Real Estate Live

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

Maryann has 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.

Haggerty is joined by Washington Post columnist Elizabeth Razzi. Razzi is the Local Address columnist for The Post's Sunday Real Estate section in Business. She's written about real estate and other personal finance topics for magazines and newspapers since the days of double-digit interest rates. She is also the author of two consumer-advice books, The Fearless Home Buyer (2006) and The Fearless Home Seller (2007).

Today, they'll discuss the local housing market -- from condos and investment properties to contracts and mortgages.

For more on local real estate, visit washingtonpost.com's Real Estate section.

The transcript follows.

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Elizabeth Razzi: Hi, everyone. Glad to see some folks are at their keyboards. Hiding from the pollen haze that has enveloped DC today? And you'll be glad to know....Maryann is back for today's chat.

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Maryann Haggerty: Thanks for joining us on this lovely Friday afternoon.

Just a random thought: When I have dropped in on Sunday open houses this spring, I have noticed that they are very nicely presented. Not just kinda clean, but well decorated and clutter-free--the kind of look that really makes you want to trade homes. This isn't just in contrast with three years ago, when no one bothered to throw out the old pizza boxes. It's a noticeable change from just a few months ago. Are you noticing that, too?

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Waldorf, Md.: I'm about to accept a position at a new company, which would mean moving somewhere closer to the Mclean, Va. area. Currently I live in Waldorf in a two bedroom townhome, which I rent for $1200 a month+ util, but I've been unable to find any housing comparable to this in the expensive Mclean area. With my new paycheck, I might be able to afford something slightly higher, but not by much, and I don't want a long commute(why I'm moving in the first place). Any suggestions?

Elizabeth Razzi: Congrats on the new position, Waldorf. Have you considered a house mate or two, at least for a while? It seems most folks moving to the close-in neighborhoods have to go that route at one point or another. You might open up your search to smaller apartments, as well. It at least will give you more selection.

Maryann Haggerty: You're just not going to find 2BR in McLean for $1,200. Maybe farther west in Fairfax you would have a chance, but then you're back to the commuting concerns. Tough, but it's the trade-off so many are facing...

One note: I dont know why people always talk about roommates as a hardship. Maybe I've been really lucky over the years, but my ex-roommates are some of my best friends. It was a lot more fun living with them than alone with just a cat.

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Anonymous: From a Nosy Neighbor: I know there are websites that have information on how much the owners paid for a home. You can get recent purchase prices from a link on the Post's website, for example.

Are there any websites that show the amount of the mortgage taken out when the home was purchased (or refinanced)? I assume this is in a database somewhere, since I get solicitations in the mail wanting me to refinance and they always include the mortgage amount for my current (or sometimes prior) loan. And I doubt that my lender would sell them that information, and lose a client. Thanks!

Maryann Haggerty: The county or city recorder of deeds has that info. Sometimes it is a bit tough to understand, especially in the format available online, but if you really really want to know, you can usually figure it out.

Elizabeth Razzi: Oh, now you have me so nosy bout why you want to know your neighbor's mortgage...

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Dayton, Ohio: I submitted an offer last week on a short sale property that has been on the market for six months. The listing agent told my agent that it will take close to six weeks to hear back from the bank about my offer. I understand that short sales take longer than conventional sales, but have you ever heard of a bank taking six weeks to respond to a buyer's first offer? Thank you.

Elizabeth Razzi: Yes. Response times on these things seem to be all over the map. If there is a second mortgage on that house, that could be one reason for added delay. At least they told you to expect six weeks for a response; I've heard others are just left hanging.

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Burke, Va.: Due to a possible job relocation, I may have to put my home on the market this spring/summer (great timing, huh?). It is a relatively new home (Five years old). I am willing to spend some money to get it in shape to sell. Aside from pricing it well, what would be your top "improvements/updates" to make a home more attractive to buyers in this market?

Elizabeth Razzi: Well, assuming you've paid some attention to maintenance over the past five years--even new houses need maintenance--you shouldn't be looking at big repairs. But builder paint and builder-grade carpet could be looking kind of shabby by now. If so, wash, repaint or replace. Clean like crazy. That includes windows, light fixtures, and hidden places you don't like to think about. Fertilize & mow the grass, spread fresh mulch, plant new flowers in pots. And be sure the front door looks clean and welcoming.

