A ‘Healthy Correction’ In Virginia
The Times Dispatch has this update from Virginia. “The frenzy is over. Put a house on the market today and you are looking at 60 to 90 days for a sale, real-estate agents say. That’s if the house is priced right, and if you live in the Richmond area. Northern Virginia has taken a hit in housing sales. So has Hampton Roads. Prices are falling in the priciest markets, such as Dulles and Northern Virginia, but are still rising in Richmond and other areas.”
“Houses in all price ranges are staying on the market longer than they did a year ago, and there are more to choose from. About 6,500 houses are for sale on the Richmond MLS, compared with 2,800 houses last July. ‘We’ve had a wonderful run for three to five years,’ said appraiser Pat Turner in Richmond. ‘Now, even aggressively priced houses are not moving fast,’ he said.”
“Multiple offers? No contingencies? Not so much anymore. ‘Houses are not selling within hours, and they are not selling for more than what they were listed for,’ said agent Smitty Smith.”
“Kevin Allocca, an agent in Henrico County, said the market has changed. ‘Instead of having three buyers for every nice listing, there’s only one,’ Allocca said.”
“Just how much has the market cooled? ‘Big time,’ said agent Ken Storey. ‘Every Realtor says the same thing. ‘The market has slowed down since the end of April.’”
“‘The days are over of seeing what the last home sold for in the neighborhood and adding $10,000 to the price of your home,’ Storey said.”
“Sales in Virginia toppled nearly 19 percent in June over the same month a year ago. Year-to-date, sales fell 15 percent over the first six months of 2005. ‘Builders are beginning to build fewer houses on speculation, said Eddie Goode, president of the Home Building Association of Richmond. ‘We have been building at an accelerated pace for 10 years,’ Goode said. ‘This is a healthy correction. It should lead to more years of sustainable growth.’”
“Dean Cobb, an agent in Sandston, said the pace had to slow. ‘The housing market can’t keep getting bigger and bigger.’”
Goode said. ‘This is a healthy correction. It should lead to more years of sustainable growth.’”
Yeah Right. After of years of searching for a bottom.
Wrong!
- “Kevin Allocca, an agent in Henrico County, said the market has changed. ‘Instead of having three buyers for every nice listing, there’s only one,’ Allocca said.”
- Kevin Allocca clearly states that there is a least one buyer per house.
per “nice” listing, very clever of Kevin to sneak in that qualifier.
Cuff ‘em stuff ‘em! Man, they’re going to have to build a few more Leavenworths at this rate!
Cuff ‘em and stuff ‘em! Man, they’re going to have to build a few more Leavenworths at this rate!
‘ If you needed more proof that the housing market that saw sky-high prices and bidding wars is gone, just look at Federal Hill, one of the city’s most desirable neighborhoods. Homes that were courting bids from multiple buyers last year are now lucky to get one. A waterfront, four-story rowhome at 706 William Street went on the market last year for more than $700,000. It’s still for sale but now marked at $599,000. The seller is offering $5,000 toward closing costs. Reduced prices and multiple open houses for listings are also the norm these days.’
Federal Hill is an odd and interesting case, because it’s a neighborhood in Baltimore that is largely populated by expat Washingtonians who take the MARC train to downtown DC everyday. People who got priced out of Capitol Hill moved up to Baltimore so they could live in a rowhouse, and Federal Hill is within walking distance of the MARC stop. The funny thing is that Federal Hill is still only quasi-gentrified. For your $599,000, you get the pleasure of seeing all of the local drunks stumbling around the street, not to mention all of the urban ills of Baltimore (and there are many) just a few blocks away. Who wouldn’t want to take out an I/O or two to get to that?
Oh, check this out re: Federal Hill and the surrounding areas…a Realtor comes clean and I mean clean. This guy must be hurting or something, because after reading his first two lines, I was hooked…
The trend” seems to worsen every month. Maybe 20 years from now we’ll talk about the real estate boom of the early 2000’s, but will we talk more about the big bust?”
http://tinyurl.com/rt3zg
It will be interesting to see what happens in Federal Hill vs. Canton or Fells Point once all of the Washingtonians can suddenly afford to live in Washington again.
