Monday, March 30, 2009

WaPo Smackdown: District Sales Full Year 2008

The WaPo issued its annual DC area housing report Saturday and, once again, they continue to under report District sales. The WaPo says it uses the District's data, but for the life of me I don't know what data they're analyzing and where the rest of it went. All I can figure is they ignored condo sales and threw away 1/3 of single family home sales.

According to the WaPo, 2239 homes sold in 2008, ending the year with a median sales price of $520,000. Moreover, the WaPo asserts that District median home prices rose when my data and MRIS' show it fell.

The District fared the best out of all the jurisdictions in the region, according to The Post's analysis. While sales volume slid 30 percent, to 2,239 homes from 3,212 in 2007, the median home price rose 8 percent, to $520,000, from $480,000.

The biggest price increase occurred in Georgetown's 20007 Zip code, one of the District's most expensive neighborhoods. There, the median home price shot up 18 percent, to $1,075,000 from $909,150, even as the number of sales decreased to 199 from 237.

"The people buying there are going to be more economically insulated, just by the mere fact that you have to be wealthy in order to buy there," said Joseph Himali, owner of Best Address Real Estate in Georgetown.

Actually, District unit sales for homes and condos fell 11.75% to 6697 in 2008 while the median price fell 6.25% to $375,000. In the WaPo's highlighted zip code 20007, 403 units were sold, a 7.99% decrease, and the median price was $746,440, a 3.46% increase. In regards to what Himali said, blah, blah, blah.

So why am I all fired up about the WaPo's poor, inaccurate reporting? Because people depend upon it and treat it as truth. For example, the realtor selling one house I looked at Sunday had the WaPo report laying on the dining room table, as if to say "relax, things are OK here." Well, in that zip code, 20015, my data shows that average prices fell 7.72%, median prices fell 1.85%, the number of units sold fell 38.27%, and the dollar volume fell 43.03% in 2008. The neighborhood's data? Unit sales were lower by 111, the average price fell $67K, the median price fell $9800, and dollar volume dropped $116.8MM. WaPo? Median prices rose $30,000 (+3.6%) although the number of homes sold fell 25%. Don't worry, be happy?

I've exchanged emails with the WaPo about this in the past and they acknowledged that their data for condo sales was off - they knew it, but since the data was sourced from thr District, they couldn't explain it. OK, fine. But to under report 2008 sales by two thirds should give the WaPo and its readers pause. Did they even fact check against MRIS' data?

The table below shows 2008 average and median sales prices and unit volume by zip code and the percentage change from 2007.

The following table shows the change in prices and sales volume for each District neighborhood. Dollar volume fell by $666MM and 892 fewer units sold. Few District neighborhoods escaped the year unscathed.

State of the Market

In 2008 the District recorded 6697 residential sales. The average sales price fell 5.94% and the median sales price fell 6.25%. The condo market took it on the chin: unit sales were down 21.17% YoY and dollar volume tumbled 26.78%. The number of homes sold was esentially flat and dollar volume was negative, down 8.34%.

All Wards suffered. Only Ward 8 showed positive growth in pricing, with the median value there increasing 6.92%.

Condo sales ruled Wards 1, 2, and 6, constituting 66.52%, 81.11%, and 57.19% of units sold, respectively.

Distribution of Sales

The chart below shows the distribution of 2008's recorded sales by sales price.

Download the Data

You can download a listing of the District's 2008 home and condo sales discussed in this post for $60.00. 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.

Full Year 2008 Sales ListingsAdd to Cart

Detailed Data

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.

Friday, March 27, 2009

Policy for Sellers

In my day job, I spend a lot of time drafting policy. I can riff policy-speak with the best of them. Having spent a week now on the chasse, I propose the following draft policy for sellers:

