The question of whether the real estate market is a bubble ready to pop seems to be dominating a lot of conversations – and everyone has an opinion. Yet, when it comes down to it, the opinions that carry the most weight are the ones based on experience and expertise.
Here are four expert opinions from professionals and organizations that have devoted their careers to giving great advice to the housing industry.
“… conditions today are quite different than in the early 2000s, particularly in terms of credit availability. The current climb in house prices instead reflects strong demand amid tight supply, helped along by record-low interest rates.”
“The housing market is in line with fundamentals as interest rates are attractive and incomes are high due to fiscal stimulus, making debt servicing relatively affordable and allowing buyers to qualify for larger mortgages. Underwriting standards are still strong, so there is little risk of a bubble developing.”
“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while, because Millennials need houses. Prices will keep rising for a while, because inventory is so low.”
“Looking back at the bubble years, house prices exceeded house-buying power in 2006 nationally, but today house-buying power is nearly twice as high as the median sale price nationally…
Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”
Bottom Line
All four strongly believe that we’re not in a bubble and won’t see crashing home values as we did in 2008. And they’re not alone – Goldman Sachs, JP Morgan, Morgan Stanley, and Merrill Lynch share the same opinion.
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
Welcome to 23393 Summerstown Place, an elegant and stately home in sought after Loudoun Valley Estates, where pride of ownership throughout is most evident! This home is a Toll Brothers Luxury model, The Carlton Federal with over $400k in after construction upgrades and fine finishes; you will notice immediately how spectacular It truly is! You will be delighted when you arrive by the curb appeal and lush yard…and that’s just the beginning. As you enter, you notice the two story foyer with sweeping staircase and gleaming hardwood floors. Perfectly situated off the foyer is a formal living room with ample windows, creating a bright and airy feel that flows so effortlessly into the formal dining room, which is separated by stunning architecture.
The gourmet kitchen shines with upgraded appliances, granite counters, gorgeous tile backsplash, a large island, and eat in area all with the perfect finishes. Enjoy your morning coffee and the views of the backyard from the inviting morning room located right off the kitchen, as well as the private staircase to the upper level. You will be wowed by the gracious family room with fireplace and the incredible wall of windows. The study/office with custom built-ins will make working from home a breeze. The owner’s suite is one of grandeur with its generous size, walk-in closet with built-ins, and inviting sitting room. Luxurious best describes the owner’s bath with roman tub and his and her vanities. The upper level boasts three additional bedrooms; one with it’s own private bath, while the other two share a Jack and Jill bath. Entering the lower level, you will be impressed by the finished space that offers a media room, kitchenette, 5th bedroom (not to code), full bath and additional flex living space. This living area is perfect as an incredible in-law suite. You will love the stamped concrete patio with pergola, expansive maintenance-free deck that opens to a beautiful tree lined yard, as well as the brick walkways, creating an incredible outdoor living area. These will be favorite spots for entertaining or relaxing! Again…welcome home! For more information on 23393 Summerstown Place, Click Here!
Whether you’re looking for homes for sale in Fredericksburg, Stafford, Orange, Locust Grove, Culpeper, Northern Virginia or even Maryland or DC, we are your Real Estate team committed to finding the perfect home for you! Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar, and in a timely manner. Pricing your home accurately, one of our area expert advisors will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available properties, please visit our website licatagroup.com
As we come to the end of this four-part series, we look to examine the outcome that we will face once this is all over. With that in mind, we ask ourselves the final question; are we going to see the same outcome and devastation that we saw in 2008?
One of the key factors in buying and selling a home is the confidence that people have, and in times like these, memories of past experiences come back to us as we recall all the uncertainties that we faced. But the focus cannot be on what has occurred in the past, but rather what is occurring today and the days to come. With that, we look to see what is being said from the Federal Housing Administration.
The Federal Housing Administration indicated it is enacting an “immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages” for the next 60 days. The Federal Housing Finance Agency announced it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for “at least 60 days.”
