December 2005 Article History

There are 15 articles published in December 2005. Here are the first 20:

Loudoun Market Update-November 2005 Movable Type 3.2 Under Construction in Raspberry Falls UNOFFICIAL November Data Featured Daughter

Looking Back | Bubble Trends Appraisals in a Softening Market Builders Offering Incentives HomeGuide123 My First (and last) 2005 "Quickie" Consequences of Bubbling Evolution of a Real Estate Blog 92,000 Home Shortfall More Real Estate Market Data Charming Colonial | Lovettsville, VA

You will find a complete Index of Articles by Category in the History Archives.

December 31, 2005

Fusion Charting Loudoun County 2003 - 2005

Several weeks ago I said I would provide trend charts for the sales statistics for Loudoun County. They are finally here for 2003 through 2005. First, a note about the requirements for your browser to view them: Now, some explanations about the charts:
You can draw your own conclusions about what you see. There are definite patterns, especially in the inventory charts. Buyers started disappearing last July and sellers were on a listing frenzy from last March to September (notice the sudden downturn). The result: a huge inventory bubble, almost twice anything we have ever experienced before. It appears to be moderating with the December data but it is too soon to really tell.

Another interesting pattern is the Days on Market is back to what it was at the beginning of 2003. The Average Sale to List ratio (%) has dropped 3% from a peak last March.

What does all this mean? For one, the volatility the last nine months has been significant (see the wide swings in Momentum). There are many rationalizations to try to explain what is happening and I have given several of them in previous articles. What is important is to look at the past and try to make some judgement about the future. This we do know: The Washington Post has another lengthy Real Estate Market article today that can be found at No Magical Answers. It's a good article and the author has some great lines like:

In the first half of 2005, prices appeared to be swirling almost out of control, as eager buyers bid up the prices, waived their rights to home inspections and even penned pathetic little notes pitching themselves as the most attractive purchasers to picky sellers who acted more like they were giving a child up for adoption than conducting a real estate transaction.

So, this is my final Hurrah for 2005. Market dynamics are intriguing. I'll keep watch and these charts will evolve over time. The second version is on its way charting the last six years (2000 through 2005) with some moving averages and other fun stuff. Also, these will be updated monthly, probably add a month and remove the oldest. Other things I have in mind is to be able to slice these by various time and market segments (such as zip code and price range).

Its been one heck of a year for Pam and I. We enjoyed it immensely. We hope you have enjoyed our blog. I think it is here to stay.

Happy New Year!

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Finally got a ratified contract. Maybe you offered closing cost assistance. Maybe you had to accept a lower offer to get the contract. Done? No. The buyer's lender will order that dreaded appraisal and everyone hopes it comes in equal to or higher than the negotiated price. Boom! Bad news. The appraisal is substantially lower than anyone expected. What happened? And, what can you do?

1. You can renegotiate the price and hope the buyer has some extra cash to make up any difference.
2. Bite the bullet and agree to the appraised value as the selling price. Just how desperate are you to sell?
3. Don't negotiate. Void the contract and start over (the buyer may have already done this.)
4. Challenge the appraisal. But, you have to back it up with comparables that the appraiser didn't consider. The buyer and seller have to be pretty motivated to get the deal done.

You probably got into this situation for a couple of primary reasons: your agent didn't get the comps right in the first place or you weren't being realistic (as in greedy) and thought you should get what your neighbors got 6 to 12 months ago regardless of what your agent presented. On the other hand, the appraiser flat out missed it (go back to #4 above). Sellers have to realize that markets change. Competition changes. Buyers wants and desires change.

There are a few ways to avoid this disappointing turn of events. Make sure your agent shows you the detail and the comps are recent and closely aligns with your neighborhood or at least the type of property within the general area. Next, since the local market started slowing a few months ago, we recommend spending the few hundred dollars to get a pre-listing appraisal. This becomes another data point for you and your agent to consider. Also, temper your expectation. You most likely have a generous tax free gain (called equity). It is still a GAIN (not a LOSS) even if the market is not as generous. The absolute worst behavior is to be unrealistic, set your price too high and sit on the market for weeks and months without even a showing or an offer.

