Northern Virginia's May 2012 housing sales were up 22% YoY, and median prices were up 6.6% to $399,000. The average days on the market decreased 23% to 43 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, June 11, 2012
Northern Virginia's May Housing Sales
Posted by Harriet at 1:49 PM
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237 comments:
Thanks for the update Harriet.
There are some good insights on the Real Estate Business Intel blog post for Metro DC (RBIntel.com/Blog/D.C. Metro). According to this data intel company, the DC metro area is now a buyer's market. Sorry that I don't have it linked. I saw it on CurbedDC. The article further breaks down the region by County. Cheers.
OOOP's! Make that a SELLER'S Market.
Core Logic has released it's June 2012 Shadow Inventory Report.
is the report publicly available at a link?
Search Core Logic Reports Shadow Inventory. It was released 6/8/12, I believe.
Here you go:
http://www.calculatedriskblog.com/2012/06/corelogic-existing-home-shadow.html
Basically, despite all the old bearish prognostications of a "tsunami" or "thunderous roar" of shadow inventory being "unleashed" onto the market, en masse, shadow inventory continues to decline, slowly as it has for the last 3 years...causing the same effect on local prices, which is to say, no effect at all...
http://franklymls.com/DC7749460
I had bid this in 2010 it was a wreck,
18" of sewage through the basement, ruined mechanicals, vandalized, burglarized, zero lot.
Decent flip though.
Do you ever wonder why so many shorts go under contract in "0" days? Well, there are many investors who concentrate on shorts. These investors approach distressed owners, get the property under contract, negotiate with the lender or, more often, have a professional negotiator. Many Lenders require that a property be on the MLS before they will approve a short; hence, the zero day listings.
Anyone see CurbedDC's 7 hottest zipcodes for the metro area? I feel like I am talking to myself these days. Is anyone still interested in this blog or is it dead?
VA_I,
I'm still out here reading. I also still need to figure out what to do with my kitchen. I need to order cabinets by May if I hope to be done by the end of Summer. As you can see, I am way behind. :)
My $0.02
Case-shiller April numbers are out. They lag the market by at least 3 months. The numbers, while stale, are good.
I'm still here too. I think the doomers have left the scene so there's less back and forth. I've always appreciated facts and data and so, visit this blog. I think it's worth keeping it alive. Personally I'm very interested in the so called fiscal cliff projected for 2013, but who knows how that might play out...
da55id-
My guess is the fiscal cliff will be averted at the last minute. Usually congress/president are pretty good at fighting back and forth and making a mockery of the process before eventually renewing everything. I guess eventually this might not happen, but that is still probably years away.
I'm especially wondering if folks will try to preemptively sell liquid assets with capital gains in order to get ahead of the 2013 tax year uncertainty. Given the number of historically wobbly macro-economic climate I expect a volatile time in the coming months - not necessarily in real estate
da55id-
There may be some of that, but a lot of those assets were liquidated 2 years ago before the 2 year extension. Markets in general have been relatively flat for the last couple of years so I would think most people do not have substantial capital gains they did not have a couple years ago.
You are also correct these things tend not to impact real estate, because the transaction cost of selling is so high that taxes are not normally the driving force of when to sell. Also most sales are tax free in real estate
Nice insights HB
I saw alot of investor selling when the tax laws changed in 1986(?). The change limited current deductions and forced many to carry-forward all losses. We were jammed with closings and I was at work well past midnight on 12/31 of that year. So I imagine that some investors may decide to sell and recognize gains. I have given some thought to selling the longest-held properties. I have to look into AMT first.
HB is correct that regular owners usually are in a situation of having tax-free gains on a sale of their primary residence.
Still here VAI. SInce I am not an investor, I basically come here now and then to see if there is another "stupidity flare up" from our 2 most notorious bears that needs correcting.
However, one of them is now apparently convinced that the govt is monitoring his posts, so he refuses to post. The other bear, who I thought was on the verge of a true stupidity meltdown, has become much more reasoned in his comments & thoughts in the last few weeks.
That aside, I agree with your comments on Case Shiller. Subject to revision it looks good here in DC. Nationally too.
Also, I dont know if you noticed but the normally measured Calculated Risk has been very outspoken about housing having hit a nominal bottom. This is way out of character for him, and thus, deserves notice.
Last time I remember seeing him like this was Feb 2009 when the stock market was melting down and he posted some positive articles titled "searching for the sun". Of course, his bear audience went into fits of hysterical screeching. Undeterred, he went long and the rest is history.
If rather funny (sad?) on Craigs List Housing Forum. The bears have taken to spamming the forum 24/7 with thousands of "Housing is dead for a lifetime" posts. Desperation reigns.
I'm still here too. I enjoy reading the facts and the opinions posted here.
Anecdotal info:
I have 2 friends who recently purchased homes in NOVA. One is a first time buyer getting into a condo. The second is a couple upgrading from a condo to a SFH. Though from what I understand they're renting out their condo (for a profit) and not selling it.
My $0.02
Actually, make that 3. Within the last 2 months some other friends sold their duplex and moved into a SFH.
My $0.02
Does anybody know about the quality of homes built by YEONAS? Is there an online resource for evaluating quality of home builders in the NOVA area?
I remember Yeonas from way back in the day- 1980's? When was the house built? If older than 10yrs you probably know the quality of construction by inspecting it.
The house was built in the mid 1960's. It seems like a well built house, but we haven't gotten to the point of a formal inspection.
Jamie-
I agree with VA_I that for a house that old it is better just see what the inspector said. I would think for a 50 year old house a large part of the systems/structures in the house have been replaced. So the contractors work matters as much if not more than the original builders work
http://ochousingnews.com/news/house-prices-in-new-england-crashing
this is an interesting presentation.
The seasonal top is in. It will be a buyers market again by October.
Joe, I notice that you are in NYC. I have read that NYS has one of the largest backlogs of reo's, due to it being a judicial state as well as the AG settlement regarding robo-signing. I can't speak to your market.
Are you stating that NoVa will be a "buyer's market" in October? Absent a dramatic increase in inventory, I don't see how this is possible. Could you elaborate?
http://www.zerohedge.com/news/japan-machinery-orders-implode-global-economy-grinds-halt
fascinating, Japan looks to be in a full scale depression, but no doubt this will be bullish for 22207 after all, that means more interest rate cuts and more QE.
Pat-
This article came out today. Japan GDP historical GDP
Sure the heavy machine sector had 1 bad month, but for a full depression they would need numbers that bad for at least a year. Also please don't forget that the machine sector is a relatively small sector. Forecasts are still calling for fairly strong growth (2% of a shrinking population is good), so even they need to have much worse deterioration just to be in a recession. I am not sure why you always try and find 1 really bad number and use it to show the sky is falling
sorry for not separating, but those are two different links.
@ Va_Investor
This is a stagnant market. Inventories are low because many people are still underwater or have close to zero equity. They cant or refuse to list their property. I still feel that the market has not found equilibrium. With the economy so good in Northern Virginia and interest rates so low you would think prices would be even higher at the present seasonal peak. Fairfax county has 4% unemployment which is outstanding relative to the rest of the country. The jobs market would have to get even better for home prices to continue their incline.
The demand coming from first time and even "move up" home buyers just isn't there. Whats going to happen if interest rates have an uptick or there's a blip in the economy?
Joes S
I would direct you to YOY stats (NVAR or MRIS) for Northern Virginia. They are on the sidebar. Volume is up over 20%. This does not suggest a "stagnant" market. You are correct that many are "priced in", but others are entering the market or moving up. I've lost 4 tenants due to their decision to buy a home. I have other tenants that have lost homes to short sales - two of them have signed three year leases with the explicit intent to re-purchase when financing becomes available to them after the 3 yr waiting period. I know my sample is small but it's my opinion that many who "lost" their homes will re-enter the market.
I expect prices to follow supply and demand. Factors unknown at this time may effect supply and demand. I don't see any now.
pat, my friend, your glass remains half-empty. I hope this does not permeate your entire outlook on life.
The rent bubble is pushing some fringe renters back into the housing market. I'm sure you were careful screening your tenants history. The best qualified and traditionally "safe" renters typically do not rent for a long time due to their credit worthiness. As silly as it sounds I know landlords who prefer to rent to section 8ers because its guaranteed revenue.
I looked at the numbers you referenced. It does look bullish but somewhat consistent with the seasonal trends.
With so many people sitting on their mortgage any significant increase in prices should trigger more supply that will keep prices from going much higher. Supply and demand are only side of the equation for housing though, affordability is the other. With so much equity lost over the last 5 years the buying power of these home seekers is strictly limited to what the bank is willing to lend.
Actually Joe, I do prefer "lifer's" but some newer acquisitions command higher rents and attract young professionals. The trade-off is some great appreciation over the past few years. "Demand" necessarily includes affordability and I don't know how a May to May comparison if affected by "seasonality".
btw, I steer clear of section 8. Too many issues to discuss here.
Joe S-
I fully agree that when prices move up there will be some incremental people willing/able to sell, but most of these people will also be buying. The net impact should be pretty negligible, because the new supply from these people will be offset by the demand from these people.
Do you agree or do you think they will sell and go to renting/move out of the DC area.
I expect the population in this area to continue increasing at a decent pace, so we will need to see new housing coming on the absorb the additional population. Housing projects have been picking up, but are still well below normal levels
This is just my take though and I would be interested to see what others are thinking
People are moving out further west where alot of new construction is still underway. I believe this trend will continue. DC is slowly offloading some of its government functions to locations outside of the district. Take a look at a 28 year satellite photo comparison.
http://earthobservatory.nasa.gov/IOTD/view.php?id=78437
"Pat said...
but no doubt this will be bullish for 22207"
LOL. You just cant let it go can you. After a quiet month, I thought you had taken enough of a beat down on that topic such that you moved on to bigger and better things. I guess not. Bitterness still reigns...
Speaking of which, now that you have "opened the door" (have you learned that means yet in evidence class ;) and given that we are 1/2 way thru 2012, you want to come clean on your whole 2012 or its Immune call?
Joe-
I think there are some people who are moving out west, but it is nowhere near all of the population growth in the DC area. I would also argue that if anything the trend of moving out west is weaker than it was 5-10 year ago as people are realizing they would prefer convenience and short commutes over large houses.
Perhaps if by outwest you mean Tysons
If we've learned anything over the past 5-7yrs, it's that the old adage "location, location, location" is still very relevant.
Joe S,
How long have you been following the NOVA market?
From what I've seen, the move out west was due to many factors. Population increase + cheaper land + larger homes + Housing bubble mania = the move to build more homes in the western part of NOVA.
