One Year Later

Many publications are marking the one-year anniversary of the pandemic's start, so here's ours for Greater New Haven real estate.  Connecticut shut down earlier, and more fully, than most other states, so we immediately felt the effect.  While our offices were forced to close until March 23rd, many things were cancelled or postponed right away--except closings.  Attorneys and lenders pushed to get those sales through before the "lockdown", and they largely succeeded.

After that, our offices were largely shuttered until July.  Some agents worked, some did not.  Few had showings at the beginning, and there were no open houses.  New listings slowed to a trickle for those first few months.  Once the weather got warm, and the infection rate declined, things changed again.

We started to see a movement toward open space, yards, home offices and gyms, and the suburbs, beginning in the second quarter.  While most who moved out of NYC were choosing Fairfield County, we did see some sales, especially for vacation homes.  What we also saw were local buyers, moving into space that they could work and live in, for the foreseeable future.  

When the lack of listings combined with the demand for more space, the market heated up.  Prices began to rise, and multiple offers were legion.  Even relocating buyers from other parts of the country, whom we thought were gone, jumped into the action.  Soon, we were selling almost everything we could list.

The third and fourth quarter saw a continuation of that increased activity, with each month outperforming its corresponding month from the year before, and no typical seasonal slowdown.  We worked right through the holidays, and are seeing strong demand as we head into what would have been the typical start of the spring selling season.

Low interest rates, stimulus checks, and continued employment for many have added to the mix.  It's a great time to buy, and our prices are still lower than in many other regions, leaving room for appreciation, even at a higher sales price.  

When will the party end?  When we run out of product.  Just as a social gathering can wind down when the refreshments run out, we need more to sell, if we are going to continue to satisfy buyers.  Connecticut is still third on the list of outmigration states, so people are leaving.  Let's hope enough of them sell property here to keep up  with the demand caused by household formation, upsizing, and transferring in to our beautiful region.  

FAQ Regarding Real Estate Activity During Covid-19



Business Not as Usual

We certainly understand that not all sellers will choose to allow buyers to view their properties.  However, for those who are eager to sell, and who can work with us to keep everyone as safe as possible during this difficult time, there are actions we can all take to make the process as sterile as we can. I want to thank my real estate friends in Nashville, for passing along this checklist as a guide to sellers, and as information for buyers to understand before going into a home for sale.  

Seller Baskets include: 

Hand wipes

Bottle of counter cleaner or counter wipes

Respiratory blend essential oil for the seller to use

Shoe covers 

Gloves 

Ribbon

Signage for home

Signage posted in home and listing instructions are as follows:

• Please do not touch countertops or open drawers. 
• Please leave lights as you found them.  Do not touch switchplates. 
• Please do not use toilets. (include ribbon in seller basket to tie around toilet seats) 
• Please wipe hands before and after touring. Gloves are also here for your use but please still do not touch countertops or drawers. 
• Please wipe door handle upon leaving. And take your dirty wipes, shoe covers and gloves with you.
• Shoe covers can be used as a temporary face mask if you wish.   

Thank you for respecting this home.

****In addition, remind your sellers to wipe down countertops and all door handles to every room after every showing

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 Old Saybrook you can say “If market conditions do not change and if no new listings come on the market it will take 5.8 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.”



From the New Haven Register By Dan Haar : Connecticut’s lost decade — and how to avoid a repeat

By Dan Haar, New Haven Register, click to read online

 

 

 

Think back to the first week of 2010.

 

The reigning champion UConn women’s basketball team was steaming toward five more rings in the next seven years. A former Stamford mayor who lost the Democratic primary for governor four years earlier was about to win the seat and hold it for most of the decade.

 

Obamacare was adopted but not yet in place. The Sandy Hook tragedy was three years away. And the Great Recession had hammered Connecticut along with the rest of the nation.

 

As the decade opened, Wall Street had started back upward but Main Street still reeled at rock bottom, facing a tough slog. Exactly ten years later, the nation has recovered heartily and then some, under two presidents.

 

Connecticut? A lost decade by just about every economic measure.

