One South

Why July Defines One South Realty Group

August 5, 2018 By Rick Jarvis

I will always have a soft spot in my heart for July.

My wife is a July baby.
My oldest daughter was born in July.
5 years ago, in July, we moved from our old office into our brand new renovated office in the Fan.

And ten years ago in July, we should have gone out of business.

Before the Bubble

In case you don’t remember, 2008 was the year everything changed for the real estate market. The economy that began to really gain speed in the early 2000’s still seemed to be robust, and though we were beginning to see some weakness at the upper price points, development was healthy and opportunities were all around us.

In the last half of 2007, we had made the decision to open One South. We saw an opportunity for a more progressive brokerage that had both a residential and commercial aspect to it. Everyone thought we were crazy. Perhaps we were; or perhaps just crazy enough to make it work.

We were actively recruiting, making hires, finalizing logos, and doing all of those tasks that you do when you are opening a company.

We were equal parts optimistic and oblivious.

One South is Born

So on January 2, 2008, we opened the doors and went to work. Our new signs went up on properties, our logo was proudly displayed on Main Street, and the Realtor community was asking ‘Who are these guys and where in the heck did they come from?!’

For the first 6 months of the year, we went gangbusters. We had convinced some really great agents to come over and were making a bigger splash faster than I would ever dreamed possible.

We represented numerous redevelopment projects — The Emrick Flats, The Reserve, Tribeca Brownstones, the Cary Mews, and the Marshall Street Bakery — and had quickly developed a reputation as the go-to city development folks. It was a great position to be in.

And then it happened: we had a purchaser of one of our condo units get their loan denied for no real reason. It was 2008 and the middle of July. And for the first time, I sensed that something was bad was happening and it was bigger than we could imagine.

July of 2008

When you are a Realtor in the spring, you are busy.
When you are a Realtor in the spring trying to sell and recruit, manage, market, hire, and grow, you are really busy. And you are aren’t really paying attention to the nightly news and the reports of rising defaults in the subprime sections of mortgage.

So when, on July 30th of 2008, former President Bush signed the Housing and Economic Recovery Act that gave the Treasury Department the ability to prop up a collapsing banking industry, it was the first inkling that this wasn’t a blip on the radar but rather, a long and cold winter was coming.

For a company as small as ours, with no history and little working capital, we had big problems on our hands.

We Were Lucky, and Good

Maybe it was fate, maybe it was intelligence, or maybe a little of both, but we had aligned ourselves with smart people and smart bankers. We all recognized that we needed to figure out the best way to get our collective exposure down and get the unsold units we were marketing sold and sold fast. And if Fannie Mae and Freddie Mac were not going to make loans, we needed to figure out a way.

We worked together. Price adjustments, creative incentives, some good hard nosed selling, and a dogged determination to succeed got us through and even earned us several new engagements. We developed a bit of a playbook for solving problematic projects (that we still use today) and earned the equivalent of a PhD in mortgage finance.

Slowly but surely, we managed to maintain growth despite a market that lost 30-50% of its value and a Realtor population that dropped by nearly the same amount by the end of 2011.

July of 2013

But by 2012, we could feel the change coming.

Inventory levels were falling. Prices were leveling out. Banks were coming out of receivership.

We decided to double down on ourselves and started looking for our next home. In December of 2012, we were able to secure 2314 W Main Street, the old Kicker’s HQ, known to all for the soccer player murals on the side of the building and construction began.

7 months later, in July of 2013, the renovation was complete and we took possession of a 8,000 SF mixed use industrial chic renovation in Richmond’s Fan District.

It was a proud moment and a testament to how far we had come.

July of 2018

We recently had an event in our space to celebrate One South’s 10th birthday. We invited many of our architect, contractor and developer clients who had allowed us to help them dream and execute their vision through the creation of new housing.

And in doing so, it gave us time to reflect back on what we had done in our first decade:

We opened with 5 agents and 1 staff member. We now are basically 100 agents and staff in two locations.
We sold a little over $20M in real estate in our first year. Last year we sold over $200M in real estate.
When we opened, we had 4 projects we represented. That count now exceeds 30.
Maybe 5% of our business came from the commercial side in 2008. We now have about 35% of our business come from our rapidly growing commercial team, including two $20M+ sales this year.
And finally, we have been named in Richmond Biz Sense’s RVA 25 for the past two consecutive years as one of Richmond’s fastest growing firms (the only real estate brokerage to make it back to back!)

