Best Opportunities for Buyers are Now!

Heads up folks, the great "window of opportunity" may be about to close.

The past few months have presented buyers with a great chance to snap up bargain homes. All at once, we have seen:-

• falling home prices, back at least to 2003 levels
• record low mortgage rates encouraged by Government intervention
• the introduction of an $8,000 First Time Buyer Tax Credit

The result has been a significant increase in activity in the past couple of months, though this has been largely focused on the sub-$200,000 price range, and in particular on foreclosures which have accounted for over 2/3 of the sales so far this year in Warren County. This activity has brought the sub-$200,000 inventory to less than 7 months' supply, which is now a balanced market and no longer a seller's market in this price range.

But here's where things stand as we move firmly into the heat of the summer:-

Home prices appear to have bottomed, though many over priced homes on the market still have to come down to more realistic levels. However, buyers waiting to see a further fundamental drop in sale pricing levels are likely to wait in vain.

Mortgage interest rates may be rising. Over the last week of May, the government's sale of 10 year Treasury Bills (to help finance the stimulus) resulted in yields increasing by 1/2%, and mortgage rates, which are closely linked to 10 Year Treasuries, also increased by almost 1/2%. The market experts believe this is just the start of an inevitable steady rise in rates as a natural response to the huge supply of money into the market and the resultant threat of inflation down the line.

The Tax Credit will end! If you are a first time buyer (defined as someone who has not owned a home during the previous 3 years), you also need to be aware that you have to complete your purchase by November 30, 2009 to qualify for the First Time Buyer Tax Credit. A recent government announcement allows the credit to be "anticipated" and used towards the downpayment, but this still all has to be completed by November 30. That's less than 5 months, and that time soon disappears when you are going through the process of looking for and buying a home.

- - - oo OO oo - - -

So now is the time to act, before you are looking over your shoulder wishing you had done so earlier. I can help you find a home, and talk you through the process if you are not familiar with it. Here's how to start . . .

• browse for listings on the market at my home search
• read more about the First Time Buyer Tax Credit
• read more about foreclosures
• ask me for an up to date foreclosure list for Warren County.
• or just send me an email or call me on (540) 671-1367

4% mortgage rates?

Great news for our ailing real estate market in Front Royal and Warren County. The Federal Reserve today announced that it is buying an additional $750 billion of mortgage-backed securities and agency debt, and $300 billion of longer term Treasury bonds - a total cash injection of $1.15 trillion, doubling its previous efforts in boosting the money supply.

The aim - and the pundits believe it will work - is to ease credit, and reduce interest rates for most borrowers, in particular mortgage borrowers. All being well we could see mortgage rates down to 4% or very close, a challenging target set by the government a couple of months ago.

The one question mark is whether the mortgage lenders will pass on the full benefit to the borrower. I hope so, and the belief is that they are likely to, due to political pressures especially on those banks that have received substantial (and cheap) TARP funds.

This is great news for home buyers - record low interest rates to take advantage of the very low house prices that are now available in the market. If you are a first time buyer, you may well also qualify for the 10% (max $8,000) tax credit. What a time to be in the market for a home!

If you've been thinking of buying, but sitting on the fence waiting, now may be just that window you have been waiting for. Give me a call or email me to see how I can help you to find the right home.

Market Update

We have been stuck in a range of around 25 to 30 sales per month for some time now in Front Royal/Warren County, but have seen the median sale price steadily fall due to the high level of foreclosures. Of the 27 sales in February, 22 (81%) were foreclosures. To put it another way, only 5 homes in regular private ownership sold in February, out of around 350 privately owned homes on the market. So far this year just 5 homes have sold for over $300k, and none over $400k.

The first chart shows active listings, sales, and months supply over the past 3 years. Click on the chart for a larger image.

The second chart illustrates the falling median sale price (green) and the Days on Market (purple) for homes that sold. Click on the chart for a larger image.

Confidence remains the principal obstacle to an improving market, and much of that depends on the general economy over the coming months. However there is no doubt that an improvement in activity will not bring about an increase in prices for a long time (my guess is 3 or 4 years). Why? Because there is still a significant over-supply of homes on the market (nearly 16 months supply), along with a large reserve of wannabe sellers waiting in the wings for a better opportunity to sell, who have either given up over the past 12 months, or who haven't yet put their home on the market.

Pricing of listings remains absolutely paramount. Most of the foreclosure companies get it right, which is why their homes sell. Most private sellers are still getting it wrong, as they cannot come to terms with the price necessary to achieve a sale.

Build Them & They Will Shop!

Exciting times for Front Royal shoppers - the new Target store opened last week, along with its in-house Starbucks and Pizza Hut Express outlets. Also now open is Famous Footwear. Over the next week, Staples (Aug 4) and Petco (Aug 6) will open their doors. And very shortly, we will see TGI Fridays, Fashion Bug, GNC, Radio Shack, and Game Stop, among others, all in the Crooked Run Shopping Center.

On the other side of route 522, the huge Lowes store is taking shape. Beyond that, the future Wal-Mart is about to spring up from its leveled site, and the rest of the Riverton Commons infrastructure is taking shape amid a flurry of activity. I drove around there earlier today to take a couple of photos, and was running the gauntlet of many large vehicles, concrete trucks, earth movers, and swarms of construction workers, surveyors, and engineers.

