U r b a n T r e k k e r

DC Beltway Most Affordable Zip Codes (under $400,000)

With falling prices, let's check in hoods where can you get the most for you bucks inside and outside the beltway with in-depth reporting for some hoods. We'll divide the story into two parts, because there's just too many zips to cover knowing that median home prices have fallen under $400,000, except for Arlington (here). Today, if you could spend the same amount of money for a house like in 2005, you could do: buy-two-for-the-price-of-one. Prices in some hoods pushing $400k and some other hoods start way below. You'll see what the difference in prices comes down to.

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PART 1

INSIDE the BELTWAY

No one could have predicted this, that one day you can buy single family or townhouses inside the beltway for prices below $400,000. We looked at most recent sales since January for the Metropolitan Washington DC area, especially Northern Virginia (in-and-exurbs), for the posts. Data is extracted from MRIS.

First we got the money thing. Bloomberg, had a story the other day about how current interest rate is below WWII? Second, the high inventory of homes. Combine the two factors, you got the best of both world! Yes, the market and interest rates are your friend. This combo won't be around for too long. With the $8,000 first-time buyer tax credit in hand, we'll probably see more buyers coming on to the market, ready to jump in the bandwagon to home ownership.

Arlington

A total of 127 properties sold in Arlington priced under $400,000 since January, 1, 2009.  The lowest 10 properties sold in Arlington were sold in zip code 22204, that is South Arlington. The lowest sales price was for a condo in Columbia Pike that was listed for $95,000 and sold for $67,000. A discount of almost 30%. In some deals there were multiple contracts on the table. Case in point. A townhouse in zip code 22206 that was listed for $180,500 and sold for $200,000. (this one property I saw).

Zip codes: 22202, 22204, 22206
These are the zips where you can have more choices. South Arlington, around Columbia Pike area zip code 22204. Over here with $400k you can pretty much buy all types of homes from condo to townhouse to single home in the order of: short-sale and foreclosure. Then off to next door zip code 22206 - Shirlington, Fairlington - where prices get a boost. You can still buy older townhouses, condos with $400k, for sure. But the prices are higher than in 22204. A foreclosure single family home at S. 25th St., listed for $299,900 sold for $332,000. Again this is an example of where multiple contracts got tangle up in a bidding war that drive up prices.

The other part of S. Arlington is zip code 22202, which is located around the Pentagon City area. The price of home (condo) get pushed higher because of its location, close to the mall and metro.  Over here condos buck the trend. Don't think that you'd never see new homes get folded into distressed category. In reality, foreclosure have got into new homes, too. A foreclosed new condo at Eclipse at Park - this one competed with regular sales - because builder (Comstock) is (still) selling their condos. This 1BR foreclosed condo was listed for $289,900 and it was sold for a cool $265,000. That's a pretty good deal for the area. (cheaper than builder's).

Zip codes: 22201, 22203, 22205, 22207, 22209, 22213
When you get to the North part of Arlington, you can probably only score condos. Location, location. There's a $100k degree of separation between South and North part of Arlington. It costs $100k more to own a condo in the Orange line corridor. But, lately with foreclosure, you can also find foreclosures around the area. For example, at the new construction Westlee over at Lee Highway which is a few blocks from East Falls Church metro, a bank-owned condo recently was listed for $314,900 (previous owner bought it for $359,400 a year earlier). This condo was sold for $299,000 to a lucky buyer.

In today's market, a $400k may give you enough dough to buy a 2BR/2ba condo somewhere along the Orange line corridor.

Falls Church

There's two Falls Church here: the City of Falls Church and Falls Church part of Fairfax County.

Zip codes: City (22046), 22041, 22042, 22044, 22043
A total of 145 homes sold year-to-date. Looking to buy single home under $400,000 close-in? Head off straight to zip code 22o42. This is the one area inside the beltway, where you've got plenty of distressed homes to choose from: bank-owned, short-sale - you got it. The zip 22042, it's like the 'ground zero' for foreclosure inside the beltway. It's been that way for at least a year or so. However, now that people know this is the hood with affordable prices, decent homes got churned out quick (and with multiple contracts, too).

