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Mixed Signals in Local Real Estate Market

by ARLnow.com May 11, 2011 at 10:59 am 4,905 106 Comments

What’s going on in the local real estate market? Depends on who you ask.

According to real estate web site Zillow, real estate list prices in Arlington were up 8.6 percent year-over-year in April, but the web site’s estimate of home values in Arlington was down 2.5 percent year-over-year as of March. That’s consistent with a nationwide downward trend, as reported by the Wall Street Journal.

According to an accounting by the Sun Gazette, home sales in Arlington are down while both average and median sale prices were down year-over-year in April. By contrast, Northern Virginia as a whole saw a continued rise in sale prices.

According to Realtor Laura Rubinchuk’s Arlington VA Real Estate News blog, however, home inventory in Arlington is down while demand and median prices are up. But, she says, there are some homes that just aren’t selling.

“I wish I had an explanation for what the heck is going on in the market right now, but I can’t seem to find a pattern,” she wrote.

Flickr pool photo by Christopher Doorley

  • meh..

    The explanation is that it’s a NORMAL housing market finally. A well kept, well priced home sells…..a shoddy, unkempt, poorly priced home won’t.

  • charlie

    Zillow is like Walmart. You get what you want but it isn’t exactly the quality you need.

    It is just computers running data without any analysis. It is statistically unsound.

    • BoredHouseWife

      I once had to hire someone to estimate my house for a re-fi. Waste of money because all he did was quote Zillow exactly.

      • R. Griffon

        Last time I bought a house (just last year) was even worse. They appraised the house at EXACTLY the sale price. To the dollar. My agent said that it’s becoming very common in this crazy market. Lenders basically want to ensure that the property is worth at least the selling price, but don’t want to assume any responsibility for estimating anything beyond that.

  • Burger

    Meh,

    You are very right but it also goes back to the 2 rules of real estate.

    Rule 1. location, location, location
    Rule 2. See rule no. 1.

    Houses that are well priced should also incorporate where they are located into the pricing. Homes on busy streets are not the allure they were a few years back.

    As someone who is looking sort of in a hapazard way, it amazes me to see what sellers think their house appreciate over the last 2 years. We walked in one house bought less than 2.5 years ago for 900K and was listed for 1.2 and the owner had made no substantial upgrades.

    I asked the RE why she thought the house appreciated that much and she said because thats what the owner believed. I almost laughed and should have said she wasn’t doing her clients any favors by mispricing the home because in the end it will cost them money as it languished on the market.

    • GreaterClarendon

      One of our VA Square neighbors is currently selling their house for the same price they bought it for in 2006 – kind of surprised me – http://franklymls.com/AR7595670

      • Burger

        Funny,

        we just drove by that house and thought about going through it.

        In reality, they bought at the height of the market, the value of the went down and certainly come back. Has it come back to its 2006 price, I guess we’ll see. I’d say no at that price range but it is in a good location.

      • R. Griffon

        I’d hesitate to call that overpriced. Just going by the pictures here, but if you’ve seen many of the $1M+ homes on the market, you would’ve seen MUCH worse go for around the same. I’m thinking of 2 specifically that went in Lyon Village over the past year that were cramped, run-down messes that sold for ~$1.2M. This isn’t LV proper, but it looks like a beautiful, spacious and modern home in a pretty darn good location.

        I’m guessing it’ll move at that price. But only the market knows.

        • R. Griffon

          Edit: Just realized that the crappy rental property next door won’t be doing them any favors price-wise. We’ll see. The market’s fickle…

      • GetReal

        He’s still got to eat the 6% commision plus some closing costs. Only losing 75-80k on a $1.3 2006 vintage home, not bad…

      • Arlington, Northside

        Lot of cash back deals going on in ’05-’06, they might have gotten it for less than the published deal.

