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Welcome to Real Estate Live, a biweekly discussion of the Washington area housing market. Post real estate reporter Daniela Deane takes your questions and comments about Washington's real estate market.

This week, Deane concentrates on the possible effects Sept. 11th's terrorist attacks on the World Trade Center and Pentagon could have on the area housing market. Will interest rates drop? Will job losses lead to a flooded market?

Submit your questions and comments before or during the discussion.

Deane has been a Post real estate reporter since April 1999. Previously, she was a reporter for more than 20 years -- mostly overseas.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

Daniela Deane: Hello, hello, hello everyone! Thanks for joining me on this beautiful Friday in Washington.....It's odd...It has been beautiful every Friday I've done my web chat in months. Seriously....We have some nice weather here....Enough abou the weather, though...I've got lots of questions here, so I'm going to dive right in...Let's go!

Centreville, Va.: Hello! Just bought a Townhome (12 years old) in July. Got a 7/1 Arm loan. Would you believe that only owning for 2 1/2 months we are already in a position to refinance due to the series of cuts the Feds have made? Wow. We talked to our mortgage company. Said we could go from a 6.8 to between a 5.6-5.8. cool Right? Well, the closing cost will run us between 2-3 thousand. After having just paid closing costs, down pymt, and new carpet -- well, our savings would be dramatically reduced -- and we we would be in "scary" territory financially if we had a major home prob. If we rolled the closing cost in the loan, if we could do that, then the interest rate would go up if I understand that correctly. So... I guess I'm looking for someone to say, yes you are doing the right thing to not refi (but man! 5.8 percent?) or -- are there any other options that we haven't thought of?

thanks!

Daniela Deane: Now this is a hard one! But I called a mortgage broker and got the skinny for you...First of all, isn't it great how rates have gone down...Mortgage brokers tell me they're inundated with re-financings calls, though...Yes, you can roll the closing costs into your loan and no, your rate won't go up. And it seems like a good thing to do, if you're staying for a few years, say four years or more. But your equity will go down a bit (because you've increased your loan amount...) But appreciation will probably take care of that in the long term. You can also get a no-cost re-fi loan, where the bank pays the closing costs, but there, your interest rate would go up, between a quarter of a percent and three-eighths of a percent. That you should do for the short-term, the broker says, say under 4 years...I hope I've helped.

Virginia: I have a question about the current state of the market, particularly around Vienna. We bought a house at the beginning of the boom. Now, we may need to relocate. I am wondering if houses are still moving quickly? I suspect they are, because I see very few "for sale" signs in my area. My house the standard 4 bedroom, 2 1/2 bath split level.

Daniela Deane: Houses are not moving as quickly as they were in the heady days of 2000. That's what agents tell me. In some areas, like in outer parts of Northern Virginia, like Loudoun County, the market can now almost be described as a buyer's market, rather than a seller's market. It's good there's not much for sale around you. That's always a help. Be sure to price your house realistically for a quick sale...and don't be offended if you get a below-the-asking price offer. Buyers are being advised to make them if a house has been on the market for more than 3 weeks. Don't think you can just get thousands more than your neighbor got 3 months ago. Those days are over. You can get more for your house if your house is nicer than your neighbors (finished basement, better yard, etc.) ... Be realistic and you'll sell....

Virginia: Daniela, first the obvious question, what do you think the long term effect of the attack will be in the housing market in the Metro D.C. area? Second question, in light of the attack, housing market has slowed down and I can imagine will probably stay slow until atleast mid next year. The question is do you think new home builders will make adjustments in prices or do you think they can sustain such a slow down?

Daniela Deane: First of all, I want to just repeat that my opinion is based on my interviews. I have interviewed literally dozens of economists, agents, housing experts and the like since these attacks for two stories I've done on the aftermath of the attacks. Please look for those on the web page to see exactly what people say...What I've heard about builders is this: They haven't lowered prices, but they have lowered some of their premiums in certain areas, i.e. the lot premium you would have paid last year to be at the end of a cul-de-sac, for example. Some of their premiums and upgrades have gone down a bit, but their prices haven't. Many large builders say they are still working on their back logs. Try to get some breaks in other ways than the base price. They might be amenable, depending on your area.

