Real Estate Blog - WHAT'S HAPPENING TO THE MARKETS? TELL US SOMETHING GOOD!!

Home : Blogs : Lenn Harley, Real Estate Broker, Maryland & Virginia : Lenn Harley, Broker, Homefinders.com in Maryland and Virginia

WHAT'S HAPPENING TO THE MARKETS? TELL US SOMETHING GOOD!!

Good Grief!! Listening to the news just isn't any fun any more. That said, I'm going to stick my neck out and venture a look at the economy. This isn't my forte, so be gentle.

Stocks are down - that's bad.
Bonds are up - that's bad.
Real estate is down - that's bad.
Insurance is down - that's bad.

The stock market is in the tank and if anyone believes it isn't going to get worse, well, they must be bridge shopping.

Worse, the bond market is now also in the tank. Seems that the underwriters that insure these babies while they're floating around are on the verge of insolvency themselves. Mmmm. If there's one thing we know about bonds, municipals, etc, it's that they don't take a step outside the door with out their insurance umbrella. How do you think Warren Buffett get so rich??

Elliott Spitzer wants to "help" Wall Street become more creditable. Elliott Spitzer got elected governor of NY by beating up on Wall Street. Shucks. I want Elliott Spitzer to be more creditable.

The real estate industry is in the tank. So the government is going to give everyone $800. That will go into the cash registers of Wal-Mart or Taco Bell. I can't for the life of me see how the government giving everyone $800 that the government doesn't have, is going to help the economy. Isn't this the same government that admits that the national debt is one of the problems with economy?? The retail market has already absorbed all of the cash that folks have not been spending on real estate for the past year or so. In some cases, with money that didn't go to mortgage payments. Does anyone know a home owner looking for a short sale or waiting for forelcosure that still has the money that they didn't pay to the mortgage company?? How many extra socks can a family buy with $800. Wait. Folks won't be buying socks. They'll be buying Wide Screen TVs, Play Stations and Apple phones. Technology is still profitable, so let's buy more. By the way, that $800 will probably be taxed.

Financial giants who aren't writing down billions in losses are looking for buyers. At this point, the Countrywide/BofA deal has about a 25% chance of going through. BofA may just have to suck up that $2Billion they sunk into Countrywide's black hole. BofA may find that "dollar cost averaging" isn't a good idea when the CEO of the target company may be going to jail.

"Real estate is a good long term investment", say the NAR and real estate agents across the country.

Here's the latest real estate report for Fairfax County, a popular market in Northern VA.

DECEMBER	2007	2006	% Change
Total Sold Dollar Volume:	$454,787,544	$657,765,128	-30.86%
Average Sold Price:**	$540,128	$537,829	0.43%
Median Sold Price:	$430,000	$450,000	-4.44%
Total Units Sold:	842	1,223	-31.15%
Average Days on Market:	112	97	15.46%
Average List Price for Solds:	$595,870	$575,194	3.59%
Avg Sale Price as a percentage of Avg List Price:	90.65%	93.50%

** Includes single family detached, single family attached, mobile homes, co-ops. All residential homes sold in Fairfax County in December 2007.

In the above example of a home priced at $540,128, a home buyer with 20% down, $108,025, with an interest rate of 5.75%, the mortgage payment will be

$2521.63 PI
$416.67 Real Estate Tax
$100.00 Insurance
___________________________
$3038.30 PITI

The average income for residents of Fairfax County is $99,000.00 a year, or $8520 monthly. With a 30% ratio for housing, a mortgage payment of $2475.00 is reasonable and reduces risk to the home owner.

Mmmmm. We're about $500 short. What to do? Perhaps an interest only loan??

WAIT!!! There's more!! The average home in the $540,128 price range in Fairfax County was constructed in 1971.

EXAMPLE: Homes in the $540,000 price range in Fairfax County.

Fact: The homes available in the $540,000 price range is not what most buyers will buy.

Fact: Few buyers have $108.025 for a 20% down payment without selling an existing home with equity. That means a buyer for their existing home.

Fact: Most Fairfax County home buyers will not pay $540,000 for a house built in 1971.

Fact: $540,000 is town home price in Fairfax County.

Fact: Wages are not going to increase dramatically in the next year.

Fact: $800 will not make a difference in the purchase of real estate. Nor will $1,600.

Fact: The average price of a single family detached fee simple home in Fairfax County is, today, $873,000.

