Northern Virginia & Washington, DC, Real Estate Market Update - September 2009

This is the monthly market update I provide to my clients. To be added to the mailing list so that you receive these updates as soon as they are available, please sign up using the box on the right hand side of the blog page.

The market doesn't seem to have slowed down very much this Fall.

There are plenty of buyers playing beat-the-clock, but the big news continues to be the lack of inventory in the greater NoVA area. The lack of homes for sale, primarily spurred by lower prices that are driving sales, is compounded by increasing new construction sales. KB Home has announced it intends to resume building in the DC area after curtailing operations in late 2007, as described in this article. The article notes that Toll Brothers has also started snapping up properties, now that listings for sale have reached their lowest level since January 2006.

Rumors abound about a potential extension of the $8000 tax credit currently scheduled to expire November 30, but no official word yet. Stay tuned. Given our lack of inventory, if the credit gets extended then we better hope that entry-level owners decide to sell or we will have even more frustrated buyers in our area.

On the lending front, FHA may be heading for problems. The agency, which is responsible for many purchase money loans given the current environment, recently announced its cash reserves will drop below its Congressionally mandated level. This sparked a number of program changes, including special appraisal rules, similar to the HVCC that was instituted for conventional loans a few months ago--so buyers and sellers should be prepared for even more appraisal headaches to come!

In other news, here are some good articles I came across this month: 7 New Rules for the First Time Buyer and Credit Scores: What You Need to Know.

As always, please let me know if I can do anything to help you or your friends with your real estate needs.

State of the Washington, DC, Real Estate Market - August 2009

Summer has been surprisingly busy this year in the DC real estate world. Here's the latest:

Buyers are in a race against the clock to claim the $8000 tax credit by November 30, which has spurred activity in lower price ranges ($500k-ish and below) dramatically.

Northern Virginia inventory, in particular, is significantly lower than past years - check out this inventory graph, and the surprising uptick in average sales price just below it. There is still a lack of "good" inventory out there, resulting in a lot of very frustrated buyers who are moving quickly and at full price when they see something they like that is priced right. At least half of the offers I've written the past few months (and there were a lot) were competing against other buyers and, even with very solid terms, often losing to others with equally solid terms.

The lack of new construction in the area is also adding to the inventory drop. As this article notes, condo prices are down, driving sales up. But this little bit in the middle is particularly intriguing: "Because the number of projects set to deliver inside the Beltway will drop to near zero, Leisch said prices will rise sharply between 2010 and 2011."

Even with buyers jumping to write offers, it's important to structure the contracts to protect yourself. I was quoted in this Express article last month about creating "safety nets" for buyers.

In related news, and adding frustration to the market for both buyers and sellers, there are continuing challenges with appraisals, as noted in this WSJ article.

I'm hosting a free first time home buyer class at Arlington Central Library on Tuesday, August 18 at 7:15 pm. This month is really the latest that a buyer should start their search if they hope to make the November 30 deadline. If you or a colleague would like to attend, please email me to register so I can reserve a seat.

As always, please let me know if I can do anything to help you or your friends with your real estate needs.

December 2008 Market Stats Available

MRIS (the consortium that owns our regional multiple listing service) has published the December 2008 stats, and I've updated graphs at my website (click on links below).

Arlington Market Stats - Arlington continues to post strong numbers. Only 4.91 months of inventory available, and of the homes that sold in December, an amazing 40% sold in under 1 month! Days on market held steady at 70, and average price increased slightly from the prior month.

Northern Virginia Market Stats - Of note here is the 37% increase in sales in December vs November, and an 8% decline in inventory, bringing the months of inventory down to 5.09 (6 months is considered a balanced market.) December 2007 was a 7.3 months inventory level.

DC Market Stats - Average price dropped significantly from prior month and prior year, which perhaps contributed to the amazing 34% increase in sales in December over November. And when it's good, it's good...almost 40% of the homes that sold in December had contracts in under one month.

Montgomery County Market Stats - MoCo continues to be a strong buyer's market, with the average price almost 20% below the same month in 2007. And the buyers responded--sales increased 22% over the prior month.

The big picture: Still a buyer's market in terms of price and selection, but drops in inventory and huge increases in contracts means the buyers are out there, circling, and ready to jump on good properties quickly if necessary.

If you're thinking about listing your home for sale, contact me to discuss how we can make your home one of those that sells in 30 days. Or sign up for a free Selling Your Home class.

If you're a buyer, give me a ring to talk about the stats in the specific neighborhoods you're looking. Or sign up for a free first time home buyer class.

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PMI Risk Index: 80% Chance of Rising Prices in Next Two Years

PMI Mortgage Insurance Co released its latest U.S. Market Risk Index, which ranks likelihood of declining prices for the nation’s 50 largest metropolitan statistical areas (MSAs). PMI Mortgage Insurance Co is one of the largest providers of PMI in the US, so you better believe they spend a good chunk of time studying the market, prices, and defaults.
The bad news is that the decline in national prices accelerated in the first quarter of 2008. The more interesting news for our area is that the Washington-Arlington-Alexandria MSA had a risk rank of just 3 (of 5) and risk index score of 21.4, down from 29.1 last year.

This risk index reflects the probability that prices will be lower in two years. So if you're planning on waiting to buy because you think prices will drop, this report is estimating that there is a 1 in 5 chance that you will make out better if you wait two years; said another way, there is a 4 in 5 chance that prices will go up. This is no doubt tied to our area's continuing low unemployment rate of 3.6%, the lowest of all 50 MSAs.

Buyers: 80% chance prices will go up...you might want to start your search soon.

Sellers: Hold on a little longer...your odds are improving.

Read the full PMI report report here.