Death By a Thousand Cuts

The real estate market in the Greater New Haven area is bifurcated these days.   Some things sell, often with multiple offers, in a few days, while other properties don't even get shown, or don't get offers at all.  The difference is mainly in the urgency that the listing conveys to buyers--they will bid on something that they think won't be there the next time they look, but will wait and ponder on everything else.  There is enough supply so that buyers feel that more will come on every week.  It's a little like Tinder--there have been articles saying that dating apps actually reduce serious relationships, because people can't choose and settle down, when each visit to the site brings new and sometimes exciting options.  Buyers can visit real estate sites whenever they please, or set themselves up for automatic notification of new listings.  This means that they are constantly being presented with new options, hence reducing their sense of urgency about an exisitng one.

In our region, some towns and neighborhoods are hotter than others, and may lack sufficient supply.  There, buyers will put in offers more quickly, although they may then back out on a contingency clause if they find something else they like better.  So, if you don't live in a hot area, like East Rock or Spring Glen, what do you do to get buyers to make offers?

Well, the key thing is not to overprice at the start.  Listen to your agent, and look at other comparable homes.  If you feel that you must try a higher price, make an agreement with your agent to lower the price at a certain point, and go ahead and sign the price reduction at the same time as the listing, so that you don't forget what the advised price was.  And finally, if you do start too high, don't chase the market down.  I titled this article "Death by a Thousand Cuts", because I see a lot of homes, especially in the Shoreline towns, being reduced over and over again by small amounts (and I really mean small--I've seen reductions as low as $1).  While you may think that a reduction will get your home looked at again, what many reductions will do is make people think that there is something wrong with your home, especially if they come from another part of the country where the market may be stronger (and that includes, unfortunately, almost everywhere). 

So, when you do reduce the price, make it dramatic!  Make a statement that you are ready to do business, and choose a price that is compelling, and one that will inspire urgency in a buyer.  Don't feel that you need to save your pride; save the sale instead.  Give buyers a reason to stop looking, and to settle on your home before someone snaps it up at a price those buyers know is going to make it sell quickly. 

Statistics from the Region

It's tempting to make you all guess about market trends for 2010, but it would be hard for me to collect the responses in a timely way, so I guess I will just tell you. The latest Commercial Record shows that, for year over year sales from 2009 to 2010, New Haven County as a whole was down almost 8% in the number of sales. For the immediate towns, Guilford, Madison, North Haven, and Bethany had an increase from the prior year. Guilford and Madison were each up 9%, while the other two had smaller increases.

Surprisingly, the median prices were almost identical in 2009 and 2010, with 2010 coming in at 0.8% less. I expect that most of you would have guessed that prices fell about 10%, so the fact that they actually fell less than one percent is very good news. Of course, as I've often pointed out, this is not an apples-to-apples comparison, so it's probably true that only the best houses sold, meaning that most homes would have sold for less in 2010 than in the prior year. As I've discussed in earlier posts, East Rock and Spring Glen did go up in price, showing the "Yale" effect most strongly. North Branford, with 24% fewer sales, had an increase of 10%, and Milford, Wallingford, and Woodbridge had smaller increases. New Haven as a whole crept up 1%.

It is important to recognize, as the issue said in another article, that this is the sixth year in a row that sales have declined. Since prices have also been declining for most of that period, the total decline is larger than what is listed for last year. And, since most homeowners looking to sell haven't been in the market for some time, those yearly decreases can really add up.

However, the fact that we are not in freefall is very good news, and the spring is still ahead of us. Anything could happen, but we're hoping for recovery mode to kick in strongly!

Spring Inventory

I ran our Wallingford Regional office meeting this morning. We went through the list of every listing we have in that office, and, as usual these days, we thought almost 90% of them were not going to sell at their current price. Sometimes it's not because of what we would consider inherent overpricing, but rather that something about the layout, the condition, the price range, or the location is causing it not to sell; in the end, though, often the only way to fix the problem is by--you guessed it--lowering the price.

At the same meeting, however, we discussed properties that went quickly and with multiple offers. We therefore concluded that, since much of our inventory was going to sit for the foreseeable future, we were short on listings for the spring market. We need more of the homes that people want to buy, in neighborhoods where they want to live.

Before deciding what to do as a seller, then, you need to consider this bifurcated market, and figure out where your home will fall. If you live in an area where employment is stable and newcomers are entering, this is a great time to list. And do it quickly, before the rush begins. There's always something to fix, or clean, or de-clutter, and you don't want to miss the spring market.

What's Selling?

Although it may sound as though nothing is selling in the current real estate market, there are some pockets of strong activity. The market is almost bifurcated, with most homes sitting and a few receiving multiple offers. I checked with two of our offices, our New Haven office and our Wallingford Regional office, to see what common threads exist with the quick sales we've had. There are three factors: price; condition; and location. Price means two things--the price must be considered a good value, and lower prices are more likely to attract first-time home buyers (the most active segment of the market now). Condition usually means that the property should be clean, freshly painted, and clutter-free. Location is the normal location, location, location. The worse the market, the closer you can get to the ideal location, and status does matter.

Having said all that, we are seeing strong interest particularly in East Rock, where demand outstrips supply now. Stefanie Rank has a listing on Livingston Street that has been shown over 50 times since the end of last week, and multiple offers. Fran DeToro sold a Whitney Avenue condo in less than a week. Mary Jane Burt has sold two high-end condos recently.

Hamden is also seeing demand. Eileen Smith has three times cleaned out a house top to bottom, shown it from Thursday to Sunday, and sold it on Monday. She has researched current prices in Spring Glen, and they have decreased by only 1%. The Edgehill team just sold a Hamden house in two days.

Remember that the tax credit can be used for one's 2008 taxes, so time is of the essence. So, if you're thinking of selling in any of these neighborhoods, please consider doing it now!