December is traditionally the slowest month of the year, so having it outpace any other month is a bit of a surprise. We think that the usually large snow storm, which was felt through the beginning of November, worked to push some business into the year’s final month.

This December also showed an uptick in activity compared to December of 2010. The number of homes that went under contract this past month is nearly 10% higher than the total from the previous year. It’s difficult to know how much of this observation can also be attributed to the snow storm. Our feeling is that it is not a result that we should read too much meaning into.

Results were well distributed at the town level, though not over as extreme a range as we have seen in previous months. More interesting is that the number of homes actively for sale has come down to about 6.6 months worth of inventory. It was at 7.3 months in the November report, and peaked at 8.8 months in the June report.

Inventory levels should be lower at the beginning of the year. Many sellers take their properties off the market over the holidays so they don’t have to worry about keeping their home in “show condition” and accommodating visits from potential buyers. New listings will begin to come on the market at a steady pace, and the pace will increase as we get through the winter and closer to the traditional spring real estate season.

We’re working on our 2012 real estate predictions, and will hope to have some more analysis of 2011 available in the coming weeks.

Perhaps winter arrived a little early this year in Greater Hartford; we all know that the snow did. Widespread power outages beginning with the storm on October 29th impacted the real estate market for the entire first week of November. Buyers were focused on other priorities and sellers’ homes and properties we in no condition to show, never mind impress. There were few, if any, showings until the weekend of 11/5 when brave buyers began to tour unlit homes with their flashlights. With the storm at the beginning of November, and Thanksgiving at the end, we were lucky to have two solid weeks during the month for real estate.

Switching over to the sell side of the equation, it feels like there is very little new inventory entering the market right now. It can be weeks between interesting new listings that match our buyers’ search criteria. November is not traditionally a popular time to put a home on the market, but it may be a good strategy in some of the more active submarkets where there are buyers actively looking. If a home shows very well, and is properly priced versus the competition (mostly listings that didn’t sell during the fall), then it should generate interest.

Homes that have been on a long time without selling probably are best served by coming off the market for a few months over the holidays. Buyers tend to tune them out over time, so laying low for a little while can work in the sellers’ favor. When sellers relist in the spring there will (hopefully) be lots of new people in the buyer pool who will be excited to go see the home for the first time.

Here are the town-by-town stats for the month of November – they are even more scattered than usual.

The County remains on track to exceed 2010′s total number of contracts. We need to have 635 homes go under contract in the last two months in order to match 2010, which is a reasonable number despite December traditionally being the slowest month of the year for contracts.

Fallout from the late-October winter storm, and the widespread power outages that came with it, definitely impacted the local real estate markets. Essentially, we had a week off as there were very few showings. That’s not to say we, or real estate agents overall, weren’t busy. As homeowners we had some cleanup to do on our property. And we spent a fair amount of time working with our sellers who had some work to do at their homes.

Once the weekend arrived we began to see signs of life. One West Hartford agent called asking to see a listing even though the home did not have power. He still did not have power at his home, and his buyer client did not have power either, but they were both ready to get back out there and look at homes again – flashlights in hand.

The market could go in one of two ways from here. Hopefully it will pick up where it left off before the storm and continue into late November, as often happens. The alternative is that buyers could just pack it in for the year and turn their attention to the holidays. This week should give us a good sense of buyer sentiment, and how likely we will be to beat 2010′s contract total.

There was a lot of interest in our markets at the beginning of September; it was a noticeable increase from the end of August and much of the summer. The rest of the month seemed pretty active too, so I’m a bit surprised to see the number of contracts come in at a lower level than August, though 35 deals (532 in August versus 497 in September) isn’t a huge number.

Looking a little deeper at last month versus this month, it appears that two towns experienced major slowdowns that nearly equal the total for the County. The number of contracts accepted in Southington decreased by 15 deals from August, while Windsor decreased by 13. Other towns also saw a less active September, but not by such a wide margin. Manchester, East Hartford, and Marborough reported decreases in the number of contracts of 8, 7, and 6 respectively. On the other side of the ledger, the town Bristol was up 7 deals and Glastonbury was up 6 deals.

