If you’ve been waiting for the Seller’s Market to return – wait no longer! In the first quarter of this year, several towns and counties in Northern Virginia have entered the Seller’s Market territory with less than a 3-month supply of homes available to home shoppers.
Buyers have been leaping off the sidelines for months to snatch up houses that have had a 5-year backup in pricing. For instance, this activity has reduced the standing inventory in Fairfax County down from a 6.54-month supply in March 2008 to a 2.94-month supply today. Here’s how the regional absorption rates look:
Northern Virginia: 3.14 months
Arlington County: 4.33 months
Loudoun County: 3.31 months
Alexandria City: 3.18 months
Fairfax County: 2.94 months
Prince William Co.: 2.03 months
Prices are starting to move up, however. Homes in the lower end are beginning to sell at or above the asking price. Meanwhile, average sales prices are selling at 96% of asking prices. As the market tightens, those price increases will start creeping up higher end homes as well.
So what? What does that mean to you? If you or anyone in your family is a first time buyer – get off the fence! The federal government is offering an $8,000 tax credit (with no pay back required!). Prices are still very affordable. And there is also $0 down payment financing available for first-time buyers as well – coupled with the $8,000 tax credit. The credit is available on homes settled by December 1, 2009.
If you’re a move-up buyer - now may be the time to make that move up before prices start escalating out of control. If you bought before 2003, you most likely have the equity necessary to make that move up while the time is right – prices are lower than in 6 years; interest rates are lingering in the 5% range (even in the 4%'s with points!); and there’s inventory still available.
Friday, March 27, 2009
Home Sellers Market Returns in D.C.
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14 comments:
Thanks for the info Anthony.
Sharon Webb
tony: what is your view on the rental market? in Nova? dm
You're mistakenly using sales divided into inventory. To determine the rate of absorption, you must use "pending sales" vs. inventory. The rate by which consumers are writing contracts is how you determine the months' supply. Also - I'm a member of MRIS and have access to the live data without having to wait for the tables created 10 days later.
In February 2009 there were 1,433 pendings - that's a 4.13 months supply in Fairfax County. The day that I printed the above rate, there were so many contracts written, that it was down to under 3 months. This market is steaming along!
ah,
that explains it. Haven't you noticed that pendings now take 2 months or longer to close? and that at least of third of contingencies fall back out to become active listings again? This is not a normal market. That has to be taken into account when using typical market stats.
So now's the best time to sell?
Now's the best time to sell IF you have enough equity to make the move up, over or down. For homeowners in the $400,000 and under, it will be a quick sale; and then there's plenty of inventory over $400,000.
If you're local - let me know if I can help.
Mr. Carr,
Why will prices escalate out of control?
Homes in the under $400K range are already starting to sell for thousands more. Obviously, they are foreclosures or short sales. The only thing holding them down now are the appraisers. Without a bank-approved appraisal, many of the buyers will not be able to buy, and thus the houses won't sell.
As REAL sellers get on the market, they will bring their cash to the table -- $50,000; $100,000; $150,000 -- and when they find themselves competing against a 3% down payment from FHA which MUST have an appraisal -- the moneyed seller will simply say -- no appraisal contingency. AND then the prices will escalate at the level the seller is able to pay for the difference between the appriased price and the price s/he's willing to pay for the property. It's only a matter of time.
REAL sellers (those who bought before 2004) are starting to come on the market and use their cash from the sale as a weapon against all other bids. If the house doesn't appraise - they have enough cash to make up the $5,000 or $10,000 difference and price out the FHA/VA buyers. We are already starting to see FHA/VA offers get rejected outright.
Now -- this is in the areas of the Northern Virginia market where have multiple offers again -- parts of Fairfax County, all of Prince William County and portions of Loudoun County.
SHAMROCK: The reason you use pendings is that they come off the market once the contract is ratified, but not sold. When it's off the market, you as a buyer cannot gain access to it. It's gone unless it comes back on a few weeks or months later. The dropping inventory is probably the most important part of this equation and it just keeps on dropping. We keep hearing rumors that more houses are coming on from the banks, but they still haven't materialized.
The thing with FHA, and the reason they're getting turned down now, is not the appraisal contingency but the inspection contingency, which is more stringent than the usual one and requires live-in condition before closing (unless you get the rehab loan).
Appraisal contingency or not, there will always be a finance contingency unless we're talking about cash buyers here.
Currently in the situation you described of a house not appraising high enough to obtain financing what's been happening is sellers having to give-in and lower the close price to meet the appraisal. Given that, it seems unlikely that buyers would give away this upper hand.
In fact, as a 1st time buyer with a hefty downpayment saved up, I'm hoping to be able to under-bid the FHA loan dependent folks by a few thousand and still win the house based on the greater likelihood of the deal coming to fruition.
I guess the $8,000 dollar tax credit will cushion the loss if the bottom of the market hasn't been reached!
It seems to me that your market is hitting a slow bottom. Not a rough decline as in the speculative markets of Southern California, Florida, Nevada, and Arizona. Those markets came down hard as much as 60% and now are on fire with sales. I think the other less speculative markets are going to take all year to roll out in a slow move to consolidate and grow again 2010 in a normal way. We are see in our market in Bergen County New Jersey a lot more activity. I think it is going to keep up with all the price reduction and the mortgage market full of the fed’s money.
I hope you see the same. I have been studying markets all around North America and it seems to be hopping a bit. The markets with the least declines are a little sluggish, but that will change.
Don't count out FHA buyers. I viewed a property within 24 hours of it listing, got the first contract in on the property, bidding slightly more than $30,000 over list, that evening, requested a decision by the seller the following day by noon which ended up working out despite a weaker FHA offer coming in and a cash offer that decided to go with short sale property, ratified our contract by noon the following day and have a home inspection scheduled less than two days from now and my local lender is almost completely on board, as I was shopping lenders at the time we found the property, with the lenders assurance that the appraisal will meet the 15 day after ratification deadline.
As long as the inspection goes well and the seller lives up to the contract and ends up selling for the appraisal price or the offered price if the appraisal is equal to or more, than I will be a proud first time home owner of a property in Northern Virginia.
The realtors are trying to say that it is a sellers market now in NoVa and I understand where they are coming from, but to me it is still a buyers market. Buying a home at the FHA apporved appraisal price is a win win for the buyer and the seller and helps spur the community, the economy and fairness in the real estate market.
So if you are looking to buy with an FHA loan, do not give up. I don't own the property yet and might not, but I can almost smell the meat loaf coming out of the oven in my first home. : )
Congrtulations Steve! But look at your posting -- you just bid up $30,000, but you didn't mention how many contract offers you were up against. That, my friend, is a sellers' market.
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