Home Improvements and Your Return On Investment

So you’ve made some improvements and upgrades in/on your property within the last year. Now, you’re going to sell your property and are curious as to what you’ll get back in value from the improvements you’ve made.  Or maybe you’re thinking about selling your home in the future and are curious as to which improvements will bring you the greatest return on investment (ROI).

Well, according to the Cost vs. Value Report, here are the top 10 home improvement projects based on average ROI:

Project	Job Cost	Resale Value	Average ROI
Vinyl Siding Replacement	$9,134	$7,963	87.2%
Window Replacement (Wood)	$11,040	$9,416	85.3%
Minor Kitchen Remodel	$17,928	$15,278	85.2%
Bathroom Remodel	$12,918	$10,970	84.9%
Window Replacement (Vinyl)	$13,120	$11,109	84.7%
Two-Story Addition	$105,297	$87,654	83.2%
Major Kitchen Remodel	$54,241	$43,603	80.4%
Attic Bedroom Remodel	$44,073	$35,228	79.9%
Basement Remodel	$56,724	$44,685	78.8%
Deck Addition	$14,728	$11,307	76.8%

Please note that these are national averages and may not reflect Loudoun County or Northern Virgina specifically.

For example, granite is not listed in this list, but is definitely in the top 10 for homes in Loudoun County. As is landscaping – a few hundred dollars worth of landscaping can be worth $500 to over $1000 in value, a significant ROI. on the flip side, two-story additions are not very common place in this area so there is no way to truly track the ROI on that home improvement.

Whatever the improvement is, make sure that you check around to see whether it’s a good ROI. Times and tastes change meaning that the most sought after improvement or feature today may be old news by next year.

Virginia Circuit Court Rules In Favor of NVTA and Increase In Grantor’s Tax

Based on a press release we obtained today from the Northern Virginia Transportation Authority (NVTA), it looks like another hurdle has been cleared in order to increase the Grantor’s Tax and other fees in the region. Today, Virginia Circuit Court Judge Benjamin N.A. Kendrick ruled in favor of the NVTA and the Commonwealth of Virginia on all counts of a suit filed on July 13, 2007. In doing so, he also denied the motions and counterclaims of the intervening defendants.

In plain English, this is a fairly big blow to those opposed to the increase in the Virginia Grantor’s Tax and the NVTA plan in general. And one of the only courses of action left is to file an appeal with the Virginia Supreme Court within 15 days.

In case you’d like to read the fine print, here’s a copy of the press realease:

      PRESS RELEASE

      For Immediate Release

      August 28, 2007

      

      Contact:  Kala Quintana

            703/ 524-3322 ext. 104

   kala@nvtdc.org

CIRCUIT COURT UPHOLDS NEW REVENUES FOR THE NORTHERN VIRGINIA TRANSPORTATION AUTHORITY

ARLINGTON, VIRGINIA – Today, Judge Benjamin N.A. Kendrick ruled in favor of the  Northern Virginia Transportation Authority (NVTA) and the Commonwealth of Virginia on all counts in the Bond Validation suit filed on July 13, 2007. In doing so, he denied the motions and the counterclaims of the intervening defendants which include Delegate Bob Marshall (R-13) and others.

Judge Kendrick issued judgments on the following claims by the intervening defendants: 

• Violation of Single Object Rule;
• Unlawful Delegation of Taxing Authority by the General Assembly;
• Pledging Full Faith and Credit of the Commonwealth; and
• Revenues must be paid into the State Treasury.

Judge Kendrick’s ruling included the following holdings:

• HB 3202 did not violate the single object rule which requires that each piece of legislation relate to a single subject.

• The General Assembly had the power to delegate the imposition of the taxes and fees to NVTA.

• NVTA is an independent political subdivision created for a special purpose, not a local or regional unit of general government; therefore, certain sections of the Virginia Constitution that apply to units of general government, such as requiring a referendum before the issuance of bonds, do not apply.

• NVTA’s bonds are not debt of the Commonwealth or any of the local governments.

Through his ruling, Judge Kendrick determined the validity of a number of things, including:

• The bonds NVTA plans to issue;
• The proceedings NVTA undertook to authorize the bonds;
• The intended uses of the proceeds from the sale of the bonds; and
• The taxes and fees imposed by NVTA that will go to repay the bonds.

The intervening defendants have 15 days from entry of a final order to note an appeal to the Supreme Court of Virginia, followed by an expedited briefing schedule.  The final order is anticipated to be entered later this week.

