Scott MacDonald shares current information on the Northern Virginia housing market. Scott’s video blog offers the latest on shortsales, foreclosures, appraisals, rental market and housing inventory – and his hair! Thinking about buying or selling your home? Contact Scott directly (703) 652-5777 or scottmacdonald@remax.net Read more… scottymacsblog.com
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Scott’s Market Minute for Northern Virginia
Just two weeks into the new year and so much to consider with the real estate market!
Top 10 Real Estate Market Predictions for 2013 -Northern Virginia and DC Metro area
Prediction #10 There will be more real estate agents entering the business. As the housing market shifts for the better, some may see it as an easy way to make money. Applications for the sales person exam has more than doubled since last year. This is very important if you are looking to buy or sell a home or investment property; you need a seasoned agent, with the education, knowledge, and experience to help guide you in making the right decisions.
Prediction #9 Interest Rates. I believe mortgage interest rates will stay below 4% as the fed rates are expected to stay around 0.25%. The cost of ownership is drastically reduced when interest rates are down, as well as, making it a great time to refinance. Contact us and we’ll show you what the numbers truly are and how we can help you make the right decision when buying your next house.
Prediction #8 New Home Market. As inventory levels of resale existing homes have been down as much as 30% throughout 2012 in NOVA, we will see new home builders increase in activity and sales. You may want to consider looking at new home builder stocks, builders with strong fundamentals in areas where there is growth and opportunity, economic and jobs, and sustained growth.
Prediction #7 Existing Home Sales. The resale housing market inventory levels have been falling since 2006 and we have had extremely low inventory levels in Northern Virginia, this year in particular. When the market does come up it will most likely be distressed properties because of pent-up inventory.
Prediction #6 Short Sales & Distressed Properties. We will probably see fewer Short Sales on the market during the 1st/2nd Quarters of 2013 should the mortgage relief act run out. Home owners may simply allow homes to go into foreclosure if there seems no true benefit of the short sale process.
Prediction #5 Housing Prices. Housing prices will continue to increase based upon the inventory levels are at or near all-time lows; supply and demand. With lending guidelines and appraisal guidelines in place we will see moderate slow gains and stabilized growth in the housing market.
Prediction #4 Lender Appraisals. I believe we will continue to have appraisal problems in 2013, guidelines are strict, binding an appraiser to work harder. We have seen some ‘bad’ appraisals with com parables outside of neighborhoods, missing items such as bathrooms, bedrooms and even giving extraordinaire value for items. You need an agent that is aware and knows how to handle this process.
Prediction #3 Lending Guidelines. Look for lending guidelines to become more stringent as the Qualified Residential Mortgage (QRM) and Quality Mortgages (QM) along with the required documentation, double and triple checking credit scores and employment verification. These precautions are the result of the housing boom and are now in place as a prevention method, helping ensure a safer housing market and growth.
Prediction #2 Investment in Real Estate. Investors have been the big player in real estate for the last 3-4 years and will continue. The rental market is extremely tight and rental prices continue to climb. Home prices have been low, making excellent returns for the Investor and allowing one to pick up distressed properties, fix-up and rent or resell. The need of rental housing has also increase as previous owners of foreclosed/short sale homes recover financially.
Prediction #1 REMAX Gateway in 2013. As I look into my crystal ball for 2013 for REMAX Gateway I see we will continue to grow and serve our clients. Currently we have 4 office locations: Lorton, Brambleton, Gainesville, and Chantilly; in 2013 we will be opening our 5th location in Arlington County, Virginia. As our agent count increases, we will continue to have the best and brightest agents, the most productive and educated, and we will continue to serve our clients better than any others!
Wishing you the best in 2013!
And the market goes on and on and on…
It is amazing what a difference our real estate market has experienced this year versus the last few years. Previously we were inundated with short sales, foreclosures, dropping prices and very little confidence in the market.
Today, we are at a low point in the number of short sales and foreclosures on 
the market since I started keeping track of them over two and a half years ago. In October of 2010, we had 1,460 short sales on the market, today we have only 386. Additionally, foreclosures are at a low point as well. In November of 2010, we had 516 foreclosures on the market and today we only have 178. Additionally, prices were falling in the Northern Virginia area. According to RBIntel.com our market prices bottomed out in February of 2009 with an average sales price of $307,225. Today our average sales price is $469,800.
We are still off our highs of 2006-2007, but we are headed in the right direction. All of this information coupled with low interest rates has restored confidence in our market.
