any guesses on when housing market will turn around? (Leesburg: for sale, real estate market)

[poohki]

Hi all:

I already live in Va and have all my life. My hubby and I are trying to sell our big house in Warrenton to move to a smaller place. My youngest child is getting ready to go to college. We placed our house on the market in April, at a good selling price, and have only had about 5 couples even come and look at it. We have lowered the price 2x and since then haven't even heard from our realtor. I was looking at homesdatabase this morning, and noticed alot of houses comparable to ours for sale for about $20,000 under what we have ours for, but also there are alot of comparable houses $20,000 over our price. We can't lower our price anymore, and are seriously considering refinancing for the time being. I was just wondering if any of you who live in this area and know the market could speculate on what will happen in the next few years. I know that it's all a big gamble right now, but I don't want to make any foolish mistakes. Are interest rates going to continue to climb? Will the housing market turn around and boom again? Again I realize that no one can predict the future, but I know there are those out there who are very knowledgeable about real estate, and would love some educated guesses.

Thanks so much for responding!

[seldomseen]

It's really extremely difficult to say, as you already know. But the housing market in the major cities along the east coast are still highly inflated, despite the fact that sellers are willing to reduce the selling price of thier homes by $10k-$20k. The majority of middle-income families simply cannot afford to spend $350k - $600k for a modest size home...even with low interest rates, and creative financing. The real estate inventory has been flooded with over-priced homes for sometime now; giving potential buyers plenty of options, but It's pretty evident that prices have exceeded the purchasing power many buyers, therefore, many potential buyers are just riding out the market to see if it the market really crashes bringing the prices back down to realistic levels.

Another thing that is most likley impacting the stale real estate market, is the skyrocketing percentage of families that have been foreclosing on thier homes recently; causing lenders to be more rigid/particular to whom they approve loans for. The high gas prices is another factor that I'm sure is impacting the real estate market. People not have to be a lot more conservative with thier spending just so they can afford fuel for thier vehicles/homes. The Real Estate, Auto Sales, and Retail businesses have all demonstarted declining sales these past few years.

[5stones]

not wnating to sound sarcastic but....

2k lowering in price in the housing market where the avg home is 400k isn't much and no buyer is going to take that as a serious "lower price" 10k is the avg here (Leesburg) for the first price cut.


I am hearing that the prices won't start to creep back up until spring 2008. They are leveling off here and the inventory is slowly reducing. Those who can are renting and those who have to sell are doing so at 50-100k less than 2005. Others are pulling the houses off the market and waiting it out.

If I were you I'd take it off the market now. wait until march 08 and put it back on the market... but also be proactive and "stage it" you know get rid of ALL the clutter, ALL personal photos etc... make it neutral...any walpaper take down and paint a neutral color etc...
But that's just my 2 cents.

[poohki]

i appreciate the advice. we already have staged our house, repainted everyroom in neutral colors, and have everything not needed for day to day life in storage. when i said we lowered our price 2x, i meant 2 times. we have lowered it by $10,000 and have been surprised that no one has even asked about it. it's not a new house,but does sit on 1 acre of fenced in land and has a beautiful inground pool. it is also about 4000 sqft living space. i guess i thought that it was priced right and beautiful enough to sell fast.

i really do appreciate the input. it is very discouraging to be in this situation. i know that many many others are in it with us...........

[seldomseen]

I personally wouldn't just plan or wait for the magical March 2008 date. Analyst have been trying to predict the real estate market for years, without any accuracy. I personally just think the real estate market bubble, has pretty much reached it's ceiling for most of the northeast. From D.C. up to Boston, you have to spend a minimum of $500k for an average/modest sized single family home on a quarter acre property!! This simply isn't affordable for middle-income families; especially when you factor in other monthly debts that the average family has.

Just take your house off the market or keep it on the market and keep a close eye on how the market is behaving, and make any necessary pricing adjustments so that your house sells. The problem most likely isn't with your house specifically...it's just the flooded, and inflated housing prices that have stalled housing sales. I personally think the real estate market is going to continue to worsen for sellers that owe more than the house is actually worth.

[New2VA]

We've been watching the market here since February and are very familiar with real estate all over the country. It looks like this area is finally realizing the same grim truth that Northern Virginia experienced awhile back...after years of home prices having been falsely inflated, a huge overcorrection is beginning to take place. We've already seen average days on the market exceeding 6-12 months. Still, sellers and builders are just now starting to lower their prices. Everyone has different motivation for selling, but anyone who needs to get out of the market will, IMHO, have to be dropping by another 10-20% in order to compete. The last post is correct about how few buyers can afford the upper part of the market, but on the other hand, there are plenty of buyers ready and waiting to make their choice once they feel the bottom has hit. IMHO, that will not happen until at least the end of this summer, possibly not even until next year. And, people who have that much money to spend on a house are wise enough to find affordable options for the short term that might even put them ahead of "the game" when they finally do decide to buy again.

