Double Dip Fears

Lately the papers have been full of talk about the possibility of a "double dip" in real estate sales. What some experts worry about is that current economic conditions will cause real estate sales, which had started to creep up, and values, which had not fallen as far as had been feared, to go down once again. The curve would then look a little like a W (although the anemic recovery would suggest that it might be more like a U, bumping along the bottom). The worst case scenario would be a V, with two downward slopes before any rise. Should those fears affect what consumers do this spring? I'm going to argue that those worries should not determine short-term behavior. In fact, if consumers step up to the plate and buy, they will actually cause the real estate market to improve and avoid the second drop. Even if units do go down again, however, we need to look at the facts in our region. Prices didn't go way up here, and they shouldn't dive downward, either. In addition, our non-profit engines are still strong, and should keep sales from plunging. Even if there isn't call for wild optimism, normal buyers should be fine, as long as they don't plan to flip their properties too quickly. The market seems to be taking care of that possibility, as more people rent until they are secure in their jobs and locations. To make a comparison, suppose that your car was old and needed replacement. Even if you thought that prices might come down for cars in another year or two, would you wait? Really? Or would you move ahead with your life, and enjoy the peace and security of owning something you valued, knowing that giving up a little in resale value is worth it in the overall scheme of things? I would bet on the latter course. I'm hoping buyers agree this spring.

New Haven Rentals

Did you know that New Haven has one of the best rental markets, and lowest vacancy rates, in the country? It's not terribly surprising, given all the students in the region, but it is good news for people who have property to rent. Every year a steady stream of students and faculty comes in, often from places very far from New Haven, and they won't sometimes be here long enough to buy, and of course many students can't afford to buy. We do sell some real estate, however, particularly downtown condo units, to students (or really their parents, in most cases). Grad students these days come in all ages and phases, and some are studying after they retire. In addition, every once in a while, parents follow their children. I once met a woman on a tour of a boarding school with our children and asked where she was from. She said that she didn't know yet, because she and her husband were planning to move to wherever their child decided to attend school! While that is taking helicopter parenting to a new level, it does increase real estate transactions.

This all just goes to show that we cannot make too many assumptions about rentals and students/families, because the demographic group is diverse enough to fall outside the normal parameters we might place on the category. So, if you own property, or are looking to buy investment property to rent, you should certainly consider the educational market. It's real, and it's big.

Statistics from the Region

It's tempting to make you all guess about market trends for 2010, but it would be hard for me to collect the responses in a timely way, so I guess I will just tell you. The latest Commercial Record shows that, for year over year sales from 2009 to 2010, New Haven County as a whole was down almost 8% in the number of sales. For the immediate towns, Guilford, Madison, North Haven, and Bethany had an increase from the prior year. Guilford and Madison were each up 9%, while the other two had smaller increases.

Surprisingly, the median prices were almost identical in 2009 and 2010, with 2010 coming in at 0.8% less. I expect that most of you would have guessed that prices fell about 10%, so the fact that they actually fell less than one percent is very good news. Of course, as I've often pointed out, this is not an apples-to-apples comparison, so it's probably true that only the best houses sold, meaning that most homes would have sold for less in 2010 than in the prior year. As I've discussed in earlier posts, East Rock and Spring Glen did go up in price, showing the "Yale" effect most strongly. North Branford, with 24% fewer sales, had an increase of 10%, and Milford, Wallingford, and Woodbridge had smaller increases. New Haven as a whole crept up 1%.

It is important to recognize, as the issue said in another article, that this is the sixth year in a row that sales have declined. Since prices have also been declining for most of that period, the total decline is larger than what is listed for last year. And, since most homeowners looking to sell haven't been in the market for some time, those yearly decreases can really add up.

However, the fact that we are not in freefall is very good news, and the spring is still ahead of us. Anything could happen, but we're hoping for recovery mode to kick in strongly!

Almost Too Late to Beat the Spring Rush

Everyone knows that more homes get listed and sold in the spring season, mostly because of school schedules. People either start jobs at the start of an academic year, or want to have their kids into new schools by September. What isn't as settled by all experts is the ideal time in which to list during that season.

I'm a firm believer in the earlier, the better. It's hard to know exactly when the market will pop, but there are certainly signs already--lots of ads, lots of open houses, lots of calls. If you are a seller, you want to have your home on the market before all of the sales activity really begins. It takes time to get the paperwork processed, get the home ready, and set a price. If possible, you want to list before the vast majority of people do, so that early lookers will see your home when there aren't as many places from which to choose.

We don't know when the snow will stop for good, nor when the temperatures will really start to climb. We do know the school vacation schedule, the holiday schedule (and Easter is very late this year), and the traditional boom times. In our company, we believe this: It's best to begin right now. If you are thinking of selling, call your agent today!