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School days and Market Changes..

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The real estate market in Northern Virginia appears to be taking a quick breath so far in September.  Through the first eight months of the year we were on a whirlwind tour with multiple offers, few days on the market and escalating sales prices, but as the summertime came to a close and with the Labor Day holiday and kids going back to school we have seen a slight slowdown in the market.

The inventory of resale homes available remains low at just over 5,400 which is down 25% from the same time last year.  In addition, sales of existing properties are up the last 30 days by 4% over the same period last year.  But the number of houses on the market is up from the previous week and the number of weekly sales the last four weeks has declined each week.  And prices are down slightly from June to July – August prices are not yet released.  As we look at these numbers, again, my belief is it is August, one of the historically slow months for real estate.  People go on vacation, families are gearing up for their kids to go back to school, it is the end of summer, and people are getting back into routines in their lives.

As we look back, in a National report by Corelogic, the July Home Price Index (HPI) showed home prices-including distressed sales-increased year-over-year by 3.8 percent in July. On a month-over-month basis, prices increased 1.3 percent from June and July marked the fifth consecutive increase in home prices on both a monthly and yearly basis.  In Northern Virginia, we are tracking very close to the year of year stats with a 3.2% increase over last year.  Interest rates remain extremely low on all loan products for housing which is good for sellers, more buyers can qualify to buy – buyers, payments are lower and home owners looking to refinance to stay in their homes also have the opportunity to lower their payments.

All in all, we are experiencing a great real estate market in Northern Virginia and we should continue on this path of recovery.  The only issues that potentially could impact the local market is sequestration and Dodd-Frank reform so we will keep on top of these fronts for you and report back as we know more.  If you ever have any questions, always feel free to call us – we are here to help you.

Shock and awe…

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The real estate market continues to be white hot for sellers who properly price their homes, get them in the right condition and have them staged.  This makes it very competitive for buyers.  We see multiple contracts on houses in all price ranges so buyers need to be prepared to be involved in situations like this and put their best foot forward when making their offer.  We have been saying this for several months now and we do not see that this will change anytime soon.

There is one area that continues to shock and amaze me today and that is interest rates.  It is an unbelievable phenomenon watching interest rates today.  Who would have ever thought mortgage rates could be as low as they are today taking into consideration where we have been since the Mortgage Banker’s Association started tracking rates.   Remember what happened in the early 80’s with rates at all-time highs in 18-19% range and even when I got into the business in 1988 rates were between 10 and 11%.  We got excited when the rates were creeping below 10%.  Then we watched as rates came down into the 6’s and thought they couldn’t go lower and they have.  This week I saw a 30 year fixed interest rate at 3.5% with a lender credit.  There was even an article asking if rates could go down to 3%.  There has never been a better time to purchase a home, investment property or even refinance your existing mortgage(s).  Please let us know how we can help you.

Real estate normal?

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What is the new normal in real estate:

Today I am going to share with you a few ideas that are going to help you get on to a successful year in 2012 – you will also hear a few ideas from other agents that they have planned to make this their best year ever as well. The important thing to remember is to only adapt 6 of the strategies. If you try to do too many, you will be overwhelmed and not do any. I recommend starting with 6 things you are not doing today and incorporate them into your business. Once you have mastered 6 add another one in until mastered and then add another and so on. In addition, it is important to set strategies for accomplishing what you set out to do and review them regularly. You are in business for yourself but not by yourself so partner with someone in the room and hold each other accountable – meet before or after training, before or after a real estate exchange – make it easy for you but the big thing is to just do it.

When looking at the strategies you are going to put in place, you need to be clear and specific about what you want to accomplish and write them down. Know what roadblocks and obstacles you will need to overcome to achieve what you want to do and then how you will overcome them. What will you need to do to develop the skills and instill the discipline within yourself to make them happen. You will need deadlines, detailed plans of action – 5 or so for each action item, and have them where you can review them regularly. Lastly, think about and visualize your end result and what it will be like when you have accomplished what you have set out to do.

