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Welcome to Real Estate Live, an online discussion of the Washington area housing market, featuring Post real estate writer Daniela Deane.

In her live online discussions with the audience, Deane discusses the specifics of the market, from condos and investment properties to contracts and mortgages.

Deane has covered Real Estate for The Washington Post since 1999 and has worked as a reporter for more than 20 years.

The transcript follows.

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: Hey there folks. Nice to be hear with you. Lots of questions here, as always, so I'll waste no time getting started.

Springfield, Va.: Hi,

Can you please tell me, in relation to office rentals, the meaning of $17 per square foot? Is that the price per month or per year?

Thanks,
Tony

Daniela Deane: In office rentals, that's the price per square foot per year. That's really cheap. Remember that price in office rentals has a lot to do with what services are included, or not included in the price. And of course, location, location, location applies with office rentals too.

Derwood, MD: Daniela --

Two questions today: First, the townhouse next door to mine recently sold. How soon before the price information is added to the online Washingtonpost.com's real estate transactions database?

Should I do anything special to welcome my new neighbors, other than introducing myself to them?

washingtonpost.com: Daniela, here's the answer regarding updating the home values database: Recent sales data is updated monthly or bimonthly, depending on the city or county.

Daniela Deane: My editor at post.com answered the first part of your question...As to what to do to welcome your neighbors, do what feels comfortable to you. When I moved in to my house in Arlington, my next door neighbor brought me a bottle of a wine and a cake she made...I thought that was incredibly nice...And it had never happened to me before. Depends on if you want to make friends or not, I would say....

Nashville, TN: Does it always make sense to get pre-approved for a mortgage? This summer we will be relocating from Nashville (where we own a house) to the Virginia suburbs of Washington, D.C. and have not yet determined if we will be able to find something we can afford. Does getting pre-approved for a mortgage help one sell their home, even if they are relocating to another state?

Daniela Deane: As far as I know, getting pre-approved for a mortgage to buy a home has nothing to do with selling your home in Nashville. What has to do with selling your home is putting a realistic price on it based on what comparable properties have sold around you. Now, for buying a home here, yes, that's something you should do. It's not hard. It just involves getting a letter from a broker or lender saying what you can afford.

Park View, DC: This may be more of a psychological question, but it's driven by our recent decision to buy a townhome in the eastern Columbia Heights neighborhood. Ours was one of about five for sale last fall in the $160,000-$200,000 range. Today there are two (same size, slightly better views) for sale above $290,000.

The real estate prices are going up over here, but we've still got major crime issues (e.g. the open air drug market that my front porch looks out upon). The crime that so many were proud to drive out of Adams Morgan and Mt. Pleasant seems to be hovering over our little community east of Georgia Ave.

We're a northwest neighborhood within walking distance of two metro stops - so many people advised us that we couldn't go wrong. But the flagrant crimes being perpetrated on my front walk are not something we considered (nor did our real estate agent - at least he didn't say anything about it). I'd just like your perspective - did we make a mistake? How much change can we expect and in what period of time? Is a $290,000 townhome in this neighborhood really going to sell?

Daniela Deane: I feel for you and I'm sorry you were surprised by the situation in the neighborhood where you bought. This is why I advise people to go to the neighborhood they're considering in the day and at night to gauge their comfort level. Agents aren't going to tell you these things...Anyway, that's all water under the bridge for you, isn't it? Columbia Heights is changing a lot, that's one thing I can say...It looks like prices have gone up in your neighborhood since you bought, so that's great news. (except when it comes to tax time...more about that later...). Don't worry too much about what your house will sell for when you want to sell...You can't really know that so it's useless to spend a lot of time worrying (i'm a worry-wart, so i know well this trap)...If you can't hack it, you'll have to move, won't you? .. otherwise, don't worry about resale price now...

Washington: Hi Daniela -- you ROCK! Your chats should be weekly, not biweekly! Anyway, here's my question: Why are people so freaked out over the threat of war with Iraq when housing prices in D.C. did just FINE during the 40-year Cold War?

Daniela Deane: Thanks....Well, what about if we get some sort of attack here, not that I think in any way that we will, but heck, we've all been thinking about it, haven't we? .. How can we not when they tell us to buy duct tape? Things have changed a lot since the Cold War, haven't they? It's a different world out there, as evidence by Sept. 11...sometimes a very scary world...

