I usually wait a few weeks before posting the current monthly note, but I published this one on 30 April, so I didn’t want the information below to get stale.
Archives of my subscription-only monthly notes. This is for April 2022. Interested in not waiting a few days to read it, and want it straight to your email? Subscribe here. For the re-posts here on the blog, I don’t do much formatting/changing as I’m more concerned about simply having the content here forever (because I own the blog, and I don’t own Substack. If you’re interested, these are all the monthly notes I have written.
My goal is to write stuff that interests me, and I hope it interests you. Please subscribe here.
As always, if you have questions or comments, please ask or call me here.
A few weeks ago, we went to the beach for a week. The whole family. My wife, my 18-year-old daughter for the last spring break of her high school career, my 27-year old daughter, our grandson, our son-in-law, and my father-in-law. It was a great week.
But this is not about the beach, it’s about the time away from home.
The night we got home, my wife and I were sitting in bed talking, and she said, “You know, we’ve been in this house for 18 years and there’s so much we have to do to it, and we still have to clean and straighten things out, but it is so nice to be home.”
I was thinking about her comments the following morning when I went downstairs at 5:05 for my ride, and the coffee that she had programmed to be brewed for me had just finished, and the coffee aroma filled downstairs.
This feeling of “home” is something I try to achieve for all of my buyer clients, and something that I am mindful of when representing sellers. “Home” is a physical contract, but it’s also a feeling of permanence and grounding that, no matter how much work we need to do to our house, you can still come home.
Waiting a Few Days
I have recently advised my buyer clients to take a step back from homes that are new to the market. If they are not willing (or able) to compete at the irrational prices, it’s best not to put themselves in positions where they will be competing against irrational offers.
But … I started this draft in the first week of April. Now I’m thinking that while this advice holds true, we may be in a transitional phase of the market. Rates are historically still low, but that’s easy to say from my perspective – I’m not buying a house right now, and I remember when rates were at 9%.
Rates could be closing in on 6% soon, which is really high when you’re a buyer who has never seen higher than 4.5% and you’ve been budgeting for closer to 4%.
5.5% – 7% is a game changer. A market changer. A substantive shift in the real estate market.
Prediction: Give us 5- 15 months to adjust to this new reality, and brace yourselves for the themes about “the new normal.” (Hint: “Normal” is whatever is happening right now.)
Timing the Market/Should I Buy or Sell Right Now?
I’m planning to go into more detail about this topic next month, but right now my thinking is this:
- If you need to sell, and can afford to, consider doing it.
- If you need to purchase a home, and can afford to, and financially and psychologically have life stability, consider doing it.
Interest rates are going up. It’s finally happening, after saying for 11 years that they might. One person I read says they might go to 8% or 9%. Another says that 6% is as high as they are going to go. We won’t know how high they will go until we have hindsight.
What I know right now is that homes that come on the market and are well priced, well presented and marketed, and are in high demand are often going under contract within the first five days, sometimes for well over asking price. I suspect that is going to change, but it hasn’t yet. If you’re selling your home, price matters; it’s really almost that simple.
A house is an asset, obviously, but for most of my clients, a house is a home where they live their lives, where they raise their kids if they have them, or take care of their pets.
I have not yet met anybody who is able to accurately time the market.
That said, if you can and want to buy a home, maybe the time is right.
If you are considering selling, now might be the last best time to sell before the market turns. Or not.
I tell my clients that I don’t want to advise them based on fearful predictions. We make the decisions when we need to with the best, most relevant, and applicable information available to us in hand.
We can play the “what might happen” game all day long, but at the end of the day, my clients need to decide what’s right for them at that particular moment in time. Again, almost that simple.
Questions about buying or selling? Just reply to this email, or call/text me – 434-242-7140
I wrote the following in 2014, and I’m still saying much the same thing. I was thinking the other day that while I remember writing most of my stories, you might not have been reading this note for the past 8- 10 years.
“Should we do this?” My honest answer is “I don’t know, but …” I usually answer this question by asking questions that lead my clients to come to the decisions themselves. I’m not the one writing the mortgage, and for a decision this massive, I truly want my clients to be comfortable and confident not just in their ultimate decisions but also in the process by which they arrived at that decision. Often, the decision is to not make an offer or to walk away during the home inspection timeframe. More often, the decision is to move forward with the purchase. But the process matters. The discussion matters.
More often than I’d like, this market presents multiple offer situations, and I do my damnedest to encourage my clients to make decisions in a vacuum. Ignore that there is another offer and
focus on whether this home is the one in which you want to be living in 17 months. And three years. And 10 years. And maybe longer. Selling a house is a hell of a lot harder and more expensive than terminating a lease.
Many times I’ve told my clients with kids that my concern and focus is obviously on helping them make good decisions, but I recognize that the advice and guidance I provide is going to impact their lives – and their kids’ lives – likely forever. This isn’t something I take lightly, and I try to convey the gravity of the decision to my clients … and then help them work to make good decisions.
Next month: Inspection summary, more on the market, & HOAs.
What I’m Reading
- We aren’t in a real estate bubble
- This shows rolling 10 Year US Housing Starts (Single Family + Manufactured Housing) relative to rolling 10-year household formation.
- US health insurance is a disaster; this thread clearly explains.
- Popularity of remote work prompts ‘hospitalitization’ of real estate
- UN warns Earth ‘firmly on track toward an unlivable world’ — but, no, please tell me about a slap.
- Really interesting. “It begins: “Fitch Ratings, earlier this week, affirmed its negative rating of Kansas City, Missouri, flagging remote work as a credit risk. The city anticipates a slow recovery in earnings taxes …because of increased remote work, Fitch noted”“
- Climate Change is wrecking septic tanks
- Garmin Varia radar – this has been a game changer for how I ride on roads.
- More time needed; my wife showed me this. Take the time to share and experience. I’ll take the time to say that 1 May is our 20th anniversary, and I couldn’t be happier to have shared the past 20+ years with her, and I’m looking forward to the next 20+ years. Life’s an adventure; I’m happy to have found the one to share it with.
What I’m Listening To
- The Future of the Final Mile — 99% Invisible — Digital redlining.
- the Dangers of Algorithmic Ads – really interesting, and troubling for our democracy’s future.