Tuesday, September 30, 2008

S&P/Case-Shiller: July 2008 report is out

The S&P/Case-Shiller Home Price Indice report for July 2008 was released today. It "shows continued record declines and a continuation in the trend of double digit declines across many cities in the prices of existing single family homes across the United States."

Home prices continue to decline in the Washington, DC MSA [see the charts below]. Effectively, the DC area's home price index has fallen to slightly above that of August 2004. Our area's month/month rate of decline picked up a bit in July.

On a national level, the report states "for the three months of May thru [sic] July, home prices cumulatively fell about 2.2%; whereas for the three months of February thru [sic] April, and November 2007 thru [sic] January, the cumulative rates of decline were closer to 6.0-6.5%..." DC is experiencing the same market behavior: prices fell 2.9% during May-July, and for November-January and February-April, cumulative prices declines of 5.69-6.45%.

The charts below reflect home price data for the Washington, DC MSA.



Monday, September 29, 2008

An oldie but "goodie"

From January 2008:

In this posting from late 2006, I commented on an article in Fortune magazine entitled "Can the economy survive the housing bust?" Quoting the beginning of the November 2006 article:

Tucked away in the briefcase of Liz Ann Sonders, chief investment strategist at Charles Schwab & Co., is a chart so scary she's hesitant to show it to investors. It plots the National Association of Home Builders' Housing Market index - a monthly measure of builder confidence - against the Standard & Poor's 500 stock market index, with a one-year lag.

It turns out that the mood of builders is a terrific stock market bellwether: The correlation between current builder confidence and future stock market returns over the past ten years is downright unnerving.

Not only did the NAHB index presage the start of the post-1994 bull market in stocks, but its decline starting in 1999 foreshadowed the equity market collapse that came the following year. Builder confidence rebounded in November 2001 - a year ahead of the stock market upswing that began in October 2002.

Why is Sonders worried now? Just look at the chart [Keith: see below]. Over the past year, the NAHB housing index plummeted 54 percent. Were stocks to follow suit, the S&P - 1400 in late October - would be trading below 700 this time next year.

Here's the graph:

So how are builders feeling today? According to a report from the AP last week, not well at all.

A reading of U.S. homebuilders' sentiment remained near a record low in January, as gloom engulfed the housing industry.

The National Association of Home Builders said Wednesday its housing market index, which gauges builders' perceptions of current conditions, interest from potential buyers and expectations for home sales over the next six months, came in at 19 in January — the second-lowest point on record.

The group also revised December's reading downward by one point to a new record low of 18, the lowest result since the index began in 1985.

Here's a graph of the NAHB Housing Market Index for January 2007 to January 2008:

The S&P 500 Index on January 18, 2008 was 1325.19, down 7.09% from January 18, 2007's 1426.37. Assuming Ms. Sonder's theory is correct, then the S&P 500 index should fall 48.57% by December 2008.

To be fair, there were a few boneheaded statements made in that Fortune article, at least from today's perspective.

"The effects of the housing correction will be entirely contained within the housing sector," says Mike Englund, chief economist of Action Economics.

Updates:

  • NAHB confidence for September 2008 is 18, up from 16.
  • The S&P has fallen 14.33% [at this moment] since this entry was first posted in January 2008 and is down 20.77% since January 2007.

Monday, September 15, 2008

MRIS August Housing Report: More of the same

MRIS released its data for signed sales contracts for existing home sales in August 2008 a few days ago. Compared to August 2007, fewer units sold, there was lower dollar volume, but average prices for single family homes and condos rose.

Key YoY data points:

What I'm seeing in the data [without adjustments for the high end, which represented 9.78% of all unit sales] is:

  • The number of units going under contract in August compared to July rose 6.28% for condos and fell 7.49% for homes.
  • Unit sales and dollar volume for condos were down, 29.05% and 26.08% respectively. Homes were down 11.71% on dollar volume and 17.39% on unit volume. Interestingly, homes increased their share of aggregate unit and dollar volume YoY.
  • Compared to January 2008, the aggregate average price in the District has risen 0.1% [August compared to January]. Average prices for condos are down 2.15% for the year while those for homes have risen 4.19%.
  • Based on August's sales volume, there's now 5.7 months of inventory for condos and 7.18 months for homes, a decrease of 13.33% for condos and an increase of 7.07% for homes. Compared to August 2007, the number of condos listed has fallen 2.2% and risen 13.9% for homes.

