Clifton

Tidbits from the Spring Economic Update…

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Yesterday was the Spring Economic Update 2011 for NVAR and as usual, it was chock full of information on not only the national economy but the local economy as well.  The featured speaker was Dr. Stephen Fuller and he gave his insight into what could expect on our way out of the recession and on the road to recovery.

35% of the local economy is the federal government but it is not driving our growth as it did from 2000-2010 when it was a much larger factor.

The remaining 65% of the economy is driving our growth even though it doesn’t have the bank roll of the gov’t it is still good.  We can’t print money like the federal government.

Still a jobless recovery – efficiency and technology recovery – more productive workforce and is stronger than everyone expected.  We are on track for a recovery for similar to 1991 – 52,000 jobs lost in 2009 we lost 50,000 but tracking in terms of GDP in the 2009 recession.

Differences 1/3 GDP was manufacturing – today is 10% of GDP; Global Economy today; flexible workforce – people work from home; Stimulus money helped us as well; Expansion is wide spread & broad based – educ/health, professional & business serv, leisure and hospitality, and manufacturing are leading the way.

Credit card debt is up 2 months in a row – savings are down as well.  People are spending – consumer confidence is up – February not as bad as last year in terms of weather so people were out spending.

Manufacturing up 19 consecutive months – non manufacturing up 17 months – these are both better than expected.  New orders continue to come in as well.

We are doing same amount of work with 8,000,000 fewer workers since recession began. ¼ of workers have been re-employed then unemployed again.  Unemployment numbers are down and are coming down faster than expected but may be misleading.  Unemployment is at 8.9% now was at 9.5% at the beginning of the year and is projected to be 8.8% by the end of the year.

Consumer’s perspective on the economy – they believe future is better than the past and are close to optimistic but the present situation is not as good as expectations.

New home sales, although at near historic lows, are on the road to recovery.  Next year will be better and their increases will come in the last quarter of this year.

Federal Reserve is expected to increase the Fed Rate by ¼% and as a result, mortgage rates will increase.  Expect rates to remain low through the fall buying season then increase after that time frame.

Energy prices, taxes, and rates are all going to go up.  Oil prices will rise – payroll taxes will go up – interest rates are going up as well.

No big bubbles on the horizon in the economy.

Locally, we are in recovery with a good trajectory and gaining altitude.

Jobs are coming back but not as much as was predicted by the labor bureau.  January was strong for job growth.  We have gained the most jobs out of the top 15 markets – Washington area and Boston are the only 2 markets to increase and we doubled them in creation of jobs.  This January was the first January in we did not lose jobs in the construction sector.  Over 40,000 jobs were lost in this sector alone.  We have 4.7% unemployment rate in NOVA – Arlington is 4.3% and is the lowest in the state.  Non-local service businesses will help pick up the slack of the government not expanding.  These are businesses are businesses that don’t need to be here but want to be here – not tied to the government.

The economy is expanding without the aid of housing – 19% of GDP is the housing sector and all that goes along with it.  Typically housing is the juice that fueled the recoveries in the past – this recovery will not see housing contribute until 2012/2013 – we saved the best for last.  Pent up demand in move up market will help drive the recovery in the future.  NOVA is driving the housing recovery locally.  If we average 6%, which is predicted, then we will get our numbers/values back in 3 years.

Forecast and challenges in 2011 for housing

  1. Low consumer confidence – fear about jobs/economy
  2. More difficult lending processes
  3. Lack of urgency
  4. Foreclosures remain in some jurisdictions
  5. Shift in housing preference – will affect builders more than re-sales but buyer’s preferences will dictate what will sell
  6. More apartments will be built – a few condo projects are on the horizon – new builds will enter market near the end of the year, beginning of next year

We have a shortage of housing – 705,000 jobs are needed to fill the demand we have in our area which is 220,000 households that we will need that we don’t have currently.  The future is bright for us in housing.  Public policy will be our challenge – gov’t wants the jobs but not the houses because houses mean police/fire & rescue, schools, etc.

Policy-cra.gmu.edu is where you can find PowerPoint slides

It is more important now than ever to stay up to date and informed as the market continues to evolve.  More changes are on the horizon with Fannie Mae and Freddie Mac, pricing, short sale reforms and much more I am sure so read, attend seminars and go to trainings.  Get it?  Got it?  Good!

Now, go sell something!

 

 

Cha, Cha, Cha,Changes….

