MRIS CMO, John L. Heithaus, was recently interviewed by the Sun Gazette. Find out what his predictions are for the real estate market both nationally and locally. Read the full Sun Gazette article here.
Northern Virginia is well-positioned to benefit from a recovering housing market, but low inventory, fewer housing starts and an influx of foreclosed properties could complicate the equation, said John L. Heithaus, chief marketing officer for Metropolitan Regional Information Systems Inc.
Heithaus, a third-generation real estate professional who began his MRIS job in June 2010, spoke with the Sun Gazette Jan. 10 about opportunities and challenges facing the market this year.
What are your predictions for the 2012 real estate market, both nationally and locally?
“On a macro level, things are conducive to a good spring market. Interest rates are at the lowest level ever recorded. All sorts of loan products are available, but inventory is a challenge.”
Which local areas will perform better and why?
“Areas with good commuting factors tend to sell quickly. I live in Rockville, Md., and can walk to Metro. The commuting factor is incredibly part of the deal. The Intercounty Connector has saved people 45 minutes’ worth of commuting.
With the Silver Line to Dulles, there’s a tremendous amount of confusion now that roads are torn up. But when they’re finished a year from now, real estate will be a big beneficiary of the new roads.
Northern Virginia has a strong employment rate and a dearth of [housing] inventory in key market areas. It used to be when people looked for a house, they’d try to get into a certain school system, but now commuting is taking a bigger role in the decision-making process, especially in two-income families. Time is scarce.”
What are some key factors that may influence this year’s market?
“Builders have been relatively dormant for last year and a half. Housing starts are at record lows, but if building picks up, it could increase supply.
Experts are predicting a major rise in foreclosures hitting the market, both nationally and in the D.C. region, because of the ‘shadow inventory.’ There are millions of houses the [Federal Housing Administration] is sitting on. We don’t know what Northern Virginia’s impact will be. There likely will be increase in foreclosures and short sales.
Last year, there was bad press because of the ‘robo-signing’ scandal. The feds moved to protect consumers and placed a de facto moratorium on foreclosures. It’s predicted that trend will reverse.
Typically, the effect of foreclosures would increase choice for buyers, create competition for sellers and lower the median sales price. We’re at a very pivotal fork in the road with regard to foreclosure market.”
What should people getting into the real estate market do?
“The No. 1 thing anybody thinking of buying or selling a house should do is to engage a seasoned real estate professional. There are a lot of complexities in the market and they’re real experts at the ground level.
I take a balanced approach. Sellers need to be realistic and analyze the local market, especially competing listings. The sales figures available represent statistics from months ago. For buyers, it’s a good time to buy a house, if your circumstances allow for it.”
Will politicians cut or eliminate the mortgage-interest tax deduction?
“In an election year, they’ll be a little reticent to touch the mortgage-interest deduction. It’s a third-rail topic in an election.”
Fairfax and Arlington counties have nearly 96-percent sales-to-listed-price ratios. Is that about as close to perfect as one can expect?
“It really is. It’s one of the strongest ratios in the region. The sellers are being realistic and there’s good, strong buyer demand. The Northern Virginia market is very well-balanced. Real estate markets don’t like bubbles. It took us two years to get out of the last one.”
Are you worried about possible federal job cuts?
“Consumer confidence and job pictures play a major role in real estate market. The AOLs of world are pulling people in and out of Virginia all the time. The corporate market, especially in Virginia, is really the employment stuff to keep an eye on. Northern Virginia is one of top areas for corporate migrations in the country.”
Are stricter buyer qualifications hurting the market?
“The problem is not only in qualification process, but in appraisal process. The federal government’s over-correction was blaming appraisers for the bubble. The feds affected the appraisers’ range of discretion and increased penalties for incorrect appraisals.
I was trained as an appraiser. Appraisers are typically evaluated on their accuracy. It’s the market, not the appraiser, that affects the price more. Appraisers don’t set value, they estimate value. A willing, qualified buyer determines what the price is.
Down payment requirements are on the rise, and that’s lender-controlled. It’s depressing the first-time buyers market, which is in turn affecting the rental market.”
What must Realtors do now to stay competitive?
“No. 1, they need to be plugged into the Web. A buyer’s survey from 2011 by the National Association of Realtors said 95 percent of buyers started their search on the Web on their own. If Realtors aren’t strongly engaged in the Internet, they will lose business opportunities for sure.
Also, there’s been a tremendous jump in Realtors’ using social media like Facebook and Twitter to alert clients and keep in touch with them during the process. Because there’s so much information available to buyers, Realtors must stay on top of market statistics.”
Any other local trends you’ve observed?
“‘Green’ and environmentally friendly houses don’t seem to move the needle here like they do in Portland, Ore.
We also are seeing that new construction is definitely smaller. The whole idea of McMansions has gone away. We’re seeing smaller, more energy-efficient houses, often in the 2,200- to 3,000-square-foot range. They’re easier to maintain and manage utility costs.”