Arlington Condo Blog

Wondering where the next hot spot will be in the DC metro area? Here is a great article from the Washington Business Journal examining what contributes to making an area a hot spot. Read it here.

The article cites Ballston & Clarendon as two wildly successful areas in recent years. Does anyone remember what Clarendon was like 5 years ago?

One area that can see substantial growth in the coming years is the Columbia Pike corridor as a model for tomorrow’s non-Metro neighborhoods. Although there is no metro, there are plans for a light rail system to run from the county line to the Pentagon.

Gas prices have finally reached a point where they are changing the way (and where) we live and drive. Metro ridership is at it highest level, people are biking to work and I’m seeing more Vespa scooters in my neighborhood.

My question to you is how have the high gas prices changed your decision on where to buy? Is being closer to a metro worth the extra money? How about a walkable neighborhood?

Let me hear from you.

Good news for first time buyers purchasing between April 9, 2008 through June 30, 2009, you might qualify for a $7,500 tax credit. The single largest provision in the $15.1 billion package of housing tax incentives in the recently enacted Housing Assistance Tax Act of 2008 (the “Housing Act”) is a measure allowing individuals buying their first home to take a tax credit of up to $7,500 of the purchase price. Qualified homebuyers can subtract the credit amount from their federal income tax when they buy a home and even get a refund if the credit exceeds the tax. However, they are then required to pay the credit back over 15 years, interest free. Here are the details of the new credit:

• The home must be located in the U.S. and must be the taxpayer’s principal residence (main home). The taxpayer (and the taxpayer’s spouse if married) must not have owned another principal residence in the U.S. in the three-year period before purchasing the new home. Thus, the home doesn’t literally have to be the taxpayer’s first home.
• The home must have been purchased from April 9, 2008 through June 30, 2009, inclusive. Purchases from certain related persons and acquisitions by gift or inheritance don’t qualify. A home constructed by the taxpayer does qualify if the taxpayer moves in from April 9, 2008 through June 30, 2009.
• A special rule allows taxpayers who purchase a principal residence in the first six months of 2009 to treat the purchase as if made on Dec. 31, 2008. This allows the taxpayer to claim the credit for 2008 rather than 2009.
• The credit is equal to 10% of the price paid for the home, up to a maximum of $7,500. The $7,500 maximum credit applies both to individuals and married couples filing a joint return. A married individual filing separately can claim a maximum credit of $3,750.
• The credit is phased out for individual taxpayers with modified adjusted gross income (AGI) between $75,000 and $95,000 ($150,000 and $170,000 for joint filers) for the year of purchase. Taxpayers with modified AGI over $95,000 ($170,000 for joint filers) can’t claim the credit.
• The credit is refundable, meaning that households with incomes too low to owe income tax can benefit from it.
• In the second year after purchase, taxpayers who took the credit must start paying back the credit in equal installments over 15 years, with no interest charge. This works as follows. Suppose a first-time homebuyer purchases a home for $100,000 this coming December and claims the maximum credit of $7,500 on his 2008 tax return. He would then be required to pay back $500 (one-fifteenth of the credit) on his tax return for 2010 and for each of the following 14 years, through 2024.
• If the taxpayer sells the home (or the home ceases to be the principal residence of the taxpayer or the taxpayer’s spouse) before complete repayment of the credit, any remaining credit is due on the tax return for the year in which the home is sold (or ceases to be the principal residence). If the home was sold at a loss to an unrelated person, repayment of the remaining credit is forgiven to the extent of the loss.
• No credit is allowed if: the taxpayer was ever entitled to a D.C. homebuyer credit; the home purchase was financed through tax-exempt mortgage revenue bonds; the taxpayer is a nonresident alien; or the taxpayer disposes of the residence (or it ceases to be a principal residence) in the year of purchase.

 

Have you ever been to Rosslyn near Fort Myer Drive and Route 50 and wondered what those large spheres are in the little park? Well, that is Dark Star Park and the ’sculptures’ were created by artist Nancy Holt.

Once a year on August 1 at 9:32 am, the shadows cast by two of the spheres and their four adjacent poles align with permanent asphalt shadow patterns outlined on the ground. This date was selected by the artist to commemorate the day in 1860 when William Ross bought the land that today is Rosslyn, Virginia, where the park is situated.

I searched on Wikipedia to get some more background on the project:

The work explores the concept of time and our relationship to the universe. When approaching one of the spheres, a visitor to the park might be reminded of the lunar surface or when glancing at the quiet pools of water around the spheres, may relate them to craters. This is no coincidence. Holt has a fascination with solar eclipses as well as in the shadows cast by the sun on the surface of the earth and the name of the park is a reference to the astronomical appearance of the large spheres that are its most distinct features. In speaking about the name Holt has said, “It’s called Dark Star Park because in my imagination these spheres are like stars that have fallen to the ground-they no longer shine-so I think of the park/artwork in a somewhat celestial way.” By engaging the viewer with these spheres and the other elements surrounding them in the park, Holt brings the vast scale of nature and the cosmos back to human scale. Time is also a major part of this work.

On July 1, residential real estate property taxes increased for most of Northern Virginia for the 2009 tax year. Below is a table showing the new tax rates and current tax rates for DC and parts of Maryland. The rates are per $100 of assessed value. To calculate the tax owed on a property, take the assessed value divided by $100 and then multiply by the tax rate. For example, a condo in Arlington assessed at $400,000 would have a tax bill of $400,000/$100 times $0.848 = $4,716.

