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As inventory has swelled across Northern Virginia (part of the Washington, DC metro area) while sales are down significantly, the months supply of housing units has increased dramatically. It is a remarkable turnaround from April 2005. The data comes from the MRIS.
Posts
David,
ReplyDeleteDo you know where one can find historical information on the number of homes sold in NOVA/DC over the last 10 years? A lot of realtors are claiming that with the time on the market increasing, we're getting back to a normal, healthy, market, that inventory levels are only now going back to historical norms.
My curiosity lies in comparing actual sales volume and supply from historical data as well. If we're going to say that 5-7 months housing supply is normal, and revert back to 1998, 1999 monthly supply levels, we should also look at what the monthly housing sales volume was back then. I suspect that if you used the older sales volumes with today's inventory numbers you'd see a much higher monthly inventory on the market - i.e. a much greater over supply.
I found some numbers on MRIS that indicated NOVA had about 47K units sold in the first 6 months of 2001. I then looked at March 2006 totals for NOVA and saw 1867 transactions.
http://www.mris.com/reports/stats/route.cfm
When multiplied by 12 (approximation - I know this number fluctuates throughout the year) you only get about 22.5K units. That's a pretty big difference which leads me to believe I'm not comparing apples to apples.
The comparison I'm after may shed light on the number of speculators in the market. (The additional volume above and beyond historical trends.)
Thank you,
My $0.02.
Right - once again, I ask, please show historical inventory numbers so we can put this in perspective. The fact that the inventory is higher now than it was during the very most breakneck period of real-estate buying in the region's history is unsuprising. How does this compare to more mundane times, say, from 1996-2003?
ReplyDeletethose inventory numbers won't last, soon it'll be DOUBLE.
ReplyDeleteThe Northern Virginia Bubble blogs shows inventory going back to 1997 and we are now well above those levels. Also, inventory is continuing to build. I don't know if this will pop or go flat for 15 years but it doesn't look good either way.
ReplyDeleteNOVA Fence Sitter
My2cents - McEnearney Realtors has a graph that shows available listings in NoVa averaging 9,000 to 10,000 units from 1991 to 1997. Here is the link:
ReplyDeletehttp://www.mcenearney.com/tips/nova-marketwatch.php?brochure_id=22
Virginiamls.com is now showing inventory of about 9,800 units for Alex, Fair, Arl, FC, and FX City (ie, excluding Pr. Will, Manass, and Loudoun).
I too suspect that inventory will continue to balloon as the months pass. I could see August inventory being 50% higher than today.
john fontain - I'm not sure you are comparing apples to apples by excluding Prince William, Mannas, and Loundon. The realtor site you provide doesn't indicate which areas are included in their numbers.
ReplyDeleteThank you for the links. Time to do a little math...
ReplyDeleteMy $0.02.
anonymous 2:01, mcenearney defines NOVA as those counties that john fontain listed.
ReplyDeleteStill relatively tight inventory in alexandria and arlington. I'd like those to jump up to 5 or 6 months inventory before I get excited about price declines. One thing I'm sure of is declines in the Landmark area and I 395 corridor.
haudi- patience, this isn't remotely close to being over, it took years to get here... the unwinding will be a painfully (for builders, specuvestors, realtors, brokers, banks) long process.
ReplyDeleteGuys, I don't mean to rain on your parade, but 4-5 months of inventory is still quite low by historical standards. In a normal market, there is usually 8-9 months of inventory. The past few years of < 1 month of inventory were truly an anomaly, but everyone knew that wasn't going to last. The rapid appreciation of the last few years may also be gone, but with only 4-5 months of inventory there is still plenty of room for prices to move up at a more sustainable pace.
ReplyDelete"In a normal market, there is usually 8-9 months of inventory"
ReplyDelete6 months is generally considered the line between a buyer's and seller's market.
The MAIN point of this post is to show the huge change in months of supply {since last year) in the declining housing market in N. Virginia
"The MAIN point of this post is to show the huge change in months of supply {since last year) in the declining housing market in N. Virginia"
ReplyDeleteBut if the MAIN point of your entire blog is that the market was at super-heated, unsustainable levels, why is the return of normalcy to the market being treated as big news?
You WANT the "huge change" to happen, but the "huge change" so far has merely been a return of normalcy. Now you want it to degrade from being normal into a patently unhealthy state, correct?
bryce
haudidoody said... Still relatively tight inventory in alexandria and arlington.
ReplyDeleteYes, I'm seeing only a modest increase in the three zips I follow in the DC area-- nothing like the huge run-up last Fall. A few months after that there was a correspondingly large drop in inventory-- apparently caused by realtors advising their clients to take the house off and, "Wait for the spring rebound."
The well-established, single-family neighborhoods didn't experience as much speculation as others. I don't think we'll see the true extent of the bubble there until the effect of the three year ARMS resetting begins to be felt this year. People who bought three years ago will be able to sell at a considerable discount to current prices-- and that, in turn, will put pressure on people who've been using their equity to supplement their incomes.
Sooner or later, lenders will start to turn off the debt spigots. In a consumer driven economy the effects aren't likely to be pleasant.
"Never before have so many Americans gone so deeply into debt so willingly," writes Michael Hudson, author and professor of economics at the University of Missouri-Kansas City.
