Sarah's Blog

New book for first time homebuyers

Sarah Toppins (Long & Foster Realtors) — Fri, 06 Nov 2009 07:34:10 -0600

I've just finished reading Michele Lerner's "Homebuying - Tough Times, First Time, Any Time - Smart Ways to Make a Sound Investment" and can recommend it as a good resource for agents working with first time homebuyers and first time homebuyers.

Lerner is a writer for the real estate section of "The Washington Times" (not my favorite newspaper, but it has a great real estate section). She came to my office to talk about the book (because Lerner bought her current home from one of the agents in my office) and sold out of the 50 books she brought to sell us. I think that's a pretty good recommendation for her knowledge and the information in the book. She's local, so she knows local customs, but the book does not have a local focus and would be good for buyers and agents across the country. (In fact, if I have any quibble it's that she doesn't quote local agents in the book.)

Each chapter begins with a story and ends with a checklist. The chapters deal with the current market, whether a buyer is ready to buy, financing, lease-to-own agreements, finding the right Realtor, choosing the right neighborhood, choosing the right house, short sales & foreclosures, contract & contingencies, insurance issues, legal and tax issues, and what to expect at the settlement table. There's also an appendix with a state-by-state and Canadian programs for first time homebuyers.

I might have organized the book a bit differently. For instance, lease options and writing a contract each get a chapter. I would have given more attention to the contract issues. But Lerner is very pro using a Realtor, so I guess it's my job to fill in the holes in the contract chapter.

The book is currently for sale on Amazon for under $11. http://www.amazon.com/s/ref=nb_ss_1_10?url=search-alias%3Dstripbooks&field-keywords=homebuying+tough+times+first+time+any+time&sprefix=homebuying

Since the first time homebuyer tax credit has been extended through April of 2010, this would be a good resource for those people who have been cautious about buying and want to do their homework.

What do September's (09) housing stats for Montgomery County, MD tell us?

Sarah Toppins (Long & Foster Realtors) — Sat, 24 Oct 2009 09:36:16 -0500

I thought there would be a big increase in inventory after Labor Day since the supply of houses and condos in Montgomery County has been dropping for more than a year, but that didn't happen. In fact, there were nine (yes, I said nine) more unsold houses (2276) in September compared to August (2267). There were 27 more condos on the market in September (932) than August (905). As a reference, there were 4177 unsold single family homes at the end of September 2008 and 1200 condos.

September 2008 is when the public became aware of the problems in the financial market and when housing sales started to fall, so it's interesting to see what's happened in the past year.

Inventory of single family houses was at its highest in April 2008 and remained fairly steady for two more months before beginning a free fall that bottomed out in August of 2009. Contributing to that big drop is the number of contracts written in April, May, & June of this year, taking a lot of homes off the market. Just over 1100 contracts were written for single family homes in each of those months. The previous record for number of contracts written was in May of 2005 when around 1600 single family homes went under contract. The highest number in 2008 was around 800 contracts written, also in May.

Settlements seem to be lagging behind the numbers for contracts. I attribute that to the length of time it is taking to get responses from lenders on short sales and the increased restrictions from lenders for new mortgages. It normally takes 45 to 60 days between the date a contract is accepted and when settlement occurs. So for April contracts, we'd expect a high number of settlements in June. There were 1103 contracts in April and 557 settlements that month. In May, there were 680 settlements, and in June, 859. The highest number of settlements for the year was in July - 905 single family houses went to closing. That dropped in 760 in August and 635 in September. (My statistics, by the way, are from the Greater Capital Area Association of Realtors.) New appraisal and lending rules went into effect this summer and that may have slowed down some of the settlements.

Our local multiple listing service, MRIS, reports that the average list price of all Montgomery County residential properties (condos & single family houses) was around $410,000 in 2008. In 2009, that average is around $350,000. Over the summer, properties were selling for about $5000 over than average. In September, that averagle sales price dropped to $333,500 from $355,000 in August. I take that to mean that a lot of bargain hunters bought properties over the summer leading to the higher number of sales, but lowering the average price.

