Virginia Market Turns To ‘Buyers’ Favor’
Inman News reports on Virginia home sales. “Home sales in Virginia dropped for the seventh consecutive month in March, while home-price growth returned to a more normal pace, according to the Virginia Association of Realtors.”
“Closed sales totaled 10,088 in March, down 12 percent from 11,464 sales in March 2005. Closed sales year to date totaled 23,871, down 13 percent from 27,719 for the same period last year.”
“‘A good sign for buyers is the fact that home-price appreciation is cooling,’ said VAR President Kit Hale of Roanoke. ‘There is better inventory on the market for buyers to choose from, and less urgency to make an offer in the competitive environment we had been experiencing.’”
And a northern Virginia realtor has this April/May report. “As we have noted here over the last several months, the metro DC housing market is clearly in transition from a strong seller’s market to a more balanced one. The number of available homes has risen significantly throughout the region, and especially so in Northern Virginia, and at the same time, the number of ratified contracts has dropped in every jurisdiction.”
“However, the market seems to be cooling at a different rate, depending on location. We have noted with some considerable interest that Washington, DC and the closer-in suburbs have not been hit quite as hard as the jurisdictions further from the city-center.”
“In Northern Virginia (Fairfax and Arlington Counties, Alexandria, Fairfax and Falls Church Cities), the number of ratified contracts in the first quarter of 2006 compared to the first quarter of 2005 is off 11%; in Montgomery County, it’s off 4%; in DC it’s off 9%. However, in Loudoun County, the number of contract has declined 31% and has declined in Prince William County by 27%.”
“Why are buyers not rushing out to pay above-list for new-on-the-market listings? Because they accurately perceive that they have more choices. Inventory has climbed substantially in all but the lowest price category.”
“The overall inventory has increased 442% from this time last year; the number of listings priced between $150,000 and $299,999 is 9 times greater than March 2005!’ “This time last year, 115 of all fully available homes on the market had a price change of at least $1,000; today, it is 29.3%, again suggesting that sellers are adjusting to new market conditions.”
At the link with the Fairfax graph, be sure to check out the other areas like Loudoun and Prince William. Also, the inventory graphic at the NV realtors site has some price catagory data that is informative.
Great Post Ben! The NoVa area is one of the first to get hit with price declines and swelling inventory. The builders are working at a breakneck pace to pop more houses out before prices fall too much. New construction incentives were getting huge but failing to bring enough buyers so actual price cuts are starting. More and more builder ads in the classifieds have “new pricing”.
The YOY inventory percentages are a bit misleading because inventory levels were so low for the last few years. The big news is the rate that inventory is piling up at the same time sales are slowing. If this trend continues (which it will) the months supply of inventory will get out of hand very fast.
Biggest losers will be condos and anything in the exurbs where new construction discounts will start killing comps very soon. South Riding and Haymarket and anyplace West of Sterling are going to get creamed at all price levels.
Watching the housing market correct has been like watching a snail race. I really thought prices would react faster than they have so far. The momentum is clearly building its just so slow as to be painful to watch.
I think its been said before on this blog but I think 2007 is when this will come to a head.
I agree with your assessment, but still think that this will not be any worse than what we saw in the early 90’s. A normal market cycle - no more, no less.
I don’t buy into predictions of catastrophic declines in prices. I believe there are many on the sidelines waiting to buy on a decent dip. Of course, interest rates are the wild card.
Don’t 70% of Americans already own homes? Who are all these people on the sidelines waiting to buy?
They’re all going to buy their second homes in traffic-clogged No Va, didn’t you know? Once prices drop, there will be no stopping the flood of buyers from snapping up two and three condos at a time just because they can. Soon, 70% of Americans will also own property in No. Va. Sorry, souldn’t help myself. While there are buyers waiting for a dip, there can’t be enough to absorb a 400% increase in inventory. Drop baby drop!
man, now that’s a money question.
I expect a soft landing scenario of price drops of only 30 - 40%. Those folks on the sidelines waiting to buy will keep us from having a hardlanding scenario.
Responding to Nikki’s 13:09 comment: What you’re saying is, NoVA will go SuperNoVA.
Oh, the humanity…
“I expect a soft landing scenario of price drops of only 30 - 40%.”
Chr!st - talk about moving the goal posts. 12 months ago ’soft landing’ meant a return to single digit growth. 30% drops were for moonbats. Now a 40% drop is a soft landing. Things have changed, haven’t they?
I agree with va_investor. There are many waiting on the sidelines, indeed. But, the biggest question is this - At what price, will the majority of these sideliners jump in??
