April 2006 Article History

There are 25 articles published in April 2006. Here are the first 20:

Different Opinions on the BUBBLE How NOT to Sell Your Home Pardon Our Dust Loudoun New Construction Data Update Ultimate Real Estate Blogger Recognition Fairfax County Housing Inventory Added Fairfax County Inventory Trends Fairfax Market Update-March 2006 Loudoun Market Update-March 2006 Consumers Drive Real Estate Change

The Perfect Real Estate Storm Loudoun Quick Look-April, 2006 Website and Blog Thieves Reorganizing the Real Estate Guide Spring in Virginia Home Pricing: Art, Science or Both FERIDIES®: the best peanuts on the planet Wonder why your home isn't selling? No Building Permit - Where's the Liability? Like New in Raspberry Falls

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

April 29, 2006

This is the start of the season for real estate transactions. But, where are the buyers? An enormous number of families are listing their homes for sale but there are a significant shortage of buyers. Here's what we see and ask:

• Sellers are flooding the market with their listings. Is there panic? Trying to get out at the top of a softening real estate market?
• Builders over built and their "spec" homes are sitting in the inventory for sale.

• Investors are dumping their homes on the market.
• Prices are sinking like lead weights.
• Sellers are getting desperate and are offering incentives.
• Buyers that want to buy are apprehensive about being able to
  sell their own homes. Result: home sale contingencies (in this market it is the kiss of death).
• Buyers are afraid they can't get the equity they need out of their
  homes because of the price declines.
• Are the low cost loans catching up with home owners that now may not be able to afford transitioning to a real mortgage?

Bottom line: The forming of the "Perfect Real Estate Storm!"

Is the proverbial BUBBLE bursting? Who in the $%&$# knows! It doesn't look good by the numbers. The pendulum has swung with a vengeance in Northern Virginia!

See the numbers and trends in Market Trends.

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April 28, 2006

Sellers will not like what we see for April in Loudoun County. As of 5:00 pm Friday, April 28, 2006 here is the data. This is the last business day of the month and many closing occur today so Sold data will change a bit from what is posted in the MLS.

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 25 week backlog. Average number of days on the market looks like it may decrease a bit to 70 days from 76 days in March. I would interpret this as the most desirable homes are selling first.

New listings are out pacing new contracts written by a 4 to 1 margin. Only 9% of the total homes for sale are being absorbed by new contracts. The calculated Buyer Intensity Index of -0.83 further indicates an extreme buyer market.

I hate to continue to repeat myself but, 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 May 10th.
2. Many new home builders are slow to post sales in the MLS.

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There are a few dasturdly deeds other website owners and/or webmasters do that literally causes the hair to raise on the back of my neck. Here are a couple I discovered while browsing through our web stats and from experience with our blog:

• HOT LINKING: This is a technique used by thieves and/or just plain lazy people. The culprit literally links to a picture or object in a victims website to display on their own. The picture or object may or may not have a copyright or be very important. At a minimum, it robs the victim of server resources (even though it may be small). On the other hand, if the culprits website is getting thousands of hits a day, it could be very significant. It is like syphoning gas from someone fuel tank, aka: stealing.(Note: there are a number of hilarious things that can be done when they are discovered.)
• CONTENT COPYING: This is done by scumbags that somehow can't create their own copy. I don't mind others using my content but they need to request permission and attribute the content to the owner.
• EMAIL HARVESTING: Malicious robots scan web pages for email addresses to build email marketing lists. I get several a day. Why do these people think it is a smart way to do business?
• BLOG SPAMMING: The art of automatically distributing junk content into blog comments or trackbacks links. I had to disable trackbacks several months ago because it was becoming unmanageable. Our comments are moderated (means I approve or not before they appear if the identity is unknown) and soon will contain other security measures to keep web trash out. Again, not a smart way for these people to do business. See my previous article about Blog Spamming.

All of these (and more) have significant financial ramifications (as well as causing frustration and rage). We need to find a better way to defend ourselves and more importantly, find these slobs and ban them from the internet.

