Well, That Was Short-Lived…

It’s just past mid-January, and the latest numbers for the market here in Fairfax County indicate something pretty different than they indicated last month:  We have dropped from roughly nine to ten weeks weeks of inventory back near the turn of the New Year, to right around 6 weeks right now.  

This is a pretty significant number here in Fairfax County, but I suppose it’s no surprise from an economic standpoint.  The Washington, DC Metro area (or “DMV,” for “DC, Maryland and Virginia”) has fully six of the nation’s 10 wealthiest counties, according to Forbes.  The environment that the DMV has afforded for educated people to find work is not just one of necessity, but one of real opportunity, with many options to find your way into upward mobility.  A map of foreclosures in Fairfax County over the past year will also illustrate (somewhat predictably) that the areas with the lowest foreclosure rates are indeed areas where the wealthiest people live.  The fact that the DMV is growing so rapidly has continued to be the greatest factor in keeping inventories here so low.  Fairfax County alone grew an average of 10,000 people per year from 2000 – 2010, according to the latest census.  That means we are at least 30,000 residents bigger just since the last information came in!

At any given point in time, at least 25% of you out there are in the process of moving, or are thinking about moving within the next six months.  If you need to find a new apartment, a new home, a new(to-you) home, I can probably help you get that taken care of.  Summer is rapidly approaching, and now is the time to get your Realtor out to your home for an expert opinion about how to help you get the most money for your home when the time comes to sell it.  If you live in Northern Virginia, I can help you personally to get this done; if you live in DC or Maryland, I have a network of trusted professionals at my fingertips.  And if you live elsewhere in the United States — it doesn’t matter where — I can help you find a Realtor that will take care of you as well as I would, if you lived here.  I know the questions to ask, the behaviors and attitudes to look for, and how to tell if someone is an expert in their market, or just faking it.  Let me know how I can help!

Don’t keep me a secret.  I am here and at your service!

Have a great week!

— J — 

Inventory Is Finally Rising!

The tides are slowly turning, homeowners.  The latest market trend numbers are in, and inventory in the Northern Virginia area is beginning to rise.  Inventory is up nearly 67% over the six weeks we maintained during the summer months, to right around ten weeks.  So what does this mean?

Well, for starters, the median sold price for homes in our area have risen about three and a half percent over this time last year, to $401,000.  Some places are still seeing 10% growth in equity as we enjoy an influx of new people to the DMV (that’s Dulles/Maryland/Virgina) area, but this is the exception rather than the rule.  New residents have kept demand high for a supply that has remained low all year.  Average days on the market is 43 days (a 12% drop from last year), and homes are closing with an average sales price of about 97% of what they originally listed for.  Click this link for more info on the NoVA area’s trends.     

It is traditionally uncommon to find an area’s inventory to rise like this in the middle of the winter months; most folks will wait until the summer time to list their home for various reasons.  It’s easier to move when it isn’t snowing or sleeting, for one.  Best to wait for the kiddies to finish out their school year before relocating them, for another.  Nevertheless, this means that homeowners who want to try to ride this current “Sellers’ Market” wave will need to move quickly.  Remember, as inventory (or “supply”) increases, buyers will have more options to choose from.  This will remove a seller’s ability to demand (and get) no closing cost assistance to the buyer, and when supply rises enough, it could eliminate the “multiple offer, gone-in-a-week” occurrences that are commonplace now.

Contact me if you would like to list your home in the Northern Virginia area; I always have time to help you and your family and friends, and I am continually grateful for the opportunity to.  The time to act is now, before a glut of new homes hits the market in the spring!

 

 

This message brought to you by Jeff Grana, a member of The Hardman Team at Tunell Realty, LLC.  Virginia Licensed Realtor # 0225 404546.

Follow Up!

As a licensed Realtor in the state of Virginia, I work very hard to make my clients happy with their home-buying or -selling experience.  I work to be forthright and timely with news, thoughtful with my closing gift choices, and dead-on accurate when it comes to negotiations and pricing strategy.  Over time they begin to see that I can be trusted to work in their best interest at all times, and I hope that they are so impressed with me that they would feel comfortable referring me to their friends and family.  One thing I really enjoy about being a Realtor is the ability to help family and friends with their sale or purchase.  It’s just an easy atmosphere in the car when you’re cruising down the road to look at homes, and have so much in common already that the awkward silences just don’t happen much, if at all.  

