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Why this buyer's market can profit home sellers, too
Our guest today is Keith Hartke. With 25 years in real estate, he is now principal broker/owner of National Realty in Reston.
Q. Based on your quarter-century of experience, when do you expect the real estate market to recover this time?
A. We are clearly moving toward a good balanced recovery. If my office, National Realty, is any indicator, our local real estate market is seriously picking up. Our office sales are going extremely well. But market fluctuation has always been a normal aspect of the real estate industry.
In reality, this is probably one of the best opportunities for buyers we have seen in a long time. Affordable housing coupled with 30-year fixed-rate loans as low as 6 percent is astounding. Finally, home ownership (the American Dream) is now back in the reach of first-time home buyers and renters.
Home ownership gives a family the pride of ownership, the IRS home interest deduction and the security of owning their own home along with a predictable monthly payment. No more worrying about the rent going up at the end of your lease. The bottom line: If you have ever dreamed of buying, don't miss this opportunity because recovery will be coming soon.
Q. But how will sellers fare in this market?
A. Spring has traditionally been a great seller's market. Now, partly thanks to the low interest rates, sellers are once again able to get their homes sold.
But it is a fact that the market right now has changed from a seller's market to a buyer's market. So sellers must price their homes right.
Our office has seen a dramatic increase in home sales over just a year ago. In February alone, in just our local market, we saw 1,500 homes sold.
The beauty of selling now is that you will make up the difference on the buy side. That is, if you lose 10 percent on your sale, you will make it up with a percent off when you are in the buyer's seat.
In addition, rather than rushing, you have your pick of the home of your dreams. Finally, we have a market where you can leisurely find your real dream home and get a bargain in the process.
Q. How does this compare with past situations?
A. In the so-called “good market” two year ago, we had higher interest rates and extremely high sales prices. If you wanted to buy, you needed to have a sales-price escalations addendum. This meant you would have to outbid the many other buyers trying for the same property. I saw some buyers bid tens of thousands over the list price, and this is for a home they hadn't been able to see inside yet ... and with no home inspection, either!
In this market you have many homes to choose from, and once you find the perfect one for your family, you won't have to beat out a dozen other contracts to make it your own.
Q. What is your advice?
A. I would buy real estate today. In my 25 years of running real estate companies, I have seen the market go up and down. But in the long run, real estate in a terrific investment. My parents' home cost $24,000 when they bought it in the 1950s. Today it is worth close to $1 million.
I can say, without question, that Northern Virginia will always be a strong real estate market. This is true for a number of reasons: our proximity to the nation's capital, the many government and quasi-government jobs, some of the best schools in the nation, excellent transportation and approximately 50,000 new positions created here every year.
One thing is certain: We are not making any more real estate, and the population growth in Fairfax and Loudoun counties is among the fastest in the nation. That drives up home values.
Q. How can both buyers and sellers profit in this cycle?
A. Sellers: If you want your dream home – not just what is available – this is an excellent time to get your first choice trade-up. Can you imagine finding your true dream home and locking in a 6-percent fixed rate for 30 years? Less competition means you'll get a great deal.
Buyers: It's very simple: Buy now for the sake of your future. If you are happy with your dwelling, think about a vacation home. Why wait until the prices go back up? Vacation homes can be rented out or just kept as your little place to get away.
Q. How do you respond to the widespread fears of a recession?
A. The fear-mongering talk means a few months of stagnant prices. But if you look back over the last 50 years, you would know that home prices are going to go up. Recession or not, it's basic economics. For people who are buying a home, it is not a housing recovery, it's a bonanza. Great prices and low interest rates: You can't beat a combination that.
Q. Would you think this is a good time to get into the real estate profession?
A. Absolutely. National Realty has seen a tremendous personnel growth, due to our free training classes, free marketing and business leads that have helped our agents be successful.
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