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.
Another apparent bidding war in Lyon Village:Franklin
Just following through on my thoughts re: a double dip but no new bottom in Case Shiller. As the tax credits continue to get unwound, I do expect some significant weakness this winter and possibly next spring/summer. This likely will cause CS to go YOY negative in the very near future and continue that way for a while. I ran through some projections for the next 2 years trying to account for (a) the unwinding of the tax credit and (b) seasonality. The format is the same as Harriet's case shiller series, 2 posts ago (i.e. index value -- MOM change -- YOY change). Feel free to critique2010...............MOM..........YOYSep 187.5.........-0.4%.......+3.8%Oct 186.0.........-0.8%.......+3.3%Nov 184.0.........-1.1%.......+2.7%Dec 181.0.........-1.6%.......+1.2%2011Jan 177.0.........-2.2%.......-0.2%Feb 173.5.........-1.9%.......-1.7%Mar 171.5.........-1.2%.......-2.2%Apr 170.5.........-0.6%.......-5.0%May 171.0.........+0.3%.......-6.3%Jun 172.0.........+0.5%.......-7.4%Jul 173.5.........+0.9%.......-7.6%Aug 175.0.........+0.9%.......-7.0%Sep 176.0.........+0.5%.......-6.1%Oct 175.5.........-0.3%.......-5.6%Nov 174.5.........-0.6%.......-5.2%Dec 173.0.........-0.9%.......-4.4%2011Jan 172.0.........-0.6%.......-2.8%Feb 171.5.........-0.3%.......-1.2%Mar 171.0.........-0.2%.......-0.3%Apr 172.0.........+0.6%.......+0.9%May 173.0.........+0.6%.......+0.9%Jun 174.5.........+0.9%.......+1.4%Jul 176.5.........+1.1%.......+1.7%Aug 178.0.........+0.8%.......+1.7%Addl comments in a minute.
Anon-The numbers look pretty reasonable to me. Although I think they are dependent on the environment not changing much. If the government comes up with new policies housing prices may stay higher or if banks start liquidating houses quickly I think prices would go lower than your expectations. I think you are right that the base case is the status quo, but the environment changing would not be surprising.
Addl comments:The biggest hit (on a MOM basis) will be seen this winter. These MOM drops are far worse than anything seen last year, yet not as bad as the drops we saw during the full bore crisis. Anyway, these MOM drops from the expiring tax credit and seasonality push the index value down significantly from where it is today (188 Aug 2010) to 170.5 next April. My guess is this will push the MSM and the blogosphere into a frenzy, and rightly so, as there is an accelerating loss to the downside. The permabears might be in hysterics by next summer as the YOY loss continues to rise.But notice what happens next august -- the YOY 2nd derivative decelerates from -7.6%YOY to -7.2%YOY. Likely, this will be spun as simply "less worse", as it was in winter 08. However, winter 08 was not simply less worse -- it was the beginning of a bottom that thus far has lasted for 2 years. By spring 2011, if the MOM and YOY both go positive, thats about as good a sign of "its over" as you are ever going to see.Finally, notice too that my index value never gets back to where it is now (188). I see this as the apex of the tax credit induced high, unliley to be seen in the next year, and maybe the year after. This will be bad news for Robert and a few other V shaped theorists. However, note too that it never drops below 170 at any point in the next 2 years. If this pans out, this means that the "bottom" was indeed March 2009 when the index hit 165. Thus, while there are going to be buying opportunities ahead, for those of you who were ready a few years ago, you are likely not to see those opportunities again.
HB -- yes, this very much presumes a status quo, and only accounts for those variables known at this time. Thus things like austerity measures would skew this index down, and things like moderate inflation would skew it up, etc.
so you're predicting the next bottom is Aug 11? would you advice buyers to wait?btw anecdotal evidence warning - but i know of one property of JPMChase was put on MLS 14 days after the bank owns it. i don't think they could move any faster than that.
MM-Although that is really fast I bet you they could have taken ownership of the property a lot earlier. In theory banks can take ownership a few months after the owner becomes delinquent. Instead most are waiting 12-24 months. I don't think they are dragging their feet, but they just don't have enough people. It also looks like Anon is saying the bottom will be a CS reading of 170.5 in April 2011 not Aug 2011. Seeing that he doesn't think prices will fall that much waiting is probably based more on personal decisions than anything else. Although the index is still at 188 this is because it is lagged and a 3 month average so prices are already a few percent below this.
