Real Estate Markets Are Like the Weather

As Mark Twain said about New England weather, "If you don't like it, just wait a few minutes."  The real estate market--unfortunately for us in the field--isn't quite so quick to change, but it does sometimes seem to go almost week by week.  We are learning that it's harder to tell what causes a shift than it used to be.  Hot weather, and the Fourth of July, used to mean a serious lull in activity.  This year, many agents were showing homes right into the holiday itself.  Others found that office calls were slow, and transactions sluggish. 

Hot weather doesn't slow the market down as much as it used to, before we had winters that were epic.  Now we need to use that time, because we lose so many days to snow and ice.  As I've written before, the school calendar affects sales much less than it used to, before so many jobs moved out of state.  So how do we know what's going to happen? 

We don't.  We can't tell you with certainty when to list, or when we should hold open houses.  We know certain things, like that Mother's Day is dead, while Father's Day isn't, but we aren't as sure of timing now.  There seem to be the equivalent of microbursts in weather, where one town will be slow, while others are booming. And that's not just the Shoreline in the summer, where people on vacation look at property.  It seems to be true throughout the region; one town's good year is another town's dip. 

Advice?  Follow your own internal clock, but don't wait for rates to rise, or prices to start spiking! 

School's Out

One of the truisms of the residential real estate industry has always been that homes are best listed in the early spring, to be sold in the late spring, closed in June and July, and moved into before school in September.  Especially in Connecticut, where the average age is high, and the birth rate is low, this pattern seems to be shifting.


 It was always true that condos, which typically had many fewer school-age children living in them, sold more often towards the end of the year.  That made sense, since the tax consequences were more important than the school calendar, particularly with lots of investors buying and selling them.  Now it appears that houses are also becoming less seasonal, and have more to do with jobs and second homes than with the school year. Part of that may involve the length of time it takes to sell, where people aim for summer and accept fall/winter, but I really think, looking over the past couple of years, that the sales pattern is evening out (except for snowy months) in general, regardless of days on the market.  There are also probably more retired people here, so that they are free to move at any time.


What does that mean for sellers?  It is still usually best to avoid peak holiday times (mid-December comes to mind) for listing, as well as the dog days of summer.  Otherwise, get it ready and price it correctly, and you are good to go.


And for buyers?  You doubtless have done enough on-line looking to know a good deal when you see one.  Don't expect it to last, if you find it, even in what you might think of as an "off" time.  Even if you buy first and sell later, supply is low for well-priced, well-maintained properties, and you shouldn't take choice for granted.

Adding Value to Luxury Listings

Today's New York Times had an amusing but informative article today about things people have done to raise the prices on their properties. Perhaps the most extreme example was a seller who regrouted the bathroom tile and added $100,000 to the estimated value of the listing, on the theory that cracked and dirty grouting would tend to make buyers think that they would need to do a major bathroom renovation. Another broker told of a client who changed the kitchen cabinets and repainted, thereby getting an offer $100,000 higher than the broker had anticipated.

Most of the examples involved big dollars, but obvious pointers: Get rid of the clutter. Clean the rugs. If you are a landlord, put in new appliances. Replace towels and bath mats with fluffy new ones. Improve the lighting. We all know these things, but it's sometimes hard to think objectively about a place we've lived, especially when the expense incurred will benefit the new owner and not ourselves. It's worth doing things that improve either curb appeal or the initial impact during a showing. Last week's Times real estate section even talked about a new trend of using pets (well behaved and freshly groomed) to make open houses more homey. Who knows? Fido might even replace the tried-and-true cookie baking, to fill the home with a delicious aroma.

The best story, however, was the last example in the article. One broker tells her clients to go out and buy 25 pairs of expensive designer shoes, which will pay for themselves in a higher sales price, as "people want to step into your life". Isn't that like the closet envy scene in the first Sex and the City movie? Well, if it works, what woman wouldn't want two dozen new pairs of great shoes?

Prices Holding Steady

When we look at the real estate market statistics from last year in Greater New Haven, we don't have much to crow about. All around, it was a blah year, made that way mainly after the tax credits expired in June. However, one thing that is surprising is that the prices didn't go down as much as you might think. Our Guilford office had a mean sales price only 1% or so down from 2009. Our market as a whole was down about 2.9%.

Those figures don't jibe with what the average person on the street thinks. Why is perception so different? One reason is that many things didn't sell at all, and, if they did, they had been reduced one or more times before they went under contract. Also, as we must always point out, these statistics are not the same as in other industries, because the same homes aren't selling every year. Therefore, the particular mix of homes could change, although that is less true when you look at numbers over a whole year. So it could have been that the home that sold for $330,000 in 2010 was as good or better than the average $340,000 one from the year before.

What the numbers do show is that people went for value. Properties that sold were in good to excellent condition, in established neighborhoods, and were priced to sell. Buyers tended to feel that they were in the driver's seat, and could choose among a broad range of options (which, as I've discussed before, was less true than they thought--another example of mistaken perceptions trumping reality).

What does it bode for this year? Value is still important. Basic conservatism will still prevail. Sellers who don't have to sell will still not sell unless and until they can avoid steep cuts. Buyers will continue to be fussy. But, finally, the market will improve. Maybe slowly, but clearly. And we can't wait!

Connecticut Commercial Real Estate Now

We had an interesting Commercial Department meeting this morning. One of the agents said that the selection of good commercial properties in our area is the best that it's been in a long time. Well-located, well-priced buildings are now on the market, for buyers who can come up with the financing. Based on what else we are hearing, that may mean that they have to have cash! Even that is not a total bar, as there are many investors around who do have access to cash or capital from others. While some may suggest that it's best to wait until prices fall further, I'm not sure that we know enough about the stimulus plan to know when that will be (or even if it's now!).

Well, it's snowing AGAIN. Since no one buys real estate in the snow, my only question for the rest of the day is whether yoga will be held. Yoga is one of the arrows in a real estate broker's quiver these days--whatever calms you down is good.