Scott MacDonald of RE/MAX Gateway offers valuable information and insight in his Northern Virginia Real Estate Market Minute as to why the Spring 2013 Northern Virginia Housing Market is slowing down just a little. Homes priced competitvely are selling fast! Home Buyers and Sellers will want to save money by closing before July 1, 2013 Grantor’s Tax increase. There’s still time to get your home listed for sale! Call Scott MacDonald (703) 652-5777
Yesterday I was at a meeting for Homes for Heroes and I heard a young Marine speak about his life and how it had changed after being injured in Afghanistan. His name is Staff Sergeant Joey Jones
Here are some notes I took and wanted to share with others – enjoy:
Determine what your personality is and what serves you best for your skills
These are things we have heard in the past at one time or another but it never hurts to be reminded of them to keep you focused.
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, 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!
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!
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”.
What has been the catalyst in spurring the housing bubble and subsequent burst that has left us in the mess we are in today? Was it the run up of prices? Was it greed? Was it poor advice given to buyers by Realtors and lenders? Was it lax underwriting guidelines? Was I the government’s proclamation that everyone should be able to achieve the American Dream of home ownership? The answer is yes to all of the above.
The housing prices escalated at ridiculous rates – far above historical percentages that had been established over decades. Builders couldn’t build fast enough to satisfy the demand which drove up their prices. Buyers were having a difficult time being able to purchase a home and therefore bid up the price of the home above what they were willing to pay for a house originally. It was a stressful and fascinating time to be a Realtor. Buyers were mad that they had to bid so high to get into a home and sellers were mad at Realtors because their neighbor’s house sold for more money than theirs did – no one was happy. Yes, over escalating prices were one of the causes that affect us today.
The greed factor came into play with “flipping”. Many people bought homes from builders. In most cases, as they went through the lengthy construction phase and because of demand, prices escalated. You could buy a house, not do anything to it other than wait until it was ready, then raise the price and sell the home for a profit – many times for tens of thousands of dollars more than their original purchase price. It seemed as if everyone had a story of someone who did this so they tried to do the same thing. As the saying goes, too many chefs spoil the pot – well same thing happened in the new homes arena. As prices declined, buyers bailed and builders got left holding too much inventory. Also, greed came into the picture with people using their homes as a piggy bank and not a savings account. How many people do you know that refinanced not just once but many times and bought properties, fancy cars, and vacations they normally would not have been able to afford? Greed is not good Gordon Gekko and it has affected us today.
How many inexperienced, uneducated people got into the real estate and lending business when the times were good? Hundreds of thousands got into our businesses. Whose interests were they looking out for in the transaction? One guess, not the buyers – theirs. They got into the business for what was believed to be easy money. They gave advice that wasn’t the right advice about the market and where prices were headed. They got people into loans that were not right for the people they gave them to and as a result, they defaulted. Poor advice definitely contributed to people’s over exuberance in their decisions on purchasing and financing properties and it is taking its’ toll on the market today.
Was it the policies that were put into place that lead to lax underwriting guidelines a cause that lead to where we are today? You better believe it! These loose guidelines resulted in allowing people who should not have become home owners to become home owners. In my opinion, this probably had the biggest impact on how everything listed above was able to occur. What were the guidelines that were slack you ask? Here are just a few: debt to income ratios up to 45%, no income no asset loans, loans up to 125% of value if combined with other liens, minimum FICO scores of 620 for prime loans, 10% down payments for financing investors, interest only loans and of course the teaser rate loan products. Without these underwriting guidelines being loosened, we wouldn’t have had the ability to do all that was stated above.
Was the government’s belief that everyone should be afforded the American Dream of Home Ownership a contributing factor? Of course it was. Not everyone should be a home owner. Credit scores need to be higher to be considered prime. People should have some skin in the game and not be allowed to finance above the sales price to get into a home. People need to verify their employment, prove they have cash reserves, and provide tax returns, etc. in order to obtain financing – it is common sense. The problem today is the virtually the same legislators who made these loans possible have swung the pendulum too far the other direction and are hampering our recovery efforts in the housing sector of the economy. FHA costs have risen, talk of raising down payments to 20% are going to hurt the market, stricter ratio requirements are in place and the overall costs associated with a loan are up 8.8% over last year as reported by Bankrate.com. These trends have to stop if we want to see true recovery in the housing market and the overall economy.
Real estate has always been the key to getting the economy out of its slump and the longer housing languishes, the longer we will be in a recession. What we do know is that more strict underwriting guidelines are not the answer. Responsible lending and more educated agents and lenders providing the consumer the right information are going to be part of the solution but getting the underwriting guidelines back in line with reality is the catalyst to recovery. Get it? Got it? Good!
Now, go sell something!
Although my crystal ball is currently in the shop, we do know where things stand in regards to the local housing market in Northern Virginia. Inventory levels of active resales are virtually the same – we currently have 7,640 homes for sale in Fairfax, Loudoun, Arlington, City of Alexandria, Prince William and Fauquier Counties. This time last year we had 7,680 – pretty similar. There is a slight difference between these two timeframes and that is in the number of distressed properties on the market. This year there are only 293 foreclosures for sale along with 882 short sales – last year, there were 450 foreclosures and 1109 short sales. This result is a difference of about 5% of the total inventory. The perception is we are inundated with distressed properties when in reality, we have a lower percentage of overall inventory than the rest of the country in relation to foreclosures and short sales. Our market is healthy.
