People always ask me “How’s the market doing? Is it really as terrible as the media makes it out to be?” My response is typically “it depends…” Different price points are reacting differently in this market. Different towns are reacting differently in this market. Today, let’s take a look at it from the price point view, from one town.
As you know, I like to look at West Hartford because it is a very active market (typically 600+ closings a year, making it statistically relevant) and has a good range of price points in the properties available ($100,000 to $1.5+ million).
First, we need to break down the market into price bands. Here are common ranges that people typically shop in, and the type of buyer that would typically buy in each of the bands…
$0K-$399K– mostly first time buyers, some move-up buyers
$400K-$599K– mostly move-up buyers, some relocation clients, some first time buyers
$600K-$999K– mostly a buyer on their second or third move up, relocation clients in the mid-level management or executive ranks
$1+ Million– mostly a buyer on their second, third, or fourth move up, relocation clients in the executive ranks
Now, let’s take a look at how homes are moving in each of the price bands in West Hartford. We’ll look at data from the beginning of the year and compare the number of properties that have Closed or are currently under contract waiting to close to those that are Actively on the market without an accepted offer. What does the data tell us?
Before we start the analysis, our standard disclaimer… All data in this chart comes from the CT Multiple Listing Service for single family homes only. It’s deemed reliable, but not guaranteed.
I’ve broken the data down into smaller price buckets, but the green dotted lines represent the price bands we identified above.
We can see that the $0K-$399K price band is moving fairly well. The number of contracts written and closings seems to be keeping up well with the active listings. In fact, the inventory level in this price band is 4.39 months, so a neutral market.
Moving on to the $400K-$599K band, movement is somewhat slower, but properties are still moving. There is six months of inventory in this price band, based on the 4 months of data. This is also considered a neutral market.
As we progress to the higher end of the market, $600K-$999K and $1+ Million, it appears that the market has slowed dramatically. Inventory in the $600K-$999K band is at 10.5 months, making it heavily weighted to a Buyer’s market. Inventory in the $1+ Million category is, well, not good. The last time a $1 Million+ property went under contract and successfully closed in West Hartford was 8/14/08. If I take that information and turn it into an inventory calculation, the $1+ Million price band has 12.76 years of inventory right now. So, that’s a Buyer’s market if I’ve ever seen one. Will it actually take more than 12 years to sell these houses? Heck no. But the data is indicating that this price band is quite stagnant as of today.
Overall, if you look at the typical buyers for each of the price bands and what is going on with the local economy, this data makes sense. The lowest price band is filled with first time buyers that may have been waiting for the market and are taking advantage of the $8,000 first time homebuyer tax credit. The second band, typically move up buyers, is seeing good movement because these people are sellers within the first band, so they are getting buyers for their houses, allowing them to move up. The two highest bands are seeing a slow down, as jumbo mortgages have become more difficult to attain and companies are slowing down on their hiring, which affects the corporate relocation market of buyers.
As an agent, what this means to me is that we need to realize that it’s going to take longer to sell the higher end homes. We’re also going to need to work harder. Yes, a house has to be priced appropriately for the condition it’s in and the competition in its price range. But agents also need to explore different ways to market these homes. The standard practices of advertising to other agents and putting the property in the Multiple Listing Service are still necessary, but no longer sufficient as standalone activities. How else is your agent building awareness for your home?