Northern Virginia's February 2012 housing sales were up 3% YoY, and median prices were up 2.6% to $384,500. The average days on the market decreased 2.6% to 75 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).
Monday, March 12, 2012
Northern Virginia's February Housing Sales
Posted by Harriet at 7:53 PM
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67 comments:
So much for that "local peak" nonsense.
You know, these monthly reports are great. For the last 3 years, since the march 09 bottom, we get 30 days of permabear flailing, followed by a permabear beatdown the 10th of every month as the prices continue to lurch slowly forward.
IIRC the recovery is now as long in duration as the peak - trough price declines. And with this months report, year 3 of the recovery is now in the books, year 4 of the recovery has now begun!!!
God, I love it!!!
re: the Feb 2012 vs. Feb 2011 sales volume, I wonder how much of a factor the very mild weather this year has played.
Ace,
There really was no winter this year. According to agent friends, the market has been fairly even. In other words; no "spring rush".
I still believe that there is a spring buying season. We'll see.
It appears from the "report" that inventory is at a 5yr low(?) - If I read it correctly. One of my tenants is buying new construction in Ashburn - not a bad locale if one works at RTC.
case-shiller sas differently...
slow miserable marginal decline.
"Pat said...case-shiller sas differently...
slow miserable marginal decline."
Yep. You gotta feel bad for those Maryland folks who (even as our county by county records show) are still seeing too high inventory, and price declines. Poor bastards.
Oh well, at least thats not here in Nova, especially in the immunozone as we reach new all time highs and the beatdowns of the (-40% off 2006 prices) permabears continue unabated.
God I love it!!!
Good point, The Anon. I believe Case-Shiller also includes West Virginia in the DC metro area index.
what Anon calls the "beatdown of Maryland" is actually fairly decent value.
PG is entirely imploded post bubble, but, it's got lots of developement value.
I was driving around Hyattsville and it's gone from a real pit to very good growth potential.
Well, lets see what happens in Nova as the defense budget cuts start biting.
"Ace said...Good point, The Anon. I believe Case-Shiller also includes West Virginia in the DC metro area index."
Yep. Along with 2 counties in southern PA as well I believe. Dont get me wrong, its awesome for what it is, but it does have its limitations.
"pat said...
what Anon calls the "beatdown of Maryland" is actually fairly decent value."
It is a good value. Good place for investors, IMO. Oh, and the beatdown isnt re: maryland. Its permabears who for 36 months have spent 29-30 days a month here explaining why the -40% off peak prices are just around the corner...only to get yet another beatdown in the form of a report showing stagnating to slowly rising prices.
"Pat said...Well, lets see what happens in Nova as the defense budget cuts start biting."
Unlike 90-95% of your parade of horrors which is a bunch of nonsensical bullshit, this is a legitimate concern.
I would not be surprised to see prices drop -4% to -7% in the area, but I think thats more of a concern for 2013 than 2012.
If this happens, it will erase most, but not all of the gains this area saw since the 2009 bottom.
I am hoping these drops will pique the permabears interest, causing them to continue screaming for immunozone prices to drop -40% from peak. Of course by then it will be 2014, stagnation will likely return and we will still be abut -35 to -40% away from the price drops they promised...
3 more years of screaming & false hope, followed by once a month beatdowns as price reports show that -40% off peak prices is a pipedream.
Im so excited. I cant wait!!!
3 offers on the same house later and they went with a cash offer... they never even counter-offered and we had the offer above ask for 2 of those offers. Sheesh....
There are only 7 properties in my zip code that match what we want as far as bedrooms/price/acreage and they are all ugly!
Come on iventory!!
There is absolutely nothing available and the housing that is available is terrible shape or just ugly not workable etc. Those homes are getting bought and even bidding wars etc. I don't want to wait much longer because I feel that we are losing money renting, but there just isn't anything to buy.
Are other buyers in the same boat or what??
"this is a legitimate concern.
I would not be surprised to see prices drop -4% to -7% in the area, but I think thats more of a concern for 2013 than 2012.
If this happens, it will erase most, but not all of the gains this area saw since the 2009 bottom. "
well if it happens in 2013, I lose one of two predictive forecasts(bets) I made.
1) the Case shiller index would approach closer to 155 in 2012.
(Unadjusted).
