Archive for November, 2010

Blog Brawl 5!

All right, ladies and gents — the time is here. Blog Brawl 5 begins.

Well, sort of. Before we really begin we need contestants. That would be you.

For those of you who missed last year’s Brawl, here’s how it works: Real estate blogs from around the country will compete to be the World U.S. RE Blogging Champion!

Blog-Brawl-5-LogoHow do they compete? We ain’t sayin’ — not yet. In past years it’s been everything from a simple popularity contest (VARbuzz visitors are asked to “Vote for your favorite blog”) to video competition to professionally-judged art.

This year will be something similar, but something different.

First things first…

Nominate your favorite real estate blog. Yes, it can be your own.

Requirements:

  • The owner/main writer is a Realtor (yes, we’ll be checking);
  • The blog is primarily focused on real estate;
  • It’s been updated regularly for the past month (doesn’t have to be every day, but you should know what “regularly” means);
  • There are no monkeys or seahorses on the front page;
  • We receive the nomination by 11:59 p.m. EST on Tuesday, November 30, 2010. UPDATE: Extended to December 31, 2010.

Just send a note to me (andrew@varealtor.com). Tell me who you are, what firm you’re with, and your blog’s address. It can be self hosted, part of your company site, on Active Rain, whatever.

If we get more than 32 nominations, the first 32 we receive are in.

Once we get the contestants lined up, we’ll tell you how it’s gonna go down — there will be four rounds. Maybe it will be elimination, maybe it will be cumulative points… you’ll just have to wait and see. We’ll say this: Multimedia skills (yours or someone you know’s) will probably come into play, as will an ability to do SEO.

You see, in honor of the holiday season, this Blog Brawl is gonna be all about traffic.

And prizes, you ask? Please. You’re not in it for the prizes. But since you asked, let’s just say that we’ll be giving away some cool stuff. (Some we have already, others we’re negotiating.) Come on, this is VARbuzz. We always have cool prizes.

All will be revealed in the first week of January!

Are you ready?

Protect the value of your home by reporting vacant homes

We all know that foreclosures are hard on homeowners, and that they can hurt a neighborhood’s property values. But you might not realize the effects they have on localities.

At the Governor’s Housing Conference in Richmond this week, Jennifer Leonard of the Center for Community Progress and Jeff Blackford from the Fairfax County Department of Code Compliance explained that yes, foreclosures put a lot of pressure on local governments too.

Here come the bullet points:

  • Between falling property assessments and vacant homes with no apparent owners to send tax bills to, localities are seeing steep drops in property-tax revenues.
  • At the same time, cities and counties are seeing their code-enforcement costs go up — there are more vacant homes to board up, and more overgrown grass in front of more vacant homes that needs to be cut, for example. (For example, according to Blackford, Fairfax County spends $250-400 to mow a quarter-acre lot.)
  • The lower tax income and rising costs are forcing some cities and counties to make cuts to code enforcement personnel, making neighborhoods less safe.

Speaking of less safe, Leonard and Blackford pointed out that vacant homes bring with them a long list of other problems:

  • Illegal activity, from vandalism to meth labs
  • Squatters may enter the home and – now that winter is approaching – light fires to stay warm, substantially increasing the fire danger
  • Unguarded swimming pools that pose a drowning risk
  • Electric companies cut off power to vacant homes when bills aren’t paid. No electricity for sump pumps can mean standing water in basements — think mold and other nasty things
  • Dilapidated roofs can lead to collapse

To make it all worse, code enforcement, policing, demolition, planning, and other concerns are often spread around and uncoordinated, making them inefficient and costly.   

Some areas have tried to mitigate the problem, although sometimes with unintended consequences. In Danville, for example, the city has taken possession of homes, demolished them, and put liens on the property for expenses. But that makes the properties too expensive in the eyes of prospective buyers, who must pay off the lien before closing on the sale. Therefore, the land just sits there, unused, and the locality receives no tax revenue for the property.

Despite all this, Blackford urges homeowners and property owners associations to report vacant homes to their local code enforcement offices.

