Newsletter October 2020
Updated: Oct 7, 2020
Housing, Mortgage, and Finance News
Micro-Markets – Critical to Selling or Buying a Property
Whether you are a seller or a buyer, when it comes to real estate, the tiniest bit of detail contained in evaluating the micro-market can make the difference between quickly selling or fairly buying a home. Generally, headlines tend to be national but our part of the country has its own special economy and frequently defies broad statistical comparisons. What really matters is the micro-market.
For instance, one of our long-time friends sent us an image highlighting the average price of a home in the Sterling area standing at $643k in July 2020. The moment we saw it, we knew something was a little off.
A search of the Multiple Listing Service to see how properties have been selling, painted a different picture.
At first, the number seems right, however, after filtering out the few dozen homes that sold for over $1 million, the real number stood at around $500 thousand, which is more in line with the Sterling market.
So, when you are looking to buy or sell your property, question everything, and seek the most relevant information you can squeeze out of the headlines to avoid overpricing or overpaying for it.
Northern Virginia August 2020 Market Statistics
The Northern Virginia Association of Realtors® reports on August 2020 home sales activity for Fairfax and Arlington counties, the cities of Alexandria, Fairfax, Falls Church and the towns of Vienna, Herndon and Clifton.
A total of 2,299 homes sold in August 2020, a 17% increase above August 2019 home sales of 1,965.
Active listings decreased this month compared with 2019. Listings were down 17.91% below last year, with 2,127 active listings in August, compared with 2,591 homes available in August 2019. The average days on market for homes in August 2020 fell by 27.27% to 16 days – compared to 22 days on market for homes in August 2019.
New listings rose by 26.17% in August compared to last year, to 2,714. There were 2,151 new listings in August of last year.
The average home sale price rose by 9.61% compared with last August, to $667,738. The August 2019 average sale price was $609,193.
The median sold price of homes this August, which was $592,500, rose by 9.72% compared to the median price of $540,000 in August 2019.
Economists are expecting the situation to get better gradually as the state opens up.
It is expected that 40% of the unemployed workers will be facing long-term unemployment.
Many households in Virginia have reported a strong return to financial security as we hope we move past the pandemic peak. This is reflected in increased activity in the real estate market in Virginia.
"Location, location, location!"...Yes, but...
...just as important, "pre-approval, pre-approval, pre-approval!" or it's hard to shop when you don't know what you can afford.
Buying a new home is certainly exciting AND it’s probably the largest financial commitment you’ll ever make. Although most people focus on the qualities they want in a home including the size, location, layout, and more, before they can move in, they have to make an offer and have it accepted. That takes two things: 1) finding out how much they can afford to buy and 2) getting their financing lined up so that, when they make an offer, theirs will be the strongest offer the seller receives.
It’s not just interest rates that fluctuate – mortgage options change as well, and when you make an offer on a home, you will need to provide some indication to the sellers of your ability to get a mortgage as well as specifying the type of mortgage you will get.
The weakest, and rarely acceptable, method of indicating your financial health to a seller is providing a mortgage pre-qualification letter. It is possible to go online, type in some information about your income and expenses, and generate a pre-qualification letter, which will state the amount of a mortgage for which you could qualify. The reason this is rarely acceptable to sellers is because you haven’t spoken with a lender, no credit report was run, and little or no verification of your income and expenses has been done. Although it may be accurate, a pre-qualification letter doesn’t have the strength of a pre-approval letter.
To get a pre-approval letter, you would meet with a mortgage broker, provide income and credit information, and get a letter stating the conditions under which your loan would be approved, the amount for which it could be approved, and the terms of the loan including the interest rate for which you have been approved. Because some real investigation was done by the lender, a pre-approval letter carries significantly more weight than a pre-qualification letter and is the most common indication of financial strength provided to sellers.
If you are in the kind of market where we currently find ourselves, I’d recommend you go to the next level which is offered by some mortgage institutions. That is preliminary loan approval. For a preliminary loan approval, you would go through the entire process of getting a mortgage - providing all the necessary documents to the lender including supplying your tax returns, source of income, employment information, and lists of your assets and liabilities, which the broker will verify and run your credit report.
When a preliminary loan approval is offered by a mortgage broker, you actually get your loan approved contingent on you getting a contract on a home. A preliminary loan approval would allow you to go to settlement in as few as 2-3 weeks after your contract is ratified (agreed-upon). In cases where there are multiple offers on a home, if you have preliminary loan approval, yours is a very strong offer and, all things being equal, much more likely to be accepted.
This is just a thumbnail sketch of ways to indicate your financial strength to a home seller. The actual options vary from institution-to-institution. We at the PJ Team, work with a number of lenders and can help shepherd you through this process.
Thoughts from Real Estate Insiders and Experts
What's Happening with the Temporary Halt on Residential Evictions?
On September 01, 2020, President Donald Trump filed an executive order to temporarily halt residential evictions. On September 4, 2020, the Centers for Disease Control (CDC) issued an action order for the "Temporary Halt in Residential Evictions To Prevent the Further Spread of COVID-19," which protects tenants from eviction in hopes of curtailing the spread of the virus through the end of this year, but requires a pro-active application process on the part of tenants to receive this federal protection.
Read HERE for more details
In the meantime, the Virginia State ban on evictions expired on September 7, 2020, when the Virginia Supreme Court denied Governor Ralph Northam's request to extend it, though a proposed legislative extension into the Spring of 2021 is currently being debated in the Virginia state senate.
Read HERE for more details
Can I Save Money by Selling My House Myself?
You may have seen yard signs in your neighborhood that state, "For Sale By Owner." In the real estate business, these are known as FSBOs (pronounced "fizz-boes").
While some FSBOs do ultimately win the day, complete the sale at a fair market value in a reasonable timeframe, and save the owner the Realtor's® fair commission (for the amount of work involved and the value of experience), these rare examples are often the exception that proves the rule. There's a reason that the "amazing" tale that a bragging relative or neighbor will share about getting more than their asking price the day they put their house up for sale stands out. It so seldom happens. However, the problem is that spectacular and rare occurrences often lodge in our brains and are tagged, "It could happen." Las Vegas is built on this principle!
FOR A MORE IN-DEPTH DISCUSSION OF THE PROS AND CONS OF SELLING YOUR OWN HOME (FSBO) CLICK HERE
Signing-off for now!
We really hope you would have liked the first edition of our newsletter; covering news and updates about Virginia Real Estate. We want our newsletter to address your concerns.