MARKET UPDATE

There is an interesting phenomenon occurring in the Northern Virginia Real Estate market today.  We have seen inventory levels drop, sales activity increase, yet, prices continue to decrease or remain flat in most of our surrounding areas.  Granted, there are areas where values have recently increased substantially in parts of Prince William and Loudoun Counties and there are areas in the City of Alexandria and

Arlington County where prices have increased slightly but with inventory levels at 2005 levels and such strong demand, we would expect an increase in prices as a result of this shift.  For resale properties in Northern Virginia, over the past 42 weeks we have seen inventory levels reduce every week but two, the month’s supply of under contract homes is at 1.7 months and the month’s supply of homes for sold properties is at 3.5 months and the rental market has remained stable at a 2.5 month supply of homes.  It is strange how the media isn’t reporting this information to the public. 

So the question is, why would this be the happening?  My theory is there is little movement up “The Real Estate Ladder”.  We don’t see first time buyers purchasing condos from owners who buy the town house who then buy the single family house who then buy the more expensive single family house.  We are seeing first time buyers and

investors purchasing “distressed” properties – foreclosures and short sales – where the properties are vacant or soon to be vacant and there is no move “up” to a larger property because the owners can’t obtain financing to purchase another home.  It will happen again, it will just take time as we work our way through the vacant inventory and short sale supply.  As a result of this situation, the rental market remains strong and makes now a great time to be a long time real estate investor.

To learn more about what is happening in your neighborhood or to learn more about becoming an investor and how to take advantage of today’s market – give us a call!

The DC 3-Day Walk for Breast Cancer
October 9-11, 2009

The Repage Team is joining the Ya Yas for Ta Tas group in the fight against breast cancer, as an
exclusive business sponsor! The Breast Cancer 3-Day is a 60-mile walk over the course of three days.
Net proceeds benefit Susan G. Komen for the Cure and National Philanthropic Trust, funding important breast cancer research, education, screening, and treatment. 

Tenant Bankruptcies: Don’t be caught off guard!

Landlord/tenant laws in our local jurisdictions are variably pro-tenant (Maryland/DC) and pro-landlord (Virginia). The states’ statutory schemes tend to favor one or the other. For instance, Virginia’s residential landlord tenant act doesn’t even apply to rental situations where an individual investor/owner is renting out one, two or three separate units. Federal bankruptcy law,  however, is a debtor’s trump card. Whatever rights you might have as a property owner under your respective state laws must take a back seat to a residential tenant’s bankruptcy. So take some time before you rent out your investment to
know the risks and downsides, and then be vigilant in watching for signs.

A tenant’s bankruptcy imposes an “Automatic Stay” (that is, a freeze) on any and all enforcement actions you might otherwise be taking or contemplating to collect unpaid rent and/or to recover possession. (A lease provision declaring a tenant’s bankruptcy as a default under the lease is unenforceable in   bankruptcy.) Unless or until the debtor is discharged or has his case dismissed, the Automatic Stay prevents you from forcing payment and from getting back your property. You will have to seek “relief” from the stay by motion to the bankruptcy court. Based on procedural hurdles in bankruptcy court, you could easily be looking at two months or more before getting a final hearing on your relief request and must allow another 10 days for a tenant’s possible appeal of an adverse decision.

Even then, “success” at that point simply means you may proceed with your state court action seeking repossession (ie. you are no longer “stayed”) and/or secure a judgment for unpaid rent.  Delaying a motion for relief only assures further delays in recovering possession, additional lost rents, and increased frustration.
Aggressively bringing the state court action in the first instance gives you the best chance of avoiding lengthy delays in a subsequent bankruptcy.

Changes to the bankruptcy laws in 2005 gave landlords added  advantages if they had already progressed pre-bankruptcy to the point of securing the state court judgment against their tenant(s). Additional burdens and constraints are imposed on such a  tenant if they are to have any ability to cure a rent default and/or to remain in the property. The best landlord defense to a   tenant’s potential bankruptcy is a strong and pro-active pre-bankruptcy offense. Don’t be lulled by promises of payment, tales of woe, etc. Press the “unlawful detainer” action as far as you can as soon as you can. You always have the right to drop the action, modify the rent terms, or simply not to evict once you have a judgment saying you have the right to do so. Do yourself the favor and press to put yourself in the position where it is your choice to make, not your tenant’s to make for you.

 Thomas W. Repczynski, Shareholder, Bean Kinney & Korman, PC

 (Mr. Repczynski is licensed to practice before the federal district and bankruptcy and state courts of VA, MD and DC.  You can view his bio and reach him directly through his firm’s web page: www.beankinney.com. 
The general statements herein are not intended as legal advice but rather as topics for further consideration with one’s personal legal advisor.)