I just read a good article regarding property assessments and how to fight them. Two interesting facts in the article: 1 out of 50 homeowners fights their assessments and 60% of assessments are overvalued by assessors.
http://money.cnn.com/2008/02/12/real_estate/tax_squeeze.moneymag/index.htm?postversion=2008021306
Here is a list of the forces that will keep home prices in Loudoun County suppressed during the coming year. These factors will prevent any appreciation in home values for the next twelve months. And without some offsetting factors that could be looked at as positive, these factors might even continue to push prices lower.
1. Foreclosures/bank-owned properties - The total number of foreclosures/REO and the percentage of the market they represent continues to climb month after month. And the forecast is for these distressed properties to continue to come onto the market. Keep an eye on the foreclosure listings and statistics to see if and when we hit the peak of this trend.
2. Rental Rates Stay Low - Even with rental properties being converted into condominiums during the boom market and less and less people qualifying to get home loans, the supply and demand factors have not caused rental rates to increase. And without rates moving higher, a lot of investors and smart money will wait on the sidelines to make purchases. Watch for rental rates on townhouses and condominiums to start to move up before home prices move with them.
3. Supply Stays High - In the heyday, there was never more than a couple (2) months worth of supply even in the slow months. We haven't come near that supply amount since Hurricane Katrina hit in August of 2005. With 2500 homes on the market and 250 sales per month we are at a 10 months supply. Demand would have to start cutting into this supply before prices have a chance at appreciating.
4. Sellers Moving Out and Down not Up and In - Baby Boomers are downsizing and/or heading South. Companies are moving out of the area (e.g. AOL) and the job growth in the area has slowed. Much of the equity people used to make a move to a larger home is now non-existent so they are staying put or looking to move to other parts of the country with a lower cost of living and lower home prices.
5. Election Year - In an election year when we have no idea who will be the candidates for President much less what party will control the White House, people will hold off on major investment decisions until they feel less uncertain about the future. And for most families, the biggest investment is their home. So until we know who will control Congress and the White House, don't expect potential buyers to be too excited about buying.
T
Everyone knows that Loudoun County real estate property values have gone down significantly over the last several years, including 2007. For everyone's sake, I hope that the Loudoun County Tax Assessor realizes this as well when computing 2008 tax assessments. Everyone we've talked to in Loudoun County is upset about their assessed value and most are worried that their 2008 tax assessments will not be in line with their fair market value. The people who are even more upset are those who appealed their tax assessments earlier this year and were completely shot down without a good, if any explanation.
Yes, they're upset because they've lost market value. But why are they really upset? Because 2007 assessed values are up to 30 percent higher than current market values (non-foreclosures or short-sales) and they think that the Tax Assessor doesn't care. That means that Loudoun County residents are paying up to 30 percent more in taxes than they should.
For example, the property located at 904 Amelia Street in Sterling, VA just sold for $276,450 net. It was assessed at $392,200. That's a $115,750 (30 percent) discrepancy between assessed and market value.
In the FAQ section of the Loudoun County Tax Assessor's web site, it states:
"Information is gathered from buyers, sellers, and real estate professionals. The bonafide selling prices are then compared to the assessed values to arrive at an assessment/sales ratio. The county is required by law to assess at 100% of fair market value."
Neither myself nor any consumer, real estate agent or broker I have run across has been contacted by the Loudoun County Tax Assessor regarding their opinion, expertise, stats or data regarding Loudoun County real estate market values.
This discussion brings to a poll we'd like for you, the consumer and real estate professional, to take. Though values vary by specific community, this will give us, you and the Loudoun County Tax Assessor a general idea of what the residents of Loudoun County think about market versus assessed values for 2008.
Related Articles:
Loudoun County Set To Steal $45 Million From Residents In 2008
*This post was edited 12/29/07 because it was brought to our attention that part of the post could be misinterpreted and those items have been deleted.
We just obtained a copy of the new Virginia Residential Property Disclosure Statement that will go into effect January 1, 2008. It is nothing more than a revised Disclaimer Statement with a new name. It's comprised of an opening paragraph that states that the Disclosure Statement is mandatory in the sale of residential property and is followed by 6 paragraphs that all start with something like:
"The undersigned owner(s) makes no representations with respect to..."
It then has a section called "Additional Written Disclosure Requirements", which goes over Section 55-518.B., Section 55-519.1 and Section 32.1-164.1:1 of Virginia Code.
The first section says that the first sale of a dwelling "is exempt from the disclosure requirements listed above". That's basically a CYA for all new home builders in Virginia. The only "protection" that a buyer of new construction has with this Disclosure Statement is that it requires the builder of a new dwelling to "disclose in writing to the purchaser thereof all known material defects which would constitute a violation of any applicable building code."
Yeah, right. Good luck trying to prove that a builder actually knew anything.
