5 reasons to buy a home in metro DC
SEARCH D.C. HOMES FOR SALE
 I recently saw a poll that half of potential borrowers would still not move forward with their home purchase even if the rate was as low as 5.5%. When I read this I knew I had something to write so people would stop, take a breath and not be scared about all the gloom and doom that is constantly out there from the media. There are many many good reasons to purchase a home now and I will mention 5.                        

1. Home prices have fallen 25% in the DC area and more in selected pockets the since mid 2006. There are encouraging signs of a rebound, granted Twain was right about lies, damned lies and statistics so we could debate your numbers versus my numbers all day. Bottom line, it’s not just about the home price driving a smart decision, what about interest rates and the mere ability to get a home loan? If the home price is down more in 6 months but the rate is much higher have you really saved anything. A few years ago anyone with a pulse could get a loan, it was too easy. Now good people are being excluded because of the banks fears and the credit crunch. It’s about far more than a good credit score these days and that is the one thing most people in the business agree on.  Lending guidelines will grow even more restrictive next year, not less. We would all like to buy our stocks at the lowest possible point, I mean wouldn’t we all like to know the day the stock market will hit rock bottom and then rise? It’s called the housing market for a reason, it works a lot like the stock market, there are dips and increases and unforeseen events. My point is, when you know it’s near the bottom and the rest of the factors make sense, make a move, and don’t wait for the bottom of the rates. Even when they are there you won’t know it anyway.

2. The number one projected job growth area in the country- the DC metro area. We all know the high quality of life we enjoy here, traffic not withstanding. It must be great for us to put up with Route 66 and Rockville Pike right?

People will always come here for the jobs this area has, we are down economically at the moment but we all know just like everything else that is a cyclical event also and when the economy heats up so will our local housing market. BTW, Miami is number 2.  

3. Stocks of the major home builders—Toll, Centex, KB Homes, D.R. Horton, and Pulte Homes—flattened out in July and have been climbing since. These stocks peaked and started dropping nine months before the housing market began its tumble. If they predicted the top nine months before it happened, why shouldn’t we believe they’re forecasting the bottom nine months from now? The big home builders’ stock prices have already made major moves north, but I expect more upside from KB Home and Centex. The above comes from Jim Cramer who inspired me to write the abridged version that was more in touch with the local angles. Too many times people see national housing trends and panic, when so much of the damage is in Florida, California and Arizona. How does that affect us directly in Washington DC exactly? My local version: VA prices started to sink and days on market increased. Supply went up and demand went down along with prices. When they hit low, people bought. Well this has already happened in certain areas of Virginia like Prince William. Virginia fell first and is coming back before Maryland. We are due north of the river for some increases in 2009.

4. Interest rates are low and predicted to go lower.  While I cannot vouch for that statement definitively, the folks at Kiplinger’s Finance and Kiplinger’s forecasting note that the prime rate is currently 4.5%.   Rates for the 30 year fixed mortgage has been averaging 6.5% but trending lower not far from the historic low of 5.8% reached in 2003-05 and 1963-65.  Credit card companies, while reining in personal spending limits, are also dropping rates.  Check out LowCards.com which tracks 1,260 credit cards to see the most competitive cards available at this time.

5. Stocks are on sale and many bonds offer Terrific Yields.  Realize though that “the current bear market is approaching the 1973-74 and 2000-2002 downturns. The two worst retreats since WWII.”  That’s the bad news.  But the good news is that some blue chips are great buys. Triple-A rated tax-free bonds, an extraordinary safe investment, are paying 5% plus for 10 years and 6% for 20 years.  “That’s better than Treasury notes right now.” <Source Kiplinger.com> 10/23/08

While we all face uncertainty in the market, be it housing, stock or any investment that doesn’t mean we should stuff our money in our mattress and rent a home forever. I do think that much of this is fear but I also think some of the hesitancy is fostered by an unhealthy desire to make profits as well. A primary residence is more than an investment, it’s a place to raise and grow a family, and you can’t place a price on that.

     Brent Mendelson of Choice Finance

Thursday, October 16th 2008 Fox News
will be at Choice Finance to interview Bob Kearns! 

Gazette article on Bob
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Interview with WJFK.com
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Movie trailer
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Washington Post story on Robert Kearns
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Wikipedia of Robert Kearns
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4. Buying an older home and updating.
With the rising cost of gas, many are rethinking the viability of the long commute.  Instead they are looking at older, closer in housing that may lack both the size and the amenities that distant, new communities offer.  With one loan, it is possible for purchasers to buy and create the home of their dreams.  Once you have decided to undertake a renovation, a key step will be figuring out what sort of financing is needed.

If the straight cash-out is not an option due to LTV considerations, you could consider a Fannie Mae HomeStyle Renovation mortgage.  The difference is that the appraisal will be based on the “best-value” of the property once the renovation work has been completed.   However, the work has to be done by a licensed contractor and the renovations have to be completed within a six month time period.  Another option is the FHA 203k rehab loan. If the work needed is basically cosmetic (no structural work is allowed) and the total cost is under $35,000, it is considered a “streamlined” renovation and the process is greatly simplified.  If the job is more extensive or it requires structural work, the traditional FHA 203k is available.  There are few restrictions and the cost of the rehab work is only limited by the FHA limits for your area.  There are cases, especially in urban areas, where a “shell” is purchased for a nominal fee (let’s say under $1,000) and $250,000 is used for completely restoring the house, all with one loan.

Rehab Purchases
What if you want to purchase a home that is in need of work, whether it be a few cosmetic improvements and upgrades or a more substantial rehab?  The previously described Fannie Mae and FHA financing is available for this situation.  Be aware, though, most lenders will require you to determine in advance the value added.