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August sales data will be out today at MRIS.
Thursday, September 10, 2009
Northern Virginia Bits Bucket 9/10/2009
Posted by Harriet at 8:31 AM
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45 comments:
A little levity while we wait:
The Onion, hurricane to strike abandoned foreclosed homes
Wall Street analyst Merideth Whitney is forecasting another 25 percent drop in real estate prices is coming:
http://www.cnbc.com/id/32773345
Not to sound like Robert or anything, but her forecast is predictated on a lack of economic engines providing job growth. That's not the case here. While we may differ on the size and timing and impact, I think most here (contrarian aside) agree that our 1-3 year outlook is pretty rosy.
OTOH, in terms of a stock prediction and a prediction for the nation's bank, that's pretty interesting that she's still that pessimissitic.
Actually - I clicked on the interview, and none of the quotes in that article (25% down, etc) were mentioned.
Also, it looks like she was calling for 25% down in an interview last september.
http://bubblemeter.blogspot.com/2008/09/meredith-whitney-predicts-25-fall-in.html
Clearly, prices have fallen quite a bit since then. Is she supposedly saying another 25% as of this year? I wonder if there was some sort of mix up in the text of that article. Did I miss something?
Actually, I found the interview. She is sticking with 25% in 2009.
we've already completed 75% of 2009. Do you mean 2010?
In general I don't find her very useful. She is always pessimistic on the economy. I am much more impressed with the people what were pessimistic on '06-'09 and turned optimistic around March. If you always pick one side people will ignore you most of the time, but you can become famous when your view is finally right. Look at people with Gold. They have been wrong since the 80s and are now saying this is what you predicted... a prediction that is wrong by 20 years is pretty worthless.
housebuyer,
Or, maybe, the damage hasn't been fully unloaded. Consider for a second the extreme lengths the govt is going through to prop up home prices. I think these people who have gotten it right when so many others were dead wrong deserve the benefit of doubt right now, even if they aren't singing the cheery song that you want them to.
The number of foreclosures in each county is down from last year, according to county data. In Prince William County, Manassas and Manassas Park, foreclosures through the first half of this year numbered 2,200, on pace to total far fewer than the 8,300 last year, said Bill Vaughn, county economist and demographer.
"If this pace holds up, we will do about half as many foreclosures as we did last year," Vaughn said. "The really bad years are hopefully behind us."
In Loudoun, foreclosures dropped from 1,288 through July 2008 to 829 through July 2009, according to data provided by the county. In Fairfax, foreclosures totaled 921 at the end of July 2009, compared with 2,039 at the end of July 2008, according to data provided by the county.
From the post article posted in yesterday's bucket, but here's the link again.
Are the bears claiming this is the result of the moratorium? the $8k tax credit? seasonality? Seriously.
Kevin-
I agree that the government is doing a lot to prop up the market, but do you really think they will stop and let the market go into a free fall. I am fully confident if housing starts to fall significantly we will see more government aid coming in.
I am not looking at anything with rosy glasses I realize the times suck and housing is not back the races, but if you look back you will notice I have a decent idea of what I am talking about. I am pretty sure I was the only person to correctly pick all the negative months and then pick the first positive CS number for DC.
I just like to see economists change their view as times change. Otherwise I treat them as a broken clock (right a couple of times...)
housebuyer: I agree that the government is doing a lot to prop up the market, but do you really think they will stop and let the market go into a free fall. I am fully confident if housing starts to fall significantly we will see more government aid coming in.
housebuyer, governments, meaning people like you and I, cannot forever influence a free market. If they can, it's not a free market.
It either is or is ain't. Can't have it both ways.
If government continues gaming the system, the players return to their chairs to read the rule book and everyone in the stands has nothing to do but watch an empty floor.
Wall Street has pretty much defined that model.
Robert,
PWC and Loudon foreclosures dropping I expected (I've said before, how many more weak hands could they have left?), but the Fairfax County number is worth a look! That's the opposite of what the WaPo chart showed for foreclosures through June (it was shooting up).
