Question: Are there specific buildings or sub-markets in Arlington that were responsible for the jump in condo values in the first half of 2018?
Answer: The most interesting data point that came from last week’s mid-year real estate review was that, for the first time in years, condo prices appreciated significantly from the first half of 2017 (9.1% growth). I received a number of emails from readers asking if this growth occurred across the entire condo market or in specific locations or buildings so this week’s column takes a deeper dive into the 2018 mid-year data for condos in Arlington.
Growth and Demand Increase Across the Market
The good news for condo owners in Arlington is that appreciation and demand increased across all markets in the first half of 2018. In fact, 63 of the 79 measures for appreciation and demand improved (if you’re a homeowner/seller). To test the market, I looked at average price and three demand indicators (days on market, purchase price to asking price ratio, and number of sales) broken out by zip code, building age, and price range. The data compares pricing and demand trends in the first half of each year for all condos sold in Arlington. Cells highlighted in green indicate improvement (for homeowners/sellers) in that category for 2018.
All Eight Zip Codes Appreciated
Demand indicators supported the price growth, with most zip codes seeing a faster pace of sale and buyers negotiate less off original asking prices. For those tracking new construction in Arlington, only 11 of the 98 sales in 22209 were in Key & Nash and it’s important to note that builders do not enter all of their sales into the MLS, so a large percentage of those sales are missing from the data. Note that 22205 is not included because of the lack of volume.
Older Properties Surged
Many older buildings in Northern VA are struggling to recover from their peak pricing from 2005-2007, which has left many owners in a difficult financial position. The strong appreciation seen in condos built before the 1970s will be a much-needed relief for many and proves that Arlingtonians and investors are seeing value in older, less expensive condos compared to their newer, amenity-rich neighbors built in the last 20 years. Check out the huge drop in average days on market for condos built in the 1950s or earlier!
Higher Demand at Every Price Point
Demand picked up the most for less expensive condos, but every price range saw at least two demand indicators increase in the first half of 2018.
If you own a condo in Arlington and would like to take advantage of the recent appreciation of your property, feel free to email me at Eli@EliResidential.com to schedule some time to talk about your options.
Question: What is the role of Business Improvement Districts in Arlington?
Answer: The Business Improvement Districts (BID) of Rosslyn, Ballston and Crystal Citydeserve much of the credit for turning these neighborhoods from convenient places to work to lively, family-friendly places to live.
Funded primarily by businesses located in the neighborhoods they represent, BIDs are an important bridge between residents, businesses and local government. Homeowners located in or near any of these BIDs can thank their leadership teams for increasing the value of their homes.
As a long-time Rosslyn resident, I have watched as Mary-Claire Burick and her team at the Rosslyn BID have transformed Rosslyn over the last five years.
I reached out to her for an interview to answer some questions about the role of BIDs in the community and how residents can take advantage of their influence on local government and business investment. Thank you Mary-Claire!
What is the role of a BID, and what role does the Rosslyn BID play in the community?
Business Improvement Districts are nimble organizations that wear a lot of different hats. In Rosslyn, we work on urban planning, transportation and business and community engagement, just to name a few.
But I think one of the most important roles that we play is that of a convener who brings together the perspectives of various stakeholders in our neighborhood –including residents, businesses and county officials — to advance initiatives that will help our community continue to thrive.
We are in constant conversation with folks on the street, in our restaurants and in our business community to better understand not only what they love about Rosslyn but also what they want to see improved.
How does the Rosslyn BID engage with residents and visitors?
As I mentioned, community engagement is one of our top priorities.
Probably our most visible presence on a daily basis is our Rosslyn Ambassadors Program. Our team is out on the street five days a week helping residents and visitors with directions and working to ensure our sidewalk and public areas are safe and clean. Be sure to say hello when you see them around the neighborhood in their purple shirts.
Our events are another important way that we connect and engage with area residents. In 2017, around 40,000 people attended more than 160 events that we hosted ranging from our popular Rosslyn Jazz Fest and Rosslyn Cinema series to lunchtime fitness sessions and pop-up concerts. Each one of these events represents a touch point for our team to engage with residents and employees in our region, and for interaction between these groups.
It’s that sense of community that these events help build that makes them so impactful.
What have been some of the BID’s most successful events?
Last year’s Rosslyn Jazz Fest was an incredible experience.
That event alone brought nearly 10,000 people to Gateway Park on one day, which was a record for us. The Rosslyn Cinema has long been a neighborhood favorite. Last summer, more than 20,000 people came out to catch their favorite movie. And it may surprise you, but Rosslyn is the largest pit stop for Bike to Work Day in all of D.C., Maryland and Virginia.
