Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Apparently, U.S. home builder's confidence worsened in September, going from gloomy to slightly more gloomy.
Northern Virginia's housing inventory is at 8,109 available listings as of September 16th, which are lower still than last year at this time when there were 8,842 available houses. It could be shaping up to be an interesting spring market for sellers if inventory doesn't improve.
Monday, September 19, 2011
Northern Virginia Bits Bucket 9/19/2011
Posted by Harriet at 8:48 PM
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35 comments:
http://franklymls.com/AR7644511
"GREAT CORNER LOT IN MUCH SOUGHT-AFTER ARLINGTON VIEW COMMUNITY! This sale includes an adjacent parcel of land, 33-007-011, Parcel A William T Syphax SUBD 2450 Sq Ft. House is in need of TOTAL repair. ENTER AT YOUR OWN RISK DUE TO PROPERTY CONDITION . House conveys strictly as-is w/ contents. "
Wow, Arlington View is by no means much sought after, nor would a complete shell be heavily sought.
Pat,
No kidding - and its listed for nearly $10k above the tax assessment! It looks like the current owner inherited it a few years back.
harriett
Be aware, the issue is Rent/Buy.
If good rentals are available,
is it any different then buying?
The key is total unit vacancy and availability.
pat,
Aside from the fact that rent and buy are not the same thing at all; have you followed apartment vacancy rates for the metro area?
cheryl, right now the vacancy rate for MFDU's isn't too bad, but, FWIW, every house buyer creates a vacancy, unless it's inward migration.
IMMigration and Household formation consume dwelling units. Outmigration and household destruction produce new dwelling units.
all i mean is that one has to assume spring buyers are inherently motivating to the market.
pat,
"every house buyer creates a vacancy"
Where are the seller's going if there is no new construction?
When the economy and job creation eventually pick up there will be alot of pent-up demand entering the market to purchase or lease. These will be the people who have doubled up during the recession out of necessity. In addition the boomlet generation is graduating from college in droves and most want out of the parental home as soon as possible.
Bizjournals.com cites the city of Fairfax, VA as having the absolute lowest residential vacancy rate in the Country. They have detailed stats for the entire Country. Fairfax County comes in at 275 (?) out of the 3,300 markets reported, with a vacancy rate of around 4.5%.
I can't find current household formation - after a brief look.
http://www.washingtonpost.com/local/incomes-fall-in-montgomery-and-fairfax-counties/2011/09/21/gIQAxFzYmK_story.html?hpid=z2
incomes decline in fairfax and Moco.
“Fairfax has more people retiring in place who are no longer making $150,000,” said John McClain, deputy director of the Center for Regional Analysis at George Mason University. “Now they’re making $35,000 a year from Social Security and income from investments.”
Pat-
Incomes did not decline. They just rose slightly slower than inflation. Also looking back at 2000 is also pretty harsh since incomes were absurdly high at that point do to the tech bubble.
It would also be nice if they have more data on people going from making 150K to 35K. I bet there are very few people this happened too. Most people I know (my parents included) who were making 150K were very senior government workers that are now retired and get a pension equal to ~70% of their salary. So they went from making 150K to 100K and seeing that they have their houses paid off or at least mostly paid off and don't have kids at home this lower income isn't a problem.
As we all know from our recent education on Warren Buffet's situation, very little "income" is earned by the wealthy. I would suggest that "earnings" from investments is a minor factor for many who are sitting on large untapped portfolio's, 401's, IRA's and other savings.
The interesting remark for me was "retiring in place". Studies have long shown this and it dispells the canard of a tsunami of supply coming on line due to boomer retirement.
My guess (without seeing the data first hand) is that the reality is somewhere in between. McClain's comment was not that people went from $150K to $35K, but that they went from $150K to $35K from Social Security PLUS income from investments. So let's say they have $1 mill. in a 401k and private investments. They could draw $40K a year from that during normal times and be OK (though things haven't been "normal" for > 10 years in the stock & bond markets nor have CD interest rates been "normal"). That would give them $75K per year--and if they have other sources of income or if they have more saved, even more. Many in this age group who worked for private companies will also have pensions of some sort besides the 401k, though younger workers will be more likely to have a different mix of pay.
Yes, there are retiring federal civilian workers (and military), but they are a much smaller % of the workforce than most people imagine around here. Check out the data. The private sector (and the state of VA, localities, etc.) employs many more people. Although there would be plenty of FFX residents in the situation HB describes, there would likely be many more who do not have as much time in the fed. service, with lower pensions, and many who were at lower salaries while serving.
I totally agree with VA-I about the data on retiring in place.
