The housing market in the Washington and Baltimore area has been declining in the Washington, DC for about 2 years. Thus the year over year comparisons only represent a portion of the declining housing market.
Northern Virginia (Fairfax County, Fairfax City, Arlington County, Alexandria City, & Falls Church City, VA (NVAR))
- Median Price: $425K
- Median Sales Price YoY: -7.6%
- Average Sales Price YoY: -1.8%
- Total Units Sold YoY: -28%
- Average Days on Market YoY: 16%
- Active Listings YoY: 10%
- Median Price: $260k
- Median Sales Price YoY: -3.8%
- Average Sales Price YoY: -.4%
- Total Units Sold YoY: -31%
- Average Days on Market YoY: 40%
- Active Listings YoY: 20%
- Median Price: $400k
- Median Sales Price YoY: -2.4%
- Average Sales Price YoY: 7.3%
- Total Units Sold YoY: -18%
- Average Days on Market YoY: -1.5%
- Active Listings YoY: 4%
- Median Price: $308K
- Median Sales Price YoY: -7.1%
- Average Sales Price YoY: -8.9%
- Total Units Sold YoY: -55%
- Average Days on Market YoY: 75%
- Active Listings YoY: 68%
Montgomery County, MD
- Median Price: $410K
- Median Sales Price YoY: -5.8%
- Average Sales Price YoY: .5%
- Total Units Sold YoY: -35%
- Average Days on Market YoY: 30%
- Active Listings YoY: 22%
Loudoun County, VA
- Median Price: $405K
- Median Sales Price YoY: -7.7%
- Average Sales Price YoY:-0.9%
- Total Units Sold YoY: -21%
- Average Days on Market YoY: -10%
- Active Listings YoY: 2%
- Median Price: $475K
- Median Sales Price YoY: -7&
- Average Sales Price YoY: 1.7%
- Total Units Sold YoY: -33%
- Average Days on Market YoY: 14%
- Active Listings YoY: -2%
- Median Price: $300K
- Median Sales Price YoY: -3.9%
- Average Sales Price YoY: -1.8%
- Total Units Sold YoY: - 39%
- Average Days on Market YoY: 59%
- Active Listings YoY: 18%
- Median Price: $420K
- Median Sales Price YoY: -9.2%
- Average Sales Price YoY: -4%
- Total Units Sold YoY: -27%
- Average Days on Market YoY: 15%
- Active Listings YoY: 14%
These numbers show a declining housing market in the Washington - Baltimore area compared to last year. For every jurisdiction listed, the number of housing sales fell in November compared to November 2006. In most the median sales price fell, while the mix of housing units sold did not change dramatically.
The Washington - Baltimore area is not recovering from the housing decline. Prices contine to fall. Far out suburbs and condos are experiencing larger price declines. In the metropolitan area a declining housing market is reality. This coming spring's real estate season will not be a recovery time in the DC - Baltimore area for real estate. Housing busts usually last many, many years. It is far from over.
Posts
So, where's the bursting bubble? Oh, maybe next year ...
ReplyDeletehowever:
ReplyDeleteGas Prices Spur Consumer Inflation
By Howard Schneider
Washington Post Staff Writer
Friday, December 14, 2007; 10:23 AM
Inflation is a good thing for mortgage holders. You pay back yesterday's loans with today's devalued dollars.
What happened to 'Skins Fan's 30% to 50% price drops? Oh, we're still waiting for those.
ReplyDeleteNext year, 'fer shure.
Lol.
ReplyDeleteIts bursting. But as everyone has agreed... a RE bust is slow. I doubt it will drop faster than the peak upswing. 2.5%/month. But coworkers are having to move and are losing $100k on DC area homes. 2008 won't even be that much of a downturn. The big drop will be 2009. Bottom? Not before 2011.
The best career opportunities are where the growth is. That, for my industry, won't be DC for a few years. If people want to stay in the area, no problem. We're going to use promotions, bonuses, and pay increases to move the experienced personnel to where the junior personnel want to work. Simple market adaption.
Right now we have no trouble hiring in Denver, Huntsville, Houston, and a few other smaller locations. DC isn't meeting attrition. Don't even start me on LA... It looks like we'll move 10% of our work force out of DC and LA in 2008. The moves are scheduled to be announced in March.
You grow or you rot. I've seen what happens to markets that stop being attractive to young workers. One can be in denial for years... and then it hits. Cest la vie.
Got popcorn?
Neil
Still can't see it, Lance? Maybe looking here would help shed some light?
ReplyDeleteagree with Lance....paradox that all of these renters throw money in the fire, while praying for a fire sale....
ReplyDeletethe old saying still has merit - BUY NOW OR BE PRICED OUT FOREVER
Ohh, the big drop is in 2009...with the bottom in 2011!? You guys keep waiting on the sidelines, while I lock in my rate. BTW, I'd like to say thanks to all those out there twiddling their fingers waiting for 20%+ price drops...you have reduced competition, and allowed me to get the house I've always wanted at a decent price.
ReplyDeleteInflation is a good thing for mortgage holders. You pay back yesterday's loans with today's devalued dollars.
