Weekend Edition

Don't know what to do this weekend? Here are some events that might interest you.

BALTIMORE

Street Beat Festival, Sunday, September 30 at Federal Hill Park, Live Music including jazz, rock, blues, and salsa on three stages.

Baltimore Book Festival, through September 30 at Mount Vernon Place

Baltimore Orioles vs. New York Yankees, through September 30 at the Oriole Park at Camden Yards.

MONTGOMERY COUNTY

Magical Montgomery, 1-7 pm Saturday, September 29 at the Silver Plaza Ellsworth Drive between Georgia and Fenton Street.

Rockville Music Festival, noon-6 pm Saturday, September 29 at the Rockville Town Center North Washington St and Middle Lane.

Maryland Renaissance Festival, through Oct. 21 at Crownsville Fairgrounds

DC

Fiesta DC, 11 am - 7 pm Sunday, September 30 at Mount Pleasant Street between Irving St and Park Rd.

DC United vs. Toronto FC, 7:30 pm Saturday, September 29 at RFK Stadium

MOVIES OPENING THIS WEEKED

The Kingdom
The Game Plan
Feast of Love

Real Estate at Bargain Prices?

If you've waited to buy real estate at a bargain price the wait is over! Hudson and Marshall, one of the nation's largest real estate auction firms, will be selling off more than 250 properties in the DC Metro Region on October 6 at the Hilton Crystal and October 7 at the Hilton McLean Tyson.

Most of these properties are located in Woodbridge, Manassas, Sterling, Centreville, Chantilly, Reston, Burke, Virginia and a few in DC and Maryland.

For more information visit their web site: http://www.hudsonandmarshall.com/.

Absorption Rates & The DC Condo Market

What is an absorption rate and why is it so important in real estate? An absorption rate is the percentage of the inventory sold in a given period of time. For example let's take a look at the condo real estate market today.

Figures obtained from the multiple listing service indicate the following:

Price/ # of condo units on the market

Less than 100K: 003
100,001-200K: 222
200,001-300K: 305
300,001-400K: 237
400,001-500K: 180
500,001-600K: 149
600,001-700K: 082
700,001-800K: 042
800,001-900K: 026
900,001-1MIL: 010
1,00,001-2MIL: 040
2,000,001+ : 015

TOTAL: 1,311

Currently there are 453 condos under contract and in the last 30 days 225 have been sold. At this rate the condo real estate market in DC has approximately 6 months left to exhaust all the inventory in the market.

Another way of looking at it is by determining the absorption rate. In this case the absorption rate would be 17%. A percentage above 25% indicates a sellers market and below 15% indicates a buyer's market and anything in between would be considered a balanced real estate market. You be the judge. Is it a buyer's market, seller's market or do we have a balanced real estate market in DC, MD & VA?

Pic of the Week

Seafood Market, Washington DC. Photo by D Romero.

Thursday Links

• Live Nation strikes deal for Silver Spring concert hall [baltimore.bizjournals.com]
• Developers vying to build in Baltimore's Lauraville [baltimore.bizjournals.com]
• Jobless claims unexpectedly fall 15,000 [reuters.com]
• Retirement Saving for the Self-Employed [morningstar.com]
• Real Estate Investing [morningstar.com]
• Back to work [marketwatch.com]
• County opens 25-acre park on Wilson Point waterfront [baltimoresun.com]
• Maryland gains 3,300 jobs in August [baltimoresun.com]
• Credit rating firms grilled on Capitol Hill [cnnmoney.com]
• The Boats. The Birds. The Views [washingtonpost.com]
• Group Aims To Protect Latino Borrowers [washingtonpost.com]
• From Custom to Commonplace [washingtonpost.com]

An Option Arm Anyone?

In the previous sizzling housing market many buyers got an Option Arm without really understanding it. This was a popular loan product because it was misunderstood. Many loan officers would tell their clients that they can buy a $500,000 house, even though they could not realistically afford it, and pay a monthly mortgage of $2,000 excluding taxes and insurance (taxes and insurance was usually omitted by the loan officer to make their payment seem really low). In theory it all sounded good--too good to be true as many homeowners found out.

For many, the ability to live in a home that they would otherwise never afford was a dream come true. This was their dream home and this loan made it possible for them to live in it, at least for a short time. In order for a typical homebuyer to get an option arm the lenders usually required a 5-10% downpayment, good credit score (no less than 620), and good credit history. As long as you met these conditions you were golden for an option arm.

