Tuesday, July 29, 2008

Case Shiller Index Way Down; Washington, DC Area Down 15.4%

Price continue to fall in the the bubble markets across the United States. The growing number of foreclosures, tighter lending standards, large inventory, weak home sales and rising mortgage rates are pushing prices down.

The Washington, DC area continued to experience price declines. According to the Case Shiller Housing Index prices declined 15.4% between May 2008 vs. May 2007 in the Washington, DC area. The monthly price decline was 1% for May.

The housing bust is not over.

46 comments:

  1. David: I want to thank you for your fine work over the years. It appears that the blog is not getting as many comments as it was back in 2005. I have checked in every so often an will continue to do so into the future. Keep up the good work; I am sure there are many lukers like myself out there.

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  2. I agree. This is a great blog to frequent and I too am surprised the comment section is so light.

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  3. The Real Estate Market Starts Climing Again

    During the past couple of years we've all seen a tremendous change in real estate in the country.
    This change actually has spread all over, businesses loosing money while gas prices are extremely high.


    The real estate market has become a big issue for all of us out there, we've seen many homeowners loosing their homes and struggling to find a home to rent because of their credit.


    What happen to us?
    Remember the bubble 4 years ago?

    That's exactly the answer, from years of prosperity and times of spending, traveling and investing in stocks and real estate, we are now experiencing another bubble but this time the bubble is going in a different direction and we are wondering what to do.


    So real estate was going down and it's still going down, some economists say that it will get stable in 2 years from now.


    The sellers market became a buyers market, and today we all know it by now.
    Investors and renters that saved their money for better days to buy to make money are in the market today, that's making the real estate market busy.


    Real estate agents that learn how to change with the market also learned how to make money from the changes, these real estate professionals are making lots of money and while we are all struggling for business they're making the business.


    Today you can get a home directly from the banks for almost half the price.
    I've seen homeowners that are so desperate that they're willing to give their homes for free, just come and take their loan and continue their payments.


    On the other hand, investors are looking to buy homes in bulk, they can get homes $.50 on the dollar.


    Some banks like bank of america and countrywide are selling hundreds of homes in bulk to investors at a discount prices.


    So real estate agents are busy getting hundreds of listings and reo's from banks, then they're selling these homes at a low price to future homeowners and investors.


    It's definitely a buyer's market like we had in the early 90's, so if you're an investor or a homeowner.
    This is your time!

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  4. ZIP 20009 - MRIS YOY June 2008

    average sold price UP 8.47%
    median sold price UP 12.05%

    2008 2007 % Change
    Total Sold Dollar Volume: $ 36,808,020 $ 46,052,919 - 20.07 %
    Average Sold Price: $ 525,829 $ 484,768 8.47 %
    Median Sold Price: $ 465,000 $ 415,000 12.05 %
    Total Units Sold: 70 95 - 26.32 %
    Average Days on Market: 55 49 12.24 %
    Average List Price for Solds: $ 553,374 $ 491,955 12.48 %
    Avg Sale Price as a
    percentage of Avg List Price: 95.02 % 98.54 %

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  5. Come on Lance, don't you know that home values in rural West Virginia are directly related to home values in the center of the Capital city of the United States? ;}

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  6. Lance,

    I think you need to look at this though for 2009.

    In June 2007, 15% of units sold were not condos or coop.

    In June 2008, 23% of units sold were not condos.

    Thus the the percentage of non condos increased and thus raising the price. As non condo units (single family residences) in general cost much more then condos.

    This most probaly accounts for the increase in median price.

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  7. "David said...

    Thus the the percentage of non condos increased and thus raising the price. As non condo units (single family residences) in general cost much more then condos.

    This most probaly accounts for the increase in median price."

    You would think so. However, if you separate out just the SFH in DC, it looks like prices are still rising (albeit at a much slower pace).

    http://www.housingbubblebust.com/Medians/South/WDC.html

    This is why I ditched Case Shiller as an indicator of whats going on in the close in areas long ago.

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  8. Comments are down, but the content is way up (from what it had been in recent months).

    While we've seen some declines in the more dangerous and gang-filled places to live in the DC area (e.g., Montgomery Village), I have yet to see any great discounts in the nicer neighborhoods where you would not have to worry about what school your kids attended.

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  9. Jason,

    "I have yet to see any great discounts in the nicer neighborhoods where you would not have to worry about what school your kids attended."

    how do you define 'great discounts'?

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  10. The conversation has come full circle re: home values in DC. They were historically low-priced for decades (1970's through 1990's). They've come up as the value of being "close in" became apparent, and as gentrication (white) washes across the city.

    For Pete's sake: Dave Chappelle has a new-ish stand-up routine on Comedy Central. (he's from DC) It was recorded at the Warner in DC. Even he makes comments about how much DC has changed since he moved away.

