Most of my first-time home buyers are using FHA financing, taking advantage of the 3.5% down payment and attempting to close in time to receive the $8,000 federal first time home buyer tax credit (which is available until 11/30).  They have heard it is a buyer's market and a great time to buy.  While it is definitely a great time to buy, we are beginning to see situations we haven't seen since the housing boom.  Many of the homes I am showing to them in their price range are bank owned homes, due to the prevalence of foreclosures in the suburbs (I am finding this mostly in Reston/Fairfax/Alexandria).  I am finding that the listing agents of these properties are intentionally drastically under-pricing these homes in order to create interest.  Within 2 days of being on the market, these homes are receiving as many as 35 bids (the highest number I have encountered thus-far).  Though my buyers are offering list price - and oftentimes far above list price - they are not being considered by the banks because they are using FHA financing.  The banks are taking lower offer prices over risker financing.  So, even though an investor may offer $15,000 less than my clients, if he can pay cash, he is winning the bid. 

If you are looking to buy a home, keep in mind that while it is a great time to buy, you should be prepared to compete for the choice houses and the best-priced houses.  In competing, remember that cash is always king, followed by conventional financing with a significant down payment.  FHA is tricker because the buyers are being approved with a lower measurement of risk and the homes they are purchasing must meet higher standards.  FHA also has an open-ended appraisal contingency that extends the entire period from contract to closing.  This leaves the seller vulnerable to the contract falling apart with little recourse to them.  The stronger your financial position, the stronger your offer. 

Dan Phillips of Huntsville, Texas, began his construction company in 1997 with a plan to provide low income citizens with affordable housing.  Like many, he found the solution of mobile homes as affordable housing an unattractive backdrop to any town.  Realizing that landfills are full of unused building materials and scraps, he came up with a new plan: building afforable homes out of trash.  He has created beautiful, rustic tree houses that any homeowner could be proud of with cork floors made out of salvaged wine corks, wood-burning stoves recycled from old ships, roofs made of leftover picture frames, and counters made of slices of orange wood.  These homes are creative works of art which are low in cost and friendly to the environment.  This is the ultimate in green living!  Mr. Phillips requires all recipients of his homes to assist him with the construction.  They learn all about the inner workings of their new homes and have a sense of pride and ownership upon their completion.  But what I want to know is: when is he coming to DC to build me a trash house?!

Check out the original New York Times article and slideshow here: 

http://www.nytimes.com/2009/09/03/garden/03recycle.html

LONG AND FOSTER HAS HIGHER MARKET SHARE IN DC THAN NEXT 3 BROKERS COMBINED!

Long and Foster       28.21%

Coldwell Banker     11.25%

Washington Fine Properties       8.34%

Remax   8.28%

Tutt, Taylor, Rankin (Sotheby's)     7.44% 

These percentages represent $$ volume of sales CLOSED in DC for July '09. 

Statistics based on MRIS compiled by Data Concepts.

MAY 2009 SALES

A bill was introduced to the Senate on June 10th by Georgian Republican Johnny Isakson and co-sponsored by Senate Banking Committe Chairman and Democrat Chris Dodd which would raise the current federal first time homebuyer tax credit from $8,000 to $15,000.  It would also eliminate many of the current restrictions.  It would eliminate the income caps of $75,000 for single purchasers and $150,000 for couples, would apply to ALL purchasers (even if they had owned a home within the past 3 years), and would extend the purchase deadline from December 1 of 2009 to a year from the date the bill passes into law.  Additionally, it would allow purchasers to split the credit between two tax years if so desired.  It would also extend to multi-family residences, provided they are the primary residence of the borrower.  This additional credit would not be retroactive to purchases made before the bill becomes law.  This bill has received bi-partisan support from lawmakers, as well as The National Association of Realtors and The Business Roundtable.

This is great news for potential buyers who are not QUITE ready to purchase yet - perhaps you are saving up your down payment, cleaning up your credit, or trying to increase your income - but are hoping that the great incentives don't pass you by in the meantime.

This is a great article illustrating the projected economic growth expected in the Washington DC Metro area over the next few years thanks to the federal government when other major cites are seeing a decline:

http://news.yahoo.com/s/bw/20090220/bs_bw/feb2009db20090219655989

NEW YORK (Reuters) - Interest rates on standard U.S. 30-year mortgages dropped in the latest week to levels just shy of record lows as concerns of a deepening recession boosted the appeal of fixed-rate investments, Freddie Mac said on Thursday.

The average fixed 30-year mortgage rate declined to 5.04 percent in the week ending Thursday, from 5.16 percent in the previous period, Freddie Mac said in a statement. That was close to the 4.96 percent reached in mid-January, which was the lowest rate since Freddie Mac began its survey in 1971.

Yields on benchmark 10-year U.S. Treasury notes, which influence rates lenders offer to consumers, dropped as low as 2.65 percent this week from 2.99 percent in early February after bearish economic reports. Forecasts from the Federal Reserve for slower growth added to the negative tone, Frank Nothaft, Freddie Mac's chief economist, said in the statement.

"Mortgage rates followed bond yields lower this week as recent economic reports suggest the economy is still slowing, which reduces the future threat of inflation," Nothaft said.

Applications for U.S. home mortgages soared last week, nearing the levels last seen as rates dropped in early January, the Mortgage Bankers Association said on Wednesday. The 30-year rate as measured by the MBA fell to 4.99 percent in the week ending February 13.

Mortgage rates averaged the lowest in the northeastern U.S., at 4.92 percent, according to Freddie Mac's survey. Rates averaged the highest in the southwest, at 5.14 percent, it said.

All rates in the survey are based on up-front payments of about 0.7 percentage point of loan principal to the lenders