scott mcdonald

How many of my 2010 predictions came true?

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It’s review time for 2010…

Well, the predictions forecasted by me last year were:

  • Interest rates would rise in the second quarter as the government was going to exit the purchasing of Mortgage Backed Securities .  Wow, was I wrong here, interest rates sunk to the lowest level in history.
  • House values will stay stable in most price points below $400,000 and will drop in mid price points – $400,000 – $800,000.  Fewer buyers will take advantage of market conditions and consumer confidence will keep them where they are today.  Well, I was pretty damn close – prices increased slightly in the lower price ranges but definitely dropped in the mid price ranges and consumer confidence remains in the tank.
  • Unemployment will rise through the first half of the year then level off late third quarter – we can’t get any worse than we are nationally.   Locally, we are in good shape with unemployment and we should hover around where we are today.  The prediction was true on both fronts and unemployment is contributing to low consumer confidence.  As the saying goes, when your neighbor loses their job it’s a recession, when you lose your job, it’s a depression – many Americans are still feeling the effects of unemployment nationally.
  • Foreclosure inventory will increase nationally – ours will see a slight increase but won’t have a significant impact like it has in recent years.  Any foreclosure inventory locally will get absorbed quickly as we have such pent up demand.  Again, pretty much true, our foreclosure numbers increased slightly but boy, nationally, they went through the roof!
  • Short sale inventory will be bigger than foreclosure inventory nationwide – including our area.  It is important to understand how they work, get a designation to take advantage of this opportunity and to understand how to get them through.  As predicted, short sale inventory increased both nationally and locally.  And, it is true, if you have a designation, you understand the process better and can help more distressed home owners as a result.
  • More real estate offices will close, merge and we will see additional acquisitions – boutique real estate offices will become a thing of the past as agents and clients demand more technology and services that smaller firms cannot afford.  This most definitely occurred and will continue through 2011 – especially in the large regional independents and the franchises agencies with fewer than 15 agents.
  • Social media marketing will be even more in the forefront moving into the future – get on board or get left behind.  The consumer embraces this medium – so should you!  Many agents have gone way overboard and although they are embracing social media, they are not utilizing it correctly and as a result are turning off consumers.
  • Videos will be more prevalent in agent’s marketing of homes and themselves.  Get proficient in the use of flips, camcorders, and digital cameras that have recording features.  More agents are becoming aware of video and we are seeing more of it in the market but more need to utilize the medium as the consumer is drawn to videos.
  • More agents will go green as this will become an even bigger “buzz” word going forward.  Get ahead of the curve and get a green designation today!  Yes, agents did go green but the residential market is still lagging behind the commercial arena in scope and magnitude of going green.
  • More agents will exit the business as the business becomes more specialized.  This has happened which is a good thing for both the profession and more importantly, the consumer.  Today, more than ever, it is important to work with a Realtor who is full time and has the capacity to convey market conditions, trends and is familiar with the contract and process.

Well, in retrospect, the vision was pretty decent for what was going to happen in 2010. The one item that was unfortunate is that people weren’t able to take advantage of the low rates or were not in a position to take advantage of the low rates due to value issues.  However, many were which is great for them.  Be on the lookout for my predictions for 2011!  Get it?  Got it?  Good!

Now, go sell something!

 

 

 

 

It’s the most wonderful time of the year…

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For glogl 
 
Well, well, well what do we have in store for the real estate market now through the end of the year in Northern Virginia?  I believe we are in for a surprise this year.  We are going to finish the year stronger than many expect.

Typically, this is a slower time of year but we haven’t seen as big a slowdown as we normally do during the holidays.  The trends show us houses are coming off the market rapidly both through sales and being withdrawn from the market due to it being “that time of year”.  But interest rates are at all time lows and buyers are out in full force!  In speaking with other professionals – the ones who have been working hard the last few months networking, giving great advice along the way about our market and are communicating with their clients are reaping big rewards.  We have one agent, Becky Green, who sold 3 houses this past week – a holiday week no less.   Toll Brothers Amberlea in South Riding had 25 visitors on Saturday and we wrote a contract early Sunday morning but I am sure they saw similar activity later in the day – 2 visitors were in the model when we left.  An agent in our office wrote a contract on a town house in Herndon and there were 3 others competing for the same house.  So much for the slow down around the holidays!

