When will the first Realtor jump from a window?
Now while I may be biased, waiting for a 36% off sale to move from my rent-controlled cheap-o digs, I am starting to see some odd signals in the DC housing market.
First up is this little chart on HousingTracker.com – the one that shows median DC housing prices generally falling for 5 months in a row, while inventory is bouncing around. And we have CNN.com reporting that according to the latest housing price forecasts from Fiserv Lending Solutions, a provider of mortgage and consumer lending services, Washington metro area prices will drop 1.9 percent in 2006.
Next we have a WashPost article that says the usual 4,000 or so condo sales in Arlington and Fairfax are going to be overwhelmed with 14,156 units under construction and almost 28,000 planned or proposed in the next few years. The best quote:
MetroStudy’s fourth-quarter analysis of the area said listings of all types of housing for sale have doubled since July and new-home inventory for sale has jumped from 6.6 months of supply to 12.2 months. But much of that jump is due to the flood of condos. “If you remove the thousands of condominium units that are being built in Arlington County, Va., housing inventories drop to a much more reasonable 7.6 month supply,” according to the report.
Need more proof? Then follow the jump…
The WashTimes says that unlike in the past few years, if you are looking for a place, you have time now to actual view the residence before making a bid. If you’re selling, you might wanna make sure that opening bid is good:
“Some sellers still haven’t made the transition, haven’t realized that the market has equalized. And their homes are staying on the market longer than others. Even some of the Realtors haven’t made the adjustment as of yet.”
Wait, did someone just say “the market has equalized”? You sure? Because Over Priced DC says
At least 27 percent of single family homes in the $400,000-$1 million price range are now offering price reductions. A quarter of condos and townhouses are also offering price reductions. The data comes from the www.ziprealty.com website, which provides listings from the MLS database. The site now offers a price reduction filter button. Try it
for yourself.
The final proof? The Petworth News kicks in this startling statistic: More houses sold below listing price than above in the month of December. Now that could be aggressive pricing, but when 20 of the 26 houses listed sold for equal or less than the list price, I say the bubble is popping.
And soon, Realtors will be jumping.
And I just got my assessment the other day. There’s a blog entry coming here. If Arlington property taxes go up, I will have much less money to spend on beer for ya’ll.
Huh.. silence. I didn’t expect that with this post. Guess too many folks holding onto thier wallet/morgage/assessment too tight to type.
Perhaps it’s too much of a shock to most of our readers… I mean, this is not good news for those who recently purchased a home here – nothing like negative equity overnight, eh?
I woulda commented but I actually had work to do that took away from my comment-forming time. As somebody who didn’t buy in 1999, and then again didn’t buy in 2002, I’ve definitely gone through the math of what could have been if I’d jumped into the market when the jumping was better. A number of times.
I have a personal interest in falling housing prices since I think this might be the year for me, but I find it a bit hard to buy into the opinions of anybody who seems more about the schadenfreude than the economics. So “returntodc” and his three blogs on the subject (as thought-provoking as they might be) don’t have as much sway on me as the single article in “The Economist” does.
And FWIW, he seems to have mistaken a realtor for a builder in his most recent post (“Then the company, or its affiliates are carrying inventory worth almost $12 billion. I wonder what will happen if they can’t sell that inventory?”). That doesn’t help his credibility in my book.
I believe that there are indications that something’s going to change in the market, and I expect the approaching glut of condos to affect prices as well, but I’m not yet convinced that an actual crash is in the cards. And nobody with an obvious axe to grind is going to convince me.
Hmmm… I feel like a lot of unrealistic expectations are at play in the market now, and a lot of fearmongering. But then, I’m no economist, so I only have my gut to go on.
Every qualified/experienced person I’ve asked says the market is normalizing, not crashing. Now these are relative terms. Crashing in my estimation would be – you bought your house for 200k and you are trying to sell it for 800k and you get 50k. Normalizing – you bought that house for 200k and you are trying to sell for 800k and you get 400k. And even that appreciation over a five year period isn’t “normal”…
What we seem to have in this area are people who bought for 200k in 2000, and are seeing tax assessments of 500k, and real estate assessments of 700k, and trying to sell for 800k and above… the profit margins are insane, really, much higher than they ever were historically.
I’m old-fashioned, I guess. Real estate to me is a solid long-term investment where you understand the market cycles up/flat/down and act according to common sense. Not where you buy a house out of your means, gut it, and try to flip it for 800% profit, all on shady financing, all fueled by stupid HGTV/TLC shows.
Those are the people who are going to jump out of windows at a 1.9% market drop…
And I think there are plenty of those people to go around. I agree with your assessment that the prices are really “normalizing”. I think that whole idea of flipping a home for 800% profit is what I would classify as “irrational exuberance”, but that’s what has been expected as the “norm” in the real estate boom we had.
The normalization of prices is really more reflective of the stabilization in demand, I think. There’s no longer a shortage of homes in the market, diminishing the associated “gold rush” effect.
S many people get all gung ho when a lot, school or building goes condo. Maybe there is something to that whole supply and demand thing after all?