Northern Virginia's May 2011 housing sales were down 16% YoY, and median prices were up 7%. The average days on the market increased by 44% to 56 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).
Tuesday, June 14, 2011
Northern Virginia May Housing Sales
Posted by Harriet at 10:44 PM
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32 comments:
This is market behaviour consistent with a peak.
So, as some of you may recall, we sold our Ballston house a couple of years ago with the intention of renting for at least two years and seeing if, when we bought again, we could either get the same house for less money, or a better house for the same amount of money. We just closed this week and, to sum up, we got a much nicer Ballston house -- updated, larger, better constructed, nicer location, similar lot -- for eight thousand more than we sold for.
I was actually hoping to get something cheaper. But for nearly a year we didn't see anything cheaper that wasn't overpriced. And often not just overpriced: Insanely overpriced. We had been looking quite intensely for the past eight months, pretty much everywhere there was was a quasi-urban environment: Takoma Park, Silver Spring, Bethesda, Alexandria, Arlington, even Rockville. I have seen houses with oil heat, no air conditioning, no parking, next door to burned out wastelands, and even holes in the roof and each agent on that particular property, regardless of the issues that I pointed out, insisted that the properties were priced properly and they each stood firm at $500K and up (sometimes way up).
The rent we were paying while we were waiting to see what the market would do after we sold was far below market -- the owner of a four bedroom house near downtown Bethesda was happy to have some responsible adults caring for the property -- and I didn't see housing prices going up any time soon but I confess I was beginning to worry that my plan was not going to work, that we'd wind up hundreds of thousands of dollars in the hole when this was all said and done. Although my wife and I both had excellent credit and were in a position to put down 20 per cent, my real concern was that by the time we found a house we were interested in at a reasonable price it would be extremely expensive or difficult to get a mortgage. A number of the realtors I'd been talking to indicated that much of their business had moved to largely cash purchases (indeed the only competitor we had for the house we wound up buying was someone who offered up cash).
While the house we wound up bidding on was both attractive and suited our needs (subway walkable, yard for the dogs, easy highway access), I was very much surprised by the asking price, which seemed to me below market. Even so we of course initially bid a bit low, but the owner refused to take anything less than the asking price, which we were happy to pay (assessment suggested it was priced about ten percent below market, which I'm delighted with as it reduces our risk assuming prices continue to fall).
Did we make the right call to sell and rent for a couple of years? In terms of raw numbers, while we rented at far below our mortgage and paid no maintenance costs for two years, there were costs associated with moving (like registering the cars in another state) and Maryland taxes were slightly higher than Virginia's taxes. The reduction in our interest rate definitely pushed the numbers hard in our favor though obviously we could have achieved that with a refi. In terms of where we're living, however, this is a dramatic improvement for about the same price. Could we have made the same move by simply staying put for two years and then buying a new home / selling our existing home in a traditional transaction? Honestly I'm not sure I would have risked a purchase knowing it was dependent on me selling my house for a required price in a month in this market. We've seen a very large number of contracts fall through when people were not able to sell their existing home. For us, at this moment, it seems like this was the right call.
gruntled, really interesting story--thanks for taking the time to share it. And congratulations! Sounds as if you have a great new home.
gruntled,
Your example shows the risks involved in making such a bet. Has your prior home increased in value? Two years ago was, arguably, a market bottom.
Did you factor-in your transaction costs? I'd bet your tenacious (sp?) search is what resulted in your getting a better house as opposed to general market conditions.
In any event, I'm glad it worked out for you. There was a Clarendon individual who sold in 2005 and moved to a rental a couple blocks away with your same intent. I do not believe that things worked out for him. I do agree with you that a buyer with a house to sell is in a much tougher bargaining position.
"pat said...
This is market behaviour consistent with a peak."
Except for the fact that in June 2006, inventory exploded to an earthshattering level of nearly 23,000 active listings versus the multi year low of just over 8,000 we see today:
http://www.recharts.com/nova/nova.html
I will grant you though, one aspect of behavior is consistent with a peak, and that is prices, which have hit a new all time peak (for May) in both Arlington & Alexandria.
