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Elizabeth Razzi
Washington Post Real Estate blogger and columnist
Friday, September 4, 2009; 1:00 PM

Post Real Estate columnist Elizabeth Razzi discussed the local housing market -- from condos and investment properties to contracts and mortgages on Friday, September 4, at 1 p.m. ET.

Razzi is the author of two consumer-advice books, "The Fearless Home Buyer" (2006) and "The Fearless Home Seller" (2007).

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

The transcript follows.

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Elizabeth Razzi: Hello, everybody! A quick glance at the questions already in the queue shows we have chatters today from California, Florida, Alaska and Great Britain, in addition to our hometown folk in and around the nation's capital. Wow-and welcome. But to the gentleman who put his phone number in his post....trust me. You really don't want me to post that for the world!

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Silver Spring, Md.": In the past, the real estate industry stated many times, where California goes, so goes the country." How is it that Washington, D.C. and the surrounding environs followed California to record high real estate prices, but refuse to follow California now as their real estate prices have dropped more than 50% in three years?

Patrick

Elizabeth Razzi: We refuse? I didn't know we got a choice! And I don't know about that "so goes California" theory. California's real estate has behaved differently from the rest of the country pretty darn frequently. One thing I'll point out (and I know I'm repeating myself) is that there have been many, many neighborhoods in and around DC that have improved drastically over the past 10-20 years. Downtown Silver Spring is one of them. Others include Ballston, Kingstowne (which used to be swampy woods), Largo, and many, many neighborhoods in the District. That's one reason prices rose here.

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Ashburn, Va.: Report from the field ... We just tried unsuccessfully to refinance our SFH under Making Home Affordable. We have credit scores around 800, a total debt-to-income ratio of 27%, enough savings in the bank to cover 21 months of mortgage payments, and a first-mortgage LTV ratio of about 97% -- well within the limits of the program. But the new interest rate we were quoted, 6%, was so close to our existing interest rate of 6.375% that it made no sense to refinance. (Why would I want a 40-month break-even period just to save $97.00 per month?) It seems like MHA is just another one of these programs that sounds great in theory but cannot be taken advantage of in real life.

Elizabeth Razzi: Ouch. Thanks for sharing.

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Bethesda, Md.: Why is there so little concern for affordable housing in this area? It seems we have too many wealthy or near wealthy who seem to think that if one can't afford a 500K house that they're just lazy and self-entitled. Is the DC area better off for pricing out a majority of the workforce around here? Seems a rather shortsighted and selfish attitude to me. How can we encourage the builders to build fewer "luxury condos" and "McMansions" and more smaller homes and even dare I say, affordable rental housing?

Elizabeth Razzi: You're voicing a frustration I've heard ever since moving to this area nearly 30 years ago. Washington is an expensive place to live. There is a lot of demand to live around here (note our lower-than-average unemployment rate) and that makes land prices high. And if a developer can make money satisfying demand for McMansions and granite-everywhere luxury condos, then that's what they'll build. If you want to encourage new construction of more affordable places, I think you'd have to push for government action. Anybody out there think it will happen without government incentives?

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Anchorage, Alaska: What is the current mortgage rate for FHA 30-year fixed in Anchorage?

Elizabeth Razzi: Don't know; you'll have to check with local lenders in Alaska. FHA does not set mortgage interest rates, btw.

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London, U.K.: Hi Elizabeth: Moving back to the D.C. area soon with two young children and likely buying a house. I often see you or commenters mention the importance of good schools to real estate values. My question is - how do I know which schools and school districts are good? Is it all word of mouth? Are there official rankings? Test scores seem to be posted on the internet, but that seems at best a partial and imperfect measure of an education. Any advice or suggestions? We're specifically thinking about Montgomery County, perhaps Kensington. Thanks.

Elizabeth Razzi: You raise excellent questions--that are difficult to answer. I agree that test scores are an imperfect measure of a school. And a lot depends on what your family considers a good school. Do you prize a fine arts program? Are athletics a priority? Do you think your children will do best in a smaller school with small class sizes? Would you prefer high-school students have access to many advanced-placement and International Baccalaureate courses? I suggest you search the Post's web site for columns written by Jay Matthews, and that you pay lots of visits to the web sites of school districts in areas where you may want to live. Arrange to visit schools before you decide on a neighborhood. And -- very important -- verify with the school district that a home you plan to buy is definitely within their boundaries before you make a purchase offer.

