Northern Virginia Real Estate Podcast with Janet Gresh and the Gresh Group

Why are homebuyers more optimistic than they have been in the past few years?

Here’s what we found.

Here’s a paradox for you: Right now, homebuyer confidence is at an all-time high, according to a survey performed by Fannie Mae. Furthermore, an increasing number of people, particularly renters, think now is a good time to buy a home. Yet at the same time, housing inventory remains very tight. It’s down 6.5% nationally from last year. Home prices are also up 6.9% nationally over last year. 

In other words, homebuyers are optimistic at a time that the market seems to be favoring sellers. So, what's going on? Why are homebuyers so optimistic all of a sudden? Here are three possible explanations:

1. Lending is loosening up. Over the past several years, mortgage rates have seen historical lows. This has meant that homes are actually more affordable, in spite of the increase in prices. However, lending has been very tight. Fortunately, that’s changing. Lenders are approving mortgages at the highest rate since 2011, with 77% of mortgages for home purchases approved.

2. Jobs are looking good. At the moment, fewer homebuyers are worried about losing their jobs, according to the same Fannie Mae survey. It's not just job security that's contributing to greater optimism about buying a home. Overall income is higher, making homes more affordable by comparison. The median household currently has 150% of the income needed to buy a median home, compared to a historical average of just 125%.

Lenders are approving mortgages at the highest rate since 2011.

3. Long-time renters are ready to buy. Millennials, the generation of people born after 1980, have largely opted out of homeownership until now. They have been renting for a longer time, putting them higher up on the pay scale compared to previous generations of first-time homebuyers. But now, many millennials are finally hitting an age when they are willing to commit to buying instead of renting. This is reflected in the Fannie Mae report, which states that much of the increase in homebuyer optimism comes from current renters.

What all does this mean for you? If you're looking to buy a home, all of the above reasons should give you confidence that now is indeed the right time to buy.

If you’re thinking about buying or selling a home, click the links above to search for homes on the MLS or find out how much your home is currently worth.

And if you have any questions about the Northern Virginia real estate market, whether you're thinking of selling or buying, give me a call at 703-328-3434 or email me at [email protected]. I'm here to help. I look forward to hearing from you soon.

A considerable number of potential buyers shy away from jumping into the real estate market due to their uncertainty about the buying process. A specific cause for concern tends to be mortgage qualification.

In order to qualify in today’s market, you’ll need to have saved for a down payment (73% of all buyers made a down payment of less than 20%, with many buyers putting down 3% or less), a stable income and good credit history.

Throughout the entire home buying process, you will interact with many different professionals, all of whom perform necessary roles. These professionals are also valuable resources for you.

Once you’re ready to apply, here are 5 easy steps that Freddie Mac suggests you follow:

Do your research, reach out to professionals, stick to your budget, and be sure that you are ready to take on the financial responsibilities of becoming a homeowner.

The Fed’s announcement to cut back its balance sheet means the longer you wait to buy or sell a home, the harder it might be for you. Selling your Greater Washington DC area home?Get a free home value reportBuying an Greater Washington DC area home?Search all homes for sale The Federal Reserve just announced a move that will have a big impact on both home buyers and sellers. At the latest Fed meeting on September 20th, Fed Chair Janet Yellen announced that the Fed would start to cut back its balance sheet. While that might sound boring compared to the usual announcements of Fed rate hikes, it's actually a very big deal.  You see, when the financial crisis hit 10 years ago, the Fed needed to take emergency measures, so it injected a huge amount of money into the economy. The Fed did this by buying up various financial assets totaling $3.5 trillion, an enormous sum that made up almost 25% of the entire U.S. economy at the time.  This money helped stabilize various markets and get the economy back on track. However, the Fed is confident that the economy is now doing well enough for it to slowly start taking some of that money back. And that's exactly what this announcement was all about.  As you can imagine, this is going to have a massive impact throughout the economy, including on real estate. According to experts, it will inevitably put upward pressure on consumer borrowing costs, such as mortgage rates, which have stayed fairly low in spite of the Fed's actions so far. if you’re thinking of entering the real estate market, now’s the time to do so. In other words, if you are thinking of buying a home, the Fed's most recent move will eventually make it more expensive for you to do so because you will be paying more in interest. If you are looking to sell your home, this might mean there will be fewer interested buyers, which might drive prices down and might make it harder to sell. Now, this won't happen immediately, because the Fed's balance sheet rollback will be gradual. As a matter of fact, the Fed is only reducing its balance sheet by a mere $10 billion a month to start with—just a drop compared to the $4.5 trillion total. But make no mistake, while the Fed's moves will take time to bear fruit, they will drive up interest rates, particularly as the Fed ramps this process up in the coming months.  That's why if you've been thinking of getting into the real estate market, now is such a crucial time.  If you have any questions about buying or selling a home, give me a call at 703-328-3434 or send me an email at [email protected]. We can discuss all your real estate needs, as well as details about the Fed's recent announcement and what it means for you. I look forward to hearing from you!

