Market Review - 4th Quarter 2011

Happy New Year! It’s amazing how the days are flying by. Last year was a hodgepodge of positive and negative news. We started the year with a lot of positive data…the DJIA was up 5% in the 4th quarter of 2010 and 6.4% in the 1st quarter

of 2011. But then things started going downhill, from the earthquake and tsunami in Japan, to the turmoil in North Africa and the Middle East, and the ensuing rise in gas prices, to the standoff between the Congress and White House that brought the economy and Wall Street to its knees. Consumer confidence was at all-time lows and the hope that we would be working our way out of the recession was replaced by the fear of a double dip.

The second and third quarters of 2011 were not good ones by anyone’s stretch of the imagination. Not for jobs, the economy or housing.

Fortunately, though, we started to see some positive trends in the fourth quarter and it seems to be continuing into 2012. The final weeks of 2011 were the strongest since the economy seemed to be slipping into recession in late spring. According to the Federal Reserve, consumers spent more freely, factories made more goods, Americans traveled more and the auto industry had its strongest sales numbers. It also said that all but one of its 12 banking districts experienced some growth from late November through the end of the year. However, the Fed did note that housing still remains weak.

With the economy and the job market picking up, December may end up being the strongest month last year; hopefully, an optimistic sign for the economy in 2012. Employers added 200,000 net jobs last month and the unemployment rate fell to a three year low…8.5%. As a result of all of this positive news, consumer confidence rose.

One major issue we still have to keep an eye on is the number of foreclosures and short sales coming on the market. Fortunately, fewer borrowers will fall behind on their payments this year, thanks to the strengthening economy and refinancing. The number of delinquent borrowers is down by 25% from the peak a couple of years ago, but many of the borrowers who fell behind on their payments during the housing crisis are still in limbo due to the robo-signing controversy last year…as banks stopped the foreclosure process on many of those homes…which means that the homes that weren’t processed last year will be, once a settlement is reached with banks. As a result, we will see a new wave of foreclosures and foreclosure sales coming on the market.

Even though our area seems to be immune to foreclosure sales, any increase in foreclosures will have an effect on us as many of the buyers moving into the Bethesda/Potomac market will be in areas that may be impacted by foreclosures. New foreclosures will depress prices for several reasons - foreclosed homes are often sold at a discount and even though appraisers say they don’t use foreclosures and short sales in their evaluations, they do factor them in there…and buyers certainly use them as comparable sales; vacant homes bring down the value of their neighbors; and high foreclosure rates are the worst thing for consumer confidence in the housing market.

As always, I’m hopeful and optimistic that this year we will start seeing a turnaround. Inventory is down (10% in Montgomery County and by as much as 30% in the District), and we’re seeing a flurry of buyers…highly motivated buyers…at open houses. The advantages of renting vs. purchasing is falling and many buyers are finally realizing that this is an absolute great time to buy…if they can find the right house!

From a personal note, my business is growing and I have added several support personnel to my team. Alice Heuser has been part of my team for over 3 years and works as a licensed buyers’ agent and in client care. Jacqui Quila joined us just over a year ago as administrative assistant and client care coordinator. In addition, I have a team of experts including a truly gifted staging & decorating professional, a professional photography team, a highly experienced mortgage broker, a talented marketing coordinator as well as a licensed contractor who can do everything from painting to major renovations...and for very reasonable prices!

And, as always, if you would like any more information on market trends, on what has sold in your neighborhood, or general questions regarding your home, please feel free to contact me. It would be my pleasure to be of service.

If you are thinking of buying or selling or know of someone who is, please give me a call. I am here to guide you and serve you. For sellers, in today’s market it’s all about pricing and presentation. For buyers it’s all about preparation and education. That’s where I can help. If you’re thinking about moving, just call me! Let’s get started…I have all the knowledge, tools and resources to help you achieve your dream!