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!

Dear Santa--A Realtor's List

Dear Santa,

We know that the following list is not the kind that you can just deliver to us.  We're hoping, however, that some of the magic of Christmas will make our wishes come true!  Here's what we'd like:

1. Please help our clients understand that required paperwork is not mandated by us, and that we are the ones who get in trouble if it isn't signed in a timely way;
2.  Please remind our clients that only get paid when a transaction occurs, so that they should realize how important it is for us to be compensated fairly when that happens;
3.  We wish that everyone knew what things are within our job description--and there are a lot of them--and what is not, so that people would be reasonable about what they are asking us to do;
4.  Please don't shoot the messenger--we only tell clients what the market is doing, not what we think it should be, and higher prices help us also;
5.  We would love to be treated like the professionals most of us are, and in the same category as lawyers, bankers, and accountants;
6.  Understand that we get into trouble mostly when we try to do something that isn't within our field, so remember that we are the agents, not the principals;
7.  Help us meet all of the deadlines, and keep the communication lines open;
8.  Please respect our time, especially since we are providing it regardless of whether we are compensated later for it;
9.  Especially at this time of year, remind everyone that we have families and obligations also; and
10. Please, Santa, make 2020 a wonderful year for Connecticut real estate!

We wish Happy Holidays to all of our clients and friends, and best wishes for a wonderful New Year, and thank them for all of their business.  And Santa, thanks for reading our list!

From all of the Realtors at Pearce Real Estate

Calling All Serious Buyers

Most people think of our local real estate selling season as going from the beginning of spring through Thanksgiving, and then taking a break through the winter.  Although the number of buyers may be greatest in the spring, as well as the sheer number of listings, there are clear advantages to the holiday season.

Many of us are so busy that keeping a house in showing condition, especially with the possible addition of winter weather, seems too difficult to contemplate.  But do you always go all out to decorate your home?  You may be one of those sellers whose property looks its best at this time of year.

Buyers can be overwhelmed with parties, gift buying, recitals, work obligations,and vacations.  However, those who squeeze out the time are usually serious buyers, who are often on a deadline.  They may have a new job, or they may want to move for tax reasons, family growth, or just because the end of the year is a fine time to accomplish a goal.  They are not as many in number, but they are motivated, without extra time to waste.  Every year, one of our agents writes an offer on Christmas Eve.  There's no time like the present for the ultimate present!

So, if you are a seller who wants to swim against the tide, and who may be willing to go the extra mile (or be doing it anyway) with seasonal sights and smells, here's your chance.  Maybe your year-end buyer will end up under your mistletoe!

What Will 2018 Bring?

The latest Federal tax bill is only hours old, but pundits have been debating various proposals and exclusions for months.  People are frantically trying to figure out what it means for real estate, and what to do before the end of the year.  Unlike making a charitable contribution, it isn't quite so easy to implement changes in the next ten days.  However, we can see that some are trying.

It's unusual for us to still be getting offers and selling at this season, when thoughts often turn to shopping and partying.  This year, the phones are ringing more, and more transactions are coming together.  There aren't too many of those buyers and sellers who expect to close instantly, so it's a sign of something else, and we hope that it's a sign that people are moving on with their lives.

They hesitated during the presidential election, they hesitated during the first few months of Trump's term, but they finally seem to be inclined toward action.  Whether that's just life, or it's in reaction to the various proposals is hard to know, but I'd bet on the former.  I think we all know that mortgage rates are heading up, and that, in the end, that makes more difference to buyers than almost anything else in a purchase.

There hasn't been enough time for digestion of all of the parts of the tax bill, so we aren't even sure what 2018 will bring.  However, it is the time of the year for predictions, so here goes:  Connecticut is going to be hurt under the bill, and more people will leave the State in 2018.  Since not all of them will be able to sell their houses, they will reduce prices on big, expensive homes.  At some point, those properties will seem like a bargain to those who have lived elsewhere, or in times past, and they will start to move.  Some of them will be sold as second homes, since those mortgage deductions were preserved in the final bill.  Buying real estate will seem prudent compared to betting that the stock market will keep going up.

