Let's Talk Real Estate!

The Good News (for a change) about the Arlington Market!

from Lisa Young

As we brace for the holiday season the real estate scene is usually pretty quiet. Our office, however, is busier than ever! We are thrilled for the business but slightly perplexed by it as we, like many of you, watch the news and worry about the future.

The market may be better explained as a "Tale of Two Markets" with things inside the beltway looking quite different than those outside the beltway. To better understand what exactly is going on, I turned to raw data provided by the Metropolitan Regional Information Systems (our local multiple listing service).

In its 3rd quarter report, prices are only slightly down from the same time last year inside the beltway while days on market (total days a home is listed for sale prior to getting a contract) are steadily declining. Also of key significance, the 'for sale' inventory is down as more buyers are taking advantage of favorable interest rates and fewer homes are being listed for sale.

Outside the beltway the numbers are different, and as gas prices remain a mystery, buyers are opting for shorter commutes making the Arlington market more and more attractive. All this combined with a tighter and more expensive rental market, sturdy local employment conditions and a projected population increase point to a much more favorable year for our sellers in 2009, or at least a more even market.

The bottom line is that there is still a fair amount of uncertainty about the economy and there are, no doubt, many, many potential buyers still watching from the sidelines. The trick is to be ready when they are finally ready to commit. 

(Information gathered from MRIS "Trends in Housing at 3rd Quarter 2008" and is deemed accurate but not guaranteed)

It's Time to Get Off the Fence!

As the economy tanked, and the election rhetoric soared, I stopped blogging. It's hard to share news and ideas when the landscape is shifting every day. And even though nothing is any clearer now (to me) than it was 8 weeks ago, it's time to write about it anyway.

We sent out our Autumn newsletter in late October. In it, we listed 9 properties we had for sale; since then two have gone under contract, but I'm going to write about about the original nine. One was a condo, one a townhouse, seven were single family homes. One was new construction, two were total renovations. Prices ranged from $315,000 to $1,499,999.

The point I'm trying to make is that there are great homes on the market, in good condition and well priced...today's buyers have plenty to choose from. Yes, money is tight with a capital T, but it's fairly cheap and if you've got 20% to put down, you're GOLD in today's market. If you're short on cash, but have a credit rating that's high (720+) you can look at FHA loans. They make you jump through a lot of hoops, but they still make loans with only 5% down, and gifts from your parents can help you with your cash up front needs.

Although you may not make the killing in this market that people did during the boom, putting your money in real estate is still a sound investment, if only for the tax breaks. Additionally, you have a home of your own to decorate, improve, and enjoy while your investment grows.

So if you've been waiting to make your move, this is a pretty good time. Go to some open houses, search online in neighborhoods you like, pick up the phone and give us a call. We'll be happy to help you dive into the real estate market.

Karen

From Coral: Banks...Can They Help Themselves?

Back in December, I had a buyer who was interested in buying a short sale property--that is when the owner owes more than the home is now worth, can't make their payments, and is trying to get the bank to accept the sale at a loss.

The townhouse was listed for $399,999 and my purchaser offered $370K with $11K in closing assistance. We were almost instantly verbally countered by the bank, Wells Fargo, for $377K with $11K back in closing and we verbally agreed. Six very long weeks ensued of being promised we would get something in writing from the bank. Literally every day we were told a new story on why we were not getting the counter in writing, but were assured by our WF contact and the listing agent that this deal was "99% sure to go through."

My buyer and I kept an eye on the market, and eventually started looking for another house to buy. Finally around the end of the sixth week, they rejected our offer, citing some comparable sale that was over $400K. No counter offer, no bottom line, just a rejection.

My buyer has since bought another home, directly from a seller, and has been happily settled for about two months now.

I've kept track of this little townhouse ever since, and see now that it is listed as a foreclosure, with a contingent contract. Listed price: $339,150. Seven months have passed since my buyer originally wrote his offer in December. We were originally going to settle on January 21. That's five months of higher mortgage payments that the bank could have been receiving, rather than 5 months of losses, ending in a price that is sure to be around anywhere from $30K-$50K lower than what my buyer would have paid.

I am not sure what the moral of this story is, other than the banks got themselves into this mess and are having a really hard time getting themselves out. Anyone have a positive short sale experience? Please share!

From Coral: How is your Credit doing these Days?

