Counting Down (or Up) to June 2006 Levels

Although the real estate market everywhere is on the mend, we in Connecticut are proceeding toward normal at a slower pace.  The high for prices in our region occurred in June 2006.  At last report, our median sales price was still 23% below that peak.  Since most of the country is within sight of their previous high, people in our area are among the lucky few who can continue to buy at lower prices.  Even if you are selling, those who are trading up would gain more from buying at those levels than they would lose from selling at current prices.  When you combine the present cost of mortgages with the sales figures, it remains a great time to buy.

And there's even one more factor in include, which improves even further the current climate, and that's the state of the Greater New Haven rental market.  We have the lowest vacancy rate in the country right now, and that tilts the equation even more toward the buying side.  Rental rates have gone up 50% in the period where sales prices have declined 23%, making us one of the clearest examples across the United States of a place where rent vs.buy decisions are so stark.  So don't kick yourself later.  Do it now--buy that property!

Greater New Haven Regional Update

Click here to view presentation

Multiple Offers are Back

When your office meeting discussion involves how to manage an "escalation clause"(with difficulty), and whether a verbal acceptance of an offer counts (probably not), you know that at least some portion of the market has turned.  According to agents, this is particularly true in the higher end of the market, especially in higher-priced suburbs and in East Rock.  Although, as I have previously written, there is still inventory on paper, much of what exists has been around for a long time and may not be ideal.  Therefore, what new listings there are many be highly sought after.  One of our new East Rock listings had well over 20 people at the first open house, with some coming back for a second look.

This level of interest, combined with the issue of competing offers, argues for a quick decision, with offers written as soon as possible.  The best way to get a house under these conditions is to try to lock it up quickly.  Rather than have the problem of a contract agreed to but not signed, better to have sewn it up first, before another offer came in. Buyers can help this process along by being prequalified, or, better yet, preapproved, and knowing what their financial and psychological limits are in advance.

P.S.  An escalation clause is an addendum that says, in some form, that you will match or exceed any offer by x amount, up to a cap of y amount.  There are many issues raised by this, often revolving around proof of the offer you have agreed to exceed; there is even the question as to whether such an offer even meets the requirements of specificity called for in a legal contract.  Nonetheless, they are out there, and being used.

Absorption Rates