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.Home lenders shed workers as mortgage rates climb.
Luckily, I had taken a mortgage in October. So, increasing mortgage rates should mean decreasing home sales I think.
CherylVacancy Rate Datahttp://www.census.gov/hhes/www/housing/hvs/rates/files/tab4_msa_05_10_rvr.xls(75 MSAs)http://piggington.com/is_this_the_dc_shadow_inventory
CherylAccording to the Census data, the DC MSA has a 10% vacancy rate, which flirts with unhealthy
Census Trying to make the Links Easier Piggingtons
Piggingtons Okay this link works
"pat said...CherylAccording to the Census data, the DC MSA has a 10% vacancy rate, which flirts with unhealthy"Pat, my post from the previous thread, repeated here for your benefit...__________________________________I think the problem is we on this blog use the term "vacant" in a very narrow way when its often defined in much broader sense. On this blog, when we think of "vacancy", we think of places that must be rented or sold in the near term -- thereby putting downward pressure on prices. However here are other examples of "vacant" places:Live in NY but own a 2nd home in McLean for business? The McLean place is "vacant".Live in Middleburg, VA but have a long term rental in Arlington for days you have to come in to the office? The Arlington place is "vacant".A place in Shaw, abandoned in the 1968 riots and unlikely to be rehabbed soon? Vacant.Partially built complex that is 90% pre-sold but yet unoccupied? Vacant.The thousands of close in townhouses that are part of a thriving business community? Vacant (because the occupants dont live there).The point is, a high and or increasing vacancy rate is not always a sign of increased distress. Take a look at this graph of homeowner vacancies from the Census:http://cr4re.com/charts/charts.html?Housing#category=Housing&chart=HomeownerVacancyQ42010.jpgThe vacancy rate has been rising nearly continuously since 1978. However, prices clearly have not been falling for the last 33 years. So again, be careful how you use the term "vacancy". After all, what if someone saw this graph in 1981 and declared "the vacancy rate is rising, so prices MUST come down". 30 years later, I think its safe to say that guy made the biggest mistake of his life.
AnonNice graph, what I see is 3 plateuaus in Vacancy.50's, 60's Vacancy is 1.3 Percent80's Vacancy is 1.6%Current Vacancy is 2.6%.Now what that all means is in definitions. All i can say is the Census data shows a spike in Vacancy.As the spike is concomittant to the Global Finance Crisis, I can only say what I see.Now is the demand in Apartments tied to Homeowners getting foreclosed? In some areas absolutely.Miami, Vegas, people are all getting tossed out and hunting for rentals.Now, what is happening in DC and NYC? These are hovering markets.These are also the top beneficiaries of Bernankes Printing Press.
Headline: Housing bear pulls the trigger and buys a house. The housing bubble must be over, or so his friends think. Owning a 4 bedroom home in Falls Church is cheaper than renting a 2 bedroom apartment in Clarendon so I made the move.Am I now on the bulls side? Nah, but I don't plan on moving for 20 years.
WSJ Article: If the government shuts down, the Federal Housing Administration will stop accepting new loans. This raises the prospect that small lenders may not close loans that are currently in the pipeline if there’s a shutdown, as well as the possibility that new FHA loans won’t be made.Housing Secretary Shaun Donovan on Thursday said he was “very concerned that a significant number of lenders would not choose to close on those loans.”The FHA guarantees more than one-third of all loans backing home purchases, so any disruption that lasts for more than a few days could have ripple effects on the spring home-buying season.Banks will have the final say, and Developments has asked a number of the major U.S. lenders how they plan to handle FHA loan closings and applications in the event of a shutdown:Wells Fargo, the nation’s largest mortgage originator, said that it “would expect to be able to take applications and close loans provided that a shutdown doesn’t continue for any extended period.” Bank of America says it will continue originating and closing FHA mortgages in the event of a “short-term” shutdown of the federal government. J.P. Morgan Chase says it will close loans already in the pipeline but would not otherwise originate new loans during a government shutdown. U.S. Bank says it plans to continue originating FHA loans for at least a week and would revisit the decision if a shutdown is prolonged.
