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Thursday, January 20, 2011
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57 comments:
http://franklymls.com/DC7483976
33% down from assessed, I think someone overpaid for a fixer.
2010 worst year in housing sales
since 97
starts low, sales low, but prices continue to hold.
Now this is national, and we all know DC is special and different.
pat,
What is your basis for stating that new construction condo's in the Ballston corridor can/will be delivered for $150/sq.ft.?
Pat,
If you look at CS, DC IS different. In fact the ten city index is quite interesting. The trend is your friend(?).
pat-
I think most people on this board expect low housing sales for a very long period of time. People are starting to understand you don't get rich by selling a house and buying a bigger house. People also have less or no equity in their house so they can't sell and use equity to move up. The job market is also weak so there are far fewer people switching states for jobs.
I think the most important factor is that peoples mindset about housing has changed and we will not see housing sales at 2002-2005 pace for a long time.
"Pat said...Now this is national, and we all know DC is special and different."
Is it not? Nationally we know 2010 was the worst year in the last 13 for resales. Guess when was the lowest year in NOVA (hint, its not 2010, nor is it 2009).
If you guessed it was 2008, ding ding ding, you win a prize.
Out of curiosity, if national sales are (presumably) bottoming now, and NOVA sales bottomed in 2008, what does that tell you about where we are in the bottoming/recovery part of the cycle?
The bottom is a long way off...
"Contrarian said...The bottom is a long way off..."
Really? It is? Such an authoratative, declarative answer makes me think you "know", (not that you think but you KNOW) something the rest of us do not. If so, please share...
In 2008, there were 17,400 re-sales in NOVA. If the bottom is "a long way off" please tell us what it is (16,000, 14,000, 10,000), and when to expect it (2011, 2013, 2015).
That or do what you always do, run away, delete your post, or flail about, refusing to answer the question at all costs...
2011 Governor’s Award of Educational Excellence Recipients
* Arlington Science Focus Elementary School
* Arlington Traditional School
* Nottingham Elementary School
2011 Board of Education Excellence Award Recipients
* Ashlawn Elementary School
* Glebe Elementary School
* Jamestown Elementary School
* McKinley Elementary School
* Taylor Elementary School
* Tuckahoe Elementary School
2011 Board of Education Competence to Excellence Award Recipient
* Campbell Elementary School **
** the only S Arl school
linky
Fairfax County – Archer Elementary, Carson Middle, Chesterbrook Elementary, Cooper Middle, Fox Mill Elementary, Franklin Middle, Frost Middle, Hunt Valley Elementary, Kilmer Middle, Langley High, Lees Corner Elementary, Liberty Middle, Longfellow Middle, Mantua Elementary, Mosby Woods Elementary, Oakton Elementary, Oakton High, Rocky Run Middle, Spring Hill Elementary, Thoreau Middle, West Springfield Elementary, Westbriar Elementary, Wolftrap Elementary and Woodson High
note: No Arl Middle or High school won the award
contrarian,
I do agree with anon that you should, at least, qualify your predictions.
No one has a crystal ball. You sound alot like those on Bubble Meter who promised everyone that N. Arlington would drop 40-60% by 2008 or 2009. "It's moving in", "concentric circles", etc.
The fact is that we can't really predict the future, only use history, experience and intuition.
Your prediction would make me head for the hills to a self-sustaining farm. The fact that you even talk about buying (albeit 5-10yrs down the road) gives me pause.
If we are going to hell in a hand-basket, buying a house should be the least of your concerns.
Just sayin'...
"Contrarian said...Apparently, it was way, way over your head. :-)"
It is. Mostly because you have for years been bringing up various crappy charts and random minutae that have little to no bearing on what happens here locally (remember the parade of horrors that was supposed to result from the default of "Dubai World"?).
Still, this is your chance to teach me, teach us all, how, if at all, all the various charts, graphs and tangential crap you spew (and delete) here over and over and over again, shall have any bearing on those of us who want to buy here locally.
Lets take the topic du jour - sales of previously owned houses. Pat shows us an article saying nationally it is crashing. I counter by showing that NOVA re-sales bottomed in 2008. Then you pipe up with your dismissive, "the bottom is a long way off" comment, presumably as it relates to NOVA re-sales.
As we all know, you have never, ever brought forth any charts, graphs or other sundry BS that shows, suggests, or otherwise hints that NOVA re-sales will be "such and such" by "year such and such". Instead you show us how "Dubai World" is defaultng and how this will lead to some sort of unspecified DOOM, presumably for NOVA re-sales at some unspecified time.
