Open Houses Rule

This weekend, despite being at one end or the other of just about every school system's vacation week, was a big one for open houses.  Some had as many as 25 people at them.  The market seems driven by first-time home buyers (proving that they are the one group that probably doesn't need an incentive to want to buy), who want to take advantage of low rates and low prices.  Of course, it is usually their parents who have to let them know how low rates are, since anyone under 35 wouldn't remember high ones.  (Conversely, my husband and I bought our first home in 1982 with an 18.75 % special low rate, that seemed OK to us, given that other mortgages were at 21%---it's all relative!).

Houses are starting to come onto the market at springtime pace, and buyers are out there to take advantage of the rates, the choices, and the weather.  Let's hope it keeps up at this rate!

Stimulus Needs Stimulating

Last year, when the first-time homebuyers incentive plan was introduced by the Federal government, there was a clear uptick in the number of buyers in the market. This year, the plan was reintroduced, along with a second incentive for existing homebuyers. It was obviously another, supposedly stronger, attempt to increase home sales.

Well, this time it doesn't seem to be working. Most brokers, including the one I spoke to this week in Phoenix, don't see the results. There could be more than one reason for this. First of all, most things like this--including big sales at stores--work better when people think that they are limited in time. If they think that deals will be offered again or extended, they are not as likely to move quickly. Secondly, it keeps getting harder for new buyers to get mortgages. This means that there may be buyers out there who want to buy, but who cannot qualify with the higher FICO scores now required. That last point is not necessarily a bad thing. If we can just stop and remember how we got into this mess, we will want banks to think twice before loaning to those who may not be able to repay.

I believe that there is also a fundamental flaw in the stimulus package, however. The government is trying to push demand from first-time buyers, who comprise the one group who will buy in almost any situation where they can. After all, they haven't bought homes at lower prices or with lower mortgage rates. They are generally buying because of changing life circumstances, and graduations, marriages, and babies happen regardless of the economy. Also, there are, in the end, only so many new households being formed. It might have made more sense to give the incentive to folks who didn't have the same motivation to move. After all, isn't it a little like giving a car price break only to teens?

Market Spike?

We're experiencing a late, late spring market surge, even though it's July. Our New Haven office has posted record sales for the past six weeks, and all offices seem flat out, despite the signs that summer has finally come. The New Haven numbers are still largely driven by Yale, and we hope that continues. All offices say that the strongest activity is in the FHA mortgage range (under $387,500 for a mortgage), and in first-time homebuyers. Lower price ranges, except again near Yale, move much faster.

Our hope for first-time buyer interest is that the national unemployment rate starts to go down. As the parent of twenty-somethings, I hear many stories of lost jobs, postponed starts, and pay cuts. While it may be slightly older people who go into the real estate market, the "last in, first out" theory of human resource layoffs has many newer workers nervous. When they, and their parents, start feeling more secure about their future job prospects, more of them will jump in at these low interest rates.

If we're brave enough to wish for anything else, we're keeping our fingers crossed that sellers understand the fragility of the current market, and respond reasonably and positively to negotiations and problems that occur along the way to the closing. It may be the general national stress level, but I hear a lot of stories about sellers who just won't compromise, even when it's in their interest to do so. Good thing our agents are so talented!

What's Selling?

Although it may sound as though nothing is selling in the current real estate market, there are some pockets of strong activity. The market is almost bifurcated, with most homes sitting and a few receiving multiple offers. I checked with two of our offices, our New Haven office and our Wallingford Regional office, to see what common threads exist with the quick sales we've had. There are three factors: price; condition; and location. Price means two things--the price must be considered a good value, and lower prices are more likely to attract first-time home buyers (the most active segment of the market now). Condition usually means that the property should be clean, freshly painted, and clutter-free. Location is the normal location, location, location. The worse the market, the closer you can get to the ideal location, and status does matter.

Having said all that, we are seeing strong interest particularly in East Rock, where demand outstrips supply now. Stefanie Rank has a listing on Livingston Street that has been shown over 50 times since the end of last week, and multiple offers. Fran DeToro sold a Whitney Avenue condo in less than a week. Mary Jane Burt has sold two high-end condos recently.

Hamden is also seeing demand. Eileen Smith has three times cleaned out a house top to bottom, shown it from Thursday to Sunday, and sold it on Monday. She has researched current prices in Spring Glen, and they have decreased by only 1%. The Edgehill team just sold a Hamden house in two days.

Remember that the tax credit can be used for one's 2008 taxes, so time is of the essence. So, if you're thinking of selling in any of these neighborhoods, please consider doing it now!