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Strong D.C. housing market has wide-ranging factors

City officials want to continue attracting newcomers while not pricing long-term Washingtonians out

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real estate, gay news, Washington Blade, DC real estate market 2017

Local Realtors say buyers are pricing their properties more strategically than they were a decade ago based on current buying trends.

Ed Wood is a D.C.-based realtor with City Houses LLC for 20 years and former president of the District of Columbia Association of Relators. He sells in all eight wards and averages 15-20 sales per year.

He spoke with the Washington Blade this week on local housing trends, renting vs. buying and why the rental market is soft now, but likely to explode in the coming years. His comments have been slightly edited for length.

WASHINGTON BLADE: It seems most agree in Washington we’re back to pre-recession prices and multiple offers on real estate. Is that your assessment?

ED WOOD: Yes. D.C. was in a much better position during and after the recession. We saw a flattening but then it picked up fairly quickly and the market has been really strong ever since about 2011, 2012. We regularly see multiple offers still on properties.

BLADE: Is the asking price sort of an opening bid in those situations?

WOOD: It depends where it’s priced. It’s they’ve priced a little below asking, they’ll often get multiple offers and it will bump up. If they’re priced at asking or above, we do see things sit on the market because of that. Buyers are more savvy and more cautious than they were pre-2008.

BLADE: Were there many cases in D.C. where a homeowner may have been underwater on their mortgage during the recession but got out of it once the economy rebounded?

WOOD: There wasn’t a lot of that in D.C. It was more in the suburbs and more likely the further you got out from the city but those prices we saw coming back by last year. Occasionally in some of the more developing neighborhoods we saw some slow downs and some price softening but those prices have completely come back. Many values have increased above what people paid.

BLADE: How is the market for rentals vs. sales in Washington?

WOOD: The rental market has been fairly soft for awhile while the buying market has been strong. A lot of the buildings that are going up in the city have been rental buildings as opposed to condos and that’s because the long-term demographic outlook for the city — we’re still gaining about a thousand residents a month — is expected to be over a million by 2030 so there are a lot of companies from around the country who see this as a really good rental market and they’re interested in the long term. We’re not seeing the number of condos we saw pre-2008, so that’s why we see the competition. There’s still not enough inventory.

BLADE: Why is the rental market soft if the projections are so strong?

WOOD: They’re building for that projected million residents. (Editor’s note: D.C.’s current population is about 672,000.) You can’t suddenly build all the units you’ll need, so they’re building them now for five-10 years down the road. These are big companies who work in the long-term market so they can afford to do this. Sometimes they’ll even go to developers building a condo building and say, “Hey, we need a rental building at this location. Would you consider reconfiguring the design a bit to turn it into a rental building and selling the whole thing to us?” That’s attractive to developers because it’s a lot easier to sell an entire building than individual units to individual buyers.

BLADE: Those population projections must be pretty solid then. Could something catastrophic throw a wrench in those plans?

WOOD: Certainly. After 9-11 around the country, it just killed the market immediately and people stopped moving to D.C. immediately. But then things turned around. A lot of things could happen to change things, but hopefully nothing of that scale. All the demographics I have looked at are pointing toward that large population growth at least through 2030. Others that go beyond that are less reliable in my opinion.

BLADE: Based on what we’re seeing now and with those kinds of projections, will gentrification spread across the river?  What’s it like in those wards now?

WOOD: There’s a lot of interest in Anacostia and there’s a lot of change going on there. Bigger companies are looking at that area. … One of the issues there has been a lack of services and also people who’ve been priced out of other areas are looking over there. There’s been a lot of revitalization there but there’s also been a very active group of long-term residents who want to see improvements but don’t want to be pushed out. I know the mayor and city council members are focusing more on that part of the city. There’s even talk of moving the Reeves building at 14th and U., of selling that building and moving it over there.

BLADE: With all the gentrification that has spread down 14th Street to Florida Avenue and starting into the Northeast quadrant — look how different Bloomingdale, for instance, looks from what it was like 10 years ago — is it safe to assume that trend will continue or is that an oversimplification?

WOOD: I think that’s true. City government for a long time was desperate to get people to move back into the city. It was a dying place as people were overall fleeing out to the suburbs but that’s turned around and most cities are growing whereas the suburbs are starting to die out. People want to be closer and they want to spend more time doing the things they like as opposed to sitting in their car going to and from a bigger house. The city government is taking a renewed look at how that happens, how that takes place and what it means for the long-term city residents.

