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The Real Estate Market Whiplash is Crazy

reallivingathomeblog Arlington, Buyer, Seller , 0 Comment
The Real Estate Market Whiplash is Crazy

Question: How much has the market changed in the last six months?

Answer: Sometimes I write columns for myself as the audience, this is one of them…I hope some of you find it as interesting as I do!

Four months ago, you couldn’t watch/read the news without hearing about the collapsing real estate market but by late January, it was obvious that low supply would prevent that from happening. Demand even prevailed through February rate spikes because 2023 was the first year that new listing volume in February was lower than January.

Market Whiplash from Q4 ’22 to Q1 ‘23

It’s normal for the market to slow in Q4 and pick back up in Q1, but the change in market conditions from Q4 2022 to Q1 2023 was the most significant on record.

To get a sense of just how much of a shift we experienced between Q4 and Q1, I compared the key performance metrics of Net Sold (sold price less seller credits) to Original Asking Price percentage and the percentage of homes going under contract within ten days. I also compared all property types, condos, and detached/townhouse/duplex. Here are the highlights:

  • Buyers lost about 6.3% of negotiation leverage on non-condos since Q4. I think that percentage accurately represents how much the market value of most non-condo properties has changed in just a few months.
  • The performance data for non-condos is surprisingly similar for Q1 ’23 and in Q1 ’22, despite 2022 being the hottest market we’ve ever experienced.
  • Market pace in Q4 was really slow, with less than 1/3 of non-condos going under contract within ten days. In Q1 that number has jumped to almost 71%.
  • The condo market in Q1 ’23 is notably more competitive than it was in Q1 ’22, despite last year’s favorable market conditions (low rates). It took buyers a while to put the pandemic-led resistance to condos behind them, but it’s now clear that condo demand has returned.

Looking ahead, it doesn’t seem like there’s any supply relief in sight, with new listing activity trending at 10-20+ year lows so even moderate demand will create upwards pressure on prices and a fast-paced market. However, you can expect demand to ease up as summer approaches and you can always count softer demand in Q4.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Eli Residential channel.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH @properties, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.

Did DC Real Estate Prices Just Crash?

reallivingathomeblog Arlington, Buyer, Home Owner, Investor , , 0 Comment
Did DC Real Estate Prices Just Crash?

Question: I found data that shows housing prices in DC are back down to the 2018 levels but anecdotal evidence suggests they are not. Can you explain whether the data I found is accurate or something is off?

Answer: The median price ($545,500) for homes sold in January ’23 in Washington DC showed a 15.4% year-over-year drop and was the lowest median price for any month going back to January ’19.

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Did DC Lose Four Years of Appreciation?

Given the economic and real estate climate since this summer, with endless headlines about market corrections, it would be easy to interpret the latest DC median price data as proof that the bottom is falling out of the real estate market. Unfortunately for our bear-market prognosticators, or those waiting for a market crash to buy property, the chart above is misleading and not representative of the actual market.

The drop in median price is due to an unusual data set and does not mean that real property values have fallen 15.4% year-over-year and/or lost four years of appreciation.

How The Data Steers Us Wrong

Real estate data can be tricky to use correctly (aka draw accurate conclusions) so if you want to make data-driven decisions, make sure you are leveraging the right data and working with somebody who understands the strengths and weaknesses of real estate data in your local market. Here’s why the January median Washington DC pricing data steers us wrong…

Timing: Pricing data lags by about 30-60 days, meaning the pricing data published in January is mostly made up of contract activity in November/December and is thus an indication of what happened in the market, not what is happening in the market. November and December are traditionally the slowest months of the year, with the least demand and lowest volume of homes being listed for sale. Sellers during this time of year also tend to be under more pressure to sell.

Combine that with the market deceleration in the 2nd half of the year due to rapidly rising interest rates and it made for an unusually slow real estate holiday season.

By the time the January pricing data was published in early February, market demand had already picked up significantly.

Sales Volume: Only 352 homes sold in DC in January compared to the 10-year monthly average of 718. Other than December ’22 (432 sales), no other month for the past 10+ years had registered under 450 sales and only five months registered less than 500 sales.