2) The Immunozones would revert to mean in 2012.
However, it does mean that housing which for the ever shrinking middle class becomes an ever worse part of their balance sheets.
Honestly, i see the system in terrible shape. MF Global to me is a sign the Billionaires have started to rip the flesh off the millionaires.
A Fiduciary company (MF Global) just bets all their client funds,
now MF Global was a fairly narrow vertical, but what happens when a major Bank (Citi) or (BofA) does the same thing?
http://eatocracy.cnn.com/2012/03/05/farmers-continue-to-struggle-after-mf-global-financial-scandal/
This was JPM raiding the productive millionaires.
Are there more MF Globals out there?
"Pat said...well if it happens in 2013, I lose one of two predictive forecasts(bets) I made.
1) the Case shiller index would approach closer to 155 in 2012.
(Unadjusted).
2) The Immunozones would revert to mean in 2012."
Nope. Sorry. You will lose 2 of 2. Your prediction was not that cs would "approach closer" to 155 in 2012. Its that it would "hit" 155 in 2012.
You set those goalposts and you are not going to get away with moving them now.
Pat-
At my previous job I did a lot of interacting with MF global and the other major banks. I am fairly confident that the vast majority of MF's issues was as a smaller bank it didn't have the governance and IT systems necessary to be an investment bank. I can tell you that they were the only bank I dealt with that never knew when we were at a margin call or not. We tracked our capital not them. I honestly believe that they didn't know what capital was theirs vs. their clients.
This is not the case with the big firms, although you may be right that the billionaires are going after the millionaires (as shown with the recent Goldman muppets comments)
HB
while MF Global may have been incompetent, that isn't an excuse for criminal negligence.
it's only an excuse if it's obvious.
Now Corzine had been CEO of Goldman, so he should have known what was wrong.
And, JPM should have known.
personally given how bad the wall streeters are, it's just a matter of time till they raid more people. They were allowed to rob at MF Global, well, what's the next level up?
Anon
Well, actually, Your bet was March 2009 was the bottom for C-S.
Deflationary spirals are real bears, they just drag on and on and on.
http://seattlebubble.com/blog/2012/01/31/case-shiller-seattle-home-prices-hit-new-post-peak-low-2/
ask anyone in Japan.
pat,
Holy moly! We are back to Japan? Is this all a head-fake (I used to be very good at those back in the day). Are we off the euro crisis? Should we hoard gold and stock the bunker? What, what, what?
My odd's of getting hit by a bus are greater than the outcomes you predict. What's so bad about making reasoned analysis and living your life? If the "big one" hits it will matter little whether you own or rent, whether you have enjoyed your life or not.
It's clearly not 2008. The question is whether you move on or not.
"pat said...
Anon
Well, actually, Your bet was March 2009 was the bottom for C-S."
Yep, and I was right. This is what happens when you focus on the things that matter like inventory, and ignore all the tangential bullshit.
Had you done that, you wouldnt be 0-2 right now, desperately trying to move the goalposts in a face-saving move that wont fool anyone...
What does Seattle have to do with the Washington DC real estate market?
IIRC, Seattle was one of the last to fall. I would expect that region to be behind us in recovery. People were paying (inflated) peak well after other regions had collapsed.
wunderbar-
I haven't been looking for almost a year so I don't know what the inventory is like, although I do feel I need to ask if it is an inventory or a price issue. If all the houses that are the size & price you want are ugly and get bid up, it could be because the price you want and the price the market will pay are different
Cheryl Says
"What's so bad about making reasoned analysis and living your life?"
I did. I bought a place in NE DC which was a decent value proposition, has a GRM of 120 and is likely to be on the wave of developement off of H STreet.
I like the other washington because it's a good signal market for DC.
1) it's well analyzed by the community there.
2) it's heavily tied to Govt Spending
3) They have a pretty decent tech community.
4) it's somewhat growth limited due to the Puget sound structure.
Pat, why look at data for a market you deem similar in some ways to the NoVA market, when you have better data, i.e., you have data for the NoVA (and DC metro) market?
"pat said...
I like the other washington because it's a good signal market for DC."
You werent posting it as a signal market. You were posting it as somehow being "proof" that I was wrong and that DC had not bottomed.