Alexandria, Va.: My husband and I own a condo in Alexandria. Lately, we've noticed that our neighbors' homes are selling like hotcakes and at higher-than-expected prices. We were thinking of house-hunting in the spring (whilst building up our money market for a down payment). However, with our condos selling so high now, would we be wiser to sell now? Or do you think the market will hold through next spring/summer? we really aren't quite ready to buy a house.

Thank you.

Daniela Deane: Condos and townhouses are still selling pretty well in this market, agents tell me. What experts are saying about the market is that it will slow down in the last quarter of this year and the first quarter of next year, but may pick up in the second quarter of next year. That's for the entire economy, actually...If you don't have the house yet, are you living in the condo? ... You need a place to live, obviously. Find the house (you may find it easier than it was last spring) and sell your condo at the appropriate time, I would say....Close-in urban-type areas like Old Town (is that where you are?) will definitely keep their value as will close-in suburban areas, agents say. And what they're predicting is a flattening out of prices, and appreciation perhaps below inflation for a couple of quarters. But hey, in truth, nobody knows for sure, do they? Life has been pretty unpredictable lately...

Fairfax, Va.: I'm curious if you've already seen signs of a shift in the housing market since Sep 11. We're looking in the Dulles corridor area, and have noticed houses staying on the market longer, even in the "hot" areas. But we don't know if its typical of this time of year or is something stronger than normal. Also, it seems that very few houses are coming on to the market. Typical of this time of year? Do you suggest waiting for a true buyers market and if so when (look into that crystal ball of yours!)

Daniela Deane: Yes, we have seen a shift since Sept. 11. The first week after was like a cold bucket of water was poured on it, like many other industries. Buyers seem a bit more skittish these days, too, about taking the plunge. They're all asking whether they should wait...And in some areas, inventory seems to be building up...A Bethesda agent told me yesterday for example, that she got a lot of listings this past week...This time of year, up until Thanksgiving (the holiday period is traditionally slow, thru December and then January ...picking up in the spring. That's the traditional swing...Thanks for letting me know what's happening in your area. The more you guys share your local information, the more informed I am...

Bethesda, Md.: We are hoping to refinance our home and take advantage of lower interest rates. We were told how much the home must appraise for in order to avoid the dreaded PMI, which we got rid of two years ago. Will the appraiser be aware of what is needed?

Daniela Deane: Usually mortgage brokers will talk to the appraisers to get a ballpark figure of what a property will appraise for. Not to say they're in collusion, but brokers don't want to waste their time either if you're not going to get the loan you need. So, ask your mortgage broker if he thinks your property will appraise for the 80 percent you're talking about. Loan officers usually have personal relationships with the appraisers they use and this isn't a big thing for them to do.

Arlington, Va.: I want to buy a big house in the NW Washington, D.C. area. With prices the way they are, I think I want to rent out part of the house and live in the other part. How common is this arrangement in NW D.C.? Where can I find a list of homes with English Basements and are there any real estate professionals that specialize in helping people locate and apply for loans for these types of homes?

Daniela Deane: Like you, others are looking into that big house/English basement to rent idea. I don't think it's a bad idea, personally. Rents are still good and have been appreciating, although at a lower rate than they were over the past two years. The rental market is still tight, rental agents tell me. Find the agent that works the area you're interested in. They should be able to handle your questions about this, i.e. find out what kind of rent you could get, etc. Doesn't sound like a bad idea to me...Be sure you get one with a cute English basement though, not cavernously dark...Not something no one in their right mind would rent...

Sterling, Va.: I know most real estate professionals don't want to comment on how the real estate market/job losses will react to the Sept. 11 attack and the recession. But I'd like your honest opinion on what you think will happen in the next couple of months regarding home sales. Will prices drop? Demand decrease? Please answer!

