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And the market goes on and on and on…

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It is amazing what a difference our real estate market has experienced this year versus the last few years.  Previously we were inundated with short sales, foreclosures, dropping prices and very little confidence in the market.

Today, we are at a low point in the number of short sales and foreclosures on the market since I started keeping track of them over two and a half years ago.  In October of 2010, we had 1,460 short sales on the market, today we have only 386.  Additionally, foreclosures are at a low point as well.  In November of 2010, we had 516 foreclosures on the market and today we only have 178.  Additionally, prices were falling in the Northern Virginia area.  According to RBIntel.com our market prices bottomed out in February of 2009 with an average sales price of $307,225.  Today our average sales price is $469,800.

We are still off our highs of 2006-2007, but we are headed in the right direction.  All of this information coupled with low interest rates has restored confidence in our market.

Rates?  Did I just mention rates?  Yes I did and they are ridiculous!  Yesterday I heard one of our clients locked in a rate of 3.25% with a lender credit of 2%.  We continue to see rates decline which leads to the question of how low can they go before more people act on refinancing or purchasing?  Only time will tell.

The last area I would like to touch on is our rental market.  The inventory of active rentals remains low and interest in these properties remains high.  At this time, many people prefer to rent over buying as they remain skittish about buying or are in a situation such as a recent short sale which prohibits them from being able to purchase.  This situation has resulted in rental rates rising making investing a viable option for many people – maybe even you!

If you would like more information on how these numbers affect you whether buying or selling a house, or if you would like to discuss becoming an investor, pick up the phone and give me a call.  I would love to speak with you about your situation in more detail.

 

 

Shock and awe…

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The real estate market continues to be white hot for sellers who properly price their homes, get them in the right condition and have them staged.  This makes it very competitive for buyers.  We see multiple contracts on houses in all price ranges so buyers need to be prepared to be involved in situations like this and put their best foot forward when making their offer.  We have been saying this for several months now and we do not see that this will change anytime soon.

There is one area that continues to shock and amaze me today and that is interest rates.  It is an unbelievable phenomenon watching interest rates today.  Who would have ever thought mortgage rates could be as low as they are today taking into consideration where we have been since the Mortgage Banker’s Association started tracking rates.   Remember what happened in the early 80’s with rates at all-time highs in 18-19% range and even when I got into the business in 1988 rates were between 10 and 11%.  We got excited when the rates were creeping below 10%.  Then we watched as rates came down into the 6’s and thought they couldn’t go lower and they have.  This week I saw a 30 year fixed interest rate at 3.5% with a lender credit.  There was even an article asking if rates could go down to 3%.  There has never been a better time to purchase a home, investment property or even refinance your existing mortgage(s).  Please let us know how we can help you.

Is the spring market coming?

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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?

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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.

My Top 10 Predictions for 2012

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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!

 

 

 

How will your year end?

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As we move forward into the second half of the year fast and furious take the time to look at your business and determine what you need to do to have a successful year end. 

The first area to review would be your contacts.  How many do you have?  How often are you communicating with them?  What are you communicating to them?  Are you picking up the phone and speaking with them?  As I meet with agents regularly to conduct performance consulting with them – the most successful agents today are the ones making the calls to their database regularly and are meeting face to face with them.  Virtual contacts through Facebook, email, texts, etc. are good but you need to pick up the phone and get in front of people to get the best results. 

Are you growing your database?  Are you involved in networking groups?  Are you holding open houses?  Are you involved in community outreach programs?  Are you involved in charitable endeavors?  You need to be actively growing your contacts in order to expand and grow your business.  You can’t send our postcards, post on social media sites or advertise in print publications and expect business to come in to you – you have to go out and find it to be successful today.

Are you educating yourself?  If so, how?  What are you reading?  How often are you reading?  Do you have designations and are they applicable to today’s market?  Do you attend seminars?  Do you attend office trainings to further your education?  In order to grow, you must take the time to learn.  If you want to earn more you need to learn more – bottom line.

