This week I’m going to focus on some new things that are going on in the market place that are shifting things in a somewhat fundamental way. Fear not you wonky types. We’ll get to the numbers too. Typically in an appreciating market there are certain “governors” on price appreciation, irrespective of market conditions. I’m referring to things that impact affordability like continuous price growth that significantly outpaces wage growth. But mostly I’m speaking about appraisals.
Appraisers have strict rules they must follow on appraising properties and limits on the adjustments they can make for market appreciation beyond what the recent sales data says to them. Because of this it’s tough to get double digit growth in short months long periods of time. Until the market gets so hot that in the majority of the deals an appraisal is not part of the contract. At that point you start getting new closed “comps” that take big jumps over previous sales and these now become the new market. There is no way for a lay person to really observe this happening but agents like myself who are tuned into the market can see these things coming.
In large swaths of the market in Northern Virginia, this is where we are at now. So expect all the multiple contract situations I’ve been blogging about to result in some abrupt market price bumps in many areas! Call me to discuss if your preferred areas and housing types fall into this category.
Next the rental market is starting to take some hits on tenant payments and thus on the landlord side. Nationally only 1 in 3 tenants are paying their rent according to the terms of their lease! That could creating huge cash flow problems for owners. It’s a situation that bears monitoring since if it continues for too long in many situations this may throw landlords into the distressed seller category. The good news is this is still a little ways out. These investors have a 6 month forbearance option from their lenders, and there is discussion of a further 6 month extension. Of course this nukes the mortgage investors! No one is escaping the pain.
The dichotomy between these two situations is interesting isn’t it? Call me to discuss and I’ll walk you through it. Plus if you are in any of the effected industries I’d crave your professional input.
Now for the numbers. Surprise surprise inventory levels are down 42% from the same time last year. The rest of the country is seeing small increases recently. Despite that fact, sales are up 4% year over year for this week. Additionally, over the last 30 days, contracts are up 9%. All of which points to a continued, robust and competitive summer.
On the forbearance front, they rose last month after declining previously.
Given the incredible job growth numbers for last month, of almost 5 million new jobs, hopefully this trend will reverse itself. As you can tell, there is a lot going on and it’s important what to pay attention to and what not to bother with.
Call me to discuss what these trends mean for you if you’re thinking about buying or selling. In closing, I want to wish everybody a fun filled, safe and blessed 4th of July!
It’s a good life.
Chris
