Archive for the 'Think Big' Category
2011 Average Prices and Sales Mix
Warning: What follows is quite dorktacular. You have been warned.
Last week we looked at the really big picture transactions data for Hartford County in 2011. The main concern we had with how the numbers turned out was that the average single-family home price appeared to rise slightly from 2010 to 2011, which was not what we saw in the market on a house by house basis.
There is no easy way to track the price trends in a region because every house is unique. Repeat sales is the best method I know of, but it’s too hard for us to use. Anyway, we were talking averages in the post. Our hypothesis as to why the average might be misleading in this case is that averages can be influenced by a change in the mix of homes that sold between the two years. They are especially susceptible to sales of expensive homes since one million dollar property contributes as much to the total sales volume as five $200,000 homes.
The first step we took to test our hypothesis was to look at how the mix of sales changed between the two years.
The chart shows that the number of sales increased in the sub-$100,000 price band and also in all three price bands above $500,000. It also shows that the $100,000s remained almost exactly the same. Finally, the number of deals in the $200,000s fell by about 20%, while both the $300,000s and $400,000s fell by about 12%. The chart confirms our anecdotal observation that there is was more interest in high end properties in 2011, but doesn’t address our hypothesis in a convincing manner.
What if we plotted the total sales volume for each price band instead of the number of deals? That would put each of the price points on equal footing in terms of their contribution to the average.
This chart shows that the homes that sold for less than $100,000 matter very little in the average. But otherwise the chart is not conclusive about whether the average remained the same due to prices holding steady between the two years or some other reason.
Maybe we should just throw in the towel on the average as a proxy for home prices and move over to the median. Between 2010 and 2011 the median single-family home price in Hartford County fell 3.3% from $230,000 to $222,500.
Or we can just trust our observations of the market … home prices fell in 2011.
2011 Closed Stats From 50,000 Feet
Last year we gathered up all the Hartford County residential transactions since the beginning of the CTMLS in 2000 and showed how the very high level trends had changed over 10 years. Today we update those charts with the data from 2011. As always, the CTMLS is deemed reliable but not guaranteed.
Observations
The total number of single-family home transactions fell again in 2011, decreasing about 8% from the 2010 total. With the latest data point, activity for this type of property is about 41% off the 2005 peak in Hartford County. Last year we wondered whether we had seen a bottom in the number of deals – clearly 2010 was not the bottom.
As sales volume fell, showing a decrease in overall demand, the average sales price was apparently not changed. We don’t put a lot of faith in average prices because they are strongly influenced by the mix of homes that sold in a particular year, so we think something else is going on.
Our anecdotal experience is that home prices are still falling in all the towns and markets in which we do business. We also see more interest in higher priced homes, which will tend to inflate the average, and believe that’s why the average sale price edged up slightly. We’ll work on building the case to either prove or refute this hypothesis and share that result too.
Big picture analysis like this is never especially satisfying since we usually end up with more questions than answers. What are you guys seeing out there as you follow the markets? Michael called 2011 almost perfectly in the comments from last year’s post, so we clearly have knowledgeable readers!
Also, we have this data broken down by every single town in Hartford County. If you’re interested in a specific town, email us and we’ll send you the charts.
Incandescent Light Bulbs
The incandescent light bulb. Once a symbol of American ingenuity, it is now under attack as a wasteful.
Just about everyone I know has strong feelings about the incandescent. Most prefer the light they provide. Most would also agree that they are inefficient compared to compact fluorescent lamp (CFL) and light emitting diode (LED) technologies. Some argue that the newer technologies are inferior due to their color spectrum and their turn on time, though both of those characteristics have been improving with each generation of the technologies. Others are just turned off by the higher prices of the newer bulbs.
Congress got involved with the Energy Independence and Security Act of 2007, which was supposed to take effect at the beginning of 2012. The plan was to gradually halt the production of incandescents starting with the 100W bulb this year. The 75W would have been phased out in 2013, and the 60W and 40W in 2014. However, action by Congress during December of 2011 has effectively pushed out the start date until October 2012.
I have two perspectives on the matter. At the personal level, I think that efficiency is important and have been testing out the various CFL products for years. They were very poor at first, and I think they earned their bad reputation. Some of the newer bulbs I’ve bought have been much better, almost as good as the incandescents. I do still have a problem with the smaller specialty bulbs that are visible. Coiled CFLs just don’t look right in a nice chandelier, and I haven’t been impressed with the performance of “decorative” CFLs I’ve bought.
At the professional level I am a really big fan of incandescents. I’ve shown buyers enough homes to know that they are always more impressed with a property well lit by incandescents than they are by CFLs. One issue is that the quality of the CFLs vary depending on which generation technology the sellers have. So it’s common to see older CFLs that play right into the negative stereotype, which gets a buyer thinking about the lighting instead of the house.
