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.
Konstantin: You once mentioned Liberty Center in Ballston as a good condo. Wanted to let you know they have a new sales company there and are giving good deals. Just bought a 1 bed and will close by June. I ended up paying a little more for a larger place. It should be more rentable when I do my 2 years in Shaghai beginning in 2012.
Story on the govt newest plan to "help" housing:http://www.npr.org/templates/story/story.php?storyId=123897602&ps=rsWhat I find interesting is this is the first federal program I have seen that is targeted to just 5 states, CA, AZ, NV, MI & FL.As much as I dont like these things conceptually, at least it is targeted (and presumably cheaper) than a nationwide program. Plus, as weve discussed here, at least it wont create another bubble here where the housing market is much stronger than the 5 biggest bubble states. Last thing we need here is more fuel to add to a relatively hot market.
Congrats condo buyer!I hope you will be very happy in your new home!I read something recently about Arl condo's being quite strong going forward.
I've calmed down about my short. I know alot of "funny business" went on behind the scenes and I got shafted. Make sure you rely on e-mails and avoid phone conversations.Onward and upward.
Can any of you access the S&P website. For some reason I can't open the site to get the CS numbers. From the Bloomberg it looked like DC was down by a couple of tenths of a percent, which is less than the last couple of months but it is still down...
Anonymous- I agree it is probably better to target the aid. Does anyone find this comment funny? "The plan addresses Nevada, California, Arizona, Michigan and Florida, where home values have fallen more than 20 percent from peak." Isn't every state down 20% and these ones are down 40+%
WSJ blog: "Take Three: Will Congress Extend the Home Buyer Tax Credit?""The National Association of Realtors and other industry groups are beginning to make the rounds on Capitol Hill to press their case, which goes something like this: We know you’ve extended the tax credit two times already, but the housing market is still fragile, the tax credit is working, and don’t forget– you’re up for re-election soon. In other words, do you really want to own the next leg down in home prices?""This time, the lobbyists certainly have their work cut out for them. For one, industry groups last time swore that the last tax credit extension would be, well, the last extension. To secure the deal, the lawmaker who shepherded that effort through Congress, Sen. Johnny Isakson (R., Ga.), made clear at the time that extending it again would be a nonstarter. (His spokeswoman says that he has no plans to offer any legislation extending the credit. “Part of the benefit of the tax credit is the urgency of it sunsetting,” said spokeswoman Sheridan Watson.)""While there’s still about 10 weeks before the current tax credit expires, that doesn’t leave much time for buyers looking to cash-in, notes Keith Gumbinger of HSH.com, a financial publisher. Home sales surged last October when it looked like the tax credit might expire for good, and then plunged in December, once it the credit had been extended."http://blogs.wsj.com/developments/2010/02/22/take-three-will-congress-extend-the-home-buyer-tax-credit/
has there been talk of extending $8K again at all? i'm not sure what i heard but the other day on WTOP a housing expert said 'making the credit into some kind of law' on a piece about Spring RE markets may start early this year due to the tax credit. did anyone else hear that piece too? it could be that he's saying it won't get extended again unless they make it a law.
Thanks, Mike, missed your post by a couple of minutes :)
MM, MikeJust because it's ineffectual, misguided and mistargeted doesn't mean they won't extend it. But I'm praying for sanity this time around. Keeping interest rates below 5.5% is what matters, the $8k is just gravy and more juice than the entry-level market needs anyway. Congrats condo_buyer.The Anonymous,Targeting, what a concept! Maybe they'll start to take notice of the adverse consequences for affordability that their "propping up" policies are having in states that didn't have as enormous of bubbles.
MM-That would be terrible if they end up making the 8K a law. Talk about a huge huge waste of money...Personally I think they should phase out mortgage deductions. It is really silly for the government to be spending trillions of dollars trying to convince people to buy houses instead of renting.
housebuyer,Mortgage deductions do phase out, it's called amoritizing your loan. :)Sorry, couldn't resist.
housebuyer,more helpfully, CR notes that the S&P site has crashed as usual when the release the numbers...
Cara- LOL. I was thinking more of a phase out like 5 years from now there are no mortgage deductions at all. In general I am not a big fan of the government trying to influence the markets during non crisis periods.
The seattle bubble blog guy rocks.He has interactive graphics of the CS already posted. From them you can see DC is up 1.9% YoY. I told you we'd be up YoY in December.But yes, the HPI is down slightly MoM. Which is all that matters for buyers. Keep that in mind.(the slider lets you take the chart back to 1990, rock on!)
I can't see the home interest deduction being messed with. They did limit it to 1 million dollar loans and limit second trusts to 100K (absent actual improvements?), I believe.Perhaps they will end it for second homes? Doubtful, unless the RE lobbying is cripled.Remember that PMI became deductible during this timeframe. We also saw the 500K no tax profit.Since I don't do our taxes, I don't know if AMT comes into play.If anything, I would guess more phase-outs for higher income on everything and the possibility of "needs-based" social security (but the AARP is pretty potent).SS was messed with in the early 90's when 85% of benefits became taxable income. This went relatively unnoticed at the time, but was a huge revenue generator. Also remember the later retirement dates and graduated payouts. And the elimination of deductions for other interest paid. Many shifted debt to their home rather than lose that deduction; this could have been the start of tapping home equity.Is Housing too sacred to mess with? The non-indexing of AMT is felt more and more as each year goes by. So there are other methods (including basic tax rates) to generate tax revenue without touching the "sacred" mortgage deduction.With States in such a bind one wonders if they will continue to allow housing related deductions. It wouldn't be as visible.
