Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
This will not be news to most of us but always important to see the hard data.U.S. Existing Home Sales Yr/Yr $0 - $100,000 Up 38.8% 100,000 - $250,000 Up 8.7% $250,000 - $500,000 Down 6.2% $500,000 - $750,000 Down 8.9% $750,000 - $1,000,000 Down 10.6% $1,000,000 - $2,000,000 Down 23.3% $2,000,000 + Down 32.4% Source: National Association of Realtors Existing Homes: What's Really SellingExisting home sales rose for the fourth straight month in a row, now to the highest pace in two years. Excellent news that buyers are getting off the fence, but they're only getting off at a certain price point. Just like in retail, where the big bargain stores are showing gains, only the low end of the housing market is moving. As I did last month, I asked the Realtors to break down sales for me by price point.
Wow even Lawrence Yun agrees with us that there is "shadow inventory" out there:The Realtor's chief economist, Lawrence Yun, called it a "business decision" by the banks: "I believe that many banks including Fannie and Freddie, who are also holding onto some properties, are releasing foreclosed properties in a measured way so as to not to flood the market which they perceive then perhaps could lead them to even more drastic price cuts. So they are releasing properties on a measured pace as a business decision to minimize losses." http://www.cnbc.com/id/32108755
TBW-I am curious what those sales statistics would be if you adjust for price declines. There are two things going on. The first and most important is starter homes are selling very fast and homes that take jumbo mortgages are just languishing. The other issue is that as prices fall there are more homes in each of the lower priced buckets and fewer in each of the upper priced buckets. So both the velocity of each bucket and the number of houses in each bucket contribute the the YoY sales change.
very interesting #s, TBW, thanks.
FWIW - here is the same/similar stat for the NVAR area. Price points are broken down a little differently, but this is what July sales look like YOY$0-$100,000 - Up 1025%$100,000-$250,000 - Up 32%$250,000-$500,000 - Down 1%$500,000-$800,000 - Up 18%$800,000-$1,000,000- Up 12%1,000,000-2,500,000- Down 13%2,500,000 + - Down 57%**3 sales vs 7 last julyI suspect the 26% drop in inventory YOY was the main reason the 250K-500K price point is down.
Geez, just when I thought TBW was laying the ground work for justifying the $15,000 bribe for move-up buyers. CRT, you burst my bubble.
CRT,any new(er) thoughts on road to recovery in NoVa - U or V or W-shaped?
Arkey,I don't think there should be a $15k credit (nor even an $8k credit). And they would pass such a credit based on national trends and not regional trends.Also NVAR is defined on the website CRT used as Fairfax County, Fairfax City, Arlington County, Alexandria City, and Falls Church City. So it's missing Prince William County, Manassas, Manassas Park, and Loudoun County. So I think this is selective data on CRT's part.
Does anyone have an opinion on the conforming loan limit increase that was extended to the end of 2009 by the American Recovery and Reinvestment Act? Specifically, I've been trying to look up opinions on whether it will be re-extended with the higher limits for 2010, allowed to lapse back to $625,500, or go all the way back to $417,000. I'm wondering if a reset to 625k will help bring down the price of all these 699k-ish list homes in Fairfax County.My current target price range is ~600k, but I may be willing to stretch a bit if current 700k homes lose some price support.
"So I think this is selective data on CRT's part."You want to elaborate on that???
CRT,PWC (and M and MP) and Loudoun are all doing worse and would drag down the higher end numbers more.
Jeremy: some banks are not treating the new limit as conforming. For example, some have conforming (<$417k), jumbo > ($7xxk), and 'jumbo conforming' (> $417k, < $7xxk).
Im aware of that TBW - I have been pretty consistent of noting the outer areas are doing worse than the inner ones. Thats why I was clear in noting this was NVAR.That aside, I can tell you that I "selected" the NVAR data set on the assumption that it was the broadest data set MRIS offered, which I assume the majority of bloggers here would be most interested in.Let me ask you, of the 50 or so data sets offered, which one would you have gone with?
