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Should old acquaintance be forgot? If we are talking about real estate market of 2007 then I say let’s forget.

Here is a look at the monthly sales activity.

Here is a look at the monthly under contract activity.

The median price for the most part remained above those prior to 2004.

I suppose we should just forget our old acquaintance and hope for the best for 2008.

I know what you were thinking when you read the headline of this post. Ok, so here is the clip from When Harry Met Sally.

Reality Check

The Chief Economist for the National Association of REALTORS®, Dr. Lawrence Yun, has been making very positive statements lately. He is also saying all real estate is local. So exactly what does this mean for the real estate in Williamsburg, Virginia?

First let’s look at what Dr. Yun calls the power of leverage for Homeowners.

If you purchased a $200,000 home 10 years ago with a $10,000 down payment and it appreciated at a normal rate of 5%, your gain would be about $110,000. Where else can you get that type of return on your investment?

But is 5% gain achievable? Let’s look at the average sales price in Williamsburg area as reported by the Virginia Association of REALTORS®.

If we look at the year over year increase of average sales price from 1996 to 2003 you can see it averages out to 5%. We all know how prices sky rocketed in 2004, 2005, and 2006. The average sales price for 2007 as shown here is only from January to November. If we average the year over year increase from 1996 to 2007 it averages out to 6%.

If you bought a home in 1996 for $168,500 it would be worth about $288,000 today if it appreciated at 5% per year or $319,000 if it appreciated at 6%. The average sales price at the end of November in Williamsburg is $340,471. If my math is correct the average sales price is higher than what it would have been if properties in Williamsburg appreciated at a normal rate. The average sales price has actually more than doubled. An average buyer puts about 10% down payment so the initial investment was about $17,000. Not a bad return on investment, is it?

This could be our Christmas Gift this year. I like to wish you all a Merry Christmas.

Check out the video below for your Christmas laugh.

Some Positive News

Laurence Yun, the chief economist for National Association of REALTORS®, had plenty of positive news for REALTORS® at last month’s conference. Yun attributed much of today’s sub prime mortgage problem to greed. Wall Street wanted the 10 to 12 percent return that sub prime mortgages yield as opposed to the smaller returns from more traditional mortgage products. His take on the Wall Street types–“They gambled. They lost.”

Yun’s outlook for 2008 sees a shift from greedy speculators to serious homeowners. 2008 will be a year of opportunity where there will be serious, healthy business. Furthermore, Yun predicted that the market returns to normal by 2009.

According to Yun, one of the biggest mistakes that reporters make is talking about national trends. Nationally, 2007 was the fifth best ever year on record! Home prices declined about 1.5 percent after a 50 percent run up in prices.

The challenge is national numbers are pretty much irrelevant. Yun argues that talking about national averages is about as effective as having a national weather forecast. Like the weather, all real estate markets are local. In fact, you may have a buyer’s market and a seller’s market operating within a single market area based exclusively upon price point. Here are the other key pieces of positive news from Yun’s economic report:

1. New housing starts – Even though these are dropping, there was too much building. The market is simply adjusting to normal supply and demand pressures. The inventory is “being controlled which makes stabilization occur more quickly.”

2. Foreclosures – According to Yun, the 41 percent increase in foreclosures has resulted primarily from investor heavy real estate purchases in Arizona, California, Florida, and Nevada. The majority of these individuals are flippers whose investments did not payoff. More importantly, the number of foreclosures in Utah, New Mexico, North Carolina, and South Carolina is actually declining.

3. Under priced markets and Super Star Cities – Although the coastal markets are still overpriced, Middle America is under priced. Nevertheless, Yun cites a new trend termed, “superstar” cities. These cities will command premium prices, regardless of what the market does. There is so much wealth concentrated in these areas, that measurements are simply not predictive. In addition to London, Paris, Tokyo, and New York, Yun also identified San Francisco, Miami, and Seattle as potential new superstar cities.

4. The recovery has started – Other than the three states hit heavily by job losses in the automotive industry (Indiana, Michigan, and Ohio), the states that first experienced a downturn in the Northeast, are now in recovery. Specifically, Connecticut, Massachusetts, New York, and Rhode Island were the first to feel the slump and are now well into a recovery. Furthermore, there appears to be a pent up demand for first time buyer properties due to large number of Gen Y’s (born 1977 to 1994) that are now buying their first homes. Falling interest rates will motivate many of these buyers to step into the market now.

5. New jobs and corporate profits are still strong - For all the news about banks writing off massive amounts of mortgage debt, Citicorp took billions in losses and still was profitable in third quarter. Corporate profits are still strong with companies as diverse as Microsoft and Jack Daniels reporting close to record profits. Furthermore, the economy has generated 4 million net new jobs and wages are rising.

6. A weak dollar means more jobs and more real estate sales in the United States – Although going overseas or buying imported items will cost us more, the weak dollar means that American products will be 30 to 40 percent cheaper in Europe. Manufacturing jobs are returning to the United States. This also bodes well for the sale of U.S. real estate. Just a few years ago, the Canadian dollar was only worth 70 cents in U.S. currency. Today, the Canadian dollar has been hovering at about $1.05 to $1.10 U.S. What this means is that we can expect more Canadians and Europeans to be purchasing U.S. property, because our prices are approximately 50 percent cheaper than they were just three years ago.

7. Real estate: Still the best shelter – For those agents who represent reluctant first time buyers, Yun points to some interesting research from the Federal Reserve. Between 1995 and 2004, the average renter accumulated $4,000 in wealth. In contrast, the average homeowner accumulated $184,400. Furthermore, the typical homeowner holds their property for six years. Within this period of time, NAR’s research shows that approximately 97 percent of the homeowners will have a positive equity position after that period of time.

