DC-area house price changes in 2008, by the numbers
From The Washington Post:No local jurisdiction except the District was spared from falling home prices, and some of the hardest hit Zip codes in the suburbs had declines of more than $100,000.
Region-wide, the median sales price for single-family houses and townhouses fell 8 percent, to $382,500 from $417,000, in 2007, according to a Washington Post analysis of government sales records. The median price for condominiums also fell 8 percent, to $268,000 from $289,900.
Washington, DC:— The District fared the best out of all the jurisdictions in the region, according to The Post's analysis. While sales volume slid 30 percent, to 2,239 homes from 3,212 in 2007, the median home price rose 8 percent, to $520,000, from $480,000.
The biggest price increase occurred in Georgetown's 20007 Zip code, one of the District's most expensive neighborhoods. There, the median home price shot up 18 percent, to $1,075,000 from $909,150, even as the number of sales decreased to 199 from 237. ...
Meanwhile, the Zip code with the biggest drop in median home price was 20011, which includes parts of Petworth and Columbia Heights. There home prices fell 10 percent, to $375,000 from $415,000, and homes sales dropped to 290 from 433. Data for the District and the other jurisdictions in this story exclude condos.
Northern Virginia:— Prince William County, plagued by foreclosures stemming from the subprime meltdown, had the region's steepest price decline. The county's median home price fell 23 percent, to $300,000, in 2008, down from $390,000 in 2007. Volume also plummeted, with 4,961 homes sold compared with 6,755. ...
— In Loudoun County, demand picked up as prices fell. The median home price dropped 17 percent, to $410,000 from $492,000, and the number of homes sold jumped to 4,885 from 4,034. The falling prices are a legacy of Loudoun's ambitious growth during the boom years. ...
— In Fairfax County, the median home price fell 14 percent, to $445,000 from $520,000, and volume declined to 9,852 homes sold from 10,851. Several Zip codes had six-figure drops.
The median home price for a house in Herndon, Zip code 20170, for example, fell 34 percent, to $309,000 from $469,900, but home sales jumped to 499 from 317. ...
— In Alexandria, the median home price fell 5 percent, to $550,000 from $580,000, while the number of homes sold fell to 832 from 1,315. It remained the region's priciest jurisdiction. ...
— In Arlington, the median home price fell 7 percent, to $543,000 from $581,000, while the number of homes sold fell to 1,375 from 1,713.
In South Arlington's Zip code 22204, the county's least expensive area, prices fell 11 percent, to $385,150 from $435,000, while home sales also decreased to 288 from 310.
Maryland:— Montgomery County experienced the steepest drop in home prices among the suburban Maryland jurisdictions, a sharp reversal for a county that had otherwise withstood some of the worst of the housing bust.
The median home price fell 11 percent, to $440,000 from $495,000, and sales volume plummeted to 7,195 from 8,598.
While prices declined in the majority of Zip codes, some of the steepest drops were in the northernmost areas.
Germantown, Zip code 20874, posted an 11 percent decline, falling to $314,990 from $353,750. Nearby Gaithersburg, Zip code 20877, posted a 20 percent decline, to $350,000 from $438,060. ...
— The housing market in Prince George's County continued to erode. The median home price fell 7-percent in the county, to $314,910 from $340,000, while sales volume fell to 3,831 from 7,993 in 2007. ...
Other Maryland jurisdictions also took a hit.
— In Anne Arundel County, the median price fell 5 percent, to $322,500 from $339,000. Home sales fell to 4,928 from 6,479.
— In Charles County, the median price fell 5 percent, to $309,990 from $325,000. There were 1,170 sales, down from 1,918.
— In Calvert County, the median price fell 5 percent, to $315,000 from $332,800. Sales fell to 500 from 782.
— In Frederick County, the median price fell 8 percent, to $300,000 from $324,900. Sales fell to 1,490 from 2,473.
— In Howard County, the median price fell 3 percent, to $391,903 from $402,500. Sales fell to 2,369 from 2,972.