If you dont want to look like an imbecile next time you want to determine when DC has bottomed, start and end your analasis with the "signal market" known as WASHINGTON DC.
http://novabubblefallout.blogspot.com/2012/01/s-november-home-price-index.html
Seriously, why do you choose to embarass yourself this way?
For those who are interested.
http://youtu.be/a-R8qpea6lc
Tokyo used to be the bubble market of all bubble markets, a global capital, with 8 of the 20 biggest corporations for capital investment,
http://townhall.com/columnists/patbuchanan/2012/03/13/creators_oped/page/full/
"During the decade of "Japan, Inc.," in 1988, Nippon boasted of being home to eight of the world's top 20 corporations in terms of capital investment. Now she is home to none, and only six of the top 100."
and Toyota is now in the Corner GM was in for 30 years. Too big to make rapid moves, dispersed management, loss of fire in the belly.
Japan has unique problems but at the same time, it's also had unique advantages.
Am I bearish, sure, because, Macro Tides are hard to beat.
"Pat said...Am I bearish, sure, because, Macro Tides are hard to beat."
Thats fine.
Yet, it still doesnt explain why you choose to embarass yourself by pointing to CS Seattle as proof that CS DC is now below the 2009 bottom.
Some people won't like this, but a mass email from Zillow just reported that:
"Zillow's Monthly Real Estate Report for Arlington
According to the Zillow Real Estate Market Reports for January 2012, Arlington home values were:
- Up 0.7% compared to December 2011
- Up 6.8% compared to January 2011."
Zillow differs from C-S primarily in that they include all properties in whatever area they are examining, rather than only sales. However, their evaluation for any given property is limited in scope, like county assessors' values. So Zillow may be way off for a given property. However, for a massive # of properties compared at 2 different times, at least this would be held constant.
HB,
It is exactly an inventory issue and not price. I have actually looked at homes that are the very top of my range and even $100k and $200k more expensive than we can afford. I wanted to make sure that it wasn't just a price thing, because that is surely a plausible explanation. But there are very few houses even available, especially the pricier I check. And the ones that are available are surprisingly the same thing as what IS in my range, just listed for more money. There are maybe 2 properties that I'd even consider once I start not caring about price and just what I want.
Kinda annoying. There hasn't been anything put on the market in the zip and price I want in 3 days!!
sehr,
There is little inventory. I don't know if you were in a position to buy 2 or 3yrs ago and that hindsight is 20/20, but there truly were compelling arguments for jumping in back then.
The problem now is that many are doing just as you are - buying. If the market mirrors past cycles, you will have time to search and wait - just be prepared to act fast when the opportunity presents.
In the past 3 wks, 3 tenants have notified me that they are buying. I don't know what the next few years will look like but I don't see any meaningful decline. And I don't base a "buy" decision on a few year window.
There are still local weak markets, but they are weak for a reason. PG might be a screaming deal as Pat suggests, but who the heck wants to live there?
sher-
Thanks for the update. I agree based on your comments it sounds like it is not a price issue. I agree with VA that you will likely need to be ready and act quickly when you see something good. Usually this is around the time that people start to list their houses. There are also more buyers out there, but hopefully you can find something you like :)
"Va_Investor said...
sehr,
There is little inventory. I don't know if you were in a position to buy 2 or 3yrs ago and that hindsight is 20/20, but there truly were compelling arguments for jumping in back then."
You remember "got popcorn" Neil? Despite him being a bear, he often warned of lack of selection we would see at the bottom and how it wouldn not pick up for a while thereafter. Thus, if selection was important to you, its better to be a bit early, than to late. In his case (and in his price bracket) he said he would be willing to miss the bottom (on the early side) to the tune of up to 100K if necessary just to ensure adequate selection.
Sehr... I do sympathize with your plight. And unforutnately, if history is any guide, its not going to get much better for a while still.
During the 90's bubble, prices bottomed in 1992, but due to lack of inventory, sales didnt pick up until 1997. So, if we use that as a guide, since prices bottomed in 2009, we should hopefully see a decent bounce in inventory in 2014.
BTW -- this thread is a great example of what I am talking about:
http://novabubblefallout.blogspot.com/2009/03/northern-virginia-bits-bucket-3262009.html
By this time, Neil had run away (he realized Arlington wasnt going to implode) so I took up his warning about if you care about selection, be forewarned.
