Tuesday, December 23, 2008

2009's ten worst housing markets

Fortune Magazine has predictions for the 2009's ten worst housing markets. You won't be shocked to learn that eight of the ten are in California.

Here's the list, with the projected fall in prices:
  1. Los Angeles, CA. 2009 projected change: -24.9%
  2. Stockton, CA. 2009 projected change: -24.7%
  3. Riverside, CA. 2009 projected change: -23.3%
  4. Miami/Miami Beach, FL. 2009 projected change: -22.8%
  5. Sacramento, CA. 2009 projected change: -22.2%
  6. Santa Ana/Anaheim, CA. 2009 projected change: -22.0%
  7. Fresno, CA. 2009 projected change: -21.6%
  8. San Diego, CA. 2009 projected change: -21.1%
  9. Bakersfield, CA. 2009 projected change: -20.9%
  10. Washington, DC. 2009 projected change: -19.9%
For Washington, DC, they predict further price declines in 2010 as well, for a total predicted decline of 24.5% over the next two years.

68 comments:

  1. Brin in LA (well, Columbus, OH actually)December 23, 2008 10:38 AM

    Is that "Washington DC" as most people think of it, including Case and Shiller and 'Cindy in DC', who actually lives in Loudoun County and considers Ashburn to be "Washington DC"?

    Or is that "Washington DC", as in "Washington, District of Columbia"?

    It is an important distinction, and it is one that most people fail to make. So, seriously, which "Washington DC" is Fortune referring to?

    ReplyDelete
  2. I agree with Brin.

    Also, I question the median price for 2008 that is used as the base reference. My prediction is that we'll see a 34% drop from the peak for the median property value in Northern Virginia minus Arlington and Alexandria City.

    ReplyDelete
  3. Brin - Fortune is referring to the whole metro area, meaning, as anon suggests, Arlington & Alexandria will once again outperform the area. DC proper too, but I do think it will give back all the price gains it made in 2008 and then some.

    Honestly, I think the real meltdown this year will be in Maryland. Montgomery, Anne Arundel, Charles & Frederick county which thus far hadnt been hit hard, are starting to look like Fairfax County a year ago (not good). Howard county, is debatable, it may be much less hit like Arlington & Alexandria City.

    Also, the mother of all bombs looks set to go off in PG county.

    ReplyDelete
  4. Every time there is a news item about price declines in the DC metro area we get another nervous, defensive post about how West Virginia is not DC.

    It's boring.

    ReplyDelete
  5. Is there anyone reading who doesn't understand that some neighborhoods are better than others? Bueller?

    If there are people reading who don't understand that outer ring suburbs and downtown neighborhoods have differences, will a simple blog comment suffice to relieve their ignorance?

    I would like to congratulate every owner who has failed to experience price declines. You are great. Whether this means that you are IMMUNE, BY GOD, IMMUNE to any threat of declines as this bust unfolds is strictly a matter of opinion. Your postings are certainly making an impression. Maybe not the one you intend, but an impression nonetheless. I hope I've saved some people from wearing out their considerable satirical gifts over this holiday season. You're welcome!

    ReplyDelete
  6. "patience said...
    Every time there is a news item about price declines in the DC metro area we get another nervous, defensive post about how West Virginia is not DC. "

    My apologies to you and other relative newcomers to this board. The reason for this post was for longest time it was claimed that there was no real difference in housing prices by area - it was long claimed by the most ardent housing doomers that Case Shiller strongly suggests the inner core areas were struggling just as much as the exurbs.

    Slowly the idocy of that position was exposed, but the final nail in the coffin wasnt delivered til case shiller admitted the same thing (inner areas ok, outer areas crushed).

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

    We like to repeat that fact again and again because it was difficult as hell to get the most ardent doomers to accept this. Many never did and just simply vanished into the either. However, for the few that remain, (like the one old time doomer that still lurks here and will invariably respond to this post), it serves as a constant reminder of how wrong they were.

    ReplyDelete
  7. We're #1!

    LA is predicted to have a 35% further decline.

    But most of that will be in the desirable areas. People over bought. Too many people stretched to 'buy as much home as possible.' That mentality is fading. Loans now max out at 41% DTI. (Vs. > 50% during the bubble).

    2009 is the wake up year.

    And how can West Palm Beach, Orlando, and Tampa be off this list? Not to mention Pheonix and Las Vegas. Those five cities are in worse shape than many others. I do not disagree with the approximate magnitude of the California declines. I see far more pain in certain other states...

    Got Popcorn?
    Neil

    ReplyDelete
  8. That's fine, but how many people have left simply because such dialog is a bore? Why not advance the conversation to different topics?

    Personally I would base my opinion on the performance of a neighborhood like Arlington, if I in fact cared about that particular neighborhood, on it's past performance in other cycles. Then I'd account for the dramatic size of this particular boom/bust. Here in MD I'm seeing the start of capitulation in some nicer areas. Watching asking prices go from 500-600 to the high 200s in nice, beltway-adjacent suburbs doesn't make me want to slap down my money right now.

    If sitting on my fat savings here in my luxury repartment in one of the best zip codes in MD makes me a bitter loser, so be it! Personally I would not stake so much emotional energy on certain neighborhoods being "immune." If things play out and they are, you can gloat, but in the meantime why put yourself through it? The people who survive this stuff are the ones who stay OBJECTIVE. I have seen that over and over again.

