Active listings (inventory) are exploding in Northern Virginia as speculators and others want to sell properties. [click on image for larger version] "Inventory spiked last year with more than 7,000 active listings. For nine consecutive months in 2005, inventory in Northern Virginia increased compared to the previous year. The year ended with 5,659 active listings, 244 percent more homes on the market compared to December 2004. (The Connection, Feb 16)"
Meanwhile the number of sales per month continues to decline compared to last year's monthly sales.
Finally, the average price has peaked. Some would argue it is a seasonal effect. However, the number of active listings in January 2006 was 392% greater then January 2005. At the very same time the number of housing units sold in January 2006 was 29.6% less then in January 2005. Housing affordability remains at an all time low in the area. There will be no spring buying frenzy. Expect continued price declines in the Northern Virginia housing market.
A huge thanks to Eric in DC who compiled the numbers from the Northern Virginia Association of Realtors website.
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Good stuff. However, on all three, if you could combine percentage change with the absolute numbers, then those graphs would really kick.
ReplyDeleteGranted things are going down the toy-toy but showing these graphs this way as a percentage YOY is not the most honest way of portraying this data.
ReplyDeleteGood job on all of this analysis.
ReplyDeleteI think it's good to show the data YOY but that to be consistent, the price data should be posted as a YOY bar graph as well.
Obviously there are lots of different ways to show the data. I will show it some other ways in teh future.
ReplyDelete"Granted things are going down the toy-toy but showing these graphs this way as a percentage YOY is not the most honest way of portraying this data."
Thats how the realtors love to show the data percentage YoY.
Thanks David for posting this information and for putting my charts up for all to see.
ReplyDeleteResponses to all three comments:
tom dc/va: You're right. I think I sent a chart of the absolute numbers for listings and sales and you can see the huge change in active listings in particular. Absolute sales were at the lowest level since at least March of 2000 even if you look at it seasonally.
Anonymous: Showing the graphs as a percentage YOY is the ONLY honest way to portray this data. This is the only way to capture the seasonality of the numbers. For example, if the numbers regularly go down in Jan/Feb then the monthly numbers don't show anything since it could be seasonal fluctuation. The YOY numbers show that this downturn is MUCH larger then the normal seasonal effects. Do you happen to work for NVAR?
the gambling economist: A bar graph would work also, but I think that connected dots showing the price levels is easier to read. The bar graphs were chosen for the percentage changes because that seems to be a better representation.
David: The realtors only love to show the data percentage YOY if it is home prices since that is still up YOY. The monthly numbers are hidden. I haven't heard a comment about inventory being up YOY 392% yet from NVAR!
Thanks again. I will try to compile more data and charts for David to post here. These really should be in the Washington Post instead of here.
You can get all this data from the NVAR website and see for yourself.
Eric in Dc
Well, those graphs and facts are one side of the argument. But what abou the other side? ;)
ReplyDeleteDavid, did you see today's Washington Post Express? The Condo Living section has a lengthy real-estate Q&A column that indicates that area folks are starting to get antsy. The columnist parroted the usual Realtor (tm) line, but she was getting pushed pretty hard.
ReplyDeleteI'd like to see an intervie of someone that has chosen to buy a $400,000 condo at this time in this market. Like, what are they thinking?
ReplyDeleteAnyone know when the realtors will release the February numbers? It will be interesting see if we get a second decline (and thus, a "trend").
ReplyDeleteMan, there are so many new condos that will be completed in this area in the next six months. I think the single family house market will suffer but not implode -- there is such strong growth in this area -- but I suspect that condos may really take a hit.
It looks like, from the historical pricing chart, if we get through April/May with flat or declining prices, then we will be able to confirm a real shift in market psychology.
ReplyDeleteIt would be nice to see a chart of real prices, not nominal.
No question condos will take the biggest hit. We won't see the biggest losses until 3Q and 4Q of 2006. That's because many new condo developments in their final construction stages all around the DC metro area. I think there are 40,000 condo units in the making around the DC area. That's a classic glut on the market.
ReplyDeletePeople who bought the condo conversions are going to get HAMMERED. They will drop like a rock in value. Savvy real estate hunters will look for TRUE condo developments.
If you own a single-family home, you should have no worries. You might have some price depreciation but not much. Sit tight and enjoy the house!
For you condo owners out there, may the force be with you.
