It's quiet in our offices this month--really, really quiet. Now we're reading that the national trends say that the uptick ended in about July, which, coincidentally, is what we saw. It was far busier through July than it typically is in the summer. It was slower in August, but that is almost always true. After Labor Day, we usually see a marked increase in activity. That lasts until about Halloween, or maybe Thanksgiving, and then the buyers hibernate like bears until the spring.
We're not quite sure what to make of this latest turn of events. The stimulus program and the $8000 tax credit for first-time homebuyers were supposed to be making the phones ring. Indeed, it did, but the phones have slowed down. I can only speculate, and my guess would be that the market will not stay up until unemployment comes down. I also think that the hoopla over national health insurance has people worried about costs. Whatever the reason, it's not good.
One of the earliest CEOs of General Motors famously said that "what's good for General Motors is good for America". I would argue that the same is true of real estate. The government needs to do what it has to do in order to stimulate the real estate market at all levels, not just at the lowest end. The recovery depends upon it.
Tuesday, September 29, 2009
Tuesday, September 22, 2009
Where are the Luxury Buyers?
I thought I should write a little bit more about the information on market inventories that I described last time. As I stated, there is a direct correlation between the price and the amount of months of inventory on the market. So, for properties under $200,000, there is a 1.7 month supply. For each increasing value bracket, that supply goes to between 2 and 3 months, between 3 and 4 months, between 4 and 5 months, and then goes to over a year above $700,000. Only 2.7% of the sales now are above $700,000, and there are more homes on the market in that price range than in either of the two price ranges below that.
This surprises me in some ways. While I know that consumers are cautious, and I realize that the governmental incentives are aimed at a lower price point, one would still think that the combination of low interest rates and a skittish stock market would drive people to spend their savings on real estate. In addition, there are still those who could be downsizing and yet be spending above that amount for a property. Since investing one's assets is so problematic these days, real estate stands out as a tangible asset that is currently selling at bargain prices.
We bought our home at what turned out to be the bottom of the last market cycle, and it has turned out to be our best investment. While you cannot pick the bottom of the cycle without luck, this clearly has to be a time that will turn out to be good, considering the interest rates and prices. Why not take advantage of that, and look back years later with great satisfaction on your best investment?
This surprises me in some ways. While I know that consumers are cautious, and I realize that the governmental incentives are aimed at a lower price point, one would still think that the combination of low interest rates and a skittish stock market would drive people to spend their savings on real estate. In addition, there are still those who could be downsizing and yet be spending above that amount for a property. Since investing one's assets is so problematic these days, real estate stands out as a tangible asset that is currently selling at bargain prices.
We bought our home at what turned out to be the bottom of the last market cycle, and it has turned out to be our best investment. While you cannot pick the bottom of the cycle without luck, this clearly has to be a time that will turn out to be good, considering the interest rates and prices. Why not take advantage of that, and look back years later with great satisfaction on your best investment?
Wednesday, September 16, 2009
Market Inventory
We recently received a market inventory study from Madison, Wisconsin, showing that higher-end properties were not selling and lower ones were. Not a big surprise, but we decided to look at our market. What we found was similar, and striking.
Properties over $700,000 are less than 3% of sales now, there are enough homes in that range on the market to represent more than a year's supply, and the sales have fallen almost in half from last year. At the lower end, under $300,000, there exists only a supply of two and a half months, sales have risen by a third, and they represent 41% of all sales. While we knew that first-time homebuyers were driving the current market, it's still fascinating to see that laid out in statistics.
Overall, in our region, prices have fallen 15% since the same time last year. If you put all these facts together, what it tells you is that you are more likely to sell your home quickly if it's in a lower price range and you price it aggressively. But you knew that already!
Properties over $700,000 are less than 3% of sales now, there are enough homes in that range on the market to represent more than a year's supply, and the sales have fallen almost in half from last year. At the lower end, under $300,000, there exists only a supply of two and a half months, sales have risen by a third, and they represent 41% of all sales. While we knew that first-time homebuyers were driving the current market, it's still fascinating to see that laid out in statistics.
Overall, in our region, prices have fallen 15% since the same time last year. If you put all these facts together, what it tells you is that you are more likely to sell your home quickly if it's in a lower price range and you price it aggressively. But you knew that already!
Tuesday, September 8, 2009
New Haven's Labor Day Road Race
I just had to do a blog entry about one of my favorite New Haven events--the annual Labor Day 20K road race. As many of you know, I'm a dedicated runner. I run lots of races all year long, but the 20K is a polestar in my running year.
