EVERMAY ESTATE IN GEORGETOWN

2/26/2010

Mortgage rates reverse declines


What???

Does this mean that the rate reversal has declined; or that the declining rates have reversed? This article from the Washington Business Journal clarifies it, but just as the headline can be read at least a couple of different ways, so can the mortgage and real estate market be "read" in different ways. Maybe rates are going up, and maybe they aren't. Maybe it's for a day or for a week. Maybe it's a momentary blip. The only thing certain is that rates remain lower now than they have been in the past (when I started in real estate in 1983, they were at 18%!). And it is likely they will rise. But we'll only know that they have hit bottom when we can look back several months after the bottom and see that they indeed bottomed out. It's good reason to consider buying a property in Georgetown or elsewhere.


Washington Business Journal - by Jeff Clabaugh Staff Reporter
Long-term mortgage rates rose for the first time in three weeks, with a 30-year fixed-rate mortgage moving above 5 percent.

Freddie Mac's weekly rate report says a 30-year fix averaged 5.05 percent in the week ending Feb. 25, up from 4.93 percent last week. A one year adjustable-rate mortgage averaged 4.15 percent, down from 4.23 percent last week.

"Interest rates for 30-year fixed mortgages followed long-term bond yields higher amid a mixed set of economic data reports," said Freddie Mac (NYSE: FRE) chief economist Frank Nothaft. "For instance, the January producer price index jumped well above market consensus, but the consumer price index remained subdued and consumer confidence declined to the lowest level since April 2009, according to the Conference Board."

The monthly S&P Case Shiller Housing Price Index report showed home prices in the nation's biggest cities rose for the third consecutive quarter. New home sales unexpectedly fell in January.

2/25/2010

Interest rates to remain at current levels

U.S. Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that the Fed has no current plan to raise interest rates. That's a good thing for residential buyers, but also signals the fact that Chairman Bernanke recognizes the continuing weaknesses in our economy. So while I like the continuing lower interest rates, I think we could stand to see rates go somewhat higher in exchange for improvements in the job market and commercial real estate. Here is a good report of Bernanke's talk.

Bernanke Article

Whew! It missed us!!

I am grateful that last night's predicted snow missed us. Beyond all the obvious reasons for that (we are still trying to get snow out of our parking lot), there is a definite upswing in the number of people looking at properties, and the number of listings coming on the market. Another snow would have interrupted this flow...a flow which we really want to continue, here in Georgetown and all around. We are approaching a window of a couple of months which will not only be our most productive time, but will also give us some clues as to what we might expect for the Summer and Fall.

2/23/2010

A Realtor braves the blizzard!!

This is from one of the agents who works in my office....

I met a couple at my Open House in Kalorama, held the first Sunday of Snowmageddon.
I showed them condos the following Thursday, in the shadow of the second coming of snow. We ratified a contract that following Saturday while the snow was still falling. The following Monday I took Metro from Union Station to Dupont Circle, traipsed across the frozen Tundra of DC and completed their Home Inspection…

Walking back from the inspection with my clients, I fell down in the snow - back first - and they had to yank me up out of the snow bank!

We all laughed and I said, "yes sir reeeeeeeeeeee. I go to any lengths, risking life and limb, to provide GREAT SERVICE for my clients!!!"

FHA loans not just for entry level properties

We have become so accustomed to interest rates being low, and mortgage money plentiful, that we have pushed FHA loans to the sidelines over the past few years. They have been until recently relegated to lower priced properties...mostly condos. This has changed significantly in the past year in several ways which have made FHA loans suitable for a much wider range of property prices, including raising the maximum loan amount in our area to $729,750. A recent property in the Georgetown area sold for $1million+, and the buyer used FHA financing.

If (when?)interest rates rise, the fact that FHA loans are assumable will be an important factor. There is a good article in the Washington Post from this past Saturday, February 20th, titled "A hidden value to FHA loans". Click the link below.


A hidden value to FHA loans

2/19/2010

Property Assessments in Georgetown


I write a Q&A column in the Georgetowner. This is one of the questions I answered in that publication.

