Archive for the 'Market Statistics' Category
Q2 Condo Contracts: Good News for Buyers
The Hartford County Condo market has fallen out of sync with the traditional seasonality, creating a good opportunity for buyers with lots to choose from and a more favorable pricing environment to go along with very attractive mortgage rates.
The data shows a 13% decrease in the total number of contracts from the second quarter of 2010. However, looking more closely at the individual months, we can see that 2011 showed very steady performance – about 150 deals came together in each of the three months. The comparison to 2010 is tricky because of the federal home buyer tax credit. Last year there was a huge surge of activity in April 2010 followed by two much quieter months to round out the quarter.
More concerning is the lack of a meaningful bump in overall activity during the spring 2011 months. The 2009 market showed more traditional seasonality, which gives a sense that 2011 spent the second quarter of the year headed in the wrong direction.
Looking at the numbers for the individual towns, sorted by total Q2 2011 contracts, we can see that performance is all over the map. Some of the towns near the top of the list (towns with more condos in their housing stock) performed pretty well – Farmington and Enfield were more active than last year, while South Windsor was basically flat. Other towns with lots of condo communities struggled to match last year’s totals, showing declines of up to 40% in the number of contracts.
Inventory levels continue to increase, which is another important indicator of the direction of the market. As of this past weekend, it would take more than 10 months to work through the inventory currently on the market.
All of the data clearly points to an opportunity for buyers. The elevated inventory means that there are lots of properties to tour, and to choose from. The lack of a real increase in contract activity through the spring months shows that, for whatever reason, condos just aren’t as popular these days. Mortgage rates continue to be quite attractive, and loans are available for those with good credit and reasonable debt loads.
Renting? It may make sense to run the numbers to see if this is the right opportunity to become a homeowner.
Curious about investment properties? Being a landlord for a condo is a little bit easier than managing a multi-family or other type of property. It’s still a big commitment, but there are fewer things you’re directly responsible for as the landlord of a condo.
We would be happy to talk about any situation, and have personal experience going through both of these scenarios ourselves, in addition to helping others understand and work through them.
June Contracts: All Over the Place
June activity in the Hartford County single family market fell slightly from May of this year, but remained much stronger than June of last year.
This year’s data shows that May will most likely be the peak of the 2011 spring market. Buyers continued to be out in force through June, though the number of deals has begun to trail off. Our next data milestone will be to see how activity holds up through the summer months.
Comparing the month to June of 2010, the number of deals is noticeably higher this year. Although the number of deals is up over 26%, much of that difference must still be attributed to the market distortions of the Federal Home Buyer Tax Credit. The chart also shows that we have once again dipped below the more relevant 2009 line, though remain at comparable levels.
Unlike last month, there is much more variation in the year-over-year comparisons between individual towns. Five towns more than doubled, thirteen showed meaningful increases, three were about flat, and seven had modest declines. It’s interesting that there does not seem to be any themes as to how the towns performed. Often there are trends related to location within the county, average home prices, or inventory levels.
Inventory levels in the County increased slightly to nearly 9 months, and differ considerably in each town. Anecdotally, it feels like homes continue to come on to the market each week, so I see inventory continuing to build even as buyer demand begins to decrease for the summer. If the data supports this observation, it could point to the direction of home prices … look for a future post on this subject.
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?
April Contracts: Spring has Sprung?
Based on the number of contracts written in April, we’re having a late spring this year. April finished with slightly more deals than March 2011, and 34% fewer deals in the year-over-year comparison.
Where are all the buyers? After quickly falling off the 2010 trend line, we’ve also now fallen below 2009′s activity level. Maybe it’s no longer cool to buy houses. Too bad though, there are lots of interesting homeownership opportunities.
That being said, we have seen an increase in activity since the Easter weekend, so perhaps people are just taking their time to search for homes this year. Guess we’ll find out when the May numbers are available.
Below is the April activity by town. Keep in mind that April 30, 2010 was the drop-dead date for buyers hoping to capture the federal tax buyer’s credit to negotiate contracts. Comparing this year to last year is not terribly meaningful because of the distortion from the credit, so don’t get too wrapped up in the decrease. Next month we’ll dramatically outperform May 2010 in a similarly unmeaningful manner.
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.
