buying & selling Home in Washington DC- Long and Foster | Selling Homes Washington DC| Eva

1517 6TH ST NW, WASHINGTON, DC 20001

2010-03-22T07:27:00.000-07:00

1517 6TH ST NW, WASHINGTON, DC 20001

For Sale: Office in Washington Dc, DC, $675,000

2010-02-28T09:36:00.000-08:00

For Sale: Office in Washington Dc, DC, $675,000

DC Weather Alert

2010-02-09T09:52:00.000-08:00

If you are one of the unfortunate 90,000 without electricity and thus no heat, or if you know someone who is, please pass this on. If you have heat and water, please help those who do not. Take in your neighbors, especially the elderly, families with young children and those who are medically dependent. This is the best time to get to know the neighbors you do not know.

If If you are planning to temporarily move out, follow theses directions

1) Locate your main water valve and turn the valve off

a. Open all of the faucets in the home and flush all of the toilets by holding the handle down until most of the water is drained out.

i. Get all of the water out of the bowls to prevent breakage

ii. DO NOT pour any automobile anti freeze into the drain piping

2) Turn the water heater to its lowest setting

a. If gas, it is the large know on the control that shows temperature

b. If electric, turn off the breaker

3) If you have hot water or steam heat.

a. Radiators and system piping is very susceptible to freezing and breaking. There really is nothing you can do except hope the power comes on before damage occurs.

b. DO NOT turn the electric off. Leave the thermostat set at 68*

Electrical Surge

It is very important to help protect your electric equipment. Once the main power starts to try to come back on, it usually sends a surge down the line because everything is calling at once. You will notice this by the power popping on and off. Here are a couple of very easy things to do that will help prevent surge damage:

1) If you have a well pump, and know where the electric switch is, turn the switch off.

a. Once the power stops popping & off and decides to stay on, then you can power it back up

2) If you have a Heat pump and you know where the breaker is, turn that off

a. Once the power stops popping & off and decides to stay on, then you can power it back up

Payam Bakhaje
Realtor®
Direct: (202) 345-2778
Office: (202) 363-1800
Toll Free: (800) 336-0655
Fax: (202) 234-6111
Payam@DCRealtyOnline.com
http://www.dcrealtyonline.com
Long & Foster Real Estate
Company Logo

Great offer for Home buyers

2010-01-29T09:36:00.000-08:00

Closing Cost Assistance and Appliance Incentive for Fannie Mae Homes
Fannie Mae is offering a 3.5% incentive* for buyers who purchase and close on a Fannie Mae-owned home between January 28 and April 30, 2010. Buyers purchasing properties listed on this site that are closed within this period may receive up to 3.5% of the final sales price for:
Closing costs;
The purchase of new Whirlpool® appliances by Fannie Mae; or
A mix of closing costs and appliances, at the buyer’s discretion, up to the maximum 3.5%.
To be eligible for this incentive:
Offers must be accepted on or after January 28, 2010
Property sales must close before May 1, 2010
Buyers must be owner-occupants, investors are excluded
Contact a Fannie Mae listing broker for more information.
*Lenders may impose their own limitations on the use of the 3.5% incentive, so buyers should consult their lenders for guidance.
Buying a home? Take Advantage of a Federal Income Tax Credit
New legislation was approved which extends the First-Time Homebuyer Credit for homeowners through April 30, 2010 with a 60-day cushion beyond that date to complete closing. The program broadens benefits to existing homeowners and now includes:
$8,000 tax credit for first-time homebuyers
$6,500 tax credit for existing homebuyers who have lived in their current residence for at least five years but want to relocate to a new primary residence
Increased income limits for individuals and couples
For more information about this program, click here. Also, speak with a lender, accountant or attorney to learn more about how this may apply to you.
Need help buying a home?
State and local housing authorities often have programs to help homebuyers research and purchase a home. Programs can include counseling, down payment assistance, and more.
Neighborhood Stabilization Program (NSP)
Currently, some local housing authorities and housing non-profits have programs for homebuyers that use HUD's Neighborhood Stabilization Program funds.
Fannie Mae supports NSP and offers some concessions to streamline the purchase of Fannie Mae properties for buyers using NSP funds. This includes:
Deposit Waivers - Fannie Mae will waive the earnest money/deposit requirement for public entities using public funds to purchase a Fannie Mae-owned property. Individual homebuyers using public funds to purchase a Fannie Mae-owned property do not have to meet the full 5% earnest money/deposit requirement. Deposits can be as low as $500.
Reserved Contract Period - Upon receipt of an acceptable offer, buyers have the ability to renegotiate their offer after obtaining an NSP-required appraisal.
Extra Time for Closing - Buyer receives up to 45 days to close, 15 days more than is usually permitted for purchases of Fannie Mae-owned properties.
For more information on NSP programs in your area, click here

Oh, by the way®…if you know of someone who would appreciate the level of service I provide, please call me with their name and business number, and I’ll be happy to follow up and take great care of them.

Payam Bakhaje
Realtor®

Direct: (202) 345-2778
Office: (202) 363-1800
Toll Free: (800) 336-0655
Fax: (202) 234-6111
pbakhaje@lnf.com
http://www.dcrealtyonline.com
Long & Foster Real Estate
3201 New Mexico Ave , NW, Washington, DC 20016

Home Buying Work Shop- Please RSVP NOW

2010-01-27T19:23:00.000-08:00

FHA Mortgages on the way of changes & Real Estate Market in general

2010-01-21T17:36:00.000-08:00

Guideline changes for property flips.

2010-01-20T11:24:00.000-08:00

HUD announced the attached/below on Friday regarding guideline changes for property flips.
Remember that not all Investors will be immediately on board with new guidelines. Some Investors will not adopt new guides at all.
If you receive an FHA Contract on your Listing that Seller has owned less than 90 days, insist that Lender address this concern in Lender Letter.

If Lender does agree to allow waiver for 90 day rule, please note that there are specific conditions that need to be met.

HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS
Measure to help bring stability to home values and accelerate sale of vacant properties

In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes…

…The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.

• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website at: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

To read this press release in its entirety, please visit: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-011

Oh, by the way®…if you know of someone who would appreciate the level of service I provide, please call me with their name and business number, and I’ll be happy to follow up and take great care of them.

New Video from American Idol

2010-01-18T11:15:00.000-08:00

National Might get New Stadium

2009-12-15T17:33:00.000-08:00

Loudoun eyes P-Nats as ballpark tenant

By Robert Daski
Published: December 14, 2009
Updated: December 14, 2009

The Potomac Nationals might get a new stadium—in Loudoun County.

A pre-application has been submitted by a representative of Comstock Loudoun Station L.C. in Reston to build a stadium in Loudoun for the P-Nats.

The request would put the new stadium in Loudoun Station, a community in the Dulles District.

"The application has to be reviewed by the staff and reviewed by the planning commission and reviewed by the board of supervisors," said Valerie Suzdak, aide to Loudoun County Board of Supervisors Dulles District representative Stevens Miller. "It is somewhat of a lengthy process."

Suzdak said the application calls for the purchase of property near a Metro station. Morefield Station is set to be a future Metro Silver Line site near the proposed stadium.

The Carolina League franchise has called Pfitzner Stadium home since 1984, but has sought an upgraded facility for many years.

"The Potomac Nationals are dedicated to trying to create the best possible environment for its fan base in Northern Virginia to watch baseball," Potomac Nationals owner Art Silber said. "We're pretty proud that our fan base is throughout Northern Virginia."

Silber said P-Nats ownership has enjoyed positive relationships to either improve Pfitzner or put together a deal for a new stadium. He would not comment "on any individual area" where the team could build a new stadium.

Prince William Board of County Supervisors Chairman Corey Stewart said the board could not do anything to prevent Silber from moving the team. But Stewart does want the team to remain in Prince William.

"The team is very important to the families of Prince William County who love baseball," Stewart said. "It's a great family past time. I think the community would be very saddened to see the team leave."

Stewart said county officials have explored sites to build a new stadium in the county.

"We've looked at sites off of I-95 and Prince William Parkway," Stewart said. "We've looked at sites at Davis Ford Road and Prince William Parkway and we're looking at sites on Innovation at [Va.] 28 and the [Va.] 234 bypass. [We want the stadium to have] more visibility and easier access. It has to have visibility and has to be located on a major roadway."

Stewart also said the economic downturn has put plans for a new stadium on hold. He said it will be unlikely a stadium will be built in 2011.

"The county has been working with the team over the past few years to get a new site," Stewart said.

"The team has been working to find financing for a new stadium. If there's anything we can do without a significant expenditure of taxpayer dollars to find a new location to help obtain financing for a new stadium, the board would be very interested in that."

Stewart said the county government cannot fund a new stadium while cutting back on every county service.

"Mr. Silber understands that," Stewart said. "He understands the situation the county is in. He's committed to Prince William county. He loves this county, but he's got a team to look after."

Monday, December 14, 2009, 6:23am EST

Slow going for Silver Spring transit center
More than a year into construction, progress has been slow at the Paul S. Sarbanes Transit Center in Silver Spring. For about 10 months, the bulk of the work involved utility relocation, including coming up with an approach that would avoid major work on nearby Colesville Road, according to The Washington Post.

Solving the logistical issues has taken its toll on the construction schedule, the Post reported. The project is three or four months behind schedule but should be done in early 2011.

Monday, December 14th 2009

Estate tax on brink of problematic repeal
Kent Hoover Washington Bureau Chief
The House passed legislation that would permanently extend this year's estate tax rates and exemptions, but the Senate may not act on the bill before Jan. 1.

If an estate tax bill isn't enacted by then, the federal tax on inherited assets would go away in 2010. The tax, however, would be scheduled to return in 2011 at much higher rates and lower exemptions.

Everyone agrees that doesn't make sense, but that's the situation Congress created in 2001, when it passed a 10-year tax bill that gradually phased out the estate tax. At the time, supporters of estate tax repeal hoped they could win permanent repeal before the tax returned at 2001 levels in 2011.

Now, as 2009 draws to a close, permanent repeal is off the table. And with the Senate stuck on health care reform, it's not clear whether that chamber will address the estate tax's future before the end of the year.

"I don't know how they solve it," said Clint Stretch, managing principal, tax policy, for Deloitte Tax LLP in Washington, D.C. "My guess is that they do."

If they don't, "we're in a bit of a touchy situation," said Will Fuller, senior estate planner and director with the law firm Howard Rice Nemerovski Canady Falk & Rabkin in San Francisco.

Small biz wants high exemption

The House voted 225-200 Dec. 3 to make the current estate tax rate of 45 percent permanent and exempt $3.5 million of assets from the tax. No Republicans voted for the bill.

"Death should not be a taxable event," said Rep. Sam Graves, R-Mo., the ranking Republican on the House Small Business Committee.

Drew Greenblatt, president of Marlin Steel Wire Products in Baltimore, said his family shouldn't have to pay a 45 percent tax on his assets when he dies because his income already is taxed at an 35 percent annual rate. The estate tax forces him to spend thousands of dollars a year on insurance policies, he said, money that could be used to hire additional workers.

"We make an insurance company rich because I don't want to give my wife a $2 million tax bill the day I die," Greenblatt said.

Many groups representing family-owned businesses agree the estate tax is unfair and should be repealed, but they're willing to settle for permanent estate tax legislation that would reduce the tax rate to 35 percent and raise the exemption to $5 million.

Plus, they want the exemption to be adjusted for inflation. Otherwise, more Americans would be subject to the tax every year. Bill Rys, tax counsel for the National Federation of Independent Business, said the estate tax exemption needs to be high enough so that it's not an issue for small businesses.

"It shouldn't be something that small business owners have to stay up at night and worry about," Rys said.

Nearly all small business owners, however, already are exempt from the estate tax, according to the Center for Budget and Policy Priorities. It points to a study by Urban Institute-Brookings Institution Tax Policy Center that found that only 100 small businesses and farm estates would owe any estate tax next year if the 2009 exemption is continued.

Tax lapse would be messy

Allowing the estate tax to lapse Jan. 1 would create its own set of problems, especially if Congress reinstated it later in the year.

For one thing, it's not clear if Congress could apply the tax retroactively to the estates of people who died during a period when death wasn't a taxable event. Any attempt to do so likely would be challenged in court.

Stretch said a temporary lull in the estate tax also could have "a perverse impact" in situations where a wealthy individual is receiving extraordinary life-prolonging medical care. Family members could make their decisions on when to pull the plug based on estate tax reasons.

"It's a very morbid prospect," Fuller said.

Also, estate tax repeal isn't attractive as it seems, because the 2001 law coupled repeal with a change in how capital gains are calculated for heirs. So-called "carryover basis" tax rules would be enacted. That means heirs would have to pay capital gains taxes on inherited assets based on the price that their dead benefactor paid for them, instead of the assets' value at the time of the decedents' death. That would expose heirs to much higher capital gains taxes and force them to try to figure out what an asset was worth decades ago.

Because of this change, "many, many small businesses" would be better off with an estate tax at 2009 levels than they would be under repeal, said Paula Calimafde, a Bethesda, Md., attorney who chairs the Small Business Council of America.

DC in The Top Five for Market Value

2009-12-15T17:30:00.000-08:00

Study: D.C. ranks No. 6 for retail growth
Washington Business Journal - by Tierney Plumb Staff Reporter
The D.C. area is the sixth most likely region to experience retail growth this year and next, according to Pitney Bowes Business Insight.

Four of the top five cities are in Texas, with Austin at No. 1, followed by Baltimore, Houston, Dallas and San Antonio.

The business research group compared sales growth for the past six quarters -- from the first quarter of 2008 through the second quarter of 2009 -- to pick out cities that have kept up relatively stable retail sales through the economic downturn. It also compared sales projections for six quarters, starting in the third quarter of 2009.

D.C., which is in the top five for value and drug sectors and top 10 for mid-tier and high-end retail stores, also stood out for its projected increase in employment in 2010. It’s also expected to have continued modest gross metro growth fueling the comparable sales growth in all sectors, said the report.

Monday, December 14, 2009, 11:58am EST

Survey: D.C. area execs expect conditions to improve
Washington Business Journal - by Tierney Plumb Staff Reporter
A majority of regional business executives — 59 percent — predict the area’s business and economic conditions will get better over the next six months, according to a survey conducted for the Greater Washington Board of Trade.

Six percent of those surveyed think conditions will get worse and 35 percent expect them to stay the same.

The business outlook index for the region has gone up since the first survey was conducted in February, increasing from 40 to 65.

Clarus Research Group surveyed 200 business executives across the region from Dec. 5 to Dec. 9.

Some regional business executives (32 percent) expect the number of jobs in their businesses to increase over the next six months and 12 percent say they will decrease. Thirty-five percent said their jobs number would remain the same.

“These findings show greater possibility for new employment in the region during the first two quarters of 2010,” said Jim Dinegar, president and CEO of the Greater Washington Board of Trade. “This is hopeful news.”

About 60 percent of survey respondents expect their business to strengthen and 9 percent say it will soften in 2010.

And 55 percent expect their total revenues or sales to go up in 2010 while 12 percent expect them to drop.

Respondents are split on whether obtaining financing and credit will be different, with 37 percent expecting it to get easier and 38 percent expect it will get tougher.

Other findings include:

47 percent of business executives and owners said current business and economic conditions in the region are “mostly good” while 40 percent said “mostly bad”
25 percent said their company’s overall financial situation has improved over the past year while 40 percent say it has declined and 34 percent said it has stayed the same
Plans to increase advertising and promotion have risen from 30 percent to 46 percent since February
About 64 percent continue to say that doing business in Greater Washington is easier than in most other places in the U.S. – by 64 percent to 19 percent
Monday, December 14, 2009, 12:08pm EST

Homes sales up in November for D.C. area
Washington Business Journal - by Sarah Krouse Staff Reporter
Houses in the Washington area spent less time on the market in November than they did a year ago netting at least 90 percent of the average list price.

According to Metropolitan Regional Information Systems Inc., every local jurisdiction except Prince William County saw an uptick in sales volume year-over-year and all Virginia jurisdictions saw a rise in median prices from November 2008.

In Arlington County the median sales price for the 230 units sold in November was $466,500 compared to $445,000 in November 2008. Homes spent an average of 53 days on the market in November of this year compared to 69 days in November 2008. In November 2008, 130 units sold.

The average sale price in the county was 94.53 percent of the average list price compared to 92.87 percent a year ago.

There were 179 units sold in the City of Alexandria in November, a 129.49 percent increase from a year ago. The units spent 61 days on the market, 29 percent less time than in 2008. The median sale price was up 8.44 percent from November 2008 at $392,000 with the average sale price at 94.46 percent of the average list price.

The median price for a home in Fairfax County in November was $350,000, a 9.38 percent increase from last year. The county saw 1,113 units sell in an average of 48 days in November 2009 compared to 872 units in 95 days in November 2009.

The average sale price was 94.82 percent of the average list price compared to 90.60 percent in November 2008.

Loudoun County homes sold in November went for a median price of $325,000, 6.56 percent more than the same time last year. The county saw 391 homes sell and spend 47 days on the market. In November 2008 the 317 homes sold spent an average of 91 days on the market.

In November, the average sale price was 94.8 percent of the average list price compared to 91.59 percent of the average list price in 2008.

In Prince William County there were 651 homes sold in November, 24.21 percent fewer than a year ago. The units spent only 44 days on the market compared to 106 days on the market in 2008 and fetched a median sale price of $213,000 in November compared to 175,000 homes in November 2008. The average sale price in the county was 96.74 percent of the average list price a marked increase from November 2008, when the average sale price was 89.65 percent of the average list price.

Montgomery County, Prince George’s County and D.C. median sales prices stayed the same or fell from November 2008 to November 2009.

Montgomery County’s median sales price stayed at 330,000 in November. The county saw 923 sales in the month compared to 528 in November 2008 and units spent 36.79 percent less time, or 67 days on the market.

The average sale price in the county was 94.21 percent of the average list price. In November 2008, the average sale price was 90.59 percent of the average list price.

The median sale price in Prince George’s County was $205,000, a dip from $246,000 in November 2008. Still, 632 homes sold in November compared to just 333 in the same period last year. Those units sold in 119 days this year compared to 141 days in 2008.

The average sale price was 90.24 percent of the average list price in November 2009. A year ago the average sale price was just 86.25 percent of the average list price.

D.C.’s median sale price was $364,000 in November 2009, down from $389,000 in 2008. The 620 units sold spent 72 days on the market compared to 75 days in November 2008. The number of units sold rose significantly — 98.08 percent — from November 2008.

The average sale price in the District was 92.64 percent of the average list price in November 2009, a very slight increase from that percentage in November 2008. The average sales price was 92.24 percent in November 2008.

Payam Bakhaje
Realtor®
Direct: (202) 345-2778
Office: (202) 363-1800
Toll Free: (800) 336-0655
Fax: (202) 234-6111
pbakhaje@lnf.com
http://www.dcrealtyonline.com
Long & Foster Real Estate
3201 New Mexico Ave , NW, Washington, DC 20016

Tax Credit Will be extended

2009-11-04T16:45:00.001-08:00

The legislation also would extend the $8,000 homebuyer tax credit to contracts signed by April 30 and closed by June 30. The controversial credit, which many say has boosted home sales in recent months, was set to expire after Nov. 30.

The Senate's bill also created a $6,500 credit for those who buy a home after owning one for the last five years. That measure would apply to contracts signed by April 30 and closed by June 30. The current credit defines a first-time homebuyer as someone who has not owned a residence within the past three years.

The Senate bill would raise the adjusted gross income cap to $125,000 for single filers and $225,000 for joint filers. The amount of the credit currently begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

"It's gonna put people back to work, the home builders, put people in the real estate business," said Sen. Chris Dodd, D-Conn. "The kind of jobs that can make a difference."

The extension will cost $10.8 billion over 10 years, according to the Joint Committee on Taxation.

Through mid-September, 1.4 million tax returns had qualified for the credit, according to the IRS. Some portion of those returns, which the IRS couldn't specify, represents buyers who took advantage of an earlier version of the tax credit, which was only worth $7,500 and has to be repaid over time.

By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors.

"The data on the present home buyer tax credit show that the credit has had its intended impact -- sales have jumped in recent months to a projected 5.1 million for the year and housing inventory has been trimmed, thus stabilizing home prices noticeably," said Ron Phipps, the association's first vice president, in Senate testimony last month.

The credit, however, has also posed many problems. Critics say it's a waste of money because most of those claiming the credit would have bought homes anyway.

It's also been the target of fraud. Some 74,000 people claimed more than $500 million in credits even though they may not be first-time homeowners, according to Treasury officials. And more than 580 children, including some as young as 4-years-old, have claimed the credit.

"Some key controls were missing to prevent an individual from erroneously or fraudulently claiming the Credit and receiving an erroneous refund of up to $8,000," said J. Russell George, Treasury inspector general for tax administration, before a House subcommittee last month.

CNN Radio Capitol Hill correspondent Lisa Desjardins contributed to this report.

First Published: November 4, 2009: 6:11 PM ET

DOWN PAYMENT ON YOUR DREAM---Neighborhood Stabilization Program (NSP)

2009-10-26T15:20:00.000-07:00

Now is an exciting time to buy a home in Prince George's County. Today, first time home buyers can take advantage of the county's Down Payment on Your Dream Program, in which buyers can receive down payment and closing costs assistance when purchasing a vacant foreclosed property in Prince George's County up to $20,000. This information specific guidelines for the homebuyers as well as the necessary steps families must take in order to qualify.

I know that the economic times we are in are tough. However, history has taught us that tough times don't last forever. As a result of our county's progress over the last seven years, we are well positioned to address the challenges we face. That's why the Prince George's County Government is administering this program.

"Prince George's County has always been a great place to experience the American dream of homeownership. We are committed to helping Prince George's families realize this dream.

Jack B. Johnson
Prince George's County Executive "

What's The Program About???

Down payment and Closing Costs Assistance to purchase a vacant foreclosed home.
First time home buyers only or cannot have owned a home anywhere during the previous three years.

Who Can Participate?

Anyone with household income at or below 120% of the area median purchasing a vacant and foreclosed property in an eligible zip code.
To take advantage of $20,000 NSP and $8000 Tax credit, please call me so we can discuss your home purchase.

Payam Bakhaje
Realtor®

Direct: (202) 345-2778
Office: (202) 363-1800
Toll Free: (800) 336-0655
FAX: (202) 234-6111
pbakhaje@lnf.com
http://www.dcrealtyonline.com
Long & Foster Real Estate
3201 New Mexico Ave , NW, Washington, DC 20016

City Business Journals survey says business optimism growing

2009-10-13T21:26:00.000-07:00

Prince George’s OKs new tax incentive area
Washington Business Journal - by Sarah Krouse Staff Reporter
The Prince George’s County Council on Tuesday approved a new incentive zone for businesses hoping to expand in or relocate to the county. The zone encompasses over 6,600 acres of commercial property and aims at encouraging development near the county’s 15 Metro stations.

Known as Enterprise Zones (PDF) , the areas last for 10 years once they are established. The current zone (PDF) would have expired Oct. 15, according to Kwasi Holman, president and CEO of the Prince George’s County Economic Development Corporation.

“We basically did minor expansions that were primarily around subway stations to reinforce the county’s priority of developing areas near Metro stops, especially those contiguous to the District of Columbia,” he said.

The county created “focus areas” around Metro stops such as Seat Pleasant and Landover in which businesses receive enhanced incentive packages.

Focus areas are places with higher than average unemployment, poverty, crime, substandard housing, or vacant square footage.

“The idea is to get an entire area around a metro redeveloped,” Holman said.

The basic state income tax credit is $6,000 per disadvantage employee and $1,000 per non-disadvantaged employee over a three-year period. Those credits jump to $9,000 and $1,500 per employee in focus areas.

Prince George’s County offers 10-year real property tax credits for increases to real property taxes as a result of qualified new construction or property improvements.

In focus areas, there is a 10-year business personal property tax credit that is 80 percent of the amount of tax otherwise due on new qualified business personal property.

Tuesday, October 13, 2009, 2:20pm EDT

Foulger-Pratt buys Alexandria apartments
Washington Business Journal - by Tierney Plumb Staff Reporter
Foulger-Pratt Cos. has bought the The Fields at Landmark in Alexandria for $26.1 million and is planning a rehabilitation process to preserve the affordable housing units.

The 290-unit garden apartment community, built in 1965 and renovated in 1998, sits on 8.57 acres adjacent to Landmark Mall at 318 South Whiting St.

The total cost of the transaction, including the acquisition, renovation and closing costs, was $30.5 million.

It has operated as a tax credit community for the past 13 years and Foulger-Pratt will preserve the property -- formerly called Crestview Apartments -- as an income and rent restricted community through the end of the tax credit compliance period, which lasts another 17 years. It worked with the city of Alexandria to score the necessary approvals.

The fully-occupied property will get a $3.2 million renovation by Foulger-Pratt, which affects its boilers, chillers, convector units, piping, paving, landscaping, lighting, and selective unit upgrades in kitchens and baths.

Foulger-Pratt, which has recently bought and revamped other older apartment communities in the area, financed the acquisition using privately raised equity from friends, family, and close business relationships.

“The equity raise for Fields at Landmark was over subscribed, so we’re hard at work finding other acquisition opportunities for our investor group,” said Cameron Pratt, president of Foulger-Pratt, in a statement.

Tuesday, October 13, 2009, 10:59am EDT | Modified: Tuesday, October 13, 2009, 11:04am

Silver Spring building sells for $4.7M
Washington Business Journal - by Tierney Plumb Staff Reporter

8665 Georgia Ave. in Silver Spring

A 16,902-square-foot office building in Silver Spring has sold for $4.73 million.

Encore Properties LLC sold 8665 Georgia Ave. to Gallagher Properties LLC. Its single tenant is EagleBank, which occupies 4,000 square feet and runs a drive-through branch on part of the first floor. The remaining space will be owner-occupied.

It is the second office building of more than 15,000 square feet to sell this year in Silver Spring, according to West, Lane & Schlager, which represented the seller.

The building formerly functioned as the Silver Spring courthouse, and the seller dumped a substantial amount of money into renovations. It last traded in 2004 for $2.95 million, according to Maryland tax assessment records.

Clark Turner and Trevor Campbell of West, Lane & Schlager’s investment services group worked on behalf of the seller.

“This is a fantastic deal for Encore,” Turner said. “The owner managed to achieve strong sales numbers in today’s challenging market.”

The price-per-square foot is significant: The sale price amounts to $280 per square foot on rentable space and $402 per square foot on above-grade space.

Monday, October 12, 2009, 5:01pm EDT

City Business Journals survey says business optimism growing
Washington Business Journal
A new poll of business executives and owners shows that optimism about the economy is growing, but it is more prevalent among big business officials than owners of small- to medium-sized businesses (SMB).

The poll of 202 SMB businesses (five to 499 employees) and 77 big businesses (more than 500 employees) was conducted by City Business Journals Network, a unit of Washington Business Journal publisher American City Business Journals.

The poll found that in September, 38 percent of SMB owners agreed that the economy was “definitely” turning around. That was up from 28 percent in August. Meanwhile, 48 percent of executives at large companies thought that a turnaround was under way.

Big company executives were also more likely to support President Obama’s health-care reform, with 49 percent in support versus 37 percent of SMB owners, and more likely to think TARP funds were being used appropriately (42 percent versus 17 percent).

Thirty-nine percent of big company executives and 25 percent of SMB owners think health-care reform legislation will pass this year, with the rest saying it will not or that they are not sure. Seventy-one percent of SMB owners think the legislation, if passed, will increase the cost of doing business, and 64 percent of big company executives agree.

Fifty-two percent of SMB owners think business prospects will get a little or a lot better over the next year, up from 35 percent in March. Seventy-one percent of big company executives see conditions improving over the next 12 months.

