May Review (Prelim)

Preliminary numbers indicate 1126 new contracts for May 2011 versus 726 for May 0f 2010. This represents a 55% increase in sales over last year. The primary difference was the tax credit that pulled sales forward last year.

This is consistent with the leveling and stabilizing of the market, that I have been discussing this year. The year to date contracts are virtually identical for the first five months of 2011 versus 2010. And generally reflect a more normal seasonal curve rather than the tax credit distorted curve of the previous 2 years.

There are 2 areas of concern. First, an 8% decrease in average price per square foot that is probably caused more by the fact that we are selling an older home on average. Second, flat or fewer (will take several days to get all new contracts in MLS) new contracts for May versus April. Historically, new contracts accelerate through May reflected in fewer closings as the summer goes on. This would seem to indicate that sales slowed slightly ahead of schedule.

I’ll update in a few days when the information in the MLS is more complete.

April Market Update

Pending Sales & Sales Success
In this market segment, Pending Sales for April are down by 23.36% to 1,165 versus April of last year at 1,520 that went under contract.

With 2,176 newly listed homes this month and 1,165 under contract, the sales success index of 53.54% for April decreased 0.74% versus last year’s index of 53.94% in 2010.

Average Prices
According to the April 2011 statistics, this market area has experienced some downward momentum with the decline of average prices at closing. Prices dipped 4.13% to $221,490 versus the previous year April at $231,022. This is a difference in price of $9,532.

New Listings & Months Supply of Inventory

New Listing in this area for the month of April yielded 2,176 available resale dwellings. This was a decline of 22.78% or 642 units in comparison to April 2010.

The total housing inventory at the end of April dipped by 14.56% to 7,634 existing homes available for sale. At an average of 791 closed sales per month over the last 12 months (May 2010 - April 2011), represented an unsold inventory index of 9.66 MSI for this market segment.
Reports produced and compiled by R E S T A T S I n c

The months supply of inventory is illustrative for planning purposes, but the current demand as ilustrated by new contracts above gives us just over a 6.5 month supply of inventory. this is a further indication that we are returning to a more normalized market.

March Market Update

Months Supply of Inventory (MSI) Decreases
New Listing in this area for the month of March yielded 2,288 available resale dwellings. This was a decline of 19.29% or 547 units in comparison to March 2010. 


The total housing inventory at the end of March dipped by 12.19% to 7,645 existing homes available for sale. At an average of 813 closed sales per month over the last 12 months (April 2010 - March 2011), represented an unsold inventory index of 9.40 MSI for this market segment.

Average Prices
According to the preliminary trends, this market area has experienced some downward momentum with the decline of Average Price this month. Prices dipped 4.60% in March 2011 to $197,786 versus the previous year at $207,327.



Sales Success for March 2011 is Positive
In this market segment, Pending Sales for March are down by 8.70% to 1,092 versus March of last year at 1,196 that went under contract. With 2,288 newly listed homes this month and 1,092 under contract, the sales success index of 47.73% for March advanced 13.13% versus last year’s index of 42.19% in 2010.Reports produced and compiled by R E S T A T S I n c.




Bottom of the Market?
Continued volatility, with some trends up and others down is consistent with being at or near the market bottom. The decrease in the number of homes sold was expected as the prior year had sales pulled into the period in order to take advntage of the tax credit.

Overall sales were up for the first quarter and if flat or up in the second quarter may finally be signalling that we have been to the bottom.

February Market Update

Pending Sales & Sales Success
In the Central Virginia Multiple Listing Service, Pending Sales for February are up by 20.73% to 1,124 versus February of last year at 931 that went under contract. With 2,640 newly listed homes this month and 1,124 under contract, the sales success index of 42.58% for February advanced 27.54% versus last year’s index of 33.38% in 2010.

Average Prices
According to the February 2011 statistics, our market area has experienced some downward momentum with the decline of average prices at closing. Prices dipped 16.70% to $178,686 versus the previous year February at $214,496. This is a difference in price of $35,810.
 
