Monday, August 15, 2016

Repairs and Upgrades

Summer is often the time when people undertake home improvement projects, DIY or otherwise.  Over the weekend, I had a friend ask me to visit the house her daughter bought last year, to see what I thought the value of the upgrades would be.  In addition, at my own house, we are in the middle of what I'm calling The Big Repair, where workmen seem to be there every day, and all the things that were new 22 years ago, or new with our "new" kitchen 15 years ago, are starting to fray, break, or wear out. 

When I talk to my friends, or my husband, I basically say that homeowners should do what they want, what they can afford, and what they need, without expecting too much in the way of a monetary return.  If something gives you joy every day (see Spark Joy for more on this concept), then why not go for it?  Very few projects raise the market value in the amount that they cost, and most are simply to keep the property current.  Some additions and changes are quirky enough, due to the taste or needs of the owner, that they add nothing, or possibly even subtract value. 

But does that mean that The Big Repair should stop?  No way!  You live in your home, and anything that you would have to do to sell it, you may as well do now, so as to reap the benefits from it.  Anything that you don't need to do, but that you want and will use (think pool, porch, garden pergola, fire pit as examples) and you can afford, are no different than what you might spend on a vacation.  And why not have as much fun at home as you could somewhere else??

Tuesday, August 2, 2016

Current Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Milford you can say “If market conditions do not change and if no new listings come on the market it will take 6.4 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5 - 7 months.”

Friday, July 22, 2016

Rental Rates Reach the Sky in New Haven

A recent article announced that the penthouse apartment in the old Union Trust building has just rented for $6200 per month, a new record as far as we know.  There have also been very high reported numbers for smaller apartments in other buildings.  New Haven is becoming full of luxury apartments, and the parade doesn't look as though it's ending any time soon.  Several more projects have just come on the market, or are on the drawing board.

Despite the increase in supply, New Haven shows up on lists of places where buying is cheaper than renting, because rental rates have gone up at least 50% over the past ten years, while house purchase prices have declined over the same period.  If you include the effect of the current low interest rates, it's really a bargain to buy here.  We are at the top of rental market boom towns, and at the bottom of recent home price appreciation areas.

Of course, buying makes more sense if housing prices stop declining, and there are signs that that is happening.  The signs that Realtors see include lower listing inventories and multiple offers on newly-listed properties.  Over time, we are also beginnnig to see year over year appreciation in certain towns and categories, and problems with purchases "appraising out".  This is an industry term that means that accepted offers are coming in higher than appraisers think fair market value is (always an indicator that prices are rising, since appraisals, which compare recent sales to pending contracts, obviously lag the market when it is rising--if prices were declining, recent sales would be higher, and everything would appraise for more than the contracted price).

If you take these two factors together--rising rents and an improving market for sales--and you throw in mortgage rates as they are today, it seems that any rational person would choose to buy right now, unless they were only going to be here for a short time, unless they didn't have a down payment or a good credit score.  But the bargains will only last for so long, so act quickly!