1st Quarter 2009 Market Update February 2009

In a continuation from our last quarterly update (which is archived at hhtp://www.twohomepros.com/page/41) we want to discuss the current real estate market and where it is heading.  With our combined 30+ years of real estate experience, Ruby and I want to share with you our insider's glimpse of the market.  In this issue we will discuss who is selling in this market and why.  Here are some of the seller types that are making up many of the recent sales..

Investors   Real estate has always proven to be a strong long-term investment, especially in areas like ours, where the local economy and job outlook remain strong and steady. Investors who have held a property for a few years may still be sitting on some profits.  People who bought homes pre-2005 are  still seeing overall appreciation in the 80% range.  If they feel the market still has the potential for more losses they are liquidating their position and are taking the profits now.

Move up Buyers   The beauty of being a move-up buyer is that although most homes aren't selling for what they would have 2 or 3 years ago, that bigger home with more amenities doesn't carry the same price tag it did either!  With the increase in inventory across all price ranges, there are some fantastic buying opportunities out there. But the wise buyer is taking two important steps first: they are seriously considering what their mortgage comfort level is, and are then selling their existing home to see exactly how much money they have to use on their move-up home.  Many times these sellers are offering good deals on their existing home; and benefiting in turn by negotiating a great deal on their move-up purchase.

Downsizers & Retirees   Those with enough equity in their current home who have been living here for a long period make up a large portion of today's buyers.  The great news for those who are looking to retire is that they don't have to leave their family and friends behind as they move to Florida or Arizona.  There are many retirement options in the DC area and the tax law that allows either $250,000 or $500,000 tax exclusion makes the opportunity even more appealing.
 
Relocation   In a large urban area like ours, relocation transactions make up a part of any market. Firms like IBM, Lockheed Martin, and Marriott are just a few examples of the firms who move employees into and out of the metropolitan area, in addition to the U.S. Government.  Most of these transferees were used to very generous relocation packages, including company-paid closing costs, loan guarantees, all moving expenses, and even the purchase of their existing home.  With the new economics many of those benefits have been taken off the table.  People are still being transferred, but now they are being much more cautious in making the decision to do so. It will be interesting to follow Hilton Hotels plans to move their headquarters to this area!

Banks   Depending on the price range and location, a large percentage of the homes on the market today are bank owned or bank controlled.  Let us quickly explain the difference between short sales and bank owned or foreclosed properties.  A short sale is when an owner owes more than what a home can sell for.  In these circumstances the mortgage company has to agree to take a loss, and they do so after the current owner proves that they are not in the financial position to either continue making the payments or to bring the difference of the sales price and the loan amount to closing. A bank-owned property is one where the bank has foreclosed on the property and are now the owners; the property goes into their asset inventory and becomes available for sale.  Bank owned properties typically sell for less than the market value of owner occupied homes.  The banks have often taken a large loss on these properties and will price them aggressively to insure that they sell quickly.

Financially Unable To Make Payments   Many buyers who took out adjustable rate mortgages have seen their rates increase in 2008; many more are expected to adjust upward in 2009.  Either because payments have gone up, or they have lost their jobs, or the overall cost of living has gone up too much, many homeowners find themselves in a situation where it just makes financial sense to sell.

In Summary:

As home owners ourselves, we know that every sale or home purchasing decision is a personal one. Many circumstances can affect your decision to buy or sell: you may be adding a new family member, you may have too many unused rooms that you are heating and cooling, or you may be a long-time renter who just wants to buy your own home and paint your living room lime green!  The best part of our profession is helping people realize their dreams and their real estate goals.  In our ongoing commitment to providing first-class service, we can help you with the major transition that buying and selling bring, and we can confidently say that if we can’t answer a specific home-related question you have, we are a phone call or email away from an expert in our professional network who can.

So if you have any home-related questions or have thought about moving, or if you have any family, friends or work colleagues who would benefit from our experience, please don’t hesitate to contact us.

Our team relationship means that you have two seasoned professionals on your side - an advantage in any market!


We look forward to hearing from you when the time is right.

Your Two Home Pros,
 

Ruby          &          Mario