Washington, DC: An article in USA Today yesterday had Alan Greenspan predicting that interest rates would rise this year. Do you see this happening soon? For various reasons, I probably won't close on my purchase until late May or early June. My lender can lock in a rate for free for 60 days, but charges a fee for a longer lock-in. He recommends waiting until I'm within the 60 day period to lock in a rate without the fee. Do you think it's safe to wait? Or am I running the risk of a higher interest rate?

Daniela Deane: Yes, Greenspan did say that. And that's what economists are saying, that interest rates will edge up slightly over the year, but still stay low. They're still as low as they can be, aren't they? If the economy stays sluggish and there's continued uncertainty, rates will stay low...Nobody knows what's going to happen with rates...But speaking strictly for myself, I probably wouldn't pay for the longer lock yet...You can lock pretty soon, from what you've told me...

Washington DC: Hi Daniela:

What are your thoughts on the Capitol Hill market? Prices have risen substantially in the last few years -- do you believe the market is running out of steam, or is still a good place to buy vis a vis some of the more gentrified areas (Georgetown and NW Dupont/Woodley Park)?

Daniela Deane: I personally think Capitol Hill is adorable...It has some of the nicest housing stock in the city, in my view...Appreciation rates will level off this year, most economists say...They're predicting appreciation rates of more along historical lines, i.e. a bit above the inflation rate. For this area, most economists are predicting appreciation of somewhere between 4 and 7 percent, which is still good. We couldn't sustain the appreciation we had been seeing. Agents are telling me though that not that many houses are coming on the market this spring (is it spring already?). When there's low inventory, prices tend to keep going up...Of course, thrown into all this is the probable war with Iraq and what that mean to us here...

Arlington, VA: Hi Daniela-

Is there any disadvantage to a 80-15-5 mortgage for first-time homebuyers. We'd like to avoid PMI and can afford a decent mortgage, but the standard 20% downpayment for the mortgage level we're looking at will take quite a while to save. We have a decent amount of cash in the bank (enough for 5% and closing costs) and would like to take advantage of the low interest rates (knowing the rate on the 15 won't be quite as low as the rate on the 80). Just wanted to see what the downside would be. Thanks so much for this discussion.

Daniela Deane: There isn't a whole lot of downside there, if that's the cash you have. And you know what?...The least amount of money down makes you the best return on investment...For example, if a house goes up $50,000 and you put down $5,000 on it, you've made $45,000 on your investment (not counting closing costs, agents fees and the like)...If you put down $15,000, you've still only had the same appreciation. See what I mean?

alex. va: for someone thinking of making a career change to real estate, what kind of advice and insight can you provide?

Daniela Deane: I'm not sure what area of real estate you're interested in, but talk to people who have done it and peruse your local book store for books, basically find out what you can...There are plenty of books about first-time agents, for example...And plenty of agents to talk to!!

Alexandria, VA: I am considering selling my rental 2-bd condo - what questions should one ask a real estate agent when interviewing one - should this be done in person or over the phone. I've gotten solitications from realtors asking if I am interested in selling - should I contact them?

Daniela Deane: The standard advice is to interview three agents and pick among those three...See if you have chemistry with one, is my view....Ask them how they plan to market it, open houses, brochures, what...How many houses have they sold or bought in the last year...Do they work mostly with sellers or buyers? ... What is their area of expertise?...Even though many agents will say they know all areas, that's impossible...Agents often know one area very well.

Alexandria, VA: Daniela - I tried sending a question with illustrative links to Realtor.com, but I think that failed, so here is my simplified query:

Who would pay $250-$350K for the ugly, WWII-era, 2br/1ba brick boxes in the most crime-ridden sections of Alexandria? Do people think it's worth the price just because it's technically in the Old Town zip code, or are insane prices like these mainly for developers who want to buy tear-downs?

I know, location x 3... It's just so dang disheartening to lower-to-middle-income, wannabe-close-in-homeowners like me. Thanks for the insightful chats.

Daniela Deane: Who would pay? Someone who can't afford a more expensive house in perhaps a nicer neighborhood (i don't even know which neigborhood you're specifically referring to), but still wants to get into the real estate market...Someone who doesn't know what the crime situation is there (like our previous clickster)... Someone who grew up there...There's a buyer for every house, agents insist. It's a matter of price.

Southern Maryland: What improvements would add more value to a house if you plan to sell in a few years? Upgrading kitchens and bath? Adding decks? Finishing basements? Spiffing up landscaping?

