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Usually, sellers are the last to arrive at the party and the buyers are right on the cutting edge of “what can I use to get a lower price,” says Jonathan Miller, president of real estate appraisal firm Miller Samuel. “What you’re starting to see is sellers are traveling further to meet the buyer, and the buyers aren’t budging. Part of that thinking is the rates will rise more before they fall, so that adds to the cost. Buyers are cognizant of that and sellers are at a point where they need to decide if they really want to sell or not.
“It takes one to two years for a slowdown in sales to impact prices. We’re in the thick of it now; it’s finally happening,” he says.
My rule of thumb for “normal” levels of price reductions is about 40% this time of year, it’s highly seasonal.
Reductions across the 20 cities that make up the Case Shiller Index are at their highest level in a decade. We’re at 46% with reductions.
Is this The Next Big Crash? My gut says no, since we’re at super low inventory still and people are well employed, with lots of cash to deploy. If we’re lucky, it’s a breather that keeps us from getting too bubbly.
Yep, to each, except a think we’re going to see more short sales and foreclosures. (more on this next month)
Some interesting numbers above, and I’m going to hit a few, briefly. In short, as the market shifts, I’m going to echo myself from 2007.
I firmly believe that we track the real estate market too closely. Real estate should be a long-term investment – at least three to five years. Tracking mortgage applications on a weekly basis, housing numbers on a monthly basis, is a bit too much analysis.
With that preface, looking at the third quarter in Charlottesville and Albemarle
nb: take the following with a trending grain of salt; your micro market requires more specific insight.
In Albemarle, single family + attached homes, listings were down a touch, from 715 to 695. In the City of Charlottesville, new listings were up significantly, from 165 to 204 – maybe some sellers finally recognizing this might be their last best chance to sell?
Looking at new contracts, Albemarle saw a 12% decline in new contracts, from 569 to 500; this seems potentially significant. The City was pretty much flat, from 143 in 2017 to 147 this year.
And solds. Due to my curiosity, I broke this down some
In Albemarle, closings were up a wee bit, from 689 to 695. New home closings were up nearly 15%, from 167 to 192.
Furthering my curiosity, and focusing on single family + attached homes, last year, the average sold price for new construction was $577K, and average price for resale was $434K – a delta of $143K! This year, that spread narrowed to a more reasonable $68K, from $533K for new construction and $465K for resales.
The City of Charlottesville saw some similar-ish numbers. In 2017, 16 of the 195 closings were new, $451K for new and $354K for resale – a nearly $100K delta. This year, 18 of the 214 closings were new, with new averaging $519K and resale $442K.
I saw in the local paper an agent quoted as saying, “market remains both a good time to sell and a good time to buy a home”
Not quite the “it’s a great time to buy or sell” from 2006, but. I’ll stop.
“Life is a series of stories,” a friend once said to me
I thought about that recently when driving around with new buyer clients, and I started telling some of the stories I always tell early in the working relationship with clients. This time, I was talking about roosters.
I’ve thought about writing those stories and sending them to new clients to read before we go out, so that we’ve set the stage even further than we have by them filling out my insightful new buyer/client survey.
But. One of the best parts of stories is the experience of telling and sharing those stories.
My stories are mere words, sometimes well crafted, often funny, usually useful.
If I sent these stories as blog posts to my clients, selfishly, I would enjoy them less, as I’d not be able to hear the 9 year old’s laughter and question, “what’s cockfighting?”
If I didn’t tell these stories in person, which invariably are either in the car or a house together, I wouldn’t be able to hear the horror, and feel the empathy of my classically-trained-musician client when I share the tale of a grand piano almost being destroyed when the quest plumbing exploded, or convey the devastation yielded by lead-based paint when I tell about my attorney client who is intimately aware of the dangers of lead because she works death penalty cases.
Stories are great, but when shared one on one, they do more than simply convey information, they help create and foster relationships – the relationships and trust that are critical when I’m advising clients on massive life decisions.
I’ll keep a list of my stories-to-tell, and keep telling them one by one.
I’ve been doing this for 17 years. For about 13, I’ve been told by colleagues and friends that I should have an assistant. The team isn’t for me. Years ago, briefly I had an assistant; she was like me, a real estate kid. She understood and rolled with the chaos.