CRT,I don't think everyone here knows what NVAR means. I would not have guessed it did not include the outer suburbs. So I wanted to make sure no one else missed that.I understand that for simplicity's sake you didn't want to run separate searches for those jurisdictions but by not doing so it makes the "Northern Virginia" data look better than it is.
contrarian,I was the one who pointed out the lack of COLA pointed to no inflation. If you are going to attack me when I try to defend you then that gives me no incentive to ever defend you.btw, I think China and India played a large role in rising gas prices by increasing demand. It was not just the SUVs in America. Also, I think OPEC was limiting supply on purpose because they stupidly thought (like realtors) that oil prices could go up forever without harming developed nation's economies.
"I don't think everyone here knows what NVAR means. I would not have guessed it did not include the outer suburbs. So I wanted to make sure no one else missed that."OK thats fine. I think you covered that well when you (originally) said:"Also NVAR is defined on the website CRT used as Fairfax County, Fairfax City, Arlington County, Alexandria City, and Falls Church City. So it's missing Prince William County, Manassas, Manassas Park, and Loudoun County."Thus you can see where I took issue with the last sentence:"So I think this is selective data on CRT's part."
Arkey, tbw, CRTGood hard numbers as always. tbw's numbers from the national data show what I think we all expected to be the case, that only well-priced homes that have fallen into affordable ranges are selling. CRT's show that around here, in NVAR anyway, buyers are bucking the national trends in droves. We apparently have the means and the job security to be buying in all rungs. Something important to keep in mind is that Calculated Risk's statements on the one and done nature of transactions due to REO's and SS, doesn't fully apply here. Even if only half to two-thirds of the sales are "organic" or "real", that's still a heck of a lot of move-up buyers based off of the rapid pace of transactions in the lowest tier.I do still think we will see some more price erosion next year under the following assumptions (1) interest rates creep up above 6% (2) whether extended or not, the bump from the $8k incentive fades to nothing as the moving future buyers forward only works so long, (3) pent-up demand from the years of being priced out fades (4) foreclosures continue their steady trickle (5) some move-up buyers see that their dream house is now within their reach even with the new lower price on their existing home and accept the new reality.2 and 3 are the key, and are the most certain. There is a limited supply of pent-up demand, before we go back to steady-state levels of buying based on incomes and a shorter number of years accumulating down-payments. I.e. when first-time buyers go back to being 80%? FHA, and stop infiltrating the lower-move-up market with saved up cash.Or maybe 1 is the most important, I can't tell you how many people at work keep saying what a great time to buy it is, not because prices have dropped (they refuse to acknowledge that by either considering 2005-2008 an abberation or just not thinking about it at all) but rather because interest rates are so low.
housebuyer,Isn't the condensation of all homes into a smaller lower price range the best news of all?
Cara,Job creation or destruction. Outlook for the national economy. The stock market. Credit conditions. Number one is jobs as I see it.
Cara,Do we see flat to declining employment as TBW is predicting? Where a couple of hundred people run the new Health Care program, another couple hundred at Energy to run Cap and Trade, and maybe 200 more at Treasury. And then belt-tightening to offset those few new jobs. Or do we get our normal 50,000 that we've had over the last couple of decades? Or something off the charts, like 100,000 new jobs in the area?
Sure, interest rates could be the #1 variable if they swing wildly.
Robert,In my "calculations" I'm assuming we go back to 4.5% unemployment, and continuing population growth. Is this different from your assumptions?New construction should better be starting up soon, and I think it will, to cope with the continued migration here for jobs. But there still is a steady-state number of first time buyers entering the market, and we are currently well above that number, as we return to "normalcy" more things will shake out. I don't expect more than a 5-10% additional drop. Which with upgrades/land/garages is in the noise as far as any of today's buyers can see. We may already be at a minimum for monthly cash-flow payments, just not for price. But the mid-to-high end buyers can afford to be picky and wait for the right house.
Robert,I wrote a pithy response but it's gone now... Meh.main point I am assuming we go quickly back to our "normal" of 4.5% unemployment and continued population growth. Is this different from your asumptions?
Robert,You are not stating my stance correctly. I'm short-term pessimistic about job numbers in the region, but long term optimistic. Whereas you seem to be short term optimistic, long term optimistic.I think there are two major differences between us:(1) You think Obama will cause the DC area unemployment rate to peak this year (maybe you already think it peaked) and start decreasing this year and get back down to 4.5% this year? or early 2010. think it might not peak until mid or late 2010 or so because the fed gov't is not creating enough jobs in the DC area to offset private, state/local gov't job losses and not get back down to 4.5% until 2012 or early 2013.(2) You think the DC region will be a national standout almost by itself in job recovery. I think DC will be joined by about 20-25 large and small cities in recovering more quickly than the rest of the nation. And there will be many areas recovering more quickly than DC.I also think you keep forgetting that home prices made no sense even pre-recession. The median household income did not support 2006-07 home prices. The home bust predates the recession.