D.C. and suburban Maryland saw a rise in home sales

2009-10-13T06:13:00.000-07:00

Washington Business Journal - by Sarah Krouse Staff Reporter
D.C. and suburban Maryland saw a rise in home sales volume in September, but a decline in median sale prices, while Northern Virginia home prices and sales volume rose.
D.C. home sales were up 18.56 percent in September from a year ago, according to Metropolitan Regional Information Systems Inc.
The District saw 552 units sell last month, compared to 409 units in September 2008.
Though the number of units increased, the median sale price dropped 4.7 percent to $371,568.
D.C. was the only part of the region to see a rise in the number of days units spent on the market — 94 days compared to 82 days in September 2008. And every locality but D.C. and Prince George’s County saw a year-over-year rise in the ratio of average sale price to average list price.
In D.C., the average sale price was 91.78 percent of the average list price, compared to 93.78 percent a year ago. In Prince George’s County, the average sale price was 88.54 percent of the average list price, compared to 89.98 percent in 2008.
Similar to the District, Prince George’s County saw an increase in the number of total units sold — 662 in September 2009, up 21.25 percent from 2008 — though the median sale price was down nearly 20 percent from 2008 at $212,925.
Homes spent an average of 133 days on the market in Prince George’s, compared to 141 days in September 2008.
In Montgomery County, 859 units sold at a median price of $330,000. The median sale price was down 5.71 percent from 2008, but the number of units sold rose 11.85 percent from a year ago and homes spent 83 days on the market compared to 101 days in 2008.
The average sale price was 91.5 percent of the average list price in the county, a slight rise from a year ago.
Northern Virginia fared the best in September. The area, which includes the cities of Alexandria, Fairfax and Falls Church as well as the counties of Fairfax and Arlington, saw 1,684, or 2 percent more units sell at a median sale price of $375,000 in 2009.
The median price rose 7.68 percent from 2008 while the average days on the market dropped to 63 days from 93 days a year ago.
Homes fetched an average sale price that was 94.67 percent of the average list price, compared to 92.56 percent in 2008.
Arlington County saw 221 units sell at a median price that was 6.37 percent lower than 2008 — about $419,000.
The upside for the county was the drop in days spent on the market — 62 days in 2009 compared to 85 days in 2009 — and an average sale price that was 95.36 percent of the average list price. In 2008, the average sale price was just 93.87 percent of the average list price.
Fairfax County homes sold at a median price of $365,000, an 11.96 percent increase from September 2008. The number of units sold rose .95 percent to 1,269 and homes spent an average of 62 days on the market, compared to 96 days a year ago.
The average sale price was 94.49 percent of the list price compared to 92.1 percent in 2008.
Sellers in the City of Alexandria saw an average sale price that was 94.73 percent of the list price compared to 92.64 percent in 2008, but fewer units sold and the median price sank 3.99 percent to $384,000.
The number of units that sold in September — 152 — fell 5 percent from a year ago, but homes spent only 65 days on the market compared to 87 days in 2008.
In Loudoun County, 426 units, 5.54 percent fewer than in 2008, sold at a median sale price of $342,000. The median price in September of this year is 6.88 percent higher than it was in 2008.
Homes spent a staggering 37.11 percent less time on the market — 61 days — and the average sale price was 95.42 percent of the average list price. In 2008, the average sale price was 92.22 percent of the average list price.
Prince William also had a staggering drop in the number of days units spent on the market. Homes in the county were on the market just 51 days in September 2009, compared to 107 days a year ago.
A total of 588 units, or 37 percent fewer than in 2008, sold at a median price of $220,000.
The 11.77 percent rise in median sale price contributed to an average sale price that was 96.39 percent of the average list price. This was a significant increase, as the average sale price was just 91.24 percent of the average list price in 2008.

Friday, October 9, 2009
Freddie Mac to help banks get credit
Washington Business Journal - by Jeff Clabaugh Staff Reporter
Freddie Mac is starting a pilot program to help lenders get access to warehouse lines of credit to fund loans those lenders eventually sell to Freddie Mac and Fannie Mae.
Freddie Mac says it is currently working with Natty Mac, a Guggenheim Partners company, in the pilot program it says.
“The warehouse lending industry has nearly exited the market making it increasingly difficult for lenders to fund loans,” Freddie Mac’s new chief executive Charles Haldeman said in a statement. He calls it much needed additional liquidity for residential financing.
Under terms of the pilot program, Freddie Mac (NYSE: FRE) will provide participating warehouse lenders with commitments to purchase loans if the servicer fails or otherwise can’t meet its obligations

Oh, by the way®… if you know of someone who would appreciate the level of service I provide, please call me with their name and business number, and I’ll be happy to follow up and take great care of them.

Payam Bakhaje
Realtor®

Direct: (202) 345-2778
Office: (202) 363-1800
Toll Free: (800) 336-0655
FAX: (202) 234-6111
pbakhaje@lnf.com
http://www.dcrealtyonline.com
Long & Foster Real Estate
3201 New Mexico Ave , NW, Washington, DC 20016

Weekend Events and Road Closures in DC

2009-09-26T08:47:00.001-07:00

Weekend Events and Road Closures
Several Events Scheduled That Could Impact Traffic

(Washington, D.C.) The District Department of Transportation (DDOT) is advising motorists that the following special events and road work scheduled for this weekend could impact traffic in the District.

Oktoberfest – Barracks Row

This event is scheduled for Saturday, September 26, from 11 am to 5 pm. The following streets will be closed from 7 am to 6 pm:
• 8th Street, SE between E and I Streets
• G Street, SE between 7th and 9th Streets
For more information about the event, visit www.barracksrow.org.

Citywide Emergency Preparedness Exercises

September is National Preparedness Month, and the District is committed to ensuring that this city is prepared to respond quickly and efficiently in the event of an emergency.
This weekend, Saturday, September 26 and Sunday, September 27, District emergency first responders along with their federal partners will conduct mock preparedness drills at multiple locations throughout the city. Please remember, these exercises are only drills. District law enforcement officials and first responders will immediately notify the public once the drills begin.

As part of the exercises, 19th Street, NW between K and I Streets will be closed from 6 am to approximately 4 pm.

Chinese Culture Festival
This event is scheduled for Sunday, September 27, from 10 am to 6 pm. As a result, H Street, NW, between 6th and 7th Streets, will be closed from 8:30 am to approximately 6 pm.
More information about the event is available online at www.dcchineseculturefestival.com.

Fiesta DC 2009

This event is scheduled for Sunday, September 27, from 11 am to 7 pm. The following streets will be closed from 6 am to 10:30 pm:
• Mt. Pleasant Street, NW between Park Road and Argonne Place
• Tilbourne Street, NW between Park Road and Lamont Street
• Argonne Place, NW between Mr. Pleasant Street and Harvard Street
• Lamont Street, NW between Mt. Pleasant Street and 17th Street
• Kenyon Street, NW between 17th Street and Mt. Pleasant Street

Motorists in the Adams Morgan\Mt. Pleasant area should expect delays and heavy pedestrian traffic on Sunday, and participants attending Fiesta DC are encouraged to take public transportation.

For more information about the event, visit www.fiestadc.org.

Lane Closures on Southwest Freeway (I-395)

DDOT is scheduled to close a lane on the Southwest Freeway (I-395) on Sunday, September 27, to conduct a field survey in the roadway. The far right lane on the westbound side of I-395, west of the Francis Case Memorial Bridge, will be closed from 8 am to approximately 2 pm. Motorists should stay to the left to get by.

Index shows third month of home-price gains

2009-09-22T17:24:00.000-07:00

Prices creep up in most Census divisions
Index shows third month of home-price gains
By Inman News, Tuesday, September 22, 2009.

Inman News

An index tracking sales of homes purchased with loans owned or guaranteed by Fannie Mae or Freddie Mac showed home prices rising for the third consecutive month from June to July, by a seasonally adjusted 0.3 percent, the Federal Housing Finance Agency said.

The FHFA's monthly index -- which can understate price swings in either direction because it excludes loans too big or too risky for Fannie and Freddie -- showed U.S. home prices down 4.2 percent from a year ago and 10.5 percent from an April 2007 peak.

FHFA revised downward, to 0.1 percent, a previous estimate that U.S. home prices rose by 0.5 percent from May to June.

The index showed prices rising in five of nine Census divisions from June to July: the Pacific (1.6 percent), Middle Atlantic (1 percent), South Atlantic (0.6 percent), Mountain (0.3 percent), and West North Central (0.3 percent).

Prices were down in the East South Central (-0.9 percent), East North Central (-0.3 percent), West South Central (-0.2 percent) and New England (-0.1 percent) divisions.

Looking back a year, home prices were down the most in the Mountain division (-9.8 percent), followed by the Pacific (-9 percent), South Atlantic (-5.6 percent), East North Central (-3.3 percent), Middle Atlantic (-2.9 percent), New England (-2.5 percent), East South Central (-1.7 percent), and West North Central (-1.5 percent) divisions.

Prices were essentially unchanged in the West South Central division, rising by 0.1 percent from a year ago.

Metro closing National Airport station Labor Day weekend

2009-09-02T13:29:00.000-07:00

Metro closing National Airport station Labor Day weekend
Washington Business Journal - by Sarah Krouse Staff Reporter
Metro will close the Reagan National Airport rail station Labor Day weekend, leaving holiday travelers to squeeze into shuttles or pay for private transportation.

The Washington Metropolitan Area Transportation Authority announced Tuesday its plans to close the Reagan, Pentagon City and Crystal City stops while it replaces 2,000 feet of rail, fixes the aerial structure at the airport stop and performs fire line maintenance on the Blue and Yellow lines.

The transit agency will also replace the Pentagon City stop’s entire rail interlocking, the system that keeps trains in sequence and allows trains to move from one track to another.

The stations will close at 9:30 p.m. Friday and reopen Tuesday morning at 5 a.m.

The Blue line will run from Largo Town Center to the Pentagon station and between the Franconia-Springfield and Braddock Road stops. Yellow line trains will travel between the Greenbelt and Pentagon stops and from the Huntington to Braddock Road stations.

Riders may have to wait up to 20 minutes for a train.

Shuttles to Reagan will leave from the Pentagon Transit Center and arrive at the airport between the rail station and parking garage.

Wednesday, September 2, 2009, 12:44pm EDT | Modified: Wednesday, September 2, 2009, 3:43pm

D.C. post offices targeted for possible closure
Washington Business Journal - by Jeff Clabaugh Staff Reporter
The U.S. Postal Service has pared its list of post offices targeted for potential closing to 413 locations nationwide, including nine post office locations in the District and three in Washington’s Maryland suburbs.

There are no post office locations in Northern Virginia on the current list.

The Postal Service has about 37,000 post office locations across the country, and closing or consolidating hundreds of them is part of massive cost cutting aimed at offsetting a dramatic decline in mail volume. The Postal Service posted a $2.4 billion loss last quarter and expects to lose more than $7 billion this fiscal year.

It has targeted $6 billion in cost cutting measures, which includes a hiring freeze, workforce reductions and buyouts and selling underused postal facilities.

D.C. post office locations on the latest list of possible closure or consolidation are:

Columbia Heights Finance, 3321 Georgia Ave. NW
Fort Davis, 3842 Pennsylvania Ave. SE
Ledroit Park, 416 Florida Ave. NE
Naval Research Laboratory, 4555 Overlook Ave. SW
Navy Annex
Northeast, 1563 Maryland Ave. NE
Petworth, 4211 9th St. NW
Randle, 2306 Prout St. SE
Woodbridge, 2211 Rhode Island Ave. NE
And in Maryland:

Friendship Heights, 5330 Wisconsin Ave., Bethesda
Silver Spring Center, 8455 Colesville Road, Silver Spring
Landover Hills, 7500 Buchanan. Hyattsville
Wednesday, September 2, 2009, 1:50pm EDT

Average salary up 3.4% in D.C. area
Washington Business Journal - by Jeff Clabaugh Staff Reporter
The Human Resource Association of the National Capital Area is out with its annual compensation report, indicating median salary increases of 3.4 percent last year.

D.C.-area employers are budgeting for median salary increases of 3.1 percent this year, HRA-NCA says.

The report, based on surveys with 324 Washington area employers, also says employee turnover between February 2008 and February 2009 was 18 percent, with voluntary turnover of 12 percent.

The financial services industry saw the highest salary increases at 9.3 percent. Publishing and broadcasting jobs saw the lowest raises, at 1.5 percent.

The median federal government employee increase was 4.2 percent in 2009.if

Metro Washington

2009-08-28T13:55:00.000-07:00

Metro Washington unemployment improves
Washington Business Journal - by Jeff Clabaugh Staff Reporter
Unemployment numbers for the metropolitan Washington area showed improvement last month.

The Department of Employment Services says the metro Washington unemployment rate was 6.3 percent in July, down from 6.7 percent in June. It is still sharply higher than the 4.1 percent unemployment rate seen locally a year ago.

Over the last 12 months, the number of employed residents in the Washington Metropolitan Division decreased by 66,600 and the civilian labor force has decreased by 12,700, the agency says.

The government continues to fuel job growth in the Washington area. Public sector jobs increased by 9,900 from June to July, led by state and federal hiring that offset a decline in local government employment.

Professional and business service jobs also saw month-over-month gains, while there were continued job losses in education and health services, information technology and finance-related jobs.

Friday, August 28, 2009, 7:29am EDT | Modified: Friday, August 28, 2009, 8:39am

Ray’s Hell Burger coming to Adams Morgan
Washington Business Journal - by Jonathan O'Connell Staff Reporter

Michael Landrum of Ray's Hell Burger.

View Larger

The local Ray’s Hell Burger chain, which attracted President Barack Obama and Vice President Joe Biden to its Arlington restaurant in May — plans to open its first location in D.C. on one of the city’s busiest corners in Adams Morgan this fall.

According to Kristen Barden, executive director of the Adams Morgan Partnership, a new Ray’s Hell Burger will open in the coming months at 2465 18th St. NW in a building that formerly housed the Ghana Cafe, which did not renew its lease. The address is smack in the middle of one of the city’s liveliest entertainment districts.

“I think it’s going to be a great compliment to the neighborhood,” Barden said. “We have a great variety of bars, restaurants and places to eat, but we don’t have just a burger place. And a burger place of that caliber.”

Barden said she heard the news from the property’s owner, Wilma Roumel, earlier in August.

Neither Roumel nor the burger chain returned phone calls seeking comment.

The building is currently undergoing renovations, and Barden said the upper floors were being made into condominiums. The Adams Morgan Partnership is a business improvement district that promotes cleanliness and safety for the neighborhood’s businesses.

Restaurateur Michael Landrum owns Ray’s Hell Burger and Ray’s the Steaks, both in Arlington. The former expanded into a larger space this summer, where Landrum eventually plans to open a seafood concept, Ray’s the Catch. He also is planning a new Ray’s the Steaks in the Benning neighborhood of Northeast D.C.

Barden said she hoped the new burger place would build on the neighborhood’s late-night offerings, which already include mega pizza slices, falafel sandwiches and empanadas. “It’s going to make a great contribution to the already terrific shops and bars that we have,” she said.

Home sales rise again

2009-06-23T13:44:00.000-07:00

Washington Business Journal - by Jeff Clabaugh Staff Reporter
Related News

Sales of existing homes rose for the second straight month in May, signaling low prices and incentives are attracting buyers.

The National Association of Realtors says existing home sales, including single-family homes, condos and coops, rose 2.4 percent in May. It was the first back-to-back monthly gain in existing home sales since September 2005.

“Historically low mortgage rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates,” said NAR chief economist Lawrence Yun. “First time buyers are also being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory.”

The numbers could be even better, if it weren’t for poor appraisals, says the Realtors association. While pending sales of existing homes - those with signed contracts but not closed - indicate stronger activity, some contracts are falling through from faulty valuations that keep buyers from getting a loan, said Yun.

The NAR calls the appraisal problem serious, and says complaints about faulty appraisals have been snowballing across the country.

First time buyers accounted for 29 percent of sales in May. The number of buyers actively looking is up almost 10 percent from a year ago.

Condominium and cooperative sales saw the biggest gain in May, up 6.1 percent from April.

DC MUD

2009-06-19T10:34:00.000-07:00

Bethesda, Metro, Montgomery Country, Prince George's County, Purple Line

The metro area's arbiters of all things transit, the National Capital Transportation Planning Board (NCTPB), today voted unanimously to endorse light-rail as the preferred mode of transport for the 16-mile Purple Line project between Bethesda and New Carrollton. The light-rail option, which has already received the support of both the Montgomery and Prince George's County Executives and County Councils, along with the Coalition for Smart Growth and the Washington Area Bicyclist Association, has faced a long string of criticisms from Bethesda/Chevy Chase area residents who fear that the project will render their three-mile spur of the Capital Crescent Trail system both physically and environmentally unsound.

Trail supporters lobbed various critiques at the Purple Line prior to the vote, including claims that it would make the area unsafe for schoolchildren, lead to the deforestation of Bethesda’s last remaining green space and the system will amount to little more than a “two billion dollar trolley line.” Others reasoned that the planned location of the Purple Line’s Bethesda depot at Woodmont East is too far away from the Metro, the National Institutes of Health and the soon-to-be relocated Walter Reed Army Medical Center to have any impact on traffic in the area. Anti-light rail advocates instead proffered that the NCTPB should endorse rapid bus service from Bethesda to Silver Spring as the Purple Line’s preferred mode of transport.

“Some of my constituents in Chevy Chase will advocate…bus rapid transit on Jones Bridge Road - [an alternative that] is not supported by the residents of Jones Bridge Road,” said Montgomery County Councilmember and Purple Line Now! founder, George Leventhal. “The difficulty that we have in proposing an alternative that is preferred by both counties, and that is likely to be endorsed imminently by Governor O’Malley, is that anywhere you try to move this transitway, you encounter other problems…This alternative, which is included in our master plan and has been endorsed by both counties, is indeed the right transitway for our congested, urban, inside-the-Beltway corridor.”

Leventhal went onto to point out that his county initially acquired the Capital Crescent Trail for the express purpose of having both a “recreational hiker/biker trail” and future transit line at the same site.

“There would not be a trail today had not Montgomery County, back in 1990, acquired that right-of-way for the purpose of building what is now called the Purple Line,” he said.

Though some area organizations- most notably the Bethesda Civic Coalition's Save the Trail campaign, which collected some 18,000 signatures in support of their cause – opposed the plan, the majority of testimony submitted to the NCTPB was overwhelmingly favorable. With an estimated daily ridership of between 42,000 and 46,000, many believe that the “Rail on the Trail” will provide a crucial east-west link between Montgomery and Prince George’s Counties, resulting in an economic boom for outlying communities and a more efficient Metro system. Even frequent trail users spoke out in support of the plan, illustrating just how multifaceted the Purple Line debate had become.

“The media, unfortunately, portrays the issue of the Purple Line as black and white. You either support the Capital Crescent Trail or you support the Purple Line, but not both. That’s not the case with WABA,” said the cyclist organization's Executive Director, Eric Gilliand. “When finally constructed, the Purple Line will include a direct bike-ped link with the Silver Spring Transit Center, where it will eventually link with the Metropolitan Branch Trail coming out of DC. This is a critical bike/pedestrian transit project that must move forward.”

With NCTPB approval now in hand, the Purple Line’s next stop is with Maryland governor Martin O’Malley, who is expected to endorse the light-rail option and announce a timetable for construction by year’s end. In the meantime, NIMBYs on the other side of the Potomac can get ready for another Metro-centric debate now that plans for a proposed Silver Line, running from downtown Washington to Dulles Airport, are being openly discussed.

Pawn shops no more. As any observer of the area can tell you, the post-riot 14th Street that used to host DC’s finest peep shows and open-air drug markets (RIP Shop Express) is long gone. True, there are probably a dozen dollar stores hocking Obama t-shirts and incense at any one time, but the retail scene has expanded beyond just Footlocker and tattoo artistry of Pinz-N-Needlez. While Whole Foods isn't too far way, the newly-opened boutique grocer, Yes! Organic, should satisfy the immediate needs of hummus-starved newcomers. In fact, the neighborhood today boasts DC’s most impressive array of niche-centric retail with everything from gourmet confectionery (Cake Love) to pricey custom furniture (Vastu) to comic books (Big Monkey) and hand-made jewelry (DC Stem), within walking distance of the U Street/Cardozo Metro station.

Real estate’s best bet

Two blocks north of the famed 14th and U interchange, DC's largest concentration of new condos and apartments is brewing, with more than 1000 new units of housing going up within a stone’s throw of 14th and W. Among those completed are PN Hoffman’s Union Row and Jair Lynch’s Solea condos, while Level 2’s View 14, UDR’s Nehemiah Center residential tower are under construction, and Perseus Realty’s 14W is scheduled to begin shortly. And, unlike, say, the area surrounding Nationals Park in Southeast, where neighborhood amenities are still absent after the residential building boom, U Street is already loaded with restaurants and nightlife of all stripes. And with Room & Board scheduled to open more than 30,000 s.f. of retail space next year, expect much more visibility for the neighborhood.

Eating out: it’s not just half-smokes anymore

While Taco Bell and McDonald's might be the most popular dining establishments (at least at 2 am), the inroads made by funky restaurants like Busboys and Poets, Marvin (country fried chicken and waffles--who knew?) and Tabaq have gone a long way to bringing some flavor to the neighborhood. In the past months, newly opened establishments like cajun/soul food eatery, Eatonville, and The Gibson, where mixologists design the perfect cocktail, have been abuzz in the press and are the newly-minted, go-to destinations for urbanistas city- (and suburb) wide. Even greasy spoon and DC dive landmark Ben’s Chili Bowl has moved upscale by opening a white table cloth eatery, Ben’s Next Door. And After you've over-indulged, you can work it off with an "Urban Funk" class at Results Gym.

Adams Morgan ain’t got nothing on U Street

While nearby Adam’s Morgan may have one thing going for it (read: boozed-up college kids), U Street’s approach to nightlife is more diversified with culture: The Lincoln Theater and Source Theater, DC's most eccentric sports bar, Nellie's, and a laundry list of music venues (The 9:30 Club, Black Cat, DC9, and the Velvet Lounge) share space next to bars that (gasp) don’t specialize in jell-o shots and specials on Miller Lite…not that there’s anything wrong with that.

But it’s still has that old school DC charm

But if you’re really attached to the iPod adapter you keep in your tape deck, it might still be good idea to take it inside before sacking out for the night. Area car thieves have made the old smash-and-grab a fact of daily life at 14th and U, much like five o’clock congestion or sidewalk sermons from Greenpeace. Whether it is women’s clothing, a half-empty pack of cigarettes or the kids’ car seat, literally nothing is too inconsequential a target for area miscreants. For a closer look, check out the MPD's crime map.

Nonetheless, don't be afraid to chill out. This is a neighborhood with not one, not two, but three yoga studios after all. Santa Monica, here we come.

First-Time Home Buyer Tax Credit for Closing will Move Market

2009-05-29T10:24:00.000-07:00

WASHINGTON (May 29, 2009) – Consumers across the country can now take advantage of a Federal Housing Administration program to allow qualified home buyers to apply the $8,000 tax credit when purchasing a home. FHA will now permit its lenders to provide a short-term bridge loan that will let qualified home buyers use the tax credit to either make a larger downpayment above the FHA required 3.5 percent, cover closing costs, or buy down their interest rate.
“A true housing recovery depends on buyers returning to the market and reducing inventory,” said National Association of Realtors® President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Since many of the homes available are lower priced starter homes, the ability for individuals to use the tax credit at closing should have a meaningful impact on home sales and values and will allow thousands of families to achieve the dream of homeownership.”
Shaun Donovan, secretary of the Department of Housing and Urban Development, announced the change today. In an address to several thousand Realtors® gathered two weeks ago at NAR’s Real Estate Summit: Advancing the U.S. Economy, Donovan announced HUD’s plan to offer the tax credit as downpayment assistance. Donovan detailed the modifications to that original proposal and announcement.
“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans allowing eligible home buyers to access the funds immediately at the closing table.
NAR has supported monetization of the tax credit, which was part of an Obama administration housing stimulus plan enacted earlier in the year. NAR petitioned HUD to allow home buyers to use the $8,000 tax credit to help them cover downpayment or closing costs to bring new home buyers to the market and stimulate home sales.
“We think this is a good program; our members have been getting many inquiries from potential buyers about it,” McMillan said. “NAR is pleased that this enhancement has been made to the administration’s housing recovery program. As we have heard before, there can be no economic recovery without a housing recovery. With an abundance of inventory, reduced home prices, historically low interest rates and now the availability of the tax credit at closing, we expect to see the housing market further stabilize and improve.”
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

$8000 Tax Credit

2009-05-20T19:19:00.000-07:00

Brought to You By:
InForum.com

There has been a lot of talk recently about Congress’ economic stimulus bill. While most of the talk has centered around who is getting what and how much, a key provision has not been getting the attention it deserves. That is, the provision that gives first-time homebuyers $8,000 to buy a house before Dec. 1, 2009.

With the passage of the American Recovery and Reinvestment Act, Congress authorized a tax credit to all first-time homebuyers in the amount of $8,000. There are a few specifics about this tax credit that make it such an incredible deal for homebuyers:

The credit is available for home sales closed after Jan. 1, 2009, and before Dec. 1, 2009, and can be claimed on either an amended 2008 tax return or on a 2009 tax return.

The homebuyer does not have to have paid $8,000 in taxes to receive the full amount. As long as it is at least 10 percent of the sale price, the taxpayer qualifies for the full amount.

The $8,000 does not have to be repaid as long as the buyer lives in the home for at least three years.

Another key provision is who qualifies as a first-time homebuyer. The definition of a first-time homebuyer is someone who has not owned a principle residence in the last three years. So this tax credit applies to those who have owned a home in the past but for whatever reason are now renting or some other circumstance.

Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Individual taxpayers with incomes up to $95,000 and married couples with incomes up to $170,000 qualify for a partial tax credit.
Buying that first home is a big deal. More than likely it will be the biggest purchase anyone makes in life. Thanks to Congress, there are 8,000 reasons why it will be a little easier this year.

So while most of the media attention focuses around billions in bailouts or million-dollar golden parachutes, do not forget about the other benefits to the everyday consumer in the stimulus package. For more information on the tax credit, please talk to your local mortgage experts. You can also Click Here to Learn More.

Even though it is a pretty straightforward tax credit, there are other specifics to be aware of. As always, it is a good idea to talk with an expert before making any big financial decisions.

Eastern Market News

2009-05-18T14:55:00.001-07:00

Mayor Adrian Fenty announced yesterday that Eastern Market, Southeast Washington’s famed and historically protected marketplace that was damaged by a fire in April 2007, will re-open – with much fanfare – on Friday, June 26th. The surprise pronouncement of the restoration’s completion came at the end of a tour of the facility, led by Office of Property Management (OPM) Administrator Curtis Clay, that highlighted the $22 million worth of both new and soon-to-be restored features in the works for the area landmark.

The development team – led by OPM, along with Quinn Evans Architects, the Minkoff Company, Keystone Plus Construction, FEI Construction and The Temple Group – plans to reinstate the North Hall’s former use a center for community activity and arts events with a new demountable stage and dance floor. Meanwhile, Fenty stressed that all of Eastern Market’s original vendors will return to their former locations in the building’s Southern Hall, while their temporary home across the street will be repurposed for an as-of-yet undesignated community use.

Additionally, Eastern Market’s basement level will feature a newly relocated pottery studio and, in a first for the 138-year-old complex, new amenities which will include air conditioning and separate men’s and women’s restrooms. OPM was also quick to point out a newly-installed sprinkler system, with the hope that it will prevent the type of incident that led to the market’s shuttering for two plus years.

Ward 6 Councilmember Tommy Wells, who was absent from the afternoon’s proceedings due to a family illness, released the following statement via press release:

"I’m thrilled that Eastern Market is on the verge of reopening. The devastating fire was a blow to our whole community, but the way in which the city rallied around the Market as more than just a building proved how important it is to the fabric of our neighborhood."

That neighborhood will be able to celebrate the project’s completion en masse the day after the ribbon-cutting. Fenty, who called the market a “sparkplug” of community activity, went on to announce that a celebration will be held on Saturday, June 27th along the newly refurbished and soon-to-be reopened 7th Street, SE, which abuts the eastern face of the market.

