Please post your local house search updates, MLS finds, on-topic ideas, and links here.
In the news: Fannie Mae easing rules for refinancing:
"Fannie Mae will drop some credit-score requirements, reduce income-documentation standards and waive the need for appraisals in some cases, according to a notice yesterday to lenders posted on the Washington-based company’s Web site. The changes apply to loans that the company owns or guarantees. . . . The company’s DU Refi Plus program will start April 4."Here's a link to Real Estate Live today at the Washington Post. Let's see if Cara's stimulus question gets answered.
72 comments:
Great... Fannie Mae to birth more mortgage zombies revived from the pool of should-be-dead-already borrowers.
Compared to this, the republican's plan of trying to convince everyone to "sell now there will be buyers, we gave them 15k each!" sounds genius.
No surprises here...
TARP Shortchanged Taxpayers by $78 Billion
“The loss estimate is conservative,” said Representative Alan Grayson, a Florida Democrat on the House Financial Services Committee. “It could turn out that those assets in the end are worthless. These are massive handouts to favored institutions to try to make up with taxpayer money the mistakes they made with investor money.”
This place has gotten substantially active!
Way off-topic, but it amused me this Friday morning.
Bill Gates releases more bugs on the world.
I must rant about the appraisal situation a little more, forgive me:
So our beloved house is on 11 acres on a rural road. It's 10 years old, Cape Cod, just over 3000sqft above grade, another 1500 in the basement, no "upgrades." A little bigger than the house we are renting now.
Here's the comps Mr. Appraiser-for-the-unreasonable-seller used:
All in "luxury estate" neighborhoods on 10 acres in a different part of PWC:
House #1
6500 total sqft
inground pool, barn, 4 years old
House #2
8100 total sqft
sold for $1,044,251 new in 2005
House #3
5500 sqft
new construction
And I was flummoxed by OUR appraiser, who used sales from last summer, a house that is still for sale after a year, and places in Gainesville (we're in Manassas).
If only I could post pictures, so you could see our cozy farmhouse next to the "luxury estates" that are supposedly comparable.
On top of all that, the $/sqft for the three properties were $159, $121, and $191, respectively, for an average of $157. What $/sqft did the appraiser use for the house we are trying to buy?
$198!!!!!!!! So it's worlds better than custom-built luxury homes?!?!
Are appraisals really just a bad joke?
Posed to the WaPo discussion group, we'll see if they take it:
Who do you think would benefit if the 15k tax credit to homebuyers passes, buyers, sellers, or banks? (it goes without saying that real estate agents benefit)
How much of a distortionary effect do you think it will have on prices, 1 to 1 increase of 15k higher sales price? Next to none as the downward momentum is unstoppable? Or as much as $75k increase in purchasing power by those who already have 20 percent down saved, and can now put 20 down on as much as a 75k higher price?
Tabitha, thanks for sharing, that's just evil.
Wow! Has anyone been following Falls Church? I hadn't looked at it for a long time and just assumed that it was holding up about as well as Arlington and Alexandria. But condos, at least, look to be cratering! I mean, $68,000? That's more like Manassas or Woodbridge than the Falls Church I remember... Admittedly, that's probably not a great example, but there are some decent-looking under $150,000 condos within walking distance of the metro.
Looking at single family homes, of course, there still seems to be a lot of denial, with even the banks trying to get nearly the full assessed value for repos.
But I think the traditional weakness of condos in a down market is finally beginning to reassert itself, as people realize all over again why they can be so problematic to own: the reluctance of banks to lend if rentership is above a certain percent, the special assessments if fees have been too low to cover long-term maintenance costs, the non-payment of fees and assessments by struggling owners, thus raising everyone else's fees and further dissuading would-be buyers from purchasing.
And when the condos fall far and fast enough, the single-family homes will start to follow suit, once the differential becomes striking enough.
Cara,
That was an unfair question to the nice WaPo ladies. I think it goes beyond their pay grade. :-)
Let me guess the answer -- stimulus is good. I'll post a link to the chat today.
Tabitha,
What is the difference in the tax assessments of those properties by the county?
It sounds like the market is going to have to work this one out -- but even so there will be another appraisal done for the next buyer -- it could get dicey then depending on the lender's choice of appraiser there. I would think the sellers would be aware of that.
Do you think the sellers would compromise at a sales price in between the two? They would save a ton of money in realtor fees. Or would your type of loan prohibit paying any more than the appraisal?
I think this deserves a sticky.
http://www.walletpop.com/blog/2009/02/05/consumers-blindsided-by-experian-on-credit-score/
Not to thread jack but seriously my tin foil hat is about to put on.. what the same hell is this about.
"
At a time when it's so important for consumers to monitor their credit scores, Experian, one of the three credit reporting agencies, has decided consumers are not entitled to see their FICO scores based on their Experian credit file. I did call Experian's press office for a comment, but have not yet received a call back.
Federal law only requires that the credit reporting agencies make your credit file available, there is no law stating that you must have access to your credit score before applying for a loan.
