RealPodVA: Talking about New Construction

Real Central Pod VA 7-18-18 The One Where Jim Talks New Construction

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Transcript follows

Jim: Hey there it’s Jim Duncan with Nest Realty, this is Real Pod VA, sitting here with Dave and Bart.

Dave: I’m Bart Isley, with Scrimmage Play.

Bart: I’m Dave Stipe with Rockfish Music.

Jim: Alright this week I think we’ll talk about selling your home, your resale home, in a market with tons of new construction and I’ll do a quick market update.

Jim: Just put out our first half of Nest Report – Mid Year 2018 – Sales, Prices Up and it’s something that it, there’re a couple tope line numbers that I will preface with, for the most part top line numbers are completely and totally meaningless. Because I can say, I can look at the Charlottesville MSA which is our region and there are almost three months of inventory and it don’t take three months to burn through what’s on the market.

Jim: Total sales are up 10% and median sales price is 310.

Bart: Okay.

Jim: Sounds pretty good. Good luck finding a great house in the house in the city of Charlottesville for $310K.

Bart: Correct.

Jim: City of Charlottesville, the average sales price is $387,000. Average sales price in Albemarle County is $450,000.

Bart: Wow.

Jim: Fluvanna’s 244, Green is 272.

Bart: Did you say the average is 450?

Jim: Yup.

Dave: Yeah that’s not going to work.

Jim: No, so a lot of that’s predicated on the fact that we have so much new construction that’s selling right now and you can’t for the most part, it’s extremely difficult to find a new home for sale or that sells for in Albemarle for under 450, 500.

Bart: Wow.

Jim: Generally if I’m looking at new construction-

Bart: But they are selling.

Jim: They are selling, a lot of them are selling, there’s a ton, I rode my bike this morning up to the back part of West Hall, foothill crossing, have you been back there recently?

Bart: Yeah.

Jim: Holy moly.

Bart: It’s crazy.

Jim: It is astonishing. So, there’s a ton of new construction that’s going on right now so these numbers, when you say that, yeah median sales price is 310 that sounds really good but then you actually start looking into what, as I call it the micro-market, your specific band of the market, it’s going to be very, very different than any top line number you see and frankly as much as I love our Nest report or any of the media reports, or any of that stuff because it’s all sound bites, figuring out what you are comfortable paying on a monthly basis is a whole lot more than a three or 10 page market report that might touch on your mini micro-segment for half a second.

Bart: Correct.

Jim: So it just, but broadly right now, what’s today mid-July, 2018, you know pockets of the market are doing exceptionally well. I had shared a house in the city last night that three offers, you know, but it was a house for around 300. There was a little people who want to buy a house in the city of Charlottesville for around $300,000. So but you’re also seeing some segment are dead, just dead, dead, no traffic whatsoever and some are doing much better. So I think it’s something we watch, when we look at the market analysis it’s good to know that Fluvanna County had contracts that were written up a little, about a half a percent year over year. It’s good to know this stuff as a top line but digging in, I think that for, if you’re looking for a house in Spring Creek in Louisa County, city of Charlottesville, or County of Albemarle numbers are completely and totally meaningless.

Jim: So transitioning quickly to putting a house on the market when it’s a resale. I was showing houses last week recently to some folks and one of the neighborhood in the county of Albemarle that is new construction, two lots left, and the last two lots were abysmal, just they sucked. And so when I look at a house like that, I selfishly put myself in the position of, okay when these guys call me in seven or 10 years, what am I going to tell them?

Bart: Right.

Jim: I’m going to say I really wish you hadn’t bought that house, because that house is very similar to all the other houses on the street and your lot sucks.

Bart: Yeah.

Jim: And so if you buy, I’m making these numbers up, if you buy it for 450, on a street of 450 homes, and I go and put that house on the market in seven years, it’s going to be a hell of a discount.

Dave: Talk to me about what makes a bad lot when you’re looking at something like that.

Jim: So I define a, for the bulk of the market unless you’re looking for 70 acres, or 100 acres, or two acres or whatever, but the bulk of the market, and I ran these numbers a few months ago, most of the market in Charlottesville in Albemarle, are on lots that are less than half and acre, so presume that a half an acre lot or under is what we’re looking at. I define a good and functional lot as a lot for which you can throw a ball for a kid or dog.