Each town is its own market, and this is yet another example of how the data can vary. Below is the year over year comparison for each town in the County, showing a 12% increase in activity for September 2011 over the same month in 2010.

Hurricane Irene passed through the County during the final week of the month, putting most of the real estate market on hold for at least three days, with some areas affected through the end of the month. We don’t know for sure how much of an impact it had, but feel comfortable saying that the number of deals would have been higher without the storm – there were essentially no showings over the storm weekend.

Interest in the real estate market seems to be picking up after the extended period of downtime caused by the storm and holiday on back-to-back weekends. It will be interesting to see how the fall market plays out this year, and ultimately how the year ends. As the chart above shows, the market is about 1.5x as busy during the warm months as it is during the cold months. It’s a noticeable difference, but there are definitely buyers making offers on homes all year.

Inventory levels decreased slightly during the month, suggesting that either the pace of deals increased or the pace of listings slowed. August showed fewer contracts than July – the pace of deals slowed – so the pace of listings must have slowed even more.

We’ve mentioned this before, but it’s something worth repeating … buyers have an opportunity to get into homes at prices well off the peak, and with very attractive interest rates. This applies to move-up buyers in addition to first-time buyers. Just give it some thought … we’ll be happy to show you what’s available.

Here’s how the month went for each of the individual towns.

Buyers have a nice opportunity in the market right now. Inventory is at a slightly elevated level, providing a good selection. Competition from other buyers is relatively low, so immediate bids are usually not needed for the “best” properties. Prices have been trending downwards, and financing terms remain very attractive.

Last month we were concerned about the pace of new listings. Fortunately, homes seem to be coming onto the market at a sustainable pace, as inventory levels have held steady at about 8.7 months since the beginning of the spring market.

It’s good that inventory is not ballooning, because that would put even more pressure on prices to move lower as sellers competed against each other to “win” a buyer. Unfortunately, it’s also a reasonable assumption that there are even more home owners out there who would like to sell their properties. Some would-be sellers have not yet listed because they’re hoping to wait for a more favorable environment, while others are properties caught up in a distressed situation.

Inventory by town is spread throughout a very broad range, with Newington and West Hartford showing the lowest inventory levels…

May’s result shows that there are still buyers on the hunt for homes. The peak of the spring market is often the month of May, so seeing the number of deals increase over April is reassuring, providing some level of confirmation that the market is returning to normal patterns.

Looking at the year-over-year comparisons, May 2011 outperformed May 2010 by 70%, which is a huge number. Although it’s always fun to make predictions and then see them come true, getting this one right (see the bottom of April’s commentary) feels like a hollow victory. There was no real insight here, just a solid understanding of how math works.

The important question is whether buyers will continue to shop through June. We’ve noticed that buyers seem to be coming out in waves this spring. There have been a few very busy weeks with lots of calls to tour homes, and showings scheduled on our listings. Then there have been other weeks that have been surprisingly quiet. We haven’t figured out the pattern, so your guess is as good as ours.

Buyers continue to prefer homes in which they don’t need to make any improvements. Picture perfect homes in popular locations sell quite quickly. Homes in very nice condition seem to find buyers who are excited to live there even if the counters aren’t granite. Properties that are clean and tidy are often more marketable than better updated homes that aren’t as well maintained.

Buyers willing to step outside of the must-be-perfect mindset can find interesting properties at a reasonable price. They just have to be willing to do a little work. Sometimes it’s a simple as painting and cleaning. Other times it’s more involved projects like updating the kitchen and/or baths.

One final thought … a lot of buyers seem to be thinking of their potential purchase as an investment more than a home. I understand that everyone wants to get the best deal possible, and would ideally like their property to appreciate over both the short and long term.

There’s a difficult-to-quantify side to residential real estate that relates to “quiet enjoyment,” or how much you like living in your new home. How much do you value a certain style of home, or layout? How much do you value the neighborhood a home is in? How much do you value your commute time? Are you willing to make compromises in one area to get what you want in another?

