INSIDE THIS ISSUE

Selling page 2
JASON CARRIER
B r a n c h M a na g e r
6 6 4 1- A Ol d D o mi n i o n D r.
M c L e a n, V A 2 2 1 0 1
O f fi ce : 70 3- 5 5 6- 4 2 2 2
C el l : 7 0 3- 21 7- 8 4 6 1
j as o n .carrier@c21nm.com
DEAR NEIGHBOR,
The priority of this publication has always been to offer
the reader a factual understanding of the fundamental
drivers of the real estate market within the DC Metro-
politan area. We avoid any tendency to “sell” a per-
spective or convince the reader of a particular point of
view. While we are always proud of who we are and
what we accomplish, we’ve stayed away from making
this a commercial for our real estate service compa-
nies. We believe that simply setting forth facts, allowing
readers to reach their own conclusions, is something
that sets us apart.
This issue will honor the same principle, however,
there are some recent accomplishments that deserve a
commercial. We also feel it important to recommend a
strategy for potential purchasers and sellers that are
contemplating a transaction within the next twenty four
months. Certainly, we will continue to provide the data
which affords the reader a factual basis for reaching
their own conclusions, but right now, much of what will
determine real estate values is not statistical, but po-
litical or policy driven factors.
Buying page 3
Summary page 4
Few in our industry are confident in forecasting more
than six months out unless the forecast pertains to the
long term outlook. Most would agree that real property
will have a greater value ten years from now than it
does today. Home ownership is once again about pro-
viding shelter for one’s family, achieving some tax
advantage and the potential of someday living in a
“paid for” home. Not many possess the risk tolerance
or personal resources to speculate for short term gain.
We are within a cycle where values have stabilized, inven-
tory has returned to a more normal level and home owner-
ship is more affordable than at any time I personally recall.
Unfortunately, we recovered from the preceding foreclo-
sure market through artificial means and not through a
market driven solution. In many ways, we have postponed
rather than dealt with the fundamental problems.
The big question now is whether we think policy makers will
sustain their intervention long enough to smooth out the jour-
ney to a lasting recovery. This is a yes or no question. If you
are considering a real estate transaction, you have to answer.

CONGRATULATIONS NEW MILLENNIUM!

Why Our Success is Important to You!
Our brand, CENTURY 21, is the most recognized
name in real estate. The CENTURY21 system is
comprised of over 8000 independently owned and
operated real estate offices, world wide. For several
years, our firm has ranked in the top ten CENTURY
21 firms in the United States. I am extremely proud
to tell the world that my company, CENTURY 21
New Millennium, is now the Number 1 CENTURY
21 firm in the United States of America. I need to
say it again. NUMBER 1! We are very proud.
So why is our success important to you? Obviously
the real estate market since 2005 has been no gen-
tler to real estate firms than it has to individuals. In a
market where fewer homes are being sold, for less
money, our business is up; considerably. We bring
the same energy and discipline with which we run
our business, to each client we represent. For us to
be successful, our client needs to be successful first.
Everything begins with analysis, whether it pertains to
our firms business plan or a custom marketing plan for a
seller we represent. To develop a valid strategy, we need
to first understand the competitive aspects of the market
we are competing within. Only when we have the fact
based understanding of our situation, will we have the
confidence needed to make good business decisions.
Our analytical skills set us apart and prepare our firm and
our clients to position themselves effectively.
While it sounds rather simple, a written plan is
fundamental to success and is another area where
our conduct sets us apart. Every entity and individual
within our firm works from a written business plan.
Every seller we represent collaborates in a written
marketing strategy, which we implement together to
meet the client’s objective. Every plan is unique and
based upon the individual circumstance of the seller.
Execution, accountability, and communication are
key to our mutual success. We became the most
successful firm in the most recognized brand in real
estate by effectively representing one buyer and one
seller at a time. We analyzed the competitive environ-
ment, made a plan and executed the plan each day.
Analysis of our circumstance today tells us we
represent an abundance of ready, willing and able
buyers for which we lack a sufficient inventory of
homes. Simply put, we have buyers and we need
listings. Our business is built upon referral of new
clients from those we have served well in the past.
We need your help; and if they have a real estate
need, your friends need our help. There is really no
such thing as a simple real estate transaction today.
An agent’s performance can save or cost a buyer tens
of thousands of dollars. For sellers, the risk is greater.
An agent that takes a casual approach to representa-
tion could cost a seller hundreds of thousands or put
them into bankruptcy. Our representation is thorough,
honest, and our results speak for themselves. Please
consider helping everyone by creating an opportunity
for us to compete for their business.
1
MARKET TRENDS | SELLER’S CONSIDERATIONS