Cautionary Note: This does not mean that the value of an average home went down. It is an indication that there are more buyers for lower priced homes.

New Listings & Months Supply of Inventory
New Listings in this area for the month of February yielded 2,640 available resale dwellings. This was a decline of 5.34% or 149 units in comparison to February 2010. The total housing inventory at the end of February dipped by 9.67% to 11,846 existing homes available for sale. At an average of 1,047 closed sales per month over the last 12 months (March 2010 - February 2011), represented an unsold inventory index of 11.32 Month Supply of Inventory for Central Virginia.

Bottom of the Market

Volatility is the norm for the bottom or top of the market. It is hard for prices and demand to reflect immediately on each other but we are seeing stronger demand and if it continues prices will go up. Reports of multiple offers are occurring more frequently. The only way to know for sure whether this is the bottom is to look back a year or two from now. At that time we will be saying; "I hit the bottom just right" or "I wish I had bought my house earlier and gotten more for my money."

Data Compiled From Central Virginia Regional MLS by RE Stats. on March 3 2011.

Week 5 Real Estate and relate news round-up

The Census Bureau Speaks: What's going on with homeownership and vacancy

The Census Bureau released its quarterly report on residential vacancies and homeownership on January 31, 2011. The homeownership rate dropped .4% to 66.5%, its lowest level since 1998. 

Home Buyers Kick Tires on a Rocky Road

Still, the traffic online, where I imagine most folks go before even heading to an open house, is an important sign, as we head into the Spring market. 

Or maybe they’re not just kicking tires.

From this blog, yesterday: The 743 new contracts represents an increase of 4.8% over last year. 

10 foreclosure hotspots

Las Vegas always wins the title for worst foreclosure rate in the country. But these 10 unexpected cities have the fastest-growing rates out of the 100 worst-hit places.

Here Comes the Sunbelt

In a little bit of a contrarian view to whats happening.

"Eighty million baby boomers are about to retire," went the argument. "They're not going to hang around in places like Chicago, New York, Boston and Pittsburgh all winter if they can help it.

Eliminating Mortgage Interest Deduction Would Raise Taxes for Middle-Class Families

liminating the deductions for mortgage interest and real estate taxes would raise taxes disproportionately for middle-class households and make the tax system less progressive, according to a new study from the National Association of Home Builders (NAHB).

January contracts up over last year

The Richmond area saw an increase of 34 new contracts for single family homes in January of 2011 over 2010. The 743 new contracts represents an increase of 4.8% over last year.

Though there are details concerning pricing that we will not know until after they close, the average size of the homes appears to be approximately 100 square feet larger.

The price they were listed for is only $1,300 more than the closed sales from last year. Based on our list to sales price ratio, I would expect to see about a 3 - 3.5% decline in average prices. I expect the average price per square foot to come in about 4.5% less than for the same period last year.

What does this mixed bag of info mean? Maybe nothing. What I suspect is that the prices have caught up with (lower) demand, and we may be seeing what the bottom of the market looks like.

I would love to hear your thoughts.

Housing links for January 29

A  sampling of the articles that I read this week that pertain to homes in our area:

Locally we found that the value of real estate has gone down 3.3% in Chesterfield and 1.13%  in Henrico according to reports in the Richmond Times Dispatch. Of course, they have been observing and working on those assessments for the year.

More positive local news came when it was reported that December unemployment was unchanged for Virginia. Richmond International is seeing increased traffic and 5 hotels received high honors from AAA.

One of the most encouraging pieces of data came from the commercial real estate sector. For housing to stabilize and our economy to improve, we will need an increase in jobs. We know that employers are announcing hiring to come, well they are also renting more space. This is also reflected nationally and the results are a growing GDP.

A new survey indicates that renters and owners agree that owning a home is still a smart decision. Meanwhile another survey indicates that affordability was a primary reason for buying a home in 2010.

Finally we have a brief guide comparing some home maintenance costs versus repair costs.

A tale of 3 foreclosed houses

When will the banks get a clue?

