Ashburn Real Estate - Think you should wait for the market to bottom out?

That's a big question!  Here's another one:  What's more important:  Price or Monthly Payment? Most everyone that I speak with tells me that  the monthly payment is the most important consideration. Do you know how much of a difference even minor changes in the interest rate will make? It might surprise you!  Here is a link to a  chart that shows the difference  each quarter of a percent increase in the interest rate will have on a mortgage amount of $330,000. I chose the amount $330,000 because it reflects the average mortgage on median priced townhomes  in Ashburn.

Interest Rate Chart

Huh!   Half a percent increase in the mortgage interest rate will decrease your buying power by $20,000.   So what do you think the chances are that a $330,000 townhouse will drop another $20,000 in value?  And what do you think the chances are that the interest rates will be going up?

Everywhere you turn, everything that you see, hear or read in the national media portrays real estate as a national problem.  Not True!  The fact is, real estate is dirt, local dirt. You can't pick it up and move it, it's local and it can't be changed. If you like your home and have to move to California, you can't take your house or lot with you - you might be able to rebuild the house but the land it sits on in Virginia will stay in Virginia.

Not only that, all of the issues surrounding real estate are local, not national. Each area is unique. Schools are a local issue and each and every school  tends to be unique in the makeup of its student body, in its academic expectations, its administration and the way that it is treated by the local school board.  While, yes there is a national employment problem,  the percentage of unemployed and the availability of new jobs and the type of jobs that are available are unique to each and every area.

In Northern Virginia, we have considerably fewer problems with unemployment than most of the country. This availability of jobs coupled with the variety of jobs that are offered tend to protect us from many of the issues that are affecting  real estate prices in other parts of the country.

Finally, the influx of new residents driven by increased hiring by the Federal Government, increased hiring by local technology firms and government contracts  continues to have a major impact on Northern Virginia and our local housing demand.

Local buyers quickly become aware of the relatively few available homes for sale. The condition of the foreclosed properties that are on the market and the length of time it takes to successfully negotiate a short sale purchase continues to create problems that frustrate buyers.  Sellers, of what are now referred to as regular sales, are suffering due to the increased competition from both foreclosures and short sales. On the bright side for the sellers, properties in pristine condition are becoming a more sought after commodity and when priced fairly and marketed well sell very quickly.

Renters are impacted by  increased competition for rental units ( the percentage of ownership dropped from a high of 65% in mid-2005 back to  a more  typical 60% ownership a level that has been constant for the past three or four decades) that additional 5% is going back to the rental market and increasing the demand for available rental housing.

So to buy or not to buy?  Here are the factors that you might want to consider:

In favor of a purchase.

• Planning to be in the area for five or more years or considering a  property that will rent for the monthly principal, interest, tax, insurance and HOA fee.
• Need to manage and or budget living expenses and expect inflation to increase.  The current estimates are that  rental costs will increase by 3 to 5% annually.
• Committed to the local school system -  the "not moving until the kid(s) are off to college game plan
• Can finance in such a way that the home will be substantially paid off by the time college  tuition payments are due.  This has been a great way to either refinance to pay the college costs or to lower living expenses when education costs are increasing.
• Need a tax break
• Comfortable in your current career and career path
• No foreseeable major life style changes
• Family stability
• Hedge against inflation
• Take advantage of today's perfect storm of low interest rates and depressed housing prices

In favor of renting.

• Likely to be moving out of the immediate area in 2 to 3 years
• Dealing with a considerable amount of unsecured debt such as student loans, credit card debt, high car payments
• Issues with credit - late payments, high balances on credit accounts,  collections
• Uncertain about your employment
• Lack of funds for a down payment
• Health problems
• Upcoming major life changes - moving into or out of a committed relationship, grad school, career changes,  life style changes  - in short anything that might prompt the need for a sudden change in where or how you live

In conclusion,  To buy or Not to buy?,  is an individual question that has no right or wrong answer - it is an individual decision made on a local level.