The total "Northern Virginia Inventory" represents the combined housing inventory (listed on the MLS) of Alexandria City, Arlington County, Fairfax City, Fairfax County, Falls Church City, Loudoun County, Manassas City, Manassas Park City, and Prince William County. These numbers are extrapolated from Virgina MLS.
(Here's the spreadsheet on a separate page).
Wednesday, June 2, 2010
Current Housing Inventory
Posted by Harriet at 6:27 PM
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26 comments:
Arlington continues to have relatively high inventories compared to all other counties.
Most counties (except Prince William and Loudon which today look pretty healthy inventory wise), have inventories about twice as much as they were in 2005. However Arlington has inventories that are three times at much than what they were in 2005. Now you could argue those inventory levels for Arlington were too low, but in fact the whole NOVA area had very low inventories that year.
Also it is interesting that at peak all counties saw their inventories increase to about 4 to 5 times what they were in 2005, including Arlington. So, it does point out to me that Arlington has relatively high inventories compared to every other county. Those expensive homes are staying on the market longer and longer. I will not be surprised if you see price depreciation for those expensive homes
Two times vs. three times doesn't matter; 2005 was crazy low. There was virtually nothing available. I call recall my entire zip having 8 available at one time. I don't see any reason for any further decreases to "move-in". Arlington has too few transactions to be meaningful.
Any price movements will be relatively consistent.
p.s. this breakdown of numbers clearly show the start of the "end" - June 2005. I never understood why any metric showed prices increasing after that date. The only explanation is new construction that had been UC for a year or so (and people foolish enough to not walk on their deposits).
You're absolutely spot on, VA Investor.
Just today, I received in the mail an unsolicited letter from a local real estate agent. She has a client who's looking for a house in N. Arlington to purchase, demolish, and build a new house (obviously a McMansion) on the lot. I used to get these kinds of letters occasionally in the 2000-2005 period (as did my neighbors). Now the N. Arlington market is heating up again.
VA investor,
It may sound like a small difference between 2 to 3 times the inventory of 2005, but the difference really is 300 percent more inventory compared to 2005, or 50 percent more compared to other counties, proportionally.
dc2,
Why would you pick 2005 as the baseline comparison for anything?
It was the peak if not of prices, it was the peak of kool-aid prices can only go up, buy now or be priced out forever, etc.
MOI is all that really matters.
Or look at it a different way, Arlington has a similar inventory now to what it did in 2009, and ~15% less than it did in 2008 and 2007. Those years saw X% decreases in prices? Unless MOI rises, why would this year's similar inventory mean more dramatic declines? I'm serious, Arlington has less inventory than it did in 2008 or 2007, similar to 2009, why would this year's drops be the greatest?
I think the bigger story here is the one I've been saying for at least a month which is that across all counties, we're finally erasing the >12 month monotonic drop in inventory, such that most counties are now above their 2009 June inventories, or close to it. The only question is, is this organic sellers coming out of the woodwork to see if the storm has passed or is this new REO inventory. Local to me, it's definitely organic sales so far. No increase in shorts or REOs, possibly a decrease YoY. More widely? I don't know.
Or the good news is selection has returned, the bad news is seller's are towing the line on prices again. (and pulling the listings if they aren't getting what they want). Stickiness is attempting to return.
Cara said...
the bad news is seller's are towing the line on prices again.
I disagree based on the Case-Shiller numbers so far this Spring. Prices continue down during a part of the year that traditionally shows them going up, and in the face of the homebuyer bribe pushing upward on sales and prices. I'd say sellers are still losing ground, just not as quickly as they did last year.
Jeremy,
I was basing this on personal observation of prices in a given neighborhood. MM has seen the same thing in homes she's interested in, more listings but all coming on at higher prices. And I haven't seen a sold with % of list less than 98% in months (only one since ours actually).
Despite the fact that I personally think the homes in my neighborhood would sell much faster if we just shed another 5%, it's not what sellers are doing (yet).