The unusually low sales volume means that the median price data can be skewed by unusual balances of less (or more) expensive homes in a given month, which is why most January pricing data comes in much lower than other months and why January ’23 was such an extreme version of that scenario. 

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There were just 46 single-family homes in the January data. As you can see from the chart below that shows the number of sales by price points, the distribution of sale prices skewed significantly lower in the January data with a big drop in the number of $1M+ homes sold but a more consistent number of homes under $600k sold. This leads to a much lower median price, but doesn’t mean home values are dropping, just that fewer expensive homes were sold.

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Average Price: The chart of monthly average prices tells a different story about price trends, showing a clear upward trend since 2019/2020. However, as you can see, using average price presents its own set of data challenges because of how much variability there is on a month-to-month basis based on the type/balance of sales included in the data for any given month.

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Buyers Still Won During Q4

I’ve shown a bunch of reasons why the low median price for January sales wasn’t an accurate representation of the market (home values not down 15.4% year-over-year or to 2018-2019 levels), but I should still point out that it was objectively a more favorable time for buyers to negotiate better deals, just not to the tune of double-digit price drops.

The average home that sold in December ’22 and January ’23 sold for 4.2% less than the original asking price, which is pretty good when you consider the average home in the spring of ’22 was selling for nearly 1% over ask. In my opinion, this is the best measure of how much home values actually dropped from spring ’22 to November/December ’22, which is likely about 5%.

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If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Eli Residential channel.

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

2022 Arlington Single-Family Housing Review

reallivingathomeblog Arlington, Buyer, Home Owner, Seller , , 0 Comment
2022 Arlington Single-Family Housing Review

Question: How did the Arlington single-family housing market perform in 2022?

Answer: The 2022 housing market came in like a lion and left like a lamb. The way things were reported in the news, one may be led to believe the 2nd half of the year was a disaster, with home values crashing because of higher interest rates, falling stock portfolios, the Ukrainian war, and buyer fatigue. 

The truth, at least locally, is that the aggregate of the first half/second half, yin and yang housing market was still marked by strong price growth across all single-family sub-markets (I’ll analyze the condo market next week).

Strong, Stable Growth Continues for Arlington Single-Family Homes (SFH)

Like a blue-chip stock, the Arlington housing market is reliably strong and stable. We didn’t experience the double-digit annual appreciation of other national housing markets from ’20-’22 but we also benefitted by excellent growth prior to the pandemic buying craze (Amazon HQ2 and overall strong local market conditions). You can also count on the likelihood of stable growth to continue even if other markets struggle as they transition out of their reliance on pandemic-buying and ultra-low interest rates.

  • The average and median price of a SFH in Arlington increase 4.4% and 7%, respectively
  • Over the last five years, the average and median price of a SFH in Arlington increased by 25.3% and 29.1%, respectively
  • The average buyer paid 1.9% over asking to purchase a home in 2022
  • Homes that sold within ten days of being listed sold for an average 5% over asking and 57% of homes sold in 2022 were sold within ten days
  • Low supply was a big driver in keeping prices elevated despite difficult second half market conditions. There were 30% fewer SFHs sold in 2022 than in 2021.
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22205, 22201 Zip Codes Lead Growth

If we drill down into performance by zip code (note: 22206 and 22209 don’t have enough SFH sales to be included), we find some really good insights:

  • 22204 is the only remaining zip code with an average price below $1M. It was only 2017 that the entire County’s average price was below $1M.
  • 22201 extended its lead as the most expensive zip code to purchase a SFH, costing an average of over $100k more than the next most expensive zip code, 22213, and finishing the year with an average price of nearly $1.6M
  • 22201 and 22205 experienced the most appreciation, with YoY increases of 9.3% and 8.2%, respecively. The next highest zip code, 22203, grew by 4.9%.
  • 22205 was the most competitive/frustrating for buyers, with the average home selling for 4% over ask
  • Over the last five years, the 22202 zip code (area surrounding HQ2) has, unsurprisingly, benefited from the highest appreciation at 33.8% growth since 2018 due to the Amazon HQ2 boost followed by the pandemic buying craze
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New Construction: Bigger Homes, Bigger Prices

New builds have outpaced the appreciation of the rest of Arlington over the past two years, gaining 21% since 2020. New homes are also bigger than they’ve ever been with the average home claiming over 5,100 SqFt of finished living space, nearly six bedrooms, and more than five full bathrooms. Buyers are now paying almost $400,000 per bedrooms to own a new home.

