Sales Around the Country This Spring

It's always interesting for me to visit with my friends from other large independent companies around the country, especially when the market is changing rapidly.  I just got back last night from Charlotte, and the mood from other places is almost giddy.  The feeling nationally is that market activity will be back within 10% of normal levels by the end of this year.  That's a big improvement from the projections we heard only last fall, when most experts thought that historical norms of housing turnover would not return before 2015.

Now the commonly heard complaint is lack of inventory.  There simply aren't enough properties for sale to meet the demand. The average number of months of inventory seems to be about three.  Well-priced, well-maintained homes in many areas get multiple offers--sometimes dozens--within a few days or weeks of being listed.  Once they go under contract, the problem that arises is that appraisals have been lagging, as they always do, so there are issues with mortgages.  In some cases, sellers and their agents are going back to the highest bidder and telling them that they need to release all the contingencies, including mortgage, or they will proceed to the next offer. New construction is hot everywhere.

Here in Connecticut, we're recovering slowly.  (Maybe that's why they call us the Land of Steady Habits?)  We have just over eight months of inventory overall in our county, with some towns much higher than that.  Guilford, for example, has 17 months' supply.  Our supply of million dollar homes will last several years.  So, for us, the report from other places tells us what the future will be like.  And it will be great.  However, if you are a buyer, my advice is to buy right now!

Judging the Market

One of the time-honored ways to judge the strength of the real estate market is by the months of supply available at any given time. In order to derive this number, we take the houses currently listed, and divide by the average number of sales per month, to get the number of months it would take to "use up" the current supply. During the recession, most parts of the country had a huge backlog of homes listed, including many places with more than a year's worth of homes for sale.

Last week, I was on a call with owners of real estate firms across the country, and recovery was in full swing.  The way they expressed this was in the decline of supply, making their areas more sellers' markets than buyers' markets, meaning that buyers no longer had the advantage of dozens (or hundreds) of homes to choose from, since supply had dropped in most places to a few months' worth at most.

In our market, we appear to be lagging, as I have said in recent posts.  Although our market has improved a great deal, we still have a greater supply than other places.  According to MLS figures, we have 7 months of homes under $300,000 available, 15 months of homes between $300,000 and 1 million available, and 31 months of homes over a million available.  This last number means that, if no new homes over a million went on the market from today forward, it would take over 2 and 1/2 years at the current rate of sales for the current inventory to dry up.

It's not quite as black and white as it may sound.  Many houses listed now may be overpriced, have something wrong with them, or may never sell.  Therefore, a seller putting on a home now should not think that his/her own home won't move for over 2 years.  He or she should, however, realize that aggressive pricing, especially in our area, is still important.

News from Tulsa

I just got back yesterday from meeting with The Leadership Council, a group of large independent brokers from around the country.  This time we met at Chenowth & Cohen in Tulsa, where growth is high and unemployment is low.  Tulsa turns out to be almost in the exact center of the country geographically, both north to south and east to west, so it is home to a lot of company distribution and service centers, as well as energy companies and others.  It is just approaching the million mark in population. People are moving from all different parts of the US, and many that I met had come from Texas. Boy, does it seem different from New Haven in those regards!

Tulsa has about two and a half months of housing inventory.  Prices are rising, and units are growing.  Like us, they have problems with mortgages and closing times, and sales are not easy.  However, it's really about jobs.  If people have jobs, and employees are moving into the region to work, then it's obviously easier to sell your home and buy another one, because there is a steady supply of buyers being created.  In addtion, the West has ranches and open land all around, making it much simpler and cheaper for builders to add new product. 

The real estate business has some characteristics in common all over, but there are some differences.  They have centralized showing, so agents make one call to arrange all the properties for a buyer to see.  They also have lots of listings where contact is through the owner, which seems odd to us.  States with title companies owned by real estate companies are more real estate agent driven than lawyer driven.  Towns and cities are farther apart, and many agents I met worked an hour or more from home.  There seemed to be more concentration--one agent I met with had 159 listings!  Advertising has left newspapers in many places, and you don't see the big Sunday ad sections.  Everything is done on line, or directly by real estate companies. 

Other practices were similar to ours, including the work ethic of agents, the changes brought by technology, and the complications of lending and governmental regulations.  It's always refreshing to see both the old and the new, and to step out of the regular daily grind and view it from a distance.