How’s the Market? Depends – are you Buying, Selling or Investing?

How’s the Market? Depends – are you Buying, Selling or Investing? by Realestateology.org I regularly get asked, "How's the market?" From a Realtor's point of view, it's ALWAYS a good market! It just depends on what YOU want to do – buy, sell or invest? In today's market, it's actually good for all three classes of clients. Sellers are benefiting from increased home prices; buyers are enjoying some of the lowest interest rates on record and a strong housing inventory; and for investors, if you're getting a mortgage, interest rates are low enough that the payments can be covered by your rental income in most cases. Let me break it down: FOR BUYERS Currently, the Northern Virginia market is at about a 3 months' supply. Traditionally, three months constitutes a "normal" market. Normal is good for buyers because it allows them an ample amount of inventory to look over and then the ability to negotiate on price and terms. For the past several years, buyers in the D.C. metro market have been battling each other with escalation clauses and giving up home inspections to win contracts. Now, there is calm in the market which allows buyers to get a more level playing field. Meanwhile, interest rates are under 4% again! FOR SELLERS Prices have continued their appreciation this year in most zip codes. In October, median home prices increased beyond last year's prices in Fairfax County by 2.3% (+$10,000). The median price for October stood at $450,000 (for all property types). In Arlington, the median price increased 1.6% to $536,000. In Washington D.C., median sales prices moved up 9.9% to $500,000. FOR INVESTORS It's all about cash flow for investors. And in today's market with the low interest rates, investors are able to purchase a condo, and including condo fee and taxes, still walk away with a cash flow (disclaimer: it has to be the right price and the right condo fee – call to start your search). If you're able to strike out the high condo fees, the return on investment is even more attractive. An interesting factor that plays in the D.C. area market is politics and mid-term elections, which have historically placed a temporary damper on the market. This year was no exception. In the two weeks running up to the election pending sales dropped 22% compared to the same two week period last year (a non-election year). In the third week, once all the votes were counted, contract writing increased 6.3% over the same period of time last year. (Source: data from MRIS.com). The market is in good shape for nearly every type of buyer and seller. Until next time… I'm never too busy for YOUR referrals! Until next time… Anthony http://www.AnthonyCarr.net Thanks for flying with WordPress.com

DC market rated #1 by Forbes

Finally -- it's not just me. Forbes magazine is letting its readers know that the DC market is on the upswing. Take a look at the link above for the Top 10 as rated by Forbes.com

Market is Up - Inventory WAY Down - Prices Holding Steady - Rates Down

2008 was the Year of Recovery in Northern Virginia and it will continue in 2009, but this time, with a vengeance! Northern Virginia continues to outperform the region, the state and the nation. Buyers face low inventory, competing with multiple buyers and even paying at or higher than asking price. If the market is divided by price ranges, there’s the Hot Market and the Not Market, thus, property condition is as much a factor as price.

Properties priced under $400,000 are snapped up by first time buyers, move-up sellers, and investors. Between $400,000 and $600,000, the houses are still selling that are priced right and in good condition – usually to first time buyers with plenty of cash and some move-up sellers. Above that range and it’s a tougher market. Many homes are priced right, but there are just no takers. The question of “how low can you go?” keeps being asked of sellers.

Inventory in Northern Virginia (from the border of Washington, DC, to western Fairfax County) is down 26% over the same period last year. Combine that with Pending Sales up 27% and you have buyers battling each other for the well-priced houses in good shape. Enter the all-powerful Interest Rate to home prices that have dropped over the last three months and you have a perfect storm for the advent of a Sellers Market.

Power of Interest Rates
Many times, consumers miss the importance of the interest rate. As of this writing – you can buy a home (or refinance) for 4.875%. These are rates that our grandparents haven’t even seen! What this means is thousands of dollars of savings per year on the mortgage today, compared to just a few months ago. When rates were around 7% mid-year in 2008, a mortgage of $350,000 would have run $2328. Now, it would be $1,852. This gives a buyer two choices – buy the same house for a smaller payment or move up the price range by almost $100,000. Fixed rates are tracking even LOWER than adjustable rate mortgages.

So what? Inventory is slipping – we need more houses on the market to meet today’s demand. Buyers are competing again for houses that look good and priced right. Consider two choices – 1) make the move up (or down) now, while prices are stable and interest rates are low; 2) invest at a time when the rent will cover the monthly payment.
While the local papers and television stations report on a dropping market nationwide, it’s not the case for the real estate market surrounding the White House. The market continues to respond to the job growth adjacent to the nation’s capital (+28,000 new jobs in the DC area in 2008 over 2007).

D.C. Area Housing Market Booming In Face of Struggling Markets Nationwide

What makes the Washington, D.C. market different than the rest of the country? The job market within the market. While other cities brag about being the headquarters of Fortune 500 companies, we have something none of them will ever have – the Capital City of the United States. I like the way one colleague puts it when explaining to agents from other states: “When you can put the Pentagon, Congress and the White House in your backyard, then you’ll have a housing market like ours.”

It’s been an interesting week on Wall Street and on Pennsylvania Avenue, leaving Main Street wondering what will happen with the housing market. When you look at our numbers around the Washington Monument, and see that the job growth here has moved upward and heating up even more, it doesn’t take a rocket scientist (or political scientist) to see that the inventory is dropping, prices are starting to level and move upward, and buyers are writing contracts at a triple digit rate more than last year.

If you’re looking to move up, this is the year to take advantage of level prices so you can move up without busting your personal budget. In addition, with FHA financing requiring a minimal down payment, first-time buyers are creating a feeding frenzy in the entry-level market in all property types. We’re seeing more parents help their kids buy a house now before they are priced out of the market. Renters are getting out of supporting the landlord and beginning to build their own equity and personal wealth.

So what? What does this mean to you? Real estate is local. Despite job challenges and foreclosures across the country, homebuyers and sellers must make a decision based on the local scene. The number of foreclosures in the area is declining month after month AND they are drawing multiple offers. Traditional sales of homes priced right and in good condition still make up the majority of the market. Is now the time for you to sell or buy? Waiting too long may cause you to say in the future: “You know, I could have …”