Predictions and Doors
August 2021 Note from Jim
Fall is around the corner.
A two-topic note this month.
Charlottesville and Albemarle real estate market predictions
Do you want to live in a neighborhood where no one opens their doors?
I’ve been thinking more and more about what the real estate market will do, and in the context of the value of market reports. I love real estate data. Looking at the data, seeing how they flesh out meaning for my clients, seeing if my gut professional instinct is correct, and importantly, understanding what this stuff means to my clients.
Here’s what I think is going to happen.
Prices have risen too high, too fast to be sustainable in the long, and in some segments, short term.
Inventory is likely to remain low, but increase beyond what we’ve seen this year. Low inventory has been a challenge for years, and despite the fact that we have seen an increase in building permits in the Charlottesville - Albemarle region, we still are not producing enough inventory.
161 single family homes have sold so far this year (23 August 2021) in Charlottesville + Albemarle. Average sold price is $671K. Median is $620K.
13 attached homes have sold. Average $405K. Median is $399K.
72 of the 296 above were under $400K; 2 were single family.
Of the 639 non-new-construction that have sold this year under $400K, the average days on market was 20, with a median DOM of 5.
There are going to be more buyers coming to our market for the foreseeable future.
Central Virginia remains a great place to live (albeit expensive) and is attractive to those from other markets that are less attractive due to climate changes.
Our climate is temperate, and even with climate change, we are fairly well protected (famous last words).
Broadband expansion into the rural areas will serve to make those areas more attractive to those willing and able to work from home.
Building a new home for under $500K is hard.
There will be fewer discretionary sellers, those sellers who see their neighbors’ prices and choose to sell and either move up or down, or rent.
NB: I wrote the above before watching Mike’s video below. :)
While the market for homes will remain strong, one of the greater challenges we face is the psychology of today’s buyers and sellers. We are now seeing the shift - while many homes are still going under contract swiftly, today’s market velocity is nothing like we saw in February through June of 2021. Telling today’s seller that that market is gone, until possibly next year, is challenging.
“But my neighbor three doors down sold in 17 minutes with 47 offers!”
Yes, four months ago.
My advice to buyers remains the same that it has for many years. If you like it, strongly consider making an offer.
I tell my buyer clients:
Many years ago, before we started Nest, I was showing an old farmhouse that had been on the market for at least 300 days. I called the seller agent and told her that I was going to meet my clients at the office around 7 that night, and would fax (!) her the offer when we were finished.
She said, “Great! We just got two other offers.”
We didn’t make an offer.
I tell my seller clients:
Price the home according to what the market is doing right now, not based on what your neighbor sold for four months ago, what you need to make, or what you want to make. Put the price in a range that is likely to go under contract in under 30 days; if we’re talking about a price reduction strategy before we activate in the MLS, that is the wrong price.
To both buyers and sellers:
Are we in a bubble? I have no idea. Buyers are qualified. Of the 1,946 closed MLS transactions this year, 496 (24%) have been marked as cash. (I wrote a twitter thread in May on cash transactions).
Unless something catastrophic happens, and I can’t imagine what it could be other than another war, rapid climate change, an ongoing pandemic that we are willfully extending by not getting vaccinated, I think the Charlottesville area real estate market will remain good for sellers and challenging but achievable with the right guidance for buyers.
Next month: navigating the tricky psychology of buyers and sellers in this shifting market.
I do this for a lot of my buyer clients. How many homes will come on the market that fit in Albemarle? And in Charlottesville.
Some of the sources I read
“What’s the neighborhood like?” Is one of the most common questions my buyer clients ask.
I tell them that if they have the luxury of time to investigate the neighborhood, drive, walk, ride through at different hours of the day.
The best way to learn a neighborhood is to walk around, meet your potential neighbors, and as one of my clients used to do, knock on doors and talk to people.
Worth 5 minutes: Who even uses a doorbell anymore?
The Bit about the Wedding
Last month I noted that I’d write about my wedding from nearly 20 years ago. Not only was it the best decision of my life, I’d recommend what we did to anyone willing to upset everyone around them (they’ve gotten over it). In short, my wife, our daughter, and I took a cruise and got married on a beach in St. John. And it was perfect.
We were talking about our wedding the other day, and I found that we remembered almost everything about it, from the boat ride there, meeting the minister with the parasol at the dock, the palm trees, the before and after, as if it was yesterday. It would have been nice to have had our families there, but our wedding was for us, and I’d not change a thing about it. (other than the sunburn)
What I’m Reading
Cities in a post-COVID world. Interesting whitepaper on our future.
16 Things to Remember at College. I printed this out and gave it to my younger daughter who just started her last year in high school. Would be cool if she read it.
Homeownership can bring out the worst in you. It’s the biggest thing you might ever buy. And it could be turning you into a bad person.
Use shims to tilt your refrigerator back slightly so the doors naturally close. Simple and effective.
What I’m Listening to
Map showing the homebuyer journey - good: they could see how they loved where they ended; bad: they could see the one(s) that got away.
I’m still calling this my August note. Things outside real estate have been interesting as we continue the journey that is an aging parent’s time in and out of the ICU, home care, and all that this journey entails. It’s been enlightening.
And we see the very real consequences of those who choose to not get vaccinated. The reduced level of care available because resources are devoted to the unvaccinated Covid patients. It’s infuriating, especially when family members choose to potentially contribute to the spread. As I said to my wife, it’s hard to have a society right now.