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.

 

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.

 

 

 

What is it worth?

What is it worth?

That is a question I get asked a lot.

Sometimes I can do a little quick math in my head and come up with a ballpark number.  Most of the time my default answer is that I need to study the recent sales….AKA “The Comps.”

When the market was flat, it was easier to do it all in my head.  I could think “Oh, I sold that house over there a couple years ago, and I remember showing that one down there last year and it sold for this much.”  The past couple of years the market has been appreciating so much that the best answer is to look at the comps.  When values are going up (or down) you should always look at the most recent sales to determine value.  It’s a big purchase for a client and they need an agent who will put in the time to make sure they don’t over pay.

I love studying the comps.

Some times they are easy.  Like in a newer neighborhood developed by a mass builder.  Most of the houses are the same age and in the same condition.  It doesn’t take long to come up with a pretty accurate value.

It gets harder when the house is more unique.  Like an older house where every house in the neighborhood has a different floor plan,  and all are in varying conditions.

I think the most challenging ones are rural properties.  I LOVE rural properties.  Part of my reason for enjoying them so much is purely selfish.  I love driving out in the country so it is always a treat just to get there.  It is also interesting to see these properties, whether listing them or working with a buyer.  No two are alike.  Also, there is a relationship between the house and the land that must work.  I often have buyers who like the house but don’t like the land, and the other way around.  That is why I always try to depict both when I list rural properties.  I know that is important to the buyers.

Here are some of the things I look for when determining value for rural properties:

  1.  Location-The closer to the subject house the better.  This can be a challenge because there are fewer properties and fewer sales in the country.
  2. Age-You often find a wide range of ages in the country, which also means a wide range of floor plan types.  If I have a mid 90s house that I am trying to find the value on,  I try not to use a brand new house or one from the 1960s even if they are next door.
  3. Lot size-The closer in size to the subject house the better.  If I’m trying to find the value of a house on 1 acre, I might use houses on up to 3 acres.  If I have a 5 acre lot, I might compare up to 10 acres.  Most 1-10 acre buyers just want to be in the country.  Most 1-3 acre buyers just want a big yard.  Some 5-10 acre buyers have horses or need that space.  Over 10 acres and you are often looking at somebody who wants a working farm.

A good rule of thumb when using recent sales to determine the value of a property is the fewer adjustments you need to make, the more accurate the value will be.  Looking at the comps is really studying buyer behavior.  You are saying a buyer paid this much for this house, and the house I’m trying to figure out the value on is 300 square feet bigger, so it should sell for the same price PLUS the value of that extra 300 square feet.  That is why beginning with the best 3-4 houses is key to ending with an accurate value.

I showed a house last night to some friends of mine.  They asked what I thought it was worth.  I pretty much told them everything you have just read.  When I went to look at the recent sales this morning, I found 3 houses on the same street that had sold within the past year that were all on similar sized lots, and were similar sized houses that were all built around the same time.

Sometimes comping rural properties can be easy too I guess.

What neighborhood is the winner in this market?

Masterson.  Formally know by it’s full name, Masterson Station.  While the whole neighborhood has seen values really go up, I think the true winners are the single story homes in the 1000-1350 square foot range.

Many many years ago, half of Masterson was in foreclosure.  That happened to a lot of the newer neighborhoods where the first owners bought at the top of the previous hot market with sketchy no money down loans.

I remember I would often spend ALL day with first time buyers just in Masterson when the market collapsed.  I would schedule 8-10 houses, all just blocks apart.  It would get confusing after a few.  I would find myself saying stuff like “This is the Roxbury plan by Schneider Homes.  It is the same floor plan as the 2nd, 3rd and 6th house we saw earlier, only this one has blue vinyl in the kitchen instead of tan, and it has a deck instead of a patio…..oh, and this one has a fenced back yard too.”  Then my client would say something like “I thought the 2nd and 6th house were the two story houses?”  Then I was like “No, it was the 4th house that was the two story.  It was a Ball Home plan.  The Fairfax is the name I think…..yes, that is it.  The Fairfax is the one I told you about that sometimes has an open loft instead of the 3rd bedroom, and realtors often call that a 3rd bedroom because they know nobody will come see it if they said it was REALLY a 2 bedroom house.”  Then my client would ask “What was the 5th house?  I don’t even remember it!”  I’d reply “The 5th house was the only occupied house we saw today.  The water was on and we both used the restroom.”  Client be like “Oh, I remember now. How do you keep all this straight?”  And I’d be like “It is taking every bit of concentration I have.”

Back then, $125k was like $155k is today.

Then the market improved.  I was amazed these houses were selling around $130k.

Then it got better.  I started seeing a lot of $140k houses a year ago.

Now a decent one is $150k, some are even higher!

That is a huge turn around from half the neighborhood being vacant houses that took 6 months to sell.