After being an active member of AR for quite some time, I've decided to focus my blogging efforts on my own "outside" real estate blogs. I'll be posting Loudoun and Fairfax County real estate related posts directly on my local real estate blogs - LoudounScene.com and LoudounForeclosures.com - and will continue writing about real estate in general over at Agent Genius and VARBuzz.
Thank you to everyone who's read my posts, commented and engaged in discussion. I look forward to continuing the relationship I've built with many of you here on AR on the "outside".
Many sellers and buyers ask me if a short-sale is the way to go whether it's to "get out" of their current mortgage/property or when buying a property in order to "get a great deal". There are lots of issues with short-sales whether you're a homeowner or a buyer and the cons many times outweigh the pros.
"Short Sales are simply not the solution for everyone. It is a dangerous idea that preys on people's hopes, not to mention makes the current mortgage crisis worse. The truth is that most short listings will never get to the closing table. There are just too many factors to take into consideration. The short sales agreement is subject to the lender's approval. Closings can be subject to marketable title. There could be multiple liens on the property. The offer presented could be too low for the bank's expectation or below the appraisal/broker's price opinion. The seller may not qualify for the program. The buyer may lose interest during the process, which can take as long as six months. The area or condo may be blacklisted. There are simply too many uncertainties surrounding this dangerous practice in these unprecedented times."
The moral of the story is that short-sales are not for everyone. If you're a buyer trying to purchase a property that's a short-sale, you may be wasting your time if your buyer's agent, the listing agent on the property, the seller and the bank are not all on the same page and know what they're doing. And even then, the chance of it being approved is less than that of you winning at a Blackjack table in Vegas.
For more resources and information about foreclosure/bank-owned and short-sale properties in Loudoun County, VA, check out my local RE blog LoudounForeclosures.com.
The foreclosure/bank-owned and short-sale portion of the Loudoun County real estate market has been steadily improving over the last 6 months. But last month brought some of the best news we've had in a long time - demand outpaced supply!
For the first time since the market turned, there have been more distressed properties sell than new ones come on the market in a one month period. August had 326 distressed properties sell versus 306 new ones come on the market.
Here's a graph showing new listings (supply) versus solds (buyer demand) for 2008 (click to enlarge):
Notice that in January, the number of new listings was more than double the amount of solds. Since then, the number of solds has been steadily increasing. The number of solds in August was more than double those in January.
As for inventory, there was a spike in new distressed property listings last spring, but it's back down to the 300 per month level.
This is very good news for not only the foreclosure/bank-owned and short-sale property market, but the Loudoun County real estate market in general. The key ingredients to a stabilization of the market is lower inventory and higher demand, which is what we're seeing across the board in Loudoun County.
Loudoun County officials are currently working on a program that will help Loudoun employees buy foreclosed homes. The program would provide $5000 in grants to county and school system employees in order to purchase foreclosed property in Loudoun County.
Loudoun County officials are currently working on the proposal which will go before the Board of Supervisors next month.
This comes after the Loudoun County board last month approved a program that would low-interest loans to those making up to $99K per year.
Loudoun has been hit hard by foreclosures and the county is trying to be a part of the solution as well as make it more affordable for county employees to actually live in the county they work in. This is definitely a step in the right direction.
Many buyers worry about one thing when it comes to a mortgage - the rate - and they pay little attention to mortgage guidelines. But in these market conditions, mortgage rates should be no higher than number 2, if not number 3 on the "worry list" with mortgage guidelines being number 1.
Why? Because mortgage guidelines dictate whether you qualify for a mortgage in the first place, regardless of the rate. If you can't qualify, then the rate doesn't matter. Private lenders, as well as the FHA, are getting more strict on their guidelines every day.
Here are some examples of how guidelines are tigthening up:
A few years ago, you needed a minimum of 620 score to qualify for a "prime" or "A-paper" loan. Now, most lenders require a 720 or higher
Rather than one month's cash reserves, most lenders are now requiring 3 to 6 month's reserves
The amount of the down payment required by the lender has gone from none or 3 percent to a minimum of 10, if not 20 percent
"No-Doc" loans are a thing of the past. Now you have to have all your paperwork and records for several years back otherwise the lender won't even touch you
As you can see, it's about much more than just rates these days. And as more banks go up in flames and credit gets tougher to get, these guidelines will get more strict. So rather than watching rates, watch mortgage guidlelines.
The silent auction will be held on October 24 from 6 to 11pm. Donations of $100 or more are requested from area businesses for the event. Auction and dinner tickets are $65.
For tickets to the DAAR charity auction and dinner, click here. To be a sponsor and/or donate an item(s), contact Kathleen Mellot, Director of Member Services, at 703.777.2468 or kmellot@dullesarea.com.
