By Spencer Marker
All my beliefs are based on the numbers that I share with you every month and I see them continuing to improve. It does not feel like the market is getting better every day but the truth is in the numbers. I believe that we will see the same trends continue as investors and first time buyers get into the market. This will keep the lower end of the market hopping. The higher end will continue to plod along but eventually we will see more and more move up buyers as the inventory gets gobbled up on the lower end. During the 4th quarter I do not see pricing changing significantly in the lower end and I expect to see some drops in the higher end of the market. There is surplus inventory in the higher end and those that have to sell will lead the market down in price. There is enough demand in the lower price ranges that will will probably not see that occur. All that being said there are some things that could set us back a bit. The first is the tsunami of foreclosures that the powers that be say is coming in the fourth quarter. I was one that underestimated the extent that the foreclosure mess was going to affect our market so I have to give credence to those that say this is coming because they were right last time. BUT, I do see our demand in our LOCAL market exceeding any other market in the country and I think these homes are getting sold now as short sales prior to them going to foreclosure. So, in the spirit of going "out on a limb" I am optimistic that we are through the worst of it and our market is strong enough to absorb what foreclosures we do get and not have them flood our market again. A lot of what is driving the 1st time buyers is the tax incentive of $8000 to buy your first home. That is slated to go away at the end of the year. It is an effective tool that is working so I would hope that it would be extended but you never know. Rising interest rates, more restrictive lending programs, inflation, even rising home values all could have an effect on our marketplace but I do not see that happening. Our local economy is strong and getting stronger, our unemployment is one of the lowest in the nation and we are one of the best areas for job creation. I am confident that the worst days are behind us and we are moving forward. As our market continues to unfold I will as usual keep you informed.
Friday, August 14, 2009
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.
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.
Monday, December 1, 2008
The Front Line
Okay folks, things are not as bad as the press is making them out to be, in the Centreville market anyhow. The number of available single family homes is at it's lowest point since January of 07! The number of single family homes sold in September (and August for that matter) are double what they were last year. All year long they have been very consistent with the 06 and 07 so I expect that to continue. The town home market is doing even better than I think that has helped in the single family homes numbers noticeably. The total number of available townhomes for sale has decreased for the 5th straight month and is almost half of what we had available September 07. In September the total number of townhomes that came under contract is more than DOUBLE what we sold last September. All year long our sales have surpassed last year's. the number of homes in Centreville that are in foreclosure or short sale status is down from the 1st quarter of the year in almost every category and has remained consistent of the past few months. This is important in that finally some of the non-bank owned homes are able to sell and those folks can move up with in the community. When a bank home sells it simply takes a home off of the banks books, when an owner occupied home sells it creates other transactions up the line as they buy another home and then that person can buy another home, etc., etc. Certainly consumer confidence is an issue but once people realize that the national numbers are far worse than our local numbers. You will see that confidence return. By the time the media is willing to report that home prices are rising the trend in this area will have been on the upswing for months!! That's why we call this column "Front Lines", because we are on the front lines of the local real estate and we will keep you informed with what is happening today.
Thursday, February 21, 2008
Beware The “Short Sale”
If you have been looking at the real estate market lately then you have seen the term "short sale." A short sale happens when an owner can no longer make their payments on a home and the sales price of the home is not sufficient to cover the costs of fully paying off all the liens on the home.
In certain circumstances the lender will agree to accept a payoff for less than what is owed and forgive the rest of what is owed on the mortgage. The key words here are "certain circumstances". The seller must be in default and the seller must meet rigid financial guidelines. If the seller is not in true financial distress and is just simply not making payments then odds are they will not be approved for s short sale. In fact less than 20% or so of short sale applicants do get approved and the process can take weeks if not months to negotiate.
While many homes are advertised as short sales and look very attractive in pricing they are in reality not going to qualify and odds are they will be foreclosed on before the process can be completed. In addition these homes are often in disrepair as any one that cannot make their payment typically cannot afford maintenance costs and they are sold as-is. Bottom line is that while they look enticing on paper they are always frustrating and typically a fruitless waste of time.
