Here's an inventory update -- the statistics are from Virginia MLS. It begins in March 2005 and ends on November 1, 2011. Available inventory on January 3 was 5,333 available properties, a decrease of 300 properties from two days ago.
Here's the link to the whole spreadsheet.
Wednesday, January 4, 2012
Northern Virginia Inventory Update
Posted by Harriet at 10:04 AM
Subscribe to:
Post Comments (Atom)
45 comments:
WaPo: "Judging the impact of federal government cuts on the region"
A not so very insightful blog post. "This region has depended on annual 10 percent increases each year over the past several years in federal procurement." "Under McClain’s worst-case scenario, if the region saw a 10 percent reduction in federal spending, the region would still grow a tepid 0.4 percent in 2013, even with a local loss of 30,000 federal jobs."
Is that a one-time 10% reduction? If so, is that really the worse case scenario? Is it too much to ask for a second opinion that is not financed by the very industry on which the forecaster is opining. "And now viewers, our weather forecast as reported by Tote(TM) Umbrella forecasters."
http://www.washingtonpost.com/blogs/where-we-live/post/judging-the-impact-of-federal-government-cuts-on-real-estate/2012/01/03/gIQAVzeWYP_blog.html#pagebreak
Referenced: "As federal gravy train ends for D.C. area’s economy, it’s time to plan ahead"
http://www.washingtonpost.com/business/as-federal-gravy-train-ends-for-dc-areas-economy-its-time-to-plan-ahead/2011/12/28/gIQAtPPvSP_story.html
"Mike said...Is that a one-time 10% reduction? If so, is that really the worse case scenario? Is it too much to ask for a second opinion that is not financed by the very industry on which the forecaster is opining."
McClain is indeed like our own personal Lawrence Yun. His data (i.e. what happened in the past) is good and reliable. However, his projections (i.e. the future) are pretty awful.
That said, while I dont know if his -10% is accurate or not, I do find that employment graph he posted on the 1991-2000 job loss helpful. I knew there were big defense draw downs as the cold war wound down, but I didnt know how many jobs were in play.
Also, in the off chance McLain is right on the job loss, then the price drops this area saw at the time are probably a good a guide as any. Look at case shiller and you will see we dropped -6% from 1990-1993, and then stayed flat for another 5 years thereafter.
If that were to happen again, we would get back down to the high 160s low 170s range...barely above the March 2009 bottom of 165.
I do think austerity and job loss is coming to this region, but I think he is at least a year too early to assume it will "hit" in 2012. Honestly, I could see 2012 being a pretty good year, with prices gaining 3-5% for the year. As this chart shows, inventory is now at multi year-pre bust lows. Also, thanks to Pat's help I am kinda shocked to find out how low foreclosure activity is compared to recent years -- that Nov 2012 data is so good, it blows the doors of anything I had seen in the 5 years prior.
However, assuming 2012 is good for those reasons, I feel reasonably certain that anything gained in 12 would then be given back in 2013 and 2014 as the austerity and job losses hit.
BTW, it is stuff like this that makes me reluctant to stray much from my now expired "Case Shiller range of 170-190 years stagnation" call. I do think we stand a decent chance of breaking 190 to the upside in 2012, but if we do, it will be short lived as 2013 and 2014 could bring us right back down into the 170-190 range again.
"
If that were to happen again, we would get back down to the high 160s low 170s range...barely above the March 2009 bottom of 165."
funny you tottally mock on me for saying 155-160.....
"Pat said...funny you tottally mock on me for saying 155-160....."
You could say the same thing about your continuous, relentless, pound the table, hyperbole filled insistence that the Mar 09 bottom will-not-hold.
In any event, I give you flak is that 155-160 is likely your upside "best case" scenario for the bottom. Given the hyperbole you are prone to using from time to time, there is simply no telling how low you think the "worst case" bottom could be.
For example, back when a few of us where speculating that the bottom is in view for the immunozone, heres what you had to say:
"pat said...
Don't start crowing about arlington, i'd rather view it like an avalance about to happen.
3/19/09 4:42 PM"
http://www.blogger.com/comment.g?blogID=4787878578920468587&postID=1791117457138339145
As it turns out, March 09 was the bottom that has indeed held firm to this day. A reasonable, yet bearish view to hold at the time is that they may have "a bit more" to go on the down side.