ReplyDeleteROTFL. Lance... mortgage holders circa 2005 through 2007 are missing payments already and somehow high inflation will save them? If inflation is high... that means fighting it. Oh wait... rents are dropping... that's a HUGE part of CPI. :) No worries.
Anyone else notice that inventory isn't rolling down as quickly as it normally does? The slope this time of year is pretty linear (not quite, but close). My first look shows its dropping at half the rate it dropped last year.
Got popcorn?
Neil
From Bloomberg
ReplyDelete"U.S. Housing Crash Deepens in 2008 After Record Drop (Update1)"
Dec. 14 (Bloomberg) -- For U.S. homeowners, builders, bankers and realtors, the crash of 2007 will only get worse in 2008.
www.bloomberg.com/apps/news?pid=20601208&sid=aFGRVkX98Hzw&refer=finance
And yet DC proper keeps going up. Have fun bargain hunting in your seedy suburbs!
ReplyDeletehttp://www.washingtonpost.com/wp-dyn/content/article/2007/12/14/AR2007121401071.html
ReplyDeleteI love how Neil tells lance about Neil's own miserable life and somehow tries to rub it in *to lance.* Neil, your life and your company sound horrible. What's that got to do with anybody else?
ReplyDeleteLance,
ReplyDeleteYou are correct that an inflationary environment is typically beneficial to (fixed rate) debtors. But this is true only if wages keep pace with inflation, particularly at a rate above the fixed rate of the mortgage. That is, the debtor's paycheck is soaring due to inflation while the mortgage payment stays flat.
I'm not sure that's currently the case; current inflation seems to be based on commodity and energy prices rather than a labor shortage. The Fed's loosening may cause wage inflation, but we're not there yet.
I'm not as well-informed as some of the posters here, so could someone explain what this month's DC proper numbers mean? A drop in total sales at the same time as fewer days on the market? A simultaneous median price drop and an average price rise?
ReplyDeleteDoes this mean that fewer, but more expensive homes were sold? And if so, what does that indicate more broadly?
Thanks.
Anon 5:29 asked:
ReplyDelete"Does this mean that fewer, but more expensive homes were sold? And if so, what does that indicate more broadly?"
I'm not that well informed either as to how these statistics should be interpreted ... And this is perhaps because I don't focus on statistics. I think it is way too easy to blind oneself to the realities out there if one only looks at the stats coming out of what is necessarily someone else's interpretation of the "big picture". I prefer looking at the big picture first and then seeing whether statistics can validate (or invalidate) what I take from my look at the big picture.
That said, the District recently experienced a big glut of relatively inexpensive condos coming on line. (Relative in relation to the existing housing stock.) I would think this would play havock with the stats. Suddenly you have lots more mid and lower priced condos for sale. The whole "mix" of condos to SFHs changes for a while. Could this lower the median price drop? More condos are sold as a percentage of the whole than usual ... for example, let's say in the past that 3 condos sold for every single family home sold ... and now you have 9 condos sold for every single family home sold ... This could shift where the "median" home is from "lurury condo" range to the "average priced" or even "lower priced" range for the period in question.
However, you could simultaneously have prices rising for like places ... i.e., while the median home for the period has shifted to cheaper because there are so many more condos vs. houses being sold, prices for what is selling on average is still going up ... The average price after all reflects the average price of ALL places sold ... and is not as directly affected by any changes in the mixture of what is selling.
Lance,
ReplyDeleteWhew. I admire your dedication. Maybe we are getting stuck on wording. OK. No Bubble. No such thing as a bubble. Can't be a bubble, doesn't happen.
Now, RE prices have fallen, are falling, and will continue to fall. Look for them to bottom in the next three years below current prices. How far below? My guess is at 2000 to 2001 prices in adjusted dollars. Lower if the lending crisis doesn't work out smoothly.
Remember that poor school teacher who bought back just before the RE peak so she 'wouldn't get shut out of ever owning a home'? Love to see an interview with her now. She is scrimping and saving to pay for a house that is worth less than she paid for it. She was in FL, so if she sold today, she'll take a 20% hit. Imagine making payments on a house you no longer own.
If she can hang in there she'll be above water in 10-15 years, and maybe she can sell into the next cycle. But not bubble. Never a bubble.
"Huntsville, Houston"
ReplyDeleteNeil, you are saying that Huntsville and Houston "are desirable to (your) young workers"
What line of work are you in? The question is relevant since you persist in using your particular organization as the macroeconomic benchmark for all of DC. Please explain.
I've got a bowl of Jiffy Pop, fresh out of the microwave oven.
Jiffy P said...
ReplyDelete""Huntsville, Houston"
Neil, you are saying that Huntsville and Houston "are desirable to (your) young workers"
What line of work are you in? The question is relevant since you persist in using your particular organization as the macroeconomic benchmark for all of DC. Please explain.
I've got a bowl of Jiffy Pop, fresh out of the microwave oven."
