Northern Virginia Real Estate News

No Tax Credit, No Problem!

2010-05-28T07:24:00.000-07:00

Daily Real Estate News | May 27, 2010

Post-Tax Credit Buyers May Save Money

Missing the tax credit deadline might have seemed like a big mistake to some home buyers, but waiting could have been the smartest thing to do.

Interest rates have fallen so dramatically since April 30th that the typical purchaser of a $350,000 home, financed with a $280,000 mortgage, would have saved a bundle by waiting until May.

At April’s average rate of 5.34 percent, a home buyer would have locked in a 30-year fixed rate loan with a monthly payment of $1,561.82.

The same borrower could have snagged a 30-year fixed rate loan at a rate of 4.625 percent in May and paid $1,439.59 per month.

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Take advantage of these historic low rates today! If you need to refinance, I can refer you to a great lender - just give me a call. And if you are thinking of buying, give me a call to take advantage of these rates and the low home prices. Low prices and low rates.....that's the best time to buy!
That’s a $1,467 annual savings. Over 30 years, it’s a $44,003 savings, dwarfing the tax credit.

Home Buyer Tax Credit Extended & Expanded!

2009-11-16T10:45:00.000-08:00

Homebuyer Tax Credit Update!

$8000 for 1st Time Home Buyers AND $6500 for existing home owners buying a new home!

On November 6, 2009, President Obama signed a bill to extend the tax credit for first-time homebuyers (FTHBs) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.

To learn what the new tax credit means to you and your clients, take a look at the concise overview below.

In addition, we’ve put together a script featuring wording you can cut and paste as needed to beat out your competition by connecting with clients who may be able to benefit from the new plan details!

TAX CREDIT OVERVIEW

Who Gets What?

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible fort FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?

Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
They do not use the home as your principal residence.
They sell their home before the end of the year.
They are a nonresident alien.
They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.

Credit Scores: What You Need to Know Now

2009-09-11T10:52:00.000-07:00

Your credit score has a lot to do with you buying a home or not. Unfortunately, they can be very confusing and so to help you understand them better, I've included this information which I obtained from The Wall Street Journal's website written by Karen Blumenthal. I hope you find this information helpful. As a real estate professional I make it my business to ensure my clients have all the information they need to be as informed as possible regarding their home sale or purchase. If you, or someone you know, would like more information, please feel free to call me directly.

With the credit crunch and the current economy, credit scores have been getting a lot of attention lately, as lenders tighten credit standards and contend with new legislation that has, among other things, reined in how credit-card issuers can raise rates.

Meanwhile, several firms, preying on our insecurities, are pushing credit scores and credit-score-tracking services for a monthly fee.

For all the attention they generate, though, credit scores are largely misunderstood. For instance, your precise score matters only when you're in need of new debt, like a home, auto or education loan or a new credit card, which should be a fairly rare occurrence.

You don't have just one score, but many. Your FICO score, the one developed by Fair Isaac Corp. that runs from a low of 300 to a high of 850, will vary depending on which credit bureau is reporting it and the kind of lender that requested it.

So the score that costs you $15.95 at MyFico.com may not be the score your lender sees. Beyond that, the three credit bureaus—Equifax, Experian and TransUnion— sell their own proprietary scores.

Confused about what to believe? Here are some common myths about credit scores:

My credit score is a good reflection of my financial smarts and good behavior.

Not really. Your score doesn't reflect your income, employment history or your assets, which should be a part of your overall financial picture. It also doesn't show whether you pay your rent or utilities on time. As a result, a credit score is less like a report card and more like an SAT score—your results on a particular date that seek to predict your future credit success or failure.

I pay my card off every month, so I must be a low credit risk.

True, your financial habits are excellent. But they won't affect your score. That's because the credit bureaus don't have a clue whether you pay your bill in full or carry a balance on your cards each month. All they know is the amount you owed on your most recent statement.

Instead, the crucial fact is how much available credit you have used. Steve Ely, president of personal-information solutions at Equifax, says you should keep your credit use to less than half your credit limit to minimize the impact on your score.

Taking advantage of reward cards shouldn't affect my creditworthiness.

Unfortunately, about 30% of your FICO score is based on "credit utilization," a broad term that includes how much you've used of each credit limit, how much you've borrowed as a percentage of your total available credit and even how big the dollar balances actually are.

