As you have likely been reading, the First-time Homebuyer Credit program will expire on November 30′th.  What many people have not understood, this means you must settle on your new home by that date.  Having just purchased a new car, I encountered the flurry of activity that occurred on the last few days of the Cash for Clunkers program.  For those who purchased a new car, it was feasible (although not advisable) to wait to the last minute.    WARNING:  This is not the way the homebuying process works.  We are quickly approaching what is the last minute for you to make your purchase.  Unlike picking out a new car, finding the right home can take a week, two weeks or in some cases several months.  Even once you have found the perfect place to call home, you will then need to start the actual buying process.  This has quickly become challenging in our local market since the more affordable homes are disappearing from the inventory.  A simple understanding of the law of supply and demand will tell you that this will create upward pressure on prices and competition for the same properties.  Remember that what you find appealing will also appeal to a great many others.  I just sold my used car to “Joe C.” who has been trying to buy a home in Woodbridge.  He said that he and his fiance have made offers on three homes, only to be out bid either by higher offers or all cash offers.  There are several things that Joe and his Realtor can do to insure that this doesn’t happen which we can easily cover in person. 

Once a contract is ratified, the process will then take a minimum of three weeks to four weeks to get to the settlement table.  And this only if everything lines up perfectly.  With that said, you will need between six and eight weeks to find the right home and settle on it.  We have only 11 weeks until the program expires.  The reality is that three weeks to spare in the homebuying process is equivalent to three hours in the auto purchase world.

If you are reading this post, you probably already decided to purchase a home, but I would suggest reading the about the Proven Path to Home Ownership since it provides a very succint discussion o fthe home buying process.  We can always discuss this in more detail once we get together. 

At the risk of sounding like a high pressure sales person, you really can’t wait much longer to take advantage of the First Time Homebuyer Credit.  Depending on you income, this credit can mean an actual dollar savings of anywhere from $10,000 – 16,000 in pre-income tax money. 

     First-time homebuyers continue to drive the real estate market to the benefit of trade-up or repeat buyers. As discussed earlier, this increased activity appears to be a direct response to the $8,000 first-time buyer tax credit. In April, first-time buyers accounted for 40% of all home sales and the trend is expected to spur more activity in the coming months. According the Lawrence Yun, NAR chief economist, “Since first-time buyers must finalize their purchase by November 30, 2009, to get the credit, we expect greater activity in the months aheead, and that should spark more sales by repeat buyers.”
A recent change this month allows qualified first-time home buyers to use the tax credit to help pay closing costs on FHA loans, to buy down the interest rate or make a larger down payment.
Existing home sales rose for the third straight month, building on gains in the previous two months. More repeat home buyers are entering the market indicating rising confidence in the market conditions. Home prices edged up 0.2% over the previous month, adding increasing signs for market stabilization. In spite of this, home prices are still lower than the same time a year ago. Foreclosures and short sales, which accounted for 45% of April sales, continue to skew the median price downword, as these properties are sold at a larger discount in comparison to traditional sales. Distressed sales, however, are helping the makret trim off considerable stock of unsold homes in areas with large inventory overhangs. There are currently on 183 foreclosures on the market in Fairfax County, down considerable from previous months.
THIS MONTH IN REAL ESTATE VIDEO

The first time homebuyer tax credit appears to be having the desired effect on our local housing market.  Home sales in the under $500,000 range have been quite robust since the inception of the tax credit.  Inventory in Reston’s 20194 zip code is down to less than three months with the 20190 zip code inventory standing at about 3.5 months.  While there have been no specific studies showing that this increased activity level is a result of the credit, one must surmise that it and the near record level interest rates are key contributors.  One would have to surmise that this pace will gain additional momentum as the December 1, 2009 deadline grows closer.  The Internal Revenue Service has provided a superb review on its website including the necessary form to apply for this credit.

The Great Falls Market which for the most part is out of reach for first time homebuyers is showing inventory of nearly 10 months.  The inventories for the two Mclean Zip Codes (22101 and 22101) are six months and 10 months, respectively.  Finally, the Vienna Zip Codes of 22180 and 22182) currently have inventories of four months and five months.

Ever since its announcement, there has been considerable confusion over the first-time homebuyer credit.  A frequently asked question pertains to whether or not someone can co-sign on the note and still have the principal buyer qualify for the credit.  I had asked numerous lenders, title attorneys and other realtors all of whom had given me the same basic answer.  This being, “Well they should be able to qualify” or “They must be able to get it.  This was actually the conclusion I had already drawn, but wanted a definitive response.   After three weeks of trying to come up with the answer, I finally got to the bottom-line.   As long as the co-signer is not a spouse (who has owned a home within the last three years), the principal is indeed entitled to the tax credit.  The answer if provided by Rob Dietz, Ph.D., director of tax issues for the National Association of Home Builders.  If you would like further info, simply check the link:  Homebuyer Tax Credit.  Feel free to contact me for additional info on other First Time Homebuyer incentives.

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.

More than 6,800 Real Estate agents from throughout North America recently attended Keller Williams Realty’s annual convention, Family Reunion, in Orlando, Florida Feb. 21-25. Starting 2008 as the fourth-largest Real Estate company in the United States, Keller Williams Realty is powering through the shift and now claims the No. 3 spot, said Mark Willis, CEO, during the State of the Company and Culture address.

