10,000 People Change Their Addresses to Connecticut

It's so nice to be popular!  Poor Connecticut, which has been lagging in most economic measures over the past decade, has now come out on top in two recent metrics:  It's the most improved state for COVID in a recent statistical analysis; and its population is on the way up, with 10,000 New Yorkers joining the ranks of the Nutmeg State.  

Our little state packs a big wallop, when it comes to outdoor space, forested land, beaches, and low density in most places.  We also enjoy, of course, easy access to the greater NYC metro area.  Those factors have combined to make this at least a temporary home to many displaced New Yorkers.  They are looking at, renting, and buying property in most counties.  All of us in real estate can feel the activity, and we are also noticing all the New York license plates on the roads.  Inventory of listed properties is very low, and multiple offers are evident at many price points.

Not only is this a great place to live, but we also seem to have done an excellent job in bringing down the rate of infection for the coronavirus.  This adds to the feeling of safety and serenity that is making people snap up our property.  After a long, quarantined spring, it's nice to think that all the hibernating paid off.  

And brought us an economic boost as well.  Every real estate transaction has a multiplier effect on the economy, and will help to make up for the slow second quarter.  In fact, although we are expecting a slow summer for tourism, maybe that's because the tourists have decided to move here,  instead of just visiting.  That bodes well for the value of our homes, our commercial property, and our tax base. So, whether you are thinking about becoming a Nutmegger, or just renting a place for the season, welcome!

Judging the Market

One of the time-honored ways to judge the strength of the real estate market is by the months of supply available at any given time. In order to derive this number, we take the houses currently listed, and divide by the average number of sales per month, to get the number of months it would take to "use up" the current supply. During the recession, most parts of the country had a huge backlog of homes listed, including many places with more than a year's worth of homes for sale.

Last week, I was on a call with owners of real estate firms across the country, and recovery was in full swing.  The way they expressed this was in the decline of supply, making their areas more sellers' markets than buyers' markets, meaning that buyers no longer had the advantage of dozens (or hundreds) of homes to choose from, since supply had dropped in most places to a few months' worth at most.

In our market, we appear to be lagging, as I have said in recent posts.  Although our market has improved a great deal, we still have a greater supply than other places.  According to MLS figures, we have 7 months of homes under $300,000 available, 15 months of homes between $300,000 and 1 million available, and 31 months of homes over a million available.  This last number means that, if no new homes over a million went on the market from today forward, it would take over 2 and 1/2 years at the current rate of sales for the current inventory to dry up.

It's not quite as black and white as it may sound.  Many houses listed now may be overpriced, have something wrong with them, or may never sell.  Therefore, a seller putting on a home now should not think that his/her own home won't move for over 2 years.  He or she should, however, realize that aggressive pricing, especially in our area, is still important.

New Year, No More Fiscal Cliff

The page has turned to 2013, and everything seems to be pointing toward a continuation of the slow recovery that we've been seeing so far.  In other parts of the country, things have moved faster, and the signs are even clearer.  I just came back from Phoenix, and I remember reporting in other years that there were For Sale signs all over the place.  This year, in the same complex, I saw two, and one was sold and came down while we were there.

Connecticut has a bigger supply of properties for sale.  Things never got as bad, prices never went down as far, and therefore they are not popping back up as quickly.  We still have spots where listings are hard to come by, but, by and large, there is a good choice for buyers in most areas.  However, that could change as the year goes on.  Interest rates are still low-very low-and prices are more flexible than usual.  People who are moving here have been able to sell their homes where they came from, and, with the lowest apartment vacancy rate in the country, the New Haven area is a tough place to land a good rental.  All those things cause sales.

In addition, the uncertainty in Washington has not gone away, but the immediate crisis has been averted.  Some nervousness still exists, which makes the stock market dicier than usual, and that also helps real estate as an alternative investment.  We are between two strong markets-Boston and New York-so that should help us as well. 

Spring will tell more of the story.  Will prices start to shoot up?  If you are a buyer, you may not want to wait and see!

Open Houses

Even though we are not in the traditional season for open houses, we've been surprised at how many people have been coming to the ones that have been held lately. We think it's a result of the tax credit, and the interest is stronger at the lower end of the price scale, but we're happy for the activity wherever it falls.

The moral of this story is that this may not be the typical holiday season, and that, if you are a seller, you may want to try harder to sell your home over the holidays. Don't make the assumption that the market will be dead until spring. Our November results were 80% ahead of our November results last year--we are clearly in the early stages of a recovery. While prices will lag for a long time after unit sales rise, there are clearly buyers out there.