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Thursday, November 5, 2009
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57 comments:
Nothing we're going to buy last night. One remains a possibility if it ages alot or drops its price considerably.
Sorry to hear that, Cara. Meanwhile, those savings keep adding up...
Nothing we're going to buy last night.
You do realize that its folks like you that drive some people [read: economists] crazy?
"Why won't they buy? Why? Why?"
"They bought the BMW's they can't afford. They bought the 4,000sq ft. McMansions. They shop for food out of the Williams-Sonoma Catalog and they even get their organic hummus and fair trade beans at Whole Foods!"
"So why won't they just BUY and help this economy!"
"For the economies sake SPEND IT ALREADY!".
LOL. [That's what goes though my head when I read the CCI reports in the WSJ or other places]
And the answer is: Because folks like Cara are the ones that walk by the Red Queen game on 34th street 'cause they've seen the bear. They don't need to see it again.
You go girl. Patience and due diligence always trumps impulse.
:)
TN -
If you like paying a higher price later, that is good advice.
This listing is not from NoVa, but it came up in my search net and it struck me funny. Perhaps the selling agent is off his/her schizophrenia meds?
http://franklymls.com/DC7037758
NOTE: SHORT SALE.
ALSO NOTE: *NO* SHORT SALE.
LOL
TN,
Thanks.
Robert,
There's nothing worth buying right now in our price bracket. Trust me, I've looked. Hence, for the time being the potential direction of price changes is moot. The only reason to buy any of the currently marketed properties is because you haven't seen anything else, and don't think anything better will ever come up for sale again. It's all awkward stuff. Bad location, bad architecture, bad lay-out or priced way out of whack. (except for one TH, which we saw last week, which is too high up in our price range for it to be such a bad fit for our tastes, I'm sure that will go under contract soon).
Robert said...
"If you like paying a higher price later, that is good advice."
Except all the homes I bookmarked this past Spring are much cheaper when they relisted this Fall.
Jeremy,
What is your price range?
Ouch this is looking like bad planning...
http://franklymls.com/FX7196098
They are trying to sell the house less than 3 months after they bought it, but not as a flip. They are listing for basically what they paid so they will end up losing almost 10% for commissions and closing costs to live there for a couple of months.
housebuyer,
Or very bad luck.
Looks like a cute house though.
HB, could also be:
--just discovered spouse's paramour
--family member just got a serious health diagnosis
--just got a pink slip, or, more positively
--just got an unexpected job transfer or new job with an employer who will fully reimburse for home sale and moving costs.
Sometimes **it happens and it's another thing that has to be factored in especially in a very high priced housing market.
If you like paying a higher price later, that is good advice.
I think the red queen is *there!*.
:)
Good googly moogly. Now that's a stellar idea chaps! Just how many arms can the government grow to plug holes into the dike?
"Fannie Mae plans to allow homeowners facing foreclosure to stay in their homes and rent them for up to one year as part of the latest effort to help troubled borrowers while keeping a glut of foreclosed properties from hitting the housing market."
"Fannie to rent Foreclosed Homes"
[rolling eyes]
Man, Cara, your house shopping experiences remind me of my experience with dating.
Here's hoping that having standards will pay off for both of us :)
TN,
Good find. That's the surest sign yet that shadow inventory is real. If it weren't they wouldn't be working so hard to keep it from flooding the market. Of course the flip side, is that the realer it is, the harder they'll work to keep from selling it...
Drag it out, that's their solution. The sad part is, I think it will work.
Anon412,
Your dates need to get more desperate or drop in price?? JK.
Having standards is a very important thing in relationships too. (though I would call it self-knowledge and self-worth) It worked out well for me, my husband and I are unbelievable compatible. Hope it works out for you too.
Thanks - I was mostly saying that as a joke, but there are a lot of parallels: You can shop online for both houses and dates, and get the sense that there's unlimited supply, but then find out when you meet / look offline, nothing looks as good as you imagined, or maybe it's already "under contract"
But in both, I think patience(while also being realistic) are key. Both are major decisions after all.