Many loan officers offered these type of loans to their clients when they themselves did not really understand the loan program. First of all they only explained the initial interest rate of 1% and did not bother to explain that this rate was fixed only for the first couple of months and later would change on a monthly basis.

This loan program also gave the homebuyers several payment options. They could pay the fully amortized payment, principal plus interest, interest only payments, just interest, and the minimum payment, less than interest. Which one would you choose? I thought so!

Most homeowners would only make the required minimum payment, which by the way is not the minimum it is less than the minimum payment, therefore causing their loan to be negatively amortized.

Usually at the end of the first year a homeowner would get a statement from the lender indicating their new payment for the coming year. This new payment was calculated on the new loan amount, which for the most part was more than what they initially paid.

Another important factor in an option arm is the margin. The margin was crucial to this type of loan because the way that the lender calculated your real interest rate was by adding the margin to the current libor index (MARGIN + LIBOR). This number was usually in the high 7's or 8's. And the higher the margin for the lender the more money the loan officer made!

Tuesday Links

• Subprime Panic Freezes $40 Billion of Canadian Commercial Paper [bloomberg.com]
• Dollar steadies near lows [reuters.com]
• City says consolidation of development projects to save D.C. more than $5 million annually [washington.bizjournals.com]
• Merger of D.C. development agencies now official [washington.bizjournals.com]
• D.C. waterfront group narrows redevelopment contenders to five [washington.bizjournals.com]
• Time to get furnace checkup before cold weather descends [baltimoresun.com]
• Higher appraisals may be result of shifting market [baltimoresun.com]
• Falling home prices hurt borrowers, neighbors [cnnmoney.com]
• Congress warned: Easy on loan fix [cnnmoney.com]
• The Loan That Keeps On Taking [nytimes.com]
• A Reality Check for Home Sellers [nytimes.com]
• A Different Kind of View [nytimes.com]
• Opulence Everywhere [nytimes.com]
• Frustrated New Yorkers Grapple With Loan Rates [nytimes.com]
• It took a dream team to get baseball back in D.C. [examiner.com]
• 250 foreclosed D.C.-area homes to go up for auction [examiner.com]
• New Rowhouse Rooflines Raising Eyebrows in D.C. [washingtonpost.com]
• The Cost of 'No-Cost Mortgages' [washingtonpost.com]
• Camera shy . . . for now [latimes.com]
• Mortgage rates lower, too? Not so fast [bankrate.com]

Resources for those facing foreclosure

• The Federal Trade Commission's Fact sheet "Mortgage Payments Sending You Reeling? Here's What to Do," www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm
• The Department of Housing and Urban Development's list of approved housing counseling agencies, www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
• Freddie Mac's guide to avoiding foreclosure, www.freddiemac.com/corporate/buyown/english/owning/avoid_foreclosure.html
• NeighborWorks America's Center for Foreclosure Solutions, www.nw.org/network/neighborworksProgs/foreclosuresolutions/default.asp
• The Homeownership Preservation Foundation's national housing hotline, 1-888-995-HOPE
• Americans for Fairness in Lending, http://www.affil.org/
• Consumer Federation of America, http://www.consumerfed.org/
• ACORN Housing, http://www.acornhousing.org/

Where are the deals?

Many homebuyers to get a good deal have had to buy farther away from the DC Metro region. This has been the case for most metropolitan areas throughout the US.

This morning I performed a search for single family homes in Montgomery County that cost less than $400,000. I was pleasantly surprised to find out that there are currently 311 homes in Montgomery County and of those 11 cost less than $300,000. WOW!

Remember the good old days where you had to use escalation clauses and pay a premium of $30-50,000 or more for a home? Those days are gone! There is plenty of inventory out there for those looking to buy and there is virtually no competition. Get the home you've always wanted at a bargain price and historically low interest rates.

Thursday Links

• Hispanic real estate group adopts new ethics code [orlando.bizjournals.com]
• Bernanke cautions on raising GSE loan limit [reuters.com]
• Housing Market Swoon Presents Buying Opportunities [morningstar.com]
• How to Choose a Financial Planner [morningstar.com]
• Kent Island land deal put on hold [baltimoresun.com]
• Balto. Co. Council backs waterfront condo plan [baltimoresun.com]
• Where the Deals Are [nytimes.com]
• Buying a historic home? [chicagotribune.com]

Pic of the Week

Montgomery County Judicial Center, Rockville, MD. Photo by D Romero.

