Academic Calendars and the Spring Real Estate Market

When I went to college, back in the dark ages, my first day of classes was on September 25th, and my graduation was on June 17th.  Things have certainly changed since then!  Most schools now gear up in late August, finish classes at the end of April, and hold commencement exercises in May.  Faculty members, who stop teaching in April, increasingly seem to travel in May, when the weather is nice, but the crowds are missing.

Our New Haven office in particular, which does more than half of its business with Yale affiliates, but all of our offices to some extent, run on an academic calendar, especially given that there are six colleges and universities in the immediate area.  We start to get relocation clients early in the year, often in January or February, after academic appointments start to go out.  Those people start looking right away, and we almost never have enough to show them, since sellers (and other real estate companies) seem to think that May is the time to list.  Actually, our biggest month for writing contracts in New Haven is March!  Once May rolls around, we find that things slow down some, and, after graduation, slow further.  This is less true on the Shoreline, where spring and summer still bring more buyers, but, even there, we see inventory shortages in the early spring.  In places where investment property, or property affected by taxes, the end of the year is also strong.

We now routinely tell sellers, especially in the City of New Haven, to get their homes ready to show by February.  That means, of course, that outdoor work needs to be done the summer and fall before they are ready to sell, since December and January are not ideal for that type of work, if it is even possible then.  This year, we took lots of listings earlier than in prior years, and most of them have sold by now, and many sold very quickly.  We are ready for a new round of listings now!

It obviously makes sense for sellers to be ready when buyers are beginning to look, especially if a house has features that might not stand up as well against a lot of other choices.  Therefore, consider this a clarion call to get your home buffed, fluffed, and ready to go, either when universities come back in the late summer, or next winter, when the new hires get made.  Why not take advantage of the cycle, even if it's not the same as what you may be used to from other places you've lived?

Stimulus Needs Stimulating

Last year, when the first-time homebuyers incentive plan was introduced by the Federal government, there was a clear uptick in the number of buyers in the market. This year, the plan was reintroduced, along with a second incentive for existing homebuyers. It was obviously another, supposedly stronger, attempt to increase home sales.

Well, this time it doesn't seem to be working. Most brokers, including the one I spoke to this week in Phoenix, don't see the results. There could be more than one reason for this. First of all, most things like this--including big sales at stores--work better when people think that they are limited in time. If they think that deals will be offered again or extended, they are not as likely to move quickly. Secondly, it keeps getting harder for new buyers to get mortgages. This means that there may be buyers out there who want to buy, but who cannot qualify with the higher FICO scores now required. That last point is not necessarily a bad thing. If we can just stop and remember how we got into this mess, we will want banks to think twice before loaning to those who may not be able to repay.

I believe that there is also a fundamental flaw in the stimulus package, however. The government is trying to push demand from first-time buyers, who comprise the one group who will buy in almost any situation where they can. After all, they haven't bought homes at lower prices or with lower mortgage rates. They are generally buying because of changing life circumstances, and graduations, marriages, and babies happen regardless of the economy. Also, there are, in the end, only so many new households being formed. It might have made more sense to give the incentive to folks who didn't have the same motivation to move. After all, isn't it a little like giving a car price break only to teens?