September 2006 Article History

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

In the Sunday Post: About RSS Fairfax County Real Estate Activity August 2006 Loudoun County Real Estate Activity August 2006 Market Data by Zip Code Dulles Area REALTORS® Gather at Lansdowne Daily Market Watch Changed Today This is not a Bubble Blog. Or is it? The Guide surpasses two milestones

If it moves, track it... Price Trends Added to Daily Market Watch Anatomy of the local buyer's market Gen. Jubal A. Early grounded on the Potomac? Market value becoming a tough nut to crack More on the agent Bubble Discovery... This day needs no reminder... Living in the richest county... 3 acre parcels or 500,000 volt power lines?

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

September 28, 2006

Tracking the real estate market in an attempt to understand what is really going on is an unending quest of the Guide. A recent subject in the blog world that received a tremendous amount of attention is the practice of "re-listing." Simply defined: deliberately withdrawing a listing, changing something (usually price) and re-entering into the MLS as a new listing. Some say this is a misleading practice. Others say it's just marketing.

Our MLS (MRIS) in the greater DC Metro area solved this problem long ago. We track two important numbers: DOMM and DOMP. DOMP is the total time a listing has been active regardless of how many times it was "re-listed" (as long as the tax ID address is the same). DOMM is the time a specific listing has been on the market. A property must be off the market for 180 days before DOMP will be reset to zero.

There are those that will always try to game the system for some marketing or client advantage and do so regularly. I'll let others pass judgement on the ethical issues of "gaming." I don't see that it really gets anything accomplished. Most good agents and buyers are smart enough to see through gaming activity. One of the most frequent questions we get on our listings is "how long has it been on the market and why?" We tell the truth.

I have cautioned our readers about re-listing as it effects the inventory trends and original list price in the data we publish. So, starting today we are tracking re-listing activity in the Daily Market Watch. Some definitions:

Under "New Activity" "Activity in last 30 days"

• Listings: these are all listings that were listed in the last 30 days from today.
• Re-List: same as Listings except, if DOMP is greater than 30 days it gets counted here.

So, Re-Lists are contained in Listings. For Fairfax today, re-lists are about 27% of new listings (look at DOMP in the table). For Loudoun, re-lists are about 35% of new listings. These could be intentional re-lists for marketing purposes or they can be simple an expired or withdrawn listing coming back on the market with new terms or a new agent.

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September 26, 2006

Price trends are now available on the Daily Market Watch charts for Loudoun and Fairfax counties. The charts show trends of Original List Price and Sold price. I didn't go back in time to collect daily samples. I did take a sample on Aug, 1, Aug 15, Sept 1 and Sept 15. Like the other charts, new construction was included prior to Sept 1.

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September 20, 2006

We have quite a debate raging on a recent "short" article I wrote entitled Market value becoming a tough nut to crack. The real issue: where are home prices heading? In response, I have done some wizardry on the MLS data and pulled some statistics representing a point in time to try and determine what might actually be happening to home prices in Loudoun County. I looked at the "sweet spot" in the $500,000 and less price range. These are resales only. No new construction. All categories represent activity in the last 30 days from the sample except for total listings.

This is going to take a lot of space...so read on...

On September 21st I pulled stats on the market to include original list price, last list price and sold price in the categories shown in the graph below. I then arranged them by highest original list price to lowest. This turns out to be roughly days on market in descending order. Not what I was trying to do but significant. There are many colors used between the chart and data table. The chart colors and table colors have no correlation.

My observations:

• Expired and withdrawn listings were on the market about 4 months and average prices dropped about 5%.
• Current active listings are on the market about 3 months with an average price drop of an additional 2.5%.
• Sold listings were on the market about 3 months and sold for 93% of the original list price and 89% of the high list price of expired and withdrawn.
• Looking at seller subsidies, I found that 90% of all sold listings had an average of $10,000 in subsidy. This is not reported anywhere. So, in simple terms the net of sold listings went for $366,000 as opposed to the reported $376,000. Or, 87% of the average asking price 4 months ago. See the blue shading in the table.
• New contracts in the last 30 days have a "last" list price equal to the average sold price, $376,000. Interesting!
• Finally, new listings are coming on the market at the same value of the last list price of those that sold.

So what? I think I can conclude:(1)selling prices are lower than those reported (I've been saying that all along) because of subsidies, (2)since a high percentage of expired and withdrawn listings come back on the market, looking at those original asking prices gives us a better idea of how prices are really coming down and, sellers are getting smart enough to list at or near recent selling prices (see new listings).

