What is this going to do to the value of my house?

I just had a client who is going to sell and buy with me ask me to forecast the market in the short term.  Here is what I said:
I think that the market and prices will at least remain stable for the next 6-12 months.  All of the unemployment is probably the biggest concern, but a lot of those that have been laid off are renters and not home owners so I am not expecting to see a lot of foreclosures.
Like any market, real estate is about supply and demand.  As long as the ratio of buyers to sellers remains fairly equal, the market will always be strong even if the total number of sales is down.  What we had already been seeing in the pre-coronavirus market is that people are staying longer in their houses.  That is one reason the market has been so strong the past few years….there have just been fewer houses for sale.  In Lexington, we have another issue that plays a big role, which is that we are running out of land to develop.  Lexington cannot simply build new houses to meet the demand like other towns across the country.  Even though the surrounding towns are seeing a construction boom, Lexington will always be the most desirable place to live in the Bluegrass.
There is a lot of refinancing going on.  Usually people stay longer in their houses when they have recently refinanced.  I saw this several years ago when rates had hit a record low at that time.  If rates stay similar to where they are now, it won’t be too bad.  If rates go up past 4%, people would have to pay a lot more for their mortgage than they do now.  If a seller’s house has appreciated a lot and so has the house they want to buy, having more equity from the sale of their old house to carry into the new one doesn’t matter as much if their payment is still going to be a lot higher.  Most people base their decision on the monthly mortgage payment.
I think there will be plenty of buyers in the market for quite a while.  A lot of the older millennials have outgrown their starter homes and will be looking for a house like you have in Chilesburg.  The Gen Z buyers are entering the market now and from what I have read, will be 27% of the population.  These are people that will be buying based on a need, not just because they want to nicer house.  One thing I learned from living through the worst real estate market in history is that first time buyers drive the market.  It’s like a baseball game where the bases are loaded.  Every player standing on a base has a house to sell before they can buy their next one.  The first time buyer comes to bat, hits the ball and because they don’t have a house to sell, everybody on a base gets to move to the next one.
So, in Lexington, I think the limited supply due to people staying in their homes longer, the lack of new construction and the number of young buyer will keep our market strong.
Probably the single greatest threat to all of this would be if we saw crazy inflation and rates skyrocketed like they did in the 80s.  If that happens, the houses over $400k would be much harder to sell.  The cheaper houses should be safe because what will happen is that you will see first time buyers competing with all the buyers for smaller, affordable houses.

What’s this doing to the market?

Not a lot so far.

Everything is a bit slower, but my listings are still getting shown and there seem to still be houses getting listed and selling every day.

Some of my buyers are laying low to see how this goes and for how long it lasts.

I’ve been reading a few articles that have said this could be like the Great Recession where real estate prices fell.  It won’t be.  Why?  We still have a shortage of houses for sale.  That will keep prices where they are.  Think of it this way:  If there are 1000 houses for sale and 1100 buyers, it is really the same as having 100 houses for sale and 110 buyers.  Supply and demand are the same.  As long as there are more buyers than sellers, prices will stay stable.

If you are a Buyer:

Don’t be afraid to buy.  Take advantage of great interest rates.  Negotiate the best price you can.  As I have always recommended, buy a house that will be easy to sell in any market.  That means a good location, a good floor plan, as flat of a yard as possible, average or better than average performing schools.  Don’t buy the biggest or smallest house in the neighborhood.  Don’t buy one that doesn’t fit in with the others such as having a one car garage when every other house in the neighborhood has a two car garage.

If you are a Seller:

I would put my house on the market as soon as possible.  In uncertain times, taking action now to prepare for the worst is always good.  I think I might put a new listing on the market on a Friday afternoon and only allow showings on the weekends.  That way you get the most people in all at once and can then clean things like your door handles, counter tops, faucet handles, garage door opener button afterwards and feel good about being home again…..and take your toilet paper with you when you leave for showings, lol.

Will T-Rex & Uni get this house sold?

trex

 

We all know this house, right?  It’s been shared all over on social media.  It’s made the news.  Heck, I was even scrolling through the news on my phone and it turned up on a website for San Francisco real estate.

It’s been on the market with the current pictures for 16 days and is still available.