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The real estate market continues to change. Loan programs are changing, rules and regulations in lending are changing, interest rates are changing, prices are changing, activity levels are changing and it takes a professional to help consumers wade through the complexities of the market and give their buyers and sellers the right advice when dealing with real estate. Yes, there are agents who have a license, who can show properties, write contracts, attend inspections and settlement but it takes a professional to explain trends, understand data, and give the right advice to people when buying and selling homes.

The internet has helped the consumer find information on real estate – what is for sale, neighborhood information, school information, crime reports, and if they can dig deep enough, sold data through tax record information. But does this really tell the whole story? Were points or closing costs paid by the seller –if so, how much was paid? What was the property’s condition? Was it a distressed property or not and how did that play into the final sales price? Were there multiple contracts on the property? There is so much more to the story – tell your clients about this information that is not available on the web. The internet provides information – as a professional, you need to provide insight. If you do, you will demonstrate your value and get paid what you are deserved each and every time.

To be able to tell someone now is a good time to buy or sell a home takes market awareness. Where are interest rates today and why? Will they be rising or falling and why? How does this impact the decision on when to buy or sell and why? What is happening with FHA condo approvals and how will it impact both buyers and sellers? Is activity up or down in the market and how will impact pricing? Is activity up or down? How does the agent know? It isn’t knowledge that is power it is the use of knowledge that is power. Use your knowledge to empower people to make the right decisions.

Get involved in the market – preview houses, visit new home sites, network with other leading professionals in our business to get the pulse on the market. Now is the time to make yourself an indispensable asset to your database and create clients for life. Get it? Got it? Good! Now, go sell something!

Shakespeare said it then, Scott says it now

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To blog or not to blog – that is the question.  My answer is to blog. There is business to be gained by blogging.  What is important to keep in mind when posting is what is the purpose of your blog?  Are you looking to pick up buyers or sellers, be a neighborhood expert or do have another goal in mind?   Whatever it is, keep this as your focus in every blog you post.

My belief is it is our job to let the consumer read what they need to read, hear what they need to hear and learn about what is really happening in the market from the experts and so they don’t get wrapped up in what the media wants them to read, hear and see.   The media’s job is to sell negative information and not plant the right seed.

What can you blog about?  Neighborhoods, client interactions, success stories, your listings, homes you have previewed – deal of the day or week, life experiences, your interactions with others or anything else you find interesting or think someone else may find interesting. 

Why is it important?  It is important because the consumer goes to the internet to get information on everything – not just houses.  This being said, when they are looking to make one of the biggest decisions of their life, don’t you think they will do more research on this topic than not?  This is why blogging is important.  Get your word out to others on where the market is – don’t be afraid to make your opinion known.

Who is reading blogs?  As previously mentioned, the consumer but also other are people you will invite to read it – past clients, other Realtors and real estate professionals, your sphere of influence and people interested in the neighborhood or area you are blogging about.  If you make it interesting, keep it up to date, and do it consistently, you will gain readership.  Why are Realtors and other industry professionals reading blogs?  To find good referral sources for their relocating clients.  If you have a relocating client, do you help them find a Realtor where they are moving?  How do you narrow down the selection?  Typically I look at production, what their hobbies and interests are and if they match my client’s hobbies and interests, if they have a website and if they blog.  If they blog, I read their blog to determine if they are positive or negative, on target with the market and generally what their knowledge is in real estate.  The more they know in what they say and how they say it, the more likely I am to refer them.

Pitfalls – time, writing ability, how to come up with new ideas, where to get started, to pay or not to pay for your blog site, and does your company have a policy on blogging?

Good examples

Bad examples

What to avoid – negativism, writing about a specific case as it is in process, defamation of character issues

What to include – add pictures, hyperlinks and video.  Have a good title, insert good metatags and keywords.  Solve a problem or provide valuable information (housing stats, trends, pricing, DOM, companies moving/relocating into the area), say it simply and in layman’s terms not in our language, again, have a call to action (subscribe here, click here for free home search, follow us here, email me for more details here, click here for a free home buying/home selling consultation, etc. and as always, make it about them – not you!

It’s all about results and ROI on your time.  Be sure to work with a site that will allow you to track numbers such as total page views, average page views per day, unique visitors, bounce rates, referral websites and most popular pages.  Also, ask for people to share and comment on your blog and you in turn should return the favor.  Give in slices, get returned in loaves!

Things to consider now that we have reviewed blogging…How do you benefit?  What can happen?  How do you do it?  It can only produce results.  Get it?  Got it?  Good!

Now, go sell something!

It’s about time!

