Short Sales-Still lurking around out there.

The improvement in home values over the past two years has greatly reduced the number of short sales on the market. For the investor or home buyer who is not pressed for time, a short sale can be a good buy. Generally you can purchase a home for below market cost because of the distressed nature of the sale. However, in many areas including the eastern and outlying portions of Montgomery County, home values have yet to appreciate above the dizzying heights achieved around 2005-6. This means that there are still many homeowners who have mortgages where the principal owned is still higher than the value of the home. For this reason, don't expect short sales to completely disappear for a few years yet. In the community where I live Hillandale MD there are now only four properties listed as short sales. This is far below the average numbers for the past few years. If you were to look in some communities in Howard or Prince George's Counties you will a greater proportion of short sales. In DC and West Montgomery County short sales have all but dried up.

There is good news in these numbers. The reduction in short sales on the market indicate a growing economy and improving housing market. This will help us all as equity in our homes in probably the biggest investment that most Americans will ever have. If you would like to explore distressed homes for sale in your community you can go to my own listing search engine. There you can use filters to find distressed homes or set up an alert to let you know when a distressed home comes on the market in your community.

Outlook for 2013

As we hit mid January and the threat of the fiscal cliff is behind us. I feel that this is a good time to write a brief  post on the current market for the Metro area and state where I think we are heading. First and foremost, the real estate market is looking pretty darn good. Well, darn good for sellers that is . Not so much for home buyers who are facing a shortage of suitable homes to look at and a very competitive market in most jurisdictions. It is hard to believe but we are experiencing a critical shortage of listings on the market. We simply have very little inventory to offer home buyers. And, this shortage of homes for sale means that there will be pressure on home prices to go up. We are already seeing may full price and above price offers, along with multiple offers coming in. A well priced home that has been updated will not usually go unsold for more than a few days.

The improved market is visible everywhere around Washington DC and it's suburbs but some jurisdictions and price ranges are seeing it have a more dramatic effect. The best market is in the District and Montgomery County but even Prince Georges County which had been hit very hard by the downturn and featured a record number of foreclosures and distressed homes is finally beginning to turn.

There are a variety of reasons for the shortage of listings for sale. A lot of unsold homes were taken off the market and rented out by the owners. Many of these homes are now tied up in long term leases. Also, there are still a lot of  "underwater" homes out there and many homeowners who survived the downturn and do not have to sell will opt to wait for prices to go up before selling. I expect to see more homes on the market as the weather warms this year but also expect to see more buyers out there as our local economy continues to expand. For this reason I do not foresee listing shortage situation improving this year and predict that we will be in a good market for home sellers all year. And this means that home values will have to go up.

For a detailed report on the current market data click here.

What Buyers Want

It is hard to say where the market is going these days in this area. One thing I know, is that we currently have a shortage of good listings. There are still plenty of short sales and distressed homes coming on the market but what is missing is an inventory of homes that show well. Buyers are out there in droves. There has been a lot of pent up demand built up over the past few years. The strong local economy combined with  mortgage interest rates that are so low that it is obscene has generated a large pool of folks wanting to buy a home. However, with the recent recession under their belt many young buyers are choosing to be very picky about the homes they look at. We are not seeing the rush to plop down good money on just anything that comes on the market. Most buyers who are not investors want more bang for their buck when considering a home purchase. I would have to say that one of the biggest factors is the age of the kitchen. New or refurbished kitchens are in high demand with new bathrooms being a close second. If you are selling a home with a 20-30 year old kitchen  then you are going to have to be patient and price it correctly. There are two factors driving home sales these days- product and price. Exposure is not necessarily the issue. Any good Real Estate Company is going to get your home exposed on the Internet. But if your product (home) is not in top shape then your only choice is to consider the asking price. You must measure what the competition has to offer and act accordingly. I realize that this is not rocket science. But many sellers are having a hard time adjusting to the realities of the market. Yes, we are in a competitive market with hungry buyers. However, the buyers out there are looking for value and passing up on the average or the overpriced. They are limiting their choices to homes that are in exceptional condition and/or have an attractive low price.

State of the Market

As we wind down 2011 and head into 2012, I think it is a good idea to give you a few of my thoughts on the market and what to expect in the next year. 2011 was an erratic year for real estate in the Washington area. What looked liked to be shaping up as a decent year this past spring came to a screeching halt when congress got caught up in the budget crisis. The situation never really got better as we passed from one crisis to another. Right now with the uncertain financial situation in Europe the market remains in the doldrums. It is hard to find much in the way of consumer confidence when everybody is worried about the global financial situation. The problem is not being helped by the partisan battles that continue to plague our own congress.

The good news is that there will be a housing recovery and prices are bound to go up. The bad news is that nobody really seems to know when this will happen. Some areas in our regions have felt the pain a lot more than others. The western portion of Montgomery County is doing well and the District seems to be one of the strongest real estate markets in the nation. But the rest of the region is still bothered by low prices, high inventory and an abnormal number of distressed properties that keep prices depressed.

But there is one thing that I do know and feel pretty confident about. Recessions do eventually end and when they do, area property values in this area should rebound and prove to be very healthy. I firmly believe that the Washington area is one of the best places to own property. My 25 plus years in the industry and proved this to me. We are going to be just fine. Just be patient and give it a little time.