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Saturday, May 23, 2009
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42 comments:
Federal Government Job Openings by location
Over the last month or two I've been reading a lot of complaints about no new properties coming onto the market in the Manassas area. Could it be that the lack of new sellers coming to the market is because so many people believe we're at the bottom and don't want to sell at the trough? I mean, if you own a house that you buy for 150k in 1992 then in 2006 it's worth 450k and now it's selling for between 200 and 250 would you sell now? It's still higher than what you bought it for and you have a lot of equity but why sell now if you can wait a few more years? I don't think anyone believes prices will fall back to 1992 levels.
Jeff:
Yes. I've posted a similar comment. There are sellers out there that regret not selling a the peak of the bubble. Not all, but some would sell again if we hit bubble prices again -- not likely in the short or even medium term.
But from where we are right now on prices, there is room to run before we get near those sellers at bubble prices.
Your example is exactly what's going on out there. Someone bought for $200k. Prices peaked at $500k and now they are back to $300k. The will not likely rust to sell at $350k. Around 450k I think some might and there would be a flood around the bubble prices, making it difficult to break through the old price high.
So, from here, up another 20-30% won't draw out many of those "shadow" sellers.
It's called behavioral economics. It may sound corny, but you can model greed and fear.
SAIC job openings.
A little more than 1/3 of SAIC's business is in the Metro area. If there are 3000 job openings at SAIC, it's safe to assume that means 1000.
That's just one contractor.
"there are 3000 job openings at SAIC,"Not exactly. I looked over the openings. Most will never be filled because suitable candidates do not exist at a price that the company is willing (able) to pay.
Region's Jobless Rates Stabilizing
But Officials Expect Unemployment Will Continue to Rise
"Most economists anticipate that unemployment nationally will only rise by another 1 percent or so before we achieve the peak for the cycle," he said, adding that the region is a "latecomer" to the recession. "It may be that unemployment rates will rise further than that in the Washington region before all is said and done."
Robert,
If the house they want to move on up into comes down to $400k you bet your bottom dollar they'll sell. What you make on your old house is irrelevant. What your new mortgage costs you is the only thing that matters. Yes, most sellers are too thick-headed to figure this out, such that most long-time owners who wanted to move up did so when they could get a lot of money on their current home, and did so at the extreme cost of having to pay way too much on their new home. Yes, most sellers are indeed that dumb. But not all. There will always be reasons people need or want to move. This will not magically disappear in the trough anymore than it did at the peak.
In more anecdotal evidence of the end of the spring blip in prices, I give you SFH for under $300k:
http://franklymls.com/FX6997915
list $319k, sold $280k (screened in porch... but back to major road)
My husband is now doing the "we're gonna buy for cash, we're gonna buy for cash" dance. That's a bit too optimistic for me. But if one extrapolated the current 12-month running averaged down trend and our current savings rate, we'd only have to wait 3 years.
the average american moves every 5 years,
so figure 20% of all OO units are eligible for sales.
figure 40% are moveups, figure 30% are regional moves, figure 30% are out of area moves.
right now the out of area moves are subletting, and waiting it out. that is why rents are dropping.
if rates increase all the crap will pop up.
Re: BRAC
Everybody expects that properties around Ft. Belvoir will appreciate after BRAC relocations. But would not Arlington prices drop at the same time? This is the KFZF's "Law of RE Price Conservation" ;-).
Cara,
If you are going to save cash for a couple more years, in 2011 you may find better deals in Arlington than in Burke.
Another question is what will BRAC do to clearances. Will underwater owners do long commutes? Will there be mass retirements? Will mass retirements create a surge in housing demand, i.e., the retired will not want to sell at a lower price, whereas new hires will be buying houses?
Let us all live in interesting times. Not.
KFZF
Cara,
http://franklymls.com/FX6997915
True, but original owner who enjoyed 4.75% appreciation for 31 years vs. CPI of 3.90%.
Did not calculate the wage inflation ;-)
Probably still pretty happy all in all. I think when properties are growing at a little less than 1% long term over inflation in this area that we are pretty close if not at the bottom.
has anyone looked at south arlington?
stuff at 200 +/-50K Not the greatest neighborhood,
but, you can be inside the beltway.
I don't like shirlington, but some nice deals there.
Robert,
What you described is almost exactly our former landlord's situation. He bought for $200K in 2000, saw his same house selling for $575K at the peak, put it for sale summer 2006. Too late. The last few houses that have sold went for $220K, $236K, $245K, $250K, with a new foreclosure asking $199K, short sale under contract that had been asking $199K. When we tried to buy from him, he wanted $300K (no realtors involved). Now he'd have to hope for mid-$200Ks, and he'll be paying realtor commissions.
