Local Housing Party Is over!!

From the wall street journal today and Toll Brothers has purchased several large tracts in West Virginia. I could not reprint the graph here which really puts it into perspective that we are in the worst situation by far of all major cities. If you subscribe to the WSJ you can look this up. I wonder how many projects are going to be canceled or put on hold indefinitely over the next 12 months. Lets see if we get devaluations on our homes for the next tax year. The sad thing is we will not because they will tax us on last years appreciation not this years devaluations.


Finding a House Gets Easier
Inventories Rise Sharply
In Many Major Markets
As Some Buyers Hang Back
By RUTH SIMON and JAMES R. HAGERTY
Staff Reporters of THE WALL STREET JOURNAL
February 8, 2006; Page D1

With the key spring selling season about to get under way, the inventory of homes on the market is climbing sharply in a number of major cities.

It is the latest sign that the balance of power between buyers and sellers is shifting as the once red-hot housing market continues to cool. The slowdown is affecting both existing homes and new homes. Yesterday, the nation's largest builder of luxury homes, Toll Brothers Inc., reported a 29% decline in new orders in its first quarter, which ended Jan. 31. That was below many analysts' expectations and prompted a sharp selloff in Toll Brothers stock. And Ryland Group Inc., a Calabasas, Calif., builder that sells homes in a wide range of prices, recently announced that new orders declined 4.7% for its quarter ended Dec. 31.

Nationwide, there were 2.8 million existing houses and condominiums on the market at year end, according to the National Association of Realtors. That is down slightly from November's 2.9 million listings, but up 26% from a year earlier. Adjusted for seasonal variations, inventories have climbed 38% since April, according to Goldman Sachs Chief U.S. Economist Jan Hatzius, the largest eight-month increase on record.
[inventory]

The changing climate is particularly noticeable in once-hot markets such as Miami, Phoenix and Washington, D.C., and in areas such as Detroit, where price increases have been modest but the job market is weak. Some brokers report that traffic has increased in recent weeks. But with plenty of properties to choose from, buyers have become more selective.

The rise in inventories has been good news for people like Mike Perillo, an accountant who has been looking for a home in the Philadelphia suburbs for well over a year. "We're now seeing a lot more properties that appeal to us," says Mr. Perillo. "There's more on the market, and there seems to be a lot less people looking now as opposed to this time last year."

In Phoenix, where inventories have climbed steadily since last spring, open houses are attracting a steady stream of lookers, says Charles McLean, broker-owner of Century 21 Metro Alliance. "But people are taking their time," he says. "They're not just jumping and writing a contract." Mr. McLean says that if a listing doesn't attract enough traffic, within 30 days they will consider lowering the price.

In Detroit, sales fell nearly 10% in the fourth quarter and inventories climbed amid uncertainty about auto-industry layoffs. To stimulate demand, Real Estate One, a Detroit brokerage firm, has been running a companywide "Bonu$ Homes" promotion in which sellers agree to provide $2,000 to $10,000 toward buyer closing costs on purchases made before April 15.

"The creativity to sell homes is coming back," says Dan Elsea, president of brokerage services at Real Estate One. "We haven't needed it for years."

Economists and real-estate experts are watching the inventory numbers closely for signs of whether the housing market is poised for a soft landing -- or something worse. When inventories are tight, buyers competing for scarce properties bid up prices. As the supply of homes on the market increases, price increases slow and buyers gain negotiating power.

The recent rise in inventories follows a prolonged housing boom during which strong demand and low mortgage rates triggered bidding wars and fueled double-digit price gains in many markets. But those days appear to be over. The National Association of Realtors said that it expects sales of existing homes to fall by 4.7% this year to 6.74 million and median home prices to rise an average of 5%, down from 12.7% last year.

Some analysts are more pessimistic. In a joint forecast issued last month, housing analytics firm Fiserv CSW, a unit of Fiserv Inc., and economic forecaster Moody's Economy.com, a unit of Moody's Corp., called for home prices to increase by an average of 1.5% this year.
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• A Web Site for Real-Estate Voyeurs


With the number of listings rising and the pace of sales slowing, there is now a 5.1-month supply of existing homes on the market, based on the current rate of sales, according to the National Association of Realtors, compared with a record low of 3.8 months in January 2005. Historically, a 5.5-to-six-month supply has been considered a balanced market, says NAR Chief Economist David Lereah. But with the Internet making shopping for a home easier, he says, it is no longer clear just what a balanced market is.

Another uncertainty: how much of the increase in inventories is due to speculators looking to sell, and whether they will be more willing to cut prices as the market cools. Investors accounted for 9.5% of mortgages to buy homes through October, but their share of purchases peaked during the first half of the year, according to LoanPerformance, a unit of First American Corp. Brokers in markets such as Phoenix and South Florida say they've seen an increase in investor-owned properties for sale.