In 2018, we will continue to host these popular events, but are also introducing new activities and expanding others.
One example is the Rosslyn Farmers’ Market, which occurs weekly during the summer in Central Place Plaza. We’ve worked with FRESHFARM to introduce a new FRESHFARM Share program, similar to a community supported agriculture (CSA) program, to help bring more healthy food to Rosslyn residents and businesses.
I’d also like to point out that these events have a wider purpose and impact. They help bring thousands of visitors to Rosslyn who could one day be residents or tenants. And there’s an economic impact–restaurants and retail in Rosslyn usually see a boost in sales and exposure.
Some of the other local BIDs are Crystal City, Ballston and Georgetown. What are some of the most significant benefits of a community having a BID? Does a BID make sense for every community?
From my perspective, there are a lot of benefits that a community can realize from having a BID. But simply having a BID alone isn’t enough. It’s important for all of the stakeholders to have a clear vision for what they want to accomplish, and to ensure a BID has the resources and buy-in to help realize that vision.
A BID with a distinct mission can be a leading driver of change for a community, serving as a liaison between government, businesses and residents. Residents, in particular, have a real opportunity to utilize BIDs to help create a viable, economically sustainable community that reflects their vision of the neighborhood.
How have new restaurants and retail spaces helped change Rosslyn? Are there any openings you are particularly excited about?
Restaurants and retail have been a critical part of Rosslyn’s transformation from a commercial area to a more vibrant, urban, mixed-use area. Between 2015 and 2017, 17 new restaurants opened in Rosslyn, adding to the more than 65 restaurants, cafés and markets within a ten-minute walk of the Rosslyn Metro. We’ve also seen more restaurants and bars staying open later, like Barley Mac, Quinn’s on the Corner and Continental.
This year, we’re looking forward to the continued evolution of Central Place, which is bringing multiple new restaurant offerings to the heart of Rosslyn. I think folks are going to be really excited to hear what they have in the pipeline.
We are also excited for the Central Place Observation Deck, opening this summer. This 12,000 square-foot-space will offer an unparalleled view of the Mall and the U.S. Capitol. Offering snacks and light fare, the Observation Deck will be the perfect place to bring out-of-town friends, a date or a colleague for an after work drink.
How can residents get involved with their local BID?
Residents should utilize their local BIDs to advocate for what they would like to see in their community. Remember, a BID is there to serve the needs of a neighborhood’s residents as well as its businesses and visitors.
Residents can also get involved with their local BID by attending events, participating in community meetings and providing feedback on BID activities. Depending on an individual’s local BID, there may be opportunities to volunteer or be a community ambassador.
Question: We are buying a home in a few weeks and one of the closing costs is an optional $1,500 for Title Insurance. Do you recommend buying title insurance?
Answer: Yes, I do recommend buying Title Insurance. It’s a one-time fee that protects your ownership in what is likely the most valuable asset you own and you cannot decide to add Title Insurance in the future. However, like any form of insurance, it depends on your appetite for risk.
I’ve asked David Cartner, an attorney with Highland Title & Escrow, to provide a full explanation of the benefits of Title Insurance and some examples of when it would be used. Take it away David…
Do You Really Need Title Insurance?
As a real estate settlement attorney, buyers often ask me if they should purchase title insurance when buying a home. My response is that it depends on what level of risk the buyer is comfortable taking. A purchase of a house or a condominium is usually the biggest investment a person makes in their lifetime. If a buyer does not purchase title insurance, he/she risks losing the entirety of the investment.
Why, then, do buyers question purchasing title insurance when the risk of loss is so high? After all, no one seems to question the need for homeowners or rental insurance. I believe the reason is twofold: (1) buyers do not understand the benefits of purchasing it, and (2) title insurance is unlike other types of insurance in that it covers issues that have already happened.
Indeed, there is a long list of risks covered by title insurance, but basically what the buyer is hedging for are the unknown or hidden hazards that might jeopardize his or her ownership in the home. Hidden hazards may include:
Liens that were not revealed in title exam or made known to settlement agent prior to closing. Normally, a title exam reveals any liens on the property which need to be paid off and released prior to closing. If, however, the title examiner overlooked a judgment, tax, or mortgage lien on the property or failed to note it in the title exam, the buyer would be liable to pay the lien incurred by the previous owner.
Boundary line issues that an accurate survey would not reveal. For example, if a survey failed to note that a neighbor’s shed encroached on the purchaser’s property, title insurance would cover the cost of removing the shed and resolving any accompanying boundary line dispute.
