1. MARKET SUMMARY & FORECAST: As owner of the R&R Team and as a graduate economist/research analyst, I take great pleasure in completing recurring analyzes of the *Dulles Market Corridor (DMC) residential real estate market and in providing the results of these analyzes to our clients. We strive to ensure that the analyzes are consistently accurate by using only highly reliable data. For those of you who have followed these analyzes over the past 20 years, we believe that you will attest that the analyzes have been consistently accurate in providing real-time assessments of the local real estate market and in also providing an accurate near-term market prospectus.
The DMC real estate market in 2018 has been driven by a mix of low inventory levels, good buyer demand and increasing mortgage interest rates. At the beginning of the year, resale property inventory levels were only 20-25% of normal and, while improving since then, are still only 40-45% of normal levels for this time of year compared to the same time periods during past years. While inventory levels have stayed low, the data indicate that we have had very good buyer activity and a robust 2018 spring market resulting in home prices appreciating on average at 1.1% per month during the 3 months that comprise the spring market (March-May). While ebbing since May, buyer contractual activity has remained stronger than was anticipated during the fall market...instead of normally expected property value depreciation, strong buyer contractual activity resulted in property value appreciation of +0.2% per month for the past 3 months. This stronger than anticipated buyer contractual activity is likely attributable to buyers anticipating and trying to get ahead of further increases in mortgage interest rates (30-year rates are currently holding in the 5.0% range and are at their highest levels in over 7 years).
These increasing interest rates may serve to have significant impacts on the real estate market going forward. Based on the upswing in U.S. economy performance indicators, the Federal Reserve Board has increased the prime interest rate for a third time in 2018 and the Fed indicated that they plan to possibly make at least one more rate hike yet during 2018. These increases are to offset inflationary pressures in the improving U.S. economy. Thus far in 2018, we have seen the 30-year fixed mortgage interest rate increase to its highest level in over 7 years with the Freddie Mac weekly survey indicating an average rate of 4.94% this past week. Many pundits predicted all year that added Fed rate hikes may likely result in a 30-year fixed mortgage interest rate of 5.0% by the end of 2018 and it looks like this may happen. These increasing interest rates may serve as a knock-out punch for some homebuyers, particularly first-timers. However, Freddie Mac indicates that while increasing interest rates may have had some negative impacts on entry-level buyers, the real culprit may be lack of actual housing inventory in affordable price ranges for entry-level buyers (and with continued increasing home prices).
Based on our most recent analyzes of market absorption rates, we continue to have a SELLERS MARKET in the DMC. The market absorption rate for single family detached (SFD) homes indicates that we currently have only 1.9 months of available inventory, while the townhouse market absorption rate indicates 0.9 months of available inventory and condo data indicate 1.7 months of available inventory. FYI: Market absorption rate represents the number of months needed to sell off existing inventory for a particular property type based on recent buyer activity. Real estate pundits nationally and regionally indicate that market forces typically need to stabilize home inventory levels at a 3-to-4 month-supply-level to constitute a normal or balanced market (where economists say that supply and demand are in equilibrium). A market absorption rate that falls below this norm indicates a sellers market, while a rate that is above indicates a buyers market.
Our current market prospectus for the post-Holiday period is to expect continued job growth in the Capital Region, to have continuing lower than normal residential real estate inventory levels, to continue to have strong buyer contractual activity, to have higher but yet still attractive mortgage interest rates and to have continued appreciating property values going into the new year. Overall, we should continue to have a healthy DMC real estate market in the foreseeable future.
Again, for sellers and buyers who are already active in the real estate market or planning to enter the marketplace in the near term, we highly recommend that you monitor for updates on the local market and review the latest detailed data for each of the important market status indicators on our Team website at this link: R&R Team Blog: Local Real Estate Market Status.
(The *Dulles Market Corridor (DMC) encompasses the large market area of Herndon/Oak Hill, Reston, Sterling/Potomac Falls/Dulles, Ashburn/ Broadlands/ Brambleton, Leesburg/Lansdowne, South Riding/ Chantilly (Loudoun County), Stone Ridge, Aldie/ Arcola and Chantilly (Fairfax County). The R&R Team has been tracking market data closely in the DMC for the past 20 years.)
If you have any questions, please call 703-625-5586 or send us an email today.
2. NEW BRIGHT Multiple Listing Service (MLS) System: Here in the Capital Region, we were using the Metropolitan Regional Information System (MRIS) for a number of years as our MLS system…MRIS has just been replaced with by a newly activated and expanded MLS system called Bright MLS.
