CHAT: Transcript of Loudoun Housing Market Chat

By LoudounExtra.com staff

Originally published at 12:00 a.m., January 20, 2008
Updated at 12:57 p.m., January 24, 2008

Jeanette G. Newton, the chief executive officer of the Dulles Area Association of Realtors, joined readers of LoudounExtra.com on Thursday to answer questions about the local market, where it's been and where it might be headed.

The full transcript of the hour-long chat is below.

Jeanette G. Newton: Hello. I am pleased to have been asked to be a part of this discussion. Please keep in mind that I am not a licensed real estate agent and therefore will not be able to answer questions about specific values and costs of real estate. I will do my best to be as helpful as possible and send you in the right direction.

Jeanette G. Newton

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Silver Spring, Md.: Hello, a real estate agent told me this week that she would be "less surprised if the local real estate market for homes in the inner suburbs/near Metro went up 10 percent in the next year than if they dropped 5 percent." I know that real estate agents are optimistic by nature, but c'mon, how could prices possibly go up any more -- they're already way higher than rents. The reason I ask is that we want to sell our home in the next year to move into a less expensive place, and are trying to decide if it's better to do it now or ride it out for a year when hopefully the market will be a little better for sellers. This real estate agent thought we should wait a year. What do you think?

Jeanette G. Newton: Most of the statisticians who have been measuring real estate stats in the metro D.C. area have indicated that we have already hit bottom and that home prices will rise. However, that rise will be extremely slow and may not even be noticeable for a year. I certainly don't think you will see any 10 percent appreciations in the next year or two, but I also don't see values going down any further. You need to review your financial needs and if it is feasible for you to wait a year, that might be good advice.

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Clifton, Va.: I am looking to move to get some land for herding dogs so that they can have their own flock of sheep to work. I'm looking for 5-15 acres give or take. What can I expect to pay for the land? No HOAs please.

Jeanette G. Newton: In Western Loudoun you won't find many HOAs for property of the size you are seeking. I would highly recommend that you contact a Realtor and contract with them for buyer agent representation. They will be in the best position to advise you on potential land values. Try to find an agent who specializes in land sales for your most accurate information.

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Falls Church, Va.: Hello, we bought a beautiful brick single-family home in summer 2007 for a good price, but not a rock-bottom price. We put down 20 percent. It's a great house, great neighborhood, 10-minute walk to the Metro but not within walking distance of stores. Unfortunately, we miss the walkable neighborhoods of D.C. and lower-maintenance apartment life so much that we want out and would even go back to renting a smaller place. Unfortunately, home values in our neighborhood have dropped. Is there anything we can do to get out without losing mega-bucks? If we rented our house, how much more than our mortgage would we have to make to break even? When do you think the outlook might get better for sellers?

Jeanette G. Newton: If you can wait a year before moving I believe you will find a better real estate market for selling. There is a great deal of inventory on the market right now, so it is definitely a "buyer's market." Competition is extreme. You should check with your financial advisor on the rent question, as well as consult with a local Realtor on what rental values in your area are. There are tax implications that only a financial advisor would comment on to determine if it is worth your while to rent the home.

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Atlanta, Ga.: I currently own a townhouse in Ashburn that is being rented out for less than the actual mortgage and will be returning to the area this summer. My family constellation has changed and I would like to buy a bigger home. However, I may only be in the area for 4-5 years. Would it be more prudent to move back into my current house or wait out the market in hopes that it will eventually correct and that its value will appreciate. I have an interest-only loan so there is no equity in the property.

Jeanette G. Newton: I honestly believe that home values will go up over the next 4 - 5 years, so I don't believe you can lose with that kind of investment, barring something unforeseen, but there are costs involved in purchasing and selling a home and you will need to weigh those costs against any equity that you may receive in appreciation. It is not likely that we will see the very high appreciation rates of the past few years, so figure in something more reasonable like 2 – 4 percent per year.

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Arlington Va.: Hello Ms. Newton: Thanks for taking my question. I know that the status of the real estate market in the D.C. metro area varies greatly by location. Which locations do you see as stronger and weaker markets?

Jeanette G. Newton: Without getting into specific markets, since I really only focus on the Dulles area, it has become apparent that the faster the values rose, the more they slowed. Loudoun homes, for instance, appreciated faster than most of the metro D.C. area, and as a result has been the slowest to recover. In reviewing the numbers, it does appear that the closer you are to the center, D.C., the faster the recovery. Look at it as a wave moving out from D.C. at the center.

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Kensington, Md.: I am thinking of renting out my single-family home instead of selling it at a loss (we're being transferred). If my mortgage is, say, $2,000, then what would I have to rent it for in order to break even or even make a little money?

Jeanette G. Newton: I would suggest you contact a Realtor in your area to find out what rental values are for your type of property and then you would need to consult with a financial advisor to calculate tax savings, depreciation to see if it would work for you.