You occasionally can find single homes under $400,000 in zip codes 22043 and 22041. A 2BR/2ba depending on which zip code in Falls Church, can be had for the price of $150's-ish to under-$300's. A few newer garage townhomes in 22041 were short-sale and sold for a penny shy of $400,000.

In the City, you can only buy condos. Once in a blue moon, you could find bank-owned or fixer-upper single home in the high-$300's over here. Other time, you might have to settle with condos.

Alexandria

Like Falls Church, there's two Alexandria: City and part Fairfax county. In the City, prices are higher than outside the City. A total of 313 homes under $400,000 were sold year-to-date in Alexandria, Fairfax.

Zip codes: City: 22301, 22302, 22304, 22314 (Old Town); 223o3, 22312, 22306, 22307, 22308, 22309, 22310, 22315
Looking to buy property for under $60,000? Go straight ahead to zip codes 22309 and 22306, around Route 1 - Richmond Hwy area, where prices have gone down as low as $35,000! Seriously. This is not a 'typo,' it's the real price. Think the Colchester, Pinewood Lawn and Sequoyah are the condominium with tons of distressed properties. New buyers can come in with prices unheard of: like under $60k for 2BR/1 ba condo.

Ditto for condos in zip 22312 and 22302. A few sales went below the $70,000 mark at the Seasons and Saxony Square. For the most part condos were sold for under $100,000. A few sales in 22302 (that borders with Arlington 22206) was sold below $100's for 1BR and $150's for 2BR/1 ba condos. At the other end of the spectrum, a few townhouses were sold in the $400's.

So if you could buy condo for under $60k here, you may ask "how much is the price a townhouse or single home then?" Well, if you just upped your budget to $200,000, you could certainly buy a single home or townhouse. Newer townhouses (sometimes with garage) in zip 22306 sold from $250,000 and up. (prices go higher when you got into bidding war).  New (or newer) townhouses, like those built in 2006 sold from $270,000 and up. This is the kind of property that gets attention from many of the buyers.  They prefer new (or newer) with a garage, if they can get it. Most newer garage townhouses in zip 22309 were sold under $350,000.

Move on to Kingstowne. At Kingstowne, the prices have sort of climbed up since January with bidding war becoming usual and customary. Supply of bank-owned townhouses have since depleted. Garage townhouses over here were sold in the range (pushing) $400,000 and higher because of (again) bidding war. Though, some older townhouses (if they're still available these days) on the market can be had for $300's and up. The home prices were so low in the neighborhood of $200's to $300's range last year! Now, it's getting harder to find any house in the range.

For the price of $300,000 and up you could buy single family home in zip 22310, 22312. Kinda mix of transactions. Combination of short-sales, bank-owned properties and regular sales. The zip 22312 is so inside the Beltway. Garage townhouses around this area were built in the late 1980's. The prices are still decent - you could buy them around $350's. Once in a blue moon, you'd see brand new like 2 years old bank-owned townhouse at Residence at Sullivan Place (Ryan home community). These homes were sold for under $370,000. Think about this, those 3BR/2 ba homes in '06, were selling over $500's.

Prices of homes in the City of Alexandria are higher than in Alexandria, Fairfax. A total of 158 houses were sold year-to-date under $400,000 with majority of deals comprised of condominium, rowhouse, and stack-condo-townhouse.

In Old Town, zip 22304, you can only get a condos and maybe a tiny 2BR/1 ba turn-of-the-century rowhouse.

The "best kept secret" in the City is the hood next to Del Ray: zip code 22305. This is the one hood where 1950's brick townhouses were selling from the mid-$150's and up. In the pricier Del Ray, zip code 22301, prices were higher over here - pushing $400's - but sometime you can find house slightly below that mark.

