Forest Glen Area of Silver Spring

Woodland Drive with Getty Park in the distance

My blog and website highlight the work I do with seniors so well that I think my other specialization can get lost in the shuffle.   I actually live in the Forest Glen area of Silver Spring, and I frequently help people of all ages buy and sell homes here.  Silver Spring is a really large area, and I’m quite familiar (and happy to help people buy and sell) in all of it, but I have a special affinity for Forest Glen.  We bought our first house here almost 18 years ago, and when we reached the point of needing a bigger house (with 3 growing boys), we chose to put an addition on our home, rather than moving.  This area is just too special to leave.

My definition of the Forest Glen area includes the area within a mile or so of Georgia Ave, on both the east and west sides, that starts just north of the Beltway (495) and goes to just south of downtown Wheaton.  This area has gotten a lot of press lately for being affordable, walkable, and community-focused.

Our house (and most in the area) is walkable to two metro stops (Forest Glen and Wheaton, both on the red line), the Sligo Creek Trail, four parks with playgrounds (most also have basketball courts, tennis courts, walking paths, and picnic shelters),  two swim clubs, and downtown Wheaton, with its many shops and restaurants.  Holy Cross Hospital is located here.  Downtown Silver Spring is also walkable if you’re willing to walk a little further.  It is very easy to get on the Beltway, and this area of the Beltway is close to both 95 and 270.

I will dedicate future posts to the individual neighborhoods that are within Forest Glen, but just wanted to introduce you to this area, if you’re not familiar with it!  Please feel free to contact me if you’re considering buying or selling a home in this area— I’d be happy to help!

Brisbane Street in Forest Estates

Springtime at Leisure World!

I thought during this time when many people are under stay-at-home orders, you might enjoying seeing a few pictures of Leisure World in springtime.  A friend and former client who is living there (and loving it!) sent me these pictures.

Leisure World is a 55+ community located on 600 acres and has more than 40 miles of walking trails.  It’s a beautiful place in the midst of a bustling area in Montgomery County, near to Washington DC.   You can read more about it here, here, and here.

I was the top buyer’s agent at Leisure World last year, both in terms of units sold and volume. I sell homes there as well. If you’re interested in buying or selling a home at Leisure World, please don’t hesitate to contact me!

How the Recent Fed Moves Might or Might Not Affect Mortgage Rates

I read this article today by someone high up at First Heritage Mortgage. I was so impressed by how well he explains what the rate cut might mean to mortgages that I asked him for permission to repost to my blog. He generously agreed, but asked that I not use his name. Here you go!

As many of you know, the Fed made an unusual move and held an emergency meeting on Sunday instead of waiting until their regularly scheduled two-day meeting this week on Tuesday and Wednesday.  The result of the meeting was the announcement of some major policy shifts. They are as follows:

1. They cut the Federal Funds Rate to 0% (This is NOT Interest Rates – more on this later)

2. They announced they will be buying at least $500 Billion in US Treasuries and $200 Billion in MBS (Mortgage Backed Securities) This is what could eventually help rates – more on this below as well.  This is known as QE (Quantitative Easing and is the reason rates dropped during the great recession.  This was the FED’s way to help stimulate the economy, which did work.)

3. The purchase of the first $40 Billion will happen today.

4. They announced that as loans the FED currently owns get paid off through refinance or sales, they will re-buy more loans with that money as well.  This is in addition to the $200 Billion above.

5. Finally, the FED announced they are cutting the reserve requirements for thousands of banks to zero.  This is important because it relieves the banks of the need to hold on to capital to meet federally mandated reserve requirements and gives them the flexibility to have those funds available to loan among themselves to help each other out and keep liquidity in the banking system. 

 
I know that some of this above may mean nothing to you so please allow me to explain a few things from above.

1. The Fed cutting the Fed Funds Rate to 0% does not mean interest rates on mortgages will go down.  Certainly not to 0%!  Could it eventually help? YES.  However, even if rates could come down there is a much bigger issue that has to be dealt with first.  That is the CAPACITY for the mortgage industry to handle all the mortgages.  Consider this.  There are $11 Trillion in mortgages in the US.  About half of those ($5 Trillion) are currently eligible for refinance.  In a great year in the mortgage industry there are about $3 Trillion in mortgages produced in 1 year.  If half are purchases, that means about $1 ½ Trillion in refinances are done by the entire mortgage industry.  Even if the industry does a heroic job of doing refinances to satisfy all of the demand and does $2 Trillion or $2 ½ Trillion in refinances, there is physically no way to do all of the refinances in one year.  So, the CAPACITY of the industry cannot handle all of the business that is out there to be had so why would they lower rates to generate MORE business when they cannot handle all of the business that is currently there?  Think about it another way, if Apple has a new phone go on the market and lines are around the block with people waiting to buy the new phone, they don’t put it on sale.  They couldn’t handle the business and there is no need to put it on sale.  It is sort of the same thing with interest rates.

2. The FED buying $200 Billion in Mortgage Backed Securities (MBS).  This is actually the thing that can help rates drop eventually.  This is because as long as there is a good buyer for MBS, then this will make sure that the mortgages that are closed have a buyer on the secondary market.  With the FED jumping in to buy $200 Billion and also replacing the loans that are already on their books when those are paid off through refinance or sale of the home, this helps with one side of the capacity issue.  The other side of the capacity issue is the simple fact that the mortgage industry (mortgage companies, title companies, appraisers, etc.) all have to be able to get caught up with the huge amount of recent business that they have taken in.  This will happen, but just takes time.  When it does, there is a good chance that rates will drop some.  How far is anyone’s guess but do not expect them to go down to 0% and don’t expect the rates to drop right away.  Any rate drop will be gradual and measured.  Rates could even move up a little depending on the capacity issue I explained above.  That would simply be the industry self-regulating to slow volume to allow for things to get under control.

 
In summary, we are in uncharted territory in our country right now.  With the Coronavirus going on, people having to work from home and avoid much interaction, there are all sorts of things that we are not used to.  As an industry, we are busy trying to keep things going from our end and will continue to work on what we can do.  As the current loans in the system close and more capacity becomes available to handle additional new mortgages, the FED’s Sunday moves may in fact cause interest rates to drop over time.  Hopefully, my explanation above will help you understand that this will not happen immediately.  The good news is, mortgage interest rates will likely stay low for quite some time.  There is no reason for people to panic and think they are going to MISS the opportunity.