Beginning on February 13, you will only be able to get Equifax and TransUnion credit scores on myFICO.com. When you go to myFICO you'll see a banner headline about the cutoff by Experian. According to the notice on myFICO's discussion boards, Fair Isaac says, "It is important to understand the majority of lenders will continue to use FICO scores based on Experian data to make creditworthiness decisions, but those FICO scores based on Experian data will not be available via www.myFICO.com, nor any other public venue."
Fair Isaac, goes on to tell lenders, "Fair Issac is dedicated to offering FICO Scores to financial institutions via all three of our bureau partners to provide the most independent and fair representation of a consumer's credit picture. . .To meet consumers' credit empowerment demands, Fair Isaac will continue to offer both Equifax and TransUnion credit management services through our myFICO.com website."
Given that Experian advertises the most on TV pushing their website FreeCreditReport.com with the singer whose credit score got ruined, it's ironic that they would close off access to this important piece of information. You can see comments about the change on the forums at myFICO.com. Here's one excellent comment from that board: "The conspiracy theorist/paranoid side of me wants to think that this is EX giving into pressure from their lender customers, who, without an informed public with any real visibility into their own credit scoring, can approve, reject and set rates with little or no explanation to the applicant other than the standard "due to information in your credit report" bit."
That comment describes exactly what did happen when consumers could not see their credit score. Without full disclosure of credit scores lenders can play games with the credit offers they give you. Right now you're only cut off from Experian's credit scores, but if they get away with it, I'm sure the other credit reporting agencies will follow Experian's lead.
If you want to protest write your Congressional representatives. Congress needs to make it a consumer's right to see the credit scores used to make lending decisions. Right now a lender must give you your score when you apply for credit, but that score is given to you after you have gotten a credit decision. Consumers need to see that information before they start applying for a loan.
Lita Epstein has written more than 25 books including the "Complete Idiot's Guide to Improving Your Credit Score" and "Surviving a Layoff: A Week-by-Week Guide to Getting Your Life Back Together."
Tabitha - Do you think the sellers know that you love the house? Maybe the husband thinks you're desperate to own it since you sought them out before it hit the market. It could also be a side effect of the marriage breaking up - perhaps the wife wants to sell quickly and this is an act of spite on the husband's part. It seems like there could be a lot going on behind the scenes.
With an appraisal that crazy it almost seems like the husband pushed the appraiser to come in high.
It might help if you bring some of the analysis you've shown here to the husband. I'd guess that he's not really aware of the market and if he sees that you know what you're talking about he's less likely to try and pull something over on you.
Sarah, that doesn't surprise me at all. I've been checking the prices there for some time, and noticed they're substantially lower now. This correction - for whatever reason - seems to start in the outer regions, and migrate inward like a pandemic disease. Except the disease is the bubble dreamland that still exists in Arlington and D.C. The cure has passed through PW County, is moving through Fairfax County, and is going to fix Arlington too.
The_Nothing,
thread-jack away!
For a non-nefarious explanation:
On NPR the other day they were saying that Fair Isaac was changing how they calculate scores. Perhaps, Experian is taking down it's credit scores so that they have time to adjust to the new norms? (Fair Isaac was adjusting the rules such that one isolated missed payment is less of a ding for example).
how FICO scores will change in 2009
And it's odd anyway, because lender's just take all three credit histories and run it through their own scorer anyway. So the transunion, equifax and experian credit scores are just guesses anyway. Useful guesses, but lender's have to point to something on your credit report anyway to justify the score, and those you still have access to by law.
lol @ Harriet
That was an unfair question to the nice WaPo ladies. I think it goes beyond their pay grade. :-)
I know Real Estate live must be moderated with a heavy hand because I can't believe that more people don't question much of their "advice".
Also, has anyone seen this article on the "Mo Mod" Obama is planning?
An algorithmic mortgage processing program will decide home values.
Cara
I hope your right.. and its not a sign of things to come. I would like to think were not that corrupt and that they aren't testing to see if we are paying attention.
And to your question... Cara. Right now we are window shopping ..and looking at a house in pw. Extremely affordable and nice house btw. If we do decide to pounce on it we will offer 15-20k lower than the listing. As there is are brand new houses in walking distance that are 20k more than the house we are looking at.
My thought process is...
New house - 22k (15govhelp+7krebate) = old house asking price.
If they want to keep their asking price.. thats fine. Well just buy the brand new one. ;-)
Hence... drop the damn price by 20k to compete. And as a bonus we will knock it down another 20k with the gov help.. get a nice low apr loan and a rebate through our lender for even more money off.
Depending on where the location of the house is.. and the new housing around it, sellers could raise prices. However it would have to be across the board. And if that were to happen, it would be polarizing and not really fulfilling the purpose of the government help.
LOL imagine that .. if everyone raised prices by 20k, right now... during a dep*recession. WHen people could care less about housing.
It could happen. If greed and pride override common sense. As i would imagine those employed with surplus funds would simply buy popcorn and wait and watch the inevitable.
Cara.. the sideliners hold all the chips. If we sit.. they starve and die or I should say drop prices. We don't have to play the housing game anymore. Don't have to give 6+% commision. Hell people don't even have to pay on their mortages right now lol. Systems broken, it can break down further.
Pride and greed got us here. Pride and greed can keep us... err them there.
