The Market Recovers, Appraisals Lag Behind

Today as I was discussing an appraisal issue with a couple of fellow practioners, I learned that appraisals are suddenly becoming more of an issue.  And, unlike a year ago, it's not really because appraisers that don't know the market place, but more because of the market changes.  A year ago, 6 months ago, we had a lot more distress sales in the market....and the "traditional" sellers had to compete with the distress sales in order to be able to sell.  But for the past 6 months things have been absolutely ROCKING and there has been upward pressure on sales prices... and we ARE seeing prices go UP.  (Sellers - this is where you cheer:  YAY!)

BUT, (and there's always a BUTT, isn't there?), appraisers are pulling comps of past sales... You know, from when we had so many distress sales, and when the market wasn't so hot.  As a result, appraisers are having a hard time justifying the new sales prices that the market is bringing.  THAT is a problem we haven't had for several years.  It's good news...."ish"... I guess.  Well, the cause is good.  The side effect - not so much.  (Buyers and sellers together:  Boooo!)  A low appraisal can kill an otherwise perfect real estate sale.

Honestly, I am frustrated.  I get it, but I am frustrated.  "Fair Market Value", is, by definition, what a willing buyer and seller agree to in an arms length transaction.  It is not what an appraiser thinks.  And yet, appraisals are holding back our market recovery.

So I am trying to be an optimist here, and focus on the positive - the market is strengthening.  And I will try to take the problems in stride.  Dear sellers, and buyers, I hope you do, too.  Real estate these days is not always a fun game to play.

In the mean time, take a look at theses posts:
To make you laugh:  Your Home, as seen during a real estate transaction.
To help you get your appraisal: Get the best appraisal for your home.
Interested in learning more about our market place?  Visit the Market Statistics part of my web site for the latest news, stats, and information.

Northern Virginia Real Estate Market Statistics

This information, and much more, is available on my web site at www.VickyChrisner.com and is updated regularly, so for the latest and greatest info, be sure and check out my site.

HOW MUCH INVENTORY IS THERE?

The real estate market is really all about "Supply and Demand", so to understand the market the first question is: How much inventory is there? In other words, how many homes are currently being marketed for sale in our area?

This chart gives you the 5 year historical data on inventory levels in our Northern Virginia area:

PRICING TRENDS & FACTORS:

When inventory is high, prices will inevitably have to fall so that inventory can be re-balanced. This is what you see in 2007-2009. Remember, too, when looking at that data, that the "First Time Home Buyer" tax credit programs were in place for parts of 2008-2010 offering financial tax incentives for those purchasing their first homes. These programs did stimulate the "starter home" market substantially. This meant that the lower priced homes were selling more rapidly and those were a significant portion of the sales during that time, pulling down the "median" sales price statistics. That program helped to re-balance our inventory levels, and made way for sellers to become "move up" buyers. This program continued to have an impact on the market statistics through 2010. In 2011, we saw more normal trends in pricing, with moderate price growth; and 2012 seems to be reflecting a similar, although even more optimistic, trend.

This chart shows you the 5 year historical data on median sales prices within our Northern Virginia area:

ARE SELLERS GETTING THEIR PRICE?

Sellers need to know how much negotiation buyers are generally expecting in the market.... and Buyers need to know if low ball offers are getting accepted. While every transaction is individual, this chart gives us a big picture answer to that question. In the chart below, you can see the 5 year historical averages in our region for the percentage of selling price to original list price.

WHAT ELSE?

If you're interested in hearing the latest available statistics, and market indicators in our region, you won't want to miss this video, and be sure to check back after the 20th of the month to get the next update.

