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.
A mess of an accidental landlord tale that may yet have a happy ending. (not in NoVA)Sister of a friend bought 5 bedroom house in the middle of no-where (but convenient for her) in 2003ish. Sister's husband needed to change jobs (can't recall why) in 2006ish. Given that they had no equity in the place (gotta love those zero money down loans) to cover transaction costs they decided to rent it out, while living in various work/family related situations near their new jobs where they really wanted to live anyway, on Cape Cod. Rental income covered P&I, but not T&I or utilities. While still renting out the house in Western Mass, they bought an REO for under $200k on the Cape last fall. Here comes the twist. Their renters who they had been very happy with the first year, it turns out, owned their own place on the Cape which they had intended to rent out to a family member, but said family member decided he wanted his own house. So, it's been vacant (with the possible exception of some summer rentals, perhaps). It's now getting foreclosed on. What had been their method of covering both mortgage and rent? Renting out two rooms in my friend's sisters house. Apparently that wasn't sufficient. No surpise.So, last week they moved out and notified my friend's sister. Luckily they are moving out quickly, and the house should get on the market this week.They need to get $187k to cover the mortgage and transaction costs. LA wanted to list for $220k, friend's planning to put it up for $199,999. (They did do the dirty work on refinishing floors, recarpeting etc, but nothing major).They could come out smelling like a rose. Getting rid of that un-needed $400/month for taxes, insurance and utilities. With the final scamble for the $8k on, now would be the best possible time to sell if you need to sell fast. Despite the series of questionable decisions that led them to this point, I wish them luck. Apparently the house rental market is flooded right now with other owners who may be in less of a position to be able to sell.
Arkey-Who knows if and what will be passed on the health care side. But I do find it unlikely that something will be passed that increases corporate profitability so much that they decide to give large raises to everyone.I would actually think that companies in this area would be hurt by a health care bill. Most of the bills would basically share the health care burden evenly across companies. Currently people in this area are healthy than most(fewer smokers and obese people than most of the US). So I would think companies in this area pay lower premiums because they have healthy workers. This is just my guess though.
22207 4/2/1 sold below the $600K mark - Original Price: 1/16/2009 $720,000, 09 Tax: $652,700btw that house is just 100-yard north of the "Final Price reduction" gem Ace posted the other day. the market has not been kind to upper N Glebe rd properties this summer, regardless of price range...here's a couple more:Original Price: $759,900, Sold: $643,000, 09 Tax A: $666,800Original Price: $715,000, Sold: $698,500, 08 Tax: $753,500
So I was decided to take another look at condos in the building I am renting. There are currently two 2 bed 2 baths. http://franklymls.com/FX7162327http://franklymls.com/FX7127979First I would like to say good luck to the none foreclosure. The guy is asking for 20% more than the foreclosure for a slightly smaller floor plan. Either way my bigger issue is how far off rental parity these still are even after they have fallen from just under 500K to just over 300K.My rent is $1900. A $300K mortgage at 5.5% is just over $1,700($1,375 interest, $325 principle). Taxes are $300 a month and the HOA fee is $400 a month. So even though these properties are some of the hardest hit properties near the orange line it is still $500 cheaper to rent than buy. I guess if you take tax benefits into account and you don't count the principle than it is near rental parity.Either way I think these condo's will likely weigh on other condo complexes in the area over the next couple of years.
tbw,I don't think it was a flaw either, I was just trying to use MD (which is more concentrated into DC and Baltimore) to try to tease out some prediction for NoVa. And then decided I couldn't do it.The real question would be where in VA would have a slower recovery than us??? But again, they don't give their methods, so I don't know how to interpret their conclusions.
RE: Moody'sI've always found 10 year economic projections to be fairly accurate.
housebuyer,Those are some impressive losses. And I agree, that's not rental parity yet. The interiors don't look very luxury to me, unless stainless steel appliances is your only criterion. Those are depressing, I'm sure they look fine with your stuff in them, and are very convenient for you to rent, but they don't look like an appealing purchase at all.
Interesting, MM. I'm not really sure what makes that part of Arlington attractive other than schools (? guessing here) & quiet neighborhoods. Any theories on the decline?I've driven up Glebe and down Military, and for one, there are some extremely hilly neighborhoods there (don't go for a jog unless you are an olympic-quality caliber athlete--I speak from painful experience), and two, you can't walk to anything except the occassional house of worship.
tbw,Actually, I heard Spotsylvania ( sounds like Transylvania - yikes) got hit the hardest. How much did areas in your desired nabe increase? I think $500 neg is not intolerable. Anyone who can afford a 500K condo, can absorb 500 for a number of years. It takes alot of 500 neg to make up 200K - just say'n.Also, I'll have to tell you that in the early-mid 80's agents were touting 400-500 neg as a "good" investment. And these were 100K houses. Been there.As far as prices in Upstate NY. My kid just signed a lease for a dumpy 3bd apt at $775 each plus utilities. I wish my mom still owned her places up there.
