OK, campers.  Here’s the scoop.

Maryland housing (and housing in general) is on the rebound.  That’s right. Homes are selling faster and, if your believe the Chief Economist for the National Association of Realtors, home sales are starting to go up.

Read that, again. Home sales are going up.

A quote:

Total existing-home sales¹, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.4 percent to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March, and are 10.0 percent higher than the 4.20 million-unit level in April 2011.

— from April Existing Home Sales Up, Prices Rise Again

That means that the bottom has most likely been hit and housing will begin to appreciate once more.  The quicker sales period means that home buyers who have a lot of what economists call “pent up demand”. Low mortgage interest rates + low home prices = quick homes sales.

Nobody wants to be the one who got into the housing market after prices get high, again.

Don’t get me wrong.  I do not see a “bubble” where prices are going to start rising at 25% a year like they did in the early 2000s.  For one, it’s harder to get a mortgage. For two, the appraisals are much stricter.

Still…..

Here is a video of Lawrence Yun, the Chief Economist of the National Association of Realtors, talking about the increase in home sales. (nerd alert: it has statistics in it!)

Do you think the housing market has turned a corner?
I’d love to know what you think.
COMMENT below
and tell me what you think. 

As I have written about in the past and, no doubt, will write about much into the future, pricing your home to sell is the most critical part of selling your home.  Let’s be honest, there are lots of beat up homes on the market. Foreclosures, short sales, even just “regular” plain vanilla sales can be in serious disrepair. Yet, even these homes will sell if the price is right.

However, many home sellers will want to price their homes above market value. There are tons of reasons for it

• sentimental value
• home improvements
• perceived negotiating position

These are the biggies. Yet, there is one that always baffles me more than all the rest.  It involves…

Protecting Neighborhood Home Values

The thinking goes like this:

You’re getting ready to sell your house and move away. Maybe you’re sticking around the area or maybe you’re relocating to a different area. It doesn’t seem to matter. You’re consulting with your Realtor and he has suggested a price – based on his research of area comps, absorption rate, market conditions, physical condition of the home and general ambiance of the neighborhood – and you might be a little shocked.

On one level, you know you can sell the house. You have he equity. On the other hand (get ready for it…), if you sold the house for [insert price here] your neighbors would be shocked, too. They would be very disappointed. They may dislike you for selling your home below what the think the value of their home should be.  Who knows? They may start giving you dirty looks on the street.

For whatever reason, you really don’t want to sell your house for too low. It’s not because of the market value of the house, it’s in order to keep the value of your neighbors house from going down, too.

Very noble.

Also, a prescription for a big disappointment…for you!

The Market Will Determine The Home Price

Trying to  protect the value of the neighborhood will not sell your house. What is even more ironic, of course, is that you are moving away. You won’t be around to see if the home values go down…or up.  Imagine that!  You sell your house for [x] and a year later you find out prices have gone up by 5%.

When it’s time to sell your house, it’s important to realize that your home is no longer going to be your home. It becomes a house to sell like all the other houses to sell.  It needs to be priced correctly and it needs to be in good condition. You need to let go of the idea that you can somehow save the neighborhood from fluctuating home prices or certain types of neighbors (some home owners are particularly afraid their home will be bought by a real estate investor and turned into a rental).

Selling your home is stressful under the best of circumstances. People wandering in and out at different times.  Keeping the place clean and neat. Packing.

I get all that. I really do.

Trying to protect the neighborhood home values will only slow down the sale of your home and probably end up with you getting less money than your were hoping for…both for you and the neighborhood.

 I can make you feel good…and the neighbors, too!
Give me a call at 240-417-9100 or e-mail me. 

As every real estate professional knows, the general public is a little suspicious when we say “It’s time to buy!” or “It’s time to sell!”  After all, we all have our “enlightened” self interst involved.  It’s called the commission.  Never mind that we have a legal, fiduciary responsibility to represent our client’s needs above our own. No one really believes that.

Seller’s Market?

You don’t have to take my word for it.  Here are some gems from the general, mainstream press – like The Washington Post - and the business press – Bloomberg News.