BLADE: They want to put some mechanisms in place to absorb some of that shock so to speak?

WOOD: Yes. There’s a lot of interest in trying to move in that direction so we don’t have a city where only the wealthy can afford to live. Whereas before they were trying to stop people from fleeing the city, we don’t even have to think about that now.

BLADE: Do people comment to you about Ed Wood the schlock film director often?

WOOD: Yes. It was actually helpful after the movie came out because growing up, my full name was Edward Wood. I would say Edward and they would think I said Ed Wood. That happened constantly. But nobody says that anymore. It’s kind of a name that sticks with people so they feel like they’ve seen it more than maybe they have.

BLADE: Have you seen “Glen or Glenda?” or “Plan 9”?

WOOD: Yeah. I’m a fan of his terrible movies.

BLADE: Do LGBT issues factor into D.C. real estate to any significant degree?

WOOD: I haven’t seen it be much of a factor at all. DC. has been such a gay-friendly city for so long, I don’t think it’s much of a consideration. When they’re selling a house, they just want the best price.

BLADE: Is there any sense of a gayborhood anywhere in 2017? Do people buy with that in mind?

WOOD: I don’t see that anymore. When I was first in the business 20 years ago, there was a desire, usually by gay men, to want to be near Dupont. I live near there. My husband and I have had a house here for 20 years so we’ve really seen the change on 14th Street. When we moved here, our friends thought we were crazy. Now they say, “How did you know?” We didn’t know. We just bought where we could afford and at the time we wanted to be near Dupont. Now when I have gay clients, they want to look all over the city and I see them asking things I never saw gay clients asking before like what are the schools like. They’re more interested now in the things you would have thought the straight couples would be looking at.

BLADE: Did marriage, either in D.C. or with the Supreme Court ruling, affect real estate in any perceptible way?

WOOD: I didn’t see much. There used to be a lot more estate planning, wills, setting things up in case something happened to one of you. My husband and I have been together 25 years and we did all that. … But now there’s a whole structure in place to keep you more protected than there was before.

BLADE: About how many of your clients on average are LGBT?

WOOD: I would say about a third.

BLADE: Are there any lesbian streets or enclaves around the city or is that not really a thing?

WOOD: It’s really not. Even with gay men, that Dupont thing is out the window. People are looking at schools, they want to be near work, they may want to be near a particular restaurant or they’re looking for the feel of a neighborhood. It’s usually things like that and it happens to be very individual to the couple.

Ed Wood can be reached at [email protected] or cityhousesdc.com

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Real Estate

Thinking of renting your place short-term in D.C.?

Here are some key factors to consider

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You’ll need a license if renting your place in D.C.

Summer is coming, and in D.C., many homeowners turn their attention to generating revenue from their primary D.C. residence while they are away for the summer. Due to the way some D.C. employers enable staff to work remotely and permit longer vacation schedules in the summer months, many owners can find extra income annually by considering short-term rentals. Here are a few key things you should know before getting started.  

In 2021 the D.C. Department of Consumer and Regulatory Affairs announced it was “finally ready to start implementing and enforcing ” a law passed three years earlier for short-term rentals (AirBnB, VRBO, etc.). According to DCist, the agency started accepting license applications for short-term rentals on Jan. 10 last year and started enforcing the law’s provisions in April 2022.

According to Martin Austermuhle’s “D.C. to Start Restricting Airbnb and Other Short-Term Rentals” he wrote for DCist, “The law applies specifically to short-term rentals, those lasting less than 30 days at a time. Under the new law, any D.C. homeowner who wants to rent out a bedroom, basement, or entire home on Airbnb or any other platform has to get a short-term rental license from DCRA. (The two-year license costs $104.50.)”

Charlotte Perry, owner of LUXbnb, a property manager specializing in furnished short-term rentals in D.C. for more than 15 years, is a trusted partner to Columbia Property Management. She shared her expertise and guidance with me on short-term rentals. Her business, LUXbnb, punches above its weight in the D.C. area, bringing owners greater opportunity to realize the gains they hope to make. She brings deep insight into what you can expect if you were to go down this path with your property. 

Companies like hers function like any other property manager might. LUXbnb collects the rents, “hotel” taxes, security deposits, departure cleaning, and any other applicable feeds on behalf of the owner. They manage turnover between guests including cleaning and any needed repairs. And at the end of each month, they release the rental income earned less the management fee and any repair costs or new purchases.

