Spring market has sprung early this year. Thinking of selling your home? Watch Scott’s Market Minute every week. Scott provides real estate market information for Northern Virginia and his Market Minute offers a quick look into current market conditions, housing inventory levels, distressed property statistics, and market projections. If you want to know what’s going on in the Virginia side of the DC Metro housing market area, contact Scott MacDonald (703)652-5777 or follow his blog http://www.scottymacsblog.com
Scott MacDonald the Broker, Owner and President of REMAX Gateway speaks on the importance of successful business model and practices for real estate agents. With over 25 years experience in the real estate market world, Scott offers his insight to agents. REMAX Gateway serves the Northern Virginia, Maryland, and DC Metro areas with locations in Chantilly, Brambleton (Ashburn), Lorton, and Gainesville. A 5th office location in Arlington, Virginia is scheduled for Spring of 2013. Contact Scott MacDonald (703) 652-5777 or follow along at scottymacsblog.com
As we enter 2012, there is much speculation about real estate yet again. Will there be more foreclosures? Will housing values continue to drop? How long will interest rates stay low? When will lending guidelines reverse their trend of more restrictive policies? Should I buy or wait? Will short sale guidelines become more uniform? What will it take to improve the housing market? Well, as I have said in the past, my crystal ball is broken but I can look at trends, read reports and provide some guidance. Let’s take a look at what we have seen recently.
Will there be more foreclosures? As the inventory of short sales decrease and the notice of trustee sales in the papers remain low, we will not see a tremendous amount of foreclosures hit the Northern Virginia market. When we see an increase they won’t have a significant impact like they had on our market in 2008-2010. The inventory will come when banks begin to evict people who have been living in houses mortgage payment and rent free for several months. Additionally we will see some foreclosures come on the as people lose their jobs. Again, the impact will not be severe in my opinion and will be absorbed as inventory levels are at 2 year lows in Northern Virginia.
As inventory remains low, prices will remain stable and in some areas they will increase. If owners invest in their homes by upgrading kitchens, bathrooms, and updating carpets, paint etc. they will see the return when they sell. Homes in the right condition, staged and priced properly see multiple contracts and often get bid up above list price.
Interest rates will remain low for the foreseeable future. The Federal Reserve has stated they will keep their rates in the same range through mid-2013 and as such, mortgage rates should remain low. There are of course some outside factors that could change this such as the European debt crisis, and energy costs rising but overall we will be in the 3.75-4.5% range for mortgage rates.
It doesn’t seem that lending guidelines will restrict any time in the near future. Underwriters continue to ask for last minute items, credit is being checked for a second time just before settlement, requests for obscure items are being asked for and when you think you’ve heard it all, you hear something new. On the bright side, mortgage insurance companies are becoming more flexible in their requirements which is helping in some instances. Unless it is mandated by the government through the GSEs, I don’t see guidelines relaxing for some time.
If someone has found a home that meets their requirements as far as location, size, price and affordability then yes, now is the time to buy! Especially if it is for a long term hold, you need to buy now. In a recent survey, 78% of Americans believe housing is a great investment. As previously mentioned, rates are excellent and you need to take advantage of them as well.
We are dealing with fewer short sales in Northern Virginia today but they do seem to be closing at a higher rate than before which is great for both buyers and sellers. We anticipate this trend to continue.
So what will it take bring the market back? In a two words, I say, consumer confidence. How does consumer confidence improve? Here are a few ideas – job creation, lower energy costs, and more positive press on the economy. Let’s see how this goes with the election coming up later in the year.
With a little more insight into the market, go help people make the right decisions when buying or selling houses. Get it? Got it? Good!
Now, go sell something!
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!