Mar 11, 2011

The Post's real estate section editor Elizabeth Razzi and real estate reporter Dina ElBoghdady take questions about the springtime housing market in the Washington area.

Hello, everybody. It's great to share a lunchtime chat with you once again!  This is a special-occasion chat (think "respawn," you gamers out there),  in conjunction with our Mega Real Estate issue in Saturday's newspaper (and online here, of course.) Post reporter Dina Elboghdady is joining us, and she can talk about FHA matters--and especially about changes coming to all types of  mortgages, a cover story she wrote for the Mega. Let's all give thanks for the firm ground beneath our feet and send our prayers and best wishes to the people of Japan.

Hello everyone! This is my first chat.  Looking forward to it.

As a ward 8 resident I believe the housing market will continue to see growth promising sales and prayerfully plenty of sunshine. Amen to that!

Welcome to the chat, Ward 8. I hope you're right on both counts! Anyone else thinking along the same lines?

I have zero equity in a $700K+ house in NOVA. It's now worth $600K. Job relocation this summer. I want no part of being a landlord. What is the best strategy to deal with the bank? After reading so many stories of bad dealings with banks, I am tempted to walk away.

Many people have been frustrated when dealing with the banks, but you should try.  Keep in mind that if you walk away in Virginia, the bank can go after you for the difference between what it collects for the house in a foreclosure sale and what you owe on the mortgage.   

You might talk with your lender and a real estate agent about the prospects for the lender agreeing to a short sale. If you go that route, be sure the lender agrees not to come after you for the unpaid deficiency.

Do you expect prices to resume increasing or should I still sit on sidelines if I'm looking to invest for long-term appreciation?

If you're really thinking like a long-term investor, you can't be too concerned about what will happen to prices in the next few months. Depending on the neighborhood, you may have missed the bottom already. Market timing is exceedingly difficult with real estate! Long term investors look at their initial investment and monthly cash flow to decide if they can really stick with it for the long-term appreciation they desire. That goes for the house you live in, too.

Hi Elizabeth, I'm a real estate agent with Long & Foster in Woodbridge. We keep hearing about how BRAC is coming and that it will greatly affect the area's market. Are you hearing the same or is it more talk than truth? Thanks! Jennifer V.

Well it certainly seems like it should affect the market. What we don't know is whether it will be positive or negative -- and when it might happen. If traffic is as nightmare-ish as some predict, my GUESS is there could be a negative effect on nearby housing--at least at first.  Freelance writer Kimberly Lankford, who wrote the story on military buyers for the Mega issue, told me some are expecting relocations nearer to locations gaining BRAC headcounts to happen around 2012-2013, as locals get fed up with traffic and relocate closer to their new base. Anyone else with ideas on this?

Thank you for addressing this topic. I would like to know whether house prices in DC neighborhoods such as Woodley Park or Kalorama are expected to rise in the Spring.

They are perennially two of D.C.'s most popular neighborhoods, but there's no way to reliably predict what will happen to prices over coming weeks. I will point you to some great--and interactive!-- statistical information, just updated with data through the 4th quarter of 2010, for DC-area jurisdictions. Check it out here.  

Is there a point at which the lender is held to the numbers they put forth in the good faith estimate? I am a first-time home buyer, under contract for a home, and in the midst of trying to obtain financing. Twice now the lender has sent me GFEs with incorrect figures. It was only after I called the lender to ask them to explain the numbers, that I found out the figures in these GFEs made it look like the monthly payment would be much lower than they actually turned out to be. At this point I feel like I don't have any idea what my financial liability will be. Is there anything I can do to hold them to the numbers that I am supposed to sign off on but have been perpetually wrong? To complicate matters more, I've been told that this is the only lender in the area that will do a 203K loan and that it is too late to start an application with another lender. Please help!

I'm told that lenders have to make any necessary corrections within 60 days.  But you should be aware of which costs can shift and which can't.  Those are listed on page 3 of the GFE form. Here's a link.

