The spring market is in full swing. This past weekend I was with an agent and they had 3 contracts on 3 different listings that went on the market the previous Thursday. One of them had multiple offers. In addition, we put a house back on the market last week that was on the market previously for about five months with no activity and got a contract on it over the weekend. So there are a lot of buyers out their looking, inventory levels seemed to have increased, but only slightly, interest rates remain low, days on market and months’ supply continue to stay relatively low as well. So if you are looking to sell, now is a great time. The trees are in bloom and the market is hot just like the weather! Let us know what we can do for you this Spring!
Current Affairs
Is the spring market coming?
In Northern Virginia our inventory levels of active resale homes for sale continues to decline. We are down to just over 4,600 homes on the market and we have a 1.8 month supply of homes. Houses that went under contract the last 7 days hit a 6 month high this past week. In a nutshell, houses are selling. Why is this happening? Interest rates hit another record low, we are creating jobs here, rental rates are increasing and our population is growing putting more demand on housing.
Last week I was asked when will we see the spring market or in other words, when will more houses be coming on the market? Some people say when the banks start releasing foreclosures, some say mid-March, and some say when their price rise. Let’s analyze each of these responses.
So far we have not seen the foreclosures hit the market and as a matter of record, the inventory has actually decreased to a 6 month low with only 311 currently for sale. In addition, “Notice of Trustee sales” published have actually remained very low as well averaging only 3 pages per day versus substantially higher numbers in 2008-2010. Lastly, I started tracking short sale inventory just over 2 years ago and we are at an all-time low in this area as well – only 651 are for sale in Northern Virginia.
As far as the inventory levels increasing in mid-March, only time will tell but several agents have indicated they have houses in the process of being prepared to go on the market around this timeframe. If they are not only preparing them for sale but are going to price them accordingly, they will sell. Two properties we listed on Friday received multiple offers because they were price properly and in the right condition. And now for the statement, “when my price increases, I will sell” is a tougher one to answer for many people. Rise compared to what? When they were purchased? Compared to 2004-2007 prices? Compared with the last sale in their neighborhood? Until these questions can be answered, we can’t help them.
We continue to have one of the best real estate markets in the country and it will be this way for the foreseeable future. Please feel free to contact us to learn more about how this market affects you and your situation.
A great time to buy…now?
It is definitely an interesting time in real estate in Northern Virginia. We have extremely low inventory levels that remain below normal for this time of year. As an example in January of 2008, we averaged 15,500 active listings, in 2009 it was 10,200, in the year of Snowmagedon in 2010 it was 4,800 because people took their houses off the market and agents couldn’t get out and about to list them, in 2011 it was 5,800 and now we are at 4,700. What is interesting to note is the month’s supply of houses in the same time frame – 2008 it was 10.8, 2009 4.0 and since then it has been 2.3 in 2010, 2.8 in 2011 and this year 2.2. What this clearly indicates is there are buyers out in the marketplace looking for homes in the winter months – not just the spring months now. Interest rates remain very low – below 4% for 30 year fixed rates – jobs are being created here so people are moving into the area and rental rates are rising throughout Northern Virginia.
If your family circumstances, job status, or you just have the desire to sell your house and move up to a bigger home, now is a great time to do so. Houses that are priced right, in the right condition and staged properly are attracting offers. One of the biggest parts of this equation is the price – price sells today. Sellers cannot price a little high for negotiations as we have seen that they languish on the market in this situation. Price it competitively and it will sell.
Buyers have a great opportunity today. The housing affordability index is at an all-time high and in many cases house payments are less than rental payments even before considering the tax benefits of home ownership. For buyers looking for the long term benefits of home ownership, there historically has not been a better time. Prices are remaining stable, interest rates are low, and the housing industry is on the rebound meaning we have already hit the bottom and we are on the upswing if you were trying to time the market.
Whatever your situation is, we can help. Please feel free to contact us to discuss your personal needs in more detail and see if now is the right time for you to make a move.
What’s 2012 looking like?
As we enter 2012, there is much speculation about real estate yet again. Will there be more foreclosures? Will housing values continue to drop? How long will interest rates stay low? When will lending guidelines reverse their trend of more restrictive policies? Should I buy or wait? Will short sale guidelines become more uniform? What will it take to improve the housing market? Well, as I have said in the past, my crystal ball is broken but I can look at trends, read reports and provide some guidance. Let’s take a look at what we have seen recently.
