Results of Bankrate.com’s May 16, 2012, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
| 30-year fixed | 15-year fixed | 5-year ARM | |
|---|---|---|---|
| This week’s rate: | 3.97% | 3.2% | 3% |
| Change from last week: | -0.05 | N/C | +0.1 |
| Monthly payment: | $784.88 | $1,155.40 | $695.65 |
| Change from last week: | -$4.76 | N/C | +$0.89 |
by Corey Hart
Rockville, MD –(May 10, 2012) – The following analysis of the Washington, D.C. Metro Area housing market has been prepared by RealEstate Business Intelligence (RBI), and is based on the April 2012 RBI Pending Home Sales Index™ released today.
OVERVIEW
Pricing in the DC Metro Area continued recent positive trends with a year-over-year Median Sale Price gain of 11.2 percent, the highest annual gain in over six years. Active inventory remains low compared to demand, with only 3.2 months of supply. This not only put upward pressure on pricing, but resulted in significant declines in Days on Market prior to sale and the percent of Original List Price discounted at settlement. Traditional listings, or those not involving a short sale or foreclosure, represented the highest proportion of closed sales since the foreclosure wave was at its peak. While new contract activity was up 9.5 percent over April 2011 levels, the percent change vs. last month was well below normal seasonal patterns.
KEY TRENDS
Pricing
All the talk of a looming shadow inventory of distressed properties apparently did not offset the effect of a limited supply of available inventory and historically low interest rates, as the median sale price for the DC Metro Area rose 11.2 percent over the April 2011 level to $371,500. This represented the largest year-over-year gain in median sale price since January 2006 and marked the third consecutive month of annual gains in this indicator. The year-to-date median sale price is $337,000, 6.7 percent higher than the $316,000 YTD level through April 2011. Every jurisdiction in the region has seen an increase in YTD median sale price, led by Falls Church (+23.3 percent), Arlington (+12.4 percent) and Fairfax City (+11.7 percent).
The biggest gain in median sale price was in the condo/co-op segment, the $275,000 April level represented a 14.6 percent year-over-year gain, the second consecutive month where this segment saw a 14 percent annual gain. The townhouse segment had a median sale price of $350,000, up 9.4 percentyear-over-year. Detached homes were up 8.4% over April 2011 to $450,000, the largest annual gain for this segment since October 2010.
While the percentage of sales that are under foreclosure continues to fall, the median sale price of $185,150 for this segment is up significantly, 27.7 percent, over the April 2011 level. The median sale price for short sales is down 14.2 percent year-over-year to $193,000, the lowest level on record, possibly the result of lenders’ propensity of late to take distressed properties through the short sale path rather than foreclosure. The median sale price of distressed properties collectively (short sales + foreclosures) was $190,000, up 10.5 percent over April 2011, though down 5.0 percent from last month. The median sale price for traditional listings (those not involving a short sale or foreclosure) was $425,000, 6.8 percent higher than March and 3.0 percent higher than April 2011.
Closed Sales
Along with continued low inventory compared to demand, the composition of the sold inventory was a factor in the pricing increases in April 2011. Year-over-year gains in detached property sales outpaced annual gains in attached property (townhome + condo/co-op) sales. The 1,910 detached property sales were up 10 percent over April 2011 while the 1,858 attached property sales represented a modest 3.9 percent year-over-year increase. The number of closed sales in April represents a 7 percent increase over the April 2011 level and 12.7 percent increase over March (outpacing the ten-year average March to April increase of 8.4 percent). The year-to-date total of 12,323 closed sales is down slightly – 1 percent – compared to the 12,448 sales through April 2011.
Foreclosure sales were down 54.3 percent vs. April 2011 to 278, the lowest level since MRIS began tracking distressed listings in April 2009. Foreclosures represented only 7.4 percent of all sales, down from 17.2 percent in April 2011. Short sales increased 18.1 percent year-over-year to 482, likely reflecting changes in the way lenders are dealing with distressed properties recently. Short sales accounted for 12.8 percent of all sales, up slightly from the 11.6 percent share in April 2011. The 3,011 traditional sales, or those not involving short sale or foreclosure, represented a 20 percent year-over-year increase, and accounted for 4 out of 5 transactions (79.9 percent), the highest proportion of “healthy sales” since the foreclosure crisis hit.
