Katie Wethman, CPA, MBA, REALTOR® - Northern Virginia & DC Real Estate

Zip Code 22201 (includes Ballston, Virginia Square, Clarendon)

Click here to see the previous North Arlington Condo Market Update

Learn more about me at http://www.katiewethman.com or read my blog at http://katiewethman.blogspot.com

Source: MRIS data as of 2/24/2008. All data deemed reliable but not guaranteed.

What is the State of the Housing Market? Please choose the best answer.

The National Association of REALTORS® statistics captures the median value of home transactions that come from all of the Multiple Listing Services nationwide. They cover all home sales at all price points, and release data in a relatively timely manner.

OFHEO, the government agency that works with Fannie Mae and Freddie Mac, also releases its quarterly analyses. They cover 287 markets, but because they are primarily concerned with the conforming loan market, the track only resales that meet that criteria (until recently, loans under $417,000. See my post on Conforming Loan Limits.) It also includes refinancings, which arguably have more generous appraisals. FYI, OFHEO does typically include an attempt at reconciling their numbers to Case Shiller. Because CS is a privately owned index, the exact methodology is impossible to duplicate.

Case-Shiller, which is probably the most widely quoted analysis, covers only 20 US markets BUT includes ALL price points and loan types-exotics, sub-prime, and limited documentation. Of course the 20 metro areas covered are very large ones, which typically have more expensive homes (anyone ever compare a 4BR colonial on an acre in North Arlington to a 4BR colonial on an acre in Cleveland?) It excludes 13 states completely and has limited information on 29 others-so incomplete or missing data from 42 states! It also weights transactions-a $700,000 home gets weighted twice as heavily in their index as a $350,000 home. But isn't a 10% decline a 10% decline, regardless of the baseline? Apparently not.

Dramatic headlines sell papers--remember all the 2004-2005 headlines screaming Buy! Buy, Before You're Priced Out Forever! Doesn't sound like a great idea in hindsight, does it?) While I'm definitely not saying that those in the industry can't spin stats better than a Maytag, I did find this little tidbit from the NAR pretty interesting:

"Another factor that rarely gets attention is that Dr. Shiller, a Yale professor, has a side business in Chicago. His index is used at the Chicago Mercantile Exchange for hedging housing futures values. The more hedging of bets that occur, the more profits go into Dr. Shiller's bank account. And more hedging of the bets will take place if people believe there will be a crash in housing values. So naturally he has a financial incentive to "scare" the market."

So what's a buyer to do? Whom to believe? First, understand the methodology and if one matches up with your situation, pay closer attention to that one. Are you in one CS's 20 markets and looking to use a no doc loan for a $600K home? CS may be the better measure for you. Are you looking to buy below $417,000? OFHEO may be a better report for you. Want the broadest measure possible? Use NAR. I find that with statistics, perception is reality, and no one calls a market bottom until it's months behind us, and in the meantime, life goes on. If you're buying a home, as opposed to an investment property, then do what's best for you, pick a time that works with your life, plan to stay there at least 3-5 years, and buy only what you can afford.

Read more: See my post from last year on Yes, the Market is Down 7% AND up 1%

Contact Katie Wethman, CPA, MBA, REALTOR® at (703) 847-3336 or via email to list your property for sale or to purchase a property in the Washington, DC, Arlington, Alexandria, Fairfax County, Fairfax City, or Falls Church City. I specialize in first time buyers.

Copyright © 2008 by Katie Wethman, All Rights Reserved.

Visit my website to find out more about my services or search the MLS for Arlington and Washington, DC, properties and read more on my blog.

One of the things that is frustrating to both clients and REALTORS is that we are prohibited from commenting on whether or not a neighborhood is "safe" due to Fair Housing Laws. (See article "What Realty Agents Won't Tell You.") The web, however, fills that void nicely with a variety of tools, and now there's a new one that looks very useful: CrimeReports.com. Just enter the address and the map populates with recent crime data, including police calls and arrests.

As this CNN article states, the site had its inspiration in a local Arlington County resident, and is not without its own controversy around privacy and other matters. Nonetheless, it's a valuable tool for buyers investigating potential neighborhoods.

It doesn't appear to have Virginia data yet (the site has a form where you can request the data from your local police department); DC and Montgomery County, MD, are already online.

************

Contact Katie Wethman, CPA, MBA, REALTOR® at (703) 847-3336 or via email to list your property for sale or to purchase a property in the Washington, DC, Arlington, Alexandria, Fairfax County, Fairfax City, or Falls Church City. I specialize in first time buyers.

Copyright © 2008 by Katie Wethman, All Rights Reserved.

Visit my website to find out more about my services or search the MLS for Arlington and Washington, DC, properties and read more on my blog.

Something interesting is going on in the Arlington condo market the last few months. Take a look at this pricing data:

This data represents just the 1 and 2 BR sold condo listings in 22201. Sales prices not including seller subsidies, which can be in the thousands of dollars. For purposes of this analysis I think we can assume that the amount is consistent though, so the argument is still the same...buyers and sellers have come to consensus on what the "fair" value is.) You'll notice that the list price and closing price are pretty close:

Does this signal that we've achieved some sort of balance in the condo market? This data does not represent the active listings that didn't find buyers, so of course there are still overpriced listings out there. But what this indicates to me, for this micro-market, is that (1) when a condo is priced fairly, a buyer will make an offer and (2) a successful offer will not be a lowball.

Now let's look at the trend over the last six months:

Here we see the close list-vs-close price trend, but we also see that 1BRs may be trending up, while 2BRs are still trending down. Very interesting...has the 1BR condo market stabilized? I'd argue that the lack of alternatives for this pool of buyers (i.e., renting as the only alternative) will drive a "recovery" at this price point first; whereas a 2BR buyer has the option of renting, choosing a 1BR at a lower price point, or even choosing a small townhouse at the same price point.

If the 1BR condo market is in fact stable, will this stabilization trend spread to the 2BR market and then further up the price point ladder? Or will the dropping 2BR market knock the 1BRs lower as new buyers wait it out, hoping to afford a 2BR soon?

A few things are clear from this graph though: 2BRs have a much quicker rate of change, at least in this six month period, so it's worth watching carefully if that's what you're looking to buy. And for the 1BR buyers, the trend may not be as bad as you think.

Contact Katie Wethman, CPA, MBA, REALTOR® at (703) 847-3336 or via email to list your property for sale or to purchase a property in the Washington, DC, Arlington, Alexandria, Fairfax County, Fairfax City, or Falls Church City. I specialize in first time buyers.

Copyright © 2008 by Katie Wethman, All Rights Reserved.

Visit my website to find out more about my services or search the MLS for Arlington and Washington, DC, properties and read more on my blog.