Deciphering the Settlement Documents

For most homebuyers the day of settlement can be one of the most frustrating events. Having to mortgage your life away to the bank just doesn't seem like a fun thing to do. To make the day of settlement a more memorable and pleasant experience here are some things that I suggest every homebuyer do.

Understand what you are signing. It is crucial for every homebuyer to completely understand what they are signing at settlement. Remember that this is a binding contract between you and the bank and will be registered at the court house.

Many homebuyers are only interested in the interest rate and monthly mortgage payment. This probably will suffice if you got a 30 year fixed mortgage, if you didn't keep reading. If you got an adjustable rate mortgage (ARM) then it is crucial that you understand what is in the note. The note basically explains the terms under which you obtained the loan from the bank. It explains the initial interest rate, how this rate will change (index plus margin), how often it will change (6 mos or 1 year), what the CAPS are, and if there is a pre-payment penalty.

The second document you should understand is the HUD-1 or settlement statement. This document discloses all the fees charged to you in connection with the loan (lines 800-811), items required by the lender to be paid in advance (lines 900-905), reserves required by the lender (lines 1000-1009), title charges (lines 1100-1113), government recording and transfer charges (lines 1200-1205), and any additional settlement charges such as a home warranty, survey, pest inspection, etc. A great website that describes the HUD-1 line by line is http://www.titlepros.com/settleproc/hudPages.php.

And the third most important document that you need to understand is the deed. The deed is the instrument that conveys the property to the borrower. Make sure that your name is spelled correctly and that the people that need to be on the deed are actually there. Many errors found in the deed could have been avoided from the very beginning if the homebuyer had caught it in time.

Tuesday Links

• Fed Lowers Rate to 4.75 Percent, First Cut Since 2003 [blomberg.com]
• Northern Rock woes reminder of bank runs threat [reuters.com]
• Countrywide's bank deposits recover, CEO says [marketwatch.com]
• Are record oil prices set to torture consumers? [marketwatch.com]
• NuAmerica money chase is a race against the clock [washington.bizjournals.com]
• House votes to expand mortgage coverage [money.cnn.com]
• Land bordering race track up for sale [gazette.net]
• For Rich Mexicans, Parallel Lives in U.S. [nytimes.com]
• A Tudor Enclave, Newly Historic [washingtonpost.com]
• Wayne Gretzky sells his Southern California home [latimes.com]
• Installment sale can lure buyers, ease taxes [bankrate.com]
• 5 Ways to Cash In on the Fed Rate Cut [biz.yahoo.com]
  

FORECLOSURE (Part III): Short Sales

In the last two articles we discussed different ways of avoiding foreclosure. I know for some of you none of these methods will work because there is no equity in the house or probably you have one of those famous option-arms with a starting rate of 1.00%. If you have any suggestions as to what a homeowner facing foreclosure can do to save their home, their credit rating, or both, please let us know by filling out the comments section.

In this article we will discuss the process of a short sale. First of all what is a short sale? Bill Bischoff defines it as "A home sale where the mortgage debt exceeds the net sale price (after subtracting out commissions and other transaction costs)".

For example, let's say that you bought a property for $615,000 in October of 2006 and would like to sell the property a year later, but there has been little price appreciation and other homes in your neighborhood have been listed between $530,000 and $585,000. What do you do? Basically you would list your home at a competitive price, let's say $565,000, and wait for an offer.

Once an offer has been submitted and you have accepted it the realtor would have to submit the offer to the lender for final approval because you are paying less than what is owed to the lender (in our example $50,000 less). This process can take a while so make sure the buyer is made aware of this from the very beginning!

Even though you will not be walking away with any money from the sale of your home it is worth selling it yourself because it looks better than having a foreclosure on your credit report.

Currently the tax law states that you would have to pay taxes to the IRS on the amount you were short on, in the above example this would amount to $50,000 and some banks might require that you pay off the amount owed to them.

