buyers market

Real estate predictions for 2029

by John Rice

Just gonna jump right into this:

Gen Z will have a harder time getting a house than the Millennials did.    They are the biggest generation ever.  They will be entering the real estate market at about the time Millennials are selling their starter homes.  Great news if you own a 1300 square foot house in Masterson.  Times will be tough for them, but they will keep the market going strong.  Every seller of a starter home needs a first time buyer so they can move up.  That first time buyer is the oil that lubricates the whole market.

The Millennials will be moving up to their 4 bedroom houses on a cul de sac in a good school district because that is just a natural progression once you start a family.  This is great news for Gen X sellers who will be downsizing to medium sized houses in upscale neighborhoods.

What makes me think all this?  It’s not really crystal ball as much as it is history.  Everything I just described happens with every generation.  You buy a smaller house you eventually outgrow, you move up at least once to the house you raise your family in, then you downsize.

So what does all this look like for Lexington?  More gentrification as it becomes expensive to live anywhere in Fayette County.  I know it sounds unheard of, but the neighborhoods that nobody wants to live in like Cardinal Valley and Winburn may become the budget choice as similar neighborhoods with better locations become too expensive.  I know it sounds crazy, but when I was in high school, people didn’t want to live in Kenwick and now those houses equal Chevy Chase for price per square foot……yesterday’s bad neighborhood can easily become a tomorrow’s good location.  Plus, it isn’t like we are ever going to see brand new starter homes ever again.  All that can be done is update/remodel existing houses.  The people that flip houses need some margin to do this so they will buy distressed houses in whatever neighborhoods are affordable, just like they are doing now in downtown, Melrose, The Meadows and all those streets that begin with D around Pasta Garage.

Before long, I don’t think there will be any new construction in Lexington.  We are already filling in every spot big enough to stick a short row of townhouses.   This means that being in Fayette County will be even more expensive, and people will go to surrounding towns like Nicholasville and Georgetown even more.  One day, people will discover that Winchester is only 15 minutes from Hamburg and the interstate passes right through it.  I’ve never understood why more people don’t move to Winchester?

Remodeling will be hot too.  With not much new construction, people will start remodeling existing houses more and more.

Sort of some majorly huge economic melt down, I think housing is going to be strong for quite some time.

 

The worst part of being a Realtor

by John Rice

I bet you are thinking I am going to talk about being on call 24/7 and other things realtors complain about.

Not quite.

To me, the worst part of being a realtor is seeing your client make a mistake you know they will regret later.  It is easy to do.  I mean, no buyer or seller really know the market like a realtor.  They only know what they read in the paper or hear their friends discuss.  Often buyers and sellers don’t totally trust their agent.  I recently told a client a truth about our market.  This client said none of her friends believed me.  I asked if any of them had recently sold a house in our area.  None of them had.

Here are the biggest ways clients can make a mistake:

Buyers:  There is nothing worse for a buyer than the first house they see being the most totally amazing house that has come on the market all year.  When this happens, buyers often assume every house is just as good.  They often decide to wait for a better one.  When they do this, they quickly realize the house they passed on was so much better than the other houses in their price range.  I dread it when this happens because I know that the buyer is thinking I am just trying to get them to buy the first house they see to make it easy on myself.

Another big buyer mistake is wanting to negotiate in multiple offers.  I often have buyers tell me they want to come in low and let the seller counter.  I tell them that if they had two offers, and one of them was lower than the other, which one would you counter if you were even going to counter at all?  When you are in multiple offers and you make the weakest offer the seller got, they simply do not counter your offer, even if your agent tells their realtor you are open to a counter.  I mean, they already have other offers that are better than your offer, they have no need to counter.  Always come in with your best offer in multiple offers because  you only get one chance at getting the house.

Sellers:  I feel for sellers.  I think they have it the worst.  I mean, they see in the news that prices are going up.  They know their neighbor got 5 offers the first day on the market.  They see what their Zestimate is on Zillow.  They often think their house is worth more than it is.  Like in any market, the most you can get out of a house is what a buyer will pay.   You can never get more than market value for your house.  It is just in a hot seller’s market, you might have 5 people all willing to pay market value for your house instead of hoping and praying that just 1 buyer will in a buyer’s market.

When a seller overprices their house, they lose the frenzy of having more than one buyer wanting their house.  When a house hits the market, all the buyers in that price range rush out to see it.  Buyers are afraid of losing it.  Once the house has been on the market for a bit, buyers are no longer afraid of losing the house, so they make less than full price offers.

Sometimes a seller will think the realtor isn’t doing enough to market the house.  Exposure is never a problem these days.  Houses get thousands of views on just zillow.  Once a house is listed you can google the address and see several pages of places the listing can be found.  There is no way there is a buyer out there for a specific house who does not know it is available unless they don’t have internet or don’t have a realtor.

So, those are some of the worst parts of being a realtor.  The 24/7 thing is something you get used to after a while.

Reading the tea leaves when your house isn’t selling

by John Rice

House not selling? Wondering how to interpret what is going on? Here are a few of my thoughts on some common situations. The following assumes your house is being presented well online with plenty of good pictures and marketing remarks that describe it with more than trendy generic AI generated verbiage.

The house that gets lots of showings but no offers

Assuming that you don’t have some negative that wasn’t obvious like backing to a highway, apartments, or having an Eiffel Tower looking electrical thing in your yard, this situation simply means that the house doesn’t live up to what buyers expected. The good news with this one is that buyers think the price for what they thought the house would be is okay or else they wouldn’t come at all. The solution here is to either lower the price or improve the house so that it meets the expectations buyers have. Whichever is easiest.

I once had a condo that got tons of showings. I kept encouraging the seller to paint. Once we did, it sold. I recently had another listing that was getting tons of showings. It was a nice place, but just felt like a 15 year old house that needed a fresh vibe. The seller did some painting and replaced the flooring in all the bathrooms. As soon as it was done, it sold. Both of these places looked great online, and just needed to match what buyers thought they were getting. Both were improved for far less than the price reduction we would have needed, so both sellers actually came out better by going that route.

The house that gets no showings

This one is easy, but hard for sellers to accept. The price is too high. If a house is presented well on the MLS, and still nobody comes to see it, all you can do is lower the price. Real estate is all about price, location, and condition. You can’t change the location, but the other two you have some control over.

Also something to think about is this: If you have a $400k house and you’re asking $475k for it, buyers are comparing it to other houses that are really worth the asking price. The buyers who are going to spend what your house is really worth aren’t even going to see it since the list price is over their budget.

The house that gets the same bad feedback over and over

This is the least fun thing that can happen to a seller. I mean, they get kicked out of their house for showing after showing with no offers AND get to hear what people hate about their house.

Several years ago I had this really cool older house that had been mostly remodeled. It had the smallest living room I have ever seen……must have been the smallest anybody had ever seen since that is all I kept hearing after the showings. I’d ask for feedback and the buyer’s realtor would go on and on about how beautiful the place was, how unexpected it was to have walk-in closets in such an old house….then they would say their client wasn’t going to buy it since the living room was so small.

We tried putting in smaller scale furniture, but that didn’t help. After that, all we could do was drop the price. A price reduction opens the house up to a larger pool of buyers as well as enticing them to overlook a shortcoming if they are getting a better deal. We got that one sold too.

If you have a situation that doesn’t fit into these scenarios, give me a shout and I’ll let you know what to do.