Short of obvious trivial things, buying cheaper granola, driving to save 3 cents per gallon on gas, buying good beer and bicycles, I’ve never done anything because of the money. The assistant track was about client care and satisfaction, and my own sanity.
Fast forward to 2018, and I’ve been working with my assistant Sarah for the past year or so.
Simple example: I was meeting a client, a key needed to be picked up and copied, I messaged her on Slack, and she did it – allowing me to focus on the client. Simple recapturing and reallocating time.
Choosing to hire the right person has allowed me to spend more time with family, friends, bicycles, and yes, clients and working more doing what I love to do – representing people and helping them make good decisions.
She and I are a constant work in progress, but I think it’s working so far. Next month, I’ll share her perspective of helping manage me and my chaos.
?They are climbing. And it’s going to be ok.
– I was talking to a lender this week who said that he’s finding his buyers who are locking interest rates at or around 5% aren’t crying (as they had before apparently) but are more accepting, albeit grudgingly. We know rates are rising, and we know that rising rates are going to affect both pricing and affordability.
As a friend said to me last week, “the market is going to do what it’s going to do.”
There was a time in the previous market cycle where I stopped trying to figure out what was happening in the market, because the why didn’t matter. Why are rates rising? I could go into the fundamentals, the 10 year Treasury Bond, etc, but to my clients, the “why” is mostly irrelevant. Besides, the market doesn’t care what I (or you) think.
I think I’m going to be telling this story more in the coming months and years.
Several years ago, a friend wanted to sell his townhouse. At the time, he was facing a $30K loss. If he rented it, he’d be eating $500/month. They could have taken the $30K hit, although it would have been extremely painful. I advised of the options, and hoped they’d take the immediate hit, but they didn’t.
Every subsequent year, we talked around the time of the lease coming due to see if now was the time they’d not lose money when they sold. After about 6 or 7 years, they ended up selling, and in the interim had refinanced so they weren’t losing $500/month. Financially, (12 months * $500 = $6K. $6K * 5 years = $30K) the right thing would have been to have sold and taken the hit.
More importantly, the psychological value of not having to write a check for nothing every month was immense. Sometimes, short-term pain is the better path to, I won’t say “happiness” in this situation, but I will say “closing a particular chapter and being able to move forward.”
The picture of the water heater? That’s a reminder to sellers to remove their crap before the final walkthrough. Nobody wants your stuff, even if it’s the basement/crawlspace.
What I’m Reading
- Will rising interest rates knock buyers off the fence or steer them toward rentals?
- The Interview: Michael Lau on the State of Mortgage Finance
- The New American Dream Home Is One You Never Have to Leave
- House Prices and Inventory
- They Called the Last Financial Crisis. Here’s What They See Causing the Next One
- An MRI for $500? Yep.
- If You’re Not Scared About Fascism in the U.S., You Should Be (Must Watch.)
- Drink Beer While You Can Still Afford It (hint: Climate Change is affecting *everything*)
- ‘You Are Still Black’: Charlottesville’s Racial Divide Hinders Black Students
- I’m ashamed to say this here, but I don’t like cville (so far) insider suggestions for finding some gems to love in this town? – some great suggestions here.
- The worst part about fall? Gourds.
From the Blogs
- Listing and Selling a Home Timeline
- Buying a home Timeline
- Testimonials Matter
- RealPodVA – Simpsons, Voting, Getting Fired
- Radon Testing and Storms
- Vacant Homes for Sale – 2018 Edition
- Upcoming School Board Meetings. No one goes to these; it’s easier to complain on Facebook than actually do something.
- Recapping the CCAC meeting; people got to these only if their neighborhood might be directly affected by something
- Taking a Moment to appreciate the amazing place we live
Food Bank and Nest’s Beer
The good news is, they brewed enough for us to have a fun launch party at South Street next month. The event is a continuation of our County Fair fundraiser for the Blue Ridge Area Food Bank, with $1 of every pint of Teal Feather going to the non profit.We’re hoping you can join us on November 7 at 5pm for the event, and if you feel so inclined we’d love for you to share with your spheres as well!
As always, thank you for reading! (If you really like it, please forward to a friend)
Jim Duncan, Nest Realty, 126 Garrett Street Suite D, Charlottesville, VA 22902. Licensed real estate agent in Commonwealth of VA.