The most likely way the mortgage deduction will be eliminated is through the flat tax. A couple of major Rep. presidential contenders have proposed having a flat tax as an option to the current 2 million page tax code and letting the individual decide how to file.
the S Arl wooded lot house is UC, not surprised at all. one less competition for me as a buyer :)
DC metro Case Shiller down 0.2% from November to December, seasonally adjusted was up .5%. YOY up 3.1%.
MM,Did you go to the open house?
VA- I agree with you I think there is virtually no chance that they mess with this. I am just saying that in my ideal world the government wouldn't be so heavily involved in the market where people hold their largest assets. In general it is very popular though so I am not holding my breath that I will get my way.
Shamrock- Thanks I am still having issues accessing S&Ps website for some reason. Personally I would look at the normal index not the seasonally adjusted, because with the 8K subsidy this winter season has unseasonal effects going on
condo buyer,if you do not mind to share, how much have you got off the list? i was looking at the sales prices for this building and in the past there was such a wide range for similar units.
Housebuyer,Eliminate the mortgage interest deduction!!!! This is a terrible idea. For those of us who make decent salaries, doing so puts a greater burden on the middle class (and in NOVA middle class is at least 100-120k a yr in my book)I mean this basically shelves all the burden on us, givign the poor a free ride -- and the rich dont get affected as they have small business tax shelters.How about we make social security and medicare contributions optional instead?I would agree to this before the mortage interest deduction
Cara,I did. The steep decline in the back is surprising. It's almost like a 30 foot cliff drops from an already slopped backyard. The houses next door both have fences up. But because it's covered by snow I didn't actually get out on the yard.I really don't like the streets beyond the immediate block. be back for more soon...
Donovan- Starting in 2011 the AMT phase out starts will likely begin in the 160-170K range AMT info which is only slightly wealthier than your middle class. I am also fine with the government getting rid of the deduction and lowering marginal tax rates for middle class. I am not looking for a proposal that would burden the middle class. I just don't like programs that create incentives for people to buy houses earlier than they would otherwise and buy larger houses than they should.
I think it would be easier to simply cap the mortgage interest deduction. That way it is not a regressive tax structure. It would also temper eventual bubble markets (on the high end) since the deduction doesn't rise in lock step with the amount of money you spend on a home.My $0.02
Housebuyer,good point (id like that too), but it operates on a premise there would be a scale down in taxes.Impossible and too idealistic with our national debt.
Donovan,Actually, the home interest deduction is quite regressive given the benefit only acrues to owners and the benefit increases with tax bracket (income).The fact that it applies to second homes is really outrageous if you take a step back and think about it. Do you know that a decent sized boat with a toilet and shower "qualifies" as a second home?Obviously, I don't want it limited or eliminated.
Cara said..."Mortgage deductions do phase out, it's called amoritizing your loan"While I agree with housebuyer that they should be eliminated permanently, this is a funny and astute observation!While I shouldn't be surprised that they are pushing for an extension of the tax credit, this really sickens me. I don't know how these self-serving RE sycophants sleep at night.
Donovan,If SS and Medicare were optional we will be in far worse trouble than we are already.How many are responsible enough to save anything? The burden for these destitute people will fall squarely on the shoulders of the responsible savers/planners.
VA_Investor,Im sure that burden will manifest itself in "VA_Investor" purchased Section 8 properties, so as to provide a semblance of generosity for these poor-non-saving individuals as thou doth does say :)If one makes a buck on these non-savers then so be it?Is this the Rich Dad credo? :)
Va_Investor said...We also saw the 500K no tax profit.is this less 'bad' than the deductions?
Fairfax 2010 assessment declines by ZIP
Dono,I have no Section 8 properties. It's nice of you to assume I take advantage of "the poor".I work hard to make a buck just like everyone else. I'm probably more compassionate and generous than you are. I most certainly pay far more taxes than you do.Where, exactly, do you get off?
MM,I don't understand your question.
Jim,None of those declines are even close to what I expected. FX is really trying to maintain the flow of RE taxes. I've got two good (bad?) comps to get mine down. If they come out with 3%, after only 5% last year, I will appeal. I have 7 properties in Reston and I'll be investigating those comps too.
VA Investor, I apologize for the inference, it seemed a good joke at the time.ANd yes, you probably are more compassionate and generous per layman perceptions. I prefer the tough love approach.Im a libertarian, and I advocate the ending of social security and Medicare to force a discipline in our young (generation unknown) to prepare for retirement through real estate, retirement accounts and efficiency.Honestly as a caucasion, we could learn alot from the koreans and chinese regarding their approach to real estate. Real local scenario (personal witness) Alexandria:They pool their money (families) to purchase laundromats and Dunkin Donuts and then take the proceeds to invest in foreclosures..(these are the cash deals some of the writers allude to here in Arlington and Annandale)Some of them use franklymls (I work with them)Thats how the poor become wealthy, in this market
Thanks Jim!Wow, tbw was pretty darn close with those predictions.Mine they kept exactly flat from last year. Which is fine by me.