Maryann Haggerty: And declutter, much more than you think you need to. You have more junk than you know.

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Arlington, Va.: Recently, I have been tracking house listing through a couple of on line resources. And I have seen something that I am puzzled about that maybe you could explain. A house that has been listed for many weeks, suddenly appears as a new listing. I have visited many of these houses, when they held open houses, so am certain of how long they have been on the market.

Did something change recently that allows for currently listed houses to appear as new? It seems a bit misleading to me.

Elizabeth Razzi: Yes, MRIS, the Washington-area's multiple listing service, changed its policy to allow listings to be re-listed as new following a shorter time off the market. But the total time on the market should still be on record for agents to look up.

Maryann Haggerty: MRIS requires that a house be off the market 90 days (down from 180 days) before the clock is reset.

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Falls Church Va.: My wife and I life in the Falls Church section of Fairfax County. We bought our Cape Cod in 2002 for $345,000. It was well within the range of comps in the area. We still owe about $290,000. By 2005, other comparable houses in the area were selling for $525-$550,000. Now houses seem to be selling (if at all) around $425-$450, possibly lower. Some economists are predicting that we could see another 25 percent price drop. Do you think prices inside the beltway could drop this low? Could homeowners who purchased their homes at the beginning of the bubble find that they will eventually owe more on their mortgage than their house is worth?

Maryann Haggerty: I still don't have a crystal ball, sorry. I leave it to others to make the predictions--lord only knows enough people have theories...

Elizabeth Razzi: The crazy thing that jumps out at me is that a Cape Cod would jump in value about $200,000 in three years. That's what wasn't real. A Cape Cod increasing from $345,000 to $450,000 from 2002 to 2008? That seems more reasonable. And you haven't lost money. How much more will prices drop? Absolutely no one knows. Will some people owe more than their homes are worth? Definitely, if they bought at the peak and put little or no money down. It has already happened.

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Anonymous:50 showings and no offers -- help make sense: My house (small, close-in) is on the market. We've had 50 showings and no offers. The feedback we've gotten is great -- house is cute and shows well. It is $100K less than a slightly larger house down the street and is at the low end of houses in the area and we've had no bad feedback re the price. Still, it sits. Are people just waiting for the market to bottom out? I'm thinking about pulling it off the market just to take a mental break.

Elizabeth Razzi: Ouch, ouch, 50 times, ouch. I mean, really, who wouldn't start to feel a little rejected after that? Did the slightly larger house down the street sell recently, or a year or two ago? If it wasn't recent, you might as well disregard that price. The market has changed. And it could be your "slightly" smaller house is small in ways that really count. Smaller by a bedroom or bathroom? Smaller kitchen? If you can stand to cut the price, cut it one more time--by enough to make it count. If you don't get any nibbles in a month, then take a break for the sake of your sanity.

Maryann Haggerty: I'm suspecting that some of the feedback you're getting is not completely honest. That assumes that by a "showing" you mean someone who has taken the trouble to come over with an agent and look at the house, not just a nosy neighbor at an open house. Because someone who has gone to the trouble of arranging a showing is actually in the market. They want to buy something. They just don't want to buy what you're selling. So push your agent for realistic feedback, not feel-good stuff.

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Alexandria, Va.: I was going to ask this as part of Earth Day, but forgot. How can I tell if my subdivision is zoned for goat? Since people persist in mowing their lawns, I think it would be ecologically sound if we bought a communal goat and moved it from yard to yard. My cube mate suggested investing in an alpaca, as it cleaner than sheep and quieter than goats.

Elizabeth Razzi: Hahahahaha! Thanks for the chuckle. Does your neighborhood have a homeowners association? Seriously, I'm pretty sure all farm animals are prohbited in the City of Alexandria. But your local zoning board will be happy to advise. And I'm sure they can use a laugh, too.