Of course, peak prices and low inventory is not always a sign of imminent price declines. This area saw low inventory and new all time peak prices in 1999 and we all know what happened after that.
Not an apples to apples comparison. Last year the tax credit was in full force. There were also more distressed properties on the market last year.
[ Now i want to preface this with that there is little DC impact directly from this announcement]
"Lockheed Martin to Cut 1,200 Jobs in Space Systems Unit
Bethesda, Md. -- Lockheed Martin Space Systems, a major unit of Bethesda-based defense technology giant Lockheed Martin, said it plans to cut about 1,200 jobs, or nearly 8% of its staff. The DC-area, however, appears to be mostly sparred, with the majority of cuts occurring in California, Pennsylvania and Colorado, where several major programs are transitioning out of development. Space Systems, which currently has approximately 16,000 employees in 12 states, said its middle management will be reduced by 25%. "In today's economic environment, we have two choices: make painful decisions now or pay a greater price down the road," said Joanne Maguire, the unit's executive vice president. "This is a difficult but necessary action to improve efficiencies and make our business more competitive going forward. "
[ LMCO is dumping 25% of middle management out of the space unit. while only dumping 8% of workforce. I would expect that this will continue across the Defense continuum. That they will
dump 25% of the middle management jelly donut types and that will hit into DC which is all Middle managers]
gruntled
interesting story.
what year did you sell?
06?, 09?
Essentially it sounds like your strategy worked out reasonably.
You got a nicer house for 10% less then assessment and you had sold your place.
it also shows you rented nicely, with low costs, and little trouble.
What are the kids doing?
Personal anecdote. My newly graduated, freshly employed 22 yr old just informed me that he and his best friend (also a new grad with a good job) want to rent a place in Ballston. The "older people" are in Reston. Bethesda may be a possibility - but Ballston is the first choice.
They are anticipating a rent of about $800 each.
[ LMCO is dumping 25% of middle management out of the space unit. while only dumping 8% of workforce. I would expect that this will continue across the Defense continuum. That they will
dump 25% of the middle management jelly donut types and that will hit into DC which is all Middle managers]
Streeeeeeeeetch.
VA-
Are they going to avoid one of the major companies, because I thought that all of the high rise buildings in Ballston were significantly more than $1600 for a two bedroom
hb,
I don't know. They have been looking at Craigs List. He said 800-1000. He's in for a wake-up when utilities, cable, phone, car insurance, gas, groceries, nights out, etc. get added up.
I explained to him why I don't own any rentals there. The number's don't work.
"They have been looking at Craigs List. He said 800-1000."
I would be curious to know if thats a whole bedroom, or perhaps part of a larger house.
A friend of mine works for Deloitte. He says much of the 22-25 year old set that works on his team all pack into group style housing in Ballston. He has 6 guys in a 4 bedroom TH they rent for $4,500 a month. 3 singles, 2 sharing another room, and one guy living in a walk in closet.
Perhaps he is going into a situation like that.
Hey Corey,
That is probably what he will discover. He is saying that they want a 2bd for only the 2 of them. They are tired of "group" situations. Good luck!!
VA-
I agree good luck to them :) Although I just checked craigslist and think they should be able to do it as long as they are willing to live in a place that isn't that updated.
http://franklymls.com/AR7486735
sells for 612K in 2007, now
goes for 395K. down 33%.
Ouch.
but, you know Arlington never goes down.
Pat-
No one thinks that southern Arlington didn't get hit. When people claimed Arlington didn't go down much they are talking about the nicer more expensive areas (basically things within walking distance of the orange line)
HB
well, that's why I am looking in South Arlington. Better values.
If the Fed would stop printing free money and thank the gods that congress stopped this silly Homebuyers tax credit.
There is motion in MFDU, what used to be Condos is now turning into apartment projects.
http://franklymls.com/DC7498626
assessed at 297K, sells for 144K,
50% off, and 4 block walk to a metro station.
On the Good News Front, VA_Investor has her anniversary next week.
30+ years of wedded bliss....
Kids, dogs, and the pursuit of happiness....
Congratulations and best wishes for many more happy and healthy years, Va_I.