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April 25, 2006

A few minor steps in reorganizing the Real Estate Guide:

• The Front Page and every page now has a directory up front for the articles you find on the page. The sidebar will show additional subject lists if available.
• The Inside the Guide is organized by major subject and subject subsets. These are now located up front on the sidebar.
• The Archive is organized by both Month and Subject with links to each article.
• The MARKET^pulse has it's own page (called Market Trends) with all the Data Points and links to Big Charts for Fairfax and Loudoun Counties. The Market Updates will refer to the Market Trends page.
• We re-assigned subjects for all articles so they can found easier.

Our next steps will be moving our favorite links (or BlogRoll) to a separate page, consolidating comments to its own page and upgrading to MovableType 3.2.

Give us your comments on how we are doing. Suggestions on what we can do better are always welcome. Thanks for your patience.

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Spring is about renewal. A fresh start after a long, cold winter. Being from California where seasons are mostly a blur, I am always in awe of the magnitude of change. Here's a sample of what it looks like today:

[click photo for a larger view]



First row from left: Unknown (help me identify this one), Cherokee Dogwood and the lowly Dandelion. Second row from left: Japanese Pine candle and cone (and a bug), Viburnum and the prickly Barberry.

Spring is also the start of the real estate buying and selling season. This one may be shorter than usual.

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April 24, 2006

Below is a link to a good article from Realty Times written by M. Anthony Carr. Here's an excerpt:

The biggest challenge in pricing the home is a seller's greed level. Sorry to be so blunt, but sellers always want more than the last sale, regardless of the market condition. My blunt advice is to "get over it." Waiting around for the "right" buyer is just plain foolishness in the world of real estate. If you're putting your home on the market, don't wait around and waste your time, the buyers' time and the agents' time with an unrealistic asking price.

If your Realtor provides feedback from colleagues that your house is overpriced, move on it. Move from denial into acceptance and price the house right. Remember, the goal here is not to price the property as high as possible, but to sell the house.

...read the full article here.

The heady times are gone, at least for a while. Sellers just can't get the price that they may have gotten last year at this time. The market is cruel and has no compassion. Lower your price and take the equity you still have (if you have equity, you have a gain, not a loss).

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April 22, 2006

Saturday night: 6:00 pm. One 9 once can of FERIDIES® (pronounced fa-ree-deez) chocolate covered peanuts, half full. I am going to eat them all.

Here is a dirty little secret. I buy these from my favorite wine shop, the Leesburg Vintner. They are only available from October to April because of the weather (hot and humid). I usually buy two cans at a time. One can is opened on the way home and a generous sample is consumed. When I get my prized peanuts home (remember, they are chocolate covered) I put them into the far reaches of the garage refrigerator, usually behind the case of cokes. That's right. I hide them. And, I don't feel bad about it (well, maybe, err...sometimes I do). These are mine. My secret. My chocolate covered peanuts. For me and me alone to enjoy...

Feridies was founded by the Riddick Family in 1973. Visit their Website at www.feridies.com. The chocolate covered peanuts are dipped in a single layer to bring out the true flavor of the nut. A heavenly sweet treat that is addictive. You can make them your little secret too!

Enjoy...(and confess)

PS: We have absolutely no business interest in Feridies. These are my personal opinions and confessions.

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This article is featured on the front page of the Washington Post this morning (image added by us):

Doors Close for Real Estate Speculators

After Pushing Up Prices, Investors Are Left Holding Too Many Homes

By Kirstin Downey
Washington Post Staff Writer
Saturday, April 22, 2006; Page A01

Investors who sought quick profits buying and selling real estate in the Washington region are in full retreat, dampening demand for homes, most notably for condos.

What is becoming apparent, market watchers say, is how big a part speculators played in the region's real estate boom of the past few years. Not just condominiums, but also townhouses and single-family houses, were snapped up by investors using no-money-down financing and non-traditional loans. They helped send prices soaring at unprecedented rates. And now many are trying to sell, or rent at a loss. Some may eventually dump properties at low prices to get rid of them. That could weigh down values for everyone.

Sales of new condos fell 43 percent in the first quarter of the year, compared with the first quarter of 2005, according to one report, and there are almost four times as many existing condos for sale than last year.