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Virginia: There's a lot behind my alley I'd like to buy. It keeps getting sold to developers who find out they can't do anything with it because it has no street frontage. Every 6 months a new Suburban drives up, surveyors measure, I get scared and nothing happens. The city confirms it can only be used for an accessory use to an existing house. How can I buy it?

Elizabeth Razzi: Go to the recorder of deeds office at your county or city government office and look up the owner of the property. (You may be able to find out by searching property tax info online, too.) Then approach the owner with a written offer.

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Columbia Heights, D.C.: Per a suggestion in a recent discussion, I went to WashPost's real estate section to look up "recent sales" by zip code. After inputting 20010, the most recent results displayed were from last December--9 months ago. I then clicked the arrow and selected to see results "from the last 6 months" but again, got only results from last December and earlier. Please have someone enter more recent information!

Elizabeth Razzi: I'll pass that along. Thanks for letting me know.

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fence laws in Montgomery County: Maybe you can advise us on how to proceed:

We have an issue with the office park behind our house -- or, more specifically, with truant teens, drug dealers, and vagrants lurking on the other side of the office park's fence (bordering our property), concealed by bushes on their side. The office park is not interested in working with us residential neighbors. Police do not come in a timely manner when called about the lurkers.

Do you know if MoCo would allow us to build a 7' privacy fence running inside their 6' fence on our property? Then we wouldn't have to see the bad behavior or feel intimidated in our own yard. Are there laws that would prevent our getting a permit for it?

If not -- any other suggestions for getting the office park to lower the landscaping, for example, to make it a less appealing place to hide out? Is there some kind of nuisance law we could invoke? As I said, the office building's management is not terribly cooperative.

Thanks!

Elizabeth Razzi: You need to go to the County and find out if you need permission for such a fence. I'm not sure an extra 1 foot will change much. If your home is part of a homeowner's association, you may need their permission, too. And if permission is denied, you should appeal for an exception because your residential property abuts commercial property. Another possibility for you to consider is a stand of fast-growing evergreens on your property. There's already a fence separating you; extra greenery could muffle a little sound and give you more privacy.

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Lafayette, Calif.: When we were married, my husband fell on behind house payments, putting us in an almost foreclosure status-- but it didn't happen.

Here is my dilemma. I have submitted a dispute to all credit report agencies and all have reviewed and updated my dispute in my favor. My problem is this--one of the three credit report agencies has a 30 to 45 day posting time for updated reports. My lender is waiting to get this information. Is there a person I can speak with in the credit agency that could expedite this update? The credit report agency is Experian and they have been very helpful in this process but I need to get the updated information as soon as possible. Do you have any suggestions? Thanks.

Elizabeth Razzi: I know lenders can ask for a "rapid rescore" of credit scores, but I don't know that you can hurry along the credit report people. Is your loan officer willing to write or call your contact at Experian to ask for a faster turnaround?

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Affordable Housing: Give it time. We had that problem here in Florida until a couple years ago. Now it's all affordable...to the point that Habitat is buying foreclosures because it's cheaper than building new, even with their business model.

Elizabeth Razzi: Thanks for the comment, Florida.

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Bethesda, Md.: Do you think the Washington Post could do more articles about the lack of affordable housing in this area and it's larger impact on the region as a whole? It seems the Post carries a lot of water for developers and others who have an interest in keeping the prices out of reach.

Elizabeth Razzi: Suggestion taken. Thanks.

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Unaffordable Housing: Any community that has the option to avoid affordable housing will do so, because in this country we let local areas set their zoning and other land-use planning laws.

To a local jurisdiction that gets most of its revenue from property taxes, the best way to keep its budge balanced is to have a high ratio of property values to population. What's the best way to do that? Create zoning laws so no one can build houses for poor people.

Since the homeowners in a jurisdiction are also its voters, they use the ballot box to keep other people from building new housing that would lower the property values of current residents. It's as if Ford, GM and Chrysler could vote to keep anyone else from selling cars.

Elizabeth Razzi: Interesting point. And there's often an argument that affordable housing will overburden schools. I'm not making that argument--just pointing it out.

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Washington, D.C.: We're planning to sell our DC condo soon, and can't decide whether to hire an agent, and if we do, what type of agent to hire. We are willing to put in much of the work to try to sell it ourselves, but we know we need assistance determining a price (we know what other units have gone for, but ours has a feature that makes it worth less; we just don't know how much less), and we need some hand-holding on the legal stuff. We're considering a compromise, a less-than-full service agent who just gets us in the MLS and helps set the price, and charges less than the standard commission. Do you think this is a good idea? Or should we just suck up the full commission for a full-service agent? Thanks for your help!