Jiffy, note that Neil isn't even in DC! He's out near LA (I think in Orange County) and even has his own blog for out there where he organizes get togethers for the SoCal bubbleheads. Yep, he knows a lot about the housing market in DC. Perhaps he participates in this blog because he wishes he lived here?
http://recomments.blogspot.com
Sunday, December 09, 2007
ReplyDeleteBlogger party 2
We had the dinner at the Il Fornaio in Old Town Pasadena last night and I call it a success. Eight fellow bearish bloggers showed up and we had a great night! No photos this time.
Discussions covered a variety of topics. TJ kept things going by bring a library of books to discuss. I was one of several who now have a bit of reading to catch up on.
One topic of the evening is other states and why they are getting hit so much harder than California. Its not that its different here, but rather why certain areas had a far more fragile bubble to pop.
Many of us discussed our buying criteria and when/where we might move to. This led to myself once again talking about aerospace job movements.
The topic of recession or depression once again came up. Basically we concluded that we could survive a depression and that certain parts of life should just go on.
Now it wouldn't have been a bearish dinner without talking about other 'non housing bubble people's' opinion on the current market. We all knew someone buying. We also all know people trying to sell. The consensus was wait. Some were already low balling (but having offers rejected). Others are far on the sidelines.
We all agreed this had years to run. How long? That wasn't agreed upon. But it was educational to discuss. As more than one at the table noted, one reason to have the conversation is to see the various sides to the conversation. :)
It was fun! I'll definitely do more dinners in 2008.
Got popcorn?
Neil
Yes, it must have been very "educational" considering everyone was "in the choir" ... Except, of course, for the 3rd hand "hearsay" originating with friends of friends who were foolishly looking to buy or sell.
It sounds like you were probably drinking "whine" made from sour grapes!
"And this is perhaps because I don't focus on statistics."
ReplyDeleteunderstatement of the year!
"That said, the District recently experienced a big glut of relatively inexpensive condos coming on line. (Relative in relation to the existing housing stock.)"
I know I know, you don't "focus" on statistics, but do you by any chance have any *proof* of what you are saying?
What is the average/median selling price of a new build condo in DC?
The District's median is only 400k, well less than fairfax county. I would think that new build condos are actually pulling up that number.
Neil, you are saying that Huntsville and Houston "are desirable to (your) young workers" ... What line of work are you in?
ReplyDeletejiffy p, as everyone knows, those to cities have a heavy aerospace/defense-related engineering presence, and that's the most likely industry that Neil is in.
Now, while I would have no desire to live there, there are plenty of people who get engineering degrees from large universities in the deep south who, for whatever reason, figure they want to stay in the area, so in that sense, they are considered "desirable" by a certain segment of the population.
Jiffy P
ReplyDeleteI'm in aerospace. Part of what is driving the move is that the pentagon cannot house young officers cheap enough around DC. Thus the government is mandating many of these moves.
As to desirable locations, to each there own. I wouldn't work in Huntsville or Houston, but we have no trouble hiring there; hence why we bribe senior officials to move there. I happen to be working with five of the largest companies in the industry. Too many of the large meetings get down to hiring complaints. So its certainly not my company alone. All are moving people, with one large exception, out of the area. Cest la vie.
The bulls persist in saying real estate is about to go back up. I see no evidence of that. Quite the opposite.
Until the people who report to my managers can afford a home I'm not even tempted to look. Not when I have so many retirees begging to be relocated (we're generous) so that they can cash out of their current property. I see where we're buying buildings and its not DC. Oh well.
But the bulls will say sales and prices really aren't dropping. Case-Shiller will be a bit of a nasty Christmas present.
Or have you really not noticed any financial stress amoung coworkers? I find that nearly impossible to believe. Either that or you hang around with people whom aren't telling everything. In previous down markets I found that the ones who screamed success the loudest were usually the first to go bankrupt.
Got popcorn?
Neil
"What is the average/median selling price of a new build condo in DC?
ReplyDeleteThe District's median is only 400k, well less than fairfax county. I would think that new build condos are actually pulling up that number."
MRIS doesn't give a median price for condo sales, but it does give a mean. In November the mean was 372k.
MRIS's numbers are not exclusively new-build condos however and will include numerous older and less desirable condos.
(actually most new build condos won't show up on MRIS at all)
It is quite likely that as usual lance was simply completely wrong:
"That said, the District recently experienced a big glut of relatively inexpensive condos coming on line. (Relative in relation to the existing housing stock.)" -lance
If "existing" condos in DC are at nearly 400k, while the DC median is only 400k to start with, we can safely assume that the newer and more desirable condos are pulling the average up, not down.
Dean,
ReplyDeleteThank you and well said. As most know, the government's first choice to relocate employees out of DC seems to be Huntsville. Why? I don't know. The job flow there is just obvious. Maybe DC is like Long Island or San Jose; Aerospace was priced out of those regions and moved on. Cest la vie.
Lance,
Since you have such strong opinions, why don't you start your own blog? Create charts showing why housing is about to increase in value! Why sales should go up... Show where rents are going up (are they, anywhere?)
