The real reason why sales are down

I’m seeing a lot of news articles with accurate data.  My issue is that I think most are drawing the wrong conclusions.

Most seem to want to make you think the sky is falling in real estate because sales are down.

You know who needs to care about the number of sales?  Appraisers, realtors, mortgage people.  Those of us who make money on each transaction.

As a buyer and/or seller, the number of sales isn’t really important to you.  What you care about is supply and demand-the ratio of buyers to sellers in the market.  If there are 3 buyers in the market and only 2 listings, then we have a seller’s market.

I am seeing a lot of articles stating that sales were down in November of 2018 versus November of 2017.  Of course they were.  It happens every election year.  The market pauses until we see which set of morons we will be stuck with.

The ones that really bug me are the ones that say the affordability crisis will hold the market back.  I think they have it backwards.

Sure, we have an affordability issue.  Many people can’t afford to buy a house with rising prices and interest rates.  All I know is that every house under $200k in this town seems to go very quickly, which allows that seller to buy up to their next house and that seller to buy up to their next house and so on.

Back when the market was terrible, I said that it was like a baseball game where the bases are loaded.  The seller on first base needed a buyer without a contingency to buy their house so they could buy the 2nd base seller’s house, who could buy the 3rd base seller’s house.  The first time buyer needed to hit a home run and push all those sales through.

Back then a buyer had a ton of choices for their next home.  The issue was selling their old one.

Today, no buyer really has a huge selection of houses.

For that reason, I think our current market is the opposite.  There are a ton of first time buyers eager to hit a home run and push all those deals through, but what is happening is that the person on 3rd base doesn’t like home plate and has decided to just stand there until they feel like running.

The buyers with the most selection are the people buying their pinnacle home.  The one they stay in forever until they begin to downsize.  These are mostly Gen Xers.  They are in their 3rd base home, which is probably a fairly large home in the $250-350k range.  They want to move up to the $400-600k range, where there are plenty of houses for sale.

Their only problem is that most are just tarted up versions of their current house.  These buyers aren’t getting a better house, a bigger house, or a bigger yard.  They are just getting prettier finishes.  They find the houses in this price range, well, boring.  And we have a TON of them for sale.

So what do these Gen X buyers do?  They wait for the right house to hit the market.  Since they already have a nice house, they are in no hurry.  Because they aren’t in a hurry, that means the people looking to buy their house are in the same position….all the way down to that first time buyer eager to bid their heart out on their first home.

And, that is where we are today.  Sellers wanting to sell but not finding anything they want to buy.

What makes a location good?

Ever wonder what all goes into making a good location?

It’s usually a combination of many things.  The more of these you have, the more appealing it is:

  1.  Proximity to amenities like shopping/entertainment/dining.
  2.  Easy access to work (Think New Circle, Interstate, airport, etc.)
  3.   Good school district.  Even for people who don’t have kids in school, this is important because realtors have convinced everybody it is good for “Resale Value.”
  4.  An absence of major negative things like road noise, smoke stacks, crime, or something smelly like a landfill.

Very few neighborhoods have all of these.  The ones that do have always sold quickly and for top dollar.  They appreciate the fastest in a hot market and depreciate the least in a bad market.

Want to know a few like this?

  1.  Chilesburg-It’s got the top rated schools in the area, two of which are within walking distance.  You can get to two interstate exits easily.  If you want to go to Hamburg, its an easy drive down Todds Road.  If you don’t want Hamburg, go out the Richmond Road side.
  2. Willow Bend-This area has really shot up in value this year.  It’s got some of the best schools on the south end of town, is close to Fayette Mall, Brannon Crossing and The Summit.  Shillito Park is close and it is right off of Man O War.
  3. Beaumont Enclave-This neighborhood has always been popular, mainly because it is the cheapest way to get into the Rosa Parks Elementary/Beaumont Middle/Dumbar High district.  It is a $200-300k neighborhood surrounded by $500k and up houses.  That helps too.  Besides one of the most desirable school districts in town, you have everything Beaumont has too offer, plus a city park and a library.  It is right between New Circle and Man O War, making it easy to get in or out.  It is also a short drive to the airport for traveling executives.

