Could the headlines cause you to miss a lifetime opportunity?

1. April 2012
By Jeffrey S. Detwiler
President and Chief Operating Officer of The Long & Foster® Companies
Green Sprouts in the Economy
and in Real Estate
Could the headlines cause you to miss a lifetime opportunity?
Investing in the housing market was once practically a no A recent Associated Press survey of leading economists points
brainer. Through the downturn, however, many of the fixed out that experts believe the unemployment rate will fall from its
assumptions about housing — that property values would current level to 8 percent by this fall, and will likely dip even more
always rise and equity would naturally grow — became variable, by the end of 2013.
leaving many consumers questioning the extent to which the real
estate market was a good investment option for them, or if now Since last summer, the U.S. Labor Department reports that
was the time to purchase that new home they have always wanted. employers have added more than 1 million workers to their
It also opened the door to years of negative housing headlines in rosters. The economy is showing green sprouts in other areas
the media, some of which continue today. as well — industrial output jumped in the early part of the year,
car sales are booming and many experts agree that the housing
The reality, however, is that the indicators we examine to market, in many parts of the country, has turned the corner.
determine the health of the housing market are gaining
momentum. The employment picture is improving, consumer
HOME PRICES ARE RISING IN SOME AREAS
confidence is increasing, mortgage rates are low and home
prices in much of the Mid-Atlantic region have stabilized. Most of the time, when we read headlines about sinking home
These conditions may add up to opportunity, which is why so values, we’re absorbing national numbers that incorporate
many qualified buyers, sellers and the hardest-hit markets in the
investors are looking to evaluate their country. The reality is that home
own equations in the context of the prices in many areas of the Mid-Atlantic
market as it exists right now. region have seen prices stabilize —
and even increase in some areas.
Still, we’re finding that although
the recovery is well under way in To get a clear picture of home prices
many regions, the mainstream in your market, it’s best to evaluate
media has been somewhat slow local-level data. At Long & Foster,
in reporting the full story. A home we believe that better market data
purchase for most of us is, first and results in better buying and selling
foremost, a place to live, raise a family decisions, which is why we provide
and be part of a community. But it’s also an investment that requires hundreds of publicly-available reports each month to take housing
careful consideration as it offers an opportunity to build long-term data down to county and neighborhood levels. A professional
equity. Being able to read between the headlines may present a Realtor® can provide a detailed assessment for your home or one
homeownership opportunity unlike any we have seen for you are considering buying.
generations, so it’s important to recognize the headlines that
support the green sprouts we’re experiencing in the economy and INVENTORY IS AT MULTI-YEAR LOWS
in the housing market.
Throughout much of the Mid-Atlantic region, buyers who
have perceptions of the housing market based on national
THE ECONOMY IS GROWING headlines and reports are finding themselves facing
In the early months of the year, we’ve seen consumer confidence an unanticipated situation — a narrow selection of
gain strength and reach levels we haven’t seen for some time. inventory from which to choose. All of the major
Improvement in the job market is the primary driver in boosting housing markets in the Mid-Atlantic are currently experiencing
consumer confidence, and we’re likely to see an upward trend as lower inventory levels than we’ve seen in at least two years —
companies continue to expand and add more people to the payroll. longer in some markets.

2. Jeffrey S. Detwiler is president and chief operating officer of The Long & Foster Companies, the parent company of the largest independent residential
real estate company in the United States, Long & Foster® Real Estate, Inc. The group of companies is the Mid-Atlantic region’s leading provider of
homeownership services. In addition to its real estate arm, The Long & Foster® Companies consist of Prosperity Mortgage® Company; Long & Foster®
Insurance; and Long & Foster® Settlement Services. The total 2011 sales volume and sales equivalents for all The Long & Foster Companies was in
excess of $42.7 billion. Visit longandfoster.com for more information and complimentary industry-leading market data.
For people who have been putting off selling their homes for an THE HOUSING RECOVERY IS HAPPENING NOW
opportunity to move up to a bigger or nicer house, the current
The headlines pertaining to housing in the last few years have
situation may present a good reason to reevaluate their options.
left many consumers justifiably concerned about making a
Currently, many sellers can offer their homes to willing buyers
homeownership decision. But as we’re seeing today, by the time
in the market and move up to homes while prices are still
the media begins to consistently report on the green sprouts in
moderate, but this window of opportunity may be quickly closing
the economy, the recovery is well underway and that could cause
as the recovery takes a firm hold.
many to miss an opportunity. The fact that cash transactions are
elevated signals higher activity by investors indicating they believe
RATES WILL NOT STAY THIS LOW FOREVER
the current environment is a buying opportunity.
Another window of opportunity that may be closing pertains
to historically-low interest rates. Headlines in the media have
announced for some time that rates remain at record lows. Some
headlines infer that potential buyers or homeowners who wish to
refinance have plenty of time to make a decision to take action since
rates have held steady for some time. The reality, however, is that
mortgage rates are expected to start a slow and steady climb
upward in the not-too-distant future.
According to the Mortgage Bankers Association, 30-year
fixed mortgage rates are expected to increase through the
second half of this year, throughout 2013 and beyond. The
opportunity to purchase or refinance at today’s low rates may not
last much longer. Consider that, on a $300,000 mortgage, just Buyers, sellers and investors in today’s marketplace understand
the value that comes with working with the best-trained and
best-equipped real estate professionals. Getting local facts and
exploring your personal homeownership goals with a professional
will help you identify an opportunity that you may not find by
scanning national headlines.
Like many housing experts, I agree that we are likely to look back
at today’s market in a few short years and recognize the historic
opportunity available at this time to qualified buyers and sellers.
a 1 percent increase in the rate increases the monthly payment by
more than $200 a month. That adds up to more than $70,000 in
interest expense alone over the life of a 30-year mortgage.
OWNING A HOME IS AFFORDABLE
As 2011 came to a close, the National Association of Realtors®
Housing Affordability Index showed that housing affordability
rose to record highs, with the index reaching the highest level
in its 20-year history. What this means is that a home buyer’s
purchasing power is greater now than it has been in recent
history. Low mortgage rates coupled with moderated housing
prices and stabilized household incomes present affordability
conditions unlike any we’ve seen in generations.