  • Elizabeth

    I am going to agree with Burger here, with a little addendum that houses here are way too expensive. Even understanding that location and demand do keep our houses on the high side, it is simply that many cannot afford a house that is upwards of 1M. Eventually they will sell, maybe below asking price or not, but this economy dictates it will take some time for a buyer with that much spending power to come along.

    • Arlington, Northside

      If you can’t afford it, you buy something else. There are others in the area with the income to pay the prices asked, and if not you see where things really are overpriced. Assessments only take the selling price, not the asking price, into account.

  • Patrick

    “but the web site’s estimate of home values in Arlington was down 2.5 percent year-over-year as of March”.

    Based on assessments for this year I guess the appraisers for Arlington County pay no attention to the ACTUAL real estate values of homes.

    • South Arlington

      My assessed value is still $70,000 less than my appraised value. The assessment isn’t a very accurate measure of value.

    • KalashniKEV

      The assessment is just a big Scam. It was engineered to yield a 5.1 percent increase in tax revenue without raising the tax rate. The size of this year’s budget compared to last?

      5.1% larger

      • dynaroo

        Hmm. The budget rises the same as revenue. From this you have two possible conclusions:

        1. The board increased spending only as much as revenue in order to avoid a tax increase (a RATE increase).

        2. In a big scam, they all colluded to make thousands of assessments add up to the amount of revenue they wanted to increase spending by. Home prices didn’t actually go up 5.1% – that’s a completely unreasonable number. Also, Obama was born in Kenya.

        • KalashniKEV

          It’s a deeper scoop with the same spoon, homey. Get a clue- the county has been pursuing personal boondoggles with public funds. An increase in the assessments while true value has gone down 2.5% should be enough to wake up even the dullest among our local sheep.

          • Josh S

            Next, you’ll be calling people “brah.”

          • dynaroo

            The world is full of bloviaters calling everyone else sheep for not believing their wild theories, isn’t it?

          • Skeptical

            +1

          • AllenB

            Let’s not let facts and reasonableness get in the way of making great soundbites. A site such as Zillow says values dropped 2.5% and that’s your hard and fast evidence of property value declines. Wow, someone foolish IS born every minute.

            And if you knew anything about the budget process in Arlington, or other jurisdictions, the budget is engineered to match available revenue, not the other way around. But go on with your conspiracy theories. Another cup of Tea for you?

            And btw, Osama is still alive…. pass it on.

          • KalashniKEV

            Brova-man, in our case the total Take must equal the true budgetary requirements to sustain our excellent level of service PLUS any psychopathic whim the county board happens to have lined up… and they’ll keep helping themselves to what’s in your pocket until you object. Oh, and please do pass the TEA…

          • dynaroo

            You should cut some of that post down for clarity. Delete all the words before “psychopathic” and all the words after “psychopathic.”

          • KalashniKEV

            And then attach a picture of Fisette? I was hoping we could edit our posts with the new software…

  • E-Ross

    Part of the problem is that people who bought their houses 4-6 years ago and want to sell them now are missing the market completely with pricing, then have to end up chasing it by lowering constantly until it gets to where they should have been in the first place.

    Clearly the market is picking up, but that doesn’t mean values are going up drastically to where you can sell without losing. But as was said earlier, well priced nice houses will go and go super fast!

    • E-Ross

      A house is only ever worth what someone else is willing to pay for it!

      • NPGMBR

        Exactly

        • GetReal

          Sorry but not exactly. If it were a cash transaction i’d agree but mortgage has a ton of leverage and if it doesn’t work out you can walk away.. Even liquid assets (like stocks) don’t have that much leverage. Plus, you need to post variation margin if the value of your stocks go down or your liquidated. So, if the home is sold to someone that needs a morgage to purchase the house is only worth what the bank is willing to finance.

    • R. Griffon

      > missing the market completely with pricing, then have to end up chasing it by lowering constantly

      Wanted to make a note about this. One thing I’ve noticed about the market is that you really only seem to get one shot to price it right out of the gate. Houses that miss the mark in their initial pricing seemed to be doomed not only to sit until they lower prices, but to languish until they lower their prices even below what they might have been able to sell for if priced properly from the start.

