Archive for the 'Moving' Category
Housing and Young People
Yesterday was the first session in a five-part series on public housing policy. Housing: The Hub of Public Policy 2010 is presented by The Connecticut Housing Finance Authority, The Connecticut Department of Economic and Community Development, and The Partnership for Strong Communities; it is hosted by The Lyceum. The pre-event briefing memo touched on many issues and gave examples of what is happening in other parts of the country – it’s an interesting read. We learned about the event through our involvement in HYPE, and stopped by to check it out.
One of the recurring themes of the discussion was Connecticut’s difficulty in retaining our young adults, which is reported regularly via both official statistics and anecdotal experiences. It is a source of concern because of the ratio of workers to retirees in the state – currently 4.5:1 and expected to fall to 2.6:1 by 2030. The baseline assumption for the group was that housing played a critical role in the flight of the youth; our graduates move to other states because they can’t find affordable housing in Connecticut.
We have lived in three different states as working adults, with each move motivated by a specific opportunity. We moved to Boston because of a job, to Charlottesville because of a school, and then to Hartford because of a job. Housing costs only entered the discussion during our most recent move, as we were interested in understanding the cost of living relative to the available salaries. Hartford was more affordable that both Boston and Vermont, the other destinations we considered. So housing was a consideration for us, but it was a secondary factor after the available opportunities, and only became a factor because we expected to be in the area for a long time building a career.
Three other points that were raised during the discussion:
1. Housing costs can influence employment opportunities since companies have an incentive to locate their facilities in low-cost areas.
2. Because Connecticut is so geographically small, and located between Boston and New York, our young adults are often still close to home even if they live in another state.
3. Perhaps many of our young adults will return to the state when they are ready for a more suburban lifestyle.
What’s your take? How important are housing costs to the young adults that you know? What motivates them (you) to choose Connecticut or to choose other parts of the country/world? If you know people who have left the area, what might have kept them here if it had been available?
Choosing a Real Estate Agent
There are something like 350 real estate agents based out of the five main offices in West Hartford Center. The number grows rapidly as the rest of the towns in Greater Hartford are also considered. Most people know at least one agent, and some know many.
With so many agents out there, how do you choose an agent to use for your purchase or sale? We believe that the three main criteria should be activity level, capability, and service level.
Of the three, activity level is the easiest to research. You want an agent that is actively working with buyers and sellers so that they have a good feel for the current state of the market. Most brokerages show an agent’s recent transactions on their website. Individual agents sometimes also show their deals on their personal websites. Even if the information is not readily apparent, you can (and should) ask the agent how many homes they have sold in the past year. There’s no magic minimum number, but we would recommend working with agents that average at least a deal a month over the course of a year. About 12 deals per years is the minimum needed for an agent to support themselves as a real estate professional.
Real estate transactions involve large amounts of money, and are difficult to reverse. You want to do the right deal the first time and need to be sure that your agent is representing and protecting your interests throughout the process. On the buy side you want to work with someone who can help you figure out what kind of home you really want, help you find a home that meets your needs, and then work through the inspection process to make sure it’s in good condition. On the sell side you want to work with an agent that will be able to accurately price your home and market it effectively. Buyers and sellers both need an agent that will help them negotiate a favorable price based on condition, location, market activity, and all sorts of other factors.
Determining how capable an agent is can be a bit more difficult. There are no independent third parties that consistently review and rank agents, so most people ask for recommendations from their friends, family, and coworkers. Ideally you also want to learn more about how they approach the business, understand their attitudes, and see examples of their work. Agents should be able to quantify their performance somehow, whether it is looking at the ratio of sales price to list price for their deals or simply knowing the percentage of their clients that are willing to recommend them. Agents with websites might post client testimonials and would hopefully allow you to call a few of their past clients. Agents with blogs have much more information about them available. You can go through their posts to see what they think is important, how they approach different issues, and get a sense of their personality.
The final important criteria in selecting an agent is the service level they provide. Your agent is going to be your go-to person throughout the transaction, so you want to make sure that you are comfortable with them and feel confident that you can reach them when needed. This criteria is the least well defined and most subjective. The only good way to assess the service level of an agent is to talk with many of their past clients. Once again, agents should be able to provide the names of recent clients you can call.