New Contracts
The 5,663 new contract agreements signed in April represent a 9.5 percent increase over April 2011 and were 11.0 percent higher than the five-year April average. This level of contract activity was essentially flat with the number of new contracts in March (5,671), going against the normal pattern for this time of year: The ten-year average March to April change is +7.4 percent.
New Listings
The 6,280 new listings in April represented a 14 percent decline vs. those entered in April 2011, marking the 11th year-over-year decline in new listings in the last 12 months. Notably, the level of new listing activity in April represents a 9.1 percent decrease compared to the 6,909 new listings in March. This is only the 2nd time in ten years that there were fewer new listings in April than March, the ten-year average trend is a 7.6 percent increase in new listings. The last time there was a March-to-April decline in new listing activity was 2006, when new listings dropped 2.9 percent month-over-month.
The 348 newly listed foreclosures represented a 40.3 percent decrease compared to April 2011 and accounted for 5.5 percent of new listings, down from 8.0 percent in April 2011. This does represent a slight increase in the share of new listings in foreclosure compared to March (4.8 percent), worth keeping an eye on in the months ahead. 12.4 percent of new listings were short sales, down slightly from the 13.4 percent share in April 2011 and well below the two-year high of 23.6 percent in December 2011. The 5,157 new traditional listings, which made up 82.1 percent of new listings in April, were down over 10 percent compared to both last month and April 2011 levels.
Active Inventory
So how does the supply level look heading into May? The 10,652 active listings at the end of April were 31.5 percent lower than the same point last year. Supply is tight relative to demand across the board, but especially so in the more moderately priced attached home segments. Months of inventory, or the number of months it would take for the current inventory to be sold given the last twelve months’ average sales rate, is 3.2 months. The amount of active townhomes relative to demand is the lowest, with only 2.2 months of supply; the detached market has 3.8 months of supply. Though townhomes accounted for 25.2 percent of sales in April, they make up only 17.5 percent of the active market heading into May. Detached homes, on the other hand, accounted for 50.7 percent of April sales, but represent a larger share of total active inventory, 58.8 percent.
Actively listed foreclosures are down 66.6% from the 1,039 active foreclosures in April 2011 and represent only 3.3% of the active market, the lowest share since MRIS began tracking in April 2009. 82.6 percent of active listings do not involve a short sale or foreclosure, significantly higher than the 2-year low of 65.7 percent in January 2011. The 1,510 active short sales are half the April 2011 level and represent 14.2 percent of all active listings, down from 19.3 percent at this time last year.
Impact on Seller Success
Low inventory relative to demand is advantageous to practical home sellers, and declines in Days on Market and seller concessions to buyers are a predictable result. The Average (Mean) Days on Market (DOM) of 70 days was eight days lower than April 2011. The Median DOM, or the number of days that half the solds in April were listed prior to contract, was only 25 Days. This is 7 days faster than April 2011 and 14 days less than the average April over the past five years. The Median DOM for townhome properties, where supply is lowest relative to demand, was down to 16 days – 12 days less than the April 2011 level. Short sales had the highest Median DOM with 63 while half of the foreclosed sales in April were on the market for 32 days or less. The Median DOM for traditional listings was lowest at only 20 days – reflecting the fact that sellers willing (and more importantly considering equity issues, able) to price homes at a practical level are receiving offers within a few weeks of entering the market. The amount of original list price received at sale (SP to OLP ratio) was 95.6 percent in April, the second highest level since August 2007, further evidence that the DC Metro Area is a seller’s market.
The RBI Pending Home Sales Index™ (first chart) is a two-year moving window on the housing market using new pending sales (signed contracts) and median sales price (closed sales). It provides unique insight into the state of the current housing market by measuring the number of new pending sales for each month through the most recent month.The results include new pending sales through and including April 2012. The market area includes: Washington, D.C., Montgomery County and Prince George’s County in Maryland, and Alexandria City, Arlington County, Fairfax County, Fairfax City, and Falls Church City in Virginia.
Low interest rates have you thinking about trading up to a bigger home? While it is a great time to buy a home, to save time and safeguard your investment, consider the following mistakes and try to avoid making them.
