The real estate market continues to amaze me.  As many of you know, interest rates more than doubled in 6 months.  From May to November, the rates went from 3.5% to over 7%. At that time, the market came to a halt as there was much speculation about how high mortgage rates would climb (and how that would affect prices). Most people said rates would trend downward, but to date, that’s incorrect in our area. Fast forward to today and it appears that buyers have now settled into mortgage rates being in the 6-7% range. This is resulting in sales happening again along with the price growth that I mentioned.  As a result, today’s market is filled with uncertainty due to several factors. 

Both sides of the aisle in DC are dealing with the upcoming debt ceiling, inflation, and rising interest rates.  As a matter of fact, today’s rates are over 7% again. The other looming issue is that people are married to their current homes because of their super low-interest rate. Many people have FOMO of their 2.5 – 3.5% interest rates. This results in a huge shortage of homes for sale in our area. With high demand, this creates multiple contract situations on many homes on the market today.  On the flip side, we have a strong job market, a growing population, and a stable economy which all has a positive impact on the real estate market – especially for sellers. Additionally, the area’s natural beauty, cultural amenities, and excellent quality of life can make it attractive for people to relocate to the Northern Virginia area. This makes today’s market tough for buyers.

It is important to note that even though market trends and economic indicators can provide an idea of what may happen in the future, they cannot predict sudden market disruptions or unforeseen events that might impact the real estate market. The banking industry being in distress is one area of concern, as is the Fed continuing to raise the overnight rates they charge banks. With so many factors affecting the real estate market, it is always recommended to consult with me as your professional real estate agent to help you determine if now is the right time for you to sell or buy. I can provide you with market data including inventory levels, absorption rates relating to sales, month’s supply of houses available, immediate sales, and other data that can be valuable to you when you are considering selling or buying a home today.

There are also additional data points that are important to consider, like the number of houses with multiple contracts, how high above list price houses are selling, what contingencies are being waived or accepted by sellers, and the timing of sales from contract to close. It is a complex time in the real estate industry, to say the least. The market today is complex as you can see. I am here and happy to help, so please feel free to call or email me today.

Enjoy the summertime weather!

Spring has sprung in the real estate market once again in Northern Virginia. We are back in the frenzy of dozens of showings almost immediately on homes, resulting in multiple offers for sellers to choose from. Open house activity has been outstanding for sellers but frustrating for buyers, as you can’t always see the condition of the house with so many people in them. This leads to stressed-out buyers, Realtors, and sellers.

We’ve had buyers bid 6 – 8% over the list price in the $850,000 range, waive every contingency, and give a free 60-day post-settlement occupancy, and they’ve still lost out several times. They’re disappointed and anxious, as they feel they should have “won” a bid at this point. Realtors are stressed out as they’re dealing with multiple offers and agents continuously calling, texting, and emailing demanding answers. In other situations, the listing agents are not communicating at all with the agents about the status of the offers, the number of offers, when they will be presenting the offers, where contracts rank versus others, etc. This makes a stressful situation even more tenuous for agents and buyers.

You may be asking why sellers are stressed. They’ve had to prepare their home for sale and determine if they did the right things to attract buyers, and they often question if they did enough to sell for top dollar. They have many people coming through their homes and feel they have to “choose” the right contract for them, which leaves other potential buyers “homeless” – and in some cases, they even wonder why they don’t have more offers. In this environment, it is critical to set realistic expectations for everyone. Communication is key and helps ease the pain of the buyers and agents that lose.

The big question is – why is this happening again? The short answer? We have very few homes for sale.

But why is this? Homeowners currently have 2.5-3.5% interest rates on their homes and don’t want to lose their great rate and payment, so they aren’t selling. This situation will keep inventory low for the foreseeable future. Additionally, buyers are used to the 6% interest rate environment we are in. Over the last 50 years, interest rates for 30-year fixed rates are 7.75%, and we are well below that today. Buyers also realize that we won’t return to 3% interest rates anytime soon, so they are ready to buy now.

If you are considering selling or buying, please call me. It is important today to have a professional in your corner to help you navigate the home selling and buying process, and I am here to help you.

Have a great spring season with your friends and family!

And you thought roller coasters were only at amusement parks, right? Well, it seems that they’re present in the real estate market as well. In February we saw rates go from the high 5s to the high 6s in less than 10 days, and now they are just over 7%. In January buyers came out in full force, and guess what? They’re still getting into the market as we head into March and the spring market.