If nothing else, local officials can do small things like board up doors and secure pools — it can make a big difference in safety, reduce the cost to the locality in the long term, and increase the likelihood that the homes will be occupied again soon.

After all, isn’t that the point? A lived-in home poses far less risk to the citizens around it and produces property tax revenues that allow localities to provide services. 

Count on deficit reduction plan changing shape

The Realtor profession stands ready to respond swiftly and decisively to oppose any specific proposal in Congress to reduce or eliminate the mortgage interest deduction. After all, there’s a lot at risk. However, at this point in time, there is no specific proposal in Congress to curb the popular tax break.

An initial draft proposal for reducing the federal deficit that suggests cuts to the mortgage interest deduction is thin on details and will likely change many times before it’s released in any final form, according to NAR. 

The New York Times Wednesday published part of a leaked draft by the co-chairs of President Obama’s Deficit Reduction Commission; the commission’s report won’t be released until Dec. 1 at the earliest and will likely look very different from the leaked draft, NAR analysts say. Therefore, early reactions to the plan are pure conjecture, say NAR analysts. In a statement sent to association leaders late Wednesday, NAR said media reports that the commission has recommended reducing the mortgage interest deduction are false.

The White House itself said in a statement released Wednesday that the draft is “only a step in the process toward coming up with a set of recommendations.” The White House quote was included in a Nov. 11 report in the Washington Post. 

Obama created the Deficit Reduction Commission earlier this year to recommend how the federal government can balance the budget by 2015, not counting interest on the national debt. The commission consists of 18 members, six members selected by the president and 12 members selected by Congress. The co-chairs, who released their initial thoughts yesterday, are retired Wyoming senator Alan Simpson and former Clinton chief of staff Erskine Bowles. 

What the actual report will look like is impossible to know at this point, because 14 of the 18 members at a minimum must agree to the recommendations before the report can be released. Presuming commission members agree or all or parts of a plan, it would still have to work its way through congressional hearings before Congress would take any action. A reform of similar scope, the Tax Reform Act of 1986, was in the works for more than two years before it was signed into law, pointed out Linda Goold, NAR Director of Tax Policy.

One congressional leader who has made clear the initial draft proposal won’t fly if left unchanged is Rep. Nancy Pelosi (D-Calif.), who remains House Speaker until early 2011, when the new Congress convenes and the Republican members, now the majority party in the House, name their speaker. Among the proposals Pelosi calls “simply unacceptable” are changes to Social Security benefits. 

For the real estate industry, any changes in incentives around home ownership, which have been around for generations, would raise considerable concern because of the core role of home ownership in fostering communities and social stability, and in building household wealth. 

As CNN, ABC, and NPR political commentator Donna Brazille has said, “For generations, the government has provided federal incentives to help families fulfill the dream of home ownership. . . The one thing that Americans aren’t cynical about is the promise of the American Dream and of home ownership’s role in that dream. We should do all we can to preserve and protect home ownership and the American Dream for today’s home owners as well as future generations.”

Source: NAR

Reports on cuts to MID are premature

This is how rumors are started. Yesterday several major media outlets (WaPo, NYT) ran stories about a sneak peek of a draft report from the Deficit Reduction Commission (DRC), a bipartisan commission charged with recommending steps to reduce the federal debt. The draft report contains a recommendation that the popular Mortgage Interest Deduction (MID) tax break be reduced or repealed in order to bring the government’s expenses in line with its revenues.

Here are the facts: The DRC hasn’t released its report. Yesterday’s stories were about a sneak peek at a draft. In order to report out its recommendations, 14 of the 18 members must agree to them. As it stands, it’s expected that this current draft will not garner enough votes from the DRC members to pass and Ezra Klein of the Washington Post posits that the DRC may never agree to anything.

All of this aside, Congress must ultimately act on any recommendation the DRC may bring forward, and the DRC itself has very little power to force Congress to do anything with their plan.

Now you know.