"Conforming mortgages. Home loans for $417,000 or less that meet guidelines devised by Fannie Mae and Freddie Mac, the government-controlled housing finance giants. The guidelines require borrowers to have good or excellent credit histories, and to have some equity in their houses -- either by making a down payment (when buying a house) or by having a house that's worth more than the amount borrowed in a refinance.
Mortgages are likely to remain available for qualified borrowers who get conforming loans, as long as they have sufficient equity. To qualify for conforming loans, borrowers might need to have equity of at least 5 percent or sometimes 10 percent or even 20 percent. The amount of necessary equity depends on where the home is, whether it's a condominium and other factors (such as credit history).
People who need to refinance, but owe more than their houses are worth, will not be helped by the powers the Treasury seeks. The Treasury's proposal isn't designed to bail out upside-down homeowners.
Jumbo mortgages. Home loans of more than the conforming limit. The jumbo limit varies, depending on location. In some places, it's any mortgage of more than $417,000. In expensive markets such as Los Angeles, it's a loan of more than $729,750. In some places, the limit is in between.
Lenders say jumbo loans, when available, have high rates and fees. This is a result of the credit crunch. If the Treasury's proposal goes through, jumbo loans might become more available and affordable. There's no guarantee of that, though.
Mortgages insured by the Federal Housing Administration (FHA). Loans for people who have so-so credit histories or who have down payments of only 3 percent or so. Those loans remain available for purchasers and for refinancers who can jump through multiple qualifying hoops."
Ultimately, you'll want to chat with a loan officer for further guidance. A loan officer will be able to determine which option is best for you, whether or not you'll qualify and what guidelines you'll have to meet based upon your specific financial situation.
Here are the September 2008 statistics for the Leesburg real estate market (20175 and 20176 zip codes):
Leesburg - 20175 - September 2008
New listings = 52. This is a 20 percent decrease in new inventory as compared to September 2007
Solds (Under Contract) = 36. This is a 45 increase in buyer demand as compared to September 2007
Leesburg - 20176 - September 2008
New listings = 101. This is 29 percent decrease in new inventory as compared to September 2007
Solds (Under Contract) = 71. This is a 236 percent increase in buyer demand as compared to September 2007
Though buyer demand increased significantly year-over-year in the 20175 zip code of Ashburn, it really spiked in the 20176 zip code. These statistics confirm what my clients and I have been seeing and feeling while searching for and writing offers on properties - there are less properties to choose from and more buyers fighting for the same property.
Here are the September 2008 statistics for the Sterling real estate market (20164, 20165 and 20166 zip codes):
Sterling - 20164 - September 2008
New listings = 126. This is a 7 percent decrease in new inventory as compared to September 2007
Solds (Under Contract) = 114. This is a 317 percent increase in buyer demand as compared to September 2007
Sterling - 20165 - September 2008
New listings = 52. This is a 27 percent decrease in new inventory as compared to September 2007
Solds (Under Contract) = 31. This is a 172 percent increase in buyer demand as compared to September 2007
Sterling - 20166 - September 2008
New listings = 11. This is a 45 percent decrease in new inventory as compared to September 2007
Solds (Under Contract) = 15. This is a 214 percent increase in buyer demand as compared to September 2007
The 20164 zip code had the largest increase in buyer demand out of the three zip codes in Sterling. In fact, Sterling's 20164 zip code had more sales and the highest increase in buyer demand in September 2008 out of any zip code in Loudoun County.
But the rate at which new listings came on the market in the 20164 zip code remained relatively steady as compared to last year. This is mostly due to the large number of sub-prime loans and distressed properties found in that zip code which are helping fuel new short-sale and foreclosure/bank-owned listings.
Also.. notice that there were more sales in that zip code than there were new listings. That's great for sellers and the real estate market in general, but not-so-great for buyers looking in that zip code.
Here are the September 2008 statistics for the Ashburn real estate market (20147 and 20148 zip codes):
Ashburn - 20147 - September 2008
New listings = 86. This is an 11 percent decrease in new inventory as compared to September 2007
Solds (Under Contract) = 71. This is a 40 percent increase in buyer demand as compared to September 2007
Ashburn - 20148 - September 2008
New listings = 31. This is a 9 percent decrease in new inventory as compared to September 2007
Solds (Under Contract) = 31. This is a 258 percent increase in buyer demand as compared to September 2007
Though buyer demand increased significantly year-over-year in the 20147 zip code of Ashburn, it really jumped in the 20148 zip code. In fact, the 20148 zip code had the same number of sales last month as it did new listings (31).
These stats confirm what's being felt on the "street" - there are less properties to choose from and more buyers fighting for the same property. This is especially true with properties in the lower price brackets and those that are great deals. This bodes well for sellers and the market as a whole though it's not news most buyers want to hear.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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