Inventory continues to be the biggest adversary today; we only had 180 houses come on the market in the 4th week of February, which is well below the last 5-year average of 675. It was only 251 on the first Friday in March, while in the previous 5 years, we averaged 800.

We continue to see around 1,200 active homes for sale in the Northern Virginia market, which is 65% below 2018’s numbers and 45% below 2019’s numbers. I believe if we had more homes for sale, we would have more sales. At a recent open house, three groups came through before the start of the open house, seven groups went in once it was “officially” open, and when I went in with my clients there were two other groups that came in with us – and it wasn’t more than 15 minutes after the scheduled start. I never heard how many visitors they had or how many offers, but I am sure they had many of both.

On the houses we have for sale, we are seeing as many as 10 contracts on some homes, and more than 50 showings in a weekend – and it’s only February. This is all happening even though rates have crept back up. In the third and fourth quarters of last year, when rates were approaching 7%, buyers were hibernating. I think they feel this is the new norm and now is the time to step up and buy. Because inventory is so low and we have multiple offers, prices will not crash, as many are predicting. It’s a simple economic equation of supply and demand – low supply, high demand, high prices.

In summary, don’t listen to reports in the media. If you want real information on the Northern Virginia real estate market, rely on me. As always, if you are looking to sell or buy, I can give you the right advice to make the best decisions.

Have a great St. Patrick’s Day!

The real estate market is never boring – it’s always changing.  Housing inventory, mortgage rates, buyer demand, consumer confidence, and so much more are consistently adjusting.  So what has changed recently? 

For starters, buyer demand has picked back up.  We are seeing more interest and more questions from people online, more showings at our listings, and more contracts written – and as a result, more sales are happening.  It also seems there is a more positive “buzz” around the market. 

Why did this happen?  As interest rates steadily climbed, buyers became apprehensive.  Couple this with the inflation and Fed rate hikes, and people got nervous about the real estate market.  When would rates stop increasing?  Would prices crash because of the increasing rates?  Now rates have come down, inflation has slowed and people are beginning to realize that a rate of 6.125% is historically a decent rate.  If you look at the history of rates, 30-year fixed rates have been, on average, 7.75%.  All of these factors are bringing back buyer confidence in real estate. It’s why we are where we are today – a healthy real estate market. 

Obviously, I have concerns about the future – where will inventory come from for all these buyers?

Right now we have only 1,337 homes on the market in Northern Virginia and with all of the recent sales, we have a one-month supply of homes.  As you know, I run the numbers every Friday, and last week, we had 188 homes come on the market in the previous 7 days.  By comparison, we had 466 houses go under contract in the previous 7 days.  At this rate, we won’t have any houses to sell by Mid-March.  What will be the result?  Higher prices – it’s a simple supply and demand equation.  We are not going to see prices crash.  We have little inventory and high demand.  Stay tuned for more details as we go into the Spring Market.

As you know, every situation is different, so whether you are looking to sell or buy, please call me to discuss your situation in more detail.  I am here to help you!

Enjoy your Valentine’s Day and don’t eat too much chocolate!

In the blink of an eye, this year is coming to a close.  It has been a true whirlwind, to say the least, regarding the real estate market. We had a fury of activity and sales at the beginning of the year with artificially low interest rates, escalating prices, and extremely high demand. Now we will finish the year with interest rates that doubled over the last year (though they are coming back down), stabilizing prices, and less demand. We are in a more balanced market, and it’s nothing like it was earlier in the year. 

This ‘slowdown’ has the media going crazy and they continue to put out sensationalized headlines to grab your attention.  One topic we’ve all been reading about is the crash of housing prices.  While there are some areas that will see price declines, most will see a decline in price appreciation.  Areas where prices skyrocketed (and are now spiking in inventory levels) will indeed see prices decline – and decline rapidly.  These areas saw the most benefit from the pandemic and remote working environments, and that was not sustainable.

Overall, prices are up year-over-year, but we have been seeing prices decline month-over-month (See Chart 1 below). Historically, price appreciation is 3.8% and the numbers far exceed those historical averages, even today. These declines are slowing down (See Chart 2 below). As a result of the year-over-year price increases, the Federal Housing Finance Agency (FHFA) recently announced the conforming loan limit values for mortgages to be acquired by Fannie Mae and Freddie Mac in 2023 will be increased to $726,200. This is an increase of $79,000 over 2022. In Northern Virginia, where our area boasts prices that have higher median home values, we have a new loan limit for properties – that number is $1,089,300. These are crazy numbers indeed, but the numbers show that prices may have hit the bottom. Price declines month-over-month have slowed, showing more realistic prices today than earlier this year, as noted in Chart 2. The question is, would the FHFA increase the loan limit if they thought prices would decline substantially? I don’t think so. 

