Welcome to Real Estate Live, an online discussion of the Washington area housing market, featuring Post staff writer Daniela Deane.
In her Live Online discussions with the audience, Deane discusses the specifics of the market, from condos and investment properties to contracts and mortgages.
Deane has covered real estate for The Washington Post since 1999 and has worked as a reporter for more than 20 years.
The transcript follows.
Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
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Daniela Deane: Folks! Hello to everyone on this beautiful day in Washington...If by any chance you didn't see D'Vera Cohn's story today, check out the home page of washingtonpost.com ... 74,000 people moved to this area last year!! That tells you more about the direction of this market than anything, it seems to me. All those people gotta live somewhere! Check it out.
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Missoula, Montana: Hi, Daniela,
Thanks for hosting such great, informative chats -- and for brightening them with the warmth of your personality!
I'm undertaking the purchase of my first home and am feeling a bit overwhelmed by all the details. Off the top of your head, what would you say is the one thing I should definitely do or keep in mind?
Thanks again! You rock!
Daniela Deane: Thanks for the compliment! Are you buying in Missoula, which I know absolutely nothing about????? For me, the most important element of purchasing is location, location, location ... it's the one thing that cannot ever be changed ... and in my book, it's the most important thing...Houses can be altered, made better, bigger, torn down, etc. etc. ... locations cannot be changed ... I keep telling myself that about my own modest rambler!
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Falls Church, Va.: I know that the economists are predicting a continued growth in housing appreciation for 2005, but have they forecasted into 2006? And if so, what is the forecast?
Daniela Deane: You're being sneaky, Falls Church, cuz I see your question further down too. But what the heck! I'll answer. For our area, economists are predicting a moderation of price growth (hasn't happened at all yet as far as I can tell) but continued price apperception. This year, they're saying double-digit appreciation again. And then they're predicting continued, but moderated, appreciation for the rest of this decade basically. Who things this spring market is as crazy as ever though???? But how long can it last? That's the story I'm working on now. There are economists that say we're getting very carried away here with real estate much like we did about stocks in the late 1990s. But then most say it's gonna stay good for the foreseeable future because rising house values, particularly here, are supported by job creation, in-migration (Cohn's story today) and not only low interest rates...By the way, rates dropped this week to an average of 5.91 from 5.93 last week...
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College Park, Md.: Do you know what area(s) in D.C. (& suburbs) have seen the lowest appreciation thus far in 2005?
Daniela Deane: No official figures on price appreciation have been released yet this year that I'm aware of...The Office of Housing Enterprise Oversight will soon put out 1st quarter figures, but haven't yet...Generally though, the eastern part of the city has seen lower appreciation rates than the western part, i.e. Northwest. Farther out has seen lower appreciation than closer in. And Prince George's County is still the most affordable county near Washington ... everywhere has seen appreciation, mind you. But some places have seen higher rates than others. Does that answer your question?
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Wichita, Kansas: Hello! Just wanted to thank you for all of your fine information and thanks in a large part to your column we were the confident out-of-town buyers closing on a co-op April 29th in 20007 on a tiny but adorable place for our son. Finding affordable entry-level homes is indeed possible (with parental help) again many thanks.
The Gardners
Daniela Deane: Well, thank you ... if this market collapses, I'm gonna have to get a bodyguard -- I think ... geez, that's scary. Some economists say we are indeed in a bubble...Although most say we're not. All I know is what I report...Will anyone protect me if/when things go south?? Please? Or will everyone want to kill me?
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Reston, Va.: Do you see any symptoms which indicate that real estate market is getting stable in the D.C. area? What is your forecast for areas like Reston/Herndon/Sterling/Ashburn?
Daniela Deane: What my reporting has shown is that this spring is turning out as insane as last, and last, and last...It looked like the market was slowing down last fall. But now it's come back with a vengeance ... there's a sense that buyers are trying to get in before rates rise ... rates crept up for six straight weeks. Now they've retreated the last two weeks...Who thinks the market is as insane as ever this spring??
