An Update on Our Fall 2018 Real Estate Market

As we head into fall, we wanted to bring you a closer look at the real estate market. Here’s what you need to know.

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If you've been thinking of selling your home, you'll want to keep listening. Today I’ll show you how to get a significant advantage over a lot of other home sellers in the market today.

First, let me give you a bit of background on the current conditions in the (area) housing market:

1. Mortgage rates have hit a 7-year high. Several weeks ago, the 30-year fixed mortgage rate broke through the 4.6%-mark—the highest level since May 2011. This is part of an ongoing upward trend in mortgage rates, which started over a year ago. In spite of the rate increase, mortgage applications spiked in September. This is a signal that buyers expect rates to go up even more in the near future.

2. Affordability is dropping, and demand might soon follow. For the past several years, home prices have increased at twice the speed of inflation. For a while, this didn't have too much of an effect on the market because there was so much pent-up demand. Affordability is suffering—an estimate from early summer put current home affordability levels at a 10-year low.    

If you’ve been thinking about selling, the time to act is now.

3. More home sellers are reducing prices. Not surprisingly, the combination of sustained high prices, increasing mortgage rates, and a drop in demand is finally starting to have an impact on the real estate market. More than a quarter of homes listed as of September 16 had a price drop. 

What does this all mean for you? In short, if you've been thinking of selling your home, then the time to act is now. In spite of the easing of demand, there are still many hungry buyers on the market and prices remain near all-time highs. This means you can sell your home quickly and for top dollar.

However, all of the reasons I listed earlier mean this situation might not hold very long. Demand might slack off even more and many more homeowners might decide to enter the market, driving down prices and really ushering in a buyer's market. That's why it can make a lot of sense to move early—before this kind of awareness reaches the majority of homeowners. 

If you want specific information about the current Northern Virginia real estate market, or you're mulling over the idea of buying or selling a home, please give me a call at 703-328-3434 or email me at Janet@TheGreshGroup.com. I look forward to hearing from you soon.

How Mortgage Rates Are Affecting the Market

The average mortgage rate is at a seven-year high. Is this what’s behind the shift we’re seeing in the market?

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The 30-year fixed mortgage rate currently stands at around 4.77%. That's near a seven-year high, and almost 1% higher than just a year ago. This is the result of a steady rise starting last September and ending this May.

What impact is this having on the real estate market? It's certainly true that affordability is down. In fact, one estimate from June found that home affordability is at a 10-year low. This is translating into fewer home sales, fewer viewings, and fewer mortgage applications.

However, I don't believe that the shifts in the mortgage rate is the primary mover of the changes we're seeing in the real estate market. In fact, even at its current level, the mortgage rate is still historically low.

Instead, the big reason for the changes in the real estate market is the ongoing growth in prices. Over the past several years, home prices have gone up at close to twice the rate of inflation, and have far outstripped the growth of incomes.   

Over the past several years, home prices have increased at twice the rate of inflation.

The price increases, in turn, have been caused by a lack of inventory, which has been shrinking for the past three years. In my opinion, it’s this lack of inventory (and the resulting hike in prices) that explains most of the effects on the real estate market that I listed above.

If you're looking to sell, you should still have no trouble doing so. Demand continues to outstrip supply, and even with dropping affordability, it's very likely that you would find a buyer quickly and at a top price.

If you're looking to buy, the picture is more complex, because it's so hard to predict what the mortgage rate might do in the near term. One thing we do know is that the severe lack of inventory is unlikely to change any time soon.

If you want specific information about the current Northern Virginia real estate market, or you're mulling over the idea of buying or selling a home, please give me a call at 703-328-3434 or email me at Janet@TheGreshGroup.com. I look forward to hearing from you soon.

Is Northern Virginia Entering a Buyer’s Market?

After being in a seller’s market for quite some time now, it looks like a shift is on the horizon. Here’s what you can expect.

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After several years of continuous price gains, the real estate market seems to be reaching its price cap. In June, the last month for which we have complete numbers, 14% of all listings saw a price cut. That's up from a low of 11.7% at the end of 2016.

In the same month, housing demand fell 9.6%, the largest decline in over two years. Mortgage applications to purchase a home have decreased as well. 

A few things are at play here. One is rising mortgage rates, which have been steadily climbing for much of this year. Another is an overall decrease in affordability, resulting from a combination of the growth in home prices and mortgage rates. 

