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Selling page 2
Buying page 3
Summary page 4
DEAR NEIGHBOR,
The priority of this publication has always been to offer than six months out unless the forecast pertains to the
the reader a factual understanding of the fundamental long term outlook. Most would agree that real property
drivers of the real estate market within the DC Metro- will have a greater value ten years from now than it
politan area. We avoid any tendency to “sell” a per- does today. Home ownership is once again about
spective or convince the reader of a particular point of providing shelter for one’s family, achieving some tax
view. While we are always proud of who we are and advantage and the potential of someday living in a
what we accomplish, we’ve stayed away from making “paid for” home. Not many possess the risk tolerance
this a commercial for our real estate service compa- or personal resources to speculate for short term gain.
nies. We believe that simply setting forth facts, allowing We are within a cycle where values have stabilized, inven-
readers to reach their own conclusions, is something tory has returned to a more normal level and home owner-
that sets us apart. ship is more affordable than at any time I personally recall.
Amy DeBok, This issue will honor the same principle, however, Unfortunately, we recovered from the preceding foreclo-
Realtor there are some recent accomplishments that deserve a sure market through artificial means and not through a
commercial. We also feel it important to recommend a market driven solution. In many ways, we have postponed
6641-A Old Dominion Drive strategy for potential purchasers and sellers that are rather than dealt with the fundamental problems.
contemplating a transaction within the next twenty four The big question now is whether we think policy makers will
Mclean, VA 22101 months. Certainly, we will continue to provide the data sustain their intervention long enough to smooth out the jour-
Cell: 703-618-2601 which affords the reader a factual basis for reaching ney to a lasting recovery. This is a yes or no question. If you
their own conclusions, but right now, much of what will are considering a real estate transaction, you have to answer.
adebok@teamdebok.com
determine real estate values is not statistical, but polit-
www.amy.debok.c21nm.com ical or policy driven factors.
Few in our industry are confident in forecasting more
CONTINGENT RISK
We discussed the number of homeowners who are active at some stage within the foreclosure pro-
cess. The initial distressed segment in 2006 through 2008 were families who acquired or refinanced
homes using sub prime, adjustable rate mortgage products. If you have confidence in Realtytrac
statistics, a sizeable portion of these properties remain unresolved and in the hands of lenders.
The graph to the right shows the arrival of a whole new set of Option Arms set to adjust. If left to their
own resolution, the vast majority of these loans will default and hit the market as bank owned inven-
tory. If that happens, there seems little alternative to the market finding new lows. There are already
indications of additional government pressure on lenders to modify loans to avoid this eventuality.
While the graphic to the right would indicate that by 2012 we will have absorbed the impact of ad-
justable resets, we will not. What legislative intervention has accomplished is the moderation of
potentially severe price movement. By slowing the pace of new inventory becoming available, price
movements were not as abrupt or as deep as they had the potential of being. On the other hand,
since the intervention slowed the pace of foreclosure, the duration of their impact will be greater.
Effectively, our government has some control over the number of homes that will be available for
sale at any given time. If they are effective at meting out this inventory, and at pace that can be
absorbed, prices should stay flat or increase modestly. It will still take a while.
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MARKET TRENDS | BUYER CONSIDERATIONS
The graph below left displays the payment per thousand dollars borrowed. A purchaser borrowing $1,000 at a 7% interest rate will repay $6.65 per thou-
sand dollars borrowed, rather than $5.36 if the interest was at today’s rate, around 5%.
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Many have been rewarded for staying on the sidelines over the last few years but If your plans include a home purchase in the nearer term, you will be
at some point, the rearview mirror will show a missed opportunity. There is sub- hard pressed to find better circumstances. The tax credits may or may
stantially more information available today than there was when this cycle began. not be extended. Interest rates probably will not get lower and will like-
Depending upon what community within the Metropolitan area a buyer is consid- ly rise. Unless there is further catastrophe, prices will stay flat or in-
ering, prices are still as much as forty percent below their peak. Last year at this crease slightly. You may, just may, purchase for slightly less. If you
time many were fifty percent below their peak and the year before, sixty. choose to wait however, odds are, that you will pay more each month.
3
CENTURY 21 NEW MILLENNIUM | REAL ESTATE NEWS
SUMMARY
If you are considering a real estate transaction, thorough analysis and competent representation are
essential. We are in a transitioning market. There is potential for profit, as is there risk of loss. If we
understand the underlying facts, we can continue to make good business decisions logically and
without emotion. I am a real estate professional and accept responsibility for keeping my friends,
neighbors and business community informed as to all aspects of things affecting the real estate por-
tion of their holdings.
If you are currently listed for sale, this is not a solicitation. If you have a real estate question, I will be Amy DeBok
happy to answer it, or find the answer. If you have a real estate need, I will appreciate an opportunity Realtor
to compete for your business. Our team is very good at what we do… our results demonstrate that.
Don’t settle for less. 6641-A Old Dominion Dr.
McLean, VA 22101
Sincerely,
Cell: 703-618-2601
Amy adebok@teamdebok.com
703-618-2601