February is the New May

Agents have known for many years now that, at least in Greater New Haven, May is not the best time to list.  That comes much earlier-- probably in February--because of the number of colleges and hospitals in the area.  Most job offers in those institutions are for years beginning on July 1st, and the offers come very early in the calendar year.  Once people decide to move, they begin looking at real estate.

Every year, no matter what we do, there is a shortage of listings to show to transferees during the winter months.  We try to get listings on the market sooner, but the "old" pattern of thinking that buyers want to buy in May and move before the start of school for their children in the fall is still stuck in the minds of sellers.  First of all, many buyers don't have children in school.  Even when they do, it is not uncommon for one parent to stay behind until the end of the school year, meaning that the purchase can come anytime in the moving process.  Now, with many school systems teaching remotely, some families can move whenever they find the right house.

Sometimes buyers find their dream home more quickly than they expect.  Our prices are still low enough that they may buy with a bridge loan, and sell in their previous location later.  Tax considerations also play into the timing of moves, and early in the year may seem safer to some.

Many buyers are local.  They don't have to move during a school vacation, and they have been looking all along, if we look at statistics on internet browsing.  Our hits go up in December, so it's clear that prospective buyers aren't waiting until spring to check out the market.  Now, in particular, with supply in general so limited, buyers will move more quickly to secure a home if it seems as though it works for them.  They have a better chance of doing so spring fever hasn't hit.

Sellers should also consider how their houses will stack up in the market.  Listing early, when choices are fewer, will give them a much greater advantage, especially if there is something about the house that might not move it to the top of a bigger choice list.  With more of the looking done remotely, even the argument that it's harder to show a home in bad weather becomes less compelling.

Once again, we are sounding the alarm early.  If you want to sell, list now!  If you want to buy, don't let those early listings pass you by!  If you want to both sell and buy, give yourself the longest possible season in which to do so, by starting early!  You won't be sorry.  

The Real Estate Market is Hotter than the Weather

Most people think that this time of year is slow for real estate, and that bad weather slows down the market even more.  While that used to be somewhat true, we now can tell-in real time, using Google analytics-that buyers are out in force during the winter months.  In addition, despite the cold, they want to get a jump on the spring market, so they are turning out in force for open houses and appointments to see new listings.

Just as in every other year, in our academic area, we don't  have enough inventory to show the number of buyers coming through.  Also, we are catching the end of the wave that has swept the country from west to east in the past few years, and inventory shortages are driving sales. While other regions have seen a slowdown, we seem to be experiencing a boom, or at least a boomlet.  Sometimes it's good to lag the market!

If you are a seller, this is your moment, and you should seize it.  If you are a buyer, don't be shy about bidding, and bidding on what you may feel is the high end of value.  While the spring market may bring more choices, it will also bring more buyers, so your chances of landing a bargain will not go up.  And think of this--if you are successful in your offer, you can be enjoying your new home by spring, instead of spending your weekends at open houses!

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.

Even With Snow Still on the Ground, the Spring Season is Here

I just went back and looked at the past three months' worth of Trulia leads and visits to our Pearce website from Trulia.  Leads were relatively flat from January through mid-February.  They went up 11% to 20% from week to week after that; in the most recent report, they have doubled. 

Although that's only one site, and the lead time for homebuyers can be long, it's a clear indication that interest in real estate is up, way up.  And, even if some people look at houses online instead of Netflix, many of the lookers will translate into buyers. 

Winter came so late this year that many buyers could begin the process without much interruption from the weather.  Even the recent "blizzard" didn't do much to send people back inside to wait for warm weather.  And sunshine helps--not only because it makes people feel positive, but because so many houses look their best in brighter light.  Of course, we've also switched to daylight savings time, giving us another hour of what feels like daytime at the end of the working day.  Anything that promotes movement and energy will boost traffic to open houses and initiate showings.

With all that happening, sellers should be doing everything in their power to get ready for the market, if they haven't already.  Spring can be fleeting, so take advantage of it while it lasts!

Spring Came Early this Weekend!

Weather has always played a big role in the cycle of residential real estate throughout the year.  I heard a group of broker/owners from around the country talk about January's results last week, and they varied in their responses from "up 40% over last January" to "down 20%, with prices lower".  Many of them prefaced their answers by comparing the weather last year to that of the past few weeks, since we know that snow, in particular, has a chilling effect (pun intended!) on showings and sales.  Weather like we had this past weekend, on the other hand, makes buyers think about spring, and gets them out and moving on the purchase process.

