Is iBuying the Next Trend in Real Estate?

Question: What do you think about the iBuying trend in real estate? Have you seen an impact in Arlington?

Answer: iBuying offers homeowners a way to sell their home quickly without going to market, using a price generated by an Automated Valuation Model (AVM) like Zillow’s Zestimates. The big players are Opendoor, Offerpad, and Zillow but recently some well-known brokerages have joined the party including Redfin and Keller Williams.

At this time, none of the main players are offering iBuying in Arlington or the DC Metro. Currently, the largest iBuying market in the country is Phoenix with about 6% of transactions going through an iBuyer (half of those are with Opendoor).

How It Works

The process of iBuying is similar for each company and looks something like this:

  1. Homeowner submits a request for an offer and provides some basic information about their home (bedrooms, square footage, etc)
  2. iBuyer makes an initial offer on the home based on their AVM pricing algorithm
  3. If the owner likes the price, the iBuyer conducts a property inspection to determine condition and cost of repairs
  4. iBuyer makes a final offer given the property condition
  5. Owner can accept and close usually within 10-14 days

Advantages

  • Sell quickly
  • Sell as-is
  • No showings
  • No repairs or improvements
  • No contingencies that cause contract to void
  • No cost to get an offer

Disadvantages

  • Sale price likely below market value
  • “Service fees” usually range from 7-10% of the sale price, well above most commissions when using an agent
  • Still pay your normal closing costs (taxes, title fees, etc)
  • iBuyers not operating in most metro areas

When Does An iBuyer Make Sense?

There are all sorts of reasons a homeowner may value speed and convenience over price so iBuying exists for that market, but it should remain only a small percentage of the overall real estate transaction market. iBuying won’t always be the best option for somebody looking for speed and convenience, but with no cost and little effort to get an offer, it makes sense to at least see what an iBuyer is willing to pay.

If you’re in a market where iBuying exists (or when it eventually comes to Arlington), why wouldn’t you request an instant offer from an iBuyer and compare it to what your real estate agent thinks you can get on market? I know a broker in Texas who got more for his house from an iBuyer than he could get on the market because the AVM pricing algorithm over-valued his house.

Will iBuying Last?

I’m not sure how iBuyers will survive an economic downturn when they’re sitting on a huge amount of inventory that’s worth less than they paid for it. It’s a great business model in a hot market, but potentially devastating when the market turns.

Another flaw I see in the current model is that homeowners (like the broker in Texas I mentioned earlier) can take advantage of the process. An owner who does their homework, meeting with agents and getting iBuyer offers, will most likely only choose the iBuyer if they’re over-paying. That’s great for owners who can take advantage of it, but I’m not sure how that can be a sustainable business model.

An additional drawback is that iBuyers generally charge a fee of 7-10% of the purchase price, which is mostly attributed to the risks associated with buying based on an algorithm and a basic property inspection. If iBuyers can figure out how to reduce risk enough to cut this fee in half and sustain themselves through downturns, things will get interesting for the real estate industry. There have always been brokers and investors who specialize in “buy now” or instant offer programs, but what makes iBuying unique is the implementation of technology to determine pricing and to make the process more convenient, as well as the scale of operations. I think the longer-term solution is something that blends the convenience and scale of a well-funded tech company with the market knowledge of a local agent.

Are Appraisal Values Keeping Up With Sale Prices?

Question: Given the recent appreciate in real estate values, are you seeing more homes appraise for less than the sale price?

Answer: As we saw in last week’s column, the Arlington real estate market has appreciated rapidly over the last six months which increases the chances that an Appraiser cannot find past sales to support the price the buyer and seller have agreed to, thus increasing the amount of low appraisals in Arlington over the last six months (unfortunately there’s no data to back that up so it’s based on what I’ve seen and heard in the market). Generally, appraisal values lag behind actual market appreciation by a few months.

Banks Often Require Appraisals

If a buyer is getting a mortgage, the bank almost always requires a third-party appraisal to assess the property’s market value. While one can easily make the argument that the price the buyer and seller have agreed to is the market value, banks don’t look at it that way, hence the third-party appraisal.