According to the Office of the Deputy Mayor for Planning and Economic Development, “[OPM] and the District Department of Transportation (DDOT) worked together to minimize disruptions and complete projects simultaneously. The new street includes upgrades of the roadway and roadbed and installation of new brick sidewalks, granite curbs, utilities and lighting.” The street will be open to traffic Monday through Friday, but remain closed on weekends to serve as, in words of DDOT Director Gabe Klein, “a pedestrian plaza.”

HUD Action Allows Home Buyers To Use $8,000 Tax Credit For Downpayments On FHA-Insured Loans

2009-05-14T10:16:00.000-07:00

May 13, 2009 - HUD Secretary Shaun Donovan’s decision to allow consumers to use the $8,000 first-time home buyer tax credit to help cover their downpayment and closing costs on FHA-insured mortgages will be a big boost to the housing market, according to the National Association of Home Builders (NAHB).

“The biggest obstacle for first-time buyers is coming up with a downpayment,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “We commend Secretary Donovan for acting decisively to enable buyers to access the tax credit at the time of closing. This will help to stimulate home sales, stabilize housing and get the economy back on track.”

The measures announced by HUD would allow FHA-approved lenders; federal, state and local government agencies; and FHA-approved non-profit organizations to supply home buyers short-term or “bridge loans” up to the amount of the $8,000 first-time home buyer tax credit.

Longer term loans secured by second liens can also be used by government agencies and FHA-approved non-profit organizations to facilitate home sales. Several state housing finance agencies have introduced such programs and a number of agencies are considering that possibility.

More information about these programs can be found on the National Council of State Housing Agencies Web site at www.ncsha.org/section.cfm/3/34/2920.

Previously, the home buyer would have been unable to access the tax credit until they filed their next annual tax return or an amended 2008 tax return and received the refund from the IRS.

Robson and others NAHB leaders discussed this matter and other housing-related issues with Secretary Donovan last week.

“Secretary Donovan shares our view on the need for a housing and economic recovery,” said Robson. “We appreciate his leadership in moving swiftly to help first-time home buyers to access the tax credit up-front at the time of closing. The timing could not have been better as we are in the midst of the crucial spring home buying season.”

The next step is to see how FHA-approved lenders use HUD’s new guidelines to actually monetize the tax credit for first-time home buyers and structure the payback provisions of the loans. NAHB encourages lenders to act promptly to put these provisions into place.

To qualify for the tax credit, first-time home buyers must actually close on their home purchase by Dec. 1, 2009. Buyers can take the credit on their 2008 or 2009 income tax return.

For further information about the tax credit – including a detailed question and answer section and a number of home-buying resources for consumers – log on to NAHB’s consumer Web site at www.federalhousingtaxcredit.com. A Spanish version is also available to provide detailed information on the tax credit to Spanish-speaking first-time home buyers.

Consumer confidence in the D.C. area rose

2009-05-07T19:27:00.000-07:00

Consumer confidence in the D.C. area rose seven points between the end of last year and April, according to the Greater Washington Board of Trade's Consumer Confidence Index.

A scientifically selected sample of more than 1,200 local consumers were surveyed in late April.

The Board of Trade’s index, which moved from 49 in December to 56 in April, measures consumer perceptions of the economic situation now and their perceptions of where things are headed in the next six months.

D.C. and Maryland counties experienced the biggest rise in consumer confidence since December, up eight points, followed by counties in Northern Virginia, up three points.

The index is highest in D.C. (59), second highest in Northern Virginia (56) and lowest in suburban Maryland (54).

“The employment situation is still tough for many area consumers,” said Jim Dinegar, president and CEO of the Board of Trade. “It is still hard for many residents to find jobs and meet their economic needs, but it is very encouraging to see consumer confidence rising. It is also good to see that expectations for the future are considerably more positive than they were in December.”

Unemployment in the D.C. area dropped slightly in March, inching down to 5.9 percent, but still way up from 3.3 percent in March 2008, according to the Bureau of Labor Statistics.

Other key findings from the survey:

• Expectations for the future are much higher (72) than perceptions of where things are now, at 39.

• Area consumers between the ages of 30 and 49 have the highest level of overall consumer confidence (58) and consumers 18 to 29 have the lowest (51).

• Positive perceptions of the area's economy (41 percent) are over three times greater than positive perceptions of the national economy (14 percent).

• Nearly four out of every five workers in the region expects their employment to continue during the next six months “as it is now.” Additionally, 15 percent expect to receive promotions.

• Despite the past six months of economic turbulence, 43 percent say their salaries were either increased or supplemented by bonuses or added benefits. Only 13 percent of respondents said their salaries decreased.

• The ends of the income spectrum – those making under $50,000 and those over $150,000 – took the biggest salary hits. Each group said their salaries decreased 17 percent, compared to 12 percent of those making between $50,000 and $100,000 and 10 percent of those making between $100,000 and $150,000.

Payam Bakhaje
Realtor®

Direct: (202) 345-2778
Office: (202) 363-1800
Toll Free: (800) 336-0655
FAX: (202) 234-6111
pbakhaje@lnf.com
http://www.dcrealtyonline.com
Long & Foster Real Estate
3201 New Mexico Ave , NW, Washington, DC 20016

Is this what a bottom looks like?

2009-05-05T13:13:00.000-07:00

Is this what a bottom looks like?

Robert Durell for The New York Times
Chris and Rebecca Whitman in the yard of the three-bedroom home in Sacramento they bought for $224,500. They looked at dozens of foreclosed houses, before buying this one from investors.

This city was among the first in the nation to fall victim to the real estate collapse. Now it seems to be in the earliest stages of a recovery, a hopeful sign for an economy mired in trouble and anxiety.
Investors and first-time buyers, the traditional harbingers of a housing rebound, are out in force here, competing for bargain-price foreclosures. With sales up 45 percent from last year, the vast backlog of inventory has diminished. Even prices, which have plummeted to levels not seen since the beginning of the decade, show evidence of stabilizing.

Indications of progress are visible in other hard-hit areas, including Las Vegas, parts of Florida and the Inland Empire in southeastern California. Sales in Las Vegas in March, for example, rose 35 percent from last year.

“It’s fragile, and it could easily be fleeting,” said an MDA DataQuick analyst, Andrew LePage. “But history suggests this is how things might look six months before prices bottom out.”

Hope for housing was on full display in the stock market on Monday. News that pending home sales rose in March instead of falling, coupled with improved construction spending, propelled a strong rally. One broad market average, the Standard & Poor’s 500-stock index, is now in positive territory for the year, after being down 25 percent on March 9.

No one in Sacramento is predicting that local housing prices, which have been cut in half from their mid-2005 peak, are going to reclaim much of that ground anytime soon.

Instead, this is what passes for wild-eyed optimism: a belief that things have finally stopped getting worse. “A period of price stagnation would boost a lot of spirits,” Mr. LePage said.

When a market bottoms, foreclosures usually stop piling up and banks become more willing to make loans, confident the collateral backing them will not fall in value.

Nationally, signs of progress in real estate are still faint at best. Existing home sales in March were down 7 percent from last year, according to the National Association of Realtors.

The supply of unsold homes was about 10 months, a number that has changed little over the last year and is abnormally high. But first-time buyers were an impressive 53 percent of the market — and that was largely before a first-time buyer’s tax credit of $8,000 became available.

With the tax credit in place and interest rates low, the pace of sales may be picking up. The Realtors’ group said Monday that the number of houses under contract in March was up 1 percent from a year earlier. Those pending deals will be reported in the existing-home sales for April and May.

Sales volume tends to recover long before prices. In fact, some analysts think price declines in many markets are accelerating. First American CoreLogic, a real estate data firm, reported that “the depth and breadth of price declines continued to worsen in February.” Fitch Ratings recently revised its estimate of future declines to 12.5 percent, from 10 percent, saying the drop would extend to the end of next year.

Amid the uncertainty, Sacramento is drawing scrutiny as a test case. The area boomed in the first part of the decade; the population of Sacramento County increased 10 percent, to 1.4 million, as San Franciscans sought cheaper places to live.

When the market peaked and the ability to refinance all those costly mortgages dried up, the carnage began. There have been 28,898 foreclosures in Sacramento County since 2005.

Sales in the top half of the market remain slow. The Federal Reserve reported on Monday that half of all banks recently tightened their lending standards on prime mortgages. Many would-be buyers, here as elsewhere, simply cannot get financing.

Sellers, meanwhile, are reluctant to lower their prices, preferring to bide their time. New construction is nearly nonexistent.

What drives the market here, then, are all those foreclosures. Two-thirds of the 2,092 existing single-family houses and condominiums sold here in March were bank repossessions, up from 8.5 percent two years ago, according to MDA DataQuick, a real estate research firm.

These cut-rate properties are engendering the same frenzy and frustration that symbolized the boom, as Rebecca and Chris Whitman discovered when they started looking for a house in December. Ms. Whitman’s new job as an athletics director at Sacramento State required an immediate move from Chico, two hours north.

In two months the couple looked at 100 houses, nearly all foreclosures priced under $200,000, making verbal offers on 20. Only rarely did they get a response. Banks trying to unload large numbers of properties are less interested in traditional transactions with individuals than all-cash offers from investors.

As interest rates fell, the Whitmans were able to increase their price limit. They ended up buying from investors. A syndicate had bought a three-bedroom foreclosure on a cul-de-sac in eastern Sacramento last fall for $172,000, made a few improvements and was flipping it — another boom-era element that is back. The Whitmans bought it three weeks ago for $224,500.

“We think we got a good deal,” said Ms. Whitman, 31. Their monthly payment, including property taxes, will be about $1,200. Renting an equivalent house, with space for their two dogs, two cats and the baby they are expecting, would have been hundreds of dollars more.

When buying is cheaper than renting, markets begin to turn. At the current rate of sales, there is less than three months of inventory in the Sacramento market. In normal times, that would indicate a seller’s market.

Except these are not normal times. The unemployment rate in the county is 11.3 percent, the highest in decades. That will prompt more foreclosures all by itself. Furthermore, banks have lifted various processing moratoriums that lowered foreclosures last fall.

These two factors yielded a rise in the number of default notices filed in Sacramento County in March to 2,819, a record. Thousands more bank-owned houses are likely to come to market this summer and fall.

“That will stall any progress toward stability,” said Michael Lyon, chief executive of Lyon Real Estate. “The prospects for a recovery are fool’s gold.”

Mr. Lyon expects further price declines and slowing sales. But David Berson, the chief economist for the mortgage insurer PMI, argues that such bleakness from the people whose livelihood is selling houses is itself a positive sign. “Things are awful at the bottom, and we’re at the bottom,” Mr. Berson said. “No question about it. But the trend going forward should be higher sales, and that will eventually affect prices.”

Payam Bakhaje
Realtor®
Direct: (202) 345-2778
Office: (202) 363-1800
Toll Free: (800) 336-0655
FAX: (202) 234-6111
pbakhaje@lnf.com
http://www.dcrealtyonline.com
Long & Foster Real Estate
3201 New Mexico Ave , NW, Washington, DC 20016

"Mortgage rates lowest in at least 39 years"

2009-04-30T21:09:00.001-07:00

By: David Stevens

"Mortgage rates lowest in at least 39 years"

The reality is treasury rates are actually rising. The 10 year is the highest it's been in weeks. The reason rates are still low is due to the presidents plan that is buying mortgage securities.

This won't last indefinitely and rates will be rising. As the us needs to raise more and more money they will have to sell treasuries at lower prices/higher yields in order to attract investors.

My point - real buyers need to know that these low rates will not be an all spring/summer occurrence.

Is Now the Time for Some Home Buyers to Make a Deal?

2009-04-29T11:39:00.000-07:00

Posted By: Mark Koba | Senior Editor

CNBC.com

While housing prices are continuing to fall, prospective home buyers may not want to wait much longer for the market to hit bottom, experts say.

"Most of the big declines in home prices have occurred," says Lawrence Yun, the chief economist at the National Association of Realtors. "Any more will probably be minimal."

Part of the reason is that homeowners are becoming more realistic in listing their asking price.

"Home prices are where they should be," says Robert Abbott, co-owner and VP of Abbott & Caserta Realtors in northern New Jersey. "Sellers are accepting the current reality and are pricing more realistically."

The latest Case-Shiller report shows that home prices in 20 cities dropped 18.6 percent in February from a year earlier. But for the first time in 16 months, that rate of decline eased from the prior month.

A look at the median home prices across the U.S. shows that some prices have actually risen in recent weeks, according to the National Association of Realtors.

RegionJanuary '09February '09Northeast $227,000$251,000 (up)South$143,300$146,700 (up)Midwest$131,000 $131,000 (same)West$215,000$204,600 (down)

The median prices are still down from the same time in 2008, but that's more a reflection of what were over inflated prices, says Abbott.

"We're experiencing an adjustment in prices," Abbott says. "From my area, we've been in a down market since 2005 and I think we are now at a stabilized place."

The current price level of homes seems to be drawing more buyers into the market, says Jim Gillespie, CEO of Coldwell Banker.

"We are seeing a lot of activity across the nation," says Gillespie. "Of course we're in the Spring market, but we've seen more buyers in the market now than at this same time last year."

More people are not only 'kicking the tires' but actually buying right now, says Abbott.

"We are showing significant activity when it comes to sales," Abbott says. "The number of days for a house on the market are going down."

But not all levels of housing are seeing the benefit, according to Cindy McLellan, a real estate broker in Denver, Colorado.

"Lower levels of home prices are seeing more of the activity," says McLellan. "Higher priced homes, those in the $1 million range and above, are still taking some time to sell. High enders still have trouble getting jumbo loans and sellers are till trying to make a profit."

McLellan says it's the first time home buyers that are driving the market. "With the $8,000 tax break from the Obama Administration and lower interest rates, first time buyers really have an incentive to buy and they are."

Not everyone thinks housing prices have bottomed or might not even go lower. Fred Skolich, president of Skolich Real Estate in New Jersey says prices remain in flux.

"I think they are still going to come down," says Skolich. "We're in the middle of the Spring market. After we get away from that, I think you’ll see some further adjustments in price."

"There's no need to rush," says J. Andrew Hansz, an associate professor with the department of finance and real estate at the University of Texas at Arlington. "It's a buyer's market right now. If you need a place, it's a good time, but buyers are in control."

But home buyers waiting on the sidelines to time the market could be making a mistake, says Skolich. "You might wait for a lower price, but then interest rates could go up," Skolich says. "It's like a stock, you don't know if you're really buying at the bottom or not."

And those prospective buyers making low offers, might find themselves in a bidding war, says NAR's Yun.

"I think some buyers are trying to steal property by offering low prices," says Yun. "But even in those markets that plunge, buyers are coming back and making bids."

"We've seen some bidding wars" says Robert Abbott. "It's very competitive especially when the home is priced right."

Whether someone is in the market to buy, just looking or waiting for prices to drop even more, analysts say the current state of housing is the best it's been for some time.

"I'm not just saying this because I'm in real estate, but I think it’s as great a time to buy as I have seen in my 34 years in the business," says Coldwell Banker's Gillespie. "Houses are affordable, there are plenty of homes to choose from and you have record low interest rates on 30 year mortgages."

High Balance Conforming $729,750 will be available on Monday

2009-04-22T14:36:00.001-07:00

High Balance Conforming $729,750 will be available on Monday

New Video for DC Realty Online

2009-04-12T20:06:00.001-07:00

http://www.mixpo.com/videoad/wLOjPeWpStSX8FghCAB50g/Washington-DC-Real-Estate-Online-

Long and Foster

2009-03-14T18:27:00.000-07:00

Near record low interest rates spur demand for home loans

2009-03-14T18:19:00.000-07:00

Saturday, March 14, 2009
U.S. mortgage applications rose
NEW YORK (Reuters) -- U.S. mortgage applications rose for the first time in three weeks as near record-low interest rates spurred demand for home refinancing and purchase loans, data from an industry group showed on Wednesday.

The jump in demand came several weeks after the unveiling of the strongest government action yet to aid homeowners since the housing market's meltdown began and may help gauge what is in store this spring, the peak home-buying season.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended March 6 increased 11.3% to 723.4.

U.S. President Obama last month announced the Homeowner Affordability and Stability Plan, which is designed to provide much-needed support to the housing market. The goals of the housing plan are to support refinancing for good quality borrowers; help distressed borrowers avoid foreclosure; and stimulate new housing demand through the expansion of Fannie Mae and Freddie Mac , the top two U.S. home funding companies.

Mark Goldman, lecturer of real estate at San Diego State University, said interest rates on mortgages are at enticing levels that could lift demand in the months ahead.

"It does not really matter if interest rates on mortgages move up one week or move down another, they are still at historically low levels," he said.

"What is important right now is that home affordability has improved and low interest rates help more people afford to buy a home," he said.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.96%, down 0.18 percentage point from the previous week and the second lowest rate since the weekly MBA survey began in 1990. The record low was 4.89% for the week ended Jan. 9, 2009.

Renters Lose Edge on Homeowners

2009-03-02T11:26:00.000-08:00

The relative cost of owning versus renting is swinging back in favor of homeownership in some U.S. markets, buoyed by several quarters of sharp declines in home prices.
At the height of the housing boom, as home prices surged, demand for rentals started to rise as the gap between owning and renting widened significantly. Even after the housing market soured, apartment demand grew as former homeowners became renters, allowing landlords to push healthy rent increases.
Now, after two years of rapid home-price depreciation, the relationship between the cost of rental payments versus after-tax mortgage payments is tilting toward ownership in a number of metropolitan areas.
Over the past 18 years, after-tax mortgage payments have averaged 26% more than rent payments, according to Green Street Advisors, a real-estate consultancy based in Newport Beach, Calif. In 2006, at the height of the housing bubble, mortgage payments reached as high as 66% more than rent payments. But by the end of 2008, average monthly rent for the largest 50 metropolitan areas was $1,045, compared with after-tax mortgage payments of $1,300, assuming a rate of 5.5% on a 30-year fixed mortgage. That means mortgage payments averaged just 24% more than rent payments, the narrowest gap since 2001.
In more than half of the top 50 U.S. housing markets -- including Los Angeles, northern Virginia and Las Vegas -- the ratio is now below its 18-year average. In Los Angeles, for example, mortgage payments averaged 60% more than rent payments between 1990 and 2008. Now, those payments average 30% more than rent.
"We're not saying on an absolute basis that it's cheaper to own a home, but on a relative basis...owning is looking much more attractive than it has in a long time," said Andrew McCulloch, a Green Street analyst. While the shift doesn't mean that renters will rush to buy homes soon, "it's not a 'no-brainer' anymore if they're going to rent versus own," he said.
If mortgage rates fall to 4.5% -- and some economists have called for the government to push rates to that level to ease the ho While lower rates could further boost home affordability, that may not be enough to overcome a psychological barrier for many would-be buyers who believe homes will become even more affordable. "One of the challenges in the housing market is not only affordability but also willingness to buy," said Nicolas Retsinas, the director of Harvard University's Joint Center for Housing Studies. "People are still worried about falling prices."
And lending standards are much tighter than they were during the housing boom, when less-creditworthy tenants left apartments in droves to take advantage of no-money-down financing. At the housing market's peak, nearly one in four renters left to buy homes, said Richard Campo, chief executive of Houston-based Camden Property Trust. That rate fell to near its historical norm of around 12% by the end of 2008. "The nonqualified renters are not moving out this time," said Mr. Campo.
A separate report by Moody's Economy.com also finds that home prices relative to rents are more in line with their historical relationship. Using data that measure average home prices and rent payments for 54 metro areas between 1984 and 2004, Moody's Economy.com estimated that eight markets are "undervalued." In those eight markets, home prices relative to rents are below or within 5% of their historical levels. "The bottom is coming into view," said Mark Zandi, chief economist at Moody's Economy.com, "But we've still got a ways to go.” using crisis -- mortgage payments would average 14% more than rent payments, a level last reached in 1998.
The report notes that home prices relative to rents remain well above historical levels in 30 markets, including Philadelphia; Portland, Ore.; and Virginia Beach, Va.
Lower prices and interest rates are spurring some buyers to get off the sidelines. Jason Schanta, 37, an independent contractor, has been ready to buy for three years, but he said he waited because Southern California home prices had become "outrageous."
"I'm not an economic guru but I knew the bubble was going to burst," he said. He is ready to buy a $500,000 home if Bank of America Corp.'s Countrywide Financial unit approves a short sale on the property in San Juan Capistrano, Calif. (In a short sale, the lender agrees to sell a home for less than the value of the mortgage.) Mr. Schanta currently rents a three-bedroom house for $2,250 a month, and says that he will pay just $150 more in mortgage payments and taxes for a house that has an additional bedroom and 350 more square feet. "Renting now costs just as much as buying," he said.
Others are finding that they could pay less on their mortgage than they would on rent. Carla Zeineh, 22, and her husband recently began shopping for a home in Irvine, Calif., and discovered that with a 5% mortgage rate, her monthly payment on a $350,000 two-bedroom home with 20% down could be less than the $1,800 month that they pay in rent on their two-bedroom condo.

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2009-02-15T10:54:00.000-08:00

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2009-02-15T10:50:00.001-08:00

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American Recovery and Reinvestment Act of 2009

2009-02-15T10:44:00.001-08:00

H.R. 1, the “American Recovery and Reinvestment Act of 2009,” passed the House on February 13, 2009, by a vote of 246 - 184. The Senate also passed the bill later that day. The President is expected to sign the bill soon. The bill is a $780 billion package, with roughly 35% of the package devoted to tax cuts (mostly for 2009) and the rest to spending intended to occur in 2009 and 2010.

The mix of provisions of interest to REALTORS® changed frequently throughout the legislative process, with changes continuing to be made just hours before the measure was released prior to the vote. In the end, the elements of NAR’s housing agenda were included. Congress and the President have announced that a finance and housing package (including tax provisions) will be the next “big” initiative, so Congress has by no means finished its work as it affects the housing industry and REALTORS®.
The bill includes the following provisions:
• Homebuyer Tax Credit
• FHA, Fannie Mae and Freddie Mac Loan Limits
• Neighborhood Stabilization
• Commercial Real Estate
• Rural Housing Service
• Low Income-Housing Grants
• Tax Exempt Housing Bonds
• Energy Efficient Housing Tax Credits & Grants
• Transportation Investments
• Broadband Deployment

Homebuyer Tax Credit – The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
FHA, Fannie Mae and Freddie Mac Loan Limits -The bill reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply. In addition, the bill includes language providing the HUD Secretary with the discretion, if warranted, to increase the loan limit for any “sub-area”, i.e.an area smaller than a county. The Secretary's discretion is again limited by the $729,750 cap. These 2009 limits will expire December 31, 2009.
The inclusion of these loan limit provisions in the final bill is a victory for homeowners, buyers and Realtors. While these new limits were included in version of the original stimulus bill approved by the House, the bill first approved by the Senate did not. NAR's Call for Action to both the House and the Senate prior to the final vote advocated strongly for the provisions which were then included in the final bill approved by both Chambers.
Neighborhood Stabilization – Division A, Title XII of the bill provides $2,000,000,000 in additional funding for the Neighborhood Stabilization Program (NSP). The NSP was created by the Housing and Economic Recovery Act of 2089 (Public Law 110–289) to provide grants through the Community Development Block Grant program (CDBG) to states and localities to address the problems that can be created when whole neighborhoods are decimated by foreclosures. The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. In addition, the funds can also be used by states and localities to establish financing methods for the purchase and redevelopment of foreclosed properties. After purchase the homes must be used to assist individuals and families with incomes at or below 120% of area median income. Twenty-five percent of funds must be used for households with incomes at or below 50% of area median income. By leveraging their expertise in partnership with others from both the public and private sector, Realtors® in many communities have been making important contributions to their local communities’ neighborhood stabilization programs.

Commercial Real Estate - Commercial real estate is impacted primarily through those provisions of the bill focused on green building and energy efficiency as well as business tax incentives. H.R. 1 provides significant funds for state energy programs, which could be used to support commerical property owners' investment in energy efficiency upgrades while commercial property owners seeking to invest in alternative energy systems for onsite power generation would benefit from the Department of Energy Renewable Energy Loan Guarantees Program. Of particular benefit to small businesses would be certain provisions of the bill that provide tax relief in the area of bonus depreciation and capital expenditures, as well as the 5-Year carryback of net operating losses for small businesses.

Rural Housing Service– The bill provides an additional $500 million to existing USDA Rural Housing programs. The RHS provides both a guaranteed loan program and a direct housing loan program for those meeting the program’s eligibility criteria. The direct loan program will receive $270 million while $230 million will be allocated for unsubsidized guaranteed loans. It has been reported that this level of funding would provide for an additional 192,000 homeowners.

Low Income Housing Grants - Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations.

Tax-Exempt Housing Bonds - Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT). In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds.

Energy Efficient Housing Tax Credits & Grants - To promote green jobs and energy independence, ARRA invests significantly in efforts to make homes and buildings more energy efficient. The bill provides state and local governments with $6 billion in energy efficiency and conservation grants for energy audits, retrofits and financial incentives. Through 2010, homeowners will be able to claim a 30% tax credit (up from 10%) for purchases of new furnaces, windows and insulation. Another $5 billion will be available to modernize the nation’s electricity grid and install smart meters on homes that help to save consumers money. There is also $5 billion for weatherization assistance for low income households and $2 billion for federally assisted housing (section 8) efficiency efforts.

Transportation Investments - The bill provides $46.7 billion to states and localities for capital investment for surface transportation projects including highways, bridges, transit, and rail projects. NAR policy supports increased spending on the types of transportation infrastructure addressed in the bill with the exception of Amtrak and high-speed inter-city rail where NAR has no policy. These investments will tend to moderate traffic congestion and support a variety of transportation alternatives which will improve the quality of life of American communities and bolster the value of real estate.

Broadband Deployment - The bill creates $7.2 billion in grants to promote broadband deployment in unserved and underserved areas and for mapping the availability of broadband service in the U.S. Any entity is eligible to apply for a grant including municipalities, public/private partnerships and private companies as long as they comply with the grant conditions. The grants are subject to “network neutrality” requirements to ensure that broadband networks be free of restrictions on content, sites, or platforms, on the kinds of equipment that may be attached, and on the modes of communication allowed.
The bill also charges the FCC is with developing a national broadband plan that shall seek to ensure that all Americans have access to broadband capability and shall establish benchmarks for meeting that goal.
These provisions are important victories for REALTORS because increased broadband access promotes economic growth and expands opportunities for home sales. A 2006 Commerce Department report determined that property values are 6% higher in communities where broadband is available. Please feel free to contact me with any questions in this regard.

Oh, by the way®…if you know of someone who would appreciate the level of service I provide, please call me with their name and business number and I’ll be happy to follow up and take great care of them.

News Letter

2009-02-12T18:21:00.000-08:00

Payam Bakhaje
Cell: 202-345-2778
Fax: 202-234-6111

Email Me @ DCRealtyOnline@gmail.com
View My Website
Forward Newsletter

Newsletter February 2009

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Payam Bakhaje
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Fax: 202-234-6111

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The Real Estate Market Minute:

Mortgage Rates Creep Up a Bit As Economy Continues to Transition – ACT NOW!
Rates on 30-year fixed mortgages climbed this week following better-than-expected economic reports. Although rates have inched up slightly, they are still MUCH lower than they were at this time last year.

Click Here to Read the Full Article by BizJournals.com

If you're considering a home purchase or refinance, now is the time to take action! Check out the "Resource Center" in the left-hand column of this newsletter for an interactive online tool that can help answer just about any mortgage or real estate related question.
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Brian Tracy Inspirational Article of the Month:

Your Most Valuable Asset
Brian Tracy is a World-renowned personal and professional development coach that has helped millions of people achieve their goals and develop a positive mindset. Brian will be contributing to our newsletter every month by providing us with an article to help inspire you, our clients, to reach higher and achieve more than ever before.