— In St. Mary's County, the median price fell 7 percent, to $285,000 from $305,000. Sales fell to 899 from 1,080.
Posts
Since 2006, Median prices in Lance's zip are down 3%. I guess thats something right?
ReplyDeleteIn urban areas such as the District, ZIP code areas often encompass too many and too varied neighborhoods to give an accurate picture of price trends. For example, the bulk of the area encompassed by my ZIP code (20009)lies in Columbia Heights, an area identified in the story as one of the few neighborhoods where values dropped. Yet, Columbia Heights is a world away from the Dupont neighborhood I am in. With most of the population of 20009 being in Columbia Heights (and part of Adams-Morgan), with the stat for 20009 do much for indicating the trend in the small Dupont sliver of 20009? Probably not.
ReplyDeleteLancey - with columbia heights zip 20010 being UP YOY, I would assume you would want to run towards them rather than distance yourself from them.
ReplyDeleteEither way I was giving you a backhanded compliment. Years ago, everyone thought you were going to seriously lose your shirt by buying where you did, when you did. Boy were they wrong.
Yeah, because all is said and done.
ReplyDeleteTime to write the history books.
Anon 10:35,
ReplyDeleteThanks. Yes, I understood you were.
Interestingly, I read somewhere the other day where in many cases in today's market it's almost impossible to define a market price ... because there really isn't a market. This would apply to areas such as out in the exurbs were most of the transactions are due to bank foreclosures (or threats of foreclosures) and you aren't really getting market transactions upon which you can say "this is the market price" (even more true when you consider that even fair market value dealings are being affected by sales of non-fair market value transactions which can erroneously be viewed as a "comp". Additinally, if you look at any area with too much granularity (even those cases where the area really contains only "like to like" properties), you can come up with ludicrous results ... probably because the sales are too few to really define a market. Take a look at zip 20036.
I'm not saying this to put down what you are saying. Obviously I agree with you. I guess I'm saying it to point out (again) that oftentimes people tend to focus too much on the "stats" ... and forget (or maybe never knew) that these stats (or rules of thumb) were developed to ease comparisons withing a specific model. But when the big picture changes ... so must the model ... and therefore the stats. We're going through a global re-arrangement of the economy on the same level as what occured when the world entered the industrial age. We're entering the global information age. Got to look at the big picture of what's happening and base your decisions on that. I may be wrong, but I do believe now more than ever that Washington's position within that new emerging economy is still a betterment ... a betterment which will be reflected in higher property values OVER THE LONGTERM.
More of lance's standard stupidity,
ReplyDelete"We're going through a global re-arrangement of the economy on the same level as what occured when the world entered the industrial age. We're entering the global information age. Got to look at the big picture of what's happening and base your decisions on that. I may be wrong, but I do believe now more than ever that Washington's position within that new emerging economy is still a betterment ... a betterment which will be reflected in higher property values OVER THE LONGTERM."
Blah blah blah... its a new paradigm!
Sprinkle a bunch of buzzwords over a heap of wishful thinking and you have lanceonomics, where any theory that predicts rising prices in his neighborhood is valid.
All anyone needs to do is look at your hilarious track-record with predictions lance to know you are utterly useless. We might as well consult the Weekly World News.
"Yeah, because all is said and done.
ReplyDeleteTime to write the history books."
Dude - give it up. It aint over but its been 4 years since this started melting down and now the velocity of the melting down is slowing.
Figure weve got what? 2 maybe 3 more years til bottom? Now that the price declines everywhere else are decelerating, are they suddenly going to accelerate in DC? My guess is DC has 2 or 3 more years of minor price declines in front of it, just like it has had for the last 3. Do you disagree?
Tell you what, you seem to have it figured out - paint a picture for me. How does the last 2-3 years play out in DC? When do the BIG declines start?
(The following is to be read in the voice of Sarah Palin.)
ReplyDeleteOh, those zany, crazy "Alphabet Streets" in that crazy mixed-up world of Washington. Say it ain't so! Do they really think that they aren't on Main Street in West Virginia? Do they really beleive that they aren't in Prince William County?!