I think I can safely conclude that actual price reductions are greater than the 8% that is officially reported (reduction due to negotiations). It could be as high as 13%.

Caution: averages can tell a story but can be misleading. Also, this is just one point in time. And, I might have flawed logic (I don't think so).

I did the same analysis on $500,000 to $1 million as well as over $1 million. Price reductions are even greater on a dollar as well as percentage basis. Just not enough time or space to present those findings here.

I am sure this will create more debate. Enjoy the graphs and charts. It is a lot of work getting to the data and then trying to present it in a logical way. Let the marathon continue!

LOUDOUN RESALE MARKET $0 to $500,000

Total [9/21/2006]	# Homes	DOM	|Orig Price	|List Price	|Sold Price	|List:Orig	|Sold:List	|Sold:Orig
Withdrawn	467	112	$420K	$403K		96.0%		87.0%
Expired	134	130	$417K	$398K		95.4%
Active	1728	98	$406K	$390K		96.0%
Sold	224	96	$405K	$383K	$376K	94.6%	98.2%	92.8%
Sold w/$10,000 avg subsidy			$405K	$383K	$366K	94.6%	98.2%	90.3%
Contracts	281	104	$402K	$380K		94.5%
New Contracts	221	106	$398K	$376K		94.5%
New Listings	312	16	$383K	$382K		99.7%
Buyer Intensity		-0.62

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CROSSING THE POTOMAC

Mutinous Ferry Roils the Waters
Boat Owner Entangled in Licensing Dispute Ignores Coast Guard's Order to Shut Down

By Fredrick Kunkle
Washington Post Staff Writer
Friday, September 15, 2006; Page B03

True to its Confederate namesake, the Gen. Jubal A. Early ferryboat yesterday defied orders by the federal government to halt operations because of a licensing dispute and instead kept chugging back and forth across the Potomac River carrying hundreds of commuters.

More to this story...with photos.

White's Ferry is somewhat of a historical landmark on the Potomac River carrying commuters back and forth between Loudoun County and Montgomery County, Maryland. It's a great alternative to the long commutes to the beltway or north across the bridge at Point of Rocks on Route 15 (a two-lane historical byway that has become the de facto "outer beltway"). I know. I used the ferry for almost four years in my corporate life.

The ferry transports about 500 vehicles a day. That's 500 less on the major commute corridors out of Loudoun County. But, the Coast Guard doesn't seem to care. On the other hand, safety and a knowledgeable, licensed captain are extremely important. I've experienced many "hard landings" on the ramps, one that damaged my car.

The owner has run the ferry since he purchased it in 1946. He is well aware of the rules. Mr. Brown: get it inspected and keep your "captains" licensed. We need you. We need the ferry. We need it to be safe.

Coast Guard: This isn't an ocean going vessel. It's a raft on a cable. Don't be so punitive. Be part of the solution. Reasonable people will act reasonably.

In case you are interested you can...read more.
The ferry carries about 21 average sized vehicles and makes a round trip in about 15 minutes, loading and unloading at each end. It is basically a metal raft guided by cable across the river. As a maritime vessel, the Coast Guard has vessel inspection authority and requires a licensed captain to operate it.

Seems as though the Coast Guard performed a recent check and found the vessel did not have a required inspection certificate and was operating without a licensed captain. The Gen. Jubal A. Early was ordered to cease operations, and threatened with significant fines. The owner who has run the ferry since 1946 defied the order and continued operation. The ferry carries about 21 average sized vehicles and makes a round trip in about 15 minutes, loading and unloading at each end. It is basically a metal raft guided by cable across the river. As a maritime vessel, the Coast Guard has vessel inspection authority and requires a licensed captain to operate it.

PS: As of this writing the ferry is still operating.

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September 16, 2006

A must read article from the Washington Post:

Valuation Gets Tough When Sales Slide
By Kenneth R. Harney
Saturday, September 16, 2006; Page F01

In cooling real estate markets, it's one of the hottest questions: How do you value a specific piece of property when local home sales are down 20 percent to 40 percent from last year, inventories of unsold homes have ballooned by 200 percent or more, and all the trend lines are pointing negative?

It gets harder and harder. Our advice to sellers: look around, objectively compare your property to similar homes on the market, make your home look and feel better than your competition, price it in the lower 10% of the competitive range and be willing to negotiate. If you can't make it the best home on the market at a value price, then make it a bargain.

