The Good & the Bad

The market appears to be stabilizing in many areas - inventory, rates, pace of sales/rentals, and months of inventory. More good news is that we are seeing more activity at our listings, lenders are getting more calls for pre-approvals, title companies are seeing more contracts, and builder sales seem to be on the same pace the last few weeks. What this means is there are people buying and selling houses.

For continued good news, here we go. Virginia boasts the 2nd lowest unemployment in the county behind South Dakota. The reason for that is no one lives in South Dakota or we would be number 1. The unemployment rate is just 3%. Mortgage rates have declined 2 weeks in a row. The main reason for the decline were the June unemployment reports. For the rest of the country, the news wasn't as good. Slower job growth means payrolls will stabilize and inflation will be in check resulting in less pressure to raise short term rates. It is crazy how the investor's/the Fed's minds work. In a recent poll of top economists in the country 61% believe the short term rates should not be increased. Whew! Another interesting fact that will help our business besides jobs is population. Our country's population will break the 300 million people this fall. Obviously births are part of it but our benefit comes from immigration - legal and illegal. One of our fastest growing segments for home purchases is Hispanic/Latino buyers. They presently make up the largest minority in our country at 14% of the population.

For good news bad news, here we go. It is not new news, but sales have eased this year versus last year. Nationally we did not break the 6 million homes sold in a year until 2003. This year, we are on pace for 6.67 million homes sold - not too shabby. Again, houses are consistently being bought and sold. Additionally, new home sales increased 4.6%. Bad news - gas prices have spiked to their highest level in 2006.

The Roller Coaster rides Again!

What an interesting ride it has been. Two weeks ago we were down, now we are up this week. The unusual thing is the market is down.

Here is an article I read recently - very surprising to me once you read my commentary below!

Increase happening despite rising inventory and an longer days-on-market
RISMEDIA, July 11, 2006-Homes sold in the Mid-Atlantic-including the Washington, D.C. region-continue to fetch top dollar, despite rising inventory and an increase in days-on-market, according to the most recent statistics released this week by Metropolitan Regional Information Systems, Inc. (MRIS). Market analysts credit the thriving job market in the nation's capital and surrounding suburbs with providing a softer landing for its housing sector than that experienced by most regions nationwide. Average Selling Prices for June 2006: Washington, D.C.: $580,167, up 12.17% from June 2005 Alexandria, VA: $554,533, up 9.81% from June 2005 Fairfax County, VA: $574,824, up 2.26% from June 2005 Loudoun County, Virginia bucked the trend with an average selling price of $531,713, down 2.80% from June 2005. Overall, the Greater DC Metro is expected to fare better than average as the nation heads further into what the National Association of Realtors® predicts will be a stabilization in sales and return to historic norms in terms of home price appreciation.

Where are we headed? More of the same in my opinion. As rates continue to creep up, inventory continues to creep up or even stabilize, we will continue to see low offers, more negotiations, and perhaps even slightly lower prices. The important information to convey is that sellers are not losing money by lowering their price. More than likely they are making money. The average house listed for $800,000 this year was purchased for $350,000 - 400,000 five years ago. Sounds like a money maker to me! If people have done a cash out refi, or taken a home equity line of credit, they have taken their profits already. Therefore, they aren't losing. They have to adjust their thinking on things like buying new furniture for the new house, or a pool, or no mortgage out of town in a more reasonably priced city or state. They have to be realistic in their thinking.

First time buyers make up 33% of our market. The rental market is red hot! It is a buyer's market - we have an 8.3 month supply of houses. A 5.5-6 month supply is considered a balanced market. Vacancies continue to rise - 28.9% of our market is vacant.

The good news is that houses are selling and there are buyers out there. Houses in the best condition, priced right, and in the right location are moving. We have several soft spots in our market so premo condition and the right price are even more important in those areas (Loudoun, Prince William, and other outlaying counties). Rates have stabilized, there are many requests for pre-approval letters from lenders I have spoken with recently, consumer confidence is stable, inflation appears to be stable (after 18 increases in short rates) and unemployment is stable (approx. 4.7%).