market update

The Market from ALL Angles

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Another successful RE/MAX Gateway Real Estate Exchange

 

I was at a lunch with business leaders across the Washington Metropolitan Area and we discussed various challenges we were having within our businesses and what our opinions were on what was to happen going forward into 2010 – here is what we discussed:

 

First and foremost, everyone is blessed to be in DC – others around the country are bleak with no hope. 

 

  • People at Rosenthal Automotive are concerned about economy
    • November was a really bad month for car sales – feels like November in first two days of December

 

  • Mike Jacoby at Broad Street says the commercial real estate market is flat and will stay there for the next few years.  One bright spot is that the Route 28 corridor’s vacancy rate had dipped.

 

  • Johnson and Strachan, the insurance company is taking a hit because of the following areas:
    • Renewals / expiration vales are down – payrolls are down, valuations on companies are down, house values are down so their revenues as a result are down. 

 

  • UBT – a copier sales and service team say in their opinion the economy is flat/stable – not terrific just like their business but they expect slight growth anticipated in 2010

 

  • Roofers are on a roller coaster this year but will probably be down at year end – the market is a race to the bottom in pricing but they remain cautiously optimistic.  John Francis on NVRoofing believes it will be a long recovery over the next 5 years. 

 

  • Jeff Nay of Sandler Training say there is still a lot of business is out there – need better skills and better systems to eat others lunches today.  Get educated and trained and you will survive in today’s market – especially in D.C.

 

  • Derek Coburn of Washington Financial Group who specialize in wealth management – money is in Bonds – not Stocks right now they are not afraid the market will crash and that the market will come down.

 

  • RE/MAX Gateway spoke about the following topics:
    • Inventory is down
    • Buyers are there but $$ are down or flat
    • Tax Credit for Home Buyers was extended
    • MBS end in March
    • HVCC is keeping $$$ down
    • Foreclosures are hitting market 2nd Quarter of next year
    • FHA raising down payment requirements this year from 3% – 3.5% and perhaps to 5% down next year
    • Credit is tightening up
    • If we continue to lose jobs it’s important to keep in mind that every 6 job lose results on 1 foreclosure.

 

Next year will be an interesting year in residential real estate with the Government getting out of purchasing Mortgage Backed Securities, the Home Buyer Tax Credit ending, and a supposed flood of foreclosures coming on the market the second quarter next year and the impact that will have on housing prices.  Stay tuned!

 

We then introduced Keith Barrett of Champion Title & Settlements, Inc. to discuss the new regulations going into effect April 5, 2010.

 

General Short Sale Guidelines under HAFA

 

Overview

 

Eligibility for Home Affordable Modification Program (HAMP):

1. Property is borrower’s principal residence

2. First lien mortgage originated on or before Jan 1, 2009

3. Mortgage is delinquent or reasonably foreseeable

4. Unpaid principal balance less than 729, 750

5. Mortgage payment exceeds 31% of gross income

 

Not guaranteed but must be in place

 

In the event modification process above does not work out, every potentially eligible borrower must be considered for Home Affordable Foreclosure Alternative (HAFA)

 

The percentages of loan modifications that default are greater than successes where people remain in their homes – there is a huge opportunity here folks!!

 

General Information:

 

Effective date April 5, 2010

 

Servicers must execute participation agreement for non-GSE Mortgages prior to end of the year.  If already participating, must follow HAFA guidelines.

 

Servicer has 30 days to contact borrower regarding short sale or deed in lieu

 

Borrower then has 14 days to respond

 

Prohibits servicer from reducing commission as stated in listing agreement

 

Doesn’t protect settlement companies and their fees – it’s unfortunate.

 

Suspension of foreclosure while under consideration for short sale

 

Short Sale Agreement under HAFA:

 

Termination date of not less than 120 calendar days after agreement signed

 

Agreement is available on line

 

Release of liability for borrower for cancellation of default

 

Allowable transaction costs

 

Roles and responsibilities of servicer and borrower, upkeep of property, pay a portion of their monthly payment until closing.

 

Borrow must submit offer/request for short sale approval within 3 days of receipt. Servicer has 10 business days to approve/deny short sale from when contract and request for short sale approval submitted. At this time, we are not aware of any penalties given if there is no response by bank by the deadline.

 

Incentives:

 

$1500.00 for relocation expenses paid to borrower

 

$1000.00 paid to servicer

 

Investor paid $1000.00 for allowing up to $3000.00 to be paid to subordinate lien holder, which lien holder must forgive the debt and release liability

 

Again, there is opportunity here – don’t miss out!

 

We had discussed if the government had given everyone $100,000.00 vs. bailing out everyone would be in a better position today versus the situation we are in today with all of the debt the government is in.