ReplyDelete"Irrational exuberance and Froth" were mere euphemisms for the state-of-the-housing-bubble.One has to shudder at the thought of what is yet to come!
Some people don't seem to understand that when you throw a ball up into the air it decelerates the whole way up, stops briefly, then it slowly starts accelerating back to earth.
ReplyDeleteThe ball is just beginning to return to earth.
Things may have returned to "normal levels" of inventory, but what is captivating is the rate of change. The rate of change can tell you a lot about the eventual direction of this whole mess.
ReplyDeleteNow I've seen everything; someone is literally applying the laws of physics to the residental housing market in the United States.
ReplyDelete"Some people don't seem to understand that when you throw a ball up into the air..."
Some people don't understand that the molecular structures of fluids and gasses are less compact than are the structures of solid masses; or that all the molecular ingredients for water on this planet were delivered here by metorites eons ago, and that these things combined mean that you should invest in commodities and open a 3 month CD at Citibank.
bryce
(E=MC2 = Buy pork belly futures!) LOL.
A lot of realtors are claiming that with the time on the market increasing, we're getting back to a normal, healthy, market, that inventory levels are only now going back to historical norms.
ReplyDeleteNot quite -- inventory levels are slingshotting past the normal levels, on their way to the bear market end of the spectrum. Remember, inventory and months-inventory are increasing rapidly. We have no reason to suspect that they'll suddenly slam on the brakes at this "normal" level.
Imagine that two realtors enter an elevator on the tenth floor. The elevator suddenly lurches upward to the fiftieth floor and then begins freefalling toward earth. As the elevator passes the tenth floor, one realtor turns to the other and says, "Not to worry. We're right back where we started!"
The Stockton Record:
ReplyDelete"'Everyone says: 'It's so beautiful. It's gorgeous. I love your house,' Marcia said. 'Then they leave.'"
Jerkstore
It is not unreasonable for anon 5:41 to use the metaphor of a ball under the influence of a constant force to describe market behavior. Anon did not say that residential realestate is bound by the same physics as a ball, but that the motion of a ball could be used to describe the behavior of the current market. It is no different than curve fitting measrued data to predict future performance.
ReplyDeleteBut the ball metaphor does not work-- when you throw up a ball, it does not shoot up, slow down, and then continue upwards at a more moderated pace.
ReplyDeleteBryce - give it up. It's embarrassing even to read your rationalizations. The jig is up, dude.
ReplyDeleteMy 2 cents
ReplyDeletethe exponential increase in inventories is hyperbolic- if this was a gradual move up, the concept of 'returning to normal' could be possible- from the looks of the chart the inventory is increasing rapidly,in a short period of time- with sales faltering- not a scenario I would call 'normal'.
I'm not rationalizing anything "van housing blogger". I'm having a good time running circles around the doom and gloom cheerleaders.
ReplyDeleteYou and others are so obtuse that you cannot see that I'm *not* arguing against a significant retraction in the housing market. I'm simply enjoying the fact that you are obtuse. (I know, I know, I have "issues", but being dense isn't one of them)
I can see why and how you'd be embarrassed VHB. If your IQ were a few points higher you'd likely not feel that way.
bryce
I'm sure that once spring selling season begins these inventories will start to decrease. When does spring selling season start...August right?
ReplyDeleteThe interesting thing about these numbers is that they offer a good counterpoint to one of the bubble defenders' recent arguments: that there is a bubble in DC area condos, but not SFHs. At least in Nova, that chart shows an increasing number of SFHs as well.
ReplyDeleteIn the Silver Spring/Wheaton area, it certainly seems like there are a huge number of SFHs for sale. Many of these homes are very old and probably need major renovations of pipes and roofs, even if everything else looks nice. But the price does not reflect that, IMHO.
A Redskins fan
Bryce, buddy
ReplyDelete- It happens all the time that healthy, well adjusted people need to tell others they're having a good time "running circles" around others.
Then throw a few insults regarding IQ around, underlining their well-adjustedness.
All the best people I know do that on a regular basis. hehehehehehe .....
Is that level 9 or 10 on Maslow's hierarchy? BWAHAHAHAHAH !!!!
I made a prediction about someone's future behavior ... please don't let me down.
ReplyDelete>> When does spring selling season start...August right?
ReplyDeletePhhthththththththhh
cough sputter ack sputter glub glub sputter ACK!!!
Yuck what a mess.
You owe me a new keyboard.
hey, I said "I have issues". Did you not catch that?
ReplyDeleteI know. And I do enjoy running circles around people. :-) (That is one of my issues)
So the fact that you think you are calling me out on something that I freely admit to is kinda "superflous", don't you think? hehehehehe
bryce
Anonymous 5:42am said
ReplyDelete"The interesting thing about these numbers is that they offer a good counterpoint to one of the bubble defenders' recent arguments: that there is a bubble in DC area condos, but not SFHs. At least in Nova, that chart shows an increasing number of SFHs as well."
I sort of agree. My sense is that we're more likely to see actual price declines in outlying properties and condos (everywhere) and that close-in SFHs will have more sticking power.
These numbers support your view that the market is slowing everywhere, but also support my view that within the market different segments will not necessarily move together.
Condos in the city aren't going to decline - they're affordable to the people who need them and belong in them: yuppies.
ReplyDelete