Things You Should Know If You Are Buying or Selling Homes in 2012

As you may know, the debate regarding a residential real estate comeback in 2012 continues to rage on unabated. The District, Northern Virginia and Maryland markets, while more stable than many other metro areas in the U.S., has to date not escaped unscathed.

However, many are expressing cautious optimism for the real estate market in the new year. Yet, along with no guarantees, there are conditions that all buyers and sellers should consider. Remember, an educated home buyer or seller is a smart buyer or seller. Here are some 2012 realities that can help you make better decisions in the coming year.

Is this (finally) the year of a market turnaround? As usual, it all depends on your outlook–positive or negative–and whether you are a prospective buyer or seller. Some national analysts are "hopeful" that home prices will crawl upward. For example, the chief economist for the National Association of Realtors, Lawrence Yun, believes that historically low interest rates, increasing rental costs and stabilizing inventory of foreclosures and short sales, project a home sales increase of around 5 percent, along with a home price rise of around 2 percent.

Combined with an increase in new housing starts, after 5 to 6 years of stagnation, the National Association of Home Builders also projects tempered optimism. However, foreclosures will continue, maintaining a stable of "cheap homes," which may prevent housing prices from rising substantially.

As usual, predictions for the Washington, D.C. area are better than the national outlook. With fewer foreclosure pressures and declining available inventories of previously owned homes, this market appears to be in position for some housing sales recoveries. Sellers will be happy in Arlington, Fairfax and Alexandria, while buyers in suburban Maryland and Prince George’s County should find the best price deals because of government cutbacks.

How does the FHA (Federal Housing Administration) compare to Fannie Mae and Freddie Mac financing? The lowered lending limits for Fannie and Freddie mortgages (from $729,750 to $625,500) may affect homes for sale inside the Beltway in 2012. However, FHA now enjoys the the former (higher) limit, which should help buyers because of FHA’s lower down payment requirements. However, there are no "free lunches." Remember, FHA-backed loans require initial and annual mortgage insurance premiums, up to 1 percent of the loan amount.

Revised standard sales contracts require buyer attention. As of January 1, 2012 the new standard Purchase Agreements have pros (simplified structure and clear language) and cons (sellers need not provide automatic warranties for plumbing, electrical, or HVAC systems). While an advantage to sellers, buyers must remain diligent as homes will legally sold in "as is" condition.

Stay informed, buyers and sellers. We welcome your questions and comments. How do you feel about the immediate future of the D.C. real estate market in the District-metro area?



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