Real Estate Closings in Greater New Haven vs. Last Year

We are in uncharted territory, as commentators remind us every day on every subject.  None of us knew what would happen to the real estate market during the pandemic.  At the beginning in Connecticut, the visits and offers really slowed down, but closings sped up--there was a big effort on the part of all parties to get things closed before the State shut down.  March was very busy on that metric, compared to other years.

When closings are charted week by week, results are only so useful, because one week versus another can be very random.  However, we can tell over the past four months that people adapted to the new normal.  After the initial bump, there was a big dip, which was followed by ups and downs throughout the period.  In general, the higher the price range, the better the closings held up. At most of the higher price levels, this year's closings exceeded those of last year during the past four months.That would be consistent with the observations and speculations that suggest that great numbers of NewYorkers are buying residential property in Connecticut, as our real estate seems very inexpensive to them.

While overall that is true, New Haven County supposedly did not get a bump from New York, nor did New London.  Anecdotally, we do believe that people are looking in our area.  If that's combined with the very short supply of listings, it makes for a vibrant market, and one far better than we expected for this spring.  And we expect that to continue, at least until (and unless) there is a second wave in the fall.  Anything that creates a sense of time pressure, be it weather, interest rates, or the possibility of further lockdown, will improve the market in the short run.  One of the biggest problems of the past decade was the sense on the part of buyers that they could take all the time that they wanted to decide, and that, as on Tinder, new choices would continue to appear, while previous ones would remain available.

Now that we know that's not true anymore, buyers are more serious.  When you add the fact that looking today is not without risk to health, there are many fewer idle lookers.  That has turned out to be a big boon for our industry; since we don't get paid for our time, we love any reason for buyers to be driven to contract faster.  Some want to sell and move while they can, while others are motivated to be in someplace where they can nest and telecommute in any future virus waves.  Those buyers also seek lower density, and value outside space, which helps us here as well.

So, in the main, we have adjusted to a new way of doing business quite well.  Market conditions were favorable for keeping sales up, and our region, with its concentration in higher ed and medicine, is fairly protected from the broader economic issues facing the whole country. Those relocating here from other parts of the world had already accepted offers, which were honored, so they needed to move. Our low prices attracted investors, too.  All in all, a good report for real estate prices and activity in Greater New Haven.



More Good News

The New York Times yesterday had the most positive article on real estate activity that I've seen there in many, many months. My interpretation was that the dreaded "W" or "L" recoveries may be replaced by a more robust resurgence. The "capital letter" recoveries suppose that the recent upticks in real estate and the stock market will be followed by either a second downturn (as happened in the Great Depression) or a period characterized by bumping along the bottom of the economic cycle.

Those who are now more optimistic seem to think that all the stimuli provided by the government will boost real estate sales to levels that are more than were expected. It may be that the stimuli are even too great, or incorrectly aimed, but they may do their job anyway. As most experts will admit, the effect of psychological factors in economics is far greater than its mathematical bases would predict. We have all known for a long time now that there is a crisis of confidence in our country, and that something would have to happen to get us off the fence, and spending again.

I still submit that it's the weather. It's a good an explanation as anything else.

Compromising

With the recent spate of real estate activity, we were hoping to see sellers more realistic than many are. This is my chance to remind them that, given the current credit climate, it doesn't help them to extract the last dollar in the sales contract, if the home then does not appraise out. Banks are understandably cautious these days, and many people don't have extra money to put down, so they are dependent upon an appraisal that will support maximum financing. Even if they do put plan to put a little more down, buyers will likely balk at paying more than the bank's appraised value for property, particularly in a market less than robust. It's funny (well, maybe that's not the word...) how the problem in getting transactions from A to Z has moved through the process, from listing to offers to inspections to financing. Let's hope that it moves right out of the system!

I'm also wondering whether the spring market will last further into the summer, especially since it seems to rain EVERY day. We got a late start, more due to economics than weather, but often a late start means a longer season for selling. We could use the time to try to catch up to last year throughout the region.

Holding Things Together

Well, activity in the real estate market has certainly picked up, but it's very hard to keep the transactions together until the closing. Agents are reporting that people are looking, they're coming to open houses, they're making offers, and they're even signing contracts. After that point, it gets iffy. Inspections are problematic, but at this point the financing clause is proving the most difficult. Sometimes the buyers don't know how much they'll be asked to put down, and they don't have the cash they need. Sometimes the appraisals don't support the sales price, particularly in neighborhoods where demand is highest. Sometimes the rates or mortgage programs have changed, or the buyers don't have the qualifications they need to get the rate they thought they could. Even when the mortgage is approved, buyers can get cold feet if they know that the bank appraised the property for less than they are paying.

All in all, it proves the old adage: It isn't over til the fat lady sings.

A snowy weekend

I'm sitting in my office waiting for the snow to begin. The first big snow of the season always leads to cancellations and traffic, but little real estate activity. Most of our activity this week has been in the form of office parties. Spirits have been surprisingly good, although maybe it's due to the spirits consumed! We've had many toasts to a better 2009.

What I am seeing, however, is that those listings that our offices collectively think are "well priced" have been selling. From one meeting to the next, more than half of those will have gone under contract. That's very surprising, considering that it seems as though nothing is selling. I guess that's because we're only talking about 5 percent or so of all the properties we have listed. I put quotation marks around well priced because it's so hard to know what that means now. Even if a seller took our advice when he or she listed it, it's probably lower now. Past sales are very little indication of what will happen today, and buyers are only signing if they perceive that they're getting a bargain. Believe it or not, there are still some multiple bid situations when that is the case. The internet provides so much information, and most buyers look at so many properties, that they know right away if they need to move quickly to lock something in before it sells to someone else. What does this mean for sellers? Your property must stand out in a sea of listings, and price is the most important factor for all but a very few.