This past week had me working with 3 buyers on purchases. In all 3 cases the houses were for sale by a bank.

House 1 Had been priced at $79,900 and recently reduced to $49,900. The house was in a state of extreme disrepair. Inside sheet rock had been destroyed and floors were disintegrating. There was an area that used to have kitchen appliances and cabinets, but they were gone now. areas of the ceiling were coming down and the floors were rolling. My client crawled under the house and counted 23 joists that would need to be replaced. In other words the house needs to come down, even though it was not that old.

The MLS for this house had a comment that it was a nice lot. Not sure why it was a nice lot. Not overly large, or small, but definitely overgrown. The overgrown weeds and bushes did serve to hide the railroad tracks that adjoined the property.

Conclusion $25,000 lot with a $30,000 demolition job, makes this $49,900 house approximately $55,000 overpriced.

House 2 was on the market for $79,900 in a very popular area. The house was definitely dated. but had a brick and vinyl exterior and floors and walls were all sound. The average to large flat yard was entirely fenced in the rear. All interior surfaces would need to be redone, and the kitchen and baths would need to be updated. Add in replacement windows, a little landscaping and the investment to make this house desirable, would be around $25,000. 

This house was on the market for 2 days and garnered 10 or more offers resulting in a contract for more than list price and closing quickly because it is all cash.

More than likely the house will be renovated and placed back on the market for around a reasonable $170,000.

House 3 I already had under contract. My buyer had identified the house and neighborhood and it turned out to be on the market for $79,500. The house seemed to be appropriately priced, not a bargain and appraised for $82,000. The bank did not respond to the offer in a timely manner and then as a result of an even slower delivery by their agent to me and the purchaser was not really under contract until this past week. 

What was remarkable in this instance, is that while there are apparently 11 similar homes on the market in the area of this sale, only 2 have gone under contract since we made this offer at the end of October. In spite of this, the bank’s asset manager was constantly wanting to “kill” the deal. He couldn’t sell the house for any more than my client was paying. He couldn’t sell it any sooner, and yet he wants to “kill” the deal because it is closing late because his company returned the “contract” late and delayed the mortgage process.

I wish I could say these are isolated instances but they seem to be happening more frequently. So whether they are overpriced, underpriced or trying to kill a legitimate deal in a competitive market the banks don’t appear to be helping their investors, customers or vendors. 

A VERY Richmond Tradition

Sure, there are folks everywhere that put up 10's or 100's of thousand of Christmas bulbs on their house, but Richmond has a tradition of tacky lights, ornaments and TOURS that goes back years (25+). Here are some pictures from a stop on the tour. You get a feel for the crowd, the effort and the 1.5+ million lights.

Crowds at The Phifers

Not your typical outside Christmas tree!

Honoring the nativity. They had several.

A room for Santas, elves, and other Christmas figures.

I couldn't resist this full moon shot the other night.

The tours run through December, and many of the houses are lit past new years. We had 14 people in a James Limousine tour and had a blast. Merry Christmas.

Better questions get better results

REALTORS® all over the country know how tight things are. Statistics show that most are, well let’s just say, underemployed. This tends to make us sympathetic to the needs of clients that want to keep their costs down. However, sometimes the costs that are involved in buying a home should not be the focus.

The other day, I was asked what I consider to be the WRONG QUESTION by another REALTOR®. “Do you have a lower cost home inspector, that charges less than $250.00?” This REALTOR® had a client that was trying to save on the inspection. I get that. But the typical inspection in our area is $300.00 and up depending on scope of work, size of home and age of the home. The inspector I usually use would charge $350.00.

For $350.00 or more he starts at the roof and works his way down into the crawl space. He identifies current and likely future problems, gives an idea of the costs involved in fixing and or avoiding them and how to maintain the house. His analysis and documentation is such that if there is a problem, that my client decides needs to be addressed, the seller understands why we are asking.