Kudos to this creative seller who is also a realtor.  This was clearly a neat idea.  I think it is going to greatly help her career.   I have looked through the pictures and it is a beautiful house in a very popular neighborhood.

I wish her the best and hope she finds a great buyer soon.

When I first saw this house, it made me think about something I have always said, which is that exposure is never a problem in real estate these days.

There is a common misconception among the public that when a house doesn’t sell, you need to increase the marketing.  This was true before the internet.  Back a long time ago, a realtor had to get the house in front of potential buyers.  There was print advertising like newspapers and those free home books with one tiny black and white picture, there were open houses and really anything to draw attention to the fact that a house was for sale.

Today, everybody goes online to see houses.  All a realtor has to do is list a house and it gets fed to a bazillion websites.  The chances of there being a buyer for a particular house and that buyer not knowing their ideal house is for sale are about the same as winning the Powerball.

This house is still waiting on a buyer after practically breaking the internet.  It just goes to show that all the marketing in the world doesn’t make a house sell.  There are 4 factors that get a house sold:  Price, condition, location and presentation.  Get all 4 aligned and any house will sell.  Get one or more out of whack, and it doesn’t.

 

 

 

 

Yard signs are dinosaurs

I often don’t even bother to put a for sale sign in a yard any more.

I just don’t see the need.

I’ve been doing this for a long time and I have never sold my client’s house to somebody who called from a sign in the yard.

I was one of the first agents to put “Call or text” on my signs when texting became the primary way of communicating.

You know what kind of calls I got?

“How much is that house?”

“How big is that house?”

“How many bedrooms does it have?”

I would answer the questions and it became very clear that it was not what the buyer was wanting.  THAT is why they did not see it online.

When you drive by a house that is listed for $300k and your budget is only $250k, that is the reason it did not come up in any of your online searches.

When you drive by a house that is 3 bedrooms and you want a 5 bedroom house, that is the reason it did not come up in any of your online searches.

Same thing for the school district, where the laundry room is, how big the lot is, etc.

Everybody is online all the time looking at houses.  There is search criteria that gets entered and they see every house available that meets that criteria.  There is no such filter when calling/texting on a sign in a yard while driving by.

So, I think the yard sign serves no purpose other than making it so other realtors don’t have to look for the house number.

What are buyers doing instead of driving around neighborhoods hoping to see a for sale sign?  They are on their GPS enabled phones.  They tap an icon to let an app know where they are and it shows every house for sale around them.  No need for a yard sign.  They have all the listing info at their finger tips, including my phone number.

 

 

I thought it was a seller’s market?

It’s been an interesting week.

I wrote an offer on a house in Frankfort that was listed at $159,500.   Looked at the comps.  Thought it was about a $147-152k house.  Seller wouldn’t budge from $156,950.  It’s been on the market for two weeks now, which is a life time in today’s market.  Even at $152k, it will be the most expensive house to ever sell in it’s neighborhood.

I showed a house last night that is listed for $187k.  The exact same model house sold 6 months ago on that same street for $180k.  Sure, lets add 2% or so for appreciation and subtract a bit because that house that already sold had granite and was nicer.  Oh, the house I showed had a 22 year old roof.  The shingles were the 3 tab kind, which usually are good for about 15-20 years.  It needs a new roof like now.  So, this one is overpriced and needs a $7k roof.  That’s a hard pill to swallow for the first time buyers in this price range, which is why it is still on the market.  BTW, in Lexington, a house in this price range would normally get multiple offers, possibly over the list price if the list price were anywhere near realistic.

I showed another house that was super nice, super pricey and only had 2 bedrooms.  I think the listing agent expected lots of offers since most houses under $200k in Lexington go fast.  The agent even put a deadline for submitting offers.  About 20 minutes after that deadline, that statement was removed.  The house is still for sale, so I guess no offers came.

So, we have 3 listings that aren’t selling in the hottest price range in the hottest market ever.

Why?

Price.  Even in a great market, you can only get market value for your house.  Market value is what a ready, willing and able buyer will pay for a house.  You can’t get over market value, which is exactly what these 3 sellers are wanting to do.

I am sure all 3 of these sellers are thinking “But I thought this was a seller’s market??”  It is, but when your price is above market value, most buyers opt to just wait for the next batch of new listings.  Dear sellers of these 3 houses, you are not drunk with power, you are just drunk.