Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Real Estate Sales
I know I know these are one month's number's and potentially totally distorted by the $8k, but still, PWC up 30% YoY? Impressive. But what may be more impressive? Arlington's median is as high or higher than any year other than the single highest peak year. This doesn't mean that individual properties haven't dropped in price. Perhaps all buyer's are paying the same prices but getting more bang for the buck. Only comp searches can tell that. Still, it's a strong indication of just how much Arlington buyers are able to pay.
Cara-My guess is that all of the people buying less expensive properties have already bought them based on the 8K over the last couple of years. This could drastically impact the mix making the number less meaningful.
hb,Yes. And I have a comment on the mix change in FFX in the bits bucket. (Huge uptick in SFH versus detached and more particularly in 4+ bedrooms)However, looking at the MRIS statistics the change in mix is less obvious in Arlington YoY, and one would want to compare say 2005's mix of 2bedroom/3bedroom/4bedroom detached attached to now to check up on that.
My office blocks google docs, so if someone can tell me what the gist of the data is, I'd greatly appreciate it.
Cara said... (in the other bit bucket)I think it's a sign of buying for the long haul which is rational when one can't count on appreciation.I agree with this. We are trying to stretch for the best SFH we can afford thinking that if we buy a "5 year" starter house now we could potentially be stuck there and unable to sell when the time comes. It is worth the extra time we've been renting to avoid that risk altogether and jump straight to the move up home - even if it means we don't find something by spring and have to rent a townhouse for a year to get started on the whole baby thing. (Our 4th floor 1 bedroom apartment will not work for a pregnant woman or mother-in-law visits to help care for the new baby.)
Jeremy,That's what people on here are clearly doing, you, me, housebuyer, tbw included, but it may or may not be the thought process of the wider buying public. We have an extra bedroom for my mom, but she's still talking about a short term rental while helping us when I return to work so that while she's looking after the kid during the day, she can still get quality sleep at night. (best laid plans... my mother will always turn into something more expensive... then again she's paying for that) So if you can get a TH where there's a good sleeping space 2 stories away from the crying kid that might be best.
Amusing things said one year ago, in response to this report as Arlington started to go positive:"Arlington is going to get theirs, one way or another.""No one's convinced me that Arlington is that much nicer now than it was in 2000""I still have the cajones to say that Arlington will correct."Glug, glug, glug.
How high maintenance is your mom? We have summer pool passes for NVRPA and went to the park in Springfield (maybe it is technically Lorton? not sure. sort of over by Burke) last week. Anyway, another parent at the pool was telling me they were staying in a furnished cabin there (with A/C) for a long DC visit and it was reasonably cheap.
Also, forgot to mention that you should see how your baby's temperament is before your mom commits to a rental. If the baby is still in your room, and is relatively easy-going s/he probably won't cry much at all bc you will be right there to feed and change when s/he wakes up.Of course if your baby has a more challenging personality, you will be the one who needs a night off in a hotel. ;)
Thanks Meshell,It'll be December when she comes for the long haul, are the cabins insulated??Good point on temprament. She's just looking into the prices of different possibilities now, it's almost always cheaper to rent at the last minute, anyway. She is also allergic to my cat, and we haven't had any takers for taking our cat for the month or two while she's here, so kitty will just be downstairs which may or may not be sufficient. (whereas being able to sleep someplace completely cat-free at night she thinks will be fine).
for kevin,Year Sales Active Listings Ratio Median Sold Price # of Sales % Change Median Price % Change Arl:2010 301 1,010 3.36 $500,000 9.85% 11.11% Alex:2010 221 836 3.78 $440,000 9.95% 2.92% FFX2010 1,567 5,771 3.50 $425,000 -4.86% 11.84%Lou: 2010 508 2,395 4.71 $394,750 -2.87% 14.42% PWC:2010 779 2,937 3.77 $255,000 -2.01% 30.77%FQ: 2010 70 612 8.74 $265,500 2.94% 4.14%Culpeper:2010 55 512 9.31 $179,900 -3.51% -2.70% Stafford:2010 196 908 4.63 $265,811 5.38% 11.94% Most of those MOI are an improvement, but not all.
