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Friday, March 20, 2009
Northern Virginia Weekend Bits Bucket 3/21-3/22 2009
Posted by Harriet at 8:54 PM
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A Big Boost for Buyers Seeking Jumbo Loans
By Kenneth R. Harney
Saturday, March 21, 2009; Page F01
New money is about to flow into a part of the real estate market that has been squeezed hard by the credit crisis: mortgages too large to be purchased or backed by Fannie Mae, Freddie Mac or the Federal Housing Administration.
Higher-cost areas throughout the country traditionally have depended on the ready availability of "jumbo" mortgages to finance houses. Such neighborhoods are heavily concentrated in California, portions of Florida and the Northeast, including the Washington region. With the collapse last year of the private mortgage bond market on Wall Street, home buyers, builders and refinancers who relied on jumbo financing were left with few sources -- except with punitively high interest rates and huge down payments.
Now, though, major banks are heading into the jumbo segment, originating big loans at affordable rates -- not for Wall Street bond traders, but for their own investment portfolios.
Bank of America, the country's largest mortgage lender, is rolling out a large program to finance jumbo loans between roughly $730,000 and $1.5 million, with fixed 30-year rates starting in the upper 5 percent range. The loans will be available through the bank's retail network and also through its Countrywide Home Loans subsidiary. After April 27, Countrywide will be rebranded -- shedding the name it has had since 1969 -- and morph into Bank of America Home Loans. Bank of America acquired Countrywide, once one of the biggest subprime lenders, last year.
http://tinyurl.com/c4z9z9
I found this link:
http://mysite.verizon.net/vzeqrguz/housingbubble/washington.html
at:
http://bubblemeter.blogspot.com/2009/03/home-price-declines-las-vegas-and.html
Per the Washington DC greater metro area chart, perhaps prices have to fall from $300,000 to $250,000. So we have another 17% drop in prices? Of course that is based on an aggregate but do you think the outlying areas like Franconia, Springfield, Lorton, Chantilly, etc may have another 15% drop?
Does anyone know a site I can go to if I want to see what a house sold for in the past? on Frankly MLS I can see the recent sale but I don't want to see sale price during the peak or decline but rather pre-bubble prices.
Jeff, you're interested in Arlington, right? If so, you can use the Arling. Co. website to search for a specific property. Sales prices are at the bottom of the page.
http://www.co.arlington.va.us/Departments/RealEstate/reassessments/scripts/DREADefault.asp
Fairfax Co. and Alexandria City have similar search functions.
No, actually I'm looking in PWC because of how cheap it is.
Jeff,
For FFX county, trulia.com sends me alerts of recently sold properties in the areas of my interest. I don't know how they gather the info--I mean, they seem to be sending it well before the county website updates its tax records.
You may want to check out trulia.com for PWC.
Anthony,
Based on that graph, if things were to go back to the inflation adjusted trend they;d need to go all the way from current 300k down to 200k. Will that happen? I don't know, I'd prefer to see a price to income ratio or a rent versus own chart as both incomes and rents have gone up faster than inflation. So, maybe that would yield your 250k estimate for the "true bottom".
Prices in Franconia are higher than Burke by a good 20% right now with lesser quality schools, so yeah, I'd say they could easily drop another 17%. I drove around neighborhoods in Burke yesterday and let me tell you, I'm pretty freaking happy about our decision to go for the better schools, because our money goes a lot further there. I can get good condition, nicely sized, walkable to the VRE non-REO backs to woods for under 300k. Franconia walkable to the metro I get run-down questionable short sales and REOs for that price bracket. So, yeah substitution is real and it will pull things down a bit more.
The MRIS inventory graphs are quite stunning. It will be interesting to see if these trends continue. It was in July of 2005 when inventory started trending up that I knew we had peaked in the spring of 2005.
Jeff, sorry, I have you confused with someone else.
I don't know where to check PW prices.
FWIW, we attended 4 open houses in Arlington today. Despite the perfect open house weather and time of year, in all cases, there was only one other set of potential buyers/lookers when we attended, and there were few names on the sign in sheets. All were either very near or reasonably near metro.
I'm not sure if this means a) prices will come down or b) if everyone's waiting for the changes in the financing market or c) if it means nothing at all. I thought all were overpriced - 3 of the 4 had an "incurable defect" that wasn't IMHO sufficiently reflected in the price, such as being on a busy corner, and the 4th had cheap materials that already look dated and it was less than 10 years old, not what you would expect in this price range (>$900K).
My prediction is that the sellers still think option b) is going to bring out the buyers in the coming weeks, so their prices will stick. In any case, I found it interesting that there was no (apparent) crush of people.
