September 2022 Market Update

Summer is coming to an end! The question is – is the real estate market coming to an end as well? If you read the headlines, watch the news, and talk with co-workers and family members (who are not real estate professionals), the answer is probably ‘yes’. Prices are going to crash, we are in a bubble, inventory is going to skyrocket, foreclosures are going to ramp up, and more false information floats around regularly. Luckily, you have the voice of reason – me – to tell you the real facts, especially about the Northern Virginia Market. 

First things first: prices will go down in some areas, but not all, and not drastically. Some sellers will be desperate and will sell their homes for less than market value, as their circumstances will dictate their motivation. This is the exception and not the norm. They’ll still make money on the sale, as prices have increased in the last few years, so they’ll not be in a negative equity position. Some sellers will receive multiple offers and prices will escalate – again, this is the exception and not the norm. This is ok, as we don’t need the market to continue to have prices escalate $25,000 – $150,000 over the list price. That was just not sustainable. 

Inventory is not going to skyrocket, and we won’t suddenly have an oversupply of houses on the market. Why? Many homeowners have 2.5-3.5% interest rates on their mortgages and their payments are affordable, so why would they just suddenly list? Because people say the market is going to crash? Not gonna happen. Inventory levels have dropped in the last six weeks in our market, and that trend will probably continue. People are selling today because they need to – not because the market is on fire. Houses will stay on the market for two to three months – not two to three hours, or even two to three days – and that is ok. We are in a balanced market. This will frustrate some sellers, but the market has changed, so settle in and know that these are the conditions today. 

In today’s balanced market, buyers will have time to look at houses more than once and for longer than just five minutes. Their contracts will have contingencies, and this, too, is ok. 

Lastly, we are not going to have a foreclosure explosion. People have equity and jobs. They will exist, but there will not be an onslaught of them.

Sellers – it is time to balance the expectations of your sale to mimic the new market. Have patience – your house will sell. Buyers – know you will have time and choices, which is a good thing, but also know that sellers will not drop prices by 10%. Be realistic and you will get a home that fits your lifestyle. Buy for the long term and don’t be concerned about price fluctuations – they are normal.

With all that being said, some parts of the country will see bigger price drops because their prices increased nearly 50% in just a few years. They will see more inventory coming on the market. Their markets are not as sustainable as ours. Remote work situations have reversed in many cases, making these “hot markets” not so hot. 

I can tell you more and show you charts and images that back all of this up, so feel free to reach out if you want to learn more. As always, I am here to help you (and those you know) with their real estate needs. Call me to discuss how all of this affects you or them!

Now, go watch some football!

August 2022 Market Update

It’s the dog days of summer, and the real estate market is generally as it is this time of year, but just a little bit slower. Typically, the market sees less activity in August – people go on vacation, the showings slow, and prices moderate. Nothing to be concerned about, but the difference this year is the market was so fast-paced the first five months that it seems like things are drastically slow now.

The good news is that we have settled into a more “normal” market. The initial shock of the changing market has worn off. Inventory levels have stabilized, prices are settling, and buyer demand remains active. The weekly absorption rate of sales this year is 19% which is good, relative to other non-pandemic years. For comparison, the rate in 2019 was 18%, in 2018 it was 15% and in 2017 it was a mere 12%. What we need now is for seller expectations to be in line with where the current market is. It will take longer for houses to sell; there are fewer buyers in the market due to rising rates, rising prices, and buyer fatigue. The great news is that there are still buyers in the market. There is no bubble and prices are not crashing.

Why you may ask? Today (versus the Great Recession), we have 5 million more buyers in the first-time home buyer age bracket (28-32) and there are 12 million more household formations. Additionally, the number of homes for sale was 3.7 million nationally in 2008. Today we have under 1 million. Builders only build when they have a buyer – they are not building spec homes like they were before the Great Recession. The overall numbers reflect a better market for both sellers and buyers. The frenetic pace from November through the end of April was not sustainable, nor was it healthy.

So, what’s next? We will have a market where buyers will have the ability to take their time when deciding to buy. When they do write contracts, they will have contingencies in them. There will still be some homes that sell quickly with multiple offers, but it won’t be like it was a few months ago. I want to reiterate that this is a good thing for everyone, as we have seen issues with people who bought homes sight unseen, didn’t do inspections, or have appraisal contingencies.

The bottom line is that if you are looking to sell or buy, you need the advice of a trusted professional. Call me to discuss your situation in more detail. I am here to help!

