Tuesday, May 26, 2009

The Washington Post examines the local housing market

According to The Washington Post, 62% of Washington, D.C. area home sellers are selling at a loss:
In the past six months, most Washington area sellers have lost money on houses they purchased since prices started climbing in 2000, according to a Washington Post analysis of residential sales. In the first three months of this year, 62 percent of local home sellers accepted less than they paid for their homes, in part because aggressively priced foreclosures have dragged down prices around the region.

While the drop is painful for sellers, experts say it is a necessary part of getting past the excesses of the boom years. This region experienced one of the sharpest run-ups in home prices in the nation. Those prices must be brought down in order for buyers and sellers to deal with each other on more equal footing, as they had for decades before the boom. ...

But as long as distress sales continue to dominate, the market will not bounce back to normal, said Nicolas P. Retsinas, director of Harvard University's center for housing studies. "The norm requires that a preponderance of transactions take place between willing buyers and sellers, not sellers who would take any price to unload a property." ...

Home prices have held steady in the District, according to The Post analysis. In the Virginia and Maryland suburbs, prices for single-family homes are down to where they were five years ago. In Prince William and Loudoun counties, a flood of foreclosures has pushed prices so low that bargain hunters have flocked there in recent months, helping to boost sales.

But while in past slumps a surge in sales has signaled the start of a rebound, this downturn is unlike any in recent times and it's premature to call a recovery, said Barry Merchant, senior housing policy analyst at the Virginia Housing Development Authority.

The encouraging signs have been offset by more troublesome ones, he said. After tapering off for a few months, foreclosures in Northern Virginia are starting to creep up again and may keep climbing now that several lenders have lifted foreclosure moratoriums.

Meanwhile, the year-over-year sales increases of the past few months are petering out in some Virginia suburbs, suggesting that interest in the fire-sale prices may have peaked, Merchant said. In April, Loudoun sales declined 12.5 percent from a year earlier.

7 comments:

  1. Here is hoping these large drops spread like an agressive pandemic across the burb's from North Baltimore to North Virgnia, and knock prices back down to pre-bubble (circa 1997) levels!

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  2. I've been following housing prices in Burke, where I used to live, using Zillow. Interestingly, Zillow is showing a bottom for prices in Feb with a significant increase through May. This seems to differ from this article and other posts (and for that matter Case Schiller data released today). Is Zillow just that unreliable? Or, is a bottom forming?

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  3. Lance, where are you?

    Lance said...

    Am I the only one to get David's allusion to "red lights" and his favorite "Realtwhore" references? Redskins, it looks like you missed it ... just like you're missing the dip in prices out there now.

    December 28, 2006 10:28 PM

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  4. TiT - seasonality of prices is returning to places like Burke. Last year, prices went down every month even in the spring when they should rise. Very likely prices will fall again in the autumn.

    What you are seeing doesnt mean the downturn is over. It does mean however that the worst of it likely is over.

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  5. agree that the worst is nearly over.

    This Bell shaped curve has a slow run up (1997-2001), rapid rise(2001-05, peak (2006), rapid fall (2007-2010 (?)), and will ilkely be followed by a slower descent (2010-2014(?)) . Possibility of an overshoot is likely if interest rates, absurd taxation, and employemnt issues continue to put further downward pressures on prices.

    Take home point: If you do consider buying now, your offer should be as insulting to the seller as possible - to the point that they may physicaly be ill and immediately vomit.

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  6. "Take home point: If you do consider buying now, your offer should be as insulting to the seller as possible - to the point that they may physically be ill and immediately vomit."

    Great advice. It is true for boats and aircraft as well. My husband has wanted a airplane all his life (he's been a commercial airline pilot for over 20 years). We made the "vomit offer" - which made me laugh, when I saw it above.

    We did that to quite a number of sellers and walked when they insulted us back and wouldn't move. 5-6 months later we got a wonderful wonderful deal from those who had their tales between their legs ...

    But, settlement is never pleasant even when the seller capitulates. They feel they just got robbed, and they almost hate you (even though you are the buyer!) We sold our house in 2008 in Dupont circle, and we got similarly low-balled (but fortunately, had 2 bidders). So, I understand the feeling!

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  7. "In the first three months of this year, 62 percent of local home sellers accepted less than they paid for their homes, in part because aggressively priced foreclosures have dragged down prices around the region."

    Yes, aggressively priced foreclosures have caused the housing bust. It's not like housing prices went up so high normal people couldn't afford them... Pardon my sarcasm, but it gets irritating constantly reading foreclosures as being the blame, not being real comps, and being manipulated in various ways. Foreclosures are a symptom of a bigger problem.

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