 

Inventory levels continue to shrink:

5,074 Active resales in Northern Virginia

1.9 month supply of homes

1.9 month supply of rentals

 

Our market is strong for sellers with equity!  Get them on the market today.  Get it?  Got it?  Good!

 

Now, go sell something!

Great Opportunities and Great Information!!

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Quick update on upcoming important company functions:  www.demandsuccesstoday.com
is on October 28 from 9 – 12 – register today, Continuing Education with Champion Title on the new HUD-1 from 2
-4 at the Sully District offices on 0ctober 28th, and short sale training with America’s Home Rescue from 9 -12
in Chantilly.  Also, there is still time
to get in on our Annual Business Planning this weekend.

Due diligence in dealing with our transactions is more
important today than ever before. 
Recently we have had experiences with leased propane tanks, fuels and HOA
docs.  Read, and reread the contract to
know what to say when situations arise. 
Knowledge is power people!!

What do you need to do when dealing with short sales and the
HUD-1’s?  Add 9 months of taxes, and HOA
dues to whatever is past due currently so there are no surprises to the
noteholder when the approved HUD is 6 – 9 months old and the numbers don’t add
up.  Are short sales getting easier?  We don’t think so!

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Jason Smith

Foreclosure inventory is down

Sales are getting easier – when dealing with arms length transactions

Houses are staying on the market a little longer so urgency
isn’t as great

Inventory is stable over the last few months but still way
down from the beginning of the year, month’s supply is consistent, rental
market is tight right now as well.

Appraisals continue to be issues on all fronts.  We have experiences with appraisers who are
inexperienced and bring in numbers way too high or way too low – it continues
to be a crap shoot.

Pat
Cunningham

Condo sales – starting November 2nd – approved
condo rules are going to change.  Spot
approvals are going to more difficult

Rates have inched up about ¼ – ½ point over the last few
weeks – they will continue to rise

Flipping rules may come into play with conventional loans
when they require Private Mortgage Insurance. 
Be careful if you are selling a flip.

Wall Street Journal ad between NAHB and NAR was published
today.  The ad showed that $28 billion to
the economy because of jobs.  An average home
sale generates $62,000 and involves 29 different industries are effected by
each sale.  It is good for continuing
momentum

Homepath financing is for Fannie Mae owned properties and is
offering special financing options. 
Conventional loans, 5% down, no MI, no appraisal, rates are only ¼ to ½
% higher, investors can get in for 15% down and there are no income
requirements plus credit score only needs to be above 660.  Check out www.homepath.com.

No new news on keeping the loan amounts at $729,750 after
December 31st.

Agents shared details on various properties throughout the
area as well as buyers they are working with to try and get them into homes
prior to going on the market.

Our next exchanges will include a commercial agent and
appraiser to keep us up to speed on those aspects of our industry.  Keep learning so you keep earning.  Get it? 
Got it?  Good!

Now, go sell something!

It’s time to invest!

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What was the first thought that came into your mind?  Was it about the stock market?  Or was it about buying investment properties?   Perhaps you thought it was getting others to invest in the previous two areas of opportunities.  Now, what do you believe this statement is about?  What does invest mean?  Dictionary.com says it means :

1.

To put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.

 

2.

To use (money), as in accumulating something: to invest large sums in books or education.

 

3.

To use, give, or devote (time, talent, etc.), as for a purpose or to achieve something: He invested a lot of time in growing himself personally and professionally.

 Well, taking this into account, my intention was that it is time to invest in yourself and your business.  The top companies in the world invest in their people – you should invest in you as well!  If companies do it, why don’t you?

The real estate market, the economy and your business are not out of the woods yet.  Yes, some aspects of the economy are stabilizing but we have a long way to go – foreclosure numbers, default rates, and unemployment rates (although reported to have slowed) continue to rise.  Therefore, now is the time to invest in your business.  It has become obvious to me that during times like these, many agents get too involved “in” their business when in fact, if they want their business to soar to the next level, they should get involved working “on” their business – today.  It is time to reflect on what is working and what isn’t – where are trends in our area heading – who are key players in the industry and what are they doing – more importantly, what are you doing?  Are you attending training?  If not, why not.  If you are involved in foreclosures, are you going to conferences out of town to meet new people, strategize and get new accounts?  If not, why not?  If you are doing short sales, are you meeting with experts who are experiencing success in the business locally and nationally to learn more about trends and what they are doing to be successful?  If not, why not?  Are you taking advantage of the free educational opportunities your association is making available to you?  If not, why not?  Are you taking advantage of one on one opportunities with your broker, fellow agents or a coaching program to help get through the market we are in and are going to encounter?  Again, if not, why not?