Sadly, since it was me saying this, and I didnt have proper "bear credentials", I was accused of using scare tactics with Kevin nervously LOLing "i will take my chances with that one"...
Yet, even by his own admission, look at what inventory & prices were doing at the time:
Date Count Median
27-Nov-07 896 $399,900
15-Jan-08 812 $375,000
11-Mar-08 807 $354,900
6-May-08 866 $329,900
15-Jul-08 740 $344,900
10-Sep-08 626 $345,000
10-Nov-08 490 $325,000
16-Dec-08 495 $319,000
26-Jan-09 400 $300,000
2-Mar-09 339 $300,000
23-Mar-09 317 $325,000
Assuming 300K was the bottom (which it was), would you rather pay 325K in Mar 2009 when there were only 317 selections available, or would you rather pay the same 325K in Nov 2008 when 490 choices were available?
Such a sad blog back then. Were you to say anthing remotely positive there were plenty of hysterical bears ready to accuse you of being a "realtard" or whatever. All I was asking was for people to simply stop with the terminal pessimism for a second, open their eyes, and consider the opprotunity that may lay before them. In terms of a mix of both price and selection, that was a once in a lifetime opportunity...
Interesting thread, The Anon. And kudos to you for calling it way back in 2009. I sort of wish more of the irrational types were still around because it is fun to watch all the sniping. :-)
Anon
What about shadow inventory?
The banks have been way behind on processing foreclosures and putting them out to market.
now your theory as I recall was it would dribble out for years, well, if so, then the market will be bad for years.
anon
I may have gotten confused on the Washington market but it's a good reference market for DC, so is London and Tokyo, Berlin, Beijing.
It's a global capital city.
if Seattle is continuing to trend down despite 3 years of ZIRP and the same boosts, and the same DoD spending, how does DC do well?
if i used the wrong words, I am sorry for confusing you, but, if you think the world is bright for the immunozones, it's a real problem.
I had an executive house in an executive neighborhood. 4 BR, 3 Bath, neighbors were VP's, Business owners, top schools.214K.
Now that was the midwest.
It compared favorably with the 22207 zip code.
My neighbors made plenty, they just didn't have to blow it on crazy houses.
Now as for The Top Tier, it's driven by a property ladder.
The lower tier can't advance to the Middle tier because a Decades worth of Appreciation went out the window.
The Middle Tier can't advance to the Top tier because they lost that same decade.
Now the argument is that the Top tier is better endowed and able to withstand equity loss.
Thats' true but the Top tier is also ruthless, vicious, mean and without honor. That's how they got to the Top Tier.
For them, a house is purely a utility purchase. A luxury good to show off.
Now when Luxury goods become albatrosses, they get dumped. Especially when they carry large instalment debt.
The Top Tier is best equipped to use the system to fight debt payments and hide assets and walkaway.
When it becomes socially acceptable to walk, expect the world to catch up.
if you think it's nothing but bright, you'd bid on teh Foreclosures i posted the other week.
but you don't think the near term future is bright. I think you said you would be thrilled with zero losses for 3-5 years.
NVAR has released it's Feb 2012 YOY report for the region (not as wide a region as CS).
These are YOY numbers: 2/12 vs 2/11
Active listings down 13.22%
Months of supply down 15.79%
Va,
2-3 years ago we were just moving to this area after I graduated law school. Then we lived in Alex for a year and now live where we are looking for a house. There are only 34 homes 4bdr or more in my price range and adding $100k only adds 18 more homes or so. Many of them are split-level or ranch and we want a colonial. THEN, we also want at least an acre or so, heck I am even willing to do 0.5acre at this point. But there are only like 7 homes that fit that description.
Only 1 home on the market in the last 5 days in my entire zip code! This is getting ridiculous. If we had been in the are 2-3 years ago we would have been looking and probably found something. I guess we just happened to move in at the wrong time in history, lol!
But, our dp will get ever bigger as we are waiting. I am not settling on any random thing just to have a home.
Pat,
Why do you think that the people that live in the expensive Arl homes will just walk? Perhaps they are happy with their value and if they are paying their mortgage, or even already paid it off, they aren't going to care about the assessment going down. They might even like that because it means their property tax should decrease.