Maryann Haggerty: Ummm... I have good friends who have two goats on their 5-acre lot 10 minutes outside the Beltway. They're not nearly as maintenance-free as you seem to believe. It seems you have to feed them in addition to their lawn-grazing. Also, sometimes they run away and you have to bring them home.

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Annandale, Va.: I know you have no crystal ball about the market, but I've really been on the fence about selling my first home. I have a one bedroom condo in an area that's seen a 6% decline in values in the last year alone. I had planned to sell my place by this year when I purchased the home in 2003. I did get two, five year ARM mortgages, but I have been paying down the prinicple during this time and should be ok when the rates reset later this year. Most everyone says I should wait. I want a bigger place, closer to work, etc. My credit is good with scores above 760. The areas I would like to live in have seen little or no decline, which means it's that much harder for me to trade up. But I'm afraid if I wait those homes will be even more out of reach. Part of me wants to cut and run, the other says I should wait and try to get more equity or at least save some more cash. What advice would you give to someone like me who's been on the fence about selling?

Maryann Haggerty: If you want to trade noticeably up, you really should have some equity or some cash. That means waiting and saving. Right now, you're not in over your head. You don't want that to change.

Elizabeth Razzi: You're probably on the fence for a very good reason--the move-up may just be too risky at the moment. I'm not talking about the market. That's way too difficult to time. But when your budget and savings are in such good shape that you can afford to deal with what the market throws your way, then you don't feel so much anxiety about the decision. Draw up a really detailed budget for yourself, and make sure you're socking away as much money as possible. Give yourself a little cushion to work with. And, when it's time to move up to the bigger home, consider taking in a roommate, if that's necessary to make the leap.

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Arlington, Va.: I asked the question about the relistings. I just had a follow up.

The listings I mentioned would appear the next day, after having no time off the market as a new listing. The data is consistent across different sites, and it has happened (in the 22201 area) multiple times with various houses.

Maryann Haggerty: Somebody is making up the rules as they go along? Perhaps the original listing was for sale by owner, rather than with the multiple listing service? Those are just guesses...

Elizabeth Razzi: Agents have been known to play games with re-listings. It's against the rules, but they've done it for years. If you're really annoyed by it, contact MRIS. Their web site is www.MRIS.com, and all their contact info is posted there.

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Anonymous: From the Nosy Neighbor, again:Fair enough -- I have a neighbor who bought a couple investment properties and has moved in an out of them and the house near me in the last couple years. I've noticed some life style changes of late (sale of an expensive car, for one) and I suspect the property in my neighborhood has a huge mortgage, and I'm nosy!

Maryann Haggerty: I have nothing against nosy, in principle. After all, nosy is pretty much what I do for a living...

Elizabeth Razzi: Same here. Nosy is bad? Maliciousness is bad. Nosiness is human.

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Arlington, Va.: I realize a lot of foreclosures and short sales are on the market. (I'm not really looking at the short sales so much since I don't expect the bank to take a loss.) But, regarding the foreclosures, if they begin to overwhelm the inventory while consuming the banks resources, do you think banks will start to take a shorter time to approve offers just to get the properties off their books?

Maryann Haggerty: Have you never worked for an organization of any size? Bureaucracies just don't operate that way, especially when every decision that's made eventually has to be justified to a bank auditor.

Elizabeth Razzi: I have been told that banks are starting to pick up the pace... just a bit. I wouldn't get too excited, though. A couple of things are going on, even on top of normal bureaucratic delays. Lenders don't have the manpower to handle all these foreclosures and short sales. They don't have automated systems to handle them. And they're deeply suspicious (with some justification) that people who really could pay back their loans are just trying to fleece the system. Then there are extra hurdles they have to go through. They're checking to see what kind of money they stand to get from the private mortgage insurance, if there was any on that deal. The lender holding the home-equity line wants a little something out of the deal. And then there are the bond investors, who might have some say over that particular deal. It's like dis-assembling a building. Not done easily.

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Anonymous: Re: "Moving to Mclean." Actually, you can rent a two bedroom for $1200-1300 in the Mclean area. You just have to settle for an older place (i.e. Dolly Madison Apartments or Commons of Mclean). They have specials running all the time.

Maryann Haggerty: Thanks for the suggestions.

