I heard a story on Marketplace last week about the National Association of Home Builders.

Apparently, they've decided to withholding donating any money to political candidates this year because they believe that Washington has not done enough to take care of the housing crisis.

I applaud their actions while completely disagreeing with their rationale.

Here's hoping every PAC feels the same way and stops donating!

Don't let anyone kid you, PACs donate money in the hopes of influencing policy. Anyone who tells you otherwise is also likely to try and sell you the Brooklyn Bridge. And, if you look at the history of how politicians vote, it's pretty rare to see one vote against the interests of those who have donated large amounts to their campaign.

As far as NAHB's belief that the government has not done enough to help them, I'd be interested in seeing their proposals for what the government should be doing on their behalf.

I believe the government has a role to play in this crisis. I believe they need to make sure that the credit markets stay liquid. I believe it's in everyone's best interests for them to try and help families stay in their homes, so long as they can truly afford them. But I don't see bailing out individual businesses as either desirable or necessary in the current climate.

If the government does what it can on the above two items, if it works to put a floor under the real estate market, the builders, like everyone else in the industry will recover over time.

So, NAHB, please do keep your money, and not only this year! Now if only we can convince some of the other PACs to do the same!

The January numbers are out and there's more good news to report. This is starting to feel and look like more than an anomaly. (Knock on wood!) But there are still danger signs as well. Let's talk about all of it.

Culpeper county continues to see inventories decline. Actually across the board we're seeing declines, but perhaps most significantly in Culpeper. This is the lowest we've seen inventory in a year. And, while closed sales were down in January, the number of contracts written more than doubled. A good sign going forward. Given how busy I am with both buyers and sellers the past couple of weeks, I believe we'll see an increase in contracts again in January.

Here's the bad news; new listing jumped back up. New listings in December were 91. New listings last month were 161. Year over year, we're holding steady. In January of '07 we saw 165 new listings. Expect that number to increase again in February. Again, my personal experience with new listings coming up would seem to confirm that.

In Fauquier we saw many of the same trends, but dialed down. Inventory decreased very slightly, from 703 to 699. Inventory still remains above where we were a year ago. As in Culpeper, sales were down, contracts were up. New listings jumped significantly. By the way, this is not unusual. Especially in a tough market, it makes a lot of sense to beat your competition to market. And the spring will likely see a flood of new inventory.

In Prince William all the above trends hold with no significant differences.

Warren County is clearly still struggling. Inventory is down only slightly. New listings increased almost threefold and while new contracts increased, it was not by much. 

Rappahannock County seems to be looking a little more anemic right now. But the volumes are so tiny in Rappahannock that you'd be in sane to try and determine trends from such scanty data. There were no new contracts written and only one sale last month. Inventory decreased very slightly and the number of new listings doubled from the month before.  It'll be interesting to see how the spring market unfolds here.

So, let's see what the increased activity I'm seeing now does to these numbers next month!

I'm wondering if one of the results of the recent subprime issues will be an increase in offers by sellers to carry financing for would-be buyers?

While there was a time when owner financing was very common, we haven't seen much of it at all, even during the last year as sales fell. But then, interest rates are still historically low and as I've said, if you had a pulse you could probably get a mortgage!

But with that changing, I wonder if sellers will step up to fill the void? Clearly it's a risky market. How desperate are sellers or how desperate will they get?

What do you think?

Once again yesterday the melt down in the subprime market made the news. With the stock market down over 200 points, at least in part because of the problems in the subprime market, it's definitely the talk of Wall Street. And it's also getting lots of attention in the real estate community.

If you're not familiar with the background on this let me fill in a little bit of the picture. During the real estate boom of the last few years it seemed like just about anyone could get a mortgage. Now some of these weren't the kind of mortgages anyone in their right mind would have signed up for. But desperate people do desperate things! Many of them were adjustable rate mortgages. Some of them adjusted gradually. Some of them ballooned suddenly after a year or two. If you borrowed 100% of the purchase price of the house and were barely scraping by and now you're payments are suddenly increasing substantially, you may have a problem.

