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.
What is everyone seeing with inventory? I'm seeing very low numbers. I can't see prices falling with inventory so low.I got an e-mail from a neighbor (we have a list that goes out to everyone in the nabe) who has friends that want to buy on our street. There has been very little turnover in the past 5 yrs.We have been thinking of down-sizing but I don't know whether I want to bother with it. I've checked where we might want to go - but, there is no inventory!
VA-According to the VaMLS site inventory is almost exactly where it was at this point last year. I also thought last year more people made sure to get their houses on the market in time for the tax credit. I guess what I am trying to say is inventory seems reasonable, obviously no where near as good as it was in 2006-2008, but much better than what it was 2002-2005. I assume it makes a huge difference though depending where you are looking and at what price range.
Inventory is indeed at a 6 year low:http://www.recharts.com/nova/nova.htmlIts funny -- One of our resident bears "Got popcorn? (Neil)" used to say its better to be a little early than late simply because of the better inventory selection. Of course, when I made this point 2 years ago, Kevin nervously lol'ed it off saying he was going to "take his chances with that one" and Konstantin accused me of being an underwater homeowner:http://www.blogger.com/comment.g?blogID=4787878578920468587&postID=379444676378794361Nevertheless, here we are 2 years later and inventory is indeed down another 61% (with higher prices). I wonder if Kevin is happy taking his chances with that one?
Anon-Agreed that we are technically at a six year low, but I would consider inventory this year vs. last as flat. As I said I think inventory hit the market a littler earlier last year due to the tax credit. Either way the point still holds that inventory is much lower than it was a couple of years ago.I think the question is what inventory causes roughly flat prices. Inventory is currently ~3x 2005 levels where prices went up 20%/year. It is also 1/3rd 2007-2008 where prices fell 15%/year. So obviously it is a much healthier level than either of those inventory levels, but I don't know whether that means prices will rise a few percent vs fall a few percent. I guess to some extent it shouldn't matter much. As long as we are now in a new environment where prices only move a few percent a year it allows people to buy when the time is right, vs needing to wait or buy immediately because prices are falling/rising quickly.
hb,My only comment would be interest rates. I don't see them dropping so even if prices bounce around a bit, I'd consider rates.Inventory is very low. So where are all the reo's? Location, location, location....
VA-I don't see REOs coming either. I personally don't really care much about interest rates (I don't like having debt and will likely pay off my house very quickly). I also don't see ARM rates going up in the near future, which is how I plan on financing the house.Although this is more for me personally, I agree that for most others interest rates make a big difference.
Va_I,It may be a good indication of low inventory relative to buyers when you see the flyers from real estate agents claiming they have buyers who want to move into the neighborhood, and please let them know if you know someone who wants to sell, etc. These (and emails from agents I know) have been coming in with some frequency. Of course, these could be somewhat targeted - they could be because they are hoping to make low bids on houses that are smaller than average, etc., like mine.
well the flyers from agents are just trying to get listings.I'd say a lot of people are holding off the market wanting to sell when conditions are better.that's delusion. The market is not ever going to be like 2007the trick is what is the market going to be like next year? same? 10% worse? 2% better? Is it worth waiting to find out?The seller decision is much harder because they remember the bubble and don't understand why borrowers with insane loans aren't out there looking for them
NAR says" Existing condominium and co-op sales increased 1.6 percent to a seasonally adjusted annual rate of 650,000 in March from 640,000 in February, but are 4.1 percent below the 678,000-unit pace one year ago. The median existing condo price was $153,100 in March, which is 10.1 percent below March 2010."so condo prices are continuing to slide nationally.
http://franklymls.com/AR7580941Under "Never try to catch a falling knife."The seller here bought in 08 at 385, now it's a HUD Foreclosure for 285.
pat,I'm going to say a few things that won't make you happy.1. If the alt-A (or other) Tsunami were here, there would be a ton more inventory.2. I didn't get an "agent" letter. It was from a non-agent neighbor. Not all agent letters are bogus solicitations.3. You know the Market. You have been on top of it for years. Why would you listen to NAR?
Pat and Va_I,re: Pat's comment, "well the flyers from agents are just trying to get listings."My point (sorry it was unclear) is this: I didn't get these flyers/emails when houses were not selling and inventory was relatively high. I got a lot of them in the early 2000s, then none as the bubble leaked air, and now am getting a lot of them again. So I see their reappearance as an indicator that inventory in the neighborhood (?) is fairly low.
Pat, re: the foreclosure, until we know what it sells for, it's hard to tell how much of a falling knife it is. It's possible HUD is trying to start a bidding war (only one day on the market). Being located right on Glebe Rd. esp. in 22204 is never a plus--looks like an out of town buyer didn't do his homework.
Some commentary from the AP on March sales here.