Sorry to see you're bitter. We had fun. Of a like mind at the dinner? Yes! As I noted, we spent a lot of time having fun on where to park our money during a downturn. :)
As I noted before, I travel a lot. LA, DC, and quite a bit of "flyover country." So be it. My wife and I would love to buy in DC... but the job flow is outward. We would also like to buy in a few other cities that travel brings us into contact with. Most people I know earning good incomes travel a bit and recognize that 'geographical flexibility' helps their careers. :)
The scariest discussions are the dinners with my banker friends. Their employers are losing billions. The housing bulls only talk about pressuring individuals to buy. This has grown so much more than that. My banking friends are talking about huge layoffs coming. Why? They are flying *everywhere* to handle defaulting commercial loans and degrading commercial credit quality. They are talking 20% write-downs on huge portfolios.
You bulls need more than petty insults. Get facts on something that shows housing will recover. Fact is that inventory is high and sales are low. The friends who showed up at that dinner were, for the most part, very well to do. Most handle hiring of people "in large batches." We bears provide evidence and then you pretend it states something else.
Or all the people I see nervous to sell must be an illusion? As credit tightens, it will only make it easier for savers to buy. :) Heck, the CEO of Fannie declared that national prices will drop 5% in 2008. DC is doing worse... (and LA, San Deigo, Florida, etc.)
If I do not qualify for a mortage, I know within 6 months I'll be able to buy cheaply. :) We bears know where we stand.
Got popcorn?
Neil
What will Ron Paul in the White House do to D.C.- Baltimore RE numbers ?
ReplyDelete"As to desirable locations, to each there own. I wouldn't work in Huntsville or Houston, but we have no trouble hiring there;
ReplyDelete...
Until the people who report to my managers can afford a home I'm not even tempted to look."
There's that static BH view combined with mind reading, again.
I wouldn't work in Houston but I know that everyone else wants to work there.
People can't afford to buy a home in DC(??) but they can in Houston, the city that had all the abandoned houses during the last bust; the one where DC area places went flat.
Man, if you buy a condo in DC for a half mill and it has a few years of no gains, you are better off than if you buy a $500K McMansion 60 miles outside of Houston, and it drops to $250K during one of those Texas sized recessions they have every decade or so.
Of course, the BH's don't quite understand that places 60 miles outside of DC have fallen hundreds of thousands of dollars but places right in the city have not.
They see it happening, or rather not happening, then they make up theories to explain it. "It has not gotten there yet." and "I can see the lower prices coming, any day now."
Financial stress? Many of my HH neighbors have paid their houses off.
You have no idea what financial stresses HH who bought 5, 10, 15 years ago are experiencing.
(the answer is, not much.)
"Or have you really not noticed any financial stress amoung coworkers? "
ReplyDeleteI'm in defense, lots of colleagues spend time in that five-sided building, some are three years out of college and making over $70K per year, others are in their 30's and making well over $100K per year. I'm in my early 40's - master's degree, technical certifications, TS clearance. Clearances count for a lot.
I don't assume that my viewpoint or experience is applicable to the broader market. I purchased in 2003 with a conforming loan, locked in at 5.5% for 30 years. Just FYI.
This just in:
ReplyDeletehttp://www.housingtracker.net/askingprices/DC/Washington-Arlington-Alexandria/
Prices are down to $375k, off the peak of $500k. Nope, no bubble bursting here!
Its obvious that Lance follows his comments with an anonomous post that agrees with himself. This shows two things. One, he's trying to scare readers into buying now. And two, that he still thinks he's clever.
ReplyDelete"As I noted before, I travel a lot. LA, DC, and quite a bit of "flyover country." "
ReplyDeleteI have noticed that one of the thing virtually all of the real estate pumpers have in common(at least those that remain) is that they HAVEN'T travelled much.
I think it is much easier to buy into the whole idea of "my neighborhood/area/city is special and the 'normal' laws of economics don't apply here!" if you just don't have much experience outside your home area.
People who think DC is an amazing city are almost without exception people who haven't spent much time outside the area.
Having lived in several different major cities I can say with confidence that DC is pretty ordinary. It has its quirks, but it offers nothing that isn't available in every other major city.
Well, I'm a stats guy... I see lots of headlines, like we all do. I see the numbers that MRIS publishes like everyone sees. But, I like to dig deeper into my numbers. So deep that no one can refute the numbers or draw more than one precise conclusion from them. With that in mind, i went to the PGCAR website (I live in Prince Georges, MD - about 20% of the DC area's population). They, too, have a stats page, similar to MRIS. I poked around a bit and was surprised to see that 1) co-op/condo prices were up in 2007 year-over-year; and 2) single-family houses were flat year-over-year. That flies in the face of a "busting" market! How can that be, when the MRIS numbers clearly show otherwise? It turns out that in the so-called peak year, 2005, 1/10 of all houses sold in Prince Georges were condos. In 2007, so far that number is 1/5. Since, condos are much cheaper in PG (and everywhere else, too), the overall median house number goes down ONLY because a higher percentage of condos have been sold vs single family/townhouses. In other words, no bust and not even a decrease in nominal price. Just less buyers. Zzzzzz. I haven't looked in other jurisdictions in the DC region, simply because I only have my one house and have no desire to leave the neighborhood, but i think others in the DC region might find the same thing about their county/city that I found out about mine.
