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If you like this note, please share with a friend! NB: this note is not for real estate folks. Really.
Ignorance & ownership.
My clients hire me for the buffer that I provide them from the ignorance that would overwhelm.
Owning a mistake is way better than covering it up. As a client and I were discussing this week, everyone makes mistakes; how you deal with it is what matters.
The Market – first six months, next six or eighteen?
- From 1 January to 15 June
- In 2014 807 homes sold, average price of $404K, average days on market of 94
- In 2015, 911 homes sold, average price of $377K, average days on market of 77
- In 2016, 977 homes sold, average price of $399K, average days on market of 72
- In 2017, 1015 homes sold, average price of $433K, average days on market of 51
- In 2018, 1168 homes sold, average price of $441K, average days on market of 47
- A quick look at the market and new construction
- The new construction market continues to be on fire, and new construction continues to be harming resales … but, I think we’re starting to see that the soaring of new construction prices are starting to make resales more attractive, even though many resales built prior to 2005 are in need of significant updates.
- Nationally, price appreciation is slowing. This is a good thing; continuous, significant price increases are not sustainable.
- Between April and June 2018 in the City of Charlottesville, the 15 new construction contracts were in only a few neighborhoods – Lochlyn Hill, C&O Row, Belmont Station leading the way.
- Between April and June 2018 in Albemarle County, 102 of the 502 contracts written were new construction; only 30 of those 102 were small builders.
- New construction will face some headwinds as material costs continue to rise
- Short sales are going to make a comeback.
- Days on Market are going to rise
- Significant market adjustments are likely in the next 18-20 months.
- Houses that are “close to stuff” will continue to do well.
I’ve tried to put together a market analysis for this month, but am opting to put that to next month’s note. There’s too much I want to cover.
I told a client this week that the market in Charlottesville and Albemarle has slowed a bit lately, and it’s hard to ascertain whether that is due to the typical summer lull, or a combination of other factors – prices rising too high, too fast, not the right inventory, perceived rising interest rate environment …. I think we’re in the eye of the storm, and it’s difficult to ascertain exactly where we are. My advise remains consistent – buy smart.
While I will be looking at a full six months of data in the next month, if there are any topics you’d like me to address, please ask! I’m thinking I’ll do broad overviews, and choose one or two school districts to focus on.
Seeing inside your home
A great friend and client shared with me recently the disparity of our relationship – I’ve been in their home(s) many times over the years, seen their cleanliness, some of their messes, dirty dishes, dog and cat hair, and seen them (and many of my clients) at deeply vulnerable stages of their lives. This insight is a privilege and responsibility that is something I respect and recognize how valuable this is. I also appreciate the one-sidedness of this relationship. There’s quite the disparity that is not easily balanced, and one way that I’ve developed is to share tidbits of my world and life with clients to alleviate this imbalance. The home may be a product to me, and to the market, but to the seller, this is their home, their castle, their life.
Things affecting our market in the short- and long-term
- Rising interest rates = lower affordability, downward pressure on pricing, possible incentive to purchase sooner rather than later. Or an incentive to save, wait until rates rise, prices drop, and one’s savings have increased.
- Affordability and NIMBYism. One of the ways to increase affordability is to add more inventory to the market. A way to add more inventory is to add more units to a parcel. But, a lot of homeowners who already have their spot want to keep their spot to themselves.
- Housing is becoming, in too many American markets, a luxury good.
- Global peril. As the United States continues to isolate itself, fewer people may attend colleges, fewer people may choose to move to the States, and the market will shift.
- Crazy high health insurance in Charlottesville and Albemarle
- Loosening lending market. I have read a few stories lately indicating that the lending world is getting more lax.
- A friend told me about a local radio ad in which the lender was advertising refinancing in order to pay for a vacation. Really.
- There’s a neighborhood in the Charlottesville area that is seeing a marked, crushing decline in the resale market, in large part because of the vast amount of surrounding new construction. Remember last month when I wrote, “Buy smart. If you think the house you’re buying is your 4-7 year house, pretend it’s your 8-15 year house. Would you still like it?” I mean it when I advise that.
Empathy and Connectivity
What about when empathy is no longer a factor in the real estate transaction? One of the biggest trends or evolutions in real estate is the advent of the iBuyer – Zillow, Opendoor, Offerai, Offerpad – the true commoditization of residential real estate. I have long told my seller clients to dispense with emotions – their home is no longer a home, it is a product.
There could be tremendous value for sellers who aren’t looking to maximize return, but are seeking ease and convenience of a sale … and have equity to spare. There is value in an easy transition for nearly every seller; how many will have that option in the next market cycle?
For homebuyers, I find there is immense, incalculable value in having a professional listen, discern, digest, and respond with questions to help guide and lead a buyer to the right home. I’m not sure Artificial Intelligence or an iBuying platform can do the aforementioned, but I’m curious to see how this commodification and process evolves.
What happens when empathy no longer matters? Listening is irrelevant? Sellers don’t have equity to spare?
As far as connectivity – this is a bit of a tease for an upcoming podcast. Connectivity and empathy. In a real context. Community, too. Oh yeah, please listen to my podcast; we’re going to start having guests on soon, too!
Three things they don’t tell you in real estate school
- How to negotiate a washer/dryer on a Saturday night.
- Front porches are required, because people need somewhere dry for their Amazon deliveries.
- Responding to angry people with commensurate vigor is not the best approach.
What I’m Reading
- The next recession is much closer
- I went 200 days without buying anything new and learned how toxic our need for possessions is
- It’s official: the end of dual-agency in Vancouver and British Columbia, Canada.
- Tomorrow’s Cities: Will the bike become an urban must-have?
- My Dad didn’t know how to get fit. I’ll do better for my kids.
- Disposable America — A history of modern capitalism from the perspective of the straw. Seriously.
- Nest Realty Spreading its Wings
- Disposable America – A history of modern capitalism from the perspective of the straw. Seriously.
A note on blogs. As the years go on, and Facebook shows more of its evil and continues to be unsearchable, Google is giving weight to pages updated more recently, Twitter is less searchable, having a blog – a historical archive – becomes more valuable and meaningful.
- Opendoor, Dairy Central, Housing Expenditures
- Describing Charlottesville to a Friend – Part 2
- “Nothing But Building Equity”
- Charlottesville Real Estate Radio – May 2018 | Market, Density, Mortgage Rates, Time in Homes
- The Podcast continues
- Waiting Tables. Everyone should do it. Humility. Patience. Low pay. Pay not commensurate with effort. Life isn’t fair. People can be wonderful, appreciative, and empathetic.
- Reflecting on Portland and Turn On.
- A question posed to the head of one of the most prominent real estate companies in the country – Does the consumer disappoint you? I’ll answer.
Thanks for reading!
Nest is now offering franchises. This note is explicitly not for real estate folks, but I know a few of you read this note anyway. If you’re reading, and you’re interested in talking about a Nest franchise, or want to suggest a location, please reach out.
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Jim Duncan, Nest Realty, 126 Garrett Street Suite D, Charlottesville, VA 22902. Licensed real estate agent in Commonwealth of VA.