 

A lost decade — and worst of all, we’re not in the clear yet. One more decade like the one that just ended and we are basically western New York, a place with some great assets that’s on the way to someplace else, looking to recapture its old glory.

 

The hopeful news is, we can still avoid another 10-year meltdown. We need some demographic breaks, a solid dose of attitude changes and an embrace of the elusive political middle.

 

Let’s look at the numbers first.

 

A lost chunk of the state

 

Connecticut’s jobs count, the most important measure of how we’re doing, grew by 4 percent in the decade, a total of 66,000 positions if we count annual averages including preliminary 2019 totals through November. By contrast, Massachusetts and the United States both added 15 percent.

 

Those are just numbers. Consider what it really means. If Connecticut had gained jobs at the same rate as the nation, we would have added another 179,000 — enough to support as many households as there are in New Haven, Hartford, Fairfield and Greenwich combined.

 

 

It’s as if we lopped off a hefty chunk of the state, heavily populated by young college graduates. And the housing market reflects that haircut.

 

When the decade started, a single-family house at the median among all sales — where half sold for more and half less — stood at $242,000, in shooting range of the Massachusetts median of $285,000, according to The Warren Group, which tracks house sales. As of 2019, Connecticut was up just 8 percent to $261,000.

 

In Massachusetts, that median house in 2019 fetched an even $400,000 — a 40 percent jump. And although there are no official figures for national median prices, one fastidious website calculates the U.S. gain at 44 percent for the decade.

 

 

What does that mean for the typical Connecticut homeowner? If you owned a house that was worth $350,000 in Connecticut a decade ago, you missed out on $112,000 of price gains that people in Massachusetts and most other states realized in just those ten years. Some parts of Connecticut, notably Fairfield County, fared even worse.

 

Shrinking in an expansion

 

If you’re counting income, we’re still the richest state in average income per person and we’re in the top ten in how much typical families earn. But we’re slipping there, too. That’s harder to measure because the reported numbers bounce around due to small Census sample sizes.

 

We do know this: The biggest picture of all — the total value of goods and services produced — shows Connecticut’s lost decade at its starkest. The total product for Connecticut actually shrank by 0.5 percent, adjusted for inflation, when we compare the average for all of 2009 with the average for the 12 months ending last June, the latest data we hav

 

That’s a shrinking economy after the U.S. recession ended, friends. One slice that meant thousands of livelihoods — the manufacturing of non-durable goods such as food, pharmaceuticals and household items — slipped by almost half, to $6.9 billion a year. The much larger, higher paying finance and insurance sector cratered by 23 percent.

 

Massachusetts, ignited by the allure of Boston and explosive gains in bio-sciences, shot ahead by 20 percent overall even as we shrank. And the nation as a whole, which grew slower than Connecticut from 2005 to the end of 2009, expanded by 19 percent in the decade that just ended.

 

What Connecticut doesn’t have is an unemployment problem, as we track the nation in jobless rates. That’s partly because we don’t have vast tracts of poverty, another strength of Connecticut. And it’s partly that many people just leave if they’re out of work or under-employed. The Census numbers show an average of 24,000 people a year moving to other states over the last five years, making Connecticut the 4th worst in the continental United States, ahead of only Illinois, New York and New Jersey.

 

 

 

 

I’ve studied Connecticut prosperity full-time for four months shy of 25 years as an economics reporter, columnist and business editor. I knew these numbers intellectually. Seeing them all together, calculating them as a decade in the mirror, I feel a punch in the gut, a wistful tear for lost opportunity as a transplanted Connecticut homeowner by choice, an employee in a struggling industry and the father of a newly minted teacher in Boston who’s not coming back.

 

What happened?

 

We’ve argued the causes of Connecticut’s relentless recession from the very start. Tax increases, driven by decades-old debts and obligations, piled up even as former Gov. Dannel P. Malloy cut the size of government by eliminating more than 5,000 state jobs.

 

We’re in the hole by as much as $100 billion including pensions and future health care for public employees, despite restructuring the debts and benefits multiple times. The problem isn’t today’s benefits, though they’re too high for older state employees. It’s that for decades, Democrats and Republicans alike failed to set aside money.

