Housing Market Cooling, Data Say

The Washington Post ^ | Nov 11, 2005 | Kirstin Downey and Sandra Fleishman

[surely_you_jest]

New data released yesterday show that in the past year, home sales in the Washington region have declined sharply, the inventory of unsold homes is up significantly, and prices have flattened and, in some cases, fallen.

The trend is most striking in Northern Virginia, where most of the region's growth has occurred, but it is evident almost everywhere.

[montag813]

I disagree. It will get a lot better after Christmas, esp. for existing homes.

Always does. Sept-Dec is ALWAYS the weakest time of year. In NYC the jump will happen before the spring, as Wall St. bonuses are projected to rise 15-25% above last year's record levels. In 2005 those people wiped out all existing inventory, leading to a massive spike in prices thereafter.

[montag813]

i completely agree with the line in the article that says that DC is the most insulated market in the country.

There is no hotter economic area of the nation than DC right now, because of 9/11 and the gov't spending like there's no tomorrow.

[montag813]

And, to be honest, it is not irrational to think that DC homes could lose 10-15% of their value by Spring 2006.

That would be NORMAL! Typically home prices fall 9-12% this time of year and rise 10-14% in Spring.

[montag813]

The Edmonds are facing the prospect of a $100,000 loss in value before they even walk through the front door.

The Edmonds overpaid. Like my new neighbor did. He bought a NYC condo for 1.61 million which 6 months later is worth $200k less. Of couse 2 years from now it will likely be worth $1.8.

[Dems_R_Losers]

Woohoo! I sold my house in Alexandria last year for top dollar. The poor slob that bought it is probably going to lose money on it.

[Netheron]

Don't forget that home mortgage rates are going up. The real cost of a house to most people is not the list price but the monthly payment. If mortgage rates increase, the prices will quickly come down to match.

[palmer]

In the two counties and three cities that make up the Northern Virginia market, more than twice as many homes were available for sale in October as in the same month one year ago -- 7,122 homes, compared with 3,254

The full story is here http://www.virginiamls.com/charts/index.htm 12,644 listings in commutable Northern VA, thousands more just beyond, plus those in DC and MD. The normal amount of influx (100 buyers a day or so) is not going to soak up that inventory easily. More will come online as the speculators start to bail out. The "good" news is that many speculators are stubborn and owners can't easily move so the price drops over the next year or years will be modest, probably 5% or so IMO.

[ContemptofCourt]

Yeah, well I'd like to see homes rise 10-14% next spring when rates are going higher and higher.

[ContemptofCourt]

"The growing inventory in Northern Virginia appears to have finally reached a plateau. Historically August has been the peak month for the inventory of available homes. Inventory of available homes is at a five year high."

[LS]

Well, here in "mid-America" people have their kids in school and so they can't think about moving until May/June, so, allowing a couple of months to shop for a home, then close, that puts you about April to start buying. Plus, houses don't LOOK as good with 2 feet of snow in front of them, so that's a drawback to winter sales.

[rodguy911]

Depends a lot where you live. Last year property went up 42% down here and has not stopped so far this year.It does take longer to sell a property though.

[PianoMan]

Now if sales aren't going through the roof 12 out of 12....it's the end of times.

But if the houses started disappearing... now that would be the end of times.

[LS]

We sold our house here in Springboro, OH, for about 15% more than what we paid for it 10 years ago; but if you factor in the additions (fence, deck, improvements) and the cost of the realtor, etc., we made only a slight profit. However, we did sell, when NO ONE else was selling in our area, which I attribute to my wife's good design taste and generally clean housekeeping.

[ARCADIA]

Yes, it has topped out. It will never ever be more expensive than it is now. /sarcasm

It might go higher; you just have to time it to match with the next 3 point Federal Reserve rate cut. That was what created the current pricing fiction, and prices will probably stagnate or drop until the Fed give yet another boost, or until inflation weakens the currency even further.

[nvcdl]

I believe that the housing market is overheated but The Washington Post has a motive to slow it down.

Real estate advertising was almost an afterthought wnen the market was red hot - few listing were advertised in the newspaper.. with the market slowing down there are more classified listings thus more money for The Washington Post.

[The Glaswegian]

anyone who bought a home during the last bubble in the early 90's was pretty happy ten years later. A bubble or short term price drop is only detrimental to those who can't hold the investment for at least five years.

[leaf errickson]

Folks.....the inflation rate is driving home prices. Until it slows considerably, prices will be only going up. Gas prices are up a dollar a gallon.....you think home prices are going to fall??

[ARCADIA]

A bubble or short term price drop is only detrimental to those who can't hold the investment for at least five years.

I am more concerned with the additional tax burden which may be imposed locally through the reappraisal of existing homes. There are those who purchased well before the bubble, especially our fixed income seniors, who may be forced to sell due to the added burden. That alone could add a cumulative effect, to the other market forces already at work, and push even more homes onto the market.

[ARCADIA]

Folks.....the inflation rate is driving home prices.

Unless wages start climbing at or ahead of inflation home pricing may see a sharp price adjustment. Cost drivers may determine whether something gets built; but demand sets the selling price, and demand will drop if people can no longer afford to buy.