Meanwhile the inventory in the Washington area is much higher then last year at this time. In Montgomery County, MD, in February 2007 inventory stood at 3736, but in 2008 that number had increased to a bloated 5722 an increase of over 50%.
In the Washington, DC area, in February there were 34,978 housing units available through the MRIS . This includes Washington, DC, Montgomery County, Prince George's County, Arlington, County, Fairfax County, Fairfax City, Alexandria City, Prince William's County, Loudoun County, Manasses City, and Manasses Park City. In these jurisdictions sales totaled a measly 2781. This represents a 12.6 months supply of housing units. The number include condos and single family residences from the MRIS. According to the knowledgeable Calculated Risk "Usually 6 to 8 months of inventory starts causing pricing problems, and over 8 months a significant problem." By 'pricing problems' , Calculated Risk means declining prices. Washington, DC area is at a 12.6 months of supply (well above the 'significant problems' 8 month threshold) . Expect major price declines in the Washington, DC area this year. In 2008, expected nominal price declines should range between 7% - 16% in most part parts of the Washington, DC area.
Some areas have of a much larger months of supply then others. Prince George's County has an astonishing 23 months supply, whereas Washington, DC has an elevated 8.6 months supply.
For more numbers please go to MRIS Market Statistics.
The Washington area is not recovering from the housing decline. Prices continue to fall. For real estate, this spring's real estate season will not be a recovery time in the DC area. Housing busts usually last many, many years. We still have many, many months to go before bottom in the Washington, DC area.
Posts
Once again, you are failing to distinguish between the inner counties and everyone else.
ReplyDeleteCounty Months of Inventory
D.C. 8.68
Arl 6.87
Alex 7.99
Ffx 10.64
Mont 11.82
P.G. 23.35
Lou 12.58
PWC 16.12
Faq 22.81
Culp 26.42
Wow - inner counties are now running between 6-8 months inventory...BFD!!! If this is the vaunted "bubble bursting" the inner counties have been waiting for for 30+ months, how much more anticlimactic could it be???
Actually I did. Reread the post where is says: "Some areas of a much larger months of supply then others. Prince George's County has an astonishing 23 months supply, whereas Washington, DC has a 8.6 months supply. "
ReplyDeleteAlso, there is some subsitution going on between housing units in DC and housing units in the suburbs.
ReplyDeleteOnce again, you are failing to distinguish between the inner counties and everyone else.
ReplyDeletetranslation: LETS SPLIT HAIRS
Lets see in 1990's it took 6-18 months to see a home. Today it can take 4-6 months or if the sellers are realistic it can take 14 days. So the inventory issue can in some ways be blamed on unrealistic sellers who don't have agents who will tell it like it is and get their house sold!
ReplyDeleteHow will the turnover precipitated by the upcoming change in the Federal Administration affect the Washington DC housing market?
ReplyDeleteExpect major price declines in the Washington, DC area this year. In 2008, expected nominal price declines should range between 7% - 16% in most part parts of the Washington, DC area.
ReplyDeleteMore like a 10% to 20% drop. The layoffs have started and that drives the spiral (unfortunately).
Even Alexandria is at 8 months of housing. The old 'rule of thumb' is you must be priced to sell in two months. So only expect the homes that are in the top 25% of value to sell. Any sellers too stubborn to enter that group, won't sell. The Best prices ~25% of the market, will.
There will be housing substitution. We also are transitioning to full doc loans. Not exactly the environment for a new bubble.
Got popcorn?
Neil
All this talk of the “substitution effect” for inner and outer beltway housing seems a bit overblown. The other day, I was traveling with a group of 8 urbanites past a new subdivision in Culpeper selling huge McMansions in the “Low 400s” – down from 600K at the peak. The issue came up, (and not from me, the only one concerned with the housing situation), what would each of them pay to live in those houses. The general consensus as to their value $0.
ReplyDeleteIntrigued, I pressed them on this. So you mean to tell me, if you could sell your house, keep all the cash (or for the renters, quit paying rent), and live here for free you STILL woudn’t do it? After thoughtful consideration most said yes – they wouldnt. I asked, what if the houses were closer in, like in Fairfax? For many the value was still $0, but for a few, they would now be willing to pay “maybe 50-100K” to live there. All conceded the McMansions were much larger than the tiny inner area places they live in now, but they still had little to no value to them. The reasons why varied by person (long commute, traffic, environmental concerns, ugly soulless architecture, lack of culture, inability to walk anywhere, nothing but chain restaurants, etc, etc, etc.) – but the issue generally came down to one thing – quality of life – even if the housing was free, the lack of quality of life for living “out there” made those places worthless.
