Friday, October 21, 2016

Flash Sale on Homes

The phenomenon of the flash sale is relatively new, but the concept is not--it's a sale promoted quickly, and without much warning, designed to create a sense of urgency, as it will only last a limited time.  Well, that happens every year in real estate!  Every year, I remind buyers that the best time to buy a home is between Halloween and Thanksgiving.  Sellers are thinking about heating and snowplowing through the winter, and both buyers and sellers want to start off the new year with a major financial transaction finished. 

In addition to the time of year, buyers should be motivated by the fact that interest rates are usually at their lowest point right around Election Day, and this is especially true in a presidential election year.  Whether it's uncertainty on the part of some, or a subconscious desire to help the party in power make the economy look good, the end result is the same--savings that will last every month for the life of the mortgage.

In New England, it's also a time of year before ice and snow make showings and open houses difficult, as well as a breather before the holiday rush sets in.  For all these reasons and more, it's the best time of year to buy.  And it doesn't last long.  So let's call it a flash sale, and let the buying begin!

Tuesday, October 11, 2016

Ireland is a Lot Like Connecticut

We got back late last night from a lightning trip to Ireland, on the new flight from Bradley that leaves every evening.  It was great!  We had a guide to take us around the Ring of Kerry, and, as we watched the beautiful countryside pass by, he told us that properties there were still way below what they were going for before the Great Recession.  In fact, he wasn't sure that some of the waterfront homes would ever sell for what they were worth ten years ago.

When we got to Dublin, though, it was another story.  It's hard to find housing there, and costs are high, especially so in new neighborhoods near the economic center, like the Docklands.  Rents are expensive and there are lots of students looking for housing.  Properties out in the far suburbs, on the other hand, are underwater, and owners there cannot move in closer, because they owe more than they can sell for at this time. 

So, the center city is doing well, rental housing is booming, second homes have taken a big hit (and Brexit is likely to make that hit greater), and homes not in the right place aren't selling.  Sound familiar?

Connecticut, like Ireland, had a big boom in the early 2000s, and prices went way up.  People moved farther away from cities to find affordable homes and second homes, and borrowed way too much.   Now we have low supply at the lower end and in rentals, with a very large supply at the very upper end.  The biggest cities, though (New York and Boston for us) have fully recovered in most categories. 

Ireland is banking on tourism to improve things further, but new companies are moving in and expanding.  Jobs will get them out of their problems, and Connecticut needs to work on finding the same solution.

Monday, October 3, 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 Hamden you can say “If market conditions do not change and if no new listings come on the market it will take 6.9 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.”

Wednesday, September 28, 2016

Report from NYC

Once again, I've met with colleagues from around the country, this time in New York City.  That market is much softer than in the past few years, especially at the upper end (although their upper end is so high that we can't even imagine sales at those prices!).  In fact, the upper end everywhere, whatever that means in a particular market, has slowed down considerably.  Supply exceeds demand, and is often over a year or more in quantity; here, that supply is much higher.  In Middlesex and New Haven counties, 5 homes over $2 million had sold by July, and there were 87 active listings in that price range on the market.  Just do the math.

On the lower end of price ranges, almost every company reported that sales were being affected by lack of inventory.  In some places, that meant that the supply of homes could be measured in days.  Again, we have more supply in our market, but even we feel that there are not enough homes in very good condition and under $300,000 in some places.

When you go to a meeting that has national representation, you can really see how far behind Connecticut lags, in almost every category--job growth, population, birth rate, home prices, and home sales.  We need to get our act together, and sooner rather than later.  Having said that, NYC is not the boom town of the past few years, and agents there complained that sellers wanted last year's prices, while buyers wanted next year's prices.  That's food for thought for sellers here, as well.

Wednesday, September 14, 2016

Showings and Sales

One of our colleagues has determined a linear relationship between showings in the first week of a listing, and eventual sales price.  While we all know that overpriced listings eventually sell for less than properties priced "correctly", we know now that you can tell that right away, by the interest at the very start of the listing period.  When a listing goes live, it needs to start having showings right away, in order to be statistically likely to sell quickly and at a good price.  If people notified or searching see something that they believe is uncompetitive, relative to other listings that they've seen, they won't rush to see it.  And it won't sell for as much, then or ever.  So pay lots of attention to what you list your property at, and be very wary of the argument that "it's worth trying it first, at the higher price".  You may regret it later.