Those elites, with their "intellects" and their "educations" sure do think they are smart, but dang-it, it tell 'ya, they're no diff-ernt from down home Wassilla Main Street!
YOU BETCHA'!!!
Yes, I'm a Maverick. Thanks for asking.
"Anon said...
ReplyDeleteWhen do the BIG declines start?"
I still think -15% is on the table this year in DC. Given the lack of price declines, its obvious that there wasnt much of a "speculative" bubble in DC but the recession & job loss will continue to weigh on the area for a while.
However, yes, that -15% will put DC prices up 113% for the decade. Far above the 50% gains for the decade the rest of the area will see. So while there is real pain ahead for DC, theres no chance it will take the BIG hit the rest of the area did.
"Dude - give it up. It aint over but its been 4 years since this started melting down and now the velocity of the melting down is slowing."
ReplyDeleteFour years? You think the spring of 2005 was melting down?
"Figure weve got what? 2 maybe 3 more years til bottom? Now that the price declines everywhere else are decelerating, are they suddenly going to accelerate in DC? My guess is DC has 2 or 3 more years of minor price declines in front of it, just like it has had for the last 3. Do you disagree?"
We are in for at least another 3-5 years of meaningful declines. A normal downturn takes at least 6-8 years to bottom, and we are less than 3 years into this one, and it is a far worse downturn than usual. (Housing prices were not yet dropping in spring 06.)
Some areas have been slower to fall, but that doesn't necessarily mean their long-term prospects are better. Ultimately this entire area competes against itself. It does seem likely those areas that have not yet see drastic yearly drops will not see them, their fate is likely to be a steady eroding of their value over the next several years. (This is already being seen in Arlington and Alexandria)
In a normal market where foreclosures are anomalies it is reasonable not to treat them as comps.
ReplyDeleteIn a market like what is being experienced out west where foreclosures are a huge part of the market, if not the majority of the market, then foreclosures are absolutely comps.
The opposite problem exists in most of the region's most expensive areas. With sales at a standstill what are houses worth?
In Arlington there were 193 listings above $900k in Feb, but only 4 sales.
What are those houses/condos worth? Who knows, clearly not what they are asking, but without any sales, valuing them is pretty impossible.
"job loss will continue to weigh on the area for a while."
ReplyDeleteDidn't we go through this already just a few days ago? Jobs are a lagging indicator of the economy.
Do you know what a lagging indicator is?
BTW, guess where all the pencil-necks from Wall Street are moving to? Guess where all the new financial oversight jobs are located?
That's right: West Virginia.
"Four years? You think the spring of 2005 was melting down?"
ReplyDeleteNo - but thats when the inventory started building up. It was an exciting time remember -- we could see the pressure building -- look at the chtistmas morning like anticipation we saw on this blog back then! I cant believe how much of a dissapointment this has been since...
"We are in for at least another 3-5 years of meaningful declines. A normal downturn takes at least 6-8 years to bottom, and we are less than 3 years into this one, and it is a far worse downturn than usual. (Housing prices were not yet dropping in spring 06.)"
Were probably not that far apart from each other. Heres the way I see the price drops going (no numbers because it obviously varies by area)
06 - Tiny
07 - Midsize
08 - Enormous
09 - Small
10 - Tiny
11 - Flat
12 - Flat
13 - Rising slightly
Generally, once these things peak, they taper off rapidly. Price declines dont go away for a while, and you still lose out to inflation. But its looking more and more likely that we just passed the big part - the rest of it will be a cakewalk.
So maybe the difference between you & I is the degree. I thought the whole area would see pretty uniform declines. I didnt think a handful of counties would do so much better than the rest and especially DC.
"Jobs are a lagging indicator of the economy."
ReplyDeletebut not the housing market.
Besides, just because we are now seeing the economy's deterioration reflected in lagging indicators doesn't mean the economy is done declining.