If this is the start of a buyer's market, it's unlikely to be just a momentary blip. One sign of this is that homebuilder sentiment has recently fallen to the lowest point in almost a year. In other words, homebuilders are losing confidence in their business due to the aforementioned affordability concerns.   

This is certainly good news if you’re looking to buy a home.

So what does this mean for you?

Well, it's certainly good news if you're looking to buy, because it means you will have more choice at more affordable prices.

On the other hand, if you've been thinking of selling, this might mean that it’s time to act. Listing your home now would give you the best odds of achieving a top price before the change in the market occurs. 

Remember that all real estate is local. There are big differences even within the Northern Virginia area, and prices can change from block to block.

If you want specific information about the current Northern Virginia real estate market, or you're mulling over the idea of buying or selling a home, please give me a call at 703-328-3434 or email me at Janet@TheGreshGroup.com. I look forward to hearing from you soon.

3 Things to Know About the Spring Real Estate Market

Here are a few things to know about the real estate market as we head into spring. It should be a great season.

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Each year, spring is the hottest season for real estate. However, spring 2018 looks to be an especially important time for anyone looking to sell a home. Here are a few facts to get you thinking:

1. Demand continues to outstrip supply. The number of homes on the market is near an all-time low, and listings of existing homes have plunged 8.1% over the past year. While this means that the total number of sold homes has actually decreased, demand continues to be strong.

2. Home prices are still surging. Home prices are up 6.3% year over year in the last quarter for which we have data. It's not just Northern Virginia that's doing well — areas around the country keep posting record highs for home values. 

3. Mortgage rates are finally rising. The Fed increased its benchmark rate several times over the past year, but this did not translate to an immediate increase in mortgage rates. However, mortgage rates do seem to be finally responding, and the 30-year fixed rate is now hovering around 4.5.%. While this is a four-year high, it is still near historical lows, and makes mortgages affordable to would-be buyers.  

It’s not clear how long this favorable situation will last.

Put together, what do these facts mean if you are considering selling your home?

First off, they mean that right now is a very good time to sell. That's because of the strong demand and the high level of current prices. In other words, if you were to put your home on the market right now, you could get top dollar, and you would be able to sell quickly and without hassle.

Second, it's not clear how long this favorable situation will last. As I mentioned, mortgage rates are on the rise. Currently, that is not enough to dampen demand. But if rates continue to rise, it might drive more buyers out of the market, eventually driving down prices and making it more difficult to sell your home. 

Another thing to consider is the effect of the new tax plan. It's not entirely clear how it will affect the real estate market, but odds are good it will make home buying more expensive. That's because of a new cap on state and local tax deductions, which could combine with higher mortgage rates to push more buyers out of the market. 

To sum up, if you have been considering selling your home, consider selling now. The current moment is very favorable, but it won’t last forever. If you have any questions for me about how to get started buying or selling a home, don’t hesitate to reach out and give us a call at 703-328-3434 or send us an email to Janet@TheGreshGroup.com. We look forward to hearing from you soon.

How Will Tax Reform Affect the Real Estate Market?

I’m sure you’ve heard a lot about tax reform lately. Here’s a few ways The Tax Cuts and Jobs Act will affect the real estate market.

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There's a lot of uncertainty about The Tax Cuts and Jobs Act and its effect on real estate. Let’s first take a look at the four key tax changes impacting the housing market at this moment:

1. Deductions for property taxes. Prior to the new tax bill, if you itemized your deductions, you could deduct all of your property tax. Going forward, this amount will be capped at $10,000.

2. Deductions for mortgage interest. The final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/2017. Other loans of up to $1 million are grandfathered in. 

3. Home sales exclusion for capital gains. If you sell your home and turn a profit, then up to $500,000 of that profit is exempt from capital gains tax. Although earlier versions of the bill required you to live in the home for five out of the last eight years, the final bill made no changes to the capital gains exclusion. In order to qualify for this exclusion, you must have lived in your home for two of the past five years to claim this exemption—just like before.  

4. Deductions for moving expenses. The final bill repealed the moving expense deduction, except for those who are members of the Armed Forces. 

These reforms may drive home prices down in the midterm.

The first two changes increase taxes on current homeowners and make homeownership less attractive. This is a part of why the National Association of Realtors claims that home prices could drop by more than 10% due to the new tax plan.

On the other hand, the last change makes it more expensive to sell your home. As a consequence, they could keep some homes off the market.

