What Makes a Neighborhood?

We recently talked at a meeting about trends in neighborhood preferences among buyers.  The average first-time homebuyer is a millennial, and the average buyer is a Gen Xer.  For a long time, people thought that those groups would only live in cities, and only commute on foot, by bike, or by public transportation.  It seems now that that's not entirely true, but there are some real differences that our agents are seeing in Greater New Haven.

Once younger buyers have children, they care a great deal, as did their parents and grandparents, about school quality.  They also tend to prefer more space, both inside and out.  Unlike their parents, however, they want to spend less time commuting, maintain less in the way of house and grounds, and live in a setting with shops, restaurants, and parks.  That's what is meant by the new "walkability" scores that show up on real estate websites.  People want to be able to get milk, see a neighbor, or arrange a play date without getting into a car. 

We are seeing this show up in New Haven, for instance, where East Rock now seems almost suburban to buyers, but has sidewalks and foot traffic everywhere, with coffee shops and other neighborhood attractions and institutions.  Most people drive many places, but want the freedom to walk children to school, or sit on a front porch and converse with passersby.  It's a feeling of safety in numbers, but also of community.  Bigger homes on bigger lots that are farther apart appeal to a different group, smaller in number, that want to entertain, love the spacious feeling of older homes built in a bygone era of grandeur, and want backyards and big gardens.  They also like walking places, but crave more privacy. 

In the suburbs, we see the same trends playing out. Spring Glen, with its high walkability score, is selling quickly.  On the Shoreline, houses and condos near the Guilford Green are at an all-time premium.  There is a second reason for this, which is that older buyers also care about walkability and convenience, and they also want less space and smaller lots to maintain.  The two groups compete for the closer-in properties along the Shoreline, although the smaller homes in East Rock are still large, and attract mostly growing families. 

This means that there is a large supply, almost everywhere, of the biggest homes in a town.  Some of that relates to taxes, but just as much to lifestyle.  Whether busy with young children, or free to travel more, buyers are choosing smaller, sometimes cheaper, and always as walkable as possible.  So, if that's the type of home you own, think about now as a good time to sell!

Assessment Woes

The City of New Haven has just released its new assessment figures, and there is a lot of talk in the media (see particularly the last couple of articles in the New Haven Independent) about tax increases by neighborhood.  As I've blogged about before, East Rock is the neighborhood in New Haven that stands out as having held its value over the past years of decline (Spring Glen in Hamden is the other one that really distinguishes itself).  Because so many areas in our region, let alone the core city, have gone down in value since the peak of the market, East Rock stands to have higher tax increases in the upcoming revaluation.

While one could look at that from a negative point of view, the real key here is that values have held up in that neighborhood, despite plenty of bad economic news and job loss around the region and the country.  Although that may cause taxes for people there to rise, they are not going to be underwater in value, as so many others are.  And that's certainly good news.

Statistics from the Region

It's tempting to make you all guess about market trends for 2010, but it would be hard for me to collect the responses in a timely way, so I guess I will just tell you. The latest Commercial Record shows that, for year over year sales from 2009 to 2010, New Haven County as a whole was down almost 8% in the number of sales. For the immediate towns, Guilford, Madison, North Haven, and Bethany had an increase from the prior year. Guilford and Madison were each up 9%, while the other two had smaller increases.

Surprisingly, the median prices were almost identical in 2009 and 2010, with 2010 coming in at 0.8% less. I expect that most of you would have guessed that prices fell about 10%, so the fact that they actually fell less than one percent is very good news. Of course, as I've often pointed out, this is not an apples-to-apples comparison, so it's probably true that only the best houses sold, meaning that most homes would have sold for less in 2010 than in the prior year. As I've discussed in earlier posts, East Rock and Spring Glen did go up in price, showing the "Yale" effect most strongly. North Branford, with 24% fewer sales, had an increase of 10%, and Milford, Wallingford, and Woodbridge had smaller increases. New Haven as a whole crept up 1%.

It is important to recognize, as the issue said in another article, that this is the sixth year in a row that sales have declined. Since prices have also been declining for most of that period, the total decline is larger than what is listed for last year. And, since most homeowners looking to sell haven't been in the market for some time, those yearly decreases can really add up.

However, the fact that we are not in freefall is very good news, and the spring is still ahead of us. Anything could happen, but we're hoping for recovery mode to kick in strongly!

More on the Market

I just gave a press interview on the results of the first quarter in our area. Those results were dreadful. Very little sold, and what sold did so at lower prices. The activity has picked up since then, although those sales won't show up until the second quarter.

What is interesting to those of us in the business, who believe that we are bumping along the bottom, is to guess when the bump will start trending up. Units always increase before prices, and, while prices may continue to go down for a while longer, units should begin to increase. Once activity improves, pent up demand for new housing may cause houses to flood the market, as homeowners seek to trade up or down. That increase in supply will satisfy the still anemic demand for some time to come.

The lesson here is that there is a window, which has already opened in East Rock and Spring Glen, where those contrarians who seek to sell in the face of awful media reports have gotten or are getting surprising high prices. Not much was on the market, and people who needed to be in place for jobs beginning in the summer or fall, or those who needed to move for one reason or another, were competing for just a few houses. Multiple offers, many over the asking price, were common. That may change as people have more choices.

A word to the wise: He who hesitates is lost. List now.

Needed: New Listings

Despite the recent blizzard, the spring market is popping. We just have one little problem--not enough to sell! Inventories in most parts of our markets are very low. We're not counting things that are overpriced and have been on the market for a long time, just well-priced and well-maintained homes. If we could list things for first-time homebuyers to move into, those people could move into other houses, allowing those people to move, and well, you get the idea...

We continue to see good listings going to contract within a few days, particularly in the East Rock and Spring Glen neighborhoods. The best ones are going for well over the asking prices, indicating that there is strong pent-up demand in certain price ranges.

It may be hard to believe, but I'm going to end this while it is a wholly positive post!

What's Selling?

Although it may sound as though nothing is selling in the current real estate market, there are some pockets of strong activity. The market is almost bifurcated, with most homes sitting and a few receiving multiple offers. I checked with two of our offices, our New Haven office and our Wallingford Regional office, to see what common threads exist with the quick sales we've had. There are three factors: price; condition; and location. Price means two things--the price must be considered a good value, and lower prices are more likely to attract first-time home buyers (the most active segment of the market now). Condition usually means that the property should be clean, freshly painted, and clutter-free. Location is the normal location, location, location. The worse the market, the closer you can get to the ideal location, and status does matter.

Having said all that, we are seeing strong interest particularly in East Rock, where demand outstrips supply now. Stefanie Rank has a listing on Livingston Street that has been shown over 50 times since the end of last week, and multiple offers. Fran DeToro sold a Whitney Avenue condo in less than a week. Mary Jane Burt has sold two high-end condos recently.

Hamden is also seeing demand. Eileen Smith has three times cleaned out a house top to bottom, shown it from Thursday to Sunday, and sold it on Monday. She has researched current prices in Spring Glen, and they have decreased by only 1%. The Edgehill team just sold a Hamden house in two days.

Remember that the tax credit can be used for one's 2008 taxes, so time is of the essence. So, if you're thinking of selling in any of these neighborhoods, please consider doing it now!