon.
I like the post toward the end where Spider says I will be "eating my words" in a few months.
I wonder how that one turned out?
"Nearly 31 percent of Washington area residents have no equity in their homes, according to First American CoreLogic. They are "underwater" because their property values have dropped and they owe more on their mortgages than their homes are worth. In order to sell, they must bring cash to the table. "
in a healthy market this number is zero. 20% down covers normal variation and Transaction costs
there was a period in 91-92 when people were underwater, any idea what the peak was on that?
Here, I'll let someone else tell you:
CNBC: Another 'Freefall' to Push Dow Below 5000
In the meantime, Hefty warned investors that although the markets are going to rise in the near-term, a sudden “freefall” is expected.
“Our number one focus on this volatility is not about how high the markets are going to go, but when the market is going to make that turn because when it does, we believe that it’s going to go into a complete freefall like we saw in oil back in 2008 that could push the Dow as low as 5,000 or lower by the end of the year,” he said.
+++
“And when we look at China—China’s just another version of Dubai, but in a greater scale,” he warned. “Not only are they going to face a real estate crash, but they’ll face inflation so they’ll have to slow their economy down in the midst of a real estate crash.”
“And the freefall is due to the fact that our financial system has $17 trillion of leverage and it only takes a handful of hedge funds to get a margin call before we start to see this freefall take place,” added Hefty.
pat,
What dates do the Corelogic study include? How many do they expect to default? Clearly, not everyone in that situation is unable to afford their mortgage. I, for one, wouldn't trash my credit because I was underwater for a few years. Many can't due to security clearances. Even private employers routinely run annual credit reports.
As to the 1990-1991 situation, I don't think the market truly bottomed until 1993 or 1994. My experience is that the best buys started in 1997 due to stagnant prices in the '90's and a drop in rates in the later '90's.
Overall "stats" are probably different as I didn't follow the entire SMA.
pat,
Given that (cannot recall correct number please fill in with more accuracy if you care to) 20% of loans are normally FHA or other low down-payment options, such that while not necessarily "underwater" in the technical sense, those people couldn't sell for 3-5 years without bringing money to the table for transaction costs, one would think the "normal" percentage of underwater owners was at least half the number of low-down-payment originations (given an overall occupancy median of ~5 years).
So, in terms of raw numbers, going from 10% who need some amoritization and appreciation before they can sell, to 30% who do isn't that scary. It will keep inventory down, which isn't good for buyers.
I'm more concerned with the depth of underwaterness than the breadth at this stage. I.e. does a 3-5 year holding time still fix the problem?
(yes in the bubble years that time line was 1 year due to unsustainable appreciation rates, and gee the inventory blossomed partially since everyone was free to try to sell their house on a whim).
MM,
I know how annoyed I used to get when people would do this to me, but are you certain there aren't other locations that wouldn't suit your needs just as well? You're working awfully hard, and have been for over a year, to find what are really lack-luster homes for now $600k. I know I kept finding it useless when someone would point out how nice of a home I could get in Chantilly for the price I was thinking of paying for a TH in Burke, but you've been at this a year. Maybe there's some point at which it's time to step back and see if there's a commute and school district that you've rejected in the past, that's worth considering given the difference in bang for your buck? Because honestly, that last house doesn't even look appealing.
(my guess is that the contract was a touch higher, but it didn't appraise due to proximity to a major road and the seller's accepted the appraisal).
Tom,
I am asserting that the Washington Post has gotten many articles wrong and usually to favor Arlington. I recall vividly how they had an article a couple years ago about how Arlington had increased over 20 percent in one month. They quoted only 0ne month data from MRIS. I wrote to the Editor about this oversimplification of analysis of data. They had to run a different story where they included a longer trend of 5-6 months (my advise to them). This was a very poor article and analysis.
Yes, I believe many journalists that cover real estate in the Post live in Arlington and have biased opinions based on the articles that I see published in the Post. The example I am giving you is just one of them.
The article you quoted was about the entire region (MD, VA and DC), however the journalist, in trying to explain a supply of what they say is 5.4 months or so compared to Prince William County (the horror that both counties could be comparable, oh no!) writes extensively about how Arlingotn is not the same (God forbid they could be), when in fact a 5.4 month supply in Arlington is quite large, considering what the journalist says is so "desirable."
The journalist basically makes the decision to dedicate about 30 percent of an article to Arlington while it does not cover any other county at all in what it is supposed to be a story about the whole region. How do you explain that if not plain bias and trying to prop Arlington further. Yes, I believe the journalist has a biased opinion, as many others in the Washington Post.
A more interesting article would have been the 5-6 months decrease in pricing in 22201 (Ballston and Lyon Park) close to the metros the article quotes. How do you explain that?
VA-
Thats a good point about the security clearance issue. One of my coworkers bought a house in 2006 in Culpepper. They are currently ~30+% underwater, but her husband works at the pentagon and is afraid of how lowering his credit score would look. So although they are way underwater and expect to stay that way for a very long time they plan on continuing to make payments. I assume people like this are one of the reasons DCs market has not fallen as hard as many others.
cara,
I agree with you re:MM, but it's hard to argue that Arlington has held up well in this downturn and that fact may portend a bright future.