Appraisals are largely based on comparable home sales over the last six months. It’s a common myth that Appraisers can only use sales from the last six months, but more recent sales are given more weight than sales 6+ months ago. Ultimately, it’s the Appraisers job to determine the market value of a home using the best available information.

Impact of a Low Appraisal

If the appraised value comes in at or above the purchase price, all is good in the eyes of the bank so things continue as planned (note: a higher appraised value has no impact on your assessed value for tax purposes).

If the appraised value is lower than the purchase price, the bank usually requires you to negotiate a reduced sale price to match the appraised value or put more money down to cover the difference between the sale price and appraised value, multiplied by your loan-to-value (LTV) ratio. In some cases, you can also change the type of loan you’re using to satisfy the bank.

The easiest way to calculate LTV is subtract your down payment percentage from 100%. In other words, if you’re putting 20% down, your LTV is 80%. If there’s a $10,000 difference between the sale price and appraised value, you’ll usually be required to bring an extra $8,000 ($10,000*.8) to the table.

All of this can change depending on your loan program and down payment, so it’s important to understand the impact a low appraisal will have on your deal prior to making an offer.

Protection Through An Appraisal Contingency

The Appraisal Contingency is one of the “Big Three” contingencies that are common to sales contracts in Northern Virginia. The Home Inspection and Financing Contingencies are the other two.

The Appraisal Contingency gives buyers an out, with a full return of their Deposit, in the event the appraisal is below the sale price and the seller is unwilling to reduce the sale price or the buyer is unwilling to make up the difference or change loan products.

If you include an Appraisal Contingency in your offer, it’s a good idea to ask your lender how long it will take to order and complete the appraisal so you can structure the contingency period around that timeline. Remember, shorter contingency periods are more attractive to sellers and longer periods generally favor the buyer.

When To Waive The Appraisal Contingency

Sometimes waiving an Appraisal Contingency is the right strategic decision when making an offer. If you’re competing against other offers, especially if they’re cash (no appraisal needed), you should talk with your agent and lender about the risk and reward of giving up this protection. In some cases, sellers will choose an offer with less risk (fewer or no contingencies) instead of the highest offer, especially when the sale price is well above recent comparable sales.

Removing the Appraisal Contingency altogether isn’t your only option either. There are ways to reduce the seller’s risk exposure, thus making your offer more competitive, while also limiting your risk exposure in the event of a really low appraisal.

Disputing a Low Appraisal

If you disagree with the appraised value, ask your lender about the dispute process. First review the appraisal report to understand what sales and details the Appraiser used to determine the value. The best chance you have at getting an appraisal adjustment is to provide the Appraiser with different sales that more accurately represent the subject property’s value, with an explanation.

Managing appraisal risk/contingencies is one of many strategic decisions you’ll make as a buyer or that you’ll have to assess as a seller. Don’t hesitate to reach out to me by email at Eli@EliResidential.com if you have any additional questions!

Mid-Year Arlington Real Estate Update

Question: How did the Arlington real estate market perform in the first half of 2019?

Answer: I am excited to announce the first of many collaborations with Jeannette Chapman, Deputy Director and Senior Research Associate, at the Stephen S. Fuller Institute at George Mason University to bring you deeper, more insightful analysis of the Arlington housing market. The Fuller Institute conducts incredible research and analysis on the Greater Washington regional economy and I’d encourage you to subscribe to their monthly Washington Economy Watch reports. Jeannette is an Arlingtonian and housing data junkie, which means even better market insights for ARLnow/Ask Eli readers!

Inventory Down, Prices Up

Amazon announced they were moving their second headquarters to Arlington in November 2018 and there has been year-over-year double-digit decreases in homes listed for sale in each of the seven months from December through June, topping out with a 29.5% drop in April 2019 compared to April 2018. I think this is due to owners deciding to hold out for more gains once Amazon employees start showing up.

The shortage in housing inventory forced buyers to compete for homes, resulting in 46.1% of homes selling for more than the asking price in the first half of 2019, compared to an average of 26.5% going over ask during the previous five years. 