    Anyway, if you turn out to be right, will it really be that sweet? Personally I am not getting as much enjoyment as I thought I would out of watching these price declines, even when it's happening to people who insulted me for selling my place and not buying another one. Not seeing what this bubble of lies and greed has done to our country. Stay objective, we need smart people to get us through this crisis.

    ReplyDelete
  9. The real reason that Patience whines about the strict delineation between Price William County and Arlington: It is to serve as a ham-fisted segue into his/her shtick about how she "sold at the top" and now "lives in a luxury apartment."

    Really, how else is she going prove to the rest of us anonymous strangers on the internet how omniscient she is, unless she has a reason to come here and talk about how omniscient she is? She reads bubble blogs only for amusement. Obviously, she's too brilliant to learn anything new here.

    I don't you forget it; dummy.

    ReplyDelete
  10. Wait, who's whining? Pass the popcorn. Or you can just leave it on the (dyed) granite countertop.

    Please lighten up, it is the holiday season. Don't be so negative.

    ReplyDelete
  11. Patience said...

    "That's fine, but how many people have left simply because such dialog is a bore?"

    Many - but believe me, the blog is much better for it.


    "Why not advance the conversation to different topics?"

    Agreed, but when the topic is "Price declines in DC", its very important to remind everyone what "in DC" means.


    "Personally I would base my opinion on the performance of a neighborhood like Arlington, if I in fact cared about that particular neighborhood, on it's past performance in other cycles. Then I'd account for the dramatic size of this particular boom/bust."

    Difficult to do because unlike all the other suburbs, Arlington, Alexandria & DC went through massive gentrification. Abandoned buildings were put to use once more - populations rose for the first time in 50 years. How do you account for this, especially given the fact that some (not all but some) price inflation was due to the bubble?


    "Here in MD I'm seeing the start of capitulation in some nicer areas. Watching asking prices go from 500-600 to the high 200s in nice, beltway-adjacent suburbs doesn't make me want to slap down my money right now."

    I see capitulation here too, its just not as powerful a force.


    "If sitting on my fat savings here in my luxury repartment in one of the best zip codes in MD makes me a bitter loser, so be it!"

    No one is claiming that.


    "Personally I would not stake so much emotional energy on certain neighborhoods being "immune." If things play out and they are, you can gloat, but in the meantime why put yourself through it?"

    Because if you believe the whole "gentrification" thing has any shred of credibility, you want to see how these areas are surviving the bubble bursting. On the other hand, if you beleve "gentrification" is merely a bubble myth perpetuated by those who bought anywhere (including sketchy areas in the urban core), you hope to see prices there collapse.


    "The people who survive this stuff are the ones who stay OBJECTIVE. I have seen that over and over again."

    Given that I rent and am likely to move overseas, I would like to think I fit that criterion.


    "Anyway, if you turn out to be right, will it really be that sweet?"

    Yes. Absolutely yes.


    "Personally I am not getting as much enjoyment as I thought I would out of watching these price declines, even when it's happening to people who insulted me for selling my place and not buying another one. Not seeing what this bubble of lies and greed has done to our country. Stay objective, we need smart people to get us through this crisis."

    The difference is, you thought Montgomery County pricing was a bubble - and you were right. I thought inner core pricing was due to a bubble AND real, systemic change. Understand that it was a sacrilege to point out that "its different here" in the early days of the bubble church, even if you meant different in the sense of gentrification. Such calls were met with mocking "OH YOU THINK YOUR AREA IS SPECIAL", and assumptions you were a realtor. Well those days are quickly winding down and it is sweet justice to realize there really was something to it all along...

    ReplyDelete
  12. "Please lighten up"

    What's wrong? Anonymous comments on the internet getting the best of you? Why do you need to ask strangers to "lighten up"? Don't like it? Don't come back.

    ReplyDelete
  13. "Given that I rent and am likely to move overseas, I would like to think I fit that criterion."

    Sounds like another incarnation of the Gay Oil Guru; only this version doesn't own a 3,000+ square foot Italianate Victorian-era brownstone in one of the better parts of the city. This version is sitting on a pile of cash, relaxing in "a luxury apartment in one of the best zip codes in MD."

    Wow. Have you thought about seeing a shrink?

    ReplyDelete
  14. "Difficult to do because unlike all the other suburbs, Arlington, Alexandria & DC went through massive gentrification. Abandoned buildings were put to use once more - populations rose for the first time in 50 years. How do you account for this, especially given the fact that some (not all but some) price inflation was due to the bubble?"

    Sure, gentrification happens. Look at neighborhoods that have successfully gentrified and those that have failed. Sucessful gentrification has identifiable characteristics. Or if you don't want to get that deeply into it, look at the histories of more historied neighborhoods with similar income profiles and how they went through past cycles. Then, you know, think critically about these facts you've laid out.

    "The difference is, you thought Montgomery County pricing was a bubble - and you were right. I thought inner core pricing was due to a bubble AND real, systemic change. Understand that it was a sacrilege to point out that "its different here" in the early days of the bubble church, even if you meant different in the sense of gentrification. Such calls were met with mocking "OH YOU THINK YOUR AREA IS SPECIAL", and assumptions you were a realtor. Well those days are quickly winding down and it is sweet justice to realize there really was something to it all along..."