You may notice the sharp drop-off in the number of new homes sold in 2022. This drop does not align with County data for new construction starts/completions and I think is more representative of the number of homeowners building outside of what’s being offered on the market – demolishing a home they already live in, acquiring their own lot and hiring a builder, or securing a lot/build with a preferred builder prior to it being marketed for sale.

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Price and Bedroom/Bathroom Distribution (for my Missing Middle friends!)

The biggest change in price distribution in Arlington has been at the ends of the spectrum, with the percentage of homes seller for under $800k dropping from 35% in 2018 to 11% in 2022. On the other end of the spectrum, the percentage of homes selling for $2M+ has increased from 3% in 2018 to 11% in 2022.

Most sales in Arlington fell between $800k and $1.2M. The median household income in Arlington is about $128,000 which at current interest rates, limited personal debt, and a 20% down payment qualifies for a roughly $900k purchase. If rates drop to 5%, the median income qualifies for roughly $1M.

Nearly 2/3 of SFHs sold in 2022 had three or four bedrooms, most of which had at least two full bathrooms, and the price of those homes averaged $940,500 and $1,155,000, respectively.

If we add townhomes and duplexes to this data, we’ll see an even higher concentration in the 3-4BR range and lower average prices, so we see here that the term “Missing Middle” is a bit of a misnomer…it’s not missing and the average costs generally align with median household income, but the supply simply of “middle” housing isn’t as high as County leadership and MM proponents would like it to be. I also expect that most Missing Middle housing built would be more expensive than the current average prices for 3-4BR homes, certainly when comparing existing “middle” housing and new Missing Middle housing in the same location.

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*Note: this table displays the most common BR/BA combinations, but does not show all sales

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Eli Residential channel.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH @properties, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.

Tax Assessments vs Market Value

reallivingathomeblog Arlington, Buyer, Seller , 0 Comment
Tax Assessments vs Market Value

Question: How close are the County’s tax assessments to actual market values?

Answer: Earlier this month, Arlington announced that the next round of annual tax reassessments would increase the total residential assessment by 4.5% (this is overall, changes to individual home/land values will vary significantly). This change is meant to align with the increase in market values of Arlington homes, but assessed values remain well below actual market values for most homes. In fact, 81% of homes sold in 2022 sold for more than their most recent tax assessment value.

Homes in Arlington that sold in 2021 sold for an average of 8.7% (median 8.4%) above their most recent tax assessment.

Homeowners in the 22205 zip code benefit the most by underassessments, for a second year in a row, with an average difference between 2022 sold prices and their assessments of 14.8%, or over $194,000. Owners of single-family homes and townhouses (12.9% average difference) benefit more from underassessments than condo owners (4.1% average difference).

If County assessments were representative of actual market values, the average Arlington homeowner would pay over $900 more per year in property taxes, so don’t forget to send the Department of Real Estate Assessments a thank you card!

The following chart details the difference between how much a home in Arlington sold for in 2022 compared to its most recent County-assessed value:

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If you believe that the County’s assessment of your home’s value is too high, you have the right to appeal the assessed value; the deadline is March 1.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Eli Residential channel.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH @properties, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.

Why the #*%$ is the Market Competitive Again?

reallivingathomeblog Arlington, Buyer , , 0 Comment
Why the #*%$ is the Market Competitive Again?

Question: A friend of mine just lost an offer on a house and there were 7 other offers, is the market competitive again?

Answer: If you’re letting news outlets, national real estate pundits, and Twitter guide your real estate strategy in the DC Metro/Northern VA, you’re likely getting a very different perspective on the real estate market than what we’re seeing locally. Despite 6-8+ months of headwinds, the market did a 180 in the first few weeks of January, compared to the weeks prior (this is a common trend).