For me, I will jump in once a good (newer) 2BR/2BA 1200 SQFT condo in a good DC neighborhood (Logan, Dupont, etc…) is in the 250K range. Currently, these same condos are going for around $550K. So a $300K drop or a 54% erosion of values is what it’ll take for this sideliner to jump in
“But, the biggest question is this - At what price, will the majority of these sideliners jump in??”
Maybe the question should really be “At what price, CAN the majority of these sideliners jump in??”
With rising interest rates and the tightening of lending standards, many sideline sitters with little cash for a down payment or shaky credit, may find they can’t jump in.
IMHO the pain will last 10 years+, the government will try in various incarnations to halt the collapse which will only prolong the demise of the market.
that might be true if there was a deposit of consequence put down, but this time around high LTV financing initially or equity extraction later make a lot of peoples’ finances precarious at best. now that the refi merry-go-round has stopped, folks are gonna get crushed. i don’t think it’s going to take lenders 10 years to wise up that their collateral will be impaired.
Seems to me that residential real estate landed on the radar screen of that great pile of mobile capital that moves around, looking for opportunities (think dot.com, emerging markets, Russian bonds, etc.). The only difference here is the relatively low sophistication of the investors (they watch a get rich quick scheme on a late night infomercial and buy property).The numbers are 40% of homes last year purchased at a second home (and that number is likely low).
My sense is that a lot of people were making RE purchases based on the premise of ever rising prices. Once that definitively stops, these guys will clear the market. Ordinary owner-occupiers are not going to come out of the woodwork to pick up the slack.
It’s back to the P/E ratio. In many markets, prices have to fall by over 30% to get aligned with fundamentals.
Respectfully, I think you’re nuts. NoVA has never, ever seen a run-up in prices like we’ve seen over the last two years and has never seen a run-up in inventory like we’ve seen in the past 6 months. The level of speculation here is unprecedented. $700K for a townhouse??? This is going to end very, very badly.
I believe there are many on the sidelines waiting to buy on a decent dip.
You’re dreaming. Homeownership is at record levels, interest rates were at record lows and credit is as loose as it has ever been. Anybody that ever wanted a home has already bought three.
The number of any potential “sideliners” is statistically (and fiscally) insignificant. Once the psychologically changes, they’ll disappear entirely.
Oh, and those on this blog are a microscopic fraction of the population and won’t be seduced so easily.
p.s.: All those “buying opportunities” didn’t save NASDAQ.
Uh, “psychology”, not “psychologically”. Damn, two errors in two days.
I know plenty of potential homebuyers that alone are making the income of the average household in the DC area. Problem is, none of them can come close to affording to buy anything. These people will be the next wave of buyers, once prices are cut in half.
A community in Woodbridge started out last October at “low 400’s”. It is now adertised at “mid-300’s”
Have you seen the number of townhouses going up down there? It is unbelievable! Drove thru Dumfries last month. Prices are ridiculous. Dumfries for God’s sake!
Yeah, it’s absurd. The ones that I’m talking about are on PW parkway, between rt. 1 and I-95. I have some pictures on my blog of that area you’re talking about in Dumfries (www.novabubble.blogspot.com). They have literally clear cut thousands of acres of land. Who is going to buy all those at the adervtised prices of 500k?.
One thing to bear in mind with those graphs is that they show the inventory levels as of the beginning of April. Today’s figures are even higher. For example, Loudoun County’s graph shows less than 3,500 active listings. Today’s number is just under 4,000.
How can anyone look at those inventory figures and not expect a crash. We’re talking about 400%+ increases in inventory in a year. That’s a disaster. A veritable disaster. I’d point out that here in my zip code in south Fl, inventory is up 273% from mid-June of last year (when I started tracking). Seems pretty nasty too, from where I sit.
This is from http://www.Itulip.com
: In 1998 when iTulip.com predicted an average 87% decline in Internet stock prices, that forecast seemed utterly unintuitive to most readers. We even though it was extreme. Think back to that time and recall how it felt to be in it. The market had been rising for so many years, a reasonable person might conclude that the prevailing conditions must be normal. Then ask yourself, if iTulip.com is right that the housing market is a bubble about to collapse, what can the Fed do about it when short term interest rates are already at 30 year lows? U.S. households aren’t sitting on a few trillion dollars in savings like their counterparts were in Japan when their housing bubble popped, in fact they are sitting on piles of short term debt.
Hoz — went to read the articlt in entirety, but couldn’t find it among the rather eclectic arrangement of items on the page.
