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

Out on a Limb

As we go into May I expet changes to come to our market. those sellers that are in a "have to sell" situation will see the summer market looming as Memorial Day approaches and they will realize they're missing the spring market. I expect them to get more aggressive in their pricing. The activity level in May will dictate how early it starts and how aggressive they have to price to get out in front of the market. If the level of activity we saw in April continues then we should be fine; but; if that was the extent of the rlo bubble we typically see, then we will not be. My opinion is that as consumer confidence comes back a bit we will see those fence sitters get into the market. Our stats LOCALLY are great with good employment numbers, good wage numbers and a slow but steady improvement in housing prices. Relocation may be a bit stagnant as they are held back by the real estate market in their part of the country as well as being incluenced by that area's market. It takes a bit of time for them to realize that they are not in Kansas anymore and our market is safer and more dynamic than "back home". The short sale market is very active and we are seeing the bank processes improve...finally! Each bank is different but we took one from contract to close in just 63 days already this year. Negotiation on these short sales represent about 15-20% of our business and, knock on wood, we have a 100% success rate! Ok, the short answer to what I see in the next 30-90 days, the upper end of the market will stay steady and it has been good so far this year. The below $400,000 market will also continue to go strong and should actually improve. The middle of the market place will see average activity and hopefully an increase as confidence comes back a bit. Homes that have been on the market 30+ days, homes that have an impacted lot or a condition issue with motivated sellers will adjust their pricing down. I do not expect to see rates move dramatically in the short term but we are continuing to see new requirements and restrictions coming out affecting affordability. As we head into the summer months we typically see inventory start to decline and we typically get a little bubble of activity as relocation procrastinators rush to get in before school starts. As the market continues to unfold I will, as usual, keep you informed.

Front Lines

The spring market thus far has certainly kept us guessing. January & February gave every indication that the market was poised to take off but then Mach fizzled. April's numbers picked up again but are still not where we hoped they would be. The number of available townhomes continued to drop from 72 in March to 58 in April. the bad news is that the number of properties coming under contract dropped as well from 81 to 64. (Compare that to the 123 we sold last April due to the stimulus incentives!) The average Days on the Market also continued to improve dropping to 29 in April from 39 in March and 48 in February! So, while the number of contracts dropped, the inventory and days on the market continued its decline which is positive overall. The single family sector actually went the other way with inventory continuing to increase substantially to 65 in April from 50 in March and 37 in February. The good news is that the number of contracts came back from March's dismal 27 to 39 in April. Given that, march and April are the big months of our spring market. This is not the best but it is an improvement. Our market could be languishing for many reasons; the turmoil in the Middle East, gas prices, uncertainty over the budget or just because we have not been able to string two days of nice weather together over a weekend. Any or all of the reasons or something I am not even aware of could be the issue but the root of the problem is consumer confidence. Buyers are scared to make a decision and they are plucking off the exceptional values or the exceptional properties and sometimes even those are sitting. Decisions can only be delayed for so long and those that are suffering from the paralysis of analysis will wind up missing the best our market has to offer. The number of foreclosures as a percentage of available inventory has continued to drop. The number of short sales has increased although overall the percentage of distressed properties has fallen. Hopefully in May we will see the increased activity of April at least continue. I will as usual keep you informed as our market continues to unfold.

