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Monday, October 11, 2010
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26 comments:
Harriet
Thanks for the inventory.
Personally I think it looks pretty ugly. My guess is at least some of the price gain is mix and moi is still going up to high levels.
HB Agree. It is not necessarily that prices have gone up but that more higher price houses are selling which skews the prices upward. In 2009 there were still a lot of short sales in Arlington and this year a more normal mix of houses is selling. Fewer houses are selling, but they have higher prices.
reecon-
I also think the tax credit pulled forward a higher percent of low price sales so once you get rid of those you are left with mostly higher priced properties. Either way I think if don't see buyers coming back to the market soon we will see prices start to fall again
I thought a good title would be "Salesmageddon" but perhaps that would have been too dramatic.
Putting it this way, Arlington and Alexandria's September sales were at a 12-year low, and Fairfax's would have been except for September 2007.
hb, I would characterize it as a lull and I would attribute it to consumer confidence. A normal pattern of sellers, but a decline in the number of buyers. A greater share sitting on the sidelines. I have no data to back this up.
Robert-
I agree with you that it is a lack of buyers more than a glut of sellers. If anything I think there are probably fewer people willing to sell now, because most of the population thinks there house is worth more than they can sell it for.
I agree a lack of consumer confidence is probably why a lot of buyers are sitting on the sidelines, but I think consumer confidence will be weak for years. Stories about high deficits and unemployment will be around for years to come. Although unemployment may be fine in this area people are still afraid and are trying to increase savings hear. The other issue is that even if our country fixes its deficit problems it likely will hurt this region not help it.
I agree with all of you, but also think there are still some, er, patient sellers whose homes have been on the market a long time with insufficient price drops, in Arl. & Alex. and possibly elsewhere. There are buyers out there who aren't willing to pay high prices for houses with significant flaws that will be costly or impossible to change.
Unwilling to pay, or in the aggregate, unable to.
Kevin, I'm sure that's true. I'm also thinking of people who are fully qualified for the price range we're looking for, but who just aren't interested in the crummy inventory currently available at the current price levels, any more than sellers are willing to sell at what would probably be a market clearing price.
I know of multiple prospective buyers in this boat (besides us). Our current, much cheaper houses/condos often have fewer faults than the "move up" places sellers want to sell us, e.g., no usable back yard, busy street or next to commercial business or parking lot etc., shady/dark lot and house, tiny rooms, $100K+ in updates needed on a $1 mill. house, small/bad floor plans, poorly done renovations, no garage, etc. It doesn't make much sense to pay more (and go through the hassles and costs of moving) for a property that is less desirable overall than your current home. Add to this the continuing financing challenges. So some buyers are there but are no more motivated to overpay than some sellers are to lower their current prices.
I was just talking to a guy at lunch today who was complaining how he can't buy a house because his condo won't sell for what it's "worth." Many of the other buyers I've talked to at open houses have also said they needed their place to sell before they could buy. I think that there are actually fewer true buyers when you take those people out of the mix. People just don't understand that their house is only "worth" what you can find someone to pay for it.
FOX is about to have some breaking news on the current foreclosure "crisis". Apparently there have been some high level talks at the WH.
Jeremy, I agree re: people who want to sell for more than current market value, but wasn't sure about your second sentence, which seems much broader (but maybe you meant it to be restricted also).
Most people moving up in this area (i.e., who are living in homes they own rather than rent) will have to sell their houses in order to afford another. But this doesn't mean they aren't serious buyers, as long as they are willing to sell at current market rates. The problem here is that houses are so expensive that most people can't qualify or can't afford to risk carrying two mortgages (in contrast, if you lived in a typical midwestern city, you probably could handle a few more payments on your $100K house while waiting for it to sell, while also paying for your $250K house). But no one wants to sell, then have to move into a rental apartment for months, while waiting to find a suitable move-up home to buy. So some buyers aren't sure what is best to do re: timing and go out looking, intending to list their house as soon as they start seeing homes that might work for them.
In the past (way before the bubble), this was less of a problem, because sellers of more expensive homes understood that contingencies were part of the picture, but now they are advised not to consider them under any circumstances. If they are rigid about this, it means they are cutting out prospective buyers.