Fact: The average price of a resale single family detached fee simple home in Fairfax county is $743,792.

THE BIG DISCONNECT. There is still a disconnect between what the consumer can qualify to buy and what they want. The disconnect is about $250,000.

This is my forte.

CONTACT HOMEFINDERS.COM EMAIL HOMEFINDERS.COM

Posted by Lenn Harley, Real Estate Broker, Maryland & Virginia on 01/18/2008 04:40 PM

Comments (92)

virginia real estate

92 Comments on WHAT'S HAPPENING TO THE MARKETS? TELL US SOMETHING GOOD!!

JAN

2008

Keep educating us, Lenn. You explain the market in ways I have never even thought of and make it understandable to boot.

ouch...

Hi Lenn - that is a dismal story - I am not seeing quite the same thing in my neck of the woods, but know it is happening elsewhere. The $800 thing is just crazy, though. Thanks for all the info.

Total units sold dropping, prices holding. Very similar stats in many of our communities.

"So the government is going to give everyone $800" - I couldn't agree with you more, what good will this do? Thanks for the insight.

The government is going to give everyone $800 - I don't think that is going to stimulate the economy, especially the real estate market, It is just going to cost us a lot of money

Great information, thanks, and yeah 800 bucks, wow. Not gonna help.

Lisa. Our market just may be picking up a tad. But, it is the season for relocation buyers which always stimulates the new year here. We'll see.

Courtney. I understand the market in your area isn't so bad. That's good news.

Randy. I believe your market is a tad better than ours.

Pam. We'll see. This is an administration hand-out. It may fall on giving money to folks who don't pay taxes.

Michael. They're talking about $140,000,000,000 stimulous. Yep. That's a lot of money.

Jodie. No, it won't. It will add to the deficit though. More deficit financing. You gotta love it.

I find it interesting that everyone is saying that the government is "giving" people $800. I thought that money belonged to those people. In other words, the government isn't TAKING another $800 from people. And that does make a difference.

Hi Lenn- "Fact: Wages are not going to increase dramatically in the next year." That is most likely a nationwide fact. The sad fact is, the $800 should be going to some mortgage companies, but will end up at Walmart on a big screen, it's human nature.

Lenn, I just received an email earlier today from our new Realtor(r) Association president. She is urging all Realtors(r) in my area to run a one line ad in the newspaper telling folks what a GREAT time it is to buy real estate. She figures if we all do this we can change the consumers perspective and help our market rebound. I guess it doesn't matter if it's true or not. Ethics are for rookies!!!!!

Jeff. Of course. Unfortunately, folks forget that before the government can "give", it has to "take.

Allison. No doubt. No doubt. Of course, that is the intention of the redistribution.

Lenn,

I'm not buying it...it makes too much sense!!! Thanks, Fran

Bryant. That's the funniest thing I've read in ages.

Rebound by Proclamation.

Doesn't she know that no one reads the newspepers any more? Wait!! Maybe her brother is the editor of the newspaper.

At least the newspaper would have some revenue.

Then, what happens when they run an editorial that denigrates real estate folks?

Fran.

Nothing in real estate makes any sense any more.

Today at the Luxury Conclave we heard:

35% of homes have no mortgage

94.88% of mortgages are NOT in foreclosure.

In 43 states there were less foreclosures in 2007 than in 2006.

That's something good that you might not read in the newspapers.

Lenn, This might not be your forte, but I would say your analysis is pretty darn good. No matter how you look at it, the picture is dismal. The forecast is dismal. At this point we're just mitigating loss as much as possible for some sellers.

Lenn, we have that same disconnect here in the Lake Norman Area. We too have had sales volume declines but not substantial median price declines. However, I have a feeling if I crunched the numbers as you did the results would be about the same regarding the disconnect even if our median prices are substantially lower as our median income is lower as well.

The whole $800.00 dollar tax break makes you wonder if the powers that be are smoking ______? Go figure! To think that people are so worried about experience in the race for Pres! Just make it up as you go along. It's just Monopoly money!

Lenn, that was a great post. I am going to look at some of the same stats in my area in the NC mountains. I know that our firms sales volume was down 31% and we have a 25% market share for 3 years running. So, I would say our numbers are similar.

"Fact: The average price of a single family detached fee simple home in Fairfax County is, today, $873,000."

WOW. That's what you pay for a lakefront vacation property here in Northeast PA. People think we're expensive! :-/

Still trying to wrap my brain around that as an "average" price for a typical home.

