Inside Market Updates
Commentary on what's going on in the Northern Virginia and DC Metro real estate markets.There are 23 articles in this category and on this page. Up to the most recent 20 are listed here.
April 22, 2006
Wonder why your home isn't selling?
This article is featured on the front page of the Washington Post this morning (image added by us):
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...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.
Published by Merv on April 22, 2006 11:16 AM | Give us your comments here.
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April 20, 2006
Different Opinions on the BUBBLE
An interesting article on "Fuzzy Math for the Housing Bubble" in the Washington Post this morning: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:
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.
- 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.
Published by Merv on April 20, 2006 08:15 AM | Give us your comments here.
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March 23, 2006
Measuring Real Estate Market Strength
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 MARKETpulse 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 MARKETpulse 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.
Published by Merv on March 23, 2006 03:35 PM | Give us your comments here.
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January 20, 2006
Perspectives: No Sooner Said Than Done
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:Read the whole article here.'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]
How refreshing!
[I really don't think their article had anything to do with little ol' me.]
Published by Merv on January 20, 2006 08:46 AM | Give us your comments here.
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Give Me A Real Estate "Bubble Break"
Here are some excerpts from an Inman News article from yesterday (1/19/2006):Let's put this into perspective:
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.
- 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.
Give me a break and lift the fog on market perspectives!
Published by Merv on January 20, 2006 06:32 AM | Give us your comments here.
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January 08, 2006
NAR Economic Forecast
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:In our local market, we might fair better than most See More Real Estate Market Data. We remain cautiously optimistic.*Estimated **Projected
National
AveragesInflation
RateGDP Jobless
Rate30 YR
Fixed RateAppreciation
RateExisting
Home SalesNew
Home Sales2004 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
Published by Merv on January 8, 2006 04:08 PM | Give us your comments here.
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December 31, 2005
Builders Offering Incentives
If you have been putting off buying that "new home," now may be the time to get a better deal. We've noticed an advertising trend by builders offering incentives to both buyers and agents alike. Up until this year, builders wouldn't even negotiate. Since about July when the market started to soften incentives started crawling out of the woodwork like a trail of ants after the sugar.
The most extreme was the email ad for 6 months builder paid mortgage and 6% commissions to agents that brought buyers and closed before year end (we commented on this one several weeks ago). Here is an excerpt from an article published in the Washington Post this morning:
Read the full article here.Facing Weaker Home Sales, Builders Sweeten Deals
Freebies Include Mortgage Help, Televisions
By Sandra Fleishman Washington Post Staff Writer Saturday, December 31, 2005; Page A01
Home builders around the region are luring would-be buyers with freebies worth thousands of dollars, in an attempt to prop up sales in a slowing real estate market.
Pulte Homes Inc. is offering a 42-inch television, free heat for six months or a $5,000 check for window coverings to some buyers. Ryan Homes will finish the basement free. NVHomes will throw in a golf club membership in some developments.
"Incentives are definitely on the rise," said Kenneth Wenhold of real estate research firm MetroStudy. He estimated that since July, when the market began to soften, buyer traffic at new-home projects has fallen off 30 percent and so have contracts. "With all the inventory, buyers now have more choices." ...
The number of homes for sale in the Washington area has more than doubled since last November, according to figures from the area's multiple listings service. The last time the Washington region had this many houses for sale was the late 1990s, before low interest rates and a growing job market fueled the years-long boom in home sales.
During that boom, even while houses and condos sold as soon as they came on the market, builders sometimes offered limited year-end deals. They have also routinely given buyers a break for using approved lenders or title companies. But those incentives were nothing compared with what's going on now.
Among the deals showing up in ads and sales offices are upgrades to gourmet kitchens, six months of mortgage payments, a year-long lock on interest rates and tens of thousands of dollars toward closing costs. Many of them have been promoted as year-end or holiday specials.
In the Washington area, incentives can amount to as much as 5 percent of the sales price, according to Daniel Oppenheim, an analyst with Banc of America Securities. One problem for builders, he said: Investors who bought recently are reselling to cash out.
"All of a sudden the new-home builder is not only competing with the resale market but with the exact same home they just completed," Wenhold said.
It is reported that over 25% of the new homes homes sold in this region the last two to three years were bought by investors looking to make a quick profit. There are an abundance of these homes now on the market by those that couldn't get out soon enough. Bad news for sellers. Good news for buyers. Many of these can be had at a steep discount.
