Archive for January, 2008

From The Washington Post: “U.S. home construction last year plummeted at a rate not seen since 1980…”

This is great news for sellers. Think about it. Since the supply of new home construction has gone down and will probably continue, there is an increased likelihood of more people inquiring about existing homes for sale. In other words, when there is less supply, demand for that supply is increased. Additionally, an increase in demand creates an increase in price.

It will probably take some time to see this increase in some markets, so buyers, take advantage of the market now!

Fannie Mae and Freddie Mac say “No more 100 percent financing products on our backs in declining market areas!”

Many lenders, including Fannie Mae and Freddie Mac, are implementing declining markets policies. This is in response to the current turmoil in the housing market. Some parts of the DC metro area are affected, but many are not — particularly neighborhoods inside the beltway. These new guidelines mean the maximum amount you borrow may be reduced by 5%.

If you’re looking for a home, consult with your lender to see if you’re affected. Your lender can tell you whether the property you are interested in is affected by these new policies.

Rob Riggins
Washington Home Mortgage

I’m constantly looking for opportunities for my investor clients and in today’s market the obvious opportunity is in foreclosures and bank owned properties (REOs). But one problem is that the Washington market hasn’t sent that large of a jump in foreclosures.

But when you drill down to look at the actual properties available, a great opportunity presents itself – RESCUE WORK!

Let’s define rescue work – a developer/builder takes on a project and begins the project. They run out of money and the bank takes back the property. You have a property sitting and many times the major structural, plumbing, electrical and mechanical work has been done. A savvy investor can come in with his/her team of contractors and get the property finished in a couple of month, minimizing holding costs and optimizing profit.

THE CATCH – you have to keep your fundamentals in mind – get it from the bank at the right price. The work has to be doable within a short timeframe, the permits already in place, your contractor has to prioritize your project over all others, and you have to make sure that the work already done is up to code. Not so bad!

December 2007 tied June 2007 for our busiest month! I’ve been scratching my head trying to determine what happened and why, and I’ve come to the conclusion that I have no idea. But I suspect

• the mortgage-financing pressures of the fall lifted and more mortgage products came back online
• having interest rates as low as they were in 2004 helped
• buyers in the DC Metro area finally felt confident in the marketplace, recognized fantastic deals, and took advantage of them

I pulled my crystal ball off my closet shelf this morning, dusted it off a bit, and posed the question: what will 2008 hold in the DC real estate market?

My crystal ball told me to stop reading the paper and listening to news reports about the market. Buy if and only if you can afford to buy, sell when you’re ready to sell, and don’t look to the market for answers. Look at your life and your goals and the timing associated with them.

No one knows what 2008 will bring – but I suspect it will be more of the same: confusing statistics, conflicting reports, and many opportunities for buyers and sellers alike.

From The Washington Post: Home Sales Plunge, Feed Recession Fears: “The housing market plunged deeper into despair last month, with sales of new homes plummeting to their lowest level in more than 12 years.”

With headlines and stories like this one, it’s no wonder new home buyers are hesitating to entering the market. Based on these reports, the situation sounds bleak and you’d think buying a house is the last thing you should do.

The scary part to me is that nowhere above does the article say “nationally.” The author has forgotten the adage that all markets are local and when buying in real estate the only criteria you should remember is “location location location.”

The November 2007 real estate trend report for Washington, DC, shows overall sales down 12 percent but prices up more than 7 percent. But if you drill down even further to particular zip codes you’ll see 20002 had in increase in sales of 11 percent with a decrease in sales price of 4 percent, while zip code 20005 saw an increase in sales of 7.5 percent and a sales price increase of 19.5 percent.

Is the upshot not to believe the media? No, but we need to have an eye for how the media can parse statements. Know your numbers for where you want to live. Of course that’s my job to give you the information you need.