Sarah,
Condos are a good bet in alexandria. Not so much in fall church/leesburg. At least until they expand metro. The condo market will be dependent on how bad the brac and gov spending/slashing affects crys city, leesburg and locations similar.
now that buscho is out of office don't expect gas to be a deciding factor for commuting. Just gov spending... this area is special in that way eh.
I also hope your right.. or i should say your theory moves a little faster lol. As im sure your right. When/if we see another round of layoffs in the area happen expect fairfax to take a major hit in the future.
More whisper numbers out across the river.
Montgomery
lists - 4273
sales - 366
MOI - 11.67
C&C - 636
DC
lists - 3120
sales - 242
MOI - 12.89
C&C 340
Just like November, it looks like whatever just hit Arl & Alex hit everywhere areawide. Montgomery & DC are once again at max distress levels. 636 C&C in montgomery is an absurd number of uncompleted contracts.
I should say, DC especially looks weak. Montgomery is finally starting to shed inventory YOY, but in DC it is still building. Year 2008 Median prices, likely to come out very soon will likely show DC prices up again, suggesting it is the strongest market out there. I disagree.
In doing my low end/high end comparison, it looks like DC is the only local area that is having a hard time selling cheap inventory (skewing medians up). This cant continue forever, once that cheap stuff starts to sell, I expect medians to come back down --- essentially giving back all the price "gains" made in 2007 & 2008, and then some.
Its hard what to make of this. We saw this exact same looming disaster last January, and then it dissipated over the spring & summer. Will it happen again, or will this distress (present in 2 of the last 3 months) be the emergence of a new trend? I for one am very interested to see!
@Jason
Your article hurt my head.
"The 21-day "Mo Mod" program works by structuring a new mortgage that more accurately reflects a home's worth so that a troubled borrower no longer owes more on their home than the property is worth.
The process then enables a lender to pool these new mortgages together into securities that reflect more accurately a home's value, which makes them less risky for investors."
Bizarro world continues... they are really determined to keep up the home values in this area. *You do realize some politicians retirement nest egg nova houses are at stake*
Seriously... i thought they were gonna help out a little and then butt out. They really want things to go back to the way they were lol. They scare me ... enough to go back to my bullion dealer in MD and buy more gold.
Seriously who in their right minds will buy those securities? They really think stabilizing housing will create jobs. Can someone explain that to me? If you have no job, one can't pay their mortgage. It would only make sense to create jobs... that create paychecks ..that create spending.
Jason... "this is madness" (300 voice) They are playing hot potato. I guess those pre school games do come in handy later in life.
Maybe they haven't figured out that the sharks smell blood in the water and they don't like being given strange meat. Only regular hunting and killing...
Pride and greed... oh wellz
the Nothing /Jason
it's the NY Post, (i.e. one step up from the Enquirer, okay maybe 2 steps). I'd wait to worry about it after it's gone through. The TARP committee is meeting entirely behind closed doors, so I'm not sure I have any faith in the rumours. They might indeed have discussed it, that doesn't mean it will happen.
I guess we will know for sure Monday when they claim the plan will be unveiled. I think it's inevitable that we'll see some sort of mortgage modification plan, but I'm worried about how it will be implemented. If a loan mod reduces the principal owed, that's not reflected in the sales price on record, correct?
jason,
Thanks for the heads up on this.
Actually a loan mod with a principle reduction would be entered into the public records and thus made useable for comps. We discovered this when we discussed this possibility last summer some time. If they were somehow going to try to keep that information secret, that would indeed be even more concerning.
@Jason
If they wanna play it straight up... then we should only see true housing values as asking prices. Regardless of the mods. The seller should still be on the hook for the leftover amount of their 50 year 5% fixed rate arm loan. Still tho, Jason if you don't agree with the asking price knock it down 40k lol for the 20k inflated price and the 20k that you should ask for off originally.
However we haven't played it straight yet so don't hold your breath.
To me it sounds like they are trying to starve/wait the market out. While playing the numbers game.
If they stabilize the foreclosures people can stay in their houses and put them on the market for longer periods of time without dropping prices.
Thing is with everyone losing their jobs how low can you modify a housing payment for those on unemployement lol.
How can you fund unemployement, modify loans, collect taxes and fund these rebates/gov assisted purchases, via unemployed US workers?
When one asks how you can create money from thin air... you start to see how big of a quagmire we are in. They can print money but that will lead to inflation.
Jason are you window shopping or definately commited to buying this year.
the_Nothing : Falls Church is inside the beltway and has two metro stops (orange line)
@ cara
How could they keep that info secret? Just brainstorming. Seriously the fact that we are having this discussion is sad. Do you think they would keep it secret?
Dunno if it would matter in the grand scheme of things tho. I would like to think savvy house shoppers are the only people left right now. Hopefully we would all low ball.
I wonder what legal recourse consumers would have to release that info..
@nova watcher
you are very much correct
I am quite familiar with the orange line stops and taking the bus to tysons from vienna or vatech. But if they were to extend it in farther out...were the newest cheaper condo's are would help those values to stabilze and possibly trickle inward..
but then again if the brac swallows up jobs in tysons you never know..
tabitha said: "And I was flummoxed by OUR appraiser, who used sales from last summer, a house that is still for sale after a year, and places in Gainesville (we're in Manassas)."