This is solid evidence that the model works!” he told a cheering audience. “When you faithfully commit to our economic model, our operating model and our organizational model, and take advantage of the education and the resources that we’ve developed, you create an edge over your competition and disrupt your local market.

While we cannot escape the trends of the industry, we have definitely outperformed the industry,” Willis said, noting that compared to the National Association of REALTORS®, which lost 140,000 of its members, a decline of 10.5 percent between December of 2007 and December of 2008, Keller Williams Realty’s total active agent count declined by only 7 percent. “Comparatively, Keller Williams did more than 30 percent better than NAR.” Citing the 2008 REAL Trends 500 report, Willis added, “Keller Williams was the only Real Estate franchise that experienced a positive growth in the total number of sides, the total number of offices and the agent count per office. Between 2003 and 2007 Keller Williams Realty increased its U.S. market share by more than 161 percent, while only one other network gained, and their increase was less than 20 percent.

Comparing Keller Williams Realty to the 10 largest independents in the country over the last five years, Willis enthusiastically noted that “Keller Williams grew by 65 percent more in associates per office, 61 percent more in transactions per associate, and 32 percent more in sales per office. The model works! This is your money, your production and it thrills us.

From the very outset, the shift in the Real Estate market has been viewed within Keller Williams Realty as an opportunity, and never has that been more apparent than right now. “The promise of the shift for our market centers who nail the model, and grow in this market, is greater than in any other market, because this is when the best agents and brokers gain market share,” Willis added. “We have to gather ourselves, get focused, get a plan of action and CHARGE!”

Although the Keller Williams McLean Center was founded less than two years ago, it has quickly grown into the most talked about office in the Northern Virginia region.  We hope to open an office in Great Falls by Summer 2009.

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.

Earlier this month, the Today Show had a segment on the Top Ten Myths surrounding the current real estate market. The advice given on the show was extremely valuable and really should be taken into account whether buying or selling a home. I am reviewing each of these as separate entries with my own experience.  This advice will be valid whether buying/selling in high end markets such as Great Falls and Mclean or in Loudoun County or Prince William County where prices have dropped dramatically.

Buyer myth #2: Sellers today are desperate.

This premise has held true for most every buyer to whom I have shown houses during the past year.  Not all sellers are desperate.  There are a number of people who are looking to take advantage of the current buyers’ market.  They are willing to sell their home at a lower price than would have been obtainable two or three years ago.  They simply do not want to give the home away.  It is important to always ask why the the home is being sold as a means of determining how motivated and anxious they are.  I will always asked where they are moving.  They are more likely to answer this than bluntly asking why they are moving.  A response of “We’re being transferred” is a very different answer than, “We’d like to find something bigger.” The first homeowner is very motivated while the second may stick closer to their price.  I am always surprised at how much info you can get from sellers by asking the right questions.  If your buyer agent doesn’t ask exploratory questions, it may be time for a new agent.

For sellers:  You are well served by following your realtors advice to vacate the home when someone is coming by to see it.  Never, never, ever have kids home!!  While you frequently think you can help market the property, you more times than not provide information that buyers use to rule out the home or give the selling agent fodder with which to negotiate a more advantageous deal for the buyer.  Kids will almost always say something about the home that you’d rather not have known.  If your listing agent hasn’t given this advice, it may be time for a switch. 

I will always maintain that your principal reason for looking at houses is to find the right home for your family. Once you have found a place to call home, don’t lose it over a few percentage points in price.  We’ll establish a fair price and then negotiate to get as close as possible to this price.  It will then be up to you to determine if you really want the home.  You can rest assured that the home will be worth significantly more in five to ten years than you are paying today. 

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.

I recently came across a fantastic article in Forbes regarding the future of the Washington, D.C. area real estate

(flickr)

market. With today’s current depressed home values and the commercial market experiencing a bit of a sag, this will be a major shot in the arm for our region.  I would seriously suggest that you take a minute and read through the article.  Even if you are not considering any type of real estate transaction in the foreseeable future, it behooves you to at least know what to expect in the coming months.

The following is the gist of the Forbes article as it applies to the DC Metropolitan area.  You can simply click on the link to read the full article.

Washington, D.C., traditionally takes a back seat to world cities like London, New York and Tokyo when it comes to real estate investment.

That’s likely to change.

Thanks to a proposed $1 trillion wave government spending, investors are flocking to D.C. for opportunities in the commercial and residential real estate markets. All these new programs will need offices, after all, and their employees will need places to live.

This year, Washington leapfrogged London for the first-place ranking in the world’s best cities for real estate investment. But don’t count out the world’s financial capitals just yet–even with massive financial troubles in London and New York, those cities finished second and third, respectively.
In Depth: World’s Best Places For Real Estate Buys

Why? It’s the appeal of long-term stability, and fears that emerging countries are going to take a harder hit. While the U.S. property market sputters, China is poised for its worst deflation in a decade, focused heavily on property price declines, according to Deutsche Bank.

(Forbes Article)