"We think the softness of the market is largely due to the pulling out of investors," said Gopal Ahluwalia, staff vice president for research at the National Association of Home Builders. "They have not only pulled back, they are canceling purchases."

... read the entire article here.

BOTTOM LINE: The result of investors dumping homes in the real estate market is rising inventory, homes that are not selling and downward pressure on prices to get out...

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April 21, 2006

A builder builds a house for himself and gets the necessary building permits and eventual occupancy permit. Later, he adds a deck and finishes the basement with several rooms including a full bath without obtaining the legal permits. He then decides to sell the home and a savvy prospective buyer notices that the tax record does not have a record of the finished basement or deck. As part of on offer to purchase, the buyer requests records of the permits for these additions. The builder can not produce the required documentation and the buyer withdraws the offer.

Not all agents and buyers are savvy enough to pick up on this little detail. In the case that the tax record was incomplete and the owner did get the required permits, no problem. Just produce the permits. On the other hand, many people modify their homes to some extent without the necessary legal permits and inspections. In the latter case, the question becomes what needs to be disclosed and who might be liable if it is not disclosed?

It is the responsibility of the listing agent and the seller to disclose any material fact about the home even when a "Property Disclaimer" is used. In our example, the seller is obligated to disclose this fact. If it is not disclosed, the seller is ultimately liable if after a purchase a defect is discovered or worse yet, an electrical problem causes a fire and the house burns down. It is also the listing agent's responsibility to disclose facts that he or she should have reasonably known or discovered in the normal course of their duties. The listing agent could be held liable as well.

Here is a good article from Inman News discussing this very issue:

Unpermitted bathroom will likely cause grief for home sellers

Contact local building department to ensure smooth sale
Friday, April 21, 2006

By Paul Bianchina
Inman News

Q: We put a second bathroom in the basement of our home, without getting a permit. A well-respected contractor did everything to code. Our concern is what happens if and when we want to sell. Can we advertise it as a two-bathroom house? Do we face any fines? --Matt A.

A: First of all, when you go to sell a home, you are legally required to disclose anything you know about the home that might affect the new buyer. This would obviously include the new bathroom. If you fail to notify them, your lack of disclosure could easily be grounds for legal action on the part of the buyer. Also, any reputable real estate agent will not take the listing if you are not honest about the condition of the home, since the agent could be taking on legal liability as well.

Most new buyers are savvy enough to ask if any remodeling work has been done on the home, and then to ask for copies of any relevant building permits for the project. Even if the buyer fails to ask and you fail to disclose, most home inspectors are sharp enough to spot the remodel and make it part of their report on the home's condition.

At this point, your best bet is simply to 'fess up and get things legal. You need to contact your local building department, explain the situation, and request the necessary building, plumbing, electrical and mechanical permits.

...read the full article here.

As a listing agent: ask the question. If you suspect the seller is skirting the issue, don't take the listing.

As a buying agent: look after your clients best interest. If there is a hint of suspicion, advise your buyer to ask for the permits.

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SOLD The Fitzgerald model by Van Metre offered at $825,000 $875,000 $899,900. Nearly 5,200 square feet of living space on three finished levels. On 1.1 fenced acres with open space and views of the Catoctin Mountains.


This spacious, open home is enhanced to like new condition with refinished hardwoods, new carpet and new interior paint on every square inch. The kitchen is equipped with all new Profile stainless steel appliances by GE. Four bedrooms, four and one-half baths, two story great room, center island kitchen, sun room, master suite with sitting room and fireplace and main floor library are just a few of the features of this fine residence.
VisualTour | MapIt

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April 20, 2006

An interesting article on "Fuzzy Math for the Housing Bubble" in the Washington Post this morning:

Open-Ended Equations

How Stable Is Washington's Housing Market? It All Depends on How You Do the Math.

By Tomoeh Murakami Tse
Washington Post Staff Writer
Thursday, April 20, 2006; Page D01 [Business]

Home buyers beware: The Washington region is now one of the most precarious real estate markets in the nation, according to reports by economists, banks and industry analysts.

But wait a minute. Maybe it's one of the safest, according to reports by other economists, banks and industry analysts.

