U r b a n T r e k k e r

At a Glance: Vienna

Vienna is unique because it has two metro stops (Dunn Loring and Vienna), there's the Town of Vienna and there's the rest of it (including Merrifield). In April of 2009, Fairfax Board of Supervisors created a Community Development Authority for the proposed Mosaic-Merrifield development. This Merrifield redevelopment deserves a revisit.

 Here's a little bit of history for Vienna, via Wiki.

The town was originally called Ayr Hill, after the name of the house built by early settler John Hunter, who named it after the place of his birth, Ayr, in Scotland. The name of the town was changed in the 1850s, when a doctor named William Hendrick offered to move there if the town would rename itself after his hometown, Vienna, New York.^[5]

The three zip codes for Vienna are 22180, 22181 and 22182. Below is comps for the three zips for the month of May.

Vienna

Zip code: 22180                               2009                           2008                 %

Ave. sales  price                                $520,835                 $566,265        -8.02%

Median sales price                           $450,000                $529,950        -15.09%

Total units sold                                         23                              26                 -11.54%

Days on market                                       134                             68               

Ave. list price for solds                 $560,661                  $611,798       -8.36%

Zip code: 22181

Ave. sales price                                $554,367                 $603,329      -8.12%

Median sales price                          $557,500                 $572,500     -2.62%

Total units sold                                       24                               24      

Days on market                                      75                               58

Ave. list price for solds                $587,321                   $632,396     -7.31%

Zip code: 22182

Ave. sales price                               $672,560                  $846,776     -20.57%

Median sales price                         $629,000                  $795,000    -20.88%

Days on market                                     25                                17

Ave. list price for solds                $716,189                   $920,553     -22.2%

Clearly data shows the higher priced market got hit the hardest. That is, zip code 22182.  Like any other hoods in the Metro DC area, Vienna is not immune to foreclosures, short-sales - because in some pockets - you can still find distressed homes in the $200's range.

More info on Vienna's demographic, population, education, etc. here and here..

data: MRIS

Builders Sentiment Hits 7 Mo. High

Builders sentiment index rises to 16 in May, according to Market Watch. Low interest rates and re-emergence of first time buyers help pushed the index to its 7 month high (after Lehman collapsed).

The NAHB-Wells Fargo index rose to 16 in May from 14 in April on a scale of zero to 100. It's the highest since the 17 recorded in September. The index got as low as 6 in January. Before the current housing meltdown, the index had never gotten below 20 in its 24-year history. It peaked at 72 nearly four years ago.

At 16, the index shows that about one in six builders thinks the market for new homes is "good." The industry trade group received 733 responses to its survey in May.

Builders are still have to clean up their inventories, however, they're more hopeful. Low interest rates, affordable home prices, the $8,000 tax credits and ample supply (in some pockets) should help fuel more sales.  The latest news on the $8,000 credit is that buyers can use the credit as part of downpayment for your FHA loans. 

Oh, by the way, builders are (also) sweetening the deals to help the sales by offering low, low interest rates (and other incentives). 

Full story here and here.

Carpeted Wonderland to Eco-Friendly Bathroom Makeover

Jumbo Defaults Rise Fast: Bloomberg

Now the financial crisis has spread out evenly from the poorest to the wealthiest, via Bloomberg.

About 2.57 percent of prime borrowers who took out jumbo loans last year were at least 60 days delinquent, a percentage reached within 10 months and the fastest since at least 1992, according to LPS Applied Analytics, a mortgage data service in Jacksonville, Florida. That’s almost twice as quickly as 2007 and a level 2006 owners haven’t attained after almost three years.
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“The biggest influence in rising delinquencies is related squarely to the economy rather than poor underwriting,” said Keith Gumbinger, vice president of HSH Associates, a Pompton Plains, New Jersey-based mortgage research firm. “We are apparently all suffering to some degree. It’s certainly more severe for some but still, it’s pretty much widespread.”

It's the economy that caused prime borrowers to be late on payments, "not" the underwriting. While subprime loan defaults is because of 'poor' underwriting primarily. Interesting.

So far we haven't seen too many short sale or foreclosure in pricey hoods around DC region. But, you never know..

Read full story here.

867+ Ac. Foreclosed Builders Lot En Route to Auction

Three developments got foreclosed, victims of the falling market. These are large tracts of (residential) land development getting ready to be auctioned. It has more than 867 acres, combined. The three communities listed on Tranzon's website are located in Loudoun County.

One of the communities, supposedly was built with the thought of building an equestrian homes (read: luxury homes), where home build sits on site of around 10 acres. This community was part of Mitchell and Best's Fieldstone Farm portfolio. Homes were sold from the low-$1 million, which in 2005 'already pricey.'