Less inventory combined with shifts in demand (buyers moving their timelines up and new investors entering the market) led to price increases across Arlington in the first half of 2019, compared to the first half of 2018, by an average of 4.6% and median 8.8%. This does not mean that all homes in Arlington are worth 5-9% more than they were this time last year – some sub-markets are up more while others haven’t experienced the “Amazon-effect” yet.

To get a more accurate picture of what’s happening in our housing market, we separated the data into smaller sub-markets. Townhomes aren’t included because there’s not enough volume to produce good data and we left out the 22202 zip code, which makes up the Crystal City/Pentagon City area (aka most of National Landing), because it’s a very different market than the rest of the County and requires its own analysis in a future column. We chose to remove new construction, age-restricted housing, and Cooperatives. Finally, the time period is based on when a property actually went under contract instead of when it closed.

Interpreting the Data

For the most part, the charts above reflect what I’ve experienced in the Arlington housing market this year so double-digit appreciation from South Arlington single-family detached homes and North Arlington condos makes sense. However, I was very surprised by the South Arlington condo data.

My experience this year tells me that South Arlington condos have appreciated more than most Arlington sub-markets, with examples of units selling for 10-20% more than they would have last year. So why does the data show that 0/1BR condos in South Arlington are only up 2% compared to the first half of 2018? The make-up of the individual sales is different in 2019 and 2019 sales are down nearly 50%, meaning our sample size is too small.

During the first half of 2018, there were more expensive sales and fewer inexpensive sales, as a percentage of total sales, compared to the first half of 2019. Sales in 2019 have also been 32sqft smaller with 7% higher condo fees than the sales in 2018. These differences in the make-up of the data have skewed the median and averages in a way that doesn’t accurately represent what we’re seeing from individual sales.

The lesson? Real estate data is tricky and doesn’t always communicate what’s actually happening in the market (e.g. this June column about 17.3% appreciation in Arlington).

Historical Context

We took a look at the strongest performing sub-markets in the first half of 2019 to see how these gains look from a historical perspective, going back to 2000:

  • North Arlington condos show the biggest “Amazon-effect” with a sharp deviation from relatively stable prices over the last 10+ years. Note that existing condo sales dropped off more than the chart suggests during the recession, but the sales in newer, more expensive buildings helped maintain the market-wide median price.
  • History suggests that the North Arlington condo market will level off and remain relatively stable at these prices. It’s easier to add new condo supply to the market compared to other housing types, so supply usually adjusts to meet demand.
  • Single-family detached homes in South Arlington received a noticeable boost from Amazon, but were already trending up over the last 3-5 years so the 12.3% gains are likely a combined effect
  • Volatility in the South Arlington single-family detached market will likely continue for years to come as the area develops and the market finds a balance. I am bullish on most single-family detached housing in Arlington because it’s nearly impossible to add more supply to meet increasing demand.

Conclusions and Questions

There’s no doubt that Amazon has had a major impact on Arlington’s housing market already, but at this stage, it’s all speculative. Homeowners speculating they’re better off waiting to sell. Investors speculating that property values will appreciate. Home buyers speculating that they’re better of buying now.

I expect the North Arlington condo market to taper off and provide owners with modest, long-term growth and believe the best days for North Arlington townhouse and single-family detached homes are 3-5 years out.

Even though the aggregate data doesn’t currently show double-digit growth in the South Arlington condo market, that’s what is actually happening (see earlier explanation). I think this, and the South Arlington townhouse/duplex market, will stabilize next year and provide modest, long-term growth. I wouldn’t be surprised if there was a pull-back in the South Arlington single-family detached market next year, but I think it has the most growth potential over the next 8-12 years, outside of the 22202 zip code. The ceiling for South Arlington will depend on the quality and pace of development along Columbia Pike, parts of South Glebe, and Nauck.