Supreme Court of Virginia upholds NVTA property tax classifications

The Northern Virginia Transportation Authority (NVTA) has levied a special tax on certain property owners to finance needed and costly transportation improvements in Northern Virginia, like Metro to Dulles. Here’s the rub: NVTA’s special tax applies only to commercial property owners, and not residential property owners.

This tax irks some commercial property owners in Northern Virginia because, in their view, all those who travel through Northern Virginia benefit from the transportation improvements, but only commercial property owners pay the bills for them. Some of the commercial property owners were so upset over the tax that they sued to have it nullified on the grounds that it violated the “benefit-burden” precedent (i.e. those who benefit from a project should share in the burden of paying for it) set by the Supreme Court of Virginia in a landmark case in 1941.

The case went all the way to the Supreme Court of Virginia which, on November 4, ultimately ruled against the commercial property owners. The special tax will stand, and this ruling gives the General Assembly a clear signal that it may authorize regional authorities to exempt certain classes of property owners from the taxes they levy.

VAR is concerned by the decision because we oppose efforts to establish a separate tax classification for various classes of real property including different classifications for residential and commercial real property.  VAR, however, does support legislation to provide voluntary authority to local governments to exempt a percentage of assessed value of residential housing provided any such exemption is targeted to those homeowners whose owner-occupied residential housing is affordable as defined by the locality, or the homeowner’s income falls within that of the population being served by the affordable housing programs of the locality.

Sourcebook offers best look yet at housing affordability

How affordable is housing in Virginia? How many middle-class families are struggling to keep a roof over their heads? Can a firefighter really afford to live in Fairfax?

A new tool from Housing Virginia answers those questions — and a lot more. It’s the first comprehensive, statewide database that looks at housing affordability.

Working with VAR, the Virginia Housing Development Authority, and Virginia Tech’s Center for Housing Research, Housing Virginia developed the Affordability Sourcebook, which takes data about incomes, housing prices, mortgage payments, and rental rates to give the first clear picture of the real cost of housing from Arlington to Abingdon.

First, some figures.

1. The national standard for whether a home is “affordable” is 30% — that is, if a home costs more than 30% of a household’s income, the family is considered “cost-burdened.”

2. If you take an area’s median income, a family that brings in 100% of that is solidly middle class, while a family that brings in 60% or less than the median is considered lower income. (Many state and federal departments use that 60% figure to decide eligibility for various social programs.)

Using data from the state’s MLSs, the Census Bureau, HUD, and Virginia Tech, the Sourcebook lets anyone (yes, anyone) look at state, regional, and local numbers to see how affordable an area is.

For example, almost a million households in the state are cost-burdened. And among lower-income families, just paying the rent or mortgage typically takes more than 42% of their income.

But the power of the Sourcebook is being able to look at that information on a local level: Incomes in Dulles may be higher than those in Martinsville, but so is the cost of housing (not to mention the commute). So the Sourcebook lets users pick a region, city, or county and see not only how affordable it is now, but how it has been trending (the data go back about five years).

Why is having this sort of information a big deal? Because it gives everyone — policy makers, media, urban planners, home builders, and of course Realtors® — the same information.

“For the first time ever in Virginia, we have a common set of data,” said Laura Lafayette, CEO of the Richmond Association of Realtors® and vice chair of Housing Virginia. “We’ll have the same database, so we’re all on the same page. We don’t have to spend time asking ‘where did your data come from?’”

Because Housing Virginia is a partnership of a wide variety of organizations — from Realtors® and home builders to not-for-profit groups, government, and academia — the information in the Sourcebook is a common ground everyone can agree on.

One of the first things it showed was that, contrary to some opinions, there are more people burdened by the cost of housing these days than before. Home prices may be declining, but so have incomes.

Housing Virginia hopes the Sourcebook will be used by a long list of groups — advocates for affordable housing will have hard numbers to show legislators. Corporations can use it to plan a move or new facility. Policy makers can use it to plan smarter growth. And Realtors® can use it to help clients make decisions about pricing and affordability.

Of course, as with any collection of data there are bound to be more uses and surprises than anyone expects. One of the first to emerge: Over the past few years, owning a home has become more affordable, while renting has become less affordable (probably because so many people were forced out of the homes they owned).