ReplyDelete"It is quite likely that as usual lance was simply completely wrong"
ReplyDeleteyou could say that about lances predictions in general but it seems to apply here as well.
more bs from lance
1.Asking prices are NOT sales prices...I think David's numbers prove that.
ReplyDelete2.There is totally NOT an outflow of jobs in the DC area, atleast not in the IT and Law industries. Inside the beltway it is still booming. But how would you know that living in California or Texas...
3.My rent continues to go UP. I live in Arlington. I pay more than 1100 bucks a month.
All out of popcorn...
We're not talking buying 5, 10 or 15 years ago. We're talking buying at today's prices. If my employees cannot afford to buy, they will move and so will my job. That is just rational thinking.
ReplyDeleteI agree with the above poster that those that travel see the extent of this collapse. Its not local. Its everywhere. Europe too.
I like how the bulls will deride condos one day and then recommend someone else buy one the next. My favorite was when an 'anon' said not everyone who buys uses a spreadsheet. That's silly, buying the most expensive purchase of a life without cost analysis?
anon with the stats: Publish them. What you just stated is counter to everything I've seen. So I'd like to see thoe numbers. Maybe only where I know people are prices going down? That would be interesting, because that seems to be the whole USA!
Oh... 1100 bucks a month is nothing compared to the cost of owning. So what's your point?
Got popcorn?
Neil
The people out in the D.C. Exurbs still dont get it. There are two separate and distinct markets around here:
ReplyDelete1. The outer suburbs & exurbs where inventory has skyrocketed, (in some places like PWC) with no end in sight, and prices are cratering.
2. D.C. and the inner suburbs where total inventory is DOWN from last years highs (although sales are admittedly down too), and prices are falling or slightly flat (when you include seller incentives).
All the BHs say "well just wait, the inner areas will get it too - its coming any day now - you'll see" but how do they explain total inventory being down which suggests to most that the worst of the downward pressure is over. Again, I am not saying all downward pressure is off, just the worst of it has passed, and with it the chance we will get hit like the exurbs did.
anon,
ReplyDeleteHow can you claim the downward pressure has lessened? Credit is further tightening! I watched coastal LA go from 1993 "impossible for it to go down" to, in amazement, seeing those markets drop percentage wise further than the exurbs.
Do you have mortgage statistics proving that DC won't be hit by the tidal wave of resets coming in 2007? Everywhere people say "its different here." I'm not seeing it...
Got popcorn?
Neil
"All the BHs say "well just wait, the inner areas will get it too - its coming any day now - you'll see" but how do they explain total inventory being down which suggests to most that the worst of the downward pressure is over."
ReplyDeleteAnd you were saying the same thing about the whole area a year ago... "where is the bust? Inventory is up in the outer areas but prices are stable, obviously things will remain on a permanently high plateau!"
Wake up, months of inventory on the market inside the beltway is at at LEAST 10 year highs right now, and climbing.
Absolute inventory is down slightly, but sales have cratered.
"But, I like to dig deeper into my numbers. So deep that no one can refute the numbers or draw more than one precise conclusion from them."
ReplyDeleteLOL
You call that hamfisted attempt to "analyze" the numbers "so deep no one can refute them?"
I hope for your employer's sake that numbers aren't part of your job.
I have been looking at SFHs in DC for months now. Prices except for really flawed properties have not fallen at all despite me and all the bubble idiots here rooting for it. All that seems to have happened is that areas people were beginning to consider have gone back to being places where no-one wants to live.
ReplyDeleteAnd Neil, that Got Popcorn tag is tedious.
"You call that hamfisted attempt to "analyze" the numbers "so deep no one can refute them?"
ReplyDeleteI hope for your employer's sake that numbers aren't part of your job."
LOL, what do you expect? He's from PG county, where all the crackheads went after they got priced out of the District.
"LOL, what do you expect? He's from PG county, where all the crackheads went after they got priced out of the District."
ReplyDeletehah... I take it you haven't spent much time in the District.
Just try to go to a park without having to avoid a bum sitting there talking to himself. All part of the urban charm though right?
DC is mostly slums and that isn't about to change.
Refute them. You are clearly smarter than me, right?
ReplyDeletePS: i had to dumb-down my analysis for people, like you, that want to see something that simply isn't there. Forests...trees..don't confuse the two. I like these blogs because they make for good discussion, but clearly there is a separation into 2 groups: those that have matured mentally, financially and logically, and then there's those that THINK they have. Guess which one owns and which one rents?
PPS: Not from the District or the DC area in general, like most people here. But I know value when I see it. That's why I bought a single-family house in early 2003. I now make every year what my entire mortgage is (my employer must not think I'm too dumb).
In addition for the usual arguments about gas prices, lack of amenities, etc. there are a number of other reasons why outer areas get hosed while interior areas remain much better off.