Out on a Limb

March will be a busy month. I look for inventory levels to increase dramatically but I also expect to see the number of contracts written jump as well. Inventory will go up as sellers try and time their move to the end of school. Relocating buyers will start to enter the market and some already have. They tend to come here on a house hunting trip, look at everything on the market, pick a house, write an offer, negotiate and complete the inspection all in a 5-7 day time frame. Once the sold signs start popping up we will see those who have been watching suddenly go under contract. In addition relo buyers jump start the move up market as well. Rising gas prices and the new problems over seas have shaken consumer confidence just a bit but I expect that confidence to come back once you start seeing the old signs. I expect the number of new listings entering the market in March to be 50% higher than Jan & Feb. I believe our pricing will continue to climb slowly this spring and then level out during late summer and fall at worst. Buyers that have been in or watching the market for the last year or so will be disappointed if they expect to find the same prices this year that they passed on last year. Our market has moved in a positive direction already and when the smoke clears I am hoping that the number of contracts written in March will also increase by 40-50% as well maybe more depending upon the depth of the pent up demand. To see numbers comparable to last year's stimulus fueled spring would not surprise me at all. Rates should remain relatively stable and as long as there are no more surprises on the horizon we are poised for another year with continued improvement. As our market continues to unfold, I will as usual keep you informed.

Front Lines

So far the year has started off much as we expected Townhome inventory has continued to rise and is up 56% over last year at the same time. (79 om 2-11 vs 51 om 2010) This dropped in February to 79 available from 85 in January which is something that I would like to see continue. The average list price for a townhome is currently $293,018 which is up noticeably from $267,749 in 2010. So while inventory has grown so has pricing which means (hopefully) that we will see the move up market keep traction and continue as more sellers finally have enough equity to be able to sell and buy again. The single family market has remained consistent and inventory has remained relatively unchanged (37 vs 36) since the same time last year. This is good as inventory had crept up to noticeably higher levels in fall of last year. I do expect that to change significantly in March and many of those homes that came off the market for the holidays will come back on. The number of contracts written dipped to 37 in February from January's 44 but it is still consistent with February of last year's 36 sales. That is significant in that last year we had the stimulus in place and this year we do not. So if demand stays consistent with last year them are seeing the turnaround sustain itself under its own power. We have already run into one low appraisal on a property and while we have worked that out it gives us pause. It does indicate that demand is strong enough to support some increase in pricing but we need the appraisal industry to share the main level of confidence. Mos t of the sellers that weathered the winter months and cane into the year with lower pricing are now gone and the new wave of sellers are more optimistic with the best selling months in front of them. Those homes with great lots in great condition are gone quickly but buyers are passing on those homes that require them to compromise in any way. They are waiting for "something better" to come on the market this spring. At some point, and I expect that to come in March, they will realize that a little compromise is part of the purchase process. Once we start seeing old signs we will see some of these fence-sitters enter the market although they will most likely have missed the best values. Those that keep waiting thinking they will find a value comparable to last fall will miss the boat entirely. It is an exciting year for real estate and as our market continues to unfold I will, as usual, keep you informed.

Out on a Limb

I call this column Out on a Limb because that is exactly what I am doing, going out on a limb by putting my opinions in writing as to where the market is going. I am pretty confident in my opinion because I have been doing this for years and I study our market daily. This year, though, is the first time that my "gut" feeling and the numbers are conflicted. On one hand I see our inventory rising and our contracts slowing. In simple terms of supply and demand, this is not a good thing. If we get too many homes on the market and not enough people buying them then pricing has to drop and as that is all people can compete on. That being said, my gut feeling is that the market is poised to jump forward. The phone is ringing, sellers are excited, buyers are actively looking and the general feeling is very positive. he stock market is up, unemployment overall is down and in our area we area actually very strong with jobs being created. Heck, once the builders crank up I think you will see an even bigger dip in those numbers as construction related jobs represented a big part of the unemployment numbers. Our area has been blessed in that while we lost jobs in the market overall, what actually happened was a shift and we gained jobs in the higher paying end of the spectrum. All that being said I feel that 2011 will be slightly better than 2010 and we ill see continued improvement as the year progresses. Consumer confidence lagged after the stimulus ended. Everyone thought that the market would fall apart after it ended and it became a self-fulfilling prophecy. Everyone waited to see where the market would go. Rates bumped up and that also put people on the fence and in a "wait and see" mode. I believe there is pent up demand to buy and as the year unfolds there will be a spike in demand as those that opted to "wait and see" realize that they have missed the bottom in both price and rates. The "have to sell" pricing from those that had to sell in the last quarter of 2010 will be gone and the sellers coming on the market in the new year with Spring in front of them will price higher. Interest rates having bumped up will affect us a little but they are still in the 4's. I look for that to increase as the year goes on. Wee keep hearing about the "shadow inventory" out there which is referring to a backlog of foreclosures but I do not see that having an affect in our market and I think the distressed inventory will stay at the same levels as last year. Relocation buyers start coming in March and once the sold signs start popping up there will be a flurry of activity. With nothing to further damage consumer confidence our market should be more consistent that last year's. I look for pricing to bump up in the first couple of quarters and to level out for the remaining part of the year. While I may be going "out on a limb" forecasting where the year will be going I am confident that it will be a good year overall and an improvement over last year. I would encourage everyone that is reading this to focus on our local market. The news tends to focus on National news and frankly what is happening in Florida, Ohio, Nevada, etc. is not what is happening here. We live in one of the most dynamic markets in the country and our underlying numbers are good. Even those articles you read about locally are usually a reflection of what happened 3-6 months ago as that is the information they have at their disposal. Every month (except January) I post a column entitled Front Lines and we call it that because it focuses on what is happening today in our real estate market. If you have questions shoot us an email or give me a call and you will get a straight, honest answer based on years of experience and current local statistics. We will as usual keep you informed.