This was then.

Via Washington Spaces.

Tucked along the hillside off Snickersville Turnpike in Purcellville, the Fieldstone Farm manor house and outbuildings hint at the history of a place with stone exteriors and walls, hand-hewn boards, and rustic red colors that say this is a country setting. Now the scenic surroundings include Mitchell & Best’s equestrian homes, a total of more than 80 when the community is complete, on homesites averaging 10 acres. It’s a setting that makes one forget about everything but that moment in time.

En route to auction this week.

Then there is this one: 11 finished single family lots at Eagle Creek part of Equity Homes. Then was marketed from the $600's.

The third one is Mosby Ridge with approx. 163 acres sits on three adjacent tracts.

Some people out there with 'slush funds' may snatch good deals here. I say may, okay. Because who knows what the reserve prices are. Whoever interested in these foreclosed tracts should come ready and prepared. Read the terms and conditions i.e. 10% buyer's premium (who says buying auction is cheaper?), auction co. only accepts cash or certified checks (no credit cards), and 30-45 days closing.

Metro DC Market Norms Will Return 2009-2010: CRA

Cardinal Bank and George Mason University held its 17th annual economic conference yesterday. Reading through the 'Washington Housing Market and Outlook' presentation by John McClain (that is loaded with stats), a Senior Fellow and Deputy Director of Center for Regional Analysis - GMU, breaks down the three underlying indicators in housing to watch for:

1. Supply and inventory
2. Prices
3. Foreclosures

You think resale (of existing homes) market is bad. Wait till you see the numbers from new homes.

When it comes to the reality of supply vs. inventory in this region: in December 2008, the number of listings was around 40-45,000 units while home sales barely hit 5,000 units or approx. only 10% of total listings were sold. Now, you see why we have overhang of supply in the market.

This overhang of supply put further pressure on prices. Sellers: please take note of that. Forget the high-flying returns you see at the peak of the market. Since then, it has come down to earth. Just look at the 10 year ave. return (1999 to 2008), the average home prices in our region have increased on average by 8%, which is not bad. Case in point. From an investment perspective, using "Rule 72" (financial Pros uses rule 72 to see how long will it take for your money to double!), the property you bought in 1999 when ave. sales was $197,500 - 10 years later was valued at $394,700 - or, doubled the price you paid. That's a pretty good return right there. Unless, of course, somewhere along the way - you took cash-out refi, which would have affected your bottom line. Gain or no gain at all.

Some interesting 2008 stats (the rear-view mirror):

• NEW HOMES. On a 10 year average, the number of new homes sold was 18,500 units. In 2008, new homes sold 6,400 units, the lowest level in 10 years - which was half of the previous year's volume!
• Meanwhile, new building permits drop to the lowest level since 1999 from a 10-year ave. of 33,000 to 14,000 new permits. At the peak of the market in 2005, building permits reached new high of 45,000 new building permits were issued. As you can see from the numbers sales vs. inventory, overbuilding was the reason new homes market in the tank. (Interestingly, NAHB person blames that supply was high because of "foreclosures" and not overbuilding)

 

• RESALE. Since 1999, resale average sales volume was 86,800 units. This year, the number of units sold was 57,000 - which was also the lowest level in 10 year stretch. The biggest drop in number of units sold happened somewhere between 2005 to 2006. In 2007 sales was a slightly better than 2008 in terms of quantity. Over 60,000 units were sold that year.
• AVE. PRICE. Ave. sales price single family home DC metro in 2008: $466,500 (-16% from peak). 2004 ave. price was $449,200.
• Ave. sales price of townhouse: $320,900 (-21.6%). At this price, it is slightly below the 2004 level of $323,200.
• Ave. sales price of condominium: $310,800 (-8%). 2004 ave. sales price was $263,200.
• NVAR market (Arlington, Alexandria and Fairfax) sales: 61 percent of the total homes sold last year in this market, was homes under $400,000! The last time we saw Northern Virginia sold more homes under $400k - was in 2003. (This is an 'eye' opener..)

• FORECLOSURE. Looking at the ratio of one filing for every 1o,000 owners, it's clear that 2008 was the record year. The number of foreclosures grew 6 times in '08 at a clip of 120 filings per 10,000 home owners, in comparison to 'under' 2o foreclosures/10k owners in 2006.
• Prince William county is definitely 'the ground zero of foreclosures' in metro DC with close to 800 filings for every 10,000 owners (this numbers eclipsed other jurisdictions).