Virginia
Arlington County	$0.848
City of Alexandria	$0.845
City of Fairfax	$0.92
Fairfax County	$0.92
City of Falls Church	$1.03
Town of Herndon	$1.16
Loundon County	$1.14
City of Manassas	$1.115
Manassas Park	$1.27
Prince William County	$0.97
Town of Vienna	$1.1291
Washington, DC	$0.85*
Maryland
Anne Arundel County	$0.88
Calvert County	$1.110
Charles County	$1.028
Howard County	$1.014
Montgomery County	$0.661
Prince Georges County**	$0.960

 

* In Washington, DC, the first $64,000 for owner occupied residential properties is tax exempt.

**Tax rates vary in Prince Georges County on a city or town level.

The Arlington County Board approved a plan to develop the Metro Bus Garage in Ballston with a mixed use development named Founders Square. The project will be built on 5.35 acres currently occupied by the WMATA Metro Bus Yard, a Shell gas station, Super Pollo  restaurant and  a recycling drop off center near Ballston Mall. The land is bounded by North Randolph St, North Quincy St, Wilson Blvd and North 5th Rd.

The developer is the Shooshan Companies, which also developed the nearby Liberty Center complex. Construction is scheduled to begin in early 2009.

The five-building development will include two office buildings with 660,290 sq. ft. of office space and 26,900 sq. ft. of ground-floor retail; two residential towers housing 362 dwelling units, and a single-story restaurant.

Talk of recession, rising foreclosures, Fannie & Freddie problems, rising gas prices - there is plenty of negative news in the press, yet Arlington remains a desirable place to live and people continue to buy and sell condos. I’ve talked with a number of agents who have been very busy lately despite July/August being a slow time. Some are calling it a ‘late Spring’. Whether it is just a blip or a sign of bottoming out, only time will tell.

Many buyers are still waiting for a ‘flood of condos’ to come on the market. If you are one of those buyers, sorry to tell you, but you are in the wrong area. The condo inventory (as measured by the number of months it would take to sell all the units on the market at the current pace) actually went down. A five month supply of units would be defined by some economists as a seller’s market. We are not close to a seller’s market, but relative to other markets the inventory level is low. Other markets around the country have a much different picture. Parts of southern California, Las Vegas, south Florida and Detroit, will have inventory levels ranging from 36 to 60 months! It’s all a matter of perspective.

 

  

 

 

 

 

 

 

 

 

 

The median and average condo/co-op price barely moved over the past month. The median price was up slightly and the average price down slightly. Average sale prices are widely quoted, but I also like to look at the median sale price. In Arlington, there is such a wide spread of condo prices that a $2 million sale can skew the average, but not the median.

 

 

 

 

 

 

 

 

 

 

 

The Spring market is usually the busiest time of year in real estate so it is no surprise the number of days on market for a listing to sell decreased this past month. Contracts written in April or May, most likely went to closing in June.  

 

 

 

 

 

 

 

 

 

 

The last two graphs show the difference between the original list price when a seller first puts a condo on the market and the net closing price, calculated by taking the closing price and subtracting any seller price concessions that are commonplace these days. Sellers are still getting less than their asking price and the percentage gap between the two is not getting any smaller (see bottom graph). When the gap begins to narrow, that will be a clearer sign of market stability.

 

 

 

 

 

 

 

 

 

 

 

This graph shows the same information as the previous one but in a different format to make the differences more apparent. The graph shows on average that condos are selling at roughly at 6% reduction from the original listing price. Remember that is only an average. Quality units well priced from the start will sell close to asking price and overpriced condos in poor condition will start high, sit on the market and occasionally go into foreclosure at a low price. 

Want some more insights? Give me a call or email.

Tune in tomorrow morning, June 28 ‘08,  to WJFK 106.7 from 10-11am where I’ll be making a special guest appearance on the contractor.com home show. The weekly radio show is hosted by Eric Steinkraus and Sean Zobaa. I’ll be giving my insight on the condo market, short sales and foreclosures. Don’t miss it! - Rick

According to a recent article in Forbes magazine, DC, Arlington & Alexandria are #10 on the list of top 10 places to buy foreclosed properties. Read the article here or go right to the top ten list.

Why did this area make the list? This area has a high quality of life and a strong local economy. The foreclosure rate is moderate (1.16%) as compared to Detroit (4.9%) and Riverside, CA (3.8%). The median home price in the area actually increased 0.77% from 2006-2007.

Interested in buying a foreclosed condo? Give us a call to get started - 877-460-2544.

Recent indication is that first time home buyers are getting tired of sitting on the sidelines. According to a recent online poll taken by the National Apartment Association, 17 percent of renters plan to make the jump to home ownership in the next year; 41 percent of the 2,041 respondents planned to be home owners within two years. Only 31 percent planned to still be paying rent five years from now.

Another factor that could very soon contribute to an increase in home buying could be rising mortgage costs. Fixed-rate mortgage rates rose to 6.32 percent, the highest it has been since October. After months of aggressively dropping interest rates, many lenders are worried that the Fed will be forced to raise rates back up. As interest rates rise, so do mortgage rates. According to a press release on freddiemac.com, Frank Nothaft, Freddie Mac vice president and chief economist said that, “Mortgage rates jumped this week after a number of Federal Reserve officials, most notably Chairman [Ben] Bernanke and Vice Chair [Donald] Kohn, expressed concern over a threat of inflation.” We may very well be seeing the beginning of the end of the super-low mortgage and potential buyers may realize that with rising rates, now may be the time to jump in. Nothaft added, “Moreover, pending home sales for April unexpectedly rose by 6.3% and mortgage applications for home purchases … were also up last week.”