What can I say about 2009 except that I am glad it is behind us. The market was consistent and showed a slow but steady improvement. It was, though, a year filled with challenges. Financing guidelines changed constantly; appraisals were neither accurate nor timely; foreclosures and short sales dominated the marketplace; banks set their own rules; the title companies were bogged down and under staffed; and, well, you get the picture. I would have to say that when the smoke clears we will recognize the bottom of the marketplace as having occurred in March of 2009. Improvement in the market actually started in June of 2008 but March of 2009 was when the turnaround took hold. In certain sectors of the market we have seen a 10%-17% “bump” in pricing as buyers compete for limited inventory. This is where pricing got lower and lower and lower until finally buyers starting flocking into the market and created a “bounce.” This is most evident in the townhome market where multiple offers are the rule of the day. As the year progressed we have seen this level of activity work it’s way up through the different pricing points and while it has not yet reached the highest end, I expect to see that change. Consumer confidence played the biggest part in this as buyers finally decided that they needed to get in the market or miss the opportunities it offers. Many did miss it as all cash investors bid up properties and first time buyers found they could not compete. We had one client that we wrote 12 offers for and she did not get one. Most were full price or higher than full price but she was in a competitive situation each time and she could not go price-wise to where the property finally sold for. Now those sales are comps and the prices are out of her reach. Now, that activity was in the entry level, first time buyer price range and that is not the case in every price category but it is indicative of the turn in the market and illustrates how the pricing can jump up 10%-17% on a market “bounce”. The number of foreclosures coming on the market has dropped significantly since the beginning of the year and the increased activity in the lower ranges takes them off the market quickly and typically at higher prices than they are listed at. Move up buyers are finally able to get sold and take advantage of the lower prices in the next range up and actually gain some ground. Short sales are still not systemized with every bank but they are with many of them. Unless some one that actually knows how to do them properly handles them they can be a nightmare and even then with certain banks they are extremely difficult. 

All that being said our pricing stabilized in all but the highest price ranges and actually increased in the lowest levels. In 2004, the highest year, 1503 town homes were sold in Centreville and in 2007, the lowest year, 648 were sold. In 2009 1057 were sold. Not the peak but a great number. Likewise in April of 09 the average list price of a town home coming on the market was 243,600 and the average list price of one that closed that month was 244,535. In December it was 278,085 for the new listings and 259,462 for what sold. The total number of townhomes available January of 08 was 299 by January of 09 that had dropped to 161 and as of the last day of December 09 there were only 39 available. 

Likewise for single-family homes, we sold 533; the high water mark for single-family home sales in 03 and the low mark was 271 in 06. This year we sold 339, an improvement that is for sure and a trend that I hope to see continue in 2010. Because there is such a wide swing in single family pricing (200,000-2,000,000) average sale and list prices are not the most accurate indicator. Fact is that in the lower price ranges those prices increased somewhat and in the upper ranges they continued to fall. The good news is the inventory levels. In January of 08 we had 138 single-family homes available, by January of 09 that had dropped to 70 and we closed out 09 on a positive note with only 31 available. All told, 2009 with all of its trials, tribulations and challenges was a positive year for our market.  

Now that the snow is gone I look for a surge in inventory, especially in the single-family sector. Typically March is when inventory really starts to grow and I believe that many who would have come on in February were prevented from doing so by the weather. I also feel that many savvy sellers are jumping in early trying to catch those buyers that are active now trying to buy so they can get the tax stimulus incentive before it goes away in April. I think that is a smart strategy. I still look for interest rates to start creeping up, regardless of what the Fed does, in response to the government getting out of the mortgage backed security business. I must admit that I am somewhat reassured that we have not already seen a larger spike in rates and believe me this is something I hope that I am wrong about. I think there is pent up demand for good housing to come on the market and I think that what comes on in March that is good will be snapped up. I look for increased relocation activity to boost that demand. I am heartened to see the short sale process drawing the attention of the bigger banks and efforts being made to somewhat streamline that process. That would be a huge plus to the market place and would certainly go a long way to relieving the fears of the looming foreclosures and shadow inventory. All that being said I believe that March will be a great month in the marketplace and that the influx of inventory will be gobbled up by current demand. The town home market will continue to generate multiple offers and be fiercely competitive. The single family market will also continue to move well although the highest brackets will not see the same level of activity as the lower and mid level price ranges. As our market continues to unfold I will as usual keep you informed.  