 

Costs for utilities, education, entertainment and health care have climbed as they have in the rest of coastal America. But the perceived value of living in Connecticut didn’t keep pace in large part because we lacked, and still lack, a true magnet city with enough critical mass to attract millennial college graduates.

 

Leafy suburbs unconnected to major cities fell out of favor and the center-cities Connecticut does have are not able to compete with second-tier metros such as Minneapolis, Dallas and Pittsburgh, let alone the giants.

 

 

Manufacturers slowly moved operations to cheaper places. Corporate headquarters, facing profit pressures, retrenched. A few big events bled thousands of jobs, chiefly rising competition for the native American casinos and consolidation in financial services — especially the breakup of General Electric’s GE Capital. That breakup cost 2,700 lucrative jobs, nine times more than the more widely cited but less important exit of GE’s headquarters from Fairfield to Boston in 2016.

 

The Trump-led tax reform of late 2017 didn’t help. Although high-income earners have seen a nice break, the new limit of $10,000 on federal income tax deductions for state and local taxes hurts the entire Northeast, costing Connecticut residents an estimated $2 billion a year.

 

What we have, in short, is a vicious cycle in which people leave or stay away because costs are high in comparison to perceived value, or they leave or stay away because we don’t have any large cities in Connecticut. And that of course drives up costs further because it lowers the tax base. Warren Buffett, the multi-billionaire corporate investor, didn’t help matters by warning people to avoid states with high unfunded liabilities.

 

Rena Carreiro was among those who felt herself moving sideways during the decade. She had worked as an office manager for a manufacturer since 1993. Over the last ten years the business retrenched in Connecticut, moving work elsewhere.

 

Carreiro performed finance, human resources, production control and inventory tasks, taking on more work as people left. “It was wonderful to learn all those new things,” the Waterbury resident said.

 

But there were few opportunities for career advancement. The company — which Carreiro didn’t want to name — closed her plant at the end of 2019. She landed a job at Parker Medical in Bridgewater, a growing company where she has high hopes and new optimism.

 

Solutions

 

Like Rena Carreiro, we as a state can take measures to avoid another lost economic decade. Here’s a 6-point plan:

 

  TAKE A MIDDLE PATH ON POLICY— Democrats and Republicans need to meet in the middle. That means Republicans need to tone down the two-note chorus about taxes and state employee benefits, and help govern like they did briefly in 2017, when the Senate was split 18-18. And it means Democrats must pull back on the throttle for great programs we can’t afford. It’s no coincidence that Massachusetts does well with Republican governors and Democratic legislatures, and the nation does well under centrist presidents such as Bill Clinton. The middle path means Republicans need to stop trashing the unions and Democrats need to stop protecting every iota of their benefits. Modest givebacks on retiree health co-payments and cost-of-living adjustments won’t kill anyone and will help the state. And the middle path means pushing hard for efficiency gains in government at the state and especially in cities and towns, where property taxes are way too high.

 

  SHOW SOME CONNECTICUT PRIDE — Yeah, that was the name of a basketball team but it’s hard to find a place that trashes itself as much as we do in this state. Knock it off. You know who you are. Connecticut has great education, access to mountains, oceans and countryside and a lot of smart and innovative people. We have good cities, not great ones, with truly notable food and music, and access — there’s that word again — to two of the greatest cities in the world. Lack of growth has left us more open space and less sprawl. Enjoy it. Get psyched. Work hard, play hard and stop feeding the collective depression. It’s a small state, go make something happen.

 

  EMBRACE RISK — What do finance, insurance and defense manufacturing have in common? They’re all built around controlling risk. That’s what we do and it shows in the personality of the state. When it comes to business, we need the culture of put-it-out-there enterprise that seems to make no sense, like Amazon, Facebook, Tesla and Microsoft at their founding. We had it in the 19th and early 20th centuries and lost it.

 

  MARKET TO IMMIGRANTS AND YOUNG PARENTS - That’s our sweet spot because it’s more about education and family than urban lifestyle. Connecticut does welcome immigrants in contrast to Trump’s America and that can help us. We do have a good record of attracting people in their 30s. We need to reach those groups more actively with targeted campaigns.

