Tolls Brothers builders last week reported that the D.C.-area housing market, which was the first to collapse, seems to be finding a bottom; my wife and I have noticed that houses in Arlington suddenly seem to be selling, at least if they are priced right; and data from the MRIS shows sales in Northern Virginia picking up, although there are still fewer sales than there are new homes coming on the market.
Does this mean that prices, at least in the D.C. area, are near a nominal bottom? Or is this just, as true housing bears suspect, the calm before the storm (aided by a sudden dip in interest rates), just before the market gets flooded with new inventory in Spring 2007? We shall see.
Speaking of the sudden increase in sales, I was all set to rent a single family house walking distance to the Ballson metro, but the day I was going to sign the lease, the owner got an acceptable offer to sell and took it. The house had been on the market for months, but of course a buyer decided to put an offer in just when I was about to sign a lease. We have some other options, but it can't hurt to ask: if any readers know of a three bedroom townohouse or single-family house for rent, walking distance to an Orange line or close-in red line metro, six months to a year lease, looking for very responsible tenants, you can email me at deliot at sign aol dot com
Wasn't there a court case that said it was okay to refuse to rent to lawyers?
I suspect you are at the bottom; prices will tick up again in Feb-Mar, which always signals the start of another selling year.
Many of the buyers who have been biding their time will probably start buying in the Spring, so I would guess, rather than a further crash, we'll see a price stabilization, perhaps with a few upward/downward swings as spring comes on.
I don't think we'll see all the leased houses coming back onto the market suddenly - remember, the leases are not co-terminus, nor are they even the same length. The REALLY interesting bit of this will be the DC condo market, which is going to get smacked with a glut due to new buildings coming on line in 2007. Of course, they were all overpriced to begin with.
On the issue of new supply in the spring: There will likely be a good deal of new supply in the spring, but it's also true that buyers tend to appear in the spring as well (many of whom are also sellers, since there are still many people following the apparently-somewhat-passe model of selling their old home before buying a new one). I don't think new supply alone will trigger a further downturn in prices. I would continue to keep my eye on the factors that people have already identified: overextensions on home equity that could force hurried sales, and increases in interest rates that reduce the number of qualified buyers.
(My usual rule of thumb is that the market hasn't truly bottomed out until people say "there's no way it can go any lower" and hasn't topped off until people say "it's going to keep going up forever!")
David: I wish you the best of luck. Unfortunately, the D.C. rental market, at least from the perspective of a goodly number of people looking for three-month leases starting this past May and ending in August (i.e., our flock of eager summer associates migrating north for the warmer months) was white-hot. It does seem to have cooled some since then, but to what degree is difficult to say.
True, and I've seen that too. After all, I'm currently renting a townhouse whose owners are renting precisely because they tried to sell (at a nice tidy $200k profit in 3 years) and it sat on the market for six months. There are some rents that seem a bit low because the owners really want to sell and aren't interesting in being long-term landlords.
I'm not interested in buying right now (recent graduate), and I'm pretty happy in my place. I locked in a 18 month lease at one rate; a lot of people are trying to rent for six months, or with clauses where they can kick people out after a month or two's notice if they sell. Not for me.
Thanks. The rental market is much better now (for renters) than it was a few months ago. The problem is that my wife and I both have some idiosyncratic requirements, including being walk-to-metro, and there isn't much available in the latter category beyond apartments. If we wanted to live in Arlington even a bit over a mile to the metro, no problem.
Actually, a lot of people in my neighborhood seem to take that walk with no problem. Or you could take the Number 51 ART bus, which stops at 16th and Buchanan, a block from that house, roughly every 20 minutes. BTW, there were workmen trimming trees in that yard this morning. I don't know whether that means that it has been rented, though.
You're really fixated on your neighborhood, aren't you, anonassociate? Believe it or not, there are other parts of Arlington where people do manage to limp along through life. ;-)
Doesn't that violate the FHA?
To answer my own question, it looks like it does not. See 42 U.S.C. ยง 3603(b)(1) (FHA prohibitions generally do not apply to a SFH sold or rented by owner).
Using the "bargain" $510,000 condo mentioned above, a 25-year fixed mortgage at 5% with $100,000 down [?!]would work out to about $2500/mo. Of course, $30,000 annual take home equals $2500 per month, meaning the average household in DC could not come close to affording even the "bargain" condo.
Sure, many households have unearned profits from sale of previous residence to roll into the new home, but how many have more than $100,000 in profit? And, yes, I understand that many households (my own included) are well above the $49,000 average. And by no means do I claim to be a real estate expert.
But I just can't shake my own common sense take that tells me that no housing market that prices the average first-time buyer household out of owning is self-sustaining.
p.s. I know, it looks like I set those numbers up to match, but, believe it or not, that was a coincidence that surprised even me. I just knew when I started that prices were out of whack with average take home income, I didn't realize how badly they were out of whack.
Note, some guy, that I said that it's possible that NOMINAL prices have bottomed, or close to it. I very much doubt that real prices have bottomed. Last time there was a runup in D.C., real prices (after inflation) went down almost 50% before it ended, but nominal prices went down much less, maybe 15%.
That aside, no matter what houses were selling for, the absolute most a $49000-a-year income can qualify you for is about $150,000 worth of house, and that's assuming you have $0 other bills (e.g., property tax, auto payment, insurance, health care, food, etc.). YOU CANNOT FIND THAT IN DC.
I am thrilled John Doe read Orin Kerr's "Sarcasm is not an argument" post.
I think there is some price premium for being in the Long Branch school district - which I think is foolish, Barrett is a fine school, and anyway the County will generally let parents apply into out-of-dictrict schools if they transport their kids - but if you don't care about school district you may do better on price if you look in Barrett.