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Interesting Articles of the Month:

Mystery Roar from Faraway Space Detected
Space is typically thought of as a very quiet place. But one team of astronomers has found a strange cosmic noise that booms six times louder than expected.

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Fishermen Afloat in Giant Icebox Survive for 25 Days in Shark Infested Waters
Two men who drifted helplessly for 25 days in a large icebox through shark-infested waters have been rescued after a chance sighting by an aircraft crew.

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Hey – Who Trunk all the Milk?!
Orphan elephant calves rescued in Kenya from slaughter by poachers can't be satisfied with an odd pint of milk - they need gallons!

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YouTube.com Videos of the Month:

Hidden Camera Prank, Freestyle Running, and One WILD Magic Trick
This 3-pack of video clips covers everything from a hidden camera prank in the woods to Russian freestyle running and one of the coolest magic tricks you’ve ever seen! Feel free to forward these videos to family, friends and co-workers!

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Delicious Recipe of the Month:

Sushi Recipe PLUS Video on How to Make Sushi Rolls at Home
You may think sushi is just raw fish, but you'd only be half right. It's actually the combination of fish and rice - and how it's combined is an art form in itself.

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Dumb Criminal Story of the Month:

Man Robs Bank and Considers it a “Short Term Loan”
This dumb criminal robs a bank and decides to call it a “short term loan”… as if that makes it all better! Did he really think he was going to get away with it? Find out below!

The Full Story by DumbCriminals.com

What Agenda US Media following by hiding these facts from their audience

2009-02-05T06:26:00.000-08:00

Some facts to know:

More than 1000 banks closed in 1930 – only 14 U.S. banks have been taken over in 2008
There are 76 million households in the U.S. that own their home - 24 million of these homes are free and clear
There are 52 million homes with mortgages - 97.2% of these are not in foreclosure, 93.8% of these homes are current on their payments

On a sobering note:

Over 20% of homeowners with a mortgage owe more than their home is worth
40% of all foreclosures are non-owner occupied
How did we get here?

Decade Homes Sold High Homes Sold Average

1970’s 3.9 million 3 million
1980’s 4 million 3.3 million
1990’s 4.9 million 3.9 million
2000’s 7.1 million 5.6 million
Resale numbers – the above does not include new home sales.

Rise in Pending Home Sales Reported

2009-02-03T18:23:00.000-08:00

Enticed by tumbling housing prices, more Americans signed contracts to buy homes in December despite concerns about the economy, an industry group reported on Tuesday.

The National Association of Realtors said that pending home sales rose 6.3 percent in December from a month earlier, with strong gains in the South and Midwest. The number of pending home sales — those in which a buyer has signed a contract but not closed — were up 2.1 percent from December 2007.

But economists cautioned that December could prove to be nothing more than a bump in real estate’s long slide.

“They rebounded from an all-time low, so the level is still low,” said Patrick Newport, United States economist at IHS Global Insight.

The number of pending sales for 2008 was down 9.5 percent from 2007 — a sign of the toll that the tight credit markets had inflicted on the flagging housing market. The Commerce Department reported that new-home sales in December fell to an annual rate of 331,000, their lowest point on record.

The median home price in December was $175,400, down more than 15 percent from $207,000 in December 2007 and at its lowest point since May of 2003, the National Association of Realtors reported.

Forbes’ Ranking World's Best Places for Real Estate Buys

2009-01-27T10:43:00.000-08:00

Forbes’ Ranking World's Best Places for Real Estate Buys
This year, Washington leapfrogged London for the first-place ranking in the world's best cities for real estate investment. But don't count out the world's financial capitals just yet--even with massive financial troubles in London and New York, those cities finished second and third, respectively.
Why? It's the appeal of long-term stability, and fears that emerging countries are going to take a harder hit. While the U.S. property market sputters, China is poised for its worst deflation in a decade, focused heavily on property price declines, according to Deutsche Bank.
"For the U.S. and U.K., part of it is flying back to safety," says François Ortalo-Magne, a real estate professor at the Wisconsin School of Business. " For China and India, there's a sense that we went there and tried it, but it wasn't producing."
Forbes' rankings come from the Association of Foreign Investors in Real Estate, a research association that tracks where member investors are finding the best opportunities around the world. AFIRE surveys its 200 members, who collectively hold $700 billion in cross-border real estate.
U.S. cities surged up this year's list: San Francisco moved to sixth from 24th last year; Los Angeles moved to seventh from 19th; Houston moved to eight from 32nd. Cities in the Asia Pacific region dropped: Sydney fell to 11th from ninth; Hong Kong dropped to 22nd from 10th place.
This year, investors know that valuations can't be trusted. In 2008, the American residential market fell 19%, according to the Case-Shiller index; U.K. prices dropped 16% according to Nationwide, a U.K. builder. Commercial values in both countries have started to soften due to recessions on either side of the pond.
In 2008, investors to spend tried to call the bottom and gambled in emerging markets. This year, they're looking at premium locations in cities with proven track records.
"We don't feel comfortable that we are able to identify what value is," says Richard Kessler, chief operating officer of Benenson Capital Partners, a global real estate investment group. "Having said that, if an opportunity exists on Park and 57th Street, or something we've always wanted to own on Pennsylvania Avenue in D.C., or some other very strategic long-term asset, we would look at it."
That makes 2009 the year of playing it safe and not chasing exotic opportunities in far-flung locations. It's even injected a sense of humility into the investing world.
"There used to be a rivalry between New York and London," says Kenneth Patton, divisional dean of the New York University Schack Institute of Real Estate. "The subject has shifted to the fact that we're both in the same lifeboat, and maybe it's leaking."
While some investors play it safe, others are content to wait out the real estate downturn entirely.
"Most of the [usual] participants are sitting on the sidelines," says Kessler. "There's a lot of capital, but everyone is uncomfortable about deploying that capital."
For their part, the optimists think 2009 might be the year that sideline money starts to come back into the marketplace--and, especially for the cities on this list, it will come back in a flood, not a trickle.
"There's a lot of money that needs to be invested, says Ortalo-Magne.”The instant people feel an inkling of a turnaround, money is going to flow in."
Whether that inkling comes in 2009 or 2010, however, is an altogether different question.
No. 1: Washington, D.C.
Commercial and residential real estate often function as different markets, but both need low unemployment and strong job growth to puts money in the pockets of consumers and help businesses to succeed.
At present, D.C. has the lowest unemployment rate in the country--4.1%, compared to the 7.2% national average. With President Obama's stimulus package recommending $1 trillion in new spending, it's unlikely government jobs--and those they support--will be leaving the District anytime soon.
No. 2: London, U.K.
A pure opportunity market. Home prices in central London continue to decline at a rate of 3.5% per month, according to Knight Frank, while commercial properties have been slipping at 2% per month. The office for market space is particularly overbuilt, according to Knight Frank, and vacancy rates have steadily inched upward.
Even as the country sits firmly in recession, London is a market where investors feel safe making long-term plays and believe they can get reasonable discounts on prices.
No. 3: New York, N.Y.
The New York residential market, which most termed bulletproof during the general housing downturn, has finally started to slip, with sales volume down by as much as 75% in some neighborhoods, according to Miller Samuel, a Manhattan-based appraisal firm. According to Cushman Wakefield, a New York-based commercial real estate firm, prices have started to slip in even premium areas like 57th Street or Soho, though this hasn't yet appeared in quarterly reports.
No. 4: Tokyo, Japan
Japan knows a thing or two about dealing with a real estate collapse. Their "lost decade" of the 1990s came as the result of a speculative real estate bubble. As a result, Japanese investors largely avoided buying and issuing the subprime products flowing through American and European institutions. That makes Tokyo a safer bet in terms of determining reasonable valuations, since there are fewer unknowns in the property market.
No. 5: Shanghai, China
China's growth has slowed from 9% to 7%, and the global slowdown threatens to sink that rate further. According to Deutsche Bank, China is poised for its worst deflation in a decade, driven by property price declines. What makes Shanghai attractive however, is the chance at getting discounted properties in a market that overheated in the last decade.
Unless you believe China won't be important by the time the global economy bounces back, it's difficult to bet against a blue-chip locale like Shanghai, which will likely have a quicker recover cycle than secondary cities like Shenzhen

A Home-Buyer Tax Credit Worthy of the Name

2009-01-24T06:44:00.000-08:00

Should you give the $7,500 home-buyer tax credit a second look? Now that Congress might be on the verge of transforming it into a true tax credit -- one that never has to be paid back -- you might want to do so.

On Jan. 15, the House Democratic leadership outlined its $825 billion economic stimulus package, loaded with $275 billion in tax cuts and $550 billion in new spending on health care, education, alternative energy and infrastructure improvements.

Tucked away in the tax section was a significant improvement to last July's congressional effort to stimulate home sales. That program offered a credit of up to $7,500 to purchasers who had never bought a house or hadn't owned one during the previous three years. To qualify, taxpayers would need to close on a house between April 8, 2008, and this coming July 1.

But relatively few people were attracted to the plan because unlike almost all other federal tax credits, this one had to be repaid in full over a 15-year period. In effect, the $7,500 was more like an interest-free installment loan from the government than a straightforward dollar-for-dollar reduction on buyers' tax bills.

Although final details on a revised credit are still subject to negotiations between the House and Senate -- and to passage of the economic stimulus package itself -- there's a good chance that buyers who sought the credit in 2008, and new purchasers in 2009, will be relieved of the repayment requirement.

According to industry projections, removing the repayment rule could lead to an additional 202,000 purchases this year. The National Association of Realtors is pushing for the July 1 deadline to be extended to Dec. 31, opening the door to even more sales.

Meanwhile, the IRS has come out with two recent advisories on the credit, plus a new Form 5405 for taxpayers interested in claiming the $7,500 benefit, either for 2008 or 2009. You can download a copy of the form at www.irs.gov [http://www.irs.gov] in the publications and forms section.

Based on the latest IRS guidance, here's what you need to know if you're thinking about buying a house this year -- taking advantage not only of low prices and record low mortgage rates, but a temporary tax credit that might or might not eventually have to be repaid.

* The $7,500 is available to singles, married couples filing jointly and unmarried co-purchasers, provided they meet the non-ownership test for the previous three years. Married couples filing separately can claim up to $3,750 each. Unmarried individuals can allocate the credit on their filings according to their respective ownership shares or capital investments in the house.

* Only principal residences -- or in the IRS's words, "the one you live in most of the time" -- are eligible. No second homes, investment properties or houses outside the United States pass the test. However, the definition of "home" extends far beyond conventional houses sited on lots. It "can be a . . . houseboat, housetrailer, cooperative apartment, condominium or other type of residence," according to Form 5405.

For example, if you buy a sailboat or powerboat with full living facilities, tie it up at a marina, and make it your "main home," you should be eligible to claim the credit, though you might want to run all the specifics of your situation by your accountant or tax adviser.

* Even if it's your first home purchase, you are not eligible if your adjusted gross income is above $95,000 (single filer) or $170,000 (married joint filers). Married couples with incomes between $150,000 and $170,000 are eligible for reduced credits, based on a phase-out schedule. Single filers with incomes between $75,000 and $95,000 also are subject to reduced credit limits. D.C. home buyers who are eligible for the city's first-time buyer credit are barred from use of the federal tax credit. Taxpayers who use tax-exempt mortgage bonds issued by state or local governments to finance home purchases also are ineligible.

* You can't claim the $7,500 credit if you buy your house from a "related person," meaning a spouse, parents, grandparents, children or a corporation or partnership in which you own more than 50 percent of the stock or capital interests.

If you pass all of these tests, and get the purchase done by whatever deadline Congress decides as part of the final stimulus package, you should be able to take $7,500 off your federal tax bottom line, and possibly not worry about ever paying it back.

10 Cities Boasting Mini Sales Booms

2009-01-16T10:42:00.001-08:00

Some cities that were hardest hit by the real downturn are experiencing mini sales booms.

Las Vegas real estate properties are down 28 percent in price, but sales of homes are up 15 percent.

Motivated buyers accounted for 64 percent of Las Vegas sales in October, says Radar Logic, a derivatives firm. That’s the highest rate in the country.

"There's a pretty active housing market, it's simply at a lower-priced inventory," says Michael Feder, chief executive of Radar Logic. "And there are now bidding wars taking place over homes in foreclosure."

Phoenix and San Diego are reporting similar experiences.

"We're clearing out the bad news," says Kiva Patten, a director at Merrill Lynch specializing in housing derivatives.

"By the end of 2010 – that's where we're calling the bottom in the forward market. You're going to get a small price appreciation in 2011," says Patten. "It's not like the turn is 10 percent per year, it'll be something like 3 percent or 4 percent."

Here are the cities where experts say it makes the most sense to buy now.

Las Vegas
Sacramento, Calif.
San Diego, Calif.
Los Angeles
Detroit
Phoenix
San Francisco
Washington, D.C.
San Jose
Atlanta

More complete information

2009-01-08T09:45:00.000-08:00

Washington, D.C. Traffic Alerts

2009-01-08T09:39:00.001-08:00

Events and activities celebrating the 56th Presidential Inauguration will take place beginning on Saturday, Jan. 17, through Wednesday, Jan. 21, with the swearing-in scheduled for Tuesday, Jan. 20.

Security and transportation plans for the inaugural have been developed by a partnership of local, state and federal law enforcement and public safety agencies, including the District Department of Transportation (DDOT), the District of Columbia Homeland Security and Emergency Management Agency, the Washington Metropolitan Area Transit Authority, the Virginia State Police, the Maryland Department of Transportation, the United States Secret Service, the Washington D.C. Metropolitan Police Department (MPD), the United States Capitol Police and the United States Park Police.

This transportation plan provides the general outlines for road closures, vehicular restricted zones, public transportation, charter vehicles and pedestrian routes. Additional information is available online for residents of the District, Virginia and Maryland, as well as charter operators, through the websites listed at the end of this plan. Additions to this plan may be made prior to the Inaugural and will be updated on these websites. Specific questions regarding this transportation plan should be directed to the participating agencies as identified.

Access into Washington, D.C., will be limited on Tuesday, Jan. 20. The following is a summary of routes and their status that day:

14th Street Bridge – Restricted to Buses and Authorized Vehicles Only
Roosevelt Bridge – Restricted to Buses and Authorized Vehicles Only
Memorial Bridge – Restricted to Pedestrians and Emergency Vehicles Only
Key Bridge – Restricted to Mass Transit Only
Chain Bridge - Restricted to Authorized Vehicles and Mass Transit Only, no charter buses.
South Capitol Street Bridge – Restricted to Buses and Authorized Vehicles Only
Southeast/Southwest Freeway – Restricted to Emergency Vehicles Only
Rock Creek Parkway – Open to traffic from Beach Drive to Virginia Avenue NW (Holiday traffic schedule in effect throughout the park)
Clara Barton Parkway operating under Holiday schedule (2 way traffic all day)
11th Street Bridges – Restricted to Buses and Authorized Vehicles Only
Sousa Bridge – Open to all traffic from east of the river to security checkpoint in Capitol Hill; Barney Circle closed to all vehicles
East Capitol Street – Open to all traffic but roadways around RFK will be filled with tour buses
Benning Road – Open to all traffic
New York Avenue – Open to all traffic
3rd Street Tunnel – Closed to all vehicular traffic and restricted to pedestrian use only.
Authorized vehicles include taxicabs and limousines with valid licenses.

4.5% Rates Possible?

2008-12-12T15:58:00.000-08:00

The news is abuzz about the Treasury lowering home loan rates to 4.5% to stem the foreclosure crisis but details have been lacking. The Treasury Department stated it is looking for additional ways to help the struggling housing industry and believes lower rates are needed.

This idea is similar to the November 26th announcement from the Federal Reserve where they indicated the intent to purchase up to $500 billion in mortgage-backed securities from Fannie Mae, Freddie Mac and Ginnie Mae. In addition they would buy another $100 billion in direct debt issued by those firms. The November news caused bond prices to spike higher and forced mortgage rates lower. Just like any commodity, whenever tremendous buying interest exists, prices rise. Mortgage rates fell almost 1/2% in rate following the announcement. However, the following week market forces continued and rates spiked a bit higher from the recent lows.

It is important to remember that there are no details to the Treasury plan as of yet. The Federal Government does not directly dictate home loan rates. Rates are determined by price movements of Mortgage Backed Securities (MBS), which compete for investor funds in the open market. The Treasury can buy mortgage bonds on the open market but remember that they are not the only entity buying and selling these instruments.

The Treasury is in a very tough position in trying to manipulate home loan rates. Creating a new Federal mortgage program could be very risky. How would rates be set, who would qualify, and can the funds be used for purchases and refinances are just some of the questions being asked. The other critical concern is implementing such a program without destroying the current mortgage securities market. Doing so could have the unintended consequence of causing additional economic turmoil.

Rates are not going to 4.5% with the wave of a wand by Hank Paulson or Ben Bernanke. As a matter of fact, the massive borrowing to fund the TARP program has a negative effect on rates. At this time, the announcement still leaves a lot of uncertainty. What we do know is that rates are at historic lows and house prices have moderated setting up a great scenario for people who need to refinance or are looking to buy a home. Waiting for rates to fall to 4.5% may leave people sorely disappointed.

D.C. area job growth up 1.2%

2008-12-12T15:57:00.001-08:00

The Washington area’s job count in October rose by 35,700 over the same month last year, according to the Department of Labor.

Employment stood at 3,040,900 in October, or a gain of 1.2 percent over the previous year.

While the local job pool grew, the national job count fell by 0.8 percent for the month compared to last year.

The government sector added the most jobs in the area — up 16,000 jobs.

Public sector jobs made up more than one-fifth of all employment in the D.C. area, second only to professional and business services.

That industry added 11,000 jobs, or a gain of 1.6 percent, while dropping 1.7 percent nationally. Education and health services added 9,900 in the area.

Of the 12 largest metro areas across the U.S., only three others -- Boston, Dallas and Houston -- also saw job increases over last October. The Washington area was condensed to D.C., Arlington and Alexandria for that particular statistic.

Sheila Watkins, the Bureau of Labor Statistics regional commissioner, said that October’s advance was the 76th consecutive year-over-year increase in local payrolls, with growth extending back to July 2002 without interruption.

New Weblog

2008-11-29T13:15:00.001-08:00

Hey guys,
Dave Steven is one of the head of the Long & Foster and he has lunched a great web log. I always refer to educate my self. I wanted to share this with you guys. Please view it and let me know what you think!

http://lnfdave.wordpress.com

RealEstate Tips in Today Market: New Weblog

2008-11-29T13:10:00.000-08:00

RealEstate Tips in Today Market: New Webloghttp://lnfdave.wordpress.com/

New Weblog

2008-11-29T13:09:00.000-08:00

U.S. markets give vote of confidence Tuesday

2008-11-04T15:39:00.000-08:00

U.S. stock markets appeared headed higher Tuesday as polls opened for the presidential election.

Futures tied to the Standard & Poor's 500 Index gained 20 points to 999 at 7:15 a.m. Dow Jones Industrial Average futures gained 181 points to 9513. Nasdaq 100 futures added 30 point to 1371.50.

European stock markets built on gains in Asia overnight. At 8:01 a.m. the FTSE 100 Index was up 89 points, or 2 percent, to 4532 on the London Stock Exchange. The Dax Index added 91points, or 1.8 percent, to 5118 on the Frankfort Stock Exchange.

The Nikkei 225 gained 537 points, or 6.27 percent, to 9114 on the Tokyo Stock Exchange Tuesday.

First-Time Buyer Tax Credit: A Reason to Buy Now

2008-10-16T07:26:00.000-07:00

The homeownership tax credit that the federal government created earlier this year is a hard-won tool at your disposal to encourage your customers to jump off the fence and get into the home buying market.

When you combine the tax credit with today’s continuing low interest rates, large selection of for-sale inventory, and low home prices, many of the pieces are in place for your customers to buy now.

How the Tax Credit Works

The First-time Home Buyer Tax Credit was passed this year as part of the Housing and Economic Recovery Act (H.R. 3221) on July 30 and targets any individual or household that hasn’t owned a home for at least three years. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9.

It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if your customers wait to buy in the first half of 2009 they can take the credit on their 2009 tax return.

The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so your customers can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500.

Income limits are $75,000 for individuals and $150,000 for households. Individuals whose income exceeds the $75,000 limit but isn’t more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000.

Any house is eligible as long as it’s a primary residence and is in the United States.

Buyers Have 15 Years to Pay Back

To help keep the program cost effective for taxpayers, the federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable.

There’s one restriction on the type of financing that your customers can use if they plan to take the credit. That restriction is on tax-exempt mortgage financing. That only applies if your clients are using below-market interest-rate financing from a public agency or nonprofit that’s funding the loan using proceeds from a tax-exempt mortgage-revenue bond issue. For most buyers, this won’t be an issue. It’s mainly an issue for low-income buyers using special mortgage financing.

Housing Will Lead the Economic Recovery

2008-10-15T07:09:00.001-07:00

Long and Foster shares in the commitment to help our clients and their families grab hold of this great thing that we call the homeownership opportunity. As we all work together through this challenging economic time, it is so important to use history in balance with our view of the future to make sure we can provide the best advice and counsel to our clients and so that we can make the best decisions looking ahead.
History 1987: The market dropped from 1st quarter Dow Jones Industrial high of 2722 to 1739 in the fourth quarter with a one day event that dropped the market 22.4%. The market lost over 1/3rd of its value in just a few months.

Today, all of us are very concerned about the events that are occurring as we stare at the media’s review of these daily stock market adjustments, financial news, and speculative forecasts. We just need to keep perspective - it wasn't the end of the world in 1987 and isn't today.

First, despite the enormity and significance of these events, the market will find its bottom and the buyers will be coming back in. All cycles work this way.

Second, this winter will be hard on the markets for a variety of reasons that are natural beyond the financial services industry impact on the global economy. We are headed into winter. Energy prices may rise simply due to heating oil consumption. Retail sales will be low in the 4th quarter and will result in worse earnings for the large retailers. Many, or most, major companies will have worse 4th quarters and worse yearend earnings due to losses this year. We should just be prepared for this.

Third, if you compare to 1987, the market today even if at 8,000, if it bottoms there just to pick a low number, would still be 400% more valuable than at that time. Markets come back from corrections. Anyone who stayed in during that significant correction would be 400% better off today.

Fourth, Housing values are staying very stable this year versus other investments. Many of the weaker markets in our area are actually seeing significant sales increases over 2007. Add to this the fact that a significant part of federal policy to improve the economy is focused on housing and financial institutions that support housing, combined with the fact that pent up demand is at a near peak, and many still believe there we should all be feeling better about our industry forecast versus most others. Put another way, we corrected first then other industries followed. In that context, it is not a surprise that housing usually leads the nation out of recession.
Remember, market corrections lead to lower rates due to a slower economy. Lower rates bring buyers into the market. Housing ALWAYS leads the market out of corrections. Let's applaud each day of this correction because it means the end of it is nearing and, combined with almost three years of pent up demand, lower energy prices, and low interest rates, we (Real Estate Professionals) will be the ones on the forefront of this recovery to come.

This is not the end. It’s the beginning of the good market ahead.

Look at Warren Buffett. He is generally known to be one of the most brilliant investors in the world. Google him today and see how many companies he is buying right now. Warren is a buyer in this market. He already sees the bottom.

I know we are looking for the magic answer, but the reality is that we Real Estate Professionals sit in the best seat in this economy and home buyers will be the first to reap the rewards. Real Estate right now is the safest investment "bet" there is and financing is readily available. I still remain bullish on 2009, and it's our focus and optimism together that will help us all team up to focus on these wins ahead.

David Stevens is President of Affiliated Businesses at Long & Foster Companies and has held numerous executive positions at Freddie Mac, Wells Fargo and Golden West Financial Corp. David sits on the board of directors of RESPRO and is actively sought to testify before congress and other federal and state regulators on housing policy.

Housing Will Lead the Economic Recovery

2008-10-15T07:08:00.001-07:00

Housing Will Lead the Economic Recovery

2008-10-15T07:00:00.000-07:00

.
History 1987: The market dropped from 1st quarter Dow Jones Industrial high of 2722 to 1739 in the fourth quarter with a one day event that dropped the market 22.4%. The market lost over 1/3rd of its value in just a few months.

Today, all of us are very concerned about the events that are occurring as we stare at the media’s review of these daily stock market adjustments, financial news, and speculative forecasts. We just need to keep perspective - it wasn't the end of the world in 1987 and isn't today.

First, despite the enormity and significance of these events, the market will find its bottom and the buyers will be coming back in. All cycles work this way.

Second, this winter will be hard on the markets for a variety of reasons that are natural beyond the financial services industry impact on the global economy. We are headed into winter. Energy prices may rise simply due to heating oil consumption. Retail sales will be low in the 4th quarter and will result in worse earnings for the large retailers. Many, or most, major companies will have worse 4th quarters and worse yearend earnings due to losses this year. We should just be prepared for this.

Third, if you compare to 1987, the market today even if at 8,000, if it bottoms there just to pick a low number, would still be 400% more valuable than at that time. Markets come back from corrections. Anyone who stayed in during that significant correction would be 400% better off today.

Fourth, Housing values are staying very stable this year versus other investments. Many of the weaker markets in our area are actually seeing significant sales increases over 2007. Add to this the fact that a significant part of federal policy to improve the economy is focused on housing and financial institutions that support housing, combined with the fact that pent up demand is at a near peak, and many still believe there we should all be feeling better about our industry forecast versus most others. Put another way, we corrected first then other industries followed. In that context, it is not a surprise that housing usually leads the nation out of recession.
Remember, market corrections lead to lower rates due to a slower economy. Lower rates bring buyers into the market. Housing ALWAYS leads the market out of corrections. Let's applaud each day of this correction because it means the end of it is nearing and, combined with almost three years of pent up demand, lower energy prices, and low interest rates, we (Real Estate Professionals) will be the ones on the forefront of this recovery to come.

This is not the end. It’s the beginning of the good market ahead.

Look at Warren Buffett. He is generally known to be one of the most brilliant investors in the world. Google him today and see how many companies he is buying right now. Warren is a buyer in this market. He already sees the bottom.

I know we are looking for the magic answer, but the reality is that we Real Estate Professionals sit in the best seat in this economy and home buyers will be the first to reap the rewards. Real Estate right now is the safest investment "bet" there is and financing is readily available. I still remain bullish on 2009, and it's our focus and optimism together that will help us all team up to focus on these wins ahead.

David Stevens is President of Affiliated Businesses at Long & Foster Companies and has held numerous executive positions at Freddie Mac, Wells Fargo and Golden West Financial Corp. David sits on the board of directors of RESPRO and is actively sought to testify before congress and other federal and state regulators on housing policy.

Good News For Real Estate Market!

2008-10-14T13:54:00.000-07:00

Former Federal Reserve chairman Alan Greenspan said the U.S. housing market will begin to recover in the first half of 2009, according to an article he wrote for Emerging Markets magazine published on Friday.

Greenspan wrote that the recent slowing in the rate of decline in U.S. home prices is the first positive note in the year-long trauma and that eventually, frozen credit markets will thaw "as frightened investors take tentative steps toward reengagement with risk."

"More conclusive signs of pending home price stability are likely to become visible in the first half of 2009," he wrote.

Once the housing market finds it footing, markets will be able to tackle the core issues of the credit crisis.

But a big question remains, he said: "How much overall deleveraging is going to be required to induce global investors to again become committed holders, at modest interest rates, of the liabilities of the world's financial intermediaries?"

Beyond that, the amount of additional bank capital required to stabilize the financial system remains in question as well.

Greenspan said one sign that the necessary level of bank capital had been reached will be when the U.S. dollar Libor/OIS spread is restored to its pre-crisis level of 15 basis points or less, down from its current level of around 300 basis points. The spread expresses the expected future three-month premium based on London interbank offered rates (Libor) over anticipated central bank rates, or Overnight Index Swap (OIS) rates -- a key measure of financial market stress.

It is happening Again!