THE FORECAST. Here's his outlook for DC in 2009, via CRA:

• Supply and inventory: all indicators pointing to positive direction, it will take some time to work through.
• Prices: market norms will return depending on geographic areas. In close in areas its either now or soon. Beltway areas mid-late 2009 and outer jurisdictions well into 2010.
• Foreclosures: subprime part of the problem is ending soon. However, Alt A and Option ARM is looming needs to be addressed. There is still time.

There's a lot of truth in his forecast above that said "depending on geo areas" or, in layman's term pockets of neighborhoods esp. where home prices dip below 2003 level, turnaround may be near. Foreclosure is partly to blame. Because it drags down home prices, especially where conventional sale are in competition with foreclosure. And by positioning it low, foreclosure holds the trump card. (I am surprised he doesn''t talk about short-sale at all, because in some hoods there are more short-sale listings than foreclosures). So when you see inventory of foreclosures disappear, you can be sure that prices about to pick up again.

From the trenches: we've seen that in some pockets signs of a come back maybe near. This is the case where multiple contracts become the norm.

If you want to buy but still on-the-fence, take a look at the prices from this chart below. Prices in the red: it's opportunity. 

There could never be a better time, than now..

For the full presentation, you can view it here. 

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Source: Center for Regional Analysis

A Constant Reminder..

Read this story a few days ago, it is a few months old. However, it's still true to this day. The notion that you've got to pay attention to the builder's financial health. That's because builders of all stripes faced with the potential of cash flow gaps.. especially in this market. A few small builders in our area  have folded their tents. Drop in the Big Builder's Online occasionally just to check the lineup. It's very unfortunate.

Here is a message that 'really hits home': When builder folds it takes with it not only an 'unfinished home' but also your deposit.

From Washington Post.

Jane Hwang spent $120,000 and devoted five years waiting for her perfect custom home. Then in one brief phone call, she learned she might lose it all. The builder, Seville Homes, couldn't pay its bills, and its bank was seizing Hwang's nearly completed house.

Scared of losing her investment, Hwang pounced into action. She went to the auction on the Fairfax County courthouse steps and outbid a bank for the house.

"For five years I have been fixated on this place," said Hwang, a real estate agent. "I planned my retirement, I put all my life in there. I had to grab that house.

The poor woman not only had to buy her "own" house at an auction but also had to spend extra money (to fix property related problems) than she'd originally intended! I don't understand how the builder could get away using deposits to fund its business operations instead of using it to build homes. Don't get it. Is it because builder uses its own-customized-sales-contract?

This is a big problem in new home is when a builder goes under. How do you protect yourself - before and after the delivery (like dealing with warranty)?

So, protect yourself and have your ammo ready, just in case..

Wash DC Region Top 10 Deals in 2008

According to MRIS data, these are "Top 10 Deals" in 2008 for DC region that includes DC, MD and Virginia.

1. 1607 28th Street NW, DC 20007. A single home in Georgetown, listed for $14,500,000 and close price was $11,500,000.
2. 36987 Mountville Road, Middleburg, VA 20117. A 327 acre estate with 11 stall courtyard barn listed for $14,0o0,000 and close price was $14 mil.
3. 9212 Harrington Dr. Potomac, MD 20854. A 25,000 s.f. custom home in Bradley Farms that was listed for $12,500,000 and sold for $10,000,000.
4. 1100 Crest La., McLean, VA 22101. A 3.64 acre of waterfront property listed for $11,000,000 and sold for exactly the asking price.
5. 3041 Whitehaven St. NW, DC 20008. Paul Mellon's former residence out in Observatory Circle hood (around where Joe Biden official residence will be). Listed for $10,000,000 and sold for $9,550,000. 
6. 3006 Albermarle St. NW, DC 20008. 1.35 acre of an estate out in Forest Hills hood. Listed for $7,595,000 and sold for $6,700,000.
7. 3154 Highland Pl. NW, DC 20008. Most possibly the largest remaining parcel (agent's remarks) in Cleveland Park hood. Listed for $7,500,000 and sold for $5,600,000.
8. 3259 R St. NW, DC 20007. An 1850's Victorian estate in Georgetown. Listed for $7,400,000 and sold for $6,500,000.
9. 3100 Woodland Dr. NW, DC 20008. Home built in 1924 and was restored completely, agent says, by Abdo over the past 2 years. Listed for $6,995,000 and sold for $6,000,000.
10. 5120 Wissioming Rd., Bethesda, MD 20816. A contemporary style home out in Glenn Echo Heights hood with view of Potomac River. Listed for $6,750,000 and sold for $6,600,000.

You think that falling prices didn't affect luxury market, since they probably would not feel the shift at all?  Uhm. Turns out to be that's not true. We checked the prices from MRIS. It shows that the median sales price went for 96.75% of list price. While the average price sales went for 96.04% of list price. Of course, somewhere in between there's some price "adjustments?"

