This a very busy time of year so let’s get right down to it. Get ready to see lots of purple. Pantone has announced its 2018 color of the year and it’s a regal and vibrant shade of blue/purple called Ultra Violet. We’ll also review the latest housing data for DC. The District continues to deviate from the region; home prices were flat and inventory rose. And, lastly, we’ll cover the latest on tax reform and what’s in the final version of the bill.
This will be my last newsletter for the year. Thank you all for taking a few minutes out of your day to read my thoughts on design, development and real estate. As always, I welcome your feedback on how I can make this most useful. All the best to you and your loved ones for a happy and healthy holiday season! See you in 2018!
It wouldn’t be year end with the announcement of Pantone’s color of the year! So, get ready to embrace all things purple. Ultra Violet is described as “complex and contemplative… symbolic of counterculture, unconventionality, and artistic brilliance.” Historically, purple was a color reserved for royalty and well, we do have a royal wedding coming up this year. But, clearly, Pantone has more in mind than that (unlike me, apparently). It’s a color that is also associated with mindfulness and meditation, a topic we covered just last week. And, it has been embraced by some of the most influential and ground breaking artists of our time. In other words, Prince. There are already some great examples of how to use it – whether that’s in accent pillows or as a bold choice for your walls. Here are a few of my favorites.
LOCAL REAL ESTATE & DEVELOPMENT
Since the summer, we have been watching the housing data for DC specifically very closely. It has bucked the trend of the overall region with inventory rising and home price appreciation slowing. Now, we find that in November DC home prices came in flat vs this time last year. Meanwhile, the region overall saw the median home price hit a decade high of $425,000. DC also saw inventory levels increase by 7.5% vs year ago levels, compared to an overall decline in inventory for the metro area of 5.7%.
In development, the typical update goes something like this – XYZ company is tearing down a building and replacing it with a new mixed-use property. However, today’s news is about [a new green space in downtown Bethesda! The corner of Woodmont and Bethesda Avenues will have a new public gathering space, the Capital Crescent Civic Green. The timing is not yet clear, but it is being developed in conjunction with a stop on the Purple Line which is planned for 2022.
REAL ESTATE, INTEREST RATES & MORTGAGE NEWS
Republicans released their final version of the tax reform bill on Friday. Let’s examine the details, as it relates to real estate and mortgages. First, the ability to deduct state and local taxes was a major sticking point, especially for high tax states. This analysis shows the relative rank of DC (5), Maryland (30), and Virginia (16) for property taxes compared to the rest of the country. The final bill keeps the so-called SALT deduction, but caps it at $10,000. And, what changes were made to the mortgage interest deduction? Well, the Senate bill originally made no changes to the deduction, but the House bill limited the amount of the deduction to interest on new mortgages of $500,000 or less (reduced from $1mm). The final version caps the mortgage amount at $750,000. Existing mortgages are still grandfathered in and you would not be affected until you take out a new loan. The value of the mortgage interest deduction to homeowners would also be affected by the nearly doubling of the standard deduction. This has been a consistent part of the legislation and would result in far fewer filers who itemize and therefore capture the mortgage interest deduction. The two chambers are expected to vote on the final legislation this week.
In other news this week, it was no surprise when the Federal Reserve decided to raise interest rates by 0.25%, making the target range 1.25% to 1.50%. There was very little reaction to the announcement and as a result 30-year mortgage rates in Freddie Mac’s weekly survey declined only slightly from 3.94% to 3.93%.