Dave: Okay.

Jim: You know and again my, through my lens, plant some tomatoes, let the dog out to go to the bathroom and 3 o’clock in the morning, that’s the kind of lot that most people want. But a bad lost is one where it drops off. You open your back door there’s a three by three square patio in a foot and a half later you’re going off a cliff.

Dave: Right.

Jim: You know that’s a bad lot. Or, you walk out four foot and you’re facing a retaining wall. Which I’ve seen a lot of those. Or you’re looking straight up a hill. So it’s a bad, you’re trying to look at today, I advise my clients to not get caught up in the, only two lots left.

Dave: Right.

Jim: Awesome, talk to me in eight years when you can’t sell it. You know so an bad lot is something that, well, I was showing a house two years ago, neighborhood in urban ring of Albemarle County and it was, it had been snowing at some point, and we walk out on the deck, was about 20 foot up … So we go down the basement, and we walk out of the basement, and the house sided on the lot in about five foot, six foot it drops 15, 20 degrees and it was, my clients, first time home buyers, they were frustrated with the market and they were trying to walk through the, “This will be fine, this is going to be great,” you know, “We don’t have kids yet but when we have kids they’re going to run 100 foot down to the bottom of the hill and they’ll play.”

Jim: And I’m like, “Would your kids go out and run down a fenced yard to a 100 foot down and chase a ball?” Mine wouldn’t. You know.

Bart: I don’t know like-

Dave: I mean, you said it had snowed, was it sled-able?

Jim: it was sled-able until you smash into the fence.

Bart: Sled-able until you hit the retaining wall.

Jim: Sled-able once.

Bart: So, no.

Jim: By the way, buying a house for a sled-able hill in central Virginia, bad idea.

Bart: You’re going to get sled-able snow, twice in five years.

Jim: Yeah it’s going to be, it’s going to be a fun two days but that’s it. But yeah so we’re standing up there and they’re like, oh we know, kids will do this, and I’m thinking and shaking my head subtly, no they won’t. But then I look around and I see that we’re standing like a five foot radius at the foot of the deck and I look down and I see dog poop, six foot radius, every where. And I looked at it and I said, “Guys, the dog’s not going to the bottom of the hill, do you really think your kids will?”

Bart: Right.

Jim: They did not buy that house, in large part because the yard was miserable. You know. It’s something that I am very aware of, is resale value. So when I go and sell the house in seven or 10 years I want to make sure that I’ve helped my guys make a good decision, but I also make sure that, you know I’ve learned this, that resale is not the main focus you know it’s something I have to be very aware that there’s intrinsic value and it’s not necessarily an investment, it’s a place to put holes in the wall, and tear up the carpet, and spill coffee and …

Dave: And when there’s so much new construction out there, when a person can say like, I can walk in and have a house that is brand new and especially if you can get a contract before it’s being finished you can put the final details to be exactly what you want them to be I mean that’s an appealing thing for buyers.

Jim: Yeah, new home smell is a thing. I mean people, you know, people will go for a house that is $600,000 dollars brand new versus one that is two years old for 550, which, I think as an objective person is somewhat absurd but people like new. They like to know they’re going to have seven to 10 years of maintenance free living and no one’s gone to the bathroom in the house, and even though I’ll be happy to tell them that contractors go to the bathroom in the house, you know …

Dave: When we bought our new construction townhouse in West Hall, friend of mine Frank from Delaware made sure that he ran into the, end of the house first so that he could use our bathroom before I did, and he never let me forget about it.

Jim: No, no.

Dave: Bart knows Frank, Bart gets this.

Jim: That’s not a good friend, that’s a great friend.

Dave: I agree.

Bart: This is Bart Isiah with Scrimmage Play I was going to write an old school radio jingle for this, something sleek with a catchy chorus with people just singing our name over and over again, but we have zero musical talent on staff, what we do have, and that is one slick transition there, is a passion for talking about, and writing about, and shooting video of high school sports in Central Virginia.