Va_Investor,I was just curious why many have problem with mortgage deduction but none seem to mind the $500K tax free profit.
Donovan said..."Eliminate the mortgage interest deduction!!!! This is a terrible idea. For those of us who make decent salaries, doing so puts a greater burden on the middle class"Obviously somebody hasn't taken finance 101 to realize the difference between progressive versus recessive taxation policies. Sorry, but I'm not going to shed a tear for homeowners not getting their freebies when renters have been denied such freebies in perpetuity. I do love the butthurt and self-entitlement that these policies create. As much as I wish deep down that they would eliminate these deductions, we know they never will. Despite the bubble bursting, the mantra that housing is the goose that lays the golden egg will never disappear, despite what a crock it is. Too many interest groups would fight against it. Boomers would get the AARP to go apeshit over it- not because it will hurt their monthly cashflow, but because it will hurt the value of their properties. NAR will really go apeshit over it since removing it would take away half of their talking points.Wishful thinking, but it won't happen=(
Va_Investor said..." The fact that it applies to second homes is really outrageous if you take a step back and think about it."Agree 110%. It's beyond outrageous and it reveals the intent of the policy: to inflate home prices permanently and to benefit RE agents and other middle men. Basically, to spur sales volumes. It's disgusting.
MM,I mind it in some ways not in others.Prior to implementation you always had to buy a house to replace your old house that was more expensive in order to cover the capital gains, and you had to do so within one year. (with a once in a lifetime exemption for trading down in retirement). This was unreasonable for a mobile workforce. If you're moving for a job in a less expensive area, you shouldn't have to buy an expensive house if you don't want to. And if you're moving to an expensive area, renting for a while may be the right financial decision.The unintended consequences of creating a class of 2-3 year hold time principal residence flippers in CA was indeed a doozy. But it's hard to tease out how large of an effect that was in terms of inflating the bubble. Definitely a factor, but how much of one?It's definitely a regressive tax break though, that's for sure.
MM-I don't mind the 500K because it allows people to move. It is not good for society if people can not be mobile if necessary. Seeing that there is inflation I don't like the idea that you could have bought a house for 200K 30 years ago that is now worth 700K, but you paid it off in full. Now if your job gets transferred you have to sell your house and buy a 700K house in a different state I am fine with you not needing to pay the ~150K in taxes you would owe, because that seems like a pretty harsh tax for moving seeing that you didn't gain or get a nicer house elsewhere.
MM, good question, esp. since people who aren't married get only half the $500K, even though the home prices are the same for them. In my opinion, there will never be an elimination of the mortgage interest and taxes deduction, and there will never be a flat tax. People have been talking about it for as long as I can remember, but these proposals have never come close to being passed. I think part of the reason is that as a social policy the citizens have long wanted to encourage homeownership for most people because of its supposed societal benefits. Although the events of the past 5 years may cause some people to re-think this, I suspect most people don't feel that homeownership is inherently bad, but rather that banks and some individuals got greedy and/or irresponsible, etc. There is some indirect benefit to renters in that the owner of the property can afford to rent it for less if s/he can deduct the interest and taxes (and other expenses, all on schedule C or E rather than on schedule A). So there are a lot of people who want these deductions to remain in place--probably many more of them than want the deductions removed--to say nothing of the efforts of the real estate lobby. Instead the deductions have been limited for higher income people, and that's what I think will continue, for political reasons.
housebuyer,I'm pretty sure you could "always" do that, you would have just needed to buy within a certain time frame. No renting for a year while your new home gets built... or while you explore the area, and see if you can stand the job.I could be wrong though. This is just from my memory of my parents' experiences.
That's funny, because our place is assessed over $100k less than we paid for it. Maybe a better way to put it is that there is no way you could have bought our place during the past year for the current assessed value. Believe me, I wish I could have paid less!That makes me wonder if the assessed value is adjusted to account for different taxing areas. I know that some parts of the country (e.g. Austin, Chapel Hill) have different rates for different parts of the city (e.g. your house is served by a new firehouse, so you pay more). Does Fairfax Co. keep the rate the same for everyone, but instead fudges the assessments? For example, is our assessment, for tax purposes, lower because we have septic rather than sewer? Would it be lower still if we had our own well rather than county water?
Donovan,"How about we make social security and medicare contributions optional instead?"This is a GREAT idea!! I actually think that you can opt out of ss now though, but there is some red tape to go through for that.But, unfortunately, the people that opt out and actually don't plan for their retirement will still feel entitled and complain until they get something... That's how it always seems to go.
Novawatcher,Ours is assessed lower than we paid too, just exactly the same assessment as last year, as is our whole neighborhood as far as I could tell.
Kevin,I believe it's just a typo on your part - "recessive"?. I'm sure you meant regressive, but I won't suggest you return your Econ Degree.
OK!I guess they looked at the only 2 sales in my nabe (both distress). Assess down 10%. Seems like a pay raise to me. I'll take it and bank it.Now I need to look at all the others.