    But...it's not over 'til it's over. By any measure, even the most psychobullish, it's too soon to say that certain areas have come through this bust unscathed. I mean seriously...are you calling a bottom at this time? If you're amusing yourself, fine, I guess. By your own insistence, different areas are on different timelines. If you could bet secretly, nobody would know the outcome, would you put your own money down on gentrified DC neighborhoods or the mystical Arlington holding nominal value from this point on? Personally I would not! I simply don't believe anyone who says they think this bubble is over and we now know that area X or Y is unaffected.

    Anyway, the reason your gloating sounds a little hollow is that this crisis is genuinely distressing. We're all going to know people and have family affected by this crap if we haven't already -- it is sad. People locking their pets into foreclosed homes...believe me I enjoy a healthy schadenfreude as much as the next person but this isn't fun.

    ReplyDelete
  15. Ummm - I think you are getting your personalities mixed up. I have no wads of cash, but I do have some euros though.

    ReplyDelete
  16. Also, please understand that some of us have lived here for a long time. There are plenty of people who remember the '90s...and the '80s. A lot of people established in the DC suburbs have lived downtown in the past. I find it hard to be bullish on east coast city governments.

    I actually love city life but would not want to be part of DC...OK this is nakedly condescending but some of the DC gentrification bulls sound like they don't have a lot of experience living in a city or a lot of knowledge about how bad these city governments can get. If anyone can swallow their pride for a minute and think about that for a little bit, you might benefit.

    ReplyDelete
  17. Yes, patience, there is more than one Anon here.

    "this crisis is genuinely distressing."

    Yes, it is. Again; have you thought about seeing a shrink? Surely you can afford it? Put your drink down on your (rented) laminate countertop and go seek professional help. Whatever you do, resist the urge to hurl yourself out an open window. You know you want to.

    ReplyDelete
  18. Yes, patience, there is more than one Anon here.

    "this crisis is genuinely distressing."

    Yes, it is. Again; have you thought about seeing a shrink? Surely you can afford it? Put your drink down on your (rented) laminate countertop and go seek professional help. Whatever you do, resist the urge to hurl yourself out an open window. You know you want to.

    ReplyDelete
  19. Oooh snap. "go seek professional help" ... :)

    Is it really a major brag to say you have a granite countertop these days? I promise you if I were making up a lifestyle I would give myself a better countertop.

    ReplyDelete
  20. "Patience said...

    But...it's not over 'til it's over. By any measure, even the most psychobullish, it's too soon to say that certain areas have come through this bust unscathed. I mean seriously...are you calling a bottom at this time?"

    Absolutely not - this thing is no where near bottom. I think we have another 2+ years to go, and probably another 10% off in pricing. Thing is, thats nothing compeared to the areas that are already 30-50% down and STILL look much much worse in terms of inventory overhang.

    Also, the thing affecting prices now is job loss & the economic downturn. These factors do not discriminate by neighborhood, everyone is affected.

    Funny thing is, job loss is not the same as the bubble. THE BUBBLE was based on speculative buying, BS loans and people who bought properties they couldnt afford. Fortunately the lenders took that away from us. In many many areas, once the speculative buyers & BS loans disappeared, so did the high prices. In other areas, once the speculative buying and BS loans disappeared, the high prices remained. Can you explain the difference?

    ReplyDelete
  21. "Can you explain the difference?"

    I guess my point is that I wouldn't try to explain anything until I've felt like the fat lady has sung. This whole thing unravels at what feels at the time like a glacial pace. I honestly haven't been following Arlington or DC neighborhoods. If you tell me that inventory, DOM and sales are at healthy sustainable levels and these prices are still high, I would say, OK the neighborhood changed, let's look at why that happened, that would be interesting. If those three numbers are not healthy then it is too early for the postmortem.

    ReplyDelete
  22. You know what, it is douchetastic to make reference to one's personal situation. I'm so used to people expressing a point of view being labeled as poor losers, the irony of it galls me. However I should not let that drive me into making such posts...if someone's critical thinking skills includes kneejerk posting "well that person must be a bitter renter" when they hear something they don't like, they probably aren't in a great situation...my anonymous postings won't change that.

    ReplyDelete
  23. Patience said...

    "I honestly haven't been following Arlington or DC neighborhoods. If you tell me that inventory, DOM and sales are at healthy sustainable levels and these prices are still high, I would say, OK the neighborhood changed, let's look at why that happened, that would be interesting. If those three numbers are not healthy then it is too early for the postmortem."

    Obviously you havent. DOM in the urban core is by far the quickest of any area (69-86 days). Nowhere in MD is under 100 days (Montgomery is best at 106).

    Absolute Inventory in Arlington & Alexandria areas peaked in summer of 2006, never to return again. DC inventory is slightly elevated but is pretty stable - in line with its 1998 trends. By contrast Montgomery county absolute inventory is at its peak now.

    Months of Inventory, the core areas have again led the pack - best in the Metro area from begiinning of 2006 til now. They have spent every summer in the 4-6 months of inventory range every winter in the 6-8 month range. Much of Maryland has spent much of the last year with double digit months of inventory. Montgomery now has 10 months of inventory. Prince Georges has 20+ months. Even worse, latecomers Montgomery & Prince George's are now consistently posting large median price declines - much larger than Arlington or Alexandria, or DC where med prices have been rising most of the year.

    Sales everywhere stink, but again its a matter of degree. Thing is every time arlington or alexandria or DC gets a bit worse, the outer areas simultaneously get even worser (for lack of a better term).