Daniela Deane: Well, the next two months are volatile, certainly, and nobody knows exactly what will happen, do they? Are we going to attack militarily? Are we going to get terrorist reprisals if we do. But basically, local regional economists are saying that Washington usually, paradoxically, benefits from any war-type situation in the form of increased spending on defense, intelligence and security. We're still creating jobs here! Even though I know it's hard to believe, looking at the daily announcements of lay-offs. Prices are more negotiable than they have been; buyers are a little more skittish, so less out there; and there's a few more places on the market, depending on your area. This isn't true in all areas. I hope that helps.

Sterling, Va.: Hi Daniela! where can I find that 5.8 percent refinancing deal?

Daniela Deane: That is an amazing rate, actually! Are you sure about that? Come back to us and tell us where you got that....ARMS are now cheaper than traditional 30-year fixed mortgages. Not that many banks do the 7/1, but some do...The 5/1 is cheap now, definitely, not to mention the 1/1.

Washington, D.c.: Do you know if the $5000 tax credit has been extended for D.C. first-time buyers?

Daniela Deane: Yes, it has...It's still in effect now.

Alexandria, Va.: Any signs of panic selling since the Sept. 11 massacres? Have people decided that they just don't want to live in the nation's capital because of terrorist targeting? Are they fleeing to, say, Sante Fe?

Daniela Deane: No, haven't seen any real panic selling...And most people aren't moving, let's face it...Okay, I'm going to quit my job, yank my kids out of school in Arlington, have my husband quit his job too and move out to Santa Fe, where there are a lot less jobs than here...Now that doesn't sound like that great of a plan for me, does it? But then if anything else happens to us here in Washington, boy was that wrong, huh?

McLean, Va.: What would you say would be the best neighborhood to purchase real estate in as a growth investment, in Washington, D.C.? I’ve been looking in the Shaw and Columbia Heights neighborhoods. Unfortunately I have not seen a drop in prices.

Daniela Deane: Well, both Shaw and Columbia Heights seem to be good, but you have to be in it for the long haul...Things don't change overnight anywhere...The other night I was walking in Clarendon, for example, which really is changing now...But people have been talking about that change for about 20 years...Have you seen that mammoth project on 16th Street going up to Columbia Heights, the renovation of teh Roosevelt?? Gosh, that's huge...And developers are definitely buying there and have plans for condos, rentals, etc...And isn't there a nice view from up that hill there? Shaw too, though, is interesting, I believe. But don't expect to make pots of money in the short-term, say in 3 years or so...Gotta to be in it for the long-term. Let's face it: We've had huge appreciation the last 3 years...That can't and won't continue...

Arlington, Va.: Got any info on the new condos being built right next to the Clarendon Metro? Price? Hopefully not TOO ridiculously high?

Daniela Deane: Isn't there a lot of activity in Clarendon?? I don't know of any specific prices, but my guess would be on the high side, yes....Builders need to make their money too. And land prices have shot up. I know the townhouses there next to that mixed-use, retail complex that is going in started in the mid-400s....I'm not sure what they are now. Be prepared for high prices. You could be pleasantly surprised (although I doubt it...) And let me know when you find out there....

Washington, D.C.: Reports said that Gary Condit was selling his apartment for $130,000, only $11,000 more than he bought it for a decade ago. I thought the in-town market was supposed to have appreciated considerably.

Daniela Deane: It has...and I have no idea what Condit is doing...But perhaps he'd like to sell it quickly? Or not be known as a greedy seller? Just guessing here....

Clifton, Va.: Even before Sept. 11, the market had slowed in my neighborhood. Houses that sold before they hit MLS or within days of the listing have been on the market 60 days or longer and the selling prices have been reduced by $10-15 thousand. One house is now for sale for $10 thousand higher than the highest selling price. The agent and seller must be nuts. There is a similar house on the market for $30 thousand less and has been on the market for more than 30 days. Past performance isn't a guarantee of current selling price. Who knows how Sept. 11 will affect the market?

Daniela Deane: Interesting, Clifton....I would say that higher seller is nuts, actually, or just trying it out...If there's a similar house on the market for $30,000 less and really is better, like you say, let's guess which one is going to sell first....

