Increased Activity for Buyers and Sellers
The local housing market will shape up, the economic stimulus package will have a positive effect, and the Spring market will be much better than the Fall/Winter market just ending. All those buyers who have been waiting patiently on the sidelines are poised to take action, and they will act.
Traffic on the Long & Foster websites in 2009 has increased substantially (e.g. on www.longandfoster.com alone, we went from 659,000 unique visitors in December to over 865,000 and 816,000 in January and February– a 30% increase!). So, buyers are looking, and sellers are competing to make their properties the best value.
We have now seen loan limits move back upward. FHA loans are back to last year’s limit of $729,500 for most of our immediate area. This means that a person with good credit scores could buy a home for up to $755,000 with as little as 3.5% down. Fannie Mae and Freddie Mac will also be raising their conforming limits to $729,750 shortly.
There is also a first-time homebuyer’s credit of $8,000 until November 30 (a true credit this time). There are very favorable, historically low interest rates (~5%) for conforming loans available. (See chart below.) Jumbo loans are just beginning to fall to 6.25 %. Arms are more attractive to buyers now, too.
Our Advice: Be realistic and act reasonably. Homes are taking longer to sell, and transactions are taking longer to complete. Both parties are looking for value. From 2000-2008, DC area homes have appreciated about 90% — better than most of the nation. (See graph below.)
Sellers should price for a value better than a competing home for sale, and Buyers should offer a price lenders are willing to finance. Appreciation will take longer to regain traction. Compare the 1989-1997 slow appreciation period in the DC market. While we may see price exceptions, it is unproductive to follow an exception rather than a substantiated trend.
WC & AN Miller Realtors, A Long & Foster Company
4701 Sangamore Road, Bethesda, Maryland 20816
Cell: 301-452-1409 Direct: 301-320-8430 Ofc: 301-229-4000