There is another good article in the Washington Post this morning about "Appraising a Shifting Market."

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If you have been putting off buying that "new home," now may be the time to get a better deal. We've noticed an advertising trend by builders offering incentives to both buyers and agents alike. Up until this year, builders wouldn't even negotiate. Since about July when the market started to soften incentives started crawling out of the woodwork like a trail of ants after the sugar. The most extreme was the email ad for 6 months builder paid mortgage and 6% commissions to agents that brought buyers and closed before year end (we commented on this one several weeks ago). Here is an excerpt from an article published in the Washington Post this morning:

Facing Weaker Home Sales, Builders Sweeten Deals

Freebies Include Mortgage Help, Televisions

By Sandra Fleishman Washington Post Staff Writer Saturday, December 31, 2005; Page A01

Home builders around the region are luring would-be buyers with freebies worth thousands of dollars, in an attempt to prop up sales in a slowing real estate market.

Pulte Homes Inc. is offering a 42-inch television, free heat for six months or a $5,000 check for window coverings to some buyers. Ryan Homes will finish the basement free. NVHomes will throw in a golf club membership in some developments.

"Incentives are definitely on the rise," said Kenneth Wenhold of real estate research firm MetroStudy. He estimated that since July, when the market began to soften, buyer traffic at new-home projects has fallen off 30 percent and so have contracts. "With all the inventory, buyers now have more choices." ...

The number of homes for sale in the Washington area has more than doubled since last November, according to figures from the area's multiple listings service. The last time the Washington region had this many houses for sale was the late 1990s, before low interest rates and a growing job market fueled the years-long boom in home sales.

During that boom, even while houses and condos sold as soon as they came on the market, builders sometimes offered limited year-end deals. They have also routinely given buyers a break for using approved lenders or title companies. But those incentives were nothing compared with what's going on now.

Among the deals showing up in ads and sales offices are upgrades to gourmet kitchens, six months of mortgage payments, a year-long lock on interest rates and tens of thousands of dollars toward closing costs. Many of them have been promoted as year-end or holiday specials.

In the Washington area, incentives can amount to as much as 5 percent of the sales price, according to Daniel Oppenheim, an analyst with Banc of America Securities. One problem for builders, he said: Investors who bought recently are reselling to cash out.

"All of a sudden the new-home builder is not only competing with the resale market but with the exact same home they just completed," Wenhold said.

Read the full article here.

It is reported that over 25% of the new homes homes sold in this region the last two to three years were bought by investors looking to make a quick profit. There are an abundance of these homes now on the market by those that couldn't get out soon enough. Bad news for sellers. Good news for buyers. Many of these can be had at a steep discount.

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Once in a while we run across a web resource worth noting. We found this one called HomeGuide¹²³.com. I was somewhat impressed with the breadth of content, organization, cleanliness and no ads. Just straight forward information from lawn care, landscaping, flooring and heating/cooling to remodeling, satellite TV, loans and swimming pools. It is like a mini encyclopedia for the homeowner. Here's an excerpt from the home page:

HomeGuide123.com was designed by a staff of individuals who understand how important—and expensive—home ownership can be. Our team believes in providing our visitors with the most practical, up-to-date home care information possible so that they can protect their investment. HomeGuide123.com's writers and developers have designed a comprehensive, user-friendly directory containing articles, tips and additional resources dealing with a wide array of topics, such as home improvement, services and remodeling. Our articles are original, thoroughly researched and written with a homeowners needs in mind. We will continue to improve this resource to better serve our visitors, so we welcome their comments and suggestions.

The publishers are rather anonymous. Whoever they are, they are attempting to do a good thing. My only criticisms are the lack of depth in some areas (although, this is not necessarily a "How To" site for the do-it-yourself crowd) and they reference other web resources with URLs that are not linked for navigation. It is organized like a blog but doesn't have the features of a blog.

There has to be a financial motive here somewhere but, I can't find it. There's a Resource Section but it doesn't appear to be financially driven.

Might want to check it out.

