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Supply/Demand in Lexington-Not what you think?

by John Rice

Supply and Demand.  We tend to think of that term regarding the whole market.  Most people right now think we have a shortage of listings.  We really don’t.  We have a shortage of listings people want to buy.  But back to my point, most would say that, over all, the whole market has more demand than supply right now.  I never like to generalize things that broadly.  Here in Lexington, some neighborhoods have more demand than others, and some have more supply.  Here is how it works:

Lets say you have 10 buyers wanting a specific neighborhood.  If there are only 8 houses for sale, then they all will sell.  If there are only 8 buyers and 10 houses for sale, well, two sellers are losers.   Those numbers will vary every year.

Right now, Hartland is pretty hot.  It has always been a desirable neighborhood, but right now, there are fewer houses coming on the market than there has been in the past.  Conversely, Pinnacle was super hot about a year and a half ago.  I had two buyers wanting to be in Veteran’s Park Elementary district.  Houses were selling as fast as they were listed.  Today, many sellers in that neighborhood have put their houses on the market and there are more for sale than there are buyers.  It is still a desirable neighborhood, there are just more sellers than buyers at this moment.

Sometimes these changes are complicated and sometimes they are as simple as how many houses are available.  We just went though the schools being redistricted.  During that time, people had no idea where the district boundaries would be.  I think many wanted to play it safe and picked neighborhoods that they knew would not be affected.  Pinnacle was within walking distance to Veteran’s Park Elementary.  There was more demand than supply.  Now that we all know where the new district boundaries are, there seems to be less demand.  And also, I wonder if today’s sellers saw how fast their neighbors were selling last year and decided they wanted a piece of the pie…..and flooded the market.  Meanwhile, over in Hartland, there was really no hope of getting a better school district.  Nothing has changed except there is less supply at the moment.

Supply and Demand applies to specific neighborhoods, price ranges, types of property, school test scores……really just about any criteria people use when considering locations.  It is a very fluid thing and changes as often as the price of a lobster at your favorite restaurant.

 

 

 

In a HOT market, every house sells

by John Rice

We sure are in a crazy market.  Get this….I just had multiple offers on a listing.  One was a first time homebuyer.  The other was an investor.  Can you guess whose offer was more?  I would have guessed the buyer that was going to live there would have paid the most.  Glad I didn’t bet, because it was the investor.  Yeah, that is right.  An investor paid RETAIL for a house he intends to rent out.  He paid exactly what I told the sellers to expect to get out of their house.

I’ve spent a lot of time advising people to make wise real estate decisions.  For example, I usually tell people not to buy a house that backs up to the interstate or another busy road.  Well, I had a listing that was beautiful inside, but it backed right up to the interstate.  We sold it the first day on the market.  Then that buyer defaulted on the contract.  I put it back on the market and by the weekend we had multiple offers on it.  WOW!

One of the things I always said in the slow market was something like this:  “In a hot market, every house sells well.”  That is exactly what we are seeing right now.  My fear is that a lot of buyers are making poor choices today just as they did back in 2003-2005 when the market was so hot that everything sold quickly and for top dollar.

I doubt that we will ever see the market drop like we did several years ago, but it will have it’s ups and downs just like it always has.  Before you pull the trigger on any real estate purchase, think about your exit plan.  I spent a lot of 2008-2011 selling houses for people who made poor choices with other realtors in 2003-2005.

Want to know what LEXington buyers are doing??

by John Rice

The real estate scene in Lexington sure is changing.  Guess it always has, but this years it seems to be doing it quicker.

What’s hot and what’s not has been pretty static around here for a long time.  Other than Kenwick getting trendy and all the flopped new downtown condo projects, this town has always been about the middle of the road, safe and predictable neighborhoods in decent school districts.  People who wanted older houses wanted in 40502 or the older neighborhoods on the south end of town that were inside New Circle.  People who wanted newer homes looked around Man O War.  There was always plenty of new construction going on all over town.

Now it seems that new construction has slowed down.  You’d think since we are running out of room inside of Fayette County, that new construction would be on fire right now.  Especially after all the slow years of the bad market.  It did bounce back strong in 2013, but has slowed since.  All the national news I read about it indicates the same is happening everywhere.

I am seeing more and more people wanting older houses.  They are rejecting the cookie cutter neighborhoods.  Many are considering neighborhoods on the north end of town.

All this is pretty interesting to me, both professionally and personally.  I have to keep up with it so I can give my clients the good advice they deserve.  I also like to think about why we are seeing this shift?

I think a lot of this has to do with shows like Property Brothers and sites like Houzz.com.  People want a house with character more than ever now.  After several years of a bad economy, people now feel safe to renovate their houses.   I think people are spending more time at home due to being so connected online.  It only makes sense that people want to create their own oasis to be in while they spend all their time connecting with the world through their phones.

