economy

Hey, Why Is It Taking So Long To Sell My Home? Theme Park: Northern Virginia Real Estate Market

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July 2014 REAL ESTATE MARKET is like a carnival rideThe summertime real estate market is a lot like a theme park – ups and downs like a roller coaster with sales, activity and interest rates and a lot of unknowns like a haunted house.

There are a lot of questions around what is happening in the market from sellers and builders we are working with to sell their houses.

It is an interesting dynamic where we have extremely low interest rates – at or near 4% – and a high home affordability index yet sales are not as strong as we expect them to be considering this situation.

July 2014 REAL ESTATE MARKET for sellers is like a haunted house
What are the reasons for this?

One potential reason is price appreciation along with the multiple offers earlier this year. Many potential homebuyers naturally paused to wonder: is it a new bubble? Or can I afford these prices? But price appreciation has greatly moderated as we have seen inventory rise dramatically since the beginning of the year.

Therefore, potential homebuyers will no longer face the sticker shock and can now make rational decisions about whether or not it makes sense to buy a home.

Along with the increase in houses on the market, we will be creating new buyers as these homes sell. So demand will increase as more sales happen in many instances.

Another reason is the economy isn’t growing as quickly as was expected and consumer confidence is not extremely strong. Once buyers gain confidence in the economy, housing will follow suit and grow with the economy. Until then, we will see moderate house sales as well as price appreciation.

We also are still experiencing tight lending guidelines and underwriting policies on mortgages. It is still hard for many potential buyers to obtain loans. The “qualification pendulum” is still too far to one side and needs to be moderated to allow more buyers into the marketplace with sound lending practices.

So, in order to be a seller in today’s market, you need to be patient. Good houses, properly priced, in the right condition will sell. It will just take a little longer.

If you have any questions or concerns, please call me (703) 652-5777 so we can discuss your personal situation in more detail. We are here to help.
Happy 4th of July!

Scott MacDonald

RE/MAX Gateway

Confidence is on the rise according to Fannie Mae

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Despite continued uncertainty surrounding the fiscal cliff, Americans are showing increased confidence in the housing market and the direction of the economy. According to results from Fannie Mae’s November 2012 National Housing Survey, such improvement bodes especially well for continued strengthening in the housing sector, which in turn should lead to overall economic growth.

According to the survey, the share of respondents who say now is a good time to sell a home jumped 5 percentage points in November to 23 percent – the highest level since the survey began in June 2010. The percentage of respondents who expect mortgage rates to go up increased by 4 percentage points to 41 percent. Those expecting home prices to go down within the next year also rose by 4 percentage points to 14 percent over last month, a rebound from the survey’s record low in the prior month, while the share who believe home prices will go up in the next 12 months edged up to 37 percent, tying the survey high. Of note, 51 percent of respondents now say it would be easy to get a mortgage, marking the highest rate since the survey’s inception.

These survey statistics support the trends that real estate brokers around the country are beginning to witness: an increasing lack of inventory, rising home values, and home buyers – who have been waiting five years or more – finally ready to purchase their first home or move-up home.

Positive housing indicators are connected to a generally improving outlook regarding the nation’s overall economic picture. When asked about the economy, those who say it is on the wrong track dipped 6 percentage points since October and a total of 25 percentage points in the past year.

Other noteworthy results from the Fannie Mae survey include:

  • 48 percent of those surveyed say home rental prices will go up in the next 12 months, a slight decrease from last month.
  • 51 percent of respondents now say it would be easy to get a mortgage.
  • 21 percent of respondents say their household income is significantly higher than it was 12 months ago.
  • Household expenses remained stable over the past month, with 56 percent responding that their household expenses stayed the same compared to 12 months ago.

As a Member of the Top 5 in Real Estate Network®, I have a wealth of real estate and home-ownership information that may be of help to you. Feel free to contact me any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.

Here we grow again…

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This tag line is very appropriate for many different reasons.  First, let’s start with the Northrop Grumman’s move to Northern Virginia from California.  Northrop Grumman had been looking to relocate their company to this region because they have over 20,000 employees in Virginia, Maryland and DC and was looking for a different presence here in the area.  There will be approximately 300 high level executives moving to the area and there is no doubt, additional subcontractors and service providers of Northrop Grumman will move here as well.  Kudos to the leadership of Virginia in capturing such a valuable resource!

Additionally, in an economic report by George Mason’s Center for Regional Analysis, the Washington area’s economy will double over the next 20 years bringing in more than 1,000,000 new jobs and perhaps  upwards as many as 1.6 million to our region.  The jobs that will be created will be government – especially defense, domestic security, and financial regulatory agencies.  Along with these new jobs, a total number of new people in excess of 1.7 million will be moving to the area.  This is a good news, bad news scenario – good that the area will continue to grow and it should have a positive outlook on the housing market but a bad news scenario for roads, infrastructure and how to accommodate this growth.  The area planners have some work to do!