You're in a different price point, what's actually going on on the ground there?
Jeremy,
Or put another way, for CS differences this small, you have to go by comps to tell if the aggragate differences are actually relevant to your target neighborhood and price point. IMO.
Jeremy -- CS prices dont normally start going up until April or sometimes May. To date all we have is data through March. So its a little early to make that call, but if the situation doesnt change in 1-2 months, you are correct.
I guess since my price point is doing much worse than yours I see things differently. I don't know how to quantify it properly other than the CS numbers, which are worst in the top tier. Sold %OL on Frankly is just a measure of seller WTF-ness.
My personal experience has been that houses in 3 of the 4 neighborhoods we like either sell in two weeks or are still for sale after price drops. Miller Heights is the exception, as it seems like everything sells there. People seem to like the combination of an Oakton-like neighborhood with that Vienna address. Fortunately it's our least favorite of the 4.
The price drops I've been seeing recently are not small, generally ~30k. This is what gives me the impression that sellers are still losing ground. Maybe I'm wrong and Oakton sellers just have more WTF built into their original list prices, giving me the impression of seller weakness.
Jeremy,
I agree that $30k is not chump change, and that it appears that if nothing else, sellers are getting some of their wishful thinking beaten out of them.
But the question in terms of purchasing power would be, how do the list prices on homes that do go under contract quickly compare to close prices from last summer, fall or winter for similar homes in similar condition?
I have been lurking for some time.
Just wanted to say thanks for the great blog and insightful comments.
I am looking to purchase in Reston. I have medium income and about 80k to put down but am lost in this market.
BF - If you are looking for suggestions then you need to be a little more specific about the kind of property you are targeting - condo, townhome, single family house?
BF,
I follow Reston. I assume by medium (median) you mean approx. 100K. What are your requirements/wishes in terms of housing?
Have you been pre-qualified? Do you know how much you want to spend? Have you identified certain neighborhoods?
Many of the posters here are looking at the $800K market and above, but there are several of us that were/are looking at $400,000 and below.
I started off in your boat - pretty confused and lurking in several RE forums. What really worked out for me was that I created a spreadsheet for evaluating properties. I created three categories of factors: gotta have, nice to have and showstoppers.
Example of gotta have: yard, non-flood zone, under $400,000
Nice to have: basement, porch
Showstopper: high crime area, major structural defects
Since I am a novice, I went for the reassurance of having my own realty agent to assist. I interviewed several. Several of them sneered at my little spreadsheet and told me that I had to start out at least $50K higher. But I found a house that met every one of my criteria in one of the neighborhoods I wanted, so fooie on them.
You can do it too, it may just take a while. Don't settle for so-so but wait for what you want, if your circumstances allow you that grace time.
Of all of us on the board I suspect VA Investor knows that area the best and has the most experience evaluating properties.
Good luck
bf,
(good advice c)
There are many versions of confused...
My husband and I couldn't have even accurately made c's spreadsheet when we started. Different goals pulling us in different directions. Spent 6 months looking in higher and higher price brackets until we realized how much we'd have to pay for a TH we might actually want to live in, and then saw that was only $50k off from the price of a single family home (in move-in but not upgraded condition) and then made the leap.
In the meantime our savings was ramping up and making these options available with 20% down still. So it worked out, but was very drawn out.
So if $80k is all you plan on putting towards closing and the downpayment, and you want to skip the long process, I highly recommend seeing a wide range of price points within your affordability level now. There's no substitute for in person. There were tons of townhouses on the internet that seemed like they'd suite just fine and were priced in the $250's. Ha. They were tiny, in disrepair and in borderline neighborhoods. But they were the reason we started actively looking when we only had $50k saved up.
So, yeah, if you don't want to make the same mistake as I did, get a realtor, go see a range of properties now and figure out what X dollars buys you, and then keep saving until you're prepared to buy at the price that gives you a home you want to live in for the long haul.