So, where are these buyers coming from?  Many are relocation buyers coming into the area and others are relocation buyers from the spring who decided to rent.  They wanted to get familiar with the market, our area and wanted to wait and see what was going to happen with the economy and housing sector and now, their leases are ending and they are ready to buy.

In a recent Fannie Mae survey, the following information was revealed by the participants:

  • People trust homeownership as an investment over buying stocks (66% to 16%). The stock market has seen its’ tremendous fluctuations and people have no control over which direction the stock will fluctuate.  In contrast, upgrading the home adds value and paying down your mortgage increases the equity in the homes plus the many other advantages of home ownership.  In addition, they also trust owning a home over investing in a 401k, buying an insurance annuity or investing in a mutual fund. People find investing in a home safer than any other investment except putting their money into a savings account.
  • 96% of homeowners feel that homeownership has been a positive experience – what’s not to like?  Stability, pride in ownership, sense of community and many other factors contribute to this positive experience.   17% of renters think renting has been a positive experience which means 83% feel it is negative or neutral. This is a huge disparity which reflects now is a good time to buy!

Additional findings in the report that we need to make note of in the report include:

  • 62% of renters have long-term ownership aspirations – we just mentioned this above in the buyer pool in the market today.  Many more will enter the market as their leases come to an end – stay tuned.
  • Americans continue to expect home rental prices to rise more than home prices over the next year. Americans believe that it is more likely that home rental prices will go up rather than go down by a ratio of almost 4 to 1.  Right now, we have a 1.7 month supply of rentals and we see rental rates increasing on a year over year basis in our property management group.
  • An overwhelming majority of mortgage borrowers remain satisfied with their loans and 3 in 4 Americans are confident they would receive the necessary information to choose the right loan.  The teaser rate products, no income no asset loans, and balloon products are out of the market along with many others that created our housing crisis that we are climbing out of today.
  • Non-financial considerations, such as accessing good education and safety, continue to trump financial reasons for owning a home. With the top three reasons (education, safety, and more space) all increasing in percentages since the last report.  People realize how important “home” and one that is theirs is in life.
  • Since the time of purchase, 59% of mortgage borrowers have seen their home value increase.  In many markets, prices have stabilized or increased throughout Northern Virginia.  It is time to get into the market before the price escalations begin to soar.
  • In conclusion, the Fannie Mae survey showed that homeownership is still considered by the vast majority as a good investment (66%) and a positive experience (96%) and, most importantly to those sitting on the fence, 68% think it is a good time for people to buy a home – and you should!

Based upon the information above, it is critical, now more than ever to reach out to a true real estate professional and get the facts on the market and don’t rely on the national media for your real estate information.  Who knows, Santa may bring you a nice surprise for Christmas!  Get it?  Got it?  Good!

Now, go buy something!

Top 10 Reasons to Sell!

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Well, it’s that time of year and we receive the same question from a lot of people about whether or not to sell now.  The answer is yes and here the top 10 reasons why:

  1. Inventory levels go down every year around the holidays because not everyone “needs” to sell so there is less competition.
  2. People will usually decorate their homes for the holidays putting them in a nicely staged condition and it can help attract buyers.
  3. We don’t know who the competition will be after the holidays.
  4. We don’t know how many properties will be for sale in the spring.
  5. We know where the competition is priced today and we don’t know where they will be priced at later or if the prices will be deeply discounted.
  6. The buyers looking this time of the year are typically not tire kickers – they are real buyers.
  7. We see houses that are priced right, are in the right condition and are staged properly are attracting multiple offers recently.
  8. Interest rates are fantastic – near record lows make now an attractive time to buy.
  9. We are seeing many buyers in the market today and we don’t know if they will be around after the New Year.
  10. If you are looking to buy – only serious sellers are on the market, who need to sell, so strike while the iron is hot!