We'll have to see how the different changes play out in reality, and how they interact with other real estate conditions. However, there does seem to be a consensus among experts that current reforms might drive home prices down somewhat in the midterm.

On the bright side, home sellers do still get to take advantage of the home sales exclusion for capital gains. That is a major victory for real estate. 

That's why if you've been thinking of selling your home, now might be a good moment to start the process. If you have any questions, whether you are buying or selling, you can always call me at 703-328-3434 or shoot me an email at Janet@TheGreshGroup.com. I can give you more specific recommendations based on your unique situation. I look forward to hearing from you soon.

A Quick Update on Winter Home Prices in 2018

This winter is shaping up to be a huge moment for area homeowners who are looking to sell. Here are a few reasons why.

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This winter is likely to be a very important moment for many home sellers. That’s because three big trends are coming together to affect the Metro DC area home prices right now:

1. Housing inventory remains extremely tight. The total number of homes on the market fell 10% year over year in the last quarter. This is the biggest drop since 2013, and it's part of a consistent pattern of very limited and decreasing housing supply. Of course, the fewer homes there are on the market, the easier it is to sell, and the higher the price you can expect to get. Home prices have increased almost 6.5% nationally since last year.

2. Buyers are increasingly optimistic. Despite the tight inventory, homebuyers are increasingly optimistic and continue to look for homes. Some of this has to do with the recent growth in income and job stability. Loosening lending standards are also making many homebuyers eager to take advantage of current mortgage rates, which slipped under 4% recently. 

It’s the perfect time to get in the real estate market.

3. The new tax reform bill will impact the market. The federal government recently passed the Tax Cuts and Jobs Act, which majorly overhauled our tax code. While it’s unclear how this will affect the real estate market as a whole, there are some changes that do not favor home sellers.  As a result of the changes made to the tax code, the National Association of Realtors now projects slower growth for home prices in 2018, with an appreciation rate of 1% to 3%. By doubling the standard deduction, Congress has significantly reduced the value of mortgage interest and property deductions as tax incentives for homeownership. On the bright side, no changes were made in the rules surrounding capital gains for home sales, which is good news for home sellers.

When you put all three of these trends together, two big conclusions emerge. First, now is a very favorable moment for home sellers, thanks to the shortage in the market, the many eager buyers, and the high and rising prices. On the other hand, higher cost, higher tax areas will likely see prices decline as the result of new restrictions on mortgage interest and state and local taxes.

If you are looking to take advantage of the present moment to sell your home, please reach out by giving us a call at 703-328-3434 or email me at Janet@TheGreshGroup.com. I'm here to help. I look forward to hearing from you soon.

Why Are Homebuyers Feeling Optimistic?

Why are homebuyers more optimistic than they have been in the past few years? Here’s what we found.

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Here’s a paradox for you: Right now, homebuyer confidence is at an all-time high, according to a survey performed by Fannie Mae. Furthermore, an increasing number of people, particularly renters, think now is a good time to buy a home. Yet at the same time, housing inventory remains very tight. It’s down 6.5% nationally from last year. Home prices are also up 6.9% nationally over last year. 

In other words, homebuyers are optimistic at a time that the market seems to be favoring sellers. So, what's going on? Why are homebuyers so optimistic all of a sudden? Here are three possible explanations:

1. Lending is loosening up. Over the past several years, mortgage rates have seen historical lows. This has meant that homes are actually more affordable, in spite of the increase in prices. However, lending has been very tight. Fortunately, that’s changing. Lenders are approving mortgages at the highest rate since 2011, with 77% of mortgages for home purchases approved.

2. Jobs are looking good. At the moment, fewer homebuyers are worried about losing their jobs, according to the same Fannie Mae survey. It's not just job security that's contributing to greater optimism about buying a home. Overall income is higher, making homes more affordable by comparison. The median household currently has 150% of the income needed to buy a median home, compared to a historical average of just 125%.

Lenders are approving mortgages at the highest rate since 2011.

3. Long-time renters are ready to buy. Millennials, the generation of people born after 1980, have largely opted out of homeownership until now. They have been renting for a longer time, putting them higher up on the pay scale compared to previous generations of first-time homebuyers. But now, many millennials are finally hitting an age when they are willing to commit to buying instead of renting. This is reflected in the Fannie Mae report, which states that much of the increase in homebuyer optimism comes from current renters.

