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.Some decent earnings news from Toll Brothers.
Harriet-Its good to see that some of the more rational home builders have made it through the worst of the housing recession and can make profits (albeit small ones) building significantly fewer houses. It really is good that the builders have dropped building dramatically, because it is the only way to cure the excess inventory across the country.I wouldn't mind though if they would speed up building in Nova, seeing that we don't have much excess inventory :)
Inventory seems to be going in the wrong direction. Have to keep an eye on that in the next few months.Mike,You are right that all this unrest and uncertainty combined with a tepid (if any) recovery does not make a great case for purchasing.I am able to do so (and sleep at night) for a couple of reasons. I am not relying on any employment income to pay mortgages and I have adequate liquid assets.I don't expect much appreciation over the next 5 or 7yrs. I hope my properties do better than average. If the rental market craters it will be a different situation.The reason that I have been buying over the past two years is less about whether the market has fully bottomed and more about getting on the am schedule. If prices remain flat for 5yrs (and that's quite a reasonable assumption), I'll have made some very good headway toward paying these places off.So, my thought process is a little different. I can't foresee what would ever cause a "forced" sale in my case.
Any comments on this house? I haven't been looking as much recently, but I did some today and this one caught my eye.http://franklymls.com/PW7520909
xpovos-I don't know much about the market, but it seems reasonable. I would have thought in woodbridge houses were selling for 10-15% less than early 2004 prices. This house is selling for ~5-10% more than 2004 prices, but it looks like they spent a fairly significant amount of money on upgrades since then. I really don't know the market, so my advice really doesn't mean very much.
hb,It seems a little high to me as well. This is post-buyer's bribe, so it feels like it should be lower. It's a big house, though, and that's one thing that can't be easily fixed with remodeling. A lot of the houses in the age range in the area are significantly smaller. Newer houses with similar sqft are selling for a lot more of course. It's a bit of an outlier any way you look at it.
Although this has nothing to do with housing I was reading this article on Krugman's blog and found interesting. It shows military spending as a percentage of GDP. I found it amazing that military spending is currently 60% lower (as a % of GDP) compared to the 50-60s.
Has anyone looked at the latest NVAR monthly report? Harriet has a link in the right hand column.It cites an interesting WSJ Article about housing affordability reaching pre-bubble levels and, in fact, being greater than the 1989-2003 average. The article quotes Mark Zandi. I read the entire article (nvar left out a couple of negative things). It states that DC may never come back down to historical prices due to economic structural changes.I seem to recall someone here (anon? hb?) discuss these structural changes. What are they exactly?
VA-I think it was mostly anon, but a couple of the structural changes I see are 1) The area has improved significantly over the past 20 years (crime, cleanliness...) 2) empty land close to DC has become very scarce. I am sure you remember back when places like Tysons were mostly farm land. 3) I believe the work force is now a higher caliber worker (lawyers, engineers, computer scientists..) I believe Arlington now has the highest percentage of people who post grad degrees of any country in the country. These workers/jobs have high paying jobs with high hours, so they are willing to pay a premium for short commutes.I am sure Anon can think of a couple of additional structural changes. When you put them together you can make a case that DC is undergoing to path that Manhattan took decades ago of becoming unaffordable in many metrics. There is some merit to this argument as long as jobs and growth continue in this area. These arguments start falling apart if jobs and people ever started to leave the area in mass.
I would think the structural changes would be the percentage of regional GDP that is directly or indirectly tied to the Federal Government. Health Care, Education, Tourism, Technology, etc., I would guess represent a larger share of regional GDP. I have no data though.
HB says"I found it amazing that military spending is currently 60% lower (as a % of GDP) compared to the 50-60s."The financial sector doesn't need a carrier battle group to protect it.
A milder meltdown About $600 billion of the loans were made from 2005 through 2007, according to Inside Mortgage Finance. Lenders have revised terms on about 20 percent of option ARMs, sometimes switching them to a fixed rate, says Michael Fratantoni, vice-president for research at the Mortgage Bankers Assn. in Washington. Many more loans have disappeared through payoffs, refinancing, foreclosures, or sales in which the lender took less than the amount owed. About half of the loans issued from 2003 to 2007 remain outstanding, Fratantoni says. ,,,,Yet the option ARM problem is far from over. A model developed by JPMorgan Chase (JPM) analysts predicts that 70 percent of remaining option-ARM loans that were bundled into bonds will eventually default. And a sudden increase in rates could trigger a new round of defaults. "Lots of lenders have taken action to stave it off, knowing it's a problem," says Jon D. Maddux, chief executive officer of YouWalkAway.com in Carlsbad, Calif., which advises borrowers on strategic defaults. "They have extra time because rates are low. But when those rates go up, that's when we're going to see this problem happen."
http://www.businessweek.com/ap/financialnews/D9LIILK01.htmForeclosures/Cash deals lift volume
I read that 60% of the option arms were originated in California.So, half have gone away already and the "guess" is that 70% of those remaining will default.How many are in this region (as a percent of total mortgages)? I think this was discussed here at one point and that number was quite low.In any event, if you read the whole article, the consensus is this problem is going to be much less than was feared.I didn't see the word "tsunami" tossed around.
Is everything okay with contrarian? We've had two big down days in the stock market, so I figured he'd be on here saying he called the market crash.
"David said...Is everything okay with contrarian? We've had two big down days in the stock market, so I figured he'd be on here saying he called the market crash."He clearly is not his normal self. Recently, he has gotten lazy with his deletions. Some comments now last weeks, and some dont ever get deleted. Plus, his tone has changed dramatically in a few of the most recent posts. Time was, all his cataclysmic predictions were expressed as certainty (i.e. its not a matter of "if" but "when" xyz happens, causing prices to drop 90%). Recently its been more questions than predictions coming from him(i.e., what if xyz happens...) which is far from his usual style.Perhaps he is learning that (after 2 years of getting nearly everything wrong), predicting the future is not as easy as it seems...
Contrarian -- I logged on around 8AM and saw that you had already deleted your post. Who knows how long it had been gone by then.Helpful hint here -- when attempting to communicate with us humans, it is generally advisable to leave the post up long enough for them to be read. Otherwise, why not save us all the trouble and not even post in the first place?
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