July of 2028

So as we prepare for fall of 2018 (is it really August already?) and continue to fight the inventory shortage, we are full steam ahead.

We continue to work on creating a better experience for our clients and our agents, and to grow our own knowledge and capabilities. The real estate market is ever changing and the minute you think you have it figured out, you find yourself playing catch up.

We can’t wait to write the July update in 2028.

Rates are Rising – Here’s What it Means

March 28, 2018 By Rick Jarvis

Jarvis Grandchildren: ‘Grandpa, please tell us a story about the way real estate used to be!’

Grandpa Jarvis: ‘Let me tell you a story about 3.5% 30 year fixed mortgage rates …’

Jarvis Grandchildren: ‘Ooooooooo, 3.5% 30 year fixed mortgage rates?!?’

Grandpa Jarvis: ‘Yep. 3.5%. Some people even got 2.9%.’

Rates are Headed Up – For Good

As I write this in the spring of 2018, the recent job report states that the economy not only added 200,000 jobs, but wages rose at their fastest rate in 8 years.

And just so you realize:

Low unemployment tends to lead to wage increases
Wage increases tend to lead to more disposable income
More disposable income tends to lead to more money to spend
More money to spend tends to lead to inflation
Inflation tends to lead to higher long term mortgage rates

Take a look at the correlation:

As you can see, even as the unemployment rate (the blue line) began to fall in the years following the collapse, wages (red line) didn’t really begin to trend upwards until the latter part of 2015, and even then, only negligibly. The most recent jobs report indicates that wages are starting to rise, a trend that is predicted to continue for some time.

So What Does it Mean for Housing?

Not much … yet. And as a matter of a fact, I am not unhappy to see the rise happening.

Why? Because it means the economy is healthy and people see positive things on the horizon. Trust me, I would rather be in a world with healthy economies and 6 to 7% long term rates than one teetering on the brink of collapse with 3.5% rates.

As we discussed in our 2018 Predictions only a few months back, we predicted a rate rise in 2018 and went into some detail about the implications. Effectively, if we are all making more money, then a slight rise in the cost of borrowing is not something that will cause the market to collapse. And furthermore, as long as credit standards remain reasonable (and consistent) then the risk of a ‘2008, The Sequel’ is quite low.

Home Prices Will Still Rise

Expect housing values to continue to rise, especially urban and affordable, due to a complete, thorough, absolute, and total lack of inventory. As the millennial generation begins to exit their downtown rentals and enter the buying market, affordable urban markets will continue to be starved for inventory.

Expect some of the upper end suburban markets to see slowing price gains due to the fact that homebuilding is finally cranked up again, mitigating some of this inventory shortage.

Think ‘Strategic Finance’

Remember, it is the long term rates that are the ones that have more room to rise. The 3, 5, and 7 year adjustable rate mortgages will still give buyers options a point or two below the long term rates, offsetting any rate increases.

But that said, it is time to get a little more strategic about how you finance your home. Gone are the days of just taking a 30 year mortgage at 3.5% simply because it is a no-brainer to do so. Thinking long and hard about how long you expect to stay in the home will become a key ingredient to making the correct mortgage decision.

But it does feel like we have come to the end of an economic era – the end of the 4% 30 year mortgage. And while I will be a little sad to see it go, it indicates much better times are on the horizon.

Buy a House, Pay for College

February 4, 2018 By Rick Jarvis

Several years ago, we wrote a blog about buying a small house or condo for your child attending VCU. That article has always been popular and carried significant traffic on the web.

And Now… We Have a VCU Student!

Since the first article is now a bit outdated and we’re currently in the works of purchasing a home for our own child headed to VCU, we think now is the perfect time to take a deeper look at the concept.

First, lets look at some pricing statistics for the past several years.

For the City of Richmond as a whole, pricing has gone up by over $63,000 in 5 years. For the areas immediately surrounding VCU, the number is a mere $55,000. Depending on which statistic you choose to measure, the annualized rate of appreciation is anywhere from 4.7% to a high of 7.8%.