• Be positive – have the right attitude and eliminate complaining from your life • I like the “theme” of the day – will you do it?

• You are going to have to work more focused and be more intentional

• You are going to have to sell yourself passively and aggressively – explain

• Training is going to be paramount – especially in financing – increase your skills by attending seminars, getting a designation, going to REIX, office trainings, you need to be good at what you do to build referrals

• Video is going to be important – Casey Anthony is doing video diaries – video houses, your listings, neighborhoods, how’s the market, etc.

• Networking is going to be critical – find a group, start a group, join a chamber, Rotary club, coach kids in sports, join a PTA, get involved in a charity, become involved in something

• Learning and interpreting market trends – you have to know your numbers such as inventory levels and types of inventory, prices, DOM, people love to hear this

• Stay on top of values by previewing – especially new homes as they will continue to have an impact on the market – this is a great way to start with video. Video your house of the week, your bargain of the week, or whatever you want to call it.

• Read blogs for more information, see what others are saying about the market. You have to know what your competition is up to and what better way to learn than to read about their thoughts

• Start a blog and of course add video. Write about neighborhoods, your listings, interactions with agents, clients, trends, your services, how’s the market?

• Set your personal business standard and stick to it. Write the personal notes, make the phone calls, stop by and visit your past clients or meet new ones and track your daily conversations.

• Hold open houses on the right houses

• Track your business, determine what gives you the best results and do more of it.

Oh what a night…

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We had another great real estate exchange last night.   There was a lot of banter back and forth about our free trip to Vegas for the RE/MAX Convention in March and who was going to win the trip and how.  Great team building and networking as usual before the event.

Topics that were discussed:

  • Virginia home sales report published quarterly by VAR and the great information available through this report
  • Information on rental rates
  • The lobbying effort upcoming in the House on raising the high loan limits back up to pre-October 1st deadlines
  • Refinance activity
  • Home ownership rates
  • Appreciation rates nationally and locally – we are way ahead of the curve year over year but are down month over month, a trend we need to watch
  • The Bank of America penalties to Freddie Mac and Fannie Mae and why
  • Fannie Mae’s quarterly losses and the combination of losses between Freddie and Fannie and why were bonuses paid
  • Foreclosures on the rise nationally but so far, we don’t see it here and the indicators of why we don’t see them yet
  • Bechtel is relocating 625 jobs to Reston and they are leasing nearly 200,000 square feet
  • 4 ways to reduce your taxes and a reminder we have accountants coming to Chantilly to discuss tax planning for 2012 on November 18th at 10AM
  • And lastly, the National Enquirer portion of the show – celebrity purchases and sales plus incomes of the top CEO’s in the Washington Metro Area
  • Pat Cunningham updated us on HARP, the Italian debt crisis and what that means to mortgage interest rates and the value of HUD homes.

Enjoy the video but better yet – attend the next one in Ashburn at Clyde’s on the 16th from 1-3PM.  Get it?  Got it?  Good!

Now, go sell something!

Got to love great real estate minds….

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Wow, what Platinum Group today.  Agents are feisty, fed up and frustrated with lenders.  Issues were flying across the conference room fast and furious.  The question was asked – How’s the market?  Here is what came about – Financing problems are prevalent.  Some owner problems by not disclosing full details – not telling agent about businesses, tax situations or other properties owned.  But most seem to be lender problems – mainly, not telling the truth.  One lender didn’t tell the agent the Visa expired, said application was in all paperwork submitted and nothing was turned in – contract and lender letter said conventional then switched to FHA at appraisal time.  Lending guidelines are too strict, lenders are too ambiguous and regulations need to be relaxed to make well qualified, legitimate buyers home owners.  We are held accountable to performing at a higher standard and the lenders are not – it is a huge problem!  Lenders need to adhere to a business standard – develop one, make them sign it and if the lender doesn’t, don’t use them.  They have no skin in the game, no accountability and no repercussions.