OK,Celebrating too early. First rental I checked is UP 10+%.
"There is some indirect benefit to renters in that the owner of the property can afford to rent it for less if s/he can deduct the interest and taxes (and other expenses, all on schedule C or E rather than on schedule A)."That assumes the interest deduction doesn't inflate housing prices... which it does. So yes, the interest deduction helps lower costs for a given mortgage amount, but it also inflates housing prices because people account for the interest deduction in their affordability calculations.
Up 10% on the next one.
VA_Investor - I would assume 2010 assessments follow the same pattern some of us have been noticing on the board of higher end homes losing value and the low end having price gains. If so it makes sense that your personal home went down while your (presumably less nice) rental properties have gone up.
Va_Investor said..."I believe it's just a typo on your part - "recessive"?. I'm sure you meant regressive, but I won't suggest you return your Econ Degree."Yes that was bad. Lesson: don't type while listening to the radio.
My assessment down 4.2% :)$50k under what we paid last year, even more under what is was appraised for, and at least $80k under what we could sell it for. Poor, dumb, FFX co. ;)Our neighbor across the street's assessment is $110k under what they paid for it in Sept. LOL.
What could these people have done to think they got $500k+ increase from when they bought just a few years ago?http://franklymls.com/AR7180556Is this neighborhood/area really that hott?
sehrwunderbar,Delusional. That's my guess. Visual, noise, and air pollution from 66, the trifecta!
sehrwunderbar,2002 is not 'just a few years ago.' obviously you've missed the 'new paradigm' discussion. what's a fair price to you?
Well, I guess I did miss that discussion... You don't want to know what a fair price to me is, seriously.But, the inside paint job is hideous, looks like something that HGTV would want to take on, hehe... People on here have said that anything over the 2000 purchase prices is still overpriced. Another reason why I asked if that neighborhood/area location is really hott or something.
With the discussion on 2010 assessments, why do you guys think the assessments dropped the way they did if the homes are still selling for more than 2009 assessments?Wouldn't the city want to capitalize on that in order to create more revinue (not that I agree with that line of reasoning)?
sehrwunderbar,In my nieghborhood I think they left it alone because they don't know what to make of the disparity in prices between REO, SS and normal sales. Yes, the normal sales were all well above 2009 assessments, but the few remaining REOs were quite low, and any shorts that closed were low too. So rather than change anything and have to revise it down next year, they just left well enough alone.And remember that map is for the mean house, not for any subdivision in particular.
sehrwunderbar,Aren't current contributions to Social Security and Medicare actually being paid out to today's Senior Citizens? So how would we cover the obligations to Seniors today if a bunch of higher income people opt out? I don't think the SS/Medicare contributions of our lowest paid citizens are enough to cover the current obligations. Plus, I don't think you realize how expensive health insurance is for people in their 60s that is why medicare was created. I doubt very few people, here, would ever be able to afford the insurance premiums that insurance companies charge for people over 65.
wunderbar- I think you misunderstood people here. I think people said that the bubble started around 2000. This does not mean that anything above 2000 prices is too high, because since 2000 wages have also gone up substantially around here. So I think what these people are saying is take 2000 prices and adjust for wage growth. This generally gets you to prices should be around 2003-2004 levels.
Regarding the intent and purpose of the mortgage deduction. Believe it or not, it originally had nothing to do with homeownership at all.IIRC, the original tax code said nothing about interest (deductable or not) whatsoever. Thus, it was not Congress but the Supreme Court who in a turn of the century tax case decided that payments toward interest of any type were not "earned" and thus cannot be counted as part of ones "income". This was not done to help or hurt any group (homeowners, renters, businessowners etc) but merely to maintain intellectual consistency to the tax code. Plus the rationale by the Court was "if Congress doesnt like what we are doing, they can amend it by statute".Congress chose to remain silent on the issue meaning it stood as deductible per the Court ruling. Over time, Congress amended the code to prevent deductibility of certain types of interest (i.e. interest on credit cards used to be deductible), and I think Congress did explicitly codify the home interest deduction eventually. However, that was certainly not their original intent as it was not Congress but the Court who first decided it was deductible. Also, keep in mind that when this was first decided the overwhelming majority of Americans were not homeowners but renters. Thus, because of its peculiar history I seriously doubt the mortgage interest deduction will ever be eliminated unless the tax code is scrapped altogether (which is always possible). Its one thing for Congress to allow a provision by statute only to then reverse it or eliminate it down the line. It is quite another to explicitly draft a statute to eliminate something first enunciated by the Supreme Court, and which would stand even if Congress was merely silent on the issue.
sehrwunderbar: because they are dumb?
Sehrwunderbar said: People on here have said that anything over the 2000 purchase prices is still overpriced. Another reason why I asked if that neighborhood/area location is really hott or something.In some areas, that may be true. In North Arlington (unfortunately for me, as I am looking there), that is definitely not the case. Prices were just starting to ramp up from a long-depressed period around 2000, and the area has become much more desirable over the last decade for a variety of reasons (schools, commute time to DC/Tyson's, amenities, etc.). That being said, that seller is out of his/her mind - there's no way that goes for anywhere near that sale price unless some serious money laundering is involved.