Although we may be seeing the beginning of a trend, we don’t think it’s cause for concern. In fact, this looks like a normal year! Last year was different, special really; buyers were out early. This year we got off to a more typical slow start. The following chart shows that we’re tracking 2009 very closely, and actually seeing more traditional real estate seasonality.

The next couple of data points will be very interesting. Will we continue to follow 2009? Will the peak of the spring market even come close to the tax-credit-driven 2010 peak in April?

Below is the data for the individual towns. We don’t think that the comparisons to last year are very meaningful, so we’ll skip the usual commentary about the individual towns. However, we will print the chart so that there is a continuous record of the data, and just in case it’s needed as a reference if others report on year-over-year results for the month.

Just so you’re prepared … the real estate markets will look fantastically vibrant and active compared to last year once we get into May for contracts written, and July for deals closed.

Despite the relatively high inventory levels, the supply is not always distributed in the same manner as the demand. Some complexes have a lot of units for sale with very little apparent interest, while other communities that are perennial favorites with buyers have maybe one or two available.

The most curious data point in the whole table is the number of contracts in South Windsor. There are a lot of condo communities in town, and South Windsor is usually one of the leaders in terms of total annual deals. Last year there were 106, while in the year before there were 110. This year has been a completely different story. There were only 4 in January, and just 2 in February.

Their inventory number is actually quite reasonable, at 6.2 months – a much more balanced market than some of the towns that are strongly favoring buyers. Scanning through the active listings, most of the big South Windsor communities do have a couple of units available, but not as many as in the past year. As a specific example, one complex had 14 closings since 1/1/2010 and currently has 2 active listings and 1 under contract. Is the huge drop in activity a supply problem, a demand problem, or a mismatch of the two?

It’s not yet clear what is going to happen in the condo markets this year. As the chart below shows, the number of transactions has been considerably lower in the past few years. The first two months of this year point to an even slower 2011 than 2010. Are the buyers simply waiting until the weather improves before they get serious about their search? More listings will appear as April approaches, but will owners look to sell their units at the same pace as they have in previous years?

Activity levels varied widely between towns. Avon came out of the month as the big winner with a sharp increase in contracts. At the other end of the spectrum, Enfield and Southington finished with less than half the market activity of last year.

The year-over-year comparisons are fun and dramatic, but we’re obligated to point out that it’s not an apples-to-apples sort of thing. Last year was different than “normal.” The Federal Home Buyer Tax Credit pulled the whole spring market forward into the first four months of the year (See the “Contracts Written by Month” chart at the bottom of this article). This year is more typical, with both buyers and sellers beginning to get into the real estate frame of mind over the President’s Day weekend.

The big story we see right now is low inventory levels. We are having trouble finding interesting homes to show our buyer clients. It’s an especially big problem in two of the markets we spend a lot of time in, Hartford’s West End and West Hartford. Owners out there considering a sale should seriously consider getting their home on the market. Call your trusted agent (preferably us) to get the process started.

The chart of towns is sorted by inventory levels this month. Newington retook the “Most Favorable Market for Sellers” crown after briefly ceding it to West Hartford. Hartland is disqualified because they only had 13 deals come together over the past 12 months, and only has 3 active listings right now. Nothing against Hartland, it’s just not an active enough market to take the stats too seriously.

After looking at the chart some more, it’s clear that there are plenty of houses for sale. Most of the towns have 6 to 9 months of inventory. The general rule of thumb is that more than 6 months of inventory is a buyer’s market.

I can think of two reasons why the inventory data isn’t completely matching up with what we’re seeing in the market. One is that everyone’s buyers seem to be looking for the same basic house. The other reason is that many of the available properties have been on the market for months or, in some cases, years. Buyers have seen these homes and ruled them out for one reason or another. Combine these two factors and we have a situation where there are bidding wars on hot new listings that come on the market. Perhaps not at the same price levels as we saw in 2007, but there is strong demand.

Still on the fence about whether or not to sell? Give us a call and we’ll be happy to sit down and talk through your specific situation. The buyers are out there, but the market needs sellers too.