These examples could go on for some time.  It is my belief that you need to get out of your house, get out from behind your desk and educate yourself or else you will be left behind – doing what you’ve always done and get the results you’ve always gotten will not propel you to success.  Times change, programs change, economies fluctuate and you need to as well if you want to succeed now and in the future. 

It is important not to confuse activity with accomplishment.  Determine what you want to accomplish and what you need to do to achieve what you set out to do.  If you get willowed in the mire of day to day activities, put blinders on to what is happening around you,  get out and network with others, and ask yourself how can you accomplish “big” things in your life.  It is my opinion you need to invest in you today.  Attend trainings, get coaching, attend business planning (it’s not too late), get a designation, attend mastermind sessions, go to real estate information exchanges.  Take the time to get educated – NOW!  Get it?  Got it?  Good!

Now go sell something!

Walter Bond, Kathy O’Neal…what a great day of speakers!

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Walter bond
Today’s speaker at our exclusive business development group Accelerent was Walter Bond who amazed the crowd with his personality, flair and common business sense to help us “sell” our way out of the recession.  Here are a few of his tips:  strive to be the top in your business – whatever your chosen field may be; connect with people – don’t just communicate; execute the principals of the of your business – be fundamentally sound; differentiate yourself and most importantly be likable!  As we know, people buy from people they know, like and trust.  They know you by branding yourself, they like you because they you “connect”/build rapport with them and the trust you through your knowledge, skill and expertise you display in your business.  Also, to be the best, carve out your niche!

Our Top Producer Panelist in today’s training was Kathy O’NealKathyo
 

Team of 3 plus Kathy

Unlicensed assistant – visual tours, schedules appointments, client coordinator

Part time IT guy – does videos, website design, blogs

Husband – writes blog, works internet stuff, but they don’t do twitter or Facebook or Linkedin

Kathy – the face of the team

Videos are of testimonials, interview Kathy, buyer process – people know you before you meet them – think about

Incorporate video into your program – financing, seeing properties, writing contracts, settlement, foreclosures, short sales

Now send video emails introducing yourself

Keep up with past clients – know market area – newsletter – client party (cut down Christmas Trees nic– birthday cakes about

Podbeam – podcasts that are hosted by another

Blog a few times a week – interview clients, potential buyers

Thoughts on the market – under $400 is hot – people who would put house on the market don’t know they can sell their house in today’s market – not enough houses for sale – lots of buyers out there – not enough move up buyers – not too many appraisal problems – think prices are coming down, sell now – foreclosures are coming so not sure how this will affect values, we know where it is now – appreciate agents who answer phones

Keys to success – do the basics, good service, keep up with your client base, figure out what you do well and keep doing it, keep up with the market, connect with people, be a real person, look for new trends. 

Here are the numbers!

 Active inventory is down 56% from 2008 with onluy 5,850 active listings on the market. The vacancy rate is holding steady at 28% of the market leaving us with a 1.7 months supply of houses for sale.

The rental market has a 1.9 month supply of rentals on the market with 3,004 properties currently for rent.

Now, go sell something!

 

We’ve caught the 500 pound elephant…

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The economy isn’t as bad as we think it is or as the media portrays it to be…especially in our Washington Metro Area.  Dr. Stephen Fuller from GMU’s Center for Regional Analysis spoke to our office today regarding the current economy in our area including unemployment and the state of the housing market…and of course his forecasts for the future.

The future is uncertain. It always has been and as it should be. We can only predict so much. So Dr. Fuller believes that in 2010 and 2011 the housing market in the Washington Metro area is going to be out of control good or in his words it’ll go “gangbutsters”!  That’s pretty optimistic considering the last batch of Alt-A loans (5/1 and 7/1 ARMS) are due to adjust in 2011, but he did say to that end that the majority of those loans have already gone into foreclosure.

Unemployment in our area is down. It’s up around the rest of the nation and according to Dr. Fuller will go up to 10.2 nationally by April of next year before we see it start to come down again.  As of this last month, there is a 3.5 point gap between the national unemployment figure and the figure in our region. He noted that as a country we are losing 200,000 jobs per month and in order to keep employment where it is currently, we would have to accrue 100,000 jobs per month – again, we are losing 200,000 per month.  Employment won’t return to pre-recession numbers until 2014. That’s a heck of a lot of jobs! And half of those job losses are in the retail sector.  Thanks to amazon.com and all of the other internet retailers that offer goods for discounted prices. Store front retailers can’t keep up, end up in bankruptcy and leave buildings and strip malls vacant along with any customer service that might have been associated with it.  Big box retail shopping centers may get rezoned to accommodate housing short fall – stay tuned.

