A Stable Real Estate Market and Great Interest Rates – That’s Something To Be Thankful For

Well, we have good news to report on the market – We have reached a point of stability.

We are now officially into the winter market as we are starting to see things wind down.  Our listing inventory is currently at 8,512 houses for sale which is actually down from our 7 year high last month.  STONE BALANCEWe have a 3.7 month supply of homes which is about the same level as last month.  Obviously, we would like to see more sales as would our sellers but we are maintaining our sales levels, not decreasing which is more good news.  Additional positive news is interest rates remain low and prices are stable so the opportunity for buyers to lock in reasonable monthly payments is available.  From the buyer’s perspective, now is a great time to buy.

I had a conversation with Josh Burruss of MVB Mortgage about payments with rates where they are today versus a situation where they to go up .5% – here is the result of our discussion.  Currently the rate on a 30 year fixed conforming mortgage is approximately 4.00% (APR 4.058%) based on a sales price of $500,000 with a down payment of 20%.  If the interest rate were to rise just 0.5% (4.50% – APR of 4.562%) from current levels, the principal and interest payments would increase by approximately $117/mo.  The difference in the overall finance charge in these two interest rates over the life of the loan is approximately $42,241.94.  As you can see, just a half percent in interest rate can mean a huge difference in overall cost over the life of a mortgage.  If you want to discuss this with him in greater detail, feel free to call him at 703-727-4239.

Moving forward, we need to pay attention to the end of QE3 and the government’s subsequent completion of bond buying.  We are expecting rates to rise into 2015 as a result of this policy.  Right now we have great rates so take advantage while you can because the Fed still thinks it will be a “considerable time” before it begins to raise interest rates. The Zero Interest Rate Policy remains in full force, as it has been since it began at the end of 2008.  This policy will change because we cannot sustain this type of monetary policy as it just continues to add to our National debt.  Plus, we need a market-driven interest rate environment and a more predictable monetary policy to help foster long term economic growth.  This will definitely impact our housing recovery moving forward.

We would welcome the opportunity to discuss your housing situation in more detail so please feel free to contact me via email scottmacdonald@remax.net or give me a call 703-652-5777

Scott MacDonald

RE/MAX Gateway

It’s good to know!

We had another great real estate exchange yesterday at Clyde’s in Ashburn sponsored by Jane Clawson at Ekko Title and Josh Burruss at Potomac Mortgage Group.  We discussed the Loudoun housing market as well as the Northern Virginia housing market and how inventory is up due to the time of year but distressed property inventory is down.  This trend has been occurring for the last few weeks throughout the region. 

New home sales are more and more prevalent as the houses that are for sale are not priced right or are not in the right condition and if they are, they are receiving multiple offers with escalation clauses.  In addition to lack of acceptable housing in the resale market, builders are now priced right and are offering a viable option. 

A few agents are experience appraisal issues and as prices escalate, we anticipate seeing even more as underwriters are not in sync with the market and appraisers want to be conservative and not be too far ahead of the curve in pricing like we saw from 2004-2006 – stay tuned!

Josh mentioned that rates remain great – 4.75% with no points on conforming/FHA products and just 5% on conforming jumbo products.  One reason we continue to see great rates is that inflation is came in lower than expected on Friday despite the fact that gas prices and food prices are on the rise.  On Monday, Standard and Poor’s downgraded the US debt which resulted in a slight uptick in rates.  It is the first time since 1995-1996 that they have downgraded the debt, if this trend continues, we will see rates rise and rise quickly – keep an eye out for further announcements.  Loan applications continue to roll in for purchases – 86% of applications were purchase apps and 75% of those were for new homes.  Again, new homes are having an impact in the Northern Virginia housing market.

Jane discussed the importance of utilizing reputable partners when buying or selling houses.  They have seen recent trends when researching titles that there are rampant defects in title.  This is because previous title companies have not gone back 40 years when looking at the title history, they just went back an owner or two. Jane and her team will go back and contact the banks to get liens released or indemnify the parties so they can move forward with the transaction, receive their title insurance and move forward. Lately, they are seeing unreleased liens, mistakes made with the wrong substitute trustee selling the properties, issues with previous second trusts and more.  Be sure you work with a reputable team to handle these issues and protect your clients.   Also, remember that you cannot put “owner of record” as seller on your contracts.  Call Ekko and they can do a quick title bring down and let you know who is the owner of the property – you need to know who has the authority to sell the house. It’s good to know and to work with people in the know.

Next, we discussed our listings and reviewed buyer needs.  Activity on listings is up which means buyers are out in the marketplace – get your house in the right condition and price it right to get a sale!  Investors are still hungry for properties in the lower price points as the rental market remains strong and rents are brining great returns.

It is imperative to stay on top of the market, review trends, and network with other professionals to inform your clients of what to do when buying or selling real estate.  Get it?  Got it?  Good!

Now, go sell something!