Barry's Magic Shop-RIP

I read in today's Washington Post that long time downtown Wheaton instution Barry's Magic Shop is closing its doors after 38 years. It is a bit anticlimatic as the store's long term location on Georgia Ave was taken by the county a few years back-forcing the shop to locate to Rockville. Still those who know and love Wheaton will remember the shop well. I have stopped in a few times over the years ant the place was quaint and friendly. I still have my "foolbox" which I pull out at family gatherings to mystify the current generation of nieces and nephews with. I bought my first box at Barrys over two decades ago.

It is great to see tired old Wheaton get a face lift but I worry that so many of the quirky old stores and fine family owned ethnic restaurants that I have known for years will be phased out in favor of franchise "fat palaces" and more upscale stores. It seems to be the cost of progress when an area goes upscale. Rents go up too and many old timers get priced out of the market.

Condo Buyers Need to Beware

I am getting a lot of calls lately from first time buyers looking to buy condos. Primarily because so many people are priced out of the market for single family homes and townhouses. With the lower prices these days there seem to be a lot of good condo deals on the market these days. However, all is not as it seems and I caution  prospective condo purchasers to be careful. Right now, I can think of three problems associated with condos that are popping up and making it very hard to get loans to purchase or for sellers to sell.

Non owner occupancy. There has been a flood of investors snapping up condos for cheap. They are mostly all cash buyers looking for attractive short sales or bank owned properties. In the past many of these investors were rehabbing and flipping the homes-which is a good thing. However, with the low costs of units and cheap financing many are buying condos in order to hold and rent them out. Typically, rental properties get less care than owner occupied properties and if there are too many rental units in a condo development then it becomes very difficult to obtain financing for prospective buyers who are looking to use FHA or minimum down conforming loans. Currently FHA guidelines allow no more than 50% of the homes in a condo project to be non-owner occupied, and a lot of projects are failing to make the grade and losing FHA approval.

Delinquent condo association payments. FHA refused to approve a project where more than 15 per cent of the units are 30 days or more behind on the payment of condo fees to the association. With the state of the economy this is a growing problem as many condo projects are now falling above this level.

Condo projects that are entering a new maintenance cycle. During the last boom in the late 1980's many apartments were rehabbed and converted into condos. These units are now entering into a 25 year cycle where key upgrades and repairs are needed. Things such as expensive new window or roofs or parking lot repaving come at about this stage. These major repairs cost big money and a lot of condo projects have underfunded reserve funds and just do not have the money on hand to pay for this work. When this happens it usually means that special assessments are passed on to the current unit owners and these generally are added to the monthly condo fees. I am seeing some units in the area where the monthly fees are topping $1,000 per month. When faced with the reality of this tough market many sellers have to cough up the full balance for these assessment at settlement. Smart buyers are checking and passing up on projects have a history of passing large assessments to the owners.

This does not mean that all condos are a bad buy, and certainly there are some very nice condos in the area. However buyers need to be very careful when looking at that condo "deal' in today's market. The best bet are newer condos or units that have been recently rehabbed and converted. In this case, FHA financing is usually readily available and you are pretty sure that you will have at least two decades before serious physical upgrades are needed. I really like some of the condo conversions that I am seeing in the District these days. Some really fine older buildings with modern units inside. A nice mix in my opinion. 

Sailabration comes to Baltimore's harbor.

Over a decade ago, Baltimore hosted the "Tall Ships" exhibition in Baltimore Harbor. My wife and I went up to Baltimore and using the excellent water taxi service and an all day pass, spent a day visiting some just incredible old sailing ships. My only regret is that we did not get to see more than a half dozen of the many ships that were visiting Baltimore at that time. Well, another chance has come and I plan on making the most of it. As part of the three years of events commemorating the War of 1812 (Why they want to celebrate a war where we pretty much got kicked around a lot-I just don' know. But there you have it.) the tall ships are coming back. I highly suggest you put it down on your calendar and make a point of going up to "charm city:" for a visit. 

The event is scheduled to take place between June 13th and 19th of this year and so far there are about 30 various ships committed to the event. Some are modern naval vessels but there will be a lot of beautiful tall ships to see as well. And, it is all free. Yes, you will probably want to buy a water taxi pass and of course will blow some coin on food, however, there is no charge to go onto any of the ships. You just can't beat that. 

I am surprised how many Washingtonians do not spend much time in Baltimore. A wonderful town that is as different from DC as any city can be. It is worth a visit to the harbor and I for one will be at the Sailabration. Don't miss it. Check out the schedule as some ships will be in town longer and if you can't make the dates you still might want to check out Baltimore around that time.

Streamlined Short Sale Process

I read a good article recently in the Christian Science Monitor about how banks are doing a better job of working with homeowners to streamline the short sale process. This has been very noticeable in my office as some banks (did somebody say Bank of America) have really changed course in the past few months over this matter. It does depend on the bank but almost all of them have moved towards speeding up the process. Basically, a short sale is where the bank allows a property in distress to be sold for less than the note owned on the property. Usually, the bank just eats the loss (but not always). You might wonder why any bank would do this. The reason is simple. You might not believe it but it is cheaper for the bank to allow a short sale than it is for them to foreclose on a property. It seems like a lot of banks had trouble accepting this but now after five years into a poor real estate market most have now seen the light.

Don't be afraid or embarrassed to ask your lender to let you sell your home short. Millions of American homeowners have done it and it is not a bad way to get out from under a house payment that is wrecking your life. Remember, that you are going to have to prove that your are under a hardships, so you will have to be prepared to write some letters and provide financial information to back up your claim. But in the end, selling your home short is much better than ignoring the problem and allowing it to go to foreclosure.