DAN REEDYou're tuned in to The Kojo Nnamdi Show. I am Dan Reed sitting in for Kojo. What is it like to buy a home in the D.C. region? It's even more difficult lately given the arrival of Amazon. Median home prices in Arlington jumped $110,000 in the five months following the HQ2 announcement to $750,000. And it's not just northern Virginia that's daunting. The entire region is booming. And despite new buildings popping up everywhere a growing population keeps prices sky high. With the market this tight, just how hard is it to buy property here in the D.C. area and what can first time home buyers do to prepare themselves? Joining us to discuss this today is Danielle Hale, the Chief Economist at Realtor.com. Thanks for being here.

DANIELLE HALEThanks for having me.

REEDYou can join the conversation by calling 1-800-433-8850. Tell us your home buying experiences by emailing us at kojo@wamu.org or get in touch with us through our Facebook page or by sending us a tweet to @kojoshow. So, Danielle, what does the real estate market look like here in the D.C. especially in comparison to other similar urban areas?

HALEYeah, so the real estate market in D.C. has really been energized by the announcement of Amazon's arrival back in November. Before that it was a bit slow relative to other major markets. It wasn't necessarily the fastest growing area, but since that time we've seen the number of homes of that are available for sale decline especially in those areas closest to the new Amazon campus, which will be in the Arlington area. And we've seen a lot of competition. So buyers are interested in getting in before all those newly hired workers come in, but sellers know that and they're raising their prices. And it's become a very difficult market to get into.

REEDSo for those who haven't looked at listings recently what's a home cost in our area and what are some of the hottest neighborhoods?

HALEYeah, so it definitely depends on where you are. So as you mentioned prices in the Arlington area are around $750,000 for listings. D.C. is a little bit less expensive; it's $625,000. Fairfax $690,000. On average across the Metro area as a whole you're looking at just over $450,000.

REEDSo Realtor.com released an analysis looking at the shifts in the Arlington housing market after Amazon announced it would locate its second headquarters there. What did you find?

HALESo we found that after the announcement prices had skyrocketed as you noted up $110,000 in those five months after the announcement. That's a big percentage increase. And we also are seeing fewer listings available for sale. So while some sellers are, you know, listing their homes now to take advantage others are waiting to see if prices go up even further as Amazon actually starts hiring in the region.

REEDSo that $110,000 increase in home prices is pretty remarkable. Do you think the market's going to keep increasing like this for the next few years?

HALESo I think we'll continue to see prices increase. One thing we haven't seen a lot of in the D.C. area is a lot of building except at very high price points. So there's definitely going to be upward pressure. It's already a desirable place to live. We already have decent population growth. And Amazon is just going to add to that as people find that there are good jobs in this area and come in. I don't think that that 17 percent or $110,000 in five months can be sustained long term, but I think we'll continue to see prices increase at a more moderate pace.

REEDAlso with me today is Christine Richardson, a Realtor with Weichert Realtors in Great Falls, Virginia. She's also the President of the Northern Virginia Association of Realtors. Thanks for being here, Christine.

CHRISTINE RICHARDSONThanks, Dan.

REEDSo what do you think? Are you also seeing the effects of Amazon and what does the tightening of the market look like from your perspective?

RICHARDSONWe are definitely seeing the effects of Amazon. As Danielle mentioned, we were already in a bit of a low inventory market meaning that there weren't that many houses to sell. And Arlington has always been a very popular area. That's where the millennials all want to buy right now, and they make up one-third of our buyers across the country really. One-third of the buyers are millennials. And they all want to live in North Arlington specifically or Arlington. And, of course, having Amazon come there is just fueling that. So we are definitely seeing a lot of demand for Arlington and at the same time fewer houses to sell there.

REEDDo you think these rapid price increases are going to stay a trend?

RICHARDSONI think they are. I mean at this point Arlington has -- I'm sorry, Amazon has hired 10 people just 10, and we're already seeing this kind of craziness. They're talking about 2500 a year for the next 10 years. There's also talk that we might get some of the jobs that didn't end up going to Long Island. So I think the demand for Arlington has always been strong. And I think it's going to continue to stay that way.

REEDWe've been getting a number of stories from people all over the D.C. area talking about their home buying experiences. We did a survey online recently. And I just -- throughout the show I'm going to read some of these stories that I've heard. One goes, "When we saw our house in 2012 it had been on the market for just three or four days. We went to see it the day after. Put in an offer the next evening Monday night. By the next morning, Tuesday, the offer had been accepted out of three and we went under contract. I had friends, who had spent over a year looking, bidding on, and losing houses at that point and expected the process to take a lot longer. We got so so lucky."