This blog has pretty thoroughly discussed and investigated the run up in prices and the subsequent hit to prices. More precisely, the excessive construction in the western areas really took a hit when the bottom fell out of the bubble.
While the move to the west will likely continue for the same reasons it started, I don't think it will fundamentally impact the older, more established areas.
But that's just my opinion.
My $0.02
down here in southern fairfax, there is a critical boundary that grows in radius as time passes. In 1981, the ring was just inside the beltway. If you were outside of that ring, prices were lower as that was the exurban "frontier". In 1991, the radius expanded to outside just outside the beltway but not quite to the (not yet existent) fairfax county parkway. In 1991, fairfax station was hit pretty hard and bargains could be had. By 2001, the ring extended to the parkway and home prices were much stronger inside that boundary. Now the southern radius extends to route 123. Inside that prices are stable. Outside, not so much. The critical new influences are the National Geospatial Defense Agency and expanding commercial real estate and jobs in the area along with the major new hospital replacing Walter Reed at Fort Belvoir. Soon The Museum of the United States Army will be built nearby, which expects .5 million visitors per year. These changes are giving this former relative backwater area the macro economic characteristics similar to Mclean VA with the high wage/high tech generating CIA at Langley which went a long way to birthing Tyson's Corner.
RealtyTrac's recent data on Foreclose Filings shows that metro D.C. is down 30% YOY. Bears on other forums are crowing about increases in some regions (this is good news?) but the fact is that there is a huge difference in Judicial vs. Non-Judicial states. Once again, the tsunami cries prevail. I find the whole tsunami thing a little tiresome as the years go by.
This is the first time I have seen this report from Redfin. There could be some slight bias because they only are showing $/sq.ft for metro areas so things like, did mode Arlington houses vs. PWC houses sell, could impact this. Either way it looks like there are some pretty big price improvements YoY and MoM for DC and most major markets.
http://www.washingtonpost.com/business/economy/new-home-construction-is-promising-sign/2012/07/11/gJQAIVhDfW_allComments.html?ctab=all_&
"Home building has also begun to pick up in the Washington area. Single-family construction in the metro area is 50 percent higher than the low point of 2009. But that is still less than half of what it was during normal times."
Im assuming everyone saw the June Sales report:
http://www.rbintel.com/
Basically, its "same old, same old" as we roll into year 4 of the recovery.
Outer areas continue to lurch upward in price, on very good MOI and very low inventory.
Inner "Immunozone" areas now continually set new all time high prices, the mild 06-09 price drops are fully erased and are now but a distant memory.
All of this done on higher sales, higher volume, lower inventory, with nary a "local peak" or "topping maneuver" in sight.
In sum, another respectable report for those interested in buying, and yet another kick in the nuts for the few holdout bears who think 09 was "nowhere near the bottom"...
it will be interesting if the impoundment(sequester) goes through.
Right now DoD is planning on this and issuing plans.
10% slam to DoD, and 5% to civilian agencies, plus a tax increase.
Certainly Bullish for 22207.
"Pat said...10% slam to DoD, and 5% to civilian agencies, plus a tax increase.
Certainly Bullish for 22207."
Obviously it is not bullish. And unlike your usual parade of horrors which is 99% bullshit, at least you focus on the one real item you and I agree could be an issue (Austerity and its impact on the DC region).
Main difference between us however, is the degree which it affects 22207. Ive stated a few times that a -3% to -7% drop is possible, starting whenever the austerity kicks in. In practical terms, the current 22207 house going for 700K, may rise to 720K next year, only to see it fall back to (worst case) 680K once all the austerity measures are in place.
You however, have gone on record with calling for -40% off 2006 peak prices meaning the house which hit 700K back in 06 (and is back at 700K today) is going to fall to a stunning $420K!!! Further, all this is supposed to start in 2012 or (per your words) 22207 is immune.
For most of the last 3 years, the pricing reports have given you a monthly kick in the nuts as we are still nowhere near -40% off, were never close to -40% off, and now is lurching higher, taking out 2006 peaks, and putting your 420K prices even further out of reach.
One would think you would have distanced yourself from that call...step away from the door where a boot comes out each month and kicks you in groin... and discuss more rational goals for pricing. Yet, 2012 is not over yet -- 6 more price reports to go. Thus, if you want to continue to cling to your call and endure more humiliating kicks in the gonads, thats fine.
Still, dont get sore that people are laughing at you and your terrible call. I mean, after all, seeing someone continue to get kicked in the nuts again and again and again is well, funny. Had this been on video, the "America's funniest videos" people would have given you first prize by now.
The Anon,
I hesitate to butt in between you and Pat, but I think Pat agrees with you. Otherwise, he would not have bought when he did and would have instead held out for that bargain 22207 property--though I am still not sure when he thinks that bottom will hit. I think he posts the other stuff here, just so that you will comfort him by telling him those 22207 prices will never arrive.
Or maybe I need to take Psych 101 over again.
Ace-
I have no idea what Pat is thinking, but he at least claimed he bought because it would give him instate tuition, so his house price could fall a ton and he was still better off.
If he is looking for comfort his house price will not fall I would hope he realizes that prices in a cheap part of DC have not been that correlated to good parts of Arlington.
By the way did you end up renovating/moving. I remember a few years ago you were looking and don't recall if you ever found a place you liked
Southern Fairfax continues to benefit from the Ft. Belvoir nexus. $180 million from 4 to 6 lane road widening on route 1 between Telegraph rd and Mt. Vernon pkw. The whole road system around here is being modernized and upgraded at a rapid pace. Looks like 3 years to the general dawning recognition that this is a new Tysons Corner a borning
HB, it was just a hunch. I would think the Virginia law schools would also be a good deal for in-state students, so Pat could have stayed where he was if he desired.
Thanks for asking. We've pretty much decided to stay put and renovate because the neighborhood and neighbors are great. Over time I have become more and more aware of how lucky it is to find yourself in that situation, with some stability. And, after much looking, the only house I really, really liked and was within a reasonable price range for us was in a much worse (for us) location (worse commute and on a busy street) and way too big.
So, the contractors finished one boring (i.e., wouldn't add value to buyers) but necessary job last winter and we have a second on-going. We're contemplating a big addition/reno but hesitant just because of the cost and stress over a long time. While some of it is a luxury, some of it would subsume a lot of necessary stuff that would have to be done in the next few years anyway, so we're thinking better to bite the bullet while the interest rates are low and contractors are looking for work.
How do you like homeownership?
da55id,
I hope you are right about that area improving. Frankly, I don't see how any comparison to Tysons can be made. I go down Route 1 now and then - when there is an accident on 95 and I bail-out (with everyone else and their cousin). It's not a pretty sight. Do you have data on the new jobs, etc., that will come? During the hayday in 2006-2007 I was stupified at the TH's, etc. being built in Triagle/Dumphries. The market in Stafford and South is still pretty miserable. The "flipper's" are down there because it's the only cheap stuff left. I follow some of those markets.
Ace-
That's good that the first reno went well and I agree now may be a decent time to do an additional reno if you are planning to do it in the next few years anyways.
Home ownership is going pretty well, I really like the house although we have definitely spent way more money than I would have liked to upgrading the house after we moved in. It seems like every month or two we end up spending a couple of grand upgrading furniture, adding fans/lighting, or doing something else.
VA-
I agree there is no way that southern Fairfax will be compared to Tysons in the next few years (unless they are saying it looks like Tysons did in the 1980s). Tysons corner is the 12th biggest jobs location in the nation and is this is expected to double with the current construction plans.
I couldn't find many reliable numbers for fort. belvoir, but it looked like it currently has ~20K military jobs and this is expected to double to ~40K. Either way this is a fraction of the size of Tysons
HB,
Thanks--good to know you agree about the timing.
It's amazing how those home maintenance/upgrades costs add up, isn't it? That's why I am like a broken record (ooh, that dates me) to prospective first-timers who add up the PITI and ask if they can afford that 50s split that they like. But I am glad you like the house and it's nice you can put your own style into it.
Hi - I agree that s. ffx is NOT Tysons. I'm saying that it is developing the early characteristics that LEAD to Tysons growing like topsy from 1980s. I agree that traffic is abysmal on Rt. 1, but that's the point of my earlier post abt widening rt 1. A ton of money is coming into the area to improve infrastructure on the basis of new high GS grade jobs. I know this will take years, but that's how it always works. Also, I definitely do not include the Stafford or Woodbridge areas in this thesis. Anything south of the Occoquan has its own distinct dynamics. Have you seen the NGA bldg and the new surrounding office bldgs?
Thought this might be food for thought for this group - RBI just released their Mid-Year Distressed Property Report. Tons of new data - slide 12 sheds just how not-short the short sale process is.
http://portal.sliderocket.com/BQICD/RBI-Mid-Year-Distressed-Properties-Report
HB
yeah, I got into law school at UDC, it's not a great school but it's ABA accredited, so, why not, and the in state tuition is saving me $7K/year
so between the savings on rent and the tuition savings, my place can fall 30% and i'm still out okay.
so at that point, it's sort of a zero pain decision.
Now the DC govt is nowhere the quality of the high functioning socialism of Arlington, but, the water runs, they pick up the trash and what can I say, the Buses run.
Now it seems like half the city council is in jail, but, it may make some opportunity for new people.
The cat likes the stairs, and certainly enjoys the occasional drug search on the street in front of the house. He tells the police to bring him all illegal cat food and he'll make sure it's safely stored.
The trolley is still on hold, but,
i'm done with my first year of school and we are looking at some big ecological improvements to the house.
So now that home prices are up nationally YoY home prices are the people who argued Arlington isn't special going to change their argument.
Before the argument is everywhere is going down except Arlington, so Arlington will also fall. Now that the nation as a whole is going up will they claim Arlington will also go up or is the argument now that Arlington is just too expensive and needs to fall even though the rest of the country is going up?
federal payrolls hold all trumps for this SMSA. All one needs to do is see the downdraft caused outside the beltway by the Clinton RIFs in the early 90s. This allowed me to buy a new McMansion in ffx station in 91 for $300k off the retail price in 1989. Sold it in 2003 when it regained its original retail price so I could build my own home, thus missing the crazy prices of 2005 on both sides of that trade.
Federal "payrolls", if you mean federal employees, are a much smaller proportion of the metro area workforce than many people believe.
Now, if you expand this to include federal contractors (especially for defense), lawyers, lobbyists, etc., then the proportion is MUCH larger.
"HB said...
So now that home prices are up nationally YoY home prices are the people who argued Arlington isn't special going to change their argument."
Probably... at least for the permabears. Permabears accept arguments, (and the corresponding data, charts, etc.) only when they conform to their agenda of falling prices.