My assessment in Arlington went up a little over 1%. It is currently about 11% higher than what I paid for the house in November.My $0.02
anyone know when pwc 2010 will come online?
What could these people have done to think they got $500k+ increase from when they bought just a few years ago? Exorcism?
"sehrwunderbar said...People on here have said that anything over the 2000 purchase prices is still overpriced. Another reason why I asked if that neighborhood/area location is really hott or something."Sehrwunderbar - the "new paradigm" discussion you missed out on focused on what we learned about Arlington (and to a lesser extent, Alexandria & DC) as compared to the rest of the metro area. In a nutshell, it appears that incomes in Arl (AX & DC) have really grown compared to the rest of the area. In particular Arl incomes are growing at 2X the rate they are in neighboring Fairfax (and beyond).The other issue is demographic. These three areas were losing population for decades, especially among whites. Since 1998, that decades long trend of "white flight" has reversed and whites are now returning at rates unseen since the 1870s.Unfortunately, you happen to be looking in the 1% or so of the US where such a mixture of improving incomes and demographics meant the area pretty much stayed desirable throughout the bubble. Prices were indeed inflated, but not nearly as much so in the other 99% of the country where these factors were noticeably absent.
Hayfieldgrad,Where are you getting your idea of the purpose of medicaid/medicare from? Also, with regards to social security, all the news media says that 2 people are paying for every 1 person recieving today. It used to be flipflopped very much in the opposite position. Social security was meant to be a short-term thing, but as usual people get all entitled about things...As far as the mortgage deduction goes, I don't know why anyone would factor it in their price point for a home. It isn't even a $-$ reduction of taxes, but a percentage reduction anyways.
CRT, thanks for explaining the discussion I missed. I was gone for a few last week, so didn't see the posts.If incomes are growing twice that of the rest of the country, how is that affecting public assistance for the area? Is the cap twice that as well? Or merely poverty level like the rest of the country? Just curious because it seems that it would further inflate the prices of the area.
sehrwunderbar,He means you missed it a year and a half ago.
sehrwunderbar,If you want to compare renting to owning on a fair basis you need to include everything, maintanence, increased utility costs, property taxes, and yes the tax consequences of owning versus renting. You can rent money or you can rent a living space, one has tax benefits, one doesn't. So if you're trying to do a fair comparison, or even if you just want to know what you can afford, you should factor in both the good and the bad. Sure, in 5 years your deduction phases out quite a bit, so you'll need to also make assumptions about either your pay increasing or your rent increasing to decide the comparison over a longer length of time than the first year of ownership.A lot of people around here either already itemize deductions even before buying a house, or are very close to that threshold, so it can mean alot, possibly comparable to maintanence issues in the first year or two or more (don't know, you'd have to ask longer term owners).
Cara,Looks like you picked one of the safest regions to buy in Fairfax County. Only Reston fared better percentagewise loss.I'm surprised Lorton and Alexandria are still suffering so much.According to Fairfax County they do not include distressed sales in comps for assessments as they are not "arms length transactions." So short sales only lower assessments when they lower the price of regular sale homes, which does happen.
"Social security was meant to be a short-term thing""I actually think that you can opt out of ss now though, but there is some red tape to go through for that"Both plain wrong.
Homes in my childhood neighborhood in Vienna appear to be down 10-12%! Looking at some other neighborhoods in Vienna and Oakton and seeing some delicious assessment declines. Wonder how this will affect some current listings.
My Case Schiller prediction for the spring. We remain up YoY until June, still declining MoM until April (remember the 3 month trailing averaging) when we slowly start back up MoM, but after June remain down YoY throughout the rest of 2010.Basically, same see-saw as last year, just not as big in either direction.My predictions are free and worth every penny...
These assessments are very random. Basically if your neighborhood had no sales Fairfax County appears to be keeping the assessment exactly the same. I'm seeing this in some neighborhoods where assessments literally stayed the same. This is despite the fact that another HOA nearby with the same school districts is assessing for 5% less. Give me a break. The county is very narrowly defining comps so as to maximize property tax revenue. I expect some people to appeal.
tbw,My neighborhood had tons of sales and they kept the assessment identical. I think they're just overworked or ran out of man-hours.
Here's a good example of some assessment nonsense. Take two extremely similar communities: Marquis at Vienna Station and Acadia (both are condo communities near the Vienna Metro).According to Fairfax (glug glug glug) County, Acadia dropped 18% in value this past year whereas Marquis 0%. Ridiculous.Acadia is down 38% from the peak assessment and Marquis 30.6%.http://franklymls.com/FX7116439 (Marquis)http://franklymls.com/FX7223056 (Arcadia)Still a lot of noise in these assessments given such disparate of very similar communities.
"Exorcism?"Poltergeists and demon infestations are right up there with black mold. They are absolutely to be avoided, even if the seller claims to have eliminated the issue. You can never be completely sure.
sehrwunderbar,From medicare.gov:Medicare is a Health Insurance Program for people age 65 or older, some disabled people under age 65, and people of all ages with End-Stage Renal Disease (permanent kidney failure treated with dialysis or a transplant).Are you saying that if you cannot afford health insurance that you should go without it? Do you even know how much health insurance costs for the type of people that Medicare covers? I get it you are advocating for a society where every man is out for themselves. If you cannot pay for health insurance, even if you are elderly, you should just die.