Without the thorough analysis and documentation, one of three things will likely happen; problems will not be identified and will create bigger costs later, the seller will not understand the reasons for the requested repairs or credits and the contract will fall apart, or the purchaser will be alarmed and the contract will blow up. More simply put, a bad inspector can keep a purchaser from getting the house that was right for them without hidden costs.

I tend to think a BETTER QUESTION to a REALTOR® is, “Do you have an inspector that you would use to inspect a house that you are buying?”

November inventory summary

This is a summary of homes in the Central Virginia MLS for the RVA and Tri-cities area

There are 8273 homes available in Henrico, Amelia, Chesterfield, Dinwiddie, Goochland, Hanover, Hopewell, New Kent, Petersburg, Powhatan, Colonial Heights, Prince George, Richmond


                Beds   Baths   SqFt          LP                LP/SqFt


High           11       10    16,248  $10,950,000      $899.25
Low             0         0        0               $1
Ave              3         2     2,151     $263,722         $116.92

Analyzing the risks may shock you!

It’s hard to be optimistic when everybody is and has been saying how bad everything is. Now, many people are saying that the worst of the real estate crisis is behind us. I see some everyday saying that prices are picking up. I hope they are right. The most pessimistic projections that I have seen recently indicate that we may be in for another 10% decrease in home values.

That sounds pretty bad. However to better understand the risk, I ran 3 scenarios based on equivalent $200,000 homes with 20% down, each for a 5 year period.

Scenario 1 - the market is flat for the first 2 years and then starts to appreciate at about 3% a year.

Scenario 2 – the market declines 10% in the first 2 years and starts to appreciate in year 3 at 3% a year.

Scenario 3 – the market declines 10% for the first 2 years and starts to appreciate in year 3 at 3% a year, but the purchase is not made until the end of year 2 at the market bottom.

Before I give the results, let’s take a look at interest rates. We know that they are at a low point for our home buying lifetimes right now. The presumption is that they will go up. If the economy starts to grow and jobs pick up, we should see rate increases to keep bonds and mortgage backed securities attractive as investments. In addition the fed will have to increase rates to keep inflation in check.

These scenarios use a current interest rate of 5% since most don’t qualify for the near 4% rate that is being reported as I write this. The future rate for the purchase 2 years from now is still a low 6% or a 1% increase over current rates. (If that hasn’t happened, then the economy is likely not growing, jobs are still a problem and we have a lot more problems than if we bought or sold a house or held onto our money.)

So using these scenarios for comparison purposes, what we find is not surprising for scenario number one; we have a positive result with a net advantage based on appreciation and cost savings of about $22,000. Because of the initial loss of 10% in scenario number 2 we actually are only ahead about $1,000 after tax savings. The most surprise is actually generated by scenario number 3. When you calculate the lack of tax savings, and costs of renting for the first 2 years, versus buying at the reduced price with a 1% increase in interest rates. the result is a net loss of approximately $8,000.

Like most investments, for many of us, buying a home now is a better strategy than waiting. MARKETS CAN’T BE TIMED.

September sales

This is a preliminary look at new contracts written during September and compared to contracts written in September 2009.

	Sales	Beds	Baths	Sq Feet	Price	Price/SF
Sep-10	823	3	2	2084	$228,877.00	$104.18
Sep-09	950	3	1	1923	$231,794.00	$118.17
Difference	-127	0	1	161	$2,917.00	$13.99

The sales decrease would be expected since September of 2009 was influenced by the original tax credit and September of 2010 had no tax credit. So, while many believe the market is continuing to crash, I believe this is a pretty good indicator of stabilizing sales. A few more months will tell the story much better.

There are a lot of people saying that prices have been going up, but keep in mind they are talking about median prices. Since the tax credit drew more first time buyers into the market, it would skew the numbers to a lower median.

I think the better indicator is the average cost per square foot, which is down approximately 12%.  This number could be heavily influenced by the condition of distressed properties, which seem to be making up more and more of the market.