Cara & Ace-
Yeah I guess I should have made it clear that I didn't actually think this was their plan. Clearly something bad happened as you said likely job loss or divorce, which normally sucks, but it sucks a lot worse when you just bought a house 3 months ago and will end up losing an additional 50K.
Jeremy -
Bullshit. Prices are higher in Cara's price range - across the board. Listing prices are MEANINGLESS.
TN -
"Be Fearful When Others Are Greedy And Greedy When Others Are Fearful” - Warren Buffett
You sound like the kind of person that goes with the herd.
Robert,
As I have hinted at before, I'm no longer sure that's true. Once you add up the renovations/repairs needed on the typical unkept, neglected home, those last year prices may not have been the bargain they seemed compared to today's real sellers. If the things that sold cheaply a year ago were in similar condition to the distressed things I'm seeing now, I think the dominant factor in what's actually happening is a change in mix to more well-maintained homes rather than a true change in price.
Sure, I'm certain some owners got scared last year and sold for less than they could have gotten this year, and so there were a few true bargains to be had, but aside from that, I'm not so sure there's a big difference. Not after looking at this stuff in person. Many of the nicest neighborhoods had zero sales for all of 2007/2008. These owners are just now considering coming out from under the covers.
i've made peace with the fact that the govt will continue to intervene to keep home prices from falling further. i now consider it the burden of my generation to carry for the greater good of the nation. it's somewhat like the previous generations had to fight the wars for the country.
peace and prosperity for the world.
I am looking to buy a townhouse in the newer section of Manassas Park. (20111 zip code) Current Rents in the area are around $1500+. Townhouses in the area are selling between $170,000 and $200,000. A $200,000 mortgage is ~$1100 at current interest rates. Would this be a good time to get into the market? Will prices get any lower? They just build a brand new elementary school.
Mark, if you find something you think you'd be happy living in for at least 5 years, I think buying where you're looking would be a no-brainer given those numbers. Maybe prices will fall a little bit when interest rates rise or when/if the credit goes away, but it already looks pretty favorable.
Mark,
I think the consensus on this blog is that PWC and Manassas have bottomed. If you can get a place you love for that much less than rent, it hardly matters if prices fall another 5% or so.
However, the real caution is that like condo's closer in, TH's further out will not appreciate for a very long time. They could very well stay flat at this price for 10 years or more, and will not rise again until SFHs become unaffordable for entry-level buyers again, because their attraction is only relative to the inaccessibility of the more prefered housing option. In Burke after the last downturn, condos stayed the identical, non-adjusted price from (whenever the crash was...) until 2003. TH's stayed constant at $160k from 1990 til 1999, only barely rising in 2000 and 2001.
So, if you're looking at this as a good long-term alternative to renting, then it's a great plan. But if you're counting on move-up equity from it to help purchase "what you really want" further down the road, then renting for a little while longer while saving up more cash and getting a couple more raises, will be a lot more cost-effective.
Mark, keep in mind that your escrow payment is going to be higher. Those real estate sites (like Zillow) that give you an estimated payment don't take everything into consideration. Basically, your escrow payment will be based the following:
Interest and Principle payment +
1/12 property tax +
1/12 home owners insurance +
1/12 mortgage insurance (if going with an FHA) +
a little more for a cushion
= total payment
You should be able to look up the property tax amount and you can estimate the rest of it.
If your property is worth around 200k, I would imagine that the property tax would be between 2600 and 3000 a year so you could figure about 100 or 120 extra. Then about 50 extra for the home owners insurance per month. If you have mortgage insurance, that would be about 100 or so I would guess.
I would assume an excrow payment of between 1300 and 1500 depending on if you have mortgage insurance and how much of a cushion the bank wants (I think it's usually two months worth of the non principle/interest portion of your payment?).
As far as this being a good time, I would think it's just as good as it was earlier this year. The number of properties for sale has steadily declined and now that the buyers credit has been extended, some folks will relax and the competition should be back at a reasonable level.
Oh wait, correction:
for about 3k in property tax you would have 250 added to the mortgage. then probably in the range of 50 for your home owners insurance so that would cost you 300 more a month in addition to your principle/interest payment. So that takes you up to 1400. Then you add the cushion and you're probably at 1450 to 1500. If you have mortgage insurance you would be somewhere in the 1600's (the bank would add a 2 month escrow cushion to this as well).