2010 Year in Review

Overall 2010 was an improvement over the previous year. the townhome market continued to improve through the spring and the single family sector Saw a bump up in pricing for the first time since this whole mess started. The number of foreclosures and short sales in the market ebbed and flowed but overall the numbers were slightly lower than in 2009. Rates stayed pretty steady at rock bottom levels for most of the year but jumped rather significantly, almost a full percentage point in rate, in December. Overall lending requirements became more stringent and it is tougher to get a loan today without question. The new home market has cranked up again and some of the deals that once were are no longer. A pivotal point in the rear was April when the stimulus program ended. Sellers rushed to get on the market and buyers moved their buying decisions up to catch this benefit. In other words, we robbed Peter to pay Paul in some respects. The most noticeable was in the townhome sector where we saw the number of contracts written in May fall off dramatically going from 123 in April to just 53 in May. June was more of the same but this was to be expected. It was a little disturbing too when you compared May of '09 to May of 2010 in that in '09 we has 102 contracts written and in '10 just the 53. It is also disturbing to see that it has continued like this for the rest of the year, inventory growing and number of contracts written dropping form the previous year's levels. This is the reverse of what we had seen since mid 2008. The single family sector has been more stable and, as I mentioned earlier, for the first time since 2005 we saw a bump up in pricing. I attribute this directly to the activity in the townhome market and the appreciation that townhomes had enjoyed for the last year. The number of sales was substantially higher in March and April over the previous years because finally the move-up market was back. Following those months, though, demand(# of contracts written) dropped back to the same levels as the previous 4 years. he good news is that single family demand is very consistent month after month. The concern, though, is that the townhome market will slow as supply (# of listings) continues to grow and demand stays at the lower levels as this will affect both categories. Looking at the numbers overall though, 2010 was the turnaround year and 2009 was the bottom. First the townhome sector: Average Days on the Market dropped to 30 from 44 in '09 and 83 in '08, Average number available in any given month was 73; just one unit higher than 72 in '09 and down from 255 in '08! (Consistent with when we believe the TH's started their turnaround) If you took the first 6 months of '10 and the last 6 months of '09, the number would be much lower. The average list price of the townhomes that came under contract jumped up to 273,962 from 258,578 in '09 lower than the 288,239 in '08 but that is because the market was continuing its downhill slide from the high of 403,017 in '05. The disappointing number was the number of contracts written which was 814 down over 20% from 1,057 in '09. Again, the first half of the year was stronger than the last half. The overall high was 1503 in '04. The good news is that the number of new listings dropped slightly to 779 from 838 in '09 and 1,196 in '08. It has consistently dropped from the high of 1,672 in '05. The single family sector showed similar numbers. The average list price of the homes that came under contract was 506,175 up from 477,894 in '09, although a long way from the high of 669,321 in '05. Good news though is this the first year that number has risen since '05! The average days on the market was 47 down from last year's 69 and '08's 103. The number of contracts written increased slightly to 366 from 339 last year and 338 in '08. That again is consistent with the "move up" bump that we saw in Mar-Apr and shows how consistent the single family sector is. The average number of active listings did increase a bit from 55 last year to 60 this year but still much better than the 128 of '08. The number of new listings coming on the market jumped almost 25% from the low of 345 last year to 428 this year. While there has been a little increase each month the lion's share of them came in Mar-Apr as they tried to catch the stimulus. The good news is that in both categories most of the new inventory was regular, healthy sales and not foreclosures. As this year's market unfolds I will, as usual, keep you informed.

