For Real Estate in Greater New Haven, March is the New June

 For the past couple of years at least, March has been the biggest sales month for our New Haven office.  Yale University, Yale New Haven Health System, and other educational institutions have the greatest impact on this result.  Academic and medical positions usually begin on July 1st, and the offers for those jobs typically start coming at the beginning of the calendar year.

Every year, we say that we need to try to get listings on the  market sooner.  And, every year, we end up with buyers who don't have enough property to view when they come to search.  Some of that is due to weather, which can cause deferral of repairs and improvements that many sellers make before putting a home on the market.  Some of it is the just the normal slippage of chores that don't get done when they should, or jobs that take longer than expected.

A big part, however, is that people think of May as the time to list, and June and July as the time for closings.  We need to be clear that the sales season is now year round, and that early spring is the best opportunity for a seller to list, in our opinion.  In the way that the first offer is usually the best offer, an early buyer is often the most motivated.  Spring brings lookers, and nice Sundays are great for open houses, but those who need to be settled by July want to get the move done early.

One of the best things about that for sellers is that there will be more product to choose from when they have sold their current homes, since many people still wait to list, for all the reasons stated.  This year is shaping up to be a great year for real estate, but that doesn't always mean that all buyers and sellers will be happy.  Time is of the essence, and product is needed to sell before buyers can buy. 

Let's get this show on the road!  List now, and reap the rewards.

What Happened to the Middle of the Market?

We just had our Pearce Annual Meeting last week, and we talked about the current state of the market in Connecticut.  Greater New Haven, and especially Middlesex County, are better off than the other counties, since they are both up.  Fairfield is down the most, which is related probably still to the GE move, and maybe to SALT no longer being deductible.  Even in South Central Connecticut, though, we see pockets of hot markets and pockets of slow ones.

First-time homebuyers are clearly out in force, and multiple offers are common below $300,000.  Even things that sold last year can fetch more today, because the supply hasn't increased; in fact, listings are down.  That's what drove the increases across the country in the past few years--lack of supply.  We're seeing it now.

The upper end, especially the areas near Yale or along the coastline, is hopping.  We don't have enough listings to show people, even as we approach the busiest time of the spring.  The waterfront sales, particularly between $1 and $2 million, seem to pop as soon as new properties go onto the MLS.  It could be that it's been seven years since the last major hurricane, or it could just be that, at these prices, waterfront seems very desirable. The volatility in the stock market could also be causing people to rethink their asset allocations, and buy second homes with some of the money that they would otherwise put into stocks, especially since they got back what they lost in the fourth quarter--they may be reaping the gains and reinvesting in real estate.

Between $500K and $1 million, however, we have seen many listings languish, even those that we feel are great properties and priced well.  It's also where there is, therefore and obviously, the most supply.  Part of that is due to baby boomers trying to downsize, with taste and property conditions that make millennials balk. The latter group wants perfect homes, decorated and finished to the latest in trends.  Perhaps the speed with which the upper and lower markets are moving will push some buyers into this price range, and that would be good news for everybody.  In the meantime, it's an anomaly, making market conditions hard to describe in terms that are too generic.

Differing Reports on CT Real Estate

We get periodic updates from various sources concerning the state of the real estate market in Connecticut.  The latest two that I've read say exactly opposite things.  One said that units are way up, but prices are down.  The other said that prices are way up, but that units are down.

Could both those findings be true?  It doesn't seem likely, but it does show that the market in our area is in transition, and that it isn't all one condition everywhere.  What it most likely means is that there is a lot of interest from first-time homebuyers on the lower end of the price range, so that those prices may be rising.  Once you get to a certain price point, which varies by region, the results show that there are caps on neighborhoods, meaning that homes don't sell above a given price, regardless of quality or size.  Therefore, we can still see downward trends, particularly in the upper brackets.