It broke my heart yesterday afternoon to find out that the second Realtor I found for an old friend of mine in Oklahoma didn’t do a very good job rounding out the deal.  (We had to fire the first one because of a lack of follow-through on their part.)  The second Realtor seemed to click with my friend pretty well at first, but once the house was under contract, my buddy told me, “It seemed pretty clear to me that it was ‘on to the next one’.”  He also thought her closing gift completely missed the mark; I don’t remember what all was included, but he was not at all interested in the Spearmint candy-cane-scented hand soap.  He told me he was frustrated because, “She didn’t do half the job I know you would have done for me.”

Here’s the thing:  He wouldn’t have volunteered this information to me if I hadn’t checked back on how his experience went.

It frustrates me that this happened because I take personal responsibility for every referral I give to somebody — and that includes anything:  Service at restaurants, veterinarians (for my fellow pet owners), Realtors, car dealers…all of those people are people I expect an exemplary level of service from, as I work hard to provide it for their referrals (read: their clients, family, and friends).  You may not be a Realtor, but the providers that you refer your family to reflect back on you, so be careful and selective when you refer someone.  Your family and friends will appreciate it, and if they did have a bad experience, they will appreciate your concern and gladly give you feedback.  Conversely, unless you follow up, you may never know that your own reputation is taking a beating because of someone else’s bad service.

Northern Virginia Metro Area Tries To Keep Up With Housing Demand

Home prices in the Northern Virginia area have continued to rise, despite the rise in interest rates and the recent government shutdown.  One by-product of the interruption in government services was that many deals fell apart because buyers couldn’t get FHA or VA financing in time to meet their deadlines, and there are many other ancillary services to a real estate deal which rely on help from the public sector to get done — many of those had to wait as well.

Out inventory here still remains stubbornly low — just shy of 9 weeks — but that is a small rise from the 6- and 7-weeks’ worth we carried all through the summer.  The DC metro area is definitely a little world all its own in that respect.  

 

My business has personally seen that there are buyers all over the place, while people tend to be staying put, and less likely to list.  Again, this area is significantly insulated from the rest of the country, and we are in the middle of the President’s last term.  We will undoubtedly see a rise in inventory in the year preceding the next election in 2016, because so many in this town are directly affiliated with one political party or another, or their line of work is beholden to the spending policies of the party in power.  

As it stands now, however, the DC Metro area is growing at a pretty fast clip, as this WashPost article will illustrate.  Supply And Demand 101 — too many buyers, not enough sellers.  Hence, low inventory levels and rising prices.  All of this is complicated by the fact that Fairfax County is seeing the construction of the Silver Line nearing completion, which will parallel the Orange Line and head out to Dulles International Airport.  The four stops at Tyson’s Corner will further bring business and commercial real estate investment, and rent and real property prices in Tyson’s will rise significantly because of it.  (For a little perspective, the blue is the Potomac River.  The central circle of rails that you see is the DC metro area with Maryland to its north and east.  The Northern Virginia metro area is shown on the west side of the map, across the river and currently served by the Yellow, Blue, Orange, and Silver Lines.  I live about a mile from the Orange Line’s Dunn Loring station.)  

 

Things are getting crazy around here!  Have a great week!

The Art Of The Offer

credit: blogginf4jobs.com

You may have recently seen my last post, targeted directly at first-time homebuyers (and others who are unfamiliar with the real estate transaction process).  Click this link to check out Step 4, if you haven’t read it yet.

I thought it might be helpful to dedicate this post to a part of the homebuying process which is often misunderstood:  The offer.  Folks have many misconceptions about how the process works, and I wanted to address and clarify some of them in the interest of making you better-prepared when you sit down to figure out the details of Step 4.   

The first thing I want you to understand about this entire situation is that there is a real, live, flesh-and-blood person at the other end of the negotiating table.  If your offer insults them before the two of you have even met, the likelihood of your offer getting picked over others is immediately very slim.  You are not negotiating with “the Manager,” that faceless “guy behind the curtain” at a car dealership, whose only purpose is to make you think you’re getting a deal while he puts the screws to you.  You are trying to make a legitimate trade with a person who may or may not have decades of emotional attachment to his/her home.  Obviously, the point of your offer is to pay the least amount for the home, or in many cases, get the maximum amount of help with closing costs (an out-of-pocket expense) that you can — but if the offer isn’t anywhere near being fair, they may not even give you the chance to play ball.