    Change is constant.

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  11. Have fun in suburbia fatties -

    Living in the suburbs may make people fatter

    http://www.webmd.com/fitness-exercise/news/20080729/neighborhood-walkability-linked-to-weight

    Bwahahahaha!!!

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  12. Latest stats for all of DC *ONLY*, (not VA, MD, or WV) from MRIS.com. Volume is down, prices are up.

    2008 2007 % Change
    Total Sold Dollar Volume: $ 314,079,984 $ 369,692,521 - 15.04 %
    Average Sold Price: $ 571,055 $ 540,486 5.66 %
    Median Sold Price: $ 425,000 $ 415,000 2.41 %
    Total Units Sold: 550 684 - 19.59 %
    Detach/Attach Average Sold: $ 974,178 | $ 549,724 $ 934,253 | $ 527,344 4.27 % | 4.24 %
    Average Days on Market: 74 63 17.46 %
    Average List Price for Solds: $ 602,328 $ 557,271 8.09 %
    Avg Sale Price as a
    percentage of Avg List Price: 94.81 % 96.99 %

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  13. A second look at the figures lance posted-

    ZIP 20009 - MRIS YOY June 2008

    2008 2007 % Change
    Total Sold Dollar Volume: $ $36,808,020 $ 46,052,919 - 20.07 %

    $46,052,919 2007
    $36,808,020 2008
    Decline of 20.07% dollar volume sold

    Total Units Sold:
    70 2008
    95 2007
    - 26.32 %

    So 70 units sold this year instead of 95 last year.
    70 houses sold this YOY for more than 95 houses last YOY.

    Sorry lance, but 70 houses sold does not a bounce in the real estate market make, and don't try to say that I am fudging the figures since you oh so kindly provided the data for us to review.

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  14. "Anon said...

    So 70 units sold this year instead of 95 last year.
    70 houses sold this YOY for more than 95 houses last YOY.

    Sorry lance, but 70 houses sold does not a bounce in the real estate market make, and don't try to say that I am fudging the figures since you oh so kindly provided the data for us to review."

    Very true, but its at times like this I take comfort in the words of every bubble heads favorite Case Shiller:

    "So even as overall sales volume drops, relatively stronger demand for housing will limit price declines in neighborhoods with shorter work commutes...Because of sharp increases in gasoline prices, living closer to work has become an even more important consideration in the location decisions of homebuyers"

    Thus, it looks like Case Shiller is still right...its playing out just as they suggested...and living in DC proper is perhaps the best location of anywhere to deal with it.

    Incidenally - to the other anon. The link with obesity is interesting. I moved from the exurbs to bethesda about 18 months ago and due to the increased walkability of the area I dropped 10 pounds without even trying!!!

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  15. Sorry I meant to include the link to that quote from case shiller

    http://www2.standardandpoors.com/spf/pdf/index/052708_Housing_bubbles_collapse.pdf

    This article speaks mostly to LA & Boston, but this guy has said the same thing about every bubble market city core.

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  16. In the 1950s:

    American factories re-tooled to produce automobiles, ovens, and 'fridges insead of tanks and bomber planes.

    The oil industry became entrenched in the middle-east, and Detroit got into bed with the big oil companies.

    Mr. Levitt 'invented' the first suburb.

    President Eisenhower kicked off the US Interstate Highway system.

    In the 1960s:

    Mass-produced cars were affordable to middle class Americans.

    The new highways enabled Americans to buy tract housing built upon former cow pastures outside the city limits, (thanks Mr. Levitt!) yet they could still reach their jobs in the city via the new highways.

    The culture of consumerism became the norm as the formerly urban majority "spread out" both literally and figuratively, and people started getting fat in record numbers. The trend continues to this day.

    Look at the old newsreels from the late 40s and the early 50s. Americans were lean and slender. Watch the news tonight - or look around you now. Americans are doughy and fat.

    Small American children are now routinely diagnosed with Type 2 ("Adult Onset") Diabetes. Why? Because of a sedentary, consumption based culture. (see above)

    It is a tragedy, really. But that culture is only about 45 years old. Change is coming, it must if we are to survive as a nation. Congested highways, 3-hour daily commutes, the high cost of gasoline, and the high cost of heating and cooling a McMansion are causing people to rethink their lifestyles.

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  17. "but 70 houses sold does not a bounce in the real estate market make, and don't try to say that I am fudging the figures since you oh so kindly provided the data for us to review."

    For those who own homes in zip codes where prices are rising in spite of the worst housing decline in history, it doesn't matter that sales volume is down. VALUE is up based upon location. Period.

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  18. "For those who own homes in zip codes where prices are rising in spite of the worst housing decline in history, it doesn't matter that sales volume is down. VALUE is up based upon location. Period."

    You are wrong.

    I own a SFH in Chevy Chase.

