Under the “Saving DC Homes from Foreclosure Act” of 2010 lenders are now required to give homeowners an opportunity to participate in mediation.  The process inserts a neutral third party appointed by a mediation administrator to reach an agreement that will avoid the lender foreclosing on the buyer’s home.

As a real estate broker in the District, overseeing the sale of thousands of homes in the last several years, I’m afraid this well intended law will actually do far more harm than good for two reasons.

1. Mediation attempts simply delay the inevitable and creates more stress and anxiety for a homeowner, holding their life in suspense for years.  The process actually delays what we are trying to do – and that is help people move on with their life and rebuild their financial capability.  If a homeowner is facing foreclosure it is because they are no longer making payments on their home and they need to move on.  How did we lose sight of this fact?  Yes, many of the individual situations are heart breaking and include circumstances beyond the homeowner’s control, but that doesn’t change the fact the current housing situation is no longer feasible and pretending it somehow is (or soon will be again) helps no one. 

Many jurisdictions across the country have been trying mediation for years and an extremely small percentage are successfully mediated, and a smaller percentage of those create long term solutions.  History is clear, the most successful solution is to assist homeowners to move in to a more affordable living situation that does not include owning the home in foreclosure. 

2. The majority of homes in foreclosure are empty and the banks are now forced to locate individuals who are nearly impossible to locate before the foreclosure can be completed.  Meanwhile rats, vagrants, vandals, and mold are taking over the properties severely degrading the condition which will force well intended neighbors into an attempt to mitigate the dangerous conditions, and eventually cause lenders to sell the properties at significant discounts – further depressing the value of homes throughout the neighborhood.  Who is this helping exactly?

Marian Siegel,  executive director of Housing Counseling Services in the District said herself in a recent Washington Post article “Our biggest fear is that people’s expectations for mediation will be too high.” 

My biggest fear is we are wasting precious time and opportunity to help people move forward in their life by setting false hopes and expectations that somehow the lender is going to cut the loan amount and payment in half for the life of the loan.

Only when we truly accept the fact we must facilitate shifting people who cannot afford their homes out – and people who can afford them in – as fast as possible - can we count on a sustainable recovering in housing.

This week I read an article in the Washington Business Journal. It caught my attention immediately when I saw the phrase “International Buyers.” The article is called “International Buyers Drive Sales of D.C. Luxury Homes.”

The article states how strong the luxury sales have been in our DC metro area thanks to international buyers. Just think about anybody you know that was born overseas. I am sure you know some people.

We are lucky to be in an international city. The strong Euro and Pound are helping the American market. The developers know that buyers looking for luxury homes are willing to buy the property for themselves and not as an investor. They know this type of buyer will pay top dollar for the luxury accommodations. Private elevators and 24-hour web concierge are some of the services that are offered in the new buildings.

What I have noticed in the DC metro area is that prices, in some particular areas and specific type of homes, have been very strong. I have seen how in certain areas (like AU Park, Georgetown, Adams Morgan, Kalorama, Dupont, and Arlington) there are not many houses for sale and prices are still strong. The few homes that sell are selling for top dollar and very fast if they show well or/and if they are properly priced. People that are buying in these areas are probably going to be there for a while and they are not concern about the current market or the prices going down next year. They understand that eventually prices will go up.

It is still a very good time to buy and sell.

If you are thinking about selling your home or you are just curious about the value of your home, please call us at 202-318-1623 or click here for a comparable market analysis.

From The Washington Post: “U.S. home construction last year plummeted at a rate not seen since 1980…”

This is great news for sellers. Think about it. Since the supply of new home construction has gone down and will probably continue, there is an increased likelihood of more people inquiring about existing homes for sale. In other words, when there is less supply, demand for that supply is increased. Additionally, an increase in demand creates an increase in price.

It will probably take some time to see this increase in some markets, so buyers, take advantage of the market now!