Failing Cost HOAs Peak | Note from Jim
May 2022 - Has the market peaked? Maybe.
I represented a client who bought a home in the Charlottesville area; her kid had been at the Parkland massacre. One of the early questions that she asked me was about school shootings in our area. My gut response was one of incredulity because of course we haven't had one here, but I took a breath before I responded and said, “Not yet.”
At what point are we going to change our culture to protect our fellow citizens?
Failing buyers and the cost of waiving inspections, HOAs, the market … peak?
Questions about the market? I’m here; ask me anytime. (Or, just reply to this email.)
I’m writing this to myself as much as to you. I try to write this note every month as if I’m writing it to one person, answering your (and my) questions about the market, and hopefully giving you a laugh, some insight, and maybe a new perspective. I try to write only what I find interesting, and hopefully, you do too.
This turning market sometimes has made me question whether I fail my buyer clients when they made offers based in part on the best, most relevant data we could put together, and advising inspections clauses and such. And then I think about the conversations we will have when it’s time for my former buyer clients, now seller clients, to sell.
Getting the House - at what cost?
Two things I have heard this year that hopefully will disappear once the market turns.
1 - I heard of at least one buyer agent writing offers with escalation clauses with no ceiling. No. Ceiling.
2 - A recent trend that started in other market and has found its way to Charlottesville are “walk and talks” with home inspectors during showings. This walk and talk is not an actual, full inspection where you may learn about nuances of how the home operates or harder-to-find deficiencies. This is a 30-90 minute walk through the home with a home inspector. (very related story from Massachusetts)
I don’t like either of these.
Correction: When I’m representing a seller, unlimited escalations and no inspections* would be great. When I’m representing buyers, I’d a) likely never write an unlimited escalation clause and b) do all I could to discourage a walk and talk “inspection.”
I saw a picture recently of a crawl space that was large, and when you popped your head in the crawl, it looked great. Crawl in, and around the bend to the end of the house, and you could see the disconnected drain line from the tub that the plumber had neglected to reconnect … a few weeks prior to the home inspector doing a full, typical inspection.
What’s the cost of “winning” a competitive offer situation?
Time will tell.
Quick Market Thought
The market is shifting, maybe peaking (peaked?). I wrote this earlier this month, and I’ve sent it to several clients. This, too, is about the slowing market; I closed this post with many more questions than answers.
My wife and I are in year 18 of our 5-year house, and it’s been a good run. Plans are fine, but making the right decision about where to live can smooth our market volatilities.
Shorter: Inventory up, rates up, things slowing a bit (and this is good).
I know this: anyone who tries to tell you definitively what’s happening in the market is either attempting to deceive, is ignorant, selling something, or some combination of the three. And I believe what I wrote last month about the market.
Does it check the boxes? Yes.
But does it feel like your home?
A couple of times recently with different buyers with whom I’ve been working a while, we found houses that fit. The bedrooms, the baths, the spaces, the location all worked. They fit. On paper, we agreed that “this house works.”
But the houses didn’t fit, for intangible, undefinable, inarticulable reasons. They were pragmatic houses that would be fine; each of my clients would have been happy enough there, but the house just didn’t work.
Each time, I agreed with their respective sentiments, because sometimes my role is to guide and reaffirm what my client is feeling.
I often know when a house is right for my client; I almost always know when it’s the wrong house.
Nest Magazine - This is a beautiful magazine, fun of good information and great stories. If you’d like a copy in your mailbox, please ask me.
Drive by, Please
Please drive (or if you can, walk or ride a bike) by a house before seeing inside, particularly a house in an area you've never been to.
I sent a coming soon house to a client, that checked enough boxes for the email to be sent. Not the right spot.
“I drove by it. It’s BEAUTIFUL and I love the one level, but frankly (this road) is the scariest road in Albemarle County in my opinion!” (I agree; I don’t ride on that road if I can help it)
When I thanked her for driving by, she said, “I will ALWAYS drive by before I waste your time! Be assured of that! 😄 I’ve been 100% sure I was in love with a house before and just a quick drive by changed my mind. Many times.”
Same buyer, different house: It came on the market, they drove by, I took a 15-minute video for them, and they saw it in person the next day. Not quite right, but it was close!
Covid and luck
We got Covid, and recovered. After 2+ years of diligently doing all the things to stay safe, we got it, and have recovered. But the point of the story is that 1) vaccines are one of the best things ever developed and 2) we’re lucky to be in a position where if we need a test, we get one. Need home tests, and can find them? We get them. PCR test? We get those, too.
This pandemic and getting older have made us more aware of just how lucky we are; yes, we work hard, but a lot of life is luck.
Get your free Covid tests from the government; ours arrived quickly.
Homeowners Associations - Not all are bad (just some)
Always read the HOA docs.
If you can, talk to the neighbors about how strict the HOA is.
Even better, see if you can get access to the neighborhood Nextdoor or Facebook group.
For context, there are 803 listings in the Charlottesville MLS within Albemarle County that are listed as active or pending. 76 are listed as being within a condo association; 541 are listed as being in a HOA. 186 are listed as not being in either.
No inspection clauses, agent population, home inspection summaries, BNPL
What I’m Reading
Chief Economist For National Association Of Realtors Predicts Uncertainty For Housing Market
Tech Workforce Trends: The Migration of Tech Jobs Since The Pandemic, showcasing the migration of tech workers throughout the United States - the coming recession is going to be really interesting with respect to remote information workers.
Wealthy Americans are buying second passports as a 'plan B' for their families, citing the pandemic, climate change, and political turmoil. Reasonable.
How Higher Mortgage Rates Have Historically Affected Home Prices
What I’m listening to
Building affordable housing is hard, but so is changing minds about where to build it
Dick’s Picks. I’m making my way through all of these. I’m on Volume 6, Hartford Civic Center, 10/14/1983 as I write this Note. Something about the paradigm of choice. I know that each of these Grateful Dead shows is going to be good, even when Jerry forgets a lyric or two. Similar but different - often when I need something, I look at Wirecutter first. Sometimes, it’s nice to have someone else narrow things down a bit to make that choice easier.