Forgery or lack of authority. If there was a forged signature on the deed in the chain of title, or a person or corporation signed a deed without authority to do so, the transfer of ownership to the buyer would be in question.
An unknown heir of a previous owner came forth to claim ownership in the property.For example, suppose a seller passed away and his three children sold the house to a purchaser. If an unknown fourth child later came forth to claim his quarter ownership in the house, the purchaser’s title to the property is in jeopardy.
Instruments executed under an expired power of attorney.
Building permit violations. An enhanced version of title insurance is available that covers existing building permit violations. If a previous owner never obtained the appropriate building permits when remodeling a kitchen or bathroom or building a deck, enhanced title insurance would cover the cost of obtaining the appropriate permits. Note: the enhanced version is about 20% more expensive than the standard version and affords additional protection to the homeowner.
Mistakes in the public record at the county in which the property lies. Recently, Arlington decided to do a look back process on taxes for individuals that were exempt up to 20 years ago. Arlington has audited the accounts to see if the exemption was applied correctly years ago. If not, the County is attempting to collect the back taxes from the current owner of the property. At the time of the closing, there was no evidence of any taxes owed and a phone call to the County would not reveal any taxes owed. At Highland Title & Escrow, we have had two of these cases arise and luckily the owner purchased title insurance and the title insurance company will pay the back taxes.
While lenders mandate that owners purchase lender’s title insurance (which only protects the lender’s interest in the property), homeowner’s title insurance is completely optional. It is a one-time fee that covers the owner for life.
Though there are certain factors that decrease the risk of an existing title defect, like having fewer previous owners of the house, a typical subdivided lot, or a recently constructed house, a buyer takes title to a house never knowing what title defect may already exist. In this respect, title insurance is unlike other types of insurance in which the purchaser can mitigate risk.
Contact David Cartner (703-760-3300 or email@example.com), an Arlington settlement attorney at Highland Title & Escrow, with further questions regarding title insurance or the real estate settlement process.
David is an Attorney originally from Asheville, NC where he learned about the business from his parents who are both Real Estate Attorneys.
Prior to joining Highland Title & Escrow in 2013, he worked as the Managing Attorney of the District of Columbia division for Morris Hardwick and Schneider. While there he tried many cases involving Foreclosure, Evictions, and Bankruptcy in front of the different courts in the District of Columbia.
David graduated, from the University of North Carolina at Chapel Hill, earning a B.A. in Public Policy specializing in Business and Government. He earned his J.D., from Campbell University, Norman Adrian Wiggins School of Law, graduating with a distinction in Business and Tax law.
David is admitted to practice law in the States of Pennsylvania, North Carolina, New York and the District of Columbia.
David currently resides in Arlington, VA with his wife, Melany, and their dog, Wheatley.
Question: Can you follow-up on last week’s column about condo/townhouse rentals with an analysis on the single-family home rental market in Arlington?
Answer: Thank you to ARLnow commenter Southy4Life for requesting that I follow-up last week’s analysis of the condo/townhouse rental market with a similar analysis of the single-family home (SFH) rental market.
The good news for those looking closely at the rental stats in Arlington is that the majority of SFH rentals are represented in the MLS data presented below, as opposed to a large percentage of condo/apartment rentals not represented in my data last week because most are handled outside of the MLS (commercial rentals, direct landlord-to-tenant).
Five Year Trends
Just like the condo rental market, there has been very little appreciation in rental rates in Arlington’s SFH home rates, until 2017, which saw a noticeable jump led by 22207, 22205 and 22203.
This doesn’t correlate to what we saw in the sales market from 2016 to 2017 so admittedly I don’t know why these three zip codes saw substantial rental growth, while the rest of the Arlington market remained relatively unchanged.
Below is a summary of the average cost of renting a SFH in each Arlington zip code over the last five years. 22206 and 22209 were removed for lack of SFH rental data points.
Below is a table of all 3-5 bedroom SFH rentals in Arlington since 2016, broken out by bedroom count and zip code, with rentals in 22206 and 22209 removed for lack of data points.
The most expensive home rented was a 7BR/7+BA home on Arlington Ridge Rd for $12,000/mon and the least expensive home rented was a 2BR/1BA home in Columbia Forest for $1,595/mon
It costs about 20% more to go from three bedrooms to four, 25% more to jump from four bedrooms to five
If you’re renting a SFH in Arlington, expect to take 5-6 weeks to find your tenant and be prepared to discount your rate by 2-3% from what you’re asking
For families looking to rent a home in some of Arlington’s top-rated schools, the 22205 zip code is a great value
75% of SFH offered for rent allowed pets, but only 28 had fully fenced yards
On average SFH for rent were built in 1950 and the average lot size was just over 10,000sqft (1/4 acre)
Only 49 SFH homes offered for rent were built in the last ten years
Our team is happy to assist you with rentals, whether you’re a renter or landlord, so feel free to reach out if you need assistance with either! We are happy to put together more specific, personalized data tables for your as well.