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Silver Spring, Md.: I am considering buying a rowhouse in the developing area near the Petworth Metro. What do you think of this area? How does this tough market affect a neighborhood's ability to develop?

Maryann Haggerty: A slow real estate market slows down gentrification, markedly. Sometimes that's a good thing in the long run. But if you're expecting two cute coffee shops and a Trader Joe's to open in a transitional neighborhood while a recession is looming-- nope, doesn't work that way.

But Petworth has good bones. So the real question is: Do you think the neighborhood is somewhere where you and other people will clamor to live when the pendulum swings? Then you buy when things are slow, and you wait for the cycles to turn. In the meantime, you do what you can to make the neighborhood attractive, and you do what you can--voting, at least--to see that the District addresses the real problems that hold back the city and its neighborhoods: Bad schools, crime, poverty.

Elizabeth Razzi: Excellent points, Maryann. Maybe a few evening/after dark strolls will help you figure out if it's someplace where you'd be comfortable living as it develops. You know, that's a fine idea before buying in ANY neighborhood.

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Anonymous:

Again, to the Nosy Neighbor

So what. It's none of your business. How would you like someone snooping into your private business, peeping and peering over fences, etc. Why don't you just get out your binoculars and sit on your front porch!

Maryann Haggerty: Actually, it is public information--and sometimes very important to neighbors. Maybe I want to know if the neighbor's house will be foreclosed upon. Or (and this has happened in my neighborhood) that a renovation is half-finished and open to the elements (weather, rodent or human) because the investor-owner stretched beyond the breaking point and has not just multiple mortgages, but also mechanics liens...

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Anonymous: Relistings: I always thought that agents would trigger a property to be relisted as a new listing by changing the price. It's new at this price. So lowering price can be a way not only to attract more buyers, but to get on more folks' New Listing List, pop up on their radar.

Elizabeth Razzi: Nope. Don't think so. Any agents out there care to chime in?

Maryann Haggerty: That doesn't happen if people follow the rules.

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Anonymous:

From the Nosy Neighbor, third time:

Thanks; I don't think I have any malice. I do think I have a legitimate concern that the house isn't going to end up in foreclosure or a short sale. Not that having the mortgage information would stop any of that...

Elizabeth Razzi: Hey, you could always bring over a casserole. Seriously, that the kind of thing that builds neighborhoods.

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Anonymous: My surveyor friend says: Yes, some ready buyers are waiting for prices to go down more.

If my house wasn't selling, I'd ask my agent to pay attention to buyers' comments more as they go through the house. If everything is ok, than the price is too high.

Maryann Haggerty: Exactly. It seemed to me that the original questioner was being told that the house was great and the price was, too. But that's not the case 50 times in a row.

Elizabeth Razzi: True, true, true. But isn't there always a reserve army of buyers waiting for prices to go down?

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Falls Church, Va.: Girls, the real scam is this, with regard to homes on the market being relisted as "new."

The crooked realtor takes the existing home off the market for a few hours and then returns it under a fake tax id. This is illegal, but that's how homes get bumped up in queue, and how buyers are mislead that a home is new to a market when it is not, thus affecting negotiating position.

MRIS threatens to fine realtors for this, but the fine is minimal compared to the eventual profit on the house when it is sold. It's the cost of doing business.

Maryann Haggerty: If people really want to break the rules, they will.

A good buyers agent should know what has really been on the market in a neighborhood, and also which agents are not to be trusted.

(And I haven't been a "girl" in 30 years.)

Elizabeth Razzi: Ah, "girls." You're bringing back memories of my great-aunt Genevieve and her 80-year old pals... Thanks for the flash-back.

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Anonymous Virginia short sales: We just bought a house that was a short sale--it took four months to get a response from the seller's lender, and five months to close. Just a data point, you may be in for a long haul. Hence the discount buyers get.

Elizabeth Razzi: Thanks for a report from the front. btw, I'd love to learn more about your experience. Would you mind shooting an email to razzie@washpost.com? You folks really are anonymous to us in these chats.

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Anonymous: From the reader with 50 postings: Me again!

