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MBA: Mortgage Purchase Applications at 13 Year Low
Wednesday, May 26, 2010
Northern Virginia Bits Bucket 5/26/2010
Posted by Harriet at 6:00 AM
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32 comments:
As an interesting side note on the financial reform bill the senate just passed, I heard that it will require a study of options to end the conservation of Fannie and Freddie. I will be very interested to see how they plan on replacing/killing these entities. I refuse to believe that the government will not have some sort of entity help with mortgage rates, but we will have to wait and see how this is handled.
So you think $525K is too much for a boring little rambler that needs work?
How about a nice wristwatch instead?
Nadal's watch
Ace-
For all that you only get a 20 gram watch. I thought for sure it would be flashy with some nice diamonds.
Well, for $525K, I would prefer that it arrive with Nadal wearing it.
(only for a tennis lesson, of course)
Redfin May Newsletter predicts rates as low as 4.5% this summer. Currently an FHA 5/1 arm is 3.25%.
The newsletter, which I'm sure many of you receieve states that foreclosures have peaked and that while the inventory will take a long time to burn off - it's no longer increasing.
Locally, I'm hearing that the mix of reo's is changing to the med-level (over 400K) from the lower tiers. I heard of one agent getting 40 listings in Mclean last week. I don't know how many are shorts vs. reo.
I just signed a contract on a short close to me. It will be interesting to see if the bank counters.
For my family, buying a house is still not a rational choice. Our rent is decreasing and other incentives are being offered to stay here. My husband lost his gov't contracting job. My job is pretty secure and in spite of the job loss, our income has gone up. However, in order to buy, we would need to bet that our situation is stable enough that we can forgo geographical flexibility. We don't believe that we will see any appreciation in the home value so we also have to take that into account. It makes more sense to keep cash reserves in this climate rather than lock that money into a depreciating asset.
I'm not saying that our choice has to be strictly rational. We may buy a house simply because we WANT to. However in order for that to happen, we have to see something in our price range that is going to be a lot better and nicer than where we live now. Our price range goes up and what we can get for it goes up, but we're still not seeing anything so charming or nice that it pushes us off the fence. A few years ago, RE sales people suggested that we would just "have" to buy a condo. We knew at the time that would be a good way to make a 100K or two go *poof*! But what makes it laughable is that we'd be trading down in terms of our living space in order to do so. A lot of this is a matter of taste. But my point is that when housing doesn't work as an investment, it needs to work on an aesthetic/emotional level, and so far what's available doesn't seem to do that.
I'm chuckling at watching the interest rates go down...I've been told for five years now that they're going to start going up any minute. One day, if everyone keeps saying that, it will be true. I don't care, because I would rather let the part that I pay taxes on go down (asset price) while the part I get a tax break on goes up (interest).
I came upon what looks to be a good rental price site:
Rentbits.com
(report from an earlier thread)
VA_Investor,
Four houses owned by one ANGEL RIVERO of Arlington recently went on MLS. Do you know this guy by any chance? He appeared to be quite successful finding RE deals...
There's a major problem with those statistics. More than half of the rentals around here are condos projects that had to go rental. This dense area already had a lot of rentals. Every single place that we have looked at in the past two years has offered two or more months free to be pro-rated with the rent so that you get a monthly discount. This allows them to state a higher rent which I'm sure is desirable for various reasons. It also gives them the option to take advantage of the market should it rise in their favor, without the ugliness, not to mention legal problem, of jacking up people's rents.
Catherine-
Where are you living that over half of the rentals are condo projects that didn't get sold? I would have thought Arlington had more of these than most areas and there are still way more apartment complexes than failed condos for rent. Also in most of the places I have looked almost no one is offering two free months. A lot are doing 1 month, but not 2.
Housebuyer - 20852
Also - I admit that this is a mental inventory, so it is going to be skewed towards what we shopped and what is currently advertised. I am compensating for the observation that almost all of what is advertised is condo-gone-rental. There is a massive number of rentals that always were rentals and I imagine those have little churn.
Don't forget repartments, which I am counting as condo gone rental. If you took a mental inventory of the area, and you've lived here for a while, you might forget how many of the buildings that you think of as rentals were renovated as condo conversions.
It's amazing. We live in one of the only nice places in the area that allow dogs, and there are so many empty units.
