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!