Feeling nosy about DC? MD? VA?

Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.

• Feeling nosy about the District of Columbia?
• Feeling nosy about Virginia?
• Feeling nosy about Maryland?

If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!)

What's the deal with the explosion of condos?

I recently received an e-mail from a former buyer client of mine who now lives on Capitol Hill. He writes:

> Are y'all at all worried about the
> explosion of condos in the District?

The short answer is no. The long answer is "yeah, maybe, kinda."

Perhaps you've been reading in the Washington Post about how our strong housing market has generated great interest in condominium units in the District --- so much so that developers are planning on bringing a slew of new condominium projects on the market in the next few years. 47,000 new condos are reportedly in the works.

What does this mean for people who currently own condos in the District? No one knows for sure, but there is some speculation that a glut of units on the market could deflate what has up until now been an incredibly strong condo market. I think certain buildings and units will be particularly vulnerable in a market that favors the new and sexy. Units in dowdy-looking buildings, or in buildings with few or no amenities, or aren't in great shape, or haven't been udpated --- these units will harder to sell, and prices for these units could be depressed. (For what it's worth, I already see this happening in many areas.)

That said, it's gonna be a great time to buy a condo in DC, with builders competing with one another to offer some great perks (plasma screen tv's, high-speed internet, closing costs, etc.). If you're considering purchasing in the near future, you should consider what would happen if you had to sell the unit again in the near term. I think that whatever happens, owners who buy condo units and are prepared to hold onto them for a while COULD ... MIGHT ... POSSIBLY make a mint ... in the long term.

The market is "interesting" this week

This week's market update:

• Interesting scenario no. 1: A condo on Adams Mill Road in Mount Pleasant had been on the market for two months. An interested purchaser submitted a strong offer through a buyer agent in my office. The buyer had extremely good financial qualifications, and the offer was $1,000 OVER the asking price). The seller REJECTED the offer without making a counteroffer, and has subsequently removed the property from the market. Help me understand.
• Interesting scenario no. 2: A listing agent in my office had a brand-new listing in NW DC on a nice street, priced a hair over $1M. The listing agent and the seller had scheduled an open house for this past Sunday. An interested purchaser made a strong offer (several percentage points above the asking price) PRIOR to the open house. The offer was to expire BEFORE the open house on Sunday. After a careful review of the offer, the seller accepted it and cancelled the open house.
• Savvy sellers are seriously considering offers that come in before open houses. They're looking at the "bird in the hand" rather than waiting for the "two in the bush" to appear later. This is good news for serious buyers. Advice: buyers who are seriously interested in new listings on the market should consider making a "pre-emptive" offer --- before the Sunday open house. It's a strategy that's working ... at least for this week.
• It appears that, as elsewhere, inventory (especially condo inventory) in Northern Virginia is sitting longer and longer unsold. In fact, many condo units currently on the market are priced BELOW recent sales in the same buildings. It appears that buyers are shopping for value ... and they're looking for LOTS AND LOTS of value. Otherwise, buyers are passing over listings that they feel don't deliver. Absorption rates in Northern Virginia (the percentage of listings that go under contract in any one-month period) is at a long-time low, dancing in the 15% to 20% range. That means that only 20% of available listings go under contract in any given month --- leaving an additional four-month supply on the market (not counting the new listings the come on the market each month). This is a statistically significant change from a time when we had merely a few days' or weeks' worth of inventory on the market.
• I had heard this week that the DC $5000 Tax Credit for first-time homebuyers had been reauthorized through 2006 by Congressional vote. A call to Eleanor Holmes Norton's office has confirmed that the bill to reauthorize the tax credit will be voted on next week. So, it's not a done deal yet. The tax credit --- which expired at the end of 2005 --- if it's passed, would likely be made retroactive to January 1, 2006. Stay tuned for more information.

Feeling Nosy about DC? VA? MD?

Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.

• Feeling nosy about the District of Columbia?
• Feeling nosy about Virginia?
• Feeling nosy about Maryland?

If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!)

Mortgage rates dip

Mortgage rates edged lower in the week ending Thursday, Freddie Mac said, as calm inflation helped keep interest rates in check.

• The national average rate on the benchmark 30-year mortgage fell to 6.15% from 6.21% a week earlier. That marked the fifth straight dip in the rate, although it is still above its year-ago level of 5.74%.
• One-year Treasury-indexed ARMs averaged 5.15%, nearly level with last week's 5.16%. ARMs, which have been more sensitive to increases in interest rates from the Federal Reserve over the past year, remain considerably higher than year-ago levels, when the one-year ARM averaged 4.1%.

For more information, contact Connie Echeverria at Prosperity Mortgage.

The market's NOT dead!

This week's market update...

