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While the Washington, D.C. market has tightened into a sellers market, you may find a good deal in your favorite vacation destination as investors have started moving to second-home buying. Meanwhile, average prices in the D.C. area keep moving up, up, up!

The National Association of Realtors 2013 Investment and Vacation Home Buyer Survey “shows vacation-home sales rose 10.1 percent to 553,000 from 502,000 in 2011.  Investment-home sales declined 2.1 percent to 1.21 million from 1.23 million in 2011, but those sales had been well under a million during the market downturn.  Owner-occupied purchases jumped 17.4 percent to 3.27 million last year from 2.79 million in 2011,” according to www.Realtor.org.

The survey revealed that “11 percent of vacation buyers and 16 percent of investment buyers purchased the property for a family member, friend or relative to use, often for a son or daughter to use while attending school.”

A good number of investors and vacation home buyers also used their cash to invest: “half of investment buyers paid cash in 2012, as did 46 percent of vacation-home buyers.  Forty-seven percent of investment homes purchased in 2012 were distressed homes, as were 35 percent of vacation homes.”

Cash is still a popular means of purchasing even in the higher-end market of Northern Virginia. Buyers in Fairfax County in February 2013 paid all cash 13% of the time in February 2013 according to MRIS.com (the regional multiple listing service for the DC region.)

The median price of a home in Fairfax County was $420,000 in February – up more than 15% year over year. For a complete report for February 2013 sales, click here.

The D.C. housing market has been a shining light in an otherwise tepid economic picture for the region. Home sales prices are set to finish up for 2012 over 2011 — which will be the fourth year in a row that the region has enjoyed value appreciation.

The chart below is for Northern Virginia home prices, which had a high average price of more than $525,000 for the summer and finished December out with more than $518,000. (The average home price includes all housing types – condo, townhouse and single-family).

The December price is only 8.1% below the highest December price on record, which was set in 2005. The tortoise-speed appreciation over the years is actually a very healthy road to recovery, rather than the sky-rocketing fashioned appreciation of the mid-2000s.

Most home sellers and 

Northern Virginia Average Prices 2012buyers have not even noticed the recovery and many buyers are surprised at the level of activity at open houses these days when they visit on a Sunday. (First opens are drawing dozens of visitors these days, instead of t

he usual trickle in open houses of the past).

 

Home sellers can be assured of good traffic and a strong sale if their home is priced appropriately. Buyers are continually blessed with excellent mortgage interest rates.

Give us a call if you need more information about your particular market. We can be reached at Weichert Realtors/McLean at (703) 821-8300.

As you see markets around the country drop inventory and increase pending sales, the question arises – is this for real? Has the market turned around?

In the shadow of Washington, D.C. – you betcha. While some observers may say it’s all about the home buyer tax credit and low interest rates – they haven’t been watching pocket markets around the country.

Northern Virginia is one of those markets that even if you doubled the inventory – it wouldn’t be enough in today’s market environment. Multiple offers (half dozen or more in many cases) are the norm; houses selling above asking price; prices moving up in zip code after zip code, month to month and year over year.

The absorption rate is dropping dramatically. (Absorption rates are measured by dividing the number of pending sales into the number of active inventory – any measurment under 3 months is considered a sellers market).

Absorption rates are pointing to a turning real estate market

While not all markets around the country have turned around at the rate here in the D.C. area – the sellers’ market has already arrived!

During the run up last time, interest rates were in the 8 – 9 percent range – so buyers aren’t afraid of rates nearly double today if they think they are buying in an escalating market. Which is starting to happen in market after market.

For more research, see www.MRIS.com and www.Realtor.org.

Until next time…

Virginia Association of RealtorsHere are the basics:

How Much:

  • First Timers: Up to $8,000 (10% of home purchase) but not for anyone buying a house more than $800,000
  • Move Up Seller/Buyer: Up to $6,500

Who?

  • First Timers – meaning you haven’t held title on a property in the previous 3 years.
  • Move up sellers/buyers: who have lived in their homes five consecutive years.

Income Limit:

  • Adjusted gross income of $125,000 (single); or $225,000 (married filing jointly). The credit fades out from these incomes and is elminated for those making more than $145,000 (single); or $245,000 for married filers.

Check out this link from the Virginia Association of Realtors for more details: http://www.varealtor.com/Portals/0/docs/ConsumerInformation/EXTENDED_First-Time_Home_Buyer_Credit_09.pdf

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.

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

Yes, I understand we’re in the worst foreclosure real estate market on record; and that a lot of people did a lot of bad things; and that we’re probably only half way through getting through this real estate debacle. However — I just ask that the feds be careful how much they need to push along the recovery in the marketplace — it’s already happening.

