Current Absorption Rates

 Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Guilford you can say “If market conditions do not change and if no new listings come on the market it will take 1.7 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5-7 months”.

 

Connecticut's Rise in Residential Home Prices

Although we all feel locally that prices are going through the roof, we are not out of line with the rest of the country.  Residential home prices are rising all over, and we are right in line.  So, despite the fact that it has been theorized that our increases are due in large part to a demand from people seeking to leave NYC, it seems to be a broader trend.

The evidence has suggested, even before the pandemic, millennials have been moving toward lifestyles very close to what their parents wanted.  There have been some changes--among them the desire for walkability and smaller lots with smaller homes--the general trend has been for buying homes, often in suburban areas, with outdoor space and good schools.  This was true before the pandemic, and has only increased with remote working and family bubbles during COVID.  Generations before this age group have largely done the same thing, but now the people buying span a bigger age range.  Student debt, poor job prospects after 2007, and protracted adolescences have caused first-time buyers to wait longer.

That cohort is now a broader spectrum, from the 20s to early 40s, and it is colliding with baby boomers who are looking to downsize.  Given the differences brought about by changing tastes, it is putting mid-size homes in walkable neighborhoods at an incredible premium.  This means that the rapid rise in prices would be driven primarily by a lack of supply, fueled by a postponement of sales for a decade prior.  Americans are staying in their homes longer than was customary, and the backing up of the supply chain is causing shortages now, just as it has with paper towels and outdoor equipment.

What will happen next?  Well, it doesn't seem that Connecticut is in a bubble by itself, which is good news.  And the death of cities may not occur, although the trend toward smaller ones may continue, especially with the likely permanent increase in telecommuting, at least for part of the time.  So prices will stay high for the intermediate future, as long as mortgage rates cooperate, and our region will go on doing well.  It won't be about the pandemic, but about lifestyle, normal life cycle changes, and job opportunities.  

If you are a buyer, you will be paying more, but at an affordable monthly cost that is comparable to what has been paid in years past, with higher interest rates.  If you are a seller, now is your chance!

 

Greater New Haven is Poised for Liftoff (Literally)

For decades, Greater New Haven business leaders have been pointing to the dwindling fortunes of Tweed New Haven Airport as a major barrier to economic development in the region.  This week's announcement that the airport will be privatized for at least the next 43 years, with a longer runway and a new carrier offering flights to several cities, is a huge boon to our area.  

Connecticut has spent most of its air transportation money on Bradley, which is now offers international, as well as domestic, flights, and is the biggest of the State's three airports.  There has been a great deal of rivalry between Sikorsky in Stratford and Tweed in East Haven.  Neither one has made much, if any, progress.  Both have been hampered by surrounding residential developments, short runways, and poor prospects for big carriers.  Nor has either location garnered steady support from its legislative delegation.  

It's a new day now for Tweed. By inking a private deal, public sector funds are no longer necessary.  The powers that be in Hartford don't need to be courted, and they should be nothing but enthusiastic about this outcome.  Both New Haven and East Haven, whose borders it straddles, will see upsides from this arrangement, apart from a boost to the region as a whole.  The terminal will be moved, which will ease the traffic burden on the Morris Cove neighborhood.  Jobs will be created for both municipalities, and other development should spring up on the terminal side.  

Once we can offer residents convenient flights to hubs or favored destinations, within minutes of their homes, people who travel regularly on business, or even for pleasure, will reap major benefits.  Whether they park at the airport, get dropped off, or take a short Uber ride, they will save hours of time now taken up with congestion leading to the NYC airports.  The certainty of the amount of lead time required to get to Tweed, and the small size of the TSA line, will outweigh in many cases the need for stopover plane changes to many cities.  

Regional business leaders have long known the untapped demand for a viable local air transportation option.  With the huge increase in remote work possibilities brought on by the pandemic, many more people are likely to choose to live in Greater New Haven.  We have recreation, schools, health care, and the arts, all in abundance.  Now we will have commutability as well.  Let the commercial expansion begin!

Inventory is the Key to the Housing Market

Everywhere in the country, there is talk of a red hot housing market, for many reasons.  Low interest rates, pent up spending and demand, and pandemic desire for more space.  Supply and demand, therefore, have gotten way out of  whack.  Today, we circulated an article featuring 76 full-price offers on one home.  