ReplyDelete1. Better mix of housedebtors. For every new homedebtor who purchased in the bubble using exotic mortgage products, there is the older couple who lived here for 30 years, and owes 56K on a house now worth 565K. When these people want to sell, they are not constrained by desperation or rate resets, and have no chance of losing a house to foreclosure. Can the same be said where the subdivision is 5 years old and is populated by people who bought into the bubble many of which are or will soon be underwater?
2. Less flippers. Outer areas had plenty of flippers trying to get in on “pre construction prices” and camping out overnight at Madeupname Farms to buy the “Inspirada” model. Inner areas never had flocks of flippers poising the SFH market, leaving the moment prices went south. Hence inner area foreclosures are a fraction of those in the exurbs. Condos…those are a different story!
3. Inner areas were already established – no one bought because of what these areas “could be”, they bought because of what the inner areas are. Outer areas, it was all about speculative moves of the population, etc…“Didn’t you hear, the developer is talking to Hermes about having a retail store here!!! This area is going through the roof!!!” A lot of that speculation didn’t materialize, and now the market is reflecting it.
4. No builders to compete with. Out there, the homedebtors are competing against the builder left with a glut of inventory and who needs to severely cut prices in order to survive. They are setting new comps that affect everyone in the area – especially the ones who bought the exact same “Inspirada” McMansion that is now being discounted 40%. Inner areas have a few scattered small time builders here and there, but nothing like the big boys out in the exurbs. Plus these houses were built long before the McMansion era of 4-5 different models to choose from – meaning comps are not as easy to come by.
Before everyone flames away with anecdotes about how all this is not true because they know a guy or an area around them that is not like this – please recognize my point. On average there is more of this crap out there, than there is in here and at the margins, it will affect prices more out there, than they do in here. Those that do not recognize this – well they are just plain dumb.
Neil - look at the sales ratios of Arlington & Alexandria. Conventional wisdom is that 6 months of inventory is a healthy market - the ratios in Arl and Alex - 6.61 and 6.94 respectively. BFD!!!
ReplyDeleteBy contrast Loudon is at 12.12, PWC 16.72, and Faquier Co. a whopping 20.72! The first sign of a spike in sales ratios showed up about the same time as the 2005 & 2006 spikes in total inentory. Arl & Alex had the same inventory spike too, but have pulled off it since then, and the worst they have to show for it is sales ratios slightly less than what you would see in a healthy market? Not much pressure if you ask me.
One caveat to note, ever since the credit crunch started in earnest this summer, Arl & Alex total inentory seems to have plateaued and is not falling over the winter as it does in most years. In fact, because of the lack of seasonal fall, November 07 inventory is actually pretty close to November 06 inventory. If this trend continues, inner areas may be in more trouble than I thought. Then again, I shudder to think what this will do to the outer areas.
Some zip codes in DC just aren't selling SFH's. That's why prices aren't falling. ;) Sellers are asking more than buyers are willing to pay. And as I noted in the newer thread, mortgage criteria is about to really tighten. So its an absolute joke to talk about a price rebound.
ReplyDeleteAs to these 'statistics.' Show us the numbers. I taught DOE in grad school, so throw the statistics my way! What's the standard deviation on price, DOM, sales price to initial asking price, etc.? Charts please! I'm all for distributing information. :) Are you excluding ouliers? What's your method? Which tests are you implimenting to see if the process is 'broken?' How are you plugging gaps in the data (which, due to slow sales, we have right now). Have you tested the data for aliasing?
Most of the real estate statisticians are bearish right now, so it would be 'enlightening' to see data showing otherwise. Do share. Don't just claim to have data. There is PLENTY of bearish data out there. Look at David's links if you need a source.
One of my banker VP friends just lost her Christmas vacation. Why? A multi-Billion dollar commercial loan is on the rocks. Oops!
So I am going to be on the sidelines spectating as this worldwide real estate bubble losses momentum.
As anon 1:33 noted:
Absolute inventory is down slightly, but sales have cratered. But then again, inventory is UP YOY 25%. Its down half its normal season drop. ;) The bullish anon, have taken some marketing classes, haven't you? What's the term they use when a market losses momentum like this? What's the implication for slower inventory turns? :)
Got popcorn and a fine Cabernet? ;)
Neil
"Neil - look at the sales ratios of Arlington & Alexandria. Conventional wisdom is that 6 months of inventory is a healthy market"
ReplyDelete6 months inventory is a healthy market?
6 months of inventory is the traditional tipping point between a buyers market and a sellers market, which puts both Alexandria and Arlington squarely in the buyers market category.
What you don't seem to understand is that in this case the trend is much more important than the absolute numbers.
The months of inventory on the market has grown steadily and rapidly since the bubble began to burst.
Between 2000 and 2004 both Arlington's and Alexandria's months of inventory was steady at 1.5 or less. In 2005 that grew to roughly 3.5. In 2006 in Arlington and Alexandria it reached 4.5 and 5.8 respectively. Now, in 2007 it is up to 6.6 and 6.9 for the two areas.
Obviously the bust is not moving as quickly in the inner areas but the trends should be obvious to anyone with some experience looking at this type of data.
A classic buyer/seller standoff is emerging. We are looking at sales numbers far lower than at any point in the last decade.