However, as soon as the data, charts, etc turns against them, they do not accept the rational conclusion that prices must be rising. No. Instead, they reject the arguments they once held dear, and now embrace anything and everything, no matter how ludicrous or absurd, so long as it supports their view of declining prices being "just around the corner".
Its interesting. I never knew of permabears until I came across housing blogs. I always assumed people would have the intellectual honesty to conform their views to the changing reality around them, even when it does not fit with what they would like to see.
I was wrong. People can be much more stupid than I ever thought was possible.
Dear Ace, yes I include federal contractors. They are the first to go. By the time you get to reductions in force, the contractors have already left the building.
Hey, Jewel (and anyone else interested),
The small, reno'd Wash. Blvd. house we've made fun of before has had another price drop (to $1M). But it still is nowhere close to where it should be priced.
Wash. Blvd.
DC case-shiller (for MAY) up 2.4% YOY.
186.71 CS May, Washington
2.76% YOY increase (not 2.4%)
The prices are also up almost the same amount MoM as YoY. All three tiers of homes were up ~1.5-3% with the less expensive houses up slightly more. This is pretty standard for less expensive homes to go up quicker as prices rise and fall faster when prices are going down.
Also as a reminder this is for March-May and other indexes showed that housing prices continued to go up in June (and are off to a good start in July)
Yep. Corelogic, Fiserve, RBintel. There is much data far more timely than CS. I was looking at unemployment data the other day. FX CTY Economic Indicators is a really good report. FX has the second lowest rate at 3.7(IIRC) with Arlington the lowest Statewide at 3.1%. I'd like to see some updated inventory numbers. Last I saw, we are under 3 months. The Report also tracks trustee notices/reo's.
Who here tracks the adjustments made to previous months home prices?
I heard on WTOP the other day that the most recent report was not only strong, but the previous 2 months numbers were also adjusted up.
This is a change I believe in what we had been seeing. Namely, that previous months were revised down making the current month's drop less drastic. This would seem to be a positive change for home prices if accurate.
Thank you,
My $0.02
http://www.calculatedriskblog.com/2012/07/house-price-comments-real-house-prices.html
nationally the bubble seems pretty much exhausted in real terms. now how much locked up "Shadow Inventory" remains, hard to say
Phx is actually in an upturn, of course after sinking 50%, it's not a huge surprise to see a rebound, and as more boomers retire, PHX becomes more attractive.
Now how many boomers can retire, what with the median boomer only having 30K in their 401K, i'm not so sure.
the ones who do have money though may well be headed down to PHX.
Atlanta seems to be in a real free fall, down 14%, apparently they are either really late to the party or they are a canary for the next wave.
rest of the country is kind of climbing out,
although, with Europe headed into recession and Japan in Recession and China, slowing hard, it's not like the US is much of an engine of growth.
Plus side one of my classmates from night school is trying to buy a house 4 blocks from mine. Nice clean flip.
Pat, you've been asked before to provide a cite to support your claim about boomer retirement savings, but I don't recall seeing one. That 30k is way off.
Hi Va_Investor, Here's a current inventory for No. Va. It shows that Fairfax County (for instance) is at the same level Today=2578 as June 30, 2005=2577. An interesting juxtaposition.
http://www.virginiamls.com/charts/index.htm
Thanks Da55id. I wonder why it doesn't stay updated on Harriet's side-bar.
pat, you finally agree that the air is gone from housing...then go on to say boomers can't retire, and Japan, and China, and Europe,...what's your point? Continued doom and gloom? That is your life's outlook. The diasater may change but your outlook won't.
Anyone want to comment on the WAPO business article about home prices being up in all major cities. The article on DC was astonishing. Some agents/industry people said that we are in a class by ourselves.
I didn't see the article. Can you provide the link? thanks
No link. See "DC Area Housing Market Recovers" 7/26/12 Washington Post/Bloomberg.
Ace,
Glad to see the house on Wash Blvd is down to a 6-digit price, finally :-)
http://www.washingtonpost.com/local/manassas-park-burdened-by-debt-from-housing-bust/2012/08/03/4ab3e33a-d102-11e1-adf2-d56eb210cdcd_story.html
don't worry, Manassas Park will be fine, it's part of the perfection sphere.
Ace
http://www.nytimes.com/2012/07/22/opinion/sunday/our-ridiculous-approach-to-retirement.html?_r=1&pagewanted=print
"I WORK on retirement policy, so friends often want to talk about their own retirement plans and prospects. While I am happy to have these conversations, my friends usually walk away feeling worse — for good reason.
Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day."
Cheryl
Lets see what happens in the public sector.
I had lunch with a very well conneted lobbyist last week, he thinks the sequester is going to happen, that the congress won't do anything and it will
force some pretty hairy cuts.
Jewel,
I predict will not sell until it reaches the 800s, and without knowing the owner's situation, I don't know if s/he will take it off the market before then.
Pat,
Thanks for the link. Although I agree with that author and many others that people of all ages aren't saving enough for retirement, I think her numbers are inaccurately low (and it's interesting that the article doesn't allow comments for anyone to point this out).
The article cited a source that is not refereed. The source said that the method over-sampled lower income households. It also used 2010 data, which probably reported 2009 balances, which we know were at a low point. I can't tell from the short description, but it does not appear to include ALL the accounts a household owns, nor does it include the value of defined benefits plans or Soc. Sec. For many people making the money in the ranges in that data base, Soc. Sec. will replace a reasonable part of their income (average SS benefits for two income household who worked all of their lives is about $30-35K per year), and a higher proportion of people nearing retirement than younger than that have defined benefit pensions that in many cases pay them $20K or more per year.
Here is another article that cites two sources reports 401k balances (also excluding DBs and SS) for people nearing retirement to be closer to $150K. It's still not a massive amount, but much better than $30K, and the story is from Feb. 2011 and based on data that are a bit old also, so the accounts are probably looking better today.
WSJ
I should have added that the #s that the WSJ cited are based on average 401k accounts--there are a lot of people (mostly lower income) who don't own accounts. So this approach may overstate how well off the average person nearing retirement is.
What is really needed is a study that takes into account all sources of retirement income for each household.
pat, I don't find the situation in Manassass Park to be all that surprising. Other local jurisdictions also wildly increased budgets when they seemed flush in the middle of the last decade. I recall commenting on the irresponsible spending of many jurisdictions (Fairfax included) They somehow fell right in to the foolish spending of the heloc tapping homeowners. Nothing put aside for a rainy day? I know some realtors that did the same.
I have been in this area for 30yrs and have never heard many good things about the Manassass area. Have you been out there?
Here is the link to VAI's story:
http://www.washingtonpost.com/business/economy/dc-area-housing-market-recovers/2012/07/26/gJQAqFLQCX_story.html
Basically, the immunozone is back at peak prices, with Immundria leading the way...
This pretty much coincides with what I see here in my immunozone hood. Round here, no one really talks about the "downturn". That was something that happened "way out", but didnt happen here because "its different here". Funny thing, they are right, it really is different here.
Every so often, I meet someone who I tune into this blog and its abject pessimism from certain bears. Now that it is all over, they look back at all the bear predictions, all the bloviating and hysterical screaming and just laugh and laugh and laugh.
Thanks for the link! As a govt employee, I suspect that sometime in 2013 there will be a serious program to reduce headcount across agencies similar in scope to the Clinton era RIFs. If (IF) this happens, it will obviously have consequences for pricing - especially if Europe and US fiscal instability worsens. There are no facts in the future, but it would be foolhardy to ignore clouds on horizons just because some people's bearish analysis was wrong.
We built a house in 2004-5 in order to avoid the madness that was obvious then, and thus avoided about 250k of silly new house overcharging. At that time, our bank literally tried to force us to borrow money - I kid you not. Two years later, our bank summarily pulled a 125k heloc line. These folks are not our friends. It remains a fragile world out there. Tiptoeing through the minefields is loads-o-fun :-)
off topic info follows...
Happily, I just leased a Chevy Volt and am pleased to report that so far I've paid Zero dollars for gas. I got one of the 2012 models that were on massive sale, and will literally make money on the deal on an all costs in net basis.
and, it's a fun car - yeah, this isn't real estate related - my bad.
"da55id said...There are no facts in the future, but it would be foolhardy to ignore clouds on horizons just because some people's bearish analysis was wrong."
Absolutely, and regarding this point (austerity & corresponding job loss), you and I agree 100%. In fact, if you look back at the last 2-2.5 years of my posts, I would say thats been my number one source of potential concern.
By contrast to this singular, focused, and (per the downturn of 1990-1996) proven concern for the DC area, over the years, our bears presented the following parade of horrors, each of which they were certain would bring DC to its knees.
The foreclosure moratorium
The shadow inventory
Sellers holding out
The option arm TSUUUUUNAMI
The buyer's bribe
Its moving in
It just hasnt happened yet
Robo Signing scandal
Mr. Mortgage's "the quickening"
foreclosure rates (even when declining)
vacancy rates (even when declining)
% of people underwater (even when declining)
Rising interest rates
Baby Boomers
Declining Volume (Local Peak)
Dubai World
The stock market
The recession
Fannie & Freddie
Increased dollar amt for jumbo rates
The Elliott Wave
Kondratieff Winter
Deflation
USA = Greece
USA = Japan
Seattle (DC signal market)
There were many many many more. However, these were the ones I could rattle off the top of my head. These are the ones that I look back upon and laugh and laugh and laugh...
yeppers - it's been the bear's equivalent of a trip through Disney's Haunted House. It's only a problem if they fire the ride operator while you're still inside.
Anon,
You forgot the big one - total societal meltdown. Extreme civil unrest, rioting, marauding mobs, no food, gas, etc. Those who have prepared (MRE's, guns, ammo, etc.) will survive. I'm not quite sure what event or chain of events will produce this, but it will happen within the next couple of years. You've been warned.
Anon,
You forgot the actual tsunami that hit Japan and the corresponding nuclear fallout.
My $0.02
Va_Investor and others may be interested in this:
Investors need patience...
http://www.washingtonpost.com/business/economy/a-renters-respite-in-washington-area-thousands-of-new-units-to-open-soon/2012/08/08/7d643afa-da9e-11e1-b829-cab78633af7c_story_1.html
"“The X and Y generations have discovered urban living,” Leisch said. “They don’t want to own. They want to rent — regardless of income.”"
certainly if it's cheaper to rent then own, then, Gen Y is being very sensible
http://www.usatoday.com/money/perfi/retirement/story/2011-12-02/retirement-not-saving-enough/51642848/1
http://www.ebri.org/pdf/surveys/rcs/2012/fs-03-rcs-12-fs3-saving.pdf
ace don't worry, those people in the bottom 90%, won't ever affect 22207.
