Bob Wood

Chuck,

Right now, if you are paying rent and, at the same time saving money for a down payment, you may be closer to being able to afford where you want to live than you think. Could I suggest that you talk to a lender who will be able to give you a better idea of your options. Once you know how much you can comfortably afford for a mortgage payment, that should give you a better idea as to the answer to your last question which, I'm betting, is 'No.'

If you want information on reputable lenders past clients of mine and my brokerage have dealt with, I'd be happy to provide that information by phone or by email. - Tue Apr 22 2008, 13:38

The best way I can think of to approach this and to be able to make the most intellligent decision is to take a look at what has been going on in terms of sales (and home improvements) in your particular neighborhood. What have homes that are similar in size to yours been selling for recently (within the past six months)? Are there any homes in your neighborhood that have the approximate amount of finished square footage that your home would have once the basement is finished? If so, have any of those sold recently and did the price they brought give any indications that you could recover the expenditure you are considering making? And looking at it from another perspective, will the improvments you're considering make your home more marketable, allowing you to obtain a better price when you sell at som time in the future?

Despite what is going on with the current real estate market, our area has low unemployment (about 3.2 percent vs. over 5 percent nationally) and is generating around 40,000 jobs a year, according to Stephen Fuller, an economist at George Mason University who keeps tabs on the local economy. Having said that, the future value of your home and what any improvements add to that value is going to be affected by a number of variables. Location is a big one and, generally speaking, the closer in your home is, the more likely it is that it will not only retain it's value but also that it will appreciate in years to come.

A realtor, by researching and providing information on recent sales in your area, can help you answer some of these questions and give you a better idea, and some peace of mind, about any decision you make. - Tue Apr 22 2008, 13:16

Most purchase contracts are contingent on the home appraising at or above the sales price the seller and purchaser have agreed on. If the home doesn't appraise, then the contract can be renegotiated between the buyer and seller at a new price they can both agree on or, if they can't agree, either party has the option of voiding the contract.

To have a common denominator to start their appraisal with, most experienced appraisers start by looking at the per square foot price of recent closed sales to arrive at an estimated value for a home under contract. Then they add or subtract for amenities and features that the home under contract has or does not have in comparision to the more recent sales in a neighborhood. Those additions or subtractions can cover a wide range including larger or smaller size, decks, lot size, a view, a remodeled kitchen or baths, overall condition and other elements.

It's likely that your appraiser, who would have been hired by your lender, arrived at the value of your home through this or a similar formula and was able to add value for your view and the fact that your place was in significantly better shape than the other homes on the market. Based on the appraiser's conclusion of the value of your home, and the fact that the appraiser's evaluation, as a safeguard, would have been reviewed by your lender's underwriting department, you probably paid a fair price for your home. Enjoy it! - Tue Apr 22 2008, 12:24

First, don't sell you own judgment short. With all the negative news going on about the real estate market, it's certainly natural to have buyers remorse but keep a few things in mind. A lot of the news you and everyone else are seeing is more about what is going on nationally than locally where we have a low unemployment rate (about 3.2 percent) and approximately 40,000 jobs being produced annually.

As I said in an earlier answer to someone expressing a similar concern but who bought in '04, there are a lot of variables that determine the curent and future value of your home. One of those is where it is located in Alexandria as some areas appear to already have started recovering from the downtrend in prices while its clear that others, especially in areas that have been overbuilt, will see further depreciation before things begin to improve.

If your reason for buying your placed was because it was the nicest you saw in the area you were interested in, chances are good that, when you do sell it in the future, other potential buyers will feel the same as you did when you bought (given that you keep up its condition and and make any upgrades necessary to be competitive in the market when you do sell).

Just don't panic and sell when you don't have to. Again, if you have your place in good condition when it's time to sell, you'll probably experience what clients of mine who bought a small single family home through me four years ago did recently when they needed to sell to move overseas. Their home was located in a neighborhood where several homes had gone into foreclosure but, because they had taken the time to do some upgrades and we did a few others to get it ready for the market, we were able to sell their home in under three weeks at a good price that was significantly over what other homes in the neigborhood were listed for but was still, considering condtion compared to tose other homes, very realistic.

If only to give yourself peace of mind or have a better idea of what situation you are in with your home, I'd suggest that, whether me, one of the other agents who has answered you her or the agent who helped you buy your home, contact someone to get an idea of how sales in your community have been going. It would be much better to be armed with some information than to worry about whether you made a good decision in buying a home. - Mon Apr 21 2008, 17:11

The answer as to when homes may begin to appreciate again is going to be determined by a lot of variables. Fortunately, in the Alexandria area, as opposed to many other areas of the country, we have a low unemployment rate (generally around 3.2 percent as opposed to over 5 nationally) and about 40,000 new jobs created annually to help keep unemployment low.

So, while I noticed a couple of answers that said we won't see appreciation again here until 2012 and one that said not for 10 years, I also saw that those answers came from people who are not in this area and probably are not familiar with the economic conditions here.

How soon you may see appreciation on your home depends very much on where you are in Alexandria. If you are in a more outlying area or one where builders have added too much to the housing inventory for demand to match supply soon, the wait will be longer. Some areas that are more centrally located, however, have managed to hold fairly steady on price and some have even seen some appreciation.

In any event, since you don't plan to sell for several more years, you might take comfort in knowing that since the government has been keeping statistics on home appreciation, there has been no ten-year period when homes have not risen in value, even though they may have fluctuated during a quarter or half of that span, ultimately they recovered and hav appreciated on an average of about five percent annually.

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Answered by
Bob Wood
Real Estate Pro
in Alexandria - Mon Apr 21 2008, 16:35