Halloween is not the only Scary thing this year!

       Well, it is that time of year, the market is really scary for sellers!  Buyers however are in the catbirds seat for at least a couple of months.  The holiday time frame is upon us and there is a real shift in buyer activity during this time frame.  Relo activity is virtually non existent and sellers are limited to move up and first time buyers only.  Thoughts turn to Thanksgiving and Christmas  and real estate gets put on hold until the new year. Many buyers opt to wait until spring thinking they can find the “perfect” house then.  Smart buyers however catch the market today !! Those sellers that wanted to sell but didn’t have to are coming off the market.  Those that have to sell though have to get aggressive in their pricing to have any hope of getting sold before the new year.  (Yes, I know there are some exceptions to this but for the majority this is a fact of life).  For sellers, new year is even scarier this year with the threat of budget negotiations shutting down the government once again and the fear of rising interest rates.  For buyers though now is a golden opportunity, this is the time to strike.  Sellers that are on the market now are marinated as well as motivated and by that I mean they have come through the selling season and they did not sell (marinated)  and they know they have 2-3 months of dead market ahead of them (motivated).  The optimism they came into the market with is gone and reality has set in and a bleak future is in front of them.  For buyers one difference this year is that inventory levels are higher than they have been in the recent past due in part to the consumer confidence crisis the shutdown caused.  So rates are low, there is inventory to chose from and pricing is at its low point.   Prices are still higher than they were at the start of the year but they are lower than they were at the peak of the market in May.  i.e. in 2012 home prices appreciated an average of 3.4% for the year.  In May of 2012 they were almost 7% then they slipped back 3%+ in the last 2 quarters.  So, over all appreciation for the year, BUT better prices in the last quarter than in the first two quarters (for the most part).  The time to act is now though as that will change as soon as we get past the holidays.  New listings that come on in the new year come on very optimistic and by that I mean they are priced higher.  They have great market time in front of them and they have time to “try” for a higher price and still catch the spring rush if it does not work out.  Relocation pops into the market and they start buying and that kicks the market off so one price builds on the next until eventually inventory catches up with demand in May-June once again.  Then we see some slip back.  We saw rates slip up a full percentage point in 2013 and the feeling is that will happen once again in 2014 so all the more reason to not let this opportunity pass.  Do the math and see what a 1% increase in mortgage rates costs you in purchase power.  Do the math and see what 3.5%* appreciation cost you in purchase power.  Taken individually it is noteworthy but combined it is substantial.  The “ paralysis of analysis “ comes with a price but this year it is a much more obvious choice.  If you cannot find the right value now there will be more homes to chose from in March but they will be at a higher price point than today and there will be competition.  It is also highly likely that they will come at a higher interest rate as well.  Would of , could of, should of!! You already lost ground in 2013 don’t let that happen to you in 2014 again.   

Out on a Limb

Numbers have slowed a bit and I look for that to continue as we move into the fall market. There are pockets of strong activity and multiple offers are out there in some price ranges and on some exceptional properties but it is not the norm at the moment. I do not see us dropping off a precipice but I do see the market cooling a bit. Seasonal factors come into play and they are exacerbated by election year jitters. Consumer confidence which has been surprisingly strong all year will hopefully continue after a brief pause. The numbers have been strong all year and in looking at them there is no reason to see anything but continued improvement. As we move into the new year, no matter which party is in office, there will be concerns as budgetary issues become a topic of conversation. That has a greater impact on our area than anywhere else in the country and this will directly influence consumer confidence locally. Let’s hope there is nothing to be concerned about and that I am looking at the half empty glass. The real truth in my opinion lies in the numbers and we will keep a careful watch on them. I am paying special attention to the townhome market right now as it is primarily first time buyers and investors. I am wary as we have seen inventory increase and contracts drop off in some sectors of that market. Rates are still low, even after a bit of upwards creep over the last few weeks. Rents have crept up over the last few years and now it is cheaper to buy than it is to rent in many cases. Also we have had folks buy homes that sold their homes short just a few years back so lenders are loosening up just a tad. That means that there is a large market of future homeowners not buying their first homes but rather coming back into the market after getting out. Lots of factors out there that can influence our market in the coming months and I will as usual keep you informed.