Va_investor,It's $500/month negative at the current price.tbw,Yeah, they built a lot in Blacksburg. I thought they were adorable, my friend who actually lives there thinks the new builds are teeny-tiny and unbefitting of the designation single-family-home. Prices within walking distance to the football stadium got totally out of hand for local incomes.
Cara- I agree the pictures are not that great. The place is very nice though. The stove is actually a fairly nice gas stove rather than a super cheap stove with a shiny finish. The kitchen is also very spacious with a lot of nice wood cabinet space compared to similarly priced places. I also like that the floor plan in the main room is open. I don't think I would want to buy one of these places, but they are much nicer than any apartment complex I have seen near the orange line.
paKa,in addition to top schools, my guess is the 'one light to DC' location. DC-bound chain bridge backup is still manageable on most mornings. also there's a country club, a golf course, lots of churches, etc. it just feels more 'upscale' i think.i don't really have a theory on the decline other than Glebe is a major and busy road and many people won't even look at those homes, post-bubble era.
Ah, I always forget about Chain Bridge--probably because I've never actually been over it!I certainly won't consider a house on a busy road, regardless of the price. It's a deal-breaker for me.
HayfieldGrad said (saturday)... "There are a lot people in Fairfax that saw their property taxes go from an average of $2500 to $4800 over a 4 year period. Does that seem fair?"Of course it's not fair. And the county will not let them go back down to that previous level either. No way, just increase the multiple. Like everybody else, they just thought "cool that doubled in value" and didn't plan for the reverse to come true.
tbw,Cara,That's really weird that they pushed condos above rental parity in Blacksburg like that. My brother went to VT and my parents bought a townhouse that my brother lived in with 3 roomates. The townhouse community was basically designed for parents or other investors to buy them to rent out to students. My parents easily sold the townhouse to another parent after my brother graduated recouping any money they put in.
TBW---3) Buy a condo for your son or daughter to move into when they go away to college. Get the gain over the years as the college's enrollment grows and they run out of dorm space. Get the tax deduction. Save on the exhorbitant dorm and meal plan costs, or apartment rental costs. Teach your son/daughter early lessons in the responsibilities of adulthood--cooking for themselves, keeping a kitchen clean, etc. Keep your kids somewhat farther away from the dope smoking, all-night party, bathroom vandalizing, panty-raiding irresponsible segment of the student population. Teach them that if they get out of line, they deal with the REAL police, not the campus "police", just like in the REAL world.Then, at the end of the 4 years:1) sell the place at a (theoretical) gain when your son/daughter moves away to a first job.OR2) rent it out to students or young graduates of the same school or otoher young adultsOR3) keep it for yourselfOR4) keep it in your or your child's name as their home because they got a local job out of collegeLOTS of parents seem to be doing this, and I have friends whose parents when this route.
The Senate wants the $8k extension for six months.In addition, Rangel wants to extend it for 1 year for service member and allow them to still claim the credit even if they are transferred before the 3 year time limit of ownership. This will likely lead to a 1 year extension of the tax credit for everyone.Details here and here
TBW,Truth is, we don't need it. I want it to go away. I was just being contrary. It only distorts the market and NoVA has a healthy market. We don't need the credit here. Time to get back to supply and demand.
I would be curious how much campaign money Senator Isakson gets from the RE lobby.
MM, I am very surprised at how "low" those prices were. Good catch. The only reason I can think of is metro- those houses are far from it. But I can't understand why metro would be so much more valuable this year vs. last.
tbw,The townhouse my parents purchased only cost about 60k. My brother spent his first two years in the dorm and his last three in the townhouse. I think VT, at the time, was experiencing tremendous growth and did have some dorm shortage issues. Also, from all I have been told there was a lot of wild things(flaming couches out of dorm windows for example) happening at VT dorms.