Pat-
You do realize that the retirement numbers you showed said that 93% of families that make over 75K save for retirement. Seeing that the median family income is ~115K it is safe to assume that the vast majority of people in Arlington are saving for retirement.
Sure there is a very minor impact if housing prices across the country fall it may have a tiny impact on housing prices here, but as you saw in the last recession it was not a big impact.
Also seeing that housing inventory across the country is falling rapidly the supply demand fundamentals are finally starting to look good.
Agree, HB. It appears that the EBRI study excluded rental real estate owned and some other investments as well.
And, everyone's savings and investments would be in better shape, had the stock market not fared so poorly 2000-2009. I'm sure some would-be investors decided long ago to get out or not to save because of concerns over how poorly stocks rewarded risk-taking. Bond and CD investors also continue to pay the price for the financial crash and low interest rate policies to help the economy recover. Makes it really hard to encourage citizens to save.
I'd also add (back on the point about local retirement preparedness) there are still a ton of people in their 50s and older who are retired military in the area, probably many in pat's beloved 22207. Those people have excellent pensions and health care, and could retire early and build income and savings at a second career. Many did. They are much better situated than the average American even in the same age group.
New MRIS numbers are out. On the surface, its more of the same: prices slowly moving up...no "local peak" or any similar nonsense in sight...the 4 years of kicks to the nuts of our resident bears continues unabated...
That said, I was shocked at how tight months of inventory (MOI) has gotten. For most of the recovery, we have seen MOI around 3-4 months. However, several areas are now seeing supertight 2, 1.5, even 1 MOI.
These are conditions we havent seen since the 00-05 run-up, so its natural to assume we could see a real jump in prices next year if this trend continues.
I am assuming too its brutal for those on the ground trying to buy a house as the sellers are firmly in command of the market. Is that the case? Is anyone out there looking, and if so, what is it like/how bad is it???
http://www.businessweek.com/articles/2012-08-09/the-rental-generation-sees-no-point-in-buying
The rental generation sees no point in buying.
Anon, I can verify that inventory is low, there are multiple offers on the good properties, and sellers are thinking they can call the shots. At least that is my experience as I sit here waiting for my inspection contingency request to be signed off by the seller.
In many areas of the country for various reasons, banks have kept distressed properties off the market. Does anyone know the scale of this phenomenon specific to the fairfax, arlington, alexandria areas? My sense is that due to Virginia's non-judicial approach to foreclosure proceedings has had the effect of rapidly clearing such "shadow inventory"?
da55id,
while the Virginia Non-Judicial foreclosure process allows the banks to foreclose rapidly, by no means are they moving the property to market quickly.
They've been sitting on things.
Now the banks have been helped by the fed far more then I thought was ever possible, but, the damage in the system is building up.
http://www.washingtonpost.com/realestate/short-sales-are-complicated-but-can-help-homeowners-who-owe-more-than-property-is-worth/2012/08/16/f8931e26-dcf1-11e1-a894-af35ab98c616_story.html?hpid=z4
"In the Washington area, with Zillow reporting that nearly one-third of properties are underwater, "
pat,
Do you have data to support your Virginia shadow inventory assertion? Fairfax County Economic Indicators is a monthly report put out by FX Cty. In tracks reo's in the County. The latest report (for June) stated that reo's have been dropping steadily and are at the lowest point since this data started being collected in 2008. They use the tax records to count the properties owned by banks. I believe that the current number is fewer than 100 county-wide. Is there some stealth inventory that you are aware of?
Actually, the number of reo's was 519, a drop of over 20% YOY.
From the same article that Pat linked is this graphic:
DC, FFX City, Arl., Alex. lowest in short sales
The Zillow figure you cited is largely a function of SSs in PG County; Manassas; Charles & Fred. Cos., MD; and places you might not consider "NoVA"--Fredericksburg and Spotsylvania Co.
Thanks folks for the info. It does seem as though NoVa proper is clearing hidden inventory at a faster pace than other adjascent regions. Cool!
http://realestate.aol.com/blog/2012/07/13/shadow-reo-as-much-as-90-percent-of-foreclosed-properties-are-h/
"As many as 90 percent of REOs are withheld from sale, according to estimates recently provided to AOL Real Estate by two analytics firms. It's a testament to lenders' fears that flooding the market with foreclosed homes could wreak havoc on their balance sheets and present a danger to the housing market as a whole.
Online foreclosure marketplace RealtyTrac recently found that just 15 percent of REOs in the Washington, D.C., area were for sale, a statistic that is representative of nationwide numbers, the company said.
"
Given that prices are good inside the beltway, in most neighborhoods, and also in many outside (e.g., Reston, Vienna), there is no reason for banks to withhold REOs from the market in NoVA. So any withholding is likely due to (a) banks' own internal reasons, e.g., not having enough trained people to get the process done, or (b) the withheld REOs' being in the farther out regions and in MD, where prices haven't recovered as well. These are likely highly correlated with the # of short sales (as per the graphic posted earlier).
Pat, does the article define "the Washington DC area"? I have noted that some of the stats related to the DC area extend to West Virginia which is nothing like close in DC, or includes very dissimilar markets such as PG Cty vs Arlington which are worlds apart. Just askin'
da55id said...
Pat, does the article define "the Washington DC area"?
da55id - As a relative newcomer, glad to see you are taking what pat posts with a grain of salt.
Just so you know, Pat has a history of making overly pessimistic predictions & assertions. Also, he has gone on record as admitting that he doesnt care if those predictions & assertions are anywhere near accurate.
Thus, its best to take everything he says with an enormous grain of salt - or perhaps just ignore him altogether.
In either event, good luck with your househunting!
Incidentally Pat back in early March when you told us you "dont care" about the accuracy of your predictions, you also said:
"I view AAPL as a short"
I happened to check and it looks like AAPL is up 21.5% since then...OUCH!!!
Oh well -- good thing you "dont care" about being accurate when you make your calls...
pat,
Please read Ribintel's 2012 mid-year distressed inventory report. Just click on the MRIS link in the top right column.
Did you look at the Fairfax County Economic Indicator's report showing the number of bank owned properties in Fairfax County? 500? I put one under contract today. The auction date when the bank took it back was 6/19 (2012, in case you were wondering). There were 8 offers that came in after mine was accepted.
You are either very lazy in your research or intentionally deceptive. Which is it? You drift by ocassionally and drop an atom bomb ("boomer's can't retire", "renter's see no reason to buy", etc) and then float away giving no analysis whatsoever.
I read the article about renter's and all the related articles in that series. You totally distorted the article and it's conclusions. You have a negative outlook but that does not give you license for intellectual dishonesty.
Hey, check out Money Magazine's Top Ten Best Places to Live!
#7 RESTON, VA
Cheryl
I include my URLs draw your own conclusions.
as for apple, yes, it's up.
http://www.zerohedge.com/contributed/2012-08-23/couple-apple-facts-mainstream-media-most-analysts-fail-harp
" Apple is a company with a
heretofore unheard of cult following. If its Apple, it can do no wrong,
and anyone who disagrees is wrong. Well for investors, that is a
dangerous perspective. Apple's share price has been on a tear, but its
tearing in an equity market that is devoid of true fundamental market
pricing. This, alone, should be enough to give the prudent man (or
woman) pause. If that's not enough, there's always the commons sense
perspective.
Apple is minting money, that's for sure, but it's minting money based
off of a single product. That product has been been totally eclipsed in
functionality by its competitors. Those competitors also happen to be
Apple's primary vendors and suppliers for that very same product that
Apple relies on for ~70% of its profits!!! If that's not a recipe for
disappointment, I don't know what it is? This was explained fully in my
post The Mobile Computing Wars Are Progressing Exactly As Anticipated - Google Is Killin' Them!!!
In 2010, I said it will probably take up to 8 quarters for the Apple competition to cause earnings
misses. I believe that I was the only one to say so, and Apple has
missed expectations twice in less than a year. Reporters and armchair
analysts (this includes much of the sell side) have blindly swallowed
Apple's mesmerizing marketing BS in chanting with the chorus "these
misses stem from the unwashed masses waiting with bated breath
anticipation for the next, greatest (and already obsolesced by the
Android competition) iPhone model to be released). I find this bullshit
to be virtually intolerable when reiterated by would be professionals."
I like Apple, I run an Apple Desktop, I work off a Apple Macbook Pro, but, what's going to be in the iPhone 5 that's not killer to the 4S? The iPad3 is very nice, but did it obsolete my iPad 1?
i figure there is at least 2 more good years life in the iPad, and frankly I don't understand the people who wait in line for 72 hours for an iPhone 3g?
But tell you what Anon, you go buy Apple Calls, if you dislike my prediction.
BTW, isn't anyone wondering if Prices are up, why is supply falling?
shouldn't increased pricing increase supply?
pat,
You are holding fast to your assertion that 85-90% of local reo's are not on the market? And that this applies to NoVa? This blog is about NoVa, as I'm sure you are aware.
Now you are throwing out the "ominous" lack of supply card. OMG, something awful must be brewing under the surface! Econ 101; if demand exceeds supply...
Why is supply low? Have you given this any thought? You didn't tell us what YOU think...just lobbed another grenade and ran off.
I have given this some thought (as I'm sure you have as well). I've read articles and opinions about inventory, as I'm sure you have. I have common sense reasoning abilities, as I'm sure you have.
Reasons for low supply:
Extremely low number of new-build in past 5+ yrs.
Many prospective seller's are "priced-in".
People see the market improving and will wait for further price improvement before selling.
People seeing market trending up and decide to buy.
Investors have bought up everything on the low end and will continue to do so until the "numbers" no longer work.
And the tried and true "who cares about my house value" majority. As long as people can afford their payment (and this is the segment that largely remains) why would an increase off the lows make them sell? I will acknowledge the "wealth effect" as it pertains to spending and the economy - but how many homeowner's day-trade their personal residence?
Would you please explain to us why YOU think inventory is low? Will you also explain why the shadow inventory data for Fairfax and the rest of NoVa is unreliable? Is Fairfax County under-reporting bank owned property? It's very easy to verify through the tax assessor's office the number of properties that are bank-owned.
You are even welcome to cherry-pick a few NoVa properties to show us how long banks are holding on to them.
btw - nice deflection with the Apple non-sense. This is a housing blog, specific to NoVa.
Pat,
Lots of people (like me) still have older iPhones and will replace them when the new 5 comes out. Not everyone buys every new model and Apple's model doesn't rely on that.