There's also a settlement booklet you may want to look at. Here's a link.

If none of these resources are of use, you should direct your questions to:   U.S. Deparmtment of Housing and Urban Development, RESPA office, 451 7th Street, SW, Washington, DC 20410 

Good luck!  


If you're really pressed to close on this loan (meaning that you're approaching a deadline to close the deal) then  demand to receive a copy of the actual HUD-1 settlement sheet the day before closing. (Ask in advance!) Go over it closely and challenge any numbers that look askew. Make the clock tick for the lender just as it's ticking for you.  Sounds like you have a good grasp of what the costs SHOULD be; make sure the lender gets on board and performs.

I know you don't have a crystal ball....but just curious about your thoughts for real estate in Tysons Corner with the metro coming. There's a mixed bag of existing properties (Old as dirt Rotunda, farthest away from the stops the Fountains, high-end Parc Crest, and closest to the stops Lillian Court) - there doesn't seem to be too much for sale right now.   I guess people are holding onto their properties just waiting for the expected jump in values. But I've also read that there are several new projects that have been approved for condos and apartments - I'm guessing that a glut in properties might make values drop. Or am I just assuming that with the metro and all the new buildings/restaurants/bars the area will not be a residential draw?

I wouldn't be surprised if owners are holding on to their properties because they figure that the extraordinarily awful Tysons traffic, snarled by Rte. 7 & Chain Bridge road construction, Metro construction AND Beltway hot- lane construction make it a less-than optimal time to market their home. (I got stuck on the Beltway for an hour at midnight recently. Do I sound bitter?) Certainly the planners are trying to make Tysons a residential draw as part of their mixed-use development. Stay tuned -- we have a story coming up on this topic soon. And by all means, chatters, weigh in!

How does the market play out if there are significant defense and non defense federal cuts over the next few years?

These types of cuts could be a big deal for the Washington area market. Federal workers and defense contractors tend to have the types of high-paying jobs that fuel demand for homes. If a big chunk of them disappear, the area's housing market would suffer.   

Well that's the big question for the DC area, isn't it? After all, if the economists tell us our market held up better/recovered faster than most others because of govt'  & defense spending, a cutback ought to harm our market as well, wouldn't you think. However, we'll have to see how it all plays out. Spending cuts might actually affect out-of-town entities more. (ie the folks building the weapons, fighting the forest fires). It certainly bears watching though.

Recently, I had an appraisal done on my townhome (Alexandria) and the value came in lower than expected. Is it reasonable to expect the value to bounce up slightly (5%) by mid-summer due to sales that will occur in the area?

It's hard to say. Take a look at what's on the market now, similar to your home in terms of location, bedrooms, bathrooms, garages, etc. Are the prices higher than your appraisal? Watch to see if they're forced to lower their asking prices.

Anecdotally speaking, it doesn't seem like houses have been moving very fast lately. My husband and I have been looking at houses every week for the last 2 years -- side note, we see a lot of a the same houses listed as "new listings." Prices seem to be all over the place. Do you think the typically spring ramp-up in sales will engender a lot of price drops as there will be more comps? Honestly, I think a lot of people in Northern Virginia need a reality check about the status of the economy and the housing market.

Looking for two years? Seems to me you aren't a very serious buyer, especially if you've seen price reductions and haven't made a deal. Will there be price reductions this spring? I don't know. But it sounds to me like you're waiting for prices to increase--which only guarantees that you miss the bottom.

Is there any truth left in the old "for every dollar you spend remodeling your house, you earn three at the time of sale" saying? I'd like to make some updates to the usable but very basic, plain bathrooms here in my NoVA condo (cabinet refacing, new countertop, etc.). Thanks!