So If you're a rewards junkie who charges for everything to get points, you may be jeopardizing your score.

Luckily, there's an easy solution: Cut back your credit-card use for two or three months before you plan to seek a car loan or mortgage so that your balances will be more modest.

I was late on a payment, but the debt is now paid off. So I'm good, right?

Afraid not. The single most important factor in your score, accounting for 35% of the total, is whether you have paid your bills on time. One late payment will ding your score for up to a year, very late payments can hurt you for two or three years, and collections and bankruptcies can sting for up to seven years.

What counts as late? In theory, one day. But because credit-card companies know that people move, get sick or misplace their bills, they commonly wait to report your late payment to credit bureaus until about 30 days have passed, or you have missed two due dates. (You will likely be assessed a late fee right away, however.)

If you have missed a payment, pay it as soon as possible and consider calling and doing the honorable thing: groveling. Many companies will waive or reduce fees the first time a good customer makes a mistake, and they may even agree to withhold reporting the infraction to the credit bureau.

Information stays on my credit report for no more then seven years.

That's largely true for bad news, including late payments. But good news hangs around—and pays dividends—a lot longer. My credit report reflects the 30-year history of the credit card I got back in college.

In addition, closed accounts in good standing will stay on your record for a decade, says Barry Paperno, FICO consumer-operations manager. Both old and closed accounts can help your score because the length of your credit history is another, if smaller, piece of the formula.

Preserving your credit history is one reason that Kenneth Lin, CEO of Creditkarma.com, recommends that you don't formally close an account but let the issuer close it for lack of activity. The longer the account stays open, he says, the more you'll add to your credit history and the longer you'll benefit from the additional available credit.

I haven't gotten a loan in a while, which should boost the "new credit" part of my score.

You don't have to get new credit to show a so-called hard inquiry on your credit report. If you have opened a new checking account, the bank may have checked your score. Last year, I bought a car and the dealer, unbeknownst to me, checked my credit. I never applied for a loan, but that one inquiry knocked 15 points off my Equifax score—and that's typical.

For that reason, Curtis Arnold, founder of Cardratings.com, suggests you ask up front if a bank, insurer or car dealer plans to check your credit record. Luckily, shopping around for a car or education loan or mortgage counts only as one inquiry as long as you do it within a few weeks. Otherwise, multiple inquiries may knock your score back for a year.

That said, when you check your score, when your current card company keeps tabs on your credit or when someone pre-approves you for a credit-card—all so-called soft inquiries—your score won't be affected.

The score I pay for or get for free is my real score.

Most free scores are not the FICO scores that lenders request. You can buy FICO scores from Equifax and TransUnion—but not Experian—on MyFico.com for $15.95 each, but even then, they may not be the exact score the lender actually sees. You can, however, see each of your three credit reports—which include all the activity that is used to determine your score, but not the score itself—for free once a year by going to AnnualCreditReport.com. Because your scores aren't likely to vary by much, ongoing tracking services are usually unnecessary.

I should aspire to a score above 800.

Sadly, a score of 800 or more—the holy grail for "high achievers" on online FICO forums—won't make you thinner, smarter, richer or more attractive to lenders or anyone else. True, every 20 points in your score can mean a slightly lower mortgage rate or better car loan, but only up to the mid-700s.

That means it's worthwhile to take steps to improve a score in the 600s or low 700s, and in the high 700s, you'll have plenty of room for score fluctuation. Beyond that, a higher score is meaningless.

Please feel free to call me if you or anyone you know is looking to buy or sell a home. I'm happy to help!

It's a good life!

Paul Hunter

The Hunter Group at RE/MAX Gateway

Short Sales and Foreclosures Explained

2009-08-20T06:07:00.000-07:00

I get calls almost daily from people who are struggling to pay their mortgage. Their reasons vary from having lost their job, their income has decreased, they bought more home then they could afford, or they have an adjustable rate mortgage and their payments have gone up significantly.

The problem is they can't refinance or sell the property because they owe much more than it is currently worth. As a Realtor in today's market, it is important to understand how to help these people. These people need solutions and answers to their questions. That's why I've invested so much time and money to become an expert in helping people who are in these distressed situations. I have a Certified Distressed Property Expert (CDPE) license which essentially means I'm educated and experienced in ways to help people avoid foreclosure.

This blog will give you some basic information about short sales and how to avoid a foreclosure. For more information specific to your situation, please feel free to call me directly.