    Again, it is disingenuous to say anywhere is healthy right now. After all prices are declining everywhere except in DC which I dont expect to rise much longer. At the same time however, the forward looking indicators in the urban core were the healtiest in the area, and continue to be to this day.

    ReplyDelete
  24. Keep in mind that only 15% of the Washington, DC metro area's population lives within DC-proper or Arlington. If the housing market was collapsing from the inside out, I bet there would be people here arguing that Loudoun County was immune because it is the wealthiest county in the USA.

    Also, DC has never gentrified its public schools. I get the sense that the people making the gentrification argument don't have any kids.

    ReplyDelete
  25. if someone's critical thinking skills includes kneejerk posting "well that person must be a bitter renter" when they hear something they don't like, they probably aren't in a great situation...my anonymous postings won't change that.

    The real irony is that this is precisely where you entered the discussion; you entered by mocking those who were expressing a point of view about how "Washington DC" means "Manassass" for many people. You did a virtual eye-roll and made reference to a straw-man faux granite countertop. Yes, you set the tone. Now you denounce the tone and fail to see the irony.

    Are you sure you don't need a shrink?

    ReplyDelete
  26. "Months of Inventory, the core areas have again led the pack - best in the Metro area from begiinning of 2006 til now. They have spent every summer in the 4-6 months of inventory range every winter in the 6-8 month range. Much of Maryland has spent much of the last year with double digit months of inventory. Montgomery now has 10 months of inventory. Prince Georges has 20+ months. Even worse, latecomers Montgomery & Prince George's are now consistently posting large median price declines - much larger than Arlington or Alexandria, or DC where med prices have been rising most of the year."

    OK, Anon 1:20...I wonder what difference you see between Montco and PG and the current state of DC...especially Montco looked like one of the healthiER areas for a while, so why could it start to drop and yet DC wouldn't at some point? Overall I can't agree with your point of view because as I said, I am looking for numbers that I would consider healthy or sustainable, and those aren't. But at least I took something away from the conversation other than "Some guy in Arlington is really nervous about his house." So thanks for that exchange of information.

    ReplyDelete
  27. "Keep in mind that only 15% of the Washington, DC metro area's population lives within DC-proper or Arlington. If the housing market was collapsing from the inside out, I bet there would be people here arguing that Loudoun County was immune because it is the wealthiest county in the USA."

    Thats another fact I find comforting. Every time someone says "high end falls last" I say BS because nothing is more high end than Loudoun, and it crashed years ago (its now down 36% from peak with more damage to come). Arlington, Alexandria, & DC are poor by comparison, yet they have held on to the greatest percentage of their gains by far, and still look best to this day.

    "Also, DC has never gentrified its public schools. I get the sense that the people making the gentrification argument don't have any kids."

    Probably true. About 10 years ago, DC sought to attract young childless folks with high income and without kids (i.e. who dont use social services). Now, 10 years later it looks like they were pretty successful in doing so.

    ReplyDelete
  28. "Also, DC has never gentrified its public schools. I get the sense that the people making the gentrification argument don't have any kids."

    As someone who lives in a gentrified area with kids, and is surrounded by other gentrifiers with kids, I'd say that your point of view is very 1999. But hey, I bet you didn't know about TCP/IP and didn't realize that the Internet existed until USA Today blathered about it at some point.

    ReplyDelete
  29. "Patience said...

    OK, Anon 1:20...I wonder what difference you see between Montco and PG and the current state of DC...especially Montco looked like one of the healthiER areas for a while, so why could it start to drop and yet DC wouldn't at some point?"

    For starters, please dont assume I am saying prices wont drop - they will. Every time I point out, prices drop the least, you respond "wont drop" or "unscathed". What I am saying is prices in the core (which rose as much as everywhere else) will fall the least.

    As to why MontCo will fall, I look at trends for the last 36 months. For example:

    From 2002-2005 both Arlington & Montgomery had 1-3 months of inventory, low total inventory, and +20% prices. Neither one diverged from the other.

    In 2006 (when the bubble first start to burst), both Arlington & Montgomery had 3-4 months of inventory and flat prices, total inventory rose in both places. Again, they moved at the same pace relative to each other.

    In early 2007, Arlington still had 3-4 months of inventory, yet Montgomery slipped to 5-7 months. Also, total inventory in arlington started to fall, but in montgomery it kept rising. These two where the same til now - why did Montgomery slip?

    In late 2007 (right when the "credit crunch" hit), months of inventory really spiked. In Arlington, it went over 6 months, yet in Montgomery, it went to over 10 months. Total inventory continued to fall in Arlington continued to rise in Montgomery. Again, both simultaneously got hit, why so much worse in Montgomery?

    In Jan 2008, both areas had their worst month of iventory. Arlington got to 9 months, but (thanks to the ever increasing total inventory) Montgomery got to 12 months.

    In Spring 2008, Arlington again, worked down its months of inventory to the 3-4 month levels. Montgomery improved too, but never got better than 7-8 months of inventory.

    By mid 2008, the damage was really done and the price declines started in earnest. Yet while Arlington looks to be down 6-7-8% for the year, latecomer Montgomery is going to be down 11% or more. Even worse is the most current month (Nov 2008) Arlington median is down -6%, but Montgomery is down -20%. Why is Montgomery getting worse?

    As we turn the page to 2009 we see the same separation in forward looking indicators continue. Arlington now has 7 months of inventory, Montgomery now has 11 months. Arlington total inventory is down below 2006 levels, and could break below 2005 levels. Montgomery county very close to its all time peak now. Again, why in this late stage of the game is Montgomery still far behind the pace?