That's true in many regions, but what is happening in Connecticut?  Even that needs to be broken down by county.  Fairfield County is booming, and is absorbing many of the 24,000 people that have moved to Connecticut in the past year.  New Haven County is seeing some of that movement.  West Hartford, one of the most popular towns in Hartford County, is actually down 8% in the first quarter.  Of course, this can all be explained by the old adage:  Location, location, location.  The closer to NYC, the higher the price, and, now, the hotter the market. 

Many families moving here are counting on working from home for at least some of the time going forward, but they want to be close enough to commute when necessary. For now, many are avoiding public transportation, but that number will diminish as vaccinations increase.  Prices are rising rapidly in many towns near the NY border.

Despite all the reasons for the increase in prices listed at the beginning of this post, the real driver is inventory.  Many sellers were burned in earlier attempts to sell, or haven't found a place that they can go.  They are tempted by the demand by buyers, knowing that they may get more than they expected.  However, they also know that when you sell high, you usually turn around and purchase high as well.  

That shouldn't matter.  People should make decisions based on lifestyle, personal preferences, and proximity to friends and family, and let the investment side of the equation take a back seat.  Since selling and buying in the same market is a wash as far as prices go, it should come down to individual choice.  And, if you want to choose a new home, this is certainly the time to do so.  The rapidity of the selling cycle may make life intense for a while, but the uncertainty is short lived, and the benefits of moving last as long as you are in the new property.

So the market comes down to the sellers--will they provide a spring season supply?  We very much hope so.  Sales depend on it.  

Current Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Branford you can say “If market conditions do not change and if no new listings come on the market it will take 2.9 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5-7 months”.

 

March Through July Sales 2019 vs 2020 : New Haven & Shoreline County

 

 



FAQ Regarding Real Estate Activity During Covid-19



Disruption in the Supply Chain

When we give advice to people about buying property, we are often guided by standard metrics, whereby the average mortgage is outstanding for about five years, meaning that it gets paid off as people move, or refinanced, at about that point.  That used to be a proxy for estimating how long someone would stay in a home.  Based on that, we would also point out that it took, when the median home price was rising year by year at a steady amount, a few years to break even when selling and buying a new home, considering the costs of moving.

We have known for many years now that people refinance more frequently, or did so when rates were first low on an historic basis.  That's been less true recently, as refinancing is not as common as the rates would predict.

What was news to me this week was a Wall Street Journal article saying that the typical homeowner now stays in a property for 13 years in most places.  Some of that is tax based.  California has long been known for giving an incentive not to move--your taxes get frozen, and, like rent stabilization, that makes people rethink what they would do absent outside considerations.  However, it appears that the supply of homes in most parts of the country limits options for moving.

We don't have the new construction here that exists in places with lots of open space to build outside cities, but we do have a generation of young homebuyers, who don't have enough to choose from, when they go to buy.  That's because, in part, from another group looking at those smaller houses--downsizing older adults.  When new homes do get built, they tend to be large, for the usual economic reasons about lot price vs. home cost.  So there is a disconnect between available produce--often priced in our area between $400,000 and a million--and what buyers want, which is smaller and less expensive.  Homes between $1 and $2 million tend to be in places where older buyers are choosing location, and they are chugging along as well, on the Shoreline in particular.

How can we lower the 13-year figure, and free up homes to start the cycle?  Sellers should list the homes they are thinking about selling.  Buyers are once again out there to purchase!

Current Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for New Haven you can say “If market conditions do not change and if no new listings come on the market it will take 4.4 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5 - 7 months.”

Why Are We Seeing These Market Conditions?

It's always dangerous to postulate about why certain market conditions exist, but I think I'll take a crack at it, since it's been going on for some months now.  To begin with, our market has been lagging behind nearly every other market in the country, and that's been happening for years.  At some point, we all knew that Connecticut would get lifted, at least to some extent, by the rising tide that's been lifting other boats, so to speak.

We also know from history that activity ramps up when interest rates rise.  Although this seems counter-intuitive, it occurs because people don't believe that rates will ever rise until they start doing so.  It's probably really more like a hope that they will continue to go down, than the real sense that buyers are ignoring the bottom of the curve.  Plus, they think, and they are correct, that 4% on the way up is the same as 4% on the way down, so it won't matter if they wait.  We in the industry put this more in the category of bottom-fishing:  Everyone is hoping to be the one who got a mortgage for the lowest interest rate possible.

