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Thursday, October 29, 2009
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85 comments:
Surprised me that this WAPO map and article were not commented upon. Localized delinquency and foreclosure data for greater washington.
http://littleurl.net/b7dcce
The noose of doom tightens around the D.C. area....
;-]
Gnat,
Good find. There's an earlier article we have been discussing, but this is a new map (Oct 29).
Looks like a nothingburger for FFX Cnty, Arlington and Alexandria, with the possible exception of my neck of the woods. Manassas is still getting slammed.
PG County is insane!
2.5% 90 days late in FFX Cnty. Is this finally going to be the REO tsunami we've been waiting for? Do we all really want to buy houses with years of damage from deferred maintanence? ...
TN,
I was going to ask, what's your opinion on concrete block foundation walls as opposed to poured concrete? I was under the impression that poured concrete is "better" so long as there are no cracks, (or the cracks were properly repaired) but since we have an expert around...
The NY Times has updated its pretty Case Schiller graphic.
Following the discussion of the SDR house from yesterday and the four listings on its block, here's another street block with back-to-back-to-back listings/UCs... What brought these sellers out in Oct? Are they seeing significant uptick in prices that I'm refusing to acknowledge?
1506 KENILWORTH ST N, new listing
1514 KENILWORTH ST N, UC in 5 days
1500 KENILWORTH ST N, UC in 11 days (it's a flip, btw)
MM,
My observation is that these same homes were commanding low to mid 700's at the peak. So it seems there has been a significant pullback. These could very well be the prices going forward.
My $0.02
uh, and by "same homes" I mean similar homes in the 22205 neighborhood north of Washington Blvd.
My $0.02
Might have already been posted...
http://www.urban.org/publications/901293.html
"Do we all really want to buy houses with years of damage from deferred maintanence? ..."
That's what I ask myself Cara when I tour FC's that have black mold in the basement.
(like one I saw yesterday)
Who still wants to pay 699K for this McMansion in LoCO?
Probably not me!
anyone know about Mold removal??
Are you doing the mold removal yourself or paying someone?
I'm not an expert but my understanding is that you basically have to rip out the entire basement (if it's finished). Then you bleach all the walls and the floor. It's best if you spray it on initially so you don't get the spores to scatter in your face. After you killed it all with the bleach (maybe a couple times to be safe?), scrub it all down. Then apply fungicide (can be purchased at The Home Depot) all over. Of course you'll need a mask when you're doing this. I'd probably wait a few weeks (maybe even a couple months?) and check occasionally to verify that it's not coming back before finishing the basement. But then, I'm paranoid.
A lot of foreclosed homes have mold problems because the bank in it's infinite wisdom turns off the power. With the power off, the sump pump doesn't start and the basement floods. Talk about "protecting" your investment. The banks really haven't caught onto the fact that a small monthly electric bill per foreclosure will cost less than the depreciation of the home due to the basement flooding.
Also, if you do it yourself but want to make it go faster, you could hire some day laborers to help with the demolition of walls and ripping out of carpet if the basement is already finished. You can't get a contractor to come and do anything at your house for any reasonable price. Labor charges are not very reasonable for this kind of work IMO.
Following on from Jeff's comment, and just for information, does anyone have a rough ballpark guess of how much getting a contractor to get rid of mold as Jeff describes would be?
Does seem like a monster job, and consequently a monster bill at the end...
Thanks for the info Jeff - we would probably Contract the Mold removal out -
but only if we could get the house a lot cheaper than the Bank is currently asking.. (like 50K cheaper, I know Mold removal AIN'T cheap)
spunky,
T last year had priced it out, and doing it right the first time could cost under 20k, I think he was batting around 8k for a TH, presumably it scales with size...
http://franklymls.com/FX7193205
Does anyone understand what the person is saying about the price of this house. IS he saying that you just need to take over his mortgage and give him 50K or is the price 530K and you can take over his mortgage and get an additional loan to pay him the 200+K?
housebuyer,
He'll provide seller "financing" of the remaining 200k (or balance towards best offer) as a 5 year balloon loan at 6%. (whether you're paying on that second mortgage during those first 5 years or not is debatable, but would be normal, after the first 5 years you'll need to get a new second mortgage to pay off the balloon payment).
Cara-
Thanks. Seeing that interest rates are at record lows it doesn't seem like there is any advantage of doing this. I guess if no bank will give you finance. Thanks though.
As far as the mold removal goes, you could probably save on some of the cost if you did some of it yourself.