    ReplyDelete
  30. You all bring up good points. Perhaps you need to let some of the folks at Northern Virginia Housing Bubble Fallout blog. They can't seem to factor in low interest rates, as well as increasing rental rates.

    ReplyDelete
  31. Oh patience, and the other reason I am confident in the fate of Arlington and Alexandria (not as much DC), is that they have been on the same roller coaster ride as has been Fairfax, Loudoun & Prince William County.

    Every step of the way, when one got better, they all got better, when one got worse, they all did.

    Now, they look to be the best in the region. Every virginia county has less months of inventory than anywhere in maryland. Less total inventory in anywhere in Maryland, less DOM than anywhere in Maryland, etc. etc.

    The difference of course is the magnitude of price declines. In Prince William, Loudoun & Fairfax, it took price declines of 25-50% to get to the point where they look about as healthy as Arlington & Alexandria. Perhaps next year, after much of Maryland works through all its excess inventory, and suffers some pretty decent price declines it too will be looking about as healthy as Arlingon & Alexandria.

    ReplyDelete
  32. Anonymous said...
    "But hey, I bet you didn't know about TCP/IP and didn't realize that the Internet existed until USA Today blathered about it at some point."

    I know a lot about the internets, and have been an expert at the Google for a full six months. :-)

    What is USA Today?

    ReplyDelete
  33. "You all bring up good points. Perhaps you need to let some of the folks at Northern Virginia Housing Bubble Fallout blog. They can't seem to factor in low interest rates, as well as increasing rental rates."

    They seem to have a pretty good handle on things. Pretty much no one over there seems to think the core areas are going to get hit hard. Its only the relative newbies like patience that dont seem to understand this yet. She is only now going through the learning curve we all did for the last few years.

    Shes probably used to dealing with perma bullish types who have a poor understanding of the facts and trends affecting an area. I think what she is realizing now there are some of us here who are bullish on core areas but only because we have very very good reasons to be that way.

    ReplyDelete
  34. DC proper is softening big time. The places we're watching are down a strong 10-20%. Where's Lance?

    ReplyDelete
  35. For starters, please dont assume I am saying prices wont drop - they will. Every time I point out, prices drop the least, you respond "wont drop" or "unscathed". What I am saying is prices in the core (which rose as much as everywhere else) will fall the least.


    Fair enough. There are a few different Anonymous posters, it seems. The objection I started out with is to some postings I see as knee-jerk, un-funny and not adding much to the conversation, which seem to be coming from what I can only describe as "bitter bulls."

    Its only the relative newbies like patience that dont seem to understand this yet. She is only now going through the learning curve we all did for the last few years.

    And if we're going to be fair, my position could be described as skepticism that any area could be "immune". I'm not actually in a learning curve right now...to substantiate that I'd have to post more about my personal experiences and that seems to be a bad idea. Suffice to say I've been calling this thing pretty accurately from the beginning and with skin in the game. I will admit to being surprised at how long this bubble progressed and the damage it has left in its wake. In spite of being off with the timing, however, I do feel confident about recognizing an out of whack price when I have sufficient information.

    I still don't have much of an opinion on Arlington/inner DC. Although your posts are informative I need to know much more before I have an opinion. The only area I've considered looking at is Alexandria due to geography, but in spite of more attractive prices than I've seen in some parts of MD, I am wary due to not knowing enough about the area. I need to spend a lot of time researching before I'd start to venture a guess on what is going to happen.

    I'd love to know how much people's point of view is based on a financial stake in the area they're talking about but recognize that's unlikely to happen in this format.

    ReplyDelete
  36. One major reason I read here and participate is because this is the only popular bubble blog that is focused on MD...thus another reason I find the whole Arlington/DC thing uninteresting.

    ReplyDelete
  37. "patience said...
    One major reason I read here and participate is because this is the only popular bubble blog that is focused on MD...thus another reason I find the whole Arlington/DC thing uninteresting."

    Fair enough. If anything, you should be glad you are not looking in the ivory tower close in areas. Back in 2005-2006, I watched in horror as a few bullish posters pointed out this divergence in the way core areas were doing relative to the rest of Nova.

    Wishing to prove them wrong, I dove head first into the stats, compiling spreadsheets, charts, projections, etc. eager to show why this would change. I eventually was won over to their side, but it was only once I realized I was going to be reassigned overseas that I was able to look at it a more dispassionate light.

    In all my stat gathering, you should know I am becoming increasingly concerned about the fate of maryland. Til about a year ago, most of VA had mild price declines, but a huge problem with absorbtion rates (months of inventory). Those chickens came home to roost this year, and most of VA suffered huge price declines this year, (save Arl & Alex) which never got really bad in the first place.

    This year, I see those same classic signs in Maryland. My best guess is Montgomery will be 17% - 20% down in 2009, with Anne Arundel, & Charles Co. doing slightly better, and Frederick County doing slightly worse. Howard, will probably be best, posting a core area type 5-10% off next year. Prince George's will be the worst by far.

    So take heart, your area is only now starting to show the signs of a sea change, just like all of NOVA saw last year. You probably wont see crashing prices the way VA saw in Loudoun county & beyond, but you probably wont see mild price declines like Arlington saw either.