Nationwide, there is clearly a growing number of foreclosures. Despite the stock market performance yesterday, this is nowhere near a panic situation right now. In Virginia for example, in the 4th quarter of 2006, 3.7% of all mortgage loans were in delinquent status. While that's a higher percentage than we've seen in a very long time, the sky is not falling.

Here's what I will be watching and worrying about in our local market. If the number of foreclosures increases dramatically, that will mean lots of additional inventory for sale. In a market that's already drowning in excess inventory, that would definitely be a bad thing.

The other piece of this is that this situation has forced lenders to tighten up the requirements on borrowers. Many lower end borrowers may find themselves unable to qualify to buy a home now. Let me just say, that this is a good thing from a big picture perspective. Many of these people should never have been in a position to buy a home and to do so would subject them, eventually, to terrible financial pressures. But the subprime borrowers were a big enough part of the market that their absence will definitely be felt in the form of lower demand.

These two factors together could mean a rougher 2007 than most economists and housing industry experts had predicted until now. This is a story to keep an eye on!

Two of the largest home builders in the nation addressed their shareholders this week. Obviously the state of the housing market is very, very important to them and they keep a close eye on things. So there is generally something to be learned from what they say.

Usually you have to start by filtering out the spin, but that wasn't the case with D R Horton's CEO, Donald Tomnitz. He said the market will "suck" in 2007. No spin there! Mr. Tomnitz' biggest concern is the tremendous amount of inventory still sitting out there.

His counterpart at Toll Brothers was much more optimistic, however. Robert Toll noted that in the last five weeks contract cancellations have dropped from 36% to 16%. He hopes Toll Brothers can burn off most of its excess inventory within five months if this trend continues.

Now, neither of these predictions is ridiculously rosy. So no one should assume that the spring market is going to make everything sell like crazy again. But it is interesting that Robert Toll now talks about the market "approaching" bottom since six months ago he said it had hit bottom. It's also interesting that Robert Toll's brother, Bruce, has sold $47 million dollars in the company stock since September. He certainly doesn't seem to believe a turn around is right around the corner!

I'll put a little asterisk on all of this with another warning that all real estate is local. But both Toll Brothers and D R Horton do business in this area.  And the greater DC market definitely figured into the predictions they provided.

My own prediction is that 2007 will be, once again, a bumpy ride!

A CMA is a Comparable Market Analysis. I've also seen it called Competitive Market Analysis. Regardless of how you define it, it's purpose is to give a potential seller an idea about what their home will sell for.

Many real estate agents routinely offer to do a free CMA as a way of getting their foot in the door with a potential client. And, a CMA can be a very valuable tool for the seller. But I don't believe most sellers have enough information to accurately determine if what they're looking at makes sense.

You've probably heard the quote about "lies, damned lies, and statistics".  Well, then there are CMAs.

I can get a CMA to say just about anything I want it to. But a proper CMA, while not an actual appraisal, should take into account the methods an appraiser will use when choosing which homes to use as comparisons for yours.

First of all, if you live in a good sized subdivision and there have been recent sales, that's what will be used. It doesn't matter if you think the people down the road don't have as nice a house. The rules that appraisers follow will almost guarantee that the most important comparables he or she will look at will be in the subdivision where you live.

And, they're only going to look at recent sales. In this market, if it sold more than six months ago it's insane to consider it as a guide to pricing your home. No appraiser worth their salt will use it. Prices in this market may have stabilized. But there's also a pretty good chance they're still dropping.  The more current comparables you have, the better.

The comparables used should be as close to your home as possible in terms of age, style, number of rooms, garage, lot size, etc. Think apples to apples!

And the comparables should be focused on what has sold, not what's active. It doesn't matter what someone asks for their house. It only matters what they can actually sell it for!

CMAs can be manipulated to pull the data that supports the price a seller wants. And there are plenty of agents who want or need business badly enough to tell a seller what they want to hear. That's a disservice to everyone in the long run!

So push back and ask the hard questions when you look at the numbers. If you think those numbers look too good to be true, you're probably right!