Ripping out the drywall is easy enough to do and not that time consuming. You just need to by a jab knife, push it into the drywall, and start cutting. The knife is serrated and it's easy to cut through drywall with it. Put the drywall in trashbags and set them out on trash day (or trash days). The only thing to watch out for are power outlets. If you see outlets, don't cut near them right away, cut away from them until you know the way that the power cable is running (it's probably vertical up a stud). You don't want to nick one of those. It's probably best if you turn of the breaker for the room you're cutting up before actually doing it.
I've cut into drywall like this, you don't have to be handy at all, you're not trying to make it look pretty, you're trying to tear it down. Anyone can easily cut into it. As far as carpeting goes...well that's a little more difficult and much heavier. You may not want to do that yourself, especially if the carpet/padding is wet....it's very heavy. My friends and I passed wet carpet/padding through a basement window and it was a pain. They hated me the next couple days because they were so sore.
Ah yeah, I meant to link this:
http://www.amazon.com/Stanley-20-556-6-Inch-FatMax-Jab/dp/B00005QVQH/ref=sr_1_1?ie=UTF8&s=hi&qid=1256832515&sr=8-1
You can buy it in person at The Home Depot (I did) but the Amazon link was shorter. :)
You can be pretty certain that a 12 dollar knife and a couple hours of your work is going to save you a lot of money compared to the labor charge of contractors. And trust me, cutting up drywall doesn't take prior experience. You literally just jab the knife in and start cutting. Then after you've cut three sides of a square, you pull the square off and stick it in the trash bag. It doesn't even take that long, especially if you have more than one person doing it.
the paper copy of the examiner had a
map in it, the article only gives you a sense of the map but there are lots of areas of foreclosure in DC,
including Immunington, Immunandria and
Immunifax.
http://www.washingtonexaminer.com/economy/Market-survey-Sales-surge-though-some-areas-see-further-price-declines.html
http://www.washingtonexaminer.com/local/Report_-New-flood-of-foreclosures-likely-to-hit-area-8446545-66709757.html
Cara said: "Looks like a nothingburger for FFX Cnty, Arlington and Alexandria, with the possible exception of my neck of the woods. Manassas is still getting slammed."
Yep, you got it right, Cara. Completely unsurprising that Arlington and Alexandria continue to do quite well, or that PG County and Manassas remain the "sick men" of Washington real estate. Someone said earlier that this picture shows a "noose" tightening around the Washington area -- what a dunce!
Upon a cursory reading of the plans to extent the homebuyer tax credit, I want to say CONGRATULATIONS to the government on finding a way to once again avoid giving me a tax break/rebate while give free money to almost everyone else.
I don't qualify as a first-time homebuyer, because I owned within the last three years.
I also don't qualify as a current homeowner!
Gee thanks. I didn't qualify for any of the bailouts, rebate checks, unemployment extensions, marriage "penalty" adjustments, bank bailouts, auto bailouts, fuel/food assistance increases, or any of the other giveaways I've been paying for in the last 10 years, either. So congrats on the perfect record so far.
I guess I'm supposed to either become a tax cheat or a gun-totin' tea baggger. Or be a defense contractor and live off the war-for-profit teat. The incentives are all there.
Jeff,
Great, but what if the mold is in the studs themselves?
How easy do you see wood paneling or fake wood paneling as being on the removal?
Personally I wouldn't do any of this without a hazmat suit. And aren't you supposed to set up the ventilation carefully such that you don't just spread the spores throughout the rest of the house?
There are reasons one gets professionals for these things...
Ripping out the drywall and carpeting immediately after a flood before mold has set in is a different matter.
Hmmm... now I see that Texas Native was kidding about the "doom" comment. My apologies, TN!
The Carpet in this moldy basement was already gone.
Mold was growing about 1 foot up from the floor on the sheet rock
& 1 closet that it about 3' high
It was not everywhere just in spots - but this was a BIG basement - theatre room, exercise room et al.
I'm assuming it was bad behind the sheetrock, but the basement smelled Ok, not moldy or musty
And I have a good nose for that sort of thing ;)
Scott said...
"Gee thanks. I didn't qualify for any of the bailouts, rebate checks, unemployment extensions, marriage "penalty" adjustments, bank bailouts, auto bailouts, fuel/food assistance increases, or any of the other giveaways I've been paying for in the last 10 years, either. So congrats on the perfect record so far."
You and me both. I don't want any of them because I don't believe in them (except maybe food assistance, people have to eat), but I sure as shit have been paying for them.
Cara, I wasn't telling them to definitely do it and I'm not saying to do all kinds of work themselves. I was just making some suggestions on something that they could possibly do themselves.