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December 30, 2005

----><----START THE MUSIC!
The last settlement day of the last week of the last month of the 2005 year. The settlement companies should be clogged today with end-of-year closings. How many buyers took advantage of the new home builders incentives that required closing by 12/31/2005? It looks like quite a few. In anticipation of getting to the Market Snapshot preview next week, we pulled some data from the MLS for December to see what the trend looks like. There are some surprises! Here's what we got:

---

Market "Quickie"

Loudoun County | Residential (Homes)
December 29, MTD 2005		Trend ←↑↓→	Sell	Buy
■   Avg Sales Price	$569,946	↑	■	■
■   YTD Avg Price	21.5%	↑ ↑	■	■
■   New Listings	469	↓ ↓	■	■
■   Active Listings	2,370	↓	■	■
■   New Pendings	262	↓	■	■
■   Number Sold	557	↑	■	■
■   Weeks Backlog	12.4	↓	■	■
■   Days on Market	38	↓ ↓	■	■
■   % of Sales Price	97.6%	↑	■	■
■   New Construction Homes Settled	190	? ?	■	■
Our Opinion: Extreme Market Volatility
Market Momentum: Volatile
Price Momentum: Volatile

---

What is difficult to interpret in these numbers is the impact of new construction sales. Introducing new variables begs for further investigation into the past to be able to judge the current. (I hate it when I do this to myself because it gives me more research to do. If I had more automated access to the MLS data base, it would be a lot easier.) New construction is rarely put into the MLS until closing significantly impacting days on the market because it is input as zero days. Also, the sold price is usually higher than the list price. List price is the basic home. Closed price adds all the options.

Barring a technical disaster, I will have some more surprises posted by tomorrow evening (I have been working on keeping a personal commitment to keep this site up to date with new content). Check back.

In the mean time, wishing all of you a Merry Christmas (or Happy Holiday as the case may be) and a Healthy, Prosperous New Year! May all your BUBBLES stay full of gas.

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December 24, 2005

The Washington Post published a huge article in last Sunday's Business section titled "Agents Aplenty." The last few years of real estate easy money attracted all sorts of people into the real estate business. We used to have more agents than listings. Now we have more agents than buyers. What will happen? Many, many of these relatively new to the business will drop out. There's just not enough business to go around. The established agents will still thrive on their experience and reputation. Those with a differentiating value proposition will be OK and probably grow. Those that lack real business experience and don't understand marketing will not be able to make it.

In my opinion, this is a good thing. There are way to many in this business that shouldn't be in it! We've rambled before about our experiences with clueless and/or unethical agents that we have come into contact with.

We wish no one ill will. But, a shakeout will be good for our industry. The consequences of market dynamics and bubbling.

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I just responded to a set of interview questions posed by Dustin at the Rain City Real Estate Guide about our blog. His insightful questions caused me to think about how we got started, why we do it and where it might go in the future.

There are many reasons to blog. One of the most significant is to get exposure for your clients, your selves and your business. When Pam and I formed our real estate partnership in July of 2004 no one knew who we were (past clients knew Pam since she has been in the business several years) or what we stood for as a new business entity. We knew we had to be different to differentiate ourselves from the crowd. We created new business models, developed a unique website and started marketing. Then, we discovered the power of the blog.

When we started blogging last March (2005) we had no idea where it would take us. We had to learn a new way of thinking, learn new techniques, learn new technologies and discover a lot about ourselves. Blogs take on the personality of its owners. Blogs thrive or die based on the content and the frequency of publishing it. Blogs let you reach people you otherwise wouldn't reach. Blogs have a global reach and can be read like news (that's what Really Simple Syndication, or RSS is all about).

Since we are coming to the end of our first full year in business together, I thought it would be interesting to see from a trend standpoint the growth of our following. These were taken directly off our blog server stats:

Jan 2005

Feb 2005

Mar 2005

Apr 2005

May 2005

Jun 2005

Jul 2005

Aug 2005

Sep 2005

Oct 2005

Nov 2005

Dec 2005

(Orange: Unique Visitors, Yellow: # of Visits, Blue: Page views, Turquoise: Hits, Green: Bandwidth in MB)

There's a Really Simple Concept here (I call it RSC). The more valuable the information we publish, the greater the following, the greater our personal exposure and most importantly, increasing exposure for our clients.