There is no doubt that it is easier to sell your house when using the services of a local real estate professional. The agent will provide: Greater exposure to more buyersThe skills of a professional negotiatorA layer of protection from possible legal liabilitiesProfessional guidance in navigating any pitfalls that may ariseA level of safety while showing the homeThere is no doubt that these services are valuable to any family that decides to sell. The only question is – how valuable? One of the main reasons For Sale By Owners(FSBOs) don’t use a real estate agent is because they believe these services are not worth the fee an agent charges. But, what if those services didn’t cost the seller a penny? A study by Collateral Analytics, however, reveals that FSBOs don’t actually save anything and, in some cases, may be costing themselves more by not listing with an agent. In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that: “FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” (emphasis added)Why would FSBOs net less money on their own than if they used an agent?The study makes several suggestions: “There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids on with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.“Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.Three conclusions from the study:FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.The differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.The sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.Bottom LineIf you are thinking of selling, FSBOing may end up costing you money instead of saving you money.

The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one. This brings us to two major misconceptions that we want to address today. 1. Down PaymentNAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less. Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket. 2. FICO® ScoresAn Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower. The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August. Bottom LineIf you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.

You may have heard of cryptocurrencies like Bitcoin. But the one you really need to know about is Brickcoin. Selling your Greater Washington DC area home?Get a free home value reportBuying a Greater Washington DC area home?Search all homes for sale In case you haven’t heard already, cryptocurrencies are meeting the world of real estate investing. It's a very exciting prospect, so let me explain what’s going on. Cryptocurrencies are very much like regular money in that you can use them to pay for many things.The best-known cryptocurrency right now is bitcoin. At the moment, you can use bitcoin to buy software on the Microsoft site, to book a plane ticket on Expedia, or even to withdraw actual dollars from a number of bitcoin ATMs around the country. The value of bitcoin has been growing explosively over the past 12 months, and it recently crossed a symbolic threshold: One bitcoin is now worth more than an ounce of gold. At the same time, cryptocurrencies and regular money are very different. Cryptocurrencies are not issued by the government and are not backed by any real asset.  This has many people worried that bitcoin and the like are open to price bubbles. Well, several startups, such as Brickcoin and REcoin, are trying to tackle this exact problem by making bitcoin-like currencies, which are backed by a very real asset: property.  Here's how it works. First, these startups make an initial coin offering. This is similar to the way traditional companies offer stock. It's a way of raising money while putting a certain amount of the cryptocurrency into circulation.  One bitcoin is now worth more than one ounce of gold. Second, the startup invests this money in a real estate investment trust (REIT). The value of the currency is then a reflection of the actual value of the underlying real estate investments. In theory, this means you get the best of both worlds: the flexibility and liquidity of cryptocurrencies like bitcoin, as well as the steady returns, the security, and regulatory oversight of a real asset such as property.  In practice, it's still way too early to say whether this idea will work, and if it does, which of the real estate cryptocurrencies will emerge as the winner. In any case, this is certainly an interesting development that's worth keeping an eye on. However, there will always be room for traditional real estate investing. People love investing in real estate because property is a tangible asset less prone to volatility and market manipulation. Also, real estate allows for greater leverage than just about any other type of investment.  If you have any other questions for me about cryptocurrencies or any other topic related to the real estate market here in the DC Metro, give me a call at now 703-328-3434 or send me an email at [email protected]. I look forward to hearing from you soon.

As a homebuyer, title insurance protects you from many things when you’re closing on a home, and it’s absolutely worth it to purchase it.Selling your Greater Washington DC area home?Get a free home value reportBuying a Greater Washington DC area home?Search all homes for sale Title insurance is a type of insurance most people don’t know a lot about, but there are a few reasons you should consider purchasing it.  According to title expert Wade Vander Molen, title insurance protects you from any liens, past liens, judgments, defective recordings, fraudulent things on the title, and any other known or unknown items at the time of the title search. When you close on a property you have clear title to, none of those things carry over to you.  Title insurance is definitely worth the purchase when closing on a home. The title insurance policy protects you for up to 150% of the value of your property. As your home value increases so does the policy. It also protects you for not only the time that you own the home but after you sell it as well. Title insurance is one of those policies that protects you from everything that happened previously—not going forward.  “Title insurance is definitely worth the purchase when you’re closing on a home,” Wade says.  If you have any more questions about title insurance and how it can protect you when closing on a home, you can give Wade a call at (480) 203-6452, email him at [email protected], or visit his blog.  If you have any other questions about the real estate market or are looking to buy or sell your home, give me a call at (703) 328-3434 or send me an email at [email protected]. I look forward to hearing from you!

