Local New Home Sales Trump Rest of Nation

There’s the national new homes sales market. Then there’s the local new homes sales market. And they’re quite different from each other. The Washington, DC metro/Northern Virginia new homes sales market is ahead of the curve and doing much better than the rest of the nation.

There have been many articles and media coverage of how new home sales have slowed down. In some areas, new home sales have “plummeted” and “almost completely dried up”. Builder Magazine just ran an article, “New Home Sales Decline, Prompting Predictions of Worst Year on Record”, which paints a very gloomy picture of the new home market.

But that’s the national market. What about the local market here in the Washington, DC metro/Northern Virginia area?

Builders with developments/communities in this area saw the worst of the local new home sales market 3 to 5 years ago. Things started slowly turning around about 3 years ago. Then, as of about 18 months ago, someone lit a match under the new home sales market and the market took off.

For example, in speaking with several folks who are in the construction business, both builder employees and subcontractors, work finally began flowing about anywhere from 12 to 18 months ago. Rather than looking for side jobs to make ends meet, they’re working full time building homes across the DC metro/Northern VA area.

Another example is builder sales centers. Instead of a lot of green dots signalling open lots and sales reps throwing incentives at buyers as if they were confetti, there are red dots all over the site maps and incentives are few and far between.

And the attitude of builder sales reps is quite different… A look of despair was hard to hide a few years ago while smiles and positive attitudes are the norm nowadays.

The most impressive example is the actual number of new homes being sold and the success of communities and developments throughout the area. At the top of the list is Brambleton (Ashburn, Loudoun County, VA)…

In 2010, Brambleton set a record for the most new homes sold in its’ 10 year history. On top of that…Brambleton has sold more homes January through July 2011 than it did January through July 2010.

The thing that makes that statistic even more impressive is that Brambleton is made up of not just one builder, but 7 builders. And they all build different products and appeal to different home buyer personalities, incomes and demographics.

Why is this information important to consumers? Here are a just a few of the reasons…

1. If you are only reading national headlines, you may get a rude awakening when you walk into a new home sales center and try to negotiate 10% off the base price, get another $50K in incentives and put down a deposit on that awesome lot that was available last week.
2. You may not have believed your Buyer’s Agent when they told you something similar last week or even 18 months ago, but here’s the thing…they were telling you the truth.
3. If you’re a seller, you need to realize that you don’t have just your neighbors’ homes to compete with. You also have nearby home builders to compete with. Buyers are not just looking at existing homes – they’re also looking very closely at what home builders have to offer. And what they have to offer is often very enticing.
4. Builders know that they have the market on their side so you have to be even more careful when working and negotiating with a builder. You should have a Buyer’s Agent well versed in new construction on your side. Remember, a real estate agent’s/broker’s commission is a already written into the sales price. And no, you don’t get that commission refunded to you if you don’t have an agent/broker. So why would you not hire an agent/broker, pay the commission anyway and pad the builder’s pockets with even more profits?

If you have specific questions about the local new homes sales market, new home communities, builders or the new home purchase process in general, email or call me any time.

 

Loudoun County, Brambleton; Record Level New Home Sales

Despite new home sales being way down as a whole across the U.S., Loudoun County, particularly Brambleton is seeing record level new home sales. In fact, Brambleton is the 8th top-selling community in the U.S.

Yes, you read that correctly (and no, this is not an April Fool’s joke).

Brambleton sold 352 new homes in 2010, the most new homes sold in one year in its’ 10 year history. On top of that, Brambleton is on pace to break that record in 2011 – and that’s without the first-time home buyer tax credit being available.

What’s so special about Loudoun County and Brambleton in particular?

- This area has always been ahead of the curve and leads the country by about 6 to 9 months. We were the first to see prices going up during the boom, the first to see them starting to come down and the first to see signs of stabilization and possible recovery.

- A large local presence of national and semi-custom builders who survived the market downturn and had money to start building once the local market showed signs of life in the second half of 2009 and into 2010.