Sales of newer condos like the ones at Exchange at Van Dorn (22304) or Pallazo (22311) mostly sold in the $200's range and up. A 2BR/2Ba bank-owned at the Exchange previously paid for $375,000 was sold for a hundred grand less - at $265,000!

Is it worth the wait? Who knows..

In the popular hood of Cameron Station (22304) we could find only one two-level condo that was sold for $390,000, almost one hundred grand less than it was paid for.

McLean

Zip codes: 22101, 22102

Pricey, pricey hood. Only 12 properties were sold in McLean, a combination of foreclosure, regular sales, and short-sale. All of them are condos. Over here 2BR/1 ba condo starts at $200,000 all the way to $354,750 for a 3BR/2 ba condo over at Tysons Corner.

Annandale

Zip code: 22203

The zip code 22203 of Annandale stretches from inside (I-395) to outside the Beltway (I-495). A total of 92 properties sold here. Condo sales between the price range of $75,000 to $150,000. A few sales of 1 BR condos over here sold below $100,000. Townhouse prices started in the $170,000 range and up.  Once prices hit above $170k, a long list of homes populated the market from townhouses, single family homes. Those houses are combination of short-sales, bank-owned and regular sales.  For single family home, you could still find them in the mid-$300's range. 

Bottom line is this: in this market, your money goes a long long way. Depending how much you want to spend on what type of property. If you want to settle close to DC, you've (still) got some option to choose from in many of the established neighborhoods around the area. Sure, these homes are smaller than McMansions and older style. But, hey, you can always remodel your house some day down the road once the house is yours. 

You can always fix the interior and exterior of a property, but you can't move the location...

To be continued.. 

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Outside the Beltway and Washington DC will be up next sometime soon. So, check back for updates.

image: Slate

McMansion Homes No More in Alexandria

image: Cameron Station

Over in Arlington, Alexandria City, Fairfax City, Fairfax, PG County, MD - either has regulations already in the books or in the works - for infill development of McMansion or Super-sized homes. The amendments include: height, front setbacks, garages, floor area ration (FAR), tree coverage and teardowns on substandard lots.

Alexandria City recently passed three amendments to address the super-sized homes issues. Three amendments approved by the City Council, via Update (subscription-only):

1. For houses that are 'too big.'

- Alexandria imposes Floor area revisions (FAR) for both residential and commercial. Removes exclusion on areas under 7'6" ceiling heights. Attic under 5' excluded. Vaulted ceilings over 15' shall be counted twice, and those over 25' counted 3 times FAR.

2. For houses that are 'too tall.'

- Dwelling height calculation is set at the greater of 25 feet or average building ht on the blockface plus 20%. Special permit is needed if owners looking to build homes that exceed those requirements.

- Front threshold heights. It's a permanent approval given to interim regulations. It limits the front threshold and by extension the first floor height. The new limit is average of front threshold height on the blockface + 20%.

- Measuring building height. This is how Alex. City would measure it: Building height will be measured from the lower of the pre-construction grade or post-construction grade to prevent cheating (for lack of better word) when builders using dirt along the foundation that gives the impression of decreasing building height. Other def are added for mansard and gambrel roof types. (sample of restoration of a gambrel home in Virginia).

image: gambrel roof (via Wiki)

image: mansard roof (via Wiki)

 

3. Curbing the growth of out-of-character houses.

To preserve neighborhood characteristics, the City gives incentives for front porches, detached garages.

- Open porches up to 240 s.f. is excluded from FAR calculations.

- Rear yard garages will be excluded from FAR measurements. Garages can only be used for cars (no more junks store in the garages).

More details, after the jump....

Fannie Deletes Higher Payment

Months ago, Fannie Mae decided that buyers should come up with higher down payment (DP)  in what they call 'declining markets.' (Read about it here). Maybe it's such a bad decision because it helps put on the brakes home buying especially for first-time buyers.

According to AP, Fannie decided to scrap the plan. So now only 3%-5% down is needed regardless of local market conditions (declining or not) which our area, DC metro region, is one of the 'declining markets.' We're now back to 97% or 95% loan-to-value ratio.