2008-10-10T13:20:00.001-07:00

1987: The market dropped from 1st quarter Dow Jones Industrial high of 2722 to 1739 in the fourth quarter with a one day event that dropped the market 22.4%. The market lost over 1/3rd of it's value in just a few months.

Today we are all very concerned about the events that are occurring as we stare at these daily stock market adjustments. We just need to keep perspective - it wasn't the end of the world in 1987 and isn't today.

First, despite the enormity and significance of these events, the market will find it's bottom and the buyers will be coming back in.

Second, this winter will be hard on the markets for a variety of reasons that are natural beyond the financial services industry impact on the global economy. We are headed into winter. Energy prices will rise simply due to heating oil consumption. Retail sales will be low in the 4th quarter and will result in worse earnings for the large retailers. Many, or most, major companies will have worse 4th quarters and worse year end earnings due to losses this year. We should just be prepared for this.

Third, if you compare to 1987, the market today, even if at 8,000 when it bottoms just to pick a low number, would still be 400% more valuable than at that time. Markets come back from corrections. Anyone who stayed in during that huge correction would be 400% better off today.

Fourth, Housing values are really staying very stable this year versus other investments. Many of the publicly acclaimed weaker markets in our footprint are actually seeing significant sales increases over 2007. Add to this the fact that a significant part of federal policy to improve the economy is focused on housing and financial institutions that support housing, combined with the fact that pent up demand is at a near peak, and I still believe there we should all be feeling better about our industry forcast versus most others. Put another way, we corrected first then other industries followed. In that context, it is not a surprise that housing ususally leads the nation out of recession.

Look at Warren Buffett. He is generally known to be one of the most brilliant investors in the world. Google him today and see how many companies he is buying right now. Warren in a buyer right now. He sees the bottom.

I know we are looking for the magic answer, but the reality is that we sit in the best seat in this economy and home buyers will be the first to reap the rewards. Real Estate right now is the safest investment "bet" there is and financing is readily available. I still remain bullish on 2009, and it's our focus and optimism together that will help us all team up to focus on these wins ahead.

Tax Credit $7500

2008-10-10T13:16:00.000-07:00

The renewal of the $5,000.00 first time D.C. home buyer (i.e., purchaser has not owned a principal residence in D.C. within 1 year of the date of settlement) was included in the Emergency Economic Stabilization Act of 2008, which the United States Congress passed on Friday, October 3, 2008 and was signed by President Bush the same day. The tax credit is retroactive to December 31, 2007 and will be good through December 31, 2009. Individuals and families buying a home in the District for the first time are eligible even if they have owned elsewhere but not in the city. Unlike the $7,500.00 tax “credit” that was made part of the Housing & Economic Recovery Act of 2008 the tax payer does not have to repay any of the $5,000.00 D.C. credit. Note, however, that you cannot utilize both credits, so I would favor the D.C. credit since the taxpayer does not have to repay it, even though it is a lower amount (check with your accountant of course). The credit is applied against the taxpayer’s total Federal income tax liability at the end of the year—not a credit of any sort at the time of settlement. It is subject to income limitations and you should consult with your tax professionals for advice.

NEW DC TAX CREDIT

2008-08-05T10:03:00.000-07:00

The Washington Post

2008-08-04T10:07:00.000-07:00

How the housing bill signed into law Wednesday by President Bush affects homeowners:

All homeowners who do not itemize their income taxes can deduct between $500 and $1,000 from their 2008 federal taxes. Anyone buying a first home between April 9, 2008, and July 1, 2009, will receive up to $7,500 in federal income tax credits. The bill includes an estimated $15 billion in housing tax breaks.

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Homeowners struggling to make payments on high-interest mortgages can contact their banks and transform their loans into government-backed, 30-year fixed-rate mortgages.

To qualify, homeowners must have a mortgage debt-to-income ratio greater than 31 percent. To see if you qualify: Multiply your gross monthly salary by 31 percent. A homeowner earning $75,000 a year, for example, must owe a monthly mortgage payments of at least $1,938.

The new loan cannot exceed 90 percent of the home's value and borrowers must prove they can repay the loan.

Congressional budget analysts project that this $300 billion program would help 400,000 homeowners facing possible foreclosure. The program begins in October but officials recommend homeowners begin the process now.

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Homeowners living in neighborhoods stricken by foreclosures, where vacant properties were left run down with overgrown yards, may see improvements. The bill provides $3.9 billion in grants for governments in the hardest-hit communities to buy and fix up already-foreclosed property at a discount.

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First-time buyers or homeowners with subprime mortgages in some states can qualify for low-interest loans or refinancing under a provision allowing states to offer an additional $11 billion in tax-free municipal bonds to pay for such housing projects. The actual dollar amount and the criteria for who might qualify will vary by state.

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Homeowners strapped for cash will be able to receive preforeclosure financial counseling and legal services. The bill allocated $180 million for these services.

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A new fund, paid for with profits from the mortgage companies Fannie Mae and Freddie Mac, will help build affordable rental housing. The two companies will be allowed to buy pricier mortgages, up to $625,000, which would make stable loans available to buyers in expensive cities. Also, Fannie Mae and Freddie Mac will be subjected to greater government oversight. Regulators will have authority to approve pay packages for company executives.

bring back rational higher LTV lending to our markets

2008-05-19T09:28:00.000-07:00

Date: May 16, 2008

Fannie Mae Announces Single National Down Payment Policy;
Replaces Policy Regarding Markets Where Home Prices are Declining

WASHINGTON, DC – Fannie Mae (FNM/NYSE) today announced a new, national policy on down payment requirements for conventional, conforming mortgages the company will purchase or guarantee. Starting June 1, 2008, Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its Desktop Underwriter® (DU®) automated underwriting system, and 95 percent loan-to-value ratios for loans underwritten outside of DU, in all geographic locations in the United States. The new national down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining.

“As another part of our ‘Keys to Recovery™’ initiative, we are today announcing that we will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions,” Marianne Sullivan, Senior Vice President, Single-Family Credit Policy and Risk Management, said. “This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover.”

The new national down payment requirements of 3 or 5 percent will apply to loans for purchase of single-family, primary residences. Down payment requirements will vary for other occupancy, property and transaction types. The company will implement systems and operational changes over the summer to accommodate the new national policy.

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Down Payment Policy
Page Two

“We are able to adopt this new, national down payment requirement, even in markets where home prices are declining, because our new automated underwriting risk assessment model DU Version 7.0 will limit risk layering and assess each loan more precisely,” Sullivan added. “At the same time, we believe that equity matters, especially in this market. Down payments are a critical success factor in homeownership – and responsible lending is good business.”

Since the housing correction began, Fannie Mae has expanded its mortgage guaranty business to serve the market’s urgent need for stability, liquidity and affordability. The company also undertook steps to help protect borrowers, manage the increased credit risk in the market, and fortify the company’s capital position. Among these steps, the company has continued to assess and establish new pricing, eligibility and underwriting criteria for its business that more accurately reflect the current risks in the housing market and guard against the potential for foreclosure. These changes have been incorporated into DU and have included adjustments to credit risk assessment, loan-to-value ratios and down payment requirements, among other factors.

Among the changes in response to market conditions, in December 2007 Fannie Mae adopted a “Maximum Financing in Declining Markets Policy” that restricted the loan-to-value ratios on properties in markets where home prices are declining, essentially requiring higher down payments in these markets. The new single national down payment policy announced today will supersede that policy.

Fannie Mae Senior Vice President Jeff Hayward stressed the company’s commitment to special affordable lending programs to support homeownership for families of modest means. “We are stepping up to provide more liquidity and affordability to some of the most distressed communities while also seeking at least a 3 percent down payment investment through our Desktop Underwriter system from borrowers to help ensure their success.”

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Down Payment Policy
Page Three

Fannie Mae will continue to provide support for homebuyers that need down payment assistance, and will continue to allow loans with Community Seconds® up to a maximum 105 percent combined loan-to-value ratio. Community Seconds allow a borrower to obtain a second-lien mortgage to help cover down payment and closing costs, with funding typically provided by a state or local housing agency; an employer; or a nonprofit organization. Fannie Mae also offers MyCommunityMortgage® and Flex mortgage products, which permit down payment assistance programs in the form of gifts and grants.

“We recognize that down payment assistance programs remain a viable tool for borrowers who can afford a mortgage long term, but might need a little help getting started,” Sullivan said.

As part of its “Keys to Recovery” initiative, Fannie Mae is expanding its partnership with the National Council of State Housing Agencies. The company will provide up to $10 billion in financing to help Housing Finance Authorities (HFA) serve first-time homebuyers of modest means. In some cases, Fannie Mae will purchase HFA mortgages that have greater than 97 percent loan-to-value ratios.

The first “Keys to Recovery” initiative that Fannie Mae announced on May 6, 2008 also includes: streamlined refinancing for Fannie Mae borrowers whose mortgage balances exceed the value of their homes; improved pricing for jumbo-conforming mortgages to help borrowers in high-cost areas; and a neighborhood stabilization initiative with the Center for Community Self-Help for targeted areas with high home foreclosures.

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Fannie Mae is a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. In 2008, we mark our 70th year of service to America’s housing market. Our job is to help those who house America.

Key to Recovery is trade marked, and Desktop Underwriter, DU, Community Seconds and MyCommunityMortgage are registered marks of Fannie Mae. Unauthorized use of these marks is prohibited

Expect a Summer Rise in Home Sales

2008-05-14T15:00:00.000-07:00

A flat pattern in home sales activity should continue for the next couple of months before improving over the summer, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.

Lawrence Yun, NAR chief economist, said the extent of an expected recovery hinges on better access to affordable loans. “Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas,” he says. “As anticipated, we continue to look for a soft first half of the year, for both housing and the economy, before notable improvements in the second half. Some time is needed for FHA and new conforming jumbo loans to become widely available.”

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, edged down 1.0 percent to 83.0 from a downwardly revised level of 83.8 in February, and was 20.1 percent lower than the March 2007 index of 103.9.

NAR President Richard F. Gaylord says additional costs in many markets are hindering a recovery. “Our members are telling us that more buyers are looking at homes but are slow in signing contracts, and that’s contributing to the weakness in pending home sales,” he says. “In many cases buyers are waiting for greater access to affordable credit, especially in higher cost areas, but some are disappointed with what appears to be unnecessarily restrictive lending requirements. The good news this week is there is some discussion toward relaxing some of the burdensome lending practices.”

The PHSI in the Northeast jumped 12.5 percent in March to 80.8 but remains 15.4 percent below a year ago. In the South, the index slipped 0.1 percent to 84.9 and is 26.7 percent lower than March 2007. The index in the West declined 1.4 percent in March to 91.2 and is 9.5 percent below a year ago. In the Midwest, the index fell 10.4 percent in March to 74.1 and is 22.3 percent below March 2007.

Existing-home sales are projected to rise from an annual pace of 4.95 million in the first quarter to 5.82 million in the fourth quarter. For all of 2008, existing-home sales are likely to total 5.39 million, and then rise 6.1 percent to 5.72 million next year. “Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied,” Yun says. The median price is forecast at $213,700 this year before rising 4.1 percent to $222,600 in 2009.

Some areas already are seeing sales increases, underscoring that all real estate is local. In March, unpublished snapshot data shows sales in Bakersfield, Calif., and Jackson, Miss., were higher than a year ago. At the same time, price gains were noted in markets such as Buffalo-Niagara Falls, and Cedar Rapids, Iowa.

On May 13, NAR will report first-quarter data on metropolitan area home prices, covering about 150 metro areas, and state home sales. “Although some market adjustments are necessary, a downward overshooting of the housing market would cause unnecessary loss in economic output, income, and jobs,” Yun says. “It is critical to stimulate housing demand by inducing fence sitters back into the market. A home buyer tax credit on any home purchase would accomplish that.”

Here are some highlights from NAR's report:

New-homes. Sales of new homes are expected to fall 30.9 percent to 536,000 this year before rising 10.1 percent to 590,000 in 2009. Housing starts, including multifamily units, will probably drop 29.5 percent to 955,000 in 2008, and then rise 1.3 percent to 967,000 next year. The median new-home price is estimated to fall 3.7 percent to $238,000 this year, and then rise 5.4 percent in 2009 to $250,900.
Rates. The 30-year fixed-rate mortgage is likely to rise gradually to 6.2 percent by the end of the year, and then average 6.3 percent in 2009.
Affordability. NAR’s housing affordability index is expected to rise 10 percentage points to 127.0 for all of 2008.
GDP. Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.3 percent in 2009. The unemployment rate is projected to average 5.3 percent in 2008 and 5.5 percent next year.
Inflation. Inflation, as measured by the Consumer Price Index, is seen at 3.4 percent this year and 2.2 percent in 2009. Inflation-adjusted disposable personal income is forecast to grow 1.2 percent in 2008 and 3.0 percent next year.

Fed Cuts Rate by a Quarter Point, to 2%

2008-04-30T11:33:00.000-07:00

WASHINGTON — The Federal Reserve reduced short-term interest rates for the seventh time in seven months on Wednesday, the latest in a series of measures it has taken to stabilize financial markets. The central bank lowered its federal funds rate — the rate it charges banks for overnight loans — by a quarter of a percentage point, to 2 percent from 2.25 percent.

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The New York Times

Related
Text: Fed Statement
The latest step by the Fed follows a period of unusual ups and downs in its interest rate policy in the last four years, as the economy has veered from an overheated state to its current downturn. In 2004, when fear of inflation was paramount, the Fed embarked on a succession of rate increases, pausing in mid-2006 at 5.25 percent.

It was then, however, that high interest costs helped burst the housing bubble, ushering in a period of defaults in subprime mortgages and shakiness among sub-prime lenders and mortgage holders. By July of last year, the Fed chairman Ben S. Bernanke was warning of a crisis in the subprime market.

As financial markets plunged in August, Mr. Bernanke led the Fed into its current phase of lowering interest rates. The Fed also pumped liquidity into the markets by making it easier for banks to borrow, and it began suggesting that it would do what was necessary to combat the tight credit market.

But even in the last six months, the Fed has offered mixed, and occasionally discordant, signals. In October, the Fed was still saying that inflation was as much of a concern as a recession. “The upside risks to inflation roughly balance the downside risks to growth,” it said.

In a somewhat embarrassing reversal, however, the Fed changed course after banks and financial institutions in Europe and the United States began writing off the costs of their bad housing loans. The Fed had to abruptly cast its inflationary fears aside, set up new lending facilities for troubled banks and inject more money into the markets.

The most recent crisis culminated in mid-March with the Fed’s extraordinary role in arranging the sale of the investment firm Bear Stearns to JPMorgan Chase, accepting $29 billion in mortgage-related securities as collateral in a deal that averted what Mr. Bernanke said was the possibility of a global panic in financial markets.

But the Fed’s actions in March were accompanied by internal disagreement as two dissenters known as anti-inflation hawks — Richard W. Fisher, president of the Dallas Fed, and Charles I. Plosser, president of the Philadelphia Fed — voted against the cut of three-quarters of a percentage point to 2.25 percent.

Some critics of the Fed’s policies say it has been too quick to respond to momentary trends and should have a more steady and stable policy of interest rate changes based on economic fundamentals.

“My view is that the Fed is back doing the silly things it did in the 1970s, of trying to make judgments that have long-term consequences based on short-term data,” said Allan H. Meltzer, professor of political economy at Carnegie Mellon University. “It should get back to the period of 1985 to 2003 known as the Great Moderation.”

The Fed’s recent move, coupled with the uncertain performance of the economy, appeared likely to deepen the partisan impasse in Washington over how to respond to joblessness, the mortgage crisis, energy costs and other problems.

Since the enactment of the $168 billion economic stimulus package earlier this year, Democrats and Republicans have increasingly accused each other of inaction. Mr. Bush is demanding that Democrats make permanent the tax cuts that expire at the end of 2010, and Democrats are pressing for an additional $30 billion in spending.

Noting that the first rebate checks have started to go out to Americans from the stimulus package already enacted, Mr. Bush and his aides argue that Congress should measure the effects of the stimulus, and lower interest rates, before taking further action.

There has also been no agreement on what to call the current economic downturn. The administration has avoided the word recession and will likely continue to do so after the anemic but still positive growth figures released earlier Wednesday. Many Democrats unhesitatingly say the United States is in a recession.

On Tuesday Mr. Bush said “these are very difficult times, very difficult.” Treasury Secretary Henry M. Paulson Jr. has said that despite progress in stabilizing the financial markets, the economic risks in the future are “to the downside.”

On Monday, the Treasury Department painted a gloomy outlook, noting that unemployment had reached a two-and-a-half year high of 5.1 percent last month, and that non-farm jobs were hit by the first quarterly decline since 2003.

Like many analysts, administration economists say that housing is the weakest part of the economy. But Mr. Paulson and his aides say that the sharp declines of prices, sales and new construction of homes reflects a “necessary correction” after years of an unsustainable bubble.

Housing starts and sales of new single-family homes fell to a 17-year low in March, the Treasury said, and starts of single-family homes had dropped by 63 percent from a peak in January 2006.

Congressional Democrats have been moving toward enactment of legislation aimed at helping the estimated two million homeowners in danger of defaulting on their mortgages in the next year. But the administration opposes the Democrats’ approach, which would widen availability of federally insured mortgages.

The White House favors “modernization” of existing programs and agencies as a better way to help homeowners.

Economists disagree over whether lower interest rates will by themselves spur a turnaround in housing or business investment.

Many specialists, for example, say that the larger problem of skyrocketing American indebtedness and the danger of weak banks and investment banks, as well as possible defaults in consumer debt, student loans and other forms of debt, are putting a damper on lending even as lending rates decline.

While many economists say that inflation has become as big a threat as a recession, especially because of soaring energy and food prices, the Bush administration maintains that “core inflation” — outside the energy and food sectors — has remained stable, at about the same range of about 2.5 percent that it has been in the last four years.

The Wall Street Journal

2008-04-28T10:09:00.000-07:00

c The sale releases borrowers from their obligations. For mortgage holders, it can be less costly than foreclosing—and could provide protection against future price drops. For buyers, it can be a chance to buy a home at an attractive price.

Short sales—which were rare when the housing market was booming—can also be a good way for lenders and investors to minimize losses. They typically result in losses of 19% of the loan amount, compared with an average loss of 40% for homes that are sold after foreclosure, according to a recent analysis by Clayton Holdings Inc., which tracks more than $500 billion in mortgage loans monthly for investors. The costs of foreclosure can include not only legal fees, but also taxes, insurance and the expense of maintaining the home until the property is sold and repairing any property damage.

As the housing market continues to weaken, the number of short sales is edging upward. Short sales currently account for about 18% of home sales, according to the National Association of Realtors. But it can be extremely difficult to get these deals completed. Unlike a traditional real-estate sale, a short sale requires the approval of not only the buyer and the seller, but also the mortgage-servicing company. In many cases, loans have been packaged into securities — which means that the mortgage servicer must consider the interests of the investors who own the loans.

Deals can fall apart because the mortgage company rejects the price that has been agreed upon by the buyer and seller. Long delays in getting an answer from the mortgage servicer are another obstacle.
The process can be so frustrating that some real-estate agents and home buyers have decided that a short sale isn't worth the effort. Shari Adams, a paralegal, bought a foreclosed three-bedroom house in Stuart, Fla., after she tried twice to buy a home being sold in a short sale. One deal fell through when the mortgage servicer turned down her offer after six weeks and didn't make a counteroffer. Another deal collapsed because it wasn't clear that the seller was truly facing a financial hardship.

"I basically started to run away from any home listed as a short sale," Ms. Adams says.

Low Success Rate

The success rate for short-sale offers is low, real-estate agents say. Molly Kay Hamrick, president of Coldwell Banker Premier Realty in Las Vegas, estimates that 20% of short-sale offers in the area lead to completed sales, compared with 85% for more traditional sales. Red-fin, an online real-estate brokerage based in Seattle, says it represented buyers on 65 short-sale offers in the first quarter but expects only two or three to result in a completed sale.

Because so many deals fall through, Jean Manner Schwim-mer of Coldwell Banker Gay Dales in Salinas, Calif., advises buyers making an offer on a short sale to put a clause in their contract that says the deposit can't be cashed until it is clear that the sale has been approved by the mortgage company and the contract has been signed.

Many borrowers walk away in frustration because it takes so long to get a response from the mortgage company to their offer. Servicers take an average of 4y2 weeks to provide an answer on a potential short sale, according to a recent survey of real-estate agents by Campbell Communications, with some taking two months or more to respond. By contrast, it takes an average of less than two weeks to get a response to an offer for a property that has been foreclosed on, the survey found.

"To make the process work, you have to have a buyer who just wants that property and is willing to wait three to four months," says Beth Butler, chief operating officer of EWM Realtors, based in Miami.

Alicia and Greg Green accepted a short-sale offer in December for a home in Los Angeles they had purchased as an investment. But the deal didn't close until late March because of delays in getting an answer from the mortgage servicer, Option One Mortgage Corp. At least two offers at higher prices fell through because of delays, says Bill Etchegaray, the couple's real-estate agent.

"Luckily, we didn't lose the buyer," says Ms. Green. "I thought we would because the process took so long." The couple sold the home for $299,000, well below the $375,000 mortgage balance. They fell behind on their payments when the construction business Mr. Green owned went under. A spokeswoman for Option One pointed to the complexities of arranging short sales and said the company is pleased that the sale was successful.

Coming up with what everyone agrees is a fair price can be tricky in a soft market. "Servicers are finding that people try to low-ball the sales price knowing that the property is distressed," says Vicki Vidal, a senior director with the Mortgage Bankers Association.

Missed Opportunities

But with home prices falling in many markets, a rejected short-sale offer may wind up as a missed opportunity. Donald Schriver, owner of Assist-2-Sell Good Sense Realty in suburban Phoenix, says a homeowner he was helping late last year was offered $190,000 for his house in a short sale but was unable to win approval from his mortgage company. The borrower later decided to abandon the four-bedroom house, which was built in 2005. The house is now in foreclosure, with an auction scheduled for June. Prices in the area have continued to fall, says Mr. Schriver, who believes that the most the home would now fetch is $180,000.

A spokesman for Wells Fargo & Co., which services the loan, said the company "made several unsuccessful attempts to connect with the customer" and didn't turn down an offer for a short sale.
Some mortgage-servicing companies are tightening up on short sales because they worry borrowers are rushing into these arrangements when there are better alternatives. In March, Oc-wen Financial Corp., based in West Palm Beach, Fla., told its customers it would consider a short sale only after it had talked directly to the borrowers and determined there are no alternatives for keeping them in the home.

"We are concerned that some of our customers are not given all the facts," says William Rine-hart, the company's chief risk officer. "In some cases, it's represented to them that a short sale is the only solution to the problem they are in."

Part of the problem may be that many mortgage servicers were ill-prepared for the spike in bad loans. As delinquencies have climbed, they have had to scramble to add staff. Mortgage companies say they prefer other means to help borrowers, such as a repayment plan or loan modification.

Clearing Hurdles

Gathering all the information needed to evaluate a short-sale offer can take time, says Patrick Carey, an executive vice president with Wells Fargo. The loan servicer must first determine whether the homeowner really can't continue meeting the loan payments, then get an appraisal or broker's opinion of the home's value.

Mortgage servicers also try to ensure that the proposed sale is an "arm's length" transaction between two parties rather than, say, a sale to a relative on sweet terms. They must also determine whether the buyer has sufficient funds or the ability to get a loan. If all those hurdles are cleared, the servicer may still need to get approval from the investor that owns the loan and provide an analysis showing that the investor will be better off with a short sale than with another solution.

There are additional complications if the borrower has a mortgage and a home-equity loan. In that case, both parties must approve the deal—which is a challenge when the sales price may not even be enough to cover the mortgage balance.

To minimize delays, Mr. Carey suggests that homeowners contemplating a short sale immediately call the loan servicer to get the approval process started, rather than wait for an offer.

There are some signs that the process is getting smoother. In recent weeks, some mortgage companies have begun to approve short sales for borrowers who can show financial distress but haven't yet stopped making monthly payments, says Dan Elsea, president of brokerage services for Real Estate One in the Detroit area. Until recently, servicers wouldn't even consider a short sale unless a borrower was at least 60 days late.

Fannie Mae and Freddie Mac, which own or guarantee nearly half of all outstanding U.S. mortgages, both say they are trying to streamline the short-sale process. Fannie Mae says that it plans to introduce a policy in the next few months under which real-estate brokers would be given an advance indication of the approximate minimum price that would be acceptable in a short sale, a move designed to quickly weed out offers that are too low.

Freddie Mac says it has already given its top servicers more flexibility to accept short sales for homes backed by loans it guarantees or owns. Lehman Brothers Holdings Inc., another issuer of mortgage-backed securities, also is offering incentives in some cases for servicers to arrange short sales or loan modifications.

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GOVERNOR KAINE SIGNS BILL TO RETURN NVTA TAXES AND FEES

2008-04-22T19:42:00.001-07:00

As anticipated, Gov. Kaine signed HB 1578 making it effective law. More information about this bill is available at www.hb3202.virginia.gov. A copy of his press release is available on the NVTA website (www.thenovaauthority.org), where inquiries regarding refunds are also directed.

The clerks now have 60 days to develop guidelines and to return the money "to the persons or entities that acted as settlement agents." The settlement agents receiving funds from the clerks of court are then required to refund the money "to the persons or entities entitled thereto" within 90 days from date of receipt from the clerk.

Estimated Real Property Tax and Other Non-tax Charges

2008-04-09T19:09:00.001-07:00

EXPLANATION OF BILL 24-07, REAL PROPERTY - DISCLOSURE - PROPERTY TAX, ENFORCEMENT
When a person buys a house to be used as the owner-occupied principal residence, the new owner pays the pro-rata share of the property tax bill in the fiscal year of purchase that the old owner owed. For example, if the property tax bill were $4,000 and the date of closing were 3 months before the fiscal year ended, the new owner would pay $1,000, which is 3/12th of the bill for that year.

However, in many cases, the new owner will owe more, perhaps substantially more, property taxes in the next fiscal year (the first full fiscal year of new ownership), than the old owner would have paid. The reason is that the new owner is not eligible for the homestead property tax credit in the first full fiscal year of ownership.

The purpose of bill 24-07 is to provide the buyer of an owner-occupied principal residential property an estimate of the property tax bill (plus non-tax charges included on the bill) in the first full fiscal year of ownership. There is no way to calculate the exact amount of the property tax bill for the first full fiscal year of ownership, because there is no way to know what property tax rates the State, the County, or the municipality if any will set for that year.

The estimate for property tax and non-tax charges is based on:

next fiscal year's phase-in value if known, otherwise the current fiscal year's phase-in value
this fiscal year's property tax rates (State, County, and municipal)
no property tax credits (homestead, homeowners, income tax offset, senior)
non-tax charges in the next fiscal year the same as in the current fiscal year

Definitions

Fiscal year (FY) is the 12-month period from July 1 through the following June 30. For example, FY2009 starts on July 1, 2008 and ends at midnight on June 30, 2009.

In late May, the Council levies the taxes for the fiscal year starting the following July 1. The terms "tax year" and "levy year" mean the same. They both refer to the calendar year in which the Council levies the taxes for the fiscal year starting the following July 1. For example, tax year/levy year 2007 refers to fiscal year 2008.

Current fiscal year means the fiscal year ending the next June 30 after the property is advertised for sale.

Next fiscal year means the fiscal year starting the next July 1 after the property is advertised for sale. Note that the bill requires the calculation to be updated every July 1, because the amounts will change every July 1.

Non-tax charges are any other charge on the tax bill, such as the solid waste charge, water quality protection charge, front foot benefits charge, and the bay restoration fund fee.

You can see the current property tax bill, which also may include several non-tax charges, at the web page of the County Government's Department of Finance:
http://www.montgomerycountymd.gov/finance
Look for a link to "Pay or view your property tax bill on line".