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Sterling, Va.: Thanks for your comments ... what do you think rise in interest rates will do to the housing prices in coming months?
Daniela Deane: Rates have retreated the last two weeks after rising for six straight weeks. Thirty-year fixed rates averaged 5.91 this week, according to Freddie Mac...Most predictions have rates somewhere around the 7 percent mark by the end of this year, give or take a bit. But there are some things out there that could bring rates up, like rising oil prices or the deteriorating dollar. All this stuff is connected, folks!
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RE: Location ... Rockville: Hi Daniela,
I really like your advice about location, and it makes me feel better about my modest two bedroom condo in Rockville. It is as cute as can be, and in a very nice neighborhood surrounded by nice ramblers and beautiful trees. The schools are good, and it is a 5-minute drive to the metro, and close to our jobs. But I have a child now, and more room would be nice. Still, I hesitate to move further out or to a less expensive neighborhood, because I love my area so much. I am constantly told to sell and trade up (I have A LOT of equity since I bought the condo cheap and it is nearly pained in full). I want to hold on to it because it just feels so secure and comfortable. Any advice on whether I am really missing out on the joys of a bigger single family home in the way out suburbs?
Daniela Deane: Only you know yourself, of course ... and whether you would be happy further out (I personally wouldn't, but who cares about me, huh?)...People like you -- homeowners who would like to trade up known as the "move-up buyer" -- are one of the reasons this market continues to stay so hot. It's very hard for the move-up buyer to move, because 1) they can't find anything and 2) you gotta make a big jump in price to get something better (or move out, like you said)...It's the stuck move-up buyer now!!! One agent said to me recently that the stuck move-up is at the heart of our inventory problem these days ... gosh, I'm giving away my next story here!
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Arlington, Va.: Daniela -- the apt. building that my wife and I currently reside in, is being turned into condominiums. They are offering the current residents a great price to buy before they go on the market to the general public. Located across the street from the Ballston metro stop, would you consider this a good investment? (We would be looking to sell in about 2 to 3 years) Also, is there any type of mortgage incentive or tax break for owning a residence close to a metro stop?
Daniela Deane: Oh my gosh, you need to ask me??????? I consider that an excellent investment. And you're so darn lucky to be able to buy something without competition and below market, my gosh. So many people would like to be in your position. I got an idea: If you have any other qualms, I'll move into your place and buy it, okay? (I bet you don't like that offer!) ... c'mon ... a below-market place near a Metro??? And no, I don't know any other mortgage incentives on buying near a Metro (but that doesn't mean there aren't any) ... how much do you want???!!!! (Lots of exclamation marks today folks. I'm feeling exuberant today!)
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Rockville, Md.: Hi Daniela ... love your chats. I moved back to the D.C. area in November and signed a one-year lease. The rent is reasonable for Rockville and the commute is great. My question is, do you think the housing prices will go up much between now and November? I'm debating whether or not I should break my lease. Thanks!
Daniela Deane: Thank you! I love you guys too. Truly. And I love this forum with you. (What did we do before the Internet???) I think housing prices have gone up about 15 percent just since the beginning of this year...At least that's what agents, builders and people like you are telling me. I have no official figures yet. I only know this spring market is nuts again ... so ... I believe prices will go up in the double-digits (appreciation I mean) this year ... everyone says they're gonna moderate, even the most bullish bullish bullish of housing economists. But as far as I can tell, that has not happened yet in this area. No way. Please tell me if I'm wrong! Like right now.
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Arlington, Va.: I'm looking to sell my townhouse in Arlington Village this summer and am trying to avoid paying a realtor tens of thousands of dollars just to list the house and hold one open house. Essentially a weeks worth of work. Any tips for negotiating a lower fee when selling in a popular location?
Daniela Deane: Real estate commissions are negotiable, don't let anyone tell you otherwise. And people are negotiating them left and right these days. Listings are so hard for agents to find these days. What are they gonna say, "No! I won't do it for less than 6 percent!" I don't think so. They're routinely 5 percent these days and maybe even less. I'm more worried about you selling an Arlington Village condo right before all the changes planned for Columbia Pike though than how much you're gonna pay the agent. Please consider this carefully. And read up on all that's planned if you don't know what it is.