REEDDanielle, your analysis looked at Arlington. But are these trends that we're seeing around Amazon going to affect other parts of Virginia, the District, or even Maryland?

HALEYeah. Absolutely. So anywhere that's within a reasonable commute of that Arlington location. You know, and it is a very reasonable commute from D.C. You can hop on a Yellow Line and get out to Crystal City very easily. Even from further down out towards Fairfax County and the Huntington Metro area, you're going to find the effects. In fact, we took a look at listings and Christine can probably attest to this having seen this. We saw people mention either Amazon or National Landing as far away as Woodbridge. So sellers are definitely taking advantage of the fact that they can market their homes as accessible to the Amazon location.

REEDIs that something you've seen, Christine?

RICHARDSONYes, absolutely. And we're expecting people to want to live really all over the Washington area. I think that might be one of the reasons why Amazon chose the location they did. It's right on the border between Maryland, D.C., and Virginia. So really people can live anywhere and still have a reasonable commute to the Amazon Headquarters. And someone might want to live out further west maybe in Loudoun County, build a new house or they might want to live right in Arlington or the city of Alexandria. They might want to live in D.C. if that's what they're looking for. Amazon is still a reasonable commute from all of those places, and then, of course, suburban Maryland as well.

REEDWe've got a call from Beverly in Washington D.C. Beverly, you're on the line.

WAVERLYHey, Kojo. It's actually Waverly.

REEDWaverly, my apologies.

WAVERLYYeah. No problem. My husband and I just closed yesterday on a co-op unit right kind of between Shaw and Petworth like between Catholic and Howard. And he works for Amazon and we live between here and the west end of Richmond. And it was an intense process. I mean, the first day we looked at it there was already so much interest in the unit that we had to move like that day to get the place.

REEDWow. That sounds very stressful.

WAVERLYWell, it's exciting. We love D.C. and we always, you know, had been wanting a place here. We love the museums. We love the culture. And, of course, living between Richmond and D.C. my husband was spending half his time in just like Airbnbs. So we just decided to move on it, because it seemed like a good investment. I mean, this area is really up and coming, and it's sort of an exciting place to live.

REEDYeah, thank you very much. So, Christine, you've been in real estate here in the region for about three decades. What are some of the big changes that you've seen in the market over that time?

RICHARDSONWell, certainly technology has changed the way we sell houses. Back in the 80s, of course, it was a totally different experience. But I think the really big change that we see is that the buyers have so much more information available to them and sellers as well. And so it's a much more educated market place and I think that's great for everybody. I think it's great for the realtors. It's great for the buyers. It's great for the sellers. Most of these buyers have been watching houses online. They've been watching the neighborhood perhaps for three, four, five years as they've been ramping up to their home purchase. So when it gets to the point where they're ready to buy, they know exactly what they're doing. They know what areas they want to be in and they know what houses sell for in that area. So I think that's great for really everyone.

REEDYeah. We've got a tweet in from Natec, who says that, prices in Ward 8 and 7 in the District are still depressed when compared to comparable homes just a few blocks away in Ward 6, which raises an interesting point that the D.C. market as a whole contains lots of different kinds of markets. Danielle, could you speak to that a little bit?

HALEYeah, absolutely. So we talked a lot about the price growth that some of the Virginia suburbs have seen, but it's true that that's not necessarily the case everywhere price growth. So we looked at county level data. Price growth in Montgomery County, for instance, has been flat on a year to year basis when we look at listing prices. And in D.C. itself prices are up only about four percent as a whole. And as you mentioned, you know, in different wards different neighborhoods you're going to see different price performance. So it really depends, you know, that mantra "location, location, location" is very true.

REEDI'm also here today with TC Caviness, who's the Director of the Homeownership Center at Manna D.C. Thank you for being here today.

THOMAS CAVINESSThank you for having me.

REEDNow, TC, you've also been involved in real estate in the D.C. area and Maryland for a long time. In your experience, has it ever been easy to buy a home here?

CAVINESSNot in the last 15 years. It hasn't been easy and affordability is always an issue, because a lot of -- it's almost two classes. It's the upper end and the lower end, which we try to figure out and help people understand the difference in the market places and price points.

REEDHow would you describe it being different between the upper end and lower end?

CAVINESSWell, most of your programs and most of your down payment assistance programs and most things that are geared towards first time homebuyers have income and household restrictions. So a lot of times it's a balancing act of trying to find a right price point property to match up with the program that people use in the District.

REEDSo, TC, the Manna Center's Homeownership Club has been going strong in the District for 32 years.

CAVINESSRight.

REEDWhat is that program?

