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.

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Daniela Deane: Hello folks! Nice to read you again after two long weeks! I'll dig right in and get started. Remember, you're more than welcome to chime in with your experiences, your suggestions and comments. We need you!

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Alexandria, Va.: Is it me, or does the market for a condo in Fairlington seem to be really cooling off compared to last year?

Daniela Deane: The market does appear to be cooling off pretty much everywhere...Remember though that it's also that time of year....the market always slows during this holiday period. Not that many people want to be out looking at houses as well as doing their Christmas shopping. And many people don't want potential buyers traipsing through their properties during this period either...But saying that, I'm curious: What's slowing? The number of Fairlington condos on the market? Or how long they're staying on the market? (probably a bit of both, I would guess). What are others seeing?

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Frederick, Md.: I want to buy a new home. Do I need a realtor or not?

Daniela Deane: Not necessarily, no. Once you've identified the builder you want (go look at what else they've built and talk to people in the development about the houses they've bought), you can directly approach the builder's sales staff...In fact, it may be easier not to have a realtor while you research a few builders you're considering....

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New York City: Hello,
I have a rental property in .D.C., (a basement condo in a very nice N.W. neighborhood that has seen nice appreciation), but I am wondering if it is time to sell to take advantage of a similar real estate growth spurt in the New England area. My thought is that the basement condo may have seen its maximum appreciation and that the proceeds could be reinvested elsewhere to achieve greater profits for multiple condos. Any thoughts are welcome!

Thanks from the North.

Daniela Deane: Hi NYC! It's hard for me to give a full opinion not knowing how big your basement condo is (1 BR?) nor where it is...A couple things to keep in mind: If you've had that condo a long time, you're probably getting positive cash flow from the rental of it, right? Something you may no longer get buying at today's higher prices. It's much harder to get a positive cash flow these days...Generally, the thinking on investments says hold, rather than sell. I don't know if it's become a problem for you to manage this from NYC or not? But if you do sell, look into a Starker Exchange (you can look on irs.gov) to avoid capital gains taxes....

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Anytown, USA: Hi Daniela!!!!

I have a touchy subject: we have a beautiful magnolia tree on our property, but just over the line, so a lot of it hangs over our neighbor's side. We want to decorate it for Christmas, but this will mean the lights will be very close to our neighbor's house. To complicate matters, they just settled on the property 2 days ago and have not moved in yet. Do we have a right to decorate our tree even though some of the lights will be on their side?

Daniela Deane: How is this magnolia tree on your property if it's just over the line? Does that mean it's on their property? If I were you, I'd probably refrain from decorating it this year if it's that close to the neighbor's house....In the spirit of welcoming, rather than alienating, your new neighbor's...Or at the very least, go talk to them about it....I'm not picturing this tree that's yours but on their property.....

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Washington, D.C.: Daniela,
I love your advice! I am in need of some today: I just sold my house and I'm not in the process of finding a new home for myself. It was very easy to sell a house but hard to find one to buy so far. The houses in my price range (which is in upper 300's to 400 thanks to a nice profit on my old house) in Arlington, Falls Church and Silver Spring areas seem to all be old and needing a lot of work. Am I crazy for thinking that they are not worth that price? will they still appreciate? should I wait with buying until springtime for more inventory? I am so discouraged. Please give me some encouragement - it is hard to spend so much money on something so old and ugly. Thank you.

Daniela Deane: Ah, this has been the buyer's refrain for quite a while in this market: IT JUST DOESN'T SEEM WORTH THE MONEY! So many buyers have said this over the past two years. And of course, they're right....But at the same time, that's the way it is....My thinking has been: If you want to buy, you should just do it. And not wait for some mythical reversal in prices here. Which could easily not happen. Most economists are predicting continued appreciation for this area...Freddie Mac announced today that house prices grew 12.4 percent from the third quarter of 2003 through the third quarter of 2004, the biggest increase since sometime in the 1970s...With their announcement, Freddie Mac's chief economist said they predict next year will be strong too, although not like this. Job growth and in-migration to this area is keeping this market healthy...The only thing that will really slow it down is if interest rates rise significantly. But so far, they haven't. Average rates closed at 5.81 this week. Economists are predicting a slow rise in interest rates over next year....If they rise a lot (like 2 percentage points), that'll put a damper on the market right away....

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RE: The Tree: Sorry for the confusion - I meant the tree is on our property, but just over the line on our side. So a lot of the branches hang over their side. Thanks!

Daniela Deane: Ah....Maybe the best thing to do here is pretend you're them....Would you want your tree decorated? Besides the legal issues, there's the issue that this is your new neighbor, who might live next door to you for years...Do you want a respectful, harmonious relationship with them? I bet you do. Talk to them...Maybe they'll like the decorations!

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Fairfax, Virginia: The real estate market seems overvalued. Should I delay buying a house?

Daniela Deane: I don't think so. I know I'm going out on a limb here and I'll feel terrible if I'm wrong....(even though there won't be a darn thing anybody can do about it...I’ll say right now: I'M PROBABLY WRONG!)....If it were me, I wouldn't wait to buy (if I had the money now), hoping prices will go down...That just doesn't seem like much of a strategy to me...What do other people think? Remember though: If you buy, you're not buying for a year or two. You’re buying to hold at least 5 years. If you need a place for only a year or two, then rent.

