May, 2006

Market Analysis

Home Sellers: Have patience. It's a slowing market.

Homes are taking much longer to sell than last year, and this slowdown has become more significant since February. Today, our current sales pace is closer to 1999-2000 levels.

To anyone who is in the process of selling a home, it’s clear that the speed at which home sales are occurring is dramatically slowing down. In early 2005, many homes sold in less than a week but today’s home sale timeframes are increasingly measured in months. In our last Corus Report, we discussed the increasing supply of real estate on the market. Here, we provide an overview of the time it takes to sell a home. Here are a few specifics:

Within the Corus service area, the Northern Virginia market has experienced the most significant slowdown. Average days on market for a Northern Virginia listing is now 61.3. By comparison, average days on market in March 2004 and March 2005 was at 25. Of the Northern Virginia counties, Loudoun is the slowest – average days on market there is 76.

Maryland and DC have slowed also, with 54 and 51 days on market, respectively. In 2005, DC was the slowest market in the Corus service area, with 45 average days on market. So, on a relative basis, the market slowdown in DC has been very modest.

Philadelphia and the Delaware Valley now represent the fastest moving market within the Corus service area. Average days on market there is 31, a moderate increase from last year.

In describing our current market environment as slow, it’s important to examine these statistics in a historical context. The current real estate environment seems far slower than the fast paced 2004 and 2005 markets, but the current environment bears some similarity to the year 2000. At that time, average days on market was 65, 74, and 95 in Northern Virginia, DC, and Maryland suburbs, respectively. 1999 was an even slower market, with properties in all three areas exceeding 100 days on market during that year.

For home sellers, this is a time to be patient. Even for attractive, well located properties, it may take a few months to find a buyer. But if you’re selling, there are some ways that you can stack the odds in your favor:

1. Price the home fairly. As we emphasized in our last Corus Report, an overpriced home is very unlikely to sell in this market. Buyers have choices, and are quick to walk away from a home they perceive as overpriced.
2. Know the competition. Pricing your home based only on recent sales can yield poor results. You must also be aware of how other active listings in the local area are priced. And in doing so, it’s important to evaluate the competition from the perspective of a potential buyer. Ask yourself “what will cause a buyer to select your home over all of the other options in the marketplace?”
3. Stage the home. Unlike the last few years, buyers now have many choices and are becoming increasingly picky about everything from kitchen remodeling and new windows to paint colors and even clutter. Staging your home to look as much like a “model home” in a new housing development is very important to selling a home for top dollar.
4. Be prepared to negotiate. Buyers are increasingly negotiating on price, but they’re also demanding more favorable contract terms. For example, sale of home contingencies are becoming far more prevalent in today’s home purchase contracts.
5. Utilize adequate marketing. In the current environment, it takes an extra level of marketing and promotion to make your home stand out from the competition. At Corus, we are encouraging our sellers to choose our Elect or Elite home sale programs instead of our more basic Express program. While the Express program may be highly effective in a faster market, we’ve found that spending slightly more for broader marketing can accelerate the home sales process.

Mortgage & Finance

How credit scores work.

Your credit score can determine your ability to get a loan, and affects the interest rate you are likely to pay. But how does it all work?

When an individual applies for a home loan, credit card, or any other type of loan, the lender will use that individual’s credit score in determining whether to provide the loan, and on what terms. Maintaining a strong credit score can have a significant impact on your ability to get financing on reasonable terms.

In the United States, there exist three main credit bureaus that evaluate consumers on their creditworthiness. These credit bureaus -- Transunion, Experian, and Equifax – evaluate consumers based upon payment and credit histories reported to them by creditors. All three credit bureaus utilize a scoring model known as FICO, which stands for Fair, Isaac and Company, the entity that developed the scoring model. It is possible that a single consumer may have slightly different credit scores from each of the credit bureaus due to slight variations in the way that elements are evaluated.

Your FICO score calculation is based upon five variables, each of which carries a different weighting:

• 35% - payment history
• 30% - amounts owed
• 15% - length of credit history
• 10% - types of credit
• 10% - new credit

Notable Homes: Lower Pottsgrove Township, PA

Big, luxurious home. Modest price.

We think this big, grand colonial offers a lot of bang for the buck.

36 Doe Run Lane, Lower Pottsgrove Township, PA
$519,000

In the Corus Report, we often like to feature houses with interesting or unique features. But this month, it’s more about value. For a buyer who wants a big, luxurious home for a modest price, this is a compelling choice.