The Economy and the Housing Market

I am not an economist, but I have seen this cycle before, the housing market dips, purchases and refinances slow down and 6 to 12 months later the federal government acknowledges that the country is in a recession. Without a doubt, we are in a recession now and probably will be through the next presidential election. The housing market is the engine of the economy, however; that does not mean that everyone should be wary of it. In fact, quite the opposite is true. Now is a great time to buy a house. It is a buyers market, something we have not seen this millennium. There are great prices out there and plenty of selection and with sellers desperate to sell they are reducing prices and offering incentives such as closing costs help, home warranties, etc.

Also, despite what you hear in the news, mortgages are still available and interest rates are historically low with a some rates below 6%. For the majority of people, mortgage qualification is no different than before: you provide documentation of your income and job and have a decent (not necessarily perfect) credit score. This is how most people have always qualified for a loan, it is called full documentation. The borrowers that will have trouble are those that can not or do not want to document their income, but even those borrowers can get loans with some cash down and a decent credit score. The borrowers who are going to have trouble are the ones that the loans probably should have not been made to in the first place: those that can not document their income, have poor credit and have no cash down. (In the last few years I have seen people come to the settlement table with no money, with a terrible credit score, and with so called "stated income" applications , yet they were able to buy houses and in some cases actually get money due to 100% financing plus a closing costs credit from the seller. Is it any wonder that now these people are not or can not make their mortgage payment?)

As I stated at the beginning, housing market is cyclical and will turn around, it always does, we have been here before and will be again. Do not let the news stories scare you away from realizing the american dream of home ownership.

Weekend Edition

DC

• Duke Ellington Jazz Festival, Sunday September 16 All Day event at the Washington Mall
• Fiesta Musical, Sunday September 16, 11:00 am to 5 pm at the National Zoo 3001 Connecticut Ave NW, Washington DC--Celebrating Hispanic Heritage Month

Montgomery County

• Housing Fair, Saturday September 15, 10:00 am to 3pm at the Bohrer Park 506 S. Frederick Ave, Gaithersburg, MD 20877
• Festival Salvadorenisimo, Saturday September 15-16 11:00am to 11pm at the Montgomery County Fairgrounds, 16 Chestnut St, Gaithersburg, MD

Carroll County

• Maryland Wine Festival, Saturday September 15 from 10:00 am to 6pm and Sunday September 16 from 12:00 pm to 6pm at the Carroll County Farm Museum: 500 S. Center St, Westminster

An Artificial Market

Was the housing market of 2000-2005 similar to the dot com era? Some analyst think so. The reason: the disparity "between incomes and home values".

In the last five to seven years home prices in the US have doubled, and in some areas quadrupled, while the median household income decreased by 2% to $48,201 since its 2000 value of $49,201, reports the Economic Policy Institute.

You might be wondering right now: How can we afford more home with less money? My personal opinion is that the lenders got together and created lenient guidelines to let anyone buy a house and get into exotic loans that a typical consumer would not understand. Only in America is this possible.

Thursday Links

• Mortgage brokers group adopts a code of ethics [baltimoresun.com]
• Life expectancy in U.S. rises to all-time high of 78 [reuters.com]
• Incomes Lagging Behind Home Values [AP]
• Lights out [marketwatch.com]
• Renting on a budget [marketwatch.com]
• Subprime and the Impact on Bond Funds [morningstar.com]
• Mansions in the Sky [nytimes.com]
• Who’s on Second (Avenue)? [nytimes.com]

Pic of the Week

The Washington Monument in DC. Photo by D Romero.

There are always Two Sides|sediS to a Market

In all markets there are those that win and those that lose. There ups and there are downs. I believe that life would not be as interesting, if we didn't take risks--calculated risks that is.

In the last 5-7 years lenders and wall street investors took this risk and benefit it many people--especially those with less than perfect credit scores and next to nothing assets. Many lenders made fortunes from underwriting, financing, and servicing these loans and are still making huge profits, homeownership in the United States increased substantially, and our economy was healthy and robust or so we thought.

In the last few weeks we have been reporting about the negative side of the real estate market because that is a part of our reality--we cannot ignore it. Recently though there have articles published that focus on the positive side of this real estate market--the real estate investor and homeowner.

To buy or not to buy? There has been a lot of speculation whether an investor or homeowner should buy in this market. My answer is a resounding YES! If you have the ability to purchase a home in today's market for 5-10% below market price, at incredibly low interest rates, why not?

