Northern Virginia January 2011 housing sales were down 11.6% YoY, and median prices were up 2.1%. The average days on the market increased by 28% to 73 days.
(The above statistics include Alexandria City, Arlington County, Fairfax City, Fairfax County, Falls Church City, Fauquier County, Loudoun County, Manassas City, Manassas Park City, and Prince William County).
About three months ago, MRIS updated its presentation of market statistics. There were slight revisions in each year of each county's sales data going back to 2005.
Source: MRIS
Friday, February 11, 2011
Northern Virginia January Housing Sales
Posted by Harriet at 11:20 AM
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16 comments:
Interesting that in the outer areas, both sales volume and prices are down, but in the inner areas, volume is down but prices are slightly up.
Is this a reflection of the buyer credit in place last year at this time, which more greatly affected lower priced inventory in outer areas?
Its amazing to look at todays results, and think back on this blog's zeitgeist 2 years ago as prices turned.
It started with a stunned silence, as Arlington, & then the rest of the area started posting YOY price gains. Back then, the "correction is moving in" meme was still alive & well, so the pervasive thought was:
"OK, yeah maybe PWC & Loudoun had bottomed, but the inner areas??? NO WAY! The close in areas are NOWHERE near the bottom..."
So, desperately seeking an answer (other than the bottom) to explain these results, someone suggested it was all due to the "buyers bribe" tax credit. Rational heads cautioned, "dont read too much into this credit - it may not do as much as you think". However, that caution was ignored, and soon enough, this tax credit meme spread like wildfire to other denialists, and the resulting theme here was:
"Just wait til the tax credit expires in Jan 10, prices will plunge, proving that early 09 prices were NOWHERE near the bottom!!!"
Now here we are in early 2011. The tax credit is long long gone, and not only are inner area prices not "plunging" as was expected, they are continuing to generally rise month after month after month.
Of course, now all the hard core denialists are pretty much gone, and rational heads dominate this blog. Still, I wonder if the "its moving in" crowd have finally accepted reality, or if they have moved on to the next meme to explain why the inner areas are "nowhere near the bottom"?
Well, of course anon!
The current thought is that inner prices MUST fall because they don't "pencil out". How hard is that to grasp!!!!:)
VA,
This "don't pencil out" phrase I think is also getting overplayed. The dump rental houses in Arlington still go for 2400-4000 per month for 3-5 bedrooms. A $4000 monthly payment is what? A $600k mortgage? Throw in 20% down and you've suddenly got a rental to purchase equivalent at $720k. That buys a lot of home in this area.
My $0.02
mytwocents-
I think the rental rates you are talking about are for reasonable places not dumpy. Having looked at a bunch of places like this on craigslist the rental price is reasonable at ~3100/month. According to Zillow the house is worth ~670K. With 20% down at a 6% rate (investors get worse rates than buyers) and 1% property tax the mortgage payment is over $3700. If you add insurance, repairs, and downtime you really need the rent to be the the mid 4K range.
Although it doesn't pencil out that doesn't bother me expensive houses rarely pencil out, this is why you generally do not see nearly as many landlords with expensive houses.
Housebuyer,
I think the more relevant point is that the difference is a few hundred dollars. So the premium to own vs rent is very low.
I know my own goal was to buy a place that could cash flow my mortgage in "a worst case scenario" if I ever lost my job. However, I was willing to risk a small premium knowing that rents will typically trend up. So then, as long as my job was okay for another 2-3 years, increased rents would catch up and I'd be in a good position if ever I became "an accidental landord."
My $0.02
mytwocents-
I think there is a difference between what you are saying and what someone who wants to be a landlord (like Pat) is saying when they say it doesn't cash flow. I agree with you that it is not dramatically more expensive to own although I think in my example it is closer to ~$600/month even excluding maintenance and downtime which a lot of people think is pretty substantial. Pat thinks that rents should be enough to cover the mortgage payment, downtime, and repairs. In my example this would mean the house price needs to fall ~30%.
I don't see housing in Arlington falling near that amount. If you need to be an accidental landlord for a few years it probably would not be a big deal as long as nothing major breaks during this period and you can keep the place occupied. You are also in better shape, because your interest rate is probably better than the interest rate an investor would get, which would save you a few hundred dollars. In general the the rent/buy calculation looks better for someone buying compared for someone who wants to be a landlord.
