Free First Time Home Buyer Class in Washington, DC

UPDATE> Classes are ongoing (even though this post is old.) You can always see the most current calendar of classes posted at http://www.newhomebuyerclass.com

The first classes of the year are now scheduled at Martin Luther King Library. As with our other classes, there is absolutely no cost or obligation to attend this one hour educational session where we will recap the current market conditions, discuss the future outlook, and provide an overview of the home purchase process. We'll also discuss the impact of the banking system collapse and bailout, the home purchase process and common pitfalls, financing basics and a how to get started checklist.

Simply contact us to register (enter seminar and the date in the comments) so that we may have materials available for you. Space is limited.

DC Neighborhoods

Ever see a listing for "Old City #1" and wonder where it is? Do you know the difference between Penn Quarter and Chinatown? Do you know where, exactly "16th Street Heights" is?

I'm working on a DC neighborhood boundary and home search map (click link to see it in progress) for you, home buyers. It's a work in progress, so bear with me while I work to complete it. On it you'll see I've outlined the approximate boundaries of many neighborhoods, and if you click on each one you'll see (for most) a link to read more about the neighborhood, and also a quick search link to see listings.

I'm not sure I'll ever cover the entire map, but I've tried to hit some of the more common areas I get asked about: Cleveland Park, Woodley Park, Adams Morgan, Mount Pleasant, Foggy Bottom, West End, Dupont Circle, Columbia Heights, Petworth, Eckington, Logan Circle, Shaw, LeDroit Park, Old City (H Street), U Street, Penn Quarter/Chinatown, Takoma, and Tenleytown. I'm still working on a few more.

My hope is that it will help illuminate some alternatives for a buyer who finds any particular neighborhood too expensive...just move a block or two to the east or west and you may find yourself in a whole new range of affordability. It also might help find 'hidden' listings...for example many buyers lump "West End" in with Dupont, so if you're only searching Dupont you might miss that enclave.

(NB: The listings link has some caveats to it...not all neighborhoods are available on my data feed, and if listing agents don't enter the data exactly right it won't show up. Agents have also been known to take some creative liberties when putting some properties into certain neighborhood boundaries for purposes of the MLS. For a complete list of homes in a given neighborhood, you can always contact me directly to set up a very detailed and accurate search.)

Have a link that's relevant for a particular neighborhood? Email me and I'll add it! I may eventually overlay the metro lines on the map as well, but am trying not to clutter it up too much. If you zoom in to a detailed view, though, you can see where the stations are.

My hope is that this map will give buyers a bird's-eye view of some neighborhoods and the chance to get an idea of what homes in each neighborhood sell for. Over time, I'll be adding in real estate statistics so that a user can see, at a glance, what the current state of the market is in one neighborhood versus another.

And remember, if you want to search the MLS using your own parameters, you can use the search feature at my website - this map view allows you to draw a box around the area in which you want to search, and the filters at the bottom allow you to narrow the search.

Read More: DC Real Estate Market Stats

Read More: Buyer Resources

Read More: Blog Posts for Buyers

December 2008 Market Stats Available

MRIS (the consortium that owns our regional multiple listing service) has published the December 2008 stats, and I've updated graphs at my website (click on links below).

Arlington Market Stats - Arlington continues to post strong numbers. Only 4.91 months of inventory available, and of the homes that sold in December, an amazing 40% sold in under 1 month! Days on market held steady at 70, and average price increased slightly from the prior month.

Northern Virginia Market Stats - Of note here is the 37% increase in sales in December vs November, and an 8% decline in inventory, bringing the months of inventory down to 5.09 (6 months is considered a balanced market.) December 2007 was a 7.3 months inventory level.

DC Market Stats - Average price dropped significantly from prior month and prior year, which perhaps contributed to the amazing 34% increase in sales in December over November. And when it's good, it's good...almost 40% of the homes that sold in December had contracts in under one month.

Montgomery County Market Stats - MoCo continues to be a strong buyer's market, with the average price almost 20% below the same month in 2007. And the buyers responded--sales increased 22% over the prior month.

The big picture: Still a buyer's market in terms of price and selection, but drops in inventory and huge increases in contracts means the buyers are out there, circling, and ready to jump on good properties quickly if necessary.

If you're thinking about listing your home for sale, contact me to discuss how we can make your home one of those that sells in 30 days. Or sign up for a free Selling Your Home class.

If you're a buyer, give me a ring to talk about the stats in the specific neighborhoods you're looking. Or sign up for a free first time home buyer class.

Search the MLS

First Time Home Buyer Class - Scheduled in Arlington

Note> For the most recent schedule of dates for 2008 and 2009, please visit the First Time Home Buyer class page at my website. Classes will be held in Montgomery County, DC, Arlington, and elsewhere in Northern Virginia.