Homeowners are not like producers of products or services and will not respond in the same ways to Econ 101 price-increases-supply arguments. If the price of a product goes up, the argument is that more producers will start up businesses in order to enter the market to compete, if there aren't barriers. Homeowners, in contrast, need some other reason to move in order to respond to price increases, because they have to live somewhere, and they have to be able to afford to sell (e.g., not underwater) and/or buy. The other potential "supplier", builders, are constrained. In most parts of NoVA that aren't far away from job centers, there is little land available for builders, who DON'T need another reason, to add more supply.
sorry - my first pgh should have read:
"Lots of people (like me) still have older iPhones (3G, not the most current model) and will replace them when the new 5 comes out. Same with Macs, iPads and other products. Not everyone buys every new model, and Apple's business model doesn't rely on customers replacing 1 year old products with brand new ones."
PS I personally wish I had bought more Apple stock a year ago (actually, wish I had bought some in the 90s--I could retire!). I bought a little when I believed people would overreact to Jobs' passing, and have some mutual funds that have some, but didn't have the courage to buy more. Even at today's much higher price, the P/E ratio is decent. It's always going to be a volatile stock, esp. in today's uncertain world environment.
Sorry if this is O/T.
CS came in today and the numbers were very strong. DC was us ~2.1% and is now at the highest level in almost 4 years. Part of this is seasonal, but I think the housing market is gaining strength. All tiers were up but the strongest was the mid-tier was up 2.9%
Cheryl,
I mentioned Apple because Anon brought up my old post where I said Apple was a short. So I cied why I think that way.
Now if Anon thinks it's relevant, i'll keep metioning why I think that. Apple is north of 600 and flirting iwth $700, but it pays a $10 dividend, and is dependent on one product for 70% of all revenue.
Despite the samsung lawsuit, Android is tearing up that market. Google just rolled out their tablet, and,
if i was going to bet, that's where the future is.
Cheryl said
"People see the market improving and will wait for further price improvement before selling.
People seeing market trending up and decide to buy."
I believe this is called Justinians conundrum.
Rising prices create rising demand, otherwise called Momentum investing.
People buy because prices are rising not because value is there.
"(Apple) is dependent on one product for 70% of all revenue."
Not according to this site:
Pie chart
Winning the recent lawsuit will also likely increase short term profitability and longer term creativity, since patents will better protect new ideas than they did pre-lawsuit.
Ace-
I think Pat meant 70% of their profit is from the iphone. Although I think what pat is missing is how quickly the smart phone market is expected to grow worldwide. So in addition to assuming that aapl, is even if aapl loses a little share to android the market is growing fast enough earning could still increase.
Also while this is going on blackberry is getting crushed so there is plenty of share both apple and google can pick up at the expense of blackberry and with the good app a lot of corporations just started allowing people to get iphones as their work phone.
I don't personally own any apple, but think there are significant risks for both longs and shorts, its not a clear one sided argument.
Va_Investor,
I am looking at an investment property for my first potential investment and wanted your opinion.
The property is a duplex in Harrisburg, PA.
It is cash flow positive, and already has tenants. It is in good condition now, but it was built in 1920, and I am worried that in a few years, a property that old will require major repairs that could wipe out my investment.
Have you invested in properties that old, and if so, can you share your experience with us? Thanks.
TedK,
Do you live in Harrisburg? It seems like a pretty cool place. I used to drive thru that area regularly, coming north on 15 and travelling along the river. Anyway, my last home was built in 1920. It was a great house; brick with high ceilings and plaster walls, etc.
You say that the place you are looking at is in good condition. If that's the case I wouldn't have too many concerns. We had to replace the water line to the street, replace all the horizontal water lines in the basement (terrible water pressure due to corrosion). The electrical had already been updated to circuit breakers - I had a duplex that was built in 1940 where I had to upgrade out of the fuse boxes. We had about 10K of termite damage (found on the inspection) but I doubt termites are a problem that far north(?).
Really, as long as the place is structurally sound and has no foundation issues, I wouldn't be too concerned. We also had asbestos on the boiler piping. Lead based paint shouldn't be an issue if it's not pealing, but you should check it out.
We had radiators and installed CAC. I love radiators.
Just get a good inspection done. My house was built far better than they are these days. The home inspector marvelled at the quality.
In sum; check the stuff you can't see - water and sewer line (clay back in the day), foundation, electrical, asbestos and lead paint. I can't think of much else right now.
VA_I,
Thanks for your advice. I will get everything checked out during the inspection. I live here in Fairfax, but have friends in Harrisburg. I found a property there with a high rent to value ratio, much higher than what I can find here. However, appreciation is slower there.
TedK,
I would advise strongly against buying your first rental so far away. I don't know what neighborhood you are considering or how well you know the area but I would never take cash-flow over location/appreciation/proximity to home/thorough knowledge of the market.
Right now you can buy 40K rowhouses in baltimore that rent for $1,300 (section 8). I wouldn't touch them with a ten foot pole. The places that cash-flow like that are generally in "war zones". I don't buy anything that I wouldn't live in myself. I've been buying some cheap stuff over the past few yrs but nothing even remotely "bad".
It's not as easy to make the numbers work now as opposed to 3 yrs ago, but it's doable. 80% of my places are within 10 minutes of my house. Even stuff that I bought for 110-160K is nice. There are still deals to be had.
Our region has about the best economy in the country. Pick an area, know it cold - comps, rents, appreciation potential. etc. I'd go for newer (mid-90's) TH's in areas that got creamed. I've bought 4 properties in one development, 3 in another and 2 in another. Same with my flips.
You need to be able to pull the trigger immediately on a good deal. The inventory is crazy low and 5-10 offers is not uncommon on the type of properties that I buy.
Then you have the tenant screening and management.
I would suggest that you go on bigger pockets.com and sign up. It's a community of investors, many new and many, many very experienced. You'll learn a ton.
I'd be happy to talk with you about different areas in the region and what I'm doing and where I still see value. Ask the Bigger Pockets community if you should start with an out of town property. The out of town property that I have is where my vacation homes are. In other words, I know the areas very well and I'm down there alot.
Just my 2 cents.
Interesting timing on this...
http://globaleconomicanalysis.blogspot.com/2012/09/harrisburg-to-run-out-of-money-in.html
Congratulations to Harrisburg, the capital of Pennsylvania, for having the highest per capita debt of any city in the country.
The town's 50,000 citizens are on the hook for $1.5 billion according to the NPR article Inside America's Most Indebted City.
The city has delayed payments to light bulb venders and paper sellers. Restaurants have hired their own security. A local strip club paid to keep the street light on. The city is projected to run out of money entirely in October.
A judge has recently ordered a 1% income tax hike on the people still left in Harrisburg. But the city council has promised to fight it.
$1.5 Billion Does Not Include Schools, Pensions, Unfunded Liabilities
The Patriot News notes Harrisburg's eye-popping debt total is just one piece of city's bleak financial puzzle
It’s almost impossible to say exactly how much money the elected and appointed officials of Harrisburg have borrowed.
Read more at http://globaleconomicanalysis.blogspot.com/2012/09/harrisburg-to-run-out-of-money-in.html#KVtQ3SecBkxkODaD.99
Thanks da55id. I know about Harrisburg's problems.
per BLS, NoVa unemployment rate contines it's downward trend.
...cue pat and the "fiscal cliff"
"Pat said...I mentioned Apple because Anon brought up my old post where I said Apple was a short. So I cied why I think that way."
I cited apple only as another indictment of how horrible your judgment is in terms where things are going and when. As it was with your -40% call for 22207, anyone who listens to you and relies on your judgment is likely to end up in tears. I guess this is what happens when you "dont care" if your calls are accurate or not.
Also, since I dont follow AAPL, I will not spout off about it one way or another since I very much "do care" about my reputation here as someone who generally makes reliable calls.
Speaking of which, yeah, HB I saw that big Case Shiller move. It certainly surprised me in its strength. Back when I made my 170-190 range call, I wondered when (after it expired) we would break out of that range on the upside or downside.
As it turns out, assuming no major revisions, CS190+ looks to be a lock for this summer. Yet another in a long line of monthly kicks in the nuts for our holdout bears who thought March 2009 was "nowhere near the bottom"...
Whatever happened to our friend "contrarian"? Did his subscription to the Elliot Wave Report expire? lol
Contrarian has "gone to ground" (no pun intended - eventhough he is a "prepper"). It's the permabear mantra - it is GOING to happen. The problem in adhearing to this thinking is that "it" may not happen for 100yrs or 200yrs and lives are lived in the meantime - or not lived, in the case of doomer's.
Well, it seems that MSM is onboard with the housing bottom/recovery. The die is cast folks. Clearly the bottom has come and gone. As predicted, housing shortages are on the horizon (witness rental demand and the dearth of sales inventory). We now enter another housing cycle which I expect will peak around 2020.
I usually follow the previous housing cycle patterns (if you don't think that housing is cyclical you should do some research) for a general idea of what will transpire. I thought that the last cycle was going to peak in 2003 and took action accordingly. The correction has, for the most part, put us back to those levels. We clearly had some over-corrections that have been remedied over the past 3 yrs.
As I predicted in 2007 and 2008, investor's have stepped in to put in a floor. This activity continues with lower-end properties in our region receiving multiple offers and the ensuing bidding wars. Areas that over-corrected are quickly returning to 2003+ pricing. As we all are aware, some areas are above prior peak pricing and are at all-time highs.
If we follow previous cycles, we should be in a period of price stagnation for a few years. I believe CS is projecting 4% yoy price increases for the next 5 yrs. It will be interesting to see how things play out. As I've said before, I am counting on some location specific events to push prices of my investment portfolio.
Got popcorn?
Pat – incidentally, I was looking into an old post to rip into contrarian (which you will see shortly) and came across this post...
“pat said...
Anon
I've got about a year before I have to eat crow, so, i've got a crow marinating, if neccessary :-)
I said a while back, and I"m sure
you have it bookmarked that 2012 was the make or break year. Either the icefloe breaks loose by then, or it never will. 9/9/2011”
http://novabubblefallout.blogspot.com/2011/09/northern-virginia-bits-bucket-962011_06.html
Happy anniversary to the last time you were being honest with us and yourself on this blog.
"Va_Investor said...
I've been schooled by a perma-bear/prepper. "things" won't unfold until mid-2013 due to a 7 wave vs a 5 wave (?????). Excuse me if I didn't use the correct terms. I'm not conversant in "Elliot" stuff."
