Prices
As we can see in the chart from 2000 to 2006 prices had gone up two and a half times in the Washington, DC area (blue line). Now, this was the average increase in this area, some areas saw prices triple during those 6 - 7 year period.
The recently released Case Shiller index for the Washington area showed that prices from March 2007 to March 2008 had declined by 14.4% (nominally). Prices declines are indeed accelerating, as prices in the last 6 months have fallen 11.1% which on an annualized basis is much over 20%.Prices continue to fall. Although prices are falling slowly in the desirable neighborhoods within the Beltway. Far out suburbs and condo units are experiencing larger percentage price declines. In the metropolitan area a declining housing market is a reality.
Inventory
Inventory continues to remain very elevated. Most areas there is a months supply which is greater then 6 months which usually corresponds with declining prices. In the inner suburbs of Northern Virginia the months supply stood at 7.3 in April.
- Washington, DC proper: 9.8
- Prince George's: 20
- Montgomery County: 9.3
- Loudoun County: 8.4
There are still a boatload of foreclosures on the market. "Although Fairfax has not been hit nearly as hard by foreclosures as neighboring Prince William and Loudoun counties, the number of foreclosures has risen dramatically as a result of the subprime mortgage crisis -- from 198 in 2005 to 4,527 in 2007. Most of the foreclosures are clustered in Springfield, Herndon, Centreville and the Route 1 corridor. The situation has raised concerns about depressed property values, a decline in maintenance and higher rates of crime, including vandalism. Waashington Post May 20th)"
Another wave of foreclosures is coming as the option arms reset. Foreclosures are making a significant contribution in lowering prices in areas hard hit by them.
Conclusion
The Washington - Baltimore area is not recovering from the housing decline. Prices continue to fall and inventory remain very high. Prices are falling slowly in the desirable neighborhoods within the Beltway, howeever far out suburbs and condos are experiencing larger price declines.
In the metropolitan area a declining housing market is reality. For real estate, this spring's real estate season has largely been a bust. Housing busts usually last many, many years. Further price declines will continue this year.
Posts
David said...
ReplyDelete"In the inner suburbs of Northern Virginia the months supply stood at 7.3 in April."
Source? I just checked MRIS and Alexandria has 6.01 months, and Arlington 5.37 months.
http://www.mris.com/reports/stats/
It is under the
ReplyDelete'Fairfax County, Fairfax City, Arlington County, Alexandria City, & Falls Church City, VA (NVAR) '
on MRIS.
Would you like to see a taco truck heaven? Go to this site:
ReplyDeletehttp://www.zillow.com/aerial/DualMapPage.htm?zpid=37520815
Can you count how many taco trucks are on this residential property? Don't forget to move the picture towards the garage to get an accurate count.
good update on the DC area. It is definitely PG County where much of the pain is being felt.
ReplyDeleteNot to mention Ghost inventory. Homes have 'for sale' signs just in case there is an interested buyer... but they are not on the MLS. How many? Good question. But one of the posters on Harriet's blog noted seeing that around DC.
ReplyDeleteAlso, why does the MRIS have so much less inventory than ziprealty?
Got Popcorn?
Neil
wannabuy said...
ReplyDelete“Also, why does the MRIS have so much less inventory than ziprealty?”
I use realtor.com and notice the same.
As I said in another post, that MRIS site shows some great data by zipcode. You can see some real devastation by looking at Montgomery County, on-the-red-line zipcodes like 20906 and 20902.
ReplyDeleteFrom April 2007 to April 2008:
20906: sales down 29%, median prices down over 30%
20902: sales down 28%, median prices down over 20%
The housing bubble ain't just for Prince William and Prince George's anymore! It's coming to a Montgomery County red-line station neighborhood near you, too!
ARF
Also, why does the MRIS have so much less inventory than ziprealty?
ReplyDeleteProbably because they look at different markets. Zip realty looks at the DC metro area which includes VA and MD (which is exploding right now). Depending on which part of MRIS you are looking at, you may just be looking at Northern VA inventory (which is down for the 3rd straight year).
Here's one for you (that will show up in the Case-Shiller index soon.) A friend of mine lives in Mananasas, Mannassas, whatever, way out there. A house in his cul-de-sac sold for $550K in 2006 or so. That price was the highest ever in his neighborhood. For various reasons including the owner being transferred in his job, it subsequently was foreclosed. After being listed, both pre- and post-foreclosure, for more than 1.5 years, it recently went under contract. Latest list price: $375K. That's a 33% decline. Brutal. Now as the post suggests, close-in neighborhoods aren't experiencing such dramatic price declines, but these homes are substitutes on some level, so such dramatic price declines way out have to put pressure on close-in neighborhoods eventually. No?
ReplyDeleteARF-- Thanks for those zips! Wow, there's a lot of inventory there that's really close to what I'm interested in: 3 bdrm. 2 bath brick, walking distance to metro. The neighborhoods seem very similar to what Del Rey was like when we bought there in 2000. Prices have gone back to about the 2003-2004 level.
ReplyDeleteOther places on the red line that have gone way down: Twinbrook, College Park and Greenbelt.
-- Formerly Sarah in DC, now Sarah in Prague
Could anyone with access to the MRIS tell me how far down the median price is for zip code 20850 (Rockville)? I'm a little curious.
ReplyDeleteDepending on which part of MRIS you are looking at, you may just be looking at Northern VA inventory (which is down for the 3rd straight year).
ReplyDeleteI'm curious about how you define Northern Virginia in this statement. I looked at June inventories going back three years on the Virginia MLS site and get the following for total listings in Northern Virginia:
June 05 12,536
June 06 25,254
June 07 22,959
June 08 24,116
(All numbers are for total listings on June 1, except for 2008 which is June 2)
Numbers are down from the peak in June 2006, but I don't see three straight years of dropping inventory.
Follow up:
ReplyDeleteIf you look at the available rather than the total listings for Northern Virginia, you do see a drop in inventory drop two years in a row, from Jun 06 to June 07, and June 07 to June 08, but from June 05 to June 06 inventory quadruples.
Kieth K said...
ReplyDelete"If you look at the available rather than the total listings for Northern Virginia, you do see a drop in inventory drop two years in a row, from Jun 06 to June 07, and June 07 to June 08, but from June 05 to June 06 inventory quadruples."
Thats correct. Unlike many bubble areas in the US where 07 was higher than 06, and 08 higher than 07, NOVA has done the reverse. NOVA peaked 2 years ago and will likely never see that peak again (the same cant be said of MD which is increasing like it hasnt in the past).
Remember too that June 05 inventory wasnt normal either - it was way too low from a historical basis. Its true June 08 inventory is too high, but dont think that we need to get down to 2005 levels before things are normal again.
Attention:
ReplyDeleteThe count the taco truck contest will end very soon.
Get you guess in soon.
Inventories in 2004, 2005 were abnormally low, less than 1 month inventory in many cases, which helped to bolster the assumption that prices were being driven by supply/demand, when in reality it was a classic bubble/mania. Now the ratio of sales to listings shows a bloated inventory.
ReplyDeleteThe statistic to watch is the months inventory. When inventory gets back into the "normal" 3-4 months supply, I think the prices may finally stop falling.