The primary details of an offer are few: the Earnest Money Deposit (or EMD check), the settlement date (your timeline to move in), the home inspection, the amount of money you are willing to pay for the house, and the closing costs.  Lets start with the EMD check.

The Earnest Money Deposit is basically an indicator to the seller of how badly you want the house.  It is an amount of money that will be submitted with the accepted offer, which sits in a separate account until the end of the transaction, when it will be returned to you.  Here’s the catch:  If you decide 25 days after your offer is accepted that you simply don’t want the house anymore because you found a better one, you will lose your EMD money to the sellers, who will take it as compensation for you not holding up your end of the bargain.  And don’t forget, once settlement day comes around and the contract is wrapped up, you get that money back and can put it toward whatever you want.

So, the size of the EMD amount is very telling of how badly you want the home.  A common amount to submit is 1% of the purchase price, but that number is completely up to you.  The EMD effectively tells the seller how much money you are willing to lose if you cut and run.  An EMD amount of five hundred bucks won’t instill much confidence in your offer to the seller.  You would want some “insurance” against a breach of contract too, wouldn’t you?

The other negotiable parts of the offer will come down to one word:  Leverage.  The next thing you and your agent will do is poke your nose around for things that can be used as leverage to negotiate on the price of the home.  If the home is in obvious need of a new roof, but the asking price hasn’t been adjusted for it, you have the leverage you’d need to ask the seller either to fix it or drop the price.  If you know the seller is up against a deadline and needs to move as soon as possible (or if the property is vacant), and you can move in tomorrow, you can use the settlement date as leverage to get your offer chosen over others which may be competing with yours for attention.  If you are in a buyer’s market and the only way for the seller to convince you to buy his property is for him to cover part or all of your closing costs, you’ll have the leverage to ask for that.  Remember, you can ask for anything, but you risk losing further credibility by being too aggressive.  You want to be assertive, not bellicose.  

There’s also one further thing to consider regarding leverage:  The price you agree to when your offer is accepted is not necessarily going to be the price you pay on Settlement Day.  Substantial things found during the home inspection, for example, are easily taken back to the seller to ask for subsidies, if they aren’t fixed by closing day.   Also, don’t forget that if any of the contingencies aren’t able to be met (for example, “satisfying the Home Inspection Contingency” means that “the home passed the inspection”), the deal is dead, you get your EMD check back, and the entire contract up until then is void unless both parties agree to revive it and continue forth.

That ought to just about cover it.  As always, if you have questions, feel free to ask them here, privately at jeff.grana@gmail.com, or over the phone at 630.306.3537.  Let me know how I can help, and don’t keep this blog a secret — if you find it to be helpful, pass it on to your friends and family!

Go Forth, My Son: How To Buy Your First House

How many of you out there have very little idea what actually goes on during a real estate transaction?  I’m sure there are a hundred questions you must have, but never thought to ask.  Let me try to shed some light on things.  (Afterward, my inbox is your inbox for questions — just hit “comment” or “reply” with anything you’d like an answer to.  If you’d like to not-so-publicly discuss a particular topic, feel free to email me at jeff.grana@gmail.com, or just call me up at 630.306.3537.)

Step 1 is pretty simple:  Pick out a real estate agent to guide you through the process.  You’ll sign a little bit of paperwork initially (which basically says legally, “You’re hired!”), they’ll ask you about your needs for the home, what you like, etc etc, and it’s on to Step 2. (Click this link for a related post about how to find one you’ll work well with from the get-go.)  /

Step 2 is also easy:  Any Realtor worth their salt will have you contact your lender (or suggest a lender you can use, if you haven’t given it any thought) to do a pre qualification.  The reason it pays to be pre qualified is best described as a “built-in safety” for you:  What sense would it make for you to find the absolute most perfect home, only to find out you can’t afford it?  Getting a pre-qual letter (also referred to as a lender letter) is a simple, quick process in most cases.  (Ultimately, of course, it is up to your lender how quickly things happen.)

Step 3:  Now the fun begins.  Time to go shopping!  Just about the time you are getting your Prequal letter from your lender, your agent will have a comprehensive list of properties for you to review.  You’ll “window shop” at first, then pick a few of your favorites to go and see in person.  If you like one enough to want to buy it, you get to move to Step 4.