On the street, we watch inventory, pending sales and pricing to determine if a market is about to turn around either upward or downward. We could track it in 2006 when it started halting and now it’s tracking upward.
Ahh- you say, the prices are still down. Yep. Because that’s just the final piece of the equation. Prices are down across the country, and they will probably remain soft until the inventory starts shrinking – which is what’s starting to happen.
Consider these sales and pending sales numbers across the country:
  • San Jose, CA: Sales up 51% in January 2009
  • California: 2008 sales up 26% over 2007
  • Northern Virginia (Metropolitan Washington DC): Pending Sales +41%;
  • Manassas, VA: pending sales +50%
  • Florida: January sales +13%
Market after market, sales are starting their predictable climb upward after prices have dropped by as high as 50% in some areas. Whether we like it or not, feel good about it or not, has no bearing on whether or not the markets are starting to turn around. They are.
(The charts here show Northern Virginia sales price drops that correlate with the number of sales increaseing through 2008.)
In these same markets, agents are starting to report multiple offers on bank-owned properties that need a lot more than just paint and carpet. In my office this week, my team is starting to report that while buyers have finally gotten off the fence, now there’s no inventory and what’s left is selling for $25,000 to $40,000 more than asking price in a shower of multiple offers.
No – this is NOT 2004. It’s now 2009 and we’re about to repeat the whole cycle of the last run up. Why? Simple — supply and demand, mortgage money available and willing/able buyers ready to pick up good deals who have been saving their money for three years for prices to hit the low they’ve been waiting for. Well, it’s hit it and they have pulled out their check books to start the bidding.
It will continue upward as well and here’s why.
  1. Lack of inventory. The resale inventory has been primarily been made up of foreclosures and the federal programs to rehash old mortgages and stop the foreclosure cycle will create a drain on the need of inventory. Seller-owned properties are scarece because sellers who are okay financially are upside down on their mortgages and must wait till prices return to their previous levels before they can even consider selling.
  2. Prices have hit the psychological low. When you’ve been dealing in prices around a half million dollars for years, a house priced at $300,000 sounds like a real deal. Buyers are diving in with a vengeance and bidding up; again, removing the safeguards of home inspections, home warranties, and appraisals (if they have enough cash).
  3. Small new home inventory: New home builders pulled out of the market and must now ramp up again to build the product buyers want. This will take years to get going. They just can’t start building, they have to get the infrastructure planned, permited and approved before they can turn the first shovel of dirt – this takes time.
  4. Job growth. As go jobs, so goes the housing market. Several job markets have continued churning out employment even through this latest downturn. Washington, D.C.; Boston; Dallas/Ft. Worth; Houston have added, rather than shed new jobs over the last 18 months. Meanwhile, the surge of the stimulus packages (whether you like the package or not, the attention on the urban infrastructure is a good and needed thing – that will create labor jobs) these jobs will create the need for housing in those markets. States are already applying for and spending the stimulus millions.
Economic growth creates jobs; houses are where the jobs go at night. Meanwhile, the prices have hit the bottom in many areas and already started the surge of buyers jumping off the fence. The inventory is shrinking, the next item to tip will be prices.
Anthony Carr is an award winning sales coach and managing broker in Northern Virginia. He’s tracked and written about the real estate market since 1989. His blog http://commonsenserealestate.blogspot.com. He’s the author of two books and contributor to Donald Trump’s The Best Real Estate Advice I Ever Received.

I met up with a potential buyer last night at a well-priced listing that is seller owned and completely fixed up inside. She was worried the price was too high, we hadn’t hit bottom yet, things could get worse, etc., etc.

She was not unlike many buyers out there in markets across the country that have already started to show signs of recovery. In Northern Virginia – the bottom was hit months ago. It’s a challenge of Myth vs. Reality.

(See this piece from Mortgage News Daily on foreclosures dropping: http://www.mortgagenewsdaily.com/12112008_realtytrac_foreclosures.asp)

For instance, in Fairfax County (just a few miles from Washington, D.C.), the inventory is down 23% while pending sales are up a whopping 60% over the last 30 days. In addition, average prices have leveled off for months now at pre-2004 levels and starting to rebound.

Buyers are now competing on foreclosures with multiple offers and escalating their offers over list price.

Prices are still thousands higher than they were in 2002 and previous. The good news for homeowners who want to move up is that if they purchased before 2002, more than likely, they can sell for a profit and move up for a lot less than they could have just a couple years ago.

The concept that “My house has lost money” is only important when you’re selling. What the consumer should look at is the purchase price vs. the sales price – not the height of the market value vs. today’s value. If you bought for $275,000 and sell at $375,000 – there’s $100,000 in profit – regardless of the fact that your house swelled in value to $450,000 three years ago. Such a seller has NOT lost $75,000, instead, he’s profited $100,000. In addition, he’ll be moving into a good deal in today’s housing and financing market.

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