Not one home has sold in our neigborhood since July (Manassas: mortgage, house)

[ACWhite]

Originally Posted by claude henry smoot

Exactly - I'm trying to get the word out - people selling homes just aren't getting it! Very little fundamentally has changed here in NOVA in the past several years. Here's a comparison of median home prices vs. median household income in Fairfax County... (numbers pulled from various websites - I had to search for hours to find this info so if anyone has an "official" chart, please post it!)

Fairfax County
__ Median Household Income _ % increase __ Median House Value _ % increase
2000___$81,050_____________________________$209,00 0________________
2001___$83,180________________3%__________$238,000 ___________14%__
2002___$85,310________________3%__________$275,000 ___________16%__
2003___$80,753________________-5%_________$315,000___________15%__
2004___$88,133________________9%__________$385,000 ___________22%__
2005___$90,000________________2%__________$479,200 ___________24%__
2006___$100,300_______________11%_________$542,744 ___________13%__

Total Increase in Income: 24%
Total increase in House Value: 160%

We are NOT much richer than we were in 2000, folks. Certainly not rich enough to afford home prices as they are. That 160% increase in home prices was predominantly smoke and mirrors. The financial engineering that allowed everything to get out of whack has collapsed, and people need to understand their homes are simply not worth what their neighbor sold their home for in 2006.

I was looking at a townhome in Burke today - rather pedestrian place - listed at $389k. I checked the assessment on Fairfax's site - 2007 assessment was $389k. It was assessed at $239 in 2004. I just want to call this person up and say "WTH are you thinking?". This housing correction can take 1-2 years, or it can take a more painful 3-5 years. Given that most of the general public doesn't really understand what happened here, we unfortunately may be in for 3-5 year correction.

Interesting info, thank you! I went to an open house in a close-in suburb recently. Very pretty house, fully updated, but with significant flaws (such as a shared driveway and too close to a noisy highway, etc.). The assessed value is significantly less than $1.1 million. The current owners bought it from the developer mid-year 2006 for less than $1.2 million, and from appearances and their agent's description it didn't appear that they had done anything to it since buying. The asking price after about 6 months on the market: about $1.3 million, a bit lower than initial asking price. What are they smoking - do they not read the papers - even the close in suburbs haven't gone up 8-10% since mid - 2006? If they were transferred and have to sell during this time, selling costs and market value changes are their loss, not a buyer's. I know you'll be surprised that the house didn't sell.

[mojo_1979]

Originally Posted by Fairfax Mom

I live in a very desirable neighborhood in Fairfax and not one home has been sold or is currently under contract since JULY!! And the prices are at least 100k less than they were 2 years ago. We are in real trouble here.....

Prices are falling and nobody wants to catch the falling knife. People are asking themselves, "if I buy now will my house be $50k cheaper next year?"

Not to mention that a recession is MOST definitely in the cards for 2008. Of course you won't hear the media talk about this on television until after the fact (hey wait.. just like there was no bubble until there was one... hmmm).

Media will only report these events after the fact. You must think critically on your own.

[goldenmom7500]

And again, interest rates are also falling, and are presumed to decline further (along with the perception that prices will fall), so buying right now, at this exact moment, probably doesn't seem like a great idea to a lot of people.

[Novamom06]

Sorry, I for one think that the Dulles corridor is pretty close to bottom. I believe that as soon as the jumbo rates drop we should be out of the woods. The area is still growing - they are building a World Trade Center off Rt 7 by Rt 28 and businesses will start moving in in two years. The Loudoun County Supervisors just squashed a huge development that was planned for Leesburg with thousands of homes. Another one was squashed for west of South Riding. The incoming Board of Supervisors is VERY slow growth (housing growth). Notice all the posters on this board relocating to the area? It is a vibrant area with high paying jobs.

I think the jobs are continuing to come, the county is halting the aggressive home building, and I think this spring is going to be an interesting market...if the interest rates drop.