Rates? Did I just mention rates? Yes I did and they are ridiculous! Yesterday I heard one of our clients locked in a rate of 3.25% with a lender credit of 2%. We continue to see rates decline which leads to the question of how low can they go before more people act on refinancing or purchasing? Only time will tell.
The last area I would like to touch on is our rental market. The inventory of active rentals remains low and interest in these properties remains high. At this time, many people prefer to rent over buying as they remain skittish about buying or are in a situation such as a recent short sale which prohibits them from being able to purchase. This situation has resulted in rental rates rising making investing a viable option for many people – maybe even you!
If you would like more information on how these numbers affect you whether buying or selling a house, or if you would like to discuss becoming an investor, pick up the phone and give me a call. I would love to speak with you about your situation in more detail.
The Market is Hot, Hot, Hot!
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!
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!
Oh what a night…
We had another great real estate exchange last night. There was a lot of banter back and forth about our free trip to Vegas for the RE/MAX Convention in March and who was going to win the trip and how. Great team building and networking as usual before the event.
Topics that were discussed:
- Virginia home sales report published quarterly by VAR and the great information available through this report
- Information on rental rates
- The lobbying effort upcoming in the House on raising the high loan limits back up to pre-October 1st deadlines
- Refinance activity
- Home ownership rates
- Appreciation rates nationally and locally – we are way ahead of the curve year over year but are down month over month, a trend we need to watch
- The Bank of America penalties to Freddie Mac and Fannie Mae and why
- Fannie Mae’s quarterly losses and the combination of losses between Freddie and Fannie and why were bonuses paid
- Foreclosures on the rise nationally but so far, we don’t see it here and the indicators of why we don’t see them yet
- Bechtel is relocating 625 jobs to Reston and they are leasing nearly 200,000 square feet
- 4 ways to reduce your taxes and a reminder we have accountants coming to Chantilly to discuss tax planning for 2012 on November 18th at 10AM
- And lastly, the National Enquirer portion of the show – celebrity purchases and sales plus incomes of the top CEO’s in the Washington Metro Area
- Pat Cunningham updated us on HARP, the Italian debt crisis and what that means to mortgage interest rates and the value of HUD homes.
Enjoy the video but better yet – attend the next one in Ashburn at Clyde’s on the 16th from 1-3PM. Get it? Got it? Good!
Now, go sell something!
Got to love great real estate minds….
Wow, what Platinum Group today. Agents are feisty, fed up and frustrated with lenders. Issues were flying across the conference room fast and furious. The question was asked – How’s the market? Here is what came about – Financing problems are prevalent. Some owner problems by not disclosing full details – not telling agent about businesses, tax situations or other properties owned. But most seem to be lender problems – mainly, not telling the truth. One lender didn’t tell the agent the Visa expired, said application was in all paperwork submitted and nothing was turned in – contract and lender letter said conventional then switched to FHA at appraisal time. Lending guidelines are too strict, lenders are too ambiguous and regulations need to be relaxed to make well qualified, legitimate buyers home owners. We are held accountable to performing at a higher standard and the lenders are not – it is a huge problem! Lenders need to adhere to a business standard – develop one, make them sign it and if the lender doesn’t, don’t use them. They have no skin in the game, no accountability and no repercussions.
Agents have buyers coming out of their ears. Listings are being shown but there doesn’t seem to be any sense of urgency from the buyers. Move up buyers seem to be lurking out in the market as well.
What prices are selling? The lower price points are selling – mid price points are coming down and languishing on the market. Prices are up year over year but are dropping month to month since July. Keep an eye on this trend through the winter. Prepare sellers to price competitively from the beginning or the house may not sell or you will end up chasing the market.
Are foreclosures coming? Agents are not doing BPO’s, short sales are down, and notice of trustee sales in the papers is down so the answer is not now. Asset managers don’t have any idea of what is coming down the road either.
How are short sales progressing? One has been in process 2.5 years – has had 6 contracts and still not approved – it is a Bank of America deal…no surprise. We had one agent had 3 short sales drop out last week. Another one has 10 under contract and they are languishing on the market.
Is the loan limit reduction hurting your business? It has had only a limited effect on the agents in the group. Only one deal has had an impact with 10 agents and multiple transactions in process.
Agent’s years are about the same as last year. Their volume is up but units are down but overall, income will be the same – we will see how the loan limit reduction will affect us next year. How will 2012 be for you? Spring is going to be strong.
All the agents agreed that this was one of the best meetings we have had which is great. The energy was high, there was lots of passion and everyone left with enthusiasm.
Now, go sell something.
Scott's Motivation and Real Estate Market Updates 