Scott MacDonald counts down his 2013 Top 10 Preditions for Northern Virginia Real Estate PREDICTION #8 Resale/New Home Building projection for 2013. scottymacsblog.com
distressed properties
Coast to Coast “Buzz” – Market Rebound!
As we enter the 4thquarter of the year, we continue to see strong sales in real estate, low inventory levels of existing homes on the market and phenomenally low interest rates. I just got back from the RE/MAX California-Hawaii Regional meetings and all the buzz was how the market is on the rebound and how there has never been a better time to buy a home.
It was funny, as I was headed to the airport back home yesterday, the taxi driver overheard my phone conversations. When I was finally off the phone, he asked if I was in real estate. When I confirmed his suspicion, even he commented – unsolicited – that more people should be buying a home today. He had no real estate experience and he couldn’t understand why people were paying more in rent than if they were to buy under the current conditions. He even made the comment that workers at 7-11 could really buy a house today because they could actually qualify for a mortgage -not like wat was happening in the past.
West Coast to East Coast – the “Buzz” is Market Rebound!
We are at historically high affordability rates for home ownership which makes today a great time to be a home owner or investor. From the investor’s side of the equation, there are many people who cannot buy because of past history, some are only relocating temporarily to the area, and some are just plain old gun shy to buy because of the negative housing market over the last 5 years. Therefore, with prices down from the all-time highs but making their way up the ladder, a good renter pool, great financing options for investors – now is the time to get in the game! Home ownership is a long term investment strategy that can pay big dividends later. To learn more about becoming an investor, call us today. We would be happy to speak with you about your financial goals and objectives.
Summertime market…it’s gonna be fun!
The spring real estate market is hopping along as we enter the summertime “fun in the sun” buying and selling season. Our inventory levels remain very low for this time of year – we actually have seen inventory levels on the decline in recent weeks. Multiple contract situations are more the norm than the anomaly, which can be frustrating for buyers. Prices have stabilized but we need to see them increase to help out people in the area that are still underwater with their house values. Although we have people still underwater on their houses, distressed property inventory remains very low – only 11% of all inventory consists of short sales and foreclosures.
The big news this month seems to be the rise in consumer confidence in our area compared with the rest of the country. My feeling is people are becoming more optimistic in Northern Virginia because we have jobs and our housing market is strong. We have a 1.5 month’s supply of resale properties and a 1.1 month’s supply of rental properties. People are not only out looking at properties but they are actually buying houses. Agents are working hard and diligently working on listings and contracts. The environment around the office is fast paced and optimistic as the agents are busy helping our clients buy and sell houses. Our lenders and title partners are expressing a lot of the same sentiments with the market and its activity. In addition, there is a lot of “good” publicity surrounding the real estate market which is a welcomed reprieve from the last several years of nothing but negative news. All of this information will propel us into the summertime selling season so if you are looking at your options with real estate, give us a call.
So this is what Deja Vu feels like!
The real estate market reminds me of the Bill Murray movie Ground Hog’s Day because I continue to say very similar things each month. We have very low inventory of houses, fewer than 4,800 in all of Northern Virginia. It has been this low for over 5 weeks and we haven’t seen inventory levels this consistently low since 2005. Interest rates remain at historic lows and it appears as if they are going to stay this low through 2014 unless something unforeseen happens in the economy. Lastly, we continue to see a drastic decrease in distressed property inventory in Northern Virginia and the onslaught of foreclosures will not happen locally. We have just 592 short sales and 290 foreclosures on the market and Notice of Trustee sales are only averaging 2 pages per day. Short sales and Notice of Trustee sales lead to foreclosures and if we don’t have them, we won’t see them.
The one thing that we typically don’t see this time of year is the number of attendees at open houses we are currently seeing. It is more typical than not to hear our agents having 20-40 people attend an open house and receiving multiple contracts as a result. This type of activity is more likely to happen in the spring but warm weather and consumer confidence building has helped spur this activity. As I have said in the past, if sellers properly price their properties, have it in prime condition and have it staged, they are receiving multiple offers because buyers are buying.
What are we reading in the news about the rest of the country and the market that will indirectly affect us? While delinquencies and defaults slowly improve in the housing economy as a whole, FHA’s portfolio has not had the same good fortune. The woes of FHA are creating increased pressure on the agency to reduce risk and increase costs to its borrowers, most of whom are first time buyers. In December, about one of every 10 FHA mortgages or 9.73 percent, were seriously delinquent, or more than 90 days past due. Compare that to all mortgages, whose seriously delinquent rate fell to 7.3% in December from 7.8 a year earlier. For nine straight months, FHA delinquencies have risen while mortgages in general have improved. We will keep an eye on this for you and let you know when the costs increase. On a positive note for those going through short sales and loan modifications, President Obama Proposes Extending Tax Waiver on Mortgage Debt Forgiveness that is due to expire at the end of this year. The Act ensures that homeowners who received principal reductions or other forms of debt forgiveness on their primary residence do not have to pay taxes on the amount forgiven. In addition to this, some banks are paying people to aid in their short sales. JP Morgan Chase went national with short-sale incentive offers last year, paying up to $35,000 in some cases. Bank of America is testing incentives from $5,000 to $25,000 in Florida to see if they should be expanding to more states. Wells Fargo’s incentive offers range of less than $3,000 to $20,000. Short sales, even with incentive payments to borrowers, can save lenders money compared with the expenses involved in completing foreclosures. Let us know if you need our assistance with either of these scenarios.
If you have questions about your personal situation, please feel free to call us. We are here to help you with all of your real estate needs.
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.
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!
Market, market, market!
How’s the market – this is a question so many people want to know the answer to on a regular basis. My answer is, it depends.
Are you a buyer? If so, the answer is definitely yes. Interest rates remain at historically low levels, prices are stable in most areas and increasing in others. If houses are on the market now, the sellers are serious and you can negotiate a good deal. The monthly expense of renting is equivalent to owning in many cases, if not higher. In addition, each payment made for the home owner goes towards the loan balance giving the owner equity over time adding to the owner’s personal wealth. Renting only goes to making landlords wealthy. Other reasons to buy include pride in ownership, sense of community, stability and the ability to improve the property without permission from a landlord – just to name a few.
If you are a seller, what is the price range of your property and where is it located? Every market is different and each property should be looked at individually. There are pockets throughout Northern Virginia where prices are escalating but further out, it isn’t the case. In Centreville as an example, the average sales price of detached homes has dropped every month since July. In South Riding, houses priced between $550,000-650,000 have not had a sale in nearly 70 days. This is not the case closer in towards Vienna, Falls Church and Arlington. Houses are selling quickly and for top dollar. However, in these areas higher priced condos – especially one bedroom units are staying on the market much longer.
In all of these markets, houses and town houses that have compelling prices, not necessarily the ones that are priced right or priced at market values, are the ones that are attracting multiple offers. For houses to sell quickly in today’s market, price is the leading indicator followed by staging, condition and location. Luckily, our distressed property inventory remains low relative to the rest of the country. We are not seeing the influx of foreclosed properties which definitely affects values.
Our unemployment rate is one of the lowest in the country in Northern Virginia – 4.9%, our wages are amongst the highest in the country and consumer confidence is higher here than elsewhere so we are anticipating a strong 2012 in the housing market.
As you can see, it is not a simple question to answer. Each person’s situation is different and therefore you should ask a Gateway professional for detailed information specifically about you. If someone answers, “unbelievable” or “great” be wary. Get it? Got it? Good!
Scott's Motivation and Real Estate Market Updates 