And yet, even when we were at that March 09 bottom your judgment was not only that there was more potential downside -- but a potential "avalanche" about to happen? Really?
To be fair, pat was hardly the only one predicting (certain?) another leg down was coming...soon. I was particularly annoyed by the certitude. Nothing was couched or qualified.
Ah, the Alt-A, shadow inventory, people in Arl hanging on by the skin of their teeth and blowing through their savings. How many other crisis scenario's were out there? Robo-signing, collapse of the financial system, angry mobs taking homes from the wealthy, etc.
Now we have many in the main stream media pronouncing a turn in the economy. I believe the MSM is usually behind the curve (no pun).
The Banks are sitting on inventory too.
Didn't bernanke just say the banks should sell their shadow inventory to the 1%?
i know a guy got forecloaed a year ago on a house in springfield and Citi still hasnt listed it for sale.
so the Fed wll loan money to Hedge Funds to buy assets from banks who have been borrowing from the Fed to pay back loans to Fannie.
merry go round.
BTW anyone want to Bet on Greece going bust?
http://www.washingtonpost.com/realestate/buying-or-selling-a-home-in-2012-heres-what-you-need-to-know/2011/12/22/gIQAz5xSaP_story.html
Anon, VA Investor, HB, Pat, et al.,
I wanted to give some feedback on some of my own experiences.
I signed the contract for my home in Fairfax/Mantua in a private deal and closed in May 2009.
I refinanced my mortgage last month. The appraisal came at 15% higher than the price I paid in 2009, giving me a good LTV cushion, and a saving of about 1.25% of the loan value in annual mortgage payments.
Had I listened to someone like Contrarian, I would have lost out on such an opportunity. Despite my bearish outlook then, once the Fed Govt. started paying the $8000 credit for first time buyers, it was clear to me that I should no longer wait. To me, continuing Fed intervention meant that the worst case would be stagnant prices over a long period, not substantially falling prices.
Also, for those wanting to use Zillow mortgage marketplace, my experience with that has been pretty good. I had read a lot of negative comments online about the particular lender that my mortgage broker chose for me, but I didn't have any such issues. They didn't ask for a lot of documents or explanations, and closed on schedule. The rates obtained via Zillow were about 0.25--0.5 % better than what banks like Wells Fargo, Capital One and TD Bank offer, and there was even some rebate applied toward the closing costs; the closing process was also easier.
http://www.washingtonpost.com/blogs/where-we-live/post/investors-jump-back-into-real-estate/2012/01/03/gIQA79y0aP_blog.html?hpid=z4
seems like Hype, when savvy investors like Cheryl have walked.
Ted Glad your deal is working out for you.
It's not "hype" pat. It's just an example of the MSM being behind the curve, as usual. Investors have been out in force for at least two years; the smarter ones, three years. People who need proof of a bottom will always miss it as the bottom is never apparent until after it passes.
There are still plenty of good deals out there but I think the best are long gone.
Contrarian,
Game on! We'll ask TedK to come back 12/31/12 and report.
This won't be another case of you moving the goal line or calling for extra innings or a rain delay will it?
VA-
Is there any other type of game. If contrarian isn't allowed to change the goal posts or call for extra innings he would actually need to admit that his predictions have been terribly wrong since 2009.
Contrarian-
The fact that your would put Citi as a bank that is about to explode shows how little you know about the system. I admit BAC is having a lot of problems due to mortgage related investments, lawsuits, and their exposure to retail banking. Although they have issues I would be amazed if anything happened to them. Your comment about Citi is absurd though, have you not looked at what this bank has done over the past several years. They are now one of the strongest banks in the country and have already sold many of their risky businesses.
HB
sorry i'm with Contrarian on this,
while you are right that Citi is one of the strongest banks that's only because the others are worse.
All the majors have such goofy off balance sheet stuff, they will implode the first time something moves in an unpredicted way.