Question: I am moving to Arlington from out of town and not yet ready to buy. I’ve heard the rental market is high in the DC area and wondering approximately how much it costs per bedroom to rent in Arlington.
Answer: I spend a lot of time in this column talking about buying and selling homes in Arlington, but about 54% of the County is renters, so as we head into the busiest rental months, I thought it’d be appropriate to share some helpful statistics on the cost of renting in Arlington.
For the most part, renters tend to be more focused on functional space to meet immediate needs, so I like the idea of using cost per bedroom on rentals more than I do for ownership.
The good news for renters is that developers have added thousands of new rental units over the last 5 years, particularly 1-2 bedroom units in the popular metro areas of the Rosslyn-Ballston corridor and Crystal/Pentagon City. While the cost of these newer units has increased, it’s kept the cost of renting condos and townhouses from owners pretty stable (or down).
The data I pulled below is primarily made up of non-commercial rental units (condos and townhouses owned by individuals) and restricted to units leased through the MLS (agent database), so only included a portion of the total rental activity in Arlington. I also excluded single family homes from the dataset.
It costs about 40% more to rent a third bedroom than it does to rent a second bedroom
Rents have not gone up for one bedroom units, and have only increased about $100/month for two and three bedroom units
Most rental units are on the market for 6-7 weeks before being rented
There’s not nearly as much negotiating on rentals as there is purchases, with only about 1% or less negotiated off the asking price, on average
The least expensive rentals are in the 22204 zip code because there are not any walkable metro stations and the housing inventory tends to be substantially older
22204 is the only zip code where the average rent of a two bedroom is under $2,000/mon and one of only two zip codes (22206) with an average rent under $3,000 for a three bedroom
22209 is the most expensive zip code to rent by a wide margin due to the fact that it hosts two of the most expensive buildings in the DC Metro in Turnberry Tower and Waterview, as well as a host of other high-end buildings. It claims this top spot, despite also hosting one of the least expensive communities in Arlington, River Place.
One tip I’m happy to share with renters is that there’s rarely a better deal in the market than the deal you get being the first person to rent a unit in a new commercial rental building. The incentives they offer on the first lease usually include 1-2 months free rent, a period of free parking, and sometimes other fees discounted or removed (e.g. pet fee, move-in fee, etc). However, you should prepare for rents to increase substantially if you want to continue renting after your original lease expires.
Our team is happy to assist you with rentals, whether you’re a renter or landlord, so feel free to reach out if you need assistance with either!
Question: Do you think the recent changes to the rankings of Arlington schools on GreatSchools.org will have an impact on home values?
Answer: Sometime in the last few months, GreatSchools.org quietly changed their school ranking criteria, which resulted in a drop in every high school and middle school in Arlington by 1-2 points (10 point scale).
The two biggest K-12 public school ranking websites in the US are Niche.com and GreatSchools.org with about 6M and 4M monthly visits, respectively (SchoolDigger is a distant third with about 500k).
In my experience, buyers in the DC Metro rely more heavily on GreatSchools because Niche lacks differentiation between schools (everybody is a winner). The change in Arlington County Public Schools rankings on GreatSchools is worth noting and I suspect that it will have a negative impact on the housing market.
In the About section of GreatSchools, they explain the changes in their grading criteria with the following: “In the past, the overall GreatSchools Rating in most states was based on test scores.
In some states*, the GreatSchools Rating was also based on student progress (or “growth”) and college readiness data (SAT/ACT participation and/or performance and/or graduation rates).
Our school profiles now include important information in addition to test scores — factors that make a big difference in how children experience school, such as how much a school helps students improve academically, how well a school supports students from different socioeconomic, racial and ethnic groups, and whether or not some groups of students are disproportionately affected by the school’s discipline and attendance policies.
Many of these important themes now have their own rating, and these themed ratings are incorporated into the school’s overall GreatSchools Summary Rating.”
Old vs New Rankings
Below is a table showing the before and after scores for all Arlington County middle and high schools, as well as a limited set of Fairfax County/Falls Church middle and high schools (the ones I had documented scores for before the change).
All “old” scores are as of Fall 2017. Note that my request to GreatSchools for the “old” scores for all Northern VA/DC Metro schools was denied.
