Wells Fargo Identifies Loudoun County As An “At Risk Market”

Wells Fargo just named most of Northern Virginia including Loudoun County as an "At Risk Market". In doing so, they will be limiting the number and types of loan products available and increasing the credit guidelines for borrowers in this area.

This will affect buyers/borrowers by making it harder to obtain a loan. It may also affect current borrowers who have already been approved by Wells Fargo much in the same way Fannie Mae revaluated or even revoked already-approved loans waiting to close.

With credit guidelines and interest rates increasing daily and loan products diminishing, it’s getting harder and more expensive to buy a home by the day. If you’re a buyer on the fence, you may want to think about getting down. If you’re a seller with your home on the market or if you’re on the fence on whether to sell now or wait, you may want to get extra aggressive with your marketing and price or put your home on the market now before it gets even harder for buyers to buy.

Related Articles/Source:

"Wells Fargo: New Tighter Mortgage Guidelines" – Calculated Risk

New Loan Limit Announced For Washington, DC Metro Area Including Loudoun County

New loan limits in the Washington, DC metro area including Loudoun County will be $562, 200, according to this podcast by Dick Gaylord, President of the National Association of REALTORS® (the second half of the podcast does not necessarily apply directly to this issue).

For more information on how the bill and new loan limits may affect buyers and the overall housing market in Loudoun County, check out this post.

Loudoun County Real Estate Market Inventory – January 2008 vs 2007

Here’s a look at the number of new listings in Loudon County this past December and January as compared to the previous December and January:

• There were 896 properties listed in December 2007 versus 791 listed in December 2006, an increase of 22 percent
• There were 1218 properties listed in January 2008 versus 1271 listed in January 2007, a decrease of 4 percent

In order for the market to start rebounding, we need to see inventory go down or buyer activity pick up. Best case scenario would be to see both of those to happen at the same time.

We’ll post the first half February numbers later this week.

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Should You Buy Or Rent In This Market?

As Realtors®  in Loudoun County, in the course of a normal week, we get asked this question at least once, if not two, three or four times…

"With the real estate market being in the sad shape that it’s in, is now a good time to buy or should I wait?"

As members of Trulia Voices, we see this question posed all the time there as well. Here’s one that was just posted a few days ago in the Northern Virginia category:

"With concerns of a recession, should I hold off on buying a town house in the area? Does anyone know when home values will begin to increase? I intend to leave the area after 5-7 years."

According to the National Association of Realtors®, you should "buy now". We’re not here to echo that blanket statement.  In fact, we both agree that it may be the right time for one client to buy while it may be better time for another client to put off buying and rent.

There is no one correct answer for all. It all depends on your personal situation. You have to ask yourself some questions and answer them honestly and realistically.

• Are you buying it as a "home" or as an investment property?
• How long are you planning on living in the home before moving?
• Will your future move most likely be work related or personal?
• Are you willing to gamble on "timing the market"?
• What factors may help influence whether real estate market values go up or down in the near term and mid-term?
• What factors may help influence whether interest rates go down or up in the near term and mid-term?

None of us have a crystal ball, not even the most well respected economists who have been focused on real estate for who knows how many years. But there are certain factors that seem to always affect real estate markets over time (hence the last two questions above).

With the Loudoun County real estate market showing little signs of signicantly improving over the next year, it may be better to rent if you only plan on living in the area for and/or moving within the next 3 years. Rental market rates are low, which is good for renters. And even though they will most likely begin to rise within the next few years, you will probably be moving by that time so you it won’t affect you much, if at all.

This scenario is often the case with active military and government personnel who relocate often.

If you’re planning on staying in the area for 3 to 5 years or more, then you’d probably be better off buying a home. Though interest rates dipped down recently, they’re at historical lows and there’s a greater chance of them being higher in 3 to 5+ years than lower.  And though current rental market rates are low, they will rebound within the next year or two, which will help stabilize and increase real estate values in the mid to long term.

This scenario is often best for those who are planning on being here for a while whether it be because of their job, starting their own business or getting married and starting a family.

As we said, we can’t predict the future so our examples above may be off by a year or two. But you get the point…

Whatever your situation may be and whichever scenario works best for your specific situation, you’re in a good position.  Conditions are favorable whether you buy or rent.

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Thursday Poll – The Down Real Estate Market and Holiday Spending

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