"BTW, guess where all the pencil-necks from Wall Street are moving to? Guess where all the new financial oversight jobs are located?"
Yeah, and I bet those jobs are going to pay them millions a year, lol.
A couple idiot local reporters write articles about new financial oversight jobs, and suddenly the housing sheep think Washington is going to turn into a boom-town.
Whoa, check it out! MBAs at the top of their classes are going to be clawing each others' eyes out to get into one of these amazing new GS-scale jobs.
Newflash people, the federal government doesn't make up nearly as large a percentage of the local economy as it once did. Why do you think unemployment is spiking up in DC, NoVA, and MD?
Yes - Jobs are a laggard, but as the anon above noted, just because we are now seeing them doesnt mean it is done declining.
ReplyDeleteThe real key will be to see when residential investment picks up. So far, we see alot of that in Virginia but not so much in DC and Maryland. When we went into this, residentail investment fell in Virginia first, then about 9-12 months later in Maryland. Thus, I think DC & Maryland have 9 or so more tough months aghead of them - hence the -15%.
Besides, all that -15% does in DC is give back all the gains since 2005 - the year we were all told to stay away from the huge speculative bubble - whoops!!!
"Why do you think unemployment is spiking up in DC, NoVA, and MD?"
ReplyDeleteBecause crappy retail operations in strip malls and places like the "Dulles Town Center" are closing down, and all the local/municipal governments are running big budget deficits and laying off large numbers of people.
That is why.
"and all the local/municipal governments are running big budget deficits "
ReplyDeleteNever fear; they will rely upon property taxes to bridge their budget gaps. Wait, never mind.
At least they have the annual car tax; oops, I mean the 'personal property taxes'.
"No - but thats when the inventory started building up. It was an exciting time remember -- we could see the pressure building -- look at the chtistmas morning like anticipation we saw on this blog back then! I cant believe how much of a dissapointment this has been since..."
ReplyDeleteYou think inventory was "building up" in spring of 2005?
Spring 2005 was the all-time low for inventory in this region, arguably the absolute height of the bubble. (It wasn't the height of pricing.)
There is no reasonable way to say the correction started any time in 2005, most certainly not spring 2005. Most of the region was still seeing rising prices in spring of 2006.
"Were probably not that far apart from each other. Heres the way I see the price drops going (no numbers because it obviously varies by area)
06 - Tiny
07 - Midsize
08 - Enormous
09 - Small
10 - Tiny
11 - Flat
12 - Flat
13 - Rising slightly"
So basically you think 2011 will be the bottom, ~5 years after the very first price declines started to show up in the outermost areas and only ~4 years after the majority of the region saw the correction begin?
That strikes me as extremely unlikely.
Go take a look at the CS data from that downturn and see where the bottom arrived, and keep in mind that that downturn was tiny compared to this one.
"Because crappy retail operations in strip malls and places like the "Dulles Town Center" are closing down, and all the local/municipal governments are running big budget deficits and laying off large numbers of people.
ReplyDeleteThat is why."
Those aren't the only people that are feeling the pain.
The vaunted "big law" lawfirms are laying off associates left and right, commercial and residential construction are dead, manufacturers are a mess, and it is all still getting worse.
"suddenly the housing sheep think Washington is going to turn into a boom-town. "
ReplyDeleteIt doesn't need to turn into one since it was a boom town going back to about 2002.
Yes, it has slowed substantially of late. That should help you untwist your undies just a bit.
"commercial and residential construction are dead"
ReplyDeleteNow lets consider this for a moment. Yes, I agree that residential construction is dead. Commercial construction will die this year.
The auto industry will die this year.
The airline industry is going to see a big contraction within 2 - 3 years.
What do these things tell us about, lets say; real estate values in PWC and Loudoun counties?
Law firm layoffs:
ReplyDeletehttp://tinyurl.com/cg976x
http://tinyurl.com/cndapb
Let me guess, you think these are "crappy retail operations in strip malls."
Anonymous said...