- A shift in builders’ product lines. Builders are building more affordable and attractive products. This is drawing buyers in that were once priced out of the market and/or weren’t fans of the “same ol’” style of homes or huge McMansions. Yes, you can still find new traditional Virginia colonials/town homes throughout the area. But you can see and feel an urban touch to some of the new product lines and community amenities especially in Brambleton – one example is the Boulevard at Brambleton, by Camberley Homes.

- The local economy is one of the strongest in the U.S. This includes employment rates, new jobs being created and incomes. This helps create a strong housing demand and one that is stronger than most other parts of the U.S.

- Brambleton is a really cool, well thought-out and well built community (and their staff is dedicated and hard working). It has won GALA’s Community of the Year and countless other awards over the years. If you haven’t been to Brambleton in person, you should check it out sometime. (Contact me for a free tour of the Brambleton including the eight different builders within the community)

The rest of Loudoun County is in similar shoes. Other communities and builders are also selling new homes at a pace not seen for years, if ever. In speaking with builders’ sales staff and selling new homes throughout Loudoun County last year, I noticed that the sales staff had a smile on their face and positive attitude about them not seen since the boom market back in 2003, 2004 and 2005.

If you’re considering a new home but think that it’s out of your price range, you may be pleasantly surprised. As I mentioned, builders have revamped their product lines and price points. Give me a call or shoot me an email and I’d be glad to tell you what’s available in your price range throughout Loudoun County and show you around.

Related Reading

General information on Brambleton, LoudounScene.com

Home Buyer Demand, Sales Up Across Loudoun and Fairfax County

Home buyer demand/sales in Loudoun County were up 11 percent in the 3rd quarter of 2009 over the 3rd quarter 2008. And it’s up 53 percent over 2007. (Buyer demand is defined by the number of homes that go under contract during a set time period)

Fairfax County had an 18 percent increase in home buyer demand/sales in the 3rd quarter 2009 over 2008. And it’s up 62 percent over 2007.

Why the increase?

1. Lower prices – prices have come down considerably since the peak making it more affordable and appealing for home buyers. And the less expensive something is, the more people can afford it
2. Low interest rates – interest rates hit historical lows and are still very low. Lower interest rate = greater purchasing power
3. Programs/benefits – Programs such as the $8000 first-time home buyer federal tax credit has helped spark demand (click here for more info on first-time home buyer tax credit). I’ve worked with more first-time home buyers this year than in any of the last 6 years (and it’s only October). Other programs such as the Freddie Mac HomeSteps SmartBuy program have also helped increased demand (click here for more info on Smartbuy program)

Will it continue?

Maybe. If rates remain steady and/or the tax credit get renewed or a similar program come out, then we’ll probably see home buyer demand steady or continue increasing (though I don’t think there’s room for too much more increase in buyer demand).

Maybe not. If rates creep up and/or the first-time home buyer federal tax credit not be renewed and/or (more) bad economic news come out, we may see buyer demand taper off or even decrease.

Who wins?

The buyers that purchased a home at a much lower price than years prior and at a low interest rate while taking advantage of the first-time home buyer federal tax credit made out the best.

Sellers came in at a close second – increased demand and very low inventory make for a winning combination when selling your home.

How to Buy a New Home and Still Have Representation

If you’re thinking about buying a new home from a builder, check out this question posted by new home buyers on Trulia:

My husband and I put an offer on a new house without representation from a Realtor. We have signed a builder’s contract. Can we still get a Realtor to represent us to go over everything until closing?

My response:

Yes, you can hire a Realtor to represent you at any time. But you will have to pay them out of your own pocket. The builder will not pay your Realtor any commission because you did not have them with you at the very beginning of the process and the transaction.

I’d be happy to chat with you more about this, but it’s a better phone call than an email or comment. What’s the best number to reach you on?