Seller's...what are you waiting for?! Add up your expenses for the month each time you don't sell your house and calculate how much that will cost if it goes on another 6 months to a year! At some point, isn't it to your advantage to drop your price before interest rates go back up and you loose even more potential buyers? This past week, interest rates (the 10 year, meaning mtg rates will follow) dropped again. The buyers that were on the fence have jumped to one side or the other. So, until the sellers and builders admit defeat, there's not much going to sell now. The ones left waiting to buy are clearly in the driver's seat and they don't appear anxious to overspend knowing the market is still on the downslide.

Good luck to you.

[5stones]

when i said we lowered our price 2x, i meant 2 times

oh sorry for the missunderstanding!

I wasn't implying that March 2008 is a magical date. Just from reading loads of real estate info. The market here has done a big self correction. prices aren't going to shoot up by any means...just that the 2% increases in property values should start to reappear. no more big 10% declines.

But in abuyers market like we have now...buyers are very very picky. And any house that has over 100 days on the market is precieved as a "problem" whether it is or not. So if by Aug you don't have an offer and you can't afford to come down 30k. Take it off the market until spring (always a better market than fall)
The new home buliders have not helped either...but they have scaled back alot here in loudoun county. (yeah!)

I personally think the real estate market is going to continue to worsen for sellers that owe more than the house is actually worth.

YES. it will probably take 5+ years for prices to incease enough for those who owe more than the house is worth.

The problem here is that alot of people bought BEFORE the big increase so they can lower the price (what it was worth 2 years ago andthey think they can get) by 100k and they are still making 100k in profit. That is killing those who bought when prices hit the all time high in 2005 and now the re-sale has fallen to below what they paid for it (people like me!!) It was a gamble buying for only 2-3 years and we knew that, we are lucky that we had a big profit from our old house so we can still sell and pay the bank back what we owe and have a tiny cash left over.

[poohki]

We're probably like alot of other people, we can't drop our prices anymore. We will only break even at the price we are now, after the realtor costs and closing fees. We can't afford to bring money to the closing table.

Thanks again for all of the input.

[seanpecor]

You missed the peak period. The highest number of closings occur during June and July, implying that offers are first being made in April and May or so. Families relocating typically want to do so during the summer period to avoid disruption to schooling etc.

I don't think you'll see real estate prices drop further. I believe they will climb at a rate comparable to the national average - because after all - the Virginia population is still growing at a faster proportional rate then the U.S. population. I just don't think you'll see a hot market for a few years to come. As for interest rates, I think they'll climb a little more but not by much. The economy is confusing the financial deep thinkers in charge of all the levers and pulleys and which lever to pull isn't very clear to them.

As for the downside. I wouldn't rule out a recession. It's a possibility given an inflation that doesn't seem to gel with other economic figures. The dollar is the weakest it has been against the british pound and the euro in a long, long time. In 2005 when we bought horses in Holland the Euro was worth 1.21 dollars and now it's $1.36. That's a loss of over 10% in the value of the dollar. So at this point you'd have to be on crack to opt for a 5 year ARM instead of a conventional fixed w/ no prepay penalty.

Personally if it were my house I'd drop the price and sell, if time were of the essence. That's assuming I had a mortgage on the property and waiting 12 months meant $10,000+ paid out in interest on the current mortgage. Smaller properties have market prices that also stalled so you're not going to lose equity necessarily. It's said the devil you DO know is alot better than the devil you don't, and that saying seems to apply to your situation insofar as I gather.

Sean

[seldomseen]

I remember back in '99 when everyone thought the real estate market was going to tank, so owners started placing thier homes up for sale, and guess what happend? Prices started to increase, and increased, and soon after spiked! Prices still increased despite the high gas prices, economic recession, and the fact that Bush was going to be president. lol

If prices continue to increase that will be freeking insane! I couldn't imagine average prices of single family houses being $800k!!! You will need to make over $300k per year to barley afford a house at this price. The DC Metro area may have a pretty high median household income, but I'm willing to bet that the current prices outprice what more than 75% of NoVa families can afford!!

Banks, local governments, etc all love the inflated real estate prices, because they benefit so greatly from it. Especially the local counties, on the real estate tax assessments. If everyone simply rented, or just hold off on buy for the next 6-9 months it will greatly impact home prices and cause prices to decline, because sellers will be so desperate to get out of thier homes, which many are probably just barely making the monthly mortgage! And it's very difficult buying a house in this market too, because most buyers realize they are getting ripped off by overpaying for a house that should in actually be sold for $100,000 to $200,000 less in many cases!!