Clearly, this is not a representative sample of the attitude of all urbanites. My guess however, is that this attitude is probably more pervasive than many of you think. For them, the quality of live is something that cannot be replicated out there and no incentive (short of perhaps them being paid to move out there) would make the move worth it. On the flip side, my guess is that if you polled most suburbanites, many would be willing to move either closer in, or farther out, depending on housing prices. For these people, the substitution effect is clearly at work. But for these urbanites however, the loss quality of live is something many will not pay for, regardless of how cheap the prices out there may fall.
Quality of Life...
ReplyDeleteOil brushed up against $110 per barrel today.
DC metro is ranked as one of the worst in the country for traffic congestion.
McMansions require lots of care and feeding, as do their lawns.
The outer suburbs may be slums faster than anyone yet imagines.
"Wow - inner counties are now running between 6-8 months inventory...BFD!!!
ReplyDeleteD.C. 8.68
Arl 6.87
Alex 7.99"
I am not in the real estate business but I am surprised that the inventory is only 6 to 8 months in the inner counties. All the potential buyers I know have been waiting on the sideline for the new conforming loan limit ($417K to $700K+) to take effect. I expected the inventory to jump to 11 to 12 months since the announcement of the new bill. We won’t see the effect of the new loan limit until the June 10 report (report for April purchases closed in May) but expect the inventory numbers for inner counties (who wants to leave in the woods anyway) to come back to the 5 to 6 month supply that we have seen for the last 2 years.
Anon said:
ReplyDelete"For these people, the substitution effect is clearly at work. But for these urbanites however, the loss quality of live is something many will not pay for, regardless of how cheap the prices out there may fall."
I might ad that you don't know to miss what you don't have. Some 12 years ago I was one of those suburbanites (ok ... I was just inside the beltway not far from where David is at now), when I moved into downtown. It didn't take long to realize how much quality of life I'd missing out on living "out there." For example, it took a snow storm 3 years after I was in my last place out there before I even met the immediate neighbors! In my new place I knew most of the immediate neighbors and the local shop people within 3 months! I never did get to know most other people "out there" who I only saw through the windshield of my car. Here I quickly got involved in local organizations and lived a quality of life which out there was really "window dressings" to the real thing. No, they'd have to pay me to move back out. And even then, I'd have to know I could spend at least 2 out of every 4 weeks back in the city.
"Quality of Life...
ReplyDeleteOil brushed up against $110 per barrel today.
DC metro is ranked as one of the worst in the country for traffic congestion.
McMansions require lots of care and feeding, as do their lawns.
The outer suburbs may be slums faster than anyone yet imagines."
----------------------------------
Really? Where are the poor people who live in DC, and there are lots and lots of them, going to go?
They can't afford those kind of fuel prices, so they will stay in the city.
And those who paid large amounts for properties in "areas of gentrification" expecting a quick exodus of said poors (cuz remember, used house salespeople were telling them "this area is up and coming")will instead be stuck with the crime and safety issues for a long,long time.
Doesn't sound like much QOL to me.
"this attitude is probably more pervasive than many of you think"
ReplyDeleteThanks. I've tried to explain this on Greater Northern VA and gotten pushback from rural pride types.
Country livin' might be attractive for some but to the majority in the city, it's just a Green Acres joke.
"it's just a Green Acres joke."
ReplyDelete-----------------------------------
kh, you're the joke.
Anon Said...
ReplyDelete"I might ad that you don't know to miss what you don't have."
I couldnt agree more, I grew up a suburban kid, and when I moved here, I went straight to the burbs as that was all I knew.
After a few years, I met a girl who lived in the city, and actually spent real time there. Before, I just made assumptions about city life (crime, trash, decay, slums, etc, etc) essentially the same stuff you see repeated here by suburbanites over and over again.
Thing is, the suburbanites dont "get it". Sure, they think they know what city life is like because they come in town for a night out, or an event or something. Unfortunately, that wont do it. To really "get it" you have to spend serious time here. Until then, they will just spout on and on about crime, etc. when in fact they really dont know what they are talking about.
I have a question sort of related to this - are property taxes going to drop to reflect the new sales price - much lower than it is assessed for?
ReplyDeleteI am thinking about jumping in to the market in a few months - possible June/July. Otherwise, I would buy late December January, though I would prefer not to, as it would mean moving into a furnished rental for six months, and purchasing around Christmas time, always my most crazy time of year.
