Archive for October, 2008

We see it from clients all the time–they are thrilled to buy a new home or sell an old one. But that excitement is always tempered by the act of moving: sorting through piles and piles of stuff (there’s no better word) to decide what to pitch, recycle, move, or donate.

Unclutterer, a blog we’ve made no secret of loving, however, suggests treating moving as an opportunity to take stock of your possessions and cull your clutter, rather than just seeing it as a hassle:

Unclutterer: Moving creates an opportunity to declutter

• There is a limit of supply and a lag time to push more supply into the market.  That lag time frequently offers the best appreciation.
• A piece of real estate is an accumulation of commodities and the replacement cost of those commodities is going up.  A house is nothing but a bundle of copper, wood, brick, labor, etc.

Remember, like any wealth storage vehicle, the rate of return will vary.  Expect ups and downs.  Don’t get greedy during the ups and don’t panic during the downs.

Inventory is high, interest rates are low, many sellers are desperate, and prices are down. With all the bad news in the market, could it really be a good time to buy?

Wait a minute, what bad news? If you’re a buyer and you’re looking at the current set of circumstances, there is no bad news in this formula at all. Now is not the time to sit on the sidelines and wait.

Now is the best time to buy real estate in a generation

The most common reason given for waiting to buy is the fear that prices will continue to drop. No one knows if we have past the bottom, are at the bottom now, or are facing the bottom next year.

It doesn’t matter.

If the fundamentals of your real estate purchase are sound, the goal is not to buy at the bottom, but to buy near the bottom. It is impossible to time your way to a successful real estate purchase at the bottom of the market.

When was the last time you timed anything with success?

• Did you time getting into a relationship at just the right moment?
• Did you time that perfect job in the perfect location?

No – it is absurd when you frame timing in that context, and it is foolish to attempt to time your real estate purchases with the market cycle.

If the following fundamentals are in place for you, now is likely the right time for you and it happens to coincide with the best cycle for buyers in decades

• Are you willing and able to hold the property for a minimum of 5 years?  (That means potentially renting it.)  Don’t expect to get rich quick in real estate; it is a slow growth strategy that takes years.  I can’t think of any extremely wealthy individuals that don’t have substantial real estate holdings. They are a vital part of your overall financial health.
• Can you afford the monthly payment? This fundamental is where most people are in trouble–their monthly payment far exceeds what they can afford. Don’t over extend yourself, err on the side of being conservative.
• Do you have a minimum of three months, preferably six months of cash reserves on hand after your purchase?  Job security is an issue right now, but whether you own or rent, you need to continue to make a monthly payment for your housing obligations. Have enough cash reserves on hand so that you can sustain yourself for several months if your income suddenly stopped.

Most people will miss this opportunity

And they won’t move into a purchase until long after the market swings back up.  Fear and indecision will override logic and history until clear gains are made in appreciation and overall stability. There will be opportunity then too, but the best opportunities will have past until the next buyer’s market.

The size of your opportunity, the strength of your financial portfolio, and the direction of your life is a result of the choices you make.

September 27’s Washington Post’s “Where We Live” section provided some real estate trends for condos.  The data compared the first three months of 2007 to the first three months of 2008.

As one would expect, metro-wide sales were down from 4,556 condos to 2,864 condos during the January to March period. Pricing held up well, however, with the median purchase price of $277,222 in 2007 compared to $274,175 in 2008, or a 1 percent decline in value.

But the District itself saw a much brighter picture.  Sales increased from 208 to 312 when comparing the two periods, and pricing went from $330,000 in 2007 to $379,500 in 2008 – a 15 percent increase!

Now, keep in mind that this is only a small snippet of the market, and one cannot draw meaningful conclusions from the data.  That being said, it is just another data point that supports the notion that living in the District has its advantages!

Whether you’re a homeowner looking to improve your living space or a seller looking to improve your home’s appearance, these two blogs are must reads:

• Unclutter –”the blog about getting and staying organized.” This blog has some great tips for organizing your home (and life), whether you’re looking to improve it’s appearance to possible buyers or you just want a nicer place in which to live.
• Dwell–”at home in the modern world.” Like it’s parent magazine, Dwell’s blog offers fantastic ideas for modern renovations and furniture, ways to improve your home’s environmental impact, and beautiful pictures of stylish (and often affordable) homes.

I just wanted to point out our press room, the newest addition to Brandon Green Companies’ website. It includes the latest news, stories, and tips from the BGA staff, as well as contact information for Brandon and his media relations contact, Chris Martin.

If you’re looking for the expert opinion of one of Washington, DC’s, best real estate agents, contact Brandon (brandon@brandongreen.com, 202.318-1623 ext. 1) or Chris (cmartin331@comcast.net, 630-670-2745).

As politics seems to rear its head in every conversation in Washington, DC, Zillow’s survey on which candidate people think will better address the current state of the housing market should be of interest to our readers.

While one candidate might be better for the real estate market than the other, so many factors influence the market that neither candidate will be able to move it all that much in any direction.

Here’s a summary of the Standard & Poor’s/Case-Shiller Home Price Indexes release last week:

• Prices of U.S. single-family homes were down 16.3 percent in July compared to a year earlier
• The composite index of 20 metropolitan areas fell 0.9 percent in July from June
• The pace of home price declines since May has slowed (to about a third of the rate of the two previous three-month periods)
• Home prices in the DC area are just higher than where they were in August 2004

Of course, what could be bad news for sellers might be great news for buyers or investors (which, based on yesterday’s post, seems to be the case).

(Via Reuters and DC Home and Condo Prices)

A local news broadcast in Washington, DC, recently included a segment about real estate investors finding great deals in the market.

And apparently local investors are not alone: according to Hitwise Intelligence, the frequency of Internet searches with the term “houses for sale” just hit a two-year high.

(Via Inman)

Here’s some great advice from The Real Estate Blog on reviewing what  you expect to gain from an international real estate investment:

• Medium- to long-term capital growth
• Rental yield
• Buy to sell opportunity
• An investment to holiday in

And if you are interested  in investing in international real estate, I also suggest working with an agent who is a Certified International Property Specialist (CIPS).

Any questions on international real estate? Post them in the comments or e-mail me at veronica@brandongreen.com.