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The national news is now reporting good news about the housing market.  Existing home sales are up, interest rates are down, inventory levels remain low, builders are selling homes and distressed property inventory is staying at bay from the market.  In addition, we are seeing more showing activity at our listings, we are receiving more calls on our signs and as a result, more sales are happening.  This has also resulted in higher prices which is a good thing for all home owners.  What a great momentum shift taking us into the spring market.  All this news can do is to continue to help the economic recovery and build consumer confidence.  As consumer confidence grows and spending occurs – we all win! 

The advice you should take away from this information is – buy today while prices are still low, interest rates are below 5% and great properties are available to you.  The spring market can result in higher prices, higher interest rates and even less inventory as fewer homes are coming on the market.  There is no time like the present. 

For Realtors, spread the word, get busy contacting everyone you know and start selling more homes.  Get it?  Got it?  Good!

Now, go sell something!

Hello? Is it me your looking for?

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Hello???  Where have all the foreclosures gone?

As we enter 2011, our area is poised for a great year in real estate in the Washington Metropolitan Area.  Inventory levels are down, we have jobs, interest rates are expected to remain at historically low levels, and we had the second highest level of price increases in the country last year.

We mentioned inventory levels are down, especially foreclosure inventory.  Why are foreclosure levels down now?  It started with the “robosigning” of documents in judicial states back at the end of October beginning of November timeframe when banks and the Government Sponsored Entities put a moratorium on foreclosures to review their processes and ensure checks and balances were in place in their foreclosure proceedings.  Then, we hit the holiday season which typically signifies a slowdown in the process-yes, the banks and GSE’s have a heart.  It will be interesting to see when the foreclosures will be released for marketing and how – all at once or methodically – and then we will see how it will impact pricing.

We have the jobs.  Of the top 15 metropolitan markets, we have the lowest unemployment rate in the country.  Major corporations have relocated here and are expected to continue to relocate here because of the education level of our workforce, multiple international airports, the cultural diversity, the Federal Government, tourism factors and so much more.  In addition, CEO’s under 30 rank our region in the Top 10 so job losses are less likely to occur here locally.

Also, it is projected that interest rates will remain below 5.5% for 2011.  In order to continue to see a rebound in the housing sector, rates must remain low.  In response to this plea, the Federal Reserve announced it would keep the Fed rate at 0-.25% and have agreed to purchase $600 Billion in mortgage backed securities.  At this time, it would have a devastating impact on the recovery if rates were to escalate substantially.

These factors contribute to more stable prices and in some cases, increasing prices.  It is area specific with some neighborhoods seeing huge price increases while others are seeing decreased prices.  It is so important to contact your real estate professional to learn more about your neighborhood.  But it is a fact; low supply and high demand lead to increasing prices.  Many purchasers who bought in the last 2 years have seen an increase already.  We don’t expect huge increases like we saw in 2003-2006 but we expect to see moderate increases, which is healthier for the economy and housing sector.  Another contributing factor to our increase in pricing is that international investors see the value in our region and in 2010, we were ranked second only to New York City in foreign investment both globally and nationally.

What else shall we keep an eye on this year?  The restructuring of the Mortgage Interest Deduction, unemployment nationally, potential terrorist threats as we approach the ten year anniversary of 9/11, foreclosure activity nationally and if we can get a streamline approach to short sales.  Stay tuned into what is happening so you too can have a successful 2011.  Get it?  Got it?  Good!

Now, go sell something!

It’s all about your peeps

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Lately there have been articles written about diversifying your business – well I say, “Go with what you know”.  It is time to focus on your database, the management of your database and its growth. 

  • The question is, why try to get into foreclosures?  This aspect of the business is already overwrought with Realtors, is difficult to penetrate and in many instances can be very expensive as expenses need to be covered until they can be reimbursed by Fannie Mae, Freddie Mac or the banks. 
  • Why begin mass mailing campaigns?  They are expensive, time consuming, produce a relatively low return on investment plus it takes years to establish yourself as the expert. 
  • Internet campaigns are time consuming and have a relatively low return on investment plus the leads can take years to incubate.
  • People – much like yourself – hate to be cold called, so why do it? 
  • Door knocking is for Girl Scouts, not professional Realtors.

So let’s focus on who you know and how they can get to know you better so you can get referred more business.  How can people in your database get to know you better?  It can be summed up in one word – consistency. 