Maybe appraisers these days don't realize that "comparable sale" is not an either/or term. It's a dual criteria; it must be comparable and it must be a sale. A house that is still for sale isn't a sale and a house far away isn't comparable.
This is the kind of stuff that makes me want to ram my head into a wall. Can you believe people get paid to produce such rubbish? Amazing.
As an aside, I do not believe the benefit of the $15k tax credit, if enacted, will accrue to sellers. I think buyers have wised-up enough to realize that, by in large, they are in the drivers seat at this point. I can't see many buyers voluntarily agreeing to pay an extra $15k or more above the going rate for a house just because they are getting the credit. Just my gut feeling.
@ the_Nothing - I am not committed to buying this year, although I have the means to jump in the market should an opportunity present itself. My situation is similar to many I've read on this blog - I have a sizable down payment saved up, excellent credit, steady employment, but I still believe prices are too high. I rented in Arlington for 7 years until last year, currently I'm renting in DC and my lease is up in June. At this point I'm more interested in buying in DC or MoCo since Arlington is out of reach (even though I work in Arlington). With these mounting job losses I can't foresee a bottom anytime soon, even in this "recession proof" area. I personally know people who have been laid off, and sadly these economic downturn seems like it's just warming up.
@Jason
We are in the same boat different locations tho. I do have an old coworker in mo co. He loves it. It sucks every time I talk to one of my friends and they say they got laid off. My job is semi secure but it still makes me think.. even more so if i would part with some funds to help out family... or buy a lot of gold lol. Seriously, i worry sometimes that the bottom may fall out on a grand scale. But were much more advance now... right ??? :-/ Ill be worried when starbucks goes belly up completly... or GE lol.
I would imagine your a fan of shorter commutes with more time to enjoy life... than a bigger house and more time with xm radio?
Thanks for letting me vent. I am rather bitter. $350 is a lot for our family, and my goodness, did we ever just waste our $.
To those who asked:
This is a unique situation, to be sure. The house was for sale for 6 months last year, and went off the market in June. I just wrote a letter to the owner, asking if they were still planning to put the house on the market. She replied immediately, and said yes. She and her husband had been separated for some time, and had tried to sell last year.
Of course, under those circumstances, it is obvious we want the house, so we did not play coy, and just made our offer, backed up with my endless spreadsheets and charts and graphs and calculations and...you understand. I knew at least one of the two would be a tough nut to crack, because the asking price last year was more than $200K higher than tax assessed value, and three times what they had paid 10 years earlier. (No mortgage--I checked county records.)
The lady accepted our (quite reasonable)offer immediately. Her husband wanted $100K more. The dueling appraisals were in the hopes of convincing him our offer was, in fact, reasonable. Our appraisal came in higher than we expected, but he still would have cleared about $25,000 more with us than if someone else paid full appraised value, due to transaction costs. HIS appraisal...well, let's just say it happened to come in right around his dream price.
I did all the math for them again, showing that even with conservatively estimated transaction costs, their net profit would still be just barely above selling to us right now IF someone paid their full asking price...which won't happen, because nothing is selling anywhere near $198/sqft in the Manassas area. The lady is pulling for us, her husband is pulling for bigger bucks. What can you do?
Harriet, that's the problem: his appraisal rightly or wrongly gave him the justification to find a better offer than ours. He didn't want middle ground--he wanted to be right.
I agree that there are probably plenty of other issues going on. But I really honestly think this guy is acting against his own self-interests. If county assessments really drop another 30% this year, their tax assessed value will be $100,000 less than our offer. The end of February can't get here fast enough for me.
The lady said she will let him put it on the market for a limited time, like a month, to let him try to find someone else. We'll just watch and wait, I guess, unless something else super-fantastic presents itself in the meantime.
Always so much drama...
@ tabitha
Sometimes i wonder if those people take money under the table or get tax breaks or something.
If fact i have an aunt that was an appraiser pre katrina in new orleans.. ill ask her how corrupt her coworkers are.
$198 *shivers* Gotta keep that tax revenue coming right?
How many other "Luxury homes" in that area are on the market @ 50k-100k more than your target home?
If there is a lot of inventory that may work out for you. As they start to drop prices there's no way on earth they can justify the appraisal wouldn't you agree?
then again.. greed and pride reigns in bizarro world... What were the recent sales in that location looking like?
@ tabitha again..
Divorce houses rock.. Greed and pride suck.
You never know what will happen in the future. Someone might get laid or.. arm might adjust or she might get fed up and stop paying the mortgage.
Do they sound desperate yet? Like... omg i 6mnths i want to be divorced from you and i can't afford this note on my own desperate?
Tabitha,
I've heard a similar story before -- in another divorce case where the house sat in limbo for three years with the wife and kids feeling stuck in it, because the husband wouldn't budge on the price. Also, the HOA had to raise everyone's dues because of the legal bills associated with the property. Aaagh.
I wouldn't stress about the lost money for the appraisal. You tried. And you will be able to wait and see.
I thought of your kids playing in the beautiful yard on this property, but perhaps it is too far away from VRE.