Published by Merv on December 31, 2005 08:47 AM | Give us your comments here.
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December 15, 2005
92,000 Home Shortfall
Everywhere we look we are getting the same forecast: The D.C. Metro area has a strong growing economy and a constant shortage of homes. If these forecasts are correct, the housing market and prices should remain firm for some time to come. The most recent predictions come from a study by the Metropolitan Washington Council of Governments and published in the Washington Post this morning:Read the entire story here.Planning Body Foresees Housing Shortfall
By Bill Turque
Washington Post Staff Writer
Thursday, December 15, 2005; Page B08
...
In its latest round of regional growth forecasts, the Metropolitan Washington Council of Governments said that while the area's economy will generate about 1.6 million new jobs by 2030, current building patterns would leave a shortage of about 92,000 homes.
COG, composed of representatives from the area's local governments, studies regional issues such as transportation, housing and population. It issues periodic reports based on data provided by member jurisdictions. This latest, called "Round 7.0," predicts that the region's population will grow by about 2 million over the next quarter century, reaching 6.6 million by 2030.
Housing supply has lagged behind job creation in the region. In Fairfax, for example, the number of jobs rose from 404,000 to 533,000 during the 1990s, according to county figures, while the home supply increased by less than half that amount.
...
Most of the new jobs the council predicts will come to the area would be in fields such as engineering, data processing, business services and medical research. But the report calls the numbers projections and points out that economic and market conditions can change. COG's data include part-time jobs, consulting jobs and positions not covered by unemployment insurance...
Staff writer Lisa Rein contributed to this article.
Published by Merv on December 15, 2005 08:35 AM | Give us your comments here.
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December 14, 2005
More Real Estate Market Data
I found this article published by David Howell, managing broker of the McLean office of McEnearney Associates, Inc. The snippet below is commentary about a presentation by Dr. Stephen Fuller, a noted professor of public policy and head of the George Mason University Center for Regional analysis, to the Northern Virginia Association of Realtors® Economic Summit in September.Read the full article here. Also, download the Fuller presentation here (PDF file 840KB, for those that like the numbers before bedtime).We have often quoted Dr. Stephen Fuller of George Mason University, a true visionary about the DC economy. At the recent Northern Virginia Association of REALTORS® Economic Summit, Dr. Fuller focused on this area's incredible job growth as one of the major reasons to remain optimistic about the long-term health of our real estate market. As an example, the DC metropolitan area has created 287,000 net new jobs in the last five years - half of which were created in Northern Virginia. In just the last year, 84,500 new jobs have been created. And here's the real impact of those new jobs on housing: the jobs created 53,000 new households, but builders are only capable of building about 28,000 new housing units - homes, townhomes, condos and rental apartments - per year. Because of the shortage of affordable housing close-in, many of those new households have headed up and out - to the ex-urbs. Dr. Fuller projects a continued and growing shortage of housing units, and that long-term shortage will continue to mean good news for sellers. As long as we continue to see strong job growth, fueled first and foremost by the engine of federal spending (Northern Virginia gets half of every federal dollar spent in the region), we will continue to have a healthy real estate market.
Over the last 27 years, the average annual price appreciation in this region has been 6.9%. Both we and Dr. Fuller expect to see appreciation rates closer to that long-term average - perhaps 7% - 12% per year for the next decade.
Dr. Fuller presents the numbers that back up the statements I made recently about the future of the Northern Virginia market driven by job growth and housing shortages.
Published by Merv on December 14, 2005 05:52 PM | Give us your comments here.
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November 16, 2005
Message To Our Clients
This is an eMail message just sent to our selling clients. We are posting it because it is relevant to all sellers in this time of market uncertainty.Friends and clients,
This is the first of periodic market updates that we will provide you in this time of market uncertainty.
Attached are market statistics for Fairfax (fx), Loudoun (lo) and Prince William (pw) Counties. You probably heard us talk about the sluggishness as well as reading about it in the local news. It's real. There are more listings available to buyers than any time in recent history. If you don't follow the frequent articles in our blog, you should. We probably do more market research than anyone else and give our opinions in a straightforward, unbiased manner.
What this means:
- Be realistic. Buyers are now buying the best for their money. Either show better for the price or reduce the price. Investing in paint, new carpet and staging when necessary yields a big return on investment. Also, Location, Location, Location are always the top 3 real estate priorities.