It's a smaller house (1600 sq ft, plus basement; would be easy to expand; 3 br/2 bath). We're really up front about it -- it is like a nice condo on a patch of land (no walls to share -- yay!). My sense is that people think that they are getting, say, a big McLean marble & granite house at an Arlington condo price and then are surprised when it's just a starter house. I think we're getting people who maybe haven't read the listing closely or who just have big expectations. The agent is not new or inexperience and is very surprised.

Maryann Haggerty: Hmmmm... Maybe your agent needs to adjust the marketing somewhat to emphasize that it really truly is a starter home?

Elizabeth Razzi: I agree. If you're attracting 50 of the wrong buyers, something may be amiss in the marketing. Maybe your agent is experienced in a more-expensive slice of the market? Perhaps you would do better with someone else? Things to consider.

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Silver Spring, Md.: MRIS listings can be manipulated. I have seen old listings suddenly becoming new. I can't tell is it is tinkering with the address number (28A becomes 28-A) or by changing the spelling of the listing (Silver Spring becomes Sliver Spring). I'm sure MRIS tries to plug the holes but there are some loopholes.

Maryann Haggerty: More ways to break the rules.

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Arlington, Va.: So in the end, if the real estate agents can change these at will, the time listed is not to be trusted?

Maryann Haggerty: Perhaps you need to ask yourself what you're trusting them for--that is, how important days on market should be in your own personal equations. If you know it has been for sale for three months, not three days, then you act on that knowledge.

And don't trust oral assurances during negotiations with that seller and that agent.

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Not Prince William County: I read with interest Wednesday's article about how the illegal immigrant crackdown in Prince William County has affected one neighborhood. Do you know of any studies correlating the presence of over-crowded houses affects the price of other homes in a neighborhood?

Maryann Haggerty: I've never seen such a study.

Maryann Haggerty: Here's a link to that article, by Kristen Mack, which I thought was really interesting: It can be found here.

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Washington, D.C.: I have heard that the housing market usually slows in the summer. How will that look this summer with all the forclosures?

Maryann Haggerty: What does slow look like when it moves into reverse? Dunno, but we may see come August.

Elizabeth Razzi: August is usually so darn hot around here, and so many people leave for vacation, sales just slow way down. Last August we had an incredibly unusual credit crisis break. Let's hope this year is more normal and boring. September will be interesting to watch, to see if the market picks up.

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Anonymous:

Not nosy, but stumbled upon info:

Every neighbor is nosey, the question is are they judgmental. Nosy neighbor seems judgmental and in the end it's nothing she/he can do!

Quick note, my wife and I note the tax liens every time they come out. Our neighbor a few doors away was listed. We thought it was a fluke or error, then we started to notice he wasn't leaving in the morning as usual. Or coming and going in suit and tie. He does now apparently have borders. It's still not like I can do anything for him or to him.

Maryann Haggerty: Maybe drop off a plate of cookies? Sounds like he could use some neighborly support...

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Falls Church, Va.: I apologize if I offended you ladies by calling you "girls." I addressed you that way because you ladies have had these live online session for awhile now, and have been so helpful that I considered you ladies closer than someone just on the other end of the internet connection. You ladies have been a great source of information and advice. Thanks.

Elizabeth Razzi: Thanks for the apology--and I gotcha. Maybe we should think of ourselves as grlzz or something. (teenagers, please cringe NOW.)

Maryann Haggerty: And I'm sorry for being teachy there!

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Anonymous: Regarding relisting shenanigans... relistings. I can tell you that even when a listing is "refreshed," it doesn't change the total Days On Market, even though the house will have had multiple MLS numbers.

Maryann Haggerty: More on relistings...

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Washington, D.C.: With all of the discussion of where home prices will go and how much longer will the correction last, I wish more articles would post actual data or plots (I'm a numbers guy).

The striking graph from Shiller's Irrational Exuberance 2nd ed. is getting some attention to illustrate just how much the current boom has dwarfed any previous cycle in U.S. history. I would love to see more of this data on a local level. The closest I know of is the NAHB/Wells Fargo Housing Opportunity Index. This index is nice because of the integration of prices, interest rates, and median incomes to create a more useful comparison. The biggest problem is that this data only goes back to 1996 (about one cycle).