The sharp rise in inventories isn't universal. In Seattle, inventories have declined modestly over the past 12 months as a robust job market sustains demand. The supply is so tight, "I don't know if it can get any lower," says Michael Skahen, owner of Lake & Co., a Seattle brokerage firm.

In Dallas, inventory has edged up slightly, but the pace of sales is up. "The buzz around my office is that everybody is busy now," says Steve Hendry of Re/Max Associates of Dallas. "Our economy seems to be picking up considerably. It's just night and day compared to what was going on this time last year."

Still, the pinch is being felt in many corners of the housing market. The number of completed new homes currently on the market has risen nearly 40% over the past year, according to Hanley Wood Market Intelligence in Costa Mesa, Calif., a market research and consulting firm. The shift has been particularly noticeable where inventories had been thin: In central California, the inventory of new homes climbed to 238 in the fourth quarter, from just 26 a year earlier, an increase of more than 800%.

As orders slow, builders are engaged in heavy discounting and promotional activity, particularly among homes for the second-time, move-up and luxury buyer. A survey conducted last month by the National Association of Home Builders found that 64% of builders are now using incentives such as offers to pay closing costs and free upgrades; 19% are cutting prices.

Last week Standard Pacific Corp., a major builder, said that new orders, excluding acquisitions, fell about 20% in the fourth quarter compared with the same period a year earlier. Lennar Corp., another builder, recently offered discounts of $20,000 to $30,000, plus help with closing costs and bonuses to brokers, on selected homes in the Tampa area.

Robert Toll, Toll Brothers' chairman and chief executive, indicated that slowing orders appeared to reflect three trends. First of all, speculators, who buy homes as investments hoping to flip them later at a hefty profit, are getting out of the market and canceling contracts. Toll said it also is constrained by long delivery times in many communities. During the first quarter, delivery times have increased to 11 months or more -- before the maximum was 11 months. Buyers are reluctant to commit to such a long delivery time when the future of the market is uncertain. Toll also has a big exposure to Washington, D.C., New Jersey, Phoenix and California -- markets that appear to slowing more rapidly than some others.

The supply of unoccupied condominiums is also climbing in many areas. In New York's Westchester County, the number of condos on the market jumped to 617 at the end of 2005 from 397 a year earlier. In the Boston area, the number of condos listed at the end of January was 5,114, up from 2,876 a year earlier. In the Washington, D.C., metro area, new-home inventory climbed by more than 900% to 2, 413 in the fourth quarter over the same period a year earlier, largely because of the completion of several condo projects, according to Hanley Wood.
[Rising Inventories]

 

Hey Lee--where in West Va? And where will the people work that buy them?

Gee, they won't drive through any of OUR roads, will they?

Barbara Munsey, from South Riding.

 

Simple extend the toll rd as a true parkway as in (GW parkway) to west Va.

People are already commuting 90 miles each way. Drive out 9 and 7 during any rush hour already overloaded.


Lee J Buividas

 

http://www.zillow.com/

 

sweet site!

 

zillow was more accurate for sales last summer in this area. I feel the spring and summer are going to tell how far down we will go compared to 2005.

 

hopefully not by much... I'd like to try and cash out while I'm still ahead!

 

Eventually these people will have kids and want homes. This market is far from dead b/c the reasons why it is hot still remain. DC is proped by Gov/Mil and Tech. Defense is here to stay, even if the bases move, contractors wills till be here b/c business development needs to be close to the source. As the space between here and DC fills so will our values of our property. People will pay not to commute for 2+ hrs from WVA just as they pay for the 5 minutes they gain by using the Greedway.

 

Lee, I don't disagree that the Greenway should be extended in parkway fashion out Rte 9 to meet up with improved rte 9 in WVa.

However, Hillsboro is doing "traffic calming", and nobody wants a bypass out there--they want everyone to stop at the Loudoun border and either travel south to 66, or north into MD.

Did you know that a few years ago, when WVa voted to 4-lane their portion of rte 9 to the Loudoun border, and build a new bridge across the Shenandoah to handle it, the PEC sued the state of West Virginia for the "irreparable damage...historic village...pristine river...blah blah waah waah..."? Look it up.

You want rte 9 incorporated into a countywide east-west pkwy? Go for it! I agree.

And I want to watch!!! mwahahahahahahahahahahaha


Barbara Munsey, from South Riding.

 

That zillow site must be a bit off. It shows my house at $870,000. I'd be lucky to get $800,000 for it. It probably was about $850,000 during the height of the boom last spring.It also shows my next door neighbor, who paid $125,000 more than me, at $857,000.
Given that I paid less than $400,000 for it six years ago, it's hard to complain about our "cold" market right now!!

 

Yeah, I wouldn't put too much stock in that website. It shows my house in Marietta, GA at about $138k, and the others in my neighborhood in the $130-140k range.

I paid $435k for mine in September, and another one up the street from me sold for $485k a couple of months ago.

Just a bit off, I'd say...

 

This is old news – it would have been more relevant last August or September. The housing market has not changed since then. The WSJ article does not say that housing prices are falling – just demand is coming back down to historically "normal" levels. As a result, prices are leveling off.