Some of the questions I have about the next 6-24 months in the Arlington housing market are:

  • Will homeowners react to recent appreciation and take advantage of a “seller’s market” by putting more homes on the market in the next 6-18 months or will they continue to wait?
  • Did 2019 cannibalize buyers who were planning a purchase/investment in 2020-2021 and will that demand be replaced with new buyers or will we see a drop in demand until Amazon hiring picks up?
  • What decisions will the County make to increase density and will that provide for more townhouse/duplex development instead of just condos/apartments?
  • How will the headwinds from a potential downturn in the US economy impact local real estate momentum?
  • How much more will office vacancy rates drop and will another Fortune 500 company soon follow the lead of Nestle and Amazon?

If you’d like an analysis on how the value of your home has changed in 2019 or would like to discuss a strategy for buying or selling a home in Arlington or nearby communities, feel free to email me at Eli@EliResidential.com to schedule time to talk or meet. Our team covers Northern Virginia, Washington DC, and the Maryland Suburbs.

How Much Are Condo Fees In Arlington?

Question: Our Board of Directors is planning for the 2020 budget and we’d like to get a sense of the market rates in Arlington, particularly in the Rosslyn-Ballston Corridor. What are the average condo fees in the Arlington area on a cost per square foot basis?

Answer: It’s that time of year for most Condo Associations – budget planning time! As a former Condo Board Treasurer, I understand the pressure you’re under to balance responsible spending and reserve contributions with resident expectations of low, stable fees. Let’s take a look at what condo fees are across Arlington…

Arlington Condo Fee Rates

Fees are generally set on an annual basis by dividing up the Association’s total budget, including reserve contributions, by the ownership percentage assigned to each unit. Ownership percentage is determined by the builder and can be found in the legal documents you received prior to purchase. In most cases, it’s determined either by the number of bedrooms or square feet.

On a square foot basis, the average condo fee in Arlington is $0.54/sqft with a median fee of $0.53/sqft. Along the Rosslyn-Ballston Corridor the average jumps a bit to $0.57/sqft and the median remains the same.

On a per bedroom basis:
Bedrooms Average Fee Median Fee Average R-B Corridor
0 $319 $380 $306
1 $436 $470 $443
2 $575 $471 $631
3 $976 $505 $1,093

Not All Fees Created Equal

Before you jump to any conclusions about the relative value of your condo fee, you need to consider what’s included.

Amenities that require staffing and/or expensive maintenance like an attended front-desk, on-site management, and pools add significantly to the budget. The value for those amenities is subjective. Amenities that take up a significant amount of space within a building like large lobbies, party rooms, or rooftop gyms take away from the total unit count, thus increasing the ownership percentage of each unit.

There’s also a wide range of utilities included, or not, in a condo fee. Some fees include all utilities (water, sewer, trash, gas, and electricity) while others may only include trash with the rest paid directly by each owner. Some fees even include internet and cable! These differences can change your monthly bottom-line between two condos by hundreds of dollars.

Another important consideration when analyzing condo fees is how well they’re being used to fund the reserves (the Association’s savings account for major repair or replacement work) and whether future planned/unplanned building expenses will require a fee increase or special assessment. A well-funded reserve account usually means long-term fee stability and decreased chances of a special assessment. Associations should complete a new Reserve Study every five years to maintain a sufficient reserve balance and healthy building maintenance.

Other Thoughts On Condo Fees

Over the past couple of years I’ve written other condo fee related columns you might find helpful including A Case For Condo Fees, How Fees Impact Resale Value, and Finding Savings In Your Condo Budget.

While I have the attention of condo owners/Boards, I’ll also remind everybody that I’m organizing an info session on smoking bans in condos and to email me at Eli@EliResidential.com if you’re interested in joining.

Opportunity Zones in Arlington

Question: How did the Opportunity Zone designation in the Nauck neighborhood come to fruition and what is the expected impact on the neighborhood?

Answer: Last year the US Treasury, with the help of each state, began designating underdeveloped or “economically-distressed” communities as Opportunity Zones (OZ) to encourage residential and commercial development by offering investors preferred tax treatment. There are currently over 8,000 designated OZs around the country and 212 in Virginia.

