Loudoun County Real Estate Statistics and News

Preview of Loudoun County Year End Real Estate Statistics

 With the new year only a couple of days away, I wanted to take a preliminary look at how the Loudoun County Real Estate market of 2009 compares to the market of 2008.  There have been many developments over the past year that have influenced the real estate market.  Here are a couple that I feel have made a huge difference to our market:

Tax Credit for First Time Home Buyers - This waste of taxpayer money has created a complete imbalance in the low end inventory levels.  The problem with the market in Loudoun is not demand, it is inventory.  Adding more buyers to the market segment that has had multiple offers for over a year is a total failure.  When you see the inventory levels you will see what I mean.

Bank Indifference - There is currently a huge shadow inventory level in Loudoun County due to the fact that banks refuse to put foreclosed homes on the market in a timely fashion.  This will keep price levels down as home buyers realize that there is still a bunch of vacant homes that need to be sold over the coming months.  This strategy by banks will increase the length of the recovery by 2 or 3 years.

Interest Rates - Rates have remained at historically low levels as the Federal Reserve has continued to be a huge buyer of mortgage backed securities.  This program is set to expire in March of 2010 and then normal market forces will take over and presumably move rates higher.  In the meantime, the rates have kept demand levels higher as the cost to borrow money remains low.

Here is a good breakdown of the government intervention into the housing market.

Recession - Bad news for the country means good news for Washington.  And Loudoun County is no exception as it has reaped the benefits of the democratic efforts to save the economy by increasing the size of government.  Unemployment levels are half as much as other areas of the country and as the government continues to expand, the jobs will be here.   And people will move here to find employment.   

So these four factors continue to push inventories down.  As of today the number of homes for sale in Loudoun County is only 770.  On Jan 8th of 2009, inventory in Loudoun was at 1471.  This is a decrease of almost 50% on top of the previous year decrease of 38%  

But prices for the full year are almost unchanged.  The average sales price of a home this year was $362,349 vs. $367,557.  This is only a 1.4% change.  And the number of homes sold has gone down 13% from 2008.  This year 4283 homes have been sold with 3 days left in the year.  Last year 4927 homes were sold.  And even more striking is the drop off in home sales over the last 4 months of the year.  Since September 1st, only 802 homes have gone to closing.  Last year 1327 homes went to closing in the final four months.   That is a drop off of 40%.  

In my next post, I will take a closer look behind the numbers and try to explain why the market is acting like it is and give you and idea of what to expect the beginning of next year.  Also, I will have charts and graphs of year end numbers once the year is over.   

Winery Thursday in Loudoun County - Breaux Vineyards

Another unbelievably nice day on Thursday forced us back out to another Loudoun County vineyard - Breaux Vineyards in Purcellville.  With over 100 planted acres on a 404 acre estate, it is definitely one of the biggest vineyards in the area and the views are awesome.  It reminded us a little of the views from the vineyards in Sonoma.

When we got to the vineyard, Alyssa was our host and she served up 14 different wines for our $10 tasting.  Included on the list was a 2002 Merlot that was awesome.  They also make a wine from the Italian Nebbiolo grape.  One of the great things about going to the vineyards and wineries in this area is the diversity of wines being made.  Last week it was a Chambourcin from Fabbioli.

The views were spectacular, the wines were excellent and the weather was incredible.  Visiting the wineries in Loudoun County is a great way to spend an afternoon.  If you would like to join us on our Thursday afternoon excursions, join our Facebook Group or drop me an email.  We also welcome suggestions for a winery to visit in the coming weeks.

Quick Statistics for Loudoun County Real Estate

Here are some statistics about the Loudoun County real estate market that I follow on a regular basis as well as some interesting trends that tell a lot about the current market conditions.  

Current Inventory - 922  

At the beginning of August this number went below 1000 for the first time in 3 years and it has continued to go down.  At the start of the year, this number was 1256.

