Loudoun County Real Estate Statistics and News

Government Hiring Keeps Loudoun County, Washington Metro Area Recession Proof

The fact that Washington DC is the capital of the US and the fact that 1 out of every 10 government jobs is located in this area is the main reason Washington DC and the the surrounding areas including Loudoun County will remain much stronger than any other area of the country during this historic period of economic turmoil. 

With the anticipated increases in government spending already proposed by the Obama administration, government hiring will keep us from feeling most of the effects of a national recession.  As the government builds up over the next 4 years of democratic control, we will be the chief benefactors of that expansion.  And real estate prices will be one area that will see appreciation in the near future.

 

Just today the FBI announced their largest hiring push since the 9/11 tragedy.  They are looking to hire 850 agents and an additional 2100 support staff.  And where do you think the majority of those new hires will be located?  The J Edgar Hoover building, headquarters for the FBI, is in DC as well as one of the largest field offices in the country.

These types of hiring announcements will continue to bolster our local economy.  And don't be surprised if an entire new goverment agency is created to handle the new position of Washington DC as the financial center of the country if not the world.  The Treasury and the Federal Reserve have already made investments of over $2Trillion in the past 3 months.    

Washington DC Metro Area Is Most Promising Real Estate Market in the World

I was invited by my Wells Fargo Loan Officer, Mike Pfeffer, to an economic workshop given by Roger Arnold.  Mr. Arnold is a macro economist who does consulting for government agencies such as HUD as well as think tanks, hedge funds and sovreign nation funds.  His workshop was extremely refreshing because he answered all questions directly and without prejudice.  He gave his analysis of current economic news and conditions and what their effect will be on the world, the nation and our region here in Washington DC.

Here are the main points and predictions he made that will directly effect us here in the Washington DC metro area

1. Washington has become the center of the world politically and now financially with the implosion of Wall Street, the size of the bailout and global recession.
2. The country is going through a deflationary period in the private sectors that will be offset by an increase in government.
3. The Washington DC area has a shortage of residential housing, office space and adequate transportation.

Inside the beltway, prices have alrealdy started to move up.  Office space in areas like Rosslyn and Crystal City are non-existant.  The question for the areas outside the beltway is how far out will the government move to search for space and housing and what areas they will expand toward. 

I think Loudoun County is poised to benefit from the increased size of government and buyers should factor this into the equation above all other media stories that predict continued doom and gloom.  The future looks bright for our area.

Two Different Viewpoints on Proposed Bailout

Here are two completely opposite opinions on the proposed bailout and how it will affect the real estate market and the economy.

Bailout's failure is bad news for U.S. housing market

The sky is not falling when bad bills do not pass

And a list of ten reasons why the bailout would be bad.

What this illustrates is that no one really knows what is going to happen. We can't predict the future. We can only hope to understand what might happen and prepare accordingly.

What Does Fannie, Freddie Rescue Mean to Loudoun County Real Estate

The government stepped in and took over Fannie Mae and Freddie Mac in order to prevent their failure. This has eliminated one huge uncertainty from the interest rate markets (and a lot of other markets) and subsequently we are seeing stocks and bonds rally. But the main thing this move has done is made it cheaper to borrow money to buy a home.

And cheaper money will translate to more buyers with more buying power. If the trend continues, rates will dip below 6% in the near term. And some predict rates can drop as much as 1% because of this rescue.

And coupled with the supply of homes trending lower, this bodes well for home prices in Loudoun County. Look for prices to start moving up once the election results are in.

Here is graph that shows exactly what has happened to the average 30 year fixed mortgage in the last 90 days.

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Loudoun County Real Estate Tax Rate Increased by 19%

The Loudoun County Board of Supervisors approved a tax rate increase of 19% for real estate.  The new rate is $1.14 per $100 in property value. 

It seems the Board of Supervisors were scared by the School Board Superintendent Hatrick  into thinking that if we don't continue to increase the school budget forever we will have uneducated children running around ruining our county in the very near future. 

The School Board has given us a number of around 3200 to 3300 new students next year in our schools.  The problem is this number cannot be confirmed because no one really knows what the future is.  And based on the foreclosures and relocations just in my neighborhood, there will be at least 6 to 10 less students in the schools next year.

Will they give us the money back if the forecast doesn't materialize?  They are fiscally irresponsible to think that a 19% increase is reasonable given the current economic conditions we are faced with. 

What to Watch for Today and What Has Happened This Week

The fed dropped rates again.  On top of the 75 basis point drop last Tuesday, they dropped the Fed Funds rate 50 basis points yesterday.   Refinancing will go through the roof because of this.  I was just at my settlement attorneys' office and they are very busy with refi closings.  The question is whether the rate reductions will entice potential buyers to start buying.

Google reports earnings today.  This will be a barometer for the economy.  The stock is down 25% in the last 12 weeks because other companies, such as Apple, have reported weak earnings.  Keep an eye out for the Google announcement.