 

  KEEP WORKING ON CITIES AND TRANSPORTATION - Connecticut will never compete on price with North Dakota and Mississippi, nor should we try. Building the place up matters even though it costs money. It’s working in Stamford.

 

  LET EQUILIBRIUM HAPPEN -- State Sen. Matt Lesser, D-Middletown, thinks it’s fine that houses are not overvalued. More opportunity for buyers, he says. It’s a matter of balance and equilibrium. At some point, millennial professionals might figure out that living in a great house in Milford or New Haven’s East Rock neighborhood, with a 15-minute commute, beats five to an apartment in Brooklyn and two hours a day on the subway. That may mean house prices have to fall even further, which sucks for us homeowners. But it’s a path that will work. Embracing equilibrium means understanding that bike lanes in and out of cities, and saving historic landmarks such as the Sanborn Library in Bridgeport, which was tragically demolished in August, will add up.

 

The cul-de-sac

 

Following a balanced path leaves plenty of room for debate over whether we more urgently need to cut taxes — the Republican solution — or, as Democrats insist, increase value by adding amenities to make the state more hospitable.

 

The same argument unfolds issue by issue: paid family and medical leave, a $15 minimum wage, housing subsidies for the poor, housing subsidies for the rich (yeah, apartments in Hartford at a cost of tens of millions for state taxpayers), corporate handouts, expanded Medicaid and on and on. In each one, there is a middle path of compromise that get too little attention. Paid family and medical leave, for example, is too rich a program, too soon, although it’s worthy.

 

All the while, we lost a decade.

 

Twenty-one years ago, a regional economic report warned that Connecticut was in danger of becoming a “cul-de-sac,” an economic dead-end, in part because it lacked “dynamism” in the coming century of urbanization and globalization. Hmmm.

 

“Right now investment is bypassing the state and we have become in many respects that cul-de-sac,” said Donald Klepper-Smith, a longtime economist who has, as of 2020, entered semi-retirement and moved to Massachusetts and South Carolina.

 

Klepper-Smith’s view: We need leadership and strategy to achieve fiscal discipline. “I don’t think it gets fixed in my lifetime because I don’t think we have the political will to fix it,” he said.

 

I’m more optimistic but only slightly. But there are many fronts in this war. Clearly, after the lost decade Connecticut just endured, there is no more wiggle room.

 

Rich Dupont, a manufacturing consultant, is helping the community college system, especially at Housatonic in Bridgeport, train machinists for the thousands of open jobs in advanced manufacturing that will disappear if qualified people don’t materialize. What he says about that battle also applies to the entire state economy.

 

“We are teetering on the edge.”

 

What Will 2020 Bring?

Predictions are always dangerous, and our region, in particular, is often out of sync with other parts of the country, but certain trends seem like fairly safe bets to continue.  One obvious one is the predominance of millennials in the real estate marketplace.  They continue to do things on their own time schedule--they marry later than we did, have children later than we did, and buy houses later than we did.  They also seem free of the stigma of renting, and often prefer to spend their money in other ways.  This makes sense in areas where appreciation has been low, and where it can take a long time to sell something, since they tend to move a lot.  One surprising factoid is that they do buy in the suburbs once they have kids, which many experts thought they wouldn't do.  They do, however, prefer smaller homes on smaller lots, with sidewalks and in walkable neighborhoods.  They also like gray color schemes and soapstone counters, to the boomer off-whites and granite.

The lack of rental stigma carries over into investment real estate.  Younger investors seem to like multifamilies and even single houses for rent, as opposed to the strip centers and office buildings of the boomer generation's investments.  This market continues to be active, especially in light of the many predictors that would indicate a future decline in stock prices.  Bigger investors are also still keen on rental properties, including larger developments.  Warehouses, in addition, are in demand, thanks to online shopping and its concomitant need for shipping locations.

