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Hello? Is it me your looking for?

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Hello???  Where have all the foreclosures gone?

As we enter 2011, our area is poised for a great year in real estate in the Washington Metropolitan Area.  Inventory levels are down, we have jobs, interest rates are expected to remain at historically low levels, and we had the second highest level of price increases in the country last year.

We mentioned inventory levels are down, especially foreclosure inventory.  Why are foreclosure levels down now?  It started with the “robosigning” of documents in judicial states back at the end of October beginning of November timeframe when banks and the Government Sponsored Entities put a moratorium on foreclosures to review their processes and ensure checks and balances were in place in their foreclosure proceedings.  Then, we hit the holiday season which typically signifies a slowdown in the process-yes, the banks and GSE’s have a heart.  It will be interesting to see when the foreclosures will be released for marketing and how – all at once or methodically – and then we will see how it will impact pricing.

We have the jobs.  Of the top 15 metropolitan markets, we have the lowest unemployment rate in the country.  Major corporations have relocated here and are expected to continue to relocate here because of the education level of our workforce, multiple international airports, the cultural diversity, the Federal Government, tourism factors and so much more.  In addition, CEO’s under 30 rank our region in the Top 10 so job losses are less likely to occur here locally.

Also, it is projected that interest rates will remain below 5.5% for 2011.  In order to continue to see a rebound in the housing sector, rates must remain low.  In response to this plea, the Federal Reserve announced it would keep the Fed rate at 0-.25% and have agreed to purchase $600 Billion in mortgage backed securities.  At this time, it would have a devastating impact on the recovery if rates were to escalate substantially.

These factors contribute to more stable prices and in some cases, increasing prices.  It is area specific with some neighborhoods seeing huge price increases while others are seeing decreased prices.  It is so important to contact your real estate professional to learn more about your neighborhood.  But it is a fact; low supply and high demand lead to increasing prices.  Many purchasers who bought in the last 2 years have seen an increase already.  We don’t expect huge increases like we saw in 2003-2006 but we expect to see moderate increases, which is healthier for the economy and housing sector.  Another contributing factor to our increase in pricing is that international investors see the value in our region and in 2010, we were ranked second only to New York City in foreign investment both globally and nationally.

What else shall we keep an eye on this year?  The restructuring of the Mortgage Interest Deduction, unemployment nationally, potential terrorist threats as we approach the ten year anniversary of 9/11, foreclosure activity nationally and if we can get a streamline approach to short sales.  Stay tuned into what is happening so you too can have a successful 2011.  Get it?  Got it?  Good!

Now, go sell something!

It’s all about your peeps

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Lately there have been articles written about diversifying your business – well I say, “Go with what you know”.  It is time to focus on your database, the management of your database and its growth. 

  • The question is, why try to get into foreclosures?  This aspect of the business is already overwrought with Realtors, is difficult to penetrate and in many instances can be very expensive as expenses need to be covered until they can be reimbursed by Fannie Mae, Freddie Mac or the banks. 
  • Why begin mass mailing campaigns?  They are expensive, time consuming, produce a relatively low return on investment plus it takes years to establish yourself as the expert. 
  • Internet campaigns are time consuming and have a relatively low return on investment plus the leads can take years to incubate.
  • People – much like yourself – hate to be cold called, so why do it? 
  • Door knocking is for Girl Scouts, not professional Realtors.

So let’s focus on who you know and how they can get to know you better so you can get referred more business.  How can people in your database get to know you better?  It can be summed up in one word – consistency. 

  • You need to become consistent in your mailings to your sphere.  The mailings need be informative to the recipient – their house value, interest rate information, neighborhood information, area trends, etc.  Also, keep good notes on your members so you can send them coupons to their favorite restaurant, information about camps for kids, etc.  Remember, it is about them – not you!
  • You need to be consistent with your calls.  Call them on their anniversary, the anniversary of the purchase of their home, holiday greetings, birthday wishes (remember I said to take good notes on your members?), summer vacation calls, your neighbor just listed calls, or just checking in calls will all work – do it consistently!
  • You need to provide great client events.  Typically one for the kid oriented groups and one for the adults.  Ball games are great, bowling nights, Super Bowl parties, and Casino nights – all work.  Get creative but just do them.
  • You need to invite to participate in charitable events.  If you don’t host one – start.  If you “don’t have the time”.  Get involved in a charity and volunteer.  Your database needs to see that you are passionate about something other than business.  By giving back – you will get back!
  • Network – consistently to add new people to your database.  Join a BNI, referral share group, chamber, hold business to business meetings, join an association, coach youth sports, and get involved in something to allow yourself to meet more people!  The only way to add to your bottom line is to add people to your database.

Basically, you need to spend the year focusing on your database – not other avenues of business to get you long term results.  Get it?  Got it?  Good!

Now, go sell something!

Over and over and over again!

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I am beginning to feel like a broken record but the statement continues to ring true – now is the time to buy a home in Northern Virginia.  The reasons are crystal clear – interest rates are low, prices are stable to increasing, new home sales are rebounding locally, rental rates are increasing and we have the jobs.  Let’s review, shall we? 