Having Unrealistic Expectations
Some people who want to buy bigger homes right now think that they can purchase homes for rock bottom prices because the housing market is recovering slowly. While great bargains exist, sellers are more encouraged by the arrival of spring and increased activity in the housing market. This means that sellers will not take just any offer. As you bargain hunt, consider that if you bid too low on properties, sellers will not take you seriously and you could miss opportunity after opportunity to buy a home that meets your needs.
Buying More House Than You Can Afford and Failing to Plan
Before the housing crisis, too many borrowers purchased more home than they could afford, resulting in high foreclosure rates from which we are still feeling the effects. For those of you out there who were less affected by the crisis and can now afford to trade up, the risk of making the same mistake still exists. Although the economy is slowly but surely improving, you need to think realistically about what you can afford. You also need to consider how a weakened economy could affect you in the future. Do you have enough money to meet stricter down payment guidelines? If you pay a big down payment, will you have enough emergency savings to keep your house if you lose your job or become ill? If you can afford to buy a bigger home now, make sure that you have a strong financial plan in place. Behaving otherwise could put your investment at risk.
I hope you will find the following snapshot of local DC/VA real estate inventory interesting. The table represents aggregated values based on MLS data for the specified date.
| Housing Inventory Snapshot |
April 30, 2012 |
||
|
Average List Price |
Median List Price |
Average Days On Market |
|
| Arlington County, VA | |||
| Single Family under $1M |
$699,894 |
$684,900 |
53 |
| Single Family over $1M |
$1,536,725 |
$1,379,000 |
78 |
| Condo/Townhome under $600K |
$339,159 |
$336,000 |
68 |
| Condo/Townhome over $600K |
$1,135,235 |
$799,000 |
109 |
| Fairfax County, VA | |||
| Single Family under $1M |
$634,921 |
$625,000 |
58 |
| Single Family over $1M |
$2,123,281 |
$1,499,900 |
131 |
| Condo/Townhome under $600K |
$338,405 |
$329,000 |
53 |
| Condo/Townhome over $600K |
$770,868 |
$712,900 |
59 |
| Alexandria City, VA | |||
| Single Family under $1M |
$674,236 |
$669,000 |
68 |
| Single Family over $1M |
$1,882,232 |
$1,495,000 |
72 |
| Condo/Townhome under $600K |
$358,296 |
$353,900 |
61 |
| Condo/Townhome over $600K |
$1,090,760 |
$849,000 |
76 |
| Fairfax City, VA | |||
| Single Family under $500K |
$440,669 |
$449,000 |
47 |
| Single Family over $500K |
$815,761 |
$749,500 |
75 |
| Condo/Townhome under $300K |
$241,678 |
$274,000 |
38 |
| Condo/Townhome over $300K |
$506,014 |
$499,500 |
65 |
| Falls Church City, VA | |||
| Single Family under $500K |
$422,517 |
$424,900 |
54 |
| Single Family over $500K |
$883,941 |
$749,000 |
64 |
| Condo/Townhome under $300K |
$208,900 |
$209,900 |
40 |
| Condo/Townhome over $300K |
$444,764 |
$399,900 |
63 |
| Loudoun County, VA | |||
| Single Family under $1M |
$609,572 |
$599,900 |
114 |
| Single Family over $1M |
$2,372,390 |
$1,700,000 |
173 |
| Condo/Townhome under $350K |
$283,157 |
$298,000 |
64 |
| Condo/Townhome over $350K |
$429,891 |
$407,900 |
91 |
| Prince William County, VA | |||
| Single Family under $500K |
$361,247 |
$380,000 |
88 |
| Single Family over $500K |
$705,153 |
$629,000 |
157 |
| Condo/Townhome under $300K |
$211,934 |
$219,999 |
60 |
| Condo/Townhome over $300K |
$368,524 |
$339,900 |
93 |
| District of Columbia (DC), DC | |||
| Single Family under $1M |
$442,491 |
$345,000 |
92 |
| Single Family over $1M |
$3,020,126 |
$2,250,000 |
126 |
| Condo/Townhome under $600K |
$307,825 |
$294,000 |
99 |
| Condo/Townhome over $600K |
$1,340,967 |
$944,990 |
113 |
A real estate appraisal will determine how much you will pay in property taxes when you buy a home or the potential sale price of your property if you want to sell your home. Therefore, getting an accurate appraisal is important because you could lose quite a bit of money if the value of your home or the home you want to buy is inaccurately assessed. Here are four tips to help you get an accurate appraisal:
1. Choose a knowledgeable appraiser
You need an appraiser who is knowledgeable about the comparable home sales in your neighborhood (if you are a homeowner) or the neighborhood where you hope to buy. Research your appraiser’s record and read reviews about the company. As an extra precaution, ask your loan officer to help you confirm the appraiser’s credentials.