So here is your chance to clarify the issue, to teach me...to show everyone else how smart you are and what a fool I have been for doubting you. Ready, PLEASE PAY ATTENTION HERE
Contrarian, you apparently think the bottom is "a long way off" when it comes to NOVA re-sales. If so, show us SPECIFICALLY what will happen.
For example:
in 2011, NOVA will have no more than __________ re-sales.
in 2012, NOVA will have no more than __________ re-sales.
in 2013, NOVA will have no more than __________ re-sales.
Note, it doesnt have to be your predictions. I will happily accept any random garbage prediction from any of your sources that specifically adresses this issue. Also, if you dont like this format, please give us something, ANYTHING that is a numerical value and date so that we can all independently determine "the bottom is a long way off" in NOVA re-sales.
Can you do this Contrarian? Can you answer the question in a straightforward, definative nature? Or are you just destined to run, delete and flail?
MM No I don't live in The Odyssey. That building was constructed in 2007 and my condo was built in 1984. We have better views because we are in Rosslyn and closer to the city and river.
You mentioned that Campbell Elementary School is the only S. Arlington school to be recognized by the Governor's awards. I am not sure if you know that Arlington Traditional is a lottery school that draws from the entire county. Also, Ashlawn Elementary has the county-wide Montessori program and county-wide special education programs. Campbell shares a campus with Kenmore Middle School which also has an arts and computer program that draws county-wide. You are probably going to see more progress in S. Arlington schools as the demographics continue to change and new principals move into those schools. Look for Oakridge Elementary school to make significant progress this year.
"Contrarian said...At least you admit it. And, as usual, you are wrong. Some of them pertained to what happened here locally. But if you didn't get it before, you ain't gonna get it now."
Contrarian -- I want to focus on this because I feel we are near a breakthrough with you.
If I didnt "get it" in the past, thats because neither I nor anyone else on this site for that matter, understood how (or at least how you think) all that various sundry crap will affect NOVA re-sales.
Well my friend, here is your chance, once and for all to rectify the situation. For example, if you say:
"in 2011, NOVA will have no more than 14,500 re-sales"
then at the end of the year, I most certainly will "get it". All of us will "get it" either because it will happen, or it will not.
So again, here is your chance to make me, VAI, ALL OF US, "get it". All you have to do is answer the question (which you have ducked twice in a row now). Specifically:
in 2011, NOVA will have no more than __________ re-sales.
in 2012, NOVA will have no more than __________ re-sales.
in 2013, NOVA will have no more than __________ re-sales.
As I said before, it doesnt have to be your predictions. I will happily accept any random garbage prediction from any of your sources that specifically adresses this issue. Also, if you dont like this format, please give us something, ANYTHING that is a numerical value and date so that we can all independently determine "the bottom is a long way off" in NOVA re-sales.
So whats it gonna be? run, delete, flail or answer?
Contrarian,
You're a permabear who adds little quantifiable value to the discussion.
You say you want to buy when others are panicking? That was in 2008/2009.
Sure the market may move sideways for years to come, or armageddon may hit, but you, as Anon points out, provide no measurable/meaningful insight as to the when and where.
If you ever are proven correct, good for you. But I expect we'll all be eating spam out of cans in a bunker if that happens.
Yay...
My $0.02
I'm not quite sure cutting federal employment/wages (if it happens) will affect housing in any kind of dramatic fashion. I'm cynical, and I hear stories from people who've worked here since Nixon was president, and they yawn at this kind of thing.
Cuts to back to 2008 levels are the idea in a nutshell.
"Contrarian said...And, ALL OF THESE ISSUES WILL AFFECT HOUSING LOCALLY, IN NoVA."
How? Re-Sales? Show us... Teach us... Complete the following:
in 2011, NOVA will have no more than __________ re-sales.
in 2012, NOVA will have no more than __________ re-sales.
in 2013, NOVA will have no more than __________ re-sales.
This is the 4th time I have asked you. Responses thus far have been flail, flail, flail. Whats it gonna be this time? Answer, run away, delete, or flail???