Remember that real estate goes in cycles--it has its ups and its downs. If you are willing to hold on to your investment for a period of time you will recuperate what you invested into it and more. Folks, real estate is a long term investment. It was not made to be a get rich quick scheme and to be perfectly frank with you, if it's too good to be true many times it is.

9-11: the 6th Year Anniversary

American flag at the Washington Monument. Photo by D Romero

This is a day that will never be forgotten. Let us remember those that gave their lives so that we may have our freedom. May God Bless America.

Tuesday Links

• City man pleads guilty in credit scheme [baltimoresun.com]
• Bargain hunters buy up houses [baltimoresun.com]
• Mortgage broker lands at bank in turbulent times [gazette.net]
• Bond fund investors may be in for shock [miamiherald.com]
• Desperate Sellers Take Leaps of Faith [washingtonpost.com]
• The Good That Subprime Loans Do [washingtonpost.com]
• It's the gated life for Paris Hilton [latimes.com]
• Hurdles not insurmountable [chicagotribune.com]
• California Coastline Defies Housing Slump [realestatejournal.com]
• Fannie, Freddie meet subprime rules, regulator says [washington.bizjournals.com]

FORECLOSURE (Part II): Reinstatement and Forbearance, Repayment and Loan Modification

In our last article, FORECLOSURE (Part I): A Cruel Reality of the DC, Maryland, Virginia Real Estate Market, we spoke about being able to refinance the property into a more stable loan program. In part II we will focus on other options a homeowner has to avoid foreclosure. The options we will discuss in this article are forbearance, repayment plan, and loan modification.

First of all what is forbearance? The merriam-webster dictionary defines it as "a refraining from the enforcement of something (as a debt, right, or obligation) that is due". Basically you are asking the lender to put off the debt for a short period of time until you are able to pay it off or reinstate the loan. Most of the time this option is not provided to the homeowner, notes attorney Kevin Shipe, because of the high default rates.

You can also try to arrange a repayment plan with the lender. A repayment plan basically adds what is owed to the lender to your current payments for a specific number of months until the total debt owed is repayed. This works well if you had a temporary loss of employment or if you are expecting a large bonus in the near future.

The last option we will discuss today is a loan modification. A loan modification is when the lender agrees to add the past due amount to the toal loan amount and extend the financing period. Also the lender could take steps to reduce your payments.

All of these are viable options to avoid foreclosure, but I cannot stress enough the importance of being in communication with your lender. Remember that this problem will not go away by simply ignoring it. Take an active role in resolving this issue with your lender and you might just save your home from foreclosure.

Don't Be the next victim

Idetity theft is one of the most serious crimes of our times. As a society we are more prone to identity theft because of advances in technology that allow us to purchase just about anything without leaving our homes and the convenience of using credit anywhere and everywhere. Life takes ______: you fill in the blank.

Identity theft can't be obliterated completely but we can take certain steps so that we are not its next victim. Here are some tips given by Equifax:

• Be careful about giving out personal information.
• Keep your social security card in a safe place
• Protect your mail
• Guard your credit cards
• Secure your valuables
• Be aware of your surroundings

If you are a victim of identity theft here are some steps you can take:

• Initiate a 90 Day Fraud Alert with one of the credit agencies (Equifax, TransUnion, Experian)
• Place an Active Duty Alert (removes your name from pre-screened offers of credit for 2 years)
• Check your credit report regularly with all the major credit reporting agencies (catch inaccuracies and fraud)
  

It was just a matter of time.

Well it is now official--the woes of the housing industry have spilled over and affected the employment rate in 4,000 negative ways. The Labor Department reported a decrease in job creations for the month of August 2007 and the unemployment rate went up to 4.6. This was the first time employment had shrunk since August of 2003. A gain of 125,000 jobs was expected for last month, but instead we had a loss of 4,000 jobs. This decrease in job creations has been linked directly with the high forecosure rates seen throughout the country.

The decrease in job growth primarily occured in the following sectors: residential construction (loss of 22,000), manufacturing (loss of 46,000), and financial services (loss of 19,000 from its peak in Feb. 2007).

It was a just a matter of time. When you have the following coctail mix: a slow real estate market, tighter lending guidelines, subprime borrowers unable to refinance or sell their homes, and tens of thousands of people laid off, you are bound to have serious economic repercussions.