Agents have buyers coming out of their ears.  Listings are being shown but there doesn’t seem to be any sense of urgency from the buyers.  Move up buyers seem to be lurking out in the market as well.

What prices are selling?  The lower price points are selling – mid price points are coming down and languishing on the market.  Prices are up year over year but are dropping month to month since July.  Keep an eye on this trend through the winter.  Prepare sellers to price competitively from the beginning or the house may not sell or you will end up chasing the market.

Are foreclosures coming?  Agents are not doing BPO’s, short sales are down, and notice of trustee sales in the papers is down so the answer is not now.  Asset managers don’t have any idea of what is coming down the road either.

How are short sales progressing?  One has been in process 2.5 years – has had 6 contracts and still not approved – it is a Bank of America deal…no surprise.   We had one agent had 3 short sales drop out last week.  Another one has 10 under contract and they are languishing on the market.

Is the loan limit reduction hurting your business?  It has had only a limited effect on the agents in the group.  Only one deal has had an impact with 10 agents and multiple transactions in process.

Agent’s years are about the same as last year.  Their volume is up but units are down but overall, income will be the same – we will see how the loan limit reduction will affect us next year.  How will 2012 be for you?  Spring is going to be strong.

All the agents agreed that this was one of the best meetings we have had which is great.  The energy was high, there was lots of passion and everyone left with enthusiasm.

Now, go sell something.

Are foreclosures really coming?

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The foreclosures are coming, the foreclosures are coming…that’s all we see in newsletters, emails and hear about in real estate circles.  Well, is this really the case in Northern Virginia?  Here is a quick update on foreclosures and short sales in the five largest market areas in Northern Virginia and how we buck the national trend.  It will be revealed why I don’t believe our foreclosure problem will be as great or as devasting as the rest of the country. 

It is truly amazing how many Americans are behind in their mortgages and for how long they have been behind.  The number of people who are delinquent has dropped but it is still at a phenomenal number – 6.373 million – 1.844 million are more than 90 days late. What and how does this mean to our region?  Only time will tell but if you look at what, in my opinion are leading indicators, we may be more sheltered than the rest of the country.  As I see it, trustee sale notices are one leading indicator as they inform the public when an auction will take place on a property where the home owner is delinquent.  Second is short sale activity and as you will see, we have, as a percentage, a very low number of short sales on the market currently and as many of us know in the business, many short sales do not get approved which eventually lead to foreclosures.  In addition, if waves of foreclosures were to hit the market, could they be absorbed and as you will see from our month’s supply of houses, we are in pretty good shape.  And lastly, distressed property inventory makes up just over 18% of our total inventory but it makes up just over 35% of our total sales which reflects people want a perceived bargain and find distressed properties as their avenue to take advantage of this buying opportunity. So let’s take a look at the numbers.

In Arlington County there are currently 11 foreclosures, 20 short sales and there is a 2.9 month’s supply of homes.  I would say that Arlington is safe from an onslaught of foreclosures as the number of distressed properties is minimal and the absorption rate of properties is extremely strong.  We need more inventory of all properties in Arlington so bring on the foreclosures. 

In the City of Alexandria we have 20 foreclosures, 38 short sales and a 2.9 month supply of homes.  Is this market primed for more inventory, of course it is and investors love the location and amenities of Alexandria so absorbing any foreclosure inventory should not be a problem.

Now, let’s look at the Fairfax County, our most populated county in the region.  The numbers are 168 foreclosures, 336 short sales and a 2.6 month’s supply of houses.  Very low numbers in the overall scheme of things, don’t you agree?

Let’s wrap it up with two of the outer counties, Loudoun County and Prince William County.  Loudoun has 60 foreclosures, 139 short sales and a 3.2 month supply of houses.  Their month’s supply of houses is creeping a little higher but overall, it is still a seller’s market and properties are moving.  Prince William has 106 foreclosures, 237 short sales and a 6.8 month’s supply.  Again, all are manageable numbers except for the month’s supply of properties which indicates a buyer’s market but from a National perspective still in better shape. 