Bart: For almost a decade we’ve been the top source for high school sports courage in this area. We’ve also got a podcast that’s now part of the central network. If you love high school sports, give us a listen and if you like what we’re doing, check out the support link in each episode description and support the work we’re doing.

Bart: In the meantime we’ll keep working on that jingle.

Dave: I mean I’m literally like, everything that you’ve said, going back to last week’s episode where we’re talking about arms are at 50%, we’re talking about, housing pricing that are just inflating and inflating and inflating, tons of new construction. I’m sitting there going, this is, we’re on repeat.

Jim: We’ve done it before.

Dave: We’re on repeat right now.

Jim: Yeah, so it’s-

Dave: And I’m so glad we got our refinance done and out of the way now.

Jim: I don’t want to move, I mean-

Dave: Because I don’t intend on moving out of the house possibly ever.

Jim: I’m good with knocking my house down and rebuilding a 900 square foot house. I can see, when I pay my house off, I’ll knock it down, I’ll 3-D print a house, for $7,000 and be good. Because in 10 years 3-D printing is going to be that bible.

Dave: Really?

Jim: Oh yeah. 3-D printing is coming, there’s a, home story … I’ll put a link in the show notes.

Dave: 3-D printing?

Jim: There’s a-

Dave: 1,000 square foot home?

Jim: I’m touching on this in my monthly note a little bit, let me find it. There’s a charity called New Story, okay, I’m looking at their site now, I met their founder a couple, well actually I met him two years ago and I saw him again a couple weeks ago, three, they can 3-D print a house in 12 to 24 hours for $4,000.

Dave: Yes. Where do I sign up? Literally like I have a thousand questions, plumbing, electrical …

Jim: It’s, for the drawing, it’s to get the structure of the house done. But then you need to do the plumbing-

Dave: What’s the material?

Jim: It’s a concrete type product.

Dave: A bunker. I’ve always wanted a bunker.

Jim: Cheshire cat grin from a guy who just wants a bomb shelter in his backyard.

Dave: That’s what I’m looking for. [crosstalk 00:12:07] Can they put this product underground?

Jim: Yeah so in 10 years, I will bulldoze my house and 3-D print a house for me, my bikes, my wife, maybe a new dog.

Dave: Does your wife get input on this? Is she into this?

Jim: No I just decided. I just concluded I’m going to spend 10 grand on a new house and it will be fine. No but 3-D printing is going to be-

Dave: Hey honey I’ve got a great idea, here’s what we’re going to do-

Jim: Who is not going to be down with this?

Dave: We’re going burn, we’re going to burn our $400,000 house to ground so we can build a $10,000 900 square foot concrete bomb shelter-

Jim: Dude it’s like for us and my bikes.

Bart: No.

Dave: For you, me and my bikes. It’s not necessarily an investment, it’s an investment in the quality of your life.

Jim: It’s like a, it’s like a-

Dave: Dude like for a long time-

Jim: Who’s quality of life?

Dave: For a long time we were buying MacBook all the time alright? But some of us have evolved and now are buying Chrome books. So you pay $200 you use the Chromebook for two years, then you dump that Chromebook, you pay $10,000 for a house and then you dump that house, and that is how we get to sustainability.

Jim: And an environmental disaster. It is.

Dave: That’s how it works. Chromebook. It’s the Chromebook of houses.

Jim: It’s the Chromebook of houses.

Dave: Oh I can’t breathe. It’s the future of your industry Jim.

Jim: There’s no doubt and it’s going to be fewer contractors, fewer builders, more onsite, bringing this ginormous printer coming in, they’re building a community El Salvador this year, it’s going to be the first 3-D printed community of homes.

Dave: Automation is going to … everything.

Jim: Oh yeah, without a doubt, I probably wouldn’t use that on the podcast but yeah you’re right.

Dave: I’m going to beep the F.

Jim: But it’s going to be a world shift in how homes are built. If you come in and you clear cut 20 acres you can come in and 3-D print a neighborhood-

Dave: In a week.

Jim: In a couple weeks. And then you have the contractors come in and do the plumbing, the electrical and all that stuff.

