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Interest Rates Trending Slightly Lower
Tuesday, 25 February 2014 00:00

This year began with the headlines reading interest rates were on the rise, and by mid-January the 10-year treasury note had broken above 3.00% on the news that the Federal Reserve's tapering program was in full swing.  However, in the weeks since then, rates have slowly started to float down once again, hovering most recently in a range between 2.70% and 2.80% on the 10-year.  As this is the particular instrument most closely associated with mortgage rates, we've since seen the rates on 30-yr conventional/conforming fixed mortgages come back down as well - from around 4.75% earlier in the year to around ~4.25% now.  And although this number is certainly off the lows of last year, when buyers were enjoying mortgage rates in the mid-3's, it's a nice change of direction in the short term and improves the relative purchasing power of buyers as they begin to step into the 2014 market; a half percentage drop in interest rates in a months time is fairly positive, and would have been big news in years gone by.

The rates on FHA and VA loans will tend to be even better than those on conventional loans at the moment, with many FHA programs offering closing credits to the buyer in addition to a lower rate by default.  Combined with the 3.5% minimum down payment requirement, an FHA loan might seem attractive in this context.  Keep in mind though that with the significant increase in mortgage insurance premiums built into the FHA program as of last year, the cost on a monthly basis will probably not be worth it if you could otherwise afford to go conventional.  With the recovery of the area housing market, many lenders are now comfortable issuing conventional loans to purchasers with solid credit for a relatively low 5% down payment requirement, and some local portfolio lenders are willing to take it even lower.

VA loans are always a great route to go provided there aren't property-specific barriers involved (such as certain condo communities), but of course these are only available to the veterans that have served in our armed forces.

Nominated to NVAR Leadership Academy
Friday, 10 January 2014 00:00

In addition to the typical business of real estate, 2014 brings a new twist with my nomination to the NVAR Leadership Academy.  This is a unique position offered up to just a dozen out of thousands of Realtors every year, and it's an honor to be considered as someone who might contribute both today and in the future back into the agent community.  Although it's not often in the foreground, the NVAR (Northern Virginia Association of Realtors) serves an important function within the fabric of the market as one of the largest Realtor associations in the DC area, the largest shareholder of the regional MLS system, and one of the most respected associations in the entire country.

Completely unexpected during this event were the numerous references to former NVAR president Renee Miller across several speeches at the induction ceremony yesterday.  Renee was not only one of the most inspiring and influential personages to hold that office in the history of the association, but she was also the mother of one of my closest friends growing up.  Of course, it was in the capacity of being my friends' mother that I knew her best, but in the early days of my entering the business she also served as support and inspiration.  Unfortunately, Renee died of cancer in 2007 after a multi-year struggle.  It's my hope to return even just some of what she gave to NVAR, and to me personally, back to the association.

2013 in the Books; 2014 is Go!
Wednesday, 01 January 2014 00:00

Another year is in the books, and I have to give thanks once again to all of the fantastic individuals I had the honor to work with in 2013 in pursuit of their real estate goals.  As I've written before, nothing can replace the feeling of playing that unique role in helping someone to find the place they will be calling "home" in the future, and I am grateful to have the opportunity to play it.

Last year around this time I was wondering what 2013 would look like relative to the year prior, which had a solidly positive trajectory so far as the direction and the health of the area real estate market.  With 2013 now in our rearview mirror, without a doubt that trend accelerated, with rising prices, increased region-wide transaction volumes, and truly fierce multiple offer competition over desirable properties dominating the news and the experience.

As we head into 2014 though, things are a bit murkier perhaps than they were at this time last year.  Whether it was a seasonal coincidence or whether it was the trigger itself, the federal shutdown last October certainly marked a cooling off of the local market heading towards the end of the year.  There was an activity spike which occurred around Thanksgiving, but generally things calmed down a bit to close out the year.  In conjunction with this, we've seen interest rates trending higher with the commencement of the Federal Reserve's purchase taper, reducing the amount dedicated towards the monthly purchase of domestic debt.

Such purchases have been credited with providing support for bond demand, and as such for keeping interest rates lower than where they might otherwise be.  The purchase amounts are still significant, however, and given the Fed's bias towards staying accommodative on rates, we shouldn't see rates spike too too greatly.  We're coming off record lows, after all, so while 4.5% on a 30-yr might seem high relative to 3.5%, on a historical basis it is still extremely low.

For the last several years, the early months have seen inventory generally lag demand; we should have an idea pretty soon as to whether this will repeat for 2014, and where buyer sentiment/confidence sits in the process.  With area unemployment relatively low, and home affordability remaining reasonable in the region (as shocking as that sounds), it is likely to be another strong year for Washington real estate.  Personally, it wouldn't be bad for the long-term market if things were a little less frenetic than last year!

Wall Street: Your New Landlord?
Friday, 02 August 2013 20:37

A recent article in the LA Times explored a growing trend amongst large financial firms - namely, that of becoming active participants in the real estate industry by purchasing blocks of foreclosed properties with the intent of renting them out.  And although the comments section in the link above would have you reaching for the torches and pitchforks to raise against our banker overlords, the subtle ramifications of these actions are worthy of careful consideration from a macro perspective.

First and foremost, the most immediate effect of these purchases has been to remove distressed "shadow" inventory from the books of the traditional lenders and place them into the hands of institutions that wish to pay for the repair, rehabilitation, and management of these properties.  Beyond removing a significant source of downward pressure on the prices of homes in the communities in which these purchases have taken place, it puts into motion the creation of jobs and an expenditure of funds towards renewal and improvement in areas where these homes might otherwise have been languishing for months or years, blighting the streets on which they are located.  To the benefit of the institutions involved, it clears non-performing assets from the rolls of the selling parties, allowing them to refocus on new lending activity; for the purchasers, they are purchasing assets with significant room for upside growth, while at the same time regarding them as long-term investments with decent yields (rents).

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Coldwell Banker Residential Brokerage
4500 Old Dominion Dr, Arlington VA 22207
Phone: (703) 524-2100 Fax: (703) 524-9014