“The Authority is pleased with Judge Kendrick’s ruling today.  We anticipate the intervening defendants in this case to appeal to the Supreme Court of Virginia.  We look forward to having this issue resolved to the benefit of the citizens of Northern Virginia,” said Chris Zimmerman (Arlington), Chairman of the Authority.   

Mr. Zimmerman also reaffirmed that the Authority continues to work toward implementation of the new taxes and fees, to finalize the 22 “ready-to-go” projects, and begin development of a full six-year plan to be funded with the new revenues.   

“Northern Virginians want solutions to the traffic and the gridlock, and the Authority is moving ahead with its work.   We look forward to utilizing the tools that the General Assembly has made available to the Authority and to provide the real transportation solutions that Northern Virginians expect,” said Zimmerman.

The Arlington County Circuit Court ruling affirms the Authority’s ability to issue bonds and levy the seven taxes and fees authorized by the General Assembly in the Comprehensive Transportation and Funding Reform Act of 2007. The revenues will result in over $300 million annually in new transportation funding for Northern Virginia. 

At its July 12, 2007 meeting the Authority approved 22 “ready-to-go” transit, roadway and pedestrian improvements totaling $102 million which would be funded by the initial bond issuance.

Court minutes of the proceedings will be posted to the Authority’s web site as soon as they are available at: www.TheNoVaAuthority.org.

The seven regional taxes and fees are:

• 2% Transient Occupancy Tax
• Grantor’s Tax of 40 Cents
• 2% Tax on Vehicle Rentals
• Safety Inspection Fee of $10
• Initial Vehicle Registration Fee of 1%
• 5% Sales Tax on Auto Repair
• Regional Vehicle Registration Fee of $10

The NVTA jurisdictions also have the option of raising additional revenues locally.  Each of the localities may choose to impose one of the following revenue sources:

• Local Vehicle Registration Fee
• Additional Commercial Real Estate Tax
• Impact Fees on new development

NVTA Who’s Who

The voting members of the Authority include:

Hon. Christopher Zimmerman  NVTA Chairman; Arlington County

Hon. Martin Nohe    NVTA Vice Chairman; Prince William County

Hon. Gerry Connolly    Fairfax County

Hon. Scott York    Loudoun County

Hon. William D. Euille   City of Alexandria

Hon. Robert F. Lederer   City of Fairfax

Hon. David F. Snyder   City of Falls Church

Hon. Harry J. “Hal” Parrish, II  City of Manassas

Hon. Bryan Polk    City of Manassas Park

Hon. Jeff Frederick    Virginia House of Delegates

Hon. Vince Callahan   Virginia House of Delegates

Hon. Jeanne-Marie Devolites-Davis Virginia Senate

Julia A. “Judy” Connally   Governor’s Appointee, CTB Member

Margaret Vanderhye   Governor’s Appointee

Non-voting members:

Matthew O. Tucker    Director, DRPT

Dennis Morrison    Administrator, Northern District Office, VDOT

For more information, contact the Northern Virginia Transportation Authority by going to www.TheNoVaAuthority.org.

## NVTA ##

Repeal the Grantors Tax

The Northern Virginia Transportation Authority was recently given the authority by the state to impose new taxes for transportation costs in Northern Virginia.  One of the most unbelievable tax increases proposed and authorized (but not yet in effect) is the Grantors Tax. 

This is a fee that every home seller pays at settlement to the State of Virginia.  Currently the tax is $1 per $1000 of the sales price of a house.  For instance, if you sell your house for $450,000 you pay the state of Virginia $450. 

The authorized increase will change the tax from $1 per $1000 to $5 per $1000, an increase of 5 times the current rate.  So now the $450 Grantors Tax will become $2250. 

Why this tax is so completely ridiculous is two-fold.  First of all, it fines the people who are leaving the area and actually lessening the amount of traffic in the area.  That is backwards.

Second, it makes people who currently live here and are considering moving up, think twice about doing so.  This actually hurts the local economy.   The move up buyer was a vital group of buyers during the bull market run of a couple years ago.

I have an idea that might do the same thing as this ridiculous tax.  How about hiring less workers to stand around on the side of the road at every highway construction zone?  Every time I drive by at least half, if not all of these workers are standing around doing absolutely nothing. 

Here is a petition to sign asking that this tax be repealed if you are opposed to the increase in the Grantors Tax.

Thursday Poll – Is Life Better Than It Was A Year Ago?

Watching CNBC this morning, there were a lot of talking heads saying that the stock market was in turmoil, but that the economy was doing fine and that the only thing to worry about was the credit crunch for lenders such as Countrywide.  The Federal Reserve has used the strength of the economy as a reason for not lowering interest rates. 