The first classes of 2009 are now scheduled at Arlington County Library. As in the past, there is absolutely no cost or obligation to attend this one hour educational session where we will recap the current market conditions (including stats like days on market, inventory levels, and average sales prices), discuss the future outlook, and provide an overview of the home purchase process, including common pitfalls and financing basics. Simply contact us to register (enter seminar and the date in the comments) so that we may have materials available for you. Space is limited. Details are as follows:

Date(s):
Tuesday, February 17, 2009
7:15 pm - 8:30 pm
registration required

Logistics:

Arlington Central Library, 2nd floor meeting room
1015 N. Quincy St
Arlington, VA
Metro: Orange Line/Ballston

Cost: There is no obligation, and the session is FREE, but registration is required by emailing me at Katie@katiewethman.com. Seating is limited.

Related Link: Search the MLS

Read More: Working with Katie as Your Buyer's Agent

Read More: Buyer's Resources

Read More: $7500 Home Buyer Credit

How will the election and relocating administration staff impact the Washington, DC, area real estate market?

I’m often asked whether the market will pick up after the election, with the incoming administration. Whether the Republicans or Democrats win, a wave of new junior staffers and senior officials will sweep into Washington, DC. My guess is that the impact on the real estate market will be positive—by which I mean positive for sellers--for this reason: people who make a career of politics often don’t leave once they’re here.

What I mean is this: many of the current administration won’t leave, so it’s not a one-for-one swap in residents even with a complete turnover in administration. Some will have fallen in love with the area, some will have kids in schools or other local commitments that they don’t want to give up, many will be absorbed into local lobbying and law firms. So 100% of the current administration won’t be leaving. Of course there will be some houses put on the market, but I’m guessing not many.

On the flip side, though some of the next administration will undoubtedly already be living locally, there will be definitely be an influx of new residents as staffers and administration are relocated here from other parts of the country for their new appointments. Those people all need a place to live, whether it’s renting or buying. Junior staffers will undoubtedly rent, but senior officials and their families could just as easily look to buy—especially when they absorb the sticker shock of high rental prices in this area. They’ll likely decide this is certainly a good time to buy, with historically low rates, relatively high (though shrinking) level of inventory from which to choose, and their new four-to-eight year time horizon. The District and Arlington, after all, were recently named two of the top ten places to live in a recession, and our local real estate market has held up relatively well versus most of the country.

Since most of these new residents will be working in the District, I expect the real estate market to tighten in the District and close in, metro-accessible areas like Arlington, Alexandria, Bethesda, Silver Spring, Falls Church, and Vienna. Outer areas like Prince William likely won’t see a bump, but that’s okay—their current uptick is coming from the investor community.

Time will tell, but I predict that the incoming administration will cause a tightening of both the rental and purchase markets in close-in areas.

Are you a member of the new administration looking for help in understanding the local real estate market? Confused about where to rent or buy? I’m licensed in DC, VA, and MD and would love to help you. Contact me for an overview of the area and the local real estate trends.

DC & Arlington Named Best Places to Be During a Recession

Worried about the economy? Here's a bit of good news: DC and Arlington were named by Business Week as two of the top ten places to live during a recession. Cities with a focus on health care, law, education, energy, and government rose to the top. The article notes:

Government towns tend to be relatively stable because—even though budgets are slashed—the public sector still must pay the salaries of politicians, building inspectors, police officers, military personnel, and tax-authority employees. Cities that we think might benefit from government employment include Chesapeake, Va., near the massive Norfolk Naval base, and the state capitals of Baton Rouge, La.; Lincoln, Neb.; and Madison, Wis.

And another piece of good news for our local area: the bailout will be a boon to our local economy. The Washington Business Journal notes:

...the most massive government takeover of private capital in U.S. history likely will bring economic activity to the region’s economy, in much the same way the tragedy of the 9/11 terrorist attacks spawned a new homeland security sector, the panelists said. The savings and loan crisis of the late 1980s also led to another government boon, the creation of the Resolution Trust Corp., which maintained office space in downtown D.C. for a decade to deal with fallout from the S&L insolvencies.

“It’s going to create a whole new industry of services for all of us, for the banking sector, for commercial real estate, the advisory and brokerage sector, legal and accounting,” said David Kessler, a principal with the accounting firm Reznick Group P.C. “We’re going to see a boost in the local economy as a result of that.”

Another boon from the bailout: the $5000 tax credit for DC first time home buyers was included in the bill! (Not buying in DC? You can still take advantage of the $7500 first time buyer "credit" (really an interest free loan) until July 9, 2009.)

