Tuesday, October 16, 2007

September Home Sales in Southern California Plunge

SAN FRANCISCO (Reuters) - Sales of houses and condominiums in the most populous Southern California counties fell 29.9 percent from the previous month and 48.5 percent from a year earlier, DataQuick Information Systems said on Tuesday.

The report covers the counties of Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura and showed a total of 12,455 new and existing homes and condos sold in September, the lowest since the company began recording the data in 1988. (Reuters 10/16/07)

110 comments:

  1. What caught my eye in this article is that same store sales are declining!

    http://money.cnn.com/2007/10/15/news/economy/colvin_buyingbinge.fortune/index.htm?postversion=2007101609

    well, I also noted:
    Home prices, which started sliding a little over a year ago, are now dropping faster, as measured by the S&P/Case-Shiller home price index. As millions of Americans see their largest asset becoming less valuable rather than more valuable, the wealth effect goes backward.

    Its happening.
    Got popcorn?
    Neil

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  2. Oh, I just received an e-mail from a realtor (friend of the family). There is a neighborhood of about 500 homes that me and my wife LOVE. Normal re-sales are usually about a dozen a quarter. Last quarter? Not one closed. Busiest sales quarter of the year and not on property closed. A few dozen on the market still...

    As to California, the dearth of available jumbo loans has only begun to hit the market. We haven't even yet gotten close to normal loan qualification (max 35% DTI, 25% plus down payment for jumbo loans).

    Its a waiters market. I'm still trying to confirm "The OC" home prices dropped 2.2% in two weeks. Sounds high even to this bear. But then again, that is the US epicenter of mortgage origination. If anything, things are trending far worse than prediction. Cest la vie.

    Got popcorn?
    Neil

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  3. CNN notes this is the lowest sales for SoCal in 20 years. Ouch... I lived through the 1990's recession in SoCal. It was brutal. I'd never seen so many adults cry before (and I hope to never see that again). People had to forfeit their 20% down payment, forfeit the false equity gains, and bring another 5% or 10% of the homes value to closing to dispose of the unit.

    http://money.cnn.com/2007/10/16/real_estate/california.ap/index.htm?postversion=2007101614

    This was the worst year since they started the records in 1988. Thus, a high chance SoCal is back to the 1974 Real estate recession. Remember that? We went into a recession because real estate was built beyond demand. Couldn't happen again...

    Oh, countrywide just announced 12,000 layoffs.
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aF.tFOaHQV1U&refer=home

    Got popcorn?
    Neil

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  4. Hey David,

    Maybe you can afford a house now in California? No? Maybe if you and Neil and Bob team up. You'd make a good thruple.

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  5. David will move to cali if you decide to move to.

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  6. Can anyone give me more insight into the lunacy I was hearing earlier from the Fed about having to prop up housing prices to 'save' the economy?

    It seems to me that if we adjust the rest of our economy so a $200K house is worth the $400K it sold for, all that means is that it will take $4 to pay for $2 worth of goods.

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  7. David,

    I surpised you haven't posted anything on local builder Comstock. There was an article in Saturday's Post, but here's a small piece from MarketWatch:

    BOSTON (MarketWatch) -- Comstock Homebuilding Cos.

    CHCI 1.69, +0.01, +0.6%) Friday said it saw only three net new orders for the third quarter. The Reston, Va.-based home builder said it had gross sales of 81 but 78 cancellations, underscoring buyer nervousness as home prices continue to fall in many areas of the country. In the year-ago quarter, Comstock reported 93 net new orders. At the company's Eclipse at Potomac Yard project in Arlington, Va., it had negative net new orders as 67 cancellations outpaced gross sales of 13 units. "The credit market crisis that developed over the summer has dampened consumer confidence in real estate and is contributing to reduced demand for new homes and rising inventories of new and existing homes," said Chief Executive Christopher Clemente in a statement, adding the company has reduced staffing by more than 35%. Shares of Comstock Homebuilding were down a penny to $1.87 in morning trades.

    (Me again) If a drop from 93 to 3 net sales YoY isn't bad enough, how about a drop from 774 net sales in the 1st two quarters to 3 net sales in the third? (from a different article) Apparently, builder sales are very seasonal, but that drop is stunning.

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  8. anon 6:30 PM is a fag.

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  9. Please specify the date and the link about the fed comments.

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  10. DOUBLE DIGIT INFLATION IS AROUND THE CORNER. OUCH!

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  11. Anonymous said...
    "DOUBLE DIGIT INFLATION IS AROUND THE CORNER. OUCH!"

    You're probably right. I'm glad I've locked my housing costs in. It'll be nice repaying 2005 costs in post-inflation dollars. I remember back in the '80s envying people who had mortgages dating back to the early '70s where the payments were $150/month, $117/month, etc. Rents of $300 - $600 seemed high then compared to what these people who'd "locked in" were paying to own. History always repeats itself. Vietnam ... Johnson's "Guns and Butter" argument*; Iraq ... Pres. 2009's "21st Century 'Guns and Butter" argument.

    Pres. Johnson's assertion that we could both spend lots on the war effort AND provide a "Great Society" (i.e., societal safety net) without causing inflation.

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  12. "You're probably right. I'm glad I've locked my housing costs in. It'll be nice repaying 2005 costs in post-inflation dollars."

    Now if only you hadn't over paid by about 30%...

    live the dream lance... live the dream...

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  13. With all the horrendous housing data we have seen, why has the major economic indicators not shown some falling off? I ask "Houston, why don't we have a problem?". Come and vote!

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  14. Lance, you're not going to even start repaying that cost for another, what, 8 years? Lock that cost in!

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  15. It sounds like Anon 7:15 doesn't understand the basics of financing. Can one of the more learned BHs clue him in?

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  16. Yeah, the basics of financing that apply here are that there is no such thing as a free lunch. By using an IO loan you are borrowing more money for longer, resulting in greatly increased cost over the length of the loan.

    Also, a good interest rate doesn't do you much good if your overpaid from the start. You fell for the same trick used car salesmen use all the time...

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  17. October 18, 2007 6:58 AM

    You hit the nail on the head. There is a reason they push IO loans, banks make more money on them.

    Plus, if in 7 more years in ltv isnt not at least a 100%, no one will refi him. And what if interstest rates go high, you are screwed. Unless you plan on making the payments on a 20 yr fixed when it converts. I doubt you can afford that.

    So why would a 50 yr old take a io loan on a 800k house? Can anyone say "get rich quick"? He can lie all he wants but everyone knows lance bought the place cause he thought it would be worth millions. I wonder how much his wife yells at him about that genious purchase.

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  18. Anon 6:58,

    I have a 30 yr fixed rate (5%) ... I called on BHs who understood the basics of an interest only loan to contribute ... not someone who doesn't even know what it means ... Why would you assume the rate would go up? Why would you assume anything needed to be refinanced once the interest only period ended? For that matter, why would you assume the interest only portion didn't go for 30 years ... or "forever" for that matter? You know why? 'Cause you don't understand the basics of financing ... OR of home buying for that matter. Educate yourself instead of spending your time being jealous of those who do know their away around these things.

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  19. and oh, btw, I'm not 50 ... not that that would matter if I were. I guess you think one should "pay off" their home loan before retirement? Do some research on good financial management practices ... you'll quickly learn that what you advocate is one of the worst things to do if you are an average employed person. (Hint: Mortgage interest is deductible. Additional hint: Equity sitting in your home is equity that could be out there making you money. And no, the after tax interest you save by not making a mortgage payment doesn't come close to making up for the lost opportunity of not investing in something like stocks, bonds, or ever CDs).

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  20. Lance's quotes examined:

    ...Do some research on good financial management practices ... you'll quickly learn that what you advocate is one of the worst things to do if you are an average employed person.
    ...(good financial management and good common sense are often two very different things. This might be the reason why those who follow 'good financial management' often see their princial erode over time. Anyone remember Milken and his "prudent" good financial management? How about mutual funds heavily invested in tech stocks, the "new economy", the can't miss ride to riches that many "good financial management" experts suggested investors to put their money in?)

