real estate

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

Question: Is it just me or have there been a lot more $2 million-plus homes for sale this year than in the past?

Answer: The $2 million mark used to represent a significant resistance point for homes in Arlington, reserved only for the best of the best and the most difficult to sell, but we’ve seen a surge of $2 million-plus homes for sale in Arlington this year and demand to absorb it.

One of the more interesting differences between Arlington’s real estate market and other expensive markets is that while a huge percentage of our homes sell for over $1 million, we have very few homes that sell over $3 million. For some context, there have been 82 single-family homes listed for sale in the $2 million to $3 million range in Arlington in 2020, but just 19 listed for sale/sold since 2010 for over $3 million (and four of them are currently for sale).

Below is a chart showing the number of single-family homes sold that were listed for $2 million to $3 million since 2010. Note that 2020 also includes homes currently for sale or under contract that are listed for $2 million to $3 million (and we still have five weeks left in the year for more homes to be listed).

Here are some interesting details about the $2 million to $3 million single-family home price point:

• The average sold price to original asking price from 2015-2019 was nearly identical, ranging from 94.1-94.7 percent, but this year that average shot up to 96.5 percent. Also, from 2015-2019, the average days on market was 93 days, but in 2020 it dropped to 58 days. Both of these changes indicate a much stronger appetite from buyers for $2 million-plus homes.
• Since 2010, 92.3 percent of homes were/are located in the 22201 (20.1 percent) and 22207 (70.2 percent) zip codes.
• I was surprised that only about half of the sales are new construction. I would have expected new construction to make up a much higher percentage of these high-price sales.
• Prior to 2019, a $2 million-plus home usually meant at least one-third of an acre, but in 2020 it brings an average of just a quarter of an acre.
• Bedroom/bathroom count has remained pretty consistent over the years, with an average of five to six bedrooms, five full bathrooms and one half bathrooms.
• If you’d like to click through the $2 million $3 million single-family homes since 2010, here’s a link.

If you’re as curious as I was about what the chart for $1 million to $1.999 million single-family homes looks like, it’s quite different. Enjoy!

If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at [email protected].

If you’d like a question answered in my weekly column or to set-up an in-person meeting to discuss local Real Estate, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at 703-539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. 703-390-9460.

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

Question: What are the key tax changes Joe Biden is proposing that will impact real estate?

Answer: Joe Biden’s proposed tax plan is full of interesting details, so I reached out to the tax experts at Bormel, Grice & Huyett, P.A. for their input on the details that would have the most direct impact on real estate. Below, Matt Bormel (301-953-3259), shares the two biggest changes that President-elect Joe Biden will likely champion as part of his overhaul of the current tax code.

Take it away Matt!

President-elect Joe Biden has proposed a number of policies that would affect taxes on individuals with income above $400,000, including raising individual income, capital gains and payroll taxes. Biden would enact tax changes on corporations by raising the corporate income tax rate and imposing a corporate minimum tax.

Biden’s plan includes all sorts of changes and updates to the payroll tax, individual income tax, estate and gift tax changes, but two particular changes stand out for the real estate industry.

Elimination of 1031 Exchanges

The President-elect has detailed many updates and additions, but one of the tax provisions he wants to eliminate would have a major impact on real estate.

Biden’s proposed tax plan would eliminate the ability to defer capital gains on the sale of real property in a like-kind exchange. A like-kind exchange — sometimes referred to as a “1031” exchange — allows real estate investors to swap one real estate investment property for another and reduce or eliminate the capital gains tax on the sold property. It’s very popular among investors and developers.

The IRS has recently issued new regulations that specifically outline what constitutes real estate property in order to determine eligibility for Section 1031 like-kind exchanges. However, those provisions would be moot if your ability to make a Section 1031 exchange is eliminated or you’re unable to get your exchange done before that elimination takes place.

With that being said, it would be prudent to consider taking advantage of Section 1031 exchange breaks before a Biden tax plan could potentially eliminate it.

First-Time Home Buyer Assistance

According to Joe Biden’s campaign website, Biden has also pledged to “provide financial assistance to help hard-working Americans buy or rent quality housing.”

Part of a Joe Biden tax change would re-establish the First-Time Homebuyers’ Tax Credit, which was originally created during the Great Recession to help the housing market. Biden’s updated homebuyers’ credit, referred to as “First Down Payment Tax Credit,” would provide up to $15,000 for first-time homebuyers.

Building off of a temporary tax credit expanded as part of the Recovery Act, this tax credit will be permanent and advanceable, meaning homebuyers receive the tax credit when they make the purchase instead of waiting to receive the assistance when they file taxes the following year.

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