Contrarian,Who's going to be left to swoop in on all of the houses if everything, as you say, explodes into oblivion?Do you even stop to consider that some of your predictions are at odds with each other?I mean, if Uncle Sam eliminates the home mortgage deduction, then the coffers will fill faster than even a single party House, Senate, and President can spend it. They'll be able to shore up Fanny and Freddie, pay for the healthcare bill, and invest in infrastructure to create new jobs. It will be a utopia!My $0.02
MM -- the only thing I am slightly concerned about right now is the 2nd derivative. It is falling and I personally am a bit reluctant to be buying while that is still falling. As soon as that turns around and starts to decelerate, even before it turns positive (like after July 2011 in my example) I would be fine with it. Also, keep in mind, you like I, am looking in the core immunozone. Case Shiller hit 250 in summer 2006 and rocketed down to 165 in spring 2009. That massive, historic drop of 33% regionwide, translated into what -- 3%, 5%, maybe 10% off peak prices? If so, im not waiting around to see immunozone prices drop another corresponding 0-2%. If the right deal comes along, im gone.
contrarian said...The biggest hit to housing will occur after the entire banking system collapses, the stock market implodes, freddie and fannie shut their doors, interest rates rise, store fronts are closed, unemployment (even in this region) skyrockets, the baby boomers retire, mortgage interest tax deductions are eliminated, ....and so onContrarian, in all seriousness, when do you expect most, if not all of this to happen? 2011, 2012?
Oakton flip. I'm a bit underwhelmed by their aesthetic choices:http://www.franklymls.com/FX7464921
Didn't this house come up before in conversation here? I'm a bit surprised by the price but not terribly given there's a garage and a fairly sizeable, if oddly shaped, lot.http://franklymls.com/AR7366718My $0.02
Contrarian-How does QE2 increase the debt. All that is happening is the fed is effectively creating money to buy treasuries. If the fed ends up retiring this money than nothing happens to the debt. If the fed doesn't retire the money than effectively the fed created money, which reduces the debt. Right now the fed/treasury are just printing money to pay for our debts, which if anything causes inflation, but no increase in the debt.
I thought these were interesting charts housing prices not surprisingly it says DC is a really expensive market and hasn't corrected as much as other markets. It would be nice if they had NoVa on the charts, because the DC MSA is so large... It would show that NoVa is even more expensive and has probably only corrected to 2005 prices.
607 ILLINOIS ST - 5/2/2 REO sold for $645,000...just out of my reach, sigh.
MM-We talked about that house before right? I agree it seems like it is much less expensive than many comps.
Speaking of underwhelming flips, there's this one in Springfield. What boring kitchen cabinets!Love the remarks tho: "OMG!! This House Is So Awesome!" All I can say is: ROTFLMAO!
newbie,Since when is 22310, Springfield? That house is between the Rose Hill area and Huntington. No one who knows that area would consider that Springfield.
Real Estate Bloggers BeersFriday NorthSide Socialfrom 5:30 on.
hayfield,Oops! Just a brain fart on my part. I have alerts for both Springfield and Rose Hill and just misremembered my zip codes.
newbie, I think that house looks pretty nice for the price but I don't know the area. It's hard (for me) to tell quality level of the upgrades from the photos. Do you think the ceiling was too low for them to use taller cabinets?
Ace,I'm not a fan of either split levels or corner lots, but I liked the looks of this initially. Just was really disappointed by the boring cabinets. You're right about the ceiling height, but my bigger complaint was the style. Of course, that's personal taste, so there's likely someone who'll find them more appealing.
housebuyer,yes. and i saw it in person (and knew right away it'd sell way over list). it's the cheapest 5/3/1 (4/2 up w/ huge master suite) ever i've seen, and only needs about $15k for cosmetic fixes. usually for $645K you'd get a 1950s colonial 3/1 up and 1/1 or 0/1 in bsmt, upkeep nicely but not fully renovated. what it'd do to the comps remain to be seen as most agents would surely leave it out coz it's an REO. need a couple more of these to see a real impact. but i'm not holding my breath.
Interesting chart.It shows Baltimore not sliding, but Baltimore has terrible troubles.Dallas, fort worth and albuq are in the good end but that may be reflection of the energy market.Casey serene was buying in Utah and NM so perhaps the foreclosure fallout is slower there.
Blogger meet up. At 5:30 onwards, north side social
newbie, If you otherwise liked the house, how much would it cost to change the cabinets? Of course, if they are new, it would seem a shame to waste them. I agree with you, they aren't my taste either, but that other people may like them.
pat-Texas is also in good shape because it didn't have a bubble. If you look at the prices in Texas they were only going up less than 5% a year, so they didn't need to correct much to get to historical levels. Also I think I am a no go on the happy hour. I have meetings at work until 6:30 :-(
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