Thanks for taking the time to visit BobNelsonTeam.com. I hope you will find the information here helpful in your day-to-day life in the Northern Virginia area as well as in your home buying or selling process.
Give me a call at: (703) 999-5812 or send me an email at Bob@BobNelsonTeam.com
Homes sales in Fairfax County have showed significant upward (+21.2 percent) movement in February when compared to Feb. 2008 numbers. I am convinced that this is the result of pent-up demand on the part of first-time home-buyers. Much of the February activity came prior to the finalizing of the government’s $8,000 first-time home-buyer tax credit. This should only further increase demand As it took a perfect storm of events to trigger the precipitous drop in demand, we now have the perfect rainbow. Home prices have fallen to an affordability level not seen in over 25 years, interest rates are a historic lows and to top it off, the USG is basically handing out checks to buy a home. Toll Brothers is evening telling me that they have a mortgage guarantee program if a buyer loses their job. The median price for a home in Fairfax County now stands at $307,000, a 24.2 percent drop from last year’s prices.
If the open house I held at my newest listing on Great Owl Circle in Reston is any indication, buyer interest has started to go through the roof. I had 26 groups of people come through the home last Sunday. This equates to more than 50 people a level of interest reminicent of four or five years ago. The home three doors down sold in three days for $7,000 over list price. A second one in the neighborhood sold for list price in one day.
My recent shift to Keller Williams Realty enables me to bring you numerous advantagous that were not available with my previous company. The home buying calculators are an example of some such benefits. Try using the affordability calculator to determine exactly how much home you can afford. FYI: Current interest rates are running between 4.5% and 5.0%. To be conservative, you should plug in an interest rate of 5.0. Feel free to share this calculator with others who may be considering purchasing a home.
To access this calculator go to the Keller Williams Website and click on the affordability calculator. Be sure to some of the other tools to help make your homebuying decision.
My son (Bob) and his wife have been thinking about moving to a single family home for several months. However, they had to put their search on hold when the twins were born. They’ve just recently asked that I ramp the search back up. They’re not sure where they’d like to live so we’ve been all over Northern Virginia including a 5 acre fixer-upper in Great Falls, a 100 year old home in Fairfax, and several beautiful homes in Ashburn and Sterling. I’ve invited Bob to be a guest contributor to the site and document his family’s experience in searching for a home, hopefully finding one they like, selling their current townhouse, and moving his family into their dream home (or at least the next step towards their dream home). If you are a first time homebuyer, you should enjoy learning about the whole process through Bob and Marie’s adventures. For those of you who have already gone through the process, you may learn something new. When Scotty (a friend of Bob’s) bought his first home, Bill (his dad) commented that he wished someone had explained the whole procedure to him when he bought each of his homes.
Earlier this week, the Today Show had a segment on the Top Ten Myths. The advice given on the show was extremely valuable and really should be taken into account whether buying or selling a home. I will be reviewing these in separate entries beginning with the top myths believed by Buyers.
Buyer myth #1: The longer a house is on the market, the more you can negotiate. When buyers ask, “How long has this property been on the market?” They think “six months” means they can negotiate the price down. It more often means the seller is stubbornly (not my choice of word) holding on to their price.
Working with both buyers and sellers in this terribly confusing market, I’ve learned that this adage is way off base. The time on market was very much a factor when negotiating a sales price during the boom period. When everything was selling in a matter of weeks if not days, a significant number of days on the market was most definitely an indicator of a home being overpriced.
The current housing inventory is such that many local markets are seeing inventories that exceed six months and actually approach 12 months worth. Buyers are simply being extremely choosy and want a home that is in perfect condition and meets all their criteria. Quite often these folks are passing up on extremely great opportunities simply because the home needs a modicum of work. Those who do recognize the bargain a home that needs work may represent will then try to negotiate too hard and not get the home they want. Avoid getting caught up in the mindset that you have to steal a home. You may ultimately get a great price for a house, but end up with your second or third choice for a home.
I always try to stress the idea that if you strictly want a bargain investment, look to the stock market. There really are some incredible bargains. When looking for a home, first find the home that makes sense for you and the family and then negotiate the best possible price. You typically only end up in your perfect home when there is a win-win type negotiation. Five years from now, you will look back and realize it was well worth that extra two or three percent that it took.