MF Global imploded within weeks of Fed review to become a primary dealer.
http://www.nakedcapitalism.com/2012/01/ny-fed-president-dudley-crosses-swords-with-gses-and-board-of-governors-on-housingmortgage-mess.html
"These are all good ideas, but they have a rearranging-the-deck-chairs-on-the-Titanic feel to them. They don’t come to grips with the central problem, that many people are in the process of losing their homes or will lose them if their finances come under further stress, and given how steep loss severities are (and they are only getting worse), a lot of them could be salvaged with deep principal mods. And the Fed fails to acknowledge the existence of a second large problem, the extent of servicer fraud, not just foreclosure-related abuses, but servicer driven foreclosures and out and out theft from investors (inflated and double charged fees, kickbacks from third party providers, overstated principal balances, delayed reporting of sales out of REO).
The Venezuelans have a saying I am fond of: “They have changed their minds, but they have not changed their hearts.” The good news is that the officialdom is beginning to come to recognize how bad the mortgage mess is. The bad news is that they don’t have the stomach for the sort of aggressive measures needed to remedy it."
Ok pat. Investors are back but housing is going to hell (along with the rest of our economy). I see your time frame of "by 2012" is shot. Can you provide a revised date for the world to end?
well, my analysis of 2012 was
based on political factors as much
as economic factors.
it would take some period of time after the adjustables started recasting for those to blowout and that the GOP would seek to torpedo Obama by trashing the economy in 12.
lets see if Boehner can trash the economy. He's got an approval of 9, which is cheneyesque in stature.
So, will he go for broke?
http://www.washingtonpost.com/business/capitalbusiness/can-the-local-retail-market-withstand-a-wave-of-store-closings/2012/01/05/gIQAbbisjP_story.html
6 high end retailers are closing locations and the replacements are lower end.
At least there are namable replacements.
If Obama were smart he's have the Pentagon dump 90% of these service contractors and leave just the FFRDCs.
If the DoD wants something done, they can do it in house, or, buy a product, but they don't need the beltway bandits doing service work
http://www.rbintel.com/statistics
the intereactive chart is interesting.
The listings are trending down slowly, pendings are trending up and solds is trending down.
really it looks like stagnation all over the place.
Sellers and banks don't want to list. Buyers are having trouble closing either on financing or sales contingencies, and a lot of property is sitting pending. Average DOM is 99 days yet, sell to list is only 91%. Usually prices should drop 10% per month to avoid stagnation
Pat-
When you and contrarian are quoting the massive numbers of derivatives you are mostly talking about currency swaps and interest rate swaps. These contracts are usually almost entirely netted out (often times with the same counter party) and the positions can only move a very small fraction of the gross value.
As for the MF issue, I had worked with them when I was with a previous employer and they were an absolutely inept company. They basically had no reporting and never knew how much margin we had (we had to tell them...) They also allowed their clients to take on substantially more leverage than any other investment bank out there. So between having a lack of reporting, virtually no risk controls, and weak liquidity positions we all expected they would go under. MF is nothing like the major banks out there.
But if you and contrarian want to continue to argue that the world is going to end with massive bank failures go for it. Although you should make sure to never put any dates on your predictions so when something happens 50 years from now you can claim that was what you were talking about...
DC is number one in attracting new residents: CNN 12/9/12
pat, did I miss your new date for the big fall in prices? I'm sure it was in your post somewhere.
contrarian, the countdown to 12/31/12 has begun.
Contrarian-
The 10 for 1 stock split was almost guaranteed to happen due to the massive dilution the company had in 2008 to avoid going under back then. If you look at the companies peak in 2007 the Citi was 20x higher. In order to hit that peak Citi would need to be worth 1.6 trillion (or 4x the most valuable company in the world). Although it is in good shape it clearly is not worth anywhere near this amount and investors will never be able to regain those losses.
The recent drop is mostly due to weaker growth products and new expensive regulation that will lower earning. People are finally starting to understand that we are not going to have a V shaped recovery, Europe looks terrible, and banks will not be able to hit past ROE targets. With all of this people realize that the stock is not worth as much as they originally thought. Just because a company goes down significantly does not mean that people think it is about to fail. As an example Cisco and Toyota have also fallen dramatically does that mean you think both of them are also going to fail soon?