      Or put another way, once a house sits unsold for some time, it gets a stigma that further devalues the property. So homes that attempt to oversell may actually end up getting less than they otherwise would.

      Meanwhile, properly priced homes in a good location will sell the week that they list, often with multiple offers.

  • 4Arl

    If you think your assessment is too high, unfortunately you have to do the work to appeal it. But if you succeed, it can pay off not just for this year but for future years too. BTW, there is an agenda item on the next board mtg on changes to the Board of Equalization.

  • Lacey Forest

    I recently picked up a very nice house in N Arlington for $80,000 less than the buyers paid in late 2005. They had the misfortune of buying pretty much at the peak of the market. They have been trying to sell for over a year, and the price started at tens of thousands over what they paid, and kept moving down from there. I agree with one of the posters above that the market is currently normalizing. Housing in Arlington is never not going to be inexpensive as you can’t beat the location, but it looks like pricing is sliding back to reasonable.

    • Arlington, Northside

      More likly the economy will catch back up to our flat for a while prices. I do not see the prices going down significantly more in Arlington, they remain at about the 2006 prices with a few up and down blips since. 2005 was the year of the loss.

    • RosRes

      @Lacey – watch the double negatives, I think you meant that housing in Arlington will never be inexepnsive?

  • Rosslynite

    When I was growing up, it was always a dream of mine to live in a $1 million home. I just never imagined it would turn out to be these homes.

    • CW

      You mean this isn’t your idea of a million dollar listing? LOL.

      http://www.wfp.com/propertySearch/prop.asp?mlsid=AR7560319

      • Josh S

        Is that a parallelogram-shaped ottoman? All in all, a very nice house. Seems a bit high at over $1m, but, again – location. And the backyard is pretty nice.

        • CW

          Right. I’m just speaking to the OP’s original point, which was that when, as an average American child, you conjure up an image of a million-dollar home, you probably don’t think of a 1963 split-level. Unless you’re from Los Angeles.

          • cheeseeater

            Exactly.

          • Arlington, Northside

            Well, to my parents the $100K house was the hope/dream… Will it be the 10mil home for my kids? It is only relative to the time you are talking about.

          • CW

            Fair. Except that I believe you’re much older than I am. We’re not talking major generational economic changes due to inflation in my case. To the vast majority of Amerricans, living in mid-sized cities or truly suburban areas (I love it when people call Arlington “the suburbs”…it’s part of the diamond for God’s sake!), the home I listed is a probably $300k house.

          • Arlington, Northside

            Parents were born in 1942 and grew up in DC and parts of the area that today are called “inside the Beltway”. You make the call. In the 1970’s, and even into the 80’s Arlington was truly a Suburb, shoot Chevy Chase is part of DC and it was a Suburb. The Metro created the corridor up Wilson Blvd and down Rt. 1 that has filled in the space creating our multi-jurisdictional metropolis.

          • CW

            Sounds like the good old days to me! 🙂

          • Arlington, Northside

            Wilson Blvd was paved with wood timbers over the cut and cover tunnel project for half a decade. Red clay dust covered everything in site.

  • Heather

    There is some good news for Northern Virginia home Sellers. Overall, contract activity in NoVA was 35.5% higher this year compared to the same week last year. This week is important because it reflects activity AFTER the time frame allowed to write an offer & take advantage of the home buyer tax credit. Of course, condition & price (and location) will always make a huge impact on value and how quickly a home sells.

    For more details, visit: http://image.mcenearney.com/live/mymce/message/files/5198/Contract_Activity_Summary_-_May_2-8,_10_v_11.pdf

    • CW

      I don’t think that there’s ever been a dearth of good news for Arlington home sellers. The exurban snouthouse farms are where the woes of the national market have actually been reflected.

  • Shawn

    It’s Obama’s fault

    • AllenB

      You mean the Kenyan guy?

