The Chairwoman of the Federal Reserve has been making serious noises about raising the cost of funds, and causing interest rates to rise at long last. Although the timing is not certain, it does seem clear that rising rates should start by the middle of this year. Obviously, that is big news for real estate, since mortgage rates direct affect sales of properties; as the cost of monthly ownership goes up, people can afford to pay less for the home or building, and the number of people who can qualify at all goes down. Clearly, although there are broad signs of economic improvement across most of the country, the Fed is worried about disturbing the fragile real estate recovery, and rightly so. However, rates have been so low for so long that there seems to be no other alternative, so the question is simply when it will happen.
The funny thing about the effect of rising mortgage rates on real estate is that buyers don't seem to be spurred by talk of rising rates. Until rates actually go up--then they rush to act. Therefore, in a way, rates going up will help us, since our problem locally is that languishing prices have caused buyers to hesitate and dither, since they don't seem to be worried that anything they are considering will get sold while they are on hold. Once they see the consequences of having waited, they begin to feel some urgency. And that causes bidding wars, competition, and, ultimately, rising prices. The buyers then face a double whammy, of rising mortgage costs and increased sales prices. So why don't they act before this begins to happen? Only specialists in consumer behavior know!
Tuesday, January 27, 2015
Wednesday, January 21, 2015
2013 vs. 2014 New Haven & Shoreline County Statistics
Click on the link below to view a report on the market change in real estate between 2013 and 2014. Page one of the report has single-family residential home data, while page two consists of condominium data.
Monday, January 19, 2015
Why National Forecasts Don't Always Help Local Sellers and Buyers
It can be very difficult to tell what the market for your own property or potential property might be, if you are reading national news about real estate and the economy. When you turn to the local news, it can be jarring, to say the least. Even within a market area, one part or one town can be outperforming or underperforming the others. What can I tell you? It confuses us also.
For the past 25 years, the Connecticut market has not matched the national market more often than not. However, there are two Connecticut markets--all of Connecticut, which includes Fairfield County, which is heavily influenced by metro NYC; and the "real" Connecticut, which is the rest of the state. Of the top 100 metro markets in the country, only 4 have declined in prices in the past 12 months, and two are here: Hartford and New Haven. You may read statistics that don't mirror what you are seeing only in your area, because Fairfield prices did not decline, and this year's Wall Street performance meant that serious money was available to throw at real estate in that region. The state as a whole was 50th out of 50 states and the District of Columbia in price appreciation (we beat Mississippi) for the prior year, but the entire state was positive for price growth, albeit slightly.
Although mortgage rates, which have a big influence on prices, are largely national, energy prices vary, because of tax rates, and tax rates vary a lot. In addition, we have tax policies here (especially our estate tax and our highly inclusive income tax) which put us at a disadvantage to other states, when people are choosing. Property taxes directly affect real estate prices, and we are more dependent upon them than are some other states.
Another factor is our legal system, requiring court involvement in foreclosures. Connecticut is not alone in being like this, but the states that have lengthy legal foreclosure processes are lagging behind in price appreciation, because those properties have not yet all turned over, and that is holding prices down. There can be real differences between average prices counting foreclosed properties and short sales, and those which only measure MLS sales, for instance.
Is there an upside, you might ask? In addition to the recent news that Greater New Haven will be the first part of the state to regain all the jobs lost in the recessions (another factor in the state's lagging performance), there is the obvious: Since we haven't seen the rise in prices yet, or the end of short sales and foreclosures, the big bump up that is likely to come is still ahead of us. That means that, if you are buying now, you will be buying somewhere else at likely a higher price point than you will be buying in Connecticut. Unless you believe that there will be permanent stagnation in prices here, and we know that all markets in the past have been cyclical, the next part of our cycle is statistically likely to outperform the areas that have already recovered fully.
You are not alone if all of this seems confusing, or complicated. The advice for sellers is to be cautious, and not be greedy about asking price. And, at the end of the day, if you live here, and you like it here, lifestyle would suggest that you should buy. And soon, before rates rise.
For the past 25 years, the Connecticut market has not matched the national market more often than not. However, there are two Connecticut markets--all of Connecticut, which includes Fairfield County, which is heavily influenced by metro NYC; and the "real" Connecticut, which is the rest of the state. Of the top 100 metro markets in the country, only 4 have declined in prices in the past 12 months, and two are here: Hartford and New Haven. You may read statistics that don't mirror what you are seeing only in your area, because Fairfield prices did not decline, and this year's Wall Street performance meant that serious money was available to throw at real estate in that region. The state as a whole was 50th out of 50 states and the District of Columbia in price appreciation (we beat Mississippi) for the prior year, but the entire state was positive for price growth, albeit slightly.
Although mortgage rates, which have a big influence on prices, are largely national, energy prices vary, because of tax rates, and tax rates vary a lot. In addition, we have tax policies here (especially our estate tax and our highly inclusive income tax) which put us at a disadvantage to other states, when people are choosing. Property taxes directly affect real estate prices, and we are more dependent upon them than are some other states.
Another factor is our legal system, requiring court involvement in foreclosures. Connecticut is not alone in being like this, but the states that have lengthy legal foreclosure processes are lagging behind in price appreciation, because those properties have not yet all turned over, and that is holding prices down. There can be real differences between average prices counting foreclosed properties and short sales, and those which only measure MLS sales, for instance.
Is there an upside, you might ask? In addition to the recent news that Greater New Haven will be the first part of the state to regain all the jobs lost in the recessions (another factor in the state's lagging performance), there is the obvious: Since we haven't seen the rise in prices yet, or the end of short sales and foreclosures, the big bump up that is likely to come is still ahead of us. That means that, if you are buying now, you will be buying somewhere else at likely a higher price point than you will be buying in Connecticut. Unless you believe that there will be permanent stagnation in prices here, and we know that all markets in the past have been cyclical, the next part of our cycle is statistically likely to outperform the areas that have already recovered fully.
You are not alone if all of this seems confusing, or complicated. The advice for sellers is to be cautious, and not be greedy about asking price. And, at the end of the day, if you live here, and you like it here, lifestyle would suggest that you should buy. And soon, before rates rise.
Wednesday, January 7, 2015
Have Buyers, Need Listings
OK, so we officially don't know when the hot times in our market start and stop. We had a slow (weather-related) winter last year, a very late spring, then a roaring summer, which screeched to an abrupt halt in August, and never returned. Now we are seeing big increases in buyer traffic to our sites, and people looking for houses that aren't yet on the market, even though it's freezing cold and it snowed yesterday. So the market is different year by year, and can only be predicted in arrears.
The real takeaway here is that buyers are out now--in early January--and we have little or nothing to show them. Sellers, here is your chance! If your home is well-maintained and well-priced, you might get your best results by listing right now. There's no need to wait until spring, when more competition gets listed, especially since Yale and Yale-New Haven Hospital make their employment offers before spring even starts. Why wait? Get a jump on your 2015 goals, and call us today!
Monday, January 5, 2015
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