    (Hint: Mortgage interest is deductible. Additional hint: Equity sitting in your home is equity that could be out there making you money.
    (Hint Hint Hint, lose your house due to a HELOC you can't afford, just like thousands are now doing.)

    And no, the after tax interest you save by not making a mortgage payment doesn't come close to making up for the lost opportunity of not investing in something like stocks, bonds, or ever CDs).


    No, the fact a home owner has their house paid off free and clear and never has to worry about it being foreclosed on or missing mortgage mayments in the future doesn't come close to the peace of mind that is lost when taking out a mortgage, betting wrong on the stock market/bond market or CD's and losing interest, dividends, principal AND the house.

    Not all home owners are sophisticated in the stock or bond market, and those who rely on good financial managers often find them to be account churners.

    Owning a house 100% free and clear is a joy and comfort that many home owners have, those who ignored the folly of 'treat a house like an ATM'.
    The 100% free and clear home owners have little if any interest if the housing market slumps or rises since their house is paid for, so if they don't have to sell, the only loss is paper losses, or if they do sell, the 100% free and clear owners walk away with 100% of the proceeds, no mortgage company to deal with, no worries.

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  21. It is funny that you say this:

    "For that matter, why would you assume the interest only portion didn't go for 30 years ... or "forever" for that matter?"

    Then this:

    "You know why? 'Cause you don't understand the basics of financing ... OR of home buying for that matter."

    lol

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  22. "Owning a house 100% free and clear is a joy and comfort that many home owners have, those who ignored the folly of 'treat a house like an ATM'."

    What is really funny is that lance wants everyone to believe that he is some kind of an expert ... but every time he starts trying to "explain" something he just ends up looking like a jackass.

    The truth I suspect is that lance did the same thing most IO buyers did... they simply used the lower IO payments as a way to buy more than they otherwise could and thought appreciation would bail them out when the time came.

    It was never about "buying" a house and actually owning it.

    It was about paying as little as possible to get their foot in the door while waiting to get rich off unsustainable appreciation.

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  23. I think anti-lance has chosen his name well (or her name, "because on the internet, no one knows you're a dog" to quote a cartoon).

    Anti-lance haven't you heard of a tax lien? Or the Kelo decision? Property rights have continously eroded over the years and you're foolish to think you own anything the government wants. The District sells tax liens at least once a year. The purchaser of the lien may then forclose on the property whether it's owned 'free and clear' or not. Also, the tax lien always gets paid first. If you ask "How could anyone be so dumb as to not pay their taxes?" I'll answer "The same way people are so dumb, that they don't pay their mortages."

    I think a lot of the posters can't dispute Lance without taking his comments out of context. "Good financial management" taken at face value pretty much excludes junk bonds, 20th century internet stocks, and get rich quick schemes in general, even if they are heavily advertised.

    Why assume Lance can't afford his house without an IO? He's not a first time homebuyer. And even if that was the case, why would he need to rely on apreciation to bail him out with a re-fi when his loan starts to amortize? Why not make the reasonable assumption that his income will at least keep pace with inflation? Ten years from his purchase date Lance could reasonably expect to be making nominally 30% percent more than he was then. Most likely, at least Lance's nominal income wil go up. His debt is fixed, and barring dis-inflation, the value of it decreases every year.

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  24. Tricked said:
    "Ten years from his purchase date Lance could reasonably expect to be making nominally 30% percent more than he was then. Most likely, at least Lance's nominal income wil go up. His debt is fixed, and barring dis-inflation, the value of it decreases every year."

    You're 100% right. And due to a job change, I'm already making more per month than the extra amount I will need to pay in year 10 when my loan begins to amortize. And yes, because I wasn't a first time homebuyer, I was able to put 25% down for the purchase and set aside funds for renovations. It sounds like you have at least basic financial skills to your credit. You must be a homeowner?

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  25. ""Good financial management" taken at face value pretty much excludes junk bonds, 20th century internet stocks, and get rich quick schemes in general, even if they are heavily advertised."

    Don't forget "housing" in that list... by the time this mess is worked out housing speculators are going to be right up there with .com day traders.

    "Why assume Lance can't afford his house without an IO? "

    Because lance gives the fact away every time he tries to make himself look smart.

    Read your quote:

    "Why assume Lance can't afford his house without an IO? "

    Now read his:

    "And due to a job change, I'm already making more per month than the extra amount I will need to pay in year 10 when my loan begins to amortize."

    He just admitted that he wasn't making enough to pay when he first bought the house!

    "I was able to put 25% down for the purchase and set aside funds for renovations."

    Like the $200k kitchen you thought would be necessary to bring the house down your street up to "standard."

    That is roughly equal to your entire 25% down payment right there...

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  26. lance has a fervent belief in the idea that one should over-extend himself now as a means of motivating oneself to make more money in the future.

    If you're 50, took out an IO mortgage and had to rent out the basement of the house to help meet the payments, then you bought a house you couldn't afford. You over-leveraged yourself at the top of the market.

    If one were towards the bottom of the market, was a doctor in his last year or two of his medical residency or a lawyer who was going to make partner in 2 or 3 years, it would make sense to use an IO loan if one needed a house in a specific neighborhood right now and was counting on greater value and larger income in the immediate future.

    I can certainly think of various justifications for wanting to free up as much money as possible rather than having it tied up in your house, but once you're in late-middle-age, that time has passed, and your finances should be large and stable enough that you shouldn't have to do that. And in any case, if that was your goal -- reduce monthly payments to a low enough level that you can invest the rest -- you'd be better off renting.

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  27. "It sounds like you have at least basic financial skills to your credit. You must be a homeowner?"

    At least 'till the bank comes acallin.

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  28. Anon 6:20,

    The analogy bewteen day traders and housing speculators is perfect. Each was the signature get rich quick scheme of its decade. Was there a similar scheme for the '80's? Junks bonds certainly were in the news, but the average person wasn't going to get involved in a LBO they way they could in stocks or housing speculation.

    Anon 10:37,

    Why am be the bank acallin?

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  29. Thank you Tricked for raising a few questions that need answering.

    Yes, I have heard of tax liens, but tax liens only effect those
    who fail to pay their real estate taxes on time just as penalties
    and interest only effect those who fail to pay their income tax
    on time.

    My point was owning 100% free and clear gives peace of mind
    to a homeowner that a homeowner paying a monthly mortgage
    does not know, a 100% free and clear homeowner has no monthly mortgage payment to worry about, one less bill to budget for, and there is more money at the end of the month in the debt free home owner's pocket.

    Even if the District uses eminent domain to force a homeowner out, the homeowners still have the right to demand adequate compensation for their forced move. A 100% free and clear owner gets 100% of the money, none goes to the banks or to loan companies, unlike a homeowner who owes a mortgage and will have to pay off the mortgage for a house they no longer can call home.


    Also, to claim I took Lance's words out of context, my intent was to show that the term "good financial management" is sometimes anything but good. Good financial management from good financial managers, as mentioned before, sometimes turns into account churners.

    As far as Good financial managers are concerned,
    A useful bit of wisdom then
    A useful bit of wisdom now
    A useful bit of wisdom always

    "Who is it that supports every one of the ruddy faced and round bellied brokers, furnishes their brown stone houses in velvet and ebony, their tables with wine and silver, their wives and daughters,-aye and mistresses too- in silks and diamonds and laces?
    It is the lamb, the meek eyed confiding and innocent little lamb."

    From ‘How to win in Wall Street’ 1881


    As to the claim
    "good financial management taken at face value pretty much excludes junk bonds, 20th century internet stocks, and get rich quick schemes in general, even if they are heavily advertised"

    we can claim junk bonds and internet stocks as bad financial decisions, but only in retrospect.

    To speak ill of them when they were the darlings of the investment world was to be labeled a chicken little, a know-nothing in the realm of the financial world, and basically become a target of ridicule by experts the same way that, well, that the bubbleheads are today by housing experts.

    And for anyone even remotely intersted, I am a gentleman, one who prefers to state his opinions and let you the reader accept them or reject them as you wish.