149 sales in Arlington this month. In 1998 there were 238 sales.
That is down 40% from PRE BUBBLE sales levels.
In Alexandria sales were at 127 last month. That is down 20%-30% from the PRE BUBBLE sales numbers of 158 and 183 in 1998 and 1999.
These sorts of buyer/seller standoffs are a classic indicator of a transitioning market where prices are "sticky."
In such a situation the volume of transactions plummets as buyers fail to find value. Sellers initially refuse to drop prices because of the personalized nature of their home's perceived value.
Ultimately a new trend will emerge and once prices correct volume will return.
This isn't rocket science but it isn't necessarily intuitive for many people. If all you do is look at the latest sales numbers you will never be able to see or understand the broader trends that are emerging.
"PS: i had to dumb-down my analysis for people, like you, that want to see something that simply isn't there. Forests...trees..don't confuse the two. I like these blogs because they make for good discussion, but clearly there is a separation into 2 groups: those that have matured mentally, financially and logically, and then there's those that THINK they have. Guess which one owns and which one rents?
ReplyDeletePPS: Not from the District or the DC area in general, like most people here. But I know value when I see it. That's why I bought a single-family house in early 2003. I now make every year what my entire mortgage is (my employer must not think I'm too dumb)."
Hey cool, another annoymous internet poster who just happens to be rich, successful, and semi-literate.
Come back when you have something to offer. Your little foray into statistics was pretty pathetic.
Anon 12:10 said:
ReplyDelete"Hey cool, another annoymous internet poster who just happens to be rich, successful, and semi-literate."
Do you think it's just coincidence that the homeowners are the ones rich and successful? .... and from your perspective "semi-literate"? I can understand why you would think someone who doesn't buy into your BH religion is "semi-literate". It comes down to your not being able to understand what they are saying. Intelligent words and ideas ringing loud and clear to those of us benefiting from maturity ... are nothing but unintelligible "noise" to you ... But someday you'll get there ... Some of you sooner than others.
Cool - I went from being an ex-DC crackhead to being semi-literate all in 24 hours.
ReplyDeleteOk, my "analysis" was shallow and incomplete. Fine. But it was certainly another layer deeper than boldly posting monthly-snapshot year-over-year declines for entire jurisdictions (which was the original blog post, after all), with the presumption that that is reality. As my rudimentary classification shows, a jurisdiction can have a negative overall housing price decline, without condo or single-family housing prices declining. I think that is damn telling. I'm sorry you don't. Of course, i'm not telling all the story, but i'm telling a slightly-more detailed story than the original blog post.
Of course, some neighborhoods are going down in a given jurisdiction, but others could be going up, too, in the same county. Even during the boom, some neighborhoods moved at different speeds. Like many, i still see enormously over-priced houses, but i also see lots of value out there. The two things can co-exist, even in the same county. Even in adjacent neighborhoods.
PS - I'm not rich or successful in terms of DC's cache (remember, I live in PG - therefore I'm clearly a janitor or a garbage man). You assumed that I make tons of loot. While I make way more than when i originally bought, the thing that made life easier was not buying above my means at the time. It was tempting, and a lot of folks did it (hence, we had the housing boom). I don't have 5000 sq ft to entertain in, but, having a small fixed-rate mortgage is the gift that keeps on giving.
Anon said:
ReplyDelete"Of course, some neighborhoods are going down in a given jurisdiction, but others could be going up, too, in the same county. Even during the boom, some neighborhoods moved at different speeds. Like many, i still see enormously over-priced houses, but i also see lots of value out there. The two things can co-exist, even in the same county. Even in adjacent neighborhoods."
This is a smart man. In 5 sentences he's managed to clearly say what I've been trying to get across.
I suspect his message will fall on deaf ears though as it doesn't jive with the fundamentals of the Bubblehead religion. It says you're empowered to find what is right for you now and not have to depend on a hoped-for failing and falling market ... And BHs will have none of that! Why work for that which will just come to you like mana from Heaven?!? ... if you just wait ... and wait ... and wait ...
Nothing wrong with having a home you can afford. But that's not lookng at the overall market. But trying to dismiss a whole bunch of web sites doing analysis on the bubble with a few comments?
ReplyDeleteAs one anon noted: 6 months of inventory is the traditional tipping point between a buyers market and a sellers market, which puts both Alexandria and Arlington squarely in the buyers market category.
Yep. Look, I'm not going to convince every poster we're following the 1989-1995 'peace dividend' model. So be it.
If you're happy good. But this isn't a normal downturn. We've had two bond insurers now go from investment grade to junk in a day. (Today was ACA.) That isn't normal. Inventory and sales... aren't looking healthy in December. We see Case-Shiller turning down. But one thing about this boom, it was late in the game that flipping went to the high end areas. Not all. But enough.
Thank you for the follow up. Can I have a link to the Arlington inventory numbers? Its one of the cities I am now tracking, but my data is incomplete.
May I recommend getting a blogger user name?
But why all the noise about buying? Its FAR cheaper to rent in 2007 than to buy. The difference is staggering! And if we do go into a recession, rents traditionally drop. :)
Got popcorn?