[claude henry smoot]

Originally Posted by goldenmom7500

Remember that interest rates have also been changing and therefore, someone could afford to buy a higher priced home a few years ago because of a lower monthly payment.

Good point - but I checked historical interest rates for reference... http://www.mortgage-x.com/general/historical_rates.asp And while I agree lower interest rates really helped inflate everything and lay the foundation for the bubble, rates during some of the biggest annual price increases held relatively steady.

For example, as prices increased 22% in 2004 and 24% in 2005, 30 year fixed interest rates held pretty steady, bouncing between ~5.5% and ~6.3%.

So in my opinion, interest rates played a big role in this mess, but prices never should have increased by 46% over 2 years while interest rates and income remained pretty much flat.

[goldenmom7500]

The two posts above have excellent points. We should also remember that buyers have never been very successful at timing markets (or interest rate changes). If the market is at bottom, buyers are probably not going to know it until it's too late.

[sheri257]

Originally Posted by mojo_1979

Not to mention that a recession is MOST definitely in the cards for 2008. Of course you won't hear the media talk about this on television until after the fact (hey wait.. just like there was no bubble until there was one... hmmm).

Media will only report these events after the fact. You must think critically on your own.

I certainly agree with this. In many cases, the exact opposite of what the media says is true ...

So ... when the media says the sky is falling and everything is absolutely horrible ... that's probably when we'll know we've reached bottom ... both with housing and stocks.

And ... that's when I'll start buying again.

[goldenmom7500]

Originally Posted by sheri257

I certainly agree with this. In many cases, the exact opposite of what the media says is true ...

So ... when the media says the sky is falling and everything is absolutely horrible ... that's probably when we'll know we've reached bottom ... both with housing and stocks.

And ... that's when I'll start buying again.

Right, they always say that when Newsweek featured the bull market on the cover around 2000, it was time to run ... it's a classic "indicator" of the end.

[saganista]

Originally Posted by claude henry smoot

Exactly - I'm trying to get the word out - people selling homes just aren't getting it! Very little fundamentally has changed here in NOVA in the past several years. Here's a comparison of median home prices vs. median household income in Fairfax County... (numbers pulled from various websites - I had to search for hours to find this info so if anyone has an "official" chart, please post it!)

I don't think the problem is with the numbers. It's just very simplistic to assume that there's any deterministic realtionship between median income and median home prices. Think of the situation where median income remains constant, while population increases faster than the housing stock. What would happen? There are also very large influences from such things as interest rates, lagged interest rates, gas prices, expected gas prices, the CPI, the stock market, decentralization of federal complexes, and a whole host of other things. In addition, it's entirely possible that the current situation has nothing to do with the housing market at all, but rather with sudden disruptions in the credit markets that housing depends on and a form of reverse-bubble mass hysteria. In any case, it is the fact in Fairfax County that even though on declining volume, the median price of new SFH's sold through August increased in 2007 over the same period in either 2005 or 2006, while the median price of an existing SFH was essentially flat across the period. It's all well and good to want to get the word out, but we might want to be sure that we understand what the word actually is before we start spreading it...

[Novamom06]

Originally Posted by saganista

I don't think the problem is with the numbers. It's just very simplistic to assume that there's any deterministic realtionship between median income and median home prices. Think of the situation where median income remains constant, while population increases faster than the housing stock. What would happen? There are also very large influences from such things as interest rates, lagged interest rates, gas prices, expected gas prices, the CPI, the stock market, decentralization of federal complexes, and a whole host of other things. In addition, it's entirely possible that the current situation has nothing to do with the housing market at all, but rather with sudden disruptions in the credit markets that housing depends on and a form of reverse-bubble mass hysteria. In any case, it is the fact in Fairfax County that even though on declining volume, the median price of new SFH's sold through August increased in 2007 over the same period in either 2005 or 2006, while the median price of an existing SFH was essentially flat across the period. It's all well and good to want to get the word out, but we might want to be sure that we understand what the word actually is before we start spreading it...

Great post!