Jan 2008 real estate data -- Fairfax County prices down 13% since last year (luxury)

[vanyali]

OK, I misread that post. But the whole issue of what the numbers mean is still valid.

[Fern435]

Existing home prices in our former "highly sought after" neighborhood along the Potomac River have fallen over $150,000 since we first rented there three years ago. We now rent in West Springfield. Listing prices for existing single family homes here have dropped to around $400,000. In both areas, many homes have been sitting on the market for several months.

List prices for new construction may be rising, but there doesn't seem to be much demand for them.

It has been interesting to move here at the height of the housing bubble and observe the changes in people's behavior as the housing market declines.

[mojo_1979]

Am I being censored for being bearish about the Northern VA economy? My last post is now gone....

[spidercharm]

So folks...I am planning to wait before I plan purchasing home in NOVA until I see prices back to 2000 level (I consider it should be inflation adjusted..which probably puts it at 2001-2002 level...it's been crazy appreciation...wasn't it?)

Granted, prices have to fall by about 30-35% more from current level to come back to what I call "sanity". Now, my questions are:

1) Is 2000 price point good enough or should it go lower?
2) How long would it be before this happens?

[saganista]

Originally Posted by mojo_1979

Wow! Now you've really lost all your credibility! Have you been to any new communities lately? Builders are desperate for any traffic that comes through the door. Upgrades are getting thrown in for free, base prices have dropped significantly. For you to say that median prices of new homes is rising is just pure fiction.

Did you miss the part about how volume has been falling precipitously? The facts are that the median value of a new SFH sold in Fairfax County in 2005 was around $805K. In 2006, it was around $935K. In 2007, it was around $1,000K. Serious analysts do not simply try to erase the data that do not fit easily into their hypotheses.

Originally Posted by mojo_1979

You, my friend, are beyond help. Let us summarize shall we. You think house prices are rising...

I haven't said anything about what I think "house prices" are doing. I have corrected various misconceptions and pointed out what should have been obvious flaws in various analyses. Flaws and misconceptions contribute to the level of mumbo-jumbo. People should not rely on mumbo-jumbo.

Originally Posted by mojo_1979

You state that inflation is not out of control even though oil is at record prices ($102+ per barrel), gold is at record highs ($975 per ounce as we speak), and silver is going through the roof (just below $20 an ounce). Actually, all commodities are skyrocketing. Look at wheat (up 160% in one year), soybeans (up 90% in one year), etc. The list goes on and on. The dollar is at an all-time low against the Swiss Franc, an all-time low against the Australian Dollar, an all-time low against the New Zealand Dollar and yes, its at an all-time low against the Euro as well. The US Dollar is at a 6-year low against the Japanese Yen and heading south. The Producer Price Index (PPI) just posted the largest increase in 27 years!!! WAKE UP!!! What planet are you living on?

I live on this planet, and unlike some here, I prefer to keep my feet on the ground while doing so. People who have access to a great deal more data than you do and who have a far better understanding of mathematics and statistics than what you have evidenced here are regularly involved in calculating inflation as measured by the CPI(U). When their results do not conform to your hypotheses, you again want to classify those as fiction. You'll need to do better than that if you wish to have credibility among any serious audience.

Originally Posted by mojo_1979

You actually believe Ben Bernanke, the Chariman of the Federal Reserve, when he says that "inflation expectations are well anchored"? You have blinders on my friend. I suggest the following short video for you... atleast one member of Congress "gets it":

A choice between yourself and Chairman Bernanke will not be a difficult one to make. Congressman Paul is meanwhile a little unhinged. If the process of "getting it" requires becoming a little unhinged (and we seem to have accumulating evidence that it does), then I think I'll take a pass on that, thank you.

[saganista]

Originally Posted by walkingnoelle

Existing home prices in our former "highly sought after" neighborhood along the Potomac River have fallen over $150,000 since we first rented there three years ago. We now rent in West Springfield. Listing prices for existing single family homes here have dropped to around $400,000. In both areas, many homes have been sitting on the market for several months.