When we advertise in the print media we have no idea who really looks at our ads. We know almost instantly how many people view our blog articles. Blogging is a very powerful tool when used wisely. It takes a lot of thought and hard work. To be really effective, blogging needs to be consistent. It takes a commitment. Bloggers must have tremendous stamina. Blogging stimulates creativity. It's a marathon with frequent sprints. Blogging must come from the heart.

We are honored to have created a following that is growing at such a rapid pace.

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December 15, 2005

Everywhere we look we are getting the same forecast: The D.C. Metro area has a strong growing economy and a constant shortage of homes. If these forecasts are correct, the housing market and prices should remain firm for some time to come. The most recent predictions come from a study by the Metropolitan Washington Council of Governments and published in the Washington Post this morning:

Planning Body Foresees Housing Shortfall

By Bill Turque
Washington Post Staff Writer
Thursday, December 15, 2005; Page B08

...
In its latest round of regional growth forecasts, the Metropolitan Washington Council of Governments said that while the area's economy will generate about 1.6 million new jobs by 2030, current building patterns would leave a shortage of about 92,000 homes.

COG, composed of representatives from the area's local governments, studies regional issues such as transportation, housing and population. It issues periodic reports based on data provided by member jurisdictions. This latest, called "Round 7.0," predicts that the region's population will grow by about 2 million over the next quarter century, reaching 6.6 million by 2030.

Housing supply has lagged behind job creation in the region. In Fairfax, for example, the number of jobs rose from 404,000 to 533,000 during the 1990s, according to county figures, while the home supply increased by less than half that amount.
...
Most of the new jobs the council predicts will come to the area would be in fields such as engineering, data processing, business services and medical research. But the report calls the numbers projections and points out that economic and market conditions can change. COG's data include part-time jobs, consulting jobs and positions not covered by unemployment insurance...

Staff writer Lisa Rein contributed to this article.

Read the entire story here.

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December 14, 2005

I found this article published by David Howell, managing broker of the McLean office of McEnearney Associates, Inc. The snippet below is commentary about a presentation by Dr. Stephen Fuller, a noted professor of public policy and head of the George Mason University Center for Regional analysis, to the Northern Virginia Association of Realtors® Economic Summit in September.

We have often quoted Dr. Stephen Fuller of George Mason University, a true visionary about the DC economy. At the recent Northern Virginia Association of REALTORS® Economic Summit, Dr. Fuller focused on this area's incredible job growth as one of the major reasons to remain optimistic about the long-term health of our real estate market. As an example, the DC metropolitan area has created 287,000 net new jobs in the last five years - half of which were created in Northern Virginia. In just the last year, 84,500 new jobs have been created. And here's the real impact of those new jobs on housing: the jobs created 53,000 new households, but builders are only capable of building about 28,000 new housing units - homes, townhomes, condos and rental apartments - per year. Because of the shortage of affordable housing close-in, many of those new households have headed up and out - to the ex-urbs. Dr. Fuller projects a continued and growing shortage of housing units, and that long-term shortage will continue to mean good news for sellers. As long as we continue to see strong job growth, fueled first and foremost by the engine of federal spending (Northern Virginia gets half of every federal dollar spent in the region), we will continue to have a healthy real estate market.

Over the last 27 years, the average annual price appreciation in this region has been 6.9%. Both we and Dr. Fuller expect to see appreciation rates closer to that long-term average - perhaps 7% - 12% per year for the next decade.

Read the full article here. Also, download the Fuller presentation here (PDF file 840KB, for those that like the numbers before bedtime).

Dr. Fuller presents the numbers that back up the statements I made recently about the future of the Northern Virginia market driven by job growth and housing shortages.

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December 10, 2005

SOLD | 3 BR Colonial | Lovettsville, VA
Meticulously kept home in quiet, established neighborhood within walking distance to new Lovettsville Town Center. 3BR, 1.5 baths, great kitchen w/breakfast room. Rec room in basement. Loads of shelving/storage space. Big fenced yard w/patio and shed, porch front and free standing gas fireplace in living room. A home to be enjoyed in every season. Minutes to MARC train.

