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Displaying blog entries 1-10 of 144

5 First Time Home-buyer Myths!

by The Stone Wood Team


NAR’s Profile of Home Buyers and Sellers for 2016 was based upon a 132-question survey that generated 5,465 responses from buyers.

Zillow conducted a 160-question survey of 13,000 homebuyers who had closed transactions in 2016.

Myth 1: Millennial attitudes toward ownership differ from those held by boomers

The average buyer in the study was 36 years old with half the buyers being millennials. Zillow’s study is especially compelling because the dataset is more than twice as big as NAR’s dataset.

The primary reason respondents wanted to purchase a home was the desire to own a home of their own. Studies also found that the percentages of millennials versus boomers who wanted to become homeowners were virtually identical.

Myth 2: First-time buyers are being shut out of the market

NAR’s data and Zillow’s data differ on one very important point. NAR reports that first-time buyers only accounted for 32 percent of the market in 2015 and only 35 percent in 2016.

In stark contrast to NAR’s findings, Zillow COO Amy Bohuntinsky reported that its data showed that 53 percent of all sales in 2016 were to first-time buyers.

Given the size and the depth of the Zillow study, one could certainly argue that the NAR numbers may be seriously underestimating the percentage of first-time buyers.

Myth 3: Homes are less affordable for first-time buyers

Zillow’s findings showed that today’s borrowers are spending an average of 15 percent of their income on their mortgage versus the 30 percent that they spent in the 1980s.

Even though prices are higher, today’s first time home-buyers are spending a smaller proportion of their paycheck on their house payments.

Myth 4: It’s cheaper to rent than it is to buy

CNBC article proclaimed that it costs more to own versus to rent a home in every U.S. state.

Although the median rents may be less than the median house payments, that comparison is a poor one, and here’s why.

  1. The median payments for homeowners will always be substantially higher than they are for renters, primarily due to the large number of homes that are priced at $500,000 or more. Homes at this price point and above only constitute a tiny proportion of the overall rental market.
  2. Every month that homeowners make a payment, they build equity. Even if there is zero appreciation or inflation, at the halfway point on a 30-year mortgage, the typical homeowners will have approximately a 35 percent equity position in their home.
  3. Focusing on the monthly cost of renting versus owning fails to acknowledge the money saved by the homeowner over time. To illustrate this point, rents increase over time — fixed mortgages do not. For example, a rental payment in July 2002 of $1,500 would have increased to $2,038.75 by July 2017 due to inflation.

Myth 5: Prices are leveling off — waiting to purchase won’t make any difference

Assume that a buyer is going to purchase a property and obtain a loan of $200,000 at 5 percent fixed for 30 years. If the interest rates increase to six percent, the buyer may pay up to an extra $50,000 in interest over the life of the loan.

If the interest rates increase to 7 percent, the buyer will pay almost a $100,000 more in additional interest.

In other words, an interest increase of 1 percent results in about a 25 percent increase in interest over the life of a 30-year fixed rate loan. An increase of two points in interest results in a whopping 50 percent increase in the amount of interest paid. That’s why it’s smart to buy now when rates are at historic lows.

So, here’s the bottom line. The next time some other “expert” tells you that it is cheaper to rent than it is to buy, share the information in today’s blog with them.

 

Renting Vs Owning

by The Stone Wood Team


Some would-be buyers have emotional reasons to own a home like having a place of their own where they can raise a family, feel safe and secure and enjoy their friends’ company. Other buyers’ dominant reasons might be financial in nature such as building equity or lowering their cost of housing.


Regardless of what might be motivating people to want their own home, it is easy to justify that now is a good time to purchase. Let’s look at a $250,000 example using a FHA loan.

The total payment will be about $1,835 dollars a month. If the payment is lower than the rent a person is paying, that should encourage a person to continue investigating.

In this example, when you consider the monthly principal reduction, the monthly appreciation and the tax savings, even with money added for monthly maintenance, the net cost of housing is less than half the total house payment.

Considering all those advantages, the would-be buyer is spending over $1,100 per month more to rent than it would be to own. In a year’s time, they would lose close to $14,000 which is more than the down payment of $8,750 required on this price home.

Most would-be buyers understand that a home is a big investment but they may not understand the advantage of the leverage caused by the low down payment mortgage. The benefits extend beyond a return on the down payment but to the value of the home.

In this example, the $8,750 down payment grows to an equity of $73,546 in seven years based on 2% annual appreciation and normal amortization on a 30-year loan. If you calculated that as a rate of return, you’d be challenged to find anything that could compare with it.