David,
ReplyDeleteI live in Silver Spring, MD. Do you know if there is a local real estate association for suburban Maryland? I am curious about the MD real estate market since that is where I hope to buy some day.
http://www.mdrealtor.org/statistics.asp
ReplyDeletehttp://www.gcaar.com/default.htm
I will attempt to do similar charts for md and dc.
ReplyDeleteI am also trying to do a chart with the Total Sales Volume per month and per agent. I can't find the numbers for how many agents there were in NVAR during any time period. The only number NVAR shows is that their total membership is over 13,000. Does anyone have any idea where to get the membership totals from NVAR?
Eric in DC
arlingtonva: Just the facts....
ReplyDelete;-)
Eric in DC
annonymous said...If you own a single-family home, you should have no worries. You might have some price depreciation but not much. Sit tight and enjoy the house!
ReplyDeleteI don't know where this comes from. Sure, if SFH prices decline by 20% while condos decline by 30% then, yeah, SFH didn't do as bad. But how can you "sit tight and enjoy" when you're losing 20%?
Everything I've seen suggests that housing is overvalued in bubble areas by around 30%. If that isn't enough to make SFH owners quake in their boots, I don't know what is.
My Dad has a house in Dale City. About 4 or 5 similar houses were sold last fall in the $400,000 range. I go the sales data from zillow.
ReplyDeleteThere is no way those houses are worth $400,000 to your average home buyer.
The fed just released data on the American public. Americans don't save, they have barely any money invested in stocks, they are losing jobs to outsourcing. That leaves us with the question:
Where is the money going to come from to pay off all the debt created in the last 5 years?
I hear the Wal-mart is hiring greeters.
ReplyDeleteI disagree that SFH prices will be unaffected even if the condo market implodes. There are certainly buyers out there who would be willing to sacrifice the dream of buying a house and buy a condo on the cheap instead. So, if we see condo prices crater, condos will become somewhat more attractive vis-a-vis houses. This leads to lesser demand for houses, leading to a drop in prices. There's no way condo prices could drop by 30% and not drag SFH's along with them, at least to some degree.
ReplyDeleteTo get back to 2000 prices would take a 66% drop in 1 bdrm condo prices.
ReplyDeleteBut "only" a 50% drop in sfh prices.
That is what we are talking about.
2000 1 bdrm condo $100k
2005 1 bdrm condo $300k
2000 SFH $200,000
2005 SFH $400,000
Any ideas on this?
I will have to do an analysis and see if this is true. Thanks for the idea to investigate.
Eric in DC
The median for single family homes is higher in 2005 than $400,000.
ReplyDeleteOK, lets say SFH prices decline 20%. That would still be about the same price they were at the beginning of 2005. So how is that such a big deal? Sure people who had a $500K house now have a $400K house, but it was only paper net worth regardless. The only people who will be screwed are those that bought in summer of 2005 who were first time buyers - and who didnt lock in at long term fixed rates ...
ReplyDeleteDon't forget about all the people that refinanced. If you have owned for 20 years, but took out a heloc and only left 10% equity in 2005 then you are still at -10% equity.
ReplyDeleteThe median unit price in Montgomery county for Jan 2006 was $425,000. Not far off.
ReplyDeleteIn Jan 2001 the median unit price in Montgomery county was $189,900.
Again, not too far off.
The problem with montgomery county is they don't break out condos vs. sfh.
NVAR only reports average sales price so that doesn't help us.
"There's no way condo prices could drop by 30% and not drag SFH's along with them, at least to some degree."
ReplyDeleteI think everyone on this board would agree that the SFH and condo markets are connected. We'll find out this year just how close they are in the NoVA area. I think condos and SFHs at the top and bottom of the market are going to get hit the worst.
Compared to other markets, though, this area has great employment, income and population influx numbers, so there will some positives that should mitigate the price drops in higher quality properties. Also, the DC area -- even more than other cities -- is suffering from rapidly woorsening traffic problems (other cities presumably build new roads from time to time), so I think we'll see prices drop more quickly in the more distant counties and Arlington/Alexandria/maybe Fairfax counties should do better.
It is going to be interesting to see whether this actually happens, after expecting price drops for the past five years or so.
