Archive for the 'The Valley' Category
National Real Estate Stories
It’s been a big day for real estate in the national news. The Wall Street Journal had three articles that caught my eye. And then Case-Shiller data was also announced this morning.
First was the front page piece titled Price Cuts Spur Home Sales. December existing home sales data was released on Monday. The market had expected another month-over-month decrease after November’s 9.4% drop in the number of transactions. However, the December report showed a 6.5% increase in sales over November. Amazingly, 45% of the sales in December 2008 are reported to be either foreclosures or sales in which the owner sells for less than they owe the bank, also known as a “short sale.”
The article goes on to discuss some of the main factors impacting the falling home prices. The three key factors seem to be local employment opportunities, inventory/supply (amount of new construction during the recent boom), and general confidence in the market. The Greater Hartford region is not specifically discussed, but it is clear that we are in better shape that many parts of the country. Employment remains our biggest threat – more job losses could trigger an increase in inventory and a simultaneous reduction in demand. Overzealous construction is a relatively small risk because most of the land in this region was either already developed or protected as green space before the recent housing boom. Everyone has had their confidence shaken (some on multiple occasions) over the past 18 months, but for the most part I don’t get the sense that we’ve collectively given up hope. People seem to be taking a business as usual approach with an extra helping of caution.
The next interesting article in today’s Journal was a quick blurb titled Many Say Goodbye to McMansions. Recent surveys of both builders and buyers suggest that people are planning to move to smaller homes. This result is not terribly surprising due to the current economic environment (can’t afford as large a home), the shift in attitude away from speculating on residential real estate (don’t believe home prices will rise quickly) and the recent energy shock (can’t believe how much it costs to heat the “great room”). This would suggest that newer, larger, more expensive homes, which are often built at the outskirts of communities, would be most at risk of losing value.
The last item in the Journal, PowerShares Goes Bargain Hunting discusses two new actively managed ETFs that will buy distressed mortgages. The funds will focus on bonds backed by pools of prime and Alt-A (better credit quality than subprime, but not quite as good as prime) mortgages. Experts quoted in the article expressed limited enthusiasm. On the plus side, mortgage backed securities have sold off dramatically over the past few years. No doubt that some bonds have been unfairly punished as investors exited these complex and uniquely individual issues en masse.
The argument against the new ETFs focuses on the timing of the opportunity. Are we really seeing the bottom of the housing market, so that resale values will be sufficient to pay off the mortgages in full? There are additional concerns about whether or not the new ETFs are the appropriate vehicle for investing in the mortgage backed securities markets. ETFs were originally devised as low-cost index investment vehicles that passively replicated equity indexes. The new ETFs are quite different in that they are actively managed and invest in the less transparent bond market. There are other ETFs already on the market that have similar structures, but they are all relatively new.
Finally, multiple sources are reporting the Case-Shiller Index number for November. The index of 20 large metropolitan regions shows prices falling about 18% on average from November 2007 to November 2008. The Hartford region is not included in the data, but our Northeastern surrogates of Boston and New York both experienced smaller price drops than the overall average.
This round of coverage illustrates that home prices continue to be a major point of interest for both the financial markets and the general citizenry. Data continues to show falling prices, and analysis suggests that prices could fall further. For Greater Hartford, the key metrics continue to be employment and confidence. As long as our job markets and wages remain reasonably stable, there is no reason to expect home prices in this area to go into a freefall.
Simsbury, CT: 2008 Real Estate Market Statistics
Recently I wrote a post covering 2008 real estate market statistics for the Greater Hartford area. This post focuses on data specific to Simsbury, Connecticut. All information came from the CTMLS and is deemed reliable, but not guaranteed. All data is for single family homes only.
Median sale price for 2008 was $372,500 compared to $357,500 in 2007. The Average Days on Market for 2008 was 60 days, versus 57 days last year. The Average Sale Price per Square Foot in 2008 was $169.75, in 2007 it was $170.86. Finally, the Sale Price to List Price Ratio for 2008 was 96.7%, compared to 97.1% in 2007.
The following two graphs present the same data, the number of closed transactions by month. Typically the busy period is in the early summer which means the majority of the closings happen between May and August.
It’s also interesting to look at the distribution of sales by price point to get a better sense of what the Median Sale Price really means. This graph helps you understand how a town’s inventory is distributed by price range and can be compared to other towns.
As always, I’m available to answer any questions you may have. Feel free to post a comment or send me an email.
Farmington, CT: 2008 Real Estate Market Statistics
Recently I wrote a post covering 2008 real estate market statistics for the Greater Hartford area. This post focuses on data specific to Farmington, Connecticut. All information came from the CTMLS and is deemed reliable, but not guaranteed. All data is for single family homes only.
Median sale price for 2008 was $374,950 compared to $390,000 in 2007. The Average Days on Market for 2008 was 65 days, versus 70 days last year. The Average Sale Price per Square Foot in 2008 was $179.85, in 2007 it was $179.62. Finally, the Sale Price to List Price Ratio for 2008 was 95.7%, compared to 96.1% in 2007.
The following two graphs present the same data, the number of closed transactions by month. Typically the busy period is in the early summer which means the majority of the closings happen between May and August.
It’s also interesting to look at the distribution of sales by price point to get a better sense of what the Median Sale Price really means. This graph helps you understand how a town’s inventory is distributed by price range and can be compared to other towns.
As always, I’m available to answer any questions you may have. Feel free to post a comment or send me an email.