Waiting for the robust spring market, peak buying season, to sell your home? Please keep your eyes on the pulse of the economy and the potential for a flood of inventory. We could be setting up for a repeat of the spring market of 2007. I remember working with several families late fall early winter 2006 and advising them to go on market during off peak months. Those that listened to me sold their homes in a declining market with limited inventory and limited buyers. There were several that chose to wait until the traditional spring real estate market and peak buying season. Many of those sellers are still living in their homes today. What happened in the first quarter of 2007 could potentially happen again this spring. We could see a tremendous flood of distressed inventory hit the market. The spring of 2007 saw a massive decline in property value in the area. Here's some statistical data for your review and research. Current market inventory is being held artificially low by the banks and government. Currently, ~8.2% of all mortgages in Prince William County are 90 plus days delinquent. That is HUGE! While this number is paltry compared to what some areas of Florida, California, Nevada and Arizona are facing, it is still a HUGE number. ~3.5% of all mortgages in Prince William County are in some stage of the foreclosure process. Again, this is another HUGE number when you look at the number of households that this represents. The REO rate or the rate in which the banks actually complete the foreclosure process and assume the property is at ~.4% currently in Prince William County (Extremely Low). Last year at this time, ~7.2% of all mortgages were 90+ days delinquent, ~3.5% in some stage of the foreclosure process and we had a ~2.7% REO rate. The bank REO rate is ~2.3% shy of last year's numbers. The role of the Government and recent moratoriums has slowed down the process and delayed the wave of distress homes available in our market. There has been a push by the Government for the banks to assist homeowners to modify mortgages; unfortunately, the re-default rate is well over 50% with these modifications. While the delay strategy has helped stabilize the local real estate market, many banks are feeling the squeeze from a large balance of non-performing assets and anticipate a rise in foreclosure and REO activity to remove some of these toxic assets from their books. Banks are looking to first try to find a solution through loss mitigation before foreclosure. This will continue to be the preference; however, they are anticipating a sharp rise in REO activity as well as the REO rate will shift back in balance with the foreclosure rate. The second potential challenge that we foresee is the rise in interest rates. The Government has been buying Treasuries and keeping interest rates extremely low. I have heard that this buyback program will end this coming spring. Various Economists are anticipating at least a 1% move upward on interest rates. That will be a huge decrease in buyer's purchasing power. Today might be the best time to sell your home!
***statistical data pulled from DS News***
Northern Virginia REALTOR®
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