Happy 2020. What’s going to happen next?

We’ve got a whole new year on our hands. And in the first weeks of a new year, I’m usually reminded of the old French maxim, plus ça change plus c'est la meme chose. 

It applies to real estate – as it does to the rest of life – in several ways. We are always anxious to know what’s coming down the pike, we always make predictions, and we are always at least partially wrong. The more things change, the more they stay the same.
 
In the spirit of public service (we realtors live to serve) I’ll throw out a few thoughts and maybe 12 months from now we’ll look back and see how well I did.

Good News on interest rates
Current rates on a 30-year fixed are under 4% and, while they will float up and down a bit, all predictions are that they will stay there. Good news for buyers because their money goes farther. Good news for sellers, too, because more buyers are in the market. 

Mixed news on inventory
Nationally new housing starts are up significantly from where they were a year ago. Good news for easing price increases because increased supply usually lowers upward pressure on prices. But Nashville is still growing very rapidly and everybody needs a place to live, so I don’t see a slow down here any time soon. Working with buyers this month, I’m already encountering multiple-offer-madness that I expected to see in the spring.

Mixed news on prices
See above. Prices will continue to rise here, and probably more quickly than state and regional average increases, which seem to be slowing. Good news for sellers. Not so good for buyers – even with those attractive interest rates.
 
Bad News on traffic
Sad to say this, but despite the anticipated completion of the I-440 renovation in August, it ain’t getting better any time soon, folks. It’s likely to get worse. But you already knew this, right? Best to take my approach. Relax and leave earlier. And when everything grinds to a halt ahead of you, breathe deeply and count your blessings. One of which is that we live in Nashville, a lively growing community with a lot of good things to offer. And that would include a good many excellent realtors. 
 
In case you wondered, I’m an excellent realtor. 

Gifts of the Season

It’s the holiday season again. When it seems like maybe everyone has gone crazy – decorating, buying, buying some more, wrapping, toasting, going to parties, going into debt, gaining weight, getting snarled up in mall traffic …
 
I also try to make it a time to slow down and think things through. Look back, look ahead, and be grateful for all that I have. Life’s not perfect – ever. But when I look with an open mind, there is always more to be grateful for than it seems when I’m standing in a long checkout line at Target.
 
This season – indeed all of life – is full of gifts. Here are just a few I’ve been thinking about lately …

Residential Real Estate
Wow! What a great business! What a great job! I get to run around all over this hopping town, looking at houses and condos, working with interesting people – clients, other realtors, developers, designers – helping clients get what they want, where and when they want it. Best job I’ve ever had. What a gift!
 
Boom Town
This town is on fire! What an exciting time to live and work in Nashville! I’ve lived here 43 years, and in that time – especially the last 10 years – I’ve watched Nashville grow from a sleepy, provincial town into a vibrant forward-looking city.  I know – we are all tired of the scooters and pedal taverns. And the tall-skinnies are far too numerous. But does anyone seriously want to go back to our past? Today’s Nashville is a gift.
 
Low Interest Rates
Historically low rates make buying easier for everyone at every budget level. They make my job easier, and my clients – both buyers and sellers – happier because at these rates, deals happen that wouldn’t happen otherwise. Everybody wins. Love these rates! A gift from the marketplace.
 
Robert G.
Robert G. is my Contributor salesman. I wrote about him in my June newsletter this year. I see him most mornings at the Church Street/I-65 exit ramp, and he continues to boost my life with his cheerfulness, positive attitude, gratitude for what he has, and sly humor. He reminds me to be grateful. He is a gift.
 
Everyone Else
Family, friends, clients, fellow realtors, people who read this email. I am surrounded by some of the best people this earth has to offer. Each one is a gift, and I am grateful for all.

So, let’s talk mortgage

As of this morning the rate for a 30-year fixed rate conventional mortgage is 3.75% (APR 3.826). A 15-year fixed rate is 3.25% (APR 3.38). This can vary with specific situations of course, but the general idea is this: money is really cheap these days. Now is a great time to get a loan and buy a house. 
 
That said, not all mortgages are created equal. In fact, they can be very unequal, and there are scenarios you need to avoid.

On-line Lenders
I’ll not mention names here, but I think you can figure it out. The concept: go on-line and get a loan without even having to put on shoes and leave the house. Easy-peasy! Just a few clicks and you’ve got a mortgage! Well, folks, it’s never that easy. There are always issues that need to be ironed out. And when that happens, you need a bit more help than you can get from someone in a cube farm looking at your account on a screen for the very first time. You need a local expert, who knows you, knows the market, and can work creatively to get the job done. I’ve had three experiences with borrowers using on-line lenders. All three were a mess.
 