October inventory summary

This is a summary of single family homes in the Central Virginia MLS for the RVA and Tri-cities area

There are 8448 homes available in  Henrico, Amelia, Chesterfield, Dinwiddie, Goochland, Hanover, Hopewell, New Kent, Petersburg, Powhatan, Colonial Heights, Prince George, Richmond        

	Beds	Baths	SQFt	Price	Price/SF
High	25	9	18248	$10,950,000	$899.25
Low	0	0	0	$1	$0.002
Ave	3	2	2161	$268040	$118.08

RICHMOND METRO

Paring the area down to Richmond Metro of Chesterfield, Goochland, Hanover, Henrico, Powhatan, Richmond

	Beds	Baths	SQFt	Price	Price/SF
High	10	9	16248	$4,495,000	$899.25
Low	0	0	0	$9,900	$6.21
Ave	3	2	2,209	$277,084	$120.16

TRI-CITIES

Includes Colonial Heights, Dinwiddie, Hopewell, Petersburg and Prince George

	Beds	Baths	SQFt	Price	Price/SF
High	25	10	14,00	$10,950,000	$782.14
Low	0	0	510	$1	$0.002
Ave	3	1	1,795	$194987	$100.91

Are we selling furniture now?

We have all seen/heard the commercials, because every town seems to have a furniture store that wants us to know, “THERE WILL NEVER BE A BETTER TIME TO BUY FURNITURE.” “THIS WEEKEND ONLY, WE ARE CUTTING PRICES TO THE LOWEST THEY HAVE EVER BEEN.”

While driving to an appointment today, I heard a similar statement on mortgages and realized that mortgages and homes are being marketed the same way. I mean, hasn’t the mantra for both businesses been “prices are down”,” rates are down” and we know “this won’t last.” Isn’t it obvious by now that we don’t know how long it will last? (These economist study it all the time.)

We do know that rates are down and home prices are down, making it less expensive to buy a home.

We do know that inventory is up, and that means options.

We do know that the mortgage interest deduction currently saves money on taxes.

We do know that most people find a sort of satisfaction, from owning rather than renting.

We do know that there is a floor plan and style for every taste and if it’s not available someone will be willing to build it.

We do know that for most, multiple families in homes not really designed for that lifestyle, is a short term solution.

We do know that our population is growing. (I wonder, is the population growing faster since people have less money to spend on out of the house entertainment?)

There are lots of reasons to buy a home, but not because this is your last opportunity. Talk to a real estate professional that understands the reasons people buy homes and the drawbacks, and can make them clear to you. Make good real estate decisions.

For you real estate and mortgage professionals out there, just remember, we shouted that prices and rates were down last summer and it surely wouldn’t last. Well, we were right, they are lower now. Yet there were good reasons for many folks to have bought homes in the last year. By the way, don't forget, when we sell homes we do help funiture sales.

Be great and remember your comments are very much apprteciated.

Speaking of HUD

HUD had a National “Real Estate Broker Webinar” this past week. In this webinar, they announced some significant changes to the way they will be doing business going forward and the plans for implementation.

Changes included:
• Longer period for owner occupants to bid on homes before investors may bid. 10 days to 30 days.
• Ability to list on any day of the week.
• A single national site for searching for HUD homes, that allows all consumers to see what all agents will see.
• Additional listing brokers creating additional marketing for many properties.
• Earnest money to be submitted with the contracts and made out to HUD.
• Changes to agent compensation.

These are overall thought to be good changes and many are long overdue. Unfortunately the announced time frame is already not being met, at least not in our area. This may cause some short term confusion, so make sure your agent (ALL HUD BIDS, MUST BE MADE BY A HUD REGISTERED AGENT WORKING FOR A HUD REGISTERED BROKER) is on top of the changes and their implentation.

I WANT THIS HOUSE FOR LESS!

I was recently told that I needed to convince a seller, through their agent that a home was over-priced. When that is the case, I feel that I do a pretty good job of selling the right arguments. However, whether it is truly over-priced or not, chances are it will remain that way on the market.

