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COVID real estate — the new normal

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COVID real estate
Masks, sanitizers, and other precautions have enabled real estate business to continue and to thrive in the D.C. market.

Despite the circumstances of this year, the D.C. Metro area real estate market has felt like it is our busiest in recent memory.

It seems that we are now in what we expected our spring market to be (delayed due to the virus shutdown), and July’s numbers prove this to be true. Typically, July is slower than June, but this year, sales increased 17% month over month, 20% in D.C. alone. July area home sales were at a 10-year best for the month. Median home prices in the area were up 13% compared to July 2019, and days on market (8) were at the lowest July level in 10 years, also the second shortest number of days on market overall in 10 years.

This market is great for both buyers and sellers, although for different reasons.

It is a great time to sell, with chronic low inventory and many people figuring out some new “must-haves” for their extended time at home. We’ve found that many sellers with second homes went to those homes early on in the shutdown, and have decided to stay there, rather than return to the city (whether that’s D.C., New York, or elsewhere). While moving during a pandemic didn’t seem possible at first, everyone has figured out how to safely manage the process. The current market is proving to also be a great time to buy, with historically low mortgage interest rates. Buyers are flocking to homes with more outdoor space, larger office areas, and to locations with proximity to outdoor access, including local parks.

Buyers, sellers, and agents have all figured out how to safely function (masks, gloves, sanitizers, and distancing are all mandatory) in our “new normal.” We continue to show property, hold open houses, and work diligently for our clients, it just looks different than it used to. Virtual showings, while initially employed more for health safety, are continuing to be used as a convenient tool for out-of-town buyers. These Facetime or Zoom showings allow buyers to preview property and get a sense of the area before taking time out of their busy schedules to go see it.

With title companies and lenders now allowing many virtual options, the teamwork that goes into a smooth real estate transaction is stronger than ever. As we continue to work and move forward, we also understand and acknowledge that safety is the first and foremost priority for everyone.

The entire Hagen-Bergstrom team wears masks throughout the day, and we provide gloves, sanitizer, and keep our distance while meeting our clients in person. This allows us to ensure safety while still maintaining that personal relationship that is crucial to a successful real estate transaction. We strive to make sure all our clients, and anyone else with whom we interact, feel safe in this new environment. Luckily, we have experts like Dr. Anthony Fauci, and other leading medical specialists, to guide us through this global pandemic.

Sylvia Bergstrom has been a top-producing agent since launching her real estate career and Marin Hagen joined her mother’s successful practice in 2007. Their business is nearly 100% repeat and referral, a testament to their high ethical standards, strong negotiating skills, energy, and discretion. Sylvia and Marin consistently rank among Coldwell Banker’s top three Mid-Atlantic teams out of more than 2,000 agents.

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Real Estate

How do Federal Reserve decisions impact mortgage rates?

Don’t panic, recent increases not as dire as some fear

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Will the increased rates mean fewer buyers? Not necessarily.

Recently, the real estate market has been incredibly active. In many neighborhoods, it seems that a for sale sign is scarcely placed in the front yard before multiple offers, even some above asking price, roll in. In many cases, this was made possible by relatively low mortgage rates, which enticed buyers to get into the market and make those offers. Recently, however, there have been concerns about the state of the economy and increased inflation – furthered by the recent news that the Federal Reserve has raised interest rates.

This increase has understandably left many potential homebuyers wondering – what does this mean for mortgage rates, and my ability to obtain the loan I need to purchase a home? It has also left sellers asking – will the increased rates mean fewer buyers? Will it be harder to sell? These are important questions to ask. While no one has a crystal ball, many remain hopeful that the real estate market will continue to thrive. Let’s take a closer look at why together.

The Federal Reserve – Why it Matters

The Federal Reserve is the central bank of the United States, and among its many functions, it essentially guides the national economy. Part of that mission is keeping inflation under control. Recently, in an attempt to slow ever-increasing inflation, the Federal Reserve raised short-term interest rates by half a percentage point. Short-term interest rates are essentially the interest rates that banks charge one another for short-term loans.