  • You need to become consistent in your mailings to your sphere.  The mailings need be informative to the recipient – their house value, interest rate information, neighborhood information, area trends, etc.  Also, keep good notes on your members so you can send them coupons to their favorite restaurant, information about camps for kids, etc.  Remember, it is about them – not you!
  • You need to be consistent with your calls.  Call them on their anniversary, the anniversary of the purchase of their home, holiday greetings, birthday wishes (remember I said to take good notes on your members?), summer vacation calls, your neighbor just listed calls, or just checking in calls will all work – do it consistently!
  • You need to provide great client events.  Typically one for the kid oriented groups and one for the adults.  Ball games are great, bowling nights, Super Bowl parties, and Casino nights – all work.  Get creative but just do them.
  • You need to invite to participate in charitable events.  If you don’t host one – start.  If you “don’t have the time”.  Get involved in a charity and volunteer.  Your database needs to see that you are passionate about something other than business.  By giving back – you will get back!
  • Network – consistently to add new people to your database.  Join a BNI, referral share group, chamber, hold business to business meetings, join an association, coach youth sports, and get involved in something to allow yourself to meet more people!  The only way to add to your bottom line is to add people to your database.

Basically, you need to spend the year focusing on your database – not other avenues of business to get you long term results.  Get it?  Got it?  Good!

Now, go sell something!

Over and over and over again!

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I am beginning to feel like a broken record but the statement continues to ring true – now is the time to buy a home in Northern Virginia.  The reasons are crystal clear – interest rates are low, prices are stable to increasing, new home sales are rebounding locally, rental rates are increasing and we have the jobs.  Let’s review, shall we? 

  • Although interest rates nudged below 4% for a 30 year fixed mortgage for a day or two and they have creeped up to a whopping 4.75% – you still can’t get a better deal on a mortgage today from a historical perspective. 
  • Prices continue to stabilize throughout most of our region and are beginning to rise in the lower price points which will have a ripple effect on prices in higher price points as buyers “move up”. 
  • Inventory levels are at their lowest level since this time last year – less supply + more demand = higher prices – Econ 101.
  • New home sales in our area are strong compared with the rest of the country.  Stanley Martin set a record for sales in 2010 – Toll Brother’s numbers are strongest in this region relative to other areas where they build and NVR said sales were strong the first 9 months of 2010.  With this momentum – prices will have to increase.
  • Rental rates are increasing as well making owning a more viable option which in turn will also impact prices.
  • People continue to move to our region because we have the jobs.  Our unemployment is the lowest in the area and the Washington Metro area boasts the lowest unemployment rate out of the Top 15 Metropolitan Markets.  Houses are where the jobs go at night so prices will have to increase. 

So how does this impact you as a buyer?  Jump on the train now because it is about to leave the station!  Interest rates in all likelihood are going to increase to around 5.25-5.5% this year.  Prices will be pushed up due to pent up demand and an influx of buyers into our market place.  You don’t want to be one of the people left on the sidelines saying, “I should have bought early in 2011”.  Get it?  Got it?  Good!

Now, go buy something!

The Rocking Realtors relay their forecasts for 2011

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I was recently on Real Estate Radio with Ryan Slopper…check out the show!

Catch the show every Monday from 2-3 p.m. on The Big Talker, 1580 AM.

Don’t rock the boat baby…

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There has been a recommendation by The President’s Commission on Fiscal Responsibility and Reform to reduce the mortgage interest deduction for home owners.  The commission recommended turning the mortgage interest deduction into a tax credit, capping eligible mortgages at $500,000, and eliminating tax benefits for second homes and home equity loans.  This deduction has been in place over 80 years and has been on of the main reasons people make the move from becoming renters to home owners.  The tax deductibility of interest paid on mortgages is a powerful incentive for home ownership and is one of the simplest provisions in the federal tax code. In a recent survey commissioned by NAR and conducted online in October 2010 by Harris Interactive of nearly 3,000 homeowners and renters, nearly three-fourths of homeowners and two-thirds of renters said the mortgage interest deduction was extremely or very important to them.  If this reform takes place it will have far reaching implications in our economy and in our housing sector.

So, how will the change in mortgage interest deduction affect housing? 

  • There are currently 75 million homes in America, approximately 51 million are owner occupied and have a mortgage.  In 2008, nearly 38.5 million people claimed a deduction for mortgage interest on their taxes.  Changing this IRS code will affect a huge number of people who file taxes each year and count on this deduction as part of their home budget.
  • It is estimated that the home prices and values of homes will drop by close to 15%.  This will impact home owners net worth and wealth drastically.  Home values in 2009 were estimated at $19.3 trillion meaning nearly $2.9 trillion of wealth would be lost by homeowners – a drastic situation for many Americans.
  • Housing is nearly 20% of GDP as each property sale generates over $60,000 in revenue and touches over 20 industries.  As mentioned above, nearly 3/4 of home owners and 2/3 of renters claim the mortgage interest deduction as extremely or very important to them and their decision to buy a home.  This will substantially reduce the number of sales every year will affect the overall economy.
  • This change will affect an already rocky housing sector of our economy.  Billions of dollars have been spent to support the housing sector so does it really make sense to reverse the trend now?
  • Jobs will be lost as a result – real estate offices will close – the need for Realtors will diminish – builders will go out of business – title companies will reduce in size – the mortgage business will shrink – county government employees in record rooms will lose jobs – trades people will lose their jobs and the list can go on and on.

