June 2023 Monthly Note – Charlottesville Market, Sleeping in Different rooms, stories and perspectives

This month: the market, homeowners insurance, sleeping in different rooms, lawsuits, and perspectives.

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Happy June.

This month: the market, insurance, sleeping in different rooms, lawsuits, and perspectives.

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The Market

There’s not much change in the market this month from May or April of this year.

  • We don’t have the inventory to satisfy buyer demand across all price points.
  • Interest rates remain historically in line, but we have a generation of buyers, sellers, and realtors who have not seen rates above 5%.
  • Homes continue to sell, many of which are going under contract quickly.
  • Every time I see a client, I ask if they want to sell. (Kidding. Not really.) One responded, “You told us when we bought here, we were never going to move!” He was right.

In Charlottesville + Albemarle:

  • Last year, from 1 Jan to 26 June 1,134 homes sold. Average price: $599,265. Average DOM: 22. 194 of the 1,080 were marked as new construction; that average price was $655,734.
  • This year, same timeframe: 1,012 homes have sold. Average price: $596,369. Average DOM: 30. 229 marked as new construction; that average price is $612,877.

You could probably write a headline based on that data that “Prices in Charlottesville and Albemarle are down!” But really they’re about the same, even though interest rates in March 2022 were just over 4%, and in March 2023, they were about 6.6%. (source: Freddie Mac weekly survey). There are lots of ways to interpret this.

The new construction numbers are interesting and warrant a more detailed look later this year.

I’m going to do a mid-year market report next week on RealCentralVA; what questions do you have?

 

Community

My wife and daughter went to our favorite vineyard a few weeks ago. It’s a great spot and on Thursdays they stay open until 9 pm, they have a band (often playing a Dead cover or two) ,and we can take food to cook on their grills.

We were relaxing in our chairs, around a little firepit (wish I had a picture), and one of the winemakers who is a friend came over, and offered to light the firepit for us so we could cook out without getting up. We took him up on his offer.

I sort of wish we hadn’t. One of the nice things about going to things like this is seeing friends, which would likely have happened if we had used the community grills. I loved our family time together and wouldn’t trade it for the world but that meant we had social isolation and a lack of serendipitous interactions with others.

We went the following week for a friend’s surprise birthday party, and naturally gathered closer to the grills. While making our food, I found myself catching up with a neighbor — nothing consequential, but it added to the community fabric that makes where we live (or anywhere) that much more of a community.

 

Homeowners Insurance Addendum

Did you know? Climate change is causing people to move. They usually stay local, study finds. That makes no sense to me from a risk management perspective but complete sense from a “know what you know” perspective.

I started using the Homeowners Insurance Addendum well before 2000. (Wrote about it in 2009) and again in 2013.

The HIA creates a contingency whereby the buyer verifies that they can get affordable homeowners insurance within 10 business days of Contract Ratification. (sample here)

I stopped using it a few years ago when the market got so seller-sided. Representationally, I needed to limit contingencies, plus explaining this form to other realtors got tiresome.

With more and more insurance companies getting out of the homeowners insurance business, I suspect we might see more people thinking about this aspect of buying (and selling!) homes.

 

Sleep in a different room

Along the lines of my client’s rule to disconnect hoses when you start wearing a sweater, here’s a fun tip:

Much like I advise clients to go into the attic and basement at least once a year to look for water infiltration, sleep in a different part of the house once or twice a year. (The couch doesn’t count.)

I’ve had clients tell me about crunching sounds from critters they heard in the attic. One time there was a house with only paint holding back the bees that had built a giant nest. (The owner didn’t connect the buzzing to bees until there were a lot of them.)

You might hear something that you wouldn’t have heard otherwise that you will need to address.

Sometimes it’s good to turn off screens and noise and just ride and think.

 

Telling the Same Story

I have no idea if I’ve written the same story multiple times. I know I tell some of the same stories to clients; I even wrote that story: “10 Most Frequently-Cited Stories When Meeting New Buyer Clients.

As I gain experience and more things to share, I do my best to tell the same stories over and over to all of my clients.

One that I’ve had to tell clients a few times this year when they apologize for their price point: There are no little deals.

 

The lawsuits

Anyone/everyone in the real estate space is likely struggling with/planning for/thinking about the big commission lawsuits that I mentioned last month.

I am too. My quick thoughts are echoed in this post:

“What has many worried is the potential fallout resulting from the court rulings. Miller called out three potential scenarios:

  • Nothing changes — the status quo remains in place and buyer brokers are compensated as they are now;
  • Compensation is partially decoupled and optional for sellers to offer, and the buyer agent can negotiate with the seller and/or their client;
  • Compensation is fully decoupled, and sellers are prohibited from offering compensation to buyer agents, forcing buyers to pay their agent out of pocket or negotiate payment.”

Shorter version: Everything is probably going to change regardless of the outcome of the lawsuits, and I suspect we’ll see fewer agents representing buyers because they cannot define their own value, and buyers (especially first-time homebuyers) are not able to pay the buyer broker commission.

This is going to be the most substantive change of my 22-year real estate career.

Next month: the first segment in a “value of a good buyer agent” series, starting with what’s the value of learning where/how you don’t want to live?

 

An interesting perspective

I came across this recently and hadn’t seen it before, so thought I’d share.

Why does the US have such a homeless problem compared to Western Europe?

“Believe it or not, because of World War 2.

Between 1938 and 1945 Europe was all but leveled by the war. Millions were displaced during this time, many became homeless when their homes were literally destroyed. The vast majority of people in Europe were suffering. So most of the nations of western Europe took action to help their people and created a strong public safety net for their citizens.”

 

 


What I’m Reading

What I’m Listening To

Ideas for the July note? I’d love to hear them! In the works for next month: I’m going to get to solar panels and HOAs, I liked my physical therapist (being remembered)=, segment one in “value of good realtor,” extra space, and what does “realtor” mean?


“This house looks a lot different in person than it does on Zillow.”

I hear that from almost every single buyer client when we see the first few houses together. Perspective matters. I was standing in the same place when I took these two photos.

 

Photos on Substack will eventually die, and I’ll be left with placeholders for photos. So I put them here. 🙂

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