You can see the phase-in value at the web page of the State Department of Assessments and Taxation http://www.dat.state.md.us/, Real Property Data Search. See examples below. SDAT will not show next year's phase-in value for properties in the third year of the three year assessment cycle until early January of the current fiscal year. In this case, you must update the calculation as soon as SDAT updates its data base in January.
The calculation uses the Total phase-in value (land + improvements), from the right-most column that has a value under the heading "Phase-in Assessments". You will know that the current fiscal year is year three of the three year assessment cycle if the right-most column has the words "NOT AVAIL". In this case, the calculation uses the total phase-in value in the column to the left, which is the last number in the row.

The following table is from the State's data base for a property that has a phase in value for the next fiscal year (FY09, starting on 07/01/2008), which is $482,560. This is the value the calculation uses to estimate next year's (FY2009) tax bill.

Value Information
Base Value Value Phase-in Assessments
As Of
01/01/2006
FY2007 As Of
07/01/2007
FY2008 As Of
07/01/2008
FY2009
Land 84,200 224,040
Improvements: 213,650 258,520
Total: 297,850 482,560 420,990 482,560

The following table is from the State's data base for a property that does not have a phase in value for the next fiscal year, (FY09, starting on 07/01/2008), so the calculation uses the phase-in value for the current fiscal year, FY08, $377,830. As noted above, you must update the calculation as soon as SDAT updates its data base in January.

Value Information
Base Value Value Phase-in Assessments
As Of
01/01/2006
FY2007 As Of
07/01/2007
FY2008 As Of
07/01/2008
FY2009
Land
Improvements:
Total: 377,830 377,830 377,830 NOT AVAIL

Note that the bill requires the estimate to be updated every July 1, because the tax rates and phase-in values will change every July 1.

Describe the total in your written materials as follows:

Estimated property tax and non-tax charges in the first full fiscal year of ownership is $X .

Definition of Advertisement:

Any "written or electronically transmitted material that a seller produces or distributes in connection with the advertisement for sale of a specific residential real property", as used in County Code §40-12C, includes:

all printed sales material available on site or at an "open house";

any information about a specific property for sale which is available on the internet or in a webpage; and

any written material which specifies the amount of tax the seller currently pays or recently paid.

Any "written or electronically transmitted material that a seller produces or distributes in connection with the advertisement for sale of a specific residential real property", as used in County Code §40-12C, does not include, unless the material specifies the amount of tax the seller currently pays or recently paid:

a newspaper or magazine classified "liner" advertisement or a "group display" advertisement in which the advertisement for a specific house is less than 16 square inches;

one or more introductory screen listings for a specific property on the internet, which may contain the asking price, as long as the disclosure required by §40-12C appears on the internet listing in any later or linked screen which provides further financial details about the property;

a "For Sale" sign posted at or near a property; or

a radio or television advertisement.

Finally, do not forget to update the estimate for the property taxes:

Every July 1, because the tax rates and phase-in values will change; AND ALSO

In early January if you used the phase-in value for the current fiscal year instead of the phase-in value for the next fiscal year, because SDAT had not yet specified the phase in value for the next fiscal year. This occurs in the period July 1 - early January in the third fiscal year of the three year assessment cycle.

What we “know”

2008-04-04T11:22:00.000-07:00

we know what we know is an arcane epistemological question, but one that now may be a matter of national economic security, at least with regard to real estate markets. Our entire financial system’s survival may depend on how we “know” what we “know” about real estate markets.
What we “know” is that day after day the headlines tell us that the real estate markets in America are falling out of bed. Because the value homes are presumably falling in value, the mortgage markets have seized up and institutions are reluctant to lend against an asset declining in value.
The financial market’s reluctance to lend against this declining asset and the public’s reluctance to buy it, fuels a self-fulfilling cycle of falling prices that today threatens the very Wall Street firms who securitized and internationalized the once sleepy, local mortgage market. The failure of one or more of those firms could have a domino effect on our entire financial infrastructure and cause further panic in financial and real estate markets of epic proportions.
But what if the headlines are not quite accurate? What if what we know about the real estate markets is distorted and being sensationalized?
Given the importance of the outcome, now might be a good time to ask how we know what we know before fiction becomes reality.
What we know today is largely courtesy of the S &P Case Shiller Index. This index has replaced older indexes on the front page of American newspapers. Older indexes came from two sources. One was the National Association of Realtors’ monthly price index and the other is the OFHEO index (Office of Federal Housing Economic Oversight). The latter two use rather different methodologies but over the years have reached remarkably similar conclusions about prices of homes in America. When different methodologies yield similar results, that means you have a good handle on reality.
Today we don’t hear much about either index. Instead, the Case Shiller index is everywhere and its ominous message is clear: Bloomberg News recently said that according to Case Shiller “prices fell 7.7 % from a year earlier after dropping 6.1% in October.” This suggests to any reader that prices are in a free fall and are even dropping 6% in one month ! The index talks about a 15% price decline in Miami and 4.8% for the year in New York. Bloomberg quotes Shiller: “We are in an historic housing bust right now.”
Two weekends ago I opened my AOL account and saw a bold headline that home prices in 20 markets were falling rapidly with quotes from Mr. Shiller that prices nationally finished down 8.9%. “Wherever you look things look bleak” Mr. Shiller said.
The Wall Street Journal runs a headline “Home Prices Decline at Record Rates” quoting Mr. Shiller yet again.
Is Mr. Shiller right? The importance of the question forces us to look at the market through the other available lenses, NAR and OFHEO.
OFHEO has been keeping a national index for years and publishes monthly a one inch thick book on housing prices. It says that in 2007 the average price in America was down .3% . Yes, that is three tenths of one percent, not Mr. Shiller’s 8.9%. Compared to OFHEO Mr Shiller’s index overstates the decline by 29 times or 2900%, not a small amount.
The National Association of Realtors index showed a median 1.4% decline nationally after 64 years of uninterrupted gains. Compared to NAR’s 1.4% median price decline, Shiller overstates the “freefall” by 6.3 times or over 600%.
When I pondered the 2007 OFHEO and NAR numbers a blasphemous thought came to mind, one contrary to today’s media dogma: that the numbers showed not weakness in the real estate markets, but rather resiliency. But that is just my musing. Interpret the data as you will.
Recently, another report came out that was greatly at odds with Shiller’s shrillness. It came from the 2007 results for Realogy, the largest real estate brokerage company in the world that owns the Century 21, Coldwell Banker, Coldwell Banker Commercial, Sotheby’s, ERA and Better Homes and Gardens brands, among others. They have over 300,000 agents under their franchised brands, or about one-fourth of the members of the National Association of Realtors. So these are real people doing real business everyday in the real marketplace, not in a Yale think tank. What do their numbers say?
While the drop in sales volume has led that company to lose money Realogy reported that their average price in 2007 was down 1%, right in line with the NAR and OFHEO data. Again this is from a real real estate firm operating in the real world daily. This makes three out of four indexes point in one way and Shiller alone pointing to much more calamitous and foreboding results. Is there a reason why?
Some think it may have to do with methodology. Shiller and OFHEO’s are both repeat sales indexes whereas NAR’s data and that of Realogy take all sales volume and divide it by unit sales to get an average price and then figure out the median. Still three out of four, even using different methodologies, give one clear answer, that prices have fallen about 1% while Shiller points to a 9 times greater fall.
A couple of notes about the discussion that should be taking place. Shiller issues national press releases monthly but his index is anything but national unlike OFHEO, NAR and Realogy’s data. He covers only 8 states out of 50 and those eight states are among the weakest in the nation, leading the Wall Street Journal several weeks ago to say that Shiller’s index may be negatively biased.
Shiller claims to cover 20 markets (some are in the same states and hence 20 markets but only 8 states are fully covered) . He labels those markets with the names of cities, not states. Hence New York, Miami, Seattle, etc. This gives the impression that the markets he is reporting on are in fact cities (what else would one think?)
In fact Shiller does not report on cities but on MSA’s, short for Metropolitan Statistical areas. This leads to some remarkable absurdities. For instance, Shiller claims New York prices fell 5.6% in 2007 versus an index created by Manhattan based Miller Samuel that says the average Manhattan price rose 17.6%. Unlike Miller Samuel that tracks coop and condo sales in Manhattan, Shiller’s index, expressly excludes condominiums and coops which account for 1/3 of New York sales and 99% of Manhattan sales. Manhattan is the high profile part of the New York market and the one most associated with New York City. Thus Shiller claims to report on what is happening in a city where he does not cover 99% of the sales in its most high profile borough.
Even more perversely, Schiller’s MSA for “New York” tracks sales in Putnam County, two hours north , and single family home sales in Bergen County, New Jersey and home prices out on Long Island. Trailer park sales in Putnam county could be included in his “New York” index.
Criticisms of Shiller’s inaccuracies are finally surfacing. RealTrends, a national industry monthly, ran its January headline “Cash Shiller Index Exposed” and ran a synopsis of a paper done by Andre Leventis of OFHEO in which it chronicles the “flaws in Case-Shiller that are traceable and have a huge impact on the variance between their reports and those of so many other reports, including NAR’s and our own.”
Lawrence Yun of the National Associations of Realtors (who was named by USA Today as one of the top ten economic forecasters for his accuracy) has ratcheted up his criticism of Shiller. Yun calls Shiller’s index a “total distortion of market conditions based upon a small selection of falling local metro coverage.”
OFHEO has also chimed in by indicating that 70% of markets nationwide are not falling but actually rising, a far cry from what Shiller is peddling to the press.
But something more sinister is coming to the fore which a responsible press cannot ignore. Shiller shrillness may be due to self interest and private gain. The gospel according to Shiller is that national homes prices are in a freefall of epic proportions and that 20% to 30% price drops are in order. How could that possibly help Mr. Shiller?
Yun suggests that Mr. Shiller profits from creating fear. He creates fear so that people will want to hedge themselves against price declines by buying insurance against a free fall in prices. Where is such insurance available? Answer: on the S & P Case Shiller index traded on the Chicago Mercantile Exchange. According to Yun, Shiller has a “side business in Chicago. His index is used at the Chicago Mercantile Exchange for hedging housing futures values. The more hedging of bets that occur, the more profits go into Dr. Shiller’s bank account. And more hedging of the bets will take place if people believe there will be a crash in housing values. So naturally he has a financial incentive to ‘scare’ the market.”
I have no direct knowledge that he does so for profit although anecdotally I have been told this is true. I suggest it is time for the media to find out.
If the media does not look more deeply into the methodology being used today, Shiller may indeed scare America into depression or a Depression.
So while asking for Shiller’s self interest to be fully disclosed, allow me to disclose mine. I am indeed a Realtor and make a better living when real estate markets are healthy than when they are sick. But in addition as a Realtor I subscribe to something made clear in our Code of Ethics: we believe that upon “widely allocated ownership [of real estate] depend the survival and growth of free institutions and of our civilization.” No small thing. We also believe that this interest imposes on us “obligations beyond those of ordinary commerce.”
Today the commerce of real estate is being distorted possibly for private gain and threatens widely allocated ownership and possibly the survival and growth of our free institutions. In addition, most Realtors actually enjoy the housing business because while ostensibly it seems to be about homes, it really is about the American Dream, which consists of owning a home. We sell dreams and we take some satisfaction out of trying to make sure as many people as possible can own them. We even think that owning a home helps our country by fostering better citizens who by owning a piece of America will want to take greater care of it.
So we feel there is a lot at stake here, both for Realtors like me, as well as the rest of America. Is it not time to start some background checks?

Cherry Blossom Festival merchandise

2008-04-03T22:21:00.000-07:00

Select Borders locations throughout DC, Maryland and Virginia will carry the official National Cherry Blossom Festival merchandise. Additionally, those select locations will have an exclusive National Cherry Blossom Festival Eco-Tote Bag that, with anypurchase of $50.00 or more, is free to customers. This bag is only available at Borders. Call your nearest location for more information.

Additionally, when you stop at select Borders locations throughout DC, Maryland and Virginia, pick up all the information you need regarding National Cherry Blossom Festival activities, parades and other scheduled events.

Borders is your source for National Cherry Blossom Festival information in Washington, DC!

Store # City St Address ZIP Phone
10 Kensington MD 11301 Rockville Pike 20895 301-816-1067
29 Vienna VA 8027 Leesburg Pike, Ste 100 22182 703-556-7766
45 Baileys Crossroads VA 5871 Crossroads Center Way 22041 703-998-0404
50 Washington DC 1801 K Street NW 20006 202-466-4999
85 Arlington VA 1201 Hayes Street 22202 703-418-0166
112 Fairfax VA 11054 Lee Hwy 22030 703-359-8420
229 Springfield VA 6701 Frontier Drive 22150 703-924-4894
262 Woodbridge VA 2904 Prince Williams Parkway 22192 703-897-8100
289 Manassas VA 11270 Bulloch Dr 20109 703-368-9824
349 Sterling VA 21031 Triple Seven Rd Suite 100 20165 703-430-4675
412 Washington DC 600 14th Street NW, Suite 100 20005 202-737-1385
452 Silver Spring MD 8518 Fenton Street 20910 301-585-0550
542 Largo MD 931 Capital Centre Blvd. 20774 301-499-2173
636 Stafford VA 1240 Stafford Market Place 22556 540-720-9636
662 Warrenton VA 251 W. Lee Highway 20186 540-347-9412

The FHA Express can put you back on track

2008-04-02T17:37:00.000-07:00

If you’re looking to refinance or buy a home with a more flexible home loan program, you should know that FHA loan amount limits just went up across the country! That means you can enjoy lower down payments and relaxed credit guidelines on higher loan amounts, plus the security of knowing that FHA Express is a government-backed loan. Quicken Loans makes your FHA Express process faster and easier than anywhere else with exclusive technology and fast approvals.

Don't forget to check out Quizzle.com, where you’ll get a free credit report and score, home value report, mortgage options, budget tools and more!

Market News

2008-03-31T21:11:00.000-07:00

Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading was volatile the entire week. The producer price index showed inflationary pressures, which hurt bonds earlier in the week. The Fed worked with Fannie Mae to restructure capital requirements. In effect, this added additional capacity helping to alleviate some of the liquidity concerns plaguing the mortgage bond market.

For the week, interest rates on government and conventional loans fell by about a half of a discount point.

The consumer confidence data Tuesday will likely set the tone for trading. The potential for market volatility is high surrounding durable goods, new home sales, GDP, income, and outlays data. Core PCE, the inflation component of the income and outlays release, will be carefully watched.

LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis

Existing Home Sales
Monday, March 24,
10:00 am, et
Down 0.6%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.

Consumer Confidence
Tuesday, March 25,
10:00 am, et
75.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower rates.

Durable Goods Orders
Wednesday, March 26,
8:30 am, et
Up 1.0%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.

New Home Sales
Wednesday, March 26,
10:00 am, et
Down 1.4%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.

Q4 GDP final revision
Thursday, March 27,
8:30 am, et
Up 0.6%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.

Personal Income and Outlays
Friday, March 28,
8:30 am, et
Income up 0.3%,
Outlays up 0.2%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower rates.

U of Michigan Consumer Sentiment
Friday, March 28,
10:00 am, et
71.0
Moderately important. An indication of consumers’ willingness to spend. Weakness may lead to lower rates.

Why Data is Important

One of the easiest and most important things to do when making a decision whether to float or lock a loan is knowing what data is going to be released. Economic releases are important because they provide a snapshot of a portion of the economy. Data is even more important in that it is often the cause of market volatility. Upcoming data events are readily available and there is no excuse not knowing what data will be released in the week ahead.

While an in depth understanding of an economic event can help a person make informed decisions, it is more important to have a rudimentary understanding of when an important piece of data will be released and what basic effect that data can have on the market. Understanding the nuances of a release does very little for a person if they are blindsided by not knowing when the release will occur. Accurately predicting how each and every release will come in is impossible. Take a look at the recent consumer price index report for evidence of that. Analysts were certain consumer prices would rise considering the recent run-up in oil and commodity prices. Consumer prices came in unchanged along with the core rate.

Floating into important economic data can be very risky and can expose a person to huge market swings. Keep that in mind this week, as there is an abundance of significant data heading our way.

Can’t Grasp Credit Crisis? Join the Club

2008-03-19T08:00:00.000-07:00

Raise your hand if you don’t quite understand this whole financial crisis.

It has been going on for seven months now, and many people probably feel as if they should understand it. But they don’t, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages.

But the overwhelming majority of homeowners are doing just fine. So how is it that a mess concentrated in one part of the mortgage business — subprime loans — has frozen the credit markets, sent stock markets gyrating, caused the collapse of Bear Stearns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?

I’m here to urge you not to feel sheepish. This may not be entirely comforting, but your confusion is shared by many people who are in the middle of the crisis.

“We’re exposing parts of the capital markets that most of us had never heard of,” Ethan Harris, a top Lehman Brothers economist, said last week. Robert Rubin, the former Treasury secretary and current Citigroup executive, has said that he hadn’t heard of “liquidity puts,” an obscure kind of financial contract, until they started causing big problems for Citigroup.

I spent a good part of the last few days calling people on Wall Street and in the government to ask one question, “Can you try to explain this to me?” When they finished, I often had a highly sophisticated follow-up question: “Can you try again?”

I emerged thinking that all the uncertainty has created a panic that is partly unfounded. That said, the crisis isn’t close to ending, either. Ben Bernanke, the Federal Reserve chairman, won’t be able to wave a magic wand and make everything better, no matter how many more times he cuts rates. As Mr. Bernanke himself has suggested, the only thing that will end the crisis is the end of the housing bust.

So let’s go back to the beginning of the boom.

It really started in 1998, when large numbers of people decided that real estate, which still hadn’t recovered from the early 1990s slump, had become a bargain. At the same time, Wall Street was making it easier for buyers to get loans. It was transforming the mortgage business from a local one, centered around banks, to a global one, in which investors from almost anywhere could pool money to lend.

The new competition brought down mortgage fees and spurred some useful innovation. Why, after all, should someone who knows that she’s going to move after just a few years have no choice but to take out a 30-year fixed-rate mortgage?

As is often the case with innovations, though, there was soon too much of a good thing. Those same global investors, flush with cash from Asia’s boom or rising oil prices, demanded good returns. Wall Street had an answer: subprime mortgages.

Because these loans go to people stretching to afford a house, they come with higher interest rates — even if they’re disguised by low initial rates — and thus higher returns. The mortgages were then sliced into pieces and bundled into investments, often known as collateralized debt obligations, or C.D.O.’s (a term that appeared in this newspaper only three times before 2005, but almost every week since last summer). Once bundled, different types of mortgages could be sold to different groups of investors.

Investors then goosed their returns through leverage, the oldest strategy around. They made $100 million bets with only $1 million of their own money and $99 million in debt. If the value of the investment rose to just $101 million, the investors would double their money. Home buyers did the same thing, by putting little money down on new houses, notes Mark Zandi of Moody’s Economy.com. The Fed under Alan Greenspan helped make it all possible, sharply reducing interest rates, to prevent a double-dip recession after the technology bust of 2000, and then keeping them low for several years.

All these investments, of course, were highly risky. Higher returns almost always come with greater risk. But people — by “people,” I’m referring here to Mr. Greenspan, Mr. Bernanke, the top executives of almost every Wall Street firm and a majority of American homeowners — decided that the usual rules didn’t apply because home prices nationwide had never fallen before. Based on that idea, prices rose ever higher — so high, says Robert Barbera of ITG, an investment firm, that they were destined to fall. It was a self-defeating prophecy.

And it largely explains why the mortgage mess has had such ripple effects. The American home seemed like such a sure bet that a huge portion of the global financial system ended up owning a piece of it. Last summer, many policy makers were hoping that the crisis wouldn’t spread to traditional banks, like Citibank, because they had sold off the underlying mortgages to investors. But it turned out that many banks had also sold complex insurance policies on the mortgage debt. That left them on the hook when homeowners who had taken out a wishful-thinking mortgage could no longer get out of it by flipping their house for a profit.

Many of these bets were not huge, but were so highly leveraged that any losses became magnified. If that $100 million investment I described above were to lose just $1 million of its value, the investor who put up only $1 million would lose everything. That’s why a hedge fund associated with the prestigious Carlyle Group collapsed last week.

“If anything goes awry, these dominos fall very fast,” said Charles R. Morris, a former banker who tells the story of the crisis in a new book, “The Trillion Dollar Meltdown.”

This toxic combination — the ubiquity of bad investments and their potential to mushroom — has shocked Wall Street into a state of deep conservatism. The soundness of any investment firm depends largely on other firms having confidence that it has real assets standing behind its bets. So firms are now hoarding cash instead of lending it, until they understand how bad the housing crash will become and how exposed to it they are. Any institution that seems to have a high-risk portfolio, regardless of whether it has enough assets to support the portfolio, faces the double whammy of investors demanding their money back and lenders shutting the door in their face. Goodbye, Bear Stearns.

The conservatism has gone so far that it’s affecting many solid would-be borrowers, which, in turn, is hurting the broader economy and aggravating Wall Streets fears. A recession could cause credit card loans and other forms of debt, some of which were also based on overexuberance, to start going bad as well.

Many economists, on the right and the left, now argue that the only solution is for the federal government to step in and buy some of the unwanted debt, as the Fed began doing last weekend. This is called a bailout, and there is no doubt that giving a handout to Wall Street lenders or foolish home buyers — as opposed to, say, laid-off factory workers — is deeply distasteful. At this point, though, the alternative may be worse.

Bubbles lead to busts. Busts lead to panics. And panics can lead to long, deep economic downturns, which is why the Fed has been taking unprecedented actions to restore confidence.

“You say, my goodness, how could subprime mortgage loans take out the whole global financial system?” Mr. Zandi said. “That’s how.”

Home Sweet Investment

2008-03-18T12:35:00.000-07:00

FEAR is ruling the financial markets. Billions of dollars have been lost in mortgage-related investments. The Federal Reserve worked madly over the weekend to engineer a takeover of Bear Stearns and avert a systemic meltdown. But the big fear remains. How low will house prices go?

If prices continue to fall, mortgage defaults will move well beyond the subprime sector. Trillions of dollars in losses for investors are not impossible. But that doesn’t mean they are inevitable.

In 1997, inflation-adjusted house prices were close to their average levels over the previous half-century. Only four years later, the price of the average home nationwide exceeded anything ever seen before in the United States. Prices continued to rise for another five years, peaking in 2006 at nearly twice the average price in 1997 (as can be seen on the graph on the bottom right, which is based on data collected by the Yale economist Robert Shiller). If house prices are heading back to the levels seen in 1997, then we are facing catastrophe.

But there are good reasons to believe that much of the increase in prices was a rational response to changes in fundamental factors like interest rates and supply. The deeper fundamentals continue to suggest strong housing prices for the future.

Sure, speculation did run rampant toward the end of the housing boom. (The debut of the reality television show “Flip That House” on Discovery Home Channel, followed shortly by “Flip This House” on A&E, was a clear sign that the boom’s end was near.) Prices will fall further, especially in the speculative developments built on the outskirts of the major cities. So yes, we overshot the fundamentals.

Still, especially in coastal areas where zoning regulations have restricted the supply of land that developers can build on, house prices were driven up by increasing population, low interest rates and strong economic growth.

More and more people want to live on the coasts, but land is hard to come by in places like Manhattan and San Francisco. Cities and regions built on ideas — like Boston, Los Angeles, New York and the San Francisco Bay Area — have grown even as areas built on manufacturing, like Detroit and the Rust Belt, have declined. And of course, government isn’t getting any smaller, so Washington and its suburbs, another hot spot of rising house prices during the boom, will continue to grow.

Even in places where land seems plentiful, zoning and other land-use regulations have made it scarce. To meet demand, we should encourage high-density development, but homeowners fought to restrict housing supply when house prices were increasing. Now that house prices are falling, the incentives of owners to restrict supply are even stronger.

Several studies estimate that the average house prices of 2004 were close to fundamental levels, so we may see prices stabilize near that level.

Granted, a catastrophe is not impossible — it did happen in Japan. House prices shot up in Japan in the late 1980s, and by 1999 they had collapsed. The graph on the top right, of Japanese and American house prices, does make for a worrying comparison. (The data come from the Standard & Poor’s/Case-Shiller national home price index and a similar index for Japan.)

But the resemblance isn’t as close as the graph makes it appear. The Japanese run-up in home prices was faster and reached higher levels than the one in the United States. In addition, the Japanese population at the time wasn’t growing, and today it’s shrinking. (None of the major presidential candidates favor drastic reductions in immigration, so population growth in the United States will continue.) As a result of these and other problems, the Japanese economy was moribund from 1992 to 2002, which kept housing prices low.

There are two very real problems for the housing market: tougher credit conditions and slower growth. Here the United States faces a self-fulfilling prophecy problem.

If the financial markets can predict where and when house prices will stabilize, then credit conditions can quickly return to normal, the economy can expand and house prices will indeed stabilize.

But if the financial markets remain uncertain about when the decline in house prices will end, then fear will tighten credit even further, which would strangle the housing market and generate even more fear.

We have nothing to fear but fear itself, but fear itself can be pretty scary. The best way to overcome fear is to look at the long run. The typical homebuyer keeps a home for 10 years or more, so there is time for those who bought in 2005 and 2006 to weather the current decline in prices. Those who bought at the top are unlikely to see any windfalls from house appreciation, but they will not necessarily suffer from buyers’ remorse. Owning a home has its advantages: the deduction on mortgage interest is substantial and too much of a sacred cow to ever be repealed, and there is a certain security and satisfaction to owning your own home.

The collapse of housing prices certainly feels painful, and for some homeowners, it will be. But the houses are still there, as good as ever. Most of the gains going up were paper gains, and most of the losses going down are paper losses.

The strength of an economy comes, fundamentally, from what it can produce. Can America still produce homes? Yes. Can America still produce desirable urban and suburban areas that people are willing to pay a fortune to live in? Yes.

That’s the real bottom line. The United States has some of the most valuable real estate in the world. Markets should not forget that.

Alex Tabarrok is a professor of economics at George Mason University and the research director for the Independent Institute.

Why is FHA suddenly HOT???

2008-03-17T07:58:00.000-07:00

For loan amounts up to $417,000

Not subject to declining markets
Buyer only needs 3% into transaction
Gift funds are allowed
No minimum FICO score
Non-traditional credit is allowed
FHA home inspections have been eliminated
Same appraisal as conventional loan
No additional paperwork
Non-occupant co-borrowers are allowed – “kiddie condos”
Seller no longer required to pay closing costs
Up to 6% seller contribution for prepaids/closing costs
Deferred student loans are not counted
Assumable

For loan amounts $417,001 to $729,750*

Buyers only needs 3% with a 620 credit score
Buyers only need 5% with 600 credit score

That is Why!

*loan maximum for DC metro area, may be lower elsewhere

Housing: Best time to buy in four years

2008-03-04T13:32:00.001-08:00

NEW YORK (CNNMoney.com) -- It may be the best time to buy a house in more than four years.

Home prices have dropped so quickly and so far that valuations - the difference between what a home should cost and its actual price - are the lowest they've been since 2004, according to a report.

The Cleveland-based bank National City Corp. (NCC, Fortune 500), together with financial analysis firm Global Insight, revealed Tuesday that more than 88% of the 330 housing markets surveyed showed price declines and improved affordability during the last three months of 2007.

"Housing valuations are almost back to long-term norms," said National City's chief economist, Richard DeKaser. He called current affordability "the best in the past four years."

But DeKaser cautioned that home prices could fall even further.

"This isn't to say home price declines are over," he said. "We could move below historic norms. By the end of 2008, housing markets could be broadly under valued."

Prices still improving
There are still 21 housing markets, or 6% of those surveyed, that are severely over valued, including Atlantic City and Madera, Calif. That's down from 56 overvalued markets at the peak of the housing bubble in 2006.

The report compares actual median home prices with what the authors determine are proper home values based on population density, relative income levels and interest rates, as well as historically observed market premiums or discounts, to determine whether markets are over or under valued.

The report also factors in market intangibles that make some areas more desirable places to live, and more expensive.