July 2022 Market Update

Welcome to the summer – and all the fun associated with it! What does summer mean to you? Trips to the beach?  Lazy days at the pool? Cookouts with family and friends? Baseball games?  How about amusement parks? 

In our current world of real estate, we are at an amusement park and rollercoaster rides are what we are experiencing. We’re facing the ups and downs and twists and turns of the most exciting ride at the park.  Now, more than ever, you need to have an agent with experience and knowledge to help you navigate the roller coaster of real estate.  We’ve seen some houses sell with multiple offers in just a few days, and other houses sitting on the market with very few showings in weeks.  We have a high demand for housing and growing – albeit slowly – inventory levels.  Interest rates are up and down regularly, yet they are still at fantastic historical levels.

The rates of the past are the rates of the past. They were artificially low and could not stay that way for an extended period.  Even though current rates are higher than where they were, they WILL come down as we enter a recession.  The good news for real estate is that in recessionary times, real estate has fared well, with only the Great Recession negatively affecting home values.

The reason for that decline in home values was the exotic home loans and the fallout as a result of them.  We are not in the same situation today.

Homeowners have equity today versus the Great Recession, when many people had negative equity the day they bought the house.  As a matter of fact, of people in foreclosure today, 90% have positive equity and 25% of those in foreclosure have 50% positive equity or greater.

So, what does all this mean if you are a seller or a buyer in today’s market?  Sellers need to be realistic with their pricing and have patience, as it may take time for your house to sell.  The good news is that your home will sell as we DO have demand. Even though inflation and rates are up, buyers are out there.  If you are a buyer, you may need to be competitive or you may not be able to negotiate like “the old days”.  In any scenario you find yourself in, we should speak more specifically about your situation.  I am here to help, so give me a call.

Happy Summer and stay cool!

June 2022 Market Update

Lately, we’ve been having conversations with each other, our clients, and others in the industry both locally and around the country to better understand what is happening today in the real world and the Northern Virginia real estate market. Lots of questions are being asked. Do we have a housing bubble in Northern Virginia? Are prices going to crash? When are prices coming down? Should I wait for prices to drop before I buy? Why is it taking longer to sell a house? How high will rates go? Should I sell (or buy) now or wait? 

In my opinion, prices will not be escalating at the rate they were previously. Those dramatic price increases were not sustainable. There may be pockets where prices decline, but we still have high demand at most price points.

Additionally, our price increases were not as drastic as in other parts of the country. According to the FHFA Top 100 Metropolitan Markets Ranking, we rank 99 out of 100! Other parts of the country will see higher price drops, but our area should remain stable. We will not have a “housing crash” in Northern Virginia. 

Don’t wait to buy real estate – buy real estate and wait. Buy because of your lifestyle, needs, and wants – and not strictly because of prices. Buy for the long term, not the short-term gains. Yes, the market has slowed down. Buyers are not “rushing” into buying decisions like they were previously, but remember – that type of market cannot be sustained. It is still a seller’s market. It’s a good thing when a house is on the market 7-10 days.  

If you are thinking of selling soon, give me a call. Rates are going up on 30-year fixed mortgages, but you do have alternatives – most notably, adjustable-rate mortgages and buydowns. The adjustable-rate mortgages are a great option and not what they were when the real estate market crashed in the past. Buydowns give you another option, with lower than 30-year fixed rates. Let’s discuss why these are often viable options for buyers. If you are looking to sell or buy – now is a great time, so call me to learn more.

Enjoy the last few days of Spring before the summer heat kicks in!

April 2022 Market Update

How about this weather? Cold temps, blustery winds, snow, sleet, and sometimes sunshine and warm temperatures all on the same day. It’s so crazy; I can’t figure out what to wear today! These conditions remind me of the real estate market in Northern Virginia this last month. One house had 100 visitors and multiple contracts in two days; another had 15 visitors and one contract in four days – in the same neighborhood one week apart. We also have a house that has been on the market for more than two weeks with just a handful of showings and no ratified contract. As I always advise, you must have the house in pristine condition, priced right, and in a great location to get the most activity as well as contracts. If you think you can sell anything in this market, you are far from reality.