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  30. "To speak ill of them when they were the darlings of the investment world was to be labeled a chicken little, a know-nothing in the realm of the financial world, and basically become a target of ridicule by experts the same way that, well, that the bubbleheads are today by housing experts."

    Exactly... lance is the modern equivalent to the idiots who pumped internet stocks right up to the end. Guess what, it was a new paradigm then too... only it wasn't.

    At this point anyone who is still trying to pump housing is either willfully ignorant, or just the dumbest SOB on earth. I am not sure yet which of those lance is.

    Five years from now everyone will have a busted RE investor story about someone they knew who was briefly rich on paper before it all came crashing down.

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  31. "lance is the modern equivalent to the idiots who pumped internet stocks "

    GOOG

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  32. Lance: "And due to a job change, I'm already making more per month than the extra amount I will need to pay in year 10 when my loan begins to amortize."

    BH: "He just admitted that he wasn't making enough to pay when he first bought the house! "

    Sorry that's not the only meaning of Lance's statement.

    Another meaning is this, say hypothetically, his loan as IO is $3,000/month. He had $9,000/month after tax income. (What he does with the other $6,000 is his business.)

    At year 10 his loan will go up to, again hypothetically, $5,000/month. An amount that he can already handle. It will be a $2,000 increase.

    Hypothetically, Lance recently took a new job which yields, not $9,000/month but $11,000/month.

    While he was able to cover his future mortgage increase, he observes that his salary already increased to cover precisely that amount.

    He does that as he pours himself a brandy and lights up a fine cigar to celebrate the new job. Life is good as a land owner in the capital city.

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  33. "He does that as he pours himself a brandy and lights up a fine cigar to celebrate the new job. Life is good as a land owner in the capital city."

    LOL

    lance is an IT tech... I am having a hard time picturing him as some kind of minor nobility.

    Besides, the "capital city" is for the most part a cesspool. There are a handful of nice areas spread out around the edges but it is still one of the worst run cities in the country, you might as well be living in Eastern Europe.

    There is a reason DC real estate has generally been very cheap, and it isn't because: "Life is good as a land owner in the capital city."

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  34. Anon 5:49,

    How bad is your reading comprehension. When I say that one's home is not an investment to be maximized, but rather an expense to be minimized, do you not understand what that means? I've said it a thousand times and I'll say it again ... The reason bubbleheads are having such a hard time buying is that they are wannabe flippers at heart. Not wannabe homeowners. Homeowners will know what I mean by that ... BHs probably won't. The concept of owning a home (and the vast vast differences between owning and renting one's abode) is something unknown to most bubbleheads. To them it is an investment to be flipped, pure and simple, which is why they can't understand that if you do your homework and buy right (and for the longterm) you will not only spend far less to own then to rent, but you will also start to reap the multiple quality of life bonuses that come from owning where you live. And sorry, but that is not analogous to pumping internet stocks or other investment vehicles. You only think it is because you don't understand the concept of homeownership. You are a wannabe flipper.

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  35. "The reason bubbleheads are having such a hard time buying is that they are wannabe flippers at heart. Not wannabe homeowners."

    Lets all go overpay! That would be really great!

    You are projecting like crazy here lance.

    "expense to be minimized"

    The best way to minimize the expense is to let the bubble pop, not rush out and buy like you have been advocating for more than a year.

    We all know your track record on this blog, some of your very first posts here were talking about how DC was the next Manhattan and how we better not miss our chance... lol.


    BTW, I missed the post where you showed those "average rowhouses" that have gone from $1 million to $2 million over 12 months. Please repost... you pathetic liar.

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  36. David,

    Whatever happened with your rules regarding "no relevant" and personal attacks not being allowed?

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  37. Sounds like some of BH's are getting desperate. David's recession is fully a year behind schedule (or is it two?) and there is no crash in sight. Prices are correcting, as they have done in every past RE cycle. I certainly wouldn't be dancing in the streets over a possible 10 or 20% decline after the run-up of the past 5 yrs (let alone the past 10yrs or 15yrs or 20yrs or 25yrs.....).

    You get the point, right? If you miscalculated and bought at 2005 peak prices, what difference does it make long term? Why even care? If you can afford your payment, just sit tight. Let inflation work for you in reducing the cost of mortgage as the years go by.

    If you are not an "investor" or wannabe flipper, why do you need to catch the bottom? The bottom will only become visible in hindsight, and then, of course, you will have missed it.

    Consider yourself fortunate to have not entered the market in 2005 and 2006. Just as you were UNfortunate to have stayed out of the market prior to 2004. I would have no qualms about buying now.

    VA Investor

    p.s. Wannalife..er,..wannabuy, I'd love some popcorn.

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  38. http://www.mercurynews.com
    /realestatenews
    /ci_7234698?nclick_check=1

    Housing holds back economy
    Downturn in mortgage, construction industries tempers strong East Bay job growth


    "We are in a housing recession in Northern California," said Scott Anderson, a senior economist with San Francisco-based Wells Fargo Bank. "I see the fingerprints of the housing slowdown in a number of industries."

    http://www.treas.gov
    /press/releases
    /hp612.htm


    Remarks by Secretary Henry M. Paulson, Jr.
    on Current Housing and Mortgage Market Developments
    Georgetown University Law Center

    The inevitable correction began in early 2006. Today, average nationwide home prices are barely up in the year through June, sales of existing single-family homes are down by nearly 25 percent from the peak in 2005, and the inventory of unsold homes has increased to levels last seen in the early 1990s.

    In addition to affecting individual homeowners, the housing correction is also having a real impact on our economy. Annual housing starts peaked at an annual rate of almost 2.3 million units in early 2006 before falling off more than 40 percent through August of this year. Employment in residential building, including specialty trade contractors, has dropped by almost 200,000 since early 2006, offsetting about one-quarter of the jobs gained in the housing boom.

    The government never admits the nation is a recession until the nation is several quarters into one.

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  39. "Consider yourself fortunate to have not entered the market in 2005 and 2006. Just as you were UNfortunate to have stayed out of the market prior to 2004. I would have no qualms about buying now."

    Nice to hear that you admit you were wrong when you were trying to convince people to buy back in 2006.

    ...

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  40. Yes, and precisely what did I tell these rubes? Anything different than what I said above (like...if you want the house and can afford it, don't be too concerned about time frames less than 5 or 7 yrs)?.

    I don't come off my position that you can find a tremendous deal in ANY market. But, for the lazy and ignorant, be thankful you now have a chance to buy in at a lower price (perhaps - it depends on the nabe). I wouldn't, of course, be patting myself on the back if this was just dumb luck. It's a very short window of time between being a genius and being a moron; at least, if all you can think of is 2 yr time frames.

    I see dumb people jumping all over Lance because he bought in 2005. Well, can you be more stupid? Lance traded out of a CONDO at the peak of market, having seen a big windfall that none of you renters have. He did his homework and found a terrific deal with excellent financing.

    OK Homer, prices correct somewhat. SF off a max of 20-25% and condos up to 40%. This is and always has been my worst case scenario. So, Lance capitalized (literally) on the run-up and hedged against a decline (by due diligence!). And you idiots laugh about that? Give me a break! You should have bought and sold a condo when he did if you are so smart.

    Anyone with half a clue would be doing some serious bottom fishing. The downside is much less than it was in 2005. If you are waiting for a bottom, buy stocks not a home. I gather that you are not buying investment property. Good ole wannalife is calling a bottom in 2012. Happy Renting!

    I don't know about you, but there comes a point when I start adding 30 to my age to assess whether I want to take on a new mortgage.

    va_investor!

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  41. Yes, we will be happy renting,
    all the while we will be watching the following take place:

    Home owners walk from their overpriced mortgages,
    Builders keep building, adding months and years of inventory that will take years to eventually sell off,
    The CDO market dries up and the credit market tightens up,
    Banks have to eat the loans they made, many are setting aside BILLIONS to cover their bad loans,
    The lenders tighten up lending,
    The government adds regulations to prevent 'fog the mirror' loans from ever causing lending troubles like this ever from happening again,
    all the while the renters will be thankful they didn't buy a depreciating house as the housing bubble deflates.