I know it is in a difficult arrangement try this page for some scary graphs from Itulip:
http://tinyurl.com/q75r9
Also the item above was from 2002!
Very cool site; thanks for the link!
At the peak of the frenzy there were 15 and 20 contracts coming in on some properties. Maybe a 4x increase is not so bad as it looks.
I think there’s some truth to this point. A local real estate agent was telling me that in Virginia Beach at one point there were only 65 homes listed for sale. I suspect that was an exaggeration, but the point is inventory did have a long way to go up.
Problem is that housing crunch got home prices artificially high, now that new construction (stimulated by those high prices) is flooding the market those artificially high prices will likely come back down to earth.
From what I’ve seen from housingtracker, and what I’ve seen in Norfolk there are now plenty of properties for sale. I was walking around Freemason/Ghent taking some photos for a website, and there were properties forsale everywhere. I turned to trying to find a good place to get a photo with lots of forsale signs for Ben’s blog photo gallery, but I haven’t found one yet. My friend suggested oceanview for that
With some 4000 condos in the pipeline for the area that haven’t been built, and housingtracker showing 135% increase in inventory over the past 7 months, we are ripe (I hope).
Housing prices in Hampton Roads (Southeastern Virginia for the non-locals) are out of wack with the salaries, that is for sure.
Well a 400% jump in inventory might be because the weather finally got warm here on the east coast. Philly has seen a slew of For Sale signs in the past two weeks. The question is will there be a 400% surge in inventory all summer long?
I know of at least one condo unit that was pulled off the market and fixed up and re-priced even higher (stupidly if you ask me), and one townhome pulled off the market to wait as well.
Only time is going to tell on this one, but I hardly think there’s going to be a 54% drop as one user says it’s going to take for him to jump into the market.
People who anticipate (hope for) 50%+ drops in housing prices have no concept of the economic fall-out of such an event. They expect to waltz in and buy their dreamhome.
What they don’t realize is that they won’t have a job, their portfolios will tank and the entire economy will be in ruin. Think 1929.
Unless you have a ton of cash, be careful what you wish for.
Sorry, I have a ton of cash. And I thought the market was outta wack 3 years ago.
me too.
Why don’t you go to http://www.Itulip.com and read! There is enough information to scare any reasonable person. WIth Itulips charts, graphs and track record, you will at least be able to make an informative decision. Much as I do not wish to see this collapse because of the pain inflicted to family and friends. I see no way to stop it.
Hoz and tj….Do you believe that this will be far worse than 1990? If so, why?
I know you cite historically low interest rates among your factors. In other words - lower rates won’t be able to bail out housing. But, what were rates in 1929? It seems there is alot of room below 5% which was the low for 30yr money. Option arms can’t make up that much of the total loans out there.
Tulips, like the nasdaq stocks, have little intrinsic value. Dirt, bricks and mortar have a value. People NEED a place to live - they don’t NEED flowers.
va_investor,
I believe it’ll be worse than 1929-1933, for lots of reasons that go way beyond just housing. And yes, people NEED a place to live, but they don’t NEED to buy it.
Who will own it? The gov’t? And it will be rent free? I don’t understand your statement.
People who anticipate (hope for) 50%+ drops in housing prices have no concept of the economic fall-out of such an event.
Quite the contrary… those of us predicting 50%+ drops know exactly what it means and have lost pretty much all hope of any better outcome. Consequently, we’re preparing for the worst and attempting to convince others of the dangers lying ahead. The only ones hoping to score nice properties on the cheap are those like yourself that blithely refuse to see the writing on the wall.
Interesting.
3:30 pm : Market spikes lower going into the close after CNBC reports that Fed Chairman Bernanke said the media misunderstood his remarks last week. The news, accompanying an interview with Chicago Fed President Moskow, has weighed heavily on bonds, lifting the yield on the 10-yr note as high as 5.145%. Further deterioration in bonds has prompted even more aggressive consolidation in the influential Financial sector while CNBC also reporting that Bernanke said it is worrisome that anyone would think of him as dovish has been a catalyst behind the Technology and Consumer Discretionary sectors turning negative. DJ30 -2.97 NASDAQ -11.24 SP500 -3.09 NASDAQ Dec/Adv/Vol 1606/1416/1.69 bln NYSE Dec/Adv/Vol 1432/1793/1.41
Huge comments by Bernanke.
He clearly is not yet fluent in fedspeak. He should have spent passover with Greenspan.
LMAO…he could have asked the 4 questions!