      • KalashniKEV

        Playa please! We all know 0bie is from the pineapple state. What concerns me is the fact that he spent many of his formative years OUTSIDE the United States and does not share our American Values.

        • JohnB

          I don’t know too many pepoel who share your “American Values”

        • dynaroo

          Most American’s values still line up with Obama’s alot more than yours, thank God.

        • dynaroo

          BTW, John McCain spent some formative years outside the U.S. (and wasn’t born in the U.S. either). Yet you didn’t notice.

          • KalashniKEV

            Nope. I did. McCain is a RINO gun grabber and a friend to the Criminal Aliens.

          • dynaroo

            Well, at least you’re consistently psychopathic.

          • RosRes

            @KalashniKEV – Americans would do well to spend time outside the United States. Otherwise their remarks about the US lack context and therefore don’t really mean much. In reality its after travelling that we can recognize what really is good here, and it also gives us a chance to see what’s better out there and incorporate whatever we find that’s better back here, thus adding to our culture in positive ways.

          • dynaroo

            You’re not very familiar with our friend KalashniKEV, are you?

          • dynaroo

            Even if you don’t find anything good about a foreign culture or country, you should still understand it. Even if it’s in conflict with yours. Know your enemy. Either way, I’m thrilled we have a president who has actual knowledge about the world. Kind of important when you’re in charge of foreign policy.

          • Arlington, Northside

            My travels allow me to KNOW that America is the greatest Nation on Earth. We are the most tolerant, the most giving, and the strongest country out there. Why do you think so many risk so much to sneak in? The world has far more to learn from the American system of government and economics than we have to learn from others.

          • KalashniKEV

            True that, homey. Americanism is the dominant world Culture and will remain that way… unless we dilute it with the backward ways of others and accommodate their savage beliefs.

          • RosRes

            KEV – Haha, you remind me of the two grumpy guys in the balcony of the muppet show! Thanks for the smile…

          • Arlington, Northside

            Was the Panama Canal Zone not a US Territory in 1936?

          • KalashniKEV

            I was going to make that point, but I’m sure he left the gate once in a while…

          • charlie

            the framers of our Constitution would have been appalled that we had “territories” since that is what they were and what they were trying to get away from. So my guess is that while it was a “territory” at some point and certainly “occupied” when McCain was born, it probably would not have held up to a constitutional challenge.

          • dynaroo

            We still have territories though, including organized ones that are considered part of the U.S. and whose residents are U.S. citizens.

          • dynaroo

            Downes v. Bidwell.

          • KalashniKEV

            Larry Sinclair.
            Can we please stick to the topic?

          • dynaroo

            You didn’t google it, didja? Or maybe you did.

            Doesn’t matter now anyway, since you’ve got a hate boner for McCain too. If you want to spend hours debating whether a slice of Panama was “in the U.S.” that’s awesome. Meanwhile, Obama is running our country and doing it pretty well and no pathetic loony theories can change that.

        • Andrew Bartbreit

          The values that went down 2.5%?

  • cheeseeater

    The houses here are still way overpriced. I should not have to pay almost 500k for a 1000 sq foot Cape. Give me a break.

    • Arlington, Northside

      If they are selling for the asking price, they are not over priced. Over valued, maybe, but so far history in this area has shown that they will continue to hold these values. Want a house cheaper, move somewhere where other folks don’t want to live.

      • cheeseeater

        Okay, yes, OVERVALUED, not overpriced.

        • dynaroo

          Yet if someone buys it for that price, it’s not overvalued either.

          • Arlington, Northside

            See Florida five years ago for when something is overvalued even when a buyer is willing to pay the asking price. The buyers quickly found out what overvalued means.

          • dynaroo

            It’s overvalued by the buyer, but not the seller then. At the time of the sale, it’s not overvalued at all.

            “Value” isn’t objective, and it changes. So you can’t declare at any given moment that something is over or undervalued. You only know it’s value when you sell it.