... more.

Some are predicting housing prices to fall 25% or more. Others are thinking it will just level off to let the economy catch up. Nobody knows the real answer to the bubble question for the DC Metro area. Here's my thinking:

• Market drops 25%: A disaster? NO. It just means that we go back to early 2005 prices. Most longer term owners (2-3+ years) still have significant appreciation. Buyers in 2005 will have a longer time to start realizing appreciation again which doesn't matter much if they bought for the right reasons (like community, lifestyle and long term).
• Market is flat: Obviously good. For one thing, everyone agrees the market was overheated, attracted speculators and too many "easy money" real estate agents. Getting these out of the system is a good thing.

So, let's not panic. All the press about the BUBBLE is feeding consumer fear and trepidation. Housing has always been one of the best places to put your money for other reasons (like lifestyle, community and tax deductions) besides appreciation. Markets will go up. Markets will go down. It's part of our economic life. Trying to time it is a foolish way to spend your time. Get over it.

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We have written a few articles about Property Presentation to help get sellers top dollar in the shortest period of time. Ardell, writing for the Rain City Guide, published this article last night (it's a kick!):

Top Ten Obstacles to Selling a Home April 19, 2006

In David Letterman style, let’s list the top ten things that make a buyer say “let’s get out of here!!”, when I am showing a house.

I can think of at least 10 more. Thanks Ardell for bringing us back down to earth!

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April 16, 2006

We are embarking on the first steps of a major reorganization of the Northern Virginia Real Estate Guide. It may look weird at times. Content will be the same...hopefully you will be able to get to what you want a lot easier.

Today, we renamed a few categories and identified several as subcategories of major topics. The next step will be to review every single article and re-assign categories and subcategories. After that, each major topic will become a sub-blog akin to sections of a newspaper. Reorganization of the sidebar to unclutter the space and upgrading to MovableType 3.2 will complete the transformation.

Any and all comments or suggestions are welcome. Please be patient.

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April 14, 2006

New construction data is updated for Loudoun County. Data was extracted for the last 15 months and has changed slightly. Builders are inherently slow adding new sales to the MLS and data will change over time. A new chart was added to the New Construction category showing year to year units sold and year to year change in price.

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April 12, 2006

Congratulations to Dustin Luther of the Rain City Guide! Here is an announcement on his blog this morning:

I’m extremely excited to announce that I’ve accepted a position with Move (HOMS) as the Director of Consumer Innovations.

Until recently, Move was known as HomeStore and they (we!) are the people who run Realtor.com, HomeBuilder.com, RentNet, Welcome Wagon, and a few other sites... The idea behind the Move brand is that we’ll be creating a one-stop-shop for connecting consumers with comprehensive real estate information and expertise.

Homestore recently announced a name change to Move and are revamping their entire approach to the consumer experience on their web offerings. Good corporate leaders know that success is largely dependent on surrounding themselves with the best people sharing a lofty corporate vision. They are getting one of the best in Dustin as an industry innovator. As a blogger I have learned a great deal from him, sometimes copied him and mostly admired him.

We look forward to significant innovation from Move knowing one of my friends is making great contributions!

PS: Dustin, Anna and family will be moving to Southern California. Will their next blog be Smog City Guide? Surfer City Guide? Star City Guide? An endless set of possibilities. Post your ideas in comments and we will forward them to Dustin and Anna.

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NEW: Fairfax Inventory Trends added to our Northern Virginia charts. History only goes back to January of 2003. We will fill in the remaining history as time permits.

Why look at history? It puts current conditions into perspective. As you can see, current inventory of homes for sale is at a three year high. Further evidence of the cooling (or is it cold?) market we are in this year. And, it started cooling last June.

We also changed the "Listing Rate" defined as rate new listings are added with "Net New Listings" defined as new listings minus new under contract (pendings). This is a more intuitive indicator of what is driving the market.

More time consuming work to be done to add the remaining charts.

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Inventory trends include active listings, homes sold and net new listings by month. Hover on data points to view values.

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April 10, 2006

NEW! Listing Inventory Absorption Rates for Fairfax County (see sidebar). 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.