    ReplyDelete
  38. After reading all of these posts I feel it is time to post a statement of my own (like it or not)
    Patience, you have chosen a very good name since you need patience when it comes to some of these anonymous posters here or on the net. From what I read on your blogger user profile you sold your house at the top of the market.
    I say Good For You!
    You did what thousands of home debtors wish they had done and thousands more facing foreclosure wish they had done.

    To the Arlingtonites who still insist their area will do less worse than other areas, here are some points to consider:
    1) Lower inventory than other counties
    Does this mean that Arlington just has fewer houses for sale because they sell faster than other counties (are bought up fast) or is it because Arlington house owners have pulled their houses off the market until prices rise? We have no way of knowing how many sellers there are in Arlington until prices rise or if prices fall even more, forcing desperate house owners to sell and get out from under their mortgages.

    2) Competition from other counties
    If houses are cheaper in other counties, will this not put pressure on Arlington house prices?
    House buyers are watching as unemployment increases, businesses lay off workers, a recession drags down the economy & the US Government itself looks to switch over some of its workforce from federal employees to contractors, all of this makes house buyers worried and nervous. Why buy a house for more money in one county when another house in another county sells for less and has a smaller mortgage to deal with (leaving more money in a house buyers’ emergency cash fund in the event of a job loss.)

    The fog-the-mirror loans are gone, banks actually Want to get their mortgages paid back (what a novel idea). The E-Z loans that drove this bubble is getting harder & harder to find, the pool of those who can actually afford to buy AND pay the mortgage is shrinking. These are not factors that point to strong house buying, not in Arlington, not anywhere.

    Buying a house is an act of confidence, and we are seeing very little of that right now.

    3) The baseball analogy
    The housing price decline has been compared to a baseball game, we are in the third inning say some. If this is true then we should wait until the bottom of the eighth before we can call who has the winning team, or the winning county. Will Arlington win the ball game or will it get struck out in the ninth? I am not taking bets on this game, I am just going to watch and see who hits a grand slam and who strikes out
    (pass the popcorn Neil)

    4)The dot com hubris
    Remember back in 1999 when the doc com/new economy geniuses were laughing at Warren Buffett for not buying stock in the ‘new economy?’
    On Jan 1, 2001 we saw who had the last laugh.
    Five years from now we will see who was right about housing, who’s county was (or was not) immune to the price declines, basically who will have the last laugh.

    Gonna be an interesting next couple of years…

    ReplyDelete
  39. I am curious as to why there is always a distinction between DC and NOVA or MD, but rarely a distinction between DC neighborhoods. I don't think Georgetown, Cleveland Park etc will experience drastic declines, but in the 12 block area that I monitor, every other house is a foreclosure or short sale. Houses that sold in 2005-2007 for 500K and above are on the market for 350-400, and they still aren't selling. The big condo buildings are being turned into rentals before they are even finished. I live in Petworth by the way, a "gentrifying" neighborhood.

    ReplyDelete
  40. A friend of mine wanted to buy in Petworth. He said that real estate prices in the city "never go down," presumably including Petworth. I asked him how it is then possible that crackhouses exist.

    ReplyDelete
  41. Lance,

    we await your wisdom and that of VA INVESTOR. ROTFLMAO!

    ReplyDelete
  42. Some posters don't want to bring up that a lot of them are facing annual rental rate increases of at least 6.5% by aggressive landlords, or that their potential PITI monthly payments for a new house will be less than paying rent, without factoring in any mortgage deduction. I think some of them will mistakenly end up entering the market well after the start of the housing recovery.

    What about San Francisco and the bay area? I would add that area to your list along with Montgomery County, MD for places to feel the pain in 2009. Even the most optimistic Bay area housing experts are predicting major price drops in 2009. The fundamentals there point this, just like the fundamentals showed that other major metro areas like Miami and Washington DC were poised for a major correction in 2008.

    Another Anonymous Poster

    ReplyDelete
  43. Who, specifically in the DC area is facing any kind of rent increase, much less 6.5%?

    Anyone who says they think anyone will "miss" the bottom has never experienced a real estate cycle before.

    ReplyDelete
  44. I moved up this year in my rental, 4 br, 3 bath, travertine tile etc, garage, 1 acre. Picked it by the school I desired. NICE cars in the neighbors drives.....$1795/month. A reduction of $420 from the last place...

    Buy now before your priced out forever and become Lances butler!!!! ..... not

    ReplyDelete
  45. The bottom was last week. We all missed it. Now we have to wait 5 more years. Damn

    ReplyDelete
  46. Only 25% in Los Angeles?

    They are crazy...this place needs to drop at least 50% before prices become sustainable and in check with incomes.

    Not everyone is fortunate to freeload in the entertainment business around here.

    ReplyDelete
  47. Patience and all others: You're right in remembering that nothing ever changes. Nothing. Ever. Changes. Neighborhoods don't change. Populations don't change. Technology doesn't change. Traffic doesn't change. Trends don't change. Generations don't change.

    Here is one example; Values don't change. People have always valued McMansions with 2 SUV's parked in the garage and with great rooms filled with home theater equipment. That's why my great grandfather had two Hummers parked outside his McEstate in Centreville back in 1902. The part he liked the best? The relaxing drive into the city the efficient interstate highways.

    ReplyDelete
  48. "I know a lot about the internets, and have been an expert at the Google for a full six months. :-)"

    James, what tools did you use to move information around the global Internet before CERN and TB-L developed HTTP?