Via Fannie Mae.

"... Starting June 1, 2008, Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its Desktop Underwriter^® (DU^®) automated underwriting system, and 95 percent loan-to-value ratios for loans underwritten outside of DU, in all geographic locations in the United States. The new national down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining.

"As another part of our 'Keys to Recovery^TM' initiative, we are today announcing that we will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions," Marianne Sullivan, Senior Vice President, Single-Family Credit Policy and Risk Management, said. "This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover."

The new national down payment requirements of 3 or 5 percent will apply to loans for purchase of single-family, primary residences. Down payment requirements will vary for other occupancy, property and transaction types. The company will implement systems and operational changes over the summer to accommodate the new national policy. [emphasis added]

That's just the down payment part. Other restrictions still apply.

UPDATE: This announcement was so 'new' (announced this am) that even the loan guy in my office was not aware of this :-)

FURTHER UPDATE: Not clear if condo included in the new policy? It doesn't say about it anywhere in the context, it refers only to "..single family, primary residences." Does primary residence extends to condo? We have yet to see how this going to play out soon.

 

On the Pipeline: Route 1 SE Fairfax Developments

Route 1 or commonly known as Richmond Highway serves as the artery road connecting the military base at Fort Belvoir to the outside world. When BRAC (Base Realignment and Closure) workers relocate to Fort Belvoir in 2011 (3 years from now), the function of Route 1 becomes more important than ever.

GMap

According to Southeast Fairfax Development Corporation information, currently there are 16 developments (.pdf) slated for Richmond Highway with different stages from planned, rezoned to completion a few of the projects. In 2006-2007 period 33 projects (.pdf) slated for Richmond Hwy in which some of them were completed, i.e. projects like Midtown Alexandria Station (residential), Safeway Center, Mount Vernon Plaza  (.pdf) and shopping center renovation, etc. Its revitalization plan stretches from Huntington Metro all the way down to around Woodlawn area, a combination of residential density, offices, and retail spaces worth $1 billion in 25 years of investment from the private sectors.

image: SFDC

A few interesting projects.

1. Owners of this property, the former Dairy Queen property located at the corner of Richmond Hwy and E. Lee Avenue, is looking for a buyer. The site has been rezoned for a three-story, 27,900 s.f. townhouse style retail and residential on 1.2 ac or property. It also includes 24 residential units and 8,700 s.f. retail space.
2. Walgreens have two stores slated here: at the corner of Richmond Hwy and Beacon Hill, and a 14,000 s.f. building corner of Richmond and Boswell Ave.
3. Three hotels: expansion of Hampton Inn, new Holiday Inn Express and Marriott Springhill Suites. Now completes and open.
4. K.B. Homes Huntington Mews with 94 new townhouses on 14 ac. along Huntington Ave.
5. Kings Crossing - a 42.2 ac. joint project of JPI and JBG Rosenfeld at near intersection of Kings and Richmond Hwy. Project includes 300,000 s.f. office, 285,000 s.f retail/ restaurants, 1280 residential units and 3932 parking spaces.  The current status of this project indicate that JPI bailed out from the project, but JPG Rosenfeld moves forward with a facade improvement (for now).
6. The big thing - Fort Belvoir. 19k employees will be relocated to work out of Ft. Belvoir. A new hospital and office space, and the National Museum of U.S. Army planned at Ffx County Pkwy and Kingman Road.

You can imagine how the traffic leading to Ft. Belvoir will be so congested with all the new developments coming on the pipeline and workers relocation. To solve the traffic challenge, the Army is even looking to consider monorail and water taxi which is an interesting combination.

Looking at the current market conditions, neighborhoods surrounding Richmond Hwy is loaded with foreclosures and short-sales properties. It has one of the highest foreclosure rates south of Alexandria. There are bank-owned townhouses in the 300's on the market which were selling in the $500's a couple years ago.