If you are considering selling your house, please give us a call.  We would be happy to discuss with you how we can help and what you can expect when selling.  Get it?  Got it?  Good!

Where’d Chicken Little go?

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Ok chicken little, the sky didn’t fall which is a good thing for us in real estate.  The moratorium has come and gone – the freeze was lifted – and foreclosures continue to happen.  Reports indicate that foreclosures were up 65% the third quarter of this year in year over year reporting.  As much as foreclosures are a part of the market now and will be for some time, they are just trickling onto the market here locally.  Currently, they account for only 494 of the 7,979 houses for sale in Northern Virginia.  As these distressed properties are such a low percentage, they are having little to no impact on housing values in our area.  As a matter of fact, Fannie Mae is spending thousands of dollars renovating homes to maximize their values to get a better return than they received previously when they foreclosed on houses. 

We have heard of people waiting for prices to drop or they are anticipating a wave of foreclosures to crash onto our market.  Up to this point we have not seen any indication of either of these phenomenons.  Historically speaking, foreclosure trends show that the foreclosure rate slows down this time of year until just after the New Year.  There has also been a slight uptick in rates which may continue into this week with the elections, unemployment numbers being reported and the Fed meets to discuss the economy.  If they continue their trend, it means waiting to buy can cost you money.  Inventory levels have stabilized, prices have stabilized and rates are fantastic and we see no reason why now isn’t the ideal time to buy a home in Northern Virginia.  We have the fundamentals in place that transcend markets – the government, cultural activities, diversity, great schools, low unemployment, access to the mountains and the ocean plus so much more.  If you are looking for long term stability in the housing sector, look no further than Northern Virginia.  Get it?  Got it?  Good!

Now, go buy something!

Don’t be spooked by the media!

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It must be Halloween because all of the scary news out there is about real estate.  All over the place you see, read or hear about foreclosures, double dip declines in pricing, the widespread number of delinquencies that will result in defaults and even more declining house values.  It is all so scary – unless – you know the truth!

 

Here is what the media sent out this week:

 

S&P Case-Shiller Index Records Widespread Declines in Home Prices  Home prices across the country slipped in August, according to data release by Standard & Poor’s Tuesday.  Home process decreased in 15 of the survey’s 20 metropolitan statistical areas on a month-to-month basis. Guess what happens when you read further?   Only Chicago, Detroit, Las Vegas, New York and Washington D.C. posted what S&P called “marginal improvements” in home prices over July.  Hey, at this point I will take “marginal improvements” over declines any day.  As we have been reporting – our prices are stable in most areas, increasing in many others and showing modest declines in just a few locations.  Here is what could have been their headline:

S&P/Case-Shiller 10-city composite remains up 2.6 percent from August 2009 levels.  In addition, the 20-city composite is 1.7 percent above a year earlier. Have no FEAR – it’s not that bad.  But why speak about the good news when you can haunt people with bad news?  Here’s what they continue to say “We still fear that the continued weak demand and high supply will push process gradually lower over the next 12-18 months” said Paul Dales, U.S. economist for research firm. “The current unfavorable balance between demand and supply is certainly consistent with a sustained fall back in prices” which means if houses don’t sell prices will fall – basic economics.  Here’s what I say, “If interest rates remain low, prices remain stable and consumer confidence comes back into the housing market – prices will increase further”.  The National Association of Realtors just announced that 8 out of 10 people believe now is a good time to buy.  If they believe it is, why aren’t they?  It is because of negativity of the national media and how it is portrayed to the consumer.

So, no matter whom you believe or where the housing market is going there are opportunities for success

  • Interest rates are better then phenomenal
  • Prices are stable in most of our making  it attractive to buy whether for owner, occupants or investors
  • Speaking of investors – the rental market is strong and prices will comeback which is what long term investors are looking for when buying real estate.
  • The housing market will rebound and both prices and rates will increase so we have a limited timeframe in which to take advantage of this opportunity.