In the District, if the owner resides at the house during the rental, s/he can host short-term renters all year long with no consequence. However, if, like many of Charlotte’s clients, the owner is renting their property while they are gone during the summer or while on assignment for, say, the World Bank, those owners can only do so for a total of 90 days for the entire year. Owners like these will want to consider that under the new law, you cannot rent out your second home as an Airbnb/VRBO short term rental, and so knowing the regulations can save you a lot of headaches.

Registration Requirements  

Did you know all short-term rental hosts in D.C. are required to obtain a Short-term Rental License? 

According to the Office of Short-term Rental Licensing, “In order to operate a short-term or vacation rental in the District, the property must be owned by an individual, and serve as a homeowner’s primary residence – with the owner being eligible to receive the Homestead Tax Deduction. ”

To be eligible for such a license the home must be your primary residence and owner-occupied.  You will need to provide DC’s Office of Short-term Rental Licensing (DLCP) the following:

Specify whether you currently have a Homestead Exemption on the property.

Proof of your liability insurance with a minimum of $250,000 in coverage. (See below for more details).

A Certificate of Clean Hands issued within the last 30 days in the property owners name must be obtained from the Office of Tax and Revenue.

The owner, or “host,” must attest to the habitability of the property.

If the rental is a co-op, condo, or if the property is in a community where there is a homeowners’ association, the owner must attest that the bylaws, house rules, or other governing documents of the homeowner/condo/ cooperative governing board or association allow short-term and/or vacation rentals, do not prohibit owners from operating short-term rentals and/or vacation rentals, or that they have received written permission from the association to operate a short-term and/or vacation rental at the address.

Once you have successfully registered with DLCP, you will be provided with a license. You will then upload this Short-term Rental License number into your property profile in both Airbnb and VRBO. Those sites will then provide bookings for “under-31-nights” on your property.  

By working with an experienced rental property manager specializing in furnished temporary stays, you can ensure that you’re operating your short-term rental legally and safely. Better yet, you can avoid any penalties or fines that could result from non-compliance with District regulations.

Some factors you might want to consider on your journey to short-term rental success:

Cleaning Fee and Preparation Service

Perhaps you’ll want to have a cleaning service at-the-ready in case your renters have a slight disaster while they’re there. Or maybe you’ll want a service to clean prior to arrivals and directly after departures, so you can quickly turnaround the property for further rental. 

Pets

Do you want pets in your home while you’re away? If so, you might want to add in an automatic post-stay pet cleaning fee to cover the expense of hair and other less pleasant odor removal.

Insurance/Accidental Damage

Charlotte’s company takes out a $3,000 accidental damage insurance policy on every stay in lieu of holding a damage deposit. The cost to the guest is $39 per rental. This insurance is a safe-guard for the guest, property owner and her company, of course. This insurance policy “allows for the equitable transfer of the risk of a loss, from one entity to another – in this case the insurance company. It is a simple way for all parties involved to mitigate risk, and most importantly, provides peace-of-mind.”

Liability Insurance

As you saw above, the District requires all owners to possess a liability insurance policy with a minimum of $250,000 in coverage to gain a license in the District. A variety of companies can help, according to the Motley Fool’s “The Ascent” newsletter, but some do this faster and better than others. And they even recommend ones that are best for Airbnb and VRBO rental owners. The Ascent’s best homeowners insurance for short-term rentals include the following:

Allstate Insurance: Best for possessing a large network of agents

Proper Insurance: Best for Airbnb and VRBO owners

Nationwide Insurance : Best for bundling policies

Farmers Insurance : Best for vacation rentals

Steadily Insurance: Best for getting coverage quickly

Safely Insurance: Best for fast claims processing

Should you have further questions or seek to explore the option of short or mid-term rentals, do not hesitate to contact Charlotte Perry directly at 202-341-8799 or [email protected]

Scott Bloom is senior property manager and owner of Columbia Property Management. 

For more information and resources, visit ColumbiaPM.com.

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Real Estate

Multiple options for buying a beach house meant for rentals

Consider going in with friends, making use of the off season

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Rehoboth Beach, Delaware (Washington Blade photo by Daniel Truitt)

As we near the summer season and you hear the beach calling and taste the orange crushes – let’s take a look at a few ways to make those dreams a reality. The real estate market across the U.S. is still very hot due to the lack of inventory and the higher interest rates. However, when looking at an investment property, it’s a little easier to stomach a higher interest rate when it is offset by rental income. Let’s take a look at a few of the options we have for rental styles.