This is the thing. If the big businesses willing to take risks and invest some $1 billion for the area, that shows some serious money will be vested down the road. From an investment perspective, that's a good sign. Because that means ka-ching. There are opportunities (foreclosures, etc.) for those who are willing and able to wait - until the market swings back up. The potential is there. You just have to sit and wait for the turnaround. And be patient.

New Homes Special Deals Line Up

Every week I receive builders email solicitation. You can sort of measure builders desperation by looking at the prices. The new home builders can afford to cut prices aggressively more than Joe home seller because to them, each home is just a commodity. Or, number on the balance sheet.

Arts District of Hyattsville

So we know from this email that Busboys and Poets is coming to the hood. And price reduced for this one home (usually a 'spec') from $470k to $399k or a 14.8% price reduction!

Centerpointe in Fairfax

420 Condominiums

Penderbrook Square

This is a serious ding to their condo prices. What a 2BR now under $250? Comstock used to sell the 1BR at high-$200's pushing $300's. They even do FHA now.

Tysons Chase

Even luxury homes cut their prices on their spec homes. Actually there are two spec homes with big discount. One is below and the other one is Carlton model, that comes with over 5900 s.f., 6 BR and 5 1/2 Ba, Chef kitchen with stainless steel appliances, open floor plan for entertaining and brick patio backing to conservation area. (around Tysons Corner, Vienna)

Cameron Station

Prices now off $70,000! It's off $70k probably for the remaining 'few?' units they have available. I love it when they say only a 'few.' My follow up question will be 'how many is few?' The answer determine how far down they're willing to negotiate.

Parker Flats

Capitol Gateway

In addition to the incentives above, they have a couple of spec homes priced from low-$300's to mid-$300's.

Midtown Alexandria Station

Logan Row

Ready for barbeque? The kicker - open house with barbeque for a change here.

I'll keep you posted when I see more deals coming on the pipeline. Here is my disclosure: Prices and incentives subject to change without notice. Got it?

Energy-Efficient Windows

I didn't realize there are so many variables build into choosing regular windows let alone the energy-efficient windows.

Why energy-efficient windows?

1. It saves money and energy. Low E-coatings, gas fills and insulating spacers and framers can significantly reduce winter heat loss and summer heat gain.
2. Protect from the winter and sun while also reducing condensation and interior fading. Frame and glazing materials that resist heat conduction do not become cold and this result in less condensation. Coatings on glass or plastic films within the window can significantly reduce the UV and other solar radiation which causes fading of fabric and furnishings.
3. Keeps your home cooler in the summer and warmer in the winter. Windows temperature are more moderate and there are fewer cold drafts. Discomfort from strong summer sunlight is reduced.
4. Rebates and credits for energy-efficient windows, doors and skylights.

The federal tax incentives for energy-efficient windows, doors and skylights, which is only good till 2007. But Congress will be voting to extend the provisions for residential energy-efficient property credits (when they return from President's day recess) on HR5351 - 'The Renewable Energy and Energy Conservation Tax Act of 2008.' None of the utility companies operating in our backyard of DC-MD-VA gives any rebates or incentives to name a few like in California, Colorado. The Federal tax incentives, via efficient windows collaborative.

• 10 percent of purchase price (not including installation cost)
• Must be installed in primary residence (not your second home)
• Max. credit is $200 for windows and skylights, $500 for doors - total max is $500
• Windows must be installed until Dec.31.2007 to qualify
• ENERGY STAR windows and skylights qualify, doors need manufacturers' statement to qualify

Tax credit is not the same as tax deduction like your 401(k) rather it is credited or use to offset tax owed, which works better than deductions.

There are important variables in the windows of the world.

• Each state have its own building code requirement. Depending on where you live, you might want to check out a couple of websites for more of the codes' information, 1) Energy Star and 2) Efficient Windows Collaborative, and 3) National Fenestration Rating Council.
• Understanding labeling: U-Factor, Solar Heat Gain Coefficient, Visible Transmittance, Air Leakage, Condensation Resistance. For explanation of the labeling terms, here.