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To see what your numbers might look like, check out this Rent vs. Own. If you need any help or have any questions, contact us. Part of our greatest satisfaction is helping would-be buyers understand why they should-be.

Buying Rental Properties

by The Stone Wood Team

Why should you buy a home to rent out ? Rental homes are the IDEAL investment because they offer a higher rate of return than other investments without the volatility of the stock market. With certificates of deposit and bonds at less than 2%, people need an alternative investment that they understand and with a reasonable amount of control. 

In this case, IDEAL is an acronym identifying the advantages of rental properties.

Income from the monthly rent contributes to paying the expenses and a return on the investment.

  • Depreciation is a non-cash deduction that shelters income for some investors.
  • Equity buildup occurs with amortized mortgages because each payment is composed of interest owed and principal reduction to retire the loan by the end of the term.
  • Appreciation is achieved as the value of the property goes up.
  • Leverage can increase the return on investment by using borrowed funds to control a larger asset.

These individual benefits working together make rental real estate a good investment for today’s economy. Increased rents, high rental demand, good values and low, non-owner occupied mortgage rates contribute to positive cash flows and very favorable rates of return. 

To find out more about how rentals might complement your current investment plans, contact your real estate professional.

Why Contacting a Lender is Important

by The Stone Wood Team

Lenders regularly publish mortgage rates but they may not be available for all buyers.Imagine that the mortgage payment based on an advertised rate influenced a buyer to make an offer on a home. After negotiating a binding contract, this buyer makes a loan application and finds out that for any number of possible reasons, that rate isn’t available.

Even if the person does financially qualify for a loan at a higher interest rate, it will not be the payment that the buyer expected when the contract was negotiated.

Lenders evaluate several factors such as the borrower’s credit score, debt-to-income and loan-to-value ratios. These variables are used to assess the risk associated with the repayment of the loan.

While mortgage money is a commodity, it isn’t priced the same way items are that involve cash for goods. The lender puts up the money today based on a promise from the borrower to repay over a long term, possibly up to thirty years.

The simple solution to avoid surprises such as the one described here is to get pre-approved at the beginning of the home search process. Since pre-qualification does not mean the same thing to all lenders, call if you’d like a recommendation of a trusted mortgage professional.

Washington DC Early Cherry Blossoms Peak Bloom

by The Stone Wood Team



With such warm weather this winter, many people are wondering when the DC Cherry blossoms with bloom and be at their peak! On February 24, the indicator tree had sprouted green buds so some experts have predicted that the peak bloom will occur around March 15-19.

Tomorrow, March 1, The National Park Service will be announcing their prediction at a press conference. 

Keep up to date at CherryBlossomWatch.com

Holiday Light Displays in Northern Virginia

by The Stone Wood Team


It’s the first day of December and we are already stoked for the holiday season! One of our favorite activities are viewing the beautiful holiday light displays. Here are our favorite locations!

 

Meadowlark Winter Walk of Lights

Location: 9750 Meadowlark Gardens Court Vienna, VA 22182

Price: $5-$13 per person

Hours: 5:30 to 10 p.m. (last tickets sold at 9:30 p.m.)

 

Dominion GardenFest of Lights

Location: 1800 Lakeside Avenue Henrico, VA 23228

Price: $5-$13 per person

Hours: 5:00 to 10:00 p.m.

 

The Bull Run Festival of Lights – Drive Through

Location: 7700 Bull Run Dr Centreville, VA 20121

Price: $15-$55 per vehicle

Hours: 5:30 to 9:30 p.m.

 

Illuminated Light Show – Drive Through

Location: 13191 Dawn Blvd. Doswell, VA 23047

Price: $25-$100 per car

Hours: 5:00 to 10:00 p.m.

 

Leftover Thanksgiving Recipes

by The Stone Wood Team


Hope everyone has a great time with family and friends this Thanksgiving! After all the festivities, the leftovers you have can be used in other recipes! Here's our Top 5 favorites.

  1. Turkey Pot Pie : Who doesn't love a good pot pie? Just throw all your leftover together and voila! 
  2. Extra Veggie Fritatta : For the vegetarians out there ...
  3. Stuffing Stuffed Mushrooms : Stuff-ception going on here! 
  4. Turkey Chili : We all love a good chili in this office! This recipe is great with ground beef too.
  5. Leftover Thanksgiving Nachos : You can't go wrong with smothering anything in cheese.