The typical idea of a beach vacation is for a week right? While we wish it were longer (and it can be!) the usual summer beach vacation is a week long. In the Rehoboth and Delaware coast region – most homes rent for a week at a time in the summer season. While the idea here is to make the most you can in summer rentals – you as the owner, of course, can always block off weeks when you want to use the home for your personal use. Talk about the best of both worlds.

Short-term rentals are a great way to make some extra money. If you plan to use your beach house for most of the season but know you have a wedding weekend here and a week long vacation planned in the Bahamas – then put that on a short term rental site for those dates. This way you can make a little extra money. Most of the time, you can make as much or even more than a weekly rental scenario. Short-term rentals are great for the sporadic renter – if you want to use your home most of the time but you want to rent it out every other weekend and during the week all of August – you don’t have the need for the “my family rents this home the same week every week and has done so for three years now…” kind of dedicated renters. It is important to make sure that your community allows for short-term rentals or this option might not be possible for you.

If you know anything about the coastal regions in the Northeast – things in the winter are not like they are in the summer. In my humble opinion – they are better! But I digress. If you are looking at a rental pro-forma and wonder if it makes sense to winterize your beach house or to rent it out, I would say rent it. You can easily rent for long weekends in the “off season” and in most cases you can also rent to one person for the entire off season period as off-season rentals are hard to come by in most markets. In this case, you wouldn’t charge the same premium you do during the summer. 

I have mentioned this ownership option before. If you have a group of friends that love to kiki in Rehoboth then it might just be an option to get four together and buy a house. I would say this option is a risky one and one I would highly encourage you to speak to an attorney about. The idea here is that an arrangement would be formed to outline what party uses the home during which periods of time. Expenses would be split based on share of the home.

Oftentimes people forget that you can often provide your rental home to a charity event for example an item at a silent auction for your children’s school gala. A portion would be tax deductible and as such is a savings for you that year. Of course – speak with a CPA to ensure these items are true and correct for you.

The above options are all great ideas in black and white on paper — but what option will work best for you is based on what you want, where you want to be, and for the last option, how well you trust your friends who you might be interested in doing a group beach house option with. In this case I would highly recommend speaking with an attorney who can walk you through the pros and cons of a group purchase with multiple people on a deed and mortgage. 

Cheers to a happy, healthy, and fun 2023 summer season and hope you can make your beach house dream a reality – I’m here to help.

Justin Noble is a Realtor with Sotheby’s international Realty licensed in D.C., Maryland, and Delaware for your DMV and Delaware Beach needs. Specializing in first-time homebuyers, development and new construction as well as estate sales, Justin is a well-versed agent, highly regarded, and provides white glove service at every price point. Reach him at 202-503-4243,  [email protected] or BurnsandNoble.com.

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Real Estate

What makes for a successful real estate transaction?

There is no magic wand to make the process go smoothly

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Taking the time to explain any confusing concepts more than once can help put a buyer’s mind at ease.

A successful real estate transaction involves multiple parties all working toward the same goal. The goal is “purchase the house” or “get the house sold.” It is not a confusing or vague goal. One of the most satisfying aspects of being a real estate agent is to see a client reach their goals.  

What can really help a client to achieve their goal is to have a team of people seamlessly working together to help them reach the goal. The team can include, but is not limited to, a lender, a title company, a home inspector, the agents involved, and sometimes a spouse, a family member, a best friend, an estate attorney, or an appraiser. When all these parties involved are working together toward the goal, the goal can be easily achieved. “Working together” can mean:

Recognizing that time is of the essence – returning phone calls, emails, and texts in a timely fashion.

Blocking out time in their day to see properties, attend inspections, or finding a suitable stand in (family member or a friend) should work obligations get in the way.

Taking the time to explain any confusing concepts more than once, and sometimes to multiple people.

Ensuring that needed documentation and funds arrive at the desired location by the agreed upon time and date.  

Having a shared communication style that helps the others involved in the transaction to feel comfortable.

Paying close attention to the details specified in any addenda, disclosures, or wiring instructions, etc. 

There is no magic potion or wand to make a real estate transaction smooth and easy. But when many of these guidelines are followed by all parties involved in the transaction, any issues that do arise can usually be worked out. As in most exchanges in life, a little grace can go a long way. If you have more questions about achieving your real estate goals, don’t hesitate to reach out.

Joseph Hudson is a Realtor with the Rutstein Group of Compass. Reach him at 703-587-0597 or [email protected].

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