ReplyDeleteIn a market like what is being experienced out west where foreclosures are a huge part of the market, if not the majority of the market, then foreclosures are absolutely comps.
A foreclosure is a comp anywhere. There’s no reason to disregard the price of a home that has similar features of another simply because of its mortgage status. Doubly true when that foreclosure has been/had been on the MLS for some time; the property has had plenty of time to see multiple (if any) offers to determine market value.
"Let me guess, you think these are "crappy retail operations in strip malls."
ReplyDeleteWhat is your point, exactly? Nice to see you went out of your way to use tinyurl in the process.
Did the collapse of Circuit City alone affect farm more people than the layoffs from these law firms?
(hint: the correct answer is 'yes')
Here you go sweet thang:
ReplyDelete"Malls are suffering a slow, painful death. The International Council
of Shopping Centers (ICSC) has predicted that 73,000 stores will close
their doors during the first half of 2009. Retail expert Burt
Flickinger III, managing director of Strategic Resources Group,
projects that 2,000 to 3,000 shopping malls and centers nationwide
could go under this year"
http://www.time.com/time/business/article/0,8599,1883546,00.html?cnn=yes
"Spring 2005 was the all-time low for inventory in this region, arguably the absolute height of the bubble."
ReplyDeleteExcuse me, fall 2005 - point to you.
"So basically you think 2011 will be the bottom, ~5 years after the very first price declines started to show up in the outermost areas and only ~4 years after the majority of the region saw the correction begin?
That strikes me as extremely unlikely"
OK then you give me your scenario.
"Go take a look at the CS data from that downturn and see where the bottom arrived, and keep in mind that that downturn was tiny compared to this one."
Thats exactly what I did. In DC's first downturn, 90% of the nominal decline per CS came in the first 22 months (1990-1992). The last 5-10% of the declines took place over the next 48 months (1992-1996).
Right now we are 31 months in to this one per case shiller, my guess is we are 80% done with the nominal declines. The last 20% comes over the next 48 months.
Also, I take my cues from the futures market which suggest this was the last year of major price delines. Do you see it differently?
Those Post numbers are lagging way behind.
ReplyDeleteThe most current numbers can be found at www.mris.com, under market statistics.
All jurisdictions have dropped from those numbers that the Post quoted.
So wait; to paraphrase a subset of the bubblehead cult...
ReplyDelete"DC's values will never rise because there aren't enough Saudi Princes and highly-compensated lawyers in town to justify high values."
and
"DC's valuse are going to crash because some highly-compensated lawyers are getting laid off."
Got it! Thanks. Now go clean up your room and get ready for bed.
"The vaunted "big law" lawfirms are laying off associates left and right, commercial and residential construction are dead, manufacturers are a mess, and it is all still getting worse."
ReplyDeleteLets see, it says here 10% of firms plan to lay off, 25% plan to hire and 65% stay the same.
http://washington.bizjournals.com/washington/stories/2009/03/23/daily86.html?surround=lfn
So in the end we are looking at a net plus in the number of lawyers. Still, since the news understandably reports layoffs, but not hirings, the bubbleheads think its just getting worse...
"Those Post numbers are lagging way behind.
ReplyDeleteThe most current numbers can be found at www.mris.com, under market statistics.
All jurisdictions have dropped from those numbers that the Post quoted."
Those post numbers are for the whole year - they are 2 months behind.
Just like last year when those numbers post numbers came out and everyone said, they were 2 months behind. They dropped the first two months of last year too.
This whole "unemployment is a lagging indicator" argument is silly for 2 reasons.
ReplyDelete1) Those of us who say unemployment will cause continuing housing price depreciation believe unemployment is going to continue increasing for a long time and not turn around for an even longer time. So yes, the housing market will improve before unemployment improves but the lag isn't gonna be 12 months or 24 months and that's how long i expect unemployment to continue to increase.