As a No. Va. resident, I know at least a couple of folks in Federal Hill, and they love the area. For me, eh, it’s ok–I prefer Canton or Fells Point, personally. Of course, I haven’t spent much time in Canton lately, and I understand that the neighborhood has yuppified a lot. It used to be a fun place to go if you appreciate the value of the corner bar and the ambience of Nacho Mama’s on gameday.
There are still fifteen (15!) houses for sale within a two block radius of my home, two on my street. Three on my street sold last April, two of those have no occupant. Two of the fifteen have hand-written FSBO signs. NOVA is about to go into FB status in a big way. It will be kind of nice to have parking again, I guess.
where you at ?
I’m in 22151 and some sales are 2004 prices already- more inventory coming in sept too
20165, but this is a drive-by observation only. I haven’t actually run any numbers online.
These comments make me sick–they make it sound like it’s a huge abberation that homes don’t sell within hours. Somebody needs to remind them that it was an abberation that they ever did.
AMEN!!
-”abberation”
+”aberration”
I just can’t believe it: I simply cannot stop a friend of mine from buying a house in here in NoVa (Herndon) right now. Noooooooo! He and his fiance are in “nesting mode”, and so nothing will stop them.
They have, in fact, found a lovely two story cookie cutter house that they have, for some odd reason, fallen in love with. OK, they probably fell in love with the first house they walked into, which maybe was this one. And they HAVE TO HAVE IT. Sure, it’s just like all the other houses on the street (and probably for miles around), thousands and thousands of which are on the market. But this is THE ONE. “We have to get our contract in, or they’ll sell it, and we won’t find another!” :-O (Oh yeah, I used to be in sales and I looooved customers like these!)
Thank God they at least have enough meager sense to offer less than list price, though 3% below asking price doesn’t seem like a lot of savings to me. Now they are hoping and praying that… their offer gets accepted. ?!?!! This is like that ridiculous HGTV show where they try and find a house for someone and always do on the third try. Jeez. Well, as for hoping and praying, I bet the SELLER is hoping and praying that they don’t back out of their offer!!
I’m happy to report that so far I’ve helped a couple of people avoid buying into this over[priced (and soon-to-crash) market, but this couple is beyond my help. Sigh. Steely-eyes at the mention of housing bubbles. You know the type, eh? At least they make good incomes, and so they’ll be able to afford their massive mortgage payments on their overpriced suburban box for the next 30 years.
His mantra, by the way, is that they have to buy because “it’s, ya know, the equity, equity thing, ya know?” Uh, yeah, I know, like the “underwater, underwater, funk and depression thing?” No, I couldn’t tell him that.
Let’s just hope they don’t have to sell anytime soon. Then he’ll find out about the “equity, equity” thing alright.
This thinking always amazes me (does anyone truly believe there is only one “right” house out there?). However, it always amazes me even more when the couple taking the leap aren’t even married yet.
This is another perfect example of otherwise intelligent people seeing prices starting to drop and jumping in assuming that they are getting a deal beause prices are going to continue to increase as they have over the past decade. This type of activity is going to make the price drops slow and painful for many years. Every trade has a buyer and a seller; so just like when the Nasdaq was at 5000 somebody was buying for each transaction all the way down.
richmond going up, my a_S
it’s all going down , even the fed taxpayer subsidised NVA
I have a friend who lives in Nova and is trying to sell his House. He bought the House for $450,000 two years go. Similar houses sold for $590,000 last year.
He originally his house at $560,000, then dropped it to $524,000 and still can’t find a buyer.
He asked my advice, and I was too chicken to tell him to drop it to $470,000 and pray to God he finds a buyer. I just told him it would be alright.
does he have to sell b/c of job relocation or to cashout??
He bought the House with a friend. The friend moved to Austin where he recently purchased a huge house with the “money” they were going to make off selling the NOVA house.