  • If your home's 1933 kitchen is still functioning and in mint condition, you shall not list at 2009 prices.
  • If you install central air on the first floor, but not on the second, you shall not list at 2009 prices.
  • If Ronald Reagan was in his first presidential term when you last performed maintenance on your house, you shall not list at 2009 prices.
  • If your home has been listed since 2007 and you're on your third real estate agent, you shall not list at 2007 prices.
  • If your home is not in the Federal style, you shall not paint the interior in the Federal style. Red dining rooms are specifically prohibited.
  • If your home is scheduled for a showing you shall not leave the toilet seats up. Or run the dishwasher during the showing.
  • If a bathroom consists of only a toilet - no sink, no tub, no shower - you shall not list it as 1/4 bathroom.
  • If by stretching my arms I can touch two walls, you shall not list the room as a bedroom.
  • If you use "as is", "handyman special", "waiting for that special touch", or "restoration" in the listing description, you shall not list at 2009 prices.
  • If photos of your listing consist primarily of photos of your furniture, you shall fire your real estate agent.
  • If your home is more than 5 residential blocks from a Metro station, you shall not state that the home is a 15 minute walk to the Metro.
  • [Update] Kitchens shall have a refrigerator.
  • [Update] The dryer shall be adjacent to the washer. Across the room shall be prohibited.

Thursday, March 26, 2009

District Sales: January 2009 [preliminary]

I'm taking a break from the house hunt to process District sales for January 2009. The tables below should give you an idea of how things looked.

Update: a sharp-eyed reader commented incredulously about the table showing the average price for a semi-detached home in Ward 8 was more than $2M. I'll take part of the blame for that, while reserving the remainder for the District. I should have indicated more explicitly that these are unscrubbed values, i.e., I've not finished my analysis and cleaned up data errors - hence the word "preliminary" in the post's title. The District's data shows that one home sold for $14.6MM, hence the high average price. However, the District shouldn't be posting crappy data, as it has done for as long as I've been doing this. If ever the day came that streets were spelled correctly, prices were recorded correctly, addresses were recorded with their quadrant, and condo unit numbers were recorded with the property, I could spend more time adding value as opposed to doing the District's job [which I've already paid them to do with my high taxes]. I suspect, and will verify, that the house really sold for $146K.

A word about the hunt, henceforth to be known as "la chasse de la maison," chasse for short. I've found two web sites to be extremely helpful in the chasse [my French teacher is cringing, I can hear her scream]: FranklyMLS.com and Redfin. They provide almost all the information anyone needs about properties for sale. FranklyMLS provides almost real time MLS data, displayed based on a wide range of search term possibilities. It lists current / previous prices [assuming the listing agent isn't gaming the MLS system], days on market, whether a listing is a short sale, etc. Mouse on the MLS number and a window appears with the property's photo and description.

In general, I've found other real estate firms' web sites to be uninformative, limited, or, worst, more focused on their needs than mine, e.g., requiring me to register before showing me a listing. Is that a knuckleheaded approach to marketing or what? PN Hoffman's site, too, thinks that requiring me to register before showing me floor plans for the Warehouses at Union Row is a brilliant marketing idea. Easily spoofed [when their site works] so all they end up with is a database full of useless email IDs.

However, to be fair, one real estate firm has a dynamite site: Sawbuck Realty. They use Google's mapping API to create an informative and easy to use web site. In fact, the best sites [Redfin, Frankly, and Sawbuck] marry real estate data and mapping technology to significantly improve the chasse experience. You've done well, Grasshoppers!

Sunday, March 22, 2009

The hunt begins

Having watched District home and condo prices explode and then swoon, my partner and I have decided to leave the security of our home's affordable lease and venture into the wilds of the DC housing market.

We looked at one condo, two homes, and two townhouses this weekend. Having sold real estate in New Orleans and owned two homes in the past, I had an idea of what to expect re: the buying experience. Yet the questions still come up when looking at a home:

  • What were they thinking of when they did that?
  • Do they really think this place is worth that much?
  • Don't you think there's a little too much pink carpet / wallpaper here?
  • Why don't they just come out and call this a tear down?
  • Why is the stairway in the middle of the room?
  • Why is the HOA so high?

And of course, the classic: Why are we doing this to ourselves?

Given the price range we can afford and our desire not to buy a condo [not that there's anything wrong with them], this may be a long hunt.


Monday, March 16, 2009

MRIS February 2009 Housing Report: Bleh!