    Some houses that are very desriable go for over a million days after being listed.

    Others in the same neighborhood hoping for bubble prices sit - price reduction - and sit - contract falls through - and sit - another reduction.

    Many are pulled and listed as a rental. (off MLS for sales sheet so down volume)

    Bubble prices aren't happening anymore.

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  19. "Some houses that are very desriable go for over a million days after being listed."

    Really? One Million Days? That is over two thousand seven hundred (2,700) YEARS.

    The DC MRIS Stats don't lie. Look at them (they're above). Overall prices *IN WASHINGTON DC* are up. It doesn't matter what you think. Facts are facts.

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  20. David

    "How do you define great discounts?"

    Houses in the nicer parts of 20850 are down around $100k. Houses that would have gone for $650+ over a year ago are now available for $550 and less in the West End and Woodly Gardens area of Rockville. We looked in the Whetstone neighborhood of Montgomery Village a year ago, and houses that would have listed at $550+ are around $410. The Franklin Park neighborhood south of Randolf and east of the Pike has really taken a hit, as most houses that were sold a year or two ago for $400-450 are prices in the low $300s (per Redfin.com).

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  21. "year or two ago for $400-450 are prices in the low $300s "

    Wow. So I could sell my home in DC and buy a place in the 'burbs outright. No housing payments ever again except for maintenance and taxes. Wow.

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  22. It's been a while since I posted here.

    I see that some are still complacent about stated sales prices in "immune" areas without regard to diminished sales. When the same price attracts less buyers than before, it's a leading indicator of downward price pressures. This is simple stuff. The recent spike in mortgage rates won't help demand either, nor will the wave of white collar layoffs that this region will see over the next year. Do you honestly think that our financial industry can deleverage without consequence to the DC proper real estate or job markets?

    Ah well, at least it's easier to argue about this now than it was in 2005-06.

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  23. And yet, case shiller sees the decreased sales and tells us:

    "So even as overall sales volume drops, relatively stronger demand for housing will limit price declines in neighborhoods with shorter work commutes...Because of sharp increases in gasoline prices, living closer to work has become an even more important consideration in the location decisions of homebuyers"

    David Stiff - chief economist for Fiserv Case Shiller

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  24. "Terminator X said...

    nor will the wave of white collar layoffs that this region will see over the next year."

    I thought this area was still adding jobs, albeit at a slower pace. I did hear this morning, Arlington county unemployment rate is like 1.7% the lowest of any county in the entire US.

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  25. 'terminator x'

    You think Defense contractor jobs for people with high clearances will evaporate because Fannie Mae is sucking wind?

    You have no idea of what really goes on in Washington.

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  26. Agreed - Incidentally, Virginia was just named the best place to do business by Forbes. This is the 3rd year in a row it got top honors. Standouts include Fairfax, Arlington, etc.

    No doubt this area is down from a few years ago. But it is still adding jobs at a clip higher than any other metro area in the US. Contrast that with places like LA, Phoenix, even NY where there are job LOSSES. This area is not immune to anything but it certainly is innoculated - and thats not going to change anytime soon.

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  27. Anonymous(es):

    Indeed, we are immune. I see the error of my ways. NY and CA are seeing revenues plummet, the federal budget deficit continues to grow unexpectedly, and a consumer-led recession is upon us. By "us" I mean all parts of the country except for the DC area that incorporates the zip codes in which you own. Those lower sales mean nothing. Prices in the immune areas are rational; it is the fence-sitters who are mistaken.

    Uncle Sam will find a magic money tree to keep paying all those defense workers. The collapse of the retail, real estate, and financial sectors will have no effect whatsoever on the demand for lobbying and legal work in the DC area.

    Why must you stay anonymous? I'd love to give you credit for changing my mind.

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  28. Terminator KY JellyAugust 02, 2008 2:23 PM

    So funny...'lets wait and see what happens this Fall in Washington'.....

    Well, what IS happening in Washington this Autumn...? Oh yeah, thats right, a new President will be elected.

    Never mind the rhetoric; the fact remains that each and every president has expanded the size of the federal government.

    But this time, it's going to be different, right? The next president is just going to fire everybody and turn Washington into the next Dayton, OH. In fact, we already know from Case-Shiller that Washington is no different than small towns in rural West Virginia.

    Terminator X - we're all touched that you use your real name. You're so brave.

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  29. You're cute when you're angry. It hurts to lose money, and it hurts even more when someone says "I told you so." Buy now before all those new GS-15 hires beat you to it!

    And I don't care if someone adopts a pseudonym, but it's just annoying trying to respond to numerous "anonymous" posts; I have no way to determine whether they come from one person or many. And the comment thread is hard to follow. David, fixing this would go a long way towards increasing traffic here.

