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.
Bill Ackman on why US housing is a great buy. http://read.bi/fEW1DU
http://read.bi/9fDxWKand right behind it is 15 reasons the housing market is headed down.
David-Ackerman seems bullish on areas where housing has been crushed and it is cheaper to buy the average house with 3% down then rent. There are some properties like this in Nova, but not many. I could be wrong, but I expect housing to settle down going forward. For the past 10 years housing has been moving up or down ~15%/year. I think we will see more years like 2010 were housing moves up or down 5%, with less of a sense of direction.
HBI think we will see more like the middle 90's. A long slow stagnation.People with good jobs will continue to hold on, hold property off market,suffer from being underwater.People with bad jobs will struggle with short sales, foreclosure andwalkaways. We have a tremendous number of people who treated their houses as ATMs. Many were careful, some were not. It doesn't take too many foreclosures to establish a trend.Right now There are still far too many unemployed and underemployed.Where this ends, i don't know.
pat,We are talking about DC (NoVa). Do you think unemployment will get worse? Who, exactly, is left to be foreclosed upon? Why would one "suffer" from being underwater?I was underwater on a bunch of stuff in the early 90's. Big deal. Unless you have to sell, who cares anyway? #$@% happens. It's not life-ending.I agree that this will resemble the 90's and it will be awhile before the next cycle occurs. In the meantime, do you really think a significant further leg down is going to happen?I'd buy, get my good interest rate and settle in. Yes, you could lose your job, get hit by a bus, etc. and if you want to go thru life with this additude, then god bless...
Make that "attitude". This is a "Kevin" thought process. 2005 and 2006 are over. The bubble is over imo. Only an idiot bought back then. How is one going to lose hundreds of thousands - as Kevin is worried about? Is he looking at 2mil properties?
Va_Investor, I think Kevin is looking for prices that you pay in the mid west or south, not the DC area. I don't know, just what I think. This area has always cost more and that will never change, it hasn't since WWII unless they move all the federal employees out.As far as inflation, I do see this. Oil, milk, eggs, utlities, bread, ceral, coffee, butter,fruit and vegatbles are already banging. That list was genrated in a 10 second rant. I really don't know what else is up. I know RV's are selling, UTV's and farm equipment. Most "recessions" these things die on the vine. I haven't looked at boats or Home Depot or swimming pool dealers but I sure haven't seen any fire deals, either.
Hey Arkey,Hope you are enjoying life on "the farm". Yes, when you have all these economists at 180 degree differences - what is one to think?Common sense should prevail at some point. Either live your life or build a bunker. These "kids" weren't looking for a job in 1980 and knew nothing of the housing market during the last cycle (late 80's - late 90's).None of them moved here in the early 80's and faced the sticker-shock coupled with interest rates going up to 17 or 18%.As happened in the early 80's and throughout much of the 90's, rents are going way up.
VAI -- Regarding Pat, et. al. it just takes time.Seems like alot of bearish types new to this board come in full of bluster, convinced that the price declines are pretty much in line with their personal timelines of what will happen, and when.Eventually, as they learn that things do not go as they predicted, they get frustrated and either buy or run away. Average timeframe for most is 2-3 years. With the exception of Contrarian, all of our biggest bears from 2006, 2007, & 2008 are now either reformed bulls, homeowners, or long gone.Our biggest bears from late 2008/ early 2009 (TBW, Kevin, etc.) are in their last throws of fighting the tape. Some of the more moderate bears have bought (i.e. Jeremy), and the 18+ months of (mostly) gains has beaten the more vigorous bears into submission. Our most recent crop of late 2009/ early 2010 bears (Pat, Spider, etc), are just earlier along in the process. Progress is being made (Spider no longer warns of a "STAMPEDE" of inventory, Pat no longer cites Mr. Mortgage's "the quickening") but they are not there yet. Just give them more time. Pat has said if the "big one" doesnt hit by 2012, he will finally conclude it wont hit. Assuming this site survives, into 2012, 2013, etc. eventually it will be nothing more than moderates, a handfull of bulls, and Contrarian.
Va-Investor..Oh yeah..I "bought the FARM" and didn't hestitate a micro second to re-buy after selling. Remember gas every other day and swapped labor for goods, jobs off the book, products under the table and lots of other oldies but goodies without any extended unemployment benefits. I know they say its bad but gosh I remember one hell of a lot worse from 74 to 80 life in these here American states was hard as hell and houses still sold when interest rates were double digit and I certainly have no memory of thinking gosh thats a well priced steal of a deal home. I thought they were expensive relative to salary.And I'm not talking DC but the Norfolk area. My first home in Cheaspeake va kept me awake a month wondering if I could pay for it! First home, tho. A VA. loan and I think at the time it was around 8% interest. A deal!
