January Contracts: A Fast Start to 2012

The number of single-family homes that went under contract in January 2012 jumped 14% over January of last year. The total of 458 deals that came together signals that the local real estate markets are off and running for 2012.

Hartford County Single-Family Contract - January 2012

We have heard a number of theories as to why buyers are active so early in the year. One is that the lack of snow has everyone acting like it’s spring. Another line of thinking is that buyers who had their search derailed by the Halloween snow storm and subsequent power outage regrouped after New Year’s weekend and resumed their search. Finally others believe that the activity level is up due to favorable buying conditions. The truth is most likely a combination of these, and other, factors. But the end result is a quick start to the year.

There are a few main factors that play into the favorable buying conditions that we should note:

1. Mortgage rates are very low with 30-year fixed loans often having interest rates below 4%. The government announced that they plan to keep short-term rates at current levels for years, so it is possible mortgage rates may also remain quite low for an extended period.

2. Prices have fallen back to the levels of the early 2000s, making homes much more affordable than they were near the peak in 2006/2007.

3. Buyer confidence has increased to the point where people seem comfortable with the idea of either becoming homeowners or moving up to a larger property. This is partially a reflection of the local business environment where we see companies more inclined to hire workers than lay them off. There also appears to be more people relocating to the Hartford area for jobs than there has been over the past few years.

We’re expecting a busy spring real estate market in 2012 and already see activity picking up. Sellers should feel comfortable listing their homes at any point in the next few months, as buyers are already out there bidding. Buyers need to realize that they will have competition for the most desirable homes and plan their bidding strategies accordingly.

Hartford County Single-Family Contract by Town - January 2012

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.

2011 Closed Single-Family Hartford County Transactions

2011 Average Single-Family Home Prices in Hartford County

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.

October Contracts: In Line With Expectations

There were 464 Hartford County single-family properties that went under contract during the month of October. Activity was closer to last year’s activity level than the 2009 level, which was influenced by a homebuyer tax credit deadline (Recall that buyers had to close by the end of November 2009, which meant getting their property under contract in October).

Hartford County Contracts for October 2011

The County remains on track to exceed 2010’s total number of contracts. We need to have 635 homes go under contract in the last two months in order to match 2010, which is a reasonable number despite December traditionally being the slowest month of the year for contracts.

Hartford County Contracts by Town for OctoberFallout from the late-October winter storm, and the widespread power outages that came with it, definitely impacted the local real estate markets. Essentially, we had a week off as there were very few showings. That’s not to say we, or real estate agents overall, weren’t busy. As homeowners we had some cleanup to do on our property. And we spent a fair amount of time working with our sellers who had some work to do at their homes.

Once the weekend arrived we began to see signs of life. One West Hartford agent called asking to see a listing even though the home did not have power. He still did not have power at his home, and his buyer client did not have power either, but they were both ready to get back out there and look at homes again – flashlights in hand.

The market could go in one of two ways from here. Hopefully it will pick up where it left off before the storm and continue into late November, as often happens. The alternative is that buyers could just pack it in for the year and turn their attention to the holidays. This week should give us a good sense of buyer sentiment, and how likely we will be to beat 2010’s contract total.

August Contracts: A Wash Out

Single-family contracts totaled 532 in August, a slight decline from July’s total, though an increase over August 2010’s tally – it was a summer month with sporadic activity.

Hurricane Irene passed through the County during the final week of the month, putting most of the real estate market on hold for at least three days, with some areas affected through the end of the month. We don’t know for sure how much of an impact it had, but feel comfortable saying that the number of deals would have been higher without the storm – there were essentially no showings over the storm weekend.

Hartford County Total Contracts for August 2011

Interest in the real estate market seems to be picking up after the extended period of downtime caused by the storm and holiday on back-to-back weekends. It will be interesting to see how the fall market plays out this year, and ultimately how the year ends. As the chart above shows, the market is about 1.5x as busy during the warm months as it is during the cold months. It’s a noticeable difference, but there are definitely buyers making offers on homes all year.

Inventory levels decreased slightly during the month, suggesting that either the pace of deals increased or the pace of listings slowed. August showed fewer contracts than July – the pace of deals slowed – so the pace of listings must have slowed even more.

We’ve mentioned this before, but it’s something worth repeating … buyers have an opportunity to get into homes at prices well off the peak, and with very attractive interest rates. This applies to move-up buyers in addition to first-time buyers. Just give it some thought … we’ll be happy to show you what’s available.

Here’s how the month went for each of the individual towns.

Hartford County Contracts Written by Town for August 2011

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.

Hartford Country Real Estate Contracts for May 2011

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.

Hartford County Contract by Town for May 2011Looking 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?