In addition to warm temperatures, we had bright sunshine.  Many, if not most, places look better in sunlight than they do on a gray, dreary day.  Also, since we know that people's moods are cheerier in lighter, brighter weather, they may just perceive something as better on a nicer day.  Whatever the reason, there is a noticeable effect on the market when the weather improves.  Sellers should bear that in mind.  We know that most sellers wish that they had started preparing for sale sooner; given that, they should, at this point in the year, weigh getting on the market before the crush of new listings versus being in better shape for sale.  That's a conversation to have with an agent, because it depends upon--as with everything in real estate--location.  It also depends upon supply and demand, as you would expect, and on price range. 

Since sunny days also make it easier to clean up, clean out, and refresh a property, we hope that potential sellers spent the past few days getting ready for the spring market (see previous column on decluttering).  When spring comes on the calendar, it always behooves you to be prepared.  The price you get could be affected, plus sellers often want to purchase new property themselves, so selling early is always helpful.  If the past few days made it feel like spring to you, we hope that you jumped on that feeling!

Let the Sun Shine In

It feels as though we just finished an epic stretch of cloudy weather.  I forgot what the sun icon looked like in the forecast!  As I write this, it looks as though the sun outside may hang around for a few days.  It's time to make hay while the sun shines, and buy some property!

Many of us have moved in heat, rain, or otherwise less than ideal weather.  I've moved one child into college and one child out of college in a downpour, and I don't remember either move fondly.  It's different, though, for buying.  Unless you are relocating, and are under the gun to buy, or unless you know exactly what you want and can grab it when you see it, it's often the sunny days that result in offers.

Sun makes most things look more appealing.  It's often hard to separate flaws from the overall gloomy feeling that you get when it's dark and damp, so sometimes we can't get excited about what we see under those conditions.  Sunny days speak of hope and promise, and most of us respond to that.  Since we are in the midst of buying season, and since the sun is finally out, it's time to look again, and make those offers while the sun is bright!

Preparing Your Home to Show

Since we are in the busiest time of year, it's important to talk about getting your home ready for sale.  If you haven't started yet,  you are really behind the eight ball.  You need to have your home available when the most buyers are looking, and that can conflict with having everything done.  I remember selling a home where the floors needed to be polished, and the people doing it came a week later than they said, and then took longer.  I missed the window of one week, where all the cherry trees in front of the house were blooming, and I think in the end we got less and it took longer.  The moral of the story?  I should have started sooner.

I made another mistake, but maybe it wasn't one.  I didn't let someone in who couldn't wait until the home was ready.  In retrospect, an eager buyer may be too good to send away, even if your home isn't at its best.  That's for you to decide.  Basic decluttering can get done pretty quickly, if you are motivated, but moving furniture, painting, and repairs can take much longer.  Again? I should have started sooner, and so should you.  If you haven't, get a yard service and declutter, paint if you have time, and fix what's broken.

We are often asked whether to undertake major repairs, or change kitchens and bathrooms.  Generally, the answer is no.  You won't have the same taste as the buyers, and you may waste your money.  Only fix what's broken, just like the old adage.  Save your money, and lower the price instead.  Remember that the average seller is 57, and the average buyer is 42, so tastes won't be the same.  White walls are out, gray is in.  Granite is out, soapstone is in.  I could go on, but you get the idea.  Do what you can with what you have.  And don't overprice!

Report from Nashville

It was almost surreal to be in Nashville this week.  After not having been there for the past nine years, it was hard to believe the growth and change.  82 people a day are moving to Nashville, and it seems as though everyone else in the country is visiting the Country Music Hall of Fame.  The streets downtown are as crowded at night as Times Square, and it's the country's #1 destination for bachelorette parties--who knew?

Corporations are moving to Nashville, and bringing plenty of employees with them.  Cranes and other signs of growth abound.  Prices for homes in the tonier neighborhoods are very high, and new hot spots are appearing.  Although they saw the same Great Recession as everywhere else, it certainly seems to be over!  Our friends at Zeitlin Realtors are looking to have a booming year, and were busy right through their traditionally slow season.  It wasn't springlike weather over the weekend, but the real estate market was.

Other companies also attending reported mixed growth in the first two months, but all are expecting a good year this year.  Rates are still low (but on the bubble of going up), and the main problem is a lack of inventory in many price ranges.  Fingers crossed!

Sometimes It's Good to Lag the Market

In many parts of the country, real estate has fully recovered from the Great Recession, has increased in price, and is levelling off.  Inventory is a problem, because demand in many areas has been greater than supply.