Anon,I have been poking around these sites since probably 2002/2003. I must say, your take on the recent rounds of bears is pretty accurate. Though I hold that late 2003-2007 was a really bad time to buy. Anecdotal evidence notwithstanding, if you bought early in that time frame you were sacrificing all of your rights as a purchaser and having to make a snap decision based on low inventory, and if you were on the trailing end of that time frame you were most likely catching a falling knife.Sure there are bound to be outliers but I think that was the time frame when it made the most sense to sit the market out.My $0.02
Two Cents..I agree with you. I wasn't talking about the bubble peak in the DC area. I knew from my tax assessments that the market had gone crazy, loony. I'd mutter and cuss and scratch my azz trying to figure out how anybody could afford these houses, my own included. I was married to an SES and we couldn't afford to buy our own home during the time frame of 2005/07. I'm not arguing that housing markets over heat, I just digress from popular opinion that they always stagnate for a decade or depreciate 60% or more and stay that way for a decade. I've never seen that happen and don't believe most housing was 50% inflated. SS and foreclosures destroyed value short term but the value is there long term or 5 years out. 2008 was the year to get the steal of a deal in PWC Va. 2009 early was still good but started firming and rising in PWC. You just have to know your area and market.
orig listed: 7/10/2009 $1,495,000sold Price: 12/7/2010 $1,175,000sold $200K less than in '07
MM-I think that house and lot is pretty. In addition to selling for 200K less than it did in 2007 it also only sold for 58% more than its 2000 sales price. So its not like the 2007 price was an anomaly unless the 2000 price was also an anomaly.
To bear in Mind guys,I believe my Bearish prediction wasC-S for this Area would drop to 155.Given it's 175, it's not some Ultra-Bear call.Now, if Bernanke starts handing out $100,000 Bills that could be called an unforseen event.if Bernanke drops Interest Rates to -5%, that could be an unforseen event.if Obama prints $30 Trillion in deficit Spending that could be an Unforseen event.if Russia invades western europe that could be an extreme event.if 5 north american cities are destroyed by atom bombs that could be an extreme event.Look, I rent a 2BR apartment in the reasonable part of Arlington for $1,000/Month. It doesn't cost me much to hang out and see what happens.Now do i see some beuatiful properties worth bidding on? Sure.As for what's happening? I see a lot of ducks. Placid on the surface, paddling like hell down below. There are plenty of people draining IRA's, 401Ks and savings accounts to keep going.I'd be happier if the interest rates were 2% higher. I'd be happier if the FHA weren't the only source of funding. I'd be happier if FHA weren't writing 700,000 mortgages.What would conditions be if those conditions were not true? I think it would be different. It's hard to make rational decisions when the Fed is buying stock futures, gaming the interest rates and the FHA is holding up the high end part of the market.
MM, HB, It is pretty. But I'm puzzled from the opposite direction, about that house. The recent selling price (nearly $1.2 mill. for a 2000 sq. ft. house), in part because of a large, pretty lot in a nice area) seems pretty on-target in the current market. When I consider what a buyer can get for $1.4 mill. today in North Arlington (e.g., a house twice that size, brand new, with a modern floor plan and features, maybe a little more if it's near metro or on an especially nice lot), I don't understand why this house is valued so highly by Arlington currently (other than that the county took its recent selling price into account), or why it sold for so much previously.
so it sold for $495K...
MM, so what do you think about the selling price?
Ace-I assume you are questions why a new house like this (5K sq.ft. vs 2k sq.ft) only cost 155K more. My guess is that the lot is very large and nice on MMs original house. It also looks like it is in a nice neighborhood where all of the houses are similar sizes. I think a lot of people dislike living in a huge house next to a bunch of poorer neighbors. I am also not sure that a new house with a modern floor plan necessarily would sell for more than a 75 year house that has been nicely renovated. A lot of people like the character of old houses.Either way I don't know the Arlington market well enough to say how much different houses should sell for. I was mostly just surprised it sold for 200K less than it did in 2007 and only 60% more than its 2000 sales prices. Its definitely possible the previous two owners overpaid.