Hey, dc2, the house on Peary St. sold, for $1179000. (IIRC, you know this neighborhood).http://franklymls.com/AR7439327
sorry - should have made that a linkPeary
Anon"Live in NY but own a 2nd home in McLean for business? The McLean place is "vacant"."Bear in mind, those aren't new conditions. People have been doing that for decades.My Dad used to own a condo in the city and a place in the suburbs.He would work long hours and preferred spending nights there.I'm just pointing to Data that shows Vacancy has tripled in Arlington in the 10 year census.Can you show any data that People have doubled their housing budgets in the last decade?
The "Richmond Fed Mortgage performance summary" has some very good data on our region. The lastest quarterly report (Q4/10) has Virginia delinquency and reo percentages broken down by County.YOY numbers clearly reflect a downward trend and place VA at the low-end of the spectrum Nationwide.This data gives a good insight into the "shadow inventory" issue as it relates to our region.
Megan mcCardle on the NYC Markethttp://www.theatlantic.com/megan-mcardle/"The housing market still isn't clearing. In my neighborhood, almost nothing is coming on the market even though we're well into spring, and half of what does appear is either utterly decrepit, or wildly overpriced, or both. People are not selling unless they absolutely have to. Nor are people buying. I think the value of our house has dropped, but I can't be sure because nothing's moving on the market. ,,,But for someone like Laura, who really wants or needs to move, this is a huge problem. I suspect that the first-time homebuyer tax credit, rather than helping matters, has simply made them worse. The remaining homebuyers on the market are those who demand an absolute steal--and homeowners who saw prices bottoming out were probably encouraged to hold on even longer for a rebound. Now everyone is even more thoroughly stuck."Had the Realtor Industrial Complex not shoved through those goofy credits, we would have hit clearing prices sooner. Now, we have a goofy market here too.
CherylBear in Mind in Q3 and Q4 of 2010,most of the banks had freezes in place while they assessed processes for MERS mortgages. Essentially they ordered their processors to do a better job of forging documents.so expect a general decline in REO/foreclosure and there has been an uptick in short sales.
Pat for starters, Arlington vacancy did not "triple" over the last decade. By your own data, it went from 4.5% to 7%. This is an increase of 3,280 vacancies over the decade, which you accurately described at Piggington as "almost doubling".That said. Regarding the 2nd home thing, I agree with you that people have been doing that for decades -- no doubt. The question however, is how many more people are doing this (or other positive activity such as using residences as businesses that can increase vacancy) than they were a decade ago? As I noted in my post above, when looking at vacancy data, (especially from the census) increases in vacancy can paradoxically, be a sign of increased affluence. Consider for example, Palm Beach, FL. 10 years ago, pre-bubble, the vacancy rate there was around 15%. Was this a sign that year 2000 prices were unsustainable? Even with the current massive bust in FL, I can assure you that Palm beach prices are still far above 2000 levels. So how does this relate to Arlington? Well, we do know that incomes in Arlington have increased at perhaps the greatest rate of any city in the country. Certainly at more than double the rate they have increased in the USA at large. Further, we know there are now 8,000 more households in Arlington that make over 200K than there were a decade ago. Add to that the increase in 200K households in Loudoun, PWC, New York, etc. etc. who "could" have a 2nd home in Arlinton, and suddenly that excess 3,280 vacancies (your data) doesnt seem all that large.Now, dont get me wrong. Am I saying that ALL of the excess vacancies in Arlington are a sign of increased affluence? Certainly not. However, are some, or perhaps even most of those increased vacancies a byproduct of the some of the largest income growth in the USA? I think yes. Finally, even if we had conclusive proof that all the excess vacancies in Arlington are indeed "shadow inventory" as you seem to suggest, you still have the problem of how they are dispensed. The past 2+ years has brought us drip, drip, drip release of the shadow inventory and slowly increasing prices. Why is that suddenly going to change?