  • Although interest rates nudged below 4% for a 30 year fixed mortgage for a day or two and they have creeped up to a whopping 4.75% – you still can’t get a better deal on a mortgage today from a historical perspective. 
  • Prices continue to stabilize throughout most of our region and are beginning to rise in the lower price points which will have a ripple effect on prices in higher price points as buyers “move up”. 
  • Inventory levels are at their lowest level since this time last year – less supply + more demand = higher prices – Econ 101.
  • New home sales in our area are strong compared with the rest of the country.  Stanley Martin set a record for sales in 2010 – Toll Brother’s numbers are strongest in this region relative to other areas where they build and NVR said sales were strong the first 9 months of 2010.  With this momentum – prices will have to increase.
  • Rental rates are increasing as well making owning a more viable option which in turn will also impact prices.
  • People continue to move to our region because we have the jobs.  Our unemployment is the lowest in the area and the Washington Metro area boasts the lowest unemployment rate out of the Top 15 Metropolitan Markets.  Houses are where the jobs go at night so prices will have to increase. 

So how does this impact you as a buyer?  Jump on the train now because it is about to leave the station!  Interest rates in all likelihood are going to increase to around 5.25-5.5% this year.  Prices will be pushed up due to pent up demand and an influx of buyers into our market place.  You don’t want to be one of the people left on the sidelines saying, “I should have bought early in 2011”.  Get it?  Got it?  Good!

Now, go buy something!

The Rocking Realtors relay their forecasts for 2011

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I was recently on Real Estate Radio with Ryan Slopper…check out the show!

Catch the show every Monday from 2-3 p.m. on The Big Talker, 1580 AM.

Don’t rock the boat baby…

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There has been a recommendation by The President’s Commission on Fiscal Responsibility and Reform to reduce the mortgage interest deduction for home owners.  The commission recommended turning the mortgage interest deduction into a tax credit, capping eligible mortgages at $500,000, and eliminating tax benefits for second homes and home equity loans.  This deduction has been in place over 80 years and has been on of the main reasons people make the move from becoming renters to home owners.  The tax deductibility of interest paid on mortgages is a powerful incentive for home ownership and is one of the simplest provisions in the federal tax code. In a recent survey commissioned by NAR and conducted online in October 2010 by Harris Interactive of nearly 3,000 homeowners and renters, nearly three-fourths of homeowners and two-thirds of renters said the mortgage interest deduction was extremely or very important to them.  If this reform takes place it will have far reaching implications in our economy and in our housing sector.

So, how will the change in mortgage interest deduction affect housing? 

  • There are currently 75 million homes in America, approximately 51 million are owner occupied and have a mortgage.  In 2008, nearly 38.5 million people claimed a deduction for mortgage interest on their taxes.  Changing this IRS code will affect a huge number of people who file taxes each year and count on this deduction as part of their home budget.
  • It is estimated that the home prices and values of homes will drop by close to 15%.  This will impact home owners net worth and wealth drastically.  Home values in 2009 were estimated at $19.3 trillion meaning nearly $2.9 trillion of wealth would be lost by homeowners – a drastic situation for many Americans.
  • Housing is nearly 20% of GDP as each property sale generates over $60,000 in revenue and touches over 20 industries.  As mentioned above, nearly 3/4 of home owners and 2/3 of renters claim the mortgage interest deduction as extremely or very important to them and their decision to buy a home.  This will substantially reduce the number of sales every year will affect the overall economy.
  • This change will affect an already rocky housing sector of our economy.  Billions of dollars have been spent to support the housing sector so does it really make sense to reverse the trend now?
  • Jobs will be lost as a result – real estate offices will close – the need for Realtors will diminish – builders will go out of business – title companies will reduce in size – the mortgage business will shrink – county government employees in record rooms will lose jobs – trades people will lose their jobs and the list can go on and on.

This decision will be bad for business, home owners, the economy and so much more – keep the mortgage interest deduction in place for the good of America.  Get it?  Got it?  Good!

Now, go sell something!

 

My Top 10 Predictions for 2011 are finally here!

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As we approach the end of the year, it is time to reflect upon what we experienced, what is happening now and where things may take us next year to allow us to adjust our plans and to make the most of our opportunities ahead of us!

This past year was once again riddle by media speculation on housing and its demise on a national level while our market was virtually ignored – even by local media outlets – on how resilient we are relative to the rest of the country.  We will see this again this upcoming year as negative news always sells.  Keeping this in mind, areas of concern that will be reported by the media are interest rates, pricing, foreclosures and short sales.  We have seen a decrease in inventory as the holiday season is upon us but houses continue to sell nonetheless.  The driving forces include interest rates which remain at generational lows and prices that are beginning to rebound in many areas encouraging fence sitters to jump off and become home owners.

So, what is my forecast for 2011?  Let’s take a look!