Front Lines

As we enter our fall market, the numbers are looking good although things have slowed a bit.  Townhome inventory has crept up to 61 in July and now 65 in August.  This is the high water mark for the year and up noticeably from the 49 available in June.    The good news is that it is less than the 78 we had last August. The number of townhomes that came under contract is the bad news as it continues to decline from 68 in June to 54 in July to only 41 in August.   This is also well below the 68 we sold last August.  This is the first time we have sold less than the amount of existing inventory in a month since January.  Typically we are seeing inventory drop as we enter the fall, not increase so this will be something that we will need to watch.   There is good news in that the average list price of the townhomes that have come under contract so far in 2012 is $301,268 up from $288,486 in July.  Average Days on Market is still a strong number improving from 29 in July to 23 in August, also better than the 35 in August of 2011.   Single Family home sales were similar statistically.  Single Family inventory dropped from 56 in June to 48 in July to 45 in August.  The number of sales continued to decline from 39 in June to 36 in July to only 20 in August.  The only two months where we have had fewer single family homes sell were January and February.  It is typical to see inventory drop as we head into the fall market but usually we see a little more activity right before school starts.  The average LIST price of the homes that came under contract for YTD 2012 stands at $532,116 which is up from $502,725 last year and is the highest number since 2007.  Average Days on Market did continue to increase from 23 in April, 32 in May, 43 in June and 43 in July to 48 in August.   Year to Date 2012 has been a good year for real estate in Centreville; we have seen appreciation and over all the numbers look good.  New homes sales are robust and builders are moving forward with confidence.  There is construction and ground breaking going on everywhere you look.  Foreclosure and short sale activity is still out there but not at numbers that we have seen in past years and not at numbers that should have a noticeable impact.  I think things have paused as election year jitters have finally taken a hold and because activity typically slows a bit in the fall anyhow.  As our market continues to unfold, I will, as usual, keep you informed. 

Out on a Limb

We did see the downward pressure on pricing come about in May that we had expected, especially in the single family sector but the overall market rebounded nicely in June.  As the spring market ends and the summer market begins this is normal, as those sellers that have to sell but have not sold start to get more aggressive in their pricing.  They do not want to miss the summer market as they missed the spring market.  It hits the single family market a little harder because they have more inventory that is taking longer to sell and because their typical buyer is more impacted by schools.  Typical cycle is that we see appreciation in the spring and then we give some back in the last couple of quarters.  As long as we do not lose more than we gained we have appreciation for the year overall.  For buyers the trade off is that there is more to choose from in the spring of the year and the good ones go fast.  We are seeing lots of “tire kickers” out there in the market with little sense of urgency and waiting for just the right deal.  Once they find it there is usually competition.  The under 300,000 market or townhomes and under 450,000 or so for single family homes is very, very active and multiple contracts are quite common on the best properties.   I expect to see the townhome market continue along at the same pace with inventory creeping up slowly.  With over 45 days worth of inventory on the market,  the single family sector is a little more precarious.  The number to watch is new inventory coming on the market.  The sales per month have been very consistent over the past 5-6 years and there is no reason for that to not continue but the number of new listings coming on per month can change that absorption rate quickly.  In April, 54 homes came on vs. 48 in April 2011 and in May, 48 came on vs.  46 in May of 2011.  Small increases but increases none the less.  I am hoping to see it trend downward. That being said inventory is well below last year’s numbers and there is demand as of this writing.  I do think as the election year rhetoric increases and it affects other economic indictors that we will see consumer confidence subside a bit.  I look for the year overall to end up higher than last year but I do expect to see the second half of the year slow down a bit.  As our market continues to unfold I will, as usual, keep you informed. 

Front Lines

Things were a bit slower in May but June was a very robust month in the market.  The single family market saw inventory increase from 62 in April and 41 in March to 71 in May, then drop back down to 56 in June.  This is less than the 72 homes available in June of 2011.   The number of sales was consistent with 39 homes coming under contract in June compared to 32 in April, 33 in May and 33 in June of 2011.    The average list price of what has sold stands at 528,102, up from last year’s (total year) of 501,725.   The average Days on Market increased to 43 from 23 in April and 32 in May but still well down from June of 2011 where it stood at 62.   So while we may be turning our single family inventory over in just over 30 days, with 56 available and 39 sales in a month we have an absorption rate of over just about 1 1/2 months.  The townhome market is looking stronger than the single family home market.  The average Days on Market is 27, up slightly from last month’s 26 and the exact same as June of 2011.  68 townhomes came under contract in the month of June, 10 more than the 58 we sold in May and 9 more than the 59 in April but still not the 76 we saw in March.  It is also down from last May’s 86 but ahead of last June’s 61.   I attribute that to the decrease in available inventory.  Currently there are 49 townhomes available, up from 36 in April but well down from the 72 we had in June of 2011.  So townhomes are turning over in less than 30 days and there is less than a month’s worth of inventory on the market.  The average LIST price of the townhomes that have come under contract so far this year is 296,675 which is up from the 288,486 average for all of 2011.  Another bright spot is that the number of distressed properties (short sales and foreclosures) is still way down from last year with only 8 spread across all the pricing categories!   

