Congrats... but you need to get pre-approved. Pre-qualification is the equivalent of getting an offer for a credit card in the mail with "You're ready for our MasterVisaExpress Platinum card". Pre-approval is the same as cash in hand. Sachin
i just want to thank everybody for their wonderful contribution to this thread. I really learned a lot about the details of the housing market. I would have never thought school distric would be so important! Again, thank to you all for such informative thread. I actually read through 4 pages post by post!
Holy Jesus. I was under the assumption that pre-approval is for when you have a specific property you want to purchase. Gonna have to look this crap up.
No... pre-approval is a commitment from a lender to lend to you up to a specific dollar amount. For example, assume a 20% down payment (just to keep PMI out of this) of $40,000. Based on your good credit, a lender will commit to lending you $160,000 for a total purchase of $200,000. A pre-approval is as good as cash in hand. If your lender or agent hasn't explained this to you, you may need to talk to another lender. Sachin
School district is perhaps the third most important criteria used in deciding where to buy a house. The first is the neighborhood the house is in and the second is the condition of the house itself. Remember, you can fix up a dump in a good neighborhood next to a good school, but you can't fix a bad school in a bad neighborhood, even if it has a beautiful house. Sachin
Hmm. I thought we were on top of things. Now I'm questioning if I need a new agent. The lender did exactly what we asked them to, although it sounds awfully like what you described above.
If you do need a new agent because you have your doubts about your current one, do not hesitate for one second to get rid of him or her in a New York minute. We went thtough this and once we changed agents we started seeing places that we liked..............not places that seemed to be pushed on to us. About buying vs. renting. If you think you're making the right decision, then you are. With the advice of a friend, I waited for a year and a half to buy a place because he kept insisting that everything would crash. In the meantime, he bought a place and basically went against the advice he was giving me. I know that I feel fine with where I am and it does not keep me up at night.
Read through Ian's thread at the top of this forum. Lots of good info there. If you want a reference for lenders, PM me. Sachin
Another article in the Post (from Sunday) on area housing and home equity loan mania: http://www.washingtonpost.com/wp-dyn/content/article/2005/05/07/AR2005050700198.html Enjoy, Tim
If the Pentagon goes through with their plans, it could really change the real estate market in Northern Virginia: http://www.washingtonpost.com/wp-dyn/content/article/2005/05/09/AR2005050901087.html Sachin
My opinion is that the market is line for a correction. I equate this to the dot.com crash. I think the biggest driver is when people who do not understand the risks and don't have a broker to explain it to them enters into a deal. In the case of the dot.com the common Joe Public did not understand - or was willing to talk about - the downside risks that these companies could not support their valuations. They started buying b/c all their friends and neighbors were watching their investments go through the roof. Dr. Koop.com was appearing on the cover of everyday magazines that Joe Public saw in the grocery store each week. Same thing is happening now but instead of unrealistic valuations we have 3-Yr ARMS and Interest Only loans. These are the only way that Joe Public can afford the house he wants. The brokers are not doing enough (and why should they since they are just repackaging and selling the loans) to explain the risks. I have heard quite a few people say - well, it doesn't matter since I will just be able to sell my house for a huge profit before the payments go up and I can afford something even bigger. It is dangerous when Joe Public begins to think they are the masters of market timing. This will be the downfall of the market - people's incomes will not be able to keep up with higher payments and defaults will start occuring.
We're going 30 year fixed. I am really concerned about buying at the top of the market though. I'm not in this to make a huge profit, although I'd like to not lose my shirt.
If you live in your house 10 years, you will break even. If you live there for 5, well.. we'll see. Sachin
John I agree with what you say and have come to the same conclusion. I am saving my money to buy a loft downtown when the correction does occur. Just like the market, I am under the impression that the correction might be overdone at first though lengthier than that of the market. I already own a house so I guess I cant relate to those who are looking forward to buy a house which happens to be their first one.
