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Market Commentary:
Real estate inventory is way up.
The number of homes currently listed for sale throughout the Corus service area is up considerably since last year.
You’ve probably read that our real estate market is slowing. Here’s some concrete proof: In nearly every county served by Corus Home Realty, the inventory of unsold homes is up considerably since last year.
In Montgomery County, PA (the location of Corus’ Plymouth Meeting office) inventory is up 37% since last year. In the Delaware Valley, Chester and Delaware Counties experienced comparable inventory increases, but inventory in the City of Philadelphia increased by 86%.
Maryland experienced a greater increase in inventory. In Montgomery County, MD (the location of Corus’ Rockville office) inventory was up 155%.
However, these inventory levels pale in comparison to Northern Virginia, where inventory is more than triple last years’ levels. At the extreme, Alexandria City’s inventory level was up 374% from last year.
Is a bubble bursting? We don’t think so. Although we are concerned about potential oversupply of certain types of properties, we believe that the fundamentals of all of these areas remain strong. We believe that a large number of buyers remain in the market, but their behavior is decidedly cautious. For those of you selling in this market, it’s important to remain patient, to plan for a longer sales cycle, and to avoid overpricing your home.
Buyers in the current market will have a variety of choices, and will have the ability to negotiate favorable contract terms. In February and March, we’ve seen more opportunistic buyers entering the market, seeking out good deals from sellers who are anxious to sell and are flexible on price.
As part of our research, we also examined inventory levels for 1999, when the market was more balanced. Interestingly, we found real estate inventory to be at levels that were very similar to those of 2006. So, this means that what we’re seeing in 2006 really represents more “normal” inventory levels after a very hot 5 year real estate market.
Mortgage News
Mortgage rates hit four year high, and then pull back.
A drop in mortgage demand last week sent 30 year fixed mortgage rates down 0.11% to 6.31%.
The Mortgage Bankers Association reported that its seasonally adjusted index of mortgage application activity for the week ended March 17 decreased 1.6 percent to 565.0 from the previous week's 574.4, its lowest level of demand so far this year. This slackening of demand helped to fuel a pullback in mortgage rates. The benchmark 30 year fixed rate dropped to 6.31% from 6.42%, which was had been a four year high. By contrast, the 2005 low point for 30 year fixed rates was 5.47%, reached in June 2005.
The Mortgage Bankers Association and the National Association of Realtors both predict that mortgage rates will level off in the mid 6% range during 2006. Economists from both organizations point out that while these rates represent an increase over 2005, they remain low by historical standards. According to NAR, rates within this range should help to keep buyer demand at healthy levels.
The Inside Track: Philadelphia, PA
Trump comes to Philly: A case study.
In January, Donald Trump unveiled his $190 million condominium planned for Philadelphia's waterfront. Here's a quick overview of Mr. Trump's business blueprint.
On January 23rd, Donald Trump acknowledged that he is planning to build a $190 million, 45 story condominium building on Philadelphia’s waterfront. The project, called Trump Tower Philadelphia, will consist of at least 250 units at Penn Street near the foot of Spring Garden Street, and completion is expected in 2008.
You may not realize that this project follows a business blueprint that has been very successful for Mr. Trump. While Mr. Trump has a reputation as a wealthy and successful real estate developer, his strategy for real estate success is quite unique and nuanced. Here’s our take on the steps involved in Mr. Trump’s strategy.
Step 1: Building a brand. It’s no secret that Donald Trump has built his name into a strong real estate brand. While many top developers have built excellent reputations, it’s hard to identify any real estate developer that has built a consumer brand even approaching that of Mr. Trump’s. Mr. Trump’s branded New York buildings, his public image, and his Apprentice television show have helped to create a brand that stands for luxury in residential real estate.
Step 2: Leverage the brand. Mr. Trump’s Philadelphia project is one of many recent condominium projects that Mr. Trump has initiated outside of New York City. Others include Las Vegas, Toronto, Chicago, and Tampa, as well as Westchester and Jersey City. All are branded with the Trump name. In these cities, the announcement of each Trump project has been accompanied by considerable public interest.
Step 3: Emphasize the superlatives. In describing his projects, Mr. Trump frequently uses the words “tallest,” “largest,” “most luxurious,” and “most expensive.” For example, the Trump Tower Tampa will be the tallest structure in Tampa. Toronto’s Trump International Hotel & Tower will be the tallest residential building in Canada. And, Mr. Trump claims his Philadelphia project will be the tallest building on the waterfront. We admire the simplicity and directness with which Mr. Trump differentiates his projects.