Remember: YOU ARE BUYING A HOME NOT A SHARE OF STOCK.
Of course the above does not necessarily apply when looking for investment property.
The Great Falls, Virginia market has tended to have fairly severe price swings over the past four housing downturns. While price swings happen in most markets, because of its uniqueness, Great Falls goes up higher and down lower than many others. I believe this is because of the desirability of the Great Falls lifestyle. When the economy is doing well, those who can afford the higher prices (the higher maintenance costs) will pay the premium to live here. Unfortunately, there are those who overextend themselves to get that dream home. These individuals end up getting into trouble when their incomes drop with a slower economy. They then either lose their homes through foreclosure or are forced to sell it at a sizable loss. This then drags down the prices of other homes which also are on the market.
While common sense, you want to be sure to buy low/sell high if you want your investment pay off. Having said this, there is no better time than the first quarter 2009 to buy low. This is particularly true for homes in Great Falls. My advice is almost always based on my personal experience or how I counsel my own sons. Nancy and I purchased our home in 1999 during the last downturn for $505,000. After a $300,000 renovation, this home was recently appraised at $1.3 million in this down market. There are currently some truly incredible opportunities.
Example one: A home that sold for $1.3 million only three years ago was recently foreclosed on and is being offered for $808,000. I am fairly certain that the bank will accept somewhere between $700,000 – $750,000. I had hoped for my son to be able to purchase this home, but it is priced just a little too high for him.
Example two: This home sold for $1.126 million only two years ago (after the market had come down) The home had about $150,000 put into upgrades and is now for sale at $1.1 million. It has five bedrooms and three full baths on the upper level. Since this one is my listing, I can’t comment on what I believe it will sell at. I do feel its the best bargain in the $900,000 – $1.2 million range. So do other realtors since it is averaging more than five showings per week.
Example three: A home that sold for $1.995 million in 2005, had about $200,000 in upgrades, is now on the market for $1.499 million. I had shown this home several times when it was priced at $1.8 million and am totally surprised it didn’t sell long ago. The home is currently vacant and will likely sell for a good bit less.
Homes one and three are definitely examples of buy high/sell low. Contact me when you would like to make an investment of a lifetime.
IT’S TIME TO TAKE THE PLUNGE!
I often tell the story of how, as a realtor, I am like that person who first taught you how to dive off a diving board. Practically all of us had this experience when we were young. You wanted so badly to learn how to dive into a pool. We stood at the end of the dock, put our hands over our heads and then jumped in feet first. It took a big brother, sister, uncle or someone else to hold their hand on your belly, doubl you over and then push you in head first. This was an exhilarating experience and you couldn’t wait to get back up on the diving board and do it again.
We all have considered taking that leap into the real estate market, either as a first time buyer, investor or move up buyer diving back in for another time. I am firmly convinced that its time to get back into the market and take the plunge. You will be thrilled you did so and will look back at the experience as the best move you ever made.
MORTGAGE RATES HAVE DROPPED!!
If you have been on the fence about whether or not is the best time to buy a new home, here is the best reason to dive in. Your dream home just became more affordable. That’s because the federal government has now taken steps that caused interest rates to drop considerably. For example, a $250,000 30-year fixed rate loan could save you as much as $220 a month now versus just one month ago.
HOME PRICES DROP AS WELL!!!
During the last two days, I have shown several homes in Fairfax County to clients who are currently renting. We found a single family home in Herndon that they should be able to purchase for somewhere in the neighborhood of $250,000. This same home four years ago would have sold for more than $400,000. I personally believe that the Herndon market is currently artificially low and will likely enjoy a 100 percent appreciation during the next five years. Using the Northern Virgina MLS system’s Rent vs Buy calculator, this couple will save over $43,000. And this is with an extremely conservative approach inputting annual appreciation of only 4 percent. Using a more aggressive appreciation rate of 15 percent per year (still less than my forecast) for Herndon this couple would save in excess of $230,000. Not bad for an initial investment (down payment) of only $8,750!!
