Real Estate Closings in Greater New Haven vs. Last Year

We are in uncharted territory, as commentators remind us every day on every subject.  None of us knew what would happen to the real estate market during the pandemic.  At the beginning in Connecticut, the visits and offers really slowed down, but closings sped up--there was a big effort on the part of all parties to get things closed before the State shut down.  March was very busy on that metric, compared to other years.

When closings are charted week by week, results are only so useful, because one week versus another can be very random.  However, we can tell over the past four months that people adapted to the new normal.  After the initial bump, there was a big dip, which was followed by ups and downs throughout the period.  In general, the higher the price range, the better the closings held up. At most of the higher price levels, this year's closings exceeded those of last year during the past four months.That would be consistent with the observations and speculations that suggest that great numbers of NewYorkers are buying residential property in Connecticut, as our real estate seems very inexpensive to them.

While overall that is true, New Haven County supposedly did not get a bump from New York, nor did New London.  Anecdotally, we do believe that people are looking in our area.  If that's combined with the very short supply of listings, it makes for a vibrant market, and one far better than we expected for this spring.  And we expect that to continue, at least until (and unless) there is a second wave in the fall.  Anything that creates a sense of time pressure, be it weather, interest rates, or the possibility of further lockdown, will improve the market in the short run.  One of the biggest problems of the past decade was the sense on the part of buyers that they could take all the time that they wanted to decide, and that, as on Tinder, new choices would continue to appear, while previous ones would remain available.

Now that we know that's not true anymore, buyers are more serious.  When you add the fact that looking today is not without risk to health, there are many fewer idle lookers.  That has turned out to be a big boon for our industry; since we don't get paid for our time, we love any reason for buyers to be driven to contract faster.  Some want to sell and move while they can, while others are motivated to be in someplace where they can nest and telecommute in any future virus waves.  Those buyers also seek lower density, and value outside space, which helps us here as well.

So, in the main, we have adjusted to a new way of doing business quite well.  Market conditions were favorable for keeping sales up, and our region, with its concentration in higher ed and medicine, is fairly protected from the broader economic issues facing the whole country. Those relocating here from other parts of the world had already accepted offers, which were honored, so they needed to move. Our low prices attracted investors, too.  All in all, a good report for real estate prices and activity in Greater New Haven.



Sellers Take Note

Many people read the national news when it comes to real estate and forget that, like politics, all real estate is local.  In the past couple of years, most news has been about prices rising once again, and inventories running low across the country, especially (of course) in California.

We don't like to dwell on bad news, but our region was one of only six out of the top hundred metro markets around the nation whose average price fell from May 2013 to May 2014.  Three of the past few months have also seen declines.  I hate to bring it up, but sellers considering offers, or even listing price, should take those statistics into account.

There are multiple reasons for the fall in prices here, and some will certainly go away over time, but, for now, we are in stasis at a lower price point for most real estate, and we should accept that during the fall market that lasts until Thanksgiving.  Buyers will have choices, and it's fine to stick to your guns about price, unless you want to sell in the short run.  The spring market may be different, so buyers, who may expect that low selling prices and low mortgage rates will last forever, should act now.  Everybody will be better off if everyone is realistic.

Hazy is the Word

Well, the weather is hazy, hot, and humid every day now, and the outlook for prices in real estate is hazy as well. I just got a report from a real estate owner friend in Wisconsin, showing that activity there is way up, but that median prices are falling as sales rise. That seems to be true pretty much everywhere, and everyone seems to know it except sellers. They are still thinking that recovery means the stratospheric gains of a few years ago.

It's not really clear why they continue to think so. After all, the rapid rise of the stock market in the past few months has not brought stock prices up to where they were when they started to fall, so why would real estate be different? Lower-priced homes are moving because there are tax incentives and new buyers entering the market, but the incentives don't apply to those with higher incomes, so the government isn't going to prop up prices in those brackets artificially. The only things that will get those buyers off the fence are massive, sustained improvements in the economic climate, or perceived bargains. The latter is the only one within the control of sellers. Also, since prices have fallen for all kinds of items, sellers can buy more with the money they get for their homes at lower sales points, even if they are not reinvesting in real estate at the same lower levels.

Although this all makes sense, the psyches of sellers and buyers have never been terribly swayed by logic. Let's hope that this time is different, and that some of them will get real before the weather turns cold.