Here’s Some Context:

The cost of a VCU dorm in 2018 is $7,200
Per our rental managers, the average cost of rent is anywhere from $600-700 per bedroom in a standard house.
- If they rent a 1 bedroom studio apartment, the number rises closer to $1,100-1,200.
Comparable sales suggest pricing to be roughly $300,000 to $350,000
- 2219 Parkwood Avenue (pictured) sold in 2 days.
- The 3 bedroom/2 bath home was 1872 SF and priced at $325,000
- It is roughly 12 blocks from the Monroe Park Campus

The Numbers

So using the scenario above, you could:

Purchase the home for $325,000 and sell it 4 years later for:
- $380,000, given only a 4% annual appreciation rate (+$55k)
- $395,000, given a 5% annual appreciation rate (+$70k)
- $410,000, given a 6% annual appreciation rate (+$85k)
Instead of paying $7,200 in rooming costs to VCU, you received $1,300 in rent per month from two roommates
Paid down your mortgage balance by roughly $20,000

(As a small disclaimer: The past does not guarantee what the future will look like and the type of loan you choose and interest rate you receive will impact how quickly you pay down the mortgage balance.)

Loan Possibilities

Though there are some navigable hurdles, you can co-sign for your child and use a Maximum FHA loan that requires a very low down payment. There are also loan programs for non-owner occupied co-borrowers for less than 20% down. And finally, there are investor loans that allow you to purchase without requiring 20% down.

So all that said, you have options and not all of them require substantial amounts of cash.

So depending on what loan type you choose, we can help you find an originator who knows the market for investor and co-borrower loans.

But Aren’t Prices Going to Stop Rising?

Maybe if we solve the inventory problem or everyone decides to leave the city.

To solve the inventory issue, all we have to do is figure out how to build another, say, 3,000 or so houses per year around VCU (which if you aren’t detecting my sarcasm, is near impossible). Take a look at the chart below to get a sense of how incredible the inventory issue is in the City of Richmond.

And take a look at what the population of Richmond is doing:

So what we have is a really unique scenario: The rapid rise in prices is not due exclusively to a overabundance of risky buyers (a la 2008), but from a constrained supply of housing, especially in the urban neighborhoods, and a growth in population at a rate not seen in 50+ years.

Affordable and urban are the two safest and most recession proof segments of the market, by far.

So What is Available?

As much safety as the supply crunch offers, it does pose a buying challenge, and that is precisely why you need a good agent to help you.

Generally speaking, buying a home in an affordable urban segment requires immediate action when a target arises and a few contractual additions that will increase the likelihood of it being accepted (we can chat in more details about how we structure competitive contracts and how we tend to win more than we lose – we don’t want to publish all of our tricks for the world to see!)

Here is a list of the neighborhoods that surround the VCU campus and currently available housing:

Summary

Imagine sending your child to college, and then offering them a home as a gift to get their life started, or selling the home and paying off half or more of their college costs. Yes, there is risk in purchasing a home – stuff breaks, prices do sometimes go down, roommates might break a lease – but with all of the potential upside, the risks are minimal.

We are in the process right now of doing so ourselves… What could be a better endorsement than that??

As someone who has been known to spend some time on the fairways and in the bunkers of RVA’s golf scene (doing market research, of course…) I have a good feel for the courses, the clubs and the real estate that many times surrounds them. I have been lucky enough to play every private course in the area enough times (and most of the public ones, as well) that I feel qualified to give the Realtor/golfer perspective (if there is such a thing) on the courses and the relative strengths and weaknesses.

[ Homes for Sale on golf courses can be found here ]

Climate

RVA, from a golf climate standpoint, is on a bit of a cut line that makes it tough to have one turf carry the course through the entire playing season. The majority of courses in Richmond have bent grass greens (few Bermuda greens) and Bermuda fairways. Sometimes, Bermuda fairways are “over-seeded” with rye grass during the early spring to increase playability until the Bermuda comes out of dormancy typically in mid-May. While I have played rounds in both January and February, it is more an exception than the rule … so expect a 9.5 to 10 month playable season.

Several of the upper end (and newer courses) have opted for bent grass fairways (in lieu of the typical Bermuda). This provides a wonderful surface for playing and it can be maintained all year long but at greater expense than the Bermuda based courses. Generally speaking, the courses in Richmond can be managed to be EITEHR at their peak during the cooler spring and fall (bent grass) OR during the summer (Bermuda grass.)

