Try to Buy Before July- The “Shadow Market” and Bond Market that Could Change Everything

I have been encouraging clients to try and buy as soon as possible. While MRIS has indicated overall improvement in existing home sales, they expect prices to drop more in the next quarter, creating an interesting conundrum: Wait until tomorrow because maybe it will be cheaper! That has been the cause of much of the drop in home sales for the past few years. I will explain why now will be the best time to buy.

Vince Farrell at CNBC (you can read his article here) echoes some of these concerns in his article today. It appears that interest rates may be affected by the issuance of billions more in Treasury bonds that helped drop the Dow Jones average by 150+ point yesterday. It also saw a 0.12% increase in mortgage rates. He also mentioned the problem of the “shadow market”- many of the foreclosed homes waiting to find their way to a multiple listing service near you. A new flood of homes MAY cause home prices to drop again, with the surplus inventory flooding the market as it has in recent times. However, interest rates MAY go up, costing home owners more money per month as opposed to the up front savings on the asking price.

I humbly submit that June will be the best time to buy a new home. Interest rates will still be below 5% if you lock in now and purchase a home in the next 30 days. Act quickly- these days may not be here for long!

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Mirror Mirror on the Wall

I recently attended a seminar with several speakers throughout the day. It was a terrific event and each speaker offered amazing insights on several topics including following your dreams, motivation, and leadership.

The last speaker of the day, Bill George, a Harvard professor spoke on what a leader in the 21st century looks like. What was interesting to me in listening to him was you could apply what he was discussing to being a leader in any circumstance. Whether in your job, your community, your church, your family, your social clubs, all of these traits are a good template for our lives.

Leadership is about giving, not getting, the old command and control just doesn’t work anymore. People want to be a part of something special, a compelling story. The Mirror of Life; look into it every now and then and ask the question, “what am I doing?” Have self-awareness, be out there, take feedback. Be clear about your beliefs and values. Know what your ethical boundaries are. What are your motivations? Your extrinsic motivations are things like money, status, title, and your intrinsic is your passion, your service. Learn how to balance the two to find your “sweet spot” Have a support team, people who are always there for you and keep you grounded. Lead an integrated life, work and personal, a full life led with integrity.

Bill George is a smart man. Sage advice from his best selling book, True North, is so right on. “Follow your compass—not your clock.” What is your true north?

Good Bye Half Price … Hello Multiples!

Preceded by falling values, reduced prices, and increased inventory, the last six months have proved interesting for the Northern VA, Maryland and DC Real Estate Market. While there are several factors at play, from a new administration to a drastically changing economy and from a large foreclosure market to a revised loan programs, things are changing if nothing else.

I have been with Avery-Hess, Realtors since early 2006 and in this short time have seen the top of the market and what was hopefully the bottom. I have seen an almost out of control price increase that made it virtually impossible for first time home buyers to qualify for the “American Dream” to a rapid fall in values that has been described as the largest foreclosure market anyone has ever experienced.

Remembering a day in the fall of ’06 when Avery-Hess, Realtors received its first Real Estate Owned (REO) property from a Bank we had not worked with in several years due to our increasingly strong market. We went from one a month, to one a week, to one a day, to a year later when we often received upwards of 5 new assignments a day. Through several years and additional staff we once again have an active REO Department.

During the recent moratorium on foreclosures we have witnessed homeowners refinance, modify and complete successful short sales, while others were given additional time to find alternative housing. In some cases, tenants renting a foreclosed property are given the opportunity to continue renting on a month-to-month basis. Now in the months following the moratorium, we are experiencing a decrease in the amount of inventory available for sale. Simple supply and demand principles have swung the pendulum from a “buyers market” where an excessive amount of homes were priced aggressively just to compete towards a “seller’s market” where a limited number of homes are selling at or above full price.

Gone are the days where a buyer could purchase a foreclosure property at 50-80% of the list price. These days we often see upwards of 10 offers above list price with creative and aggressive terms within 5 days of the home being placed on the market; however, escalation clauses are not accepted.