"Declines are no longer confined to once-frothy markets," said DeKaser.

The survey covered home valuations during the last three months of 2007, but DeKaser pointed out there's reason to believe that valuations are even more favorable for buyers today.

Price declines have continued into 2008 and interest rates, although they have inched up lately, have been steady or lower compared to late last year. There have even been wage gains; personal income rose 0.5% in December. Soaring foreclosure rates have added inventory to many housing markets, depressing home prices further.

The biggest gains in affordability occurred in California, Michigan and Florida, which are areas that have also been some of the hardest hit by foreclosures. Those states registered 43 of the 50 biggest price declines.

Bend, Ore. currently tops the overvaluation list. Home prices there were judged to be about 59% higher than their fair-market value. Miami, despite a median home price decline of 5.7% last year, is the most overvalued big city, by 44%.

All the best bargains were found in Louisiana and Texas. Houses in Houma, La. were under valued by 31.2%, according to the report. Dallas was the most undervalued big city, by 30%.

District’s property values to rise again

2008-02-29T12:56:00.001-08:00

District’s property values to rise again
Feb 29, 2008 3:00 AM (12 hrs ago) by Michael Neibauer, The Examiner
WASHINGTON (Map, News) - The value of D.C. real estate will rise an average 7.54 percent in 2009, according to property assessments to be mailed today, a drastic reduction from previous years but still far stronger than in surrounding areas.
The mailings come two days after Chief Financial Officer Natwar Gandhi announced that the District faces a $96 million budget deficit in 2009. That shortfall is blamed on a crash in income, property transfer fees and sales taxes, not the real estate market.
Property tax revenues are still expected to increase by $63 million next year, even after factoring in a new rate reduction that will return $95 million to thousands of commercial property owners.
All told, residential property assessments are slated to increase 2.28 percent next year, down from an increase of 8.57 percent the year before. Commercial property values will jump 14.29 percent, down from a 21.41 percent rise of a year prior. About 190,000 properties were assessed.
Examiner.com Related Articles:
Region works to increase safety for all foreign-born pedestrians
Nationals to showcase local flavors at new stadium
Senate RollCall-HB11-Albo
Foreclosed properties up in most of area, figures dropped off in Loudoun County
NCAA Official RPI Ratings
The entire Washington region is generally insulated from volatile shifts in the housing market and associated swings in assessments, economists say D.C. and its inside-the-Beltway neighbors, where interest in real estate rarely wanes, tend to fare best.
D.C. communities likely to see the largest home value increases are those populated by moderately priced properties that people can still afford to buy in a difficult economy, said Phillip Appelbaum, the District’s acting chief appraiser.
Values may dip, he said, in high-priced neighborhoods west of Rock Creek Park, such as Colonial Village, Massachusetts Avenue Heights and Observatory Circle, where the “potential pool of purchasers is smaller.” But homes east of the Anacostia River — Anacostia, Barry Farms, Congress Heights, Marshall Heights, Randall Heights — may see their assessment rise the most.
“The basic theory in property valuation is that the more affordable a home is, the more of an increase there’s going to be,” Appelbaum said.
The city remains in good shape comparatively. The value of condos and single-family homes in Alexandria dipped 2 percent in 2008, while its commercial properties rose by an average of 10 percent.
Residential property in Arlington dropped by an average 1.25 percent. Fairfax officials expect home values to fall by at least 4 percent, while residential properties in Loudoun fell by 10 percent

2008-02-27T11:54:00.000-08:00

Me and My Dogs

2008-02-22T07:31:00.001-08:00

Ignore the head lines

2008-02-19T13:50:00.001-08:00

Famed Money Manager is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.

That's no easy thing. How do you tune out all the chatter and ink on recession, housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $100 oil and nukes in Iran? It's enough to make you sit on your thumbs and wait before making any big moves. But what, exactly, are you waiting for?

There has rarely been a moment in history when you couldn't scare yourself into doing nothing. And yet, as Lynch observed nearly 20 years ago, "in spite of all the great and minor calamities that have occurred ... all the thousands of reasons that the world might be coming to an end--owning stocks has continued to be twice as rewarding as owning bonds."

A top reason to not buy stocks, in Lynch's view, is if you don't already own a home--in which case, that should be your first investment, since an owner-occupied home is nearly always profitable. Through a spokesman, Lynch reaffirmed these views to me--housing debacle and all.

When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run. As John D. Rockefeller famously said, "The way to make money is to buy when blood is running in the streets."

And the streets are stained crimson. Start with stocks. They have been pummeled this year. GDP braked sharply last quarter, and there has been plenty of panic about a recession. The Federal Reserve is slashing short-term interest rates at the fastest clip in decades. But if you stick to your steady, diversified plan while everyone else is retreating, you will be happy years from now. For one thing, Fed rate cuts always lift the economy eventually, and the stock market typically starts responding just as headlines get gloomiest. Sure, the market could fall again before recovering. But the recession may be half over already--or we may avoid one altogether. You just never know.

As for housing, certainly some skepticism is in order. Formerly sizzling markets in Florida, Nevada, Arizona and California probably haven't seen the worst headlines just yet, though they may well be close. And "jumbo" mortgages, those more than $417,000, are likely to remain artificially high for a few more months while banks work through their credit issues.

But let's say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It's time to get serious--before an inevitable rise in interest rates wipes out your advantage. "The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher," says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today's rate of 5.5%. Monthly principal and interest come to $994.31. Let's say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you'd have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be.

It's more complicated if you must sell before you can buy. But that logjam won't persist forever--and if it appears you'll be trapped for a few years, try to refinance at today's lower rates. Risks always seem most acute when the headlines give you ulcers. But that's exactly when you should think long term--and get off your thumbs.

Real Estate NEWS

2008-02-13T15:35:00.000-08:00

Congress passed the economic stimulus package last week and the President is expected to sign it today. This means most of us will be getting a check from Uncle Sam in the next few months for a couple hundred bucks and that the conforming loan limits will be increased. The FHA loan limits will be increased as well. There is much anticipation around these increased limits but many of the details have yet to be worked out.

The new loan limits will be calculated at 125% over the median home prices for DC area; however, it is yet to be announced whose data they will use to calculate the median and if they will use the median prices from 2006 or 2007. Most data supports median sales prices for our area in the mid to upper $400,000s. If they use the numbers from the Federal Housing Finance Board, the median is $475,000 so our new limit would be in the neighborhood of $593,750.00.

Meanwhile, Fannie and Freddie have to figure out how to implement the changes and bring them to the market. We should not expect the loan limits to be increased and pricing and underwriting criteria to remain the same on those larger loan amounts. The general consensus is that the increased loan limits will have a rate add-on of .25% to .50% over the loans at the current $417,000 loan limit. In spite of the rate add-on, this is still an improvement over current jumbo rates, which, at times, have been as much as 1% higher in rate. Once Fannie and Freddie decide how to implement the higher loan amounts then the lenders have to decide how they will implement and ready their systems to accept/process applications at the new limits.

The increased limits will remain in effect only until the end of 2008 and some speculate that the new limits won’t hit street level until June by the time all is said and done. No matter how long it takes, it will still be a boost for borrowers looking to borrow more at lower rates and lenders who have been waiting to unload securities (at the higher loan limit) to free up cash flow.

Recognizing that this process may take some time, we are encouraging people to act now (not wait for the increased limits) while rates are low and housing inventory remains and then we can always refinance them later if the benefit presents itself. Acting now might afford a purchaser the opportunity to buy now before the increased loan limits have a positive effect on housing values.

We will continue to keep you updated as information presents itself.

Fed Interest-Rate Cuts Fail to Lower Borrowing Costs

2008-02-13T12:18:00.000-08:00

The Federal Reserve's interest-rate cuts last month have failed to lower borrowing costs for many companies and households, increasing the chance of further reductions from the central bank.

Companies are paying more to borrow now than before the Fed reduced its benchmark rate by 1.25 percentage point over nine days in January, based on data compiled by Merrill Lynch & Co. Rates on so-called jumbo mortgages, those above $417,000, have increased in the past month, making it tougher to sell properties and risking further price declines.

``It's the clogging up of the credit markets that worries me most,'' Harvard University economist Martin Feldstein said in an interview in New York. ``The Fed has done a lot of cutting, the question is whether it's going to get the traction that it did in the past.''

Lenders and investors are demanding greater compensation for offering credit as losses mount on subprime-mortgage securities and concerns grow that ratings of bond insurers will be cut. Elevated borrowing costs mean Fed Chairman Ben S. Bernanke will have to reduce rates further to revive the economy, Fed watchers said.

Banks have been forced to abandon loan sales or offer discounts of as much as 5 percent for companies including Harrah's Entertainment Inc., First Data Corp. and Alltel Corp. in the past six months because of investor reluctance to buy debt perceived to be too risky.

Delphi Financing

General Motors Corp., the world's largest automaker, said yesterday it may have to help its former auto-parts unit, Delphi Corp., obtain $6.1 billion in financing to emerge from two years of bankruptcy because of ``difficulty'' in finding investors for the loans Delphi needs.

``The problem is that every piece of news we're getting continues to be bad,'' said Stephen Cecchetti, a former New York Fed bank research director, and now a professor at Brandeis University in Waltham, Massachusetts. ``They will have to ease more. It's the only thing they can do.''

Feldstein, who heads the National Bureau of Economic Research, the group that sets the dates for U.S. economic cycles, said the chance of a recession is ``close to 50-50.''

Traders now see a 100 percent chance of at least a half- point reduction at or before the Federal Open Market Committee's March 18 meeting, up from 68 percent on Jan. 31, when the Fed cited tighter credit conditions as a reason for lowering rates. Futures show 20 percent odds of a three-quarter point move.

Retail Sales

Futures rallied even after a government report today showed retail sales rose 0.3 percent in January from December, against the median forecast in a Bloomberg News survey for a decline. Economists said the gain, led by car and gasoline purchases, wasn't enough to indicate Fed rate cuts are affecting spending.

Bernanke may give an update of his outlook tomorrow when he testifies before the Senate Banking Committee at a hearing on the economy and financial markets. Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Christopher Cox are also scheduled to appear.

The extra yield investors demand to buy investment-grade U.S. corporate bonds rose to 2.37 percentage point Feb. 12 from 2.24 percentage point on Jan. 21, Merrill data show. For high- risk, high-yield securities, premiums over Treasury securities have risen a quarter-point, Merrill data show.

Yellen Frustration

``The increase in credit spreads has sort of worked against our policy,'' San Francisco Fed President Janet Yellen told reporters at her bank yesterday. ``The fact that the spreads went up so dramatically really resulted in an effective tightening of financial conditions that our cuts were partly meant to address.''

Those cuts were the fastest since the federal funds rate became the principal policy tool around 1990. The Fed lowered the rate by 75 basis points on Jan. 22 in an emergency move, then by an additional 50 basis points at the regular meeting on Jan. 30. A basis point is 0.01 percentage point.

Beyond March, traders expect quarter-point rate reductions at the following FOMC meetings in April and June, based on futures prices on the Chicago Board of Trade.

In the market where banks lend to each other, borrowing costs have receded since the Fed began special auctions of funds in December. The three-month dollar London Interbank Offered Rate fell to 12 basis points over the Fed's target rate today, from more than 1 percentage point above it two months ago.

`Not Functioning'

Yellen acknowledged in a Feb. 7 speech, repeated yesterday, that borrowers with greater default risk are paying more for loans. The markets for securities backed by mortgages ``are not functioning efficiently, or may not be functioning much at all,'' she said.

``As long as the credit strains remain and might even still be intensifying, it certainly supports the case for continuing to ease aggressively,'' said Brian Sack, a former Fed research manager who is now senior economist at Macroeconomic Advisers LLC in Washington. ``We don't need spreads to come down. We do need them to stop widening.''

The lack of improvement may make a fiscal-stimulus plan passed by Congress last week more critical. The $168 billion package, to be approved by President George W. Bush today, would send tax rebate checks to more than 111 million households, probably beginning in May.

``It's a necessary thing given the uncertainties about both the economy and the power of monetary policy at this point,'' said Harvard's Feldstein. It will probably add 1 percentage point to economic growth, he said.

Fannie, Freddie

The bill will allow Fannie Mae and Freddie Mac to raise the limit on purchasing ``jumbo'' loans to $729,750 from $417,000. The idea is to help struggling homeowners finance larger mortgages at lower interest rates, especially in expensive metropolitan areas such as New York, Washington and Southern California, where median home prices now exceed the $417,000 limit.

Yesterday, at a closed-door luncheon with Republican senators in Washington, Bernanke was ``very upbeat'' that the economy would avoid a recession, Iowa Senator Charles Grassley said in an interview.

Kentucky Senator Jim Bunning said in an interview that while Bernanke didn't comment on interest rates, the Fed chief said that ``they have their eye on inflation and price stability, and if the credit crunch didn't ease, obviously they are going to have to do something about it.''

Review of few Real Estate Market History

2008-02-12T09:27:00.000-08:00

"The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline." (Time, December 1, 1947)

Houses cost too much for the mass market. Today’s average price is around $8,000—out of reach for two-thirds of all buyers." (Science Digest, April, 1948)

"The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs $28,000." (Business Week, September 4, 1969)

"The era of easy profits in real estate may be drawing to a close." (Money, January, 1981)

"The golden-age of risk-free run-ups in home prices is gone." (Money, March 1985)

"Most economists agree… [a home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980s." (Money, 1986)

"Financial planners agree that houses will continue to be a poor investment." (Kiplinger’s Personal Financial Magazine, November 1993)

Washington D.C. head list of locales for foreign investors

2008-02-01T11:48:00.001-08:00

WASHINGTON (AP) -- The Big Apple and the nation's capital edged out other world cities as the top spots for foreign commercial real estate dollars, according to a trade group survey released Monday.

The Association of Foreign Investors in Real Estate said foreign investors named New York as the No. 1 city for commercial real estate investment, up from No. 2 the prior year. Washington, D.C., and London tied for second, while Paris followed at fourth and Shanghai at fifth.

The results marked the first time U.S. cities have taken the top two spots since the category was added to the annual survey.

The survey also showed that foreign investors overwhelmingly believe the U.S. offers the most stable and secure real estate investments despite recent credit market disruptions and a slowing economy.

The U.S. market also offers the best opportunity for capital appreciation, investors said, followed by China, India, Russia and Mexico.

On average, investors said U.S. assets will make up more than 50 percent of their real estate acquisitions this year, roughly the same as last year. The weak dollar has not yet prompted any increase in U.S. allocation, 85 percent of respondents said.

U.S. retail ranked as the most preferred property type among foreign investors. Hotels came in second, followed by industrial, multifamily and office.

The survey was conducted in the fourth quarter of 2007 among the group's 200 members.

Change on the way!

2008-01-25T10:23:00.000-08:00

NEW YORK (CNNMoney.com) -- The economic stimulus plan announced Thursday by Congress and the Bush administration includes provisions that specifically address the mortgage crisis. It aims to make getting a mortgage easier and cheaper in high-cost markets, to facilitate refinancing and to prevent foreclosures.

The package proposes lifting the dollar amount of loans that are eligible for purchase by Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM) and that can be insured by the Federal Housing Administration (FHA). The cap limits for FHA loans, which offer protection to lenders against losses that result from defaults by borrowers, would be raised to $725,000 and would be permanent.

These government sponsored enterprises currently guarantee a secondary market for loans of less than $417,000, which makes lenders more willing to issue them. The stimulus package proposes raising that cap to $625,000 for twelve months in order to make it easier for buyers to get or refinance mortgages - especially in high-cost regions like California.

"It's about time," said Richard DeKaser, chief economist for banking giant National City Corp. "The idea has rattled around Congress for a year. Most analysts agree the market for "jumbo" loans [which exceed the cap limits] has been hurt by lender flight."

The increased cap should give a boost to some of the most sluggish markets in the nation, like Florida, where high home prices typically mean that mortgages exceed the $417,000 loan limits. When credit markets contracted last summer, jumbo loans over that amount became much harder to get and, as a result, home sales in pricey markets took a hit.

"This will have a big, immediate impact, especially in California where sales have been down most significantly," said Lawrence Yun, chief economist for the National Association of Realtors.

Homeowners with jumbo mortgages also pay higher interest rates because, with no guaranteed secondary market for the loans, lenders take on more risk, and charge borrowers more for doing so.

For instance, the interest rate difference between loans that fall within the cap limit and jumbo loans was more than 1 percent on Thursday -- 6.39 percent compared with 5.30 percent, according to Bankrate.com. On a $500,000 mortgage, the difference is about $350 a month.

Pain relief for mortgage fare-ups

"The 1 percent drop is a huge factor," said Yun. "In California, it could create a mini-boom."

Before the stimulus package was announced, analysts including Merrill Lynch had come out with dire forecasts for housing markets over the next couple of years.

But, said Mike Larson, a real estate analyst with Weiss Research. "[the raise in loan limits] could remove some of the inventory overhang and alter the buyer psychology a bit. Right now they're still waiting for prices to fall."

Yun added, "There's a lot of pent-up demand in the market. This will boost confidence among these potential buyers, and some of the people on the fence will start buying."

The National Association of Realtors recently projected that a higher loan limit, which the organization and other industry trade groups have been lobbying for, would boost home sales by nearly 350,000 a year.

It would also reduce the average period of time a home sits on the market by a month and a half, and lift prices by two or three percentage points.

Home price increases could help keep foreclosures in check by increasing a distressed owner's home equity, making it easier for them to refinance.

How to maintain or improve your FICO Score

2008-01-19T17:23:00.000-08:00

Question: What is Fico score?

Answer: Devised by Fair Isaac & Co (based in San Rafael, California) the score, ranging from a low in the 300’s to a high above 800- represents a statistical evaluation of a borrower’s risk of future default. A FICO score is produced by running a consumer’s raw credit bureau data through computer software marketed by fair Isaacs. The higher the score the better! Good credit is 620 or more. To Maintain, or improve a score keep in mind these three rules:

1) Don’t come close to “maxing out” your credit cards.
2) Pay everything on time.
3) Dispute any “derogatory” information in your credit history.

Remember there is no “quick fix” to repairing credit. The most rapid improvements in a credit score, however, can come when erroneous data sitting in your file is eliminated.

Snap Shot of Shaw

2008-01-05T17:38:00.000-08:00

Your Initial Inspection

2008-01-04T06:44:00.000-08:00

This is not meant to replace a professional home inspection. If you end up making an offer on this house, you will want a licensed home inspector to go over it with a magnifying glass.

Foundation: Look at the base of the walls and the ceilings in each room. Are there obvious cracks or apparent shifts in the foundation? Do the same around the outside. Are there any trees encroaching on the foundation?

Lot: Does the drainage appear to be away from the house? Any obvious soggy areas?

Roof: What is the overall condition? When was it last replaced? Are there any trees encroaching on it?

Exterior: Does the house look like it will need repairs or repainting soon? Are gutters and downspouts firmly attached? Are there loose boards? Dangling wires?

Attic: How does the interior of the roof structure look? Any signs of leaks?

Interior evidence of leaks: Check ceilings and around windows in each room.

Basement: Is there dampness? Adequate insulation? (If there’s a crawlspace instead of a basement, you might want to leave this for the professional home inspection.)

Electrical: Do the switches work? Are there any obvious malfunctions?

Plumbing: Any unusual noises or malfunctions?

Appliances: If these are included, what is the age and condition of the stove, dishwasher, refrigerator?

Heating/cooling system: Does it seem to do the job? How old is the furnace?

Environmental: Ask your home inspector if he offers an environmental report which searches government databases and will inform you if the home is located near any potential source of contamination such as leaking underground storage tanks and landfills.

Need a Loan? Think Twice About Using Your Home as Collateral

2007-12-27T08:48:00.000-08:00

If you need money to pay bills or make home improvements, and think the answer is in refinancing, a second mortgage, or a home equity loan, consider your options carefully. If you can't make the required payments, you could lose your home as well as the equity you've built up. That's why it's important not to let anyone talk you into using your home to borrow money you may not be able to afford to pay back. Not all loans or lenders are created equal. Some unscrupulous lenders target older or low-income homeowners and those with credit problems. These lenders may offer loans based on the equity in your home, not on your ability to repay the loan. High interest rates and credit costs can make it very expensive to borrow money, even if you use your home as collateral.

Talk to an attorney, financial advisor, or someone else you trust before you make any decisions about borrowing money. Non-profit credit and housing counseling services also can be useful in helping you manage your credit and make smart decisions about loans.

Early Warning Signs

Avoid any lender who:

tells you to falsify information on the loan application. For example, stay away from a lender who tells you to say that your income is higher than it is.
pressures you into applying for a loan or applying for more money than you need.
pressures you into accepting monthly payments you can't make or could have trouble making.
fails to provide required loan disclosures or tells you not to read them.
misrepresents the kind of credit you're getting, like calling a one-time loan a line of credit.
promises one set of terms when you apply, and gives you another set of terms to sign — with no legitimate explanation for the change.
tells you to sign blank forms — and says they'll fill in the blanks later.
says you can't have copies of the documents that you've signed.

Comming Changes....

2007-12-20T04:56:00.000-08:00

Fannie Mae and Freddie Mac have posted several counties and cities in the state of Virginia (as well as several states in the nation) as listed in a declining market area. The counties in Virginia are Alexandria, Arlington, Clarke, Fairfax, Fairfax City, Falls Church, Fauquier, Fredericksburg City, Loudon, Manassas, Manassas Park, Prince William, Spotsylvania, Stafford and Warren.

What does this mean to you? Conventional loans (excluding My community) in these areas will have the LTV reduced by 5%. This means that if your borrower had only intended on putting 5% down payment, he will need 10% down payment instead. The good news is that as of right now, FHA, VA and the affordable housing products with Fannie and Freddie have not adopted this policy (this is changing on a daily basis, please check www.efanniemae.com www.fha.gov www.freddiemac.com for continuous updates). VHDA (www.vhda.com )is still in the process of publishing guidelines on this, but they will probably adopt the Fannie/Freddie policy as well.

This is a temporary restriction that will be lifted, however there is no date or time frame promised as to when this will happen.

Also new for 2008, Risk based pricing for conventional products. Borrowers with lower credit scores will experience an add on to the points as follows:

Below 620 (or missing credit score)
2.00%

620-639
1.75%

640-659
1.25%

660-679
0.75%

REAL Trends Housing Market Report - October 2007 vs. October 2006...

2007-12-20T04:50:00.000-08:00

National
Closed Sales Units - Down 21.7%
Average Sales Price - DOWN 0.9%

Northeast
Closed Sales Units - Down 17.7%
Average Sales Price - Up 3.5%
South
Closed Sales Units - Down 27.2%
Average Sales Price - Up 0.8%
Midwest
Closed Sales Units - Down 14.3%
Average Sales Price - Down 2.1%
West
Closed Sales Units - Down 52.2%
Average Sales Price - Up 1.6%

Existing-home sales are projected to trend up in 2008, with pending home sales showing a slight near-term rise, according to the latest forecast by the National Association of REALTORS. However, a recovery for new-home sales is unlikely before 2009.

Existing-home sales are likely to total 5.67 million this year, the fifth highest on record, rising to 5.70 million in 2008, in contrast with 6.48 million in 2006. Existing-home prices should be down 1.9 percent to a median of $217,600 for all of 2007, and then rise 0.3 percent to $218,300 in 2008. Areas showing healthy price gains include disparate markets such as Gary-Hammond (IN), Binghamton (NY), Corpus Christi (TX) and Spokane (WA).

New-home sales are forecast at 788,000 this year and 693,000 in 2008, down from 1.05 million in 2006; no sustained improvement is seen for new homes until 2009. Because builders have correctly adjusted production, housing starts, including multi-family units, will probably total 1.36 million this year and 1.16 million in 2008, down from 1.80 million last year. The median new-home price is projected to drop 3.0 percent to $239,100 for 2007, and then decline another 0.2 percent to $236,600 in 2008.

Congress Votes to Extend Federal Tax Deduction for

2007-12-18T17:36:00.000-08:00

Congress Votes to Extend Federal Tax Deduction for Mortgage Insurance Premiums Through 2010.
WASHINGTON, D.C. December 18, 2007 – Congress has extended the federal tax deduction allowing homeowners with low down payment mortgages to deduct the cost of their government or private mortgage insurance premiums for three more years.

Qualified borrowers will be able to take the deduction if their insured mortgage originates between 2007 and 2010.

The deduction was first approved late in 2006 and initially applied only to the 2007 tax year. Extension of the tax deduction for mortgage insurance premiums was part of the Mortgage Forgiveness Debt Relief Act of 2007 approved by both the U.S. House of Representatives and the U.S. Senate.
The legislation now goes to President Bush for signing.

The tax break for mortgage insurance premiums is for families with an adjusted gross income of $100,000 or less. Families with incomes up to $109,000 are eligible for a partial deduction.

“Continuing this tax deduction will help low- and moderate- income consumers, particularly first-time home buyers who are unable to put down 20 percent,” said Kevin Schneider, president of the Mortgage Insurance Companies of America (MICA). “On average, the annual tax break could be worth $350 per taxpayer.”

Even with home prices declining in many areas, many families find it difficult to accumulate a 20 percent down payment so the need for insured mortgages with low down payments continues to grow.

“This important tax deduction is a crucial component in keeping the American dream of homeownership alive for many families,” said Suzanne Hutchinson, MICA Executive Vice President. “As risky, exotic loans are no longer considered viable housing finance options, more secure loans with private mortgage insurance remain readily available for qualified borrowers.”

MICA is the trade association representing the private mortgage insurance industry. Its members help loan originators and investors make funds available to home buyers for low down payment mortgages by protecting these institutions from a major portion of the financial risk of default.

###

For more information contact Payam bakhaje at 202-345-2778 or visit us at http://www.dcrealtoronline.com

Fannie Mae to Announce Response to Adverse Market Conditions

2007-12-04T16:23:00.000-08:00

About a month ago, we announced several credit-risk-based price increases for significantly under-priced portions of our business. Since then, we have seen an acceleration of adverse market conditions:

· The S&P/Case-Shiller® U.S. National Home Price Index showed a price decrease of 4.5% year-over-year for the third quarter, a second consecutive record decline;

· The inventory of existing single-family homes for sale is the highest since 1985;

· Credit default swaps and other spreads demonstrate that the market has little appetite for credit risk.

We don’t know how long these conditions will continue. Prices are volatile, which leads to losses, and in turn impacts capital – for all of us.

Seeing the further dramatic deterioration in the credit and capital markets in recent weeks, and the negative outlook for home prices, we have decided to take some additional steps in response to this adverse market. Later this week we intend to issue three announcements stating that we will:

1. Implement an Adverse Market Delivery Charge of 0.25% that will apply to all whole loans purchased or loans delivered into MBS with issue dates on or after March 1, 2008. The charge will apply to ALL loans, whether delivered via flow or deal, including Long-Term Standby Commitments, whole loan structured transactions, government loans, recourse loans, subprime loans, and reverse mortgages.

2. Reinstate a policy to limit maximum financing for properties in declining markets to 5 percentage points below the maximum LTV/CLTV otherwise allowed for a specific mortgage product.

3. Update our policy on interested-party contributions (IPCs) to change or clarify the types, calculation, and allowable uses of IPCs.

We intend to continue to operate smoothly and steadily as a reliable secondary market outlet in all parts of the country. To ensure that we are in a position to continue supporting you in these unstable times, we believe these additional steps are prudent and necessary.

We appreciate your support and your business as we weather this very tough environment together.

November Snap Shot

2007-11-30T06:26:00.000-08:00

2007-11-30T06:25:00.001-08:00

Fed Lowers Key Interest Rate by a Quarter Point !!!! What is Next???

2007-10-31T12:02:00.000-07:00

WASHINGTON, Oct. 31 — Federal Reserve policy makers, worried that the meltdown in housing could continue to slow the entire economy, cut their benchmark interest rate today by a quarter point to 4.50 percent, from 4.75.

Fed’s StatementToday’s rate cut follows an unusually large one-half percentage point in September, when the volatility in the markets and problems in housing, led the Fed to take action.

“Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance,” the Fed said in a statement. “However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction. Today’s action, combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and promote moderate growth over time.”

One Fed governor, Thomas M. Hoenig, voted against the rate cut. The board also approved a 25-basis-point decrease in the discount rate to 5 percent.

Financial markets had put heavy pressure on the central bank to reduce short-term rates a second time. The markets fell quickly after the announcement, but also started to recover somewhat almost as quickly.

But policy makers faced a difficult decision because the overall economy has yet to show much sign of being crippled by the twin problems in housing and mortgage finance.

Analysts said the central bank’s decision was akin to taking out an additional insurance policy against recession. Housing downturns have preceded 8 of the last 10 recessions, and this year’s downward spiral is shaping up to be the deepest in history.

Yet just a few hours before the Fed announced its decision, the Commerce Department reported that the nation’s gross domestic product expanded at a healthy pace of 3.9 percent in the quarter that ended Sept. 30.

Consumer spending, which accounts for more than two-thirds of America’s economic activity, climbed 3 percent. Job creation has slowed in recent months, but employers are still hiring more than firing and wages are rising faster than inflation. The unemployment, at 4.7 percent, is low and has barely budged.

The most recent data on home sales, housing prices and construction have all been worse than analysts expected. Defaults have climbed sharply on mortgages to subprime borrowers with weak credit histories, and analysts are predicting anywhere from 500,000 to 2 million foreclosures on subprime loans by the end of next year.

Wall Street firms and major banks have announced billions of dollars in losses on mortgage-backed securities in the last several weeks, and Merrill Lynch’s $8.4 billion write-down was among the factors that led to the ouster of its chief executive, E. Stanley O’Neal, earlier this week.

Fed officials and private economists alike have predicted that the housing market has yet to hit bottom. Housing starts in September were down 31 percent from the year before. Sales of existing homes have dropped 30 percent since their peak in 2005, and the supply of unsold homes last month reached its highest level in more than 19 years.

The nationwide average price of homes have declined almost 5 percent in the last year, the first time on record that has happened in the United States. On Tuesday, Standard & Poor’s reported that its Case-Schiller index of housing prices in 20 major cities had declined 4.4 percent in August, compared with a year earlier. That was the eighth consecutive monthly decline, and the steepest since April 1991.

“If the Fed is in the business of managing risks, as it claims to be, the argument in favor of easing is, in our view, overwhelming,” wrote Ian Shepherdson, an economist at High Frequency Economics, in a research note on Tuesday.

But at least some Fed officials have worried about reacting too strongly. The president of the San Francisco Fed, Janet Yellen, cautioned in a speech last month that the Fed cut rates dramatically after the Russian financial collapse in August 1998. Then, as now, credit markets began to freeze up as investors worried about defaults. But the fear abated and the economic boom did not slow that year.

At the Fed’s policy meeting on Sept. 18, 5 of the 12 regional banks did not request a reduction in the discount rate, the rate at which banks can borrow directly from the Fed. That was a quiet sign that some Fed presidents did not yet see the need for lower rates at that time.

Lyle E. Gramley, a former Fed governor and now a senior adviser to the Stamford Washington Research Group, said some policy makers were worried that rising wages and slower productivity growth could aggravate inflation.

“Unless productivity improves or the rise in compensation slows down, unit-labor costs will be rising too rapidly to keep core inflation down to 2 percent,” Mr. Gramley said. “That’s what’s got them worried.”

But Fed officials were under heavy pressure from financial markets. Prices of Fed-funds futures, which provide a way of betting on the Federal funds rate, showed that investors placed the odds of a rate cut on Wednesday at 96 percent.

Had the central bank decided to leave interest rates unchanged, without any advance warnings from policy makers, the stock markets would likely have plunged in panic.

Instead, policy makers were expected to give investors the rate cut they expected but also to warn against assuming additional rate cuts later this year.

DC 1st Time Homebuying and Counseling Programs cont.

2007-10-30T05:18:00.001-07:00

Near Northeast Community Improvement Corp 1326 Florida Ave NE Washington DC 20002 202/399-6900 Counseling Services: Home equity conversion mortgage counseling, Mortgage delinquency and default resolution counseling, Pre-purchase counseling, Renters assistance Language: English only

NID-HCA Sherman 7826 Eastern Ave NW St 402 Washington DC 20012 202/321-8955 www.nidonline.org Counseling Services: Fair Housing Assistance, Home equity conversion mortgage counseling, Homebuyer Education Program, Loss mitigation, Money debt management, Mortgage delinquency and default resolution counseling, Post-purchase counseling, Mobility and relocation counseling, Services for Homeless Language: English only

University Legal Services 220 I St NW St 130 Washington DC 20002 202/547-4747 Counseling Services: Fair Housing Assistance, Home equity conversion mortgage counseling, Homebuyer Education Program, Loss mitigation, Money debt management, Mortgage delinquency and default resolution counseling, Post-purchase counseling, Mobility and relocation counseling, Services for Homeless Language: English only

University Legal Services 3232 Pennsylvania Ave SE St 4 Washington DC 20020 202/547-4747 Counseling Services: Fair Housing Assistance, Home equity conversion mortgage counseling, Homebuyer Education Program, Loss mitigation, Money debt management, Mortgage delinquency and default resolution counseling, Post-purchase counseling, Mobility and relocation counseling, Services for Homeless Language: English only

Some info about HPAP

2007-10-30T05:15:00.001-07:00

The specifics of Washington DC's Home Purchase Assistance Program (HPAP): Home Purchase Assistance Program is a program that helps low and moderate income individuals and families buy a home in Washington DC. Up to $70,000 in financial assistance is available for qualified applicants.
How do I qualify... 1. Be the head of household and a first time homebuyer... 2. Be a low to moderate income resident... 3. Cannot have held residential real estate interest within three years prior to application... 4. Must be the purchaser's primary residence and be inside the District of Columbia... 5. Have a good credit rating...

Note: You don't need to be a DC resident to apply but DC residents always come first.

Up to $7,000 separate closing assistance is also available.

*You need $500 or 50% of liquid assets greater than $3,000

*Loan repayment begins in the sixth year of the loan and is amortized over 40 years.

*If you transfer the property, refinance the property or if the property does not remain your principal residence, the entire amount of the loan is due immediately....

To apply contact one of the following organizations...

Housing Counseling Services Inc 2410 17th St NW Washington DC 20009 202/667-7006-108

Marshall Heights Community Development Organization 3939 Benning RD NE Washington DC 20019 202/396-1200

Lydia's House 3939 S Capitol St SE Washington DC 20032 202/373-1050

Latino Economic Development Corp 2316 18th St NW Washington DC 20009 202/588-5102-16

University Legal Services 220 I St NW St 130 Washington DC 20002 202/547-4747

University Legal Services 3232 Pennsylvania Ave SE St 4 Washington DC 20020 202/547-4747

The Top Ten Reasons It's a Great Time To Buy Real Estate!

2007-10-22T09:18:00.000-07:00

Selection, selection, selection. There are about 57,000 resale homes on the market in Maricopa county(Phoenix). Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the resale inventory dropped below 5,000 units. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat or RV. There are lots of options in this market.

No Bidding Wars. In 2005 we had one client that made an offer on ten homes. They lost the first nine to the 'feeding frenzy' that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is no competitive bidding in this buyer's market.

You can make an offer. A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you 'make them an offer they can't refuse'.

Patience is tolerated. In the hot seller's market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer. Today a buyer can take their time. Look at several homes and think about your decision for a few hours.

Due diligence is welcomed. In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.

There are plenty of specs. In the not too distant past buyer had to 'play games' if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.

Repair requests are welcomed. After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold 'as is'. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.

Few, if any investors. It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It's a great time to buy without having to compete with hundreds of prospective landlords.

Location, location, location. Today's buyers can find homes closer to work. In the past buyers flocked to Maricopa and Queen Creek in order to find affordable homes. In this market, reasonably priced homes are within biking or walking distance to schools, rapid transit lines, and relatives.

Real Financing is available. The 'wink, wink' zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It's a great time to buy real estate!

Best Places For Real Estate Deals

2007-10-19T14:52:00.000-07:00

DC Still one of the best places for Real Estate.

Home sales have sunk to their lowest levels since 2001. Investors are jumping ship, foreclosures are mounting and lenders are exercising caution.
Still, there are areas of the county where it makes sense for some to buy. That's because, in a market slump, sellers eager to unload their homes often accept less money from buyers. New construction also slows. Both bode well for buyers hoping to score a deal--if the market in which they are buying is expected to experience increased sales.
To find such places, we paired with Moody's Economy.com to research current home sales patterns and sales projections in the country's 40 biggest real estate markets. Based on models that estimated housing inventory, sales rates and turnover for 2008, we arrived at a list of markets that are experiencing price stalls or declines, but where over the coming year are expected to provide deals for buyers.
A buyers' market in the purest sense is one where there are far more sellers than buyers, creating a supply and demand dynamic that benefit those looking to invest in a home. However, by that definition, a floundering market like Detroit is a good buyers' market because prices are dropping and inventory is high.
"A market with declining prices and few sales is a strong buyers' market," says Anthony Sanders, professor of real estate finance at Arizona State University. "But it is also a risky market given that prices could decline further."
With that in mind, we required the slumping or neutral markets on our list to have expected volume and turnover increases, based on sales and inventory models run by Moody's Economy.com.
The results turn out three types of markets and three types of deals.
Attractive Arrangements
The first are undervalued, affordable markets like Fort Worth, Texas, which haven't felt huge, post-boom price corrections, but where there is an expected acceleration in sales volume, making now the time to buy.
Second are markets like Long Island, N.Y., and Washington D.C. These are traditionally strong markets that are recovering from speculation, especially in the D.C. condo market and by Long Island's second-home buyers. Once these areas stabilize, the market as a whole should return to health.
"Long Island is continuing to slip, but a modest amount," says Jonathan Miller, president of Miller Samuel, a New York-based real estate appraisal and consultancy firm. "In [Long Island] the upper-end market was the market of choice for speculation and tear downs."
Third are riskier markets such as Las Vegas or Orlando, Fla., which are experiencing lending and inventory problems but relative to regional markets--in Las Vegas' case, Los Angeles and in Orlando's case Tampa and Miami--are expecting to see significant pickups in sales activity, according to Moody's, and therefore become better buyers' markets because of a relatively lower risk.
But economists caution that while over the next year the dust may settle in these 10 spots, buyers should be prepared for future swings. This is especially true in the case of riskier markets like Orlando and Las Vegas, where the expected increase in sales volume and housing turnover doesn't necessarily mean that the price trough is imminent.
"Housing market activity revives when house prices decline sufficiently to restore housing affordability and entice buyers to step up and make a purchase," says Mark Zandi, chief economist at Moody's Economy.com. "Some markets are already approaching those price points, in many others prices will have to decline much more to get to that point."

The Real State of Real Estate

2007-10-19T14:48:00.001-07:00

The Real State of Real Estate
Presented by: Gary Watts – Real Estate Economist, California Previews Retreat
Monterey, August 2007

Brief History of Real Estate

Historically, housing downturns average 27 months. We are in the 23rd month of the current downturn, so
once we are past this financial over-reaction, things should improve. The national median price of a
resale home is 3.4% higher than a year ago and the pending sales index is moving back up. There may
just be some light beginning to shine at the end of this tunnel!

1970 to 1980

Prior to my entering real estate in 1971, a quote appeared in Business Week (late 1969) due to an increase
in housing prices: “The goal of owning a home seems to be getting beyond the reach of more and more
Americans. The typical new house today costs about $28,000. “In 1972, interest rates were 7% and it
would take over 24 years before a home buyer could be able to obtain those low rates once again - today,
we are in the low 6’s. In 1973, banks had a run on deposits and for a period of approximately 8 months
there were no lenders who were in a position to make loans to home buyers. This should have caused a
collapse in the real estate market, but home prices continued to rise. In 1977, the National Business
magazine stated: “The median price of a home today is approaching $50,000. Housing experts predict
price rises in the future won’t be that great.”

1980 to 1990

At the end of the 70’s and into the 80’s, inflation hit 21.5% and home loans were reaching 18%! This was
followed by a crash (and later bail out) of the savings & loans industry in America. Although large job
losses were creating foreclosures, home prices continued to rise. By 1985, Money Magazine made this
prediction about home prices: “The golden-age of risk free run-ups in home prices is gone.”With a buildup in defense spending and huge growth in manufacturing sector in the late 1980’s, increased job creation led to a boom in home construction and home prices continued to rise. Then on November 11, 1989, a dramatic event took place: the Berlin Wall came down! With the Evil Empire (the Soviet Union)
breaking up, things were going to change around the world and change quickly!
1990 to 2000

In early 1990, Congress began slashing funds for defense spending. Within a very short period of time, a
lot of highly paid workers in both defense and manufacturing had lost their jobs. California home prices
declined about 12% by 1996 when the San Francisco Examiner said: “A home is where the bad
investment is. “In the following 3 years, California home prices rose 19.7% wiping out all the losses of
the early ’90’s and ended the decade with a net gain of 9.35%. The median price in California has not
declined since 1996.

The Media

Today’s media plays up bad economic news now more than ever, which leads to misconceptions about
economic realty. Our economy is extremely strong, profits are superb and the world economy is
exploding.
• All you read and hear is that real estate is going down, yet last month, prices in the U.S. rose
3.4% from a year ago and California is up almost 1%. The Bay Area prices have gained 4.1%
over the last year and southern California median price is up 3.7%.
• Foreclosures are supposed to be at a record high - but last year 98.83% or mortgages did not go to
foreclosure. Today, the Bay Area’s foreclosure rate is up only 1.5% over last year while southern
California’s foreclosure rate is up 2%.
• The media reported 53,942 notices of default for the 2nd Quarter - a near record high. They are
comparing it to the 1st Q. of ‘96 when 61,541 notices were filed but fail to mention that 2 million more home have been built in California since then!
• What if the media’s headlines read: 99.2% of Mortgages are Not in Foreclosure? The media and the financial markets have greatly over-reacted, to the real problems that have been revealed in the lending marketplace, which is typical.

The Sub-Prime Market

It may surprise you to know that sub-prime loans make-up only 5% of the U.S. total loan market and Alt -
A loans (those with credit better than sub-prime but less than prime) total only 8% of all loans in the U.S.!

1. These exotic loans became a major influence in the early 2000’s, but anyone obtaining them up through
2004 had very few problems due to rapid equity growth. Many with no-money-down purchases soon
found they had 20% (+) equity within a year or two!
2. Most of the problems with sub-prime loans originated in the summer of2005 through 2006. In
California, 43% of all loans funded during that time were sub-prime loans.
3. Sub-prime loan investors that needed to sell their loans were liquidating their paper for $.96 on the
dollar. There has been no current data on sales since August 5th, but with the current turmoil in the
financial markets, I am sure they are being “dumped” for less.
4. Here is a financial report on some of the banks that provided the sub-prime money:
• Bear Stearns 2nd quarter revenue was $2.512 billion - a new record!
• Merrill Lynch saw 2nd quarter profits rise 30.2% Morgan Stanley (holding $5.2 billion in subprime
loans) had a 60% jump in earnings.
• Goldman Saks earned $2.33 billion in the past year.
• Bank of America (#2 U.S. bank), after putting aside $1.81 billion for potential credit losses, saw
net income rise to $5.76 billion - up from $5.48 billion last year.

The media will still report about massive delinquencies and huge foreclosures in the sub-prime market,
but those reports will not be accurate because they don’t explain the difference between a delinquent
payment, a notice of default or a foreclosure. They tell us “Foreclosures at Record High!” but that is not
accurate.
Source: Mortgage Bankers Association, National Homebuilders Association, Inside Mortgage Finance

Delinquencies vs. Notices of Default vs. Foreclosures

Delinquencies

Delinquencies cover any missed payment - even if it is just for one month, it is reported as a delinquency.

1. The delinquency rate on sub-prime loans was running at 13.77%, which is up 13.44% from the
previous year. In the last quarter, the delinquency rate dropped to 12.4%!
2. The delinquency rate on Alt-A loans is only 2.69%, while prime loans are at 2.57%.
3. Combining the three rates with the loan volume gives you a delinquency rate for all loans in the U.S. of
only 4.84%. The record low is 4.0%.
4. On jumbo mortgages (anything larger than $417,000) the delinquency rate is 0.37% 5. California’s
delinquency rate is only 3.25%.

Notices of Default

Notices of Default are filed when lenders’ loans have been delinquent for a specific period of time. These
loans begin the foreclosure process. The four states of California, Florida, Nevada and Arizona currently
have the largest amount of loans in the foreclosure process. Yet, in the 1st Quarter, 24 states saw a
decline in foreclosure starts and 36 states saw a decline in the 2nd quarter!

1. Only 3.23% of all sub-prime loans have entered the foreclosure process, with most of the defaults
occurring on loans from Jan. 2005 to June 2006.
2. Only 1.28% of all prime loans have entered the foreclosure process.
3. In California, the last quarter saw 53,943 notices filed, with most filings being on loans from the
summer of 2005 to the summer of 2006.
4. The lowest number was 12,417 in the 3rd Quarter of 2004.

Foreclosures

Foreclosures occur when the buyer has been unsuccessful in curing the debt, and either a lender or an
investor has acquired the property. As of last month, there was 1 foreclosure filing for every 693 homes
in America.

1. For sub-prime loans, 68% of the buyers are able to prevent the foreclosure by either refinancing the
property or successfully selling their home.
2. For prime loans, the foreclosure rate is 0.86%. Last year, the U.S. saw a combined foreclosure rate of
only 1.09% while California’s rate was 1.17%!
3. California now ranks #4 in the nation in foreclosures - down from #1!
The media will try to scare you with numbers like $1 trillion in loans needs to be recast this year and that
foreclosures could cost lenders as much as $2.3 billion dollars! They never mention that there is $10.4
trillion of mortgages with $56 trillion dollars of equity in American households.

Add to that the wealth of the U.S. at $70 trillion, with the value of stocks between $15 and $20 trillion,
while the bond market is even larger. So these loses (should they occur) should not have any great effect
on home prices.
A final note about foreclosures: The #1 reason they occurred was due to fraud. The #2 reason was
unethical lending, followed by #3 - loss of job, and finally #4 was medical reasons. By the way,
mortgage insurers are in a good position to cover losses at these (high) levels.
Source: Mortgage Bankers Association, Federal Reserve, Federal Bureau of Investigation

Why the World Changed in 1979 Baby Boomers’ Impact

Never before in the history of the world has a generation accumulated so much wealth as the baby
boomers. The Internal Revenue Service will tell you that from 1945 to 1979, incomes increased at the
same rate for all tax brackets. By 1979, the early baby boomers had been in the workplace for over 10
years. They were the most educated generation to enter the work force, and they had the skills for our
changing world. Today, the IRS tells us that, from 1979 to 2004, the median income in the U.S. rose
18%. From 2004 to 2005, incomes grew 5.8%.

The number of taxpayers making more than $100,000 grew by 3.4 million and accounted for more than
two-thirds of the growth vs. 2000! Half of Americans make less than $30,000 and two-thirds make less
than $50,000.

Those making more than $1 million grew by 26% and numbered 303,817 in 2005! These individuals,
who constitute less than a quarter of 1 percent of all taxpayers, reaped almost 47 percent of the total
income gains in 2005.

The top 85% of the nation’s wealth resides with the richest 15% of Americans; the bottom 50% of
Americans holds only 2.5% of the nation’s wealth.
Over the next decade, there will be a 25% increase in the population over 50 years of age. They have
more money than any preceding generation, due to having dual incomes, equity growth, and record
inheritances (60% goes to the top 40%)! This age group is spending $2 trillion dollars annually! Last
year, 2.1 million boomers turned 60, with 25% planning on not retiring.
They found a way to mix leisure with work and are not ready to fully retire - they have money and
income and they are still investing in real estate.

Washington DC Real Estate "NEWS"

2007-10-13T10:10:00.000-07:00

The 2007 Mortgage Correction and the Recovery Ahead
With the lowering of the discount rate by ½% the Federal Reserve took the first major step to lead the way in establishing a path towards the next stage of the housing cycle. The following will highlight for you the steps that created the current market climate and the reasons why we are poised for recovery in the mid-Atlantic markets.

The beginning of the big changeSince the peak in mid 2005, the sale of existing and new homes has slowed, reflecting a correction long overdue after an almost decade long un-interrupted period of housing growth and house price appreciation (hpa). This housing slowdown was aided by two key items that helped stall the market beyond any natural timing of the overdue economic cycle. First, we saw a slight increase from the record low interest rates of 2003. As the graph below reflects, interest rates adjusted in 2003 and the corrective period following only foreshadowed the subsequent housing correction in 2005 as the steam from excessive liquidity was impacted by these rising rates.

While the absolute change in the average 30 year fixed rate increased minimally compared to the historical perspective as shown here, this approximate 80bp change from the 2003 low to the post 2003 high fueled the beginning of the correction we are now experiencing.

Adding fuel to the fire:

Compounding the impact of this interest rate correction was the fragile nature of the credit markets that were exposed to a new risk layering that, combined with little interest rate relief, began showing its impact in the sub-prime markets but soon spread to even the prime markets.

The combination of factors, reduced documentation mortgages and low credit scores, layered on top of a variety of adjustable rate products, including interest only and negative amortizing products, resulted in a much higher than expected level of defaults, as the table below shows.

Many of these mortgages were pooled into non-agency, private label, mortgage backed securities with ratings from agencies such as Moodys, Standard and Poors, and Fitch, that did not perform as expected. The securities were sold to investors around the globe at premium prices reflecting their agency ratings. There were two fragile factors, however, that ultimately toppled the market. First most of the mortgages, sold from lenders to Wall Street conduit firms responsible for packaging them in securities for sale, had early payment default (epd) language in them that obligated the lender to repurchase them in the event that one, or some, of the first few payments became delinquent. This became the case and billions of dollars on delinquent loans were returned to lenders across the country for repurchase, per their contract obligations.

Thus began the first crack in the soon to come mortgage meltdown. Companies like Own It, Harbourton, and other less capitalized institutions that focused on sub-prime mortgages exited the industry abruptly, faced with the enormity of the re-purchase obligations from the investors. But, unfortunately, this was just the beginning.

The next crisis to hit the markets would only exacerbate the shock value. With the market already jittery, faced with the sub-prime crisis, the loan performance on other alt-a and prime books were showing the signs of weakness. Unfortunately, since rates had moved slightly upward, ending years of endless improvement, the home price appreciation and home sales had leveled or were slowing in most markets. While this would normally be a case for a normal correction, headed for a “soft landing”, the unstable financial markets would fuel this correction. As the table below reflects, delinquency rates tend to naturally rise when home values de-flate.

So now the international markets that had invested for years in this un-ending US mortgage market, fueling it with un-ending capital, were experiencing a different picture. Sub-prime loans were defaulting and forcing the failure of institutions, some with large names like “Ameriquest”. Now other non-agency mortgage pools were showing their weakness, filled with no-doc mortgages, interest only ARM’s, and a variety of other layered risks. Managers of pension funds, who, for years had felt mortgage securities to be safe investment, saw their values declining rapidly. Foreign investors like the bank of china began to shy away from investing in the US mortgage market. Suddenly, liquidity for anything non-agency (not sold as a Freddie Mac or Fannie Mae security with their guarantee) mortgages dried up.

So what happened next?

American Home mortgage, like many other non-bank mortgage banking firms, had no place to sell their mortgages. American Home suddenly found itself holding a large balance sheet of unsold non-agency mortgages without the capacity to retain them nor any outlet to buy them except at some enormous discount to their original value. For American Home it meant failure. This collapse of one of America’s largest mortgage institutions only added to the fear factor. The market went instantly dry. There was no outlet anywhere in the world to sell a jumbo mortgage. This meant the end for dozens of other institutions like First Magnus, Greenpoint, and First Bank of Arizona, all who had to exit the business. The markets became very volatile, and the media only added to the intensity through their evening broadcasts of the “liquidity crisis”.

The reality is that this was both liquidity and a credit crisis and while liquidity will return, the impacts to credit will be far more extensive. For the weeks/months following this rapid series of events that caused such an enormous disruption, the only investors left in the non-agency markets were the major banks that had the balance sheet capacity to hold the mortgages and retain the risk on balance sheet while waiting for the markets to normalize. Only the large banks like Bank of America, Wells Fargo, Citi, and JP Morgan/Chase, and several others committed themselves to the industry and had the capital to sustain this correction with least impact to the market.

As the market normalizes, and the Federal Reserve participates by fueling liquidity in the form of cuts in the discount rate, we will see the return of the non-agency market, but it will be far different from before this crisis occurred. 100% loan to value, piggy back mortgages (home equity and 2nd mortgages), reduced and no-documentation, and unique mortgage products such as interest only and “option” arms, will no longer be provided in combinations that result in risk layers that result in defaults at these levels. Lenders will have to show more capital to be extended credit from investors, and underwriting of mortgages will require greater scrutiny from originating lenders in order to help insure that borrowers are getting mortgages they can afford to keep.

A recovery on the horizon?

The market for anyone looking at Housing in the metropolitan Washington DC area is far different than anywhere else. If one is looking to buy, there is a strong argument to be made that buying now may be one of those unique opportunities that happen so rarely in economic cycles. Why do I say this? Four simple reasons:

1. The economic strength of this area.
2. The inventory on market or relative lack of
3. The interest rate perspective
4. The rally to come

1. Economic Strength: This market area outperforms most national markets. The broad based economy. The employment forecast for the metropolitan Washington DC area calls for a shortage of skilled labor to fill the anticipated job demand from employers. The chart below reflects the fact the metropolitan Washington DC area is at economic full employment and performs better than the national average.
2. Inventory: There are two charts below that show key variables. First, new home inventory is not as prevalent as in past corrections. Builders reacted quickly to this market correction and simply backed away from many planned developments. The availability of existing home stock is actually low and, with the coming recovery, this could be inflationary to home values. The second slide shows days on market for listings in our area. As you can see, while days on market have risen, this market performs very well and better than most. This reflects the unique economic strength and the fact that real inventories are not that high relative to the core demographic economic strength of the Washington-Baltimore area. Never the less, the inventory is stronger than is past markets, providing opportunity for buyers to purchase their preferred home with the ability to negotiate.

3. Interest rates are close to historical lows. Look at the history of interest rates below. Today, while we sit near the historical lows for mortgage rates, the facts are that, for most of history, interest rates have been higher. The ability to lock into these rates now will save a homebuyer a significant amount of money over time. Failure to act in this current period could end up being a costly error to any prospective buyer sitting on the sidelines.
4. The Rally to Come: With federal intervention on rates, a strong core economic market in the Washington-Baltimore area, reduced inventories of new homes, and historically low rates, the market is poised for a housing recovery. The pent up demand building for housing will be fueled quickly by the increased money supply from the fed and the calming of the industry as we come out of the trough, which many believe we hit in the third and early fourth quarter.

The ability for buyers to act during this near bottom of the buyers market is critical. The buyers market we are in now is rare when combined with historically low rates and strong economic fundamentals. When the recovery begins, which may be soon, the loss of inventory will mean less selection and less bargaining power for the prospective buyers and potentially (depending on timing) the loss of this perfect storm we are currently experiencing, where inventory and interest rates both exists put buyers in the best market position possible.

Something 2 Know

2007-10-09T09:58:00.001-07:00

“Do you currently have an insurance rider to the condominium building master policy to protect you against lost income in event of catastrophic loss and also damage from above? If not, such a policy is direly indicated! Earlier this week, a spectacular fire gutted a 30 unit condo on Adams Mill Road. Press coverage revealed that many neighborhoods in DC are afflicted with under-sized water mains such that firefighters could not get adequate water pressure right away to power their hoses and better control the fire. A rider policy (like one that I have with State Farm on my own condo) should protect you against lost rental income in event of a catastrophic loss while you are waiting for the condo to repair/rebuild but are still obligated to pay mortgage and property taxes on your apartment."