 

Arlington’s Opportunity Zones

It may come as a surprise that there were two areas in Arlington that received OZ designations by the Governor/Treasury – Nauck-Shirlington Road and Barcroft-Columbia Pike. Both are located in the area bounded by Columbia Pike to the north, 395, and S Four Mile Run (link to map and details). Note: Although the zone is called Barcroft-Columbia Pike, part of it is actually Douglas Park and the rest is an area that I don’t think belongs to either the Barcroft or Douglas Park Civic Associations, but the apartment buildings there do take the Barcroft name.

On a national scale, I don’t think anybody would argue that these neighborhoods are economically-distressed, but within Arlington these designations should help stimulate or expedite development from South to North and West to East instead of the other way around. Both of these areas also have detailed planning documents in place to guide investors.

 

How Do Opportunity Zones Work?

OZs are a bit outside of my purview because they require commercial development and tax expertise, but the general idea is that investors will put money into Qualified Opportunity Funds and deploy capital to one or more projects in Opportunities Zones around the country in returned for preferred tax treatment on their gains. The theme behind the OZs is encouraging long-term, sustained investment from these funds by incentivizing investments of 10+ years.

It’s important to note that OZs were first written into the tax code in December 2017 and while a lot of money has been raised by funds, there’s still uncertainty on how everything works. The last planned public OZ hearing between industry and Government was June 9 in which industry raised numerous concerns about the governance of the funds/tax exemptions, thus keeping a lot of the money sidelined.

The primary concern for industry seems to be around how the IRS will apply the tax code to different exit strategies common within commercial and residential development. Some investors are happy with any preferential treatment or willing to take the risk of not having an exit strategy, but many are understandably hesitant to deploy huge sums without a full plan in place.

 

What To Expect

You can expect the development in each of Arlington’s zones to follow the guidance of the 2004 Nauck Village Center Action Plan, 2018 Four Mile Run Valley Master Plan, and 2012 Columbia Pike Neighborhoods Area Plan. The recently approved Nauck Town Square was the first step in realizing the Nauck area plan and much of the Columbia Pike plan is underway, including major commercial and public/utility improvements.

According to Arlington County’s project mapping website, there are not currently any proposals for major development within either of the OZs. However, the redevelopment of Centro Village (anchored by Harris Teeter), directly across from the Barcroft-Columbia Pike OZ, is nearly complete and the Trafalgar Flats condos, also directly across the street from the OZ, has done very well.

It’s quite possible that OZ funds have already been deployed in Arlington and we wouldn’t know. Given the impact Amazon is/will have on South Arlington, the Nauck, Four Mile, and Columbia Pike area plans were going to take shape, but I suspect that the recent OZ designations will lead to a more rapid implementation of the County’s vision. 

Investors in Arlington’s OZs likely fall into a category of investors who won’t wait for the Treasury to fully address all of industry’s questions before deploying capital because they’re content with any preferred tax treatment on investments that will be financially viable without the extra help. Is this a fair implementation of tax incentives for a national program? Probably not.

 

Impact on Residential Real Estate

While the OZs themselves have a relatively limited supply of homes, the homes within and adjacent to these zones make-up the least expensive property in Arlington County. If you’re looking for growth opportunities relative to the rest of Arlington, I recommend adding these neighborhoods to your list, but plan on holding for 7-10+ years to realize the full benefit.

Tax benefits aren’t limited to commercial or multi-family property, but also apply to single-family homes. In some cases, there may be financial benefits to making substantial improvements (a requirement for preferred tax treatment in OZs) to rental properties located in OZs and holding them for 10+ years to qualify for the maximum tax benefit. This may not work in Arlington because the cost of substantial improvements must be at least 100% of the adjusted basis (net cost) of the acquisition price within a 30-month period. Before considering this strategy for your next rental property acquisition, it’s critical that you speak with a tax professional well-versed in OZs.

I recommend Larry Bormel of Bormel, Grice & Huyett (LBormel@bormel-grice.com) for any tax-related OZ guidance.

Banning Smoking in Condos

Question: Do you have any updates to your previous columns about banning smoking in condos?