Fannie Mae just announced that they are going to be looking into the foreclosure practices of many of the lenders they service which means that the release of their properties onto the market will be delayed and so will settlements.  The question is – for how long.  We will have to wait and see as well as note how many properties will be affected.  Stay tuned for more details about Fannie Mae.

Oh! One more good piece of news came across the wire…New home sales are also up 6.6% – good news is here and will hopefully continue to come.

Think long term, plan long term and educate long term and you will be successful long term.   Get it?  Got it?  Good!

 

Stop the Madness!

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The good thing about the weekends recently is that we don’t get emails from the real estate news services in which we subscribe.  It seems all the news we read about are comments on the real estate market that are negative, speculative and do nothing but contribute to the decline in consumer confidence in the housing market.  The sweeping generalizations about the National market do absolutely nothing to reflect the news about our local market in Northern Virginia.  As we all know, you can make the numbers say what you want – the national home pricing index set by Clear Capital dropped 5.9% in the last two months as reported by DSNews.com but it means absolutely nothing to the Northern Virginia market except uncertainty and continued fence sitting by both buyers and sellers.  Let’s look at the reality of our market over this same timeframe.  Over the last two months as the majority of the country has seen a decrease in equity we have seen our average sales prices over the same period of time increase from $333,502 to $334,274 as reported by MRIS through RBIntel.com.  The question is, why isn’t this being reported about Northern Virginia?

Granted, our market isn’t like it was in the period from 2004 – 2007, and it never will be like it again.  We are in a “new normal” market.  Inventory levels are stable, prices are stable, mortgage interest rates are at historic lows and people are still buying and selling houses.  Do we have pockets that are exceeding expectations?  Yes.  Do we have areas that are underperforming?  Yes.  Do we have foreclosures in our market?  Yes.  Are they having a significant impact?  For the most part, no as they only represent less than 6% of houses for sale today.  Do we have short sales?  Yes.  Do they have a significant impact on the market?  It depends.  Some areas have more than others, Arlington County has a very low percentage versus Prince William County that has a higher percentage of distressed properties for sale.  Therefore, it is extremely important to consult with a Realtor that knows the trends and knows the market – I challenge you to become that Realtor.  There are opportunities in every market, especially this one.  In 5 years and beyond people will say, “Do you remember when rates were at 4%?  I should have taken advantage of it when I could”.  Do whatever it takes to not be that person or have clients that are that person.  Get it?  Got it?  Good!

Now, go sell something!

Great Information from last night’s Real Estate Information Exchange!

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Top Producers Chime in on the Market

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As you have read in the past, the Platinum Group meets once a month to discuss the market, trends in the market, share ideas and to network.  These individuals earn in excesses of $250,000 per year and have been meeting for over 5 years.  Basically, they are the best of the best.  Here is what they had to say about the market this month.

Foreclosures:  the robosigners and paperwork/clerical errors had many banks jumping on the bandwagon putting a moratorium on foreclosures in all 50 states whether they are judicial or non-judicial states.  Basically, this policy is wrong and they should continue with the foreclosures in non-judicial states and clean up their act and their process in the judicial states.

Foreclosures may be stopped temporarily going forward on properties under contract in our area.  Be in touch with the listing agent and title companies on where the house is in the process and see if it is going to close or be stalled for any reason.  As always, stay ahead of the curve.

Be careful of prices going forward because of the onslaught of foreclosures coming.  Right now, we in Northern Virginia, have one of the highest 90 day late delinquency rates in the country.  Many of those are people who stopped paying because they are in short sale but at least 50% of those, if not more, won’t close as short sales and will come on as foreclosures later.  We had a historical month of foreclosures in September and these homes will come on the market soon so get price reductions today to get them sold as we are going to see a price reduction of 5 -20% over the next year – potentially.  There is water behind the dam, it is only a matter of how much water they let over the dam as to how it will relate to where prices will fall.  The question is who is going to be affected?  We still have pockets and price points where there are multiple offers and escalation clauses.  Our market is hyper local – you have to educate your buyers.