If nothing else, being able to quickly pull up accurate information about any part of the state will make it possible to see what the data really say about the economic situation. As Lafayette put it, “It allows people to unpack the headlines.”

Click here to visit and use the Affordability Sourcebook.

 

 

 

 

 

VAR welcomes John Dickinson as 2011 President

For one Virginia Realtor, the day after the last day of the NAR convention in New Orleans isn’t just a day to get back into the swing of things as a working Realtor, or to get reacquainted with the office, or to sleep off the remnants of another night out and about in the French Quarter. For John Dickinson, GRI, CCIM of Union Hall, the first day after the last day of the NAR convention means that today is the day he officially takes up office as VAR’s 2011 President.

Leading VAR as its 2011 President is the culmination of Dickinson’s many years of service to the Realtor family with the Roanoke Valley Association of Realtors, NAR and VAR. John made his way up through the ranks of the VAR Board of Directors, serving four years as Treasurer and having spent the last year as President-elect.

The day after the last day of the NAR convention also means that today we say thank you to Cindy Stackhouse of Dumfries for her service to VAR as its 2010 President. Cindy will continue to serve on VAR’s Leadership Team as the 2011 immediate past president.

Trish Szego of Fairfax ascends to the position of VAR’s 2011 President-elect, and Mary Dykstra of Roanoke takes over as VAR’s 2011 Vice President. John Daly from Virginia Beach begins his second two-year term as VAR’s Treasurer.

Rounding out VAR’s 2011 Leadership Team is Chief Executive Officer Scott Brunner.

Today, the gavel is passed to a new class of VAR leaders. If you can spare the time, please take a moment to wish your 2011 Leadership Team all the best for the year ahead. Click here to learn more about them or to contact them directly.

Is uncertainty about taxes fueling a surge in commercial listings?

Could the end of the Bush-era capital gains tax cut mean a jump in commercial sales? Could be, at least according to an article in Bloomberg.

With Congress deadlocked over extending the tax cuts, chances are looking good that rates will return to pre-Bush rates — most notably the capital gains tax, which will go back to 20% from its current 15%. That potential jump, Bloomberg contends, is convincing some commercial-property owners to try to sell now, rather than pay higher taxes later.

Longtime U.S. property owners … are testing the sales market amid uncertainty over the status of the tax cuts, setting the stage for a surge in transactions followed by a decline, said Robert Knakal, chairman of Massey Knakal Realty Services, a brokerage in New York. His firm has already seen a jump in deals, with contract signings reaching the highest monthly totals in three years each month since July.

 There may be precedent as well.

Commercial-property sales soared before the implementation of a 1986 change in the federal tax code that increased the capital-gains rate to 28 percent and ended the practice of allowing real estate losses to generate large tax write-offs, said Hessam Nadji, managing director of research and advisory services at brokerage Marcus & Millichap in San Francisco.

“The second half of 1986 was off the charts,” Nadji said in a telephone interview. “We did about a year’s worth of business in about four months. There was such a frenzy to sell and book profits before the tax laws changed.”

But economics is rarely simple, and others point out that you can’t be sure that it’s the impending end of the tax break behind the sales bump.

The increase in deals could stem from a sense that real estate values are no longer plummeting, rather than tax uncertainty, said Robert Bach, the Chicago-based chief economist at commercial-property broker Grubb & Ellis Co.

“The tax issues are sort of overwhelmed by the broader issues of supply and demand,” Bach said in an interview. “There’s a limited number of properties, and maybe the increase is from the fact that buyers and sellers are coming to common ground as contrasted with a year ago, when there was little clarity on pricing and nobody was doing anything.”

And, of course, there’s the simple fact that prices are still dropping — down 3.3% from July to August to the lowest level they’ve been since 2002. Property owners may figure the recovery is further off than they want to wait.

Click here to read the full Bloomberg article.