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In the Post this morning:

Influx -- or Glut?
Despite Slump, New Agents Rushing In

By Kirstin Downey
Washington Post Staff Writer
Saturday, September 16, 2006; Page F01

In the face of a real estate slump that has left home sellers longing for the good old days, when homes sold within minutes of hitting the market, real estate agents are still flooding into the business.

So many agents...so few sales. Over 100,000 agents in the DC Metro area and over 120,000 in Maryland, DC and Virginia combined. In the past year, the number of agents increased by 4,000 in Virginia. This report has many of us scratching our heads. The easy money is over. Read my lips...O...V...E...R. The law of supply and demand seems to be out of whack. Or, these people don't read. Many of us are still expecting to see a decline.

This is not an easy business (except for getting licensed...now that's easy). Recent studies show it takes 3 to 5 years to build a business that can generate an average income of something less than $50,000 per year (that may seem like a lot unless you live in Loudoun County).

At a time when the industry is concerned about its image and is focused on raising the professionalism of its practitioners, revising the entrance requirements becomes an imperative. My advice to those that want to get into this business:

• have enough financial resource to carry you 2 to 3 years,
• get some basic business education (or have suitable business experience),
• be able to create a business plan,
• understand completely the concept of customer service,
• determine what sets you apart from the crowd (develop a unique value proposition),
• be willing to work into the wee hours of the night and on weekends (ie; be available when your clients are)
and
• find a broker that will help you develop your skills and learn the "real" business of real estate.

Finally, understand the definition of professional:

"applied to describe a person (or work of such a person) with the following attributes: service orientation, making expertise available to others, based on a distinctive body of knowledge and skills underpinned by abilities and values, autonomy in performing working within defined boundaries, public recognition of the authority of the practitioner by virtue of working to ethical standards and being accountable."

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September 12, 2006

Time well spent this morning discovering the entertaining and useful Real Estate Tomato. What is this you ask? I asked the same question. A tomato? Then, browsing this Website/Blog I GOT IT! Jim Cronin is a real estate on-line marketing consultant/educator based in Sacramento, California...my hometown. Sacramento just might be the tomato capital of the world. Real Estate + Sacramento = Tomato. Juicy...

OK, enough. Jim has an awesome site giving sage advice on on-line marketing, technology as well as other relevant real estate topics. This is a must read for anyone contemplating a Blog and participating in Web 2.0. Check out these articles:

• Steal this blog
• The 8 P's to Blogging Success, and
• If You Write It, They Will Come

I'm feeling just a little humbled by my layman's attempt to promote Blogging to my peers...

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September 11, 2006

...we will never forget.

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September 10, 2006

In the Loudoun Extra of the Post today is a feature called Readers' Forum. Snippets from three perspectives on the richest county in America:

Middle income families can't afford housing in Loudoun.

HEATHER: ...those of us working, living and serving in our community (my husband is a sheriff's deputy with Loudoun County) and trying to move up, it will be one more pat on the head - and a reminder of where we belong.

"...to whom much is given, much is expected"

SERENA: Our Board of Supervisors should explain to residents why we have so many problems budgeting for new schools and roads when we are the richest county in the country.

"This is why we moved to Clarke County 5 months ago"

DEBRA: The influx of residents brought many extremely materialistic, superficial, self-centered and, most of all, rude people. Aggressive drivers became common...

...warmth and friendliness were replaced with indifference and selfishness. (We moved again)...to escape the very same behavior and attitudes that prompted us to leave Massachusetts six years ago.

Remember the weeks and months after the 9/11 tragedy how courteous, caring, warm and friendly people were to each other without regard to status? Too bad it didn't last.

When real people speak we should listen. Poignant!

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Also in the Post this morning:

Power Line Could Undo Open-Land Conservation
Soaring Usage Puts 3 N.Va. Counties in Path

By Sandhya Somashekhar
Washington Post Staff Writer
Sunday, September 10, 2006; Page A01

Dominion Virginia Power is planning to build a high-voltage power line that could stretch across parts of Prince William, Fauquier and Loudoun counties, an answer to the region's growing energy needs that has raised fears of spoiling some of the state's most fiercely protected open land.

