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Tuesday, December 28, 2010
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17 comments:
The CS numbers came out today and finally we are starting to see prices come down. The DC area was down 0.2% so the decline is pretty pitiful, but I think it will be the start of a string of negative prints.
The low and middle tiers are up 0.3% and 0.4%, but the high tier is down 0.5%.
DC is still out performed other cities. It and Vegas were down 0.2% everyone else was down at least 0.6% and the index was down 1.2%.
Vegas is in the dead cat bounce.
They are so negative, that it just can't go any lower.
DC i think it's a combination of spending, and tax credits.
http://franklymls.com/DC7454835
Taxed at 312K, sells at 171K.
above the bottom at 149 which it didn't sell at last year, but
for 22K in gain, they spent 18 months on market.
better to have sold 18 months ago,
and cleared the books
Case Shiller graphs
Wow, DC is up 4% YoY. WooHooo!!!!!
with the fed pushing rates through the floor, Banks sitting on inventory,
and an 8K buyers bribe.
Most of the 4% boost matches the 8K buyers bribe.
I suspect this coming year we will see more market clearing.
The house is very unlikely to pump a trillion into the banks again, not with the teabaggers in place.
the banks may have to sell inventory to get cash.
Pat-
I agree with your comments on Vegas and DC. I also expect housing prices here to fall, although I have been surprised over the past 6 months how resilient this area has been. I still expect ~10%, but probably not much more unless rates really go up without inflation, something I don't think will happen.
Does anyone have an opinion on how the BRAC will affect zips/RE around the NGA site (belvoir North) and in general? My thinking is the gradual influx of high paid gs14s and 15s will support the market in 22153/springfield and adjascent zips. thoughts?
Pat-
I think banks will speed up the pace of foreclosures next year, although this is because they are getting better at the process not because they need cash. Currently the banks have excess reserves of ~$1 Trillion dollars. The one thing the banks currently have is excess cash. Perhaps they will try and get rid of the houses to reduce risk, but cash is one thing they currently don't need.
HB
"I think banks will speed up the pace of foreclosures next year, although this is because they are getting better at the process not because they need cash. Currently the banks have excess reserves of ~$1 Trillion dollars."
But it's all arbitraged. The banks are all in a massive carry trade. They are borrowing from the Fed at 0.25% and then buying treasuries from Geithner at 5% for the 30.
that trillion isn't equity it's overnight borrowing.
now as they see the longbond rise, the positions become less attractive and Bernanke may be limited on what he can give them from the discount window.
contrarian, thanks for the link. It would be nice if journalists could get their facts straight - Wolf is not the rep. for the 8th district; Moran is.
8th
dumpy deal
assessed at 452K, priced at 259K
how the heck this got past me, i don't know.
Pat-
I agree the overnight lending is not equity, but it is cash. Cash is what banks need to keep liquid when customs withdraw money. Right now they have they have tons of liquidity and a reasonable amount of equity. Over the next year I expect they will reduce their liquidity, but increase their equity.
I am not sure why everyone thinks that the $1T that banks are borrowing from the fed is being invested in 30 years. That is an extremely risky investment and would only make money if rates stay low much longer than the market thinks.
All of the cash that banks received was from the Fed was from it buying their treasuries and agency-MBS from these banks. These banks are now keeping that cash at the fed, so in reality the fed is the one doing the carry trade you are proposing the banks are.
Contrarian So Huntington has a vacancy rate of 14% or just more than 2% above the national average. What Ms. Landsman failed to mention was the impact of the massive, ongoing Wilson Bridge project on that neighborhood for the past 5 years. A fairly undesirable area was made more so by that project. Just as the Metro started to have a slight positive impact on the area, the project began. Now that the related road work is nearing completion Huntington might finally get some traction.
contrarian,
Beyond the top four (in the region) our region is below the national average.....
I'd bet you could cherry-pick neghborhoods with much worse numbers if you looked at the entire nation.
Huntington, Route One South and Anacostia have never been too desirable. Middleburg? I don't know what it happening out there.
How often have you visited Huntington or Route One South (Alex. south - Fiarfax County)?
I made the mistake of buying a property down route one about 20 yrs ago. The community had to have the public phone booth removed because it was being used for drug deals. The neighboring condo development was 90% section 8.
Route one was quite bad all the way to Quantico and then we had crazy construction. I bailed out of 95 in 2004 or 2005 due to traffic and was litterly shocked at the number of townhouses under construction in Dumfries. Same goes for Lorton.
20 yrs ago I looked at the duplexes in Huntington as possible rentals. They were 50-70K+ based on condition. The crime stats were horrible. It would be interesting to see what they are now.
I don't know what these places went for at peak, but I would guess there were many marginal buyers.
A couple years ago, the same vacancy would have affected Loudoun and PW (at least certain areas).
If I lived closer, I give a real life view.
p.s. I think BRAC will help. Maybe the tatoo parlors and rampant drug problems will clear.
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