Fairfax

Summertime market…it’s gonna be fun!

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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.

The Market is Hot, Hot, Hot!

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The spring market is in full swing. This past weekend I was with an agent and they had 3 contracts on 3 different listings that went on the market the previous Thursday. One of them had multiple offers. In addition, we put a house back on the market last week that was on the market previously for about five months with no activity and got a contract on it over the weekend. So there are a lot of buyers out their looking, inventory levels seemed to have increased, but only slightly, interest rates remain low, days on market and months’ supply continue to stay relatively low as well. So if you are looking to sell, now is a great time. The trees are in bloom and the market is hot just like the weather! Let us know what we can do for you this Spring!

So this is what Deja Vu feels like!

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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.

Is the spring market coming?

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In Northern Virginia our inventory levels of active resale homes for sale continues to decline.  We are down to just over 4,600 homes on the market and we have a 1.8 month supply of homes.  Houses that went under contract the last 7 days hit a 6 month high this past week.  In a nutshell, houses are selling.  Why is this happening?   Interest rates hit another record low, we are creating jobs here, rental rates are increasing and our population is growing putting more demand on housing.

Last week I was asked when will we see the spring market or in other words, when will more houses be coming on the market?  Some people say when the banks start releasing foreclosures, some say mid-March, and some say when their price rise.  Let’s analyze each of these responses.

So far we have not seen the foreclosures hit the market and as a matter of record, the inventory has actually decreased to a 6 month low with only 311 currently for sale.  In addition, “Notice of Trustee sales” published have actually remained very low as well averaging only 3 pages per day versus substantially higher numbers in 2008-2010. Lastly, I started tracking short sale inventory just over 2 years ago and we are at an all-time low in this area as well – only 651 are for sale in Northern Virginia.

As far as the inventory levels increasing in mid-March, only time will tell but several agents have indicated they have houses in the process of being prepared to go on the market around this timeframe.  If they are not only preparing them for sale but are going to price them accordingly, they will sell.  Two properties we listed on Friday received multiple offers because they were price properly and in the right condition.  And now for the statement, “when my price increases, I will sell” is a tougher one to answer for many people.  Rise compared to what?  When they were purchased?  Compared to 2004-2007 prices?  Compared with the last sale in their neighborhood?  Until these questions can be answered, we can’t help them.

We continue to have one of the best real estate markets in the country and it will be this way for the foreseeable future.  Please feel free to contact us to learn more about how this market affects you and your situation.

What’s 2012 looking like?

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As we enter 2012, there is much speculation about real estate yet again.  Will there be more foreclosures?  Will housing values continue to drop?  How long will interest rates stay low?  When will lending guidelines reverse their trend of more restrictive policies?  Should I buy or wait?  Will short sale guidelines become more uniform? What will it take to improve the housing market?  Well, as I have said in the past, my crystal ball is broken but I can look at trends, read reports and provide some guidance.  Let’s take a look at what we have seen recently.

Will there be more foreclosures?  As the inventory of short sales decrease and the notice of trustee sales in the papers remain low, we will not see a tremendous amount of foreclosures hit the Northern Virginia market.  When we see an increase they won’t have a significant impact like they had on our market in 2008-2010.  The inventory will come when banks begin to evict people who have been living in houses mortgage payment and rent free for several months.  Additionally we will see some foreclosures come on the as people lose their jobs.  Again, the impact will not be severe in my opinion and will be absorbed as inventory levels are at 2 year lows in Northern Virginia.

As inventory remains low, prices will remain stable and in some areas they will increase.  If owners invest in their homes by upgrading kitchens, bathrooms, and updating carpets, paint etc. they will see the return when they sell.  Homes in the right condition, staged and priced properly see multiple contracts and often get bid up above list price.

Interest rates will remain low for the foreseeable future. The Federal Reserve has stated they will keep their rates in the same range through mid-2013 and as such, mortgage rates should remain low.  There are of course some outside factors that could change this such as the European debt crisis, and energy costs rising but overall we will be in the 3.75-4.5% range for mortgage rates.

It doesn’t seem that lending guidelines will restrict any time in the near future.  Underwriters continue to ask for last minute items, credit is being checked for a second time just before settlement, requests for obscure items are being asked for and when you think you’ve heard it all, you hear something new.  On the bright side, mortgage insurance companies are becoming more flexible in their requirements which is helping in some instances.  Unless it is mandated by the government through the GSEs, I don’t see guidelines relaxing for some time.

If someone has found a home that meets their requirements as far as location, size, price and affordability then yes, now is the time to buy!  Especially if it is for a long term hold, you need to buy now.  In a recent survey, 78% of Americans believe housing is a great investment.  As previously mentioned, rates are excellent and you need to take advantage of them as well.

We are dealing with fewer short sales in Northern Virginia today but they do seem to be closing at a higher rate than before which is great for both buyers and sellers.  We anticipate this trend to continue.

So what will it take bring the market back? In a two words, I say, consumer confidence.  How does consumer confidence improve?  Here are a  few ideas – job creation, lower energy costs, and more positive press on the economy.  Let’s see how this goes with the election coming up later in the year.

