Is The Alexandria VA Real Estate Market Out of Control?
Yesterday's rainshowers mean lots of green lawns, beautiful flowers blooming, and sunny skies today. I know you've got 'Work To Do', but find the time to enjoy it today and I'm sure you'll be glad you did.
One of the ways that I can tell that we're back into a sellers market is that buyers are contacting me about homes that sold over six months ago, and they want to look in those neighborhoods, and they are astonished to learn that the prices have risen. We try to make it super easy to search for homes that are currently for sale, but for some reason, buyers want to dig, hunt, and scavenge for listings that are obsolete and have sold. Oy!
But many are wondering, are things out of control again in the Alexandria VA real estate market? Is there a new housing bubble forming? Are people more confident now about buying a home? Take a look at the infographic and you'll see that from coast to coast, home prices are up. This graphic shows first quarter of 2013, compared to first quarter 2012. Across the United States, home prices are in the green. What you need to understand in the current real estate market, is that waiting for the next house means the next house will likely cost more money.
There are two things that factored heavily into the last housing bubble:
- Banks were too lenient with their money. Anyone with a pulse could get a mortgage, and without documentation. That means you didn't have to provide paystubs, tax returns, or bank statements to your lender, they would give you a mortgage and you didn't have to prove that you could pay it back.
- Appraisers were lax and loose when it came to valuing a property. Comparables were laughed at, and there was so much pressure to close, that many appraisers felt obligated to appraise properties at the contract sales price. Appreciation was assumed and appraisers took into account the number of offers received and the short days on the market.
These two things are clearly not happening today. The two biggest challenges for buyers now are the tighter lending guidelines and tighter appraisal guidelines. Just last week, a buyer for one of my listings was denied the mortgage because her credit score dropped before closing. The buyer had charged too many items on her credit card, and in doing so brought her closer to her credit limit, and that brought her score below the qualifying guideline. We were past all inspections, only five days to closing, and her lender said, "no way Jose!".
Appraisal guidelines have also tightened up. There are federal guidelines in place to prevent you from overpaying for a home (not that you still couldn't pay cash for more than the value). Lenders cannot speak to the appraisers, they only take into account what has sold and settled, not homes that are still pending.
We are in a healthy Alexandria VA real estate market. And that healthy real estate market is fueling the economy. And when the economy has momentum, you can expect interest rates to rise. When interest rates rise, the cost of buying increase. So don't delay your home search any longer.
Home prices are still below their peak levels, but now is a good time to buy a great home, in a great location, and still lock in with an attractively low interest rate.
Need help with your search, I'll be around this week for your real estate needs.
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