The current U.S. housing market and financial crisis has caused tremendous stress and heartache for many families. During times like these, there are always a certain percentage of homes or homeowners who are distressed. According to the Mortgage Bankers Association, as many as 1 out of 10 homes are either delinquent or in foreclosure, and unfortunately, 7 out of 10 homeowners in foreclosure proceed without the assistance or advice of a real estate professional. If you or someone you know is among the millions of people affected by the prospect of foreclosure, understand that you have options.

Call me and I'll explain the best option for your specific situation - Below are the options someone MAY have - every situation is different. I've also given you some information below about "Short Sales". They are currently one of the most popular options people are pursuing. One important point to make.....if you are currently in a distressed situation, you must seek help because the one thing you absolutely do not want to have happen is FORECLOSURE. There are too many lasting consequences and you do have alternatives.

OPTIONS FOR HOMEOWNERS TO AVOID FORECLOSURE:

Reinstatement - To reinstate a mortgage, the homeowner has to pay all the missed payments, late fees and legal fees that are due up to the date that the loan is reinstated.
Forbearance or Repayment Plan - The lender allows the buyer to pay the missed amount over a period of time or the lender places the missed payments on the end of the amortization of the loan.
Rent the Property - In some cases, homeowners facing foreclosure will have payments low enough to allow them to rent their property and keep up their mortgage payments.
Sell the Property - If sellers have equity in their property, they can sell it and prevent a foreclosure.
Refinance - If homeowners have sufficient equity and income and their credit has not been too badly damaged, they may be able to refinance.

Mortgage Modification - A loan modification is very similar to a lower interest refinance where the lender lowers the interest rate on the existing loan to lower the payments.

Short-Refi - This process involves the refinance of a home with a reduction in the principal balance and often the interest rate as well.

Deed-in-lieu of Foreclosure - A deed-in-lieu of foreclosure is sometimes referred to as a friendly foreclosure because the homeowner essentially gives the deed back to the bank.

Bankruptcy - A bankruptcy may stop a foreclosure and allow homeowners to reorganize their debt and keep their property.

Servicemembers Civil Relief Act (SCRA) - This law provides certain protection to military personnel who are in foreclosure in specific situations.

Short Sale - When homeowners owe more on a property than it is currently worth and one of the previous solutions does not apply to their situation, there is the option of pursuing a short sale.

The Basic Foreclosure Process...

Default - Homeowners must miss a payment or default on payment for the property to enter the foreclosure process.

Legal Notice - The lender of the foreclosing property must notify homeowners that they are entering into the foreclosure process.

Bank Sale or Auction Date - Homeowners are informed that they have a bank sale or auction date at which point the foreclosing mortgage company will gain control of the property.

Redemption Period - The period of time in which homeowners may present payment to the bank and regain possession of their property. (Not all states have a redemption period.)

Short Sales - What You Need to Know...

In the past, it was rare that a bank or lender would accept a short sale. However, due to the overwhelming market changes, lenders have become much more negotiable when it comes to these transactions. Recent policy changes within many organizations have made the chances of getting a short sale approved even higher.

The following information describes the short sale process:

Homeowners are "short" when they owe an amount on their property that is higher than the current market value.

A short sale occurs when a negotiation is entered into with the homeowner's mortgage company to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is "sold short."

Foreclosure vs. Short Sale - The Consequences

Issue:

Obtaining a Future Fannie Mae Loan for a Primary Residence (Effective May 21, 2008):

Foreclosure: A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years.

Successful Short Sale: A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years.

Future Fannie Mae Loan Non Primary (Effective May 21, 2008):

Foreclosure: An investor who allows a property to go to foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years.

Successful Short Sale:An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years.

Future Loan with any Mortgage Company:

Foreclosure: On any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 that asks, “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?” This will affect future rates.
Successful Short Sale: There is no similar declaration or question regarding a short sale.

Your Credit Score:

Foreclosure: Score may be lowered anywhere from 250 to more than 300 points. Typically, this will affect a score for more than 3 years. Only late payments on a mortgage will show and an after sale mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points if all other payments are being made.

Successful Short Sale: A short sale’s effect can be as brief as 12 to 18 months.

Your Credit History:

Foreclosure: Foreclosure will remain as a public record on a person’s credit history for at least 10 years.
Successful Short Sale: A short sale is not reported on credit history. There is no specific reporting item for a “short sale.” The loan is typically reported “paid in full, settled.”