If I buy an item and really want it and like it, just because the value of that item decreases it doesn't mean that I no longer like it and just want to discard it. If I was willing to pay x in 2006 for an item and had the salary to afford it (and salaries in the DC-metro area keep increasing because of gov), why shouldn't I be content on keeping it at the price point I paid?
Heck, the same people you speak of that may be all about status may like the idea that they afforded a home for so much and still have it. That itself may be a status symbol in a way...
Ace and mytwocents,
This has got to be the worst decorating job I've in awhile for a $1.8 mil house. And baseboard heating? Really? They didn't think to upgrade that for this price? I also like the close-up pic of the basketball hoop, that's a big selling point.
Here's another overpriced listing closer to my house. $1.2 mil and the backyard backs to Rte 50.
Jewel,
I have to agree. And all for only about 40% over assessed value! At least a lot of it can be corrected cheaply, with some primer and paint. But that is a lousy, small kitchen for a house that size/price.
Did you see this one, which is my nominee for worst decorating? Can you believe the listing agent calls it "totally renovated in 2011"? By whom - Liberace's grandkid?
ewwww
And, our Washington Blvd friend still hasn't dropped his price after 27 days.
rambler
His much bigger competition on Wash. Blvd. is unsold too.
Jewel,
Re: the 2nd (flip) house
Totally agree about the bad location.
One would think that the $375K price the flippers paid when buying it (it looks as if the flippers might have kept the original house and popped the top, then reno'd) might give them a clue that they are going to have to give a pretty big discount based on location, when selling as well.
Correction - the flippers got a $7500 discount, so they paid only $367500.
From the photos, the construction quality looks cheap.
The house is a long way from a metro also.
So, even though there are buyers who are happy to pay a premium for "new" in Arl., I think this one's grossly overpriced.
Jewel,
I agree, that was a miserably decorated house. It looks like it hasn't been updated in about 20 years. As Ace points out though, it's mostly minor cosmetic work to brighten that one up.
As for the second house on Rt 50, I say good luck. The house is right on 50 and I think they're going to have a tough time getting over 1 million down there. North of Washington Blvd and closer to Ballston, East Falls Church, or Clarendon and maybe they have a chance. But I doubt there...
My $0.02
Ace,
LOL.
I was going through the photos of that house thinking, "well this isn't so bad if you just get rid of the furniture. And that garish gold mirror in the bathroom. Oh, and the chandeliers. Oh, and the striped painting in that one room. Oh, and the textured looking paint in the next..."
I eventually stopped keeping track. "Liberace's grandkid." hahahaha
My $0.02
Ace,
I actually like the exterior of the Liberace house. The interior is over-the-top to say the least.
At least the sellers are consistent in their design choices, right? :-)
Regarding the house on 1st St, you think the flippers have been sitting on this one for 3 years? Seems like a long time.
Also, I agree on the cheap construction quality. The lack of a deck off the main level particularly looks bad.
Yep, the Washington Blvd rambler seller is still dreaming...
sehr
"Why do you think that the people that live in the expensive Arl homes will just walk? Perhaps they are happy with their value and if they are paying their mortgage, or even already paid it off, they aren't going to care about the assessment going down. They might even like that because it means their property tax should decrease.
If I buy an item and really want it and like it, just because the value of that item decreases it doesn't mean that I no longer like it and just want to discard it. "
Oh the long term residents it won't matter.
I know a guy bought a place off spout run in 1985, he's just paying off the last of the mortgage.
He doesn't give a crap wether it's a 500K house or a Million and a half.
He bought wehn the place was 250K which was psychotically high even then, but, it knocked an hour off his commute, so he struggled, sold off a bunch of other stuff, and made it work.
Now, Long term pre bbble residents are fine, it's the ones who bought during the bubble, who are paying, but worrying wether there are other suckers in the pipeline behind them.
Out west they are having a lot of strategic default. People who can still cover the mortgages but realize they can rent for even less and wait a few years for their credit to improve and then rebuy.
I don't think people in Orange County are any less ruthless or incsive then people in 22207.
Pat,
So how much, on average, has the peak 22207 buyer "lost"? Should we factor in any "gains" on a sale of a prior home at peak in order to move up?
Mytwocents and Jewel,
I had exactly the same reaction to the Liberace house. Liked the outside reasonably well, then thought "just need to change the furniture..." but each room got worse and worse, with stuff that would be expensive to change.