2. Research the appraisal process
Avoid surprises by knowing what to expect during an appraisal. Find out in advance who pays for the appraisal ─ often homeowners must pay appraisal fees up front. More importantly, understand that your home’s value may be assessed based on market value rather than tax assessments. These days, tax value and current market value can differ widely, but your lender can only go by appraisal value.
3. Do your own research on comparable homes
Although the appraiser will research sales of comparable homes in your neighborhood to help assess its value, you should do your own research. After going online to research homes that have similar square footage and amenities, share your research with the appraiser. This will ensure that he or she has complete information with which to assess the value of your home.
4. Be present during the appraisal
You need to be present during an appraisal to answer any questions about the property. Make sure to have a ready list of any improvements that you have made to your home and point out any features that might increase the value. If you are a homebuyer, check with your real estate agent to find out if your presence is necessary. Homebuyers are not usually present during appraisals.
Divorce is hard on families and finances, but it happens. In fact, a new study on divorce conducted by the CDC found that nearly half of first marriages end within 20 years. If you are going through a divorce and you own a home, you will have to make a decision about what to do with your home. Before you make that decision, you need to consider the following:
If you sell your house, how will net proceeds be divided?
Net proceeds from the sale of a home are not always divided 50/50 when you go through a divorce. The proceeds may depend on laws in your state, the source of the original down payment, any signed pre- or post-nuptial agreements, or the divorce settlement agreement.
If you buy out your spouse, how will you meet your financial obligations?
If you needed two incomes to make your monthly payments, buying out your spouse may not be the best option. Consider how you will meet your financial obligations on one salary and find out if you can qualify to refinance the home if necessary.
If your spouse buys you out, will you qualify to buy a new home?
If your spouse buys you out, make sure that he or she can refinance the original loan. If you try to buy a new home, you may not qualify for a new mortgage because of your attachment to the first mortgage. If your spouse does not refinance, some lenders will still consider you as a co-signer on that original loan, which can disqualify you for a new mortgage even if you have no legal ownership of your old home.
What impact will retaining the home under joint ownership have on your taxes?
If you decide to retain your home under joint ownership once you are divorced, make sure you know the tax implications of this choice. Your tax obligations could change from the time you divorce to the ultimate sale or buyout of the property.
Although we saw mortgage rates go up at the beginning of last week, by Friday, we saw another drop following less than stellar jobs news. Although the economy is still struggling, financial analysts are suggesting that the Federal Reserve may not provide an additional stimulus to keep rates low. This means that you cannot assume that you will be able to find 30-year fixed rates under 4% three months from now. Borrowers should view the current low rates as an opportunity to lock in a great rate. If you plan on buying a home soon, consider the following tips to ensure that you get and keep a great loan package at a great rate:
1. Maintain Good Credit
Since many lenders do not want to take on borrowers who have credit scores below 680, make sure that you are creditworthy before you apply for a mortgage. You should check your credit reports from all three credit bureaus and request your credit scores. Clear up any inaccuracies and get current on any outstanding debts that appear on your credit report. Be aware that unpaid debts and late payments can lower your credit score.
2. Shop for the Best Mortgage Rates
After verifying your creditworthiness, shop around and get quotes to find the best mortgage rate. To ensure that your credit score is not negatively impacted, only allow two or three reputable lenders to run your credit. Once you choose a lender, try to lock in a great rate that coincides with your closing date to guarantee that the rate will not go up. Make sure you have something in writing that says your rate is locked in for at least a 30-day period. If the lender offers to lower the rate if it drops during that period (float-down option), that is even better!