The real question of the month is, “when should I put my house on the market?” Interest rates have impacted the market as they continue to rise. We’ve had the most volatile few weeks of increases, with rates topping out at over 5%. This has some buyers looking to buy sooner rather than later (many believe rates will continue to rise), and they want to get in today. Another aspect to consider when I’m asked this question is the number of houses for sale – especially in your neighborhood. Overall, in Northern Virginia, inventory levels are down 29% from this same time last year – but inventory is rising. I also consider pricing when answering this question. Prices are up over 9% from last year, but with rising interest rates, inflation, and more homes for sale, price increases will not be as substantial as earlier this year. My answer is simple – get your house on the market sooner rather than later. Call me today if you are considering selling and want to see how this impacts you.

So how does all this impact buyers? If you are financially stable to buy a home, don’t wait – just go for it. Remember to buy for the right reasons – lifestyle, distance to work, and schools to name a few, just don’t forget what your why is. Don’t expect mortgage rates or home prices to come down because neither is going to happen for the foreseeable future. Waiting will cost you more. As the saying goes, ‘don’t wait to buy real estate; buy real estate and wait.’ If you are thinking about buying, call me, and we can discuss your situation in more detail.

In the meantime, have a great spring. Hopefully, the weather will begin to normalize soon!

August 2021 Market Update

There is a lot of news swirling around about the real estate market today. You are probably hearing, reading, or seeing that the market has slowed, inventory has increased, buyers are taking a break, and prices will crash once forbearances end. Well, the question is – what is real news and what is not? In my opinion, we are back to a more “normal” market based upon seasonality, and the market is not going to crash – at least not in Northern Virginia. The months of July and August are typically slower times of the year for real estate, and this year is no different (other than more people are vacationing due to the pandemic and travel restrictions last year). So, this is having a slight impact on the market. Couple this with the frenetic pace of the spring market, and the media would have you think the real estate market is coming to an end. In my opinion, It is not, so you can sleep at night now.

Let’s address each issue:

  • The market has slowed. Yes, it has slowed down slightly in relation to the overheated market we discussed previously and the time of year. This being said, houses are still selling, and some have multiple offers on them. If you are selling, make sure you prepare your home in the proper condition and price it right. Now is not a time to overprice properties. Call me to discuss your situation in more detail.
  • Inventory has increased. Yes, it has. We were at near all-time lows for houses for sale in Northern Virginia, and previously, there were not enough homes for the buyer demand we were experiencing. Additionally, we are still well below what is known as a “typical” market for the number of houses for sale.
  • Buyers are taking a break. Houses are still selling, so they have not taken a break. Buyers are not competing as much in multiple contract situations, so the number of multiple offers has decreased. This does not mean the buyers are taking a break. Buyers are more discerning, and with increasing inventory, they can be. This is an excellent opportunity for buyers – more inventory and less competition. If you are considering buying, give me a call to discuss your situation in more detail.
  • Prices will crash once forbearances end. Prices will not crash… inventory is low, demand is high, mortgage rates are still fantastic, and just because an event like this occurs does not mean prices will crash. There will not be a flood of foreclosures like there were before. Too many reasons to list why, but feel free to call if you are interested in learning more.

There is lots of information out there about real estate. To make sure you are well informed, call on your trusted professional 😊 As summer comes to an end, I wish you all good luck sending kids back to school this year!

July 2021 Market Update

It is hard to believe that half the year has come and gone. It certainly has been an interesting six months in the real estate business. We encountered a frenetic sales pace that saw prices escalate tens of thousands to hundreds of thousands above list price with no contingencies and multiple offer situations, with buyers doing all they could to “win” the negotiations. Then, almost overnight, we saw the market tap the brakes. It is still a great market – we just went from 110 miles per hour to 60. Today, houses are staying on the market longer – days, not hours like earlier this year, with fewer showings and only one or two contracts instead of multiple offers. In many cases, we have been able to negotiate prices and contingencies like finance, appraisal, and even home inspections.  

So, what is going to happen moving forward? Buyers who took a break after losing out on multiple homes may want to consider getting back into the market as there is less competition, rates are still great, and prices have leveled off. Sellers need to exercise patience, price their home properly and get the house in top condition to get it sold. Previously, anything that came on the market would sell in many cases regardless of the condition; this is not the market we are in today. Buyers are more discerning when looking at homes. The property’s condition, price, and location need to be top-notch, or they will sit on the market longer.

All this being said, every situation is different and needs to be analyzed on its own merits. Some properties are receiving multiple contracts, and prices are escalating; there are just fewer of them in our current market. If you are considering a move, please call me so we can come up with the right game plan for you.