In the last two days, May 11th and May 12th – The Washington Post has run stories about the Seller’s Market in the area.

• How To Buy A House In DC’s Seller’s Market and
• What Buyers Need To Know In A Seller’s Market

Some interesting observations:

If you’ve dipped a toe into the Washington-area real estate market these days, you know it’s returned to an era of multiple offers, escalation clauses and competitive bidding. According to RealEstate Business Intelligence, the active inventory of homes in March was down more than 25 percent from March 2011. Increased demand, driven by such factors as a stable local economy and low interest rates, has created a seller’s dream and a buyer’s nightmare.

– from  How To Buy A House In DC’s Seller’s Market

What Does the 1% Have To Say?

In  a recent news summary on Bloomberg News, PIMCO bond trader, Mark Kiesel thinks it’s now time to buy even though he’s been negative on the housing market for years.

Home prices that have fallen 35 percent from their mid-2006 peak and mortgage rates of less than 4 percent are helping make it a good time to buy, said Kiesel, who is global head of the corporate bond portfolio management group at Pimco. Other signs the housing market is turning around include foreclosure filings dropping to levels last seen in 2007 and sales of new and existing homes that have begun to increase as rising rents boost the relative affordability of purchasing, he said.

“For those of you renting or on the sidelines, I recommend you at least consider getting ‘back in’ and buying a house,” he wrote in the note. “The future is hard to predict, but U.S. housing is healing and is probably close to a bottom.”

– from Pimco Housing Bear Kiesel Says It’s Time to Start Buying

Don’t take my word for it.

Don’t get left behind.  Give me a call and I can help you make your next move!
240-417-9100 or e-mail me. 

OK. It’s not only Maryland. It’s everywhere.

Mortgage rates have dipped, again, for 30 year and 15 year mortgages to and average 3.83% for 30 year mortgages and 3.05% for 15 year mortgages. Hey, don’t take my word for it, scour the web…especially Inman News, a pre-eminent real estate site.

This is crazy stuff and it only means that owning a home is becoming more and more affordable.

What About Renting in the Maryland Suburbs?

As it turns out, rents are spiraling higher and higher, especially in the District of Columbia.

Hey, don’t take my word for it.  Take a listen (or a read) of the Kojo Nmamdi Show aired earlier today on WAMU-FM (88.5), one of our local public radio stations.

What this means is that owning a home is becoming cheaper than renting. No big news there. It’s kinda been that way for awhile. Now, it’s just becoming more so.

What’s The Catch?

Here’s the catch. You have to be able to obtain a mortgage.

It’s still not easy to qualify for a mortgage.  If you are a first time home buyer and barely scraping two nickels together to make ends meet, you will have a hard time getting a lender to give you a mortgage.  You still need:

• Great credit
• Documented verification that you can repay the loan – employment, money in the bank, etc.
• Some money for a down payment and closing costs

Sure, a home seller may pay some of your closing costs but with the housing inventory getting tighter and tighter (see my most recent blog posts about the absorption rate in College Park, MD and Greenbelt, MD), you may be in for a shock.

Sellers will be getting wise to the tight market. The amount of time a home stays on the market in already getting shorter and shorter, especially for homes where the Seller has equity and can make a decision without consulting with a bank. How long so you think it will take before people realize that their neighbor sold their house in 3 days?  Think about it.

Now May Be The Time To Sell in College Park

If you have equity in your home. If your home is in decent condition and can be staged so it looks great for potential home buyers. If you have been thinking about selling your home.  This may be your golden opportunity to do so with the least amount of hassle.

Is it getting time to sell your home?
Call me at 240-417-9100 or e-mail me and I’ll help you out. 

In yesterday’s post, I took a look at the absorption rate for College Park, MD.

Today, let’s take a look at Greenbelt, MD.

Greenbelt is the next town over from College Park yet has an entirely different makeup for housing. There are:

• single family homes (much like College Park)
• condos (lots of condos)
• townhouses (lots of townhouses)
• co-ops (this is a completely different type of home ownership)

So, you would think that perhaps the strong sellers market existing over in College Park might not carry over into its neighboring town. Plus, truth be told, lots of people who want to live in College Park want to be close to the University of MD and Metro. Greenbelt is a little farther out. There is still a Metro station and bus lines as well as schools (a magnet high school) and shopping.