With a little more insight into the market, go help people make the right decisions when buying or selling houses.  Get it?  Got it?  Good!

Now, go sell something!

 

Are foreclosures really coming?

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The foreclosures are coming, the foreclosures are coming…that’s all we see in newsletters, emails and hear about in real estate circles.  Well, is this really the case in Northern Virginia?  Here is a quick update on foreclosures and short sales in the five largest market areas in Northern Virginia and how we buck the national trend.  It will be revealed why I don’t believe our foreclosure problem will be as great or as devasting as the rest of the country. 

It is truly amazing how many Americans are behind in their mortgages and for how long they have been behind.  The number of people who are delinquent has dropped but it is still at a phenomenal number – 6.373 million – 1.844 million are more than 90 days late. What and how does this mean to our region?  Only time will tell but if you look at what, in my opinion are leading indicators, we may be more sheltered than the rest of the country.  As I see it, trustee sale notices are one leading indicator as they inform the public when an auction will take place on a property where the home owner is delinquent.  Second is short sale activity and as you will see, we have, as a percentage, a very low number of short sales on the market currently and as many of us know in the business, many short sales do not get approved which eventually lead to foreclosures.  In addition, if waves of foreclosures were to hit the market, could they be absorbed and as you will see from our month’s supply of houses, we are in pretty good shape.  And lastly, distressed property inventory makes up just over 18% of our total inventory but it makes up just over 35% of our total sales which reflects people want a perceived bargain and find distressed properties as their avenue to take advantage of this buying opportunity. So let’s take a look at the numbers.

In Arlington County there are currently 11 foreclosures, 20 short sales and there is a 2.9 month’s supply of homes.  I would say that Arlington is safe from an onslaught of foreclosures as the number of distressed properties is minimal and the absorption rate of properties is extremely strong.  We need more inventory of all properties in Arlington so bring on the foreclosures. 

In the City of Alexandria we have 20 foreclosures, 38 short sales and a 2.9 month supply of homes.  Is this market primed for more inventory, of course it is and investors love the location and amenities of Alexandria so absorbing any foreclosure inventory should not be a problem.

Now, let’s look at the Fairfax County, our most populated county in the region.  The numbers are 168 foreclosures, 336 short sales and a 2.6 month’s supply of houses.  Very low numbers in the overall scheme of things, don’t you agree?

Let’s wrap it up with two of the outer counties, Loudoun County and Prince William County.  Loudoun has 60 foreclosures, 139 short sales and a 3.2 month supply of houses.  Their month’s supply of houses is creeping a little higher but overall, it is still a seller’s market and properties are moving.  Prince William has 106 foreclosures, 237 short sales and a 6.8 month’s supply.  Again, all are manageable numbers except for the month’s supply of properties which indicates a buyer’s market but from a National perspective still in better shape. 

Let’s review, fewer trustee sale notices + fewer short sales = less foreclosures.  Until the trustee sales in Northern Virginia pick up, I don’t believe our market will have to endure a rash of foreclosures but if it does, we can absorb the inventory.  The only wild card that I see is what the banks have foreclosed on that they don’t have on the market and/or are letting people live in mortgage payment free that they haven’t evicted yet.  Is this number big one or a small one?  Only time will tell.  You have to know your numbers to paint the picture properly to your clients.  Get it?  Got it?  Good!

Now, go sell something!

 

How will your year end?

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As we move forward into the second half of the year fast and furious take the time to look at your business and determine what you need to do to have a successful year end. 

The first area to review would be your contacts.  How many do you have?  How often are you communicating with them?  What are you communicating to them?  Are you picking up the phone and speaking with them?  As I meet with agents regularly to conduct performance consulting with them – the most successful agents today are the ones making the calls to their database regularly and are meeting face to face with them.  Virtual contacts through Facebook, email, texts, etc. are good but you need to pick up the phone and get in front of people to get the best results. 

Are you growing your database?  Are you involved in networking groups?  Are you holding open houses?  Are you involved in community outreach programs?  Are you involved in charitable endeavors?  You need to be actively growing your contacts in order to expand and grow your business.  You can’t send our postcards, post on social media sites or advertise in print publications and expect business to come in to you – you have to go out and find it to be successful today.

Are you educating yourself?  If so, how?  What are you reading?  How often are you reading?  Do you have designations and are they applicable to today’s market?  Do you attend seminars?  Do you attend office trainings to further your education?  In order to grow, you must take the time to learn.  If you want to earn more you need to learn more – bottom line.

Are you effective on line?  Are you blogging?  Are you utilizing Google+?  What is the content you are providing on your other social media sites that engages people to read your posts and view you as a trusted resource and provider of information?  It is not the end all be all to obtaining business but it is a spoke in the wheel of your success that should not be overlooked.

You have to be better than your competition to be successful today.  You need to communicate better, you need to have better sales skills, better negotiating skills, better people skills, bottom line – you have to improve every day.  What are you going to do today to become better?  Pick a skill set and work on it!