POLICY, PROGRAMS AND PERSPECTIVE

All real estate is local and we are fortunate to reside in the DC Metropolitan
Area. Circumstances relating to real estate are more positive here than in
most metropolitan areas of our country. It is hard to feel good about signifi-
cant equity losses over the last few years, but there are many others that
would trade places without question.
According to RealtyTrac, an industry tracking and analysis firm, 2.8 million
homeowners received at least one foreclosure notice in 2009. They estimate
that 4.8 million will go in to foreclosure in 2010 and there are up to 7 million
homes upon which lenders have foreclosed, but not put up for sale.
Lenders holding on to foreclosed inventory are doing so in order to prevent
an over supply. Excessive inventory would result in a return to declining
values. In a declining market, lenders will shed foreclosed inventory as
quickly as possible to avoid selling at even lower value.
Potential sellers must now understand the normal market characteristics and
weight their conclusions with the probability of government action or inaction.
Some feel we would have been better off if the government would have sim-
ply allowed the market take it’s course and let the chips fall where they
landed. Others feel the government has not done enough. What seems cer-
tain is legislation will continue it’s role in the manipulation of home values.
The arbitrary influence of law in the real estate sector makes it difficult to
accurately forecast mid term trends. As an example, the first time homebuyer
tax credit is set to expire on April 30th. There is likely to be more demand right
now than there will be if the credit goes away. A potential seller needs to con-
clude right now whether there will or won’t be another extension.
Interest rates remain near historic lows. Low rates mean more people qualify
to purchase a home. Rates are artificially low and if they increase, which
most feel they will, fewer people qualify. The smaller the buyer pool be-
comes, the more stress we will feel on pricing.
The near term opportunity is clear. Rates are low, tax credits are available.
Now is a very good time to sell for anyone contemplating their sale within a
two year window. Now is a great time to sell if selling one home and buying
another. Certainty has a value.

CONTINGENT RISK
We discussed the number of homeowners who are active at some stage within the foreclosure proc-
ess. The initial distressed segment in 2006 through 2008 were families who acquired or refinanced
homes using sub prime, adjustable rate mortgage products. If you have confidence in Realtytrac
statistics, a sizeable portion of these properties remain unresolved and in the hands of lenders.

The graph to the right shows the arrival of a whole new set of Option Arms set to adjust. If left to their
own resolution, the vast majority of these loans will default and hit the market as bank owned inven-
tory. If that happens, there seems little alternative to the market finding new lows. There are already
indications of additional government pressure on lenders to modify loans to avoid this eventuality.

While the graphic to the right would indicate that by 2012 we will have absorbed the impact of ad-
justable resets, we will not. What legislative intervention has accomplished is the moderation of
potentially severe price movement. By slowing the pace of new inventory becoming available, price
movements were not as abrupt or as deep as they had the potential of being. On the other hand,
since the intervention slowed the pace of foreclosure, the duration of their impact will be greater.

Effectively, our government has some control over the number of homes that will be available for
sale at any given time. If they are effective at meting out this inventory, and at pace that can be
absorbed, prices should stay flat or increase modestly. It will still take a while.

FORECLOSURE DRIVEN MARKET — VALUE TREND

The first “tsunami” of foreclosures hit our market in the
early part of 2007 and were the dominant inventory cate- Inventory Level - Average Sold Price Relationship
gory until the Spring of 2009. During that two year pe-
riod, we saw the average sold price in our market decline $700,000 14,000
from $585,000 to about $390,000. The decline was on
$600,000 12,000
average a third of market value. Until that time, there
$500,000 10,000
were many that would have never believed that could
$400,000 8,000 Avg Sold Price
happen. Since then, inventory has continued to decline
$300,000 6,000 Active Listings
but much of the limitation on inventory is due to pro-
grams which may not be a permanent resolution of the $200,000 4,000
property. Prices have recovered somewhat as a result of $100,000 2,000
the inventory controls. $0 0
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09

2
MARKET TRENDS | BUYER CONSIDERATIONS

INTEREST RATES AND PURCHASING POWER

The graph below right displays the amount of debt an individual will repay based upon a static payment of $5.36 per month, based upon interest rates be-
tween 5% and 7%. The analysis uses a thirty year, fixed rate, fully amortizing loan product. Using a 5% rate, the $5.36 monthly payment will service a
$1,000 debt. At the other end of the spectrum, a 7% interest rate, the same payment of $5.36 will service only an $805 debt.