Cara/Robert,I'm not sure I follow the growth argument affecting home prices. Most of the growth in the region this decade was in the exurbs and especially Loudoun County. There were a lot of articles about how Loudoun County was one of the fastest growing counties in the nation. Almost all of these people worked for private sector jobs located in the suburbs. They did not have GS jobs in DC. Between 2000 and 2007 Arlington County grew 8%. Between 2000 and 2007 Loudoun County grew 64.4%. Prince William County 28.3%. Fairfax County 11.1%.While you may argue 11.1% is still a lot that is the smallest gain in residents (percentage-wise) for Fairfax County since the 1920s.I also am not following why continued growth would increase home values. Am I the only one who would list lower population density as a plus of the DC region as compared to NYC as opposed to a minus? Ever been on the NJTurnpike during rush hour? Ever tried to take a bridge or tunnel out of Manhattan on a Sunday? No thanks.And given the conservatives and environmentalists have a strong coalition against ever building more public roads and the conservatives and car drivers have a strong coalition against expanding Metro it's only going to get worse. As someone put it recently we might need to eventually hire someone to push people into the subway like they do in Japan.I certainly do not want to live in a one stoplight town. But I'd be in heaven if this region stopped growing the rest of my life or at a 1-2% pace.
Cara,(3) pent-up demand from the years of being priced out fades Wouldn't that just create a mini-bubble again if that's a factor? It sounds like you are saying some people did not buy in 2005-07 because they were "priced out forever." So that means they are one marshmallow children and didn't oppose the pricing on principle (price/income or price/rent) but instead on principal ;)I had thought most of the people who would have bought in 2005-07 were not priced out but just two marshmallow children. They will wait as it takes to get their two marshmallow house instead of one marshmallow house. Maybe if you have a child about to enter kindergarten you give up on waiting and eat that one marshmallow. Maybe that pent up demand is out there. But I don't think there are tons of people like that. Until the vast majority of the market gets back to the idea that home prices have to be reasonable then the bubble has not ended.
I posted this late one evening, and regular readers may have read it, but this article stands out as the most significant article to date of anything I have found:LinkThis is pure private investment, big dollars, and very high wage jobs being created.I think we really have to begin to distinguish Northern Virginia from Suburban Maryland and the Central Business District of Washington, D.C.Because of the favorable business climate and the equally important location of Dulles Airport, Northern Virgina alone could easily be first to emerge from recession if it were counted separately.
I wanted to add one thing to that previous post. The job creation is happening NOW.
Robert,Because of the favorable business climate and the equally important location of Dulles Airport, Northern Virgina alone could easily be first to emerge from recession if it were counted separately.Why do you always list things that have been true for the region for 30+ years. Dulles has been around since the 1960s and Virginia has been seen as a business friendly state for at least that long.Also, having an airport is not unique to this area. DCA is a very short trip from the DC CBD. Probably one of the shortest of the major cities. And each major city has an airport. Nor is being seen as business friendly -- that describes many states and areas. Heck, even DC is seen as much more business friendly nowadays than it was 12 years ago.Anyways, I nominate North Dakota, South Dakota, and Nebraska as the first areas to get out of the recession given how low their unemployment rates have stayed.
Obama to Reappoint Bernanke as Fed ChairPresident elects to maintain continuity in the nation's top economic policymaker with decision expected to be announced Tuesday morning.
