Cracks in the wall … ?

Unless you’ve been living in a cave for the past several years – and if you have, how did you get internet access to read this message? – you know we are in a very lopsided sellers market.

I am working with buyers who are wondering – out loud, so I can hear them – if they should just drop out and rent for a while longer. Perhaps rent for the rest of their lives.

I think this is a bad idea.

For one thing, if you can get a deal at, or near, what you are paying in rent, you are ahead as an owner. It may be a shopworn cliché, but that doesn’t make it untrue: with a mortgage, you are paying rent to yourself, not someone else. Gradually, equity builds. And you have a much better shot at itemizing your deductions which will pay off in April.

Three examples:
 
One: This Monday, I got buyer clients under contract. Their limit had been dropping with the rise in rates and this house was priced about $15,000 above their top dollar. I told the listing agent that my folks loved the house but could only offer to their limit, fully expecting that to be the end of the story. Two days later, the agent called me back and said they hadn’t had a serious offer and my folks could have it for their number. 
 
Two: I’ve got my eye on a condo that a client likes but believes is listed about $25,000 too high. It is pushing the ceiling on comps, but it’s in a very desirable building, and I expected it to sell quickly. Eight days later, it’s still available, and we are circling back around. My client might make an offer.
 
Three: I’ve got a client who own a duplex. Several months ago, I was approached by a corporate buyer about selling, and my client asked $700,000. They came back and said the mid-$600s was as high as they could go, so no deal. The same buyer called me yesterday afternoon to see if there was still any interest in selling, but said lending in the wholesale space had tightened up and he could only offer in the high $500s. 
 
Let me be clear! This is not a bubble bursting. Our fundamentals are still strong. I seriously doubt prices will go down – but the rate of increase may moderate. And the more aggressively priced listings will still sell – but at less than asking. 
 
Let’s all keep our eyes on the prize, watch closely as things develop, and keep making offers. 

Nashville Real Estate: Past as Prologue

Joan Didion has been one of my favorite writers since the early 1970s when I was in college and discovered her essays in magazines like Esquire and The New Yorker. Elegant, precise, intelligent writing. As hard and intense as a clear blue sky, and sometimes laugh-out-loud funny too. Wonderful!

She died a couple of months ago at the age of 87, and since then I’ve been re-reading. 

In one piece titled “On Keeping a Notebook” she ruminates about the value of her life-long habit of writing down snippets of things she hears and sees. This line jumped out at me when I (re)read it two weeks ago, and I marked the page:

I think we are well advised to keep on nodding terms with the people we used to be, whether we find them attractive company or not.

She was talking about the value of knowing oneself, but of course this reminded me of real estate. Doesn’t everything?  And I have some thoughts. Don’t I always?

These days, in a super-intense sellers’ market, with prices pushing ever higher, it’s easy to assume that everything’s going to hell in a handbag and to long for the good old days. No question there are serious challenges these days – especially for buyers of modest means – but the old days weren’t always so good. 

Which is where the Joan Didion quote comes in. Let’s try to remain on nodding terms with who and where we used to be. 

Interest Rates While rates have recently drifted upward to above 4%, that is still a historical low. When I bought my first house in 1978, I got a “great deal” at almost 8%. Within a year, rates had risen to double digits, hitting a high of 16% in 1980. They didn’t come back to single digits until the late 1990s. Had I waited, I’d have been frozen out of the housing market for more than a decade. Do we want to go back to that?

Housing Discrimination I live in College Hill, a neighborhood where middle-class African Americans built houses in the 1950s and 60s, just before discriminatory lending was finally outlawed. I have a very nice house on a very nice street. But the people who built these houses built here because they had to. There was no other choice. Do we want to go back to that?

These days, in a super-intense sellers’ market, with prices pushing ever higher, it’s easy to assume that everything’s going to hell in a handbag and to long for the good old days. No question there are serious challenges these days – especially for buyers of modest means – but the old days weren’t always so good. 

I know things are a little weird right now. A more balanced market and more (a lot more!) affordable housing would benefit us all. But taking the long view – both behind us and ahead –brings a little perspective. And that’s a good thing.  

Palm Beach Perspective

Last week, I spent several days in Palm Beach, the guest of a couple who are dear friends of long standing. They invite me to visit every winter, and it’s always one of the highlights of my entire year – not to mention a lovely break from the Nashville winter. 
 
They are excellent hosts. We eat well, drink well, have interesting conversations, and laugh a lot. What’s not to love?
 
And then there’s Palm Beach itself. Near-perfect weather in February, the beach on one side and Lake Worth on the other, breathtaking beauty everywhere you look. Wonderful!
 
But also a little disorienting.
 
Being on Palm Beach is a bit like visiting another planet. Everything looks both familiar and strange at the same time. The amount of wealth concentrated on this small island is hard for most of us to imagine – and it makes everything seem a little “more.”
 
Which brings me to real estate and perspective. Palm Beach is a great place from which to observe Nashville. 

Here in Nashville, our white-hot market is unlike anything we’ve seen heretofore. This causes a lot of emotions among buyers. Many fear they will never be able to buy a house. Others are angry at the rising prices, feeling it’s all unfair. Others are afraid if they buy high, the bubble will pop and they will lose a bundle.