On a sadder note, isn't it a shame to see what has happened to the home in the last picture below? A handsome brick colonial of over 3,000 sq.ft. on a nicely landscaped 5 acres, this home once looked out over gently rolling land and a 2-lane route 522 wandering north towards Winchester, with the mountains as a background. Now it looks down on all this development, with a bird's eye view of Lowes and a busy intersection which at one point is 8 lanes wide. I guess that's the price of progress.

New Shopping Centers for Front Royal

Anyone who last traveled route 522 north of exit 6 of I-66 a couple of years ago, will be astonished at the changes now taking shape. It started with the creation of the Blue Ridge Shadows championship golf course, now with a Holiday Inn & conference center being constructed alongside the highway. But more significantly, we are now seeing the development of two out of town retail parks, a first for Warren County.


Crooked Run Shopping Center (on the west side of 522) and Riverton Commons (on the east) have been in the development stage for some time, but will come to life with the opening of the new Target store this coming July on Crooked Run, followed closely by PetCo, Staples, Fashion Bug, Famous Footwear and TGI Fridays. By early 2008, Riverton Commons will be welcoming Wal-Mart, Lowes and others, which so far apparently include several eating places like Crackerbarrel, Chic Fil-A, Checkers and Starbucks. Yes, Front Royal, Virginia will have arrived - we will have a Starbucks

What's more, a third retail park - bigger than these two combined - is in the pipeline off Rockland Rd, a mile or so further north. I understand it will be a couple of years before we see major developments there, but you can probably begin to think of some of the major retail names who will no doubt be looking for a share of the spoils.

Virginia Wine & Craft Festival

Don't miss the 21st Annual Virginia Wine & Craft Festival, to be held Saturday May 19, 2007 in historic downtown Front Royal, in Warren County, Virginia.

The main downtown area of Front Royal - The Commons, Chester St, & East Main St - is cordoned off to leave a delightful area for visitors to roam and mingle. Wine producers and skilled crafters come from all over Virginia, and in addition there are many local Warren County businesses and organizations represented, and lots of fun, games and rides for the kids.

Musical entertainment is at the gazebo in The Commons, and on the Court House lawn. At the gazebo will be popular local Beatles cover band Glass Onion (from 10 am to 1 pm), and Texas Chainsaw Horns (2 pm to 5.30 pm), a band blending soul, funk, rock and country. In front of the Court House will be Bill Dykes & The Beatnik Night Players (bluegrass/jazz variety) from 12 pm to 2 pm.

Admission is $12 in advance, $18 at the gate - for that, you get all the wine tasting you want. If you don't want to join in the wine tasting, admission is just $2, with kids aged under 6 free.

Advance tickets may be purchased from the Warren County Chamber of Commerce, call (540) 635-3185.

This is a great event with a fantastic buzz - if you are new to Warren County or haven't been to the event before, make it a priority!

Welcome to the New Year

A Happy New year to everyone. I want to take this opportunity to thank all of my clients of the past year, who have helped me to achieve sales of over $16m during 2006. This was significantly my best year ever, despite the downturn in the market which affected the whole area, not just Front Royal and Warren County.

The market is tough, but don't let anyone have you believe that it is a disaster. What we have seen is effectively a return to a "normal" market where sellers have to put their best foot forward to make their home as saleable as possible, where correct pricing is paramount, where Realtors have to work harder (and sellers should expect them to) to maximize the promotion of their listings, and where buyers expect to negotiate on price and terms. Above all, where it is normal for a home to be on the market for several months before it sells.

That is all a far cry from 18 months ago, when sellers and Realtors could get away with the minimum work, and where buyers had no choice but to accept the prices being sought - because if they didn't, then someone else would take it from under their feet while they were thinking about it.

The age of reality has set in, and unfortunately some sellers still don't "get it"; their homes will remain on the market unsold. Some Realtors also continue to think that listing a home in the Multiple Listing Service, and perhaps a homebook or two, is sufficient to get it sold; their business will dwindle. Homeowners are coming to appreciate the value of a comprehensive marketing plan, combined with a high profile website that is easily found in the search engines, and that provides extensive information for the buyers including plenty of quality pictures and virtual tours.

Did I mention that I do a great job of marketing a home? :) If you're thinking of selling your home (or have it on the market, but are unhappy with your present arrangements), check out my Featured Listings page, and give me a call to talk things through.

Home for the Holidays in Downtown Front Royal

December 1 to December 3 sees "Home for the Holidays" in The Commons, right outside our office in downtown Front Royal, hosted by the Downtown Business Association. The Christkindlmarkt will open Friday and Saturday from 10am to 10pm, and Sunday 11am to 3pm. There will be musical entertainment, crafters and artisans, indoor vendor booths, international food, Winter Wonderland, and Paws & Claus.

Don't miss the Christmas Parade, Saturday December 2nd, starting at 4.30 pm. The event also includes carriage rides, Victorian and Civil War strolling Carolers, and of course Santa Claus.