Broadlands property values

Historically you could link the direction of rates as set by the Fed to Mortgage rates. However, in the past several years, it seems there is little correlation between the actions of the Fed and mortgage rates. In fact the Fed has raised the rates by 1.5% since June 2003 and yet today 30 year rates are only .52 to .12 higher than they were in June 2003. In my opinion there are many new factors in the mortgage market that are changing some of the commonly held "beliefs".

What is happening is mortgage providers are facing a more competetive market. If you look at mortage rate trends in the past 18 to 24 months, there are upward spikes in the rate that correlate to Fed actions but then rates immediately trend back down. I would argue that mortage rates are now tied more to consumer demand than any other factor. Markets also tend to create price ceilings that become defacto limiters because of consumer perception. 10 years ago, 10 to 12% was considered high for mortgages, 5 years ago it was around 8%, now it's news if it gets much higher than 6 to 6.5.

The other factor driving home prices is not actual cost of the home, but the "cost" as defined by your payment. For example, my mortgage payment on the house we built in Southern Walk is only $300 more a month than what my payment was on the first house we built in Broadlands in 1996, even though our current house was more than double the price. When I evaluate what something is "worth", the purchase price is mostly irrelevant. What I look at is what is it's monthly cost. I would imagine that I am not the only one with that view.

One more factor is the ratio of mortgage payment to monthly income or house prices to annual income. In the DC area we still below historical averages for those ratios. Technically speaking houses are more affordable today in relative terms than they were 20 to 30 years ago.

 

Are you in Loudoun County? Our assessments are at market. My assessment came in at $750K yet my appraisal for a refinance last week came in at $725K. I am going to appeal the assessment but I have found the assessments in Loudoun are very close to market. Also, my initial assessment in 2000 (when I moved to Broadlands) was at 100% of my purchase price not below.

Finally, I agree with Neil on the 1990 to 1998 market. I bought a SFH in Sterling for $180K in 1991 and sold it for $175K in 1999 (after putting $15K into it). No appreciation. The ten year average growth for this area is only 2-3% and that is heavily weighted by the past three years of excessive growth.

Question is whether this is sustaintable or able to continue to increase? Look at San Jose/Boston and other areas where these same questions have been asked for decades. I just thank the Lord that I bought when I did rather than waiting like alot of people I know.

Fido

 

Our first assessment (2004) for our new home was 20% below the purchase price. Our second assessment (2005) is, based on a recent appraisal, about 16% below market. Based on my perusal of our neighbors assessments on the Loudoun website, this appears to be consistent all over Broadlands.

 

Please see the assessment site to see the difference between the assessed value and the market value. My market value, according to the site, is $125k higher than the assessment.
http://inter1.loudoun.gov/cgi-bin/db2www.exe/webpdbs/re.d2w/INDEX

If the weblink does not work go to www.loudoun.gov and click on assessments, then enter your property address.

 

I was reviewing my assessment and found that the exact same house (meaning you can review the details and if you didnt look at the address you can't tell the difference) on an adjacent street is assessed at $90K less than mine. Go figure this one ...
My assessment is about 9% below what I paid.

 

On our street assessments went up from $20,000 to $120,000!! No rhyme or reason for it other than the assessor must have gone up and down the street rolling a pair of dice.

 

Location .. location ... location. Check out the street where the house is on, what does it back on, have there been improvements that you did, that they haven't: IE: finished basement, deck, patio, etc.

Neil Z.
Resident since 1999

 

neilz-
Don't give the county any benefit of the doubt. I appealed my assessment last year and had a hearing. Their methodology for assessments is absolute horse***t.

 

They actually have a methodology ??[]

Neil Z.
Resident since 1999

 

Actually if anything the other house would have more done than me.
I was in that house just prior to completion and it is the exact same as ours, except for the water table which is brick and mine is stone. It was only completed about 3 months before mine also.

So far we havent done any additions (deck, patio, etc)

 

I know people who have been successful in challenging their assessments here. By all means appeal if you have a concern. As to "methodology", a few years ago when the "we're just a sleepy little place that can't keep up" attitude was the answer to a lot of things, a friend of mine appealed and discovered that his small community (west of Middleburg) had been reviewed by an assessor driving through and looking around. My friend has since referred to "drive-by assessments". Appeal if there's something out of whack.

Barbara Munsey, from South Riding.

 

vweisenburg-
Thanks for sharing your perspective. I am a novice to economics and have been trying to learn more. I was wondering what you meant by saying, "Markets also tend to create price ceilings that become defacto limiters because of consumer perception." I completely agree with you about the monthly. Also, after seeing the hustle and bustle of the Miller and Smith sales office for the new "villas", that I think are starting around $550+?, that demand must be key to the prices around here. There are a lot of jobs and a lot of people! I am hoping it is true that compared to other urban areas, someone mentioned Boston, that DC may have a little ways to go in catching up. That would be better for those of us that are new home purchasers and also first time home buyers.

 

Further to the assessment fun...
I reviewed four of my model (with and without basements), average was $83K less than mine and noticed that one with basement was assessed below two Go figure that one.

I also reviewed a cross street that has homes generally 200-400 square feet bigger on large lots - average price below mine $54K

And my favorite - 800 square feet bigger than mine, assessed at $7K below mine.

 

What I was trying to say regarding price ceilings is as products or a services fall in price the high end of the range that consumers are willing to pay will also fall. Once the public gets used to a low price it becomes difficult to return to higher prices (for example the 0% financing by auto manufacturers after 9/11 was supposed to be a temporary program to stimulate sales, yet they have become permanent and as a result have also reduced the rates offered by others in order to remain competitive). Most areas of the economy have operated this was for a long time, however it has taken the emergence of competitors to the old paradigm of begging your local banker for a loan to move the mortgage industry into the economic realities of today.

 

Unfortunately, in Loudoun County, when there is a sale, the assessors up the assessment to close to the sale price. I had successfully appealed a few assessments in my townhouse, but when we moved into the SFH, the assessment the following year was only $4000 less than the purchase price, and MUCH higher than comparable properties/ same floor plans, etc.

When I spoke with the assessor, he told me that sales essentially red flag a property and gives them a new basis to go on. I guess their theory is that you aren't going to pay more for a house than what it's worth...

What I've noticed is that this is not across the board. My neighbor bought his house last year for $85000 more than I paid (same floor plan with similar accessories), and his assessment is about $15000 less than mine. Go figure-I guess my assessor is just decent at his job.

Regarding the appeal, my experience is that it's hit or miss whether you'll win, but it NEVER hurts to try.

 

I just looked on-line -oh isn't it nice that our private information is available to everyone - Our assessment is down $11k from the sale price of $491k.

My neighbor's house is assessted $178,500 more than our house. He has the room above the garage and the bump out on the back for all 3 floors and is listed as a total living area of 3,730 ours is listed as 2,464, if we add our basement we'll have another 1000 sq ft or so of living space. We also added a large stone patio under and beyond the rear deck. I finished the garage with phone & cable tv, can that count as living space?

our .28 lot assesses for $125,300 while his .25 assesses for $125k -- we back to trees

They can keep our assessment low.

 

Once you add your finished basement, you're assessment will surely rise though.

 

I would guess that we would remain "unfinished" on the books until we sell or refi.

 

unless you apply for permits for finishing the basement...

 

Bingo. And if you don't apply for permits, you may end up in bigger trouble. Plus, it may be difficult to find a reputable and trustworthy contractor to do the work without getting a permit. I don't think a contractor would risk getting in trouble with the county.

Even if you do-it-yourself, I believe you still need a permit. The folks a few houses down from our house built their deck on their own. But they still got a permit from the county.