But it's still difficult because even with only one person you still have to balance your want for financial freedom with your want for nicer housing. With two you need to both be open about what you really want. I didn't discover my husband so strongly preferred a SFH until I suggested we go look at them. He hadn't wanted to spend that much, and hadn't wanted to admit to me/himself that he wasn't as much of a cheapskate as me. (we had looked at a few $300k ones early on, but they were too tiny for either of us).
Yes some more info would be good.
I have a family. We made about 140k last year. 2 toddlers oldest about to start kindergarten next year. Very little debt just some students loans.
My limit for a house is 400k. I don't want to extend myself because I was a bubble hater back in 2005. And my gut is telling me the government is trying to cure the symptoms and not the disease. So would anyone buy a house in 2005 knowing what they know now?
Other contradiction is we rent a great townhouse now by a lake and can walk to shopping. We love it. Rent is 1900 and the landlord is the best I ever had. So it pains me to move, pay more monthly, wipe out my savings, and lower my standard of living. The house we rent now I would say is worth about 475k in this market.
But the other point is for 500k you get SOO much more house in Reston. It would be better to save more or just get a crazy FHA loan and hope for the best.
Another pain point is the metro coming in 2013. The realtor we engaged keeps bringing that up and has my wife convinced we need to make a move now or we will be "priced out forever".
Uhhggg..
We could probably wait another year and save enough to get 20% down on a 500k house.
At this point I just don't understand the inventory. Why so low? Is time on my side or is it working against me?
bf,
1900/month rent is about a $320k mortgage on a $400k house... So at your "limit" you wouldn't be paying any more.
I would say if $500k buys you SOOO much more in Reston than $400k, and the TH you love and live in now is worth $475k at the moment, I would strongly caution against buying now at $400k simply because that's what is 20% down.
Inventory in FFX Cnty is still rising now, so you may get better selection soon, it's unlikely that it will get worse... (says me).
There is such a thing as 10% down conventional with PMI. This would carry much less upfront premiums (if any). So if you're finding anything at $500k that you like, you could indeed buy it now. On $140k/year with two toddlers, it'd be tight but not insane. But you have to run those numbers for yourself. May I suggest the washington post calculators if you haven't found them yet?
I don't think waiting a year so that you have another $20k down would hurt you, but unless prices do go down, rising interest rates might eat away at the marginally lower monthly cost you get for putting down $20k more.
But, first and foremost, don't buy what you're not comfortable paying on. And don't buy something you won't be happier in than where you're currently renting. And while your real estate agent may or may not have a point, if it's not the right time for you, it's not the right time for you. If it takes a couple more raises before your means catches up with your wants, so be it.
Thanks Cara et al for the advice I will look at washpost calculator. I really need to dig into the numbers.
The anxiety I get with housing is the same feeling I get when I walk into a casino. I hate that buying a house feels like gambling but that is the world we live in.
bf,
It will feel a lot less like gambling after you've run the numbers every which way from Sunday.
If buying and renting are the same cost, and you like what you bought enough to stay there for at least 10 years, it's not much of a gamble.
Our rent was 1700 (until we went month to month at 1950) and we bought at $409k. Income ~$155k. But with no kids yet, we're still saving $2000/month just like we were before buying. I'm hoping/calculating that that's enough to cover the added costs of a kid in a few months here...
So our situations are very close to comparable, and personally I think the additional $800/month for a $500k house would be do-able, I mean $1200/month of savings isn't bad but not something I would choose. I'd want a few more raises first if that level of house was important to me. But you and I won't be identical on all other expense allocations nor life history so, maybe that $800/month wouldn't be uncomfortable for you.
bottom-feeder,
My family's situation is very similar to yours--I even have two children, one ready to enter kindergarten in the fall--although my husband bought the townhouse we live in back in 2002. We've been looking for over a year, and have gone to see dozens of properties. Lots of houses in Loudoun, mostly townhouses in Fairfax County. Like Cara's experience, instead of really sitting down to define what we want in the beginning, we've learned a lot along the way. That's like any research project. By going to houses in person, you'll understand the limits of photographs, you'll get a better understanding of what 2000 or 3000 square feet "feels like," and as you define what you want, you'll also get a better sense of what you can or cannot afford.