There are also discrepancies in similar reports, depending on exactly what they measure, and over what time periods.  For us at Pearce, this winter was remarkably good, despite the weather.  We see a lot of "Yale effect", so that our offices are busy when Yale puts out its offers for the following year.  A more traditional pattern of spring-summer sales exists in other locations.

 I guess the real point is that you can say anything at all, and find the statistics that will back you up!  We do know, however, that when the market is changing, it is probably going up.  Downturns tend to be more sudden, and often involve dead stops.  So, if you want to bet one way or the other, I'd say that the market is one in which buyers should move, and sellers should stay flexible.

Corp renews Homebuyer Program

Written by Serena Cho of the Yale News, click here to read on Yale News website

The Yale Corporation last month renewed the Homebuyer Program, which provides financial assistance to Yale employees purchasing homes in New Haven, for another two-year cycle through Dec. 2019.

Established in 1994, the University Homebuyer Program gives employees working 20 hours or more per week substantial income benefits to buy a home in designated areas of the city. In its meeting last December, the Corporation recognized the program as one of the most long-lasting examples of Yale’s commitment to its home city.

“The Homebuyer Program is one of the many fantastic benefits Yale offers to its employees. In particular, this program demonstrates how the university is committed to being a good neighbor and partner to our hometown,” said Karen King, a community affairs associate in the Office of New Haven and State Affairs. “We consider this an important investment for both Yale and New Haven communities.”

The Corporation assesses the impact of the Homebuyer Program every two years. In the December meeting, trustees collectively agreed that the program continues to support employee welfare while also promoting strong New Haven neighborhoods, King said.

The program grants up to $30,000 to its participants: a $5,000 bonus on the first year and an annual contribution of $2,500 for the following 10 years, as long as the employee continues to work at Yale and live in the home.

The neighborhoods covered by the program — Beaver Hills, Dixwell, Dwight, East Rock, the Hill, Newhallville and West Rock — attracted many Yale homebuyers in the most recent two-year phase. As of last fall, 1,221 Yale employees had purchased homes in New Haven through the program, according to King. These purchases summed to a total market value of more than $237 million, and employees benefitted from a total commitment of more than $31 million from Yale.

Yale spokesman Tom Conroy said the Homebuyer Program helps Yale employees not only by providing financial incentives but also by hosting information sessions for potential homebuyers that address the process of selecting, financing and maintaining a home.

King emphasized that these information sessions are particularly important because around 80 percent of the program’s participants are first-time homebuyers.

The program also represents one of the University’s key initiatives aimed at engaging with the city, according to Bruce Alexander ’65, vice president for New Haven and state affairs.

“Realtors say the Homebuyer Program is very important in helping to stabilize neighborhoods,” Alexander said. “Homeownership not only helps Yale employees build financial equity, but it also helps the neighborhoods build community because of the owner’s ongoing stake in its safety and stability.”

Conroy added that employees living in New Haven are more likely to befriend the city’s residents, strengthening the University’s relationship with its neighbors.

While 29 percent of all homebuyers who have benefitted from the program are faculty, 30 percent are clerical and technical staff, and 27 percent are management and professional staff. According to the Office of Institutional Research, around 32 percent of Yale employees are faculty, 28 percent are clerical and technical staff, and 32 percent are management and professional staff.

Conroy emphasized that the program benefits all Yale employees who meet the eligibility requirements, regardless of their employment sector.

“One of the great attributes of the program is that it has appealed to unionized staff, management staff, professional staff and faculty,” Conroy said. “Because the incentive is not tied to the cost of the home, the benefit is a larger share of the cost of less expensive homes.”

Yale employees must commit to own and reside in the home for at least two years to qualify for the Homebuyer Program.