Also amusing was the sentiment from our most famous doomer 13 months ago as Arlington posted its first positive YOY gain in years:"It just posted its first increase in median prices since March of last year, and that is only because May of last year was anomalously low month."Yep, that was the "only" reason. Im sure every month following will be down down down -- glug, glug, glug, glug, glug...http://novabubblefallout.blogspot.com/2009/06/northern-virginia-may-housing-sales.html
cara and hb,Why would the "mix" be relevant now and not relevant over the past 3yrs? It was predominately the low-end that was slaughted by the number of foreclosures and drastically impacted by price declines as a result.Wouldn't this explain the disparate price declines in various neighborhoods/jurisdictions? A change in "mix" may just produce a more accurate picture of price movements.I've always contended, on the whole, that wealthier areas would be the least impacted. Witness the wide variance in foreclosure activity. Teaser rates and living pay check to paycheck don't bode well for the ability to pay the mortgage, especially when many of these workers relied on the construction industry for a living.
Thank you Cara. What's that -4.86% for Fairfax compared to? Are we already 5% lower in prices than we were a year ago?
Kevin,I'll butt in here. The almost 5% represents the drop in number of sales. Prices increased almost 11%. Something I attribute to increases in the lower end.
Va,We've been talking about it the median being affected by mix all along. Not just now. Comps are the only way to judge both then and now, Case-Schiller being an imperfect approximation to that (as well as useless for subregions, obviously).Hence why I used to pull up prices within a given homogeneous neighborhood in Kingstowne or Burke to plot the bubble trajectory. (and would get shot down because almost no one else was interested in these areas)However, since you've brought it up again, I went back to check, comparing 2005 versus 2010 detached/attached, by number of bedrooms for Arlington. As I think you're suggesting and I had a hunch this might be the case, there is NO obvious change in mix between which houses were selling then, and which were selling this June. I'll still leave it to the Arlington afficionados to report on whether the sale prices in the neighborhoods they follow were higher, lower or the same this month as they were in 05. Although, since Frankly only goes back 4 years, that will be difficult... The only obvious difference is the total volume of sales (lower now than 2005).Kevin,The -4% in FFX was number of sales. There were more sales last year than this year and at lower price points. (for the same house? hard to say, in my neighborhood prices are still up this year, but that's just one neighborhood).
You are right Contrarian, I take that back -- that entry I posted earlier was from our second most famous doomer.Our most famous doomer wrote this screed one year ago (which thankfully was saved from the "great deletion campaign of 2009"):_________________________________"I'm a broken record at this point. Freddie and Fannie will no longer exist. They are merely a shell at this point. Federal Home Loan Bank is worse off now than Enron before it imploded.I have said you will see schisms break out between class, races, religions, politics, etc. Current examples include the recent civil unrest in Iran and Honduras. There are signs of unrest with the Uighurs in China's westernmost province. This should get worse here in the U.S., especially as unemployment increases. These disruptions should increase in frequency around the world.Unemployment will far exceed 25% before this depression is over. U.S. citizens will probably be dissatisfied with their jobs going to illegal aliens. Sen. Schumer has recently taken a firm stand on this and Sec. Napolitano is now (allegedly) going to use E-verify on federal contractors and build a fence along the border.Speaking of jobs, for those who are lucky enough to have one, find one, or keep one, their salaries will most likely decrease significantly over the next decade or so. We have to compete globally, China will start importing cars, driving down prices.While I think the stock markets will eventually go somewhat higher over the next several months, the primary direction is still down, ultimately ending in a major collapse far below what most people believe is remotely possible.I think thousands more banks will collapse and hundreds of billions in derivatives (think: Enron) that are waiting to implode.The last 70 years has been a credit bubble. We are having a credit implosion. Before it is all over, 90% of the credit will dry up.Large banking institutions are leveraged 35:1 and 40:1. Citigroup is currently trading around $2 per share. **Poof** Bank of America .... ***Poof*** General Electric, probably wont be around when the dust settles. GM will probably not last too long, then their employees will be dumped onto the PBGC.Some money market accounts probably are not worth a dollar a share. Translated: some people may eventually learn that every $1.00 they have in a money market brokerage account (including 401(k)'s) is actually worth less than a dollar.Housing has much further to fall, whether in Arlington or Manassas, whether on the east coast or west. As deflation sets in more, prices will drop everywhere, even in the Heartland.Many cities and counties will file bankruptcy and flush their pensions down the drain, forcing many retired workers back to work, running down wages even further.Some municipal bonds will probably lose most of their value. I wouldn't count on FDIC insurance. You see Ron Paul and other congressmen demanding the Federal Reserve be audited.There will come a point where the government (Federal Reserve, Treasury, FDIC, PBGC, ABCD, EFGH, JKLMNOP, etc.) cannot bail everyone out. And, people who sat back and watched the financial institutions get bailed out by former and current Goldman Sachs executives in the current and former administration will most likely resort to civil unrest.When the party is over and the hangover starts to set in, the only people who will be able to get credit will be those who already have the money to begin with.There is going to be a huge baby boomer retirement over the next decade. These people will be downsizing their homes, adding more downward pressure on housing prices.The $USD should go below $0.50, eventually.Some may call that doom, I call it reality. :-)" 7/12/09 3:14 AM ___________________________________Anyone want to guess who wrote that???