Re: the 1st St. house, I am jumping to the conclusion that it is a (slow) flip, based on:
--per the Arl. Co. website, it was bought in 2009 and has changed a LOT since then, e.g., at least a 2nd floor added. Owner-occupants typically don't do this and then try to sell less than 3 years after buying a fixer-upper. It's possible that the owners intended to stay and had some bad luck.
--According to the Arl. Co. website, the changes weren't finished until the 2012 assessment period, so while the changes may have been started in 2009, they weren't finished probably until 2011. Sometimes it takes amateur flippers/builders a lot longer than pros, because they don't know what they are doing, don't know whom to call for good subcontracted work and have to undo/redo, run into cash flow and inspection problems and delays, etc. For example, there was one in my neighborhood that took a semi-pro almost two years to build, and I am sure the builder lost his shirt on it (he overpaid for the land, too).
--there are minimal furniture and few pictures on the walls, etc., suggesting that the furnishings may have been moved in for sale.
--amateur flippers often overprice their houses.
YMMV.
"pat said...
Anon
What about shadow inventory? The banks have been way behind on processing foreclosures and putting them out to market.
now your theory as I recall was it would dribble out for years, well, if so, then the market will be bad for years."
Correct and it will be bad. The main difference is how we define "bad". I expect to see an underperforming market with stagnation to less than inflationary gains. Just as it was in 2008, 2009, 2010, 2011, 2012...
"pat said...
anon
I may have gotten confused on the Washington market but it's a good reference market for DC, so is London and Tokyo, Berlin, Beijing."
Your an imbecile if you believe that. In terms of pricing, your "reference markets" are all over the map. One is at or near all time peaks, while another has been declining for 20+ years.
Im sorry you got caught red handed trying to move the goalposts, but again, if you dont want to look like an imbecile, dont claim that 2009 was not the bottom for DC by looking at the performance of seattle or any another market.
Next time, stop and think before you embarass yourself.
Pat said... it's the ones who bought during the bubble, who are paying, but worrying wether there are other suckers in the pipeline behind them.
Sounds scary doesnt it Sehr? It sounded scary the first time the bears mentioned it in 2007, 2008, 2009, 2010, 2011...
Thus, the real question is, if these people did not walk away en-masse during the depths of the crisis, why will they do so now, especially in the immunozone where prices are once again near an all time peak?
The answer of course is they, wont. Still, that doesnt mean that pat wont try to convince you otherwise.
Watch this space carefully, and look for a response from him that will include an amalgam of marginally cohesive ramblings and wishful thinking, and may or may not reference bernanke, fukushima or the myerton.
What you will notice however is no good answer to the question "why would they walk away now, en-masse at the peak". That one will be avoided at all costs....
http://franklymls.com/DC7446297
460K Assessed.
320K Sold 220 DOM.
somebody took a beat down.
Pat-
I think everyone here understands that in many areas prices really got hurt. In some areas its because too many houses were made and land is abundant and cheap (PWC) and others its because they are not safe and most people don't want to live there (all the houses you show). Did you notice that all the houses around that area have bars on them... You do realize you are the only person on this blog who is willing to live in an area where you need bars on the windows, because it is a "good value" right?
Anon
Ever hear of a thing called a duck?
Placid on the surface, swimming like hell below.
Lots of people have been hanging on, burning 401Ks.
The Iraq war is just about over, the Afghan war looks like it may have just hit exit conditions and the Budget plan is a disaster for DoD.
AS much as the TeaBaggers whine, Obama has been trimming spending.
Where does it get spent?
Now I made a somewhat foolish assumption back in 09, that the FHA superJumbo's would not get extended again. That would just be foolish and bad economics and bad politics.
That the Obama administration so openly embraced idiotic suicide was unforeseeable.
However, that still makes the 22207 market untenable.
Depending upon the Good Graces of the FHA to finance the zip code is
dangerous in it's own way.
if the inherent value were there, Private lenders would be financing.
I guess it's just a waiting game at this point. Hope the right house comes on the market and that a zillion offers don't go in on it, lol.
Pat, I understand strategic default. But, perhaps, the people that might be willing to do that in other circumstances don't see it as that much of a "good" in these. If they can still afford their mortgage, even though they may currently be underwater, there may be many other factors that keep them from strategic default.