 

The EPA has required Virginia and all of the Bay states to submit a Watershed Implementation Plan (WIP) to them, describing how the state will lower its discharges of nitrogen, phosphorous and sediment into the Chesapeake Bay and its tributaries.  The WIP covers the next 15 years, and will require reductions from the agriculture, urban runoff, wastewater, on-site septic and forest source sectors.   Virginia must submit a Phase II WIP on November 29.

The members of VAR have a small window of time to comment on the Phase I Virginia WIP or Virginia’s pollution diet for the Bay and its waters.  Comments must be submitted by THIS MONDAY, November 8.  It is very important for VAR members to comment on the Virginia WIP. 

After months of development meetings on the Phase I WIP, a very late change in the Phase I Virginia WIP was made that will significantly impact your and your clients’ properties in Virginia.  YOU ONLY HAVE UNTIL NOVEMBER 8 TO SUBMIT COMMENTS.  PLEASE SUBMIT YOUR COMMENTS TODAY.

To help you send a comment letter, following please find comment letters prepared for you to express our (your) concerns with the Phase I Virginia WIP.  Please select one a sample comment letter below and copy and paste it into a short email.   Thank you for your time and attention to this matter.

Email your comment letter to VABAYTMDL@dcr.virginia.gov.   Make your inside address in your email to:  Mr. Russ Perkinson, Assistant Division Director for Nonpoint Source Programs, Virginia Department of Conservation and Recreation.  Make sure to end your email comment letter with your name and company name. 

Comment Letter 1.

Dear Mr. Perkinson:

It is my understanding some late changes that were made in the Phase I Virginia WIP were designed to allow the urban runoff sector to acquire credits from the waste water sector through a new Nutrient Trading Exchange (NTE).  I do not believe the Commonwealth has the ability to create a cost efficient, orderly, and effective NTE between these two source sectors. 

My sector, the urban runoff sector would need to acquire permanent or perpetual NTE credits for the permanent roads and other permanent impervious surface it creates.  Unfortunately, I do “NOT” believe the wastewater sector would or could provide us with permanent credits, without permanently sacrificing future capacity in their service areas.  In addition, I fear some localities or their wastewater operators will use the denial of the use of NTE credits, as a “no growth” tool.

I recommend that the Sector Allocations in the SAG WIP be adopted by the Commonwealth.  They are much more equitable to all sectors.

Best Regards,

YOUR NAME

YOUR COMPANY

Comment Letter 2.

Dear Mr. Perkinson:

The Phase I Virginia WIP requires new redevelopment projects to reduce the phosphorous and associated nitrogen and sediment discharges by an arbitrary 20%.  Perhaps even more if a determination is made that the reductions from redevelopment are not being met.

I am concerned that such a high standard will retard the much desired redevelopment of the older cities and older suburbs and, once again, encourage sprawl into the nearby undeveloped areas of the Commonwealth. The first and most important principle of “Smart Growth” is to reutilize existing infrastructure in the older cities and older suburbs that are deteriorating quickly in many parts of the Commonwealth.  I am an advocate for “Smart Growth” and I believe state and local incentives should be enhanced to encourage such redevelopment.  Cost prohibitive barriers for redevelopment like this, should not be erected by the Phase I Virginia WIP.

I recommend a more modest stormwater reduction requirement for redevelopment projects in Virginia that may impact the Bay. 

Best regards,

YOUR NAME

YOUR COMPANY

Three Virginia Constitutional Amendments pass on Election Day

Candidates for Congress weren’t the only names on the ballot yesterday. Three Virginia constitutional amendments passed on Election Day this year:

  • One authorizes legislation that permits localities to establish their own income or financial worth limitations for purposes of granting property tax relief for 65+ year-old or permanently- and totally-disabled homeowners;
  • second requires the General Assembly to provide a real property tax exemption for the principal residence of a veteran, or his or her surviving spouse, if the veteran has a 100% service-connected, permanent, and total disability; and
  • The third increases the permissible size of the Revenue Stabilization Fund (also known as the “rainy day fund”) from 10 percent to 15% of the Commonwealth’s average annual tax revenues derived from income and retail sales taxes for the preceding three fiscal years.