So about 1500 with no mortgage insurance and 1600 with mortgage insurance.
Mark, Jeff,
Oh, I had assumed he was already doing the full calculation. WaPo and NYTimes both have good calculators, some of which do the full deal.
At 5% interest rates, a 200k mortgage isn't going to generate an interest payment that's more than the standard deduction, but if you already pay a considerable chunk in state income taxes, then you may garner some tax benefit from the purchase too, which should get factored in to a complete calculation.
Hey Cara. I wasn't really talking about the total value of renting vs buying like the NY Times does. I was just giving him a ball park estimate of the "real" monthly payment he'll be making. The NY Times is fine for a sort of ethereal, "This is what it all works out to in the long run" kind of thing. As far as the monthly payment goes, and the amount of money he's going to be putting out on a monthly basis (and thus won't have available for other things during the month), I thought he might be interested in knowing that the zillow estimates aren't that good.
I just thought it might give him a better idea of the budget necessary when "only paying 1,110 a month". Of course, a good faith estimate from a bank should give a good idea about the monthly payment too but those things are skewed to convince people the payments are lower than they really are. I had three banks give me GFE's before I bought.
I guess what I'm getting at is that if he goes in thinking, "Look at all the money and equity I'll generate in 10 or 15 years from the NY Times calculator" or if he's thinking, "Wow, my rent payment is higher than my house payment, think of all that extra disposable income I will have. Hawaii, here I come!" then he's being misled. When the rest of the escrow payment is added in, he can pretty much count on a 1500 dollar monthly payment.
Sure it's the same as renting and sure he gets some of his payment put into the equity of the townhouse. BUT, he's not going to be paying 1,100 a month total. He's not going to have that extra 400 a month in what's now a rental payment, to go splurge on extra vacations and plasma TV's. He's going to be paying the same thing as his rent but the non house part is going into the escrow payment for other costs.
Jeff,
No reason to guess. Go to the tax assess. site and call your ins. agent for real numbers. P&I are easily determined. Expect re taxes to go down. Also need to know HOA.
@ Jeff: I think, though, that even though looking at it that way makes it look like a wash, if he's gonna stay there for 5 years, buying has the edge because of the part of the payment that will go toward paying down principle (will be small after 5 years but still something) and the good likelihood that his rent would have gone up over those 5 years while the house payment will stay the same.
VA Investor - oh yeah, I forgot about those pesky HOA fees.
Anon, I also think the edge would go to buying in this case. I just didn't want him to think 30% of his current rent payment would turn into disposable income.
Of course, if he's putting down 40k, then maybe the 1,100 does include the escrow payment. I'm just kind of assuming FHA because you can buy a decent SFH in the Manassas/Manassas Park area for 250k.
Regarding the homebuyer credit of $8,000 - if you buy a house with someone that is already a homeowner, can the non-homeowner claim the full amount of the credit ($8,000) with the homeowner claiming $0, provided the two are not filing tax retursn as married filing separate?
MJC, you have to real careful about this sort of thing. You don't want to get a refund then have to pay it back with interest and penalty. Look at this site:
http://www.irs.gov/newsroom/article/0,,id=206294,00.html
I'm pretty sure you can find something significantly cheaper than $1500 for a rental in a Manassas Park TH. Even if that's the list, you could probably get it for $1300. I see TH after TH up for rent at $1500. Months later, they're still up for rent. Still at $1500. Still no tenets. That just means the true rent is less--no idea how much, really, but I can estimate based on what I pay (see a post I made a few months ago).
Just run the calcs again with a lower rent and see if the same value is there. Honestly, it may well be. MP, Manassas and Woodbridge aren't going to get much (if any) cheaper in nominal terms. Future houses will sell at the same prices with higher interest rates (until we get back to 6%, if we do, which will force the prices lower again), with more amenities or upgrades, or for a lower inflation-adjusted price, but there's a floor on the prices now.
Xpovos makes a good point. I see the same thing with rental listings in the "Immunozone" and I assume the rental market is even softer in PWC.