Last week MRIS released its data for signed sales contracts for existing home and condos in the District during February 2009. Compared to February 2008, the carnage continues: unit sales, dollar volume, average and median sales prices all fell. Key YoY data points:

What I'm seeing in February's data:

  • I'm wondering whether we're witnessing the condo market's collapse: unit sales and dollar volume fell 45.05% and 37.04% YoY, respectively. Home sales were just as bad: unit sales down 16.04%, dollar volume down 33.83%.
  • To put it in perspective, the least number of condos sold in any month during 2008 was 137 in November. For homes - 168 in January. In other words (or to belabor the point), no month in 2008 had sales volume as low as that of February 2009.
  • YoY, average prices for condos rose 14.59% while those for homes declined 21.19%. Overall, prices fell 6.07%. I attribute the decoupling of condo prices to condo sales volume to the fact that 3 condos sold for more than $1MM, one of those in the range $2.5-5MM, presumably skewing the average sales price.
  • Based on February's sales volume, there is a 16.12 month inventory of condos listed [a 2.92% increase from January] and 12.01 month's supply for homes [a 0.65% increase]. Compared to February 2008, the number of condos listed is up 5.02%, while home listings grew 1.95%.

Detailed Data

Average Sales Price

Dollar Volume

Transaction Volume

Sunday, March 15, 2009

Let them drink Veuve Clicquot

We visited NYC this weekend to see how our holdings - Wall Street - were faring. After poring through the books late into the evening Saturday, I started Sunday leisurely, reading the NY Times. In it, I read that the...

Obama administration is increasingly concerned about a populist backlash against banks and Wall Street, worried that anger at financial institutions could also end up being directed at Congress and the White House and could complicate President Obama’s agenda.

Why would people be so angry? Surely it wasn't about AIG (the company that's received more than $150B from the US taxpayer) paying $165MM in executive bonuses to the very clowns who pushed the company and the global economy to the very brink. I mean, come on, AIG is contractually bound to fork over the bucks. It's not like they can afford a crackerjack team of lawyers to get them out of those pesky contracts - remember, they're broke. Except for the $165MM.

No, I think what's really pissed off Americans is these dancing fools described in another NY Times article (the photo at right is sourced from the article, too). While millions of Americans lose their jobs, their retirements, and their homes, each Saturday afternoon these idiots...

Spend $500 on two magnums of Veuve Clicquot Champagne at Bagatelle on West 13th Street in the meatpacking district, and the bottles are delivered to your table with lighted sparklers stuck in their corks.

Spend $2,500 on a jeroboam of Veuve Clicquot and some magnums of Dom PĂ©rignon, and the lights dim, the D.J. cues up the theme from “Superman,” and a waiter is hoisted onto the shoulders of his fellow servers. With a tablecloth knotted around his neck as a makeshift cape and his arms outstretched, he carries one of the blazing bottles of bubbly to your table.

As the waiter soars through the air, he does so against a backdrop of patrons fist-pumping Champagne flutes, flashing cameras capturing pictures ripe for Facebook and a dozen young women clad in sequins, stilettos and Chanel bags climbing onto chairs, banquettes, even tables — any elevated surface that is sturdy enough to dance on.

Thank God for Facebook.

Granted, not all of these morons are "investment" bankers; one fist pumper is "a 28-year-old who lives in Gramercy Park and works for a TriBeCa advertising agency." I won't ask how someone in that job can drop $500 on bubbly. However, never fear, there are "investment" bankers lurking around in the dark nooks and crannies of Bagatelle and Merkato 55.

Whatever diversion these afternoons bring, some acknowledged that the sight of the young well-to-do partying hard when many financial firms are being castigated for profligate spending could appear embarrassing. [You think?]

A man who works in finance and was standing near the bar of Merkato 55 the following Saturday started to talk about this issue, but then he had second thoughts, saying he could be fired for drawing attention to the subject in the news media. Any overt display of conspicuous spending, he added, even if not a dime was expensed to a corporate account, would not sit well with his employer. “Excess,” he said, “is frowned upon heavily.” [Unless it's contractually required]

As for how he and his fellow Wall Streeters could still afford such afternoons, he said: “We all made so much money in the past five years, it doesn’t matter.”

A 29-year-old man who works for a large investment management firm and was at Bagatelle’s brunch one recent Saturday and at Merkato 55’s the next, put it another way: “If you’d asked me in October, I’d say it’d be a different situation, and I don’t think I’d be here. Then the government gave us $10 billion.”

There you have it - that's why Americans are pissed off. We gave Wall Street $10 billion and they're spending it at Bagatelle and Merkato 55 on overpriced bubbly. BTW, did the owners of these establishments really think through the idea of being profiled in a NY Times article now?