I hope you are enjoying the summer!

June 2021 Market Update

Here is the update on the crazy Northern Virginia real estate market…round and round and round it goes, where it stops, no one knows. The interesting thing is the market has shifted, and it happened quickly. Was it mortgage interest rates rising so high it stopped people from buying? No. Was it a flood of foreclosures and short sales hitting the market? No. Was it a pricing bubble that popped and collapsed home prices? No. Was it regular sales coming on the market giving buyers more choices? No.

So, what has caused the shift in the market?  First, the frenzied market we experienced from mid-January through early May could not be sustained. We were experiencing 50-70 showings in only one or two days and contract numbers in the high teens to low twenties on houses we put on the market.  Additionally, we saw prices escalate tens of thousands to hundreds of thousands above list price, with buyers waiving everything to “get” a home. It was a stressful time for everyone involved – buyers, sellers, and Realtors alike.

Now, we are seeing 5-15 showings in an entire weekend, and we are receiving between one and five offers. Still excellent numbers historically, but it is, in a different way, causing stress on sellers. The expectations of sellers are what they “heard,” “saw,” or “read” about the market two months ago or more – not recent facts. Well, the market shifts on a dime with no real rhyme or reason. The one thing I feel has put a damper on the market is “buyer fatigue.” Buyers had gone out, written contracts, and lost out on many houses. They wrote what they perceived to be the perfect contract and were beat out by someone who had to have the home and irrationally made an offer the seller couldn’t refuse. The conversations I am having now with buyers and agents are – oh, they have three offers? Someone will pay too much; I don’t want to waste my time. Therefore, we are now seeing fewer offers; still, great offers – above list price and waiving contingencies, but the number of contracts and showings are just down. So, if you are a seller or considering selling, your house will sell; just realize the market is different today, not bad, simply different. On the other hand, if you are a buyer, don’t give up; fewer people competing for homes mean you have a better shot at getting one now than a few short months ago. We can help you determine your best course of action, whether buying or selling, so call us to learn more!

Have a great summer!

February 2021 Market Update

Again, I have said it before, and I will repeat it, inventory levels on homes for sale in Northern Virginia are critically low! We currently have just 1,701 homes for sale in all of the counties we serve in Northern Virginia. The amazing fact is the number of condos that are currently for sale – 792 – which represents just under 50% of the total inventory. Condos typically do not reflect nearly 50% of the inventory levels … more on this later. 

Continuing with the numbers; there are only 646 single family homes currently on the market. Are you kidding me? There are only 235 townhouses total, again, WOW! Do you know what this means? The chances of multiple contract situations are possible on virtually every home on the market. We have had as many as 30 contracts submitted on one house in Gainesville priced at $635,000. It escalated above $700,000. We had another home in Aldie that had 78 showings and 62 visitors at the open house. This one was priced at $772,000 that had 21 offers and escalated to $831,700. It is insane – I cannot think of another word to describe it. 

A question I am frequently asked is when will it end? I think it will be a long time, as I believe it will be rate driven, and rates will remain low for the foreseeable future. Once rates rise to the 4 or 5% range, we will see a slowdown in contracts/purchasers, but not an inventory increase. Another question is, when will buyer burnout take them out of the market? My answer: it depends as this is and has always been an individual question. I have heard about prospective buyers writing as many as 15 contracts (on different homes) and still in the fight, while others are not even entering the market because of these “bidding” war situations. Typically, buyers will write until they win a bid on a property.  Usually, in a market like this, it has been between 3-5 times in my experience. 

One more question I hear is how do I buy if I must sell my house first? This one is more complicated, but I can give you details if you are interested. We have nine ways to make this work!

If you or someone you know would like to discuss their situation with me in more detail, whether it is purchasing or selling a home, please feel free to call me.

Have a Happy Valentine’s Day!!

Peak Performer Series – Weekly Motivation

In this weekly motivational series, I’ll highlight how YOU can become a Peak Performer. Are the goals you set for 2021 SPECIFIC?

Setting goals every year is imperative for growth – both personally and professionally. But are the goals you set SMARTY ones? Learn more about this concept in my latest Peak Performer Message. 

Need more motivation? Give me a call at 703-652-5777 or email at scottmacdonald@remax.net 

FOLLOW MY NEW FACEBOOK PAGE for more motivation, success tips, and inspiration: https://www.facebook.com/SuccessSecretsforRealEstate/