January 2006 Article History

There are 18 articles published in January 2006. Here are the first 20:

An Agent Bubble? Loudoun County Sold to List Price Ratio Loudoun County Price Volatility Real Estate Appreciation Rates Loudoun County Annual Appreciation Rates Loudoun County Average Days On Market Loudoun County Market Trends Loudoun County Inventory Trend

Loudoun Buyer Intensity Index Loudoun County Buyer Intensity Index New Real Estate Blogs Perspectives: No Sooner Said Than Done Advice For the First Time Home Buyer Give Me A Real Estate "Bubble Break" A Real Estate "Me Too" Business Idea Loudoun Market Update-December 2005 New Construction Sales Trends NAR Economic Forecast

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

January 30, 2006

Inman news recently ran an article about Nate Summer's Marin Market HEAT Index™. Nate is a broker in Marin County, California. Discovering his work was timely as we were also investigating the use of indicators to help identify market conditions. We concluded there was a simple relationship between how many properties are being sold and how many properties are for sale at any given point in time.

Nate's Market HEAT Index™ Website is here and he provides a discussion on how the index is used. He also has the ability to view the index by cities or price ranges.

Our application of his index to Loudoun County has a couple of tweaks but the math behind it is similar. See a full graph of the application here. We used all property types in our application (single family, townhouses and condos). A future project will be to add selection criteria for location (towns and zip codes?), property type and price range. More tools to be able to give our clients the absolute best advice based on real data.

Our next article will discuss the development of our own version of the Market HEAT Index (Loudoun Buyer Intensity Index) and show why it might actually show more.

Comment on Loudoun Buyer Intensity Index. Follow this article is off. More articles like this one filed in: Loudoun County Market News

The Loudoun Buyer Intensity Index (Loudoun BII) is simply an indicator of buyer intensity at any point in time (monthly). Positive index values means more property is being sold than there are active listings. Negative index values means fewer properties are being sold when compared to total active listings. Values close to zero indicates a relatively balanced market; number sold is close to number active. An out of balance condition exists when the difference between sold and active is greater than 25% of the number of actives or when the difference is less than 20% of the number of total actives. Hover on data points to view values.

RED Columns: HOT - Strong Seller Market, buyers need to be aggressive. BLUE Columns: COLD - Strong Buyer Market, buyers can be selective and negotiate. Gray Columns: Balanced Market, buyers and sellers are on equal footing.

The Loudoun BII is an adaptation of Nate Summer's Marin Market HEAT Index™. He describes it as

"an indicator of the intensity of buyer competition for listed residential properties at the current time, a snapshot of conditions. Higher numbers indicate more buyer competition for each home on the market; lower numbers mean less intense, lower levels of buyer competition for each listed home. This measure includes single family homes and condominiums (other types of real estate are excluded)."

Our modification gives an index value of positive and negative numbers that makes it visually more intuitive. Note the following:

• The initial Loudoun BII includes all property types (detached, townhouses, condos, and new construction).
• New construction data is historically unreliable as entries into the MLS are often made after settlement (never appear as active). Future indexes will exclude these.
• The Loudoun BII thresholds are +0.25 (red columns) and -0.2 (green columns) respectively. A balanced market is indicated by the gray columns.
• We include the two lines on the chart above to illustrate the relationship of SOLDS to ACTIVES.
• The Marin Market HEAT Index is a trade mark of Nate Summer.

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January 26, 2006

I am Pleased to announce two of the newest real estate blogs to join the "Real Estate Innovators." First is Mollie Wasserman and Talking Massachusetts Real Estate. Mollie is my inspiration for all things about "Real Estate Consulting."


The next is Jean Scott and the Bragdon Coastal Real Estate Times. Jean is in the process of re-thinking the entire real estate business model, taking on a new look, aggressively marketing against stiff competition and preserving a 100 year old tradition and brand.

Our kudos to both these innovators for having the courage to continue to reinvent themselves to maintain the competitive edge in a tough marketplace.

I know my friends in the Blogosphere will visit and offer their encouragement!

My thanks in advance!