 Not so for Connecticut.  Our poor business climate and high taxes has caused us to underperform everywhere else.  That means that we have yet to see any price increases, and our inventory remains higher than in other places.  And what does that mean?  It means that buying here makes more sense than it does in almost anyplace else in the country, because we share the same low interest rates, without the appreciation that would make housing prices higher than they were a few years ago.  We are still recovering from the downturn, and our jobs did not return in the same categories nor at the same rate as in other states.  That puts us in a different phase of the housing cycle, and makes us expect that this year will be strong. 

Certainly the weather is helping!  It's over 60 degrees today, and it already feels like spring.  So what does spring mean to us?  It's time to buy!

Expecting an Early Start to the Year

The traditional wisdom in real estate has people talking about the "spring market".  Prices are higher, attendance at open houses goes up, and contracts proliferate.  Sometimes the spring market even becomes the summer market, especially when the winter is lengthy and snowy, as happened last year.

There is another pattern in south central Connecticut, however, that happens for a couple of reasons. One is that we have an unusually high number of colleges and universities, which operate on a July to June calendar (as do most nonprofits, which also exist in large quantities in our region).  That means that offers of employment go out early in the calendar year, with July 1st starting dates. 

Also influencing our timing are the demographics we see.  Our average age in the State tilts high, and our birth rate tilts low (obviously, those two things are related).  That means that relatively fewer households have school-age children, causing their moves to take place according to other factors.  Although we do see many sales occurring in the spring, with closings taking place in the summer, we see lots of people buying at other times of the year.  People buying toward the close of the year are often investors, who are looking at tax considerations.  People buying early are coming into academic jobs or hospital positions.  This is especially true in the city of New Haven.

What that translates to is a paucity of listings in the winter, when the job offers starting coming in.  We are scrounging for homes to show in January and February, especially when we don't have snow on the ground.  We are expecting that to be true this year in spades, since we had activity straight through the holiday season, as well as increased hits to our website. 

We hope that sellers and potential sellers take this information and rush to get their homes ready to show as soon as possible.  While there may be more buyers in the spring, there are very motivated ones now, and the competition is less.  Try it and see for yourself!

School's Out

One of the truisms of the residential real estate industry has always been that homes are best listed in the early spring, to be sold in the late spring, closed in June and July, and moved into before school in September.  Especially in Connecticut, where the average age is high, and the birth rate is low, this pattern seems to be shifting.


 It was always true that condos, which typically had many fewer school-age children living in them, sold more often towards the end of the year.  That made sense, since the tax consequences were more important than the school calendar, particularly with lots of investors buying and selling them.  Now it appears that houses are also becoming less seasonal, and have more to do with jobs and second homes than with the school year. Part of that may involve the length of time it takes to sell, where people aim for summer and accept fall/winter, but I really think, looking over the past couple of years, that the sales pattern is evening out (except for snowy months) in general, regardless of days on the market.  There are also probably more retired people here, so that they are free to move at any time.


What does that mean for sellers?  It is still usually best to avoid peak holiday times (mid-December comes to mind) for listing, as well as the dog days of summer.  Otherwise, get it ready and price it correctly, and you are good to go.


And for buyers?  You doubtless have done enough on-line looking to know a good deal when you see one.  Don't expect it to last, if you find it, even in what you might think of as an "off" time.  Even if you buy first and sell later, supply is low for well-priced, well-maintained properties, and you shouldn't take choice for granted.

REAL Trends Housing Market Report

APRIL HOUSING SALES CONTINUE STRONG SURGE ABOVE PRIOR YEAR

May 13, 2015 – The REAL Trends Housing Market Report for April 2015 shows that housing sales increased 13.2 percent from the same month a year ago. All four regions reported unit sales had increased from a year ago with the Midwest leading the way with an increase of 14.8 percent.

The annual rate of new and existing home sales for April 2015 was 5.659 million units up from a rate of 4.999 million in April 2014. 

Housing prices rose an average of 3.5 percent from April 2014, continuing the moderate price increases of the past twelve month period. 

"April housing sales continued to show extraordinary strong growth that started with the March results. The results were strong in every region with only the Northeast reported less than double digit increases over the prior year.  With pending contracts also reported to be very strong we expect the trend of increasing housing unit sales to continue through the rest of the spring selling season", said Steve Murray, editor of the REAL Trends Housing Market Report. "Reports from industry CEO’s in late April and early May indicate that May business will continue to be stronger than expected just a few months ago. The only cautionary note is that inventory continues to decline and in a large number of markets it is approaching critical levels.  Future month’s sales as we head into the summer may be negatively impacted by the lack of inventory and the decline of affordability.”

Housing unit sales for April 2015 increased 14.8 percent in the Midwest, the best performance in all regions. Sales in the South region were up 14.1 percent, the West saw an increase of 14.0 percent and the Northeast had an increase of 6.8 percent.

