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 Branford you can say “If market conditions do not change and if no new listings come on the market it will take 3.5 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”.

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 Branford you can say “If market conditions do not change and if no new listings come on the market it will take 2.0 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”.

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 Branford you can say "If market conditions do not change and if no new listings come on the market it will take 2.0 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".

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 Guilford you can say “If market conditions do not change and if no new listings come on the market it will take 1.7 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”.

 

Inventory shortage sends home prices soaring at record rate

Inventory shortage sends home prices soaring at record rate

14.8% annual home price growth is the highest seen in Black Knight data going back nearly 30 years

By Matt Carter of inman

With listings shortages persisting, U.S. housing markets remained “white hot” in April, with home prices growing at a record — and unsustainable — annual rate of 14.8 percent.

 

Black Knight’s latest Mortgage Monitor Report recorded “the highest annual home price growth rate we’ve ever seen” in records going back nearly 30 years, said Ben Graboske, the company’s data and analytics president, in a statement.

 

Western states saw the biggest price gains, with six metro markets — Austin, Texas; Phoenix, Arizona; Seattle, Washington; Riverside, Sacramento and San Diego, California — growing at an annual rate of 20 percent or more.

“Current levels of home price growth aren’t sustainable for an extended period, especially if mortgage rates begin to rise,” Black Knight analysts concluded in the report.

If home values keep climbing at the current pace, and mortgage rates go up, that will push a key measure of affordability, the payment-to-income ratio, above the 23.6 percent average over the last 25 years. Anything above the current ratio of 20.5 percent is considered a “tipping point” where home price appreciation typically slows, Graboske said.

If rates on 30-year fixed-rate loans rise to 3.5 percent by the end of 2022, the national payment-to-income ratio would hit 21.6 percent by the end of this year, and 25 percent by 2022.

Low mortgage rates are fueling demand for housing, but Graboske said the more acute driver of price increases is the shortage of available listings.

“The total number of active listings was down 60 percent from the 2017 to 2019 average for April,” Graboske said. That means there were close to 750,000 fewer homes on the market than is typical. “It’s not getting any better, either.”

Compared to pre-pandemic seasonal levels, there were 26 percent fewer newly listed properties in April. With homes selling so quickly, newly listed properties now account for more than 75 percent of listings, compared to 27 percent a year ago.

The drop in new listing volume is likely to “create noticeable headwinds for both purchase lending and existing home sale volumes in coming months,” the report said.

At the metro level, even the slowest-growing markets are seeing “aggressive” price growth, the report noted. At 8.1 percent, Pittsburgh, Pennsylvania, had the lowest home price growth rate among the 50 largest markets.

But that’s the highest “floor” Black Knight has ever seen — more than three times as high as previous high of 2.4 percent.

The top 10 metro markets with the strongest price appreciation were:

• Austin, Texas (24.9 percent)
• Phoenix, Arizona (24.4 percent)
• Riverside, California (22.3 percent)
• Seattle, Washington (20.8 percent)
• Sacramento, California (20.8 percent)
• San Diego, California (20.1 percent)
• Salt Lake City, Utah (19.9 percent)
• Providence, Rhode Island (18.1 percent)
• Tampa, Florida (17.3 percent)
• Jacksonville, Florida (17.0 percent)

Among the 50 largest housing markets, the 10 markets with the weakest price appreciation were:

• St. Louis, Missouri (11.6 percent)
• San Antonio, Texas (11.6 percent)
• Orlando, Florida (11.0 percent)
• New Orleans, Louisiana (10.9 percent)
• Minneapolis, Minnesota (10.8 percent)
• Birmingham, Alabama (10.8 percent)
• Houston, Texas (10.3 percent)
• Oklahoma City, Oklahoma (10.0 percent)
• Chicago, Illinois (9.9 percent)
• Pittsburgh, Pennsylvania (8.1 percent)

Many would-be homebuyers have seen the headlines about rising home prices and shortages of listings in many markets. More than half (56 percent) think it’s a bad time to buy, according to a recent Fannie Mae survey. The survey also found that while would-be homebuyers know it’s tough out there, an all-time high share of consumers (72 percent) said they’d buy a home if they moved.

Current Absorption Rates (Single-Family Residential Homes)

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 New Haven you can say “If market conditions do not change and if no new listings come on the market it will take 2.8 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”.

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 Branford you can say “If market conditions do not change and if no new listings come on the market it will take 2.0 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”.

Are We in a Real Estate Bubble in Connecticut? Tips for Deciding

Real estate cycles are inevitable.  No matter what happens, there are always economists around on both sides of the bubble question.  Every hot market is described by some of them as being fundamentally different, and therefore not likely to go down.

Market always go up and down.  Economic cycles always occur.  There are several factors to consider when you are a buyer or a seller in a market that is changing rapidly:

1--Where in the cycle are we?  Are there reasons to believe that there is more growth to come?

2--How does the local market compare?  Have we been ahead of the national curve, or lagged behind?

3--What are interest rates doing, and how is that likely to change over the next couple of years?

4--Will the transactions being considered balance out?  If there is both a buy and a sell contemplated, are they in equivalent markets, so that the "buy low, sell low" or "sell high, buy high" rules apply?

5--Are there reasons to believe that this part of this economic cycle might truly have any unique factors?

6--Do other life or work considerations come into play?   (Hint:  Other considerations always come into play!)

When considering our particular Connecticut market, it is important to note that we have lagged behind the rest of the country in price appreciation, and this has gone on for a couple of decades, at least.  That would suggest that there is more room for growth in this area than in some others.  

Interest rates are not likely to be this low for a very long time, even though they have already begun to rise.  Even in a "sell high, buy high" market, and even if only the "buy high" applies, interest rates will make a huge difference over the life of a mortgage.

There really are some unique factors in this economy at this time.  People have extra cash, in many cases, because they may have gotten stimulus checks, they haven't traveled, they haven't been able to dine out, and they haven't bought anything but garden tools, athleisure clothes, and liquor for a year.  So the pent-up demand isn't just for housing--it's for everything.  Spending more on a house can be a better plan than eating out every night, and with a longer-lasting benefit.  Working at home may not go away for many people, so extra space is important.  Our region is well-positioned to see an influx of residents from big urban areas.  Some of our drawbacks in transportation and infrastructure are being addressed nationally, with funds for improvement.  These points can possibly tip the scales on the question of this market really being different from other hot markets.

So, we are down to the last question--are there other considerations?  Whether buying or selling, it's time to weigh the options, and act quickly.

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 Branford you can say “If market conditions do not change and if no new listings come on the market it will take 2.9 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”.

 

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 Guilford you can say “If market conditions do not change and if no new listings come on the market it will take 2.8 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”.