Connecticut vs.the Country

Reading the national news, we get a lot of news about real estate in other places, where the biggest obstacle is lack of inventory.  That, obviously, pushes prices up, since demand then exceeds supply. This has now been going on for so long that the market has begun to cool off in some of the places that were strongest, including metro NYC.

Despite our proximity to New York, we in Connecticut have fallen way behind the curve. We're not growing, in jobs, in income, in housing, or in really anything much these days.  Therefore, our demand is lower, so our supply is higher, and prices have been going down for the past year; there's almost nowhere else in the country where this is true.

Good news, however, came yesterday!  Our prices for housing went up last month, after twelve straight months of decline.  Sometimes it's good to be behind the curve, because the curve can bend, and we are still catching up. Some of this is household formation, which is bound to occur as the millennials settle down.  Some of it is pent-up demand, from renters who are seeing their rental costs rising quickly (and more quickly than in most states, since our supply has been very low, and we have lots of students to use it up), and from investors, who see this region as affordable, compared particularly to New York and Boston.

Let's expect that our growth will continue for some time to come, since rates are still low, and prices have a long way to rise.  Our building permits are down, so the supply of housing (except on the rental side), shouldn't be increasing much in the near future.  It's time for us to join the party!

Where the Money Is

I've been reminding agents this week that most, if not all, of the money people make investing in real estate comes during the run-up in prices after a downturn ends. While it can be somewhat equivalent to trying to be a market timer in the stock market, it's a little easier to judge in real estate.

We know that prices and units have both been flat or declining since the beginning of 2006. We also know that there is a lot of pent-up demand, as people have been sitting on the fence for some time now. As soon as demand picks up, there's a good likelihood that prices will follow. Those who act now, and get in on the ground floor (no pun intended) will reap the biggest rewards.

Of course, that applies as well to investment property. There is a fairly good selection now of rental and other property. This might be the time to take money out of that 1% (or less) money market account, and buy some real estate.