Countrywide missed their earnings by a huge amount.  I called that.  Problem is they are still pegged to the price of Bank of America's stock because of the announced deal.  Each share of Countrywide is worth .1822 shares of BofA.  BofA is trading at 43.65 per share which should value Countrywide shares at 7.95.  They are currently trading at 6.80.  If you think the deal is going to happen you should sell BofA and buy Countrywide.  That hedge will make you 1.15 per share.  Problem is a lot of people don't think it will happen (at least not at the current exchange rate).  That is the reason it is trading so far below the conversion value.

T

Assessed Values and The Loudoun County Budget

Assessed values for property in the state of Virginia (Loudoun County included) are based on the market value of homes as of January 1st of each year.  Questions have arisen recently regarding this extremely important practice especially here in Loudoun because so much of the county revenue comes from real estate property taxes. 

The assessed value is just one part of a two part formula used to determine how much each homeowner will owe the county in the coming year.  The other part is the tax rate.  In 2007 the tax rate was .96.  This means that a homeowner whose home is assessed at $500,000 will owe $4800 in taxes or $400 every month.

A recent post on our blog was met with some extremely criticism by the Loudoun County Assessor regarding our opinion on the current assessment and how much they will need to be reduced given the sad state of property values in the county.  This post was not meant to be a criticism of the assessor so much as a warning to property owners to be vigilant regarding their assessments in 2008.  And the reason for the warning was the incredible news that Loudoun County will have a budget shortfall of $250 Million in 2009 (the budget for 2009 is set by the county supervisors in April of the preceeding year). 

The main reasons for the projected shortfall are two:  Decrease in Revenues (housing prices stopped going up) and School Budget continues to grow.  The school Superintendent has asked for a $117 Million increase for his budget.  So in the face of declining revenues, slowing growth and a possible recession, there is a very high probability that our taxes will rise.  How else will the Supervisors make up the shortfall?

The problem I have with this whole scenario is the fact that the Loudoun County homeowners have had their taxes increased an average of 13.5% per year since 2000.  And that is all fine and good when the population was growning and the number of kids of school age continued to grow.  But that kind of growth is gone and has been replaced by moderate growth.  And it wouldn't suprise me if there is actually no growth to the overall population in Loudoun County in the coming year and only slight growth in the student population.

Which brings me to my point:  We don't need to keep increasing the school budget.  We don't need to increase spending 13.5% to keep up with 3% growth.  We have already paid it forward.  Our tax rate is higher than Fairfax County (89%) and Prince William County (83.8%).  We have already increased our taxes significantly in the past 7 years and now it is time to be fiscally responsible.  It is time to tell our government officials that they must cut spending, trim the fat that has accumulated over the years, come up with less expensive alternatives.

And we can do that by holding them accountable to the assessed values they place on our homes.  It can be no more than 100% of market value.  And we can do it by voicing our opinions to the new Board of Supervisors.  Let them know that enough is enough.  Our homes are not a blank check for them to cash.

Related Articles:

"Assessment Shock: Know Your Rights" - The Washington Post 

Thursday Poll - The Down Real Estate Market and Holiday Spending

Home Sales in Loudoun County Remain Slow, Prices Hold Steady

For the second month in a row, sales for Loudoun County will be below 300 units.  This marks the first time since November and December of 2000 that this has occurred.  Homes that have gone under contract during the month of October totalled 286.  This represents 9.25 sales per day.  In September there were 239 homes sold in the entire county, an average of only 8 per day.

Although sales per day are up approximately 1.25 per day throughout the county, that entire windfall can be attributed to more foreclosure and distressed properties being sold.  In October 96 properties that were either foreclosures, short sales or pre-foreclosures compared to only 59 in September.  The percentage of homes sold in October that were distressed was 33% of all sales, up from 25% in September. 

In October, 3 of the 4 foreclosures that our office listed for Countrywide were sold in less than a week with multiple offers on all three.

The average list price of the homes that went under contract in October was $477,960 and the median sales price was $399,900.  The average list price of a home sold last October was $483,173 and the median price was $424,850.  This tells us that more of the activity is taking place at the lower price ranges but that prices as a whole are holding steady at their current levels.

14% of Homes Listed in Ashburn are Foreclosures

A search of the 551 active listings in Ashburn showed 78 properties were either owned by a bank or lender, in pre-foreclosure or short-sale candidates.   This represents 14% of the current homes available for sale in the local MLS.  Of these 78 properties, 53 were townhouses, 15 were single family homes and 10 were condominiums.

Back in March of this year the percentage of homes that were foreclosures in the same area was 5%.  From an absolute number and from a percentage, the percentage of the marketplace that could be considered distressed properties has risen dramatically. 

Here are some interesting facts and statistics about these distressed properties:

• Lowest priced property: $193,000
• Highest priced property: $919,900
• Average list price: $419,000
• Median list price: $405,000
• Average number of days on market: 84
• Average age - 8 years old

Of the 84 homes sold in Ashburn during the month of August 11 distressed properties went under contact.  Interestingly, this represents 13% of the total sales, comparable to the 14% of homes listed that are distressed.

As of now, the foreclosures haven't driven down prices down dramatically and they haven't been a disproportionate amount of the total homes sold.

If you would like to have these foreclosure listings emailed to you, just let us know.  There are some very good deals for investment opportunities as well as for primary residences.