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!
Scott’s Northern Virginia Real Estate Market Minute
2012 Synopsis and a quick look forward into the Northern Virginia Real Estate Market for 2013. Scott MacDonald (703) 652-5777 or read his blog scottymacsblog.com
Coast to Coast “Buzz” – Market Rebound!
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.
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.
Is the spring market coming?
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.
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!
How will your year end?
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…
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?
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”.