The Missing Domino: First-Time Buyers

I really enjoy watching a creatively placed set of dominoes fall down piece by piece. There’s a rhythm and organization to it all that is very appealing … I find it calming. Mind you, I’m not the one to set them all up, but that’s a different story.

Red HouseReal estate can be like knocking over dominoes. When people want to move within a town, they often will have to sell their existing home in order to buy their next home. Most are moving up to a larger property, though there are some down-sizers out there too.

First-time buyers are important to the market because they can trigger chains of deals. When they buy my listing that’s an entry level home, that frees up my seller client to become a buyer and bid on a larger property, which in turn opens up possibilities for the seller of that home. You get the idea … one deal can lead to a series of deals.

The market has been slower this spring than in years past, and as we enter May a trend has become apparent. There are surprisingly few first time buyers in the market this spring. First time buyers still exist, but that group is smaller than it has been in recent memory.

What makes us think the first time buyers are missing?

The hypothesis began with a collection of observations and conversations. Parents at youth softball are lamenting their difficulty in selling. Other real estate agents are at a loss as to why homes aren’t moving. The distribution of our buyer clients is different than in past years, with many fewer first time buyers. The market’s feedback to our listings is different than we have received in past years. None of this proves anything, but low numbers of first time buyers seems to be a common theme.

Contract data also hints at differences between 2013 and 2014. At the County level, the number of contracts for single-family homes with asking prices of between $200,000 and $399,999 is lower this year than last year, down 15% and 13% respectively. These are very active price points in the County and frequent targets of first-time buyers.

2014-05-04 Hartford County Contracts by Price Band

In the West Hartford market, which is usually the most active in the region, the price points are slightly higher than in the overall County. West Hartford is seeing meaningfully less activity at price points between $200,000 and $500,000. The largest year-over-year drops are in the $300,000s and $400,000s, which are common price points for first-time buyers in town. Those two price bands are behind last year’s pace by 34% and 41%, respectively. Wow.

2014-05-04 WH Contracts by Price Band

Local real estate markets should be active this year. The economy has rebounded so that people are less worried about job security. Mortgage rates are still very attractive, though no longer at historical lows. And home prices have stabilized throughout the region. For a while we thought that the cold and snowy winter was to blame for the slow start to the spring real estate market. And I’m sure it did play a role. But now that the flowers are blooming, and the real estate market isn’t, we have to look for new and better explanations as to why we’re seeing less activity than we have in past years.

A lack of first time buyers seems like a good place to start. Does this match with your observations – are you seeing fewer friends, family and co-workers looking to buy than in past years?

Relocating to Hartford: Picking a Town

So you’re thinking of moving to the Hartford area? That’s great – it’s quite lovely here!

Scion of the Charter Oak, in Bushnell ParkHave you thought about which town you might want to move to – where to put down roots? Greater Hartford is made up of lots of small towns that each have their own character, strengths and weaknesses. The challenge is that what may be a strength to one buyer is a weakness to another.

If you have a job lined up, then I’m sure that your future coworkers have been generous about sharing their views on where you should live. People are very opinionated on that subject. You’ll quickly realize that they’re advocating for the town/area that they live in. And that they’re also warning you about towns/areas that they know very little about other than what “people say.” Unless they know you pretty well, it’s probably best to do your own research – how do they know what you will like?

How do you research different towns? I’m glad you asked. We help people relocation to Greater Hartford regularly and have some suggestions.

The best way to check out a town is to come visit.

Drive around the business district(s) and neighborhoods to get a sense of what they are like. Walk the streets at different times of the day to see how you feel. It’s interesting to see how people respond to the different towns when we take them on a tour. Most have a mental image of what kind of town they want to live in – they don’t know how to articulate it well but they know it when they see it.

Another important step is to investigate the expenses and amenities of each town.

On the expense side, how do the property taxes compare to other towns? Almost all the towns in the area can be compared on an apples to apples basis using mill rates. The City of Hartford cannot because it uses a dramatically different tax system than everyone else. The Town of West Hartford, at the time of this writing (Jan 2012), is also tricky because of a frozen phase-in that will hopefully be resolved by Jul 2012.

Connecticut has motor vehicle taxes at the town level. So you will be taxed on the value of your car in addition to the value of your home.

On the amenities side, you can check out the parks and libraries they have, whether they do curbside trash, recycling, and/or leaf collection, how the schools are organized and perform. You can also research crime statistics for the community.