FYI:
I found this site for Manassas:
http://www.visionappraisal.com/databases/
jeff--
that is the city of manassas site, and harriet has a link to the pwc assessments site, which also has all past sale information. just scroll down--it'll be on the right.
of course, if you have a specific proprty/neighborhood, you know pwc is my area of expertise ;)
Tabitha, I tried the PWC site and I couldn't find houses on it in Manassas City itself.
The Manassas City site covers only houses that are inside city limits. The County website does not include data for the City of Manassas or the City of Manassas Park. But the city boundaries are smaller than you'd think. So some houses with Manassas City zip codes will only be on the county site.
Kind of frustrating, like the way the "Prince William Parkway" is actually several roads often at right angles with each other.
"FWIW, we attended 4 open houses in Arlington today. Despite the perfect open house weather and time of year, in all cases, there was only one other set of potential buyers/lookers when we attended, and there were few names on the sign in sheets. All were either very near or reasonably near metro."
It could also have a lot to do with the price range of the houses you were looking at. The higher end market in Arlington is absolutely dead.
I suspect if you were looking at the very bottom of the price range for SFHs you would see more people.
The wife and I got a kick out of visiting an open house yesterday. Within a minute of walking in the door, the realtor strikes up a conversation. The first thing she says it that the place is way overpriced -- she doesn't know what the owners were thinking, as houses in that neighborhood are now selling in the 6's, not the high-7s the owners' had priced it. She also said that if we walked around, we'd notice that the place needed a lot of work. Sure enough, as we walked around, it looked like the owners did the painting, and did a very poor job (paint from walls on ceiling and vice-versa).
At one point she mentioned that she was thinking about putting her house on the market...before ti was too late. Very interesting comment.
P.S. While I found it refreshing to have a realtor be open and honest at an open-house, she's the last one I'd want to be showing my open house!
Leroy, yes, I agree; I should have been clearer that that was why I included info about the price range. My point was meant to be that, if my few anecdotes are any evidence, nothing has changed despite what the RE pumpers have been saying and despite the fact that this is supposedly the busiest time of most real estate years.
As we know, this market segment has been very slow (except for a few relatively well-priced, new homes with great features and without any incurable defects) for quite some time. I think that, if and when sellers in general (rather than a few exceptions) begin to "get real" about what buyers are able and willing to pay these days, the price drops in this range will drive down prices in other ranges as well. But we'll see. So far sticky is the rule and according to Sawbuck, there are still a few knife catchers in this market every month, which amazes me.
NovaWatcher, that is a very unusual experience. Maybe the agent is savvier than she first appears - maybe there has been NO interest on the property and she is trying her best to at least get a nibble started. If she were my agent, I would hope she would have said the same things to me BEFORE she took the listing!
Ace: This was the second open house for that property, and apparently it received quite a bit of traffic the first time. I know I'm taking her word for it, but I can believe her, because based on the appearance on the web, it would have been a pretty sweet place (except that the owners hadn't taken care of it).
Interestingly, she was not the listing agent. In fact, she told us of some other open houses (they were already on our list) nearby that were much nicer. Those other open houses weren't listed by her either, but they were all part of the same agency. Maybe she got roped into doing the open house, and she otherwise had no skin in the game and could tell it like it is?
Y'know what? She was right: the next house on our tour was much, much, nicer (really, a quantum leap) and was listed for $50k less.
novawatcher,
it seems bizarre, but for the agency as a whole, it sounds like a lose your losers and win your winners strategy. You can only sell the houses that are priced competitively, and the ones that aren't make the ones that "are" seem like an even better deal. Given that the sellers want to call the shots on pricing, the agency then needs to do what it can to keep some income flowing...
NoVAwatcher, ain't it the truth? I can't tell you how many times I have seen houses (on the web or open) where the owners who have put very little work or $ into their properties think that they are entitled to the bubble prices that people who did much more received. You can usually spot these when you read the real estate-ese "beautifully maintained by original owner" or something along those lines. That means the owner vacuumed and mowed the lawn as needed, but loved his/her wallpaper, appliances, roof, kitchen, bathrooms, etc., so much that they are all still there just as when originally purchased.
As for the open house host, I wonder what the legal requirements are for the person who is roped by his/her agency into doing the open house when it isn't his/her listing. As a layperson I would think they have the same obligation to protect the owner's best interests but maybe this is simply wrong. I had one open house experience somewhat like yours, though the agent wasn't quite as open. She told us that the open house we visited had been on the market a long time (everyone at this site would have already known that, but there are so many buyers out there who do not do their homework!) and that the renovator had accepted x terms (very favorable to the buyer) on another property he sold recently, etc. She tried to steer us to her own listing, which was more expensive and wasn't suitable, but it really was a better deal for most buyers and it did sell more quickly.
ps when I said that maybe the property hadn't generated interest, what I meant was desirable (to the seller) bids, not just foot traffic.
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