Still…

The Seller’s Market in Greenbelt, MD

Just like yesterday, I crunched the numbers. I also used the same time frame - one year – to look at how quickly the housing inventory was turning over in Greenbelt.  Here is what I found:

Over the past year, 205 homes have been sold in Greenbelt. That include condo, co-ops, townhouses and single family homes. That averages out to about 17 homes sold per month. Currently there are 60 homes in ACTIVE status (i.e. available for sale). That includes condos, co-ops, townhouses and single family homes.

Let’s see what the absorption rate tells us. 205 ÷ 12 = 17 (avg number of sales per month) 17 ÷ 60 = 3.52 months of inventory

3.52 months is well below the 6 month benchmark for an equilibrium between a buyer’s market and a seller’s market. Thus, it appears that Greenbelt has a pretty robust seller’s market.

What Does This Mean For Home Buyers and Home Sellers in Greenbelt?

Well, there is one catch. There are lots of condos in Greenbelt that make up the Active listings number. Those condos, by and large, are in serious mortgage distress. They have either been fully foreclosed on or have been in short sale status for a long, long time. Their prices are dirt, dirt cheap and that, in turn, causes downward pressure on all prices.

However, sellers that have equity in their home should still be able to sell their home quickly. They may even see some competitive offers. In fact, if you’ve been thinking about selling your home, this might be a good time to do it.

My guess is that home prices in the Maryland Suburbs will begin to inch up now that housing inventory has shrunk. The real wild card is the “shadow inventory” being held by the banks. The banks are not going to hold the thousands of foreclosed homes on their balance sheets forever. This may actually be a small window of opportunity.

Are yo wondering how much your home might sell for in this market?
Give me a call at 240-417-9100 or e-mail me!

Recently, I had two clients that expressed an interest in buying a home in College Park, MD. One client was someone who wanted to purchase the home to live in – someone like you and me – the other person was a real estate investor who was looking for a property to purchase and then rent to local students or anyone else, for that matter.

Over the past year, I would have thought, “No big deal. Let’s see what’s out there and, if there is something you want to think about or take a second, third and fourth look. We’ve got plenty of time.” Things have changed.

The Shrinking Housing Inventory

Even as recently as six months ago, there were plenty of homes on the market.

In the real estate business we call this “inventory”. The more inventory there is on the market, the better the chance for a buyer to get that bargain they’re after. When housing inventory shrinks, prices tend to stabilize and then inch upward as increased buyer demand leads to competition for the existing homes on the market.

A lot of the housing inventory is currently driven by the number of foreclosed homes and short sales. Yes, there are a few homes being sold by home owners with equity in their home. That’s a good thing. That also means that homes won’t stay on the market as long.

Absorption Rate

Housing economists and data geeks of all kinds tend to look at the absorption rate as a key indicator of a seller’s market, a buyer’s market or a market in equilibrium which does not favor either the buyer or the seller.

In simple terms, the absorption rate is the amount of time it would take for all the houses currently on the market to be sold if no other new listings came on the market. Six months of inventory is considered market equilibrium. The longer the absorption rate means a stronger buyer’s market. The shorter the absorption rate means a stronger seller’s market.

How do you figure out the rate?

1. Take the number of homes sold within a certain time period — I took 12 months (one year)
2. Divide the number of homes sold by the time period to get the average number of homes sold per month.
3. Take the number of ACTIVE Listings (# of homes currently for sale) and divide it by the average # of homes sold per month.

In the most recent 12 months, 254 homes sold in the 20740 zip code (College Park and Berwyn Heights). 254 ÷ 12 = 21 homes per months sold on average. There are currently 45 single family homes for sale in the 20740 zip code. 21 ÷ 45 = 2.14 months of housing inventory

So, based on a years worth of home sales it appears as if College Park, MD is in the midst of a strong seller’s market with an absorption rate of 2.14 months.  That’s well under that 6 month mark for equilibrium.

Is This The Whole Story?