2) As I said in another thread a few days ago, unemployment improvement has lagged housing price improvement. However, housing hasn't improved while unemployment was still increasing and the slope of the decrease (ie first derivative) was steady or worsening. That's the case now. Unemployment is increasing at a constant or perhaps accelerating rate. While this is the case I think housing will see declines nationally.
As far as how DC proper has managed to fare so well, I gotta say I'm stumped. And I'll admit that I've been wrong about the decline I expected so far and maybe there won't ever be a major drop in DC. But I still don't believe it for many reasons that have been discussed a million times.
Actually for DC inventory didn't really peak until late 2006 (and hasn't started falling yet).
ReplyDeletehttp://www.recharts.com/mris/mris_5.html
Actually for DC inventory didn't really peak until late 2006 (and hasn't started falling yet).
ReplyDeletehttp://www.recharts.com/mris/mris_5.html
Yep - hence my prediction for 15% off in DC - same with Maryland where you see the same thing. Late start did them no favors...
The point with the jobs, is that the economy is getting hit from the top to the bottom, everyone from MBAs and lawyers to ditch diggers and burger flippers are feeling the pain.
ReplyDeleteTrying to spin this as if it is only a few low-end jobs in malls is stupidity.
"Lets see, it says here 10% of firms plan to lay off, 25% plan to hire and 65% stay the same."
ReplyDeleteThose are survey results...
All this shows is that lawyers are no less delusional than anyone else when asked how likely their own personal firm/house/neighborhood will be affected.
We are currently seeing record setting layoffs among big lawfirms. If you think that means we are going to see a net increase in lawyers, well lets just say you probably believed lance when he said the bottom passed sometime in 2007.
Anecdotal, but my friend at Georgetown Law tells me lots of firms have been revoking offers or pushing back start dates indefinitely.
ReplyDeleteWe are currently seeing record setting layoffs among big lawfirms. If you think that means we are going to see a net increase in lawyers, well lets just say you probably believed lance when he said the bottom passed sometime in 2007.
ReplyDeleteNo actually, I just believe that all the foreclosures, new sales, bankrupbcies, forbearances, loan mods, derivative suits, etc. etc. etc. do not take care of themselves.
The lawyers are not deluded, they make judgments based on what needs to get done - and believe me, when the world is busy de-leveraging there is alot of stuff that needs to get done.
By the way, my sister works at a firm in Woodbridge, they are desparate for a 2 new bankruptcy attorneys and are willing to pay a $1,000 finders fee if you know of anyone...
"By the way, my sister works at a firm in Woodbridge, they are desparate for a 2 new bankruptcy attorneys and are willing to pay a $1,000 finders fee if you know of anyone..."
ReplyDeleteDoes that mean you have to live in Hoodbridge? Muahahahahaha
Anon who wrote this:
ReplyDelete"So basically you think 2011 will be the bottom, ~5 years after the very first price declines started to show up in the outermost areas and only ~4 years after the majority of the region saw the correction begin?
That strikes me as extremely unlikely"
Im still curious to hear how you think this all plays out. You saw my prediction
06 - Tiny
07 - Midsize
08 - Enormous
09 - Small
10 - Tiny
11 - Flat
Plotting this against case shiller present & futures - this is what we have.
06 -1.7%
07 -9.8%
08 -19.2%
09 -9.3% (futures estimate)
10 -4.7% (futures estimate)
12 +2.1 (futures estimate)
So basically, im a little more bearish than CS because I think we aill have a bit of deflation to deal with (not much but a little). CS futures disagrees and thinks at the end of 2010 we will be exactly at year 2000 levels adjusted for inflation.
Further, this matches up with medians. DC, Arlington, etc. started seeing small price drops from 2005-2006 (not much but they all had em). They got larger in 2007 and larger still in 2008. Synchs up quite nicely with case shiller if you ask me).
So unless you think we are in for a serious bout of deflation, perhaps you dont realize how close we are. If you believe we end up right were we started per CS, I hate to say it, but we are running out of time and percentages for anything serious to happen my friend!
So again, do you see it differently?