Personally, I would wear gloves, a mask, and do it myself. As far as doing everything, it's possible for them to do it all but I was just making the suggestion of something that requires no skill and could possibly same some money.
As far as the studs, it's easy to cut down to it and once there they can decide if they want to do anything there themselves as well.
You could definitely hire someone to do all these but the amount you're buying the house for better be a lot less.
The data is old and not accurate (up to June 09). 20109 is the only Manassas zip code still having foreclosures and they are on the low end. Manassas zips are(20109,110,111,112)20109 is currently 5th in foreclosure rates behind the 3 woodbridge zipcodes and Dunfires. Oh I'm not saying we are done but with Hoodbridge fighting for the top three slots and foreclosures down 40%, I don't think we are looking at any tidal wave.
http://democrats.senate.gov/calendar/2009-10.html
Still no sign of a housing credit vote. I wouldn't assume we know if it will happen with the unemployment bill and if so what form until it happens. Remember also that with AARA the Senate passed a very large housing credit and the House pared it down. Don't assume the Senate version will be the final version.
These are going to be some very busy days. The current CR expires Oct 31st and needs to be extended or the gov't shuts down. So time will need to be made for that in both houses (although not particularly onerous).
Fred brought up the multiplier effect of the housing credit. This was brought up in the op-ed in the Washington Post against extension. The economists argued the housing credit has a much smaller multiplier effect than many other stimulus proposals.
Potentially huge:
Oct. 29 (Bloomberg) -- The Federal Reserve completed its $300 billion Treasury purchase program today amid signs the seven-month buying spree helped stabilize the housing market and limited increases in borrowing costs.
Yields on the benchmark 10-year note, which help determine rates on everything from mortgages to corporate bonds, never rose above 4 percent after the central bank began acquiring the debt. They are less than half a percentage point higher than the day before the program was announced on March 18, even though the U.S. sold a record $1.25 trillion in notes and bonds, more than double the amount in the year-earlier period.
Article
I suppose Robert and others will argue the Fed will just go on another MBS buying spree if interest rates hit 6% and housing crumbles. I guess we shall see.
Mortgage rates have risen for the third straight week to slightly above 5%. Where will they go from here? Presumably up.
Actually this looks to be a separate program from the mortgage backed securities one. The second paragraph confused me. I guess the Fed has been doing multiple programs to keep rates low.
tbw,
Yes, the MBS program doesn't run out until March I believe. This is the treasury purchases that was supposed to end in September abruptly but they chose to ramp it down. This could/will have an effect, but it's partly a test case to see how large that effect will be...
TBW & Cara-
My guess is it will not matter buying $300 billion of treasuries hardly moves the needle on that market. This will not be a big issue. As Cara said the much larger program is that they have been buying 1.25 Trillion of MBS. This on the other hand is huge. In total there are ~$5 Trillion of GSE sponsored MBS so they bought a 25% of all MBS during this program.
I think when this program ends there will be a small impact to mortgage prices, but I would be surprised if it more more than 0.1-0.2%
I suppose Robert and others will argue the Fed will just go on another MBS buying spree if interest rates hit 6% and housing crumbles. I guess we shall see.
Doesn't matter here. Prices are going higher.
housebuyer,
I've been thinking more about inflation lately (particularly after the WaPo op-ed noted salaries had slightly declined nationwide after inflation).
Ffx salaries beat inflation between 1979-89, but were barely above inflation from 1989-99 and 1999-2007. Salaries
1979 - $30,000
in 1989 dollars that is $51,239.67. But 1989 is - $59,300. [I am using the BLS inflation calculator.] So income growth was 15.7% above inflation.
1989's $59,300 is $79,672.42 in 1999 dollars. 1999 is $81,100. So income growth was 2.4% above inflation.
1999's $81,100 is $100,932.99 in 2007 dollars. 2007 was $105,200. So income was 5.2% above inflation.
---
So take this home in eastern Vienna: http://franklymls.com/FX7145625
Sold in 1997 for $272,000 (btw sold in 1992 for $235,000 so Robert's claim is not true that prices were flat between 1992-97). Stick in $272,000 in 1997 dollars into the inflation calculator and you get $366,003.54. Adding say 7% for income gains beyond inflation from 1997-2009 (guesstimate) you get $391,623.79. Let's go nuts and just make it $400,000.
Interest rates were 7.48% in August 1997. Now they are ~5%. I don't think that gets us to the list price of $735,500. Nor even the county assessment of $506,560.
Even if we deemed the 1997 sale as a market failure and used the 1992 sales price of $235,000 in the inflation calculator that gets us to $361,744.23 in 2009 dollars. So a lower result than using the 1997 sales price.
