Foreclosures are not what they used to be. Since the lending extravaganza, more and more Northern Virginia homes are falling into foreclosure because homeowners cannot afford to pay their mortgage. What does this mean? Well for starters, there are some bargains out there. Rewind a few years ago. You see, during the hot market, a lot of buyers got in over their heads. They thought because sellers were making big profits on the sale of their home, they would be able too as well. However, these sellers had purchased their properties when they were priced low. These homebuyers that purchased at the peak of the market had no idea it was the peak. Lenders were giving out loans to anyone during this time without proof of income or work history. Most of the homebuyers took out ARMs (adjustable rate mortgages) that would expire a few years later. These homebuyers had no idea that they wouldn’t be able to sell their home for a higher price in a few years. Fast forward a few years later. The ARM loans are adjusting and the mortgage payments are increasing thousands of dollars. What do the homeowners do that purchased at the peak who had ARMs? Some of them don’t pay their mortgage and the home goes into foreclosure. So with that being said, there are foreclosure homes that are fairly new out there. These foreclosures are in more desirable areas than observed in the past, and are getting scooped up by responsible buyers.

The increase in foreclosure homes can also hint at the bottom of a real estate market. Whether you live in the DC metro real estate market or plan to move there, a real estate professional can examine statistics to track the lowest foreclosure sales. Of course not every foreclosure is in a great neighborhood. You will find some of the best foreclosure deals in neighborhoods with new construction that sold in 2005-2006 that were priced above the median home price for that area. Most of the foreclosures in Northern Virginia are popping up in the suburb counties of Prince William, Loudoun and Fairfax, Virginia.

If you keep an eye out on the foreclosure market, it will give you a good idea of how well homes hold their value in your market. Who knows, you might find a great deal.

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Not everyone can resist a great deal when they see it. However, when one is put right in front of our face, we have a tendency to not believe it. It’s out of human instinct that something inside of us needs reassurance. It’s those of us who recognize and take advantage of the bargain that are the real winners. So as home prices have fallen in the Northern Virginia real estate market, those people on the fence who are thinking of owning a home are beginning to notice.

The stars are aligning and different factors are making this a good time for first-time buyers to consider owning a home because they don’t have the issue of selling their home to buy another one. With that said, home prices are low and there is a plethora of inventory to choose from. Some people even say it’s been too difficult because of all the choices they have. People are often finding three or four homes they like and are stuck on making a decision. Another factor that comes into play right now is the relatively low interest rates surrounding us. Not to mention the increasing number of foreclosures and bank-owned properties out there. Now you can afford more home for your money with these types of property.

Even with everything pointing in buyers favor, there still is that fear issue. You have people concerned that prices will keep falling. That little thing inside make them uncertain. Something has them scared about 1% depreciation in the next year. You have to look at the long-term appreciation for this kind of an investment.

The best advice for those first-time home buyers looking to own a home is go talk to a lender about financing and then contact a HomeZill agent for any questions you may have. If your credit score is low then you’ll end up paying a higher interest rate and if you plan on living in the home for 2-3 years then maybe you should postpone buying a home. But first look into an FHA insured loan which does not have a credit score requirement.

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By now you have all heard that the real estate market has been the slowest in recent years.  However, this is not a bad thing.  It means that there are nicer houses for the DC Metropolitan area buyers. 

The area that is pulling down the national economy is Northern Virginia.  The home prices are being affected by the increasing number of foreclosures.  This means that there are homes that are priced well below what they are worth.   It’s been hard for homeowners to sell their home because the foreclosure next door is $80,000 less and is in the same condition or at least close to it.  The median home price around the region in 2007 was $420,000.   DC Metropolitan area home prices were down 11% in a year ago in January according to the Standard & Poor’s/Case-Shiller index. 

Each of the numbers are measured differently.  Case-Shiller and similar indexes use statistical models to determine how the prices of physically similar houses change over time.  However, median price data shows actual sales prices disregarding any physical characteristics. The difference between the two types of price measurements suggests that buyers were likely to be spending about the same amount as they would have in the recent past but were getting more home for the money. The region is still one of the most expensive in the country, even with slow home sales. The priciest jurisdiction last year was Arlington, where the median price of a single-family house or townhouse was $580,000, up 3 percent. Medians in neighboring Alexandria and Fairfax County also remained above $500,000, though they were down from 2006.

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I wanted to share this article about buying a home right now from Time Magazine with you all:

Famed Money Manager is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.

That’s no easy thing. How do you tune out all the chatter and ink on recession, housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $100 oil and nukes in Iran? It’s enough to make you sit on your thumbs and wait before making any big moves. But what, exactly, are you waiting for?

There has rarely been a moment in history when you couldn’t scare yourself into doing nothing. And yet, as Lynch observed nearly 20 years ago, “in spite of all the great and minor calamities that have occurred … all the thousands of reasons that the world might be coming to an end–owning stocks has continued to be twice as rewarding as owning bonds.”