VA_I asks
"Where did you come up with $150/SF for condo's"
http://www.b4ubuild.com/faq/faq_0002.shtml
"Home prices of $55, $79, $84, $87, $92, $110, $122, and $315 per square foot combine to produce an average of $118 per square foot, which is probably a reasonable figure for many areas of the country, "
I added some for vertical costs, but, basically when prices fall to around that, productin stops, when it rises, to $200, production starts.
Take 10% off for sales costs, 10% for profit, and 10% for G&A, bang.
pat,
Please let me know when I can buy 1,000sq ft new construction condo's in Arlington for 150K.
What land cost are you factoring in?
If you want to read some disturbing housing forecasts, check out Business Insider and Gary Shilling's charts and predictions of at least a further fall in prices of 20%.
Sorry that I don't have the link.
Pat-
I agree with VA that land is the determining factor in price in Arlington. This is why all of those ~1,000 sq. ft. houses sell for 600K. I assume the land to build the condo's costs many millions and needs to be allocated over the condos. Also for condos they only can sell ~75% of the square footage, because they can't sell hallways elevators, gyms, lobbies... so the cost of these also needs to be allocated over the rest of the units they sell.
Hello, Long time lurker here with a question--I put an offer for a short sale and my realtor has just sent me back two pages of the contract with the following clauses to sign (I quote added wording in {} below (btw original spelling preserved)--are these standard short sale clauses or not?)
{Utilities will not be connect by sellers for inspection purposes, utilities have to be connect under buyers' names for inspection, at buyers' expenses.}
(...) Seller will pay at settlement $xx,xxx {Depends on third Party Approval} towards Buyer's charges (...)
And one more question: is EMD really required (any hints how to avoid it)?
Thanks!
GC
VA_I
Land costs aren't bad on vertical.
if you can go 10 stories up, then
your land costs drop by 10X, and
construction costs start to dominate,
unless of course you pay some crazy amount for the land.
what matters is what the zoning is,and do you pay for that.
and do realize cost isn't the same as price. It's why i think things are overpriced.
But, here's the take, compare rents for apartments to similiar condos.
When rents make sense, then the whole deal probably makes sense.
it's why you are buying condos in reston, they make sense.
pat,
Your land cost doesn't go down if the land is zoned for high density. The higher the density, the more expensive the land.
Cheryl
"what matters is what the zoning is,and do you pay for that"
Yes, the trick in any vertical building is to buy a flat zoned property and then get it upzoned.
takes some time, but sure saves a bunch.
If the county is good about providing that upzoning, then, it's a supply/demand thing.
if they provide more then the market demand the land premium is low.
pat,
I did see your remark about paying for zoning, it just seemed completely at odds with your premise.
As to your follow-up. The parties involved know what the Master Plan is and would have had talks with the County about what can be built.
If you somehow believe that the Plan will change at it's next review, perhaps that might present an opportunity. I am quite sure that much of the area is already planned out pretty thoroughly.
Gene,
The utilities clause is not unusual. I assume they are off now?
The approval for seller contribution to your closing costs is just part of the bank approval process. They will determine whether to accept the "net" that will be received and the seller contribution decreases that figure.
I usually just fax a copy of my check and hang onto the original until bank approval.
housebuyer said...
...land is the determining factor in price in Arlington. This is why all of those ~1,000 sq. ft. houses sell for 600K.
housebuyer i'm surprised to hear you say this. i understand where you're coming from, just thought on principal the market sets the price, not costs.
housebuyer,
my friends unit has an (yet) unobstructed view of the monument. but does it worth/cost $400K or whatever hundreds of thousands dollars?
Va_Investor--Thank you for your reply! Your comments are much appreciated, as well as your time.
Best, GC
reecon,
tks for the detail info.
my friends kids went to Oakridge for K and the only complain she had was the afternoon pickup line was really chaotic. i visited the school one time and thought it's kind of small.
i agree S Arl schools will improve overtime. but i'm more surprised that none of the 10(?) Arl middle and high schools made the list. not even an honorable mention. what's the deal with that?
Va_Investor said...
Gene,
The utilities clause is not unusual. I assume they are off now?
the utilities were on a couple weeks ago when I checked the property (the owner still lived there)
Thanks, GC
MM-
The market does set the price, but a very large part of the market for 1000 sq. ft. houses in Arlington is construction companies that plan on tearing down the house (they put no value on the house and instead are valuing the land). They know that they can build a 5K sq.ft. house cheaply enough that they will make a decent profit off when they sell the house for 1.5MM+. Houses rarely cost much more than the value of the land plus the cost of creating a new house, because there is a huge supply of construction companies willing to do this.