Let’s review, fewer trustee sale notices + fewer short sales = less foreclosures.  Until the trustee sales in Northern Virginia pick up, I don’t believe our market will have to endure a rash of foreclosures but if it does, we can absorb the inventory.  The only wild card that I see is what the banks have foreclosed on that they don’t have on the market and/or are letting people live in mortgage payment free that they haven’t evicted yet.  Is this number big one or a small one?  Only time will tell.  You have to know your numbers to paint the picture properly to your clients.  Get it?  Got it?  Good!

Now, go sell something!

 

2012…what will it bring?

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I was recently asked to provide some answers to the following questions for the RISMedia’s Real Estate Magazine…

1.  As we wrap up the fourth quarter of 2011, has this year panned out as you expected it to? Were there any major surprises…good or bad?   

This year was definitely a little more challenging than expected with all of the financing changes that occurred as far as the tightening of credit, increase in FHA MI, and continued issues with appraisals but overall we still are having a great year.  We opened a fourth office and agents are affiliating with us which is great.  Each year, I do my Top 10 predictions for the upcoming year and I hit on some, missed on others.  The best miss was I had predicted interest rates would be above 6% and as we all know, I couldn’t have been any further off which is good.  For the best hit, I predicted we would see new home sales prices come down and as a result we would see more new home sales and we did – at least in Northern Virginia we did.  Toll Brother’s had a record year in South Riding, a community next to our Chantilly office, selling 110 houses in their fiscal year which ended in October.  The community where our Ashburn office is located, Brambleton sold 354 houses in 2010; the 8th best-selling community in the country has sold over 500 houses YTD.

 

2.  In your opinion, what will be the most significant drivers of business in 2012 and how are you preparing your company to take advantage of them? 

In my opinion, there are a few.  Investors will continue to play a huge role in our market.  Educating agents on how to work with investors, helping them get involved in property management and learn to market themselves to attract more investors and tenants to ensure success in this arena. On the flip side of investors are first time buyers.  As rents increase, with the interest rate environment we are currently in, buying may be a better option for many would be tenants.  So having a plan of action to help first time buyers is extremely important.  Although interest rates have been at record lows, they have not motivated huge numbers of buyers to enter the market but a sharp increase in rates could be devastating to the housing recovery so keeping rates low is critical and educating the public on the true cost of home ownership is critical.  In addition, HAMP 2.0, if successful will help keep in their homes longer, this will help stabilize neighborhoods and prevent further foreclosures plus it will aid in increasing consumer confidence.  So being a trusted advisor to our past clients, letting them know about this opportunity is important to growing their business as they are a trusted advisor.  We also need to lobby RPAC to keep the Mortgage Interest Deduction as well as prevent the implementation of 20% down payment loans so getting our agents involved in RPAC is a focus next year as well.

3.  What are your predictions for consumer confidence in 2012? What issues stand to most significantly impact consumer confidence next year and what strategies will you employ to help restore confidence?  

If the press continues to pump out negative information on the economy and housing instead of putting a positive spin on what is happening and jobs are not restored, consumer confidence will stay low.   It is critical that agents get the word out about their market as each market is local and even hyper local.  Consumer confidence will be a key for us to continue to drive sales locally.  Our market in Northern Virginia is unlike any other in the country.  Our distressed property inventory is only 18% of our market, as such, foreclosures and short sales are not a driving force, our unemployment rate in Northern Virginia is in the 5% range, and we only have a 2.9 month supply of houses.  It is our job to get this information out to our clients and consumers to dispel the negative news they hear virtually daily on the housing market.  We need to continue to let them consumers know that if their employment is stable, the house is right for them and their family, interest rates are phenomenal and now is the right time to buy. So education is the key.  Blogging, videos, email campaigns and direct mail are how we plan to get the word out to the public.