Join in as Alex and Mary discuss the biggest headlines in real estate news this week. The transcript is provided below.
ALEX: Hey guys. This is Alex Pachedzhiev with KW Beltway Homes, and I’m on a conversation with my partner Mary Anthony today.
Well thank you so much for jumping on this group call. I am recording this video so we can send it to all of our contacts and peers and people we love. Just a quick discussion. I wanted to ask you more in an interview style about, you know, a few interesting bits of news that happened lately.
Let’s start with the biggest news that Biden actually extended the forbearance programs for an additional six months on FHA loans and an additional 90 days for all the Fannie Mae Freddie Mac homes. Basically, forbearance is letting people live in their homes without paying their monthly mortgage payments due to the pandemic or any kind of loss of income, and for an extended period of time.
Let’s say it started with just six months, then it extended with another six months until April 2021. And now Biden has agreed to extend this for another 3 months for conventional or 6 months for FHA.
The current due date is now until April 1st. So they can extend it for another 3 months, which will be the end of June on Fannie Mae Freddie Mac loans, and 6 months on any FHA loans.
So at the end of this period, probably they will have a few to reinstate the loan by paying the full amount by setting up extra payments toward their regular mortgage payments, or they can just defer those payments to the back of the loan and continue from where they left.
MARY: I mean, it’s gonna be very hard for people to come up with 15 months of forbearance… 15 months of mortgage payments in a lump sum is probably not possible for people. I mean, banks are going to have to tack it onto the end of the loan, which is really just a tragedy for a 30 year mortgage. I wonder how that will figure with interest payments. It probably would behoove people to refinance at that point.
ALEX: So, if they don’t have another option because there are some people forbearance that are they don’t have Fannie Mae or Freddie Mac insured loans, so for those folks it would be tougher. With Fannie/Freddie loans they just defer payments. The payments go to the back of the loan. They continue from where they left, so nothing is going to change for these people.
So I mean, I expect this to be positive news for the real estate industry because there were some fears that after these programs are over a lot of homeowners will be troubled by not being able to continue their mortgage payments, therefore leading to foreclosures. So at least for right now, I think that we are safe until, you know, end of June. And for many other people until the end of September.
MARY: That is very good news.
ALEX: Yeah. Let’s talk now a little bit about the news the interest rates are climbing and the builders are not building as much as needed.
MARY: Yeah, that’s too bad because when the builders don’t build that obviously leads to a shortage of homes, and inventory is just absurdly tight right now, almost uniformly across the whole united states. Certainly in the Washington metro area here in DC. So less homes, I mean, the builders need to build something like a half a million units a year in order just to keep up with demand. Just demographics, people having babies and the population growing. So if they drop down then it pinches an already tight market. That will lead to a continued buying frenzy that we’ve been experiencing now for, well, for at least a year.
ALEX: Yeah, I mean it is crazy. Right now there are only 387,000 homes available on the market in the whole United States of 380,000,000 people. With 380,000 available homes.
I won an offer for a buyer of ours two weeks ago that I beat 15 offers. My personal ever record beating 15 offers in order to win this home for them. And that was our 6th or 7th attempt to buy a house.
MARY: I know exactly what you mean. Well that goes to your skill also as a buyers agent, Alex. Good job.
ALEX: Thank you, thank you. I think another reason also for builders not building because, I read some statistics, that there are 26% more building permits already approved just sitting there without actual work starting. I think this is because of the increasing cost of lumber, increasing cost of delivery and delays because of the pandemic, so it is much much tougher for builders to actually build…
MARY: The supply chain is just broken in so many areas. They just can’t source things, and I guess for builders it must be really hard for them too. If they’ve got their workers on lined up to work and they can’t get the materials in then they’re just wasting time.
ALEX: Yeah, I agree. Also, interest rates have risen recently. This is actually the biggest jump since November of last year. Right now for a conforming conventional loan that is up to $540,000 the average rate is about 3% now, when you know, just a few weeks ago it was 2.5%.
MARY: Yeah, that’s a shame. Although, 3% if nothing to sneeze at. A year ago it was 4% and we thought it was really great then. So 3% is still amazing, but it’s not as amazing as 2.5%… which was just really amazing. With the supply as tight as it is, I don’t know raising the interest rates is just gonna…
ALEX: I agree. The affordability will go even lower, because if you increase the rates and the inventory remains low or goes lower, then the affordability gets really bad. So I really hope that we can see a little bit more inventory coming and interest rates to remain, you know, as they are.
MARY: You and I have some million dollar inventory coming up.
ALEX: Yeah, tell us about yours and then I’ll tell about mine.
MARY: Well, I have a lovely house in McLean that backs up to the very large school grounds, it’s almost like a park, of one of the elementary schools there. It’s a 4 bedroom 4 bath home, plus den and rec room. It’s all remodeled, kitchen, all the bathrooms. It’s absolutely adorable. It’s gonna go on at $1,050,000. What’s beautiful about the back yard is that you have a wonderful deck and then it looks out. About 200 feet away you can see the playground, so it’s far enough away that you’re not hearing kids yelling but you can actually watch your child from a huge distance on the playground. So that’s a real plus. It’s in a really popular neighborhood, and we’re ready to start showing it and it will be on market on March 10.
ALEX: Excellent, sounds exciting. I have a single frailly home in North Arlington in Highview Park near the Virginia Hospital Center that is gorgeous property. They had a big addition done to the house so now it’s a beautiful three level home about 3200-3300 square feet and great condition inside. It has been remodeled and looks great. So I’m excited about itm and probably will list it right under a million, like $999,000. So this is probably around end of March beginning of April.
MARY: Okay great!
ALEX: And guys, if you’re interested in any of the information we discussed and you want ore clarity or you’d like to discuss any particulars and how these may affect you and your decisions about buying or selling, please do not hesitate and reach out to us and we will schedule a Zoom meeting we can go over the details and specifics.