VAI that’s hilarious. It amuses me that you have a 1 way channel of communication with our most famous doomer who still reads here but refuses to post. It also pleases me to know that he will see this:
Dear Contrarian – Its clear now, this blog is in its twilight. Harriet has not put up a post in over 3 months...Doomer prospects like Kevin, Vinny & spider have given up... Even our one holdout Pat has lost the will to bloviate. It pleases me however that one very old prediction CRT gave about you turned out to be very much correct:
CRT Said...As the years go by, if this isnt playing out like a deflationary grand whatever, the rest of us will slowly dissipate to the winds, purchasing homes and living our lives. Still im sure he (Contrarian) will still be here, angrily calling us all fools and saying it just hasnt happened - yet. 6/15/09 12:10 AM
As our time on this blog ends, I want to thank you for amusing me so over the years. I never knew anyone who could be so stunningly wrong, yet so cocksure and arrogant about it at the same time. You even gained a cult following here at my office as lurking co-workers would check in to laugh (not with, but) at you as all your predictions went belly up one by one. For that we will never forget you.
You know whats most amusing? At the end of the day, my position is not that different than Contrarian. I too recognize the economy is on an "unsustainable" path. Yet, unlike Contrarian who thinks it all goes WOOSH, crumbling down in a matter of years, I recognize (as was the case with the UK which "peaked" say in 1940) that it takes years, possibly multiple human lifetimes for an unsustainable trend to play out. Further, as the last 70 years in the UK has shown, deciding to "wait it out" in a nominal currency position will destroy you as inflation slowly works its magic.
So Contrarian, as the years grind on and this blog is long forgotten, there will be two numbers I will always associate with you, and never forget:
CPI = 200
DC Case Shiller = 165
The first number (CPI), hit back in 2005-2006 is when you decided the 70 year inflationary trend would stop and you went “all in” on your deflationary thesis assuming your horde of dollars would be worth more as CPI plunged to 180, 130, 70, etc in the years ahead. Not only was that call wrong, but here, 7 years later, CPI is now at 230 and rising - your cashe of 2005-2006 dollars worth less and less all the time.
The second number is the Case Shiller 2009 bottom of the DC real estate market. At the time, you passed on the bottom, continuing to rent as you assumed CS would continue fall to 140, 100, 60, to your ultimate prediction of 90% off (CS 25). Not only was that call wrong, but today Case Shiller is at 190 and rising.
In the last 7 years, Your horde of 05-06 dollars has gained you nothing, and you have spent roughly 150K in rent over that time. Further, given that (as CRT predicted) you forever continue to push forward the timeperiod of your deflationary implosion (i.e. “it just hasn’t happened yet”) - I will continue to occasionally check those two numbers over the decades ahead and contemplate how much worse your life will become.
I will think of you in 8 years as CPI continues to stay above 200 and CS home prices stay well above 165. By then, the house you purportedly bought around 1990 would have been paid in full. Yet you will then be in your 15th year of renting, spending (minimum) 370K in rent with no end in sight - continuing to think “it just hasn’t happened yet”.
I will think of you in 17 years as CPI 200 and CS 165 are but distant memories. You will continue to watch your horde of 05-06 dollars diminish, your life continuing to slip away, as you continue to rent, spending (minimum) 500K by then with no end in sight – all the while thinking “it just hasn’t happened yet”.
I will think of you 30 years from now as I will tell my grandchildren the true story of the now geriatric “Contrarian” who is in his 37th year of renting, with no end in sight. As he eclipses the 800K mark in rent paid, his horde of 2005-2006 dollars long depleted, he slips the cyanide capsule into his mouth thinking – “my god – it never did happen - 2009 really WAS the bottom – what have I done…”
So good bye contrarian and thank you - not only for amusing me over the years, but giving me a wonderful cautionary tale about the destructive power of wishful thinking.
In addition to bullying maybe driving people away,there is the simple fact that the housing bubble of 2003 -2005 has run its course, and perhaps people are moving along with their lives. For my part, I think there are tons of hazards out there, but if you worry about all of them, life becomes not worth living. So, I'm guessing that people's attention has shifted to other more immediate concerns.
If there is indeed a fiscal cliff that leads to significant RIFs in DC/VA/MD, then I bet this or a similar blog will once again begin to get alot of traffic. Round and round it goes - where she stops, nobody knows :-)
There has been a demand that I delete my recent posts. A claimed violation of confidentiality. Someone is using me to play some deviant game. I'll delete soon. This blog is no longer relevant.
FWIW,
I don't see what Anon is doing as bullying. It is agressive, sure, but it was targeted at folks who were consistently wrong and it's intent was to hold them accountable. Dissenting views from reasonable folks were not targeted in the same manner.
As always,
My $0.02...
FWIW,
I think Anon's comments were very fair. Some can't take the heat, yet refuse to leave the kitchen.
For those who seem to care,
I've been phenomenally busy with Law School at Night, Work during the Day, House repairs/improvements weekends.
When you buy a 80 year old place that has not had a single capital improvement, you find yourself, really juggling routine problems with systems problems.
CS is up locally, that's the data, however, it's all being driven by phenomenally low interest rates,
we also have an amazing bond bubble
yet the system as it stands is unsstainable, you can't have this kind of shitty draggy high unemployment, while the 1% eat up the capital base of 3 generations.
Anon, if you are so convinced you are right, why arent you buying rental houses in 22207?
Pat
Missed the deletion, but I am assuming it had to do with me acting like a petulant dickhead.
As the vast majority of you know, I have been generally civil here so long as the people I am speaking with (even the ones I disagree with) are truthful, accountable, etc. Glad to see that most of you agree with my assessment.
But WRT the deceptive, manipulative, (generally) permabears on this site, yes, guilty as charged. I have been a petulant dickhead in terms of my efforts to hold them accountable for their actions. And if (rather than accepting a modicum of accountability) it drives them from this site -- so be it.
Oh and speaking of deceptive...
"Pat said...Anon, if you are so convinced you are right, why arent you buying rental houses in 22207?"
As I have said, many many many times, I think 22207 is a terrible investment and I expect "0 increase for 3-5 more years, then underperforming inflation by 1% for the next 10 years"
http://novabubblefallout.blogspot.com/2012/02/northern-virginia-bits-bucket-312012.html
You KNOW this, and confirmed you understanded my viewpoint on 22207 when you said I "would be thrilled with zero losses for 3-5 years."
http://novabubblefallout.blogspot.com/2012/03/northern-virginias-february-housing.html
So why you continue to post this "why arent you investing in 22207" bullshit is deceptive and pathetic.
The real dispute is (A) my view
22207 is a terrible investment likely to stagnate, then underperform...vs (B) your prior view (which you refuse to back off of) that 22207 is 40% OVERVALUED and will come crumbling down by 2012.
Oh, and BTW pat, one of the reasons I give you so much grief about your deceptive bullshit is I hold you to a higher standard. The ramblings of a possibly insane guy like Contrarian are one thing, but you are apparently going to become an officer of the court in the next 2 years...
If you expect to get away with this behavior in your professional life -- think again. Judges arent stupid, and have very little tolerance for bullshit. If you make these deceptive type arguments in court, you will be subject to censure...repeatedly.
Also, just so you know, a few months ago, a buddy of mine (hiring partner for a "biglaw" firm) asked in passing if I knew any UDC grads and what I thought of them. I said "no", but I did say I interacted with one on this blog and pointed him to your posts.
Needless to say, he was horrified with the quality of your arguments, and it likely affected what he thought of UDC candidates going forward.
Say he had 15 openings and planned to interview up to 100 candidates. If only 80 people applied, and some of them were UDC 3Ls, then yes, they would get a fair shake.
However, given the economy, he typically would get 200-300 applicants, and he needed some way to pare that down to a manageable list of 100 interviewees. Thus in this case, im sure one of the first things he would do is throw all UDC resumes in the garbage.
So in some ways, your behavior here is already subtly affecting your chances of success going forward. Its your life Pat and you are free to continue to be deceptive here if you so choose. Still, you might want to stop some of the 2Ls and 3Ls you see in school, and apologize for putting them at a competitive disadvantage.
Anon
I don't obsessvely track every one of your posts, if you have that kind of time, it just speaks to the fact you are wildly bored at work.
I have real things to do,
Thanks for sharing!
Real Estate Search Seattle
http://franklymls.com/DC7813639
factor of 7 variation 180 DOM
Well thank you pat! That certainly clears things up(????).
btw - for some relevant current data see the top sidebar on NVAR data. The September report is out. YOY inventory is down and sales volume up. Prices appear relatively flat when taking the region as a whole. Individual zips show variations.
2.53 Months of inventory regionwide for NoVa. 75 days left in 2012.
VA-
I have been amazed at how quickly inventory is moving at MetroWest (near the Vienna Metro). I thought I was overpaying, but liked the place so figured that I was fine overpaying by ~20-30K for a house I wanted.
I was the first to move into the community ~11 months ago. Since then ~100 TH units have been sold and they have raised prices twice and one other time they made standard features upgrades. So basically they have raised prices 3 times in the last year and are still able to sell places very quickly. This does not look a market in free fall.
Congrats HB! You should have a nice buffer should we see some backtracking on pricing - which is doubtful.
Many indicators suggest a housing recovery has gained traction and all but the gloomiest of doomers recognize we are past the bottom. The latest Fairfax Economic Indicators Report shows a further drop in unemployment and reduction in reo's.
I believe that I read in the WSJ that only about 10% of the population believe home prices will continue to decline. Builder confidence is up considerably. As has been stated for years, consumer sentiment is self-fulfilling.
Jewel, are you still out there?
There are 3 homes all in a row on Carlin Springs that are having pretty extensive additions done. I thought you indicated you lived over near Arlington Forest. Anyhow, I think the builder has done a really great job with those homes.
I wish I could have something similar done but then, having the smallest home in the most expensive neighborhood you can afford seems to be a time tested rule of thumb for success.
My $0.02.
mytwocents,
Yep, I'm still out here.
Are the homes on the MLS?
Yes, I live in the Arlington Forest area, but I generally don't drive down that part of Carlin Springs too often. Maybe I will have to take a detour ;-)
Jewel,
The homes aren't for sale as far as I'm aware. They're just all being remodeled/added to by the same builder. It's about a half mile south of the Ballston mall on Carlin Springs.
My $0.02
for those interested, the Union market is now open in NE DC near Trinidad.
http://www.flickr.com/photos/inked78/8098527745/
yes, trinidad still ahs trouble, there was a gang related murder on 8th st NE, and, there was a shooting about a mile from my place on Benning, but, there is also some decent investment and amenities coming on line
Any thoughts on sequestration now that we know Obama will be around for another 4 years?
NOVA inventory plumets.
btw - why is this site still up?
