Real Estate and Reston, VA: February 2008

Gloom and Doom is all we hear these days, but there are bright spots in the Reston Real Estate Market. Each of the zip codes in Reston has a variety of housing types (condominiums, townhouses and single family homes) which has an impact on the average sales price.

The real bright spot is the North Point area, the section of homes north of Baron Cameron Avenue in the 20194 zip code.  In this market, the average days on market was 73 days, but the average sales price was up from the same quarter last year by 10.23% for an average of $559,200.

In the Lake Anne area, 20190 zip code, the prices were down only 3.23% from the same quarter last year and the average days on market was also 73 days. The average price was $414,100. The negative here is that the number of sales were down 40.86% from the same quarter last year.  This translates to  homes selling at close to the same prices as last year, but at a much slower rate.  This zip code also contains the upscale condominiums in the Reston Towncenter area. 

In the Hunters Woods area of Reston, distinguished by being South of the Dulles Toll Road and in the 20191 zip code,  the prices were more significantly off, down 9.08% from the same quarter last year, but the change in % sold was only down by 13.3% from the last quarter last year. The average price for homes in this zip code was $393,500. This could be a factor of more townhouses and condominiums selling and fewer single family homes going to settlement.

This information is extracted from the  Q4 2007 MRIS Economic and Market Watch Report, Local Report for Fairfax County.  In Fairfax County, the report shows a forecast for  a steady number of sales for 1st quarter of 2008, an increase in prices and fewer listings.  This bodes well for sellers who have been waiting to sell and are trying to ‘play the market.' While this is not Reston-specific, it is reflective of the market in Fairfax County.

Remember, however, that your real estate investments should be part of a long term strategy and that you should buy real estate because the timing and pricing work within your personal investment strategy, not because you think the market has ‘hit bottom.'

I just returned from a ‘girl's weekend' with my college friends.  During some downtime, I was sitting around with one of my friends and we started talking about marketing.  She is a marketing professional, so I was very interested in what she had to say.

Her first question was how does your marketing target the decision maker, ie. the woman in most relationships? Before you jump all over me, I recognize that there are male decision makers everywhere, this was more asked as a thought provoking question about my marketing tactics.

That question got me thinking...is my marketing campaign too broad?  In trying to appeal to everyone, am I missing my target?

As Realtors® we are called upon to wear many hats: business managers, marketers, sales people, web designers, copy writers and more.  Most of us develop some skills in each of these areas, but are we too reluctant to call in the professionals?

Are there professionals that you use that you find invaluable?  What percentage of your overhead is spent on their services? How do you calculate your return on investment?  I would love to hear what others are able to accomplish--and where you find that you need help.

If you have been contemplating a purchase, but are paralyzed by the media reports that we haven't hit rock-bottom yet, analysts are finally starting to come around!

Every Realtor will tell you that waiting until the absolute bottom can really work against you.  Do you really want to get in a bidding war? How much will that extra $10,000 REALLY cost you monthly if you buy the house now? How much more will you pay in taxes by not buying right now? What about writing off the points you might pay on a mortgage? Not to mention the big one--getting on with your life in a new home!

This article, posted on MSN today, presents many of these points and is a well thought out, clearly written article:

http://realestate.msn.com/Buying/Article2.aspx?cp-documentid=6112643

Another point to make is that every market operates independently from every other market.  Paying  attention to the job growth and employment rates in your area may be a good way to get an understanding of what housing demands will be going forward.

By now I expect that most sellers have heard that buyers expect the homes they are purchasing to be in good, if not excellent, condition.  I have shown homes recently where the fact that the homes were not in good condition appeared to be reflected in the asking price.  The specific homes of which I am thinking were each 15-20% below comps. 

In each of these cases, despite the fact that they loved the neighborhoods and the floor plans of the homes, my clients opted not to write offers.

Neither of these clients were naive about house prices, remodeling expenses or comparables. Each was going through a divorce and hoped to get in low and was willing to put some time and money in to make the numbers work. The problem was that the numbers did not work for either of these houses.

What I am seeing is that there are a number of properties that have gotten so behind on their maintenance that it is almost impossible to bring them up to market standards without the cost of improvements and the property costs together exceeding the neighborhood comps.

These homes are in nice neighborhoods where other homes have been well maintained.  Because the owners could not afford routine maintenance, and in some cases improvements that were virtually standard in their neighborhoods, the homes will require almost a complete overhaul.

One specific situation I saw last week; I had my husband, a contractor, do a 'realistic' estimate of what it would take to get the house up to standards of the neighborhood (remember, he has no interest in padding this--he would want me to make the sale, if it was the right thing for my client). This included doing a mid-range kitchen remodel, updating baths and replace flooring. The windows had broken seals, the skylights appeared to be leaking. The roof needed to be replaced (cedar shake), there were MAJOR drainage issues, the deck had not been maintained. There was a lot of dry-rot, the house had cedar siding that probably needed to be stained.  Just to do these things--conservatively--his estimate was $150,000.  This included a small pad for things we could not see behind the walls. It did not include finishing the basement, which is a fairly standard feature of homes in our area.