Neil
"Do you think it's just coincidence that the homeowners are the ones rich and successful?"
ReplyDeleteWhat does the phrase "correlation does not equal causation" mean to you?
For the record most Ferrari owners are rich and successful. By your stupid logic we should all be looking to buy Ferraris with ridiculous car loans...
Hey,
ReplyDeleteHere is where anon did his "statistical research!" Why didn't I look there before? I missed the sales updates. This is going into my tracking. I am very glad for all of the blogs doing housing research:
http://novabubblefallout.blogspot.com/2007/12/decade-of-november-sales.html
0.86 months of inventory in Nov 2004, then 3.4 in Nov 2005, 4.56 in 2006 and 6.61 in November 2007.
I'm still looking for a good ANOVA analysis. If you're going to claim "statistics," that is but the starting point. ;)
I missed that sales had fallen to the lowest in a decade throughout DC!
Talk about missing the forest for the trees... Most areas are indicating very slow sales in December (outside of DC, I don't know of a way to view DC/Virginia closings daily. Link anyone?).
Got popcorn?
Neil
I decided to follow my own advice and see if 2007 was off (per previous link at novabubblefallout)
ReplyDeleteArlington Novemember sales:
Mean: 240
Median 245.5
std-deviation: 37.1
2007 off by 2.45 standard deviation
2006 within 0.51 stdev
Comparing the standard deviations off the mean, Arlington was behaving like a normal maket (in terms of sales) until August when it was 1.8 standard deviations from the mean. That's significant. It clearly shows what ever previous patter there was... is broken
Taking the same data, Alexandria city held on until September/October. (1.56/1.85).
What is VERY interesting is that only 2004 sticks out as another anamolous year. Hmmm... We all know what happened then... (loose credit)
Oh... this clearly shows we've passed the other turning point!
Lance, you were in the comments. You should have pointed out this data to me. :)
Got popcorn?
Neil
"Hey cool, another annoymous internet poster who just happens to be rich, successful, and semi-literate."
ReplyDeleteYour petty and vapid insults would have had more bite had you yourself been able to spell.
"Here is where anon did his "statistical research!" Why didn't I look there before? I missed the sales updates. This is going into my tracking."
ReplyDeleteI assumed you knew about that blog. She does great work over there.
It is a mixture of specific examples of houses asking far below their previous sale price and bigger picture data on the whole NoVA area.
There are a lot of common posters between the two blogs, especially when this blog goes dormant because of its comment moderation...
and don't go expecting lance to point you to any data. At this point he fully understands that essentially all data is his enemy.
and don't go expecting lance to point you to any data. At this point he fully understands that essentially all data is his enemy.
ReplyDeletelol
Hey, I'm a data fiend, but somehow when I looked at the other blog, I was always seeing... missed the 'decade of sales' series. I do have to work, at times. ;)
Got popcorn?
Neil
MRIS data in charts:
ReplyDeletewww.rechart.com/AroundDC.htm
"1. Better mix of housedebtors. For every new homedebtor who purchased in the bubble using exotic mortgage products, there is the older couple who lived here for 30 years, and owes 56K on a house now worth 565K."
ReplyDeleteI agree but this understates the effect.
If you define the bubble as 2003-2007, 5 years, and divide the past into 5 year blocks. Further assume a constant purchase rate in the older neighborhoods.
There are 6 or 7 old timers for every person who purchased during the bubble years.
One like you defined, another who owes 80K, a third who owes 170K and so on. All are sitting pretty.
Except for the millions across the country that borrowed against their home equity and are now underwater. But maybe we should just ignore that...I'm sure no one around here did that.
ReplyDelete"Except for the millions across the country that borrowed against their home equity and are now underwater."
ReplyDeleteI do not know that any of my neighbors did that. Two neighbors told me they paid off their places and I suspect others did also.
I do know 3 people who have looted their equity to sustain their lifestyle. One bragged about the free money. Another bought a 6 wheel diesel truck to match his ego. The third was into gizwhitches, home theaters, computers, etc.
All three live way out there and complained about the commute to our office, outside the beltway.
Two different personality types come to the table in 1995.
Type 1 - them "I gotta have a big house so I'll buy a McMansion in Manassas. Look how much I'm making on my place. I'm rich and I need to show the world."
Type 2 - my neighbors "An older, modest place suits my needs, I can afford a SFH or TH in Arlington, Alexandria, or DC. I don't care how much I'm making on my place but I am trying to pay it off."
I'm not saying that's the reason that real estate values close in are stubbornly refusing to fall.
"Anonymous said...
ReplyDeleteExcept for the millions across the country that borrowed against their home equity and are now underwater. But maybe we should just ignore that...I'm sure no one around here did that."
We sho' 'nuff know 'ol "$20k brickworkh" didn't do that.
I am sick and tired of this never ending discussion about real estate..... The country is about to go into a depression -- read the book the forgotten man. Things are so bad in the financial sector....really bad. Maybe a rich Arab will help you buy a house or pay your mortgage.....
ReplyDelete