Hi Va_I,
I too am watching the inventory. Looks like were back to early 2005 inventory levels, and this is especially interesting because we are in the slowest of the slow season for real estate. Hinge of Fate time :-)_
So what is the latest update now about this sales?
Mckinley condo for sale-->http://www.gdgroup.com.ph/mckinley-hill-condo/for-sale
Hi da55id,
The numbers are surprising. Clearly, there will be no tsunami. There is strong demand which is pushing prices. I've seen some pretty dramatic increases on the low end (under 300K) since late 2008. As prices increase people on the sidelines decide to jump in. It looks like a bottom has come and gone and, while we won't have robust appreciation, people aren't worried about losing their shirts.
Some will remain terrified of the market for years and they are contributing to a severe shortage in rental inventory. Others are "priced in" and can't sell. This should gradually improve as pricing increases. A decent number cannot qualify for a mortgage under the tighter credit standards.
Builders are starting to build again but the lack of new supply over the past few years will take some time to replace.
Barry has told us (at the debate) that the fiscal cliff is not happening - some have been calling it the "fiscal bluff".
Our regional economy is fairly good. I'll have to read the most recent data.
If this is the Hinge of Fate, I don't see the odds stacking up to break the trend although I would feel much better had the election gone the other way.
There are still worrisome issues and Forbes (I believe) had a rather doomish article recently about a "debt bubble" and huge RE downturn starting in 2015.
I believe the consensus is 3% per year for 5 yrs. As a "glass half-full" type of person, I think I'll go with those numbers and hope the silver line boosts that a little.
ALERT
October NVAR report just released. Inventory down to 2.25 months. Median price up over 7% YOY.
the Case shiller national numbers are now up YOY and Q-Q 3 quarters in a row, looks like the national numbers have bottomed and started refilling.
Of course interest rates are down into statistical noise.
I think the GOP is going to try and take hostages,
depends wether Obama uses leverage or caves...
A trip down memory lane. For anyone with time on their hands (like me) it's fun to go back to 2009, a tipping point in my mind, and review the debates that took place on this forum.
The Anonymous said...I asked you then, when if ever will you quit giving people false hope about seeing 450K prices in the immunozone neighborhoods?
You stated if they dont happen by 2012, they will never happen.
++++++++++++++++++++++++++++++++++
Pat replies...sales year isnt over... lets see where C-s is in August.
++++++++++++++++++++++++++++++++++
The Anonymous said...if I understand you correctly, you will finally quit on all your misleading, false hope, immunozones will drop -40% bullshit on Tuesday October 30, 2012 (the August data), unless CS then shows some sort of scorching downturn.
Is this correct? Yes or no?
++++++++++++++++++++++++++++++++++
pat replies...Anon
if it makes you happy,
either the immunozones drop by end of this season or they don't.
++++++++++++++++++++++++++++++++++
The Anonymous said...Yes -- that would make me happy. It would be further confirmation of things I learned about 5-6 years ago, and you are just accepting now.
--The immunozone is a terrible investment.
--The immunozone really is different.
--The immunozone is (pretty much) immune.
--Anyone tying up "all" their cashflow in an immunozone house is unwise.
--Anyone waiting for the immunozone to become a good investment will be renting for a considerable amount of time, perhaps for the rest of their lives.
--Renting is a cheap and viable long term way of living in the immunozone, and there is nothing wrong with it.
--A number of people who didnt buy (say pre 2003) in the immunozone truly were "priced out forever".
These are but a number of the modern day realities of the immunozone, both good and bad. It is better to accept ALL such realities, (even the ones you dont want to believe can be true) than it is to perpetuate some sort of false hope that -40% prices are just around the corner.
We shall see if you can step back from the permabear camp and join us on the reality side of the river this fall. Personally, I have my doubts -- but we shall see.
http://novabubblefallout.blogspot.com/2012/02/housing-affordability-update.html
So if I understand you correctly, once the Case Shiller report comes out on Tuesday, August 28, 2012, (unless it then shows some scorching downturn) or whatever, you will finally answer the question:
"PAT SAID...if arlington doesn't clear by 2012 well then its immune."
After that date, no more skirting the issue...no more deception...no more "lets wait and see"...no more, "but if the bernank/myerton/fukushima/cap rates" nonsense...
After that date, no more bullshit?
After that date, you will finally declare that a -40% drop in imunozone prices is "off the table"?
Yes or no?
http://novabubblefallout.blogspot.com/2012/02/housing-affordability-update.html
When I see articles like this in yahoo finance I kinda of miss the good old days when the regular doomers gave us their daily dose of pessimism.
I do find it amazing that articles like this still get any news coverage. The housing crash started over 7 years ago and he is still awaiting the tsunami of inventory. You would think at some point you would give up. I think we all agree that the inventory will be released, but seeing that it has been a slow drip for years you must be a special kind of crazy to think it is going to all come out immediately.
I think people also forget that when people leave a house they usually end up renting a different one, so you just have an investor buy it and rent it out. The super low level of construction over the last 4-5 years has really taken nearly all of the excess housing units out of the market
At first I thought that Henry Bloget (sp?) was making a doomish call on housing. He is at the bottom of my list (along with Abbey Joseph Cohen) in terms of credibility. After the dot-com implosion, he should still be hiding in a hole. I'll go with my own thoughts, thank you very much.
http://www.zerohedge.com/news/2012-11-29/guest-post-housing-recovery-what-has-been-forgotten
The National home builder sentiment numbers appear to be making a decent recovery and nationally the C-S numbers are looking good 2% YOY, and Q-Q better.
The Immunozone has appeared to ride out the wave,
Now, if we look, Long term money is cheaper then ever, the Fed has pumped trillions into the market, far more then I ever thought would be allowed and the banks are allowed to hold inventory off the market.
Now, things that didn't happen or haven't played out, remain
1) The GOP is still trying to push the fiscal cliff. I'd have thought they'd have engineered a major recession in 2012 to force Obama out of office the way they did Carter. In 80, Bill Miller stepped on Short Term rates and poleaced the economy, why Bernanke didn't do that especially once he was re-appointed seems odd.
2) That the GOP didn't push a fiscal cliff, when they controlled the house and in 09 were looking to control the senate, wasn't in their planning at that time.
3) While southern Europe is in a full scale depression, it hasn't bled up to northern europe.
The UK is the worst performer in the north, with a recession, but, Germany has ridden out much better.
4) Japan despite cyclical recessions and massive Government debts is teetering along, although the unpredictable TOhuko earthquake and nuclear explosion may yet poleaxe them.
5) the chinese and canadian real estate bubbles seem more durable then one would expect.
I spotted on one of my tracking scans a deal in late 11, and have been fairly occupied dealing with 80 year old house.
However, I'd have remained happy with my cheap rent in Arlington were it not for my change in life circumstances.
VA Investor (and others) might like this:
http://homes.yahoo.com/news/secrets-successful-house-flippers-183027083.html
Ace, those numbers seem about right but I would imagine we will see a decrease next year. The bidding wars on the lower end (up to 250K) are crazy. This is squeezing margins. For example, there is nothing in one of my target zips under 200K and only a handful below 250K. On the shorts, banks are getting ridiculous on their counters - practically full retail when repairs are added.
pat, I see we still have our friendly doomer on board. I suggest you read Fiserv's latest (11/28?) forecast. You are still throwing everything but the kitchen sink at your caveats for a price fall.
I know this site is nearly dead, but I saw this article today and thought the few people left here might find it interesting.
It is long, but basically explains that the long term house price graph that Shiller made was wrong. This chart was one of the first things that people used to show exactly how big the bubble was. Even with updated data it still obviously shows that there was a bubble, but the difference is it shows us back at the long term trendline.
It also shows that home prices tend to increase slightly more than inflation (~0.6%/year). At this point I doubt any of us are worried about the Shiller graph, but it is interesting to see how Shiller's methodology was wrong.
FWIW
I was bearish on Apple as they approached 600/share,
and I mentioned it here, to much guffawing by Anon.
Apple opened today to 518.
http://www.zerohedge.com/news/2012-12-06/apple-implodes-one-generation-lasts-less-three-week
It's a great company they make great products, I have a macBook Pro, an iPad and a MacPro tower plus the GF wants an iPhone to match her iPod.
But, that said, I didn't think the stock was worth 600 and i didn't think it was worth 700.
now is it worth 518?
I think they will have a good christmas, and will close a decent quarter, as good as any christmas in 10 years, but, they have real problems..
1) they haven't refreshed the desktop line
2 iPad has lots of competitors
3) android sales continue grabbing share.
4) Far too much apple stock is held by Hedge Funds instead of mutual funds or pension funds.
Wow pat, that was on point.
HB, I thought that was a very compelling argument. Shiller's data most certainly seems flawed.
Check the lastest inventory on MLS. Way low. Also, per Curbed DC, pat made the right choice to jump off the fence when he did.
Wall Street has decided that housing has bottomed. They profited prior to the catastrophe they created and now they're profiting from the devastation. They wouldn't be doing this unless they believe prices will start to accelerate. Even if it wouldn't happen, they'll make sure it does by squeezing inventories with billions in cash purchases.
http://www.bloomberg.com/news/2012-11-14/blackstone-sees-two-year-window-to-buy-houses-mortgages.html
http://www.washingtonpost.com/local/dc-house-inspires-168-bids-in-red-hot-real-estate-market/2012/12/20/b0c37ac0-488d-11e2-b6f0-e851e741d196_story.html?hpid=z3
"It didn’t look like a house anyone would pay $400,000 extra for.
Several walls inside the gray townhouse with blue trim were streaked with water stains. The first floor was noticeably uneven. And termites had dined in front.
The big pluses: It was 2,850 square feet, had off-street parking, and was in walking distance of Union Station and the bars and restaurants along H Street NE. Then there was the list price: $337,000. Similar houses in the neighborhood were going for closer to $500,000.
Two weeks and 168 bids later, the house — in the 800 block of Fourth Street NE — was sold this month for $760,951 to an unidentified buyer."
"Homes in Arlington, Fairfax and Montgomery counties — all of whose median sale prices are up more than 4 percent from last year — are reaping battlefield premiums. One Maryland couple beat out the competition by agreeing to adopt the seller’s dog"
"The house at 825 Fourth St. NE was unusual in a few respects. It had been in foreclosure, which is rare in the city because of a de facto moratorium that began after the city revamped its foreclosure process in 2010.
Katherine Rollins, one of the former owners, said she and her then-husband held on to the house after buying another home in Bowie. But they could not afford to keep both, she said. The bank foreclosed in 2010, the same year the couple filed for divorce, public records show.
