Ask Eli

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Can you provide some end-of-year statistics for the residential real estate market in Arlington?

(Updated at 10:50 p.m.) Arlington continued to be a strong, stable real estate market in 2015 with $1.82B in home sales and 2.1% year-over-year growth on average sale price, highlighted by 10.7% growth in the 22203 zip. However, it took the average seller 9 more days to sell his/her home, an increase of 22.8% over last year.

I’ve charted 2011-2015 stats to provide some context and broken the numbers out by zip code to show localized trends. “Sale price” factors in seller credits/subsidies. “Days on market” is an indicator of market pace (anything under 30 days is extraordinarily fast). “Discount” shows how much less the average homes sells for compared to its original list price (100% means buyer paid full price).

I love working with data so if you have any data-driven questions you’d like to see answered here, let me know and I’ll see what I can do! I recently got a question about median price-per-bedroom in Arlington, which I’m excited to take a shot at in an upcoming article.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 202-518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Why are there no new big condo projects coming? All of the major announcements such as the old Macy’s Furniture plat, the Mazda dealership plat and the bar at Quincy and Fairfax Drive are going to be apartments.

Answer: You’re right. We’ve seen a ton of large apartment projects recently and in future plans. Just around the corner from where I live in Rosslyn, we’ve added about 1,000 new apartment units in the last two years at Slate & Sedona, 1919 Clarendon and 2001 Clarendon, but zero new condos.

Why? Here are some reasons building an apartment complex has been a popular choice — although, I believe that’s changing, hence the growing list of new condo projects — in recent years:

Millennials

According to the Washington Post, over 27 percent of Arlingtonians are age 25-34 and they’re not buying homes just because their parents did, but comfortably renting until they’re sure it’s the right decision for them. I think a lot of this has to do with job-hopping every couple of years and Fannie Mae making it more difficult for those with less savings and shorter credit history to get a mortgage.

However, millennials are having kids and finding more value in settling down with an employer and, according to Jake Ryon with First Home Mortgage, Fannie is “making it much easier to become a homeowner by reducing down payment requirements from 10 percent to 5 percent on loans of $417,000 to $625,500 and to 3 percent for loans under $417,000.” These two shifts are resulting in an increase in the number of new condo projects in Arlington.

I’d love to see new condo projects include family-friendly amenities like indoor/outdoor playgrounds, daycare centers and game rooms like buildings I’ve seen in New York City.

Investment Strategy

I’d also argue that when a developer chooses an apartment project, they have some very savvy people determining that Arlington is a great long-term investment, and they’ll fare better generating long-term income here than quickly flipping their project to homeowners.

Something else to consider is the condo conversion strategy, where a developer may find it more lucrative — and easier, due to looser building codes — to build an apartment now, generate solid income returns while rental rates are at all-time highs and convert to a condo building when the time is right. There are many examples of this, including 38 Place, Arc 3409 and Prospect House in the 80s.

Location

I’d be remiss not to acknowledge the transient nature of our population, relative to most other cities.  With so much of our population being made up of short(er)-term/contract employees and grad students, we have an extraordinarily high demand for rentals.

Where Should They Build?

I think Cherrydale, Columbia Pike, and Rosslyn are primed for new condo construction. What neighborhoods would you like to see new condo construction instead of apartments?

If you’d like a question answered in my weekly column, please send me an email at [email protected]. To quickly read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 202-518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

I received a lot of questions about the interest rate increase by the Fed last week, so I turned to a mortgage expert, Troy Toureau (NMLS ID #5618) of McLean Mortgage Corporation, to guest-author this week’s column. Thanks Troy!

Question: I am planning to purchase a home early next year, yet I saw that the Federal Reserve Board (Fed) just raised interest rates. Will I still be able to get a good rate when I am ready to make an offer?