Arkey, VA_I,No, I don't think houses here should cost what they do in Iowa. Don't be dramatic. However I don't see any justification for prices being double what they were in 2000, something I'm sure you can justify with a less-than-sophisticated "this area [wave the magic wand] is special" conclusion.
kevin,for starters, how about:household income doubled; interest rates halved; down payment requirement also halved/quartered; population grew;you get the idea.
kevin,What were prices in the early 90's? Should those numbers factor in to your calculations? How about the cost of $$$?Why is the "starting point" 2000? Why is debt to income no longer relevant? Have wages increased (locally) from 2000 (or 1992?)?I would surmise that interest rates of 17% in the early 80's are irrelevant also?
Ace,the price was lower than i expected but not by much. it needs a ton of repairs and everyone has a different mechanism to factor in the costs.it's also on Glebe, and in a less appealing immediate neighborhood which borders Highview Park. and we know how these factors fair in this market.but all in all it'd be a good start home with lots of space; i'd be happy if i'd gotten it at my price.
MM: for starters, how about:household income doubled; interest rates halved; down payment requirement also halved/quartered; population grew;Really, household income has doubled in the past ten years?http://www.fairfaxcounty.gov/demogrph/gendemo.htm#incNice try though.Interest rates are much lower, but certainly not half what they were ten years ago. The purchasing power associated with today's rates versus ten years ago is about 30-40%. And obviously, when rates do go up, this relative purchasing power will no longer exist.Population growth has been met with a deluge of home construction. If the net effect isn't zero, then it is adequately reflected in the household GDP data. Hence, none of your points can justify prices being double now what they were ten years ago.VA_I: Why is the "starting point" 2000? Why is debt to income no longer relevant? Have wages increased (locally) from 2000 (or 1992?)?2000 is an adequate starting point because the housing bubble hadn't swung into high gear yet and a decade is a clean number. Sure, we can use 1995 when Fairfax Co.'s median household salary was $70k (versus 2000 when it was $82k or now when it is ~$105k).
HB, I am not questioning why the house on 36th sold for the price it did--as I said, that price seems in line with the current market. I'm also not arguing that everyone prefers big houses on small lots. I am trying to explain why this house could have "dropped in value" so much since 2007 (while Country Club in general has not dropped as much), or "failed to gain" more than 58%. Either the current price is out of line, or the previous price(s) are out of line, with the market, or the house condition has declined substantially. It doesn't appear to me that the current price is out of line or that the house has not been kept up to date. I suppose it's also possible that the owners HAVE to move and thus might have had to accept a lower offer, but there is enough demand in this range in No. Arl. that they likely got a market offer (i.e., there were other buyers but no one else thought it was worth more). So, from the above and my own pretty extensive keeping-an-eye-on-certain houses in Arlington, what appears to account for this is that the sellers overpaid substantially when they bought in 2007. I also gave them credit for the lot value--2000 square foot houses on less desirable lots are selling now for a lot less than $1.2 mill.
"more than 58%" since 2000 that is.
MM, interesting and that makes sense.
Ace-Gotcha that makes sense. Thanks for the clarification.
Ace,That 36th st house sold in 28 days in '07, after dropping $100K in list price to $1.45MM. hard to judge whether they simply overpaid (maybe that's the actual peak of N Arl?!) or were fooled by pricing strategy which is unlikely given the price of the purchase and people with that kind of buying power cannot be stupid with money.another possibility - they under bought in '07 but now has settled in a $5MM+ mansion so couldn't care less of a mere $200K hiccup.
MM, that is a possibility, but I keep coming back to the fact that that house's price seems in line for today, and out of line during 2007, given the alternatives available. If other houses like it were now selling for $1.3 mill. or so, I would be more inclined to think they just wanted to sell it quickly and could afford to lose what is for most of us, a lot of money. In any case, at least we all agree it is a pretty house on a nice lot.
Also, it seems to me that in 2007 there were a lot of banks not demanding really accurate and/or conservative appraisals. And, if they were so well-heeled that they now don't mind losing $200K, then they wouldn't have minded over-paying by that amount or somewhat less than that in 2007.
"Contrarian said...We now have the Pentagon planning for economic collapse and civil unrest."So what? As your source notes, theyve been planning for nuclear attack for 60 years now. Despite the warnings of doomsdayers that nuclear attack was "imminent" how many have we actually had?If anything, im more worried that our defense dept is this behind the ball in what seems like an obvious (if remote) threat to our national security.In any event, what does it all matter anyway. As per your most recent "source" Charles Nenner, civil unrest is easy to predict, via sun-spot activityhttp://www.cnbc.com/id/40436518Glug, glug, glug, glug, glug, glug, glug!!!
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