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.

Confusing Inventory

I just read in a real estate publication somewhere that at least 40% of the listings on the market are either overpriced or overexposed, leaving the true inventory at a much lower level.  That's an important concept to point out, since we have been in a buyers' market for a long time, and many buyers feel that there is so much to choose from that they can lowball anything. 

Although there are many listings that do not sell quickly, and some that end up getting withdrawn before they ever sell, many others go quickly, often with multiple offers.  How can both those things be true?  It has to do with the ease and speed of getting information about housing.  Buyers and potential buyers can put themselves on search lists, and can potentially find out about new offerings before their agent gets informed.  Since it's human nature to get excited about the new and exciting, buyers commonly look at the most recent listings.  If they see enough activity on a property, or if they just know from having looked at so many houses that a certain one will go right away, they may proceed to an offer.  This is exacerbated in seasons where people traditionally move or relocate, so that the normal pattern of looking and waiting gets disrupted, and what is going to sell sells quickly.

That doesn't necessarily mean that sellers shouldn't list at an off-time, since the supply will typically be much lower, and those looking may consider a property that they otherwise would pass over.  However, the general rule that activity breeds more activity holds true, and sales proceed at a faster pace when the timing seems more urgent.  

My advice to buyers is to consider the true value of a property to you, and try to put your market information (or misinformation, in some cases) into the background.  Move at a reasonable speed, both to keep the seller engaged, and to appear more serious.  For sellers, I would say that you have to consider the micromarket that your home is in, and put aside the broader picture.  Listen to your agent, and remember what s/he said at the very beginning was the price that the property would bring.  It's right more often than you might think!  So, even if you've "tested" a higher price, don't get wedded to it, and don't wait too long to lower it, if you are not seeing action at your current listing price.  After all, money is lost when a sale is delayed, and that's important to consider as well.