As for your friends house I would have thought the extra size of their house plus bathroom would account for ~$100K. I would not be surprised if the higher floor & better view costs 100-200K. This makes up most of the difference. It is also possible your friends overpaid or the house on the market could be a decent deal. Although seeing that it is on the market for its 2007 price, when it was brand new I doubt today's price is a good deal...
Gene,
It's quite possible that they are still on and this is just a "standard" clause.
I don't pay much attention to what I sign :)
Va_Investor said...
If you want to read some disturbing housing forecasts, check out Business Insider and Gary Shilling's charts and predictions of at least a further fall in prices of 20%.
in a nutshell, unemployment will bring out more distressed homes and depressed prices 20%.
MM,
Later yesterday I read an article in Smart Money (I think) that gave a good case for the "now is the time to buy" sentiment.
Who knows? But if Shilling's spiral occurs, we will have a truly "contrarian" outcome.
I respect Schilling's opinions. He is very smart, uses lots of historical data, and has been correct more than he has been wrong. I do think that he is being overly bearish, but I have said I expect prices to fall another 10%, which isn't that different. In general I think he is underestimating the strength of the economic improvement and the amount the government will try and support prices.
Also if prices fall 20% that is not a Contrarian forecast. That is more of a Pat, Spider, Kevin... forecast. I think prices need to fall another 50+% to get close to Contrarian's forecast
In case anyone is curious about the properties mentioned in today's WaPo article about sellers having a hard time finding buyers (http://www.washingtonpost.com/wp-dyn/content/article/2011/01/21/AR2011012103042.html):
Angie and Tony Howard, Fort Washington
http://www.redfin.com/MD/Bowie/12018-Long-Ridge-Ln-20715/home/10645397
Bought $469k 2/07, article says they are selling now at sub-$300
Scott Laisney, Kensington
http://www.redfin.com/MD/Kensington/3500-Sandy-Ct-20895/home/11059805
Bought back in 97 for $186k, were trying to sell at mid-400s but took it off the market in November
Liz Dordal, Haymarket
http://franklymls.com/PW7413977
Bought for $400k 9/04, asking $359k now
David and Debbie Hopkins, Waldorf
http://franklymls.com/CH7430415
Bought for $400k 7/08, asking $450k now
hb,
He said a "minimum" of 20% but if you follow his analysis to it's logical conclusion - the result is far more grim. What would stop the self-sustaining spiral?
I don't agree with his predictions. I believe that sentiment is the most important factor. Business believes we are past the bottom. And it becomes a self-fulfilling prophecy.
I do believe that a good segment of the population is "afraid" to buy and that, for those and other "demographic" reasons, renting will remain the choice for many.
Household formation and net migration and local employment/wages will all contribute to the way things shake out regionally.
The rent vs buy, drop 20% or stagnate issues don't really concern me from a personal standpoint. The regional economy has always been strong (relatively) and I see no reason for this to change.
Lowering conforming loan limits? I'll believe it when I see it.
WSJ Article:
"At a minimum, the Treasury is likely to take steps to begin encouraging private capital to return to the market, both by allowing Fannie and Freddie to raise fees they charge lenders and by reducing the maximum loan limits for mortgages the companies can purchase."
http://online.wsj.com/article/SB10001424052748704115404576096301759391950.html?mod=WSJ_hp_LEFTWhatsNewsCollection#articleTabs%3Darticle
Mike-
I think they will probably make some changes, but not go far enough to make the businesses profitable. I really hope they decrease the limits dramatically. There is no reason that the Feds should be subsidizing fairly wealthy people to buy houses with very little money down.
cheryl
schillings charts are why i've been holding back.
1) The buyers bribe ended and sales promptly stalled. The December surge was the last of the buyers bribe deals closing. I suspect January won't be very good.
2) The Feds are the market for mortgages. Private lenders hate the market right now. That should be a big warning.
3) FHA had to double the size of jumbo mortgages to support the market, that was a big boost to the upper end, otherwise, we would see the drop there.
4) interest rates are still insanely low. Which creates a trap for future sellers. if you buy at 500K at 5%, what price do you sell at in 5 years when rates are 8%? Answer? 375K.
5) Unemployment remains high, and incomes stagnant for all but the wealthiest.
