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

The Latest from Laura - Is a Housing Recovery on the Way?

How nice it would be to say Yes. Instead, the answer is that it all depends. Market success and failures are zip code specific. The media reports national news, so be careful not to paint your house (or your zip code) with the same brush the media is using.

Our market in the general Washington DC area has strengths and weaknesses. The strong markets remain the usual suspects: Washington DC, Arlington County and the City of Alexandria. Fairfax County is too large to generalize; the closer in, the better the market. Given the climbing costs of transportation, those areas will continue to perform well, and will likely enjoy an early boost of price appreciation.

Inventory is key to turning the housing market around. High levels of inventory favor a buyer's market and lead to aggressive price negotiation. Building permits continue to fall and eventually housing inventory, both re-sale and new construction, will shrink. When that happens, we will start to see the recovery of the housing market. Earlier this year, some economists belived that the second half of this year would show real improvement. That optimism has been revised to late this year.

In my immediate experience, there is strong buyer interest in our real estate market. Most buyers are slow to act, and feel anxious that the market may continue to decline. If you plan to stay in your home for at least 4-6 years, then I believe you should consider buying a home. Longer than 6 years is a no-brainer; our market will improve and we will see price appreciation.There is no doubt in my mind.

I believe we are at the bottom of our market in the DC region, as we have already seen the closer-in communities improving. If you would like to discuss your particular situation, or review a value analysis of your home/community, please give me a call. I'd be more than happy to bring you up to date.   

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 - Interest Rates

(This column - The Latest from Laura - will be a regular feature of this blog, with different topics, but always the same reliable source - Laura Fall)

The Federal Reserve has lowered interest rates, there is a general consensus that the economy is in the midst of a downturn, real estate values have corrected since the boom boom of 2003-2005, but mortgage interest rates have been climbing over the last two weeks. What gives?

Interest rates are certainly affected by policy of the Federal Reserve. However, interest rates are highly reliant upon actual investors of mortgage backed securities. Large investors purchase 'pools' of mortgage loans (called mortgage backed securities) - these 'pools' are comprised of similar loans grouped together that reflect: loans with ample down payments; loans with more limited down payments; loans that conform to $417,000; and loans that exceed the conforming limits and are called 'jumbo' loans - and many other 'pool' types.

Investors are skittish about mortgage backed securities as many investors have either experienced or watched the melt down of the sub-prime mortgage market. That is rather ironic because the mortgage loans that are closing in today's market are going through much greater scrutiny with regards to property value (called an appraisal), borrower's credit score (gone are the days when marginal credit scores could still allow you to qualify for a mortgage loan), and loan down payment (say goodbye to 100% financing). It seems to me that investors would actually be flocking to buy the 'pools' of mortgage loans because these new pools represent reason, financial conservatism, and plain common sense.

We are in a period of financial turmoil and interest rates are bound to be up and down, day to day. It is agonizing when you are in the midst of a home purchase: should you lock or should you float and see if rates drop? What you should do is work with a reputable mortgage lender and ask some hard questions: if I lock in, and the rate drops, will my final rate be lower? Many lenders are willing to look at a rate lock with a float down option - ASK THEM! Additionally, if you lock into a loan program and wish to change before closing, from a fixed to an ARM or vice versa, can you get the rate that was reflected on the same day as your lock within the other loan program? The answer is usually yes. Lenders want your business and will work with you to help you obtain the best loan program - it is your job to pick the right lender!

One more comment on interest rates: the leading indexes that ARM adjustments are tied to have been declining. If you have an ARM loan that is coming due for an adjustment, you may be in luck. It is possible that your rate will either go up marginally, or even possibly go down. If you do not know how to evaluate your ARM adjustment, pick up the phone or your keypad, and talk to me now!!

By the way, there was an interesting item in the Washington Post's business section today on the stock market that you might like to read: http://www.washingtonpost.com/wp-dyn/content/article/2008/02/19/AR2008021902463.html