    ReplyDelete
  49. I live in Bakersfield,Ca. Prices have fallen off a cliff. You can buy a foreclosed home for 50-60% off 2006 prices. -20.9 thats funny.

    ReplyDelete
  50. Sure, things change. Remember when the Internet came along and productivity went to a permanently high plateau, raising stock prices through the roof forever? That was great.

    You know it's bad when you can't even set up a lame strawman argument to pretend to refute.

    ReplyDelete
  51. "You know it's bad when you can't even set up a lame strawman argument to pretend to refute."

    Your own statements are the best refutation of your arguments. But you're too wrapped up in anxiety to recognize that fact.

    Yep, when our great-grandparents were Concorde-flying, McMansion-owning, Hummer-driving, pharmaceutical-popping, vacation-home-owning, plasma-screen-watching, mega-commuting citizens of the world, they knew that two generations hence; everything would be the same.

    (in other words, the world as you know it, the one that you cannot see beyond, is no more than 50 years old. and you're right, we're going to revert to the mean, and that means if you don't have real, marketable skills, you're fucked)

    ReplyDelete
  52. "Concorde-flying,"

    p.s. I know the Concorde went the way of the Dodo. It's ironic, get it?

    Merry (Luxury) Christmas! Good luck with your move to Europe! Things are better there! :-)

    ReplyDelete
  53. Do you know what straw man means? When did I or anyone else argue that "nothing ever changes"? If you think it's different this time, OK, explain why.

    If you could do that I doubt you'd be compulsively posting unfunny snarks. Yeah, I'm the one who is anxious.

    ReplyDelete
  54. Anon at 4:28PM said...

    To the Arlingtonites who still insist their area will do less worse than other areas, here are some points to consider:
    1) Lower inventory than other counties
    Does this mean that Arlington just has fewer houses for sale because they sell faster than other counties (are bought up fast) or is it because Arlington house owners have pulled their houses off the market until prices rise? We have no way of knowing how many sellers there are in Arlington until prices rise or if prices fall even more, forcing desperate house owners to sell and get out from under their mortgages."

    This argument is silly. Yes, yes, we know ONLY Arlington owners pull listings and wait it out, whereas everywhere else they list list list...

    The fact of the matter is, there are some holdout sellers EVERYWHERE, yet despite this fact inventory is declining everywhere in NOVA. Moreover since arlington has had the quickest sales since day 1 of this crisis, you can make the argument that there are less holdout sellers here than anywhere else in the area.

    "2) Competition from other counties
    If houses are cheaper in other counties, will this not put pressure on Arlington house prices?"

    What you are talking about is the substitution effect. Yes, it affects prices, but this has been affecting prices since day 1. This is nothing new.


    "The fog-the-mirror loans are gone, banks actually Want to get their mortgages paid back (what a novel idea). The E-Z loans that drove this bubble is getting harder & harder to find, the pool of those who can actually afford to buy AND pay the mortgage is shrinking. These are not factors that point to strong house buying, not in Arlington, not anywhere."

    Thats the thing, the fog the mirror loans are gone, yet the high prices remain. Lack of these buyers crushed some areas, it did not crush Arlington. Why?

    "3) The baseball analogy
    The housing price decline has been compared to a baseball game, we are in the third inning say some. If this is true then we should wait until the bottom of the eighth before we can call who has the winning team, or the winning county. Will Arlington win the ball game or will it get struck out in the ninth? I am not taking bets on this game, I am just going to watch and see who hits a grand slam and who strikes out
    (pass the popcorn Neil)"

    Ever since 2005, when the downturn started, forward indicators suggested Arlington will do best. So far, they have proven correct. Now, on the eve of 2009 those same forward looking indicators suggest Arlington will STILL be the best Why should I not trust them now?

    4)The dot com hubris
    Remember back in 1999 when the doc com/new economy geniuses were laughing at Warren Buffett for not buying stock in the ‘new economy?’
    On Jan 1, 2001 we saw who had the last laugh.
    Five years from now we will see who was right about housing, who’s county was (or was not) immune to the price declines, basically who will have the last laugh."

    Come on, this has been going on for well over 3 years now 3 YEARS! This is not 2005 (spiking inventory), 2006, (declining sales), 2007, (tightening loan requirements, or 2008 (price declines). We are now on the verge of 2009. As I see it, we have a few more years to go - the bottom will be in maybe 2011, and then prices wont rise for years afterward. That said, if the last few years is any guide, and if the forward looking indicators are any guide we know who will turn out best.

    At this point, I am likely eliciting anger in someone, and will get a hostile response about me claiming Arlington is "Immune" or "wont go down" - stop it. Read carefully what I said and it basically comes down to two elemental things (1) Arlington WILL decline (2) Arlingtion WILL decline LEAST. Why is this so hard for some to accept?

    ReplyDelete
  55. "If you think it's different this time, OK, explain why. "

    You want to believe that I think "Its different this time."

    I don't. My "nothing ever changes" rhetorical statement is a way to suggest that things are going back to the way they used to be. (Back when Montgomery, PG, AA, Howard counties weren't even blips on the radar of economic activity - and that is the tip of the iceburg)

    But if it helps you to feel superior to an anonymous stranger over the internet... here it goes: "It is different this time."

    There you go. My gift to you. Merry (luxury in Md) Christmas!

    Good Luck in the Coming Shit Storm!
    (that's the new way of saying "Happy New Year")

    ReplyDelete
  56. "Yeah, I'm the one who is anxious."