I would be shocked if rents went up any time in the next three years or so. Not saying that events can't be so at odds with my first-hand observations, but that hasn't been part of my experience yet, and it would surprise me.
So, I wonder if all 11 or 14 units will hit the market, and if so, in what fashion, short-sale, foreclosure, etc.
http://www.redfin.com/VA/Arlington/1735-Fairfax-Dr-22209/unit-2/home/16897624
"Developer owns 11 of 14 Units."
My bad, it already appears to be a foreclosure:
http://www.arlingtonva.us/Departments/RealEstate/reassessments/scripts/Inquiry.asp?Action=View&lrsn=65150
Re Mike's find
I don't understand why picture #9 shows a window looking out at close by bricks when the aerial view shows a building not immediately surrounded by anything.
I also chuckle that the developer appears to have spent $5 on window coverings. What is that brown thing?
I wonder how much the internet has changed the ability to sell a home like 1735 Fairfax Drive. In the past your realtor might have driven you there and you'd only learn of the Route 50 problem then. Now you look at the online listing and see how it's on Fairfax Drive but also sorta on Route 50 too.
Catherine =
20852 is North Bethesda. You are in the wrong blog unless you are considering moving to NoVA.
I'm living in a condo gone rental. Plan to move in a few months though. Everyday I congratulate myself - Thank God I didn't buy this POS. Living in a rental is bad enough except that I am month-to-month and every couple of months corporate jacks up my rental amount while dropping prices on similar properties in the complex. I estimate that I am currently paying 35% over standard. I realize now that I should have rented a SFH (would have been about 75% of what I am paying now) but I finally got p.o'ed enough to buy a property even though I expect values to keep dropping.
well if people want to buy houses and they expect the market to keep declining at least we won't see the prices going through the roof.
Catherine said...
My husband lost his gov't contracting job.
I'm in the same boat. I have two offers, but it's taking months to get "govt approval". Things are changing. This myth that DC incomes will keep shooting towards the sky or that we're immune is... well, a myth.
VDOT to Begin Work on Spot Three Lane Widening of I-66W
I've brought this topic up a few times. Well, it took 11 years from when Congress repealed the Coleman Decision in 1999 that kept I-66 to two lanes but they are finally expanding portions of I-66W inside the Beltway to three lanes. I continue to predict three lanes on both sides of I-66 inside the Beltway. I just cannot tell you when it will happen.
c -
Yep, unfortunately the MD blogs are troll-infested, and for some reason they are filled with people obsessing about Arlington anyway. I read/lurk here because its actually informative. I started a blog (see profile) about looking at MD homes, but it didn't catch on. I haven't even updated it because we can't be bothered to even look at anything lately.
We say the same thing, thank god we didn't buy the POS. It looks nice but the materials and quality of the renovation are shoddy. There are units for sale here and they have just been reduced down to rental parity after many months. Of course nobody will buy these units, you'd have to be nuts.
We want a house, but there are so many SF rentals that we could get into without the agony and waiting of a short sale/distressed sale.
When I bought my condo in 2003, it was cheaper and faster to buy, and I could actually have gotten cash flow on the rent if I had needed to rent it out. Glad we sold it. When we buy again, we'll do it with our eyes open.
TBW-
Its about time. Its unfortunate for those who live right on the highway, but it really is silly that one of the most traveled highways into the city is only 2 lanes and is stop and go all day long. This probably will not fix all of the problems, but it surely won't hurt traffic.
Catherine,
Yeah, the MD blogs just aren't as good.
But restricting yourself to Bethesda when there's lots of well priced stuff in N. Bethesda and Rockville, is like using Manhattan prices as the basis for deciding whether owning makes sense when you work in New York.
You have very good and very compelling reasons specific to you such that buying right now is a terrible plan. Even if you intend to buy on the basis of one salary alone (same thing we did) it makes no sense to buy when you don't know where your husband will find the best job for him. You might end up with a really awful commute for one of you. That'd just be silly when it's so easily foreseeable. Sure, you can/will also change jobs once you do own later, but now is not the time to give up that geographical freedom.
But when you are in a position job-wise to buy, I wouldn't wait for Bethesda to come down to meet you. It has significantly grown in cachet and income in the past 10 years, and seems likely to be one of the places that has now come disjointed from rental parity, like Georgetown, like the nice parts of San Francisco, like Manhattan. A wealth barrier to entry has been created that will probably stand, because as you well know, it is by far the most desirable of the close in MD suburbs.