CAVINESSSo first there are three components. First, Manna is an affordable housing builder. Second, we are the starting block to home education counseling for homeownership. And third, we have an advocacy department, which is called HAT. And so the Homebuyer's Club has actually been around for 32 years. It was created by Manna and it was duplicated and replicated by HUD across the country. And it basically it started off as peer groups coming together with one common goal of learning how to purchase whether it was working through credit whether it was working through savings whether it was working through trying to understand the process.

CAVINESSAnd in today's market what we find going back to what was said earlier, technology has kind of changed that. And so what we do now is we teach classes and workshops. We help with people, who might not understand, because a lot of times what we find is people do not really understand the home buying process no matter how it is. No matter whether you're in the marketplace or whether you're in the affordable housing marketplace, a lot of times people just don't know. And so what we try to do is educate them through a program we started called "Start to Keys," and basically when you come into our program we'll look at your situation. Assess where you are and whatever is available we will lay it out to try to help you understand where your starting point is in homeownership.

REEDSo that leads me to my next question. Christine, you estimate that you sell about 60 houses per year in Northern Virginia including many first time homebuyers. For each of those homes, what does that process look like from the moment the perspective buyer walks into your office? What are they looking for?

RICHARDSONWell, that's a great question, Dan, because it's really important that people understand. They sort of need to put a team together to do this. You know, kind of like the "Start to Keys" program that TC is talking about. So the team that you need really is a very strong realtor to help you with the search and to get you through the process. And then also a good loan officer to help you with the financing. Of course, most people are financing their purchase.

RICHARDSONAnd so I find the best thing to do is start with a conversation with realtors, interviewing realtors till you find somebody that you feel really comfortable with. Interview loan officers till you find somebody that you feel really comfortable with. And then together the three of you are going to sort of embark on this process of trying to get you into a house. And then--then you start talking about things like what's important to you, what neighborhoods do you want to live in, do you want a garage, do you need three bedrooms, those types of things. What's important to you and then the realtor will help you find the right house from that point forward. So it's really kind of a team.

REEDWe've been getting a number of tweets in response to this episode. Differenttune tweets, "My husband and I closed on our home on April 16. We were planning to buy over the summer and somehow we found a house just under our minimum price range just outside our desired range in Alexandria. We jumped in and bought. It was stressful. Offer on Sunday. Under contract on Tuesday." Monica tweets, "Bought our home in Colmar Manor in Prince George's County after spending 10 years in the Silver Spring Tacoma Park area. We could not afford to stay." Michelle tweets, "D.C. market insane, lost five houses in Ward 3, had to offer way over asking. Preinspection for $1,000 before even making an offer." We are going to talk to a lender and continue this conversation after a short break. Stay tuned.

REEDWelcome back. I'm Dan Reed in for Kojo Nnamdi. We're talking about D.C. real estate trends. I'm here today with Sylvia Setash, a Mortgage Loan Officer with the United Nations Federal Credit Union. Thanks for being here.

SYLVIA SETASHDelighted to be here.

REEDSo we talked before the break about the process of buying a house. So once hopeful homebuyers have started talking with a realtor their next step is securing financing. That's where you come in. What does that conversation look like?

SETASHWell, it's amazing how many people will come in and say, "I need to get pre-qualified for a loan," and they have no idea how much they want to spend. So most of it is basic budgeting. How much do you want to pay in a mortgage and how much can you afford? And then we break it down that way. What are your debts and then that's how we spiral out to where we're going to buy and how much.

REEDWhat kind of factors do you look for in deciding whether to approve somebody for a loan or not?

SETASHWell, credit is key. You don't have to -- there's a big misconception that you have to have perfect credit. That is not the case. There are many different programs out there that somebody can buy with flawed credit. That's the first thing. Down payment is another key, and then income. Those are the three basic corners of how we pre-qualify.

REEDOne of the common pieces of advice, I've heard and I'm sure others have to, is that you should shop for a loan. What are the points of comparison that you'd encourage people to look at?

SETASHAbsolutely. The biggest -- I don't know how -- error people make when they shop for a loan is they will call lender A on Monday. They'll call lender B on Tuesday and then another lender on Thursday. And they'll say, "Well, this rate is crazy." You know, they go back to their first lender and say, "I got this rate." "Well, I'm not going with you." And the reason being is that the market's changed. It changes hourly. It changes by the minute. Some lenders change their rates every hour. Some only do it once a week. So know how your lender is pricing.

REEDDoesn't reaching taking out to multiple banks take a hit in your credit?

SETASHOnly if you let them pull your credit. You don't need to have your credit pulled to get a quote. You can find out where your credit score is and use that. If they cannot give you a rate based on what you tell them your score is, keep going.

REEDWe've got another call from John in Bethesda, Maryland. John, you're on the line.

JOHNHi, Dan. Thanks for taking my call.

REEDOf course.