These tips are critical to your success not only for the second half of the year but going forward as well.  Get it?  Got it?  Good!

Now, go sell something!

As we near the end of July…

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As we near the end of July, I thought I would provide a little insight into our Northern Virginia real estate market.  Inventory of resale properties has been very stable throughout the late spring and into mid-summer at 7,636 houses for sale.  What has caught my attention is the number of properties that have gone under contract the previous 30 days.  At the end of May, 3,500 homes had gone under contract the previous 30 days.  Since then, that number has declined every week to where we just had 2,880 homes go under contract the last 30 days – a 17.7% decline.  Does this cause us to panic?  Probably not, we are in prime vacation season.  We had the 4th of July holiday during this timeframe as well.  Plus, sales are cyclical and summer is usually a slower time of year for us.  Nonetheless, we will continue to see if this a more serious trend as we move forward into late summer and fall.

This decline in sales has resulted in a slightly larger month’s supply of homes.  We currently have a 2.7 month’s supply of house up from the end of May’s 2.1 month’s supply.  Again, no need to panic as it is still as seller’s market.  We continue to see when sellers price their houses to sell, have it staged properly and are in the right condition they sell in a reasonable amount of time.  In fact, we have experienced several situations where homes had received multiple contracts on them. 

Distressed home sales continue to hover around the 15.5% of total inventory active and on the market for sale.  In these numbers, we have seen a slight decline in short sales and a slight increase in foreclosures.  What continues to baffle me is that distressed property sales make up 30.7% of the home sales the previous 30 days.  This tells me that people want to say they bought a short sale or foreclosure because they believe it is a “deal” when often times they are not deals at all.

Our rental market continues to be strong for landlords.  We currently have a 1 month’s supply of rentals available.  Houses that used to take weeks to rent in the past are renting in just days.  Additionally, these homes are, in most cases, renting for more money.  The market continues to be prime for investors.

Builders in the area are still selling as well.  Loudoun County along the Greenway is selling exceptionally well.  What we are seeing in the new home sales arena is that houses that are priced right – just like resales – are selling.  Overpriced builders whom have not responded to the market are languishing on the market just like the resale properties.  As mentioned in previous blogs, we are in a very price sensitive market today.

Let’s review the national real estate news, housing starts rose to a 5 month high – up 15% from May.  The FTC won’t enforce the MARS rule against Realtors who help consumers obtain short sales – this is good news as the paperwork was unnecessary and didn’t apply to Realtors. And the Helping Responsible Homeowners Act is gaining additional support.  This Act will eliminate barriers blocking millions of non-delinquent home owners from refinancing their mortgages at today’s incredibly low interest rates.  This will help stabilize neighborhoods by keeping people in their homes.

As long as interest rates remain low, foreclosures and short sales remain a low percentage of our market, we will continue to have a steady real estate market in Northern Virginia.  Get it?  Got it?  Good!

Now, go sell something!

What’s it all mean?

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Over the last few years we have been providing you with information on the real estate market that we believe is valuable to you and helps aid you in your decision as to whether or not to buy and sell real estate.  Also, our thought is it gives you something to talk about around the office, with your neighbors or at cocktail parties! 

  • But what do all the numbers and terms mean you may ask?  Well, here is a quick guide for you going forward.  The numbers we quote are for the areas our offices conduct a majority of their business.  These areas include Arlington, Fairfax, Prince William, Loudoun, and Fauquier Counties plus all the cities in between like Alexandria, Falls Church, Fairfax, Manassas, and Manassas Park. 
  • Active inventory or resales are the number of houses for sale where the owners are selling their homes and not a builder. 
  • Month’s supply of houses is the absorption rate or sales of homes divided into the number of active properties on the market.  Basically, if no other houses came on the market, it would take that many months to sell all the houses that are for sale.  As a general rule, 6 months is considered to be a balanced market – neither a buyer or seller’s market.  Less than 6 months is considered to be a seller’s market and more than 6 months is a buyer’s market. 
  • Days on the market are the average number of days on the market it takes for a house to sell after going up for sale.  Again, typically the fewer the average days on market the more likely it is to be a seller’s market and the longer the average days on market is typically indicative of a buyer’s market.  In addition, the fewer the days on the market of a particular home, the more likely the sellers are to receive a full price offer or even multiple offers. 
  • This brings us to multiple offers.  It is what it says.  The owners received more than one offer to purchase the home when it was put on the market for sale.  How does this happen?   Typically it is because of high demand for an area because of the school district, location to commuter routes, shopping, etc. along with the sellers pricing the property properly, getting the home in the right condition and the staging of the house that makes this possible.
  • Distressed property inventory are houses that represent short sales and foreclosures.  A short sale is when a home owner owes more money on the house than what the house is worth and they are trying to get their lender(s) to approve a sale for less than the amount owed to them.  A foreclosure is where the owner of the house stopped making payments and the bank took the property back through a series of steps required by the state and allowed through the deed of trust.

If you have any other questions or concerns about the numbers or the terms discussed monthly, feel free to contact me.  As Sy Sims used to say, “An educated consumer is our best customer”.