The Palm Beach real estate market is almost exactly like Nashville’s – assuming you add a zero to the end of every price. A $500,000 tear-down in Nashville is a $5 million tear-down in Palm Beach. A $2 million spec house in Nashville is a $20 million spec house in Palm Beach.

And Palm Beachers’ reaction to this situation is about the same as Nashvillians’ is to ours. Tongues are clucked, eyes are rolled, and things keep right on going … upward.

To me this says a couple of things –

Scale and substance are not the same thing. Everything in Palm Beach is bigger brighter, glossier, and more expensive. But, the market dynamics are exactly the same as here. No matter where you are, you buy a ticket and you play the game. For better or worse, you roll with it. More expensive isn’t better – or worse – it’s just different.

Money does not buy happiness! My hosts are two of the happiest people I’ve ever met. They have a very nice house – four bedrooms, three baths, pool, gorgeous kitchen – that is totally dwarfed by some of their neighbors. (One of those $20 million spec houses was built across the street and sold before it was finished.) Do they care? Heck no! They love the life they have. And I suspect they’d be happy in a two-room shack if they had each other.

Which brings me back to a truth I tell all my buyers. Sometimes sellers, too. This is about a place to live. Your house is where you do your life. It involves money and investing, yes – but it’s about life. If your life is okay, your house will be okay – or at least endurable – too.

My job as a realtor is to help my clients get where they want to be, when they want to be there, on the best possible terms. But looking at the market from a Palm Beach perspective might make the whole process seem less daunting.

Covid Lessons

So, this happened …
 
Two weeks ago, I began having mild cold symptoms – runny nose, a few sneezes, a few coughs. No big deal, but because I was planning to be with clients the next day for a walk-through and closing, I decided to get a Covid test, just to say I had done it – such a good citizen! – and to prove I didn’t have Covid. How could I have Covid? I’d been vaxed and boosted and I’d been taking precautions since the beginning of the pandemic.
 
As it turns out, I did have Covid!
 
Fortunately, it was an extremely mild case – like having a cold, but not as bad – undoubtedly because of the vaccine and the booster. I’m glad it was mild, and I’m grateful for the vaccine and to the scientists and medical people who are working so hard to keep us safe. 
 
I’m writing this on my third day loose from quarantine, and thinking about real estate – what else? Any parallels here? Aren’t there always?

Be Prepared
I had a mild case because I’d done what I could to protect myself. For sellers and buyers, the same applies. Get your ducks in a row first, and the process will always go better. Prep the house for sale before listing. Get approved for a mortgage before shopping. And work with a good realtor. Something unexpected is likely to occur (see below) but well-prepared buyers and sellers shoot the rapids with less damage.

Expect the Unexpected
Something always happens! In my case, I got Covid. In the case of a real estate deal, the possibilities are literally endless. Buyers and sellers who are well prepared to begin with usually have less severe roadblocks. But attitude is always important as well. I was “prepared” or so I thought, and was floored by my positive Covid test result. It took me a day or two to get my mind adjusted to the reality and move along. When the unexpected hits, a positive attitude always makes things better. Or at least, less painful.

Get Expert Counsel
I believe in science. I trust the experts. I took precautions to protect myself and others from this terrible disease, and when it happened to me, the fallout was mild. Whether buying or selling, working with a good realtor will protect you from the worst of the unexpected and lead you to the best outcome. Every time!

What I want for Christmas

As usual, last month’s email message was about gratitude – because that’s traditional in November and it’s also my birthday month and my real estate license anniversary month.
 
Moving on. It’s time to ask for a few things. Traditional in December, like saying thanks in November.
 
Despite the challenges that we all have been facing, 2021 was perhaps the best year of my entire life. I continued healthy amid the pandemic. I doubled my sales volume from the 2020 level – which had been a record year for me. I learned a lot in the process, and made wonderful new friends among my clients. And I blew past 70 into my eighth decade with no noticeable ill effects. Who could ask for more?
 
Well, try me. I’ve got a list.

In 2022, I’d like:
 
Less hate, more love!
Seriously! We, as a nation and as individuals, need to simmer down! The current level of angry rhetoric and divisiveness in this country is unbelievable. People abusing waiters and flight attendants. Politicians demonizing and name-calling each other and anyone else they disagree with. Book banning and burning. It’s at a level I’ve never seen before. We must work to embrace our common humanity and work together despite disagreements. Or we will lose everything. The effort begins with you. And me. So, I ask you to give it a try. I’m with you on this.
 
A little more sanity in the real estate market
I’ll go ahead and say it: can we have a bit more balance in the market this year? The current situation is wearing pretty thin on buyers, not to mention their realtors, and a more balanced market wouldn’t exactly kill sellers. We’re just going to have to ask the universe for help on this one, and I doubt we’ll get much. But it never hurts to ask. So, I’m asking.
 
Continued low interest rates
I know it tends to whip up buying frenzy – see above – but don’t the poor buyers deserve some sort of a break? Again, it’s up to the universe, but I might as well ask.
 
More real estate deals
I love, love, love my job! More work, but much more reward, than anything I’ve ever done. I love almost everything about it – the houses, my clients, my fellow realtors  – even the paperwork. I love it all and I’m good at it, so bring it! I’m ready to roll!