So, if you can't stomach the prices in Bethesda, or what you would get for the same price as renting, you have two choices, invest more money in your downpayment to keep the cash-flow down, or spread a wider net geographically.
But you don't need to worry about it now. Not until your husband has a new job, and has held it for long enough to know that he likes it, and for you to both feel confident that the time is ripe for you, personally.
Buying at the wrong life-timing is a surer way to financial disaster than not picking the bottom right.
Doh!
That is Rockville. I'm such a twit, taking someone else's word for it. Sorry!!!!!!
There are houses to be bought, they just require a 20% downpayment being sunk into it to make sense on a day to day basis versus renting. If you also want a step up in lifestyle over your current rental, then you're going to have to pay for that. But despite the overbuilt condos, most of which make more sense as rentals with their proximity to the metro, I'm not sure a collapse in condo prices that might be coming will really do much to dent the SFH prices. Boston managed to have a condo collapse in the 90's which did nothing to the SFH's other than a brief flatness. And recent, quality, SFH's are not overbuilt there, as you are probably well aware if you've been hunting for them.
Catherine - I'm sorry for your lack of a good MD board but that's what a good moderator is for. We are very fortunate that Harriet is diligent, checks regularly and removes spambot droppings or anything that is too offensive.
I have the same issues with the condo/rental that you mentioned and saw up close too many of the properties thrown up in a few days by unethical builders at the top of the bubble.
I lurked on this blog for several months before posting and read for another eight before buying. It concentrates on NoVA of course, but there's a lot in here of use in DC and the greater metro area.
As I have said before, I like the nearby MD properties and they are more affordable than NoVA. I was just afraid of what I would be getting into. But from what I do know of the local market, the Bethesda area is considered one of the more desirable, and Montgomery more desirable than PG and Howard. It does seem to me that the bloom is off the rose somewhat compared to ten or twenty years ago. I, for one, would welcome informative MD observations here as it would expand the field of information for interested buyers. Dunno how others feel.
Cara - When I googled, that zip came up as North Bethesda. But it also seems to be shared by part of Rockville. I just don't know that area well enough to understand the difference between Bethesda and North Bethesda.
Thanks for your comments - we were actually looking in a couple of zip codes in Silver Spring (when we were looking) but 20852 is where we rent now.
The bloom is definitely off the rose in MontCo. Yes there are some reasonably priced houses but they are still overpriced historically for their neighborhoods. In other words, if we buy an affordable house we will likely have the highest education/income in the neighborhood. That makes me think the price is still too high.
MM,
No, I don't know the guy. As far as I can see he made nothing on 3 of the 4.
Mike,
I used to rent close to that building, and I remember when it "went condo" a couple years ago. I remember looking at the listings thinking, no one is going to buy those at that price.
Also, the location is terrible. You are so close to 50 that you might as well be on it. And you are also at the bottom of a large hill that goes up to the area between Courthouse & Rosslyn, which doesn't have that much to offer in terms of shops/restaurants.
It should have stayed a rental. I think people are much more willing to rent in a location like that than buy.
c,
Not your fault, mine for not recognizing my own former zip...
Cara, c,
I think the practice of calling parts of Rockville as North Bethesda and parts of Gaithersburg as North-Potomac is something that happened during the early years of the bubble. People want to attach the name of the area that has more cachet to their own communities. Some people who lived in Wheaton would say they were from Silver Spring.
Aside: A friend of mine who lived at the Wheaton/Silverspring border, technically in Wheaton, was able to buy a home in Great Falls, VA for $900K in 2005 because his home had tripled in value from what he paid in 1996.
Tedk,
When we moved here, I snickered when the property manager referred to the area as "North Bethesda." I figured this was the same concept as "North Potomac" AKA Germantown/Gaithersburg.
Technically, there is an unincorporated area called "North Bethesda" but I never use that term because it will always sound fake to me. However it is completely accurate. The actual border of Rockville starts close to Twinbrook Ave, not down near White Flint (which is in Kensington. How many people realize that 355 runs through/by Kensington?)
Incidentally, the triangle between the two legs of 270 and 495 is officially/technically North Bethesda, but is traditionally referred to as "Bethesda" by virtually everyone.
North Bethesda
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