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  30. barney likes transformersAugust 03, 2008 5:11 PM

    Here is a perfect example of what Transformer-x is talking about:

    http://tinyurl.com/5znz9h

    34 Qunicy Place NW in THE MIDDLE OF WASHINGTON DC (can you say 'hood'?) just sold for $543,820. The full asking price was $544,900! HAHA sure hurts to lose money!

    To make matters worse, It was on the market A FULL FIVE DAYS! Ouch, it sure hurts to lose money.

    I just looked up the last sale of that property on DC.gov. Turns out that it sold in December 2004 for $350,000!

    GAME OVER FOR THAT HOMEDEBTOR! HAHA sure hurts to lose money.

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  31. Actually, that should read "34 Seaton Place"

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  32. And to think, the Case Shiller futures index (futures meaning people who put money on this - instead of us merely pontificating bloggers) says DC will be up +3.7% next year.

    http://images.businessweek.com/ss/08/06/0626_housing_markets/11.htm

    Suck it renters!!!!!

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  33. Futures?

    Hmmmmm.....

    Two weeks ago futures investors bought oil at $145 a barrel betting it would go up.

    Oil closed at $121 a barrel today.

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  34. "Two weeks ago futures investors bought oil at $145 a barrel betting it would go up.

    Oil closed at $121 a barrel today."

    Due to the greater number of investors betting oil would go down - thats the way markets work.

    3 months ago, DC futures were trading at +2.9%. Despite all the bad news between then and now, DC is now trading at +3.7%. What do they know that we do not?

    Incidentally, if anyone is so convinced the DC market will not cover this position, why not go put your money where your mouth is. That or just blog away like the rest of us cowards.

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  35. "What do they know that we do not?"

    Nothing.

    They are going to lose money.

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  36. Hilton, Marriott, Harris Teeter, Au Bon Pain, and others are building new facilities *right now* in a "transitional" neighborhood in NE DC.

    The Marriott is standing there now. Its windows were installed over the past two weeks. The Au Bon Pain will be adjacent to it.

    The foundation for the Harris Teeter is being poured now. *TODAY*.

    Interesting how these large companies and corporations are investing serious money in "bad" neighborhoods in Washington.

    After all... who does Harris Teeter think will be shopping at the new store? Surely they most have performed some market research. Right? Or do we just accept the blanket statement: "Nothing. THey will lose money."?

    My money's on Harris Teeter.

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  37. "The Marriott is standing there now. Its windows were installed over the past two weeks. The Au Bon Pain will be adjacent to it."


    If you are talking about NY Ave and Blandensburg Rd, you should buy a property near there. You'll make tons of money. That's a real up and coming neighborhood.

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  38. The area where the Harris Teeter is being built is in NOMA, which is tucked between Union Station, North Capital Street, and the neighborhoods of Capital Hill North (H-Street Corridor) to the East and Eckington (North of Florida Avenue) to the North.

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  39. transformer - okAugust 05, 2008 2:23 PM

    What's up with this place? Successful businessmen who run http://www.hellersbakery.com/

    and

    http://www.verandaonp.com/

    are now in the process of opening another restaurant in a "bad" neighborhood in DC?! Don't they know that homedebtors in DC have no disposable income because they can't afford their mortgage loans, and that we're in the throes of a recession?

    They should read this blog more often. It must suck to lose money.

    http://imgoph.blogspot.com/2008/08/bloomingdale-youre-finally-getting-bar.html

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  40. smarty macsmarty pants, renterAugust 05, 2008 2:28 PM

    "The area where the Harris Teeter is being built"

    HAHAA! Harris Teeter is going DOWN! They don't read this blog. Not only is that a BAD NEIGHBORHOOD, but the homedebtors who "own" homes in that neighborhood are SCREWED because they "took out mortgages". They shoulda rented in Arlington or Silver Spring instead, like all the smart people!

    Harris Teeter's food is going to ROT ON THE SHELVES in that location! HAHA! BLOOD IN THE STREETS!

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  41. "What do they know that we do not?"

    Nothing.

    They are going to lose money."

    HMMM who to belive an anonymous source on the internet, or a bunch of people who have some skin in the game. HMMMMM

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  42. Something else about that harris teeter location: It is near Union Station and railways.

    Gas prices will spike to record highs again.

    Food can be brought into the center of the city on rail. It will be cheaper than trucking food out to far-flung exurban strip mall locations.

    Actually, any place within a mile or two of rail is a good place to be. Bonus points for locations near light rail (metro) and heavy rail (Amtrak). Union Station is one of those locations with both types of rail.

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  43. Yep,

    Just think of all those dumb a**es that bought row houses for a couple of hundred-thousand ten years ago near the Whole Foods on 14th and P Street NW before it was built. It must really suck for them now that their places are worth anywhere from eight hundred-thousand to 1.5 Million. Am I predicting something here with Eckington and Bloomingdale? You bet.

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