Amissville, Virginia
An ongoing dialog on real estate news, opinion and trends in Northern Virginia and the greater Piedmont area.
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Nov. 2, 2008
With two days to go before the election, it's time to take a final look at both candidates plans for the real estate portion of our economy. Here, straight from their web sites without editing, is what each candidate has to say:
Barack Obama:
Protect Homeownership and Crack Down on Mortgage Fraud
Obama and Biden will crack down on fraudulent brokers and lenders. They will also make sure homebuyers have honest and complete information about their mortgage options, and they will give a tax credit to all middle-class homeowners.
- Create a Universal Mortgage Credit: Obama and Biden will create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.
- Ensure More Accountability in the Subprime Mortgage Industry: Obama has been closely monitoring the subprime mortgage situation for years, and introduced comprehensive legislation over a year ago to fight mortgage fraud and protect consumers against abusive lending practices. Obama's STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity.
- Mandate Accurate Loan Disclosure: Obama and Biden will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.
- Close Bankruptcy Loophole for Mortgage Companies: Obama and Biden will work to eliminate the provision that prevents bankruptcy courts from modifying an individual's mortgage payments. They believe that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law.
John McCain:
John McCain believes there is nothing more important than keeping alive the American dream of owning a home. Priority number one is to keep well-meaning, deserving home owners who are facing foreclosure in their homes.
John McCain's approach to helping sub-prime or other financially strapped mortgage borrowers is built on sound principles:
- No taxpayer money should bail out real estate speculators or financial market participants who failed to perform due diligence in assessing credit risks. Any assistance for borrowers should be focused solely on homeowners and any government assistance to the banking system should be based solely on preventing systemic risk.
- Any policy of financial assistance should be accompanied by reforms that promote greater transparency and accountability to ensure we never face this problem again.
John McCain has proposed a new "HOME Plan" to provide robust, timely and targeted help to those hurt by the housing crisis. Under his HOME Plan, every deserving American family or homeowner will be afforded the opportunity to trade a burdensome mortgage for a manageable loan that reflects their home's market value.
- Eligibility: Holders of a sub-prime mortgage taken after 2005 who live in their home (primary residence only); can prove creditworthiness at the time of the original loan; are either delinquent, in arrears on payments, facing a reset or otherwise demonstrate that they will be unable to continue to meet their mortgage obligations; and can meet the terms of a new 30 year fixed-rate mortgage on the existing home.
- John McCain's HOME Plan Will Keep 200,000 To 400,000 Families From Losing Their Homes. "But at the same time, McCain is calling for aggressive federal action to help keep 200,000 to 400,000 families from losing their homes. That plan has many of the elements of a proposal by Rep. Barney Frank, D-Mass., and Sen. Chris Dodd, D-Conn., requiring participating lenders to forgive part of the loan principal and then write a new loan that would be backed by the federal government through the Federal Housing Administration." (Tom Raum, "Everyone's Invited: McCain Economic Plan Draws From Both Parties," Tucson Citizen, 4/17/08)
- How It Works: Individuals pick up a form at any Post Office or download the form over the Internet and apply for a HOME loan. The FHA HOME Office certifies that the individual is qualified, and contacts the individual's mortgage servicer. The mortgage servicer writes down and retires the existing loan, which is replaced by an FHA guaranteed HOME loan from a lender.
- John McCain will bolster groups like Neighborworks America that provide mortgage assistance to homeowners in their communities.
Jan. 28, 2007
The existing home sales numbers for December were released this past week and we now have a complete picture of the 2006 year. If you're a seller, it wasn't pretty. But then I'm probably not telling you anything you don't already know!
2006 saw the steepest drop in the number of homes sold in 17 years! That's a pretty tough market. If you sold your home in 2006, congratulations! If you bought a home in 2006, congratulations! If you tried and failed to sell a home in 2006, if it's any comfort, you're not alone!
In spite of those abysmal sales numbers, the price of homes, nationally actually rose by about 1.1 percent. I'm sure you're wondering about those numbers and I'll admit there seems to be a mismatch! Here's some of what I think is going on.