Chantilly would not be my first choice for an alternative. West Falls Church is good. I don't know what you get for 600K. I'd definitely take N. Reston over Chantilly (of course). Metro is less than 5 yrs away and there is a commuter bus (park and ride) to the WFC metro.
I'm not too familiar with other parts of FC, Annandale, etc. Staying inside the Beltway is always a good move. Dunn Loring?
VA-
I think Cara was saying people recommended Chantilly to her instead of Burke, which could be reasonable. I don't think she was recommending this to MM. I would think West Falls Church, Dunn Loring, or Annandale would probably be the best alternatives.
MM, not to pile on if you find suggestions of alternative neighborhoods annoying, but you might want to look at the Poplar area of Falls Church. Some parts are somewhat close to WFC metro (and it has park and ride lots). It's not far from the west parts of Arl. and close to 66. Many parts are in the McLean school district.
For example, see these sold houses on Fairview:
Fairview 22046 solds
Sizable price cut in my neighborhood, though I think they were shooting too high to start with (considering the recent comps).
http://www.redfin.com/VA/Falls-Church/7326-Fairwood-Ln-22046/home/9551270
McLean/Longfellow pyramid, though the elementary school is extremely diverse. 25 min walk to the WFC metro, but an easy 7-8 minute drive&park.
Ace - that was creepy. LOL
oops, make that Fairwood. And ooo-Fred, can't believe your post so closely followed mine.
Fred, I think we're going to drive some business that way - maybe not MM's, but someone else will head there!
Charlie the realtor would be happy. He's a fixture of the neighborhood - has sold a high % of the homes over the years. He also started the one on Fairwood that sold in January in the $570k range, but eventually sold it for $536k.
I've never been clear on the distinction between Poplar Heights and Westwood Park. Maybe the subdivision is Westwood Park, and the area is called Poplar? Either way, I like the area, plus you don't have to pay FC city property taxes ;)
Way back in the day I lived in WFC. 1/4 mile to the metro. We bought the year before it opened. It was a nice, middle of the road, neighborhood inside Haycock and Great Falls St. Mclean schools, except for Haycock elementary (magnet, I believe).
We had a rental another 1/4 mile away. Oddly enough, we also had a rental in Woodley Park and one off Graham RD and one in Fenwick Park and something on Hampton Court (can't remember the subdivision.
All always had multiple rental applicants.
My choice would be WFC. Second choice would be Fenwick (for FC). Picking anything in Dunn Loring could be good, too. Prox. to Tysons and Metro(s).
Fred, I would definitely defer to a resident of the area as to what it or parts of it should be called. I meant to refer to the area broadly--there are many nice houses on nice streets in the larger area.
I believe that with land costs in the comparable parts of Arlington, you really can't expect much of a house or condition in the $500's-600's range, since the land value is probably $450K or more of that for most of them. So if that is the range of interest, many parts of Falls Church are a better deal, all things considered. It's just farther away from DC bringing up the commute, if you're going in that direction, and bringing down the land costs. I know people who are moving out that way and I think your neighborhood and the surrounding area is really lovely.
Va,
I don't know where would be the best alternatives for MM, since I can't remember where they work. Chantilly was an alternative option people presented for me, since it would only add another 20 minutes. As it is I baulk at the people who live "all the way" up Braddock Road in Fairfax City. (despite how much I do really like FFX City, and I'm thinking if my mother ever does move down here, that's where she'd most fit in).
N. Arlington may very well continue to hold up well, and even appreciate sooner due to its apparent desirability. There's more than one question though. That answers whether your $600k leveraged investment will hold up for you. There's also the question of whether you personally want to pay that much and get that little in the way of a house. I'm obviously much more comfortable with what $600k buys you in Reston or Burke than what it buys you in N. Arlington. But that's just me. The reason it feels like it may be relevant to MM, is that her price range keeps creeping up but she's still coming up short. So taking a deep breathe and seeing what say, $500k could buy her with a longer but still reasonable commute may be worth gathering that perspective again. A nicer house and more financial breathing room??? Or is getting your foot in the door to a N. Arlington neighborhood and (one hopes) a really easy breezy commute worth stretching for?
It could be. It's just the last couple houses she's oo'd and aw'd over have looked pretty depressing to me (at that price).
Oh cara I wouldn't call anything in the beltway an "easy breezy commute" unless you can walk to it or work the graveyard shift.
c,
I would call my commute (which is reverse) and my husband's by the VRE, pretty easy breezy. So, I'm just hoping that if they're spending $600k to get essentially the same thing I got for $400k that it's just as convenient for them as it is for me...
i guess i could settle for this $499K N Arl home...
MM - Assuming that it's in reasonable shape, that looks like a good deal.
MM, houses are cheaper in Highview Park, but I think its a good area to look check out.
I would do a drive-by. I have walked around that area some and I think that house might have a strange neighbor--someone on that street used to have a cactus farm in their front yard. That area is like the land of no-zoning.
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