Will there be more foreclosures? As the inventory of short sales decrease and the notice of trustee sales in the papers remain low, we will not see a tremendous amount of foreclosures hit the Northern Virginia market. When we see an increase they won’t have a significant impact like they had on our market in 2008-2010. The inventory will come when banks begin to evict people who have been living in houses mortgage payment and rent free for several months. Additionally we will see some foreclosures come on the as people lose their jobs. Again, the impact will not be severe in my opinion and will be absorbed as inventory levels are at 2 year lows in Northern Virginia.
As inventory remains low, prices will remain stable and in some areas they will increase. If owners invest in their homes by upgrading kitchens, bathrooms, and updating carpets, paint etc. they will see the return when they sell. Homes in the right condition, staged and priced properly see multiple contracts and often get bid up above list price.
Interest rates will remain low for the foreseeable future. The Federal Reserve has stated they will keep their rates in the same range through mid-2013 and as such, mortgage rates should remain low. There are of course some outside factors that could change this such as the European debt crisis, and energy costs rising but overall we will be in the 3.75-4.5% range for mortgage rates.
It doesn’t seem that lending guidelines will restrict any time in the near future. Underwriters continue to ask for last minute items, credit is being checked for a second time just before settlement, requests for obscure items are being asked for and when you think you’ve heard it all, you hear something new. On the bright side, mortgage insurance companies are becoming more flexible in their requirements which is helping in some instances. Unless it is mandated by the government through the GSEs, I don’t see guidelines relaxing for some time.
If someone has found a home that meets their requirements as far as location, size, price and affordability then yes, now is the time to buy! Especially if it is for a long term hold, you need to buy now. In a recent survey, 78% of Americans believe housing is a great investment. As previously mentioned, rates are excellent and you need to take advantage of them as well.
We are dealing with fewer short sales in Northern Virginia today but they do seem to be closing at a higher rate than before which is great for both buyers and sellers. We anticipate this trend to continue.
So what will it take bring the market back? In a two words, I say, consumer confidence. How does consumer confidence improve? Here are a few ideas – job creation, lower energy costs, and more positive press on the economy. Let’s see how this goes with the election coming up later in the year.
With a little more insight into the market, go help people make the right decisions when buying or selling houses. Get it? Got it? Good!
Now, go sell something!
My Top 10 Predictions for 2012
Credit unions in real estate – if the merger between Pen Fed and Prudential Caruthers is successful – and only time will tell – more credit unions will look to enter the market. If the merger muddles along as it is now, other credit unions will remain on the sidelines. This one will be interesting to watch as NAR and RPAC spent so much time and money keeping banks out of the business.
The Presidential election – Nearly 1/3 of voters say how the candidates view housing will impact how they vote. The foreclosure crisis and 11 million people with negative equity are what concern so many Americans. Next to unemployment, the stance they take on housing will drive the election. Therefore, agents will need to get busy listing and selling houses the first half of the year as I see people going back to the sidelines after July to see who wins and what policy they will put in place for housing.
Interest rates – if they go higher, they will crush the fragile housing market which the Federal Reserve will not allow. Unlike last year’s prediction where I predicted rates to get to 6% and was wrong, this year I believe they will stay in the 4 – 5% range but closer to 4% than 5%. This is what will keep some people in the home buying mode.
New home sales locally will continue to rise. The shortage of resale properties available, the fact that 20% of our market is distressed and buyers are tired of the short sale process will continue to drive buyers to new homes. Price will continue to also play a role in the new home market. Builders will have to stay within reason and not price themselves out of the market.
Land values in our area will continue to rise. Fueled by lack of inventory and new home sales, land values will continue to increase. We are seeing new signs popping up on vacant land already.
Existing home Sales forecast will stay flat. Unemployment, the election, strict lending guidelines and the fallout from foreclosures will keep people at bay from jumping into home purchases.
Lending guidelines will stay strict and may get even stricter. As such, it will make our job as Realtors even more challenging. Both buyers and sellers need to choose a professional and only work with local lenders – not internet lenders.
Foreclosures in NOVA versus rest of USA – we will continue to see low levels of foreclosures in NOVA for the first 6 months of the year, at least. Notice of trustee sales are down in the papers, short sales make up less than 14% of our market and as such, foreclosures won’t be as prevalent. The rest of the country needs to be leery as unemployment and dropping values continue to put pressure on home owners and foreclosures will follow as a result.