First of all, the calculate what's happened in pricing using the prices on homes that actually sold. In a down market what sells is typically the homes in pristine condition. And, they typically hold their prices better than the rest of the homes on the market. In addition, remember that all those people whose homes are on the market and who've lowered the price $50K and still haven't seen a buyer, are not even showing up here. I believe the 2007 numbers will actually show a further price decline, but that most people in our market won't feel it as much because it will just be a documentation of what's already happened. If you're a seller and you lowered the price of your home substantially, you've already mentally and emotionally taken that hit, even if it doesn't show up in the statistics yet.
As always, all real estate is local. That 1.1 percent is a national average. If you look at the numbers here locally they definitely tell a more dramatic story. We flew higher than most at the peak of the market and we're suffering more than some now. The greater northern VA area shows sales prices for 2006 down a little over 4%. As you get further away from the beltway that decline is steeper.
The National Association of REALTORS, along with several large builders says they've seen the bottom of this market. That may be true, but I don't think we'll know for certain until about May. I'll be watching to see how many homes come on the market and how many buyers show up to buy them.
Whatever 2007 brings it will still likely be a somewhat challenging one for sellers. And we may be nearing the end of the best negotiating opportunity buyers in our area have seen in many years!
As the data begins to appear, you'll see it here! So stay tuned. RSS feeds are now enabled so you can make sure you don't miss anything!
If you'd like to read the MSNBC story on the December numbers, here's the link:
http://www.msnbc.msn.com/id/16806979/from/ET/
Dec. 27, 2006
Having taken a break for Christmas and for nursing of a very sick pet, it's time to get back in the swing of things in the real estate world!
I know many of you are wondering what the new year will bring for the real estate market. I don't claim to have a crystal ball and make no guarantees. Remember the old saying, "I don't make the news, I just report it!" That's how it works with the market as well.
There was an radio interview with Nicholas Retsinas from Harvard University's Joint Center for Housing Studies. The interview was to ask him about the outlook for 2007. Bear in mind that Mr. Retsinas has been pretty bearish on the markets overall and that no doubt remains true as he looks forward. He does agree that the market appears to have bottomed out. However, he sees it staying at the bottom for most, if not all, of 2007. He sees a year of continued slower sales and no increase in prices. According to his projections there may be a few overheated markets where we'll still see additional small price reductions. But for most of us, it will be status quo in the new year.
I don't know how accurate Mr. Retsinas' forecast is, but I don't see any economic factors or real estate market developments that would tell me he's dead wrong.
So, it's your turn to play prognosticator! What do you project for the year ahead? Are you bullish or bearish? More sales? Higher prices, lower prices, or more of the same? What will 2007 bring for the No. VA housing market? I look forward to your input!
Dec. 5, 2006
Toll Brothers came out with earnings reports today that looked pretty ugly! Their net income feel 44% last quarter. And their forward predictions weren't all sunshine and daffodils either! Now, I'd be the first to say that doesn't sound like news. We've heard one bad news story after another in the housing sector. Everybody's earnings look terrible!
But the interesting thing today is that Toll Brothers stock actually went up after their press conference. The market wasn't looking at last quarter, it was looking at what Toll Brothers was saying. And what they said is that they believe they're seeing the bottom in some markets. Most notably for us they specifically mentioned the DC/Northern VA area as one of the places they're seeing that bottom. That would be terrific news!
It should be noted that seeing a bottom does not indicate a big rebound to what we were seeing a couple of years ago. In fact, it doesn't indicate price increases are in the works at all. But if it's true, it would mean an end to falling prices in the near future. It would mean buyers would be a little more comfortable buying again. And these are all very good things!
The question here is how reliable is what Toll Brothers is saying. And it's hard to know. Certainly they have a reason to want to be optimistic for the sake of a higher stock price. But companies who mislead the markets typically get hammered later and most reputable companies don't want to risk that by puffing up their estimates. In fact, often a company would prefer to downplay future expectations.
So, there is reason to be optimistic there. And a little optimism in December never hurt anyone!
Nov. 22, 2006
It is a continuing vexation to me that some of the most important people in our communities can't afford to buy housing! I fret over this, but Long & Foster and their affiliated companies has now done something about it!