Out on a Limb

This time of year is usually fairly easy to forecast but we could be in for some surprises this year. I can say with certainty that the last quarter of any year, 2003 include, is always slower and homes always sell for less than they did in the spring. This is because buyers tend not to compromise at the time because they think more and better inventory will come on in the spring. They will sit on the sidelines in the holiday time and wait until spring UNLESS there is some mitigating factor that creates urgency such as rising interest rates. Sellers who "have to sell" can typically only compete on price so they get out in front of the market, which is why we see the decline in pricing in the last quarter. This year could be different though in that we have stellar interest rates, the lowest I have seen in my career, and despite what you hear on TV and read in the paper our fundamentals are strong here in Northern Virginia. Consumer confidence is the issue but once people realize that what they read about in the paper is happening in Florida, Nevada, Ohio and other states but NOT Northern Virginia they will feel better and realize that this market is slipping away. It might take the stock market bouncing up, administration changes in the mid terms, announcements that the job cuts announced for Virginia are not in our area but down in the tidewater area or some other bit of positive news but at some point the pent up demand will be unleashed. That is where it gets iffy in predicting the next 90 days or so because I feel there is pent up demand to buy and once buyers feel confident or more importantly once they fear the market is slipping away and that the bottom is gone they will all pounce on the market. Rates staying low and there being no indication of change in the near future will probably mean that there will not be a mass rush and in fact we may not see a change until spring but I do believe that those deals that are out there now will disappear and next spring pricing will build off of these numbers. I can't begin to stress enough that real estate is local and that the negative news you are getting pounded with is national, our local market is alive and well, going strong. We are the highest group in the nation as far as job creation and the lowest as far as unemployment numbers. The builders are back to buying land and everyone is gearing up for a steadily improving market. I look to see steady activity at worst and solid improvement at best. We will watch the numbers for you and as usual, keep you informed.

Front Lines

We saw some appreciation in the single family sector for the first time in years this spring. The townhome sector continued it's steady 19 month trend of increased sales and diminished inventory levels. The spring was very good for both sectors but that changed in May for the townhomes as we saw the number of sales com in at 53, a drop of 57% from April's high of 123. I attribute this to the fact that any buyer in the market pushed to get a contract in place by the end of April so that they could cash in on the Feds stimulus plan. April took May and June's buyer's. It is a bit disturbing in that August's number only increased to 66 sales compared to August '09's 78 sales. The more disturbing trend is that the townhome inventory levels have increased slowly but steadily for the last 3 months. Prior to that they have steadily decreased for the previous 23 months! In August '09 we had only 49 available compared to 213 in August of '08 but that has increased to 86 in August of 2010, an increase of 44%! Our absorption rate is now over 30 days for townhomes and approaching the 60 day mark. Not a good trend. This is bound to influence the single family home sales, as it will once again be a challenge for a move up buyer. With increased inventory and fewer buyers the "have to sells" (foreclosures being a big one) will compete solely on price and squeeze out the move ups who need the equity. We finally saw the positive impact of move up buyers this spring in the single family home sector. Once the townhome inventory level got down to where an owner occupied seller could compete in the marketplace. There was enough demand that the pricing increased and vacant foreclosures were gobbled up leaving the owner occupied homes as virtually the only choice. These people sold and moved up to a larger home in the same school district increasing the single family home sale numbers. We also saw a little bump in single family home pricing!! Inventory levels declined and we saw more sales in every month than in the same month last year. Since May though we have seen inventory levels increase and that does not bode well for the future. As of August we have 68 single family homes on the market, a 32% increase over the 46 available in August of '09. The good news is that single family sales this August were up by 20%over August of '09, with 30 compared to 25. the number of foreclosures has increased correspondingly in virtually every category but our inventory is not increasing due to a higher number of foreclosures so do not worry about that. Our inventory has increased because the slight bump in pricing has allowed some sellers to finally be able to enter the market. The problem is that as we hit the historically slower "post school starting" market of the fall increased inventory means that those seller that absolutely "have to sell" will only be able to compete on price and we will more than likely give back some of the gains we saw this spring. All told though it has not been a bad year for real estate so far although filled with challenges. As the year continues to unfold we will, as usual keep you informed.