2008 Trends

Average Sales Price

Change in Sales Price

Unit Sales Volume

Detailed Data

Average Sales Price

Dollar Volume

Transaction Volume

Saturday, September 13, 2008

DC Sales: May 2008

I've finished my analysis of full value residential sales the District recorded in May 2008. I fear I'm beginning to sound like a stuck record: it wasn't a good month - huge declines in the number of units sold and dollar volume - and expensive homes continue to skew the data. Key points:

  • Compared to May 2007, sales volume was down 18.12% and dollar volume was 24.38% lower
  • In May, Old City II led the District in sales, accounting for 21.63% of units sold and 19.6% of dollar volume.
  • Condos dominated sales in Wards 1-3 and 6.
  • Thirty two homes sold for more than $1MM; 5.23% of units sold accounted for 17.92% of the month's dollar volume.

One new item I've added to the analysis is sales by neighborhood.

All data have been uploaded for viewing on DCHomePrices.com and DCCondoPrices.com.

State of the Market

In May 2008 the District recorded 601 residential sales. In general, the average price fell 7.64% and the median price fell 4.13%. However, results for the condo market looked especially dire: unit sales down 27.15% YoY and dollar volume down [as in April] a whopping 38.57%. Although not as bad, single family home sales didn't escape the month unscathed. Average prices fell 2.57%, the median price fell 9.24%, the number of homes sold fell 5.28%, and the dollar volume declined 7.72%.

Every ward had lower sales YoY. Wards 1 and 8 were alone in having higher average and median prices. Otherwise, all wards had lower average sales prices and, aside from Ward 6, had lower median prices, too. Ward 8 again had the steepest drop in sales volume, dropping a tad more than 49%.

Condo sales ruled Ward 2 [again]: 85.95%.

Distribution of Sales

The chart below shows the distribution of May's recorded sales by sales price.

Condos

The number of condos sold [existing and new] fell 27.15% YoY. Average and median prices were much lower, down 15.69% and 1.34%. Among those condos that have sold:

Single Family Homes

Overall demand for single family housing is down 5.28%, as measured in unit sales. Average prices were down 2.57% and median prices were down 9.24%.

Purchase the Data

For $5.00, you can purchase a listing of the May home and condo sales recorded in the District discussed in this post. Information in the listing includes [see below]:

  • Address
  • Sale price and sale date
  • Unit number [if a condo and if available]
  • Price per square foot
  • Square footage
  • The number of bedrooms and baths for each unit

Note: Data may not be available for all properties. My analysis is dependent upon the completeness and fidelity of the District's appraisal data.

May 2008 Sales ListingsAdd to Cart

Detailed Data

Aggregate by Zip Code

May 2008 average and median sales prices and unit volume by zip code.

Aggregate by Neighborhood

May 2008 average and median sales prices and unit volume by neighborhood.

Category by Zip Code


Category by Ward

Disclaimer:

  • Unlike MRIS, my data and analyses include new units [primarily condos] so there will be some differences in my conclusions about the market's state compared to a similar analysis based solely on MRIS reports, which only report sales of existing units sold and/or listed by real estate agents.
  • This analysis is of sales recorded by the District during the month as opposed to sales settled in the month, which is what MRIS reports, so there may be some discrepancies because of timing issues. However, I believe the data do provide a helpful indicator of trends in the District.
  • Sales may have been recorded by the District's Recorder of Deed during the month yet may not appear in the District's real property sales database, my data source, many months later. Consequently, those sales will not be in the month's analysis.
  • My analysis is based on District sales and appraisal data that I've collected and processed. I've deleted those sales that appear to be of questionable data quality. Errors are always possible.
  • My analysis is limited to condos and single family homes; I omit properties the District classifies as multifamily conversions. I'm sure I'm excluding some properties that are legitimate single family homes, but I want to eliminate uncertainty.

Thursday, September 11, 2008

Pro Bono

Quite a few folks who read this blog are lawyers. You may demur, but web logs tell no tales. So I would like to pose a question to the iurisconsultus among you, prompted by a comment to yesterday's post.