Millennials will be a major force.  They may need help, and we may see more sellers taking back money, as used to happen in different cycles of the market.  Big employers may turn to housing allowances, in order to attract employees from out of the area.

On the commercial side, we will see more and more 1031 tax-deferred exchanges, as those were preserved as well.  Investment real estate will be strong in Greater New Haven, where properties seem inexpensive compared to Boston and New York.  The State Legislature may actually listen to the new commission on fiscal health, and make changes that will cause business to expand or relocate here.

And our New Year's resolution here in Connecticut?  We will continue to do our best to sell our beautiful State and region, in little pieces.  Happy New Year to all!

The Phones are Ringing!

A new year and a new decade have started, and I've never heard so many people say that they were happy to put the old year behind them. We can tell that they've moved on, because our phones, even in Commercial, have taken a big leap from December. It will be a few weeks before we see the results, but, in the meantime, we're busy.

What does that mean for sellers and buyers? It means that people are coming off the sidelines. They've put their lives on hold for long enough. Even in commercial real estate, where there are dire predictions for the next couple of years, business goes on. The leases may be shorter and smaller, but space needs will prevail at some point.

Therefore, there will be competition for well-priced listings. Well-priced is the key here. There are still plenty of listings getting no play, but others go right away. The latter ones are perceived to be good deals. There are also a lot of short sales in the market; i.e., houses where there the proceeds will not cover the debt. Banks are required to get within a certain percentage of fair market value, so don't look for big bargains in that department.

If you're a serious buyer, buy now. You need to leave time to get through the whole sales process, and you don't want to miss out on the tax credits available. And please, don't assume that you can take 10 or 20% off the listed price (see paragraph above!).

If you're a serious seller, be realistic about the price. And list now, to get a jump on the competition.

New Year, New Attitudes

Happy New Year! It is clear from watching the stock market that investors in that area have confidence about the future. In our business, we are looking forward to the same sort of sustained rise during 2010. I just returned from Arizona, where the number of sales has gone up quite a bit from the year before, although prices continue to lag and short sales are still very common. Since we are behind Arizona on the real estate curve, we can look there to see what's down the road for us.

What they are worried about is the glut of homes that could come up for sale if owners lose interest in trying to hold on to them while values are low. Moral suasion may not be enough to convince people to continue paying on mortgages that are underwater. There have recently been a number of articles about just that--homeowners moving into rentals and spending the difference in their monthly payments on trips and consumer goods. That's not good for real estate.

We will be somewhat protected from that phenomenon in Connecticut, I believe, since whatever happens on the West Coast and in Florida will most likely cause the government to take steps to prevent the spread of anything that might impede a general economic recovery, and before it gets to us. They took prompt action in the banking crisis, and the recent extension and expansion of the tax credit for homeowners is a good indication that real estate will be treated in much the same way. In addition, since we had nowhere near the amount of speculation and building as the South and Southwest, we are not in the position of having lots of empty houses and condos to fill. Sometimes it's not bad to suffer from slower growth!

In the meantime, we should take heart in the surge of interest in real estate in Arizona and other similar markets. Investors are buying, and there is activity. I talked to one agent who said that her experience there is bearing out what I've been preaching in this blog: Those properties that are priced correctly and are in good condition are hard to get, since they receive multiple bids early on. Although there is a great deal on the market, only homes and buildings considered to be good values are moving. So, if you want to sell, be sure that you are in that category. If you want to buy, get a jump on that trend and buy before the spring market and before the tax credit expires on April 30th.

Happy Holidays

As this challenging economic year comes to a close, I'd like to take this opportunity to wish all H. Pearce agents, staff, clients, and blog readers a very healthy and happy holiday season, with best wishes for a prosperous New Year. We value your business, and commit ourselves to providing you with the best in professional real estate services. Please call us with any and all of your real estate needs in 2010!