Tabitha,
how about once it's on the market we overwhelm this guy with 'LOIs' expressing desires to buy at your appraisal number, to knock some sense out of his greedy mind? seriously the market is full of such listings wasting our precious time!
best of luck!
OT -
we've decided not to renew our current lease and are apt shopping again (it's so stressful!) i know this came up before on this board, but i'd like to ask again: is there a way to find out whether the owner is current on their mortgage if we rent from an individual owner/investor? i'm looking at two Arlington rentals and they're both relatively new so it's unlikely the owners own them outright (but there's always HELOCs). i thought about asking their HOAs but don't think they'd give out such information.
Harriet,
I have that house on my "watch" list, but it is a hike to the VRE from there. My poor husband's commute would be LONG.
MM,
The plans are already in motion. This guy doesn't know who he's messin' with.
All,
Just think about this again. The average $/sqft for the almost-new, "luxury estate" houses with all the bells and whistles on 10 acres: $157. Our offer's $/sqft: $162. His desired price: $198/sqft. And he found an appraiser to agree.
ugh.
MM - I gotta ask, did you even consider asking your current Landlord for a month to month with a 90 day termination? If you were a good tenant, most LL I know will take that over having a place vacant and the hassle of relisting. Plus it saves you the hassle of moving & gives you flexibility if you find a place you like.
Nothing:
Here is just a tiny sampling of bigger and nicer houses on large lots asking less than $600K:
http://franklymls.com/PW6974963
http://franklymls.com/PW6959482
http://franklymls.com/PW6953807
http://franklymls.com/PW6930143
http://franklymls.com/PW6929346
http://franklymls.com/PW6951219
http://franklymls.com/PW6906183
http://franklymls.com/PW6962803
http://franklymls.com/PW6968092
Don't even get me started on the ones in the $600Ks, which is where Mr. Man thinks his house belongs.
Tabitha - this appraisal issue isnt uncommon especially when one party has a vested interest in showing a particular price. Thats why when I know something is going to be adversarial I prefer the 3 broker method...just keep that in mind if you end up down this road again.
The other thing I need to caution you about is the fact that the divorce can really mess with things. Often times, when the divorce is messy, the one party will screw with the other on this or that as leverage. I.e. He knows she wants to sell the house, he wants her to waive alimony, he will try to muck up the sale til she waives alimony (or some other similar nonsense).
It is amazing what people can do to screw with each other. Were they just to get along, they could divde everything, get max $$$ out of it, and move on. Instead what often happens is parties dig in, use every little thing as leverage (a lawyer in my office once had a hearing over a star wars DVD collection for god sakes), and everything gets frittered away in legal fees and the like.
Just be careful in dealing with them. They may be more interesting in hurting each other than doing anything, resulting in a colossal waste of your time...
Nothing,
One last thing, then I need to stop neglecting my kids:
Sales on 3-10 acres (all from last summer, before the economy fell apart):
$560K, $567K, $467K, $575K, $570K, $535K
Most similar nearby sales since October:
$515K, $432K, $515K, $599K, $527K, $450K
(on fewer acres, but much bigger/nicer houses)
According to my spreadsheet, the average $/sqft for houses on more than one acre of land that sold since last June: $135, with a range of $116-$191, with the highest value a true outlier.
CRT,
Thanks for the caution. My husband has handled some divorce issues as a lawyer for the Marine Corps, and we know how crazy things can be. We won't wait on this house. Thankfully, it has a tiny kitchen, so it's not perfect, but it's close enough to perfect to make this painful...but not impossible to turn away.
What I meant was...we have a little time before we "need" to start making offers elsewhere, so we can see how things develop for now. He has not been living there for over a year, so he is not getting any benefit from the asset as it stands now. How long can he wait? How long until self-interest wins out over stubbornness?
One thing's for sure...he's going to need to feel like he's gotten the last word. We'll need to work on that.
john fontain, (et al)
Okay so I calmed down a bit on the 15k from the government translating into 75k higher home price.
(and by higher, I don't mean they jack the price up, just that they don't drop it as they otherwise would have to, and have been doing)
My logic (today) being that only people in my exact situation, who have 20% available for a home price 2.5 times their income, but not for a price 3 times their income would be in a position to leverage the 15k into a 75k increase. So basically it just moves people who have been saving already a little bit forward in time in their ability to max out their home price. (btw, I'm only using 1 of our 2 incomes in my calculation)
So, for those looking in my market segment, i.e. under 300k, the relevant question is how many of them have 20% down. And I haven't looked it back up, but I'm pretty sure somewhere between 60 and 80 percent of purchases in the under 300k category put down 10% or less. Thus, the multiplicative factor for the 15k subsidy is unlikely to be greater than 1.
However, for the lower end of the move-up market, i.e. 400-500k you have alot more people with 20 down who might be tempted to go for that bigger/nicer home for 75k more and that will prop prices up.
I, unlike the_Nothing, am not convinced that only savy buyers are left. A new hire at work popped into town for 4 days and put an offer on a house for $340k south of Huntington. Just like that. So, there are still buyers out there who are buying simply because now is the right time for them, and not participating in our stare-down.
Cara,
Good. We need knife-catchers, otherwise the market stalls, and that's bad for everyone.
