Real Estate Live
Maryann Haggerty
Washington Post editor
Thursday, March 25, 2004; 2:00 p.m ET
Welcome to Home Values, a special edition of Real Estate Live. In this online discussion about the local housing market, Washington Post real estate editor Maryann Haggerty will answer your questions about local sales prices and tax assessments. She'll also explain local housing trends, such as price fluctuation from county to county, and what your home is worth - emotionally as well as financially. Haggerty has been real estate editor of the Washington Post for more than four years and has worked in various editorial capacities at the paper since 1987. She currently oversees the Saturday real estate section and coverage of related residential issues 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.
Maryann Haggerty: Greetings on this lovely spring afternoon. Sorry for the slight delay starting; I had a technical problem.
If it's spring, then the hot spring housing market can't be far behind. But how much hotter do we really need it to get?
In yesterday's special Real Estate section, we reported on median sales price cahnges, Zip code by Zip code, around the region. Bottom line, prices went up 17.3 percent last year, on top of 16.5 percent the year before. That's one heck of a lot of appreciation.
If you haven't seen the section, it's probably in your recycling bin. I thin the paper version is pretty cool but you can also check it out on line. (There were some URL glitches this morning, but I'm told they have been/are being fixed.)
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Alexandria, Va.:
Hi there...My wife and I are looking to buy a 2 bdr townhouse in late June. when should we get pre-approved? Also, how do we go about choosing the right lender ? Thanks very much.
Maryann Haggerty: Check out your credit rating & get pre-approved starting now. June is not far in the future, & there can be quite a bit of paperwork,especially if you haven't neatened up your financial files recently. As far as lenders: Shop around. I have a preference, personally, for lenders that I've heard of, ie, not mom-and-pop.com...
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Silver Spring, Md.:
Hi. Love your show. My question is simple: how long should you go before refinancing your home? I bought a home last year on a 3 year ARM and am thinking about refinancing now to extend the ARM anothr 5 to 7 years (by which time I expect to have sold). As such, I do not have a lot of equity in the house yet. What do you think?
Thanks
Maryann Haggerty: You need to examine your own situation & do the math. If rates now are favorable for the refi, and you'll be in the house long enough to amortize any upfront costs, go for it. I know people who have successfully re-fi's practically every 6 months.
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Washington, D.C.:
My husband and I are on the verge of selling our current (first) house and buying a bigger one. Can you tell me what expenses are involved in paying off my current mortgage? I see the notation on the statements that the principal balance is not the amount required to pay off the loan in full. Besides interest, what else is there? I'm just trying to get a feel for what kind of cash we'll get out of our current house to put into the next. Also, how does the commission payment work? If an agent's commission is 6%, do both the buyer and the seller pay that on each transaction or is it split between the parties? Thanks!
Maryann Haggerty: --The payoff is pretty close to the remaining principal, but not spot-on-to-the-penny, which is why the disclaimer on the bill. The payoff will be whatever principal remains on closing day.
--The seller pays the commission. Period.
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Washington, D.C.:
Maryann, thanks for taking questions! This real estate market is nuts. I bought my home on Capitol Hill in 2001 for $300k. Other homes on my street, which are a little bit bigger and have central air (but not a separate dining room), have recently sold for $450k-$479k. This makes me think that I could probably get at least $400k for my house. My question is this: what is the value of central air in this market? Is it something that we should consider stalling before putting the house on the market? I'm actually inclined to wait until the fall to even list the house because I think that the lack of a/c would turn off potential bidders (for what it's worth, our two window units do a great job cooling the place).
Maryann Haggerty: Hey, neighbor. I can't put a $ value on central air, tho I bet a real estate agent or appraiser could. What I can tell you is that you live in one of the few neighborhoods in this region where lack of CAC won't terrify buyers. People shopping on the Hill know that not everyplace has central air, & that not all of our houses are built to allow it.
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Arlington, Va.:
Hi- I've thought of trying to buy a little place near the water as a weekend get-away (but, as a self-employed person, I definitely don't have a high income!). I'm wondering what your take is on real estate values in the little beach towns in Anne Arundel and Calvert Counties. As elsewhere in the area, I realize that values in those communities have increased quite a bit over the last year or two, but don't have a sense of how quickly they're escalating or of the long-term picture. I'd also welcome your thoughts about which areas near D.C. might be best to look at for affordable places near the water.
Maryann Haggerty: Again, take a look at yesterday's section; we go out to AA & Calvert counties.
Prices there seem to be measured in commuting time to the Beltway. If it's a convenient commute, then the prices are those of a bedroom suburb. If the commute is unbearable--few roads, etc.--then less escalation. I still see bearable prices, for instance, in the older neighborhoods of North Beach. Of course, those might be influenced a bit by the fact that many of the town's waterfront homes were badly battered last year by Isabel.