On a different topic--Here's an article that says a family of four needs at least $104K per year to have "security" in Fairfax Co.:
WaPo
oops, I meant $108K.
My second sentence was implying that a lot of the traffic at open houses aren't real buyers, but rather "tire-kickers" because they have unrealistic expectations about when and at what price their current house will sell. I think those move up buyers are effectively out of the buying pool.
I'm generally not thrilled with the inventory that's out there. REO's are fine, but there aren't very many of them. Non-REO listings are ridiculous, asking what these delusional sellers think they're "worth". As a buyer, it's not worth my time dealing with such irrational people.
That rant aside, I just put an offer in on this REO:
http://franklymls.com/FX7406710
Ace-
That was an interesting article. I think although I am confused by the end of it. They said "Its last report, in 2008, said almost $80,000 was necessary for two adults with one infant and one schoolchild.
Today, WOW's new report estimates, that family would need $104,00, including $7,500 for savings. "
I refuse to believe that prices have gone up 30% in the last two years, particularly since housing cost has come down (financing and home price). Also energy related costs are way down.
Either way I find it interesting and assume they changed their criteria for what is necessary.
Kevin-
It looks nice and the price looks good (based on 2000 selling price, I don't know the area that well). Goodluck
HB,
I actually offered them considerably less than asking price. Based on what it sold for in 2000 plus a ~30% increase in household GDP since then, minus the cost of mold removal in the sub-basement, my price is fair but below what they'll probably receive in a climate with such low interest rates as we're seeing today. It's one of those take-it-or-leave-it things. Not too hung up on it as it's a bit more than I was looking for.
HB: good catch.
Jeremy: agreed.
Kevin: very nice house and land; hope you can get it for a fair price.
Ace, thanks. We'll see if the bank takes the offer. At this point I'd have to say it's probably only a 25% chance. And should they reject it, I'll remain a happy renting market bear. This was the only house I've bothered to see in the past two years.
http://www.nytimes.com/2010/10/10/opinion/10fountain.html
"Apparently, significant quantities of foreclosed and distressed properties change hands without ever being listed on the multiple listing service. And then there’s the increasingly popular Z sale, where the stated sale price — usually the original list price — is noted with a “Z,” indicating that the actual sale price is, well, something else. But that bogus Z price goes straight into the numbers machine that cranks out the statistical sausage of trends, median prices and comps that are supposed to tell us where the market stands. "
Um, do they do that here also?
Pat,
Yep. They do that here too. When looking over weekly solds on redfin, sometimes I notice wildly low sale prices for properties that were never on the market. These are usually noted as public records, when the banks have foreclosed and repossessed the property. These properties will then appear on the market a few months later, as REOs, at prices that are perhaps lower than those for organic sales, but still within "normal" market range.
When an investor buys a property at a foreclosure auction, these do not appear in the redfin solds. If you happen to know that a property has been flipped, you often have to go to the county assessment records to know how much the flipper paid. Flippers sometimes try not to include that information when they list the property.
Actually, I think you were asking if there were properties that are never put on the market once they change hands? There was a short sale in Stowers (Leesburg), that we looked at. It went under contract, and then was foreclosed after about 8 or 9 months. I saw the sale on the recontrust.com site; it was likely purchased by someone who intended to own it. It never came back onto the market. So, there's one tiny piece of evidence that it happens here, too.
good luck, Kevin. What's up with the comment about the buried oil tank in the yard? That sounds odd!
Thank you Meshell. Funny, I should have read the comments before making an offer, right? I think what it means is that the house was listed as oil-heated, but now there is a new HVAC/heating unit (it looks brand new). Didn't see any remnants of a buried oil tank, will look into it.
kevin, buried oil tanks can pose an environmental hazard, as they can leak. That's why sellers have to disclose this. I'm sure you've read up on it by now.
If you negotiate further on the house, maybe you could ask for them to have the tank professionally removed. I had a non-buried oil tank removed professionally about 10 years ago for $600. So you could factor it upwards from there.
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