Loudoun Real Estate Blog

There were actually some positive signs in the real estate market at the national level lately. New mortgage applications jumped up in the beginning of March for the first time in more than a month according to the Mortgage Bankers Assocation. Also, the pending home sale index didn’t decline in February as many predicted. It stayed flat. Finally, the Federal Reserve is keeping short term interest rates low. Could this mean real estate conditions are improving? I will keep you posted.

According to the Metropolitan Regional Information Systems, Inc., the statistics for February resale homes in Loudoun County were dismal. In the 20147 zip code of Ashburn, there was only 1 sale for the month of February for homes listed for $700,000 or more. There were 46 homes on the market in the 20147 zip code during that same time period. Obviously, 1 out of 47 are not good odds. Unfortunately, the 20165 zip code of Sterling/Potomac Falls was even worse if it is possible. During the month of February, there were no sales in homes listed over $700,000 and 19 homes listed for sale over $700,000 during that same time period. Hopefully, the increased FHA and conforming/Jumbo loan amount increases will help. I will keep you posted.

As we had heard through the rumor mill, Fannie Mae has now increased the conforming loan limit in our high cost area to $729,750.  This gives people increadible buying power and we are looking forward to seeing how this affects sales for the rest of the year.  There are some resitrictions, which you can view in Fannie Mae Conforming Loan Limit Announcment and Details pdf file.  The changes go into efftect April 1st 2008 for fixed rate loans and May 1st 2008 for adjustable rate loans.  We have heard some lenders will allow the limit changes earlier, but you need to verify with your loan officer.

Jennifer Moist with First Horizon Home Loans has just updated us that the U.S. Dept of Housing and Urban Development has informed lenders of the new changes to FHA loans.  This is a huge opportunity to move some buyers into homes and/or provide some alternatives to Sellers who have had homes on the market for an extended period.  Also the rumor is that the jumbo loan limit is going to be raised to $729,750 as well and some speculate that HUD decided to go to the same limit.  We will know more about the jumbo limit within the next week.

HERE IS WHY FHA LOANS ARE GREAT:

• There is currently no minimum credit score requirement (although guideline is 580+)
• There is only a 3% downpayment requirement (which you can negotiate for the Seller to pay on the buyer’s behalf via a Seller Funded Downpayment Assistance program such as Nehemiah or AmeriDream–explanation of this attached)
• Seller concessions of up to 6% of the purchase price allowed (PLUS with First Horizon, we currently permit the Seller to contribute another 3-4% towards downpayment assistance for a total of 10% in allowable contributions)–most other lenders include the Seller Funded Downpayment Assistance contribution as part of the maximum 6% concession
• NO INCOME RESTRICTIONS FOR BUYERS
• NOT RESTRICTED TO FIRST TIME HOMEBUYERS, AND NO LIMIT TO HOW MANY PROPERTIES BORROWER CAN OWN SIMULTANEOUSLY
• Current 30 year fixed rate of 6%, or a 3 year ARM at only 5%!!!
• If the Seller isn’t willing to fund the downpayment, the Buyer can receive the entire downpayment as a gift from an immediately family member
• No reserves required

There are other changes coming due with the FHA program, including the prospect of reducing the downpayment required to only 1.5%!!!  This may be in conjunction with tiered pricing adjustments for credit scores/loan amounts, but the exact guidelines for such have not yet been released.  I’ll keep you posted of developments and news as the information becomes available.  It is expected the anticipated changes on Conventional loans will be released tomorrow as well, so I’ll be providing you the information on that too as soon as we get it!

Things to be cautious about concerning FHA:  condominium projects must be FHA approved, and there are not a lot in Loudoun county that are.  Also, there are two forms of mortgage insurance on FHA loans:  an upfront premium that is financed into the loan (so it only marginally affects the monthly payment) PLUS a monthly premium (which is roughly half of what it would be on a conventional loan, so it isn’t a big deal.  Plus the monthly premium can be eliminated once the balance of the mortgage reaches 78% of the initial loan amount (at this time, they won’t allow a new appraisal to eliminate the PMI).  The Borrower must keep the monthly PMI a minimum of 5 years.  However the Borrower can refinance the loan within 6 months of purchase if they qualify and have established enough equity at that point (i.e. they put an addition on the home or the market turns and home starts appreciating, or if they pay a lump sum down on the principal balance). FHA loans must be used for primary residence purchases.  Lastly, the new loan limits are only verified to be through December 31, 2008 at this time.  FHA may decide to extend them, but we won’t know that until a later date. 