Next, let’s review New Home Sales.  Month over month sales of new homes jumped 26.9% in March – the largest increase in nearly 50 years!  New Home Sales had been in a four month slump coupled with a record low of housing starts in February; this segment of our market got a strong shot in the arm with this excellent news!  Let’s see how these numbers are affected by the home buyer tax credit ending this week and see if sustainable growth will occur.

Now on to existing sales…existing home sales rose as well.  The number increased by 6.8% in March – this is the ninth straight month of increase in sales over previous year ago levels each month.  This is a result of favorable market conditions – great rates, lower prices, and the homebuyer tax credit amongst other things.  Let’s keep this pace headed in a positive direction!

We must also speak about inventory levels.  They too have been increasing every week since the last week of December.  It is important to keep an eye on this number and how it affects pricing on a number of fronts.  In the Northern Virginia region – the inventory of existing homes for sale in week ending April 23 was 7,252…stay tuned.

And the last piece of good news – and it isn’t about an increase – it is about relative stabilization in mortgage interest rates.  Many expected rates to shoot up at the end of the government’s purchasing of mortgage backed securities but it hasn’t really happened.  Interest rates were just below 5% in March and have stayed in the 5.125 – 5.25% range over the last 3 to 4 weeks.  Let’s hope private investors continue to buy mortgage backed securities and the government keeps the funds rate low as well.

It is important for professional Realtors to keep up-to-date with the market and market conditions to keep their buyers and sellers completely informed on what is happening so they can make the right decisions when buying and selling homes – get in the game of learning more!  Get it?  Got it?  Good!

Do we have sustainable growth in our market?

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It appears that based upon recent news about our market we can!  Sales of new condos rose to their highest first quarter levels in three years with 630 sales posted – last year there were just 316.  This allows the inventory levels to shrink which is good on all levels for real estate sales.  We have inventory levels of unsold condos that match inventory levels of 2003.  As new homes starts slow and as financing remains tough to obtain for builders and demand increases, look for conversions to become popular again if demand continues.

Additional good news is that the vacancy rates on apartments also have dropped locally and regionally and the month’s supply of rentals owned by individuals is also at recent lows of just 1.5 months.  As a result, lower concessions are being made to tenants as well – are increased rental rates next?  This should be attractive to investors who are savvy and want to take advantage of today’s lower house prices and see a great return on investment as long term real estate investors. 

There is also renewed interest in Harbor Station in Prince William County.  The board of supervisors is reporting that virtually every major developer is interested in the 2,000 acre parcel along the Potomac River which is anticipated to be a 20 year project.  A golf course, VRE stop as well as the right mix of retail and housing is planned for the mixed use development.  The last few years the project has been mired in financial disaster but it is now in control of the bank and Compass LLC and they are making quick decisions on moving the property forward for development.

We are also experiencing near historic lows in interest rates.  The Fed got out of the purchasing of mortgage backed securities and rates did not skyrocket as previously predicted they would by so many industry experts.  The Federal Reserve has vowed to keep the funds rate at 0 – .25% for the foreseeable future to keep mortgage rates low and keep the housing market moving forward.  This too will help allow us to maintain growth in the housing sector!

Unemployment rates continue to hover in the high 9% range nationally but we are well below that here locally and houses are where the jobs go at night.  As long as we continue to keep people employed – we will have strong housing numbers.  There is nothing that indicates we will lose jobs as we are insulated with DHS, the Federal Government, defense contractors, as well as the hospitality, technology, and communication industries coupled with their support services, we will be in good shape for some time.

The housing affordability index will reach 160 this year – the highest level since 1972!  This index measures what percent of households can afford to purchase a home based upon median income, median house prices and interest rates.  For more details visit: http://www.realtor.org/research/research/hameth

The HAFA program will also help facilitate more sales as it will streamline the short sale process which is approximately 25% of our market in most areas and even higher in suburbs further out from DC.  Additionally, foreclosures are higher in Maryland versus Virginia further suggesting we can sustain the growth we are experiencing.

These factors coupled with the fundamentals of our region – low unemployment, relatively affordable prices in relation to 2004-2007, excellent school systems, international and cultural attractions, and so much more will help us remain a viable housing market for many years.

It appears that the extension and expansion of the homebuyer tax credit has not had as much impact on the housing market as the original tax credit.  Builders are selling homes beyond the June settlement deadline and many sellers and buyers are unaware that the credit affects them despite our efforts and the efforts of media outlets and NAR.  The elimination of this program should have little effect on our market if everything else stays equal – consumer confidence remains high, jobless claims continue to decrease, and pending home sales continue to increase (up 8.2% – highest in 8 years) we will have sustainable growth in the housing sector.