HB, real incomes DID decline, per the article:
"Median household incomes in the two largest, wealthiest jurisdictions in the Washington region suffered significant declines over the past decade, ending up well below what they were in 2000.
According to census data being released Thursday, the median household income in Montgomery County fell to $89,000 in 2010, about $4,500 below the figure a decade earlier using inflation-adjusted dollars. Fairfax County lost $3,000 from its median income, ending the decade at $103,000."
The authors attribute it to a changing demographic mix and other factors. Macro studies on the country as a whole show quite similar findings -- real pay for the middle income group and below has basically been stagnant.
While I agree you can question the starting point, the tech. bubble likely didn't inflate the average middle class person's salary much. It puffed up the portfolios of those who invested in tech. stocks, and probably accounted for a small % of huge salaries/bonuses in this area, and that sector may have had a bigger share of employment than it does today (does it?), with possibly some ripple effect (these folks may have bought expensive houses). Are there any data showing a big drop in average compensation or employment in this area from 2000-2001 that can be attributed to the bursting of the tech. bubble? Without knowing more about the data, I'm not sure these factors are big enough to knock out 2000 as an appropriate starting point.
HB, just to clarify, I see that you note that income went up slower than inflation, but why would you feel that nominal income are a better indicator than real income, of household well-being?
Ace,
I think that the decline is more attributable to the influx of immigrants with little skills, sub-par language proficiency and, hence, incomes bordering on poverty. The severe decline in (relatively high paying) construction jobs added to declines in income. I don't know what percent of population increase in the 2000's this represents, but I'd bet the numbers were significant enough to account for a large part of the "loss" in income.
Ace-
Real incomes are better indicators, Pat said incomes fell. If he had said real incomes fell I would have been fine with the comment, I just wanted to clarify, because when most people talk about income they are talking about nominal not real income.
Also I think Pat is trying to use this as another example of housing prices must fall because incomes are going down. This is different than saying that housing prices will go up less than inflation over the next decade. I generally believe housing prices will be pretty flat so the real price will fall not the nominal. In a debt driven economy there is a big difference between real and nominal prices.
Gotcha, HB.
VA-I, I think that's consistent with what the author of the article was saying.
Gee, I thought that I came up with that insight....
Anyone around when Black Monday happened? I was 28 I think. People were in panick. I had no money in the market but heard of people I knew going bankrupt due to margin calls.
The Washington Post story fails to mention that Fairfax County still has the second highest household income, after Loundon. Other jurisdictions may have gained (DC, Arlington) but Fairfax is still the second wealthiest county in the area.
However, it is still not great that income declined adjusted for inflation over 10 years.
dc2,
It's really not that surprising or alarming given the fact that we are in the worst recession since the Great Depression.
I don't know how we compare nationwide, but I'd imagine quite well. It's clearly not good news but not too bad.
VA-
That is how I interpret the news. In 2000 we were in one of the biggest bubbles ever so wages were very high. Now we are in one of the worst recessions, so the fact that wages rose slightly slower than inflation is not terrible. Particularly seeing that technological changes made realized inflation lower than reported inflation. Over the last decade gas prices accounted for almost half of the inflation. Cars however currently get substantially better mileage so most people are using less gas. Also interest rates are much lower on cars/houses making payments cheaper.
So in net I think standard of living in this area is probably roughly flat, which really isn't that terrible.
WSJ Article:
A push by the industry to stave off a decline in the size of mortgages that can receive government backing has fallen flat. It marks a rare defeat for an industry with considerable clout.
Lobbyists for real estate agents and mortgage bankers have tried to convince lawmakers to extend the current limits. But they have had no luck, especially among Republicans incensed about government bailouts – including the federal rescue of Fannie and Freddie three years ago. Fannie, Freddie and federal agencies currently back roughly nine in 10 new home loans.
A year ago, when Congress was controlled by Democrats, lawmakers extended the loan limits with little discussion. It’s a turnaround for an industry that has had considerable success on the lobbying front. Real estate interests spent $65 million on lobbying last year, according to the Center for Responsive Politics. The Realtors group led that list, with $17.6 million in total spending.
The Obama administration, meanwhile, supported letting the current limits fall and did not change its stance as some Democrats had hoped. Now, real estate industry lobbyists are looking toward a spending bill that may be hashed out by year-end to enact a one-year extension of the current limits. It’s likely to be an uphill battle, given conservative opposition to government support of the mortgage market and a populist political climate.
