We're All Busy!

We are smack dab in the middle of our slow season, but it isn't slow!  Although there have been some epic lows in the temperature department, and some messy storms, it isn't shaping up to be the winter that the last ones were. People are looking at real estate, and they are looking both on line and in person.

Weather may be part of it, but I also have thought for some time that we just aren't as seasonally tied as we used to be.  Maybe it's because Connecticut is old on average, and doesn't care as much about the school calendar.  Maybe it's because taxes drive real estate purchases as much as anything does, and that means end of year for lots of people.  Maybe there just isn't any reason at all. Whatever the answer, we can't tell what kind of winter we'll have until we're in the thick of it. 

It's also true that it may not matter that much, because we say that the market is "late" or "early", if the listings and sales don't mostly come in the spring.  That's really just another way of saying that the market for real estate is not as predictable as it used to be.  What that means for us now?  We have buyers and tenants out there, so sellers should decide that spring has sprung, no matter the temperature, and list as soon as possible!

Consumer Confidence and Real Estate

Real estate sales have always tied closely to the index of consumer confidence.  Buyers' attitudes toward spending in general matter as much as interest rates to our level of sales.  The index has been going up most of the time over the past couple of years, rising even before we noticed an uptick.

Now, although the real estate market is much improved, the consumer confidence index is wobbling.  The past couple of months have seen declines, and, although we aren't seeing its effects directly, we know that the market recovery has always been shaky.  Every change in the stock market or mortgage policy makes us nervous.  We cannot count yet on the rising tide to carry us back to a strong sales climate.

We certainly can keep our fingers crossed that the recent dip is just that--a dip.  Also, it seems as though our improvement has come disproportionately from first-time buyers, who might be less inclined by age (they can't remember past downturns), life status (they are in the peak years of household formation), and risk profile (they tend to be less conservative), to worry quite as much about statistics.  Let's hope so.

It's Time for a New Year and a New Attitude

Much of what's been published about recent consumer trends and confidence is very encouraging.  Even the real estate news is improving.  Car sales went up at the end of 2011, and both online and retail holiday sales were very strong, compared to projections.  Can there be any doubt that, in 2012, real estate sales will follow?

So now the question for prospective buyers is:  Do you want to be ahead of or behind the curve?  Once all the signs for improvement are in place, you know that it's only a matter of time before prices start to rise.  You also know that, due to tightening mortgage requirements everywhere, and the hurricane and freak snowstorm locally, there is a lot of pent-up demand waiting to be satisfied.  There are also a lot of folks on the sidelines, just holding off until they know that the economy is on the mend. 

Given those variables, you can put your oar into the water first, and get the best price, or you can stand still until you see other people starting to move, and then try to beat them.  It's your choice, but I think the correct answer is clear!

A Warmer Winter?

To us, a warm winter is one with a lot of real estate sales! The recent extension and expansion of the homebuyers' tax credit gives us hope for the traditionally slower months. Because of the timing on the new bill, sellers and buyers should realize that they can't wait until the spring market. Buyers who have no home to sell (usually the first-time buyers) can probably put off finalizing a sale, since the contract must be signed by April 30,2010 and must close within 60 days, by June 30, 2010.

Many of the houses listed in the so-called "spring market" are still coming on the market even into May, so it won't be possible to wait until all the possible choices are available for viewing. Of course, if a buyer also has a house to sell, he or she should get started right away, since that could take up the intervening months. In addition, people should factor in extra time for mortgage approval, as we have been finding that the appraisal process in particular is taking far longer than it did before.

All of that leads to the conclusion that buyers who wish to take advantage of the tax credit cannot risk waiting until the spring rolls around. Since sellers certainly need to start soon, that argues for a busier winter than we're used to having. Don't forget that, although the holidays are busy and it's difficult to schedule showings, many homes look their best when decorated. In addition, the snowiest and iciest months are later in the winter, so now is better from that angle. It's also good to remember that it can pay to list when there isn't much around to compete. Once others realize that time is of the essence, you can already be negotiating your sale and moving on to a new purchase.

More Bad Commercial News, and a Weather Report

Our latest few weeks of statistics show the problem in commercial real estate in our area. This week's report shows only one sale, of a 15,000 sf building, in all of New Haven County. Last week, there were three small leases, together totaling only 2600 sf. If you are a seller, and you're not selling, or a landlord, and you're not renting, you're not alone!

Maybe it's the weather. Does anyone remember us ever having worse weather for a month of summer? Our pool is still not up to 70 degrees, and I haven't been in it yet. I can't even bike much, since the roads always seem to be slick with rain. It's pretty good running weather, as long as you don't mind getting a little wet. I know that I'll be complaining about the heat soon (maybe even when I run on the track tonight), but I'm ready for some sunshine!

We are hoping that the delay of summer will cause real estate sales to keep happening, instead of slowing down next week, as they normally would. That would certainly be a silver lining to the cloud that's been sitting over New Haven for the last month!

Lagging Statistics

Now that we're finally seeing some increase in the number of buyers and the resulting sales, the statistics for April are out. They show that prices fell and units fell. Not surprising, since that's reflecting activity from the first quarter. It doesn't measure today's pulse, but rather what was happening 60 to 90 days ago.

If we're lucky, the news will convince sellers not to be greedy, and buyers that it's a good time to get a reasonable price on the real estate they wish to own. It will let the government know that it can't stop trying to help the housing market. If we're lucky, it will not send everyone screaming for the hills, or more accurately, back into the cocoons where they have been hiding since last fall.

All of this does show the importance of the consumer confidence index, which is a measurement the government puts out on a periodic basis, to judge the mood of the buying public. Lately, this number has been at historic lows. The most recent results, however, have shown a sharp uptick in consumer confidence. We consider this number, along with personal income levels and interest rates, to be one of the three most important ways to predict the level of real estate sales. We could have told the press that sales would rise in May, after seeing the rise in consumer confidence. Since it's such a subjective measure, though, almost anything can affect it. That's why I'm hoping that the April sales numbers don't send it plummeting again.