Connecticut is mixed in appreciation growth and in strength of the market in general.  Some places in Fairfield County are popular, while others are not.  New Haven is the epicenter of demand for residential property.  Shorter (and sometimes non-car) commutes and the factors listed above both contribute to that result.  We will have to wait and see what effect tolls have on individual towns and cities, if they ever come to pass. The State's "debt diet" may also come into play, as municipalities lose State financing for improvements and amenities, and local taxes rise.

In conclusion, we are pretty bullish on 2020.  We don't have excess supply in most categories, our distances are small compared to many parts of the country, and cities are thriving in many places.  If Connecticut can manage to raise the rate of job growth, which is close to zero, real estate will only get better as an investment.  We look forward to a year where that can occur!

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 5.5 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.”

 

 

What’s Causing the Current Housing Market Uptick?

It seemed for some years that Connecticut, alone among almost all the states, would never see the benefits of a better residential real estate market.  While recovery is spotty, both in terms of price and number of units, there has definitely been a feeling of optimism all year.  Despite a bitter winter, sales began early and continued strong.  Despite talk of fiscal woes, and estate taxes especially, in Connecticut, people were looking.  And, despite the recent Federal tax act, with its threat of limiting property tax deductions for blue states, they are buying.

The strongest correlation between the housing market and the economy has always been, for us, the consumer confidence index.  When people feel bullish about the future, the real estate sector gets stronger.  Consumer confidence has jumped this year, and we can tell.  Even though many uncertainties exist for taxpayers, employers and employees, and all Americans, homeowners and would-be homeowners are apparently responding to a few clear points:  We can see upward pressure on wages, in part because unemployment is low; interest rates, although there has been some movement, remain very favorable, and mortgage availability has eased in some areas; and, perhaps most importantly, the stock market has created a great deal of new wealth, and many stockholders think that they should cash out, at least partially, while their gains are still high, and that money has to go somewhere.  Real estate, with its versatility of use (investment, vacation, or primary residence), its tangibility, its prominent place in the defining of the American dream, and its centrality in life passages and aspirations, fits the that bill for many.

Don’t think that real estate professionals are crying wolf when we urge fiscal prudence in State and local spending, or when we call for repeal of onerous provisions in Connecticut’s estate tax, because the tide could turn again, if consumers once again switch to pessimism about the future.  For now, though, it appears that buyers are planning to “seize the day” and diversify into property.  And that’s good news for sellers, and all of us.

Bidding in a Market with Tight Inventory

Currently, the Greater New Haven market is experiencing a shortage of inventory in some price ranges.  Although most of the country has been like this for a while, it has been a long time since it has occurred in Connecticut.  Many local buyers are not accustomed to needing to, or may not even believe that they need to, compete with other offers.  Some people that real estate agents mislead potential buyers about other buyers, in order to encourage interested parties to act quickly, or bid higher.  We are amazed now at how often a house that has been on the market for months, without any interest, suddenly may have two or even three parties competing to buy it.  Once a certain point in the spring has been reached, people feel that they have seen most of what might be coming on, so that they no longer feel that they should wait. Of course, homes that are well-priced and desirable attract interest, and usually these days multiple offers, almost right away.

So my advice to buyers is simple, and fairly obvious.  First, make a list of what you require in a house.  Keep a running preference order for what you’ve already seen, with your first three choices clear.  If those choices don’t change every time you go out, it’s probably time to stop looking. Be honest with yourself, and your agent, about your limits.  It’s amazing how often people tell us their upper price range, and then exceed it. Then, make the cleanest offer you can, with the fewest contingencies and for the shortest amount of time.  Assume that there is other interest in the property,  and follow this important rule:  Bid the highest amount that you would be sorry to hear that someone else paid.  If your reaction to a later record of the sales price is that you couldn’t, or wouldn’t, have matched it, then you did the right thing.  If your immediate thought (never mind what you told your agent about the highest you would go) is that you would have paid that price, then you should have bid more.

Report from Denver

I just returned from a meeting of similar companies from around the country, held this time in Denver.  We always poll the group about market trends, and there was a great deal of commonality this year. Inventory, or the lack thereof, is the driver in most of the United States.  Even Connecticut is short on supply in the lower price ranges, and in the healthy range for all but the million plus category.  That higher supply in more expensive homes is also true in most areas around the country, but the real story is that starter homes and homes under about $500,000 have marketing times that are measured in days in most communities.  This is driving up prices, which hasn't happened here as often yet, although we are seeing it with well-maintained and desirable homes.  Mortgage rates are headed up as well, so time matters for many lookers.