My main recommendation at this point is to sellers. No matter how you feel about the different bulb technologies, you will make your home sell faster, and potentially for more money, by replacing all your CFL bulbs with warm incandescents. Think of it as part of the staging process, and remember that you can pack up your CFLs to bring to your new home.
Technology, Real Estate and Me
Note: This post is written by the Luddite, Amy.
I’m of the generation that started using computers in grammar school. I died more than once from dysentery while playing Oregon Trail. I’m sure many of you fine readers suffered similar fates. After college I worked for IT consulting firms. Again, surrounded by technology. I used to transfer data from legacy computer systems to whatever new, spiffy software my company was installing. Thrilling, I know.
Today I continue to find myself inundated with technology. My laptop for all of my everyday work. My smart phone (currently a Droid 2-something-or-other) for talking, emailing, texting and surfing the web while I’m on the go. And most recently, an iPad2. I’ve lovingly named it Tiny.
Kyle convinced me that we needed the iPad for business stuff. I’m not going to tell you for what exactly because that’s strategic voodoo and many of our competitors read this blog, so I can’t be letting them in on the goods. Let’s just say he had a compelling argument on why we should have one. So I sent him off to the store to make the purchase. My only input was to demand the sky blue colored cover rather than the apple green one he proposed.
Maybe there is something wrong with me (and I’ve been told by several that there is), but I really have no interest in the latest addition to our family. Tiny, while cute, small and light has no draw for me. I shudder when I look at it. Another device and technology to learn- I’ve been a Microsoft girl since undergrad, some 17 years ago. Another time suck. My laptop and phone seem to do everything that it does. Why the redundancy?
Urgh. I’m all about technology and my job, but it’s getting to a point where I’m starting to feel overwhelmed. I need to keep up with my various devices. I need to keep up with Facebook, Twitter, Linked In, and Google+ (does it even exist anymore? I just don’t know…).
When can I go back to doing my job? After I learn how to use Tiny to make me “better” at my job, I guess… Thanks Kyle!
Who’s Listening?
We had some company visiting us this week and I thought it would be a good idea to go get some fresh Connecticut peaches that we could all enjoy during their stay. Most of the South Glastonbury orchards open at 8am so I hopped in my car bright and early, with the kid, and headed across the river.
Traffic was light and we made very good time. The farm stand at Belltown Orchards wasn’t open yet but they were still picking blueberries. We decided some fresh blueberries would be good too so we stopped to pick some.
A quick tractor ride into the orchard and we were happily picking from the bushes. About five minutes passed and we heard the tractor coming around again, dropping off the latest batch of berry enthusiasts.
If you aren’t familiar with blueberry picking, the bushes, at least at Belltown, are arranged in fairly dense rows and the bushes are around six to seven feet tall. You can see the people around you in your row, but not those in the other rows. Although you can easily hear conversations in the other rows when people are around you.
So there I am, picking in my row, minding my own business, talking to my kid. A couple of rows away I hear a group of a few new people arrive, presumably from the latest tractor drop. One person has a distinctive voice and I recognize it. It’s a real estate agent from West Hartford. They start talking about work with the people they’re there with. They are complaining loudly about some clients. The person they’re with, who doesn’t appear to be an agent, is laughing and commiserating with them. The agent continues to talk in this vain for about 5 minutes and is saying some not-too-nice things about their clients.
I’m standing there picking my berries and shaking my head. It’s just totally unprofessional. No wonder people hate real estate agents. Honestly, as agents, and really any profession, we all have some clients that are difficult but it’s important not to talk about our relationships and transactions with others. It’s our job to keep our mouths shut. Clearly this agent had no clue I, and many others picking in the area, were listening, and she didn’t seem to care. She just wanted to tell a good story and entertain her friends.
At this point my daughter is starting to move down our row, she doesn’t stay still for long. I’d say she leads us about 100 feet away, we’ve moved to a new area around new people. No more agent blabbering. Near us a small child that can squirm between the bushes pops out of the row. Then another small child appears. They look at me and say “Amy!”
Do you know who these kids are? The children of one of my clients. Their mom is on the other side of the row. We peer through the bushes and say “Hi! What are you doing here?” Apparently we both had the bright idea to pick blueberries this fine morning. We chat a little bit and continue picking. We finish up around the same time and I see them again at the farm stand.
On my drive home I think about my morning interactions. How ironic is it that I just listened to an agent complaining about a client in a public place and then I run into one of my clients? Small world, isn’t it? What would have happened if I were the agent bad mouthing clients and my client overheard me? How would that make me look?
Professionalism please, people!