For the DC MSA, it appears that 70-80 percent was steady-state for the post early 90's bust of the previous cycle. If that is indeed nominal for this area, the current value of 40 percent indicates that the correction is about 2/5 of the way complete (from the low of 20 percent).

Any chance of a Post article with some pretty plots of this or any better data that you may have for the D.C. area?

Maryann Haggerty: Wow. You ARE a numbers guy.

I keep hoping we can pull together the definitive local chart of all charts, but that hasn't happened yet. Thanks for the prodding.

Elizabeth Razzi: My reaction, exactly. Wow. The trouble I have with these databases is that each measures a slightly different thing. The Office of Federal Housing Enterprises Oversight (OFHEO) measures repeat sales prices for less-expensive homes. Case/Shiller counts more expensive homes, but in a limited number of metro areas. It's truly mind boggling as you dig in.

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Falls Church, Va.: I bought and sold (sold PG, bought FFX Cty) during the downturn of this market and have noted key attributes that withstand the test of time. They include:

1. Top Schools

2. See #1

3. Realistic price

4. Location

5. Good condition of home/updated

6. Nice neighborhood

If 1-5 aren't up to par, expect the home to be on the market for a long, long time.

Maryann Haggerty: That's a good list, with one little caveat: In some parts of the District, prices have more or less held up despite the schools, not because of them. These are neighborhoods that appeal either to kid-less families, or to families that assume they will use private schools.

(Oh, and Nos. 4 and 6 are almost the same, although I guess you could have a lousy location, such as being next to a freeway, in an otherwise nice neighborhood.)

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Washington, D.C.:"Bureaucracies just don't operate that way, especially when every decision that's made eventually has to be justified to a bank auditor."

They approved and justified NINJA loans at lightning speed, why can't they approve short sales at even moderate speed?

Maryann Haggerty: BECAUSE they justified all those other loans, they are now under greater scrutiny.

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Anonymous: For the Nosy Neighbor:Just a question, but why are you so interested in what other people's mortgages are? My house is currently on the market and I get really peeved at buyers trying to determine just what my equity should be. They write low ball offers and then have the nerve to ask for closing help. For the record, homeowners who pay their mortgages each and every month, despite rising taxes and insurances, especially in this market, have earned equity. When buyers purchase property and hold on to it for a while, they too will have built up their own equity. Maybe then they might be able to see circumstances from a seller's point of view.

Elizabeth Razzi: Buyers will never see sellers' point of view. Sellers aren't real good at seeing buyer's perspective either. Human nature. Try not to get peeved at the lowballs. Welcome them as an invitation to negotiate. The chatter with the 50 showings and zero offers might relish one of those lowball offers.

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Annandale Va.: A field report from western Annandale: Our neighbor's house was listed last Friday, open house on Sunday, contract by Tuesday.

I think they underpriced it a bit, by 3-4 percent, but they're moving, so the house had to as well. Another house in our neighborhood also received a contract even before it entered MLS. Meanwhile, two other local houses, including one banked owned forclosure, are languishing at lower prices than the two that have contracts.

So, houses are selling as long as they are competitively priced and staged well.

Elizabeth Razzi: Thanks for the report!

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Elizabeth Razzi: Thanks everyone. Love the back-and-forth and the reports from the field. It helps all of us! Have a fantastic weekend. Speaking of reports from the field, Sunday's column has some interesting observations from two of the biggest names in DC real estate, P. Wesley Foster, Jr., and John McEnearney. You may recognize their brokerage companies...

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Maryann Haggerty: Thanks so much for joining us today.

In Saturday's Real Estate section, we have a story that looks at the trend(let) among builders to build slightly smaller houses and so bring down prices somewhat. Also a piece about the ups and downs of life in a basement apartment, and columnist Ken Harney examines criticism of the way lenders have determined exactly what is a declining market.

On Sunday, Elizabeth talks with two of the deans of the local real estate market about how this cycle compares with others they have seen. Also, there's a real cute low-cost curb appeal makeover of a small house in Northern Virginia.

Have a wonderful weekend! Looks like it may be time to see to the garden...

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