Put another way:
ReplyDeleteActual price declines of -28.3% per case shiller (06-08) = -3% in lance's hood (06-08).
Expected price declines of -13.6% per case shiller (09-11) = X% in lance's hood (09-11).
Please solve for X...
But that assumes price declines happen uniformly across the region, which as we are seeing with MD, is not the case.
ReplyDeleteYou can also see the high-end areas in LA and SF starting to get worse than they were when the lower-end areas were having their worst price declines.
"But that assumes price declines happen uniformly across the region, which as we are seeing with MD, is not the case. "
ReplyDeleteThats probably fair - so tack a year on to DC - maybe sondis 15% down is correct. Why DC remained at 113% of 2000 prices while Fairfax was at 70% of 2000 prices is another question, but hey, its something right.
"You can also see the high-end areas in LA and SF starting to get worse than they were when the lower-end areas were having their worst price declines."
Actually, none of the high end areas are worse than low end. Early on high end LA & SF were -10 low end was -30 Now its -20 and -40.
"Actually, none of the high end areas are worse than low end. Early on high end LA & SF were -10 low end was -30 Now its -20 and -40."
ReplyDeleteWell, what I said and thought was true was that high-end SF & LA was getting worse as low-end was getting better (which I assumed it was now). I knew that say West LA has and probably won't ever see the price declines of Riverside, just as I don't ever expect to see DC have -25% YoY declines. But I could see DC go -15% YoY as PWC moderates to between flat and -10%.
"But I could see DC go -15% YoY as PWC moderates to between flat and -10%."
ReplyDeleteThat makes sense to me - so under your theory it would go like this.
PWC
2006 -1%
2007 -8%
2008 -39%
2009 -9%
2010 -2%
2011 Flat
2000 - 2011 price change +17%
DC
2006 -3%
2007 -0%
2008 -2%
2009 -15%
2010 -3%
2011 Flat
2000-2011 price change +107%
"Trying to spin this as if it is only a few low-end jobs in malls is stupidity."
ReplyDeleteA FEW low-end jobs? We're talking about 73,000 employers going under in the retail sector alone. That translates into HUNDREDS OF THOUSANDS of low-end jobs.
"That's the case now. Unemployment is increasing at a constant or perhaps accelerating rate. While this is the case I think housing will see declines nationally."
ReplyDeleteSounds like we're on our way to Thunder Dome. Or at least some subset of Mad Max scenarios.
Got riots?
I don't know about those #'s for 2010 and 2011 ... I wouldn't be surprised to see another -15% or a couple -10%'s. It's pretty far out to predict, but I'd guess 2011 prices will end up somewhere between 70-100% higher than 2000 prices.
ReplyDeleteThe other thing no one's mentioning (on this thread) is interest rates. This doesn't play in to how different parts of the region will do compared to each other, but considering that 5.0% for a 30-year fixed is about 1.5 points lower than a historically normal rate, and it lowers the payment by about 20%, I would say that prices are being artificially propped up by 15%, and that they will go down by that much when rates rise.
ReplyDeleteThink of it this way. Say you bought your house in 2005 for $500,000. Ignoring downpayment, if you used a 30-yr fixed at 6.5% your payment would be $3,160. Now say it's 2009 and I want to buy your house and because it's in the immunozone I have to pay $500,000 also. But I use a 5.0% mortgage and my payment is only $2,684. So "prices" measured this way are 15% lower. Do you think I'd still be willing to pay $500,000 if interest rates were still at 6.5% I imagine I'd only be willing to pay about $420,000 in that case, which would put me at today's actual payment.
The other thing no one's mentioning (on this thread) is interest rates. This doesn't play in to how different parts of the region will do compared to each other, but considering that 5.0% for a 30-year fixed is about 1.5 points lower than a historically normal rate, and it lowers the payment by about 15%, I would say that prices are being artificially propped up by 15%, and that they will go down by that much when rates rise.
