patrick.net

Who posted this thread?

Reston? Fairfax county baby. My old stomping grounds. We looked in Reston when we first moved to DC. No offense, but didn't like it at all. Extremely cramped. We looked at one deveopment back in 2000 maybe it was Herndon. Small house, small property on a hill. Could look off the porch and see at least 80 roof tops all the same. Dismal playroom in the basement with no windows.

You want to know about inventory in Fairfax? See NVAR.com and click on "market stats." The numbers for Fairfax are worrisome. about 50% inventory increase from last year.

By the way, when you hear "things slow down in August", then just look to the previous August. The number I gave above is year over year. Sure, things slow down from May to August, but August of 04 to August of 05 is instructive.

My opiinion? Fairfax peaked in February/March 04. It's now on a down slope, and I expect flat out panic in the spring, when everybody who has any inclination to get out will have seen the winter heating prices, the slowdowns accross the economy, the inflation, . . . . If they don't know it's time to get out now, they will in 5 months. Check the inventory numbers in May 06 versus May 05 - I'll bet they're double.

By the way, no offense again, but in no way on God's diminishingly green earth is Reston a "short" ride from DC.

Reston is a brutal nightmare of a commute into and out of DC, and it's getting worse every year. We ended up located 20 mintues closer and I still despised the commute to downtown.

Sorry to spam. That peak in Fairfax, IMO, is in 05, not in 04.

Even with the increase inventory in California, the supply is below normal. This would normally be considered a shortage. However, it is critically important to recognize the direction of inventory movement and the potential for it to quickly pass the normal supply to demand ratio.

Inventory in some parts of Sacto have doubled but it's still below the 6 month norm. I know from some of the graphs Mr. Right/left/wrong (it was you right? Hard to tell for sure with the name changes. :) ) put up that some area's are showing steady increases, so it bears watching.

I hear the last correction in my area (DC) was in 1988/1989, at least that's when it began, and continued till 1994ish. I might be off slightly with the dates. Is the relevant comparison to today's levels the 1988 levels? Seems logical. How do I get information such as how many units were on the market on any given day back then? Is information like that even available?

btw, here are some helpful links

1) to the MLS in Virginia/DC/Maryland (which typically only realtors can access). Some realtor posted a link which allows access to it.

http://www.homesdatabase.com/frankly/

2) This is the listing which the Washington Post keeps track of regarding sales in NOVA. they don't have the dates of sales so you can't port this directly into Excel or a similar application to keep track of, but I've noticed that the average "sold" prices are dramatically lower than the average asking prices on the MLS.

http://www.washtimes.com/fhg/vahomes.htm

It's a little hard to figure out, but most of the entries with confusingly similar addresses are part of new condo/home developments, meaning that they were sold a year or more ago.

By plugging the addresses into www.maps.google.com you can figure out where stuff is selling in your area (assumign you're in the DC Metro area).

The rate of sale, based on this page, has been dropping significantly. Should have seen how many units, in each town, were selling 6 months ago (when i started keeping tabs).

Well for one I don't believe anything published by the realtors, MLS, realtor groups or other asshats tired to the greed circus. Here's what's going on down here on the Central Coast. Every street has 3-4 signs out front, there are at least 7 new developments going in. Mind you, these are Boomer McMansions at there finest. Valle Vista, on 1 acre homesites, from the low 1.2. $hitboxes everywhere with signs out front. I've been here 6 months and have driven by several of them that have not had the signs removed. I think the end is near. The trite argument of "it never goes down", "sticky on the downside" all bullshit. What happens when Mr & Mrs McDebtor can't make their monthly and the bank takes over? The bank doesn't fucking care, it's firesale time. I predict a sucker bounce, "values" fall a bit, the suckers buy up and then it's free fall time. Grab your ankles Mr & Mrs MrDebtor because while that LCDTV only cost 340 a month, it's not yours. Suck it long, suck it hard.

Inventory is definitely on the rise in Marin. The same as everywhere else, there's a lot of gaming of the MLS data, so that data isn't very helpful. I know we've been tracking a constant folder of 12 homes in the Mill Valley, Corte Madera, Larkspur area, substituting new homes when with ones that sell, in an attempt to track days-on-market and price movements ourselves. Early last year, it was a lot of work because homes didn't stay in the folder longer than 30 days, but now we've only had to substitute 1 or 2 each month, and many have been stuck for 90+ days.

