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Housing Prices Still Going Up

A housing development with a sign bragging "from the low $600's" is hardly a bargain but a reality in this area's housing market.

The most common way for someone to afford such a place on a modest income is to "buy up." That's a phrase coined by Realtors referring to selling the townhouse or bungalow bought 10 years ago at a lower price, walk away with $80,000 cash after paying the rest of the mortgage, and have a sizable downpayment so the monthly payment is nearly the same as the townhouse.

"They're just rolling it over into bigger houses," said Dave Meyers, real estate agent at Long & Foster.

Doug Thomas, residential mortgage broker for Access National Bank in Chantilly, is familiar with the process. A dual income household is common.

"When you drive down through Fairfax County and see all these houses, I guarantee they are dual incomes. It's not just doctors and lawyers buying these houses," he said.

One house he's working on, for example, is a four-bedroom, 2.5 bath, 3,400 square foot house in Chantilly listed for $650,000. To get the selling price, it was averaged with three other houses in the area that sold recently. On a 30-year loan, and no money down, the monthly payment came out to $4,600.

THE BUYERS, a husband and wife, were pulling in about $156,000 a year together, and had a low debt to income ratio.

Thomas is also working with some golf course homes, priced in the $1 million range. The buyers got a 3.5 percent arm loan and pay $3,000 a month. With low interest rates and the variety of lending situations available, "it enables them to afford a lot more house than they normally would," Thomas said.

Meyers pointed at the market as well.

"Everything's selling over price. It shows confidence in our economy," Meyers said.

Although he's heard the "balloon will burst" cliché, there are no signs of it bursting.

"At the moment, nothing is slowing," he said.

One of his clients bought a $740,000 house after selling their house for $450,000 and putting $400,000 down on the new house.

"There's a lot of that going on," he said.

IN THE PAST, Meyers sold a $1.4 million house, where the monthly payment ended up being eight or nine thousand, he said.

"My buyer was very young, under 30," he said.

Although Meyers wasn't specific on this buyer's profession, he called him an "entrepreneur."

There is some truth in the "doctors and lawyers" stereotype though. Another house Meyers sold was a Clifton house that sold for $1.2 million.

"I sold it to a doctor. They put in a lot of equity, he was making a good salary too," Meyers said.

So where does that leave the rest of the county? With houses selling at an average price of $375,000 according to Thomas, with a 20 percent down payment of $7,000, the monthly payment would be somewhere around $3,500.

Centex is building houses that fit this description along Silverbrook Road in Lorton. Their big houses on small lots with prices ranging from $557,990 for "The Thorsen," which is 2,947 square feet, to the 3,696 square-foot "Brittany," at $624,990.

The salary to support home ownership is now in the $50,000 range, according to Ann Goergen, the executive director for the Housing & Community Services of Northern Virginia.

"I would say you need to earn at least $50,000 a year, I think you struggle then as well," Goergen said.

ACCORDING TO INFORMATION on the Fairfax County website, the median household income in the county is $85,310. At the $50,000 range, 23.8 percent of the county's households are below that. In addition, 23.5 percent of the county's household income is between $100,000 and $149,000 and 18 percent is over $150,000.

At Housing and Community Services, they help people get their credit back in order and put them on the way to owning a home. For some of her clients, it takes a long time to get in the position to buy a home.

"Their goal is to buy a home but that's a long-term goal," Goergin said.

She's only seen the prices go up though.

"They claimed that everything was flat until 1998," Goergin, a Springfield resident, said.

"My home was affordable until 10 years ago," she added.

In 2004, Fairfax County established three homeowner initiatives to help people buy. "Home Stretch" is down payment and closing costs assistance up to $20,000 for first-time buyers in Fairfax County. It is open to all county employees and residents for a first trust loan through the Virginia Housing Development Authority (VHDA). Price limits apply with this.

"SPARC" is a first trust finance program under VHDA, which is .5 to one percent below VHDA published rate. Funding can be reserved through a VHDA lender after Feb. 1.

First Time Homebuyers Program is another program that applies to new and resale homes provided through the Affordable Dwelling Unit Ordinance and other county proffers. Income qualification is required in all three of the programs