I am thinking that there is a disconnect between what they think is happening to the actual people of America and what their numbers tell them.  As a real estate agent, I know that I am not doing as well this year as I was last year and that is the case with most of my fellow agents.  I also don’t see the future looking too bright.  But maybe I’m wrong.

This weeks poll asks the question:

How The Mortgage/Credit Crunch Affects You As A Home Seller or Buyer

If you’ve looked at any news pages online or picked up any newspaper recently, you know all about the subprime mortgage fiasco and how it’s caused investors to flee, money to dry up, the banks to inject money into Wall Street and the government to step in. But how does it really affect you as a home seller or home buyer here in Loudoun County, Virginia? To find out, let’s look at two real life scenarios that I ran across in the past 2 weeks:

1) I am representing sellers who have their town home up for sale. It was originally listed a few weeks ago at $449,900 and during that time, buyers that went through it said that it was just outside of their budget. This was based on the asking price and the interest rates (at that time), which came out to a certain monthly mortgage payment. The buyers asked that we let them know if/when the price was adjusted because they were very interested in the property, but just couldn’t afford that much.

Fast forward two weeks…

Based on market conditions and recent comps, we adjusted the price to $432,000 this past week. I immediately called the buyer’s agent to let her and her clients know of the new price and to see if her clients were still interested in the property. The buyer’s agent told me that due to the interest rates going up a quarter point the week prior, that her clients went from affording $430,000 to only affording up to $410,000.

The buyers lost $20,000 in purchase power and a chance to purchase the home they really liked while the sellers lost a potential buyer and sale and possibly, market value. All in just one week.

2) I am representing buyers who are looking to purchase their first home. We originally started our search almost a year ago, but something came up that made them put off purchasing a home until this month. Prior to searching last year, they spoke with a reputable lender and were approved for up to $360,000 based on their financials and the interest rates at that time. They spoke with the lender again two weeks ago and were told that the rates had gone up, but due to their financial situation improving since last year, they were approved up to $350,000. They weren’t thrilled, but they weren’t as upset as they would be shortly.

Fast forward two weeks…

Due to the interest rates going up almost a quarter point on conforming loans last week, they are now only approved to $340,000. They lost $10,000 in purchase power in one week.

But wait, it gets worst.

Due to the price points of town homes in Ashburn, the difference between a town home that is $350,000 and one that is $340,000 is huge.

• One car garage versus no garage
• Move in condition versus $5,000 to $10,000 in work and/or sweat equity
• New appliances versus original appliances
• 1700 square feet versus 1900 square feet
• Backs to common area versus backs to another town home
• More desireable location versus less desireable location (based on buyer feedback)

The list goes on. And yes. All for $10,000.

The buyers had their eye on a particular property and decided that they wanted to place an offer on it. After speaking with the lender and finding out that they could no longer afford to buy it, they were heartbroken. Every property they’ve seen since then (at the lower price point) is compared to the one they liked and now, they all "don’t work".

Though they will eventually get past it, it’s not fun to go through it for anyone. It hurts the buyers and the sellers whose homes the buyers saw and now "don’t work" because they’re stuck on the one they now can’t afford.

Well, it could be worse. According to some, there are consumers out there that may have been approved for a loan in the past, but may no longer be approved even if their financial situation stayed the same. Are you one of them?

Related Articles

Who Can’t Get A Mortgage Now – CNN Money

Mortgage Mania – Part 10, The Credit Crunch – 3 Oceans Real Estate

You Think The Subprime Mortgage Fall Out Won’t Affect You? Think Again – Loudoun Stats

Washington Mutual, National City and Now IndyMac – real/diaBlog

Moorefield Station Update

It seems that Miller and Smith got a response from the Loudoun County Transportation/Land Use Committee last Monday that was not what they were hoping for. It was even better: Build more! Miller and Smith originally proposed 624 multifamily homes and 600,000 square feet of office space and retail uses just south of the planned Moorefield Station Metro stop in Ashburn. The planning staff came back and suggested that Miller and Smith and their Dulles Parkway Center project maximize the potential density allowed in the county policy. This would raise the number to 1000 homes and taller office buildings.

To help with their proposal, planning staff pointed out that neighboring Loudoun Station won approval for 1,514 homes and 1.9 million square feet of nonresidential uses on 43 acres. Dulles Parkway Center calls for about one-third of that on 40 acres.

There is some opposition including Supervisor Stephen J. Snow (R-Dulles) who said he opposed the staff’s push to "density park" eastern Loudoun County. But he also said that the Metro rail would provide a way to bring educated workers to Loudoun County from the east.