The average price of homes sold in April 2015 in the South region increased by 5.0 percent, the best result in the nation. The West saw average prices increase 4.0 percent, average prices in the Midwest were up 3.1 percent, and the Northeast saw average prices rise 1.4 percent.

"While the job market remains strong average household incomes continue to show very sluggish growth. And while the private market for mortgages is less stringent than it was inthe past, many of the major lenders remain wary of adopting looser underwriting standards. So while there has been a pick up in first time homebuyer activity, it is not expected to return to normal historical levels of activity", Murray added.

REAL Trends Housing Market Report 
 
April 2015                                                      March 2015

                  
Closed Sales    AVG Price                        Closed Sales     AVG Price

National                     
+13.2%                       +3.5%                         +15.9%                       +4.9%

Regional Report

Northeast
+6.8%                         +1.4%                        +9.3%                          +7.4%

South    
 +14.1%                      +5.0%                        +16.7%                        +4.6%

Midwest
+14.8%                      +3.1%                         +18.4%                      +9.8%

West               

+14.0%                       +4.0%                         +16.4%                      +3.6%

Current Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period.  If you look at the number for Middletown you can say “If market conditions do not change and if no new listings come on the market it will take 7.4 months for the current inventory to sell at the current pace of the market.  A balanced market’s absorption rate is typically between 5 – 7 months.”

Urgent Message to Listors and Potential Listors

Last month, I blogged about what I had learned from reading the new book Zillow Talk.  One of my primary takeaways from the book, which used statistics derived from the millions of real estate listings on Zillow to draw conclusions about best practices, was that there is a best and worst time to list.  The worst time--sometime in mid-December--seems obvious.  The best time, however, was a surprise:  30 days after most listings come on the market in the spring.  Why?  Because when buyers get serious, which takes them a few weeks after the spring market begins to heat up, they look for the newest listings, which are not the ones already on, but the new ones just entering. Those, therefore, are homes that have come onto the market just as people have begun to narrow and intensify their searches. 


Why did I mark this post urgent?  Because that sweet spot for listing--at least to get the most money in the fastest time, statistically--is now!  The authors boiled it down to "between filling out your bracket sheets for March Madness, and when the green jacket is slipped on at Augusta".  For those of you who don't follow golf, the green jacket-winning golfer at Augusta is crowned this coming Sunday. 


Now, I realize that there are always exceptions to every rule.  People who decorate well, and keep their homes neat all year, can do very well in December, when very little is on the market, and those buyers that are out there are very motivated.  Any given home can do well at any particular time, especially if it is well-priced, and in a good location.  However, if you want to play the odds, now is your time.  So beat the green jacket, and list this week!

What the Data Tells Us about Real Estate Sales

We've been experiencing higher than normal volume on our website lately.  I know that's a message that you are used to hearing when you call in for customer service almost anywhere, but here it means something different.  It means that we can tell, from the analytics provided to us by our web provider and our Search Engine Management provider, that the usual uptick in site visits and searches began right after the holidays this year.  Usually we would see that rise begin in February or so, and that would translate into more traffic at open houses and more showings by the end of March. 


This year, all indications are that the spring market has already started.  And this despite all the snow!  While you might think (as I did) that bad weather and dark, cold nights would have people rushing to their computers to search for property, we can tell that the visits are coming during the day, and during the week, more than on the bitterly cold and messy weekends we've been having.  That would suggest that the traffic is normal, but early, as opposed to caused by boredom.


Our agents are reporting that showings are surprisingly robust for this time of year, and that open houses were strong, even on the traditionally slow Super Bowl Sunday (I've never understood why it takes all day, if you're not hosting a party, to get ready to watch a football game, but that's another blog topic...).  Inventory is down, and buyers are clearly eager to see new listings.  Many of the listings that have been on the market for a long time have been judged by buyers to be overpriced, or compromised in some way, so new offerings are highly prized.  Sellers take note!

Weather or Not?

Spring was very late in coming this year, and it's been raining every morning this week when I went out to get my paper, so summer is late as well.  All around the country, real estate professionals were complaining about the effect weather was having on home sales.  We all expected that May and June would be crazy, and would make up for the lost winter, as happened last year after the blizzard in February. 

We're still waiting.  Yes, we're busy, but no more so than in the spring and early summer that follows a normal winter.  We are missing that catch-up phase, where buyers and sellers come out of the woodwork when the weather improves.  This part of the year has also been the same in many parts of the country, albeit the worst area has been the Northeast. 