He's renting out again. Now he'll have to pay capital gains. Is he really going to wait for Manassas to bring his house back up to bubble-time? I guess he's getting rental income, so that's good. But with at least three more houses sitting vacant in the neighborhood and needing to sell sometime, when will prices start moving up?
David,
4.75% a year, every year over 31 years is a little much to expect from a totally unupdated house that all you've added is a screened in porch. That, by the way, backs to a major through road.
But yes, this is pretty darn near the bottom. I wouldn't think houses like this will go lower than $250k, or $225k if there's an overshoot. $280k is not that far off from that. Just another 10% to go. This tiny house was now selling for below 3x the median family income, hence probably is a starter home for someone. (though perfectly serviceable for a whole life as demonstrated by the previous owners). That is as it should be. This would be an outlier to the downside though, in terms of the area to date. But it is the availablity of houses like this one for under $300k that is going to sap much of the life out of the THs for $350k market. The THs for $350k are much bigger and updated, but potential buyers may now recognize that if they just wait a little longer they may be able to get a comparable single family home for not that much more money. When the 1500 sq ft. SFHs come under $400k (like one I pointed out a few weeks ago as the single best value in Burke at $350k which went under contract shortly thereafter) then there will really be more downward pressure on the nicer townhomes.
Cara,
Thank you for that link: http://franklymls.com/FX6997915
Hard proof that the permabulls have been so wrong for so long.
Tom (Arlingtonva)
Nah, they'd just trash Burke. Or claim that this was the only long-term owner in the whole county willing to sell for an amount that was merely keeping up with incomes (approximately), and that I've now missed my one chance to own.
Pat: For South Arlington those price points are mostly in the 22204 zip code, although now and then a house in Claremont in the 22206 zip gets into that range. In looking at 22204, the areas of Nauck/Green Valley are the only scary places left. If you want to be as close to the city or the Pentagon as possible try Johnson's Hill at the eastern edge of Columbia Pike. Just off Walter Reed Dr, there are a few houses in the Arlington Village neighborhood. They are nicely buffered by the Arlington Village condos which continue to be attractive buys and the Commons of Arlington condo. The Penrose, Alcova Heights and Arlington Heights neighborhoods on the north side of Columbia Pike will occasionally have a good buy. Try to get into one of those neighborhoods as they were lower priced than N. Arlington in the boom years and have not "depreciated" as much. A lot of young buyers have also upgraded the houses, so the neighborhoods look pretty good. Going west along the Pike, the Barcroft neighborhood is less expensive as you are near the Pike but gets well into the $500K range as you move toward Arlington Blvd. The big buy from Oct 2008 to about April 2009 was the Columbia Forest neighborhood, wedged between George Mason Drive and Columbia Pike and west of Four Mile Run. This was a neighborhood of small colonials and ramblers. Lots of small, not-so-skilled contractors bought the colonials at boom prices and tried to expand or renovate them and flip them. They either did bad reno or expansion jobs (saw one where the bathroom plumbing was not connected to any waste lines and the waste just accumulated in the crawl space under the bathroom)or missed selling. Many of them went first to short sale where a lot were bought by young buyers who saw them as alternatives to condos or to investors who are normalizing them and renting them. A few got to the foreclosure stage and were bought by the same type of buyer. There are still some short sales in 22204 and the banks are getting better at expediting them. Would still try to get as north of Columbia Pike as possible if you want to live in the house, but for an investment house, you might look at Columbia Forest.
http://franklymls.com/FX7057426
this one is a little half duplex, they want 190K which strikes me as a little overpriced, but, it's 1500 foot walk to the
Huntington Metro station. Neighborhood kind of sucks, not a lot of street life or that sort of thing, but,
it's at least just inside the beltway and under 200K.
http://franklymls.com/AR7056505
here's one that's not so bad. 210K again location is a little shitty, but, reasonably close to crystal city
http://franklymls.com/AR6943840
this one is a little more then the other, but, 4 BR, much better value.
it's 60K over it's 2000 price which is basically 30% appreciation in 9 years, that's a decent price trend assuming it was
properly priced then
http://franklymls.com/AR6978001
now this is 160K, the comments indicate the dog has done a lot of damage, so it may be a long ardous effort
to fix up. I don't like the area, although it's a walk to shirlington, but still. the other one it's a trade between access to the shrlington
community and lack of metro.
http://franklymls.com/AR6988498
144K probably better condition but same as the one above.
http://franklymls.com/AR6879138
this one is just FUGLY, but, it's a nice walk to columbia pike
http://franklymls.com/AR6955256
i don't like the hood here but 220K and it's all redone.
http://franklymls.com/FX6980860
4 BR 7000 foot lot across from the Huntington Metro.
160K
It's a shitt area, but it will improve.
what do you think.
in theory next year will have lots more deals but one should be out deal spotting.
i don't see any good deals north of C pike yet.
it seems the banks are cutting prices south of the pike.
right now i'm renting a 2BR 1 BA Apt for 1K/month, if i can find a little house for a similiar deal i would buy it.
i would prefer a place in DC but no deals there.