So I did a quick Frankly MLS search and I would definitely be looking for a SFH rather than paying 200k for a townhouse in the manassas areas. I don't know what these houses are like on the inside but there are definately options out there if a buyer is able to spend between 200 and 250 instead of maxing out at 200 with a townhouse.
As Cara mentioned, houses will have to start appreciating before townhouses start to go up. So if it takes 10 years for house prices to start going up, it's going to take 12-15 for a townhouse!
http://franklymls.com/MP7194206
http://franklymls.com/PW7182882
http://franklymls.com/PW7190257
http://franklymls.com/MN7170880
My point is, there's plenty of decent sized houses that would be at the very least a starter home and almost certainly a better investment and not significantly more expensive than a 200k townhouse. Of course that's me. Maybe he doesn't want to mow a lawn or something?
Va_Investor said...
"What is your price range?"
We would like to spend about 600k, which of course means all the homes I bookmarked are 700k (funny how that works). Mostly Oakton/Vienna addresses. I'll try to remember to post some examples, but won't get home tonight until 11:30 or so. The point is that many have lowered their list prices after being delisted a while, which removed the original list from the history. I have notes on some of them in my bookmark or in the redfin e-mails I orignially got when the went on the market with the true "original" list and not just the one for the current listing.
Jeff,
Scenario A is exactly what is happening with my friend. She bought last month with her fiance and they are marrying this weekend. Here's Scenario A:
S1. If a single person (Taxpayer A) qualifies as a first-time homebuyer at the time he/she purchases a home with someone (Taxpayer B) that is not a first-time homebuyer and then later that year they marry each other, is the credit still allowed?
A. Eligibility for the first-time homebuyer credit is determined on the date of purchase. If Taxpayer A, a first-time homebuyer, buys a house and then later that year marries Taxpayer B, not a first-time homebuyer, the credit is allowable to Taxpayer A. Taxpayer A may take the maximum credit.
However, it seems like single people get the full $8,000 credit from everything I have read on the IRS website.
There is an IRS notice (2009-12) which allocates the credit between two non-spouse buyers; however, that seems to only apply to last year's $7,500 "credit."
I think it's kind of ridiculous that my friend gets the full $8,000 and she gets down payment help from her fiance, but if my husband and I buy, we get the same amount as her. Usually the IRS doubles the benefit given to a single person for married couples.
VI, I'm not so sure we can expect RE taxes to go down. Although the housing prices have come down in Manassas as elsewhere, most counties are in serious financial trouble and are raising or will raise the tax rate % to make up for the decline.
RE: buying versus renting a TH
The first 5 years on a 30 year mortgage don't get you very far equity-wise. Look up an amoritization table, (it depends on the interest rates, the lower the interest rate the faster you pay down equity). If you're counting on accumulated equity to pay for 6% transaction costs, it can take quite a while of renting and owning being equivalent on a cash-flow basis before selling is a real option.
The TH vs SFH in Manassas is exactly the same quandry Kevin had on condo vs TH in Vienna. I'm sure he would chime in, don't make the same mistake. If a SFH is obtainable, go for it, otherwise you're being penny wise and pound foolish.
(says me who's focusing heavily on THs in Burke)
I agree with Cara. If you're looking in the Manassas area and can afford a house instead of a townhouse, then get the house.
House before townhouse.
Townhouse before condo.
Townhouses won't go up until houses have been going up for a few years. Condo's won't go up until those townhouses start to get pricier.
Heck, if you sell for the same price you bought for, the house would still be preferable because it would resell faster as it's more desirable.
Cara, no reason to second guess yourself. You've said before that the drive would be unbearable for you so living further out is not an option. Until that changes, I wouldn't regret looking at TH's.
Jeff,
the other option would be hunting and pecking for SFHs in Burke, but unless they come down to under $400k for over 1200 sq feet, it's not happening.
Cara, you should look in Great Falls. You can buy a single family cardboard box in the 350-400k range there. :)
Jeff,
Yeah, maybe some one would sell me one of their detached au pair suites over their garage. It'd be like a mini co-op.