Sharon. I don't see much use for national stats in my market. While we don't have as many foreclosures as in some markets, one of my partners just listed a townhome in a community of 108 homes, 7 are for sale and all but one of the listings is either a short sale or bank owned.

I don't think that 5.22% of all mortgages in foreclosure is good news.

Jesse & Kathy. That is exactly what we do in a down market, mitigate the losses for for our clients. Sugar coating the facts of the market just encourages overpriced listings and seller disappointment. It doesn't bring buyers out either.

Diane. Your prices might be lower for real estate, but I doubt that your average incomes are that much lower. Could be though. Cost of living here is a disconnect too because of the cost of housing.

Lenn - I missed the news of the $800. Will they be sending me a check in time for the Kentucky Derby? I could certainly wheel a lot of horses in exotics with that kind of mad money! Speaking of mad money, how is our boy Cramer doing with the market tanking every other day? Haven't seen him sharing his wisdom on the Today show lately.

I like your forte. It sure beats circling the wagons. You and I both know that circling wagons for too long will produce a large rut. A rut is just a grave waiting for dirt on the coffin.

I couldn't wait to get your take on the $800. I was not disappointed. The art is terrific, too. Thanks!

Karen. Wrap it up. Also, the average price of new construction single family detached fee simple in Fairfax is $1,655,419. It takes about $350,000 income to buy one of those babies, even with 20% down.

Todd. You are smarter than the average bear. I believe that builders need to know these facts too. Helps planning.

Endea. That's funny. But, you are right. They will just "print it". And I thought they were worried about inflation.

Loved this post, but especially where the $800 is going to "Wal-mart or Taco Bell"...the government could find something way more useful for all of our $800 bonuses.

Cigars and Martinis I sure do love this post! The problem isn't that there is no solution, the problem is that no one is willing to comprimise and reach a real agreement that makes sense for America but in which not everyone gets what they want.

As for my share of the take? You bet! $20 cigars and $80 vodka! Actually that's not true but I'm not going to say because you'll laugh. Oh, wait, what's that? I don't QUALIFY for the rebate? How in the heck can I not qualify for the rebate?

"Bush said the rescue effort should be both quick and temporary" - Ya, like it will take longer to distribute the checks than it will to waste the money. What's crack going for these days. Do people still smoke pot or is that something out of the past? I'm betting the corner hookers and drug peddlers reap the whirlwind on this one. Of course if we HAD a fair tax at least they'd have to recontribute to the cess-kitty. But that's a different socio-political commentary all together.

Laurie. Thanks for calling that "art".

John. I heard Cramer on DNBC today. He recommends a 100 basis points rate cut and that the government buy the mortgage-backed securities insurers.

He may not be too far off. That industry just might need a federal bail out a-la Resolution Trust. Can you imagine the $$$Billions that is going to take.

If any of these insurers tank, the financial houses that hold the securities will go down like dominos. The government are not going to let that happen.

Ken. I'm laughing out loud.

Don't worry about the junkies and hookers using the $800 for silliness. I understand the "rebates" are going to go to tax payers.

Wait. I just thought of a solution to the budget problem. Legalize the drugs and the oldest profession and tax it. That alone, by many estimates would bring in about $300,000,000,000 a year. That's another $300B to redistribute.

Hey, the drug dealers and hookers would also be able to qualify for mortgages and buy homes. Shucks, that could cure the real estate troubles. Another 5-6 million home buyers in the market. Add to that a few million drug dealers and our real estate problems are over. No more homes sitting. No more idle lenders.

Chelle. I'm happy to see it go to Wal-Mart and Taco Bell. At least the families will get $800 worth of good or lunches for it.

If the government spends it, they'll get about $150 worth of value for every $800 they spend or disburse. If that much.

Lenn, Where do I start. It's amazing what politicians and the government will say and do to us, the peons. Yes, I love going further into debt for freakin' $800 per. Therefore, they can say that they tried and gave to us. We haven't sold this country away enough already? What bs! This is just totally mind boggling, but it shouldn't be. I can't believe what BB's assoc. pres. is suggesting. Talk about a joke. Sure, make us look more ridiculous by the minute. But that's just like the state of Florida and FAR telling us that our property tax amendment is a good thing. Like hell it is! Very little if any good can come out of it for the typical homeowner. I wish that they'd spare us the crap!