First of all a slow real estate market signals plenty of inventory--some of which are short sales and foreclosures competing with perfectly priced homes. Even though there may be buyers wanting to purchase these properties nowadays the guidelines have become stricter with too many hurdles for potential homebuyers to jump.

Add to the mix the typical subprime borrower who got a 2 to 3 year adjustable rate mortgage (ARM) in 2005, when the market went belly-up, and is now looking to refinance it because the payments have become unbearable but has less than perfect credit scores and no equity! And to top it all off, you have tens of thousands unemployed. What do you have? A recession?

Many wonder how long the wait will be till we're out of this mess. My guess: 2 to 3 years from 2005. Maybe longer. But one thing I do know--by the end of 2008 beginning of 2009 all the subprime borrowers who got a loan in 2005 should have refinanced it, sold their homes, or unfortunately gone to foreclosure.

Higher Real Estate and Development Taxes: An Affordability Issue?

Montgomery County Council members have put forth a plan to raise real estate taxes and development taxes in expectation for the future growth and the financial demands of the County.

This proposal will essentially increase the sales price of a single family home "from $1,000 to tens of thousands of dollars" according to Margie Hyslop and Janel Davis, staff writers for the Gazette. What does this translate for sellers and buyers? If this proposal becomes law it will definitely slow down an already sluggish real estate market in Montgomery County.

The median sales price for a home in Montgomery County is around $606,000 and interest rates have gone up considerably in the last couple of months for loans greater than $417,000, also called jumbo loans. This is causing sellers to stay put in their current home and not move-up to a more desirable neighborhood where homes exceed the median sales price.

Weekend Edition

Don't know what to do this weekend? Here are some events that might interest you.

Baltimore Region
Maryland Seafood Festival, Friday through Sunday September 7-9 at Sandy Point State Park. Experience the culinary delights of the ocean: fish, mollusks and crustaceans. Other festivities to include music and contests.

Hatford County Wine Festival , Saturday and Sunday Setpember 8-9 in Bel Air
Taste the reds, whites and everything in between wines

Montgomery County
All America Memorial Concert, Tuesday September 11 from 7-8:30 pm at Cabin John Regional Park Amphitheatre, 7400 Tuckerman Lane, Rockville MD

Prince George's County
Prince George's County Fair, Thursday-Sunday September 6-9 at the Showplace Arena and Equestrian Center in Upper Marlboro, MD

In Theaters
3:10 to Yuma
The Brothers Solomon
Shoot 'Em up
Halloween
Superbad
The Bourne Ultimatum

Is a Lease-Option An Option for You?

One of the options available to sellers who can't sell their home but have the time to wait for the market to correct itself is a lease with option to buy. This is a great way to let a cash strapped buyer get into a home with little money down and provide the seller with a positive cash flow in the meantime.

A lease with option to buy is a legal agreement between the seller and the prospective buyer. This document is executed before the prospective buyer takes possesion of the property and the following terms are clearly stipulated:

• the sales price the tenant will pay for the property at the end of the lease term
• the lease term period--anywhere between 12 and 18 months
• the amount of the non-refundable fee charged to the buyer for agreing to this option--this fee could be used as part of the downpayment
• the monthly lease payment--usually higher than market value
• set an interest rate ceiling in the agreement

Thursday Links

• Minorities pay more for home loans [baltimoresun.com]
• $60 million superblock project proposed [baltimoresun.com]
• Retailers score high grades on August sales [cnnmoney.com]
• Growth, taxes and quality of life: It’s decision time for the county [gazette.net]
• Construction spending plunged in July [miamiherald.com]
• Democrats Prepare Bills to Tighten Loan Rules [nytimes.com]
• From Ex-Mayor To Mogul? [washingtonpost.com]
• Realtors report shakes markets [washingtontimes.com]

President BUSH offers aid to struggling homeowners

The rise in mortgage defaults and a slow economic market has caught the attention of top government officials including President Bush. Today the President announced several options under review to aid struggling homeowners.

One of the proposals offered by President Bush was to revamp the FHA program "which would permit lower down payments, allow FHA to insure bigger loans, and give it more pricing flexibility". Currently the FHA program insures loans up to $417,000.

In addition to revamping the FHA program the President offered a new program called FHA Secure. This program would help homeowners with good credit refinance their current mortgages to a more affordable loan.