The median sales price of existing SFH's in Fairfax County has been about flat over the past two years. About $615K in 2005, about $625K in 2006, and about $618K in 2007. Neighborhood-by-neighborhood data may of course diverge significantly from the county-wide trends. It's a big county.

Originally Posted by walkingnoelle

List prices for new construction may be rising, but there doesn't seem to be much demand for them.

It's the median sales price for new SFH's that has been rising, and it's entirely possible that actual demand for SFH's has not materially changed, while the number of units actually being sold -- an event that is necessary for a unit's inclusion in the samples being considered here -- is being depressed by the currently restricted access to credit. There are obvious linkages between the two, but it remains the case that the real estate and credit markets are separate entities, a fact that sometimes fails to come to people's attention.

[saganista]

Originally Posted by spidercharm

So folks...I am planning to wait before I plan purchasing home in NOVA until I see prices back to 2000 level (I consider it should be inflation adjusted..which probably puts it at 2001-2002 level...it's been crazy appreciation...wasn't it?) Granted, prices have to fall by about 30-35% more from current level to come back to what I call "sanity". Now, my questions are:
1) Is 2000 price point good enough or should it go lower?
2) How long would it be before this happens?

Just to provide a point of reference, the median sales price for an existing SFH in Fairfax County in 2000 was about $290K. For a new SFH, it was about $500K. Adjusted for inflation through January 2008, those numbers would be about $365K for an existing SFH and about $630K for a new SFH. Your wait could be a long one, but still, there's a lot to like about apartment life...

[vanyali]

Originally Posted by spidercharm

So folks...I am planning to wait before I plan purchasing home in NOVA until I see prices back to 2000 level (I consider it should be inflation adjusted..which probably puts it at 2001-2002 level...it's been crazy appreciation...wasn't it?)

Granted, prices have to fall by about 30-35% more from current level to come back to what I call "sanity". Now, my questions are:

1) Is 2000 price point good enough or should it go lower?
2) How long would it be before this happens?

You might be surprised how much of a difference inflation-adjusting will make in the nominal price of a house. Our currency is in the gutter, which means prices are going way up. A lot of people (experts, not just tinfoil-hat types) argue that the official CPI numbers nowadays greatly understate inflation, but even the official CPI is running over 4% right now.

But let's say that inflation is averaging about 5%/year over the period.

A house that cost $300k in 2000, with no actual appreciation (just inflation), would cost $443,000 this year, and almost $489,000 by 2010.

The numbers would of course be different if you make a different assumption about inflation, but the idea is the same. So "going back to 2000 prices" doesn't really mean you'd see anything in the $300k range again for that same house.

That being said, I wouldn't be surprised if prices dipped below their "equilibrium" price before coming back up because people are particularly afraid of buying (and can't get credit) right now, but prices have to eventually even out. I think that your prediction of a further 35% drop is too much across the board. That might happen in some outlying areas (Manassas, etc) though those areas have already seen huge price drops. 35% on top of what they've already seen would be huge. Maybe it'll happen that way, but I don't think it's a sure thing.

[mojo_1979]

Originally Posted by saganista

I live on this planet, and unlike some here, I prefer to keep my feet on the ground while doing so. People who have access to a great deal more data than you do and who have a far better understanding of mathematics and statistics than what you have evidenced here are regularly involved in calculating inflation as measured by the CPI(U). When their results do not conform to your hypotheses, you again want to classify those as fiction. You'll need to do better than that if you wish to have credibility among any serious audience.

Once again, you have completely ignored the facts that I have presented and decided to go off on an unrelated rant. Would you like to address the facts stated about commodity inflation and then explain to me how this reflects low inflation?

Oh and one more thing, don't be so sure that there are many people that "have a far better understanding of mathematics and statistics" than I do... My Ph.D., from a very well respected University, says otherwise.

[mojo_1979]

Originally Posted by saganista

Did you miss the part about how volume has been falling precipitously? The facts are that the median value of a new SFH sold in Fairfax County in 2005 was around $805K. In 2006, it was around $935K. In 2007, it was around $1,000K. Serious analysts do not simply try to erase the data that do not fit easily into their hypotheses.

Would you care to cite your sources on these statistics?