Real Estate and Reston, VA: June 2009

For many of us in the Real Estate industry, the end of June is almost like the end of tax season is for accountants; many of the transactions that we have been nurturing since the new year have closed and others are close to it.

You may actually find that you have a morning or two where your phone doesn't ring off the hook. This is a great time to review the educational requirements for your license and your personal education goals.

I can only speak for Virginia, but the state provides a great on-line tool that allows an Agent or Broker  to check progression toward their educational requirements. This is also an easy way to make sure all the classes you've taken, that qualify for credit, have been reported to the state. If they have not been reported, you have time to do the follow-up and make sure you receive the credit you have earned.

Perhaps you have been considering a new designation or certification.  There are many resources available on-line for training. Your local association, as well as others that are close by, will have course offerings available.  It is a great time to get these classes on your calendar  for the fall and winter months so that you can start working toward your personal education goals.

Many of us take classes only to meet our licensing requirements, but I have found that the continuing education classes that I have taken have provided me with new inspirations, great ideas and invaluable contacts. It is hard to think of a way one could feel 'over educated' about the real estate industry--there are so many nuances and unique situations.

If you haven't done so lately, take some time to review your education goals and put a plan in place to meet them over the next year.

One day you are running around making sure you have diapers and sippee cups and the next, it seems, you are the parent of teenagers.  How does this happen so quickly?

Today, our young prince, Robbie, turns 13.  He is the youngest child in our family and follows two older sisters.  When he came along, they were old enough to enjoy the novelty of having a little brother.  We would often catch my youngest daughter trying to play house with him. He was dragged to every school function, soccer game and swim meet in the greater DC area.  I still run in to people who ask how my 'little guy' is doing (not so little anymore).

He survived his sisters to become a wonderful young man.  But I still wonder, how did this happen so quickly? I look forward to seeing the transition from childhood to adulthood, but wish the clock would slow just a little bit!

For the next 7 months we have 3 teenagers. After that, my oldest will turn 20 and we enter that new phase of having 'grown children' (but not quite, since we will still be paying the school bills).

If you have older children, you understand my mixed emotions.

If you have younger children, enjoy every second...the teen years come up so very quickly!

School has ended, sports are winding down, the rain (may have) temporarily stopped. It is time to get outside and enjoy yourself!

This weekend is the Alexandria Waterfront Festival taking place at Oronoco Bay Park at Oronoco and North Union streets in Old Town Alexandria, Virginia.  It will run on Saturday from 10 am to 11 pm and on Sunday (remember it is Father's Day!) from 11 am to 5 pm.

There will be a tall ship for the kids to explore, a beer and wine garden, live music, fireworks a dog zone and an Arts Market.

The festival benefits The American Red Cross and is accessible by Metro.

So grab the family and head down to Alexandria!

I still remember the skeptical looks my children gave me the first time I announced we were going out for Indian food. Always adventurous eaters, somehow my husband and I had overlooked introducing our children to this wonderful cuisine earlier in their lives.  We have now made up for lost time!

I have a friend who immigrated here from India and figured she would be my best source to find a close-by, high quality Indian restaurant.  She told me of a couple, but said her favorite was Angeethi, located on Elden Street in Herndon, Virginia.

Fast forward a couple of years and I would say this restaurant is the number one most requested in our family.

If you have not had a chance to try it, I would highly recommend it. The atmosphere is casual and comfortable, the food is wonderful and the staff is attentive.  The clientele is a mix of couples out on dates and extended families meeting for dinner.  The restaurant can accommodate fairly large parties.

My husband and I also hosted a dinner party that, unfortunately, fell on a weekend when my daughter had a soccer tournament. Rather than miss her games, we had the dinner catered by Angeethi. It was a big success!

I was recently told by my son that they have opened a restaurant in Leesburg,VA and I just saw on their website that they have one in Bethesda, MD, too.

So if you are looking for something a little different to do for dinner, head over to downtown Herndon and give Angeethi a try--I don't think you will be disappointed!

BTW, they deliver, too!

The Washington D.C metro area is an expensive place to buy a house.  Fannie Mae and Freddie Mac recognize this  and have approved a higher Jumbo Conforming Loan amount for the area, $729,500 (in addition to Washington D.C. this new amount has been approved for a number of the more expensive Metro areas around the country) through the end of 2009. This is good news for home buyers; they can obtain a larger loan while still taking advantage of lower rates and federally backed money.

This has been mixed news for sellers of these properties, however, as it has combined with  some other changes in loan underwriting rules.