I normally encourage my buyers to pick a neighborhood with as many of these location features as possible since we don’t know what the market will be like when they need to sell.  The first rule in real estate is ALWAYS have an exit plan.

Why buy a house when you can rent?

Now that the market is becoming balanced, I am seeing a lot of articles predicting doom and gloom for real estate.  I get it, nobody wants to read an article that says “The real estate market is about to become boring because it will neither be a seller’s market nor a buyer’s market”.  They’ve got to go to an extreme to get and keep your attention.  I am seeing lots of articles telling people that their home is not an investment.  I’ve even seen some articles suggesting people continue to rent and get into the stock market instead of buying a home.

Which might be good advice if you were going to live in your car, or with your parents the rest of your life.  Sure, you might come out ahead over the long haul, but the reality is you will have to pay to live somewhere, may as well pay to live in your own house.

Why did I want to buy my first house as soon as I could save the down payment?

I used to mow lawns for a lot of elderly people.  I would always enjoy them telling me what they paid for their houses 30-40 years ago and what their mortgage payment was.  I had one little old lady who told me her mortgage was $163 a month and some months it was hard to pay it.

When it was new, her house might have rented for about the same amount.  Do you think rent prices have gone up since the mid 1960s?  Meanwhile, that little old lady paid $163 a month until the house was paid off. (Okay, I am sure her property taxes and insurance went up, but not by that much.)  And when she made her last $163 payment, do you know what she did the next month?  Nothing.  There were no more payments to make (Okay again, she would still have taxes and insurance to pay but both of those expenses would be FAR less than what the house would rent for at that time.)

Let’s take a look at what happens when this little old lady moves out of her house.  She pays a real estate commission and gets to keep the rest because there is no mortgage.

What if she had rented a house that whole time and moved?  She would have paid off the house for the landlord and had nothing to show for it.

I think owning your home is the best decision you can make.

Some of my favorite marketing remarks for listings

One of my favorite things about getting a new listing is writing the marketing remarks.

My sellers often ask me what I am going to say about their house.  I tell them I don’t know yet.  What I like to do is sit down with a cup of coffee and look through all the pictures until something pops in my mind.

I like to use the words in the remarks to tell a buyer what they can’t see in pictures.  I also like to say something that will be memorable.  I know I’ve done a good job when all my realtor friends will text or call me saying how much they enjoyed reading them.

Here are a few of my favorites:

 

  1. “Get out your MUST HAVE list and let’s compare. Do you have these items on it: 1/4 acre level lot that is fully fenced & private? Hardwood floors? Replacement windows? A nicely updated bath? Stainless appliances? Fireplace? Good so far???? Come see it in person. Don’t just peek through the windows. You will love the shape and vibe of this house. The location is amazing.”

runnymede

 

2.  “DO THE OTHER HOUSES you are looking at have a wooded area & a lake behind them? Didn’t think so. Besides the wooded+water view, this house has numerous unique features: *HUGE finished room in the basement plus a full bath down there.  *HUGE storage room in the basement that walks out to driveway.  *End of Cul-de-Sac with nothing but Mother Nature behind you. Come check it out!”

harbor

 

3.  “Like Top 5 lists? The first 5 pictures tell you everything you need to know about what makes this house sooooo special. The rest are there just to make you drool 😉 Classical Character meets a whole house high end reno here….yeah, you CAN have it all, IF somebody else doesn’t beat you to it.”

firebrook

 

4. “Old. New. Modern. Distressed. Pinterest. IKEA. Style. Functional. Character. Unique. Amazing. These are all words to describe what the seller’s affectionately call their Frankenhouse. While you will be amazed at all the detail they have put into this house to make it look so cool, I want you to be sure to notice that you have 3 full bathrooms, an open concept eat in kitchen/family room, a large fully fenced backyard with two decks, a shed and a root cellar. Oh, and the HVAC was all replaced two years ago and the roof is 10 years old….so what you have here is the unique old house you have fantasied about WITHOUT the reality of all the expenses typical to an older house. They have got it all ready for the next caretaker. Could it be you?”