Daniela Deane: I would make the improvements that make me happy, simple as that, what I want in my house. Would you rather have a new kitchen? Or a finished basement? The answer is different for every homeowner...Kitchens and baths tend to give the highest return on investment, but there will be a buyer who loves your new deck or has to have a finished basement for their kids...Do what you want, I beg you. Don't just think about resale...There will be someone out there who has the same opinion as you....

dc: I don't think the economy will improve any time soon, and so I believe interest rates will stay low. I'm praying prices in the Maryland burbs will even go DOWN. could this be? The price inflation last 18 months really killed me as a buyer- and I'm dying and ready to buy- but can't really pay the inflated prices....

Daniela Deane: Nope...I don't think prices will go down, barring any unforeseen circumstances...And I feel for you with these prices...There is no way I could afford my own house anymore...

Springfield, VA: Fairfax County home tax assessments are out of control! Is there any relief in sight?

Daniela Deane: All Washington area assessments have had huge increases...that's what everyone has been telling me, and what I've seen in my own mailbox...One of my condos in D.C. got assessed $100,000 higher, can you believe that? It's going to screw up all my investor numbers..sigh..(was that a stupid buy?)...You can appeal..But let's face it: Higher tax assessments are the flip-side to the price appreciation that's made all us homeowners happy. What do they say about there being no such thing as a free lunch? Local governments want to get in on these high prices....

Re: 80-15-5: Your 15 interest not necessarily would be markedly different from 80. Rate for a second mortgage is determined basically solely by your credit score. If it is good enough, the differnce in rates between 80 and 15 would be .5% or so.

Daniela Deane: Is our 80-15-5 person still on?

The least amount of money down...: That's "Insane Troll Logic" Daniela. You aren't factoring in the interest paid on the difference. If you're assuming the "insta return" of the past few years, maybe. But over even a moderate amount of time you're losing money.

Daniela Deane: Okay...yes, of course, there's interest costs...I knew that answer would rile you guys up...But basically, what makes real estate a good investment is the leveraging aspect of it. You put down an amount of money but you get appreciation on the entire house price...See what I'm saying?

20002: As for what you said about war with Iraq - I'm thinking that if there's any kind of attack on DC, all the homeowners here will lose evrything since there's no war or terrorism or nuclear homeowner's coverage. And DC IS a prime target. That doesn't seem to be slowing the market down any, though.

Daniela Deane: Can we all just hope now that nothing happens here, please...I can't even stand this discussion. It scares the devil out of me, seriously.

Del Ray Alexandria: You're article this week about appreciation rates in DC, VA, and MD was very interesting. I was surprised to see how much appreciation DC has seen. Why do you think that is? People sick of commuting from far away? I'm curious to know if there are more detailed data for geographic breakdowns. Loudoun county isn't the same as my neighborhood, so a single VA appreciation rate is hard to interpret. PS...your boss should allow you to do this every week!

Daniela Deane: In periods of appreciation, most cities tend to appreciate more rapidly than their suburbs, economists tell me...d.c. was undervalued for a long time...it was like a lightbulb was turned on and people went, hey, we've got a nice city here....yes, people are also sick of commuting and traffic isn't getting any better...that data came from a federal agency that looks only at metro areas, not individual neighborhoods...thanks so much for reading!

Washington, DC: Just got my tax bills for three houses in DC (Dupont Circle, Burleith, and Capitol Hill). The increases from last year are about 75%. I thought the DC Council voted to cap year-to-year increase at 25%. What's going on? Appreciate any advice here.

Daniela Deane: You've got 3 houses in D.C? And you've seen incredible appreciation in those areas....You gotta give some of it back to the city, mate!

Maryland: Hi Daniela. Where are all the new spring listings? Seems there are awfully few. I guess it could be the weather or threat of war. Any idea when things will pick up?

Daniela Deane: The spring listings haven't showed up, agents tell me...One big reason could be that people can't afford to move..or don't want to pay the high prices to move, so are adding on instead...It's too early to say what the spring market truly is (I've still got snow all over my yard.) We should know in the next month....

Farifax, VA: I have a question about the return on investment answer you gave. If I put $5,000 down and the house goes up $50,000 then I get $55,000 when I sell. If I put $15,000 down and the house goes up $50,000, don't I get $65,000 back? And I have paid less in interest to the bank, thus saving money each month. And with the crazy stock market at least with the house, I have a pretty good chance of not losing money. What am I missing?