$5000 Credit for DC First Time Home Buyers

Here's a little known add-on to the 2008 Emergency Economic and Stabilization Act - aka the $700 billion bailout bill: the $5000 credit for DC first time home buyers.

Area residents are familiar with this credit, and know that it had expired on Dec 31, 2007. Though typically every year it's passed in a last minute rush of bill approvals, there's never a guarantee and 2008 home buyers had their fingers crossed that it would once again find its way into a bill before year end. Well, DC home buyers, start celebrating: The bailout bill approved the $5000 credit retroactively for all 2008 purchases, and approved its use for all 2009 purchases as well!

To use the credit:
- You must buy a home in the District of Columbia (and not have owned a home in the previous year)
- You must occupy the home as your principal residence
- You must meet the income requirements (up to $70K AGI for single filers, phased out until no credit for AGI above $90K; up to $110K AGI for joint filers, phased out until no credit for AGI above $130K).

Note that this is an actual $5000 credit (not a deduction--an actual dollar for dollar offset on money owed!) on your Federal Taxes. That's the same as Uncle Sam giving you $5000 of your hard earned money back just as a 'thank you' for buying in the District. But you can't take advantage of both this credit and the new Federal $7500 "credit"--not really a credit at all, but rather an interest free loan. For almost all buyers, you're much better off taking the DC credit and passing on the Federal loan.

If you're interested in buying a DC property and want to learn more, contact me.

What is the State of The Housing Market? (Multiple Choice)

What is the State of the Housing Market? Please choose the best answer.

A. Looks like the start of a recovery. NAR Q3 2007 Report indicates roughly half of US markets show an increase in median home prices.

B. About flat, plus or minus 1%...OFHEO reports Home Prices down 0.4% in Q3 2007

C. We have years of decline ahead of us…start keeping cash--strike that, better make it Euros--in your mattress, folks! Case Shiller reports “The Sky is Falling, The Sky is Falling!” (Ok, that wasn’t really a headline attributed to them, but that’s basically the message in all of their press releases…pick which ever press release you want.)

Ok, pencils down. You all get a gold star. No matter which one you choose, you're correct. Why? It comes down to the methodology.

The National Association of REALTORS® statistics captures the median value of home transactions that come from all of the Multiple Listing Services nationwide. They cover all home sales at all price points, and release data in a relatively timely manner.

OFHEO, the government agency that works with Fannie Mae and Freddie Mac, also releases its quarterly analyses. They cover 287 markets, but because they are primarily concerned with the conforming loan market, the track only resales that meet that criteria (until recently, loans under $417,000. See my post on Conforming Loan Limits.) It also includes refinancings, which arguably have more generous appraisals. FYI, OFHEO does typically include an attempt at reconciling their numbers to Case Shiller. Because CS is a privately owned index, the exact methodology is impossible to duplicate.)

Case-Shiller, which is probably the most widely quoted analysis, covers only 20 US markets BUT includes ALL price points and loan types—exotics, sub-prime, and limited documentation. Of course the 20 metro areas covered are very large ones, which typically have more expensive homes (anyone ever compare a 4BR colonial on an acre in North Arlington to a 4BR colonial on an acre in Cleveland?) It excludes 13 states completely and has limited information on 29 others—so incomplete or missing data from 42 states! It also weights transactions—a $700,000 home gets weighted twice as heavily in their index as a $350,000 home. But isn’t a 10% decline a 10% decline, regardless of the baseline? Apparently not.

Dramatic headlines sell papers--remember all the 2004-2005 headlines screaming Buy! Buy, Before You're Priced Out Forever! Doesn't sound like a great idea in hindsight, does it?) While I’m definitely not saying that those in the industry can’t spin stats better than a Maytag, I did find this little tidbit from the NAR pretty interesting:

“Another factor that rarely gets attention is that Dr. Shiller, a Yale professor, has a side business in Chicago. His index is used at the Chicago Mercantile Exchange for hedging housing futures values. The more hedging of bets that occur, the more profits go into Dr. Shiller’s bank account. And more hedging of the bets will take place if people believe there will be a crash in housing values. So naturally he has a financial incentive to “scare” the market.”

So what’s a buyer to do? Whom to believe? First, understand the methodology and if one matches up with your situation, pay closer attention to that one. Are you in one CS’s 20 markets and looking to use a no doc loan for a $600K home? CS may be the better measure for you. Are you looking to buy below $417,000? OFHEO may be a better report for you. Want the broadest measure possible? Use NAR. I find that with statistics, perception is reality, and no one calls a market bottom until it’s months behind us, and in the meantime, life goes on. If you’re buying a home, as opposed to an investment property, then do what's best for you, pick a time that works with your life, plan to stay there at least 3-5 years, and buy only what you can afford.