In fact,  the property that was sold with the highest price (#1) even though data shows property stays on the market for "0 (zero)" day - the original price was $14,500,000 and sold for $11,500,000 - making it 20% less than what it was listed! Maybe negotiations went behind close doors before property put on the market..

And there's even a few deals sold for less than 30% asking! So much for falling prices not affecting the richiland.

Top Deals 2008

Publish at Scribd or explore others: Money/Wealth Business trends top 10

Lastly, while it's not common to see sellers' help in the form of subsidies for the upper-$3 mil market, there's few properties sold with sellers giving a helping hand ranges from the low-$4500 to the high $180,000.  Something isn't it?

FUN FACTS:

• Among the top 96 deals in 2008, DC and Virginia (No. Virginia that is) - are the most popular addresses for those searching luxury homes.
• Georgetown is the most popular address for the rich-and-famous (12 homes sold over $3M).
• Langley Forest in McLean comes in 2nd place (7 homes).
• Kalorama holds a 3rd place (6 homes).
• And Cleveland Park is 4th (5 homes).
• A condo at the Waterview in Rosslyn with approx. 4500 s.f. of living space sold for $5.3 mil - making it the most expensive penthouse sold in DC for 2008. Sure, the view from here is probably 'million dollars' view..

data: MRIS
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* Top 96 listings per MRIS (good only for 30 days)

Need Loan? No. We Pay Cash. (w/update)

- post pushed up (from yesterday) with update. -dewita

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Financial crisis may affect the buying trend of certain type of buyers, but certainly didn't do much for Washington DC's Richistan. A few of its denizens bought homes with cash. Look at the numbers from MRIS below.

Since October 1, there was a total of 17 transactions for homes above $2 million range in Northern Virginia, with sold prices range from $2.3 mil to $11 mil. Of these 17 sales, 6 of these deals were paid in cash. That means, more than 30% of sold homes above $2 mil were paid in cash! Million of dollars, that is. Cold cash. With lots of zeros after the 'first' number.

Over in DC, for the same period, there were 6 homes sold with price range from $2.5 million to $9.5 million. Of these 6 homes sold, 2 were paid cash. Or 30% of homes sold were paid in cash.

Interestingly, supposedly when you show the money: cash, these buyers should get a break, you think? That's what we think. But the reality is different. It turns out that they didn't get much that much break from sellers because sellers stay firm on their prices, after going through some adjustments in pricing, data shows. You know how sellers sets high expectations in pricing the house the very first time - only to see later on they have to drop the prices - to get them sold.

Uhm, it seems not much wheelings-and-dealings?

In comparison, the overall trends for October in Northern Virginia, cash transactions fed about 99 sales out of a total 1,457 homes or slightly under 7% of all sales. In DC, 58 sales were cash transactions of 414 homes or slightly under 15% of all sales. At the same time, the Feds quietly (armed with VA and FHA loans) has quickly become the 'new lender' in town with a total of 30% of sales in No.Va and 20% in DC.

As you can see it, cash rules in the Richistan..

Just wondering, going forward if cash still be the 'preferred' type of financing for the Richistans since the stock market is on a free falling..

*** UPDATE: On a related note, NYT has this piece about cash deals of a few of Obama related people, who decended in Washington DC recently.

image: WSJ

What Were They Thinking

THIS HOUSE is on the market for $1.395 million. Just shy of $1.4 mil. Wondering how to market this house and justify the price? For one. It sits on a tiny corner lot on Old Dominion Drive - a very busy street in McLean - connecting McLean and Arlington. It's a three level home with side garage.

Then. Look at the design.

For $1.4 mil. Just wondering... Who would want to buy this kind of house? The location is already bad enough - for resale. The lot. No comment. Add to it the not-so-attractive design.

Okay. You get the picture.

Check out the COMPS here. Other new homes on the market in McLean for the same price  range. (link only good for 30 days)

The two homes around my hood. The first one was a rebuilt (not a complete tear down) from this old house. (link to old post). Originally listed for $1.44 mil. Since no bite at that price, they drop it to $1.295 mil.

This one is a tear down. Built from the ground up.

List price: $1.475 mil.

Same thing: What were these guys' thinking? Granted that there is 'no' new homes in the price range. Uhm, maybe that's what went inside those builders' mind.

The thing is..with jumbo loans 30-year fixed rates hovering in the 9+ percent (BTW, Wells Fargo today's rate is at 9.4% APR)! - the challenge for prospective buyers (if they want to have first trust to stay under $729k 2008 FHA limit) - is to come up with $700,000 down payment or, 50% of sales price.

In this environment? That's quite a stretch.