HB, as a former accidental landlord/lady, and a current owner of a typical older Arl. home that requires the typical substantial repair and updating expense, I completely agree with you.
$600 is nowhere close per month to capturing the true differential, especially if one believes (as I do) that the monthly rent should cover ALL of the true costs of the property, including the lost downpayment income as well. Why would any rational investor put $100K (for example) into a down payment that generates nothing, when s/he could be getting substantially more in a no more risky mutual fund, for example?
Otherwise, one could argue, an investor should put 100% down and just about any property would "cash flow."
And of course, there's no accounting for the hassle factor of the services you must provide as a landlord (you could quantify them as = to paying 10% to a management company to provide).
So while an accidental landlord/lady could survive for a few months while subsidizing the rent on a $600K+ house, few rational investors are going to buy a property like that with the objective to make money, because they are very likely to have to subsidize it much more than $600 per month over the longer haul. They would have to have another reason, e.g., believing it will go up in value, wanting to live in the property themselves after returning from an overseas assignment, etc.
Realtors/investors have told me that higher priced properties rarely "cash flow", so I don't think it's just an Arlington thing.
I also agree that, unless the fed. contractor etc. jobs and pay are substantially cut, I don't see Arl. dropping significantly. It's been about 5 years since the peak for many Arl. neighborhoods and so inflation, though low, has cut those real prices. Meanwhile, everyone except perhaps retired and low income homeowners has probably invested a pretty good chunk of change in the homes in the interim, so the real cost of the houses has gone up. The days of windfall profits that provide plenty of negotiating room are long gone for most owners.
MyTwoCents said: "I think the more relevant point is that the difference is a few hundred dollars."
Actually, I think that is demonstrably not true through much of Northern Arlington. It's pretty easy to compare by using the available websites. In fact, in some instances -- where the house is both for sale and rent at the same time -- the comparison is quite exact. I’m happy if mytwocents found a place that does pencil-out, but I think that is the exception.
And yes, rents will rise, but so will property taxes and maintenance costs (e.g., every day you own is one day closer to the day you’ll have to replace the roof, water heater, windows, carpet or fridge or dishwasher).
HB Said
"Pat thinks that rents should be enough to cover the mortgage payment, downtime, and repairs. In my example this would mean the house price needs to fall ~30%. "
that is a fair description of my take.
Look a lousy tenant will just beat on a place a good tenant will neglect it.
you figure on being down 1-2 months between tenants and you figure on
3-4% of home value for maintenance.
Pat,
How do you figure 3-4% per year for maintenance? That is just extraordinarily high to me. On even a modest 400k home in Arlington you're talking about spending $12-16k per year.
I bought a fixed upper and barely spend that much and I went into it knowing I needed a new roof, floors, Windows, bathroom, gutters etc.
My $0.02
mytwocents-
I agree 3-4$ seems like a ton. Although if you exclude the land value (since you don't need to fix the land it may be reasonable). Most of the cheaper houses in Arlington have less than 100K of house value and 3-4K is probably reasonable if tenants are not taking care of the place.
pat combines the misconceptions of the vast majority of people and the experience of many novice LL's.
Pat, you are a renter. Have you trashed the place? How long have you been in place (not causing your LL any downtime or painting, etc.).
Given the number of places I have, you would be shocked by how little time I actually spend dealing with tenant issues/repairs.
I've made a few major blunders in the past. A thorough background check is a must.
If you take out the past couple of years (new purchases), I'd guess my average tenant has been in place 5 yrs - some over 10. My new leases are all 2 yr and rented to people who I don't believe are going anywhere.
I think Pat's figure is pretty reasonable. Mytwocents, you may know that those changes are needed, but have you made all the changes yet? I would be amazed if you could do them on $16K, even if you did the work yourself and bought the cheapest materials possible. Most homeowners in Arl. are not going to do either of those things, for good reason.
Don't forget also that someone has to do (and pay for) maintenance as opposed to major improvements, such as mowing the lawn, trimming, edging, cleaning gutters, washing windows, painting interior and exterior from time to time, etc.
Although for SFHs, the parties sometimes agree that the tenant will do some of the yard work, often they don't (or they do it poorly), meaning this is an added expense for the owner. And someone's got to provide the equipment (e.g., lawnmower).
Ace,
I disagree on most of your points but I doubt many here want to talk landlording. I'd say my average over close to 30yrs is 1 to 1.5 percent, if that.
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