Answer: Barring unforeseen circumstances, the answer is absolutely yes. There are several reasons rates will remain attractive in the near future:

1. We are still dealing with historical lows

One must remember that the Fed is raising rates from record low levels. As a matter of fact, rates have been below five percent for only the past five years. For the 30 years before that, they averaged over seven percent. According to Freddie Mac’s chief economist Sean Becketti, “mortgage rates will tick higher but remain at historically low levels in 2016.”

2. The Fed rate and mortgage rates are not directly correlated

Even if the Fed continues to raise rates, they are raising short-term rates. Mortgage rates are based on long-term rates. You can see from the chart below that the last time the Fed raised rates significantly, from February 2004 to June 2006, mortgage rates stayed relatively flat.

3. Rates will increase gradually

Here is an excerpt from the statement released after their meeting: “The committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.”

Becketti states, “we take the Fed at its word that monetary tightening in 2016 will be gradual, and we expect only a modest increase in longer-term rates.”

Chief economist for the National Association of Realtors Lawrence Yun agrees. Yun indicated that an uptick in short-term rates shouldn’t have a big effect on those looking to borrow in 2016. With rates going up by such a small amount, the Fed’s move could serve as a stimulant to the economy.

That being said, the Fed’s action to raise rates could be the beginning of the end of the easy monetary policy we have enjoyed for the past several years. So even if rates do not go up significantly next year, it would behoove you to purchase sooner rather than later. Basically, we have had a sale on money going on and sales do not last forever.

If you’d like more information about interest rates or mortgage products, Troy can be reached on his cell at 301-440-4261, by email at [email protected], or via his website www.AnyHomeLoans.com.

If you’d like a question answered in my weekly column, please send me an email at [email protected]. To quickly read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 202-518-8781. McLean Mortgage Corportation | NMLS ID #99665 (www.nmlsconsumeraccess.org). McLean Mortgage Corporation is an Equal Housing Lender.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: My condo building is doing a comprehensive common space redesign [of interior décor and landscaping]. Is there any precedent for an increase in value in units after the project is completed?

Answer: If the project is well-planned (the design makes sense) and budgeted for (doesn’t require a special assessment or fee increase) yes, but it’ll probably take 2-3 or more years.

The price of a condo is heavily influenced by the sale of similar units (comps) within the same building over the past six to twelve months. The first buyers to come along after the renovations are complete will be able to leverage sale prices from the comps to negotiate for a minimal, if any, increase in sale price.

However, a well-planned redesign should mean better curb appeal and more interested buyers, which will lead to faster sales (fewer days on market). As the speed of sales pick up in a building, buyers become more likely to pay full ask and during busy months, bidding wars may take place. At this stage, you’ll see property values increase at a faster pace than surrounding buildings in your local market (all else held constant).

In summary, the ideal redesign lifecycle is:

1. Redesign
2. Increased buyer activity/interest
3. Faster sale cycle and more buyer competition
4. Increased property value.

For readers living in a building that’s considering a redesign, strategy and planning is key. Here are some things to consider:

• What types of buyer will your building attract over the next 5-10 years (Hint: over 27 percent are ages 25-34, according to WAPO) and what do they like?
• Will the expenditure result in an increase in fees? Increased fees put downward pressure on sale price.
• Maintenance cost and durability of new décor (don’t put wood floors in your foyer).
• Encourage your board to take a field trip to newer buildings for ideas.
• Bring in an expert! You’re going to spend a lot. Get a few proposals from interior designers and let somebody help you choose the colors, lighting, and furniture.

If you’d like a question answered in my weekly column, please send me an email at [email protected]. To quickly read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 202-518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: I’m moving in with my fiancé and don’t need my furniture. Should I rent my apartment furnished, partially furnished, or unfurnished?

Answer: I get this question frequently and it’s common for landlords, especially new ones, to struggle with this decision. There isn’t one right answer to that question. Rather, there are a few good options — each with its own pros and cons — that you should choose from based on your financial goals and what type of landlord you want to be. I’ll go through a few, but you can mix and match strategies to fit your profile.