TN -
"Be Fearful When Others Are Greedy And Greedy When Others Are Fearful” - Warren Buffett
You sound like the kind of person that goes with the herd.
Federal law requires herd mentality. It's only when I am filling in those little ovals on Tuesday that I get to be an individual.
:]
I agree with Ace regarding expecting property taxes to go up. I mean Prince William County has the most Republican county board and it's raised its property tax instead of massive spending cuts. This is partly because local government spending is wildly popular (schools, libraries, parks, police, firefighters, etc). And Virginia localities do not have a history of massive social welfare programs beyond what is required by the federal government like a major city would have so there's really little for the Republicans to grab onto when trying to push spending cuts.
Does David Stevens (FHA head) remind anyone of the Iraqi Information Minister who kept claiming Saddam and Iraq was winning the early parts of the Iraq War in 2003? Stevens's claims about FHA are similarly ridiculous. Although I don't think the Congress has the stomach to pass a bailout until the FHA is completely bankrupt (even though that will probably increase the total cost of the bailout).
Mark, the townhouse in 20111 is fairly safe but like the others said this listing in 20110 is a good buy.
http://franklymls.com/MN7170880
Yes, it has the 20110 zip but its up towards the high end houses in 20111 and its below its 09 tax assessment and zillow estimate. The others on the list, the one in pw sudley manor is nice, too but traffic on 234 but be a real deal killer. The other 2 are foreclosures and I doubt they are available.
Pimco higher-up makes argument many here have made.
An S&P/Case-Shiller index for 20 metropolitan areas showed values rising 4.8 percent in the four months through August after a record 33 percent drop from its July 2006 peak. Such statistics are being distorted by U.S. efforts to reduce foreclosures, which are temporarily limiting sales of seized homes, said Scott Simon, Pimco’s mortgage-bond chief.
“It only makes prices look like they’re going up,” Simon said yesterday in a telephone interview. “Think about it this way: If you had 100 percent of the sales as foreclosure sales, prices would look like they went down a ton, and if you had none, prices would look like they went up a ton.”
Cara, I know you have settled on Burke because of the commute but have or did you give ever consider Little Rocky Run 20121 and investigate commute options from there.
My tax bill actually went down by about $600 or something like that in PWC.
Arkey,
Not specifically no. If we're going to move further out, then somewhere along one of the VRE lines would be best. But I remember all too well what my husband was like with the hike up to Rockville by metro... I don't think a longer commute for him is a good option. And I'm pushing my limit a bit with Burke as it is. Each time I look at the map my stomach sinks...
Arkey,
Interesting. I thought the counties were raising rates enough to keep property taxes at least flat but maybe not.
I still think in general you should budget for your property taxes to go up. Once the recession is over the various county unions will win pay raises and citizens will be asking for smaller class sizes, longer library hours, etc.
But maybe over the next 2-3 years you might see some property tax savings.
So since we agree the more traffic congestion, the more a premium for living closer-in . . . anyone want to make any predictions about whether future Governor McDonnell will actually do anything for Northern Virginia transportation?
I think he won in part because Northern Virginia voters gave him the benefit of the doubt that he'll actually do something. And since I think he plans to run for political office after being governor I think he'll actually do something and might even pursue higher gas taxes or something he denied he would do to pay for it. Part of me though thinks we might be in for another four years of the bare minimum from VDOT.
Arkey, TBW, you might be interested in this article. Not sure how much in $ that levy turns out to be.
http://www.washingtonexaminer.com/local/43926862.html
"The Prince William County Board of Supervisors adopted an $845 million budget for fiscal 2010 Tuesday, closing a nearly $200 million shortfall in revenue by trimming services and eliminating nearly 100 county positions.
The average homeowner will pay about $430 less on his tax bill next year, based on the adopted property tax rate of $1.212 per $100 of assessed value. Homeowners also will have to pay a 7 1⁄2-cent levy for fire and rescue funding...
...The county government had to cover $80 million of the $200 million shortfall, while the schools had to handle the remaining $120 million.
Supervisors, though, remain concerned about the school system’s projected deficits of $126.5 million in fiscal 2012, 2013 and 2014."
TBW, I predict your 2nd option is more likely.
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