The application was forwarded to the full board for approval on a 3-1-1 vote. We’ll see what happens next…

You Think The Subprime Mortgage Fall Out Won’t Affect You? Think Again.

So you think that the subprime mortgage fall out won’t affect you? You have great credit, low debt, high income, a lengthy credit history and think you’re immune? You think that you won’t have to deal with this issue because you’re paying cash for your next home? Well, read this email sent out by WaMu (Washington Mutual) and think again:

"Subprime Policy Changes Effective on new submissions beginning July 20, 2007:

- Elimination of all Stated Income (including Stated Wage Earner) and Limited Doc transactions.

- WaMu Sub prime Wholesale will only offer Full Documentation transactions.

- Elimination of sub prime Hybrid Adjustable Rate Mortgage loans with initial fixed-rate terms of less than five years

- We are eliminating our 2/28 and 3/27 products.

- 30 Year 5/25, 40 Year 5/35, 50 Year 5/45 and Interest Only 5/25 remain available.

- Interest Only Arm products will be underwritten at the Fully Indexed, full amortizing (FIFA) rate.

- Minimum FICO for All transactions is increased to 540, unless a higher score is identified by policy.

- Maximum Cash out is $100,000 for all transactions.

- There will be no change in the sub prime definition of cash out; debt consolation will still be permitted.

- Elimination of all second lien loan products.

- Third party second mortgages are permitted; maximum CLTV is restricted to 90%.

- Maximum CLTV for all Non-Owner Occupied Transactions is 80%.

- Maximum LTV/CLTV for all Owner Occupied and 2nd homes transactions is 90%.

- Maximum Loan Amount of $1,000,000.

- Taxes and Insurance impounds are required for all transactions." 

The greatest change of them all is the "elimination of all second lien products". This means that you can no longer obtain an 80/20, 80/10/10, 80/15/5 or anything with a second trust/loan. This will make it much harder for consumers to buy a house and may put downward pressure on home prices. Falling prices mean less cash to buy your next home with or worst, not enough to allow you to move at all.

So you’re smart and creative and say "I’ll just get an Equity Line and use that money instead of obtaining a second trust". Well, notice that WaMu’s cash out limit is now $100K, which may not be enough to pull off your "master plan". WaMu and other lenders seem to have already thought about this scenario and conveniently added the cash out limit at the same time they ceased doing second trusts.

With the way the housing market has been over the last 2 years here in Loudoun County, the last thing we need is less buyer activity due to tighter lending guidelines. Though the lenders are trying to protect themselves from future fall out, the damage has already been done and there’s nothing they can do about that.

By tightening guidelines, they will hurt consumers by greatly limiting their ability to buy a house. This will in turn, hurt sellers and market values, further adding fuel to the "housing market crash" and "subprime fall out" fire.

Though this email is from WaMu, they are most certainly not the only lender/bank adopting similar guidelines. National City, a top mortgage lender and heavy hitter is no longer accepting applications on 2nd liens either. Most mortgage lenders and banks began tightening up earlier this year and we will see more of that moving forward.

Tighter lending guidelines; builders posting losses left and right; the stock market down 300+ points due in part to the housing market…the hits just keep on coming.

Loudoun County Sales Statistics for July – 2007 vs. 2006

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.

Thursday Poll-New Homes vs Existing Homes; Which One Is A Better Value?

The Median Home in Loudoun County

The median list price of a home that went under contract in July of 2007 was $435,000.  Here are the pictures of those six homes and some statistics of those homes. 

4 Bedroom/2.5 Bath/1 Car Garage on .12 acres in South Riding

Approximately 2100 square feet on upper two levels, unfinished basement, built in 2002

4 Bedroom /3.5 Bath/2 Car Garage end unit in Ashburn

Approximately 2700 square feet on 3 finished levels, built in 2003

3 Bedroom/2 Full, 2 Half Baths/2 Car End Unit in Sterling

Approximately 2550 square feet on 3 finished levels, built in 1997

3 Bedroom/2 Full, 2 Half Baths/2 Car Interior Unit in Leesburg

Approximately 2900 square feet on 3 finished levels, built in 2004

3 Bedroom/3.5 Bath/2 Car Interior Unit in Sterling

Approximately 2550 square feet on 3 levels, built in 1997

3 Bedroom/2.5 Bath/2 Car Garage End Unit in South Riding

Approximately 2100 square feet on 3 levels, built in 2000

Photos courtesy of MRIS