There is a catch. When I was running the numbers on the absorption rate I was only using single family homes that are in ACTIVE status. I filtered out the condos and the pending sales (i.e., under contract but not sold).

However, if I add in all the condos and all the pending sales the absorption rate actually drops to 1.63 months – an even stronger seller’s market.

What Does This Mean for Home Owners and Home Buyers?

It means that home owners with equity will start to see competitive offers for their homes and the average Days on Market will begin to decline. It means prices will stabilize and even begin to inch up as home buyers begin to realize there are fewer and fewer homes on the market for them to purchase.

It means that “the bottom” may well have passed in College Park and it’s time for people who may want to buy a home in the area to make their decisions more quickly. Remember the old saying, “While you’re sleeping on it, someone else may be sleeping in it.”

Do you want to know the absorption rate for the housing inventory in your area?
Give me a call at 240-417-9100  or e-mail me and I’ll crunch the numbers for you.

Below is a short video put together by Real Estate Business Intelligence (a MRIS company). It shows the trends based on numbers from April 2012 with a heavy emphasis on the improving area economy. New jobs and lower unemployment bode well for the housing market as does the increasing costs of renting.

The video shows stats for the Montgomery County, MD and Prince George’s County, MD area which includes my service area of College Park, Beltsville, Greenbelt, Laurel, Silver Spring and Bethesda…among other towns.  The video suggests that home sellers are starting to enter the market as lower housing inventory and a strengthening economy put upward pressure on home prices.

I have found this to be true with quicker sales (fewer Days on Market) of homes that are priced competitively and in good condition.

Enjoy the video (note: you may not see this if you get this by e-mail. Click Here to see the full video)

It seems that deep pocket real estate investors may actually be the saving the housing market from further decline.

In a nice story on Morning Edition on NPR, the reporter talked about how major real estate investors are poised to by thousands of homes at a time to turn them into rentals.

The housing market has a new frontier — turning foreclosed homes into rental properties. Some big-time investors are starting to buy up thousands of homes to turn into rentals. That might help shore up home prices.

— from Hoping for Payout, Investors Become Landlords (NPR Morning Edition)

This is a good thing.

Even though “bank mediated” home sales (foreclosed homes and short sales) are on the decline, the recent National settlement between five large banks and most States means that the “shadow inventory” of foreclosed homes is getting ready to be released to the market. There are only so many people — just regular folks — who will be able to buy the thousands of foreclosed homes.

That’s where big time real estate investors will step in.

It’s an interesting story and is cause for some optimism. It will provide housing for the many people who have lost their homes to foreclosure or who otherwise cannot qualify for a mortgage. It will also provide some stability to the housing market and housing prices.

Below is a chart of the trend of bank mediated homes in Prince George’s County.  It’s a nice downward trend. The chart still shows a lot of homes that are in trouble.

Back in the early 2000s, home buyers needed to make split second decisions about a home or risk losing it to another home buyer within the hour. Sometimes those decisions turned out to be good.  Sometimes, not so good. Back in those days, though, it wasn’t so much about the house as it was about the decision about what type of mortgage to get or whether or not to take the risk of asking for a home inspection.

A Changing Housing Market

Fast forward to 2012. We have had years of a major housing decline with rampant foreclosures and short sales. Even if the home owner had equity in their home, they might price it too high in the hopes of catching a non-existent wave or blip in the market. This was great for home buyers because it meant prices were coming down to affordable levels. It also meant they could come back and take a second or even third look at a house they were considering.

Eventually, home prices stabilized. Some areas were even seeing an uptick in home prices. Other areas were seeing homes sell faster (less Days on Market). However, this time the home buyers haven’t caught on yet. They’ve been lulled into a kind of complacency that could mean they don’t get the home they really like.

Someone Bought My House!

Awhile back I wrote about a house that sold pretty quickly…in December.

The house was in a good location. It had been maintained well by the owners. They had the home professionally staged. Most importantly, they priced it competitively.

They wanted to sell their house.

During the showing period (it only lasted 18 days), I got a couple of calls from other Realtors asking me to let them know when a offer came in. Why? Their clients were seriously considering the house but just weren’t ready to make the offer themselves.

OK. Fine.

