Turning Back The Housing Bubble Clock In N. Virginia
The Washington Times has an update on the N Virginia housing bubble. “Buyers and sellers in Northern Virginia found themselves in a time warp at the end of 2005. At the beginning of last year, the Northern Virginia communities of Fairfax County, Arlington County and the city of Alexandria were the hottest markets in the region. But by the end of the year, it was suddenly 1998 again.”
“Buyers only had 1,584 homes to choose from in those three markets combined. But by October, more than 7,000 homes were for sale, and they weren’t moving quickly.”
“Another thing changed dramatically between the start of 2005 and the end. In February last year, I wrote this sentence: ‘Condos are the most sought-after type of housing.’ That was true, then. By the end of the year, however, the market was flooded with condominium listings that weren’t selling.”
“Realtors tell me that condos were the hardest type of home to buy early last year, but now they’re the easiest. That, too, reminds me of 1998. Condos were not doing well back then, and it appears an abundance of condo inventory is rewinding the clock.”
“One thing that is different from 1998, of course, is home prices. Even though the Northern Virginia market cooled down more drastically than other parts of the region, home prices didn’t fall through the floor. The median sales price in Northern Virginia fluctuated some last year. In July the median was $500,000. In December it was $479,000.”
Thanks to the reader who sent this in. I am working on some big changes in inventory and prices for NOVA in January, that I received via another blogger. Check back for an update.
NOVA is definitely going down, and I’m getting to see it first hand. The only reason prices haven’t dropped more is because everyone’s waiting for spring when the “market is going to rebound”. When June and July get here and people see that it’s only gotten worse, that is when panic is going to set in, and prices will begin crashing.
Fannie Mae eyes late Feb Rudman release–sources
http://tinyurl.com/a5yu9
Feb 23rd is D-Day for Fannie Mae. The day of reckoning is nearly here. This will be ugly.
I hope so cuz my FNM puts are not doing as well as my TOL puts, which are up 100% and in the the money.
I live near the Midtown Alexandria condo building that is going up now (probably 8-10 of the 16 floors are skeleton are up and walls are on 3-6) expected completion is 2007 (which seems late to me but oh well). They claim to be 95% sold out at a price of $500/sqft on the smallest units but I wonder how many of the units will be up for sale at completion. I’d really like a one bedroom on a high floor with a view of old town or the river. I’m even willling to pay say $200/sqft for one, what does anyone think my odds are?
not particularly good for $200/sq. foot..
That said, I think $350-$400/sq. ft 5 years from now will probably be in the cards. Which, inflation adjusted, puts you at $250-$300/ft.
Many of those units won’t make it to closing. People will bail and lose their deposits. As far as pricing, I think 300-350/sqft is about right for 2 years from now.
The price will move soon, with so much inventory on the market.
Most people will try not to lower their price now, but they will soon when more and more houses come to mmarket.
I just spoke to a realtor friend last night, according to him, “the market is loaded”. Price drops will come, we just have to be patient.
Bond yield curve fully inverts.
http://tinyurl.com/d7nvd
Ben-
I’m very interested in any data you can provide on the NOVA market. I’ve been watching inventory closely but haven’t seen any sales data for Jan yet. Very curious what happened in Jan.
In case I run out of time:
‘Here some stats, January 2006 vs. January 2005:
Northern Va: sales down 29.6%, inventories up 392%; Loudon Co: sales down 26%, inventories up 284%; Montgomery Co.: sales down 26%, inventories up 218%; Washington, DC : sales down 27%, inventories up 168%. Since July, the median sales price has fallen about 9% in Northern Va and Montgomery Co, and 7% in DC proper.’
This site has January data:
http://www.mris.com/
Ben,
Sweet thanks.
You know wordpress usually has a search feature. That would be cool if you had that. Great blog.
http://www.mris.com has the data
San Diego Borrows $100 Million to Infuse Underfunded Pension System
http://www.theepochtimes.com/news/6-2-9/37971.html
Quote From Article:
“The city of San Diego is really good at doing two things: nothing and overreacting,” said Shea.
Ouch. San Diego is operating on borrowed time and now borrowed money. What happens when the bubble busts and property taxes lower, they are gonna be in a world of hurt. For that matter then entire state of California will be in a budget crisis.
Do you think the politicians will finally get a clue and close the boarder. Much of the maligned problems come from services provided without tax base returns. Maybe citibank and wells will keep spending lobby money to keep them open, so they can continue to provide loans to non-SSN holders. WOW!
Classical Keynesian theory says that both the Californian state government and various local governments should be running large surpluses at the moment.
http://www.wtopnews.com/?nid=25&sid=695626
I was listening to WTOP this afternoon, and they also said condo inventories in the District are up 130% from last year.
OT but pretty amusing:
A house erroneously valued at $400 million is being blamed for budget shortfalls and possible layoffs in municipalities and school districts in northwest Indiana.
http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2006/02/10/national/a110332S54.DTL
LOL! Too funny.