Option #1: Quick rent, flexibility

Offer unfurnished at market rate and furnished for a 10-25 percent premium (depending on quality and amount of furnishings). Be willing to negotiate for partially furnished. The value of furnished versus unfurnished depends on the type of tenant likely to move in. For example, a recent college grad will value avoiding the expense of buying/moving furniture, but a young family likely has everything they need and wants to keep most/all of it.

• Pros: largest pool of renters, best chance to rent quickly, more likely to find a long-term tenant (18+ months)
• Cons: high chance of having to quickly sell unwanted furniture at a deep discount or pay to store it

Option #2: Top dollar, unpredictable

Target the corporate rental market by offering short-term (monthly) rentals at a premium (50-100+ percent) above market for comparable unfurnished, 12+ month rentals in your area).

• Pros: great returns when occupied, low probability of late or non-payment, lower risk of excessive wear and tear during occupancy
• Cons: high turnover, unpredictable cash flow, high cost of renting (prepping for new tenant to include cleaning service and possibly handyman), smaller pool of potential renters

Option #3: Daily rental, active management

The extreme version of Option #2. Use a site like AirBnB or VBRO to capture the massive tourism and business traveler market by turning your apartment into a daily rental. I’ll leave income fluctuation/predictability out of the list because ratings, pricing, marketing, and experience will likely start as a negative and develop into a positive over time. If you aren’t living in the immediate area, this becomes a less appealing option.

• Pros: potential for huge return, opportunity to meet interesting people and be a local tour guide
• Cons: requires constant attention/management, high cost of operation, increased wear and tear, political scrutiny (not you, but the industry)

A few notes to help with your decision:

• “Fully furnished” = everything from couches to silverware to a TV.
• DO NOT furnish with anything you want to keep (e.g. family heirlooms).
• Property managers handle things like rent collection, service/handy calls, and the eviction process if necessary. On average, they charge about one month’s rent annually for their services.
• If you choose to list through a realtor, expect to pay anywhere from 75-100 percent of one month’s rent, but make sure you’re getting things like a full MLS/MRIS listing with professional photos.

This is a particularly good opportunity to tune in to the comments and hear from the Arlington community on their positive and negative experiences using various furnished rental strategies. Please share!

If you’d like a question answered in my weekly column, please send me an email at [email protected]. To quickly read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 202-518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Is the winter a good time to buy a home?

Answer: Every agent, homeowner, and homebuyer seems to have a different opinion on real estate during the coldest months of the year. I’d encourage you to read the comments for a range of theories. We’ve all heard that the winter is a bad time to sell a home (not necessarily the case and something I’m happy to address this in another column), so shouldn’t that make it the best time to buy a home? Well, it depends on what type of buyer you are and your motivating factors.

YES, if:

• You’re a deal-hunter primarily concerned with value and the bottom line
• You’ve already spent a long time seeing homes and defining your criteria, so you’ll know it’s the right home as soon as you see it

PROBABLY NOT, if:

• You’re picky and have a very specific and unique set of criteria that would benefit from a higher housing inventory
• Finding the “perfect” home is more important to you than the bottom line

Check out the trends in Arlington over the past five years:

Chart #1 shows a significant drop in housing supply (average active listings) from late November to mid/late March (Thanksgiving through NCAA Basketball March Madness are two good markers).

Chart #2 shows that from November to March, buyers usually receive a greater discount from the original list price by a couple more percentage points than the median discounts from April to October. The percentage along the y-axis is the percent of the sales price to the original list price (100% means the buyer paid full price). Note that these numbers do not factor in any seller credits.

This doesn’t mean you can’t find the perfect home in January or can’t get a great deal in June, but if you want to play it by the numbers, the data for Arlington over the past five years is pretty consistent.

P.S. Please email me your questions, I’m running low!

If you’d like a question answered in my weekly column, please send me an email at [email protected]. To quickly read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 202-518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: What are the five things Arlingtonians can be most thankful for?

