Real estate markets are a largely local phenomenon, and to figure them out it’s important to know what to pay attention to out there, and what to just ignore. In today’s wide ranging post we’re going to talk about the relevant numbers both in comparative and absolute terms and touch on financing and distressed sales and throw in a little prognostication. All so that you can not just be informed but to provide elite level information to inform your real estate decisions. Let’s start with the big one. Inventory levels. There are currently only 2,850 homes on the market in Northern Virginia (that would be inside the beltway, Fairfax, Loudoun, Prince William and Fauquier Counties). That figure represents a 38% decrease from a year ago, and a 52% decrease from 2 years ago! This carries lots of implications. The obvious are price pressures, lack of selection, and lots of people competing for the same homes. If you are a buyer you are more likely to be competing than negotiating. It also carries profound implications for the future. When the market went south during the last recession, there were some 22,700 homes on the market in November of 2006! So while we don’t know what the future holds for the economy for the next year or two, we’re still going to have more buyers than sellers in this region.
Currently we have a .9 (that’s “point nine”) months supply of homes on the market for sale, and the same .9 months supply for rentals so there is no relief there. Median Days on the Market (DOM) is 5, and the Average DOM is 14. Wow. You can see why well priced and well prepared homes are getting multiple offers. This is actually a really good time, right now, to get your home on the market. Roughly a third of the market, both buyers and sellers, has gone to the sideline for a host of easily discernible reasons. But the 2/3 that remains is running hard! June, July and August is the new Spring Market this year. Now all of this activity is occurring in a modified fashion. Only one group of buyers in a home at a given time, strict showing and safety protocols, no more piling into the car together, Facetime showings, etc. But I am adapting to meet this new reality and to meet my clients needs at their comfort levels. We are positioned to excel for you.
The curve is flattening for mortgage forbearances which is a good thing. Currently there are about 4.2 million borrowers nationwide in mortgage forbearance making up 8.3% of the outstanding loans. This has been a real weight on the mortgage industry and would normally be a major cause for alarm for borrowers, but unlike 2006 most borrowers have a much stronger equity position which provides a safety net. The ability to go this route for many folks has been a needed lifeline. If you are in forbearance or are considering it I can’t encourage you strongly enough to reach out to me to discuss your options and the implications of going that route. These are changing weekly, both for the positive and negative, but there is a path forward for you.
Right now there are only 22 foreclosures and 22 short sales on the market. That’s it. More will likely come later but given the improved economic conditions from the strong economy of the last several years and the stronger equity positions most have from the appreciating market do not expect an explosion of these. There are just too many other less severe options for these owners.
And let’s talk a bit about interest rates. It’s a bifurcated situation. The conforming market (max $510,400) is fantastic! Rates are scaring 3%. However, the Jumbo market, without the liquidity and security provided via the secondary market to the conforming loan market, is in a very different place. Fewer investors, fewer options, more things impacting rates and availability. And it’s changing significantly and rapidly. Best to call me about those.
Lastly this is a professionals market. Broker and lender selection has never been more important at any time in my 31 years in the business. Yes these are scary, uncertain times, but I’ve got the knowledge and high level information to lead you to a successful home purchase, sale or both. Call me about anything remotely related to real estate and if I don’t know the answer I’ll get it for you!
It’s a good life.