Archive for the 'Market Statistics' Category
Multi Family Property in Distress
I had some downtime last night, so I decided to look through the MLS to see how the multi family markets are holding up in the current environment. Although multi family properties can be found throughout the region, they make up a small fraction of the overall residential market in most towns. I started by identifying the towns in which they represent a meaningful portion of the housing stock, which makes the data more interesting and relevant. I settled on Hartford, New Britain, New Haven, and Waterbury as the focus of the research.
All data was pulled from the CT MLS and reviewed and compiled manually. “Distressed” property to me means that either a bank already owns the property or the sale will require lender approval because it is a Short Sale. This analysis does not include properties going through foreclosure if they are not listed in the MLS because there is no central data source which collects that information. And when I say “reviewed manually” that means me going through every single MLS listing for that type of property and counting it manually. The MLS does not require agents to enter in the owner, nor does it require us to enter in a Short Sale, although those data fields do exist. Some agents fill in the information, but most do not, so the easiest way to gather the data is just to look through and manually count. It is not fun, but is doable while sitting on a couch on Tuesday night, watching TV. I counted a property as Distressed if the owner was listed as Corporate or a bank, if the Short Sale field said Yes, or if anywhere in the listing description or agent remarks it said that the sale needed lender approval, was bank owned, or was a short sale.
Here’s what I found. Remember, data from the MLS is deemed reliable, but not guaranteed. My ability to count correctly while watching House Hunters is deemed fairly reliable, but also not guaranteed…
Some Observations…
1. The levels of distress among multi family properties is consistently above 20%, and in some cases above 30%. In absolute terms, these numbers are higher than we have seen in previous years and show that the Connecticut’s cities have felt some of the impact of the “housing crisis.”
2. The levels of distress among multi family properties is generally higher than among single families. Unfortunately, the data does not give any clues as to why multi families have become distressed at a higher rate. There are many factors that play into a property owner’s decision to default, but the most likely explanation is that investors took on too much debt to buy marginally profitable properties in hopes of continued price appreciation.
3. Inventory levels vary between the towns. This suggests that there are more buyers shopping in New Haven, where the multi family inventory is 7.3 months, versus Hartford. The other side of the coin is that there may be more opportunities for buyers right now in Hartford.
Connecticut is experiencing distress in its multi family markets, and seeing it at a higher rate than the single family properties in the same markets. This creates opportunities for buyers with cash, whether they are looking for investment properties or plan to live in one of the units themselves. Next month’s market statistics post will include updated data for distress in the single family markets of our usual towns.
Greater Hartford May 2009 Real Estate Market Statistics
Yesterday I was preparing my data for the May real estate market statistics post and this morning the Courant had an article about housing prices for the state as a whole. While aggregating the state as a whole is good for a macro economic perspective, your average Joe and Jane are more likely to be concerned with what’s going on in their town or the few towns surrounding where they live, as that’s what’s affecting the micro economy that they live in.
So here’s how we did with real estate sales in the Greater Hartford area in May 2009. As always, data came from the CT Multiple Listing Service for single family homes only and is deemed reliable, but not guaranteed….
More interesting data will come with my June statistics post, as that way we’ll be able to review the entire second quarter of home purchases and sales. Simply put, more data = more relevancy.
A few observations…
1. Eight of the seventeen towns covered actually saw an increase or no change in the number of closed sales when comparing May 2008 to May 2009. That’s the most we’ve seen in many months, so a nice positive. However, when aggregating these towns, the number of sales is down 13.1% when comparing May 2008 to May 2009, which is a slight improvement over the decline of 18.9% in April.
2. I noticed that several of the towns that had an increase in the number of Closed Sales had somewhat substantial declines in Median Price, particularly East Hartford, New Britain, Vernon, and Wethersfield. Hartford saw declines in both the number of Closed Sales and Median Price. In most cases, the decline in Median Price for these towns is likely attributable to the number of closings that were Bank Owned/Short Sales. For example, 33% of East Hartford’s Closed Sales in May were either Bank Owned or Short Sale properties. Hartford was 38%, New Britain was 39%, Vernon was 30%, and Wethersfield was 11%.
3. When I was calculating the months of inventory for each town I was surprised by the number of homes currently for sale in West Hartford. Typically West Hartford has anywhere from 215 to 240 homes actively for sale (not currently under contract) at any one time. Late yesterday there were 296 houses actively on the market in West Hartford. When I looked back at the beginning of May, there were 264 houses available. I wouldn’t necessarily expect this number to be increasing, as the spring market has started and typically it plateaus at a higher number and decreases. We’ll keep following this to see if we’re plateauing later or if it really is a problem.
Here’s how inventory has changed for each of the towns, comparing yesterday to the same time at the beginning of May. A negative number is a good sign for Sellers, the months of inventory has decreased…
All towns shown are still a Neutral market (3-6 months of inventory) or Buyer’s Market (6+ months of inventory).
Greater Hartford April 2009 Real Estate Market Statistics
More numbers today. We’re through April, so it’s time to look back and see how the market fared last month compared to the same timeframe in 2008.
All data comes from the CT Multiple Listing Service, is for single family homes only, and is deemed reliable, but not guaranteed.
My observations…
1. Just like January and February, there were so few transactions in some of the towns that this data is not very statistically relevant, particularly the Median Sale Price and Days on Market columns. I am simply including these two columns because I’ve done so in the past and people like to see the data. Those two buckets are much more relevant on a quarterly basis, so just keep that in mind.
2. The number of closings are down again when comparing April 2009 to April 2008. Aggregating the data for these towns, the number of closed sales was down 18.9% in April 2009 compared to April 2008.
3. Every town presented with the exception of Manchester and Newington is now seen as a Buyer’s market, with more than 6 months of inventory available in each town. Remember, certain price points and neighborhoods may still have an advantage to Sellers, but when aggregating all price points and neighborhoods for a town, most towns are showing an advantage to Buyers right now. Many Sellers are listing right now to time the spring/early summer market, so this is leading to a build up of inventory. By June and July I would expect the Months of Inventory to decrease as Buyers will have made their decisions on the spring market and Sellers will slow down on listing heading into the summer.