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Spencer Marker's Blog

By Spencer Marker | Broker in Centreville, VA

2012 Year in Review

2012 overall was a good year for real estate.  The year was very strong and on pace to beat 2011 until we got near the election.  This election was as bitter a contest as I have seen but it was not until we got very close to the actual election, the month of August, that we saw an impact in the real estate market.  Consumer confidence had been strong all year and then everyone just went into holding status.  Buyers sat on the fence and sellers decided to wait until spring, even though inventory levels were very, very low.   Rates have stayed low but that was tempered somewhat by the more stringent lending guidelines.  Foreclosures and short sales did not disappear but they did slow dramatically in our local market.  Not so dramatically across the nation but locally they are very difficult to find.   Builders are busy and new home projects across the region are moving full speed ahead.  Certainly, confidence in our local market is being displayed by the building community.  That is a plus and a minus for the resale market but it is a boom to the local economy. 

 Townhome inventory ended the year at only 25 available listings, the lowest it has been since I started keeping records of it.  That is less than half of what we had in Dec 2011.  Single family homes were low with only 33 available, not out of line with what we typically see, although still on the low side.  There were 33 townhomes that came under contract in December, down from 35 in November and 43 in December of 2011.  I attribute that directly to lack of inventory to choose from.   14 single family homes sold in December, our low month of the year.  That is almost half of what we sold last December and down from the 16 we sold in November; not our lowest year but certainly below average.  The high point is that the average list price of the single family homes that sold is $522,996, up from last years $501,725 and continuing our upward trend.  Townhomes saw similar improvement with an average list price of the homes that came under contract of $307,234, up from $288,486 in 2011 and our 4th straight year of appreciation.    Those are good numbers indeed and we enter the new year in a great position. 

 The election is behind us, consumer confidence is doing OK, inventory is low, rates are incredibly low and I believe there is pent up demand to buy.  Certainly there are folks that have been sitting on the fence waiting for inventory and waiting for the election year jitters to subside.  I look for our year to start off with lots of activity, homes coming on the market and buyers out looking in January, but it will be February when we start seeing sold signs pop up.  We still have a couple of brawls yet to be fought over the budget so that will still have an effect on consumer confidence here in Northern Virginia.  At the end of the day, it is all about jobs and while we avoided the “fiscal cliff” so far, it is inevitable that there will be cuts that do affect jobs related to the government.  There are however many, many jobs being created in the construction industry, primarily here in Northern Virginia, so the net jobs should be relatively stable.  How many of the jobs lost to cutbacks will be lost here in Northern Virginia as opposed to elsewhere in Virginia is anybody’s guess.  I am pretty confident that as we move through the year, fears will subside and confidence will continue to grow and 2013 will be a very strong year.  The actual turnaround began in 2009 and 2013 will be the year that the legs stop wobbling and a strong foundation is in place.  I do expect rates to begin to climb slowly and I look for home prices to continue to appreciate.  Short sales and foreclosures will grow even scarcer.  It will be more difficult to make the numbers work for investors but they will still be a huge player in our marketplace.   Rents will continue to climb, but they will level out as at this point you can buy for less than rent in many cases.  New homes will affect our resale market; more this year than last as they become a viable option for buyers that are willing to leave the school system and switch counties.  While I do not expect rates to increase substantially, I look for them to be higher at the end of the year than they are at the beginning of the year.  A bigger impact will be the continuing, more restrictive changes to lending guidelines.  This will lock some of the folks out of the market BUT I am a believer in those changes being made. 

 I started this business when lenders had debt to income guidelines of 28/36% (this means that you mortgage cannot be more than 28% of your income and combined mortgage and other debt cannot exceed 36% of your income) so the current “restriction” of 43% I do not see as being way out of line.  Likewise I think you should have to document your loan more than just verbally.  Seems like common sense to me but I digress.   Appraisals will continue to be a problem as lenders have set very stringent guidelines that they must follow and in a market that is appreciating it is hard to document with supporting comps.  This keeps a tight rein on values.  I saw a sign on a church in Manassas many years ago that I have always remembered.  It said “Calm seas doth not a skillful sailor make”.  The upcoming year has a lot of promise and it has a lot of challenges.  It is a market where you do need some one experienced to guide you through.   As the year unfolds I will, as usual, keep you informed. 

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