Don't Forget that Connecticut is a Blue State

The tax bill that was recently passed by the Senate, although work remains to be done,  would affect the value of real estate by as much as ten percent, if it doesn't get changed.  In Connecticut, and in Greater New Haven, the effect could be greater, because we are a high property tax state, and some of our local towns have high tax burdens for homeowners. 

Whether or not the intent of Congress was to punish blue states, it behooves those of us who live in one to make our voices heard.  In the way that property owners who bought in an area that gets impacted by some governmental project are usually compensated for any decrease in value, it seems as though people who bought with mortgages and property taxes that were deductible fully should be protected to some extent going forward.

What is it going to take to make that happen?  We Realtors have already been contacting our Congressional representatives, but we don't have the same impact as "real" homeowners do.  So make your voices heard!  Let Congress know that Connecticut, while it has problems it must find a will and a way to solve, will be harmed disproportionately by the bill as it stands.  This is because we have high property taxes, but also income taxes that will not be deductible, either.  As we know, anything that impacts a potential buyer's cash flow, be it mortgage rate increases, tax issues, or other circumstances, will affect what such a buyer will be willing and able to pay for the home.  We need time to address our pension and deficit issues, before we adjust to a changing tax climate.  Please contact our representatives, but get others in different places to contact their Congresspeople as well.  After all, we don't want our State's hole to be dug any deeper, nor our taxpayers to suffer more than those in other areas.  Act now!

Where Have All the Buyers Gone?

The national news, as well as area papers, are full of stories about the abrupt dropoff in housing sales for May. Everyone knew that this might happen when the tax credits expired, but the amount of the decline is still surprising to people. After all, many families did not qualify for the credits, which decreased as income increased. Also, although the second round of credits applied to repeat buyers, it was always aimed at first-time buyers. They bought, but probably mostly in the first round, from what we could see. Ordinarily, first-time buyers make up about 45% of the total market for sales. With the tax credit, that percentage had increased to 55%. Even though that means that we have moved 10% of the sales from the future into the present (now the past) with the help of tax credits, there is still almost half of the buying population unaccounted for in these numbers.

Where did they go? It seems that consumer confidence, once again, has reared its ugly head. All the news reports about job losses, retail sales, and the stock market have affected homebuyers negatively. While we knew that this could happen--it's some version of the double-dip theory--it still surprises those of us in real estate, to some extent.

Interest rates are very low. Housing prices are back down, in many cases, to where they were several years ago. Everyone knows that, even if you sell low, it doesn't matter, as long as you also buy low. Consumers have stayed out of the fray for most of the tumultuous recent past. So they should be out in force, and they're not.

One theory is that there's too much on the market, and therefore they have paralysis. Another is that they think prices will continue to decline. It is true that mortgages are harder to get. And, of course, it's summer--hot and humid weather tends to keep people from doing all but the essential tasks of life.

However, we're all watching with bated breath. The housing industry cannot afford a long layoff from sales, as we endured at the beginning of last year. Congress, take note!