Real Estate Live

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.

_____________

Daniela Deane: Hello everyone! What a miserable day out there, huh? Thanks so much for joining me...I'll do my best to answer your questions. Please chime in with your experiences and thoughts, as you always do!

_______________________

Falls Church, Va.: We are considering buying a new home in order to do that, we probably need to do an interest only loan. From this chat I've learned that you invest in real estate, are interest only loans worth checking out? Also, any tips on selling a home in this slower period? Thank you for your assistance.

Daniela Deane: Hi. Yes, Interest-only loans are worth checking out, in my opinion. For some people who have bought recently, they've been the only way to afford a property. We wrote a story about them recently. I'm going to try and cut-and-paste it in my next response. The basic thing to remember is that you won't be building equity by paying off some principal every month with a no-interest loan. That's the real drawback. But let me try to send that story. Now, on getting your home ready for sale now...The most important consideration is always price. Be sure you price it correctly for what it is. There's a price for everything agents like to say. Also, check out the story I wrote in last week's section on how to get your home in the best possible shape it can be in for sale. It's called staging, or fluffing a home. If you look on the site under recent stories....

_______________________

Anytown, USA House or townhouse?...Hi, I'm struggling with the decision about whether my first home should be a house or a townhouse and could use some unbiased opinions. I'm a single woman, have some minor muscle disabilities that would prevent me from doing constant house maintenance/upkeep but can manage the everyday stuff like clogged drains and such. But I wonder if what I call the "exterior maintenance" (shoveling, raking, mowing) would be more than I could manage, and for that reason if a townhouse complex would be a better option for me--except that I really don't want to live in a townhouse--people on all sides of you, assigned parking, tiny decks, no yard for my big dog. It's just not for me. So I guess clearly I'd rather have a house--do I go with what I want and maybe hire help, or with what would be a more realistic choice and take some of the bad with the good? Anyone ever been in a similar position? Thanks in advance!

Daniela Deane: Hi! If you can afford a house, it seems to me that you should probably go for a house if I'm reading you correctly. It sounds like you'd rather have a house, and generally single family houses tend to be better investments than townhouses. I think you can hire someone to do the things you can't manage...Townhouses tend to have a lot of stairs, tend to very vertical. Is that a consideration for you? Perhaps a rambler would suit you better? Others?

_______________________

Silver Spring, Md.: Hi Daniela, I really appreciate your advice! I have a question about starting the home-buying process. My fiance and I basically know how much we can afford to borrow/spend on a home. But we have no idea what that could actually get us in this market. We don't want to sign a contract with a realtor to start looking since we really don't know if we should wait to save more, etc. The question sounds silly but, how to we get a realistic idea of how much house we would get for our money without actually making the commitment to buy right away??

Thanks so much for your help.

Daniela Deane: Talk to a mortgage broker...A mortgage broker will be able to tell you exactly what you can afford on your incomes and what you have saved. At that point, you can narrow down some neighborhoods with homes you could actually buy. You can then go to open houses and check out some properties without having to contact an agent until you're ready.

_______________________

Arlington, Va.: The blue monster on N Sycamore St in Arlington is for sale! The owner wants $699,000 for it. I recall reading in it was out of compliance with Arlington codes, though -- is it now considered habitable? I was hoping it would meet face-to-face with a wrecking ball...

And who would buy it???

Daniela Deane: From what I understand, the house is still too close to the lot line and it'll need to be shaved off somehow...How the heck you do that is beyond me! Considering everyone in the neighborhood despises it, seems like a great buy, huh!

_______________________

Fairfax County, Virginia: Do you think housing prices in Spring Valley, Cleveland Park, Kalorama, Potomac, Bethesda and Takoma Park will slide now that all of the Kerryites will make good on their pledges to move to Sweden, France and other socialist havens since Bush has been reelected?

Daniela Deane: No. Those are some very popular neighborhoods....And I bet nobody is going anywhere, even though they may be depressed.

