Welcome to Real Estate Live, an online discussion of the Washington area housing market featuring Post Real Estate editor Maryann Haggerty .

Maryann's been with The Post for 18 years and has served as real estate editor for the last five years. She's been a business and real estate editor and reporter for about 25 years. In all that time, she still hasn't figured out where you can find a lovely but inexpensive house in a charming neighborhood.

The transcript follows.

____________________

Maryann Haggerty: Greetings, all. The sun is out, a welcome change from yesterday -- but we're here to talk about what's going on inside the four walls of the buildings where we live...

Anyway, you know how I say all the time that I don't have a crystal ball? Well, I still don't. But as the year draws to an end, the intrepid reporters of the Real Estate section will be asking the experts to pull out their crystal balls and hazard some guesses about the future of the market in 2006. Do you have questions you would like to see us ask? Send 'em along -- to this chat for today, and also directly to me, at haggertym@washpost.com.

But here we go for today...

_______________________

Alexandria, Va.: I have reserved (put down a binding seven percent deposit) on a one-bedroom condo to be ready in the first quarter of 2007. The developer has offered a mortgage broker to us that can lock in our rates two years early, but for two points. Do you have any feelings about projecting two years ahead in the market and signing up for a locked in loan now vs. pressing my luck and later at least be able to deduct the points that I have to pay for a lower rate?

Maryann Haggerty: We all agree: We can barely see two weeks into the future, let alone two years. Do the math. If you can't afford a higher rate, then you will have to lock in. If you're willing to gamble on the future of rates, then don't take the lock. Two points is a lot of money -- but for your peace of mind, it might be worth it. Or not!

_______________________

Washington, D.C.: In the Rosslyn-Ballston corridor, any opinions on the virtues of one neighborhood over another, for instance Clarendon vs. Courthouse, especially regarding condo prices, future development and resale?

Maryann Haggerty: If you're thinking resale, you want to see whether the submarket is totally saturated with new units. But in reality, I think all those "submarkets" have pretty much blebbed together in recent years.

_______________________

Cleveland Park, D.C.: My wife and I have been in our condo for one year and would like to sell and move into larger condo/small house. How will the capital gains rules affect us? We have a three-year ARM. Do you think we should look to refinance or move?

Thanks.

Maryann Haggerty: If you have only been in the unit for one year, you will owe capital gains tax, ules the reason for your move is one of the specified ones, such as a job transfer. (See IRS publication 523, "Selling Your Home," for the full list.)

And whether you should refinance or move? Depends on your individual circumstances. If there's a place you want to move, and you can afford it, and you can sell your unit... then move. But if those three things aren't true, then you may want to give serious thought to a refi before your payments jump too much.

_______________________

Vienna, Va.: Hi Maryann,

With rents currently not able to cover mortgage and operating expenses, at least not in the D.C. metro area, what areas in the Mid-Atlantic do you think are best suited to acquire investment properties?

Thanks, Robert

Maryann Haggerty: Obviously, you want "undiscovered" areas. And let's face it, there aren't a lot of them left in the mid-Atlantic. Even downtown Wilmington has seen prices soar these past couple years. So you just have to work -- check listings, check rent prices, do the numbers, do the numbers. And if you find an undiscovered gem somewhere in, say, the Philadelphia suburbs, more power to you!

_______________________

Adams Morgan, D.C.: A while ago, you wrote an excellent article about Wardman houses and I remember there were instructions on how to look up whether your house is a Wardman. The description on my deed states something to the effect of "developed by Harry Wardman." Does that mean it is a Wardman house or do I still have to look it up to be sure? Thanks in advance!

Also, if you could repost the information on how to look it up, or a link to the original article, that would be great.

washingtonpost.com: Wardman's World (Post, Oct. 15)

Maryann Haggerty: Here's the link; I hope it answers your question

_______________________

Washington, D.C.: Hi Maryann,

I took a very telling picture of the building at 2020 12th Street NW this past weekend. The link to the picture is:

http://photos1.blogger.com/blogger/1783/1012/1600/lockboxes.jpg

Please look at it, and share your comments.

Maryann Haggerty: For those of you who don't feel like clicking on the link, the photo shows 19 lockboxes lined up outside a condo building door -- ie, a good indication that 19 units are for sale in that building.

What we can't tell is how many of them are residents who really need to move -- and how many are investors trying to bail out. But I bet you don't have to worry about bidding wars if you want to buy there...

