Here is a quick impression of what I have been seeing lately in working with Northern Virginia home owners and buyers, as well as those moving here from other areas.

I’d summarize the mood this way:  “I am going to get on with my life!

After four plus years of non-stop bad news, people are tired of having their real estate life on hold.

Of course, reality is ever present, and some people have circumstances that simply prevent them from doing what they would like to do.  Some things you can not, and should not ignore.  No point in making a real estate move that will make your situation worse.

But “distress” is not the only reality that is out there.  There are many buyers and sellers on solid financial ground.  They have been watching the national drama, and trying to figure out when is the right time to do whatever it is they planned on doing, real estate wise.

So what point do I want to make from this?  Let me offer a few ideas to any of our readers who may be thinking through a real estate decision.

First, make rationally-based decisions, not fear-based decisions.  To me, this means not being overly optimistic or pessimistic.  It means looking honestly at the key factors that are part of your decision.

Second, get really good professional advice.  Never work with someone who you feel is trying to exert pressure on you to make their preferred real estate decision.  I have made this point from time to time in this blog:  choose a really outstanding real estate agent.

Third, if the finances add up for you, do remember that you are living through a time of special opportunity.  At some future point, who knows when, the real estate market will be much different than it is today.  Add just enough contrarian thinking to see beyond what the “crowd” sees.

And if you do happen to be looking for someone to help you make that next move, we invite you to watch a different kind of testimonial video…in the voice of our clients.

One of the stress points for home buyers is knowing when to lock-in to their mortgage rate.

By all means,  make your own decision, in collaboration with your loan professional and your real estate agent.  But as you do so, here are a few ideas that I hope will add a little something toward making the process work better for you.

Last week was an example of volatility in mortgage rates.  They fell on Monday and Tuesday, then jumped up on Wednesday and Thursday.

Several factors contributed to the bumpy ride.  For starters the Unemployment claims fell, and Leading Economic Indicators rose. On top of that inflation readings are modest.

As a home buyer trying to make a good decision, and manage your own stress, what should you do?  In the spirit of Keeping It Simple, let me offer three things that are very basic but will help you avoid what is not doable.  You can “drive yourself a little crazy” trying to nail the perfect interest rate decision, but often the better part of wisdom is knowing what is truly “controllable” and what is not.

And that is my first point.  One key strategy in managing the psychology of uncertainty is acknowledging and accepting what is knowable and what is unknowable about a given situation. So, the first thing is to acknowledge that there is no “perfect” timing, and there is no absolute way of ensuring that your locked -in rate won’t be better – or worse – next day, or next week.  The stress comes from trying to anticipate what is unknowable.

The second thing we can do is determine our time frame.  Most people can’t live comfortably with open-ended uncertainty.  So determine your own time line for getting that rate locked.  You can try to guess this or that movement of rates, but that may add a great deal of stress to the already stressful process of buying your home.  And listen carefully to the insights of the professionals you are working with both from the mortgage side as well as the real estate agent side.

The third thing you can do is be ready to act rapidly.  What enables you to act with speed?  Doing the “due diligence” and making decisions on what your timing needs to be.  So much of the home buying process can be made easier by having a plan.  After you have gotten the details of your program worked out with your loan professional, and you have gotten all of your own financial arrangements worked out, be ready to act decisively.

And as always, I urge you to be quality and integrity conscious in your choice of both loan officer and real estate agent.  Even though you can’t know some things in advance, it is vital to be advised on what you can know, and that is why you should be discerning in your choice of professional help.

One of life’s enduring lessons is that perspective matters.  By perspective I mean the way in which we look at, analyze, interpret, and come to make sense of the world around us.

The current coverage of our national economic trials and tribulations is a case in point.  You are unlikely to hear that 95.42% of home owners were not delinquent on their mortgages.  But you will hear that 4.58 % of homeowners are delinquent.  Both are significant numbers.  They both move the mind in a direction that provides a perspective.

The report comes from TransUnion and states that 4.58 percent of American homeowners were at least 60 days past due on mortgage payments last quarter.  The study is based on anonymous data from its national credit database

TransUnion also indicates that mortgage delinquencies are up 53%  when compared to data from a year ago.

Another part of perspective is to consider the facts behind the stats.  For example, in looking at TransUnion’s data for the 5 largest states in the Union, it’s apparent that the national delinquency numbers are being skewed by California and Florida.  New York and Texas, for example, exhibit delinquency rates below the national 4.58 percent marker.

Then there is North Dakota.  Its delinquency rate is about 1 percent.

When you hear these numbers think about the purpose of headlines and lead stories.  Their function is to attract attention.  They sensationalize.  They tend to channel emotions away from anything resembling a wise perspective.  And in the process the facts behind the numbers get thrown overboard.

(Image courtesy: TransUnion)

Ever heard the song “One Note Samba?”

The melody cleverly used repetition on one single note to create a memorable melodic motif.  The song was a hit back in the 60’s.

But you are hearing a version of it every time you listen to most news telecasts.  Most of the stats we hear are true but usually the story is incomplete.

The examples are endless.  Here is one:  today’s headline regarding the Existing Home Sales figure.  The surface interpretation is “more trouble ahead for housing.”