Dear Darrell,

I live in Georgetown. In the process of thinking about selling my house over the past few years, I have twice asked a Realtor to tell me how much I could get for it at that time. Both times the price she came back with was very different than the assessed value. Once it was higher and once lower. How is this possible? Joan S


Dear Joan,

I am guessing that the two Realtor price opinions were in two different markets. Once when prices were on the rise, and once when they were declining. It's common for the Realtor's opinion and the assessed value to be different. The higher/lower result is a function of the strength of the real estate market, and the fact that property assessments always lag behind what is happening in the day-to-day real estate transactions. Pricing is a subjective art in any case. The property owner and Realtor are "reading" the market in a sort of snapshot. The price at the moment of that snapshot takes into consideration the recent sales of comparable properties. The tax assessors use the same process to set the assessed value, but it is six months to a year (or longer), after a given property has sold. By then the real estate market has changed...strengthened or weakened...and the assessors "snapshot" is somewhat outdated. If the gap between the assessor's value and your opinion is quite large, it is worth challenging the assessment.

2/17/2010

U.S. looks to reluctant foreign investors to help fund the housing market

The Fed's [Federal Reserve] departure from the market for mortgage-backed securities is only one step being taken to wind down the emergency measures put in place by the U.S. government during the [recent] financial crisis. But it is one that could have a direct effect on homeowners and potential buyers and on the tentative recovery in the real estate market.

So reports Howard Schneider of the Washington Post. Later in the article he also references "financial analysts" who have said "U.S. officials consider a healthy housing market so vital to an economic recovery that they would roll out new policies to keep mortgage rates low..."

The full article is quoted below. While this article is not related to individual foreign investors seeking Georgetown real estate purchases, it is another indicator that even though our real estate is "local", the economy of the world has an impact on us. Whether it is individual buyers or sovereign wealth funds, foreign investors are important to us, and can help us sustain the beginnings of a housing recovery.

By Howard Schneider
Washington Post Staff Writer
Tuesday, February 16, 2010; A01

As the U.S. housing market boomed in the past decade and fueled a bull market in mortgage investments, Norway's government-owned fund went along for the ride -- and the fall.

After that fund recorded its worst-ever year in 2008, managers cited investments backed by U.S. mortgages as a key culprit and began to cut back.

Now, U.S. officials are looking to foreign government funds again. The Federal Reserve is scheduled at the end of March to halt its purchases of mortgage-backed securities, a move that could drive up the low interest rates that have helped the housing market show new signs of life. The Fed is gambling that private investors will step in to buy the securities, helping to keep rates from spiking. Senior officials in the Obama administration and at the Fed say they are counting in part on foreigners to keep the housing market funded.

But financial analysts and advisers familiar with foreign government funds, known as sovereign wealth funds, predicted that the United States will get limited relief from abroad.

"I don't think it will be enough to fill the hole," said Ajay Rajadhyaksha, head of fixed-income strategy for the United States at Barclays Capital.

Nor is Norway's experience encouraging. Its government's holdings of securities issued by the mortgage financier Fannie Mae declined from a 2007 high of more than $15 billion, at current exchange rates, to just more than $5 billion as of Sept. 30, 2009, according to the fund's public reports. Contracts with external investment mangers were slashed, and the fund's guidelines were refocused toward individual stocks, real estate and other deals that the fund's staff had the expertise to vet.

Sovereign wealth funds are pools of money used by governments to make investments. The largest belong to big exporters such as China and the oil-rich monarchies of the Persian Gulf that accumulate trade surpluses.

These funds often set guidelines for the amount of money they are willing to put into bonds or other fixed-income investments, including mortgage-backed securities. Even if interest rates begin a modest rise, as he expects, Rajadhyaksha said he does not think it will be enough for sovereign wealth funds to direct large amounts of money away from alternatives, particularly U.S. Treasury notes, that are less risky and not associated with the mortgage crisis.