cara,I intentionally mentioned the hardest hit areas and the reasons, I believe, are behind it. I reiterated my thoughts of wealthier nabes (which were roundly shot down by many here).I was on another forum prior to this one and repeatedly pointed out that the Trustee Notices were in certain areas and largely consisted of one particular race.A 30% bounce in a market that was down up to 70% should surprise not surprise anyone.Sorry if I bore you with "common knowledge" that might be food for thought for those looking in Oakton and Vienna.
speaking of mix, (sorry for the incoherence of the writing... it was a new thought that popped in my head and I was too excited to write more lucidly...)Here's a controversial prediction for you:Take a gander at the Monthly reports for FFX Cnty. Condos were flat YoY price wise. Single-family-attached were up as were SFHs. Look at the distribution though. In June, this month where people are thinking that the prices and sales could have been propped up by the credit, what shot up? The 700k and up "move-up" market (in my mind anyway) the market that for the most part doesn't get the $8k directly. What does this imply? If these buyers weren't directly motivated by the $8k (the 6.5k may have been a factor but one would think it would have been relatively minor on a 700k decision) then there's no reason these buyers should disappear. We may actually be witnessing the healing process towards a not totally skittish market. Reasons I could be wrong. 1) If these people sold their home to $8k buyers, they were still lubricated by the bribe just indirectly.2) Perhaps the $6.5k is a bigger deal than anyone thought around here.Neither of these two seem persuasive to me because (1) would need to have matched sales in the lower brackets which instead fell YoY, and (2) a 1% incentive just seems pretty wimpy.Any other flaws in my logic you all see?Point being, a few months back I predicted a higher median post tax credit as the lower end dried up, but instead the higher median and change in mix happened now. Non-buyer-bribe induced sales have no strong reason to fall in the coming months.OTOH fewer low-end sales even when the buyer bribe was still going on may signal further weakness on the low end in that demand may truly have evaporated by all being stolen from the future. But whether that will have any effect is all going to be a matter of supply and demand... With supply also way down in the lower bracket, who's to tell?
Arlington aficionado here - i'd say sold prices are same to a tad higher now than '05 (can't adjust for interests rates in my head); though as i've said before '05 was not the peak for Arl from my observations.i was ready to declare N Arl is doing an 'M' shape correction (while other places are doing the 'W' shape recovery), but i'm so afraid The Anonymous would 'glug, glug, glug' me six months from today so i'm not going to say that.
Va,"food for thought for those looking in Oakton and Vienna"Ah, makes more sense now. And I will stand back from those fireworks. Arlington indeed might be a better proxy for Oakton/Vienna than FFX cnty as a whole. You could be right, and I don't want to touch it with a 39 1/2 foot pole.
MM,Thanks. Very interesting.And indeed 06 was the June peak, my original observation being that other than that one peak year Arlington looks to have fully recovered if one trusts the median to be an accurate representation of prices.
