Cindy's Blog

So sorry for the lapse in time between postings-- I am only now crawling out of the haze that the flu has thrown over everyone in our house. Would that the market would come out of its haze as well!

Things do seem to be picking up. I know I've said that before, but it is absolutely true, and the media continues to only give the bad news. Yes, the mortgage industry is in the hole right now, and there are all sorts of ideas of things to do to "fix" things, but in the meantime, the rates are at near record breaking lows, and it is a great time to buy.

As for sales, it is true that things are taking longer to sell, and that the prices are not appreciating at the rate they once were (and arguably, there are areas where prices have dropped) but for the most part, real estate, for the majority of people and the majority of purchases, is something like the stockmarket. It doesn't except in an exceptional market, appreciate so quickly that you can watch it.

The typical length of time spent in a home is 3-7 years. In an average market, that home will appreciate during that time, degrees of which will be determined by the area, the home, etc. Just as anyone will say about the stock market, you shouldn't watch it every day, because the fluctuations will make you crazy. Since we've been in a market for a few years that allowed us to watch it every day, and gave us the expectation that we could make 50k on a home to which we've done nothing in six months, it's tough to come back down to earth and realize that that was the weird market, not this one...

I recently was talking with a real estate investor who explained that he had actually lost money on every home he had ever purchased- because they had all risen in value after he had sold them. Interesting take on things, isn't it?

How does that affect me, though, you may be asking... If you're planning to buy all cash, you may still feel like waiting it out, if you don't need to move for some reason- family, job, schools, etc. If you're planning to get a mortgage, you are still in terrific shape to get a great deal- not only on the house, but the financing as well.

Well, I spent the last four days (rather, the weekend- still recovering) at the Home Show/ Maymont Flower & Garden Show. All in all, I met loads of great people, and learned alot, particularly from the other vendors!

I have to say that there were a number of things that I found rather disheartening, though, especially on Thursday and Friday. The first is that while much of the focus of the home show was on the "green zone" and the "green" speakers that they had brought in for the event, there were only two recycling bins at the entire event, at least that I (or anyone else to whom I spoke) saw. There also seemed to be little to no effort on the part of many vendors or organizers to recycle the cardboard from boxes carrying merchandise, etc, or from the foodservice items- I definitely saw a large number of plastic water bottles, and saw even more when the trash was emptied at the end of the day. 

Every time I start to feel like there is definitely movement, albeit small, towards being a bit more conservative (in the truest sense of the word), a bit more conscientious, more conscious, in fact, of the earth and our place in it, I realize that I'm still in Richmond, VA and we have a looooonggg way to go!

I don't want to be negative, because overall it was a positive experience, and certainly Saturday and Sunday somewhat restored my hope that we can change here in ChangeAverse, USA. Before I can be positive, though, I do just have to vent (I promise to try to be brief!) my top 5 pet peeves/quotes/ occurrences from this weekend:

5-The complete lack of recycling bins for vendors and attendees.

4- People saying, "I had four kids and they don't live with me anymore, so I'm saving energy that way." --What?

3- Vendors who say, "Let me put that tiny item in a plastic bag for you." The purchaser who says, "Yes, I would like a bag for that tiny item."

2- "I already save all the energy I need to save" (when you KNOW that they don't, because really, who does?)

1a- The massive numbers of plastic bags. 1b-The massive amount of paper that filled those plastic bags , most of whic I'm 100% positive will go in the trash.

I will be doing another show this weekend, and hope that it will be better in many respects, than this one.

Moving on to a more positive note- I did meet quite a number of people over the weekend that were absolutely terrific, and that were very enthusiastic about trying to do something positive as they buy, build, or renovate.

My next post will be one about some of the really terrific vendors I met at the show, and that I hope (if you have the occasion to use any of their services) that you will give them a call or visit their sites...

I read an article the other day that really struck a chord with me, and that I'd like to talk about just a bit. It wasn't that it was anything particularly new, or for that matter anything I didn't know. I suppose it was more that it articulated something in a way a bit differently, or more clearly than I am able sometimes.

While I still wouldn't say that the Richmond market has "tanked" or that the "bubble has burst" there is no doubt that there are areas where there has been little or no appreciation, and admittedly, areas where homes clearly could have sold for more a year ago than they could now. Having said that, this has certainly been a learning process for those entering the market on either the buying or selling side.

It's funny- sellers sometimes seem so concerned about leaving money on the table that they end up doing that out of fear. Sometimes I feel like a broken record- homes that are priced right will sell (yes, even in this market) and even if it takes a little longer for them to sell. However, in a market like this, it's sometimes hard for us to determine (even those of us who do this for a living!) what that "right price" is. It's like a moving target at times.

Going back to the idea of leaving money on the table- What often happens when we're in a slow or declining market is that people hear so many stories of people who got a "great deal" or "stole" a house, that they draw a line in the sand, and try to stand firm that they're not going to "give the house away" and they end up pricing it too high to start with. Once it becomes very clear that they are priced too high, they end up having to drop it lower than they would have started had they begun at a reasonable level-- this is the part where it always seems to get confusing for people, or where I have my difficulty making myself clear.

This is largely because the first 2-3 weeks (even in a market where things are declining or staying flat) are something of a honeymoon period- that is the time when the buyers who are out there, and have been looking for a home like that, would have bought it had it been the right price. After the first few weeks, the home loses the newness and gets put back on "the shelf" to wait for a willing buyer.

What the article said was this- using the example of a declining market (at 5% decline). Homes on the market today need to be priced at tomorrow's prices. A home that is priced at $500k today will be worth $498k in a month and $495k by the time it closes. To get that house sold, it needs to be priced at $495k today. If there have been alot of showings, and no offers within those first 2 or 3 weeks, it may be 5% higher than the market. Many buyers and agents are more than willing to offer 5% less than the listed price, but when a home is 10% off, buyers and their agents will likely not come, and most people will not offer that much lower, period. (Even in the world where people are getting "steals" on homes.

Something to think about.

Today I spent a while helping some clients make their selections about what to put in their new home. If you've never renovated or built a house, let me tell you, even with the selections whittled down by a builder, the selections and the decisions can be quite overwhelming!

You may have seen on my site references to ENERGY STAR, and certainly any references to EarthCraft House include the mention of the program as well. We all see the stickers on appliances, and hear the words, but do you really know what the ENERGY STAR program is?

As you probably have heard, the Fed cut rates again yesterday by another .5%, bringing the Federal Funds Rate to 3 percent- the lowest it's been since June of 2005. Awesome, you say, but what does that mean for me?

The federal funds rate is the target interest rate for banks borrowing reserves among themselves. The discount rate is the interest rate that the Fed charges banks to borrow reserves from the Federal Reserve. The Fed wants to be the lender of last resort: It wants banks to borrow from one another at the federal funds rate before borrowing from the Federal Reserve at the higher discount rate.

Long-term rates, such as those for mortgages, don't respond directly to the Fed's short-term rate moves. Sometimes, mortgage rates move in the opposite direction when the Fed reduces the federal funds rate. But more often than not, mortgage rates eventually follow the Fed's lead. That is probably one of, if not the primary, motivation, for the central bank dropping the rates in the first place.

In a nutshell, rates are at tremendously low levels, so at the risk of repeating myself, it is a great time to buy a home. If you are on the fence, it may be a good time to jump off of it. If you are in a higher rate mortgage, it is definitely time to call your lender and check into refinancing.

We are definitely seeing a spark in the marketplace, but really, with the number of homes on the market right now, and the market still filled with price reductions, the combination of the loan rates and the market are the "perfect storm" to get you into a home this spring!