ReplyDeleteThink of it this way. Say you bought your house in 2005 for $500,000. Ignoring downpayment, if you used a 30-yr fixed at 6.5% your payment would be $3,160. Now say it's 2009 and I want to buy your house and because it's in the immunozone I have to pay $500,000 also. But I use a 5.0% mortgage and my payment is only $2,684. So "prices" measured this way are 15% lower. Do you think I'd still be willing to pay $500,000 if interest rates were still at 6.5% I imagine I'd only be willing to pay about $420,000 in that case, which would put me at today's actual payment.
"I don't know about those #'s for 2010 and 2011 ... I wouldn't be surprised to see another -15% or a couple -10%'s. It's pretty far out to predict, but I'd guess 2011 prices will end up somewhere between 70-100% higher than 2000 prices."
ReplyDeleteSeems a bit of a stretch to me. Lets look again at CS per DC under your scenario:
2006
CS -1.7%
DC -3%
2007
CS -9.8%
DC -0%
2008
CS -19.2%
DC -2%
2009
CS -9.3% (futures estimate)
DC -15%
2010
CS -4.7% (futures estimate)
DC -12%
2011
CS +2.1 (futures estimate)
DC -10%
DC started burning down in 06 just like PWC Just like the rest of the USA per CS. For the period 06-08 DC is one of the better performing areas.
Then, 2009-2011, suddenly & inexplicably, During the time CS, PWC & the whole us shows lessening rates of declines, DC goes from one of the best perfomers into a sudden severe downturn?
I could see a 1 year rate of -15% decline - basically DC is 1 year behind the US. I can accept that. However, before I think DC is 2 or 3 years behind the US I think this explanation also from case shiller is a bit more likely
"So, even as overall sales volume drops, relatively stonger demand for housing will limit price declines in neighborhoods with shorter work commutes, better schools, and easier access to parks, recreation, and retail centers....When combined with large inventories of undold housig on the edges of urban areas, this shift in preferences will mean that prices in outlying neighborhoods will continue their more rapid decline and will be slower to rebound when housing markets finally start to recover."
http://www2.standardandpoors.com/spf/pdf/index/052708
Hmm, I guess I'm more bearish than CS (I wrote the post above about interest rates).
ReplyDeleteI agree it would be unexpected to see DC do worse than the region overall in 2009-2011. But I guess I see the region overall doing worse. I don't expect to see prices in PWC get too much cheaper, but I think Fairfax, Loudon, & MoCo still have a lot more pain ahead of them. So basically, I think it's gonna be worse (than you and the futures market) overall in DC, and even though I think it won't be as bad in DC, I see more than -15% between now and whenever this is over.
That is amazing to see Washington DC going up in price. That is one of the few areas that have across the country. If under the conditions of last year it could go up, wha t is going to happen under these more favorable conditions now. There are mortgages now, jumbos also at good rates. Most areas are now feeling a bit of pick up. DC led the way. What do you attribute it to?
ReplyDeleteMost areas are now feeling a bit of pick up. DC led the way. What do you attribute it to?
ReplyDeleteMassive gentrification is a good start. Remember when DC was the murder capital of the world around 1991? The crack epidemic which caused an enormous amount of violence til around 1994? Those days are now long gone.
The change wasnt instant. Marion (the bitch set me up) Barry was our mayor til 1998. After he left and people realized neither the violence nor the corruption & mismanagement is coming back, perceptions started to change.
I moved to the city in 2001. My mother cried when she found out. She was convinced DC was the same place it was in 1991. I did see some violence til about 2003 when the last criminal elements were priced out of my hood.
My mom now thinks my neighborhood is wonderful. However all her friends still think I am insane for living in DC. Perceptions die hard, but as more and more people realize the city isnt the same crack invested shithole it was 15 years ago, the more the prices will reflect this.
Let's be honest here. Prices in DC deserve to be lower than prices in PWC because everybody knows a bunch of animals live in DC, and civilized hardworking folks live in PWC.
ReplyDeleteIts a fact. I know, because I live in PWC, and my cousin's friend was robbed while buying drugs in DC in 1998.