New home sales are down – builders aren’t making money – at least the production builders we are working with now.  They are not accepting offers on houses because they say they aren’t making money at the lower prices and then a few months later they are dropping their prices to where offers were previously.  They are just trying to hang on at this point.

Interest rates will not increase for the foreseeable future – market can’t sustain it and we don’t have inflation and rates and inflation go hand and hand.

What is happening with short sales?  An approval came through with 8 days to close after working with Wells Fargo for over 1 year…some have had no issues, even with 2 mortgages…no zero deficiency judgments now, banks want money at the table or are getting deficiency judgments (Litton Loan Servicing, Wells Fargo – 2nd trust, PNC, and Aurora, Astoria, Bank of America and Wells Fargo all wanted cash at closing).

What Steve Harney said:  Strategic defaults make up 31% of all distress sales.  Additionally, now is the right time to be a buyer considering where interest rates are today – buy because it is a home, not an investment.  Don’t worry about what may happen to prices in 6 – 12 months, if the house is right, buy today.  If you are a seller, it looks like prices may come down in the future so reduce today to get it sold so you are competing with foreclosures that may enter the market.  Either way, now is the time to get into real estate!

How is our market otherwise?  Houses are selling and buyers are buying – now is the time to get out in front of people to get it done!  Get it?  Got it?  Good!

Now, go sell something!

 

Can you do the time?

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Don’t do the crime if you can’t do the time.  This saying comes to mind with the latest banter back and forth about the mortgage foreclosure moratorium.  What is happening in the real world and not in the media’s demented mind and the mind of special interest groups is people aren’t paying their mortgages – PERIOD!  If they were making their payments as many of us are and as we agreed to do when we signed our deeds of trust – regardless of the home’s value – they wouldn’t need to worry about whether their paperwork was Robosigned or not.  As many of us have heard at the settlement table, “you pay stay, you don’t you won’t” has never been more applicable. 

The moratorium on foreclosures is bad for our industry and the economy as a whole.  We can’t get out of the mess we are in until we flush through the mass amounts of REO inventory the banks, Freddie Mac and Fannie Mae are holding in their inventories.

Let’s make the right decision to help the country get back on its feet and get the housing market back on its feet and stop talking about any type of mortem.  Get it?  Got it?  Good!

Now, go sell something!

Lists, surveys & reports…oh my!

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It seems all the rage lately has been lists such as Top Reasons to…Top 10 Foreclosure Markets…Top 7 Markets in Mortgage Delinquencies, etc. and people are asking where Virginia ranks in these types of surveys.  These lists don’t always rank all states or areas but many times these lists rank the Top 10 and Bottom 10 and Virginia has not been in them.  This tells me we are in the middle of the pack – until now.  I recently read a report on Real Trends about Corelogic reporting housing prices remaining flat and guess what?  Virginia was number 5 in price appreciation – woo hoo!  We made a list and it was for a good reason!  Read the report here.

Here is other real estate information making the news…Foreclosures are up 25% on the year.  Banks took back 95,363 properties in August – nationwide – making it the 9th month in a row foreclosures increased on an annualized basis.  Since December 2007, 2.3 million homes have been foreclosed on by banks and there are at least 1 million more to go.  Yes, we will be impacted by foreclosures but it will be to a lesser extent than the rest of the country which is good.  It will bring inventory on the market in lower price points – which is needed – and it will help first time buyers enter the market as many of these homes are made available to owner occupants for the first two weeks the property is marketed.

Regardless, all real estate is local and it is our job as professionals to get the word out prospective home buyers and sellers that we are in one of the best markets in the country and people are buying and selling homes in Northern Virginia.  Get it?  Got it?  Good!

Now, go sell something!