Step 4 is the next logical progression of the process:  You want to buy a property, now it’s time to tell the owners.  You will sit down for a short time (between thirty and sixty minutes) with your agent, and discuss the ins and outs of submitting an offer (effectively, the one where you win).  (Click this link for a post on how to craft a successful offer.) You’ll decide the terms, the price, contingencies, and the amount you have to put down as a down payment (also referred to as an initial investment).  You’ll also let the sellers know how soon you can move in by picking a settlement date.  The settlement date is the day when both you and the seller will sit across the table from each other, and officially transfer the property’s ownership.  (Typical settlement date timelines generally run between 3o and 60 days.)

Step 5 happens once your offer is accepted.  Effectively what happens here is that the contract which you and the sellers have both signed, gets executed.  The terms dictated within the contract will begin to be satisfied, one by one.

Step 6:  Once the contract’s terms have been executed to the satisfaction of both parties (and according to the region’s laws), Settlement Day arrives shortly after.  Settlement day can be overwhelming at times, but I want you to focus on two things here.  First, much of the paperwork you will sign is copies of the same paperwork in duplicate or triplicate, which must be original and sent to the places that need them.  Second, at the end of it, you’ll walk out with the keys to your new home.  It’s really not much different than signing an apartment lease.

So, in a nutshell, that’s it.  That’s all there is to it.  The whole process, right there.  I hope you have found this to be informative, and again, feel free to contact me at any time with questions, concerns, or if you are in need of my services.  I am happy to help you any way I can.  Have a great week!

July Numbers Are In!

Northern Virginia Inventory

Hi all!  I hope your month has been as busy and productive as mine has been.  Here’s a quick snapshot of the real estate market here in our area.  

If you’ve followed this blog for any length of time, you know there is one main component that I tend to focus on: Inventory.  Why inventory?  I follow inventory numbers so closely because they give us a good, solid look at what your clients (or you, as a client) can expect to find when you go out into the market to buy or sell a home.  When inventory is low (as it is here), buyers can typically expect to pay at or above what the seller is asking for.  The reason for this is because if there is no shortage of buyers, the seller can simply wait until another one comes along if they don’t like what they see in the offer package.  This is called a “Sellers’ Market” because the sellers have a goodly portion of the leverage at the negotiation table.  Conversely, when inventory is extremely high, the buyer is in the driver’s seat because it is in the seller’s interest to do things to attract buyers to their property over others.  A “Buyers’ Market” happens when buyers have a broad range of home choices, many of which are similar or identical to each other.  

Fairfax County Inventory

So.  Inventory is rising now here in Northern Virginia, albeit slowly; we have noticed an uptick to right around nine weeks.  Remember, a “balanced” market will have between six and seven months of inventory, so we are still extremely low in spite of the small rise we’ve seen this month. It is still very much a sellers’ market right now here in the NoVA area.  If you are thinking about listing your home, now is the time, before interest rates creep up even further, and potential buyers are priced out of your market.

Don’t hesitate to contact me for help buying or selling your home.  If I don’t have the answer you seek, I won’t lie and make something up so I look cool; I’ll just tell you I don’t know, and I’ll quickly find someone who does.  My cell is 630.306.3537.  Let me know what I can do to help you!

History Is Kind To Those Who Learn From It.

credit: trulia.com

There’s been a pretty significant amount of hubbub surrounding home mortgage interest rates lately, and the primary reason is because it hits people where it hurts:  Their pocketbooks.

In the course of sixty days, from the beginning of May to the end of June, the base rate — or prime rate — of a home mortgage has risen from an all-time low of 3.59% to 4.68%.  

Why is that important?  Well, let me quantify it for you:  A jump from 3.5% to 5.0% represents nearly twenty percent less buying power for a homebuyer.  That means someone who could afford to get and service a $200,000 home can now only afford a $160,000 home.  Forty thousand dollars’ worth of equity, just gone.    

Bear in mind also that these are — as I mentioned earlier — prime rates for mortgages.  Prime rates are for people who are considered “safe” by lenders.  These folks have sky-high credit scores (730 or above, typically), and enter the purchase of a home with significant initial investments (down payments).  Since each individual buyer’s situation is slightly different, the interest rate on a mortgage can be the deal breaker, significantly altering their monthly payment.  Folks who enter a deal without much initial investment and have credit scores below 680 will find it difficult to qualify for a mortgage with prime rates.  

There are mortgage options (called “products” in the industry) out there which can make home ownership more accessible to those who are not as well-equipped to service a traditional, 30-year-fixed mortgage.  Many people have begun once again making use of the Adjustable Rate Mortgage (or “ARM”).  The way this loan works is simple:  The first three or five years of the loan will be guaranteed to stay at a low interest rate.  After that time period, the loan becomes tied to the interest rate of the day (hence, the “adjustable” part).  

