March 2006 Article History

There are 15 articles published in March 2006. Here are the first 20:

Buyer Intensity for Fairfax County, VA Fairfax County Buyer Intensity Index Hot Real Estate Commission Debate Loudoun Market Update-February 2006 Loudoun Average Home Price Drops 6.6%

ABC Values™ Previews on the Web One Year Real Estate Blogging Anniversary Blog Visits Blog Favorites Blog Page Views Blog Search Engine Referrals Measuring Real Estate Market Strength Loudoun County March MTD Market Activity Where is Loudoun Going? 3 Virginia Real Estate Bloggers, 3 Perspectives

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

March 30, 2006

RealEstateABC.com launched their own home valuation tool free for consumer use just a few weeks after Zillow announced their beta site. Called ABC Value™, it operates on the same principles, namely public records and recent sales. I find it easy to use and I particularly like the easy way to adjust for value based on general interior amenities, exterior, lot size, view and noise/traffic factors. I also like the feature they included for market conditions; cold, average and HOT. After these adjustments, you can also adjust for square footage of the home if the tax record is wrong. ABC makes it very clear that these are only estimates and "For deeper insights, contact a local real estate expert." Here are some screen shots (click for a big picture):



Selecting your own comps from the local area around your property is as easy as clicking check boxes. ABC Value™ doesn't have all the cool charting that Zillow does but then again, it is quick and easy. Testing a couple of my current listings I found it to be as accurate as Zillow and better with the value adjustments provided (remember, you have to be objective as most home owners are not).

Let the race begin! Read more about RealEstateABC.com...

About RealEstateABC

RealEstateABC.com was started in March 1998 with the goal of providing a site that candidly informs homebuyers and home sellers about the real world of real estate, without puff, hype or sensationalism. We want to help consumers with insight into how things really work with straightforward analysis of market trends and "how to" guides.

This philosophy applies to all the resources on our site, including the Agent Directory and the Home Values tool. Most Agent Directories focus on having the greatest number of agents, but we want the best. So we continually work to put the most informative agents in the directory and we list the agents in the geographies where they are experts. Our Home Values tool helps consumers with the central mystery of buying or selling a home, "what is it worth?" By providing an "ABC Value™", an estimate of value of the selected property based on recent home sales, the consumer has a starting point which they can refine further based on their knowledge of the specific property and by working with a local market expert, a real estate agent.

We've been gratified by the response to RealEstateABC.com from consumers and real estate professionals:

• Our "how to" guides appear on over 30,000 real estate web sites RealEstateABC.com is one of the most-linked-to real estate sites on the web
• Our site has had numerous mentions in the media including being named "Cool Site of the Day", featured on CNBC's "Power Lunch", and named by PC Magazine as one of the "100 Best Sites You Didn't Know You Couldn't Live Without"

RealEstateABC.com is part of InternetBrands.

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March 25, 2006

On this day in 2005 (March 25th) at about 5:00 pm we posted our very first article: Real Estate and More. Our blog initially was called "Ask the Real Estate Experts." We posted 13 articles in the next 6 days to March 30th. Most of these were on subjects foremost on my mind including a couple on wine (we collect and enjoy)Over the next weeks the name changed a few times and we finally settled on the Northern Virginia Real Estate Guide. To date we posted 160 articles, averaging about 3 per week.

As I recall, growabrain found us first and gave some helpful hints on how to immediately improve the way we chronologically posted (as in newest at top...duh!) I didn't know what RSS was at the time but knew it must be important. We learned a tremendous amount of technical stuff in the first year including a lot of server side coding! More importantly, we also learned that blogging can be very powerful. People actually read what we have to say. As it turns out, more people come to our blog than to our website (although our website is pretty cool too). In fact, this blog is actually driving more visits to WWW.CHOICE3REALTY.COM. Hmmmm...we paid a lot of money for a unique, custom website and paid nothing for the blog. There's a conclusion to be drawn here I think.

