The Northern Virginia Real Estate Blog

At today's NVAR Economic Summit, 4 experts shared their thoughts and forecasts for the Metro area real estate market....

Dr Charles Capone, Director, FHA Office of Risk Management:

We have a unique market in the Metro DC area, with a much higher borrower annual income of $101,964 versus the US average of $54,216. Our home prices are higher at an average of $330,000 compared to the US average of $154,598. FHA loans allow for a higher mortgage payment to income ratio for this area at 3.14 versus the US average of 2.84, and our average FICO credit score of borrowers at 733 is higher than the national average of 692.  

FHA had 35% of the area loans in 2009 compared to the nationwide average of 15% to 20%. Our FHA loan limit for the area is highest as well at $729,750 - which will also be extended into 2011.

However, FHA is tightening up their requirements for loans as of October 4th. Currently, you can obtain an FHA loan if you have a 500 FICO score with a 10% down payment. Starting October 4th, you will need a FICO score of 580 for that same loan. They will also be tightening up the loan to value ratios on refinancing.

Even with these new rules, they are much more lenient that conventional financing, which requires a FICO score of 660 to 680 with 10% down or 700 with 5% down.

John Courson, President & CEO, Mortgage Bankers Association:

Lenders are using stricter guidelines for lending that is required by FHA in order to protect themselves with an additional cushion.

14.5% of borrowers are currently in default, but 40% of them have never called their bank to discuss their options or to request a loan modification.

There are new loan modification programs available that allow lenders to defer a portion of the mortgage as a second trust without monthly payments, which allows the bank to reduce the monthly mortgage to a manageable payment.

25% of purchasers are buying a short sale.

Jerry Giovaniello, Senior VP and Chief Lobbyist, Governmental Affairs, National Association of Realtors:

Our mortgage tax credits and the benefits of home ownership are being threatened!

Under current rules, homeowners are allowed to deduct up to $100,000 of mortgage interest attributable to mortgage debt up to $1,000,000. The Congressional Budget Office has suggested that Congress either reduce the cap, change the mortgage interest deduction.

You can follow the latest news at http://www.realtor.org/government_affairs

Dr Stephen Fuller, Director, Center for Regional Analysis, School of Public Policy, GMU:

We are now in the 5th quarter of recovery and 2012 will be an excellent economy.

Of the 15 largest job markets, we are leading in new jobs with 41,800 new jobs created in the Metro area last year.

Our unemployment rate is the lowest of the 15 largest job markets at 5.2% in NVA.

Homes are selling as fast as we have homes coming on the market, and we have had more than 2 years of inventory reduction.

The market has come into balance.

We have had 10 consecutive months of price increases, at an average of 5.5%. Sale prices have firmed up and fewer sellers are willing to drop their price or negotiate terms.

In 2007, 65% of new construction home sales canceled, compared to under 10% cancelation since Jan of 2009.

Our current economy shows that we are paying off our credit card debts and living within our means, buying more modestly priced homes and not spending more than we make.