Month: October 2010

Don’t be spooked by the media!

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It must be Halloween because all of the scary news out there is about real estate.  All over the place you see, read or hear about foreclosures, double dip declines in pricing, the widespread number of delinquencies that will result in defaults and even more declining house values.  It is all so scary – unless – you know the truth!

 

Here is what the media sent out this week:

 

S&P Case-Shiller Index Records Widespread Declines in Home Prices  Home prices across the country slipped in August, according to data release by Standard & Poor’s Tuesday.  Home process decreased in 15 of the survey’s 20 metropolitan statistical areas on a month-to-month basis. Guess what happens when you read further?   Only Chicago, Detroit, Las Vegas, New York and Washington D.C. posted what S&P called “marginal improvements” in home prices over July.  Hey, at this point I will take “marginal improvements” over declines any day.  As we have been reporting – our prices are stable in most areas, increasing in many others and showing modest declines in just a few locations.  Here is what could have been their headline:

S&P/Case-Shiller 10-city composite remains up 2.6 percent from August 2009 levels.  In addition, the 20-city composite is 1.7 percent above a year earlier. Have no FEAR – it’s not that bad.  But why speak about the good news when you can haunt people with bad news?  Here’s what they continue to say “We still fear that the continued weak demand and high supply will push process gradually lower over the next 12-18 months” said Paul Dales, U.S. economist for research firm. “The current unfavorable balance between demand and supply is certainly consistent with a sustained fall back in prices” which means if houses don’t sell prices will fall – basic economics.  Here’s what I say, “If interest rates remain low, prices remain stable and consumer confidence comes back into the housing market – prices will increase further”.  The National Association of Realtors just announced that 8 out of 10 people believe now is a good time to buy.  If they believe it is, why aren’t they?  It is because of negativity of the national media and how it is portrayed to the consumer.

So, no matter whom you believe or where the housing market is going there are opportunities for success

  • Interest rates are better then phenomenal
  • Prices are stable in most of our making  it attractive to buy whether for owner, occupants or investors
  • Speaking of investors – the rental market is strong and prices will comeback which is what long term investors are looking for when buying real estate.
  • The housing market will rebound and both prices and rates will increase so we have a limited timeframe in which to take advantage of this opportunity.

Fannie Mae just announced that they are going to be looking into the foreclosure practices of many of the lenders they service which means that the release of their properties onto the market will be delayed and so will settlements.  The question is – for how long.  We will have to wait and see as well as note how many properties will be affected.  Stay tuned for more details about Fannie Mae.

Oh! One more good piece of news came across the wire…New home sales are also up 6.6% – good news is here and will hopefully continue to come.

Think long term, plan long term and educate long term and you will be successful long term.   Get it?  Got it?  Good!

 

Stop the Madness!

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The good thing about the weekends recently is that we don’t get emails from the real estate news services in which we subscribe.  It seems all the news we read about are comments on the real estate market that are negative, speculative and do nothing but contribute to the decline in consumer confidence in the housing market.  The sweeping generalizations about the National market do absolutely nothing to reflect the news about our local market in Northern Virginia.  As we all know, you can make the numbers say what you want – the national home pricing index set by Clear Capital dropped 5.9% in the last two months as reported by DSNews.com but it means absolutely nothing to the Northern Virginia market except uncertainty and continued fence sitting by both buyers and sellers.  Let’s look at the reality of our market over this same timeframe.  Over the last two months as the majority of the country has seen a decrease in equity we have seen our average sales prices over the same period of time increase from $333,502 to $334,274 as reported by MRIS through RBIntel.com.  The question is, why isn’t this being reported about Northern Virginia?

Granted, our market isn’t like it was in the period from 2004 – 2007, and it never will be like it again.  We are in a “new normal” market.  Inventory levels are stable, prices are stable, mortgage interest rates are at historic lows and people are still buying and selling houses.  Do we have pockets that are exceeding expectations?  Yes.  Do we have areas that are underperforming?  Yes.  Do we have foreclosures in our market?  Yes.  Are they having a significant impact?  For the most part, no as they only represent less than 6% of houses for sale today.  Do we have short sales?  Yes.  Do they have a significant impact on the market?  It depends.  Some areas have more than others, Arlington County has a very low percentage versus Prince William County that has a higher percentage of distressed properties for sale.  Therefore, it is extremely important to consult with a Realtor that knows the trends and knows the market – I challenge you to become that Realtor.  There are opportunities in every market, especially this one.  In 5 years and beyond people will say, “Do you remember when rates were at 4%?  I should have taken advantage of it when I could”.  Do whatever it takes to not be that person or have clients that are that person.  Get it?  Got it?  Good!