This is a very well written post. I can tell that a lot of thought went into this post. It accounts in a large degree as to why not as many people are buying as many homes. While I like a healthy bond market, I agree that a bond market doing too well is not healthy overall for the economy. Investors typically invest in bonds while taking shelter from a down stock market. This "strategy" that Bush and his cronies have come up with is foolish. The dow was up 100 and change today after losing 300 points yesterday. The market rallied in anticipation of Bush's news. When it was done, it was still lower than yesterday. People are investing because in stocks because they know that there will be a short lived spike in retail as a result of this tax credit. Very short lived... What's $800.00 spending cash last the average american? 2 weeks? It certainly will not create more of a demand, causing expansion, therefore creating more jobs and saving the economy...

Lenn- By the time I got through all the comments I had forgotten what I wanted to say! I love your response to Ken's comment and I must say, that seriously I agree with your comment. Legalize those two things and you will dump a bunch of money into the economy. Giving people money is just stupid and irresponsible. I think that we should eliminate income tax and tax goods. After all, I just saw the report on the poor of America: If you are single and earn $10,000 a year you are considered poor. If you are a family of 2 making under $25,000 a year you are considered poor. But those same households you are 'poor' have big screen TV,s computers, IPODS, game systems, cell phones, cameras and more. Well in every other country that is considered RICH! SO make the tax fair, eliminate income tax and make the government stay in a budget, no special interest money and you have to go out and raise the money in the private sector, and increase the sales taxes on luxury items. When you follow that model, a lot like what Ireland did, the people will prosper and be able to buy more real estate. Katerina

Lenn... Excellent post as always. $800... I'm still shaking my head about that one. It amazes me when go into a home that is a short-sale and they have a new flat screen tv, PlayStation, furniture, 2 new cars... I'm sure there are people out spending their $800 right now.

Lenn, ok, I promise to be gentle...

It's simply the cyclical nature of the real estate markets assisted by a credit crunch. Middle america is driven by debt.

However, in my opinion, the stock market being down is not a bad thing -- the market goes through corrections -- and some of the best times to invest are when things are at lows. Stocks become overvalued (it is a speculative market) just like real estate. So I am an optimist! When things are low --- BUY! And there are some sectors of the market doing quite well (Just like Western Pennsylvania real estate...we have very affordable housing, and appreciation).

WE all wants bond yields down! Credit will become less expensive! The credit worthy should have the ability to invest wisely with interest rates that are affordable.

OF course we don't want to see depreciation of home values, but they were fueled by a out of control credit market, in that credit was granted credit to almost anyone!

I agree, lots of bad things, but once the realized loss of the credit crunch work their way through the economy, there should be a recovery.

Katerina. Thanks. I would love to see the IRS disappear and go to a consumption tax. But, the lobbys for the accountant and legal industries will never let it happen.

Legalizing prostition sounds extreme. But, I have a hobby of matching political contributions and legislation Some can see a real comparison between what a prostitute providing a service for money and a legislator providing tax relief for money.

Christopher. Thanks for the comments. Actually, that $800 will simply help a lot of folks pay off what they charged for Christmas.

Marc. I saw that Fl property tax amendment. You'd be surprised at the escalation in property taxes around here. In one county, Frederick County, the taxes have about doubled.

Um...Disconnect is one way of saying it...or perhaps we might term the lack of comprehension on a number of levels...delusion.

Hi Lenn...here's the GOOD NEWS...when the market is down "bad", agents who should have never been in the business start leaving in droves, YES. Just like they did in the late 80's and early 90's. That mean the good agent like you and me, have more business, the consumer gets a better trained agent and is less likely to get whoever is on "up time" to work with. It's a WIN WIN! There is a big bight side to these things, and the market is becoming affordable for first time home buyers too. I think we should stop watching the news, and just focus on all the business we will have a bigger share of :). Liz

Lola. Indeed, delusion is also good. Of course, that describes the sellers pricing the proprties.

Liz. When, when??? Our MLS has 56,013 subscribers and 89,193 listings. Need I say more??

Debbie. I believe you. Once the government floated that $800, they'll have a rough time backing away from it.

Michael. Thanks for your very thoughtful comment. I have always believed that the market would work it's way through this mess without any intervention. But, it doesn't appear that we are going to have the luxury of "letting the market rule". Governments that tinker with markets always cost us dearly. They play favorites and that just causes more pain for the rest of us.

