Advice as we dig out of a housing shortage

I’m starting to see an interesting thing happen.

We all know that due to the lack of new construction for many years, we have a shortage of houses for sale.

Many people have said the way to solve this is to build our way out of it.

I am starting to see this happen.

In Nicholasville between $200k and $250k, 17 of the 30 houses for sale are new.  In Lexington’s 40509 zip code, there are 104 houses for sale between $300k and $500k.  48 of them are new.  That’s an incredible amount of houses for sale in the Hamburg part of Lexington.  No wonder sales are slowing way down in that price range and I am seeing $10k price reductions left and right.

So what does this do to sales of existing houses?

Most people who buy a new house are only looking at new or newer houses.  If you live in an older existing neighborhood, you are probably in good shape.  Few buyers will seriously consider a 20+ year old house on a bigger lot with mature trees AND a brand new one on a smaller lot with trees shorter than they are.  If you have a house that is less than about 10 years old in this price range, well, you may have a hard time competing with brand new houses.

Any time I have a buyer wanting a newer house in an area with a lot of new construction around them, I always tell them that it might be hard to sell and/or might not appreciate that much until the last new house has sold.  The longer they plan to be there, the better.  If they tell me they may only be there for 2-3 years, I tell them it might be wise to pick another house.

If you are buying in an area with lots of new homes around you, try to pick one that has some unique feature or has a super good lot.  In a neighborhood where most homes aren’t too much different from each other, these small things are the difference between your house selling and always being a buyer’s second choice house.

2 thoughts on “Advice as we dig out of a housing shortage

  1. I love your blogs John, so many are dead on what i’ve seen as a home owner selling over the last few decades. One thing that has helped me with several new builds is that I try to get into a very desireable neighborhood where my new build is on the low end of that market. You can usually sell in this case well against brand new builds. But to your point on number of days, 3 of the 4 I’ve sold have gone in days, 2 in like 2 or 3 days. First was a bail-out I wasn’t living in (temp assignment) and just wanted out of – covered all but $2k living there only a year – only loss ever. 2nd was a couple days in Stonegate in Versailles, full price offer. had to drop price as it wouldn’t appraise (or wait, and this was another transfer so easy choice to accept 2.5K less). built for 78k, offered 98k but lowered to 95.5k appraised value in exactly 4 years – didn’t even worry about the corp buyout, was very happy. Custom home in Indy didn’t sell, but was there 15 months and corp buyout was $15k over what I had in it so my asking price was kinda absurd (free to try). Last was in old Beaument 6 years ago, gone in 3 days. Two offers, not full price but above what I expected for a house that was structurally sound but had a couple dozen small projects including carpet and significant basement living update, a pink bath redo and kitchen cabinets to bring best price. I knew what it was worth totally updated as one near me had just sold for $240, mine had a very nice master bath, would have gone for $250 needing nothing. I priced it at $218 as is, and accepted a $213k offer in that 3 days, AS IS (other offer wanted everything fixed AND my massive lawn tractor, good for a laugh!). It would have cost at least $40k and 6 months to get the updates done, probably doing a little work myself. Best part: every room I packed I saw another project I didn’t have to do!

    1. I’d like my next house to be brand new. I get jealous of my clients who build a new house, live there for 5-10 years and all they have had to do is change the furnace filter.

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