I once had an out of town client tell me that the Lexington market is very broad but not deep.  We tend to have the same 10 floor plans build by the same builder throughout all of Lexington.  It is almost like 3 easy step:  1)  Pick your floor plan.  2)  Pick which part of town you want to be in.  3)  Pick if you want that house to have been build in the 90s or 2000s.   I had another client from New York tell me he wanted a contemporary or modern house.  He didn’t get one because we have so few.  People today are just not excited about living in a modern day Levittown.  (Google that if you don’t know what I mean.)

Lexington doesn’t have the sprawl like a real city does.  We keep adding people but we don’t expand the geographic boundaries of the town.  That means more density, which means more traffic.  People are wanting more than ever to be closer to amenities they frequently use.  That is one reason the older neighborhoods are doing so well right now.

As prices have returned to 2005 levels but wages have not, you don’t get as much for your money.  That is why we are seeing some people look on the north end of town.  You get more for your money there.  This is especially true for many first time buyers.  An older house on the north end of town is a real bargain today.   Also, the north end of Lexington is a great spot for younger buyers who want to be close to all the new spots along North Limestone.

Well, I’m over 600 words now.  I could go on and on.  Bottom line is that buyer tastes are shifting in this town and it is kind of exciting to me.

Advice on TODAY’s Market

by John Rice

Such a funny market.  All the realtors I know, and the media, are saying we have a shortage of listings.  Not the case.  There are a lot of listings out there in any price range.  The issue is few people want them because they are not move in ready.  This is the pickiest market I have ever seen.  Buyers are super price conscious too.  If your house is not priced right and move in ready, you might as well not even have your house on the market.

Also, your best shot of selling is……IMMEDIATELY!  Yeah, if a house makes it past the first few days without at least one offer, then you should be nervous.  Everybody is rushing out to see new listings like it was a 911 call.

I’ve got a theory here.  Back not too long ago, a buyer had to typically sort through all the existing listings to find the handful of new ones.  They might see the same house every day as they did this and eventually be like “Well, I’ve been on the fence about seeing that house for a few weeks and there is nothing else to see right now, maybe I should go see that one?”  I don’t think many are doing that.  Heck, I don’t think many are seeing anything but new listings.  Buyers can set up their own searches now and I think most are only viewing new listings.  They sort through the new listings, see the ones they like, discard the ones that don’t interest them and never look back.  That makes for a polarizing market and shows how important it is to get price and presentation right from the get go.

Another reason I think this is the number houses that have come back on the market after selling immediately.   There are several houses I am watching that sold as new listings but the deal fell apart for whatever reason.  Then the house sits there forever like that last piece of pizza at a buffet.

And if you are a buyer caught up in multiple offers, remember what I have always said…..there are other issues more important to a seller than money.  Few times do I ever see one buyer going a lot higher in price than the other buyer.  Often, the difference between the highest and second highest offer is maybe $1000.   So, do something like make your offer where you will inspect the house but will not ask for any repairs, or let the seller pick a closing date that works for them.  Does this work?  Yes.  I am typing this from my home office.  I got this house 3 years ago the first day on the market and beat out several other offers, one of which was cash and full price.

What Realtors need to hear

by John Rice

So much of my industry is about growing your business.  How to get more leads.  All the places you should go online to try to hook up with buyers or sellers.  How to use Zillow to get more work.  More work is what it is all about.  More more more.

It is never about being a great realtor.  Nobody sees the old school benefit of making your first priority taking care of your clients.

Since I have always wanted to be one of those motivational guru real estate dudes who tells large audiences of realtors what to do, I think I’ll share my story/POV/Logic behind how I do things.

From the beginning, I never wanted to be the agent that sat in the office and licked the back of stamps, sending post cards to everybody I knew.  I wanted to “Do” real estate.  That was the business.  The business was not about promoting my business.  People thought I was crazy.  I probably am a little bit, but that has nothing to do with the model of real estate I was incubating in my brain.

What did I do instead?  I studied the market.  I already knew the neighborhoods having lived here for so long.  Also, when I got a client, I wanted to keep them for the rest of their life.  I wanted them to be so excited about me that they told friends/family members about me.  What I had to do to earn that was put their interests above mine, protect them, fight for them, etc. It is all about trust, wisdom and experience.

Did any of this happen over night?  No.  It took about 4 years in a terrible market,  But it did happen.  Last year about 75% of my work was repeat clients and referrals from past clients and LEXpert fans.  This year so far, I have 24 deals pending/closed.  Only 5 of those came to me without somebody recommending them to me.

So, my advice to new agents that might be reading this:  Wake up every day and do whatever work you need to do to push your deals one day closer to a closing.  Care about your people.  Don’t worry about trying to get the next deal.  I know in this business you wake up everyday unemployed and have to always look out for new work, but focus on what you have in your hand right now.  Advertising and social media are okay to use, but if you are not going to be the best agent you can be, I sure hope you always have a stream of new people…..because you will never get repeat business and referrals.

Be the best agent you can be and watch what happens in a short period of time.  It’s a simple old school model of putting others first and giving them the attention they deserve.  And it works!