Pat,Why are you setting the heyday to 2007 (when you mention delusional sellers)?The peak for irrationality was 2005. For anyone that was watchig closely, May of 2005 was when things rather abruptly stopped selling. In my estimation, the first knife catchers were in 2006. This was after things finally stopped selling like hotcakes, and there was a 2-3 quarter slowdown, the impatient buyers started jumping in thinking the market had settled. Of course it took through 2007 for the banks to implode and for inventory to really start ramping up.My $0.02
Katie,A quote from that article:"Many would-be buyers are holding off, worried that home prices haven't bottomed out. Others are having trouble getting mortgages because banks have tightened lending requirements. The average credit score for Freddie Mac and Fannie Mae-backed mortgages is now 760, up from 720 in 2007."What is it Buffet always says? Be greedy when others are fearful? Buyers are fearful (fewer first time buyers) and banks are fearful (tighter lending standards). From the article, it seems the investors are beginning to speak in earnest with their cash.My $0.02
mytwocents-I agree about buyers being fearful, but I would say banks are being rational not fearful. They should have had the current standards a long time ago. Personally I think they should tighten requirements more and demand at least 10-15% down.
hb,Lending will loosen up in a few years. Memories are short.OT - what has been the fall-out for all the mortgage insurance companies?
VA-I agree that is likely, but would depend on what happens with Fannie and Freddie. There is a decent chance that the government will limit the size of Fannie and Freddie. If they do I think lending will remain tight. The only reason that lending was loose is Fannie/Freddie would buy all the prime mortgages and the banks would securitize all of the alt-a/subprime loans. I don't see subprime loans being securitized anytime soon, so banks will either need to keep lending standards high or make rates high enough that it is worth holding the loans on their balance sheets.
As a coincidence (to my earlier question), a major mortgage insurer, MGIC reported earnings yesterday (?) and took a big hit. The trends in delinquencies look good though.Stock was around $70 in 2006 and is now 7.50.
contrarian-Why would the government default rather than just print money to pay the bills? You do realize they can print as much money as they want and it costs them nothing to do this right? The government has said multiple times it would rather have inflation, because it can handle this than deflation. As long as they continue to think this all of our debts are in $ so they can be paid off.Also really your example is roads and bridges? Why wouldn't you pick things that are actually expensive like Medicare/medicaid, social security, defense...Also here is an updated picture of your graph debt to GDP Total debt to GDP is slightly higher your 2008 numbers, but it has been coming down pretty quickly ~20% points in 1 year. In general the economy will continue to pay down debt, which will keep GDP below trend line, but doesn't have to be disastrous.
contrarian,The dollar index is down another 0.75% this morning. The purchasing power of your t-bill portfolio continues to plummet.
Curious.NVR Inc.'s (NVR) first-quarter earnings plunged 53% as the home builder reported a decline in revenue and new orders.
Blogger Robert said... Curious. NVR Inc.'s (NVR) first-quarter earnings plunged 53% as the home builder reported a decline in revenue and new orders.Blogger Va_Investor said... What is everyone seeing with inventory? I'm seeing very low numbers. I can't see prices falling with inventory so low.Blogger housebuyer said... VA- According to the VaMLS site inventory is almost exactly where it was at this point last year.When you have opening a closing blog comments like these I find it curious too.I've given up on trying to read the tea leaves here.I'm just doin' my own thing.
Speaking of doing your own thing, does anyone know if there are height restrictions on storage sheds in Arlington? I've been able to find that sheds that are less than 150 sq ft do not require a permit but I'm not sure how tall I can make it. I'm not looking to do anything crazy, I just want to know if I have to duck under a 5ft door or if I can make a more comfortable 6.5 ft door.Thanks,My $0.02
Contrarian,You should really be focusing on buying a big empty track of land in the middle of nowhere, building a bunker, and stocking the thing with several years worth of food, water, and ammunition.You should be doing that rather than wasting your time blogging on the interconnected series of tubes known as the Internet.My $0.02
Contrarian, Thanks for the link to the retirement penalty article. I think it's a terrible idea, for two reasons:1) All indications are that many people are not saving enough for their retirement and that too many take distributions when they leave a job, even if they find another. So anything that encourages them to take money that should be used only for retirement or emergencies and use it to buy a house, which may put them in further financial jeopardy (what's wrong with renting if you don't have enough savings and income without misallocating your retirement funds?), seems wrong to me. 2) This is being proposed simply to prop up housing prices and to give banks more buyers willing to pay higher prices for their foreclosure properties. I don't see the social good in that. Let the price fall to where people who can afford these houses buy them without potentially putting others on the hook to take care of them when they retire.
Contrarian-Even if you ignore the fact the government can print money it would have more than enough to pay for roads if you get rid of the major expenses you are talking about. This chart shows the spending breakdown and you will notice that $2.25B of spending is defense, medicare, and social security. Although the budget deficit is large because of stimulus it is $1.5T. So the government could easily afford all other spending if it cut the programs you are talking about.In reality it will obviously never completely remove these programs, but if you think they will then the government deficit would be solved.
contrarian,I think you will want the land to grow crops and hunt, etc. You should be on the water and have some timber for firewood.I read somewhere that greater than a 50 mile radius is sufficient in the case of a nuclear bomb.Hope this is helpful.
C, re: Obama:“Frankly, there’s some folks who are probably better off renting.”Is there anyone who could reasonably disagree with this statement? The only debate is over who might be in that category.