As for your price point, that is exactly where we started out. We originally planned on moving over one county, from Loudoun to Fairfax. But our requirements and our price point seem to be keeping us in Loudoun. And, most significantly, we have increased our upper price limit to about 500k. I don't know if everyone eventually increases their housing budget the more they search, but it certainly seems to be a common theme among those who purchase real estate.
There's an article by Frank Llosa on his blog (http://blog.franklyrealty.com/) that he posted on September 28, 2009. He tells the same story we are telling: excuse me, we'd like to buy a house for 400k. The realtor's reply? Sure, but most houses around here sell for 550k. That's the reality of the market.
It's a great blog post. But, aside from the fact that people tend to underestimate housing costs, if a large percentage of house hunters think that 400k is a reasonable price for a house, maybe that post is also an indication that housing is still overpriced and out of line with incomes. Sure, interest rates are very low now, but, as many on this blog expect gradual price declines, you're in trouble if some unforeseen event makes you sell earlier than anticipated, especially if you've made a substantial downpayment.
My personal view of housing prices? Today's short sales, as troublesome as they are, might be giving us a feeling for what future prices might be. They're painful, but they're a way to get more for less.
Just the other day, ny husband and I sat down to estimate how much we can continue to contribute to our savings if we move to a 500k house, comparing it to what we are currently saving. When we determined that we'll be saving 2/3 less than what we do now, that gave me pause. And that is not factoring in the effects of potential future macroeconomic problems like heavy inflation.
On the other hand, while I'm not well versed about Reston, it's entirely possible that prices there will go up, or at very least, fall less or not at all, compared to surrounding areas.
bf,
You really need to spend alot of time actually looking. You need to narrow your search to a few neighborhoods and follow them closely. This will allow you to know immediately if a good deal comes along.
Since you have kids, I would suggest a single family home as opposed to a TH. OTOH, a TH would be much easier to lease out should circumstances require a quick move.
Obviously, the best bet is to get a bargain. I always go in knowing I can get out unscathed if I need to sell right away. This requires the ability to know the market and move quickly when an opportunity presents.
If you are renting mos to mos, you are in a good position to go for a short. I saw a couple SFH's on cul de sac's in Reston in the 400K range. If you require move-in, totally updated, perfect paint colors, etc., expect to pay top dollar. Paint, carpet and cleaning can allow you to save 100K. The premium can be absurd.
va_investor you said.
Since you have kids, I would suggest a single family home as opposed to a TH. OTOH, a TH would be much easier to lease out should circumstances require a quick move.
Sorry I don't understand this. a SFH is better to buy but a TH is easier to lease?
Some great ideas here thanks. We have been really narrowing down our area of interest to east half of 20191. We are not under any lease so we are good to move whenever. A short seems like a good path to get more house.
This is such a great news, it really helps
Term Papers
bf,
Yes, as a LL and a parent I think you will be happier in a single family home. You will be surrounded by like people vs a TH community that will probably have fewer kids and be much more transient.
If you HAVE to move quickly it's very easy to rent a TH (in terms of management and getting more long term tenants). Single family homes require that you rely on tenants to perform yard work and outside maintenance - not many are interested in cleaning gutters or keeping the yard weed-free.
It's also a matter of demographic's. You want to be in a nabe with like situated people at the same stage of life. You make great friends thru your kids. I'd take a single family home that will sustain you for 10 yrs.; even at the risk of having to hold on to and lease out a sfh.
Afterall, you are not an investor. It is just my opinion, but I think a single family (particularly on a cul de sac) will give you greater satisfaction.
va_investor-
Ok now i understand you. Interesting about the ease of renting a TH vs a SFH. Thanks for that perspective.
As far as buying a SFH yes of course the family would prefer that over a TH. It is a matter of economics.
I just need home prices to plunge 20% and I will be good to go.
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