Who says there's no loan money?

Sarah Toppins (Long & Foster Realtors) — Mon, 24 Aug 2009 17:23:05 -0500

MRIS (Metropolitan Regional Information System), the multiple listing service for the Washington, DC area has issued its statistics for July. Of the 1130 homes in Montgomery County, MD that settled in July, half (565)of them were financed with conventional loans. That says a lot about the market. It means that many people have money to make larger downpayments and are able to qualify in today's tougher mortgage market.

The financing alternative for folks with less money for a downpayment and/or lower credit scores is the FHA loan. Thirty-two percent (359 buyers) used FHA, which requires as little as 3.5% of the sales price as a downpayment. Three percent or 36 people used the no downpayment VA loan.

The more surprising number is the number of people buying property and paying all cash. Ten percent of the July buyers did that. I think that many of those buyers were buying the many foreclosures that are on the market and needing cash buyers because of their sorry condition.

Another surprise is that 4% or 43 buyers assumed loans. We haven't seen many assumptions in years.

Inventory is down, as are sales prices, but volume is up. Welll priced houses in good condition are seeing multiple offers again, so days on market (DOM) is also decreasing.

To Rent or Sale? Part 2 - Washington, DC

Sarah Toppins (Long & Foster Realtors) — Mon, 26 Jan 2009 13:54:08 -0600

Yesterday, I wrote about the 2008 rental market in Montgomery County, MD, to try and get a handle on whether it’s easier to rent a property in this declining real estate market than to sell it. I offered statistics, but very few conclusions.

Today, I’ll include the statistics for the 2008 Washington, DC rental market, which generally look very similar percentage wise to the Montgomery County figures.

In 2008, 1823 properties were rented in the District ranging form a one bedroom, one bath condo in Southeast, which rented for $500 a month, to a 5 bedroom, 5 full bath, 2 half bath estate in Kent that rented for $15,000 a month. In addition, 67 properties have rental applications pending.

Currently, 594 properties are on the market in DC. They range from at 2 bedroom condo in Anacostia for $475 a month to a 6 bedroom, 8 full bath, 2 half bath estate in Spring Valley, which is listed for a monthly rental of $35,000. It’s also listed for sale for $9.5 million, and has been on the market for two years.

(I want to make note that these statistics are probably less accurate than the Montgomery County rental statistics because I’ve only included the properties that are listed through our multiple listing service, MRIS. There are many buildings in DC that rent without going through the MLS, and most of my clients in the past have found it easy to rent their own properties through various bulletin boards and Craigslist. However, that seems to be changing. The reason I’ve done this research is because one of my clients has been having a hard time trying to rent his row house in the U St. area on his own and has now listed it through me.)

But if you look at the rental stats overall for Montgomery County and DC, the percentages are about the same – a 3 month rental absorption rate in Montgomery County compared to a 4 month rate in DC.

The more disconcerting figure from the DC stats is that 1319 properties were withdrawn or expired without being rented in DC, a number equal to 72% of what was actually rented. (That compares to 2284 in Montgomery County, a little less than 50% of what was rented.) I’m hoping that if I dissect that number further, I would find that many of those properties had been listed both for rent and for sale, and eventually sold.

In 2008, 5464 properties sold in DC, almost equally divided between condos (2640) and single family homes (2824).

To Sale or to Rent? - Part 1, Montgomery County, MD

Sarah Toppins (Long & Foster Realtors) — Sun, 25 Jan 2009 07:04:17 -0600

A year and a half ago when I noticed that the market was beginning to slow down, I suggested owners might consider renting their properties if they couldn’t afford to sell at the dropping prices. Since then, I’ve had some experience with the rental market and have heard others’ stories – enough to think that the rental market might also be slow.

So as the good journalist I used to be, I decided to do some research. I looked at all the properties that had rented in Montgomery County, MD since January 1, 2008. 4283 properties were rented through the multiple listing service (MRIS) during that period. The least expensive property was a basement bedroom in the Wheaton area of Silver Spring that rented for $515 a month last summer. The most expensive properties were two estates in Potomac that rented for $13,000 a month. (The next highest rental was $9000 a month and a total of only 60 rented for more than $5000 a month.)