Friday, March 13, 2009

District Sales: 4Q 2008 [Data uploaded]

I've finally finished processing almost 1700 records for home and condo sales recorded in the District during the fourth quarter of 2008 [October through December]. The data have been uploaded and can be viewed at DCHomePrices.com and DCCondoPrices.com. Analysis forthcoming once I've returned from NYC.

Wednesday, March 11, 2009

February MRIS Sales Report Released

MRIS released data on sales of existing homes in the District yesterday. The market continues its downward spiral. YoY:
  • Dollar volume down 35.07%
  • Average price fell 6.78%
  • Median price declined 13.04%
  • Total units sold fell 30.35%
On average, homes sold for 89.75% of list price, about the same as last month's figure.

The condo market may be collapsing: the number of units sold fell 45%. The number of sold homes declined 13.7%, in and of itself a large figure.

More later.

Tuesday, March 03, 2009

Metropole: Overpriced?

Habituées of the 1400 block of P Street NW are well aware that the Metropole condo building [located at 1515 15th St NW] has been slowly rising on the site of the old Duron Paint store for the past few years. Originally scheduled to deliver in 2007, it finally started closing sales in late 2008. As described by our friends at DCRealEstate.com:

The Metropole, facing both pedestrian-thriving P Street and the converted warehouses of Church St., adds 90 new condos starting from $485k to $2.1m (underground parking included with all units) by Metropolis Development (MDC), which also built Cooper-Lewis, Lofts 14, & Langston Lofts, all in Logan Circle. Architecture by RTKL and interior design by HGTV-design phenom Cecconi Simone will offer 20-foot high floor to ceiling windows in many units, Bosch appliances standard, two-story interiors on most units, and braggingly large private terraces on all top floor units (all of which also include a loft that overlooks the main living space), and some of the best interior design south of Manhattan. The Metropole replaces the old Duron paint store (no architectural loss) just steps from Whole Foods and Logan Circle, now rivaling Dupont for great retail, 4 blocks from Metro, 8 minutes by foot to the White House. Retail occupies the first floor, including a 23k s.f. Vida Fitness and Bang Salon. Construction began in August 2006, but received a major setback when Glen Construction, the main contractor on the project, went bankrupt, leaving this and other large residential projects throughout DC to find new GCs, here with Foulger Pratt. Settlements began Nov. 7th, 2008. This will be one of the few condos to feature Ritz-style concierge services, available to purchasers from the time they sign the contract.

Given its prominent and visible location, there was a lot of interest in the building. It was featured in a WaPo article in late September 2008 and my friends at UrbanTurf wrote a story on it, too. One fact that struck me when reading UrbanTurf's article was that the prices seemed a little too 2005ish to me. So, armed with Excel, Redfin, and the District's real property sales database, I did a little analysis to see whether my gut instinct was correct.

My approach:

  • I captured price and unit data [bedrooms, size, whether parking is included] on all sales in the building through year end 2008 as well as those units currently listed on MLS.
  • I pulled comparable sales for the neighborhood - condo sales in squares 0208, 0209, and 0210 - for 2008.
  • To account for those units that are listed as having parking spaces, I determined that the District values parking spaces in the area at $35,000.
  • For those Metropole units I know have parking spaces (all are listed on MLS), I performed two analyses: value with parking space included, value excluding parking space. Since I don't know whether other units sold in the area and building had parking spaces, I assumed not.

The comparables I used were based on sales of 37 units in the area. The comparable price per square foot for each unit type was:

  • 1/1: $586.48 / sq foot
  • 1/1.5: $549.65 / sq foot
  • 2/2.5: $660.86 / sq foot

Results? On an unadjusted price per square foot basis, with two exceptions units at the Metropole range from 7.13% to 58.65% more expensive than comparable units sold in the neighborhood in 2008 [see table below]; the average is 23.11%, the median is 24.89%. Moreover, there's a wide disparity in prices paid for units that have the same floor plan. For example, units 203, 204, and 205 are the same size and have the same floor plan, yet almost $40,000 separates the most expensive unit from the least.

I'm sure having Vida and Bang downstairs is nice and the [probably expensive] Ritz-style concierge services is convenient, but I'm unsure it's worth the hefty premium.