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RE: The poster who just sold her house: Call me crazy, but she already sold her house and is just now looking for a new one? And maybe will wait until the spring? What did she do, get an indefinite rent back?!?!

Daniela Deane: Good question! Where the heck are you living?

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Falls Church, Va.: My husband and I are thinking about leaving the state for work reasons. I'm in love with my neighborhood and I don't want to sell my town home. How do we go about converting our home into a rental until we come back to the area? We've lived in the house since 2001 however, we just refinanced in April of 2004. Is this a wise idea to try and keep the home or is this a disaster waiting to happen?

Daniela Deane: If you feel you may come back to this area, and want to live in your townhouse again, then it's a really good idea to keep it now. If you're making a permanent move (as much as you can possibly know now what's permanent), then you could consider selling. You'll probably need to find a property manager to take care of the rental while you're not here. Basically you have to do that. Find a property manager and rent it out. Before you rent it, you may need to paint or re-carpet if it warrants it.

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RE: The tree poster: Hi Daniela,

It seems to me the poster has every right to decorate a tree that is on their property, even if the branches go over. I was always told that as long as it is rooted on your property, you can do anything you want to it. Our neighbor just axed an awesome tree that gave me wonderful privacy and beauty that was mostly on my side - its branches were right up against my house - but since it was rooted just over the line on his side, I had no say. I say, decorate all you want! It's legally yours.

Daniela Deane: Yes, legally that tree is his....I was just counseling caution since you want good relations with your neighbors, it seems to me. But yeah, he can decorate it, have the lights flashing in his neighbor's eyes at night, and then wonder for the next few years why his neighbor doesn't say hello....If he goes over there and tells the neighbor he wants to do it and asks if that might be okay, it might make for a nicer relationship, that's all. I personally love my neighbors and I think that's worth a lot.

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Arlington, Va.: You seem to get a Fairlington question in nearly every chat. I wonder if it's the same person?

Daniela Deane: I have no idea....Fairlington questioner: Is that you all the time?

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Bethesda, Md.: Hi Daniela,

Really enjoy this exchange of info on your online show!

How does one diplomatically let a neighbor living above them know that his hardwood floors without any carpeting creates much noise down below in my condo unit?

Condo documents state that as much as 70% of the unit is to have some kind of carpeting on the floor (even with hardwood flooring). Basically only leaving bathroom and kitchen with bare floor exposed.

This is a new neighbor and would like to be as polite as possible, however I would like a positive outcome for myself!

Bill

Daniela Deane: Tricky....but I understand why you need to do something....Perhaps just go upstairs and politely tell them what the problem is and politely tell them about the condo rules....You may have to end up going to the condo board to enforce them....I hope not. Good luck!

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Bowie, Md.: Hello,
I am in the process of selling investment property. After all is said and done I stand to gain at least 60,000 from the sale. Does anyone know the percentage of taxes I would have to pay on my profit from the sale?

Daniela Deane: Capital gains tax is 15 percent....You could look into a Starker exchange, where you buy another investment property when you sell this one, thus delaying the capital gains tax payment...Or go live in it for two years! www.irs.gov has a lot of info on capital gains tax or consult a tax advisor.

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Arlington, Va.: Any books or other resources to recommend for those looking to buy and are unfamiliar with the whole process?

Daniela Deane: Thousands....Type in first-time homebuyer into google or another search engine and see what you get. Peruse the real estate stacks of your local library or bookstore. Look at your county website for info. for first-time homebuyers. There's so much stuff out there.

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Arlington, Va.: Hi Daniela - I have been following your column now for several years (you can pretty much get a sense on the market just by reading it regularly)!

Just signed preconstruction for 2 bedroom new condo at 1150 K Street NW (right next to old Convention Center on "K" street). I think $550K price is an absolute bargain for this location. Your opinion on the area?

Thanks!

Daniela Deane: Congratulations! My opinion is that that area will do well going forward. The places to live in downtown D.C. are just growing by the day it seems to me. And $550K doesn't seem like a bad price for new construction....(What am I saying? I know...) A 2 BR condo in my building sold for more than $500K a couple weeks ago and that's not new....I think over time that's going to prove to be a nice investment for you.

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RE: Tree decorating: Daniela, you are right -- the long-term relationship with the new neighbor is more important than legal rights or forging ahead without discussion. What if the new neighbors are Jewish, Muslim or Hindu? Not that people of other religions can't admire a pretty Christmas tree, but they might not want it blazing in their faces!

Daniela Deane: People always appreciate being consulted....Maybe go over there with a poinsettia and welcome them to the neighborhood....That might break the ice and make decorating any trees easier!

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Original Fairlington poster here: Yes, it is me in every single chat. I am obsessed with Fairlington and have a hidden agenda to see it discussed by you and your readers every week.

But enough about my obsession with Fairlington, what do you think of Fairlington?

Daniela Deane: Funny! Now that we've done Fairlington, can we talk about me please????????