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Washington, D.C.: Hi Daniela,
Wondering if you could help a new homeowner out?
I recently just placed a contract down on a condo (new development) scheduled to be delivered in November 2005.
There was an article, by you, noting the frustrations (delivery time, closing issues, inspection, countless delays, etc.) of new construction homebuyers ... I think the article was published late 2004.
Would it be possible for you to provide a link to that piece? I would really like to reference it and be prepared when it comes time for the inspection, closing, etc.
Whatever you can do is greatly appreciated.
Thank so much!
washingtonpost.com: When the House Isn't Ready (Post, Dec. 6, 2003)
Daniela Deane: My producer tells me my astute colleague Sandy Fleishman wrote that...And she gives the link below...
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Silver Spring, Md.: I have in-laws who immigrated to this country from Vietnam a few years ago. How long does it take to establish the necessary credit before they could buy a house? They have no credit history but have saved up for a down payment.
Daniela Deane: I can't give you a precise time. Please contact a mortgage broker (or two) and talk to them about this. So your in-laws can get into the market as soon as possible. And Mazel Tov to them! How do you say that in Vietnamese?? By the way, I went to Vietnam once a long time ago. What a magical country ... and truly a magical trip for me.
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Houston, Tex.: This weekend my husband and I are traveling to Tampa for a 5-day house hunting trip. We pretty much need to have something picked out by the end of the trip. We're first time buyers, and have been reading the "dummies" books, etc. Any last minute advice? Thanks.
Daniela Deane: Nothing beyond what the books tell you really. Pick up another couple books for first-time buyers. I repeat my earlier statement: Location, location, location ... and in Tampa, my instinct says that's gotta be near the water somehow. They're not making any more coastlines as far as I can tell ... and the coasts of this country have seen the greatest appreciation, much more than the interior of our great country.
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Washington, D.C.: I'm thinking of purchasing a condo in the Silver Spring area, near the metro and the new revitalized downtown area (delivery late 2005). The cost is around $400K-$500K for, I think, either a one bedroom with a den or a two bedroom (the sales company won't actually divulge much info, including floor plans, before my scheduled meeting with them). What do you think of the Silver Spring market? Are those prices too high? How much room for growth and appreciation could there be at these rates? People are already having to resort to "creative" (see "risky") financing options in order to afford such places at today's rates -- could prices really go up 10-20% for the next couple of years? (And I'm slightly concerned about the risk of a catastrophic collapse, particularly in the condo market, where my $500,000 condo suddenly couldn't sell for even half that)
Also, the sales company has scheduled one meeting with me, and has said I must make my purchasing decision at that meeting. Is that typical? They say they've sold more than half the building like this, and have thousands of people on a wait list to even get an appointment.
I'm a first time buyer (currently renting an apartment in D.C.) and would appreciate any pointers you can give me! Thanks so much!
Daniela Deane: I believe in the growth potential of Silver Spring. I believe in the growth potential of the Washington area, particularly when we're creating some 80,000 jobs a year (last year and projected for this year) and 70,000 some odd people are moving to this area. This is a booming area these days. It's hard for people who have lived here for a long time to really believe, but it's true. We have to thank our federal government for this at this moment. So many of these jobs are related to increased government spending. (But what about that ballooning budget deficit, which could push rates up??? It's all connected, folks.) at
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Boston, Mass.: Hi Daniela,
What do you think of the Park Fairfax neighborhood in Virginia? We are trying to choose between that and Fairlington and really aren't familiar with the area. We need to move very soon and would love your opinion ... thank you!
Daniela Deane: I wrote a story about those two developments recently that my producer is now trying to dig out to give you the link. Both those developments are very cute and so incredibly well located. Fairlington is a bit more expensive for various reasons -- you can put a little fence around your back area, for one reason...Both are good buys, in my humble opinion. But they are some differences that you need to check out. Are you one of those tens of thousands of people who are moving to this area? Stupid tidbit: My best friend in elementary school, Becky Rios, (Becky, are you there????) lived in Fairlington and I spent a lot of my early years playing there...Who cares, you say!!!!!