Anyway, I thought it would be interesting to show the world what blogging can do. Here are two charts (as you can tell, I love doing charts) that tells the whole story without further comment:

 

[click the charts for a large pop-up or click here for actual charts]

This adventure has been most gratifying albeit hard work. It is gratifying to know that people appreciate good, candid information about this business because it seems it has always had some mystical aspect to it. Because of the internet and specifically the blogs, consumers are becoming a lot smarter; smarter than some agents I have dealt with (sad to say). The home run on our blog is the market data we extract and present in tables and graphs. You can see the almost "hockey stick" appearance of the trends above starting in January of this year. We posted our first market graphs on New Years Eve 2005. Another surprising data point is that over 60% of our visitors are bookmarking the blog! We still have a lot of work to do to make them user customizable but have not had the time. (What I need is a php/mySQL programmer to help us out! I have a ton of ideas and not much money to pay anyone but, it would be an awesome project.)

I'm not sure how to put the above graphs into perspective. All I do know is that going from 0 to over 25,000 page views per month is pretty darn cool. It certainly is motivating me to keep doing it!

Finally, thanks to all the bloggers I have come to know, commenters that participate, my broker for not telling me to stop and for all the thousands of internet people in blogospace for finding us and coming back for more.

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Hover on data points to view values.

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Hover on data points to view values

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Hover on data points to view values.

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Hover on data points to view values.

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March 23, 2006

There are a gazillion (or at least many) ways we can talk about market strength and it really depends on the perspective: sellers or buyers. Our MARKET^pulse measures a form of buyer intensity. Values greater than 0 indicate stronger buyer intensity and values less than 0 indicate weaker buyer intensity.

Here are a couple of additional ways it can be measured (using Loudoun County data):

• Sales Absorption: The ration of contracts written to the total number of properties for sale.
  Let's take February MARKET^pulse Data Points:
  New Contracts Written = 495
  Total For Sale = 2,982
  The % Absorption: (495/2,982)*100 = 16.7%
  Or, only 16.7% of the available homes are being absorbed into sales. From a sellers perspective: a weak market.
• New Listing Absorption: The ratio of new contracts written to new listings coming on the market.
  Using February Data Points:
  New Contracts Written = 495
  New Listings = 1,193
  The % of New Listing Absorption: (495/1,193)*100 = 41.5%
  Or, only 41.5% of the new listings are offset by new contracts written. From a buyers perspective: more opportunity.
  As this % tends to a value of 100%, we have a pretty balanced market. If it becomes greater than 100% more contracts are written than new properties are coming on the market. For instance a value of 120% means 20% more contracts are written than new listings and total listings should be declining.

Confusing? We will try to graph these soon to compare with all the other data.

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Here's a quick sample of month-to-date market activity for Loudoun County as of March 22, 2006:

• Total Active:  3,181
• New Listings:    1070
• New Contracts: 372
• March Sold: 248
• Average Price: $563,998
• Average Days:   81
• Pulse Index:   -0.81

If we extrapolate these to predict the end of month (9 days remaining):

• Total Active: 3,200 to 3,300
• New Listings:  1,400 to 1,600
• New Contracts: 500 to 550
• February Sold: 325 to 375
• Pulse Index:   -0.75 to -0.79

It doesn't appear market direction is turning this month. Sold and new contracts appear to be occuring at the same rate as last month with new listings potentially much higher. We will take another sample on April 1st.

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

March 22, 2006

The Washington Post reports this morning that the Loudoun County Planning Commission voted 6 to 3 to relax the rules limiting growth in Western Loudoun. As we all know, the courts threw out the comprehensive plan devised by the previous board and the western two thirds of the county reverted back to roughly one house for every three acres. The Commission voted to recommend that anyone starting a home-building project this spring could do so under the previous relaxed rules. The full Board of Supervisors will have the final say.

Will there be a rush to get projects approved? Probably. Will approvals ruin Western Loudoun County in the short term? Probably not. I always thought it is not how many get built but, how you arrange it and what it looks like with an eye toward the common good. Growth is inevitable because of the regional economic engine and supply and demand. The real trick is to balance growth with quality of life. I don't envy the people we put in charge to make these decisions and judgements.