Keep in mind these changes have just gone into affect, so many lenders will need to update their computer system and automated approval engines to incorporate the changes

Metropolitan Regional Information Systems (MRIS), which is the MLS system that all of Northern Virginia, including Loudoun and Fairfax Counties, most of Maryland and parts of Pennsylvania is changing the Days On Market Property reset time.  The Days On Market Property was the counter that would continue to increase every day the home is listed regardless if the home owner changed Real Estate Agents.

The Days On Market Property use to reset after the property was no longer active for a period of 180 days (6 months).  This value to established in 1993 and was thought to be a good indictor of a complete market cycle.  Since then people have started to move more frequently and value started to lose its meaning.  As of February 15^th 2008 the reset time is being changed to 90 days (3 months) which is a huge improvement and a welcomed change.

The other important factor in this change is that MRIS is going back through all the data and updating the Days On Market Property values.  Here is a quote from MRIS:

MRIS will recalculate the Days On Market for all existing listings.  In terms of appraisers accustomed to the old formula for assessing property value, the statistics that they have always relied on will still maintain value as the “market snapshots” they were intended to be.  Those market snapshots are still valid.

Any thoughts or questions please let us know and I will be happy to answer them.

A MSNBC Video with advice on selling your home in todays housing market

I was reading some good news for the real estate market in the Washington Post newspaper the other day that the global technology and consulting firm, Computer Sciences Corp., is relocating its headquarters to Falls Church from El Segundo, California. CSC will be one of the largest companies based in the Washington area. About 200 people would be relocating from the Los Angeles area to Northern Virginia. In this market, I look for every piece of good news for local real estate that I can find.

We are continuing to see an increase in activity at several of our listings. To follow up on my post from the middle of January, sales remained down in 20165 & Ashburn comparing 2007 vs 2008! In January of 2007 there were 66 contracts to ratify compared to 38 in January of 2008. That puts the number of ratified contracts down 42% for January in 20165. In looking at Ashburn, there were 183 contracts ratified in January of 2007 vs. 95 ratified contracts in 2008. That puts the number of ratified contracts down 48% in the Ashburn zip codes. We are seeing an increase in traffic and got a townhome under contract in Ashburn Village this weekend so we will see how sales continue in February!

Looking at the Loudoun County average sales price of homes monthly since 1996, a few interesting things stand out to me. First of all, the average sales price of homes in Loudoun County has steadily risen since 1996 at a rate of 4%-7% every year. In 2004 and 2005, the average sales price of homes increased dramatically. At the end of 2007, the average sales price in Loudoun County is down to about where it was in the middle to end of 2004. Furthermore, if the average sales price had continued at the appreciate rate prior to 2004, average prices would be about where they are now.  The increased foreclosures and short sales doesn’t help but could it be that the “pricing adjustment” is almost over?

We had an increase in showings across the board this past weekend compared to the number of showings last weekend. Although, in looking at the market and comparing 2007 to this year, the number of ratified contracts so far in 2008 is down in Ashburn & the Sterling/Potomac Falls zip codes. Comparing ratified contracts in the first three weeks of 2007 vs. the first three weeks of 2008 the data is as follows:
In the Sterling/Potomac Falls 20165 zip code, there were 42 contracts ratified in the first three weeks of 2007 compared to the 25 this year which puts the number ratified contracts down 40%. In Ashburn, there were 105 contracts ratified in the first three weeks of 2007 & there have been 52 this year which puts the number of ratified contracts down 50%.

We have seen a slight increase in traffic at our listings and hope that this increase in activity will generate more contracts to make the last 10 days of the month increase the overall sales for January.