_______________________

washingtonpost.com: The Intrigue of Interest-Only (Post, Jun. 19)

_______________________

Gotta Ask: Is there any reseacrh on how a presidential election year effects real estate? The stock market is up with the winner but we also won't have a lot of people moving in/out as the administration didn't change hands. What are your thoughts?

Daniela Deane: That's exactly the subject of our real estate cover next weekend. So I won't spoil it for you. Please look for my colleague Sandy Fleishman's story next weekend, November 13.

_______________________

Silver Spring, Md.: Daniela,

What do you think about buying new condos in downtown Silver Spring for rental and perhaps sell in 5 to 7 years? I am worried that the rental income may not cover the mortgage.

Daniela Deane: In general, I think that's a good idea...BUT...what you ask is a very good question and one that is putting off some investors these days. The fact that the numbers don't work like they did, i.e. what you can get in rental income doesn't cover your outgoings anymore because prices have shot up so high. You gotta do the numbers here: Find out what the mortgage will cost, what the condo fee is, and what the rent you can get is. And then make your decisions based on the hard numbers. Good luck!

_______________________

Washington, D.C.: Wish me luck, please!; I've somehow found the nerve to list my Dupont Circle condo for sale by owner. Open house this weekend!; Tell me I'm not crazy and I'll keep you posted on the progress.

Daniela Deane: Good good luck! I've got my fingers crossed for you....Please let me know how it goes. My feeling is that if you have it priced correctly, you'll be fine. Let me know!!!! I'll be thinking of you this weekend....Did you put an ad in the paper?

_______________________

Maryland: Hi, Daniela!

I'm sick at home today but I wanted to respond to the two sad postings from your last chat. One was a single wage earner who fretted that he or she couldn't afford to buy. The other was from a couple who couldn't spend over $170 and thought they were out of luck. Have no fear, one of my dearest friends just bought a SUPER DUPER cute house in the super cute neighborhood of Cottage City/Brentwood (between the great-but-increasingly-expensive Hyattsville and Mt. Rainier) for less than $150. I wasn't too familiar with Cottage City before she bought there, but its housing stock looks Takoma Park-esque and her neighbors are just the nicest. Granted, there were like six bids on the house, but hooray she got it! And it's terribly close to D.C. and all the new development that's planned for Route 1 and the nearby green line Metro stations.

In other words, don't give up hope!!

Daniela Deane: Thank you so much for the encouragement! People need it!

_______________________

Daniela Deane: Sorry....I don't think Sandy's story is about how the election has affected the housing market or will, but rather national housing policy in a second Bush administration....I think. Don't hold me to it! I haven't quite understood what it is about....Anyway, I'll answer the question about the elections: A lot of market-watchers said one of the reasons the market was slower was because people were jittery about the elections....Now they're gonna say it's slower because of the holidays....I think the market has slowed a bit, and everyone is looking for any reason they can find.

_______________________

Silver Spring, Md.:

The house next door just sold for $400,000. Our house is almost identical except we have a family room addition with a full bath and fire place. How much do you think these extras add to the value our house?

Thanks!

Daniela Deane: It's hard for me to answer that...All that is subjective to streets and neighborhoods....There would definitely be a premium though, I just can't say how much...An appraiser .. or a local agent...would be able to tell you.

_______________________

RE: Finding out how much you can buy: For Silver Spring.....most good realtors can set you up with a service that will email you info on all properties that meet certain criteria (price, location, etc.) as they come on the market, so that you can see what's out there in your price range. The really good ones recognize the value of building goodwill in the community, so they'll set you up with things like that with no obligations at all. (I'm one of those Realtors, and would offer to do it for you myself, but I'm guessing Daniela doesn't want us trolling her chat for business. If she's amenable, though, I'd be glad to send her my contact info to pass on to you if you want.)

Daniela Deane: Thank you for answering! But yes, you're right...No ads here....Why doesn't the poster give a contact number and I'll post that...And this agent will call you. How's that?

