Dear Neighbor

“Real Estate is Great at CENTURY 21 New Millennium!” “We at New Millennium are focused on transforming the real estate industry by integrating and efficiently delivering those services our clients value. We are known for being forward-thinking and for the passionate pursuit of our goals. We endeavor to create an environment in which we all grow individually and as a team. We work hard, innovate, communicate honestly, and choose the harder-right rather than the easier-wrong. For all involved, we strive to do everything in a way that is fun, fair and profitable.”

and policy which influence our client’s contemplated transaction. We’ve acquired firms and expanded our footprint in market conditions which caused others to fail. We’ve “integrated and efficiently delivered those services our clients value.” Firms that don’t lend, provide title and escrow services, insure or manage property are simply not prepared to fulfill their client’s needs. Now is no time to do business with strangers. Sometimes the “harder-right” is recommending our client not complete a transaction which would have paid a commission. Our success is due to relationships of trust and we will not violate that trust; period.

Kimberly Inge

Associate Broker

12581 Milstead Way, Suite 400

Woodbridge, VA  22192

Office: 703-491-9570

Kimberly.inge@c21nm.com

www.superagentkim.com

703.328.1618

At no time since our firm was established in 1998, has living our “Mission Statement” been more impactful  than this current market cycle. Because “We work hard, innovate, communicate honestly, and choose the harder-right rather than the easier-wrong,” our business is up thirty two percent over the prior year. The market we compete in is not. We’ve “grown individually and as a team.” We’ve worked hard to understand and communicate data, trends

It is hard to believe this cycle began in July of 2005 and it will soon be 2010. Home values remain at the center of the economic universe. Lawmakers likely have more influence upon the value of your property than do the number of bedrooms and baths. In this issue, we’ll  provide information that will help you align the moving parts and hopefully develop a strategy relative to your real property holdings. It’s no longer that simple

THE GOVERNMENT'S ROLE IN THE HOUSING SECTOR

This economic cycle began when the “Housing Bubble” burst and we can’t expect sustainable recovery until real property values improve. When home values began to decline, accounting standards required that financial institutions mark their assets at fair market value. While declines were modest initially, as inventory swelled, buyers lost confidence and the housing sector ground to a halt. Home prices then began their freefall.

 Throughout the boom, lenders made mortgages which relied more on the appreciating value of the home than they did the credentials of the borrower. There was little risk since prices were on the rise and if the borrower had problems, they could sell or refinance. On a worst case basis where the lender had to foreclose, they were claiming an asset that likely was worth more than the loan amount.

 Obviously, that’s not the way things worked out. Values plummeted. Those owning the mortgages were then forced to mark the value of their collateral at the diminished market value. This undermined

capital ratios and put the nation’s largest financial institutions on the brink of failure; some failed.

The Federal government stepped in with TARP and suspended the “Mark to Market” accounting standard. Since TARP didn’t buy the bad assets and instead recapitalized the banks, the impact of the problem was merely postponed. Lending dried up, businesses contracted and started cutting jobs. Those that lost their jobs then lost their homes. 

 Foreclosures were then sold at distressed levels which set the new value for like property and the spiral continued downward. A substantial percentage of homeowners are now “upside down” on their mortgage. Estimates of bank’s potential unrecognized losses are now expressed in multiples of our nations Gross National Product. It is hard to comprehend the scale of risk.

If managed properly, we have now weathered the worst of the storm. Government programs are in place that encourage foreclosure as a last resort which limits inventory. Incentives for those qualified

to buy a home are working. Values in many markets are stable. That doesn’t mean the problem is solved; just solvable.

 Banks are no longer eager to take a home and sell it as quickly as possible because values are no longer eroding. Keeping someone in their home and parceling out inventory only when forced to will limit inventory and strengthen values. In an appreciating market, borrowers are more inclined to stay the course. Lenders’ balance sheets improve. Government can pull back on  their involvement.

 While government intervention with taxpayer dollars was distasteful, once the decision to save the banks was made, there was no turning back. If we remember that the fundamental cause of the banking crisis was the deterioration of home values, then it only makes sense that purging the bad assets over an protracted period of time will prevent further deterioration of values. This is the only sustainable recovery alternative. The paper loss was just too large. Even our government is not large enough to call a “do over.”

CENTURY 21 NEW MILLENNIUM | REAL ESTATE NEWS