February 2008 Real Estate Data: Fairfax County (-10%) -- Northern VA (-9%) -- Prices Continue to Drop (rental, condos)

[scimitar12]

Originally Posted by Margery

The interest paid on a mortgage is tax deductible, as are real estate taxes. Do we have any accountants that could do a cost comparision buying versus renting? I would be interested in seeing those figures.

Here are a few rent vs. ownerhsip calculators I mentioned earlier. You can plug in different figures to see differences between the costs of renting and home ownership based on downpayment, interest rate, length of time, and inflation rate, and other factors.

Rent vs Own Calculator at Ditech: Calculate House Payments

Rent vs Buy Calculator, Should I Rent or Buy? - Yahoo! Real Estate

Ginnie Mae: Your Path to Homeownership

Rent versus Buy Calculator

Basically, if appreciation does not exceed 3 to 4 percent (and most economists and loan officers agree) in the next several years, than it will take at least four to six years to make owning a home go past the break even point versus renting.

[FatherOf2]

This is a very interesting topic to me because -- without getting into my whole life story -- I think I am the textbook case of someone who was cautious about buying, then saw how they were giving money away and approving loans willy-nilly, bought, refinanced to pay off bills and bridge gaps, and now find myself staring at an ARM that resets this summer.

I am not that worried because I have since gotten a much higher-paying job and paid off a car payment, so I can hold off foreclosure for now. (in fact, I'm now paying my mortgage on time)

However, I see single-family houses or townhouses for rent for as much as $1000/month less than we pay monthly for our townhouse. So it seems we could revert to renting for a couple years and use the extra G a month (or whatever it turns out to be) to fix our credit and save for a downpayment so that we could get a loan again in a couple years.

I have come to believe in my case, renting would likely be advantageous.

My wife saw the light, but has also grown attached to the home in which we were married and brought home both of our children. So recently I've been thinking about the cost of staying (and avoiding the hassle of moving) now that we think we can afford it.

We still owe less than our house is worth on zillow (just to have a ballpark figure), but to sell it, we'd probably have to go no-realtor to make money or break even. Also, as you all know, this is a terrible time to sell, and our house probably needs a little work to be spit-shined for sale.

So as it stands I am sitting on a depreciating asset when I know I can get something similar in the same are for much less monthly.

The first time, however, the house appreciated $135,000 in two years. I realize I can't expect that to happen again, or for it to even reach the number it was at at its peak, but is the truism of real estate tending to appreciate over a 7-year period still true? Wouldn't now, at the low point, be a terrible time to sell even though it's still worth tens of thousands more than we paid for it (a profit we have already mostly tapped by refinancing)?

Given how much we could potentially save per month, is it a no-brainer to move, is it wise to stay, or does it seem as complicated as I feel it is? (Granted, I have to deal with the emotional pull and stuff, whereas anyone answering this question doesn't and can be blunt).

Just curious. Because of the new job, I am not distraught, but I suspect that also because of it Hope Now or someone similar might not be able to help me get a lower payment before the ARM.

So I'm basically stuck laying in the bed I made, no?

[FatherOf2]

One more thing.

We love the home and the area, ideally I would stay if I could get my monthly payment more in line with what is out there.

I have yet to appeal to the mortgage company, but given that I don't intend to let my house go to short sale or foreclosure, would they be more willing to help?

I don't think I/we would get approved to buy another house right now, FWIW, if any of the above affects your answers.

[vanyali]

You know, people keep talking about bailing out homeowners just like you, including lenders themselves. It could be that you can renegotiate your ARM-reset and get to stay in your home, with no knocks on your credit, and save some money on the payment too.

Thousands of people across the country have been able to renegotiate with their lenders (tons of others couldn't, I know, but I recently saw some numbers in the WSJ that went against the grain of what people say, and yes, many lenders are renegotiating. Foreclosures are a disaster for them.)

If you can't renegotiate with your lender, but you can afford to sit tight, then you might think about holding on to see whether any of this bail-out talk actually materializes into help you can use. So maybe you can get help from your lender, and maybe you can get help from the Government. Sounds pretty good to me.

How bad is your ARM reset going to be? Do you know? Is it resetting to some number of points above Prime or something? If so, you might be pleasantly surprised once you see the actual reset -- rates are rock-bottom right now. Rates on home equity lines of credit are falling below the rates on most peoples' fixed-rate mortgages. The interest rates on certain government bonds (TIPS) has actually dipped negative. This is not a bad time to be in debt at a floating interest rate.

If you have equity in your house (sounds like you do) and your credit isn't too bad (?) then you might look into refinancing into a fixed-rate loan if the changing rate scares you. Rates on fixed-rate mortgages haven't really been falling like rates on everything else. It's worth checking out, but make sure you understand the numbers and terms of the loan and really analyze whether any particular new loan really puts you in a better financial position.

