Thursday, July 29, 2010

Second Quarter Results

We just released second quarter statistics from the Greater New Haven region, which showed a major uptick from the same quarter of last year. Of course, the homebuyer tax credit was expiring, so there was a rush to close units while that was still in place. Also, however bad the economy still is, there is some national sense that things are better than in 2009, and the base of comparison was therefore low.

Within the region, Guilford and Woodbridge had the highest prices, with Madison coming in third. Prices generally went down from the second quarter of last year to the first quarter of this year, and then climbed in the second quarter of this year. Unit sales went up more sharply, rising 20% from last year's second quarter through this year at the same time.

It would be interesting to know how many of the sales were from properties which have been on the market for a long time, languishing at high prices, where a price reduction sparked an offer. Anecdotally, we know that many of the stories we hear involve sellers who are finally putting things on where they will sell. They are helped in their efforts by mortgage rates, which are so low that they allow for buyers to feel that they are getting a good deal, based on monthly payments. A recent article in a national paper suggested that buyers are trading up as a way to lock in cheap money. Let's hope so!

Wednesday, July 21, 2010

Stimulus Money

Everywhere I've driven lately seems to have road construction going on, and it seems to be paid for by Federal stimulus money. You certainly can't tell by driving around that towns and cities are in fiscal crisis! The real estate stimulus money is gone, even though closings that were delayed can still take place through an extension bill passed recently.

I was one of those who thought that giving a tax credit to first-time homebuyers was unnecessary. First of all, they are the people most likely to buy under any circumstances. Secondly, interest rates are very low. And lastly, I thought it was repeat and second-home buyers who needed pushing.

I guess I was both right and wrong. Most buyers didn't even qualify for the full tax credit, or even part of it. Although the second version of the credit allowed repeat buyers to participate, many of them earned too much to get the benefit. However, it's clear that sales plummeted as soon as the stimulus money expired. That indicates that even those who did not get the money back were affected by the offer. And, as we all know, perception is reality. Whatever it took to get buyers off the fence was needed, and the tax credit seemed to help. It moved people who would have bought anyway into an earlier closing, which pushed sales up in the first part of the year, and will have a negative effect in the second half.

There is another kind of stimulus available, however, and that's a perceived bargain. Sellers can make their properties attractive by lowering prices. There's a great deal of evidence that that is exactly what's happening in some segments of the market. Things are selling, but at discounts off the asking prices. Even in New York City, long considered exempt from the housing recession, recent articles have referred to big discounts leading to sales. Until the Federal government acts to spur housing again, we'll have to depend upon owners doing it through pricing. And, given the normal seasonal fluctuations in the market, they'll have to do it soon if they want to sell in 2010.

Wednesday, July 14, 2010

Weather and Real Estate

I'm looking out my window at what promises to be the first full day of rain all summer. We need it! And it's hard to object, when there's been so much sun for so long. It's a great day for people to do what they haven't gotten done through the sticky season. Procrastination is very easy in hot, humid weather.

Well, that applies to buyers and sellers of real estate as well. We've known for a long time that there is a bell curve to open houses, for example. If the weather is too nasty, people don't come. If the weather is too good, people don't come. We also know that wintery weather causes almost everyone to cancel showing appointments. The height of summer is usually very slow, with few phone calls, although vacations have a lot to do with that also.

So what's the message here? Just as when you travel, you should expect weather delays when you buy or sell real estate. But on a day like today? Grab it and get business done!

Wednesday, July 7, 2010

Waterfront Statistics

Since I've been blogging about prices and trends in New Haven compared with its suburbs, I was prompted to look at the shoreline statistics. Since we've been talking about the upper end of the city market, we checked sales of waterfront property since the beginning of the year. Taking Branford, Guilford, and Madison, a dozen homes on the water over $1 million (which we assumed meant all but an anomoly) sold in the first six months of 2010. They stayed on the market anywhere from one day to over 600 days, and none sold for the full listing price. The lowest listing to sales ratio was 62%, although most I calculated were in the 85% range, with only a couple selling at over 90% of the listed price. One was in Branford, three were in Guilford, and the rest were in Madison.

While this is an exceptionally low number of sales in that period of time, it does tend to confirm the idea expressed in earlier pieces that the City of New Haven is outperforming other high-end areas. The surprising thing about this particular comparison is that waterfront is the ultimate example of location, location, location. The most frequent comment on its primacy as an investment choice is that "they're not making any more of it". When even that theory fails to prompt sales, especially during a time when the traditional hoped-for investment bankers are doing well enough to buy waterfront summer homes, there's cause for real concern about the economy. Let's hope that the next quarter shows a different result.