I don't know how to reconcile the two.
Incentives for short sales
The goverment to push for more short sales instead of foreclosures.
Gee, just what the doctor ordered. As a buyer, I have to say, an unencumbered, unoccupied REO is a heck of a lot more attractive than a short sale process, no matter how "abreviated" or "streamlined". Because, really? Who thinks they will succeed at an abbreviated process?
Cara-
I think the difference between Shorts 7 Foreclosure now is the $$
It appears to me now that the Banks are deliberatly setting low prices for REO's in a effort to create a highest-bid scenerio (no a good deal anymore IMO)
Shorts are still the "best" deals (or so it seems) but it still takes Months to get one thru (and sometimes the house still goes to Foreclosure)
What is a savy home shopper to do these days???
spunky,
Indeed, around here anyway shorts tend to be lower priced than comps, but don't have the bidding war problem of low priced REOs.
But sitting in limbo for an undefined period of time with no way of knowing if or when the short sale will close or at what price, is a high price to pay for saving money.
At least if you're in the fungible home markets. (i.e. all the homes at similar prices are pretty darn similar).
As my realtor has pointed out, now that our short sale deadline has expired, we are in the best of both worlds. If we do see anything better we can just give them 3 days notice to produce the bank approval or void the contract. But the only things I'm seeing that might qualify as "better" are also shorts, and the few "real" sales aren't tempting in terms of price.
But since foreclosures are now selling for closer to market value than shorts are, I don't see how this is a win for the banks.
What is a savvy buyer to do? Make 2-3 short sale attempts hoping to land a deal, while waiting for this mess to work itself out? It's a lot of effort, for a roof.
Cara,
Can you elaborate how you structured your contract for an out/contingency when the $8K tax credit runs out? I'm looking at an REO and might put in an offer but want an out of some kind if I don't get the $8K.
BTW I don't have an agent yet and may just work with the L/A on this one.
I predict MRIS/Case-Shiller data for the region will remain flat or positive until the $8k credit expires and/or the Fed raises interest rates. Once one of those changes we will see drops in prices again.
Texas Native nailed it. Govt can continue to prop up the market all they want. For the people who buy into it, they will ultimately lose in the end. I refuse to make my largest purchase on a manipulated market that forces buyers to pay way more than they should, and will ultimately correct at some point to burn them even more.
MM,
I didn't quite manage what you asked for.
The short sale addendum includes a clause,
"Seller must provide Purchaser with written evidence of the creditor(s)' approval as required under paragraph 3 of this addendum by DATE ("short sale deadline"). Such written evidence, if received by Seller, shall be delivered to Purchaser in a timely manner.
If Seller has not delivered written evidence... by the Short Sale Deadline, Purchaser may deliver notice to Seller of Purchaser's intent to void the Contract. Seller shall have three (3) business days from receipt such Notice to deliver written evidence of creditor(s)' approval to the Purchaser or the contract will be void."
So, if you think you'll definitely be able to close within 40 days, set that date to Oct 20, 2009 or something.
But yours is an REO. so... you'd want to have the usual "must close within X days" clause be one that bound both of you. Usually it's the seller who demands the close by date and could sue you for not closing....
Really you just have to make sure that you still have an "out".
you could try an offer that itself has an expiration, but it looks like they have a specific offer form they want you to follow.
I'm not a realtor or a real estate lawyer, and I've never closed a house. So I should shut up now.
I can see why you'd feel $8k would be a realy handy amount to have to do at least some updating of that place, because it does look like it's a good size with good bones.
TN & Kevin-
I never claimed it was a free market. Also as long as the government only stops housing from falling rather than actually increasing prices than inflation and time will bring it back to fair value. Don't forget the more the government does to prop up the housing market the more inflation they will create thus bringing the real house price into historical levels more quickly.
housebuyer, TN, Kevin,
I think the concern is that policies designed to keep the rest of the country from falling any further will induce their own new bubble here.