With the exception of investors who took delivery in the 4th quarter of last year and had to "flip" before the first payment was due, almost no one in Loudoun County has taken a loss on the sale of a house.

Appreciation on houses will be around 5% for the next few years. The article says the worst case would be 1.5% appreciation. It’s still a gain.

There is still strong demand for housing – especially in the DC suburbs. The economic climate is nothing like the early nineties when this area experienced a downturn in house prices. However, anytime there is a change, there will always be people who shout that the "sky is falling".

This is normal and healthy.

 

Actually builders are discounting heavily. Centex made national news several weeks ago about how few takers there were in the dc area for their discounted homes.

There is not going to be appreciation over the next few years and as far as sales just ask the people who are trying to sell their homes and see what they say you will find a very different story from what real estate people say. real estate people must give a optimistic picture or the little business they are having as far as sells NOT listings would dry up further. Real estate agents are don't tell the real picture, and just like the investors that drove up home prices unrealistically most will be gone soon as most real estate agents that jumped on the band wagon this last couple of years and the real pros will get back to business of building and selling at realistic prices. I am not shouting the sky is falling just have been through 5 downturns in the building business here and in texas and in california and everytime time what goes up also goes down. Without appreciation most cannot afford or will not buy a new home and no one evers talks about this in the real estate or building business. I doubt many here will buy a new home unless they have too such as a relocation or needs more space. My prediction prices are going down down over the next several years. Employment will not go up much and when we get a new president that will slow the spending on this horrible situation in Iraq and and take control of this runaway homeland security dept that issues scare propaganda and does little to improve our saftey except waste money on james bond type projects and gimmicks which will come to the public eye in the next couple of years of the billions in waste that we the taxpayers have paid for. Most foolishly. Yep I take that back the sky has and is falling and one who does not take heed will be hit in the head. Housing should not be a major profit center in ones life if you expect your home to keeping going up into the stratosphere. If you do that you might as go to Vegas and roll the dice.

Lee J Buividas

 

Quick, hide the link to this website (flynnflame where are you when we need you) The next thing we'll know is that the county assessment office is going to start using this site to establish our assessments.

 

I work on the 'james bond projects' They are well funded for many many years. Tech gorwth is not stopping any time soon even if a new President shifts priorities.

And housing prices in places similiar to dc such as Boston, San Diego and San Francisco are still through roof, almost a decade since the boom and 5 years after the bust. I really don't see houses going down much more. It may take longer to sell, but they will eventually. Even these 480k+ Miller And Smith townhouses are selling for what they are asking give or take a few k.

 

Lee,

I appreciate your opinion, but I disagree. You cite Centex as an example of falling house prices, but I see a different outlook:

Centex says demand slowing, but sees record net in 2006, 2007
http://www.marketwatch.com/news/sto...C-474F-AD70-4F7A3C73493B}&siteid=google&dist=

From the article:

More quotes from the article:

What is happening now with house appreciation and time on market is exactly how it was 5-7 years ago. Everyone has become accustomed to doubling their money every 2 years and being able to sell their house in 1 day. People just need to check their expectations. This is not a bubble.

 

Lee, what exactly is your agenda here with the impending real estate train wreck? You looking to buy more real estate on the cheap? Why are you whining about real estate values and taxes when your $1,086,000. home is being assessed at $858,000.? Your home could lose a quarter million dollars in value and your taxes wouldn't theoretically change. As I've said before, you need to get yourself a new crystal ball (or your prognosticating "friends in the business" who haven't a clue), this isn't the Texas market from the 80's. By the way, Centex sold 143 homes in 12 hours with their "incentive", none of which came close to a $100k discount.

 

Robert Toll was on the Neil Cavuto show last fall and predicted a robust 2006 and shortly after retracted what he said. Toll also said what he says affects the price of his stock tremendously. That said builders are the most optimistic bunch out there except perhaps for realtors. I personally don't put much stock which either group says publicly.


As far as what a home is worth, it is only worth what someone will pay for it, not what some chart or website says.

I have not seen any proof that centex sold anything except what they have said which is meaningless until they close. Also how many of these fantasy sales are real, To me a sold home is only sold when it closes.

Nope I have no agenda here and if you want to see some fireworks you should see what some of my colleague's say about my predictions on the professional forums.

Lee J Buividas

 

Bingo, Lee! A home is worth what someone will pay for it!

Supply and demand! THE MARKET!

Limit supply in the face of demand and prices go up! Keep limiting in the face of continuing demand and they stay up!

You've got it!

Which could explain not necessarily any agenda of Lee's, but certainly does clarify a bit of "smart" growth's.

Barbara Munsey, from South Riding.

 

Real estate is not an exact science, all news stories to the contrary. But it is Economics 101. I've always said, "Welcome to Loudoun County. What a wonderful place to work in....we just don't want you to live here." What does that do to real estate prices?