The subsequent Sections go over disclosures pertinent to properties located in military air installations and those with septic systems.
The last part alerts consumers to the Virginia Condominium Act, the Virginia Cooperative Act and the Virginia Property Owners' Association Act, which are already covered in the Virginia Jurisdictional Addendum.
Basically, nothing will change with the new Virginia Residential Property Disclosure Statement. Sellers still get to say "I have no idea about anything" and Virginia retains its' "Buyer Beware" status.
For further guidance, please contact a real estate attorney licensed in the Commonwealth of Virginia.
Homes under contract in Ashburn in the last 7 days:
| Address | Subdivision | List Price | Date |
| 44385 NAVAJO DR | ASHBROOK VILLAGE | $379,900 | 10/31/07 |
| 20402 ELM GROVE TER | ASHBURN FARM | $339,000 | 11/6/07 |
| 21092 LOST MOCCASIN TER | ASHBURN VILLAGE | $309,000 | 10/31/07 |
| 44219 SHEHAWKEN TER | ASHBURN VILLAGE | $399,000 | 11/2/07 |
| 42849 CHESTERTON ST | BELMONT FOREST | $429,900 | 11/2/07 |
| 20238 PORTSMOUTH BLVD | BELMONT GREENE | $375,000 | 11/2/07 |
| 20432 BOWFONDS ST | BELMONT GREENE | $579,900 | 11/5/07 |
| 20218 LEIER PL | BELMONT GREENE | $649,900 | 11/4/07 |
| 42815 OATYER CT | BROADLANDS | $629,900 | 11/4/07 |
| 43122 CROSSWIND TER | BROADLANDS SOUTH | $370,500 | 10/30/07 |
| 21942 WINDOVER DR | BROADLANDS SOUTH | $479,900 | 11/5/07 |
| 20604 CORNSTALK TER #201 | LAKESHORE | $230,000 | 11/3/07 |
| 22701 HIGH HAVEN TER S | LOUDOUN PARKWY | $374,000 | 11/2/07 |
| 21789 FLANDERS CT #21789 | PARKSIDE AT ASHBURN | $299,500 | 11/2/07 |
| 19909 RIDGECREST SQ | RIVERSIDE VILLAGE | $299,900 | 11/5/07 |
| 22691 BLUE ELDER TER #204 | BRAMBLETON | $214,900 | 11/2/07 |
Homes under contract in Sterling in the last 7 days:
| Address | Subdivision | List Price | Date |
| 39 BERKELEY CT | COUNTRYSIDE | $285,000 | 11/1/07 |
| 104 BRIARWOOD CT | FOREST RIDGE | $434,900 | 11/2/07 |
| 500 BEACON DR | MIRROR RIDGE | $365,000 | 11/4/07 |
| 20334 ASHCROFT TER | POTOMAC LAKES | $379,900 | 11/5/07 |
| 20617 GLENMERE SQ | POTOMAC LAKES | $400,000 | 11/1/07 |
| 20374 ASHCROFT TER | POTOMAC LAKES | $409,850 | 11/5/07 |
| 406 WILLIAMSBURG RD | STERLING PARK | $256,900 | 11/6/07 |
| 607 YORK RD | STERLING PARK | $321,000 | 10/30/07 |
| 105 KENNEDY RD N | STERLING PARK | $379,000 | 11/5/07 |
| 1902 AMELIA ST | STERLING PARK | $380,000 | 11/2/07 |
| 504 MAPLE AVE W | STERLING PARK | $399,900 | 11/1/07 |
| 118 WOODGATE CT | SUGARLAND RUN | $187,900 | 11/2/07 |
| 194 COTTAGE RD | SUGARLAND RUN | $250,000 | 11/5/07 |
| 117 AVONDALE DR | SUGARLAND RUN | $315,000 | 10/30/07 |
| 511 SUGARLAND RUN DR | SUGARLAND RUN | $364,900 | 11/2/07 |
Homes under contract in Leesburg in the last 7 days:
| Address | Subdivision | List Price | Date |
| 307 KING ST S | COLONIAL SQUARE | $398,000 | 11/2/07 |
| 324 COLTSRIDGE TER NE | EXETER | $263,900 | 10/30/07 |
| 814 RUST DR NE | EXETER | $399,900 | 11/5/07 |
| 459 FOX RIDGE DR SW | FOXRIDGE | $349,900 | 11/1/07 |
| 19111 MOUNTAIN SPRING LN | G & M THOMAS LAND | $775,000 | 10/30/07 |
| 109 CONNERY TER SW | GREENWAY FARM | $282,900 | 10/30/07 |
| 904 RHONDA PL SE | KINCAID FOREST | $550,000 | 10/30/07 |
| 19005 COREOPSIS TER | LANSDOWNE | $549,000 | 11/2/07 |
| 43103 NORTHLAKE OVERLOOK | NORTHLAKE | $364,900 | 11/5/07 |
| 111 OAK VIEW DR | OAK VIEW | $340,000 | 11/5/07 |
| 43169 MALLOCH PL | POTOMAC STATION | $569,900 | 11/2/07 |
| 19375 CYPRESS RIDGE TER | LEISURE WORLD | $300,000 | 11/1/07 |
| 18476 WIDE MEADOW SQ | SPRING LAKES | $359,900 | 11/2/07 |
| 430 PEARLBUSH SQ NE | SYCAMORE HILL | $325,000 | 11/2/07 |
Loudoun County Sales statistics for July 2007 as compared to July of 2006 are incredibly similar in many areas. Here is a breakdown and analysis of the median and mean comparisons of List Prices, Sales Prices and Days on Market as well as Total Sales and Sales Price as a Percentage of List Price.