Location can be a huge factor, don't cross that one off!!
HB said...
... because they are not safe and most people don't want to live there (all the houses you show). Did you notice that all the houses around that area have bars on them... You do realize you are the only person on this blog who is willing to live in an area where you need bars on the windows, because it is a "good value" right?
I wouldn't live in the places Pat posts if the rent was free. From today's WaPo: DC Crime on the Rise, Again
Jeremy,
Nor would I, so I am happy to forgo the big returns that people willing to do so sometimes get when an area transitions.
I think the most interesting thing about the article you linked is that the graphic shows a HUGE increase in District 2 (including the richest parts of NW DC). Of course, when the baseline is lower than in some other districts, the percentage increase can be misleading, but even taking that into account, 57% is a lot.
I think crime remains a main reason why a lot of people choose Arlington and other parts of NoVA even when they don't need the good schools, can afford even the hoitiest of toitiest houses, and love the vibe of the city.
Ace,
Taxes are another big reason. I know people that have maintained a residence in VA just to have lower income tax rates even when they'd prefer to live in the city.
My $0.02
M2C, agreed, there are many other factors - crime and taxes are only two of them. Another is more responsive city/county govt. and better services.
sehr
"
Pat, I understand strategic default. But, perhaps, the people that might be willing to do that in other circumstances don't see it as that much of a "good" in these. If they can still afford their mortgage, even though they may currently be underwater, there may be many other factors that keep them from strategic default. "
Strategic default is not about not being able to afford a mortgage, it's about realizing it's a loser bet.
Do you throw good money after bad, or do you waltz?
The wealthy are best positioned to do this. It's merely a trade between cost of transition and expected loss.
the usual trigger on this is knowing someone else who did.
Jeremy
You may not want to live in the areas I post about, but people do.
In fact, People were uite willing to spend Half a million or more on these places.
Now reality is coming to these areas.
It's funny because the macro trend is into the urban areas. If we get $5 gas this summer, who knows how popular some of these places may become again.
Pat-
If we get $5 gas these areas will continue to be less popular than places like Arlington and Vienna where you are still right on the metro, the other amenities, and have all of the other shopping you want within a couple of miles. As for your people will walk because it is a suckers bet comment, I think you dramatically underestimate how much people care about status. Many people know housing is a suckers bet but still do not walk, because either they need their credit score (they have a job with a security clearance) or they don't want the stigma of walking away. I think you also believe most people are underwater or nearly underwater and this just isn't the case.
"Pat said...Do you throw good money after bad, or do you waltz?
The wealthy are best positioned to do this. It's merely a trade between cost of transition and expected loss.
the usual trigger on this is knowing someone else who did."
And I ask you again...
In 2008, when the world was on fire, when prices were -5% to -10% from peak, they didnt walk.
Its now 2012. 4 more years of equity payments have been made. Prices are again now near peak or at new all time highs. So, why do they walk, en masse, now?
Anon-
1. Pat wants there property for dirt cheap (and people want to make Pat happy)
2. On average across the country prices go up with inflation, so this means that it is impossible for them to go up more than inflation anywhere (please ignore places like NYC, San Fran, LA... that have been going up way faster than inflation for over 100 years)
Anon
"So, why do they walk, en masse, now?"
Gravity..
pat said... Gravity..
So your argument boils down to a feeble metaphor based upon nothing more than wishful thinking... Nothing intelligent to offer???
Didnt think so.
Well this thread is certainly going into the archives. First we see you being caught red handed trying to move the goalposts.
Then you make perhaps your most assinine assertion to date, that somehow, seattle's CS performance is proof that DC has reached a new CS low.
Finally you top it off with an assertion that people in the immunozone are going to walk away, en masse, now that prices are again rising and are at or near peak because of.... "gravity".
Its interesting, when it came to who here had the worst judgment and constructed the most pathetic arguments, I used to think it was Contrarian by a mile. Yet since the beginning of 2012, you certainly are doing your best to close that gap.
I find it interesting too in that based on the infrequency of his posts it appears that Contrarian is losing steam. Apparently there are indeed limits to his ridiculous assertions and self delusion. So perhaps its fitting that you are doing your best to fill the void he is leaving behind.
If thats the mantle you wish to assume here then congratulations Pat, you are well on your way.
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