I've posted townhomes in this neighborhood before, but this is a new record for an initial asking price.
Depending on condition, that seems like both a reasonable price for the location and quality, and an affordable price for almost anyone who'd want to buy it.
Heck, it's affordable for me, but I don't want to get stuck in a TH and with a HOA.
@ Tabitha
*sighs* i hope your coworker does a little more research on groveton before moving..lol. Thinking about it..those townhouse/condo things were in the 290's last time i looked. I lived in huntington when i first moved up here... meh. If she's going for a townhouse.. they are below 300k also. If its a SFR for 340... i don't wanna know what it looks like lol.
Honestly those kinds of buyers aggravate me. Patience is a virtue. She will feel bad when cameron station and kingstown become affordable if she's in it for the short term.
I will say a lil prayer for your situation. When spring hits.. reality will hit. And hit hard. I would suggest to keep a dialog up with wife. Divide and conquer may work out.
Pride destroys a lot of families/people. Give it some time, they have plenty of competition. Something will give if they are serious about getting divorced and out each other hair.
They might have a lot of funds to weather the wait as they have for 6 months... do they have another 6 months of funds.... hmmm
Check wapo from time to time.. maybe someone will default at some pt.
my future co-worker is a he.
Yes, we do need knife-catchers. And I can't really say his purchase is a bad one, it's a 3/2 SFR on 1/2 acre. For $340k that's an appropriate price right now, for something that looks decent. (the junky ones in Franconia Springfield are asking $200k now).
That Woodbridge property cracked me up, because it invokes Redfin's warning that they won't do business on places with list prices under $175k. Make me laugh.
Cara,
I saw that for the first time today. I've been looking at tons of properties in that range too, but I guess I never paid close enough attention.
I think Redfin may well be finished before it's really begun if that's the case long-term. We're going to see far more properties under $175K than we will above. (Across the nation--I realize Redfin is selective in the areas they service.)
Cara,
Probably stupid question here. I am reading about people advising to have 20% downpayment saved up and forth.
By my calculations, I can afford to buy a house for 230k based on current income (3X gross income) and I only have 10% down-payment saved up with only a car payment loan. Yet when I was in the market for a home, Bank of America said this is more than sufficient to qualify for a FHA loan.
Is there something wrong with FHA loans that only require 3.5% down?? thanks!
NovelReader,
I'm in about the same situation you're in. Looking to buy a ~300k house, have ~20k in the bank plus another ~15k available. But I'm far short of the $60k+ that I need for the 20% down. My lender said it basically doesn't really matter what I put down if I can't afford the 20%. So I guess I'm just going to put 11.5k down and keep the rest of the money for emergencies or whatever. Would appreciate any other advice anybody has to offer.
NovelReader,
There's nothing wrong with FHA loans. There's nothing wrong with having as little as 3.5% down. It's just that you pay for this with either private or FHA mortgage insurance. The thing is, that the mortgage insurance premium is like 0.5% on the total mortgage amount, so if it's only covering the 10% that you were short you could think of it as if you're paying an additional 5% interest on that missing 10% down...
There's nothing wrong with that. It's just that it's a high price for a small sum of money. And even with the current low interest rates, if you get a 30 year loan it takes a very very long time to gain any equity. Especially if realtor's take 6% off the top at resale. A friend of mine bought a condo 5.5 years ago (because she couldn't find another roommate to keep rent cheaper than buying) and put 3% down, she only owns an additional 5% of the property now, so could barely cover transaction costs if she had to sell for her buying price.
Whereas, at ING and other places your DP is earning interest. So, in a market that's going lower anyway, why buy now, when you'll just be renting from the bank and the realtors for at least another 5 years, when it would only take 2-3 years to flesh out the DP fund with interest free money? Buying with 3.5% to 10% down is only an asset to buyers in an appreciating market, where price increases can be counted on to cover realtor costs.
I saw this on USNews.com. Thought it might be helpful for people who still had some questions on the proposed $15K housing tax credit.
The $15,000 Home Buying Tax Credit: 6 Things to Know
February 06, 2009 03:15 PM ET | Luke Mullins | Permanent Link | Print
A number of readers have written in asking for details about the home buyer tax credit amendment that was recently added to the Senate version of the economic stimulus package. The provision, introduced by Sen. Johnny Isakson, a Republican from Georgia, would provide a tax credit of as much as $15,000--or 10 percent of the home's price tag, whichever is less--to anyone buying a primary residence during a one-year period beginning on the date of enactment. After reading through your questions, here's a list of six things to know about the amendment.
1. I recently bought a home and qualified for the $7,500 new home buyer tax credit. Should this provision become law, would I qualify for it well? The short answer is no, says Rob Dietz, an economist for the National Association of Home Builders. "The effective date of the…amendment is the date of enactment," Dietz says. "So if you've already completed a purchase, you would not be qualified for the new program."
2. Isakson's press release reads: "The amendment would sunset the current $7,500 housing tax credit on the date of enactment." What does the term "sunset" mean there? In this context, the term "sunset" means that the $7,500 new home buyer tax credit would be supplanted by the proposed $15,000 credit, which applies to all home purchases--not just new homes. "If you are operating under the $7,500 [credit], that's the one you [have]," says Joan Kirchner, Sen. Isakson's Deputy Chief of Staff. "Then, from the date of enactment forward, the new one takes over and nobody else gets the old $7,500 [credit]."
