Washington Region a Seller's Market

The Washington, D.C., region “is a seller’s market,” reports Where We Live, The Washington Post’s real estate blog. “Housing prices are going up, days on the market are going down, and the scarcity of houses for sale indicates that the Washington region is a seller’s market,” wrote Kathy Orton, blogger for The Post. The assessment comes from a report by RealEstate Business Intelligence and the GMU Center for Regional Analysis on January housing data. “Yet, homeowners remain reluctant to put their homes up for sale. The number of new listings in January was the lowest for that month in 15 years,” Orton notes.

She proposed several theories to explain why so few homeowners are putting their homes on the market. “Many are underwater on their mortgages and can’t afford to sell. Others are worried about finding something to buy after they sell. And some are concerned about how the pending federal budget cuts might affect them and don’t want to undertake a large purchase because of that uncertainty.” The Washington region’s median sales price continues to increase compared to last year, she points out. “It climbed to $343,200, which was up 10.7 percent from January 2012, the fourth consecutive month it has shown a double-digit increase. However, it was down 4.4 percent from December, which is typical for this time of year.”  The median price for townhomes rose 13.3 percent over last year, condos climbed 13 percent, and single-family houses rose 3.8 percent.

Orton breaks down the numbers:

Sales of single-family houses had the biggest gain, up 8.8 percent. Sales of condos rose 5.4 percent, while townhouses were up 3.9 percent. This is the first time since March that single-family houses led the other two property types.
Active listings fell by more than 4,000 from January 2012 to 6,049. Townhouses are in the shortest supply, accounting for only 16.2 percent of listings. This is the lowest on record for this property type in the region dating back to 1997. There were 4,004 new listings in January, down 4.2 percent year-over-year.

She adds that the median of the number of days properties are on the market has fallen to 32 days, 25 days fewer than January 2012. An inventory shortage is driving this number down.
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Flipping houses: a booming business once again?

Flipping, or the act of buying houses at discounted prices and selling it quickly in a few weeks’ time, is said to be on the rise.

It earned a bad reputation during the housing boom thanks to speculators who bought and sold millions of homes in search of easy profits. But the practice is gaining popularity again as the nation’s real estate market shows signs of life. The number of flips rose 25 percent during the first half of 2012 from the same period a year earlier, according to research firm RealtyTrac, and the gross profit on each property averaged $29,342.

RealtyTrac Vice President Daren Blomquist said the resurgence in flipping offers another indication that, in many parts of the country, housing prices have finally stopped falling.
“There are flippers in any market, but a market where home prices are appreciating is much more forgiving for flippers than a market where prices are depreciating,” Blomquist said. “We have turned that corner in a lot of places in the last six months, so that’s going to attract flippers.”
Areas of the country that were hit particularly hard by the housing crash have seen the most pronounced boom in flipping, as investors gobble up foreclosures and short sales — properties sold for less than the owners owe on the mortgage — and resell them to buyers eager to take advantage of record-low interest rates.

Maryland and Virginia have seen an increase in the number of flips during the past year, according to RealtyTrac. The District saw a sharp increase starting two years ago though the percentage in the last year is down slightly.
“Loan applications have tripled in the past few months,” said Justin Konz, an executive at Chantilly-based Restoration Capital, a “hard money” lender that provides fast, short-term financing to flippers. Konz said the firm funds everyone from weekend warriors flipping a house or two a year to professionals turning around dozens of houses a month.
“We thought it would slow down in the colder months,” Konz said. Instead, he said, business has picked up heading into the fall, with few signs of slowing.
With numerous investors and home buyers vying for a small list of available properties in the District and close-in suburbs of Maryland and Virginia, bidding wars and outsized offers have become a routine part of the landscape. The average gross profit for flipping a home in Maryland and Virginia is about $55,000, and it’s even higher in the District, according to RealtyTrac.

“It’s very competitive for people doing what I do, and the margins are very thin,” said Jud Allen, co-owner of D.C.-based Express Homebuyers, a company that flips dozens of local properties a year. “The upside is, if you can find a deal, you know you can sell it and make some money. The difficulty is in finding the deals, not selling the property.”

The flippers flocking to the market today are often a different breed than the opportunistic investors that helped fuel the housing boom.

The new generation of flippers can still frustrate some would-be home buyers by snapping up properties with cash offers and exacerbating low inventories in certain markets. But Blomquist said they also are playing a useful role.

Irvin, the 25-year-old flipper in Virginia, carefully researched each of his three properties — one in Dale City and a pair in Manassas — before buying. He said he spent tens of thousands of dollars improving the houses, refinishing hardwood floors, updating bathrooms, installing new kitchen cabinets and appliances, and landscaping yards but stuck to a tight budget to maximize his profit.
Irvin, who has a business management degree from George Mason University, plans to close on his fourth short sale this month, a home in Fairfax County that is larger and pricier than any he has flipped so far. With low interest rates, scarce inventory, rising home prices and willing buyers around Washington, he doesn’t plan on selling shoes again anytime soon.
“There’s always somebody who’s going to want to buy your house,” he said. “As long as there are short sales or foreclosures, I’m definitely going to want to be doing this.”

Source: washingtonpost.com

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Real Estate "Dark Age" finally over?

Our economy has finally picked up. Yes, it’s not a statement wrapped in hope but figures are actually showing us that we are indeed on the rise. According to a recent article by The Wall Street Journal, it is great news for us, Realtors – the housing market has turned, finally.

According to S&P’s David Blitzer, most indexes of house prices are bending up made apparent by the first monthly increase in the slow-moving S&P/Case-Shiller house-price data after a seven-month slump.

Nearly 10% more existing homes were sold in May than of the same month last year. Most of the homes were bought by investors who plan to rent them for now and sell them later, an important sign of an inflection point. The number of vacant homes is at its lowest since 2006.

Mark Fleming, chief economist at CoreLogic (housing data-analysis firm), stated that reduced inventory of unsold homes is key. Few years back, house prices have increased in the spring but then slumped onwards. He is positive that this won’t happen again this year as the declining supply of houses currently in the market indicates the trend.

Economists from Wells Fargo Securities have hinted that although the general economy is slowing, the budding recovery in the housing market appear to be gradually gaining momentum.

According to this article, housing is still far from healthy despite the Federal Reserve's efforts to resuscitate it by helping to push mortgage rates to extraordinary lows: 3.62% for a 30-year loan, according to Freddie Mac's latest survey. Single-family housing starts, though up, remain 60% below the 2002 pre-bubble pace. Americans' equity in homes is $2 trillion, or 25%, less than it was in 2002 and half what it was at the peak. More than one in every four mortgage borrowers still has a loan bigger than the value of the house, though rising home prices are reducing that fraction slowly.

Despite the figures not as good as we actually want them to be, we can still consider the upturn in housing a huge milestone, particularly with the unemployment rate we’re facing currently. Though housing has been notorious for being one of the causes of economic weakness, it has now moved to a more positive light.
A lot of other factors can be put into the equation but we can all breathe normally now --- the housing bust is over.

Do you want to work with a Realtor who's always in the know about the latest Real Estate trends and gives his clients essential information about the best ways to deal with the current market?  Call me, Mynor Herrera, today for expert help buying or selling in the DC, MD, & VA areas! I also specialize in Bethesda and Chevy Chase, as well as the subdivisions of Rosemary Hills, Rock Creek Forest, East Bethesda and Whitehall Condominium.