This compares to 2284 properties that were listed and never rented. I did spot checks on some of those properties and found that some of them sold (for much lower prices than their original list prices), some were relisted for a lower rent, some were taken off of the rental market, but left for sale, and others just disappeared from any activity in MRIS.

Currently there are 1087 properties (basement bedrooms to condos to estates) listed in Montgomery County. The lowest price rental is the same basement apartment that rented for $515 last summer. It’s currently for rent for $575 a month. The most expensive property for rent is a huge (11 bedrooms, 10 full baths, 3 half baths) estate in Potomac listed for $20,000 a month. It’s also for sale for $5.5 million. It’s been on the market (for sale) for two years and has dropped from a list price of $6.5 million.

There are also 132 properties with rental applications pending.

How does this compare to sales? MRIS wouldn’t give me an exact number of how many condos and houses had sold over the last year (the number was over 5000, the highest MRIS reports for any certain period). But I went to the Greater Capitol Area Association of Realtors (GCAAR) yearend stats and found that 8391 properties (1641 condos + 6750 single family homes) sold in 2008 (The 2007 number was 10,157). According to GCCAR, a total of 8912 went under contract in Montgomery County in 2008 (down for 10,106 in 2007). At the end of 2008, there were 4252 properties on the market for sale, the result of a dramatic drop in new inventory since summer. At the end of 2007, 4549 properties were active and available for purchase.

In my next blog, I’ll analyze the Washington, DC numbers.

My initial conclusion is that there is a market for lower priced rentals, $2500 or less, but it’s becoming very difficult for an individual owner to compete with property management companies that can offer free rent for 3-6 months.

Why don't listing agents for short sales & REO's post more photos?

Sarah Toppins (Long & Foster Realtors) — Sat, 24 Jan 2009 06:15:24 -0600

I've noticed that most listing agents for short sales & REO's don't post any inside photos. Is there a reason for this? Many of the properties are quite nice. But my buyers automatically eliminate any listings that don't have multiple photos - there's so much inventory, that's an easy way to make the cut. In our area, the Washington, DC metro area, it doesn't cost anything to post extra photos. So agents, please do your sellers, and my buyers, a service and post more photos.

The Election Factor in Washington, DC Metro Housing Sales

Sarah Toppins (Long & Foster Realtors) — Tue, 11 Nov 2008 10:00:36 -0600

Every election cycle, potential home sellers ask me whether they should hurry and get their houses on the market to meet the housing needs of the new employees coming in to work for the new administration. And every four years, I tell my clients anecdotal tales about how I've never seen an uptick in housing sales because of an election. I quizzed my colleagues about this and they all agree - elections have never had an immediate impact on the housing market.

This year, faced with the same questions and a problematic housing market, I decided to go back and research this issue using statistics from our multiple listing service, MRIS. I'm only licensed in Maryland and DC, so I've only used statistics from Washington and Montgomery County, MD. (My agent friends in Virginia tell me they don't see an increase in housing sales because of a presidential election, but I don't have the statistics to prove that.

The Washington area changed its multiple listing service in the early 90's, so I don't have statistics for the first Clinton administration. But I remember that most of the calls I got at that time from incoming appointees (and I had some Arkansas connections having been born there) were for rentals in the District.

Anyway, the statistics are very telling. I ran searches of all of the properties that sold between November 1st and February 1st of an election year - a three month period to cover the election through the inauguration, and the year immediately after the election year (assuming new appointees moved to town and rented for a year before buying). In every case, except for President Bush's election to a second term, sales were higher the year after the election rather than election year.

Here are the actual numbers or houses & condos sold between November 1 & February 1:

Washington, DC Montgomery County, MD

Clinton's 2nd term (96-97) 949 1887

97-98 1247 2251

Bush's 1st term (2000-01) 1783 3266

01-02 (despite slowdown after of 9/11) 1835 3389

Bush's 2nd term (04-05) 2180 4006

05-06 1888 3161

The way I explain the lack of an increase in home sales is that most appointments aren't immediate, and those appointees that are appointed sooner rather than later decide to rent for at least a year to see if they like the job and to scope our the area.