Health care workers, teachers, firefighters, police and armed forces personnel can now get some help with buying their own home! This new program uses Prosperity Mortgage to give great deals to these deserving servants. In addition to very attractive interest rates, these mortgage programs provide up to 100% financing, and allow the seller to help with up to 4% of closing costs. There is also a $500 credit at closing to help with anything left over. The program can be used to buy a first home or move up to a larger one. For those who have less than stellar credit, this program has help there as well. Most borrowers will qualify for this program!
There are a lot of other associated benefits and I'll be putting the details of the entire program on my web site http://www.JulieEmery.com later today. In the meantime, you can call me directly at 540-270-2742 or call Sal Rotante with Prosperity Mortgage at 703-303-0356 and tell him I sent you! By the way, Sal is who we used for our mortgage when we bought our home and I can't recommend him highly enough!
If you know anyone working in these service industries, please pass this information along to them. Too many people think it's simply impossible for them to ever own a home. But it's often not true and this program could make a difference for many of them!
Nov. 2, 2006
We have a guest blogger today. His name is Chris Moyles and he is with the Rapidan Better Housing Corporation, a housing oriented non-profit. This is actually taken from a longer post on a local list-serve. But I thought it a timely and important topic for discussion. I'm anxious to hear your thoughts!
First, "Workforce Housing" is a relatively new catch-phrase that has overtaken "Low-Income Housing Project" (with its associated connotations).
However, there is a much better phrase that reflects a new vision of "housing".
That phrase is "Sustainable Community Design". This phrase illustrates that "housing" is just one part of what makes a community viable and sustainable.
Sustainability in this context can be defined as:
The ability to provide for the needs of the community without damaging the ability of future generations to provide for themselves. When a process is sustainable, it can be carried out over and over without negative environmental effects or impossibly high costs to anyone involved.
This concept is vitally important to a discussion of housing for several reasons:
It is important to understand that "affordable housing" is not affordable if it is not tied in to the local community and economy.
Housing is not affordable or sustainable if its occupants must drive far out of the community to find employment. Similarly, local employment is not sustainable if employees must come from far outside of the community to fill those positions.
Community members who have to travel long distances for employment are less likely to engage in the community - as volunteer rescue squad and firefighter members, school mentors, and in other civic opportunities. They are less likely to simply "have the time."
A drive through the suburban sprawl of northern Virginia will illustrate these points. The end result of poor planning in those areas is terrible traffic congestion, poor air quality, and a diminished "quality of life" for all involved.
Aug. 26, 2006
Unless you were on another planet this week, you heard an awful lot of bad news about existing home sales. If you're a seller, or about to be, I'm here to talk you back in off the ledge!
It is certainly true that the documented evidence is now in to support what we've been seeing and feeling locally now for some time. It is a full-fledged buyers market. The numbers locally are worse than the national numbers. But keep in mind that our appreciation was also higher than the national average for the last several years!
So, what should you do if you're home is already on the market? First of all, reevaluate why you're selling. There are people who don't need to sell in this market and who should not sell right now. If you have a choice, I think there's a case to be made for waiting. Now I'm not talking about waiting a month. If you have to sell in less than six months you might as well sell now. I don't think we're going to see a significant improvement in the market for sellers in the near term.
If you're on the market now and no one's looking at your house, it's overpriced. It doesn't matter what the neighbor's house that wasn't as nice sold for last year. Prices are falling and they're going to keep falling. You can drop your price now and actually get a buyer and get it sold. Or you can hold on and eventually take a much steeper discount because prices have fallen further. It's always your choice on how you price your home. But it's the buyer's choice on whether they bother looking at it and whether or not they put in an offer on it. If you're overpriced in this market, neither is likely to happen!
If you know you're going to have to put your home on the market in the near future, consider the pricing very carefully. I would suggest undercutting the price of the most recently sold comparable home by 5%. That's assuming your home is in similar condition. Discount further if that's not the case.
You should also plan on doing a lot more to get your house ready to show. It should be free of clutter. It shouldn't smell like your dogs, cats or birds! If you have animals you may not notice the smells. Ask your REALTOR to do a smell test! Think about hiring a staging professional. Statistics show that homes that are staged sell faster and for more money!
The bottom line is don't panic. There are still buyers out there. You just have to compete aggressively to get them. Go prepare for battle and get in touch if you need reinforcements!
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