    Perhaps I am wrong, but I dont recall the entire credit market getting hit this hard because of bad loans in previous housing downturns.

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  42. Inflation is accelerating at a higher rate than most know. The reality and truth is that the Fed has attempted to sacrifice the Dollar on the Alter of American Houseing.

    These attempts are failing miserablly. Anyone notice those ABX indices are right back to the lows of early August:
    http://www.markit.com/information/products/abx.html
    (check the AA=AltA)
    That is one nasty Dead Cat bounce, looks like we could relive the first week of August again.

    The inflation will actually cause House cost deflation, as the masses are forced to spend more and more of their income on Food and Energy.

    Commodity inflation is bad for all FB's and BH's alike.

    For those that think the trickle down into wages will even remotely keep up with basic survival necessities your about to be taught a lesson in Fiat currencies festering underbelly.

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  43. anon 7:38,

    Wow! Sounds like doomsday! Is your bomb shelter stocked with food and water? Seriously, will we all become peasants? Are you leaving the Country? Are all your assets in gold?.

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  44. "David,

    Whatever happened with your rules regarding "no relevant" and personal attacks not being allowed?"

    I have not been enofrcing them. Perhaps I should

    ReplyDelete
  45. >There is a reason DC real estate has generally been very cheap, and it isn't because: "Life is good as a land owner in the capital city."

    25 years ago, a fellow told me that prices were low because there was ample land within a half hours drive.

    At that time, Manassas was cow pastures, there were farms this side of Fairfax city, and Federal era TH's were going for $50-$100K.

    That wise man said that most other world cities had expanded and built up to the point that there was no more land available.

    Another moderating effect is building sky scrapers as they do in New York, Tokyo, or Chicago. DC doesn't allow that.

    A well maintained series of spoke roads or other mass transportation will help keep prices down. DC doesn't have and will never have the roads (thanks I66 neighbors, you fools) and rail and subway service is lagging.

    The result, demand for premium living space near the jobs will continue to increase.

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  46. "The result, demand for premium living space near the jobs will continue to increase."

    bah, there has ALWAYS been demand for premium living space near jobs, what you don't seem to realize is that the District isn't premium, just near jobs. Every major city has its slum and the District is the metro area's slum, and that isn't about to change.

    Besides, it isn't as if the number of jobs in the District is really increasing requiring increasing number of people to commute in. Most of the jobs now are outside the District. Even the federal government is expanding outside of the District.

    When new companies move into the area they generally end up in Dulles, Tysons, Fairfax, Bethesda, etc

    People act like being in close is some kind of a cure-all for the District's huge problems, it isn't. The District is a crime ridden dump with schools so bad you would have to get out to a backwoods part of Mississippi to find their equal.

    During the bubble the District's prices went up just like prices in places like Prince William County. Now that the bubble is popping the District is leading the way down, not quite as fast as PWC, but pretty darn quickly.

    Check out the most recent MRIS stats, DC down 18% YoY.

    ReplyDelete
  47. "Anyone with half a clue would be doing some serious bottom fishing. The downside is much less than it was in 2005. If you are waiting for a bottom, buy stocks not a home."

    Bottom fishing? lmao

    We aren't anywhere NEAR the bottom yet.

    Don't let that slow you down though. You have been trying to talk people into buying for two years and that was simply terrible advice the whole way.

    A "good deal" on a house that is 30%+ overpriced is still a pretty crappy deal.

    Hey, at least you seem to have realized that the people who waited were right though. A prospective buyer could potentially have saved about 100k PER YEAR they waited depending on what part of the area they were looking at.

    ReplyDelete
  48. Anon 5:34

    Jeez, that is some crystal ball you have! My best purchase ever was in 2005! Where was your ball in 2000? Oh, I forgot, none of you were in a financial position to buy prior to 2005; at which time you brilliantly realized that the market would correct.

    VA_Investor!

    p.s. there were many years that people were making 100K+ on their property.

    ReplyDelete
  49. "Where was your ball in 2000? "

    Can't speak for everyone here... but that was my freshman year in college... in another state.

    Yeah, shoulda bought then huh?

    What is it with you real estate pumpers that makes you want to go back in time the better part of a decade to make comparisons? If I had a time machine to take me back to 2000 I could do a heck of a lot better than to put money into housing.

    "I forgot, none of you were in a financial position to buy prior to 2005; at which time you brilliantly realized that the market would correct."

    It is true that I wasn't in a position to buy in 2000 in my case. I guess that does sort of shoot holes in your time travel idea though huh? Even if I had been it wouldn't make a bit of difference. We live in the present and just because GOOG was a great investment at $100 years ago doesn't mean it is a great investment at $650 today.

    I have an idea, lets talk about the present day. I don't have any interest in playing hypotheticals about what someone might have invested in years and years ago.

    Real estate TODAY is a terrible investment. We aren't at the bottom, it isn't time for "bottom fishing," and we all know that you are a classic perma-bull who is never going to think RE is a bad idea.

    The fact that you are still trying to convince people it is time to buy when there is no longer any real debate about whether there is a bubble speaks volumes about you.

    I can't tell if you lack brains or ethics but your advice is crap and your attitude is too.

    ReplyDelete
  50. Anon 8:16,

    Feel free to ignore my posts. Just like they say: when everyone is talking about what a great(can't lose) investment something is, run for the doors! The opposite is also true. I don't pretend to predict tops and bottoms. I can only make educated "guesses".

    You are fortunate that you were unable to get caught up in the mania. I didn't either, but it wasn't dumb luck. You know the saying - "the harder I work, the luckier I get".

    I bought in 2004 and 2005, but not with "new" money and these were terrific bargains. I am an investor. You are a potential homeowner. If you want to, and can, time the market - go for it.

    My opinion, for what it is worth, is that you should buy when you find something you like and can afford. History tells us, that down the road, timing is not a big factor. Everyone would be rich if they had a crystal ball. It's not an all or nothing proposition. If you are not prepared for the ups and downs, stay out of the market.

    ReplyDelete
  51. Now that the bubble is popping the District is leading the way down, not quite as fast as PWC, but pretty darn quickly.

    Check out the most recent MRIS stats, DC down 18% YoY.


    OK, this makes no sense as written,

    "District is leading the way down" from behind? PWC is in front but the District is leading from the back???

    DC 18% down YOY??? Is that the district or the Washington metro region which includes Manassas and Jefferson WV?

    ReplyDelete
  52. I said DISTRICT. I also said check the MRIS stats.

    Are our schools failing us or is English your second language?

    http://www.mris.com/reports/stats/

    DC's Sept stats:

    Dollar volume down 37%
    Average down 3.6%
    Median down 17.58%
    Total units sold down 34.6%

    The outer areas are getting hit the worst and got hit first. The District seems to be trying to catch up though and is leading the way down amongst the inner areas.

    This shouldn't have been a surprise because the District is generally speaking, a dump. People only started moving back into crime ridden slums because they had no choice. As choices expand those neighborhoods are going to remain no-go zones.

    Who the heck wants to pay a half million dollars to live somewhere where they have to deal with some of the worst crime, worst schools, worst services, and worst overall management anywhere in the country?

    You aren't even represented in congress...

    ReplyDelete
  53. "The District seems to be trying to catch up though and is leading the way down amongst the inner areas."

    I am unable to hear the voices in your head. Sorry. You did not say, "amongst the inner areas" on the blog in your previous post.

    I must also have failed geography and did not realize that PWC was an inner areas

    "not quite as fast as PWC"

    Lance, I'm trying but your friends are confusing me.

    ReplyDelete
  54. "Lance, I'm trying but your friends are confusing me."

    Bah, you are just here to bicker and make a fool of yourself.

    You are nit picking wording without even trying to make a meaningful contribution to the discussion.

    As for being confused? I don't doubt it you have to be a special kind of stupid to be a housing bull in the current market.

    Are you perhaps a student in DC somewhere?

    Can D.C. Schools Be Fixed?
    After decades of reforms, three out of four students fall below math standards. More money is spent running the schools than on teaching. And urgent repair jobs take more than a year . . .