• This past weekend witnessed a "reversal" in some of the trends we've been seeing over the last couple of months. Open houses were well attended (In some cases OVER attended. One agent in my office had a well-located listing in Dupont Circle that saw more than 150 groups of visitors come to its open house on Sunday, standing room only in the small condo); and some listings even had multiple offers. Is this a new trend? I have no idea. It does underscore that listings ARE selling --- the doom and gloom that may have been reported recently in the media may be premature. Properties that look great (think Pottery Barn), are well-located (think near Metro), and are well-priced (think JUST BELOW recent sales) will sell no matter what, in just about any market.
• Last week, I wrote about some upcoming legislation relating to termite damage that would affect DC home sellers. It turns out the information we had, already sketchy, was sketchier than we thought. The legislation actually affects MARYLAND home owners who are selling their homes. The legislation has been PROPOSED, but local termite inspection firms are already taking the proposed legislation as gospel. Basically, the new legislation states that when a home is sold, if there is a termite inspection that reveals either an active termite infestation, OR evidence of previous termite damage OR evidence of a previous termite treatment, the home MUST BE TREATED with a liquid termite treatment. I should have more definitive information within the next few days. Stay tuned. Where Maryland goes, DC and Virginia are soon to follow.
• A recent article in the Washington Post reveals some major changes to the FHA loan program, which will make these loan products much more attractive to many first-time home buyers. In the recent past, FHA loan requirements obligated sellers to do all sorts of repairs --- major and minor --- before a loan could close. Many of these obligations were quite burdensome to sellers. As a result, many home sellers would refuse even to consider buyers who were using FHA loans. In a market where there were 20 offers on the table, it didn't affect sellers very seriously. As we enter a market where multiple offers may or MAY NOT materialize, this change in FHA regulations may affect more and more transactions.

Feeling Nosy about DC? VA? MD?

Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.

• Feeling nosy about the District of Columbia?
• Feeling nosy about Virginia?
• Feeling nosy about Maryland?

If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!)

Today's economic update ...

From my favorite loan officer, Connie Echeverria:

• Mortgage bond prices opened higher erasing the small losses seen yesterday afternoon. Bonds are receiving support from weak stock futures, which indicate the Dow Jones index, will open lower.
• In news released this morning, the trade deficit stood at 64.2B. This data was in line with market expectations and had little impact on trade.
• With no more economic news set for release today, traders will spend the day watching stocks as they prepare for a BIG news day Friday. Tomorrow both retail sales and PPI are going to hit the wire at 8:30 am ET. Retail sales is an indication of consumer demand, which is the driving force of the US economy. Weakness may lead to lower rates. The Producer Price Index (PPI) is an indication of inflation at the producer level. If the cost to produce goods rises, traders grow concerned that companies will pass on the increases to the consumers causing inflation to rise. ***If inflation rises, so will interest rates.***
• Stay tuned! Tomorrow may be a big day ...

This week in DC real estate ...

It's crazy out there:

• One realtor in my office reports: "My buyer client made an offer of $240K on a listing that had been reduced from $359K to $249K. Seller wouldn't budge."
• Another realtor says: "I have co-op listing in NW. A buyer made an offer late last week but withdrew it after reading the condo article in the Washington Post on Saturday."
• It seems to be a market in which negotiation is happening between buyers in sellers in very small increments. Buyers make an initial offer (below the sellers' asking price), which is inevitably viewed as a "low-ball" by the sellers who are initially outraged, then when their outrage cools --- namely because no other competing offers materialize --- they make a counter-offer a few thousand dollars below their list price. Buyers then counter a few thousand dollars above their original offer. This process can go on for days. Little bit by little bit, though, realtors and their clients are able to make these deals work. Just like the good ol' days.
• The best (read, "win-win") deals are struck when sellers agree to sit down face-to-face with the buyers' agents to craft deals that meet at least some of the needs and goals of both buyers and sellers. If sellers and buyers are prepared to give a little, these deals can be very smooth, if not always transcendent!
• That said, there's a ton of free-floating anxiety out there. Buyers are anxious about buying now (as opposed to waiting). Sellers are anxious about "losing" money by selling now (as opposed to six months ago). Realtors are working overtime to keep everyone calm.
• As I mentioned last week, pricing listings for sale is incredibly difficult right now, especially if sellers have not been kept abreast of what's been happening in the market over the last few months. The danger is that sellers will want to price their homes based on the "escalated" prices of homes sold six or eight months ago. Those prices were arrived at in the face of multiple offers and certainly don't reflect the reality of today's market. Today, multiple offers are RARE. As a result, sellers and their agents should be looking at the LISTING prices of those houses that sold six to eight months ago --- and not the ultimate sales prices. Many sellers, though, are behind the market-information curve. As a result, there are many homes that are sitting on the market ... sometimes for months.
• The fact that many sellers are currently valuing their homes move highly than prospective purchasers does not, however, prevent some realtors from taking these over-priced listings. Depending on the price point, location, or curb appeal of the listing, some agents will decide to take an over-priced listing in hopes of picking up other clients from the listing (from an open house, from a "sign call" or ad call, and from marketing the property to neighbors).
• DC sellers should be aware of new legislation relating to termite damage in their homes. Apparently (and I'm trying to get more information on this as I write this), new District legislation went into effect on January 1, 2006 that states that if, as a result of a termite inspection, evidence of "old" termite damage or previous termite infestation is discovered, the home MUST be treated for termites. In a city where many of our homes are a 100 years old, is there a chance that your house has had a termite infestation at some point in its past? You bet. If you're thinking about putting your home on the market in the near future, stay tuned for more information about this issue.