Dr. Fuller did comment on inflation and whether or not it will happen in the near future due to all of the spending our government has been doing lately. Will we have to endure a hard inflation period to “pay it all back”? His answer is not likely.  Unemployment is a major factor affecting our economy, but it’s not enough to put pressure on the economy to spark inflation. He noted that manufacturers are not struggling as hard as they would be during an inflationary period. This is in large part because of all the products you can purchase online. They costs of  not having a physical store, employees, etc. allows for the lower cost product and thus more profit in the long run. Therefore, if they continue to produce the goods, they continue to sell, then inflation shouldn’t occur…but that doesn’t mean another recession won’t occur. Dr. Fuller said another recession is inevitable, but when is the question.

A recession is defined as a period of an economic contraction, sometimes limited in scope or duration or as Wikipedia says it’s when the GDP falls or when we have negative growth. We have experienced this negative growth for the past 18 months and things are finally looking upward.  As is the housing market!

The real estate market in the Washington Metro area is hot and soon to get hotter! At Gateway our sales are up 4% over last year, but our volume is down by 5%, thus showing that prices have come down quite a bit from last year. Dr. Fuller predicted that builders will start building more spec homes about springtime of next year. He commented that we need to have 25,000 new homes (not resales) to accommodate just the new residents in the Northern Virginia area, compared to 1 million nationally. Currently in our Northern Virginia market, inventory is slowing decreasing. This week we see 5,984 active listings on the market…that’s down 56% from this time last year. Just goes to show it’s a great time to sell and with the $8,000 first time home buyer tax credit and low interest rates, it’s also a great time to buy.

Interesting market update

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It is an interesting time in the market right now. For the first time in a long time, there are not a lot of changes in our market to report – it is the same ole story – which is kind of nice.   Over the last several weeks, we have reported shifts which were affecting our industry and we were on top of for our clients and agents alike.  Last month we talked about short sales, foreclosures and those trials and tribulations. Right now everything is flat in terms of news. The inventory levels are down, buyers are still out looking for homes, the hot price ranges remain hot and we are ready to help!

What makes me wonder is, is now the calm before the storm?  As we’ve been speaking about over the last several weeks, many questions have been raised that we cannot answer – yet.  Many of our questions include the short sale process, inventory levels, release of foreclosures by banks, and other concerns over distressed properties still have not been answered.  Additionally, we have impending issues we are dealing with such as the first times tax buyer credit coming to an end on November 30, …will that be extended with all of the billions of dollars being spent by the government?  When will interest rates rise…is looming on our horizon – how soon will that happen? Foreclosures are slowing being released…will they be released all at once and will that have an impact on our values?  How much can the government spend to buy mortgage backed securities against the Federal Reserve’s advice and how will this impact us going forward.  There are a lot of questions that need to be answered and only time will tell what the outcome will be for the housing market.  So, for now, there is nothing turbulent to write or speak about today.  All’s well that ends well I guess will be the theme of this month’s update.  Mortgage rates are great, buyers are buying, houses are selling, and we are still working to make it all happen for our clients.  Let’s hope we get more of the same going forward!

Converstations on Shorts sales, HERA with Ed Dean with Potomac Mortgage Group

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The shorts sales continue to rear their ugly head. Our agents continue to have problems with the time spent working on them, the energy devoted to them and the lack of results they are getting out of them.  It appears now that many of the banks have gone to call centers handling the shorts sale calls for the banks and these people have no training no experience, but more importantly no authority to make decisions on whether or not to approve or disapprove a short sale. 

Enough of short sales, now onto the mortgage news…

This week the head of FHA, Dave Stevens, made the announcement that FHA will not be going the way of HVCC because he is a wise man and recognizes the inherent problem associated with the HVCC.  Great news for all of us in this regard!

In a recent conversation with Ed Dean, we were further educated on the new TIL reforms and told us that 10 days is a reasonable amount of time to get a loan to close, you would have to move heaven and earth to get a loan done in 7 days (it can be done, but it’s not recommended), but his belief is that it is not going to have as much of an impact as many people are indicating. Check out his notes on the subject from our conversation.  Ed did a review of 5,000 loans that his former mortgage company had done and noted that only 30 of those loans would have needed re-disclosure. A majority of those 30 needed re-disclosure as a result of people failing to lock in their interest rate or it was initially a pre-qualification and it went to contract several months later. You’ll note at the bottom of page 3 of his notes, how significantly the numbers need to change to get a re-disclosure.

Other mortgage news included guidelines continue to get tougher on condos with more restrictions imposed. In addition it has become virtually standard operating procedure for every lender to pull the Form 4506 from the IRS to request the borrower’s tax returns to make sure they match the ones they provided in the loan application process. Basically with the way the loans are going today, you have to fit inside the box. There is no thinking outside, underwriting or loans being approved outside the box. And lastly, second trusts continue to have no future or part of the mortgage or sales landscape.

As is always we strive to keep you educated in the real estate world.  Get it? Got it? Good!