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Bowie, Md.:
When is the party going to stop? It will eventually - just as the stock market of the '90s did, and all must at some time...question is when? Also, how high do you expect rates to go once China and Japan stop floating American's overindulgence in such record amounts? And how fast would the rates rise?
Maryann Haggerty: I have officially stopped making this prediction. For nigh on 4 years, I have been saying publicly that the bubble is about to burst. Shows you what I know.
So now, I have new mantras: This Time, It's Different. What Goes Up Does Not Necessarily Have To Go Down. (Maybe I need even MORE coffee today?)
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Dale City, Va.:
My credit score is in the 730s, but I don't have a lot of money to put down - in fact, none! Looking to buy a house under $160K (list price). Do you think I'll be approved to purchase a home w/no money down? Also, what is your opinion on an "interest only" loan if I only plan on being there for a year or 2? I just am tired of paying rent and kicking myself for not having a house that I can make some money on.
Maryann Haggerty: For absolutely no money down, expect to pay a higher rate & demonstrate very strong income. (Or qualify for a plan aimed at increasing low-and-moderate-income homeownership rates. Check those out with your state/county housing finance agencies. Soem are great.)
As far as interest-only: If you truly believe house prices are going up up up, why the heck not? But beware of the problems should things slow down even a little. When you sell, you have upfront costs, such as commissions. And if the house price hasn't climbed, then you better be ready to bring cash to the closing table.
Experience speaks here: A looming balloon payment when prices are falling is not something that helps you get to sleep at night.
Wait. I forgot: This Time, It's Different!
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Hyattsville, Md.:
There's talk of making Mt. Rainer, Brentwood and Hyattsville into an Arts District...do you think that the buzz about this is getting around? It seems to be moving at snail pace.
Maryann Haggerty: Well, we're certainly writing enough about it all over the Post. But the nature of these things is that they DO move at a snail's pace. Rewards go to early risk takers, but one risk is the time horizon. Ask the folks who bought in Logan Circle in the '70s or '80s.
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Washington, D.C.:
This may seem like a dumb question, but I'll ask it anyway! How do I go about putting my house on the market? Do I interview potential listing agents? What type of information will/should they give me? If you have any good books on this topic, I'd love to hear it! I've obviously done the buying already, but the selling has me worried.
Maryann Haggerty: Not a stupid question.
Get back into the groove of reading the Real Estate section--we've got loads of advice for you.
In the meantime: I like Home Selling for Dummies. (It's almost as good as the Buying version.)
Ask among your friends/neighbors for recommendations for agents. Also look at open houses to see who's active in your neighborhood. Then, interview at least 3 agents. Believe me, they'll be happy to spend the time. They shuld give you a full presentation, including a comparative market analyis (what comparable houses have sold for); a run-down of what exactly they will do to sell your house, & what they will expect from you. They should also give you references, plenty of 'em. Read over the presentations. Check the references. Think about your personal chemistry. Then, sign a 90-day (NOT 120 day) listing agreement.
Above all, do not feel rushed or pressured. You are in the driver's seat here.
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Washington, D.C.:
My partner and I are looking to purchase a house. Given the current real estate market and economy, do you think we are buying at the wrong time? Our thoughts are that the real estate market is overpriced, and once the economy turns the corner, the market will correct itself with housing values falling.
Maryann Haggerty: Like I said, no predictions.
Buy if you want to settle down & own a house. At least you'll put a semi-freeze on your housing costs, which is more than you can say about rents. If prices DO go down, you may be stuck in the house for a while as they work their way back up. But you'll have a roof over your head, & you can paint the walls any color you want.
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Providence, Rhode Island:
I am in the military and moving to the D.C./Md. area in June, likely for only 4 years. I'm getting a decent rate on a 7 year ARM, but I'm nervous about this market. I've found a house in the $230-240,000 range but they're both 2 BR/2 BA w/ fireplaces in Burtonsville. I've read people are estimating this market will stay steady through 2004, but what are your thoughts on selling a 2 bedroom 4 years from now? If necessary could I rent it out to cover a $1500 mortgage?
Maryann Haggerty: As military folks know, your buying/selling situation is particularly precarious. Four years is more than anyone can predict into the future, but it's also a shorter time horizon than conservative advisers counsel for buying, ie, you're secure if you're staying for 5 years or more, but in shorter times, fluctuatins in the market can be a real killer.
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Washington, D.C.:
Of the close-in suburbs in Md. and Va., which do you feel are nearing the top of the market and which do you feel will going to escalate rapidly?
