Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Yesterday, Tabitha provided us with an interesting price change Map from Zillow: http://www.zillow.com/reports/RealEstateMarketChartsAndMaps.htm?msa=Washington%20Arlington%20Alexandria%20DC%20VA%20MD%20WV&graphic=Map-Real-Estate-Market-Year-over-Year-Home-Price-AppreciationAccording to Zillow are up in most of Alexandria, North Arlington & (surprisingly) South Arlington, whichy I personall find a bit optimistic in comparison to most of the data I look at. Im curious, for those of you who focus on this or that area (especially outside the beltway), how does this map compare with your personal experiences?
In the price range I'm looking at, homes that are actually selling now are down from list prices of ~260k to sale prices of ~180k for the communities I checked out last June. (that we've decided are too tiny for us). So that's more like a 30% drop in slightly under a year. Given that this stuff is probably slightly less than half the market, a median downturn of around 20% seems about right. But given that the Zillow estimates for given properties that I've looked at are consistently 5-10% higher than the list price, I don't understand how their aggregate numbers could possibly work out right...
CRT, your map suggests that it's primarily 22202 and parts of 22206 that are hanging in there. A lot of people lump together 22204, 22206, and 22202 as "South Arlington", but in fact each is quite different. 22206 has some great, established condo communities such as Fairlington and these have held value. The quality of neighborhoods and SFH values in 22202 (which some residents prefer to call "East Arlington", in part because of this perception problem) are very much like those in 22201, 22203, etc. The key difference is that you probably have more parents & kids in North Arlington because the schools have fewer ESL and lower income kids (who tend to be concentrated in 22204 and to a lesser extent 22206), which then gets translated into "The North Arlington Schools Are Better." But since 4 out of 5 Arlington households have no kids, a large number of home buyers are not interested in pay a huge price premium in order to obtain North Arlington schools, yet they want the convenience and other services and amenities of Arlington.So it is much more rational for them to consider 22202 - it's closer to DC (with no I-66 problem) than most of Arlington, close to metros, close to shopping options, and may cost a bit less.There have not been many sales of SFHs in 22202 recently (mostly because of delusional sellers, IMHO). So it's really hard to judge based on one month or one quarter. I suspect that, like the over $700K would-be sellers in 22207, who are also still in stare-down mode, we would get a much more accurate picture of home values in these neighborhoods.
I watch properties in a particular mid-valued condo building of a particular upscale downtown DC neighborhood, where I sold my condo for around $600K in May 2007.Zillow says the condo and others like it are down to around $575K. Cyberhomes says values are down to around $450K.List prices? As far as I can tell, NOTHING in the building has sold or gone on listing since July 2008.When I was living there, we had 2-5 units listing all the time (of the more than 100 units in the building.)
oops - need to add onto that last sentence - "when the sellers get more realistic."
Ace thanks for the tutorial as I (a non Arlingtonian) am only vaguely familiar with where the boundaries lie.My own perception is that 22204 is the weakest of the Arlington zips. However I take it that when most people refer to "South Arlington" they principally mean zip 22204 correct?
I'm closing on a TH next week. We are paying ~ 25% less than the last purchase price of the TH in 2004. It is located on the Centreville/Clifton border in a nice neighborhood (the neighborhood is made up of single garage car THs and SFHs in the $500 to $650 range). Our payment (4.875% interest rate) including taxes, insurance and HOA fees will be ~$150 to $250 less a month than renting would be for us (for a similar size/location TH). Perhaps I'm looking for a little reassurance that in 5 to 7 years if we have to move, we won't loose our shirts! Thanks.
To clarify - the SFHs are in the $500 to $650 range. Obviously the TH are not as expensive.
dgg,Congratulations. Enjoy your new home. You might not get what you paid for it, and you might have to cover the transaction costs, but you shouldn't "lose your shirt". For peace of mind, once you've recovered from any moving/closing expenses, start up a monthly savings for home repair/ improvements that can also be used to make up any shortfalls in the sales price compared to the transaction costs and your outstanding mortgage. And sleep soundly at night in your new home.
Ace,I think you are exactly right on the price differences in the Arlington zip codes.We are friends with two families in the south Arlington schools and they have been happy but so much is perception...people irrationally (IMO) are willing to pay a huge price premium for the same house to send their kids to a richer, whiter school.OTOH, some of the elementary schools in close-in Fairfax (FC area and some Annandale) with similar demographics to S Arlington schools have a much crappier reputation. I think the wealth and small size of the Arlington school system vs the Fairfax behemoth makes a difference.
