interest rates

How Fast Will My House Sell? A Look Into The Real Estate Market Roller Coaster Ride

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July turned out to be a roller coaster month for real estate as the long-awaited day of reckoning came: The era of historically low interest rates is over.

How Fast Will My House Sell INTEREST RATES

Additionally, inventory levels continued to increase – we are up nearly double the number of homes for sale since the beginning of the year.  Also, home prices have risen and sales slowed slightly all resulting in a hectic month for residential sales.  Oh yeah, throw in a long holiday weekend so some sellers are a little anxious today about their home sale situation.

So the biggest question is…what was the impact of rising rates?

  • It knocked some buyers out of the home purchasing arena as they could no longer qualify.
  • Some buyers are waiting to see if the rates will come back down so they are on the fence.
  • Higher prices coupled with higher rates have made some people uncomfortable with the elevated payments and don’t want to make a move at this time.

How do we look going forward into August…. Houses will sell!

  • Existing home sales are expected to rise more than 8% for the remainder of the year.  As our prices continue to rise, albeit at slower pace than the rest of the major metropolitan areas as reported by Case-Shiller – home prices in the 20 biggest cities rose 2.4 percent from April to May, with a 2 percent monthly gain in the Washington market. How Fast Will My House Sell
  • Sellers in our area will continue to take advantage of the gain in equity, especially closer into Washington and put their houses up for sale giving us a more balanced market between buyers and sellers.
  • Interest rates will remain stable and we won’t have the drastic increases we experienced over the last two months bringing some of the buyers back into the market.

So overall, I believe we will have a good August, not great, but that is typical for this time of the year.

If you have any additional questions or concerns about your particular situation, feel free to call me (703) 652-5777.

Scott MacDonald

RE/MAX Gateway, LLC

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Top 3 Reasons Why You Should Buy or Sell a Home in Northern Virginia NOW!

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Wow, it has been a crazy 8 weeks for interest rates.  As we have discussed in the past, if someone was considering buying or refinancing, they should do it then.  Well, I hope you took that advice because interest rates have gone up three quarters of a point in just the past 2 months.  This week, we saw the largest increase in rates since April of 1987 – that’s 26 years!  The reason behind the increase is Ben Bernanke of the Federal Reserve made remarks that they may be tapering its bond purchases later this year if the economy continues to improve.  Although the stock market was up the second quarter with all three indexes recording gains of between 2% and 5%, it too took a hit on these comments.  We will have to keep a close eye on the economy and see where rates will go moving forward with this type of news on the forefront.  If you recall, at the beginning of the year, we predicted rates to rise to around 4.5% which I believe will still be the case, I thought it would be more gradual and not so drastic.

Largest interest rate increase since April, 1987

Largest interest rate increase since April, 1987

All of this being said, interest rates from a historical perspective, are still very low.  Today 30 year fixed rates are 4.25% with .75 points on conforming loans above $417,000.   While the increase in interest rates will certainly dampen some housing activity, the effect will be softened by the high level of buyer affordability, and home sales should still remain strong.

What else do we see in our real estate market?  We continue to see housing prices increase throughout the area as demand remains strong despite the increase in rates which is good news for our sellers.  We are also seeing more houses coming onto the market in Northern Virginia which is good news for our buyers. The inventory of resale homes is above 5,000 for the first time since the third week of October 2012.  Since the beginning of the year, inventory levels are up nearly 37% but we are still in a seller’s market with just a 1.4 month’s supply of homes.  The market still remains competitive with many properties receiving multiple contracts.   We had one house with 3 contracts on it this week in Virginia Run.  Distressed property inventory remains very low as well – just 6.9% of the market which is good news for everyone.   We should continue to see these trends continue throughout the summer.

Lastly, we are excited to announce we have signed a lease on our 5th office.  It is in the Clarendon section of Arlington and is located at 3000 10th Street – look for our grand opening announcement soon.  Please let us know how we can serve you.

Scott MacDonald

RE/MAX Gateway, LLC

Top 10 Real Estate Market Predictions for 2013 -Northern Virginia and DC Metro area

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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!

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Scott MacDonald TOP 10 Predictions 2013 Prediction #9

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Scott MacDonald counts down his 2013 Top 10 Preditions for Northern Virginia Real Estate PREDICTION #9 Interest Rate projection for 2013.

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#10 Scott’s TOP TEN Predictions for 2013 Northern Virginia Real Estate

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Northern Virginia Real Estate TOP 10 Predictions for 2013 – Scott MacDonald shares his insights as to what the real estate market will hold in the upcoming year. View Past Predictions: https://scottymacsblog.com/2011/12/28/my-top-10-predictions-for-2012/

Coast to Coast “Buzz” – Market Rebound!

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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!

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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.

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!

 

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”.