The only good that may come of all this is tighter lending standards and less real estate wannabes

$800.00 sure won't help real estate. It may stimulate other parts of the economy. Probably a whole bunch of TV's. It's an election year. All sorts of weak ideas get proposed masked as real solutions.

Allen. That's already happened.

Wayne. What?? Politics is playing a part is the stimulus??? Say it ain't so.

Lenn:

Have faith. 2008 will indeed be a tough year for many.,.......but hang tough 2009 is coming, along with a new administration, new laws, better lending guidelines, yada yada yada. The foreclosures, many of which have yet to hit the market will be partially absorbed, the big new home builders will sit on the sidelines this year (which will help absorb existing homes) and by late 2009 we'll be running smoothly.....just in time for the 2010 census which will tell us that there are tens of millions of first time home buyers looking for a deal.....and a Realtor.

Robb.

I expect, as you say, recovery in 2009.

I still believe that we need more downward trend in pricing. The affordability gap is still hurting our market.

I guess someone recently stated that taking an aspirin will relieve the pain short term, but if you don't cure the underlying "disease" it won't cure the "patient"! I am afraid that is the way the current adminstration is going --

Lenn - you have such a way with words, and get right to the meat of the problem. The $800 for folks is absurd, and who is going to pay for it? It's all political IMO. Sharon shares some words that are encouraging. But we have a ways to go.

Jeff

JAN

2008

You are seeing what we are here as well. Homes are priced higher than what people can afford and are willing to pay.

I agree that there's a huge disconnect in real estate between income and housing prices, not to mention the many band-aids that are being floated in an attempt to solve the current economic situation. Lenn, if you could "fix" it, where would you start?

Jeff. If the government were refunding to us money that they were holding and they were merely returning to us that which is ours, the "rebate" would make sense. However, all of the tax money the government took, they spent, and much more. The government are printing more bills and distributing them to some of us. About $140Billion worth. That can only increase the deficit by another $140Billion.

The government are not returning anything to us. The government have no money to return. They have nothing but a printing press and when they print those checks and send them out, the folks that cash them will be adding to the deficit, $800 at a time.

Joan. Or, they could let the economy cure itself. Government aspirin wil just move the pain around. Markets work if they are left alone.

Bob and Carolin. If average prices are significantly higher than average qualifying incomes, you have a serious disconnect. There is only one cure for that market imbalance. Lower prices or higher incomes. One could take weeks or months. The other could take years, many years.

There has been so much media attention on sub-prime mortgages, and we're just now starting to hear coverage that the whole economy is in trouble. Far too much has been blamed on sub-prime mortgages. People usually don't want to lose the roof over their heads, so if they aren't paying their mortgages what is up?

This really was educating. I will have to look into our market to see if there is "market inbalance". You are such a smart woman, I wish I could find a way to "channel" you when I need to explain information like this to customers/clients! There is so much to learn and understand. Thanks

Dru. What would Lenn do to "fix" the current mess? Thanks for asking.

1. Lenn would form a joint federal, state investigative task force managed by the FBI to enforce the laws that were broken that caused the collapse of the mortgage industry causing the callapse of the stocks for the financial industry and contibuting to the depression of the real estate industry and more.

Starting with Franklin Raines, the crook that took Fannie Mae out of their role of purchasing loans and providing liquidity for mortgage companies. Fannie Mae has tried to correct their past perfidy by now causing huge increases in the cost of financing to the consumer. Making the consumer pay for the criminal actions of their own CEO and lack of oversight of the Fannie Mae Board. Avery board member of Fannie Mae should be forced to disgorge every dime they took for oversight when they were neglecting their duties and collecting their board fees.

2. The President of the United States should form a task force to examine those Congressional Committees that have oversight responsibility for financial markets and identify every one that neglected the duties for which they serve on those committees. I would also publish in the Federal Register, every dime a member of Congress took from a financial industry player in the banking, mortgage, securities interests that permitted the securitization of subprime and other loans.

3. Lenn would request that the SEC accelerate their investigations of financial institutions and public company executives to make public the "off balance sheet" entities that permitted these institutions and executives to trade in instruments that were not reported in the company's filings with the SEC.

4. Lenn would have the FDIC and FBI examine the books of every financial institution that sold mortgages to the public with less than qualifying incomes and credit scores and by simple mathematical formula determine where mortgage fraud originated and prosecute the owners of those entities and get them out of the systems to prevent further abuse of the public.

