Well, all the hype over the government’s propping up of the real estate market is over and where do we stand? It may be too early to tell as it has only been one week but in speaking with lenders, title companies, home inspectors and – oh yeah – Realtors too, the market continues to hum along. Contracts are being written and accepted. What appears to remain hot are the lower price ranges (those below $400,000) and the upper price ranges ($800,000-$1,000,000 in some areas) so it appears to be business as usual – so far – for these sellers.
The sellers we are concerned about are the ones priced between $400,000 and $800,000 as it seems in many areas these housing prices haven’t found their bottom of the market yet. Going forward it will be critically important to pay particular attention to this segment of the market as we are starting to see the beginning stages of the foreclosures being released into the market. More BPO’s (Broker Price Opinions) are being requested, Bank of America has hired a third party vendor to help with their release of foreclosures and Notice of Trustee sales are flooding the papers. And from what we notice, they are going to fall into the $400,000-$800,000 price ranges – not the lower end as we saw in 2008. From all indications, we are looking at an alarming number of foreclosures hitting our market prior to the third quarter of this year – not as many as we saw in 2008 but close to those levels. This will have a definite impact on prices.
As far as rates are concerned, mortgage interest rates hit a 6 week low this week suggesting that private investors have filled in for the government in their purchasing of mortgage backed securities. In addition, there have been several reports stating that the government will continue to keep the Federal Funds rate at or near 0-.25% which should continue to encourage investors to buy these securities and keep rates low for home owners through the end of the year which is good news for housing.
How will the end of the home buyer tax credit impact the market? In a recent survey of first time buyers conducted by SunTrust, they found that only 10% of these buyers purchased their homes because of the home buyer tax credit. Low interest rates, affordable house prices, desire to own versus rent were the main reasons why decided to purchase over any other. A good deal is a good deal. If the market shows signs of slowing, let’s keep an eye on seller and builder incentives to lure buyers into their properties – right now, we don’t see any but only time will tell. For now, we don’t believe our market will be severely impacted by this incentive ending.
Another bright spot in our market that will help us continue to sell houses is the “new and improved” short sale process through HAMP to HAFA. These programs will help qualified sellers have the ability to get approval on short sales much more quickly than in previous years. This streamlined process will not only help sellers avoid foreclosure but also help buyers get into homes and protect neighborhood values. We are anticipating this to be a tremendous asset in selling houses going forward.
All things being considered, now is a great time to be a buyer or seller in the Northern Virginia Market. It is important to stay on top of the trends that affect real estate, watch inventory levels and the type of inventory coming on the market, and lastly, track the number of buyers in the market place to help buyers and sellers make the right decisions when considering real estate. Get it? Got it? Good!