Got $500k or more? It’s your market

Once a month the local MLS sends out the sales statistics.  Being into numbers, it is always fun to drop a K-Cup in the Keurig and check it out.

I guess the biggest news is that when you compare Fayette Co sales in September 2016 to September 2017, the number of new listings was down 16% and the number of sales were down 13%.   Hard to sell houses when fewer are for sale.

This whole year has been a frenzy.  Agents and buyers are struggling to find houses.  Everybody is talking about what a hot market it is…..but I think the word we use should be tight.  It’s a tight market.

The hot market was last year.  There were more sales in 2016.

January 2017 beat January 2016.  390 sales compared to 318.

Every other month in 2016 saw 40-90 more sales each month.

The fine line between a seller’s market and a buyer’s market has always been which side of 6 months of inventory we are on.  Less than 6 months is a seller’s market.  More than 6 months is a buyer’s market.  In Lexington, it is a seller’s market up to $500k.   It is REALLY a seller’s market under $250k.   Got $500k or more?  It is very much a buyer’s market.  That is why prices on houses in this price range have been pretty flat for several years.  It’s a great time to move into this price range, especially if you are selling something cheaper.

I just finished that cup of coffee, so I guess my closing remarks will be that it is an interesting time to be in real estate.

 

How good advice can be not so good

The first new car I ever bought was a 1996 Geo Prizm.  This was before the internet.  Back then, Consumer Reports was not only the most respected source for advice, it was about the only one.

They had a service where you could purchase the invoice cost to the dealer for whatever car you wanted.  They suggested bargaining up from the invoice rather than down from the sticker, and even suggested an amount deemed a reasonable profit for the dealer.

It all made perfect sense.

I thought I was being the wisest consumer ever.

I went into whatever the Chevy-Geo dealer in Winchester was called back then.  They had a dark green Prizm that my wife wanted.  We later brought our first born son home from the hospital in that car.

I sat down, told the guy what I would pay based on their invoice cost.  He immediately accepted.  Of course, it was about 7:45 PM by the time we got there.  I have since learned that showing up at a time when everybody is wanting to go home is the perfect time to walk into a dealership.

We got the car.

I felt like a hero for getting the dealer to accept my terms.

Later I realized that most of the Geo Prizms had been sitting on the lot for a long time.  This was when full sized truck based SUVs were gaining popularity.  There was a waiting list to get a Suburban since they couldn’t build them fast enough.  Gas was cheap.  A small economy car was not a hot seller.

I received great general advice that turned out being not so great for my specific situation, which is why the dealer was eager to accept my offer.

I see that happen a lot in real estate.

I wish there was a 3rd party in the deal that was looking out for me.  Somebody who could have given advice for my specific situation.  Somebody who would have told me that what I was wanting to buy was a car the dealers were having a hard time selling.  That they were more motivated to sell than I was to buy.  I wish there was somebody who would have told me that buying a small economy car at a time when everybody was buying Suburbans and Tahoes meant that it would depreciate rapidly.

I love being such a person for my clients.

 

 

My first lesson about real estate

1669 Elliot

 

This was my grandparents house.  1669 Elliot Avenue in Ashland Ky.

I have lots of good memories of this place.  See that lonely window on the right?  That use to be a screened in porch.  My grandfather made it into a bedroom and the house’s 2nd full bath.  I helped him build it.  Well, as much as a 6 year old can help.  I remember trying to help him do something with the new toilet.  Using a hammer on porcelain turned out not being the right tool.  The house use to have white asbestos siding and diamond shaped shingles.  It had much more of the 40s character back then.

See that gray house on the left?  It use to be white too.  The neighbors added an in-ground pool in about 1975 or so.  It has since been filled in.  That driveway is shared.  It use to have two concrete strips with grass in the middle.  It has now been filled in too.  Not only was this the location of my first real estate lesson, it is also where I discovered my love for cars.  The neighbor with the shared driveway had a red Camaro with white stripes.  Probably a 1971-1973.  Car was super loud.  Then I guess the gas crisis hit and one day it was replaced with a yellowish MG Midget.  I loved that car.  Probably why I love my Miata and M Roadster so much.  The car smelled so good inside.  It had that great British car smell, which I have since realized is probably a combination of leather, dust and mold from a leaking top.   My grandfather had a series of old Datsun Z cars too, so I would hang out in the driveway and just look at the cars, counting down my days until I could drive.

This house is also where the “Incident” occurred.  I was trying to get a garden rake that was hanging on two nails off the garage wall.  I was a little kid and could only reach the very bottom of the rake handle.  I was successful at getting it off the nails, but not successful at preventing it from falling, tines down, on the hood of my grandfather’s car.  So, if anybody sees a brown 1975 Datsun 280z with 5 little dents right in the middle of the hood, please apologize to the owner for me.

