Prices continue to decline in the Washington, DC metropolitan area. From peak price which was around fall 2005, inflation adjusted (real dollar) prices are generally down between 8 - 25%. The real dollar declines are greater in condo buildings and in the outer suburbs.
An example of the price declines over the past two years:
4610 HUMMINGBIRD WAY #97
FAIRFAX, VA 22033
List Price: $424,000
Prior Sale: $486,838 07/01/2005
Listing Date: 08/20/07 -12.9%
Courtesy of: Nova Fallout Blog
According to the the S&P/Case-Shiller Home Price Index the metropolitan Washington area experienced a 7% price decline from June 2006 through June 2007 level.
According to the Housing Tracker website the median price for listings in the Washington, DC area has fallen 11.1% from August 2006.
The pullback in the U.S. residential real-estate market is showing no signs of slowing down," said Robert Shiller, chief economist at MacroMarkets LLC, which computes the price index for S&P. (MarketWatch 8/28/07) The Washington, DC area will continue to see real dollar price declines for the remainder of 2007 and throughout 2008.
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Zillow estimate currently even less than asking at $406K. And I think Zillow is een having trouble keeping up with falling values. Asking price 12% below last sale price and STILL overvalued.
ReplyDeleteHere is an interesting tidbit I saw today on MLS. A house for sale in North Arlington, which was put on the market in March:
ReplyDeleteList Date: 03/30/07
Status Date: 08/29/07
Price: $580,000
Original List Price: $669,000
Location: 4919 18TH ST N, ARLINGTON, VA 22207
Bedrooms: 5
Full Bathrooms: 3
Approx Lot Size (Acres): 0.253122
Approx Lot Size (Sq.Ft.): 11026
Year Built: 1987
MLS#: AR6357093
What caught my eye was something new in the description:
Back on the market - Buyer couldn't get financing.
So I dug a little further. The 2007 assessed value of this property is $587,300. But is is listed for sale at $580,000. I thought North Arlinton (and anywhere else inside the beltway) was immune from price drops?
I guess we will have to add that premise to the increasing pile of horse shit statements that have proven to be spectacularly wrong.
Well what about this report:
ReplyDeletehttp://www.bizjournals.com/washington/stories/2007/08/27/daily36.html?jst=b_ln_hl
What does the "S&P/Case-Shiller Home Price Index" consider "the metropolitan Washington" area to include? Does it include WV as one news article on the MSN website did?
ReplyDeleteI know a couple in the DC area (MD)
ReplyDeleteThat are selling their home they bought 30 years ago and buying a 55 and over detached home in Tolland Connecticut.
Their Realtor told them that real estate in the Washington area was 'unbelievably bad'. Need I say more?
They told me they would have to price the home 'competitively' and give closing cost allowances- very different world then 2 years ago.
caveat emptor,
ReplyDeleteWow, that is crazy! Thanks for posting that, I found it intriguing.
David,
ReplyDeleteYou cite one property that has fallen 12.9%. I can find you 1 property that has gained 12.9% in the same time frame. In addition, most of my data suggests that the market here (in DC) has stabilized and the market is projected to grow. All of the research is on my blog.
Developersagent:com
developersagent com said...
ReplyDelete“In addition, most of my data suggests that the market here (in DC) has stabilized and the market is projected to grow.”
Yes, yes, yes. There’s a DMZ (devalued market zone) fence around these parts. They still make interest only, Adjustable rate, negative amortized, no-doc loans in these areas. Furthermore, AHM is really not out of business, they just set up shop in these areas and continue business as usual.
Developersagent,
ReplyDeleteI'm sure there are fraudulent cash-back transactions you can find (your colleagues can undoubtedly point you to them).
However, the Case-Shiller index is the most comprehensive and unbiased indicator of price trends. It also trades in a REAL MARKET Take a look at the DC Futures Price Chart to see trends of "stabilization".
http://chartsrdc.cme.com:443/cs/charts.jsp?_symbol=WDC&_month=-1
Don't see stabilization? Maybe because 1) there is immense supply coming onto the market in the next twelve months (check the construction cranes). 2) all of the junk loans that enabled financially illiterate people to overleverage themselves (these accounted for approximately 1/3rd of your sales in DC last year) are gone for the foreseeable future. And 3) a huge wave of foreclosures that will hit the market as payments reset and the purchasers of the last 2 years realize they are better off walking away 4) there is a dwindling pool of suckers available to fraudulent hucksters and real estate cheerleaders due to media coverage.
Of course, if you still believe "your data" (assuming such data isn't fabricated marketing-puff to sell some lemming an overpriced condo), you can make a bet with your own money on the Chicago Mercantile Exchange price index. Good luck with that one!
The real estate boosters these days do a lot of quoting of selling prices.
ReplyDeleteThe problem is that inventory has exploded so much that sales are a tiny fraction of inventory, which was not true a couple years ago.
So the fewer sales are really not indicative of the market out there. If a 3-bedroom condo sells for 15% less than two years ago, but 5% more than a two bedroom condo a year ago, and there are no other sales, then you could say that sales prices are up 5%, but really, prices are down 15%.
That's why I find asking prices so much more meaningful. The "old" housing tracker website has asking price data going back two years, with asking prices now down more than 15% from two years ago. In real terms, that's more like 20% or more.
That is a real haircut. People got mad when I predicted, on this blog, 50-60% real price declines. We are already well on our way, only two years later.
ARF
Sam said:
ReplyDelete"Of course, if you still believe "your data" (assuming such data isn't fabricated marketing-puff to sell some lemming an overpriced condo), you can make a bet with your own money on the Chicago Mercantile Exchange price index. Good luck with that one!"
So typical of bubbleheads ... ignoring real comprehensive data (and history itself) ... and then cherry picking that data that provides personal hope and comfort.
"The real estate boosters these days do a lot of quoting of selling prices."
ReplyDeleteThis is the most desperate post ever on this site. Well done.
"So the fewer sales are really not indicative of the market out there. If a 3-bedroom condo sells for 15% less than two years ago, but 5% more than a two bedroom condo a year ago, and there are no other sales, then you could say that sales prices are up 5%, but really, prices are down 15%.
That's why I find asking prices so much more meaningful. "
Why don't asking prices have exactly the same weakness?
*crickets*
Stop saying stupid things to discredit data that doesn't support your preferred conclusion. Makes you look like a sore loser.
" most of my data suggests that the market here (in DC) has stabilized and the market is projected to grow."
ReplyDeleteWith the way the bond market has died? You do realize that the mortgage market will only regain life 60 to 90 days after the bond market returns to normal. Since not even the commercial paper market is healthy... You might want to rethink that statement.
We're *almost* back to the times where a down payment matters and they verify the loan will be repaid. *Almost* It will take another year to fully get there, but we will.
All equities, including housing, lose value as credit tightens. This is the "mother of all credit tightenings." Home prices have a long way to correct.
Got popcorn?
Neil