***The National Association of Realtors, Mortgage Bankers Association and National Association of Home Builders pushed hard for the extension, noting that the declines will not just impact high-cost housing markets. The Realtors trade group’s president, Ron Phipps, argued in a letter to a Senate committee this week the declines will impact nearly 670 counties in 41 states, force sellers to reduce prices and “further erode the wealth of American families.”***
http://blogs.wsj.com/developments/2011/09/22/housing-lobby-in-rare-defeat-on-mortgage-limits/?mod=WSJBlog&mod=WSJ_Real%20Estate_BLOGSDEVELOPMENTSFEED
For those Interested, i believe the ultimate bearish signal just tripped off.
http://franklymls.com/DC7556360
I accepted an offer on this property.
BTW 40% below Assessed Value,
30% below their initial asking price.
move in clean, across from a golf course and the trolley line. 13 blocks from Stadium Armory, 2 blocks from the River.
I figure even with the market expected to decline another 20%, it could take another 2 years to bottom.
My rent is $1K/month, so that's 22% right there, and i'm at UDC Law School, so, i'd save half my tuition,
So really, i can justify about a 30% loss and still end up on a balance sheet wash. As the property has been heavily marked down, I'm in good shape.
will I miss my place in Arlington? Yep.
Will I miss my neighbors? a lot.
Will I miss my involvement in local politics? Yep.
but i have a neighbor bought a semidetched unit, here in arlington, 2 BR, 1 Ba. postage stamp lawn. 59 years old. Paid 440K. I"m getting into DC with all the concomitant issues, for half that.
If my personal situation was different, I'd be hanging out here in Arlington, but the rent/buy calculation is different in arlington. Rent for $1K/ vs Buy for 350K a lot different story then
what I am about to undertake.
So at Any Rate, run for the hills, the DC Real Estate market is now signaling death and destruction.
Pat-
Congrats. It sounds like between the rent and savings on law school you should be in pretty good shape unless housing really take a huge hit.
HB
I've got 3 years of school
so even if the market dumps 50%
unless i move away, i'm in good shape.
Lets look at the worst case, the market dumps 50%. in 7 years i'm at break even compared to rent, unless rents fall.
i've got a 4 year committment ahead of me and almost half the potential loss is offset by tuition savings.
So as long as i finish law school,
i'm good. in a broad spectrum of scenarios.
If we can green up the place, with Solar Hot Water and PV, then I can reduce my footprint.
Well, the inspection is wednesday,
and the place does need a few bits and pieces but i'm not real worried about that.
The biggest one is the electrical is dated, it's right out of the 40s.
but, what do you want. It's an old neighborhood.
Congrats pat!
Once you are a newly-minted JD you can buy an Arlington place if you still miss it. You can convert this purchase to a rental and start your real estate empire.
We still have contrarian to keep us grounded.
Not to sound like a stalker, but a recent post by contrarian got me thinking. Contrarian stated that he sold his home of 15yrs in 2005; meaning that he bought in 1990 (the last peak). He has been renting for 6yrs. I don't know if 1990 was his first purchase. The numbers put contrarian in my age group or close to it.
I don't know why but I had imagined that contrarian bought around 2000 and was much younger. I'm sure it is just a mind-set thing, but I would have a real hard time becoming a renter after 15 yrs of ownership. I don't think that I could do it no matter how much sense it made. I have no problem buying and selling my rentals - but my home? Me rent from someone? Not.
cheryl
I sold my house in the Midwest in 09
which while it was a bad year here was a good year there. (Energ State),
so I did alright.
now I didn't mind renting because the utility was just not there. Rent for 1K/month or buy an equivalent condo for 2-3K/month? I'm here in South Arlington and look at the nutty prices. I've pointed out Myerton and there are other places on the pike equally over the top.
however, i've been actively hunting and posting various targets of opportunity.
This wasn't my preferred number one choice, but, my GF liked the place a lot, and liked the area, which is important and I think H street and Benning road are changing.
Va_I,
Since we sold, we have rented two brand new properties. Both were bubble construction. We were the first people to live in both places.
The first townhouse (3 story plus basement) was a development where the buyer had to put down a deposit before construction began. The first few sold for $400K, the next for $410, then $420, all the way until the final sold for $550K. Same model, same sq. ft., $150K difference in price between the first sale and the last sale. The builder essentially auctioned them off, bidding up the price after each sale. Construction didn't begin until all units were sold.
When construction was completed in 2005, all townhouses went to closing within a few months of each other. At the time of closing, many people flipped them for around $500K. Those who paid over $500K never had the opportunity to break even.
Because they were bubble construction, and because the buyers had to put down a deposit before construction began, the builder cut many corners when building the townhouses. When completed, the units were worthless. The HVAC units were too small for the sq. ft. of the townhouses. The air ducts were not properly installed to direct the air to heat/cool the units. There was a 20-25 degree difference between the third floor and the basement. It was unbearable. There was inadequate insulation in the outside walls, where the water/drain pipes ran, and they would freeze and back up during the winter, flooding the townhouse. We finally broke a two year lease and moved when the owner would not take appropriate action and make the builder fix the problems.