_______________________

Washington, D.C.: Is it insane to think it's possible to get a small 2 bedroom condo in N.W. Washington (Dupont, East Dupont, Logan, U Street) for $350-375K these days?

Daniela Deane: That's cheap for a two-bedroom in those areas these days, unfortunately....One-bedroom den? One-bedroom?

_______________________

RE: Interest only thoughts: Hi Daniela,

Isn't the interest only loan, for the recent question from the Silver Spring condo-investor, a good idea? the interest only loan may offset his condo fee, and in 5-7 years the condo may have appreciated.

Daniela Deane: It's certainly an option, yes.....

_______________________

Virginia: Daniela, If you buy a property that isn't built yet, does the mortgage start right away, once the contract is signed, or do you just basically put a downpayment down and then once the place actually exists you start with the mortgage payments? I'm thinking newly developed condos here.

Daniela Deane: Usually, you put down a down-payment, like up to 5 percent of the purchase price, and then you start on the mortgage only when you take possession and it's finished...You can't pay half a million dollars for nothing, can you?? Some of these developments are taking contracts almost two years out...That would mean you'd have to pay on a mortgage for two years without having anything...We haven't gone that berserk yet, thankfully.

_______________________

Washington, D.C.: Daniela - what's the most insane price you've seen for a small place? I looked at a 700-sq-foot condo last week that I expected to be about $250K (I wandered in off the street). It was $425K! Who's paying this? Can prices for small one-bedrooms really keep going up, when it's half as expensive to rent?

Daniela Deane: Rents are starting to go up too. I just toured the new Kennedy-Warren wing on Connecticut Avenue near the zoo, and the rents there were eye-popping....Condos are going up so much because people are being priced out of single family homes and townhouses...Affluent empty-nesters are also entering the condo market in large numbers, which has pushed prices up. I wish I knew how long they would keep going up....

_______________________

Washington, D.C.: Good afternoon,

I have lived im Washington almost my whole life. I am in my 20s (single) w/ credit that is not all that great. My earnings are in the low $40's and steady rising at an average rate. I would like to stay in Washington for a long time, but fear because of the gentrification that is going on in my neighborhood (Petworth), as well as other neghborhoods across the city, that I might be forced out and have to move somewhere that I am not familar with (P.G. County).

My question is...what can I do about it. Is there a program I can enroll myself in for 1st time home buyers with not as high of an income as others that are moving in? Any program at all? I would hate to be forced out of my neighborhood that was good enough for me when drug dealers and prostitutes use to hang out there, but am not good enough after they leave. Thank you.

Daniela Deane: Try to clean up your credit so you've got the best credit you can get. Look into programs the D.C. government offers for 1st time homebuyers. Talk to a mortgage broker about what you might be able to afford. Look for something in your neighborhood to buy. And Persevere. You can do it. I know it.

_______________________

Vienna, Va.: Houses where I'm looking to buy (Vienna area) often sell for well over their appraised value (up to $100,000 over the appraised value in some cases). What gives? Will prices go down or should I suck it up and buy now?

Daniela Deane: That's the million dollar question, isn't it? ... will prices go down? Although the market has slowed -- more properties on the market (in some areas)and not as many multiple contracts, prices don't seem to be going down. The most some agents will say is that they don't seem to be going up much...If you want to buy, I think you should just "suck it up" as you say and go ahead and buy now. Waiting for prices to go down doesn't seem that good of a strategy....Most economists aren't predicting any price drops -- unless interest rates go up a lot. This week, 30-year rates rose slightly to 5.7 percent, from 5.64 percent last week.

_______________________

Washington, D.C.: First time buyer: I have the cash for a 20% down, but I don't want to use it. I'd rather it stay and earn some interest for when I need it. Is it better to pay the 20%?