Comment on New Real Estate Blogs. Follow this article is off. More articles like this one filed in: Blogging

January 20, 2006

Get this: I just published an article an hour or so ago about Inman News using drastic terms in headlines to introduce market data for San Francisco. I called for some reasonable perspectives. Well, a few miutes ago I received this notice about a new Inman article as follows:

'Normal' real estate market not bad news

Perspective: End of boom offers benefits, opportunities
Friday, January 20, 2006
By Marcie Geffner

Many savvy real estate executives around the country aren't dismayed by the prospect of a slower housing market this year after the unprecedented housing boom of recent memory. In fact, many of these executives are even eagerly looking forward to quieter times that will allow them to regroup, rebalance and, at long last, perhaps even relax.

This positive outlook is a reasonable response to a "normalized" market that is characterized not by rapidly rising house prices, dozens of offers for every for-sale house and a frenetic pace of doing business, but rather by modest home price appreciation from year to year, negotiation between buyers and sellers and a manageable pace of business. Yet sadly, a lot of the good news about today's housing markets has been buried in negativity about the outlook for the future as compared with the past. Here are some positive points to ponder...

[Ms. Geffner is a real estate reporter in Los Angeles]

Read the whole article here.

How refreshing!
[I really don't think their article had anything to do with little ol' me.]

Comment on Perspectives: No Sooner Said Than Done. Follow this article is off. More articles like this one filed in: Market Conditions (with charts)

I received this great question from a reader who appears to be contemplating her first home purchase. I thought it was timely because of the current level of uncertainty in the real estate market. It is important enough to bring to the front page. My response is also included.

I've managed to save up roughly $37732 in my bank account, but I'm not sure if I should buy a house or not. Do you think the market is stable or do you think that home prices will decrease by a lot?

Here are my thoughts:

That's a great question and one every first time home buyer should ask. I wish we had a crystal ball and could predict the future. We don't, but here's what we do know:

1) The national economy is still expanding with some geographic areas doing better than others. In the DC Metro area jobs are being created at a rapid rate and the predictions are that it will continue to do so for some time (barring some national disaster). Job growth creates housing demand. For the last several years, builders have not been able to keep up with the demand.

2) Average home values in our area have risen nearly 100% in the last 5 to 6 years. It cannot continue that trend because when home ownership becomes less affordable, people quit buying and as a result, prices are forced to moderate simply due to supply and demand.

3) Real estate investing has been red hot (buying and flipping is estimated to be 25% of the current market). The easy money days (we believe) are gone and many investors are trying to get out at what appears to be a market top, inflating inventory.

4) All the "bubble talk" is causing purchasers to be cautious and buying has slowed.

5) Although current mortgage rates are still historically low, they most likely will continue to rise. This will have a moderating effect on the market.

6) The result is a greater supply of homes for sale (inventory).

So, all indicators are that the market will slow, less hysteria, more reasonable housing availability and a more rational market. Prices may decline. The may continue to rise. We don't think it will be extreme in any case.

Here are my final thoughts. Home ownership is part of the American dream, always has been and will continue to be. Over the long range, home prices continue to rise. As in any free market, there are short periods of fluctuation both up and down, but the long term trend is up.

You should want to purchase a home for the right reasons; a place to call your own, your personal sanctuary, your desired lifestyle and maybe your privacy and your ability to make your home an expression of who you are. The other major reason is the obvious tax benefits. I look at it as the government helps us make our house payments because of the interest and property tax deduction.

We always look at a home purchase as an investment. It is basic human nature to do so. On the other hand, buying property is not like buying stock. Companies can evaporate overnight as you know. Property values may go up and down, but you will always own something tangible.

My advice: If you want to own your own home, determine what lifestyle you desire, what you can afford and where you want to be. Then, contact a reputable Realtor® to help you get the best possible deal. This may be a great time to be in the market. There are more choices and sellers are more willing to negotiate.

I hope this is helpful. Send us an email if you want to discuss this offline. Thanks for visiting!

Comment on Advice For the First Time Home Buyer. Follow this article is off. More articles like this one filed in: Buying & Selling Real Estate , Real Estate

Here are some excerpts from an Inman News article from yesterday (1/19/2006):

S.F. Bay Area real estate sales dive

Median home price falls $16K from previous month

The median price paid for a Bay Area home was $609,000 last month. That was down 2.6 percent from November's record high of $625,000, and up 14.3 percent from $533,000 for December a year ago.