The Fourth Street house ended up with the U.S. Department of Housing and Urban Development, which disposes of foreclosed homes that were financed with Federal Housing Administration-insured mortgages. Would-be buyers had to agree to live in the house. No investors needed to apply. And they had two weeks to put in an offer through the HUD Web site, an unusually long time for such a hot property, said Leslie White, an agent with Redfin, an online real estate company."
"To be sure, the housing recovery has been uneven. In Northeast Washington, the boomlet has bypassed Benning Heights, Central Northeast and Deanwood. In the Zip code those neighborhoods share, 20019, the median sales price is down more than 7 percent from last year, and houses take more than three months, on average, to sell, RBI reported.
The foreclosure moratorium has helped prop up prices in the District by keeping foreclosures off the market, said George Rothman, president of the nonprofit housing developer Manna. It has also made it harder for organizations such as Manna to find properties to rehab and sell to lower-income buyers.
Bullish real estate agents say it is only a matter of time until those areas catch up as well. There is no talk of “bubbles” or fallout from a dive off the “fiscal cliff.” People are still moving to the Washington area, where the population grew by 122,000 from 2010 to 2011, Census Bureau data show.
The combination of high demand and low supply is pushing buyers priced out of the Atlas District, as H Street NE is also known, to the north and east. Investors and first-time buyers have descended on Orleans Place, a one-block street in Near Northeast that was once the home base of 1980s drug kingpin Rayful Edmonds III."
Interesting, inventory is in the sewer, foreclosures have been held off the market for years, and 30 year interest rates are in the noise.
I think my timing on the place on Benning was good, as the seller kept dropping the price but, i wouln't have minded keeping my cheap rent in Arlington.
If i hadn't gotten into school, my circumstances would have been different.
I too am sorry to see this blog almost dead. I learned a lot from it and still pop in now and then to see if there are any new postings.
I haven't followed all of the messages so am not sure why Harriet abandoned it. My impression was that many felt that we are no longer in a bubble.
That's why I am posting the following piece that argues that yes, we are indeed in the middle of another bubble. This time, it is driven by speculators in the rental market.
I realize that the article discusses national rather than local trends but I am curious if there is any overall mechanism to track whether non-multifamily-unit sales are to homeowners or to investors.
new housing bubble
Hmmm... This blog does not allow anonymous comments but changed my username from "c" to "unknown". Sorry about that.
So, as the sound of one hand clapping on this dead blog, here are my takes on RE in DC area ;-)
We are now officially past the horrific period of subprime and option arm resets that acted as massive and risky headwinds in the market. 2013, and especially 2014 brings us to 5 years after the purchase droughts of 2008-9. I expect that all of the remaining underbrush of short sales and foreclosures that may remain will be cleaned out during 2013.
Simultaneously, the effect of the 5 year long new homes building drought will come home to roost as available housing stock turns net negative in 2013. The 2005 housing bubble pretty much exhausted infill lots in Arlington and Fairfax, so there's really not much land/teardowns left upon which to build.
Lower homeowner stress = fewer distressed homes thrown onto the market, Virtually no new homes built in the last 5 years = low available listing inventory, scare land prevents possibility of single home/townhouse project rampups. Many folks decided to or had no choice but to rent, but by now many will become very very tired of renting and will add to demand in a world of diminishing supply. Finally, houses do wear out, so I expect that part of the method to create new housing will be teardowns and significant renovations. This will NOT be enough to cover demand though.
Tyson's will continue to grow over the next two years, but S.W. Springfield continues to become Tysonized as NGA/brac/belvoir hospital and camp follower commercial real estate pile on (Patriot Ridge). On top of that, The National Museum of the US Army is slated to open in 2015. Thus 22153 and 22079 will appreciate significantly in the next three years.
Wild cards are: 1.) FBI relocation competition - if this HQ ends up in gsa bldgs near Franconia Metro, it will make Spfld THE new Tysons.
2.) Sequestration if it happens may add significant headwinds
NoVa investor, you still out there? What do you see/predict?
da55id,
Things have unfolded pretty much as I expected. I said, years ago, that investors would put a floor in on the lower end (which was clearly the hardest hit). I thought that some areas were unfairly/overly hit and I was able to capitalize on that. I did not anticipate rates being and remaining so low; but, when you think about it, RE is so important to our economy that we should have anticipated that the fed would do whatever necessary to stop the bleeding.
Going forward, I really can't comment on Springfield as I don't study that market. In general, I don't see our region dropping the gains we have seen since early 2009.
Obviously, the tsunami never happened (although there was a lot of distressed inventory in 2008-2010). Inventory is very tight right now and I do not believe, in any way, shape or form, that it is being held off the market in our region. VA is a non-judicial state and many failed to understand the implications of that. The "option-arm" deluge of reo's never happened either. Low rates have prevented much of the "payment shock".
I predict steady appreciation for the next 6 years. I can't tell you how much - as it is very area/price range specific. I believe that I am well positioned (hey, I always do!).
http://www.nytimes.com/2013/01/13/magazine/washingtons-economic-boom-financed-by-you.html?hpw
Pat, I find it annoying when articles are posted with no comment or analysis by the poster.
That said, I read this yesterday and when I went to tell my husband about it, he had already received a lengthy analysis by Fuller. He told me that the long and short of it was that housing looked great but the rest could be a drag on the regional economy.
Did you intend this article to portend "doom and gloom" for the region and housing? If so, say so.
I suugest that everyone read the two top sites on this blog. Judge for yourself. Median prices up 8+% yoy and average up 13% yoy - iirc. Doom? Hardly. The article seems to say that DC is becoming the new NYC - my exageration, I know. But you get the drift.
I, respectfully, demurr. My glass is half-full.
Pat, thanks for posting the URL for the NY Times article. I thought it and the comments in response to it were very interesting.
http://www.zerohedge.com/news/2013-01-14/aapl-trades-under-500-first-time-11-months
AAPL trades under $500. Anon was crowing about how wrong I was when I said that AAPL was overvalued, and that a good short play existed on it a year ago.
I suppose somone with far too much time on their hands could look up the post.
I would merely note that AAPL broke $500 on the way down.
Pat-
I am not a huge fan of AAPL either, but posting an article that says AAPL is at its lowest level in a 11 months vindicates the fact you said to short it a year ago doesn't really make sense to me. Doesn't that just mean your short would not longer be kicking your ass and instead you would not roughly be at breakeven?
Also I don't know if you invest a lot, but it can be really painful shorting a stock that is going straight up. I am sure many people shorted AAPL when you said it was a good short only to cover when the stock was up 30-40%, because they couldn't take the losses.
It's interesting to discuss Apple's performance when YOY median prices are up 8% and average is up about 13% in NOVA. Inventory is the lowest since 2005 at less than 1.5 months.
But, heck, that is only housing...
VA-
I think Pat is refusing to talk housing numbers because he was way off. I don't talk about it much because it is clear that the crisis is already over. Although I guess a new issue could start to occur if they aren't able to get more new houses in areas like DC. With the population continuing to grow and very few new houses there is really starting to be a shortage.
not much inventory, prices are up, and
nothing much investable, and flippers are back.
And one of the rational ideas out there is minting a trillion dollar coin.
HB i called it as i saw it back then.
i didn't think the fed could hold interest rates at
zero percent nor would be that stupid.
we now have 2 bubbles rolling.
student loans and housing again.
The fed is carrying a trillion dollars of garbage on it's balance sheet.
http://www.washingtonpost.com/blogs/where-we-live/post/demand-for-condos-in-washington-dc-area-market-intensifies/2013/01/22/0ad908f8-64b4-11e2-b84d-21c7b65985ee_blog.html?hpid=z4
Maybe "The Meyerton" will finally sell out.
"8/20/12, 3:27 PM
The Anonymous said...
Incidentally Pat back in early March when you told us you "dont care" about the accuracy of your predictions, you also said:
"I view AAPL as a short"
I happened to check and it looks like AAPL is up 21.5% since then...OUCH!!!
Oh well -- good thing you "dont care" about being accurate when you make your calls...
"
Pat-
It looks like you are finally right about your apple predictions and the stock is now down ~10% from your initial short call. Although the important thing about being short is knowing when you would want to close your position.
In terms of the bubbles and Bernanke I have to disagree. I think it was relatively easy to realize Bernanke would keep rates low for a long time. He basically disclosed a formula in late 2009 involving the inflation rate and unemployment rate for determining interest rates. The formula basically showed he wasn't going to raise rates until inflation was either well above 4% or unemployment was below 7%. For financial crisis recoveries are always slow so it was clear it was going to take a long time before this happened.
I know you are saying housing is a new bubble, but if you look at inflation adjusted prices or price/rent nationally we are very close to the long term historical levels. In DC we are higher, but this is how housing markets work. There are always outperformers and underperformers. So I think its hard to argue the country is in a new bubble. If you want make an anti-DC housing market argument you should talk about potential austerity, as that is the biggest risk for this area. I personally do not think it will have a big impact, because we already have a housing shortage so if some people have to leave the area it will just reduce the shortage.
pat,
Congats on the 10% short on Apple. Home builder's are up as much as 300% YOY.
Why did your nabe miss the DC increase?
Prices didn't see a double-dip - but we are now in a "new bubble"?
Krugman (sp?) says we are fine, despite debt, etc. We will see - he thinks we are no Japan.
Econ 101.
I'm no genius, but I know the history of these cycles. How is this different?
I would not pay much attention to Apple short term price drops and increases. It has always been an extremely volatile stock (for a company of that size and age) and there is a herd mentality among investors when news is released (+ or -). If one wants to make money on it, one has to have a stomach for risk and try to purchases when other investors are overly pessimistic. But I don't know what it has to do with housing, or even other stocks.
HB, I think that the budget fights have already had an effect, not just on employment, but on pay increases for people around here. This also has kept the housing market from moving much--even if you are an experienced employee with a fairly secure job, you aren't getting huge increases that would enable you to buy a new place.
Because of the uncertainty, some employers have already made cutbacks or deferred hiring, and many employees are in limbo. Many others (including those not tied directly or indirectly to govt.) have not paid good increases for the past few years (except for a few "stars") because of the recession and aren't feeling much economic pressure to change their policies in the near term.
Once we know more about how the budget cuts will play out, the implications for housing should be clearer.
Arlington residential assessments increased only about 1% for the past period and the officials also noted the federal budget uncertainty.
Va_I,
Krugman believes we are still emerging from a "depression" and thinks we need to focus more on how to get more people back to work than on the deficit and debt at this point. He believes that the latter are also problems but that because the former is a bigger problem, that should be the focus today and that we should address the other issues later.
Krugman columns
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