Answer: Okay, I cheated. Nobody actually asked the question, but it’s the time of year to step away from our insanely busy lives (statistically, we’re THE BUSIEST), take inventory of all we’re thankful for, and appreciate our family, friends, and selves. I thought it’d be fun to come up with my own top five list of things Arlingtonians can be thankful for, and I would love to hear your top five. I’m dishing non-existent awards for 1) most creative, 2) most sarcastic, and 3) most comments generated.

#5: Walkability

Arlington is a model for urban planning with walkable communities all over, including Shirlington, Crystal City, Columbia Pike, Rosslyn-Ballston, Cherrydale, and North Arlington.

#4: (Reagan) National Airport

If you live in Arlington, you’re within a 15-minute drive and most are within 5-10 minutes. I’ve gone door-to-gate in under 25 minutes and give thanks every time they add a new Southwest route!

#3: Diverse (and Delicious) Food

With so many people from so many parts of the world, there are few cuisines you can’t find within a short drive. Our world-famous El Chilango taco truck ranks #58 in Yelp’s Top 100 Places to Eat in the entire country! If you haven’t fully enjoyed Arlington’s culinary diversity, spend some time over the holidays at Thai Square (Thai), Pho 75 (Vietnamese), Mele Bistro (Italian/Mediterranean), Bob & Edith’s (Diner), Rays the Steaks (Steak), and the brand new Secret Chopsticks (Chinese tasting menu) and let me know what you think.

#2: Access

The nation’s capital in a few minutes, vineyards and the Bay in under an hour, the Appalachian Mountains in 90 minutes, and numerous beaches in under 3 hours. Fun evenings, relaxing getaways, and great vacations are at our doorstep.

#1: Strong Housing Market (c’mon, it’s a Real Estate column, I had to)

Relative to most of the country, we fared well during the recession, bounced back quickly, and have seen strong growth since due to our reliable, well-paying employers anchored by the Pentagon and large public consultancies.

What are your top 5 things to be thankful for this year in Arlington?

If you’d like a question answered in my weekly column, please send me an email at [email protected]. To quickly read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 202-518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Is it possible for me to get a refund on my property taxes if my home sold for under tax assessment? If so, what are the steps? Has anyone successfully been able to accomplish this?

Answer: Earlier this year, Adam addressed a question on property assessments, but your first question is a good one and differs from what’s already been discussed. I’ll answer the last two questions first so I can explain the first a bit easier.

Your tax payment is based on (.996 percent of) your home’s annually assessed value by an appraiser/assessor in Arlington’s Department of Real Estate Assessment. Every year, you have an opportunity to appeal the valuation and yes, it has been successfully accomplished, but the burden of proof is on the homeowner, not the County.

Arlington offers two informative web pages on how they determine property value and the appeal process.

Quick hits on the appeal process:

• Expect to receive your 2015 assessed value in January 2016 (usually closer to the end of the month)
• Your first appeal with the Department of Real Estate Assessments must be filed by March 2, 2016
• Step 1: Call 703-228-3920 for information on how your assessment was determined
• Step 2: File your appeal online (First Level)
• Step 3: An assessor will visit your home and you can provide relevant info to make your case
• Step 4: If you’re not satisfied with the decision or have not received written notice by April 1, file your second appeal with the Board of Equalization online (Second Level) by April 15
• Step 5: If you’re not satisfied with the decision, your final option for appeal is with the Circuit Court, which will likely require you to hire an attorney (better be worth it!)

Now to your first question, which I’ll separate into two parts:

1)   Can I get a refund?

A scenario in which you receive an actual refund is fairly unlikely because, unless you go to the 3rd level of appeals (Circuit Court), you should have a decision from Arlington before your first tax payment is due, which is June 15. In the event that your assessed value is reduced after you make your tax payment(s), the County will either hold the excess payment and apply it towards your next payment or issue a refund.