First of all, my running buddy Ray Fair has a model (available on his website, http://www.aginginsports.com/), that computes an equivalent time at every age to your absolute fastest time. That gives those of us older runners a chance to improve; not in actual time, which is very difficult after a certain age and a number of running years, but in relative time. It calculates a regression line for each runner, and allows you to have a goal that incorporates aging, by giving you a factor by which you "should" slow down. Then you try to beat that time.
Yesterday was a near perfect day. It was cool at the start, breezy on Long Wharf, and sunny, but never too hot or humid. Real runners would prefer cooler weather, but, for early September, it doesn't get much better than yesterday. In addition, great weather brings out more spectators, and they always help a lot.
Therefore, many of us had good races. I didn't feel great for the first 3 or 4 miles, but, once I got into a groove, I calmed down and even picked up the pace. Although my time was not my fastest, it was my fastest in age-adjusted terms. That's always something to celebrate! I'm below my regression line for the first time ever, I think. Ray says it's because I train well, but I think it's because I had a lot of improvement and slow times in the earlier years, which brings my average time up. Whatever the reason, I'm happy.
Everyone else who came out to run or to cheer seemed happy as well. That's why it's such a great day for runners, and a great day for New Haven. And the best part? We don't need to do it again for 364 days!
First of all, my running buddy Ray Fair has a model (available on his website, http://www.aginginsports.com/), that computes an equivalent time at every age to your absolute fastest time. That gives those of us older runners a chance to improve; not in actual time, which is very difficult after a certain age and a number of running years, but in relative time. It calculates a regression line for each runner, and allows you to have a goal that incorporates aging, by giving you a factor by which you "should" slow down. Then you try to beat that time.
Yesterday was a near perfect day. It was cool at the start, breezy on Long Wharf, and sunny, but never too hot or humid. Real runners would prefer cooler weather, but, for early September, it doesn't get much better than yesterday. In addition, great weather brings out more spectators, and they always help a lot.
Therefore, many of us had good races. I didn't feel great for the first 3 or 4 miles, but, once I got into a groove, I calmed down and even picked up the pace. Although my time was not my fastest, it was my fastest in age-adjusted terms. That's always something to celebrate! I'm below my regression line for the first time ever, I think. Ray says it's because I train well, but I think it's because I had a lot of improvement and slow times in the earlier years, which brings my average time up. Whatever the reason, I'm happy.
Everyone else who came out to run or to cheer seemed happy as well. That's why it's such a great day for runners, and a great day for New Haven. And the best part? We don't need to do it again for 364 days!
Wednesday, September 2, 2009
Countdown for Tax Savings
We were talking about the $8000 first-time homebuyer's credit this morning, and figuring out the timeline for the deadline of December 1, 2009. Given the time it takes to get a mortgage and close, we think that a safe deadline for purchase would be October 15th, 2009. That means that anyone who wants to take advantage of the tax credit must buy within the next six weeks!
We further realized that many people (including most of us) have lots of questions about exactly who qualifies and for what, so it's worth talking to an accountant or doing some research on the Web. Many more people qualify than one might expect. Also, the type of property is broader than just single-family homes. I don't want to put in too many details, since that would imply that I know all the answers. I learned in business school, however, that the important thing in life is to know the right questions, and then find someone who knows the answers. That advice may be worth what you just paid for it, but I think you should think about whether anyone in your family might qualify. I'm thinking that parents may want to help their kids purchase homes in the next six weeks.
When the tax credit is combined with positive real estate news--like the article in today's Wall Street Journal, saying that now is the time to buy---we're looking forward to a very busy fall season!
We further realized that many people (including most of us) have lots of questions about exactly who qualifies and for what, so it's worth talking to an accountant or doing some research on the Web. Many more people qualify than one might expect. Also, the type of property is broader than just single-family homes. I don't want to put in too many details, since that would imply that I know all the answers. I learned in business school, however, that the important thing in life is to know the right questions, and then find someone who knows the answers. That advice may be worth what you just paid for it, but I think you should think about whether anyone in your family might qualify. I'm thinking that parents may want to help their kids purchase homes in the next six weeks.
When the tax credit is combined with positive real estate news--like the article in today's Wall Street Journal, saying that now is the time to buy---we're looking forward to a very busy fall season!
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