Answer: Banning smoking in condos is probably the most popular topic I’ve written about and it has given me visibility into how many communities have tried, are trying, or want to ban smoking in units and common areas.

 

Multiple Buildings Have Banned Smoking

As of 2019, only 12% of Arlingtonians smoke so it’s not surprising so many condo residents are interested in eliminating it from their buildings. Over the last few years, multiple condo buildings in Arlington have successfully amended their by-laws to ban smoking in units and on private balconies (common areas are relatively simple).

Hosting Info Session for Residents/Board Members

This fall, I’m organizing a meeting/info session for all interested condo communities (residents and/or Board members) to discuss strategies and lessons learned on banning smoking, misinformation surrounding smoking bans, and other topics I’ve gotten questions on over the years. We’ll have guests who were heavily involved in the smoking bans in their communities, including an attorney who led the charge in his building, and who has helped other communities get their process started.

Let Me Know If You’re Interested

If you’d like to be included, send me an email at Eli@EliResidential.com with your name, condo building, whether you’re a Board/Committee member or resident, and if your building has already tried or currently trying to ban smoking. I’m targeting a September meeting and hope to set a date and time by early August. Don’t worry, you won’t get signed up for a bunch of junk marketing emails from me if you reach out 🙂

 

I hope everybody has a great July 4!

What Stays When a House Sells?

Question: What is customary to leave behind when we sell our house? Is there anything we have to leave or take?

Answer: The answer to this question varies by state/region so it’s important to understand what’s customary or required in your area. Throughout the entire DMV (DC, MD, VA) it’s customary to leave/convey all appliances, anything fixed to the home (e.g. light and plumbing fixtures), and take electronics or anything not attached to the home (e.g. free-standing shelves).

Fortunately, the Northern Virginia sales contract has a section dedicated to what conveys, including a yes/no option for the 30+ items below:

 Around here, it’s customary for the items listed above to convey if they’re present, so if you intend to take any of them with you, such a washer/dryer, you should be sure to let your Agent and potential buyers know ahead of time.

In addition to some of the obvious conveyances like landscaping, carpet, and heating/cooling systems there are some not-so-obvious items that convey unless stated otherwise. Those include light fixtures (chandeliers), attached shelving, and wall mounts for electronics. The electronics (and wiring) themselves do not convey, so in practical terms – the TV comes with you but the wall-mount stays.

 

Other Tips/Grey Areas

  • You do not have to remove nails and other hardware used for hanging photos and other personal items. In fact, if you do remove them, you’ve technically changed the condition of the home and can be held responsible for patching and painting.

  • You are responsible for leaving the property “broom clean.” Broom clean is a bit of a grey area, but it surely means you do not have to hire a professional cleaning service or scrub the grout. Regardless of what the contract says, I always recommend sellers use an altered version of a common axiom and convey their home in the condition and cleanliness that they’d like a home to be conveyed to them.

  • You are also responsible for leaving the home “free and clear of trash and debris” which certainly means not leaving junk in the attic, clothes in the closet, or food in the refrigerator but it’s common (and generally appreciated) to leave behind extra matching paint, extra tiles or floor boards, and other items used to for replacement or repair. It’s generally a good idea to run these items by your buyer first, before leaving them behind, so you don’t get a call 30 minutes before closing to haul away a bunch of stuff they don’t want.
     

Price and contingencies generally command all of the attention in contract negotiations, but ensuring you’ve accurately documented what conveys also deserves your attention to avoid a major disagreement in the last hour. If you have any other questions about what’s customary when selling a home in Northern Virginia or the great DC Metro area, feel free to email me at Eli@EliResidential.com.

Landscaping Tips for Resale or Long-Term

Question: We’re hoping to do some major landscaping work over the next year and would like your thoughts on what we should focus on that will also be good for resale.