So technically, my friend doesn’t have to move. He’s happy in NOVA and not sweating it to bad. But he is kind of surprised he hasn’t been able to sell.
If they don’t sell in a couple of months, they’re going to rent out the avialable room for a $500 a month loss.
This healthy correction will soon resemble a piano falling from a B-52!! Who do these shill morons think they are kidding. We’re in for a King Kong size azz-whoopin!!
As long as the piano never has a suden deceleration event, everything is fine!
Didn’t the ‘B-52’s record a song ‘piano falling’?
I like the way you just get to the point Death-spiral.
I lived in Richmond when it first started. I can’t believe how many moron moved to that violence infested sh*thole. My question was - where do these people work at that can afford to buy these houses in there? I mean, other than VCU, Phillip Morris and Capital One there’s nothing there.
these workers bought 4 houses each.
Their market will continue to tank, but they’ll still hear that it’s taking 60-90 days to sell. Crap! Most contracts are for 90 days, and when the home doesn’t sell, the sellers find a new agent (of course it was the agents fault the house didn’t sell) or if they keep the same agent, he/she just relists as new. Rarely do I see “extended” anymore. I watch one particular area where I’m at with interest and this is what happens. Most properties in this neighborhood have been on the market for 9 months to a year.
Hopefully people will start doing the math on how much carrying costs are…costing them and drop the price right at initial listing.
‘The days are over of seeing what the last home sold for in the neighborhood and adding $10,000 to the price of your home’
It’s really weird to read a quote like this, because the exact same quote was spoken about the DC market over six months ago. Its like Richmond is on time-delay. Richmond bubbleologists can look to the DC market if they want to see what they have in store. And it ain’t pretty.
-
I’ve said this all along - The areas that rose first and highest are also the areas that fall first and hardest.
Some believed that the most bubblicious places are the last to fall and the outlier areas get hurt first. I disagree.
What about LA . . .they’ve been rising as much as anywhere and they are lagging in the drops department.
Can someone explain how prices are going up, eventhough the market is soft??? This makes no sense at all, am I missing something??? In my industry alone we are losing money daily , we are doing about half the bbusiness we did last year..times are changing fast.
Can someone explain how prices are going up, eventhough the market is soft???
Easy: prices (or at least listing prices) can keep going up because the sellers can ask for whatever they want. Buyers, on the other hand, balk, and what you then have is a situation where only a few nit-witted buyers actually accede to the high asking price.
So you do have *some* sales occuring in those few cases where a desperate sellerand spendthrift buyer connect, but overall the sales volume drops like a rock. This is the classic “beginning of the end” of the bubble, and this phase will continue until a larger proportion of sellers simply cannot carry the costs of their “alligators” and either decide to take their losses or have the bank do it for them.
“It’s called ‘Losing money - but making it up on volume”
Can someone explain how prices are going up, eventhough the market is soft??? This makes no sense at all, am I missing something??? In my industry alone we are losing money daily , we are doing about half the bbusiness we did last year..times are changing fast.
I’m sure there are some fudge factors, i.e. not recording incentives and so on. Others have said the pick of the litter houses are selling but not the starter homes. There is also the economics 101 curve. Higher prices mean fewer unit sales. Many people are holding on by their fingernails. A crash is inevitable at this point. The Icarus syndrome.
Many people realize the housing bubble is doomed, but there are still some people who are absolutely clueless. They still think they have to buy before they get ‘priced out forever.’ These are today’s buyers - the truly clueless.
That’s why you see sales prices still crawling upward ever so slightly even though sales volumes have plummeted.
I bet we all know someone who has bought recently. They might even have lots of book smarts, but just don’t have the common sense to think about things for themselves and be critical of what the NAR and home builders are telling them.
In addition to the incentives that aren’t counting, here is what is going on:
Median prices are going up slightly b/c, if you think about it, when you shop for a house, you look in a price range. And because interest rates are still reasonable and haven’t gone up tremendously vs. last year, people are still shopping for a similar range when buying.
