Preceded by falling values, reduced prices, and increased inventory, the last six months have proved interesting for the Northern VA, Maryland and DC Real Estate Market. While there are several factors at play, from a new administration to a drastically changing economy and from a large foreclosure market to a revised loan programs, things are changing if nothing else.
I have been with Avery-Hess, Realtors since early 2006 and in this short time have seen the top of the market and what was hopefully the bottom. I have seen an almost out of control price increase that made it virtually impossible for first time home buyers to qualify for the “American Dream” to a rapid fall in values that has been described as the largest foreclosure market anyone has ever experienced.
Remembering a day in the fall of ’06 when Avery-Hess, Realtors received its first Real Estate Owned (REO) property from a Bank we had not worked with in several years due to our increasingly strong market. We went from one a month, to one a week, to one a day, to a year later when we often received upwards of 5 new assignments a day. Through several years and additional staff we once again have an active REO Department.
During the recent moratorium on foreclosures we have witnessed homeowners refinance, modify and complete successful short sales, while others were given additional time to find alternative housing. In some cases, tenants renting a foreclosed property are given the opportunity to continue renting on a month-to-month basis. Now in the months following the moratorium, we are experiencing a decrease in the amount of inventory available for sale. Simple supply and demand principles have swung the pendulum from a “buyers market” where an excessive amount of homes were priced aggressively just to compete towards a “seller’s market” where a limited number of homes are selling at or above full price.
Gone are the days where a buyer could purchase a foreclosure property at 50-80% of the list price. These days we often see upwards of 10 offers above list price with creative and aggressive terms within 5 days of the home being placed on the market; however, escalation clauses are not accepted.
While this is an exciting time and reminiscent of our previous market boom, I wonder if this is an artificial boom in the market. Thinking about supply and demand, what will happen if a large number of foreclosed properties are released into our market over the next 60-90 days?
Search For Homes: www.averyhess.com