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washingtonpost.com: Complex Analysis (Post, Sept. 4, 2004)
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Fort Belvoir, Va.: The economists may all be saying modest home price increases this year, but word in the trenches is different. We signed for new construction that will be completed maybe September/October and are looking at selling our current home. Both our realtor and the sales rep for the builder were discussing how it is going to be a hot housing market this summer too. Since prices are also a function of expectations, if enough people share this sentiment, it's going to have an effect.
Our realtor has started buying new construction purely for investment purposes. I know of other realtors who are doing this. I makes me nervous about the medium-range (2-5 year) perspective cuz it looks like speculation to me, but it seems like good news for anyone looking to sell now.
Daniela Deane: Wait a minute! I said they are predicting that at some point, but it has NOT happened yet. We are having an insane spring and we are going to almost certainly have double-digit appreciation this year ...the scary thing is -- how long can this possibly last???? Historically, real estate goes up and down. Here, we've only seen up for the past oh, about, 7 years now...
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Columbia, Md.: I own a townhouse right now and am looking to upgrade to a single family in the Baltimore/D.C. suburbs. Many of the houses that I have looked at have .5 or 1 acre, but the acreage is rather hilly. Will this matter a lot in terms of resale vs. a flat lot?
Daniela Deane: Flat lots carry a premium, no doubt about it. And I think that is proven by the fact that you are asking this question. A flat lot is more popular with more folks...Badminton, anyone?
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Hyattsville, Md.: I purchased a home 1 year ago with an individual whom I was not married to. Since moving in the home we have parted. He has a serious drug problem, never came home and only helped me pay the mortgage about 3 times. We are joint tenants in common with rights of survivorship. I am in the process of refinancing but can't locate him to sign off on a quit deed claim. He had signed off on a quit deed claim last year (sent to me by the title law firm used during our closing) it wasn't until after I returned the notarized document that I was informed they had (law firm) sent me the wrong type do quit claim deed. What can I do?
Daniela Deane: Ohmygosh ... I'm sorry ... in my opinion, you need legal advice ... if it were me, I'd probably pay for an hour with a real estate attorney at this stage. Good luck! And please, let me know how it goes....
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Rockville, Md.: Which one: rent a condo, or buy a condo? About to be married, planning on staying in condo for about 1-2 yrs before getting a townhouse or single-family house. Make about $110K combined.
Thanks.
Daniela Deane: Usually I would say buy, hands down ... but if you really only have a one-year horizon, then maybe wait. Real estate comes with high in-and-out costs...It's better to hold ...Here's another scenario for you: Buy, live in it, and then rent it out when you buy something else. Buyer closing costs can run between 3-5 percent of the purchase price; seller costs are more like 10 percent of price (including that pesky agent fee!) That's a lot to pay for a year or so horizon...Real estate is a long-term hold. I've told you guys that!!!
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Washington, D.C.: Hi Daniela, Thank you for taking our question!
My wife and I bought our first home a little less than two years ago -just a couple blocks from the U Street metro. At the time, we were without any sizeable savings and so took whatever mortgage we could get. What we ended up with, in retrospect, is pretty frightening: Two adjustable rates, interest only loans for 100% of the cost of the house.
Could we, and should we, refinance? Will the increase in value of our home and our consistent paying down of the principal allow us now to qualify for a more stable 30 year fixed rate mortgage? We really don't see ourselves moving anytime in the next few years and will need the time to continue fixing up our place before selling anyway.
Beyond the stability of the fixed rate, would taking out more money to accomplish some of the renovations be wise or foolish? We had resigned ourselves to scrimping and saving to remodel -- easy cash leaves a bad taste in our mouth. Are we being too conservative?
Thanks again!