Multiple offers, escalations, and limited contingencies have returned to many parts of the market, so this week’s column is chart-heavy to show that the “crash” in the 2nd half of the year was all relative to the breakneck pace of the market in 2021 to mid 2022 and how natural supply/demand economics are keeping the market competitive and prices up, despite how much higher the monthly payments are.

Second Half 2022 was Relatively Bad, Historically Normal

Overall, across the DC Metro region, total sales transactions finished the year 3% above the 10-year average. Things seemed a lot worse than they were because of the massive number of sales we experienced in 2021 and 2020.

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While prices in most sub-markets did drop from the first to second half of ’22, real estate in the DC Metro still appreciated in 2022 above the 10-year average. Even condos, which struggled through the heart of the pandemic, appreciated nicely in 2022.

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In Northern VA, there’s a clear jump in average prices in Q1/Q2 2022, followed by a very normal drop in average prices for Q3/Q4 (this has more to do with more expensive homes being sold in the spring, not a seasonal drop in home values), but the Q3/Q4 average prices fit nicely within the normal trend line and do not suggest any sort of crash, just a jarring difference from what we experienced in the first half of the year.

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Average sale price to original asking price ratios, one of the best demand metrics, fell sharply through December, from all-time highs in the spring. While the speed of the drop shocked the market, it dropped to normal Q4 levels so the “crashing market” feeling was only relative to the extreme demand in early 2022, but not so when compared to historical norms.

A similar pattern can be seen in the second chart for median days on market. In fact, the 2nd half of 2022 was still a faster pace market than the 10-year average.

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Showing activity during the past week, as measured by Bright MLS, is 73.7% lower than it was in 2022, but 5.5% higher than it was during the same week in 2019.

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Interest Rates Are Lower, Relatively Speaking

The relative effect of interest rates plays a huge role in demand. For most of 2022, buyers felt like they were losing every week as rates climbed steadily from January through October. Conversely, rates have fallen since November and stimulating demand.

**It’s worth noting that there are Jumbo loan products currently available at rates ~.5% less than what the second chart shows.**

Just look at the difference between the mortgage rate trends from January ’22-October ’22…

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…compared to the mortgage rate trends since November ’22…

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Not Much Demand Needed to Make the Market Competitive

With supply this low, it doesn’t take historic demand to generate competition. Q4 2022 was by far the lowest quarter for new listing supply in over a decade and total active listings still trail well behind the 10-year average heading into a new year.

We’re currently see many more homes go under contract than what is being supplied to the market. For example, over the past seven days in Arlington, 48 properties went under contract compared to only 31 new listings.

The pace of new listings will continue to increase through the spring, peaking from roughly mid-March through May, so it will be interesting to see whether demand will keep pace with increased supply or whether supply will outpace demand and reduce the amount of competition that currently exists.

For now, the low inventory and current demand levels are enough to create competition in many sub-markets for good properties priced appropriately and thus putting upward pressure on prices at a time when many expected prices to fall or remain stable.

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If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Eli Residential channel.

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

So You Want a Big Yard in Arlington?

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So You Want a Big Yard in Arlington?

Question: We’re moving to Arlington from out of state and have always had at least an acre of land. We’d like at least ½ acre in Arlington, but can’t find much. How big are most lots in Arlington?

Answer: I talk a lot about making sure the home you want exists before setting your hopes and dreams on finding it. Understanding what lot sizes you can expect to find in Arlington is a great example of that, so this week I’ll share data on lot sizes from homes sales going back to 2019.

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The data is based on total square footage of a lot, including the land the home sites on. Most people think about lots in terms of acres, so here’s a quick conversion key:

Square FeetAcres
5,4451/8
10,8901/4
21,7801/2
32,6703/4
43,5601

Arlington Lot Size Highlights (sales since 2019):

  • Average lot = 8,479 SqFt
  • Median lot = 7,277 SqFt
  • Lot with ¼ acre or more is in the top 83% largest lots
  • 1.4% with ½ acre or more
  • Just six of 4,355 were 1+ acre, none were 2+ acres
  • More homes sold on 1/10th acre or less than ½ acre or more

The chart below shows the percentage of homes sold in Arlington within five different ranges. 69% of homes sit on lots with 5,000-9,999 SqFt.