Elizabeth Razzi: Either way could work. Know thyself--and just how much hand-holding you really need. Is there a real estate agent who seems to dominate listings in your condo building? That could be formidable competition for you and your less-than-full-service agent.

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Montgomery County, Md.: I agree with your answer to the "good schools" question, Elizabeth, in terms of the individual child. However, in terms of real estate values relationship to schools, I think it is purely a numbers game. The schools that have the highest SAT scores and/or are high on Jay Mathews' rankings are the ones where you will find the high property values (all other things being equal).

Elizabeth Razzi: True. But the neighborhoods where there are high home prices also have high incomes...where parents can pay for endless rounds of SAT prep, exotic foreign-travel internships, tutoring, college-entrance coaching, etc. How much does that matter?

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Affordable housing: It's the market!

Developers can't build affordable housing because it's hard to get financing for projects. Often, they're financed with tax credits, but those are really competitive. Because land's expensive around here. Because there aren't that many incentives like density bonuses that can be used, and for every government bonus, money comes out of somewhere. There's not the political will to require it: for every person who bemoans the lack of affordable housing, there are two who don't want "those people" living near them.

Want affordable housing? Tell your representative to offer more tax credits, more creative financing, or to require mandates to build it.

Elizabeth Razzi: Thanks for the comment.

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Addition??? Yes/No... maybe?: Ciao,

My wife and I live in Wheaton and own a small 2-bedroom rambler. We also have three young children. We are looking to add on to our house, but only a small addition that would be our dining room (we currently eat in the kitchen, which is too crowded). As part of that work we would also upgrade our kitchen. We would probably only live in the house for another year and a half or so before we'd need more bedroom space (one child is under a year). The estimates we have are about $60k.

I know we wouldn't get all of that "back" when we sell the house, but the market seems a bit chaotic right now as far as home prices with the shorts and the foreclosures. In some neighborhoods (mostly in 20902) the prices on similar homes vary by as much as $100k, which is what I mean by chaotic.

The house is currently about 900 sq ft, we are adding about 200 sq ft and redoing the kitchen.

Are we crazy to be looking at doing this considering the length of time we expect to remain in the house?

Oh, and I love your chats!!!!

Thanks, -confused.

Elizabeth Razzi: Thanks, Wheaton. Honestly, I don't know that spending all that money on a house that would end up being only 1,100 sq. feet AFTER the work is done is worthwhile. Your small but affordable house might be perfect for another first-time buyer (remember they have that $8k credit now) or single person, maybe a retiree. Why not save your cash and try to sell?

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Fairfax, Va.: I'm currently in the process of purchasing a "short sale" home in Fauquier City, Va. We have paid out of pocket expenses of $3000 for appraisal, inspection, etc. If this deal falls through at the last moment, can we recoup any of our expenses from the seller/bank? Would we have a case if we had to take legal action? Thanks for your assistance, Peggy

Elizabeth Razzi: Sorry, Peggy. I highly doubt you could get anything back even if you tried to sue.

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Gainesville, Va.: We have a 6.25% 30-year fixed mortgage on a $625,000 home we've owned for 5 years (and we plan to stay in for at least another 5 years). We put $200,000 down. We're not underwater, but we'd like to refinance at a lower rate. My husband was laid off last year and had to take a job at half of his previous salary. Between his lower salary and mine we'd still have no problem qualifying for the loan, but now our credit report will show our lower combined earnings. Plus, our home is now worth about a hundred thousand less than when we purchased it. So now we're applying for a loan on a house that's worth less and we're making less money. Is this too much of a mess to start dealing with, or is a lower rate worth it for us? (This question sounds confusing but I hope you can figure it out!)

Elizabeth Razzi: Well, if you have a $425,000 mortgage on a house that's now worth about $525,000, that would put the new loan at 81 percent of the home's value. (That's the LTV ratio.) I think it would be tough to get a refinance without taking cash to the table, and who wants to do that? Also you'd have to pay closing costs on a new loan. For that you'd get less than a 1 percentage point break on the rate. Doesn't sound worthwhile to me, and very likely not possible.

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Easier and Faster than a Fence: Seriously: blast some Mozart, or better yet some 70-era Miles Davis (think "Bitches' Brew") at 120 dB across the fence. Nothing chases away the nogoodniks like a little culture. If anyone complains about the noise, you take the cops to your back yard and make them aware.

Elizabeth Razzi: I love it!

