Tuesday, February 22, 2011

Adding Value to Luxury Listings

Today's New York Times had an amusing but informative article today about things people have done to raise the prices on their properties. Perhaps the most extreme example was a seller who regrouted the bathroom tile and added $100,000 to the estimated value of the listing, on the theory that cracked and dirty grouting would tend to make buyers think that they would need to do a major bathroom renovation. Another broker told of a client who changed the kitchen cabinets and repainted, thereby getting an offer $100,000 higher than the broker had anticipated.

Most of the examples involved big dollars, but obvious pointers: Get rid of the clutter. Clean the rugs. If you are a landlord, put in new appliances. Replace towels and bath mats with fluffy new ones. Improve the lighting. We all know these things, but it's sometimes hard to think objectively about a place we've lived, especially when the expense incurred will benefit the new owner and not ourselves. It's worth doing things that improve either curb appeal or the initial impact during a showing. Last week's Times real estate section even talked about a new trend of using pets (well behaved and freshly groomed) to make open houses more homey. Who knows? Fido might even replace the tried-and-true cookie baking, to fill the home with a delicious aroma.

The best story, however, was the last example in the article. One broker tells her clients to go out and buy 25 pairs of expensive designer shoes, which will pay for themselves in a higher sales price, as "people want to step into your life". Isn't that like the closet envy scene in the first Sex and the City movie? Well, if it works, what woman wouldn't want two dozen new pairs of great shoes?

Tuesday, February 15, 2011

Making Connecticut Business Friendly

Many people don't understand the connection between a business-friendly climate and housing prices. Connecticut is a good example of it. We have ranked dead last among the fifty states in job creation over the past twenty years--for those of you who are counting, that's far longer than the current recession. We export college students, young people, all kinds of people. They go where the jobs are. Lots of you will know where those places are, because it's where your children live.

Without new jobs, there aren't people coming into the state, or staying in the state, to buy homes. Therefore, there isn't a growing market, and there are no buyers for those homes vacated by others who leave, or who downsize, or who transition into assisted living. That also means that new construction competes with existing housing, since relocated homeowners who buy new homes therefore don't buy current ones. All of this explains why low job growth is bad.

But why is it bad? To begin with, we in the Land of Steady Habits tend to believe that everyone wants to live here, and therefore we don't have to make it attractive to do so. We also tend to believe that businesses need to be here. That's true in some cases--like a local real estate firm, or a utility--but is clearly not the case in manufacturing and in more other industries than you would think. So we don't push our lawmakers and state and local officials to do more to attract and retain business. Yes, we want to keep those big defense contracts. But most of the jobs are in small businesses and start-ups. That's where the NIMBY (not in my back yard) folks, the preservationists, the anti-big box protesters, and the knee-jerk city planners and economic development departments lose the race for jobs. Of course, those same people often decry the increases in taxes, but without seeing the connection.

What can you do? Ask your municipality and state officials to be kind to business. Don't jump on the bandwagon to avoid personal tax increases by loading up corporate taxes. Don't let local planning and zoning processes become obstacle courses. Try to think about all sides of the issues. And vote for those who do.

Thursday, February 10, 2011

Prices Holding Steady

When we look at the real estate market statistics from last year in Greater New Haven, we don't have much to crow about. All around, it was a blah year, made that way mainly after the tax credits expired in June. However, one thing that is surprising is that the prices didn't go down as much as you might think. Our Guilford office had a mean sales price only 1% or so down from 2009. Our market as a whole was down about 2.9%.

Those figures don't jibe with what the average person on the street thinks. Why is perception so different? One reason is that many things didn't sell at all, and, if they did, they had been reduced one or more times before they went under contract. Also, as we must always point out, these statistics are not the same as in other industries, because the same homes aren't selling every year. Therefore, the particular mix of homes could change, although that is less true when you look at numbers over a whole year. So it could have been that the home that sold for $330,000 in 2010 was as good or better than the average $340,000 one from the year before.

What the numbers do show is that people went for value. Properties that sold were in good to excellent condition, in established neighborhoods, and were priced to sell. Buyers tended to feel that they were in the driver's seat, and could choose among a broad range of options (which, as I've discussed before, was less true than they thought--another example of mistaken perceptions trumping reality).

What does it bode for this year? Value is still important. Basic conservatism will still prevail. Sellers who don't have to sell will still not sell unless and until they can avoid steep cuts. Buyers will continue to be fussy. But, finally, the market will improve. Maybe slowly, but clearly. And we can't wait!

Tuesday, February 1, 2011

Waiting for Spring

While I am snowed (or iced) in tonight--again!--I am thinking once again about how happy I am that real estate is not as time sensitive as some other industries. If you had a restaurant this week, or a theater, or an airline, you would be losing revenue that wouldn't be replaced, in many cases. With real estate, it's different. I was looking at Google Analytics tonight, which tells us how many people look at http://www.hpearce.com/, and from what sites those people reach us, and it was amazing. Every snowstorm for the past month had a huge spike upward, showing us that prospective buyers and sellers are using the downtime we've all experienced when there just isn't anything to do in all this snow, and they are using it to look for real estate on the Web. They can't get out to look at property (we didn't even officially open our offices today, preferring to leave the roads to those who absolutely need to get to work), but they certainly are thinking about it.

That's great news for us. We already know that a bad, snowy winter is usually devoid of sales, but that it is generally followed by a robust spring market. All that searching on the internet, and all that time cooped up inside, leads to a frenzy of springtime real estate activity. If that's the normal pattern, what on earth will we see this spring? Real estate flying off the MLS in April and May, we hope! So, if you are a potential seller, use this indoor time to de-clutter your home and do all those fix-it projects. If you are a potential buyer, keep surfing the net--we'll be waiting for you when the sun shines!