CR median income FELL between 2007 and 2008.
I'll see if there's any area specific data...
Cara said...PWC and Loudon foreclosures dropping I expected (I've said before, how many more weak hands could they have left?), but the Fairfax County number is worth a look! That's the opposite of what the WaPo chart showed for foreclosures through June (it was shooting up).
I don't know how to reconcile the two.
Cara, is this the chart you were referring to:
Link
Sigh, the geographic breakdown is by huge regions, and I don't even know if we're in the South or not. The other breakdown available is by metropolitan, suburban and rural, but again, not specific enough to interpret for here.
Sigh.
On the Meredith Whitney thing - she made her fame forecasting doom for Citigroup, thats the easiest way for her to get airtime these days.
Never mind that the main purchasers of real estate right now are not US citizens, its sovereign wealth funds - aka the Chinese.
Robert,
Yes, sorry to make you go hunt for it. Any ideas on reconciling the county and WaPo foreclosure auctions? Seems like the WaPo's total is a lot higher, 1700 Q1 2008, 1900 Q2 2008 is a lot more than 2039...
Do properties go up more than once if no bidder is found? I thought they just go to the bank then...
"Kevin said...
Texas Native nailed it. Govt can continue to prop up the market all they want. For the people who buy into it, they will ultimately lose in the end. I refuse to make my largest purchase on a manipulated market that forces buyers to pay way more than they should, and will ultimately correct at some point to burn them even more."
I would be extremely cautious in that line of reasoning Kevin. For example lets say fundamentals suggest we bottom at case shiller 150, but thanks to govt intervention we "bottom" at 160.
A year later fundamentals suggest the true bottom is 155, but because of the continuing govt intervention we are at 165.
A year later fundamentals suggest true bottom is 160, but because of the govt intervention we are at 170.
Next year, the govt stops the manipulation, market falls falling, everyone claims double dip w recession, etc. However, since the fundamentals now suggest a true bottom of 165, the market drops from 170 to 165 & then tracks fundamentals.
In this case your refusal to buy due to govt manipulation at 160 means you buy 3 years later at a non manipulated 165.
You can quibble with the made up numbers all you want, however, please recognize the larger point. It is not necessarily true that by refusing to go along with the govt manipulation, you get "burned even more" at a later date.
CRT,
I think he meant burn them more if they did buy.
Argument still holds though, if you buy at 160 and the fall doesn't happen until fundamentals puts the bottom above 160 then you don't lose.
This is basically what housbuyer and I think is going to happen. If the government props up the housing market in such a way as to preserve the economy and jobs and allow a recovery in other sectors, then the fundamentals (or inflation) will improve, such that prices don't need to fall once manipulation is removed.
I do think there will be a dip this winter though.
An interesting perspective relative to my recent comments on home sizes:
NYT - When Home Shrinks
By the way, please do not interpret my post as saying you should "buy now". Although cara brings up an interesting point with a new bubble developing, I remain pretty convinced its more or less flat for years to come.
My larger point was about managing expectations (i.e. expecting a huge pull back after the manipulation is removed).
In a way this reminds me of the inventory argument. The peak of the inventory cycle was 2006 - we all saw it, yet much of this blog couldnt accept it as such.
Theory after theory was proposed as to why it truly hadnt peaked, and why (when X or Y or Z happened) then inventory would spike back up.
It wasnt til 2009 that the last remnants finally acknowledged maybe the peak truly was 2006. A full 3 years after the peak was hit.
Likewise, many of the pundits who said govt manipulation "cannot stop anything" in 2008, are the same ones who now blame it for all support we see today in 2009. I do think that govt manipulation has some effect. However, I think its far to easy to overstate its effects to convince onself a cataclysm awaits if and when the manipulation is removed.
The MRIS still hasn't posted August numbers. Sigh. Where's my data fix?
"Cara said...
CRT,
I think he meant burn them more if they did buy.