I wouldnt worry about it MM. You have a reputation for even handedness and never truly bought into the "its moving in" thesis of yesteryear. You have the right to be skeptical in either price direction.
Hey MM another doomer of yesteryear who hasnt earned the right to be skeptical is featured here. This post comes from 2 years ago today, back when the Arlington Wars were raging full bore. 2 years ago today, as Arl posted that -14.61 number and prices were at the rate of peak burndown (before going positive in Jun 2009 and Jun 2010) this doomer said:"I reiterate my position that the white collar job market in this area will deteriorate over the next year; this will finally cause capitulation among sellers in the close in areas, and price discovery will follow."Finally cause capitulation?FINALLY? And price discovery "will follow"?This doomer had just witnessed the absolute worst Arlington was going to suffer and yet he still thought the "big one" was yet to come -- glug, glug, glug, glug, glug, glug, glug!!!!http://novabubblefallout.blogspot.com/2008/07/decade-of-june-sales.html
Ah, I see I am a famous "doomer" again now...Funny how that isn't what our "most famous" liar had to say as recently as 18 months ago..."This is nothing against you - you have always been more restrained in your calls about price declines. However, as those "blood in the streets" types are now long gone, you can understand why I am a bit frustrated.I may get lucky and someday get within the range of the price I passed on in 2003. Then again, seeing as I will not get the last 6+ years of my life back, it looks like waiting for the bubble to burst was the biggest mistake I could have made."- The Anonymous (to me) - 2/11/09http://novabubblefallout.blogspot.com/2009/02/northern-virginia-january-housing-sales.htmlIn short, even HE knows I am not who he claims I am, but since he can't find anyone that actually fits what he is looking for he is happy to try to smear me out of sheer petty frustration with his life.
Cara said...Although, since Frankly only goes back 4 years, that will be difficult...If you put the map over your particular neighborhood you can select "All" sale records in Redfin searches and get sales from at least 2003 (where I look anyway). It is a quick visual way to see the bubble and its decline if you happen to know that all the homes on one particular street are comparable.The neighborhood I look at does show a distinct bubble and pop if you look at the sold dates, which is why I disagree that Oakton is like Arlington when it comes to bubble resilience. Some places I assume didn't crash and bounce, but rather just corrected less - especially those places with fewer foreclosures.
Cara-I am pretty sure Jumbo loans are continuing to thaw. Part of the reason sales were so anemic in the higher brackets was financing. As loans become available at good rates that probably is helping with sales. Although as long as rates stay low for a while I agree this is part of the healing process.
"Leroy said...but since he can't find anyone that actually fits what he is looking for he is happy to try to smear me out of sheer petty frustration with his life."While what you said was/is true about me, that wasnt what I was doing here.What I was doing was pointing out how terrible this particular call was -- you had just witnessed the first of many YOY gains for Arlington and concluded the "ONLY" reason it was going up was because of what happened the year before.
"While what you said was/is true about me, that wasnt what I was doing here."Oh good, so trying to smear someone for something even you don't believe they are guilty of is ok so long as you can't find someone better. You must be a fun guy to be around."What I was doing was pointing out how terrible this particular call was -- you had just witnessed the first of many YOY gains for Arlington and concluded the "ONLY" reason it was going up was because of what happened the year before."My point, which should have been abundantly clear, was that since the percentage change is calculated YoY, a bad number from the previous year can make the next year's number look better, even if it is still a poor showing by historical standards.
"Leroy said...My point, which should have been abundantly clear, was that since the percentage change is calculated YoY, a bad number from the previous year can make the next year's number look better, even if it is still a poor showing by historical standards."Is that it then? Is that ALL that had happened 13 months ago? After that bad YOY comparison last May, did prices keep going down YOY when the comparisons werent as dire?
"After that bad YOY comparison last May, did prices keep going down YOY when the comparisons werent as dire?"Well it depends when you are talking about obviously. YoY Jun 2007-2008 showed the largest drop of any month between 2007-2008.The -14.6% from Jun 2007-2008 turned into a -6.6% YoY between Jul 2007-2008.(with a median 60k higher) I think we can agree that much of what we are looking at here is noise in the data. Housing prices do not fluctuate that much that quickly. ...but really, who gives a crap what the market actually did? I can't say I have a ton of desire to discuss anything with you considering your tendency to back a few months later and lie about my supposed predictions or views.