Real Estate Taxes 

While writing this I had a gentlemen stop by my office asking about his current real estate assessment. Once again the county is playing games with land values and house values and this is causing confusion. Bottom line though is that the county needs to generate “X” number of dollars in real estate tax revenues. They have 3 numbers they can play with to do so, land values, improvement values and the tax rate. It is always unpopular to raise the tax rate and actual house values are easier to track because of neighborhood comps. So switching land and improvement values around further confuses the issue and the homeowner. At the end of the day though folks do not let that cause you any stress. Simply look at the total value that you are assessed and then look at your local neighborhood comps. If the comps are higher then there is no argument but if they are lower then we can argue with the county. If you need us to send you comps we are happy to do so just let us know. While I hate paying the taxes I am tired of seeing my assessment go down!!  

We had 63 townhomes come on the market during the month of February with an average list price of $267,749 compared with 60 listed in January with an average list price of $283,318.
For single-family homes we had 33 come on the market in February at an average list price of $543,103. In January, 27 listed with average list price of $548,399. Last year for February there were 36 single family homes listed at an average list price of $523,315
and 76 townhomes were listed at average list price of $262,455. 

This year in February we had 71 townhomes sell at an average list price of $265,448 compared with last year when we sold 80 at average list price of $241,014. For single-family homes 28 sold this February with an average list price of $511,453 compared to last year when 21 sold with an average list price of $468,162.
Our current absorption rate for single-family homes is 1 month (meaning at the current sales pace, it would take 1 month, compared to 4 last year at this time - for all of the current inventory to sell) Keep in mind that this speaks to current inventory and does not take into account additional inventory that will be coming on over the coming months. For townhomes the current absorption rate is 1 month (down from 2 months last year).  

I expect to see inventory levels creep up in March and the level of activity continue at its present pace. I hope to see some improvement in the town home sector as buyers should take advantage of the stimulus before it is gone and investors continue to pluck off good values that are becoming scarcer by the day. Usually sellers that come on the market in the spring are very optimistic about the market and tend to price higher or push the market a bit. Appraisals will continue to be a factor so you can only push so far but we will have to see if the market will bear this out. We have been successful in this strategy on homes that “hit on all cylinders” meaning great condition on a great lot. So far we have gotten these appraisals through so knock on wood that this continues. The higher the price range though the tougher that is. We all still need to keep in mind the changes in the financial sector looming on the horizon. The Fed pulling out from buying mortgage-backed securities has to have an impact, and big changes have been proposed for FHA financing which will have an impact if they go through, as I think they will. I believe our market is strong enough to work through these challenges but if you do not or simply want to hedge your bets and you are thinking of selling then you need to get on the market quickly. For buyers, you definitely need to act quickly as rate changes can quickly erode your purchasing power. Likewise changes in the qualifying guidelines such as requiring a larger down payment and/or stricter underwriting regulations can take you out of the market completely. As our market continues to unfold I will as usual keep you informed.  

Whether you are a buyer or seller, making decisions on how to proceed in this market can be daunting. It is more important than ever to be working with an agent who has the experience and knows how to guide you through the dangers and pitfalls of the coming months. Marketing, staging and pricing are key considerations for every seller.
After 25 years of selling real estate in Centreville you can be confident that we have the experience to help you win in any kind of market. If you are thinking of moving now or in the future give us a call today and see why our buyers and sellers have a "Distinct Advantage."
 

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