Loudouner's have been hotly debating land use in Western Loudoun for over six years. This news is going to elevate that debate to ever greater heights. The fight that is inevitable will be won by the entity that has the most "power." We don't seem to want a sea of McMansions on three acre parcels across this historic and beautiful land and we certainly don't want it cut by 15 story high towers draped with 500,000 volt power lines. NIMBY is going to take on a whole new dimension. High growth brings high demand for power that we all depend on. Here's more:

It would be part of a 240-mile, 500,000-volt electricity line from southwestern Pennsylvania to a substation near the Loudoun village of Aldie to serve Northern Virginia, where the addition of tens of thousands of residents the past decade has pushed demand up by 40 percent. It is also one of about 10 similar proposals across the country that could test a new federal law giving power companies far-reaching authority to take land if their services are deemed vital to national interests.

There are those in Eastern Loudoun, Fairfax and Prince William counties that will be amused by the NPLIMBY's I am sure.

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A good article this morning in the business section about news feeds for those that are RSS challenged (Really Simple Syndication).

Making Your Own News Page Is Really Simple
By Chris Barylick
Special to The Washington Post
Sunday, September 10, 2006; Page F07

Imagine a book without an index, chapters, page numbers or paragraphs. All the information you'd ever need might be at your fingertips, but without a clear way to sift through it, the chances that you'll find what you're looking for are slim...

But how much do you know about something called RSS -- a technology that allows you to put updates from news sites in one easy-to-scan location on your computer or on the Web?

RSS (Really Simple Syndication) is a tool that allows you to subscribe to a site's update feature with only a few mouse clicks.

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September 9, 2006

Fairfax Buyer Intensity
Red Bars: Sellers Market | Green Bars: Buyers Market Gray Bars: Balanced Market
[click for more detail]

This is the continuation of a monthly series of commentary on the housing market in Fairfax County. See Fairfax County Market News and Daily Market Watch graphs.

INVENTORY:
Inventory of homes for sale definitely peaked in June at nearly 9,200 homes on the market, declined slightly in July and then again in August. August shows a small decline to a little less than 8,700 homes for sale. Fairfax County sellers did get a smidgen of a seasonal bounce through the spring and early summer but sold inventory levels are in the average range below year 2000 levels and down 50% from the 2005 market peak.

HOME PRICE APPRECIATION:
Surprisingly, average home price appreciation is maintaining after a decline early in the year. Year over year is showing a 6% increase. Compared to surrounding jurisdictions, Fairfax County seems to be holding up much better.

DAYS ON MARKET:
Average time it takes to sell is higher at 67 days in August. With a slower sales season ahead of us I suspect this measure is going even higher.

SOLD TO LIST PRICE RATIO:
This ratio continues to decline and is now 93.6%, down 2 percentage points from last month. This is the "negotiated" ratio, SOLD PRICE as a percent of the LAST LIST PRICE. Buyers are getting about a 7% price reduction during negotiations.

NEW CONSTRUCTION (chart not yet available):
As of the end of August, the MLS is reporting 624 homes on the market with only 41 SOLD during the month, a 7% absorption rate. A lot of the excess inventory may be due to Condos being overbuilt and investors trying to flip. Reminder: new construction data in the MLS is very unreliable. More may have sold but we won't know the real number for several months.

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Loudoun Buyer Intensity
Red Bars: Sellers Market | Green Bars: Buyers Market Gray Bars: Balanced Market
[click for more detail]

Market commentary for Loudoun County, Virginia. Headings are links to historical charts.

INVENTORY:
Inventory of homes for sale continues a slow decline to a bit above 4,400 from nearly 4,800 last month. Again, it is NOT because of more homes being sold because both new contracts and settlements (sold) remain flat. It appears the small reversal in inventory is mainly due to sellers not re-listing when they withdraw or when listing contracts expire. For a buyer's market, we see few buyers taking advantage of the good deals that are available.

HOME PRICE APPRECIATION:
Average appreciation declined by 5% from last years average. At this point in the year, full year appreciation could easily see an 8% to 12% decline.

DAYS ON MARKET:
Average time it takes to sell continues its upward trend to 93 days. This appears to be headed even higher based on the rolling 30 day accumulation we provide on the Front Page Daily Market Watch (100 days as of this writing).

SOLD TO LIST PRICE RATIO:
This ratio declined another two percentage points to 92%. This is the "negotiated" ratio, SOLD PRICE as a percent of the LAST LIST PRICE. Successful sellers are drastically lowering their price and buyers are getting another 8% during negotiations.