While this is an exciting time and reminiscent of our previous market boom, I wonder if this is an artificial boom in the market. Thinking about supply and demand, what will happen if a large number of foreclosed properties are released into our market over the next 60-90 days?

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Housing Hurricane is NOT Howling Again

In the Monday, May 25th edition of BARRON’S, Mike Moran, a real estate broker in Sarasota, Florida has a story Titled, The Housing Hurricane Will Howl Again. His experiences in Sarasota since December 2008 could not be more different than what is being experienced by brokers and home buyers in the Washington, DC market, particularly in Northern Virginia.

The moratorium on foreclosures starting in late November 2008, for four plus months, had the effect of stopping the deluge of inventory that had been driving prices relentlessly down for over 18 months. Whether that was the intended effect, or the desired effect was just to give folks time to re-work their existing loan with their mortgage holder, it has reduced inventory and firmed prices. In fact prices are back to last fall’s level in Northern Virginia after hitting their lows in December 2008..

As prices firm and then rise, as they are now doing, buyers’ confidence rises yet again. Many buyers were already back in the market as affordability had improved dramatically and people intuitively know that housing in America, particular around Washington, DC, is a great long term investment.

So what did Mike Moran say in his article that I disagree with? Mr. Moran says that “All of the Obama administration’s attempts to revive, resuscitate and shock the housing markets into recovery have failed.” At the end of his article he states “Unfortunately, there are no signs of recovery, despite the hype and the twisting of numbers in many media reports. The end of the unofficial moratorium on foreclosures, combined with rising unemployment, signals that the back half of this housing hurricane is only just beginning.”

Mr. Moran has been right with two previous articles since 2006 correctly foretelling the real estate down turn. But this time he has missed the clear signs of a change in market psychology, pricing, inventory levels and mortgage applications, among other statistics. Loan modifications, even with their high rate of re-default, are also keeping many borrowers in their houses and reducing inventory. So with falling supply and rising demand, unless the law of supply and demand has been repudiated, all of those people who started buying in the summer of 2008 in the Northern Virginia market should be feeling good about their purchases now.

It may be bad in Florida, although I hear many areas of Florida are seeing some signs of improvement, but it is anything but bad up here in Northern Virginia. Under $400,000 buyers are bidding against each other to get the house they want. To paraphrase Tip O’Neill, “All real estate, like politics, is local.” Go get yours today!

Search for Homes: www.averyhess.com

Marketing Listings?

I was reading an article today where the author wrote about how he often passes by a listing in his neighborhood listed by some real estate brokerage that has a post sign in the yard, a rider with a name of an agent and an empty brochure box.

WOW. Or should I say, WHOA.

Where’s the marketing? How does a consumer who is interested in that home get information about it? How is this home being marketed to the public?

The public perception is that all agents and all brokers do the exact same things to market their listings for sale. This is not the case. Very few brokers have actual baseline marketing standards; a set of criteria, a toolbox of services to market listings in this increasingly Internet-savvy and mobile world.

I am proud to say that Avery-Hess is different.

We DO have a set of criteria, a baseline standard of marketing that ensures that an Avery-Hess listing is exposed to a wide consumer base. In this consumer-centric, wired and mobile marketplace, Avery-Hess delivers information to consumers through the web, print, social media, on-line and off-line classified services, text messaging, and mobile-friendly marketing.

We get it. We Get how to reach consumers with information about your home. We get that consumers LOVE pictures. Lots of pictures. We get that Consumers LOVE virtual tours. We get that Consumers LOVE learning about your home without being hassled by a sales pitch.

We get it. Our agents get it, and they implement it.

It is 2009 folks, it’s time to get with the program… I now will remove myself from my soapbox and return to my desk.

Search for Homes: www.averyhess.com

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We are proud to be an affiliate of Leading Real Estate Companies of the World®. Because our standards may be even higher than yours. This exclusive group is comprised of only the finest firms in the industry, forming a global network that surpassed $370 billion in home sales last year – more than any other real estate organization. So whether you are looking to buy or sell your home – here or across the globe – call on us, for the finest service available.

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