Big Bank Lenders
Maybe not as scary as the on-line type, maybe, but still … just don’t!  In this case the problem is bureaucracy – death by committee. Too many layers, and not enough accountability vested in one person. Everything happens in slo-mo. Again, a local mortgage company (non-banking) can generally do a better, less expensive job, and can act faster than a bank in the case of a glitch. 
 
So, what to do?
Consult with your realtor – I’d be a good choice! – and get a recommendation for one or more local lenders – someone you can walk in, sit down, and talk to – who work for a mortgage company (not a bank). Mortgage companies are set up to do nothing but make mortgage loans. They’ve got local presence, a ton of expertise, and an absence of bureaucracy. In my experience, they almost always do better – cost-wise and process-wise.
 

Scary Stuff

Buying or selling a house is a big deal. It usually involves fairly intense emotions and it always involves a lot of money. If things don’t go right, it can get really terrifying. A realtor’s job is to be a buffer and take the fear out of the process – handling slowdowns, rough spots, and u-turns that can come up along the path to closing. But it can get scary at times. Even for me.

In honor of the Halloween season, a few examples of things that make real estate transactions scary.  

BOO!

Lousy Lenders
All lenders are not created equal. Beware of on-line lenders and big banks. They can make things scary. When a problem pops up along the way (and something quite often does) or if you have special circumstances, you need focused attention and personal service. On-line you’re at the mercy of someone in a cube farm who has never met you and may be looking at your case for the very first time when you call in. Big bank lenders usually have layers of bureaucracy that can slow things down and screw things up. Decisions are often made by someone other than whom you’ve been dealing with. Stick with a local lender at a mortgage lending company and you can avoid a lot of scary surprises.
 
Non-permitted Repairs
I’m sure we all know someone who’s just great with tools. “Loving hands at home” is a nice concept in theory and sometimes in actual practice. But when it comes to renovations, it’s always best to stick with the pros. One thing pros do is apply for the proper permits to do the work. When I see additions and obvious modifications to a house, I generally advise my buyer clients to check on building permits. If they don’t exist, it might be time to back away and look at another house. Who knows what could be lurking beneath that new siding? Or underneath that added storage room? Or in that electrical panel box … Yikes!
            
Shared Driveways. And other shared things …
Here’s a recipe for conflict: try sharing a driveway with your next-door neighbor. This can work – for decades, even. But if one party doesn’t play by the rules, the arrangement can become a disaster overnight. It’s all fine … until it isn’t. In one situation I know, neighbors sharing a driveway in the Whitland area came to blows and one of them drove stakes down the middle of the drive, preventing either party from using it. This is a major reason reason I generally don’t show attached HPRs. The potential for conflict is absolutely ominous. 
 
Always remember that good realtor will help keep the spooky stuff at bay.

Location, location, location

It’s the oldest real estate cliché there is. The three factors in the price of a house are location, location, and location. That isn’t totally true, of course. Condition has a lot to do with it as well. But …
 
Lately, the old cliché has come back to me. Big time. 

I got my real estate license five years ago in November, and landed in a market that had lost its mind. My first attempt at a deal started on December 26 with a call from a friend who had seen a new For Sale sign that afternoon and wanted the house. I was coming down with the flu and losing my voice, but I helped her write an offer the same day. We didn’t get the deal because there were five other offers within 24 hours. My client offered asking price, but most of the others were higher.

And so it went for several years. If you wanted a house priced under $500,000 you had to be ready to jump into the game immediately. And bring your biggest, boldest offer.

In the past 18 months or so, our market has cooled a bit. Inventory is up a little, prices – or price increases, at least – have eased. And yet …

Right now, I’m working with a couple shopping in the $800,000 range. In the past three months they have lost out in three multiple offer situations. In one, they offered $50,000 above asking and still did not get the house.

Over the same time period, I’ve worked with several buyers whose budgets top out at $350,000 and they’ve had plenty to look at. We’ve made offers and gotten deals.

So, what’s driving this upside down situation? The only thing that matters it seems – location.

My $800K clients are looking close to town, between the Vanderbilt campus and Belle Meade/Green Hills. Inventory is low, demand is high, and things are nuts. My other clients have looked in a variety of neighborhoods, and in most of them the action is a little less intense.

So, what do we learn from this? With location, flexibility is the key to happiness.

I’m sure, sooner rather than later, my $800K clients will be living in their new house and the long, hard search will be fading into memory. It’s a matter of time and patience.

But those with less time and patience will have it easier if they are happy looking in a variety of areas. If you have your sights locked on one specific neighborhood, it’s a pretty good bet others do as well, and the competition is going to be fairly stiff, regardless of the price point.

There are lesser-known neighborhoods all around us, still convenient to town, that offer interesting, livable houses at reasonable prices. Bordeaux, Glencliff, and Madison come to mind.

So, look around with an open mind.

I can help.