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Drilling down even further, we see that 1,672 of 4,355 lots (38%) were between 6,000 and 7,999 SqFt

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Lot sizes are not evenly distributed across the County. The smallest lots are found in South Arlington and along the Rosslyn-Ballston corridor with larger lots found further norther. The large lot sizes are one reason why 22207 has so much tear down-new build activity.

Below you can see a distribution of lot sizes by zip code, first as a percentage of sales in each zip code and then by number of sales in each zip code.

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If any readers would like to see pricing data for certain lot sizes, I’m happy to pull that for you, just send me an email.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH @properties, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.

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

Interest Rate Forecasts and New Loan Limits

reallivingathomeblog Arlington, Buyer, Investor, Loan , , , , , 0 Comment
Interest Rate Forecasts and New Loan Limits

Question: What are current forecasts for mortgage rates in 2023 and beyond?

Answer: Happy New Year everybody!

A few weeks ago, I posted a “Beyond the Headlines” deep dive with James Baublitz, VP of Capital Markets at First Home Mortgage, into why interest rates have increased so much.

As the calendar turns, many of you will be kicking off your home search and asking about current and forecasted interest rates, so I’ll cover that today, plus a quick note on recent loan limit increases for down payments as low as 3%.

What is a “Normal” Mortgage Rate?

The first thing to understand about mortgage interest rates is that they are market-driven and forecasting comes with the same amount of unpredictability as any other economic/market-based forecasting (GDP, Unemployment, Stocks, etc). Take predictions/forecasts with a grain of salt.

The other truth that is best illustrated by the chart below, which shows the average 30yr fixed mortgage rate since 1971, is that there really is no established “normal” interest rate that we can point to and say “this is what you can expect when markets stabilize.” So, use caution when relying on assumptions about future rates (e.g. for a refi).

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Forecasting Future Rates

Most major forecasting organizations including Mortgage Bankers Association, Freddie Mac, and National Association of Realtors (NAR) believe rates will steadily decrease through 2023 and that trend will continue into 2024.

Mortgage Bankers Association expects rates to fall faster than Freddie Mac and NAR, with average 30yr fixed rates hitting mid 5s by the 2nd quarter and low 5s by the end of 2023. They forecast that rates will be in the 4s by Q1/Q2 2024 and believe the long-term stable rate to average 4.4%.

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Freddie Mac sees rates remaining in the mid 6s for most of 2023 and closing out the year at an average of 6.2%.

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NAR expects the average 30yr fixed rate will hover just above 6% in the first half of 2023 and then settle into the upper 5s in the second half of the year:

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Higher Loan Limits for Lower Down Payments

The Federal Housing Finance Agency (FHFA) just released new conforming loan limits for 2023, with significant increases to reflect recent price growth. The jurisdictions in the greater DC Metro area were given the maximum loan ceiling of $1,089,300.

Beginning this year, Fannie/Freddie will insure loans up to $1,089,300 with as little as 5% down, or the equivalent of a purchase price just under $1,115,000 with 5% down. The new conforming limits increase the maximum loan amount with 3% down to $726,200, or the equivalent of a purchase price just under $749,000 with 3% down.

For any conforming loan (or any loan for that matter), borrowers must also qualify on several factors including credit score, debt-to-income ratio, first-time buyer status, and more. Feel free to reach out to me for lender recommendations if you’d like to explore your mortgage options.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.

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

Most Expensive Homes Sold in the DMV in 2022

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Most Expensive Homes Sold in the DMV in 2022

Question: What were some of the most expensive homes sold this year in the DMV?

Answer: Happy holidays and new year everybody!

It’s always fun to look back at the most expensive homes sold in our nook of the world, so without further ado, let’s take a look at the most expensive homes sold this year in DC, Maryland, and Virginia. Note: this includes what is entered into the MLS, it’s certainly possible (likely) that expensive homes have traded hands privately outside of the MLS.

The most expensive home sold this year in all three DMV states is a beautiful 550-acre estate, with a private 18-hole golf course, in Upperville VA that sold for $23.5M! Despite the hefty price tag, it falls well short of the record sales from 2018, 2020, and 2021 that all cleared $40M.