_______________________

Arlington, Va.: Our mortgage went from $3,400 to $3,900 last year due to taxes. Any idea what I'll be paying next year? If this continues, I won't be able to live there much longer!

Maryann Haggerty: Of course I don't know what you'll be paying next year! But it will be more. When the next round of assessments comes out, they will be based on increases from 2004 to 2005 -- ie, they're going to jump. So you need to know what your bill will be, and divide by 12. (In my case, the assessment comes so much earlier than the jump in escrow that there's like a year to figure it all out in advance.)

_______________________

Bowie, Md.: Quick question I've noticed no one asking/addressing anywhere.

Since as far as I can tell, there's never been as widespread of a real-estate boom for as long/as high, except Japan many years ago. What's to stop us suffering the same fate?

If you're not familiar with it, here's a hint... prices are something like 40 percent of what they were at their peak -- and this is more than a decade after they started to plummet.

Any rational explanation that says it won't happen here seems to be easily refuted by the simple fact that all rationale/logic/common sense left when all the greed kicked in a few years ago.

Maryann Haggerty: The question underlying this: How far out of whack did things get here -- if indeed they were out of whack with the underlying fundamentals such as job growth? I just don't see a correction like the Japanese one, because their economic structure is so very very different.

_______________________

Brussels, Belgium: After spending a few years abroad, I will be moving back to D.C. next year. Could you give me some advice as to which areas close to the city have particularly good or bad school districts? Thanks!

Maryann Haggerty: The D.C. suburbs have some of the best public schools in the country. What we consider fair-to-middling here would be excellent in many places. (Just look at any of the many lists of top schools published. For instance, county by county, the Extras sections of The Post this week publsihed lists of the most challenging schools, as compiled by my colleague Jay Mathews. They're on the Post site--I don't know if there's a single link to all of them. Maybe my gracious producer could help here?)

Unfortunately, the schools in the District of Columbia itself remain among the nation's most troubled.

_______________________

Reston, Va.: My new home's settlement is scheduled at end of December. However, my existing house is still in the market. I don't have enough income to support both mortgages. Builder's mortgage company is using "Stated Income" to get the approval, because if they use "Full Doc" loan, it won't get approved. "Stated Income" loan will have higher mortgage rate. How can I stop them from using this approach, because they are determined to get the loan approved?

Maryann Haggerty: Oh, geez, if you can't afford the loan with full doc, then are you using the truth, the whole truth & nothing but the truth with the stated income loan? Which will have higher payments by the nature of the higher interest rate?

I mean, let's face it, your income is your income. Make sure they don't fudge the truth AT ALL. And examine your contract with them to see what you agreed to.

_______________________

Washington, D.C.: My wife and bought a condo a year ago. In six months, we're going to be moving away. Where can I get info about turning my condo into a rental unit? And where can I find out how much to charge?

It's a 2BR, 2.5BA condo in Mclean Gardens. Thanks!

Maryann Haggerty: Head to the library/book store. There are loads of books out there on how to be a landlord.

_______________________

Anonymous: How often has the imminent bursting of the housing market bubble been predicted? I sold a house, purchased for $280,000 in late 2000, for $550,000 this year. The condo I bought for $76,000 in 1989 and lived in for several years and is now rented, could sell for over $250,000 now. Both units are in Silver Spring. I can't imagine prices continuing to rise like they have in the past few years, but many people have felt the same for many years.

Maryann Haggerty: Actually, that 1989 purchase was in the LAST bubble. If you had tried to sell it in 1991, maybe it wouldn't have been so pretty.

Anyway, although real estate swings in cycles -- with some big upswings along the way -- long-term, it pretty much historically keeps up with inflation.

_______________________

Anonymous: Maryann -- I just started my (first) home search and I was interested in getting your thoughts on condos. I don't have a lot of money, so I can't afford to purchase a townhome or single-family home right now. With that said, do you think a condo (two-bedroom, two-bath) is a good investment?

My goal is to keep the condo for three to five years and sell it, and I would take the money that I make from the condo and use it toward purchasing a townhome or condo.

Please give me your thoughts. Thank you!

Maryann Haggerty: Historically, condo prices have swung more widely than single-family prices. Who knows what will happen now? But if you want to live in it, take your chances & buy, if the price seems reasonable. (Or wait a bit--there may be some softening coming...)