The Courses

Kinloch (Goochland County)

For the most part, Kinloch (Goochland) is considered the best RVA (and arguably, the State) has to offer. It boasts PGA tournament level conditions, world class customer service and one of the best clubhouses in the area. It also boasts a fabulous practice facility and 19 holes (yes, 19) but offers nothing other than golf for its members.

It is one of two courses in Richmond that features the caddy system. Kinloch is a newer course so the design features (Lester George, architect) were more sculpted than many of Richmond’s courses built in the 1950’s to the 1970’s (the era when most of Richmond’s private courses were built.) A few homes border the course, but not many, and they are highly custom.

The neighborhood also features coach homes targeting empty-nesters.

County Club of Virginia (City of Richmond and River Road Corridor in Henrico)

As the name would suggest, is one of the oldest and wealthiest clubs in RVA. It offers three courses, The River Course (which hosts high level State tournaments and is generally considered the best of the three), The Westhampton Course (which was recently renovated) and Tuckahoe Creek.

The Westhampton course abuts the University of Richmond and is visible from Cary Street making it well known throughout the City. CCV’s courses are classically designed and the CCV facilities are quite substantial. CCV boasts exceptional facilities for dining, tennis, fitness or events in addition to 3 courses. There is not any real housing development surrounding these courses (the courses are all older) but there are houses that do border the course and availability varies.

Salisbury (Midlothian) and Hermitage (Goochland)

While these clubs exist on different sides of the River, they are similar in many ways in that they represent mature clubs with substantial facilities that serve more than just the golfing member. Both Salisbury and Hermitage offer more than 18 holes (27 and 36, respectively) and the courses are similar in age and course design (with the exception of the newest 9 at Salisbury) and both have houses that surround the courses (but not on the level of many golf course developments). The clubhouses are similarly scaled and offer all of the typical country club services with dining, tennis, swim and fitness. Hermitage is also known for its racket facilities and hosts numerous tennis tournaments throughout the year.

Both courses were designed in such a way that they have the length to handle the changes in technology that have harmed many older courses and thus can still handle RGA and VSGA tournaments.

The Federal Club (Western Hanover)

Opened in 2008 just as the market turned (down, in case you didn’t get the memo,) The Federal Club opened to great fanfare but whose success was stunted by the plunge of the economy and real estate market, upon which much of its business model was dependent. After being acquired by the lender and subsequently sold to a local family, The Fed is back on track with new members and capital improvements being added at a rapid pace.

The course winds through the upscale Mountain Run neighborhood in Western Hanover county.

Designed by Arnold Palmer’s best architects and shaped by the crew that remade the K Club in Ireland for the Ryder Cup, the course is arguably the best test of golf in Richmond. The Signature Tournament, held each year in May, attracts some of the best players in the State, including many elite collegiate players.

The Federal Club is entirely bent grass and is one of the only courses in RVA to feature bent grass fairways AND greens making it an unique golfing experience.

The Dominion Club (Glen Allen)

Built in the later 1980’s as the centerpiece of the Wyndham Subdivision developed by Snyder-Hunt (now HH Hunt) near 295 and Nuckols Road. Wyndham/TDC did an excellent job of really making the golf course and clubhouse a signature of the development. Anyone who has played the course, knows the striking roofline of the clubhouse and the 9th and 18th greens reflecting off the lake as you turn the corner on Dominion Club Drive.

TDC is a solid golf course. It would be considered a modern course in that there was a large degree of shaping and strategic bunkering and played host to a Nike Tour/Buy.com tournament for many years. The tournament’s signature moment was Notah Begay shooting 59.

The clubhouse is excellent and the pool and tennis facilities are also very strong. TDC also boasts one of the largest memberships in the area despite some recent developer/club issues relating to ownership of the land the course is built upon.

Richmond CC (Goochland/Henrico Border along Paterson Avenue)

Richmond country Club, located along the border of Henrico and Goochland, provides a unique test of golf in that it has narrow tree lined holes that force controlled shots into tight landing areas. It is a full service club with pool, tennis and dining but does not have the same scale of clubhouse as CCV or Hermitage.

