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10
Northern Virginia Housing Affordability Index
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.
5
Selling Homes in Northern Virginia; Sold vs. Failure Probability
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.
5
Northern Virginia Home Appreciation; A Picture Says A Thousand Words
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.
5
Northern Virginia Investment Property Returns; A Class Of Their Own
Investment Property is Real Estate Purchased for the Purpose of Renting.
Investment property is generally considered property held by the owner to earn rent, or acquire gains through capital appreciation, or both. For the typical buy-hold investor it's both - rent and capital appreciation.
Total Return = Cash Flow + Loan Principal Pay Down + Value Appreciation.
Investors view and financially model investment cases on a total return basis. Cash flow is rental income less all your expenses, mortgage payments, repairs and maintenance, taxes, insurance, etc. - essentially the money left over after all bills are paid. Principal pay down is the declining loan balance with each mortgage payment. Appreciation is the increase in property value over time. These three financial elements added together create the total return.
Investment Property Produces Highest "Risk" & "Work" Adjusted Returns.
In my opinion, there is no better return on a "risk", "work", and "time" adjusted basis. One can consider the returns produced by limited and opportunistic stock trades, or an exotic investment like options - which is the reason I mention "time" and "risk" adjusted. Someone else can point to the returns from starting a business that is scalable and saleable, but that's an incredible amount of work which generally cannot be done in combination with a full-time job. Yes, landlording is some risk and work, and is also the best return on an adjusted basis compared to other investments.
5
Low Housing Inventory in Northern Virginia; Challenging for Buyers, Advantage Sellers!
The Northern Virginia housing market is in the midst of one of the most competitive environments experienced by buyers. "Why?" is a common question asked of real estate agents, but the question is usually met without a complete answer, so I thought it would be a great topic to address in this month's issue of Tim's R/Eview! The common answer given by most agents is simply "fewer homes for sale combined with an ever-growing number of prospective buyers". That response doesn't really explain the cause. The cause is a multi-faceted supply and demand side problem. Here's what I share with my seller and buyer clients to help them best understand how we navigate this type of market to ensure we reach their desired outcomes at full value.
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