What all does this mean for you? If you're looking to buy a home, all of the above reasons should give you confidence that now is indeed the right time to buy.

If you’re thinking about buying or selling a home, click the links above to search for homes on the MLS or find out how much your home is currently worth.

And if you have any questions about the Northern Virginia real estate market, whether you're thinking of selling or buying, give me a call at 703-328-3434 or email me at Janet@TheGreshGroup.com. I'm here to help. I look forward to hearing from you soon.

5 Reasons to Hire a Real Estate Professional When Buying or Selling!

Whether you are buying or selling a home it can be quite an adventurous journey, which is why you need an experienced real estate professional to guide you on the path to your ultimate goal. In this world of instant gratification and internet searches, many sellers think that they can For Sale by Owner or FSBO.

The 5 reasons you NEED a real estate professional in your corner haven’t changed, but have rather been strengthened by the projections of higher mortgage interest rates & home prices as the market continues to pick up steam.

Read more here.

The Latest News on Interest Rates for Northern Virginia

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Surprisingly, interest rates are still historically low. Many economic experts predicted interest rates would increase steadily through 2016. However, due to the combination of volatile economic reports and our falling stock market, we’ve actually seen interest rates decline.

No one really knows what will happen next. What we do know is that rates are the lowest they have been since April of 2015. Many of the experts in the industry still expect interest rates will rise throughout 2016, but nobody knows for sure. Not the National Association of Realtors, nor Fannie Mae, nor Freddie Mac.

What you need to know is that rates are incredibly low. Read more about it in this article here. If you’ve been thinking about buying or selling, now is the time to take action. If you have any questions, give me a call or send me an email. I would be happy to help you!

What Can We Expect for Our Northern Virginia Real Estate Market in 2014?

Click here to find out what your home is worth or to search all area homes for sale.

Welcome back and Happy New Year! The real estate market had a great 2013. With low inventory and low interest rates, homes were flying off the market. Toward the end of the year, though, we saw interest rates increase a bit and home sales slow. So what can we expect from 2014?

2014 will bring about a stable market. We don't expect to see the increase in prices as we did in 2013. The Federal Reserve is also expected to pull back on it's bond purchasing which means interest rates will increase. While we don't know when exactly, we do predict they will hit 5%.

Mortgage rules have also changed. It's important to talk to a lender today and find out how those changes affect you. Also, get a pre approval letter, this will help strengthen your offer.

2014 is a year of new construction. This means more competition for sellers. If you want to sell this year, your home needs to be in good condition and priced aggressively.

Give me a call today at 703.636.3588 and let's talk about your situation. The Gresh Team is dedicated to helping you make the best decision for you.

Are We in a Sellers or a Buyers Market?

I’ve been telling you and showing you stats of how strong of a market we had the whole year. We’ve experienced high buyer demand, and low inventory of sellers willing to list. 

So the big question comes, has the market changed? Yes and no. It really depends on your location and what your price point is.

As a whole – yes, we have noticed a trend in the market slow down just prior to the government shutdown (about 60 days ago). Earlier in the year first time homebuyers accounted for 40 percent of the home sales, while now they make up only 28 percent.

So what does this mean for you as a seller? Didn’t you tell me in your last blog now is a great time to sell? Yes and it still is. We are entering more of a balanced market. What it really comes down to is your location, price, and level of condition – with great pictures and staging (as I mentioned in my home ready tips blog).

And if you were one of the buyers who walked away from the market – whether you were frustrated of getting out bid or the lack of inventory, we have the tools to find you the right home because it may not even be on the market yet.  

But don’t take our promises, our numbers prove it. So if you’re thinking of buying or selling, I would be happy to set up an appointment to discuss the market in your specific area of Northern VA, DC, or MD.

If you are looking for more information about the real estate market you can click here to view a great article  I found that describes the top 10 issues affecting real estate.

Northern Virginia Market Update June 2013

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The housing market in the Washington D.C. area and Northern Virginia has been booming!

According to an article published by the Real Estate Business Intelligence, the median sale price today is over $30,000 higher than it was in May of 2012. Low inventory and a demand for homes have continued to put pressure on prices raising the median sales price in most of the DC metro area.

Inventory is very low despite the ‘recent surge in new listings.’ This is good news for sellers. A properly priced home in good condition will fly off the market. In fact, the median-days-on market is just nine days.

Click here to read the full article >>

So if you are looking to sell your home or have any real estate questions, please call me at 703.963.5500.