JOHNA little bit about getting a mortgage, I think it's important for people to realize that when they're about to get their mortgage the mortgage officer will say, "Hey, do you have a car loan? You know, do you have other short term loans? You know, if you roll them into this mortgage, you know, I'll be able to lower your payments." And I think a lot of people don't realize that if they've got three years left on their $5,000 balance of a car loan is instead of going from paying five percent a year for three more years you're paying maybe just the mortgage rate for that amount for another 30 years. So I think a lot of people who are getting debt rolled into a mortgage and make them think they're doing okay. But they're just going to be paying it off over 30 years instead of three, four, or five. And why the mortgage lenders would do this. That's my question and comment.

SETASHAbsolutely. The only reason that would make sense not everybody is the same. Everybody has a different criteria of what they need. You might have somebody that just became a single mom and needs every dime that they can get to just to get through the month. That may make sense, you know. Let them go ahead and roll in a debt. Is it recommended across the board? Absolutely not. Everybody is different. Everybody needs to be assessed individually.

REEDDanielle, you're a researcher for Realtor.com and you look at sort of macro real estate trends. And one of them is that millennials are struggling to buy homes because of things like student loans or additional debt. Is that, you know, something that they're able to overcome? Is it something you see in the D.C. area?

HALEYeah, absolutely. So as Christine mentioned in the D.C. market and nationwide millennials are making up about a third of home purchasers. When we look at the data we're looking at that based on mortgage data. So we're not including cash buyers in those statics. So even though it is difficult for them given those debts that they're facing given the fact that a lot of them struggle to get decent jobs coming out of the recession they are still finding success in the market. And in fact, the homeownership rate for those younger buyers has started to tick up. So that's definitely a good sign.

HALEI know there was a lot of talk for years about the fact that millennials were just going to be generation rent and never want to own a home. But we're seeing that that's not the case. And in fact if you survey them there's a strong desire to own homes. It's just a question of making that happen. Balancing those previous debt loads with, you know, the fact that they'll take on more debt to buy a home.

REEDYeah. We've got a tweet from Alyssa Braver, who says, "I'd like your program to discuss whether it makes sense to even buy a home. Real estate is not as good an investment as people think it is. A lot of people might be better off renting than buying. In my daughter's neighborhood homes have gone down in value since 2001." Christine, you're a real estate broker. Has that -- I imagine that's a conversation you have with potential buyers a lot like is it the right time or is it a good idea at all?

RICHARDSONAbsolutely. And it's a great question for people to ask. And similar to what Sylvia said everybody is a little different. Real estate should be considered a long term investment. It's not something that you can buy and plan on selling in a year or two years. So if your plans are sort of short term you're not sure you're going to stay in this area, it might make sense for you to rent, because it costs, you know, something like three percent in closing cost to purchase a home. Maybe more like seven or eight percent to sell it. So if you think about it, you really need 10 percent of appreciation just to break even on a house. But there are also, of course, tax benefits to owning. There's a lot of great benefits to owning. It's a wonderful savings plan. A 30 year mortgage is the best savings plan out there. So there's a lot of great advantages, but it's not something that should be done short term.

REEDWe've got a call from Davis in Gaithersburg. Davis, you're on the line.

DAVISJust to give you a little context. I'm 33 so I'm kind of at the top end of the millennial group. And I bought my first home two years ago in Gaithersburg at, you know, around the $300,000 price point. And when I was looking there was very little to choose from and a lot of it needed a lot of work. And like a lot of other people are saying, you know, every time you would put in an offer there would be a bunch of others. The home I ended up purchasing was only on the market for three days and I was one of eight offers. And I had to put a general inspection down on my offer, which means I didn't get to negotiate on anything found on the home inspection. And I had to bid over asking price in order to be competitive. So, you know, it seems a lot like there's a very short supply of affordable housing for people, who are younger or want to live and work in Montgomery County.

REEDAbsolutely. Thank you. Is that something that our panelists have experienced?

RICHARDSONAbsolutely. We're seeing lots of multiple offer situations and buyers having to be very competitive. As the person that tweeted earlier mentioned having to do your home inspection before you even right an offer. So you're spending the money on an inspection for a house that you may not even get to buy. So we're seeing a lot of that. We're seeing people waving inspections all together, and certainly bidding higher than the list price for the house in order to be competitive.

REEDHow would you advice buyers like this one from making their offer stand out in a competitive situation?

RICHARDSONThere's some -- a lot of things that you can really do for that. One is to really look at the sellers' motivation. Some sellers it's all just about the numbers. They want to get the highest price the highest net. But for most sellers it's about the stress perhaps. And so the risk and so an offer that is the lowest risk for the seller is important. For some sellers, for example, they might be building a new home. And they don't know when their new house is going to be ready. It's going to be ready sometime in September. So I would council a buyer to, you know, give them a quick closing with a 30 year 60 day free rent back so that the seller will know they're not going to be homeless. To them that's very valuable and so that might cause them to choose that buyer over someone else.