One of the problems with this type of loan is that people who get them can only afford to pay the initial, low-interest portion of the payment, thinking they will sell the home before they get to the part they can’t afford.  As the past five years have shown us, certain events can happen concurrently, and prevent this from happening.  It’s part of the reason that foreclosures shot through the roof, and are only now beginning to stabilize.

As a final note, I’ll say this:  If you are well-equipped to buy a home, do not delay.  Interest rates are rising, and history shows us that rates this low will probably never come back around in our lifetime.  If you aren’t quite there yet, put the work in to get positioned well.  Don’t get yourself into a position where you can’t afford the loan you have been approved for.  It’ll take some time, but you’ll be glad you put in the work.  The last thing I’d ever want to see is any of you tossed out of your house because you can’t afford to stay, and the market is flooded with homes exactly like yours, which nobody has any money to buy anyway.  The past five years have been transformative for us as a community.  Let’s learn from the mistakes of countless others before us, and keep our community strong!

June Numbers Are In!

The real estate market is hotter than ever here in Fairfax County!  

Take a quick look at the graph:  Closed sales have shot up (typical of the summer months, but we have topped the amount over the last few years) and inventory remains stubbornly low here, at around eight weeks.  (Don’t forget, a “normal” market will be running between six and seven months of inventory.)  

Not only that, but take a look at our Days On Market (or DOM) chart:  25 to 30 days, and your house will be under contract.

All this, despite Sequestration.  And it’s comparable in the areas around Fairfax County: Loudoun County, Alexandria, and Arlington County are all experiencing similar trends.  (I won’t bore you with chart after chart in this post, but click this link for the actual website and county-by-county details.)  

I have clients who are looking in McLean (where the average sold price of a home tops $1.1 million), and even at that price point, homes are only staying on the market for an average of 40 days — and they are going for over 98% of asking price, too.  It seems as if the DC/Maryland/Virginia areas (commonly referred to around here as “the DMV”) really are in their own special economy here.  After all, jobs are plentiful if you are educated and/or military.  

(Today’s post brought to you by Jeff Grana, of The Hardman Team at Tunell Realty in Leesburg, VA.  If you have questions or concerns, don’t hesitate to contact me at 630.306.3537, or shoot me an email at jeff.grana@gmail.com.)

Have a great week!

April Numbers Are In!

This monthly market report is brought to you by RBIntel and Tunell Realty, LLC.  Here we go, folks!  

As the chart shows, our inventory here in Fairfax County remains stubbornly low throughout April, and into May.  With an average sold price of $522,960 in Fairfax County, we are 1% down from last month, but we are 10.55% up over last year at this time.  Further analysis shows that new listings have risen sharply over the last few months, pretty much in line with the pattern of the last five years.  

As you’ll notice, it’s the same story in both Arlington and Alexandria — rises in average sales price ($609,729 in Arlington–up 2.1% over last month–and $536,868 in Alexandria, a staggering 9.53% gain over last month alone!) — and record-low inventories (both holding fast at just about seven weeks).  Again, I am hearing rumblings of clients tossing out Financing and Home Inspection Contingencies just to stay competitive.  (Take a look at last month’s post for clarification on what that means.)

It’s nuts!  The market here is roaring.  Homeowners without a motivation to sell are beginning to notice that it’s their market right now, and are waiting to put their home on the market (despite sub-60-day Day On Market stats), if they’ll sell at all.  For those who are up against a deadline or other circumstance, a well-priced home in great shape and which shows well will likely be gone in no more than two weeks.  The homes in the best locations are still being snapped up before they even hit the market, and homebuyers are even getting creative in the face of defeat and frustration.  (Click the link for a story about how.)     

Thanks again for taking the time to read this…it is fantastic to watch a real, live, breathing organism (the market) and all of its parts intermingling and at work.  Here is a link to the site that compiles the research, if you happen to be interested.

As always, don’t keep me a secret.  If you happen to notice someone mention that they are in need of help buying or selling their home, pick up the phone and call me at 630.306.3537 immediately so we can discuss how you can help us meet.  If you are sitting there wondering, “Who’s this Jeff guy?” you can check out my other blog over at The Pen IS Mightier, where you will find all kinds of musings and opinions.  Hey, you never know what we might have in common!

Until next time, Happy Home Hunting!