Welcome to 2024 and Trending Real Estate Topics

We at Integrity Real Estate Group hope that you have enjoyed a peaceful, relaxing holiday season. We wanted to take a look back at 2023 in Real Estate and also touch on some trends that we expect in 2024, along with some helpful tips on Real Estate and financing. As the year unfolds, we will continue to update you as emerging topics and trends present themselves. Our website at www.gowithintegrity.com will receive more attention this year and all updates will be posted there, and some will also arrive by mail.

The last three years have been extraordinary as far as both selling conditions (lack of
inventory for buyers) and interest rate swings – from 2.75 to 8.25 at one point, all in less than 2 years. How do you navigate such a volatile market? Read on and consult with us when you have Real Estate questions – we have a working compass for all market conditions and changes!

The 2023 Market in Northern Virginia – in review

As the year ended in 2022, it seemed that sellers’ dominance of the market might be coming to an end. Rates had climbed to over 7% and that, along with a lack of “good homes for sale” and the usual seasonal doldrums, made for slow sales in the last 2 months of 2022. I started initial planning with a new first time buyer and we agreed that by the time we started actually looking in January, things would likely be favorable – finally – for buyers!

Fast forward to the second week of January and our first weekend of looking at homes. I showed him about eight homes and within days, 7 were under contract – yikes! Time to recalibrate expectations. We did put a home under contract in February, after another buyers’ financing fell through. Suffice it to say, the first half of 2023 was a brutal experience for buyers, as they had to compete with MANY other buyers for the best homes. As summer turned into fall, the market moderated a bit, depending on the home type/price range. In October, rates peaked at OVER 8% and “the doldrums” of seasonality took over again. STILL, properly prepared detached homes, in the most favored school areas, often received well over list price offers with limited or NO contingencies. Folks, we still have a housing shortage heading into 2024 and rates have eased back to about 6.5%, with VA rates closer to 6%.

So…the first half of 2024…

In early December, we put a “total fixer upper” detached one level home on at $550k and were pleased to receive 12 offers with the winning bid being $582,000 with NO contingencies. This home needed about $100k in upgrades/updates. That experience, the continued low inventory, and sinking rates leads us to believe that 2024 will start off much like 2023, a strong sellers’ market. One day soon this market will balance out, maybe in late 2024, but the spring months should be great for sellers. Buyers – you can navigate around these challenges, but you must “get good help.” An experienced, savvy buyers’ agent is a must! We are here for you, your family and friends!

Searching for homes online

The vast majority of “serious” real estate searches online are conducted on three websites: Zillow, Redfin or Realtor.com. All three have invested hundreds of millions to create this technology, and Redfin and Zillow have lost hundreds of millions over the last ten years because “monetizing” these investments has proved to be difficult. These ARE the best ways to search and a lot of our clients start out there to “get ideas,” which is great.

But be aware, when you hit “get more information” on these sites, you become a “lead” and you are diverted or sold to an agent who has paid these organizations to buy your contact info, often up to 40% of any commission that the agent may earn if they sell you a house. These leads are usually bought by less skilled agents who have not had enough experience or success to attract repeat clients on their own. You could get lucky… but when you are ready to talk about a plan to obtain a great property and understand your costs and all of your options, don’t gamble on luck, call us for a consultation and planning session. No cost, no obligation.

“Trigger leads”

Connie and I learned this week that Willie Nelson’s guitar is named Trigger, while watching the four part series on “Netflix” called “Willie Nelson & Family.” Highly recommended – he is truly an American Legend.

But this is not about Willie or his guitar. When you apply for a mortgage loan, the lender will pull a credit report, naturally, to assess your creditworthiness. This is where the trouble begins…

The three major credit bureaus have found a new way to create more revenue – when a lender pulls credit from their databanks that is a “trigger” for the dastardly credit bureaus to then sell you as a “lead” to hundreds of OTHER lenders who might want to offer you a loan. YOUR lender is not doing this, Experian and Equifax are. What’s the problem? A few months ago I had a client in my car and suddenly her phone starting ringing constantly. She had applied for a loan in another state for a vacation home and “trigger leads” were unleashed. She received an easy 100+ calls in 2 days. That is a problem for most people who are not excessively lonely!

The cure? At least 10 days before applying for a home loan/home equity loan, go to this site www.optoutprescreen.com

You can OPT out for 5 years.

VA ASSUMABLE LOANS

Many of you bought homes with Integrity using your VA loan benefit. VA loans come with a lower rate, but also an assumability feature, under certain circumstances. I discussed this with some of you when you bought with an interest rate in the 2’s or 3’s. Now, with rates much higher than that, it makes sense to look at VA Assumption scenarios if you are considering selling in 2024 or later. A win-win can be created for both buyer and seller on these transactions. We closed two of these this year – the sellers received a premium for the house and release of liability and the buyers inherited a sub 4% interest rate. Call us for details of how these transactions work. It is not an easy process, but it can be worth it!

What is your Basis?

Owning a home is one of the few ways left to create future tax free income. Single people have an exemption from paying capital gains tax on the first $250,000 in net profit from a home sale event. Married couples are exempt up to $500,000. That used to seem like a lot, and for all but the wealthy – an unlikely event for most.

With today’s price levels, gains exceeding this tax exempt level are increasingly occurring. Any qualified improvements that you make to the home will add to your exempt amount. Let’s say you bought a home for $350,000 in 1991 and sell in 2024 for $1,100,000, on the surface you had a gain of $750,000. However, closing costs to sell and those qualified improvements could very well add up to $250,000, making it a non taxable event. This is a greatly simplified explanation of a complicated and nuanced subject. The point of this paragraph is: Start a file of every capital improvement that you make noting the purpose, amount, etc. If you do not have some old records, take pictures of the improvements and make a good estimate. We will do more on this subject in 2024 – it is important!

We did a lengthy paper on the current flood of Class Action lawsuits involving the real estate industry and commissions, some of you received this in the mail. If not, you can view on this blog. This will be in the news more in 2024. There will likely be good changes to come of this.

And just to start your New Year right, here are a couple of favorite vendor recommendations for you:

MAC Garage Door – 703-505-5367 Mario Cruz does great work on everything involving garage doors.

RAVEN Termite and Pest Control – 571-489-8563 Joe Stuart and family have handled our recent pest control issues. Family and Veteran owned company.

JAT Carpet and Upholstery Cleaning – 703-507-9152 James and his crew are carpet cleaning “zealots”- they care!

Greg Stiger
Broker/Owner
Integrity Real Estate Group
571-233-7895
goldenruleteam@aol.com