    You are the only author in this thread who has bothered to describe their living situation. ("Luxury" and 'big profits from my sale at the top of the market')

    If you need to broadcast your situation to strangers, it means you are defending it to yourself by putting it in front of others to judge.

    Shrink.

    ReplyDelete
  57. "patience said...

    Anyone who says they think anyone will "miss" the bottom has never experienced a real estate cycle before."

    It can be missed. The CA bust hit bottom in about 1996. One of the more bearish people I know, was still on the sidelines in 1998, calling the rise a "dead cat bounce" because prices hadnt declined as much as HE expected.

    I lost track of him after that, but I heard he ended up buying in 1999 +27% off the 1996 bottom (ouch). Note, I dont expect a "v" shaped recovery in this case, but if we get it, some will certainly miss the bottom.

    ReplyDelete
  58. Frankly if prices don't correct enough in CA to come in live with salaries, then Californians can take their homes and shove it. Anyone stupid enough to stick around if they "miss" the market is just that...stupid.

    It ain't worth living in the most expensive, one of the most polluted, most congested, one of the ugliest places in the US.

    Paying for an overpriced POS in California is placing yourself in economic prison. If you like that sort of thing, by all means knock yourselves out.

    ReplyDelete
  59. Noz, I totally agree. The San Francisco Bay area needs to lose another 50% in value to come in line with salaries. I can't understand why people in various housing bubble blogs don't just get it about San Francisco. They are perma-bears for every metro region except San Francisco.

    ReplyDelete
  60. All this arguing is nonsense. When the average HOUSEHOLD income is $60K and the average house for sale on the market is $450K, it doesn't take a genius to figure out the average Joe cant buy an average home.

    I dont need to think about months of inventory or how long a house has been on the market to see that. Besides, here in Rockville, Ive seen 2 places that I was interested in a year and a half ago go on and off the market multiple times. One place has been on the market for over 2 years now and it was just put back up as a new listing last week again. Maybe I will think about it when the price drops another 20% this coming summer.....you know, right after all the ARMS reset AGAIN on those $60K earners.

    ReplyDelete
  61. Anon,
    Let me get this strait you are going to hang your hat on the CS index. And you are touting that the rest of the planet is sniffing glue. Dude I am a cali. guy we are in the perfect storm. And you are not going to get a taste?? Wake up. This playes out like a greek tragedy. God help us all.....

    ReplyDelete
  62. Washington DC is down 4% from November 2007 to November 2008.

    (dc proper, not the metro area, not the CS index)

    ReplyDelete
  63. DC proper prices went up astronomically with the bubble, but were also supported by an unprecedented rise in government spending after 9-11.

    The continued rise in government spending growth has about stopped and my reverse.

    DC proper prices with fall as with all the bubble markets, though there will be a lag. There is correlation among prices in the neigboring areas. Correlation may not be 100%, but after an unprecedented run up in prices, this too shall fall.

    Note to the wise. Even if you have a low interest rate, if the price isn't right you will lose if you sell anytime in the next years and likely for longer than five. As interest rates return to historical levels, prices will fall. They will return to those levels because risk wasn't properly taken into account with the vast liquidity created on Wall Street, and because government borrowing to fund our way out of the current crisis will push rates higher.

    ReplyDelete
  64. While I don't think DC, Arlington, and Alexandria won't get hit as hard generally speaking one are that is getting hard - mostly I think due to over building - is condos. So many were built and sold a fairly high prices that I think this is a market that is going to get fairly hard. I live on the Hill and the houses have done better on the market than the condos (and that doesn't included the development that were/are due recently that went apartment instead).

    As for DC proper generally speaking - some area like the Hill, Georgetown, Adams Morgan and up/down Connecticut will do OK - decline yes but not as steeply as the neighborhoods that were "gentrified" or whatever you call it a bit later. Obviously those who bought at the peak and want to sell anytime in next year or so are going to take a hit. I bought about a month to 3 before the prices started to climb steadily (about 4 months after I bought my house I wouldn't have been able to afford it) so barring an unforseen catastrophe - knock on wood - if I had to sell I would do OK. Thankfully I am not thinking of selling and my fixed rate mortgage is doable.

    ReplyDelete
  65. Much of DC's value arose from the fact that much of DC itself was a ghetto.

    Much what once was a ghetto is now thriving (Penn Quarter, Logan Circle, etc.)

    So for those areas, thier intrinsic value arose along with the bubble values. Those areas are the ultimate "close in" areas, and will retain intrinsic value even as bubble "value" gets stripped away.

    Then watch what happens when gas prices start to climb again.

    ReplyDelete
  66. We would like to nominate you for a FreedomToBlog.com Best of Blog Entry.

    Please visit our site at: http://www.freedomtoblog.com

    to submit your blog entry!

    Benefits include:
    1) Permanent Backlinks to your blog
    2) Fully SEO optimized for maximum exposure
    3) A chance to be published into a top 500 best of blog book"

    ReplyDelete
  67. We would like to nominate you for a FreedomToBlog.com Best

    of Blog Entry.

    Please visit our site at: http://www.freedomtoblog.com

    to submit your blog entry!

    Benefits include:
    1) Permanent Backlinks to your blog
    2) Fully SEO optimized for maximum exposure
    3) A chance to be published into a top 500 best of blog

    book"

    ReplyDelete
  68. Truly love the posts and the comments at this blog

    ReplyDelete