What we are seeing is things in 2008 that we got wrong that you are now seeing the government respond to in regard to the needs that the consumers and the industry have so that It doesn’t happen again. We are seeing how banks are going to respond individually to borrowers in those situations. Actions like this show that the way this is being handled is significantly different than back then, and there are also structural actions that we can look at that are very different now. The visuals provided below will help to better illustrate this.
This first visual shows us exactly where we were in 2008, and what you’ll notice is that there were $828 Billion in cash out refinances back then, and homes were basically being used as ATM machines to which cash was being taken out to harvest equity from their home, a lot of which was being put in depreciating assets. When we start to look at today in the last 3 years, cash out refinances are a fraction of what they were leading up to 2008. What this entails, is that people have learned their lesson and are no longer doing what they have done in the past with the equity in their homes, and today the equity position is very different than what it once was, with over 50% of homes in the united states having over 50% equity. In 2008, people were walking away from homes when they had negative equity, but that is no longer the case.
We are in a very different situation today than we were back then. Those that fail to learn from history are doomed to repeat it, and its fair to say that the government and the American people have learned their lesson.
As we started out this year, we saw a market where income is rising, and mortgage rates have been falling. What this has created is a drop for the historic norm in the payment as a % of income, as demonstrated in the visual above. Historically speaking, the norm percentage of income that has been dedicated to their mortgage has been 21.2%, and right now what we’ve seen leading into this, is that number being 14.8%. This is significantly lower than the historic norm speaking in leverage to the consumer in relative to housing.
In conclusion, what we are seeing now and, in the months/years to come is not going to be the same as we saw after the crash in 2008. Homeowners have learned from their past mistakes, and the government is taking the necessary precautions to ensure that history does not repeat itself. While the uncertainty factor remains for a lot of what is occurring in the county and the world, it can be said with confidence that we will come out of this stronger, and better than going into it.
We hope that this four-part series has shed some light into the biggest questions that you may have right now. If you have any other questions about the current market and what’s to come, feel free to give us a call at (540) 388-2541.
Moving into part three of our four part series, the next question that we need to ask is: Are we headed towards another recession, and what does that mean?
When we talk about where we are today, the reality is that we can feel the slowdown occurring across the county, and it will continue to have an impact on economic activity. When addressing this question/concern, we have to ask ourselves what a recession truly is. A recession is a slowdown in economic activity. Now when we hear the word “recession” we immediately have these ideas and thoughts of what the prior recession was. If we talk about an economic slowdown, it’s very different, and keeping that in mind as we continue to talk about it is critically important in these times. To help discuss this, we’ll turn to the experts. Bill McBride from Calculated Risk had this to say:
“With this sudden economic stop, and with many states shutting down by closing down schools, bars restaurants etc. my view is the US economy is now in a recession (started in March 2020), and GDP will decline sharply in Q2 (as Goldman Sachs is forecasting). The length of the recession will depend on the course of the pandemic.”
Now certainly we can say that we are feeling this slowdown, and it can be said that we will continue to feel this throughout the course of the pandemic. If we look at where we were in 2008 compared to today, 2008 was like a tornado that had ripped through our town and tore things that had to be slowly rebuilt over time, and what we are experiencing today is a heavy snowstorm that is shutting things down. What we do know is that as time moves on, we will start to see things open back up again. We will be able to go to bars, restaurants and sporting events with the only challenge being getting into these places as everyone is going to be out and about.
Looking at that graphically speaking, the figure above provided by Goldman Sachs begins to show a “V” of recovery, and not a “U” like we saw in 2008, being a sharp decline followed by a sharp increase displaying further strong gains as we head into 2021. When looking at what the experts have to say, Wells Fargo agrees as well, saying “We do not expect a repeat of the severe recession of 2008-2009, because the virus and oil shocks are not endemic to the financial system, but are, rather, external. Once the virus infection rate peaks, we expect a recovery to gain momentum into the final quarter of the year and especially into 2021.”