• Energy Star windows has its own chart of key product criteria based on climate zone. Click on image to enlarge.

If you are still confused, to start with check out EFC website, where you can use the toolkit to compare energy savings and all the good criteria in choosing energy-efficient windows, even though it's designed for builders and designers. And go from there.

Factsheet: Selecting Energy-Efficient Windows in DC, Maryland, Virginia [pdf]

Sources: Efficient Windows Collaborative, Energy Star, National Fenestration Rating Council.

 

Technorati Tags: energy-efficient windows windows,doors,skylights,efficient windows,high performance windows,energy-star,energy savings,tax credit,rebates,remodeling,fenestration,energy-efficiency

Northern Virginia's First Energy-Star Certified Homes

A few weeks ago, I drove by Stockwell Manor, a new homes community in the border of McLean and Falls Church and saw the big sign that reads, "100% Energy-Star Certified Homes."  The 100% Energy Star homes, peaked my interest to go back and revisit. Because sometime in 2006, I visited the community when they just opened up the office. Don't remember if at the time, they'd started marketing the Energy Star certified homes yet. Maybe they did, or didn't.

With no end sight on how high oil prices can climb, Camberley Homes, the developer really took the plunge and committed to build Energy Star certified homes. Even in today's standard, it's not 'main stream' yet. Wait a few years from now, this type of homes will be trendy by that time, especially as more and more home owners feeling the pinch.

This is probably the first Energy-Star certified community of new homes on the market in Northern Virginia that I know of. There is a few eco-friendly and LEED condos on the market. But, eco-friendly and energy efficient does not necessarily offers the same features. [We'll talk more about some other time about the differences between the two in another post]

What is an Energy-Star Certified New Homes?

According to U.S. Environmental Protection Agency information, Energy-Star certified new homes must meet guidelines for energy efficiency set by the Agency. These homes must have 15% more energy efficient than homes built to the 2004 International Residential Code [IRC], and include energy-efficient features that typically make them 20-30% more efficient than standard homes. The energy-efficiency that separates them from the regular (standard) homes.

Energy-Star Certified homes uses energy-efficient features that contribute to improved home quality, comfort, lower energy demand and reduced air pollution.

image: front-loading washer & dryer

There are six 'Must-Have' components to qualify (or certified) for 'Energy-Star' homes:

1. Effective insulation 
2. High-performance windows 
3. Tight construction and ducts 
4. Efficient heating and cooling 
5. Efficient products 
6. Third-party verification

Yes, they do have to be certified by an independent third-party rater.

The components are what separated a home from being energy-efficient versus today's not-so-energy efficient homes. Think about this, a well-sealed and properly insulated home is not only quiet, but it offers other features that aren't so much can be found in today's (or yesterday) standard homes. Things like better indoor air quality, lower utility bills and because it's designed to use less energy, it helps reduce the greenhouse gas emission. Less energy consumption equal to less strain on the grid. 

From the outside, you probably can't see the differences between a standard homes versus energy-efficient homes. But, when you get to the inside, that's when you find most of the differences.

Here are some of the specs of Energy Efficiencies that you can find in their new homes:

• Third party energy inspections to meet ENERGY STAR certification 
• Dual-zone gas heating and central AC 
• Carrier Performance Series 93% high-efficiency gas furnaces 
• 13 SEER Puron refrigerant AC 
• Carrier 5 day programmable thermostat 
• Carrier humidifier 
• 75 gallon high-efficiency water heater 
• Tankless hot water system 
• Attic spaces insulated to R38

image: Camberley Homes

There are two types of homes available at Stockwell Manor: Townhouses and single family houses. Twenty-nine single homes and seventy-one townhouses are planned. A number of homes already been built and occupied. Single homes offered approximately 3600 s.f. to 4200 s.f. of finished square feet, comes with top-of-the-line kitchen appliances, i.e. Viking Professional and Designer series appliances. Homes are priced from low $1.5 million to high $1.7 million.