6) Charts 13,25 and 26 are the interesting ones to me. While we are off the Hyperbubble, the national rate is still C-S adjusted above the worst bubbles of 89 and 78.I remember the 78 Real estate bubble.A whole bunch of banks got trapped in that and went south.
89? that was the RTC and the S&L crisis. sucked for years to sell a house after that. Now, we are at that same peak (2X).
Chart 25 has the banks holding shadow inventory, Chart 13 shows delinquencies still rising.
What schilling leaves out is the really scary chart.
http://www.moremortgagemeltdown.com/download/pdf/T2_Partners_presentation_on_the_mortgage_crisis.pdf
slide 12 and
slide 60.
cure rates are an issue.
DC was a bubble market and faces those same headwinds
If you're on Redfin's email list, you may have already seen this:
Redfin
I thought there were some interest agent comments in the article, such as:
...“Buyers are clearly in a holding pattern right now,” said Brian Herndon, a Redfin agent in Arlington and Alexandria. Low inventory appears to be the leading factor as buyers are beginning to recognize some of the values in the market and in some cases are beginning to feel better about the economy. Buyers are wondering when sellers will finally get off the dime, accept reality and list their home. Jeremy Cunningham said, “I’ve talked to many buyers who just don’t like their options. Last year, we would have been able to show them twenty homes that suited their criteria and fell within in the $400,000 to $600,000 price range. Now it’s down to eight to ten. The choices are just not out there.”
...Brent attempts to sum up the market dynamics. “We are consistently experiencing across all DC neighborhoods that sellers are not psychologically ready to take big price hits without letting a lot of time on the market pass. For buyers this means that it’s very rare for a seller to accept an offer more than 6 to 8% below the current list price. Often the best strategy for overpriced homes is to let some time pass without an offer so the seller realizes they are overpriced and drops the list price to within a reasonable range.”
"interesting", not "interest."
slide 12 and
slide 60.
Pat-
Although the data is useful and fairly accurate I do have a couple of complaints about it. First on page 16 the data is fairly outdated. It appears that he picked the bottom for CS prices, seeing that CS claimed prices were going up in Q3 of 2009, but the graph claims % equity was falling while total mortgage equity was decreasing. So I assume this would help add a couple of percent of equity. More importantly though is the mortgage debt side. Since Q3 of 2009 the total amount of mortgage debt has fallen ~400B, while the population and number of houses has grown. mortgage debt
The main point of commenting on this is to say that the amount of equity will increase ~4%/year assuming house prices stay constant. So every year that prices don't crumble makes it less and less likely they will fall in the future.
I do agree with you about page 60. This will likely continue to stay low, because a high percentage of defaults are voluntary so of course they will not cure after missing payments.
Finally although I don't have these these numbers for DC, but I am 99% confident that the numbers look better in Nova than the country as a whole. I really do think the chance of a nationally let alone local plunge in prices is getting less and less likely.
Ace I have a different interpretation of what the Redfin article said. If there is a lack of inventory, won't there be more competition for the few houses available? Not all buyers can be in a holding pattern waiting for sellers to either put more attractive houses on the market or lower prices 6 to 8%. There are always people who are going to buy no matter the market conditions. This could bid up the prices and entice sellers to put houses on the market but I wonder if there will be the discounts the holding pattern buyers want.
reecon,
I agree with you. What will MAKE these seller's move off the dime? Absent distress or a strong reason to sell, I just don't see it.
reecon, Va_Investor,
that's my first reaction too because it's basic laws of supply and demand.
then i think about myself who has been in this holding pattern for years, and i can't be the only one out there. in the meantime, good deals in the $400K-$600K market in Arl are flying off the shelf in this dead of winter.
i guess there's always someone who has to buy at any time, and always those who have to sell, so houses are still selling. but the 400K-$600K market in Arlington is the entry-level/first-time buyer tier so it's likely (owner-occupant) buyers are being cautious/hesitant/sensitive about their cash then move-up buyers with equity.
MM, FWIW, an agent told me that a lot of the purchasers during the buyer bribe period included people selling/moving from condos (in addition to the first time buyers you mentioned).
Also, I suspect some of the sellers in that range who don't have to move are still in a holding pattern waiting for houses to buy, that meet their criteria. And/or some are getting more nervous about how future economic/political trends will affect them, so their willingness/ability to roll the dice and make the expensive decision to move up may be lower.
I should have said "potential sellers", meaning people who aren't "getting off the dime" and putting their houses on the market but would like to under the right conditions.
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