But there is price stickyness, at least in South Marin. My data has homes in our selection criteria dropping by and average of roughly $45K, but this is relatively minor (at least so far).

We recently started tracking North Marin also--primarily San Rafael and Novato. There, there is a much more rapidly growing inventory and, in particular, Novato prices have dropped quite significantly. Some McMansions (some of which are quite nice, all things considered), have come down by well of $200K, but my data is less than 3 months old there. Nonetheless, this is pretty compelling price movement in such a short time. Keep in mind that some of these poor saps in Novato bought 3,000K+ ft^2 homes for well for $1.3M, which is way out of line for what Novato should support given its geographic location, commute difficulties, and so-so schools.

Note, my data is merely anecdotal, and specifically targets properties which will accomidate my ability to care for a disabled retiree parent while still having room for my children, meaning we have fairly specific requirements.

Rant on Real Estate Data

I am particularly irked by the terrible dirth of accurate data/information regarding real-estate. It strikes me as the worst form of self-serving market manipulation, and it causes a great deal of damage and waste. From local MLS to state-wide "official" California Association of Realtors data, the information is simply erroneous.

This causes price stickyness, aggrevates the agency problem, and worsens the realtor(tm) intermediary transaction-friction, all to the benefit of those very intermediaries.

I don't know why we stand for this. It is unacceptible. I wish there waw some reasonable way that we could systematically leverage this type of forum to generate our own, statistically sound data sets that might provide a more accurate view of the RE market. I know...that would be hard for myriad reasons, but I can dream.

Here's my take on the numbers . . .

The easiest one to look at is YoY inventory.

That number is hard to fork with. It's a number.

When you start talking about "# months" of inventory, then this has to include a certain level of sales, right? At the rate of 500 a month, there is a 5.6 month inventory. Well, frankly, that's going to open up the number to all kinds of manipulation.

Which is why I like YOY. Look at the yoy inventory for each month and calculate the %. Then look at the change in %. That # will tell you which way the market is going. I'll try to work some numbers for Fairfax later tonight.

When 70% of people already own, the calculation of "3 mos of inventory" I think is difficult...I think at the same time that inventory is rising, so to are days on market...not only due to picky buyers (whos mentality is also affected by "so many choices")...but also the buyers left are cautious type...haven't bought yet for a reason. When things are so dynamic...which they appear right now (in spite of real estate valuation being a slow process)...calculations such as these are probably less meaningful than in steady upward/steady downward market.
Of course this idea of owner saturation could be non applicable, depending on...Question: is ownership saturation a new phenomenon of real estate? Is 70% ownership higher than, say, late 1980's in california?

Here are the numbers for Fairfax Viginia - I don't know how there could be anyway that these numbers mean anything other than a downward turn.

2005

Jan -40%
Feb -18%
Mar
Ap
May
June
July
August

[How do I keep doing that? What is that, tab and enter - crap]

Here are the numbers for Fairfax Viginia - I don’t know how there could be anyway that these numbers mean anything other than a downward turn.

2005

Jan -40%
Feb -18%
Mar +3%
Ap +8%
May +18%
June +12%
July +27%
August +47%

Interestingly, price has kept up. I think this is simply because the obvious spike in inventory isn't obvious to buyers whose major source of information is their realtors. Further, I think people who are not risk averse and will buy into the peak like this want to believe that the house is worth what they are paying. In other words - who would buy a ratbox in fairfax for 900k if they thought that it wasn't going to appreciate? Not many. So those who are still left to buy believe appreciation will occur. Many no longer see it this way, which is why inventory is climbing. When inventory gets high enough, there won't be enough RE bulls to keep prices aloft. Said in one last permutation, momentum has kept prices up, but the increasing inventory is a sail that will add drag, thereby reducing momentum

In final words, it's going to take 6 months of building inventory before buyers finally decide that the asking price is too high. I think that 6 months of increasing inventory for Fairfax puts us in . . .

September 06.

So I think that's it then. Fairfax is done. I'll chart the selling prices for Fairfax once the September #s come out. I think late summer will show a flattening of the housing price curve . . .