The only bad memory of this place was the morning of May 29th 1977.  I remember my grandmother crying and not knowing why.  The lady across the street, who we called Tink, had died the night before in the Beverly Hills Supper Club fire.   I didn’t know that it was one of the deadliest fires in history.  I just knew my grandmother’s friend wasn’t ever coming home.  It was strange to be outside playing and see her red Olds Cutlass still in her driveway.  I thought that was a cool car and always remember her every time I see one.

I guess I better get to real estate now.

My grandparents decided to move to Florida.  I was so unhappy about this.  They used an agent with ERA.  Being the 70s, I had no idea WHY the Equal Rights Amendment people were selling my grandparent’s house.

My grandparents timing was fantastic on this sale.  The house was in Ashland.  Like, when Ashland Oil was in Ashland.  It sold quickly and for top dollar.

A few years later interest rates went though the ceiling and Ashland Oil left town.  It was a double whammy for the local real estate market.  It took well over a decade for the house to be worth more than the buyers paid for it.

Supply and demand.  How interest rates and the local economy impact value.  What happens when more people are leaving town than moving in from another town…..Lessons I learned as a kid that benefit my clients today.  Other lessons I learned at this place?  Don’t throw a baseball through the neighbor’s window.  Don’t jump off the roof of a detached garage.  Every neighborhood has a grumpy old lady.   Your parents are the tooth fairy.

Best undervalued neighborhood in town

My first new car was a 1996 Geo Prizm.  Green.  Because green was a hot color for everything in the mid 90s.  We bought it because it was mechanically the same thing as a Toyota Corolla.  General Motors and Toyota had a joint plant back then in California where they produced the Geo Prizm and U.S. market Toyota Corollas.

They were the same car, only the Prizm was cheaper.  Few people knew that you were essentially getting a Toyota Corolla for less that what a Toyota Corolla cost.

Neighborhoods can be like that too.

If you are the type to have picked the Geo Prizm over the Toyota Corolla, then you should check out Old Paris Place.

This is a Ball Homes neighborhood.  It has the same model houses as any other Ball Homes neighborhood, only they are cheaper than you will find in other neighborhoods like Masterson Station.

If you are looking in the $125-160k range, this neighborhood should be on your radar.  The same houses will cost you $140-175k in other similar neighborhoods.

Here is what I like about it:

  1.  You are close to the interstate if you need it.  Close to Hamburg too.  Close to all the cool things on the north end of downtown.  And not a terrible drive to the south end of town either.  My kid’s school is very close to Old Paris Place.  I remember rushing to pick them up from a house I was renovating waaaaay out Harrodsburg Road.  It mentally felt like I was super far away, but I would hop on New Circle at Harrodsburg Rd and before you knew it, I was turning left on Old Paris Pike.
  2. You are closer to restaurants, banks, gas stations and grocery stores than you would be if you lived in Masterson Station and paid more for your house.  You’re 10-15 minutes away from Hamburg too.
  3. Several of the lots back to a wooded area owned by the HOA.  Many back to two farms.
  4. I have had a couple of clients live in this neighborhood and have met several other residents.  All say it is a friendly place to live.

Right now,  this neighborhood is a little undervalued.  Most people wanting a 10-15 year old home in this price range default to Masterson Station for their search, just like most car shoppers knew about the Toyota Corolla but not the Geo Prizm.

 

Shhhhh….Don’t tell anybody this

I’m going to let you in on a little secret.

The market has slowed down in much of the Bluegrass.  I don’t mean that it is dangerously slow or anything.  It is still a hot market with too few houses for sale.  It just isn’t the crazy frenzy it was earlier this year.  That is to be expected since it does slow down a little after school starts, then a little more the closer you get to Thanksgiving, then a little more the closer you get to Christmas.

How much?

In Fayette County, sales are down 6% when comparing August 2016 to August 2017.

I put two new listings on the market last week.  I try to put my listings on late Friday afternoon so we get lots of showings on Saturday.  That way everybody is off work and they can all see each other come and go from the house….it makes it feel more like an auction.

I knew it had slowed down some, so I was expecting only 4-5 showings at each house, and probably at least two offers on each.

House A did not get any showings the first day on the market and only one showing was scheduled for the second day on the market.

House B had only one showing scheduled the first day on the market.

Fortunately both sold to the first buyers who saw them, but I imagine they and their agents would be surprised to know this.

Both houses were priced right, presented well and in the most popular price range.

I sold another house this week too.  This time I was working with a buyer.  We saw a very affordable house the very first day it was on the market.  Throughout most of this year, I have shown a house and had another agent showing it before and/or after my showing.  Sometimes there has been a line, prompting me to consider a side hustle of selling snacks and drinks while I am there waiting.  I was at this house for an hour.  No agent was there before me.  No agent was waiting for me to leave.

I am noticing home inspectors have been able to get to jobs in fewer days too.

When I scroll through the pending sales every day, I am seeing fewer and fewer 1 day on the market sales.  Most are still selling in less than a couple weeks, but that is a big change from earlier this year when almost every house sold the first day.

All of this makes me think it is a great time to buy.  Probably the best time all year.