CENTURY 21 NEW MILLENNIUM | REAL ESTATE NEWS

© Copyright 2012 CENTURY 21 New Millennium. Each Office Is Independently Owned And Operated. Equal Housing Opportunity. Equal Housing Lender.

6629 Old Dominion Dr

McLean, VA 22101

www.teamdebok.com

SUMMARY

If you are considering a real estate transaction, thorough analysis and competent

representation are essential. We are in a transitioning market. There is potential for profit,

as there is risk of loss. If we understand the underlying facts, we can continue to make good

business decisions logically and without emotion. I am a real estate professional and accept

responsibility for keeping my friends, neighbors, and business community informed as to all

aspects of things affecting the real estate portion of their holdings.

If your home is currently listed for sale, this is not a solicitation. If you have a real estate

question, I will be happy to answer it or find the answer. If you have a real estate need,

I will appreciate an opportunity to compete for your business. Our team is very good at what

we do. Our results demonstrate that. Don’t settle for less.

Sincerely,

Leslie and Amy Leslie Stewart and Amy DeBok

Leslie Stewart and

Amy DeBok

6629 Old Dominion Dr

McLean, VA 22101 Office: 703-556-4222 Cell: 703-662-3092 Cell: 703-618-2601

Leslie.stewart@c21nm.com

adebok@teamdebok.com

www.teamdebok.com

1

SUMMER 2012

Leslie Stewart and

Amy DeBok

6629 Old Dominion Dr

McLean, VA 22101 Office: 703-556-4222 Cell: 703-662-3092 Cell: 703-618-2601

Leslie.stewart@c21nm.com

adebok@teamdebok.com

www.teamdebok.com

The Washington, D.C. Metropolitan area has been

an appreciating market for the last several years.

Still, a modest pace of foreclosure will continue even

though home values are increasing and regional

unemployment stands at less than six percent.

Today’s defaults are a result of positions taken

several years ago without provision for fluctuating

market cycles.

While real estate values always have and always

will appreciate over time, there will be interim periods

when values fall below the trend line. Market

dynamics in Maryland are different than those in

Northern Virginia or those in Washington, D.C.

Inside the Beltway, some suggest there never was

A housing crisis. More rural areas continue to lag

recovery trends. Understanding the local trend is

fundamental to making sound choices.

Investors remain active market participants but are

now more focused on buying to hold rather than

flipping property. Twenty-two percent of purchasers

paid cash for the property. The percentage of

inventory presented as “short sale” is declining due to

restoration of market value and therefore equity. First

time homebuyers remain active and the number of

families completing local upgrades is growing rapidly.

Modest home prices, public policy initiatives, and

incredibly low interest rates make today an ideal time

to acquire real property. Real estate is an investment,

first and foremost. The exponential return on

investment is living in the investment, raising a family,

and making memories.

Our commitment as real estate professionals is to

make certain our clients evaluate real property with

perspective. The foundation of our success is always

placing our client’s long term objectives at the

forefront of the transaction. Positions established

today must be sustainable through a variety of

market cycles.

Every key indicator demonstrates a strong foundation for our local market continuing its positive momentum. Values bottomed out between 2009 and 2011 and now enjoy a stable upward trend. Still, an estimated twenty five percent of owners have a mortgage balance which exceeds the market value of the property.

As values rise, equity positions are restored which motivates owners to stay the course rather than pursue a distressed sale. With inventory levels already fifty percent lower than a year ago, and distressed owners more likely to stay the course, low inventory will continue to put upward pressure on prices.

RISING TIDES LIFT ALL BOATS!

The Timeline of Washington DC MSA Housing Recovery — Key Indicator by Sub-Region

Key Indicator MEDIAN Value PEAK Value BOTTOM Value

Jun - 11 Jun - 12 Value Month Value Month

District of Columbia $435,000 $455,000 $455,000 Sep—06 $340,000 Feb—10

Suburban Maryland $279,000 $296,000 $403.800 Jul—07 $226,300 Feb—11

Northern Virginia $383,000 $465,000 $457,000 Jun—06 $253,800 Feb—09

Key Indicator Jun -11 Value as a Percentage of Peak Value

Jun -12 Value as a Percentage of Peak Value

Equity Restoration Over Last 12 Months

Months Of Inventory June 2011

Months Of Inventory June 2012

Current Inventory as a Percentage of June -11

District of Columbia 96% 100% 4% 5 2.4 48%

Suburban Maryland 69% 73% 4% 11.2 5.5 49%

Northern Virginia 84% 98% 14% 4.9 2.4 49%

THE “NEW NORMAL” IS “PERSPECTIVE”

2

TESTING THE WATERS? IS IT SAFE TO JUMP IN?

Inventory levels have declined by fifty percent across our region. More jobs, fewer distressed sellers, and low interest rates will continue to fuel this trend. Jobs numbers will always be a leading indicator for housing trends, and for us, the numbers are all positive. When inventory is scarce, and reasonable demand exists, home prices appreciate. Today, the relationship between available inventory and ready, willing, and able buyers is balanced. We expect to enjoy a measured yet stable appreciation in property values. Nationally, there are 6.6 months of inventory currently for sale, a relatively healthy statistic. Our region averages less than four months available with Maryland offering the greatest selection of properties. DC and Virginia inventories are both under three months and all three sub-regions are trending lower.