Why It Does/Doesn’t Matter
I’d be lying if I told you I knew what the impact will be to Arlington home prices and demand, but I think a negative impact will be felt to some degree.
Schools are at the top of many buyers’ criteria list and most of those buyers, whether they’re local or relocating into the area, set a minimum score for the school boundaries they’ll purchase a home in and rely on GreatSchools for their data.
Below are some points I came up with for why it may or may not have an impact on the housing market:
It Doesn’t: It appears the majority of public schools in Northern VA were reduced by 1-2 points on GreatSchools, so buyers are still as likely to choose Arlington as they have always been. The alternatives have not improved.
It Does: While the reduction of most school scores in Northern VA may not change where or what people buy, the lower scores may decrease overall demand in Northern VA housing and result in less motivated buyers.
It Does: I don’ know if Montgomery County and Northwest DC public schools saw similar changes, but if they did not, we may lose buyers to those jurisdictions because their relative value has increased.
It Doesn’t: It doesn’t appear that Niche.com has introduced any changes and Yorktown and Washington-Lee are ranked an A+ and Wakefield is ranked an A on that site.
It Does: Could the fact that Arlington’s highest ranking high school is now a 5 impact the decisions of employers considering a move to the DC Metro?
I have no doubt that over the course of 2018 I will have local and out-of-town buyers tell me they do not want to purchase a home in Arlington because it has poorly rated (high) schools.
For me and my colleagues who know Arlington, we will point them towards resources that show how great the entire ACPS system is. However, if you recall from my column in July 2017, about half of the agents who closed a deal in Arlington only had one or two transactions here, meaning that agents who don’t know Arlington well are unlikely to have the appropriate background to give their clients better guidance about our schools.
What To Do?
GreatSchools.org wields a lot of power over home values across the country and the drop in our ratings is frustrating, but just like a bad Yelp review for a restaurant, we have to acknowledge the change and find ways to offset it by making it easy for buyers to find more favorable information.
I’d love to hear from readers in the comment section who purchased or are in the process of buying a home in Arlington, who placed a lot of weight in the GreatSchools rankings – how would these changes have impacted your decision when you bought or how are these changes impacting your current purchase strategy?
If you would like to discuss how the new GreatSchool rankings impact your upcoming plans to purchase or sell a home in Arlington, feel free to reach out to me at Eli@EliResidential.com to set-up some time to meet.
Question: As interest rates have increased over the last 6-12 months, how will the market react to higher rates and do you expect them to come back down in 2018?
Answer: The rates I’m seeing today are about 1-1.5% higher than what I’ve seen on average over the last few years and about .5% higher than where they’ve been over the last 6-12 months. Generally, most economists are projecting growth in the US and there are similar signs in Europe so if that holds true, expect interest rates to continue their upward trajectory.
Higher Mortgage Rates In 2018
According to Freddie Mac, the average Mortgage rate from the 1970s-2000 was about 7%, the average rate from 2000-2008 was 6% and we’ve been hovering around 3.5-4% since 2008. Freddie Mac currently predicts that rates will reach about 5% by the end of 2018.
Mortgage rates are at the mercy of the US and global economies so predicting their direction is no different than predicting how the stock market will do.
Contrary to popular belief, mortgage rates are not directly correlated to the Fed rate that you regularly hear about in the news. So when you hear that the Fed is planning to increase rates by .25%, that does not mean your mortgage rate will be .25% higher the following day. See chart below for historical trends of Fed rate vs mortgage rates:
We are currently experiencing high daily and weekly volatility in mortgage rates, which is frustrating for many. Some weeks see swings of .25% so you can either benefit or lose out from those swings based on when you lock your rate. Discuss this risk with your loan officer.
You may have missed the lowest rates over the last few years, but historically mortgage rates are still well below average as you can see from the chart below from Freddie Mac:
The Impact Of Higher Rates
For my clients, the ones who feel the rates increases the most are those who have been in the market for 6-12 months but have not purchased yet either due to lack of suitable inventory or urgency.
It’s tough to accept that rates were about 1% lower when they started looking and now they feel like they’ve lost. Those who are just now entering the market tend to be much better at brushing it off. It also impacts my clients who are not also selling a home because those who are selling will realize the benefits of the stronger market vs those who are just buying are at its mercy.
First time buyers are also more sensitive to rate fluctuations because most are already struggling to adjust to the hefty price tag of buying what they want in the DC Metro area.
