Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
I believe once the jumbo conventional loan goes down rom $730K to $625K in October, coupled by more stringent mortgage requirements, such as 20 percent downpayments, we will see another housing downturn for the higher priced market in particular. There are a lot of homes priced around $1 million or more which are not selling. These may not be only desperate sellers, but also builders who will turn desperate very soon.
Interesting regulatory changes who will affect all buyers at http://blog.hsh.com/index.php/2011/04/changes-to-the-mortgage-market-beginning-today-april-1-2011/Costs for borrowing are going up.
By virtue of the power and authority contained in a Deed of Trust dated September 28, 2006, and recorded at Instrument Number 2007214104 in the Clerk's Office for the Circuit Court for Arlington County, VA, securing a loan which was originally $99,750.00. The appointed TRUSTEE, Commonwealth Trustees will offer for sale at public auction at the front steps of the Circuit Court for Arlington County, Virginia, 1425 North Courthouse Road, Arlington, VA 22201 onApril 18, 2011 at 1:30 PMimproved real property, with an abbreviated legal description of LT 7, SEC 1, BLVD ADD LYON, PARK, 5445 SQ FT, and as more fully described in the aforesaid Deed of Trust. The property will be sold subject to prior mortgages, the amounts to be announced at the time of sale.This must be a second trust?
The property will be sold subject to prior mortgages....Could even be a third.
Who forecloses on a second or third?Unless they think there is some decent equity there.
http://realestate.yahoo.com/promo/why-the-housing-market-is-three-times-worse-than-you-think.htmlCorelogic, on the national and market by states. They have a good map of inventory per state.
pat,I'm not a collection attorney and I don't know too much about debt.Perhaps the first is sitting on their hands while the arrearages pile up (leaving less and less equity for the second), perhaps the owner is letting the place fall apart.Perhaps the second wants a judgment in order to go after other assets or do a garnishment...I don't know but there must be a reason.
Here's a study with some interesting national statistics on first time buyers and repeat buyers. With an early 2008 pub. date, the data may not be the same as what you would find in 2011. NAHB study
I liked this bit"First-time buyers are also more likely to have a mortgage, pay a slightly higher rate on their mortgage, and have a higher LTV ratio than move-up buyers"I think there will be a generational Cohort heavily burned and unlikely to want to do this again.
I am sure that move up buyers in this area are more likely to hold mortgages and higher LTV ratios that move up buyers in other areas of the country. Unless you are downsizing (not a move up buyer) or have lots of savings I would think those buyers will still have a mortgage in this area.
http://www.zerohedge.com/article/inflation-misconceptions-hide-downright-u-g-l-y-real-estate-landscape-%E2%80%93-part-1http://bit.ly/huoO0Sefects of interest rates on Cap Rates
DC2,What's the basis for your claim?Thanks,My $0.02
My twocents,The basis of my claim is all the people who I know who are move up buyers and still have a mortgage -bigger than what they had unless they moved far away where prices are lower. I do not consider that moving up.
DC2,So your basis is anecdotal. That's what I figured.For the record, the 2 move up buyers I know, 1 went from a 2/1 condo to a 3/2.5 townhouse that is now paid off. The other went from a 3/1 townhouse to a 5/3 SFH with, currently, a very low LTV.And neither left the area...My $0.02
My twocents,Congratulations to the one who has the house paid off. I am sure that person had a mortgage initially. We are talking at the point of purchase, move up buyers also carry mortgages. Now, several years later (for many 30) they may not have a mortgage. First time buyers will also eventually pay their mortgagges.
My twocents,My point is that I doubt many move up buyers, at the point of purchase had smaller mortgages than the one they were carrying at the point of selling their first property. In other words, I doubt that a move up buyer has a lower mortgage payment than the one they had while living in their first home at the point of sale. Otherwise it does not make any sense. If you have high savings you would have paid your first home and lived mortgage free. Therefore you are exchanging a mortgage free situation to a new mortgage by virtue of moving up.
twoCents25% of all mortgages around here are underwater.i ran into a colleague, we got to chatting, i mentioned bankers and he asked about if i knew anything about mortgage mods. This guy is a retired Military O-6, has a good job, bought a house in 05 and is now 6 figures underwater.He's looking at manuevers to get broke even so he can refi, but,he needs to sink every dime he has to do that.sorry, there are lots of people in that bind in this area. All of whom once were move up buyers.http://www.businessinsider.com/cities-most-underwater-mortgages-2011-3?op=1Look if the MoveUp strategy were a great idea, we wouldn't have 290,000 underwater mortgages.
Pat,There are under water mortgages because prices ran up and then pulled back. Not because move up buying is a flawed strategy.My $0.02
pat, dc2,"move up" means that they sold an existing home to purchase another. I would guess that anyone doing this b/t 2003 and 2006 made out like a bandit on their sale and paid top dollar on their new purchase. A wash perhaps?I would further speculate that the lower priced "first" home had gone up more than the move up; maybe not in absolute dollars, but percentage wise.I don't know what others put down on a move up but when I was doing closings a good number put their entire profit down on the new purchase.I have never done this except in 1031's.
VA Investor,As a percentage, pretty much a lot of properties went up by the same percent in the same locale. Even when the lower priced property went up by a higher percent, you are starting from a lower price point. The difference between the higher priced property and the lower priced property still exists and it is usually wider than what it was when you first bought the first property. It is just math.The only instance when you would have a lower priced property is when prices are going down, but so your first property. No, it was not "a wash". Also remember costs of selling and buying another property ino that equation.
dc2,Let's turn this around and try a different scenario.Suppose your first home was 300K and dropped 20%. Your loss is 60K (not including transaction costs).Your move-up would have been 850K had you bought it during peak pricing when you bought your starter. It also has dropped 20%. This would result in a current price of 680K or 170K less.170K - 60K = 110KObviously, the optimal situation would have been skipping the starter or buying it before 2003 but I don't think anyone here has a crystal ball.
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