Daniela Deane: I'm never going to get into this again!!!...You have to subtract what you put in, no, to calculate what you made? You get 65,000 back, but you've put down 15,000, right? Anyway, what I was trying to point out was the power of leveraging....Putting down an amount but getting appreciation on the entire house so that the bank's money works for you too..But of course there are interest payments and closing costs and agents fees and whatever else....Real estate is the steadiest, least risky way for most American households to build wealth...Now anyone want to argue with that???

Alexandria, VA: There certainly are spring listings in my development. A ton of houses (probably 10%) just went on the market in the last couple of weeks. I talked with two of the sellers--one went in 11 days, the other in 2 days. Just hope mine goes as quickly.

Daniela Deane: That's interesting and not what I'm hearing...I was hearing that there are lots of listings in the million-dollar-plus range only....Where are you in alexandria?

alexandria va: FYI,
My real estate assessment on a townhome in Fairlington went up by 37% this year. Ick. It's almost as high as the market value (which I know is what the jurisdiction is shooting for, but really, do you know ANYONE who has an assessment that's as high as the market value?)

Daniela Deane: Some seem to be approaching it...but generally, they're lower! (So I guess we have to stop our whining....Heck, I'm whining along with you...)

Alex, Va: Um, if DC is hit by a nuclear attack, I don't think the value of my home will be my top concern, as I'LL BE DEAD!

Daniela Deane: Good point...Ohmigod.

Alexandria, VA: Nobody in DC should care how much your house will be worth if we get attacked because we won't be around to sell for the profit we've made. Live a little and buy the house already. Sheesh.

Daniela Deane: That's my thought, but I'm being optimistic...(what else can we be?)

Alexandria, VA: My assessment went up $60k from last year. Sigh. Oh well. My house also goes on the market tomorrow and I'm leaving the area.

Daniela Deane: So you really gotta stop your whining!

Alexandria: Daniela, I love your chats. Do you go to any events or things where your admiring readers might get to meet you?

Daniela Deane: Now you're scaring me....What if I don't want to meet you? (just kidding, I do...) One day you may find me wandering your neighborhood, you never know....Seriously, I go to conferences, builder's shows and the like, but I'm not sure anywhere you go...Starbucks? I go there a lot.

Alexandria, VA: I'm the Alex person who's seen several houses go on the market in my neighborhood--Townes of Cameron Parke on Eisenhower Avenue. I think it's a similar situation in Cameron Station. It's the same thing I've seen every spring since I've lived here.

Daniela Deane: Thanks for sharing.

Germantown, MD: I am so depressed at these exhorbitant prices. I do not think I will buy any time soon or maybe never. I pay a really great rent and don't have to worry about any maintenance expenses. The only down side is no equity. However, I am investing the difference in the rent vs. mortgage costs and may come out better in the long run. Am I missing anything?

Daniela Deane: Real estate is the steadiest, least risky way for most American households to build wealth. That's what you're missing. But I understand your depression. Truly.

Arlington, VA: Do funds in a 403b (or 401k) count towards cash reserve requirements? Thanks.

Daniela Deane: You're talking about for a mortgage? Yes, they generally do...But who the heck wants to pay the penalities and taxes associated with getting the money out? And who has any money left? (I don't...)

Washington, DC: What should I look for if I'm interested in a home equity loan to upgrade the kitchen in my condo? I know there are several options. How does one "shop around" for such a loan?

Daniela Deane: Talk to a mortgage broker.

Alex, VA: Just an FYI: prices on townhouses in my neighborhood continue to go up. Not as fast as they had in the past (about $120k in 2 years), but still creeping upward. Most sellers are getting full asking price.

Daniela Deane: Thanks for sharing.

Insane Troll Logic: Don't worry Daniela. Most of us smart ones out here understand about low down payments being the best bet. If other people want to stay poor I say let 'em.

Daniela Deane: More on my stupid decision to talk about leveraging!

Re: 80-15-5: See if you can get a no-PMI loan for 95% financing. I know they exist, since I got one (and a competitive rate) for 100% financing at Allied Mortgage. Otherwise, the 80-15-5 is probably your best option.

Daniela Deane: More advice on the 80-15-5...I'm not saying another thing!

Alexandria, VA: I don't think I'll be that concerned about my homeowners insurance in the event of a nuclear attack. Think about it, my fellow posters.