To answer your actual question, finally, I think it's hard to sell right now, and even harder to sell without a realtor (many buyers in the DC area are coming from out of town and won't know about your listing if it's not on the MLS), so you might be setting yourself up for a lot of frustration to try to sell right now when you don't have to.

[spidercharm]

I suggest you should sell now else you might lose whatever appreciation you think your house has. Most (if not all) real estate downturns are long and very painful. Rent vs. Buy won't make sense for quite a while now (at least 3-4 years I think) Most people with money are wise and don't want to buy. People who aren't wise may have tough time getting the credit approval. My 2 cents anyway for what it's worth.

Originally Posted by vanyali

You know, people keep talking about bailing out homeowners just like you, including lenders themselves. It could be that you can renegotiate your ARM-reset and get to stay in your home, with no knocks on your credit, and save some money on the payment too.

Thousands of people across the country have been able to renegotiate with their lenders (tons of others couldn't, I know, but I recently saw some numbers in the WSJ that went against the grain of what people say, and yes, many lenders are renegotiating. Foreclosures are a disaster for them.)

If you can't renegotiate with your lender, but you can afford to sit tight, then you might think about holding on to see whether any of this bail-out talk actually materializes into help you can use. So maybe you can get help from your lender, and maybe you can get help from the Government. Sounds pretty good to me.

How bad is your ARM reset going to be? Do you know? Is it resetting to some number of points above Prime or something? If so, you might be pleasantly surprised once you see the actual reset -- rates are rock-bottom right now. Rates on home equity lines of credit are falling below the rates on most peoples' fixed-rate mortgages. The interest rates on certain government bonds (TIPS) has actually dipped negative. This is not a bad time to be in debt at a floating interest rate.

If you have equity in your house (sounds like you do) and your credit isn't too bad (?) then you might look into refinancing into a fixed-rate loan if the changing rate scares you. Rates on fixed-rate mortgages haven't really been falling like rates on everything else. It's worth checking out, but make sure you understand the numbers and terms of the loan and really analyze whether any particular new loan really puts you in a better financial position.

To answer your actual question, finally, I think it's hard to sell right now, and even harder to sell without a realtor (many buyers in the DC area are coming from out of town and won't know about your listing if it's not on the MLS), so you might be setting yourself up for a lot of frustration to try to sell right now when you don't have to.

[Novamom06]

I'm still a believer that we have just about bottomed out. I can't believe the real estate activity I've seen and heard about in the past month in our area in eastern Loudoun. An open house in Cascades over $700K had 30 showings last weekend. Lots of "under contracts". We have a few houses close by and I've been seeing them shown by realtors almost constantly all week.

[FatherOf2]

I appreciate the wisdom from both of you.

I'm sort of proud to say we've dug out of the mess we've created and aren't looking for a bailout, but it'd be dishonest of me to say I wouldn't take advantage of whatever is available. I think I know a lot more about how the game is played now, so to speak, and I realize it's a win-win for a lender to keep us in our mortgage, even at a lower rate, and for us to keep our home.

We have more or less given up trying to sell at this time. The glut of homes on the market means we'd have a lot of competition and are likely to run up against someone more desperate to sell than we are. We would definitely use a realtor, which makes uncertain whether we would walk away in the black or in the red.

I will definitely look into what's available from my lender. Thanks for the insight.

[FatherOf2]

Originally Posted by Novamom06

I'm still a believer that we have just about bottomed out. I can't believe the real estate activity I've seen and heard about in the past month in our area in eastern Loudoun. An open house in Cascades over $700K had 30 showings last weekend. Lots of "under contracts". We have a few houses close by and I've been seeing them shown by realtors almost constantly all week.

I really thought things would begin to pick up as spring arrived this year, with prices having dropped far enough to entice buyers who have been holding off.

But given some of the early returns and speculation on threads like these, I began to have doubts.

Best of luck to all who are currently in a holding pattern

[Fairfax Mom]

I have noticed about 4 or 5 homes either "contract pending" or "under contract" after no homes selling all Winter - I wonder if it is the Spring or if the real estate market is starting to rebound?

[mojo_1979]

Originally Posted by Fairfax Mom

I have noticed about 4 or 5 homes either "contract pending" or "under contract" after no homes selling all Winter - I wonder if it is the Spring or if the real estate market is starting to rebound?

Rest assured there is no rebound. Builders, as recently as this month, are still slashing prices to try and move inventory. Nova's inventory is significantly higher than this time last year, and sales are way down. I promise you that the real estate numbers that come out about the 10th day of every month will confirm that we're still sliding downhill.

Alexandria Inventory

Monthy Real Estate Trend Indicator