Dave: That takes two more weeks.

Jim: Yeah. So it’s going to shift a whole lot of stuff. And it’s really going to, the new construction economy is going to be vastly different but I also think that it’s something that, it’s going to be interesting to see if the shift happens and people start demanding this and they start 3-D printing or, the community, the construction community says, there’s going to be one builder that takes the lead, he comes in or she comes in and says, “I’m 3-D printing houses, who wants one?” And if they take off it will shift everything.

Dave: And lets just consider like once you get in all the materials for like cabinetry and plumbing and all of the things, the amenity décor stuff, if it’s only $10,000 to put up a house-

Jim: 40.

Dave: 40, 45k for a home, as part of a major rant for this podcast now that’s been going on for six plus months I mean, lowing income housing has been a major thing that we’ve discussed here.

Jim: Not even low income, it’s affordable.

Dave: That’s true right, not low income, I’m sorry.

Jim: It’s affordable.

Dave: Affordable housing.

Jim: You know-

Dave: Where we’re not building $450,000 homes as a median for Albemarle County-

Jim: No but this is where I specifically use the term NIMB as a pejorative. I mean the NIMBs are going to say we don’t want those concrete houses. We don’t want those kinds of people living next door.

Dave: We did a pod just a couple weeks ago called housing in a luxury item.

Jim: Yeah. This is going to be-

Dave: Like I’m skeptical as all get out from this 3-D printing of a home but if it is legitimate I mean it does resolve a major, major like housing affordability and getting a home out of a luxury item as opposed to a practicality item again.

Jim: There’s a, I’ll put this in the show notes also, a colleague of mind saw the 3-D printed house in Austin and said it was amazing.

Dave: Really?

Jim: Yeah, so again, people don’t need-

Dave: I’m going to start doing some google searches for 3-D printing houses.

Jim: People, most of my clients do not need 2500 square feet. They need 1200, 1300. That’s-

Dave: That’s part of what the tiny home boom has been about too.

Jim: Yeah. Well it’s, so tiny homes I’ve talked to folks, clients who say that they want a tiny home-

Dave: I typed in, I typed into google search, “3-D,” the first thing that came up was 3-D printed house.

Jim: Yeah.

Dave: Now either that is a popular search or google is-

Jim: Just listening-

Dave: Just listening to us talk about it and record this podcast.

Jim: To you and they said, “Okay.”

Dave: Get out of my head google.

Jim: But yeah it’s going to change, ti’s something that I think is going to shift when it takes off and it will because fundamental economics are going to demand it. It’s going to change everything. I’ll let you google search.

Dave: A pretty cool home for $4,000. This is the new world for Airbnb, this is what happens.

Jim: Yeah we gotta keep those Airbnbs out of here. Nobody wants them as an Airbnb.

Dave: Mr. Anti Airbnb.

Jim: Yeah we don’t want Airbnb.

Dave: No think about it, you could put up like an entire like, you don’t want it to take over the neighborhoods that are already existing but you could build up neighboring neighborhoods and just be like here’s a whole network of neighborhoods that could be Airbnb’ed.

Jim: Good luck with the NIMBs.

Dave: The what?

Jim: NIMBs. Not In My Backyard.

Dave: Oh well yeah.

Jim: It will never get done. But yeah, New Story Charity is phenomenal they’ve built a couple thousand homes so far.

Dave: That’s incredible.

Jim: And they’re doing it in third world countries, and they are, they’re extraordinary, and it’s really amazing-

Dave: I don’t why my first instinct was skeptical about this because the more I’m like I’m actually like letting the wheels turn in my head, it makes a lot of sense. That’s unbelievable.

Jim: Yeah they just bring in, it’s not just, but they bring in a machine and they 3-D print the house onsite. Think about that. It’s almost star trecky.

Dave: Can you put this link up?

Jim: Yeah. With the link-

Dave: Because it’s a whole video showing how the thing gets printed and laid. That’s pretty awesome.

Jim: Yeah so I’ll put that in the show notes and I’ll send it to you.

music: You can talk me into a good time. What I can’t get out. You can talk me into a good time. What I can’t get out of.

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