Not so fast.

Look below the attention-grabbing headlines and there is a story with substance.   But the real story points to housing market fundamentals coming back into balance.  Not as fast as we all would like, but the statistic is not one-dimensional.

As home values edge lower, value buyers are responding.  True, the number of homes sold fell to the lowest levels in 12 years, but it is also important to remember that the number of homes available to buy fell, too.

Reasons why…

• Banks have slowed foreclosures
• Not as many job related relocations due to current economic conditions
• New home construction is slim

The result: The nation’s housing supply is as low as its been in more than a year.

Projecting the current rate of sales activity, the national housing supply would be 100% sold in 9.6 months — that’s a two month improvement from the high point that was set June 2008.

Can we expect demand for homes to rise?  Considering the Fed’s commitment to low mortgage rates, Fannie’s moves to open it’s resources to investors, tax credits to first-time buyers from the Stimulus Package, the impact of the huge mortgage plan yet to be implemented, as well as several years of qualified buyers on the sidelines, I’d say there is a reasonable expectation that we’ll see demand going up!

My point:  the headlines are not entirely wrong, but they tend to focus only on a one-sided…should I say lopsided…perception.

It is wise to not be on “auto-pilot” when you hear these headlines.  They typically don’t tell the full story.  Falling supply plus rising demand are two primary conditions that, over time, contribute to housing stabilization and recovery.

(Image courtesy: Wall Street Journal Online)

I am not sure where consumer confidence is for Chantilly and Northern Virginia home buyers.  Given the traditional strength of our local economy, maybe it is much better than the national average for Consumer Confidence which fell this month for the first time in three months.

This is not much of a surprise, given the daily mantra of rough economic news. When something is repeated consistently enough, and believed, it takes on the dynamics of a self-fulfilling prophecy.

In spite of this, could we be seeing the faint glimmer of a housing revival?  I know, there are so many current and “in the wings” foreclosures that any “revival” may seem a long way off.  So maybe “revival” is way too strong a word.

At the same time, sales of existing homes are on the rise and an increasing number of homes are under contract to sell. To interpret these statistical reports we are well advised to remember the “action-reaction” tendency that we see in nature as well as social systems. The idea is that a sharp reaction eventually results in a counter-reaction.  As home prices decline, not everyone will respond by staying out of housing. Some will react, as many are now doing, by seeing the decline as their entry point.

In this way cycles are perpetuated. Cause and effect is a pretty powerful principle. Not every home buyer knows they are supposed to react with fear and avoid the opportunity!

For example, consider the other forces that are part of the current economic turbulence:

• In some markets, home values have declined to early-2000 levels
• Government interventions have brought mortgage rates to near-5 percent
• Congress is pledging more support for housing, and a housing credit is part of the impending stimulus package.

Two points are worth considering as you watch the economic drama play on. First, cycles and the “action-reaction” tendency of human behavior and human systems is ever present. Gloom and doom eventually gives way to boom and zoom.  And the second, to make good home buying and selling decisions look to all of the important factors in your own life, and not to the “programmed” mindset, especially the steady stream of  “news” which seems like it is edited to ensure that only negative information gets through the screening filter.

One’s confidence is far too precious to be determined by something outside your own good judgment.

If you have become weary of the never-ending stream of economic news that fill the media these days, this one is for you.  Let me offer a “cognitive therapy” way of seeing the bad news in its more accurate context:  the context is seeing the whole picture, not just part of the picture.  Realizing something is not true, or only partly true, is one way to get rid of worry.                                                                                                

Here is the problem:  lots of people are in a state of fear and worry that is based more on seeing just part of the picture, and not focusing on the whole picture. The news media can be a powerful force toward creating a nearly hypnotic state that we might label “media attention disorder.”   As viewers process and internalize the bad news which is implicitly the only news, they begin to see the world in the one-dimensional way it is presented.  In this sense the news media is not just reporting reality, it is creating reality. 

The reality that is created in the minds of viewers can run the spectrum from low-grade annoyance on up to high-grade anxiety. As viewers believe the one-dmensional world of only bad news, they begin to assume this view as valid and apply it as one of their prime psychological filtering mechanisms.   As this happens, all other information is interpreted through the “bad news” filter.  Even good news is seen as the exception that proves the bad news rule.

There are many reasons why the news media presents information in the way it does.  But my point here is simply to suggest that the incessant diet of negatives can distort an honest view of the world, as well as do real psychological harm.

Bringing it back to real estate, it can distort rational analysis and clear-headed thinking on important real estate decisions.  

One way to counteract the impact of this is to recognize that the presentation of such a one-sided view is simply not true.  Not true in that it is only a part of reality, not the full picture of reality.  It is not a matter of putting a happy spin on bad news.  It is a matter of seeing more than just one thing at a time.  

Doing so provides freedom from “media attention disorder.”  And when you don’t have this condition, you will be far better able to do whatever you need to do in real estate with a clear head.  At the very least, you won’t have to waste valuable time with worry and stress.

We also help combat real estate induced stress and worry with honest answers to your questions about buying and selling!  Do feel free to contact us at any time.