Oh, and congrats DGG! Clifton is charming-one of my daughter's favorite toy stores (Noodles and Noggins) is there. (Not sure if you are at a point in life where this info is valuable but they do free kiddie concerts).
And while I'm talking to myself, does anyone else find the WaPo real estate columnists impossibly smug? Especially Maryann. Or am I projecting?http://www.washingtonpost.com/wp-dyn/content/discussion/2009/02/06/DI2009020602357.html
"And while I'm talking to myself, does anyone else find the WaPo real estate columnists impossibly smug? Especially Maryann. Or am I projecting?"These two are not a couple of rocket scientists. Pretty much throughout the bubble they made excuses to justify the ever more ridiculous pricing, and when the bubble began to burst they switched straight over to the "it is always a good time to buy" routine.
Meshell, it's not just you. Many responses were annoying me, but this one ticked me off:Alexandria, Va.: I have been cutting costs and trying to save money for a down payment on my first home. I will have around $70K saved up when I am ready to finally buy. My question is this: Should I put all my savings towards the down payment? I feel like that would not be a wise choice and that I should only put about $30k-40k towards my down payment so that I still have a savings fund to fall back on in case something comes up. What are your thoughts?Maryann Haggerty: You need to keep some of that savings fund. Elizabeth Razzi: Absolutely keep some of your savings in cash. You never know when a job loss or health problem would make you need that cash. Take a good look at FHA financing, which requires as little as 3.5 percent downpayment. Just make sure your monthly payments would really be affordable on your budget. There is nothing inherently evil about low-downpayment mortgages, as long as they are safely underwritten. Very few first-time buyers have enough cash to make a full 20 percent downpayment, especially in an expensive market like Washington, D.C. Why? because this person is talking about 30-70k, and Little Miss Sunshine is telling them to pay interest and mortgage insurance on that money instead. And to own nothing of your own home for the first 5-10 years!!!! Grrrrr. Nothing inherently wrong, my ass.
Someone asked a question on whether you could treat a purchase in 2009 as occurring in 2008 and apply it to your '08 return:Charlottesville, Va.: Any word yet on whether the $8,000 credit can be applied to 2008 tax returns (i.e. treat an 09 purchase as occurring on 12/31/08)? The $7,500 credit allowed the tax payer to elect whether to apply it to 08 or 09. Thanks.The answer? Elizabeth Razzi: No. Details are still coming out, but as it stands now, the $8,000 credit starts this year. If you bought last year and qualified for the $7,500 credit, you'll still have to repay it. A lot of people are unhappy about that. Maryann Haggerty: The retroactive refundability (I think that comes close to what I mean to say) was one of the things wiped out during the conference committee, when congress types were trying to reduce the overall cost of the legislation. Ugh. How much do these two get paid? It seems like one of them totally misunderstood the question that was asked, and the other one simply answered it incorrectly.
Who won't be helpedNothing special about this article, but it features a local from Bristow.Take Joe Martinez of Bristow, Va., who fits the profile of the "responsible" homeowner Obama cited in the plan. The government contractor and his wife thought they did everything right when they bought their brand new $600,000 house two years ago. They put 5% down and got a 30-year fixed-rate mortgage they could afford.Martinez isn't interested in having his interest rate lowered. He would like to see some of his principal forgiven."Why would it be such a big deal for them to modify my loan?" he said, noting that his tax dollars are being used to finance the program. "Wouldn't that stabilize the economy?"So, since his tax dollars are being used to finance this program, it's no big deal to modify his loan? My tax dollars are being used too and i'm not living in his house."Homeowners aren't day traders in their homes," he said. "The investment value is not an issue." Based on the article, it appears they can still make their payments. They just don't want to because values have dropped and they want a mod. So, then what is the issue if it's not the "investment value"?
tiredbubblewatcherI think their point was that a portion of the condo fee is for repair and replacement costs. An individual homeowner should be saving up for future repairs (rather than needing a HELOC). An apartment landlord has profits from which to save up for repairs. As a condo association you have the choice of fees that will cover future expected repairs or one that issues special assessments once things are already broken. It's your choice. But my point being that the condo association doesn't get anything out of the PITI/rent comparison, they have to assess it separately. So, yes, there is a whole class of condos that are maintained much more poorly than similar age apartment buildings because the owners don't want to foot the bills, whereas the landlord, once the loans are paid off, is basically making money hand over fist and simply protecting their capital investment.No offense, this is all stuff I'm sure you already know. It's just that the hoa fees are daunting because of these complications such that renting is often indeed more attractive than buying a condo. Which, I'm guessing, was your point.