- Be flexible. Buyers are being more selective and expect more from sellers in price negotiations and perhaps subsidies for closing costs.
- Be logical: This is market dynamics. What your neighbor sold for last spring or last year has nothing to do with market value today.
- Be professional: Generally, work on your home done by a professional will be worth more in the long run. Buyers will be picky.
- Be patient. We can't know what the future may bring but we do know this:
- The Washington Metro area economy is among the strongest in the nation. Jobs are being created at a rapid pace.
- People moving to the area for jobs will need housing.
- The market was over heated the last few years and it is now moderating to "normal", whatever normal is.
- First time and "move up" buyers are looking further away from the Beltway because prices tend to be lower and quality of life better.
- 25% of the homes sold in the last two years were by "investors" buying and flipping. Those that didn't flip soon enough are now stuck. That inventory needs to dissipate.
- And, all the "real estate bubble" talk is feeding on itself.
Anecdotal evidence:
- Public open houses are drawing few attendees (discussions with other agents).
- A nice property in Waterford priced below appraised value has had 3 showings in 6 weeks (a good friend of ours also in the business).
- According to our broker, town homes have been hit the hardest. These are typically sold to first time buyers who are hesitant to buy into uncertainty.
- A reliable and objective appraiser we know bought a new construction, "to be built" home in an upscale community in and around Leesburg, VA several months ago that the builder is now selling the for tens of thousands less. He can't get out now and he wishes he could.
- Builders and sellers are offering more incentives to buyers and "bonuses" to buyer agents for contracts. Builders are negotiating again after several years of naming their own terms. (By the way, we do NOT advocate agent bonuses. It creates a potential conflict of interest. If we recommend incentives, it is always to the buyer.)
Our marketing:
In summary, the heady times are no longer with us. Normal used to be a few days to a couple of weeks on the market to get a ratified contract. Normal is now an average of 45 to 60 days. More for some properties. Pam and I never quit talking and brainstorming on strategies that will help you sell.
- Our internet marketing is second to none. We showcase all listings on realtor.com, homesdatabase.com, Yahoo, MSN, washingtonpost.com among others.
- Every property has a VisualTour (75% of buyers look at homes with Visual Tours or those with more than 1 picture first.) Our VisualTours are among the best in the industry. We average over 300 total views per week for all our listed properties. Our properties get exposure.
- Our website and blog get over 1000 unique visitors per month and is growing rapidly.
- If you do a Google Blog search for Virginia Real Estate or Northern Virginia Real Estate, we come up at the very top of the first page. This means exposure for your property.
- Our properties are posted to "craigslist" and soon on Google Base (beta in test now) as well as Google and Yahoo maps.
- We employ more technology than 99.9% of all other agents. To make us more efficient and to get our clients the maximum property exposure.
- We advertise for our own self promotion and at our own expense, primarily in Leesburg Today, Loudoun Business and Elan magazine.
- Our ads stand out above all others in professionalism, size and white (or blank) space.
- Not every property is advertised every week.
- We advertise primarily to drive buyers and prospective clients to our Websites and to your properties.
- When we get buyer calls, they are almost always from something they see on the internet as opposed to print (there are a few exceptions, we have received a few calls from our ads in Elan).
- We will also run ads on specialty Websites when appropriate.
- All of our materials are created toward the discriminating eye of the buyer and their agent.
- We rarely do public open houses. The return on investment is minuscule. That is why we can offer our services at a more reasonable rate than anyone else. You don't have to pay for activity that does not work.
We hope this has been helpful. We need to temper our expectations to the reality of the marketplace. We will send the attached reports as they are available. Please call or email if you have questions. Looking forward to the market "upside".
Our very best regards,
Merv and Pam
Published by Merv on November 16, 2005 05:14 PM | Give us your comments here.
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November 11, 2005
Home Builders Sweeten Incentives
Jim Duncan, my Blogging friend at www.realcentralva.com commented on my last post referring to this article in the WSJ. Thanks Jim.
Published by Merv on November 11, 2005 12:39 PM | Give us your comments here.
