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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Maryann Haggerty: Hi. Thanks for joining me. It's a nasty day, just perfect for huddling around the computer.

Elizabeth won't be here today; she's down in sunny Florida giving a speech. Or so she told me.

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Alexandria, Va.: I bought a condo almost three years ago with an interest-only 3 year ARM and two trusts. The second trust is a balloon loan (about $40,000). I have not paid anything toward the principle in either loan over the last three years. Right now I have an extra $10,000, that I'd like to use toward these loans. Should I put it towards the primary loan or the second loan? Or something else?

Maryann Haggerty: What are you planning on doing when the three years on the ARM ends? How will it adjust?

Most of those loans are going to require you to start paying down the principal.

Usually you can make the biggest dent by paying principal on the smallest or the highest-rate loans. In your case, I assume those are the same trust.

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Columbia Heights, D.C.: Hi Folks,

I just had my first (and hopefully last) rude awakening in the real estate market. Three years ago I sold my coop in Adams Morgan and moved to Columbia Heights. Because I bought a new place before I had sold my old one, I had to use two mortgages to buy the new property. The second mortgage converted to a home equity line of credit after I paid it off with the proceeds from the sale of my old place. Well, I got a letter from my lender -- National City Mortgage -- two weeks ago saying that it was canceling the entire line of credit effective pretty much immediately. The reason for the cancellation was that their automated appraisal method had calculated that my home was now worth less than it was when I bought the place. The only options they gave me were to either refinance my mortgage and get another line of credit from that or pay for an appraisal myself to convince them that their valuation was wrong. I've decided to go through my bank to get a line of credit. I know this story is not uncommon. I'm lucky that I did not incur some huge expense that I was counting on the line of credit to pay for. Though I am annoyed that they did not just reduce the line of credit to an amount supported by their revised valuation of the property. I suspect that they just want to get out of, or seriously reduce their exposure in the HELOC market.

Maryann Haggerty: Yup, that's a letter a lot of people have been getting lately, no matter who their HELOC lender is. The lenders really really want to reduce their exposure to those loans.

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washingtonpost.com: Homeowners Losing Equity Lines

Maryann Haggerty: Here's an article we ran earlier this year on HELOC cancellations.

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Anonymous: Dear Maryann,

My husband and I love your column. We both work in D.C. and live in Fairfax. The commute is terrible. We would like to buy a single family home in Arlington so we can spend more time with our 2 year old son but everywhere we look is about $1 million for a single family home. Why is it still so high when the housing market is down?Thanks.

Maryann Haggerty: Location, location, location.

There's still demand in many neighborhoods, and that's keeping prices up there. Appreciation is no longer happening at the crazy 20 percent-plus rates of years past, but prices aren't tumbling, either.

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Silver Spring: All the recent news about price drops and discussion about what a house should cost in metro D.C. has really started to annoy me. So, for the sellers out there, allow me to share my 2 cents. I gross 98K a year and each month I pay my rent, car loan, student loan, credit card, insurance payments, and a whopping 200 to retirement. I can't afford a 450K house, nor if I married my 60K significant other could I buy a 450K house.

Sellers groan and fret about how low prices will go before the market will pick up. For me, that's 275K-300K and no more than an hour commute to downtown... Gaithersburg, Columbia, Manassas, Ashburn, etc are all out. I'd rather rent for the rest of my life than spend yet more time commuting.

When I can get a decent 3-1 SFH for 300K or less I'll do my portion to reduce inventory and no free TV, granite countertops, or even paid closing costs will change that. (And just so there isn't endless debating about decent... IMO, that's at least no basement bedrooms and with off-street parking and central air.)

Maryann Haggerty: Well, I can't tell from thumbnail photos if they meet your definition of decent, but I see almost 200 3br/1BA or more houses for sale in Silver Spring for $300,000 or less. So that's not really your stumbling block, is it?

I'm with you as far as free TVs, but paid closing costs are real money that can come in real handy.

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Maryann Haggerty: Sorry, folks... that was a relaly nasty computer crash here. I'll get back to answering!

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Re: Alexandria with Two Loans: Alexandria should just wait for the government to help out, since this person has no hope otherwise.

Really, if you've spent three years without paying down any principle, you aren't ready to own a home.

Maryann Haggerty: See, I assume that not paying principal was a choice. Not maybe a good one, but a choice.

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washingtonpost.com: We apologize for the inconvenience, but Real Estate Live is cancelled due to technical difficulties. Thank you.

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Editor's Note: washingtonpost.com moderators retain editorial control over Discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions. washingtonpost.com is not responsible for any content posted by third parties.