Data for January should be coming soon from nvar.com. Although all data from realtor organizations should be questioned.
Check out nvfh.com…over 24K listings for Northern Va…there were 4 or 5K less than a year ago for Northern Va. Someone mentioned there are some duplicate properties..but still that’s a lot.
I’ve been monitoring that site. If you compare current inventories for Arlington and Fairfax counties, with inventories listed a year ago on http://www.nvar.com, there is like a 800%+ increase in inventory. But as you said, there are duplicates, and some rouge rentals made it in there too, but still, inventories are waaaaaay up, even higher than Ben’s data for January suggests. I know just this week since Monday there has been about 700 new listings added to NVFH.com.
Virginia HPI
My unofficial statistics are gathered whilst I walk the dog. Within 1.5 blocks of my house, on Capitol Hill, there are 15 rowhouses for sale. Of these 15, three are being sold by real people - families, moving on. The rest are new construction or “freshly renovated” by speculators. The property winning the days-on-market contest has been for sale since last July.
If I walk a three block radius, I will probably lose count and will certainly be mugged. Perhaps that is why these rowhouses are not selling at the $700,000 asking prices? Time will tell. I can not wait for spring.
:LOL:
My guess is that you live around the H Street corridor
I was in the U street area the other night. Same thing. For sales everywhere. I know that area has seen a lot of speculation too in the past few years. I predict that any speculator infested area will fall the hardest too, along with condos.
Sorry for offtopic..but was doing googling for open MLS( I dont know why! ) and came across this prnewswire like for open MLS in CA..does any of you CA folks know about it?
Again, consider your source. Even though the story appears mostly accurate, this is not a real newspaper anymore than Fox News is a real network. Even a blind pig finds an acorn sometimes.
Eff off. This is from the RE supplement, which does not have ties to the editorial policy. This guy Chris Sicks clearly has ties to the RE mafia and is a RE bull. I have read his “charting the market” for years. However, he has a useful sales metric called sales chances, which is a good to the market. This is sales divided by inventory. Apparently it was down 10% in the mid 1990s and should get back there soon. This is the magic number for a strong buyer’s market.
On the other hand Patrice Hill has written excellent articles exposing the housing bubble including the three part series on lending practices, which Ben has picked up.
What has the Post published of value recently?
the year she’s looking for is 1989
the end of the last bubble
“Another thing changed dramatically between the start of 2005 and the end. In February last year, I wrote this sentence: ‘Condos are the most sought-after type of housing.’ That was true, then. By the end of the year, however, the market was flooded with condominium listings that weren’t selling.”
You’d think this hasn’t played out a few times in the past 30 years. Everyone knows that in a real estate downturn, condos fall first, fall hardest, and are the last to recover.
What is the opposite of a “bidding war?”
Curt,
My tongue-in-cheek guess is that the opposite of a bidding war is seeing prices being lowered frequently on the same property every day.
I looked at the MLS data from the D.C. region’s MRIS statistics. I noticed that the larger counties in VA, such as Fairfax, Loudoun, and Prince William, are doing what I expected. I’ll use Fairfax as an example. The total sold dollar volume is down 27%, another huge drop that started in about November at these levels. It’s still showing the median price as up 7% January 2005. Which is a lot less than the 23% YOY increase in July 2005. Which leads me to anticipate there could soon be some negatives showing up in the YOY data. What was really interesting was Fauquier County. It’s the rural one just past Prince William County. It’s been fighting the growth, of course, but still allowing many houses around planned zones so that they don’t encroach on the rich people’s horse farms and take away their views. Anyway, their numbers always wildly fluctuate but this month they’re showing negatives in all columns, with average prices down 15% YOY. A lot of that, I believe, is due to the mix of new homes vs. older homes. (There is a big gap in pricing between them as the old ramblers out here are far less than the new homes). Yet folks out here have been asking the moon for their properties when you consider the distance from most jobs. Just this morning I saw a house get re-listed for 100K less than it was two weeks ago, from 749 to 699 to 649. There are also two developments in which houses are 100K apart in asking price, and they are truly comparable. I can understand buyer’s hesitation. Who wants to be the sucker to jump on a listing early and overpay by 100K or more? My agent used to call what we’d buy “instant equity” but with the pace of the price drops I think it ought to be called something else.
Just wanted to add about tracking price drops in VA:
I use the MLS tools at “Fairfax Realty” as I like the simple interface. I get the notices of new listings and price changes sent to my e-mail every morning. (I have also been spam free so they are decent about not giving out my address). One useful thing about this, is when I see something at the same address come back after a few days, weeks, or months, I can search through my e-mail archives and discover that the agent has re-listed under a different MLS number or else that the person has listed with a new agent. Usually it is the former.
I think homesdatabase.com is the most accurate, however, especially with land listings. Fairfax Realty has some of those dropped from its system and it’s e-mail feature for them is broken. And of course ZipRealty is good for new and reduced listings at a glance.