Are you effective on line?  Are you blogging?  Are you utilizing Google+?  What is the content you are providing on your other social media sites that engages people to read your posts and view you as a trusted resource and provider of information?  It is not the end all be all to obtaining business but it is a spoke in the wheel of your success that should not be overlooked.

You have to be better than your competition to be successful today.  You need to communicate better, you need to have better sales skills, better negotiating skills, better people skills, bottom line – you have to improve every day.  What are you going to do today to become better?  Pick a skill set and work on it!

These tips are critical to your success not only for the second half of the year but going forward as well.  Get it?  Got it?  Good!

Now, go sell something!

As we near the end of July…

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As we near the end of July, I thought I would provide a little insight into our Northern Virginia real estate market.  Inventory of resale properties has been very stable throughout the late spring and into mid-summer at 7,636 houses for sale.  What has caught my attention is the number of properties that have gone under contract the previous 30 days.  At the end of May, 3,500 homes had gone under contract the previous 30 days.  Since then, that number has declined every week to where we just had 2,880 homes go under contract the last 30 days – a 17.7% decline.  Does this cause us to panic?  Probably not, we are in prime vacation season.  We had the 4th of July holiday during this timeframe as well.  Plus, sales are cyclical and summer is usually a slower time of year for us.  Nonetheless, we will continue to see if this a more serious trend as we move forward into late summer and fall.

This decline in sales has resulted in a slightly larger month’s supply of homes.  We currently have a 2.7 month’s supply of house up from the end of May’s 2.1 month’s supply.  Again, no need to panic as it is still as seller’s market.  We continue to see when sellers price their houses to sell, have it staged properly and are in the right condition they sell in a reasonable amount of time.  In fact, we have experienced several situations where homes had received multiple contracts on them. 

Distressed home sales continue to hover around the 15.5% of total inventory active and on the market for sale.  In these numbers, we have seen a slight decline in short sales and a slight increase in foreclosures.  What continues to baffle me is that distressed property sales make up 30.7% of the home sales the previous 30 days.  This tells me that people want to say they bought a short sale or foreclosure because they believe it is a “deal” when often times they are not deals at all.

Our rental market continues to be strong for landlords.  We currently have a 1 month’s supply of rentals available.  Houses that used to take weeks to rent in the past are renting in just days.  Additionally, these homes are, in most cases, renting for more money.  The market continues to be prime for investors.

Builders in the area are still selling as well.  Loudoun County along the Greenway is selling exceptionally well.  What we are seeing in the new home sales arena is that houses that are priced right – just like resales – are selling.  Overpriced builders whom have not responded to the market are languishing on the market just like the resale properties.  As mentioned in previous blogs, we are in a very price sensitive market today.

Let’s review the national real estate news, housing starts rose to a 5 month high – up 15% from May.  The FTC won’t enforce the MARS rule against Realtors who help consumers obtain short sales – this is good news as the paperwork was unnecessary and didn’t apply to Realtors. And the Helping Responsible Homeowners Act is gaining additional support.  This Act will eliminate barriers blocking millions of non-delinquent home owners from refinancing their mortgages at today’s incredibly low interest rates.  This will help stabilize neighborhoods by keeping people in their homes.

As long as interest rates remain low, foreclosures and short sales remain a low percentage of our market, we will continue to have a steady real estate market in Northern Virginia.  Get it?  Got it?  Good!

Now, go sell something!

What’s it all mean?

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Over the last few years we have been providing you with information on the real estate market that we believe is valuable to you and helps aid you in your decision as to whether or not to buy and sell real estate.  Also, our thought is it gives you something to talk about around the office, with your neighbors or at cocktail parties! 