5. All of the above actions should be made public and what would result would be a series of visuals of CEOs raising their hands and taking the oath to tell the truth, quickly followed by those same individuals "taking the Fifth". The public would see where their money went, who benefited, what happened to the mortgage industry and concurrently to the real estate industry.

Believe it or not, every one of the above actions could be done without any new laws. The laws and guidelines and regulations are already there. All it would take is leadership.

Lenn would do a lot more but, who's going to read these comments???

I would, and I bet I'm not alone. You are one of the most knowledgable real estate professionals around, and I appreciate that you share what you know.

Steve. You're right. It is a lot more than just subprime mortgages. I do know from experience that a lot of the folks what took those subprime mortgages did not intend to hold those homes very long. They purchased with the full intention of selling in a couple of years and pocketing the equity with every increasing market value, which came to a screeching halt in about August 2005 when prices got so high that even with a subprime folks couldn't buy.

Kim. It's easy. Just compute the average home price mortgage payment in your market and qualify the average home buyer based on the average income for that area. It's very enlightening. I started computing qualifying stats for my market segments back in 2005. I realized in May of 2005 that we were in trouble here. The dramatic increases in home prices just couldn't be sustained with the present incomes. At first folks tried to overcome the extraordinary price increases by moving farther and farther out. Then came the gasoline price increases and it broke the average buyer's budget. The cost of commuting 40 miles to work daily is about $320 a month. $322 a month is worth about $70,000 in house price. Commuting from where I live to DC would cost about $4.65 a day plus $7 in tolls. That's about $233 a month, which is worth about$388,000 in house value. The consumer just cannot win.

Lenn, I think a BIG part of our economic problem is that we listen to the media too much. The media loves bad news and when one listens to bad news all the time it affects your thinking.

Kevin. Since you're using my blog to advertise your services, I am compelled to point out that your office has 47 agents, 131 active listings with an average DOMP of 204 days and DOM of 161 days.

The average price of your office lisings is $416,889. The average price for single family detached homes is $427,313. It takes about $110,000 for a buyer to qualify for a 95% LTV on that price range.

The median income for Spotsylvania County is about $68,000. THAT IS A DISCONNECT.

Of course, there is "good news" in pockets of our market. My article related to Fairfax County. You're not in Fairfax County. You're in the Fredericksburg/Stafford/Spotsylvania area where the commute to DC is about 1.5 hours. Comparing Fairfax and Spotsylvania is apples and oranges. You're 50 miles to DC.

Spotsylvania County VA	2007	2006	% Change
Total Sold Dollar Volume:	$27,353,540	$45,611,014	-40.03%
Average Sold Price:	$297,321	$328,137	-9.39%
Median Sold Price:	$270,000	$290,000	-6.90%
Total Units Sold:	92	139	-33.81%
Average Days on Market:	135	110	22.73%
Average List Price for Solds:	$331,850	$353,176	-6.04%
Avg Sale Price as a	89.60%	92.91%
percentage of Avg List Price:

When you advertise your services on my blog, be prepared with facts.

Lenn,

My apologies. I will delete my comments from your blog. I was merely trying to add to the conversation. While I do blog to advertise, I do more so for the education and the free exchange of ideas. I had lots of business before blogging. It is only one aspect of my business.

Have a great day!

Kevin. Thanks for deleting your comments. I respect your opinions, but they weren't supported by facts.

I'm very familiar with your market because it's one of my favorite areas in my market. A home in Loudoun County that would sell for $850,000 is going to be $650,000 in Stafford County that that makes it attractive to many buyers. Stafford is a great area with popular public schools and a new medical center opening. I rave about Stafford. I have a buyer now who, when his home in NJ sells will buy in either Stafford or Loudoun County. Stafford will probably win because of price.

BUT, the Stafford/Spotsylvania market is not what it was before 2005. Prices got too high there, just like they did in our entire market.

I am of the opinion that recognizing the facts about our market is the only thing that is going to get prices down to a level where buyers will be back out looking and buying.

That's my goal.

Lenn - Whoa! That expended a tremendous amount of time and energy, didn't it?! Point well made, as always. I also love your list to Dru about how Lenn would fix things, especially #1. Now Fannie Mae is flagging markets left and right and setting up more barriers for lenders and appraisers to make it nearly impossible for even creditworthy buyers to buy a home! I don't know about anyone else but $800 won't make a dent in my gas tanks over the course of a month. I'm fairly certain that money would be better spent eliminating debt rather than handing it out for consumer spending (or overspending). But what do I know?