This traditional colonial was built in 2005 and offers 3,532 feet of above-grade living space. There are four bedrooms, two full baths, and one half bath. It has a two story grand entry foyer, two staircases, formal living room, and two story family room. There’s a gourmet kitchen with cherry cabinets. The master bedroom suite has a sitting area, three walk-in closets (with closet organizers), tray ceilings, and even includes a rear projection TV.

So why the price? In short, Lower Pottsgrove Township is less expensively priced than many neighboring areas. A similar home in a more widely recognized area would likely cost $100,000 to $300,000 more. We believe that this type of property represents excellent value for a purchaser seeking a substantial home.

For more information, contact Kathy Davila at 610.825.3225.

Notable Neighborhoods: Rockville, MD

Creating a new downtown Rockville.

Years in planning, development, and construction, the massive Rockville Town Center is taking shape. Here's the latest on the newest "instant downtown."

It’s hard to talk about suburban development these days without mentioning the term “town center.” The idea here is that a well-planned high-density, mixed-use, pedestrian-oriented development can create a vibrant center of activity that creates excitement, a sense of identity, and a sense of community for the surrounding area. Critics may deride these town centers as “manufactured towns” but proponents argue that such developments help to counteract some of the negative effects of suburban sprawl.

In the 1980s, Reston Town Center in Reston, Virginia along with town centers in other regions provided a successful blueprint for this type of development. And since then, town centers have proliferated in places like Bowie, Largo, Gaithersburg, and Fairfax. Rockville represents one of the newest and largest such town centers.

Phase I of Rockville Town Center is currently being built on 15 acres near the Rockville Metro Station. The first elements of the project are expected to be completed in the fall of 2006, with a full grand opening expected in 2007. Future phases of the project are planned, and could expand the project to as many as 60 acres. The first phase is being funded through a private-public partnership, with the City of Rockville, Montgomery County, and the State of Maryland covering $88 million of the estimated $352 million development cost.

The first phase of the development will feature 644 residential units and 175,000 square feet of retail and restaurants. It will also feature a new Rockville Cultural Arts Building, a business incubator, an open plaza for special events and the new Rockville Regional Library (to be the largest public library in the Montgomery County system). The residential condominium units are currently selling. Although the most expensive condo units surpass the $1 million mark, 15% of the units have been designated as Moderately Priced Dwelling Units (MPDUs).

If you live, or plan to live in Rockville, what impact will this have on you? In cases where other town centers have been built, proximity to those town centers has often been a key selling point in the marketing of nearby homes. Empirical evidence shows that a successful town center is a net positive for home values in nearby areas.

For more information on homes in and around the Rockville Town Center, contact Richard Barney at Richard@corushome.com.

Notable Neighborhoods: Washington, DC

Sending your son or daughter to college? It pays to live in DC.

DC’s Tuition Assistance Grant (TAG) program is a remarkable public benefit – it might be worth a move to the District.

Paying for college can be expensive, but the Federal Government has a program that can dramatically reduce the cost of college for DC residents.

In 1999, the U.S. Congress enacted the D.C. College Access Act for the purpose of expanding higher education opportunities for college-bound District of Columbia residents in an effort to stabilize D.C.’s population and tax base. Under the program, referred to as the DC TAG (Tuition Assistance Grant) program, residents of the District of Columbia may attend any public college or university in the U.S. at low in-state tuition rates. The student pays the in-state tuition rate, and the grant pays the difference between the in-state and out-of-state tuition up to a maximum of $10,000 per year. The grant permits a maximum of five award years for a lifetime grant of up to $50,000.

TAG also provides smaller grants for students attending certain private universities. $2500 per year (over five years) is provided to DC residents attending any historically Black college or university (HBCU) in the nation, or to DC residents attending participating private universities in the Washington DC metropolitan area. Participating universities include Georgetown University, George Washington, Catholic University, and Marymount University. Students receive no grants for attending UDC, since they already receive in-state tuition rates as DC residents.

These are grants, and not loans. No repayment is required. Also, the DC government has a series of rules pertaining to eligibility. They include:

• The student’s parent, legal guardian, or spouse must be a DC resident and must show proof of payment of DC income taxes. This must be the case throughout the award period.
• Students must make satisfactory academic progress.
• Students must be attending college at least half-time.
• Students must be US citizens.
• Selective service registration is required.
• Students must not be in default on any government student loans.
• Students who already have a BS or BA degree are not eligible to use the grant for further study.