Anielarke, good intel on S. Arlington neighborhoods. My only additional advice is to be VERY cautious about buying anything in S. Arlington. N. Arlington is like a different planet; S. Arlington has more in common with PW County -- lots of illegal aliens, etc., though that problem is improving as more of them are leaving Arlington altogether due to being priced out.
For Pat: the 5 Arlington properties you mentioned are under contract. There is a new listing on Kemper Rd. (AR7061842) which might be of interest.
The area around the Huntington Metro started to gentrify and when construction began on the Wilson Bridge and the associated off ramps near Huntington, everything stopped. Now that the construction is nearing completion there might be some upside to buying near there.
For Tom: The Arlington County Board's heads would collectively spin if they knew you compared South Arlington to Prince William County. The County Boards for the last 10 to 15 years have been working to rid Arlington of every low income person (except for the young women who live on the Orange Line corridor whose rents are subsidied by parents) and emigre in North and South Arlington who might need any type of social service. The Board and the new citizenry of Arlington want only three types of service providers in Arlington: the people who plant the trees and flowers in the medians, traffic circles, mini and major parks; the people who install the speed humps/bumps/bulbouts which make the streets hideous to drive, and the kindly young police officers who give speeding tickets to harried moms racing to soccer games with the oranges and the denizens of Clarendon/Courthouse and Ballston who overstay their time at parking meters. Among long time Arlington residents the motto is: will the last normal person leaving Arlington (with a bag of cash from the sale of their house) turn out the lights.
Anielarke: as a fellow long-term homeowner in N. Arlington, I salute you -- you nailed it!
i was more interested as the examplars showing
that south arlington is pricing out a 100-150
less for a home then the same property north of the pike. as for north arlington, those people must think they are in mclean.
i like the orange line corridor but think it's going to take a while before that finishes imploding, but the area divided by 395 appears to be deflating hard
i've seen one or two nice listings right near glebe and columbia pike, but, i think it's going to be cheaper next year.
Contrarian, I think that foreclosure protection is a good thing. I can tell you that if I were paying rent to my landlord and I had not been late or missed a single payment and one day the county police comes to my house and evicts me then I would be enraged. If the banks want those 90 days back then they can go to the home owner and get that rent out of them. You have to let the people that rent there and have no idea that the owner is in trouble time to move out.
Pat said: "i like the orange line corridor but think it's going to take a while before that finishes imploding,"
LOL! Er, that area is not "imploding" at all.
Housing Bust Leaves Most Sellers at a Loss:
Local Prices Expected to Continue Falling
Interesting WAPO article but really poorly written. Are those owners short-selling? In foreclosure? I would only consider it taking a loss if they are coming up with the difference from their own bank account.
And it implies that anyone buying since 2000-on is taking a loss. So not true.
Also, Pat, IIRC when we were house-hunting in 2001-2002 there seemed to be at least 100k price difference for very similar houses between South Arlington and N. Arlington. I haven't looked at the actual statistics on this though-just what I remember. We were mostly looking between Columbia Pike and Route 50.
Pat: Depends on how you define "imploding" in the orange line corridor. Looking at re-sale condos in the corridor: there are currently 126 available, 98 under contract and 148 have settled since Jan. 1, 2009. So about 59 units are selling per month which means there is roughly a 2.5 month inventory of re-sell condos. Looking at new condos in the corridor: Liberty Center has about 15 units left; Hawthorn has 5 units; Phoenix has 10 units and high priced Wooster Lofts which has about 5 units left. Big inventory is at the two buidings off Rt. 50 (Residences Courthouse Park, Vista Courthouse Park)and the builders are aggressively pricing them. Turnberry Towers (very high priced but first units will settle in the summer) and Waterview (also high priced but settling units, including the highest price ever paid for a condo in Arlington: $5,650,000).
Price differences between North and South Arlington vary greatly depending on location and type of house but $50,000 to $100,000 difference is typical.
Also, McLean is less expensive than North Arlington because you get much more for your money in McLean. McLean is just perceived as more expensive because it has a larger stock of expensive houses, particularly north of Rt. 123. The typical $650,000 house in McLean (often in neighborhoods between Great Falls and Westmoreland St) is larger and in much better condition/or renovation level than a similarly priced house in Arlington.
I drive around wilson blvd late at night and i see lots of black windows in buildings which tells me that hose are unoccupied condos. I remember reading that the height of the bubble, there was almost 14 years of inventory getting ready to come on line.
Now most of these were sold on 5/25s, 2/28's,
Option Arms and ARMS, very few were sold as conventional finance.
