An early look at factors that may drive the NOVA real estate market in the first half of 2017:
- Easier MONEY for loans: Fannie Mae is now offering 3% down loans to buyers with credit scores as low as 620! FHA loans can be had with 3.5% down and are also easy on credit dings. VA loans up to $636,000 can be utilized with ZERO down and we have lenders that can contribute in a large way towards closing costs. We have helped many VA buyers get into a house with almost NO money out of pocket!
- New President “honeymoon period:” There is always optimism once the election cycle is completed, no matter who won or lost. The honeymoon may be short, but at least we will not be bombarded with negative campaign ads for a period of time. The last few months of recent presidential campaigns have tended to dampen everyone’s enthusiasm that things are good in this country.
- Rates are up since early fall: Normally, this might be a harbinger of a sales slowdown, but fixed rates are still around 4%, less for a VA/FHA loan. Many became complacent that rates would continue to stay at all time lows, but this was not to be! THIS rate increase, we believe, will actually spur sales activity early in the year, as buyers fear being left behind as the “low rate train” pulls away from them.
- Inventory of homes for sale entering 2017: We are starting the year with about 20-25% LESS inventory of homes for sale than in January of 2016. The inventory level, and rent cost vs. buy cost monthly are the TWO most important numbers that we watch!
- The Northern Virginia job market is stable to slightly growing.
- Rents are stable to growing: When we sit down with buyers who currently rent, they are often shocked to find that the monthly outlay to buy is very nearly the same as what they are paying in rent. In 2005, the cost to own was 60-70% higher in many cases, but people were incentivized to buy because house prices had risen so rapidly in the years before. Think of the rent price vs. price of home ownership as you would the Price Earnings ratio for stocks. This ratio is currently very favorable to owning, even if prices just track inflation. This, and the inventory vs. sales ratios (Absorption Rate), can tell us in advance when the market is changing from a seller’s market to a buyer’s market.
For the first half of 2017, the key ratios we track, and the other influencing factors indicate that sellers of well prepared and intelligently priced homes should have the upper hand. Buyers –you must have a sound strategy for getting what you want! Work only with a proactive, professional Buyer Broker who has exceptional market knowledge and negotiating skills, so you can get the best rate and the house you want. Don’t allow yourself to be a “lead” passed on to just any agent. Don’t pick an agent from a sign! Be the client of “a trusted advisor”- perhaps an agent with Integrity Real Estate Group. It’s what we do every day – 95% of our business comes from client referrals.