Archive for the 'Contracts' Category
Multi-Family Properties in Hartford County
We spend a lot of time talking about single-family homes and condominiums, but multi-family properties are another important part of the local housing scene.
Where are the the multi-families in Hartford County? As you can see by the number of contracts written on this type of property over the past two years, they are concentrated in just a few towns. Lots in Hartford and New Britain, and a solid number in Bristol, Manchester, and East Hartford. Beyond that you have to really keep a close eye on the market or the opportunities will sneak past.
The overall number of contracts in 2010 was actually up slightly versus 2009, which is a big difference from what we saw in the single-family and condo markets. Even more interesting, there was a slight decrease in activity in the two biggest markets, but nearly all the other towns added just a couple deals and made up the difference.
Inventory is on the high side for the towns with lots of multi-family housing stock. This is partially related to the higher rate of financial distress than with other types of properties. Many investor-owners felt the pain of the housing crisis first (uh oh, prices aren’t going to continue rising) and gave up their multis early in the game – sometimes it was voluntary, other times not. Either way, the distressed sales have increased the available inventory and pushed prices down for everyone, even quality properties.
Our main observation is that even with the bloated inventory, the best multi-families sell quickly. There are financially strong investors out there looking to add to their portfolios, and the cap rates are much more attractive now that prices have fallen. Buyers on the hunt for a top-quality multi need to (1) have their financing in order, (2) have an automatic MLS search set up to get the new listings ASAP, (3) have a flexible enough schedule that they can visit the home the first day or two, and (4) be comfortable making quick evaluations/decisions. The good stuff sells very quickly if it is priced right.
Slower January for Condos
The number of condominiums that went under contract in Hartford County this January trailed 2010′s total by just over 20%. The drop in activity continues the post tax credit trend from last year. Since this month’s deal count was actually in line with the January 2009 numbers, it appears that the market is simply returning to a more realistic activity level after being goosed by last year’s tax credit.
Buyers and sellers successfully negotiated contracts on 103 Hartford County condominiums in January. The table shows the results by town, and sorts it based on the number of deals. There are some surprising results in the data, both in terms of the number of sales and the change from last year.
Some towns have more condos than others – it’s just the way the housing stock was built in those areas. What’s interesting about the January result is that some of the towns with the most condos had relatively few deals. South Windsor has numerous condo complexes and is routinely at the top of the list in terms of the number of deals. This month they only had 4, which was well off last year’s count of 12. Rocky Hill is another town with an active condo market that got off to a slow start.
The other important stat is inventory. We ran the calculation using the current number of listings and the total number of contracts over the past 12 months. This is how we always do it so that we can minimize the impact of seasonality. Since we believe that the number of deals last year is artificially high (because of the tax credit), then that’s going to make the inventory look lower than it really is. Inventory is also often at a seasonal low in January. The spring market hasn’t quite kicked in, and sellers have not yet listed their properties.
With those two points in mind, the current inventory is concerning. The County is going into the spring with more than 8 months of inventory, which is already well into “Buyer’s Market” territory (more than 6 months). We’ll keep a close eye on this in the coming months and expect a large jump in the calculation in May once the tax credit deals are more than 12 months in the past.
January Single-Family Contracts Rise
The number of Hartford County single-family homes that went under contract in January 2011 was 12% higher than the January 2010 total. Clearly, the month of snow had less of an impact on buyers than we had previously thought (January Listings Down 24% Year-Over-Year). Here’s the breakdown of how the individual towns fared.
As always, individual towns within the County performed very differently. Avon and Manchester are the first towns that jump out since both have strong increases and are generally active markets.
On the downside, Southington and Bloomfield are the only two towns that are active enough markets for the drop in number of deals to be a surprise.
The inventory numbers are also interesting. They generally start low in the early spring and grow as sellers begin to list their homes. Newington and West Hartford stand out right now since both have less than 4 months of inventory. Not quite a true seller’s market (less than 3 months), but close.
As we noted the other day, some of our buyers have been reluctant to go see homes with all the snow on the ground. Other agents we’ve spoken with have also felt the snow has been an issue. But the data shows that we’re off to a perfectly reasonable start to the year. What gives? Hopefully the current activity, plus the buyers waiting on the sideline, indicate that we’re going to have a nice spring market this year.