Redfin recently asked 4,000 buyers who planned to purchase in the next 12 months how increasing rates would impact their purchase and found that only 6% would cancel their plans to buy while nearly 50% wouldn’t change anything or would increase their urgency to buy.
This might seem like a good result for homeowners, but losing 6% of buyers, having 21% reduce their budget, and 27% waiting for rates to drop is a bad sign. Especially if rates continue to go up and the 27% who were waiting for rates to drop decide to either stop their search or reduce their budget.
I think the biggest reason increasing rates will slow the market is the psychological effect of higher rates vs the actual impact to buyers’ budgets. For buyers struggling to internalize the “loss” they’ve taken now that rates are higher, consider the following:
On a $400,000 loan, a .25% increase in rate represents $60/month. Try to decide if a $50-$150 change in your monthly mortgage cost is worth giving up on a home purchase or compromising on what you want/need. Most buyers decide to spend less than what they’re approved for, so there is usually some cushion.
The reason rates are higher is because the economy/stock market have done so well lately so your investments and/or income are hopefully increasing at a rate on pace with or above what you’re giving up in increased mortgage rates.
In 2017 the S&P 500 returned about 20% to investors so maybe you earned enough in the market to allow for a higher down payment?
Hopefully the net effect of everything that factors into mortgage rates is still positive for you.
With so much volatility around mortgage rates, it’s even more important that your lender be able to advise instead of just being a pass-through for today’s rates.
My clients have found Jake Ryon of First Home Mortgage (firstname.lastname@example.org) and Troy Toureau of McLean Mortgage (email@example.com) to be valuable resources during their home purchases and I’d encourage anybody to reach out for advice.
Question: I’ve submitted two offers on home this year and both times lost to multiple offers. Is this normal or is the market more competitive this year?
Answer: 2018 has been a good year for sellers and a frustrating one for buyers already. Generally, I don’t start seeing multiple offer deals until late February/early March, when it starts to warm up and days get longer.
However, about 80% of the listing and purchase deals I’ve been on this year have ended up with multiple offers. I even had a listing that had been on market for three months receive three offers in one weekend. My colleagues who work in new construction and generally have the best pulse on market pace have also been surprised by the amount of activity this early.
Here are some numbers in Arlington from January to back up the anecdotal evidence of a hot market:
Supply Down, Demand Up: Monthly of supply measures how long it would take to sell all existing inventory at the current market pace (supply and demand) is down 21% YoY and at its lowest levels (1.31 months of supply) since March 2013 (1.22 months of supply)
More Homes Under Contract: Over 200 homes went under contract in January (215) for the first time since 2012 (219)
Homes Under Contract Faster: Of the 119 homes that were listed and went under contract in January 2018, 69% went under contract within one week. Over the last five years, 49% of homes listed and under contract in January went under contract within one week.
Average Number Of New Listings: The amount of new homes listed on market in January 2018 (234) is about average for what we’ve seen over the last decade
Advice For Buyers
Periods of low inventory and high demand can be frustrating for buyers, so here are a few tips for buyers to create leverage for themselves without simply paying more:
Quality Of Lender: Have a pre-approval letter from a strong local lender who has review all relevant documents, not just somebody who checks credit score and asks for basic financial information. A strong lender letter gives the seller confidence you will close on the home on time, without complications.
Contingencies: Consider giving up your right to request repairs and credits after the home inspection and using a Pass/Fail contingency instead. This shows that you’re not interested in nickel and diming a seller, but just want to make sure there are no major issues. You can also offer to cover up to a certain dollar amount in the event of a low appraisal, if you are offering to pay above the asking price.
Close Faster: Most homeowners want to close as quickly as possible. A good lender can have you ready to close in 20 days vs the more common 30-40 day close.
Don’t Play Games: We all want to negotiate a great deal, but oftentimes a great deal is actually having your offer accepted not saving a few thousand dollars. When a seller has multiple similar offers, they often put more weight in who they think is most likely to close with the least complications. In that scenario it pays off to make it clear how much you love/want the home instead of acting like you could take it or leave in an attempt to negotiate a lower price.
Days On Market: The number of days a property has been on market should dictate how you approach an offer. You won’t have much leverage in the first few weeks or after a major price reduction.
The spring market can be a great time for buyers who are prepared for competition because you’ll see a significant increase in inventory, so that illusive 2 bedroom + den or half acre yard with a deck is more likely to materialize.
If you’re not prepared to make a strong offer, the spring can be frustrating and defeating because you may watch your dream home(s) go to other buyers who have made smarter, but not necessarily higher offers.
Question: A big reason I chose to live in North Arlington and pay the premium that comes with it is because most of the neighborhoods were full of large, mature trees.
