A Case for FHA loans

There seems to be a lot of disdain for the old FHA loan these days. Many sellers and listing agents do not like to see a purchase contract with an FHA loan rather than a conventional loans. The worry is that these loans have stiffer requirements for the seller and take longer to settle. A FHA government loan also many not seem attractive to a buyer because the mortgage insurance premiums have gotten more expensive. Today a buyer can put a bit more money down and seek a conventional loan if they can afford the extra money..

However, aside for the fact that a FHA government backed loan takes less money down to get int,o and is easier for a buyer to qualify, there is one very important reason why this type of loan is a great loan to have if you are the owner of a home. This reason is that a FHA loan can be assumed by a qualifying buyer. What exactly does this mean to you? Well interest rates today are insanely low. Everybody agrees that they will have to go up. Historically the average interest rate over the past three decades has ranged between six to eight per cent and to really have a strong economy will have to go back up to these levels.. And I have been around long enough to remember when rates were briefly at 17 per cent. Believe me that was not a fun time to be a Realtor.

If you have a very low rate government backed loan on your home then if the market goes up-especially if rates go up and the housing market softens, then you actually may have a valuable asset. Ask yourself this, in a slow market with higher rates, if you are trying to sell a home that has an assumable FHA home and your neighbor is selling the exact same home, then all things other things being equal you then have a much more attractive bargain. Imagine if you will a real estate market where interest rates are around ten per cent. (Yes, it can happen.) And your home can be bought with its assumable four per cent mortgage. That would be a pretty sweet looking deal in any market.

So think twice before you get your new loan. Perhaps a FHA loan is a better investment in the long run. If you want to read more and go into the numbers involved here is link to a good article in the Washington Post from 2010. The information is still relevant to today's market.

Outlook for 2013

As we hit mid January and the threat of the fiscal cliff is behind us. I feel that this is a good time to write a brief  post on the current market for the Metro area and state where I think we are heading. First and foremost, the real estate market is looking pretty darn good. Well, darn good for sellers that is . Not so much for home buyers who are facing a shortage of suitable homes to look at and a very competitive market in most jurisdictions. It is hard to believe but we are experiencing a critical shortage of listings on the market. We simply have very little inventory to offer home buyers. And, this shortage of homes for sale means that there will be pressure on home prices to go up. We are already seeing may full price and above price offers, along with multiple offers coming in. A well priced home that has been updated will not usually go unsold for more than a few days.

The improved market is visible everywhere around Washington DC and it's suburbs but some jurisdictions and price ranges are seeing it have a more dramatic effect. The best market is in the District and Montgomery County but even Prince Georges County which had been hit very hard by the downturn and featured a record number of foreclosures and distressed homes is finally beginning to turn.

There are a variety of reasons for the shortage of listings for sale. A lot of unsold homes were taken off the market and rented out by the owners. Many of these homes are now tied up in long term leases. Also, there are still a lot of  "underwater" homes out there and many homeowners who survived the downturn and do not have to sell will opt to wait for prices to go up before selling. I expect to see more homes on the market as the weather warms this year but also expect to see more buyers out there as our local economy continues to expand. For this reason I do not foresee listing shortage situation improving this year and predict that we will be in a good market for home sellers all year. And this means that home values will have to go up.

For a detailed report on the current market data click here.

Bethesda's Tastee Diner

After a 30 year hiatus I am beginning to feel my way around the Woodmont area of Bethesda where my new Keller Williams office  is located. As it happens my office window overlooks the Tastee Diner, a B-town fixture for all of my life. Long, long ago, I used to live in a group house of young singles on Madison St. behind Suburban Hospital. Bethesda was a simpler place then as it has not undergone the massive redevelopment that the metro station brought. Although there were plenty of decent places to eat in Bethesda, most were not the upscale trendy eateries that you find today. Prices were a lot more reasonable too. Most of the time the Tastee Diner was our eatery of choice. It was gritty and cheap with a lot of local flavor. Usually after our regular weekly all night poker game the winner would treat the less fortunate to breakfast at the diner. I think every American should spend some time in an old fashioned diner at three AM in the morning.

Yesterday I took a walk, mainly to check out restaurants in the area and to get a bite to eat. There really are a lot of decent places to choose from and the variety of food is greater than you would find when I lived in Bethesda. I ended up back at my office and saw that they were advertising beef stew as a special at the diner. So, I went in and had lunch there. I had not been inside the dinner in three decades.  Amazingly, it has not really changed. In today's dinning world of tapis bars and  sleek chrome, the dinner is a throwback to the 1940s. I expected it to have been modernized at some time but it still the same. The floor is the same arts and crafts colored tile that was there in the 1970 and there is an amazing amount of lovely wood trim. I felt right at home and enjoyed a cup of  coffee and some good stew.

Well, what do you know. I have rediscovered an old friend and it is only steps away from my office door. Go to Bethesda and eat at the Tastee Diner. Have a cup of coffee and some pie. Soak it up, and for those of you who remember what Bethesda looked like 40 years ago, savor the moment and get a little nostalgic.