October 2008 Housing Stats for Montgomery County, MD & Washington, DC

Sarah Toppins (Long & Foster Realtors) — Mon, 10 Nov 2008 08:12:06 -0600

The Greater Capitol Area Association of Realtors has released the October housing statistics for DC and Montgomery County and they tell a tale of two "cities".

Inventory in Montgomery County is way down while it's up in Washington. Sales in both jurisdictions is down to varying degrees.

In Montgomery County, sales were highest for both condos and single family houses in May. Inventory was highest in April.

DC is less consistent. More single family houses are on the market now than at any other time this year. The previous high point was in April and then inventory dropped until it started rising again in September. The high point of home sales was in May, but September was also a good month. Condos had their highest inventory in April; the same month that sales were at their highest. Sales have been falling since then at a fairly steady pace. Condo inventory started falling in May and reached its lowest point in August. The good news for DC condos is that condo prices seem to be rising after a high point in 2005, a big fall in 2006, and a slight fall in 2007. DC houses seem to have fallen a little from a high point in 2007.

Montgomery County houses have fallen a lot this year after a high 2007. Condos have also fallen, but to a lesser extent.

For more information on these statistics, go to http://gcaar.com/statistics/default.htm.

Why didn't financial leaders know about the credit problems?

Sarah Toppins (Long & Foster Realtors) — Tue, 19 Aug 2008 12:35:00 -0500

I get really irritated every time I read or hear an industry "leader" say that they had no idea that a mortgage crisis might be in the offing. This morning it was a quote in the Washington Post by Fannie Mae's chairman. Why not? I did.

I could see it in the buyers coming to buy the listings my senior citizen clients were selling. Four years ago I even started a division of our local board of Realtors to provide networking opportunites for people for whom English was not their first language because I saw them being taken advantage of. Unfortunately, the people I thought might be helped by this group didn't come to it. GCAAR's International Society became more of a high end networking group.

Last week, I heard that the Mortgage Bankers Association was saying that the worst was over. And once again I wonder where they're coming up with that information. I believe, if we're lucky, we may be at the half way point.

I read an article in a real estate publication that blames the market decline in places like Arizona and Florida on investors. That's not the problem in the Washington, DC area.

Most of the short sales I see are coming from the immigrant population - people who were encouraged to become a part of the American dream, who often don't have fixed incomes, and who were taken advantage of by lenders and agents who spoke their language, but didn't have the training or market knowledge to know what might be around the corner. I remember sitting in a settlement where an agent asked to look at the loan papers to see what his clients' interest rate was. It was 9.5% at a time when 6% was the norm. He told them that was good. That same agent now has that property on the market as a short sale, $160,000 below what the buyers paid for it two years ago.

The problem, however, cannot be fixed with some mortgage changes. It's got a lot to do with housing markets. For instance, in Hyattsville, in Prince Georges County, MD, there is an aging housing stock. Many houses are what we would call functionally obsolescent. They are post WW II houses built for the returning soldier, generally with 3 bedrooms and one bath. Most first time buyers I work with want a 4 bedroom, 2 bath house at a minimum. They won't even look at these houses. And a lot of these houses have been coming on the market over the past 5 years as the original owners have aged and need to move to one level homes or retirement communities. During the housing bubble, new immigrants bought these houses - happy to be homeowners and less picky about schools. They got stated income loans for 100% of the then current value. These same people can't get loans now because income must be documented and buyers must have downpayment money. And many of the people who bought at the height of the market now can't afford their mortgage, which has adjusted up, and they can't refinance. Their houses are up for short sales or in foreclosure. So who's going to buy these houses? Not the adult children of the people who grew up there. They've moved on to other neighborhoods and houses more conducive to their modern lifestyles.