Right next door a house was listed for $150,000 more.  It was in beautiful shape. It had a finished basement, and updated kitchen and appeared to be well maintained. By the time we were done looking at the two, my client was interested in the 2nd, even after visiting the 1st several times over 4 months.

Okay, I know you don't have to offer full price.  I am sure the price on house one is very negotiable.  But you know what, so is the price on house 2!  There comes a point where the client sees that a year or so of remodeling comes with a high cost and a lot of unknown angst and potential expense. 

It looks like there are some good opportunities out there for buyers who are handy and patient. In the meantime, if you are a seller and plan to list your house, make sure you take care of what ever maintenance you can handle and afford. It will help you sell in the long run. If a buyer can't make the numbers work for your house, you are going to have hard time selling it!

This morning in the Washington Post (Monday, Feb. 11, 2008) a really interesting editorial by Michael Hall was published.  The link for this editorial is:

http://www.washingtonpost.com/ac2/wp-dyn/NewsSearch?sb=-1&st=michael%20hill&

I will not attempt to paraphrase his statements, as I believe the most accurate way to interpret his opinion is to read what he wrote. I would invite you to follow the link and read his comments.

I would agree with many of Mr. Hall's contentions.  It is naive to think that as the issues with lending, particularly in the sub-prime market,  self-correct, through foreclosures, short sales and reductions in house values, that eventually, we will not work back to a system where people in certain markets have to borrow large amounts of money to afford housing.  Rents are tied to demand and landlord expenses, so as housing prices go up, so do rents. If a family has to make a large payment for rent, and the payment to own is not too much more, many will opt to buy.  It is part of the American Dream that we all own our own homes!

Shortly before the 'sub prime crisis,' as it is known, emerged, I was starting to hear about 40 year loans. I suspect that we will begin to see more products like this one brought out by lenders. I remember when car prices really started to go up, the traditional  3 or 4 year loan became an option next to a 5 year loan.  Personally, a 40 year house loan makes more sense to me than that, since most people don't stay in their homes for the length of their loan, but folks often own their cars for 5 years.

It will be necessary for mortgage companies to develop new products that will allow willing and informed consumers to purchase homes that are out of their reach with the traditonal 30 year fixed loan.

I wrote a blog awhile back titled, "We May Not Be Respected, But We are Happy!" referring to a Times article about the fact that, in general, real estate agents are a happy bunch. Here is the link for anyone that wants to read it: www.activerain/blogsview/2857951/We-may-not-be.

I was surprised to see that while a lot of folks have viewed the blog, no one commented.  I am not sure exactly how to interpret that, since, in general, I usually receive a least a few comments!

With the 'shake out' in the real estate business, I think that some of the 'only in it for the money' agents will give it up. I, personally, find that it would be an expensive hobby if you are not out there marketing and getting new clients!  (Before you react, this is not intended to be an insult to any part-time agents--I have worked with some really good ones! You are not the ones to  which I refer).  I do think, in general, it will serve to improve our reputation if we have more committed folks out there working with buyers and sellers and doing a professional job.

Our family plays a little game; trying to pick out comments disparaging estate agents  in television shows or in movies.  Unfortunately, there is no shortage of negative comments that we can laugh about. Ironically, I don't even watch a lot of TV!

We all know them; the friends and family who continue to see the half-empty glass instead of the one that we see that is half-full. I confess that sometimes they drag me down.  Luckily, I have made a habit of looking for the good in any situation, and it usually doesn't take me long to leave their 'issues' behind and move on in a way that lets me be happy.

I have never understood why people, with no medically defined issues, would make the choice to be negative and unhappy--and it is a choice.  Everyone has dealt with failure, disappointment and frustrations. We have all had to be on the receiving end of things that were just not fair or even awful.  There is a quote by Fredrich Nietzche,"That which does not kill me makes me stronger," (incidentally used in the refrain of a popular Kanye West song).  I am not talking about the truly awful things that happen to people, I am talking about the type of bad news you get one afternoon that says your dishwasher cannot be repaired, your teenager had a fender bender and the dog vomited on the rug.

Move on, let it go, enjoy the blessings and luck that you DO have.  Be happy that it is only an appliance, that your kid is allright and that you have a great rug shampoo machine!

That is my 'pep' talk for the day.

Incidentally, in my craving for more positive energy, I have really been enjoying this Active Rain Group; it inspired me to get up on my soap box and write this post.  I hope you all have a GREAT day!