Front Lines

Once the snow melted the market heated up pretty quickly. March built on February's numbers and while inventory grew a little in March, sales surged keeping active listings below '09 levels. As of March 31st, there were 56 townhomes available, up 10% from 51 in February but down 51% from January '09's 109 active listings. A far cry from the 315 active listings in March of '08. The single family sector saw similar numbers with 54 active listings as of March 31st, up 50% from 36 in February but down 61% from March of last year's 87 active listings and well below the 146 of March of '08. Townhome sales bumped up 62% with 115 sales from February's total of 71 but stayed consistent compared to 110 sales in March of '09 but still well above 56 in March of '08. There was a notable jump in the single family sector with 53 sales, up 89% from February's 28 and a 39% improvement over the 38 sales in March of '09. Sales more than doubled March of '08's 24 sales. This is outstanding news but not entirely unexpected and right in line with what we have discussed in our most recent Out on a Limb. The townhome market has been improving steadily now for 19 months with inventory steadily dropping and sales well above '06-'08 levels. Many segments of the townhome market have seen 12-15% appreciation over the bottom of the market a year ago. The real good news is that this has finally moved into the single-family sector in the past 4-6 weeks. I attribute this to owner occupied townhome sellers finally being able to move up and buy a larger home. This has been missing from our market for a number of years and finally we have seen an impact. With each passing day and small bits of good economic news consumer confidence has risen as well giving relocation buyers the desire to own as opposed to renting. There has been pent up demand to buy a larger home and it is finally starting to be released. Interest rates have risen only slightly, which is a surprise to me but a good one. I had expected a more substantial jump once the Fed pulled out of the mortgage backed securities business but that has not happened...yet. I still think it will at some point but clearly I called it wrong thinking we would see a more substantial jump in rates by now. The stimulus plan ends in April and I feel that will have some effect on the townhome market but I do not think that it will be as significant as some do and certainly not have the impact that a rise in interest rates will.

Out on a Limb

I look for April to continue in the same way that March did. New inventory coming on and strong sales continuing, keeping inventory levels low. That being said some of the pent up demand has been sated and April is always a big month for new inventory to come on the market so I feel that the townhome market will stay the same but we will see some increase in the available single family properties for sale. Townhomes will stay the same, as those that are motivated by the stimulus plan are rushing to buy before the plan ends on April 30th. There is not that kind of drive in the singe family market but move ups will continue to bolster sales there compared to previous years. It will be interesting to see if May continues the same way. I expect townhome sales to slow a tad but for the most part stay status quo. I look for our foreclosure listings to increase a bit as well. Competition in the single-family sector will be fierce as those that "have to sell" start aggressive adjustments in May realizing that the spring market is all but over. This will level out some of the frenzy from March and we may even see a slight pull back. That being said our market is strong, sales will continue, good homes on good lots in good condition will sell. As our market continues to unfold I will as usual keep you informed.