With respect to the data center expansion article: I didn't mean it as the end all of job creation. I linked to it as an example of private capital coming to the area. Disney building a hotel at National Harbor would be another example. Hilton relocating from Beverly Hills to Tysons Corner a third. There are plenty of others.
tbw,I'm not arguing for house price increases. I'm saying that typical growth in this area and typical unemployment in this area are already baked in to my assessment that house prices will continue to erode next year.One marshmallow two marshmallow. Whatever. It's a distinction without a difference. Who cares why it was that people chose not to buy in 2005-2007? Each HH that chose to keep renting had some specific income then, and some new income now, and some considerable accumulated savings by having waited. Whether they percieved it as having already been priced out of this region forever, and now being a fabulous windfall of being able to buy when they thought they never could, or whether they just didn't like what was available in 2005-2007 or the terms of the mortgage they'd have to get to do it back then, is largely irrelevant. I refuse to broad-brush claim that all those who waited were "better" on some impulse control level than those who bought. Plenty of people waited because they didn't know I/O ARMs were even an option, or that FHA was available to people above the poverty line, or that 80/20 piggy back seconds existed. Or they were only borderline ready to buy in 2005-2007 and the selection convinced them it wasn't worth it. I said that this pent-up demand will fade. And I do think we are in a mini-bubble right now. Maybe not where you're looking, but most certainly where I am. For some places it'll just be a ledge on the way down, others a mini-bear rally. The pent-up demand I'm talking about specifically is the 14,000 more HH in FFX county in 2007 who rented with incomes over 150k than were renting with that income in 1998. Whether you want to claim that those people were waiting for a house that was worth it, or whether they were cheap-skates like me who refuse to put more of their income than they absolutely have to into housing because they've got kids on the way or other major expenses to consider is totally beside the point. It's their aggragate actions that matter. These people can afford to "spend" $350k-$450k on a house because of the combination of their HH income and the time that they've been saving up. I'm seeing tons of buying of THs at that price. That doesn't sound like the actions of your two marshmallow folks to me. But there's also a lot of first time buyers going for the $600k first home, like that couple on Slate. There's a limited supply of that too.Either way, this pent-up demand has more cash and more ability to pay than the typical steady-state first time buyer pool. So even without the $8k incentive, this other slightly more wealthy group would be softening the blow on the way down.
Calculated RiskPrime cure rates for delinquencies go from "45% during 2000-2006 to the currently level of 6.6%. ..."Holy moley. While the new charts from the NY Fed don't look that scary for northern VA, at the same time, one wonders if we'll also see this higher percentage of delinquencies turning into REO's like the rest of the nation. My guess is not to this absurdly dramatic extent, 45 dropping to 6.6% cured is nuts, but we could see 45% dropping to 20% and that would still be significant in terms of the continued impact of forced sales on the market.Our jobs picture may get better sooner rather than later, but we've still got a whole heck of a lot of overhanging burdensome debt to work through.
For what it's worth, my periodic Zillow alert yesterday said:"According to the latest Zillow Real Estate Market Reports, home values in Arlington decreased 3.9% in the second quarter of 2009, compared to the second quarter of 2008. Nationally, home values decreased 12.1% during this same period."Of course, it's hard to tell what a county-wide # means. 22204 makes up a big chunk of the sales, and they are in the lower ranges, and this doesn't separate condo from townhouse from SFH sales.
WSJ: The Vermont modelno boom, no bust. Why? Actually regulating mortgages. A great read. Despite huge limitations on development and growth which one would think would limit supply and artificially raise prices, the reality of requiring borrowers to prove they qualify seems to have prevented both the boom and the bust.
Cara-Yes more houses moving into cheaper buckets is most likely good news for those of us who want to buy. The one caveat is that if a large part of these are foreclosures/ short sales they may be in lower price buckets because they never got the TLC that most houses get before they are sold. Either way it should be good.PS impressive numbers from CS today. My guess is that this is the largest MoM increase and we will see prices start to flatten out.
housebuyer, good call: Examiner on the CS numbersReally, you think June will be flat? After rises for both April and May? Given that it's a three month moving average, I'd say June's almost bound to still be up. I'm going to go out on a limb and guess the June increase will be over the 1.5% MoM seen in May. I don't expect flattening (i.e. 0% MoM) to occur until the August or September numbers are in (which would require July to be less than 1% up).
Cara-Sorry I should have been more clear with what I meant by flattening out. I meant that each month would be up less than the month before. So I would guess for the next 5 months we will see something like +2%, 1.5%,1%,0.5%,0%
housebuyer,agreed. by the time I finished writing my comment I realized the difficulty in specifying "flattening out". We're probably pretty much on the same page, I'll be looking forward to Harriet's post on the Index, and other people doing the work of looking it up by tier. :)
Oops, she has posted it, and my comment made no sense at all because June is out. Wow, 2.85% MoM. Yikes, let's move the conversation over to that bucket.
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