In certain circumstances the lender will agree to accept a payoff for less than what is owed and forgive the rest of what is owed on the mortgage. The key words here are "certain circumstances". The seller must be in default and the seller must meet rigid financial guidelines. If the seller is not in true financial distress and is just simply not making payments then odds are they will not be approved for s short sale. In fact less than 20% or so of short sale applicants do get approved and the process can take weeks if not months to negotiate.
While many homes are advertised as short sales and look very attractive in pricing they are in reality not going to qualify and odds are they will be foreclosed on before the process can be completed. In addition these homes are often in disrepair as any one that cannot make their payment typically cannot afford maintenance costs and they are sold as-is. Bottom line is that while they look enticing on paper they are always frustrating and typically a fruitless waste of time.
Tuesday, January 22, 2008
Fed's Rate Cut
We wanted you to be the first to know that this morning the Fed lowered the discount rate by ¾ of a percent. This is the rate that has a direct impact on mortgage rates. We expect this change to have a substantial impact on the real estate market. Already today we have seen one lender offering 5 ½ % rates with no points! We look for even more aggressive pricing as the day progress’s.
Last July when the sub prime market crashed it “froze” our market leaving many sellers lowering their prices below actual market value and creating a lot of “low hanging fruit”. We expect that the Fed lowering the interest rates will jump-start our spring market early. The lower rates and the “low hanging fruit” mean unprecedented opportunities for the “early bird” buyers.
We have all been reading tales of doom and gloom regarding our real estate market and, it certainly has been better for buyers than sellers. However, while 2007 was certainly no 2004, it was still the 4th best year on record for real estate sales.
Our thinking is that this action may be politically motivated meaning that these lower rates may not be around for long. In addition, the “low hanging fruit” we spoke of will be plucked off the market quickly by savvy buyers. Bottom line, those that act early will reap the greatest rewards.
Spencer
P.S. More good news – Northern Virginia is ranked #3 for new jobs created in the nation – this is what sustains our local market and why our market does not feel anywhere near the pain that other states are feeling. Real Estate is a local business!
We update our local market stats monthly as we compile the information – check them out on our website under Local Information/Stats
Last July when the sub prime market crashed it “froze” our market leaving many sellers lowering their prices below actual market value and creating a lot of “low hanging fruit”. We expect that the Fed lowering the interest rates will jump-start our spring market early. The lower rates and the “low hanging fruit” mean unprecedented opportunities for the “early bird” buyers.
We have all been reading tales of doom and gloom regarding our real estate market and, it certainly has been better for buyers than sellers. However, while 2007 was certainly no 2004, it was still the 4th best year on record for real estate sales.
Our thinking is that this action may be politically motivated meaning that these lower rates may not be around for long. In addition, the “low hanging fruit” we spoke of will be plucked off the market quickly by savvy buyers. Bottom line, those that act early will reap the greatest rewards.
Spencer
P.S. More good news – Northern Virginia is ranked #3 for new jobs created in the nation – this is what sustains our local market and why our market does not feel anywhere near the pain that other states are feeling. Real Estate is a local business!
We update our local market stats monthly as we compile the information – check them out on our website under Local Information/Stats
Monday, January 14, 2008
The Year In Review
What a year we had in 2007. The first half of the year was a definite improvement over 2006 as far as the number of listings that were selling. By all early indicators 2006 was going to be the bottom of the market and we were on our way up. Inventory was shrinking monthly and was 20-25% below 2006 levels. Each month we were selling the exact same or slightly more than we did in the same month in 2006. So our number of sales rose slightly in the first half but our percentage of listings sold rose noticeably.
All that came to an abrupt end in July when the sub prime mess rose it’s ugly head. Inventory spiked, sales dropped, contracts fell out, lenders disappeared and consumer confidence hit rock bottom.
By October though the shock had worn off and our number of single family home sales came back into line with last years numbers although townhomes were still down by 25-30%. This is based on Centreville stats only. This varies by county and varies within the county. (We post all the stats monthly on our web site so you can review by area by visiting www.seln4u.com.)