I guess I'm confused as to why you view my claim that Vienna will bottom around 2003 assessments as not keeping up with inflation. Looks like it exceeds inflation. Is the inflation calculator you use giving you different results than the BLS Calculator?
The U.S. economy roared to life in late summer, as gross domestic product rose at a 3.5 percent annual rate in the July through September period. It was the best quarter for growth in two years though analysts warned that it was fueled largely by government recovery programs.
Article
I noted this was likely to happen (no predictions on my part; just quoting what Greenspan said on TV.)
The chart shows this growth exceeds even most of the positive quarters in 2006-07. I think this is good news for housing bears since if continued it puts pressure on the Fed to increase interest rates to fight inflation. I don't expect higher rates from next week's meeting though.
TBW, that's a good example of why I think Vienna prices need to drastically decrease. I think anybody paying anything above a 2003 price anywhere outside of the beltway is going to get absolutely hosed in the long run.
"Completely unsurprising that Arlington and Alexandria continue to do quite well, "
It's even better than the data at the link suggests. Notice that it said:
"Percentage of mortgages 90 days or more delinquent"
Many of my neighbors here in Immundria don't have mortgages. I imagine that it's similar in Immunington.
One extreme case is a retiree on a modest pension who just up and paid off the mortgage because it was only a few thousand dollars. Their TH assessed at over $400K.
Jeff
The biggest problem is not removing the mold or the damaged drywall, etc but finding the source of the water which lead to the conditions which created the mold. Be sure you repair any water penetration before you try to dry out the areas and remove the mold. You will also probably have to use a good insecticide because all the bugs are attracted to those wet areas and it is warm and cozy behind that drywall.
Kevin & TBW-
I have said multiple times that I think Vienna will come down some ~10%. I think unfortunately the area where the three of us are looking has not come down nearly as much as almost anywhere else. So the DC area may be close to fair value even if Vienna is overpriced.
TBW your math said that the house should be worth ~400K before interest rates are taken into account. So if you assume interest rates have a modest impact the house may be worth ~450K now. Which is 12% below the assessment pretty close to my 10% estimate. The fact that the owner is an idiot and is listing his house for 230K over its assessment does not mean it will go for anything close to that. There are always crazy listing.
Also don't forget that it is very possible inflation is 3 or 4% a year going forward and the house becomes fairly valued not by price drops but through inflation.
Kevin-
Personally I think comparing inside and outside the beltway is meaningless. I would compare expensive areas and less expensive areas. Vienna is considered a very premium place to live, which is probably why it has performed more like Arlington than some of the less nice areas inside the beltway.
TBW -
The Vienna house:
Assuming it sells for something close to list and using your math, how is it possible? I mean theoretically. You showed that the income isn't there to purchase at that price. So, where does the money come from?
I think you are missing money. And I think the money your are missing is accumulated home equity and other investments, inheritance, stock options, whatever.
You have a couple living in a Centerville TH that has paid down their mortgage $100k, has $100k in home equity they are moving to Vienna and have another $100k from savings or other sources, and bingo, $300k down payment and $400k mortgage.
I don't think you understand your competition in your target market.
Sweet, Harriet. Love the new banner ad blasting Deeds!
Robert-
I think TBW understands his competition, but I think he doesn't understand why the house is priced that high. Its not like people came upon wealth recently, but 20 years ago no one had any wealth to bring the the house. This is why he doesn't understand the relative price changes.
Foreclosures in Fairfax County
Based on data from the Department of Tax
Administration, the number of county-wide net
remaining foreclosures in Fairfax County stayed
below 1,000 in August. A total of 969 properties
were still owned by lending institutions at the end of
August. While up 48 properties over July, the
August figure is substantially below the September
2008 peak of 2,257.
If there are 300,000 housing units in Fairfax County and 969 are owned by banks, 0.323% of homes are owned by banks. Yep, one-third of one percent.
Let's assume that 50% of those properties are listed - 500. That means if the banks UNLEASHED their entire remaining inventory a flood of 500 homes would hit the market. Aaaaaaaaaaaaaaaaaaahhhhhh!
That Vienna home has a fantasy price.
I'd rather pay a little bit more and get this:
http://franklymls.com/FX7176600
TBW, HB, Robert, I don't see where the costs of the addition (if it was post 1992) or the renovations (many of which definitely were post 1992, some quite recent) were factored in.
NoVAWatcher, the county assessor clearly agrees with you. I do like the back yard on that first house, though.
housebuyer said...