Do you even know? Nobody's perfect. Things happen and bills go in late, get lost in the mail, eaten by the dog, what have you. But if you want to buy a house, you need to make sure those things are fixed. And not just with the person to whom you owe money, but to the three major credit reporting bureaus: Equifax, Experian and Trans Union. My FICO.com is a great place to start.

Even when you resolve an issue with a creditor, you need to make sure that they have resolved it with the credit bureaus. And if you want to buy a house, you are judged by your credit score. Yes, your income and assets matter. But if you have spotty credit history, get prepared for some very personal questions.

So, if you pay a bill late, immediately call the creditor and play nice. Beg, plead, and give all kinds of personal reasons for why it was late, promise to never do it again, and then ask them if they can please not report you to the credit bureaus. If they have already, and agree to "forgive" the late payment, you need to file a dispute with the credit bureaus.

If you have something long standing that you delayed paying, like taxes, and it's on your credit report, don't assume that once you've paid it , it has been taken off the report. Sometimes you have to ask several times.

This has happened to me personally: a credit card I had paid off was simply not removed from my credit report. It showed a full balance and a monthly payment that did not exist. I had to call the creditor and say "please take this off my credit report." And then they did.

The most important thing you should know is this: You are the only one who will look out for your credit. Check it once or twice a year and resolve any issues on it, big or small. There are almost always mistakes, and it's your job to clean them up. If you're diligent about this, then when you need for your credit to be stellar, it will be.

It's time to Stop Renting & BUY!

Rents for U.S. apartments increased 1% in the first quarter of 2008 for the 24th consecutive quarter...that means there hasn't been a decrease since early 2002. Why do so many people rent? Right now, the soft housing market combined with tougher loan terms have combined to drive potential buyers into rental units.

Are you a renter? Maybe it's time to jump into home ownership. Here's a calculator to help you look at your specific situation -- "Buy vs. Rent." Some of the reasons to invest in a home are financial: tax breaks -- you get to deduct loan interest, property taxes & some of your purchase costs; equity -- money paid for rent is money you'll never see again, but mortgage payments let you build equity ownership interest in your home; savings -- building equity is a ready-made savings plan, and you can take up to $250,000 ($500,000 for a married couple) as gain when you sell, without paying any federal income tax.

Some other reasons to buy are predictability -- unlike rents, your fixed rate mortgage payment won't increase; freedom -- your home is yours, and you can decorate as you like and improve your home to suit your needs; and stability -- living in the same neighborhood for several years allows you to make friends, participate in your community, and keep your children in the same school system.

So take a look at your finances. Speak to a lender and decide what you can afford. Make a "wish list" of features you'd like in your own home, and then prioritize them -- your must-haves, your desires, and your dreams. Choose neighborhoods that you like. Get your credit in order & start saving with purpose (it's really easier to save when you have something specific you're saving for).

If you have any questions, we are always here to help you. And we can hook you up with lenders that can clarify the numbers for you...with no obligation. Before you know it, you, too, will be on the way to home ownership, and leaving your landlord behind.

The Latest from Laura - Increased Loan Limits

Increased loan limits for FHA, VA and conforming conventional loans have just been announced, and the greater Washington DC area will be allowed to go to the maximum of $729,750. Let's not forget that there is a sunset on this announcement -- December 31, 2008. If it is successful, and if our economy is still suffering, then the Feds will hopefully extend this.

For the last several years, FHA loans have been limited to those loans below $360,000. That limited would-be buyers to low cost areas or condo purchases. With the new limits, first-time buyers in Arlington, McLean, Falls Church and other close-in areas can purchase a home or townhome with FHA financing. FHA loans are insured by the Federal Government. For that insurance, buyers must pay MIP (mortgage insurance premium) on all loans, regardless of the down payment. The downpayment is extremely generous with a minimum of 3% down, and most of the MIP can be added to the loan amount, resulting in a higher tax deduction because you are paying interest on the principal plus the mortgage insurance.

In addition to the low down payment, FHA allows non-occupying co-borrowers (Thanks, Mom and Dad!). The borrower who does occupy can rely on the other person's income to qualify for the loan (with conforming loans, there are ratio requirements for the occupying co-borrower -- not so with FHA). This is fantastic for parents who want to help their adult child buy their first home; or parents can buy a small home for their student child to live in while they complete their education. If you are going to pay for housing, why not own it?