Dan. In some ways, there is a lot of bad news out there. The problem with the media is that they don't know what news is important and what is simply "misery" stuff.

I get calls from media folks regularly about short sales and foreclosures. However, they aren't looking for facts. They're looking for a photo op of a family to feature to show the children sitting on the curb waiting for the sheriff to evict them. What they don't want to hear is that the family has already moved on in their SUV with their flat screen TV in the moving truck.

Irene. I do tend to get carried away. But, the facts are right there if someone wants them. It takes only minutes to pull. I guess I'm "old school" to want to get to the bottom of things and not just look on the surface. I don't just want to know that we have a slow market. I want to know why. Only when we know why we're in the mess we're in can we find solutions.

The Fannie Mae thing really infuriates me. I want accountability from all the executives that neglected their fiduciary to the public. I want some "perp walks".

Yes. I'm a statistical junkie. "It's a blessing. . . . and a curse." Monk.

Do you think we could all pool that $800 and get some CPAs and CFOs to run the government for awhile and send the politicians home for the summer? I have often wondered if finanical experts ran the government maybe we would be better off? just my musings.

Gail. THANK YOU FOR THAT.

But, isn't that what some of the folks running are doing?

Romney certainly touts his "turn around" business accumen. He "turned around the Olympics so that now there are no more drug abuses with Olympic athletes, right??? Also, Romney doesn't understand that government imposed "fees" are taxes. I loved watching him squirm on that one. Although, I will admit to believing that "use" taxes are fairer than general taxes.

Giuliani touts his miracles in "turning around" NYC. Everyong loves his record but NYC folks.

Clinton touts her "experience" although, in my recollection, it's vicarious.

Obama has none, claims none and that, in itself recommends him for not making any mistakes because he hasn't done anything.

Huckabee claims fabulous success as a governor in Arkansas. Many support him for his record except folks from Arkansas.

McCain doesn't tout any business accumen and rightly so.

Thompson? If he were still alive, he'd probably be claiming the best business experience too. No, he'd probably be quoting the Constitution. Not a bad idea.

John Edwards is a Plaintiff's trial lawyer. That requires the ability to "find the money", not manage it.

I just can't find any business experience in any of the folks running now.

Fact is, business exedutives are not really interested in taking the pay cut to run the U.S.

Lenn: Congratulations on number 667 being featured..LOL!

You are so spot on. I really wish you would run as an Ind third party presidential candidate. Maybe members of active rain can start funding your campaign :)

Renee. Thanks for inspiring me to make a post. I had given up hope of getting a Gold Star again. "Hard Core Real Estate Talk" doesn't seem to get featured much. Not a problem. I have wonderful subscribers.

If you want a Rainer to run for Pres. ask Linda Davis. She already has a toe in the water. She's a straight talker too. I'd vote for her. Her experience is real and personal. She actually runs a business.

Lynn, this brings up my favorite rant about politicians... limit each and every one of them to 6 years in any office.. from dog catcher to president... nothing more... being a policitian doesnt qualify one for more than taking and transferrring someone money to someone elses pocket. politician is or should not be a profession! or a career!!

of course im living in a dream!! :)

Lenn, thank you for the great information and keeping us abreast of the NOVA market from a realtor's point of view instead of the media.

Gail. The problem with the folks on the hill today is that they spend more time raising money than doing their job. Unless, of course, getting elected IS their job. Unfortunately, the need for money has totally corrupted the process for Washington Politicians.

Michelle. Where are you located in Northern Virginia??

Incredible post! I ran the numbers back to 2005 for Fairfax and they are even worse! I could come back to the Fairfax market...and could afford to buy a home, but like you mentioned...the age of the home! Ouch! I could buy much of the same housing in better shape in the Atlanta area for 2/3 less. It is the condition of the homes that bothers me here... in Fairfax it is condition and price! That is why they call it a buyers market...I see no short term solution... and renting looks like a very good option!

EEEEeeeekkkkkk. You used the "R" word.

The solution to buying a home in Fairfax is knowing your market and doing some tough negotiation.

Buyers are often handicapped by falling in love with a home. In order to get a really good price to protect against further price deterioration is "being willing to walk away". Few buyers when they find what they want to live in are willing to do that. When they are, we can often make some very, very good buys.