Another big trend is in marketing.  With the exception of certain kinds of direct mail, mostly postcards about homes just listed or recently sold, advertising is going digital at a rapid rate.  We in Greater New Haven spent more on newspaper ads than almost anyone else, and very few did print advertising at all anymore.  Digital ads (SEM) or organic search tools (SEO) dominate the field, along with costs of website improvements and video production. Lead generation is front and center, often focused simply on how to track leads. Some are even spending money to appear in the answers given by Alexa!

Some things haven't changed much.  Personal relationships still account for most agent transactions, and, although people search for an agent on line (and pay a lot of attention to client testimonials), they are often starting with a recommendation from someone they know.  Good agents still generate a lot of repeat business, and good agents are doing more and more of the total transactions.  Real estate is an expensive business to be in for agents and for brokers (lately, even agents might feel sorry for the pressure put on broker returns!), and more is sold by a few top agents than ever before.  As the market improves, more people are going into the business again, and they are more likely to be younger, but the industry as a whole skews old and non-diverse.

Companies are also consolidating, so that megafirms are more and more a dominant force.  Teams have mostly taken the place of small firms,  and are run as companies within companies.  Legal and ethical compliance are big reasons for this tightening of the market, along with cost drivers that favor economies of scale.  One-half of one percent of brokers did a third of all the business in the last year reported.

Buyers haven't varied in their desires as much as most thought they would, given the demographic profiles we see.  Gen Xers and Millennials nationally still favor traditional homes with outdoor space, and in good school districts.  That's good news for sellers, although the younger buyers are much more concerned with maintenance and walkability scores.  Since there hasn't been enough new housing built in many regions, buyers will eventually have to buy what sellers have to sell, at least in the short run.

What are the takeaways here?  Almost everyone thinks that mortgage rates will rise, and prices will rise as well, making now the time to buy.  This is especially true at the high end of the market.  Buyers will still want personal assistance in navigating home ownership, and sellers want that touch as well. Therefore, we will be reaching out to them in new and different ways, but with the same message:  We're here to help.

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 Madison you can say “If market conditions do not change and if no new listings come on the market it will take 8.2 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.”



Set A New Deadline

We are just coming off of what turned out to be a very busy December.  There were lots of changes, of course, with the new Federal tax bill, but it was--and still is--very unclear as to whether some things should have been done last year, or will be more advantageous to do in 2018,  Nowhere is that more true than in the real estate realm.

So, while uncertainty generally slows a process down, last month it sped up.  When I tried to think of why that would be, I realized that the end of a calendar year is a powerful and motivating deadline.  All sorts of people rush to finish projects and clear off their to-do lists before a year ends.  This year, despite all the potential changes, was no different, and even busier.

It made me conscious of the fact that the real estate market has been slowed down by people feeling that there was no pressure to make decisions.  Instead, they thought that properties would continue to be available, maybe even for less, into the foreseeable future.  Our job as agents was to try to create urgency.  That was often hard.

Therefore, our hope for next year is that all potential and current clients have a self-imposed deadline of some sort.  Whether their hope is to move, sell, or redeploy assets, everyone needs a finish line to cross.  Uncertainty can be problematic, but, if it lasts too long, more is lost by waiting than by simply moving on.

Greater New Haven, or Connecticut as a whole, residential, commercial, or investment, buy, sell, or rent--all are choices.  Just make one, and you will feel accomplished and relieved.

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 7.0 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.”



Median Home Prices Up in September

Article is from the CT REALTORS®

In a press release to the media today, CTR reports that the single-family residential home median sales price is $250,000 which reflects a 2 percent increase from $245,000 in that same time period last year. Median indicates that half the homes sold for more and half for less. Single-family residential home sales in Connecticut decreased 0.6 percent comparing October 2017 to October 2016. The total units of homes sold were 2,919 in October 2017 and 2,936 in October 2016.