  • But what do all the numbers and terms mean you may ask?  Well, here is a quick guide for you going forward.  The numbers we quote are for the areas our offices conduct a majority of their business.  These areas include Arlington, Fairfax, Prince William, Loudoun, and Fauquier Counties plus all the cities in between like Alexandria, Falls Church, Fairfax, Manassas, and Manassas Park. 
  • Active inventory or resales are the number of houses for sale where the owners are selling their homes and not a builder. 
  • Month’s supply of houses is the absorption rate or sales of homes divided into the number of active properties on the market.  Basically, if no other houses came on the market, it would take that many months to sell all the houses that are for sale.  As a general rule, 6 months is considered to be a balanced market – neither a buyer or seller’s market.  Less than 6 months is considered to be a seller’s market and more than 6 months is a buyer’s market. 
  • Days on the market are the average number of days on the market it takes for a house to sell after going up for sale.  Again, typically the fewer the average days on market the more likely it is to be a seller’s market and the longer the average days on market is typically indicative of a buyer’s market.  In addition, the fewer the days on the market of a particular home, the more likely the sellers are to receive a full price offer or even multiple offers. 
  • This brings us to multiple offers.  It is what it says.  The owners received more than one offer to purchase the home when it was put on the market for sale.  How does this happen?   Typically it is because of high demand for an area because of the school district, location to commuter routes, shopping, etc. along with the sellers pricing the property properly, getting the home in the right condition and the staging of the house that makes this possible.
  • Distressed property inventory are houses that represent short sales and foreclosures.  A short sale is when a home owner owes more money on the house than what the house is worth and they are trying to get their lender(s) to approve a sale for less than the amount owed to them.  A foreclosure is where the owner of the house stopped making payments and the bank took the property back through a series of steps required by the state and allowed through the deed of trust.

If you have any other questions or concerns about the numbers or the terms discussed monthly, feel free to contact me.  As Sy Sims used to say, “An educated consumer is our best customer”.

The bubble burst…Now what?

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What has been the catalyst in spurring the housing bubble and subsequent burst that has left us in the mess we are in today?  Was it the run up of prices?  Was it greed?  Was it poor advice given to buyers by Realtors and lenders?  Was it lax underwriting guidelines?   Was I the government’s proclamation that everyone should be able to achieve the American Dream of home ownership?  The answer is yes to all of the above.

The housing prices escalated at ridiculous rates – far above historical percentages that had been established over decades.  Builders couldn’t build fast enough to satisfy the demand which drove up their prices.  Buyers were having a difficult time being able to purchase a home and therefore bid up the price of the home above what they were willing to pay for a house originally.  It was a stressful and fascinating time to be a Realtor.  Buyers were mad that they had to bid so high to get into a home and sellers were mad at Realtors because their neighbor’s house sold for more money than theirs did – no one was happy.  Yes, over escalating prices were one of the causes that affect us today.

The greed factor came into play with “flipping”.  Many people bought homes from builders.  In most cases, as they went through the lengthy construction phase and because of demand, prices escalated.  You could buy a house, not do anything to it other than wait until it was ready, then raise the price and sell the home for a profit – many times for tens of thousands of dollars more than their original purchase price.  It seemed as if everyone had a story of someone who did this so they tried to do the same thing.  As the saying goes, too many chefs spoil the pot – well same thing happened in the new homes arena.  As prices declined, buyers bailed and builders got left holding too much inventory.  Also, greed came into the picture with people using their homes as a piggy bank and not a savings account.  How many people do you know that refinanced not just once but many times and bought properties, fancy cars, and vacations they normally would not have been able to afford?  Greed is not good Gordon Gekko and it has affected us today.

How many inexperienced, uneducated people got into the real estate and lending business when the times were good?  Hundreds of thousands got into our businesses.  Whose interests were they looking out for in the transaction?  One guess, not the buyers – theirs.  They got into the business for what was believed to be easy money.  They gave advice that wasn’t the right advice about the market and where prices were headed.  They got people into loans that were not right for the people they gave them to and as a result, they defaulted.  Poor advice definitely contributed to people’s over exuberance in their decisions on purchasing and financing properties and it is taking its’ toll on the market today.