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Leesburg, Va.: What do you think the real estate market in Leesburg will do over the next 12 - 18 months...Thanks!

Daniela Deane: For builders Leesburg is close in...did you know that? ... unbelievable, huh? .. Anyway, that tells you something. I think Leesburg's market will continue to appreciate like the Washington market....I see appreciation slowing next year, but not going away completely....Real estate historically appreciates 3-5 percent a year. Maybe we'll get back to that at some point...That would be revolutionary in itself!

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RE: Xmas tree: Good answer on the decorations. It's nice to see the practical "talk to your neighbor" approach beat out the technical "yes, it's legal" response.

I also find humorous the thought that you are helping to avoid an ugly dispute waiting to burst over involving decorations to celebrate the love and charity of the season.

Daniela Deane: Love and charity? I thought it was shopping, shopping, shopping!

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McLean, Va.: Thanks for the chats!

My fiance and I (young, recent college grads) hope to have $25k towards the end of next year. We have good credit and have slightly less than 40k salaries. I know this sounds more of a financial question, but the two of us want to live in a town home($250-300k). We are interested in Burke, but areas West are so much cheaper. Do you think it is wise to invest in the Fairfax County area or did this area see as much real estate boom as it can? Loudoun County is farther than I want to reside, but there is a lot of potential. Thanks.

Daniela Deane: Okay, now this is just my own opinion....I would rather pay a few extra dollars (okay, a lot more) to live closer to my job. Now that's just me. I know there are mega-commuters among us who think 90 minutes each way in their car is no big thing...But when I moved here, I picked a smaller, older house in Arlington that allowed me to get to my job quickly rather than a larger, much newer home further away. Commuting is a very subjective thing, I've found...Decide what you feel about it...

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Tree Decorating - The Other Perspective: Hi Daniela,

I have the opposite problem - my new neighbor just decorated a tree that is on my property, but just over my side of the line, so some of the branches are on his side. Nonetheless, it is my tree, and I intended to decorate it this weekend. What can/should I do? I don't care for the way he decorated it, and it certainly is going to clash with the rest of my yard.

Daniela Deane: Rip a branch off and clunk him over the head with it! Seriously, what else can you do besides talk to him about it? What a pain....You were just going to decorate it???...Anyway, be nice, take a deep breath, and then clunk him over the head!

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Takoma Park, Md.: I live in Takoma Park. Real estate prices have increased significantly in the last 5-6 years, and I'm wondering if that trend is expected to continue, has the market flattened out, or, perhaps, are housing prices expected to drop?

Daniela Deane: Heck if I know! ....Seriously, if you believe what economists are saying, then Takoma Park will continue appreciating too....It's hard for me to say more than....the overwhelming majority of economists believe that house prices will continue to go up here, albeit at a slower rate. If interest rates go up a lot (which is not expected at this point), that could throw a monkey wrench into that prediction...What's keeping things healthy here is phenomenal job growth (better than anywhere else in the country..thank you, Federal Government!) and population growth...

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Washington, D.C.: My wife and I recently moved back to D.C., and although we are currently renting, we are looking to buy. I have looked at all the listings for new condos, may of which are on the D.C. Lofts website, and it seems that a huge number of new units are being released over the next year. Do you think this will depress the D.C. condo market, particularly if a lot of the units under contract are being held by investors? If so, are we better off to continue renting and increasing our down payment so we can afford a rowhouse instead of condo?

Daniela Deane: The number of condos coming on the market is downright scary, especially for a condo owner like me! There does seem to be a lot, doesn't there? So far, new condos have continued to sell well. But a lot of competition could mean prices don't rise like they have been....But who knows?..Condos have been selling so well for a variety of reasons. One is that buyers have been pushed into condos by the high prices of other housing. And empty nesters have also embraced condos as the place to live after raising their kids. So far, that's meant healthy condo sales...

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Re: Young homebuyers: As long as you can afford to buy something close in, do it, no sense buying farther out just for something bigger. At our age we don't need something huge, and those of my friends who have moved farther out like Loudoun hate it and wish they were further in. Why isolate yourselves?

Daniela Deane: Good point!

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Anonymous: Daniela- I'm surprised you support buying an ugly run-down house in Arlington for 400-500K. I am in the same boat. And I would not be happy living in a dump I poured my savings and earnings into. You are not helping the market by encouraging people to buy something they couldn't possibly enjoy!
I may have to commute farther and live in Md., but I will not pay for a dump!

Daniela Deane: Okay....Everyone must do what they must do...Shoot, I bought a dump in Arlington! Have some respect!

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Daniela Deane: Folks! I've enjoyed being with you today, as always...Will the guy with the tree decorations please come back in two weeks and tell us what happened? And the other guy, who's tree was usurped by the neighbor and decorated behind his back...let us know if you got your tree back, will you? Please join me on December 16, two weeks, same time, same place...In the meantime, I'm going to hang out in my dump in Arlington, which I didn't tell you, may get a bunch of new houses right next to it! aahahahah!!! I'm a NIMBY...NOT IN MY BACKYARD, DARN IT!!!!!!!!!

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