Homes sold since Jan 1 - 3125

This is the lowest number since 2000.  Last year there were 3306 sold in the first 8 months.  2007 there were 3312.  Contrary to what you read in the papers, home sales are not going up, they are just not going down very much.  FYI, in 2005 5291 homes were sold between Jan and Aug.

Pending Home Sales - 1241

This is the number of homes under contract but have not yet settled.  That means there is a backlog of over 3 months of homes waiting to close.  This number has been growing due to the incredible length of time it takes a bank to approve short sales.  775 of the 1241 are short sales. 

Percent of Sales that are Distressed - 38.2%

Of the homes that have sold in Loudoun County this year, 1117 have been classified as foreclosures or short sales.  That number has stayed relatively constant throughout this year but the mix has shifted to more short sales as the year has progressed.

Short Sale Tax Implications for Homeowners

One of the most asked questions I get from homeowners selling their homes short is regarding the tax implications of the short sale.  Up until now I haven't had a very good answer or a direction to point a homeowner regarding this topic.  Now I do.

The Internal Revenue Service publication that handles this exact situation is Publication 4681.  The name of it is Cancelled Debts, Foreclosures, Repossessions and Abandonments.  Although it doesn't say short sales, a short sale is a cancelled debt.

In a short sale of a house, the cancelled debt is the difference between what is owed and what the bank gets at settlement.  When the bank agrees to this loss and the homeowner does not have to repay it, they will almost certainly report the cancelled debt to the IRS.  The question is does the homeowner now have to report the cancelled debt as income on their tax return.   Prior to 2007, the answer was yes but Congress changed the code and now the answer is a little more complex.

Here is an easy to understand explanation of what the publication says:

If the loans were the original loans on the property and the house is your primary residence, you do not have to claim the cancelled debt as income.  

If you refinance the loans and used any excess money to improve the home (and you can prove it) than you do not have to claim the difference as income.

If you used your house as an ATM and took money out to buy a car, vacations, clothes, pay off other credit cards, etc, than you will have to claim the amount that you took out that wasn't used directly to improve the property as income.

If the house is not your primary residence, than you might have to claim it as income but that is much trickier and you should consult an accountant.

This is just an explanation of what the publication says and is not accounting or tax advice and you should always consult a tax professional if you have any questions.  

But IRS Publication 4681 is definitely a publication you should consult concerning the tax implications of a short sale.

Wineries in Loudoun County - A Visit to Fabbioli Cellars

One of the most appealing aspects of living in Loudoun County is the ability to jump in your car, drive 20 minutes and find yourself at one of over 25 wineries in Loudoun County.  Yesterday was one of those days.  

With a couple hours of free time, Heather (my better half) and I drove up Route 15 to Fabbioli Cellars.  We had heard good things about their wines and wanted to sit for a tasting.  For $5 we tried 8 different wines including a couple from the nearby 8 Chains North winery.

If you have never been to a tasting at one of Loudoun's wineries I would suggest going on a less busy day.  We went on a Thursday and we got top notch service and tasted a couple of different wines that we probably wouldn't have had we showed up on a Saturday afternoon. 

There is a great article in the Washington Post about just how friendly and accessible the wineries and the wine makers are.  It also gives some really good tips on how to get the most from the experience.

A great resource for Loudoun County wineries and vineyards is the Loudoun County Visitors Center. 

There are also some great blogs dedicated to wineries and vineyards like Cellar Blog, DC Wine Country Blog, and Virginia Wine Time. 

And if you are on Facebook you can sign up for the Fabbioli Fan page and get updates on events and news. 

Former Greenvest Land Bought Back for 42 Cents on the Dollar

The finance company that loaned Greenvest $130 Million for the 4 parcels of land in Loudoun County was the highest bidder yesterday during an auction of the property.  The 4 pieces of undeveloped land had a total of 4,123 acres  and each piece was auctioned off separately.  

According to reports, iStar Financial initiated the foreclosure proceedings and was willing to pay as much as $91 Million for the land.  In the end its total bids added up to $69 Million.  With a reported value of $165 Million, this means that no other party, investor or developer, was willing to pay more than 42 cents on the dollar for the land. 