Read more: See my post from last year on Yes, the Market is Down 7% AND up 1%

Read more: from one of my favorite mortgage blogs on spin in the mortgage industry headlines: How Ignoring Adjectives Can Improve Your Understanding of Mortgages

Read more in the Carnival of Real Estate, which included this post. They make the extremely important observation that all real estate is local, so national trends don't mean very much in the first place! Read my posts making similar points here and here. This one is also interesting to look at the very different foreclosure stats, even from county to county, in our area.

Sign up for my newsletter to keep up with DC area trends

Sign up for a first time buyer seminar to learn more about the market

WSJ: "Beyond Auctions" Article on Buying Foreclosures

There's a fantastic article today online in the WSJ: "Beyond Auctions: Ways to Buy Foreclosed Homes."

It explains why there are actually very few bargains to be had in foreclosure auctions, and why buyers (especially first time buyers) need to instead focus on bank owned property (REO). There's a good list of do's and don'ts too. It goes on to say--and I find this to be true--that "Some of the banks will sit [on a property] until they hit their target number -- they may get 20, 30, 40 offers before they're ready to take one....Potential buyers should...put in a realistic bid. You can't expect to bid 50% of the asking price and hope to get it."

Of course there are tons of foreclosures in the Northern Virginia area as a whole, but painting the entire area with one brush stroke can be dangerous. Take a closer look at the foreclosure stats below.


















On the bottom, you can see where Washington, DC, falls compared to other major metropolitan areas. But even that average (about 88 per 10,000 homes) is misleading...Looking at the top part of the chart, I've broken it out by county. You can easily see that DC, Arlington, and Alexandria are a very different market than PG, Stafford, Loudoun, and PW. Are there parts of Arlington that have more foreclosures? Of course. But the moral of the story is to make your decisions based on your specific situation--where you want to live, what type of property you want, etc....and not by a perceived "bargains" of price or availability. You may be surprised at the details behind those "opportunities."

Read more: Blog Post - "I want to buy a foreclosure."

Data Source: GMU Center for Regional Analysis

Read more: Alexandria Real Estate News

Read more: Falls Church Real Estate News

Crime Reports for DC, MD

One of the things that is frustrating to both clients and REALTORS is that we are prohibited from commenting on whether or not a neighborhood is "safe" due to Fair Housing Laws. (See article "What Realty Agents Won't Tell You.") The web, however, fills that void nicely with a variety of tools, and now there's a new one that looks very useful: CrimeReports.com. Just enter the address and the map populates with recent crime data, including police calls and arrests.

As this CNN article states, the site had its inspiration in a local Arlington County resident, and is not without its own controversy around privacy and other matters. Nonetheless, it's a valuable tool for buyers investigating potential neighborhoods.

It doesn't appear to have Virginia data yet (the site has a form where you can request the data from your local police department); DC and Montgomery County, MD are already online.

2008 Regional Outlook: "Fundamentals Sound"

George Mason University has updated their 2008 Outlook for the Washington, DC, metro area. It’s fairly consistent with previous presentations (perhaps slightly more positive, in my opinion.) Here are the key findings:

• Local job market continues to be very strong, with Washington, DC, having the lowest unemployment rate of the largest 15 job markets (US average = 4.4%, DC = 3.1%.) (See slide 5.) As I have commented here before, the job market is a great indicator of the housing market to come—people go where the jobs are, and they need a place to live. Because this area doesn’t have particularly high vacancy rates in rentals, that translates into pressure on rents (thus providing an incentive for renters to buy), or more demand for homes.
• This area has significantly fewer foreclosures (as measured per 10,000 units) than most large metropolitan areas in Florida, California, and the rust belt. DC (22), Arlington (27), and Alexandria (34) have the fewest foreclosures of any local county. (See slide 13) Think about those numbers for a minute. For every 10,000 homes in the District, just 22 are in foreclosure. This is consistent with other posts I’ve made about this area having two different markets—close in neighborhoods versus outlying suburbs.
• Days on market has increased significantly. (However, this can easily be misinterpreted—see my post on “Some Sellers Get It—And Get It In 30 Days!” Total units sold have declined (duh). Total active listings have increased (again, duh.)
• Percentage change in inventories has slowed dramatically and is consistent with 2003 levels. (See slide 23). We still have quite a backlog to work through, but at least for now it doesn’t appear to be getting any worse.
• Outlook: “Fundamentals are sound, 2008 will be moderately better than 2007.” (And by “better,” of course, they mean better for sellers.) “Housing prices will be flat until at least Spring & will be a mixed story across the region—some jurisdictions will be negative and others showing increases.”

So in summary, all real estate is local, and the DC market is, all things considered, not a bad place to be right now.

(If you found this interesting, see my related post: When will the DC real estate market turnaround?)