Listing by John Coles, Thomas and Talbot Estate Properties, Inc (1584 Rokeby Rd, Upperville, VA)

Top 5 Most Expensive Sales in Arlington

Listing by Robert Hryniewicki, Washington Fine Properties (3433 N Albemarle St, Arlington, VA)

Arlington’s average and median prices are sky-high, but the area generally likes ultra high-end properties we see elsewhere in the region. Arlington’s most expensive sale this year is a new build in Country Club Hills clocking in at 7,450 SqFt, seven bedrooms, seven full bathrooms, and two half baths. The property sits on an unusually large (for Arlington) .39-acre lot.

Top 5 Most Expensive Sales in Alexandria

Listing by Preston Innerst, EYA Marketing (5 Pioneer Mill #502, Alexandria, VA)

The most expensive sale in Alexandria is a townhouse built in 1800 in Old Town that sits on nearly ¼ acre with over 6,000 SqFt and seven bedrooms. Pictured above is the second priciest sale in Alexandria, a waterfront penthouse condo in Robinson Landing with nearly 2,800 SqFt for $4,509,000.

Top 5 Most Expensive Sales in Fairfax County

Sold by Daniel Heider, TTR Sotheby’s International Realty (576 Innsbruck Ave, Great Falls, VA)

The most expensive sale in Fairfax County comes in at $11M for a 20,000 SqFt home recently built one block from Langley High School. Pictured above is the second most expensive sale in Fairfax County of a sprawling Great Falls residence on five acres, built in 2007, sold for $10.5M.

Top 5 Most Expensive Sales in Loudoun County

Listing by Cricket Bedford, Thomas and Talbot Estate Properties (21827 Quaker Ln, Middleburg, VA)

The most expensive sale in Loudoun County for $4,950,000 of nearly 190 acres with an active Angus cattle operation.

Top 5 Most Expensive Sales in Washington DC

Listing by Michael Rankin, TTR Sotheby’s International Realty (3017 O St NW, Washington, DC)

3017 O St NW in Georgetown is Washington DC’s most expensive sale, at $11.5M, for nearly 8,000 SqFt on over ¼ acre.

Top 5 Most Expensive Sales in Maryland

Listing by Brad Kappel, TTR Sotheby’s International Realty (3235 Harness Creek Rd, Annapolis, MD)

The most expensive sale in Maryland is a beautiful waterfront home in Annapolis with over 3.5 acres and nearly 12,000 SqFt, built in 2014 for $12,000,000.

I hope this makes for some fun conversation during the holidays about what type of ultra high-end home you would buy if you win the lottery! But I’ll be honest, the most expensive homes this year aren’t nearly as impressive as last year’s (link if you want it).

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.
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.

My Best Advice to Start Your Home Search

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My Best Advice to Start Your Home Search

Question: We are looking forward to buying a home next year. Do you have any recommendations on how we should start the home buying process?

Answer: If you Google “home buyer tips” or “what to know before buying a home” and you’ll find plenty of advice on the topic, so I’ll include some suggestions I don’t usually see online and put my own spin on some of the more common advice. 

Weighted Criteria

It’s easy to come up with 3-5 things that are most important to you, so challenge yourself early to come up with a list of 10-15 must-haves and wants. Then, starting with 100 points, allocate points to each criteria based on how important it is to you and you’ll end up with a weighted criteria list to help you focus your search and objectively compare properties.

I encourage couples to complete this exercise individually first, then work together on a combined list. This will put even the best relationships to the test!

If you want to take it to the next level, bring your weighted criteria list with you on showings and score each house based on the points you allocated to it and score each home on a 100-point scale. I often find that buyers who have taken this exercise seriously and are working within a budget are hitting scores in the 70s-80s on their top choice homes.

Length of Ownership

How long you expect to live in your home is one of the most important factors in defining what you prioritize and how you use your budget. You should focus on the following:

  1. Likely length of ownership
  2. Difference in criteria for a 3-5 year house vs a 10-12+ year house
  3. Difference in budget requirements for a 3-5 year house vs a 10-12+ year house

Appreciation is not guaranteed and difficult to predict, but the value of longer ownership periods is undisputed. One way longer ownership adds value is the potential for eliminating one or more real estate transactions over your lifetime, thus the associated costs (fees, taxes, moving expenses, new furniture, etc) and stress that comes with moving.

