Sep
7
2006
home market
As a prospective homebuyer, I (and my finances) cautiously like hearing news like this:
In the latest evidence of a cooling housing market, U.S. home prices rose in the second quarter by the slowest rate in more than six years, according to a government report released yesterday…The ballooning number of homes for sale and higher interest rates have put a brake on rising home prices, analysts said…
What is notable about the report — the latest in a series of statistics this year that point to a downturn in the housing market — is the rapidly declining rates of appreciation in prices in regions that were once red-hot. The quarterly report is based on comparisons of prices of the same houses sold or refinanced over time.
For example, just last year in the South Atlantic region, which includes Maryland, Virginia and the District, appreciation was at its highest rate since 1975, with home prices rising 18 percent year over year. The change in the quarterly rate over the past year was the biggest drop since the second quarter of 1976…
In the market that includes the District, Northern Virginia and Prince George’s, Charles and Calvert counties in Maryland and Jefferson County in West Virginia, home prices increased by 1.79 percent in the second quarter. But the region posted a year-over-year increase of 16 percent because of jumps in prices late last year.
(The Washington Post: “Growth Slows in Housing Market” - 09/06/2006)
All this talk about the local market sort of resetting itself makes me a bit nervous about how much any property we buy might appreciate in the coming years. I can only hope that values don’t go down. (A friend recently told me that this might be the case coming up this winter with new constructions and an expected glut of condos in Arlington.) That said, given the relative prosperity of the region and the constancy of its largest employer (the federal government), the conventional wisdom seems to be that things will level off or slow down — or, at worst, dip down slightly and then come back up again.
What I’ve seen so far in my own search process seems to live up to this assessment of the local housing market from back in May:
Homes on average are sitting on the market longer — in many neighborhoods, much longer than they did a year ago. Those who study local real estate markets say the homes are lingering for two main reasons: because of a housing glut in areas where builders put up large developments during the housing boom of the past five years and because of buyers who are counting on better prices as the market cools.
(The Washington Post: “Blink and They’re There” - 05/02/2006)
Many of the properties we’ve looked at have been on the market for as many as three months, which has allowed us some room to take our time in considering our options and not rush into things.
TrackBack
TrackBack URL for this entry: http://www.morethanthis.net/mtadmin/mt-tb.cgi/1534
![[Photo]](http://photos.morethanthis.net/images/2008-09-13/thumbs/IMG_0272.jpg)
Comments
I remember living through a real estate bust in Southern California in the early ’90s.
Our neighbor bought her house for something around $400k right at the top…as an investment! She started trying to sell it when I was a junior in high school (90-91), and couldn’t find anybody to buy it for more than she had paid.
I think she finally sold it, after trying off and on, just a few years ago.
Be careful…my advice? Buy a house/condo because it’s somewhere you want to live for a long time, not as an investment. And don’t pay more than you can afford!
We got very lucky in our house buying. Prices in our neighborhood have gone up such that I don’t think we could afford our house now, plus we caught a good interest rate.
Good luck; I’ll be keeping my fingers crossed for you & Rob. :)
That’s good advice: Buy what works for us, and what’s within our means.
At the moment, we can really only afford a one bedroom condo in the neighborhood in which we want to live. And that’s really all we need. But if, a few years down the line, we want to expand, we’re going to have to upgrade to a larger place, which means selling our first place.
Ideally, we’ll find a place that both suits our needs and has good resale value, in that the basic characteristics we’re looking for — within walking distance of a Metro station in north Arlington, recent renovations, new kitchen appliances, etc. — tend overlap with what’s generally considered “desirable” in this area.
I think, with the prospect of outlaying all this money chief in my mind, I’m mainly worried about timing. I’m worried some about prices falling further in this area after we buy. At least it’s not the boom anymore, so, as buyers, we have some bargaining room and won’t be starting out at a financial disadvantage by paying an overinflated price for a property. And after a few years, hopefully things will have levelled off or even picked back up, so this downturn that’s aiding us as buyers won’t be a hindrance when we’re the sellers.
But you’re right — I’m getting ahead of myself a bit. While it’s a good thing to keep in the back of my mind while I evaluate properties, I shouldn’t obsess about selling a place I haven’t even bought yet.
Mmm, music to my ears, or not. I”m wondering if it was foolish of me to do this 5-year ARM. I guess this news isn’t going to keep me from selling in 5 years (which is more likely going to happen because I’ll need more space), but I am nervous that I won’t have made a small profit on my place. It is a good time to buy, but sheesh… I never thought it would end up this far downward…
I’ve posted about this a few times on my blog. Warren Buffet says the worse reason in the world to buy a stock is because the price went up. I don’t see why housing is any different. Trying to “get in before it’s too late” is a recipe for disaster. The fact that people are afraid to buy is good news for you because buyers will be more willing to negotiate with you. Whether you decide to buy or not should be based on your individual circumstances and how much it will cost you to own it vs renting it. NOT on how much you think it will go up (which is uncertain).