The annual price increase was the lowest since prices rose 13.1 percent to $474,000 in March 2004...

...A total of 9,347 new and resale houses and condos were sold in the region last month, down 3.8 percent from 9,717 for November and down 15.5 percent from 11,068 for December last year, DataQuick reported.

Let's put this into perspective:

• Interest rates are going up (but still at historical lows),
• Appreciation has been nothing short of fantastic the last few years,
• Real estate gains are outpacing wage gains,
• Affordability is at an all time low and
• Headlines such as these: "Prices Dive" and "The Bubble is Breaking" are causing buyers to have second thoughts.

A $16,000 decline in aveage price in one of the wealthiest and high priced cities in the nation is hardly what I would call a DIVE! What does one expect? Double digit appreciation forever? Markets adjust. It is about time.

Give me a break and lift the fog on market perspectives!

Comment on Give Me A Real Estate "Bubble Break". Follow this article is off. More articles like this one filed in: Market Conditions (with charts) , Opinions

January 12, 2006

Have you seen the $1,000,000 home page? If not, view it here. A bright idea that has earned a British college student over $1,000,000.

Then, guess what? Knockoffs. Another bright person is offering pixel real estate with a $1,000,000 real estate home page. What is this all about? Buying pixel real estate for advertising our business. Take someone Else's successful idea and apply it to a different or targeted audience. Will it succeed? Maybe. Not with this real estate agent. I prefer to get my business from past clients, people that are referred to us from past clients, people that get to know us through our website or blog and/or people that understand we have a different, value focused business model.

We get several emails a day from people marketing their next big, successful real estate marketing tool. Everyone seems to be marketing how they can teach us how to make a million. It may work...it probably won't. We believe that delivering honest, straight forward personal perspectives on the business of real estate is the most powerful tool to attract clients. Our service delivery and candid advice keeps them.

Looking for an agent? Check out the next big "me too" marketing ploy. Or, you can select one based on what you might know about them and their real value proposition.

I won't be buying pixels anytime soon.

Comment on A Real Estate "Me Too" Business Idea. Follow this article is off. More articles like this one filed in: Opinions , Real Estate Technology

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 and Trend Charts (see sidebar). December reports from The Northern Virginia association follows:

Housing Reports | December 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.)

The dramatic inventory rise continues to reverse course. Open the Loudoun PDF file above. Here are the significant highlights:

• Sold and Under Contract (Pending) housing units exhibits a sharp uptick.
• A seperate data extraction shows New Construction closed sales almost always doubles in December (see New Construction Sales Trends graph). 24% (171 of the 710 closings) of the closings in December were New Construction sales.
• The average sales price is influenced by the New Construction closings (New Construction prices are typically higher as builders are selling more homes in the $750,000 and up range).
• Average Days On Market is down by 10 days also influenced by New Construction closings as most of these are posted in the MLS after the fact with 0 days on the market.

History shows a downward trend in January of each year after the December surge. This trend should repeat itself this month with a decrease in units sold.

At our monthly brokers meeting this week, agents are reporting more buyer activity. It remains to be seen if this turns into ratified contracts this month.

Here's the latest from our local association:

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

Comment on Loudoun Market Update-December 2005. Follow this article is off. More articles like this one filed in: Loudoun County Market News

January 9, 2006

The official December, 2005 results for Loudoun County should be released in the next 24 to 48 hours. Based on our preliminary analysis there appears to be a significant increase in December units sold. Subsequent analysis shows that for the last three years a significant increase in new construction settlements occur in December. We created yet another chart showing these trends at New Construction Sales Trends (also available as a link in the sidebar). This chart shows the number of monthly units sold and the average monthly sales price. Also of note, The average sales price increased 80% over the three year period to a whopping $800,000. Where is the affordable housing in the county? Certainly not in new construction. Even new town homes are approaching a half million dollars!