If you have an opportunity to significantly increase your length of ownership by stretching your budget, you generally should. On the other hand, if your budget or future (e.g. job will move you in a few years) restrict you to housing that’s likely to be suitable for just 3-4 years, it’s generally better to stay under budget.

Influencers (not the Instagram ones)

Family, friends, colleagues…they’re all happy to offer opinions and contribute to your home buying process, but the input can be overwhelming and unproductive if you don’t set boundaries. Try to determine up-front who you want involved in the process and how you’d like them to be involved.

Think about how you’ve made other major decisions in life – what college to attend, what car to buy, where to get married, whether to change jobs – and if you’re the type of person who likes input from your friends and family, you’ll likely do the same when buying a house. Plan ahead with those influencers so their input is productive and comes at the right time (e.g. not when you’re already two weeks into a contract).

Does Your House Exist?

Before jumping too far into the search process, spend a little bit of time searching For Sale and Sold homes on your favorite real estate search website/app to see if the homes selling in the area(s) you want to live in and that are within 10% of your budget are at least close to what you’re looking for. If not, spend some time adjusting price, location, and non-critical criteria to figure out what compromises you’ll need to make and then compare those compromises to your current living situation and/or alternatives like renting.

Know Your Market

We’re transitioning from the most intense housing market ever into a much more moderate environment, but what you see and read about the housing market may not be accurate in the sub-market you’re looking in.

Each sub-market behaves a bit differently and comes with its own unique set of challenges and opportunities, so take time early on to understand the sub-market(s) you’ll be involved in and what you’re likely to experience. This is something your agent should be able to assist with.

Pre-Approval & Budget

There is a lot of value in working with a lender early in the search process. For starters, you’ll have somebody who can provide real rates and advice based on your specific financial situation/needs. A lender can only do this if they’ve reviewed your financial documents and credit. The more you put in, the more you get out.

You’ll need to have a lender pre-approval to submit an offer (the seller has to know you qualify for the purchase you’re offering to make) so if you have to do it anyway, do it early on so you get the most value out of your lender. It also means that you’ll be prepared to make an offer if you find the right home earlier than you expect.

Despite the market slowing down, the quality of your pre-approval can make a big difference when you make an offer. Quality means a lender who has taken the time to fully review your documents and credit, will speak on your behalf to the listing agent, and is a bank/mortgage broker with a good local reputation.

You should strongly consider having a pre-approval from a reputable local lender to give yourself an advantage when making an offer. Pre-approval letters from big banks and online lenders don’t go over as well in our market. If you’re looking for a recommendation, consider Jake Ryon of First Home Mortgage (JRyon@firsthome.com).

Find an Agent

Agents come in many different forms and finding somebody who suits your personality and goals is important. Ask friends, colleagues, and family for referrals or spend time talking with different agents at Open Houses until you find somebody you like.

The worst thing you can do is choose your agent based on whoever responds to an online showing request faster. A good agent can provide a lot of value getting involved in your buying process 2-4+ months before you’re ready to buy.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.

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

High Mortgage Rates, Beyond the Headlines

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High Mortgage Rates, Beyond the Headlines

Question: Is there anything other than the increasing Fed Funds Rate that is driving mortgage rates higher?

Answer: This week we continue the effort to get educated on mortgage rates and products so you can be smarter, more informed consumers. Higher mortgage rates are being driven by the increases in the Fed Funds Rate, which is the storyline that commands news headlines, but that’s not the only thing driving your interest rate up.

To learn more about what’s happening beyond the headline news, I interviewed First Home Mortgage’s “market maker” James Baublitz (official title, VP of Capital Markets). Let’s jump right in….

ET: What is your role at First Home Mortgage?

JB: I work as Vice President of Capital Markets for First Home Mortgage Corporation. In this role I oversee the different loan programs we offer to borrowers, the mortgage rates we offer daily and the trading strategy we use to manage risk for the organization. This involves frequent communication with broker/dealers and monitoring market developments both intraday and throughout the year.