July 2007 vs. July 2006
Total Sales: 397 vs 395
This number has been very similar for almost every month this year. In fact for the first seven months of the year the difference is only 21 sales, 3039 vs. 3060.
Average List Price: $530,280 vs $525,247
This is the average list price of the home when it went under contract. This is useful for determining what list price will motivate a buyer to submit an offer. When combined with the Percentage of List Price it can give you a fairly accurate idea of what homes are actually selling for before they go to closing.
Sales Price as a Percentage of List Price: 97.5(est) vs. 97.7
This number has stayed fairly consistent and although we don't know the exact number for July of 2007, the previous quarter the number was 97.5 and it hasn't changed much this year.
Average Sales Price: $517,023 vs. $513,324
Contrary to what many people think, the average sales price for a home in Loudoun County has not changed much at all in the last 12 months. And although it does show a slight increase in price versus last year, this is a little misleading due to the fact that many more newer homes have sold this July versus last July.
Median List Price: $434,900 vs. $449,900
The median list price is the price at which half the homes sold for more than this price and half the homes sold for less. I believe this better reflects the trend of home prices in Loudoun County because it doesn't let a few very high priced homes skew the number. This number is the only number that shows a significant difference versus the previous year.
Average Days on Market: 98 vs. 99
This number has stayed consistent for the last year around the 100 mark.
Median Days on Market: 69 vs. 81
This number tells us a lot more than the average Days on Market number. The fact that the number is 12 days less than last year says that people who are listing their house this year are doing a better job of pricing it to sell. This could mean they are pricing it lower to begin with or making adjustments to the price sooner.
Bonus Statistic
Average Listing Price Adjustment: $23,209 vs $30,038
This statistic is the amount of money a seller had to reduce their list price before they got to the price that enticed a buyer to write an offer.
Coupled with the Median Days on Market statistic, the Average Listing Price Adjustment data suggests that sellers this year are pricing there properties more accurately, making smaller price adjustments and selling in a shorter period of time than the sellers of last year.
If the past is any indication of the future of real estate prices in Loudoun County, then we are in for another 5 years of little if any price appreciation in Loudoun County. According to annual statistics on the Dulles Area Association of Realtors website, the last market slowdown/correction occurred in 1990 when the average sales price dropped from $181,800 in 1989 to $170,100 the next year. The market didn't get back to that high water mark until 1994.
The bull market that proceeded the current market slowdown started in 1997 when the average price of a home in Loudoun County was $202,166. Eight years later the average price had increase to $546,897. This awesome market was bound to slow down if not retreat. Through the first six months of 2007 the average price of a home sold in Loudoun County has dropped to $502,005. This is the first drop in the average price since 1996.
With the bull market over and a price correction already in place, past market cycles indicate we are probably going to see a consolidation period. A consolidation period or base building period is characterized by a long period of time with little if any price movement.
A comparison can be made to the stock market of 7 years ago when a huge correction began in 2000, lasted for about 18 months and then a base building period of 4 years lasted until 2006 and led to the current bull market.
So look for the next real estate bull market in Loudoun County to start around March or April of 2011.
Virginia House Bill 2016 went into effect on July 1, 2007. Among other things, the bill allows management companies of Homeowners Associations to increase the fee they charge to provide a resale disclosure document to a home seller from a maximum of $100 to $325. Almost all of the associations in Loudoun County use the services of a management company, so this price increase will effect a majority of home sellers in our area.
The full bill can be found here: HB 2016
In a nutshell, what has happened is the lobbyists for the association management companies were able to convince our elected officials that the cost to make some copies and drive by and inspect the exterior of a home somehow leaped from $100 to $325. And not only that, they can send the documents over the internet so the cost of the copying actually went down.
So why is it that it now costs 325% more to do the same thing they did for $100 just one week ago?
So to sum up what the our state legislators and officials have done for home sellers in the last couple of months:
1. Increased the property tax rate.
2. Allow for the increase of the grantors tax by 400%.
3. Increase the liability of the seller when selling a home.
4. Increase the fee for resale disclosure documents.