However, on an apples to apples basis, almost suredly home prices are falling EVERYWHERE - this is consistent with the now overwhelming anectdotal evidence in every market that inventories are up, sales are down, and sellers are cutting prices.
So what’s basically happening now is, vs. last year, you are getting more house (more square footage, more amenities, better location, better materials) for the same $$ you would have spent last year.
Again (and again, and again), when FEWER sales are happening on the low end, the median will drag up - even if each individual unit has dropped.
1,1,1,3,3,3,5,5,5,7,7,7,9,9,9
median: 5
Drop each number by one, but sell fewer of the low end:
0,2,4,6,6,8,8,8
median: 6
Each individual number was lowered by one - then lose a few of the low end sales, relative to the number of high end homes sold, and you have an increasing median. No one can afford the “starter” homes anymore, so relatively more sales are happening above the old median.
Below, Ed has posted a great site explaining how the median can better be described as a measurement illustrating where more activity is occuring (lower end activity brings median down - upper end, up). Medians are actually quite poor at predicting individual values.
“Kevin Allocca, an agent in Henrico County, said the market has changed. ‘Instead of having three buyers for every nice listing, there’s only one,’ Allocca said.”
So Mr. Agent man, according to you you’re looking at 60-90 days if the house is priced “right” and you’ve got one buyer…what’s going to happen to the price?
Wild! Here in Norfolk, VA (and the surrounding Hampton Roads) there are houses for sale everywhere! I see never lived in Condos on Craigslist for high dollars. It’s amazing to hear friends say “$325k is a good price” when just a few years ago $325k would get you a brick new construction, almost a mcmansion. Now it gets you entry level crap.
On another note, the apartment building I’m in has been pushing $100/month rent raises on everyone. Lots of people moving out. ~$1200-1300 for a 2 bedroom apartment with coin op laundry doesn’t go over well.
> On another note, the apartment building I’m in has been pushing $100/month rent raises on everyone. Lots of people moving out.
Do you kow where they move to?
I do not. There are lots of rental townhomes listed on Craigslist, perhaps from recent investors. I’ve seen some of the higher end Condos on craigslist. Assuming these higher end condos are in the hands of people who bought them, then the rents shouldn’t cover the payments + condo fees + taxes + insurance. But it may be the units still in hands of the developer/owner of the building who can’t sell them, in which case it should be profitable since he bought the building pre-boom.
This apartment building is a high-rise with 45 units. The value on it went up something near $300k this year alone. Property management tools are saying it’s due to increases in taxes and insurance.
I wore my housing bubble shirt into the office one day. The lady read it aloud and looked like she was going to cry. Most people don’t get it. I wonder if she has a bunch of investment properties.
What does this housing-bubble shirt look like?
Hey, VaB…if you know anyone looking for a rental in Newport News, let me know. I live in CA but the 3/2-1/2 townhouse that I’ve owned the last 7 yrs is being marketed…looking for a new tenant as my current ones are moving out. It’s in the 23603 area off Warwick, a few minutes from Williamsburg. Carleton Falls is the community.
BayQT~
Wow so you used to live here? I will keep my ears open.
No, never lived there. In ‘99 when my ex hubby and I were splitting up property and selling a condo here in Ca, I looked here for a rental to buy. I didn’t have much time as I was working on a 1031 exchange and Uncle Sam has a very strict timeline. It turned out that a close friend suggested that I also check NNews (we have a mutual friend there). I looked at 5 houses and settled on the townhouse, but my friend in NNews couldn’t move in. No problem…the property manager that I hired found a tenant right away. As you know, there are a lot of military bases (3) in the area so when it’s vacant, it gets snapped up within a month or so. I’ve only had to go in my pocket for a month on 3 move-outs since I’ve owned it. Personally, I would LOVE to live in it…2 story, laundry room, redwood deck, fireplace, eat-in dining room, 1450 sf, no garage though.
Just a parking space. Rent is lower than what you are paying but you get much more. I’m definitely not a LL from hell. 
I have a lot of friends in DC, Richmond, B-more so whenever I come out, I make sure I stop in for a chat with my PM, tour around the area a bit, say hello to my tenants.