Security Clearances:

Foreclosure: Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. If a client has a foreclosure and is a police officer, in the military, in the CIA or any other position that requires a security clearance, the clearance will be revoked and the position will be terminated.
Successful Short Sale: A short sale on its own does not challenge most security clearances.

If you know of someone who is among the many people facing the prospect of foreclosure, please call me with their name and number. I'm happy to provide guidance and assistance to them.

It's a good life!

Paul Hunter

The Hunter Group - RE/MAX Gateway

703-929-7145

paul@huntersellshomes.com

Inflation Leads to Higher Interest Rates

2009-07-20T09:29:00.000-07:00

“We are all faced with a series of great opportunities

brilliantly disguised as impossible situations.”

– Charles R. Swindoll

A lot of negative coverage has been devoted to today’s housing market. However, there are many reasons why the current real estate market may be beneficial to you.

For example, low sale prices and low interest rates make it a great time to buy.

Buyers tend to pay close attention to sale prices and some choose to remain on the sidelines thinking the prices will continue to fall. This can be a dangerous strategy because price isn't the only factor to take into account. One extremely important factor that gets overlooked are interest rates.

If interest rates rise from 5% to 7% that is equivalent to a 20% increase in price when it comes to your mortgage payment. Interest rates on home loans are historically low, making now a great time to lock in a long-term mortgage rate.

Inflation leads to higher interest rates. As we weather this current economic storm, the government is on a spending spree and is adding huge numbers to the deficit. This kind of spending leads to an increase in inflation which will inevitably lead to an increase in mortgage interest rates.

So for those that are thinking about waiting.....beware of inflation. It can have a dramatic effect on your ability to purchase a home. Remember higher interest rates are equivalent to higher home prices and since we are seeing stable prices and rising prices in many areas, you don't want to end up with higher home prices and higher interest rates.

Ultimately, though, the current favorable conditions will go away. As inflation rises, so will interest

rates. If you are looking to become a homeowner, you need to strike while the iron is hot!

Feel free to give me a call to discuss this in further detail.

Your Tax Assessment

2009-04-28T08:07:00.000-07:00

Recently, I was on a listing appointment with a home owner who had been in their home for 20 years. Looking at their public record I noticed that their tax assessment was way over assessed based on the comparable properties in their neighborhood. They were paying about $200 more a month than the comparable neighbors. My client was very upset to hear this because we calculated that this had been going on every since he bought the house. He had overpaid property taxes for 20 years costing him thousands of dollars. He never knew and never thought to check. Unfortunately this was lost money now.

Every home is assessed at a certain value by the county based on the public data that exists on the house. Since the county is doing this for thousands of homes, it is bound to make mistakes and they do. In fact, when I bought my current home I noticed the tax assessment was too high and so I appealed the assessment to the county and they agreed and lowered my tax bill. So what's the process?

By now, you probably have received your 2009 tax assessment. It's important to look at your assessment and compare it to your neighbors. This is public information and is listed on most county websites. I'm more than happy to provide this information for you if you email or call me.

If you'd like to research it yourself, I'm providing you the with this information below. It will help you analyze your assessment and if need be how to appeal your assessment.

Below is information about real estate assessments and how a homeowner can appeal your locality’s assessment of your home or property. It should be noted that each locality follows slightly different procedures for determining real estate assessments, reviewing appeals, and determining eligibility for tax relief.

FAQ's about assessments:

1. What is a real estate assessment?

All assessments of real property, including land and permanently affixed structures, are based on fair market value and are equitable with the assessments of comparable properties. Title 58.1-3201 of the Code of Virginia provides for the assessment of real property at 100% of fair market value. Fair market value is the probable amount a property would sell for today if exposed to the market for a reasonable period of time.

2. Who assesses the property and how is property value determined?

Each locality has an assessor who estimates the value of the property. The assessed value of property is part of the equation that determines how much a homeowner pays in real estate taxes. The assessor does not determine the local tax rate. The assessor determines the value of a homeowner’s property by looking at the physical characteristics like square footage of land and improvements made to the structure like adding a garage. Another factor the assessor uses to determine value is location of the property. It is important to remember that the assessment is an estimation of value that is determined through sales, income, or cost data. Sometimes an individual appraisal is necessary if properties cannot be analyzed through mass appraisal.

