Key Local Market Info!

What is Gross Rent Multiplier (GRM)?
In a recent blog post, I explained the use of Cap Rate by investors as a financial technique to estimate value when considering the buying or selling of a multi-family apartment building.  Another metric used in real estate is Gross Rent Multiplier (GRM).  Like Cap Rate, GRM is simply a gauge of value, but it can be used to quickly compare investment opportunities.  GRM accounts for the gross rents as measured against the selling price. It's calculated by taking the price and dividing it by the total annual gross rent.  For example, a price of $1 million divided by $100,000 in gross rent produces a GRM of 10.  Generally, GRM's in the Northern Virginia region vary widely between 6 and 16 based upon building location, rent level, age, and class.  Generally, the higher the GRM the better the building and lower the perceived risk.  Likewise, the higher the GRM the longer it will take an investor to recover their investment, meaning a lower ROI.

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Not All Realtors® Are Created Equal
There are over 16,000 member Realtors® in Northern Virginia between the three associations; the Northern Virginia Association of Realtors (NVAR), the Realtor Association of Prince William (PWAR), and the Dulles Area Association of Realtors (DAAR).  The largest association being NVAR with over 12,500 members and each is part of the overarching National Association of Realtors®.  Buyers and sellers should know the only common denominators shared among practicing agents in Northern Virginia is they have passed an exam to become licensed in the state, they have activated their license with a supervising broker, and they have joined one of the three Realtor® associations in Northern Virginia to be recognized as a member.  That's where the similarities and standards generally end.

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Attention Buyers:  Most Buyer-Friendly Level in Years
The DC-MD-VA Affordability Index is at its most buyer-friendly level in years.  The index is presently 147 (meaning the typical buyer generally earns 47% more income than required to qualify for a mortgage to purchase a typical home in the DC metro area).  The current score is 14% more affordable than the historical average of 129 in the DC metro area and well off the unaffordability lows (upper 70's) experienced in the lead up to the 2007 housing market top.

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Most sellers don't realize the probability of successfully selling their home in Northern Virginia versus the probability of failing to sell their home.  It's a probability sellers should know when interviewing a Realtor to represent them in one of the most important financial decisions of their lifetime.  More importantly, how the Realtor will operate differently than average to increase the chances of seller success.

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Home prices bottomed in the 2011-12 range coming out of the housing decline and Great Recession.  Many home buyers don't realize that prices have fully recovered in most Northern Virginia areas and have actually elevated beyond the former 2006 price highs. 

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