Townhouses have approximately 2600 s.f. to 3600 s.f. of living spaces comes with 10' ceilings on the main level with 9' ceilings on lower and third level. All homes come with 2-car garage. These townhouses are priced from the low $900's to high $1.1 million.

Crossposted with New Homes Trekker

Technorati Tags: energy efficient appliances,energy star products,certified energy star homes,carrier appliances,puron,mclean HS,garage townhome,viking appliances,u.s. epa,stockwell manor,falls church,west falls church metro,new homes,longfellow MS,haycock ES,fairfax public schools

Climate Change and Real Estate

What climate change got to do with real estate? It all started out at homes. The electricity generated by buildings sector contributes one-third of the greenhouse gas emissions. According to Pew Center for Climate Change, buildings sector accounts for 43% of total carbon dioxide (CO2) emissions [chart below].

image: Pew Center on Global Climate Change

As you can see from the chart above and breaking it down further, the real estate industry that includes commercial and residential accounted for a total of 38% of total CO2 emissions in 2002. Residential sector produces 21% of CO2. To put it in context, in total electricity spew about 38 % of CO2 emissions to the atmosphere -- mostly come from electricity generated in homes, offices and industrial buildings -- that power everything from heating and cooling, fixtures, lighting, appliances, computers, and cell phones. Yes, your cell phones, too. That is one-third of the total U.S. CO2 emissions! Hello?

Okay, here is the thing Realtors don't build homes, they sell. Builders, are supposedly in the forefront of this carbon footprint because they build homes. How many energy-efficient homes being built in this area? Very, very few...if any. Knowing what we know about how greenhouse gas emissions causing the average global temperatures to rise, why haven't more low-energy (smart) homes being built? I found it intriguing to see why builders haven't done more beyond installing energy-efficient appliances? Costs? Yes, there's that. But the difference won't be much. Then, the marketing side of it. Whatever.

When you think about it, it is much easier to start from scratch in building low-energy homes (or even zero energy homes) than to retrofit later.

Now we know that there is virtually no limit on how high energy prices can climb. We saw crude oil price passing the 'psychological' mark of $100 yesterday. That got every one on the econ pundit lists talking about the possibility of recession. In real life, how is it going to impact you? It will have an impact on 1) your 'disposable income', and 2) because of that, you now have to 'seriously' take a hard look at how well you manage your finances.

image: Energy Information Administration

When it hits our pocketbook badly, we have no choice - but, to react. Control spending (now?)... er, reduce expenses. At home, that means, spending less money on energy bills. The dollars and cents approach to be energy-efficient.

It's only a matter of time before we see the interest into home energy conservation techniques - to spike up. Energy efficiency (inside the home) first before even thinking about going solar.

The good news. When we apply energy conservation at home, it reduces the strain on the grid. The move is not only help to cut our energy bills, but also reduce carbon dioxide emissions into the atmosphere. And, it helps save the environment we live in.

UPDATE: If you haven't read it yet. Dominion Power receives 'the blessing' from Virginia environmental regulators and U.S. Forest Service the tentative okay (whatever that means) to build a clean coal plant in Wise County. What clean coal? And guess what? Excuse for the plant: To meet the demand in Northern Virginia. [source: Bristol Herald]

Cross-posted with Talking Green

image: MSNBC
source: PEW Center on Global Climate Change

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N.Va Homes Sales Lowest Since 1998

Houston, we got a problem. The total number of homes sold year-to-date for 2007 is the lowest since 1998.

Here's what we've been hearing over the years: The best market happened in 2005. The year 2005 might be the best year as far as prices is concern, but not the number of homes sold.

click image to (+). data: NVAR

Looking back 10 years, we can see how the total number of homes sold between the period of 1998-2007 was actually peak in 2004 with 33,193 homes changed hands. Y-to-Y from 2004 to 2005 homes sold declined by 8% to 30,480 homes. The trend has been going downhill since then.