"housebuyer said...
Pat-
No one thinks that southern Arlington didn't get hit. When people claimed Arlington didn't go down much they are talking about the nicer more expensive areas"
Its a coping mechanism to deal with the disappointment of not seeing the type of declines you expected.
Back in my bear days, I used to believe we would see a -30% to -40% nominal declines across the board. And it wouldnt just be a house here or there that saw -30% to -40%, it would be everywhere (remember no place was different). Reasonable bulls would disagree and tell me, while some places may get massacred, the declines in the majority of the desirable areas would be "far far less".
As time went by and it turns out the bulls were far more right than I was, I would lash out in anger and frustration, exaggerating their claim and focus more on outliers like Lance. Thus, their claim of "far far less" became "immune" in my mind, and I would gloat "but, but, but, I thought N. Arl was IMMUNE" to make me feel better about the disappointment I felt at seeing (largely) -10% off peak prices.
Eventually, I got over it, but it took a long time to get there -- lots of coping to deal with first. So give Pat some time, he too will get there -- eventually.
Thanks all on the congrats....and they said it wouldn't last.
Wow Anon,
You must have been hating me big-time back in the day. I didn't always agree with Lance but our general views were the same. The "it's moving in" argument never really held water when you examined length of ownership, trade-up equity, wealthy people with other assets, etc. There were clear reasons that some areas got creamed and others didn't.
The Anon, are you still looking in No. Arl? It appears to me that prices have been edging up since 2009, and more in the primo parts of No. Arl. (Lyon Village, Clarendon) than elsewhere.
Based only on my eyeball, anecdotal level observations, and not on the systematic analysis several of you guys do, I believe that the best places for possible future appreciation are in the seedier parts of Del Ray, and in Arlandria.
One would have to be a risk taker, prices are not dirt cheap (i.e., one will probably not find $250K SFHs and there are few duplexes at any price), and one could easily be burned because these areas have been questionable for a long time, so they may never turn around. In the case of Arlandria, you have to be comfortable with majority-Hispanic neighbors, many of whom are relatively low income.
My reasoning is that they have potential for "gentrification" because:
-- they are extremely convenient to much of DC
-- they are surrounded by nice neighborhoods, and some parts of Arlandria and Del Ray are already transitioning
-- there are some run down places that have some original charm that could be restored (though not as architecturally cool as many properties in the district)
-- the neighborhoods themselves have some charm, e.g., little shops and restaurants
-- lots of people don't have kids at home so don't need great public schools
-- there is some public transportation (buses), though not as good as planned for the Col. Pike corridor, and there may be a Potomac Yard metro some day
-- crime, while high in some places by NoVA stds., is nowhere close to that in comparable neighborhoods in DC and the Alex. police may be more responsive than DC's.
I don't have the $ or time to be an investor, nor the stomach for the risk, so I am not putting any resources where my thoughts are. It's just my 1.5 cents.
I should clarify that my comments about parts of Del Ray, Arlandria, etc., were not targeted toward The Anon, because I don't think he's interested in these properties, but intended a bit for Pat, and for anyone interested in discussing.
Full disclosure I should have included - I have always been fond of Alexandria, lived there for awhile, and if it weren't for a horrid commute for me, we would have bought there.
fwiw i put an offer on an investment property last week. 14% yield. 9% cap rate, transition neighborhood.
seller greaked rejected the offer and withdrew the listing
The top 20% tend to hold better because they have more wealth and more income.
I was at a talk where the speaker said "To the ones with jobs and capital, the world is on a fire sale, to the ones with underwater mortgages and unemployment, the world is on their back".
So, figure effectively 20% un,under and out of work types, and 25% of mortgage holders so some 20-35% of the world is in a world of shit,
20% are raining shit down and the middle 50% are hoping they don't end up in the shit chute.
FWIW, to follow up that comment, look at Harriets numbers.
PG has deflated all the way back to 2002, 2001.
PW, LO, FQ are down a lot and starting to recover. These are the bottom 50%.
Look at that article i posted from the City Paper. Deanwood, anacostia, these haven't done well at all. Georgetown, NW, These are the bright shiny future.
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