Have Buyers, Need Listings

OK, so we officially don't know when the hot times in our market start and stop. We had a slow (weather-related) winter last year, a very late spring, then a roaring summer, which screeched to an abrupt halt in August, and never returned. Now we are seeing big increases in buyer traffic to our sites, and people looking for houses that aren't yet on the market, even though it's freezing cold and it snowed yesterday. So the market is different year by year, and can only be predicted in arrears. The real takeaway here is that buyers are out now--in early January--and we have little or nothing to show them. Sellers, here is your chance! If your home is well-maintained and well-priced, you might get your best results by listing right now. There's no need to wait until spring, when more competition gets listed, especially since Yale and Yale-New Haven Hospital make their employment offers before spring even starts. Why wait? Get a jump on your 2015 goals, and call us today!

Why New Haven is a Destination for Entrepreneurs and Startups

Article written by Matthew Storeygard / Senior Investment Associate / Connecticut Innovations

Please click here to view his article online

Four reasons for entrepreneurs to be excited about where the Elm City is headed

 

1. New Haven’s residents are educated

Companies are finding a strong base of talent across industries. The city demonstrated the 5^th highest growth rate in college degree attainment between 2000 and 2010. The talent pool includes many graduates from Yale University, as well as other colleges and universities in the region.

The high number of well-educated residents also means a stronger economy. Those with advanced degrees earn more money, on average, and can afford to spend more locally. New Haven has been seeing this trend for several years now.

2. New Haven has culture

New Haven offers more food, art, and culture that most cities of similar sizes, making it an attractive place to run a business. It has the best pizza in the country (I’m partial to Frank Pepe’s – try the bacon and clam), is home to the world’s first hamburger, the Yale Art Gallery, which is completely free to the public, and the Peabody Museum. Combine this with exciting nightlife and beautiful scenery, and you’ll understand why the city has been getting a lot of attention for its culture in recent years:

• “New Haven is Happening” – New York Daily News
• “Yale and Hearty” – New York Post

3. The region has a diverse industry base

Not dependent upon one large employer or industry, the region’s sectoral diversity has helped it weather economic and social changes. It was even named one of the country’s 20 recession-proof cities during the recent economic downturn. While education and medicine represent New Haven’s core strengths, the city also has a base of talent in finance, IT, manufacturing, and other industries.

4. New Haven’s relationship with Yale has improved dramatically

Perhaps most import of all, Yale and the City of New Haven are working together to move the city forward. The divide between town and gown was previously a wide chasm, with a baseline of antipathy that occasionally erupted into larger demonstrations of tension and differences. By the time I came to New Haven, the leaders of both New Haven and Yale had recognized the symbiotic relationship, and have fostered a much closer partnership. A good example is the New Haven Homebuyer Program in which Yale provides financial incentives to employees and faculty to purchase homes within designated areas of New Haven.

Financial Times Article

Yesterday, I posted an article from Financial Times of London, comparing the New Haven market to the Cambridge, MA one.  We lost.  I thought it was not a fair comparison.  New Haven is a very different place--it's a center city, with suburbs around it.  Cambridge IS a suburb, of Boston.  It seems to me that that makes them very different, with many more low-income areas in New Haven. 

Having lived in both places, I don't find them as disparate as the article would make them appear.  Harvard has always had a very good PR image, and has managed to weather bad news without making as many headlines.  Most people would no more walk through Cambridge Common after dark than stroll across the New Haven Green.  Yet, somehow, the national media has always presented New Haven as a dangerous place in which to live or attend school, while Cambridge comes across as a trendy, high-end metropolis.  Granted, Yale has more high-crime areas within walking distance than Cambridge does, but the subway system in Boston has the potential to deliver crime there as well.  My old dorm had an incident a few years ago, where someone was killed after a student opened the gate for a "townie" (yes, Harvard now locks its gates as well). 

It is true that Cambridge has two major institutions--Harvard and MIT--compared to New Haven's Yale, and that the biotech spinoff effect is therefore twice as great.  It's also true that dual-career couples have a somewhat easier time both finding jobs in the Boston area (although New Haven offers the possibility of NYC).  Real estate values are indeed higher in Cambridge, especially since Massachusetts is undoubtedly further along in its recovery from the Great Recession.  Yet I would argue that both are residential hubs, with lively nightlife, lots of educational institutions, and plenty to do.  I would even give New Haven the edge in the arts, especially if you take Boston out of the equation.  There may be statistical truth to the article, but it presents a very one-sided look at the numbers, in my opinion.