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Bowie, Md.: Another barrier to affordable housing is the credit ratings of people who would buy them. A family with 2/3 the median family income can't normally buy a house costing 2/3 as much, because their credit rating won't support an equal interest rate.

Elizabeth Razzi: Thanks for adding to the mix.

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Arlington, Va.: What affordable housing proponents also need to do is direct sunshine on those who stand against affordable housing. Find compelling stories and publicize them. Here's where you come in, Elizabeth. A "journalist" would be well-positioned to examine those who stand up against these types of projects. For example, if a person who ostensibly works on "Civil Rights" at the Federal level were to be a plaintiff in rounds of lawsuits opposing a mixed-income project, then perhaps an intrepid journalist might want to write about this. Just a thought.

Elizabeth Razzi: This "journalist" (thanks for the dig, btw) isn't a "mind reader." Send me an "email" if there's something you're trying to tell me. Razzie@washpost.com

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RE: AFFORDABLE HOUSING: I totally agree with the poster about afforable housing. In the D/M/V you cant' even buy a house for under $200k. It makes me sick when I watch Real Estate shows the show markets with homes under $100K! I brought my home last year under the USDA mortgage program which isn't in all areas.

Elizabeth Razzi: More for the mix.

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Lyon Village, Va.: I can't say this publicly, but I'm AGAINST affordable housing. You put those projects in, and next thing you know your neighbors could be gang members or drug dealers. No thanks. There's lots of other things I can talk about, like building height, density, and character of the neighborhood. But really, I moved here for a reason, and it's not to live next to Jose and Maria.

Elizabeth Razzi: Okay, Lyon Village is baiting us here. But does anyone think that sentiment is not real among some folk?

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Rockville, Md.: Fairfax shines a spotlight on one of the major shortcomings of getting a "bargain" price on a short sale property. All the upfront money spent on inspections is down the drain if the deal does not go through. Another problem is that a prospective purchaser must be incredibly flexible on settlement and move-in. We just settled two short sales that have been pending since contracts were ratified in Feb. and March.

Elizabeth Razzi: Thanks.

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Anonymous: Yesterday (9-1-09), over the phone, I agreed to a home refi with Chase. At that time I was required to give my credit card information for the $750 application fee. Later that same day I spoke to a different mortgage co. and was offered a better deal. When I finally reached the original loan office at Chase, I was told the fee was unrefundable. Is this true? I have not yet received or signed the Truth in Lending disclosure or the good-faith estimate. Loaded with some information, I told him that my understanding was Chase could only charge me a reasonable fee for the credit report. He said this wasn't true and he would have to check with his supervisor. Is there any recourse I can take if Chase charges me the $750 application fee? Isn't this against the new law telling their customers their fee is unrefundable? Thank you, -Janet

Elizabeth Razzi: First thing to do is to call your credit card company and ask them to reverse the charge. Tell them it's in dispute, and then immediately mail a letter (the old-fashioned paper kind) to the proper office at the credit card company formally placing the charge in dispute. That at least buys you time to find out if the new law prohibits the charge before you were given proper disclosures. You raise good points--but I'm not sure off the top of my head if the over-the-phone charge before documentation is prohibited.

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Arlington, Va.: We just bought a home last year and are renewing our homeowners' insurance. The mortgage co. said we don't have enough coverage, but our insurance co. said in Virginia they don't insure the balance of the mortgage but the value of the structure (total value-land). B/c we live in an area of high property values, our insurance only covers about 1/2 of what the mortgage balance is. Is this normal? Right? How do we know we have enough coverage for the structure?

Elizabeth Razzi: Get your insurance company to write a letter to the mortgage company assuring them that your home is insured to the full cost of rebuilding cost. That's not even the assessment minus land value. It's supposed to be the cost of rebuilding after an insured disaster, such as a fire.

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Affordable Housing: LOL at the affordable housing person who thinks it will all be drug dealers.

We bought our affordable housing condo for $350k...Drug dealers what?

Elizabeth Razzi: two cents more...

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Arlington, Va.: "Lyon Village" is talking about the rounds of lawsuits that neighbors there have launched against the First Baptist Church of Clarendon to stop their mixed-income housing project. Ironically, I think one of the plaintiffs WAS in the Bush (43) Administration.

Elizabeth Razzi: Thanks for the translation.

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Cap Hill: A certain developer who shall remain unnamed built "luxury" condos at the corner of 11th and Penn SE. They haven't been able to move some of those condos, including the 2000 sq ft "penthouse" (their term, not mine) at the prices they're apparently willing to accept. So, the "penthouse" is now on the rental market for almost $5k a month. Is this developer crazy, or am I?