Know the market, know the trends, and know how to communicate this to clients and you will succeed in any market.  Get it?  Got it?  Good! 

Demand Success Today

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As you know, RE/MAX officials were in town yesterday. 
Here is what was shared!  Click on the link for the presentation.

Demand
Success Today

 

The Economy –

Right now our recovery is considered to be a jobless
recovery because we continue to lose jobs yet; the economy is pulling out of
the recession without creating jobs. The nation’s jobless rate won’t be back to
4.5 % until 2014.

 

Most companies have cut back and will not rehire people they
let go.  The car business most definitely won’t hire their people back –
everything is cheaper in China and a lot of production is being exported there.

 

Housing will have a hard time helping economy get out of
recession because new home sales have plummeted so far down.

 

America is responsible for 27 % of the world’s GNP China is
7% within 30 years China will lead world in production.

 

Foreclosures –

Build your resume, contact the right people and give right
presentation to get REO business

 

There are 3.5 million foreclosure filings per year expected
in 2009 and 2010

 

25 % of homeowners with a mortgage are underwater

 

A huge number of commercial loan maturities are coming due
in 2011 and 2012 which will put pressure on this sector.

 

Savings rate is 7 % today as a result of people’s fear over
job loss, their property values being down, and they can’t use their house as a
piggy bank anymore plus their 401K’s are down so consumers have become less
likely to spend.

 

You can’t use yesterday’s business methods to make money in
today’s market and expect to be in business tomorrow.

 

Number of Realtors –

800,000 in 2000

1,400,000 in 2006

1,100,000 in 2009

Need 900,000 for more agents to be successful

 

LIFO last in first out is a great rule for real estate when
referring to Realtors

 

9.7 million Distressed properties right now,  4.7
million will sell over the next few years – many will renegotiate to stay in
their properties.

 

RE/MAX has 6 % of agent total and handles 26 to 28 % of REO
sales

 

Systemized and standardized process for short sales is
expected to be announced within 2 business days.  This is coming from the
government and discussions with Liniger.

 

NAR has a new designation to handle short sales – SFR. 
RE/MAX agents can get discount on Mainstreet – contact me for details

 

Rebuild USA 203k specialists

 

There is a new foreclosure tab on remax.com.  Don’t
forget to register as well as update your profiles email address, education,
designation, specialties to get leads.  You must have a designation to
receive leads for short sales and foreclosures – don’t delay, do it today!

 

Know your market and its dynamics –

 

Our market is predominantly 1st time buyers and
investors  – get into these business arenas.

 

Generations –

Baby boomers 3 more moves downsizing selling buying selling
smaller house moving in with their kids or family members

 

Generation X –

50 % not married yet and most have no kids.  They are
just now beginning to buy houses skeptical but loyal

 

Millennials –

Very different on line, no high pressure, knowledgeable,
instant everything

 

 

When dealing with online leads, have the shot gun approach –
send out response to 5 agents and the first to respond gets the lead.

 

80 % of Americans have nothing to retire on assisted living
or nursing homes or moving in with family

 

Social media will take you to the next level take pictures
of clients after settlement do portraits get busy getting involved with it
today – don’t delay it is not going away.

 

The crowd was enthused – you should be too!  Get
it?  Got it?  Good!

 

BrettandDave

 

An Enlightening Weekend

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As a Realtor, you never know who you will run into to discuss our business.  This weekend was no different for me.  I was invited to attend a political function for an incumbent who is attempting to keep his seat as a delegate for our area.  Of course, Chuck Caputo is the right candidate and the right person for the job and, for our area, we need him to be re-elected.  His views on education, business and transportation for our area far exceed his competitor’s opinions on how to continue to run our region and for us to stay the number one state to do business in 4 years in a row. 

But I digress, at this function I had the opportunity to meet Mark Warner and we discussed our local real estate market.  Our conversation included inventory levels, supply and demand challenges, trends in housing prices, profiles of our purchasers, as well as HVCC and the First Time Buyer $8,000 Tax Credit.  Over the last several years, we have discussed the need to know your numbers, and know the trends in our business and to have them ready to discuss at any time.  As a result of staying abreast in these areas, I was able to accurately convey why we need to address the HVCC issue but more importantly, the need to extend the First Time Buyer Tax Credit.  In our discussion, he told me he was going to vote to extend the credit!  It is a wise decision to keep the housing sector of our economy moving forward and to help continue to bring our country out of the recession.  When it comes to making the right decisions about our economy, we need to knock down political affiliations and work together for the common good.  Get it?  Got it?  Good.

Now, go sell something!