_______________________

Silverdale, Wash.: Where is the next hot market (i.e., six years ago Nevada Las Vegas, three years ago to present Arizona)? Texas? West Virginia?

Maryann Haggerty: I'm thinking this is one of those questions that we want to ask the experts!

_______________________

Dupont Circle, D.C.: Hi -- I have an agent ethics-related question. Recently moved into a new home that is permeated with the smell of cigarette smoke, despite repeated cleanings. The smell wasn't noticable during the open houses -- not sure how the agent covered it up but it's clear they did something. Is this something that can be reported against the seller's agent -- maybe to the Nat'l Assoc. of Realtors? It feels like a clear misrepresentation -- although it probably unfortunately happens all the time. Thanks for your advice.

Maryann Haggerty: I don't see where there's an ethics problem there. The smell was there for you to perceive, even if the odor of chocolate chip cookies covered it. Of course, if the only time you were in the house was for 20 minutes during an open house, you may not have noticed. Or if you were caught up in a bidding frenzy, or the like. But that's not the agent's fault. Open the windows, pull out the Febreze & the paint. If for some reason, you feel compelled to file a report somewhere, the proper place is the state licensing board, not the Realtors Associaiton...

_______________________

Brooklyn, N.Y.: Hi Maryann --

Can you please provide a link to that article where the couple bought a townhouse in Cameron Run, Alexandria, only to see the prices decrease $100,000? Thanks!

washingtonpost.com: Here's that story: Housing Market Cooling, Data Say , (Post, Nov. 11)

Maryann Haggerty: Here you go.

_______________________

Jacksonville, N.C.: Question about the impact of a new car payment that I may take on with regard to my ability to get a mortgage next spring. I have a good income, no credit card debt, no car payments at this time, but don't want to screw up my chances at a mortgage next spring. Any thoughts?

Maryann Haggerty: If that loan swings your debt ratios out of whack, it WILL affect your ability to get a mortgage. If your numbers are at all tight -- as they are for just about everyone -- please consider waiting on the new car until after you get the house.

_______________________

Washington, D.C.: I currently own my small studio condo and am in dire need of more space. However, I want to be able to rent out my current condo and then purchase another to live in. I'm very new to real estate. My income alone would not allow me to carry two mortgages, but with the rental income I could afford both. How do people in this situation become investors? Would I have to live in a rental while I find a tenant? Thanks!

Maryann Haggerty: You do need some cash to carry you through. But talk to a mortgage broker for details -- you may be able to do it.

_______________________

Anonymous: I would like to thank the investors and greedy developers that are converting my perfectly good, affordable, well maintained and operated apartment complex into yet another overpriced, unaffordable condo.

Since growth is being limited, now the greedy developers will concentrate on destroying the affordable rental units. So much for workforce housing.

Maryann Haggerty: Just a comment...

_______________________

Kensington, Md.: Are there more houses on the market for sale than this time last year in the D.C. metro area? What is your source for your answer?

Maryann Haggerty: There are quite a few more houses on the market now throughout the area than there were a year ago. Source: Monthly numbers released by the local Realtors associations (Northern Virginia Association of Realtors and Greater Capital Area Association of Realtors), which bases its count on the listings in the local multiple listings service.

_______________________

washingtonpost.com: Here's a link to the Washington Post Challenge Index for public high schools: The 2005 Challenge Index.

Jay Mathews did a chat on this topic yesterday, too: Transcript

_______________________

Rockville, Md.: Moved here from Chicago this past summer and am currently renting. Within a couple of years my husband and I will like to buy a place. Since we're new to this area, we're both overwhelmed as to where to start looking (as far as picking a neighborhood to purchase in). Can you give me some advice on where to start?

Maryann Haggerty: Think about your needs, wants, likes. Think about your commute. Visit other neighborhoods -- the places where your co-workers live, for instance. Attend events throughout the area, such as weekend festivals. Go to Sunday open houses. Or spend a Friday evening at a restaurant & movie in a place you've never heard of.

With a couple of years to poke around, you may find the perfect place for you. But it will be the place that fills your needs, not the place that fills mine -- for instance, school districts are not a big personal concern for me, because I have no school-age children. They may be a big deal for you. And I MUST be walking distance to things. Maybe that isn't a concern for you.

_______________________

Columbia Heights, D.C.: Hello,

I keep hearing people say they can't find anything in Washington, D.C., that is affordable. My wife and I bought a nice, smallish rowhouse for about $350K six minths ago and love the house and the block. Is it just the fear of the unknown?