Those units, where the owners paid $400K - $550K, sold for under $300K when prices bottomed a few years ago. They are now selling for a little over $300, but not much.
When we moved out of that dump, we moved into another brand new bubble construction townhouse. This owner had sold a previous rental and had a down payment to help cushion his loss. This dump was built on property zoned for commercial construction, allowing the builder to cut many, many corners. The walls between units are thin. You can hear everything next door, and I mean everything. The driveways are barely large enough for a compact car. There is virtually no lawn, to the point the building is almost sitting on the street. The insides look elegant. Lipstick on a pig. My wife and I call this place the slums of the future. It is in a nice neighborhood, but graffiti is already painted on every building. New construction. Nice neighborhood. No lawn. Graffiti.
The owner paid just under $500K for this dump, and these also sold for just under $300K when prices bottomed a few years ago. These also are now selling for a little over $300K. These homes also required a deposit before construction began.
In addition to being the owners of worthless slums, the individuals who purchased these townhomes get the honor to pay the property taxes on these slums, plus pay to fix all that goes wrong with them. Earlier this year, pipes burst in the unit next to us and ruined part of the entryway in our unit. We pay very low rent to live in a brand new slum in a nice neighborhood. It actually looks like a nice place on the inside. The owner had the builder include $60K in upgrades, but the construction quality simply s*cks.
In a few years, when prices fall much further in this deflationary depression, along with salaries, we will probably buy a place. But, we will find a nice place, not built during the bubble, and will pay a fraction of today's price for it. In the mean time, our landlord can pay the underwater mortgage, property taxes, repairs, upkeep, HOA fees, community association fees, etc., etc., etc. The owner is paying many thousands of dollars a year for us to live here - while the value continues to drop.
contrarian,
A couple of things strike me. You mention several times that "prices bottomed a few years ago". You also state that you live in a "slum", in sub-par construction - not my idea of the good life.
How are you better off by selling your home n 2005? After 15 yrs you must have begun blitzing off the principal on your mortgage. Have the numbers really worked for you? You mention some price rebounds; how does your sale price in 2005 compare to that same house today? Factor in transaction costs on the sale and a new purchase when doing that comparison. Consider the intangibles - MOVING, leaving neighbors, schools, etc. TWICE!
Can you think of a better strategy (shorting CS)? While your present situation sounds wonderful (sarcasm), how probable is your desired outcome? You are the one that kept alluding to a bottom 3 yrs ago.
You may be right in the end - but at what cost?
Congrats Pat.
Looks like a good place for your eventual line of work.
2519 BENNING RD NE
WASHINGTON, DC 20002 Crime Stats
You know my thoughts re: DC.
Be safe.
TN
http://i655.photobucket.com/albums/uu277/nathguy/DCcrime/georgetowncrimereport.jpg
Here's the Georgetown crime report.
About the same number of violent crimes, so perhaps my friends are right when they say H Street is the new Georgetown.
Now the homicides are a bit higher, but you can't tell me a texan is afraid of a little killing?
Anon
According to Trulia
"This is a Single-Family Home located at 2519 Benning Road Ne, Washington DC. 2519 Benning Rd Ne has approximately 1,716 square feet. The property was built in 1933. The average list price for similar homes for sale is $346,950 and the average sales price for similar recently sold homes is $303,817. 2519 Benning Rd Ne is in the Kingman Park neighborhood in Washington, DC. The average list price for Kingman Park is $317,796. "
so I just demolished the Comps, and I get to go Golfing any day I want.
well FWIW, i'll be having a house warming party in November.
TN oil up your guns and throw a few burgers on the Grill.
pat,
I will grab the mace and don my flack jacket. Please schedule your soire during daylight hours!
Now the homicides are a bit higher, but you can't tell me a texan is afraid of a little killing?
No. No fear there. My issue is DC's style of not allowing gentle peace loving folks like me to carry a firearm for self protection while turning a blind eye to 3 and 4 time felons running around with an armory.
At least in Texas we get that part of the law right. Most folks we send to the pokey stay there, above or below ground.
FWIW.
TN
"My issue is DC's style of not allowing gentle peace loving folks like me to carry a firearm for self protection while turning a blind eye to 3 and 4 time felons running around with an armory."
you are so 1999, there.
http://en.wikipedia.org/wiki/District_of_Columbia_v._Heller
http://en.wikipedia.org/wiki/McDonald_v._Chicago
DC doesn't have open carry, but, it's not what you think
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