pat,i seriously doubt that 90 day delinquencies (the fore-teller of foreclosures) was impacted in the least by any moratorium.Also remember that VA is a non-judicial state and has a very rapid foreclosure procedure. Will you not concede that the Fed numbers look promising?There are also colored maps showing delinquencies statewide and nationwide. We look very good by any comparison.
cherylBy comparison we look better then the disaster states but the bet state is NoDak
http://www.washingtonpost.com/realestate/proposed-federal-rules-would-drive-many-out-of-market-for-home-loans/2011/04/04/AFrcop2C_story.html"hat is correct, and it’s deeply sobering news for large numbers of first-time and moderate-income buyers who can’t come up with that much cash or afford to pay higher rates. "
AnonSorry to get confused.4.5 to 7.5%...The real question is as you point out how long it will take for that to clear. Good news the markets nationwide are continuing to slide despite the tax credit,cheap credit and unlimited finance to the major banks.What's the difference between Fukushima and the Federal Reserve?At Fukushima we know how much toxic waste there is..
Pat,Difference is, Fukushima isn't nearly as bad as the media tries to make it out to be.Difference is, Fukushima is approaching being under control, and is slowly getting better.(In fairness, Fukushima is pretty bad. Indeed, the daily IAEA briefing still starts with "the situation is very serious". But, while it may be the worst since Chernobly, it's nowhere near as bad as Chernobyl...)
pat,My main focus is this region with particular interest in certain smaller sub-markets.While North Dakota may look good and FL terrible, neither concern me. I've long since accepted the situation with my properties in SW FL.The Richmond Fed has data relative to this market and I believe it is the least speculative information available. The 4th quarter 2010 yoy numbers show significant declines in local re "distress".If you combine this with the local data and forecasts coming out of FX Cty and GMU, it presents an encouraging picture for local economic trends.
Daveit's chernobyl class.Chernobyl Unit 4 925 MWTotal power Fukushima units 1-4 2600 MWChernobyl blew iself to snot.Racs 1-3 are in meltdown, Rac 1 is breached, the Contents of Rac 4 are open to the environmentEffectively we have two breached reactors and 2 in full meltdown.now chernobyl tossed it's contents into the stratoshpere and fukushima is dumping it's contents into the Japan current.
Contrarian,Of course, if the world ends all bets are off... and, I guess,YOU WIN!
Pat-Dave is correct this nuclear crisis is nowhere near as bad as Chernobyl. With Chernobyl the control rods where made of graphite, so when they got hot instead of stopping the reaction from happening they caught on fire and put large amounts of radiation into the atmosphere, which rained down all over the place. In Japan almost all of the radiation is contained inside the steal containment vessel. The news is misleading when the say the vessels are cracked, because there are several vessels. Sure some radiation is leaking into the ocean, but the ocean is huge and it will be diluted. I think the easiest way to show the difference, is you are still only allowed to spend a few hours within 30 miles of Chernobyl even though it melted down decades ago. You are currently allowed to spend longer than this inside the reactors in Japan.