Answer: Now is a great time to start planning a landscaping redesign project for next year’s warm weather. If you’re preparing for a sale, small improvements to your yard can be just as valuable as updates to the inside of your home. I sat down with local landscaping expert and long-time Arlington resident, Jeff Minnich (you should see his yard!) of Jeff Minnich Garden Design, to discuss smart ways to boost the outdoor appeal of your home before listing it and talked about some of the landscaping trends he sees in Arlington.

 

High ROI Landscaping for Resale 

  • DAPPR: Define bed edges, Add fresh mulch, Pull the weeds, Prune the bushes, and Remove dead leaves

  • Lawn is King: Tall Fescue grass works the best in Arlington. The best time to seed your lawn is March – April and September. Water 1-2x per week. Give it about a month to grow.

  • Blast of Color: Azaleas are beautiful around here in April and May. Pansies are good options fall thru spring. Geraniums are great in the summer.

  • Grand Entrance: Your front door is a focal point – hit it with a fresh coat of paint or replace all together. Power wash your driveway and walkways. Flagstone aka Pennsylvania Bluestone offer great value if you need to replace or add a walkway (also perfect for patios).

  • Create a Scene: Help potential buyers picture themselves relaxing in their future yard by staging an area of your yard with chairs, table, umbrella, hammock, lemonade pitcher, etc.

  • De-clutter: Just like you removed personal items from inside the home, put things like statues and lawn gnomes away

  • Condos too: If you have some outdoor space (balcony, patio, etc) pot some plants (see Blast of Color) and stage it (see Create a Scene)

 

Landscaping for Personal Enjoyment (not everything needs to be done with ROI in mind)

Trends:

  • Outdoor living spaces are the biggest trend in Arlington. This includes kitchens, fire pits, entertainment areas, and lighting

  • Hydrangeas and other “old fashioned” shrubbery are back in style. Dogwoods and azaleas are always trendy in Arlington.

 

Approaching a landscaping project:

  • Step 1 Hardscaping: Install patios, walkways, living spaces, water features, etc. This can cost anywhere from $10,000-$25,000+

  • Step 2 Sheds and Storage: Establish space for these items next

  • Step 3 Plantings: Work from biggest (trees) to smallest (flowers)

  • A full project usually takes 1-3 months to complete

  • There’s no such thing as maintenance-free

 

Thank you Jeff for all of your great advice. To learn more about Jeff or see examples of his work, please visit his website (link) or send an email to jeff@minnichgardendesign.com. Jeff received his horticulture degree, with an emphasis on landscape design and nursery management, from Virginia Tech. His garden design/build firm, Jeff Minnich Garden Design, Inc. takes the client from initial design concept through the completed garden design. Enjoy the wonderful colors of his personal Arlington garden at 2268 N Upton St.

How an Organized Garage Helps Sell Your Home

During home sale preparations, one of the most overlooked spaces in a home is the garage. I’ve shown many homes where owners have packed their garage full of furniture, toys, and boxes in an attempt to clear out the rest of their home, not realizing that a clean, organized garage can have a huge impact on their resale value.

I asked Laura Johnson at Garage Design Source to detail how important your garage is to maximizing your resale value. Garage Design Source helps homeowners in the DC area organize their garages through customizable garage storage solutions.

  

If you’re looking to add a finishing touch to your home that attracts buyers and adds appeal, the garage is the best place to start. According to this study, 85% of homebuyers are looking for garage storage space. If homebuyers walk into an unorganized and cluttered garage, “extra storage space” won’t be checked off their wish list.

We’ve compiled three ways having an organized garage can help sell your home, and how to achieve garage envy that goes beyond just the garage door.

 

1.)   Extra Storage Appears Achievable

Homebuyers that are looking for extra storage space won’t feel confined to storage closets and pantries when garage storage options are clearly visible. Organizing and adopting a storage system allows the potential buyer to see the storage possibilities your garage has to offer. Decluttered space makes an area appear larger, a great way to add appeal.

Garage conversions are on the rise in popularity and many homeowners are looking to convert their garages into additional rooms. In-home gyms, in-home offices, and many other conversions are common among homeowners. If a potential buyer is looking for more space your home has to offer, but can clearly see the garage potential, that might be your saving grace.