I think this is an example of “Bernanke backing off a statement”, rather than a case of media misunderstanding. His statements were extremely suggestive, and the media can hardly be held liable for any “over interpretation”. Markets have moved, and Bernanke was caught looking like he failed to anticipate. Rather than retract, he pointed the finger at the media for “misunderstanding”.
Not from where I was standing.
Rookie mistake by Ben in testimony last week. You’ll know he’s seasoned when he can obfuscate with the best of them.
this was a private conversation with CNBC anchor over the dinner party. i thought it was totally unprofessional for him to make that statement. nevertheless, this is somewhat a good news as it seems he isn’t planing to bail RE (yet)..
and my HBs shorts paid off
Off topic:
Does anyone know why zillow.com has not updated its current prices on its site. Usually the updating took place around the 25th of every month. This month it has been lagging.
My guess is that comps are going to be mostly in the red compared to past months so they are avoiding releasing as much as possible.
Anyone with any other ideas why?
Maybe it’s due to the volume.
nick818 ….Your take on it is the same as mine .
“The overall inventory has increased 442% from this time last year; the number of listings priced between $150,000 and $299,999 is 9 times greater than March 2005!’Just wait until September when the panic sets in.
it is as well…pause and resume is more fatal to that market than the status quo of keep hiking..
Any how the important thing about real esatate has been “relocationed” to : Inventory. Inventory. Inventory.
Lereah should take notice…
Behold the new Boarding House !
http://www.homerentalads.com/details.cfm?state=AZ&id=1313&
Just wait until the HOA enforces the no parking on the street clause, there goes two bedrooms worth of rent. Whomever dreamed this scheme up was clearly not thinking, read that ad carefully, no credit checks ? Month to Month ? And I love that dry landscaping, run out of money there
sport ?
Mo! What a find! Did you notice the “amenities” and property description don’t include the use of a bathroom. Maybe the 3 on site are available at an additional cost?
I don’t know about you but I’ve always aspired to share a bathroom with a totals stranger, oh yuck ! I’ve know people who were freinds become roomates only to become mortal enemies over trivial things. Imagine what happens here with the revolving wheel of losers.
I sent mail to the “Investment” company asking if they were licensed to run a boarding house in a residential neighborhood.
Amenities
# Dining Room
# Living Room
# Family Room
# Great Room
What the hell is a “great” room?
A large useless space above a normal room, think no ceilings and a large space above to heat and cool.
don’t forget to wear your flipflops in the shower; or you can rent them from us for an extra $10/month
Harbourton Capital Group Inc., McLean, Va., has reported a net loss of approximately $2.8 million ($0.55 per share) for the fourth quarter of 2005, in part as a result of “turmoil in the secondary market” affecting its wholesale mortgage subsidiary.
The company’s results for the quarter were significantly impacted by Harbourton Mortgage Investment Corporation (”HMIC”), the Company’s wholesale mortgage subsidiary, as it continued to cope during the period with significant interest rate increases and turmoil in the secondary market in which it sells all the loans it funds. For the quarter ended December 31, 2005, HMIC originated $189.2 million of loans, a 33% decline as compared with fundings for the previous quarter of $280.6 million, reflecting the general slowdown in the national real estate market. Sales of loans during the quarter ended December 31, 2005 were $202.7 million, with an average gain on sale of 2.07%, as compared with sales in the prior quarter of $250.5 million with a comparable gain on sale of 2.53%.
Harbourton Financial Corporation (HFC), the Company’s mezzanine lending subsidiary, reported a loss for the fourth quarter after recording a one time charge to adjust the carrying value of selected mezzanine loans and acquired real estate. The non-recurring charge reflects management’s assessment of the change in valuation for the specific projects, including two residential condominium projects on which the Company foreclosed in 2005. To date the Company has subsequently sold 23 of the original 26 units received in the first foreclosure and is completing the construction of the 8 units received in the second foreclosure, with delivery expected in the third quarter 2006. Never the less the Company’s investment in real estate owned negatively impacted HFC’s interest revenue during the fourth quarter 2005.
2 Condo foreclosures??? I thought RE only went up????
I think these midsize to small players will be the first to go. Just like the earlier post Ben had of the HB in the midwest.
Don’t miss this late breaking news: HOV blows it on earnings:
http://biz.yahoo.com/prnews/060501/phm052.html?.v=24
Incidentally, I think they already cut Q2 earnings expectations. So this means things are deteriorating so fast they had to cut AGAIN several weeks after doing so once.