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When you're looking for a REALTOR that knows the market, you can trust Vicky Chrisner. Vicky Chrisner, Northern Virginia REALTOROffice: 703.669.3142

Email: MyAgentVicky@Gmail.com  

www.Facebook.com/TheRealEstateWhisperer

Update on the Market: Washington DC Area (VA/MD/WV/DC)

Delta Associates is a well respected authority within the housing market, but their reports are rarely public, until now. MRIS (The Metropolitan Regional Information System), which is the local multiple listing service, now offers reports to the public through their web site each quarter. The video below explains how to view some of the information, offering highlights from the 2nd quarter reports for 2009. The Washington DC metropolitan area includes Northern Virginia, most of Maryland, and the panhandle of West Virginia, and (of course) DC.

For more specific information or assistance interpretting what this data means to you - as a potential home buyer, home seller, renter or property owner - please don't hesitate to contact me. I am happy to be a resource for you!

Also, you can run an automated report showing sales information for YOUR NEIGHBORHOOD, by clicking this link.

REOs, Short Sales, Foreclosures! Oh, My!

These buzz words abound within our real estate market today. Headlines about our economy, politics and global affairs keep you from sleeping at night. If those things are not directly impacting your daily life you, you know you’re just waiting your turn. You find yourself wishing you were Warren Buffet or Donald Trump. And then, late at night, when you turn on the TV, hoping to find some mindless show that will help you drift off to sleep, you end up watching a “get rich quick” infomercial… and THEN you can’t sleep because you’re wondering if you ARE missing your opportunity to become the world’s next real estate billionaire. So, what’s the truth?

Well… it depends. It’s true that some people take high risks and make a mint. Other people take high risks and lose, big. I recently received an email from a financial planning consultant that said his firm’s recommendations in today’s economy were to make no decisions based on fear, panic or greed. Good advice, I think, especially when it comes to real estate.

Real estate decisions should be based on the lifestyle you’re trying to create for yourself and your family.

• If you’re ready to settle down, buying a first home can be the best investment you’ll ever make.
• If you’re already stable in your family and financial life, and thinking of moving up, it’s true that selling your current home can be daunting … but you will also get an amazing deal on your next home, so it’s all relative.
• Perhaps you’re considering investing. To the true (well capitalized and long term) investor, I say “go for it”. The rental market is strong right now, and properties can be purchased with positive cash flow from day one. But, with each of these tidbits of advice come warnings.

It’s often said that real estate is a LOCAL business, but I feel it’s a personal business. Buying or selling in any market condition can be a good decision or a bad one, and more important than timing the market, is understanding how these decisions will impact your life and your family - today, tomorrow and for years to come.

If you have an opportunity to buy a home for a rock bottom, absolutely fabulous, amazing deal…if you can not afford the mortgage payments, then you should not buy. Even if the home you’re considering is a terrible financial deal, but you can afford the mortgage payments and you will love every moment of every day of your life because of your new home, then it is well worth it.

Hire the right real estate consultant. I can help you understand the short term and long term risks and benefits of buying or selling, help you make financing choices, and to educate you on the local market place. You'll learn all the terminology in today’s market – like REOs, Short Sales and Foreclosures.

If you’re buying, we’ll help you understand the risks and benefits of buying any of these types of properties so you can make the decision that’s best for you.

If you’re selling, we’ll help you understand if these sales are likely to impact your sale, and how; and help you evaluate the pros and cons of taking the “wait out the market” approach. Let me assist you in evaluating your options in the real estate world today.

More information about me is available at http://www.vickychrisner.com/.

Check out other blog posts to learn the answers to common questions like What is a Short Sale? What do I need to know about buying an REO? and Updates on Market Statistics.

Just follow the links… and, there’s good news for Loudoun County – check it out!

Please note the date of this blog post.  Please get updated information from me personally or at least by reading more current posts.  The market is forever evolving, and therefore, so is my advice!

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.

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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.