That means there is a huge wet sack of air ready to go south, sometime.
I realize the Orange by definition makes the WIlson avenue corridor far more desirable, but 2X?
i think when all those bad mortgages foreclose there will be a glut of condos available.
The real hazard is how many of these associations will collapse in the meantime.
The Washington Post story cited this:
>Predictions vary about when the region's prices will hit bottom. They may keep tumbling until late 2009 for close-in communities and until 2011...<
I think this may be too optimistic.
There are lot of people banking on a good, we-have-turned-corner, Q4.
A similar prediction, for instance, is made for the tech labor market. The tech labor market has been shrinking nationally since Dec. 08. (but not in DC.)
The prediction of a tech labor market upturn is based on thin evidence, wishful thinking, and a it-can't-keep-shrinking-forever belief.
Maybe.
It's important to note that the impact of the $800B stimulus spend didn't turn up in first quarter numbers (gov spending showed a decline) and probably won't show 2Q, so that will help with Q4 but won't carry it.
Bottom line: My hunch is that the Q4 prediction on close-in housing is hinged on the general view that the last quarter will show some strength. We should know at the end of 2Q how this year will really finish.
tiredbubblewatcher: What I was talking about was the decrease in low income population in Arlington. An easy way to see it is by looking at elementary schools which drew from low-income areas and how the percentage of students receiving free or reduced cost lunches has declined in the last few years: For example: Campbell Elementary School off Carlin Spring Rd. went from 82% in 2002-03 to 59% in 2008-09; Barcroft Elementary which draws from red brick rental apartments on Columbia Pike went from 64% in 2002-03 to 55% in 2008-09; Barrett Elementary School, a north Arlington school which serves the Buckingham area where many of the apartments were torn down or upscaled went from 77% in 2002-03 to 53% in 2008-09. Glebe Elementary school, a north Arlington school, which serves the traditionally African American community of Halls Hill went from 40% in 2002-03 to 21% in 2008-09; Oakridge Elementary School which serves the apartments at the intersection of S. Glebe Rd. and W. Glebe Rd. near Rt. 395 went from 56% in 2002-03 to 32% in 2008-09. You will recall that a huge red brick apartment complex was torn down and replaced by a "luxury" rental community. Interestingly, the biggest increase in free/reduced lunches was at the most "prestigious" (read "white") North Arlington school - Jamestown went from 0.85% free/reduced lunch students in 2002-03 to 3.38% in 2008-09.
Tiredbubblewatcher, check this out:
https://www.blogger.com/comment.g?blogID=4787878578920468587&postID=2944447743414252338&page=1
Tom
busted link
We should know at the end of 2Q how this year will really finish.Really? Did we know June 30 or July 15 how 2008 where we'd be at the end of 2008? For example, did the stock market predictors know? Did the economically-sensitive voters know? Was there a sameness in what the candidates were saying about the economy all that time? Was the message the same from the general media between July and December? Was the consumer confidence number the same?
HARDLY.
anielarke,
it's more like 30-35 units left in phoenix (i believe they have about 194 units total and sold about 160 per tax records that are pretty up-to-date) and about 100-110 units left in liberty (they had about 234 units initially and it seems that they've sold about 124 so far). i don't see them having a big problem selling them if they continue to drop prices slighlty like they did last couple of years.
just wonder where you have got your numbers.
Konstantin: Got my numbers from the sales offices. I just bought units at Hawthorn, Phoenix, Liberty Center and am holding 1 at 1888 Wilson. Went through the inventory pretty carefully with sales offices as I was looking for the bargain units. They are making deals at all of these places. They may have been counting what they have under contract but not settled. Even The Phoenix is getting rid of the commercial space. Brian Normile who owns Liberty Tavern and is a builder in the area just bought the big corner space where Dan Kain's trophy store had been for an Italian restaurant. Can't remember who asked about rentals, but I am going to settlement in late June and have all of the places rented as of July 1. 5 of the 7 units were rented to military couples who are either here for short tours or language school. 2 other units rented to National Science Foundation people coming into the area. Rents were a little better than I expected but I was conservative in estimating cash flow. Also just rented another unit in an older building in Ballston and got $100 more than Feb. 2008. Renter is a single woman who works at Booz Allen in Ballston.
anielarke,
you can be right (you are definitely up to speed with arlington re), but this is kinda surprising, especially with liberty center, unless i am totally confused about their total unit count (thought it is about 234 as they advertised on their website) or they sold/put under contract 100 units since mid-april which is not really likely given average pace of 5-10 sales per month in that building.
it is also a surprise that they started to allow people to buy properties as straight-to-rentals. when i talked with their sales reps they said that this is an absolutely no-go. seems that their integrity is somewhat dubious.
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