The graph below left displays the payment per thousand dollars borrowed. A purchaser borrowing $1,000 at a 7% interest rate will repay $6.65 per thou-
sand dollars borrowed, rather than $5.36 if the interest was at today’s rate, around 5%.

Cost of Funds by Interest Rate Purchasing Power by Interest Rate

$7.00 $1,200.00
Monthly Loan Am ount
$6.00 $1,000.00
$5.00 Paym ent per per $5.36 in
$4.00 Thousand $800.00 Monthly
$3.00 Dollars $600.00 Paym ent
$2.00 Borrow ed $400.00
$1.00
$200.00
$0.00
$0.00
5. %
6. %
6. %
6. %
0%
5. te

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0%

5%

0%

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0%
0
5
0
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25
62
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In

TO BUY OR NOT TO BUY, THAT IS THE QUESTION

Home ownership is still the “American Dream” and if you plan to stay in one place
for at least a few years, there has never been a better time to buy. Although it is
likely our dreams are more modest than in the past, the great majority of Ameri-
cans would prefer to own their home rather than rent. “Owning a home” may
also have a different definition that it did just a few short years ago. Maybe then, it
meant we were making a mortgage payment rather than paying rent. Now it
means we have finished making the mortgage payments. We have returned to
some “old fashioned values” which would make our parents proud.
This change in perspective is the direct result of an economic cycle unlike any-
thing most of us have experienced. Like a homeowner considering a sale, pro-
spective purchasers have considerably more to weigh than in the past. Have
home values truly passed the bottom or will another wave of foreclosures occur
and take prices down substantially farther? Will legislation continue to limit inven-
tory growth? Will interest rates stay low? Will the first time and move up buyer tax
credits be extended beyond the end of April? Should I buy now or should I wait?
If inventory is well managed, which it is in the bank’s best interest to do, the
worst is behind us. We should not expect double digit appreciation but dou-
ble digit decline is unlikely. Banks are becoming more adept at modifying
loans for distressed borrowers. Their goal is to keep the borrower in the
home; a payment coming in while the home’s value improves. Borrowers are
more motivated to stay the course in an improving market.
Strategic defaults will no longer be accepted by lenders and short sellers will
no longer find lenders willing to forgive the deficit loan amount. We are al-
ready seeing lenders that foreclosed in 2007 begin to pursue the deficiency
judgment recorded at foreclosure. Short sellers in that same time period who
did not obtain a release of liability for their negative equity are now being
sued in an effort to collect the deficiency. Many of these sellers were not
aware that they still owed the money even though the bank released the lien.
Their only choice now is to repay the debt or face bankruptcy. These collec-
tion efforts will discourage some from short selling and further limit inventory.

Many have been rewarded for staying on the sidelines over the last few years but
at some point, the rearview mirror will show a missed opportunity. There is sub-
stantially more information available today than there was when this cycle began.
Depending upon what community within the Metropolitan area a buyer is consid-
ering, prices are still as much as forty percent below their peak. Last year at this
time many were fifty percent below their peak and the year before, sixty.
If your plans include a home purchase in the nearer term, you will be
hard pressed to find better circumstances. The tax credits may or may
not be extended. Interest rates probably will not get lower and will
likely rise. Unless there is further catastrophe, prices will stay flat or
increase slightly. You may, just may, purchase for slightly less. If you
choose to wait however, odds are, that you will pay more each month.

3
CENTURY 21 NEW MILLENNIUM | REAL ESTATE NEWS

SUMMARY
If you are considering a real estate transaction, thorough analysis and competent representation are
essential. We are in a transitioning market. There is potential for profit, as is there risk of loss. If we
understand the underlying facts, we can continue to make good business decisions logically and
without emotion. I am a real estate professional and accept responsibility for keeping my friends,
neighbors and business community informed as to all aspects of things affecting the real estate por-
tion of their holdings.

If you are currently listed for sale, this is not a solicitation. If you have a real estate question, I will be .
happy to answer it, or find the answer. If you have a real estate need, I will appreciate an opportunity
to compete for your business. Our team is very good at what we do… our results demonstrate that.
Don’t settle for less.
JASON CARRIER
Sincerely,
Branch Manager

6641-A Old Dominion Dr.

Jason Carrier McLean, VA 22101

Office: 703-556-4222

Cell : 703-217-8461

Email: jason.carrier@c21nm.com

6641-A Old Dominion Drive

McLean, VA 22101

www.c21nm.com