REEDAnd so a rent back is when the buyers are literally renting the home they just purchased to the sellers.

RICHARDSONThat's right. Yes. Allowing the sellers to stay in the house after closing for a short period of time. Lenders as Sylvia would tell us are never going to allow that to happen for more than 60 days, because then it starts to look as an investor loan. But for up to 60 days the seller can stay in the house after closing.

REEDWe've talked a lot about the difficulties of buying a house, but there are programs out there designed to help people afford a home. And that's something that you do, TC, at Manna. A lot of folks assume that you have to be really struggling to qualify for a home purchasing assistance. But some of the programs out there offer help for middle class homebuyers especially first time homebuyers. Could you talk a little bit about that?

CAVINESSSo in D.C. there are two or three different programs, and in Maryland there are two or three different programs, and I assume in Virginia there are two or three different programs.

RICHARDSONYes.

CAVINESSPart of what we try to do is make sure that people understand what's available to them. So as an example there's one program provided by the District Government, the HPAP program, which goes on three different layers. So as an example, householder of one that made $90,250 could get $16,000 for down payment help. And that's at a zero interest loan that you don't start to repay for five years.

REEDAnd this is for a single person?

CAVINESSThat's for a single person, right. And then the other side of that is you take a single person who does not make that kind of money, and let's say a single person makes 41,000, they qualify for 80,000 down. And they don't repay that money until they sell or refinance. So, you have those types of programs.

CAVINESSYou have D.C. Opens Doors. That is another down payment-assistance program that will provide the down payment. You also have what -- people have a misconception of affordable housing. When people hear the word affordable housing, it can mean so many different things to so many different people. So, what we try to do is make sure that people understand that the word is not a blanket word, that there are different layers.

CAVINESSSo, as an example, Manna will take a vacant lot, as an example, and we'll go to the D.C. government and bid on it. And we'll find out what is needed in that neighborhood in that area. And a lot of what we build is for lower or moderate income people, but real quickly, just to give you an example of how it works: we have just completed construction and we're doing punch-out now on 8th and T in the Shaw neighborhood. And we have four three-bedroom, two-and-a-half bath townhomes, three-level townhomes.

CAVINESSWith the subsidy from DACD and the lot belonging to the D.C. government, these four units will be for sale for $280,000. And that $280,000 is what they will pay. If they stay in the property for 15 years, the covenant goes away, and that equity becomes debt. And so that program and that workshop that we give is how do you build wealth through affordable housing. And that's it.

REEDJust to put that in the context, these are $280,000 homes, and the median list price in D.C. this year was $625,000.

CAVINESSYes. And just to give you a little more context, in order to make sure that the construction is subsidized, we're building two market-rate units right next to the affordable housing, and their price point is 1.25 million.

REEDThat sound you hear is my mind and everyone's mind blowing. (laugh) We've got a call from Dawn in Chevy Chase. Dawn, you're on the line.

DAWNHi. Thank you for taking my call. I'm an agent, and I practice in D.C., and have been in D.C. for 21 years. And what I have an issue with right now is that D.C. has always been beautiful, but the attraction wasn't there when D.C. was 70-plus percent black. Now that it's almost 70-plus percent white, it seems that the prices are up, the attraction is greater, so much so that current residents, current older residents are being priced out because of higher taxes. That's just my comment. Thanks for taking my call.

REEDThanks, Dawn. We've got another call from Walter, in Washington, D.C. Walter, you're on the line.

WALTERThank you for having me, Dan. I just wanted to say that, kind of the piggyback on Dawn's comment, I was not here when the city was 70-plus percent black. I was born sort of in the end of that transition, but I am I D.C. native, and I want to own a home in D.C. I know (unintelligible) they have moved away from D.C. and various places, but I would like to, you know, utilize the resources that you all have touched on in this program just to kind of take my stake and just grab a piece of my home and keep it.

REEDThank you. T.C., you know, part of your work at the Homeownership Center is helping people set, you know, realistic expectations about their search for a home in a city that is experiencing a tremendous amount of gentrification. You know, how do you start having a conversation with them, particularly folks who do have a limited purchasing power?

CAVINESSSo, the way the process works is you fill out an application, we call you in, and we sit down and we look at everything from credit to budget to savings. And we start with first trying to find how your savings patterns, how you're using your saving patterns, and do you need to work on savings. And so we start the conversation there. From there, we look at credit. You know, it was said earlier that you don't have to have perfect credit to be able to purchase. So, we try to get that message out to people, and then we start to -- we get those three things out of the way, your budget, your credit, your savings.