Jeremy, thanks for the Redfin tip, but how do you get it to display the graph going back to 2003? I tried several Arlington zips, indicated that I wanted "all" sales, but the graph depicts only about 2008-onward (the small one on the right of the screen, and the enlarged version when you double-click that one). I must be doing something wrong.
Cara,I highly recommend "Mack's Pillow Soft Earplugs". :-)
What do you suppose Northrup Grumman will do with all of this space?NG
Cheryl says:"I've always contended, on the whole, that wealthier areas would be the least impacted. "I would suggest this article http://www.doctorhousingbubble.com/luxury-california-real-estate-troubles-the-rich-do-it-too-million-dollar-california-real-estate-foreclosures-high/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DrHousingBubble-HowILearnedToLoveSocal+%28Dr.+Housing+Bubble+-+How+I+learned+to+Love+SoCal%29or http://www.nytimes.com/2010/07/09/business/economy/09rich.html?_r=1"Biggest defaulters on mortgages are the rich".Having good assets, they see a house going bad as just a failed investment.I think because the rates are so low around here the defaults are slower, but when it becomes a business decision, Geithner will walk on his house.
Ace - I don't know if it is possible to manipulate their graph. I just sorted through the "All" data with the map zoomed in on my target neighborhood and the search criteria set up for similar sized homes. I just clicked from house to house and compared sold dates to prices, but if you click "Download" on the bottom left of the map view you can download all the search result data in excel form and make your own graphs.
Thanks, Jeremy.Pat (or others), do security clearances take into account whether one has walked on a mortgage?
They were climate-controlled but I am thinking even an adventurous older lady might find the park a little deserted and scary in December, you know?
Blogger Ace said... What do you suppose Northrup Grumman will do with all of this space? NG 7/12/10 7:21 PMFrom:01/06/2010 Blog Entry:"Most of the top tier C-levels will live in Va. At least one will be in D.C. proper, in a +4BDR Room Condo of fairly new construction. At least one will be in MD. None will live more than 15 miles from Rosslyn in their primary residences. All done by Monday 10/31/2011.1/6/10 1:28 PM" So I was wrong about them buying in Rosslyn. Falls Church isn't that far away. I am still standing by my other predictions about where the C level types will live tho....Maryland and DC never had a chance for the HQ. VA was a foregone conclusion from the get go.:)
Meshell,Yeah that occurred to me to. Just doesn't feel like the safest place to be in December.Still the nightly rates on the cabins are a good deal for other purposes.
I'm not sure that this contributes anything beyond what Cara already pointed out, i.e., more thorough analyses are needed, but for SFHs:The NVAR charts show that there was a near doubling of $1 mill. + homes sold in Arlington in June 10 vs. June 09, and months of inventory is roughly half of what it was. At the same time, the number of sold <$400K homes dropped from 11 to 4. A similar pattern can be observed in ranges between these. As she said, I don't know if these are essentially the same size/amenity/land etc. homes, or whether the 2010 homes are better and due to financing availability or buyers' seeing a bargain, they are now buying them whereas they couldn't, or saw the houses as overpriced a year ago -- or both, or other things going on.