Now if you’ve been listening to the news reports you no doubt have repeatedly heard that we experienced “the Perfect Storm” in the real estate market over the past three years. I have to tell you that we are now in the midst of a “perfect trifecta”. The significant drop in home prices combined, with extremely low interest rates (at the time of this writing they are less than 6 percent) and an abundance of money (for those with decent credit scores) have created a perfect opportunity for first time home-buyers. In addition to this, the federal government’s first time buyers’ tax credit (see earlier blog entry) makes it even easier to afford a home.
One of my favorite movies of all time is Forrest Gump. This film is an extremely deep comment on life and how we approach things that come our way. After sitting through a presentation by an investment counselor on Wednesday, I immediately thought of Forrest and Lieutenant Dan as they were out at sea on their shrimp boat in the midst of one of the worst hurricanes to hit the Gulf of Mexico. Their shrimping business had been a total bust up to that point. As Forrest captained the ship through the storm, Lieutenant Dan sat atop the mast and relished the moment. They did this as every other shrimp boat sought the safety of the harbor. As you will recall, every other shrimp boat was destroyed while Forrest and Dan came back into port with a huge catch. Due to their willingness to brave the storm, they went on to be extremely successful and ultimately owned the largest fleet of shrimp boats while others went bankrupt.
We are currently in the midst of one of the worst housing hurricanes seen in decades. The winds are extremely volatile and everyone has been running to a safe harbor. Needless to say, it is those who brave the storm and seek out opportunities while everyone else waits for the market to strengthen who will fare the best. Whether you are considering purchasing one, two or more rental properties or are looking to upgrade your own personal residence, I don’t believe you will experience a better time than now to make the move. Prices are have come down dramatically and interest rates are still quite low. Weichert Financial, Wells Fargo and Bank of America (my three preferred lenders) all assure me that they have plenty of money and that you can secure personal mortgages with 10 percent down and investment loans with 20 percent.
To give you an idea of what is out there, in the past month a $2.8 million property in Great Falls sold for $1.1 million and potential rental properties in Sterling have come on the market at $80,000 – $100,000. I am currently negotiating the sale of a $5+ million home for less than $3 million and working on several other incredible opportunities for my clients. With 20 percent down, the PITI for an $80,000 rental property in Sterling would be somewhere in the area of $600 per month. Rent for such a property would be around $1,000 per month. My assumption is that in five years time, these will be back to selling at $250,000 – $300,000. A potentially huge return on a $16,000 investment.
My buddy Frank Barlow told me a few months ago that when you are in the middle of a hurricane, it seems like it will never end. It always does and the sun always does return.
Contact me if you are ready to move towards owning a fantastic personal residences or your own fleet of rental properties before its too late.
I can’t say how many times I’ve had people say that it is nearly impossible to get a home mortgage at this time. The have also said that they heard you need 20 or 30 percent down to get a loan. These two are really the biggest fallacies in today’s market. I refer to them as Washington Post headlines!! As with most new articles, you really need to read further down to fully understand the story. Those people with bad credit or other issues may well need to come up with 20 or 30 percent, but the majority of people can typically get a loan with only 10 percent down and in some cases there is still mortgage money available with only three or five percent downpayments. Each of the lenders that I deal with have assured me that they have plenty of money to lend and at very good interest rates. Don’t let the myths keep you from getting into this incredible buyers market.
Don’t get caught waiting for the bottom only to find that the sellers’ market has returned. Once this happens it will be too late to take advantage of this incredible opportunity.
Contact me at Bob@BobNelsonTeam.com for more info.
The Federal Housing Finance Agency has just released the 2009 guidelines for Conforming Loan Limitations. Anyone who has been considering purchasing a home for which they will need a loan exceeding the new guidelines should definitely consider making a move prior to the end of 2008.
The new loan limits for Northern Virginia (Component Counties: Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania, Stafford, Warren and Component Cities: Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, Mannassas Park) has been set at $625,500. The current limit for Conforming Loans in these areas is $729,750.
Using current interest rates, a jumbo conforming loan of $725,00 will cost somewhere in the neighborhood of and additional $500 per month (or $6,000 per year) if you wait until January 1, 2009.
For additional information, contact me or call: (703) 999-5812.
You can also access the FHFA new release at: http://www.ofheo.gov/newsroom.aspx?ID=481&q1=1&q2=None