Of course, the "reported" value was an overly optimistic value set by someone who had no intention of buying the property.  Most likely this was the county's assessed value for tax purposes.  The $130 Million loan that Greenvest took out on the property was more than likely based on being able to rezone the land, a plan that was denied by the Loudoun County Supervisors and led directly to the auction.  

iStar will now work to find a developer willing to by the parcels and try to recoup some or all of the $69 Million it has invested in the land.  But in a hostile environment for developers that includes increased proffers, denied requests to rezone, tightened financing options and an overall weak economy, it will be a difficult sell to say the least.  

Largest Private Land Owner in Loudoun County Being Foreclosed

Over 4100 acres of land is going to be auctioned off today at the Leesburg courthouse barring any last minute bankruptcy by the current owner, Greenvest.  Greenvest had tried to rezone much of their holdings to allow 15,000 new homes to be built several years ago but the county denied their request.

The loan on the property is currently $130 Million.  County officials are watching closely to see if the land sells for less than the "market price" of $165 Million because this could have a significant impact on taxes in the near future. 

One of the co-owners of Greenvest, Ahmad Abdul-Baki, was quoted in 2003 when asked about future growth and development trends,  "You have to allow for dips and changes that slow down that equation...Otherwise you are a fool."  How right you were Ahmad.

Underwater Mortgages - An Interview on Nightly Business Report

A  story that has been getting alot of media attention lately is the impact on homeowners of owing more on there homes than the home is worth.  Usually referred to as being "underwater", this financial situation is becoming a serious problem throughout the country. 

It has led directly to the explosion of short sales and voluntary foreclosures and indirectly to the drop in consumer sentiment and a pull back in the American consumer's appetite for spending.  

I was lucky enough to interviewed by Stephanie Dhue of Nightly Business Report yesterday and the segment ran yesterday on PBS nationwide.  It is the second segment in this video.

Here are several stories regarding underwater mortgages.

The report from Deutsche Bank thatunderwater mortgages will hit 48%.  This was quoted in the NBR report.

An in depth report on the effect of underwater mortgages and foreclosures by CoreLogic.

Report that currently 1 out of every 4 mortgages in America is underwater.

Another Loudoun County Advertising Casualty - Radio Station WAGE 1200

The drop in advertising by local businesses has claimed another casualty.  Radio station WAGE 1200 based in Leesburg has suspended operations.  The station tried several different formats and models in the last 4 years but local advertisers were turned off to the most recent syndication format.  Word is they are going to come back with a bigger signal.

Along with the demise of the Loudoun Easterner at the end of July, Loudoun County has lost two hyper local advertising mediums over the last 2 weeks.  This is a direct result of the contracting economy.  And even in a somewhat recession proof area the DC metro, business is still very difficult and business owners are tightening their purse strings in reaction to the slowing activity.  And as in most cases, advertising is one of the first areas to be reduced or cut out completely.

And with the cheap, very cheap, online advertising opportunities, it was only a matter of time before the more traditional businesses began to lose too much revenue to sustain their outdated business models.

Sign of the Times - RIP Loudoun Easterner

I just found out that the Loudoun Easterner has ceased to exist.  Ironically I found out while reading the Loudoun Independent.  Started in 1968, it published its last paper on July 22.

The reason I started writing a blog was because of the deterioration in the effectiveness of print advertising.  Local newspapers were a staple of any real estate advertising campaign and in Loudoun County the paper most people read for real estate ads was the Easterner.  But that started to fall off in 2006.   My old company, CC Sells, used to take out full page ads and sometimes 2 full pages when the market was hot.

But the writing was on the wall for print advertising and newspapers.  The slowdown in real estate and the high cost forced us to look for more economical choices such as Google Adwords and other electronic advertising opportunities.  

Subsequently I began writing this blog.  Fortunately for me, blogs have become a great replacement for print advertising and I now have a separate website for my real estate company, CompleteHomeRE.com.  

Oh well.  Rest in Peace, Loudoun Easterner.