acefinancial matters are part of how a clearance is granted or reviewed.financial stress is a big one, if you are wildly in hock that's a bad sign.treatment of past debts is also an issue. Depends on how you got there and what you are doing. If you file bankruptcy it's part of the review, b ut if you were irresponsible and got into debt it's worse then if you had some misfortune like an illness or an accident.if you want a few examples either way,http://www.dod.gov/dodgc/doha/industrial/2010.html
Interesting Ace,That's even more dramatic than the change in FFX Cnty. I'm with hb on feeling it's a return of jumbo loans, and confidence.Looking closely at the FFX Cnty June SFH page from NVAR, the one possible area of weakness that I see in the market is the 400-600k slice. Sales were only up, 4 and 18% (400-499, 500-599) but active listings were up 22% and 14% and worse still, new listings in June were up 16% and 35%. Given those sales did receive some $8k boost, that looks like a significant pressure on the supply side.Just one month, but it jives with what I'm seeing in Burke/Springfield. Since my own neighborhood seems to be sitting tight (only 1 active), I widened my search the other day. OMG, there is nothing worth buying out there in the 400-600k range. There's nothing comparable to our own house within bidding distance of the price we paid. And to get something actually better, both slightly bigger and as sturdily built, nicely appointed, similar quality neighborhood you need to look a full $150k higher if not more. The stuff between 400 and 550 is just not worth the prices their asking. (Okay there were 1 or 2 well priced homes, but out of 50-some that's pretty weak). People are listing totally non-updated homes for the same price that beautifully redone ones garnered earlier this year. So, I do think there's a lot of wishful thinking in the starter home market (of SFH's anyway). And the inventories seem to be bearing this out. We'll see what happens to them this summer (de-listing, lowering price, accepting lower %'s of list price, or miraculously finding enough buyers).
Cara-I am seeing the same thing out here that a bunch of houses that haven't been updated in 20 years think they should sell for 20% over assessment, because a couple of nicely remodeled homes did. I will be absolutely shocked if a bunch of buyers come in and buy the houses. My guess is a bunch of the sellers take the houses of the market and try again next year at a slightly lower pace. The summer buying season is coming to an end and I just don't see the sellers dropping prices by enough to find buyers.
Pat, thanks. Do you think that the high # of jobs requiring security clearances around here are one reason why we don't see as many "strategic defaults" as, say, Nevada?
Ace, I know this is anecdotal but that is exactly why two of the people I eat lunch with every day have not strategically walked away from their loans. They are afraid of losing their clearance, job, and home all at the same time.
ace, cara, et ali'm seeing the same in my search, though some non-updates on nice lots still commanded top dollars, often with cash, which led me to believe (and concur to many here have said) that due to land cost builders/investors buy them to flip. as VA_Investor said, "the floor is in" in N Arl.though on the $1MM sales doubling and MOI cut in 1/2 - isn't that the nature of things? if houses are selling twice as fast MOI maturely drops at the same rate, all else being equal?
Ace-I also know a handful of people who are afraid of losing their clearance if they walk from their house. I think a lot of these people also have a more encompassing sense of morality than many people. So they will not default because they think it is wrong to walk away from an obligation.
MM, months of inventory and sales will not necessary go hand in hand. If more sellers are entering the market at the same or faster pace than sales are closing, months of inventory could stay the same or increase. The withdrawal of unsold homes is also a factor.
"necessarily", that is.
MM,Indeed in N. Arl and the like (wherever that happens to be) the non-updated stuff can be torn down for a profit. That isn't really true out here in the boonies. Or it was only true during the peak. Yes, doubling sales and halving MOI are the same thing, UNLESS enough new sellers are attracted by those sales such that supply keeps up with the increased demand. (i.e. all else not being equal).
Interesting, Jeremy and HB.MM, re: teardowns, two expensive properties on Arlington Ridge Road may be torn down. When I went past there recently I saw the same builder/renovator signs in front. I couldn't believe the land would make it worth it, though the views from the first of these places are probably spectacular, and possibly it could be subdivided.$1.6M$950K
ace,i agree land won't make up for those, but rich people don't think/function like me...but this one sure will1610 TAYLOR ST N
Well, MM, the two I posted were sold. So someone felt it was worth the investment or risk. I just was amazed that, at those prices, they weren't bought by people who essentially liked them as they are. On both houses, from the photos, the owners had put $$$ into improvements, but I don't think they chose the improvements wisely for resale. Maybe the contractor isn't going to do major work, but his signs are on several other new builds in that area.It will be interesting to see what happens.
MM, HB, Cara, Jeremy and others, I have also see a lot of delusional non-improvers in Arl. They usually sit on the market a long time, with price drops, and then eventually sell for something under assessed value.
"seen". Wish I had gotten more sleep last night...zzzz....
Aceincomes here are a bit better maybe people are deluded and afraid of their clearances.but anyone 50% underwater is hosed.
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