Argument still holds though, if you buy at 160 and the fall doesn't happen until fundamentals puts the bottom above 160 then you don't lose."
Gotcha and agreed. The good thing is, absent a new bubble, there isnt any real harm in waiting.
Contrast that to say the stockmarket. I know some who say the move from dow 6500 to 9500 (today) is all market manipulation - therefore they refused to get in.
Problem is, if the restraints were removed today, while the market likely would fall, is the market still so fragile that 6500 or less would be the bottom? Or is it that the bottom would (now Sept 2009) be 8,000 or whatever?
Again, there is little risk of this happening in real estate, but for those who apply this to the stock market, they put an afwul lot on the line.
Is anyone looking for a Capital LLC TH in Burke?
http://franklymls.com/FX7152589
oddly, they skipped the wood floors. Don't know why. My guess is because it would be overkill in that development. I say the $265k is overpriced (movein ready in that neigborhood has been around $230-245k.) but with the $8k about to expire, they may get it.
I was skimming through the inventory to see whether my impression that "everything" left active with 3bdr under $300k was a short. It's not true. There are 3 real sales amongst the 7 shorts. It's just that I've already rejected 2 of those, and the third is the Capital LLC one above.
Stats are finally up. Seems like more of what we've been seeing all year. I am about ready to concede that the laws of gravity do not apply to Arlington & Alexandria.
Montgomery County, PG County, & DC Proper continue to suffer more than NoVA.
http://franklymls.com/FX7152589
Ouch. That's quite the 50% haircut for family Rios in only four years.
[grimace]
Cara, they paid 200 for it in 08. Its big and nice only draw back is those monthly condo fees..make an offer at 230
"Anon 412 said...
Montgomery County, PG County, & DC Proper continue to suffer more than NoVA."
They sure are -- look at PG county -- wow! I gotta hand it to you CRT, last year you were beating the drum -- MD was the laggard in this and Nova was the leader. Looks like you called that one perfectly.
TN,
Wow, yeah, I hadn't even looked up the records, just recognized the work.
Arkey,
The finishings are not to my taste, and the neighborhood is further than my target distance to public transit. It's a good property, just not for me. They'll get at least $245k for it, if not higher.
I may take a look though... It's funny how having one open house I want to go to makes me find other things that are also worth looking at...
PG
at least those 20% YoY price declines mean sales are up 48% YoY. That's almost exactly like last year in PWC, no?
Prices reaching some kind of clearing point is darn good news.
@ Cara, yes that is true.
And also in PG: 56% of Aug 09 sales were FHA. Yikes.
CRT: "You can quibble with the made up numbers all you want, however, please recognize the larger point. It is not necessarily true that by refusing to go along with the govt manipulation, you get "burned even more" at a later date."
No I am saying I'll get burned if I buy now. They can play this game forever if they want, and give us a wonderful Japan-like situation that will go on for years and years, and ensnare the maximum number of people under such a debt trap. I might eventually be one of those people, but I won't submit to it just yet. They cannot fight a market correction forever, so I'll just wait.
Cara: "I do think there will be a dip this winter though."
Depending on the buyer's bribe expiring and a healthy number of foreclosures hitting the market, that's probably when I'll make my move. Then again, I said the same thing probably a year ago, so we'll see.
It's nice having a landlord that doesn't mind going month-to-month. But given that I'm always on time with the rent and will let him know well in advance of a purchase (he is my buyers agent).
Kevin: They cannot fight a market correction forever, so I'll just wait.
That my blogger friend is the nugget.
No I am saying I'll get burned if I buy now.
Kevin - in all seriousness, non snarkyness, I dont follow - can you explain?
Look at my example prices are artificial 160 now, there will be fundamental 160 later. In that example, is there a harm in buying?
Cara,
sorry i misread a post of yours from yesterday:
"...I'd like to move in before Christmas, not because of the $8k, I've intentionally written that out of my calculations. Just because I'd like to move in before Christmas..."
but thanks much anyway for the response.
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