Bottom line: 2008 represents the best window that buyers will have to find excellent deals with excellent financing. Get the word out there. If they wait, prices and interest rates will be higher and the reluctant buyer may be forced out of the market.

Click the link below to download a pdf version of Dr. Yun’s presentation, “From the Roulette Table to the Closing Table: Lessons for Serious Buyers”

http://www.realtor.org/Research.nsf/files/07AnnualResForum.pdf/$FILE/07AnnualResForum.pdf

This post has nothing do with the market conditions. In other words, there are no graphs or charts. Hey it’s the Holiday Season, we can all act a little crazy right?

This week I came across two communication tools I want to share with you. One is Jott, and the other is Pinger. They are not exactly tools but services. Let me explain.

Jott is a fairly versatile service. You go to http://www.jott.com and sign up for a free account. It may be free right now since they are in beta testing, they may charge later. Anyway, you will need to enter your name, cell phone number and email address. Once you validate both of those you log in and enter or upload your contacts. You can set-up groups as well. For your contacts you will need to enter their name, cell phone number and or email address.

Ok so what’s so great about another contact list, right? Here is the cool part. You call a toll free number and Jott will answer and ask, “Who do you want to Jott?” You speak the name of a person or a group. Jott finds them in your database and asks you for the message. You speak your message (right now limited to 30 seconds), Jott will say, “Got it” and ask you again, “Who do you want to Jott?” You can simply hang up or “Jott” someone else.

Now the really cool part. Jott takes the message you left for an individual or a group and sends it as a text message to their cell phone(s). Also, the message is sent to their email inbox(s) as well. They can read it or click on a link to listen to it. Is that cool or what? You can even set up folders for yourself for reminders, to do, expense tracking, client notes etc. You call Jott and leave a memo on any folder. This could make you a safe driver. No more texting or writing notes while driving. Set up the Top agents in the market as a group or all the agents in your office. As soon as the seller signs the listing agreement you can Jott the other agents about your new listing. Would that be a neat thing to demonstrate to the seller at a listing presentation or what? Ever deal with a couple where you leave a message for one and the other one doesn’t get it? You can set up both Bob and Sue Smith as a group, call it ‘Smiths’. Jott ‘Smiths’ and both get the same message. Now there is also a written record of your message. No more he said she said. Are you a team leader of your team? Jott your entire team with one phone call instead of calling them individually. No entering codes for different teams, just speak the team name. You can see the possibilities can’t you?

Pinger (http://www.pinger.com) on the other hand is not as versatile. However, it is a good solution for group communication. Sign up is similar to Jott. Enter the contact’s Name, Cell number and email address. One cool feature Pinger has is the ability to upload from contact managements; it can sync with Microsoft Outlook. The service is simple to use. You call Pinger and tell it who you want to message. The system sends a text message to the recipients. The message tells them to call a number to retrieve the message. The recipient can reply or forward the message without hanging up and dialing you back. The message can also be delivered to an email box as voice only. Not as many bells and whistles as Jott but it does give you the ability to communicate with a group of 2 or 20. No more calling 20 individuals to leave the same message. You certainly can’t beat the price.

WARNING! WARNING!

While the use of both of these services is currently free, keep in mind not all cell phone plans are alike. Some may charge for incoming messages.

November to remember?

Remember, remember the 07 November? The November real estate market in Williamsburg Virginia is not as historic as Guy Fawkes’ history making November but let’s hope it is history none the less.

As I mentioned in the previous post ‘Are we out of the slump?‘ November sales historically have been lower than October. This year proves to be no exception. Low number in the Sold column does lead to a higher absorption rate. However, I don’t believe this is a true absorption rate. I believe we should rename that column to ‘Pent-up Demand’. I think that is exactly what we are seeing here.

Source NAR

There is nothing scary about the economy; mortgage interest rates are low, unemployment is low, wages are up, and, there are plenty of homes to choose from. Buyers are just waiting for the market to bottom out. They are waiting for home prices to hit rock bottom. Unfortunately, on one knows where the bottom is; they will only know where it was.

Just the facts, ma’am

How is the market? How many times have you been asked that in the recent weeks? Be Sgt. Joe Friday and give the facts. Let’s look at the activity in the market. Properties under contract in a given month give a true indication of market activity. So let’s just look at the facts. Below is the graph of monthly pending sales from 2001 to 2007. I have also included an average for all those years.

The activity for 2007 is lower than the average. But, there are months in 2007 that saw more activity than some previous years. For the most part we are not that far apart from our average. Market is seeing some correction and we are getting closer to the market prior to mid 2004. How will the “Sold” compare to the under contract activity? Stay tuned…..

‘Tis the season

It’s the season to party. From family dinners to your office Christmas party to your spouse’s office Holiday party (they are more PC) there is no shortage of parties for the next month or so. The best thing about being in the real estate business is people will seek you out at these parties. Everyone wants to talk about real estate. This is your time to take your vengeance on the media. You have to spread some positive news about the real estate market. People are going to ask you, “So, how’s the real estate market?”

The market is not dead. Properties are selling. Buyers are buying; but, what are they buying? I looked at the properties that went under contract so far this year. Here is what I saw.

When it comes to size it seems small sells. Smaller homes are selling more than larger ones. Here is a breakdown by square footage:

Almost half of the homes that went under contract were three bedroom homes.

Now the neighborhoods. So where are the people buying? Below is the list of the top twenty neighborhoods by number of sales. Now keep in mind the sizes of these neighborhoods as well as the available number of homes for sale.

And now the most important thing of all – price range. What price ranges are seeing the most activity?

Now you have something to talk about when someone asks you, “How’s the market?”

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