Real Estate Advice for Connecticut from Around the Country

I've written many times about my group of friends around the country, who run large real estate companies, and meet regularly to share and discuss trends and ideas.  In many such settings, the learning decreases over time, and the value lessens.  Not with this bunch!  We are now meeting virtually, but we can still teach each other, and we always do.

Our last call focused, of course, on real estate sales during the pandemic so far.  Conditions have been very different at various times throughout the last few months, but all of us have faced lockdowns or restrictions that have affected the way we do business.  And, as it turns out, we've all adjusted to the new normal.  While not all of us are back to work physically, real estate is changing hands just about everywhere.  

One metric that has changed is the calendar.  Usually, 60% of listings come between April 1st and August 1st.  This year, April and May saw very little in the way of listing activity.  The summer seems to be making up for that, as the "spring" season is still going on.  Most of the drop in sales in the second quarter turned out to be from lack of inventory, as much as from the virus.  Sales in many places jumped just as the coronavirus first started spreading, and then dipped way down for some period of time, finally beginning to rise and then approach normalcy. Many areas saw closings up in the first quarter from 2019, then down 20-30% in the second quarter, with nothing left to sell by now.   Who could have predicted that?

New York City, which had somewhat of an exodus during its COVID peak, was another story.  Closings there were down 67% in the second quarter.  As I've reported before, 10,000 people changed their addresses to Connecticut in that time period, meaning that Connecticut could find itself well above the national curve for the rest of the year.  Again, however, inventory becomes the big question mark.  If we don't have anything to sell, there won't be sales.  Will sellers decide that this is their moment?  Some towns are finding that to be true, while others have experienced different results in varying price ranges.  Depending upon the location, the high end of the market is either very strong, or less strong than the rest of the ranges.  Only time will tell whether more listings will change that picture.  There is clearly every indication that Connecticut will see a bump from New York, for either primary residences, or seasonal escapes.  

Mortgage rates dipped below 3% for the first time in recent memory this month, adding fuel to the fire for buyers.  If they can buy, we think they will.  Open space is important, as are commuting possibilities; both of these factors help Greater New Haven.  Occasional commuting with lots of telecommuting put us well within the range for NYC-based employees.  Bidding wars are common, and listings are moving quickly.

Our advice is, for both buyers and sellers, to seize the moment.  Move while you can, sell while you can, and enjoy being outside while you can.  If there is one thing the pandemic has reminded us, it's that life is too short not to live it to the fullest.

Snow and Real Estate Sales

Snow is not good for real estate sales.  I taught my children at a young age to moderate their excitement on school snow days, telling them that snow causes people to cancel their showing appointments.  Buyers don't want to go out and drive around in bad weather, and sellers don't want to worry about shoveling and dirty boots tracking through their clean houses. 

But real estate isn't an impulse purchase, right?  It's hardly in the category of the candy by the checkout counter, or even the perfect dress in a shop window. Therefore, people who don't look and buy one day should do so the next, or the next week or month. 

Well, they probably do.  Unfortunately for us, we track sales  year to year by the week and the month.  When we look back, we don't always remember the weather at the same moment the year before.  Perhaps, however, this year will be different.  This weekend marks the first anniversary of the Blizzard of '13. That storm impacted sales for weeks, so much so that the whole month of February 2013 was horrendous for us.  That loss followed us for the whole year, for good and for ill.  We popped later in the spring, the spring market lasted well into the summer, and the summer lag started in late August. 

So what will 2014 bring?  So far, a lot of ice and snow!

Cash is King

We heard that last year, across the country, about a third of all sales were closed with cash, or at least did not have mortgage contingencies (that means that the buyers could have gotten a mortgage, either before or after the closing, but didn't require that they have one in order to close).  Given the low interest rates available out there now, that's particularly amazing, and says a lot about the difficulty of getting a mortgage now.  Even at the best of banks and mortgage companies, there are more regulations, requiring more paperwork, effort, and time, than ever before.  Many people who can, therefore, are choosing to opt out of the process.

When it comes to Connecticut, the results are even more surprising.  Last year, 39% of state sales were reported as cash deals.  We were about the same, or even a little higher, at Pearce.  Then we looked at this year's statistics, which were greatly affected by weather and delays, so that sales were down across the region for that period.  We were startled to discover that 56% of all our sales for the first four months were for cash, or without mortgage contingencies! And this in a period when not only are interest rates historically low, but when the stock market is performing very well, leading investors to want to keep their money in the market.  We know credit is tight, appraisals are an issue, and that exceptions are rare, but we still can't get over this fundamental change in the way business is done in our industry.  Will it continue?  Dodd-Frank would argue yes, but the number of buyers out there who can't afford to pay cash would argue no.  I guess we'll just have to wait and see.