    By Dan Keating and V. Dion Haynes
    Washington Post Staff Writers
    Sunday, June 10, 2007; A01

    Kelly Miller Middle School opened its doors in a struggling Northeast Washington neighborhood in 2004, a $35 million showcase for the District's public schools, every classroom equipped with a whiteboard and computers. A particular source of pride was a media production room, where students could broadcast announcements and produce programs to be viewed on TVs wired in each classroom.

    Three years later, there have been no broadcasts. The room still needs a last, critical piece of equipment, which fell into a bureaucratic chasm. Until a few days ago, the principal had never been told what the part was or when it was coming. For now, the $150,000 production room is a storage closet for unused books and furniture.

    As Mayor Adrian M. Fenty (D) prepares this week to become the first Washington mayor with direct control of the schools, his team promises a clean slate and a rapid turnaround. Yet a detailed assessment of the state of the school system, based on extensive public records, suggests that the challenge is enormous: The system is among the highest-spending and worst-performing in the nation. Kelly Miller is one small example of a breakdown in most of the basic functions that are meant to support classroom learning.

    · Tests show that in reading and math, the District's public school students score at the bottom among 11 major city school systems, even when poor children are compared only with other poor children. Thirty-three percent of poor fourth-graders across the nation lacked basic skills in math, but in the District, the figure was 62 percent. It was 74 percent for D.C. eighth-graders, compared with 49 percent nationally.

    · The District spends $12,979 per pupil each year, ranking it third-highest among the 100 largest districts in the nation. But most of that money does not get to the classroom. D.C. schools rank first in the share of the budget spent on administration, last in spending on teachers and instruction.

    · Principals reporting dangerous conditions or urgently needed repairs in their buildings wait, on average, 379 days -- a year and two weeks -- for the problems to be fixed. Of 146 school buildings, 113 have a repair request pending for a leaking roof, a Washington Post analysis of school records shows.

    · The schools spent $25 million on a computer system to manage personnel that had to be discarded because there was no accurate list of employees to use as a starting point. The school system relies on paper records stacked in 200 cardboard boxes to keep track of its employees, and in some cases is five years behind in processing staff paperwork. It also lacks an accurate list of its 55,000-plus students, although it pays $900,000 to a consultant each year to keep count.

    · Many students and teachers spend their days in an environment hostile to learning. Just over half of teenage students attend schools that meet the District's definition of "persistently dangerous" because of the number of violent crimes, according to an analysis of school reports. Across the city, nine violent incidents are reported on a typical day, including fights and attacks with weapons. Fire officials receive about one complaint a week of locked fire doors, and health inspections show that more than a third of schools have been infested by mice.

    "I don't know if anybody knows the magnitude of problems at D.C. public schools. It's mind-boggling," said Abdusalam Omer, the school system's chief business operations officer, who was hired in February to tackle payroll, purchasing, personnel and repair operations.

    Omer, who worked for the schools as chief financial officer a decade ago, said little has changed.

    "It's like I've been in a coma for 10 years and just woke up," said Omer, who left the schools to be chief of staff to former mayor Anthony A. Williams (D) and then worked in Kenya for the United Nations.

    He said that when he walked into the personnel office this year, it was "strikingly scary" to find the mountain of boxes holding files on more than 11,000 employees.

    The article goes on...

    DC is the closest thing to the third world you are going to find north of Mexico. There is a reason the vast majority of the District is nothing but run down slums. Nobody in their right mind would want to live in a city that can't even provide basic services to its residents.

    ReplyDelete
  55. "Bah, you are just here to bicker and make a fool of yourself.

    You are nit picking wording without even trying to make a meaningful contribution to the discussion."

    Don't think so. I am incredibly on topic. I don't let BH slide when they are hearing voices or using each other as proof.

    For example, it is not a given that RE prices will fall next year. Saying it will does not make it so. Citing another BH is not proof.

    RE might fall, then again it might not.

    What we do have evidence of is RE prices climbing in premium, close in locations. For example, there is study group 1006.

    There is also some evidence that assessments in Alexandria are artificially low.

    I don't have conclusive proof of that but the data suggests that many places are under assessed.

    I am certain that your claim in untrue.

    "the vast majority of the District is nothing but run down slums"

    There are slums but there are also incredibly beautiful and classy areas.

    ReplyDelete
  56. "For example, it is not a given that RE prices will fall next year. Saying it will does not make it so. Citing another BH is not proof."

    lmao... yeah, maybe it will rise right? I guess the Fed are all bubbleheads now, and Paulson, and the national association of home builders, and hell, everyone with a clue. Maybe you are still waiting for the light bulb to come on but that isn't our problem.

    "What we do have evidence of is RE prices climbing in premium, close in locations. For example, there is study group 1006."

    WTF is "study group 1006?"

    There are still a few neighborhoods that haven't been hit yet, but they aren't "premium," more like dumb luck.

    "There are slums but there are also incredibly beautiful and classy areas."

    It is a run down, mismanaged innercity mess. There are a handful of decent neighborhoods around the edges of DC but you wouldn't want to walk down the street alone at 9pm in 90% of the District.

    ReplyDelete
  57. WTF is "study group 1006?"

    Fair question.

    Here is Study Group 1006, it's a collection of "comps" in my area, zip code 22305, Alexandria VA, the closest neighborhood to the District.

    The city uses "Study Groups" to determine assessments. If actual sales fall, they lower assessments in January. If the sale price rises, they raise assessments.

    The city publishes the comps so that owners can see why their assessment changes. There are hotlinks to the house descriptions.

    An owner can appeal the assessment but it's D*MN hard when the city shows you the actuals.

    Study group 1006 is mostly older SFH, 3/1's, 3/2's, near Russell Road.

    The actuals suggest that the city will slap on a 10-20% increase in January 2008.

    Here's another Study Group, 1012 it's close to the Braddock Rd Metro.

    I've looked through the city's database and don't see a real estate bubble bursting.


    Prices are generally rising. The DB is a terrific resource and combined with Zillow.com puts the data at everyone's finger tips.

    ReplyDelete
  58. LOL... tax assessments?

    You think rising tax assessments is a valid way to gauge where the RE market is heading?

    lmao

    Those assessments ALWAYS lag actual prices by a wide margin. You aren't comparing this year to last year. You are comparing this year to at least two years ago.

    That entire approach is brain dead.

    Besides, only 4 of those 29 sales are from Sept or Oct. Only 8 are from August or later. Not only is it a crappy comparison that wouldn't be valid under the best circumstances, it isn't even recent crappy data.

    As for 22305... it doesn't look like there is any meaningful data available at all. There were only 8 sales in that zip code last month. Count them, 1,2,3,4,5,6,7,8.

    There are 72 houses sitting on the market... a healthy 9 months of inventory right? There were 22 new listings with only 8 new pendings! You think that is a neighborhood that is shooting up?

    If so think you are the one who is shooting up...

    At least with the District nearby you probably don't have to go far to pick up your stuff.

    ReplyDelete
  59. Here's another part of 22305, study group 1010, which is near Route 1 and generally tattier than 1006. Check out the prices at the link!!!!

    You can see the area on Zillow and Google Maps, click for a view. Pretty cool, huh?

    ReplyDelete
  60. Annoymous 6:35 is completely right.

    You can't compare sales prices to tax assessments like that.

    It is a meaningless comparison.

    ReplyDelete
  61. Anons,

    Are the assessments lagging because the house houses are selling for more than the assessed value or less than the assessed value? Because Alexandria updates its values every year, and the assessments reflect the City's best guess based on 2006 data, shouldn't all or at least most of the sales be for less than assessed value? Also, when you consider methodology, you have to consider that the City is extremely reluctant to cut assessments since that means they get less revenue.

    If you go to the individual house data, you'll see in most cases the 2007 assessment is less than the 2006, which makes sense, because 2006 was the local peak. Also, when your looking at the indivual house data, you can get a sense of how well the city tracks values versus the repeated sale of individual houses. It's pretty responsive.

    ReplyDelete
  62. The issue is that assessments are based on a mix of sales from all through the previous year and are at best general estimates.