US Property Sales: Harvard vs. Yale

Two cities home to Ivy League universities are strikingly different from each other

 

Harvard and Yale may be North America’s most famous universities but the east coast home cities of these two “Old Ivies” could barely be more different. Harvard is based in Cambridge, Massachusetts, an affluent and famously left-leaning locale, once named the US’s most liberal city in a study by the Bay Area Center for Voting Research. It is nicknamed, not always admiringly, the “People’s Republic of Cambridge” and was the first city in the US to elect an openly gay, black man as mayor.Yale’s home is in New Haven, Connecticut, a city that has earned the unfortunate reputation of being one of the most crime-ridden and ghettoized in the US.

By Ruth Bloomfield of the Financial Times, click here to continue reading


 

Listing and Buying in the Shadow of Yale

In most national real estate publications, you will read that people buy in the spring and move in the summer. This is largely tied to the school calendar, and buyers want their children to get settled before the new school year starts.  If you back that up, the best time to list a property would therefore be late March or April.  That also coincides, in the Northeast, with better weather for open houses and showings in April and May.

There are some deviations from that, even in our area.  For example, Branford has a big supply of condos, and only 1 in 30 units sends a child to the public schools.  Thanks in large part to the big proportion of condos, there is a relatively smaller pool of single-family homes, and so a lower percentage of spring sales and summer closings. Since condos are often investment properties, and since investments are influenced heavily by tax considerations, we see a jump in condo closings in the last quarter of the year, in part for tax reasons, and partially just because there isn't a school-based reason to prefer summer.

Yale is, of course, the region's biggest employer.  Therefore, the Yale calendar is very important in the decision of when to buy and sell, especially in New Haven and closely contiguous towns.  While offers are made to new employees year-round, and while promotions and local hires can occur at any time, we see a big uptick after the first of the year, especially with the Medical School and Hospital, where July 1st is a traditional starting date.  This moves the optimal time to list up into late January or February, even though there can be weather issues in those months.

If you are a local buyer, therefore, you should consider buying before you have to compete with Yale buyers on short time frames.  In case you haven't done the math on that, you need to be buying now!

Listings Flying Off the Shelf

After a long, long, long winter, we're seeing signs of spring! And that includes the spring market. I'm starting to get lots of calls from people connected to Yale, who've gotten their job offers and are beginning to look for housing here. We are entering lots of new listings into the system--several dozen in New Haven alone last month. And, at long last, some of the suburban inventory is moving. I heard last week that a spate of sales in Pine Orchard has reduced the available inventory drastically. Even things that have been for sale for a very long time have gone on deposit. That's good news for sellers, who have been consoling themselves with the thought that nothing was selling, while they sat with their houses unsold. If they aren't going now, it's time to re-examine the price, because we're experiencing a boost that should help everyone. And it's about time!

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!

Who Would Have Thought It?

If someone had told us twenty years ago that the center city's residential properties would be holding value better than those in the suburbs--better even than direct waterfront--we probably would have scoffed. It's clear right now that the hot market is New Haven--the closer to downtown, the better.

This isn't by accident. President Levin of Yale, who has been in office for fifteen years, lived in New Haven for many years before he became Yale's leader (and, in fact, has continued to live in his own home, rather than the one that Yale provides). He has made it clear that he would be happy if every new hire lived there as well. The last time that I heard, 47% of Yale's senior faculty lived within the city limits. In today's New Haven Advocate, the stated equivalents of New Haven's municipal police and firefighters were 13% and 17%. Yale's showing clearly represents the payoff of a long-term strategy.

