Front Lines

Ok, it is official, we have just finished the July stats and we have now seen 12 straight months of improving market conditions. It may not seem that way but it's true. The town home market is on fire and our inventory is turning over every 2 weeks. We currently have 51 town homes on the market and we sold 103 in the month of July. Great numbers! We are seeing fewer homes coming on the market, which in this market means we are getting fewer foreclosures listed than last year in the corresponding months. The percentage of available properties that are "distressed" sales has dropped to around the 30% mark, which while is not great is better than the 70% mark we had seen. Certainly a vast improvement. We are seeing multiple offers on all the best values and this means that in many cases the prices have escalated up over the list price so as those homes close it should start to affect our pricing in a positive way. The single family sector is not doing a swell as the town home market but it is doing better than the previous years and continues to improve. There are currently 48 homes available and we sold 33 in the month of July. In other words we are turning that inventory over every 6 weeks or so. The under 500K price range is where all the action is and the over 700K market is the slowest of the categories. There has been increased activity in the higher ranges primarily driven by relocation but with the town home market moving so quickly there are finally some move up buyers back in the market. Appraisals continue to be the biggest hurdle as they (and the lenders)fail to recognize that our market has "bounced". By bounced I mean we have hit bottom and bounced back up to more realistic numbers for our area. New appraisal guidelines, while well intended and frankly a good idea, are just not being implemented properly. Until this is worked out it will continue to be a challenge and effect pricing. After all is said and done, though, our market is doing okay; homes that are priced competitively, in good condition and on a nice lot are selling quickly. Homes that are not, don't. If you are on a bad lot then you cannot ask what a home on a good lot is getting. If you have deferred maintenance (poor condition) then you cannot sell for what a a home in good condition is getting. If you do not have the same features as other homes in your price range then you must complete in a lower price range. At the end of the day price cures all ills. Banks know this, which is why foreclosures sell for less than the rest of the market and as long as there is nothing pushing the buyer to buy and there are plenty of homes to choose from buyers are only cherry-picking. Buyers are still controlling the market although that is changing in the lower price ranges. I will, as usual, keep you informed as our market continues to unfold.

March Update

The stock market is doing well overall, interest rates are fantastic, consumer confidence is increasing and Virginia has one of the strongest job markets in the nation. There is no reason for 2007 to not be a great year for real estate. Housing inventory is at much more realistic levels compared to 2006. Those sellers that are in the market are fully aware of market conditions and not caught by surprised like some sellers in 2006. Buyers are taking advantage of the pricing corrections and all of the other positive factors in today’s market and they are very active. YTD the market has been very strong. There is no reason for that not to continue. Once the ice is gone and warmer weather appears sold signs should pop up everywhere just as they did in the warmer weather in January. Overall I look for 2007 to be a strong year with some appreciation in the spring months and flat in the last half of the year. I expect buyer demand to be greater than 2006 and the wild card is the amount of inventory that will come on the market. I do not expect to see the same amount of inventory in 07 that we had in 06. The “flippers” and the new home “specs” are gone from the market. Many of the slated condo projects are now going to remain apartments and may of the sellers who were in the market just to “catch the wave” before it was gone are out of the market. Many of the sellers who rented their homes because they could not sell it may be back but they will not be here this spring as they are stuck in 12 months leases and most only rented when the spring market was over. In 2006 every other home was a vacant house as the sellers got caught in the transitional market. (They must not read this blog!) Most of those vacant homes are now gone and the sellers currently in the market know what to expect and they have staged their homes and priced accordingly. These homes are selling. There are a fair number of foreclosures in the market; something we have not seen in the last 5 years and more will be coming. Same with relocation listings. These will have an effect on the market as they primarily compete on price. We will have to watch this trend. Overall I expect 2007 to be a great one, more in balance with opportunities for everyone.