In other places, it could be that anemic sales relate more to lack of supply than to lack of demand.  It could be that Connecticut, with its 50% recovery rate from the recession is lagging for economic reasons, while others tell a different tale.  We're not sure.  But we are waiting for more activity, and keeping our eyes and ears open for the cause of the delay. 

Action step for buyers and sellers:  Treat June as though it were April.  Make plans to list, which we see happening, and buy, which we're hoping will follow!

Listings Still Needed

Spring has brought buyers, but good new listings are still in short supply. Many people think that they should wait until prices go up more, maybe forgetting that selling low and buying low is as rational a strategy as selling high and buying high. Therefore, I fell compelled to point out once again that interest rates are going up, and that the most important factor to consider is the monthly cost of home ownership. The price you buy for matters less than the interest rate on your loan, over the long run. Unless you can afford to buy before you sell, you are better off selling at the current price levels and financing a new home at today's mortgage rates than to wait until you have more cash, but will be paying higher loan rates. It's the kind of problem that is so easy to see when it's someone else's money; it's very hard to be as rational about one's own situation. That's why Realtors are here--to point out the facts. Your job is to act!

Home Foreclosure Activity In State Shows Signs Of Improvement In March

By Kenneth R. Gosselin, The Hartford Courant, click here to view online

Home foreclosure activity in Connecticut rose again in March, but there were more signs that the state's foreclosure troubles are beginning to moderate, a report released Thursday shows.

One component of overall foreclosure activity — first-time notices — fell 16 percent in March, the first year-over-year decrease after a string of 13 months of increases, according to the monthly report from RealtyTrac, which monitors foreclosure filings nationally and by state. RealtyTrac also markets foreclosed properties.

First-time notices totaled 1,022 in March, down from 1,221 a year ago, the report showed.

"This could signify a turning point for the recent rebound in foreclosure activity in Connecticut, indicating that lenders and the court system are beginning to catch up with the backlog of delayed foreclosures in the state," Daren Blomquist, vice president at RealtyTrac, said.

He added, "The latter two stages of foreclosure activity — scheduled foreclosure auctions and bank repossessions — continued to trend higher in March, but the decrease on the front end of the foreclosure process is a good sign."

Foreclosure auction notices rose 75 percent, to 156, and bank repossessions rose 65 percent, to 717.

Residential properties in some stage of foreclosure rose nearly 9 percent in March, to 1,895, from 1,742 for the same month a year ago. While an increase was still registered in March, it was in the single-digits, far below the 40 percent, year-over-year increase in the previous month.

The nation as a whole saw overall foreclosure activity decline by nearly 23 percent.

Experts say recovery in Connecticut was slowed by the robo-signing scandal in 2010. The scandal involved major mortgage lenders and servicers signing off on foreclosure documents without verifying their accuracy. The controversy touched off far-reaching federal investigations that led to paperwork reforms and hefty monetary settlements — and also delayed lenders pursuing foreclosures.

That, some experts have said, led to the spike in activity in Connecticut and a backlog in the state's courts. Not all states process foreclosures in the courts, so the fall-out varied from state to state.

In March, one in every 784 residential properties in Connecticut had a foreclosure filing, compared with one in 854 for the same month a year ago. Connecticut ranked the seventh highest among all states in this measure, compared with sixth highest in February and 13th highest in March, 2013.

 

Spring is Here!

After a very long, very cold, very harsh winter, there is a great deal of pent-up supply and demand in the real estate market.  Now spring is here at last--let the buying and selling begin! 

Recent Statistics

There have been new indications that shed some light on what we may expect for a spring market in residential real estate.  It's been a brutal winter, but the February job numbers, which just came out, were not as bad as they might have been, and put Connecticut at 50% of its jobs regained from the lowest recessionary level.  This, of course, compares with 92% of jobs regained nationwide, after awful weather everywhere, but we welcome any good news.

Other recent studies predict that the Northeast is the likeliest region to see multiple bids on property this spring, suggesting that demand has been postponed due to winter storms, and will "pop" when spring arrives (will it ever come??).  Rates are edging up, which is another indication that time is of the essence for buyers, since monthly payments matter more than total cost for most people.

Another report from Zillow suggests that the West Coast is best for sellers, and the East Coast for buyers.  That's not surprising, since prices in Connecticut are still 23% below their peak in June of 2006.  It is yet another indication that our region will see strong buyer demand.  Since the listing inventory is delayed, again by weather, supply may be tight.

In our office, we've been getting reports of greatly increased web traffic to our site, with strong demand for certain types of searches by buyers.  Again, that would seem to indicate pent-up demand.

My crystal ball is a little cloudy, but my outlook, based on all of the above, is positive!