CAVINESSThen we get into down payment. Where is the down payment going to come from? Where is the money going to come from, and we get into that. And then the last component is we get into, what's your vision, because the most important conversation, like it was said earlier, is what's your vision, because this is kind of how the conversation goes a lot with us. I want to buy a house. Okay, great. What's your vision? Well, I want three bedrooms, two baths. I could use a little bit of yard. Oh, that sounds fantastic. Well, what's your comfort zone monthly? What do you think you can handle monthly? What do you feel good with monthly? Oh, about 1,200 a month. Well, that doesn't work.

CAVINESSSo, this is when the conversation begins to take shape, and this is when we literally have to say, you know, this price point gets you this. And this price point gets you that. And in this area, nothing is in that price point. So, it's a real detailed conversation. The other thing that we do, though, is we have a workshop called It's Not Your Realtor's Fault. And what we do in that workshop is we literally pull up the MLS and we teach people how to search the MLS and how to look at -- because a lot of times, they'll see something, but they don't understand the details in what they see.

CAVINESSLike, if you're using HPAP as an example, HPAP will allow you to use an FHA 203K streamline loan.

REEDYou're using some letters here.

CAVINESSOh, okay.

REEDWhen you say HPAP, you mean...

CAVINESSIt's a program by the D.C. government for down payment assistance. And that's the program I spoke of earlier, where you can get the 80,000 and the 16,000. So, if you're using a program like that, there's another layer. So, FHA is Federal Housing Administration loan. So, if you're doing an FHA loan, as an example, they might allow your ratios to be one thing. But if you're getting down payment assistance, they might cut it shorter.

REEDAnd you're talking about the income-to-debt ratio.

CAVINESSThat's correct. That is correct. Yes, yeah. So, we want people to understand that, and we want people to understand that, a lot of times, in certain price points houses need work, which throws another layer of what they need to learn.

REEDNow, Sylvia, you're a mortgage lender and I imagine one question you get a lot is that buyers need to have a 20 percent down payment to even consider getting a mortgage.

SETASHIt's a huge, huge misconception.

REEDIt's a huge misconception.

SETASHYou can get by with no money down and not be a veteran. It's very easy to find. Getting these loans is kind of like ordering off a menu. The more you order off the menu, the higher the price tab's going to be. And if you look at a no down payment, you look at a gift or whatever from another entity, it's only going to be that much more. The high ratio, cha-ching, it's going to be an even higher rate. So, your rate's going to depend upon proportionately how much do you need out of the loan.

REEDHave you decided against buying a home here? Why, and what's your craziest D.C. real estate story? We'll continue this conversation after a short break.

REEDWelcome back. I'm Dan Reed, in for Kojo Nnamdi. We're talking about D.C. real estate trends, but first we've got a call from Karen (sic) in Arlington, Virginia. Karen, are you on the line?

KARAYeah, it's Kara.

REEDKara.

KARAHi, there, everybody. Yeah, I manage our (unintelligible) Arlington office, and I really appreciate this panel. It's been a great discussion thus far, so thank you everybody, and thanks for having me on. Really, I just wanted to mention, I think that one of the things that -- or comment is one of the things that we've seen in the Arlington market and especially with Amazon, how it's gotten just so competitive, is that I think also, as a real estate agent, and, you know, our value proposition has shifted, as well, into having a much more proactive approach for, you know, helping our buyers find things before the come on the market.

KARASo, you know, as agents and brokers, how are we helping develop off-market strategies to find properties, you know, before they list on the market to help our clients get into a particular neighborhood?

REEDThank you very much. Christine, you're a realtor with Weichert Realtors in Northern Virginia. How important is it for you to keep an eye on what's on the market for your buyers?

RICHARDSONWell, that's really important, because that's, of course, what our buyers are relying on us for, is the knowledge about the marketplace. And to Kara's point about homes that aren't on the market yet, sometimes that's a great opportunity for a buyer, if you kind of know about a property that's going to be coming on in a neighborhood that your buyer's really interested in. And you can potentially start that conversation with the seller before it hits the big market and the rest of the world knows about it. So, that can be a benefit for a buyer.

RICHARDSONNot always the smartest approach for the seller to sell that way, but, you know, sometimes sellers have a reason why they want to do it that way. So, I think just being on top of the market and networking with each other -- as realtors, we're constantly talking to each other about what we have coming on the market and what's going on in the neighborhoods that we specialize in. And that's, you know, what our buyers are counting on us to do for them.

