Skepticism increases 1.3% on conflicting housing data

by Dan Krell © 2012

housing dataWhen the National Association of Realtors® announced last week that April’s existing home sales increased 3.4% to an annually adjusted rate of 4.62 million compared to a downwardly revised 4.47 million in March (, I have to admit I was a bit skeptical. The local market is not exactly humming along, so as I read in the above referenced NAR release that April’s existing home sales rose 10% over the figure from April 2011, I thought some perspective is needed.

Let me quote you some housing statistics. The number of Montgomery County single family homes that sold increased 5.1% in February, 14.7% in March, 33.9% in April and 27.9% in May (MRIS data reported by the Greater Capital Area Association of Realtors®; These numbers are not from 2012; but rather, these are the local stats from 2010 compared to closings from 2009. Yes, as you remember – 2010 was a spectacular year for local real estate!

Sarcasm aside, the number of Montgomery County single family home closings increased 5.8% during April 2012 (compared to 2011); and the number of Montgomery County condo closings also increased 8.1% during the same time. But, Montgomery County year-to-date settlements are still below the number of settlements that occurred during the same time in 2011 (-1.4% for single family homes; and -2.8% for condos). Although the 690 single family home settlements that occurred in April 2012 is higher than 652 that occurred in April 2011, the 2,034 single family home settlements that occurred year-to-date through April 2012 is lower than the 2,062 settlements that occurred the same period in 2011. Regardless, the number of settlements is far lower than what we have seen in past “normal” markets (for example, GCAAR reported that there were 849 settlements of Montgomery County single family homes in April 2001).

It must be noted that although the first half of 2010 seemed to be on a role, the number of 2010 Montgomery County single family home closings actually ended the year slightly lower than 2009. So, even though we have a month of some positive news, let’s be cautious about making assumptions.

housing dataOk, I know you’re going to ask about NAR’s statements about rising home sales. Sure, NAR chief economist, Lawrence Yun, was reported to say that “the housing recovery was underway.” He was also quoted to say, “A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices…”

However, the latest release of the S&P/Case-Shiller Home Price Indices (May 29th; states “that all three headline composites ended the first quarter of 2012 at new post-crisis lows.” Although there was a 1.6% decrease in home prices in the Washington DC metropolitan area in February compared to January, there was a 1% increase in March compared to February; however, prices have decreased 0.6% for the year.

Although media headlines shout that housing has turned a corner, it’s a little premature to assume that the housing market has normalized with only one month’s data. The housing market has turned so many corners in recent years that I think we’ve made several circles! Just as in 2010, let’s see the final tally. There’s still some data to collect; let’s see how the housing market fares through the remainder of the summer.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of May 28, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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Real Estate in review 2011

Since the housing downturn, optimistic predictions the real estate market have been forecasted annually. However, what we have seen in retrospect is that home buyer incentives along with other housing stimulus measures have only acted to maintain an ailing housing sector from deteriorating further. Some still await the market bottom. And although 2011 revealed additional weaknesses in global economic systems as well as the unintentional consequences of policy and regulation, 2011 felt as if it was the most optimistic year in real estate since the downturn.

2011 will be remembered as the year that the National Association of Realtors (NAR) revised existing home sales down 14.3% for estimates between 2007 and 2010 (data released on December 21, 2011 and available on Regardless of the re-benchmarking of data, the NAR has announced that existing home sales in 2011 continue to strengthen as November’s data indicates increased sales from the previous year (really?).

2011 was not the year for home price gains, however. Home prices continued to decline nationwide. However, the Washington DC and Detroit metro areas were the only two regions that posted positive home price gains from the previous year according to the S&P/Case-Shiller Home Price Index.

2011 was the year that housing finance reform continued to crawl forward, while Wall Street reform seemed to move quickly with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Although Dodd-Frank seemed to be focused squarely on Wall Street, it appeared to be far reaching with the requirements such as the 20% down payment Qualified Residential Mortgage (QRM).