Also, current tax laws treat the loss that a bank has when a property sells for less than what is owed as taxable income to the seller. President Bush is asking Congress to pass a bill that would provide "temporary relief" for these homeowners.

The Federal Reserve is also expected to help consumers by announcing at their September 18th meeting the reduction to its rate for overnight federal funds by at least a quarter point.

Picture above taken d by Chris Greenberg.

What features are buyers looking for in their home purchase?

A report recently published by the National Association of Realtors (NAR) describes what "specific features and amenities buyers value most in a home". This data was gathered from home buyers that purchased a home between late 2005 and early 2007. Here are the findings:

CHARACTERISTICS OF HOME PURCHASED

• The typical home purchased during the survey period was 12 years old, 1,840 square feet in size, and had three bedrooms and two bathrooms.


• First-time buyers typically purchased smaller and older homes than repeat buyers and were more likely to purchase a home in an urban/central city area.


• More than 80 percent of homes purchased had central air conditioning and garages, and less than half had basements.
  
• More than 90 percent of home buyers were satisfied with the home they
  purchased, and nearly two-thirds of all buyers were very satisfied.

SEARCHING FOR A HOME

• Nearly four out of five home buyers worked with a real estate agent to purchase their home.


• When searching for a home, the most desired features were central air
  conditioning, an oversized garage, a walk-in closet, and a backyard or play area. The most desired rooms/spaces were garages, living rooms and laundry rooms.


• Repeat buyers placed more importance than first-time buyers on almost all home features.


• Home buyers that purchased a home without a desired feature or room would be willing to pay extra for central air conditioning (typically $1,880), two or more full bathrooms (typically $2,040) and hardwood floors (typically $1,900).
  
• Over 90 percent of recent home buyers thought energy efficiency was an
  important consideration when searching for a home to purchase.
  
• When comparing the home they recently purchased to their ideal or preferred home, most home buyers were satisfied with regard to their home’s age, overall size, size of the kitchen, number of bedrooms and bathrooms, and closet and storage space.

Tuesday Links

• Construction moves forward on Rivendell project [oceancitytoday.net]
• Group warns of 'con artists' preying on homeowners [baltimore.bizjournals.com]
• Downtown condo project delayed by power problem [baltimore.bizjournals.com]
• Rosslyn's Colony House site up for sale [washington.bizjournals.com]
• Yearlong rezoning begins in Balto. Co. [baltimoresun.com]
• views you won't lose [nytimes.com]
• Preparing the Lawn for Its Winter Nap [nytimes.com]
• Fending Off The Mortgage Crunch [washingtonpost.com]
• A Rebirth in Washington Highlands [washingtonpost.com]
• Dixie Chick comes to roost in L.A. [latimes.com]

FORECLOSURE (Part I): A Cruel Reality of the DC, Maryland, Virginia Real Estate Market.

More and more homeowners in the DC, Maryland and Virginia area are finding themselves with the cruel reality of foreclosure. In the last couple of years many would be homeowners got adjustable rate mortgages because of their low introductory interest rates. But this is about to change in the coming months since many of these loan will adjust to a much higher interest rate. This adjustment is causing waves of panic in many homeowners since their options are limited.

So what is a homeowner to do if they are found in this predicament? Nancy Trejos, a Washington Post staff writer, wrote an article in this weekend's Post titled "Fending Off the Mortgage Crunch" outlining the various options that homeowners have to save their homes and possibly their credit rating.

The first option that was offered was to refinance the current mortgage into a more stable long-term loan, such as a 30-year fixed. For many this is simply not an option. The reason? There is no equity in the property to cover the cost of the refinance and the homeowner does not have the funds to cover the cost out of pocket. Also the majority of the banks no longer refinance to 100% of the current appraised value--some banks only go as far as 90 to 95% of the appraised value.

The homeowners that bought their property several years ago (4+ years) can refinance it today if they have a considerable amount of equity (10-20%) in their homes. Interest rates have been coming down slowly but surely and the unemployment rate is still low. Bankrate posted today that the average 30 year fixed mortgage has come down from 6.12% last week to 6.10% and banks are still in the business of helping consumers refinance their current loan. Except nowadays, the only applicants they will consider have credit scores above 700 and a considerable amount of equity in their homes.