3. What are the odds of this provision becoming law? The $15,000 home-buying provision is a component of the massive--and increasingly controversial--economic stimulus package. The House of Representatives has already passed its version of the stimulus bill, and the White House is putting pressure on the Senate to do the same. However, the size of the package--which now totals more than $900 billion--has prompted some Republic Senators to try and slash provisions to lower the tab. Still, Kirchner argues that the $15,000 tax credit enjoys strong support from the National Association of Realtors and the National Association of Home Builders, and will remain in the stimulus bill that is signed into law. "Because of the way that it was adopted--unanimously, they didn't call a roll call vote because both sides agreed to accept it--this provision is in," Kirchner says. Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, also predicted that the amendment would make it into the final package. "It’s a targeted solution that will address housing as well as taxpayers--both of which need help," he said.
4. Does this tax credit need to be paid back? Nope. That's a key distinction from the $7,500 first-time home buyer credit, which was "actually a 17-year repayment, which translates into a no-interest loan," Dietz says.
5. Is there an income limit or any other restrictions on participation? The tax credit would be limited to primary residences and does not come with an income restriction, Kirchner says. "You must occupy [the property] for at least two years as your primary residence," she says. It applies to "any home, meaning a condo, a house, foreclosed, new, [or] previously owned."
6. Can I take the credit during tax year 2008? Yes, says Chris Cook, a legislative assistant to Sen. Isakson. Even if you buy a home in 2009, the provision would enable you "to file your taxes as if you purchased your home on December 31 of 2008," he says.
kevin,
Your banker is essentially correct. If putting 20 down is either impossible or would put you in financial danger (i.e. eat up your emergency fund) then there's no point in putting more than 3.5% down.
The reason to keep saving is because in 2-3 years those places that are 300k now will be 225 or less, and you'll be able to decide whether you want to stick to 300k and get something much nicer, or get a nice cheap place that you can comfortably afford with plenty left over for vacations and cars and toys and whatnot.
The low-money down was designed for low-income folks and places where rents were exorbinant relative to purchases. If neither are the case for you, then the painful waiting plan is the way to go (says me who's nearing the other end of the crazy saving half our take-home plan).
But if 15k free money comes to pass, you'll have to factor that in for yourself.
CRT,
i thought about your 90-day idea but then i looked at the listings, and just couldn't see them coming down to my price range anytime soon, or even in a year. but at least i could find something cheaper and save. but yes moving is very stressful, and i guess that's one of the reasons people own.
NovelReader:
I'm in the exact same position as you and I'm going the FHA route.
The only downside to the FHA is the up-front 1.75% "funding fee." The upside is that this can be rolled into the loan (i.e. you don't need the money up front). Also, if you sell within 5 years, you get a pro-rated amount back.
The other downside is the monthly MIP insurance (about 160/month for a 350k purchase). Remember though, if you don't have 20% down, you will have to pay mortgage insurance no matter if it's an FHA loan or not.
Another downside (I guess there is more than "one") is that the FHA interest rates are a bit higher. From the quote's I've received, its about .5% higher than for non-FHA loans. Why? Who knows. (I've been quoted several times at 5.5% for 0 points FHA loan).
-Pac
The more you put down, the lower your interest rate, to a point. Even putting 30% down can get you a lower interest rate than if you put only 20% down.
For example, Wells-Fargo is currently charging 5.25% for a 30-year conforming, but 6% for a 30-year FHA (both with 1 point).
tabitha - sounds like the husband is willing to cut of his nose (hurt himself financially) to spite his face (hurt his ex).
regarding your blown $350, I feel your pain. but just remember the context of that sunk cost. you are "blowing" a few small amounts to hopefully save you a much, much larger amount at the time of purchase. with your dogged determination, you will surely be rewarded in the end.
Cara, unfortunately I make a decent bit more than $75k and won't get my $15k good buyer bribe money. Bastards.
mm, besides searching for foreclosure notices on the washington post website I'm not sure how you'd be able to find out if a landlord was current on his mortgage. the only obvious suggestion - don't rent from someone with mortgage payments the current rent won't support (i.e., someone who paid way too much for their property). even that isn't full-proof, but it certainly helps your odds.
I subscribe to realtytrac for ~50 bucks a month. Small price to pay to have a heads-up on the underworld of foreclosures, particularly in a very defined area. But if a house is in any phase of foreclosure, from non-payment to post-auction.
As of now, there is no income restriction for the $15,000 credit. It does have to be offset against tax liability, which is why they are giving you 2 years to claim the credit. If your federal tax liability is only $8000, then you can claim 7500 this year and 7500 next. Also, note that you can claim this credit on your 2008 tax return. Important to remember that the credit (assuming it makes it thru conference committee) will only be effective starting on the date the bill is signed into law (I think they are hoping to have the bill signed by February 19th).
dgg, good to know, thanks. Now I have to merely pretend I hate the idea, still knowing how futile it is.