A top reason to not buy stocks, in Lynch’s view, is if you don’t already own a home–in which case, that should be your first investment, since an owner-occupied home is nearly always profitable. Through a spokesman, Lynch reaffirmed these views to me–housing debacle and all.

When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run. As John D. Rockefeller famously said, “The way to make money is to buy when blood is running in the streets.”

And the streets are stained crimson. Start with stocks. They have been pummeled this year. GDP braked sharply last quarter, and there has been plenty of panic about a recession. The Federal Reserve is slashing short-term interest rates at the fastest clip in decades. But if you stick to your steady, diversified plan while everyone else is retreating, you will be happy years from now. For one thing, Fed rate cuts always lift the economy eventually, and the stock market typically starts responding just as headlines get gloomiest. Sure, the market could fall again before recovering. But the recession may be half over already–or we may avoid one altogether. You just never know.

As for housing, certainly some skepticism is in order. Formerly sizzling markets in Florida, Nevada, Arizona and California probably haven’t seen the worst headlines just yet, though they may well be close. And “jumbo” mortgages, those more than $417,000, are likely to remain artificially high for a few more months while banks work through their credit issues.

But let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious–before an inevitable rise in interest rates wipes out your advantage. “The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher,” says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today’s rate of 5.5%. Monthly principal and interest come to $994.31. Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you’d have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you’d rather not be.

It’s more complicated if you must sell before you can buy. But that logjam won’t persist forever–and if it appears you’ll be trapped for a few years, try to refinance at today’s lower rates. Risks always seem most acute when the headlines give you ulcers. But that’s exactly when you should think long term–and get off your thumbs.

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I was at lunch the other day with some real estate agents and lenders from around the Northern Virginia area. Unfortunately, I was the only Re/Max agent in the restaurant but I can hold my own ground with these middle aged women. Anyhow, we all got started on the topic of the current market situation. Somehow by the grace of God we all agreed that finally, it’s a buyer’s market out there. Surprisingly, no one had anything to say when the topic was brought up. Usually some smart ass will go on a rant about all his/her experiences while the rest of us realize this is our chance to ignore them and dive into our food.

So why do we think it’s a buyer’s market? For the past few years the quickly increasing prices kept many first-time home buyers out of the housing market. However, now those rising prices have started a downward spiral. With the interest rates hovering at relatively low levels, it only makes sense to become a homeowner.

Now don’t go out and try to buy a home if you don’t have a secure job and good credit. The lenders are going to be stricter with income and credit requirements. Take it from my friend at Bank of America. He said that they’re not pushing everyone away, it’s just that they have to start being realistic with who they give the loans to.

You want stats? Here they come. The U.S. median home price was $201,000 in January which is down 4.6% from last January in 2007. The home-price index for the fourth quarter was down 8.9% from a year earlier which was the biggest drop in 20 years. There is a 10-month supply of existing homes right now.

An approach that you might want to take when buying right now is K.I.S.S. This means keep it smart and simple. To sum it up, you’re investing into something big so buy cheaper. Do your research before starting your home search. You can also call me at 888-998-9455 and I’ll explain the home buying process to you and the steps you need to take fully understand everything.

Here’s an insider tip: you have all heard it before, but now more than ever, LOCATION is crucial. You want to make sure that you’re in a good school district if you want to start a family or if you want to sell your home in the future. Also compare your estimated monthly costs for the mortgage, taxes and other expenses with the cost of renting a similar place nearby. If you can rent virtually the same house for a much lower cost, the seller is asking too much.

So if you have been waiting for the right time to buy it’s right in front of your face. Do your research, contact a HomeZill agent, and we’ll take care of you.

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January’s existing home sales rate was 4.9 million - its lowest level in 10 years and down 23% from a year ago. However, this has been the theme since September, which could indicate a bottom. Along those same lines, January sprouted 57% more foreclosures than the year before, which is better than December’s 97% increase year-over-year. The bleeding still has not come to a halt, but we can see that it might be stabilizing.

This is based on the following rationale:

1. Home prices have decreased 4.6% in the last year.
2. There is a 10 month inventory of homes for sale.
3. Interest rates are lower - a 30-year conventional loan was at 5.76% compared to 6.22% last January.
4. Many buyers are waiting for the President’s Economic Stimulus Plan to take effect, which will increase limits for FHA loans, and allow Freddie Mac to repurchase jumbo loans.

What all this means: If price declines were to follow sales declines, it would compare to the 24% decline experienced during the Great Depression of 1929. However, this is unlikely to happen since most homeowners will take their homes off the market before losing their arses. Furthermore, mortgage rates are around 6%, only half the rate they were in the 80’s. This allows mortgage holders to refinance, therefore reducing the potential of foreclosure.

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