Experts have been talking about the lack of supply for a few years now, which is what has caused spikes in prices and decreases in days on the market in other places.  Part of that is because of the lack of new supply, and that was more acute in Connecticut, because of our poorer economy.  Now it's true here as well.  The years of a bad market have caused sellers to hesitate before selling, and buyers now face a dearth of choices in many areas and price ranges.  This is particularly true at the lowest price points, where first-time homebuyers are competing with each other for the homes that have come on the market.  Many sellers also wait for spring before listing, and this year's snow (even today's snow!) made that more likely.  Buyers in our region tend to want to buy sooner than sellers want to sell.

Employment is also tightening, which is driving up wages.  That means that more people can afford to buy a home, and that those who already own homes can afford to trade up more easily.  Rising wages also increase the consumer confidence index, which I have long found to be a very important predictor of real estate activity.  In turn, that makes buyers think that they can stretch further to purchase, because they believe that their wages will continue to rise.  They may be right about that, and there are many reasons for that to be so--one is that there are fewer undocumented aliens and immigrants filling those jobs out there.  Another is that the baby boomers are hitting retirement age.

The new tax rules are so complicated for many taxpayers that, in a funny way, they may be helping also.  Since it's hard to know what effect the new provisions will have on any given individual or family, some are choosing to buy now, especially since this year's taxes were not affected.

Other reasons may also exist, but the ones above seem to be driving the market, despite the old saws of bad weather and wrong season, which have not held true this winter in our area.  Let's hope that the standard spring market kicks in anyway, and that our good fortune will continue throughout 2018!

Current Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for North Branford you can say “If market conditions do not change and if no new listings come on the market it will take 6.2 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5 - 7 months.”



Corp renews Homebuyer Program

Written by Serena Cho of the Yale News, click here to read on Yale News website

The Yale Corporation last month renewed the Homebuyer Program, which provides financial assistance to Yale employees purchasing homes in New Haven, for another two-year cycle through Dec. 2019.

Established in 1994, the University Homebuyer Program gives employees working 20 hours or more per week substantial income benefits to buy a home in designated areas of the city. In its meeting last December, the Corporation recognized the program as one of the most long-lasting examples of Yale’s commitment to its home city.

“The Homebuyer Program is one of the many fantastic benefits Yale offers to its employees. In particular, this program demonstrates how the university is committed to being a good neighbor and partner to our hometown,” said Karen King, a community affairs associate in the Office of New Haven and State Affairs. “We consider this an important investment for both Yale and New Haven communities.”

The Corporation assesses the impact of the Homebuyer Program every two years. In the December meeting, trustees collectively agreed that the program continues to support employee welfare while also promoting strong New Haven neighborhoods, King said.

The program grants up to $30,000 to its participants: a $5,000 bonus on the first year and an annual contribution of $2,500 for the following 10 years, as long as the employee continues to work at Yale and live in the home.

The neighborhoods covered by the program — Beaver Hills, Dixwell, Dwight, East Rock, the Hill, Newhallville and West Rock — attracted many Yale homebuyers in the most recent two-year phase. As of last fall, 1,221 Yale employees had purchased homes in New Haven through the program, according to King. These purchases summed to a total market value of more than $237 million, and employees benefitted from a total commitment of more than $31 million from Yale.

Yale spokesman Tom Conroy said the Homebuyer Program helps Yale employees not only by providing financial incentives but also by hosting information sessions for potential homebuyers that address the process of selecting, financing and maintaining a home.

King emphasized that these information sessions are particularly important because around 80 percent of the program’s participants are first-time homebuyers.

The program also represents one of the University’s key initiatives aimed at engaging with the city, according to Bruce Alexander ’65, vice president for New Haven and state affairs.

“Realtors say the Homebuyer Program is very important in helping to stabilize neighborhoods,” Alexander said. “Homeownership not only helps Yale employees build financial equity, but it also helps the neighborhoods build community because of the owner’s ongoing stake in its safety and stability.”

Conroy added that employees living in New Haven are more likely to befriend the city’s residents, strengthening the University’s relationship with its neighbors.

While 29 percent of all homebuyers who have benefitted from the program are faculty, 30 percent are clerical and technical staff, and 27 percent are management and professional staff. According to the Office of Institutional Research, around 32 percent of Yale employees are faculty, 28 percent are clerical and technical staff, and 32 percent are management and professional staff.

Conroy emphasized that the program benefits all Yale employees who meet the eligibility requirements, regardless of their employment sector.