    Comparing actual sales to assessments simply doesn't work well. Assessers don't look at the same thing buyers do.

    Try it sometime, redo your kitchen and see what it does to your tax assessment.

    It is a waste of time to even attempt to compare assessments to sales. Period.

    ReplyDelete
  63. Anon 9:38,

    What's really a waste of time is arguing with anonymous posters who aren't even paying attention to what you write.

    Look at the houses that have had multiple sales in the last 10 years and see how the sales prices compare to the assessed values. It is very simple to do that kind of research on the Alexandria website KH linked.

    Yes, there are errors on individual homes, because the assessor has no idea you put in Uba Tuba and and a commercial style oven that no one uses in your kitchen, but the whole point is to look at the trend, not "my house".

    ReplyDelete
  64. The problem is that the relationship between appraisals and actual values isn't constant.

    Generally speaking, appraisals will lag real values when prices are going up and are going to overstate values when values are going down.

    In a transitioning market appraisals will take time to show the new trend.

    Appraisals are a very dicey way of trying to see trends, especially when you consider that there is much better data available in the form of actual sales statistics.

    KH is trying to use appraisals because when you compare the very conservative appraisal values to actual sales values it looks like prices are rising which allows KH to sleep better at night.

    If he was interested in an honest discussion about the RE market she would be using real sales statistics but those numbers don't show what KH wants to see he ignores them.

    Appraisals are almost useless as a means to track real estate values in another other than the broadest terms. Over a couple decades could you look at appraisals to see what the trend is? Sure. Will appraisals help you in a year over year comparison? Not at all...

    ReplyDelete
  65. Anon 2:01,

    Ok, I just pulled up MRIS sales statisitics for the City of Alexandria, Sept 2007.

    Median up 6.21% YoY
    Average up 1.45% YoY

    I do agree that the assessments are lagging indicators, but they are not conseravtive,in Alexandria, beyond lagging. (I'm a former Alexandria homeowner who challenged my assessment twice, with a 50% success rate). The methodology is similar to the unassailable Case-Schiller index where sales pairs are used to create change factors applied to the aforementioned "study groups".

    ReplyDelete
  66. "Ok, I just pulled up MRIS sales statisitics for the City of Alexandria, Sept 2007."

    Now you are on the right track.

    Without decent data you can't even get started in trying to examine what is going on.

    The City of Alexandria has certainly escaped the bursting bubble better than most areas so far but the current month's data is deceptive and forward looking indicators are not favorable.

    Sales are down 20% and days on the market are up. There were 981 homes on the market with only 130 sales.
    (7.5 months of inventory)

    Additionally, there were 329 new listings with only 141 new pendings.

    Also,~and this is key~ the median price gain is deceptive because a different mix of houses is selling as compared to last year. If you really want to understand what is taking place you need to dig deeper into the numbers.

    This year for example there were 61 SFH and 69 condos sold. (47% SFH)

    Of those SFHs 25 were detached. (19%)

    Last year there were 75 SFHs and 91 condo's sold.(45% SFH)

    Of those SFHs 25 were detached. (15%)

    You need to consider that the average sale price of a condo in Sept 2007 was $324,440 and $320,906 Sept 2006. Both of these numbers are well below the Median and Mean sales prices for Sept 2006 and Sept 2007.

    The opposite is true for the detached homes which were well above both the Median and Mean.

    This means that 2006's numbers appeared low because of the greater percentage of condos that sold in that year and the smaller percentage of detached homes.

    2007 sounds like an improvement compared to 2006, but what happens when you compare to 2005?

    The Median in 2005 was $430k while the Median in 2007 was $427k.

    That certainly doesn't show that the City of Alexandria is getting hit hard, but it also doesn't show a market on its way up.(which is what KH tried to claim initially)

    Alexandria is basically flat from the peak right now and looks to be edging lower in the coming months.

    ReplyDelete
  67. Anon 5:37,

    Your analysis is very good, and I agree that small data sets like 1 months sales in a small to medium size city llike Alexandria are not necessarily indicative of the overall all trend.

    What's your analysis of the leading indicators? I know inventory is a good one, but is 7.5 months that far above the long term norm (6 months) to be a big drag? Sure, excess inventory will hold down prices, but how much? Is there a rule of thumb along the lines of "for every month of excess inventory per year above the average, prices will drop 1% per year"? (i.e. if there was 8 months of inventory for a year, then prices would drop 2%) I haven't heard of one, but I can imagine one exists. Are there other solid leading indicators out there? I've heard of mortgage applications being one, but I wouldn't call that "solid".

    ReplyDelete
  68. Hey "tricked",

    Serious questions, what's the deal with this assessment?

    2005 $3,478,700
    2006 $3,493,900
    2007 $3,493,900


    And check out Study Group 714. I think someone's getting away with something.

    Also, what do you think about 2918 Russell Rd. Same deal 3 flat years but when it sells it jumps 38% over assessment. ("Real estate flat or did someone pay off the city? " )

    Could I protest that 2819 is too low?

    Take a look at 331 Mansion Drive.

    2003 $907,100
    2004 $930,000
    2005 $930,000
    2006 $930,000
    2007 $930,000

    This one had essentially the same assessment since 2003. Where's the real estate bubble? (I don't think that real estate was flat on Mansion Drive. I think it means the fix is in. )

    Where this ties back to BH mantra is this, if a bunch of rich sots are getting away with way too low assessments, then the total profile for the city is wrong, it's way too low.

    As long as no one sells, then the city can't justify a higher assessment. This is a different paradigm from, say, Manassas. There are few sales in Alexandria and in zipcode 22305 because few places are offered. 72 is not a large number for an entire zip code.

    ReplyDelete
  69. "it looks like prices are rising which allows KH to sleep better at night. "

    No, you have it backwards.

    I don't need a higher assessment until the day I choose to sell. I might never sell.

    The data strongly suggests that Alexandria and especially my zip code is under assessed.

    "Actuals" are coming in above assessments.

    If enough of these come in, the city will raise my taxes.

    I already pay too much real estate tax.

    ReplyDelete
  70. kh,

    The only one that looks unusal to me is 331 Mansion. If you're in the neighborhood, has this house been undergoing renovations? I challenged my assessment once during renovations and was able to get it dropped below the previous year's assessment because the house was basically uninhabitable.

    What looks odd to me was the decrease in the land value from 04 to 05. But that could be a result of an active homeowner who has scoured the neighborhood tax records comparing sqft to assessed value.

    I don't think a lack of sales in a study group would prevent the City from raising assessments. It would be very simple, and statistically relevant to aggregate the study group into a larger group and apply the overall trend. My experience is that the City is not bound to the increase in the study group.

    ReplyDelete
  71. tricked wrote:"The only one that looks unusal to me is 331 Mansion. If you're in the neighborhood, has this house been undergoing renovations?"

    Yes, 331 Mansion was extensively renovated about 3, 4 years ago. It was also professionally landscaped and looks quite attractive from the street.

    Could it be that the city has lost track of it?

    A neighbor put $200K into his place several years ago and reports being way under assessed. I'm not going to rat him out but, I wonder how common this is.

    I gotta admit that I cannot get used to the numbers, 100K is nothing, 250K is a nice 1/1 condo, 500K is a commodity TH, SFH are $750K, maybe I'm a BH.

    ReplyDelete
  72. "What's your analysis of the leading indicators? I know inventory is a good one, but is 7.5 months that far above the long term norm (6 months) to be a big drag?"

    It is really hard to say. Generally speaking inventory numbers above ~6 months tend to suggest price declines are on the way but it depends what time of the year it is. Generally speaking greater amounts of inventory is a worse sign late in the year. (7.5 months of inventory is a worse sign now than it would have been in the spring)

    The main thing that suggests to me that Alexandria is going down is that sales have fallen through the floor and inventory is rising.

    Sales all over the area, and the country, have dropped dramatically as a result of the tightening of the mortgage market. Without the availability of exotic loans values will have to come down. (Because earning power in the area simply hasn't increased dramatically over the last 10 years.)

