On Target

The Fulton Research Blog

The Route 28 Corridor

September 22nd, 2009

Fulton Research recently prepared a study of the development potential for Class A Office Space along the Route 28 Corridor in Loudoun County.  The report evaluates many factors that will encourage and challenge growth in the corridor under current zoning and land use policies.  Our recommendation includes a long-term vision for development of the Corridor through 2040 and what needs to be done to achieve that vision.

You can find this report on our Project Profiles page or download directly by clicking here.

Market Trends delivered: June was a big month for home buyers!

July 15th, 2009

[This is an excerpt from July Market Trends report] As I write the July 2009 edition of RESIDENTIAL MARKET TRENDS, the housing market is still turning the corner with one of the strongest sales months in recent memory with over 1,200 more sales in June than May.  The recovery is led by housing activity in the affluent core counties of Washington and Baltimore MSAs.  In fact, in most of the closer-in markets of Washington, the resale market is at a point of being undersupplied, which bodes well for home builders since home buyers will be prompted to also consider new homes.  Even in the less affluent markets, home builders have mentioned that sales are strong.

 

Read more.  Register here to download your free version of Residential Market Trends

Dilemma: Bank Owned Inventory

July 15th, 2009

CNBC’s Diana Olick’s blog, Realty Check, is one of my favorite blogs.   In her latest entry, she dives into the subject of bank-0wned inventory that’s not hitting the market.  Why aren’t banks unloading their homes while the market is hot?  Backlog.  Due to the backlog of paperwork, only one-quarter of the bank owned homes are offered for sale.   While sales may be good right now, this slow-drip of below-market real estate will keep prices artificially depressed for years to come. 

-D.

Density on the Metro Silver Line to Dulles

June 17th, 2009

Fairfax County elected officials are still threatening not to build Metrorail stations at Reston Parkway, Herndon-Monroe, and Route 28.   However, the Washington Business Journal reports that landowners along the Metro extension to Dulles, who have been fighting a special taxing district  because they’re not guaranteed increased density, are seeing some positive movement by the Fairfax County Board of Supervisors.   The Board is now conducting a special study of the increased density requests for each land parcel.  

There are two elements to this situation that should be addressed:

First, haven’t we learned our lesson from the Vienna Metro Station?  Higher density development is necessary within one-quarter to one-half mile of a Metro station to fill the demand for walkable residential neighborhoods (i.e. Transit Oriented Development)  and employment centers.  

Second, building this rail line without these stations would be a travesty that will live on for decades.  One primary reason to build the line is to alleviate traffic along the Dulles Toll Road – Route 7 corridors — and the residents who live beyond Wiehle Avenue are those who need it most. 

Our housing market is undergoing a seismic demographic shift.  Home builders and developers, being part of a demand-driven industry, have met the needs of the aging Baby Boomers for the last several decades.  This massive population have demanded suburban single family home development — until now.  Now this population demands closer-in, walkable, more lifestyle-oriented communities.  

There is only one way to build the Silver Line:  with the three stations and with increased density.   Otherwise, Metro and Fairfax County are building a monumental missed opportunity.

Just like the good ol’ times? Not quite!

June 17th, 2009

Over the last couple of months, I have heard incredible news come out of the resale housing markets in Northern Virginia. Resale listings are sold within 1-3 weeks on market and are seeing multiple offers, some at higher than list price. Foreclosure inventory is low and the process of buying a foreclosure is a hassle, so bargain hunters are now looking to market-priced listings. 

The latest listing inventory numbers in the Fulton Research Market Trends report, show that the three northern Virginia markets have less than six months worth of inventory.  Prince William County has 3.5 months inventory. 

This strong sales activity is likely due to the release of pent-up demand, low rates and government stimulus.    The limited supply of existing homes for sale leaves room for home builders to add new homes into the market — even pushing prices up a bit.  Enjoy this strong activity while it lasts, but don’t expect it to last forever.

-Dan

The Other Shoe(s) to Drop…

May 28th, 2009

Don’t let current positive market conditions lull you into a false sense of security.  While Fulton Research called “the beginning to the bottom” of the Washington area housing market in April 2009, that statement came with a few qualifiers that may have been overlooked.  There is a minefield of economic problems ahead of us which we have to maneuver and we run the risk of a third leg to this downturn to begin later this year.    What are those problems?

  • Rising unemployment into 2010 will result in declining housing demand.
  • Alt-A and Option-ARM mortgages resetting this year, resulting in many high end properties hitting the foreclosure markets.
  • There is a real threat of inflation, and skyrocketing interest rates, in 2010 and beyond. 
  • Commercial real estate industry has a mortgage mess to deal with.  Many commercial loans are maturing this year and many will default as the credit markets are still frozen.  Those initial loans were made with aggressive underwriting, and now the pendulum has swung the other way.  Some analysts predict that commercial real estate values may drop as much as 30 percent. 

The housing activity we’re seeing today is largely government-manufactured, with low interest rates, tax credits and other stimulus.    Fulton Research analysts continue to look past the manufactured demand to see what the real economy has in store.

Case-Shiller Home Price Index suggests the Washington area housing market is near the bottom.

May 26th, 2009

Today’s Case-Shiller report is doom and gloom nationally, but there is a positive angle to the local numbers.  

The Case-Shiller Composite-20 Index (i.e. the national sample) saw March home values drop 2.1% from the previous month, which is approximately the same monthly percentage decline as February.  In Washington, however, the trend is encouraging as home values decrease only 1.2% from February, an improvement from last month which saw Washington home values lose 2.3% from the previous month. 

This month-over-month improvement is the indicator that we have reached the bottom of the housing market.

Nationally, home values are on a rapid decline.  However, the Washington metro area is seeing signs of stability and improvement.  Washington is the strongest housing market in the nation and the current Case-Shiller numbers demonstrate that.  I anticipate greater improvement in the coming months as we continue to work our way through our excess inventory.  At that point, we may even begin to see some appreciating home values.

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Two Positives On The Foreclosure Front

May 22nd, 2009

Here’s an interesting blog posting regarding foreclosure activity.  Realty Check, by CNBC’s Diana Olick, is one of my favorite blogs.

-Dan

The thawing of the financial markets

May 21st, 2009

According to the Washington Post, the financial markets are beginning to thaw. This should lead the way to increased acquisition, development and construction (AD&C) lending for residential and commercial real estate. Residential land acquisition activity should improve, as the housing market is finding solid ground and the bid-ask gap for land is shrinking. But will the ‘thaw’ come in time to finance the maturing CMBS (commercial mortgage backed securities) market? Probably not.  According to Commercial Property News article from May 8th, Deutsche Bank said two-thirds of the CMBS loans which will mature in the coming decade may default. That includes the nearly $50 billion in CMBS loans to mature in 2009.

Commercial property values are expected to decline 30 percent or more in some markets.

Disney at National Harbor!

May 20th, 2009

Disney is a placemaker.  They have the brand name, resources, and innovation to result in a net increase in overall tourism and convention travel to the area. National Harbor and southern Prince George’s County will enjoy the job growth and upscale image that Disney’s 500-room hotel will add to National Harbor. When they will break ground is anyone’s guess.

Congratulations to The Peterson Companies for this big win during these difficult times.