Referring back to the analogy previously used, we will not have to rebuild our financial system like in 2008. Once the snow melts from this current storm, things will kick in, and that’s why we see that “V” curve instead of the “U” curve.
So rather than use the actual word “recession” we should look to use the definition, being an “economic slowdown” and if that does happen, we need to look at our history of events that have shown similarities to what is occurring, and what we can expect to see moving forward. The visual provided below shows what has occurred with changes in home price over the last 5 recessions.
What we can see from this graphic is that in three of the last five recessions, home prices actually increased as a result. We did see a slight decrease in 1991, but what we all really remember is the significant decrease shown in 2008.
The message that needs to be taken from this is that recession does not equal a housing crisis.
As we continue to look for answers to some of the biggest
questions surrounding this crisis, we start to wonder what kind of effect the
stock market has on the housing market, and how much of an impact we will see
as a result. We begin by asking ourselves; When the stock market goes down as
quickly has it has been, does it have a tremendous effect on home prices?
Often the best answers to questions is another question itself, and in this case, we look to the last crisis that occurred; being the crash of 2008. So, we ask, will this be just like 2008?
To help answer this, we take a look at the graph provided above which shows the crash of 2008, to the S&P Correction of the same time. The graph illustrates the S&P Correction at 51% during that time, and the Annual Home Price Deprecation that occurred just under 20%.
In a quote by David Rosenberg, he explains that what we are experiencing now has more in common with what we experienced in 2001 (9/11) than with 2008.
“What 9/11 has in common with what is happening today is
that this shock has also generated fear, angst, and anxiety among the general
public. People avoided crowds then as they believed another terrorist attack
was coming and are acting the same today to avoid getting sick. The same parts
of the economy are under pressure – airlines, leisure, hospitality,
restaurants, entertainment – consumer discretionary services in general.” –
David Rosenberg, Gluskin Sheff + Associates Inc.’s Chief Economist.
When breaking down what was said by Mr. Rosenberg, we can see that this event lines up more with how we acted when 9/11 occurred. To help better illustrate this comparison, we will look at the graph below similarly as we did for 2008, but instead observe what occurred with 9/11 as well as the Dot.com crash.
Here we can see that the S&P Correction was at 45%,
however cumulatively over the same time, Housing Price Appreciation was
up almost 24%. This shows that housing reacted very differently during 9/11 and
the Dot.com crash compared to how it reacted in 2008. This visual helps make
the case that it’s not unreasonable to say that if what we’re experiencing
right now is a lot more like 9/11 and not 2008, than the housing market will react a lot more
like it did during 9/11 and the Dot.com crash than it did in 2008. Annual Home
Price Appreciation reacted very well, and based of off what’s occurred so far,
we can make the argument that we are seeing similar situations now.
When the pandemic began, the housing market was off to a tremendous start, with home sale reports showing the highest number of houses sold within the last 13 years, on an annual basis. While a bit of a slowdown has occurred due to the events going on, we can say that when this is all over, and it will be, we can expect the market to come roaring back and continue that trend that started the year off.
In these recent times of uncertainty, you may find yourself asking
how the Novel Coronavirus has impacted the housing market, and what changes you
can expect to see. We are here to give you some insight by answering four of the
biggest questions in this four-part blog involving what has happened to the
housing market, and what we can expect to see in the months and years to come.
Now more than ever it’s important to stay informed on what’s occuring in the
county, and we hope this series will provide you with the necessary information
that you need.
The first biggest question you may be asking yourself, is
what are people doing with their money, and what does it mean for housing?
To start off, it’s important to look at the relationship between the 30-year mortgage rate and 10-year treasury rate. For almost 50 years, the two rates have moved in unison with one another, with the 10-year treasury rate often being used to predict the foreseen mortgage rate.
As seen in the graph above, the two have held a symbiotic relationship of the past several decades. What you may now notice, is that this relationship has recently changed. This change can be attributed to several other factors such as money coming out of the stock market and into bonds. While treasury rates have seen a recent decline, mortgage rates have not followed in the same trend. In fact, what we are seeing right now is volatility in the market as pricing is going back and forth intraday.