Now, go sell something!

Great Information from last night’s Real Estate Information Exchange!

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Top Producers Chime in on the Market

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As you have read in the past, the Platinum Group meets once a month to discuss the market, trends in the market, share ideas and to network.  These individuals earn in excesses of $250,000 per year and have been meeting for over 5 years.  Basically, they are the best of the best.  Here is what they had to say about the market this month.

Foreclosures:  the robosigners and paperwork/clerical errors had many banks jumping on the bandwagon putting a moratorium on foreclosures in all 50 states whether they are judicial or non-judicial states.  Basically, this policy is wrong and they should continue with the foreclosures in non-judicial states and clean up their act and their process in the judicial states.

Foreclosures may be stopped temporarily going forward on properties under contract in our area.  Be in touch with the listing agent and title companies on where the house is in the process and see if it is going to close or be stalled for any reason.  As always, stay ahead of the curve.

Be careful of prices going forward because of the onslaught of foreclosures coming.  Right now, we in Northern Virginia, have one of the highest 90 day late delinquency rates in the country.  Many of those are people who stopped paying because they are in short sale but at least 50% of those, if not more, won’t close as short sales and will come on as foreclosures later.  We had a historical month of foreclosures in September and these homes will come on the market soon so get price reductions today to get them sold as we are going to see a price reduction of 5 -20% over the next year – potentially.  There is water behind the dam, it is only a matter of how much water they let over the dam as to how it will relate to where prices will fall.  The question is who is going to be affected?  We still have pockets and price points where there are multiple offers and escalation clauses.  Our market is hyper local – you have to educate your buyers.

New home sales are down – builders aren’t making money – at least the production builders we are working with now.  They are not accepting offers on houses because they say they aren’t making money at the lower prices and then a few months later they are dropping their prices to where offers were previously.  They are just trying to hang on at this point.

Interest rates will not increase for the foreseeable future – market can’t sustain it and we don’t have inflation and rates and inflation go hand and hand.

What is happening with short sales?  An approval came through with 8 days to close after working with Wells Fargo for over 1 year…some have had no issues, even with 2 mortgages…no zero deficiency judgments now, banks want money at the table or are getting deficiency judgments (Litton Loan Servicing, Wells Fargo – 2nd trust, PNC, and Aurora, Astoria, Bank of America and Wells Fargo all wanted cash at closing).

What Steve Harney said:  Strategic defaults make up 31% of all distress sales.  Additionally, now is the right time to be a buyer considering where interest rates are today – buy because it is a home, not an investment.  Don’t worry about what may happen to prices in 6 – 12 months, if the house is right, buy today.  If you are a seller, it looks like prices may come down in the future so reduce today to get it sold so you are competing with foreclosures that may enter the market.  Either way, now is the time to get into real estate!

How is our market otherwise?  Houses are selling and buyers are buying – now is the time to get out in front of people to get it done!  Get it?  Got it?  Good!

Now, go sell something!

 

Can you do the time?

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Don’t do the crime if you can’t do the time.  This saying comes to mind with the latest banter back and forth about the mortgage foreclosure moratorium.  What is happening in the real world and not in the media’s demented mind and the mind of special interest groups is people aren’t paying their mortgages – PERIOD!  If they were making their payments as many of us are and as we agreed to do when we signed our deeds of trust – regardless of the home’s value – they wouldn’t need to worry about whether their paperwork was Robosigned or not.  As many of us have heard at the settlement table, “you pay stay, you don’t you won’t” has never been more applicable. 

The moratorium on foreclosures is bad for our industry and the economy as a whole.  We can’t get out of the mess we are in until we flush through the mass amounts of REO inventory the banks, Freddie Mac and Fannie Mae are holding in their inventories.

Let’s make the right decision to help the country get back on its feet and get the housing market back on its feet and stop talking about any type of mortem.  Get it?  Got it?  Good!

Now, go sell something!