Here's what I see as contributing factors to our dilemma from a practical standpoint:

1. Developers have flooded the market with $1M mini mansions on 2-5 acre parcels the last few years.
2. The market slowdown has caused developers to give huge incentives to move these homes.
3. It remains to be seen if developers can make money in the current market.
4. The day of the quick buck speculating on real estate may be gone for quite some time
5. Traffic in Western Loudoun is becoming unbearable as families are moving further west to access affordable housing in Berryville, Winchester and Charles Town (WV) and commuting to work in Northern Virginia and Washington DC.
6. It doesn't appear anyone is doing anything of substance about affordable housing in Loudoun County.
7. Our politicians cannot agree on transportation solutions badly needed everywhere in Northern Virginia or how to pay for them.
8. Our Loudoun government announced a need to increase the car tax to cover shortfalls from Richmond.
9. The average 2006 property assessment went up an average 28%.
10. I am always surprised that anyone can afford to live here (including myself).

We are getting frustrated with the politics surrounding these issues and a total lack of compromise and common sense. Politics and special interest groups on all sides seem to be directing our government's inability to find reasonable solutions. Lets hope the next set of elected officials (probably new) will listen to the needs of the majority of us living, working and enjoying life here. We know it will cost us. Inaction will cost us more.

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The Virginia Association of REALTORS® (VAR) published the bi-monthly Commonwealth journal for March/April this week hi-lighting the use of technology in the real estate business: " Here's to high-tech." Three REALTORS® are featured who use blogging as a new medium to reach consumers to help "grow and service" their business. The three blogs are:

• The Roanoke Real Estate Blog by broker Dolores Farmer of Roanoke (Long and Foster)
• Central Virginia Real Estate Blog by agent Jim Duncan of Charlottesville (Century 21), and
• The Northern Virginia Real Estate Guide by agents Merv and Pam Forney of Leesburg (RE/MAX)

The three blogs have three different personalities and focus on different themes. Dolores and her team (she has her agents participate as authors) use their blog as a viable way to market their sellers' homes. Dolores sees blogging appealing to the younger buyers and specialty buyers who are not reached by traditional advertising. Really Simple Syndication (RSS) and Google's blog search make it easier to find relevant content being published by bloggers of all genre. She was skeptical at first but now sees great value in the new medium. (Note: Dolores was not available for the photo shoot. I am sure she would have made the pictures much more appealing.)

Jim Duncan, on the other hand tends to focus on local growth and land management issues. He frequently comments on new development in and around Charlottesville, green issues, transportation, political decisions related to real estate matters and quality of life. His readers also know he has an appreciation for wine. In addition to blogging, he is pod-casting on subjects such as Virginia wine and providing Visual/Audio property tours to promote his clients homes. (Note: Jim is the much younger one on the cover picture.)

Our blog has a major focus on real estate market trends. Why? Because about a year ago real estate bubble talk was driving conversations everywhere about the state of the real estate market. We discovered there was very little meaningful data available to consumers about the real state of the market place. We also discovered that our listing clients were uncertain about selling their properties. We needed information to be able to set realistic expectations on price and length of time to sell. We also comment about the absurdities embedded in this business (including politics) as well as a little humor and wine talk. By the way, we are honored to be included in VAR's feature article.

Three blogs, three personalities and three passions. The attribute we all share is that we turn our professional interests into marketing tools. Technology has and will continue to shape the way people access the information they want and need. All three of us embrace the notion that we are either leaders or followers. We choose to be leaders.

A final comment about blogging to be an effective tool: it is hard work, requires great stamina, often stretches personal creative boundaries, demands free expression, must be honest and first and foremost must come from within. The single most gratifying result is not in any new business that may emanate; it is to know that we are providing valuable information to our readers and following. How do we know? In our case, 0 to over 25,000 page views per month in just one year.

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March 15, 2006

NEW! We are beginning to gather historical data and report market trends for Fairfax County. The first installment is the Buyer Intensity chart in Market Trends. It will be updated monthly on the same time frame that we are reporting Loudoun County. We have only looked back 26 months but will continue to fill previous periods as time permits. In addition, we will build a complete set of trend graphs over the next few weeks.

Fairfax County shows similar trends as Loudoun. The difference is that the sellers market was significantly stronger in prior months and the current buyers market is not as strong as Loudoun.

Stay tuned...more to come.