Daniela Deane: Talk to a mortgage broker. Do the numbers. See what rate you can get with a lower down-payment and what your monthly payments will be with different down-payments. There will be a difference. The less you put down, the more you'll have to pay monthly.

_______________________

Gaithersburg, Md.: Daniela,

What suggestions do you have for a young couple, buying their first home together, no money for a downpayment on a new home, but hoping to save enough money to cover closing costs next year?

Daniela Deane: Save as much as you can. Clean up your credit. Have lots of dinners in watching the tube. Pasta with tomato sauce is a good choice. But don't give up!

_______________________

Re: Anytown, USA: It sounds like the person wants a house rather than a townhouse, especially if she has a big dog. I don't know where in the country the person is living, but when we had a townhouse in Southern California, there were limits on the number and the size of pet we could keep.

My advice: just get a house and pay someone to mow the lawn and rake the leaves.

Daniela Deane: Yeah, that's certainly a way to go.

_______________________

Leesburg, Va.: Daniela, Can you give your opinion on how real estate prices can possibly go even higher than they are now? I would have asked this question three years ago too, and look what happened to prices since then. Will they continue to rise? And if so, where will all this money come from?

Daniela Deane: You know, the truth is, I don't know....All I know is what people who should know think. Most economists believe that prices will indeed keep going up here, between 5-8 percent a year for the next few years, as job growth and a healthy local economy mostly keep things ticking over here (in-migration, job formation, an increase in immigrant buyers, etc.)...One black cloud could be increasing interest rates. As one economist said to me the other day, it's not jobs that has made this market what it's been, it's interest rates. And that is certainly a valid opinion....If interest rates go up -- even 1-2 percent -- that could pour a big bucket of cold water on this market and prices could fall. What's happening here in the meantime is that this area is becoming more like New York and San Francisco, where people can't afford to buy close to their jobs....I wish I knew what was going to happen. Thoughts?

_______________________

Sterling, Va.: I agree with you that the market has slowed anticipating the holidays, and that it's all about price. Especially about price since we feel that the over-inflated prices this past year should re-adjust for the winter and deflate. We're already in a townhouse, so unless we feel we're getting more value for the already ridiculous prices out there, we're happy staying put.

Daniela Deane: Be happy you've got something! When I read this chat over, it reminds me I'm lucky to have my crappy old rambler in Arlington! Very lucky, in fact. Right?

_______________________

Washington, D.C. (FSBO'er): Daniela,

Thanks for the encouragement - and the exclamation points! I will keep you posted. I'm going to get an ad in the Post - by tomorrow's deadline. Craig's List and MLS listing, too.

I'm willing to pay 3% to a buyer's agent. I just like the chance of perhaps not having to pay one. In any event, I'll save from the seller's end AND have control over the process (something that was sorely lacking in my purchase of the property).

Pricing it was a bit rough. I had an idea in my mind for where I should price it, only to learn that a slightly smaller unit on the same floor with no upgrades went under contract in ONE DAY for $30,000 more than I was contemplating asking.

Oh my. I guess the market is still jumping. Needless to say, I adjusted my price accordingly, with a bit of a discount because of the FSBO status.

Daniela Deane: Great that you found out about the pricing in time...Pricing is one of the hardest things for a FSBO...And smart that you're willing to pay the 3 percent to the buyer's agent....Many FSBOs do have to pay that...It sounds like you're set. You're going to let me know what happened, right? I'm here for you!!!!!!!

_______________________

Daniela Deane: This is for Shana....I have no way to pass your number onto the realtor....So will the Silver Spring realtor please send their number on and I'll post that, so Shana can call you?

_______________________

Washington, D.C.: Just a comment about insane prices for small places - something to make the D.C. folks feel better. I sometimes have to research the NYC real estate markets. This past quarter, Manhattan broke a record - studios selling for over $1 million! Even more shocking, there actually was a 380 square-foot studio that sold for $575k. No kidding!