franken

 

5.  “If this house could talk, it would say: I’m a Mid-Century charmer in a fantastic neighborhood. I’ve got lots of hardwood floors, more than one bathroom, and have had updates but still kept my original character. Some people judge me because I back to a shopping center, but you can’t really tell since my large and level backyard has sooooo many mature trees. I mean, just look at the pictures? You have to look really close to even notice. My last people that lived here liked not having another house right behind them. They said there wasn’t any noise and it sure beat seeing a neighbor or hearing a barking dog…………..Since this humble houses doesn’t like to brag, you should know that it is in the Beaumont Middle and Dunbar High School districts.”

traveller

 

6.  “Jessica & Duane looked at many house before picking this one…..and if you’ll take a look at the pictures you’ll see why! For starters, this simply has to be the BEST lot in the whole neighborhood. The house is at the end of a cul-de-sac that is in the very corner of the neighborhood and backs to FARMLAND…..has a bunch of space between the houses too. Step inside, and you will notice that this house feels much more expensive than it is. Sure, it has the open floor plan, fireplace, upgraded laminate floors, separate tub/shower & tall ceilings that everybody wants, but look close and you’ll notice things like an office nook, crown molding just about everywhere, beadboard on the back of the kitchen island, a multi-level deck, cabinets in the laundry area, some floored storage space in the attic, a coated garage floor……well, you get the drift here. Come see it for yourself, but open your eyes so you don’t miss the other cool details of this home!”

crockett

 

7.  “I honestly am challenged to describe this place in less than the 1000 characters I have. I mean, the setting is fantastic. You are on top of a ridge, but don’t have to drive up a steep road nor driveway to get here. Fantastic views & very private. Then there is the house. It has been totally remodeled with attention to design, detail and character. Look at the pictures? This place could be in a magazine!! When you come see this place, walk around it several times to take it all in. Want to be a farmer? A vineyard, orchard trees, chicken house, pond & barn are ready for you. 30 minutes to Lexington & 10 minutes to Nicholasville-can it be any more ideal?? (there is more but I am running out of room.)”

taylor

 

8.  “I don’t often have 61 pictures of a house……but then again, there aren’t many houses like this!! Some thoughts that popped into my head as I toured it today were: Craftsmanship, attention to detail, LOTS of crown molding & trim work, farmhouse sink, awesome cooktop hood, lots of hardwood, wrap around porch, custom built, elegant while being inviting, the best breakfast room I have EVER seen, natural light, I can’t believe it has a great room AND an upstairs family lounge AND a basement family room, Pottery Barn, Southern Living, STORAGE, an unfinished room in the basement that would be a perfect Theater Room. Then as I left, I noticed it is across from dedicated Green space. Before you check out those 61 pictures, let me point out a few other things: The main level bedroom is being used as an office. It works great either way. The basement bedroom has French doors & could be anything you want….Lots to love. Worth a visit!!”

Vanznat

 

9.  4 ooooh 5 ooooh 2.The best zip code in all of Lexington….and this house is in THE most awesome location with access to The Lansdowne Shoppes, The Signature Club, Chevy Chase, Downtown, UK, The Arboretum, Southland Drive, Fayette Mall and The Summit. Map it. This place is right in the middle of all that. You also get mature trees and are in the Glendover Elementary/Morton Middle/Henry Clay High district. But what about this house? Well, to begin with it sits on nearly a 1/3 acre corner lot that offers a very private backyard. It’s got hardwood, tile and a nice mix of updating and all the original charm that you want in a mid century home. My favorite thing about this place is the floor plan. All the rooms are big and bright and flow well. The kitchen is open to the family room just like in a newer house. When you come check it out, be sure to spend a few minutes sitting at the kitchen island. It’s a great gathering space.”