    I suspect Alexandria will be among the last to experience significant declines but it isn't somehow immuned to what is going on all around it. Just how much it loses will be hard to say.

    Like you said... tracking Alexandria on a month to month basis is tricky. It is a small enough area that its numbers will jump around a lot, especially with the market in transition.

    One thing that I can say for sure is that KH's original statement:

    "What we do have evidence of is RE prices climbing in premium, close in locations. "

    Is simply not true.

    ReplyDelete
  73. "One thing that I can say for sure is that KH's original statement:"

    is supported by study group 1006

    Of course, one would have to follow the link, consider the information, and come to a conclusion.

    My conclusion is that prices are rising because recent sales are higher than past assessments which are based on past sales. If this is BH heresy, then the argument is with the numbers and should be supportable by more numbers.

    ReplyDelete
  74. "If this is BH heresy, then the argument is with the numbers and should be supportable by more numbers."

    It isn't heresy, just stupid. Even after the flaws in your reasoning were explained to you at length you persist in making a fool of yourself.

    Just so long as you don't expect anyone to humor you.

    Being ignorant is one thing, being ignorant and unwilling to learn is a lot worse.

    ReplyDelete
  75. anon said:
    "Being ignorant is one thing, being ignorant and unwilling to learn is a lot worse."

    I've been trying to come up with a succinct definition for Bubblehead. Thanks for the definition!

    ReplyDelete
  76. "Even after the flaws in your reasoning were explained to you at length you persist in making a fool of yourself."

    Why the anger?

    I guess you didn't follow the link, here are the recent entries in Study Group 1006.


    Addr, 2007 Assess, Sold, Amount

    2500 SANFORD, $534K, Jun, $569K
    2712 SYCAMORE, $523K, Jun, $705K
    3104 HOLLY, $802K, Aug, $880K
    2819 RUSSELL, $1,008K, Oct, $1,393K


    I suspect that 2712 Sycamore was tarted up for the $182,000 increase over assessment. 2819 Russell was not. The $385,000 increase was simply the market.

    2819 is a big, modern house; the others are nothing special, like my place. They are a 5 minute drive to the Braddock or King St Metros, Crystal City, Old Town, the Pentagon, and walking distance to interesting restaurants.

    Although there are places in Study Group 1006 that sold for less than assessment, most are at or above the January 2007 assessment.

    Saying that an assessment means nothing does not prove that the assessment means nothing.

    That's how BH's cherry pick the data. Where assessments fall YOY or sales are below assessments, BH trot that out as proof of a fall. That's happening out there, Manassas, West Virginia, and other areas that shiller-the-book-seller includes in the Washington Metropolitan statistics.

    Study Group 1006 and many other Study Groups in Alexandria show sales prices above past assessments.

    No argument that sales volumes are off, even in Alexandria. However, 72 (whatever) places for sale in zipcode 22305 is not a large number.

    "Tricked" appealed his assessment twice. Those words mean, s/he argued with the city that the house and lot were worth less, not more.

    BH's, perhaps because they are renters, don't understand that equity is not the goal. The goal is to own the property, be secure, enjoy life, and pay less out of pocket.

    Many homeowners have no intention of selling nor need HELOC.

    Flippers do and they are another matter entirely.

    ReplyDelete
  77. KH, trying to explain things to you is like talking to a child.

    You really can believe whatever you want.

    Yes, prices are on their way up in Alexandria. That is why Sept 2005 sales are above Sept 2007 sales data.

    Clearly things are shooting to the moon!

    You can cherry pick all the apples to oranges comparisons you want. It doesn't change a thing.

    ReplyDelete
  78. you should start your own blog where you can post all this stupid shit about the status of tax assessments in alexandria anyone who cares about that bullshit can just go there and read about it all day long it has nothing to do with what we are talking about here that is why most people just ignore your posts you aren't adding anything!

    ReplyDelete
  79. Over the years I've owned a lot of rental properties and I don't remember ever having a property assessed at it's actual market value and that include 4 properties in Alexandria.

    ReplyDelete
  80. "Over the years I've owned a lot of rental properties and I don't remember ever having a property assessed at it's actual market value and that include 4 properties in Alexandria."

    It is rare for a city to assess at a property's true sales value because it leads to too many challenges.

    It is much easier to consistently assess below the market value and set the tax rate to reach the desired level of revenue.

    In order for kh to even begin to make a case that comparing assessments to sales is meaningful he would have to demonstrate that assessments are GENERALLY at full market value. To do that he would need to find a long period where assessments matched sales prices. (and not in one or two cases either, in general)

    kh isn't going to find that data though... so we can all look forward to a bunch more stupid posts consisting of lists of assessments that are below sales prices.

    ReplyDelete
  81. Anon 5:12 said:
    "you should start your own blog where you can post all this stupid shit about the status of tax assessments in alexandria anyone who cares about that bullshit can just go there and read about it day long it has nothing to do"

    funny you should mention that since there IS such a blog for Nova ...

    http://novabubblefallout.blogspot.com

    ReplyDelete
  82. "funny you should mention that since there IS such a blog for Nova ... "

    That blog is about actual real estate values... not assessments. Don't encourage KH to spread his stupidity any farther than necessary.

    ReplyDelete
  83. Anon 7:24,

    On the contrary, that blog isn't about "actual real estate values". The blogger there posts "list prices", "prior sales prices" ... Like the blog being proposed for KH, nothing posted on the Nova Blog is about "actual real estate values."

    ReplyDelete
  84. sales prices are values.

    assessments are not.

    too complicated? go back to school

    ReplyDelete
  85. sales prices from 1, 2, 5 years ago are NOT "actual real estate values"; they are past sales prices.

    It's funny how BHs have a grasp of "current" and "past" and sales prices not being the bottom line sales "value" figure ... but only when it suits them. Selective recognition of the facts is indicative of a situation where one wants things to be as they think they should be and not as they are.

    ReplyDelete
  86. Well I don't know if there's some official definition of "actual real estate value" out there, but I do know there's a difference between assessment values and list prices/prior sale prices.

    ReplyDelete
  87. Many here are showing their lack of knowledge. The RE market was not invented 3 or 4 years ago. If you don't know that assessments exceeded sales prices in many circumstances in the early to mid-90's, you should just keep your mouth shut and read some history.

    ReplyDelete
  88. "If you don't know that assessments exceeded sales prices in many circumstances in the early to mid-90's, you should just keep your mouth shut and read some history."

    Translation, assessments are not values.

    Sometimes they are high. Usually they are low.

    If at some point assessments briefly match values it is only conincidental.

    ReplyDelete
  89. What I don't understand is why many of the posters who argue with kh think the city is not assessing for FMV as of January 1. Do you think that there is some sort of conspiracy in local government? Is the City of Alexandria part of the REIC? Do you think they had anything to do with the 9/11 conspriacy too?

    Do you disagree with the City's methodolgy? It's very similar to the Case-Shiller method, only it doesn't use information from WV to determine values in DC. Maybe if the City used information from other states it would be better? How about if it used the number of units for sale on average the previous year to determine values? What exactly is wrong with the methodology?

    ReplyDelete
  90. "What exactly is wrong with the methodology?"

    How about that it correlates poorly with actual sales prices?

    ReplyDelete
  91. This isn't just a problem of the methodology, it is a problem of comparing an assessments to actual sales.

    Alexandria assessments may indeed provide some kind of useful historical trend information, assuming a consistent methodology has been used, which is very risky to assume.

    The problem is that KH is trying to compare assessments to sales.

    It isn't an apples to apples comparison.

    ReplyDelete
  92. Assessments lag the market by a couple of years. And, if you don't live in a tract home, they can be all over the place. If the house hasn't sold in 20 or 30 yrs and is non-subdivision, it's a crap shoot.

    Va.

    ReplyDelete
  93. "Assessments lag the market by a couple of years. And, if you don't live in a tract home, they can be all over the place. If the house hasn't sold in 20 or 30 yrs and is non-subdivision, it's a crap shoot."

    I am shocked, for once you contributed something!

    You CAN NOT directly compare tax assessments and sales prices. They are simply not interchangable.