 

2.) Parking Space

According to the US Department of Energy, 1 in 4 Americans say their garage is too cluttered to fit their car. Chances are, your potential homebuyer may not have been able to fit their car inside their current garage. Showing a spacious garage helps the homebuyer see the parking potential. Your home can be their ray of hope for in-garage parking.  

If you’re located in an area that has frequent snowfall during the winter, this is especially important. In addition to indoor parking, adding a garage heating system adds an extra perk to the garage. If you’re located in an area of extreme heat, adding an AC system to your garage can also be a great feature to add buyer appeal.

 

3.) Functionality & Customizability  

Unlike other rooms in a home, the garage is typically low (if not completely missing) on the home tour list. A custom garage storage system and gives you the chance to show off the design potential of the garage. Through color and added functionality, your garage can easily become a home tour destination. A Thompsons Company study showed that over half of Americans want to have a garage their neighbors’ envy- allowing your garage the potential to shine could be the tipping edge for potential homebuyers. If any part of your garage is unfinished (paint is missing etc.) consider giving your garage some TLC and tie up the loose ends. Homebuyers, when they walk into the garage, should feel they are entering another room in the house. You wouldn’t allow a room to go unfinished inside your home, would you?  

If your garage appeal is lacking, your selling chances are too! A clean, organized garage completes your home tour and adds value to potential buyers. Anytime a space is more organized, it appears larger and more usable. Don’t allow yourself to become discouraged by a messy garage.

The National Media Is ______ About Arlington’s Housing Market

Question: Are you seeing a sharp increase in the asking prices of homes in Arlington, as reported by Realtor.com, since Amazon announced HQ2?

 

Answer: You guessed it, the national media is wrong about Arlington’s housing market (sort of). I don’t mean to jump on the Fake News bandwagon, but a few weeks ago Realtor.com ran a misleading article, that got a ton of coverage here, stating that the median asking price of homes in Arlington were up $110,000 or 17.3% from November 2018 to April 2019.

 

I was suspicious of their report because I’m not seeing that type of increase in the asking prices of homes across Arlington, so I dug into the numbers a bit more to understand why the data looks that way. Technically, they weren’t wrong/lying but like most reports about local markets, they chose the version of the data with the biggest numbers to generate the most clicks and reposts without regard to whether it’s an accurate representation of our market.

 

The Truth Is In The Details

The reason the median price is up so much isn’t because owners are actually asking that much more for homes, it’s because the number of homes listed from Jan-May 2019 vs Jan-May 2018 for under $700k is down nearly 27% compared to a decrease of just over 9% for homes over $700k. This has shifted the middle/median up substantially, but doesn’t actually indicate owners are asking more for their homes rather that there’s just less availability of homes under $700k.

 

For reference, the average listing price is up just 5.6%, to $782,156, in the first five months of 2019, a more accurate representation of the actual increase to asking prices.

 

The main reason for the drop-off in housing supply below $700k is the decrease in 1-2BR condos, as detailed in the chart below:

 

To highlight how easy it is to manipulate housing data to show the opposite of what Realtor.com claims to be happening in our market, I looked at three sub-markets to compare how median price is changing within similar housing stock. Looking at cross-sections of a local market with similar housing stock allows us to draw a more accurate picture of what’s actually happening, but even the chart below is misleading because it suggests asking prices are dropping this year, which isn’t true.

 

 

So What’s Actually Happening?

Over the last few months I have started to see asking prices increase. Occasionally I’ll see an asking price 15-20%+ higher than where it would’ve been last year, but mostly it seems asking prices for similar types of homes are up by 3-5% which is why you’re still seeing so many homes sell for above ask because most market values have increased by more than that (I’ve teed this one up perfectly for famed ARLnow commenter $4 Million to Heirs Annually).

Next month I’ll be working closely with Jeannette Chapman of George Mason University’s Fuller Institute to provide a detailed look at the Arlington housing market through the first half of 2019. I’m looking forward to collaborating with Jeannette on multiple columns to bring you more advanced market studies and opinions.

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 Eli@EliResidential.com.