Townhouses and condominiums median sales price is $163,000 representing a 2.5 percent increase from $159,000 in that same time period in 2016. Sales in Connecticut decreased 1.3 percent comparing October 2017 to October 2016. Total units sold were 731 in October 2017 and 741 in October 2016.

Statistics released by the National Association of REALTORS® indicate total home sales nationwide (includes single-family homes, townhomes, condominiums and co-ops) decreased 0.9 percent comparing October 2017 to October 2016; and the median national home sales price is $247,000. Regionally, Northeast home sales had no change from that same time period; with a median sales price of $272,800. do with the security deposit when a tenant who was under age 62 at the start of the lease turns 62 during the time of the lease.



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.

Connecticut Rental Rates Take A Breather After A Year of Increases

Article is from Article is from CT Real Estate and Construction, click here to read the article on their website.

 

CONNCECTICUT: Rents in cities across Connecticut saw a monthly dip in rent, running counter to a year long trend. New Haven county rents have posted the steepest annual increases, with New Haven and Meriden seeing annual increases of 5% and 7% respectively. Connecticut’s overall annual rent increase for 2016 is only 1.3%.

October showed a different direction with rents making modest declines in Hartford, New Haven and Stamford as well as other cities across the state Only Danbury registered an increase in rents for October [1.35%].

Currently, median rents in New Haven stand at $1,080 for a one-bedroom apartment and $1,320 for a two-bedroom. Hartford is more affordable with only $820 and $1030 respectively.

Stamford remains the most expensive to rent among Connecticut cities with $1500 for a single bedroom and $1890 for a two bedroom.

New Haven and several of the cities have seen several months of modest declines but most of Connecticut have seen increases for the year. Danbury and Norwalk have both seen modest declines however.

According to Apartmentlist.com cities nationwide have seen rents grow more modestly, or in some cases, even decline. But most Connecticut cities are still more affordable than most large cities across the country.

Several Connecticut cities have rents above the national average of $1,160. Nationwide, rents have grown by 2.7% over the past year compared to the 5.3% increase in New Haven, 2.7% in Waterbury, .7% in Hartford and a 1% decline in rents for the year in Stamford.

In spite of Connecticut’s increases, renters will find more reasonable prices in the state’s cities than most large cities across the country. For example, San Francisco has a median 2BR rent of $3,070, which is more than twice the price in New Haven.

Data from Apartment list is skewed toward luxury apartments and information that is available from data on private listing sites, including but not exclusively apartmentlist.com. Apartment List says they are “committed to making our rent estimates the best and most accurate available. We start with reliable median rent statistics from the Census Bureau, then extrapolate them forward to the current month using a growth rate calculated from our listing data. In doing so, we use a same-unit analysis similar to Case-Shiller’s approach, comparing only units that are available across both time periods to provide an accurate picture of rent growth in cities across the country.”

Article is from CT Real Estate and Construction

Generational Stalemate in our Real Estate Market

Article is written by David Stark, Real Estate Market Source of South Central Wisconsin

NEW LISTINGS? ABOUT THE SAME AS A YEAR AGO

(earlier hopes that they were finally increasing did not materialize). Prices? Up, again (about seven percent year-over-year in Dane County). New construction? Still not enough to satisfy overall demand.

So, here we are. Not stuck, really, as that would imply things are bad. Far from it. While overall sales are not yet increasing year-over-year, they’ve settled in at a brisk and healthy pace. What’s frustrating—if that’s the right word—is that we can’t help feeling it could be even better. Better, if we could just find enough homes to sell to satisfy our region’s growing demand. And growing it certainly is. Steve Steinhoff, Deputy Director of the Capital Area Regional Planning Commission, reported in a recent talk that our region is growing at a rate of about 80,000 people every 12 years. That’s enough new people to fill Camp Randall Stadium. And it’s now well understood that many of those new arrivals in the Greater Madison area are Millennials—the largest age cohort in the nation’s history.