“One of the great attributes of the program is that it has appealed to unionized staff, management staff, professional staff and faculty,” Conroy said. “Because the incentive is not tied to the cost of the home, the benefit is a larger share of the cost of less expensive homes.”

Yale employees must commit to own and reside in the home for at least two years to qualify for the Homebuyer Program.

Ten Great Reasons to Live in Greater New Haven and Connecticut

10.  75 Miles from NYC and 125 Miles from Boston

9.  332 Miles of Coastline

8.  60% of State is Forested

7.  Top 10% of Metro Areas in Support for the Arts

6.  4th Oldest Symphony Orchestra in the Nation

5.  5th Among States in Quality of Life

4.  4th Most Intelligent State

3.  Yale University Ranked #3 in U.S.

2.  Median Home Price of $229K is Below U.S. Median of $256K

and

1.  World's Best Pizza

Current Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Hamden you can say “If market conditions do not change and if no new listings come on the market it will take 3.1 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5 - 7 months.”



The Greater New Haven Market Picks Up

Where were the buyers right after Labor Day?  We're not sure, but they are out now!  Open houses are busy, multiple offers have increased, and mortgage lenders are busy.  We've learned not to try too hard to predict what's going to happen in our market area, but we can certainly talk about what is happening, and we can certainly say that it is happening now.

This doesn't mean that everything is rosy--sorry to say.  Prices have continued to go down in many places, and still aren't back to 2008 levels in most parts of the State.   There is probably a good correlation, in fact, between low prices and high activity.  Especially if  you move here from another part of the country, a lot of our inventory looks like--and is--a bargain.  So sellers shouldn't expect that more traffic will mean higher offers.

As my father often said, "There is no tomorrow in real estate".  So I can't tell you that those buyers will still be out there next spring, or even next month.  Do what you have to do to get your property sold, and move on to the next stage of your life while you can.  It's good news that we have activity at this time of year, and it's better news if sellers take advantage of that to close transactions.

From Scary to Thankful

This is the time of year, every year, when I remind people why it's the best season for buying real estate.  Rates tend to be lower than other times, and sellers are often more flexible, because they want to sell before the end of their tax year, and they don't want to head into the cold and snowy season with empty property. 

People who buy between Halloween and Thanksgiving have a fighting chance to close before the end of the year, and they get to start the new year in a new place.  They have less competition than at other times, and they spend less time, on average, both looking and negotiating.  Something about a calendar deadline seems to make people more serious and more efficient.  As an added benefit, no one buys a property where the furnace doesn't work, when the temperature outside is low enough!

So why don't more buyers buy at this point in the calendar?  It's a busy time, and they get distracted with other things.  There is less daylight, when it's easier to see properties.  There are more expenses for holidays and tuitions, so people feel poorer.  There can be weather delays as you get toward winter. 

None of those reasons should outrank the simple time and money advantages.  It might be scary to think about looking on Halloween, but won't you be grateful at Thanksgiving?

Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Madison you can say “If market conditions do not change and if no new listings come on the market it will take 6.4 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5 - 7 months.”

Current Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Cheshire you can say “If market conditions do not change and if no new listings come on the market it will take 5.7 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5 - 7 months.”



Current Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for North Haven you can say “If market conditions do not change and if no new listings come on the market it will take 5.1 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5 - 7 months.”

Ninja Training

Last week, we closed all of our offices for the day, and took Ninja training together.  It's a sales system that involves listening carefully to clients, keeping in touch with them, and giving them relevant and useful information on a regular basis.  Since the average person knows 12 real estate agents (!), we need to stay top of mind, and it takes a carefully thought-out plan to do that well. 

The goal of the whole program is to work smarter, not harder, and to be able to live a balanced life, something that can be challenging for everybody, but which is particularly difficult for real estate agents, who need to work so many nights and weekends.  We are excited by what we learned, and are looking forward to translating training into action.

Along the lines of working smarter, and listening to our clients, this is a good time to ask readers:  What do you want from your agent or company?  How do you want to hear from us, and how often?  What questions can we ask that will make your buying or selling experience easier and more effective?  How can we best demonstrate our expertise in the field, so that you can take advantage of what we know?

We ate now imbued with a very clear purpose, and will endeavor to work the Ninja way going forward, so expect to hear from us, and for us to be eager to hear from you.  There is a better way, and it's a win-win for all of us!