_SEM6025

 

10.  Let’s call this the TRIFECTA house: You get greenspace, a water view and move in ready condition. You also get a lot of natural light, an open floor plan, a walking trail, are close to Hamburg as well as two of Lexington’s newest schools, Garrett Morgan Elementary and Frederick Douglass High. A little extra icing on an already good cake is that there is more space than usual between you and one of your neighbors, the driveway is flat and it is going to be the cleanest most move in ready house you have ever seen. (Even the lawn is in immaculate shape!!)”

3276 Sweet Clover - 013

 

Some of my favorites houses I have sold

It’s been a pretty relaxing day.  Woke up a little early.  Drank some coffee.  Thought about some of my favorite houses that I have sold.

There are a lot more than these, but I wanted to share with you a bit about what I saw in these homes.

1.  The Cottage on the Lake House

LAKE

One of the things that made this place so cool was how much it offered for such a little price.  The seller used it mostly as a weekend get away.  While the whole place was special, this room with a wall of windows overlooking Herrington Lake was amazing.

2.  The Preserved Craftsman Cottage

sTAMPING GRD

The sellers used me when they bought this place.  It was a time capsule.  I think it was built in the 20s and updated a bit in the 50s.  The previous owner had lived there forever.  Everything was pink.  My sellers updated it with an eye on preserving it’s original character.

3.  The Transformation in the Sticks House

tAYLOR RIDGE

This place was so deep in Jessamine County that it was closer to Madison County than it was to Nicholasville.  It was literally a very plain shack when my buyer with a ton of vision and the energy for the transformation bought it.  Everything she did was totally amazing, but I had to pick one picture and I picked this one because of the window.  The ceilings were low in this house.  The windows were low too.  She came up with the idea to put all that trim around the windows and get this, to make the windows look taller, she put mirrors above them.  Take a closer look and you will see a reflection of what is inside.  Pretty clever!

4.  The Party House

Wyndham

Some friends of mine built this house and then added the pool.  I just sold it for them.  What I loved about this house was all the space for entertaining, which sounds strange of me to say because I never entertain….but if I did, the pool, the flat lawn, the patio, deck, and finished basement with a kitchenette would be what I would want.

5.  The Cozy Corner House

Hemming

I am a sucker for natural light.  This place was vacant when my clients bought it.  I liked this corner because it had windows on two sides.  It looked even better when they got this wicker sectional.  It was so cool that the people who bought it when I sold it wrote on their offer that the sectional stayed with the house.

6.  The “Everything I wanted except a 10 car garage” house

lake v

This is a house that made me wish I was 10 years younger.  Well, I wish that all the time, but what I mean is that I am too close to being an empty nester to want a perfect 5000 square foot house on an amazing lot, in my favorite neighborhood, that has been totally renovated.  If it were 2008, I would have bought it.

7.  The Love at First Sight Garage House

David Powell Media

These buyers had a 3 car garage in their old house that I sold.  They didn’t want to go backwards.  It is hard to find a 3 car garage in Lexington, but somehow we managed to find a 4 car garage.  The seller of this home was some famous football player.  He added the extra garage seemlessly into the house…..that’s how I will always remember him.

8.  The In the Country but not in the Country House

Todds

Talk about location.  Here are 10 acres and all the wonderfulness that comes with being in the country, but Domino’s in Hamburg will deliver your pizza.  Plus it has a pool and a bonus garage with an apartment.

9.  The “My Three Kitchens” House

Cambridge

This place not only had a really nice kitchen upstairs, it had a really nice kitchen in the 3000 square foot basement, plus this poolside kitchen.  I am not really sure why this impressed me because I never cook anything, but it did.

10.  The “Made my wife cry tears of joy” House

antilles

While it doesn’t look this good now, it did when I bought this place.  My wife had always wanted a covered patio and an outdoor fireplace.  When we came to see this house, she cried because she liked it so much.  It was like a dream come true.  I try to remind myself of that when I think about all the work I need to do to the inside….which I have been deferring for over 6 years now.