Step 4: Use other peoples’ money. While Donald Trump is recognized as a wealthy businessmen, many people don’t realize that he is not necessarily funding these projects. We don’t know the financial details of Mr. Trump’s dealings, but in many of these new developments, Mr. Trump has partnered with a local developer. On the Tampa project, Mr. Trump has partnered with local developer SimDag-RoBEL. Mr. Trump owns less than 50% of the project. By leveraging his brand rather than just his money, Mr. Trump is able to maximize his returns while minimizing his own financial risk.
Has this strategy worked? We believe so. It is widely reported that Donald Trump’s projects in Tampa and Chicago have sold briskly. And Mr. Trump claims that adding his name to a building can increase the value of units within it by about 25%. This sounds about right to us. This kind of track record bodes well for the potential success of Trump Tower Philadelphia.
You may not be building high rise condos anytime soon. But, if you are a real estate investor or developer, gaining an understanding of Donald Trump’s strategy may be helpful in your own pursuits.
Notable Homes: Arlington, VA
Room with a view.
Condos with great DC views are a limited commodity. This Corus listing in Pentagon City has excellent views of the Jefferson Memorial and Washington Monument.
For Sale: 1301 Arlington Ridge Road #406, Arlington, Virginia 22202, $337,000.
There are three things we really like about this 1 bedroom condominium unit in Arlington’s Ridge House: Location, condition, and views. Allow us to elaborate.
Let’s talk location: Pentagon City is tough to beat for convenience. This condo is just a few blocks from the Pentagon, the Pentagon City shopping area, restaurants, and the Pentagon City Metro Station. It’s also only a few minutes drive to downtown DC and National Airport.
Next, the unit is in great condition. The owner, a senior Capitol Hill staffer, has renovated this unit top to bottom. The kitchen is brand new, and includes granite countertops, European cabinets, stainless steel appliances, and tile floors. The entire unit has been repainted, floors have been refinished, and the trim is all new.
Finally, there’s the view. The building sits high on Arlington Ridge. From the balcony, living room, and bedroom, you can see the Jefferson Memorial, the Washington Monument, and the city skyline. Note that many other buildings in the area offer interesting views, but in many cases, those views are dominated by noisy Interstate 395. By contrast, this unit is on the quiet side of Ridge House, so the view is undisturbed.
What’s not to like? For one thing, Ridge House is an older building, constructed in 1965. The building’s façade is definitely dated. As in many older buildings, washers and dryers are not in the units. Also, utilities are not separately metered – they’re included in the $400 monthly condo fee. But on the positive side, units in many of the area’s older buildings generally run larger than in newer buildings. This one is no exception – at 899 square feet, it is large for a one bedroom unit.
To see this property, contact the McLean office of Corus Home Realty at 703-827-0075.
Home Maintenance
Stop raising mosquitoes in your house!
There's a simple way to reduce the number of mosquitoes in and around your home - clean your gutters.
Throughout the Corus Home Realty service area, spring and summer signal the arrival of mosquito season. Female mosquitoes bite humans to suck their blood in order to produce a batch of eggs. Mosquitoes are a serious nuisance, but they can also carry disease. Since the 1999 arrival of West Nile Virus in the U.S., mosquito control has become a very serious health issue.
Clogged gutters and downspouts can hold a half inch or more of water, providing an outstanding place for mosquitoes to breed. Even if they are not clogged, sagging gutters can also hold standing water. Mosquitoes lay their eggs in this standing water, where they hatch in a day or two and mature in seven to ten days. Imagine – millions of mosquitoes hatching just a few feet from your bedroom windows!
Actually, mosquitoes can lay their eggs in any location where standing water exists for long periods of time – ponds, old tires, planters, birdbaths, or hollow tree stumps. We recommend checking your yard for all of these potential mosquito breeding zones. Just don’t forget about your gutters.
Corus News
Corus CEO and client featured in Reuters, Yahoo, MSNBC.
Corus Home Realty CEO Michael Gorman and Corus client Elaine Lippmann were interviewed by Reuters last month.
Michael Gorman, Corus Home Realty’s CEO, was recently interviewed by Reuters on how real estate brokerages and clients are using the Internet. Corus client Elaine Lippmann was also featured. Elaine found Corus Home Realty on the Internet, and also used the Internet in her search.
Click on one of the links below to read the Reuters article.
Yahoo News.
Online home-hunting gets more sophisticated - Yahoo! News
MSNBC.
Online home hunting gets more sophisticated - Real Estate - MSNBC.com
Believe it or not, we also got picked up in the Russian press!
Cайты недвижимости становятся популярнее - CNews
And even in the Vietnamese Press.
GSO-Media
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