  • Short sales will remain difficult as banks continue change the rules under which they operate.  Until there is a systematic, streamlined process buyers and sellers will remain in peril when dealing with short sales.  Recent issues have been with banks countering contracts to ridiculous values and countering with unrealistic settlement dates of just a few days after making our clients wait over 15 months for an approval.  The banks need to hire people familiar with the home buying process or train the ones they have to understand how real estate sales are processed in order to facilitate more successful sales.  The problem is, this won’t happen in 2011.
  • Rates hit record lows the second week of November and have increased every week since with the announcement of QE2.  However, the central bank voted to keep the target range for its benchmark federal funds rate at 0 to 0.25 percent, and reiterated its commitment to purchase an additional $600 billion in long-term Treasury securities by June 2011. This announcement should help keep interest rates below 5.5% for 2011.
  • New home sales will rebound locally as builders have weathered the storm.  Additionally, we will see more local builders enjoy success as new companies are formed or have been formed recently and they can fill the new home niche better than the national builders with their knowledge, skill and flexibility as they have lower overhead.  Competitive pricing, up to date floor plans and desirable locations will contribute to all builders’ success in 2011.
  • Many agents, loan officers and title agents will drop out of the business as the business becomes more specialized with short sales, foreclosures and continuous changes in financing. The consumer will demand professionalism from their agent.  The new agent pool will be younger and will not only embrace technology but will use it to their advantage over “experienced” agents.
  • More agents will gravitate to utilizing video as the consumer prefers video over text and pictures.  Those who adopt early will enjoy more success than those who do not embrace this medium of communication – much like the implementation of various social media tools.  Video is the new trend in real estate in 2011 and beyond and is here to stay.
  • We will see a moderate increase in prices in 2011.  Some areas will see greater gains and some will see moderate declines as each market/neighborhood has its unique benefits and challenges.  The saying has gone from “all real estate is local” to “real estate is hyperlocal” – use a professional.
  • The banks, Freddie Mac and Fannie Mae will slowly release foreclosures onto the market to protect their values and the market values in neighborhoods.  Foreclosures will remain a constant force in the news in 2011.
  • The economy is recovering slowly but at a rate that has been insufficient to bring down unemployment nationally.  Locally we are at 4.8% and we should remain low compared to the rest of the country.  The DC area boasts the lowest unemployment relative to the 15 major markets around the country and this trend will continue through 2011.  This trend will help sustain our real estate market as houses are where the jobs go at night.
  • The market and consumer will demand more professional agents with the ability to provide the right tools and technology to make their transactions smoother and efficient.  Agents who attend trainings, earn designations, and continue their education will see their incomes soar above the agents who continue to conduct their business as usual.
  • Companies that provide up to date educational opportunities, hire the best of the best, invest in technology, services and support plus trim their expenses by making tough choices will thrive in 2011 and beyond.  Companies that are top heavy, unable to consolidate or provide tools necessary for success will fail and close providing opportunities for well balanced companies.  As a result, more closures in the real estate industry will continue in 2011.

As you can see, the New Year will offer challenges and opportunities.  Recognize how you can take advantage of what is presented to you and make 2011 your best year ever!  Get it?  Got it?  Good!

Now, go sell something!

Don’t miss out on the American Dream!

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Why is now the time to pursue the American Dream and buy a house in today’s market?  The reason is because many of the fundamentals of home ownership remain strong in every market – even today!  Let’s review, shall we?

  • Owning a home provides stability in you and/or your family’s life.  You are not subject to having to move on the whim of your landlord and you can start to build “roots” in a neighborhood.
  • You become part of a community hence building upon the theme of pride in ownership.
  • Today’s interest rates are at historic lows making payments extremely affordable.
  • Prices have bottomed out and are on the rebound in many areas – get on board before prices and rates increase again.
  • The home becomes “yours”.  You can paint, re-carpet, renovate, landscape and even more without approval from a landlord and the improvements add value to your home, not someone else’s property.
  • Home ownership is a wealth building strategy – each payment decreases your loan balance increasing your equity in the home – it is a built in savings account!
  • The tax savings and benefits are a huge benefit to your financial bottom line.
  • You choose when to move – not someone else.
  • Home ownership strengthens our economy – each home purchase touches over 20 industries and creates over $60,000 in revenue
  • The housing sector represents nearly 20% of the US’s GDP and helps drive our economy
  • And best of all – it is the American Dream!

As we know, all markets are cyclical and we have been in a down cycle for real estate for over three years now – the market will come back – it always does.  Now is the time to take advantage the opportunity afforded you today – just look at the graph…

                           Now…                                   Later…

Sales Price           $400,000                              $360,000 (assumes 10% drop in prices)

Loan Amt             $320,000                              $288,000

Rate                  4.375%                                  6.125%

P&I                   $1,597.71                             $1,749.92

Save      $152.21 per month by buying now

Save      $18,265 over the next 10 years

If you are a savvy buyer, now is the time to make the move.  Get it?  Got it?  Good!

Now, go buy something!

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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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!