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Builder Desperation? Agent Incentives
Great News for You: 6% Commission*
Good News for Your Clients: 6 Months Free*
I receive emails from the real estate agent and builder community advertising the homes they are marketing. I received this one (click to view) a couple days ago with the headline above. That's right. 6% commission to me if I can sell one of their homes and 6 months free to home buyers (I assume no mortgage payment). There are three caveats:
- Purchase contract signed by 11/30/2005 and
- Close by 12/31/2005
- Buyer must use their lender
So, here's the deal: anyone out there that wants to buy one of these Stanley Martin homes as described and you can meet the time constraints, we will share half, or 3%, of the commission with you as a rebate at closing! Now that is a buyer incentive. You have to call us before you visit Stanley Martin.
Published by Merv on November 11, 2005 06:50 AM | Give us your comments here.
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October 20, 2005
Bubblettes
Overvaluation now referred to BUBBLETTES!!!!???? Actually a brainy report that may have some merit. Global Insight ranks the D.C. Metro area 50th with a 35% overvaluation. Good bedtime reading!Overvaluation in Housing Market Becomes More Pervasive During Second Quarter
RISMEDIA, Oct. 17, 2005 — The second-quarter update of the Global Insight/National City Housing Valuation Analysis released today shows the single-family housing market became more overvalued from the first quarter.
Fifty-six of the 299 metropolitan areas studied, accounting for 32 percent of the total single-family housing market, were identified as being at risk of future price declines. This represents a slight increase from 53 metropolitan areas (31 percent of the single-family market) during the first quarter.
"Evidence of bubblettes clearly continues to build," said Richard DeKaser, chief economist at National City Corporation (NYSE:NCC), "though frothy conditions still account for a minority of the overall housing market..."
The net addition of three metropolitan areas to the list of extremely overvalued markets includes five new listings and two areas that have been dropped. New to the list are Fort Walton Beach, Fla.; Portland and Eugene, Ore.; Edison, N.J. and Bethesda, Md. Except for Fort Walton Beach, where prices advanced at a 6.9 percent annual pace during the quarter, each area among the five new listings posted increases between 21 and 29 percent. The two metro areas that fell off the list of extremely overvalued markets are Boston and Essex, each located in eastern Massachusetts. While prices there continued to rise at a healthy clip, improving fundamentals, such as income and population gains, helped reduce the imbalance.
"We're not surprised by the emergence of extreme overvaluation in what are clearly hot spots for the housing market," stated Philip Hopkins, managing director of U.S. Regional Services at Global Insight. "And the Boston area adjustment illustrates the possibility for orderly corrections, rather than inevitable crashes. Outside the hottest housing markets, some signs of a slowdown in the rate of price growth were evident. The average level of overvaluation declined from 22.7 percent to 19.9 percent, with 171 of the 299 metropolitan areas analyzed showing a decrease in the extent of overvaluation between the first and second quarters."
The Global Insight/National City Housing Valuation Analysis examines the top 299 U.S. real estate markets to determine what home prices should be, controlling for differences in population density, relative income levels, interest rates, and historically observed market premiums or discounts. Markets with valuation premiums above 30 percent were deemed at risk for price corrections based on the typical degree of overvaluation that preceded the 63 known local market price declines observed since 1985.
The Global Insight/National City Housing Valuation Analysis is a joint venture that combines a statistical model originally developed at National City Corporation with data largely developed at Global Insight. More information is available at www.globalinsight.com/housingindex or www.nationalcity.com/economics.
Published by Merv on October 20, 2005 07:13 PM | Give us your comments here.
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October 15, 2005
Don't Blow Your Own Bubble
The hottest topic in real estate these days is about the housing bubble. Seems the Bubble Bloggers and Bubble Commenters found our commentary. How do we know? There was a HUGE spike in unique visitors to this blog yesterday. Tracking it down, I discovered the reason. A free lance writer in Arizona, Ben Jones, found us and published excerpts of our market comments on his popular blog. Thanks Ben for the instant attention! You are now linked in my BlogRoll.
We are one of the few (or only) agents that provide data and commentary on the real estate market in Loudoun County, Virginia via our blog. Our commentary is based on trends in data, anecdotal evidence picked up from talking to other local agents as well as our own real world observations. We don't sugar coat it.
I recently made the statement that September is "historically" a slow month and that the market "usually picks up" again from October through the end of the year. These are not casual, self serving statements. They are based on historical trend data.
