Adam's Home News

Sign Up Today!   

What a great way to stay on top of current real estate news in our area as well as enjoy fun and informative articles for everyone.

Don't take our word for it.  Take a sneak peek at some of our front page articles in our past newsletters.

December 2007 

October 2007

September 2007

August 2007

July 2007

May 2007

Virginia Home Prices Outperform Nation for September!

Median home prices in Virginia rose 8.29% in September over the same month last year.  Median home prices nationally declined 4.2 percent for the same month.  The median price of a Virginia home purchased in 1999 would realize an 83% return if sold in today’s market.  And, a Virginia home purchased in 2002 at the median price has appreciated 58% in the past five years.  

How Much Have Real Estate Investors Lost Due to the Housing Market Bust?

Let’s look at a couple of examples.  An investor who bought a property in Las Vegas five years ago would be ahead by $150,000; up $200,000 in Miami.  The average investor nationwide – up $54,000.  Only the recent buyers (flippers) who bought last year in few specific markets would have encountered a loss.  

Consumers and homeowners who are in it for the long-term are once again showing to come out well ahead.  Because of the power of leveraging, $10,000 used for a down payment on a typically price home in the U.S. at a typical home price appreciation of 5% will return $110,000 after 10 years.  The same $10,000 invested in the stock market appreciating at 10% annual increases will result in $23,600.   No wonder the data from the Federal Reserve show consistent results year-after-year of the staggering difference in net worth between homeowners and renters.  A typical homeowner had $184,400 in net worth versus only $4,000 for a typical renter.  

As for stocks, they are not the enemy of real estate.  Many Realtors own stocks.  The latest NAR research on vacation-home buyers reveals that many of them rely on stock market wealth to fund that second-home purchase.  Stocks and real estate both promote the importance of private ownership.  

Of course, with housing figures down, all eyes are looking to the stock market.  Indeed, the stock market is at an all-time high.  That’s terrific in and of itself and reflects confidence in the U.S. economic outlook.  Just be careful about taking specific advice from any hyper-emotional TV personality.  

(Information Provided by NVAR) 

11th Annual Economic Summit – Northern Virginia
October 2007

Every year, George Mason University and the Northern Virginia Association of Realtors (NVAR) host an Economic Summit to educate the community on what the housing market has been doing, why and what we are likely to see in the coming year.  I am providing a summary of the more interesting points that were made during the summit.

Local & National Market
Housing affordability is measured by three factors: 1) home prices 2) mortgage rates 3) family income.  We have not caught up with the spike in home prices that took place in 2003-2005 but rising family incomes and historically low mortgage rates is helping narrow the gap.  The ratio of Median Housing Value to Median Household Income in 2006:

Los Angeles = 10.89
New York = 7.73
Boston = 6.31
Washington = 5.75

The strong job market is key to the Northern Virginia area’s economic health and ability to have bounced back so quickly from adversity in the housing market.  We added 52,000 jobs to the Washington area in the last year (July 06 to July 07).  Of the 15 largest job markets, Northern Virginia has the lowest unemployment rate at 2.3% compared to 4.9% in the U.S.

New construction has slowed down dramatically, which is exactly what we want to happen so that demand can catch up with supply. Building permits in the Washington area have dropped 37% in the last 12 months. New home sales for condominiums are returning faster than townhouses or single-family houses in Northern Virginia.  The average number of sales for the area is 900 units and we are at 860 for 2007. 

The average sales price of homes in Northern Virginia is up a modest .8% from 537,700 to 542,100 for the year.  These numbers have been trending upwards through the summer.  It is taking longer for homes farther away from DC to bounce back from the slow down.  If you include counties on the outskirts of Northern Virginia, prices fell 2.9% on average in 2007.

U.S. Economic growth has been around 2.5% for the second half of 2007.  Anything less than 3% indicates that the economy is not growing fast enough to keep up with the labor market and this can lead to recession.  This is one of the major reasons for the Fed’s recent rate cut and why another cut may be considered in October.  The result in the mortgage industry is slightly less expensive adjustable rate loans and lines of credit.  The Fed does not have as much influence on the long term – 30 year fixed rate loans. 