Comment on Buyer Intensity for Fairfax County, VA. Follow this article is off. More articles like this one filed in: Fairfax County Market News

The Fairfax Buyer Intensity Index (Fairfax 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 Fairfax 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 Fairfax BII includes all single family property types (detached, townhouses, 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 Fairfax 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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March 13, 2006

Evidently Brad Inman of Inman News touched off a hot debate about real estate commissions last week in one of his blog entries. Quite a variety of comments and lots of them (over 200). Brad has another regular news article discussing his remarks and the comments. Very interesting to see the various reactions to what seems to be a very touchy subject.

Here are my top 20 21 responses to the commission debate.

1. Commissions are not sacred.
2. Brokers and agents do not have an inherent right to anything including commissions.
3. The consumer has a right to negotiate.
4. Consumers have a right to understand what they are paying for.
5. Innovators have a right to interject themselves into our business.
6. FSBO's have a right not to pay anyone.
7. Consumers are tired of the old models.
8. The old models are dying.
9. New models will provide enormous competition.
10. Change is good for the consumer.
11. Consumers generally don't want cheap, they want to understand the value delivered for the fee paid.
12. All agents have a right to present themselves to consumers.
13. The agents with the highest quality, professionalism and VALUE driven fee structure will be chosen by consumers.
14. Transparency in fee structure will win.
15. This is still a relationship business.
16. Relationships are built on trust.
17. Trust is attained by being trustworthy.
18. Trustworthy (worthy of trust) is attained by being honest, looking after your clients best interest and not your own, and delivering on commitments.
19. Prospering in this business is dependent on doing the right things and doing things right.
20. Consumers will do business with people that deliver value and people they trust.
21. We should not feel threatened...we need to innovate.

Comments are welcomed and valued!

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March 9, 2006

Correction: March 10, 2006 | Thanks to Mark (one of our commenters) for pointing out some differences in our data. We jumped the gun trying to use a different data source than usual and botched it. Corrections are in the sidebar (the comments have explanations). This is a corrected post.

Zeroing in on the final data for February, it appears that average sale price in Loudoun declined 5.2%. Contrary to my previous announcement that home prices dropped 6.6%, the "official" numbers came in flat (see sidebar). Not all the data is in but should be filled out in the next couple of days. We never know the final impact of new construction postings to the MLS as they are often weeks late. In addition, about half of the new construction postings in the MLS in February had 0 days on the market, an indication they are after the sale postings. Another interesting feature is next month looking back at February, there will be more new construction postings.

I extracted the data again this evening and found the following:

	#	Avg Price	DOM
Resales	317	$526,508	70 days
New	56	$745,803	17 days
Total	373	$559,432	62 days

What I don't understand (or maybe I do) is how sold plus new contracts can be less than new listings and the total inventory of actives still declines. The only explanation can be those withdrawn or "off the market" listings that are not reported. Can't sell? Withdraw. What is interesting about how we (the MLS) keep track of things is that if a "temporarily off the market" comes back, on the status is like a new listing. There is wizardry here someplace.

Nonetheless, except for average sales price, the numbers aren't that far off from the data I pull at the end of the month. I need to be more careful about my pronouncements with "unofficial" data. We are only as good as the data that is entered into the MLS (sorry if this sounds like waffling). I will report what I see when I see it and always with qualifications.

So, what does the next few months have in store for us? All I can say is the weather is getting warmer, the birds are nesting and buyers are emerging like crocus (what's this? ). We see more activity by buyers looking at homes the past couple of weeks than we have seen in the last few months.

I think we will have a good spring real estate fling. Just not a hysterical one. Sellers will sell. Buyers will get a good deal. And, the real estate economic machine will keep humming.

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March 2, 2006

We collected the "unofficial" February 2006 market data for Loudoun County, Virginia and the average home price dropped 6.6% from the January 2006 average. Based on number of homes sold and new "under contract" for the month at current inventory levels (homes on the market) there is almost a 4 month backlog. Average number of days on the market increased by 16 days from 63 days in January to 79 days in February.

The calculated Buyer Intensity Index of -0.72 indicates continued good news for buyers. New Construction builders are only reporting 42 homes sold reflecting the reported sluggishness in the new home market. New home buyers should be looking for even more incentives in March! And, builders should be much more willing to negotiate.

Buyers are looking for value. Sellers getting contracts are those that have the best showing homes at a value price.

Buyer Intensity Data Points

Notes:
1. The Official MLS reports should be available on March 10th.
2. Many new home builders are slow to post sales in the MLS.

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