In my opinion, and as you can see, the media is not telling the whole story. To get a much more accurate story about housing, please rely on me, your trusted real estate advisor.  Real estate is extremely local, so call me to learn more how this affects you if you are selling or buying a home today. Next month, we will debunk another media fallacy – so stay tuned!

In the meantime, have a great holiday season with family and friends!

The leaves are the most beautiful I have seen in years…it must be all the rain we had earlier in the season.

As we enter the shift from fall to winter, we’re all wondering if the market will bring us stability or change. It’s tough to tell right now, as we are on a real estate market roller coaster, not only in Northern Virginia but the rest of the United States. Soaring interest rates and inflation, declining house sales and buyer demand, plus the overall negativity about the economy have put us off (number wise) when we compare this market to last year and 2020. My advice has been, and will continue to be, to stop comparing today’s real estate market to 2021 and 2020. Those years were outliers, and I can explain why. It all began with the pandemic, which resulted in historically low interest rates, remote working conditions, lack of inventory and then resulted in irrational exuberance when it came to making offers. On top of that, the overall mindset about the future contributed to the unique situation we were all in. Taking all of this into consideration, we really should be benchmarking against pre-Covid times and post Great Recession times instead of the pandemic years. If we do this, we’re having very comparable years regarding yearly sales, month supply of homes, and weekly absorption rates – which means we should end up with a historically good year. 

The biggest differences are inventory and number of weekly sales. Inventory is down 22% from 2019, down 45% from 2018. At the same time, weekly sales are down 40% from 2019 and 39% from 2018. People seem to remember what their neighbor’s sale was like last year, or even earlier this year, and not what happened when they sold in 2015. Our perspective when selling a home today should change to a more realistic approach to the market we are currently in.

So, what’s the moral of the story? If you are seller, get your house in the right condition to sell, price it right, be patient, and wait for it to sell. You also have the option to sell later. If you are a buyer and you are ready to buy, then buy – don’t wait! If the house fits your needs and lifestyle, make the move. In most cases, you can negotiate and get a home on your terms. When the economy shifts and rates come down, refinance and then it becomes a win-win for you.

If you have any questions at all, feel free to reach out me.  I am always here to help you.

Have a great holiday season with your family and friends!

As we enter the last quarter of the year and with Halloween quickly approaching, here’s my question: is the real estate market going to experience a trick or a treat? We are all hoping for a treat but as mortgage interest rates rise along with inflation, it seems like the economy might give us a trick. As a result, buyers are in for a treat if they are in the market to buy a home. There is less competition for houses today. This allows buyers to negotiate with sellers to get lower prices, closing cost credits, and most contingencies they desire as we enter a more balanced market. 

In the past, I’ve discussed that buyers should consider alternative financing options like Adjustable-Rate Mortgages and 2-1 Buydowns to temporarily get a more reasonable rate. This still stands. As my friend Jared James says, marry the house and date the rate.  When the economy settles in, or if we enter a full-blown recession, we should see rates come down. Buyers can then refinance to the lower rates, especially on 30-year fixed rates. 

Now as a seller, it’s going to be more of a trick going forward.  Be prepared to settle in when selling your house, as the days on market are increasing.  Additionally, the house will have to be in top condition, staged, and most importantly, priced right.  Prices have moderated, and in most cases, we are not seeing higher prices on properties.

If you plan to sell, now is not the time to get greedy on the price, but the timing is good as there is less competition in the market. There are still savvy buyers looking to purchase a home today, and the contracts will have contingencies in them. If you are a buyer, call me if you would like to know more about the financing options I discussed, and let me guide you through the home selling process we are encountering today if you are considering selling.

On another note, we are growing! I recently purchased RE/MAX Regency out of Haymarket and Warrenton.

We’re consolidating our Gainesville and Haymarket offices into one, located at Regency’s Haymarket location in the Dominion Valley Country Club shopping center.  Please let me know if you would like to check out our state-of-the-art offices – I’d love to show you!

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!

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!