Okay there are 17 submarkets on the Fairfax County map. In 2007 the median submarket was Fairfax. I compared each submarket to Fairfax in 2007 and 2010. As you can see in those three short years there has been a large change in the price differential. 2007Great Falls +127%McLean +69%Fairfax Station +51%Oakton +43%Clifton +41%Vienna +28%Chantilly +0.5%Herndon +0.3%Fairfax -Annandale -6%Burke -6%Alexandria -7%Springfield -7.5%Falls Church -9%Reston -12%Lorton -12%Centreville -12%2010Great Falls +141%McLean +85%Clifton +55%Oakton +51%Fairfax Station +46%Vienna +38%Fairfax -Herndon -6%Chantilly -8%Burke -8%Alexandria -10%Annandale -12%Falls Church -12%Reston -12.5%Springfield -14%Lorton -22%Centreville -22%I would argue this shows either one of two things: (1) Great Falls, McLean, Clifton, Oakton, Vienna, and Fairfax have undercorrected and are due for more pain or (2) Fairfax Station, Herndon, Chantilly, Alexandria, Springfield, Falls Church, Lorton, and Centreville overcorrected and are due for price increases. [Reston and Burke essentially kept their distance from median.]
Leroy, agreed that the deductions may increase prices - what I should have clarified was that I was speaking about the *relative* affects on homeowners vs. renters, i.e., that it doesn't just affect homeowners.Re: the delusional seller of http://franklymls.com/AR7180556,notice the many days on the market without a sale.
woops, I mean "relative effects."
tbw,I think it is less of FFX co. maximizing tax revenue, and more of just having a terrible system. Like I said upthread, houses on my street and in my neighborhood were selling this summer and fall for 10-20% over '09 assessments, and the '10 assessments fell almost 5%! I don't know where they are pulling comps from, or from how long ago, but it doesn't make much sense if these are supposed to be nearly market-based estimates. Completely random example from a street that I was watching early on in my house hunt (Summerfield Rd., uninc. Falls Church) Assessed in '09 for $339k, a 24% drop from the prior year. It gets foreclosed upon, and bought from the bank for $361k. Does the assessment go up, or flatten to reflect this? Nope, down another 6% to $319k. I wonder what % of sales in the latter half of 09 are going to be over the '10 assessment. 75%?
"CRT said...Unfortunately, you happen to be looking in the 1% or so of the US where such a mixture of improving incomes and demographics meant the area pretty much stayed desirable throughout the bubble."To put it another way, you happen to be looking in the 1% of the USA where "its different here" actually means something :)TBW -- very interesting results on assessments 2007 vs 2010.One question, when you use "fairfax" as a means of comparison, do you mean the city, or the county as a whole?Hopefully you mean the second as I think that would be a better control (i.e. it could be FFX City suffered too much or too little to make it meaningful basis of comparison). Thus, are you using FFX county as your control? If not, would you mind re-running it with FFX county?
The Anonymous,It's the Fairfax part of Fairfax County and not Fairfax City. I found an older map with 2003 numbers so I'm going to post those numbers soon as well.
As more evidence of seller delusionality (is that a word?) the same guy who owns that property also owns 1606 Kirkwood. It was built in 2006 and he's had it on and off the market (currently off) for nearly all of that time, at a ridiculously high price. He refuses to consider the busy (and ugly) street it's on, the backyard that slopes into the house, the relatively poor design of the house and quality of finishes, and how out of scale the house is with the rest of the neighborhood. Arlington still has it assessed too high, because it doesn't factor these things in to its assessments, which perpetuates the seller's delusion, I'm sure. Also, Kirkwood has been torn up with noisy construction for a long time -- I think FIOS or something was being installed.He's had tenants in there at various times. So now he has a 4 year old "used" house, instead of a new one, to offer buyers.
TBW-Maybe rather than saying that something should be 1.5x Fairfax prices its possible people say it should be $XXX more than Fairfax. If so the 2007-2010 number make sense. It looks like as prices fell across the board the more expensive regions became a higher % over fairfax and the less expensive regions become more underpriced compared to fairfax.I don't think this is actually the case, but one could make this argument...
Hayfield Grad and others,This vilification of wunderbar is not justified.The issue is why do these programs social security and medicare need to be funded through payroll.No one wants to see the elderly "go off and die." But to a certain extent, the world needs to get a grip on overpopulation and subsequent environmental damage. Would de-funding Medicare through payroll help this? Maybe and maybe not. Try to think without emotions. The taxes could be levied elsewhere, like Democrats sin tax proposals.Social Security and Medicare forced funding has been argued as unconstitutional: legally and (unsuccessfully)Hayfield instead of demonizing Wunderbar, I ask you this humble question. If the government cant save the Social Security trust fund for Generation X and beyond, why should they be required to "opt in today?"Gen Xer's are hence forced to find pensions or 401k or 403b. This is forced discipline via FDR's reckless Social Security creation.I ask you what, will Generations retiring in 2030-2050 be entiled to?You cant gurantee social security for them.