I never heard that one -- and it is NOT true. Good remodeling does increase your home's value, but in practically all instances you recoup LESS than you spent. The exceptions may be for when you repair something the whole market sees as a deficiency, such as a 3-bedroom house with only one bathroom.  The best source of info out there comes from Builder magazine. They have a great interactive feature here:


I listed my condo about a month ago, but there hasn't been much traffic. It's a security-controlled building, so I think that accounts for the lack of uptake the open houses had. Anything else that can be done to generate more interest in the place?

Maybe you can tout that tough security in your ads? And if your agent isn't doing so already, post ads on Craigslist and neighborhood bulletin boards and Web sites. With luck, better weekend weather might bring more lookers. And what does your agent have to say about the price?

I found a Real Estate lawyer that charged me $500 to review our contract and $300 to attend the settlement. He explained everything to me as we went. I sent him the contract, the GFE, he reviewed, and told me what the liabilities would involve, what would be covered, what would not be, etc. He helped us find an error in the loan documentation on the day of closing that required the closing company to postpone for a day. With him there, they also agreed to pay me a day's lost wages and a fee to cover the lawyer's attending a second day of closing. The error that he found would have cost me thousands of dollars if I had signed. Instead he saved me that money and got me compensation for the extra day that it cost. Considering I spent over half a million dollars on the house, $800 for peace of mind and legal protection was well worth it.

Thanks for chiming in, Real Estate lawyer. Seriously ... paying a lawyer for this type of help may be just the thing to keep your deal from blowing up.

Hi -- my husband and I are considering selling our 3-bedroom 1946 colonial in North Arlington and buying a new and larger home (we just had our second child and we're bursting out of our current home). Given the still depressed economy generally, is this a good time to sell an older, lower-priced home, e.g., less than $1 million, and purchase a new, more expensive home, e.g., approx $1.5? Also, do you have any advice on what order to do this in, should we sell our old home first and then purchase our new one? Thanks very much!

Oh, my fluttering heart. An "older, lower-priced home less than $1 million." (Welcome to DC, any out-of-town chatters.) You may get a good response to your N. Arlington home (usually a popular neighborhood). But, please, unless you have lots 'o cash in the bank to cover double mortgage payments, SELL first before you buy. Even if you have to relocate to a temp rental, it's the much more fiscally sound approach. Dina -- want to chime in on the mortgage aspects of this?

You're in luck. The lower-priced homes seem to be the only ones that are moving. That's because the "jumbo" loans often needed to purchase larger homes have pretty tough lending requirments -- such as 30 percent down payments and excellent credit scores.  These jumbo loans are not backed by the federal government. Come Oct. 1, the maximum loan limit for jumbos is scheduled to drop to $625,500 from $729,750.  So that could hurt the higher-priced home markets too.

How realistic is it to think that Fannie Mae and Freddie Mac will go away? While they may be easy political scapegoats for all that has happened, are homebuyers really willing to cough up 20 percent down again?

It seems both Republicans and the Democratic  administration agree that Fannie/Freddie should be eliminated. When both sides agree, that tells me something will happen.  But when? Neither side is willing to take it head on while the housing market is in such a fragile state. If anything happens, it will probably take five to seven years.  I do think there will be requirements for larger down payments but no one is touching FHA, which offers low down payment loans.  

Fannie and Freddie have always had a weird heritage. Created by Congress for a public purpose--but owned by stockholders and expected to return a profit to them. I can't begin to predict what will happen, but to this housing/economics junkie it will be fascinating to watch how the government tries to accomplish the public purpose--equitable access to credit for housing and at least some standards for mortgage terms and quality--in a post Fannie/Freddie world.

I live in NoVa and have an offer to sell my house now at a small profit. I don't need to sell right now - so, should I wait for the spring and see what offers are out there? -- Worried homeowner

Have you talked to any real estate agents about the price? Is it even listed? Your bird-in-the-hand offer might be low. And, of course, do you WANT to move? What can you afford? Talk to a couple of agents if you haven't already.

Yay! I am so glad this chat is back! I am a new homeowner, who unfortunately is getting PCS'ed across the country. I would like to rent out my house, but am not sure how to begin that process. I live in Washington, DC. Do you recommend I use management company? How much do they usually charge? Can you recommend any good ones? Thank you so much!