Contrarian-
Here is a good chart for you that in one graph explains the banking sector. tier 1 capital
For a very long time banks had ~7% tier 1 common equity. (this is $0.07 of equity for every $1 dollar of assets). Then the crisis came and this equity number started to plummet and hit an all time low of ~4.75%. Since then the banks did several large equity raises and retained the vast majority of their earnings, which has helped increase their common equity levels to 10%, which not only is twice what it was in 2008 but is also 40% higher than it was back in normal times.
This chart is a quarter old, but if I had a more current chart it would show that banks continued to increase this in Q2 and Q3 or last year. I would also be amazed if it doesn't continue to go up as banks report their 4th quarter earnings over the next week.
HB
whats the tier 3 positions.
http://media.pimco.com/PublishingImages/sunlight-on-us-banks-chart-7.jpg
lots of cruddy inventory
http://seekingalpha.com/article/302940-u-s-banks-third-quarter-overview-better-than-expected
Pat-
Haven't the tier 3 assets been going down as these banks have continued to remain profitable and increased their capital. I am not saying banks are great investments, because they do have a lot of risks to their future earnings potential, but I am saying that fears of their eminent collapse are not necessary.
As one last comment if you read the comments the writer of the argument says that most of the level 3 assets are actually marked below fair value and as the assets are rolling off they are getting write ups not writedowns on these assets.
http://franklymls.com/DC7667206
they wanted a cool million in 07,
they were down to 440K when it finally went for 480K.
HB
the better place to discuss the banks is at calculated risk or zerohedge.
Contrarian,
I know that you love conspiracy theories, but the TedK profile is still the same old me. I got a new gmail account last year, so the profile when linked to that account must be showing it as a recent account. Now I know that you are somewhat paranoiac, and your predictions also come from that.
pat, what someone wanted in 2007 is completely irrelevant. You aren't going to start posting cherry-picked listings again are you? You had to be an idiot (or find an extremely great buy) to purchase in 2007. Most seller's were delusional and prices were dropping rapidly.
I just put an offer in 30 minutes ago. If you are not an investor and are looking for a home, I think it's pretty safe to buy. If it turns out I am wrong, I will admit it. Caveat; I can't protect people who don't perform their due dilligence.
As an aside, do you really think the banking crisis is worse than later 2008? Do you honestly believe Europe is a game-changer? Do you see anything positive about our regional economy? Does the fact that, for the fourth year in a row, we are #1 in new residents influence your outlook?
Pat-
I will agree that calculatedrisk is a good place to discus things. Zerohedge less so. There are some good posts, but the vast majority of the people there are conspiracy theorists who don't really understand the banking system at all.
HB
Yes ZeroHedge has far too many Gold Bugs ( I despise those morons), and
far too many Austrians (Cretinous Fools) and far too few who understand the value of debt, but,
it does front run a lot of the issues and it had the unique history of writing Fukushima Blogs and being denounced by name by the Japanese.
Calculated Risk is more data less opinions, Naked Capitalism is more analytical and political.
HB
Fundamentally the American financial markets are rotten, it's gone from capital aggregation to just fixed casino gambling.
Hell, Bad casino gambling and even worse record keeping.
And MF GLobal may have been hamhanded fools, but, 6 weeks before they screwed the pooch, The Feds made them Primary dealers in Treasuries. Which gave them access to the big credit flows.
So, if the Treasury can't audit their primary dealers, or even perform any due diligence, what makes you think C or BAC is any better?
Half the screaming over clouded titles is because Goldman et al, couldn't bother to do basic record keeping.
Cheryl
I thought you were out of the market?
pat,
I am closing on a flip in a week or two. The offer last night is a sweet deal and, due to the circumstances, I believe there won't be a chance for other offers. It's going to be a 50/50 deal with my son. I've hired an assitant to handle the books but really don't want any more rentals. I couldn't help myself on this latest one.
For anyone interested, here is the deal on my flip:
purchase price (reo) 154K
retail price 215-225
light rehab 16+-
rehab equals: flooring (laminate and carpet) switch out formica for granite, SS type appliances, light fixtures, paint, faucets.
Not a homerun, but something to do and some cash. It had been on the market for 60+ days at 190K. I offered 150K. Bank came back at 165K. I came back at 154K and they took it.
I put my neighbors on to something last week. There were 17 offers.
Cheryl
"
purchase price (reo) 154K
retail price 215-225
light rehab 16+-"
So Cost basis 170.
