Taking Advantage of the Advantage

Housing markets are turning around all across the country. The way this is measured is first through pending sales and then the following closed sales. By the time the national numbers turned, the recovery had already been happening for months.

Albuquerque is one such city. Prices are still down from last year, but they are now leveling out at around $180,000 (for about 8 months now). The pendings have been increasing for months and now the closed sales are following suit. The same is true for cities such as Las Vegas, Washington DC, Miami, and others.

Are you taking advantage of this advantage as a sales person? Are you getting the word out to your local sphere about what's happening in the local market place?

The recovery has happened, predictably, in two fashions in the favor of buyers.

1 - While prices dipped, buyers could have named their price and received thousands of dollars back from the seller to buy their home.

We had a phrase of -- "what would be the price you just couldn't walk away from" on this house. The buyer would look it over and say -- "Well -- if it was $25,000 less, I would buy it." So that's what we'd offer - and that's what they would get. While the market continued it's slide, buyers got ahead of the drop and "stole" houses all over the country. To the shagrin of banks and owners, the buyers pulled in discounts in the hundreds of thousands. The agents who knew how to forecast that drop, helped buyers save a ton of money and made good incomes through the process.

2 - The cost of money kept dropping and then Uncle Sam started throwing in money to boost morale and buyer interest.

In the home-purchase process, buyers have to buy two huge commodities -- the house - of course, everyone knows that. They keep waiting for the price to drop to the bottom and THEN jump in and buy. But you have to also look at that second product - the money.

The cost of money is measured in the interest rate and the points paid for such interest rates. This year, buyers have picked up money for interest rates as low as 4% - those are rates that my grandparents never saw!

So we have low prices and low interest rates. Did you pick up on that as the sales pro? More importantly - did you get your buyers on board and off the fence?

If you wanted to have predicted the come-back, then a look at sales on a state-by-state level would have been a good place to start. The media looks only at price. A very foolish move. A recovery begins when the buyers return - much sooner than when prices start upward.

On this table from Realtor.org you can see that the hardest hit states (California, Nevada, Arizona, Florida, Virginia) have now had the best quarters (up 100%+ in some markets).

Yea - we hit the bottom alright. Get ready for the bounce.

Local Outlook is All that Matters: Inventory Down, Prices Up

As I’ve been saying for months – the Northern Virginia market is totally in a seller’s market. The only price range not fully recovered is the over $1 million price range. Every other price range from the $100,000 condo to the $700,000 single family is selling like the proverbial hot cake. Fresh off the griddle, and ready for the butter and syrup. And therein lies the problem – or should I say, opportunity.

When it comes to housing data, sales prices, inventory levels, pending sales, etc., it doesn’t matter what’s happening across the country when you’re looking for a house in your locality. All that matters is what’s happening in the market where you want to sell or buy. It doesn’t matter that foreclosures are slated to increase nationwide when they are selling like hotcakes in Fairfax, VA.

The challenge for buyers in Northern Virginia is they have little inventory from which to shop. As a result - the bonus for sellers is that prices are on the rise. Not year over year, mind you, but month to month, they are definitely on an upward ascension.

Since January 2009, the overall average sold price has increased 15%. The average price in January was $376,669. In May the average price tapped at $433,257. (Source: Metropolitan Regional Information Systems, Inc.) Is this a trend? Well, consider this: the last time we had a 4-month, month-over-month increase in sales prices was in 2006. (At that time, by the way, the average price hit $553,618).

Why is this happening?
* Foreclosures rates are dropping in Virginia (Source: George Mason University, Center for Regional Analysis)
* The inventory is beginning to include private-seller owned properties (instead of banks), stopping the price drops and pushing them forward and upward.
* Buyers are taking advantage of the affordable housing prices, the historic interest rates and the First-Time Buyers Tax Credit (up to $8,000) before it expires November 30, 2009. (But there’s talk on Capitol Hill to extend the sunset period.)

So what? What does this mean to you? Buyers get in line. You will be competing for well-priced homes now. We have multiple offers in all price ranges. (The highest I’ve heard told of so far is 23 offers in a weekend).

Sellers, get ready to sell quickly if you are priced competitively and start using home of choice clauses and ready to move into your new home sooner. (The higher up you move in price, the more inventory that’s available). You have the opportunity to move up into your bigger home for a smaller price for the home and a smaller interest rate for the loan.

What Part of “Bottom of the Market” Do You NOT Understand?

I was looking over the supply of houses on the market this week in Fairfax County, Virginia and it’s really getting dangerously low. Compared to May of 2008, we have 55% fewer homes on the market – and 20% more contracts written on them.

That leaves home buyers with only a 7-week supply of houses and it’s getting smaller. Officially – we’re in a sellers’ market. For pocket markets (townships, subdivisions, etc.) it’s as hot a market as it was in the peek of 2005-2006 – it’s just that the prices are much lower. Ergo – the opportunity. If you’ve ever heard about buy low, sell high – now is the time to buy low.

The same is true across the country. Pending sales are up all over Florida, in Seattle, Phoenix, Los Angeles, Las Vegas, you name it, and buyers are coming off the fence like they were stung by a bumble bee!

For a macro look at how this can benefit you - consider the suburban Washington DC market of Fairfax Countty. If you are sitting in a house purchased in 2000 or earlier, you’re most likely sitting on a lot of equity that could enable you to move up to a larger home with the upgrades you’ve wanted but couldn’t afford.

I know – this sounds like a sales pitch – but frankly – it’s just the simple truth. Sellers and buyers have a unique opportunity to purchase a house at prices that have been backed up several years and at interest rates not seen for decades (currently in the mid-5% range).

In fact - we haven't seen these kind of rates since they've been tracking them at Freddie Mac (http://www.freddiemac.com/pmms/pmms30.htm).

The average price of a 4BR, 2BA house in Springfield, VA, for instance, sold for $235,665 10 years ago. Today, that same house sells at $371,549. While this price is down from the last five recent years, the pricing has leveled and starting to rise in pocket markets throughout Northern Virginia.

And if you’re wondering if the market has turned around consider this – the average days on market for that house in Springfield is down to 18 days. That is not a misprint – NOT 180 Days, but 18 Days – a little over 2 weeks. Many other towns in the area are in the same situation.

So what?

• Inventory is beginning its dip downward because buyers are coming off the fence, the foreclosure rate in the Northern Virginia area has been cut nearly in half (see www.CRA-GMU.org) and
• Regular owners have not yet decided to place their homes on the market yet.
• We are experiencing multiple offers (7 - 10 is not unusual, we've seen upwards to 35)
• Escalation offers are back - one of my team members lost a bid after escalating $75,000!

Just remember DON'T MAKE A LOCAL DECISION BASED ON NATIONAL INFORMATION!

HELP! WE NEED LISTINGS!

This post is going to be very local in nature - Northern Virginia readers -- we need houses to sell! The market has turned on a dime and sellers are now starting to get their asking price, (or 10s of thousands more -- see Steve's comment on last posting); entertain multiple offers and move up to their next house with very cheap loans.

Are you ready to sell? Who do you know that's ready to sell? Please respond asap so we can catch this upsurge for you, get your home sold and move up to that next great home that you can buy with interest rates that even you grandparents haven't seen! (Lingering today under 5%).

The whole Northern Virginia market is down to a 2.0 months' supply -- that's deep in seller market territory. For price ranges under $500,000 it's even less than 2 months!

Call me today, please! (703) 819-9800. I need the lead!

Home Sellers Market Returns in D.C.

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.