By Carl Fischer
For the past six months, the media has been filled with “promising signs” suggesting that our long housing nightmare is over … and based on personal observation, in our area of Northern Virginia, that certainly seems to be the case.
To be sure, affordable single family homes and townhouses are becoming very hard to find.
So when a new listing hits the market, you need to be fully prepared to act on it promptly, if the property meets your needs. This shortage of inventory has had the to-be-expected impact on prices … they are definitely going UP!
So what’s there to worry about?
We somehow got past the “fiscal cliff” without losing body parts. There is talk of a “deal” to extend the debt ceiling issue rather than rattle the markets. What more do we need to be concerned about?
The “sequester” issue is still unresolved.
To date, the biggest defense spending cuts in 40 years in October thru December of 2012 has already taken a huge toll. The Commerce Department reported on January 30, 2013, that our economy contracted at an annual rate or -0.1 percent in the last quarter of 2012. compared to the 3.1 percent growth the preceding quarter. And consumer confidence is sharply down as well.
The “sequester”, scheduled to kick in March 1, promises to drain 9.4 percent of the entire military budget, along with an 8.2 percent reduction in social safety net programs like Head Start, Air Traffic Control operations and community development block grants if not modified or negotiated away. But a huge negative impact appears to be assured.
From my vantage point, this spells “T – R – O – U – B – L – E” no matter how you look at it.
The “recovery” thus far has just been way too tentative.
So what does that mean to me regarding house values?
Hard to say exactly, but there’s one thing I’m absolutely sure of: You can’t kick back and relax knowing that the worst is over, just because you happen to live in one of the highest per-capita-income counties in the United States. Many local executives and two-income families are at considerable risk as the military complex winds down post Afghanistan. All you need to pay attention to is the sharp increase of upscale houses newly on the market to understand that even the most affluent among us are beginning to try and downsize as best they can, without leaving too much equity on the table. For most of these folks, prices have not recovered nearly as much as they had hoped for, and a surge of new listings will only worsen their plight.
Bottom line: If you are a “move-up buyer”, do it now!
Take advantage of the ongoing extremely low mortgage rates to tie down your home purchase, knowing that further delay may actually cost you $$$$ due to rising prices of both re-sale and new homes, as well as the risk is of escalating mortgage rates. Not anticipated now, but unlikely to stay this low in perpetuity.
If you’re holding a big-ticket home you know that you no longer need or want …
Do “whatever it takes” to make that change now. There is little reason to believe there will be any price recovery of substance in the next 12 to 18 months on homes now worth $800K or more. If the “unknowns” in this economy heighten capable a buyer’s predisposition to make NO CHANGES during times of great uncertainty, this could be a tough year for sellers.
Here’s a look at Loudoun numbers for December from the MRIS:
As you can see, December’s numbers showed declines over the preceding month, but a significant upswing year-over-year. The residential market continues to improve, for now.
On a personal note:
This past month I listed over $20,800,000.00 in residential and commercial real estate, a new all-time one-month high. Sellers now sense activity in the market, and many have decided that NOW is the right time to sell what they’ve got to get more liquid.
Carl Fischer is the Broker/Owner of United Country Real Estate, specializing in commercial, investment, and selected residential properties, as well as Northern Neck of Virginia waterfront homes. He is licensed in Virginia and West Virginia, and is a member of the Dulles Area Association of Realtor (DAAR) as well as the Northern Neck Association of Realtors (NNAR)