August Stats Show Stabilizing Market in Northern Virginia

In reviewing the latest statistics published by the local MLS system, I continue to feel cautiously optimistic about the stabilization in our market place. Northern Virginia includes Fairfax & Arlington Counties and all of the cities within those areas. Highlights of the report include: - Inventory this month is down from 11956 active listings to 9191 active listings as of the end of August. - With 1887 newly recorded contracts last month, that indicates an inventory of approximately 4.87 months supply (NAR considers 6 months inventory a balanced market). - We continue to see confidence in the market place by investors and first time home buyers, indicated by the number of cash transactions (about 8% of purchases) and those financed with FHA and VA loans (about 27% of purchases). - Perhaps the best statistic in all of this is that the number of units sold was up about 6% compared to the same time last year. Northern Virginia is a large area.

Arlington has not followed the trends of the other sub-markets. Arlington has remained relatively stable, with prices and activity level being extremely similar when compared year to year; and inventory levels hovering around the 4 month level.

Conversely, Fairfax has seen dips, and seems to be showing signs of recovery. The prices in Fairfax are down about 20% compared to last year, with the number of solds up more than 10% from August 2007. The inventory level in Fairfax County is now at about 5 months.

Personally, I am concerned about Arlington. When everything around the area is adjusting, it seems odd that one area would be able to weather the storm without showing wear. I believe that gas prices have kept that area stronger, as people wanted to live close to the city to save on gas. In addition, Arlington has been "built out" for much longer with no significant new development to increase inventory. However, as the suburbs seem to have adjusted to the new market, Arlington will not appear a value compared to things just a few miles away. In order to keep demand high, I expect to see price drops in Arlington in the coming months. Only when the entire area has "rebalanced" will be able to move to the next level, "recovery".

================================================================= 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.

A Market Shift In Loudoun

Could the "Whisperers" be right (click to see original post)? June's month end reports for Loudoun suggest that may be the case. Although sales prices are down about 17% from last year; market activity is UP, with a 19% increase in the number of homes going under contract compared to the previous year. NAR says a "balanced market" carries about a 6 month supply of homes (meaning that at the current absorption rate, it would take 6 months for all the homes to go under contract). In Loudoun, as of the end of June, we're at just over a 5 month supply. It's also important to look for indicators of affordability and renewed confidence in the real estate market, like signs of investors and first time home buyers entering the market. One of the best indicators for this is the type of financing being used. - In June 2007, 94% of purchases where financed with conventional loans; with less than 1 percent being financed with a government backed loan like FHA or VA (typically used by first time home buyers); and just over 5% of the purchases were via loan assumptions or cash transactions (often indicators of investor purchases). - Comparatively, in June 2008, only 55% of the purchases were using conventional loans; over 30% were FHA or VA; and nearly 13% were purchased with cash or by loan assumption. Before you decide to buy or sell, contact an expert who can give you even more specifics about your area. But in general, in Loudoun, there are definately measureable signs of stabilization! A few words of caution.... A stabilizing market does not mean that prices will start to rapidly appreciate immediately. So, sellers, please don't convince yourself that by next year you'll be able to get more for your home than you can this year. To keep abreast of the sales going on closest to you, visit this web site to get a free market snapshot (it works throughout No. Va, regardless of your zip code) -www.20175homesales.com - you will need to enter your actual address and email so that the report can be properly generated and emailed to you automatically, and it will be updated monthly and resent until you unsubscribe or increase the frequency of updates you're receiving. There is no charge or obligation, and this is all handled automatically through the software program. The information is pulled straight from the MLS. And, buyers, don't put off that purchase since you think prices won't be increasing immediately - the lending world is changing daily and investors and first time home buyers are finding it harder and harder to be deemed worthy of a loan. Costs of some loans are going up and if you are paying more to borrow the money, then your "buying power" is reduced. Any first time home buyers hoping to get in "no money down" should be moving quickly. Recent legislation will be taking away the most popular national no money down program - a seller funded down payment assistance program combined with FHA. Those programs disappear if you have not closed on your new home by October 1st of this year - so move quickly! (You can read more about this at http://therealestatewhisperer.blogspot.com/2008/07/take-action-now-save-down-payment.html Call or email anytime with questions or comments - vchrisner@kw.com 703-669-3142 Visit my web site at www.VickyChrisner.com for many more resources.

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!