Real Estate Taxes

While writing this I had a gentleman stop by my office asking about his current real estate assessment. Once again the county is playing games with land values and house values and this is causing confusion. Bottom line though is that the county needs to generate "X" number of dollars in real estate tax revenues. They have 3 numbers they can play with to do so, land vaules, improvement values and the tax rate. It is always unpopular to raise the tax rate and actual house values are easier to track because of neighborhood comps. So switching land and improvement values around further confuses the issue and the homeowner. At the end of the day though folks do not let that cause you any stress. Simply look at the total value that you are assessed and then look at your local neighborhood comps. If the comps are higher then there is no argument but if they are lower then we can argue with the county. If you need us to send you comps we are happy to do so; just let us know. While I hate paying the taxes I am tired of seeing my assessment go down!!

Out on a Limb

Not that the snow is gone I look for a surge in inventory, especially in the single-family sector. Typically March is when inventory really starts to grow and I believe that many who would have come on in February were prevented from doing so by the weather. I also feel that many savvy sellers are umping in early trying to catch those buyers that are active now trying to buy so they can get the tax stimulus incentive before it goes away in April. I think that is a smart strategy. I still look for interest rates to start creeping up, regardless of what the fed does, in response to the government getting out of the mortgage backed security business. I must admit that I am somewhat reassured that we have not already seen a larger spike in rates and believe me this is something I hope that I am wrong about. I think there is pent up demand for good housing to come on the market and I think that what comes on in March that is good will be snapped up. I look for increased relocation activity to boost that demand. I am heartened to see the short sale process drawing the attention of the bigger banks and efforts being made to somewhat streamline that process. That would be a huge plus to the marketplace and would certainly go a long way to relieving the fears of the looming foreclosures and shadow inventory. All that being said I believe that March will be a great month in the marketplace and that the influx of inventory will be gobbled up by current demand. The townhome market will continue to generate multiple offers and be fiercely competitive. The single-family market will also continue to move well although the highest brackets will not see the same level of activity as the lower and mid level price ranges. As our market continues to unfold I will as usual keep you informed.

Front Lines

Well, let's start off by saying Thank God the snow is almost gone! It sure put a chill on the market. We had come out of the gates strong in January but this stopped everything in its tracks. The month however saw improvement, just not what it could have been in my opinion. Sales of townhomes increased 54% going from 46 sales in January to 71 in February. Still below the 80 we sold last February but I think that is purely a function of there being far fewer homes on the market and this February only 51. The average Days on Market for townhomes was 28 days up slightly from 20 in January, a HUGE improvement from the80 plus days of last February. Single family homes also showed improvement although not the same high numbers as townhomes. The number of sales increased by 21% from 23 in January to 28 in February. This is 33% higher than the 21 sales last February so I think it is a good trend. I also think this is a direct result of the bounce in the townhome sector allowing folks to move up in the housing market. Lets hope that continues!! Inventory only increased slightly from 34 in January to 36 in February, still less than half of last year's available inventory in the same months. Sellers that have come on the market are for the most part optimistic in their pricing. That means they are pricing higher than even the most recent comps in hope that the market will come to them. For townhomes this is much easier to do than it is for single family homes. There is much demand in the lower price ranges that you can try higher and then reposition if you have to and you will not have lost any ground. This is harder in the mid and higher levels because there is just not the same amount activity and there is more inventory to choose from. If you miss that buyer they are not necessarily going to be there when you change your price because they are not a first time buyer or an investor, they are either relocating and have to buy quickly or they have their home sold already and have to buy quickly. I expect, or maybe just hope, to see a "bounce" in the single-family sector or at least the bottom. I base this upon incoming relocation levels and move up traffic that we have not seen in the past. As long as the surge in inventory is not more than what we typically get I think the stage is set to at least see the bottom. As our market continues to unfold, I will as usual keep you informed.