Yay yourself! I'm afraid this is a one-off chat, but with any luck we may reappear at least occasionally. About your rental. Someone is going to have to manage your rental; check out the costs they charge, and whether you can find a trusted, experienced person to help you manage it. First, however, check out the landlord laws for DC. There's a lot involved.  And do some rental shopping on Craigslist, and elsewhere to get an idea of what you can get for rent. Good luck.


Hi Elizabeth and Dina: So if I learned anything from the past few years, it's that the housing market shouldn't be treated like a commodity market. Price and demand are not based on harvests, or production, but more on speculation. With that being said, when will I be able to go house shopping without feeling like I am paying an artificial price? Are we still a decade away from a stable housing market with the average buyer (folks like me) feeling confident?

I wouldn't agree that prices are based on speculation. That was true during the frothiest (to quote Mr. Greenspan) part of the boom. But the effects of supply and demand have not gone away. An individual buyer can feel confident when s/he finds a home that will be reasonably  suitable for, say 10 years, and that they can afford--maybe stretching the budget A LITTLE at first, but realistically over that long term.

I think the underwater commenter who is relocating this summer should pay for an hour or two of attorney time, and not rely on an agent for advice. Once paid, the lawyer has no vested interest in your decision. But the agent makes money faster in a short sale (tho they are slow!!) than waiting for a f.c. to clear and get listed. Deficiency judgments are rare in many localities, esp. if a judge signs off on them. The commenter might have options like sheltering a nest egg in a new home, with a homestead exemption. The attorney will know this, cold. The agent, less ironclad as a source and with an agenda. (BTW - it is rare for a short sale to include a no-deficiency clause. Banks don't have to offer this up and most don't...)

Thanks for the 2 cents!

I know that MetLifeHomeLoans local office has a POC that works solely on 203Ks...if that's not who you are already using call them...they are great. I used another company for a 203K on my personal residence and it was not a good of luck!

Thanks, chatter.

Will the phasing out of government-backed loans have a real impact on the market in DC? What are the positives and negatives of this?

The impacts are set to take place soon. The FHA is raising the premiums on the loans it backs by a quarter of a percentage point in April. The maximum loan limits for jumbo loans are set to drop in October from $729,750 to $625,500.  There's talk of down payment requirements going up gradually for loans backed by Fannie, Freddie and the FHA.  So basically, mortgage costs are rising.  Much further down the line, if Fannie and Freddie disappear, the future of the 30-year fixed rate loan will come into question. There are all sorts of risks to lenders for holding onto these pre-payable loans for the long haul. So some may choose not to offer them or they may raise the costs of those loans, at least that's what some housing experts are arguing.

I so missed this chat!! I think there's a story to be done about the many people who weren't able to sell their homes during the bust that became reluctant landlords in this area (maybe they had to move for a job or something) and some of the nightmares that became of what should have been a mutually beneficial situation.

Thanks -- I've missed this chat, too! And thanks for the good idea. Anyone who'd like to chime in on that can contact me at

Home is probably $40k less than what is owed on the mortgage loan. I'm not eligible to refinance or enter programs helping distressed homeowners. I have not loss any income, mortgage is manageable (well under 30% of my income), have never been late. Just ready to move on from this place. What are my options?

Eat the $40k, rent it out or stay put. Seriously, I don't see a lot of alternatives. Does anyone else?

There is a new "short refinancing" program available through the Federal Housing Administration tailored for borrowers who are underwater but on-time with their mortgages.  You should check it out if you decide not to rent.

Hi, I and many of my neighbors in Springfield are hoping that the new BRAC office will increase our home prices- what do you think? Thanks

See my reply to a similar post above. Any one else with ideas on this?