An offer did come in. I called the other Realtors and both said that their clients still weren’t ready to act. Hey, works for me.

Fast forward four months and I occasionally get an e-mail from one of the other Realtors wondering if I know of any other similar homes that were going to come on the market.  It seems the person who wasn’t ready to act then is experiencing a different kind of buyer’s remorse. The kind of remorse that comes with letting the good one get away.

Don’t Second Guess Yourself

I don’t know the reason why the person who is now eager to buy a house similar to the “one that got away” didn’t act when she had a chance. Maybe she thought house in similar condition at a similar price would come on the market.

Not so.

I’m finding that the housing inventory is slowly getting smaller which means there will be less to choose from. I’m also finding that home prices are stabilizing.

• Low interest rates
• affordable home prices
• small housing inventory

These are all conditions which point to making a decision about your home purchase. This means that sleeping on it for too many nights may mean someone else slept on it one night less than you did.

There’s an old saying in the real estate profession: “While you’re sleeping on it, someone else may be sleeping in it.”  Meaning they’ve made the decision to purchase and they’re ready to move forward.

Don’t lose the house you really want to someone else who is ready to make a decision. Be thoughtful about your decision…but make it!

Don’t lose sleep over your home purchase. 
Give me a call at 240-417-9100 or e-mail me. 

Even now, some six years after the beginning of the rapid decline in the housing market, home buyers don’t really understand what it means to deal with a short sale. For that matter, home sellers don’t quite understand the ramifications, either.

For the home buyer, a short sale looks like it might be a good deal.  For the home seller, a short sale looks like it might be a way out from underneath an unaffordable house payment. Unfortunately, both are misguided.

Short Sale: A Definition

When a home’s market value is less than the amount owed on the mortgage, the home owner is “short”.

Normally, when a home is sold, the mortgage is paid off as part of the process through the sales price of the home. When the sales price is far below what the home owner owes on the mortgage, the home owner has two options:

1. bring the difference, in cash, to the settlement table or
2. get approval from the mortgage holder (the bank) to sell the house for less

Third Party Approval

The real challenge with Option #2 is that the bank needs to approve the terms of the sale.

For example: Let’s say you own a house that has a market value of $300,000. But you bought it back in 2006 for $380,000. Even though it’s been six years, the amount you owe on the mortgage is probably closer to $346,000. Do you have the $46,000 +/- to bring to the table to sell your home?

Probably not.

So, you put your house on the market for $300,000 and start to work with the bank to get them to approve a $46,000 loss. Wanna guess how much the bank wants to do that? C’mon. Guess.

Even if the bank wanted to do that for you because you’re such a nice person and you’re having a hard time making ends meet and [fill in the blank], they are getting this same request from hundreds of thousands of home owners across the country. That’s right. Hundreds of thousands.

Wanna guess how quickly the bank is gonna move to approve the $46,000 loss you want them to take? C’mon on. Guess.

Short Sales Are Not Short

The thing about short sales is that the home buyer — the person with the money who is ready to buy the house — is not the one the bank is concerned about. Presumably, the potential home buyer has gone out and gotten approved for a mortgage or might even be buying the house with all cash.

No. The bank is concerned with the home seller. They want to make sure they are truly in a state of hardship and cannot afford the mortgage. Even if the home seller can prove beyond a shadow of a doubt that there is no way in hell they can keep up payments, the bank still takes forever to process the paperwork. After determining they can’t get another dime from the seller, they’ll try to squeeze the potential home buyer and their Realtors to get every last penny possible out of the deal.

All this take time. A lot of time. And there is no guarantee the transaction will ever make it to settlement. Many times the foreclosure process is completed before the short sale is approved and you have to start over from Square 1.

What Do Home Buyers Need?

Aside from the mortgage approval a home buyer needs to buy any house, there are only two things a home buyer needs to buy a short sale:

1. Time
2. Patience

If you want to move into a home anytime soon, stay away from short sales. If you don’t have the patience to wait a months and months with little to no communication from the bank, stay away from short sales.

Would you like to know the homes of sellers who have equity and can sell you a home?
Give me a call at 240-417-9100 or e-mail me.