The problem is that I've been poking around the DC property tax assessors website, and the property tax assessment on one house I looked at, is $75K above the asking price, and $100K above what I think it will go for. So what happens to the assessment? Does the government have to lower it to reflect the market value of the home? Can I appeal on that absis, and the fact that nothing in that neighborhood assessed at that point has or will sell at that price?
"Wow - inner counties are now running between 6-8 months inventory...BFD!!! If this is the vaunted "bubble bursting" the inner counties have been waiting for for 30+ months, how much more anticlimactic could it be???"
ReplyDeleteBecause there is a lag, as is expected. Look at the trend in terms of months inventory and tell me which way it has generally headed (up then plateau), and which way it will head (up, as the economy sags and more units come into the market.)
Let's check the numbers in 6 months. If prices don't change significantly, the time in inventory will.
"Really? Where are the poor people who live in DC, and there are lots and lots of them, going to go? "
ReplyDeleteThis indicates a lack of knowledge regarding current events in Washington. "Poor people" are literally scrambling to retian affordable housing choices in DC. "Gentrification" is the word of the day in all of NW DC and much of NE now too. Ask "poor people" and they will tell you that they are being pushed out. Why? The value of the land they occupy in DC.
Do a little research and you will see this is true.
"Look at the trend in terms of months inventory and tell me which way it has generally headed (up then plateau), and which way it will head (up, as the economy sags and more units come into the market.)"
ReplyDeleteWhich trend are you talking about? For a lot of last year inventory in Arlington Alex & DC were DOWN from the same point 2 years ago. None of the other counties could say that. Bet you didnt know that huh?
This indicates a lack of knowledge regarding current events in Washington. "Poor people" are literally scrambling to retian affordable housing choices in DC. "Gentrification" is the word of the day in all of NW DC and much of NE now too. Ask "poor people" and they will tell you that they are being pushed out. Why? The value of the land they occupy in DC.
ReplyDeleteThere was an article out last year - for the first time ever, in terms of raw numbers, poor people in the suburbs outnumbered those in the inner cities. See a trend here?
the property tax assessment on one house I looked at, is $75K above the asking price, and $100K above what I think it will go for. So what happens to the assessment? Does the government have to lower it to reflect the market value of the home? Can I appeal on that absis, and the fact that nothing in that neighborhood assessed at that point has or will sell at that price?
ReplyDeleteJanie - as a general rule, there is no better comp in the world than actual sales price of a place. Thus, if you buy for less than assessed price, they should automatically reassess based on your purchase price. If they dont, you most certainly can challenge and I see no reason why (assuming the sale was legit) you would not win.
anon said:
ReplyDelete"Janie - as a general rule, there is no better comp in the world than actual sales price of a place. Thus, if you buy for less than assessed price, they should automatically reassess based on your purchase price. If they dont, you most certainly can challenge and I see no reason why (assuming the sale was legit) you would not win."
I wish that were true, but it isn't. Some years back I had just bought a condo for some $50K less than someone two floors up had bought theirs. When the assessments came out they two places were valued at nearly the same amount right about half way between what I paid and what the other person paid. When I called the assessor and explained that my place was being valued for $25K more than I paid for it, he explained that the assessment they had done was for the entire tier (condos above and below each other) and that since there'd been two sales the prior year (me and the one 2 floors up) they used the average of those to calculate values of all condos in that tier. Yes, higher floors were valued a bit more than lower floors, but the average was still the mid-point between my place and the one 2 floors up that sold for $50K more than mine. When I noted that that wasn't fair and that we each should have our assessments based on what we paid, the assessor said it wouldn't be fair to assess the other person more than the average for the tier. That's when I realized that assessments on an individual basis are pretty much divorced from fair market value. For a neighborhood (or a condo building) they might be accurate, but definitely not for a single condo unit or a single family house.
lance said...
ReplyDelete"I wish that were true, but it isn't"
Lance - Anon was right. The assessors are pretty much trained to always reject a homeowners explanation for why a place is priced too high. You just gave up too early.
I always appeal (to the assessor) and used to always lose. Unsatisfied, I would then file suit in the local circuit court (you are allowed to as a matter of right). At this point, the assessors usually back down because they know they would lose.
One county was so bad that I had to file a Writ of Mandamus (basically an order to the assessor saying do your f'ing job) before he would re-assess based on sales price.
Now I dont even mess around - basically every time I write to the assessor I show them I am serious and attach a sample show cause order I will file if they do not re-assess based on sales price. Works every time!
Jamie - I will reiterate what anon said - FMV always trumps any other indication of value out there. You may have to work a bit to get your way, but I promise you, at the end of the day you will win.
"That's when I realized that assessments on an individual basis are pretty much divorced from fair market value. For a neighborhood (or a condo building) they might be accurate, but definitely not for a single condo unit or a single family house."
