sell

I thought it was a seller’s market?

by John Rice

It’s been an interesting week.

I wrote an offer on a house in Frankfort that was listed at $159,500.   Looked at the comps.  Thought it was about a $147-152k house.  Seller wouldn’t budge from $156,950.  It’s been on the market for two weeks now, which is a life time in today’s market.  Even at $152k, it will be the most expensive house to ever sell in it’s neighborhood.

I showed a house last night that is listed for $187k.  The exact same model house sold 6 months ago on that same street for $180k.  Sure, lets add 2% or so for appreciation and subtract a bit because that house that already sold had granite and was nicer.  Oh, the house I showed had a 22 year old roof.  The shingles were the 3 tab kind, which usually are good for about 15-20 years.  It needs a new roof like now.  So, this one is overpriced and needs a $7k roof.  That’s a hard pill to swallow for the first time buyers in this price range, which is why it is still on the market.  BTW, in Lexington, a house in this price range would normally get multiple offers, possibly over the list price if the list price were anywhere near realistic.

I showed another house that was super nice, super pricey and only had 2 bedrooms.  I think the listing agent expected lots of offers since most houses under $200k in Lexington go fast.  The agent even put a deadline for submitting offers.  About 20 minutes after that deadline, that statement was removed.  The house is still for sale, so I guess no offers came.

So, we have 3 listings that aren’t selling in the hottest price range in the hottest market ever.

Why?

Price.  Even in a great market, you can only get market value for your house.  Market value is what a ready, willing and able buyer will pay for a house.  You can’t get over market value, which is exactly what these 3 sellers are wanting to do.

I am sure all 3 of these sellers are thinking “But I thought this was a seller’s market??”  It is, but when your price is above market value, most buyers opt to just wait for the next batch of new listings.  Dear sellers of these 3 houses, you are not drunk with power, you are just drunk.

When will there be more houses for sale?

by John Rice

The simplest answer to this is when sellers feel like moving…..so I guess it boils down to what will it take for that to happen?

Many people who have been in their houses for more than 5 years either got a super low interest rate or refinanced to get one.  It is hard to give up something like a 3.5% rate and buy your next house at the top of the market and do a 5% mortgage.  Right now, all that free equity from appreciation isn’t enough to make somebody want to give that up.

But, eventually there will be a tipping point.

Let’s say you bought a house 5 years ago for $200k.  You put down 5% and got a 3.5% rate for 30 years.  The principal and interest part of your loan is about $900 a month.  Flash forward to today.  The house is probably worth $240k.    You owe about $173k on it and have about $67k in equity.

You decide you want to buy a $300k house.  You finance about $235k after you get the equity out of your last house.  You get a 5% rate.  The principal and interest part of your loan is now $1200 a month.

Maybe you don’t want to spend $300 more each month?

What will it take to make you list your old house?

Maybe another $40k equity in your old house?  Assuming rates stay about the same and the price of the $300k house you want appreciates less than the $240k house you have, this $40k is what it will take to keep your payment about the same each month.  It will take about 3 years for that to happen between appreciation and what you are paying down each month in principal.

We all bemoan higher interest rates, but lets keep in mind that the reason we don’t like higher rates is because they make the mortgage payments higher.  People have a certain amount they can/will spend each month on housing.  People will always try to stuff as much house into that payment as they can.  I think the day sellers can move up to a nicer house and not pay that much more will be when we see more for sale signs in yards.

Bluegrass market update & fun with a calculator

by John Rice

I’ve always been a number person.  When I was a kid, my dad gave me a calculator.  I would make pretend budgets, figure out things like compound interest, and do things like type 77345 and flip the calculator upside down to see that I spelled ShELL.

So I guess I am not surprised that I get excited when my local real estate board publishes the statistical info once a month.

It is also nice to see if my own experience is echoing what is happening in the whole market.  It usually is.

For example, I hardly show any houses any more because there is so little for sale.  I used to be out 3-4 nights a week and ALL weekend just showing houses.  Now I may show 4-5 a week and have the same amount of buyer clients……on a busy week.  There just aren’t enough houses to show people, and buyers are making fast decisions because they don’t want to lose a good house while waiting for a great one.

In Fayette Co, sales from Jan 18- April 18 are down 11% from the same period in 2017.  Listing are down 9%.  You’d think a decrease in sales would be bad, but since listings are down by a similar number, it is still a super tight market, especially in the sub $200k range.

All the Bluegrass counties have a big decrease in listings.  Most have an equally big decrease in sales too.  Makes sense.  If there are fewer houses to buy, there will be fewer houses sold.  Unless you are in Scott, Madison or Jessamine Counties.  Those places are the only ones where sales have increased from this same time last year while listings have decreased.  I know, I know.  How can that be?  This is just my gut, but I think those counties had more on the market last year that just sat and didn’t sell.

I also feel like I am spending more time in surrounding counties than I have in a long time.  When I first got into this business, there were a lot of people moving to Jessamine Co in search of a cheaper house.  But then gas prices went crazy and nobody in Fayette County wanted to leave.  Now gas is fairly cheap and people have returned to moving outside of Fayette Co again.  Jessamine County has the tightest market under $180k.  There is literally next to nothing for sale there.

Just this past March, we had a net loss of 61 households in Fayette County.  Scott and Jessamine Counties were the only ones that saw much of a gain in new households.  Yep, Fayette County folks are back at it.

I still play with my calculator a lot.  Only now I’m using it to determine what a house is worth before listing it or making an offer.  Maybe with all this extra time I have from not showing houses every night, I can figure out some new words my calculator will spell?

Want to know what BUGS me about a house?

by John Rice

You know what scares me when I see a house for sale and the seller has lived in the place for a very long time?

Termites.

For most people, the only time they think about getting termite inspections are when there is a sale involved.  While I don’t think you need annual inspections unless you just want to help your pest inspector generate revenue, you should do one at least every few years.

I was in a house last weekend that my buyer is considering making an offer on.  Well, I guess they are still interested.  I haven’t heard from them since I pointed out all the termite damage.

And there was a lot of damage.  Fortunately most of it would be easy to fix.  All you’d need is to sister a few new joists to old ones.  The damage didn’t look any higher than that.  I figure there is about $2-3k in work to be done.  A termite treatment back in the 90s would have been much cheaper.

As the husband and I were walking around in the basement using our phones to look at all the joists, he said “This is why we like you.”

Who knows if they will make an offer on this house.  If this isn’t the one, no worries.  I know I am their realtor.  I want to sell them the right house, not just any house.

 

It’s like the most boring baseball game ever

by John Rice

I have always said that first time buyers grease the real estate market.  Not that I’ve played much baseball since I was a kid, but I always pictured the market this way:  The bases are loaded with people who needed to buy and sell, then a first time buyer hits a home run and lets everybody else move.  Being the person who didn’t have anything to sell kept the market moving.

That wonderful analogy that I have been using my entire career doesn’t work any more.

First time buyers are struggling to get a house.  The person on first base can’t find their second base house, the second base person can’t find their third base house, etc.  They know selling their old house will be easy, but they dread the thought of being a buyer right now.  So they stay put….and that first time buyer keeps striking out.

Now that I think about it, being a realtor feels just like when I went on a 7th grade field trip to see the Reds play.  There was a lot of waiting for something to happen, and then a brief moment of excitement.  That is how the market is today.  A lot of waiting.  A lot of checking for new listings.  A lot of networking to find houses not on the market yet.  Then when a house that meets your buyer’s criteria hits the market, a lot of excitement.