Washington, DC: I know this question probably has many variables, but at what point (if ever) would it be a good idea to refinance, again? I started off at 8.375 percent on a $200,000 30-year (no points) in July 2000 and refinanced to 7.00 percent 30-year (again, no points) in March 2001. Any chance of 30-year rates dipping so low it would be worth my while (and money) to consider refinancing again?

Daniela Deane: Well, rates are definitely drifting down now...Averaging 6.64 last week on a 30-year fixed, the lowest in ages...BUT ....brokers say they probably won't go that much lower, although they will stay low for the rest of the year...Work out your numbers to figure out whether to refinance. How much will you save per month? How long will you be in the house? How much will it cost you? Do you need/want to take money out of your home to use for something else? All these questions need to be evaluated to decide whether it's worth it re-financing again...People are definitely re-financing repeatedly though. It's gotten a lot cheaper to re-finance over the years with all the competition among lenders and the Internet.

Fairfax, Va.: Hello. I'm moving. Darn the terrorists, I am even more encouraged to move now -- part opportunism on the great rates -- part rebuking the idea that we should run and hide. Anyway, we're planning to go on the market in the next two weeks and move back to Silver Spring. I just wanted to voice this thought -- it's a good time to move, right? Rates are down, the market is primed to sell, right? Buying might be problematic but I'm flexible. Regardless of whatever is going on, I'm moving. That's all I wanted to say. Thanks.

Daniela Deane: Thank you for sharing your thoughts...If you want to move for personal reasons, yes, move...But think also about remodeling or making your present home more what you want too. It's a hassle to move, isn't it? Look around and be sure there's somewhere you want to move to before you sell your place...

Capitol Hill: Probably the same old question, but here goes. I'm contemplating selling my one bedroom condo on Capitol Hill and buying a house in the same neighborhood. My real estate agent said that the inventory for condos is virtually nil, but there appear to be a reasonable number of houses available in my price range ($300 thousand). It sounds like I might be enjoying a sellers market in terms of selling my condo, except for the fact that it would have to have a contingency for finding a suitable new home. Any thoughts on this, either generally or specifically? Recent events considered, is the housing market on Capitol Hill going to remain about the same as it has in the recent past, with possibly some slowing in the appreciation of values?

Daniela Deane: Very interesting, Capitol Hill, that there are more houses for sale on the Hill now and that condos are still very tight...Agents are saying that the market in the District hasn't changed that much....And I think Capitol Hill is still a good bet. It's a beautful neighborhood, isn't it? I think your assessment is right....There will be a slowing in appreciation definitely (how can you sustain what we've had for the past three years?)...but if you want to live there for the long term (i.e. more than 7 years...) it's still a good investment....

Herndon, Va.: I have started looking at the real estate market to buy my FIRST house. I am looking at older townhouses in established neighborhoods. Unfortunately, I don't have enough saved for a down-payment to take advantage of the lower prices happening right now. What things should I be doing to be ready to buy something in the spring or early summer?

Daniela Deane: Save some money for your down-payment is my first suggestion so you can avoid PMI, which can run into some change there...

Upper Marlboro, Md.: What is your prediction on the interest rates? Do you think they will stay down the rest of the year? When buying new propety when can you lock into an interest rate?

Daniela Deane: Economists expect rates to stay low for the rest of this year. As long as uncertainty continues, i.e. the threat of war and whatever else, rates will stay low....When that goes away, rates will drift up, they say. Don't expect long-term rates to just drop precipitously though. They're not influenced that much by Fed actions, only short-term interest rates are...Mortgage rates are based on bond yields, which are governed by supply and demand. In times of uncertainty, investing in treasuries usually goes up and so mortgages go down...

Loudoun, Va.: Dear Daniela,

We have a huge mortgage with a very high interest rate (10 percent) and a three year pre-pay penalty. We bought at the higher end of our scale and it was a lot of property. Don't regret it at all as land is now very valuable out here and our property/home value has increased significantly in one year.
However, I hate paying this high interest rate when I hear how low the rate is elsewhere. We are in a better financial situation than when we first bought 3/2000 and had to take what we could get. What factors should be looking at in terms of whether it would be better to eat the pre-pay penalty and refinance at a lower rate. I've already figured out if we went down to 8 percent our monthly payment would be $1,000 less. Thanks so much!