The government tends to go for quick fix. Problem is the fix is a band-aid... and possibly just a prolonger. The reality is, in my primitive brain that is, the market will have to fix itself. Aside from raw numbers (which are too ugly to look at right now) the government's hope appears to be in the thought that we'll see a jump in consumer confidence when everyone gets their presents. It'll take more than a check to do that.

Sorry for using the "R" word! Let's just say it stands for the word "Reluctance!"

Chuck. Right on the money. Wait!! We don't want money. You win the "Smarter Than The Average Bear" award for the day.

That is awful. The government isn't going to be able to fix that with $800. And you are right, it will go to flat screen tvs and all kinds of the latest technology. I don't think they were trying to fix it. I think they were trying to make us forget about it for a little...LOL

Christy. I believe you hit the nail on the head. Lots of folks will thank the government for $800.

I don't know. It took $55 to fill my gas tank today. $800 doesn't go far with $3.00 gasoline.

Great post as always. I think 2009 will better for the real estate markets with new administrations! fresh views!

An $800 "rebate" is a feel-good solution, a band-aid.

Those in power in this country are also disconnected. They're completely out of touch with reality and with what the public sector needs in order to survive.

JAN

2008

Lenn- Oh you made my day with this one.. Seems to me we tried this little maneuver a few year ago.. I think the amount was $500 then.. hmmm maybe there is more inflation then we thought.. As I remember the ploy didn't work then and as you point out it won't work this time either.. Would like to see these guys do something worthwhile instead of sucking up to the polls

Mohamed. Thanks for commenting. 2009 may be better. I can't wait.

Eric. They are disconnected. Indeed. All one has to do is listed to the Congressional hearings and that's all one can believe.

Kaye. I remember the last handout. It was also taxed. What's $800 after taxes?? Of course, if you don't pay any taxes it's not any less. But, then, if it's a rebate, if you don't pay taxes, how can you get anything. I'm going in circles. It's not a rebate. It's a massive income redistribution.

The best news for anyone selling in Fairfax County right now is that they aren't in neighboring Prince William or Loudoun County. Those folks have really got some depressing MRIS data to look at. It could be worse...

Lenn,

I think simple, graphic illustration of complex financial matters is your forte!

Mike in Tucson

Anon. I'm seeing some improvement in the January stats for Fairfax.

Mike. Thanks. A picture is worth a . . . . . . . .

Thank you for making the market "understandable" instead of all these articles with a few big words no-one can understand ! Keep teaching us, you are awesome at it !

Melissa.

Thanks. The numbers are all in our data systems. It's just a matter of pulling them out. These are fects, not opinion.

Enjoy.

JAN

2008

Lenn, you're 100% right. The good news for buyers is that the $250,000 disconnect is heading to zero, and it's not because people are about to be getting big raises. Reversion to the mean, it's called, as you know. Good post, as usual.

Lenn,

I do not get the chance to read your posts as often as I did in the past, but this one is right on the money. I feel you have a good grasp of our market

Truly, my head is spinning. Wow.

John. The disconnect is shortening, but slowly.

Gary. Thanks. This market is complicated but it pays to know it. For some reason, when you know what you're talking about, buyers and sellers trust you. Trust is in short supply in real estate.

Jayne. Thanks. Now relax and stop spinning.

JAN

2008

Yea if you want to get sucked into the abyss of negativity happy trails. Not me. Being informed is one thing but one constant regardless of the market conditions is....there is always money out there and business to be had so if you want to wallow? Wallow. It just means more business for me.

Kirk. We don't have to be wallowing to recognize facts when they stare you in the fact. Going through life with rose colored glasses on is a good way to be hit by a Macke Truck.

It's only those of us who recognize the problems who can do anything to get on the right track or adjust our businesses for what is, not for what we wish it to be.

FEB

2008

This stimulus idea has been used twice before that I can remember. It was used by I believe by Nixon. we were young workers and it was delivered as a tax credit in our payroll checks but our companies health insurance deduction was raised the exact amount so we netted nothing. It was tried again, was it under Ford? This time checks were mailed to us but again insurances went up along with other costs, many companies trying to get a piece or all of the rebate before we could spend it so over all as young workers we lost and inflation really took off! In retrospect it was the Inflation Stimulus Package.

Send my check directly to Arabia or China, it will save me a lot of time, keep the emissions down and exclude ´stuff´ from the local landfill.

This blog does not allow anonymous comments