Out on a Limb

Our team’s activity level from the last half of 2011 carried over into the first part of 2012. We have already received multiple offers on two of our listings. We are busy! I look for at least the first half of 2012 to do very well as buyers take advantage of low rates and low prices. The word is finally getting out that our market has seen the bottom so some pent-up demand is being released. As of this writing unemployment for Fairfax County is 4.2% compared to 4.5% for the entire Northern Virginia area and 8.6% for the nation as a whole. A total of 18,600 jobs were added in the metropolitan area and over half of them were in Northern Virginia in 2011. The BRAC results also bought a net new job gain of 14,000 to the area. This bodes well for 2012 to be a great year. Election years however, are always difficult to predict. I have been in the real estate business for seven presidential elections and our area is different than the rest of the nation. We enjoy a stronger real estate market and lower unemployment than the rest of the nation because our largest employer is the federal government. Most folks around here are tied directly or indirectly to government contracting. Elections years bring stress and uncertainty to our area that the rest of the country does not feel. That hurts our local consumer confidence and will put some folks on the fence that otherwise would be moving.
I expect that to affect our market somewhat especially as the election nears. So, to truly go out on a limb with my predictions for the 2012 real estate market I would say that rates should stay stable for the year although an increase is likely as we get nearer to the election. It will still be a cumbersome and frustrating process to obtain a loan and I look for that to get worse before it gets better although I do look for some more flexible loan programs to start popping up. Consumer confidence should stay strong as will our market for the first couple of quarters anyhow and then we will see things slow down noticeably. Short sales will still be a part of our market but foreclosures will continue to slow. Pricing will trend upward in the first half of the year but level out for the last half. I look for the number of sales to increase slightly over all as well. This is just my opinion of what the future holds and as the 2012 market unfolds I will as usual keep you informed.

2011: YEAR IN REVIEW

2011 was certainly a challenging year. I would like to say that we saw improvement in the market across the board but that was not the case. Over the entire Northern Virginia Marketplace the number of homes that were sold dropped by 11.54%, from 18,881 in 2010 to 16,703 in 2011. The good news is that the average sales price increased by 3.04% to 483,189 from 468,919. Centreville’s numbers held pretty close. First, the townhome market, the number of homes sold dropped from 814 in 2010 to 720 in 2011, a drop of 94 sales. The number of homes listed dropped as well though by 143 homes so over all we sold a higher percentage of our town home inventory. The average list price of the homes sold reflected that increasing from 258,578 in 2009 to 273,962 in 2010 to 288,486 in 2011, a nice little bump in price! This was the 2nd straight year we have seen appreciation in the townhome sector! It did take a little longer to get that though as the average days on market increased from 30 in 2010 to 40 in 2011. There was an average of 75 townhomes on the market in any given month up from 73 in 2010 and 72 in 2009. Single family sales did not fare quite as well. The average list price of the homes that came under contract dropped to 501,725 in 2011 from 506,175 in 2010. We had seen an increase in 2010 to the 506,175 number from 477,894 in 2009. The number of sales also dropped from 366 in 2010 to 328 in 2011. We should note though that the number of new listings coming on the market dropped as well by 66 homes year on year. The average days on market jumped significantly (50%) to 71 in 2011 from 47 in 2010. There was an average of 58 single family homes on the market in any given month down from 60 in 2010 but up from 55 in 2009. So to sum it up the townhome market did well and continued to improve in 2011 while the single family home market stalled somewhat. You would have thought that given the improvement in our townhome market the same would have translated into more sales in the single family sector but that was not the case.
The continually changing loan process added to the stress level and had a significant impact on our market. Obtaining financing is exponentially more difficult now than it has been in past years. The added layers of review and accountability coupled with new and more restrictive qualifying criteria has just created havoc in the marketplace. We work with some of the best in the business and even they have had their problems. We are glad though that we have them as we did not miss getting one to closing! If you are looking for purchase money or looking to refinance, be patient, be prepared to document everything and be organized. The good news on the financial front is that rates were at all time lows and stayed there all year long. Low rates and low prices have made this a wonderful year for buyers. New homes came roaring back in our area. Builders are building and they are selling very well. Lots of activity in sites that were dormant for the last 3 years. I do believe this has had an impact on our single family sector sales for those folks that don’t have to stay in the Fairfax County school system. Foreclosures and short sales were still a part of our market but have continued to be a smaller and smaller part of it, especially foreclosures. Our market is strong enough to absorb the short sales so they never get to foreclosure. Demand for rental has continued to grow leading to increased rental prices. This must stabilize as now it is cheaper to buy than it is to rent in many places! The spring market was slower than what we had hoped but the last 2 quarters were stronger than we thought they would be so overall 2011 turned out to be a pretty good year. Just as we predicted in January it was more of the same we saw in 2010. We look forward to all that 2012 has to bring and as usual we will keep you informed as the market unfolds