It used to be that if you wanted to purchase a home that cost over a million dollars, you put together a combination of down payment money and a first and second trust that made up the balance. These loan combos, which were available at all price points, were often referred to as 80-10-10 (10 % down payment, 80% conforming loan and a 10% second) or 80-15-5 (5% down, 80% conforming 15% second).  This type of package was almost a necessity because the conforming loan amounts were lower. With new, more stringent underwriting rules and less available loan money, banks are no longer making it easy to put together this type of financing package.

Buyers are left with a desire to have a loan that does not exceed $729,500 and the remainder of their down payment must be made in cash.  Understandably hesitant to put more cash in to the home than necessary, buyers are making low offers on properties. These offers are often for homes listed at around 1 Million Dollars but the offers are coming in below that. If a buyer wants to take out a jumbo conforming loan for a million dollar home and put down no more than 20%, the maximum they would offer for the home is $912,000. Anything above this amount is money that they feel they are throwing in to 'sweeten the deal.' Unlike a second trust, which can be increased as long as the buyer can make the monthly payments, most personal bank accounts have a cut-off point.

With the old scenario of combination loans, a home purchase negotiation where the buyer agrees to pay more for the house would result in them adding some money to the second trust, which usually had a minimal impact on their monthly payments.  Now that second trusts are  not part of the financing picture, any extra money negotiated in a deal needs to come either from the buyers bank account or from their stock portfolio--neither is particularly appealing to most buyers.

Obviously, there are folks who are going to buy homes for over a million dollars that will just not worry about this.  But for the folks in the $900,000 to $1,100,000 price range, this is a big consideration. If every dollar of the sales price over $729,500 must be paid in cash, the house prices are either going to come down, or fewer of those houses are going to sell.

Just one more way that we are seeing policy changes result in unintended consequences....

June 2009

Every day, at least once, I am asked, 'How is the real estate market?'

Wow.  I used to be able to say, "great" and move on to their specific questions about  their house projects and what has sold recently.

These days, I try to be positive, because the truth is that I am super busy.  The difference between now and 'before' is that every transaction is just REALLY hard! 

The buyers want to buy, the sellers want to sell, the lenders want to lend and the Realtors want to make it all happen; so why is everything so hard?

There is no easy answer, but the way I see it, we all feel like the sand is shifting under our feet.  Sellers are surprised to find how far below their asking prices buyers are willing to pay for their houses. Buyers are nervous about paying too much, given what has happened to home values in the past 2 years.  Lenders are constantly having the rules re-written for them in an effort to protect investors who are making the loans, making underwriting a real challenge. Appraisers are afraid to over value a home and often have very few (good) comps to work with. Foreclosures and shortsales are domintating many markets and they are often far more complicated to get from contract to closing than a more traditional purchase.

I feel confident that the tide is turning.  The days on market statistics seem to be dropping and then inventories seem to be stabilizing.  I think everyone knows that it is not going to be an easy road to a full recovery in the housing market. The baby steps are beginning to happen--and we all know a baby has to learn to walk before they can run!

Today, I was talking to a friend at my son's class pool party. It was being held at a community pool surrounded by lovely homes on regular, suburban-sized lots. As we got to talking, she shared with me her mild regret that when they moved 'out'--further to the West--they opted for land over community. She said they have a wonderful house on 3 acres, but no one close by for their kids to play with and no where for the children to do swim team. The community where the pool party was being held really suited their family now--but not then.  After all, who moves further out to get less land?

With the recent downturn in the economy, I think it is important for all of us to think about our houses less as commodities that can be quickly bought and sold, and more as lifestyle choices. In the early days of our marriage, my husband and I decided we would take a smaller house and less land in exchange for a shorter commute. With that framework in mind, it was easier to make decisions about houses...we took a lot of properties off the table immediately. Further refining our choices by financial restrictions, it became easier to decide which houses worked for us and which didn't.

I think that the trap that many of us fall in to is the idea that in order to move, we must move up---more land, more house, more prestigious neighborhood, more amenities, etc. I think the most important thing to think about is how you want to live, both today and down the road. If your dream is to own a horse, and your own stable, you won't be able to do it on a suburban lot; it could be,  however, be a stepping stone in your plan--just be prepared for deferred gratification.  If you fall in love with the house on 5 acres because it has a 4 car garage and gorgeous granite, but you love to go to the Yoga studio 5 days a week, you better be prepared to spend a lot of time in the car.

I think sometimes we, as consumers, get caught up in the fancy kitchens and humongous yards and don't think enough about how it means we will live. A 5 acre yard is going to require a commitment to mowing (or paying to have  someone mow it), but will probably give you the room to put in a pool, if you've always wanted one. A 1/4 acre yard will not allow you to raise chickens or enough grapevines to make wine, but may make it easier to get to know your next door neighbor.

Your house is more than just a place to set up your furniture; it is the framework for your life. Make sure it 'frames' the life that you want to lead.