" I have said multiple times that I think Vienna will come down some ~10%. I think unfortunately the area where the three of us are looking has not come down nearly as much as almost anywhere else. So the DC area may be close to fair value even if Vienna is overpriced."
Well, that begs the question of whether areas that correct the most at first have further to correct than those that are taking longer. One can look at places like Vienna, Arlington, and Mclean as being "bubble correction-proof" because they haven't fallen yet, but that logic applied to places like PWC would suggest they'd have further to fall. I argue that PWC is at or near full correction, and that while Vienna won't tumble 50% more, has at least a 25% decline in its future. I think the less-corrected areas therefore are the more risky ones to buy in. This is for long-term investments, which I see these to-date stubborn areas as having some pain to dish out over time, price-drop-wise.
Robert said...
"You have a couple living in a Centerville TH that has paid down their mortgage $100k, has $100k in home equity they are moving to Vienna and have another $100k from savings or other sources, and bingo, $300k down payment and $400k mortgage. I don't think you understand your competition in your target market."
Do you know anybody living in Centreville that has $100k equity, $100k paid down on their mortgage, and $100k in savings? Let alone ALL over the above? I don't know anybody that has ANY of the above, and I know a lot of people living in Centreville.
Ace,
The listing says there was a sunroom addition. Fairfax County lists above ground living space as 1,491 sq ft. The listing unhelpfully says square footage is 2,982 sq ft (clearly including the basement). Subtract out the basement's square footage and you can see if Fairfax was aware of the sunroom addition. If not, then the assessment does not include the sunroom.
I guess one question is why not? Don't you need a building permit to add a sunroom? And if so why wouldn't the county then add to the assessment for it? It bothers me that some people are paying the full amount of property taxes while others are not.
I don't know how much an extra sunroom should be worth.
I think people (not me but the market as a whole) likes hardwood floors on the main floor. So that's worth something. I think though they went nuts with hardwood in the bedrooms. I thought most people prefer carpet there.
And hardwood in the basement???? That seems crazy to me with the possible flooding and other things that occasionally happen to basements.
As for kitchen/bath remodels -- if you increase the size that's obviously worth something. But if you replaced the oven that came with the home when it was built in 1970 with a more modern one in 2008? I think that's no extra money for you. Same with the fridge. And I think kitchens and baths should be re-tiled once the olds ones look worn out. I don't think you get money for that.
I think some renovations are actual renovations. But many things people are calling renovations are really just repairing wear and tear on 25-50 year old homes.
Do you know anybody living in Centreville that has $100k equity, $100k paid down on their mortgage, and $100k in savings? Let alone ALL over the above? I don't know anybody that has ANY of the above, and I know a lot of people living in Centreville.
You don't know any Indian or Korean people then.
Found this. If anyone has personal experience or is knowledgeable about home design I'd appreciate hearing your thoughts as well:
Rule 1: Wood flooring in a basement is always a bad idea. Whether moisture is coming from the concrete, from a plumbing leak, or is flooding directly into the house from a foundation problem, water WILL reach the basement floor in time. In a mere 48 hours, mold will start to grow, and if you have wooden floors, there's no easy way to dry them out. At best, wood basement floors and wood basement sub floors are a risk- at worst, they're an enormous and expensive problem!
Article
Ace -- maybe if I brought along a knowledgeable home inspector and/or realtor they might tell me to subtract for the hardwood floor in the basement on that home. ;) [I'm assuming the pool table pictures are the basement]
I know the neighborhood and I agree that the Split Foyer (it is not a colonial), seems overpriced.
That particular street though, has huge new custom houses (over $1 million dollar homes) on 1/2 acre lots. The seller may be pricing the house accordingly.
There are not that many homes in the Town of Vienna with 1/2 acre lots. The other home in Vienna, which is better priced, has also 1/2 acre but it is a little further away from both Metros (Vienna and Dunn Loring). I know it is not that significant, but there are micro cosmos even within the Town of Vienna.
NoVAWatcher,
That is a much nicer home -- I think we may have discussed it before because I recall seeing it and thinking the dining room area was too frilly (although that's easily fixed).
I don't care for the home I found. I just needed an example with selling points in the 1990s because assessments only go back to 2000.
dc2,
I feel like you can find tons of 0.5 acre or larger homes in Vienna and Oakton. You are right that as you get closer to I-66 and the two Metro stops it's pretty uncommon. But FX7145625 is a drive to Dunn Loring, not a walk.
