Flawed Expertise Breath Moving | July 2022

July 2022 marked a massive shift in the real estate market, flawed dreams, hard facts.

Jul 29, 2022

First, thank you. Thank you for reading, sharing, emailing me your thoughts and feedback. I truly appreciate the time you give me to read this note.

The market is moving too quickly for relevant analysis; by the time I publish this note, some new report will be out, and I’ll read it. The gist: I think we either are now, or will be very soon, in a buyer’s market across many segments of the Charlottesville market.

I read a lot, so you and my clients don’t have to.

Full list of what I’m reading at the end of the note.

This month:

The American Dream is flawed.

Talking to my younger one about this: the American Dream marketed by Realtors is BS.

I’d argue that the American Dream that I see today is one with less fear:

Shelter that is affordable – whatever that means to you.
Ability to go to the doctor or emergency room without fear of bankruptcy.
Ability to go to kids’ soccer/baseball/soccer games and still have a job that pays the bills.
Work to live, rather than live to work.
Live without fear that someone is going to shoot you randomly.
Ability to consider actually retiring, or better yet, enjoy life before retirement.

The American Dream can incorporate homeownership, but I’d also argue that being able to move to another town/state/country without being anchored to an immovable asset could be a part of that dream.

Buying a house could be the best decision for a lot of my clients. Not buying a house right now, or ever, might be a better decision for some.

But saying that homeownership is the only way forward is illogical, disingenuous, and damaging.

Expertise

A story about two attorneys: Attorney 1 wrote something in 10 minutes that was cogent and conveyed what needed to be conveyed, whereas Attorney 2 took far more time, and the end result was less efficient, convoluted, and confused everyone.

I’d argue that the first attorney’s 10 minutes was more valuable than the second’s 75 minutes of writing, researching, and delivering an inferior product. Although attorney 1 took 20 years to be able to do that work in 10 minutes.

When I see a house, I usually know (once I’ve calibrated to the market) what the value is, without looking at the data. I always use the data to independently verify and support my guidance and argument, but I usually know where the price should be.

How? Time, practice, expertise, and knowing the market. I may write nine offers for the same clients, and get paid only once. The first offers I wrote a long time ago took a lot longer than the ones I write today, and the ones I write today are better than the ones I wrote then.

Take a Breath.

That’s my advice for this market. January through May = irrelevant. We’re now seeing the shift in earnest.

The Market

Last month, I wrote about the market, and I’ve written recently on my blog about it, so I’ll share a few brief thoughts instead of a deeper analysis:

We track the market too closely. A person doesn't buy or sell a house every day or week; tracking what’s happening in housing every day adds uncertainty to the equation.
The market is shifting.
Buyers are going to have more options.
Sellers are going to have to moderate expectations.
Interest rates need to stabilize, but they remain historically low.
Hire a good experienced agent to guide and represent you.
More price reductions.
Cancelations. A client asked me about a national story concerning an increase in cancelations. We don’t have a great way to track this, but anecdotally, yes, cancelations are up in our market.
Inventory: Up and Up.
Prices: Likely coming down. Not crashing, still likely appreciating, but hopefully appreciating much less than the pandemic highs.

A market story as told by one house

Clients know that I work through stories and anecdotes, as well as data. Anecdata, if you will.

Without being too specific, a house came on the market in our area early this year, swiftly received five offers, and sold for 15- 20% over asking price, cash. For whatever reason, the house came back on the market soon after it closed, for close to what it had sold for. It has been on the market again for almost two months.

Looking at a different segment:

Quick market look at a small section of the Charlottesville city market: detached, >4BR, >2BA.

- 16 active: Avg DOM - 56. High DOM of 140.

- 14 pending: Avg DOM - 19. High DOM of 77.

Price matters, folks.

Evolving opinions

I wrote last month about how it’s good to grow and move away from people we used to be close with. It’s good to learn and grow your opinions too. I can’t imagine believing some of the things I believed when I was younger, and I’m grateful for the experiences I’ve had and the wisdom I’ve gained.

If I’m holding the same opinions now that I held then, I’m doing something wrong. Growing and evolving is one of the good parts of life — and I’d argue this growth better helps me serve and counsel my clients.

I say this in the context also of my younger daughter going to college soon; I’ve suggested that she start new social media profiles so that she starts fresh - she can be known for who she is as an 18-year-old first-year college student, rather than who she was in high school. She won’t do it, but I think it’s a great idea.

I’ve missed writing on the blog.

I asked people on Twitter what questions they had about the Charlottesville market and wrote a few stories in response:

I’m going to speak to this one next month

“It’s a personal struggle to come to terms that prices are often almost 2x or more. I just have to accept either this is the new normal or perhaps a correction will come in a year or two.”

Telling parents their kids are going to move out

Think long-term.

Yes, you love your kids. But they’re also 12 and 14. Think about life in that big house with one of your kids living elsewhere.

There’s no story here, but just a prompt to consider that next phase —- the one with a first floor primary bedroom, maybe a little bit less square footage, a more central location, and a more energy efficient (read: stable monthly expenses) home.

As my wife and I are in the final moments of sending kid #2 to college, (“small one” for those who've known/followed me for years), I’m reminded of what my dad told me at the going away to college lunch for our older kid. “You know, son, she’s never coming home.”

He was pretty much right, but we do see her quite often now when she brings our grandson over. :)

What I’m Reading

Stop for a minute. These space images are worth your time. My brain can’t conceive of a cosmic cliff seven light years high.
Period-Tracking Apps and Data Privacy in Post-Roe America
Pet peeve: link text of "here", "click here", or "go here"- After this tweet, I’m really trying to make my writing more accessible.
We should build cities and towns to support life without cars; just think about how much we’d be able to save.
Are today’s temperatures influenced by climate change? — We’re starting to see more climate refugees considering the Charlottesville - Albemarle region.
Couple bought home in Seattle, then learned Comcast Internet would cost $27,000
I refer to this Aesop’s fable frequently when talking to clients.
I love Calvin and Hobbes.
5 VA Counties Are Among Least Vulnerable U.S. Housing Markets: Report (Albemarle is one; I hate these stories.)
Quiet is not a luxury, it’s a necessity.
Increased demand for water will be the No. 1 threat to food security in the next 20 years, followed closely by heat waves, droughts, income inequality and political instability, according to a new study which calls for increased collaboration to build a more resilient global food supply. I try to not focus on this sort of thing, but I really don’t know what it’s going to take for humanity to recognize the existential threat facing us, and deal with it together.
New research shows where people move as young adults. Eight in 10 live within 100 miles of where they grew up.
For tracking the market, I tend to focus on the people in my Econ Twitter list; each person here brings a different perspective to their analysis.

What I’m Listening To

Next month: Calibrating horrible, a first-time homebuyer, working well with other agents.

Thank you so much for reading and sharing my note; it truly means a lot to me.

— Jim

Jim’s Note