{"id":5799,"date":"2011-01-17T12:31:14","date_gmt":"2011-01-17T16:31:14","guid":{"rendered":"http:\/\/www.amybergquist.com\/blog\/?p=5799"},"modified":"2011-01-17T12:31:14","modified_gmt":"2011-01-17T16:31:14","slug":"our-2011-predictions","status":"publish","type":"post","link":"https:\/\/www.amybergquist.com\/blog\/2011\/01\/17\/our-2011-predictions\/","title":{"rendered":"Our 2011 Predictions"},"content":{"rendered":"

\"ElizabethIt’s the second half of January, and we haven’t even published any predictions for the year. Shame on us! The point of predictions is to get them out there early so that everyone has already forgotten about them by the time the real action starts. That way you don’t get egg on your face when the exact opposite happens. But if you get it right, then you can smugly point back to your calls and say, “See, should have listened to me.”<\/p>\n

Environment<\/strong>
\nThe overall real estate environment can be charitably described as unfavorable over the past few years. It\u2019s been characterized by falling prices, decreasing sales volume, and tightening credit as the overall economy works through a financial downturn. Buyers have been far more reluctant to make a big real estate purchase despite the Federal stimulus and the very low mortgage rates. Part of it is undoubtedly less confidence in their personal financial security, the concern that they could be laid off tomorrow. At the same time people no longer believe that real estate prices will always increase, so they\u2019re less interested in sweating out the first few years of big mortgage payments in hopes of being rewarded with quick appreciation and home equity.<\/p>\n

Our research shows<\/a> that the number of single-family home sales in Hartford County peaked in 2005 at just over 9,000 properties. Sales quickly fell to the lower 6,000s by 2008, and remained about there in 2009 before falling to the upper 5,000s for 2010. Single-family home prices didn\u2019t peak until 2007, fell 14% in two years, and then rebounded a bit in 2010. It\u2019s still not clear to us why the average home price increased this year, though it\u2019s encouraging that they didn\u2019t fall further. Our current theory is that the mix of sales changed to included more larger (higher priced) homes.<\/p>\n

Looking Forward<\/strong>
\nWe don\u2019t see any major changes in the big picture story, so we expect 2011 will bring more of the same. Local employers seem relatively stable in that there have not been major layoff announcements recently, but lots of people are still looking for work. And thrift continues to be a virtue, so the rank and file are less likely to reach for a larger home. We think the number of deals will remain in the vicinity of 6,000 for the year, and that prices will be flat-to-down for the region overall. We expect mortgage rates to continue to slowly rise, though not jump so much that buyers feel their purchasing power has been taken away. Basically, we expect that it will be another year in which homes have to be priced and marketed well in order to sell.<\/p>\n

That said, we have some disagreement about the specifics. Rather than settle it internally, we thought it would be more fun to have a public airing of differences, so that bragging rights can be established at the end of the year.<\/p>\n

Number of Transactions<\/strong>
\nOne of the largest differences in the market between then and now is the number of transactions. Neither of us believe that they will return to previous levels, but we do have a bit of disagreement over the direction they’re heading.<\/p>\n