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Winchester, Va.: Do you have any knowledge of and prediction for the market west of Dulles and Loudoun, i.e. Winchester/Frederick County, Va.? We are about 70 miles west of the metro area and on the fringe of that market. Winchester is somewhat of a D.C. bedroom commuter community. What would you say will happen out here in the coming months?

Jeanette G. Newton: As I indicated in another answer, there is a wave that seems to be moving out from the center of our Metro area. There are two other factors which seem to be prevalent right now, price and gasoline/commuting costs. The Winchester area has been more affordable than much of Loudoun so its ability to recover more quickly is an important consideration, however, at $3 per gallon, many people are now taking that into consideration when they decide where to live. Those are the things that seem to be driving the current market for the outskirts of the metro area.

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Purcellville, Va.: Thanks, Jeanette, for doing this! The $64 question: How much have prices fallen in Loudoun since 2005? 10 percent?

Jeanette G. Newton: I have not received my 2007 annual statistics yet, but I believe your figure of 10% in the last two years could be very realistic.

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Sterling Va.: The Virginia General Assembly just killed abusive driver fees which would have raised $150-plus million per year but has not acted to repeal the 400 percent increase in the grantor tax which was implemented during the worst real estate market downturn during at least 20 years. What tax revenue policy changes do you support to help fund more road construction in Northern Virginia?

Jeanette G. Newton: As an Association we support very broad-based tax increases that legislators must be accountable for. We fought very hard, unsuccessfully may I add, against that Grantor's Tax increase, which we renamed a "Farewell Tax" because the only people paying it were those who were leaving the area. We support "user fees" and therefore would have been happier with a gasoline tax increase or, since everyone benefits from good roads, perhaps even a slight increase in the sales tax. We feel strongly that the current homeowner is already paying their fare share and should not longer be held to carry the full burden.

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Leesburg, Va.: I am a single, working mother of two in my early 30s who is currently renting a townhouse in the Leesburg area. I would like to know if I should continue renting with the market the way it is or if I should take advantage of the current "buyer's market." Do you anticipate housing prices will rise in the next couple of years? What home buying programs are available for one-income households?

Jeanette G. Newton: Now is an incredible time to buy. Prices are at their lowest, there is a great deal of inventory and with the Prime rate just being lowered, mortgage rates should be even better. You absolutely should be out there looking. Don't forget to take that tax deduction into consideration on your mortgage interest when you figure what you can afford. County assistance may be available for certain income levels and you might always want to consider contacting Habitat for Humanity if you feel your income might be low enough to qualify. I would definitely contact a lender now to discuss your options. Now is the time to buy!

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Sterling, Va.: We are listing our Cascades townhouse next month and were wondering about pricing. We have lived there nine years and paid under $200K in 1999. This information is available to anyone accessing the Loudoun County Appraisal District Web site. Should we expect buyers to know this information and, if they do, should we also expect to get "lowballed" more than someone who doesn't have as much equity? Will we have to adjust our price/expectations accordingly?

Jeanette G. Newton: I don't believe you need to be concerned with the public records and how much you purchased your home for nine years ago. The biggest issue is how big your mortgage is, and no one knows that but you and your bank. Contact a Realtor have them do a CMA (Comparative Market Analysis) and take their advice on pricing your home to match your home type and area.

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Reston, Va.: If approved, how do you expect housing prices near the planned Dulles Metro extension to be affected over the next five to 10 years?

Jeanette G. Newton: I believe you would see homes within walking distance of public transportation maintain their value as they are in demand, especially in an area with as much congestion as we experience. Over a 10-year period I think it would be very safe to say that you will experience excellent appreciation. Real Estate is a long-term investment and generally 10 years is more than enough to see appreciation.

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Sterling Park, Va.: I live in an area that has about 10 foreclosure homes in a three-block radius, and I've seen prices drop roughly 30 percent since 2006. Considering the high number of foreclosures in the Sterling Park area, how long do you see the price/value declines continuing?

Jeanette G. Newton: Foreclosures can certainly have an affect on a market area. I continue to believe that the market is flattening out on the whole. Of course, individual neighborhoods could experience very different results. We should also see foreclosures flattening out over the next year since many of the problems were do to ballooning loans. Give it another year and you should see some improvement.

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Silver Spring, Md.: Thanks so much for your answer. We can definitely wait a year or longer before selling. Is there anything we can do in the meantime to help it show better? Is improving the energy efficiency and the lighting a good idea? If we end up staying longer, that is something we would do anyway.

Jeanette G. Newton: Buyers are very fussy these days. Modern kitchens and baths are very important. Nice paint, flooring and carpeting come in at a close second. Today's buyers want a house in "move in" condition, so think about what you would like to move into without doing any work if you were a buyer.

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Jeanette G. Newton: Thank you to our guests and the Post for providing this forum. I truly enjoyed being a part of the program and look forward to the opportunity to do it again in the near future. Remember, it is a great time to buy, and contact a Realtor in your area for professional advice on your real estate needs. Thank you. Good day!

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