There is another factor at work, however. Current demographics favor the central city, although this is a change from earlier generations. Young professionals have always preferred urban life, but now, increasingly, so do empty nesters. The arts, the dining, the conveniences, and the lack of commuting time have all contributed to make New Haven a popular housing choice. Even those with school-age children, if those children attend one of the city's prestigious private schools, have been moving into the city neighborhoods.

And that's all good news for the region, since a vibrant city makes for healthier suburbs.

New Haven is hot!

I'm looking at the figures for June and July in our New Haven office, and they're great! We sold as many units in those two months as we did year-to-date through May, and the two months together were 50% over June and July of last year in both units and volume! This week was the best week they've had in at least two years. What's particularly surprising is that it's happening in what is usually a very slow month, and finally hot and humid to boot. Maybe all the hype about hitting bottom is old news, and we're on the way up!

The Case-Shiller index for last month also showed a halt in the decline of prices, and it corroborates my earlier paragraph. We are also finding our Wallingford Regional office to be running ahead of last year in sales, so it's not just New Haven (although Yale continues to be a driving force in the local real estate market).

I was at the Lexus dealer yesterday, and Dave McDermott and I had a friendly argument as to whose business was worse this year. He has trouble with my argument that at least he has his excellent service department to bring in revenues. Dave says that customers want to buy, and that credit is the issue. I'd say we're both in much the same situation, although, if he reads this blog, he's going to think we're in clover now. I wish...

Market Spike?

We're experiencing a late, late spring market surge, even though it's July. Our New Haven office has posted record sales for the past six weeks, and all offices seem flat out, despite the signs that summer has finally come. The New Haven numbers are still largely driven by Yale, and we hope that continues. All offices say that the strongest activity is in the FHA mortgage range (under $387,500 for a mortgage), and in first-time homebuyers. Lower price ranges, except again near Yale, move much faster.

Our hope for first-time buyer interest is that the national unemployment rate starts to go down. As the parent of twenty-somethings, I hear many stories of lost jobs, postponed starts, and pay cuts. While it may be slightly older people who go into the real estate market, the "last in, first out" theory of human resource layoffs has many newer workers nervous. When they, and their parents, start feeling more secure about their future job prospects, more of them will jump in at these low interest rates.

If we're brave enough to wish for anything else, we're keeping our fingers crossed that sellers understand the fragility of the current market, and respond reasonably and positively to negotiations and problems that occur along the way to the closing. It may be the general national stress level, but I hear a lot of stories about sellers who just won't compromise, even when it's in their interest to do so. Good thing our agents are so talented!

Commercial Real Estate Update

It's worth a mention about what's happening in the commercial real estate arena these days. The answer is: nothing. The nation's banking woes, and the resulting credit crunch, have brought most real estate transactions to a screeching halt. Traditionally, there is a lag between the residential market performance and the commercial market performance of about nine to twelve months. I had an interesting discussion yesterday with an economist running buddy as to why this should be so, but it has been consistent over the past recessions as well. One might think that jobs and business profits would decline before housing sales, but it's usually the other way around. Residential sales can be predicted if you know personal income numbers, interest rates, and the consumer confidence index. Commercial real estate has more to do with credit, GNP, tax structure, and general business cycles, yet they do coincide and overlap this way.

Given the current state of the economy, pundits are not forecasting an improvement in commercial real estate this year. New Haven is lucky that so much of our space is occupied by Yale, but even mighty Yale has seen the effects of this market cycle, so we may not be as protected as we might otherwise have been. Our best protection is coming from a lack of new product, meaning that we don't have the see-through office buildings sitting empty, the way we did in the last recession. One of the worst problems is that there has been a fundamental shift in the way people work, causing companies with the same revenues to need less office space. That may not change back when the economy improves. Other new companies will have to spring up to take that space, and Connecticut's cost and tax structures have caused it to be at or near the bottom of new business creation. In our area, biotech has made our regional results somewhat better, but we should all do what we can to attract corporations and jobs to our region.