Archive for the 'Closing' Category
Friday the 13th
The other day we were talking about our current pending deals, and noted that we both have closings scheduled for mid August. Closing in the middle of the month is pretty common, but we discovered that our two deals have something in common. Neither us, nor our clients, wanted to close on Friday the 13th.
Friday is the most common day for real estate closings in Hartford County. In looking at data for over 30,000 single-family and condo closings since the beginning of 2007, there are more than twice as many closings on Friday as any other day of the week. The reason we often hear for a preferred Friday closing is so that people have time to move in over the weekend before returning back to work on Monday.
Are we the only agents with an aversion to Friday the 13? No, no we’re not.
In weeks that contain a Friday the 13th (red bars below), there is a noticeable decrease in the number of Friday closings. Clearly not everyone is afraid of the day, but there are others who would prefer not to risk it. The chart shows that many buyers choose to close on Thursday the 12th, while some push it out to Monday the 16th.
We expected there to be more of an aversion to Friday the 13th closings than the data shows. Especially since many of the agents we know are mildly superstitious (no sense putting clients at risk of bad karma/energy/whatever). Maybe people don’t realize that the closings they schedule on a 13th are also on a Friday. Or maybe they’re too embarrassed to admit their phobia. Or maybe we’re just a little too sensitive to this sort of thing.
Would you schedule a closing on Friday the 13th?
HCPR: Soaring Sales in Second Quarter
Sales in Hartford County soared in the second quarter of 2010 versus the second quarter of 2009 thanks to the Federal Home Buyer Tax Credit. Median prices were up modestly over the year-previous quarter. Median days on market fell meaningfully, reflecting the frenzied pace of the County’s residential real estate market as the tax credit overlapped with the traditional spring market.
Single-Family Homes
Second quarter sales of single-family homes increased 23.8% compared to the year-earlier period. Although the total number of 2,047 sales improves on the results for the quarter in both 2008 and 2009, second quarter activity still trailed all of the years between 2000 and 2007 for which the CTMLS has data.
The median price for single-family homes in the County increased by 1.3% from $227,000 to $230,000. Sales price per square foot, another valuation metric, remained virtually unchanged at $147/sqft. Finally, the median time on market decreased from 40 days to 31 days.
Condominiums
Hartford County condominiums trended in the same directions as the single-family homes during the quarter. The number of sales was up 43.8% over the second quarter last year, with the 644 total sales running ahead of 2008 — 2009 and behind 2000 — 2007.
The median sales price rose 3.0% during the quarter, from $165,000 to $169,900, and the median price per square foot held steady at $134/sqft. Condominiums also experienced a decrease in sales time, with the median days on market falling from 51 to 45 days.
Residential Real Estate is More Than the Tax Credit
Local residential real estate markets continued to function even after buyers could no longer claim the Federal Tax Credit. As expected, there was a dramatic lull in the number of contracts written in May and June, which should be visible in the number of third quarter closings. However, buyers still made offers even after the credit expired.
Extending the Home Buyer Credit
The National Association of Realtors (NAR) has been leading a push to get part of the Federal Home Buyer Tax Credit extended. But don’t get too excited – their proposal won’t give allow anyone new to claim the credit.
Before diving into the details, here is a quick review of the current rules of the game:
1. First time buyer or existing owner (extra criteria).
2. Binding purchase contract by April 30, 2010.
3. Closing by June 30, 2010.
In a June 11th press release, NAR argues that 180,000 buyers met the first two rules but are at risk of missing out on the credit because their lenders will not be able to underwrite the mortgage in time. In fact, they state that “as many as one-third of qualified applicants have been notified by their lender that their mortgages will not close before June 30th.” NAR would like to protect these buyers by extending the deadline for closing to September 30th.
NAR’s main concern is that the surge in purchases at the end of April is overwhelming lenders. Others seem to believe that the tighter lending standards and the new appraisal rules that fall under the Home Valuation Code of Conduct (HVCC) are a big part of the delay. A number of articles, including Senator Reid’s press release on the issue, state that there is “growing concern” that short sales will be impacted.
We have heard about mortgage delays with some of the larger national lenders and with special programs (like CHFA) that require additional steps or approvals. However, buyers using standard mortgages with local and regional lenders are seeing their loans go through without much trouble. Appraisals can be an adventure when someone is assigned from outside of the area (like from Rhode Island!), but they have occurred in an expeditious manner. Short sales are a whole different animal, and the concerns identified seem to lead to a discussion about when the purchase contracts becomes binding – not a debate for today.
Buyers in Greater Hartford are seeing some of the same challenges that have been reported in the country overall, especially when they use national lenders. Hopefully we won’t see too many closing delays as the month of June comes to an end. And if the “closing by June 30th” rule is relaxed, that will help ensure everyone gets the incentive they were expecting.