Yes, please…if you hear anything, I’ll let you know who they should talk to. Thanks much!!
BayQT~
Wow! Really close to Busch Gardens. How much rent had you been charging, if you don’t mind my asking?
Yes, indeed! Close to Busch Gardens. $995. Prop Mgr tells me tells me that we’ll be asking around $1,075. 7 years ago I started with $795 rent, and it was only 9 years old at the time…in excellent condition, which is the reason why I bought it instead of the others I looked at.
I don’t intend to live in it but as retirement grows closer (and my daughters are not planning to live in CA forever either), I may just do that. Who knows…
BayQT~
I live in Arlington, VA, and got my first “desperation” flyer in the mail a few days ago–touting some POS new townhouses and some garble about it being a ‘great time to buy’. Real low-budget flyer, too–looked about as well done as your average college kegger party flyer. I’m pretty sure it was from a homebuilder, which is the first of those I’ve gotten.
My particular neighborhood is somewhat unique in that it is old, quaint SFHs within walking distance of two Metro stops. I’ve seen a few more homes up for sale, but not the forest ofr ‘for sale’ signs elsewhere. Prices seem to have stabilized, but my ‘hood is small enough that it’s hard to do any meaningful statistical calculations.
I’m in Arlington also, and agree with your assessment of the market here. Not a huge inventory, some places with bubble-high prices are sitting, but others that are more “reasonably” priced are still moving within a month or two.
I haven’t checked out what the condos are doing in Arlington, though. The Courthouse/Clarendon/Ballston corridor is a sea of new condo developments, and while that has rapidly become a desireable, basically ‘hip urban’ place to live, I can’t imagine that they are selling like hotcakes, given the insane asking prices.
There is almost no new development possible for SFHs in Arlington, so the market might take a little longer to correct here, the way it is already doing out in the ‘real’ burbs. But I think some areas in Arlington are in for a big haircut. One of my favorite little ’secret’ neighborhoods in Arlington is Columbia Forest, which is full of neat little smaller post-war colonials between Columbia Pike and George Mason Dr. near Baileys Crossroads. They were built as starter homes, and it’s just a great neighborhood. Of course, those 50-year old “starter homes” have been selling for around $600,000, and I think that ‘hood is poised for a big drop, because there is simply nothing there that a person who can legitimately afford that kinda mortgage would want.
I too am in Arlington. I agree that the market is still fairly solid around here, but, no question things are going for a little less than last year. I’d say my condo is off 5% easy. A friend’s $1mil townhouse is also easily off 5% (based on comps). Plus, you see several unrenovated 1940’s cape cods that would have fetched the low $600’s last year, now listed in the mid to high $500’s. It’s really hard to get a feel of what’s happening here because of the mixutre of housing - everything is so different - age, renovation, lot sizes, location, etc. Clearly though, we too are in a decline, albeit slow.
Take a walk down wilson blvd. betweeen Quincy street and Washington blvd. Tons of new condos that are going to hit the market in the next 12 months. The Post has reported on 52,000 hitting the area in the next 24 months.
Now check out: 152 condos in the entire county of Arlington in June settled.
http://www.nvar.com/market/marketstats/jul06/arcc0706.PDF
Things are not fairly solid.
July’s numbers for all of Northern VA are out as well.
http://www.nvar.com/market/marketstats/jul06/index.html
Arlington County Condos
Median price down 10K
655 active condos
145 contracts
152 settlements
Arlington County SFH
Median price up 5K
549 properties on the market
107 contracts
112 settlements
fairfax county posted yoy median price decline for both condos and SFH
Arlington SFHs are much more skewed toward the higher end, at least in terms of recent prices. I think the close-in location plays a huge roll.
Thanks for the info!
According to the info you linked to, as of July, SFH listings are up 157% from last year, contracts are down 15%, and settlements are down 15%. Condo listings are up 207%, contracts are down 13%, and settlements are down 10%.
With that kind of increase in the listings, I have to think some real pain is headed Arlington-way.