Maryann Haggerty: Oh, let's give this a try, silly as it may be:
The upper-upper neighborhoods may be topping out. There really aren't an unlimited supply of people who can afford Bethesda or Great Falls.
However, in the less-snooty neighborhoods, there's more room for escalation. Think Silver Spring. Think, please, about many parts of PG County, where it truly is possible to buy a house close to Metro for under $200k.
No, it's not Bethesda. That's the point.
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Prince William, Va.:
I think there has been a lot of irrational exuberance in this chat recently. Yes, home values here are being driven by job creation, but what is creating the jobs? From what I read, it is federal (deficit) spending. Those dollars create not only federal jobs but federal contracts which lead to jobs in this area. Pressure seems to be building to cut federal spending and I'll bet after the Nov. elections Congress will be more stingy. In 2005 we could have net job losses and higher interest rates, but people seem convinced that they have to buy real estate now because it can only get more expensive. I would be very interested in hearing opinions about this.
Maryann Haggerty: Well, I think you've heard mine.
Another thought: Somehow, whether federal spending goes up down or sideways, the federal/contracting job market here does tend to remain very stable.
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Mclean, Va.:
Regarding the housing bubble. I was waiting since last october for it to pop since I sold my big 500k house in Fairfax. But guess what? The prices kept rising so i just recently closed on a small house in falls church city. I couldnt believe the competition, I struck all contingencies, paid all cash and still barely got the place. I hope that this housing market continues for at least one more year cause now I am back in the market.
Maryann Haggerty: More bubble thoughts...
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Ashburn, Va.:
I just bought a new home in Lansdowne, Va. I am considering adding a porch ($4000), upgraded carpet ($3500), and upgraded carpet pad ($1500) as options. I have two very young children. Do any or all of these options make sense as far as future resale?
Maryann Haggerty: What are your neighbors doing? If everyone has a porch, you should consider one too.
As far as the carpet & carpet pad: Those really aren't resale considerations. If you're there any length of time, normal wear-and-tear will take care of that. The prices seem very reasonable, though, for something that tends to make life much mor pleasant, ESPECIALLY that carpet pad upgrade.
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Falls Church, Va.:
My wife and I tried to refinance our home with a mortgage broker. The mortgage broker did not come through with the refinancing. We payed him $318.00. We asked for refund. He told us since the check was cashed there was very little he can do. What would you recommend my wife and I do? Should we expect to get a refund since the problems were on his side.
Maryann Haggerty: Push him, in writng. Push his boss, in writing. Report him to the county consumer protection agency & to the state agency that regulates his license.
If that doesn't shake the $318 out of him--& it probably will--then I go with the regular advice from my columnist Bob Bruss: Take him to small claims court.
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Herndon, Va.:
I'm looking to buy my first house by the end of the summer or in the fall.
I have 30k of grad school debt at low interest rates, 35k saved up, and I make 45k/yr right now. I currently live at home, and can save $1600 a month or so towards a house.
I don't know what my credit score is, but I haven't had much credit in the past: I own one credit card which I pay off each month, and I paid cash up front for my car (no payments).
I want to wait until I have 40k saved, then use that as a downpayment, financing another 160k or so.
Think that's realistic?
Maryann Haggerty: Running all your numbers will take more time than I have today, so you should ask a lender to do that.
However, I can't see any justification for putting more than 20% down on a first-time home purchase. In fact, I usually tell peopel to put a lot less down--consider an 80-10-10 mortgage or a PMI mortgage. You have absolutely no idea how much money you spend during the first few months in a house, & you need a cushion. (Well, YOU may have no idea, but the folks at Home Depot & Ikea have a very very good idea.)
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Capital Hill, D.C.:
I have been trying to find a house for the last 6 months and have put a bid on 5 house and the last one when 100 over asking. I'm thinking of giving up in DC and try Hyattsville. I can't spend more than 220 and need two bedrooms and to be by the metro. What do you think of Hyattsvile? What areas of Hyattsville would your recommend?
Thanks,
Homeless
Maryann Haggerty: I don't know individual Hyattsville neighborhoods, so I'll give you the all-purpose pick-a-neighborhood advice:
Go there. Drive & walk around, at all times of the dat/week. Talk to neighbors who are out mowing their lawns. Find out about the schools, the commute, the dog parks. And see what makes you feel good.
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Capitol Hill, too!:
Maryann, what is your impression of the Barracks Row revitalization project that's been going on at 8th Street S.E.? I love the lights and new shops/restaurants. Is this likely to have a big impact on the area or is it more of a cosmetic change that just really needed to happen? Now, if we could just get rid of that 7-11.