"If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.Even if you pay outright, you're still renting the house to yourself, losing alternative uses of that money, and taking the risk of falling house prices. "The Risk Renters take on is1) High inflation2) Landlord kicking them out.3) Limited ability to modify the property.
Pat-They also take on the risk that housing prices could go up. (in areas where land is scarce prices move with incomes/wealth not inflation). They also take on the risk investing there money elsewhere. As you said housing prices could go down, but if you invest in bonds or stocks those can also go down.
pat,Owning will lock-in payments. It also requires that you maintain the property, pay the taxes, etc.It's an individual choice. I couldn't rent my house for less than my PITI.This is the way I think about it when I buy a rental; the tenants will buy the house for me in 10-15yrs. RE will keep pace with inflation. If the price drops I don't care too much as the place will be paid-off by the tenants. If prices beat inflation - terrific!Ah, but rents could drop! Haven't seen it yet. It could happen, but I don't live my life worrying about the world ending.I could hide in a cave like contrarian. Some kind of life.IF you like a place and can afford it, why worry so much about a price downturn? I know your rent is dirt cheap but I doubt that is the lifestyle you want (dragging your clothes to the laundry mat, no yard, living at the whim of your LL.You seem to want to be convinced one way or the other. If I had a 100% answer, I'd give it to you.
Blogger mytwocents said... I just want to know if I have to duck under a 5ft door or if I can make a more comfortable 6.5 ft door. Thanks, My $0.02 4/21/11 1:13 PMWhat I was told when I asked the same question is that in most cases, you cannot exceed the height of existing structures and you cannot use the building to block the line of sight access to your neighbor's "view."That is what I was told when I asked. The best answer is to call the planning department of the county or the city you live in. Since I live within a city limits, their rules trumped Fairfax County. I submitted my plans for a shed with dimensions and got them to stamp them "approved for construction" even though I fell under the 150 sq. foot limit.
Thanks TN!I was hoping to avoid actually having to get a permit since, once you do, you have to go through all of the inspection steps even if you're under 150 sq ft. At least, that's the best I can tell from the various documents I've managed to read.My $0.02
02you can always get the plan permitand just get the footer inspection,build the damned thing and never call for any of the other inspections.Yes the permit stays open, and, if you want to sell, you may need to go get those closed out, but, that's a later problem.When i went to sell my house in Oklahoma, i found out the contractors hadn't closed some of the permits. I ended up dealing with the building inspector myself and getting them closed out.
mytwocents, if it is anything like getting a privacy fence permit, which suspect that it is, it is only a mild nuisance, like a DMV visit. You have to stand in line awhile, then present your documents, then get your permit and leave. If there is a required inspection after construction, probably the inspector can do it when you aren't home, so even if s/he doesn't show up as scheduled, and you have to make some follow up calls, you should eventually get the OK for it as well.To me, this is far preferable than (a) wondering if the shed is ok and safe(b) wondering if a busybody neighbor might try to cause trouble for me, or(c) wondering if I might lose a good buyer later who understandably wants evidence that all permits and inspections were done properly.If you were in DC, this might be a much bigger hassle, but it is just a question of a time drain (a small one or a larger one) in Arl., if my experience is typical. I've had to have other things inspected and permitted by Arl. too, with the same experience (usually the contractor took care of it as part of the paid job, and gave me the paperwork later).
I'm seeing quite a few examples of people that purchased in 2005-2007 that are trying to sell now, and they're just hoping and a praying that they can escape without bringing anything to the closing. Some have already abandoned that hope and are already priced below what they paid. MISC EXAMPLES: http://www.redfin.com/VA/Arlington/4913-16th-Rd-N-22207/home/11235457http://www.redfin.com/VA/Arlington/5645-19th-St-N-22205/home/11238710http://www.redfin.com/VA/Arlington/1043-N-Stafford-St-22201/home/11245137Any guesses as to how many of these end as short sales, foreclosures? A separation, divorce or relocation forces sales in many instances. But, what happens when the house is underwater?
Mike,Sorry to burst your Schadenfreude, but they all probably put down $200,000 in profits from their townhomes in Burke, Centerville, or Springfield. So, they aren't sweating it.
Mike, in the case of job transfers for professional or managerial-level employees, the employer typically picks up any costs or losses resulting from the transfer.
"they all probably put down $200,000 in profits from their townhomes in Burke, Centerville, or Springfield. So, they aren't sweating it."Even if they havent, they likely have built up another 5-7% in equity paying on their note over the last few years. That alone will clear many of the costs associated with selling.
Blogger Robert said...they all probably put down $200,000 in profits from their townhomes in Burke, Centerville, or Springfield. LOL. Yeah, that's probably it. I hear they even use a mail list:alt.users.formertownhomeowners.burke.centerville.sprinfield:)
Robert,Those 3 houses Mike posted were tiny (800-1400 sq ft). I think they were likely first homes. I just can't see it being worth the effort to move from a townhouse into a house that small if you have a 200k profit down payment to play with.
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