Speaking of the "Town of Vienna" I wonder if there is a penalty applied to home prices there because you have to pay an extra property tax for town functions. I've never quite understood what someone gets for living within the towns borders that someone outside does not. Seems to me like the town creates a lot of public goods (like parks etc) that anyone can use for free.
TBW: is that hardwood? Some of the pictures, especially the one with the pool table, make it look like cheap Pergo. That's a big negative to me.
Robert: I know Indians that owe $100k more on their Centreville townhouse than they could get it for today.
In 1999, houses were selling above assessments in Northern Virginia. This is when prices were not bubblish on the contrary. So I doubt there was anytime when houses consistently (not on a case by case basis) sold at assessment. As you have noticed, assessments went up when prices were going up and they have come down as prices have come down, but they are hardly ever one and the same. For the most part assessments have always been lower, at least since 1999 in Northern Virginia (closer suburbs and inner core). You have to look at the fundamentals of the house, location, schools, neighborhood, etc., to determine price.
I think the other place is much closer to Tyson's, which would be an advantage to many.
TBW, I can only agree with you to a point, on the renos. you gave in your example.
If someone makes a capital improvement in 2008 of something that isn't simply decorating or taste-specific, indeed it does increase the house's value, both to the IRS, which lets you add the cost of the item to your basis for calculating gains (or losses in the case of rentals), and to prospective buyers, who prefer that new oven to the 1970 model. Will you get dollar for dollar? Not from the buyers, probably, but you will from the IRS. Even the buyers will likely give you something, especially if that 2008 oven is accompanied by other recent updates. Look at it this way: if you walk into a house and everything is just as it was in 1970, then you go a street over to the exact same house, except that everything was updated in 2008, for which house will you pay more? Then scale that answer back accordingly, depending on how much of the house has been updated. Even if you or I wouldn't pay more, most buyers would, especially if the updates are for popular stuff or to their taste. And that is what drives up the price of houses and cannot be ignored.
I just don't "get" why you (and some others) seem to think that, if a buyer pays $300K for a house that has all new appliances and countertops, for example, that that is somehow different from buying a house without these things for $285K and then going out the day after purchase and getting the same new appliances and countertops as in the first house, installed for $15K. Both houses are basically worth $300K after the work is done. You can't ignore real improvements in value if you want to compare apples to apples and to understand the market. My hunch is that this will be much easier to accept one you have owned a house for 5 or 10 years or so and you actually have to shell out the $.
Where owners lose out is on replacing things multiple times. Buyers obviously aren't going to pay for that stove you bought in 1981 and replaced in 2000, since it isn't in the house any more, and the IRS says you can't count it either. But you definitely haven't worn out stuff you bought in 2008 and it's still there for the next owner to use. So it has value--the newer and nicer, the more that buyers will value it.
I definitely agree that bad or aged "improvements" don't automatically increase value. I am just arguing that you can't ignore capital improvements simply because they weren't made at the time of purchase when you are talking about changes in home value over time. You have to deal with the complexity of sorting out what they are worth.
kevin,
Robert is just flaming. His hypothetical family does not exist. Search "Centreville" in FranklyMLS. Look at any TH bought between 2003-05. Most are underwater. If they have equity it's tiny. So Robert's $100k of equity fails.
Now let's analyze Robert's they've paid $100k down on the mortgage. Most of these homes cost high $200s to high $300s. In 4-6 years these people have paid 1/2 to 1/3 of the mortgage? Unlikely. Fail.
$100k in savings? In 4-6 years? So $16,667-$25,000 in savings per year? If that was Robert's only claim I could buy it. But how does this family have so much disposable income while paying 10-15 years of mortgage payments in 4-6 years? I'm failing this one.
On a side note most of the TH in Centreville have as much (if not more) square footage than the 1960s-1970s homes in Vienna that Robert thinks are move up. My guess is most people moving up from TH move up to SFH that are larger than their TH.
tiredbubblewatcher,
Yes, there is an additional tax for living in the Town of Vienna. I do not know the differences of what you get outside the town, and you may be right. The services are managed by the town (there is a Mayor and Council) and may be better than those from Fairfax County. The Town has its own police which makes for higher safety. You also get free mulch (loads), two free pick ups of large furniture, construction material, etc. Street repairs, sidewalks are paid with that revenue also, besides the parks which you mentioned. I do not know what people get outside the Town compared to this. And yes, you are closer to the metros and all the activities that occur in the Town year round. For the most part you can walk within the Town everywhere. I used to live .5 mile from a Grocery story and restaurants. I could walk to those stores. I used to walk a good portion of the entire town by the way. It makes for great excercise and the town is fairly flat so it is easy to walk and bike there.