Home remodeling is as hot as it's ever been. Here are five projects that bring the best return on investment. Selling your Greater Washington DC area home?Get a free home value reportBuying an Greater Washington DC area home?Search all homes for sale Home remodeling is hotter than ever. According to researchers at Harvard University, remodeling investment is up 6% over last year, and now makes up a $324 billion market.  According to a survey of remodelers and real estate professionals, there are five remodeling projects that offer the best returns: 1. Your kitchen. Kitchen remodeling can be as simple or as elaborate as you like. However, to maximize your return, keep your investment to under 20% of the value of your home—as is recommended by surveyed real estate professionals. The outcome? A whopping 85% return on your investment. 2. Your bathroom. A thorough bath remodeling project can cost up to $20,000. However, not only will it pay for itself, it should give you an added 80% return. 3. Your deck. Replacing your deck can cost you anywhere from a few thousand dollars to tens of thousands of dollars, depending on the size. The expected benefit will be similar to a bathroom remodeling project—around an 80% return for a fresh, new deck. Some will make more sense for your home than others. 4. Your siding. Fading or worn-out siding can turn off potential buyers before they even step foot in your home. Replacing old siding will make it much easier to sell your home, and in addition, it should give you an 80% return on an investment of around $10,000. 5. Your windows. New windows can mean greater energy efficiency, increased thermal and acoustic comfort, and a more modern look. Homebuyers are well aware of this, and they are willing to pay accordingly. That's why a typical window replacement should yield at least a 70% return on your investment.  Clearly, some of them will make more sense for your home than others. If you're considering selling your home, then just one of these projects could add tens of thousands of dollars to the price you'll be able to get. If you have any questions or want additional advice about which remodeling projects make sense for you, give me a call at now 703-328-3434 or send me an email at [email protected]. We can discuss all the details and I can give you an accurate estimate of what these projects could be worth. I look forward to hearing from you!

The Fed’s recent rate hike shouldn’t have any significant impact on our market. In fact, it might actually stimulate it. Selling your Greater Washington DC area home?Get a free home value reportBuying an Greater Washington DC area home?Search all homes for sale On June 14th, the Federal Reserve increased its federal funds interest rate by 0.25%. They’re also widely expected to raise rates once or twice more over the course of 2017. What does this mean for the real estate market? While any action by the Fed always garners a lot of attention, I believe these increases will not have any significant impact on our market. First of all, mortgage rates have actually trended lower in the wake of the Fed’s recent announcement. The 30-year mortgage rate recently hit 3.9%, the lowest level in 2017. In fact, it’s a common pattern for the mortgage rate and the Fed rate to move in opposite directions, and the same thing has happened the last two times the Fed raised rates. These increases will not have any significant impact on our market. Second, the economy continues to do well. The Fed decided to increase its rate because unemployment and inflation are low, household spending is picking up, and we’ve seen steady growth for the past nine years. This is good news for the real estate market. As expected, we continue to see strong demand and a corresponding increase in home prices.  Third, while the Fed’s rate increase is normally meant to cool off the economy, it might actually stimulate it in this case. Because interest rates were so low for such a long period of time, experts believe the recent increases might ease pressure on the financial system and encourage lending.  Case in point: since the Fed started raising its rate in December 2016, total mortgages are up 2.5% year over year.  In conclusion, while any move by the Fed is likely to lead to a lot of hand-wringing, I believe the real estate market will not be affected and will continue on its own healthy course. Nonetheless, it’s clear that right now is a uniquely good moment for everyone in the real estate market. Today’s low mortgage rates are good for homebuyers because they make homes more affordable. If you have any questions about our market or you’re thinking of buying or selling a home, give me a call at  703-328-3434 or send me an email at [email protected]. I’d love to help.

In Realtor.com’s recent article, “Home Buyers’ Top Mortgage Fears: Which One Scares You?” they mention that “46% of potential home buyers fear they won’t qualify for a mortgage to the point that they don’t even try.”Myth #1: “I Need a 20% Down Payment”Buyers overestimate the down payment funds needed to qualify for a home loan. According to the First Quarter 2017 Homeownership Program Index (HPI) from Down Payment Resource, saving for a down payment was the barrier that kept 70% of renters from buying. Read more here.