I will gather the data I use and graph them within the next few days for all to see. I will provide my own objective opinion and all our readers can come to their own conclusions. The most common question we get from our clients, prospects, friends and neighbors is: "What's going to happen in the next 3 to 6 months?" Our answer: "We don't know. There is immense negative speculation in the market. But, what we do know is there are still buyers willing to buy. Be more realistic in pricing your property and make it show better than your competition. Be patient. Don't panic. It will sell."
Moderation in the market is a good thing. Supply and demand in any market will drive value. Let the investing speculators go somewhere else so we can get back to normal. Whatever normal is.
One last thought. Don't blow your own BUBBLE.
Published by Merv on October 15, 2005 06:14 AM | Give us your comments here.
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September 10, 2005
One Last BUBBLE Comment
I get a lot of questions about real estate market timing. My simple answer is this:Real Estate has always been the most stable "long term" investment anyone can make. History proves this statement. Buy real estate for making a home and generating memories. Our home is our safe haven.This will be my last statement about the B word. Or, maybe not.
Over the long haul, you won't be dissappointed with the returns. Markets will adjust. Be patient. It is foolish for us average types to try to predict what might happen a month from now or five years from now.
Published by Merv on September 10, 2005 08:57 PM | Give us your comments here.
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August 09, 2005
Appraisals: Step on the brakes?
Northern Virginia Housing Market Cooling?
The last two to three years it was unusual for a property not to appraise. Home values were rising rapidly, interest rates were low, the market was red hot. We have anecdotal evidence that the market is changing:
Market value appraisals on five out of five of our recent listings came in lower than our own market analysis and clients expectations!
The normal client reaction is:
How can this be? My property tax assessment rose 25% last year! My property must be worth 25% more. The one like mine down the street sold for X last year and 25% more than X is what mine must be worth and besides, my property is a lot nicer!
Here is a possible explanation:
Last year's market data drive this year's tax assessment. Appraisals focus on market activity of comparables in the most recent period of time data is available; sometimes only the last few weeks. Market value is loosely tied to assessments. Buyers and sellers drive market value at any point in time.
The market has changed in the last few months. There are definite signs of market braking. Inventory is rising, it is taking longer to sell, there are fewer buyers as interest rates continue to rise and we see many price reductions on current listings and buyer incentives coming back to the new construction market.
Is the bubble bursting? We still don't think so. Just a normal market adjustment based on economic factors. The market is still great, just not red hot! Sellers may not get what they expect but nobody is losing money either. Sellers are extracting huge amounts of equity built up over the last several years.
What's bad about that picture?
Buyers: Be cautious but not afraid. Purchase for lifestyle changes and long-term gains in value...not short-term financial gratification.
Sellers: If you have owned property for a couple of years, you are making money, not losing.
Published by Merv on August 9, 2005 06:19 AM | Give us your comments here.
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July 25, 2005
Bubble Bursting?
The Washington Post is reporting this morning:D.C. Area Housing Market Cools OffShould we panic? Not yet. July and August are historically slower months in the real estate cycle. It should pick up a bit after school starts. Plus or minus a few days on the market doesn't constitute a major shift. No doubt about it. Some properties are taking longer to sell, especially above the $700,000 price point. There are properties in the $300,000 to $400,000 range that sell in less than a week.
Inventory Up 50%; Region Still Strong
Home sales tend to slow in the summer, but the number of houses for sale in the Washington area has climbed by 50 percent in recent months. The available inventory has risen to about 35,300 homes, up from an average of about 23,000 in the past three years, according to Metropolitan Regional Information Systems Inc., which runs the local multiple-listing service.
The average number of days a house stays on the market has crept up by two days in Fairfax County, to 16 days in June from 14 days a year earlier. In Montgomery County it has risen to 20 days from 18 days, according to MRIS. Those are, however, still short turnaround times by historic standards.
Loudoun County: Data show that since the first of the year, average prices increased nearly 16%...down from nearly 25% the last couple of years. We fully expect prices to settle down with more normal appreciation rates in the single digit range in the future. There are three forces counter balancing the housing market in the D.C. Metro area:
- Job growth: The metro area is still experience healthy job growth and is expected to do so for the foreseeable future creating housing demand.
- Inventory: While the Post reports inventory rising, there is still a several thousand-unit shortage of new homes built. In addition, as counties struggle with growth controls, the inventory shortages will continue.
- Interest rates: Every report I read say rates are going higher. Listen to Greenspan. This fact alone will moderate demand, as potential move up buyers will think twice about getting into potentially higher mortgage payments.