Recommendations from past clients are one of the few ways to learn about an agent. Unfortunately, even they are not foolproof. Most people go through the home purchase/sale process infrequently. They work with one agent and have little basis for making comparisons between the capabilities and service levels of different agents. In addition, they have a strong incentive to say that the person they used was excellent, unless they were really, really terrible. Who wants to admit that they made a bad decision? It’s like asking parents which school is the best in town – they nearly always respond with the one their child attends.
At the end of the day, you have to make the decision to trust one agent or another. After you’ve done some asking around, and have researched as best you can to narrow down your choices, don’t be afraid to ask the remaining candidates to interview with you. They should be willing to spend some time talking about their approach and getting to know you better.
The good news is that there are many excellent agents in Greater Hartford, so you should feel confident that you can find one after doing a little research. Just remember, you want a full-time agent that is actively working with buyers and sellers, one that understands the local markets and is comfortable analyzing them, and finally one that is responsive and you feel comfortable working with.
Give us a call if you’re not sure where to start. True, we are agents and think we meet all these criteria, but we also know that we might not be the best fit for everyone. We’ve suggested people use other agents in the past and will not hesitate to do so again when it is the right thing to do.
Homebuyer Tax Credit Update
The Senate has overwhelmingly passed an extension to the hotly debated homebuyer tax credit. The updated version of the program has larger scope and is more generous than its predecessors. Note that the extension is not official until it is also passed by the House and signed by President Obama.
The new program offers people that have lived in their home for 5 years or more (move-up buyers) a $6,500 credit. It also increases the income cap to $125,000 for single return filers and $225,000 for joint return filers. Just like the previous incarnation, first-time buyers receive an $8,000 credit. Purchases must either close by April 30, 2010 or be under “binding contract” by that date and close within 60 days of April 30th. Homes must cost less than $800,000 to qualify, and buyers must be at least 18 years old to take advantage of the program. Once the final version is passed, we’ll link to all the specifics and details – this is a summary of the main points and changes.
Observations
1. “Move-up” buyers do not need to be buying a more expensive home. In fact, it seems likely that there will be lots of “move-down” buyers that take advantage of the program. Just imagine how many homeowners there are out there that have lived in their home for 20, 30, 50 years and are ready to downsize.
2. The expiration of the program is not very convenient for families with children in school, who often prefer to move over the summer. The absolute latest that a deal could close and qualify for the credit is 60 days after April 30th, which is Tuesday, June 29th. The last scheduled day of the West Hartford school year is Thursday, June 17th, with three snow make-up days taking the possible last day to Tuesday, June 22nd. If school did extend to the 22nd, then families would either have to move during the school year or try to move within one week of school ending.
3. In the Greater Hartford area, the “move-up” clause may be more effective in spurring real estate activity than the “first-time buyer” clause. We’ve already reported that we did not encounter many first-time buyers that were only making a purchase because of the credit. Nearly all were going to buy anyway and simply accelerated their purchase. The “move-up” credit, and the short window to claim it, could create a flurry of activity for people who were considering a move in the next year or two.
4. The “move-up” clause seems like it will encourage current homeowners who want to take advantage of the credit to put their home on the market early in the new year. They would need to find a buyer for their place, and then successfully bid on a new home to move to by April 30th.
5. The credit has been encouraging buyers to accelerate their purchases for the past year. At some point that trend will reverse and there will be a period in which real estate activity is unusually low. The most likely time will be just after the credit finally expires for good, though it’s possible it could happen while the credit is still available. The summer of 2010 seems like a good candidate.
6. Do we know how much this program is expected to cost the Federal government? I have not seen any projections as to how many “move-up” buyers are out there that could claim the credit. We know that over 1.8 million first-time buyers are expected to claim the credit in 2009. Presumably the shorter window of opportunity will be the main way in which the program’s costs are contained.
Old Paint in the Basement
Most homes that I show to my buyers have a corner of the basement with cans of old paint. Amy and I probably have more than most in our own home, just in case we need to touch up any one of the rainbow of colors that adorn our walls. We also have a couple of cans containing colors that are no longer in use.
While homeowners may feel comfortable stockpiling reserves, they can become a problem during the sale of a home. Sellers are supposed to clean everything out of the property. Including the old paint. Buyers may ask for certain colors to be left, but sellers should assume that they need to dispose of it all.
Paint is considered a hazardous material, and should not be thrown into the trash. The MDC has a hazardous materials collection program that includes paint and other chemical waste. Check out their complete guide to the program. They list the items that they can accept in addition to those that they cannot.