SOLD at $384,900

Map it! | VisualTour | Flyer (PDF)

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December 9, 2005

All the market data; all right here. "Official" market stats were published yesterday by the various regional associations. We focus on extracting data for Loudoun county for our Snapshots (see sidebar). In addition, we are now picking up data from the Northern Virginia association as well. They publish compact, informative market overviews for the following:

Housing Reports | November 2005 | Single Family Detached Homes

• Fairfax County
• Fauquier County
• Loudoun County
• Prince William County

(Each of the above links will open a 1 page PDF file.)

So, here is what we see (obvious). Sales are still sluggish. It appears the dramatic inventory rise is reversing course. Open the Loudoun PDF file above. I notice a couple of interesting trends:

• Even though sales are now sluggish, we are about on par with 2004 settlements for the year.
• There is a phenominal value shift in price ranges. More at the higher end. Sellers are extracting equity from the rapid rise in prices the last few years. And, there are buyers in significant numbers in the upper ranges.
• The luxury market (over $750,000) shows the most significant rise in activity, over 150% in all categories.
• Sellers below $500,000 are being hit the hardest. Add another dimension to these reports to see what is happening to the condo/townhouse market. [Actually these are available but we are in data overload now. I'll pull these at year end.]

I wish I could put my 3-D chart glasses on and line these monthly reports up to see the month-month changes in the various price ranges. [Actually, I am working on creating a data base with flexible data extraction methods so we can pull the data and trends however we (or you) want to.] So many ideas, so little time.

The most frequent question we get is: "What's it going to look like next spring?" The answer: "I wish we had a crystal ball." Prediction: should see an uptick in activity after the first of the year.

Our advice to sellers has not changed: do whatever is necessary to make your properties show their best. The most pristine homes sell quicker and for more money. See our recommendations at Property Presentation.

Buyers: be selective, be patient and negotiate. You now have the advantage. Might be time to make your move.

Here's the latest from our local association:

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The above table for Loudoun County includes "All Property Types."

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December 5, 2005

We just installed MovableType 3.2 and are developing Websites and Blogsites. What an improvement. Our main Website Choice3 Realty and the Northern Virginia Real Estate Guide were built on Version 3.11. Over the next few weeks we will be converting to Version 3.2.

What does this mean to you. Maybe not much. If you like what you see and read you will come back often. If not...we need to do a better job communicating. To us it means building better, faster, cheaper with more flexibility!

More to come soon...

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Building Websites and Blogsites have become my passion right after real estate. We are building this website and blog (Forum) for our community. Check it our at Raspberry Falls. Every community should have one. Don't you think?

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It is very interesting to watch the market the last few months. Some say bubble bursting. Some say moderation. You be the judge. The UNOFFICIAL market data for Loundoun County is now in the sidebar.

Comparing November to October yeilds some interesting trends. Solds are down by 200 units but new listings are down dramatically, from 1,302 to 794! Active listings declined by nearly 300 units. Average sold price is still up 15% for the year while the average days on market rose to 47 days for sold listings.

The average sold price is down from last month but still 15% higher from the first of the year. Condos and townhouses are starting to move.

I said it before: The Loudoun market is past it's peak and is normalizing. Price appreciation will continue to erode until the fear of buying at the top subsides. We will probably not see double digit year to year price increases as we have the last few years. Supply and demand still drives the market. The regions economy is growing, new jobs are being created at a brisk pace and there is still a shortage of housing inventory across the entire region.

If you have owned a home for more than 2 to 3 years, you still have plenty of appreciation.

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Moments like these...

PHOTO JOURNAL

Photo by: Martha Rial / Pittsburgh Post-Gazette (12/5/2005)

(click photo for larger view)
Carnegie Mellon University junior Karen Forney adjusts a costume she designed for fellow student Pauline Law, who was playing the role of Charles Darwin yesterday in Forney's art project titled "The Temple of Science" on the steps of Mellon Institute in Oakland. Ms. Forney, a sculpture major, was assigned to make art in a public space for an Art in Context class. Ms. Forney chose historical scientific figures to explore the relationship between science and religion. Also helping Forney were, from left, CMU students Hetal Choxi as Galileo, Anne Catalano as Albert Einstein and Sarah Crosskey as Louis Pasteur.

...makes mom and dad very proud!
Pittsburgh Post Gazette

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