NEW CONSTRUCTION:
Builders continue to struggle to write new contracts on "to be built" and "spec" homes. As of the end of August, the MLS is reporting 707 homes on the market and we measure only 28 SOLD during the month. A dismal 4% absorption. Average price is down into the very low $700,000's. Incentives are plentiful.

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September 8, 2006

The local MLS (MRIS) began publishing market reports by month according to Zip Code in the MLS coverage area. The monthly periods available are from January, 2006 forward with plans to eventually go back in time to match all the monthly reports.

You can find them at MRIS Reports and Statistics.

Go ahead...try it. Enter the zip code you are interested in, select a month and press "generate." Here's a quick example:

ZIP CODE: 20141
Round Hill, Virginia
July, 2006
112 total active listings
  26 new listings this month
   7 new contracts this month
   7 sold (yuk)
141 average days on market for the 7 sold
89.6% sales price to list price

Wow, more data for me to pour through. I could make a lifetime career of extracting data and producing graphs for people. If I could just get to their entire data base!

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September 5, 2006

Tuesday, September 5, 2006: The Dulles Area Association of REALTORS® is hosting the annual Expo at the Lansdowne Resort in Leesburg, VA today. The Expo includes a trade show, notable (or not so notable speakers) followed by the annual meeting and networking reception.

The Expo website can be found here. The theme for this year is "learn - grow - become more."

Yours truly has a 45 minute speaking spot mid-afternoon on the subject of "Blogging for Business." This is the "not so notable" on the speaker list. My entire presentation is geared toward a practical introduction to real estate blogging and can be found here (a quick Blog of course). It will be delivered live using the Internet and the presentation Blog to acquaint agents to Blogging and its power to create web-based relationships. My theme is: How to stop worrying (about SEO) and love the Blog!

Comments from the Blogging critics are welcome. This is an open forum and contributions from my expert Blogoshpere friends are appreciated. Participants will be able to ask questions and get answers long after the Expo concludes.

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September 2, 2006

New Construction is now removed from the daily sample as of this morning. The charts will show an abrupt change in all the trends (we did not go back and re-sample the last 30 days). Additionally, the chart window will gradually expand to 90 days. Below are the daily sample for September 1^st BEFORE New Construction was removed and also a sample of ONLY New Construction.



Reminder: Many builders do not post in the MLS until after closing therefore, the above data is not reflective of actual activity and the reason for removing it from the Daily Sample. On the other hand, the data clearly shows the tremendous weakness in New Construction home sales with Loudoun County suffering to a greater degree.

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September 1, 2006

The very first article in the Guide that mentioned the Bubble was on the second full day of our Blog experiment, March 26, 2005. Since then, the Bubble is mentioned no less than 37 times, about twice a month on average. My approach has always been to dig out data and present it in an objective way. I started commenting on the market downturn in Loudoun County a little over a year ago. I also commented that the attention the media gives the Bubble just might be a self fulling prophecy. I still do to some extent.

I am not an economist. Even those that are, cannot agree. Some say "normal adjustment," some say an inevitable "cooling from an overheated market" and "soft landing" is yet another phrase used. Others predict "crash, burst and significant decline."

What I do know is that demand has dwindled and we now are over supplied in Northern Virginia. New home builders are slowing production, offering huge incentives and abondoning building lots already approved. Buyers are like vultures waiting for sellers to capitulate. Lets look at Loudoun County for example: The average rate of homes being sold is about the level last seen in 2001. Average monthly home sales are off 33% from the 2005 average. Home prices are off at least 6% from last year. As I sit here and look at all my charts, I see significant breaking...not a crash. Even if prices roll back 20-25% we will still be at the same level as early 2005. Still not a crash in my mind. And, unsold inventory is now slowly declining. That's good.

There are many factors that influence the market, emotion has to rank very high. Even though housing is considered somewhat of a commodity, it is still an emotional purchase (and sell for that matter). What value do we place on lifestyle, security, personal space, privacy, community and similar intangibles?

If economists can't agree (those that don't have some interest in the industry) then I am at a loss as to what this practioner can tell my clients. We just do the best we can helping them meet their objectives.

So. Is it a Bubble Blog? It is if you want it to be.

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I am very gratified that our readership is growing exponentially! The number of visitors surpassed the 10,000 mark in August to 14,215, a 51% increase in one month. Page views are up another 28% to 66,615.

All I can say is...WOW! This is going to be a hard act to follow.

This started as an experiment 17 months ago with no idea where it would go. It is no longer an experiment. It looks like the real deal. Many thanks to our followers!

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