As Danilo showed us in this earlier VARbuzz post, depending on where you work in the Commonwealth, the real estate market is bouncing back. In the DC area, one of the areas hardest hit by the changing real estate market, especially its outer suburbs, there is good reason for optimism. After all, what goes down must come up, and certain areas in Northern Virginia have gone way down.

Bouncing back might not be the right term for many areas of the state, as they have been somewhat insulated from the national housing slump. Many regions in Virginia, including Richmond and Hampton Roads, have maintained steady appreciation in home prices throughout the national housing slump. Here’s more evidence (some comical, some serious) that the market is looking up:

1. The Richmond area continues to see moderate appreciation in average home values, based on expert economist analysis in the GMU/VAR first quarter 2008 home sales report.
2. The Loudoun Times reports that the best REALTORS® have weathered the storm and are well-positioned to capitalize on the turnaround.
3. Despite what his grandmother thinks, Frank LLosa isn’t broke yet.
4. Blacksburg is tilting towards a seller’s market.
5. The affordability index is coming back down to earth in Prince William and Loudoun.

Things aren’t looking quite so good for one Virginia REALTOR®, as you can see in this video:

We’ve all seen the headlines and heard NAR’s new pitch about how “Real Estate Is Local”. Well, here’s a real life example showing just how true that really is…

Richmond is about 90 minutes away from Loudoun County (in northern Virginia). But the current condition of each local real estate market is completely different from the other.

Brick Smith recently posted his personal opinion and analysis of the Richmond area real estate market on his blog. His unofficial analysis and forecast are a bit dismal, although his forecast does not take into account that the housing market typically picks up in the spring.

On the other hand, about 90 minutes north of Richmond in Loudoun County, the current conditions are much more stable and the forecast more upbeat. Here’s an excerpt of a post I recently wrote on Loudoun Scene regarding the current state of the Loudoun real estate market:

“The rate of new properties coming on the market is decreasing (supply). Buyers are increasing in numbers and making a move after sitting on the sidelines (demand). The percentage of total listings that are foreclosure/bank-owned and short-sale properties has stabilized.

That’s less supply, higher demand and stabilization in the distressed property area - a winning combination.

So you see, it’s actually getting better, not worse. The worst is over with prices having already come down 20 to 40+ percent from the peak in August 2005. “The sky is falling mentality” that is prevalent today should have been around last year and in 2006 when it really was falling. But it’s not the case today. “

As you can see, the two markets are very different. While a Richmond agent predicts a staggering market, Loudoun’s market is stabilizing and showing real signs of improvement.

The saying “Real Estate Is Local” is very true and obvious in this and hundreds, if not thousands of other examples and comparisons. Every market is different and you have to be an expert in your local market to give consumers an educated and accurate response when they ask you the age-old questions “So what’s the market like right now in our area as compared to ______? And where’s it headed?”

Homeowners associations are, too — often over a few hundred bucks.

In many situations, homeowners are losing their properties over a few hundred dollars in delinquent homeowners assessments.

What’s more, [lawyer Bob] Tankel said he’s advising his homeowners association clients to foreclose quickly, before the lender does. A homeowners association lien is inferior to a claim brought by a lender holding the mortgage, Tankel said. So if a bank files first, the association may not be able to collect the back dues.

“We’re always in a race to the courthouse steps,” Tankel said.

From yesterday’s NYT, here’s an excellent point-counterpoint on the psychology of buyers and sellers in today’s real estate market by Ron Lieber. It’s presented in the form of a letter to a seller from a market savvy-buyer explaining his low-ball (or more realistic, depending on your perspective) offer on the seller’s home, followed by the seller’s equally market-savvy reply.

A taste:

A few years ago, when multiple bidders would show up at a real estate open house, the truly desperate resorted to writing love letters to the sellers.

Their plaintive scribblings painted a picture of first-time buyers chasing the American dream or growing families hungry for more space. The letters dripped with compliments for the property and ended with a plea for mercy (and a signed contract).

Today’s real estate market, however, calls for a different kind of letter, less a fuzzy valentine and more like a cold splash of water. It’s what you write to accompany a bid that is so far below the listing price that it cries out for explanation.

Inspired by the success of a friend who used this tactic, I drafted a sample letter that buyers who fear overpaying might send to homeowners. Then, I crafted a reply that confident sellers could fire back.

No seller would be happy to get a letter like this. The most powerful missives stoke doubt and create fear. Sellers who get them may be tempted to write off the bidders as lowballers. But it makes little sense not to at least reply, given the number of competing properties in most places and the difficulty lately in getting mortgages.

We’ll let the first line of this bit of news speak for itself:

Prices paid for single-family homes fell 7.7 percent in the first quarter from the level of a year earlier, the steepest decline ever recorded by the National Association of Realtors, which has been tracking sales for 26 years.

Originations and loans are both way up. From the National Mortgage News Daily Briefing:

Federal Housing Administration single-family mortgage originations took off
in the first three months of this year, as FHA applications doubled to 181,900
between Dec. 31 and the end of March, according to Department of Housing
and Development data.

The data also show that FHA-insured loans jumped by 64%, to 89,000,
from December to March. Mortgage banking consultant Brian Chappelle
estimates that FHA lenders are now taking 200,000 FHA mortgage applications
per month and insuring 100,000 loans per month.