I’ve watched over the last 5-10 years as so many beautiful trees have been removed to make room for large new homes, only to be replaced by small trees that don’t survive or aren’t fit for this area. What can we do to educate homeowners about the value trees have in the community and on home values?
Answer: Thank you so much for this question, especially on the heals of a terrific study on Arlington’s tree canopy. It’s one that I don’t think gets nearly enough attention from homeowners, my colleagues in the real estate industry and local government.
The loss of our tree canopy resulting from reckless tree removal by builders who are more concerned with maximizing profit on a single lot than promoting long-term growth of our communities is a major problem for Arlington. In 2017, I wrote an article highlighting the financial benefits to developers who actively work to keep the existing mature trees on a lot so if we can show both short-term and long-term benefits to builders and developers, what do we do?
Don’t Wait On Local Government
For starters, we can’t rely on government policy, but need to work within our communities at a Civic Association level to promote education and understanding. Not every homeowner is concerned about the tree canopy, but everybody is concerned about the long-term value of their home, so we need to educate everybody that the two are not mutually exclusive.
We are never going to stop the replacement of old homes with new ones, but we can support builders who take steps towards tree preservation and discourage residents from working with builders who have no regard for our neighborhoods.
Over the past couple of years, I’ve worked with some fantastic Civic Associations (residents of Williamsburg should be proud of their community leaders!) and the Arlingtonians For A Clean Environment to brainstorm ways to protect our tree canopy and I encourage anybody who has an interest to get involved.
An Education For Homeowners and Builders
I will continue this discussion through my column on ARLnow until we see progress. I hope that readers with an interest in getting involved can share ideas and connect via the comments section.
To kick things off, I want to introduce Heath Baumann, an ISA Certified Arborist with Bartlett Tree Experts, to provide education for homeowners and builders on tree preservation, tree replacement and tree care. Take it away Heath…
One of the most overlooked assets on a property is often the trees.
Trees not only improve quality of life with shade and beauty, mature trees can affect property value. As Northern Virginia continues to infill and urbanize, trees will face greater amounts of environmental stresses. Larger homes, less permeable surface area, soil compaction and heat island effects can stress both new and mature trees in your landscape.
Your home is comprised of multiple systems such as HVAC, plumbing and electrical. It helps to think of trees in the same manner. Routine maintenance performed by a licensed professional is affordable and extends the life of your trees.
Tree Preservation During Construction
Constructions projects can severely affect the health of trees. Physical stability, water and nutrient collection are vital functions of the root system. Here are some Do’s and Don’ts to preserving trees during construction projects:
Develop a Tree Preservation Plan. Contractors and Consulting Arborists can develop this during the planning phase of your project.
Avoid intrusion into the critical root zone. Create a physical barrier with construction fencing to reduce soil compaction and physical damage to the tree by heavy equipment.
Have a licensed tree care provider perform any required root pruning.
Develop a tree care plan for affected trees. Certified Arborists can help the tree compensate for root loss and stress from construction activities.
Do not use heavy equipment to cut roots. Heavy equipment will cause extensive damage and compact the soil.
Do not allow construction materials, debris or chemicals to be stored around trees. Tree preservation zones are enticing areas for temporary storage. Soil compaction, chemical runoff and physical damage are all possible.
Do not use construction tools to perform pruning. Arborists’ tools are designed to make proper cuts reducing the impact on trees.
Replacing or Planting New Trees After Construction
Planting a tree is a wonderful feeling. A relatively simple activity can turn into a lifetime of enjoyment and an investment for future generations. The best part about planting trees is that nearly everyone is capable of doing it. It generally only requires a few tools that are available at your local hardware store or garden center. A few basic guidelines will help improve our success when replacing removed trees or adding to your landscape.
Purchase your trees from a respected nursery or garden center. These businesses offer warranties, have higher quality nursery stock and have knowledgeable staff that can help you make the right selection.
Select the right tree for the location. Height, spread, shade tolerance and growth rate are all things to consider. A full sun tree will not thrive in an already shady landscape and vice versa.
Have your soil tested. The soil’s pH affects the nutrient availability for a tree. The Virginia Tech extension service and certified tree care companies can perform soil tests for a nominal fee. Use this information to select the tree or to build a soil care program with your tree care company.
Dig the correct hole. The hole for your tree should be 3 times as wide as the root ball. If possible, rototill an area 5 times the root ball to help root production. The bottom of the hole should remain intact.
Have your trees structurally pruned. Some tree species have growth tendencies that can lead to structural failure or root issues. An ISA Certified Arborist can show you how a few well-place structural pruning cuts can help your tree develop its ideal form.