2011 will be remembered as the year that the Eurozone almost collapsed. The financial déjà-vu that played out over the summer (and is still yet totally resolved, mind you), threatened markets worldwide- including the U.S. housing market. The sharp economic decline, that some braced for, was averted.

2011 was the year that we saw a bifurcated market become increasingly significant. The upper-bracket/luxury home market appeared to stabilize ahead of other housing, as upper-bracket/luxury housing activity remained strong. In fact two of the most expensive homes in Washington, DC sold this year! Reports that Evermay, the DC mansion that was originally listed for $49 Million, sold for $22 Million in July; while Halcyon House was reported to sell a couple of months later for $12.5 Million.

Regardless of the continued efforts of government preparedness campaigns (remember the Center for Disease Control “Zombie Apocalypse” preparedness campaign on; 2011 will be remembered as the year that nature made a point about preparedness. If you weren’t concerned about preparing for the Mayan 2012 prophecy; then enduring hurricanes, floods and an earthquake probably had you at least checking your homeowners’ insurance.

As foreclosures declined in 2011, it seemed as if reports of mortgage lender abuses increased. Lenders appeared to be under fire from class action lawsuits as well as attorneys general for lending practices and foreclosure procedures; Bank of America recently reportedly settled a lawsuit for $335 Million.

Alas, the year is almost over; having us searching for fond memories of 2011 and wondering what will 2012 bring. Some look for home prices to make some gains in the coming year (, however more importantly you can probably expect the housing market to be glamorized in the pomp and circumstance of the election cycle of 2012.

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

by Dan Krell
© 2011

Trapped and Pigeon Holed

by Dan Krell

A May 13th 60 Minutes piece that aired nationally attempted to portray a balanced view of how online brokerages have been chipping away at “standard” Realtor commissions. If you missed the segment, it was a story about the success and battles of an online brokerage called Redfin. (Interestingly, there was a similar story in the Washington Post almost a week later).

The story appeared to be an underdog piece about how Redfin is pitted against a real estate industry that is against change. Everyone loves an underdog, right? Although the story attempted to offer both sides of the story, 60 Minutes decision to interview a top real estate agent in the Seattle area made for sensationalism but little for advancing the truth and facts.

The agent interviewed was clearly not representative in income or business methods of an average Realtor. It appeared that the agent’s comments fed into the stereotypes being portrayed by her comments when challenged to lower her commissions as well as comments about home buying not being high tech.

The facts are that according to the United States Department of Labor Bureau of Labor Statistics, the average licensed real estate agent income was $35,670 in 2004. The average agent earned between $23,500 and $58,110 a year. Only the top ten percent earned more than $92,770.

Additionally, the real estate industry has embraced technology to assist in change as can be witnessed by the explosion of internet listings and computer based real estate applications. Many home buyers search for homes online before going to see the home in person. In fact new technology has allowed much of the process to become remote and impersonal; contracts and mortgage applications can be completed and signed and delivered via email. The truth is that the industry is very high tech and the National Association of Realtors is committed to technological advancement (

As a Realtor in the trenches, I can tell you that commission structures have been changing for a while, however not because of “discount” brokers, but as a necessity of survival in a saturated industry. The recent record sellers’ market assisted in the growth of real estate business models that are based on flat fees. Online brokerages, such as Zip Realty, as well as “full service” Realtors have been offering closing credits, rebates, and low commission structures for some time.

How do you get a full service Realtor for a “discount” price? The truth is that although some Realtors are not negotiable on commission, many are. All you have to do is ask and chances are that you can negotiate a lower listing commission or a closing credit on your home purchase.

I was once told by a professor in graduate school that once others’ perceptions have you pigeon holed, you can never get out. Although the 60 Minutes story may be good for ratings, the one sided treatment and depicted stereotype of wealthy Realtors who are steadfast for the status quo did nothing to promote the facts. The National Association of Realtors has posted depicted misrepresentations as well as the correct facts on their website: (

To CBS’s credit, some facts and rebuttal comments from the National Association of Realtors, as well as others, have been posted on the story webpage:

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of May 28, 2007. Copyright © 2007 Dan Krell.