It’s been some time since the Federal Reserve has made a move of that nature – slightly more than 20 years in fact, with the last such increase occurring in 2000. The Fed also indicated that more adjustments may be planned before the end of the year. Certainly, this raises the question – what does this mean for mortgage rates?

Federal Interest Rates Vs. Mortgage Rates

It’s important to understand that the Federal Reserve does not actually set mortgage rates – there is in fact no such thing as a “federal mortgage rate.” Ultimately, the decisions of the Federal Reserve don’t directly impact mortgage rates in the same manner as with other products, like savings accounts or CDs, for example. Mortgage rates generally respond both to the actions of the Federal Reserve, as well as to the general movement of both the United States and global economies, so there are many factors to consider.

Nevertheless, those in the mortgage industry do closely monitor the actions of the Federal Reserve, and certainly, how much buyers pay for a home loan is influenced by those decisions. As a very rough rule of thumb, for every one point increase by the Fed, your buying power goes down by $100,000.

When the Federal Reserve makes it more expensive for banks to borrow by setting a higher federal funds rate, the banks typically pass on those higher costs to their customers. This ultimately means that interest rates on consumer borrowing, which includes mortgage rates, tend to go up.

Keeping it in Perspective

While any increase in mortgage rates may not be welcome news for buyers, it’s important to keep these increases in perspective. Historically, the current interest rate, which is around 5 to 6%, depending on whether you have a 15 or 30-year mortgage, is still very low and very favorable for buyers. At the end of the 1970s, for example, interest rates were hovering near 10%, only to ultimately reach an all-time high of about 16.5% in 1981 before eventually decreasing. Throughout the 1980s, however, mortgage interest rates remained near 10% – nearly twice what they are today.

Another potential silver lining is that increased rates may also mean increased inventory – which is certainly good news for buyers. While rates are still historically very low, the increase may nevertheless mean that there are more available homes to choose from, as the number of buyers in the market decreases overall. This could be a refreshing change of pace for those buyers who felt that they had minimal choices in a highly competitive market.

While this may not be the most welcome news for sellers, it’s not necessarily bad news either. As rates are still relatively low, there will still likely be plenty of potential buyers out there. When the present market is compared to the course of the real estate market over the last several decades, now is still an excellent time to sell.

At GayRealEstate.com, we are passionate about helping LGBTQ home buyers and sellers through every aspect of the real estate process – and that includes more than just buying and selling. It also includes addressing the important issues in the real estate market that matter to you the most. We believe in the importance of connecting LGBTQ buyers and sellers with talented and dedicated agents who can help. We also believe in ensuring that our clients feel informed, prepared, and knowledgeable about all aspects of the real estate process. You deserve nothing less. Whatever your real estate needs, we’re here to help.

Jeff Hammerberg is founding CEO of Hammerberg & Associates, Inc. Reach him at 303-378-5526 or [email protected].

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Real Estate

Rain. On. Me? Flooding a common concern among buyers

Always ask your insurance agent if you have the coverage you need

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Worried about moisture intrusion? If you’re buying a home, you should be.

One of the many concerns buyers of homes and condos have are moisture intrusion and how well the building is prepared for floods, heavy rains, burst pipes and if they have installed sump pumps and other things to help with moisture intrusion.

To find out how to handle these situations I had a call with a local insurance agent and asked her to give me her advice about being able to make sure you are covered if there is any type of water event that costs you money as a home owner.

In a condo, you will have the master insurance policy that will help if something outside of the walls of your home causes a moisture intrusion. You will also have your own homeowner’s insurance. The agent that I spoke to said to always make sure you SPEAK to your insurance agent and ask specifically about what is covered and what is not. Just getting an internet quote is not the same. There are also third-party companies that can help cover conditions that are considered “exceptions” by the insurance company so you are going to want be educated on that.

There is a difference between being in a flood plain, having a pipe burst, water leaking in around windows, having water back up into a home and having a sump pump fail. There is also a difference in the types of coverage you can get for these situations.