Inheritance versus Gift - Is there a difference?

by The Stone Wood Team




A person called into a radio talk program with a situation that was troubling to the caller and disturbing based on the potential tax liability that may have been avoided.

The caller’s elderly father had deeded his home to his daughter a few years earlier because in his mind, his daughter was going to get the home eventually and this would be one less thing to be taken care of after his death. The daughter didn’t really care because the father was going to continue to live in the home and take care of it so that it would be no expense to her.

Obviously, unknown to either the father or the daughter, transferring the title of a home from one person to another could have significant tax implications. In this case, when the father “gave” the home to his daughter, he also gave her the basis in the home which is basically what he paid for it. If she sells the home in the future, the gain will be the difference in the net sales price and her father’s basis which could be considerably higher than had she inherited it.

If the home was purchased for $75,000 and worth $250,000 at the time of transfer, there is a possible gain of $175,000. However, when a person inherits property, the basis is "stepped-up" to fair market value at the time of the decedent's death.  If the adult child had inherited the property, at the time of the parent's death, their new basis would be $250,000 or the fair market value at the time of death and the possible gain would be zero.

In most cases, there are less tax consequences with inheritance than with a gift. There are other factors that may come into play but being aware that there is a difference between a gift and inheritance is certainly an important warning flag that would indicate that expert tax advice should be sought before any steps are taken.

Loan Principles

by The Stone Wood Team

 

It's the Principal of the Thing

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Most people think they’ll have a house payment and a car payment for the rest of their lives but it doesn’t have to be with a plan and a little discipline. The plan is to make additional principal contributions to a fixed rate mortgage to shorten the term and save tens of thousands in interest.

If a person were to make an additional $100 payment each month applied to principal on a $175,000 mortgage, it would shorten the loan by five years six months. If the person were to make $200 a month additional payments, it would shorten the loan by 9 years. $459 additional payment would shorten it to 15 years.

If a person does make a decision to regularly pre-pay their mortgage, it will be their responsibility to verify that the lender is applying the money to the principal each time as opposed to being placed in the reserve account for taxes and insurance.

In today’s market, a savings account pays around 0.5% or less. Even with the low mortgage rates available, there is still a considerable savings. People who might need the funds in the near future should carefully consider this option due to the difficulty to access equity easily from one’s home.

Make your own projections using the Equity Accelerator

Halloween Events in Old Town Alexandria

by The Stone Wood Team

Ghost ToursFollow a lantern-carrying guide who gives you lots of early history, a little suspense and mystery and a dose of "ghost." Tour begins at Ramsay House Visitor Center! It's great for kids of all ages and large groups. Oct 29-31

Poe In Alexandria - Actor David Keltz returns to The Lyceum’s lecture hall to re-create Poe’s visit to Virginia in 1849, shortly before his death. Enjoy a night of spooky stories and classic poem readings! Oct 30-31
 

Chadwick's Monster Ball -  Feast and drink to your heart's desire! There will be devilish drink specials, a costume contest, and killer tunes all night. They promise that you'll have a howling good time. Oct 29
 

Boo Cruise - Experience a spooky cruise on the Potomac! The ever-popular Halloween BOO Cruise aboard Spirit of Mount Vernon is a Halloween party to take your costume game to a whole new level! Come decked out in your Halloween costume to participate in a live costume contest for the best getup. Oct 29
 

Doggy Trick Or Treat - We can't leave out our furry friends now! Come to The Dog Park in Old Town Alexandria to get your map and have pictures taken. Then tour the rest of the participating stores to get more treats and find a sale or two in town! Oct 30
 

Del Ray Halloween ParadeThe 20th Annual Del Ray Halloween Parade begins at Mount Vernon Ave., south of E. Bellefonte, and continues down to the Mount Vernon Recreation Center play fields at Mount Vernon and Commonwealth Avenues. Children, pets and strollers in costumes are invited to march and show off their finest and scariest Halloween garb with prizes in different categories. The parade and all activities are free! Oct 30
 

Bootiques - Start trick-or-treating early and stop by the dozens of shops of the Old Town Boutique District dishing out treats to goblins and ghouls of all ages from 2 to 6 p.m.! Oct 31

Displaying blog entries 1-10 of 144

Contact Information

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Stone Wood Team
Keller Williams Realty
2165 Jamieson Avenue
Alexandria VA 22314
Office: (703) 739-4663
Office: (703) 739-HOME
Fax: 703-683-9692