Arlington County Condos
Median price down 10K
655 active condos
145 contracts
152 settlements
…and one of those numbers is about to take off, hint: it’s not median price, contracts or settlements.
I’ve been keeping track of the 2bed/2bath condos on North Garfield St. Its pretty hilarious. All the sellers will break even if they get their asking price after paying commission cost. And you can see the asking price is always about 6%-9% above what they paid last year.
North 15th St condos the developer is posting new listings that are about $100K under what they were selling last year. They are bigger than the Garfield St. condos. The only difference is that they are in Courthouse instead of Clarendon area.
I did see some recent sales that puzzled me since they were way over the current listing price of current comparables. These were recorded in tax records for June. Makes me a little suspicious and think of the bum buyer escape route…..but then I think I overestimate the intelligence of the general population. There are still GF out there.
22201 area code in Northern Virginia for reference.
22305 here. check out this condo
MLS #: AX6052184
ZipRealty Price Track:
Price Reduced: 05/17/06 — $379,000 to $314,900
Price Reduced: 06/27/06 — $314,900 to $299,000
Price Reduced: 07/20/06 — $299,000 to $289,000
Price Reduced: 08/04/06 — $289,000 to $279,000
Days on Market: 85
actually doesnt seem such a bad price. i know my friend paid over 300k for his condo Conversion much farther from dc, i’m scared to show him this
Are these conversions, as well? Yeah, if you tell your friend, make sure you have plenty of tissue (or a barf bag) with you. Dude may start weeping.
BayQT~
maybe W will grow balls and RIF some gov parasites- that would get things moving in Arlington/Alexandria
Here’s a fantastic explanation of why (how) the median prices continue to go up as the market tanks.
This is typical and right on schedule.
Next stop, basement.
http://www.doityourself.com/stry/medianhomeprice
This was very good. I would like to note that this paragraph is a bit misleading:
“The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median price.”
The first sentence is vague, as written - what the heck is the “midway?” It almost feels like they mean to say the average of the high and low. The second is accurate. The majority of the article, though, seems a very good representation of median prices.
Just an OT market observation. I live in a neighborhood of post-war starter homes in College Park. (Inside the Beltway in Maryland) The two houses on each side of my house are empty, although only 2 of the 4 actually have for sale signs. I predict that my neighborhood will take a condo-like 50% pounding.
Looking to relocate to Manassas area in 3 mo. Any idea on wha’t going on there?
Moving there in 3 months…anyone have an idea wants going on there?
Drastically overpriced for what it is. Why are you relocating to Manassas specifically? Is your work there? Because otherwise you are looking at a hellish commute from there to other parts of the metro area. Parts of Manassas still have kind of a neat small-town ambience, which means lots of tiny little Cape Cods with big ‘ol pickup trucks parked out front. The people that are really ‘from’ the Mansassas area, in other words, not DC refugees. Also lots of craptacular new townhouse developments and some hilariously priced SFHs, considering that in Manassas you are about halfway between DC and West Virginia.
Anyone have insight/comments into what is going on in Alexandria 22307. Buddy of mine has a two bed-1 bath unit which are quickly becoming a dime a dozen there. What might the outlook for that area look like in the next year?
Anyone have insight/comments into what is going on in Alexandria 22307. Buddy of mine has a two bed-1 bath unit which are quickly becoming a dime a dozen there. What might the outlook for that area look like in the next year?
There are some very good comments here — I followed one of the links back to the NOVA reports page and looked at the PDFs. What is most interesting are the 2002-era prices. Looking at the run up, about 100%, a skeptical investor has to ask whether there was any rational cause to the increase in value.
Of course, most of the people here believe that it was nothing more than bubble psychology, fed in part by speculative greed. BTW, is there an I hate Bob Kiyosaki page here?
I think one way to accurately price real estate today would be to go back to pre-bubble price, say early 2000s, calculate a reasonable increase, say inflation plus a couple opf points, and that would binng you to what you should be offering. Of course, the simple method is simply to offer 50% of sellers’ asking prices!