In a quote from First American, “As evidenced by recent events, often the spread increases because mortgage refinance application processing capacity cannot meet demand, so lender-offered rates don’t follow the Treasury yield down one for one. So, while the mortgage rate has declined in response to the decline in yields, it is unlikely to fall by the same magnitude as the Treasury yield…
It is plausible that mortgage rates fall further if the
benchmark 10-year Treasury bonds yield decline further…
It’s reasonable to expect that rates will fall even further
and likely surpass the prior record low, but not necessarily one-for-one with
the 10-year Treasury yield.” – Odeta Kushi, Deputy Chief Economist, First
American.
In the graph below, we can look at the rate environment over the last year to better illustrate the flow of the 30-year mortgage rate going forward.
With all the volatility we’re seeing in the market right now being different than we’ve ever seen, we should look to the 10-year treasury as a way to judge what to expect in the future.
Buying a house out of state can be a big bite for many of us. Some are even scared to try, and rightfully so. There are many things that can go wrong even when you are buying a house in your neighborhood, let alone somewhere far away. But, don’t be discouraged. If your mind is set on buying a property out of state, this guide will help you ensure the deal goes smoothly.
Do a thorough research
It goes without saying that you should do thorough research before buying a home wherever you decide it should be. Don’t rely entirely on your real estate agent. Of course, he or she is there to help you find the best place for your relocation, but there are some things that should be doublechecked. Furthermore, there are some details about the neighborhood that not even your agent is familiar with. Google can lend a helping hand, you just have to know where to search. Arm yourself with patience and start browsing. There are many neighborhood guides that can be very helpful for getting to know a community of your interest. These guides are great because they tell you a lot about local crime rates, employment potential, weather, and economic stability.
Always do thorough research before making any big decisions
Start early to avoid stress
Searching for a home to buy is stressful under the best of
circumstances, but buying out of state can be incredibly stressful. A house is
usually the most expensive thing that people buy, so the process should be
performed with the utmost care. You can
help yourself a lot by starting the search as early as possible. If you
have decided to move, the ideal time to start searching for your new home is six months before the due date of your
relocation. Three months is also a doable period, but don’t let yourself start
a search later than that.
Be careful when choosing an agent for buying a house out of
state
When
you decide to relocate out of state, you need to find a real estate agent who
will do most of the work for you. And, there is a lot of work to be done. An
international move often means a lot of paperwork, so some people are not sure
whether they should hire a real estate agent or a lawyer when buying
a property.
The best decision you can make is to hire a buyer’s agent in the state you are relocating to. Do not ask a listing agent to represent you since he or she will probably represent the seller. In that case, their job is to sell a certain property for the biggest amount of money and they only have the seller’s best interest in mind, not yours. So, you should choose a buyer’s agent.
A good buyer’s agent is your biggest help
How do I choose a buyer’s agent for buying a house out of
state?
The
buyer’s agent is definitely a better option than a listing agent, but still, you shouldn’t pick one randomly.
Instead, you can discuss it with a real estate agent in your present community.
Find one that you trust and ask him/her
to refer a colleague from the area you’ll be moving to. If the real estate
agent is a member of the National
Association of Realtors, he/she will have access to various databases. They
can even see their colleagues’ success rates. By getting a referral, you can
ensure that you do not become a victim of various realty scams.
Hire a relocation specialist
Have
you heard of relocation specialists?
No, that is not the term used for professional movers such as Gibraltar
Van Lines who can help you relocate wherever
and whenever you feel like. A relocation specialist is a person who can help
you with many aspects of your move. The only thing that they do not do is
negotiate your home purchase. However, they can:
help you find a real
estate agent to start home-hunting;
connect you to moving
companies;
give you the necessary details about the education and employment system in your
future home town;
help you sell and close on your current home which is an important part of
the procedure you have to go through when buying a house out of state.