Cara/Tiredbubblewatcher - Keep in mind too that in theory, a well funded condo reserve will help the place maintain its value to a future buyer. Case in point, I represented a guy who was buying a business and a commercial condo. Price & payment terms were already negotiated, however when I got the condo docs, I was appalled at how underfunded the capital reserve was. By my estimate, my client (the buyer) was a year or two away from seeing a 40K special assessment since there was no money in the reserve fund to pay for it.Bottom line was we were able to negotiate an 100K price reduction to pay for the special assessment (which happened), and to guard against my clients downside risk when he tried to sell and his new buyer likely noticed how poorly funded the association continued to be.In practice it doesnt often happen - too many people dont look at the reserves, they just look at the monthly payment when they buy (hence the problem with cronic underfunding). Still, all things being equal I would pay extra for a well funded reserve than I would for a place with low fees and the risk of a big special assessment.
crt,yes, that was the other side of the point that the WaPo folks were trying to get across. I.e. you can have a low-monthly-fee condo association, but it will deteriorate and buyers might notice its lack of reserves and steer clear or ask for concessions.
tiredbubblewatcher, it's true that there are a lot of apartment renters and condo owners in Arlington, but I think you need to look further into the statistics, not only for Arlington, but for the nation in general. Most people greatly overestimate how many households currently have kids or might have them in the future, as well as the proportion of married couples vs. other households. They underestimate how many people are empty nesters, voluntarily or involuntarily childless/childfree, retired, etc. No one said schools aren't important. But schools are like anything else--rational buyers have to decide how much they want to pay for things they will or won't use, and many choose deliberately not to pay the huge premium for schools that some parents are happy to pay and hope that others will also pay. The fact that many people don't have school age kids in the home is one reason why a lot of people want to live in the District despite the chronically struggling schools.I'm not sure what your source is on crime and schools relationship you reported, but even if there is a correlation, it is highly unlikely to be a cause-effect relationship. For example, both could be influenced by other factors, such as income levels, which does influence crime involvement, and tax levels, which pay for both schools and police.
That Bristow guy is obviously insane. First off, he bought a 600k house in freakin' Bristow. How could he think that someday it would be worth more? (I grew up in Manassas, and Bristow was what craptacular Manassas looked down on!)
TBW, I think you are missing my key point, which is that, in this region, people who want to live near good schools and can afford them have lots of options, but there are many people who prefer not to pay high housing prices to live near those schools and that is a very rational thing to do. It's not necessary to pay a premium for schools to get a nice house and a nice neighborhood, though it's certainly a choice you have. Unless you are fabulously wealthy, there are a LOT of things you have to give up or trade-off against the things you really want here (not true in many less expensive places). Just as some people don't want to commute an hour each way to work and are willing to pay more or squeeze into a smaller and older place, while other people with different commutes or priorities prefer to live farther out and get more house and land for the price, not everyone wants to pay more for schools they aren't going to utilize.An analogy is paying extra to live near metro. If someone can't use the metro to commute, it's perfectly reasonable for him/her to choose to pay less and live elsewhere. Is metro associated with higher house prices (ceteris paribus)? Probably, and it may even cause them, in the case of good planning. But it would be a mistake to assume that for everyone, it's worth the higher cost or that they have to live near metro to get into a good neighborhood. And, as Meshell so correctly pointed out, in some cases, the premium people may be seeking is a "whiter" school rather than a better school.For years we paid huge RE taxes in a suburb in the midwest that had superior schools. All those years we subsidized other people's kids. Yet frequently when parents with 2 or more kids who'd gone through 12 years of the suburbs' schools became empty nesters, they moved out to other neighborhoods -- apparently they didn't feel any obligation to support other people's kids in school, in addition to feeling they would get better value elsewhere! So certainly anyone who is never planning to have kids would have at least as much of the same basis. The mistake is assuming one-size-fits-all, which is very frequently done, by other homeowners, journalists, Realtors, etc.
What do you all think about integrating a direct link to the official tax records for each property from FranklyMLS.com?Do most of you try to hunt down the tax records?Frank
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