What's more, number homes sold this year were almost half from its peak in '04 to a low 16,843 in November. Between 2006 to end of November 2007, the total number of homes sold declined by a 'whopping' 32.8% from 22,377 to 16,843 homes, while prices remain flat.

This year monthly trends indicated that we do have a big problem at home. The number of homes sold in most of the jurisdiction in our backyard declined by steadily after the end of second quarter in June. [chart]

Entering winter season, the number of homes sold in Fairfax county declined from its peak of 1,423 in June (technically it's the end of Spring season) to 765 by the end of November. The same is true with other No.Va jurisdictions. In Alexandria, homes sold declined from 228 (June) to 127 (Nov). For Arlington, the total number of homes sold dip from 308 to 149 homes. Loudoun county also faced with the same problem. Homes sold there, declined from 466 to 285 homes.

click image to (+). data: NVAR

Reality Check

The challenges we have today, coming from different directions. The two big things are inventory and financing.  Speaking of inventory. Look at how long will it take to sell all homes at different jurisdiction in Northern Virginia from its current level at the current market absorption rate, without adding new listings and new homes to the pipeline.

data: NVAR, GCAAR

• Washington DC: 7.3 months.
• Alexandria: 10.2 months.
• Arlington: 8.3 months.
• Fairfax: 9.3 months.
• Falls Church: 17 months.
• Loudoun: 11.9 months.

The absorption rates pointed to an overwhelmingly 'strong' buyers' market for Northern Virginia...and Washington DC.

To reduce market inventory, sellers would need to help buyers buy their properties. As simple as that. Whatever works. One of the solutions would be to come down in prices. This is probably a 'wishful thinking.' Because of new mix of products like foreclosed properties, bank-owned, short sale - that were scarce during the heyday of housing market have already  started to blend in with the regulars.

The blending in of unusual products mix made the gap in prices vary widely. You have banks seeking to 'unload' their inventories pronto, like yesterday. Some of them already got burned with subprime. They need to move forward [read: sell now]. They are the type of sellers who are in the position to make deals happen. Sales of new homes hit the lowest in 12 years. That's why home builders have been offering all kinds of incentives along with cutting home prices aggressively to survive. They too, are also in the position to make deals happen.  And then, we also have sellers who are still 'dreaming' wanted get their home sold with 2005 prices. The latter is the slow mo group of sellers.

Going in to 2008. So, what's this market has in store for you?

With the glut of inventory, this current market condition is 'very' good for buyers. Somehow these homes need to be sold one day. These are opportunities waiting for those who are ready, willing and able.

Just make sure that you get the money part straighten up first before out shopping. Because things won't happen without the money thing.. unless of course, you have cash.

Moving on. Have a prosperous and healthy new year.

Technorati Tags: nvar,subprime,citibank,nahb,new homes,mris,gcaar,bank-owned,reo,foreclosed properties,short sale

Builders Profit

NV Homes, Cameron Station

Wondering how builders make their money? Via Market Watch.

Question: Can you provide any idea of what the average home-builder gross profit is on a square-foot basis right now here in the Northeast? I was getting ready to start negotiating the purchase of a townhouse here and I know the builder has a mortgage on the home for $286,000. I am trying to buy the home for around $340,000, which I think equates to a $12 per square foot profit. Just wondering if that seems reasonable.

Answer: I cannot give you a precise number, but I can extrapolate one from data provided by the National Association of Home Builders.

The average net profit before taxes of a typical home-building company was 9% in 2006, the latest year for which figures are available. The average price is now $300,000, give or take a few pesos, and the average size is roughly 2,500 square feet.

Now, 9% of $300K is $27,000. Divide that by 2,500, and you come up with a profit of $10.80 per square foot.

These days, builders are fighting for their own survival! Some of the big builders are in deep trouble financially. Their profit margin may be less than 9%, especially if they offer concessions either to buyers and/or agent bonuses. Incentives, price reductions, and overhead expenses could easily eat up their bottom line.

Somehow, a few of them would do it as 'a matter of survival.'