Published by Merv on July 25, 2005 08:07 AM | Give us your comments here.
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July 17, 2005
Feeding frenzy over? Not quite!
In Loudoun County, prices are still rising and home sales are brisk. But, instead of days on the market, some segments are taking a few weeks. Here are the averages according to the Dulles Association of REALTORS®...
2005 Loudoun County Monthly Sales Statistics
Month Residential Units Sold Average Sales Price Median Price Average Days on Market Active Listings New Listings This Month New Pendings This Month Average S/P as a Percentage of L/P January 508 $469,168 $419,900 31 714 439 557 98.69% February 485 $462,467 $429,000 30 908 720 678 99.15% March 698 $501,491 $450,500 24 930 1007 808 99.84% April 760 $525,525 $470,000 23 1259 1298 898 99.67% May 799 $515,239 $475,900 14 1486 1295 942 100.28% June 994 $547,057 $491,000 21 1779 1485 802 99.47% **July** **631 **$584,344 **21 **1995 **1224 **499 **99.01% August September October November December Metropolitan Regional Information Systems,Inc. :: Last Updated on 07/08/2005
**Unofficial Estimate Only
Published by Merv on July 17, 2005 07:49 PM | Give us your comments here.
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June 24, 2005
Northern VA Home Sales
The Washington Post is reporting that home sales slow a bit but are second-highest on record.
Averages show price appreciation in the 12% range just since January of this year. Is housing still affordable? You be the judge.
In Loudoun County, prices are still rising and home sales are brisk. But, instead of days on the market, some segments are taking a few weeks. Here are the averages according to the Dulles Association of REALTORS®...
2005 Loudoun County Monthly Sales Statistics
Month Residential Units Sold Average Sales Price Median Price Average Days on Market Active Listings New Listings This Month New Pendings This Month Average S/P as a Percentage of L/P January 508 $469,168 $419,900 31 714 439 557 98.69% February 485 $462,467 $429,000 30 908 720 678 99.15% March 698 $501,491 $450,500 24 930 1007 808 99.84% April 760 $525,525 $470,000 23 1259 1298 898 99.67% May June July August September October November December Metropolitan Regional Information Systems, Inc. :: Last Updated on 05/16/2005
Published by Merv on June 24, 2005 08:53 PM | Give us your comments here.
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June 20, 2005
Home Prices and ARMS Collide
High Prices, Risky MortgagesAs reported in the Loundoun Connection June 14, 2005. When is a home a home and when is it just an investment? We're seeing more and more new construction homes being purchased for pure speculative purposes. Buy now, little investment, flip!
The average sales price for a single-family home in Loudoun County has now topped $650,000, making home ownership an even more remote dream for workers in the service industry.
Adjustible rate mortgages work well if interest rates stay low, as they have for the last five years.
Last year the DC Metro region added over 64,000 new jobs. Based on 1 1/2 workers per home, the region needed to add over 42,000 new units just to match the job growth. Actually, only 27,000 new homes were added - a 15,000 home shortfall.We believe that as the region continues to have substantial job growth demand will out strip supply and prices will continue to rise. There will become a point when employers will not be able to attract job seekers because of the high cost of home ownership and general cost of living and the situation will somewhat stabilize. Employers will also consider relocating operations elsewhere in lower cost geographic areas.
ARMS and "interest only" loan programs are attractive. In this environment it may be the only way to afford to live here. There is a point however, that the piper will eventually be paid! Interest only is not and should not be the vehicle for many people. Here's is our advice:
- Seriously evaluate how long you may live in your home. If you are reasonably certain you will be moving on in 3 to 5 years then interest only ARMS may be a good option.
- If you have a lot of equity built up in a home and you just want the added benefit of lower payments (and more positive cash flow) then refinancing with an interest only loan may be the right financial vehicle. But, at the end of the fixed payment period (3 to 7 years) plan on paying the higher price! Interest rates are on the way up and we should assume for planning purposes they will continue to rise even if moderately for the next few years. Then, of course, no one has a crystal ball to know for sure.
- If you are considering buying or refinancing, interview 3 to 4 reputable lenders or mortgage brokers that give good advice. Be wary of the internet loan sharks. You want local, personal service with someone you can grow to trust that will give you good advice based on your financial circumstances and short and long range goals.
Published by Merv on June 20, 2005 08:09 PM | Give us your comments here.
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