Daniela Deane: You're in an interesting situation Loudoun...And I'm glad you're happy about your purchase though...I think this one is a numbers game, i.e. evaluating how much the pre-penalty payment is, how much you will save, how much it will cost you to re-finance, how long you plan to stay in the property (could that change?) and the like. If it were me, paying 10 percent would just gall me in this environment...Someone I know got 6.5 percent last week on a 30-year...That's 3.5 percent less than what you're paying, isn't it? That's amazing!

Arlington, Va.: In about a year, I want to buy a one-bedroom condo in North Arlington. I am looking at Colonial Village. What's the ballpark figure price for something like this, and how much would I have to put down?

Daniela Deane: Sorry, I don't know off-hand, but I do know that people who work in Arlington real estate think Colonial Village is a decent buy...It's so cute, isn't it? There are a lot of mortgage products out there that allow you to put down less than 20 percent and still avoid PMI, like the 80-10-10 for example...

Centreville, Va.: Back again -- the 5.8 rate was given to us by PHH mortgage. Well, that's what we were quoted over the phone at least. (I will say that we have had some problems with them... but then again, it seems that everyone has some kind of prob with their mortgage company at closing. I'm assuming that frustrations to close on a home loan are par for the course!)

Daniela Deane: Thanks Centreville...that really seems low you know...I'm not sure everyone has problems with their mortgage company at closing....

Alexandria, Va.: If you're looking for anecdotal evidence on the state of the market, in my neighborhood things don't seem to have changed too much. I live in Alexandria near Fairlington and a townhouse went on the market the Thursday after the attacks and sold that weekend for approx. 3 percent over the asking price. So there are still buyers around in the over $200 thousand townhouse market.

Daniela Deane: Thank you Alexandria...The market is still very good in the lower price ranges, I've heard, although someone speculated yesterday that it could cool off there, as more low-end jobs are lost in this area...for example, in the hotel industry, aviation and restaurant...Here's a little anecdote for you: I grew up in Shirley Park apartments off 395 and Glebe near Gunston Middle School after my parents immigrated here from Italy...And my best friend, Becky Rios, lived in Fairlington, so I spent a lot of my childhood there and loved it! (who cares, you're asking now...)

Washington, D.C.: Hi Daniela:

Why are there such hugh disparities in prices between seemingly identical buildings? I saw a listing for a two bedroom, two bath in the Broadmoor for $430 thousand. I also live in a co-op near the Broadmoor and have a two bedroom, two bath place. My building has more amenities than the Broadmoor but my apartment would sell for at least 175 thousand less if I put in on the market?

Daniela Deane: Co-ops don't command quite the same prices as condos, although co-ops have also seen healthy appreciation over the past three years, haven't they....And some of Washington's most beautiful buildings are co-ops...I did a big story on co-ops earlier this year, main story in the real estate section, that might be interesting to you.

Alexandria, Va.: A pet-peeve of mine is that the real estate web sites (both the industry sites like realtor.com and homesdatabase.com and the individual sites like Weichert, Long & Foster etc.) don't list the house's street address. Why don't they do this? It's not like you're going to be able to buy the house without using an agent (at a minimum the listing agent). With the Internet explosion, people are much more self-reliant and doing a lot of real estate research before bringing an agent into the picture. The street address of a house allows drive-bys without wasting anyone's time. By the way, some agencies do it, O'connor Piper & Flynn, Pardoe. It's a big help.

Daniela Deane: Thanks for that information...I think they may say they leave it out for security reasons, but you know what, I've never really asked that question and it's a good one...I agree with you that it makes life a lot easier for a prospective buyer and I'm going to ask them that specifically now...Ask me again in a few weeks and I'll know...

Daniela Deane: Folks! It's 1:00, my fingers hurt and my stomach is growling...Have a great week-end all of you (they're saying it's going to cool off again), thanks so much for coming! I couldn't do it without you (gosh that's a stupid observation...) Talk to you in two weeks!

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