          • Burger

            Of course, there is a ton of area to expand in South Florida, including up so there was always new supply on the market. Arlington only has so much land near metro which is the real insulator of home prices in the area.

          • Justin Russo

            Huh? They have the ocean on one side and the Everglades on the other. Hardly a “ton” of area to expand in. In fact, that was one of the justifications for the bubble pricing down there: “they aren’t making any more land.”

    • James

      You don’t have to pay anything for any house. You can choose to live somewhere else.

    • AllenB

      I agree with James – you don’t like the price? Great, don’t buy it. You want to live in a high priced area and not pay high prices. Good luck with that.

      • G

        Agreed. Or you can buy a really crappy condo in South Arlington like I did and hope it’s value goes up enough within the next 10 years and move into something better.

        • Arlington, Northside

          Did great buying in 2002 in S. Arlington and selling four years later. Of course would have done even better if I had sold a year earlier. 😀

  • JohnB

    Appraisals are based on recent comperable sales. Assessments are based on year old comperable sales. Assessments will always lag appraisals on the way up and on the way down. As for the 5.1% increase in revenue, that includes commercial property while the very questionable Zillow number is only for residential property. Don’t argue with someone who has an unsound understanding of economics because they constantly offer the opportunity to buy things for less than they are worth and sell them for more than they are worth.

    • FrenchyB

      Exactly. When I saw that my most recent assessment rose about 8%, I checked the previous year’s comps for my condo’s layout – my assessment was the average of those sales.

  • Hattie McDaniel

    Of course the realtor would say home inventory in Arlington is down while demand and median prices are up. It’s always a good time to buy for them.

  • Abe Froman

    Good lord, legit real estate info is so hard to come by. Zillow, Trulia, the NAR, a real estate agent, they are all motivated by getting you to pay more for something they get comission on.

  • Alex

    Tightening of lending standards and the eventual privatization of mortgage securitzation is playing a role. It reduces the pool of qualified buyers, therefore reducing demand. This problem will only be exacerbated as lending standards tighten during a period will interest rates are also expected to rise.

    Adding to it inflation has been consistently reducing the purchasing power of the dollar for every day goods (and some services), thereby reducing the amount of house that people can afford and causing further contraction in real estate spending as a result.

    Finally, this area is mostly supported by government employment and contracting — both of which are, at least to some degree, under a long term threat because of the US government’s fiscal insolvency. Austerity measures, tax hikes and further service cuts are unfortunately all but unavoidable.

    That’s my $0.02…

    • GetReal

      I agree with points 1 and 3 but have a comment for point 2. Yes, inflation will reduce purchasing power but what if you borrowed tons of $ to buy a lot of homes? The price of the home follows inflation so you sell and net gain after inflation is $0. But, you pay off the mortgages with inflated dollars so you gain.

      • Alex

        The problem is that house prices are not gaining in value at the unsustainable rate that they used to. In addition, most of the time the amount of money invested in the house in bills, taxes, maintenance, upgrades, etc. may wipe out any potential gains in resale value.

        The more money that’s borrowed, the higher the leverage of the debtor. While it may seem advantageous to try to borrow as much as possible, should an unexpected financial crisis hit the borrower or the lender, the mortgage could be called in, putting the debtor in an extremely precarious position.

        The other problem I see is that most of the inflation is not being seen in real estate prices — infact in most areas there is still some level of disinflation there. Most of the inflation is in raw commodities, agriculture and energy. Of course if this trend turns on its head as bond yields and the commodity sell off is suggesting — and we go in to a double dip recession, that could bode poorly for the notion of gaining any benefit from inflation.

    • DR

      People in this area make so much money I kind of think the housing market in Arlington will be fine. Tightening lending standards don’t matter when you have, for example, lawyers right out of school at firms making $160,000 and government workers making way more than they should. Nobody wants to live far out anymore – gas prices alone are enough to make people want to stay close to DC.