Thanks!

Maryann Haggerty: Probably yes.

_______________________

Alexandria, Va.: Maryann -- I have heard recently that Prince George's County is the most affordable area around. Is this true? And do you know what areas would be good for buying investment property?

Maryann Haggerty: Prices are lowest in Prince George's, yes. Again, where to invest? You have to look at the numbers and see if there's anyplace left where rents support the purchase prices.

_______________________

Jacksonville, N.C.: I may be moving to the D.C. region next summer and am taking a look at the town of Brunswick, Md., as a nice area. Any thoughts about the town?

Maryann Haggerty: That is one heck of a long commute -- although it is on the MARC train line. I don't know it well enough to say much more than that.

_______________________

Vienna, Va.: Hi Maryann. I've been looking at a number of new or newly converted/remodeled condos around the region, where the seller is not an individual, but rather the developer. They all seem to have set or standard prices per unit, but I've noticed some of them are now offering cash, discounts or premium incentives which either lower the price or add features. I was wondering if the sellers of these properties consider or accept bids that are lower than their advertised prices.

Maryann Haggerty: Generally, developers do NOT want to sell at below the list price; they would prefer to throw in freebies instead, to keep the comparable prices up. It doesn't cost you anything to make a lowball bid, but the developer might have to be pretty desperate to take it.

_______________________

Washington, D.C.: Ms. Haggerty,

I recently (within the month) purchased a new home in N.W., D.C. Unfortunately, I now need to sell it. How do you see our housing market in D.C. for FSBO? Do you have any suggestions for how to minimize my potential losses, especially at closing?

Maryann Haggerty: Good luck. FSBO will cut your selling costs, at least somewhat -- but could extend the time on market, if buyers or their agents shy away from dealing with you because they have other options available. At least interview an agent or two or three to see what ideas THEY have about minimizing your losses. Be upfront; say you are considering FSBO; ask whether there's anything they can do to make it worth your while to go with them instead.

_______________________

Takoma Park, Md.: Thanks for the chat, it is great. My question: My wife and I own a house that we are looking to keep probably for another year or two. We have a second kitchen on the top floor (that has been there since we moved in, and is located next to the main bedroom upstairs) I was wondering if it is worthwhile to change this 2nd kitchen into a bathroom to create a master suite.

With you not being familiar with my house, do master suites add significant value to a house, at least more often than not than what I would spend to do it, to make it worthwhile? I have heard that master suites are up there as far things to do to add value to a house. Just a little unsure if I should do it. Many thanks.

Maryann Haggerty: What have your neighbors in similar circumstances done? If EVERYONE has two kitchens, or EVERYONE has a master suite, then follow the herd.

In most cases, though, that extra bath is going to add a lot more value than just about anything else you can do. Second kitchens are for multi-family buildings. (Although second refrigerators/freezers are fantastic!)

_______________________

Anonymous: Hello there! I have been considering buying a small single-family home within the next quarter. I am a first-time homebuyer and am looking to save money wherever I can. What do you think about these non-traditional brokerages like Help-U-Sell?

Maryann Haggerty: You're a buyer, not a seller! You won't save a penny by going with a "non-traditional" brokerage, because buyers do not directly pay agents. Sellers do. (Yes, it all comes out of the buyer's pocket in the end, but for the purposes of this question, that's irrelevant.)

_______________________

Ashburn, Va.: Hi, thanks for taking my question. Which is better, buying a house for a higher price at a lower interest rate or buying at a lower price for a higher interest rate? Considering the monthly payment and the loan term stays the same.

Maryann Haggerty: That question only requires thought if one mortgage is a fixed rate (the higher rate) & the other is an ARM (the lower rate.) And if you choose an ARM, please determine what you will be able to afford when it adjusts.

_______________________

Washington, D.C.: Newsflash for "Columbia Heights": $350,000 is not remotely "affordable" for many people.

Maryann Haggerty: We all determine "affordable" by our income. I may not be able to afford what you can afford, or vice versa. And for a two-income couple in much of the DC area, that is indeed affordable -- several of our suburban counties are among the wealthiest in the nation. And for many other people, it is so far beyond their reach as to be inconceivable.