Kevin - I know what you mean. I am against the whole stimulus package. A lot of waste that I don't feel will help us out of this mess. Still, I delayed my closing to possibly take advantage of this credit. Not sure if I'm a hypocrite or just trying to make the best of a bad situation.
Cara,
thanks for the explanation!
Interspersed in this thread is some discussion of mortgages... so here is my question-where are you all finding these deals? I looked yesterday through all of the "upfront mortgage lenders" from MTG prof's site. Most were not offering any loans for LTV <75% (for a loan >417,<625 some call conforming, others jumbo conforming. One would offer a loan, but 5.1% with 1.67 points. Credit score is not the issue. So, I really don't know where you all are coming up with 5.0% w/o points. Is everyone borrowing <417K?
After looking at this, all the more reason that high end still has a way to fall.
Regarding baby boomer moving to Florida, here are the population stats for the Washington metro area:
1980: 3.5M
1990: 4.2M
2000: 4,9M
2008: 5.3M
kob: interesting that the growth rate is slowing. For each of those time periods, the annual rate of growth is:
1980-1990: 1.84%
1990-2000: 1.55%
2000-2008: 0.99%
Of course, that's assuming that I did my math correctly.
The population growth has been pretty consistent.
From 1980 to 1990 the population increased by 700,000; it grew by that same amount between 1990 and 2000. So from 2000 to 2008 (which may be actually 2007) it grew 400,000. There are three years to add here but I suspect it will be less than 700K,but possibly not by much.
But 700K over 10 years for this area (since DC itself is what, 550,000)is pretty good growth.
dgg, no that doesn't make you a hypocrite at all. If they're going to waste your tax dollars rewarding buyers, and you're a buyer, by all means take advantage of it.
Whoops, I did growth rate as a proportion, not as absolute growth rate.
Tabitha said...
Are appraisals really just a bad joke?
Yep. Remember all those appraisers afraid that they’d be black listed by the REI? They are still afraid. Sales are down, a recession, those appraisers gotta eat too.
Tabitha, one if the few times (and last time) I used a realtor; they came back with “comps” for the next neighborhood over that was newer, had larger lots, and larger homes.
With all the talk of bailouts and yep, more bailouts, there are few words on the prosecution of fraud and cleaning up the industry. Where’s the NAR? Where’s your local realtor? These “professionals” have yet to clean up their act, and no one cares.
the_Nothing said...
I hope your right.. and its not a sign of things to come. I would like to think were not that corrupt and that they aren't testing to see if we are paying attention.
How much more corrupt must “we” become to be corrupt?
Cara said...
Actually a loan mod with a principle reduction would be entered into the public records and thus made useable for comps. We discovered this when we discussed this possibility last summer some time. If they were somehow going to try to keep that information secret, that would indeed be even more concerning.
I remember talking about this and I remember the ribbing I got from it. Now where will this be disclosed? Any examples? Links?
Sorry, I just don’t remember seeing where it was decided that this was to be public record..
Robert,
Yup, sorry about that. Right after you brought it up, Tanta posted about it and explained that yes it would be posted in the public record. Which I think I posted back to here, but I don't remember you responding to that so maybe you weren't reading then. So it's in CR somewhere... not that I can find it, it may have been buried in the comments sections.
It’s pretty clear from reviewing a Freddie Mac multistate loan modification agreement that they do NOT always have to be recorded:
IF THE LOAN MODIFICATION AGREEMENT MUST BE RECORDED, TWO ORIGINAL LOAN MODIFICATION AGREEMENTS MUST BE EXECUTED BY THE BORROWER: ONE ORIGINAL IS TO BE FILED WITH THE NOTE AND ONE ORIGINAL IS TO BE RECORDED IN THE LAND RECORDS WHERE THE SECURITY INSTRUMENT IS RECORDED
Although Virginia Law, http://tinyurl.com/cvn23d (see: section 17.1-249 B), certainly provides the procedure for recording loan modifications, upon a cursory review, I have not found a Virginia Statute requiring the recordation of loan modifications.
This law firm’s web page seems somewhat informative as to when recordation may be required. The law firm is from Ohio, so to the extent Ohio law is involved, it may not be applicable to Virginia.
In most instances, a recorded modification will not be necessary. However, in some circumstances, a recorded modification may be required to ensure that the lender is protected. When a modification is being recorded, it is common to prepare two separate documents, one containing the significant business terms that is not recorded and one that is recorded that places the required terms of record. The following are the most common instances in which a loan modification will require recordation:
• Adding new collateral to secure the loan or releasing part or all of the collateral currently securing the loan
• Increasing the maximum available funds under the loan
• Adding a revolving feature to an existing loan
• Changing the borrower.
Of course, this law firm is all about protecting the lender; therefore, if I were the beneficiary of a favorable loan modification, I would want the public record to accurately reflect the new situation and I would record the loan modification even if recordation was not otherwise required. Others may not care.
Now where will this be disclosed?
Land Records, Third Floor, Fairfax County Judicial Center, 4110 Chain Bridge Road, Fairfax, VA 22030, or online for a monthly fee.
Of course, for properties located in a county/city other than Fairfax, you would search the land records at the courthouse in that jurisdiction.
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