It’s going to be a long and busy summer!

As we head into the dog days of summer, I thought you may be interested in reading about the Northern Virginia real estate market as well as some national real estate news as well.  Let’s dive right in!  The Fox Gate development at the doorsteps of Loudoun County received its’ approval to begin development.  Fox Gate is located between Pleasant Valley Road and Tall Cedars Parkway, encompasses 27 acres which will offer 1.2 million square feet of office, retail, hotel and civic space along with 110 residential units. 

Apparently Bechtel, the country’s largest contractor – the contractor building the Silver Line – is secretly looking for up to 300,000 square feet in Loudoun County.  Obviously, this is a huge home run for the area as Loudoun boasts a 26% vacancy rate on commercial properties and Fairfax County has 16% in the areas where they are searching.  Forbes ranks Bechtel as the third largest privately held company with just under $28 Billion in revenue with 52,700 employees – not too shabby!  Here is a great opportunity if you know of anyone who works there to do some relocation business.

Also, locally our market is seeing the same market we were in last year as far as numbers are concerned.  For the first week of July, active resales were 7,379 this year versus 7,534 last year.  We have a 2.3 month’s supply of houses for properties that went under contract the previous 30 days both this year and last.  The rental market is virtually the same with a one month supply this year and a 1.2 month supply from last year.  I have to say it to remain consistent.  If you aren’t working with investors, holding investment seminars or obtaining a designation to help investors, you are missing out on a huge opportunity.  We will discuss more reasons why later.  Houses that settled the last 30 days have a 2.7 month’s supply of houses – last year it was a 2.5 month’s supply, a difference of 300+/- houses.  I think the difference here is short sales and the changes in the bank’s stance in regards to their handling of them.  We are seeing the banks counter the prices way above what is realistic based upon market conditions, asking for interest free loans and even the requirement for sellers to bring cash to the table.  Agents need to set the expectations for our sellers so they know that these options are serious possibilities and keep these deals together.  Obviously the pricing piece can’t be overcome easily but the other two options can be discussed upfront to help keep deals together.  Additionally, Chase recently announced that they are not in the short sale business, they are in the foreclosure business so be on top of your Chase owned loans.  Distressed properties make up 15.5% of the active inventory this year versus 19.9% this year.  Foreclosures are down this year versus last year as the foreclosure process is taking longer and inventory continues to be slow to get on the market.  Buyers continue to be price sensitive and are looking for the “perfect” house so continue to encourage proper pricing, staging and even prelisting inspections to get your listings in the best light for potential buyers otherwise, they will sit on the market.  Pricing properly is even more important in the outer counties and localities as new home prices are attractive in areas closer to the beltway.  Therefore, new home sales continue to post strong numbers as their pricing is competitive today and the buyers get to select how they want their houses to be decorated.  Our friends from Van Metre will share their success with us shortly.

There have been several good articles posted recently to help buyers realize now is a good time to buy along with the Housing Secretary Shaun Donavan stating it is unlikely housing prices will drop further and a noted now was a good time to buy.  He also mentioned officials must find ways to provide access to home ownership without requiring a 20% down payment.  Additionally, Warren Buffet posted his Five Real Estate Tips which include: 1) Housing prices increase in value over time especially as the dollar becomes worth less.  2)  Buy low, prices are down due to the housing bubble and appear to be at the bottom and you can never time a market.   Also, remember, you make money when you buy – not when you sell.  3)  Don’t wait too long to take advantage of low prices – if you wait for the robins, spring will be over.  4)  Smart home ownership has 3 elements – fixed rate mortgage, affordable payments and a long term hold.  5)  Buying a dream home can be a nightmare – don’t let your eyes be bigger than your wallet – go with the fundamentals previously discussed.  And lastly, pending home sales rose strongly in May which was the first time contract activity was up over the previous year since April of 2010 and we all know the reason for that was the expiration of the tax credits.  Let’s continue this trend into the second half of the year!

The things to look out for to carry us into the second half of the year are number one, jobs.  If jobs don’t get created then consumer confidence will stay low and housing sales will suffer. Number 2 is  underwriting guidelines for mortgages cannot get stricter, they need to be relaxed as the pendulum has swung a little too far.  In 2009, 23.5% of loans were rejected, in 2010, 26.8% of loans were rejected which is not a good trend.  If underwriting continues to become more difficult home sellers and buyers will be hurt and the ones who will benefit will be investors.  Investors typically pay cash plus, if buyers can’t get loans, they become renters and the rental market becomes stronger.  Remember, you need to be working with investors. Number 3 is distressed property numbers need to remain low which may be difficult.  CoreLogic estimates that 10.9 million or 22.7% of home owners with a mortgage are underwater at the end of the first quarter – 2.4 million home owners have less than 5% equity so this puts a total of 27% of the nation’s mortgage holders at risk.  The foreclosure process is now taking an average of 400 days which is twice as long as it took in 2007 so distressed properties will be in our market for the foreseeable future.  Number 4 is rates need to remain low allowing more buyers to be able to afford homes – Leslie Wish knows all too well how an increase of 1% in rates can knock down the potential number of buyers in the buyer pool.  And lastly, number 5 you!  You have to be active in the business, speaking with people – not just emailing, blogging, texting and attending trainings – you must physically speak with people on the phone, at networking events, open houses, at the pool, at your kids or grandkids sporting events anywhere you can get belly to belly with people.  You need to make it happen by spreading the word about how market is different from what they read in the papers or see on TV.  Get busy getting busy!

Now, quickly some fun stuff.  Zip Realty is no longer offering buyer rebates.  They have closed offices in 12 markets and have shed 700 agents.  They will continue to offer sellers a 1% listing credit in the 23 markets they are staying in but after posting losses of $12.9 million in ’09 and $15.5 million in ’10 they are finding it increasingly difficult to remain profitable – duh!  In addition to these losses, they will experience even more as their transactions are down 12.2% this year versus last…who could be next??  Perhaps it could be Redfin – we shall see!

Take this information and share it with your clients and demonstrate to them you are the expert in the business.  Get it?  Got it?  Good!

Now, go sell something!


Top Producers Chime in on the Market

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!