"A lot of sovereign wealth funds have a vested interest in seeing the U.S. stabilize," said R.P. Eddy, whose Ergo consulting firm advises foreign funds on U.S. and global economic issues. "But some wealth fund coming in to save the day? That is not going to happen."

The securities issued by government-sponsored enterprises such as Fannie Mae and Freddie Mac are not debts of the U.S. government but do carry an implicit guarantee that the companies will not default. In December, the government carried that a step further, saying it would not limit the amount of money made available to keep the firms solvent.

Senior U.S. officials said the goal was to reassure buyers of the companies' mortgage securities that they were safe. "That's particularly true for foreign investors," said Eric S. Rosengren, president of the Federal Reserve Bank of Boston.

The Fed's departure from the market for mortgage-backed securities is only one step being taken to wind down the emergency measures put in place by the U.S. government during the financial crisis. But it is one that could have a direct effect on homeowners and potential buyers and on the tentative recovery in the real estate market.

By packaging home mortgages into large bundles that are then sold to investors, Fannie Mae and Freddie Mac generate funds that allow banks and other lenders to provide more loans. Keeping that market liquid during the depths of the global credit crisis was a high priority -- enough so that the Federal Reserve is expected to own $1.25 trillion in mortgage-backed securities by the time the program ends.

If funding evaporates in the absence of federal support, that would mean higher interest rates -- making purchases more difficult for buyers and payments more expensive for those with adjustable-rate loans.

But some financial analysts said U.S. officials consider a healthy housing market so vital to an economic recovery that they would roll out new policies to keep mortgage rates low if sovereign wealth funds and other private investors fail to step in with enough funding.

"We recognize that a deep and liquid home mortgage market is an important U.S. policy priority," said Paul O'Brien, head of fixed-income strategy at the Abu Dhabi Investment Authority. He said U.S. officials would be sure to protect this market.

Like most sovereign wealth funds, the Abu Dhabi Investment Authority publishes only broad statements of strategy and does not disclose individual holdings. Norway's fund is an exception. But even those broad intentions hint at the degree to which sovereign wealth funds may be interested in mortgage-related securities in the United States.

Over the past two years, as the world economy cycled from crisis to an uncertain recovery, some sovereign wealth funds were forced to turn inward -- directed by their governments to provide capital to local companies, as in the case of Russia, or pulled back from troubled investments abroad, as in the case of Dubai.

Others signaled a new set of investment interests: commodity and natural resources companies, thought to be undervalued during the economic downturn, and emerging economies that are thought to hold better long-term growth potential than the developed markets of Europe and North America.

In recent publications and interviews, for example, executives at both the Abu Dhabi Investment Authority and Singapore's Temasek fund pointed to a focus on developing markets.

Asian wealth funds in particular are looking to tap into economic growth in their region as a broad new class of consumers emerges, offering fresh opportunities while consumption spending in the United States and Europe plateaus, said Jan Randolph, head of sovereign risk analysis at the IHS Global Insight consulting firm.

Not only is the United States seen as a slower-growth region, he said, but some funds are looking for non-dollar investments to guard against the currency's possible decline and are still hesitant about the U.S. mortgage industry.

"Put yourself in the position where you do have the capital to invest. A lot of it is heading to emerging markets and into equity," Randolph said. "The bigger uncertainties are still in the West."

Staff writer David Cho contributed to report.

2/16/2010

Georgetown and DC Statistics for January

The Multiple Listing System (MLS) of which I am a member, regularly updates the housing statistics for DC in general, and for individual areas of DC. It provides a review of sales and listings on a monthly basis which can be broken down by zip code and by price range. The chart is too big to print in this blog, but if you are interested in such things, please send me an email, and I'll send you the chart. darrell@lnf.com

2/12/2010

Nationally - 4th quarter home sales surge 13.9%

This is clearly not about Georgetown real estate in particular, but we are all connected in one way or another. So it's good to know what's happening elsewhere because it will eventually have an impact on us.