They are all filed under different types of claims, and you will want your insurance agent to walk you through the various types of protections you can purchase and if you need additional protection from a third-party company. A recent inquiry by a client of mine resulted in him being told that his property was not in a flood zone so the basement (which is finished) would not be brought back to its current condition. Only drywall would be replaced.

Always ask your insurance agent if you have the coverage you need and please shop around. Water issues seem to happen more frequently, so you want to be prepared. I am always available to discuss homeownership and how to make that happen – feel free to reach out.

Joseph Hudson is a Realtor with The Rutstein Group at Compass. Reach him at 703-587-0597 or [email protected].

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Real Estate

Baltimore offers affordable alternative to D.C. real estate

One-third of city’s structures lie within National Register Historic districts

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A townhouse that recently sold in Baltimore’s Oakenshawe neighborhood. (Photo courtesy CharmCityRealEstate, LLC)

Move to Baltimore?

Are you one of the residents of the District who turn pale and woozy just by reading that question? If so, there’s probably a lot you do not know about your next-door neighbor, just 35 miles to the north. So, recline on your fainting couch with a glass of water, and read on.

Baltimore was one of the nation’s largest and wealthiest cities when D.C. was a swampy village where even members of Congress wouldn’t live in the summer. As a result, more than one-third of Baltimore’s structures — 65,000 of them — lie within 72 designated National Register Historic districts, more than any city in the country. Now you know why it’s called “Charm City.”

According to salary.com, the cost of living in Baltimore is currently 29% lower than in Washington. A District resident making $60,000 would see their disposable income rise by $12,800 just by making the move. 

How would your quality of life change if you had nearly 30% of your income back, to spend as you pleased?

One of the greatest differences between the two cities is in the cost of comparable housing. Here are two head-to-head comparisons that illustrate the point.

In December of 2021, two townhouses went to settlement, one in Glover Park in D.C., the other in Baltimore’s Oakenshawe neighborhood. The Glover Park beauty had 1,690 finished square feet above grade, the house in Oakenshawe had 1,981. Both houses were beautifully renovated and maintained. Both had private, lovely gardens for outdoor entertaining and front porches where neighbors interact on summer evenings.

The neighborhoods are very similar. Oakenshawe is a circa 1920 development near the main campus of Johns Hopkins University in North Baltimore, a National Register Historic District. Baltimore’s Penn Station (commuter rail and Amtrak) is just 10 blocks away, and there’s a free city bus line that originates at Hopkins and has a stop at the train depot.

Glover Park sold at $1.135 million. Oakenshawe’s sale price? $430,000, at what was then a high price for the area. In March of this year a similar property with a freestanding garage, just a few doors down the block, sold for $447,000. 

Want something more affordable? Last month, a 1,400-square-foot duplex townhouse in Fort Dupont Park sold in the District for $530,000. The home is in a transitional area — where some homes are newly refurbished and others are still in need of modernization — near I-295 and the Prince Georges County boundary. This house has been fully renovated.

Last week, a newly renovated duplex townhome went under contract in the Southwest Baltimore neighborhood of Irvington, a transitional neighborhood near St. Agnes Hospital, Mt. St. Joseph High School, and minutes away from I-95 and the boundary with Baltimore County. This house, just like its D.C. counterpart, has 1,400 square feet, a finished basement, new appliances, and a comfortable front porch. Two commuter rail stations are short drives away, each with free parking. It was listed at $224,900.

I am familiar with the Baltimore examples because in Oakenshawe, I was the listing agent, and in Irvington I am working for the buyers.

If you could get similar quality housing in neighborhoods of similar character and quality of life, but spend only 1/3 to 1/2 the amount, what would you do with the money left over every month?

Welcome to Bawlamer, hon.

Wayne Curtis has been a Baltimore Realtor since 1998 and is affiliated with the Roland Park office of Monument Sotheby’s International Real Estate. He is an Accredited Buyer Representative, certified At Home With Diversity, and a member of the National Association of Gay and Lesbian Real Estate Professionals.

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