Loudoun Housing Inventory Way Down, Market Conditions

Loudoun County's housing inventory/supply is still going down. The number of active properties for sale as of 12:30pm today is 1252. This is less than half the number of homes for sale in 2007 and about a third less than the latter part of 2008. We haven't this few homes for sale in Loudoun County since the boom market in the first half of this decade.

What does this mean?

1. Buyers have less homes to choose from
2. Multiple offers are increasingly common (not just my observation and experience, but that of  other agents in Loudoun and NoVA I've spoken with)
3. Prices are holding steady
4. Less competition for sellers with their home on the market
5. Great time for sellers to sell their property if they're in the position to do so

The interesting thing is that the "spring market", which means more housing inventory on the market, typically starts in the middle of February or beginning of March. Here we are April 10 and the inventory is less than it was in January, February or March meaning that the "spring market" has yet to materialize (if it will at all).

Note: I do not include new construction listings in the MLS because they are extremely inaccurate. But, when looking at those, they plummeted as well so it just confirms that overall inventory in Loudoun is way down.

Loudoun is a Seller’s Market? Are You Crazy?!

People love to ask me, "How's the market?" and usually throw in a comment such as, "I've heard it's a total buyer's market". That was definitely the case in 2007 and most of 2008. But, sorry to burst your bubble, that's not necessarily the case anymore.

Just look at this example – this town house in Ashburn was priced correctly and sold around Thanksgiving of last year (a major holiday when real estate is "slow") for 98.6% of the list price (including seller closing cost assistance) within 19 days of being on the market. (And no, they didn't "give it away")

I don't blame you if you think I'm crazy. But I'm not pulling this out of my ___ so please keep reading…

"Buyer's", "Seller's" and "Balanced" Markets

There's a universally-accepted and used formula for determining whether it's a "buyer's", "seller's" or "balanced" market…

• more than 6 month's supply = buyer's market
• 5 to 6 month's supply = balanced market
• less than 5 month's supply = seller's market

The "month's supply" is determined by comparing the overall supply (active inventory) to the demand (homes going under contract/selling). So let's look at the supply and demand in Loudoun County.

Supply

• The real estate inventory in Loudoun County has been steadily declining since the beginning/middle of 2008. It currently stands at 1773 (including new construction)
• This is its lowest level since well before the market turned and tumbled

Demand

• 450 properties went under contract in January
• 316 have gone under contract so far this month (through 2/18)
• That's a current average of 15.6 properties that go under contract per day in Loudoun (aka 468 per month)

Month's Supply/Absorption Rate

• 1773 divided by 468 = 3.8 months

As you can see, according to the age-old, tried and tested supply-and-demand model, Loudoun County is technically a "seller's" market (and you thought I was crazy, didn't you?).

Now I know that there are a lot of other factors that play into what type of market it is such as availability of financing, interest rates, overall economic conditions, etc. But, the supply-and-demand formula has worked for years and in all the good and bad markets since these statistics started being tracked decades ago. The current economic conditions already weigh in to the amount of demand and the supply so this formula is still relevant and accurate today.

Does this mean that you can't negotiate as a buyer?

Not at all. It just means that you can't go into buying a home thinking that you're going to get a Ferrari for the price of a Honda because you won't. If you're going after the best deals around (like most buyers), be prepared to act quickly, compete against other offers and put your best foot forward or walk away.

Traditional sellers and banks and their listing agents/brokers look at statistics and numbers like this too - they know the current local market conditions are becoming more favorable for them. This is one reason why sellers/banks are getting tougher on price negotiations, as well as the type of financing they will and won't allow.

What about sellers?

Know your market value and competition well and price and market your property correctly. If you do these and other basic (though important) things, you'll sell for the most amount possible in a short period of time.

This may not seem right to you nor make sense when you look at the grand scheme of things or turn on the news. But it is what it is and we all have to play the cards we're dealt (and this isn't Spades or Blackjack so there's no cheating or card-counting).

“How’s the Real Estate Market?”, “How’s Business?”

"How's the real estate market?" and "How's business?" are two questions I get asked almost on a daily basis. Whether it's a client, family member, friend, acquaintance or someone I just met, everyone wants to know what someone who's on the "street" every day is seeing and hearing.

"How's the real estate market?"

The market is improving for sellers and getting tougher for buyers. Here's why…

• There are less homes on the market today than since the end of the boom market in 2005. Less inventory means less competition for sellers. This is good for sellers and bad for buyers.
• Short-sales are becoming more and more popular which is good for traditional sellers and banks with REO listings because most buyers stay away from short-sales (with good reason) meaning less homes for buyers to actually choose from. This goes back to my first point.
• Banks are starting to "freeze" foreclosures meaning less new bank-owned properties will be coming on the market in the near to mid-term future. This goes back to my first point as well.
• Interest rates are still near 40 year lows and have dropped some over the last few weeks. This is great for buyers.

"How's business?" 

• The year started off slow and steady and remained that way through late spring
• The summer was great with buyers coming out in packs to pick up great deals at low interest rates. Many buyers felt comfortable that prices had come down significantly and felt it was time to make a move after waiting it out for months, if not years.
• The summer rush ended near the beginning of October and buyer demand dropped off through Election Day. I think things slowed down because people were busy worrying about the financial crisis, the federal bail-out, the stock markets tanking and the uncertainty of one of the biggest elections in U.S. history. 
• Since Election Day, buyers have come back out and it's been a really busy few weeks with little time for rest. I see this continuing through the end of the month and possibly into December.

If you have specific questions not answered here, email or call me anytime.

Loudoun Real Estate Statistics – October 2008

Here are the Loudoun County real estate market statistics for October 2008. The statistics cover supply (new listings) and demand (solds). 

    

The number of new listings in October '08 was down slightly from September '08 and down 23 percent year-over-year. This is a great sign for the overall Loudoun County real estate market.

The number of properties that sold (went under contract) in October '08 was lower than the previous month, but was 33 percent higher than that of the previous year. Though the year-over-year numbers are great, I hope that the down-tick in October buyer demand is only temporary (more on that to come soon).

NOTE: I'll be posting hyper-local real estate market statistics broken down by town and zip code tomorrow (Saturday) so stop back by to check those out as well.

Real Estate, Lending News Stories Worth Reading

If you've been out of the loop lately, here are some of the top real estate, mortgage and financial headlines worth reading:

U.S Unveils Mortgage Plan

U.S. Mortgage Plan Falls Short

Citi To Modify $20 Billion In Home Loans

JPMorgan Chase Expands Housing Rescue Plan

Foreclosures Spike 25 Percent Year-On-Year

Countrywide Cancelling Short-Sales and Freezing Foreclosures

Foreclosure Freeze "Icing" Loudoun Real Estate Market