What's happening in Fairfax:

Buyer Intensity Data Points

Of note: Inventory (homes for sale) rose 60% from February to March. Homes sold plus homes under contract rose only 34% February to March. The entire region is feeling the sales pinch!

As we collect more data the tables and charts will be updated. Stay tuned.

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We've been crunching March numbers all morning and updating the Loudoun County trend charts and graphs. We predicted a rise of active listings to the 3,200 to 3,400 unit range. What a surprise to see it at 3,734. That's a whopping 25% increase in just one month. New listings for March reached 1,831, an incredible 54% increase from February. Total closed sales were 552, up from 387 and ratified contracts rose to 585 from the February level of 495.

Absorption rates were 16% of total listings and 32% of new listings using March ratified contracts. Average price recovered some of the ground lost in February and average days on the market went down slightly to 76 days.

Buyers in the market have more to choose from than ever before. Sellers are dropping their asking price, sometimes dramatically. Sellers provided subsidies to buyers on about half of the homes sold in March; some as high as $25,000 to $30,000!

It looks like a long season for sellers. This level of inventory will not dissipate quickly unless buyers start coming out of the woodwork. I saw a recent report noting that spending on remodeling is up sharply. Inflated prices might explain why homeowners may be electing to spruce up the current home instead of purchasing another one.

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April 7, 2006

This just in from Inman News:

Client as catalyst: Consumers drive real estate change

Report focuses on consumer behavior, demands
Friday, April 07, 2006

Inman News

Consumers are demanding a range of real estate products and cost options and driving the real estate industry to a new era of specialization and segmentation, according to a work group that included real estate brokers, sales associates and consultants.

The work group, formed by a National Association of Realtors committee that is composed of Realtor association executives, also reported "conflicting consumer desires" – consumers seem to want both autonomy and personalized service in real estate transactions.

"The Consumer: Catalyst of Change," a Realtor association report released this month that is based on the work group discussions, also noted that consumers are hungry for: "convenient online services and search tools, including full information about listed properties," "immediate responses to their online or telephone communications," "personal, friendly service from both the agent and the real estate company," "a smoothly integrated transaction process with effective solutions for any hurdles along the way and no surprises at closing," "low fees and commissions or a choice of fee packages," and "a convincing sense that the agent and broker add value to the buying (and) selling experience."

This new study report from the National Association of REALTORS® (NAR) reinforces the A.D. Little study prepared for NAR several years ago.

National Association of REALTORS® A. D. Little Study: "Technology and the consumer will change the business model and execution of the real estate transaction. By 2005, real estate licensees will re-frame themselves from salespeople to real estate consultants".

The conclusion then and now: consumers are empowered with more information from the internet, want to see real value delivered by hiring an agent and want more choice in what they pay for and how they pay for it. Enter: the "Real Estate Consulting Model". When Pam and I founded our business we concluded that consumers were ready for change and that we would do business in non-traditional ways. So far, we are very successful using this new model. It is based on the premise that "one size does not fit all" in a real estate transaction. Here is how it works:

• We show you all the services and associated costs that makeup a real estate transaction and we jointly choose those right for your situation. We call it smart planning or SmartPlan™.
• We show you the cost of the services selected compared to typical commission rates.
• Then, you choose how you want to pay. We call these financial smart choices or SmartChoice™.
• We put our joint plan into action and focus on producing the desired result. You attain your real estate goal at the right cost, in the shortest amount of time with the least hassle.

In addition, we offer a one stop shop to provide any necessary pre-listing items such as new carpet, paint, maintenance, floors and even new appliances to get the home prepared to sell. We use contractors and suppliers we know and trust and manage the entire process. We charge a management fee for this value added service.

Ever wonder where our name came from: Choice³ Realty? It is intended to brand our way of doing business; giving consumers choices. You can find a complete description of our service model at OUR SERVICES: Real Estate for the 21^st Century. You will even find an entry titled: Consumers Drive Real Estate Change that we created over a year ago.

We believe we are on the edges of what will be enormous change in the industry. We didn't make 2005 as A.D. Little suggested but, it is not far off. The innovators have and will continue to change the landscape. "Lead, follow or get out of the way." We choose to lead by being different.