Subprime defaults are 10 times those of prime loans and equal previous highs in 2003.  Prime, VA and FHA loans have not seen much increase in defaults.  Even jumbo loans are at historically average rates of default.  This needs to be recognized by the investment community to bring back confidence levels. Legislature is currently being worked on to enhance FHA loans and possibly increase the rate above $417,000 for conforming loans.  This could add quick and dramatic relief to buyers and current homeowners. 

The D.C. area has the second fewest mortgage foreclosures next to Minneapolis.  In the first half of 2007 we had 75 foreclosures for every 10,000 mortgages.  The speaker joked that homeowners in Northern Virginia are more responsible. 

Rents are getting higher and the home dynamic is seeing something uncharacteristic.  More people are moving back with parents or sharing homes with more roommates.  They predict that this cannot last much longer.  It is a result of would-be buyers and renter sitting on the fence.  In other words, there is pent up demand for homes that is predicted to start being released in 2008. 

Local Transportation
Northern Virginians contributes over 40% of the revenue in Virginia, but receives little too no attention to the growing transportation problem.  The recent solution is to stop waiting for funding from the State government and to generate revenue on a regional and county level through means such as the increase in the Grantor’s tax.  They plan to generate about $300 million per year.  About $50 million is earmarked for the metro rail development, $35 million for VRE and most of the remaining dollars going back to the localities where collected. 

Arlington is the model for success.  Within the 26 square miles of Arlington there are 11 metro rail stations.  Within the 400 square miles of Fairfax County there are only 5 metro rail stations. 

With such companies as VW/Audi moving their headquarters to N. Virginia the largest attractors are high quality schools, international airport and a pro-business climate.  The largest deterrents are high home prices and traffic.

Gerry admits that the traffic problem will never be solved completely.  The things they are doing to relieve some of the congestion: addition of “hot lanes” on 495, creating more pedestrian friendly communities and the additions/improvements to metro rail. 

The tunnel through Tysons Corner appears to be a dead issue at this point.  Though the federal government is contributing less than 20% of the funds for the metro line out to Dulles, they are calling most of the shots.  The budget cap the federal government has imposed makes it impossible to go underground through Tysons.  He did make two good points in regards to this issue.  1) With the original development of metro, the national government contributed over 80% of the funding.  2) The total cost of the tunnel would be less than the cost of 4 days in Iraq. 

Speakers:
Dr. Frank Nothaft – Chief Economist, Freddie Mac
Dr. Stephen Fuller – Director, Center for Regional Analysis, School of Public Policy, George Mason University
Dr. Lawrence Yun – Senior Forecast Economist, National Association of Realtors
Gerry Connolly – Chairman, Fairfax County Board of Supervisors; Chair, Legislative Committee; Vice Chair, Economic Advisory Committee.

Upgrade and Save with Tax Credits
September 2007

Under the Energy Policy Act of 2005 (EPACT), homeowners who make energy-related improvements in 2006 and 2007 may qualify for tax credits.  Products covered include:

Exterior windows and skylights

Exterior doors

Certain roofing materials

Storm windows

Storm doors

Certain water heating equipment

Insulation

Main air circulating fans

Central air conditioners

Gas, oil or propane furnaces and hot water boilers

Air-source and geothermal heat pumps

In order to qualify, products must meet standards set by the IRS for each product type.  Most credits are based on a percentage of product cost excluding installation, whereas for heating system components flat credits apply.  Only improvements to a primary residence qualify, and they must be made between January 1, 2006 and December 31, 2007.  Homeowner tax credits for the tax years 2006 and 2007 combined are capped at $500.

Homeowners can harness the sun’s energy for even larger tax credits.  Credits of up to 30 percent, capped at $2000, are available for qualified photovoltaic systems, fuel cells and solar water heating systems.  For the latter, only solar components and not the entire water heating system can be claimed.  The solar-heated water must be used within the residence, so don’t plan on the IRS’ help in heating your hot tubs and swimming pools.  Qualified systems must be placed in service between January 1, 2006 and December 31, 2008.

As always, consult a tax professional regarding IRS regulations.  For general summary, go to www.energystar.gov or www.energy.gov/taxbreaks.htm

I recently encountered my first demand water heater in a new construction condominium called the Westlee in Arlington.  After hearing so many great things about these powerful replacements to the giant water heater tanks, I was excited to say the least. 