Oil based paint can be collected by the MDC. Latex paint cannot, which is unfortunate since most household paints are now latex. Their guide suggests cracking the lids on the cans to let the paint dry out. For cans containing a meaningful amount of paint, they suggest using kitty litter to speed the drying process. Once everything is dry, we are allowed to throw the cans (with the lids off) in the regular garbage can.
Collections are held on Saturdays at different sites each week. This Saturday (June 6, 2009) they will be in Windsor from 8:00 to 1:00 at the Poquonock Water Pollution Control Facility. Next week they’ll be in Hartford at Fox Middle School, and the following week they’ll be in Wethersfield at the High School. After those three collections there is a break until August.
I don’t know anyone that enjoys dealing with their old paint. I know that I don’t. But I think it is important to dispose of paint, and other hazardous materials, properly to protect our environment. We’re fortunate to have a collection program in place, even if our opportunities to participate are limited to Saturday mornings. The program is open to residents of most towns in Greater Hartford (see the site for the complete list) and residents of the participating towns can visit any collection site.
Don’t miss your opportunity, especially if you’re considering selling your home.
West Hartford Sales Contracts
Real estate activity in West Hartford feels like it has really picked up over the past few weeks. Agents are buzzing around like busy bees, and houses are going under contract. We’re seeing some homes sell very quickly after they are offered for sale, and we’re seeing multiple buyers compete for properties. There is clearly still broad interest in living in West Hartford.
I was curious to see if the data supported our “feel” for the market, so I decided to try to look at the number of homes that went under contract in the town of West Hartford since the beginning of the year. My initial plan was to plot the number of contracts written on a week-by-week basis and then compare that to last year. Unfortunately, I was foiled by the MLS data source. We are only allowed to see the date on which a property went under contract after the listing agent moves it to “Deposit” status.
Properties flow through five standard categories in the MLS during the sales process. They go from “New” to “Active” to “Show” to “Deposit” to “Closed.” The “New” status helps flag new inventory for agents and lasts for a maximum of 7 days before a property is automatically moved to “Active.” Homes that are considered “for sale” are in either “New” or “Active” status. Once an offer has been accepted, the listing agent sets the status to “Show,” which means that buyer’s agents can still show the home to other potential buyers just in case the current deal falls apart. Since most deals stay together, we don’t typically show properties in “Show” status. There are no formal rules about when a property moves to “Deposit” status, but most agents wait until the mortgage commitment contingency has been satisfied.
Which brings me back to my data problem. Most of the recent contracts have not achieved “Deposit” status, so I’m not allowed to see the date on which it went under contract. All I can see is that of the 176 contracts that have been accepted so far in West Hartford in 2009, that 52 have closed already, 53 have reached Deposit status, and the remaining 71 are in Show status. Circumstantial evidence that there has been a flurry of deals, but nothing concrete.
The research got me thinking about the number of contracts written each month versus the number of closings during that month. Agents do a lot of work in the spring, but the results don’t show up until later when the closings actually happen. And West Hartford in particular seems like a town where people like to close during school summer vacation. Below is the number of contracts written versus the number of closings for each month in 2008.
From January through May, the number of contracts exceeded the number of closings by a considerable margin. In June, the number of closings nearly doubles, setting the stage for more closings than contracts through September. Contracts written has a final hurrah in November, followed by a spike in December closings.
The real estate market is busiest when buyers and sellers are agreeing to contracts. That’s when the action is for the agents too – we have to be able to keep up with all of our buyers and sellers. Once the contract is in place, the focus shifts to the inspection, mortgage and legal team members as buyers work through their purchase contingencies on their way to closing.
The time between a buyer and seller signing a purchase contract and the actual closing can vary considerably. What’s hidden in the chart above is that contracts written earlier in the spring tend to close more slowly than average. And contracts written over the summer tend to close more quickly than average.
Although every situation is different, contracts written during March, April and May take noticeably longer to close than those written in July and August. There’s not really any way to prove motive, but the trend seems to support the hypothesis that closings are intentionally scheduled within the summer school vacation if possible. Deals negotiated in the spring extend the closing, while deals negotiated during the summer accelerate it. Deals negotiated when the summer school vacation is not in play cluster around 40 days to close.
So there we have it – a meander through real estate purchase contracts, MLS statuses and days to close. The data seems to support my mental models about both when the real estate market is most active and that West Hartford buyers and sellers tend to work around the summer school vacation. Hopefully I’ll remember to look into my initial question once the 2009 data is available…