ET: Other than the highly covered Fed interest rate increases that have increased the cost of borrowing for everything, what else has caused actual mortgage rates to increase so much?

JB: The Federal Reserve lowered the Fed Funds Rate all the way to a range of 0.00% – 0.25% to defend the economy in the wake of the COVID-19 pandemic. Since rates were effectively at 0.00% they couldn’t go lower, but the Fed wanted to stabilize the economy further given the unprecedented macroeconomic uncertainty the pandemic caused. So, the Fed reinstated the so-called Quantitative Easing program where the Fed began buying mortgage-backed securities, the bonds backed by the mortgages many of us hold.

Supply and demand – the Fed materially increased demand for mortgage assets so prices went higher which meant rates (which move inverse to price) went much lower. Fast forward to today, the Fed never intended to remain a buyer of MBS in perpetuity and earlier this year they announced they would stop their purchases. As a result, demand decreased significantly and the rates they helped drive dramatically lower increased.

ET: Do you expect the Fed to return to buying mortgages to help bring mortgage rates down and prevent a housing crisis?

JB: It’s important to note that the Fed views their purchases of mortgage assets as an extraordinary measure done in the wake of only the most concerning economic environments. The Fed seeks to implement policies that foster full employment in the economy and a modest rate of inflation – 2% – over the long haul. The Fed does not try to ensure mortgage rates are at a certain threshold, however.

It’s also worth noting that extraordinarily low mortgage rates contribute to inflation in the form of much higher home price appreciation – the general idea being that a buyer might be willing to stretch to pay more than asking prices if their financing costs are low enough. We all certainly saw that in the bidding wars in our local markets the past couple years! With this in mind, Fed officials have previously pointed to very hot housing markets as a cause for concern and see more normalized housing markets as a good thing. Remember, their concern is price stability, not dramatic increases in home prices.

ET: Mortgage rates generally follow a predictable spread above the 10yr treasury bond, but we’ve seen this spread increase significantly over the last 6 months of rapidly increasing rates, why is that?

JB: Markets don’t like uncertainty, and mortgage markets especially don’t like volatility. Big picture, we’re phasing out of a paradigm where the Fed was the main buyer for mortgage assets to a situation where they are on the sideline. The traditional buyers of mortgage assets – commercial banks, money managers and foreign investors have big shoes to fill when it comes to replacing Federal Reserve buying activity.

The multi-billion-dollar question here is – why? There is no shortage of answers ranging from volatility resulting from the war in Ukraine, to leverage and margin concerns from US money managers, to currency fluctuations in markets like Japan. My two cents, however, is that big changes take time. We’re moving from an environment where the Fed provided clear signals to market participants that rates were going lower. In the face of all this uncertainty following the Fed’s exit and the macroeconomic events I mentioned the traditional buyers of mortgage assets are being selective and waiting until they have more certainly to buy in bulk.

It’s the same as any of us when we think about investing personally: the wider the range of potential outcomes, the more potential that our return will vary, the higher overall return we will require. In the mortgage market that means rates need to be higher. They have big shoes to fill – depending how you define it; the Fed was buying something on the order of 30-40% of newly issued mortgages. The Fed exiting the mortgage-purchasing business is a big change and like I said, big changes take time.

ET: Major organizations like the Mortgage Bankers Association, Freddie/Fannie, and National Association of Realtors have recently issues revised interest rate forecasts that vary widely. How should consumers look at these forecasts and use them for planning purposes?

JB:  Each of these groups put a great deal of time into the projections, but they are just that, projections. My advice to prospective borrowers is to use these projections as loose inputs in your planning process, but remember to focus on the house and make sure you’re comfortable with the major decision that is homeownership as a whole.

It’s no secret rates are higher today than they have been in the past few years but they remain low by nearly any historical standard. If rates decline, refinancing is certainly easier today it has been in years past. If rates remain the same or move higher in the future, today’s rates will naturally look better. Either way, take the time to find the right home for you and your family.

ET: Thank you very much for your time and thoughtful answers James. We appreciate the expertise you and First Home Mortgage have provided today!

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.

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