Daniela Deane: It's always worse somewhere else!!!! A guy I interviewed for the Kennedy-Warren story told me the rent he's going to pay here (he's a new renter) is $1,000 less than what he was paying in Manhattan! And he was paying $400/month to park in Manhattan too....(But that's Manhattan, let's face it!..We're not Manhattan...).

_______________________

Forest Glen, Md.: Hope I'm not too late--thinking of selling our single family home, but the time frame would be February or March of next year--is this a bad time of year to sell? I'd be interested in your opinion, oh guru of all things real estate!

Thanks!

Daniela Deane: No, that's a good time....March of this year was the height of the spring market...spring is a good time to sell.

_______________________

Anonymous: It's not just the single family home that is pricing people out, its everything in the D.C. area market that is not bad area, and even the bad areas are getting to $$

In the next few years, and even now to a great extent the young single income, or probably most single income people simply cannot afford to live in the D.C. area in anything they can own.

Daniela Deane: That's a very sad thought.....But let's look at the bright side: It's not Manhattan yet!

_______________________

Alexandria, Va.: My 87 year old mother just moved into an assisted-living facility and my sisters and I are trying to get her house ready for sale. The house (and my sisters) is in Michigan. While the house, a rambler, is structurally sound and well-located, the kitchen appliances are old (date from the 1960's, except for the fridge), it hasn't been re-painted inside for years, and the cheaply-installed (again, in the '60's) extra bath and bedroom in the basement look a mess, in all honesty. (Haven't been used in years.)

The real estate agent, to my surprise, said don't bother to re-paint inside, people want to change things anyway. While the price does reflect the condition (it's about $30,000 lower than what comparable updated houses in the neighborhood sell for), still, that seems a mistake to me. But where's the line? Would you just re-paint? Re-paint plus replace appliances? All of the above plus a full kitchen remodel?

Daniela Deane: Hmmm...Well, I just wrote a story about fluffing and staging a home and agents I interviewed said it's almost always worth it to paint...So based on that story (please look it up), I would say it was worth it to paint....and perhaps change the appliances....I'm loath to give out advice without seeing it though...Check out my story please. Perhaps get a second opinion.

_______________________

Contact info for Shana.: 703-244-7112.

Daniela Deane: Shana, you there? Here it is.

_______________________

Upper Marlboro, Md.: To Washington, D.C.
There are several programs to assist first time home buyers. One such program is NACA. They offer interest rates 1 percent below prime. Also, check out Home Free USA. Good luck on your home search and keep the faith!

Daniela Deane: Thank you! Yes! There are a lot of programs...They're definitely worth checking out.

_______________________

Alexandria, Va.: We are looking for a 3-4 bedroom house in Alexandria/Arlington as a step up from our 2BR townhouse. We've noticed that, while a few gems sell quickly most of the houses we look at now are staying on the market for several weeks and think that this may be an indication that the market is slowing. Is it just that we are in a higher price range now than we were when we bought several years ago and people aren't as quick to buy in upper price ranges or is it that the market is softening a bit? (Then again it could be that people are just greedy -- I've seen houses listed for over 700K that need at least 100K worth of work before they are habitable. It's crazy. No wonder they sit.)

Daniela Deane: It's a combination of all those things, I think....Some sellers are being greedy. Also, the market has slowed. More out there, not as many buyers as there were. Pricing is the most important thing when selling...And in this market, it's even more important to price a property right. Check out my recent market story...Gosh, I'm flacking all my stories today!!! (Yuck....)

_______________________

Daniela Deane: Folks! Thanks so much for joining me today. It was lovely to have you....Join me in two weeks when I'm going to host Barb Schwarz, founder of stagedhomes.com. We're going to talk about staging, or fluffing a home for sale. Barb is very articulate on the subject..Please join me and Barb then. Two weeks from today. Same time, same place. Let's hope it stops raining! And that our FSBO friend sells his Dupont Circle apartment this weekend! We're all in this together folks.

_______________________