Archive for the 'Contracts' Category
July Contracts: Plugging Along
Contracts negotiated on single-family homes this July fell from the previous month’s total as buyers took their traditional summer break. Transactions for the year continue to track the 2009 data reasonably well, though at a slightly lower activity level.
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 Contracts: A Classic Look
Activity in the Greater Hartford real estate markets continued to build through the month of May, with a total of 687 Hartford County deals coming together in the Connecticut Multiple Listing Service. Markets are now back in line with the 2009 numbers.
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?
March Contracts Lag: Cause for Concern?
Negotiated contracts on single-family homes in March 2011 were down about 24% from the year-previous monthly tally. Wait a minute … that sounds awfully familiar. For the second month in a row the market was only three-quarters as active as last year. Does this establish a trend? Is it cause for concern?
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.
February Condo Contract Musings
Through the first two months of the year, buyer interest in condos has been relatively mild. The February data on contracts in Hartford County show that 26% fewer deals came together this February versus last. Overall, there is 8.6 months of supply, which by definition makes it a buyer’s market (6 months of supply is the threshold).
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?
February Contracts Show Single-Family Snoozefest
Negotiated contracts on single-family homes in February 2011 were down about 24% from the year-previous monthly tally. We thought the market felt slow, and the numbers definitely support our anecdotal evidence.
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.