The new Bright MLS system covers an expanded Mid-Atlantic service area involving 7 states (including D.C.), consolidates 9 MLS systems and 43 realtor associations and provides coverage spanning 10 million property records and nearly 40,000 square miles. The Bright MLS system provides enhanced real estate informational services for over 85,000 realtors and their clients, likely making it our nation’s largest MLS system.
Specifically, the new Bright MLS provides you as a client with an enhanced Client Portal within the Bright MLS system. The Client Portal is a personalized website where the client can see and track listings that the agent sends them from Bright MLS system or listings that clients generate themselves through their own searches in Bright MLS. The Bright MLS system has many state-of-the art and futuristic enhancements that we agents have wanted for you as our clients for some time now. Some of these great features include:
- New mobile-friendly design, so clients can access and use their individualized Client Portal on a phone, tablet or laptop.
- Vastly expanded property and community information to be available right at the client’s fingertips while reviewing an individual listing.
- A totally integrated Client Portal that makes it easy for clients to run their own MLS searches of the Bright MLS database while getting the most up-to-date and accurate real-time MLS information.
- Two-way communications Client Portal information sharing between the agent and client, including exchanges of notes and emails.
- Provides capability to select Favorites, Possibilities and Discard icons to document quickly what they think of a property on the Client Portal.
- Provides capability for clients to choose listings they want to visit/view and email the agent right from the Portal, thus precluding any confusion about the properties having client interest.
We are excited about the new Bright MLS system that serves as a vastly improved tool that is available to you as a client and to us as your agent. If you would like to see how it functions, please call me at 703-625-5586 or send me an email with your current home address...we will do a Bright MLS search of listings in your neighborhood to send to you…from this, you can enter your own Client Portal and enjoy all the capabilities and features of the new Bright MLS system.
3. WHEN SHOULD YOU BUY OR SELL AND WHAT SHOULD YOU DO WHEN YOU DECIDE? Below are some links to our more popular R&R Team articles to assist you in making your decisions as a buyer and/or as a seller:
- When is The Best Time to Buy or to Sell Real Estate? We are frequently asked when is the best time to sell or to buy real estate. We share this article (click here) with hopes that it will help clear up some of the prevailing misconceptions that linger among both sellers and buyers as to when is the best time to sell or to buy real estate.
- Seller Preparations for the Market: Sellers who wisely complete pre-market preparations before listing a property are rewarded tremendously for their time and efforts...we hope that you these two articles helpful: the first article is a getting started checklist for sellers (click here) and the second article outlines detailed early-on actions for sellers (click here).
- Buyer Preparations for the Market: Reduce your stress and better ensure your success in buying your dream home by using these two articles: one article is our getting started checklist for buyers (click here) and the second one is our detailed early-on actions for buyers (click here).
Also, please remember that when you use our services, you will benefit from our NEARLY 20 YEARS OF EXPERIENCE in the local real estate market. If you have any questions, please feel free to call us at 703-625-5586 or send us an email.
4. REAL ESTATE POTPOURRI: Hopefully, you will find one or more of these real estate-related topics of possible interest.
- Student Loans Proving a Barrier to Homeownership: Here are Some Solutions: The role student loans play in denying would-be buyers from getting into a home of their own has grown to staggering levels. According to the 2018 Homebuyer Profile report from the National Association of Realtors®, “Almost one in four homebuyers this year had student loans, which made it harder for them to save for a down payment and delayed their purchase," said USA Today. So, what can you do if you are looking to budget and buy a home but you have student loans holding you back? This article (click here) discusses some options for you to consider.
- Scary New Trend: Lying About Income on a Mortgage Application: With high home prices, rising mortgage rates, and heavy competition for available properties, potential buyers are feeling more pressure to own a place than ever. “As a result, an increasing number of buyers are lying and cheating,” CoreLogic has reported. Borrowers may think of padding their income as a harmless white lie that has little downside if they are able to achieve their goal of buying a home; however, mortgage fraud carries with it some serious risks. This article (click here) discusses the risks and serious penalties for a fraudulent mortgage application.
- Sellers: 6 Surefire Ways To Get Your House Sold: Whether you are just getting ready to list your home or have not had any bites on your existing home for sale, this article (click here) provides some very sage advice that will get your home sold and get you moving.
- How Will the TCJA of 2018 Affect Your Taxes? TCJA or the Tax Cut & Jobs Act of 2018 that was signed into law last December made multiple changes to the tax code that covered several areas, including how the tax code addressed mortgage interest deduction and home equity lines of credit (HELOCs). This article (click here) provides some clarity as to how this may affect your taxes.
We very much appreciate your continued support and hope that you find our newsletters helpful. Please feel free to pass this newsletter along to your friend and associates and please let us know if there is any particular subject you would like us to address in a future newsletter. Kindly send us your questions or comments in an email or call 703-625-5586. Thank you.