The average LIST PRICE for ALL single family homes sold in CENTREVILLE in 2007 dropped to 602,293 from 663,621 in 2006. For ALL townhomes it dropped to 366,140 in 2007 from 391,827 in 2006. The total number of townhomes that came under contract in 2007 dropped to 648 from 826 in 2006 and 1,278 in 2005. The number of single family homes that came under contract actually increased to 279, up from 271 in 2006 but down from 434 in 2005.
The average number of single family homes that were available on the market in 2007 dropped (this is a good thing) to 151 from 172 in 2006 but still was almost double 2005’s number of 78. Townhomes did not fair quite as well averaging 274 active listings in any given month in 2007, down from 293 in 2006 but more than double the 127 in 2005. The real disparity comes in how we begin the year in 2008. With single family homes we are starting the year with 128 active listings up only slightly from the 118 of 2007 and 112 of 2006. Townhomes however are starting with 255 active listings compared with 153 in 2007 and 170 in 2006. This is primarily due to the changes in mortgage lending and availability of no money down loans and a higher percentage of foreclosures than in single family homes. Again these numbers are for Centreville only and we will not have the overall Northern Virginia Stats available until next issue. We will post them on our website as soon as we have the information properly formatted.
Overall 2007 will go down as the 4th best year on record at the NVAR and while it did not seem like it the only reason for that was that it is compared to 2003-2005. We sold all of the homes we listed (excluding those we still have on the market) and our days on market averaged just under 41. As this year unfolds we will continue to keep you informed.
All that came to an abrupt end in July when the sub prime mess rose it’s ugly head. Inventory spiked, sales dropped, contracts fell out, lenders disappeared and consumer confidence hit rock bottom.
By October though the shock had worn off and our number of single family home sales came back into line with last years numbers although townhomes were still down by 25-30%. This is based on Centreville stats only. This varies by county and varies within the county. (We post all the stats monthly on our web site so you can review by area by visiting www.seln4u.com.)
The average LIST PRICE for ALL single family homes sold in CENTREVILLE in 2007 dropped to 602,293 from 663,621 in 2006. For ALL townhomes it dropped to 366,140 in 2007 from 391,827 in 2006. The total number of townhomes that came under contract in 2007 dropped to 648 from 826 in 2006 and 1,278 in 2005. The number of single family homes that came under contract actually increased to 279, up from 271 in 2006 but down from 434 in 2005.
The average number of single family homes that were available on the market in 2007 dropped (this is a good thing) to 151 from 172 in 2006 but still was almost double 2005’s number of 78. Townhomes did not fair quite as well averaging 274 active listings in any given month in 2007, down from 293 in 2006 but more than double the 127 in 2005. The real disparity comes in how we begin the year in 2008. With single family homes we are starting the year with 128 active listings up only slightly from the 118 of 2007 and 112 of 2006. Townhomes however are starting with 255 active listings compared with 153 in 2007 and 170 in 2006. This is primarily due to the changes in mortgage lending and availability of no money down loans and a higher percentage of foreclosures than in single family homes. Again these numbers are for Centreville only and we will not have the overall Northern Virginia Stats available until next issue. We will post them on our website as soon as we have the information properly formatted.
Overall 2007 will go down as the 4th best year on record at the NVAR and while it did not seem like it the only reason for that was that it is compared to 2003-2005. We sold all of the homes we listed (excluding those we still have on the market) and our days on market averaged just under 41. As this year unfolds we will continue to keep you informed.
Wednesday, January 2, 2008
Fair Market Value
What is the best price for a piece of real estate? Mortgage lenders, appraisers, and real estate brokers use what is called the "fair market value" (FMV). FMV has been defined as "the price that a buyer is willing to pay and the seller is willing to accept, when both parties are knowledgeable about the property and neither is under any time pressure to buy or sell". Sounds great, but how is this price determined? The starting point for determining a fair price may be an opinion of the value or "comparative market analysis". Such an analysis uses information on similar properties which are: 1) currently for sale, 2) already sold, or 3) expired properties (those which did not sell). Local, national and international trends and market conditions must also be evaluated.By comparing similar properties in each of the three categories and the market conditions, appraisers, lenders and agents come very close to the maximum price that buyers would be willing to pay for a house.
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