Richmond Ky

Where are the entry level brand new affordable homes?

by John Rice

When the ink on my real estate license was still drying, Lexington was already getting pretty expensive for first time buyers. Yes, I know $150k for a brand new home in Masterson sounds absurdly cheap right now, but there was a time when that was just beyond the reach of your then millennial first time buyer. Back then, your choice for entry level new construction money was a 2 bedroom/1.5 bath townhouse in Lexington or a 3 bedroom/2 bath ranch in Nicholasville.

Nicholasville was close to Lexington. Even closer now. It was just another 20 minutes of driving to get a better house. That was enough for all those My Space loving kids to pull the trigger. You got your own yard, a two car garage and didn’t have to share a wall with anybody.

Where is that happening today? Richmond. A quick search for brand new 3 bedroom/2 bath ranch homes under $300k shows that. Yeah, there are a few in Georgetown but not many. Forget about it in Lexington. Nicholasville? Nope. Nicholasville has become a legit suburb of Lexington. The market there is now more mid and upper level homes for new construction.

When a nice house is a bad choice

by John Rice

Some houses are just a bad choice.

I was out with a buyer this past week. We looked at several new/newer homes in neighborhoods all over town. All within a similar size and price range too.

One house in particular was on my buyer’s radar. It had a 3 car garage. He liked that. Being a car guy, so did I!

Before going to see the house, I looked at the recent sales in the neighborhood. I found that most of the houses were 1400-1600 square feet and were selling for $270-290k. While there were several lots left to build upon, my realtor red flag was raised and frantically swinging when I saw the house we were going to see was also about the size and was priced at $340k. I am probably somebody who personally would pay a premium for that third garage spot, but even I wouldn’t pay $50k more for it.

I thought perhaps the house had some other features that would make it stand out from the significantly cheaper ones that made most of the neighborhood?

Once we got there, it was clear that the third car garage was about the only difference. Upon viewing the house, I noticed that the primary bedroom was sort of small compared to other new homes in the same price range. Also, all the backyards were really small in the whole neighborhood. The location of this neighborhood was also what I would call less than Grade A.

So, what did I do? I told my buyer that I just did not see this house being worth $50k more just for the garage. I also told him that when he goes to sell it, buyers with good realtors will tell their clients the same as well as how the backyard and primary bedroom were small. Long story short, I think this particular house is always going to be harder to sell and likely won’t appreciate as much. I think this neighborhood is a fine pick though for any buyer wanting a new/newer home whose budget tops out at under $300k.

My buyer saw what I was saying and while he would love to have had that huge garage, he chose another house.

Why buying now always beats waiting

by John Rice

I reckon this is sort of like a market update type of post.

I showed a very affordable house in Berea last weekend. It was very nice. Good sized. More than one bathroom. In good condition with a couple of nice features. The list price was $229k.

The house sold 15 months ago for $205k. From the pictures of when it sold back then, about all that is different is that it was vacant.

15 months ago was a little different of a market. We had just seen rates rapidly rise to about where they are today. Buyers were still in a little bit of shock. Back then I predicted that the market would pick back up as people acclimated to current rates and the period of super low rates disappeared in the rearview mirror. Guess I was correct although that was a pretty safe prediction to have made.

The house sat on the market for a few months back then. It being vacant didn’t help. If at all possible, you always want to sell your house with some furniture in it to warm it up a bit. Most buyers have a hard time envisioning what a house would be like when it is empty.

Back to today. We were one of four offers. We went $5k over the list price and waived the home inspection. Know what? We still didn’t get it.

That means this house sold for at least 14% more in those 15 months. That’s a really good return for not having done any updates and in a small town that isn’t really considered a hotbed for growth.

I am totally sure that the seller of this house was anxious about their purchase 15 months ago. They probably felt like they paid top dollar for it and were anxious about their interest rate. Want to be this person? All you have to do is think about where you’ll be a year, five years, ten years down the road and not focus on today’s fear. Other than the Great Recession, it’s hard to go wrong with homeownership.