3. What causes real estate assessments to increase or decrease?

There are a variety of reasons that can result in an increase or decrease. Some include: changes in economic conditions; changes in the property such as structural damage or additions like a new bedroom or garage; land divisions; and re-zonings.

4. How does the assessment affect what I pay in property taxes?

Real estate taxes are calculated by multiplying the property’s assessed value by the real estate tax rate. The real estate tax rate is determined locally.

5. What is the difference between sales price, appraisals, and assessments?

Sale price is the price a buyer pays for a particular property. An appraisal is a detailed single property valuation and a private appraisal may be obtained any time throughout the year. Appraisals have a variety of purposes, for example, mortgage loan, sale, home equity loan, and estate valuations. An assessment is a mass appraisal of property for tax purposes. Assessments are based on large numbers of sales that are analyzed to determine values for large groups of similar properties.

The Appeals Process

There are three main reasons that you may want to appeal your assessment:

1. Your locality has the wrong information about items that affect property value, such as number of bathrooms or square footage or a new structure like a garage.
2. Your assessment is too high based on evidence you have that similar properties in the area have sold for less than the estimated market value of your property.
3. Your assessment is fair and accurate, but higher than similar properties in the area therefore making your assessment unbalanced.

How to Appeal

Gather information

*Be sure you understand the deadlines and procedures for making an appeal; instructions should be on your assessment notice.
*Research what your local real estate assessment office has on record about your property. I'm happy to help you get this information if you'd like.
*Compare your assessment to the price that similar size homes in your area have sold for to see if they are comparable.

Evaluate

*Review and evaluate the data you have collected; you may find that your assessment is on target.

Review and Appeals

*If you wish to proceed with the review and appeals process, follow the instructions given by your locality. The first step may include a review by your local real estate assessment office. If a dispute still exists after the review, you may appeal to the Board of Equalization and Assessment Review. The Board is appointed locally and it has the power to increase your assessment as well as decrease it.

Your Local Assessment Information

* Fairfax County Assessment Website

* Loudoun County Assessment Website

* Prince William County Assessment Website

* Arlington Assessment Website

* Alexandria Assessment Website

* Fairfax City Assessment Website

* Falls Church Assessment Website

* Manassas Assessment Website

Why Should I Buy Now?

2009-04-13T07:03:00.000-07:00

"When people get greedy, I get fearful. When people get fearful, I get greedy." Warren Buffett

I don't know about you, but I like to listen to, watch, and learn from other successful people.

When the market is strong, people's purchases quickly increase in value, which can lead to euphoria, which can lead to rash decision making, which can lead to greed. At the height of the market real estate professionals saw lots of greed. Many sellers were being very greedy trying to get as much as they could for their homes even when profits were at crazy numbers. People all wanted in on the real estate boom which drove the euphoria, rash decision making, and greed.

When the culture is going one way, that is the exact time to go the opposite way . If this is true, then now is the time to buy real estate. People are fearful about the economy and the real estate market and as Warren Buffett says, when people are fearful he gets greedy. When people are fearful the natural tendency is to become fearful. This causes prices to drop drastically and the government to respond with programs to stimulate the market.

The point of maximum risk for any investment or purchase is during the euphoria state. From this euphoria (the height) starts a downward cycle. As prices start to fall, buyers go into denial which turns into fear, followed by panic, despondency, and even depression.

The point of maximum opportunity is at this lowest point, between despondency and depression. This is really what Warren Buffett means when he says he gets greedy when others get fearful. This is the point of maximum opportunity. Well guess what, we are at the point of maximum opportunity in real estate.

This point won't last long. History proves that once we reach this point it is followed by hope and then optimism and the cycle starts back up again. We are now seeing these signs of hope and optimism in the real estate market with first time home buyers and investors. All across Northern Virginia, we are experiencing multiple contracts on prices below $350,000.

With low home prices and historically low interest rates people are realizing that now is a great time to buy. As we saw in my last blog, the number of homes for sale continues to drop (low home inventory). Currently, we have around 8000 homes for sale in Northern Virginia and that compares to over 16,000 at this time last year. If this trend continues, prices will rise and there are some areas where prices have already started to rise.

Successful investors know not to follow the crowd because the crowd doesn't know where they are going. Most of the crowd is fearful right now so take the advice of Warren Buffett and take advantage of the opportunity that their fear presents. The time to buy is now.