Darrell

***************************************************************************

Strong gains in existing-home sales were the predominant pattern in most states during the fourth quarter, with many more metro areas seeing prices rise from a year earlier, according to the latest survey by the National Association of Realtors. Sales increased from the third quarter in 48 states and the District of Columbia; 32 states saw double-digit gains. Year-over-year sales were higher in 49 states and D.C.; all but three states had double-digit annual increases.

Total state existing-home sales, including single-family and condo, jumped 13.9 percent to a seasonally adjusted annual rate of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the 4.74 million-unit level in the fourth quarter of 2008.

Distressed property accounted for 32 percent of fourth quarter transactions, down from 37 percent a year earlier.

In the fourth quarter, 67 out of 151 metropolitan statistical areas reported higher median existing single-family home prices in comparison with the fourth quarter of 2008, including 16 with double-digit increases; one was unchanged and 84 metros had price declines. In the third quarter, only 30 MSAs showed annual price increases and 123 areas were down.

The national median existing single-family price was $172,900, which is 4.1 percent below the fourth quarter of 2008; the median is where half sold for more and half sold for less.

Markets by Region

Northeast: Regionally, existing-home sales in the Northeast rose 11.1 percent in the fourth quarter to a pace of 1.03 million and are 33.6 percent higher than a year ago. The median existing single-family home price in the Northeast declined 5.6 percent to $234,900 in the fourth quarter from the same quarter in 2008, but with widely varying conditions.

Midwest: In the Midwest, existing-home sales jumped 14.5 percent in the fourth quarter to a pace of 1.38 million and are 29.9 percent above a year ago. The median existing single-family home price in the Midwest rose 1.1 percent to $141,100 in the fourth quarter from the same period in 2008, with the region accounting for the majority of metro areas experiencing double-digit gains.

South: In the South, existing-home sales rose 13.8 percent in the fourth quarter to an annual rate of 2.23 million and are 28.2 percent higher than the fourth quarter of 2008. The median existing single-family home price in the South was $153,000 in the fourth quarter, down 2.4 percent from a year earlier.

West: Existing-home sales in the West jumped 16.2 percent in the fourth quarter to an annual rate of 1.38 million and are 18.2 percent above a year ago. The median existing single-family home price in the West was $227,200 in the fourth quarter, which is 8.9 percent below the fourth quarter of 2008, but with many areas showing notable gains.

Source: NAR (National Association of Realtors)

Neither rain, nor sleet, nor SNOW...kept these Realtors from their rounds.

Despite the storm, agents have been working in Georgetown real estate. 5 properties were brought under contract by intrepid agents (and buyers and sellers) who in some cases outdid the Post Office...

Those 5 properties range in price from $395,000 to $4,200,000.
Also, one property at 3314 O ST NW closed in the past week at a price of $4,950,000.

Congratulations to all the parties involved!!

2/09/2010

Bottom in home prices?

All articles about house prices and volume of sales have to be taken with a large grain of salt since they are all based on averages. Georgetown isn't your average U.S. town or neighborhood. So trying to draw conclusions from articles based on national averages is dicey at best. But...it IS a good sign that someone, somewhere sees prices bottoming out. And the article below quotes PMI, a powerful company which is on the front lines of the real estate business. While this article doesn't address Georgetown real estate directly, it certainly can be used as an indicator...and in this case a positive one.

A new study from PMI Mortgage Insurance Co. suggests home prices have found their bottom. The company's analysis shows that by almost all measures, residential property values began stabilizing considerably during the second and third quarters of last year - and monthly data through November confirms that this stabilization continued into the fourth quarter. PMI says the likelihood that home prices will drop lower over the next 24 months is diminishing for most large metro markets.

Of the 50 most-populated MSAs in the United States, 22 had declines in their risk index, while only 17 had increases in the third quarter. Among all 384 MSAs, risk scores in 212, or 55.2 percent decreased, compared with 136, or 35.4 percent, that had rising risk scores. Florida, California, Nevada, and Arizona MSAs continued to face the highest probability of continuing price drops. PMI said all metro areas studied in Florida, Nevada, and Arizona have risk scores that remain significantly elevated.