Home improvements are expensive--no doubt about it.  My husband, Bob, has a very well-respected home remodeling company, Ardent Home Services. He is often called upon to help friends, neighbors and clients decide how much to spend on their updates.  Kitchens and baths seem to be okay; people generally know if they are staying, or looking to re-sell, and budget accordingly.  It gets trickier when they have to do more maintenance oriented projects.

Windows are always a challenge.  You know you need to replace your windows; the seals have failed, the wind blows both indoors and out, your energy bills are outrageous. You can do your windows cheaply, or you can spend quite a bit on this project.  My million dollar house clients expect more wood and less vinyl...that is just the way it is.

In one neighborhood that comes to mind, homes went from being nice homes in a nice neighborhood to 'million dollar homes' over the course of 7 or 8 years. The decision that you make for a mid-range home might be very different than the one you make for your million dollar home. 

I also see this with decks...cheap materials, pedestrian plan don't reflect a million dollar home.  Spend a little more to enjoy your home and reap the benefits when it is time to sell.

I am a realist, and recognize that just because the value of the home has gone up, that does not translate in to increased income.  I am simply advocating that if you are fortunate to have a choice, you should pick accordingly.

Bottom line, pick your options for the house you live in--not the house you bought.

There was a little article in Parade Magazine's column, Intelligence Report, this morning (Feb. 3, 2008) that discusses the fact that home purchasers in California are occasionally asking to spend the night in a home before writing a contract.

I have often advised my purchasers to go to a neighborhood at several different times (early am, rush hour, school dismissal) to get a REAL feel for the area. I am a strong believer in the fact that you can't see how a neighborhood lives if you see it at 11:00 am on a weekday.

I doubt any of my current clients would go so far as to ask for a 'sleep-over,' but I love the idea!  There are always little, quirky things about a home that you don't discover until you move in (water pressure problems when multiple showers are running, delay in hot water to bathrooms, etc.). 

On the flip side, unfortunately, while you would learn these things, I suspect our society would turn the graciousness of the owners in to a way to ask for more in the contract.  Additonally, it would be hard for some people to get past the owners 'stuff,' if they had to be with it for 12 hours.

I wonder if this would be a plus or a minus for sellers? And buyers? Would you want to sleep-over? Would you want your clients to?

Many of us feel like our home equity has been 'taken away' from us as the value of our homes have declined.  When you recognize that you stand to see a reduced profit from the sale of your home, you may be tempted to do it yourself.  Here are some things to think about before you make that decision:

1. Information Accessibility: With so much information available on line, you may think that you can do your own pricing research pretty easily, and that is true--to a degree.  Only Realtors have access to the real-time information about recent settlements. These recent settlements are the ones that matter, not the ones that happened last year, or even 6 months ago. Tax information is often lagging behind by several months.  Realtors use both Tax information and information from the local multiple list system to set pricing. They are also out there every day talking to buyers and getting a feel for what a buyer would realistically be willing to spend. Remember, pricing has NOTHING to do with what you want for your home and everything to do with what a buyer is willing to pay for your home.
2. Mass Distribution: As a Realtor I am eager to show my buyer clients every home that is available. This includes New construction and For Sale By Owner properties. Unfortunately, the information on these homes is not easy for me to find quickly.  When I use the MLS, I bring up all of the homes that meet their criteria without having to manually sort through them.  If we get through all of these properties without finding their dream home, I begin looking on-line and in advertisements for other homes that meet their needs. I almost never get to this point. The reason I proceed in this order is that the on-line information posted by owners and the ads are often out-dated and the homes are often no longer available. It is not the best use of my time on their behalf.
3. Marketing: In this instance I don't mean where you advertise, but what you emphasize and how it is presented.  I work with both buyers and sellers. This means that I understand what they are both looking for.  Sometimes things that seem a waste of money to you, as a seller, are things that are fully expected by both consumers and other agents.
4. Security: When I put your house on a lock-box, I get a listing of every agent who has been in your home. These agents have established a relationship with the buyer and in most cases these buyers have already applied for a mortgage--in other words their identity has been confirmed by multiple people. When you list your house, you get phone calls from strangers and no one vouching that they are who they say they are. And then you let them in to your house...
5. Home Preparation: Don't underestimate this! I spend weeks (and sometimes months) working with my clients to present their home in the most favorable light. Remember the old adage--you never get a second chance to make a first impression!

I am not saying you should not try to market your home yourself, if you think you want to do that. In fact, I often encourage my clients who express an interest in this to give it a shot. I believe you should not have regrets--go ahead and give it a try it may work out well for you. But give yourself a reasonable amount of time, maybe 2 or 3 weeks, and be willing to reevaluate your strategy and price!  There is a reason that many of your neighbors have used me, or another qualified Realtor, to sell their homes...because we get it done!