Say it goes U/C at 220, 10% closing costs. net 200.
20% Return, decent outcome,
what area was this in?
Annualize that return. 60 day turn-around.
cheryl,
I don't like annualized returns.
I look at each deal in it's own context.
Annualizing drives you to chase more and more,faster and faster for less and less.
If you made 1% but were able to flip it in a day, it'annualizes out to 365%. Seems awesome, but, you step back and if the deal had slid even a week, due to some kickup, now
all of a sudden it's fallen bya factor of 5.
it's that chase for annual returns that led to wall streets, picking up nickels in front of a bulldozer
business models.
Look 20% is a decent return, and you should look at it in that context. Annualizing is in essence an accounting fiction. If you had actually done 6 deals in a year, sure, that's a pretty amazing return, but, if you actually only do 2 deals in ayear, because the opportunity wasn't there, then it's 40%.
But, that's my little rant on Annualizing and IRR and ROI. All fictions which are destroying america.
The Wall Street pieces of crap are down to millisecond positions for 1 thousandths of a basis point. They risk billions on a currency posture.
HB may think these are all real smart guys, i just point out that they historically lose their customers asses and need bailouts on a regular basis.
All they have really done is socialize their losses.
Pat-
I am not a huge supporter of a lot of wall street. The main two differences I have is that I think the banks are in much better shape than you or the public thinks they are. I also realize that it was few not many that caused most of the losses. If you look at AIG it was less than 100 people that took down the entire company, but you would vilify the entire company when in reality 99% of the people are not taking crazy risks.
You also appear to blur the line between banks and hedge funds. When you are talking about high frequency traders you are mostly in the hedge fund space. Hedge funds did not get bailed out (other than second order effects of not letting the banks and economy implode). Also the high frequency people are not the ones who are losing clients money. Most of the high frequency traders almost never lose money for a day much less lose money over a year.
As one last note I agree that you can't annualize returns because you need to look at risks and how often the opportunity presents itself, but you also can't ignore IRR. If all you care about is total return you would end up getting long term assets with very low annual returns like 30 year treasuries.
HB
I'm not sure what you mean about banks not doing High Frequency trading
http://blogs.reuters.com/commentaries/2009/07/05/a-goldman-trading-scandal/
"he platform is one of the things that apparently gives Goldman a leg-up over the competition when it comes to rapid-fire trading of stocks and commodities."
or
http://www.fool.com/investing/beginning/2011/11/09/behind-the-scenes-of-the-market-high-frequency-tra.aspx
There are trading advantages for market makers and high-frequency traders that most of us can't tap into, but they're concepts we should be aware of. They contribute to profit and risks in financial institutions such as Wells Fargo (NYSE: WFC ) and Interactive Brokers (Nasdaq: IBKR ) that make markets in stocks, options, and other securities and can see positions change value in the blink of an eye.
Making a dollar or two on each trade may sound like an easy proposition, but remember that there's no such thing as a riskless trade. The big banks found this out the hard way,
or
http://www.highfrequencytraders.com/tag/investment-banks
Mar 23 2011 - 1:04pm
Morgan Stanley have announced the launch of Morgan Stanley Fix, an over-the-counter algorithmic trading product which provides institutional clients with flow-weighted average pricing (F-WAP) in currencies.
And HB if the banks were in such great shape, why are they laying off like crazy and their stocks are declining? If you think they are such great shops, mortgage your house and buy an assload of calls on BAC, C, WF and JPM?
and while you shouldn't annualize a deal, you should look at annual returns.
That's a big difference.
Pat-
I think you missed my comment about "mostly". The vast majority of high frequency traders are at hedge funds. This does not mean that banks do not have high frequency it just means they are not the majority of the industry. There are several hundred hedge funds in this space and only a handful of banks.
I think you have the investing in banks backwards. My comment is just that banks will not fail. If you read my comments I already said I think their earnings will be weak for a long time and they may never be able to regain their previous ROE targets. So with this view I have no reason to expect their stocks to go up quickly. Your comment is that all the banks are massively under capitalized and the economy is falling apart. So you should be putting all of your money in puts on the banks, if you want I am perfectly willing to sell you all of the $2 BAC Jan 2014 puts you want. The market price is $0.22.
Post a Comment