Scott: Lots of parents thought the same thing, but apparently didn't run the numbers. I remember talking to some folks that were going to buy their kid a condo in San Diego (UCSD?). I asked them how much campus housing cost and how much the condo cost. They never could explain to me how they were coming out ahead by owning a condo vs. dorm fees and just looked at my blanking because I was not 'getting it'. The fact is that they weren't coming out ahead (height of the bubble), but the cognitive dissonance confused them.Same thing right here in Fairfax. Parents (ironically in San Diego) bought the kid a $500k condo to go to Mason. Now its a $300k condo, and their mortgage payments are far higher than rent. Brilliant.Personally, I think all kids should live in the dorm for 1, preferably 2, years. Otherwise they miss out on the whole college experience. When I 'went away' to college, I moved into the dorms, despite my parents living in that same college town. I knew several folks that either moved into a condo* or lived at home. To put it bluntly, those folks had no social life. They never met anyone outside of class, never went to campus parties, etc. I also got the impression that those of us who stayed in dorms the first few years grew more than those who lived off campus.* The rules at my U. said that all freshman had to live in the dorms or live at home. A condo your parents bought you counted as 'living at home'
The census' annual American Community Survey was released Tuesday. Among its findings for 2008:» Median household income, Loudoun: $111,925 ($107,207 in 2007)» Median household income, Fairfax: $107,448 ($105,241 in 2007)» Median household income, Arlington: $101,171 ($94,876 in 2007)» Median household income, Montgomery: $94,319 ($91,835 in 2007)» Median household income, Prince George's: $72,166 ($68,370 in 2007)» Median household income, D.C.: $57,936 ($54,317 in 2007)TBW, this is the data you were waiting for Right
Never buy a place for your kid to live in in College. It is a 4 yr deal, at most. College kids wreck stuff. Your kid will be incredibly stressed (if he/she has any sense of responsibility) because you own it and it's being trashed. It doesn't teach responsibility - just maybe makes your kid a cop. And a miserable one.
What's wrong with flaming couches?
I have a friend in the area here who has owned since she was in school here--in 1989. So she's 20 years into her mortgage, in a still sought after neighborhood, and she's 39. One of the most independent people I know.Bad deal?Contrast that with my experience at a school somewhere else--in the early eighties. I had to help pay for a new floor on my floor of the dorm, because some idiot thought it would be fun and funny to fill an industrial sized rubber trash can with water in the shower and dump it down the hallway to see how flooded he could make all the dorm rooms. Also had to deal with intentionally clogged toilets, flooded and diseased bathrooms, broken lighting, not having heat for part of the winter, people getting trapped in rooms by people putting pennies in the door jam, fatal elevator accidents, druggies thinking they can fly from 6th floor windows, graffiti, harassment, middle of the night false fire alarms, stolen/destroyed clothes from the laundry room, missing dining hall hours and making a meal out of soda pop, and on and on. Plus the aforementioned idiots who think the only way they can study is all night, the night before the exam, with Jethro Tull or some other road-noise at full volume. Guess they were too stupid to realize *I* had an exams those next days too--in subjectsthree times as hard as theirs.Still a bad deal?I guess all this counts as "growing." I guess all the clubs I was involved in count as "no social life". The campus parties I went to were PATHETIC. I guess not coming out of school with a lifelong alchohol abuse problem, like the should-be-adult idiots that ruin every pro sporting event for families, means I didn't "get the whole college experience."I would have KILLED to have a place of my own. Did have, in senior year.Not everything is price to rent ratio. On the other hand, timing is everything, and if some parents are just as stupid and pick the absolute worst year to buy and pay too much in a bad location, it still doesn't shake my argument.
did anyone notice this?Prince George county is laying off 125 employees.The recession is starting to squeeze the richestblack county in america.http://www.washingtonpost.com/wp-dyn/content/article/2009/09/21/AR2009092101740.html?hpid=moreheadlines
Arguing against higher prices would be that the TI of PITI has grown, so the 27% increase in affordability is actually less when you consider insurance and taxes. Still, I'm not sure the census survey is capturing all income gains. It certainly doesn't capture the increase in household net worth. One example is the 401k contributions. Suppose a family does contribute the maximum of $31,000 for a couple. That number is much higher than 1999 as a percentage. Then you have all of the earnings or losses of that money inside the 401k.Instead of using 1999 as your launch point for HH income, what would it be if you used 1995 or 1991?This paragraph sticks out:The Washington area remains among the wealthiest places in the country. The median household income of $85,824 last year -- up from $83,200 in 2007 -- is second only to San Jose. Blacks, whites and Hispanics in the region are all on average the highest earners in the nation, while Asians here are the third highest, behind their counterparts in San Jose and Raleigh, N.C.
TBW:You can't add proportions like that, you need to multiply.32.4 + 27 = 59.4% 1.324 * 1.27 = 167% (or 67% increase)
I agree with Novawatcher, you may want to re-run those scenarios...If anyone wants to mine the 2008 1year ACS themselves the link is: Fact Finder
Nova- Good catch on TBW's numbers, although once you account for the fact that lower interest payments mean smaller tax deductions his additive numbers may not be that far off.
Ace said: "...I can't understand why metro would be so much more valuable this year vs. last."I believe the 'Metro in, Car out' trend is only going to intensify in Arlington until, I don't know, one day driving becomes 'cool' again, or when enough buyers have the option of working from home 2, 3 days a week so commute is no longer a critical factor.This is actually good to me because I don't use Metro and don't intend to pay a premium for it (and that's why I keep an eye on 22207.) It has resale values, no question about it, but who know how long/strong the trend will last.
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