Daniela Deane: I hate this subject, but everyone is into it....

Del Ray, Alexandria, Va.: Daniela, I know this no one's business but yours, but I look at the online photo of you and the bio which says you've been a reporter for 20 years, and my reaction is "No way!" Did you include the junior high and high school papers in that 20-year figure?

Daniela Deane: How could I possibly resist this question, you tell me....But yes, I've been a reporter for 23 years, since I was 25...You do the math...(Man, I'm depressed now...)

Del Ray, VA: My tax assessment went up by over 33% this year (to close to $600,000 for a property I bought for $250,000 only 6 years ago). I'm not sure if I should appeal or bless my good fortune when I go to sell. Do you know the success rate in Alexandria when a person appeals their tax assessment?

Daniela Deane: Oh my....I don't know what the success rate is at all..Should I do a story on appealing your tax assessment? I think I might...

Arlington, VA: I asked the question about cash reserves and a 403b account. Thanks for the quick response. I'd like to follow up. Would I have to take the money out (and thus pay the penalties) before I can count it toward my cash reserves?

Daniela Deane: No.

Falls Church, VA: I just wanted to point out that, with everyone waiting for the spring market offerings, I think some older listings have real potential. My husband and I looked at a place near the WFC metro that had been sitting for 2 months. The price had been cut, but the place was in very good shape. Result? We offered asking price, put in a home contingency clause, and guess what? Got the contract accepted without a bidding war or escalation clause. FWIW, we saw several older listings that had great potential - and aren't likely to get into a bidding war!

Daniela Deane: Thanks for sharing, Falls Church....

Nuclear attack-: OK, but what if your house is destroyed by a terrorist whose parachute didn't work when he leaped from 10,000 feet while you're at work? You still gotta pay the mortgage and the insurance co. won't pony up!

Daniela Deane: Stop!!!

401(k)s: remember, if you take cash out of your 401(k), you have to pay taxes and a 10% penalty - even for a first time home purchase. You can take cash out of an IRA penalty free (but still taxed). In otherwords, to avoid the 10% tax you MUST roll it over.

Daniela Deane: More on our lousy 401Ks...

The District: Do you have an opinion regarding the McLean Gardens condo community in Cleveland Park?

Daniela Deane: I don't...I try not to give opinions like that..See what happened to my leveraging opinion? I love Cleveland Park though...Truth is, I think D.C. is beautiful and has many beautiful neighborhoods....It may not always be as fun as New York, but what the heck! We live here....

Hong Kong, China: Ms Deane,

I'm being transferred to Washington this August and need to find a four-bedroom home in Virginia or Maryland for my family. We're doing a worksheet to find out how much money to put down and how big a mortgage we can carry.

We'll have one first grader and a toddler, so I guess looking for a good school is the first step -- right? But how do we start comparing Washington-area public schools? Many thanks! Worried working stiff

Daniela Deane: I still miss Hong Kong 9 years after leaving...I love that city....The expatriate life is just so much fun, isn't it? ...anyway, enough about that...Brokerages will give you school reports...It's good to look at the high school in the area, the test scores, kids going to colleges, etc...The other schools feed into the high school...

Daniela Deane: And Hong Kong, there are plenty of good school districts in this area. You don't have to spend a bundle for private school is my view.

capitol hill: my tax assessment just arrived and it's exactly what we paid for the house last year. oh, well, i guess that's an honest system, eh?

Daniela Deane: I guess...It hurts, though, doesn't it?

Bethesda, MD: When interest rates get to where they are now, there's another consideration-- reductions in the rate don't have as big an effect on the monthly payment-- It turns out that at about 5.5 percent the total amount you pay in interest (over 30 years) is about the same as the principal.

Daniela Deane: A thought on rates...

Washington, D.C.: I spoke to a real estate agent on Tuesday who said that the D.C. market is softening. I maintain that this is a unique market, a wealthy market and that any minor percentage change, up or down, is no real big deal. Your thoughts?

Daniela Deane: Price appreciation is slowing down...There are some price reductions out there and more wiggle room in negotiation (before there was none...) But inventory is still low and so good properties with all the bells and whistles people want in good locations are still selling well....There may not be 6 contracts, but two, like that......

Daniela Deane: That's it for today, folks..Thank you so much for your thoughts, experiences and efforts to keep me on my toes...Whew...I'm tired! Come back in two weeks, same time, same place. Ciao!

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