Elizabeth Razzi: Chatters, who's crazy?

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making homes affordable: I have an 800+ credit score and refinanced my SFH under that program. I was one of the first ones though and I moved from a 5.5% 10/1 arm to a 30 year fixed at 4.75%. And I negotiated the closing terms very aggressively (my rate wasn't going to adjust for another 6 years, so I was indifferent if it closed or not), so I did the deed for a total of around $1800. I'm saving a little over $200 a month. took a total of about 8 weeks. Didn't seem like a big deal to me - I just had to keep on top of the underwriter.

Elizabeth Razzi: Thanks for the report from the field!

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Ashburn, Va.: Hello Elizabeth!!!

Thanks for taking my question. I have dipped in and out of the housing market (as a potential buyer) for the last 2 years. I was glad I waited because of the 1st-time homebuyer tax credit. But my joy was quickly dashed when I saw the quality of homes in the District area in my price range ($250k being my limit).

I have taken a break from looking (too much frustration and disappointment from not finding much that didn't require more rehab work than I've budgeted). I'm wondering, should I just rent instead? I'm living with family (and saving money) but would like my own space. What would you recommend for a 1st-time homebuyer in my situation? Should I go up in price to get what I want and be cashed-strapped? Should I go for the so-so neighborhood and a house that needs work? Or should I bite the bullet rent and figure out purchasing later?

Thanks,

Frustrated in the 'Burbs

Elizabeth Razzi: One rule: Never buy something that you don't really want to own. If you can't afford anything you want, why the rush to buy? Better to save your money and keep your options open.

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Affordable Dwelling Unit: Elizabeth,

I actually OWN an ADU. But I might be going out of the country for a year or two. Do you know the rules about renting it out?

Thanks

Elizabeth Razzi: I'm sure they're detailed somewhere in the pile of documents you got when you bought the unit. Dig in.

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atlanta: re: affordable housing.

Well, not everyone CAN live in a McMansion - so, well, eventually, things change. WITHOUT government intervention. It takes time.

But look at NYC - where they implemented price controls. And that's one reason the un-price controlled places are so ridiculous. BECAUSE of the price controls. Let the market work...eventually, those McMansions will have to be rented for $500 a month cause there's a limited supply of 'rich' people. It's just the way it goes. I live in an expensive neighborhood that is very sought out. So many developers built too many large expensive houses, they are languishing on the market. They can't get sold. Some are in foreclosure. Where you couldn't rent a house several years ago, well, you can now. The market works. And think about it - what's affordable for you might not be affordable for someone else. The govt intervention usually makes things worse.

Elizabeth Razzi: Well........New York has rent control, not price control. And the way the market is working here in DC is that has made our real estate among the most expensive in the country. If people want there to be a greater supply of new affordable housing--something the market hasn't seen fit--or been able (choose according to your own philosophy) to provide on its own--then people can lobby for government to offer tax incentives or other deal-sweeteners to encourage more of the affordable product.

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RE: Florida: FL and DC Metro cannot be compared...there is no industry in FL besides tourism...govt jobs abundant here...what happened in FL will never happen here

Elizabeth Razzi: 2 cents more.

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Alexandria, Va.: Affordable housing doesn't mean projects or public housing. It means that your average DC Metro area employed consumer could afford a home. I've been searching since March and I am incredibly frustrated at having to spend over $500K on a "starter" home to live inside the Beltway. How many families can really afford that, considering the fact that a large percentage of people are employed by the state or federal government around here? There should be better options for incentives for public employees to purchase homes that don't exclude the DC metro area.

Elizabeth Razzi: Thanks for adding to the chat.

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Affordable Dwelling Unit Rental: And that's the real issue: when an ADU becomes a rental property, there's no control over the tenant.

Elizabeth Razzi: ...2 cents more...

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Montgomery County on schools again: I live in one of those areas that feeds to a highly ranked school. I'd be the first to say that there are very few low income people in the area. And the relative affluence certainly helps the kids in terms of the opportunities you raise. But the fact still remains that the school is good because bright kids go it -- however, they "got bright" -- and that makes people want their kids to go to this school.

Elizabeth Razzi: Thanks, Montgomery County.

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Elizabeth Razzi: That was quick. Thanks for adding to a great discussion! This Saturday's Real Estate section has more details--and more pictures--from the Extreme Makeover home just finished in Prince George's County. And the Joel Lerner has a refrigerator-door worthy story about ground cover that grows well in the Washington area. Have a great Labor Day weekend and stay safe!

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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.


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