Comment on New Construction Sales Trends. Follow this article is off. More articles like this one filed in: Loudoun County Market News

January 8, 2006

The National Association of REALTORS® (NAR) recently published their forecast for 2006. A record real estate market? No. A melt down? No. "The real estate boon is showing signs of slowing" but, "what we are calling a slowdown is really a stellar market by any measure." They are saying because the US economy remains strong, we will have another strong market for real estate. Here are their forecasts:

National Averages	Inflation Rate	GDP	Jobless Rate	30 YR Fixed Rate	Appreciation Rate	Existing Home Sales	New Home Sales
2004	2.7%	4.2%	5.5%	5.9%	9.3%	6.8M	1.2M
2005*	3.4%	3.5%	5.1%	5.9%	12.4%	7.1M	1.3M
2006**	2.7%	3.8%	5.0%	6.5%	5.3%	6.9M	1.2M

*Estimated **Projected

In our local market, we might fair better than most See More Real Estate Market Data. We remain cautiously optimistic.

Comment on NAR Economic Forecast. Follow this article is off. More articles like this one filed in: Economic Forecasts , Market Conditions (with charts)

January 6, 2006

I just can't resist anything that has "Bubble" in it! The latest bubble talk from Inman News:

Opportunity grows in slowing real estate market

Big brokerages may benefit as smaller companies sink or sell
Monday, January 02, 2006

By Glenn Roberts Jr. Inman News

Excerpt...
There is no "real estate bubble" in store for the industry in 2006, said Brent Bonine, executive director of sales and marketing for Buffini & Co., a coaching company for real estate professionals. "However, we do see a 'real estate agent bubble.' The increase in licensed agents has outpaced the number of units sold for the past few years," he said. [I'm sure he means on a percentage basis]

A rapid pace in real estate sales and price-appreciation that has sustained agents during the real estate boom, Bonine said, but that equation is changing. "As the pace of deals slows and prices settle to normal, agents with low production will be squeezed out of the market," he said.

There is a graying population of real estate agents who are looking to reduce their workload or retire, and Bonine said he expects a stream of experienced and low-producing agents to leave the business as the market settles down. In this fallout is an opportunity, he added.

"Real estate agents who can articulate their value to their clients and who serve their clients will see an increase in market share as the consumer begins to demand more from their agents," he said...

How true it is...

My next charting project will use "Bubble Charts!"

Comment on An Agent Bubble?. Follow this article is off. More articles like this one filed in: Real Estate

January 5, 2006

Sold Price as a percent of List Price. Hover on data points to view values.

Comment on Loudoun County Sold to List Price Ratio. Follow this article is off. More articles like this one filed in: Loudoun Sold Price Ratio

Six (6) years of average price data for Loudoun County, Virginia. The red bars measure absolute change in price (volatility) and is an indication of market instability. Hover on data points to view values.

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January 4, 2006

NEW: Six years of home value appreciation rates for Loudoun County, Virginia (2000 thru 2005). Click here for a full page view. It's an amazing story and no wonder property owners are cashing out and moving up. We welcome comments, questions and/or suggestions on the data being provided.

Note: Adding too many charts to the main page slows the load time. We will work on creating convenient navigation to all the charts.

Note: As of April 2006 all market data and related charts moved to Market Trends.

Comment on Real Estate Appreciation Rates. Follow this article is off. More articles like this one filed in: Loudoun County Market News

Six years of data displayed is based on the average sales price for all residential property types each month as reported by the MLS for Loudoun County, Virginia. Cummulative Appreciation uses January, 2000 as the base with a starting value of zero. Monthly % Appreciation is either (+) or (-) representing an increase or decrease in appreciation for the month. Year to Year Appreciation is the difference in appreciation over a twelve month interval calculated monthly. The chart to the right shows the Average Yearly Appreciation for each year (Blue line below).
Hover on data points to view values.

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Average number of days homes are on the market from list date to ratified contract by month. An indicator of how long it takes a home to sell in the current market. Hover on data points to view values.

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January 3, 2006

Note: As of April 2006, all the market data was moved to Market Trends instead of the sidebar.

New for 2006! We put 6 years of market activity in the sidebar. These supplement the sidebar SNAPSHOTS and illustrates the dramatic volatility over the the last several months of 2005. Full page views always available. Click here. Stay tuned. More to come...

Comment on Loudoun County Market Trends. Follow this article is off. More articles like this one filed in: Loudoun County Market News

Loudoun inventory trends include active listings, homes sold and net new listings. Hover on data points to view values.

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