3. Keep a Consistent Credit Image Until Closing
Once you have secured a mortgage and locked in a great rate, you need to maintain your creditworthiness. Since the lender will run your credit again before you close, you need to make sure that there are no material changes in your finances. To keep a consistent credit image, do not pay bills late and do not apply for new credit cards or finance big ticket items such as a new car. Do not close bank accounts. Doing any of these could lower your credit score and affect the mortgage rate for which you qualify.
If you would like to learn more, please contact me at jdeevy@cbmove.com or (703) 930-5198.
In the last six months, home sales have increased 13 percent. With the arrival of spring and increased optimism about the housing market’s recovery, you might be thinking that this is a good time to put your home on the market. Well, you’re right! It is a good time to sell because buyers are taking advantage of low mortgage rates. This means that you have a better chance of selling your home faster.
In this emerging market, to get your home sold, you need a real estate agent who is experienced, knowledgeable, and successful. To find an agent who meets this criteria you should ask the following questions:
1. Why should I list my home with you?
An agent worth hiring should have a solid strategy for selling your home that includes a marketing plan and outreach to buyers.
2. What is your company’s track record and reputation in the market place?
You want an agent from a reputable company with a history of success.
3. What are your marketing plans for my home?
A great marketing plan can get a home sold quickly, saving you time and lots of money.
4. What has your company sold in my area?
If a company has a presence in your area, the odds are that they know the area and how to best market your home.
5. Does your broker control your advertising or do you?
Your agent should have access to advertising resources within and separate from the brokerage to ensure that your property gets the most exposure possible.
6. When your listings sell, how close is the asking price to the selling price?
You want an agent who is an expert in negotiation and can get you the most money possible.
7. How long does it take for your listings to sell?
Pick an agent whose homes sell within a reasonable amount of time for a reasonable price.
8. How many buyers are you currently working with?
The more buyers your agent is working with, the better your chances are of selling your home quickly.
9. Do you have clients who will give you a good reference?
You need to know how past clients rate an agent. Ask for references to ensure that you hire an effective agent.
10. How do you track and report your marketing efforts?
At least once a week, until your property is sold, your agent should be able to tell you how many potential buyers viewed your home online, at open houses, or with buyer’s agents.
Know Your Home!
A home inspector will examine the condition of a home’s heating system; central air conditioning system (temperature permitting); interior plumbing and electrical systems; the roof, attic, and visible insulation; walls, ceilings, floors, windows, and doors; the foundation, basement, and structural components. Among these, there are 10 common problems that homeowners need to know about and correct if necessary to pass a home inspection.
Although homeowners are not expected to possess the same knowledge as a home inspector, it is important that you at least know about these problems so you won’t get caught off guard by the results of an inspection. As an example, waterproofing a basement could cost up to $15,000. If you know in advance what to look for, you can spot potential problems and have them repaired before they go into a home inspection report. The 10 most common home inspection problems include:
If you would like to learn more, please contact me at jdeevy@cbmove.com or (703) 930-5198.
Find Those Deductions!
Tax season is here and as a new homeowner you can expect to benefit this year from the following three major tax deductions:
Mortgage Interest
What it is: The interest charged on a loan to purchase a home.
How the Deduction Works: According to IRS.gov, you can deduct mortgage interest if:
Property Taxes
What it is: A tax assessed on real estate by the local government. The tax is usually based on the value of the property (including the land) you own.
How the Deduction Works: To be deductible, the tax must be imposed on you and must have been paid during your tax year. Property taxes may be claimed only as an itemized deduction on Form 1040, Schedule A.
Points on a Mortgage
What it is: The number of discount points you need to receive a lower mortgage interest rate. You buy mortgage points for a fee from a lender. Each point costs 1% of your mortgage amount.
How the Deduction Works: As a general rule, you cannot deduct the full amount of points in the year that you paid for them. Because they are prepaid interest, you generally deduct them proportionately over the life of the mortgage. Of course there are exceptions if you meet certain standards. You can click here to find out if you qualify to deduct the full amount of points in the year that you paid for them.
If you have questions about anything you have learned about above, please contact me at jdeevy@cbmove.com or (703) 930-5198.