The Foundry (Powhatan)

When first opened in the early 1990’s, The Foundry was a unique concept to Richmond in that it was golf only (no tennis or swim), with caddies required, and a level of service that was not found in the RVA golf market. Kinloch now offers the same ‘top end’ service/golf only model. The course is generally in excellent condition and the entry features and clubhouse are some of the most memorable and striking in Richmond.

Even though the course is a little off the beaten path, the Foundry offers a great experience.

Stonehenge (Midlothian) and Brandermill (Midlothian/Chesterfield)

Both courses were built towards the end of the 1970’s and are modeled similarly as clubs that cater to a surrounding neighborhood. Both Stonehenge and Brandermill are larger subdivisions that surround their courses. Brandermill would be considered to be the more hilly and narrow of the two with a higher density of houses that abut the course. Brandermill also borders The Swift Creek Reservoir along several holes giving that section of the course a little extra visual ‘umph.’

Stonehenge has redesigned a few holes since its inception and hosted a Buy.com tournament mid-2000’s. It is the longer of the two courses and while built before course architects moved as much earth as they do today, Stonehenge, still offers many unique holes.

Both clubs offer pretty solid amenity mix with a nice pool complex, tennis and dining facilities.

Willow Oaks (City of Richmond/Forest Hill Avenue)

Visible from the Powwhite Parkway bridge, Willow Oaks is a classically designed golf course with several holes that wind along a very scenic section of the James (don’t pull it left on number 5….) Many a golfer has taken a glance to their right as they cross the bridge on a sunny day and wished that they were in the midst of a round instead of on their way to an appointment. Willow Oaks has hosted the State Open on numerous occasions and its Fall Invitation attracts a quality field from all over the Mid-Atlantic.

The Willow Oaks facilities are excellent (especially the racket facilities) and anyone who has ever attended a wedding or event there invariably ends up on the rear patio overlooking the 9th and 18th greens to watching golfers finish up their 9’s.

Its convenient location make it accessible from much of Richmond.

Lakeside and Hanover (Lakeside area and Ashland)

Lakeside and Hanvoer are considered to be two of the more value oriented courses in the RVA Metro. Built in more tightly constrained areas, the courses rely on sharp doglegs, small and fast greens and narrow fairways to provide the teeth that their lack of length does not. Hanover CC has the superior facilities with a small driving range and larger club house.

Lakeside is accessible from everywhere so it makes it easy to sneak away for a quick 18 without being discovered (unless your boss is on the course, too). Both courses play quickly so a round there is not a full day commitment.

Lakeside renovated their greens and expected to during 2012. Hanover underwent a renovation in 2008 so the course should not be in need of any major upgrade (think ‘assessment’) for the foreseeable future.

Meadowbrook (South Side/Jeff Davis Highway)

Built in the late 1950’s as a club to service the burgeoning industrial presence that DuPont and Philip Morris’ were bringing to the area, Meadowbrook boasts a value oriented course, strong membership and solid test of golf. As with may courses built in the era before technology changed the length required for a championship course, Meadowbrook relies on tight fairways (#2 feels as narrow as a bowling lane) and some of the smallest greens in the area (#18 is the size of my closet) to create an excellent test of golf. With a relatively flat setting, it is also an excellent course to walk.

Upscale Public Courses/Semi Private Courses

The Independence Golf Club, located off Winterfield Road along the Powhatan/Chesterfield border, was originally built to house the Virginia State Golf Association. It recently changed hands to private ownership and switched from cool season grasses to bermuda greens. Independence is built within the Founder’s Bridge neighborhood and along with a championship 18 hole layout, has probably the best practice facilities in the region for a public course.

A 9 hole executive course is also on the Independence property.

Magnolia Green Golf Course is located within the large planned community of (you guessed it) Magnolia Green. The club is currently semi-private.

Chesdin Landing is located within the large planned community of (you guessed it again) Chesdin Landing.

StoneHouse, Vinitarra, Brickshire and Royal New Kent are located east of town in New Kent County and within a few minutes of one another. Three of these courses (Royal New Kent, Stonehouse and Brickshire) are owned by the Traditions group and membership in one allows play at all three. For many in both Richmond and Williamsburg, membership in these courses is a great and affordable option for those who want the benefits of club membership at a lower monthly obligation.