If I had to guess, the question was probably about getting a retroactive refund on previous tax years (home sold in 2015 for $50,000 less than assessed value, can I get a refund on that over-valuation for the last few years?). Unfortunately not. The appeal process is only for the current tax year and cannot be applied retroactively. Thanks Joe Aiken, CPA, Aiken & Co for confirming this!

2)   If my home sells for less than the assessed value, is that enough to justify a reduction in my assessed value?

Sales price alone is not enough to justify a reduction. Instead, your home’s sales price would be one of many factors an assessor will use to determine if your assessment is accurate. In fact, most homes in Arlington sell for significantly more than the assessed value, so overall, we should be glad the County doesn’t adjust the tax value based on a single sale.

Your Realtor is a great (commission free) resource for anybody appealing an assessment. We have full access to micro (past and pending sales) and macro (trends) neighborhood market data that can help you determine if your property is over-assessed and then easily communicate that to an assessor. One other helpful tip when making your case is to understand that the assessor uses data from Sept. 1 to Aug. 31. For example, your 2015 assessment is based on market data from Sept. 1, 2014 to Aug. 31, 2015 for taxes paid in 2016.

Facts & Figures

I pulled figures for the last 12 months of home sales in Arlington and found the following:

• On average, homes sold for $88,502 more than its most recent assessed value
• The median home sold for $45,900 more than its most recent assessed value
• Only two homes sold for exactly the same amount as the assessed value
• The greatest positive difference in sales price to assessed value was $1,684,667
• The greatest negative difference in sales price to assessed value was $693,200

If you’d like a question answered in my weekly column, please send me an email at [email protected]. To quickly read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 202-518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Hello neighbors! I’m excited for the opportunity to interact with my community and look forward to providing honest, informative answers to your real estate questions. Before I dive into my first Q&A, a bit about me – Rosslyn resident, husband, proud puppy owner, Maryland Terp, O’s/Ravens fan.

Some of my Arlington favorites:

• Restaurant: Mele Bistro
• View: Sunrise over D.C. from the Netherlands Carillon
• Dog Park: Towers Park
• Tennis Courts: Bluemont Park
• Place to take out-of-towners: Gravelly Point

Will Wiard left me with some great questions that I plan to answer over the coming weeks, but I went with one that I think is extra spicy and you all will enjoy.

Question: I made an offer on a competitive property for sale and really wanted it so we submitted the offer with an Escalation Addendum. Post-submission, we received an email from the Listing Agent saying, “you won” with the full escalation amount updated on the Sales Contract. After we signed and ratified the contract, we requested the competing offer(s) used to justify the price escalation and were told by the Listing Agent that they did not use the Escalation Addendum and it was just a counter offer. Is this allowed?

Answer: Great question! There are a lot of factors at play and I’ll do my best to address the key points without turning this into a book. Feel free to contact me with any follow-up questions or if I can help clarify something. Before I dive into the response, I’ll explain some basic terms.

What is a Sales Contract? A Sales Contract is the main contract between a Buyer and Seller that lays out the majority of the terms influencing a home sale. It includes the sales price, when the property will be sold, and which items convey/transfer with the sale (washer/dryer, hot tub, curtains, etc).

What is an Escalation Addendum (EA)? EAs should be used with great care and full understanding. It is an “advanced” strategy used by Buyer Agents to increase the chance of their offer being accepted on a competitive listing. When used correctly, it allows a Buyer to be aggressive up to their maximum offer price and protect them from over-paying relative to the other offers.

It is included with a Sales Contract and provides terms to the Seller that allow the offer price to be increased up to a maximum amount in specific dollar increments in the case of a competing offer. For example, a potential Buyer may submit an offer for $500,000 with an EA allowing an escalation to $550,000 in increments of $1,000. If the Seller receives another offer with comparable terms for $520,000, the Seller may use the EA to automatically increase the original offer from $500,000 to $521,000. If the competing offer is for $549,500, the original offer may be increased to $550,000.

(more…)