Ace,
I'm not disputing that improvements make a difference. I am saying that some things you are viewing as improvements become necessity. Maybe this example will help:
Assessments are supposed to be based on comps. Say that in a neighborhood of 10 similar homes that eight have sold recently. All eight had finished basements. So the county's assessment starts to assume a finished basement because all the comps had it. So all 10 homes are now pegged at $400k.
Now home #9 comes on the market. They just finished the basement. They then ask $430k to account for the finished basement. I'm saying hold on that $400k assessment assumes a finished basement.
If home #10 came on the market without a finished basement we might see its price go for $370k.
That's where I'm coming from.
Now if home #9 added 500 square feet to the home interior and asked for $450k I'd understand. But keeping up with the average style of your neighbors gets you what the neighbors got.
I think a lot of home sellers are double dipping -- home assessment goes up because new interior feature becomes new normal, then they tack on the cost of including that home feature.
dc2,
Yes, I agree that the 2000 assessment generally was not as high as what homes were going for. I'd say though that most homes now are selling for less than assessment. We've discussed this before.
As for the town services: You also get free mulch (loads), two free pick ups of large furniture, construction material, etc. This sounds like the only thing we did not get outside of the Town. I don't think that's worth the extra amount you pay per year. The festivals, fireworks show, etc can all be visited by people outside the town. Plenty of non-Vienna homes are walking distance to Metro, restaurants, grocery stores. Many homes in the Town of Vienna are not walkable to Maple Avenue. Anything north of Maple (half the town) would be a far walk to either Metro. All parks are free etc.
I think at the end of the day it's a raw deal for the Town citizens (as well as those in Herndon). But obviously the majority of residents must like it or put up with it (or are just too lazy to complain) or else they would have merged the town completely with the county.
Tiredbubblewatcher said,
"Most homes now are selling for less than assessment."
Well, I have missed those conversations. So where are most homes selling for less than assessment. I have not seen that evidence unless you are talking about foreclosures.
http://franklymls.com/FX7193633
I find this a little depressing. I think this house may go for something close to list price, yet its last sale was only 10% higher, the exact month of the peak, June 2006. It is also a REO. Talk about the town hasn't fallen much even foreclosures are only a little going for 10% less than peak prices.
GO YANKEE'S!!!!
p.s. most of the Vienna discussion can be summed up in 3 words....location, location, location. Been there. Lived there. Lived within 3 miles of Tysons for 15 yrs. Owned there for 25yrs.
TBW, thanks for the example. I agree that if there were so many sales that this would get factored into the assessed value and someone's house that was not up to the average would sell for less. But wouldn't that be true for size as well, i.e., if everyone is adding on a room, then doesn't that become the new "average"? Nothing is ever a necessity, in that sense - the value simply adjusts to how each place offers more or less than others.
But more importantly, I'm not sure that your example is realistic. I know that, in my neighborhood, there are far fewer sales relative to the proportion of homes that are not on the market, and that those that are sold vary widely in degree and nature of updates. So the value of a finished basement such as in your example would not get incorporated into the assessor's value, to become the new "average."
And I do think that the recent basement improver might get a little more than the average because people like shiny new stuff.
Finally, in your prior post, you were comparing Time 1 vs. Time 2 and trying to infer what was simply keeping up with "inflation" and what was more than that. Using your example, if 80% of the people improved their basements the houses at Time 2 simply aren't comparable to the houses at Time 1.
Gotta turn in so that my nose will be ready for tomorrow's grindstone. Night all!
RE: Living in a "Town"
I've lived in a Town (Herndon) and I think the double taxation is a complete rip-off. For an additional 50% in RE Taxes you get free trash collection and speed traps. No thanks. I'd rather pay a very minimal amount to Reston and get all the pools, parks, programs, etc.
Arlington County has one of the lowest assessments in the area (86 cents per $100 assessed). Although houses there are assessed higher.
Fairfax County is $1.04 per $100 dollars assessed. I just googled Vienna Town and it is 22.81 cents per $100 dollars assessed. Assessments have gone up since I lived there. I believe it was due to depreciating values and the desire of the County and Town to keep the same revenue. So yes, you pay a premium to live in Fairfax and in the Town of Vienna, compared with Arlington although property assessments are lower compared with Arlington.
I am new to these forums, but have been watching Vienna for over 2 years. I think that a substantial correction is overdue for most part of FX county. Something in the region of 20% is probably very realistic.
I just don't understand folks jumping in to this overheated NoVA market without looking at the inflation, income levels over the years and prior selling points.
