Friday, October 17, 2008
The area is one of Arlington's famed "Urban Villages" along the Orange line which combines public transportation, business centers, retail, and residential buildings into a walkable AND livable mini-city. The concept, ground-breaking when it was introduced, has transformed Arlington into one of the most highly sought after places to live and work in our area. North Arlington, in particular, epitomizes the best of both urban and suburban living.
Are you thinking of buying along the Orange Line? Check out recent condo prices in my post here, and contact me to discuss current market conditions and how to get started.
Area residents are familiar with this credit, and know that it had expired on Dec 31, 2007. Though typically every year it's passed in a last minute rush of bill approvals, there's never a guarantee and 2008 home buyers had their fingers crossed that it would once again find its way into a bill before year end. Well, DC home buyers, start celebrating: The bailout bill approved the $5000 credit retroactively for all 2008 purchases, and approved its use for all 2009 purchases as well!
To use the credit:
- You must buy a home in the District of Columbia (and not have owned a home in the previous year)
- You must occupy the home as your principal residence
- You must meet the income requirements (up to $70K AGI for single filers, phased out until no credit for AGI above $90K; up to $110K AGI for joint filers, phased out until no credit for AGI above $130K).
Note that this is an actual $5000 credit (not a deduction--an actual dollar for dollar offset on money owed!) on your Federal Taxes. That's the same as Uncle Sam giving you $5000 of your hard earned money back just as a 'thank you' for buying in the District. But you can't take advantage of both this credit and the new Federal $7500 "credit"--not really a credit at all, but rather an interest free loan. For almost all buyers, you're much better off taking the DC credit and passing on the Federal loan.
If you're interested in buying a DC property and want to learn more, contact me.
During my conversation with the author, I noted that prices inside the Beltway--areas that are optimal for finding renters--have not dropped to the extent people may think, and thus finding an investment property that is cash flow positive is difficult. Having said that, it's not impossible to find a good property with long term potential, and if you're looking out side the Beltway, there are deals to be had in terms of price (though finding renters may be more difficult than with close-in areas). The challenge right now is in obtaining financing, as I and Will Gaines, of Access National Mortgage, noted here.
If you have the cash for a larger down payment, and the patience to ride out the downturn, there are investment opportunities out there. In particular, being flexible on timing and having a bit of cash for repairs makes short sales and foreclosures more of an opportunity for investors (versus someone who has to move before their lease is up: read more on my foreclosure risk post on timing a transaction.)
» DOUBLE DOWN: Expect to break the piggy bank open — wide open. "You usually need a minimum of 15 percent down for an investment property, and, ideally, for good pricing, it should be 20 percent," says Will Gaines, senior loan officer with Access National Mortgage in Reston, Va. "To get your very most competitive pricing, you really need to have 30 percent to put down."
» DOUBLE TROUBLE: Don't blame the banks for tighter restrictions. "The private mortgage insurers got burned so, so bad in the past few years, and they're reluctant to provide insurance," warns Katie Wethman of Long & Foster. She says they're especially wary of insuring rental properties because "if a borrower falls on hard times, they're more likely to skip a payment on an investment property than one they live in." That said, she advises borrowers to come up with a big chunk of cold, hard cash to sweeten the deal; the less credit you need, the more likely you are to get the loan you want.
» DOUBLE UP: Count on your friends. "I see more younger people going in together to buy investment properties," Gaines says. "That way, they can share the down payment and spread out the risk if they're without a renter for a period of time." Be sure to have a game plan for buying each other out in case one of you is ready to cry "Uncle!" before the other.
What else do you need to consider when searching for an investment property? Long term demographic trends, price to rent ratios, competing inventory (i.e., apartments), cash flow, and a host of other factors. If you're considering an investment property and need an advisor for your transaction, contact me to set up a meeting.
Zip Codes 22201, 22203. Includes Ballston, Clarendon
ACTIVE LISTINGS: 1BR Condos / 2BR Condos
Number of Active Listings: 46 / 68
Average List Price: $351,858 / $526,993
Days on Market (Property): 74 / 100
SOLD LISTINGS: 1BR Condos / 2BR Condos
Number of Sold Listings in Prior Month: 18 / 14
Average Sold Price (excludes subsidies): $313,085 / $461,407
Days on Market (Property): 66 / 64
6 = Balanced Market;
>6 = Buyer’s Market;
<6 = Seller’s Market
1 Bedroom Condos = 2.5
2 Bedroom Condos = 4.9
* Statistics exclude retirement communities
Click here to see the previous North Arlington Condo Market Update
Source: MRIS data as of 10/17/2008. All data deemed reliable but not guaranteed.