NVR downgraded by Moody’s to “Strong Sell” from “Sell”
Ryan is the biggest builder in N. VA and NV only sells homes here and in a few other Mid-Atlantic states. Glad I shorted NVR a few months ago and held on. Their homes leak like a sieve, by the way. Pulte at least has the Structural Insulated Panels in some of their developments here.
http://www.hobb.org/hobbv2/index.php?option=com_content&task=view&id=860&Itemid=384
These people are a perfect example of F’d borrowers!
Excerpt:
“Fast forward 6 months to April 2006. We are two weeks away from closing on our new house and our existing home is still on the market. We’ve inquired about pushing our closing off for a couple of weeks, and that is not an option . . .NVR Mortgage has concocted a program for our new mortgage that will enable us to carry two mortgage payments at once! How lucky we are! However, since the two mortgage payments will put us over the 50% debt to income ratio that we keep hearing about, NVR Mortgage will only qualify us under a loan program that looks at credit scores and not income. Thankfully our credit is good to very good, but the payment on the new house still will be almost $4000 per month with a 9% interest rate (the payment on a loan under the full-income verification program was $1200 less per month and carried only a 6.25% interest rate). That is absolutely ludicrous! Your mortgage brokers keep telling us that they don’t want to strain us financially, but I’m confused how making $1200 a month more in mortgage payments (not counting the $1600 mortgage we have on our existing house) doesn’t burden us. “
As I’ve written before, what’s wrong with two mortgages? RE always goes up, so if one mortgage is good, two has to be better!
Unless RE doesn’t always go up. Uh-oh.
debt = wealth
I forgot this juicy bit:
“And of course, there was never anything mentioned about a 10% deposit until the day we were signing the contract. It’s hard to hear, “We’ll need your check for $45,000 within 30 days to approve the contract” when you just don’t have that kind of money. And so then they recommended that we take a HELOC out on our existing home to get the down payment (effectively reducing the amount of equity in our home). “
Awesome post! At the risk of overusing a line, you’d have to have a heart of stone not to laugh at these imbeciles. The next time I see one of them hanging out behind a 7/11 dumpster, visiting their hopes and dreams, I won’t be able to resist the urge to ask, “What the h*** were you THINKING?!!!”
The cluelessness of this lady and husband (no doubt egged on by Suzanne) is mind-boggling. These people sound like prime candidates for a court-ordered sterilization. Here are my favorite gems from her whiny, futile screed against NVR:
It was explained to us by your sales representative that Ryan Homes does not accept home sale contingencies in their contracts and were assured that everyone enters the contract while owning another house and there hadn’t been problems with selling current homes before closing on the new.
BWHAHAHAHAHAHAHA! Call the village — we’ve located their idiot.
We find it regrettable that you train your sales representatives to tell people whatever it is they want to hear in order to get a signed contract. Everything was portrayed in a positive manner, whether or not it was in reality.
Why do we let people like this vote, drive, or reproduce? Here’s a news flash Pollyanna: EVERYBODY’S sales reps tells rubes like you whatever it takes to seal the deal — on their terms.
It’s hard to hear, “We’ll need your check for $45,000 within 30 days to approve the contract” when you just don’t have that kind of money.
Then why the hell are you buying the house in the first place?!!!
We had become good friends with our sales rep and she was willing to go above and beyond her normal duties to make sure we were satisfied.
BWHAHAHAHAHAHAHA! While the day is not too far off when desperate sales reps will indeed go WAY above and beyond her normal duties to make sure customers are satisfied (nudge, wink), your newfound “friend” played you like a Stradivarius.
My husband and I would like to see you come through on your “superior customer service” promise and start working with us on the sale of this home, rather than playing by your rules all the time.
Or you’ll do what? They’ve already got your $45,000 deposit, you silly twit. You and hubby are screwed, blued, and tattooed no matter if you go forward with the “deal” (snicker) or back out. Appealing to the better angels of a homebuilder’s nature, however, is as comical as it is pointless.
This is rich. Somehow I just can’t summon any sympathy for anyone this naive and foolish.
my fave line:
Yes, we are using a licensed Realtor to sell our current home,
just in case you were wondering.
Whew, what a relief! LOL!
“‘A good sign for buyers is the fact that home-price appreciation is cooling,’ said VAR President Kit Hale of Roanoke.
More Realtor BS. Home price appreciation isn’t slowing, it’s negative. Look at the lower left corner of this March report from the NVAR. It clearly shows that prices dropped YOY from $533K to $525K.
multiply these fools by several thousand for all over the country.