SUSTAINABILITY

Obviously, there have been peaks and valleys in our markets throughout the current cycle. The fundamental variable which tempered the severity and duration of our negative housing cycle is the relatively low unemployment we enjoy in the DC Metropolitan area. We share the lowest rate of any metropolitan area in the country, virtually tied at 5.3 percent with Minneapolis. There is a direct correlation between job gains and losses to velocity and direction of housing trends. Home values peaked regionally between 2006 and 2007, immediately prior to the period of job loss detailed in the chart to the right. Home values reached a solid bottom between 2009 and 2011 when we began to see jobs return to our area. Since 2011, we’ve seen steady growth in employment and corresponding appreciation in home values. Projections out as far as 2015 suggest an improving economic climate fueled by steady growth in jobs. A healthy jobs market means a healthy real estate market. It’s that simple.

How much you pay for a property usually matters less than how you pay for that property. Mortgage rates are at all time lows and are expected to hold steady for the balance of 2012. As conditions continue to recover, interest rates will begin their anticipated climb to guard against inflationary concerns. A $477 principal and interest payment services a $100,000 mortgage when the interest rate is 4%. The same $477 payment will repay only $88,900 when the rate is 5%. When rates hit 6%, the $477 payment only repays $79,560. To borrow the same $100,000 at 5% and 6%, requires a monthly principal and interest payment of $536 and $600 respectively. The cost of owning real estate is more aptly defined by “down payment” and “monthly payment” than by “purchase price.” It is un-likely conditions for purchasers will ever be more favorable from a cost of funds perspective. If you own real estate, consider refinancing at today’s rates. If you don't own real estate, you should buy some today.

AFFORDABILITY

PROPERTY SELECTION

3

INSTITUTIONAL AND ADMINISTRATION INVENTORY CONTROLS

Twenty five percent of homeowners remain in a negative

equity position despite the recovery of values to date. Public

policy will encourage the orderly and cost effective disposition

of these assets over the next several years. These incentives

to homeowners will diminish as the risk of another spike in

inventory declines.

Understanding alternatives available to the distressed

owner is fundamental to competent representation. Resolving

default requires a specific knowledge base beyond that

typically associated with a real estate licensee. In conjunction

with the real estate professional, our Default Resolution team

empowers an owner to pursue that strategy which best fits

their objective.

Resolving a default before it occurs is always a more

favorable alternative. Policy guidelines change on a regular

basis and some mortgage loans are not eligible for

participation in any Administration programs. Postponing eval-

uation until the lender makes unilateral decisions to

resolve the default is damaging. In some cases, lenders have

internal programs available for loans that do not qualify for any

of the Administration options. Everyone’s goal is to resolve a

default through the least costly and disruptive alternative.

The first, and perhaps most consequential policy expiration

may be The Mortgage Forgiveness Debt Relief Act. Some

homeowners are now asking banks to accelerate individual

foreclosure actions to make certain the event is completed in

2012. Many “short sellers” share a growing concern over

having their transaction approved and concluded by the end

of the year. Those that do not make the deadline, pending

any decision to extend the Act, will face substantial

additional liability.

The Mortgage Forgiveness Debt Relief Act is set to expire in 2012. The Administration has NOT yet extended the deadline for distressed owners to take advantage of The Mortgage Debt Relief Act. This legislation generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure or short sale, may qualify for the relief. If not extended, after 2012, any debt discharged by means other than repayment will be taxed as ordinary income in the tax year in which the event occurs. Simply put, a short sale of a qualifying principal residence, where a $100,000 deficiency is forgiven, which concludes by December 31st, 2012, will create no income tax liability to the seller. If not

completed in 2012, the forgiven debt will be taxed as ordinary income at the individual’s personal rate. The additional tax liability will amount to tens of thousands of dollars and be due in full on April 15th, 2014.

Making Home Affordable has been extended through 2013. HAFA: For those not able to meet mortgage payments with a need to transition to more affordable housing, the Home Affordable Foreclosure Alternatives (HAFA) program is a reasonable resolution. HAFA provides two options for concluding a mortgage; short sale or Deed-in-Lieu (DIL) of foreclosure. Eligibility for HAFA includes the following criteria:

A documented financial hardship.

Applicant has not purchased a new house within the last

12 months.

First mortgage is less than $729,750.

Mortgage originated on or before January 1, 2009.

HAMP: Home Affordable Modification Program has been extended and expanded to include:

Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it.

Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower.

Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments.

Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing.

HARP: Home Affordable Refinance Program has been extended and is designed to help get a new, more affordable, more stable mortgage. HARP refinance loans require a loan application and underwriting process, and refinance fees will apply. The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months and:

The mortgage must be owned or guaranteed by Freddie

Mac or Fannie Mae.

The mortgage must have been sold to Fannie Mae or

Freddie Mac on or before May 31, 2009.

The current loan-to-value (LTV) ratio must be greater than

80%.

DEFAULT RESOLUTION SERVICES—POLICY DRIVEN VARIABLES