Demand (also commonly referred to as tankless or instantaneous) are common in Japan and Europe.  They have been available in the U.S. for about 25 years but are just recently rising in popularity.  Water heating accounts for 20% or more of an average household's annual energy expenditures. Traditional storage tank-type water heaters raise and maintain the water temperature to the temperature setting on the tank (usually between 120-140 degrees). The heater does this even if no hot water is drawn from the tank. With demand heaters the water is heated instantaneously on demand.  It takes more time for the water to get to the faucet than it does to heat. Demand water heaters don't produce the standby energy losses associated with storage water heaters, which can result in significant energy and dollar savings

Tankless water heaters also save money over time due to life expectancy. The average 40 gallon storage tank will last 13 years, has an initial cost of $380, and uses $179 in fuel per year. An average whole house tankless water heater will last 20 years, have an initial cost of $800, and will use $90 per year to operate. This breaks down to a per year operating cost of $208.23 for the conventional heater; and $130 for the modern on-demand tankless water heater. When you take those savings over the life of the heater; the cost savings are even more attractive.

Demand heaters also save space. An average conventional heater is about 60" tall, 22" wide, and 22" deep. The average tankless water heater is about 25" tall, 14" wide, and 10" deep. Tankless water heaters are generally wall-mounted, which can save even more space.

In terms of comfort, demand water heaters deliver virtually unlimited hot water.  If you are thinking about replacing your current water heater and would like to consider a demand tankless heater, I would be happy to help you find a local dealer.

The Facts:
Northern Virginia will see an infusion of transportation funding, but some of those revenues may come from a grantor’s tax increase.  The highly touted centerpiece of the 2007 session was the transportation compromise, House Bill 3202.  The bill allows a Northern Virginia regional authority to raise an array of fees totaling $400 million per year. The fee of interest to the real estate industry is the $.40 per $100 ($4.00 per $1000) increase in the real estate grantor’s tax.  Through the increase the total grantor’s tax would be $5.00 per $1000 of value.  

The Grantor’s Tax increase date has not been determined. 

One Person’s Rant:
This bill permits NVTA (Northern Virginia Transportation Authority) to impose a regional congestion relief fee of .40 per $100 of sales price to the grantor's tax that is paid by sellers at the closing table.  This essentially increases the grantor's tax about 500%.  That's not cool at all! Currently a seller would pay a $500 grantor's tax when selling a $500,000 home.  Well thanks to the Virginia General Assembly that will soon cost Sally Homebuyer $2500.  That's an extra $2000 to shell out when selling a home.  To me that is anti-American.  Politicians should not make it more difficult to own, buy or sell real estate.  The positive socioeconomic result of large percentages of the population owning their own homes make it worthwhile as a policy issue to always encourage home ownership.  Not to penalize it or make them harder to procure.

Another point of view:
The Washington area has been adding 50,000+ jobs year after year.  The strong job market has arguably been the number 1 factor for the real estate market’s quick rebound in many local areas.  Long-term a major concern for local economists is transportation.  We have all experienced the congestion that happens at least twice a day.  Will we continue to be able to attract employees and employers to the Washington area if the gridlock worsens?  How will it affect your quality of life as many of us are forced to commute every day?  If the money from this regional congestion relief fee is used effectively, maybe it’s not so terrible. 

Ongoing:
If this is an issue you would like to be kept informed about, please send me an email and I will be happy to keep you informed about the future of Bill 3202.

The First EcoBroker® servicing Arlington and Fairfax County
May 2007

I am proud to say I am one of the first real estate professionals in Northern Virginia to earn the EcoBroker designation. 

I have broadened the range of real estate opportunities I offer my clients. Whether the transaction involves environmental assessment and mitigation (mold, radon, etc.) or the opportunity to reduce utility bills, I’m in a position to help. The real estate industry is changing, and to best serve my clients I need to understand the newest designs, technologies, and environmental issues. My EcoBroker designation helps me stay ahead of the game.

With national surveys indicating that 80 percent of consumers consider themselves “green-minded”, real estate professionals with the EcoBroker designation are in a better position to serve the real estate consumer.

From windows to moisture control to energy savings, I now have more resources at my disposal to help my buyers and sellers make better real estate decisions. The EcoBroker designation doesn’t make me an energy and environmental expert, but it allows me to better understand the issues and to convey this understanding to my buyers and sellers.