This is the way to go, if you ask me. If I were looking to enter the market about now, I'd be out there scouting places constantly, but biding my time to catch the crash. Every crash bottoms farther than it should, then rebounds relatively high, then falls again towards a more stable level. The trick is hitting the bottom. Re: the comparisons to the nasdaq bubble...I believe, ultimately, there are HUGE differences between a housing market bubble and the tech stock bubble. Houses are tangible. Inherently, it is not "insane" to buy a house. Even if the price is high, your sole motivation for purchasing this is not equivalent to relying on other people's insanity to buy it from you. Even if the land they sit on is overvalued and their sticks and paint isn't worth all that the structure is valued at, there is a true tangible value that people will snatch up when it is available. Our society desires safety in our culture of fear. We feel personal safety in owning a house. There is no tangible value to a start-up internet site that is just an idea. While each market can be overvalued, when the house market corrects many, many people will see opportunity. When the tech bubble crashed, people woke up and said, "Dr. Koop, what the f'ck were we thinking?" Now, as for all the craziness about the floating rate loans, interest only bananas, and ridiculous home-equity nonsense...that's a whole other ball of wax. I don't think that we should be worrying so much about the value of our houses in this context, but rather the fabric of our house-of-cards consumer society. Cheers, Tim
In Florida, some people are already positioning themselves to buy low, sell high: Vultures smell drop in hot Florida condo market
I agree with most of what you say above. My problem is "I'll just wait until prices come down" seems like a somewhat risky strategy to me. That smacks of market timing to me. In addition, from what I understand, my landlord is raising the rent some absurd percentage on tenants in our building. (I'm talking about 7% plus requiring us to pay our own utilites, which woudl add about another 10%.) A large part of my motivation is that I don't want to rent any more. In addition, I don't see prices falling through the floor unless interest rates go crazy.
True, as they say in the stock market, dont try to catch the proverbial "falling knife." Wait for some consolidation (stabilization.) That isnt to say thing will improve, but it much less risky than standing in front of a Mack Truck...
Well, erikl2's observation could be spot on: http://www.washingtonpost.com/wp-dyn/content/article/2005/05/15/AR2005051500686.html If the DOD and all their contractors vacate NoVa, we're looking at a serious office market hit, which could soon be followed by a residential NoVa dip should the impacts be widespread and the departure of employees be swift. Tim
Precisely what the Post was saying. The "hot housing market" is just a pump-and-dump strategy with several conspiratorial factors (not a conspiracy, just an intersection). 1. Local governments soaking homeowners with property tax hikes; 2. Speculators (about 30 percent) who are not even occupying the houses they are buying; 3. Low interest loans that are suckering even marginal-risk people into thinking they can "live the dream"; 4. Infomercial scammers egging them on; 5. Banks looking to gentrify low-income neighborhoods; 6. Realtors making beau-coo bucks off the instability (if people don't move from place to place, realtors don't make money, right?); 7. Suburban sprawl.
Are you referring to predatory lending? Some loan agencies have been chastised for this, which amounts to loaning out to low-income folks who can't afford to get a loan in most circumstances, thereby essentially lending in cases where it shouldn't happen except to increase foreclose rates. I have a hard time moving from cases of predatory to what you write above... Gentrification is so much more than what you write. Hell, I've been pushed out of neighborhoods many times over. I've technically been gentrified from Mount Pleasant and Capitol Hill proper. But what you don't get at is why the gentrification happened to begin with. In both these instances I know for a fact that I was pushed out due to the distinct factors relating to the economy (ie, I wasn't keeping pace) and the District's policies. Banks had absolutely nothing to do with it. Cheers, Tim
The Economist weighs in, too: http://www.economist.com/opinion/displayStory.cfm?story_id=4079458 Like a brick tied to a parachute. Wow.
Ugh. Still probably going to purchase. Basically, I get advice both for and against buying. EDIT:I really do go back and forth on this. But both my wife and I are really sick of renting. And we'll have to move anyway, or deal with construction noise in about 6 months. Neither of us wants to rent again. I just keep looking at the demographics of this area, and don't see a huge drop coming. A correction, maybe, but we're looking at staying in our place for a good 5 years, and hopefully we'll be able to ride out any softening of the market.
It's hard to figure what it means for Washington, which due to the government's and related industry's role in the economy may--or may not--be a special case.