Some observations from 14 years in real estate:
1. Sellers don't change their mind about the value of their home. They may acquiesce to the market, but if they do, they feel cheated.
2. Buyers don't change their mind about the value of the home they are buying. If they negotiate up, they almost always feel like they should have gotten it for less.
3. Most people buy for emotional reasons, logic takes a back seat.
4. Sellers have agents that usually study the market, and have an idea of the value of the home. Those agents are often proud and don't like to hear that they made a mistake.
5. Buyers that are represented, have agents that usually study the market and have an idea of the value of the home. Those agents are often proud and don't like to hear that they made a mistake.
6. Agents need to present information to their clients and let them make the decision.
7. Buyers that chase value, often find it.
8. Buyers that chase deals, in a market where there is competent representation on the other side, seldom find them.
9. Buyers that chase deals, often get no value.
10.REALTORS® subscribe to a code of ethics that includes “honesty” and “truth.” Most REALTORS® take it very seriously.

There are others, but the most important thing to remember when making an offer is that everyone has information and has come to their own conclusions based on their thought processes. Those thought processes are usually a mix of logic and emotion, and are often dominated by the emotional side of the equation.

I always welcome your comments.

Qualifying purchasers; Are they able?

The credit challenged buyer. Though there are still some loan programs and remedies for less than perfect credit, not every buyer that may want to buy your home is going to be able to do so within the time period you want. Furthermore, since the rules are changing almost daily, there is a distinct possibility that a person with credit dings approved today, might not be approved tomorrow.

It is very important to have an understanding of the purchaser's ability to get financing for your home, before even accepting the terms of the contract. Then it is equally important to make sure that the buyer proceeds to get financing as soon as possible after the contract is written, to insure that you do not tie the home up with someone that ultimately can't purchase.

There are two sides to most issues, and this is no exception. Qualifying is best done by an objective professional third party. One who is experienced, stays on top of the changes and is reliable. Otherwise you risk alienating the buyer and losing the contract on a qualified prospect.

Qualifying Purchasers; Weeding out the dreamers

You have enhanced and packaged the home for sale, price it with the best market price and exposed the house to all of the potential buyers. Now the buyers are starting to show up and it is time to qualify them or in other words to insure that you are dealing with the right people to sell your home.

This crucial step will insure that you don't tie yourself to the wrong person taking your home off the market prematurely and/or wasting your time and money.

The less than serious buyer

This person likes to feel important and is sometimes a dreamer. They appear interested in buying your home, but are really interested in a great deal, they will buy if it is under market, or includes some fantastically unique feature. Even with these conditions this is the type of buyer that will use anything possible to get out of the contract, when they get cold feet at a later date.

It is important that you qualify the potential buyer as being serious about buying a house. The buyer needs to have a genuine desire for buying a home or better yet a need, such as relocating from out of town. The buyer needs to also have a definite time frame for buying the home. Best of all the buyer needs to be serious about buying your home.

Expose your homes to the widest pool of buyers possible

Market the home where buyers are. Internet (personal and company sites, listing sites, social media sites, advertising sites) agents, neighborhood, print

According to the National Association of REALTORS® 87-percent of home buyers use the Internet to search for homes. A Brokerage with a strong company internet presence is helpful, but any seller will need to utilize:
Listing sites such as Realtor.com, Zillow, and in Richmond, Richmond.com.
Social media sites, such as Twitter, Facebook, LinkedIn, Plaxo and others.
Advertising sites such as Craigslist.
Finally personal blogs and websites, such as this also add a chance to communicate with buyers.

To get the most benefit from each of these sights, requires taking advantage of what they have to offer. If 10 pictures can be uploaded, then 10 pictures should be uploaded except in special circumstances. If a virtual tour can be made available, then it should be linked appropriately. Descriptions that paint a clear view of the benefits of the home and contact information that is readily accessible are absolutely necessary to maximize these sites.

There are still other buyers out there and signs, for those in or canvassing neighborhoods, print, and direct communication with buyers and the agents that have pools of buyers will expose your home to the widest available buyer pool.

However you market your home, be prepared with a plan to tap into the largest buyer pool possible with the maximum market exposure.