I believe that the housing market problems have the possibility of creating a new type of suburban slum. Neighborhoods where short sales and foreclosures are growing, prices are falling, and no one is buying. And what's to become of seniors who need to sell to move, but can't find any buyers?

What can be done about the problems in those neighborhoods? I don't see any of the industry leaders even "acknowledging" that aging housing stock may have problems for years to come.

Maryland Proposed Property Management Tax

Sarah Toppins (Long & Foster Realtors) — Thu, 01 Nov 2007 06:54:11 -0500

Maryland Realtors will be amassing in Annapolis today to protest a number of proposed taxes being considered in this special session that affect real estate. Because Gov. O'Malley's tax package is so broad, there's been little news coverage on these taxes, but you should know about the proposals and pass the information on to your clients.

The state is looking at adding four luxury taxes - one of which is property management fees. This will affect apartment renters, homeowners living in property-managed HOA's & condos, seniors in managed, age-restricted housing, as well as small businesses who lease. The Maryland Association of Realtors is also warning that this is the first step before taxing sales commissions. http://www.MDRealtor.org.

What really makes this tax insulting is that the other three luxuries we are linked with are tattoo parlors, escort services, and massage parlors.

Please contact your local legislators to protest this tax. Addresses and phone numbers are available at the MDRealtor site.

Renting instead of selling

Sarah Toppins (Long & Foster Realtors) — Wed, 17 Oct 2007 14:27:41 -0500

In this changing market, many sellers who are unable to sell their properties are deciding to rent them if they must make a move and are unable to sell the property.

In Montgomery County, MD, the odds are better that a property will rent faster than sell, although there are more rentals coming on the market because of the difficulty in selling in this changing mortgage market.

For instance, today in Montgomery County, there are 367 single family houses currently for rent. During the last three months, 371 single family homes were rented – so we have a pretty even market or a three month supply of detached rentals.

Compare that to the sales market. Currently 3115 single family houses are for sale in Montgomery County and only 671 sold during the past two months* – that means we currently have a little over a 9 month supply of detached homes on the market.

In condos, there are 218 condos for rent and 207 have rented over the last three months – once again an even, three month market.

In the condos sales market, there are 1188 condos for sale and 305 have sold in the last two months, creating an 8 months supply.

The townhouse market is even more even, 298 townhouses are for rent in Montgomery County and 298 were rented in the last three months.

And currently 1387 townhouses are for sale, while 337 have sold in the last two months, creating an 11 month supply.

Some other things to consider when deciding to rent your property.

You’ll have to rent your property at the prevailing rent, which may be lower than your mortgage payment, particularly if you purchased or refinanced your property in the last couple of years and took out a loan with a high loan to value ratio, such as a 100% loan. But sometimes having to come up with a smaller amount of money on a monthly basis is easier than having to come up with a huge chunk of money if you are upside down with your loan (owe more than the property is currently worth).

You can rent the property on your own or go through a real estate agent. If you rent it on your own, make sure you do a credit, employment and housing check on prospective tenants. And you’ll need to check with the local jurisdiction to make sure you follow whatever registration and inspection rules are in place. Any rental property built before 1952 must have a lead inspection.

If you decide to use a real estate agent, they should handle this and the drafting of the lease for you. To procure a tenant, real estate agents usually charge between one half month to a full month’s rent, but real estate commissions are negotiable.

If you’re moving out of the area, you may want a local property manager to take care of the property for you. The property manager will be the person called when the furnace goes out in the middle of the night. You will be required to pay for the furnace repair, but the property manager can probably negotiate a better repair rate because they have people on call. Property managers charge up to 10% of the monthly rent to manage a property on top of the charge to get the tenant.

If you need to buy a property in another area, a lender will count 75% of the income you receive from rent to offset your debts. They do this to cover for the period of time the property may be vacant.

And when you finally do go to sell your property, you may have to follow local tenant laws, like Takoma Park’s 1^st right of refusal where you have to offer the property to your tenant regardless of whether they have the means to buy it. That could delay a sale. I generally advise that it’s best to get a tenant out before putting your property on the sales market.

