01-07-2013 04:48 AM - edited 01-07-2013 06:55 AM
This is not what I was expecting during the holiday "bargain" season. What has been surprising to me is that so many properties that have been sitting on the market since Summer-Early Fall have suddenly gone under contract since Dec 23rd.
I am looking in the Vienna-Annandale-Fairfax-Oakton region. During the two days I have been out househunting (Dec 23rd and Dec 30th - both Saturdays) three of the six houses I was scheduled to visit went under contract on the same day. All had been on the market for more than 50 days. Beyond that, the number of houses that have flipped to pending since mid-December has been shockingly high. The very few properties that remain seem to all have very odd floorplans, septic systems/wells/oil heating systems AND are priced to a tee.
I was expecting this in NE Vienna, given the metro construction, but not south Annandale.
What am I missing? Fears of interest rate increases? Dramatically improved access to loans? The impact of HOT lane completion? I suspect it is more macro-driven since I am seeing similar activity in my Germantown neighborhood.
Insight much appreciated.
01-07-2013 08:59 PM
That sucks. i think the reason is principally pent-up demand in that area (not for nothing, but you're looking to buy in a super-desirable area). I don't think that things are going to change any time soon, including inventory. Good luck!
01-08-2013 11:57 AM - edited 01-08-2013 11:59 AM
I can't speak intelligently about the Annandale area but what Goldilocks said is 100% the case in Montgomery county. Very low inventory and lots of pent up demand has lead to the holiday bargain season not existing at all this year.
I am cautiosly optimistic about the spring and am hoping for a better balance of inventory but am not sure that it will materialize.
01-09-2013 05:12 AM - edited 01-09-2013 05:25 AM
Thanks for the replies. Good to know the buying pressure has been high in MoCo also, since I plan on selling there in the Spring.
I understand inventories have been tight for a couple of years now. My nagging question, though has been why so many houses listed last Summer and early Fall were suddenly snapped up in December. A few friends with underwater mortgages recently told me they had finally been able to refinance. I think this is the key. Here is the best I can come up with:
1 ) HARP was modified to allow Fannie and Freddie to allow homeowners to refinance with a LTV ratio of more than 125% as of November 1, 2012 - do I have the date right???
2) This has essentially killed off the foreclosure/short-sale offerings since so many homeowners are no longer forced to sell. The inventory drain has trickled up.
3) Existing homeowners who were thinking about selling are seeing recent sales prices begin to rise in their neighborhoods and are holding out for better opportunities to place their own homes on the market.
4) Speculative buying is also increasing, especially on the ultra-low rental properties - relative new condos and townhouses priced at $100-300,000 are virtually non-existent now in most neighborhoods. This is further pushing demand. I'm seeing a lot of flipping indicators in my searches also.
Unfortunately, I agree that inventory stocks will probably not improve much in the Spring, given that many potential sellers will try to hold out for better prices. In the unlikely event that sequestration happens, there may be a noticable impact one way or the other. Further speculation about the Fed easing their bond-bonding initiative may also fuel a panic buying scenario, as sideline buyers come to believe they must buy before its "too late".
Se la vie.
01-14-2013 09:44 AM
I think that there is another piece to this which is worth considering. Price in moderately to marginally appealing and priced areas fell hard, anywhere from 30% to 50% depending on what part of the area your are talking about. While prices have clearly risen from the lows of 2009 they are nowhere near their peak in these areas. The theories in your post totally apply here. Less distressed sales and yet many people are still in a position where selling would cause them to take a loss so they are either staying put or buying but renting the old property out.
In more desirable and higher priced areas (NW DC, Captial Hill, Arlington, Bethesda) prices didn't fall as hard, around 10% to 15% and are back to near peak. The issue here is that there isn't a lot of room to "move up" unless the new property is priced well over $1M to over $1.5M in some cases. The lack of a viable upgrade alternative is keeping inventory low in many of these areas.
01-23-2013 11:22 AM
Unfortunately I am all too familiar with the outlying vs. closer in dynamics. I am living in my second ex-burb property in Germantown, MD which is currently around 25% off peak. I previously lived in Gainsville, VA, where my old property bounced back better than this one.
In both areas the pace of development has been terrifying. The difference has been that Virginia actually took steps to update their roads (66 widening and several local road fixes) when they built out Gainsville, Haymarket, etc. They have been very efficient in building out the Silver Line and HOT lanes also.
Maryland and MoCo are simply insane - local government's priorities are completely out of whack. I have never seen such an accommodating population. Current homeowners should be screaming murder at the Gaithersburg West and White Flint development initiatives which comes on top of Crown Farm, countless developments in Germantown, and of course the brand new metropolis of tightly packed rows of McMansions in Clarksburg, MD. In exchange the only transit "improvements" I have seen are the underutilized and ridiculously expensive ICC (for which we pay $1.50/month for the privilage of using the transponder), and a widening of Montrose Road. In contrast, Virginia's proposed monthly $0.50 surcharge to the transponders was quickly shot down when the citizenry screamed.
The BRT is a nothing more than a sham to justify the mega development. I have read that MoCo used a similar gimmick to justify the KingsFarm project and ended up just adding another Ride On line. The state and county are too financially strapped to apply necessary fixes - HOT lanes on the northern Beltway, Red Line, etc.
I'll give Ike credit for announcing major projects will be delayed to further clean up the budget mess, but steps need to be taken to slow the housing development in the meantime.
Sorry for the rant, and I know people tend to hate these MD vs VA posts. My daily drive into Tyson's by the Crown Farm development, which is moving at warp speed, doesn't help either.