Do not plant trees too deep. This is the most common mistake I see on landscapes. Ideally, the transition zone between the trunk and the roots should be slightly above soil grade.
Do not mound mulch. Mulch mounds, along with deep planting, can cause the roots to encircle the trunk of the tree forming a tourniquet that strangles the tree.
Do not leave the tree in the container. If the tree is in plastic container, remove the tree and loosen the soil and roots before planting. If the tree is in a wire encased burlap bundle, cut away the wire basket and remove the burlap from the sides of the root ball after placing it in the hole.
Do not overwater your tree. Infrequent, slow saturations with a soaker hose will help good root development. Frequent shallow watering will develop shallow, unstable roots. Constant soil saturation will lead to root diseases. If the soil at finger depth (4 inches) is dry, it is time to water.
Tree Care Basics
The majority of my clients are established homeowners who are concerned about the health of their trees. Sometimes it is a large, prominent oak or a bright, flowering ornamental tree. Here a few simple Do’s and Don’ts that home owners can follow to help their trees:
Keep a mulch ring around the tree. This aides in temperature and moisture regulation while adding organic matter to the soil.
When watering use a soaker hose for infrequent, heavy saturations. This will ensure adequate soil moisture and help in root development.
Routinely look at your trees. The earlier an issue is caught, the better the odds of helping the tree.
Consult a professional. Certified arborists can work with you to develop a tree care plan based on your needs and budget.
Do not allow mulch to mound up at the base of the tree. Mulch can hold moisture against the trunk that can cause decay, increase stress and invite pests.
Avoid heavy application of lime or other lawn products. Lime and other lawn produces can affect the soil, making it unsuitable for trees.
Do not park or drive your vehicle over the root zone. This can lead to soil compaction.
Avoid damaging the tree with mowers and string trimmers.
Avoid employing a non-certified person or company to perform tree care. Improper pruning can lead to tree mortality and expose you to risks.
Even in ideal conditions, pests and diseases can attack trees. Fortunately, treatments exist for many of the common maladies in our area. If you are concerned about a tree, always contact an ISA Certified Arborist for a consultation.
Heath Baumann is an ISA Certified Arborist with Bartlett Tree Experts. If you wish to schedule a consultation with a Bartlett Arborist Representative, please call (703)550-6900.
Question: My property taxes didn’t change much this year, but the County announced that residential home prices increased 3.9%. Are the County’s tax assessments a good way of determining the market value of my home?
Answer: Tax assessments are not a good way of establishing the market value of your home. In fact, if Arlington homeowners used their tax assessment to determine their asking price, on average they’d be undervaluing their home by 10%!
Also, just because the County saw appreciation of 3-4% this year doesn’t mean that will be applied to all homes. Tax assessments are adjusted on a much more localized level based on neighborhood, number of bedrooms, square footage and other factors specific to your home. I would also advise that just because your tax assessment did not increase, doesn’t mean the market value of your home did not increase (and vice versa).
Market Values Higher Than Assessed Values
The following table compares the average sold price (market value) with the average 2017 tax assessment for all homes sold in 2017. I cleaned up the data a bit by removing Co-op sales (River Place), Ballston’s Senior Living Community, new construction (new tax assessments may take a year to catch-up) and a handful of sales that didn’t have a tax assessment available.
The average Arlington home has a market value 10% higher than its tax assessment
Only 14% of homes sold in 2017 sold for less than their 2017 tax assessment
The County struggles the most assessing the value of detached homes in Arlington, likely because of how difficult it is to assess land value with due to the proliferation of tear-downs being bought for land only
The most under-assessed zip codes were 22213, 22205 and 22204 with homes selling for 12% or more above the assessed value
The most accurately assessed zip code was 22201, with assessments coming in within 7.4% of the average market prices
Appealing Your Assessment
For the 2017 tax year, Arlingtonians will pay .996% of their assessed value in real estate taxes, up from .991% in 2016. Every year you have an opportunity to appeal your assessment and yes, it has worked, but the burden of proof is on the homeowner, not the County. Arlington provides an informative website on the appeal process.
Quick hits on the appeal process:
You should have received your 2017 tax assessment in the mail some time this month
Your first appeal with the Dept of Real Estate Assessments must be filed by March 1, 2018
Step 1: Call (703)228-3920 for information on how your assessment was determined
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 here (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
If you’re considering appealing your tax assessment, feel free to reach out to me to discuss building a case. I have access to micro and macro market data that can help you determine if your property is over-assessed and can help you create a clear report supporting your appeal.