HCPR: Increasing Activity in the First Quarter
Hartford County’s housing markets saw an increase in the number of closings in the first quarter of 2010 versus the first quarter of 2009. This continued the positive momentum from the second half of 2009, but is still well below the sales pace from the early and mid 2000s. Median sales prices were up slightly, while median days on market fell sharply.
Single-Family Homes
First quarter sales of single-family homes increased 16.4% compared to the year-earlier period. However, the 1,024 total sales for the quarter were still below Q1 2008 levels and the 1,596 average Q1 sales from 2001 — 2007.
The median price for single-family homes in the County increased by 6.4% from $206,700 to $220,000. Sales price per square foot, another valuation metric, increased 2.2% during the quarter from $137/sqft to $140/sqft. Finally, the median time on market decreased from 59 days to 45 days.
Condominiums
The condominium market trended in the same general directions as the single-family market. The number of sales was up 13.3% over the first quarter last year, though the total of 315 for the quarter was well below the average of 583 from 2001 through 2007.
The median sales price was flat during the quarter, increasing slightly from $172,500 to $173,000, and the median price per square foot fell 2.1% from $139/sqft to $136/sqft. Condominiums also experienced a decrease in sales time, with the median days on market falling from 67 to 55 days.
Trend Towards Faster Deals
The extended Federal Tax Buyer Credit has pulled much of the traditional spring activity forward. Buyers must have a property under contract by the end of April in order to capture the credit, which has motivated them to start looking sooner. Sellers have also gotten an early start by listing their properties in hopes of attracting the credit-seeking buyers. The decrease in days on market is the main result of the credit this quarter, while there will likely be a large spike in closings next quarter.
Radon, Radon Everywhere
Radon is a naturally occurring gas, and is part of the normal mix of elements that make up the air we breathe. However, the concentration varies greatly throughout the country, within individual towns, and even within neighborhoods. If the concentration is too high, then radon can be a health hazard.
We always recommend that our buyers test for radon as part of their home inspection. If elevated levels are found, then our buyers have an opportunity to make sure they have addressed it to their satisfaction before proceeding with the purchase. Some become uncomfortable with the home and choose to walk away. Others require that the sellers install a radon mitigation system to lower the concentration to more acceptable levels.
Mitigation systems are very effective at reducing radon levels. Because radon is produced underground, and is heavier than most other components of air, it tends to enter through the foundation and pool in the lowest levels of a home. Mitigation systems are simple ventilation tubes (usually PVC piping) that blow air from under the home’s foundation to the outside of the structure. They are easy to install and relatively inexpensive compared to other mechanical systems in a home.
The EPA has a website devoted to radon and real estate that should be required reading for all home buyers and sellers. They also have more general pages that talk about the health risks of radon in addition to their overall radon portal. The EPA defines a concentration of 4.0 pCi/L as the point at which a mitigation system should be installed. As a point of comparison, the average indoor concentration level is 1.3 pCi/L and the average outdoor concentration is 0.4 pCi/L.
In September of 2009 the World Health Organization completed the International Radon Project, a comprehensive study of residential radon health risks. They recommended that countries adopt tighter standards regarding acceptable radon concentrations in residential environments. Their target action level is equivalent (they use different units to measure) to 2.7 pCi/L, and they suggest that the highest action level a country adopt is 8.0 pCi/L.
The EPA’s action level is comfortably within the suggested range, and in their reaction to the report they did not give any indications that they would change the standards in the United States. A different article pointed out that the EPA actually recommends that home owners “consider fixing their home” when concentration levels are 2.0 pCi/L, even though the accepted action level is 4.0 pCi/L.
Radon is an environmental issue that impacts everyone involved in residential real estate, whether or not they are actively pursuing a transaction.
Home Owners: Consider testing your property to make sure that radon concentrations are at safe levels in your home. We tested our home a couple of years ago. It’s a two day process for the continuous monitoring test (we recommend this over a canister test) and currently costs about $250 when done alone (versus as part of a home inspection).
Sellers: Be prepared for buyers to conduct a radon test during their home inspection period. Since elevated radon levels are considered a “Material Fact” in the state of Connecticut, you will be required to disclose the results to all potential buyers (even if the buyer that discovered the radon walks away from the deal). The practical implications are that sellers with high radon must have a mitigation system installed in order for their home to be marketable.
Buyers: Read up on radon so that you understand the potential risks and the effectiveness of mitigation systems. Conduct a radon test during the home inspection process, and insist that elevated levels are addressed by the seller either in the form of an installed mitigation system or a credit to cover the cost. Remember, you will be required to disclose the radon test results when you sell the house, so keep the paperwork.
All of us are exposed to radon on a daily basis, inside our homes and out – there is no way to eliminate it from our environment. The key is to understand the potential risks and to make sure that our homes contain safe concentration levels.