In the housing crash of the early 90's the condos got hit really hard. The 1 bdrms in the building I lived in were selling for $100,000-$125,000 in 1990. In 1995 the same 1 bdrm was selling for $60,000. In 1998 it was $65,000. In 2000, it was $100,000. In 2002, $212,000. In 2005, $300,000.
ReplyDeleteThis is not accounting for inflation, but I know that the people that bought in 1990 for $125,000 and had to wait 10+ years to sell at the same cost knew all about what a 50% price cut in condos was like. (I have spoken with multiple people in the building I lived in about this. They got out as soon as the price came back to their buying price.)
Eric in Dc
Yeah, I never understand why it is perfectly natural that prices go up 100-200%, but if you think that prices will fall 50%, you are a nut.
ReplyDeleteI like the stat they keep rolling out that says "since we started keeping records the US median house price has never gone down."
ReplyDeleteDoes anyone know when the last time that the US median house price actually did go down?
1933
Real Estate is local, until it ain't.
Eric in DC
"Don't forget about all the people that refinanced. If you have owned for 20 years, but took out a heloc and only left 10% equity in 2005 then you are still at -10% equity."
ReplyDeleteIf you owned a house for 20 years, you'd have been sitting on a PILE of equity. If you borrowed all that money, where the hell did it go???? If it's all gone, that's your own damn fault.
Kevin: "If you owned a house for 20 years, you'd have been sitting on a PILE of equity. If you borrowed all that money, where the hell did it go???? If it's all gone, that's your own damn fault."
ReplyDeleteI think that the mortgage industry should take some of the blame for giving out these loans to people that shouldn't have been able to get the loan. This has been the easiest time in history (or at least since the 1920's) to get a loan. Unfortunately, we all are going to take the hit (in the economy and increased taxes) to bail out all these people that were given loans that they shouldn't have been given.
I've often read that home buyers aren't as concerned with the price of homes as they are with the amount of the monthly payment. They reasoned that expensive homes at low interest rates was equivalent to cheap homes at high interest rates. (For now, we'll ignore the fact that we now have expensive homes at relatively high interest rates.)
ReplyDeleteThis thinking is fallacious.
Homeowners who buy when prices are high but rates are low may pay the same monthly mortgage, but:
o They pay more in taxes(especially in California, where the purchase price gets permanently locked in as the ceiling against which property taxes are applied).
o They pay more in home insurance.
o They're less likely to ever benefit by refinancing at a lower rate.
Ultimately the economy is harmed too, as any downturn in home prices can create a negative equity situation. Negative equity leads to a non-mobile workforce, as many Americans would be unable to accept job assignments if it meant selling their homes at a loss.
However you want to look at it, cheap houses at high interest rates are MUCH better than the recent spate of expensive homes at low interest rates.
IMO, anyone who would buy a house at today's prices, today's rates, and today's dubious outlook for housing's future would be in serious need of a financial sanity check.
IMO, DC is one of the few safe areas in the country. I lived there for 8 years, and recently moved to Miami to semi-retire and get back to my hispanic roots.
ReplyDeleteI owned a home at a very upscale condo since around 2000 in Old Town. I sold it in 2 weeks this month. I got lucky looking at the listings, but if you buy a condo in a very upscale building it will always be in demand in DC. There are too many transient people from other countries who are scared to live in houses (cultural security issue) or from other major cities around the US (NY for example).
My 2 cents. I think the biggest thing is for people to remain patient. I watched the dot com bubble burst, and the people who were hurt were the people who invested in things they knew wouldn't be attractive logically 10 years later. Buy something you know will stand the test of time, and always be high quality and you'll be fine. If you bought something with aluminum siding 30 miles from DC, then you did yourself a disservice by holding it.
In my experience, you can take advantage of hot markets like the dot com period, and the housing market (even now)......but just make sure you buy something STABLE and something you would buy even without the craze.
So people in areas like Ballston, Arlington, Old Town Alexandria who have purchased homes in the upscale high rises in the past 2 years, you're fine. That's the most attractive area for most Europeans, South Americans and urbanites for the next 25 years. It's beautiful, pretty safe, pedestrian friendly, good transportation and just feels "upscale".
I honestly miss it quite a bit. I think this same logic applies anywhere you buy. Then again I'm saying this simply because I would never consider owning an actual home. To do that in my own country (Dominican Republic) is an invitation to be killed. Glass is just not enough to make me feel safe. Now being up 10 floors is. :-)
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