It will sure correct in due time - however I agree that it has been little frustrating to see the slowness of correction in this region compared to some of the others...
Apparently everyone but Cara is looking to buy in Vienna. Maybe that explains the lack of correction. I'll make a deal, I won't look within town limits and you guys let me have the area between Lawyers and Vale road west of Hunter Mill. TBW says it's the boonies out there anyway, and too far from everything.
Of course maybe the backlog of Vienna home shoppers is caused by the fact that the correction in list prices hasn't happened yet. About 50% of the houses I bookmark sit and sit before being delisted and coming back on 90 days later.
dc2 said
Well, I have missed those conversations. So where are most homes selling for less than assessment. I have not seen that evidence unless you are talking about foreclosures.
My observation about what gets the crossed out line (i.e. sold) on FranklyMLS and what does not. I'm very confident that when the 2010 county assessments come out that any home you pick in Vienna (and most places in Ffx Co) will have a lower assessed value because comps (sales) will have been lower than '09 assessments.
---
As for Arlington vs. Fairfax tax rates. Yes, Arlington is much lower than Fairfax. It's partly because values have not dropped as much in Arlington but also because Arlington has more commercial real estate. The more diversified the tax base the lower the tax rate. Loudoun and PWC have even higher tax rates than Fairfax for similar reasons.
Jeremy,
You must have me confused with someone else. Vale Road and Lawyers Road are very close to things. And I definitely am looking in that area. I'm also looking at Fairfax. Not just Vienna and Oakton.
I think we used to have more Loudoun and PWC shoppers on here as well as Centreville, Chantilly, Herndon. Those areas have corrected a lot more. I was seeing some pretty nice prices on Centreville homes when I ran that search earlier today. So I suspect many of those people are no longer waiting for the end of the bubble and complaining on here but taking advantage of some pretty attractively priced short sales and foreclosures.
Va_Investor,
Definitely agree with you. Reston's extra tax is okay because you get things that non-Restonians cannot. Or at least if they want to use them (like the pools) they have to pay a premium.
Although whenever I read the Restonian blog everyone's complaining about the excesses of the RCC. ;) But it still seems a better deal to me than the Town of Vienna or Town of Herndon taxes.
Cara - does Burke Centre have an extra tax? There too it's probably fine since you've mentioned Burke Centre has its own pools for area residents as well as some other amenities.
One last thing before I retire for the night. I just don't think 1600-1800 square feet homes in Vienna are move-up homes. If anyone has any concrete data I'll look at it.
Anecdotally, I hear all the time who is moving into my parent's neighborhood -- couples in their early 30s with a young kid (or about to have a kid). I've also mentioned the home I helped my grandmother sell. She sold to a couple in their early 30s who was renting in Vienna and had a four year old kid (buying right before kindergarten I suspect).
I know a couple of you (Va_Investor, Robert) bought when you were barely out of college (~22). But that is not common. NAHB says the average first time homebuyer's age is 33. The average age of a move-up buyer is 45. Article
No one who bid on my grandmother's home was in their 40s. The bids came with letters about the family (do people still do this?) and based on the info given it's clear they were all newlyweds and young couples.
Now Robert is right that really only someone in their 40s with a lot of savings (or a really, really high income) could have afforded the home. I'd be shocked if the young couple that bought my grandmother's home does not foreclose. I suspect they only were able to pay the list price by very loose lending standards.
tbw,
If by tax you mean HOA fee then yes. It's comparable to the rest of the HOA fees in the Burke Springfield area, and gives you cheaper access to the common amenities, but you do need to pay an additional pool membership if you want to use the pools. (which IMO is better than everyone fully sharing that cost as mainly families with kids want to actually use them). Its' between $225 and $325 per quarter. (Some houses along particular trails get assessed a higher one for trail maintanence).
thebubblewatcher said:
"You must have me confused with someone else."
Sorry TBW, maybe it was NovaWatcher or someone else that had mentioned that the area I'm looking in was a little too far from restaurants and stores for their taste. It was mainly a joke post anyway. I'm really not too worried about bidding wars with anyone on this board, since I think most of us still looking are too logical to overpay for a home.
"I've lived in a Town (Herndon) and I think the double taxation is a complete rip-off. For an additional 50% in RE Taxes you get free trash collection and speed traps. No thanks. I'd rather pay a very minimal amount to Reston and get all the pools, parks, programs, etc."
Can you show me where these tax rates are found? I want to make sure to be able to compare my yearly out of pocket expenses accurately when looking at buying in Reston vs Herndon. My manual calculations point to a 1.3% tax versus a 1.0% tax in Herndon and Reston.
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