More bubble talk

From today's Washington Business Journal by John McCalla (on the opinion page) ...

...No one answers the question, "Is there a [housing] bubble?" because
journalists are not psychic. And in this case, they are more likely bored.
However, if we ask enough, guess what will happen?

True, market corrections will happen anyway. True, Greater Washington's
demand is out of hand enough that even Loudoun County was enticing buyers into
big-ticket mortgages and even bigger commutes.

But don't tell me the histrionic heandlines don't keep impressionable, but
otherwise optimistic, readers from open houses. Real estate bubble stories
usually hinge on the "figures lie, liars figure" setup. Yes, home sales decreased,
as any given story may report, and many did. But read on and you'll see it was
November to December decrease. Duh. Here's what many of the stories should also
be reporting: Homes in suburban Maryland, Northern Virginia and the District all
saw average sales prices in 2005 jump at least 15 percent from the year before,
says the Greater Capital Area Association of REALTORS. And yes, during the same
period, each area also experienced a decrease in the number of units sold. This
may or may not be a bubble. It also may or may not be the end of the world. Only
God and that screaming guy on the subway know for sure ...

... But the mainstream media won't readily report this kind of stuff. For
some, it's more fun to predict widespread disaster than boring economic
realities.

Amen, John McCalla. Thanks for that refreshingly equable description of the current market. Yes, the market is different. But, honestly, the market is amazingly fluid and constantly changing. For heaven's sake, everyone, let's stay calm.

I hate to admit it in public, but I watch Fox 5 News every evening, primarily because it's the only local news program on at a sane hour. Fox 5 News is one of the worst offenders when it comes to whipping viewers up into a lather with it's headlines and teasers. Fox News would never run a teaser for an upcoming housing-related story that says, "This just in: DC housing market remains largely stable and robust! Next on Fox News!!" This is the truth, but who would tune in for that? Yet, it's just this kind of rhetoric that has continued to bouy the housing-bubble frenzy. Enough already. REALTORS and consumers alike should keep an eye on the facts and not just the headlines.

Feeling nosy about DC? MD? VA?

Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.

• Feeling nosy about the District of Columbia?
• Feeling nosy about Virginia?
• Feeling nosy about Maryland?

If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!)

What’s happening in the local housing market?

A question I get asked a lot is, “Has the bubble burst yet?” Usually folks have some evil grin on their face when they ask, as if they’re hoping for bad news --- presumably that would put realtors out of business. I never quite know how to respond. Real estate schadenfreude is a popular pastime, I guess.

My answer to the bubble question is … I’m not convinced (and never was) that there actually is a housing bubble in DC. There is a change in the market these days, but I certainly won’t go so far as to say it’s a result of a bubble. With that said, what is actually happening in the market today?

• Undeniably, the market is much less seller-oriented than in the recent past; it’s a much more balanced market, which is encouraging to purchasers, who’ve been treated pretty badly over the last few years. This is a good thing. It’s never great when either buyers OR sellers are in complete control of the market. What this means in real terms is that there aren’t so many frenzied multiple bid situations. In most cases, properties are selling under (sometimes *just* under their list prices. Buyers are asking for, and getting, the opportunity to have home inspections.
• Sellers are having a hard time viewing their homes as “investments,” the value of which can go up *or* down. Just like the stock market, the housing market *can* go down in value. Every investment has risk. That said, unless you bought your home six months ago, you’re likely to benefit --- in dramatic fashion --- from the recent sellers’ market, even now. Because of the current volatility in the market, though, you must be extremely careful with pricing.
• The average amount of time it’s taking homes to sell is going up. All neighborhoods in the whole metropolitan area have been affected. Some areas have been more affected than others. The areas that are most affected are those where the rates of appreciation over the last few years has been so astronomical (condos in the sexy areas, like Dupont and Logan; emerging areas like Trinidad, Deanwood, etc.). These neighborhoods in DC are likely to feel the shifting market more than others. These areas are seeing an increase in inventory, with many homes sitting on the market.
• Generally speaking, inside the Beltway, selling prices today are in line with selling prices of LAST August and September. This reflects a 20-25% deflation in the overall market. This sounds very scary, I’m sure. BUT my personal feeling is that we’re simply in a sort of shake-down period after the hyperappreciation of the recent spring and summer market.
• What’s also happening is that many buyers who’ve taken themselves out of the market over the last few years are suddenly realizing that the current environment is friendlier --- so many are jumping back into the ring. If this happens in great enough numbers, we may soon begin to see some more competitive bidding situations. Currently, though, there seems to be enough inventory to go around for some time to come.
• Interest rates are still very, very attractive (e.g., 30-year fixed as low as around 6%).