Maryann Haggerty: Correction: 7-11 Good. The place that was there BEFORE 7-11, Bad.
I am amazed at what has happened on Barracks Row after years of some-day-soon activity. I mean, Marty's (a new low-key, inexpensive family restaurant, for those of you feeling a bit left out) fills up on Saturday nights AND on Sunday after church. Backstage seems to be doing a thriving business. I think it has already been a big impact, & to my tastes, it feels just about right now. yeah, we got a (boo-hiss) Starbucks, but we still have a Popeye's & Phase III. Maybe nobody else will discover the street ever & it will remain the one last in-equilibrium High Street in the District.
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D.C.:
Have you heard anything about the D.C. first time home buyer $5000 tax credit? Has Congress moved on this yet? Will they??
Maryann Haggerty: Still in limbo, as far as I know. They keep telling us everything will be fixed retroactively.
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Forestville, Md.:
Hey, hey! Stop talking about Prince George's County until I buy my next house. There are some mansions in the Largo area, however, if some of your typers insist on spending $450 to $500k.
Real question: We are just getting our minds ready to sell a townhouse, 13 year old, with fresh paint, but the original carpet. We have been told that houses are selling so fast in our area that the carpeting can stay, and that I was silly to replace the broken blinds. Can that be true?
Maryann Haggerty: To the "real" question: Broken record time: See story yesterday about what sellers should do to make the best of this market. The fix-up will likely bring in a few more bucks, according to folks we talked to. But, hey, why bother?
(And on PG: It is my sacred responsibility to inform the public. Particularly those parts of the public who don't realize there are more than 5 or 6 Metro stops in the region.)
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Silver Spring, Md.:
My husband I are trying to buy our first home. As we are currently childless, we do not think we will have a kindergarden age child for 7 years. The neighborhoods that are in our target price range (around 350k + or minus 50k) do not have the best schools. Should this concern us in case we can't sell in 7 years due to the market, or for resale value?
Can you recommend good neighborhoods with high potential for appreciation? Forest Glen was mentioned in this month's Washintonian but that neighborhood might already be out of our reach.
Maryann Haggerty: On the schools question: The conventional wisdom is that you should ONLY buy in a neighborhood with A-plus-plus-plus schools. However, isn't it logical that if you don't have kids, maybe the next buyers won't have kids either? Maybe the schools will get better in 7 years, who knows? Or, more to the point, take the money you're saving on mortgage payments, invest it, & be prepared to pay private school tuition if that's what you feel you should do.
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RE: Housing prices:
In your opinion, is looking into Fredericksburg as an investment a good idea? I can put down the money on a house there, but only want it because I think it's an area that'll continue to grow. Thoughts?
Maryann Haggerty: Depends on where you work & what you can handle commute-wise. If you only want the house because you think the area will continue to grow, will that make you happy two hours each way in traffic?
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Re: P.G. County:
There are Metro stops out there, but the schools are lousy. That holds down property values there.
Maryann Haggerty: I know kids who are getting good educations in PG schools, just as I know kids who are getting good educations in DC schools. And I bet there are some kids who aren't learning anything in Bethesda. And if you plan to homeschool your kids anyway, do you care?
The tradeoffs you are willing to make are up to you. (Full disclosure: As you might guess from my name, I attended Catholic schools my whole life. The neighborhood had less-than-Bethesda public schools, but my folks didn't care.)
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RE: Rising balloons:
Dale City again: If you think the market is eventually going to crash (or if it's NOT going to be different this time!), do you recommend buying a townhouse or condo farther out from the city, like in Prince William? I'm going to go looking at one of each today, but am also trying to think what I'll do if "I'm stuck". How do I research what are good trends?
Maryann Haggerty: Commute, commute, commute. PW is a nice place to raise kids. But if the distance makes it impossible for you to ever see the kids, what's the point?
As an old friend of mine used to say: Life is not a simple thing, my friend, and there are no easy answers.
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Silver Spring, Md.:
Hello! I was wondering if you post the link to appreciation as related to zipcodes. I saw the county information online, but know that last year an infographic was published highlighting the appreciation by zipcode (I am particularly interested in 20901!!)
Maryann Haggerty: It shold be there somewhere--Go to the county, click around on table, map, analysis...
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Maryann Haggerty: There are many, many good questions I haven't gotten to, but I see that I'm over time now.
So: Thanks for stopping buy. If it really is spring now, take some time this weekend to just enjoy the place where you live now. For most of us, it could be much worse.
Bye!
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Forestville again:
There are great individual schools in P.G. County, and wonderful private schools. I have children in each. C'mon down!
Maryann Haggerty: Whoops. Meant to send this one before I closed down. really, bye & thanks...
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