According to Zillow Group, Millennials nationwide now make up 42 percent of all homebuyers, and 71 percent of all first-time homebuyers. (So much for the theory that Millennials will never be home owners, a theory we’ve never subscribed to anyway.) These Millennial buyers are looking for homes primarily in the $200K to $350K range, which unfortunately is below the range where builders in our market can help fill the inventory gap (a fact we’ve discussed in a number of previous editions of the newsletter).

Where does this leave us, and what can we expect going forward? Do we have any further insight into the causes of our low inventories? Will we break out of the current situation any time soon? And if not, how do we manage it?

THE GENERATION GAP

We’ve speculated, along with many others, about the root causes of today’s housing shortages. A lack of new construction has been the most frequently mentioned culprit. There’s no doubt it’s going to have to be a part of the solution. But there’s another theory we’ve heard recently that rings true to us.

Up until the Millennials came along, the Baby Boomers were by far the largest generation in our history. They’re also the longest lived. Most important for this discussion, Baby Boomers are also the generation staying in their homes the longest. According to an August 8th Bloomberg article by Prashant Gopal, “People 55 and older own 53 percent of U.S. owner-occupied houses, the biggest share since the government started collecting data in 1900, according to real estate website Trulia. That’s up from 43 percent a decade ago.”

Baby Boomers, in general, are healthier and more active than previous generations were at the same age. As a result, a growing number of them are choosing to ‘age in place.’ In other words, Baby Boomers are not selling their houses after retirement as quickly as previous generations. This contributes to the housing shortage we’re experiencing all over the country, including here.

There’s a wonderful irony in this, one that should remind all of us to take the predictions of pundits and prognosticators with a huge grain of salt (including those from yours truly). Back around the beginning of the 21st Century, a number of articles forecasted an impending housing bust. The reason? Baby Boomers, it was assumed, would begin to retire and start putting their homes on the market, downsizing or moving to retirement homes. A housing glut was predicted that would decimate home values.

In fact, what we have is the exact opposite. Boomers in greater numbers are simply choosing to stay where they are, hogging the supply of housing already built. Add in the fact that the Millennial generation is even bigger, and now entering prime home-buying age, and we have the perfect ingredients for a housing shortage.

It’s not just that simple, of course, and the obstacles we’ve outlined in previous editions that discourage new construction are still playing a role.

 

THE PICKY BUYER?

In our last edition, we speculated that some buyers were withdrawing from the frenzy of the spring market, perhaps to reappear in late summer or fall. We continue to believe this is true. Our own internal numbers are running slightly ahead of last year for offers-to-purchase; we’ve been ahead every month since a lackluster April. It would seem that many buyers have taken our advice to remain in the game beyond the spring market.

As is often the case, however, we did see a bit of a lull right after Labor Day. September seemed to get off to a very slow start, and there was a point where we wondered if we might be writing about a declining market to finish the year. We also started to see something we haven’t seen for a long time: the picky buyer. We heard a number of stories about buyers who made offers with somewhat of a take-it-or-leave-it attitude. Rather than playing the bidding war game, they were walking away if the first offer wasn’t accepted. We were hearing far fewer instances of multiple buyers bidding up the price on new listings, and even heard some stories about sellers who were surprised when their home didn’t fly off the shelf like most did in the spring.

As it turned out, it was short-lived. September ended with a flurry, and October is off to a very solid start. As we draft this edition in mid-October, we’re starting to hear stories of multiple offers and bidding wars again. While it seemed there was a brief window where buyers could perhaps exert a little more control during negotiations, the October push has, for the moment, drawn that window closed. We remain in a very strong seller’s market, and as long as homes remain scarce, buyers will be forced to compete.

ADVICE FOR BUYERS

If you’ve stayed active through summer and early fall, you’ve probably found it somewhat easier to navigate the market than in spring. You can perhaps afford to be a little pickier. But as always, don’t outsmart yourself. It’s still a seller’s market, and most sellers don’t have to capitulate to a lowball offer in order to sell. You can pass up some good values overplaying your hand, and if you don’t buy this year, you’ll be back in the spring market madness. Activity is still high for this time of year, and competition remains brisk for good new listings. But it’s far less busy than it will be in March. If you can find something now, the process will be much easier.