Based on MRIS data, the median home price in DC has been on an upward trend since the spring of 2009. The Case Schiller Index has confirmed that trend for the DC MSA. The FHFA index shows the same trend. However, a reader following the real estate market through the Washington Post only hears about the national trends and would not have any sense that our market is outperforming the Nation. Many local buyers are sitting on the sidelines waiting to hear that prices have bottomed out. When is the Post going to start covering the local market?

I respectfully disagree. We repeatedly cover this story.

Do you have a sense what the impact of the impending BRAC move to Ft. Belvoir will be on the nearby Mt. Vernon area? Will it make the area "hotter" for folks wanting to be near Belvoir? Or "less hot" because congestion wil be an issue?

That's  exactly what I want to know!!

For the chatter who was asking about the stories on the local market, I've written at least two on this topic this year.  Here's a link to one of them

Hello Elizabeth, How accurate would you say that online services (like Zillow) are at estimating the current value of properties in our area. Homes on our street recently took a hit when a foreclosure was purchased for a pittance - it had been subdivided into seven illegal apartments, the interior was absolutely trashed. Fortunately the new owner is doing a great job fixing it up, and I do know that home prices are highly dependent on other local sales. But it just boggles my mind that any buyer could reasonably expect to pay the same for that mess as they would for any other home on the street, all of which are in excellent repair, good curb appeal, etc. The online estimates have plummeted in response to that one foreclosure sale, but in real life would condition play any role at all in what price someone on our street could get for their home? This has been really confusing - thanks for any advice you can offer.

I think Zillow is better than it used to be, and it's a good tool for general information. For an actual buying/selling transaction, you need more tailored information. A thorough market analysis by one (or a couple) of real estate agents, your own good sense, and eventually an appraisal will help address the condition question. Good luck.

There's talk that Congress wants to severely limit FHA, which currently requires only 3.5% down and is limited to $729,000 in this area. What do you think will happen to the local DC area market if these loans disappear (or require 20% down.) If you have limited cash to put down, should you race to buy this summer?

Not to worry.  Even though the administration wants to scale back the government's role, a proposal it submitted to Congress recently specifically states that FHA (and its low down payment loans) will not go away.  The down payment requirements may rise a bit though -- maybe up to 5 percent. But there's no telling when or if that will happen.  

I would like to buy in DC and make a decent salary (low 6 figures), but as a single woman, find it hard to afford something nice in a decent neighborhood. As has been reported, I also have not seen much of a decline in prices. What I've seen is properties taking longer to sell and an end to the days when people were putting escalation clauses in their offers. But I remain puzzled by the D.C. market. A few weeks ago, I visited the open houses for two different 2-BR, 1 1/2 bath condos, both with parking--One in Columbia Heights and one in Cleveland Park (this one was bigger and in better condition). There was only a $30,000 difference in price and both agents told me the condos were priced to sell. To me, the CH one seems priced too high (or the CP one too low) given the greater size, lower crime risk, and easier Metro access of the CP property. How would you rate and price these neighborhood differences?

Well, agents have a tendency to say things are priced to sell. What was your estimate of the condos' values? If you want one of them, get the bidding started. Remember...they're called "asking" prices.

I just wanted to say: I'm so glad that you're doing this chat! I wish that the weekly sessions would return. Have a great weekend.

Thank you, DC -- and to other chatters w/similar comments. You have a great weekend, too. Oh...and I'm starting to tweet. Training wheels still on that, but if you're interested, I'm @erazzi.

Is zillow. Nothing more. Appraisers don't use it to determine value, nor do realtors.

Well said.

Can you share any information on the housing market for Prince Georges and surrounding counties?

Please check out the interactive Post housing link I posted earlier. A good print map will be in Saturday's paper, too.

I live in Silver Spring, and my rent is almost what a mortgage payment would be...I'm thinking about buying. Where do I start? (Silver Spring doesn't seem to be hurting so much, at least if they can keep charging so much for rent)

Start where you always must start: Your own budget. Do your best estimate of what you can really afford on housing (including utilities, taxes, repairs, furnishing, etc.) Look at your downpayment cash (keeping some $ in reserve for emergencies -- and to please lenders). Then shop. Buy where you'd like to live, where the commuting options are decent. (Best if there are alternate ways to work, ie drive/bike/Metro.) And do some exploring.