The comment:

I'm pretty sure that part of the Metropole purchase agreement was a requirement that the owner occupy - or at least maintain ownership of without renting - the property for a minimum of one year after closing.

I've seen this other places to minimize "flipping." The newly-formed condo association can probably vote to change the rule, but I actually think it's a good one provided there are exemptions for life events like sudden long-term disability, job loss, or birth of a child during the first year (or perhaps while waiting for construction). As for a "flipper," would someone want to casually open herself to legal action by breaking a contract? I'm not sure.

My question: assuming a developer has added such a clause to a purchase agreement, is it enforceable once deed has transferred to the purchaser? I'm hard pressed to believe anyone can control when a property owner can sell his/her property.

What say you, avvocati?

Wednesday, September 10, 2008

Metropole: Taking Bets

I received an emailed invitation this afternoon to the Metropole's grand opening on September 25. I'd love to attend, if only to see whether my unit (#222) is still available. Come on Powerball! Make me a winner!

Anyway, so I'm now taking bets on how soon someone will try to flip a unit. Rules of the game:

  • Contestants must name the date by which a unit will be listed on MLS. Craiglist ads are acceptable substitutes.
  • Listings from the Metropole's marketing company are excluded from this contest.
  • The listing must be a true resale, i.e., the owner closed on the unit and has placed it back on the market to make an obscene profit or avoid losing his/her shirt/skirt. The District's real property sales database will be used for verification of the original sale.

The winner will be the person whose proposed date is closest to the actual date of the first listing. The winner will be named once a confirmed MLS listing is emailed to yours truly. The email should contain the MLS # and, even better, a URL for the listing. In case of a tie, I'll break it.

And I suppose a prize is expected... OK, the winner gets a martini at Halo, my treat. Which means you have to be over 21.

Saturday, September 06, 2008

District Sales: May 2008 [Data uploaded]

Thanks to Hannah, I've been able to process data for sales recorded in the District in May 2008. The data have been uploaded and can be viewed at DCHomePrices.com and DCCondoPrices.com. Analysis forthcoming.

Friday, September 05, 2008

Oh Jeez

I don't think this will be good:

Senior officials from the Bush administration and the Federal Reserve on Friday informed top executives of Fannie Mae and Freddie Mac, the mortgage-finance giants, that the government is preparing a plan to seize the two companies and place them in a conservatorship, officials and company executives briefed on the discussions said.

The plan, effectively a government bailout, was outlined in separate meetings that the chief executives were summoned to attend on Friday at the office of the companies’ new regulator. The executives were told that under the plan, they and their boards would be replaced, and their shareholders virtually wiped out, but that the companies would be able to continue functioning with the government generally standing behind their debt, people briefed on the discussions said.

It is not possible to calculate the cost of any government bailout, but the huge potential liabilities of the companies could cost taxpayers tens of billions of dollars and make any rescue among the largest in United States history.

Thursday, September 04, 2008

District Sales: May 2008 [preliminary]

I've started processing the District's data for sales recorded in May 2008. It'll take me a few days to plow through it, but preliminary sales information on average prices per ward per housing type is provided in the table below.

Monday, September 01, 2008

District Sales: April 2008 [By Neighborhood]

I hope everyone had a great holiday. Since we couldn't go to New Orleans thanks to Gustav, we visited my folks in Florida.

I've received many requests for information about sales by neighborhood, so you'll find April's information organized by neighborhood below. I use the District's assessment neighborhood names, which means you won't find Penn Quarter, Shaw, Logan Circle or NoMa in the list. Old City I and Old City II dominate sales - 14.92% and 19.9% of all units sold and 12.9% and 18.04% of total dollar volume.

For $5.00, you can purchase a listing of the April home and condo sales recorded in the District, organized by neighborhood. Information in the listing includes [see below]:

  • Address
  • Sale price and sale date
  • Unit number [if a condo and if available]
  • Price per square foot
  • Square footage
  • The number of bedrooms and baths for each unit

Note: Data may not be available for all properties. My analysis is dependent upon the completeness and fidelity of the District's appraisal data.

April 2008 Neighborhood Sales ListingsAdd to Cart