We have a 2.6 month supply of homes which is a seller’s market. Houses are selling when the sellers have them priced right, in the right condition, and staged properly – often times with multiple offers. We had several agents engaged in multiple contract situations this past weekend with a few of those properties being listed for several months. We have buyers in our market because we have jobs. One of our agents relayed a story of his nephew and their job search. Over 140 people interviewed for a job at an oil change shop in Florida – that’s unbelievable.
Our rental market is strong, currently posting a 1 month supply of homes. The reason is people relocating into our area are gun shy on purchasing. This is as a result of a few different factors. It may be their confidence in the housing market because of where they came from to relocate here, they can’t buy because of a potential short sale or foreclosure on their credit report or they are losing out to other contracts and have a short time to find a property and get forced into renting. Either way, it is a great time to be an investor in Northern Virginia.
Prices are stable to increasing in the Washington Metropolitan area. We are seeing price increases throughout our region in several price points. Typically in house priced below $400,000 (pretty much everywhere) and those priced between $800,000 and $1,200,000 (closer into the beltway and DC). In addition, builders found their bottom in pricing towards the end of last year and the first quarter of this year and have started to escalate their prices as they have seen an increase in sales of their homes. Reports show that we are expected to have a 7.4% increase in housing prices in our region compared with -3.2% in the rest of the country – a difference of over 10%. Again, we have a healthy market.
We also have low interest rates which are fueling our sales – housing is affordable because of rates. If people are waiting to buy because they feel prices will come down – they are mistaken. If they think rates will continue to decrease, they are mistaken as rates have actually increased over the last few weeks. Now is the time to buy.
It is hard to believe it was the second Thursday of the month already…time and summer sure fly by fast! Here is what the Top Producers in real estate had to say this month. If you have questions you would like me to pose to them, please let me know.
Negative news is everywhere. Some websites even post good news one day and negative news the next. How do you handle it and when will it stop? Tell people to look at time frame of ownership – long terms hold will have fluctuations no matter what the investment is – stocks, gold and housing. Show stats of our area being number one in appreciation month over month. We are seeing incremental price increases in lower prices. The news is reporting what is true across the country, we are just jaded because our prices are stable, unemployment is low, and pay rates are low plus they can’t sell houses. Use the bad news to get price reductions. Talk about the “cost” of money today and how great rates are compared with other years.
The government will come to an agreement on the deficit so we don’t lose AAA status, rates will stay low and the dollar won’t devalue. Both sides of the aisle on Capitol Hill will do the right thing and make it happen because if they don’t, we all lose.
Control your closings – select the title company to get information on the lender when agents fail to give you Form 100 – removing financing contingency. The bottom line is too many agents are not familiar with the contract or the process. Agents need to be educated and then educate their buyers.
Interest rates have increased recently, have you seen any effects on the market? Everyone agrees that nothing has really slowed down. The market remains stable.
Where is the market? Contracts have slowed down in Loudoun and Prince William counties, agents are busy listing houses and trying to find where the prices should be on their listings and trying to find buyers. Townhouses are selling well in Western Fairfax County – singles are lingering on the market.
Appraisals are problems for some not for all right. Appraisers are still coming from outside the area to and are appraising properties low – herein lies the issue. We need market specific appraisers every time.
What are you going to do the second half of the year? Some agents are hiring coaches for the second half of the year, focusing on new home construction, and one is bringing in vendors to open houses to provide gift cards to agents who attend. Others are calling their sphere more frequently and generating leads this way.
The discussions today were lively so it is better to attend if you qualify then just by reading the notes. Get it? Got it? Good!
Now, go sell something!
Likability is one of the critical areas for success in sales and in life. As the saying goes, people do business with those that they know, like and trust. So the question becomes, how do you get people to like you?
The first step is to become approachable – smile, make eye contact, extend a handshake first and introduce yourself first.
Listen more than you speak – people love the sound of their voice and to voice their opinions. Listen, don’t interrupt and be respectful of others opinions.
Much like the sound of their voice, they love to hear their name. Use their name – it not only will make them happy but it will reinforce and help you remember who they are when you see them later. Remember and acknowledge dates that are important to them – birthdays, anniversaries, and birthdates of their children are just a few!
Deliver on what you promise and be true to your word. Your reputation takes years to build and you do it one day at a time one interaction at a time. Remember, each encounter is extremely important to the other person you are meeting with – make it count for them!
Become solution oriented for others. Help them solve what issues they are encountering and it will endear them to you.
Be humble – don’t brag, put down or show a huge ego. Let your actions speak for you not your words.
Respect others and be empathetic. Don’t talk down to people or ignore their needs or wants. You don’t always have to agree but take the time to understand where they are coming from in with their point of view.
Be happy, positive and upbeat. Optimism goes a long way to having people like you. Negativity, snapping at people, complaining and putting others down is ways to drive people away from you.
Act professionally in your appearance, your demeanor, your actions and remember to be polite – it will go a long way to adding to your likability.
Be honest and show integrity. When people lie, exaggerate or stretch the truth, people will see through this over time and you will lose credibility and in turn, it will hurt your likability factor.
Be inspirational, motivational and last but not least have a great sense of humor. Be able to laugh and do it often. People like to be around people who are fun.
These are just a few thoughts to help you get further in life faster. Get it? Got it? Good!
Now, go sell something!
Scott's Motivation and Real Estate Market Updates 