Source: DSNews.com, Carrie Bay, (02/05/2010) (From RealTrends newsletter)

2/08/2010

Mayor Fenty visits Georgetown and a reminder of the Peabody Room

As I walked down Wisconsin Ave to my office a couple of days ago, I heard…coming from the hill above, behind the Georgetown Library construction site…an amplified voice. Turns out the voice belonged to Mayor Fenty, and he was helping mark the occasion of placing the cupola on the under-renovation library building. (http://www.dclibrary.org/node/3855).

I was reminded of the day nearly three years ago when I could hardly get to my office because of the fire fighting equipment, and the smoke which engulfed the library building and surrounding area. It was heartbreaking to see that significant building burning so ferociously, and to know we were losing its contents. Beyond the obvious loss of the books and historical objects, there was a loss of particular significance to the real estate community.

The flames ate through the Peabody Room, the key source for original historic materials about Georgetown. The second-floor room was named after the financier who in 1867 provided seed money for a library for Georgetown. For years Georgetown real agents and brokers had gone to the Georgetown Library to do historical research on Georgetown properties. The collection in the Peabody room had always been a unique one, and its curator a knowledgeable source of historical property information. Seeing the collection go up in flames was disheartening. Thankfully though, the fire was stopped before it consumed that collection, and nearly all of the collection was saved.

The Peabody Room presently houses a special collection of current and retrospective materials that relate specifically to Georgetown, its history, culture and economy. The collection contains information about local houses with chain of title, assessment records and other pertinent information; and local residents in both text and non-text formats. There are plats, maps, vertical clippings files, local newspapers, photos and engravings that depict various aspects of Georgetown life and history. There is also a collection of published books and journal articles either about Georgetown or by Georgetown residents.

What was there in the Peabody Room then, is now housed temporarily at the MLK,Jr Library in the Washingtoniana Division. Jerry A. McCoy is the Peabody Room librarian and archivist and may be reached at (202) 727-2271 or jerry.mccoy@dc.gov. Historical research can still be done by those who are particularly interested in the history of Georgetown properties, and the people who have owned those properties.

Martin Luther King, Jr. Memorial Library
901 G Street, NW
(202) 727-0321
(TTY 202-727-2145, M-F 9:30am - 4pm)

2/03/2010

Long & Foster Real Estate Market Conditions Report - 4th Qtr 2009



This is a page from the the 35-page Market Conditions Report which our company makes available to us each quarter. While it covers an area much wider than Georgetown, it informs one as to the state of the real estate market in the area of which Georgetown is a part.



If you would like a copy of this report, I'd be happy to email it to you. darrell@lnf.com

Georgetown Property Sales Statistics - January 2010

12 properties went under contract in the month of January in Georgetown.
6 were Single Family houses (SF) and 6 were condos or co-ops (C/C).

For SF, listing prices range from $739,000 to $4,995,000.
For C/C, listing prices range from $239,000 to $2,295,000.
(Sold prices will be available once these properties have gone to closing).

Four properties closed in January in Georgetown:

1531 31st Street,NW #1 $500,000
3261 O Street,NW $708,000
3414 Prospect Street, NW $1,650,000
1621 31st Street, NW $2,225,000

There are currently 57 active Single Family (SF) listings in Georgetown ranging in price from $599,000 to $39,500,000. (9 are new in January)

There are currently 41 active Condo/Co-op (C/C) listings in Georgetown ranging in price from $199,990 to $4,200,000. (11 are new in January)

If you have any questions about any of these properties please don't hesitate to ask. darrell@lnf.com

Real Estate Market Conditions Report

Long & Foster publishes a quarterly Report which analyzes the real estate market in the mid-Atlantic States where Long & Foster is the leading real estate firm. The report is 35 pages long with charts, graphs and statistics. I'd be happy to email a copy to you if you like. Just let me know at darrell@lnf.com