What’s Causing the Current Housing Market Uptick?

It seemed for some years that Connecticut, alone among almost all the states, would never see the benefits of a better residential real estate market.  While recovery is spotty, both in terms of price and number of units, there has definitely been a feeling of optimism all year.  Despite a bitter winter, sales began early and continued strong.  Despite talk of fiscal woes, and estate taxes especially, in Connecticut, people were looking.  And, despite the recent Federal tax act, with its threat of limiting property tax deductions for blue states, they are buying.

The strongest correlation between the housing market and the economy has always been, for us, the consumer confidence index.  When people feel bullish about the future, the real estate sector gets stronger.  Consumer confidence has jumped this year, and we can tell.  Even though many uncertainties exist for taxpayers, employers and employees, and all Americans, homeowners and would-be homeowners are apparently responding to a few clear points:  We can see upward pressure on wages, in part because unemployment is low; interest rates, although there has been some movement, remain very favorable, and mortgage availability has eased in some areas; and, perhaps most importantly, the stock market has created a great deal of new wealth, and many stockholders think that they should cash out, at least partially, while their gains are still high, and that money has to go somewhere.  Real estate, with its versatility of use (investment, vacation, or primary residence), its tangibility, its prominent place in the defining of the American dream, and its centrality in life passages and aspirations, fits the that bill for many.

Don’t think that real estate professionals are crying wolf when we urge fiscal prudence in State and local spending, or when we call for repeal of onerous provisions in Connecticut’s estate tax, because the tide could turn again, if consumers once again switch to pessimism about the future.  For now, though, it appears that buyers are planning to “seize the day” and diversify into property.  And that’s good news for sellers, and all of us.