NOVA housing values by the end of 2012 (Annandale, Merrifield: real estate, 2013)

[stealthology]

Hi all,

I was hoping to get some opinions here. I'll get right to my main question: overall, do you think housing values in NOVA will be up a decent % by the end of the year? (if you could state your qualifications or what your answer is based on, that would be awesome). I was at a Chamber meeting a few months ago where I met a couple who did commercial real estate, and they recommended I buy a townhouse (instead of condo) ASAP instead of waiting towards the end of 2012. Is their advice sound?

My girlfriend and I are first time home buyer with a stash of cash saved up, currently renting in the Annandale area. I want to find either a condo or townhome to buy close to where we work (Merrifield/Dunn Loring Metro).

Other questions:

• If we decide to get a 3+ BR place to save on living expenses, would it be fairly easy to find a decent renter off CL who'd want to live with us?
• Should we get a condo or townhome?!?!

[finecognac]

Originally Posted by stealthology

[*]If we decide to get a 3+ BR place to save on living expenses, would it be fairly easy to find a decent renter off CL who'd want to live with us?[*]Should we get a condo or townhome?!?! [/list]

Yes, it's fairly easy. Just make sure you did credit check and keep photocopy of an identification. Also make sure you get security deposit.

Get the townhouse. Condo fee will eat you up.

[Carlingtonian]

Do townhouses not have the common-maintencance fees too? I always assumed they did.

Prices? Who knows. The economy is coming back (especially here), which (coupled with low interest rates) means more demand, meaning higher prices. But some areas have more supply than there is demand. I suppose there could be some people waiting to see the results of the November elections--but I doubt it. If you need to buy a home, you buy a home. People even bought homes in 1981, when interest rates were around 18%.

If I had to bet on it, I'd guess prices will be slightly higher when 2013 hits. But then they've gone down a little since 2010, even as the economy has slowly regained steam--so it's anybody's guess.

As Yogi Berra said, it's hard to make predictions--especially about the future.

[NC211]

Prices, as themselves have been down for quite some time. In regard to over paying on a per square foot basis, I think you're about as safe as you're going to get right now. However, every equation has an "x" factor, an unknown. Today that factor is interest rates. This determines buying power more than anything else, and very unpredictable and quick moving. For example: $1,000 a month can but you a $200,000 mortgage. Tomorrow however, when rates go up (and only a fool wouldn't think they are/will), that $1,000 bucks may only buy you a $130,000 mortgage. There is the x factor in being in a "subsidized" housing environment of rates in the 3-4% range. Only one way to go when you're that low.

So what do you do then, if you know this is going to happen? You play the subsided game and buy the mortgage that allows you to buy the rate as well. FHA. Not cheap in terms of PMI costs, both initially and on going until 80% LTV and/or 5 years in. But, on a $600,000 investment that is exposed to interest rate risk, the ability to assign the rate to the property instead of the borrower, is going to be a HUGE advantage in a few years, when rates are back to normal levels of 7%. I have a 30 year FHA mortgage at 3.75%. Levered up to max of 97% and put the rest of what was to be my down payment ($125,000) in a CD at 2%. In 10 years, when it comes time to sell, I can price my home to a payment that will probably equal a much lesser home in the open market, thanks to that assumabilty clause on my mortgage. The PMI costs, in this environment, aren't just for an insurance policy for the lender, but the cost of having a debt instrument that will create an arbitrage for your biggest purchase!

Merrified: EYA's Mossiac Townhomes. Only way to go in that pocket. Top notch developer that really does care about their reputation with their customer. Ask any one in the business, they'll say the same thing..

When I hear the word condo, I always think of George Carlin: Con Dough, as in I got conned out of my dough!

[finecognac]

Originally Posted by Carlingtonian

Do townhouses not have the common-maintencance fees too? I always assumed they did.

They do but not as much and usually run from 50 to 100 while condo fee is expensive. Condo fees sometimes include utilities and you paid for it even if you don't use A/C.

[boyd888]

Originally Posted by NC211

The PMI costs, in this environment, aren't just for an insurance policy for the lender, but the cost of having a debt instrument that will create an arbitrage for your biggest purchase!

So you're paying thousands a year in PMI plus losing another $2000 in extra interest since your down payment is in a CD so that someday you can say "look at the low interest rate on this house" when you sell? Not to mention the money you are losing by pissing it away in PMI vs investing it somewhere that earns more than -100% (like stuff it in a mattress). It seems like you're saying as rates go up, home prices will go down, but yours won't because your rate is "locked in" as low. I don't think that is true. If rates are 7% and yours is 3.75%, will it really sell for more money...or just sell faster due to the attractive rate? If I'm an all cash buyer I don't care what the rate on your mortgage is. Also, if interest rates just so happen to be low when you decide to sell, you've gained nothing! Maybe I'm missing something here I dunno.

Originally Posted by finecognac

Get the townhouse. Condo fee will eat you up.

Many new townhomes are actually condos (with the absurd fees to match) so watch out for that as well.

By condo I assume the OP means in a high rise? I'd say the TH is definitely better (especially if it is just an HOA) because you only have 1 or 2 people attached to you as opposed to someone possibly on all sides. A TH is generally easier to sell. The TH should be bigger and might even have a little bit of a yard or garage.

[mdcrim]

Not all townhouses have separate fees- only the "townhouse-condos". You can get a townhouse without maintenance fees. I'd go the townhouse route personally. Not sure where the prices are going to go but I think it's a good time to buy. The interest rate on my first house was 7.25%, which was a good rate at the time. Not all that long ago, either.

[FCNova]

FHAs fees can be pretty brutal. Not only the monthly PMI which is high but they're taking 1% of your 3.5% downpayment at closing as a fee.

[ChristineVA]

I have no credentials but just have been watching.

My feeling is that prices are at least stable and no longer dropping. There is supposed to be another glut of foreclosures soon as the later phases of bad lending loans are coming through so that could keep things on the lower side for awhile depending where you are.

I would say it is a good time to buy but do not, do not, do not look for any quick appreciation for many years. Buy the home because you want a home not because you are looking for a quick flip.

Townhouse is always a better investment than a condo in the suburbs.

[Caladium]

Originally Posted by ChristineVA

I would say it is a good time to buy but do not, do not, do not look for any quick appreciation for many years. Buy the home because you want a home not because you are looking for a quick flip.

Very good advice.