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April 6, 2006

SOLD Occassionally we are fortunate to have the perfect listing. This home is as close to perfection as you can get. Priced at $799,000 $825,000.

The pictures shown here highlight the custom cabinet work and professional appliances.


Gorgeous Van Metre Ashford (now Sinclair II) model on 1.1.acres in Raspberry Falls. Upgrades throughtout including custom kitchen, granite and built-in stainless appliances (Thermador, Sub-Zero and Bosch). Fully finished basement with media, pool room and wet bar all custom designed, custom cabinets and woodwork. Basement also has full bath and extra room that could be used as 5th bedroom. Professionally landscaped yard with automatic watering system. Huge party deck with screened gazebo. New paint inside and out. New carpet. Hardwoods refinished. Vast open space behind lot with views of the Catoctin mountains. You must see the Visual Tour. You will agree it is spectacular!

VisualTour

MapIt

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Ref: Measuring Real Estate Market Strength

A new 6 year graph is implemented with a view toward a measurement called Inventory Absorption. It shows the percentage of new contracts to total listings and to new listings over time.

Net: total listing and new listing absorption are at 6 year lows. About 17% of total listings are turning into ratified contracts and only about 42% of new listings are being offset by ratified contracts. Here are a few interesting questions:

Where are all the sellers going? Moving up or moving out? Or is a large part investor flipping? Has new construction flooded the market?

If there is a shortage of housing in the Metro area, where are all the buyers? Has BUBBLE TALK become a self fulfilling prophecy? Have we become unaffordable?

Digging through more data may hold the answers.

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Listing Absorption Rate is the percentage of new contracts to total listings.
New Listing Absorption Rate is the percentage of new contracts to new listings.
Hover on data points to view values.

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April 4, 2006

Our Loudoun County Board of Supervisors are zeroing in on the 2006 tax rate. It looks like it will be in the neighborhood of $0.90 per $100 of assessed value. The 2005 rate was $1.04. Lets do the numbers:

Average assessed values went up 28%.
$0.90 per $100 of assessed value is a rate reduction of 13.5% from $1.04.
Net: Average property tax will increase 14.5% (28%-13.5%).

So, if your property tax bill was $5,000 last year, then (on average) your tax bill will increase $725 to $5,725. For some a lot more because I have seen assessed values up as high as 50%. For few, if any, a little less than average.

The assessor looked backward into a hot market in 2005 when sales prices were going out of sight. The assessor does not visit homes (unless you appeal your assessment) so every home in a given area sort of looks the same. The market has melted in the last several months and many sellers are having to price homes less than assessed value. I know, because we have a few of those listings. So what about next year? Will assessments decrease? Never. Will government budgets decrease? Never. Now, there is a permanent bubble in the cost of government.

Have our assessments been wrong for several years? We used to be able to estimate assessments at 70 to 80% of market value. Has the new assessor determined that the past was in error? Where are the checks and balances? Who checks the assessor's math, past and present?

Market dynamics are pushing many residents out of Loudoun and other jurisdictions in Northern Virginia. Some of us just can't afford to live here any more. Many residents are outraged! Maybe we all should be. Have the political pendulum swings the last two or three elections caused mismanagement? Probably. Will the silent majority wake up and get involved in finding common sense, center focused people to run for office and elect them? I hope so. This year is the wake up call.

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April 1, 2006

We collected the "unofficial" March 2006 real estate market data for Loudoun County, Virginia and sellers will have little to cheer. Although, the average home price recovered a bit at only -2.5% YTD. 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 16 week backlog. Average number of days on the market looks like it may decrease a bit to 76 days from 78 days in February

New listings are out pacing new contracts written by a 3 to 1 margin. Only 14% of the total homes for sale are being absorbed by new contracts. The calculated Buyer Intensity Index of -0.72 remains unchanged and indicates continued good support for buyers. We will pull the new construction stats in a couple of days.

I hate to continue to repeat myself but, buyers are looking for value. Sellers getting contracts are those that have the best showing homes at a value price.

MLS official March results will be available on or about April 10th.

Buyer Intensity Data Points

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

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