On a related note, you may want to read this post regarding a new home builder taking home buyers to the cleaners (to the tune of $50 million) - http://loudounscene.com/2009/07/beazer-homes-to-pay-50m-to-victimized-home-buyers.html

Here are excerpts from other responses:

I used to work New Homes for a decade. Keep in mind when you a prospective buyer enters the Sales Office of a new home commuity and you are asked to fill out and sign the little registration card, that is so the builder knows how the buyer came to the community. Builders have a formula they use to figure out the pricing of a community. Using historical information, they budget in the price the number of homes that will be sold with Realtor representation and if the advertising campaigns work well,and the road signage works well, sometimes they make out better with more buyers wandering in without representation. It’s business. They are trying to sell and make a profit. My advice for others out looking, if you have a Realtor or feel you want Realtor representation, just write on the card you have a Realtor. That way you will have that option at a later date if you feel you need it.

Remember Builders are no different than glorified For Sale By Owner situations. The person onsite works for the builder. Period. There responsiblity is to sell the homes on that site.

- Peggy James

Yes, you can, but the builder is under no obligation to pay them a commission. So if you want to pay them or they want to do it because they love you, its all good.

- Fred Wolfe

I sell new construction and new home communities with builders/developers of New Construction and New Home Developments and have so for years like many real estate professionals doing so.

This [registering of the buyer's agent/broker] must be done with broker/agent and potential buyer on the very first visit in the Sales office with the Sales Representative for the new home development on the floor during time of walk in to preview models of the new home community.

After first initial registration, the would be buyer can go back a number of times with their friends and family to preview models again in consideration of their purchase in that community once already registered with their agent representing them.

No money is out of pocket with the buyer. The commission earned to the buyers agent/broker is paid by the New Home Developer to the broker and broker/agent representing the buyer and the buyer is allowed to have his own agent represent him in the purchase of the new home development. The new home builder developer of that community represents then the seller which is the Builder of the new home development, and the agent/broker represents the new home community buyer for that developer.

- Sandra Allman

Don’t put yourself in the same situation as these new home buyers. Be prepared and you can have representation throughout the entire process and transaction – without having to pull extra money out of your pocket.

And the great thing is that being prepared is simple:

1. Before you start looking around, interview and hire a knowledgeable Buyer’s Agent experienced with new homes and builders in the area
2. Bring your Buyer’s Agent with you on your first visit and/or have them go out and preview new construction home sites and models on your behalf ahead of time

If you need to speak with an agent that knows the ins and outs of new homes and builders, email or call me. I would be glad to help.

Related Articles

Brookfield Homes starts up sales once again at Goose Creek Bend

Brambleton Launches “Immediate Delivery/Spec Home” Blog Site

Gulick Group Lowers Base Prices, Revises Products in Brambleton

New Home Buyers: What You Don’t Know Can Cost You

Beazer Homes to Pay $50M to Victimized Home Buyers

Sterling Housing Market Update

Here’s a look at what’s going on with the Sterling housing market (all zip codes)…

Sterling Median Price

The median price has been falling in Sterling since the market turned until about March of this year. Over the past rew months, the median price has spiked significantly (by almost $100,000).

Sterling Inventory

Inventory of single family and town homes in Sterling has dropped by 60 percent since 2007 and 56 percent since this time last year. The condo inventory in Sterling has dropped by 45 percent since this time last year. This is most significant decrease of inventory out of any large town in Loudoun County.

Sterling Housing Market Overview

The huge drop in inventory throughout Sterling along with a huge increase in buyer demand has lead to a huge shift in the housing market in Sterling. Sterling has some of the lowest price points in Loudoun and lots of foreclosure and short-sale activity making it extremely attractive to first-time home buyers and investors. We’re even seeing areas of Sterling with slight to substantial recent price appreciation.

Homes that are priced well are getting a lot of traffic and a purchase offer within 1 to 2 weeks on the market. Homes priced slightly below (or way below as is the case with many bank-owned and short-sale properties) are getting multiple offers (5, 10, 15+ offers) and are bidding up over asking price within days, if not hours of hitting the market.

We’re seeing slight signs of the inventory leveling out. Unless it levels out, we’ll most likely see median prices continue their upward trend and lots of multiple offers on properties well into the summer.