Some Important Changes for GLBT Homeowners

A reminder to the gay community in Maryland that when marriage for GLBT partners becomes legal as of January 1, 2013 there are important considerations for  homeowners. Before January 1, 2013 gay couples could only take title to real property in Maryland as "joint tenants" or "tenants in common."   Prior to the new legislation only legally married couples (heterosexual) could take title to property as "tenants by the entirety." When the new law comes into effect, all legally married gay couples (no matter in which state they were legally married) can now take title to property in Maryland as "tenants by the entirety."  I will not discuss the ramifications as I am not an attorney, but in general tenants by the entirety tends to offer more legal protection to married couples than either other form of ownership. So, if you own property as a couple in Maryland, I advise you to contact an attorney who has knowledge of real estate law for advice. The easiest choice is for you to contact the attorney that conducted your closing. If you choose to proceed, the attorney can usually make application to change the type of ownership on your title for a reasonable fee.

This right also exists for property owners in the District since gay marriage is legal there as well. Many GLBT couples that are married are unaware of this right, and still hold title to their homes as joint tenants in the District. I advise District homeowners to place a call to their attorney as well.

Unfortunately, these changes do not apply in Virginia as gay marriage is not yet legal there.

Round House-Ruined House?

Last year I posted a photo of one of my favorite homes in the Brookland neighborhood of DC. Although in poor condition, the home has always been a total charmer. Built in 1901 and designed by architect Edward Woltz, this home was bought last year by a local developer after it's long term owner passed away. A few weekends ago it was featured in the Washington Post and one has to admire the slick new home that they created out of it which is now on the market for $899,000.  Of course, this does not sit too well with me as the original charming historic home has been totally erased and will no longer be there for people to enjoy. I wonder what the DC government was thinking or doing when they allowed this remodeling to go on. It is a prime example of a developer taking a fantastic historical property and significantly alter the character of the home in order to monetize the property. Well, there you have it. The home is still mostly round but everything that was original about the property is gone. The original layout, interior, windows-you name it, is no longer there.

In order to make the home larger and  more palatable to the high end buyers now relocating to the District the developers put a hideous addition on the rear of the home that has destroyed the ascetic beauty of what was a totally round home. Don't get me wrong, this is a nice modern home and somebody is bound to jump on it. The Brookland neighborhood just like most of the District is a very hot market. However, whoever buys this home will never have the satisfaction of owning a real historic property. That home is gone forever and it just make me sad.

Post Election Notes

I am not really going to write about real estate today but just wanted to comment on the election and what I saw in Silver Spring this past Tuesday. Last year we went downtown to have dinner and noticed that you could vote early there. Since there were no lines, we just jumped in and voted. It was such a breeze that we decided we would go back downtown this year and vote early. To our surprise, the early voting line was very large and we decided to skip early voting since our own polling station in Hillandale has never had very large lines in the past. We had a nice dinner at Thai Derm and never gave early voting another thought.

However, on Tuesday when we went to vote, the line was incredibly long. Longer than any line I have ever seen at a polling place. (That covers a lot of elections) Well the wait was not too long and most people were in a very good mood so it was not much of a bother. It was nice to see everyone there. Apparently a lot of folks in our area thought that the issues were important enough for them to get out and vote this year. I was also pleased to see the amazing diversity of the people standing in line to vote. It seems like every ethnic and age group was well represented this year. Sometimes in the past our polling places was very quite and it seemed like the only people voting were elderly-but not this time. Anyways, it was great to see and made me feel a whole lot better about our political process.

As for real estate. With the elections behind us, look for a steadily improving market in 2013. There, you heard it here first.

Sitting the fence?

Let's admit it. We Realtors are the eternal optimists and it would seem that by reading our marketing material that it is "always" a good time to buy a home. Well here is the honest truth, it is sometimes not a good time to buy a home and  Realtors are not necessarily the most reliable source about this subject. However, I can say that most of the time it is a good time to buy a home and as a long term investment owning your own home is usually the best investment you will make over the course of your life. Right now is really a fine time to think about getting off the fence and buying a home. Here are my reasons.

• We have seen home values bottom out and they are now back on the rise. This especially holds true in Montgomery County and the District.
• Interest rates are not going to "ever" go lower. They just can't go lower and in my almost three decades as a Realtor, I have never seen rates this low. Low rates mean monthly payment that are as cheap or lower than  paying rent.
• We are already seeing a shift from a buyers market to a sellers market. There is currently a shortage of inventory in many areas. Expect that to get worse after the elections are over.
• Rents are steadily going up. Does it really make sense to help pay off someone else's mortgage. That is what tenants do.
• Be the master of your own domain. Surely you must be getting tired of moving. The average tenant stays in a place about two years. The average homeowner in this area stays put for about seven years.

 So now you have it. Probably not for the first time either. If you want to buy a home, now is the time. Wait if you want but I assure you that the costs for you will be higher if you delay. Drop me a line if you have some questions about this. I am always willing to talk.