Was it the policies that were put into place that lead to lax underwriting guidelines a cause that lead to where we are today?  You better believe it!  These loose guidelines resulted in allowing people who should not have become home owners to become home owners.  In my opinion, this probably had the biggest impact on how everything listed above was able to occur.  What were the guidelines that were slack you ask?  Here are just a few:  debt to income ratios up to 45%, no income no asset loans, loans up to 125% of value if combined with other liens, minimum FICO scores of 620 for prime loans, 10% down payments for financing investors, interest only loans and of course the teaser rate loan products.  Without these underwriting guidelines being loosened, we wouldn’t have had the ability to do all that was stated above.

Was the government’s belief that everyone should be afforded the American Dream of Home Ownership a contributing factor?  Of course it was.  Not everyone should be a home owner.  Credit scores need to be higher to be considered prime.  People should have some skin in the game and not be allowed to finance above the sales price to get into a home.  People need to verify their employment, prove they have cash reserves, and provide tax returns, etc. in order to obtain financing – it is common sense.  The problem today is the virtually the same legislators who made these loans possible have swung the pendulum too far the other direction and are hampering our recovery efforts in the housing sector of the economy.  FHA costs have risen, talk of raising down payments to 20% are going to hurt the market, stricter ratio requirements are in place and the overall costs associated with a loan are up 8.8% over last year as reported by Bankrate.com.  These trends have to stop if we want to see true recovery in the housing market and the overall economy.

Real estate has always been the key to getting the economy out of its slump and the longer housing languishes, the longer we will be in a recession.  What we do know is that more strict underwriting guidelines are not the answer.  Responsible lending and more educated agents and lenders providing the consumer the right information are going to be part of the solution  but getting the underwriting guidelines back in line with reality is the catalyst to recovery.   Get it?  Got it?  Good!

Now, go sell something!

My crystal ball broke…it’s all about the numbers

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Although my crystal ball is currently in the shop, we do know where things stand in regards to the local housing market in Northern Virginia.  Inventory levels of active resales are virtually the same – we currently have 7,640 homes for sale in Fairfax, Loudoun, Arlington, City of Alexandria, Prince William and Fauquier Counties.  This time last year we had 7,680 – pretty similar.  There is a slight difference between these two timeframes and that is in the number of distressed properties on the market.  This year there are only 293 foreclosures for sale along with 882 short sales – last year, there were 450 foreclosures and 1109 short sales.  This result is a difference of about 5% of the total inventory.  The perception is we are inundated with distressed properties when in reality, we have a lower percentage of overall inventory than the rest of the country in relation to foreclosures and short sales.  Our market is healthy. 

We have a 2.6 month supply of homes which is a seller’s market.  Houses are selling when the sellers have them priced right, in the right condition, and staged properly – often times with multiple offers.  We had several agents engaged in multiple contract situations this past weekend with a few of those properties being listed for several months.  We have buyers in our market because we have jobs.  One of our agents relayed a story of his nephew and their job search.  Over 140 people interviewed for a job at an oil change shop in Florida – that’s unbelievable.

Our rental market is strong, currently posting a 1 month supply of homes.  The reason is people relocating into our area are gun shy on purchasing.  This is as a result of a few different factors.  It may be their confidence in the housing market because of where they came from to relocate here, they can’t buy because of a potential short sale or foreclosure on their credit report or they are losing out to other contracts and have a short time to find a property and get forced into renting.  Either way, it is a great time to be an investor in Northern Virginia.

Prices are stable to increasing in the Washington Metropolitan area.  We are seeing price increases throughout our region in several price points.  Typically in house priced below $400,000 (pretty much everywhere) and those priced between $800,000 and $1,200,000 (closer into the beltway and DC).   In addition, builders found their bottom in pricing towards the end of last year and the first quarter of this year and have started to escalate their prices as they have seen an increase in sales of their homes.  Reports show that we are expected to have a 7.4% increase in housing prices in our region compared with -3.2% in the rest of the country – a difference of over 10%.  Again, we have a healthy market.

We also have low interest rates which are fueling our sales – housing is affordable because of rates.  If people are waiting to buy because they feel prices will come down – they are mistaken.  If they think rates will continue to decrease, they are mistaken as rates have actually increased over the last few weeks.  Now is the time to buy.