I found this map from 2004. It appears that's when they first started providing this (at least online). It has the 2003 numbers for each submarket. Great Falls +128% vs. +154%McLean +82% vs. +92%Fairfax Station +59.5% vs. +57%Oakton +44% vs. +56%Clifton +41% vs. +59%Vienna +34% vs. +42%Herndon +1% vs. -6%Fairfax -Chantilly -2% vs. -9%Annandale -9% vs. -13%Burke -10% vs. -8.5%Reston -11% vs. -14%Springfield -14% vs. -15%Falls Church -14% vs. -13%Alexandria -15% vs. -11%Centreville -17% vs. -23%Lorton -35% vs. -24%---This provides slightly different results. Here the following possibly undercorrected: Great Falls, McLean, Oakton, Clifton, Vienna, Alexandria, and Lorton.So maybe that explains why on the 2010 map Alexandria and Lorton are still suffering. Lorton is a tough call because it's so new in many ways that it's hard to say its 2003 median price is not noise.
Oh and Burke and Falls Church technically could be on the undercorrection list but it's very slight. What I find hard to understand is why Clifton is faring better than Fairfax Station.
Donovan said:"No one wants to see the elderly "go off and die." But to a certain extent, the world needs to get a grip on overpopulation and subsequent environmental damage." So, actually, you DO want the elderly to go off and die?
Donovan- Even if they make no changes to social security at all and the fund dissapears in a couple of decades. The current inflows into the system will be able to pay the retirees 75% of their benefits. So it is not like any of us who are paying in now will not get most of the expected benefits coming out.I would love if people could save themselves, but people have shown for decades their inability to consider the future so I would rather the government force them to save. Because you can't allow our society to be full of homeless dying elderly on every street corner...
TBW- I don't think Lorton is under correcting. The federal jail was closed down in 2001. I am sure that it took several years for prices to appreciate do to the fact the jail was gone, because it take sometime before neighborhoods can be reformed.
tbw,Regarding FX not using "distressed" sales in their comps, I would argue that just about every sale last year was "distressed". Who would sell in that Market unless they had too or were extremely motivated?
Donovan,Social security is doing fine. They have enough money to pay 100% of benefits from 2010-2036. In 2037 they will only be able to pay 76% of benefits and then it goes down. As someone who is likely not to take social security until the 2040s I suppose I should be concerned but I am confident that Congress will get around to fixing social security before then. That's plenty of time to do some combination of payroll tax increases, benefit cuts, and/or raising the retirement age. Also, they tend to be optimistic about the nation's health whereas I think we are going to see decreasing life expectancy.Medicare does have more immediate problems. But the Medicare tax rate is 1.45% (and the employer match is 1.45%). I have a hunch they will raise that rate instead of letting the program end.
VA- There are lots of people like Ace who are trying to get larger houses. If that is the case why not use a down market. Sure your house fell in value, but the more expensive house you are buying likely fell by more. Unfortunately for Ace Arlington just hasn't fallen that much. Also using the 8k to get interest in your inexpensive properties could work.
Donovan,I am member of Gen-X and I was always told that Social Security wouldn't exist for me. I would never advocate reliance upon Social Security as a retirement plan, but I do think it is necessary for a country that values having a social safety net. Payroll deductions are the most equitable way for the collection of the funding. Some people will be able to avoid paying a "sin" tax, but still would likely receive benefits.If you really want to minimize environmental damage you should probably be scolding the wealthiest Americans under 65 since they are most definitely using more natural resources than the poor or elderly in this country.
housebuyer,I agree about Lorton. The closing of the jail obviously transformed the area. And there were a massive amount of new home communities there (as opposed to built out communities like Vienna, McLean, etc) so all that new housing stock should up the median price. Va_Investor,This is how Fairfax County explains it:As a duress sale, foreclosures themselves, or lender “take backs”, are not “arms-length” transactions under Virginia law. These forced transactions are typically based on the loan amount, not necessarily the fair market value. Regardless, foreclosures generally have a dampening affect on competitive sale prices, and some influence continues to be reflected in the 2010 assessment decline. The prevalence of foreclosure activity was not uniform throughout the County.
Hayfield Grad,You have confidence in our government to fix SSI?1) Did you have confidence in tax dollars used for the invasion of Iraq?2) Do you have confidence in Obama's reckless spending and Bush's borrowing?The optimism you have in Congress' partisan politics is shocking. I do agree with you on possible life expectancy drops -- obesity -- is coming hard and fast.
housebuyer,You do realize that some of the closest homes to the Lorton reformatory were actually in the 22039(Fairfax Station) and not in 20079(Lorton) zip code. The Barrington, Triple Ridge, and Crosspointe subdivision were all built within a few miles of the prison starting in the late 1980s. I know that these homes were selling in the 300s in the mid-1990s well before the prison was closed.