And if you’re lucky enough to have the price of the property increase while you’re renting it, you may have to pay capital gains taxes if you can’t count the property as your primary resident during two the past five years.

*(I’m looking at two month sales figures because it was two months ago when the mortgage market radically changed.)

Washington, DC September Housing Statistics

Sarah Toppins (Long & Foster Realtors) — Tue, 16 Oct 2007 06:52:52 -0500

The recently released housing statistics for August show that listings for both Washington, DC single family homes and condos are up significantly from August while sales are down slightly.

There are some significant differences in the single family and condo markets. Inventory was at a yearly high for single family homes, while condo inventory was higher last fall.

The average and median prices for single family prices continue to climb ($689,766 average and $533,450 median) but the condo averages, while higher than last year (currently $408,436 average price and $364,459 median), are considerably below the highs of 2005 ($428,576 average and $375,000 median).

Year-to-date single family housing is up almost 12% over last year while condo inventory is down 11%. Contracts and settlements for single family homes are below last year’s numbers in the double digits – contracts down almost 13% year-to-date and settlements down 13%. Condo contracts are up almost 8% year-to-date and settlements are up 9%.

My take on this is that many buyers are looking to buy the less expensive condos to stay within the conforming mortgage limits. And they are willing to take smaller properties close-in because they’re confident if their housing needs change, they will be able to rent their properties.

These statistics are provided by the Greater Capital Area Association of Realtors from data from the Metropolitan Regional Information System. A detailed look at the statistics is available at http://gcaar.com/statistics/default.htm.

Pricing Your Home to Sell

Sarah Toppins (Long & Foster Realtors) — Mon, 15 Oct 2007 08:27:02 -0500

I was at a real estate conference Wednesday put on by Howard Brinton’s Starpower group (www.GoStarPower.com) with a lot of top agents from around the country in places that have been experiencing a changing or “correcting” market for a lot longer than we have in the Washington, DC area.

They advise that sellers price their houses $1 below the most recent sales price of a similar property. So a seller hoping to sell his or her house “as is” should price his house $1 less than the most recent and closest “as is” sale. A spruced up house would be priced $1 less than the closest, similar spruced up house.

Leslie McDonnell, an agent in the Chicago area, gives here sellers a flyer outlining what a house is and is not worth. Market value is not what a seller has in a house or needs out of it, what a seller wants, what the house has been appraised for in the past (even recently) or assessed by the property tax office, how much it’s insured for, what the rumor mill says the neighbor sold his house for, or how much houses cost where the seller is moving.

True market value is what a buyer is willing to pay based on today’s market, competition, financing, economic condition, location, normal marketing time, showing accessibility , and the buyer’s perception of the condition.

Sellers can’t control location, market or economic conditions, the motivation of their competition, or value. They can control the price they ask, the condition of the property, and access to the property.

So, in order to be one of the properties that is selling in today’s market, McDonnell suggests improving the condition of a home dramatically, improving the way it shows, offering good terms, and adjusting the price to reflect great value.

I’m finding that the buyers I’ve been working with want a house in which they can live in long term (at least 5 years) in case it takes that long for the market to improve. That means they are less willing to compromise with location, the number of bedrooms and baths, and other updates. Sellers having a long term “deficiency”, such as only one bath, need to be in great condition and have a value price, one that gets the buyer to overlook the deficiency because the home is special in other ways.

September Montgomery County, MD Housing Stats

Sarah Toppins (Long & Foster Realtors) — Sat, 13 Oct 2007 07:29:07 -0500

The Greater Capital Area Association of Realtors (GCAAR) has just released its September housing stats showing that both Montgomery County, MD condo and single family home inventories were slightly up over August, but that contracts continue to decline. September inventory was at its highest in over a year and contracts were at their lowest.

Despite the bad news, average and median prices of both single family homes and condos remain at their highest - $626,091 average and $510,000 median price for single family homes and $326,794 average and $288,000 median for condos.

More details and trends are available at http://gcaar.com/statistics/default.htm.