    Pointing to lists of houses that are selling above their assessments doesn't prove the market is rising in the current time frame. It doesn't prove a thing.

    Just use sales data. It is available afterall.

    ReplyDelete
  94. anon 11:41,

    I can safely say that I have learned absolutely nothing from you.

    ReplyDelete
  95. "I can safely say that I have learned absolutely nothing from you."

    You know the old saying...

    You can lead a horse to water but...

    ReplyDelete
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    ReplyDelete
  97. "Just use sales data. It is available afterall."

    Unfortunately, it isn't available. All there are are Study Groups. This isn't Manassas with the A, B, and C model replicated over and over and over and where hundreds of identical houses are sold each year.

    There are usually about 150 houses for sale in my zip code, 72 last I looked but this is the slow time of the year. There are so few houses offered that each sale tends to stand alone.

    There is still no evidence that prices are soft or falling in close-in, premium areas. Any BH is welcome to link to such data as I have pointed to rising indicators.

    Where is the data?

    /Sales are off <> falling prices
    //falling prices == falling prices
    ///Lance, your BH friends...

    ReplyDelete
  98. bury your head deeper kh, some light is getting in!

    Your neighborhood is nothing special. I have driven through there dozens of times. You think some special rules apply because you are in GASP Alexandria?

    bullshit... your cute little neighborhood is just like many similar ones in arlington, falls church, etc...

    You are a classic case of why homeowners tend to set their prices far too high. They convince themselves that their neighborhood, block, steet, and house are all just a little bit nicer than the others and thus...

    blah blah blah

    ReplyDelete
  99. kh,

    You'll never learn will you you? Experts in Ivy League Universities and the New York Times have determined that location is not important in determining real estate values. That's why experts use real estate sales in Jefferson County to determine trends in Alexandria. It's SALES DATA, you see? Probably some of the anons you're arguing with are Mr. Case or Mr. Shiller ad their just too humble to post under their real names.

    ReplyDelete
  100. kh,

    There isn't any data; that is why it is not posted. We are directed to the BubbleFallout Blog - home to the REO's. I saw a couple of interesting condo's at Reston Town Center listed there, but, alas, they were gone before I had a chance to investigate them. See anything in your zip listed there? I didn't think so.

    I have yet to see one in my zip either. But according to the doom sayers, it's just a matter of time.

    Yes, time. How long until the bottom and how much will we drop? These are the important questions. From what I've seen so far, it looks like the 90's all over again.

    If we see corrections averaging 20%, how big an issue is this for the average homeowner? Sure, the wealth effect is important but the economy seems to be weathering the storm quite well so far. Remember, many people saw their homes more than double in value over the past five years. Despite the constant drum beat of the BH's, a small minority of owners used their homes as ATM's.

    va.

    ReplyDelete
  101. anon 5:18,

    It couldn't have been Shill(er), he was just on Larry Kudlow. He didn't sound too convinced about the future when Larry tried to pin him down (?). I guess David J., Neil and his anon pals are our best bet!

    ReplyDelete
  102. "It's SALES DATA, you see?"

    What is amusing is that in your attempt to be sarcastic you actually came closer than you likely have at any other point in your life.

    Sales data, and it is available by zipcode, dipshit.

    If you are looking at sales data from WV then it is your own damn fault, there is local information available.

    ReplyDelete
  103. Anon 6:56,

    Your not Anon 5:37 Oct. 22 are you?

    ReplyDelete
  104. "You'll never learn will you you? Experts in Ivy League Universities ... anons you're arguing with are Mr. Case or Mr. Shiller ad their just too humble to post under their real names."

    I like it! Thanks!

    One correction though, they may be arguing with me but I am not arguing with them.

    The reason, they are not posting anything concrete that could be argued with.

    They are repeating mantras, "there's a bubble. The bubble is bursting. I said it. That proves it."

    I reply with Study Group 1006 showing price jumps.

    They talk about 72 places for sale in my zip code. While that is more than last year and 2005. I recall seeing 20 or 30 places for sale then. It's not very much for this entire zip code.

    I submit the dollar amounts, they start cursing. Even by NEWGROUP standards, that's tacky.

    ReplyDelete
  105. "See anything in your zip listed there? I didn't think so.

    I have yet to see one in my zip either. But according to the doom sayers, it's just a matter of time.

    ...

    If we see corrections averaging 20%, how big an issue is this for the average homeowner? "


    I am looking for evidence of lower prices so that I can appeal next year's tax increase. Study Group 1006 suggests that my taxes may increase by 20 or 30% as that seems to be the valuation trend, one house went up 38%!

    I'm still not sure what's going to happen.

    Houses in Alexandria and other close-in locales have been flat or rising slightly while Manassas and WV have fallen.

    Inflation, gasoline, food, energy, materials are up.

    There is pressure on the Fed to stimulate the economy, if they do that to "save" Manassas, they might set off a boom, close in.

    A year or two ago, I thought I might see a 5%, 10%, maybe 15% price pullback in my place.

    15% is not quite break-even on a round trip, sell, move, rent, move buy again.

    And that assumes that I sell at the peak and buy at the trough on a 15% pullback. That's very unlikely.

    15% is about $70,000 on my place.

    ReplyDelete
  106. Kh Kh Kh...

    you think you can substitute tenacity for thinking ability?

    You can't...

    Go ahead and bury your head as deep as you can. Maybe an archaeologist of the future will find your fossilized remains and wonder when modern man emerged...

    ReplyDelete
  107. KH - I am normally on your side my man, but this time I have to call you out on using assessments. I used to challenge assessments for my commercial clients (mostly in Maryland) but I think I do have a good idea for how these things work.

    Anon Oct 24 6:56 is right. Assessments are generally lower than FMV because if they are too close to FMV it leads to too many challenges before the appeals board. I will note that Alexandria (I live here too) is much closer to FMV than other counties. A few years back they switched from low assessed value and higher mils (1.08) per thousnad of assessed value) to more accurate assessed value, and lowered mils (0.98 per thousand) (lowering the mills made us all feel like we were getting a break).

    Bottom line, I will admit that our assessments are closer to FMV than some other counties, but at the end of the day, they really dont tell you much.

    ReplyDelete
  108. "Bottom line, I will admit that our assessments are closer to FMV than some other counties, but at the end of the day, they really dont tell you much."

    I'm concerned about the converse. My thesis is that the recent high sales in Study Group 1006 (and other Study Groups) will give the city an excuse to raise assessments.

    319 Mansion (I won't bother w/ the link because you've seen it.) and other places are sandbagged, holding lower assessments than they should. I know the city keeps some places comfortably under assessed.

    I'm not saying, "woo-hoo-yippie, see the big price jump of recent sales over assessments. That means I are rich!"

    I'm saying, "Dang, the recent sales are all up and that is exactly what the city needs to justify higher assessments."

    and

    "Those crooks will jack my taxes up."

    The BH's all think we want higher assessments and prices to go up.

    Here's the broken record again. I don't care about prices going up, which they are. I don't intend to sell, ever.

    I'll die and my heirs will get the step up value but they won't sell either.

    The BH are arguing with the ASS-U-Mption that when I compare past assessments and recent sales, I'm saying "goodie-goodie, this proves that recent valuations are higher than past valuations" and they go, like, "pish-posh, past assessments are not related to valuations past or future."

    Well, they haven't been listening. It's the assessment that matters, not some ethereal notion of value. If the sale of 2819 Russell road drives Study Group 1006 up 38%, that costs me thousands of dollars each year, forever.

    ReplyDelete
  109. People pay Anon October 26, 2007 3:23 PM to fight for lower assessments.

    Another poster appealed his assessment twice and got a reduction once.

    BH's, most househeads do not want prices to up (until the day before they sell.) We're not flippers. We are paying our places off. We don't use our houses as ATMs.

    Earlier this year, sales prices were flat to slightly rising in my area. Recent sales are at higher prices and suggest that assessments will be higher in January 2008.

    I've cited those prices in this blog. While I do sympathize that BH's may be priced out and appreciate that BH are angered by discussions of price increases, realize that I don't want the price inceases either.

    ReplyDelete