New Construction in New Haven

Around the country, there are locations with much more raw land--and therefore much more new construction--than in our region.  However, we have just listed a new condominium complex on the harbor in New Haven, and we are experiencing some of the excitement that accompanies new projects in this improving real estate market.

There are 31 units listed, and 8 went on reservation as of the first weekend!  Visitors to the complex, called Breakwater Bay, were blown away by the water views and expansive space of the units, which range in size from 1870 sf to 1915 square feet.  All have luxurious fixtures and detailing, and the response has been so good that prices on later reservations have already risen.

New construction tells us a lot about the state of the market, since older homes can usually be gotten for less.  The confidence to buy new shows that buyers believe that prices will rise.  It's really nice to have that feeling again after much too long!

Rates Are Creeping Up

Here's a shout out to all those buyers out there who are waiting to be sure that real estate prices have hit bottom:  You may succeed in buying when prices have passed the bottom, but you may lose on rates.  Although the Fed has signaled that it won't be raising its rates any time soon, the mortgage rates are more creatures of supply and demand, as well as bank appetites for new loans.  Rates also tend to follow a seasonal pattern--lowest at election time (what a surprise!), and higher in the busiest spring buying season).

 I get rates sent to me on a weekly basis, and it's clear that they are headed up.  If you have waited this long to buy, don't make the mistake of continuing to wait.  They may go back down in the fall, but, by then, prices will have risen.  Buyers have increasingly begun to think of the cost of housing as the cost of the monthly payment, since that matters far more to them than the actual price of the home at any given time.  Not only are mortgage rates heading higher, but insurance and taxes have risen in most places as well.  Buy now, or regret it later!

Learning from Ebay

I'm not an Ebay person, but I have lots of friends who are, and I've certainly read enough about the philosophy to get the idea.  You go on looking for something, and then you watch the bidding over a period of time.  In the end, if you want to get something, you pay the price that it takes to get it.  If you can't stand watching others bid, you take the "Buy It Now" option.

There's a real estate theory along the same lines.  When a house is listed, potential buyers look, and note the price.  They often sit back and watch the action, sometimes bidding, but often waiting.  If they really, really want just that house, they will go in early and strong, and close the deal.  If not, they wait and see.  At the end of their search, if that's the house they want, they need to outbid others to get it.

The idea is that things will sell, in most cases, for what they're worth.  There may be times when sellers get lucky, or buyers do, because of circumstances not created by them, but by the other party.  Most of the time, property goes for its fair value, because bidders will eventually come in and pay what they know it's worth. The moral?  It's not the listing price, it's the inherent value.  Put your property on low, and let buyers bid it up.  Just as in Ebay, if you can create a feeding frenzy, you will get more, and much more quickly, than if you list it too high.

First-time Buyers

There are lots of first-time buyers in the market now, and they are driving the action.  It's clear that it's harder to get a mortgage now than it was when those of us who are older bought our first homes, and the qualification standards are stiffer, even though rates are lower.

Because they are buying for the first time, they are often more hesitant to buy in situations where they might not feel comfortable.  Therefore, they often request more in the way of repairs, tests, and allowances for improvements.  In addition, having buyers ask for contributions to closing costs is a trend that we have seen in increasing numbers.  Sellers should not be insulted, since first-time buyers have no history, so no way of knowing that such a proposition might seem aggressive.

Since beginning buyers often look at more options, open houses have been very popular.  There may also be more repeat showings, with relatives and friends coming to weigh in on the potential purchase.  The closing can take longer as well, since documentation requests may be unfamiliar and take more time to fulfill.

Whatever the downsides, there is a great upside:  They are very motivated to buy and own their own homes, and they are out there!