_______________________

Vienna, Va.: My parents live in a rather small split-foyer house near Wolf Trap. An acre yard and some beautiful trees were theirs for only $250K in 1985, less than what I paid for my tiny condo in Fair Lakes over the summer. So realtors and developers send them mail almost every day trying to get them to either sell their house to a family that is "really interested in moving to our neighboorhood," which means they want to rip our house down, or buy some mansion out in Loudoun or Faquier County, for the exact same reason.

I see the pictures of these places and can't imagine what these people pay in energy bills, but the thing that made me realize how much this area has changed in my lifetime was an ad that was promoting how close this one development was to Gainesville and played it up as if it was Tysons Corner. I'm only 24, but I remember when Gainesville was a pit stop on the way to Charlottesville. My dad remembers the same thing of Tysons Corner. What's next?

Maryann Haggerty: West Virginia?

_______________________

Arlington, Va.: Some of the discount buyers agents give the buyer a portion of thier half of the commission I believe Zip Realty does this. So it could pay to use a dicount brokerage as a buyer.

Maryann Haggerty: Good point.

_______________________

Falls Church, Va.: I have noticed that houses are sitting much longer then usual. I also notice that people are posting these houses and then reducing the asking price by $40,000 to 80,000. Is this a sign that real estate is coming back to the norm? Right now I purchased a condo a year ago for about $256,000 and now they recently sold for over $300,000. Although I am happy with my investment, how on earth will I be able to afford a single family house? My household income is over $170,000 a year and I could barely afford a 1950s rambler with a $100,000 downpayment. This madness needs to stop!

Maryann Haggerty: Well, maybe things ARE finally getting back to normal. We'll see.

_______________________

Alexandria, Va.: Greetings, Maryann. I'm retired, in good health and feel comfortable living modestly on my fixed income. In addition to the small condo I live in, I own a rental townhouse, but I have no additional assets. Do you think that I would benefit from selling my rental property and transferring the proceeds to the financial market?

Maryann Haggerty: You sound like you're comfortable as you are. If that townhouse is bringing in decent income, you're probably doing better than you would be on the (much more volatile) stock market.

_______________________

Bethesda, Md.: Googled the address of the place with all the lock boxes -- it was sold out in 2004, completed in mid-2005 -- so one can assume that the "investors" are now trying to cash out.

Maryann Haggerty: That is a reasonable assumption. And there is no reason to put quote marks around "investors" -- what investors do is cash out, so there is no air-quote-worthy irony here. Schadenfreude, maybe; irony, no.

_______________________

Laurel, Md.: My husband and I bought our first home in Laurel, Md., a year and a half ago, and it looks like we'll need to move within the next six months. We've never sold a house before, so I don't know what all the financial ramifications are for selling "early" -- could you enlighten me? I don't think we'll have an equity issue because homes in our development have been selling for about $100K more than what we paid. Thanks!

Maryann Haggerty: Try to hold out for a full two years -- 24 months -- so you don't have to pay capital gains tax on that equity. Read up on the law (the aforementioned IRS publication 523, Selling Your Home).

_______________________

Falls Church Va.: What do you do first? I am having this debate with my fiance. She wants us to buy our new home and then later sell our condo. I think that it would be better to sell our condo and then buy our new home.

Maryann Haggerty: Depends on cash flow & comfort levels. If you absolutely MUST have the cash to close, then you have to sell first & risk spending some time in transitional housing. But if you have a cash cushion, you can buy first & know for certain that you won't have to move twice.

But guess what? People do this all the time, and in many many many circumstances, they can set up same-day closings. Real estate agents & mortgage lenders work with this all the time & can help you out.

_______________________

Falls Church, Va.: What is the likelihood that the local housing market could fall, say 10 percent over the next year?

Maryann Haggerty: This question, and many like it, are impossible for me to answer -- but guess what, we will try to make some high-paid economists answer them for you. The Dec. 31 issue of the Real Estate section will take a stab a predicting the course of the market in 2006, so stay tuned.

_______________________

Fairfax, Va.: I put my SF house in the market in October and it is not yet sold. Mine is one of the lowest priced SF in fairfax. Any ideas?

Maryann Haggerty: Have you asked your agent what is wrong with it? Does it need a bit of sprucing up? In times like this, it is a good bet that houses in good condition will move most quickly.

_______________________

Maryann Haggerty: Folks, it has been fun, but I have to leave. Have a great weekend -- and tomorrow, I hope you read The Post Real Estate section. (There is a photo you just HAVE to see -- I can't even begin to describe it.)

Thanks!

_______________________

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.