This decision will be bad for business, home owners, the economy and so much more – keep the mortgage interest deduction in place for the good of America.  Get it?  Got it?  Good!

Now, go sell something!

 

My Top 10 Predictions for 2011 are finally here!

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Images 
As we approach the end of the year, it is time to reflect upon what we experienced, what is happening now and where things may take us next year to allow us to adjust our plans and to make the most of our opportunities ahead of us!

This past year was once again riddle by media speculation on housing and its demise on a national level while our market was virtually ignored – even by local media outlets – on how resilient we are relative to the rest of the country.  We will see this again this upcoming year as negative news always sells.  Keeping this in mind, areas of concern that will be reported by the media are interest rates, pricing, foreclosures and short sales.  We have seen a decrease in inventory as the holiday season is upon us but houses continue to sell nonetheless.  The driving forces include interest rates which remain at generational lows and prices that are beginning to rebound in many areas encouraging fence sitters to jump off and become home owners.

So, what is my forecast for 2011?  Let’s take a look!

  • Short sales will remain difficult as banks continue change the rules under which they operate.  Until there is a systematic, streamlined process buyers and sellers will remain in peril when dealing with short sales.  Recent issues have been with banks countering contracts to ridiculous values and countering with unrealistic settlement dates of just a few days after making our clients wait over 15 months for an approval.  The banks need to hire people familiar with the home buying process or train the ones they have to understand how real estate sales are processed in order to facilitate more successful sales.  The problem is, this won’t happen in 2011.
  • Rates hit record lows the second week of November and have increased every week since with the announcement of QE2.  However, the central bank voted to keep the target range for its benchmark federal funds rate at 0 to 0.25 percent, and reiterated its commitment to purchase an additional $600 billion in long-term Treasury securities by June 2011. This announcement should help keep interest rates below 5.5% for 2011.
  • New home sales will rebound locally as builders have weathered the storm.  Additionally, we will see more local builders enjoy success as new companies are formed or have been formed recently and they can fill the new home niche better than the national builders with their knowledge, skill and flexibility as they have lower overhead.  Competitive pricing, up to date floor plans and desirable locations will contribute to all builders’ success in 2011.
  • Many agents, loan officers and title agents will drop out of the business as the business becomes more specialized with short sales, foreclosures and continuous changes in financing. The consumer will demand professionalism from their agent.  The new agent pool will be younger and will not only embrace technology but will use it to their advantage over “experienced” agents.
  • More agents will gravitate to utilizing video as the consumer prefers video over text and pictures.  Those who adopt early will enjoy more success than those who do not embrace this medium of communication – much like the implementation of various social media tools.  Video is the new trend in real estate in 2011 and beyond and is here to stay.
  • We will see a moderate increase in prices in 2011.  Some areas will see greater gains and some will see moderate declines as each market/neighborhood has its unique benefits and challenges.  The saying has gone from “all real estate is local” to “real estate is hyperlocal” – use a professional.
  • The banks, Freddie Mac and Fannie Mae will slowly release foreclosures onto the market to protect their values and the market values in neighborhoods.  Foreclosures will remain a constant force in the news in 2011.
  • The economy is recovering slowly but at a rate that has been insufficient to bring down unemployment nationally.  Locally we are at 4.8% and we should remain low compared to the rest of the country.  The DC area boasts the lowest unemployment relative to the 15 major markets around the country and this trend will continue through 2011.  This trend will help sustain our real estate market as houses are where the jobs go at night.
  • The market and consumer will demand more professional agents with the ability to provide the right tools and technology to make their transactions smoother and efficient.  Agents who attend trainings, earn designations, and continue their education will see their incomes soar above the agents who continue to conduct their business as usual.
  • Companies that provide up to date educational opportunities, hire the best of the best, invest in technology, services and support plus trim their expenses by making tough choices will thrive in 2011 and beyond.  Companies that are top heavy, unable to consolidate or provide tools necessary for success will fail and close providing opportunities for well balanced companies.  As a result, more closures in the real estate industry will continue in 2011.

As you can see, the New Year will offer challenges and opportunities.  Recognize how you can take advantage of what is presented to you and make 2011 your best year ever!  Get it?  Got it?  Good!

Now, go sell something!