  • Stew Magnuson

    Wish someone would buy my one bedroom condo in Colonial Village. Great location, low condo association fees, and you can’t beat the location between the Rosslyn and Courthouse metros. $265,000 is about as low as it gets for this neighborhood.

    • Rosslynite

      I can attest that this is a great location. We bought in Colonial Village years ago right after the conversion because it was the only property in the area that we could afford. I think we sold our 2 bedroom second floor unit for about $125,000 a few years later. It sounds like it is still the affordable option for those just entering the market.

      • Flava Flav

        But they is tiny.

        • KalashniKEV

          Fo’ reelz, yo…

          I can attest that this location is slummy, and should be replaced by something decent.

          • Southeast Ben

            Aren’t they part of “Arlington’s Historical Buildings” or something?

            Who wants to buy without washer/dryers and limited parking? I like the area. I like the prices, but they are still come out overpriced.. Look at the current listings in Colonial Gardens.

          • KalashniKEV

            Yeah, I think George Washington took a dump there or something and now the county wants to keep it as an eyesore.

  • 4Arl

    Shouldn’t assessments be determined by people with no incentive to choose a higher price? I think the BOE qualifications say members have to be real estate professionals.

    • dynaroo

      What’s the incentive? Assessments don’t affect sales value. Buyers and sellers alike are smarter.

      • Burger

        To cover any budget gap and to pay for Artisphere’s that no one wants to go to.

        • dynaroo

          Real estate professionals care deeply about Artisphere?

          • Burger

            The statement was about assessments which relates to tax assessments, you mean appraisers and appraisals. Two very different things.

        • RosRes

          Consdiering that Arlington is one of the best places to live in the US, I think most people here would trun to pillars of salt if they had to “suffer so” anywhere else. Sheesh already! There’s a pea under my mattress and my back hurts. Can we say spoiled?

          • Arlington, Northside

            Yes, this is one of the best places to live in the world, but, we pay A LOT to live here. Why should we not want to get the most bang for that buck and not have it wasted on easily forseen failures like the Artsphere?

          • RosRes

            What I don’t get is why it always seems that those who think we have THE GREATEST CULTURE EVER TO EXIST (insert movie trailor voice here… with echo) are also the ones who seem to be so discontented and unhappy with it. For the record I do think we have a pretty good thing going here… which is why I am happy to live here and I like the way things are done. If you don’t like the system, or the pople who run it or the way its done, then I have to wonder whther in fact you actually do think we live in the best of all possible places. I’ve met many people in third world countries who have the tiniest fraction of what we have and who complain about 99% less.

          • Arlington, Northside

            We don’t beat people and lock them up in secret prisons for mearly complaining here the way they do in the Third World nations. And even with that, in my travels I have found many in the Third World complaining, they just don’t have access to power or the interwebs the way we do in order to be heard.

            Point on the Artsphere, the place is charging to compete with one of the world’s great Art Gallaries across the river which is free. It would be like putting a Kia dealer next to a Bentley dealer and expecting to be able to charge more for your cars then they do. This before you even take into account the agenda that the Artsphere management and supports obviously push.

            Arlington County is well run, no doubt about it, but part of that is because resident involvement/complaints steer things.

  • 4Arl

    Dynaroo, if real estate professional means professional appraiser, then I agree there is little incentive. If it means realtor or developer then they are motivated to support higher prices .

  • 4Arl

    RosRes, I can’t speak for others, but I think a big factor in what you are calling complaints is a high expectation combined with frustration from one party rule. Here’s an analogy-Imagine you buy a luxury car. You might think it’s the best car out there. But you find out the door handles are cheap plastic and crack. Naturally you are going to feel differently than if you had bought a cheap economy car. On top of that, imagine the dealer ignores your complaint and is unresponsive because they are catering to new customers or celebrating their awards. Arlingtonians should expect and can receive better value for the taxes collected. Look for this message outside the ruling party and management.

    • Arlington, Northside

      this

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