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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!

Do you over promise and under deliver?

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To over promise and under deliver is one of the worst mistakes a sales person can make in business.  You take both your time and the client’s time to a build a relationship through finding out each other’s wants and needs, as well as learn what their expectations are for you and for them.   Agreements and commitments are made based upon satisfying these needs.  Then, the salesperson doesn’t deliver based upon promises that were made.  In the end, when you can’t deliver upon the promise, and you didn’t set the expectation up front, you broke the bond of trust and in turn, hurt your business situation which can take years to recover from financially.

The question I have is why?  Why do people say and commit to delivering results that they cannot produce?  It brings ill will, harms friendships and causes more harm than good.  Your reputation is one of the most valuable assets you have in business – it takes years to develop – why put yourself in the position of having to defend yourself to others or rebuilding your reputation.

My advice is know what you and your business can deliver and by when.  Don’t say yes or we can do that to just get the business.  Return phone calls, emails, and text messages promptly.  If your company changes policy which results in you not being able to perform, notify the client immediately.  If you delegate to others, stay on top of them to make sure nothing slips through the cracks.  Remember, it is your reputation, not theirs at stake.  After the sale, service is critical and will get you more referrals in the end.  Follow up and follow through is what matters most.

Expectations are set through relationship building, proper delegation and being held accountable to get the job done.  This is what you get paid to do, so DO IT.  Live up to your word, do your job and make someone satisfied, not disgruntled and upset that they made the decision to go with you.  Get it?  Got it?  Good!

Now, go sell something and deliver on your promise!

Don’t believe everything you hear!

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Be careful to pay attention to what you read.  It was recently reported that Fannie Mae foreclosures were up 12% in the second quarter – loan modifications that are 30 – 59 days late are up 2.19% – deeds in lieu of foreclosure and short sales are up 27% – there is “frailty” in the housing market and on and on. 

Well, as the cops say in the movie Hangover – not up in here, that’s right, not up in here!  In Prince William County, the average sales prices of properties are up to $255,000 from $229,000 in August of 2010 versus 2009 numbers – this reflects an increase of 12.46%.  And the average days on the market are down to 44 from 63 – a decrease of 30%.  This is great news but wait, there’s more.  In Loudoun County property prices are up to $378,000 from $344,000 from August 2009 to August 2010 – an increase of 8% and the average days on market are down from 65 to 52 – a decrease of 20%.  The story of good news continues for Fairfax County as well – average sales prices are up to $417,000 from $381,500 – an increase of 8.6% and the average days on market are down to 52 from 61 – a decrease of 15%.  The City of Alexandria and other localities here in the Washington area are experiencing similar results. 

The government has release nearly $1,000,000,000 to states for their Neighborhood Stabilization Program.  This program was introduced to bring stabilization to neighborhoods that have been affected by foreclosures and abandonment.  As a result of this program, Virginia received $6,254,000 (mainly for the Hampton Roads area and Richmond) a relatively low number compared to Florida who received over $208,000,000 and California who received over $149,000,000.  Again, this is good news for the Northern Virginia real estate market.

The bottom line is that we will be having more foreclosures coming on the market and short sales will continue to be present in our market place as well.  But, the good news is we are seeing that the distressed market is having less of an impact on our market than the rest of the country.  Our market is strong compared with the rest of the country – people are still moving here and houses are selling with price increases over last year’s numbers.  Know the facts and make it happen!  Get it?  Got it?  Good!

Now, go sell something!

Extra, Extra…there is some Good News in Real Estate!

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Good news is that the Case-Schiller Home Pricing Index reflects that housing prices are up in the Washington area for July, the 4th straight month of gains – good news…there is talk about prices not making a comeback to 2006 price levels until 2014 – bad news…nationally, home sales were down 27.2% from June- bad news…but our numbers were only 18.4%, nearly 9% better than the rest of the country – good news.  Days on market is down – good news.  Inventory levels continue to maintain and even slightly decrease…not really bad or good news either way, just an FYI.

Well, enough of that silly little exercise.  However, I did that to illustrate a point – the market is what you make it and you can spin it the way you want so why not be positive.  The other point is, if you head is spinning, so are consumers.  It is our responsibility to get in front of people and explain to them that our market is different.  In our area, people are always buying or selling – we have a 2.6 month supply of houses – your job is to find them.  We can talk about the negative sales numbers or the positive sales prices – choose to move people forward and not keep them down!

More good news, Virginia was once again ranked extremely high as a business friendly state, #2 over all nationally, as ranked by CNBC.  To illustrate this point, Northrop Grumman selected Fairfax County for its headquarters, MeadWestvaco is relocating to Richmond, Pfizer has agreed to stay in Richmond, Southern University is relocating jobs to VA, and Thermo Fisher Scientific is expanding as is Evatran.  Northern Virginia boasts the lowest unemployment rates in the country and Northern Virginia has seen a drop off in foreclosures where the rest of the state has seen an increase.  In addition, Gables Residential is building 120 apartments near Fair Oaks after sitting on the property since 2007 as they see a need now for more housing.  STG has also inked a deal for 100,000 square feet in Reston and plans to grow from a $220,000,000 company today to a $1 Billion company by 2016 – keep an eye on them!

Now for the numbers!  Inventory levels are down to just under 7,600 – contracts continue to come in at about the same pace weekly – mid 600’s and month’s supply remains in the mid 2’s with rentals still posting strong numbers at a 1 month supply.  Interest rates continue to be phenomenal as well.  So, as we have said for several months now and was reconfirmed at the broker owner meetings in Denver…it is an investors market!  Find’em, sell’em, rent’em, manage’em and then sell’em again…what a theory and business model for the next few years!  Get in the game or get out.  Get it?  Got it?  Good!

Now, go sell something!