Miscellaneous comments:Re: Soc. Sec., not all of the current contributions are going to pay for current retirees. Some are, but some funding came out of previously employed people's contributions over time. Remember also that boomers etc. have been paying in all their working lives for older workers who may not have contributed nearly as much (since SS was instituted in the 30s and began paying out immediately). Research shows that it has greatly decreased the poverty rate of the elderly. So, like HayfieldGrad, I think it is a reasonable and necessary program. Soc. Security was never intended to be the sole source of retiree income. It was to be the third of a 3-legged stool, with the other 2 legs comprising employer pension plans and individual savings. However, over the past 25 years, employers have dramatically shifted the risks and costs onto employees; for example, defined benefit plans are far less common than they once were. The effect has been (partially) what Donovan seems to want - but people are not saving enough to make up the difference.Housebuyer, thanks for the sympathy (?) and I agree that a down market is a good time for a "move up" buyer to act. But just to clarify, the main reason I am having trouble is the lack of supply of the type of house I want (and there is plenty of competition for houses with many of the features I'd like). Not that I wouldn't be happy if prices went down more in Arlington, but I don't expect them to decline much more. So I am considering other options too (including entering the HGTV dream home sweepstakes).
http://franklymls.com/DC7251255see the nutty behaviour?It wouldn't sell at 329, they loweredit to 275 and people bid it to 360?I won't be surprised if it doesn'tgo to foreclosure again.
Donovan,You are attributing some of tbw's and housebuyer's comments to me. I never said SSI was healthy or that it would exist for those who are today under 40 years old. However, I do believe we cannot just cut off some of the most vulnerable citizens in our society just because it is not fair that those under 40 may not see benefits.
Donovan,First you say that the tax deductions from owning are like an entitlement that the middle class needs, now you're saying we shouldn't kill off the elderly. The more you mix your rational opinions with your irrational ones, the more I'm inclined to think they're all bad ideas. Kill the elderly.
Va_Investor said...Regarding FX not using "distressed" sales in their comps, I would argue that just about every sale last year was "distressed". Who would sell in that Market unless they had too or were extremely motivated?So you think prices last year were below actual value? Come on.
hb,You are absolutely correct. You only "lose" if you sell and exit the market or if you sell in an area that got creamed and buy in an area that saw a lesser decline.People who sold and then bought another home in 2005 or 2006, saw a wash. People who exited the market in 2005 or 2006 won and those who entered the market during that time period lost.Simply trading up or down was a wash and continues to be (generally speaking). In fact, as I believe you stated, move-up buyers seem to have the advantage right now. Lower to mid range sales are hot and higher end (mid-higher and higher) are not. At least that what it looks like to me. I am not out looking at 600K to over a million homes.tbw,Does FX look at shorts the same as bank-owned? How would they tease these out?
My assessment (in Fairfax/Mantua) went down 3.8%. Homes in the neighborhood are showing 3.5--5% declines in assessment from last year.Tax assessments in FFX Co used to reflect actual sales with a lag of 1--1.5 years. NovaWatcher showed a plot for that here a couple of years ago.By the way, shouldn't tax assessments in fact be about 6% less than the market price, given that a seller has to give commissions to both agents? The 'realized' value of the property should be the one that is taxed?
RE: Fairfax County Assessment Not all assessments went down for all properties in Fairfax County. Newer, bigger homes saw assessment increases. In one street in the Town of Vienna (zip 22180) that I checked, older homes (from 1940s-60s) went down in assessment (percentage varies, one by 7%), however new bigger homes (2002-2009) went up by as much as $100k or more to average $1 mllion in assessment value.So does this mean expensive new homes are going up in price, while older homes are losing value?I would not be surprised the same happened in other areas particularly where you have a mix of old and newer, in-fill properties.
Konstantin: Paid list of close to $400K and $6K toward closing costs. I think it is an okay deal, particularly since the DARPA building going up across the street should be ready by mid-2012 when I leave and I should be able to get a good tenant.
Ace- You can't enter the HGTV dream home that is my plan :-pDC2 a bunch of houses in falls church also went up. I was thinking about getting a town house that was assessed at 550K 2 years ago 400K last year and is now 450K. I was willing to buy it for ~460K, but it ended up going for 500K after 3 months on the market ohh well...
"By the way, shouldn't tax assessments in fact be about 6% less than the market price, given that a seller has to give commissions to both agents? The 'realized' value of the property should be the one that is taxed?"No, because they are taxing the value of the home. Many people live in their homes for many years or even decades without selling so the realtor commission is more or less meaningless for them. Besides, the realtor commission is hardly mandatory and could be less than 6% or even zero depending on the seller.
tbw,Thanks for digging up the text.That's what I thought was really meant by "Foreclosure sales".That's just the ones bought back by the bank or another bidder at auction. REO sales that go through the MLS and short sales that go through the MLS are both most definitely counted. I think you'll agree these generally transact at a discount to seller-owned non-distressed sales. These tight definition of excluded sales jibes well with the assessments in my neighborhood, there's no way we'd all be assessed this low if only normal transactions were counted all along.So the assessed values are going to be some wierd amalgam part-way betweeen what you'd pay for an REO and what you'd pay for a normal sale, but not what anyone actually ever pays. (unless there are neighborhoods with no normal sales or no REOs).
Leroy,"because they are taxing the value of the home."The problem is what exactly is the 'value of the home' ? Where brokers are not used, the sale price would reflect the absence of commissions. I bought with neither side using a broker. That is why I am bringing it up. But most transactions happen via MLS and involve commissions.In finding comparables or in calculating assessments, whether commissions were paid ought to be a factor.
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