It
is a common practice for companies that are relocating to hire relocation
specialists. That is why many people do not know they are available to
individuals as well.
Take a trip and get an inspection of your potential home if
you can
If
you are buying a house out of state you will probably not be able to go to
every showing in person. What you can do is ask your agent to give you a virtual tour of the houses that you have
shortlisted. Speaking of such tours, don’t fall for online virtual tours
because they are usually a part of a moving scam.
When the time comes for you to make an offer on the house, you should really make an effort and see everything in person. There are many things that even the best real estate agents will not notice. You will be able to feel the space, and that is something no virtual tour or agent’s descriptions can replace. And you wouldn’t want to make a mistake when making such a crucial decision as buying a house out of state, would you?
Try to go and see the property you are interested in buying in person
Many
sellers would work on some features that make their home sell faster while neglecting some major issues about their property.
That is where a home inspection comes in handy. It might be a burden to your
budget, but at least you will know what you are dealing with.
Close on your current home first
If the out-of-state closing is scheduled on the same day as the closing on your current home, you might have a problem. The lender for your new house must receive a closing statement from the old one. The best thing you can do is schedule the closing on the new house a few days after the closing on your current one.
Whether you’re looking for homes for sale in Fredericksburg, Stafford, Orange, Locust Grove, Norther Virginia or even Maryland or DC, we are your Real Estate team committed to finding the perfect home for you! Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar, and in a timely manner. Pricing your home accurately, one of our area expert advisors will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
Welcome to 712 Lakeview Pkwy in Lake of the Woods, Virginia 22508
You will be impressed as soon as you pull in the driveway! This colonial home is so full of extra detail. From the bright foyer with two story ceilings you will find a quaint den with french doors and a charming formal dining room. Enjoy the family room full of windows and high ceilings as well as a cozy fireplace. The kitchen boasts granite counters and stainless steel appliances with a breakfast nook and bar. You will find a spacious master on the first floor and master bath with a jetted tub for relaxation. Upstairs you will find three large bedrooms for family or guests as well as a bonus room that would work great as an office or additional living space.
This home and lake community have so much to offer! A private, gated, secured community, Lake of the Woods offers anything and everything you could possibly want. Home to two lakes (the 550 acre main lake and a 35 acre “fishing lake”), a golf course, an equestrian center, a fire and rescue department, and a church all within the gates, Lake of the Woods simply has it all. Whether your passion is boating, water-skiing, kayaking, golfing, horseback riding, or simply taking in the breathtaking views from the clubhouse while enjoying a fabulous meal, from your own deck or yard, or from one of the beaches, you won’t be disappointed! Perhaps you’d like a game of bridge or volunteering your time and talents…Lake of the Woods offers more than 60 clubs and/or organizations from which you may choose to become involved. Located in Orange County, we are fortunate to enjoy low real estate taxes. Coupled with home prices ranging from $100,000 to over $2,000,000, Lake of the Woods is the perfect community for both full-time residents, as well as weekenders. But don’t take my word for it, please come see for yourself! I will gladly give you a tour of Lake of the Woods by boat and by car so that you may experience why I love Lake of the Woods!
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your professionals for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia, we are your proven Real Estate professionals. Thinking of selling? In any market condition, “what is my homeworth?” is the #1 question asked by home owners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
According to Zillow data the houses in the United States listed in early May tend to sell 18.5 days faster than the average listing and for nearly 1% more of the average price!
There is still low inventory of houses on the market across the country, which has influenced the prediction of the May trend. Before, homes listed between mid-March and mid-April sold quicker and for the highest price.
Another influence is weather. Here on the east coast when the colder weather sets in, houses tend to sit on the market longer. With warm weather right around the corner, Zillow’s predictions for the Washington, DC market (which is the market closest to us in Locust Grove/Fredericksburg, VA) the ideal time to list your home is April 16 – April 30th and it will have a faster than average closing time of 18 days.
Inventory is low – let us help you sell your home today!
We may already have a buyer ready for you!
Contact Pat Licata today.
