August Market Update for Loudoun

Reports continue to show stabilization within Loudoun County. Since prices adjusted (down about 25% from last year as of the end of August), activity levels continue to be on the rise.

MRIS reports a 28.47% increase in the number of closed sales in August 2008 compared to August 2007. This has been a trend for several months (up 8% in July, 19% in June, 12% in May, when compared to the same months in 2007), and is a very positive indicator that Loudoun, at least for now, seems to have reached the "bottom" of the market and is improving. I have even seen recent transactions where an investor purchased a home from a bank a few months ago, and has flipped the property, quickly, making no improvements and raking in a handsome profit. Although I do NOT recommend this investment strategy in a volital market, it is very nice to see that we may be experiencing not just stabilization, but perhaps some recovery in limited areas.

The 37 cash purchases in August (about 7% of the closed transactions) indicate investors support the theory that Loudoun's market in strengthening.

And, with 37% of the transactions being financed with FHA and VA loans, we know that first time home buyers are seeing opportunities in the market of newly affordable homes available, coupled with historically low interest rates. I anticipate September will show further increase in FHA loans as those using the seller funded down payment assistance programs will rush to complete their transactions before the program disappears (CLICK HERE TO LEARN ABOUT THIS CHANGE). We may see a "lull" in October as first time home buyers, real estate agents and loan officers scramble to learn about other low/no money down options to keep a steady flow of these buyers entering our market.

Currently, Loudoun has a little less than a 5 month inventory of homes on the market. The National Association of REALTORS suggests that a 6 month inventory is indicative of a "balanced" market, with higher inventory levels being a "buyers market" and lower inventory levels indicating a "sellers market". I am not certain I would call this a "seller's market" considering how far prices have dropped compared to previous years. However, sellers who are pricing RIGHT when their listings enter the market place ARE seeing multiple offers and quick sales. The MRIS report shows that 30% of the homes that went under contract did so in the first 30 days on the market, and another 18% got a contract within the first 60 days. What happens to sellers "testing" the market with unrealistic pricing expectations? Those would be the listings that remain on the market well beyond the "average" of 103 days of marketing time.

So, what's next? With the Fed taking control of Freddie and Fannie, Lehman Bros filing for bankrupsty, Merill Lynch being purchased by Bank of America, and the seller funded DPA's disappearing, what's to come over the next few months? Stay tuned as I work to provide you with insights on this ever changing market.

=============================================

MRIS publishes new statistics monthly, around the second week of the month. The public can access these reports from MRIS.com. They are published by region, county, city, and even zip code. A qualified agent can help you understand the information contained in these reports.For an even closer look at market conditions, order a personalized Market Snapshot by clicking HERE. Type in the information about your home, and your email address... a personalized report will be sent to you in a few minutes, detailing information about the geographically closest homes which are for sale and have recently sold.