Finally, you’ll need to figure out if the town has the kind of housing you’re looking for.

To get there, you’ll need to do some thinking on your own.
– What kind of environment you like – urban, suburban, rural?
– Do you want a single-family home, or would you consider a condo or multi-family?
– Are you interested in historic, or more architecturally ornate homes?
– Would you prefer a newer, more energy efficient home?
– What are you hoping to have for a commute?
– Are there other criteria that are very important to you?

Greater Hartford has just about everything out there. Knowing what you would ideally like to find will help narrow the options quickly since each individual town has different housing types.

The quick way to sort through the different towns is to work with a real estate agent, like us. We’re happy to take some time to tour the different towns with you – show you the highlights and provide some commentary. We can also tell you which towns to look in for your preferred type of home.

Congratulations on moving to Greater Hartford … just let us know if we can help!

Real Estate Agent or Therapist?

The other day a client was sharing something personal with me and said “Gosh, I’m sorry, I’m acting like you’re my therapist.”

I hear this often. My job puts me in the position where people are sharing personal information with me. A lot. They’re asking for advice based on difficult decisions that they may be making. I hear about very happy and sad situations all of the time. A marriage. A new child. A better job. An impending divorce. Family sickness. Death of a loved one. Financial distress.

These are all reasons why people move. Depending on a particular situation, different advice needs to be given. This all requires listening. And empathy. Hence why folks often vocalize that they feel like they’re talking to a therapist when I have conversations with them.

I don’t really mind this. I left my job in corporate America because I felt that I wasn’t making a difference. In my role now I help people solve problems that they’re having. Sometimes their situations are happy, sometimes not. But I’m assisting them with moving on in most cases. I appreciate that my clients trust me enough to let me into their worlds. And I respect them by keeping our conversations confidential.

I guess the point is that you want to have an agent you feel you can trust with personal information, because there’s a good chance something sensitive will be shared along the way. And better yet, you want an agent who is trustworthy and actually cares about your situation.

Boomers Boomerang Back into Town

This Sunday’s Hartford Courant had an interesting piece by Tom Condon titled “Subdivisions On Way Out?” It is definitely worth a read if you were focused on other things yesterday, like spending time with your mother or enjoying the beautiful weather.

10 Walbridge Road, West HartfordThe basic thesis is that a confluence of trends will lead to more large houses for sale in the suburbs than buyers who will be interested in purchasing them. Supply will come from the Baby Boomer generation downsizing to smaller, lower-maintenance housing options.

However, demand for their properties may not materialize. Household size is increasing as multiple generations of a family are more frequently living together. Financially marginal buyers struggle to get a mortgage in the current environment, preventing them from being homeowners. Factors like smaller home sizes, walkable neighborhoods, mixed-use environments, and shorter commutes are creeping up to the top of buyer wish lists.

Many interesting questions could be asked using this thesis as the set-up. The first one that jumps to my mind is this, which areas of Greater Hartford will benefit most from these trends?

Some of the winners are obvious. West Hartford Center offers exactly the mix of features that Mr. Condon describes. It is an established mixed-use community with smaller homes, in a walkable setting, that is convenient to just about everything in the region. Slam dunk. The Center is currently one of the hottest real estate markets in the area with basically no inventory available. If you want to buy there, then you need to have your act together.

Other areas seem like logical winners, but there is still considerable work to be done. I see Downtown Hartford as a long-term winner. Right now there is a core group of residents excited about Downtown as a neighborhood. Seven recent apartment developments (The Hollander, The Metropolitan, The Lofts at Temple & Main, 915 Main, Bushnell on the Park, 55 on the Park, and Hartford 21) are generally considered successes. Active planning is underway to rehab another building, the former hotel on Constitution Plaza. There are many additional opportunities to add residents in smaller, apartment-style, homes that are in a mixed-use community with major established businesses and legitimate public transit.

Really, the whole Farmington Avenue corridor from Downtown Hartford through West Hartford Center seems like it has a chance to win big in the coming decades. Asylum Hill and the West End have a lot to offer on the Hartford side of the line. Residential density continues on the West Hartford side of Prospect Avenue with numerous apartment buildings and commercial areas transitioning to single-family housing just off the main road.

In the real estate market, we are already seeing buyers from the Farmington Valley come over the mountain to look at our listings in the Elizabeth Park neighborhood of West Hartford and in Hartford’s West End. If Mr. Condon is right, then this could be the beginning of a trend that will play out for years to come.