Investor market and rents – as the inventory of houses shrink throughout Northern Virginia, people remaining leery of the housing market, and lending guidelines continue to tighten – our rental market will continue to be strong and rents will increase. The good ole supply and demand theory of economics. This will in turn bring more investors into the market.
Now you have my Top Ten Predictions for the real estate market in Northern Virginia. Let’s meet up again this time next year and see how I did! Get it? Got it? Good!
Now, go sell something!
Oh what a night…
We had another great real estate exchange last night. There was a lot of banter back and forth about our free trip to Vegas for the RE/MAX Convention in March and who was going to win the trip and how. Great team building and networking as usual before the event.
Topics that were discussed:
- Virginia home sales report published quarterly by VAR and the great information available through this report
- Information on rental rates
- The lobbying effort upcoming in the House on raising the high loan limits back up to pre-October 1st deadlines
- Refinance activity
- Home ownership rates
- Appreciation rates nationally and locally – we are way ahead of the curve year over year but are down month over month, a trend we need to watch
- The Bank of America penalties to Freddie Mac and Fannie Mae and why
- Fannie Mae’s quarterly losses and the combination of losses between Freddie and Fannie and why were bonuses paid
- Foreclosures on the rise nationally but so far, we don’t see it here and the indicators of why we don’t see them yet
- Bechtel is relocating 625 jobs to Reston and they are leasing nearly 200,000 square feet
- 4 ways to reduce your taxes and a reminder we have accountants coming to Chantilly to discuss tax planning for 2012 on November 18th at 10AM
- And lastly, the National Enquirer portion of the show – celebrity purchases and sales plus incomes of the top CEO’s in the Washington Metro Area
- Pat Cunningham updated us on HARP, the Italian debt crisis and what that means to mortgage interest rates and the value of HUD homes.
Enjoy the video but better yet – attend the next one in Ashburn at Clyde’s on the 16th from 1-3PM. Get it? Got it? Good!
Now, go sell something!
Got to love great real estate minds….
Wow, what Platinum Group today. Agents are feisty, fed up and frustrated with lenders. Issues were flying across the conference room fast and furious. The question was asked – How’s the market? Here is what came about – Financing problems are prevalent. Some owner problems by not disclosing full details – not telling agent about businesses, tax situations or other properties owned. But most seem to be lender problems – mainly, not telling the truth. One lender didn’t tell the agent the Visa expired, said application was in all paperwork submitted and nothing was turned in – contract and lender letter said conventional then switched to FHA at appraisal time. Lending guidelines are too strict, lenders are too ambiguous and regulations need to be relaxed to make well qualified, legitimate buyers home owners. We are held accountable to performing at a higher standard and the lenders are not – it is a huge problem! Lenders need to adhere to a business standard – develop one, make them sign it and if the lender doesn’t, don’t use them. They have no skin in the game, no accountability and no repercussions.
Agents have buyers coming out of their ears. Listings are being shown but there doesn’t seem to be any sense of urgency from the buyers. Move up buyers seem to be lurking out in the market as well.
What prices are selling? The lower price points are selling – mid price points are coming down and languishing on the market. Prices are up year over year but are dropping month to month since July. Keep an eye on this trend through the winter. Prepare sellers to price competitively from the beginning or the house may not sell or you will end up chasing the market.
Are foreclosures coming? Agents are not doing BPO’s, short sales are down, and notice of trustee sales in the papers is down so the answer is not now. Asset managers don’t have any idea of what is coming down the road either.
How are short sales progressing? One has been in process 2.5 years – has had 6 contracts and still not approved – it is a Bank of America deal…no surprise. We had one agent had 3 short sales drop out last week. Another one has 10 under contract and they are languishing on the market.
Is the loan limit reduction hurting your business? It has had only a limited effect on the agents in the group. Only one deal has had an impact with 10 agents and multiple transactions in process.
Agent’s years are about the same as last year. Their volume is up but units are down but overall, income will be the same – we will see how the loan limit reduction will affect us next year. How will 2012 be for you? Spring is going to be strong.
All the agents agreed that this was one of the best meetings we have had which is great. The energy was high, there was lots of passion and everyone left with enthusiasm.
Now, go sell something.
Scott's Motivation and Real Estate Market Updates 