I know sellers are waiting anxiously for how February numbers look.  And while it's too early to have all the data, here are two quick items to make you feel a little better!

Overall inventory fell this month from 1903 to 1793. These numbers cover Fauquier, Culpeper, Madison, Orange and Rappahannock counties. I can't tell you yet how much of this is attributable to new contracts and how much is attributable to the wintery weather that plagued us for much of the month.

There's also good news on the interest rate front with rates falling again this week for the second week in a row! That's good news for buyers and sellers!

Stay tuned to this space for more data as it becomes available!

It's time for another update on what the local market conditions look like from a statistical standpoint. The numbers I'm providing here are January, 2007 numbers unless I specify otherwise. These statstics are taken from the local Mulitple Listing Service (MLS).

We'll start with what I see as the most discouraging numbers: the total number of newly ratified contract in the Greater Piedmont Region (Fauquier, Culpeper, Rappahannock, Orange & Madison counties) in January of 2007 is 150. The total number of new listings entering the market was 485. Clearly inventory is headed back up again and that's bad for sellers. Buyers, life continues to look pretty rosy from your perspective!

Average days on market was 82 in January of 2006 and is now up to 148.

Average sales price as a percentage of list price was 94.59% in January of 2006. That number is now down to 90.58%.

Here's an interesting one for you! Average list price is up 2.66% year over year, but average sales price is down 1.69% for that same period.

Total active listings is 1903 as compared to 1334 last year at this time. This gets even more striking when you consider that just a month ago, December 2006, there were a total of 1260 active listings. I can confirm that I'm getting calls to take new listings almost daily.

What does this all mean? If you thought the spring would bring a hot sellers market, not a chance! For all those who are saying we've hit bottom, I doubt it! While there have indeed been more buyers out looking around they're not opening up the checkbook and you shouldn't count on them to.

If your home is not in top condition and priced very aggressively you are probably doomed to fail. If you don't have to sell right now, don't!

If you're a buyer, the news just keeps getting better!  Enjoy!

The existing home sales numbers for December were released this past week and we now have a complete picture of the 2006 year. If you're a seller, it wasn't pretty. But then I'm probably not telling you anything you don't already know! 

2006 saw the steepest drop in the number of homes sold in 17 years! That's a pretty tough market. If you sold your home in 2006, congratulations! If you bought a home in 2006, congratulations! If you tried and failed to sell a home in 2006, if it's any comfort, you're not alone!

In spite of those abysmal sales numbers, the price of homes, nationally actually rose by about 1.1 percent. I'm sure you're wondering about those numbers and I'll admit there seems to be a mismatch! Here's some of what I think is going on.

First of all, the calculate what's happened in pricing using the prices on homes that actually sold. In a down market what sells is typically the homes in pristine condition. And, they typically hold their prices better than the rest of the homes on the market. In addition, remember that all those people whose homes are on the market and who've lowered the price $50K and still haven't seen a buyer, are not even showing up here. I believe the 2007 numbers will actually show a further price decline, but that most people in our market won't feel it as much because it will just be a documentation of what's already happened. If you're a seller and you lowered the price of your home substantially, you've already mentally and emotionally taken that hit, even if it doesn't show up in the statistics yet.

As always, all real estate is local. That 1.1 percent is a national average. If you look at the numbers here locally they definitely tell a more dramatic story. We flew higher than most at the peak of the market and we're suffering more than some now. The greater northern VA area shows sales prices for 2006 down a little over 4%. As you get further away from the beltway that decline is steeper.

The National Association of REALTORS, along with several large builders says they've seen the bottom of this market. That may be true, but I don't think we'll know for certain until about May. I'll be watching to see how many homes come on the market and how many buyers show up to buy them.

Whatever 2007 brings it will still likely be a somewhat challenging one for sellers. And we may be nearing the end of the best negotiating opportunity buyers in our area have seen in many years!

As the data begins to appear, you'll see it here!  So stay tuned. RSS feeds are now enabled so you can make sure you don't miss anything!

If you'd like to read the MSNBC story on the December numbers, here's the link:

http://www.msnbc.msn.com/id/16806979/from/ET/