ReplyDeleteRE Troll!!!!
Really? Where are the poor people who live in DC, and there are lots and lots of them, going to go?
ReplyDeletePrince Georges's County, Hoodbridge, Manass, etc.
Oh wait, they've already gone? That's right. Look at the demographic changes over the past decade. Median incomes are rising in the District and they're plummetting in the places mentioned above.
Poor don't need gas, they don't have cars. They just roam the street and live in and loot (read: make money off of) foreclosed houses. Where is the greatest concentration of foreclosures? Hoodbridge, Manass, PGC. Hope your "investment" mcmansion in Hoodbridge does nice for you ;)
Because there is a lag, as is expected. Look at the trend in terms of months inventory and tell me which way it has generally headed (up then plateau), and which way it will head (up, as the economy sags and more units come into the market.)
ReplyDeleteLet's check the numbers in 6 months. If prices don't change significantly, the time in inventory will.
Lag shmag. Face it. Your overpriced POS mcmansion in Hoodbridge is worthless. No one wants it, no one wants to live there. District prices aren't falling 60%, yet Hoodbridge homes are. Now go on. Go chase off the illegals, they're camping out in your backyard.
"Prince Georges's County, Hoodbridge, Manass, etc."
ReplyDeleteSo true. Suburbs are the new ghetto. Here's an article that just came out about the ghettos of PWC and Fairfax county:
“There are no cars are parked in the driveways of many new subdivision cul-de-sacs. ‘For Sale’ signs litter the yards in outlying areas of Fairfax and Prince William County.”
“Some new developments appear to be ghost towns. No children ride their bikes down the sidewalks — instead there are moving trucks loading up personal belongings as families wipe away tears and kiss their dream homes good-bye. The foreclosure epidemic has struck and its effects ripple across the area.”
http://www.fcnp.com/news/the_many_facets_of_foreclosure_20080312.html
Notice they said PWC and Fairfax county, not the District. I think the we in the District should just pack up the remaining poor and ship them out to NOVA! Plenty of vacant homes for them to squatter in. Muahahahahaha.
ha ha. suburbia is dead.
ReplyDeleteWith gas over $3, who wants to live in the suburbs? The suburban growth in this country was never sustainable, and now it is all falling apart.
ReplyDeleteWith the way most of those suburban houses are built, they will quickly fall into disrepair. There will be swollen particle board floors, broken vinyl siding, and everything else that is of any value will be looted by the illegals and the squatters. Eventually it will become such an eyesore that the local governments will just bulldoze it all and replant forests.
This anon gets it.
ReplyDelete"I might ad that you don't know to miss what you don't have."
I couldnt agree more, I grew up a suburban kid, and when I moved here, I went straight to the burbs as that was all I knew.
After a few years, I met a girl who lived in the city, and actually spent real time there. Before, I just made assumptions about city life (crime, trash, decay, slums, etc, etc) essentially the same stuff you see repeated here by suburbanites over and over again.
"Thing is, the suburbanites dont "get it". Sure, they think they know what city life is like because they come in town for a night out, or an event or something. Unfortunately, that wont do it. To really "get it" you have to spend serious time here. Until then, they will just spout on and on about crime, etc. when in fact they really dont know what they are talking about."
Thank you Sir or Madam. The words ring true. The traffic keeps getting worse. Kids do drugs, drink, have sex when the parents are not home. The community may be safe, but the home may be dangerous.
Loudon County....the lawns are perfect, and the kids are effed up.
During the past few decades, I've lived in a small town in the Shenandoah Valley, rural Maryland, Springfield, Burke, Old Town, Capitol Hill, Arlington, and Portland, Oregon. Now I live in Reston, which is very far from DC, but gave us the walkability we couldn't afford to buy in Arlington or DC. I can put my daughter in the stroller and walk to locally owned businesses and community center classes, not to mention the farmer's market, playgrounds, pools, woods, and friends' homes. All suburbs are not the same. Would I rather live closer in? Sure, but we couldn't afford even a small condo in Arlington when we bought in 2004 and we have a great community here. We come into DC at least once per week and my husband endures a long commute on the bus and Metro. Is it ideal? No, but it's pretty great. The city offers interesting diversions, but it's also dirty and noisy and DC services are pretty crummy. I lived on the Hill during the garbage strike and had rats in my apartment as a result. Here, we actually get a huge return for the property taxes, Reston Association dues, and cluster dues that we pay. I am anxiously awaiting Metro out here? You bet. But I love where I live, even with its drawbacks.
ReplyDelete