Thinking of Selling? Some Facts about Northern Virginia

So, you're thinking of selling... wondering what the market's like? Here are some interesting statistics, published through the end of last quarter (June 2008)... and a bit of information about how to interpret it: In Northern Virginia (No. Virginia is defined by MRIS as Fairfax Co. & City, Alexandria, Falls Church and Arlington) * Prices of SOLD home are down about 15% from last year. * The number of homes sold are down about 5% from last year. * The average number of days a home stays on the market is 83. * The SOLD prices of homes is, on average, 93% of asking price. Who the buyers are: Looking at how people are financing homes gives us some clue about who the buyers are: * 65% finance with conventional loans. This requires a 20% down payment, which usually signifies someone OTHER than a first time home buyer. * 23% finance with FHA or VA loans - these are typically first time home buyers. * 10% pay cash, assume a loan or use seller financing - these are typically investors. Compared to last year, there is a huge difference. Last year more than 90% of the purchases were paid for with conventional loans, only about 1% were FHA or VA loans, and less than 5% were paid for with cash, loan assumptions or seller financing. What does this mean? Well, it says that the No. Va. region is showing some signs of stabilization. When you see an increase in first time home buyers and investors entering the market, that is a good sign. Further supporting this, is the supply ratio - last year this time, we had a 5.7 month supply of available homes; this year, it's down to 4.96 months. That might not sound like a big adjustment, but it is measurable. There are signs of stabilization in the market place. Having said all of this, what's going on in Northern Virginia does not tell you what your area is like. Some areas are showing even stronger levels of stabilization, where other neighborhoods have indicators that seem to suggest further price decline in the coming months. If you're trying to decide what your next step should be, call me. I will be happy to run reports and help you analyze the data that is most critical to you. But, for you "do-it-yourself-ers" out there, feel free to use these resources to help you learn more: * If you follow this link, you are welcome to run the same reports for anywhere that MRIS services. You can run them by area or by zip code. There are a lot of numbers on these reports, but I have shared with you some of the greatest industry markers available to us. New statistics are published around the 10th of each month for the preceding calendar month: http://www.mris.com/reports/stats/monthly_reti.cfm * On the home page of my web site is a Market Snapshot tool, it links to the MLS with live data and will tell you the prices and other information of homes that have sold or that are on the market that are closest to your home. Please note, the report will be automatically generated and emailed to you - so you must include a REAL email, or you will not receive the report. You must also include the specific address of the property so that tool can function - since it is looking for the closest addresses to yours, if it does not know where you live, it will not be able to determine who is closest to you. Once you've entered the information, you'll get monthly updates automatically. You can also choose to get information more often. If you have any difficulties or would like assistance obtaining or analyzing this information, my team and I are here to serve you. Don't hesitate to ask!

What A Seller Should Know About Short Sales

We live in a rapidly changing environment, and what was good advice just a few weeks ago is not true today. So, check with MANY professionals before you make the decision to attempt a short sale. Things that increase your chance of having a short sale approved: -You have one lender, not multiple lenders. -If you have more than one lender, other lenders will be getting some of the proceeds of the sale. (With a foreclosure they usually get nothing.) -You are not requesting full debt forgiveness, but instead are asking for an unsecured note to pay any deficit in what is owed to the bank(s). -You are current in your payments (if you’re behind already, its too late – they will foreclose faster than you can get the sale approved). -You move QUICKLY. -You provide the documentation they ask for, QUICKLY. -You have had a change in your circumstances that has led to this issue – forced relocation (like military), illness, job loss/change, disability, divorce, etc. -You can prove every claim you make “I can’t afford the payments much longer”, “I don’t have the resources to pay off the balance I’ll owe”. -You marketed the property properly and received one or more reasonable offers, all of which are arms length (not your brother). Other things you should consider: -If the lender forgives any portion of the debt, you could owe taxes on that amount. Learn about the Debt Forgiveness Act Here, and talk to a competent tax advisor who is “up” on this (this is a law recently enacted and there are very few people who’ve filed a return yet under this new law). -You will be forced to give the lender a gazillion papers (you will know that gazillion is a number once you see what they are asking for). -This will take A LONG time. -Consumers are being PROSECUTED for loan fraud, if you fudged the truth about your income when you got the loan, you should seek competent legal advice before contacting your bank. (Please note this is true even if the foreclosure happens). -Your credit will still be significantly tarnished, and you likely won’t be able to buy another home (ever) without 20% down, and you won’t be able to buy at all in the near future. (However, it will probably be better than a foreclosure.) As you can see, you’ll need to consult with a tax accountant, possibly an attorney and definitely a real estate agent before making the decision. It might seem too hard, but, if your house goes to foreclosure, you’re not off the hook. Banks are pooling these “bad debts” and selling them to companies who will come after you for the remaining balance, unless you’ve negotiated something with the bank that prevents that. And, consumers who participated in loan fraud are being prosecuted regardless of whether the home went to foreclosure or there was a short sale. Being proactive and negotiating with a bank upfront for a short sale is probably your best option, you might be able to limit your future exposure for collection efforts, tax ramifications or prosecution for loan fraud.

Bottom line - if there is a way you can continue to ride out the market, pay your mortgage payments and make good on your debt, the market WILL eventually come back, and THAT is your best option. The WORST thing you can do is take the "Ostrich" approach and stick your head in the sand. Call a professional who can walk you through this process and get you the resources you need.