REEDOne of the, you know, discussions that's sort of lurking in the background about, you know, inventory and house inventory is the issue of housing supply, and what kinds of homes are being built. A Realtor.com study out today indicates that there is a fundamental mismatch between what homebuyers are looking for and what homes are being built. Danielle Hale, you're chief economist at Realtor.com. What were your findings?

HALESo, when we looked nationwide, we found that the biggest group of buyers searching are searching for homes in the 100 to $340,000 price range. And in that price range, they far exceeded the number of homes that are available for sale in that price range. In the D.C. market -- so we looked at the gap nationwide, and we also looked at different metro areas. In the D.C. market, surprisingly, the gap is not quite as large. I think some of that stems from the fact that the D.C. metro area is a very, very big metro area. And we're talking about the official metro definition, and it goes all the way out to West Virginia, you know, far out in Maryland and almost to Fredericksburg in the Virginia area. So, it's a very large metro area.

HALESo, I think a lot of people are looking at homes in those lower price points in area where they're actually hard to find. So, they're not so hard to find if you are willing to go further out, but that's not necessarily what people are looking for. But that gap has been a persistent problem for the housing market for several years now, because builders find it difficult to build at those affordable price ranges. I mean, you've got programs like T.C.'s that make a special effort to build in those affordable price points. But, as you mentioned, you know, in order to build some affordable units, you've got to build some market-rate units. It's hard to do just affordable housing and that's something that builders have really struggled with.

REEDYou know, anecdotally we see all these new apartment and condo buildings going up all over the region. But those tend to describe themselves as luxury buildings. Who are those buildings for? What is the market for a lot of the housing being built, and is it reflective of what people are looking for?

HALEYeah, so that study found that luxury is, you know, the dominant type of listening. So, we do see a lot of listings at that higher price point, and know the search traffic suggests that people are looking for prices that are lower than the median price nationwide. And that's slightly true in the D.C. area, as well. So, there's a lot of entry-level demand that's coming not just from potential first-time buyers, some baby boomers looking to downsize, also investors are in the market. They tend to look for those lower-priced homes.

HALESo, there's a lot of competition that's very intense at that lower price point, which means if you're a buyer in a higher price point, you might see a different market condition than if you're looking at the entry level price point. But, you know, we're talking a lot about first-time buyers today. They're going to experience a very competitive market in the D.C. area and across the country.

REEDWe've been getting a number of responses from listeners about their home-buying experiences. One writes: we've been living in D.C., but just bought a house in Baltimore and moved in this week. It wasn't just about cost, but we also like Baltimore. But the cost and stress differential between D.C. and Baltimore was stark. In D.C., for 50 percent more than we paid in Baltimore for a gorgeous huge row house, our options were a tiny, quote, "sad box," unquote, in a neighborhood we really liked, or a fixer-upper and/or pushing further and further out. We're now commuting to D.C.

REEDYou know, is there a danger here that prices are so astronomical, that younger people -- especially those starting families -- just decide to give up and move out of the D.C. area entirely?

HALEThat's certainly a risk. I think, you know, D.C. is an attractive market. You look across the spectrum, incomes tend to be high. I mean, we've talked a bit about Amazon coming in. Their average wage is going to be $150,000. So, you know, if you can get those good-paying jobs, it's a great area to stay, and housing can be relatively affordable, even though it is expensive.

HALEBut it's obviously not the experience for everyone and, you know, we're serving different price points differently. And so for folks in that entry level price point, they may make the decision to go further out or leave the metro area entirely. Anecdotally, have lots of friends who have made that decision to go back to wherever it is that they came from before moving to D.C., to look for more affordability.

REEDT.C., over the break, you briefly mentioned one program in D.C. that might actually help keep families who want to stay in the city affordably called Vacant to Vibrant. Could you talk about that?

CAVINESSYeah. So, most of the down payment assistance programs and most of the affordable housing -- which we call ADUs -- they're designed...

REEDCan you...

CAVINESS...affordable dwelling unit. So, most of them are designed for people in the -- it's AMI, average median income. Most of them are designed for a 50 or 80 percent AMI.

REEDSo, people making roughly how much money per year?

CAVINESSSo, a single person in an 80 percent AMI cannot make more than $65,650. In the 50 percent AMI, they couldn't make more than 41,000. So, if you look at that 41 and then you look at the 80 you get from HPAP, that kind of offsets it.

REEDWhat is Vacant to Vibrant, though? Is that...

CAVINESSSo, in late 2017, the mayor rolled out a new affordable housing component, and that component is called Vacant to Vibrant. And the Vacant to Vibrant is designed to create affordable housing for people in the 81 to 120 percent AMI bracket. So, in...

REEDThese are people making about $100,000 a year.

CAVINESSYes, or more. That's correct, yeah. So, in 2018, I think they auctioned off 33 or 32 properties throughout the city that D.C. owned.