There are concerns that the FHA might not be able to handle the increase in
business. But Mr. Chappelle said the FHA direct-endorsement lenders manage
the whole approval process. From an origination standpoint, "there are no
backlogs because the lender controls the process," he said. Mr. Chappelle
is with Potomac Partners in Washington.

This means that more than ever it’s important to keep up to date on what the FHA can do for you — heck, it’s your tax dollars at work!

Ergo, you should set aside some time and some popcorn and watch VAR’s webcast, "Mortgage Lending in 2008: Back to the Future, How FHA can help you and your clients."

The questions keep coming …

“Are we in a recession?” “Aren’t we expected to make a lowball offer?” “Will we get our money back if we sell in two years?” “Won’t we make $100000 on this flip in just two months like they do on TV?”

Okay, so maybe I haven’t gotten that last question - at least not phrased like that - but everything else is verbatim. Plenty of mixed signals floating around about the real estate market, and it’s understandable that people have questions.

Making matters worse, Scott Rogers posted links to posts entitled “The Recession That Never Was Is Now Over“, and “Is Housing Slump At A Bottom?“. I point these out not because I think Scott shouldn’t have posted them, I just think that both posts make strong arguments to at least make you consider that perhaps times they are a changin’. For instance, the post “Is Housing Slump At A Bottom” makes the argument that new housing starts slumped below the one million mark in March. Historically, every time that’s happened in the last 50 years, it’s been at the bottom of a recession. It’s hard to argue with history - as a friend of mine says, “hindsight is 40/40″. Yea, she’s like me, she was never good with numbers.

I do think there are concerns that need to be addressed. Dependence on foreign oil, uncertainty overseas, among other things, compounded by a constant barrage of negativity and fear in the mainstream consciousness, have people scared. These things need to be addressed in order to begin an upswing in confidence, IMO.

One thing I DON’T understand is how we hear about massive layoffs in industries like auto and manufacturing, yet GDP is up. Wouldn’t conventional wisdom say that by laying off in massive quantities, and exporting goods and jobs out of the country, that GDP would go DOWN? In the last three years, Volvo has announced layoffs of 1000, 650 and 1100 personnel in their Dublin, VA factory, for instance - incidentally, it’s the largest truck manufacturing facility in the world. I’ve got to imagine that production in the plant slowed down accordingly, not increased … I didn’t do well in Economics, for sure, but what am I missing here?

I have writer’s block. The deadline for my column in VAR’s Commonwealth Magazine passed earlier this week, and I’ve yet to type a word of anything coherent (no wry comments, please).

So here’s the deal: YOU can help me write the column. Don’t worry, it’s not difficult. All it requires is a sense of humor and the recollection of a song or two.

ANNOUNCING: Scott’s “Songs for an Economic Slump” Contest….

Here’s the premise: In the great soundtrack of life, even an economic slump needs its own theme song.

Below are several categories. Your job is to suggest a song title or snippet of lyrics – from actual, reasonably mainstream music – that in your opinion summarizes the particular category. Just leave your suggestion in the comments on this post. I’ll take the best suggestions…determined solely by me and my own subjective and somewhat warped sense of humor…and publish them in my June Commonwealth column. (And no, this contest is NOT just limited to Virginia REALTORS®.)

So be creative. Be clever. Just be helpful. I really do need to finish this @#!% column. Deadline for submissions is Monday at 5 p.m. EDT, and you can make recommendations in any or all categories.

1. SONGS YEARNING FOR THE HOUSING MARKETS OF 2004-2006

2. SONGS FOR SUBPRIME LENDERS

3. SONGS FOR ECONOMISTS WHO DIDN’T SEE THIS COMING

4. SAD SONGS FOR SHORT-SELLERS WHO THOUGHT THEIR NO-MONEY-DOWN A.R.M. WAS A SWEET DEAL

5. SONGS FOR UNREALISTIC SELLERS AND THE REALTORS® WHO OVERPRICE THEM

6. SONGS OF THOSE ADVOCATING A FEDERAL BAILOUT

7. SONGS DESCRIBING THE WHOLE, CURSED ECONOMIC MESS

Now go to it. I look forward to hearing your entries!

Scott Rogers, with Coldwell Banker Funkhouser in Harrisonburg, VA, I mean.

Amid all the hyperbole and sweeping generalization in the media about the state of real estate markets nationwide, Rogers had added a dose of reality to that most-essential of REALTOR® marketing branding tools: He’s added his market’s monthly home sales data to the back of his business card. Clever, huh? Good conversation starter, certainly. Business tool? Absolutely. And remarkably low-tech (though of course he does direct folks to his blog for “more analysis”).

And yes, he prints new cards every month.

Ken Harney in today’s Washington Post:

Could designations of Zip codes, metropolitan areas and entire states as “declining markets” hinder a real estate recovery and hurt minority groups and moderate-income buyers disproportionately? Growing ranks of critics say yes.

Since late 2007, most lenders, insurers and mortgage investment firms have compiled lists of markets that they regard as higher risks because housing values are dropping. In those areas, borrowers are charged higher rates and loan fees and are required to make bigger down payments — costs that can rise significantly when applicants have credit scores below designated minimum levels.

In some cases, the extra fees can add more than two percentage points to the interest rate and require much more cash up front. At their extreme, declining-market designations remove entire categories of real estate from financing eligibility. Some private mortgage insurers, for instance, won’t touch second homes or rental-home investments anywhere in large swaths of Florida and California.

Industry estimates on affected Zip codes range from 8,000 to more than 12,000 across the country. Many parts of the Washington area are included.

Full story here.