Glad to see you back, I missed the chats! I live in a townhouse community in NoVA and, while the market is down for everybody, there is a large discrepancy in sale prices between homes with nice listings (lots of photos, maybe staged furniture, etc.) and homes that list no photos or sometimes just a FSBO sign in the yard. I feel like the number of houses with poor listings is really pulling down the neighborhood's average sale price. I don't plan to sell for at least five years: should I care about the sale price? If so, can I do anything? I've thought cold-calling agents and offering to take photos ....

Glad to see you, too. Five years? I'd ignore the market for now. Plan neighborhood bbq's; tree-planting parties, etc. Get involved and help build up your neighborhood. That pays all kinds of dividends -- could even help you sell someday, too.

Good afternoon. Is it a (perceived or real) conflict of interest for a condo association board member to have a unit up for sale in the building? I serve on my board, and I haven't listed my condo yet, but I'm considering it. What do I need to know?

Oh, I don't see how it would be a conflict. Don't give yourself top billing on newsletter advertisements or anything. Be up-front with your other board members about your plans. Good luck.

I recently received my tax assessment from the city and it is significantly higher than the assessment I had done by a real assessor back in 2009 when I refinanced my home. Do you recommend I fight the amount I am being taxed on?

Appraisal is different from tax assessment. And 2009 is different from 2011. Look at the other government assessments for comparable homes in your city. Get as apples to apples as possible. If yours is out of line, appeal. Your tax assessor's office can guide you on the process.

I think the "you get it back" meme on home renovation spending is for those who sell pretty quickly (or right away.) A kitchen that you update and then use for six years is not a "new" kitchen and you can't expect to be "paid back" dollar for dollar. That said, it will still look newer than the old on would have, six years from now...

Thanks for the 2 cents.

That "every dollar you spend" statement is more of an old wive's tale from say 1950. Just watch shows like HGTV's Bang for Your Buck and you'll see that kitchens and bathrooms tend to recoup the most at about 65-85% depending on how functional the design is (vs how personal you make it) and your area. Region and even neighborhood will play a significant part of that. And for other renovations, you'll likely get less...more like 50-70%. First and foremost, you should do renovations to suit your needs. And you should consider renovations when selling a house don't necessarily increase the value of the house as a dollar figure, but increase the value of a house for whether a prospective buyer will buy your house or move on to the next.

Thanks, chatter.

I had the exact opposite experience of a previous poster. I started looking to buy in Feb '10 and houses on the market on a thursday were under contract by saturday. Many times 3 days was the average for a house that i was looking at to be on the market.

I've been hearing the same thing in certain "hot" neighborhoods, basically the ones close in to the District. Further out (in Prince William County for instance), I hear that cash investors are snapping up the lower-priced homes pretty quickly.

We've missed the Real Estate chat. Please tell the powers that be that we'd like this back on the regular schedule. Even every other week would be appreciated. There's a lot to cover in the Washington RE market.

Thanks for that.

Thanks, everyone for tuning in! It has been fun. With any luck we'll be able to schedule at least the occasional session. Do check out Saturday's Mega section. Lots  o'content! Dina's comprehensive mortgage story, a home-value map, and a great story about an often-overlooked DC market: Military buyers. Drop me a line with suggestions & criticisms anytime at And, for those inclined to tweet, I'll catch up with you @erazzi. Have a great weekend!

In This Chat
Elizabeth Razzi
Razzi authors the Local Address blog and is the editor of The Washington Post's Real Estate section. She is the author of two consumer-advice books: "The Fearless Home Buyer" (2006) and "The Fearless Home Seller" (2007).
Dina ElBoghdady
Dina ElBoghdady covers real estate for The Post.
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