Real Estate is Local!

2009-03-28T08:36:00.001-07:00

Real Estate is Local!

You hear this term a lot but what exactly does it mean? To demonstrate how true this statement is, look at the graphics below. They point out the difference in home values from 2007 to 2008 in Fairfax, Loudoun, and Prince William Counties by zip code. Prices do not only vary from state to state in the US but they vary within our local area of Northern Virginia from zip code to zip code. This is why you can't read the paper or watch the news in order to determine how the real estate market is doing in your neighborhood. You need to call an expert to run your local numbers to determine your home's value.

As you can see below, some areas saw huge price reductions like in Manassas which was down 51% while other areas like McLean were only down between 3%-8%.

Looking at Fairfax County as a whole on average prices were down 25% for single family detached homes from Dec. 2007 to Dec. 2008. However, if you look more closely at the County in Herndon prices were down by more than 25% while in the Tyson's Corner area prices were down as little as 3%. The same differences can be found in Loudoun and in Prince William. It is safe to say that all of our home prices are down, but you have to be careful in generalizing by how much.

I'm happy to run the numbers for your specific neighborhood for anyone who is interested. Just contact me via email or phone and I'll give you specific information about your home.

Fairfax County Price Changes Dec. 2007 to Dec. 2008

Prince William County Price Changes Dec. 2007 to Dec. 2008

Loudoun County Price Changes Dec. 2007 to Dec. 2008

Early March Numbers Look Good!

2009-03-26T08:59:00.000-07:00

The real estate sale numbers for March continue to look strong. In Northern Virginia, for every 10 homes on the market, 3.9 were under contract which is an increase of 15% over February contracts. It's important to look at homes under contract because they are an early indicator of market activity and 39% is very strong. In February, Northern Virginia posted a 33% increase in homes under contract, over January, so any increase in March is impressive. The trend is looking very promising....

One question that I get a lot is: How do I determine the direction of prices in my market?

Although there are no steadfast rules to determine future pricing, months' supply of inventory (total number of homes on the market divided by the number of houses sold per month) is a great guideline. A normalized or balanced market has 5-6 months inventory. If 100 homes sell a month, there should be 500 to 600 houses in active inventory. Based on this principle, if you have less than 5-6 months of inventory, prices should rise. This is simple supply and demand economics (low supply and high demand = price increase). Lack of supply causes potential buyers to clamor over the few homes that are for sale, which in turn drives prices higher.

In Northern Virginia we currently have a 6.1 months' supply of homes so we are right in the "balanced" range. We are seeing multiple contracts in the $350K and lower price range though. That market is very hot with foreclosures dominating. With low prices and low interest rates, first time home buyers and investors are flooding that market. If you need any further information, please feel free to text me your contact information using the following link:

Just the Facts!

2009-03-23T09:59:00.001-07:00

The facts are hard to find these days. With the media publishing any news that is negative and all the different views and opinions that are out there, this blog is intended to give you an accurate picture of what's is truly going on in the Northern Virginia Real Estate market......just the facts.

The news is usually behind what's actually going on by about 2 months....so if you want to stay abreast to current news, stay tuned to this blog. I will report on the news from a front-line perspective.

Currently, the market is hot! Despite what you read, the local market is cooking. Inventory of homes on the market is low and sales are rising. Foreclosures are still making up about 45% of the sales, but they are decreasing. The number of foreclosures coming on the market has been slowing down.....it's down to a trickle compared to what we were seeing last year. Prices are still low and now that interest rates are hovering at historic lows, buyers are snatching up the available homes. Multiple contracts are common practice especially on the foreclosures because of their lower prices.

Here are the actual numbers for Northern Virginia for February:

Pending Home Sales are up +19.07% from February 08.

Number of Homes on the Market is down -17.75% from February 08.

Average Sale Prices are down -20.07% from February 08.

Prices do remain down; however, that can't hold true if inventory remains low and sales continue to rise. March's numbers look to be holding true to these trends.

We are lucky to live in Northern Virginia. Our unemployment is half of what the national average is and our job growth outlook is strong. Real estate here has taken a hit but it appears it needed it and now seems to be showing signs of life again. I'm happy to any of your specific questions....just give me a call!

(Figures include data collected from the counties of Fairfax and Arlington, and the cities of

Alexandria, Falls Church, Fairfax, and the towns of Vienna, Herndon and Clifton.)