REEDVacant houses.

CAVINESSVacant houses or vacant lots for builders and developers to build affordable housing for that price bracket, the ones that are 81 and up.

REEDAll right. So, Sylvia, we've talked about people who have made the decision to buy a home, people who are experiencing -- their experiences buying a house. But what about people who aren't sure if the time is right yet? If you're thinking about buying a home in the future, what do you need to figure out now to get all your ducks in a row?

SETASHPretty much what we've been discussing. You need to get your credit in gear. You need to make sure of those debts that need to be paid off. Is there a collection sitting there from 12 years ago that you forgot about when you were in college? Get your credit lined up and look at what's going to be going on in your life. Are you going to be dropping an income, or are you going to have somebody that's going to be graduating and adding an income? And decide what that's going to do to your picture, and if it's worth waiting or not.

SETASHOther than that, it's just keeping your eyes open, and before you go out, get preapproved. We were talking about the competition in getting a contract. If you can have a commitment letter that -- Christine will attest to this -- if you have a commitment letter in hand before buying a home with the offer, it's going to be accepted or it's going to be looked at closer.

REEDGot a number of Tweets and emails and phone calls coming in from listeners. Marcos Tweets: don't forget about closing costs. Many buyers are often shocked by this final expense in buying a home. Judith suggests: how about considering buying a co-op or a condo in Washington? Prices are a lot lower than those of a house. Monica called in, and said she is a 100-percent disabled veteran, and looking for resources to help her buy a home. Dempsey Tweets: my family always treasured the D.C. government for helping us to buy through Manna, Inc. in 2013 in the Ivy City area. Today, that neighborhood is totally transformed. Thank you for picking the right family to support.

REEDAnd Lloyd emails: one of your callers mentioned seniors being priced out by increasing value and gentrifying neighborhoods. She should know that seniors who earn less than $130,000 a year are entitled to a 50 percent reduction in their property tax in the District. But there's one question I think has been on a lot of folks minds the past year or so -- this is for Danielle -- there's been some speculation lately that there could be another recession coming in the relatively near future. Do you believe that?

HALEYou know, it's certainly a possibility. Economists are notoriously bad for actually predicting when the recessions are coming. We do know that growth has been very strong. We've had several consecutive years of job growth. And most economists are expecting growth to slow down. I don't know if it will actually get into recession territory, but we'll probably grow a bit slower in 2019 than what we saw in 2018.

HALEWe did a survey of spring homebuyers who were out shopping in the market this spring. And it was very surprising to me to find that nearly 70 percent of them expect a recession sometime within the next three years. You can look at that data and think, my goodness, people have really negative outlooks for the economy. Or you can look at that data and think, wow, in spite of a potential negative outlook, they're still out there in the market trying to find a home.

HALEAnd that probably means they're going about it in a really realistic fashion. So, thinking about not just what they can afford today based on a really high stock market valuation and based on probably a very good income and job market right now, but also thinking about what that might look like their ability to afford a home in the event that someone loses their job or in the event that they're out of work for a couple weeks or months in the future. So, I think that's a really positive thing for the housing market, that people are going in with their eyes wide open, thinking not just about today's good economic times, but also the possibility of a slowdown in the future.

REEDChristine, last question, 15 seconds, any advice for buyers or sellers concerned about a recession?

RICHARDSONI think, again, you want to keep in mind that it's a long-term purchase. I mean, studies have shown that neighborhoods where people own homes are, you know, safer, happier people, or happier owning a home. So, it's something that you want to do long term, because it won't necessarily hold its value short term.

REEDChristine Richardson is a realtor with Weichert in Great Falls, Virginia and president of the Northern Virginia Association of Realtors. Thanks for being here.

RICHARDSONThank you.

REEDDanielle Hale is the chief economist at Realtor.com. Thanks for being here.

HALEHappy to be here.

REEDSylvia Setash is a mortgage loan officer at the United Nations Federal Credit Union. Thanks for being here.

SETASHThank you.

REEDAnd T.C. Caveness is the director of the homeownership center at Manna D.C. Thanks for being here.

CAVINESSThank you for having me.

REEDThis show about home ownership was produced by Margaret Barthel. Coming up tomorrow, we'll check in with the head of D.C.'s Housing Authority and housing advocates about the District's plan to demolish or renovate a third of its public housing stock and partnership with private developers. We'll also hear about efforts to document D.C.'s rich punk music history. That sounds like a really interesting show, and I won't be guest hosting, but I'll be listening to it, of course. (laugh) That all starts tomorrow, at noon. I hope you'll tune in then. I'm Dan Reed, in for Kojo Nnamdi. Hope you have a great afternoon.