2010 Condo Market Stats
Today we’re going to look at the Hartford County condo market for 2010. Like we’ve been doing with the single-family market, we’re going to focus on the contracts written so that we have a sense of when buyers and sellers are most active. The chart below shows the number of contracts written by month for each of the past two years, which will give a good baseline for what we will see in the coming year.
2010 got off to a quick start, with buyers out shopping early. The number of contracts written trended ahead of 2009 for the first four months, spiking in April as the Federal Home Buyer Tax Credit expired. After that, the activity level was rather low and did not exhibit the traditional market seasonality. The number of total contracts was down about 10% for the year.
Looking at stats for the individual towns, we can see that it was a mixed bag.
Nearly all towns in the County have at least some condos, though certain towns have a much larger supply than others. This chart doesn’t show it, but the price points often vary between towns. Buyers looking at higher price points will have different towns available to them than buyers looking a lower price points, and vice versa. There are also still some new construction projects available, if that is a priority.
Although most of the towns showed a decrease in the number of contracts written for the year, the change in contract number varied widely. Five towns actually saw an increase during 2010. West Hartford jumped all the way from the eighth largest condo market in 2009 to number one in 2010 as all of the towns ahead of it experienced a slowdown in their markets.
Over the past two years it has consistently taken about 90 days to sell a condominium in Hartford County. Sellers need to be aware that the sales process could take a few months so that an extended time on market can be factored into their planning. Keep in mind that the days on market stat counts the time from when a property is listed until it goes under contract, so the seller will still own the home for another 45 to 60 days as the buyer goes through their inspections and secures their mortgage.
Condominiums are an important part of the Greater Hartford real estate market. There are not nearly as many available as single family homes, and they are distributed differently throughout the County. We’ll do regular posts tracking the condo market and see how it evolves during 2011.
November Market Statistics
This month we’re reporting statistics a little differently. They’re based on the number of contracts written rather than the number of closings. Why? Because it’s fun to shake things up every now and then. And because I honestly think it’s a more relevant way to look at the market.
By focusing on contracts, we get the most up-to-date view of market activity possible. The contract date is when deals are struck, when prices are negotiated, and when homes go off the market. That’s where the action is. Buyers should care about contracts because it will give them a sense of the activity level of their competition for homes. If there is a lot of buyer activity, then they may need to be more aggressive. Sellers should care about contracts because it shows when the buyers are active. If there’s a lot of activity, and their home isn’t selling, then it might be time to take some action.
What we lose by shifting the focus away from closings is information about the final sales price. We can’t report on changes in median sales prices since that figure doesn’t become public information until the closing. But is the final sales price that important? It is in individual deals, and when finding comparable sales for a specific property, but I have not been impressed with its relevance when looking at entire towns. We’ve been tracking and reporting on closings for years. Over that time I’ve noticed that the median (or average) sales price bounces around from month to month. Looking deeper into the data, it’s almost always because the mix of homes that sell is different each period. Every comparison is apples to oranges. Using longer time periods (quarters instead of months) helps smooth out some of the randomness, but it doesn’t completely go away.
Reporting on contracts makes more sense to me, but I’ll be curious to hear other opinions. We’ll definitely continue to look at the pricing trends, because they are both important and interesting. However, high level stats for an entire town on a monthly basis doesn’t seem like the best approach.
With that, here is some data about contracts written in Hartford County this past month.
Home buyers were more active this November than last November, with an 11% increase in the number of deals. The differences between towns are considerable, with some showing a big increase and others with many fewer deals. November is traditionally one of the slower months for real estate deals because buyers begin to wind down for the winter. The past two years have been a little different than usual due to the various tax credits. The number of contracts by month is shown below for 2009 and 2010, which can be contrasted to a more typical seasonal pattern that we published late last month.
Although the number of November deals is up versus last year, there has also been an increase in the days on market for the homes that did go under contract. Inventory, as measured using contracts written over the past 12 months and current listings, stands at just over 7 months. This means that there is a slight buyer’s market for the County overall, though that too varies by town.
NOTE: As always, the data used comes from the CTMLS and is deemed reliable, but not guaranteed.