Daniela Deane: I think you should explore re-financing with a mortgage broker, definitely. Rates are still low. You don't want to get caught with your pants down when the rates adjust. That's the problem these days. People are taking out riskier loan products in order to afford properties -- and of course I understand it -- but you gotta be sure you can carry these mortgages when the rates change...This kind of behavior is scaring the most bullish of housing economists. Folks, please, don't let yourself get in over your heads...Be careful!
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Wheaton, Md.: I hear and understand the concerns about the unaffordability of D.C. area housing, but I think that real estate like single family homes under $450K in reasonable areas will be affordable to many people in the area even with steady appreciation. Nice cape cods in my part of Silver Spring are still affordable under $350K, and it seems like maybe areas like this were undervalued to begin with? The high-end market and especially the luxury condo/town home market that may be another story. What do you think?
Daniela Deane: I think there are still some pockets out there where prices are not quite as high ... Cheverly! (So many people tell me about Cheverly these days!) Higher-priced homes -- like over $1.5 million ... aren't moving as fast as cheaper (is half a million bucks cheap? Gosh!)properties ... and guess why? Fewer people can afford them! I'm not sure I've answered anything. And I'm not even sure you've asked anything!
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Washington, D.C.: To the person asking about credit ... I moved here from Canada a couple years ago with zero U.S. credit. You'll probably have to give the bank some deposit to get a credit card, and then use it every month, pay your bills blah blah. Anyhow, 2 years later and my credit was in the 75th percentile.
Daniela Deane: Yes, definitely ... you gotta start building a credit history as soon as you can. I just couldn't answer how long that might take. When I came back from overseas 8 years ago with my British husband in tow, he didn't have a lick of credit anywhere so we had to put everything in my name ... (kinda scary) ... then we put him on the car loan, got him a charge card at Hecht's, at which point he got his first credit card solicitation ... got a kinda fringe credit card for awhile then all the big boys started soliciting him. Now he's fighting them all off with both hands!
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Washington, D.C.: I have a friend in L.A. who is an economist focused on real estate markets and on his last visit out here he said that while this market is rising, the area is still not considered expensive for housing overall. I find that hard to believe. What's your take?
Daniela Deane: Depends on what you compare it to ... compared to some of our great cities, like New York, San Francisco and even Boston, we may not be that expensive (am I really saying that?).Compared to Kansas, you need a defibrillator (is that how you spell it?) to shock your heart if you're going out looking for property here...
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Important comment: To the Silver Spring buyer ... Beware of that company! Home buying is never a decision that can or should be made based on one meeting. If they're doing that, they have got something to hide. Better to pass it up than face some potentially horrible consequences down the road. By the way, $400k for a 1 bedroom plus den in Silver Spring is ridiculous -- you can get that in Dupont Circle.
Daniela Deane: I agree, kinda sorta ...yes, you can get a one-bedroom condo in Dupont for $400,000 (what a bargain folks!) But ... new construction is attracting a heck of a lot of buyers these days. People are lining up, camping out, etc. etc. to buy pre-construction ... so I'm not sure they're just hiding something as you say ... they may be hiding that incredibly long list of potential buyers they have ... the pre-construction buying thing has definitely caught on. There really is no debate about that last sentence.
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Washington, D.C.: What do you know about the condo market in College Park, Md. -- Westchester Park in particular? I'm thinking of buying in the area and was wondering if this is an area where I can expect to make money if I sell in the next couple of years.
Daniela Deane: Real estate is not generally something you buy for a couple years. Yes, I know, I know, it has been, but historically it is NOT...The rule of thumb is around 5-7 years actually. And many savvy investors say you never sell. And I'm really starting to believe that if you want to truly build wealth.
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Daniela Deane: Folks, I cannot believe it's 3:00 already! Where did that hour go?? Thank you so much for joining me, as always...I really do love this forum. I'm not just saying that for Mr. Graham's benefit, I promise!!! Now, I'm taking volunteers: Who wants to be my bodyguard if this market goes south???? I know there's someone out there. Join me again in two weeks, folks. I'll be here.
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