Archive for March, 2009
PW County Inventory-What’s Missing from our Numbers
March 19th, 2009 Categories: Focus on Prince William, Local Market Updates
Currently the MRIS data shows that the number of new listings in our area is down. This chart shows Prince William County inventory for Feb 2009 as compared to Feb 2008.
Okay this should be good news. However along with every set of data comes the back story.
In the case of lower inventory some of that back story has to do with foreclosure listings. Last fall Freddie Mac along with other lenders put a moratorium on new foreclosure proceedings until the economic stimulus packages worked their way through Congress. Only those properties that had already been through the foreclosure process made their way to the MLS and not even all of those have been listed.
For example one agent in my office who handles Freddie Mac foreclosures has just now received the go ahead to list a few of the properties that had been through the foreclosure process last October and November. Even more interesting is that in one case the owner of the property is still living in the property five months after the foreclosure. A quick look through RealtyTrac.com shows a few hundred properties with the title transfers to a lender, yet none of them have made it to the market. A recent Friday Washington Post showed close to 300 Trustee Sales at the PW Courthouse alone and those properties haven’t hit the market yet either.
At some point many of those properties that have been in a holding pattern for the last three to five months will make their way to the spring market. Add to those the properties where tenants have been living with their lender landlords and you begin to see when the foreclosure moratorium is lifted that we could have a huge influx of new foreclosures on the market.
Hopefully the lenders are looking at the impact of how unleashing all of these listings at one time could devastate an already fragile Prince William County market. If they don’t consider a staggered release of this pent up inventory we could be facing another significant drop in prices, creating even more problems for those sellers in the middle of trying to refinance their homes.
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Once upon a time when a letter arrived from your lender you probably believed that what they said was accurate. However today before you agree to whatever your lender has sent you do a little double checking.
Our household recently received notification that our payments would increase due to a “shortage” in our escrow account. The lender was proposing, a not insignificant increase in our escrow account and our payments to cover real estate taxes. Now most of us living in Northern Virginia know that our real estate assessments have dropped and in my area they have dropped a huge amount. Looking over the lenders figures immediately made me mumble, “Not so fast buddy.”
With my 2008 and 2009 tax assessment in hand a call was made to the lender. After a few transfers and even a few more minutes on hold I was able to reach someone in the tax department. It seems that they just “assumed” that our tax value would be the same in the subsequent year and collect based on that amount.
Oh really? Now there probably isn’t anyone in Northern Virginia that isn’t counting on an increase in our real estate tax rate in the near future. However to make the numbers that our lender suggested work our tax rate hike will need to be over 4x the current tax rate. And despite record budget shortfalls there isn’t anyway that in one year the tax rate will climb by that amount.
So our escrow account is being “re-analyzed” and we should hear back in the next 7 to 10 days after they have confirmed the values with the local county tax offices. So before you throw the letter from your lender in the file take time to read it carefully. If your intuition tells you that it doesn’t add up, make a call to customer service or send a letter asking for additional information.
Lenders have proven that they aren’t infallible when it comes to mistakes. They shouldn’t get more of our money to mismanage than the already have.
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Military Families Making Tough Decisions When the Orders Arrive
March 12th, 2009 Categories: Military Relocation
Over the last few years many military families making the move to Fort Belvoir, the Pentagon or any of the installations within the Military District of Washington made the decision to purchase a home when their orders arrived. With quick appreciation and fast sales it made the choice easy. Now with prices lower and the market slow trying to make the choice between buying and renting is harder.
VA loans make buying a home in Northern Virginia with no money down a snap. With lower prices military members can buy more house today than they could before. With sellers often making a contribution to the closing costs up to the allowable VA limits it gets even easier to keep your money in your savings. But is it the right choice?
If this tour is your first to our area and you know that you are coming back in the next five years, buying and using your home as a rental after you leave could be a viable option. Understanding the costs associated with owning a rental property including maintenance, management fees and tax implications are a big consideration. If you know your current tour is less than three years, you have to weigh the risks of breaking even or even a loss when you go to sell. There are tax benefits to owning your own home but do they outweigh the concerns you may have when you go to sell?
Finding a rental can take as much time as finding a home to buy. The more flexible you are in what you are looking for will be helpful. If you focus on only one type of home or only one school district then you will need to understand that your choices may be limited. If you own a pet or two the available homes shrinks even further. None of this is insurmountable it just means that you need to be realistic.
Before you decide which is the right choice for you, talk to your financial advisor and a mortgage professional to understand how buying or renting will impact you. Then find an agent who is willing to work with you no matter which decision you make. Just as with buying a home if you decide to rent work with an agent who knows the local neighborhoods, transportation options and school districts.
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