The Washington Post has a great graphic that illustrates the percentage of purchasers that put down less than 10% on home purchasers. In Arlington, 35-37% put down less than 10% and 45% put down less than 20%. These are better than national averages. However, I think it calls into serious doubt the theories I've heard on this board about most Arlington homebuyers being cash-rich and making substantial down payments. The proposed rule that will require 20% downpayments for the best rates will disproportionately effect this area because of the high cost of homes here. There's no way to spin this. http://www.washingtonpost.com/business/economy/tough-down-payment-proposals-worry-home-buyers/2011/04/07/AFFOCCAD_story.html?hpid=z2
Maybe some of those vacanies that Pat and Anon are discussing are vacant condo units?WaPo: "Washington area condo market still struggles"http://www.washingtonpost.com/realestate/although-a-few-neighborhoods-shine-washington-area-condo-market-still-struggles/2011/04/01/AFAzGl2C_story.html
Mike,You show that down purchase rates in Arlington in excess of 10% *exceed* the national rate in a market where home prices are approximately *twice* the national average and you doubt the cash rich position of a lot of those buyers?That doesn't make a lot of sense to me.My $0.02
mytwocents-I think Mike is saying that people can afford high price to income ratios because they are putting down so much money the loan is very small compared to the price of the house. Instead he is saying roughly half of the people put down less than 20%, so for these people they need to be able to afford the house based on income not on wealth.It is very possible though that the market is segmented. There are a lot of people who have lived in Arlington a long time and have wealth, but not as much income. These people are less likely to move. As for the new people who move to Arlington they may be less cash rich, but have higher incomes. I am not sure the two views can't coexist.
I dont know if I ever really bought the "cash rich" argument for Arl. The "income rich" yes as the stats have borne that out, but the cash rich? Not so much.When looking at that graph, in absolute terms, perhaps no one is "cash rich". However, if relative to the rest, one group was considered "cash rich" who would that be? Put another way, when this is enacted, which group would be hit the least? Judging from that graph clearly it would be Arl buyers.As far as a "spin" goes, I would note that since early 2009, this blog has a tendency to be too pessimistic on what impact certain events would have on the region. In the past 2+ years: (1) the lifting of the foreclosure moratorium; (2) the continued high unemployment (3) the end of Q.E.; (4) the return of house flippers; (5) the continuing tightening of credit; (6) the instability in overseas bond rates; (7) the end of the 8K tax credit; etc, were all presented as reasons why prices will continue to go down. Yet, prices have continued to slowly climb at a measured pace. Thus, my first reaction is to add this rule change to the "wall of worries" that the DC market has thusfar continued to climb. This may be the straw that breaks the camel's back -- or it may not -- we shall see.Second, I note that it appears this rule change is to be implemented slowly over the next few years -- likely in an effort to minimize its impact. Thus if this rule is not merely a drag on the rate of price gains, but enough to cause actual price drops, how much will prices have gained in the interim? Put another way, if you were ready to buy in 2009, and prices rose from 400K to 440K, only to fall back to 420K when the rule is fully implemented, was it really worth it to wait?I dont have the answer to any of these questions, but (if one is now ready to buy) I certainly would be very careful before I decide anything in particular will be the linchpin that will prove waiting a few more years to be a worthwhile endeavor.
Housebuyer,The flip side of that argument is that more than half the homebuyers in Arlington (a percentage higher than the national average) do, in fact, put down a downpayment 20% or higher on their properties.So, if Arlington is above the national average in 20%+ down payments, in a market where values are at least twice that of the national average house price, how do these stats, as Mike puts it "call into serious doubt the theories I've heard on this board about most Arlington homebuyers being cash-rich and making substantial down payments."The stats, as presented, indicate a stronger than average position.My $0.02
mytwocents-I agree they are in a stronger position than most people in the country. This is clearly one of the major reasons why N. Arlington fell ~10% vs. 30% for most of the country. I was just trying to say that you don't need everyone to be cash rich. You can have some mix of cash rich and income rich so stats look bad if you only look at one half of the stats.
I agree with MyTwoCents. Also, some seem to be assuming that the size of the down payment is equivalent to the cash available to the home buyer. But some homebuyers do not put the maximum down that they have available. They make a financial decision to put a lower % down, because they may have other uses for some of their cash, e.g., maybe they own other properties that they may sell later and apply to the balance; maybe interest rates are great at the time of the loan; maybe they can make other investments with $ that they are not putting on a down payment. I don't know what proportion this would be, but my guess based on the other data we have is that a higher proportion of Arl. buyers than average national buyers are doing this.
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